Fortune Brands Innovations, Inc. · NYSE:FBIN
Fortune Brands Innovations — Investor Presentation (May 2023)
28 slides from Fortune Brands Innovations's investor presentation, May 2023
Slide 1: A Supercharged Growth Opportunity
A SUPERCHARGED GROWTH OPPORTUNITY I N V E ST OR P R E S E NTATI ON May 2023 All references to operating margin and EBITDA margin are on a before charges/gains basis
Slide 2: Forward Looking Statements
FORWARD LOOKING STATEMENTS This presentation contains certain “forward-looking statements” made within the meaning of the Private Securities Litigation Reform Act of 1995. Forward looking statements include all statements that are not historical statements of fact and those regarding our intent, bel
Slide 3: Why Invest in Fortune Brands Innovations
WHY INVEST IN FORTUNE BRANDS INNOVATIONS Leading Positions in Proven Growth Newly Aligned Growth Categories Engine with Defined Organization Driving with Long-term Path to Long-Term Significant Growth Secular Tailwinds Value Creation and Efficiencies Successful Track Strong Financial Meaningful and
Slide 4: Fortune Brands Innovations: A Brand, Innovation and Channel Leader
FORTUNE BRANDS INNOVATIONS: A BRAND, INNOVATION AND CHANNEL LEADER Operates in high growth categories: Powered by strong secular tailwinds WATER OUTDOORS Underpinned by leading brands SECURITY And driven by our Fortune Brands Advantage Capabilities I N V E S T O R P R E S E N T A T I O N 4
Slide 5: Underlying Fundamentals Support Long-Term R&R Growth
U.S. Remodeling Spend Has UNDERLYING Grown at a 5% CAGR Since 1996 (3) FUNDAMENTALS SUPPORT LONG- $450 TERM R&R GROWTH $400 $350 R&R FOCUSED $300 ~67% of FBIN’s North America mix is R&R $250 $200 RECORD HIGH HOME EQUITY $300,000 $150 average equity per homeowner (1) $100 AGING HOUSING STOCK $50 ~40
Slide 6: Long-Term New Construction Outlook Remains Favorable
LONG-TERM NEW CONSTRUCTION OUTLOOK REMAINS FAVORABLE HOUSEHOLD FORMATION 12 million households formed 2018-2028 (1) HOUSING UNDERBUILD 3 million units underbuilt since 2002 (2) PENT-UP DEMAND 3 million more young adults living at home vs. pre-2008 (3) (1) Harvard Joint Center for Housing Studies (2)
Slide 7: Driving Resilient, Accelerated Growth and Margin Progression Through the Cycle
DRIVING RESILIENT, ACCELERATED GROWTH AND MARGIN PROGRESSION THROUGH THE CYCLE ORGANIC TARGETS Net Sales Operating Margin (1) EBITDA Margin (1) MARKET: COMPANY: COMPANY: 4% - 6% CAGR 20% - 22% 23% - 25% COMPANY: (+300 bps - +500 bps) (+300 bps - +500 bps) 6% - 9% CAGR (≥+200 bps vs. market) Water: 7
Slide 8: Fortune Brands Innovations Is a Proven Growth Company
FORTUNE BRANDS INNOVATIONS IS A PROVEN GROWTH COMPANY Net Sales Net Sales Net Sales 10-year CAGR 5-year CAGR 3-year CAGR 2012-2022 2017-2022 2019-2022 Reported (i.e., including acquisitions) +10% +11% +12% Organic (i.e., excluding acquisitions) +7% +7% +7% ACQUISITIONS HAVE CONTRIBUTED +300 TO +500
Slide 9: Organic Growth Drivers
ORGANIC GROWTH DRIVERS Brands Innovation Channel Leading brands in categories Investing in and organized to Omni-channel company, leveraging where brands matter accelerate innovation across the business relationships and insights across in our products and processes wholesale dealers, leading home c
Slide 10: Disciplined Acquisition Strategy Augmenting Accelerated Growth
DISCIPLINED ACQUISITION STRATEGY AUGMENTING ACCELERATED GROWTH Proven track record of value- Go Forward M&A Priorities creating acquisitions in high- growth categories Profitable & Supercharged Innovative Brands • 11 major acquisitions since 2011 End-Markets • >$2 billion deployed into M&A since 201
Slide 11: Evolution of Fortune Brands Innovations
EVOLUTION OF FORTUNE BRANDS INNOVATIONS THEN (2011 - DECEMBER 2022) NOW (DECEMBER 2022+) FORTUNE BRANDS HOME & SECURITY, INC. FORTUNE BRANDS INNOVATIONS, INC. NYSE: FBHS NYSE: FBIN • Capture the housing recovery with a broad portfolio of • Focused on high-growth categories in housing and adjacent ma
Slide 12: Newly Aligned Structure Will Drive Growth, Efficiency & Results
NEWLY ALIGNED STRUCTURE WILL DRIVE GROWTH, EFFICIENCY & RESULTS CEO Matrix Organization Matrix Organization Commercial Strategy & Growth Finance Digital HR Supply Chain Legal Business House Moen NA WINN Asia Outdoors Security Manufacturing Sourcing of Rohl Global Supply Chain Brand Development & Dir
Slide 13: Fortune Brands Advantage: Our Powerful Business System
FORTUNE BRANDS ADVANTAGE: OUR POWERFUL BUSINESS SYSTEM Category Business Global Supply Chain Digital Management Simplification Excellence Transformation ALIGNED STRUCTURE NOW ENABLES US TO UNLOCK THE FULL POTENTIAL OF THE FORTUNE BRANDS ADVANTAGE ACROSS THE COMPANY I N V E S T O R P R E S E N T A T
Slide 14: We Operate in Deep, Opportunity-Rich, Growing Categories
WE OPERATE IN DEEP, OPPORTUNITY-RICH, GROWING CATEGORIES H I G H - GROWTH C A T EG ORIE S 4% - 6% M A R KE T C A GR Water Outdoors Security $20B $25B $30B N.A. Residential TAM N.A. Residential TAM N.A Residential TAM $15B $15B $45B N.A. Commercial TAM N.A. Commercial TAM N.A. Commercial TAM S U P E
Slide 15: ESG Accelerants
ESG ACCELERANTS W E LE V E R AG E O U R LE AD I N G P O S I T IO NS, AD V AN T AGE D B U S I NE SS MO D E L AN D T ALE N T ED T E AM T O D E LI V E R I N S P I R ING P R O D U CTS save water I utilize recycled materials I conserve energy I protect people I N V E S T O R PR E S E N TAT IO N 15
Slide 16: Growth Category: Water
GROWTH CATEGORY: WATER 54% of consumers start their online faucet search with a brand name GROWTH DRIVERS INCLUDE 2019-2022 GROWTH • #1 consumer faucet brand: Moen • #1 luxury kitchen and bath fixtures among +8% CAGR designers: House of Rohl Net Sales • Leading operating margins +270 bps • Award-win
Slide 17: Identified Pathway to Accelerated Future Growth: Water
IDENTIFIED PATHWAY TO ACCELERATED FUTURE GROWTH Water Tailwinds Organic Water Targets C O N N E CT E D P R O DU C TS S A F E T Y & W E L L NES S S U S T AI N A B I L I T Y More water damage claims 7% - 9% per year than Net Sales fire and theft combined 25%+ Operating Margin1 Smart Point-of-Use Damag
Slide 18: Growth Category: Outdoors
GROWTH CATEGORY: OUTDOORS GROWTH DRIVERS INCLUDE 2019-2022 GROWTH • #1 fiberglass entry doors among builders: Therma-Tru +25% CAGR • #1 storm doors: Larson Net Sales • Advanced material science expertise; pioneered fiberglass entry doors; expanding composite +60 bps portfolio from Fiberon Operating
Slide 19: Identified Pathway to Accelerated Future Growth: Outdoors
IDENTIFIED PATHWAY TO ACCELERATED FUTURE GROWTH Outdoors Tailwinds Organic Outdoors Targets OUTDOOR LIVING M A T E R I A L C O N V E R SI ON S U S TAI NABI LI TY Exterior Door 50% 50% 7% - 9% Market Fiberglass Conversion Opportunity Net Sales (other materials) Volume (2) 18% - 20% Fiberglass vs. Woo
Slide 20: Growth Category: Security
GROWTH CATEGORY: SECURITY 44% of consumers start their online padlock search with a brand name GROWTH DRIVERS INCLUDE 2019-2022 GROWTH • #1 mechanical padlocks: Master Lock • #1 fire safes: SentrySafe +3% CAGR Net Sales • Widely recognized brand names in locks, safety, and security devices +260 bps
Slide 21: Identified Pathway to Accelerated Future Growth: Security
IDENTIFIED PATHWAY TO ACCELERATED FUTURE GROWTH Security Tailwinds Organic Security Targets C O N N E CT E D P R O DU C TS S A F E T Y & W E L L NES S Consumer 3% - 6% Concerns <10% Net Sales consumer smart/ connected lock penetration 18% - 20% today1 Operating Margin1 20% - 22% EBITDA Margin1 Comme
Slide 22: Key Drivers of +300-500 bps of Margin Expansion
KEY DRIVERS OF +300-500 BPS OF MARGIN EXPANSION INCLUSIVE OF SG&A PRODUCTIVITY GAINS TOTALING $50 TO $75 MILLION NET OF REINVESTMENT ~1% 1% - 1.5% 1% - 1.5% 1% - 2% • Continuous SG&A • Site productivity consolidations improvement • Continuous • Acquisition • Benefits from COGS integrations aligned s
Slide 23: Long-Term Capital Allocation Priorities
LONG-TERM CAPITAL ALLOCATION PRIORITIES • Brand, Innovation, and Channel investments ORGANIC • Investments in digital factory and connected products GROWTH • High-returning CapEx investments • Acute focus on supercharged categories TARGETED • Create value via channel and supply chain synergies M&A •
Slide 24: Appendix
APPENDIX I N V E S T O R P R E S E N T A T I O N 24
Slide 25: Presentation Reconciliations: Net Sales CAGR
PRESENTATION RECONCILIATIONS FORTUNE BRANDS INNOVATIONS ($ In billions) (Unaudi t ed) PRESENTATION RECONCILIATIONS FORTUNE BRANDS INNOVATIONS RECONCILIATION OF TOTAL COMPANY NET SALES (GAAP) COMPOUND ANNUAL GROWTH RATE (CAGR) TO TOTAL COMPANY NET SALES EXCLUDING ACQUISITIONS CAGR (Unaudi t ed) Compo
Slide 26: GAAP Operating Margin to Before Charges/Gains Operating Margin
PRESENTATION RECONCILIATIONS FORTUNE BRANDS INNOVATIONS GAAP OPERATING MARGIN TO BEFORE CHARGES/GAINS OPERATING MARGIN (Unaudi t ed) Operating margin is calculated as operating income derived in accordance with GAAP, divided by GAAP net sales. Before ch arges/gains operating margin is operating inco
Slide 27: Reconciliations of Operating Income, EBITDA and EBITDA Margin
PRESENTATION RECONCILIATIONS FORTUNE BRANDS INNOVATIONS RECONCILIATIONS OF OPERATING INCOME, OTHER INCOME/EXPENSE, DEPRECIATION, AMORTIZATION GAAP TO BEFORE CHARGES/GAINS, EBITDA AND EBITDA MARGIN ($ In billions) (Unaudi t ed) ** Depreci ation excludes accelerated depreciation expense of ($1.6) mill
Slide 28: Definitions of Terms: Non-GAAP Measures
DEFINITIONS OF TERMS: NON-GAAP MEASURES (a) Operating income before charges/gains is operating income derived in accordance with GAAP, excluding restructuring, other charges/gains and Solar compensation. Operating income before charges/gains is a measure not derived in accordance with GAAP. Manageme
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