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Fortune Brands 2025 Q1 Earnings Misses Targets as Net Income Declines 47%
Generated by AI AgentAinvest Earnings Report Digest
Wednesday, May 7, 2025 4:25 am ET2min read
Fortune Brands (FBIN) reported its fiscal 2025 Q1 earnings on May 06th, 2025. The company faced a challenging quarter, with both revenue and net income falling short of expectations. The total revenue decreased by 6.9% to $1.03 billion compared to the same period last year, failing to meet consensus estimates. The company's guidance adjustment remains unaddressed due to ongoing market uncertainties, reflecting cautious sentiment. Despite these challenges, remains focused on strategic initiatives to navigate the current economic landscape.
Revenue
Fortune Brands reported a total revenue decline of 6.9% to $1.03 billion in Q1 2025. Within its business segments, the Water division generated $565.40 million, while the Outdoors segment contributed $304.70 million. The Security segment added $163 million to the overall revenue.
Earnings/Net Income
Fortune Brands's EPS declined by 44.7% to $0.42 in 2025 Q1 from $0.77 in 2024 Q1. Meanwhile, the company's net income fell to $51.40 million in 2025 Q1, down 46.7% from $96.40 million in 2024 Q1. This performance indicates a significant decrease in profitability.
Price Action
The stock price of Fortune Brands edged down by 0.99% during the latest trading day, decreased by 1.86% over the most recent full trading week, and experienced a decline of 4.00% month-to-date.
Post-Earnings Price Action Review
Over the past five years, the strategy of purchasing Fortune Brands (FBIN) shares after quarters with declining revenue and holding them for 30 days has resulted in underwhelming performance. This approach yielded a meager return of only 0.10%, significantly lagging behind the benchmark return of 29.25%. The excess return was negative at -29.15%, indicating that this strategy not only failed to generate gains but also underperformed the market benchmark. The compound annual growth rate (CAGR) was a mere 0.05%, which is notably low compared to the benchmark CAGR. Additionally, the strategy experienced a maximum drawdown of -14.15% and a Sharpe ratio of 0.01, underscoring high risk with low returns. The recorded volatility was 9.48%, suggesting significant volatility risk associated with this investment approach.
CEO Commentary
“During the first quarter, we delivered margins and earnings per share in-line with our expectations,” said Nicholas Fink, Chief Executive Officer of Fortune Brands. He noted that rapidly changing geopolitical and macroeconomic environments are impacting consumer demand. Fink emphasized the team's ability to respond to challenges and prioritize opportunities for outperformance. The focus remains on mitigating tariff impacts, making key investments, expanding the digital business, and maintaining a strong balance sheet. He expressed confidence in the company's long-term strategy and its capacity to manage costs and cash while navigating an uncertain landscape.
Guidance
Due to uncertainty around consumer demand and volumes, the Company is not providing detailed 2025 full-year guidance. However, it is offering a framework for EPS before charges/gains scenarios based on different volume assumptions. The team is actively working to mitigate tariff impacts through strategic sourcing and pricing. The Company remains committed to its long-term strategy centered on brand-driven categories and innovation, with a focus on accelerating its digital initiatives.
Additional News
Fortune Brands recently appointed Jonathan Baksht as the new Executive Vice President and Chief Financial Officer, effective May 5, 2025. With nearly a decade of public company CFO experience, Baksht is tasked with leading the company's financial strategy and managing its cash flow and balance sheet. Additionally, the company repurchased $175 million of shares in the quarter as part of its opportunistic share repurchase program, with $225 million repurchased year-to-date. This move highlights the company's commitment to returning value to shareholders. Finally, Fortune Brands Innovations has focused on reducing reliance on China, aiming to bring down its China cost of goods sold to around 10% by the end of the year.
Revenue
Fortune Brands reported a total revenue decline of 6.9% to $1.03 billion in Q1 2025. Within its business segments, the Water division generated $565.40 million, while the Outdoors segment contributed $304.70 million. The Security segment added $163 million to the overall revenue.
Earnings/Net Income
Fortune Brands's EPS declined by 44.7% to $0.42 in 2025 Q1 from $0.77 in 2024 Q1. Meanwhile, the company's net income fell to $51.40 million in 2025 Q1, down 46.7% from $96.40 million in 2024 Q1. This performance indicates a significant decrease in profitability.
Price Action
The stock price of Fortune Brands edged down by 0.99% during the latest trading day, decreased by 1.86% over the most recent full trading week, and experienced a decline of 4.00% month-to-date.
Post-Earnings Price Action Review
Over the past five years, the strategy of purchasing Fortune Brands (FBIN) shares after quarters with declining revenue and holding them for 30 days has resulted in underwhelming performance. This approach yielded a meager return of only 0.10%, significantly lagging behind the benchmark return of 29.25%. The excess return was negative at -29.15%, indicating that this strategy not only failed to generate gains but also underperformed the market benchmark. The compound annual growth rate (CAGR) was a mere 0.05%, which is notably low compared to the benchmark CAGR. Additionally, the strategy experienced a maximum drawdown of -14.15% and a Sharpe ratio of 0.01, underscoring high risk with low returns. The recorded volatility was 9.48%, suggesting significant volatility risk associated with this investment approach.
CEO Commentary
“During the first quarter, we delivered margins and earnings per share in-line with our expectations,” said Nicholas Fink, Chief Executive Officer of Fortune Brands. He noted that rapidly changing geopolitical and macroeconomic environments are impacting consumer demand. Fink emphasized the team's ability to respond to challenges and prioritize opportunities for outperformance. The focus remains on mitigating tariff impacts, making key investments, expanding the digital business, and maintaining a strong balance sheet. He expressed confidence in the company's long-term strategy and its capacity to manage costs and cash while navigating an uncertain landscape.
Guidance
Due to uncertainty around consumer demand and volumes, the Company is not providing detailed 2025 full-year guidance. However, it is offering a framework for EPS before charges/gains scenarios based on different volume assumptions. The team is actively working to mitigate tariff impacts through strategic sourcing and pricing. The Company remains committed to its long-term strategy centered on brand-driven categories and innovation, with a focus on accelerating its digital initiatives.
Additional News
Fortune Brands recently appointed Jonathan Baksht as the new Executive Vice President and Chief Financial Officer, effective May 5, 2025. With nearly a decade of public company CFO experience, Baksht is tasked with leading the company's financial strategy and managing its cash flow and balance sheet. Additionally, the company repurchased $175 million of shares in the quarter as part of its opportunistic share repurchase program, with $225 million repurchased year-to-date. This move highlights the company's commitment to returning value to shareholders. Finally, Fortune Brands Innovations has focused on reducing reliance on China, aiming to bring down its China cost of goods sold to around 10% by the end of the year.
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