Fortune Brands Home & Security, Inc. (NYSE: FBHS) announced second quarter 2015 results from continuing operations and updated its 2015 annual outlook for earnings per share.

“The rate of growth for the home products market improved modestly in the second quarter and our teams again delivered profit growth that was right on plan,” said Chris Klein, chief executive officer, Fortune Brands. “We continue to anticipate accelerating new construction activity in the second half of the year. Based on that market assumption and our solid execution, we are maintaining our expectations for our core business for the remainder of 2015.”

Second Quarter 2015

For the second quarter of 2015, sales were $1.17 billion, an increase of 13 percent over the second quarter of 2014. Earnings per share were $0.48, compared to $0.51 in the prior-year quarter. EPS before charges/gains were $0.59, compared to $0.51 the same quarter last year. Operating income was $128.2 million, compared to $125.5 million in the prior-year quarter. Operating income before charges/gains was $150.5 million, compared to $125.6 million the same quarter last year.

“In the second quarter, sales increased 13 percent for the total company and 17 percent for the U.S. businesses. Importantly, operating income before charges/gains grew 20 percent, with solid performance across all operating segments,” Klein said.

For each segment in the second quarter of 2015, compared to the prior-year quarter:

• Cabinet sales increased 18 percent to the prior year. Excluding the impact of the Norcraft acquisition, sales increased 8 percent, with the dealer channel growing 10 percent and in-stock cabinet and vanities increasing high teens.
• Plumbing sales increased 5 percent, with growth across the U.S. wholesale and retail channels, offset somewhat by the impact of Canadian currency and slower China sales.
• Door sales were up 6 percent with growth in both the wholesale and retail channels.
• Security sales increased 28 percent driven by the SentrySafe acquisition.

“In the second quarter we also took advantage of the opportunity to secure long-term financing,” said Lee Wyatt, chief financial officer, Fortune Brands. “Importantly, with $975 million of availability on our revolver, we have significant financial flexibility to drive incremental shareholder value.”

Annual Outlook for 2015

The Company’s 2015 outlook now includes the impact of the Norcraft acquisition, as well as incremental interest expense from the recent long-term financing.

The Company’s 2015 annual outlook continues to be based on a U.S. home products market growth assumption of 6 to 8 percent. Based on the Company’s expectation to continue outperforming the market, the acquisition of Norcraft and the impact of foreign currency, the Company expects full-year 2015 net sales growth in the range of 13 to 15 percent.

The Company updated its expectations for 2015 EPS before charges/gains to be in the range of $2.03 to $2.10, which compares to 2014 EPS before charges/gains of $1.74. This EPS expectation now includes an incremental 4 to 5 cents due to the acquisition of Norcraft, partially offset by incremental interest expense unrelated to the Norcraft acquisition.

“The second quarter home products market improved modestly, as we had planned,” said Klein. “We continue to see positive signs and look for stronger market growth in the second half of the year.”

The Company expects to generate free cash flow of approximately $270 million for the full year 2015. The expected free cash flow is net of anticipated capital expenditures of approximately $135 million, as the Company invests in incremental capacity and infrastructure to support multi-year growth.