On Oct. 27, Fortune Brands (NYSE:FO) released third-quarter earnings for the period ended Sept. 30.

  • On an adjusted basis, the company's EPS of $1.30 fell short of analysts' expectations.
  • Sales increased by 23.1%, driven by the high performance of brands like Moen, Master Lock, and Sauza.
  • Net income saw a huge increase by 90.8 % to $151 million, due to higher margins in spirits and wine.
  • Free cash flow for the quarter increased by 75.6% to $390 million due to lower capital expenditure needs.

(Figures in millions, except per-share data)

Income Statement Highlights

Avg. Est.

Q3 2006

Q3 2005

Change

Sales

$2,192

$2,219

$1,802

23.1%

Net Profit

--

$151

$79*

90.8%

EPS

$1.33

$0.98

$0.52*

88.5%

Diluted Shares

--

155

151

2.3%

*Does not include $12.9 million in income ($0.09 in earnings per share) from discontinued operations.

Get back to basics with a look at the income statement.

Margin Checkup

Q3 2006

Q3 2005

Change*

Gross Margin

45.98%

45.25%

0.73

Operating Margin

17.11%

16.35%

0.76

Net Margin

6.82%

4.40%

2.42

*Expressed in percentage points.

Margins are the earnings engine. See how they work.

Balance Sheet Highlights

Assets

Q3 2006

Q3 2005

Change

Cash + ST Invest.

$219

$207

5.4%

Accounts Rec.

$1,267

$1,114

13.8%

Inventory

$2,111

$1,665

26.8%



Liabilities

Q3 2006

Q3 2005

Change

Long-Term Debt

$5,038

$5,389

(6.5%)



Learn the ways of the balance sheet.

Cash Flow Highlights

Q3 2006

Q3 2005

Change

Cash From Ops.

$392

$271

44.4%

Capital Expenditures

$2

$49

(96.1%)

Free Cash Flow

$390

$222

75.6%



Find out why Fools always follow the money.

Related Companies:

  • Diageo (NYSE:DEO)
  • Constellation Brands (NYSE:STZ)
  • Brown-Forman (NYSE:BF-B)

Related Foolishness:

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