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Fortune Brands (FBHS) Q2 Earnings & Revenues Beat Estimates

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Fortune Brands Home & Security, Inc. (FBHS - Free Report) reported second-quarter 2020 earnings before charges/gains of 94 cents per share, surpassing the Zacks Consensus Estimate of 59 cents. On a year-over-year basis, the bottom line decreased 8.7% due to a decline in sales.

Fortune Brands’ net sales were $1,375.8 million, decreasing 8.7% from the year-ago figure. The decline was attributable to weaker performances across Cabinets, and Doors & Security segments. The top line beat the consensus estimate of $1,316 million.

Segmental Details

Cabinets’ sales declined 15% year over year to $538.7 million. Results were affected by a softer market for premium products, which more than offset the solid demand for value products.

Plumbing sales remained relatively flat at $504.8 million. Impressive sales performance in the United States and China were partially offset by forex woes.

Doors & Security’s sales fell 9% to $332.3 million due to lower sales of security products.

Costs & Expenses

In the second quarter, Fortune Brands’ cost of sales decreased 8% year over year to $892.9 million. It represented 64.9% of net sales compared with 64.3% in the year-ago quarter. Selling, general and administrative expenses decreased 14% to $276.2 million, and represented 20.1% of the net sales compared with 21.3% a year ago.

Operating income before charges/gains decreased 7% to $196.7 million. Operating margin before charges/gains climbed 20 basis points to 14.3%. Interest expenses decreased 9% to $22.2 million.

Balance Sheet

Exiting the second quarter, Fortune Brands’ cash and cash equivalents were $398.4 million, up 2.7% from $387.9 million at the end of 2019. Its long-term debt climbed 10.4% to $2,245.9 million sequentially.

In the first six months of 2020, net cash generated by operating activities was $260.5 million compared with $112 million generated in the year-ago comparable period. Capital expenditure amounted to $42.3 million, down from $54.9 million in the year-ago period.

Outlook

On uncertainties, regarding the impacts of the coronavirus outbreak on financial and operating results, the company has now suspended its guidance for 2020.

Zacks Rank & Other Stocks to Consider

The company currently flaunts a Zacks Rank #1 (Strong Buy).

Some other top-ranked stocks are Griffon Corporation (GFF - Free Report) , AGCO Corporation (AGCO - Free Report) and Avery Dennison Corporation (AVY - Free Report) . While Griffon and AGCO currently sport a Zacks Rank #1, Avery Dennison carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Griffon delivered an earnings surprise of 21.76%, on average, in the trailing four quarters.

AGCO delivered an earnings surprise of 41.73%, on average, in the trailing four quarters.

Avery Dennison delivered an earnings surprise of 7.70%, on average, in the trailing four quarters.

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