Fortune Brands Innovations, Inc. Q4 FY2025 earnings call

• Leadership transition: Nick Fink is stepping down as CEO, Amit Banati will be effective in May. Susan Kilsby will manage CEO responsibilities until then. • 2025 results: Faced volume deleverage and tariffs. Reduced headquarters workforce by 10% and captured $60M in savings. Mitigated tariff impact through strategic actions. Strengthened core brands and repositioned ecommerce. • 2026 outlook: Anticipates global market declines, expects net sales growth flat to 2%, operating income margin 14.5%-15.5%, EPS $3.35-$3.65. Identified $35M annualized operating income savings for 2026

Water: Q4 sales $617M, down 4%; full-year sales $2.4B, down 5%. Operating income Q4 $141M, down 8%; full-year $450.4M, down 20 basis points. Outdoors: Q4 sales $295M, down 3%; full-year sales $1.3B, down 2%. Operating income Q4 $42M, down 24%; full-year $172.9M, down 280 basis points. Security: Q4 sales $166M, up 6%; full-year sales $693M, flat. Operating income Q4 $22M, up 52%; full-year $104.6M, down 100 basis points

• Net sales expected flat to up 2% in 2026. • Operating income margin expected 14.5%-15.5%. • EPS expected $3.35-$3.65. • Free cash flow expected $400M-$450M. • Guidance assumes tariffs continue at current rates, normalized incentive compensation, additional systems investments, and incremental strategic brand spend

• Macroeconomic uncertainty including low consumer confidence and uncertain market recovery. • Continued impact of tariffs and manufacturing costs. • Execution risks related to initiatives to improve performance in segments like Outdoors

Q: About consolidated sales outlook and margin decline.

A: Tariff impact, input cost inflation, but offset by productivity and continuous improvement initiatives.

Q: On Amit Banati as new CEO.

A: Amit has strong background in consumer branded products, worked closely with the company, and is seen as right choice to continue transformation.

Q: On Outdoors margins.

A: Margins came down due to soft wholesale demand, mix element, and need for initiatives to optimize footprint and cost structure to return to 2024 levels.

Q: On Water guide.

A: Nice market outperformance, share gains, improved ecommerce, but volumes may be down, and impact of raw materials like copper needs to be considered.

Q: On CEO transition timing and personnel changes.

A: Timing felt natural as company completed transformation, no major personnel changes planned at this time.

Q: On digital portfolio.

A: Flo had double-digit growth, subscription model launched, Yale smart lock performed well, but digital portfolio is smaller and more volatile