Fortune Brands Reports Strong 2Q 2022 Results as Price and Cost Actions Fully Offset Inflation; Separation of Companies Progressing Ahead of Schedule and Company Updates Guidance to Reflect Incremental Costs Related to the Separation

Business and Operations Highlights:

• 2Q 2022 sales of $2.1 billion, an increase of 9 percent versus a year ago
• 2Q 2022 earnings per share (EPS) of $1.46, a decrease of 6 percent versus a year ago; EPS before charges / gains of $1.67, an increase of 7 percent versus a year ago
• Separation of companies progressing ahead of schedule; Company expects to file initial Form 10 during 3Q

Fortune Brands Home & Security, Inc. (NYSE:FBHS, the "Company", or "Fortune Brands"))), an industry-leading home and security products company, today announced second quarter 2022 results.

"Our teams once again delivered strong results while also advancing key strategic priorities," said Nicholas Fink, chief executive officer, Fortune Brands. "Consumer demand for our products remained resilient as net sales grew solidly, especially considering the stimulus-driven growth during this quarter last year. Additionally, each segment improved its margins sequentially and versus the prior year. The long-term fundamentals driving the housing market remain intact, and we are committed to thoughtfully taking the actions necessary to deliver margin progression and effectively manage our cash through any short-term softness in demand. Just as in previous cycles, we will be proactive and agile in our response to dynamic conditions, enabling us to continue achieving our long-term objectives. Finally, the separation of our two companies is moving forward ahead of schedule. Our teams are executing with excellence, and we are excited for the future of both New Fortune Brands and Cabinets."

Second Quarter 2022

For the second quarter of 2022, sales were $2.1 billion, an increase of 9 percent over the second quarter of 2021. Earnings per share were $1.46, compared to $1.55 in the prior-year quarter, a decrease of 6 percent. EPS before charges / gains were $1.67, compared to $1.56 the same quarter last year, an increase of 7 percent. Operating income was $284.1 million, compared to $294.9 million in the prior-year quarter, a decrease of 4 percent. Operating income before charges / gains was $319.8 million, compared to $297.5 million the same quarter last year, up 7 percent. Operating margin was 13.5 percent, compared to 15.2 percent in the second quarter of 2021. Operating margin before charges / gains was 15.1 percent, compared to 15.4 percent in the second quarter of 2021.

For each segment in the second quarter of 2022, compared to the prior-year quarter:

• Water Innovations sales decreased 6 percent, or 5 percent adjusting for FX. Results were impacted by coronavirus-related shutdowns in China; excluding China, sales increased 4 percent. Operating margin before charges / gains was 24.9 percent.
• Outdoors & Security sales increased 13 percent driven by price across all product categories. Organically, sales increased 12 percent. Operating margin before charges / gains was 15.4 percent, up 70 basis points in the period over last year
• Cabinet sales increased 21 percent, driven by price and volume growth. Operating margin before charges / gains was 11.5 percent, up 60 basis points in the period over last year.

Balance Sheet and Liquidity

At the end of the quarter, net debt was $3.0 billion and net debt to EBITDA was 2.3x. The Company had $361 million in cash and $564 million of availability under its revolving credit facility.

During the second quarter, the Company repurchased approximately $125 million in common stock and year-to-date has repurchased approximately $505 million in common stock.

Annual Outlook Update

The Company now anticipates delivering an increased full-year sales growth in the range of 6.5 percent to 7.5 percent relative to a global home products market growing at 3 percent to 5 percent and a U.S. home products market growing at 4 percent to 6 percent.

The Company now expects EPS before charges / gains for the full year to be in the range of $6.36 to $6.50 to account for incremental costs related to the separation.

The Company now expects to generate free cash flow of approximately $590 million to $630 million.

"We remain well positioned to achieve our long-term objectives," said Patrick Hallinan, chief financial officer, Fortune Brands. "We are proactively managing expenses and cash in response to a dynamic housing products market and will continue to drive value-creation opportunities. Our balance sheet remains strong, and we will appropriately manage our liquidity and cash flow to pursue the best returns for our stakeholders."

About Fortune Brands

Fortune Brands Home & Security, Inc. (NYSE:FBHS), headquartered in Deerfield, IL., is a Fortune 500 company, part of the S&P 500 Index and a leader in the home products industry. With trusted brands and market leadership positions in each of its three operating segments, Water Innovations, Outdoors & Security, and Cabinets, Fortune Brands' 28,000 associates work with a purpose to fulfill the dreams of home.

The Company's growing portfolio of complementary businesses and innovative brands includes Moen and the House of Rohl within Water Innovations; outdoor living and security products from Therma-Tru, LARSON, Fiberon, Master Lock and SentrySafe; and MasterBrand Cabinets' wide-ranging offerings from MANTRA, Diamond, Omega and many more. Visit www.FBHS.com to learn more about FBHS, its brands and how the Company is accelerating its environmental, social and governance (ESG) commitments.

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

This press release contains certain "forward-looking statements" that are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), regarding general business strategies, market potential, anticipated future financial performance, the potential of our brands and the housing market, and other matters. Statements preceded by, followed by or that otherwise include the words "believes", "positioned", "expects", "estimates", "plans", "look to", "outlook", "intend", 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. Where, in any forward-looking statement, we express an expectation or belief as to future results or events, such expectation or belief is based on the current plans and expectations of our management. Although we believe that these statements are based on reasonable assumptions, they are subject to numerous factors, risks and uncertainties that could cause actual outcomes and results to be materially different from those indicated in such statements, including but not limited to include the expected benefits and costs of the intended spin-off transaction, the tax-free nature of the spin-off, the expected timing of the completion of the spin-off transaction and the transaction terms; general business and economic conditions; our reliance on the North American repair and remodel and new home construction activity levels; our reliance on key customers and suppliers; our ability to maintain our strong brands and to develop innovative products while maintaining our competitive positions; our ability to improve organizational productivity and global supply chain efficiency; our ability to obtain raw materials and finished goods in a timely and cost-effective manner; the impact of sustained inflation, including global commodity and energy availability and price volatility; the impact of trade-related tariffs and risks with uncertain trade environments or changes in government and industry regulatory standards; our ability to attract and retain qualified personnel and other labor constraints; the uncertainties relating to the impact of COVID-19 on the Company's business and results, our ability to achieve the anticipated benefits of our strategic initiatives, our ability to successfully execute our acquisition strategy and integrate businesses that we have and may acquire; and the other factors discussed in our securities filings, including in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2021 and our report on Form 10-Q for the quarter ended June 30, 2022, filed with the Securities and Exchange Commission. The forward-looking statements included in this release are made as of the date hereof, and except as required by law, we undertake no obligation to update, amend or clarify any forward-looking statements to reflect events, new information or circumstances occurring after the date of this release.

Use of Non-GAAP Financial Information

This press release includes measures not derived in accordance with generally accepted accounting principles ("GAAP"), such as diluted earnings per share before charges / gains, operating income before charges / gains, operating margin before charges / gains, EBITDA before charges / gains, net debt, net debt to EBITDA before charges / gains, and free cash flow, sales adjusted for foreign exchange, sales excluding specified regions, and organic increase in sales. These measures should not be considered in isolation or as a substitute for any measure derived in accordance with GAAP and may also be inconsistent with similar measures presented by other companies. Reconciliations of these measures to the most closely comparable GAAP measures, and reasons for the Company's use of these measures, are presented in the attached pages.