Fortune Brands Cuts 2026 Earnings Outlook After Agreeing to Sell Fiberon

The Tip Desk · November 4, 2026 · 4 min read

Full-year EPS before charges and gains is now seen at $3.20 to $3.30, versus a prior midpoint of $3.37, after third-quarter sales of $1.11 billion.

Fortune Brands Innovations, Inc. (FBIN), a home, security and digital products company, lowered its 2026 earnings outlook after a third quarter in which sales slipped and it booked a large asset impairment, then moved to sell Fiberon, exit commercial operations in China and rationalize a Water-segment EMEA footprint.

Third-quarter sales were $1.11 billion, down 3.1% from a year earlier; excluding China, sales decreased 2.4%. GAAP earnings were $0.42 a share, inclusive of a $0.47 asset impairment charge. EPS before charges and gains was $1.14, including a $0.28 net tax benefit and $0.14 of net tariff refunds.

GAAP operating income was $60.4 million, with a 5.4% operating margin. Operating income before charges and gains was $155.5 million, down 24.6% from a year earlier, and the operating margin before charges and gains was 14.0%. Chief Executive Officer Jesse Singh said third-quarter results were in line with the company’s outlook excluding the tax and tariff benefits, but not where they need to be, and that the biggest challenge has been execution.

Water Innovations, the largest reportable segment, posted net sales of $584.5 million, down 5.5% from a year earlier. Water sales excluding China decreased 4.3%. GAAP operating margin was 2.3%; the margin before charges and gains was 17.6%. Outdoors net sales were $347.4 million, up 0.8%. Outdoors sales excluding Fiberon increased 3.4%. GAAP operating margin was 15.1%; the margin before charges and gains was 15.3%. Security net sales were $181.8 million, down 2.4%. GAAP operating margin was 21.1%; the margin before charges and gains was 21.3%.

The company entered into a purchase agreement to sell Fiberon, is exiting commercial operations in China, which it expects to complete by the third quarter of 2027, and is rationalizing the EMEA operating footprint of a Water-segment business, expected to be complete by the fourth quarter of 2027. Together those businesses generate an annualized operating loss of approximately $50 million to $55 million on revenue of $320 million to $330 million. Singh said the company remains on track for $70 million of annualized SG&A savings by the first quarter of 2027.

Service levels improved 10 percentage points in the third quarter, with fill rates in the high-90% range entering the fourth quarter. The company said it expects more than 80% of its salaried workforce to directly support a specific business by year end, up from roughly 40% at the start of the year.

Cash generation was a bright spot. In the quarter the company generated $347.0 million in operating cash flow and $331.1 million in free cash flow, and repurchased $40 million of shares. Liquidity was approximately $1.3 billion. Net debt was $2.1 billion, and net debt to EBITDA before charges and gains was 2.5x, versus 2.7x at the end of the second quarter.

Chief Financial Officer Pete Clifford said fourth-quarter and full-year net sales are expected to be $925 million to $995 million and $4,205 million to $4,275 million, respectively. Fourth-quarter and full-year EPS before charges and gains is expected to be $0.19 to $0.29 and $3.20 to $3.30. Full-year operating cash flow is expected to be $480 million to $500 million and free cash flow $380 million to $410 million. The midpoint of full-year EPS before charges and gains moved from $3.37 to $3.25, with a $0.23 impact from the core business and end market, $0.22 from portfolio optimization and alignment actions and $0.02 from businesses subject to portfolio optimization, offset by $0.07 of net tariff refunds and $0.28 of net tax benefit.

Clifford said the company sees a softer environment for single-family new construction, with that part of the market expected to be down mid to high single digits for the year, and repair and remodel down low single digits. Customers are signaling greater caution, and the company is taking a more conservative approach to channel inventory. Those businesses will continue to have an impact on results for the fourth quarter and the first half of next year.

Singh said that in the fourth quarter the company expects incrementally lower revenue, driven by lower sales from the businesses involved in the portfolio optimization actions, incremental softening in single-family new construction, and a reduction in channel inventory. The company is using the quarter’s net tax benefit to fund additional portfolio and alignment actions in the fourth quarter.