Home Consumer Goods CG Stocks Midpoint= Fortune Brands Home & Security Inc (NYSE:FBHS), Flowers Foods,...

CG Stocks Midpoint= Fortune Brands Home & Security Inc (NYSE:FBHS), Flowers Foods, Inc. (NYSE:FLO)


Fortune Brands Home & Security Inc (FBHS) recently declared fourth quarter 2016 results from continuing operations and offered its 2017 annual outlook for sales and earnings per share.

“In the fourth quarter overall sales growth accelerated, led by plumbing, and our teams again delivered strong operating margin growth across all segments,” said Chris Klein, chief executive officer, Fortune Brands. “For the full year 2016, our teams executed well against our strategy for profitable growth and we achieved strong results that met our expectations that raised throughout the year. With this consistently solid execution, we are well-positioned for continued strong performance in 2017 as the housing market continues on its elongated recovery.”

Fourth Quarter 2016

For the fourth quarter of 2016, sales were $1.3 billion, a boost of 6 percent over the fourth quarter of 2015. Earnings per share were $0.67, contrast to $0.54 in the prior-year quarter. EPS before charges/gains were $0.71, contrast to $0.56 the same quarter last year. Operating income was $166.4 million, contrast to $140.3 million in the prior-year quarter. Operating income before charges/gains was $172.8 million, contrast to $147.0 million the same quarter last year, up 18 percent.

“Operating margin before charges/gains for the total company grew by 130 basis points to 13.3 percent, with solid performance across all operating segments and organic operating leverage of 45 percent,” said Klein.

For each segment in the fourth quarter of 2016, contrast to the prior-year quarter:

  • Plumbing sales raised 19 percent. Apart From recent acquisitions, sales raised low double digits driven by a re-invigorated sales and marketing focus under the new Global Plumbing Group structure, and new products. Segment operating margin before charges/gains raised 80 basis points to 20.6 percent.
  • Cabinet sales were down 1 percent mainly because of the negative impact of a calendar shift. Segment operating margin before charges/gains raised 60 basis points to 10.6 percent.
  • Door sales were up 6 percent driven by growth in both the wholesale and retail channels, and operating margin before charges/gains raised 170 basis points to 13.3 percent.
  • Security sales raised 6 percent. Operating margin before charges/gains raised 260 basis points to 15.6 percent.

Full Year 2016

For the full year 2016, sales were $5.0 billion, a boost of 9 percent over 2015. Earnings per share were $2.61 contrast to $1.88 in the prior year, and EPS before charges/gains were $2.75 as contrast to $2.07 last year, a boost of 33 percent.

“In 2016 we continued to execute our strategy of disciplined, profitable growth as we raised earnings per share 33 percent. Our sales grew 9 percent and our operating margin before charges/gains exceeded our plan for the year, rising 140 basis points to 13.2 percent. We also saw early benefits from the recent formation of our Global Plumbing Group, where the strategy is to grow sales faster than the market while maintaining margin. Overall, our teams delivered strong results by remaining focused on growing in the most attractive parts of our markets,” said Klein.

“In addition to growing our earnings, we continued to deploy capital in value-creating ways as we bought back $424 million of our shares, accomplished two plumbing acquisitions, and again raised our quarterly dividend. Our balance sheet remained strong during 2016,” said Lee Wyatt, chief financial officer, Fortune Brands. “As of December 31, 2016, cash was $251 million and debt was $1.4 billion, resulting in net debt to EBITDA of 1.5 times and giving us substantial flexibility to continue to create incremental shareholder value. In Addition To, free cash flow was $531 million.”

Flowers Foods, Inc. (FLO) produces and markets bakery products in the United States. It operates through two segments, Direct-Store-Delivery (DSD) and Warehouse Delivery. The DSD segment produces and markets fresh bakery foods, counting fresh breads, buns, rolls, tortillas, and snack cakes. This segment offers its products under the Natures Own, Wonder, Whitewheat, Cobblestone Bread Company, Tastykake, Home Pride, Merita, Dave’s Killer Bread, Country Kitchen, and Roman Meal brand names, in addition to markets franchised and licensed brands, such as Sunbeam, Bunny, and Holsum. It operates 39 bakeries, in addition to sells its products through DSD route delivery model to retail and foodservice customers. The Warehouse Delivery segment produces snack cakes, breads, and rolls for national retail, foodservice, vending, and co-pack customers. It operates 10 bakeries. This segment markets its products under the Mrs. Freshleys, European Bakers, Broad Street Bakery, and Alpine Valley Bread Company brand names. The company was formerly known as Flowers Industries and changed its name to Flowers Foods, Inc. in 2001. Flowers Foods, Inc. was founded in 1919 and is headquartered in Thomasville, Georgia.