FBIN 10-K & 10-Q changes, risk factors and insider trading

Our business primarily relies on home improvement, repair and remodel, and new home construction activity levels, principally in North America and China. Those housing markets are sensitive to changes in economic conditions and other factors, such as the level of employment, access to and the cost of labor, consumer confidence, demographic changes, consumer income, government policies and tax programs, availability of financing, inflation and interest rate levels. Adverse changes in any of these conditions generally, or in any of the markets where we operate, could decrease consumer demand and could adversely impact our businesses by: causing consumers to delay or decline to pursue home ownership; making consumers more price conscious, resulting in a shift in demand to smaller, less expensive homes; making consumers more reluctant to make investments in their existing homes or causing them to delay investments, including kitchen and bath repair and remodel projects; or making it more difficult for consumers to secure loans for major home renovations. U.S. single-family and multi-family new home construction activity generally increased from their 2023 level whileand U.S. repair and remodel activities generallyall declinedcontracted from their 20232024 level.

In connection with the Separation,separation of our Cabinets business, MasterBrand, Inc. (“MasterBrand”), via a tax-free spin-off transaction (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. Although we believe that this transition allows us to fully leverage the scale and execution excellence of our total business, such transitions can be inherently difficult to manage, and may result in a diversion of management’s focus and attention from other aspects of our business. 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. These efforts will result in certain restructuring cash and non-cash charges and also may not yield the desired results and may have unexpected consequences, including the potential for increased employee transition costs or difficulty retaining key employees, including as a result of market pressures or a reluctance to relocate to a new geographic area, and difficulties in identifying, or negotiating terms with, potential assignees or subtenants for existing leased office space.

Technological change continues to progress at a rapid pace. The creation, development, advancement and implementation of new technologies such as internet of things, 5G data networks, artificial intelligence, data analytics, 3-D printing, robotics, sensor technology, data storage, automation technologies and augmented reality, amongst others, hashave impacted and may continue to impact our processes, productsproducts, operations and services.

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 may also require the development of new processes, including those designed to oversee the implementation of such new technologies.technologies, The integration of any such new technologies into our business, even if successful,and may require significant financial and operational resources. IfEven weif failsuccessfully toimplemented, compete with our peers in effectively integrating these or other newsuch technologies into our business, or fail to guard against new competitors disrupting our business using such technologies, such failure may adverselynot affectdeliver ourthe businessanticipated and results of operations.benefits.

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. Our success depends in part on refining our cost structure and supply chains to promote consistently flexible and low-cost supply chains that can respond to market changes to protect profitability and cash flow or ramp up quickly and effectively to meet increased demand. Supply chain disruptions could continue to impact our ability to timely source necessary components and inputs. Import tariffs, including recentexisting or potential 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. FailureSuch tariffs may increase our costs of products sold, and raising prices to account for any such increases in costs may negatively impact the competitiveness, and in turn market share, of our products. However, on February 20, 2026, the Supreme Court of the United States declared some of the existing U.S. tariffs imposed on China, Canada, Mexico and other countries unconstitutional. It remains uncertain how this decision will affect the existing tariffs or whether additional tariffs will be imposed under other laws. The scope and duration of any such tariffs, as well as the possibility that they may lead to additional, unpredictable retaliatory responses between the impacted countries, make it difficult to predict whether, and to what extent, they will impact our business. While in the past we have been able to mitigate the impact of such tariffs through productivity improvements and passing on increased costs to our customers, if we are unable to offset additional costs created by current or new tariffs, it could result in materially lower margins, result in lower revenue, and have an overall adverse effect on our results of operations. In addition, failure to achieve the desired level of quality, capacity or cost reductions could impair our results of operations, cash flows and financial condition.

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. Security threats, including cyber attacks, artificial intelligence assisted cyber attacks, security breaches, power outages, system failures, malware, ransomware, worms, Trojan horses, spyware, adware, rogue software and other attacks, are becoming increasingly sophisticated, frequent and adaptive, which increases the difficulty of detecting and successfully defending against them. 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 security threats, depending on their nature and scope, could potentially result in the misappropriation, destruction, corruption or unavailability of critical data and confidential or proprietary information (ours or that of third parties) and the disruption of our business operations or the business operations of third parties on which we rely. 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. 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.

We manufacture, source or sell our products in a number of locations throughout the world, predominantly in the U.S., Asia, Canada, Europe, Mexico and Africa. Accordingly, we are subject to risks associated with potential disruption caused by changes in political, economic and social environments, including war, civil and political unrest, illnesses declared as a public health emergency (including viral pandemics such as COVID-19), terrorism, expropriation, local labor conditions, changes in laws, regulations and policies of foreign governments and trade disputes with the U.S., and U.S. laws affecting activities of U.S. companies abroad. We could be adversely affected by higher manufacturing costs and international trade regulations, including, tariffs (including recentexisting and potential 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. Risks inherent to international operations include: potentially adverse tax laws; unfavorable changes or uncertainty relating to trade agreements or importation duties; uncertainty regarding clearance and enforcement of intellectual property rights; risks associated with the Foreign Corrupt Practices Act and other anti-bribery laws; mandatory or voluntary shutdowns of our facilities or our suppliers due to changes in political dynamics that could result in longer lead times, economic policies or health emergencies and difficulty enforcing contracts or protecting our intellectual property rights. While we hedge certain foreign currency transactions, a change in the value of the currencies will impact our financial statements when translated into U.S. dollars. In addition, fluctuations in currency can adversely impact the cost position of our products in local currency, making it more difficult for us to compete. Our success will depend, in part, on our ability to effectively manage our businesses through the impact of these potential changes.

Impairment charges could have a material adverse effect on the Company’sour financial results.

Our success depends in part on the efforts and abilities of qualified personnel at all levels, including our senior management team and other key employees. Their motivation, skills, experience, contacts and industry knowledge significantly benefit our operations and administration. As recently announced, we are undergoing a CEO transition, which may create continuity risks and may adversely affect our financial condition, results of operations, cash flows and ability to execute on our business plans.

LowTight unemploymentlabor ratesmarkets in thecertain U.S.,U.S. regions or functions, rising wages and competition for attracting and retaining qualified talent could result in the failure to attract, motivate and retain personnel. These challenges have resulted in higher employee costs, increased attrition and significant shifts in the labor market and employee expectations, and we may continue to face challenges in finding and retaining qualified personnel, particularly at the production level, which could have an adverse effect on our results of operations, cash flows and financial condition. In addition, our recently announced organizational and leadership changes could result in difficulty retaining key employees, including as a result of market pressures or a reluctance to relocate to a new geographic area.

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. These matters may include contract disputes, intellectual property disputes, data privacy disputes, product recalls, personal injury claims, construction defects and home warranty claims, warranty disputes, other types of consumer litigation, environmental claims or proceedings, other tort claims, employment and tax matters, and other proceedings and litigation, including class actions. Defending ourselves in these matters may be time-consuming, expensive and disruptive to normal business operations and may result in significant expense and a diversion of management's focus and attention from other business and strategic matters. It is not possible to predict the outcome of pending or future litigation, and, as with any litigation, it is possible that some of the actions could be decided unfavorably and could have an adverse effect on our results of operations, cash flows and financial condition. Such proceedings could also generate significant adverse publicity and have a negative impact on our reputation and brand image, regardless of the merit of the claims or the existence or amount of liability. Additionally, any amount that we may be required to pay to satisfy a judgment, settlement, fine or penalty may not be covered by insurance and for some matters, such as class actions, no insurance may be available on attractive terms.

We have many patents, trademarks, brand names, trade names and trade secrets that, in the aggregate, are important to our business. Unauthorized use of these intellectual property rights or other loss of our intellectual property competitive position may not only erode sales of our products but also cause us to incur substantial significant damage to our brand name and reputation, interfere with our ability to effectively represent the Companyus to our customers, contractors and suppliers, and increase litigation costs. There can be no assurance that our efforts to protect our intellectual property rights will prevent violations. In addition, existing patent, trade secret and trademark laws offer only limited protection, and the laws of some countries in which our products are or may be developed, manufactured or sold may not fully protect our intellectual property from infringement by others. There can be no assurance that our efforts to assess possible third-party intellectual property rights will ensure the Company’sour ability to manufacture, distribute, market or sell in any given country or territory. 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.

In light of the increased focus on and public debate surrounding ESG matters, including unpredictable changes in legislation, government regulations, and policies of increasing complexity and numerosity, 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. Stakeholders are increasingly scrutinizing ESG practices, and their expectations are diverse and rapidly changing. Any failure or perceived failure by us in this regard could adversely impact our business and reputation.

In addition, developingdeveloping, compiling and acting on ESG initiatives,initiatives and regulations, including collecting, measuring and reporting related data, can be costly, difficult and time consuming. Significant expenditures and commitment of time by management, employees and outside advisors is involved in developing, implementing and overseeing policies, practices and internal controls related to ESG risk management and performance, and we may undertake additional costs to control, assess and report on ESG metrics as the nature, cost, scope and complexity of ESG reporting, particularly given inconsistency in state and local, federal, and international laws, diligence and disclosure requirements or expectations may continue to expand. Such costs may have an adverse impact our business and results of operations.

In connection with the Separation, the Company and MasterBrand have agreed to indemnify each other for certain liabilities. If we are required to indemnify MasterBrand, our financial results could be negatively impacted. Further, MasterBrand’s indemnities may not be sufficient to hold the Companyus harmless from the full amount of liabilities for which MasterBrand has been allocated responsibility, and MasterBrand may not be able to satisfy its indemnification obligations in the future.

Pursuant to the Separation and Distribution Agreement and certain other agreements between the Company andwith MasterBrand related to the Separation, each party has agreed to indemnify the other for certain liabilities, in each case for uncapped amounts. Indemnities that MasterBrand is required to provide to us are not subject to any cap and may be significant and could negatively impact our business. Third parties could also seek to hold us responsible for any of the liabilities that MasterBrand has agreed to retain. Any amounts that we may be required to pay pursuant to these indemnification obligations and other liabilities could require us to divert cash that would otherwise have been used in furtherance of our operating business. Further, the indemnities from MasterBrand for our benefit may not be sufficient to protect us against the full amount of such liabilities, and MasterBrand may not be able to fully satisfy its indemnification obligations.

Notwithstanding the IRS Ruling and the Sidley Opinion, the IRS could determine that the Separation should be treated as taxable if it determines that any of these facts, assumptions, or representations is not correct or has been violated or if it disagrees with the conclusions in the opinion that are not covered by the IRS Ruling, or for other reasons, including as a result of a significant change in stock or asset ownership after the Separation. If the Separation ultimately is determined to be taxable, the Companywe could recognize gains in an amount generally equal to the excess of the fair market value of the assets of MasterBrand (determined based on the fair market value of the common stock distributed to Fortune Brands'our stockholders on the date of the Separation) over MasterBrand’s tax basis in such assets. In addition, the Companywe could recognize gains in an amount equal to the excess of the fair market value of the MasterBrand common stock distributed to Fortune Brands'our stockholders on the date of the Separation over Fortune Brands’our tax basis in such MasterBrand common stock. Furthermore, Fortune Brandswe could incur significant tax indemnification obligations under the Tax Allocation Agreement related to the Separation.

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.business.

TheWe Companyare an industry leading home, security and digital products company whose purpose is ato leadingelevate innovationevery companylife focusedby ontransforming creatingspaces smarter,into safer and more beautiful homes and liveshavens 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.

We believe that thewe Company hashave 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. We are focused on outperforming our markets in growth, profitability and returns in order to drive increased stockholder value. We believe the Company’sour track record reflects the long-term attractiveness and potential of the categories we serve and our leading brands. 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.

We have been and may continue to be impacted by near-term supply, labor and freight constraints, a volatile geopolitical environment, as well as sustained elevated rates of inflation, fluctuating interest rates, unfavorable fluctuations in foreign exchange rates and the ongoing and potentially worsening costs of tariffs (including recentexisting and potential 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). We continue to manage these challenges and are diligently working to offset potential unfavorable impacts of these items through continuous productivity improvement initiatives and price increases.

During the three fiscal years ended December 28,27, 2024,2025, our net sales declined at a compounded annual rate of 1.4%1.9% reflecting the contraction of the U.S. home products market and a decline in demand in our international markets, partially offset by an increase in sales resulting from acquisitions. Operating income grewdeclined at a compounded annual rate of 9.1%12.6% with consolidated operating margins ranging between 16%12% and 17%16% from 20222023 to 2024.2025. GrowthThe decline in operating income over this period was primarily due to changesthe todecline ourin portfolionet ofsales businesses,as well as asset impairment charges and higher restructuring and restructuring-related charges, partially offset by control over our operating expenses and the benefits of manufacturing productivity programs.

During 2024,2025, the U.S. home products market wascontracted relativelydue flatto overalla as an increasedecline in both new homehousing construction activity was mostly offset by a decrease inand repair and remodel activity. We believe new housing construction activity increaseddecreased approximately 7%6% and spending for home repair and remodeling decreased approximately 3%1% in 20242025 compared to 2023.2024. In 2024,2025, the Company'sour net sales declined 0.4%3.2% due to lower sales in our international markets ($136.7$80.8 million), higher customer sales incentives and unfavorable foreign exchange ($6.9$2.3 million), partially offset by thedisciplined benefitpricing fromactions, theincluding acquisitionsstrategic ofadjustments Springwellto mitigate tariff-related costs and thelower Emtekcustomer andsales Schaub premium and luxury door and cabinet hardware business (the "Emtek and Schaub Business") and 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") from ASSA ABLOY, Inc. and its affiliates ("ASSA") ($175.5 million).incentives. In 2024,2025, operating income increaseddecreased 20.0%30.1% over 20232024 primarily due to thehigher impacts of the acquisitions of SpringWellrestructuring and therestructuring-related Acquiredcharges, Businesses,asset impairment charges, raw material cost deflation, lower transportation costs, lower restructuring chargesinflation and higher distribution costs. These factors were partially offset by continued productivity improvementsgains inacross all of ourthe segments assupported a result ofby strategic sourcing initiatives and manufacturing efficiencies as well as thereductions absenceto ofincentive the 2023 asset impairment charge ($33.5 million). These factors were partially offset by increased intangible amortization expense as a result of the acquisitions of SpringWell and the Acquired Businesses ($11.4 million), higher customer sales incentives, higher advertising and marketing costs, higher headcount related costs and higher distribution expenses.compensation.

The consolidated financial statements in this Annual Report on Form 10-K have been derived from theour accounts and those of the Company and itsour wholly-owned subsidiaries. Effective January 1, 2023, the Company changed its fiscal year end from December 31 to a 52- or 53-week fiscal year closing on the Saturday closest but not subsequent to December 31 of each year. The following discussion contains references to years 2024,2025, 20232024 and 2022,2023, which represent fiscal years ended December 27, 2025, December 28, 2024,2024 and December 30, 2023 and December 31, 2022.2023.

The discussion of consolidated results of operations should be read in conjunction with the discussion of segment results of operations and our financial statements and notes thereto included in this Annual Report on Form 10-K. 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 theour continuing operations of the Company unless otherwise noted. 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.

Certain items had a significant impact on our results in 2024,2025, 20232024 and 2022.2023. These included restructuring and otherrestructuring-related charges, asset impairment charges, transaction expenses and the impact of changes in foreign currency exchange rates.

restructuring and restructuring-related other charges of $41.3 million largely related to costs associated with a product line rationalization within our Outdoors segment, the previously announced closure of a manufacturing facility within our Security segment and headcount actions across all segments; 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 20232024 of approximately $7 million on net sales and approximately $2 million on both operating income and net income.

restructuring and otherrestructuring-related 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;

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 of $19.7 million related to the acquisition of the Emtek and Schaub premium and luxury door and cabinet hardware business (the "Emtek and Schaub Business") and 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") offrom $19.7ASSA million.ABLOY, Inc. and its affiliates ("ASSA").

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 Wise Water Solutions, LLC, doing business as Springwell Water Filtration Systems (“SpringWell”) and the Acquired Businesses ($176.5 million).

Restructuring charges of $16.2 million in 2024 are largely related to a product-line rationalization within our Outdoors segment, the previously announced closure of a manufacturing facility within our Security segment, and headcount actions across all segments. Restructuring charges of $32.5 million in 2023 are largely related to costs associated with the closure of the same manufacturing facility within our Security segment and headcount actions across all segments.

Other expense (income), expense, net, was expense of $11.9 million in 2024, compared to income of $19.5 million in 2023. The decrease in other income,(income) expense, net is primarily due to higher net periodic benefit expense, a decrease in foreign currency transaction income and lower interest income.

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 ofdue to statute of limitations lapses and federal tax credits.

This discussion contains forward-looking statements that are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). 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 strategies and investments to enhance execution and realign our business, 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 effects 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, the anticipated impact of future tariff refunds and other matters that are not historical in nature. 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. 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 current expectations, plans, estimates, assumptions and projections of our management about our industry, business and future financial results available at the time this report is filed with the SEC. 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: (i) our reliance on the North American and Chinese home improvement, repair and remodel and new home construction activity levels, (ii) the housing market, downward changes in the general economy, unfavorable interest rates or other business conditions, (iii) the competitive nature of consumer and trade brand businesses, (iv) our ability to execute on our strategic plans and the effectiveness of our strategies in the face of business competition, (v) our reliance on key customers and suppliers, including wholesale distributors and dealers and retailers, (vi) risks associated with our recent leadership changes and our search processprocesses to identify ouradditional nextpermanent CEOmembers andof CFO,senior management, (vii) risks relating to rapidly evolving technological change, (viii) risks associated with our ability to improve organizational productivity and global supply chain efficiency and flexibility, (ix) risks associated with global commodity and energy availability and price volatility, as well as the possibility of sustained inflation, (x) delays or outages in our information technology systems or computer networks or breaches of our information technology systems or other cybersecurity incidents, (xi) risks associated with doing business globally, including changes in trade-related tariffs (including recent U.S. tariffs announced or imposed on China, Canada, Mexico and other countries and any reciprocal actions taken by such countries) and risks with uncertain trade environments, (xii) risks associated with the disruption of operations, including as a result of severe weather events, (xiii) our inability to obtain raw materials and finished goods in a timely and cost-effective manner, (xiv) risks associated with strategic acquisitions, divestitures and joint ventures, including difficulties integrating acquired companies and the inability to achieve the expected financial results and benefits of transactions, (xv) impairments in the carrying value of goodwill or other acquired intangible assets, (xvi) risks of increases in our defined benefit-related costs and funding requirements, (xvii) our ability to attract and retain qualified personnel and other labor constraints, (xviii) the effect of climate change and the impact of related changes in government regulations and consumer preferences, (xix) risks associated with environmental, social and governance matters, (xx) potential liabilities and costs from claims and litigation, (xxi) changes in government and industry regulatory standards, (xxii) future tax law changes or the interpretation of existing tax laws, and (xxiii) our ability to secure and protect our intellectual property rights, as well as those described in the section of our Annual Report on Form 10-K for the year ended December 27, 2025 entitled Item 1A. “Risk Factors”. We undertake no obligation to, and expressly disclaim any such obligation to, update, amend, clarify or revise any forward-looking statements to reflect changed assumptions, the occurrence of anticipated or unanticipated events, new information or changes to future results over time or otherwise, except as required by law.

ThirteenTwenty-Six Weeks Ended MarchJune 28,27, 2026 Compared toTo ThirteenTwenty-Six Weeks Ended MarchJune 29,28, 2025

Fortune Brands delivered net income of $24.2$1.7 million, or $0.20$0.01 per diluted common share for the thirteentwenty-six weeks ended MarchJune 28,27, 2026 compared to net income of $51.4$151.6 million, or $0.42$1.24 per diluted common share in the prior year. Net income for the thirteentwenty-six weeks ended MarchJune 28,27, 2026 was negatively impacted by asset impairment charges of $229.3 million and lower sales unit volumevolume, andpartially $42.4offset millionby duetariff torefunds costsof associated$104.2 with governance advisory services and leadership changes.million. We delivered cash usedprovided inby operating activities of $(119.2)$83.6 million of the thirteentwenty-six weeks ended MarchJune 28,27, 2026, compared to $(83.4)$66.0 million in the same prior year period.

The following discussion of consolidated results of operations and segment results refers to the thirteentwenty-six weeks ended MarchJune 28,27, 2026 compared to the thirteentwenty-six weeks ended MarchJune 29,28, 2025. Consolidated results of operations should be read in conjunction with segment results of operations.

Net sales decreased by $21.8$71.3 million, or 2.1%,3.2%, primarily due to lower sales volume across all operating segments, primarily driven by demandmarket softness.softness, service level challenges and discrete share losses in certain product categories. Volume declines were offset by year over year price increases, including tariffthose and commodity mitigating actions. Net sales within our China business decreased by $9.1 million, or 25%, dueintended to volumemitigate declines.cost Theseincreases, declines were partially offsetand by the favorable impact of foreign exchange of $10.1$15.2 million.

Cost of products sold decreased by $2.8$99.9 million, or 0.5%,8.1%, primarily due to the recognition of the IEEPA tariff refunds in the current year and lower sales volume,volumes, partially offset by materialhigher costlanded inflationproduct and tariffs. Cost of products sold was also impacted by lower restructuring-related charges of $8.4 million.cost.

Selling, general and administrative expenses increased by $37.8$42.8 million, or 12.0%,6.5%, primarily due to costs associated with governance advisory services and leadership changes of $42.4$43.6 million and increased variable incentive compensation costs of $14.3 million, partially offset by lower restructuring-related charges of $14.2 million.

Restructuring charges of $4.3$12.5 million arewere primarily due to costs incurred in connection with the Company's headquarters consolidation and its related organizational changes.changes for cost optimization.

Interest expense decreased by $2.1$5.9 million, or 7.3%9.9%, to $26.5$53.9 million primarily due to lower commercial paper borrowings net of repayments and lower interest rates on commercial paper during the thirteentwenty-six weeks ended MarchJune 28,27, 2026 of $168.3$5.0 million, as compared to the thirteentwenty-six weeks ended MarchJune 29,28, 2025 of $280.0$640.0 million.

Other income, net, was $(0.10.5) million in the thirteentwenty-six weeks ended MarchJune 28,27, 2026, compared to other income, net of $(1.0)$8.2 million in the thirteentwenty-six weeks ended MarchJune 29,28, 2025. The decrease in other income, net iswas primarily due to a decrease in interest income,income of $2.5 million, and increases in foreign currency transaction expense.expense of $5.9 million.

The effective income tax rates for the thirteentwenty-six weeks ended MarchJune 28,27, 2026 and thirteentwenty-six weeks ended MarchJune 29,28, 2025 were 28.4%153.1% and 25.9%,30.1%, respectively.

The difference between the Company’sCompany's effective income tax rate for the thirteentwenty-six weeks ended MarchJune 29,27, 20252026 and the U.S. statutory income tax rate of 21% primarily relates to statediscrete incometax taxesitems andrecognized foreignyear-to-date. incomeBecause taxedthese atitems higherwere rates.significant relative to the Company's pre-tax income, the resulting effective tax rate is not meaningful.

Net sales decreased by $9.8$43.7 million, or 6.0%,3.6%, primarily due to lower sales unit volume,volume partiallyfrom the carryover of discrete share losses from the first half of 2025, service level challenges, and market softness among the production builders. Volume declines were offset by pricingprice actions to mitigate commodity and tariff-related cost inflationinflation, continued growth in the eCommerce channel, and the favorable impact of foreign exchange of $2.6$12.0 million.

Operating income increased by $5.7$19.4 million, or 35.6%,7.5%, primarily due to tariff refunds recognized of $73.9 million, lower restructuring and restructuring-related charges of $7.2$14.2 million, partially offset by the impact of lower salesnet unitsales, volumehigher landed product cost, and higher tariffvariable costsincentive netcompensation cost of price$7.1 mitigating actions.million.

CorporateOperating expensesincome increaseddecreased by $37.8$224.7 million, or 84.4%347.3%, primarily due to costsasset associatedimpairment withcharges governanceof advisory$228.7 servicesmillion, lower net sales and leadershiphigher changeslanded ofproduct $42.4 million,cost, partially offset by lower restructuring and restructuring-related charges of $9.8$13.6 million, and tariff refunds recognized of $7.9 million.

Our principal sources of liquidity are cash on hand, cash flows from operating activities, cash borrowed under our credit facility and cash from debt issuances in the capital markets. Our operating income is generated by our subsidiaries. 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 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 MarchJune 28,27, 20262026, and in the long-term.

As of MarchJune 28,27, 2026, the Company had aggregate outstanding notes in the principal amount of $2.2 billion, with varying maturities (the “Notes”). The Notes are unsecured senior obligations of the Company. In addition, we believe that we have the ability to obtain alternative sources of financing if required. 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 MarchJune 28,27, 2026 and December 27, 2025:

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. On March 28, 2026 and December 27, 2025, thereThere were no outstanding borrowings under this facility.facility as of June 27, 2026 and December 27, 2025. As of MarchJune 28,27, 2026, we were in compliance with all covenants under this facility.