Fortune Brands Innovations, Inc. · NYSE:FBIN
Fortune Brands Innovations — Fortune Brands Home & Security — JP Morgan Home Building and Building Products Conference 2012
23 slides from Fortune Brands Innovations's conference presentation, May 16, 2012
Slide 1: Advantage: Fortune Brands Home & Security
Advantage: Fortune Brands Home & Security JP Morgan Home Building and Building Products Conference May 16, 2012 Exhibit 99.1
Slide 2: Disclaimer
2 Fortune Brands Home & Security Disclaimer Please note that the information included in this presentation contains statements relating to future results, which are forward- looking statements. We caution you that these forward-looking statements speak only as of the date hereof, and we have no obli
Slide 3: Solid business model as foundation for performance and share growth
3 Fortune Brands Home & Security Market Recovery Strong Free Cash Flow Effective Capital Deployment Market Recovery Share Gains Attractive Product Categories Consumer Driven Innovation Operational and Management Excellence Demonstrated Ability to Outperform the Market Strong Capital Structure Solid
Slide 4: Foundation to grow market share and leverage housing recovery
4 Fortune Brands Home & Security Attractive Product Categories Consumer Driven Innovation Operational and Management Excellence Demonstrated Ability to Outperform the Market Strong Capital Structure Market Recovery Share Gains Organic Growth Solid Business Model We believe this foundation and the ag
Slide 5: Free cash flow and balance sheet for incremental growth
5 Fortune Brands Home & Security Attractive Product Categories Consumer Driven Innovation Operational and Management Excellence Demonstrated Ability to Outperform the Market Strong Capital Structure Free Cash Flow Leverage Capital Structure Market Recovery Share Gains Incremental Growth Organic Grow
Slide 6: Long-term value creation
6 Fortune Brands Home & Security Long-term Value Creation Attractive Product Categories Consumer Driven Innovation Operational and Management Excellence Demonstrated Ability to Outperform the Market Strong Capital Structure Long-term Value Creation Free Cash Flow Leverage Capital Structure Increment
Slide 7: Brand Leadership Position
Brand Leadership Position Fortune Brands Home & Security 7 Advantage: We have leading brands and businesses in each segment, with differentiated positions across categories and channels. • Primary strength in dealer channel • Fully integrated platform • Poised to leverage scale across multiple brand
Slide 8: 2011 Net Sales by Segment
8 Fortune Brands Home & Security Kitchen & Bath Cabinetry 38% Plumbing & Accessories 29% Advanced Material Windows & Door Systems 16% Security & Storage 17% Sales are balanced across four segments, with Cabinets and Windows & Doors having above average potential to leverage in a recovery while Plumb
Slide 9: Balanced business mix by end market and channel
9 Fortune Brands Home & Security *Source: Company internal estimates for year ended December 31, 2011 Repair & Remodel 47% New Construction 19% Security & Storage 13% 4% Commercial International 17% Wholesale 29% Home Centers 29% Dealer 14% Other Retail 8% International 17% Builder Direct 3% Repair
Slide 10: Consumer driven innovation leads to winning new business
10 Fortune Brands Home & Security Consumer driven innovation has led to consistently winning profitable new business and has driven long-term outperformance to the market. Track Record of Leading New Product Launches across All Business Segments Vented Sidelites New Glass Styles 2012 2011 The Origin
Slide 11: Sales growth has exceeded the market over time
11 Fortune Brands Home & Security 1 Excludes impact of acquisitions and divestitures. ~2% 4% 9% We have demonstrated growth that has exceeded the market over an extended period of time and through multiple cycles. Sales performance reflects both organic growth and acquisitions. includes housing rece
Slide 12: Restructured operating platform supports revenue up to $5B
12 Fortune Brands Home & Security 1 Before charges/gains. We quickly and strategically restructured early in the downturn (2007- 2009), and believe our operating platform is more efficient and scalable to support revenue up to $5B with normal capital spending levels. Substantially improved cost stru
Slide 13: Market Outlook
13 Fortune Brands Home & Security 4% Mid-to-High Teens Mid-Single Digits 1-2% Mid-Single Digits 2% Market Outlook — We have raised our growth expectations for the overall housing market from low-single digits to mid-single digits based on the broad firming that we saw in the quarter. Growth Rate Ass
Slide 14: Capitalize on the recovery and sustain growth beyond it
14 Fortune Brands Home & Security Growth opportunities initially reflect significant organic growth…but we are also focused beyond the recovery, as we look for opportunities to leverage cash and a strong balance sheet to expand into new markets and adjacent categories and return cash to shareholders
Slide 15: Positioned to return to previous levels in recovery
15 Fortune Brands Home & Security 2 Including incremental standalone corporate expenses. 1 Before charges/gains. Fiscal Year Ending December 31 While the housing market slump has significantly reduced sales and profit, we believe the business is positioned to return to previous levels when the housi
Slide 16: Q1 2012 results
16 Fortune Brands Home & Security 2 Before charges/gains. 1 Company internal estimate of growth in the market for our home products. Fiscal Q1 Ending March 31 2012 is off to a solid start as we outperformed a market that was stronger than anticipated. $ millions, except EPS Net Sales $799 $715 12% M
Slide 17: Flexible capital structure through strong balance sheet
17 Fortune Brands Home & Security Capital Structure: (as of 3/31/12) Net Debt/EBITDA (as of 3/31/12) 1.1x Balance Sheet Statistics: (as of 3/31/12) Flexible capital structure through a strong balance sheet and cash flow should result in reduced risk and fuel incremental opportunities. $ millions Ter
Slide 18: 2012 full year outlook
18 Fortune Brands Home & Security 1 Before charges/gains. $0.77 – $0.87 1 High-Single Digit Growth Mid-Single Digit Growth Mid-Single Digit Growth We raised our 2012 full year outlook based on an improved market assumption, and we plan to continue to meaningfully outperform our market. EPS: Net Sale
Slide 19: Potential organic market recovery scenarios
19 Fortune Brands Home & Security 1 Before charges/gains. $3 $4 $5 $300 $550 $800+ flat ~600,000 ~0% mid-recovery ~1,000,000 ~3 – 4% steady state ~1,500,000 ~5 – 6% Longer term, we do not expect organic growth to be dependent on a full market recovery for solid returns and cash flow, although return
Slide 20: Potential cash available to drive shareholder value
20 Fortune Brands Home & Security Free Cash Flow¹ Maintain 1.25x Debt/EBITDA Potential cash available to drive shareholder value $2.0B+ $1.4B $600M+ 1 Free cash flow is cash flow from operations less net capital expenditures plus proceeds from the exercise of stock options. Strong cumulative free ca
Slide 21: Uses of cash flow and acquisition criteria
21 Fortune Brands Home & Security Primary focus on core categories Fit within our market attractiveness criteria Ability to leverage existing capabilities, market positions and structure Good companies to be made great, not turnarounds New home & security categories under two conditions: – Truly dif
Slide 22: Long-term value creation
22 Fortune Brands Home & Security Long-term Value Creation Attractive Product Categories Consumer Driven Innovation Operational and Management Excellence Demonstrated Ability to Outperform the Market Strong Capital Structure Free Cash Flow Leverage Capital Structure Market Recovery Share Gains Solid
Slide 23: Thank You; Reconciliations
Advantage: Fortune Brands Home & Security XXX XXX XXX XXX Thank You Reconciliation of FBHS Net Sales Growth Rate to FBHS Organic Sales Growth Home & Security 1989-2011 Projected CAGR* Net sales growth (GAAP) 9% Net impact of acquisitions/divestitures (5)% Organic sales growth 4% * Compounded annual