Fortune Brands Cuts 2026 EPS Outlook to $3.20-$3.30 as Q3 Sales Fall 3.1%; Plans Fiberon Sale and China Exit
Fortune Brands Innovations cut its 2026 earnings outlook on Tuesday and laid out a series of portfolio moves, including a planned sale of its Fiberon decking business and an exit from commercial operations in China, as third-quarter sales fell 3.1% to $1.11 billion.
The company behind the Moen, Therma-Tru and Master Lock brands now expects full-year EPS before charges and gains of $3.20 to $3.30, according to the earnings release it filed with an 8-K. The $3.25 midpoint is down from $3.37 at the midpoint of its previous guidance. Full-year net sales are now expected at $4.205 billion to $4.275 billion.
Quarterly EPS before charges and gains rose 4.6% to $1.14 from $1.09, but that figure included a $0.28 net tax benefit and $0.14 of net tariff refunds. GAAP EPS fell 28.8% to $0.42 from $0.59, including a $0.47 asset impairment charge.
'Not where they need to be'
"Third quarter results were in line with our outlook excluding the tax and tariff benefits, but not where they need to be," CEO Jesse Singh said in the release. "Our biggest challenge has been our own execution, and we are taking aggressive steps to drive improvement."
Singh called the effort "a multi-year turnaround plan" and said the company remains on track for $70 million of annualized SG&A savings by the first quarter of 2027. He said the company has added a new chief financial officer, chief information officer and chief legal officer.
Pruning the portfolio
Fortune Brands has entered into an agreement to sell Fiberon, expects to finish exiting commercial operations in China by the third quarter of 2027, and is rationalizing the EMEA operating footprint of a Water segment business by the fourth quarter of 2027. Together, those businesses generate an annualized operating loss of an estimated $50 million to $55 million on revenue of $320 million to $330 million, the company said.
The quarter carried $73.8 million of asset impairment charges, including $69.5 million tied to the EMEA footprint actions and $4.3 million for the Fiberon asset group.
For the fourth quarter, the company guided net sales of $925 million to $995 million and EPS before charges and gains of $0.19 to $0.29. CFO Pete Clifford said Fortune Brands expects single-family new construction to be down mid to high single digits for the year, with repair and remodel down low single digits.
Segments
Water Innovations sales fell 5.5% to $584.5 million, and its operating margin before charges and gains narrowed by 680 basis points to 17.6%. Outdoors sales rose 0.8% to $347.4 million, or 3.4% excluding Fiberon. Security sales slipped 2.4% to $181.8 million, but its adjusted operating margin improved 350 basis points to 21.3%.
Cash flow
Operating cash flow was $347.0 million in the quarter and free cash flow was $331.1 million. The company repurchased $40 million of its shares and ended the quarter with net debt of $2.1 billion, or 2.5 times EBITDA before charges and gains. It expects full-year free cash flow of $380 million to $410 million.
By the numbers
- Net sales: $1.11 billion, down 3.1%
- EPS before charges and gains: $1.14, up 4.6%
- GAAP EPS: $0.42, down 28.8%
- 2026 EPS guidance before charges and gains: $3.20 to $3.30
- Q3 free cash flow: $331.1 million
- Share repurchases: $40 million
Sources
- Fortune Brands Innovations, Inc. Form 8-K with third-quarter 2026 earnings release, filed Nov. 3, 2026 (accession 0001193125-26-445366)
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