Fortune Brands’ second quarter performance was marked by a positive market reaction, as investors responded to the company’s share gains in its core water and outdoors segments despite softer overall sales. Management attributed these results to targeted actions, such as strengthening relationships with national builders in the water business and refreshing product assortments in retail channels. CEO Nicholas Fink highlighted ongoing investments in digital capabilities and operational efficiency, stating, “We have made significant progress on our multiyear transformation into a highly aligned and efficient growth company.” The quarter also saw early benefits from cost control initiatives and a renewed focus on brand positioning, even as the macroeconomic environment remained uncertain.
Is now the time to buy FBIN? Find out in our full research report (it’s free).
Fortune Brands (FBIN) Q2 CY2025 Highlights:
- Revenue: $1.20 billion vs analyst estimates of $1.20 billion (3% year-on-year decline, in line)
- EPS (GAAP): $0.83 vs analyst expectations of $0.95 (12.9% miss)
- Adjusted EBITDA: $250.3 million vs analyst estimates of $241.1 million (20.8% margin, 3.8% beat)
- EPS (GAAP) guidance for the full year is $3.85 at the midpoint, beating analyst estimates by 7.8%
- Operating Margin: 14.3%, down from 16.1% in the same quarter last year
- Organic Revenue fell 2.8% year on year vs analyst estimates of 3.8% declines (94.5 basis point beat)
- Market Capitalization: $6.87 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Fortune Brands’s Q2 Earnings Call
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Matthew Bouley (Barclays) asked about the connected products subscription rollout and digital business growth. CEO Nicholas Fink explained the broader but slower pipeline, highlighting the recurring revenue potential and consumer preference for lower entry points.
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Susan Maklari (Goldman Sachs) inquired about Security segment retail wins and brand refresh. Fink described the impact of new leadership and the Master-It campaign, noting early signs of improved momentum and accountability.
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John Lovallo (UBS) questioned the sustainability of high Water segment margins and the components of tariff mitigation. CFO Jonathan Baksht clarified that margin gains were from productivity, not one-time events, and described a mix of supply chain and pricing actions.
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McClaren Hayes (Zelman & Associates) asked about the effect of lower tariffs on cost-out actions and the outlook for China. Fink emphasized a continued focus on regional supply chain resilience and noted the developer channel in China remains soft, while showroom and designer channels show growth.
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Michael Dahl (RBC Capital Markets) sought detail on ex-China tariff exposures and copper tariffs. Fink and Baksht indicated exposure beyond China is limited, with Mexico the next largest, and copper tariffs are not expected to be material at this stage.
Catalysts in Upcoming Quarters
In future quarters, the StockStory team will be watching (1) the adoption and conversion rates of the new digital subscription model, (2) the impact of tariff mitigation efforts on margins and pricing power, and (3) the scale and success of product launches in both luxury and connected home categories. Execution on supply chain regionalization and further growth in insurance channel partnerships will also be key indicators of strategic progress.
Fortune Brands currently trades at $57.29, up from $54.76 just before the earnings. In the wake of this quarter, is it a buy or sell? Find out in our full research report (it’s free).
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