Fortune Brands Home & Security, Inc. FBHS reported its financial results for second-quarter 2019, wherein earnings before charges/gains were $1.03 per share, in line with the Zacks Consensus Estimate. Notably, on a year-over-year basis, the bottom line improved 3% on the back of sales growth.
Fortune Brands’ net sales were $1,507.2 million, increasing 5.5% from the year-ago figure. The rise was driven by healthy growth in Plumbing and Doors & Security segments.
However, the top line missed the consensus estimate of $1,526 million.
The company’s segmental results are discussed below:
Cabinets segment’s sales decreased 0.4% year over year to $635 million. As noted, growth in sales of value products was offset by weakness in premium, semi-custom and Canada.
Plumbing sales jumped 5% to $506.1 million on the back of organic sales growth of 6%.
Doors & Security segment’s sales increased 19% to $366.1 million, backed by gains from the buyout of Fiberon.
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 second quarter, Fortune Brands’ cost of sales before charges/gains increased 7% year over year to $969.6 million. It represented 64.3% of net sales compared with 63.3% in the year-ago quarter. Selling, general and administrative expenses jumped 1.3% to $320.6 million, and represented 21.3% of the net sales compared with 22.1% a year ago.
Operating income before charges/gains increased 7% to $202.4 million. Operating margin before charges/gains climbed 20 basis points to roughly 13.4%. Interest expenses surged 40.8% to $24.5 million.
Exiting the second quarter, Fortune Brands’ cash and cash equivalents were $276.3 million, up 5.1% from $262.9 million at the end of the 2018. Its long-term debt decreased 7.9% to $1,666 million from the end of last year.
In the first six months of 2019, net cash provided by operating activities were $112 million, reflecting 18.4% decrease year over year. Capital expenditure amounted to $54.9 million, down from $67.2 million in the year-ago period.
Sales for 2019 are expected to increase in the range of 5.5-6.5% compared with 6-7.5% rise predicted earlier. Earnings before charges/gains are estimated to be $3.53-$3.67 per share, lower than the $3.53-$3.77 guided previously.
Zacks Rank & Key Picks
Fortune Brands currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the same space are DXP Enterprises, Inc. DXPE, Dover Corporation DOV and Roper Technologies, Inc. ROP. All these companies carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
DXP Enterprises delivered average earnings surprise of 48.47% in the trailing four quarters.
Dover pulled off average positive earnings surprise of 6.91% in the trailing four quarters.
Roper delivered average earnings surprise of 6.92% in the trailing four quarters.
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