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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 28, 2026


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 1-35166

Fortune Brands Innovations, Inc.

(Exact name of Registrant as specified in its charter)

     Delaware

     62-1411546

     (State or other jurisdiction of
incorporation or organization)

     (I.R.S. Employer
Identification No.)

1 Horizon Way, Building N, Deerfield, Illinois 60015-3888

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (847) 484-4400

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	FBIN	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares outstanding of the registrant’s common stock, par value $0.01 per share, at April 17, 2026 was 119,293,417.

PART I. FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS.

FORTUNE BRANDS INNOVATIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the Thirteen Weeks Ended March 28, 2026 and March 29, 2025

(In millions, except per share amounts)

(Unaudited)


	Thirteen Weeks Ended March 28, 2026			Thirteen Weeks Ended March 29, 2025
Net sales	$	1,011.3		$	1,033.1
Cost of products sold		575.6			578.4
Selling, general and administrative expenses		352.7			314.9
Amortization of intangible assets		18.5			18.0
Restructuring charges		4.3			24.8
Operating income		60.2			97.0
Interest expense		26.5			28.6
Other (income) expense, net		(0.1	)		(1.0	)
Income before taxes		33.8			69.4
Income tax		9.6			18.0
Net income	$	24.2		$	51.4

Basic earnings per common share	$	0.20		$	0.42
Diluted earnings per common share	$	0.20		$	0.42

Comprehensive income	$	14.4		$	57.7

See notes to condensed consolidated financial statements.

FORTUNE BRANDS INNOVATIONS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions)

(Unaudited)


	March 28, 2026			December 27, 2025
Assets
Current assets
Cash and cash equivalents	$	223.1		$	264.0
Accounts receivable less allowance for credit losses of $9.8 and $10.0		584.7			513.1
Inventories		1,038.1			1,024.9
Other current assets		177.8			172.2
Total current assets		2,023.7			1,974.2
Property, plant and equipment, net		804.8			805.9
Operating lease assets		260.0			259.6
Goodwill		2,002.7			2,006.4
Other intangible assets, net of accumulated amortization		1,211.4			1,231.7
Assets held for sale		104.0			113.8
Other assets		139.2			129.0
Total assets	$	6,545.8		$	6,520.6
Liabilities and equity
Current liabilities
Accounts payable		507.3			524.6
Other current liabilities		441.7			547.0
Total current liabilities		949.0			1,071.6
Long-term debt		2,713.7			2,544.9
Deferred income taxes		159.2			146.9
Accrued defined benefit plans		22.5			23.2
Operating lease liabilities		249.2			243.8
Other non-current liabilities		95.3			101.6
Total liabilities		4,188.9			4,132.0
Commitments and contingencies (see Note 17)
Stockholders' equity
Common stock(a)		1.9			1.9
Paid-in capital		3,218.1			3,214.2
Accumulated other comprehensive income		54.4			64.2
Retained earnings		3,159.2			3,135.0
Treasury stock		(4,076.7	)		(4,026.7	)
Total stockholders' equity		2,356.9			2,388.6
Total liabilities and equity	$	6,545.8		$	6,520.6

(a) Common stock, par value $0.01 per share; 188.7 million shares and 188.4 million shares issued at March 28, 2026 and December 27, 2025, respectively.

See notes to condensed consolidated financial statements.

FORTUNE BRANDS INNOVATIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Thirteen Weeks Ended March 28, 2026 and March 29, 2025

(In millions)

(Unaudited)


	Thirteen Weeks Ended March 28, 2026			Thirteen Weeks Ended March 29, 2025
Operating activities
Net income	$	24.2		$	51.4
Non-cash adjustments:
Depreciation		23.5			33.3
Amortization of intangibles		18.6			18.0
Non-cash lease expense		9.9			9.4
Stock-based compensation		(0.7	)		7.4
Deferred taxes		11.9			1.7
Other operating activities, net		0.9			0.9
Changes in operating assets and liabilities:
Increase in accounts receivable		(69.5	)		(48.8	)
Increase in inventories		(14.5	)		(41.2	)
(Decrease) increase in accounts payable		(17.7	)		12.4
Increase in other assets		(7.8	)		(8.7	)
Decrease in accrued expenses and other liabilities		(88.3	)		(129.7	)
(Decrease) increase in accrued taxes		(9.7	)		10.5
Net cash used in operating activities		(119.2	)		(83.4	)
Investing activities
Capital expenditures (a)		(20.3	)		(29.2	)
Proceeds from the disposition of assets		9.8			-
Net cash used in investing activities		(10.5	)		(29.2	)
Financing activities
Issuance of long-term debt		455.8			420.0
Repayment of long-term debt		(287.5	)		(140.0	)
Proceeds from the exercise of stock options		4.5			0.6
Treasury stock purchases		(43.5	)		(175.0	)
Employee withholding taxes related to stock-based compensation		(6.1	)		(6.9	)
Dividends to stockholders		(31.2	)		(30.5	)
Other financing activities, net		(1.6	)		(0.2	)
Net cash provided by financing activities		90.4			68.0
Effect of foreign exchange rate changes on cash		(1.7	)		3.0
Net decrease in cash and cash equivalents	$	(41.0	)	$	(41.6	)
Cash, cash equivalents and restricted cash(b) at beginning of period	$	267.5		$	385.5
Cash, cash equivalents and restricted cash(b) at end of period	$	226.5		$	343.9

(a)

Capital expenditures of $8.1 million and $5.1 million that had not been paid as of March 28, 2026 and March 29, 2025, respectively, were excluded from the Statement of Cash Flows.

(b)

Restricted cash of $1.4 million and $2.0 million is included in Other current assets and Other assets, respectively, as of March 28, 2026 and restricted cash of $1.3 million and $2.6 million is included in Other current assets and Other assets, respectively, as of March 29, 2025. Restricted cash of $1.4 million and $2.0 million is included in Other current assets and Other assets, respectively, as of December 27, 2025.

See notes to condensed consolidated financial statements.

FORTUNE BRANDS INNOVATIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

For the Thirteen Weeks Ended March 28, 2026 and March 29, 2025

(In millions)

(Unaudited)


	Common Stock		Paid-In Capital			Accumulated Other Comprehensive (Loss) Income			Retained Earnings		Treasury Stock			Total Equity
Balance at December 28, 2024	$	1.9	$	3,189.3		$	42.4		$	2,956.8	$	(3,768.4	)	$	2,422.0
Comprehensive income:
Net income		-		-			-			51.4		-			51.4
Other comprehensive income		-		-			6.3			-		-			6.3
Stock options exercised		-		0.6			-			-		-			0.6
Stock-based compensation		-		7.4			-			-		(6.9	)		0.5
Treasury stock purchases		-		-			-			-		(176.6	)		(176.6	)
Dividends		-		-			-			0.4		-			0.4
Balance at March 29, 2025	$	1.9	$	3,197.3		$	48.7		$	3,008.6	$	(3,951.9	)	$	2,304.6

Balance at December 27, 2025	$	1.9	$	3,214.2		$	64.2		$	3,135.0	$	(4,026.7	)	$	2,388.6
Comprehensive income:
Net income		-		-			-			24.2		-			24.2
Other comprehensive income		-		-			(9.8	)		-		-			(9.8	)
Stock options exercised		-		4.5			-			-		-			4.5
Stock-based compensation		-		(0.6	)		-			-		(6.1	)		(6.7	)
Treasury stock purchases		-		-			-			-		(43.9	)		(43.9	)
Dividends		-		-			-			—		-			—
Balance at March 28, 2026	$	1.9	$	3,218.1		$	54.4		$	3,159.2	$	(4,076.7	)	$	2,356.9

See notes to condensed consolidated financial statements.

FORTUNE BRANDS INNOVATIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Presentation and Principles of Consolidation

The Company is an industry leading home, security and digital products company whose purpose is to elevate every life by transforming spaces into havens that has a portfolio of leading branded products used for residential home repair, remodeling, new construction and security applications. References to “Fortune Brands,” “the Company,” “we,” “our” and “us” refer to Fortune Brands Innovations, Inc. and its consolidated subsidiaries as a whole, unless the context otherwise requires.

The condensed consolidated financial statements and notes are presented pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and do not contain certain information included in our annual audited consolidated financial statements and notes. The December 27, 2025 condensed consolidated balance sheet was derived from our audited consolidated financial statements, but does not include all disclosures required by U.S. generally accepted accounting principles (“GAAP”). This Quarterly Report on Form 10-Q should be read in conjunction with the audited consolidated financial statements and notes included in our Annual Report on Form 10-K for the year ended December 27, 2025.

The condensed consolidated balance sheets as of March 28, 2026, the related condensed consolidated statements of comprehensive income, equity and cash flows for the thirteen weeks ended March 28, 2026 and the condensed consolidated statements of comprehensive income, equity and cash flows for the thirteen weeks ended March 29, 2025 are unaudited. The presentation of these financial statements requires us to make estimates and assumptions that affect reported amounts and related disclosures. Actual results could differ from those estimates. In the opinion of management, all adjustments necessary for a fair statement of the financial statements have been included. Interim results may not be indicative of results for a full year.

FORTUNE BRANDS INNOVATIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2. Recently Issued Accounting Standards

In November 2024, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2024-03 Disaggregation of Income Statement Expenses, which requires disaggregated disclosure of certain expenses on an interim and annual basis in the notes to the financial statements. This standard is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027, with early adoption permitted. We are currently evaluating the impact of this new standard on our consolidated financial statements.

In September 2025, the FASB issued ASU 2025-06 Targeted Improvements to the Accounting for Internal-Use Software. The standard eliminates references to "development project stages" and clarifies the threshold to begin capitalizing internal-use software costs. The ASU is effective for fiscal years beginning after December 15, 2027 and interim periods within those fiscal years, with early adoption permitted. An entity may apply the amendments prospectively, retrospectively, or utilizing a modified transition approach. We are currently evaluating the impact of this new standard on our consolidated financial statements.

3. Balance Sheet Information

Supplemental information on our balance sheets is as follows:


(In millions)	March 28, 2026		December 27, 2025
Inventories:
Raw materials and supplies	$	304.6	$	335.1
Work in process		69.0		73.3
Finished products		664.5		616.5
Total inventories	$	1,038.1	$	1,024.9

Property, plant and equipment, gross	$	1,678.6	$	1,737.5
Less: accumulated depreciation		873.8		931.6
Property, plant and equipment, net	$	804.8	$	805.9

Assets held for sale	$	104.0	$	113.8

During the third quarter of 2025, we determined that certain assets, with a carrying value of $153.6 million as of December 28, 2024, met the criteria to be classified as held-for-sale and ceased recording depreciation. The decision to dispose of the assets was driven by a strategic refocusing of the business towards areas with higher growth and profitability potential and the ability to leverage available capacity at existing manufacturing facilities. We concluded that the carrying value of these assets exceeded their fair value, less estimated costs to sell, and recorded an impairment charge of $49.7 million within the Outdoors segment.

During the third quarter of 2025, we determined that assets with a carrying value of $13.1 million as of December 24, 2024 met the criteria to be classified as held-for-sale and ceased recording depreciation. The decision to dispose of the assets was driven by the Company's decision to consolidate its U.S. regional offices into one campus headquarters. We concluded the carrying value of these assets exceeded their fair value, less estimated costs to sell, and recorded an impairment charge of $0.4 million within the Outdoors segment. During the fourth quarter of 2025, we determined that additional assets to be disposed related to this decision, with a carrying value of $12.9 million as of December 28, 2024, met the criteria to be classified as held-for-sale and ceased recording depreciation. We concluded the carrying value of these assets exceeded their fair value, less estimated costs to sell, and recorded an impairment charge of $3.5 million within the Water segment.

The estimated fair values were determined using a combination of market and income approaches, which were based on valuation assumptions including certain Level 3 inputs. These assumptions included estimated sublease rental income, discount rates, market sales data and other market participant assumptions. The assets were reclassified from Property, plant and equipment, net to Assets held for sale in our Consolidated Balance Sheets.

In the first quarter of 2026, we completed the sale of certain assets within the Outdoors and Water segments. The total proceeds received were $9.8 million. The sale of these assets resulted in a net loss of zero.

FORTUNE BRANDS INNOVATIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

4. Goodwill and Identifiable Intangible Assets

We had goodwill of $2,002.7 million and $2,006.4 million as of March 28, 2026 and December 27, 2025, respectively. The change in the net carrying amount of goodwill by segment was as follows:


(In millions)	Water			Outdoors		Security			Total Goodwill
Goodwill at December 27, 2025(a)	$	1,224.9		$	651.1	$	130.4		$	2,006.4
Year-to-date foreign currency translation adjustments		(3.5	)		-		(0.2	)		(3.7	)
Goodwill at March 28, 2026(a)	$	1,221.4		$	651.1	$	130.2		$	2,002.7

(a) Net of accumulated impairment losses of $399.5 million in the Outdoors segment.

We test goodwill for impairment annually during the fourth quarter, or whenever events or circumstances may indicate that the carrying value of a reporting unit may be greater than its fair value. The Company has three reporting units, Water, Outdoors, and Security, which are determined in accordance with the provisions of ASC 350, Intangibles - and Other. The historical cushion on the Outdoors reporting unit and the recent and sustained decline in the Company's stock price since the last impairment test conducted in the fourth quarter of 2025 triggered the Company to perform an interim goodwill impairment test at the Outdoors reporting unit as of March 28, 2026. The fair value of the reporting unit was determined based on an equally weighted combination of a discounted cash flow analysis, or income approach, and a guideline public company method, or market approach, based on market multiples of comparable companies. The most significant assumptions used in the fair value analysis were forecasted revenue growth rates, operating income margins, market participant discount rates, and EBITDA multiples. As a result of this test, we determined that no impairment existed for the Outdoors reporting unit and that fair value substantially exceeded the carrying value.

The gross carrying value and accumulated amortization by class of identifiable intangible assets as of March 28, 2026 and December 27, 2025 were as follows:


(In millions)	As of March 28, 2026							As of December 27, 2025
	Gross Carrying Amounts		Accumulated Amortization			Net Book Value		Gross Carrying Amounts		Accumulated Amortization			Net Book Value
Indefinite-lived tradenames	$	519.5	$	-		$	519.5	$	519.8	$	-		$	519.8
Amortizable intangible assets
Tradenames	$	78.1	$	(18.7	)	$	59.4	$	78.8	$	(17.8	)	$	61.0
Customer and contractual relationships		1,021.8		(422.2	)		599.6		1,024.0		(408.4	)		615.6
Patents/proprietary technology		141.2		(108.3	)		32.9		140.9		(105.6	)		35.3
Total		1,241.1		(549.2	)		691.9		1,243.7		(531.8	)		711.9
Total intangible assets	$	1,760.6	$	(549.2	)	$	1,211.4	$	1,763.5	$	(531.8	)	$	1,231.7

The $2.9 million decrease in gross identifiable intangible assets was primarily due to foreign currency translation adjustments.

Amortizable identifiable intangible assets, primarily customer relationships, are amortized over their estimated useful life, ranging from 5 to 30 years, based on the assessment of a number of factors that may impact useful life, which includes customer attrition rates and other relevant factors.

FORTUNE BRANDS INNOVATIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

5. External Debt and Financing Arrangements

Senior Notes

As of March 28, 2026, the Company had aggregate outstanding senior notes in the principal amount of $2.2 billion, with varying maturities (the “Notes”). The Notes are unsecured senior obligations of the Company. The following table provides a summary of the Company’s outstanding Notes, including the net carrying value of the Notes, net of underwriting commissions, price discounts, and debt issuance costs as of March 28, 2026 and December 27, 2025:


					Net Carrying Value
(in millions)	Principal Amount		Issuance Date	Maturity Date	March 28, 2026		December 27, 2025
3.250% Senior Notes	$	700.0	September 2019	September 2029		697.4		697.2
4.000% Senior Notes	$	450.0	March 2022	March 2032		447.3		447.2
4.500% Senior Notes	$	450.0	March 2022	March 2052		437.0		436.9
5.875% Senior Notes	$	600.0	June 2023	June 2033		595.0		594.8
Total Senior Notes long-term					$	2,176.7	$	2,176.1

Credit Facilities

In January 2026, the Company entered into a fourth amended and restated $1.25 billion revolving credit facility (the “Revolving Credit Agreement”), and borrowings thereunder will be used for general corporate purposes. The maturity date of the facility is January 2031. Borrowings under the Revolving Credit Agreement will bear interest at variable rates equal to, at the Company’s election, the term Secured Overnight Financing Rate ("SOFR") plus an applicable term SOFR margin for an interest period selected by the Company. The applicable term SOFR rate margin will be determined based on the ratings of the Company’s senior unsecured long-term debt securities. The daily simple SOFR rate margins range from 0.80% to 1.30%. Under the 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. 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 March 28, 2026 and December 27, 2025. As of March 28, 2026, we were in compliance with all covenants under this facility.

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 March 28, 2026 and December 27, 2025. There were no outstanding balances as of March 28, 2026 and December 27, 2025.

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 Company’s Revolving Credit Agreement is the liquidity backstop for the repayment of any notes issued under the Commercial Paper Program, and as such, borrowings under the Commercial Paper Program are included in Long-term debt in the condensed consolidated balance sheets. Amounts available under the Commercial Paper Program may be borrowed, repaid and re-borrowed, with the aggregate principal amount outstanding at any time, including borrowings under the Revolving Credit Agreement, not to exceed $1.25 billion. The Company will use any issuances under the Commercial Paper Program for general corporate purposes. Outstanding borrowings under the Commercial Paper Program as of March 28, 2026 and December 27, 2025 were $537.0 million and $368.8 million, respectively.

FORTUNE BRANDS INNOVATIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

6. Financial Instruments

We do not enter into financial instruments for trading or speculative purposes. We principally use financial instruments to reduce the impact of changes in foreign currency exchange rates and commodities used as raw materials in our products. The principal derivative financial instruments we enter into on a routine basis are foreign exchange contracts. Derivative financial instruments are recorded at fair value. The counterparties to derivative contracts are major financial institutions. We are subject to credit risk on these contracts equal to the fair value of these instruments. Management currently believes that the risk of incurring material losses is unlikely and that the losses, if any, would be immaterial to the Company.

Raw materials used by the Company are subject to price volatility caused by weather, supply conditions, geopolitical and economic variables, and other unpredictable external factors. As a result, from time to time, we enter into commodity swaps to manage the price risk associated with forecasted purchases of materials used in our operations. We account for these commodity derivatives as economic hedges or cash flow hedges. Changes in the fair value of economic hedges are immediately recognized in current period earnings.

We may be exposed to interest rate risk on existing debt or forecasted debt issuance. To mitigate this risk, we may enter into interest rate hedge contracts. There were no outstanding interest rate hedge contracts as of March 28, 2026.

We may enter into foreign currency forward contracts to protect against foreign exchange risks associated with certain existing assets and liabilities, forecasted future cash flows, and net investments in foreign subsidiaries. Foreign exchange contracts related to forecasted future cash flows correspond to the periods of the forecasted transactions, which generally do not exceed 12 to 15 months subsequent to the latest balance sheet date. Our primary foreign currency hedge contracts pertain to the British pound, the Canadian dollar, and the Mexican peso. The gross U.S. dollar equivalent notional amount of all foreign currency derivative hedges outstanding at March 28, 2026 was $656.1 million. Based on foreign exchange rates as of March 28, 2026, we estimate that $11.6 million of net derivative gains included in accumulated other comprehensive income as of March 28, 2026 will be reclassified to earnings within the next twelve months.

We have entered into cross-currency swap contracts to hedge both our Canadian dollar and Chinese yuan exposures of the Company's net investments in certain foreign subsidiaries. As of March 28, 2026, the notional value of the cross-currency swap contracts was $141.0 million and expire at various dates through November 2026. The cross-currency swaps were designated as net investment hedges, with the amount of gain or loss associated with the change in fair value of these instruments included within accumulated other comprehensive income and recognized upon termination of the respective net investment.

For derivative instruments that are designated as fair value hedges, the gain or loss on the derivative instrument, as well as the offsetting loss or gain on the hedged item, are recognized on the same line of the consolidated statements of income. The changes in the fair value of cash flow hedges are reported in accumulated other comprehensive income and are recognized in the consolidated statements of income when the hedged item affects earnings.

The fair values of derivative instruments on the consolidated balance sheets as of March 28, 2026 and December 27, 2025 were as follows:


		Fair Value
(In millions)	Location	March 28, 2026		December 27, 2025
Assets:
Foreign exchange contracts	Other current assets	$	3.3	$	1.2
	Total assets	$	3.3	$	1.2
Liabilities:
Foreign exchange contracts	Other current liabilities	$	1.5	$	1.6
Net investment hedges	Other current liabilities		1.5		2.9
	Total liabilities	$	3.0	$	4.5

FORTUNE BRANDS INNOVATIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The effects of derivative financial instruments on the statements of comprehensive income for the thirteen weeks ended March 28, 2026 and March 29, 2025 were as follows:


(In millions)	Classification and Amount of Gain (Loss) Recognized in Income on Hedging Relationships
	Thirteen Weeks Ended March 28, 2026
	Cost of products sold			Interest expense		Other income, net
Total amounts per Consolidated Statements of Comprehensive Income	$	575.6		$	26.5	$	0.1
Gain (loss) on fair value hedging relationships
Foreign exchange contracts:
Hedged items		-			-		(3.2	)
Derivative designated as hedging instruments		-			-		1.5
Gain on net investment hedging relationships							0.5
Gain (loss) on cash flow hedging relationships
Foreign exchange contracts:
Amount of gain or (loss) reclassified from accumulated other comprehensive (loss) income into income		0.2			-		-
Commodity contracts:
Amount of gain or (loss) reclassified from accumulated other comprehensive (loss) income into income		-			-		-
Interest rate contracts:
Amount of gain or (loss) reclassified from accumulated other comprehensive (loss) income into income		-			3.1		-

(In millions)	Classification and Amount of Gain (Loss) Recognized in Income on Hedging Relationships
	Thirteen Weeks Ended March 29, 2025
	Cost of products sold			Interest expense		Other income, net
Total amounts per Consolidated Statements of Comprehensive Income	$	578.4		$	28.6	$	1.0
Gain (loss) on fair value hedging relationships
Foreign exchange contracts:
Hedged items		-			-		3.0
Derivative designated as hedging instruments		-			-		(2.5	)
Gain on net investment hedging relationships							1.0
Gain (loss) on cash flow hedging relationships
Foreign exchange contracts:
Amount of gain or (loss) reclassified from accumulated other comprehensive (loss) income into income		(0.4	)		-		-
Commodity contracts:
Amount of gain or (loss) reclassified from accumulated other comprehensive (loss) income into income		-			-		-
Interest rate contracts:
Amount of gain or (loss) reclassified from accumulated other comprehensive (loss) income into income		-			3.1		-

FORTUNE BRANDS INNOVATIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

7. Fair Value Measurements

The fair value hierarchy consists of the following three levels:

•

Level 1 - valuations are quoted prices in active markets for identical assets or liabilities.

•

Level 2 - valuations based on quoted prices for similar instruments in active markets, quoted prices for identified or similar instruments in markets that are not active and model-based valuations in which all significant inputs are observable in the market; and

•

Level 3 - valuations using unobservable inputs, due to little or no market activity for the asset or liability, such as internally-developed valuation models.

The carrying value and fair value of debt as of March 28, 2026 and December 27, 2025 were as follows:


(In millions)	March 28, 2026				December 27, 2025
	Carrying Value		Fair Value		Carrying Value		Fair Value
Notes, net of underwriting commissions, price discounts and debt issuance costs	$	2,176.7	$	2,050.0	$	2,176.1	$	2,109.3
Commercial paper borrowings		537.0		537.0		368.8		368.8
Total debt	$	2,713.7	$	2,587.0	$	2,544.9	$	2,478.1

The estimated fair value of our Notes is determined by using quoted market prices of our debt securities, which are Level 1 inputs. The estimated fair value of borrowings under our Commercial Paper Program is determined primarily using broker quotes, which are Level 2 inputs, and are equal to their carrying value.

Assets and liabilities measured at fair value on a recurring basis as of March 28, 2026 and December 27, 2025 were as follows:


(In millions)	Fair Value
	March 28, 2026		December 27, 2025
Assets
Derivative financial instruments (Level 2)	$	3.3	$	1.2
Liabilities
Derivative financial instruments (Level 2)	$	3.0	$	4.5

FORTUNE BRANDS INNOVATIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

8. Accumulated Other Comprehensive Income (Loss)

The after-tax components of and changes in accumulated other comprehensive (loss) income for the thirteen weeks ended March 28, 2026 and March 29, 2025 were as follows:


(In millions)	Foreign Currency Adjustments			Derivative Hedging Gain (Loss)			Defined Benefit Plan Adjustments			Accumulated Other Comprehensive Loss
Balance at December 28, 2024	$	(25.6	)	$	78.1		$	(10.1	)	$	42.4
Amounts classified into accumulated other comprehensive (loss) income		8.4			(0.2	)		0.9			9.1
Amounts reclassified from accumulated other comprehensive (loss) income		-			(2.8	)		-			(2.8	)
Net current-period other comprehensive (loss) income		8.4			(3.0	)		0.9			6.3
Balance at March 29, 2025	$	(17.2	)	$	75.1		$	(9.2	)	$	48.7

Balance at December 27, 2025	$	6.8		$	67.6		$	(10.2	)	$	64.2
Amounts classified into accumulated other comprehensive (loss) income		(7.5	)		0.4			(0.2	)		(7.3	)
Amounts reclassified from accumulated other comprehensive (loss) income		-			(2.5	)		-			(2.5	)
Net current-period other comprehensive (loss) income		(7.5	)		(2.1	)		(0.2	)		(9.8	)
Balance at March 28, 2026	$	(0.7	)	$	65.5		$	(10.4	)	$	54.4

The reclassifications out of accumulated other comprehensive loss for the thirteen weeks ended March 28, 2026 and March 29, 2025 were as follows:


(In millions)
Details about Accumulated Other Comprehensive Loss Components	Amount Reclassified from Accumulated Other Comprehensive Loss						Affected Line Item in the Statement of Comprehensive Income
	Thirteen Weeks Ended March 28, 2026			Thirteen Weeks Ended March 29, 2025
Gains (losses) on cash flow hedges
Foreign exchange contracts	$	0.2		$	(0.4	)	Cost of products sold
Interest rate contracts		3.1			3.1		Interest expense
Total before tax		3.3			2.7
Tax expense		(0.8	)		0.1
Net of tax	$	2.5		$	2.8

FORTUNE BRANDS INNOVATIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

9. Revenue

The following table disaggregates our consolidated revenue by major sales distribution channels for the thirteen weeks ended March 28, 2026 and March 29, 2025:


(In millions)	Thirteen Weeks Ended March 28, 2026		Thirteen Weeks Ended March 29, 2025
Wholesalers(a)	$	497.9	$	505.8
Home Center retailers(b)		244.2		244.1
Other retailers(c)		103.8		104.4
U.S. net sales		845.9		854.3
International(d)		165.4		178.8
Net sales	$	1,011.3	$	1,033.1

(a)

Represents sales to customers whose business is oriented towards builders, professional trade people and home remodelers, inclusive of sales through our customers’ respective internet website portals.

(b)

Represents sales to the three largest “Do-It-Yourself” retailers: The Home Depot, Inc., Lowe's Companies, Inc. and Menards, Inc., inclusive of sales through their respective internet website portals.

(c)

Represents sales principally to our mass merchant and standalone independent e-commerce customers.

(d)

Represents sales in markets outside the United States, principally in China, Canada, Europe and Mexico.

As part of our contracts with customers, we recognize contract liabilities, principally deferred revenue. Deferred revenue liabilities represent advanced payments and billings in excess of revenue recognized. Deferred revenue liabilities of $18.2 million and $20.0 million as of March 28, 2026 and March 29, 2025, respectively, were included in Other current liabilities in our consolidated balance sheet, and $13.8 million and $12.1 million as of March 28, 2026 and March 29, 2025, respectively, were included in Other noncurrent liabilities in our consolidated balance sheet.

10. Defined Benefit Plans

The components of net periodic benefit cost for pension benefits for the thirteen weeks ended March 28, 2026 and March 29, 2025 were as follows:


	Pension Benefits
(In millions)	Thirteen Weeks Ended March 28, 2026			Thirteen Weeks Ended March 29, 2025
Interest cost	$	2.3		$	2.9
Expected return on plan assets		(2.0	)		(2.7	)
Net periodic benefit cost	$	0.3		$	0.2

11. Income Taxes

The effective income tax rates for the thirteen weeks ended March 28, 2026 and thirteen weeks ended March 29, 2025 were 28.4% and 25.9%, respectively. The difference between the Company’s effective income tax rate for the thirteen weeks ended March 28, 2026, and the U.S. statutory rate of 21% primarily relates to state income taxes and equity compensation.

FORTUNE BRANDS INNOVATIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

12. Product Warranties

We generally record warranty expense related to contractual warranty terms at the time of sale. We may also provide customer concessions for claims made outside of the contractual warranty terms and those expenses are recorded in the period in which the concession is made. We offer our customers various warranty terms based on the type of product that is sold. Warranty expense is determined based on historic claim experience and the nature of the product category. The following table summarizes activity related to our product warranty liability for the thirteen weeks ended March 28, 2026 and March 29, 2025.


(In millions)	Thirteen Weeks Ended March 28, 2026			Thirteen Weeks Ended March 29, 2025
Reserve balance at beginning of period	$	19.9		$	20.2
Provision for warranties issued		1.6			1.6
Settlements made (in cash or in kind)		(3.0	)		(3.0	)
Foreign translation adjustments		0.1			0.2
Reserve balance at end of period	$	18.6		$	19.0

13. Information on Business Segments

The Company’s operations are structured into three segments, Water, Outdoors and Security. These segments are strategic business units with differing products and services.

The chief operating decision maker (“CODM”), our Interim Chief Executive Officer, uses operating income to evaluate the performance of our segments and to make resource allocation decisions. Segment operating income excludes unallocated corporate costs. Operating income is the primary measure of segment profitability used in internal management reporting to the CODM. This measure is used to view operating trends, perform analytical comparisons and benchmark performance between periods, and to evaluate historical and forecasted financial performance as well as performance relative to our competitors. The monthly and quarterly results provided to the CODM include the net sales and operating income or loss of the consolidated Company and each segment. These financial results are reviewed against budget and the prior year in evaluating the performance of the segment. The CODM is also regularly provided qualitative and quantitative metrics to establish an understanding of drivers to the overall performance. The metrics provided include information at a functional level for the Company's operations and supply chain in addition to each segment. These metrics also include service and quality ratings, brand awareness, market performance and outlook, working capital efficiency, operational plant efficiency, commodity pricing, capital spending and an overview of transformation initiatives.

The significant expense categories and amounts shown below align with the segment level information that is regularly provided to the CODM. Intersegment expenses are included within the amounts below. Other operating expenses principally consist of cost of sales and selling, general and administrative expenses, which are not provided to the CODM in managing performance of the operating segments.

FORTUNE BRANDS INNOVATIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The 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. The Outdoors segment includes fiberglass and steel entry door systems under the Therma-Tru brand name, storm, screen and security doors under the Larson brand name, composite decking and railing under the Fiberon brand name, urethane millwork under the Fypon brand name and wide-opening exterior door systems and outdoor enclosures under the Solar Innovations brand. The Security segment includes locks, safety and security devices, connected and mechanical lock out tag out solutions and electronic security products under the Master Lock, American Lock, Yale and August brands, and fire-resistant safes, security containers and commercial cabinets under the SentrySafe brand. Corporate expenses consist primarily of headquarters administrative expenses.


(In millions)	Water		Outdoors		Security		Thirteen Weeks Ended March 28, 2026
Net sales	$	563.7	$	294.4	$	153.2	$	1,011.3
Depreciation		10.3		9.0		2.1
Amortization of intangibles		9.8		7.4		1.2
Other segment items (a)		439.9		260.6		128.2
Total operating income	$	103.7	$	17.4	$	21.7	$	142.8

Unallocated expenses								82.6
Total operating income							$	60.2
Interest expense								26.5
Other (income) expense, net								(0.1	)
Total income before income taxes							$	33.8

(a) Other segment items recognized during the thirteen weeks ended March 28, 2026 include cost of sales and selling, general, and administrative expenses.


(In millions)	Water		Outdoors		Security		Thirteen Weeks Ended March 29, 2025
Net sales	$	565.4	$	304.7	$	163.0	$	1,033.1
Depreciation		12.6		16.2		3.9
Amortization of intangibles		9.9		7.5		0.6
Other segment items (a)		439.7		258.4		142.5
Segment operating income	$	103.2	$	22.6	$	16.0	$	141.8

Unallocated expenses								44.8
Total operating income							$	97.0
Interest expense								28.6
Other (income) expense, net								(1.0	)
Total income before income taxes							$	69.4

(a) Other segment items recognized during the thirteen weeks ended March 29, 2025 include cost of sales and selling, general, and administrative expenses.

FORTUNE BRANDS INNOVATIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

14. Restructuring and Other Charges

On January 18, 2025, we announced the decision to consolidate U.S. regional offices into one campus headquarters in Deerfield, Illinois. In connection with these consolidation activities and related organizational and personnel changes, the Company currently expects to continue to incur certain cash and non-cash restructuring and other charges related to employee relocation, severance, retention, non-cash asset related costs, lease exit costs, and other transition activities estimated in the range of approximately $100 million to $120 million in the aggregate. For the fifty-two weeks ended December 27, 2025, we incurred total charges of $89.6 million, including cash charges of $71.6 million primarily related to severance and other exit costs, and non-cash charges of $18.0 million primarily related to acceleration of property, plant and equipment depreciation. For the thirteen weeks ended March 28, 2026, we incurred total charges of $4.6 million, including cash charges of $5.1 million primarily related to severance and other exit costs, and non-cash income adjustments of $0.5 million. The estimated ranges of restructuring and other charges are provisional and include management judgments and assumptions that could change as we execute our plans. Actual results may differ from these estimates, and the execution of our plan could result in additional charges.

Total restructuring and other charges for the thirteen weeks ended March 28, 2026 were as follows:


(In millions)	Thirteen Weeks Ended March 28, 2026
			Other Charges (Gains) (a)
	Restructuring Charges		Cost of Products Sold		SG&A (b)			Total Charges
Water	$	2.3	$	-	$	0.1		$	2.4
Outdoors		0.1		0.8		-			0.9
Security		0.1		0.1		(0.2	)		-
Corporate		1.8		-		0.9			2.7
Total	$	4.3	$	0.9	$	0.8		$	6.0

(a)

“Other Charges” represent charges or gains directly related to restructuring initiatives that cannot be reported as restructuring under GAAP. Such charges or gains were incurred directly in connection with discrete, strategic restructuring activities and would not have been incurred otherwise. Such charges or gains may include losses on disposal of inventories, trade receivables allowances from exiting product lines, write-off of displays from exiting a customer relationship, accelerated depreciation resulting from the closure of facilities, and gains and losses on the sale of previously closed facilities.

(b)

Selling, general and administrative expenses.

Restructuring and other charges for the thirteen weeks ended March 28, 2026 are primarily attributable to costs associated with the decision to consolidate our U.S. regional offices into one campus headquarters and related organizational and personnel changes.

Restructuring and other charges for the thirteen weeks ended March 29, 2025 were as follows:


(In millions)	Thirteen Weeks Ended March 29, 2025
			Other Charges (Gains) (a)
	Restructuring Charges		Cost of Products Sold		SG&A (b)		Total Charges
Water	$	9.6	$	0.4	$	-	$	10.0
Outdoors		2.5		5.6		1.0		9.1
Security		3.9		3.3		-		7.2
Corporate		8.8		-		3.7		12.5
Total	$	24.8	$	9.3	$	4.7	$	38.8

(a) “Other Charges” represent charges or gains directly related to restructuring initiatives that cannot be reported as restructuring under GAAP. Such charges or gains may include losses on disposal of inventories, trade receivables allowances from exiting product lines, write-off of displays from exiting a customer relationship, accelerated depreciation resulting from the closure of facilities, and gains and losses on the sale of previously closed facilities.

(b) Selling, general and administrative expenses.

FORTUNE BRANDS INNOVATIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Restructuring and other charges for the thirteen weeks ended March 29, 2025 are primarily attributable to costs associated with the decision to consolidate our U.S. regional offices into one campus headquarters and related organizational and personnel changes, product-line rationalizations within our Outdoors segment, and plant closures in both our Water and Security segments.

Reconciliation of Restructuring Liability


(In millions)	Balance at December 27, 2025		2026 Provision			Cash Payments(a)			Non-Cash Write-offs		Balance at March 28, 2026
Workforce reduction costs	$	27.2	$	4.5		$	(9.8	)	$	-	$	21.9
Other		0.4		(0.2	)		(0.4	)		0.2		-
Total	$	27.6	$	4.3		$	(10.2	)	$	0.2	$	21.9

(a) Cash payments primarily relate to severance charges.


(In millions)	Balance at December 28, 2024		2025 Provision		Cash Payments (a)			Non-Cash Write-offs			Balance at March 29, 2025
Workforce reduction costs	$	6.2	$	22.1	$	(3.0	)	$	-		$	25.3
Other		7.7		2.7		-			(0.5	)		9.9
Total	$	13.9	$	24.8	$	(3.0	)	$	(0.5	)	$	35.2

(a) Cash payments primarily relate to severance charges.

15. Earnings Per Share

The computations of earnings per common share for the thirteen weeks ended March 28, 2026 and March 29, 2025 were as follows:


(In millions, except per share data)	Thirteen Weeks Ended March 28, 2026		Thirteen Weeks Ended March 29, 2025
Net income	$	24.2	$	51.4

Earnings per common share
Basic earnings per share	$	0.20	$	0.42
Diluted earnings per share	$	0.20	$	0.42

Basic average shares outstanding		119.8		122.2
Stock-based awards		0.4		0.8
Diluted average shares outstanding		120.2		123.0
Antidilutive stock-based awards excluded from weighted-average number of shares outstanding for diluted earnings per share		1.9

Fortune Brands Innovations, Inc. 10-Q