Core Insights - Moen and Meritage Homes have signed a multiyear agreement to continue as Meritage's exclusive supplier of faucets and bath accessories, enhancing the quality and durability of plumbing solutions in energy-efficient homes [1][2]. Company Overview - Moen is recognized as the 1 consumer faucet brand in North America, offering a wide range of innovative kitchen and bath products that enhance user experience and water control [4]. - Meritage Homes is the fifth-largest public homebuilder in the United States, known for its energy-efficient and affordable homes, with operations across multiple states [6][7]. Partnership Details - The partnership between Moen and Meritage has lasted over 20 years, focusing on innovative and stylish plumbing products that align with Meritage's mission of creating sustainable homes [2][3]. - Moen's products meet EPA WaterSense® criteria, promoting water conservation and providing homebuyers with potential monthly utility cost savings [3]. Industry Recognition - Meritage Homes has delivered over 185,000 homes and has received multiple awards for its commitment to energy efficiency, including the EPA's ENERGY STAR® Partner of the Year for Sustained Excellence Award [7].

Investment Thesis - Fortune Brands Innovations, Inc. (FBIN) is expected to see upside driven by good execution, market share gains, and new partnerships in its connected product portfolio [5] - The interest rate cycle is anticipated to reverse, benefiting both new construction and repair & remodel (R&R) demand in the housing industry [5] - The company's margins are projected to improve due to favorable price/cost dynamics, an improving mix, cost savings, and volume leverage [5] - Despite a slightly higher valuation multiple than historical averages, it is justified due to the exit from lower-margin cabinet business [5] Revenue Analysis and Outlook - Recent sales were negatively impacted by channel inventory destocking and lower end-market demand due to a weak housing market [6] - In Q2 FY2024, FBIN experienced a 6.6% year-over-year increase in total revenue to $1.2 billion, although organic sales declined by 3% year-over-year [7] - The Water Innovation segment saw a 7% year-over-year sales growth, while the Security segment grew by 11.7% year-over-year, despite organic sales declines in both segments [8] Margin Analysis and Outlook - FBIN posted a 40 basis points year-over-year increase in adjusted operating margins, aided by improved margin mix and manufacturing efficiencies [12] - The Water Innovation segment's adjusted operating margin improved to 23.3%, while the Security segment saw a significant increase to 18.9% [13] - The company is expected to benefit from easing raw material costs and improved margins from connected/digital products [12][13] Valuation and Rating - FBIN stock is currently trading at 18.85x FY24 consensus EPS estimates of $4.29, which is a premium to its 5-year historical average of 16.48x but a discount to the sector median of 19.77x [14][15] - The company is expected to trade at a premium due to its higher-margin profile after spinning off its less profitable cabinet business [16] - The stock is projected to provide a good double-digit CAGR for investors, supported by double-digit EPS growth and a ~1.2% dividend yield [16]

Core Insights - Fortune Brands Innovations (FBIN) reported revenue of $1.24 billion for the quarter ended June 2024, reflecting a year-over-year increase of 6.6% [1] - The earnings per share (EPS) for the quarter was $1.16, up from $1.07 in the same quarter last year [1] Financial Performance Metrics - Net Sales for Outdoors were reported at $389.40 million, exceeding the average analyst estimate of $387.33 million, representing a year-over-year change of +6.9% [3] - Net Sales for Security were $191 million, falling short of the average estimate of $213.12 million [3] - Net Sales for Water were reported at $659.60 million, below the average estimate of $678.72 million [3] - Operating Income (Non-GAAP) for Water was $153.40 million, compared to the average estimate of $158.20 million [3] - Operating Income (Non-GAAP) for Outdoors was $63.30 million, exceeding the average estimate of $59.70 million [3] - Operating Income (Non-GAAP) for Security was $36.20 million, surpassing the average estimate of $33.19 million [3] - Total Corporate Expenses (Non-GAAP) were reported at -$37 million, compared to the average estimate of -$35.93 million [3] Market Reaction - The reported revenue represented a surprise of -3.06% compared to the Zacks Consensus Estimate of $1.28 billion, while the EPS surprise was +3.57% against a consensus estimate of $1.12 [4] - Over the past month, shares of Fortune Brands Innovations have returned +5.9%, contrasting with a -0.3% change in the Zacks S&P 500 composite [6] - The stock currently holds a Zacks Rank 4 (Sell), indicating potential underperformance relative to the broader market in the near term [6]

Company Overview - Fortune Brands Innovations (FBIN) reported quarterly earnings of $1.16 per share, exceeding the Zacks Consensus Estimate of $1.12 per share, and showing an increase from $1.07 per share a year ago [3] - The company achieved an earnings surprise of 3.57% for the recent quarter and had a previous surprise of 9.21% when it reported earnings of $0.83 per share against an expectation of $0.76 per share [4] - Over the last four quarters, FBIN has surpassed consensus EPS estimates four times [5] Revenue Performance - FBIN posted revenues of $1.24 billion for the quarter ended June 2024, which was 3.06% below the Zacks Consensus Estimate, compared to $1.16 billion in revenues from the same quarter last year [5] - The company has exceeded consensus revenue estimates two times in the last four quarters [5] Stock Performance and Outlook - FBIN shares have declined approximately 9.3% since the beginning of the year, while the S&P 500 has gained 13.8% [6] - The current estimate revisions trend for FBIN is unfavorable, resulting in a Zacks Rank 4 (Sell), indicating expected underperformance in the near future [8] - The consensus EPS estimate for the upcoming quarter is $1.22 on revenues of $1.27 billion, and for the current fiscal year, it is $4.26 on revenues of $4.83 billion [12] Industry Context - The Retail - Home Furnishings industry, to which FBIN belongs, is currently ranked in the bottom 5% of over 250 Zacks industries, suggesting a challenging environment [11] - The industry outlook can significantly impact stock performance, with top-ranked industries outperforming lower-ranked ones by more than 2 to 1 [11]

This maker of products for the home, like faucets, cabinets, windows and doors has an established record of topping earnings estimates, especially when looking at the previous two reports. The company boasts an average surprise for the past two quarters of 5.68%. Price and EPS Surprise Our research shows that stocks with the combination of a positive Earnings ESP and a Zacks Rank #3 (Hold) or better produce a positive surprise nearly 70% of the time. In other words, if you have 10 stocks with this combinati ...

Group 1: Strategic Partnerships and Acquisitions - Fortune Brands Innovations, Inc. (FBIN) has entered into a partnership with Value Hybrid Global, S.L. to enhance its Master Lock brand's capabilities in connected lockout tagout (cLOTO) solutions, which are expected to improve safety and efficiency globally [9][10] - The partnership aims to transform workplaces from mechanical systems to cLOTO, thereby expanding the reach of these solutions in the global market [2] - FBIN's recent acquisitions, including a 100% stake in Wise Water Solutions LLC for $105.2 million, are expected to capture opportunities in the $4 billion U.S. residential water filtration market [11] Group 2: Financial Performance - Fortune Brands' first-quarter net sales reached $1.11 billion, reflecting a 7% year-over-year increase, largely driven by recent acquisitions [4] - Despite a 14.1% decline in shares over the past three months, FBIN's strategic investments and cost reduction initiatives are anticipated to drive growth momentum in upcoming quarters [12][15] Group 3: Market Position and Growth Outlook - The company focuses on both inorganic and organic growth opportunities, leveraging its market position to gain momentum despite uncertain economic conditions [15] - The Zacks Consensus Estimate for WING's 2024 sales and earnings per share indicates growth of 27.5% and 36.7%, respectively, from the previous year [6]

monsitj Investment Thesis Fortune Brands Innovations, Inc. (NYSE:FBIN) has good revenue and margin growth prospects. The company's revenue growth should benefit from an increased level of housing completions given the healthy housing start levels in the back half of last year. In addition, the company is also focused on enhancing its product portfolio with consistent innovations within connected offerings like FLO Smart Water Monitor and Shutoffs, Connected sprinklers, and Smart Locks. These offerings are g ...

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use tried-and-true metrics and fundamental analysis to find compa ...

Fortune Brands Innovations (FBIN) reported $1.11 billion in revenue for the quarter ended March 2024, representing a year-over-year increase of 6.7%. EPS of $0.83 for the same period compares to $0.69 a year ago.The reported revenue represents a surprise of +2.16% over the Zacks Consensus Estimate of $1.09 billion. With the consensus EPS estimate being $0.76, the EPS surprise was +9.21%.While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street expectations ...

[First Quarter 2024 Performance Overview](index=1&type=section&id=First%20Quarter%202024%20Performance%20Overview) [Highlights and Management Commentary](index=1&type=section&id=Highlights%20and%20Management%20Commentary) Fortune Brands reported first-quarter results that surpassed expectations, with a 7% increase in reported sales and a 20% rise in non-GAAP EPS, driven by strategic execution and confidence in market outperformance - Q1 sales and margin results exceeded expectations, driven by the successful execution of the company's strategy to grow its core business and accelerate in connected products[3](index=3&type=chunk) - The company reaffirmed its initial 2024 guidance, signaling confidence in its strategy for above-market sales performance, margin expansion, and cash generation[5](index=5&type=chunk) [Consolidated Financial Results](index=1&type=section&id=Consolidated%20Financial%20Results) For Q1 2024, Fortune Brands reported net sales of $1.11 billion, a 7% increase year-over-year, while organic sales declined 3%, with GAAP EPS rising 13% to $0.76 and non-GAAP EPS increasing 20% to $0.83 Q1 2024 Total Company Results vs. Q1 2023 | Metric | Q1 2024 GAAP | Change (YoY) | Q1 2024 Non-GAAP | Change (YoY) | | :--- | :--- | :--- | :--- | :--- | | **Net Sales** | $1,110 M | 7% | $1,110 M | 7% | | **Operating Income** | $155.4 M | 18% | $167.2 M | 22% | | **Operating Margin** | 14.0% | 130 bps | 15.1% | 200 bps | | **EPS** | $0.76 | 13% | $0.83 | 20% | - While reported sales grew **7% to $1.1 billion**, organic sales (excluding acquisitions) decreased by **3%** compared to Q1 2023, indicating that recent acquisitions were the primary driver of top-line growth[5](index=5&type=chunk) [Segment Performance](index=2&type=section&id=Segment%20Performance) [Water Innovations](index=2&type=section&id=Water%20Innovations) The Water Innovations segment reported a 5% increase in net sales to $625 million, driven by acquisitions, despite a 7% decline in organic sales, with operating margin improving by 100 basis points to 22.6% Water Innovations Q1 2024 Performance | Metric | Value | Change (YoY) | | :--- | :--- | :--- | | **Reported Net Sales** | $625 M | 5% | | **Organic Net Sales** | $555 M | (7)% | | **Operating Margin Before Charges/Gains** | 22.6% | 100 bps | [Outdoors](index=2&type=section&id=Outdoors) The Outdoors segment achieved strong performance with a 9% increase in both reported and organic net sales to $315 million, alongside a significant 680 basis point expansion in operating margin to 12.0% Outdoors Q1 2024 Performance | Metric | Value | Change (YoY) | | :--- | :--- | :--- | | **Reported Net Sales** | $315 M | 9% | | **Organic Net Sales** | $315 M | 9% | | **Operating Margin Before Charges/Gains** | 12.0% | 680 bps | - Operating margin improvement was positively impacted by higher production volumes and continuous improvement initiatives[6](index=6&type=chunk) [Security](index=2&type=section&id=Security) The Security segment's net sales grew 9% to $169 million, primarily due to acquisitions, despite an 8% decline in organic sales, with operating margin increasing by 170 basis points to 15.7% Security Q1 2024 Performance | Metric | Value | Change (YoY) | | :--- | :--- | :--- | | **Reported Net Sales** | $169 M | 9% | | **Organic Net Sales** | $143 M | (8)% | | **Operating Margin Before Charges/Gains** | 15.7% | 170 bps | [Financial Position and Outlook](index=2&type=section&id=Financial%20Position%20and%20Outlook) [Balance Sheet and Cash Flow](index=2&type=section&id=Balance%20Sheet%20and%20Cash%20Flow) The company maintained a strong balance sheet with $360 million in cash and a net debt to EBITDA ratio of 2.9x, while experiencing negative operating cash flow due to seasonality and repurchasing $100 million in shares Key Financial Position Metrics (as of Q1 2024 End) | Metric | Value | | :--- | :--- | | **Net Debt** | $2.7 billion | | **Net Debt to EBITDA (before charges/gains)** | 2.9x | | **Cash** | $360 million | | **Available Revolving Credit Facility** | $875 million | - The company experienced negative operating cash flow of **$(71.3) million** and free cash flow of **$(135.9) million**, which was attributed to typical seasonality[8](index=8&type=chunk) - The company repurchased **$100 million** of its shares in Q1 2024 as part of its opportunistic share repurchase program[8](index=8&type=chunk) [Full-Year 2024 Guidance](index=2&type=section&id=Full-Year%202024%20Guidance) Fortune Brands reaffirmed its full-year 2024 guidance, projecting net sales growth of 3.5% to 5.5% and adjusted EPS between $4.20 and $4.40, despite anticipating a challenging global market - The company reaffirmed its full-year guidance, prioritizing above-market sales growth, margin expansion, and cash generation while continuing strategic investments[9](index=9&type=chunk) 2024 Full-Year Guidance Highlights | Metric | Guidance Range | | :--- | :--- | | **Global Market** | -3% to 0% | | **Net Sales Growth** | 3.5% to 5.5% | | **Organic Net Sales Growth** | -1% to 1% | | **Operating Margin (before charges/gains)** | 16.5% to 17.5% | | **EPS (before charges/gains)** | $4.20 to $4.40 | | **Free Cash Flow** | Around $520 million | [Detailed Financial Statements and Reconciliations](index=5&type=section&id=Detailed%20Financial%20Statements%20and%20Reconciliations) [Consolidated Financial Statements](index=6&type=section&id=Consolidated%20Financial%20Statements) The detailed financial statements provide a comprehensive view of the company's performance, showing a 7% revenue increase to $1.11 billion, a 14% rise in net income to $96.4 million, and a seasonal use of cash in operations [Condensed Consolidated Statements of Income](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) For Q1 2024, net sales grew 7% to $1.11 billion, operating income increased 18% to $155.4 million, and net income rose 14% to $96.4 million, resulting in diluted EPS of $0.76 Q1 2024 Income Statement Highlights (in millions) | Line Item | Q1 2024 | Q1 2023 | % Change | | :--- | :--- | :--- | :--- | | **Net Sales** | $1,109.6 | $1,040.0 | 7% | | **Operating Income** | $155.4 | $131.8 | 18% | | **Net Income** | $96.4 | $84.6 | 14% | | **Diluted EPS (Continuing Ops)** | $0.76 | $0.67 | 13% | [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 30, 2024, total assets increased to $6.79 billion, driven by higher goodwill and accounts receivable, while total liabilities rose to $4.51 billion, primarily due to an increase in long-term debt Balance Sheet Highlights (in millions) | Line Item | March 30, 2024 | Dec 30, 2023 | | :--- | :--- | :--- | | **Cash and cash equivalents** | $359.7 | $366.4 | | **Total current assets** | $2,172.1 | $2,045.7 | | **Goodwill** | $1,988.7 | $1,906.8 | | **Total assets** | $6,791.5 | $6,565.0 | | **Long-term debt** | $3,044.7 | $2,670.1 | | **Total liabilities** | $4,510.7 | $4,271.6 | | **Total equity** | $2,280.8 | $2,293.4 | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) In Q1 2024, the company experienced a net cash outflow from operating activities of $(71.3) million, used $169.8 million in investing activities, and generated $238.7 million from financing activities, primarily through increased debt Q1 2024 Cash Flow Highlights (in millions) | Line Item | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | **Net cash from operating activities** | $(71.3) | $76.1 | | **Capital expenditures** | $(64.6) | $(42.6) | | **Cost of acquisitions** | $(105.2) | - | | **Net cash from investing activities** | $(169.8) | $(42.6) | | **Treasury stock purchases** | $(100.0) | $(100.0) | | **Net cash from financing activities** | $238.7 | $(139.3) | [Non-GAAP Reconciliations](index=5&type=section&id=Non-GAAP%20Reconciliations) This section provides detailed reconciliations for key non-GAAP metrics, including organic net sales, operating income, diluted EPS, and the net debt-to-EBITDA ratio [Reconciliation of Organic Net Sales](index=13&type=section&id=Reconciliation%20of%20Organic%20Net%20Sales) Total company organic net sales for Q1 2024 were $1.01 billion, a 3% decrease from the prior year, excluding $96.5 million in revenue from recent acquisitions Q1 2024 GAAP Net Sales to Organic Net Sales Reconciliation (in millions) | Segment | Net Sales (GAAP) | Acquisition Impact | Organic Net Sales | Organic % Change | | :--- | :--- | :--- | :--- | :--- | | **Water** | $625.3 | $70.4 | $554.9 | (7)% | | **Outdoors** | $315.0 | $0.0 | $315.0 | 9% | | **Security** | $169.3 | $26.1 | $143.2 | (8)% | | **Total Company** | $1,109.6 | $96.5 | $1,013.1 | (3)% | [Reconciliation of Operating Income and Margin](index=5&type=section&id=Reconciliation%20of%20Operating%20Income%20and%20Margin) Total company GAAP operating income of $155.4 million was adjusted to $167.2 million before charges/gains, representing a 22% increase year-over-year and a non-GAAP operating margin of 15.1% Q1 2024 Operating Income Reconciliation (in millions) | Line Item | Value | | :--- | :--- | | **Operating Income (GAAP)** | $155.4 | | Restructuring Charges | $2.8 | | Other Charges/(Gains) | $9.0 | | **Operating Income Before Charges/Gains** | $167.2 | [Reconciliation of Diluted EPS](index=10&type=section&id=Reconciliation%20of%20Diluted%20EPS) The company's GAAP diluted EPS of $0.76 was adjusted to $0.83 before charges/gains for Q1 2024, reflecting a 20% increase from the prior year after excluding specific charges Q1 2024 Diluted EPS Reconciliation | Line Item | Value | | :--- | :--- | | **Diluted EPS from continuing operations (GAAP)** | $0.76 | | Restructuring charges | $0.02 | | Other charges/(gains) | $0.05 | | **Diluted EPS before charges/gains** | $0.83 | [Calculation of Net Debt-to-EBITDA Ratio](index=9&type=section&id=Calculation%20of%20Net%20Debt-to-EBITDA%20Ratio) As of March 30, 2024, the company's net debt was $2.685 billion, resulting in a net debt-to-EBITDA ratio of 2.9x based on a trailing fifty-two-week EBITDA of $940.5 million Net Debt-to-EBITDA Ratio Calculation (as of March 30, 2024) | Line Item | Value (in millions) | | :--- | :--- | | **Total Debt** | $3,044.7 | | Less: Cash and cash equivalents | $359.7 | | **Net Debt** | $2,685.0 | | **EBITDA before charges/gains (52-week)** | $940.5 | | **Net Debt-to-EBITDA Ratio** | **2.9x** |