Fortune Brands 2025 Q2 Earnings Misses Targets as Net Income Declines 25%

Fortune Brands (FBIN) reported its fiscal 2025 Q2 earnings on Jul 31st, 2025. Fortune Brands Innovations reported a 3% year-on-year decline in sales, aligning with Wall Street expectations at $1.2 billion. However, its earnings per share (EPS) missed analysts' estimates, falling short by 13% at $0.83. The company’s updated full-year guidance forecasts EPS between $3.75 and $3.95, surpassing analyst expectations by 7.8% at the midpoint. Despite challenges, Fortune Brands remains committed to navigating tariff impacts and pursuing profitable growth.

Revenue
Fortune Brands Innovations saw a decrease in total revenue by 3% to $1.20 billion in Q2 2025 compared to Q2 2024. The Water segment contributed $646.90 million, while Outdoors generated $378.80 million. The Security segment accounted for $177.60 million, resulting in net sales of $1.20 billion after accounting for corporate expenses.

Earnings/Net Income
EPS for Fortune Brands declined significantly, dropping 22.4% to $0.83 from $1.07 in Q2 2024. Net income similarly decreased, reaching $100.30 million, which is a 25.1% decline from the $133.90 million reported in the previous year. The EPS performance was disappointing for investors.

Post Earnings Price Action Review
The investment strategy of buying Fortune Brands shares after a quarterly revenue increase on the earnings report date and holding for 30 days has proven ineffective over the last three years. This approach has resulted in a negative return of 29.50%, falling short of the benchmark return of 60.69%. The strategy's excess return was -90.19%, with a compound annual growth rate (CAGR) of -12.62%, indicating significant losses. Moreover, the maximum drawdown was 0.00%, and the Sharpe ratio stood at -0.41, suggesting a high-risk profile with no assured returns.

CEO Commentary
"I am proud of the Company’s performance during the second quarter. Our highly-engaged team executed well, and many of our businesses gained momentum and outperformed our end market, including in Water and Outdoors," said Nicholas Fink, Chief Executive Officer. The company is focused on leveraging its capabilities to offset 2025 tariff impacts and is committed to investing in profitable growth opportunities that align with its strategic priorities. Fink emphasized that Fortune Brands is well-positioned for consistent outperformance, supported by strong leadership and a compelling value proposition.

Guidance
"We guide to net sales declining 2% to flat and EPS before charges/gains between $3.75 to $3.95," the company stated. The outlook includes a global market decline of 4% to 2% and anticipates operating margins before charges/gains of 16.0% to 17.0%. Cash flow from operations is expected around $650 million, with free cash flow projected between $500 million and $520 million. The company remains focused on generating profitable growth while navigating an uncertain external environment.

Additional News
Fortune Brands Innovations has actively engaged in share repurchases, repurchasing $238 million worth of shares year-to-date as of July 31, 2025. The company aims to complete the year with a net debt to EBITDA ratio between 2.2x and 2.5x. Additionally, the company has aligned its structure to advance in the digital and connected products sector. This strategic realignment is focused on enhancing brand leadership and pursuing innovative product offerings that align with market trends. The firm’s ongoing efforts to mitigate external challenges like tariffs are part of its strategic initiatives to ensure sustained growth and profitability.