Fortune Brands Home & Security Grows Sales in Q4 and Full Year 2011
Highlights:
-
Q4 2011 net sales increase 4 percent to
$876 million ; both net sales and EPS on the high end of Company expectations amid continued soft home products market - Company expects full year 2012 net sales to increase mid-single digits with assumption of 1 to 2 percent growth in the market for its products
-
Company expects full year 2012 diluted EPS before charges and gains
in range of
$0.66 - $0.74
Fourth quarter 2011
For the fourth quarter of 2011, net sales were
On an adjusted pro forma basis, diluted EPS was
On a GAAP basis, operating income was a loss of
"Our sales growth continued in the fourth quarter, despite a market for
our products that remained challenging. Overall, we performed at the
high end of our expectations and we believe we continue to outperform
the market for our products," said
For each segment in the fourth quarter 2011, compared to the prior-year quarter:
- Security & Storage net sales were up 13 percent, on increased sales of Master Lock padlocks and safety products, as well as Husky garage organization products.
-
Plumbing & Accessories net sales were up 8 percent, with strength in
U.S. retail and wholesale channels, as well as
Canada andChina . - Kitchen & Bath Cabinetry net sales were up 5 percent, driven by growth in new business.
-
Advanced Material Windows & Door Systems net sales were down 11
percent. An increase in door sales, helped in part by growth in
Canada and a recently launched exclusive relationship with a major window & door brand in whichTherma-Tru will be making all of their entry door panels, was offset by a sharp decline of more than 20 percent in window sales. The Company believes last year's energy tax credit pulled substantial windows demand forward into 2010.
"Our Plumbing and Security & Storage segments showed ongoing strength, while consumer hesitancy with big-ticket items continued to impact our Cabinets and Windows & Door segments," Klein said.
"We continued to win in this challenging environment, and we are poised to keep the momentum going. Our companies plan to announce new products and programs across all segments this year that will represent the next phases of our product innovation and market expansion. We believe our ability to create and deliver the products consumers want, when and where they want them, enables us to be successful and outperform the market, no matter the state of the industry recovery," Klein added. "Our transition to an independent company is complete, we are structured for success and we are well on our way to writing the next chapter in the history of our storied brands."
Full year 2011
For the full year 2011, net sales were
On a GAAP basis, full-year operating income was a loss of
"Our balance sheet as of
Outlook for 2012
For the full year 2012, the Company's assumption for the growth of the
overall market for new housing construction and home repair & remodeling
is 3 percent versus 2011. The Company developed its plans expecting the
market for its products, given the discretionary nature of its cabinet
products that currently lag the overall repair & remodel market, to
increase 1 to 2 percent, with growth rates modest early in the year and
accelerating as the year progresses. Therefore, based on these planning
assumptions, the Company expects its full year 2012 net sales to
increase at a mid-single-digit rate. The Company expects diluted EPS
before charges/gains to be in the range of
The Company expects free cash flow for 2012 to be in the range of
Adjusted pro forma
"Adjusted pro forma" is defined as continuing operations results before
charges/gains, adjusted to assume that
About
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
This press release contains certain "forward-looking statements"
regarding business strategies, market potential, future financial
performance and other matters. Statements preceded by, followed by or
that otherwise include the words "believes," "expects," "anticipates,"
"intends," "projects," "estimates," "plans," and similar expressions or
future or conditional verbs such as "will," "should," "would," "may" and
"could" are generally forward-looking in nature and not historical
facts. Where, in any forward-looking statement, we express an
expectation or belief as to future results or events, such expectation
or belief is based on the current plans and expectations of our
management. Although we believe that these statements are based on
reasonable assumptions, they are subject to numerous factors, risks and
uncertainties that could cause actual outcomes and results to be
materially different from those indicated in such statements. These
factors include those listed under "Risk Factors" in the "Risk Factors"
section contained in the Information Statement filed as an exhibit to
our registration statement on Form 10, as amended, filed with the
Defined benefit plans accounting change
Supplemental information on the new accounting method adopted by the Company with respect to defined benefit plans is available on the Company's website at www.FBHS.com and is furnished in the current Report on Form 8-K filed by the Company on the date hereof.
Use of non-GAAP financial information
This press release includes measures not derived in accordance with generally accepted accounting principles ("GAAP"), such as adjusted pro forma operating income, adjusted pro forma diluted earnings per share, diluted earnings per share before charges/gains, free cash flow and net debt-to-EBITDA ratio. These measures should not be considered in isolation or as a substitute for any measure derived in accordance with GAAP and may also be inconsistent with similar measures presented by other companies. Reconciliations of these measures to the most closely comparable GAAP measures, and reasons for the Company's use of these measures, are presented in the attached pages.
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| ADJUSTED PRO FORMA INFORMATION | ||||||||||||||||||||||||
| (In millions, except per share amounts) | ||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||
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Three Months Ended |
Year Ended December 31, | |||||||||||||||||||||||
| 2011 | 2010 | % Change | 2011 | 2010 | % Change | |||||||||||||||||||
| Net Sales (GAAP) | ||||||||||||||||||||||||
| Kitchen & Bath Cabinetry | $ | 301.7 | $ | 286.7 | 5.2 | $ | 1,256.3 | $ | 1,188.8 | 5.7 | ||||||||||||||
| Plumbing & Accessories | 258.1 | 239.7 | 7.7 | 962.8 | 923.8 | 4.2 | ||||||||||||||||||
| Advanced Material Windows & Door Systems | 153.7 | 173.1 | (11.2 | ) | 552.9 | 600.7 | (8.0 | ) | ||||||||||||||||
| Security & Storage | 162.6 | 144.2 | 12.8 | 556.6 | 520.2 | 7.0 | ||||||||||||||||||
| Total Net Sales | $ | 876.1 | $ | 843.7 | 3.8 | $ | 3,328.6 | $ | 3,233.5 | 2.9 | ||||||||||||||
| Adjusted Pro Forma Operating Income (Loss)(a) | ||||||||||||||||||||||||
| Kitchen & Bath Cabinetry | $ | (3.1 | ) | $ | 0.4 | - | $ | 18.4 | $ | 30.7 | (40.1 | ) | ||||||||||||
| Plumbing & Accessories | 39.2 | 35.0 | 12.0 | 138.0 | 132.5 | 4.2 | ||||||||||||||||||
| Advanced Material Windows & Door Systems | 2.9 | 11.1 | (73.9 | ) | (3.8 | ) | 20.6 | - | ||||||||||||||||
| Security & Storage | 16.9 | 10.4 | 62.5 | 62.6 | 61.0 | 2.6 | ||||||||||||||||||
| Corporate expense | (15.6 | ) | (17.3 | ) | 9.8 | (65.7 | ) | (64.5 | ) | (1.9 | ) | |||||||||||||
| Total Adjusted Pro Forma Operating Income | $ | 40.3 | $ | 39.6 | 1.8 | $ | 149.5 | $ | 180.3 | (17.1 | ) | |||||||||||||
| Adjusted Pro Forma Earnings Per Share(b) | ||||||||||||||||||||||||
| Diluted | $ | 0.16 | $ | 0.16 | - | $ | 0.58 | $ | 0.73 | (20.5 | ) | |||||||||||||
| Adjusted Pro Forma EBITDA(c) | $ | 65.7 | $ | 68.3 | (3.8 | ) | $ | 247.9 | $ | 289.0 | (14.2 | ) | ||||||||||||
|
(a) Adjusted pro forma operating income (loss) is operating income derived in accordance with GAAP including estimated incremental standalone corporate expenses and excluding restructuring and other charges, business separation costs, asset impairment charges, and the impact of the change in our defined benefit plan accounting. Adjusted pro forma operating income (loss) is a measure not derived in accordance with GAAP. Management uses this measure to determine the returns generated by FBHS and to evaluate and identify cost-reduction initiatives. Management believes this measure provides investors with helpful supplemental information regarding the underlying performance of the company from year to year. This measure may be inconsistent with similar measures presented by other companies. A GAAP reconciliation is included in subsequent tables. |
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(b) Adjusted pro forma diluted EPS is Net Income calculated on a
diluted per-share basis adjusted to assume that FBHS was an
independent business as of the beginning of 2010, including the
impact of an initial debt level of approximately |
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(c) Adjusted pro forma EBITDA is net income derived in accordance with GAAP including estimated incremental standalone corporate expenses and excluding restructuring and other charges, business separation costs, asset impairment charges, the impact of the change in our defined benefit plan accounting, depreciation, amortization of intangible assets, related party interest expense, net, external interest expense, and income taxes. Adjusted pro forma EBITDA is a measure not derived in accordance with GAAP. Management uses this measure to assess returns generated by FBHS. Management believes this measure provides investors with helpful supplemental information about the company's ability to fund internal growth, make acquisitions and repay debt and related interest. This measure may be inconsistent with similar measures presented by other companies. A GAAP reconciliation is included in subsequent tables. |
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| CONDENSED CONSOLIDATED BALANCE SHEET (GAAP) | |||||||||
| (In millions) | |||||||||
| (Unaudited) | |||||||||
|
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December 31, | ||||||||
| 2011 | 2010 | ||||||||
| Assets | |||||||||
| Current assets | |||||||||
| Cash and cash equivalents | $ | 120.8 | $ | 60.7 | |||||
| Accounts receivable, net | 346.1 | 374.2 | |||||||
| Inventories | 336.3 | 332.1 | |||||||
|
Loans to |
- | 571.7 | |||||||
| Other current assets |
148.8 |
127.3 | |||||||
| Total current assets |
952.0 |
1,466.0 | |||||||
| Property, plant and equipment, net | 525.8 | 550.0 | |||||||
| Goodwill resulting from business acquisitions | 1,366.6 | 1,364.9 | |||||||
| Other intangible assets, net of accumulated amortization | 697.3 | 798.8 | |||||||
| Other assets | 94.7 | 77.9 | |||||||
| Total assets | $ |
3,636.4 |
$ | 4,257.6 | |||||
| Liabilities and Equity | |||||||||
| Current liabilities | |||||||||
| Notes payable to banks | $ | 3.8 | $ | 3.0 | |||||
|
Current portion of long-term debt |
17.5 |
- |
|||||||
| Accounts payable | 260.7 | 252.8 | |||||||
| Dividend payable to Beam Inc. | 6.0 | - | |||||||
| Other current liabilities |
309.8 |
320.7 | |||||||
| Total current liabilities |
597.8 |
576.5 |
|||||||
| Long-term debt |
389.3 |
16.8 | |||||||
| Deferred income taxes | 204.1 | 267.4 | |||||||
| Accrued pension and postretirement benefits | 244.1 | 136.0 | |||||||
|
Loans from |
- | 3,214.0 | |||||||
| Other long-term liabilities | 74.0 | 103.6 | |||||||
| Total liabilities |
1,509.3 |
4,314.3 | |||||||
| Stockholders' equity | 2,123.4 | (60.2 | ) | ||||||
| Noncontrolling interests | 3.7 | 3.5 | |||||||
| Total equity | 2,127.1 | (56.7 | ) | ||||||
| Total liabilities and equity | $ |
3,636.4 |
$ | 4,257.6 | |||||
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CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS |
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| (In millions) | |||||||||||
| (Unaudited) | |||||||||||
| Year Ended December 31, | |||||||||||
| 2011 | 2010 | ||||||||||
| Operating Activities | |||||||||||
| Net Income (Loss) | $ | (32.0 | ) | $ | 65.0 | ||||||
| Depreciation and amortization | 111.5 | 111.6 | |||||||||
| Asset impairment charges | 90.0 | - | |||||||||
| Defined benefit plan actuarial losses (gains) | 75.9 | (3.5 | ) | ||||||||
| Deferred income taxes |
(60.8 |
) |
22.7 | ||||||||
| Other noncash items | 17.4 | 12.2 | |||||||||
| Changes in assets and liabilities, net | (26.6 | ) | (69.1 | ) | |||||||
| Net cash provided by operating activities | $ | 175.4 | $ | 138.9 | |||||||
| Investing Activities | |||||||||||
| Capital expenditures, net of proceeds from asset sales | $ | (65.0 | ) | $ | (55.7 | ) | |||||
| Acquisitions, net of cash acquired | (6.0 | ) | - | ||||||||
| Net cash used in investing activities | $ | (71.0 | ) | $ | (55.7 | ) | |||||
| Financing Activities | $ | (43.5 | ) | $ | (81.4 | ) | |||||
| Effect of changes in foreign currency exchange rates on cash | $ | (0.8 | ) | $ | 1.1 | ||||||
| Increase in cash and cash equivalents | $ | 60.1 | $ | 2.9 | |||||||
| Cash and cash equivalents at beginning of year | 60.7 | 57.8 | |||||||||
| Cash and cash equivalents at end of period | $ | 120.8 | $ | 60.7 | |||||||
|
FREE |
Twelve Months Ended |
2012 Full Year | |||||||||
| 2011 | 2010 |
|
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|
Free |
$ | 121.4 | $ | 83.2 | $ | 145 - 180 | |||||
| Add: | |||||||||||
| Capital Expenditures | 68.5 | 58.3 | 80 | ||||||||
| Less: | |||||||||||
| Proceeds from the sale of assets | 3.5 | 2.6 | - | ||||||||
| Proceeds from the exercise of stock options | 11.0 | - | 20 - 30 | ||||||||
| Cash Flow From Operations (GAAP) | $ | 175.4 | $ | 138.9 | $ | 205 - 230 | |||||
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(a) Free Cash Flow is |
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Adjusted Pro Forma Financial Information
The adjusted pro forma financial information of
The adjusted pro forma information is for informational purposes and is
not intended to represent what FBHS's operating income and diluted EPS
or cash flows would have been had the spin-off of FBHS from
Adjusted pro forma results are continuing operations results before
charges/gains, excluding the impact of adopting the company's new method
of accounting for defined benefit plans, and further adjusted to assume
that FBHS was an independent business as of the beginning of 2010,
including the impact of an initial debt level of approximately
-
The spin-off of FBHS as if it had occurred on
January 1, 2010 including (i) the elimination of all intercompany borrowings withFortune Brands, Inc. (ii) initial bank borrowings by FBHS of$500 million to fund a dividend toFortune Brands, Inc. immediately prior to the spin-off and (iii) the distribution of FBHS shares to Fortune Brands' shareholders at a ratio of 1:1. -
Annual FBHS interest cost associated with bank borrowings of
approximately
$8 million and$6 million in 2010 and 2011, respectively, based on FBHS's credit facilities entered into inAugust 2011 . -
Estimated incremental costs required to operate and report as an
independent public company as if the spin-off had occurred on
January 1, 2010 . - The elimination of charges/gains associated with restructuring and other charges and intangible asset impairment charges attributable to the FBHS business.
- The elimination of the impact of the company's fourth quarter 2011 change in accounting for its US pension and post retirement defined benefit plans.
- An estimated stand-alone FBHS effective income tax rate of approximately 35%. This rate excludes the impact of unusual items such as adjustments to provisions related to uncertain tax positions and other unusual charges.
The adjusted pro forma measures are not derived in accordance with GAAP. Management believes this information provides investors with helpful supplemental information regarding the underlying performance of FBHS from period to period were it functioning as an independent public company. The adjusted pro forma information may be inconsistent with similar measures presented by other companies.
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| CONSOLIDATED STATEMENT OF INCOME (GAAP) | |||||||||||||||||||||||
| (In millions, except per share amounts) | |||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||
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Three Months Ended |
Year Ended December 31, | ||||||||||||||||||||||
| 2011 | 2010 | % Change | 2011 | 2010 | % Change | ||||||||||||||||||
| Net Sales | $ | 876.1 | $ | 843.7 | 3.8 | $ | 3,328.6 | $ | 3,233.5 | 2.9 | |||||||||||||
| Cost of products sold | 634.2 | 577.4 | 9.8 | 2,329.3 | 2,177.1 | 7.0 | |||||||||||||||||
| Selling, general | 250.9 | 219.0 | 14.6 | 899.3 | 834.3 | 7.8 | |||||||||||||||||
| and administrative expenses | |||||||||||||||||||||||
| Amortization of intangible assets | 3.4 | 3.7 | (8.1 | ) | 14.4 | 15.7 | (8.3 | ) | |||||||||||||||
| Restructuring charges | 2.9 | 7.2 | (59.7 | ) | 4.7 | 8.0 | (41.3 | ) | |||||||||||||||
| Business separation costs | - | - | - | 2.4 | - | - | |||||||||||||||||
| Asset impairment charges | 90.0 | - | - | 90.0 | - | - | |||||||||||||||||
| Operating Income (Loss) | (105.3 | ) | 36.4 | (389.3 | ) | (11.5 | ) | 198.4 | (105.8 | ) | |||||||||||||
| Related party interest expense, net | - | 28.6 | (100.0 | ) | 23.2 | 116.0 | (80.0 | ) | |||||||||||||||
| External interest expense | 3.0 | 0.1 | (100.0 | ) | 3.2 | 0.3 | 966.7 | ||||||||||||||||
| Other expense (income), net | (0.3 | ) | (0.5 | ) | 40.0 | 1.6 | (1.0 | ) | 260.0 | ||||||||||||||
| Income (Loss) before income taxes | (108.0 | ) | 8.2 | (1,417.1 | ) | (39.5 | ) | 83.1 | (147.5 | ) | |||||||||||||
| Income taxes | (39.7 | ) | (3.4 | ) | - | (7.5 | ) | 18.1 | (141.4 | ) | |||||||||||||
| Net Income (Loss) | $ | (68.3 | ) | $ | 11.6 | (688.8 | ) | $ | (32.0 | ) | $ | 65.0 | (149.2 | ) | |||||||||
| Less: Noncontrolling interests | 0.1 | 0.4 | (75.0 | ) | 1.0 | 1.2 | (16.7 | ) | |||||||||||||||
| Net Income (Loss) attributable to | |||||||||||||||||||||||
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$ | (68.4 | ) | $ | 11.2 | (710.7 | ) | $ | (33.0 | ) | $ | 63.8 | (151.7 | ) | |||||||||
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Earnings (Loss) Per Common Share, |
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| Net Income | $ | (0.44 | ) | $ | 0.07 | (708.5 | ) | $ | (0.21 | ) | $ | 0.41 | (151.7 | ) | |||||||||
| Diluted Average Shares Outstanding(a) | 155.7 | 155.1 | 0.4 | 155.2 | 155.1 | 0.1 | |||||||||||||||||
| Diluted Actual Shares Outstanding(a) | 160.7 | ||||||||||||||||||||||
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(a) On |
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| (In millions, except per share amounts) | |||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||
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Three Months Ended |
Year Ended December 31, | ||||||||||||||||||||||
| 2011 | 2010 | % Change | 2011 | 2010 | % Change | ||||||||||||||||||
| Net Sales (GAAP) | |||||||||||||||||||||||
| Kitchen & Bath Cabinetry | $ | 301.7 | $ | 286.7 | 5.2 | $ | 1,256.3 | $ | 1,188.8 | 5.7 | |||||||||||||
| Plumbing & Accessories | 258.1 | 239.7 | 7.7 | 962.8 | 923.8 | 4.2 | |||||||||||||||||
| Advanced Material Windows & Door Systems | 153.7 | 173.1 | (11.2 | ) | 552.9 | 600.7 | (8.0 | ) | |||||||||||||||
| Security & Storage | 162.6 | 144.2 | 12.8 | 556.6 | 520.2 | 7.0 | |||||||||||||||||
| Total Net Sales | $ | 876.1 | $ | 843.7 | 3.8 | $ | 3,328.6 | $ | 3,233.5 | 2.9 | |||||||||||||
| Operating Income (Loss) | |||||||||||||||||||||||
| Kitchen & Bath Cabinetry | $ | (15.2 | ) | $ | (1.0 | ) | - | $ | 5.7 | $ | 28.2 | (79.8 | ) | ||||||||||
| Plumbing & Accessories | 39.2 | 35.0 | 12.0 | 138.0 | 132.5 | 4.2 | |||||||||||||||||
| Advanced Material Windows & Door Systems | (91.6 | ) | 8.5 | - | (101.2 | ) | 17.6 | - | |||||||||||||||
| Security & Storage | 16.9 | 4.8 | 252.1 | 62.6 | 54.0 | 15.9 | |||||||||||||||||
| Corporate Expenses(a) | (54.6 | ) | (10.9 | ) | (400.9 | ) | (116.6 | ) | (33.9 | ) | (244.0 | ) | |||||||||||
| Total Operating Income (Loss) - GAAP | $ | (105.3 | ) | $ | 36.4 | (389.3 | ) | $ | (11.5 | ) | $ | 198.4 | (105.8 | ) | |||||||||
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ADJUSTED PRO FORMA OPERATING INCOME RECONCILIATION |
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| Adjusted Pro Forma Operating Income (Loss)(b) | |||||||||||||||||||||||
| Kitchen & Bath Cabinetry | $ | (3.1 | ) | $ | 0.4 | (875.0 | ) | $ | 18.4 | $ | 30.7 | (40.1 | ) | ||||||||||
| Plumbing & Accessories | 39.2 | 35.0 | 12.0 | 138.0 | 132.5 | 4.2 | |||||||||||||||||
| Advanced Material Windows & Door Systems | 2.9 | 11.1 | (73.9 | ) | (3.8 | ) | 20.6 | (118.4 | ) | ||||||||||||||
| Security & Storage | 16.9 | 10.4 | 62.5 | 62.6 | 61.0 | 2.6 | |||||||||||||||||
| Corporate expenses | (15.6 | ) | (17.3 | ) | 9.8 | (65.7 | ) | (64.5 | ) | (1.9 | ) | ||||||||||||
| Total Adjusted Pro Forma Operating Income | 40.3 | 39.6 | 1.8 | 149.5 | 180.3 | (17.1 | ) | ||||||||||||||||
| Restructuring and other charges(c) | (16.6 | ) | (9.6 | ) | (72.9 | ) | (20.0 | ) | (12.5 | ) | (60.0 | ) | |||||||||||
| Standalone corporate costs(d) | - | 5.0 | (100.0 | ) | 13.8 | 20.0 | (31.0 | ) | |||||||||||||||
| Business separation costs(e) | - | - | - | (2.4 | ) | - | - | ||||||||||||||||
| Asset impairment charges | (90.0 | ) | - | - | (90.0 | ) | - | - | |||||||||||||||
| Defined benefit plan accounting change (f) | (39.0 | ) | 1.4 | - | (62.4 | ) | 10.6 | (688.7 | ) | ||||||||||||||
| Total Operating Income (Loss) - GAAP | $ | (105.3 | ) | $ | 36.4 | (389.3 | ) | $ | (11.5 | ) | $ | 198.4 | (105.8 | ) | |||||||||
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(a) Corporate expenses include allocations of certain |
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| (b) Adjusted pro forma operating income (loss) is operating income derived in accordance with GAAP including estimated incremental standalone corporate expenses and excluding restructuring and other charges, business separation costs, asset impairment charges, and the impact of the change in our defined benefit plan accounting. Adjusted pro forma operating income (loss) is a measure not derived in accordance with GAAP. Management uses this measure to determine the returns generated by FBHS and to evaluate and identify cost-reduction initiatives. Management believes this measure provides investors with helpful supplemental information regarding the underlying performance of the company from year to year. This measure may be inconsistent with similar measures presented by other companies. | |||||||||||||||||||||||
| (c) Restructuring charges are costs incurred to implement significant cost reduction initiatives and include workforce reduction costs and asset write-downs; "other charges" represent charges directly related to restructuring initiatives that cannot be reported as restructuring under GAAP. Such costs may include losses on disposal of inventories, trade receivables allowances from exiting product lines and accelerated depreciation resulting from the closure of facilities. | |||||||||||||||||||||||
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(d) The Company estimates that it would have incurred |
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( |
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| (f) Defined benefit plan accounting change represents the impact on defined benefit plan expense attributable to the Company's adoption of a new accounting method. | |||||||||||||||||||||||
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ADJUSTED PRO FORMA DILUTED EPS RECONCILIATION |
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Adjusted pro forma diluted EPS is Net Income calculated on a diluted
per-share basis adjusted to assume that FBHS was an independent
business as of the beginning of 2010, including the impact of an
initial debt level of approximately |
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For the fourth quarter of 2011, adjusted pro forma diluted EPS is
adjusted pro forma Net Income calculated on a per-share basis
excluding |
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For the year ended |
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For the fourth quarter of 2010, adjusted pro forma diluted EPS is
adjusted pro forma Net Income calculated on a per-share basis
excluding |
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For the year ended |
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| Adjusted pro forma diluted EPS is a measure not derived in accordance with GAAP. Management uses this measure to evaluate the overall performance of the company and believes this measure provides investors with helpful supplemental information regarding the underlying performance of the company from period to period. This measure may be inconsistent with similar measures presented by other companies. | |||||||||||||||||||||||
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Three Months Ended |
Year Ended December 31, | ||||||||||||||||||||||
| 2011 | 2010 | % Change | 2011 | 2010 | % Change | ||||||||||||||||||
| Earnings Per Common Share - Diluted | |||||||||||||||||||||||
| Adjusted Pro Forma Diluted EPS | $ | 0.16 | $ | 0.16 | - | $ | 0.58 |
$ |
0.73 |
(20.5 | ) | ||||||||||||
| Restructuring and other charges | (0.06 | ) | (0.05 | ) | (20.0 | ) | (0.08 | ) | (0.05 | ) | (60.0 | ) | |||||||||||
| Standalone corporate costs | - | 0.02 | (100.0 | ) | 0.05 | 0.08 | (37.5 | ) | |||||||||||||||
| Capital structure change | (0.01 | ) | (0.11 | ) | 90.9 | (0.08 | ) | (0.44 | ) | 81.8 | |||||||||||||
| Business separation costs | - | - | - | (0.01 | ) | - | - | ||||||||||||||||
| Income tax related credits | - | - | - | - | 0.01 | (100.0 | ) | ||||||||||||||||
| Adjusted pro forma tax rate adjustment | (0.02 | ) | 0.04 | (150.0 | ) | (0.07 | ) | 0.05 | (240.0 | ) | |||||||||||||
| Asset impairment charges | (0.35 | ) | - | (100.0 | ) | (0.35 | ) | - | - | ||||||||||||||
| Defined benefit plan accounting change | (0.16 | ) | 0.01 | - | (0.25 | ) | 0.04 | (725.0 | ) | ||||||||||||||
| Impact of adjusted pro forma diluted shares outstanding | - | - | - | - | (0.01 | ) | 100.0 | ||||||||||||||||
| Diluted EPS (GAAP) | $ | (0.44 | ) | $ | 0.07 | (708.5 | ) | $ | (0.21 | ) | $ | 0.41 | (151.7 | ) | |||||||||
|
RECONCILIATION OF FULL YEAR 2012 EARNINGS GUIDANCE TO GAAP |
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|
For the full year, the company is targeting diluted EPS before
charges/gains to be in the range of |
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| (In millions, except per share amounts) | ||||||||
| (Unaudited) | ||||||||
|
RECONCILIATION OF 2011 DILUTED EPS BEFORE CHARGES/GAINS |
||||||||
|
Year Ended |
||||||||
| Before charges/gains 2011 Diluted EPS (a) | $ |
0.60 |
||||||
| Defined benefit plan restatement (b) | (0.05 | ) | ||||||
| Capital structure change | 0.02 | |||||||
| Impact of using actual average diluted shares in 2011 | 0.01 | |||||||
| Adjusted Pro Forma 2011 Diluted EPS | $ | 0.58 | ||||||
| Restructuring and other charges | (0.08 | ) | ||||||
| Standalone corporate costs | 0.05 | |||||||
| Capital structure change | (0.08 | ) | ||||||
| Business separation costs | (0.01 | ) | ||||||
| Adjusted pro forma tax rate change | (0.07 | ) | ||||||
| Asset impairment charges | (0.35 | ) | ||||||
| Defined benefit plan accounting change | (0.25 | ) | ||||||
| Diluted EPS (GAAP) |
( |
) | ||||||
|
(a) 2011 Diluted EPS before charges/gains is GAAP Diluted EPS
adjusted to (i) reflect pro forma interest expense based on the
borrowing arrangements and debt levels that actually existed
immediately after the separation from |
||||||||
|
(b) Excludes the impact of expense from actuarial losses totaling
Diluted EPS expense of |
||||||||
|
RECONCILIATION OF 2011 OPERATING INCOME BEFORE CHARGES/GAINS |
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|
Year Ended |
||||||||
| Operating Income Before Charges/Gains (c) | $ | 163.0 | ||||||
| Defined benefit plan restatement (d) | (13.5 | ) | ||||||
| Adjusted Pro Forma Operating Income | $ | 149.5 | ||||||
| Restructuring and other charges | (20.0 | ) | ||||||
| Business separation costs | (2.4 | ) | ||||||
| Standalone corporate costs | 13.8 | |||||||
| Asset impairment charges | (90.0 | ) | ||||||
| Defined benefit plan accounting change | (62.4 | ) | ||||||
| Operating Income (Loss) - GAAP |
( |
) | ||||||
|
(c) Operating income before charges/gains is GAAP operating income
adjusted to (i) exclude actuarial losses associated with the
Company's defined benefit plans, (ii) exclude asset impairment
charges, (iii) exclude restructuring and other charges (iv) exclude
business separation costs, and (v) include incremental adjusted pro
forma stand-alone corporate costs for the 2011 period preceding the
separation from |
||||||||
|
(d) Excludes the impact of expense from actuarial losses totaling
approximately |
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|
|
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| (In millions, except per share amounts) | |||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||
|
RECONCILIATION OF ADJUSTED PRO FORMA EBITDA TO GAAP NET INCOME |
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|
Three Months Ended |
Year Ended December 31, | ||||||||||||||||||||||
| 2011 | 2010 | % Change | 2011 | 2010 | % Change | ||||||||||||||||||
| Adjusted Pro Forma EBITDA | $ | 65.7 | $ | 68.3 | (3.8 | ) | $ | 247.9 | $ | 289.0 | (14.2 | ) | |||||||||||
| Depreciation (a) | $ | (21.7 | ) | $ | (24.5 | ) | 11.4 | $ | (85.6 | ) | $ | (92.0 | ) | 7.0 | |||||||||
| Amortization of intangible assets | (3.4 | ) | (3.7 | ) | 8.1 | (14.4 | ) | (15.7 | ) | 8.3 | |||||||||||||
| Restructuring and other charges | (16.6 | ) | (9.6 | ) | (72.9 | ) | (20.0 | ) | (12.5 | ) | (60.0 | ) | |||||||||||
| Business separation costs | - | - | - | (2.4 | ) | - | - | ||||||||||||||||
| Related party interest expense, net | - | (28.6 | ) | - | (23.2 | ) | (116.0 | ) | 80.0 | ||||||||||||||
| External interest expense | (3.0 | ) | (0.1 | ) | - | (3.2 | ) | (0.3 | ) | (966.7 | ) | ||||||||||||
| Standalone corporate expenses | - | 5.0 | - | 13.8 | 20.0 | (31.0 | ) | ||||||||||||||||
| Asset impairment charges | (90.0 | ) | - | - | (90.0 | ) | - | - | |||||||||||||||
| Defined benefit plan accounting change | (39.0 | ) | 1.4 | - | (62.4 | ) | 10.6 | - | |||||||||||||||
| Income tax (provision) benefit | 39.7 | 3.4 | - | 7.5 | (18.1 | ) | - | ||||||||||||||||
| Net Income (Loss) | $ | (68.3 | ) | $ | 11.6 |
(688.8 |
) |
$ | (32.0 | ) | $ | 65.0 |
(149.2 |
) |
|||||||||
| Noncontrolling interests | (0.1 | ) | (0.4 | ) | 75.0 | (1.0 | ) | (1.2 | ) | 16.7 | |||||||||||||
| Net income (loss) attributable to Home & Security | $ | (68.4 | ) | $ | 11.2 |
(710.7 |
) |
$ | (33.0 | ) | $ | 63.8 |
(151.7 |
) |
|||||||||
|
Adjusted pro forma EBITDA is net income derived in accordance with GAAP including estimated incremental standalone corporate expenses and excluding restructuring and other charges, business separation costs, asset impairment charges, the impact of the change in our defined benefit plan accounting, depreciation, amortization of intangible assets, related party interest expense, net, external interest expense, net, and income taxes. |
|||||||||||||||||||||||
|
Adjusted pro forma EBITDA is a measure not derived in accordance with GAAP. Management uses this measure to assess returns generated by FBHS. Management believes this measure provides investors with helpful supplemental information about the company's ability to fund internal growth, make acquisitions and repay debt and related interest. This measure may be inconsistent with similar measures presented by other companies. |
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|
(a) Depreciation excludes accelerated depreciation of |
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|
|
||||||||||||||||||||||||||||
| Reconciliation of Income Statement - GAAP to Adjusted Pro Forma Information | ||||||||||||||||||||||||||||
|
Three Months Ended |
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| $ in millions, except per share amounts | ||||||||||||||||||||||||||||
| (unaudited) | ||||||||||||||||||||||||||||
| Pro forma adjustments | ||||||||||||||||||||||||||||
| Defined | ||||||||||||||||||||||||||||
| Restructuring | Standalone | Asset | benefit plan | Capital | Pro forma | |||||||||||||||||||||||
| GAAP | and other | corporate | impairment | accounting | structure | tax rate | Adjusted | |||||||||||||||||||||
| (unaudited) | charges | costs | charges | change | change | adjustment |
Pro |
|||||||||||||||||||||
| 2011 | FOURTH QUARTER | |||||||||||||||||||||||||||
| Net Sales | $ | 876.1 | - | - | - | - | - | - | ||||||||||||||||||||
| Cost of products sold | 634.2 | (13.7 | ) | - | - | (19.4 | ) | - | - | |||||||||||||||||||
| Selling, general & administrative expenses | 250.9 | - | - | - | (19.6 | ) | - | - | ||||||||||||||||||||
| Amortization of intangible assets | 3.4 | - | - | - | - | - | - | |||||||||||||||||||||
| Restructuring charges | 2.9 | (2.9 | ) | - | - | - | - | - | ||||||||||||||||||||
| Asset impairment charges | 90.0 | - | - | (90.0 | ) | - | - | - | ||||||||||||||||||||
| Operating Income (Loss) | (105.3 | ) | 16.6 | - | 90.0 | 39.0 | - | - | 40.3 | |||||||||||||||||||
| Related party interest expense, net | - | - | - | - | - | - | - | |||||||||||||||||||||
| External interest expense (income) | 3.0 | - | - | - | - | (1.5 | ) | - | ||||||||||||||||||||
|
Other income, net |
(0.3 | ) | - | - | - | - | - | - | ||||||||||||||||||||
| Income before income taxes | (108.0 | ) | 16.6 | - | 90.0 | 39.0 | 1.5 | - | 39.1 | |||||||||||||||||||
| Income taxes | (39.7 | ) | 6.4 | - | 34.7 | 14.7 | 0.6 | (2.9 | ) | |||||||||||||||||||
| Net Income (Loss) | $ | (68.3 | ) | 10.2 | - | 55.3 | 24.3 | 0.9 | 2.9 | $ | 25.3 | |||||||||||||||||
| Less: Noncontrolling interests | 0.1 | - | - |
- |
- |
- | - | |||||||||||||||||||||
|
Net Income (Loss) attributable to |
$ | (68.4 | ) | 10.2 | - | 55.3 | 24.3 | 0.9 | 2.9 | $ | 25.2 | |||||||||||||||||
| Average Diluted Shares Outstanding | 155.7 | 159.3 | ||||||||||||||||||||||||||
| Diluted EPS | (0.44 | ) | 0.16 | |||||||||||||||||||||||||
| 2010 | ||||||||||||||||||||||||||||
| Net Sales | $ | 843.7 | - | - | - | - | - | - | ||||||||||||||||||||
| Cost of products sold | 577.4 | 0.1 | - | - | 0.5 | - | - | |||||||||||||||||||||
| Selling, general & administrative expenses | 219.0 | (2.5 | ) | 5.0 | - | 0.9 | - | - | ||||||||||||||||||||
| Amortization of intangible assets | 3.7 | - | - | - | - | - | ||||||||||||||||||||||
| Restructuring charges | 7.2 | (7.2 | ) | - | - | - | - | |||||||||||||||||||||
| Operating Income | 36.4 | 9.6 | (5.0 | ) | - | (1.4 | ) | - | - | 39.6 | ||||||||||||||||||
| Related party interest expense, net | 28.6 | - | - | - | - | (26.7 | ) | - | ||||||||||||||||||||
| External interest expense | 0.1 | - | - | - | - | - | - | |||||||||||||||||||||
|
Other income, net |
(0.5 | ) | - | - | - | - | - | - | ||||||||||||||||||||
| Income before income taxes | 8.2 | 9.6 | (5.0 | ) | - | (1.4 | ) | 26.7 | - | 38.1 | ||||||||||||||||||
| Income taxes | (3.4 | ) | 3.0 | (1.9 | ) | - | (0.6 | ) | 10.1 | 6.3 | ||||||||||||||||||
| Net Income | $ | 11.6 | 6.6 | (3.1 | ) | - | (0.8 | ) | 16.6 | (6.3 | ) | $ | 24.6 | |||||||||||||||
| Less: Noncontrolling interests | 0.4 | - | - |
- |
- |
- | - | |||||||||||||||||||||
|
Net Income attributable to |
$ | 11.2 | 6.6 | (3.1 | ) | - | (0.8 | ) | 16.6 | (6.3 | ) | $ | 24.2 | |||||||||||||||
| Average Diluted Shares Outstanding | 155.1 | 154.6 | ||||||||||||||||||||||||||
| Diluted EPS | 0.07 | 0.16 | ||||||||||||||||||||||||||
|
|
|||||||||||||||||||||||||||||||
| Reconciliation of Income Statement - GAAP to Adjusted Pro Forma Information | |||||||||||||||||||||||||||||||
|
Year Ended |
|||||||||||||||||||||||||||||||
| $ - millions, except per share amounts | |||||||||||||||||||||||||||||||
| Pro forma adjustments | |||||||||||||||||||||||||||||||
| Defined | |||||||||||||||||||||||||||||||
| Restructuring | Standalone | Business | Asset | benefit plan | Capital | Income tax | Pro forma | ||||||||||||||||||||||||
| GAAP | and other | corporate | separation | impairment | accounting | structure | related | tax rate | Adjusted | ||||||||||||||||||||||
| (unaudited) | charges | costs | costs | charges | change | change | credits | adjustment |
Pro |
||||||||||||||||||||||
| 2011 |
YEAR |
||||||||||||||||||||||||||||||
| Net Sales | $ | 3,328.6 | - | - | - | - | - | - | - | - | |||||||||||||||||||||
| Cost of products sold | 2,329.3 | (15.3 | ) | - | - | - | (32.0 | ) | - | - | - | ||||||||||||||||||||
| Selling, general & administrative expenses | 899.3 | - | 13.8 | - | - | (30.4 | ) | - | - | - | |||||||||||||||||||||
| Amortization of intangible assets | 14.4 | - | - | - | - | - | - | - | - | ||||||||||||||||||||||
| Restructuring charges | 4.7 | (4.7 | ) | - | - | - | - | - | - | - | |||||||||||||||||||||
| Business separation costs | 2.4 | - | - | (2.4 | ) | - | - | - | - | - | |||||||||||||||||||||
| Asset impairment charges | 90.0 | - | - | - | (90.0 | ) | - | - | - | - | |||||||||||||||||||||
| Operating Income (Loss) | (11.5 | ) | 20.0 | (13.8 | ) | 2.4 | 90.0 | 62.4 | - | - | - | 149.5 | |||||||||||||||||||
| Related party interest expense, net | 23.2 | - | - | - | - | - | (20.1 | ) | - | - | |||||||||||||||||||||
| External interest expense | 3.2 | - | - | - | - | - | - | - | - | ||||||||||||||||||||||
|
Other expense, net |
1.6 | - | - | - | - | - | - | - | - | ||||||||||||||||||||||
| Income before income taxes | (39.5 | ) | 20.0 | (13.8 | ) | 2.4 | 90.0 | 62.4 | 20.1 | - | - | 141.6 | |||||||||||||||||||
| Income taxes | (7.5 | ) | 7.5 | (5.2 | ) | 0.7 | 34.7 | 23.4 | 7.7 | - | (11.7 | ) | |||||||||||||||||||
|
|
|||||||||||||||||||||||||||||||
| Net Income (Loss) | $ | (32.0 | ) | 12.5 | (8.6 | ) | 1.7 | 55.3 | 39.0 | 12.4 | - | 11.7 | $ | 92.0 | |||||||||||||||||
| Less: Noncontrolling interests | 1.0 | - | - | - |
- |
- |
- | - | - | ||||||||||||||||||||||
| Net Income (Loss) attributable | |||||||||||||||||||||||||||||||
|
to Fortune Brands Home |
$ | (33.0 | ) | 12.5 | (8.6 | ) | 1.7 | 55.3 | 39.0 | 12.4 | - | 11.7 | $ | 91.0 | |||||||||||||||||
| Average Diluted Shares Outstanding | 155.2 | 156.9 | |||||||||||||||||||||||||||||
| Diluted EPS | (0.21 | ) | ` | 0.58 | |||||||||||||||||||||||||||
| 2010 | |||||||||||||||||||||||||||||||
| Net Sales | $ | 3,233.5 | - | - | - | - | - | - | - | - | |||||||||||||||||||||
| Cost of products sold | 2,177.1 | (1.0 | ) | - | - | - | 5.3 | - | - | - | |||||||||||||||||||||
| Selling, general & administrative expenses | 834.3 | (3.5 | ) | 20.0 | - | - | 5.3 | - | - | - | |||||||||||||||||||||
| Amortization of intangible assets | 15.7 | - | - | - | - | - | - | - | - | ||||||||||||||||||||||
| Restructuring charges | 8.0 | (8.0 | ) | - | - | - | - | - | - | - | |||||||||||||||||||||
| Operating Income | 198.4 | 12.5 | (20.0 | ) | - | - | (10.6 | ) | - | - | - | 180.3 | |||||||||||||||||||
| Related party interest expense, net | 116.0 | - | - | - | - | - | (108.0 | ) | - | - | |||||||||||||||||||||
| External interest expense (income) | 0.3 | - | - | - | - | - | - | - | - | ||||||||||||||||||||||
|
Other income, net |
(1.0 | ) | - | - | - | - | - | - | - | - | |||||||||||||||||||||
| Income before income taxes | 83.1 | 12.5 | (20.0 | ) | - | - | (10.6 | ) | 108.0 | - | - | 173.0 | |||||||||||||||||||
| Income taxes | 18.1 | 4.0 | (7.6 | ) | - | - | (4.0 | ) | 41.0 | 1.8 | 7.2 | ||||||||||||||||||||
|
|
|||||||||||||||||||||||||||||||
| Net Income | $ | 65.0 | 8.5 | (12.4 | ) | - | - | (6.6 | ) | 67.0 | (1.8 | ) | (7.2 | ) | $ | 112.5 | |||||||||||||||
| Less: Noncontrolling interests | 1.2 | - | - | - |
- |
- |
- | - | - | ||||||||||||||||||||||
| Net Income attributable | |||||||||||||||||||||||||||||||
|
to Fortune Brands Home |
$ | 63.8 | 8.5 | (12.4 | ) | - | - | (6.6 | ) | 67.0 | (1.8 | ) | (7.2 | ) | $ | 111.3 | |||||||||||||||
| Average Diluted Shares Outstanding | 155.1 | 153.2 | |||||||||||||||||||||||||||||
| Diluted EPS | 0.41 | 0.73 | |||||||||||||||||||||||||||||
Media Contact:
gary.ross@FBHS.com
or
Investor
Contact:
brian.lantz@FBHS.com
Source:
News Provided by Acquire Media