Fortune Brands Reports First Quarter Results
Leading consumer brands company, Fortune Brands today reported record results for the first quarter of 2005.
Strong demand for the company’s kitchen and bath cabinet brands, Moen faucets, Therma-Tru doors, Titleist golf balls, FootJoy golf shoes and Starbucks Coffee Liqueur helped drive Fortune Brands’ growth in the quarter.
“We are delighted Fortune Brands delivered such strong performance that grew significantly above our extraordinary results in the year-ago quarter,” said Fortune Brands chairman and CEO Norm Wesley. “Despite challenging comparisons, we delivered double-digit growth in EPS and 5% sales growth – both achieving our long-term growth goals.
“Consumer demand remains strong across categories,” Wesley continued. “Sales for Moen, our cabinet brands and Therma-Tru all grew at a double-digit rate, benefiting from sustained share gains with major customers as well as strength in remodeling and new construction. New products drove strong sales growth for Titleist golf balls, FootJoy golf shoes, Cobra golf clubs, Master Lock security products and Kensington computer accessories. Starbucks Coffee Liqueur is off to an excellent start. Overall results in Spirits & Wine were moderated by challenging comparisons to our 16% spirits and wine sales growth in the year-ago quarter driven by previously disclosed distributor buy-in ahead of price increases. Even so, spirits and wine sales excluding foreign exchange and excise taxes grew 4%, reflecting a favorable mix shift to premium and super-premium products. In the second quarter, we expect reported spirits and wine sales to bounce back, and we also expect to benefit from the timing of new product launches in golf, as well.”
For the first quarter:
— Net income was $152.7 million, or $1.02 per diluted share, up 11% from $0.92 in the year-ago quarter. Excluding a net gain of $0.01 in the year- ago quarter, diluted EPS before charges/gains grew 12%.
— Net sales increased 5% to $1.79 billion. The net impact of acquisitions, excise taxes and foreign exchange was minimal.
— Operating income was $255.7 million, up 11%.
— Return on equity was 26.8%.
— Return on invested capital was 17.7%.
Outlook for Continued Double-Digit Earnings Growth
“As we look to the second quarter, we feel well positioned to continue driving strong earnings growth that achieves our long-term goals. We’ll continue to benefit from our brand-building investments, new product innovations and industry-leading supply chains. For the second quarter, we’re targeting diluted EPS before charges/gains to grow at a double-digit rate. For the full year, we’re continuing to target double-digit growth in EPS before charges/gains, as well.
“Let me also note that our free cash flow target remains in the $450-500 million range, and that’s after dividends and capital expenditures and before the impact of the two previously announced transactions we expect to complete this year.”
The company added that its previously announced plan to spin-off to shareholders its ACCO World office products business and merge it with General Binding Corporation remains on track to occur this summer.
“Fortune Brands is off to a strong start in a year in which we’re making high-impact moves that even better position the company to deliver strong growth in the years ahead. With the spin-off of ACCO and the exciting potential acquisition of major spirits and wine brands we announced yesterday, we’re sharpening our focus on our businesses with the strongest consumer brands. We look forward to completing these initiatives aimed at creating greater value for our shareholders.”
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