Fortune Brands Delivers Solid Sales and Strong Margin Results Amid Dynamic Macro Environment; Increases Full-Year 2023 Guidance

DEERFIELD, Ill.--(BUSINESS WIRE)--July 27, 2023--Fortune Brands Innovations, Inc. (NYSE: FBIN or “Fortune Brands” or the “Company”), an industry-leading home, security and commercial building products company, today announced second quarter 2023 results and increased its full-year 2023 sales, EPS before charges / gains and free cash flow guidance.

“Our Company continued to leverage its core strengths in brand, innovation and channel excellence and delivered very strong margin results in the quarter amid a dynamic macro environment,” said Fortune Brands Chief Executive Officer Nicholas Fink. “We also took concrete steps to position the Company for future growth, including completing a highly attractive acquisition of leading, innovative brands which will accelerate our larger growth strategy, particularly in the differentiated connected home and luxury markets.”

Fink continued, “Looking forward, we are well prepared to respond to any short-term macro challenges, while further positioning ourselves as a forward-thinking leader in a market supported by long-term growth drivers and secular tailwinds.”

Second Quarter 2023 Results ($ in millions, except per share amounts) Unaudited
	NET SALES	OPERATING INCOME	OPERATING MARGIN	EPS
Q2 2023 Reported	$1,164	$152.6	13.1%	$0.80
Change versus prior year	(7%)	(30%)	(440 bps)	(27%)
Q2 2023 Before charges / gains	$1,164	$197.8	17.0%	$1.07
Change versus prior year	(7%)	(11%)	(60 bps)	(4%)

For each segment in the second quarter of 2023, compared to the prior-year quarter:

• Water Innovations sales decreased 5 percent, primarily due to lower sales volumes, partially offset by price. Excluding the impact of the Aqualisa acquisition and FX, sales decreased 6 percent. Operating margin was 23.0 percent. Operating margin before charges / gains was 23.2 percent.
• Outdoors sales decreased 14 percent, driven by lower sales volumes, partially offset by price. Operating margin was 16.3 percent, a 90 bps increase over Q2 2022. Operating margin before charges / gains was 16.4 percent, an 80 bps increase over Q2 2022.
• Security sales increased 2 percent, driven by increased distribution, price and continued growth in the commercial safety business. Operating margin was -0.2 percent. Operating margin before charges / gains was 15.6 percent.

Emtek, Schaub, Yale and August Acquisition

On June 20, 2023, the Company completed its acquisition of the Emtek and Schaub premium and luxury door and cabinet hardware business, and the U.S. and Canadian Yale and August residential smart locks business from ASSA ABLOY (collectively, the “Acquisition”). The purchase price was $800 million, or approximately $700 million net of tax benefits, on a cash-free, debt-free basis, subject to customary adjustments. The net purchase price of $700 million equates to approximately 7.8x 2022 adjusted EBITDA before synergies. Results from the Acquisition were immaterial to Fortune Brands’ 2023 Q2 results.

For the second half of 2023, the Acquisition is expected to generate net sales of $190 million to $210 million and earnings per share of $0.04 to $0.06, inclusive of approximately $0.08 unfavorable EPS impact from purchase price amortization, or $0.12 to $0.14 excluding purchase price amortization.

By the end of 2026, the Acquisition is expected to generate net sales of $500 million to $550 million, earnings per share of $0.45 to $0.55, $65 million to $85 million of run-rate sales synergies and $10 million to $20 million of run-rate cost synergies. For more information on the Acquisition, please visit ir.fbin.com/quarterly-results.

Balance Sheet and Cash Flow

At the end of the quarter, net debt was $2.6 billion and net debt to EBITDA before charges / gains was 2.9x. The Company had $682 million in cash and full availability under its $1.25 billion revolving credit facility. Cash flow from operations was $428 million while free cash flow was $358 million for the quarter, reflecting the favorable impact of the Company’s working capital and inventory reduction efforts.

Annual Outlook

The Company is increasing full-year EPS before charges / gains guidance to a range of $3.75 to $3.90, reflecting the impact of the Acquisition and improved market conditions. The mid-point of this guidance represents a $0.13 increase over the mid-point of the Company’s initial 2023 guidance provided during its fourth quarter 2022 earnings call. In addition, the Company upwardly revised its market outlook, full-year sales and free cash flow guidance, reflecting the impact of the Acquisition as well as the Company’s outperformance and a stronger than anticipated single family new construction market.

“We took decisive actions in the first half of 2023, while still maintaining investments in our key strategic priorities, and delivered impressive results amid a volatile operating environment,” said Fortune Brands Chief Financial Officer David Barry. “Our updated guidance reflects our confidence in the Company’s strong financial position as we continue to position Fortune Brands for future shareholder value creation opportunities by prioritizing above-market sales growth, margin preservation and enhancement and cash generation.”

The Company now expects:

	Prior Guidance	Updated
MARKET
Global market	-6.5% to -8.5%	-5.5% to -7.5%
U.S. market	-6.5% to -8.5%	-5.5% to -7.5%
U.S. R&R	-4% to -6%	-4% to -6%
U.S. SFNC	-18% to -22%	-12% to -14%
China market	-15% to -20%	-15% to -20%
FINANCIAL METRICS
Net sales	-5% to -7%	0% to -2%
Net sales [organic]	-5% to -7%	-4% to -6%
Operating margin	16% to 17%	16% to 16.5%
EPS before charges / gains	$3.65 to $3.85	$3.75 to $3.90
Cash flow from operations	-	~$855 million
Free cash flow	~$475 million	~$575 million
Cash conversion	~100%	~120%

For more information on the Company's guidance, please visit ir.fbin.com/quarterly-results.

For certain forward-looking non-GAAP measures (as used in this press release, EPS before charges / gains and cash conversion), the Company is unable to provide a reconciliation to the most comparable GAAP financial measure because the information needed to reconcile these measures is unavailable due to the inherent difficulty of forecasting the timing and/or amount of various items that have not yet occurred, including the high variability and low visibility with respect to gains and losses associated with our defined benefit plans and restructuring and other charges, which are excluded from EPS before charges / gains and cash conversion. Additionally, estimating such GAAP measures and providing a meaningful reconciliation consistent with the Company’s accounting policies for future periods requires a level of precision that is unavailable for these future periods and cannot be accomplished without unreasonable effort. Forward-looking non-GAAP measures are estimated consistent with the relevant definitions and assumptions.

Conference Call Details

Today at 5:00 p.m. ET, Fortune Brands will host an investor conference call to discuss results. A live internet audio webcast of the conference call will be available on the Fortune Brands website at ir.fbin.com/upcoming-events. It is recommended that listeners log on at least 10 minutes prior to the start of the call. A recorded replay of the call will be made available on the Company’s website shortly after the call has ended.

About Fortune Brands Innovations

Fortune Brands Innovations, Inc. (NYSE: FBIN), headquartered in Deerfield, Ill., is a brand, innovation and channel leader focused on exciting, supercharged categories in the home products, security and commercial building markets. The Company’s growing portfolio of brands includes Moen, House of Rohl, Aqualisa, Emtek, Therma-Tru, Larson, Fiberon, Master Lock, SentrySafe, Yale and August. To learn more about FBIN, its brands and environmental, social and governance (ESG) commitments, visit www.FBIN.com.

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

This press release contains forward-looking statements that are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements include all statements that are not historical statements of fact and those regarding our intent, belief or expectations for our business, operations, financial performance or financial condition in addition to statements regarding our general business strategies, the market potential of our brands, trends in the housing market, the potential impact of costs, including material and labor costs, the potential impact of inflation, expected capital spending, expected pension contributions, the expected impact of acquisitions, dispositions and other strategic transactions including the expected benefits and costs of the separation (the “Separation”) of MasterBrand, Inc. (“MasterBrand”) and the tax-free nature of the Separation, the anticipated impact of recently issued accounting standards on our financial statements, and other matters that are not historical in nature. Statements preceded by, followed by or that otherwise include the words “believes,” “expects,” “anticipates,” “intends,” “projects,” “estimates,” “plans,” “outlook,” “positioned” 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 current expectations, estimates, assumptions and projections of our management about our industry, business and future financial results, available at the time this press release is issued. 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, including but not limited to: (i) our reliance on the North American and Chinese home improvement, repair and remodel and new home construction activity levels, (ii) the housing market, downward changes in the general economy, unfavorable interest rates or other business conditions, (iii) the competitive nature of consumer and trade brand businesses, (iv) our ability to execute on our strategic plans and the effectiveness of our strategies in the face of business competition, (v) our reliance on key customers and suppliers, including wholesale distributors and dealers and retailers, (vi) risks associated with our ability to improve organizational productivity and global supply chain efficiency and flexibility, (vii) risks associated with global commodity and energy availability and price volatility, as well as the possibility of sustained inflation, (viii) delays or outages in our information technology systems or computer networks, (ix) risks associated with doing business globally, including changes in trade-related tariffs and risks with uncertain trade environments, (x) risks associated with the disruption of operations, (xi) our inability to obtain raw materials and finished goods in a timely and cost-effective manner, (xii) risks associated with entering into potential strategic acquisitions and joint ventures and related integration activities, (xiii) impairments in the carrying value of goodwill or other acquired intangible assets, (xiv) risk of increases in our defined benefit-related costs and funding requirements, (xv) the uncertainties relating to the impact of COVID-19 on the Company’s business, financial performance and operating results, (xvi) our ability to attract and retain qualified personnel and other labor constraints, (xvii) the effect of climate change and the impact of related changes in government regulations and consumer preferences, (xviii) risks associated with environmental, social and governance matters, (xix) changes in government and industry regulatory standards, (xx) future tax law changes or the interpretation of existing tax laws, (xxi) our ability to secure and protect our intellectual property rights, (xxii) potential liabilities and costs from claims and litigation, (xxiii) our ability to achieve the expected benefits of the Separation of MasterBrand, (xxiv) the risk that we may be required to indemnify MasterBrand in connection with the Separation or that MasterBrand’s indemnities to us may not be sufficient to hold us harmless for the full amount of liabilities for which MasterBrand has been allocated responsibility, (xxv) the potential that the Separation fails to qualify as tax-free for U.S. federal income tax purposes and (xxvi) unanticipated difficulties or expenditures relating to the transaction, including, without limitation, difficulties that result in the failure to realize expected synergies, efficiencies and cost savings from the transaction within the expected time period (if at all). These and other factors are discussed in Part I, Item 1A “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2022. We undertake no obligation to, and expressly disclaim any such obligation to, update or clarify any forward-looking statements to reflect changed assumptions, the occurrence of anticipated or unanticipated events, new information or changes to future results over time or otherwise, except as required by law.

Use of Non-GAAP Financial Information

This press release includes measures not derived in accordance with generally accepted accounting principles (“GAAP”), such as diluted earnings per share from continuing operations before charges / gains, operating income before charges / gains, operating margin before charges / gains, EBITDA before charges / gains, net debt, net debt to EBITDA before charges / gains, sales excluding the impact of FX and acquisitions, and free cash flow. These non-GAAP 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 applicable most closely comparable GAAP measures, and reasons for the Company’s use of these measures, are presented in the attached pages.

	FORTUNE BRANDS INNOVATIONS, INC.
	(In millions)
	(Unaudited)
			Thirteen Weeks Ended			Three Months Ended										Twenty-Six Weeks Ended			Six Months Ended
	Net sales (GAAP)		July 1, 2023			June 30, 2022			$ Change			% Change				July 1, 2023			June 30, 2022			$ Change			% Change
	Water		$	617.1		$	650.0		$	(32.9	)	(5	)			$	1,211.3		$	1,293.6		$	(82.3	)	(6	)
	Outdoors			375.6			437.2			(61.6	)	(14	)				665.5			780.8			(115.3	)	(15	)
	Security			171.0			168.2			2.8		2					326.9			321.2			5.7		2
	Total net sales		$	1,163.7		$	1,255.4		$	(91.7	)	(7	)			$	2,203.7		$	2,395.6		$	(191.9	)	(8	)
	RECONCILIATIONS OF GAAP OPERATING INCOME TO OPERATING INCOME BEFORE CHARGES/GAINS
	(In millions)
	(Unaudited)
			Thirteen Weeks Ended			Three Months Ended										Twenty-Six Weeks Ended			Six Months Ended
			July 1, 2023			June 30, 2022			$ Change			% Change				July 1, 2023			June 30, 2022			$ Change			% Change
	WATER
	Operating income (GAAP)		$	142.1		$	160.7		$	(18.6	)	(12	)			$	270.5		$	310.0		$	(39.5	)	(13	)
	Restructuring charges			1.1			0.9			0.2		22					1.3			0.9			0.4		44
	Other charges/(gains)
	Cost of products sold			-			-			-		-					0.1			-			0.1		100
	Selling, general and administrative expenses			-			-			-		-					-			0.8			(0.8	)	(100	)
	Operating income before charges/gains (a)		$	143.2		$	161.6		$	(18.4	)	(11	)			$	271.9		$	311.7		$	(39.8	)	(13	)
	OUTDOORS
	Operating income (GAAP)		$	61.2		$	67.4		$	(6.2	)	(9	)			$	74.2		$	107.2		$	(33.0	)	(31	)
	Restructuring charges			1.5			0.1			1.4		1,400					3.0			0.7			2.3		329
	Other charges/(gains)																					$	-		-
	Cost of products sold			(1.7	)		-			(1.7	)	(100	)				(1.7	)		(5.4	)		3.7		(69	)
	Selling, general and administrative expenses			-			-			-		-					-			(0.2	)		0.2		(100	)
	Solar compensation (e)			0.6			0.6			-		-					1.3			1.0			0.3		30
	Operating income before charges/gains (a)			61.6			68.1		$	(6.5	)	(10	)				76.8			103.3		$	(26.5	)	(26	)
	SECURITY
	Operating income (GAAP)		$	(0.4	)	$	25.1		$	(25.5	)	(102	)			$	20.8		$	45.5		$	(24.7	)	(54	)
	Restructuring charges			19.6			-			19.6		NM					20.2			-			20.2		100
	Other charges/(gains)
	Cost of products sold			7.4			-			7.4		100					7.5			-			7.5		100
	Operating income before charges/gains (a)		$	26.6		$	25.1		$	1.5		6				$	48.5		$	45.5		$	3.0		7
	CORPORATE
	Corporate expense (GAAP)		$	(50.3	)	$	(33.7	)	$	(16.6	)	49				$	(81.1	)	$	(63.4	)	$	(17.7	)	28
	Restructuring charges			-			-			-		-					0.7			-			0.7		100
	Other charges/(gains)																						-		-
	Selling, general and administrative expenses			0.3			0.2			0.1		50					0.3			0.2			0.1		50
	ASSA transaction expenses (d)			16.4			-			16.4		NM					17.4			-			17.4		100
	General and administrative expenses before charges/gains (a)		$	(33.6	)	$	(33.5	)	$	(0.1	)	-				$	(62.7	)	$	(63.2	)	$	0.5		(1	)
	TOTAL COMPANY
	Operating income (GAAP)		$	152.6		$	219.5		$	(66.9	)	(30	)			$	284.4		$	399.3		$	(114.9	)	(29	)
	Restructuring charges			22.2			1.0			21.2		2,120					25.2			1.6			23.6		1,475
	Other charges/(gains)
	Cost of products sold			5.7			-			5.7		100					5.9			(5.4	)		11.3		(209	)
	Selling, general and administrative expenses			0.3			0.2			0.1		50					0.3			0.8			(0.5	)	(62	)
	ASSA transaction expenses (d)			16.4			-			16.4		100					17.4			-			17.4		100
	Solar compensation (e)			0.6			0.6			-		-					1.3			1.0			0.3		30
	Operating income before charges/gains (a)		$	197.8		$	221.3		$	(23.5	)	(11	)			$	334.5		$	397.3		$	(62.8	)	(16	)
	NM - Not Meaningful
	The Yale/August and Emtek/Schaub acquisition net sales, operating income and cash flows from the date of acquisition to July 1, 2023 were not material to the Company.
	(a) (d) (e) For definitions of Non-GAAP measures, see Definitions of Terms page

FORTUNE BRANDS INNOVATIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (GAAP)
(In millions)
(Unaudited)
		July 1,			December 31,
		2023			2022
	Assets
	Current assets
	Cash and cash equivalents	$	681.7		$	642.5
	Accounts receivable, net		621.2			521.8
	Inventories		954.5			1,021.3
	Other current assets		186.2			274.8
	Total current assets		2,443.6			2,460.4
	Property, plant and equipment, net		859.5			783.7
	Goodwill		1,917.8			1,640.7
	Other intangible assets, net of accumulated amortization		1,421.5			1,000.8
	Other assets		230.8			235.3
	Total assets	$	6,873.2		$	6,120.9
	Liabilities and equity
	Current liabilities
	Short-term debt	$	599.8		$	599.2
	Accounts payable		489.5			421.6
	Other current liabilities		551.4			523.9
	Total current liabilities		1,640.7			1,544.7
	Long-term debt		2,668.5			2,074.3
	Deferred income taxes		138.2			136.9
	Other non-current liabilities		248.7			278.1
	Total liabilities		4,696.1			4,034.0
	Stockholders' equity		2,177.1			2,086.9
	Total equity		2,177.1			2,086.9
	Total liabilities and equity	$	6,873.2		$	6,120.9

FORTUNE BRANDS INNOVATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
				Twenty-Six Weeks Ended			Six Months Ended
				July 1, 2023			June 30, 2022
	Operating activities
	Net income			$	186.7		$	372.9
	Depreciation and amortization				66.1			93.8
	Non-cash lease expense				15.8			22.2
	Deferred taxes				(1.0	)		(0.5	)
	Other non-cash items				16.7			23.3
	Changes in assets and liabilities, net				219.3			(469.8	)
	Net cash provided by operating activities			$	503.6		$	41.9
	Investing activities
	Capital expenditures			$	(112.2	)	$	(115.6	)
	Proceeds from the disposition of assets				2.7			8.0
	Cost of acquisitions, net of cash acquired				(781.8	)		(61.6	)
	Net cash used in investing activities			$	(891.3	)	$	(169.2	)
	Financing activities
	Increase in debt, net			$	595.1		$	650.4
	Proceeds from the exercise of stock options				5.0			0.4
	Treasury stock purchases				(100.0	)		(505.0	)
	Dividends to stockholders				(58.6	)		(73.6	)
	Other items, net				(13.7	)		(45.1	)
	Net cash provided by financing activities			$	427.8		$	27.1
	Effect of foreign exchange rate changes on cash			$	(2.1	)	$	(11.3	)
	Net increase (decrease) in cash and cash equivalents			$	38.0		$	(111.5	)
	Cash, cash equivalents and restricted cash* at beginning of period				648.3			476.1
	Cash, cash equivalents and restricted cash* at end of period			$	686.3		$	364.6
	FREE CASH FLOW			Twenty-Six Weeks Ended			Six Months Ended			2023 Full Year
				July 1, 2023			June 30, 2022			Estimate
	Cash flow from operations (GAAP)			$	503.6		$	41.9		$	830.0 - 880.0
	Less:
	Capital expenditures				112.2			115.6			250.0 - 300.0
	Free cash flow**			$	391.4		$	(73.7	)	$	575.0
	*Restricted cash of $2.3 million and $2.3 million is included in Other current assets and Other assets, respectively, as of July 1, 2023. Restricted cash of $1.2 million and $2.8 million is included in Other current assets and Other assets, respectively, as of June 30, 2022. Note that our net decrease in cash and cash equivalents for the six months ended June 30, 2022 represents the combined cash flows of both our continuing and discontinued operations.
	** Free cash flow is cash flow from operations calculated in accordance with U.S. generally accepted accounting principles ("GAAP") less capital expenditures. Free cash flow does not include adjustments for certain non-discretionary cash flows such as mandatory debt repayments. Free cash flow is a measure not derived in accordance with GAAP. Management believes that free cash flow provides investors with helpful supplemental information about the Company's ability to fund internal growth, make acquisitions, repay debt and related interest, pay dividends and repurchase common stock. This measure may be inconsistent with similar measures presented by other companies.
	The Yale/August and Emtek/Schaub acquisition net sales, operating income and cash flows from the date of acquisition to July 1, 2023 were not material to the Company.

	FORTUNE BRANDS INNOVATIONS, INC.
	CASH FLOW FROM OPERATIONS (GAAP) TO FREE CASH FLOW
	(In millions)
	(Unaudited)
			Thirteen Weeks Ended
			July 1, 2023
	Cash flow from operations (GAAP)		$	427.5
	Less:
	Capital expenditures			69.6
	Free cash flow**		$	357.9
	** Free cash flow is cash flow from operations calculated in accordance with U.S. generally accepted accounting principles ("GAAP") less capital expenditures. Free cash flow does not include adjustments for certain non-discretionary cash flows such as mandatory debt repayments. Free cash flow is a measure not derived in accordance with GAAP. Management believes that free cash flow provides investors with helpful supplemental information about the Company's ability to fund internal growth, make acquisitions, repay debt and related interest, pay dividends and repurchase common stock. This measure may be inconsistent with similar measures presented by other companies.
	The Yale/August and Emtek/Schaub acquisition net sales, operating income and cash flows from the date of acquisition to July 1, 2023 were not material to the Company.

FORTUNE BRANDS INNOVATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (GAAP)
(In millions, except per share amounts)
(Unaudited)
		Thirteen Weeks Ended			Three Months Ended						Twenty-Six Weeks Ended			Six Months Ended
		July 1, 2023			June 30, 2022			% Change			July 1, 2023			June 30, 2022			% Change
	Net sales	$	1,163.7		$	1,255.4		(7	)		$	2,203.7		$	2,395.6		(8	)
	Cost of products sold		695.6			742.0		(6	)			1,327.2			1,413.8		(6	)
	Selling, general
	and administrative expenses		280.7			281.3		-				541.7			557.7		(3	)
	Amortization of intangible assets		12.6			11.6		9				25.2			23.2		9
	Restructuring charges		22.2			1.0		100				25.2			1.6		100
	Operating income		152.6			219.5		(30	)			284.4			399.3		(29	)
	Interest expense		27.7			30.5		(9	)			54.6			52.3		4
	Other (income)/expense, net		(5.2	)		(0.2	)	100				(11.6	)		(2.4	)	383
	Income from continuing operations before income taxes		130.1			189.2		(31	)			241.4			349.4		(31	)
	Income tax		28.0			44.9		(38	)			53.7			78.9		(32	)
	Income from continuing operations, net of tax	$	102.1		$	144.3		(29	)		$	187.7		$	270.5		(31	)
	(Loss) income from discontinued operations, net of tax		-			47.7		(100	)			(1.0	)		102.4		(101	)
	Net income	$	102.1		$	192.0		(47	)		$	186.7		$	372.9		(50	)
	Net income attributable to Fortune Brands	$	102.1		$	192.0		(47	)		$	186.7		$	372.9		(50	)
	Diluted earnings per common share
	Continuing operations	$	0.80		$	1.10		(27	)		$	1.47		$	2.03		(28	)
	Discontinued operations	$	-		$	0.36		(100	)		$	(0.01	)	$	0.77		(101	)
	Diluted EPS attributable to Fortune Brands	$	0.80		$	1.46		(45	)		$	1.46		$	2.80		(48	)
	Diluted average number of shares outstanding		127.5			131.2		(3	)			128.0			133.0		(4	)

FORTUNE BRANDS INNOVATIONS, INC.
(In millions)
(Unaudited)
	RECONCILIATIONS OF INCOME FROM CONTINUING OPERATIONS, NET OF TAX TO EBITDA BEFORE CHARGES/GAINS
		Thirteen Weeks Ended			Three Months Ended						Twenty-Six Weeks Ended		Six Months Ended
		July 1, 2023			June 30, 2022		% Change				July 1, 2023		June 30, 2022			% Change
	Income from continuing operations, net of tax	$	102.1		$	144.3		(29	)		$	187.7	$	270.5		(31	)
	Depreciation *	$	19.5		$	20.1		(3	)		$	38.7	$	40.1		(3	)
	Amortization of intangible assets		12.6			11.6		9				25.2		23.2		9
	Restructuring charges		22.2			1.0		100				25.2		1.6		100
	Other charges/(gains)		6.0			0.2		100				6.2		(4.6	)	(235	)
	ASSA transaction expenses (d)		16.4			-		NM				17.4		-		NM
	Solar compensation (e)		0.6			0.6		-				1.3		1.0		30
	Interest expense		27.7			30.5		(9	)			54.6		52.3		4
	Income taxes		28.0			44.9		(38	)			53.7		78.9		(32	)
	EBITDA before charges/gains (c)	$	235.1		$	253.2		(7	)		$	410.0	$	463.0		(11	)
	* Depreciation excludes accelerated depreciation expense of $2.1 million for the thirteen weeks ended July 1, 2023, and $2.2 million for the twenty-six weeks ended July 1, 2023. Accelerated depreciation is included in restructuring and other charges/gains.
	CALCULATION OF NET DEBT-TO-EBITDA BEFORE CHARGES/GAINS RATIO
	As of July 1, 2023
	Short-term debt **						$	599.8
	Long-term debt **							2,668.5
	Total debt							3,268.3
	Less:
	Cash and cash equivalents **							681.7
	Net debt (1)						$	2,586.6
	For the twelve months ended July 1, 2023
	EBITDA before charges/gains (2) (c)						$	898.5
	Net debt-to-EBITDA before charges/gains ratio (1/2)							2.9
	** Amounts are per the Unaudited Condensed Consolidated Balance Sheet as of July 1, 2023.
		Six Months ended			Twenty-Six Weeks Ended		Twelve Months Ended
		December 31, 2022			July 1, 2023		July 1, 2023
	Income from continuing operations, net of tax	$	269.5		$	187.7	$	457.2
	Depreciation***	$	42.7		$	38.7	$	81.4
	Amortization of intangible assets		25.1			25.2		50.3
	Restructuring charges		30.8			25.2		56.0
	Other charges/(gains)		2.2			6.2		8.4
	ASSA transaction expenses (d)		3.4			17.4		20.8
	Solar compensation (e)		1.1			1.3		2.4
	Interest expense		66.8			54.6		121.4
	Defined benefit plan actuarial gains		(1.3	)		-		(1.3	)
	Income taxes		48.2			53.7		101.9
	EBITDA before charges/gains (c)	$	488.5		$	410.0	$	898.5
	*** Depreciation excludes accelerated depreciation expense of $2.2 million for the twenty-six weeks ended July 1, 2023, and $0.1 million for the six months ended December 31, 2022. Accelerated depreciation is included in restructuring and other charges/gains.
	NM - Not Meaningful
	(c) (d) (e) For definitions of Non-GAAP measures, see Definitions of Terms page

RECONCILIATION OF DILUTED EPS FROM CONTINUING OPERATIONS BEFORE CHARGES/GAINS

For the thirteen weeks ended July 1, 2023, the diluted EPS before charges/gains is calculated as income from continuing operations on a diluted per-share basis, excluding $22.2 million ($16.9 million after tax or $0.13 per diluted share) of restructuring charges, $6.0 million ($4.6 million after tax or $0.04 per diluted share) of other charges/gains, $16.4 million ($12.6 million after tax or $0.10 per diluted share) of expenses directly related to our ASSA transaction and $0.6 million ($0.5 million after tax) related to the compensation agreement with the former owner of Solar.

For the twenty-six weeks ended July 1, 2023, the diluted EPS before charges/gains is calculated as income from continuing operations on a diluted per-share basis, excluding $25.2 million ($19.2 million after tax or $0.15 per diluted share) of restructuring charges, $6.2 million ($4.6 million after tax or $0.04 per diluted share) of other charges/gains, $17.4 million ($13.4 million after tax or $0.10 per diluted share) of expenses directly related to our ASSA transaction and $1.3 million ($1.0 million after tax or $0.01 per diluted share) related to the compensation agreement with the former owner of Solar.

For the three months ended June 30, 2022, the diluted EPS before charges/gains is calculated as income from continuing operations on a diluted per-share basis, excluding $1.0 million ($0.7 million after tax or $0.01 per diluted share) of restructuring charges, $0.2 million of other charges/gains and $0.6 million ($0.5 million after tax) related to the compensation agreement with the former owner of Solar.

For the six months ended June 30, 2022, the diluted EPS before charges/gains is calculated as income from continuing operations on a diluted per-share basis, excluding $1.6 million ($1.2 million after tax or $0.01 per diluted share) of restructuring charges, ($4.6) million (($4.8) million after tax or ($0.03) per diluted share) of other charges/gains and $1.0 million ($0.8 million after tax or $0.01 per diluted share) related to the compensation agreement with the former owner of Solar.

Thirteen Weeks Ended

Three Months Ended

Twenty-Six Weeks Ended

Six Months Ended

July 1, 2023

June 30, 2022

% Change

July 1, 2023

June 30, 2022

% Change

Earnings per common share (EPS) - Diluted

Diluted EPS from continuing operations (GAAP)

$

0.80

$

1.10

(27

)

$

1.47

$

2.03

(28