Q3 FY2026
Filed Nov 3, 2026Fortune Brands Announces Third Quarter Results, Taking Action to Revitalize the Company's Performance
Q3 net sales declined 3.1%, GAAP operating income declined 52.0%, and GAAP EPS declined 28.8%. EPS before charges / gains increased 4.6%, but the company reduced its full-year net sales and EPS before charges / gains outlook while undertaking portfolio optimization and alignment actions.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Q3 2026 total net salesGAAP | $1.11B | – | (3.1%) |
| Thirty-nine weeks ended September 26, 2026 total net salesGAAP | $3.28B | – | (3.2%) |
| Q3 2026 operating incomeGAAP | $60.4M | – | (52.0%) |
| Q3 2026 operating marginGAAP | 5.4% | – | (560) bps |
| Q3 2026 operating income before charges/(gains)non-GAAP | $155.5M | – | (24.6%) |
| Q3 2026 operating margin before charges/(gains)non-GAAP | 14.0% | – | (390) bps |
| Thirty-nine weeks ended September 26, 2026 operating incomeGAAP | $111.7M | – | (71.7%) |
| Thirty-nine weeks ended September 26, 2026 operating income before charges/(gains)non-GAAP | $503.5M | – | (6.9%) |
| Q3 2026 net incomeGAAP | $49.9M | – | (29.5%) |
| Thirty-nine weeks ended September 26, 2026 net incomeGAAP | $51.6 | – | (76.8%) |
| Q3 2026 diluted EPSGAAP | $0.42 | – | (28.8%) |
| Q3 2026 diluted EPS before charges/(gains)non-GAAP | $1.14 | – | 4.6% |
| Thirty-nine weeks ended September 26, 2026 diluted EPSGAAP | $0.43 | – | (76.4%) |
| Thirty-nine weeks ended September 26, 2026 diluted EPS before charges/(gains)non-GAAP | $3.01 | – | 9.5% |
| Q3 2026 cost of products soldGAAP | $607.7M | – | (3.5%) |
| Q3 2026 selling, general and administrative expensesGAAP | $339.5M | – | 8.4% |
| Q3 2026 amortization of intangible assetsGAAP | $15.9M | – | (18.0%) |
| Q3 2026 asset impairment chargesGAAP | $73.8M | – | 47.3% |
| Q3 2026 restructuring chargesGAAP | $16.4M | – | 51.9% |
| Q3 2026 interest expenseGAAP | $24.4M | – | (14.7%) |
| Q3 2026 income tax (benefit) expenseGAAP | ($9.4) | – | (139.3%) |
| Q3 2026 cash flow from operationsGAAP | $347M | – | – |
| Q3 2026 free cash flownon-GAAP | $331.1M | – | – |
| Thirty-nine weeks ended September 26, 2026 cash flow from operationsGAAP | $430.6M | – | – |
| Thirty-nine weeks ended September 26, 2026 free cash flownon-GAAP | $370.9M | – | – |
| Q3 2026 EBITDA before charges/(gains)non-GAAP | $196.5M | – | (20.6%) |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Water InnovationsWater sales excluding China decreased 4.3%. | $584.5M | – | (5.5%) |
| OutdoorsOutdoors sales excluding Fiberon increased 3.4%. | $347.4M | – | 0.8% |
| SecurityQ3 operating margin was 21.1%, an increase of 620 bps, and operating margin before charges/gains was 21.3%, an increase of 350 bps. | $181.8M | – | (2.4%) |
Amounts quoted below without a unit are in millions, as in the filing’s tables. Per-share figures are as printed.
Q4 and full-year 2026 outlook
- RevenueFourth quarter and full year net sales are expected to be in the range of $925 million to $995 million and $4,205 million to $4,275 million, respectively.
- NoteFourth quarter and full year EPS before charges / gains is expected to be in the range of $0.19 to $0.29 and $3.20 to $3.30, respectively.
- NoteFull year operating cash flow is expected to be in the range of $480 million to $500 million.
- NoteFull year free cash flow is expected to be in the range of $380 million to $410 million.
- NoteFull year capital expenditures are estimated at $90 to $100.
- NotePreviously-announced estimated additional non-cash impairment charge for the Fiberon asset group of approximately $175 million to $205 million.
Capital returns
- Repurchasing $40 million of its shares in the quarter.
- Thirty-nine weeks ended September 26, 2026 treasury stock purchases were $(84.4).
- Thirty-nine weeks ended September 26, 2026 dividends to stockholders were $(93.2).
What drove it
- Service levels improved 10 percentage points in the third quarter, with fill rates in the high-90% range entering the fourth quarter.
- The company expects to have more than 80% of its salaried workforce directly supporting a specific business by year end, up from roughly 40% at the start of the year.
- The company remains on track for $70 million of annualized SG&A savings by the first quarter of 2027.
- The company entered into a purchase agreement to sell Fiberon.
- The company is exiting its commercial operations in China, which it expects to be completed by the third quarter of 2027.
- The company is rationalizing the EMEA operating footprint of a business in its Water segment, which it expects to be completed by the fourth quarter of 2027.
- The businesses involved in portfolio optimization actions generate an annualized operating loss of approximately $50 million to $55 million on revenue of $320 million to $330 million.
- Q3 EPS before charges / gains included a $0.28 net tax benefit and $0.14 of net tariff refunds.
Concerns
- Q3 total net sales decreased 3.1% and sales excluding the impact of China decreased 2.4%.
- Water Innovations sales decreased 5.5%, and Water operating margin decreased 2,130 bps to 2.3%.
- The company expects incrementally lower fourth-quarter revenue from lower sales at businesses involved in portfolio optimization actions, incremental softening in single-family new construction, and a reduction in channel inventory.
- The company sees a softer environment for single-family new construction and expects this part of the market to be down mid to high single digits, with R&R down low single digits for the year.
- Customers are signaling greater caution and the company is taking a more conservative approach to channel inventory given the uncertain macroeconomic environment.
- Asset impairment charges were $73.8 in Q3 and $303.1 for the thirty-nine weeks ended September 26, 2026.
- The Board approved a plan to exit the Moen commercial business serving domestic markets in Asia, producing a discrete tax impact of China commercial exit of $9.2 million, or $0.08 per diluted share.
What to watch
- Execution of the multi-year turnaround plan and progress in service levels and fill rates.
- Delivery of more than $70 million of annualized SG&A savings by the first quarter of 2027.
- Completion of the Fiberon sale and the expected additional non-cash impairment charge for the Fiberon asset group of approximately $175 million to $205 million.
- Completion of the China commercial exit by the third quarter of 2027 and EMEA operating-footprint rationalization by the fourth quarter of 2027.
- Fourth-quarter revenue effects from portfolio optimization actions, single-family new-construction softness, and channel-inventory reduction.
- The impact of net tax benefits and net tariff refunds on EPS before charges / gains.
Balance sheet and cash flow
- Liquidity of approximately $1.3 billion.
- Net debt was $2.1 billion.
- Net debt was $2,065.7.
- Net debt to EBITDA before charges / gains was 2.5x.
- Cash was $231 million.
- Cash and cash equivalents were $230.9.
- Amount available under revolving credit facility was $1.1 billion.
- Long-term debt was $2,296.6.
- Total assets were $6,134.3.
- Cash flow from operations for the thirty-nine weeks ended September 26, 2026 was $430.6.
- Capital expenditures for the thirty-nine weeks ended September 26, 2026 were $59.7.
- Free cash flow for the thirty-nine weeks ended September 26, 2026 was $370.9.
Analysis
Fortune Brands reported a weaker top-line and GAAP profit quarter. Q3 2026 net sales were $1,113.7, down 3.1% from $1,149.2, while sales excluding the impact of China declined 2.4%. Water Innovations was the principal revenue drag, with sales down 5.5% to $584.5. Outdoors grew 0.8% to $347.4 and grew 3.4% excluding Fiberon, while Security sales declined 2.4% to $181.8. For the thirty-nine weeks ended September 26, 2026, total net sales declined 3.2% to $3,278.9.
Management, verbatim
Third quarter results were in line with our outlook excluding the tax and tariff benefits, but not where they need to be. Our biggest challenge has been our own execution, and we are taking aggressive steps to drive improvement.
Jesse Singh, Chief Executive Officer
We remain on track for $70 million of annualized SG&A savings by the first quarter of 2027.
Jesse Singh, Chief Executive Officer
While these actions will weigh on our near-term results, they position us to enter 2027 on stronger footing.
Pete Clifford, Chief Financial Officer
Not in the filing
stated, not guessed- Gross profit and gross margin for Q3 2026 and the thirty-nine weeks ended September 26, 2026 were not reported.
- Prior-year Q3 operating cash flow and free cash flow were not reported.
- Q3 2026 capital expenditures were reported as 15.9 without a dollar sign in the reconciliation table.
- Prior-quarter comparisons for reported operating, earnings, cash flow, segment revenue, and margin metrics were not reported.
- Forward guidance for gross margin, operating expenses, and tax rate was not reported.
- A separately provided previous outlook section was not supplied; therefore, no versus-prior-guidance comparisons were made.
Written by an AI language model from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure is checked against the filing text, and a metric the filing does not print, or whose value, prior period and change do not add up, is dropped from the metrics. The model can still misread a table, in the metrics or in the text, so check a number in the filing before you rely on it. Consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.