Fortune Brands Innovations (NYSE:FBIN) executives used the company’s fourth-quarter 2025 earnings call to outline the impact of a softer-than-expected market backdrop, review results across its segments, and frame a 2026 outlook that assumes continued uncertainty and no near-term demand inflection. The company also discussed a planned CEO transition, with CEO Nick Fink set to depart and board member Amit Banati slated to become chief executive in May.
Leadership transition and “profitability reset” focus
Board Chair Susan Kilsby said the company has appointed Amit Banati as CEO effective in May, noting he has served on the board for nearly six years and most recently chaired the Audit Committee. Kilsby said she will manage the responsibilities of the CEO’s office during the interim period between Fink’s departure and Banati’s start. In response to analyst questions, Kilsby said the board had been evaluating succession “on an ongoing basis” and viewed Banati as a proven leader with deep commercial and financial experience in consumer-branded products and business transformation. Management said there were no major personnel or portfolio changes planned at this time.
2025 results: sales down, margin pressure amid tariffs and volume declines
CFO Jon Baksht reported 2025 sales of $4.5 billion, down 3% year over year, with sales down 1% excluding China. He attributed the decline primarily to lower volumes across segments, partially offset by higher price realization, including pricing actions tied to tariff-related costs.
Operating income for the full year was $699 million, down 10%, and operating margin was 15.7%, down 120 basis points, which Baksht said was largely due to lower sales volume and higher manufacturing costs, including tariffs. He said tariffs were mitigated through productivity and pricing actions, but still pressured margins by roughly 20 basis points. Earnings per share were $3.61, down 12%.
Baksht also highlighted what he described as reduced exposure to China: China accounted for less than 5% of total revenue in 2025, down from about 10% in 2021. In China specifically, the company continues to see “double-digit declines,” and management said it is taking action to significantly reduce costs and reposition the business in that market.
Fourth-quarter performance: softer market in Water and Outdoors, better momentum in Security
For the fourth quarter, Fortune Brands posted sales of $1.1 billion, down 2%, with sales flat excluding China. Baksht said the quarter reflected market softness that was “more than expected” in Water and Outdoors, driven by wholesalers responding to weaker construction data and avoiding inventory builds ahead of the spring season. Consolidated operating income was $158 million, down 13%, and operating margin was 14.7%, down 170 basis points. Adjusted EPS was $0.86, down 12%.
- Water: Q4 sales were $617 million, down 4%. House of Rohl delivered low-double-digit net sales growth, and Flo generated double-digit growth. Moen was down low single digits, with management citing cautious wholesale inventory behavior. The company reported builder share gains, with 16 net builders added in the quarter and 67 net builders added for the year. Water operating income was $141 million, down 8%, and margin was 22.8%, down 90 basis points, reflecting lower volume and higher sales and marketing investment in e-commerce.
- Outdoors: Q4 sales were $295 million, down 3%. Baksht said Larson benefited from an in-aisle reset and Therma-Tru was impacted by softer wholesale demand and reduced inventory build late in the quarter. Fiberon results were “more challenging,” and management disclosed that Fiberon lost business with a key retailer since the end of 2025. Outdoors operating income was $42 million, down 24%, with margin down 400 basis points to 14.2%, driven by lower volume, product mix, and higher manufacturing costs.
- Security: Q4 sales were $166 million, up 6%, supported by slightly higher volume and pricing tied to tariffs, along with brand investment and improved execution. Operating income rose 52% to $22 million, and operating margin improved 410 basis points to 13.4%. Baksht noted the prior-year quarter was negatively impacted by a third-party software outage that affected a distribution center.
Tariffs, pricing, and market share commentary
Management emphasized that the company mitigated the dollar impact of tariffs in 2025 through supply chain actions and “targeted and disciplined pricing,” with most incremental tariff pricing implemented early in the year. Fink said this helped the company maintain pricing integrity and customer relationships, and positioned the portfolio to return to more normalized pricing in 2026.
Fink and Baksht both pointed to improved share performance. Based on point-of-sale data, management estimated that excluding China, Fortune Brands outperformed the market for its products by about 130 basis points for the full year and about 300 basis points in the fourth quarter. Baksht also said that excluding China, the company’s point of sale outperformed the market across all segments in the fourth quarter and delivered point-of-sale growth.
2026 outlook: flat to 2% sales growth, margin down amid tariffs and higher SG&A
For 2026, Fortune Brands guided to net sales growth of approximately flat to 2% and operating margin of about 14.5% to 15.5%. EPS is expected to be approximately $3.35 to $3.65. Baksht said the outlook assumes global market declines of low single digits, including low-single-digit declines in the U.S. market for the company’s products, mid-single-digit declines in U.S. single-family new construction, and low-double-digit contraction in China.
Management said margin expectations reflect share gains and pricing discipline, offset by higher manufacturing costs driven by tariffs and inflation, including commodities, partially offset by productivity initiatives. Baksht said the company assumes tariffs remain at current rates through 2026. On the call, he said mitigated tariff impacts in 2026 are expected to be about $151 million, an increase of just over $100 million year over year, and he noted that tariff costs and under-absorption from 2025 will flow into the income statement in the first half of 2026.
The 2026 guide also assumes a more normalized level of incentive compensation, additional systems investments, and incremental brand spending—together totaling more than $80 million of incremental SG&A versus 2025. The company expects free cash flow of about $400 million to $450 million in 2026, with capital expenditures of roughly $110 million to $140 million and cash restructuring costs of about $25 million.
Baksht also flagged an accounting reclassification planned for 2026: more than $100 million will move from SG&A to cost of goods sold, largely related to customer freight. He said the change is only a reclassification and will not affect company or segment margins.
About Fortune Brands Innovations (NYSE:FBIN)
Fortune Brands Innovations (NYSE: FBIN), formerly known as Fortune Brands Home & Security, is a global leader in water innovations, specializing in the design, manufacturing and marketing of plumbing fixtures, fittings and related products. Headquartered in Deerfield, Illinois, the company leverages two iconic brands—Moen and House of Rohl—to deliver high-quality kitchen and bathroom solutions across residential and commercial markets. With a focus on performance, reliability and aesthetic design, FBIN’s portfolio spans faucets, showerheads, accessories and water filtration systems.
The company’s products are sold through a diversified network of retail partners, wholesale distributors and online channels across North America, Europe, Asia-Pacific and Latin America.
