Fortune Brands(FBIN)2025-02-25 21:34Financial Performance - For the year ended December 28, 2024, total net sales were $4,609.0 million, a decrease of 0.4% compared to 2023[130]. - Operating income increased by 20.0% to $737.9 million in 2024, primarily due to acquisitions and cost deflation[138]. - The Water segment reported net sales of $2,564.6 million, a slight increase of 0.1% from 2023[138]. - International market sales declined by $136.7 million, impacting overall net sales negatively[135]. - Net sales decreased by $96.8 million, or 2.0%, primarily due to lower sales unit volume in the U.S. and unfavorable foreign exchange of approximately $24 million[159]. - Operating income decreased by $159.4 million, or 20.6%, attributed to lower sales unit volume, manufacturing inefficiencies, and higher restructuring costs[165]. - Net sales in the Water segment decreased by $8.0 million, or 0.3%, due to lower organic sales unit volume and unfavorable foreign exchange of approximately $24.4 million[172]. - Operating income in the Outdoors segment decreased by $60.7 million, or 31.3%, due to asset impairment charges of $33.5 million and lower net sales[175]. - Net sales in the Security segment increased by $87.5 million, or 13.8%, primarily due to the acquisition of the Yale and August Business[176]. Expenses and Costs - Selling, general and administrative expenses rose by 6.1% to $1,226.5 million, driven by acquisitions and increased marketing costs[142]. - Selling, general and administrative expenses increased by $90.5 million, or 8.4%, due to the impact from the acquisition of the Acquired Businesses and higher headcount-related costs[161]. - Corporate expenses increased by $25.4 million, or 19.6%, primarily due to costs related to the acquisition of the Acquired Businesses[178]. - Interest expense decreased by $2.7 million, or 2.3%, due to lower interest on floating rate debt[166]. Acquisitions and Investments - The acquisition of Wise Water Solutions LLC. was completed for $105.6 million, contributing to the Water segment's performance[127]. - The company plans to continue investing in organic growth initiatives and strategic acquisitions to enhance shareholder value[131]. - The company acquired SpringWell for $105.6 million in February 2024, and the results are reported as part of the Water segment[196]. - The company completed the acquisition of the Acquired Businesses from ASSA for approximately $813.9 million in June 2023[197]. - The company invested approximately $60 million in incremental capacity in 2024 and expects capital spending in 2025 to be between $100 million and $140 million[191]. Cash Flow and Debt - The net cash provided by operating activities was $667.8 million in 2024, a decrease of $388.0 million from 2023[201]. - The company used $302.9 million in investing activities in 2024, significantly lower than $1,037.8 million in 2023, primarily due to lower acquisition costs[202]. - The company had aggregate outstanding notes of $2.7 billion as of December 30, 2023[184]. - The company entered into a $1.25 billion revolving credit facility with a maturity date of August 2027, with no outstanding borrowings as of December 28, 2024[185]. - As of December 28, 2024, the company had cash and cash equivalents of $381.1 million, with $335.4 million held at non-U.S. subsidiaries[191]. - Debt payments due in the next five years include $500 million in 2025 and $1.5 billion in 2030 and beyond[210]. Tax and Liabilities - The effective income tax rate for 2024 was adversely affected by state and local taxes and foreign income taxed at higher rates[148]. - As of December 28, 2024, liabilities for unrecognized tax benefits pertaining to uncertain tax positions totaled $25.2 million, with a reasonable possibility of a decrease by $6.1 million in the next 12 months[241]. - The company has contractual obligations of $545.1 million as of December 28, 2024, with $522.4 million due within one year[207]. Pension and Actuarial Information - The weighted-average long-term expected rate of return on pension plan assets was 7.3% for 2024, compared to 6.1% for 2023[235]. - The weighted-average discount rate for defined benefit liabilities was 5.7% as of December 28, 2024, compared to 5.0% as of December 30, 2023[236]. - Total pension cost for 2024 was $11.6 million, with an actuarial loss component of $18.5 million[238]. - The actual gain on plan assets in 2024 was 0.3%, compared to an actuarial assumption of an average 7.3% expected return[238]. - A 25 basis point change in the discount rate assumption would lead to an increase or decrease in pension and postretirement liability of approximately $6 million[239]. - The assumed rate of increase for postretirement medical and prescription drugs for pre-65 retirees decreased from 7.3% in 2023 to 7.1% in 2024[237]. Inventory and Impairments - Inventory provision was $69.3 million and $75.8 million as of December 28, 2024, and December 30, 2023, respectively[216]. - No material impairments related to long-lived assets were recorded in 2024, 2023, or 2022[218]. - Pre-tax impairment charges of $28.0 million and $5.5 million were recorded for two indefinite-lived tradenames in the Outdoors segment during the fourth quarter of 2023[229]. - The fair value of indefinite-lived tradenames was $518.8 million as of December 28, 2024, with $215.6 million in the Water segment, $271.2 million in the Outdoors segment, and $32.0 million in the Security segment[228].