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What changed in Fortune Brands Innovations, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Fortune Brands Innovations, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+267 added−270 removedSource: 10-K (2025-02-25) vs 10-K (2024-02-27)

Top changes in Fortune Brands Innovations, Inc.'s 2024 10-K

267 paragraphs added · 270 removed · 221 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

80 edited+12 added−10 removed125 unchanged
Biggest changeFor 2023 our TRIR was 0.99, compared to 1.16 for the year ended December 31, 2022 (herein referred to as “2022”), and our LTR was 0.31, compared to 0.45 for 2022 (which figures do not include the ASSA Businesses we acquired from ASSA in 2023).
Biggest changeFor 2024 our TRIR was 0.98, compared to 0.99 for the year ended December 30, 2023 (herein referred to as “2023”), and our LTR was .31 in both 2024 and 2023 (which figures for 2023 do not include the Emtek and Schaub premium and luxury door and cabinet hardware business (the "Emtek and Schaub Business") or the U.S. and Canadian Yale and August residential smart locks business (the "Yale and August Business", and, collectively with the Emtek and Schaub Business, the "Acquired Businesses") we acquired from ASSA ABLOY, Inc. and its affiliates ("ASSA") in 2023).
However, the ultimate amounts to be contributed are dependent upon, among other things, interest rates, underlying asset returns and the impact of legislative or regulatory changes related to pension funding obligations. 12 Legal, Regulatory and People Risks Our failure to attract and retain qualified personnel and other labor constraints could adversely affect our results of operations, cash flows and financial condition.
However, the ultimate amounts to be contributed are dependent upon, among other things, interest rates, underlying asset returns and the impact of legislative or regulatory changes related to pension funding obligations. Legal, Regulatory and People Risks Our failure to attract and retain qualified personnel and other labor constraints could adversely affect our results of operations, cash flows and financial condition.
Any significant liabilities associated with violations of any related laws or regulations could also have an adverse effect on our business, results of operations, cash flows, financial condition, reputation and consumer relationships. 10 We manufacture, source and sell products internationally and are exposed to risks associated with doing business globally, including risks associated with uncertain trade environments.
Any significant liabilities associated with violations of any related laws or regulations could also have an adverse effect on our business, results of operations, cash flows, financial condition, reputation and consumer relationships. We manufacture, source and sell products internationally and are exposed to risks associated with doing business globally, including risks associated with uncertain trade environments.
Our Water segment manufactures or assembles and sells faucets, accessories, kitchen sinks and waste disposals, predominantly under the Moen, ROHL, Riobel, Victoria+Albert, Perrin & Rowe, Aqualisa, Shaws, Emtek and Schaub brands. Although this segment sells products principally in the U.S., China and Canada, this segment also sells in Europe, Mexico, Southeast Asia and South America.
Our Water segment manufactures or assembles and sells faucets, accessories, kitchen sinks and waste disposals, predominantly under the Moen, ROHL, Riobel, Victoria+Albert, Perrin & Rowe, Aqualisa, Shaws, Emtek, Schaub and SpringWell brands. Although this segment sells products principally in the U.S., China and Canada, this segment also sells in Europe, Mexico, Southeast Asia and South America.
If we are unable to meet customer demand, there could be an adverse effect on our results of operations, cash flows and financial condition. 11 Risks associated with strategic acquisitions, divestitures and joint ventures could adversely affect our results of operations, cash flows and financial condition. We consider acquisitions, divestitures and joint ventures as a means of enhancing stockholder value.
If we are unable to meet customer demand, there could be an adverse effect on our results of operations, cash flows and financial condition. Risks associated with strategic acquisitions, divestitures and joint ventures could adversely affect our results of operations, cash flows and financial condition. We consider acquisitions, divestitures and joint ventures as a means of enhancing stockholder value.
Statements that include the words “believes,” “expects,” “anticipates,” “intends,” “projects,” “estimates,” “plans,” “outlook,” “positioned”, “confident,” and “opportunity” and similar expressions or future or conditional verbs such as “will,” “should,” “would,” “may”, and “could” are generally forward-looking in nature and not historical facts.
Statements that include the words “believes,” “expects,” “anticipates,” “intends,” “projects,” “estimates,” “plans,” “outlook,” “positioned”, “confident,” “opportunity”, "focus" and similar expressions or future or conditional verbs such as “will,” “should,” “would,” “may”, and “could” are generally forward-looking in nature and not historical facts.
We continue to believe our most attractive opportunities are to invest in profitable organic growth initiatives, pursue accretive strategic acquisitions, non-controlling equity investments, and joint ventures, and return cash to stockholders through a combination of dividends and repurchases of our common stock.
We continue to believe our most attractive opportunities are to invest in profitable organic growth initiatives, pursue accretive strategic acquisitions, non-controlling equity investments, and joint ventures, and return cash to stockholders through a combination of dividends and opportunistic repurchases of our common stock.
Furthermore, market demand may decline as a result of consumer preferences trending away from our categories or trending down within our brands or product categories, which could adversely impact our results of operations, cash flows and financial condition. 7 In connection with the Separation, we shifted from a decentralized structure with separate businesses to a more aligned operating model that prioritizes activities that are core to brand, innovation, and channel, among other changes.
Furthermore, market demand may decline as a result of consumer preferences trending away from our categories or trending down within our brands or product categories, which could adversely impact our results of operations, cash flows and financial condition. 7 In connection with the Separation, we shifted from a decentralized structure with separate businesses to a more aligned business unit-led operating model that prioritizes activities that are core to brand, innovation, and channel, among other changes.
For example, we are continuing to align our Water Innovations, Outdoors and Security products with long-term secular trends within connected products, outdoor living, sustainability, water management, material conversion, and safety and wellness.
For example, we are continuing to align our Water, Outdoors and Security products with long-term secular trends within connected products, outdoor living, sustainability, water management, material conversion, luxury, and safety and wellness.
This segment sells products principally in the U.S., Canada, Europe, Central America, Japan and Australia. Approximately 23% of 2023 net sales of the Security segment were to international markets.
This segment sells products principally in the U.S., Canada, Europe, Central America, Japan and Australia. Approximately 23% of 2024 net sales of the Security segment were to international markets.
We sell our products through a wide array of sales channels, including kitchen and bath dealers, wholesalers oriented toward builders or professional remodelers, industrial and locksmith distributors, “do-it-yourself” remodeling-oriented home centers, showrooms, e-commerce and other retail outlets.
We sell our products through a wide array of sales channels, including kitchen and bath dealers, wholesalers oriented toward builders or professional remodelers, industrial and locksmith distributors, “do-it-yourself” remodeling-oriented home centers, showrooms, direct to consumer, e-commerce and other retail outlets.
Forward-looking statements include all statements that are not historical statements of fact and those regarding our intent, belief or expectations for our business, operations, financial performance or financial condition, in addition to statements regarding our expectations for the markets in which we operate, general business strategies, the market potential of our brands, trends in the housing market, the potential impact of costs, including material and labor costs, the potential impact of inflation, expected capital spending, expected pension contributions, the expected impact of acquisitions, dispositions and other strategic transactions including the expected benefits and costs of the spin-off of MasterBrand, Inc. and the tax-free nature of the spin-off transaction, the anticipated effects of recently issued accounting standards on our financial statements, and other matters that are not historical in nature.
Forward-looking statements include all statements that are not historical statements of fact and those regarding our intent, belief or expectations for our business, operations, financial performance or financial condition, in addition to statements regarding our expectations for the markets in which we operate, general business strategies, expected impacts from recently-announced organizational and leadership changes, the market potential of our brands, trends in the housing market, the potential impact of costs, including material and labor costs, the potential impact of inflation, expected capital spending, expected pension contributions, the expected impact of acquisitions, dispositions and other strategic transactions including the expected benefits and costs of the spin-off of MasterBrand, Inc. and the tax-free nature of the spin-off transaction, the anticipated effects of recently issued accounting standards on our financial statements, and other matters that are not historical in nature.
Low unemployment rates in the U.S., rising wages, competition for qualified talent and attracting and retaining personnel in remote locations could result in the failure to attract, motivate and retain personnel.
Low unemployment rates in the U.S., rising wages and competition for attracting and retaining qualified talent could result in the failure to attract, motivate and retain personnel.
The potential consequences of a material cybersecurity incident and its effects include financial loss, business disruption, reputational damage, litigation or regulatory action, theft of intellectual property, fines levied by government agencies, diminution in the value of our investments in research, development and engineering, and increased cybersecurity protection and remediation costs due to the increasing sophistication and proliferation of threats, which in turn could adversely affect our competitiveness and results of operations.
The potential consequences of a material cybersecurity incident or other material system interruption and their effects include financial loss, business disruption, reputational damage, litigation or regulatory action, theft of intellectual property, fines levied by government agencies, diminution in the value of our investments in research, development and engineering, and increased cybersecurity protection and remediation costs due to the increasing sophistication and proliferation of threats, which in turn could adversely affect our competitiveness and results of operations.
In addition to the importance of their financial performance, companies are increasingly being judged by their performance on a variety of environmental, social and governance (“ESG”) matters.
In addition to the importance of their financial performance, companies are judged by their performance on a variety of environmental, social and governance (“ESG”) matters.
Our segments compete on the basis of innovation, fashion, quality, price, service and responsiveness to distributor, retailer and installer needs, as well as end-user consumer preferences. Our markets are very competitive. Approximately 20% of 2023 net sales were to international markets, and sales to two of the Company’s customers, Lowe’s Companies, Inc. (“Lowe’s”) and The Home Depot, Inc.
Our segments compete on the basis of innovation, fashion, quality, price, service and responsiveness to distributor, retailer and installer needs, as well as end-user consumer preferences. Our markets are very competitive. Approximately 17% of 2024 net sales were to international markets, and sales to two of the Company’s customers, Lowe’s Companies, Inc. (“Lowe’s”) and The Home Depot, Inc.
We are committed to continuing to invest in our capacity and supply chain through strategic sourcing, automation, machine learning, artificial intelligence, data-driven insights and processes, and leveraging our global scale to strengthen our business and continue to meet demand for our products. Developing innovative products and processes for customers and consumers .
We are committed to continuing to invest in our brands, our digital and connected transformation, capacity and supply chain through strategic sourcing, automation, machine learning, artificial intelligence, data-driven insights and processes, and leveraging our global scale to strengthen our business and continue to meet demand for our products. Developing innovative products and processes for customers and consumers .
We are committed to continuing to invest in new product development and enhance customer service to strengthen our leading brands and penetrate adjacent markets, including in the digital space and connected products. Building an aligned organization using the Fortune Brands Advantage to drive results.
We are committed to continuing to invest in new product development and enhance customer service to strengthen our leading brands and penetrate adjacent markets, including in the digital space and connected products. Using the Fortune Brands Advantage to drive results.
In aggregate, sales to The Home Depot and Lowe’s comprised approximately 18% of net sales of the Water segment in 2023. This segment’s chief competitors include Masco, Kohler, LIXIL Group, InSinkErator (owned by Whirlpool Corporation), Huida, Hgill, and Jomoo and imported private-label brands. Outdoors.
In aggregate, sales to The Home Depot and Lowe’s comprised approximately 19% of net sales of the Water segment in 2024. This segment’s chief competitors include Masco, Kohler, LIXIL Group, InSinkErator (owned by Whirlpool Corporation), Huida, Hgill, and Jomoo and imported private-label brands. 3 Outdoors.
In aggregate, sales to The Home Depot and Lowe’s comprised approximately 29% of net sales of the Outdoors segment in 2023. Therma-Tru, Larson, Fiberon, Fypon and Solar Innovations compete with Masonite, JELD-WEN, Andersen, Trex, Azek, Plastpro, Pella, and various regional and local suppliers. 3 Security.
In aggregate, sales to The Home Depot and Lowe’s comprised approximately 26% of net sales of the Outdoors segment in 2024. Therma-Tru, Larson, Fiberon, Fypon and Solar Innovations compete with Masonite, JELD-WEN, Andersen, Trex, Azek, Plastpro, Pella, and various regional and local suppliers. Security.
Our Security segment’s products consist of locks, safety and security devices, and electronic security products manufactured, sourced and distributed primarily under the Master Lock, American Lock, Yale and August brands and fire resistant safes, security containers and commercial cabinets manufactured, sourced and distributed under the SentrySafe brand.
Our Security segment’s products consist of locks, safety and security devices, connected and mechanical lock out tag out solutions and electronic security products manufactured, sourced and distributed primarily under the Master Lock, American Lock, Yale and August brands and fire resistant safes, security containers and commercial cabinets manufactured, sourced and distributed under the SentrySafe brand.
Any prolonged disruption in our manufacturing operations, whether due to technical or labor difficulties, continued labor shortages, transportation-related shortages, supply chain constraints, weather conditions (including due to the impacts of climate change, particularly for those facilities near any shorelines or in any other area traditionally impacted by extreme weather), lack of raw material or component availability, startup inefficiencies for new operations, cybersecurity incidents, destruction or disruption of, or damage to, any facility (as a result of natural disasters, fires and explosions, use and storage of hazardous materials or other events) or other reasons, could negatively impact our profitability and competitive position and adversely affect our results of operations, cash flows and financial condition.
Any prolonged disruption in our manufacturing operations, whether due to technical or labor difficulties, continued labor shortages, transportation-related shortages, supply chain constraints, weather conditions (including due to the impacts of climate change, particularly for those facilities near any shorelines or in any other area traditionally impacted by extreme weather), lack of raw material or component availability, startup inefficiencies for new operations, cybersecurity incidents, destruction or disruption of, or damage to, any facility (as a result of natural disasters, fires and explosions, use and storage of hazardous materials or other events) or other reasons, could negatively impact our profitability and competitive position and adversely affect our results of operations, cash flows and financial condition. 11 Our inability to obtain raw materials and finished goods in a timely and cost-effective manner from suppliers could adversely affect our ability to manufacture and market our products.
Approximately 28% of 2023 net sales were to international markets. This segment sells directly through its own sales force and indirectly through independent manufacturer's representatives, primarily to wholesalers, home centers and mass merchandisers. This segment is increasingly investing in digital trends and “smart” home capabilities.
Approximately 24% of 2024 net sales were to international markets. This segment sells directly through its own sales force and indirectly through independent manufacturer's representatives, primarily to wholesalers, home centers and mass merchandisers. This segment is increasingly investing in and developing digital products and “smart” home capabilities.
As part of the Company’s reorganization and shift to a more aligned operating model under one leadership team, we expect to continue to prioritize activities that are core to brand, innovation, and channel . • Global Supply Chain Excellence - Leveraging our robust, global supply chain to strategically drive scale efficiencies with cutting-edge capabilities. • Digital Transformation - Supporting our products of the future with best-in-class services, technology, data and analytics and using data science to unlock valuable consumer and business insights.
As part of the Company’s ongoing reorganization and consolidation efforts to align our business unit-led operating model under one simplified executive leadership team, we expect to continue to prioritize activities that are core to brand, innovation, and channel . 2 • Global Supply Chain Excellence - Leveraging our robust, global supply chain to strategically drive scale efficiencies with cutting-edge capabilities. • Digital Transformation - Supporting our products of the future with best-in-class services, technology, data and analytics and using data science to unlock valuable consumer and business insights.
We rely upon information technology systems and infrastructure, including support provided by third parties, to support our business, our products and our customers. 9 For example, we routinely rely on systems for manufacturing, customer and supplier orders, shipping, regulatory compliance, finance, company operations, research and development and various other matters, as well as information technology systems and infrastructure to aid us in the collection, use, storage and transfer and other processing of data including confidential, business, financial, and personal information.
For example, we routinely rely on systems for manufacturing, customer and supplier orders, shipping, regulatory compliance, finance, company operations, research and development and various other matters, as well as information technology systems and infrastructure to aid us in the collection, use, storage and transfer and other processing of data including confidential, business, financial, and personal information.
We have been and may continue to be impacted by near-term supply, labor and freight constraints, a volatile global supply chain environment, as well as sustained increased rates of inflation, rising interest rates, unfavorable fluctuations in foreign exchange rates and ongoing tariffs, all of which have increased our costs.
We have been and may continue to be impacted by near-term supply, labor and freight constraints, a volatile global supply chain environment, as well as sustained elevated rates of inflation, fluctuating interest rates, unfavorable fluctuations in foreign exchange rates and new, ongoing, expanded or retaliatory tariffs, all of which have increased, and may further increase, our costs.
Compliance with these requirements, including the European Union’s General Data Protection Regulation, the California Consumer Privacy Act, the California Privacy Rights Act and other international and domestic regulations, has resulted and could continue to result in additional costs and complexity to our business operations.
Compliance with these requirements, including the European Union’s General Data Protection Regulation, the California Privacy Rights Act, the Personal Information Protection Law of the People's Republic of China and other international and domestic regulations, has resulted and could continue to result in additional costs and complexity to our business operations.
Master Lock, American Lock, Yale and August compete s with Abus, W.H. Brady, Hampton, Kwikset, Schlage and various imports, and SentrySafe competes with First Alert, Magnum, Fortress, Stack-On and Fire King. Other Information Raw materials. The table below indicates the principal raw materials used by each of our segments. These materials are available from a number of sources.
Brady, Hampton, Kwikset, Schlage and various imports, and SentrySafe competes with First Alert, Magnum, Fortress, Stack-On and Fire King. Other Information Raw materials. The table below indicates the principal raw materials used by each of our segments. These materials are available from a number of sources.
Failures in our information technology systems and the costs of increasing information security regulation could also subject us to significant financial, legal and operational consequences.
Failures in our information technology systems or in the third-party information technology systems that we use and the costs of increasing information security regulation could also subject us to significant financial, legal and operational consequences.
Some of our competitors may resort to price competition to sustain or grow market share and manufacturing capacity utilization. Also, certain large customers continue to offer private-label brands that compete with some of our product offerings as a lower-cost alternative.
Some of our competitors may resort to price competition to sustain or grow market share and manufacturing capacity utilization. Certain large customers continue to offer private-label brands that compete with some of our product offerings as a lower-cost alternative. Imported low cost product offerings have also recently become more prevalent in various e-commerce channels.
(“The Home Depot”), accounted for 10.9% and 10.2% of the Company’s net sales, respectively, in 2023. Sales to all U.S. home centers in the aggregate were approximately 25% of net sales in 2023. In 2023, sales to our top ten customers represented approximately one-half of total sales. Water.
(“The Home Depot”), accounted for 11% and 10% of the Company’s net sales, respectively, in 2024. Sales to all U.S. home centers in the aggregate were approximately 24% of net sales in 2024. In 2024, sales to our top ten customers represented approximately 48% of total sales. Water.
As of December 30, 2023, Fortune Brands had more than 11,700 full-time and part-time employees worldwide (excluding contract workers). Approximately 60% of our workforce is composed of hourly production and distribution associates and the remaining population is composed of associates in an office role. Approximately 1% of employees in the U.S. work under collective bargaining agreements.
As of December 28, 2024, Fortune Brands had more than 11,000 full-time and part-time employees worldwide (excluding contract workers). Approximately 58% of our workforce is composed of hourly production and distribution associates and the remaining population is composed of associates in an office role. We have no associates in the U.S. working under collective bargaining agreements .
In addition, our new operating model may not yield the intended results, and may have unexpected consequences, which could negatively affect our business and results of operations and make it more difficult for us to execute on our strategic plans.
In addition, our new operating model may not yield the intended results, and may have unexpected consequences, which could negatively affect our business and results of operations and make it more difficult for us to execute on our strategic plans. We also recently announced certain organizational and leadership changes designed to drive accelerated growth.
In light of the increased focus on and public debate surrounding ESG matters, there can be no certainty that we will manage such issues successfully, or that we will successfully meet stakeholder expectations as to our proper role.
In light of the increased focus on and public debate surrounding ESG matters, there can be no certainty that we will manage such issues successfully, or that we will successfully meet stakeholder expectations as to our proper role. Any failure or perceived failure by us in this regard could adversely impact our business and reputation.
Potential liabilities and costs from claims and litigation could adversely affect our results of operations, cash flows and financial condition. We are, from time to time, involved in various claims, litigation matters and regulatory proceedings that arise in the ordinary course of our business and that could have an adverse effect on us.
We are, from time to time, involved in various claims, litigation matters and regulatory proceedings that arise in the ordinary course of our business and that could have an adverse effect on us.
While we carry cyber insurance, it cannot be certain that coverage will be adequate for liabilities actually incurred, that insurance will continue to be available to us on economically reasonable terms, or at all, or that any insurer will not deny coverage as to any future claim.
While we carry cyber insurance, we cannot be certain that coverage will be adequate for liabilities actually incurred, that insurance will continue to be available to us on economically reasonable terms, or at all, or that any insurer will not deny coverage as to any future claim. The proliferation of, and advances in, artificial intelligence may exacerbate these risks.
While we may use derivative contracts to limit our short-term exposure to commodity price volatility, the commodity exposures under these contracts could still be material to our results of operations, cash flows and financial condition. In addition, in periods of declining commodity prices, these derivative contracts may have the short-term effect of increasing our expenditures for these raw materials.
While we may use derivative contracts to limit our short-term exposure to commodity price volatility, the commodity exposures under these contracts could still be material to our results of operations, cash flows and financial condition.
Third-party systems that we rely upon could also become vulnerable to the same security threats and may contain defects in design or manufacture or other problems that could result in system disruption or compromise the information security of our own systems.
Third-party systems that we rely upon are also vulnerable to the same security threats and may contain defects in design or manufacture or other problems that have in the past resulted, and could result in the future, in system disruptions that affect our operations or compromises of the information security of our own systems.
Such actions may result in customers transitioning to available competitive products; loss of market share; negative publicity; reputational damage; loss of customer confidence; or other negative consequences (including a decline in stock price) and could increase our capital expenditures and adversely impact our results of operations, cash flows and financial condition. 14 Future tax law changes or the interpretation of existing tax laws may materially impact our effective income tax rate, the resolution of unrecognized tax benefits and cash tax payments.
Such actions may result in customers transitioning to available competitive products; loss of market share; negative publicity; reputational damage; loss of customer confidence; or other negative consequences (including a decline in stock price) and could increase our capital expenditures and adversely impact our results of operations, cash flows and financial condition.
The change in segment reporting was made to align with changes made in the manner our chief operating decision maker reviews the Company’s operating results in assessing performance and allocating resources.
The change in segment reporting was made to align with changes made in the manner our chief operating decision maker reviews the Company’s operating results in assessing performance and allocating resources. Comparative prior period amounts have been recast to conform to the new segment presentation.
Risks associated with global commodity and energy availability and price volatility, as well as the possibility of sustained inflation, could adversely affect our results of operations, cash flows and financial condition.
Failure to achieve the desired level of quality, capacity or cost reductions could impair our results of operations, cash flows and financial condition. Risks associated with global commodity and energy availability and price volatility, as well as the possibility of sustained inflation, could adversely affect our results of operations, cash flows and financial condition.
We have a long track record of successful product and process innovations that introduce valued new products to our customers and consumers, including products that save water, utilize recycled materials, conserve energy and protect people.
We have a long track record of successful product and process innovations that introduce valued new products to our customers and consumers. Our focus is on products that drive meaningful and valuable functionality and improvements in the lives of people and communities, including products that save water, utilize recycled materials, conserve energy and protect people and spaces.
A reduction or interruption in supply or an issue in the supply chain, including as a result of our inability to quickly develop acceptable alternative sources for such supply, could adversely affect our ability to manufacture, distribute and sell our products in a timely or cost-effective manner. 8 We regularly evaluate our organizational productivity and global supply chains and assess opportunities to increase capacity, reduce costs and enhance quality.
A reduction or interruption in supply or an issue in the supply chain, including as a result of our inability to quickly develop acceptable alternative sources for such supply, could adversely affect our ability to manufacture, distribute and sell our products in a timely or cost-effective manner.
We may experience delays or outages in our information technology systems and computer networks. We may be subject to breaches of our information technology systems or other cybersecurity incidents, which could damage our reputation and consumer relationships.
We may be subject to breaches of our information technology systems, breaches of third-party information technology systems that we use or other cybersecurity incidents, which could damage our reputation and consumer relationships.
This change was made in order to align the Company’s fiscal year with that of its operating businesses and to align the Company’s reporting calendar with how the Company evaluates its businesses. The Company's fiscal 2023 year end is the 52-weeks ended December 30, 2023 (herein referred to as "2023").
This change was made in order to align the Company’s fiscal year with that of its operating businesses and to align the Company’s reporting calendar with how the Company evaluates its businesses.
If environmental laws or regulations are either changed or adopted and impose significant operational restrictions and compliance requirements on us, they may have a material adverse effect on our business, access to credit, capital expenditures, operating results and financial condition. Environmental, social and governance matters may adversely impact our business and reputation.
If environmental laws or regulations are either changed or adopted and impose significant operational restrictions and compliance requirements on us, they may have a material adverse effect on our business, access to credit, capital expenditures, operating results and financial condition. 13 Potential liabilities and costs from claims and litigation could adversely affect our results of operations, cash flows and financial condition.
We may be unable to enhance quality, speed and flexibility to meet changing and uncertain market conditions, as well as manage continued cost inflation, including wages, pension and medical costs.
We regularly evaluate our organizational productivity and global supply chains and assess opportunities to increase capacity, reduce costs and enhance quality. We may be unable to enhance quality, speed and flexibility to meet changing and uncertain market conditions, as well as manage continued cost inflation, including wages, pension and medical costs.
We evaluate on an ongoing basis new and emerging technologies that we believe are applicable to our business to potentially integrate them into our current and future products, services, processes and operations. The integration of any such new technologies into our business, even if successful, may require significant financial and operational resources.
We evaluate on an ongoing basis new and emerging technologies that we believe are applicable to our business to potentially integrate them into our current and future products, services, processes and operations.
Effective in the first quarter of 2023, the Company revised its segment reporting from two reportable segments, Water Innovations (referred to as Water) and Outdoors & Security, to three reportable segments, Water, Outdoors and Security.
The Company's fiscal 2024 year end is the 52-weeks ended December 28, 2024 (herein referred to as "2024"). 1 Effective in the first quarter of 2023, the Company revised its segment reporting from two reportable segments, Water Innovations ("Water") and Outdoors & Security, to three reportable segments, Water, Outdoors and Security.
We endeavor to do this through talent acquisition, development, succession planning and fostering a diverse and inclusive workforce. Enhancing returns and deploying our cash flow to high-return opportunities.
We believe that investing in our employees is a critical component of our business strategy. We endeavor to do this through talent acquisition, development, succession planning and fostering an inclusive workforce. Enhancing returns and deploying our cash flow to high-return opportunities.
While our business segments are focused on distinct product categories and are responsible for their own performance, the Fortune Brands Advantage is an operating model consisting of a set of unifying capabilities that we believe are critical to our strategic growth across all of our businesses.
The Fortune Brands Advantage is an operating model consisting of a set of unifying capabilities that we believe are critical to our strategic growth across all of our businesses.
Climate change and related impacts, including legislative and regulatory initiatives, could adversely affect our business and results of operations. Concerns over the long-term effects of climate change have led to, and we expect will continue to lead to, governmental efforts around the world to mitigate those effects.
Concerns over the long-term effects of climate change have led to, and we expect will continue to lead to, governmental efforts around the world to mitigate those effects.
Below is a summary of the number of employees by segment and role: Segment Production and Distribution Office Total Water 2,398 2,714 5,112 Outdoors 3,052 999 4,051 Security 1,640 714 2,354 Corporate — 212 212 We believe our associates are the key to our success.
Below is a summary of the number of employees by segment and role: Segment Production and Distribution Office Total Water 2,294 2,576 4,870 Outdoors 2,735 965 3,700 Security 1,398 819 2,217 Corporate — 254 254 4 We believe our associates are the key to our success.
The COVID-19 pandemic may also exacerbate certain of the other risks described in this “Risk Factors” section. Risks Related to the Separation of MasterBrand The Separation may not achieve some or all of the benefits anticipated, and, following the Separation, our stock price may underperform relative to our expectations.
Risks Related to the Separation of MasterBrand The Separation may not achieve some or all of the benefits anticipated, and, following the Separation, our stock price may underperform relative to our expectations.
Our inability to secure and protect our intellectual property rights could negatively impact revenues and brand reputation. We have many patents, trademarks, brand names, trade names and trade secrets that, in the aggregate, are important to our business.
We have many patents, trademarks, brand names, trade names and trade secrets that, in the aggregate, are important to our business.
Unless the context otherwise requires, references in this Annual Report on Form 10-K to “Fortune Brands,” the “Company,” “we,” “our” or “us” refer to Fortune Brands Innovations, Inc. and its consolidated subsidiaries.
Unless the context otherwise requires, references in this Annual Report on Form 10-K to “Fortune Brands,” the “Company,” “we,” “our” or “us” refer to Fortune Brands Innovations, Inc. and its consolidated subsidiaries. Our Company We are a leading innovation company whose purpose is to elevate every life by transforming spaces into havens.
If we fail to compete with our peers in effectively integrating these or other new technologies into our business, or fail to guard against new competitors disrupting our business using such technologies, such failure may adversely affect our business and results of operations.
If we fail to compete with our peers in effectively integrating these or other new technologies into our business, or fail to guard against new competitors disrupting our business using such technologies, such failure may adversely affect our business and results of operations. 8 Operational and Sourcing Risks Risks associated with our ability to improve organizational productivity and global supply chain efficiency and flexibility could adversely affect our results of operations, cash flows and financial condition.
We often do not enter into long-term contracts with our suppliers or sourcing partners. Instead, most raw materials and sourced goods are obtained on a “purchase order” basis.
We purchase raw materials to be used in manufacturing our products and also rely on third-party manufacturers to produce certain of the finished goods we sell. We often do not enter into long-term contracts with our suppliers or sourcing partners. Instead, most raw materials and sourced goods are obtained on a “purchase order” basis.
Approximately 38% of hourly production and distribution employees are people of color and 16% of employees in an office role are people of color as of December 30, 2023. 5 Talent Development and Succession We aim to inspire and equip our associates to be successful in their current roles within the organization and help them to develop the skills to build on opportunities to grow their careers.
Talent Development and Succession We aim to inspire and equip our associates to be successful in their current roles within the organization and help them to develop the skills to build on opportunities to grow their careers.
Our Employee Safety & Environmental Stewardship Principles set standards for how we maintain a safe work environment and guides our business operations. The Company also has an Environmental, Health & Safety network composed of representatives from across the Company’s businesses that shares best practices and implements environmental, health and safety strategy.
The Company also has an Environmental, Health & Safety network composed of representatives from across the Company’s businesses that shares best practices and implements environmental, health and safety strategy.
In addition, the segment sells lock systems and fire resistant safes to locksmiths, industrial and institutional users, residential and multi-family housing hardware and service providers, and original equipment manufacturers. In aggregate, sales to The Home Depot and Lowe’s comprised approximately 17% of the net sales of the Security segment in 2023.
The segment primarily sells to locksmiths, industrial and institutional users, residential and multi-family housing hardware and service providers, third-party integrators, and original equipment manufacturers. In aggregate, sales to The Home Depot and Lowe’s comprised approximately 16% of the net sales of the Security segment in 2024. Master Lock, American Lock, Yale and August compete s with Abus, W.H.
Any failure or perceived failure by us in this regard could adversely impact our business and reputation. 13 In addition, developing and acting on ESG initiatives, including collecting, measuring and reporting related data, can be costly, difficult and time consuming.
In addition, developing and acting on ESG initiatives, including collecting, measuring and reporting related data, can be costly, difficult and time consuming.
Furthermore, others may assert intellectual property infringement claims against us or our customers, which may require us to incur significant expense to defend such litigation or indemnify our customers. COVID-19 has impacted our business and may cause further disruptions to our business, results of operations and financial condition.
Furthermore, others may assert intellectual property infringement claims against us or our customers, which may require us to incur significant expense to defend such litigation or indemnify our customers. Environmental, social and governance matters may adversely impact our business and reputation.
Comparative prior period amounts have been recast to conform to the new segment presentation. 1 Historically, Fortune Brands operated a Cabinets business segment that manufactured and sold cabinets and vanities for the kitchen, bath and other parts of the home. On December 14, 2022, the Company completed the separation of its Cabinets business, MasterBrand, Inc.
Historically, Fortune Brands operated a Cabinets business segment that manufactured and sold cabinets and vanities for the kitchen, bath and other parts of the home. On December 14, 2022, the Company completed the separation of its Cabinets business, MasterBrand, Inc. ("MasterBrand"), via a tax-free spin-off transaction (the "Separation"). The Separation created two independent, publicly traded companies.
Actual or perceived breaches and breakdowns affecting our information technology systems or protected data, including as a result of external actors or employee error or malfeasance, could have an adverse effect on our business strategy, results of operations, cash flows, financial condition, reputation and consumer relationships.
Actual or perceived breaches and breakdowns affecting our information technology systems or protected data, including as a result of external actors or employee error or malfeasance, could have an adverse effect on our business strategy, results of operations, cash flows, financial condition, reputation and consumer relationships. 10 In addition, the domestic and international regulatory environment related to solicitation, information security, collection and data privacy is increasingly rigorous and complex, with new and rapidly changing requirements applicable to our business, which are sometimes contradictory, and which may require changes to our business practices.
As a result, the ultimate outcome from any audit could be materially different from amounts reflected in our income tax provisions and accruals. Future settlements of income tax audits may have a material adverse effect on earnings between the period of initial recognition of tax estimates in our financial statements and the point of ultimate tax audit settlement.
Future settlements of income tax audits may have a material adverse effect on earnings between the period of initial recognition of tax estimates in our financial statements and the point of ultimate tax audit settlement. 14 Our inability to secure and protect our intellectual property rights could negatively impact revenues and brand reputation.
This includes integrating our digital organization to improve speed to market and further develop a culture that fosters innovation, collaboration and value creation, and developing products supported by service technology, data and analytics. 2 We continue to grow our competencies in these areas, allowing each of our businesses to take advantage of available opportunities for revenue growth and margin improvement, no matter the market environment.
This includes integrating our digital organization to improve speed to market and further develop a culture that fosters innovation, collaboration and value creation, and developing products supported by service technology, data and analytics.
Our pension costs and funding requirements could increase as a result of volatility in the financial markets and changes in interest rates and actuarial assumptions.
Accordingly, we may be required to perform impairment tests based on changes in the economic environment and other factors, and these tests could result in impairment charges in the future. 12 Our pension costs and funding requirements could increase as a result of volatility in the financial markets and changes in interest rates and actuarial assumptions.
See Note 5, Discontinued Operations, in the consolidated financial statements in Item 8 for additional information. Our Strategy Building on leading business and brand positions in attractive growth and return categories . We have leading brands with what we believe to be sustainable competitive advantages in many of our product categories, which we sell primarily in North America and China.
See Note 5, "Discontinued Operations," of the Notes in the consolidated financial statements in Item 8 of this Annual Report on Form 10-K for additional information. Our Strategy Building on leading business and brand positions in attractive growth and return categories .
Driving value through talent. The Company has built a diverse and talented leadership team that is well positioned to continue to execute on our transformation to a more aligned operating model. We believe that investing in our employees is a critical component of our business strategy.
We continue to grow our competencies in these areas, allowing each of our businesses to focus on opportunities for revenue growth and margin improvement, no matter the market environment. Driving value through talent. The Company has built a talented and inclusive leadership team that is well positioned to continue to execute on our transformation to a more aligned operating model.
Our businesses are subject to taxation in the U.S., as well as internationally, including income tax, value-added tax and property tax.
Future tax law changes or the interpretation of existing tax laws may materially impact our effective income tax rate, the resolution of unrecognized tax benefits and cash tax payments. Our businesses are subject to taxation in the U.S., as well as internationally, including income tax, value-added tax and property tax.
Fortune Brands does this through the programs summarized below, and the objectives and related risks of each is overseen by our Board of Directors or its committees. 4 Health and Safety Safety is a critical element to Fortune Brands’ growth strategy, integral to Company culture and one of our core values.
We also endeavor to create a culture where doing the right thing is embedded in the way we conduct business. Fortune Brands does this through the programs summarized below, and the objectives and related risks of each is overseen by our Board of Directors or its committees.
We could be adversely affected by higher manufacturing costs and international trade regulations, including duties, tariffs and antidumping penalties.
We could be adversely affected by higher manufacturing costs and international trade regulations, including, tariffs (including recent U.S. tariffs imposed or threatened to be imposed on China, Canada and Mexico and other countries and any retaliatory actions taken by such countries), duties and antidumping penalties.
We continue to evaluate the impact of economic and other developments to assess whether impairment indicators are present. Accordingly, we may be required to perform impairment tests based on changes in the economic environment and other factors, and these tests could result in impairment charges in the future.
We continue to evaluate the impact of economic and other developments to assess whether impairment indicators are present.
The Company is committed to increasing representation of qualified professionals of color and women by ensuring an inclusive culture. The Company has a cross-functional inclusive culture council, which sets priorities and initiatives. The Company reinforces fair, equitable, and effective practices across our entire organization through training, enterprise-wide Employee Resource Groups and partnerships with external groups.
The Company reinforces fair, equitable, and effective practices across our entire organization through training, enterprise-wide Employee Resource Groups, which are open to all associates and which span a variety of associate groups, and partnerships with external groups.
We believe that attracting and retaining talented and diverse employees will enable us to be more innovative and responsive to consumer needs and deliver strong performance and growth. Fortune Brands has a comprehensive diversity, equity and inclusion strategy to increase representation of underrepresented associates.
We believe that attracting and retaining talented employees from a variety of backgrounds will enable us to be more innovative and responsive to consumer needs and deliver strong performance and growth. The Company has a cross-functional inclusive culture council, which sets priorities and initiatives.
We continue to look for ways to improve our ESG programs and practices by focusing on ways to improve water conservation, waste reduction, and carbon and climate impact, keep our employees safe, and create a culture where all employees are treated with dignity and respect. Business Segments We have three business segments: Water Innovations ("Water"), Outdoors and Security.
We continue to look for ways to improve our ESG programs and practices by focusing on meaningful initiatives like water conservation, material conversion and safety. Business Segments We have three business segments: Water, Outdoors and Security.
Creating a Culture of Diversity, Equity and Inclusion (“DEI”) We continue to take measured actions that create an inclusive culture and diverse workforce, that increase representation and engagement of underrepresented associates and that are reflective of our consumers and communities.
By valuing and integrating diverse viewpoints with respect, we believe we can foster innovation and achieve superior performance. 5 We continue to take measured actions that create an inclusive culture, that increase engagement of associates from a variety of backgrounds and that are reflective of our consumers and communities.
We operate in very competitive consumer and trade brand categories. The markets in which we operate are very competitive.
U.S. single-family and multi-family new home construction activity generally increased from their 2023 level while U.S. repair and remodel activities generally declined from their 2023 level. We operate in very competitive consumer and trade brand categories. The markets in which we operate are very competitive.
Import tariffs could potentially lead to further increases in prices of raw materials or components which are critical to our business. Failure to achieve the desired level of quality, capacity or cost reductions could impair our results of operations, cash flows and financial condition.
Import tariffs, including recent U.S. tariffs imposed or threatened to be imposed on China, Canada and Mexico and other countries and any retaliatory actions taken by such countries, could potentially lead to further increases in prices of raw materials or components which are critical to our business.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeOur current CIO has over 25 years of experience in information technology matters, and has over a decade of experience at the Company. Our Senior Director of Enterprise Cybersecurity has over 20 years of expanding leadership experience in information technology and 17 years of experience in information security leading and developing security programs.
Biggest changeOur Senior Director of Enterprise Cybersecurity has over 30 years of expanding leadership experience in information technology and 18 years of experience in information security leading and developing security programs. Our CIO provides regul ar updates on cybersecurity matters to our senior executives.
We have experienced, and will continue to experience, cyber incidents in the normal course of our business. However, to our knowledge, we have not had any cybersecurity incidents in the past three years that have had a material adverse effect on our business, financial condition, results of operations, or cash flows.
We have experienced, and will continue to experience, cybersecurity incidents in the normal course of our business. However, to our knowledge, we have not had any cybersecurity incidents in the past three years that have had a material adverse effect on our business, financial condition, results of operations, or cash flows.
We describe the risks that cybersecurity threats, including as a result of any previous cybersecurity incidents, pose to us that have materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations, or financial condition, under the heading “We may experience delays or outages in our information technology systems and computer networks.
We describe the risks that cybersecurity threats, including as a result of any previous cybersecurity incidents, pose to us that have materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations, or financial condition, under the heading “We may experience delays or outages in our information technology systems and computer networks and the third-party information technology systems and computer networks that we use.
In certain circumstances, including in those where we believe a third party could introduce cybersecurity risk to us, we generally contractually require such third parties to manage their cybersecurity risks. We also receive the results of cybersecurity and data privacy audits conducted on certain vendors to determine if those vendors meet our cybersecurity standards.
In certain circumstances, including in those where we believe a third party could introduce cybersecurity risk to us, we generally seek to contractually require such third parties to manage their cybersecurity risks in certain proscribed manners. We also receive the results of cybersecurity and data privacy audits conducted on certain vendors to determine if those vendors meet our cybersecurity standards.
Our cybersecurity risk management and strategy processes are led by our Senior Vice President and Chief Information Officer (“CIO”) and are supported by the Senior Director of Enterprise Cyber Security. These individuals are also supported by both dedicated cybersecurity professionals and third-party security service providers.
Our cybersecurity risk management and strategy processes are led by our Chief Information Officer (“CIO”) and are supported by the Senior Director of Enterprise Cybersecurity. These individuals are also supported by both dedicated cybersecurity professionals and third-party security service providers.
Failures in our information technology systems and the costs of increasing information security regulation could also subject us to significant financial, legal and operational consequences" included as part of our risk factor disclosures under Item 1A of this Annual Report on Form 10-K, which disclosures are incorporated by reference herein.
Failures in our information technology systems or in the third-party information technology systems that we use and the costs of increasing information security regulation could also subject us to significant financial, legal and operational consequences" included as part of our risk factor disclosures under Item 1A of this Annual Report on Form 10-K, which disclosures are incorporated by reference herein.
Annually, management assesses and ranks the risks identified through the enterprise risk management program according to the likelihood of occurrence and the potential monetary impact, which the Audit Committee reviews. Management also identifies and provides the Audit Committee with quarterly updates on the these risks. The CIO typically reported twice a year to the Audit Committee with cybersecurity updates.
Annually, management assesses and ranks the risks identified through the enterprise risk management program according to the likelihood of occurrence and the potential monetary impact, which the Audit Committee reviews. Management also identifies and provides the Audit Committee with quarterly update s on these risks. The CIO typically provides the Audit Committee with cybersecurity updates on a quarterly basis.
Starting in 2024, the CIO is scheduled to provide the Audit Committee with cybersecurity updates on a quarterly basis. 17 As part of the above processes, we engage with assessors, consultants, auditors and other third parties, including by (i) engaging third-party managed security services to assist with the operation of certain aspects of our cybersecurity program, (ii) engaging security assessment services to provide assessments on our cybersecurity program, (iii) engaging an incident response retainer service to provide timely cyber incident response support and digital forensics analysis services, (iv) engaging risk monitoring services to help identify emerging cybersecurity risks, and (v) engaging with other information technology and legal subject matter experts to review our cybersecurity program to help identify areas for continued focus, improvement, and/or compliance.
In 2024, the CIO reported to the full Board of Directors on the Company's cybersecurity programs and risk mitigation efforts. 17 As part of the above processes, we engage with assessors, consultants, auditors and other third parties, including by (i) engaging third-party managed security services to assist with the operation of certain aspects of our cybersecurity program, (ii) engaging security assessment services to provide assessments on our cybersecurity program, (iii) engaging an incident response retainer service to provide timely cyber incident response support and digital forensics analysis services, (iv) engaging risk monitoring services to help identify emerging cybersecurity risks, and (v) engaging with other information technology and legal subject matter experts to review our cybersecurity program to help identify areas for continued focus, improvement, and/or compliance.
We may be subject to breaches of our information technology systems or other cybersecurity incidents, which could damage our reputation and consumer relationships.
We may be subject to breaches of our information technology systems, the third-party information technology systems that we use or other cybersecurity incidents, which could damage our reputation and consumer relationships.
Our CIO is responsible for leading our technology organization across our global portfolio, which includes ERP, commercial, supply chain, and product development technologies, enterprise architecture, infrastructure, cyber security, technical operations, end-user services, and finance and human resources systems.
Our CIO is responsible for leading our technology organization across our global portfolio, which includes ERP, commercial, supply chain, and product development technologies, enterprise architecture, infrastructure, cyber security, technical operations, end-user services, and finance and human resources systems. Our current interi m CIO has over 30 years of experience in information technology matters.
During such updates, the CIO generally covered topics such as data security positions, results from third-party assessments, our incident response plan, and any material cybersecurity threats and developments. In 2023, the CIO reported to the Board of Directors on cybersecurity programs and risk mitigation efforts and enhancements to the incident response plan that were applied in 2023.
During such updates, the CIO generally covers topics such as data security positions, results from third-party assessments, our incident response plan, and any material cybersecurity threats and developments.
Removed
Our CIO provides regular updates on cybersecurity matters to our senior executives.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeSegment Manufacturing Facilities Distribution Centers and Warehouses Owned Leased Total Owned Leased Total Water 7 6 13 2 17 19 Outdoors 11 3 14 3 11 14 Security 4 — 4 1 7 8 Totals 22 9 31 6 35 41 We are of the opinion that the properties are suitable to our respective businesses and have production capacities adequate to meet the current needs of our businesses. 18
Biggest changeSegment Manufacturing Facilities Distribution Centers and Warehouses Owned Leased Total Owned Leased Total Water 7 5 12 1 17 18 Outdoors 11 2 13 2 10 12 Security 3 — 3 1 7 8 Totals 21 7 28 4 34 38 We are of the opinion that the properties are suitable to our respective businesses and have production capacities adequate to meet the current needs of our businesses. 18
In addition, we have 41 distribution centers and warehouses worldwide, of which 35 are leased. Some of our facilities are considered to be multi-use and have been included in more than one facility category. The following table provides additional information with respect to these properties.
In addition, we have 38 distribution centers and warehouses worldwide, of which 34 are leased. Some of our facilities are considered to be multi-use and have been included in more than one facility category. The following table provides additional information with respect to these properties.
Item 2. P roperties. Our principal executive office is located in Deerfield, Illinois. We operate 16 U.S. manufacturing facilities in 9 states and have 15 manufacturing facilities in international locations (4 in Mexico, 4 in Europe, 4 in Africa, 2 in Asia and 1 in Canada).
Item 2. P roperties. Our principal executive office is located in Deerfield, Illinois. We operate 14 U.S. manufacturing facilities in 7 states and have 14 manufacturing facilities in international locations (4 in Mexico, 3 in Europe, 4 in Africa, 2 in Asia and 1 in Canada).

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeFink served as President of the Company’s Water Innovations business. David V. Barry has served as Executive Vice President & Chief Financial Officer since March 2023 and has served as the Company's principal accounting officer since January 29, 2024. From April 2021 to March 2023, Mr. Barry served as Senior Vice President of Finance and Investor Relations.
Biggest changeHe also served as the Company's principal accounting officer from January 29, 2024 until March 1, 2024. From April 2021 to March 2023, Mr. Barry served as Senior Vice President of Finance and Investor Relations. From 2017 to 2021, he was Chief Financial Officer and Senior Vice President for the Water Innovations segment. Hiranda S.
Item 4. Mine Sa fety Disclosures. Not applicable. Infor mation about our current Executive Officers As of the date of this filing, our executive officers are: Name Age Position Nicholas I. Fink 49 Chief Executive Officer David V. Barry 42 Executive Vice President and Chief Financial Officer Hiranda S.
Item 4. Mine Sa fety Disclosures. Not applicable. Infor mation about our current Executive Officers As of the date of this filing, our executive officers are: Name Age Position Nicholas I. Fink 50 Chief Executive Officer David V. Barry 43 Executive Vice President and Chief Financial Officer and President, Security and Connected Products Hiranda S.
Prior to that, she served in various roles at Pfizer Inc., a research-based, global biopharmaceutical company, from September 2015 to March 2021, including most recently as the Vice President of Human Resources from November 2018 to March 2021. Cheri M. Phyfer has served as Executive Vice President and Group President of Fortune Brands since September 2022.
Prior to that, she served in various roles at Pfizer Inc., a research-based, global biopharmaceutical company, from September 2015 to March 2021, including most recently as the Vice President of Human Resources from November 2018 to March 2021. 19 PART II
Papesh held various positions at retail pharmacy Walgreens Boots Alliance from March 2021 to November 2023, including most recently as Senior Vice President, HR Business Partnering from July 2022 to November 2023.
Papesh has served as Executive Vice President and Chief Human Resources Officer of Fortune Brands since November 2023. Prior to that, Ms. Papesh held various positions at retail pharmacy Walgreens Boots Alliance from March 2021 to November 2023, including most recently as Senior Vice President, HR Business Partnering from July 2022 to November 2023.
Lee has served as Executive Vice President, Chief Growth and Digital Officer of Fortune Brands since May 2023. From January 2020 to May 2023, Mr. Lee served as Executive Vice President, Chief Strategy & Global Growth Officer. Mr.
Donoghue held various positions as a legal advisor at Walgreen Co., including most recently as Vice President, Corporate and M&A Legal. John D. Lee has served as Executive Vice President, Chief Growth and Digital Officer of Fortune Brands since May 2023. From January 2020 to May 2023, Mr. Lee served as Executive Vice President, Chief Strategy & Global Growth Officer.
Lee served as Senior Vice President, Global Growth & Development of the Water Innovations segment from July 2016 to January 2020. 19 Kristin E. Papesh has served as Executive Vice President and Chief Human Resources Officer of Fortune Brands since November 2023. Prior to that, Ms.
Mr. Lee served as Senior Vice President, Global Growth & Development of the Water Innovations segment from July 2016 to January 2020. Matthew E. Novak has served as Executive Vice President and Chief Supply Chain Officer of Fortune Brands since February 2025. Mr. Novak served as Vice President, Global Logistics and Customer Service from October 2022 to February 2025.
Donoghue served as Vice President & Deputy General Counsel of Baxter International Inc., a healthcare company, from November 2018 to December 2021. Prior to that, Ms. Donoghue held various positions as a legal advisor at Walgreen Co., including most recently as Vice President, Corporate and M&A Legal. Sheri R.
Donoghue has served as Executive Vice President, Chief Legal Officer & Corporate Secretary of Fortune Brands since December 2021. Ms. Donoghue served as Vice President & Deputy General Counsel of Baxter International Inc., a healthcare company, from November 2018 to December 2021. Prior to that, Ms.
Phyfer 52 Executive Vice President and Group President Ron Wilson 58 Executive Vice President and Chief Supply Chain Officer Nicholas I. Fink has served as Chief Executive Officer since January 2020. From March 2019 to January 2020, Mr. Fink served as President and Chief Operating Officer of Fortune Brands. From July 2016 to March 2019, Mr.
From March 2019 to January 2020, Mr. Fink served as President and Chief Operating Officer of Fortune Brands. From July 2016 to March 2019, Mr. Fink served as President of the Company’s Water Innovations business. David V.
Donoghue 45 Executive Vice President, Chief Legal Officer & Corporate Secretary Sheri R. Grissom 59 Executive Vice President and Chief Transformation Officer John D. Lee 51 Executive Vice President, Chief Growth and Digital Officer Kristin E. Papesh 49 Executive Vice President and Chief Human Resources Officer Cheri M.
Donoghue 46 Executive Vice President, Chief Legal Officer & Corporate Secretary John D. Lee 52 Executive Vice President, Chief Growth and Digital Officer Matthew E. Novak 50 Executive Vice President and Chief Supply Chain Officer Kristin E. Papesh 50 Executive Vice President and Chief Human Resources Officer Nicholas I. Fink has served as Chief Executive Officer since January 2020.
Removed
From 2017 to 2021, he was Chief Financial Officer and Senior Vice President for the Water Innovations segment. Hiranda S. Donoghue has served as Executive Vice President, Chief Legal Officer & Corporate Secretary of Fortune Brands since December 2021. Ms.
Added
Barry has served as Executive Vice President and Chief Financial Officer since March 2023 and as President, Security and Connected Products, since January 2025. Mr. Barry will continue in his role as Executive Vice President and Chief Financial Officer until a new Chief Financial Officer is appointed.
Removed
Grissom has served as the Executive Vice President and Chief Transformation Officer of Fortune Brands since November 2023. She transitioned to this role after serving as Executive Vice President, Chief Human Resources and Transformation Officer since December 2022. Prior to that, Ms. Grissom served as Senior Vice President, Chief Human Resources since February 2015. John D.
Added
From January 2020 to October 2022, Mr. Novak served as Vice President, Global Distribution and Transportation for the Water Innovations business. Prior to that, Mr. Novak held various positions at GE Lighting, including most recently as General Manager, Distribution and Transportation. Kristin E.
Removed
From March 2019 to September 2022, Ms. Phyfer served as President of the Company's Water Innovations segment. Ms. Phyfer served as President of Moen’s U.S. business from February 2018 to March 2019. Prior to that, Ms. Phyfer held various positions at the Sherwin-Williams Company, a manufacturer of paint and coatings products.
Removed
Ron Wilson has served as Executive Vice President and Chief Supply Chain Officer of Fortune Brands since September 2022. Mr. Wilson joined Fortune Brands as Senior Vice President of Global Operations of the Company’s Water Innovations segment in November 2019 and served in that role until September 2022. Prior to that, Mr.
Removed
Wilson served as Vice President of Operations for ABB, an electrification and automation technology company, from June 2018 to April 2019. 20 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changePurchases of Equity Securities by the Issuer and Affiliated Purchasers Below are the repurchases of common stock by the Company or any “affiliated purchaser” (as defined in Rule 10b-18(a)(3) under the Exchange Act) for the thirteen weeks ended December 30, 2023: Thirteen Weeks Ended December 30, 2023 Total number of shares purchased (a) Average price paid per share Total number of shares purchased as part of publicly announced plans or programs (a) Approximate dollar value of shares that may yet be purchased under the plans or programs (a) October 1 – October 28 331,799 $ 60.19 331,799 $ 434,580,518 October 29 – November 25 — — — 434,580,518 November 26 – December 30 — — — 434,580,518 Total 331,799 $ 60.19 331,799 (a) Information on the Company’s share repurchase program in effect during the period covered by the table above follows: Authorization date Announcement date Authorization amount of shares of outstanding common stock Expiration date March 1, 2022 March 2, 2022 $750,000,000 March 1, 2024 In addition, on January 29, 2024, the Company's Board of Directors authorized the repurchase of up to $650 million of shares of the Company’s outstanding common stock over the next two years on the open market or in privately negotiated transactions or otherwise (including pursuant to a Rule 10b5-1 trading plan, block trades and accelerated share repurchase transactions), in accordance with applicable securities laws.
Biggest changePurchases of Equity Securities by the Issuer and Affiliated Purchasers Below are the repurchases of common stock by the Company or any “affiliated purchaser” (as defined in Rule 10b-18(a)(3) under the Exchange Act) for the thirteen weeks ended December 28, 2024: Thirteen Weeks Ended December 28, 2024 Total number of shares purchased (a) Average price paid per share Total number of shares purchased as part of publicly announced plans or programs (a) Approximate dollar value of shares that may yet be purchased under the plans or programs (a) September 29 – October 26 — $ — — $ 534,394,909 October 27 – November 23 664,046 75.3 664,046 484,394,911 November 24 – December 28 — — — 484,394,911 Total 664,046 $ 75.3 664,046 (a) Information on the Company’s share repurchase program in effect during the period covered by the table above follows: Authorization date Announcement date Authorization amount of shares of outstanding common stock Expiration date January 29, 2024 January 29, 2024 $650,000,000 January 29, 2026 On February 7, 2025, the Company announced that on February 4, 2025, Company's Board of Directors authorized the repurchase of up to $1 billion of shares of the Company’s outstanding common stock over the next two years on the open market or in privately negotiated transactions or otherwise (including pursuant to a Rule 10b5-1 trading plan, block trades and accelerated share repurchase transactions), in accordance with applicable securities laws.
This graph assumes $100 was invested in the stock or the index on December 31, 2018 and also assumes the reinvestment of dividends, including the effect of the Separation.
This graph assumes $100 was invested in the stock or the index on December 31, 2019 and also assumes the reinvestment of dividends, including the effect of the Separation.
In December 2023, our Board of Directors announced a quarterly cash dividend payable to stockholders of $0.24 per share of our common stock. Our Board of Directors will continue to evaluate dividend payment opportunities on a quarterly basis.
In December 2024, our Board of Directors announced a quarterly cash dividend payable to stockholders of $0.25 per share of our common stock. Our Board of Directors will continue to evaluate dividend payment opportunities on a quarterly basis.
On February 9, 2024, there were 7,229 record holders of the Company’s common stock, par value $0.01 per share. A substantially greater number of holders of the Company’s common stock are “street name” or beneficial holders, whose shares of record are held by banks, brokers or other financial institutions.
On February 7, 2025, there were 6,745 record holders of the Company’s common stock, par value $0.01 per share. A substantially greater number of holders of the Company’s common stock are “street name” or beneficial holders, whose shares of record are held by banks, brokers or other financial institutions.
Item 5. Market for Registrant’s Common Equity, Related Sto ckholder Matters and Issuer Purchases of Equity Securities. Market Information, Dividends and Holders of Record Our common stock is listed on the New York Stock Exchange under the ticker symbol “FBIN”. On December 15, 2022, our ticker symbol was changed from "FBHS" to "FBIN".
Item 5. Market for Registrant’s Common Equity, Related Sto ckholder Matters and Issuer Purchases of Equity Securities. Market Information, Dividends and Holders of Record Our common stock is listed on the New York Stock Exchange under the ticker symbol “FBIN".
The authorization is in effect until January 29, 2026, and may be suspended or discontinued at any time. 21 Stock Performance The above graph compares the relative performance of our common stock, the S&P MidCap 400 Index and S&P MidCap 400 Consumer Durables Index. This graph covers the period from December 31, 2018 through December 30, 2023.
The authorization is in effect until February 4, 2027, and may be suspended or discontinued at any time. 20 Stock Performance The above graph compares the relative performance of our common stock, the S&P MidCap 400 Index and S&P MidCap 400 Consumer Durables Index. This graph covers the period from December 31, 2019 through December 28, 2024.
The $650 million share repurchase authorization is in addition to the approximately $435 million remaining as of January 30, 2024 from the existing authorization described above expiring on March 1, 2024. The new purchases, if made, will occur from time to time depending on market conditions.
The new $1 billion share repurchase authorization replaced the authorization described above, effective on February 4, 2025, that otherwise would have expired on January 29, 2026. The new purchases, if made, will occur from time to time depending on market conditions.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Biggest changeItem 6. Reserved . 22 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. 23 Results of Operations . 25 Liquidity and Capital Resources. 31 Critical Accounting Estimates . 36 Item 7A. Quantitative and Qualitative Disclosures about Market Risk. 42 Item 8. Financial Statements and Supplementary Data. 43 Notes to Consolidated Financial Statements . 53
Biggest changeItem 6. Reserved . 21 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. 22 Results of Operations . 24 Liquidity and Capital Resources. 30 Critical Accounting Estimates. 35 Item 7A. Quantitative and Qualitative Disclosures about Market Risk. 41 Item 8. Financial Statements and Supplementary Data. 42 Notes to Consolidated Financial Statements . 51

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

107 edited+32 added−33 removed75 unchanged
Biggest changeFor the year ended December 30, 2023, net sales based on country of destination were: (In millions) United States $ 3,708.0 80 % Canada 352.4 8 China 335.2 7 Other international 230.6 5 Total $ 4,626.2 100 % We believe that the Company has certain competitive advantages including market-leading brands, a diversified mix of channels, lean and flexible supply chains and a strong capital structure, as well as a tradition of strong innovation and customer service.
Biggest changeOverview The Company is a leading innovation company focused on creating smarter, safer and more beautiful homes and lives that is focused on the design, manufacture and sale of market-leading branded products in the following categories: plumbing and accessories, including digital water products, entry door and storm door systems, security and safety products, and outdoor performance materials used in decking and railing products. 22 For the year ended December 28, 2024, net sales based on country of destination were: (In millions) United States $ 3,809.0 83 % Canada 344.5 7 China 233.6 5 Other international 221.9 5 Total $ 4,609.0 100 % We believe that the Company has certain competitive advantages including market-leading brands, a diversified mix of channels, lean and flexible supply chains and a strong capital structure, as well as a tradition of strong innovation and customer service.
The increase in net cash used in financing activities of $343.8 million was primarily driven by the absence of cash flow items related to the dividend received from MasterBrand as a result of the Separation ($940.0 million), partially offset by lower share repurchases in 2023 compared to 2022 ($430.1 million decrease), a decrease in dividends paid to stockholders and the absence in 2023 of the final payment for the remaining equity interest in Flo ($16.7 million) which was made during 2022.
The increase in net cash used in financing activities of $343.8 million from 2022 to 2023 was primarily driven by the absence of cash flow items related to the dividend received from MasterBrand as a result of the Separation ($940.0 million), partially offset by lower share repurchases in 2023 compared to 2022 ($430.1 million decrease), a decrease in dividends paid to stockholders and the absence in 2023 of the final payment for the remaining equity interest in Flo Technologies ($16.7 million) which was made during 2022.
Operating income Operating income decreased by $159.4 million, or 20.6%, primarily due to lower sales unit volume in the U.S., lower international sales ($41.2 million decrease), manufacturing inefficiencies related to lower sales unit volume, amortization of the inventory fair-value adjustment related to the acquisition of the ASSA Businesses ($12.4 million), higher restructuring and other costs associated with the planned closure of a manufacturing facility in our Security segment, higher headcount-related costs, as well as unfavorable foreign exchange of approximately $7.9 million.
Operating income Operating income decreased by $159.4 million, or 20.6%, primarily due to lower sales unit volume in the U.S., lower international sales ($41.2 million decrease), manufacturing inefficiencies related to lower sales unit volume, amortization of the inventory fair-value adjustment related to the acquisition of the Acquired Businesses ($12.4 million), higher restructuring and other costs associated with the planned closure of a manufacturing facility in our Security segment, higher headcount-related costs, as well as unfavorable foreign exchange of approximately $7.9 million.
These factors were partially offset by the impact from the acquisitions of the ASSA Businesses in June 2023, including amortization of the inventory fair value adjustment ($12.4 million) and Aqualisa in July 2022, manufacturing inefficiencies related to lower sales unit volume across all of our businesses, costs associated with the planned closure of a manufacturing facility within our Security segment and the absence of the $6.2 million gain on sale of a previously closed manufacturing facility in our Outdoors segment in 2022.
These factors were partially offset by the impact from the acquisitions of the Acquired Businesses in June 2023, including amortization of the inventory fair value adjustment ($12.4 million) and Aqualisa in July 2022, manufacturing inefficiencies related to lower sales unit volume across all of our businesses, costs associated with the planned closure of a manufacturing facility within our Security segment and the absence of the $6.2 million gain on sale of a previously closed manufacturing facility in our Outdoors segment in 2022.
All other benefit accruals under our defined benefit pension plans were frozen as of, or prior to, December 31, 2016. 39 We recognize changes in the net actuarial gains or losses in other income, net to the extent they exceed 10 percent of the greater of the fair value of pension plan assets or projected benefit obligation for each plan (the “corridor”) in earnings immediately upon remeasurement, which is at least annually in the fourth quarter of each fiscal year.
All other benefit accruals under our defined benefit pension plans were frozen as of, or prior to, December 31, 2016. 38 We recognize changes in the net actuarial gains or losses in other income, net to the extent they exceed 10 percent of the greater of the fair value of pension plan assets or projected benefit obligation for each plan (the “corridor”) in earnings immediately upon remeasurement, which is at least annually in the fourth quarter of each fiscal year.
Volume allowances are accrued based on management’s estimates of customer volume achievement and other factors incorporated into customer agreements, such as new products, store sell-through, merchandising support, levels of returns and customer training. Management periodically reviews accruals for these rebates and allowances, and adjusts accruals when circumstances indicate (typically as a result of a change in volume expectations). 41
Volume allowances are accrued based on management’s estimates of customer volume achievement and other factors incorporated into customer agreements, such as new products, store sell-through, merchandising support, levels of returns and customer training. Management periodically reviews accruals for these rebates and allowances, and adjusts accruals when circumstances indicate (typically as a result of a change in volume expectations). 40
Defined Benefit Plans We have a number of pension plans in the United States, covering many of the Company’s employees. In addition, the Company provides postretirement health care and life insurance benefits to certain retirees. Service cost for 2023 relates to benefit accruals for an hourly Union group within the defined benefit plan for our Security segment.
Defined Benefit Plans We have a number of pension plans in the United States, covering many of the Company’s employees. In addition, the Company provides postretirement health care and life insurance benefits to certain retirees. Service cost for 2024 relates to benefit accruals for an hourly Union group within the defined benefit plan for our Security segment.
If this comparison indicates that there is an impairment, the amount of the impairment is calculated based on fair value. Fair value is estimated primarily using discounted expected future cash flows on a market-participant basis. No material impairments related to long-lived assets were recorded in 2023, 2022 or 2021.
If this comparison indicates that there is an impairment, the amount of the impairment is calculated based on fair value. Fair value is estimated primarily using discounted expected future cash flows on a market-participant basis. No material impairments related to long-lived assets were recorded in 2024, 2023 or 2022.
Impairment losses are recorded to the extent that the carrying value of the reporting unit exceeds its fair value. The Company’s reporting units are operating segments, or one level below operating segments when appropriate. 37 To evaluate the recoverability of goodwill, we first assess qualitative factors to determine whether it is more likely than not that goodwill is impaired.
Impairment losses are recorded to the extent that the carrying value of the reporting unit exceeds its fair value. The Company’s reporting units are operating segments, or one level below operating segments when appropriate. 36 To evaluate the recoverability of goodwill, we first assess qualitative factors to determine whether it is more likely than not that goodwill is impaired.
Under the 2022 Revolving Credit Agreement, the Company is required to maintain a minimum ratio of consolidated EBITDA to consolidated interest expense of 3.0 to 1.0. Consolidated EBITDA is defined as consolidated net income before interest expense, income taxes, depreciation, amortization of intangible assets, losses from asset impairments, and certain other adjustments.
Under the 2022 Revolving Credit Agreement, the Company is required to maintain a minimum ratio of consolidated EBITDA to consolidated interest expense of 3.0 to 1.0. Consolidated EBITDA is defined as consolidated net income before interest expense, income taxes, depreciation, amortization of intangible assets, losses from asset impairments, and certain other one-time adjustments.
Impairment losses are recorded to the extent that the carrying value of the indefinite-lived intangible asset exceeds its fair value. 38 We first assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired. Qualitative factors include changes in volume, customers and the industry.
Impairment losses are recorded to the extent that the carrying value of the indefinite-lived intangible asset exceeds its fair value. 37 We first assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired. Qualitative factors include changes in volume, customers and the industry.
As a result of the Separation, our former Cabinets segment was disposed of, and the operating results of the Cabinets business are reported as discontinued operations for all periods presented unless otherwise noted. All amounts, percentages and disclosures for all periods presented reflect only the continuing operations of the Company unless otherwise noted.
As a result of the Separation, our former Cabinets segment was disposed of, and the operating results of the Cabinets business are reported as discontinued operations in 2022. All amounts, percentages and disclosures for all periods presented reflect only the continuing operations of the Company unless otherwise noted.
Selling, general and administrative expenses Selling, general and administrative expenses increased by $90.5 million, or 8.4%, due to the impact from the acquisition of the ASSA Businesses, including transaction related expenses of $19.7 million, and higher headcount-related costs across our segments.
Selling, general and administrative expenses Selling, general and administrative expenses increased by $90.5 million, or 8.4%, due to the impact from the acquisition of the Acquired Businesses, including transaction related expenses of $19.7 million, and higher headcount-related costs across our segments.
This expense was offset by favorable benefits for the release of uncertain tax positions, primarily related to audit closures and statute of limitations lapses, share-based compensation and a valuation allowance decrease. The 2021 effective income tax rate was unfavorably impacted by state and local income taxes, foreign income taxed at higher rates, as well as non-deductible executive compensation.
The 2022 effective income tax rate was unfavorably impacted by state and local income taxes, foreign income taxed at higher rates, as well as non-deductible executive compensation. This expense was offset by favorable benefits for the release of certain uncertain tax positions, primarily related to audit closures and statute of limitations lapses, share-based compensation, and a valuation allowance decrease.
This section also provides a discussion of our contractual obligations, other purchase commitments and customer credit risk that existed at December 30, 2023, as well as a discussion of our ability to fund our future commitments and ongoing operating activities through internal and external sources of capital. • Critical Accounting Estimates: This section identifies and summarizes those accounting policies that significantly impact our reported results of operations and financial condition and require significant judgment or estimates on the part of management in their application.
This section also provides a discussion of our contractual obligations, other purchase commitments and customer credit risk that existed at December 28, 2024, as well as a discussion of our ability to fund our future commitments and ongoing operating activities through internal and external sources of capital. • Critical Accounting Estimates: This section identifies and summarizes those accounting policies that significantly impact our reported results of operations and financial condition and require significant judgment or estimates on the part of management in their application.
A 25 basis point change in the long-term rate of return on plan assets used in accounting for our pension plans would have a $1.1 million impact on pension expense. In addition, if required, actuarial gains and losses will be recorded in accordance with our defined benefit plan accounting method as previously described.
A 25 basis point change in the long-term rate of return on plan assets used in accounting for our pension plans would have a $0.4 million impact on pension expense. In addition, if required, actuarial gains and losses will be recorded in accordance with our defined benefit plan accounting method as previously described.
These factors were partially offset by savings associated with our 2022 corporate reorganization and restructuring activities and lower advertising and marketing costs. 26 Amortization of intangible assets Amortization of intangible assets increased by $13.8 million, primarily due to the acquisition of the ASSA Businesses in June 2023 and Aqualisa in July 2022.
These factors were partially offset by savings associated with our 2022 corporate reorganization and restructuring activities and lower advertising and marketing costs. Amortization of intangible assets Amortization of intangible assets increased by $13.8 million, primarily due to the acquisition of the Acquired Businesses in June 2023 and Aqualisa in July 2022.
We believe that our current cash position, cash flow generated from operations, and amounts available under our revolving credit facility should be sufficient for our operating requirements and enable us to fund our capital expenditures, share repurchases dividend payments, and required long-term debt payments.
We believe that our current cash position, cash flow generated from operations, amounts available under our revolving credit facility and access to the capital markets should be sufficient for our operating requirements and enable us to fund our capital expenditures, share repurchases dividend payments, and required long-term debt payments.
If it is deemed more likely than not that an intangible asset is impaired, we will perform a quantitative impairment test. We measure fair value of our indefinite-lived tradenames using the relief-from-royalty approach which estimates the present value of royalty income that could be hypothetically earned by licensing the brand name to a third party over the remaining useful life.
If it is deemed more likely than not that an intangible asset is impaired, we will perform a quantitative impairment test. We measure fair value of our indefinite-lived tradenames using the relief-from-royalty approach which estimates the present value of royalty income that could be hypothetically earned by licensing the brand name to a third party.
Refer to Note 5, Discontinued Operations, in the consolidated financial statements in Item 8 in this Annual Report on Form 10-K for additional details.
Refer to Note 5, "Discontinued Operations," of the Notes to the consolidated financial statements in Item 8 in this Annual Report on Form 10-K for additional details.
Significant actuarial losses in future periods would be expected if discount rates decline, actual returns on plan assets are lower than our expected return, or a combination of both occurs. 40 A 25 basis point change in our discount rate assumption would lead to an increase or decrease in our pension and postretirement liability of approximately $12 million.
Significant actuarial losses in future periods would be expected if discount rates decline, actual returns on plan assets are lower than our expected return, or a combination of both occurs. 39 A 25 basis point change in our discount rate assumption would lead to an increase or decrease in our pension and postretirement liability of approximately $6 million.
We believe our operating cash flows, including funds available under the credit facility and access to capital markets, provide sufficient liquidity to support the Company’s working capital requirements, capital expenditures, other contractual commitments and service of indebtedness, as well as to finance acquisitions, repurchase shares of our common stock and pay dividends to stockholders, as the Board of Directors deems appropriate, both for the 12-month period following the 2023 fiscal year, and in the long-term.
We believe our cash on hand, operating cash flows, funds available under the credit facility and access to capital markets, provide sufficient liquidity to support the Company’s working capital requirements, capital expenditures, other contractual commitments and service of indebtedness, as well as to finance acquisitions, repurchase shares of our common stock and pay dividends to stockholders, as the Board of Directors deems appropriate, both for the 12-month period following the 2024 fiscal year, and in the long-term.
A 50 basis point change in the discount rate or long-term revenue growth rate assumptions, or a decrease in multiple of 1.0 in the EBITDA multiple assumption, during the year ended December 30, 2023 would not have resulted in an impairment being recognized when estimating the fair value of our reporting unit goodwill.
A 50 basis point change in the discount rate or long-term revenue growth rate assumptions, or a decrease in multiple of 1.0 in the EBITDA multiple assumption, during the year ended December 28, 2024 would not have resulted in an impairment being recognized when estimating the fair value of our reporting unit goodwill.
In addition, the Company's ratio of consolidated debt minus certain cash and cash equivalents to consolidated EBITDA generally may not exceed 3.5 to 1.0. There were no outstanding borrowings under this facility as of December 30, 2023 or December 31, 2022. As of December 30, 2023, we were in compliance with all covenants under this facility.
In addition, the Company's ratio of consolidated debt minus certain cash and cash equivalents to consolidated EBITDA generally may not exceed 3.5 to 1.0. There were no outstanding borrowings under this facility as of December 28, 2024 or December 30, 2023. As of December 28, 2024, we were in compliance with all covenants under this facility.
In 2023, financial results included: • restructuring and other charges of $54.2 million before tax ($41.3 million after tax), largely related to costs associated with the planned closure of a manufacturing facility within our Security segment and headcount actions across all segments; 25 • asset impairment charges of $33.5 million related to the impairment of two indefinite-lived tradenames within our Outdoors segment, which were primarily the result of a decline in forecasted sales; • the impact of foreign exchange primarily due to movement in the Canadian dollar, Mexican peso, British pound and Chinese yuan, which had an unfavorable impact compared to 2022 of approximately $24 million on net sales and of approximately $7.9 million on both operating income and net income; and • Transaction expenses related to the acquisition of the ASSA Businesses of $19.7 million.
In 2023, financial results included: • restructuring and other charges of $54.2 million largely related to costs associated with the closure of a manufacturing facility within our Security segment and headcount actions across all segments; • asset impairment charges of $33.5 million related to the impairment of two indefinite-lived tradenames within our Outdoors segment, which were primarily the result of a decline in forecasted sales; • the impact of foreign exchange primarily due to movement in the Canadian dollar, Mexican peso, British pound and Chinese yuan, which had an unfavorable impact compared to 2022 of approximately $24 million on net sales and approximately $7.9 million on both operating income and net income; and • transaction expenses related to the acquisition of the Acquired Businesses of $19.7 million.
The Company used the net proceeds from the 2022 Notes offering to redeem a portion of the outstanding balance on the 2021 Term Loan (as defined below). 31 At December 30, 2023, the Company had aggregate outstanding notes in the principal amount of $2.7 billion, with varying maturities (the “Notes”). The Notes are unsecured senior obligations of the Company.
The Company used the net proceeds from the 2022 Notes offering to redeem a portion of the outstanding balance on the 2021 Term Loan (as defined below). At December 28, 2024, the Company had aggregate outstanding notes in the principal amount of $2.7 billion, with varying maturities (the “Notes”). The Notes are unsecured senior obligations of the Company.
The assumptions used to estimate the fair values of the goodwill related to continuing operations tested quantitatively during the year ended December 30, 2023 were as follows: Unobservable Input 2023 Discount rate 10.3 % Long-term revenue growth rates (a) 3.0 % EBITDA multiple 14.0 (a) Selected long-term revenue growth rate for the goodwill that was tested quantitatively.
The assumptions used to estimate the fair values of the goodwill related to continuing operations tested quantitatively during the year ended December 28, 2024 were as follows: Unobservable Input 2024 Discount rate 10.8 % Long-term revenue growth rates (a) 3.0 % EBITDA multiple 14.0 (a) Selected long-term revenue growth rate for the goodwill that was tested quantitatively.
MD&A is organized as follows: • Recent Developments: This section provides a summary of noteworthy recent developments in the most recently completed fiscal year in the operation of the business, including changes in segment reporting and significant acquisitions. • Overview: This section provides a general description of our business and a discussion of management’s general outlook regarding market demand, our competitive position and product innovation, as well as additional recent developments we believe are important to understanding our results of operations and financial condition or in understanding anticipated future trends. • Basis of Presentation: This section provides a discussion of the basis on which our consolidated financial statements were prepared. • Results of Operations: This section provides an analysis of our results of operations for the fiscal years ended December 30, 2023, December 31, 2022 and December 31, 2021. • Liquidity and Capital Resources: This section provides a discussion of our financial condition as of December 30, 2023 and an analysis of our cash flows for each of the three years ended December 30, 2023, December 31, 2022 and December 31, 2021.
MD&A is organized as follows: • Recent Developments: This section provides a summary of noteworthy recent developments in the most recently completed fiscal year in the operation of the business, including acquisition activity. • Overview: This section provides a general description of our business and a discussion of management’s general outlook regarding market demand, our competitive position and product innovation, as well as additional recent developments we believe are important to understanding our results of operations and financial condition or in understanding anticipated future trends. • Basis of Presentation: This section provides a discussion of the basis on which our consolidated financial statements were prepared. • Results of Operations: This section provides an analysis of our results of operations for the fiscal years ended December 28, 2024, December 30, 2023 and December 31, 2022. • Liquidity and Capital Resources: This section provides a discussion of our financial condition as of December 28, 2024 and an analysis of our cash flows for each of the three years ended December 28, 2024, December 30, 2023 and December 31, 2022.
Similar to foreign currency translation adjustments, these changes in fair value are recognized in earnings only when realized upon sale or upon complete or substantially complete liquidation of the investment in the foreign entity. Deferred currency gains (loss) of $5.2 million, $4.7 million and $(2.6) million (before tax impact) were reclassified into earnings for 2023, 2022 and 2021, respectively.
Similar to foreign currency translation adjustments, these changes in fair value are recognized in earnings only when realized upon sale or upon complete or substantially complete liquidation of the investment in the foreign entity. Deferred currency gains (losses) of $(0.4) million, $5.2 million and $4.7 million (before tax impact) were reclassified into earnings for 2024, 2023 and 2022, respectively.
The weighted-average discount rate for defined benefit liabilities as of December 30, 2023 and 2022 was 5.0% and 5.2%, respectively. For the postretirement benefits obligation, our health care trend rate assumption is based on historical cost increases and expectations for long-term increases.
The weighted-average discount rate for defined benefit liabilities as of December 28, 2024 December 30, 2023 was 5.7% and 5.0%, respectively. For the postretirement benefits obligation, our health care trend rate assumption is based on historical cost increases and expectations for long-term increases.
The weighted-average interest rates on these borrowings were zero in 2023 and 2022. 32 Commercial Paper The Company operates a commercial paper program (the “Commercial Paper Program”) pursuant to which the Company may issue unsecured commercial paper notes.
The weighted-average interest rates on these borrowings were zero in 2024 and 2023. 31 Commercial Paper The Company operates a commercial paper program (the “Commercial Paper Program”) pursuant to which the Company may issue unsecured commercial paper notes.
The long-term outlook for our products remains favorable, and our strategic advantages, including the set of capabilities we refer to as the Fortune Brands Advantage, has helped us to continue to achieve profitable organic growth over time.
We believe the long-term outlook for our products remains favorable, and we have a number of strategic advantages, including the set of capabilities we refer to as the Fortune Brands Advantage, that has helped us to continue to achieve profitable organic growth over time.
As of December 30, 2023, we had liabilities for unrecognized tax benefits pertaining to uncertain tax positions totaling $25.6 million. It is reasonably possible that the unrecognized tax benefits may decrease by $7.7 million in the next 12 months primarily as a result of the lapse of the statute of limitations of U.S. federal, state and foreign income taxes.
As of December 28, 2024, we had liabilities for unrecognized tax benefits pertaining to uncertain tax positions totaling $25.2 million. It is reasonably possible that the unrecognized tax benefits may decrease by $6.1 million in the next 12 months primarily as a result of the lapse of the statute of limitations of U.S. federal, state and foreign income taxes.
We currently have uncommitted bank lines of credit in China, which provide for unsecured borrowings for working capital of up to $30.5 million in aggregate as of December 30, 2023 and $20.5 million in aggregate as of December 31, 2022, of which there were no outstanding balances as of December 30, 2023 and December 31, 2022.
We currently have uncommitted bank lines of credit in China, which provide for unsecured borrowings for working capital of up to $30.5 million in aggregate as of December 28, 2024 and December 30, 2023, of which there were no outstanding balances as of December 28, 2024 and December 30, 2023.
The following discussion contains references to years 2023, 2022 and 2021, which represent fiscal years ended December 30, 2023, December 31, 2022 and December 31, 2021.
The following discussion contains references to years 2024, 2023 and 2022, which represent fiscal years ended December 28, 2024, December 30, 2023 and December 31, 2022.
These factors were partially offset by the benefit from the acquisitions of the ASSA Businesses in June 2023 and Aqualisa in July 2022 (approximately $247 million combined sales benefit in 2023) and favorable channel mix.
These factors were partially offset by the benefit from the acquisitions of the Acquired Businesses in June 2023 and Aqualisa Holdings (International) Ltd. ("Aqualisa") in July 2022 (approximately $247 million combined sales benefit in 2023) and favorable channel mix.
On December 30, 2023, we had cash and cash equivalents of $366.4 million, of which $306.1 million was held at non-U.S. subsidiaries. We manage our global cash requirements considering (i) available funds among the subsidiaries through which we conduct business, (ii) the geographic location of our liquidity needs, and (iii) the cost to access international cash balances.
On December 28, 2024, we had cash and cash equivalents $381.1 million, of which $335.4 million was held at non-U.S. subsidiaries. We manage our global cash requirements considering (i) available funds among the subsidiaries through which we conduct business, (ii) the geographic location of our liquidity needs, and (iii) the cost to access international cash balances.
The following table provides a summary of the Company’s outstanding Notes, including the carrying value of the Notes, net of underwriting commissions, price discounts and debt issuance costs as of December 30, 2023 and December 31, 2022: (in millions) Net Carrying Value Coupon Rate Principal Amount Issuance Date Maturity Date December 30, 2023 December 31, 2022 4.000% Senior Notes $ 500.0 June 2015 June 2025 $ 498.9 $ 498.1 4.000% Senior Notes $ 600.0 September 2018 September 2023 - 599.2 3.250% Senior Notes $ 700.0 September 2019 September 2029 695.7 695.0 4.000% Senior Notes $ 450.0 March 2022 March 2032 446.2 445.8 4.500% Senior Notes $ 450.0 March 2022 March 2052 435.9 435.4 5.875% Senior Notes $ 600.0 June 2023 June 2033 593.4 - Total Senior Notes $ 2,670.1 $ 2,673.5 Credit Facilities In August 2022, the Company entered into a third amended and restated $1.25 billion revolving credit facility (the “2022 Revolving Credit Agreement”), and borrowings thereunder will be used for general corporate purposes.
The following table provides a summary of the Company’s outstanding Notes, including the carrying value of the Notes, net of underwriting commissions, price discounts and debt issuance costs as of December 28, 2024 and December 30, 2023: (in millions) Net Carrying Value Coupon Rate Principal Amount Issuance Date Maturity Date December 28, 2024 December 30, 2023 4.000% Senior Notes $ 500.0 June 2015 June 2025 $ 499.6 $ 498.9 3.250% Senior Notes $ 700.0 September 2019 September 2029 696.5 695.7 4.000% Senior Notes $ 450.0 March 2022 March 2032 446.7 446.2 4.500% Senior Notes $ 450.0 March 2022 March 2052 436.4 435.9 5.875% Senior Notes $ 600.0 June 2023 June 2033 594.1 593.4 Total Senior Notes $ 2,673.3 $ 2,670.1 Less: current portion 499.6 — Total long-term debt $ 2,173.7 $ 2,670.1 Credit Facilities In August 2022, the Company entered into a third amended and restated $1.25 billion revolving credit facility (the “2022 Revolving Credit Agreement”), and borrowings thereunder will be used for general corporate purposes.
The expected rate of return on plan assets is determined based on the nature of the plans’ investments, our current asset allocation and our expectations for long-term rates of return. The weighted-average long-term expected rate of return on pension plan assets for the years ended December 30, 2023 and December 31, 2022 was 6.1% and 4.4%, respectively.
The expected rate of return on plan assets is determined based on the nature of the plans’ investments, our current asset allocation and our expectations for long-term rates of return. The weighted-average long-term expected rate of return on pension plan assets for the years ended December 28, 2024 and December 30, 2023 was 7.3% and 6.1%, respectively.
Recently Issued Accounting Standards Refer to Note 2, “Significant Accounting Policies,” in Item 8 for discussion of recently issued accounting standards. Critical Accounting Estimates Our significant accounting policies are described in Note 2, “Significant Accounting Policies,” of the Notes to consolidated financial statements in Item 8 of this Annual Report on Form 10-K.
Recently Issued Accounting Standards Refer to Note 2, “Significant Accounting Policies,” of the Notes to consolidated financial statements in Item 8 of this Annual Report on Form 10-K for discussion of recently issued accounting standards.
The pre-tax recognition of actuarial gains was $0.6 million and $1.3 million in 2023 and 2022, respectively. The total unrecognized net actuarial losses in accumulated other comprehensive income for all defined benefit plans were $35.8 million as of December 30, 2023, compared to $49.2 million as of December 31, 2022.
The pre-tax recognition of actuarial losses (gains) was $18.2 million and $(0.6) million in 2024 and 2023, respectively. The total unrecognized net actuarial losses in accumulated other comprehensive income for all defined benefit plans were $12.3 million as of December 28, 2024, compared to $35.8 million as of December 30, 2023.
The assumptions used to estimate the fair values of the tradenames tested quantitatively during the year ended December 30, 2023 were as follows: 2023 Unobservable Input Minimum Maximum Weighted Average (a) Discount rates 11.1 % 14.5 % 13.6 % Royalty rates (b) 2.5 % 3.5 % 3.3 % Long-term revenue growth rates (c) 2.0 % 3.0 % 2.1 % (a) Weighted by the relative fair value of the tradenames that were tested quantitatively.
The assumptions used to estimate the fair values of the tradenames tested quantitatively during the year ended December 28, 2024 were as follows: 2024 Unobservable Input Minimum Maximum Weighted Average (a) Discount rates 11.0 % 15.0 % 12.6 % Royalty rates (b) 2.5 % 4.0 % 3.5 % Long-term revenue growth rates (c) 2.5 % 3.0 % 2.6 % (a) Weighted by the relative fair value of the tradenames that were tested quantitatively.
Discount rates for 2023 postretirement benefits increased by an average of 20 basis points . Discount rates in 2022 used to determine benefit obligations increased by an average of 230 basis points for pension benefits. Discount rates for 2022 postretirement benefits decreased an average of 190 basis points.
Discount rates for 2024 postretirement benefits increased by an average of 110 basis points . Discount rates in 2023 used to determine benefit obligations decreased by an average of 20 basis points for pension benefits. Discount rates for 2023 postretirement benefits increased an average of 20 basis points.
This expense was offset by favorable benefits for the release of uncertain tax positions of statute of limitations lapses and federal tax credits. The 2022 effective income tax rate was unfavorably impacted by state and local income taxes, foreign income taxed at higher rates, as well as non-deductible executive compensation.
The 2023 effective income tax rate was unfavorably impacted by state and local income taxes and foreign income taxed at higher rates. This expense was offset by favorable benefits for the release of uncertain tax positions of statute of limitations lapses and federal tax credits.
There were no outstanding borrowings under our Commercial Paper facility as of December 30, 2023 or December 31, 2022.
There were no outstanding borrowings under our Commercial Paper facility as of December 28, 2024 or December 30, 2023.
Operating income decreased by $60.7 million, or 31.3%, due to asset impairment charges related to two of our indefinite-lived tradenames ($33.5 million), lower net sales, the impact of costs associated with manufacturing inefficiencies related to lower sales unit volume, the absence of the 2022 gain of $6.2 million on the sale of a previously closed manufacturing facility and higher employee-related costs.
These were partially offset by the benefit from changes in product mix and lower customer sales incentives. 29 Operating income decreased by $60.7 million, or 31.3%, due to asset impairment charges related to two of our indefinite-lived tradenames ($33.5 million), lower net sales, the impact of costs associated with manufacturing inefficiencies related to lower sales unit volume, the absence of the 2022 gain of $6.2 million on the sale of a previously closed manufacturing facility and higher employee-related costs.
Pension Plans Subsidiaries of Fortune Brands sponsor their respective defined benefit pension plans, related to our continuing operations, that are funded by a portfolio of investments maintained within our benefit plan trust. In 2023, 2022 and 2021 we voluntarily contributed $4.0 million, $9.0 million and $18.5 million, respectively, to our qualified pension plans.
Subsidiaries of Fortune Brands sponsor their respective defined benefit pension plans, related to our continuing operations, that are funded by a portfolio of investments maintained within our benefit plan trust. We made no pension contributions to our qualified pension plans in 2024 and made voluntary contributions of $4.0 million and $9.0 million in 2023 and 2022, respectively.
Below is a table showing pre-tax pension and postretirement expenses, including the impact of actuarial gains & losses (which include settlement losses): (In millions) 2023 2022 Total pension loss (income) $ 0.7 $ (7.8 ) Actuarial loss (gain) component of income above 2.0 (0.3 ) Total postretirement income (1.7 ) (0.2 ) Actuarial gain component of income above (2.6 ) (1.0 ) Discount rates in 2023 used to determine benefit obligations decreased by an average of 20 basis points for pension benefits.
Below is a table showing pre-tax pension and postretirement expenses, including the impact of actuarial gains and losses (which includes settlement losses): (In millions) 2024 2023 Total pension cost $ 11.6 $ 0.7 Actuarial loss component of cost above 18.5 2.0 Total postretirement cost (income) 0.6 (1.7 ) Actuarial (gain) component of cost (income) above (0.3 ) (2.6 ) Discount rates in 2024 used to determine benefit obligations increased by an average of 70 basis points for pension benefits.
Interest payments due during the next five years as of December 30, 2023 are $116.3 million in 2024, $202.5 million in 2025 through 2026, $192.5 million in 2027 through 2028 and $723.5 million in 2029 and beyond. Foreign Currency Risk Certain anticipated transactions, assets and liabilities are exposed to foreign currency risk.
Interest payments due during the next five years as of December 28, 2024 are $106.3 million in 2025, $192.5 million in 2026 through 2027, $192.5 million in 2028 through 2029 and $624.0 million in 2030 and beyond. Foreign Currency Risk Certain anticipated transactions, assets and liabilities are exposed to foreign currency risk.
Based on foreign exchange rates as of December 30, 2023, we estimate that $9.9 million of net derivative gain included in accumulated other comprehensive income ("AOCI") as of December 30, 2023, will be reclassified to earnings within the next twelve months.
Based on foreign exchange rates as of December 28, 2024, we estimate that $12.5 million of net derivative gains included in accumulated other comprehensive income ("AOCI") as of December 28, 2024, will be reclassified to earnings within the next twelve months.
Our actual gain on plan assets in 2023 was 10.0% compared to an actuarial assumption of an average 6.1% expected return. Our actual loss on plan assets in 2022 was 22.6% c ompared to an actuarial assumption of an average 4.4% expected return.
Our actual gain on plan assets in 2024 was 0.3% compared to an actuarial assumption of an average 7.3% expected return. Our actual gain on plan assets in 2023 was 10.0% c ompared to an actuarial assumption of an average 6.1 % expected return.
(In millions) 2023 2022 2021 Net cash provided by operating activities $ 1,055.8 $ 566.3 $ 688.7 Net cash used in investing activities (1,037.8 ) (455.5 ) (207.1 ) Net cash provided by (used in) financing activities (271.3 ) 72.5 (428.6 ) Effect of foreign exchange rate changes on cash 0.5 (11.1 ) (1.9 ) Net increase in cash, cash equivalents and restricted cash $ (252.8 ) $ 172.2 $ 51.1 Net cash provided by operating activities was $1,055.8 million in 2023, compared to $566.3 million in 2022.
(In millions) 2024 2023 2022 Net cash provided by operating activities $ 667.8 $ 1,055.8 $ 566.3 Net cash used in investing activities (302.9 ) (1,037.8 ) (455.5 ) Net cash (used in) provided by financing activities (363.4 ) (271.3 ) 72.5 Effect of foreign exchange rate changes on cash (11.5 ) 0.5 (11.1 ) Net (decrease) increase in cash, cash equivalents and restricted cash $ (10.0 ) $ (252.8 ) $ 172.2 Net cash provided by operating activities was $667.8 million in 2024, compared to $1,055.8 million in 2023.
As a result of the impairment tests performed, we recorded pre-tax impairment charges of $28.0 million and $5.5 million, respectively, related to the two indefinite-lived tradenames. As of December 30, 2023, the carrying value of the tradenames were $83.0 million and $12.5 million, respectively.
As a result of the impairment tests performed, we recorded pre-tax impairment charges of $28.0 million and $5.5 million, respectively, related to the two indefinite-lived tradenames.
In 2024, we do not expect to make any pension contributions. As of December 30, 2023, the fair value of our total pension plan assets was $468.0 million, representing funding of about 96% of the accumulated qualified benefit obligation liability.
In 2025, we do not expect to make any pension contributions. As of December 28, 2024, the fair value of our total pension plan assets was $177.1 million, representing funding of about 95% of the accumulated qualified benefit obligation liability.
Therefore, changes in the value of the related currencies affect our financial statements when translated into U.S. dollars. Contractual Obligations and Other Commercial Commitments The following summarizes our contractual obligations and commitments as of December 30, 2023. Purchase obligations were $635.3 million, of which $622.8 million is due within one year.
Therefore, changes in the value of the related currencies affect our financial statements when translated into U.S. dollars. Contractual Obligations and Other Commercial Commitments The following summarizes our contractual obligations and commitments as of December 28, 2024. Purchase obligations were $545.1 million, of which $522.4 million is due within one year.
Refer to Note 5, Discontinued Operations, in the consolidated financial statements in Item 8 in this Annual Report on Form 10-K for additional details.
See Note 5, "Discontinued Operations," of the Notes in the consolidated financial statements in Item 8 in this Annual Report on Form 10-K for additional information.
As of December 31, 2022, for postretirement medical and prescription drugs in the next year, our assumption was an assumed rate of increase of 5.8% for pre-65 retirees and 6.3% for post-65 retirees, declining until reaching an ultimate assumed rate of increase of 4.5% per year in 2028.
As of December 28, 2024, for postretirement medical and prescription drugs in the next year, our assumption was an assumed rate of increase of 7.1% for pre-65 retirees and 7.5% for post-65 retirees, declining until reaching an ultimate assumed rate of increase of 4.5% per year in 2035.
Income from continuing operations, net of tax Income from continuing operations, net of income taxes, decreased by $19.8 million, or 3.5%, due to lower net sales, lower operating income and higher interest expense, partly offset by higher other income and lower tax expense.
Income from continuing operations, net of tax Income from continuing operations, net of income taxes, decreased by $134.4 million, or 24.9%, due to lower operating income, partly offset by lower income tax expense, lower interest expense and higher other income.
In July 2022, we acquired 100% of the outstanding equity of Aqualisa for a purchase price of $156.0 million, net of cash acquired of $4.8 million. The results of Aqualisa are reported as part of the Water segment. We financed the transaction with borrowings under our existing credit facility.
The results of Aqualisa are reported as part of the Water segment. We financed the transaction with borrowings under our existing credit facility. In January 2022, we acquired 100% of the outstanding equity of Solar Innovations LLC and an affiliated entity (together, "Solar") for a purchase price of $61.6 million, net of cash acquired of $4.8 million.
The increase in net cash used in investing activities of $582.3 million from 2022 to 2023 reflects the net cash paid to date as part of the acquisition of the ASSA Businesses of $784.1 million as compared to the acquisitions of Aqualisa and Solar ($217.6 million combined) in 2022.
The increase in net cash used in investing activities of $582.3 million from 2022 to 2023 reflects the net cash paid for the Acquired Businesses of $784.1 million as compared to the acquisitions of Aqualisa and Solar ($217.6 million combined) in 2022. Net cash used in financing activities was $363.4 million in 2024 compared to $271.3 million in 2023.
(In millions) 2023 % change 2022 % change 2021 Net sales: Water $ 2,562.2 (0.3 )% $ 2,570.2 (6.9 )% $ 2,761.2 Outdoors 1,341.1 (11.6 ) 1,517.4 7.1 1,416.5 Security 722.9 13.8 635.4 1.9 623.4 Total net sales $ 4,626.2 (2.0 )% $ 4,723.0 (1.6 )% $ 4,801.1 Operating income: Water $ 574.3 (6.6 )% $ 614.6 (2.4 )% $ 629.7 Outdoors 133.5 (31.3 ) 194.2 (5.4 ) 205.3 Security 62.4 (34.6 ) 95.4 10.2 86.6 Corporate (155.3 ) 19.6 (129.9 ) 17.6 (110.5 ) Total operating income $ 614.9 (20.6 )% $ 774.3 (4.5 )% $ 811.1 Certain items had a significant impact on our results in 2023, 2022 and 2021.
(In millions) 2024 % change 2023 % change 2022 Net sales: Water $ 2,564.6 0.1 % $ 2,562.2 (0.3 )% $ 2,570.2 Outdoors 1,350.1 0.7 1,341.1 (11.6 ) 1,517.4 Security 694.3 (4.0 ) 722.9 13.8 635.4 Total net sales $ 4,609.0 (0.4 )% $ 4,626.2 (2.0 )% $ 4,723.0 Operating income: Water $ 595.1 3.6 % $ 574.3 (6.6 )% $ 614.6 Outdoors 198.0 48.3 133.5 (31.3 ) 194.2 Security 100.4 60.9 62.4 (34.6 ) 95.4 Corporate (155.6 ) 0.2 (155.3 ) 19.6 (129.9 ) Total operating income $ 737.9 20.0 % $ 614.9 (20.6 )% $ 774.3 Certain items had a significant impact on our results in 2024, 2023 and 2022.
For the indefinite-lived tradenames tested quantitatively in 2023, a 50 basis point change in the royalty rate assumption would change the fair value of those tradenames by $27.0 million; a 50 basis point change in the discount rate assumption would change the fair value of those tradenames by approximately $8.0 million; and a 50 basis point change in the long-term revenue growth rate assumption would change the fair value of those tradenames by approximately $4.0 million.
For the indefinite-lived tradenames tested quantitatively in 2024, a 50 basis point change in the royalty rate assumption would result in an impairment of those tradenames of approximately $8 million; a 50 basis point change in the discount rate assumption would result in an impairment of approximately $2 million; and a 50 basis point change in the long-term revenue growth rate assumption would result in an impairment of approximately $2 million.
The consolidated financial statements are prepared in conformity with U.S. generally accepted accounting principles (“GAAP”). Preparation of the financial statements requires us to make judgments, estimates and assumptions that affect the amounts of assets and liabilities reflected in the financial statements and revenues and expenses reported for the relevant reporting periods.
Preparation of the financial statements requires us to make judgments, estimates and assumptions that affect the amounts of assets and liabilities reflected in the financial statements and revenues and expenses reported for the relevant reporting periods.
On March 18, 2022, the Company entered into a Second Amendment and Incremental Agreement to the 2021 Term Loan (the “Second Amendment”), increasing the principal amount from $600 million to $1.1 billion. All other terms and conditions remained the same under the First Amendment and Second Amendment.
The First Amendment provided for an increase in the principal amount from $400 million to $600 million. On March 18, 2022, the Company entered into a Second Amendment and Incremental Agreement to the 2021 Term Loan (the “Second Amendment”), increasing the principal amount from $600 million to $1.1 billion.
Income from discontinued operations, net of tax Income from discontinued operations, net of income taxes, for the year ended December 31, 2022 included eleven and a half months of results of our former Cabinets segment.
Income from discontinued operations, net of tax Income from discontinued operations, net of income taxes, for the year ended December 31, 2022 was $146.8 million and includes the results from operations of our former Cabinets segment.
In 2022, financial results included: • restructuring and other charges of $26.8 million before tax ($19.6 million after tax), largely related to severance, asset impairment and other costs associated with plant closures and headcount actions across all segments, net of a gain on the sale of a previously closed manufacturing facility within our Outdoors segment of approximately $6 million; and • the impact of foreign exchange primarily due to movement in the Canadian dollar, Mexican peso, British pound and Chinese yuan, which had an unfavorable impact compared to 2021 of approximately $41 million on net sales and of approximately $12 million on both operating income and net income.
In 2022, financial results included: • restructuring and other charges of $26.8 million largely related to severance, asset impairment and other costs associated with plant closures and headcount actions across all segments, net of a gain on the sale of a previously closed manufacturing facility within our Outdoors segment of approximately $6 million; and • the impact of foreign exchange primarily due to movement in the Canadian dollar, Mexican peso, British pound and Chinese yuan, which had an unfavorable impact compared to 2021 of approximately $41 million on net sales and approximately $12 million on both operating income and net income. 2024 Compared to 2023 Total Fortune Brands Net sales Net sales decreased by $17.2 million, or 0.4%, primarily due to lower sales in our international markets ($136.7 million), higher customer sales incentives and unfavorable foreign exchange ($6.9 million), partially offset by the benefit from the acquisitions of SpringWell and the Acquired Businesses ($176.5 million).
In accordance with this policy, our inventory provision was $75.8 million and $49.2 million as of December 30, 2023 and December 31, 2022, respectively. 36 Long-lived Assets In accordance with ASC requirements for Property, Plant and Equipment, a long-lived asset (including amortizable identifiable intangible assets) or asset group held for use is tested for recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable.
Long-lived Assets In accordance with ASC requirements for Property, Plant and Equipment, a long-lived asset (including amortizable identifiable intangible assets) or asset group held for use is tested for recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable.
There were no events of default as of December 30, 2023. Cash and Seasonality In 2023, we invested approximately $215 million in incremental capacity to support long-term growth potential and new products inclusive of cost reduction and productivity initiatives. We expect capital spending in 2024 to be in the range of $175 million to $225 million.
Cash and Seasonality In 2024, we invested approximately $60 million in incremental capacity to support long-term growth potential and new products inclusive of cost reduction and productivity initiatives. We expect capital spending in 2025 to be in the range of $100 million to $140 million.
Inventories Inventory provisions are recorded to reduce inventory to the net realizable dollar value for obsolete or slow-moving inventory based on assumptions about future demand and marketability of products, the impact of new product introductions, inventory levels and turns, product spoilage and specific identification of items, such as product discontinuance, engineering/material changes, or regulatory-related changes.
We believe the policies discussed below are the Company’s critical accounting policies as they include the more significant, subjective and complex judgments and estimates made when preparing our consolidated financial statements. 35 Inventories Inventory provisions are recorded to reduce inventory to the net realizable dollar value for obsolete or slow-moving inventory based on assumptions about future demand and marketability of products, the impact of new product introductions, inventory levels and turns, product spoilage and specific identification of items, such as product discontinuance, engineering/material changes, or regulatory-related changes.
In March 2022, the Company issued $900 million in aggregate principal amount of senior unsecured notes in a registered public offering consisting of $450 million of 4.00% senior unsecured notes maturing in 2032 and $450 million of 4.50% senior unsecured notes maturing in 2052 (together, the “2022 Notes”).
The Company used the net proceeds from the notes offering to redeem its 2023 4.000% senior unsecured notes that matured in September 2023 and for general corporate purposes. 30 In March 2022, the Company issued $900 million in aggregate principal amount of senior unsecured notes in a registered public offering consisting of $450 million of 4.00% senior unsecured notes maturing in 2032 and $450 million of 4.50% senior unsecured notes maturing in 2052 (together, the “2022 Notes”).
The $84.2 million settlement of our interest rate swaps in 2023 and increased accrued expenses and other liabilities also contributed to the increase in net cash provided by operating activities. These amounts were partially offset by lower net income in 2023 and the absence of operating cash flows as a result of the Separation ($213.0 million in 2022).
The absence of the $84.2 million settlement of our interest rate swaps in 2023 and a decrease in accrued expenses and other liabilities also contributed to the decrease in cash provided by operating activities. The decrease in cash provided by operating activities was partially offset by higher net income in 2024.
Purchase obligations include contracts for raw materials and finished goods purchases, selling and administrative services, and capital expenditures. Total lease payments under non-cancellable operating leases as of December 30, 2023 were $37.6 million in 2024, $32.9 million in 2025, $29.5 million in 2026, $24.6 million in 2027, $20.9 million in 2028 and $61.1 million thereafter.
Purchase obligations include contracts for raw materials and finished goods purchases, selling and administrative services, and capital expenditures. Total lease payments under non-cancellable operating leases as of December 28, 2024 were $38.6 million in 2025, $33.7 million in 2026, $26.0 million in 2027, $21.0 million in 2028, $16.6 million in 2029 and $44.7 million thereafter.
Growth in operating income over this period was primarily due to higher sales volume, changes to our portfolio of businesses, control over our operating expenses and the benefits of manufacturing productivity programs. 24 During 2023, the U.S. home products market contracted due to decreases in repair and remodel and new home construction activity.
Growth in operating income over this period was primarily due to changes to our portfolio of businesses, control over our operating expenses and the benefits of manufacturing productivity programs. 23 During 2024, the U.S. home products market was relatively flat overall as an increase in new home construction activity was mostly offset by a decrease in repair and remodel activity.
Our subsidiaries are not limited by long-term debt or other agreements in their abilities to pay cash dividends or to make other distributions with respect to their capital stock or other payments to the Company. 33 Acquisitions We periodically review our portfolio of brands and evaluate potential strategic transactions and other capital initiatives to increase stockholder value.
Our subsidiaries are not limited by long-term debt or other agreements in their abilities to pay cash dividends or to make other distributions with respect to their capital stock or other payments to the Company.
We selected the assumptions used in the financial forecasts using historical data, supplemented by current and anticipated market conditions, estimated growth rates and management plans. These assumptions represent level 3 inputs of the fair value hierarchy (refer to Note 10, "Fair Value Measurements").
We selected the assumptions used in the financial forecasts using historical data, supplemented by current and anticipated market conditions, estimated growth rates and management plans.
Components of our long-term debt were as follows: (In millions) 2023 2022 Notes (due 2025 to 2052) $ 2,670.1 $ 2,673.5 Less: current portion — 599.2 Total long-term debt $ 2,670.1 $ 2,074.3 In our debt agreements, there are normal and customary events of default which would permit the lenders to accelerate the debt if not cured, in certain cases within applicable grace periods, such as failure to pay principal or interest when due or a change in control of the Company.
In our debt agreements, there are normal and customary events of default which would permit the lenders to accelerate the debt if not cured, in certain cases within applicable grace periods, such as failure to pay principal or interest when due or a change in control of the Company. There were no events of default as of December 28, 2024.
Due to the uncertainty of the timing of settlement with taxing authorities, we are unable to make reasonably reliable estimates of the period of cash settlement of unrecognized tax benefits. Therefore, $25.6 million of unrecognized tax benefits as of December 30, 2023 have been excluded from the paragraph above.
Due to the uncertainty of the timing of settlement with taxing authorities, we are unable to make reasonably reliable estimates of the period of cash settlement of unrecognized tax benefits.
Share Repurchases In 2023, we repurchased 2.5 million shares of our outstanding common stock under the Company’s share repurchase program for $150.0 million. As of December 30, 2023, the Company’s total remaining share repurchase authorization under the program was approximately $434.6 million.
Share Repurchases In 2024, we repurchased 3.3 million shares of our outstanding common stock under the Company’s share repurchase programs for $240.4 million. As of December 28, 2024, the Company’s total remaining share repurchase authorization under the then current program was approximately $484.4 million.
The increase in other income, net is primarily due to an increase in interest income ($8.4 million increase) and foreign currency transaction income, partially offset by a decrease in defined benefit plan income. Income taxes The 2023 effective income tax rate was unfavorably impacted by state and local income taxes and foreign income taxed at higher rates.
Other expense (income), net Other expense (income), net, was income of $19.5 million in 2023, compared to income of $12.0 million in 2022. The increase in other income, net is primarily due to an increase in interest income ($8.4 million increase) and foreign currency transaction income, partially offset by a decrease in defined benefit plan income.
These factors were partially offset by the benefit from the acquisition of the ASSA Businesses, productivity improvements, savings associated with our 2022 corporate reorganization and restructuring activities and lower advertising and marketing costs.
These factors were partially offset by the benefit from the acquisition of the Acquired Businesses, productivity improvements, savings associated with our 2022 corporate reorganization and restructuring activities and lower advertising and marketing costs. 28 Interest expense Interest expense decreased by $2.7 million, or 2.3%, due to lower interest expense incurred on floating rate debt, partially offset higher interest expense on fixed rate debt.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

3 edited+0 added−0 removed6 unchanged
Biggest changeWe do not enter into derivatives or other financial instruments for trading or speculative purposes. We enter into financial instruments to manage and reduce the impact of changes in foreign currency exchange rates and commodity prices. The counterparties are major financial institutions. Interest Rate Risk The Company did not have any external variable rate borrowings as of December 30, 2023.
Biggest changeWe do not enter into derivatives or other financial instruments for trading or speculative purposes. We enter into financial instruments to manage and reduce the impact of changes in foreign currency exchange rates and commodity prices. The counterparties are major financial institutions. Interest Rate Risk The Company did not have any external variable rate borrowings as of December 28, 2024.
The estimated maximum one-day loss in the fair value of the Company’s foreign currency exchange contracts using the VAR model was $1.4 million at December 30, 2023. The 95% confidence interval signifies our degree of confidence that actual losses under foreign exchange contracts would not exceed the estimated losses.
The estimated maximum one-day loss in the fair value of the Company’s foreign currency exchange contracts using the VAR model was $1.4 million at December 28, 2024. The 95% confidence interval signifies our degree of confidence that actual losses under foreign exchange contracts would not exceed the estimated losses.
From time to time, we use derivative contracts to manage our exposure to commodity price volatility. 42
From time to time, we use derivative contracts to manage our exposure to commodity price volatility. 41

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