Story URL: http://news.medill.northwestern.edu/chicago/news.aspx?id=225246
Story Retrieval Date: 12/10/2013 2:53:45 AM CST
Fortune Brands Home & Security, Inc. shares soared almost 6 percent Thursday as increased demand for new homes and consumer interest in improving existing homes drove sharp gains in sales and profit in the third quarter.
Net income in the quarter ended Sept. 30 rose 61 percent to $64.6 million, or 37 cents per diluted share, from $40.2 million, or 24 cents per diluted share, in the year-ago period.
Excluding the impact of restructuring and other charges, the Deerfield-based company reported earnings of 46 cents, exceeding the consensus analysts’ estimate of 40 cents, according to Bloomberg LP.
The company also increased its expectations for full-year 2013 revenues by more than 15 percent and significantly raised its full-year adjusted earnings per share to between $1.47 and $1.49, compared with the previous estimate of 89 cents.
Revenues in the quarter increased nearly 24 percent to $1.13 billion from $909 million a year ago.
“Notably, we're seeing strength in some areas that had been lagging such as bigger ticket semi-custom and custom cabinets and replacement windows,” CEO Christopher Klein said in a conference call.
“We're also seeing increased project size and stronger demand for more premium faucets in our Moen wholesale showrooms.”
In NYSE trading, Fortune Brands' shares jumped $2.35, or almost 6 percent, to close at $42.70 on Thursday.
Sales in the company’s cabinet business surged 36 percent due to growing construction, repair and remodel markets as well as growth in dealers and home centers.
Fortune Brands is still feeling the positive effects of the June acquisition of vanity sink top-maker WoodCrafters Home Products.
“This acquisition further builds on our competitive advantage in cabinets, particularly as the repair and remodel market gains momentum,” Klein said.
The company’s plumbing business booked a 22 percent rise in revenue that “should continue improving, driven by strong volume growth in domestic and international markets (China) and benign raw material costs,” Robert Wetenhal, an analyst at RBC Capital Markets, said in a note Thursday.
“The combination of seasoned management, leading positions in growing categories, and substantial leverage to the housing recovery should enable FBHS to achieve robust earnings growth,” Wetenhal said.
Fortune Brands’ net income for the first nine months of 2013 rose 64 percent to $166 million, or 97 cents per diluted share, from $101 million, or 61 cents per diluted share, in the year-ago period.
Revenue in the first nine months increased 16 percent to $3.05 billion from $2.64 billion.