Fortune Brands Home & Security, Inc. FBHS reported fourth-quarter 2021 earnings before charges/gains of $1.32 per share, which surpassed the Zacks Consensus Estimate of $1.30 by 1.54%. On a year-over-year basis, the bottom line increased 5.6% on the back of sales growth.
In 2021, the company’s earnings before charges/gains came in at $5.73, up 36.8% from $4.19 in 2020.
In the fourth quarter, Fortune Brands’ net sales were $1,962.8 million, increasing 18.3% from the year-ago figure. The improvement was driven by solid performance across all its segments. Also, the top line beat the consensus estimate of $1,927 million by 1.85%.
In 2021, the company’s net sales were $7,656.1 million, up 25.7% from $6,090.3 million in 2020.
Segmental Details
Cabinets’ quarterly net sales grew 14% year over year to $744.8 million. Results were driven by continued strong demand for the company’s products.
Plumbing net sales increased 10% year over year to $703.6 million. Results were driven by impressive performance across the business.
Outdoors & Security’s net sales increased 40% to $514.4 million on the back of solid sales growth for decking, doors and security products and positive contribution from the LARSON buyout.
Fortune Brands Home & Security, Inc. Price, Consensus and EPS Surprise
Fortune Brands Home & Security, Inc. price-consensus-eps-surprise-chart | Fortune Brands Home & Security, Inc. Quote
Costs & Expenses
In the fourth quarter, Fortune Brands’ cost of sales increased 20.9% year over year to $1,271.9 million. It represented 64.8% of net sales compared with 63.4% in the year-ago quarter. Selling, general and administrative expenses increased 13.4% to $412.9 million and represented 21% of the net sales compared with 21.9% a year ago.
Operating income before charges/gains increased 7% to $263.7 million. Operating margin before charges/gains were 13.4%, down 140 basis points year over year. Interest expenses increased 8% to $21.1 million.
Balance Sheet
Exiting 2021, Fortune Brands’ cash and cash equivalents were $471.5 million, up 2.3% from $460.7 million at the end of the previous quarter. Its long-term debt decreased 12.1% to $2,309.8 million sequentially.
In 2021, net cash provided by operating activities was $688.7 million compared with $825.7 million a year ago. Capital expenditure amounted to $214.2 million, up from $150.5 million. In 2021, its free cash flow was $518.2 million, down 30.1%.
In 2021, the company rewarded shareholders with a dividend payout of $143 million. The amount represents growth of 7.3% year over year. Amount spent on purchasing treasury stock totaled $447.7 million, up 138.6%.
Outlook
Fortune Brands anticipates benefiting from strength in its housing end market and its focus on product innovation in the quarters ahead.
For 2022, the company expects sales to increase 5.5-7.5% from the previous year, based on its anticipation of U.S. home products market growth of 4-6%. Earnings before charges/gains are estimated to be $6.35-$6.55 per share, indicating growth of 11-14% year over year.
For 2022, cash flow from operations is anticipated to be $973-$1,108 million, while capital expenditures are likely to be $375-$425 million. It anticipates generating a free cash flow of $615-$700 million.
Zacks Rank & Stocks to Consider
The company currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the Zacks Retail-Wholesale sector are discussed below.
The Lovesac Company LOVE presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Its earnings surprise in the last four quarters was 245.88%, on average.
In the past 60 days, Lovesac’s earnings estimates have increased 40.6% for fiscal 2022 (ending January 2022) and 57.9% for fiscal 2023 (ending January 2023). LOVE’s shares have lost 36.3% in the past three months.
Tempur Sealy International, Inc. TPX presently carries a Zacks Rank #2 (Buy). Its earnings surprise in the last four quarters was 22.39%, on average.
Tempur Sealy’s earnings estimates have been stable for 2021 (results awaited) and 2022 in the past 60 days. TPX’s shares have lost 11.1% in the past three months.
Ethan Allen Interiors Inc. ETD presently sports a Zacks Rank #1. Its earnings surprise in the last four quarters was 12.02%, on average.
ETD’s earnings estimates have increased 5.8% for fiscal 2022 (ending June 2022) and 4.3% for fiscal 2023 (ending June 2023) in the past 60 days. Its shares have gained 2.3% in the past three months.
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