Fortune Brands Home & Security (FBHS) Reports In-Line Q4 EPS, Revenues In-Line; Offers FY18 EPS Mid-Point Outlook Above Consensus

Fortune Brands Home & Security (NYSE: FBHS) reported Q4 EPS of $0.80, in-line with the analyst estimate of $0.80. Revenue for the quarter came in at $1.383 billion versus the consensus estimate of $1.38 billion.

Highlights from continuing operations:

• Q4 2017 sales increased 6 percent year-over-year to $1.4 billion with EPS of $0.83; EPS before charges/gains increased 13 percent to $0.80
• Full-year 2017 sales increased 6 percent with EPS of $3.05; EPS before charges/gains increased 12 percent to $3.08
• Company expects full-year 2018 EPS before charges/gains to grow to $3.54 - $3.66 on sales growth of 6 - 7 percent

Annual Outlook for 2018

The Company’s 2018 annual outlook is based on a U.S. home products market growth assumption of 5 to 7 percent and an assumption of 5 to 6 percent growth for our total global market. The Company expects full-year 2018 sales growth in the range of 6 to 7 percent.

The Company expects EPS before charges/gains to be in the range of $3.54 to $3.66, the midpoint of which is 17 percent higher than last year, including the positive impact of a reduction in the U.S. corporate tax rate.

“We are excited about the new tax legislation. The one-time adjustments we had to make in 2017 were nominal and positive overall, and going forward the impact should be significantly favorable. We estimate our 2018 effective tax rate will be between 24 and 26 percent,” said Klein. “As a large U.S. manufacturer, with a large majority of our sales and employees based in the U.S., we are a clear winner as a result of this change and are better positioned than we were just six weeks ago. We look forward to leveraging our improved position to sell even more products in the most exciting housing market in the world.”

“Entering 2018 our annual outlook again calls for strong performance based on improved earnings; a continued focus on disciplined, profitable growth; and the financial flexibility we have to drive incremental growth,” continued Klein. “Although we continue to drive sales and profit growth, I believe we have only begun to test our full value creation potential in this housing market. Additionally, tax reform is a significant positive that will enable us to continue to invest in our businesses, and deploy additional capital to drive long-term shareholder value. We continue to believe we are well-positioned to leverage our structural competitive advantages and drive profitable growth well into the future.”

GUIDANCE:

Fortune Brands Home & Security sees Q1 2018 EPS of $3.54-$3.66, versus the consensus of $3.53.

For earnings history and earnings-related data on Fortune Brands Home & Security (FBHS) click here.

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