Fortune Brands Home & Security, Inc. 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.
Segmental Details
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.
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.
Balance Sheet
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.
Outlook
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 - Free Report) , Dover Corporation (DOV - Free Report) and Roper Technologies, Inc. (ROP - Free Report) . 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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Fortune Brands Home & Security, Inc. 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.
Segmental Details
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.
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.
Balance Sheet
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.
Outlook
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 - Free Report) , Dover Corporation (DOV - Free Report) and Roper Technologies, Inc. (ROP - Free Report) . 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.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +98%, +119% and +164% in as little as 1 month. The stocks in this report could perform even better.
See these 7 breakthrough stocks now>>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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