UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form10-K

☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 20182021

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to_______

Commission filenumber 1-35166

Fortune Brands Home & Security, Inc.

(Exact name of registrant as specified in its charter)

520 Lake Cook Road, Deerfield, IL60015-5611

(Address of Principal Executive Offices) (Zip Code)

Registrant’s telephone number, including area code:(847)  (847) 484-4400

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes☒ No ☐

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐No☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of RegulationS-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes☒ No ☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 ofRegulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of thisForm 10-K or any amendment to thisForm 10-K.        ☒

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, anon-accelerated filer, a smaller reporting company or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” and, “smaller reporting company” and “emerging growth company” in Rule12b-2 of the Exchange Act.

Large accelerated filer      ☒      Accelerated filer      ☐Non-accelerated filer      ☐      Smaller reporting company      ☐      Emerging growth company      ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒

Indicate by check mark whether the registrant is a shell company (as defined inRule 12b-2 of the Act). Yes ☐ No ☒

The aggregate market value of the registrant’s voting common equity held bynon-affiliates of the registrant at June 30, 20182021 (the last day of the registrant’s most recent second quarter) was $7,606,348,311.$13,699,604,954. The number of shares outstanding of the registrant’s common stock, par value $0.01 per share, at February 1, 2019,11, 2022, was 140,549,295.134,174,304.

DOCUMENTS INCORPORATED BY REFERENCE

Certain information contained in the registrant’s proxy statement for its Annual Meeting of Stockholders to be held on May 7, 20193, 2022 (to be filed not later than 120 days after the end of the registrant’s fiscal year) (the “2019“2022 Proxy Statement”) is incorporated by reference into Part III hereof.

Form 10-K Table of Contents

PART I

Item 1. Business.

Cautionary Statement Concerning Forward-Looking Statements

This Annual Report on Form10-K contains certain “forward-looking statements” 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”), regarding our general business strategies, anticipated market potential, the potential impact of costs, including material and labor costs, the potential impact of inflation, the potential of our brands expected capital spending, expected pension contributions, expected impact of acquisitions, the anticipated effects of recently issued accounting standards on our financial statements, planned business strategies, market potential, future financial performance and other matters. Statements that include the words “believes,” “expects,” “anticipates,” “intends,” “projects,” “estimates,” “plans” 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 plansexpectations, estimates, assumptions and expectationsprojections about our industry, business and future financial results available at the time this report is filed with the Securities and Exchange Commission (the “SEC”) or, with respect to any documents incorporated by reference, available at the time such document was prepared or 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. These factors include those listed in the section below entitled “Risk Factors.” Except as required by law, we undertake no obligation to, and expressly disclaim any such obligation to, update 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.otherwise, except as required by the law.

Unless the context otherwise requires, references in this Annual Report on Form10-K to “Fortune Brands,” the “Company,” “we,” “our” or “us” refer to Fortune Brands Home & Security, Inc. and its consolidated subsidiaries.

Our Company

We are a leading home and security products company that competes in attractive long-term growth markets in our product categories. With a foundation of market-leading brands across a diversified mix of channels, and lean and flexible supply chains, as well as a tradition of strong product innovation and customer service, we are focused on outperforming our markets in both growth and returns, and driving increased shareholder value. We have three business segments: Cabinets, Plumbing, and Doors & Security. We sell our products through a wide array of sales channels, including kitchen and bath dealers, wholesalers oriented toward builders or professional remodelers, industrial and locksmith distributors,“do-it-yourself” “do-it-yourself” remodeling-oriented home centers, e-commerce and other retail outlets. We believe the Company’s impressive track record reflects the long-term attractiveness and potential of our categories and our leading brands. Despite increased pressures driven in part by tariffs, higher interest rates and inflation, our performance demonstrates the strength of our operating model and our ability to generate profitable growth as sales volume increases and we leverage our structural competitive advantages to gain share in our categories.

Our Strategy

Build on leading business and brand positions in attractive growth and return categories. We believe that we have leading market positions and brands with what we believe to be sustainable competitive advantages in many of our product categories. In 2018,categories, which we expanded intosell primarily in North America and China. We believe that established brands are meaningful to both consumers and trade customers in their respective categories and that we have the outdoor living market by acquiring Fiber Composites LLC (“Fiberon”), a leading U.S. manufacturer of outdoor performance materials usedopportunity to, among other things, gain share in decking, railingthe marketplace and fencing products. The acquisition of Fiberon provides category expansion and product extension opportunities into the outdoor living space for our Doors & Security segment. We continue to invest in targeted advertising and other strategic initiatives aimed at enhancing brand awareness and educating

consumers regarding the breadth, features and benefitsstrengthen many of our product lines. For example, in the third quarter of 2018, Moen launched its new “Who designs for water” advertising and brand campaign showcasing its appreciation for Earth’s most crucial resource, while inspiring consumers to look at water from a renewed viewpoint. We also strive to leverage our brands bythrough cross-branding, expanding into adjacent product categories, and expanding in international and e-commerce markets. We are committed to continuing to invest in our capacity and supply chain to strengthen our business and continue to develop new programs by working closely withmeet demand for our customers.products.

Continue to developDevelop innovative products and processes for customers designers, installers and consumers.    Sustained investments We have a long track record of successful product and process innovations that introduce valued new products to our customers and consumers. We are committed to continuing to invest in consumer-drivennew product innovationdevelopment and enhance customer service along withto strengthen our low cost structures, have contributed to our successleading brands and penetrate adjacent markets, including in the marketplacedigital space and creating consumer demand. In 2018, our Global Plumbing Group developed partnerships and investments in the “whole home” water space, including partnering with Flo Technologies. In 2018, MasterBrand Cabinets, which provides a wide range of cabinets for the home, launched innovative new cabinet door designs, lighting systems, color palettes and features in a range of styles that allows consumers to create a custom kitchen look at an affordable price and introduced new, exclusive laminate door and finish options across multiple price segments. We continue to provide channel support with responsive websites featuring our cabinet brands that drives consumers to our partner dealers. TheTherma-Tru portfolio ofon-trend door and glass collections continued to evolve to meet current and emerging architectural design trends including wider and taller door styles, expanding panel configurations, as well as additional decorative, privacy and textured glass designs. Master Lock continued to be an innovation leader in security and safety products and services, driven by consumer and end user focused insights with continued emphasis on electronic enabled solutions for enhanced capability and convenience. In 2018, we launched our Vault Enterprise software and suite of Bluetooth^® enabled hardware for business, providing a convenient way for companies to control access, manage assets and improve accountability across many users simultaneously. SentrySafe continued to provide a full line portfolio of quality security, fire and water resistant safes to help consumers and small business owners protect documents and valuables.connected products.

Expand in international markets.    We expect to have opportunities to expand sales by further penetrating international markets, which represented approximately 16% of net sales in 2018. We continue to develop our relationship with dealers and distributors and their Moen-branded stores throughout China. In our Cabinets segment, Kitchen Craft remained a leading cabinetry brand in Canada, while WoodCrafters provided a company presence in Mexico. Within our Doors & Security segment, Master Lock continued to expand its presence in Europe and Asia, whileTherma-Tru made inroads in Canada as consumers transitioned from traditional entry door materials to more advanced and energy-efficient fiberglass doors.3

Leverage our global supply chains.    We are using lean manufacturing,design-to-manufacture and distributive assembly techniques to make our supply chains more flexible and improve supply chain quality, cost, response times and asset efficiency. We view our global supply chains and manufacturing presence as a strategic asset not only to support strong operating leverage as volumes increase, but also to enable the profitable growth of new products, adjacent market expansion and international growth.

Enhance returns and deploy our cash flow to high-return opportunities.opportunities. We continue to believe our most attractive opportunities are to invest in profitable organic growth initiatives, pursue accretive strategic acquisitions,non-controlling equity investments, and joint ventures, and return cash to stockholders through a combination of dividends and repurchases of shares of our common stock understock.

Advance our share repurchase program. In 2018, we repurchased approximately 12 million shares ofdigital strategy to fuel growth. We continue to invest in our outstanding common stock under the Company’s share repurchase programs for $695 million. In September 2018, we acquired Fiberon providing category expansiondigital capabilities to leverage our scale across technology, data and product extension opportunities into the outdoor living space fortalent to further accelerate and sustain growth in e-commerce and connected products.

Invest in appropriate ESG initiatives that positively impact our Doors & Security segment.

Our Competitive Strengths

We believe our competitive strengths include the following:

Leading brands.    We have leading brands in many of our product categories.employees and community and conduct business responsibly. We believe that established brandsadvancing environmental, social and governance (“ESG”) initiatives are meaningfulcritical to both consumers and trade customers in their respective categories

and thatmaking sure we have the opportunity to, among other things, continue to expand many of our brands into adjacent product categories and international markets.

Strategic focus on attractive consumer-facing categories.    We believe we operate in categories that, while very competitive, are among the more attractive categories in the home products and security products markets. Some of the key characteristics that make these categories attractive in our view include the following:

Operational excellence.    In 2018, we invested approximately $45 million to support long-term growth potential both in the U.S. and international markets. In addition, our supply chains and low cost manufacturing structures allow us to adapt to challenging market conditions. We believe that margin improvement will continue to be driven predominantly by organic volume growth that can be readily accommodated by current production capacity.

Commitment to innovation.    We have a long track record of successful product and process innovations that introduce valued new products and services toserve our customers and consumers.consumers to meet their needs. As a manufacturer, conducting business ethically is a priority for our businesses. We continue to look for ways to improve our environmental, social and governance programs and practices by focusing on ways to improve water conservation, waste reduction and carbon and climate impact, keep our employees safe and create a culture where all employees are committed to continuing to invest in new product developmenttreated with dignity and enhance customer service to strengthen our leading brands and penetrate adjacent markets.respect.

Diverse salesend-use mix.    We sellInvest in a varietycommon set of product categories and sales channels incapabilities across the U.S. home and security products markets. In addition,enterprise, known as the Fortune Brands Advantage.

While our exposure to changing levels of U.S. residential new home construction activity is balanced withrepair-and-remodel activity, which comprised a substantial majority of the overall U.S. home products market and abouttwo-thirds of our U.S. home products sales in 2018. We also benefit from a stable market for plumbing and security products and international sales growth opportunities.

Diverse sales channels.    We sell through a wide array of sales channels, including kitchen and bath dealers, wholesalers oriented to builders or professional remodelers, industrial and locksmith distributors,“do-it-yourself” remodeling-oriented home centers and other retail outlets. We also sell security products to locksmiths, industrial distributors and mass merchants. We are able to leverage these existing sales channels to expand into adjacent product categories. In 2018, sales to our top ten customers represented less than half of total sales.

Decentralized business model.    Our business segments are focused on distinct product categories and are responsible for their own performance. This structure enablesperformance, the Fortune Brands Advantage is an operating model consisting of a set of unifying capabilities that we believe are critical to our strategic growth across all of our businesses. The Fortune Brands Advantage currently consists of three critical pillars:

Category Management -Partnering with our channel partners to drive optimal performance and best serve our consumers through actionable category insights.

Global Supply Chain Excellence - Leveraging our robust, global supply chain to strategically drive scale efficiencies with cutting edge capabilities.

Complexity Reduction - Simplifying workstreams to be even more efficient.

We continue to grow our competencies in these areas, allowing each of our segmentsbusinesses to independently best position itself within each category in which it competestake advantage of available opportunities for revenue growth and reinforces strong accountability for operational and financial performance. Each of our segments focuses on its unique set of consumers, customers, competitors and suppliers, while also sharing best practices.

Strong capital structure.    We exited 2018 with a strong balance sheet. In 2018, we repurchased 12.0 million of our shares. As of December 31, 2018, we had $262.9 million of cash and cash equivalents and total debt was $2,334.0 million, resulting in a net debt position of $2,071.1 million. In addition, we had $930.0 million available under our credit facility as of December 31, 2018.

Business Segments

In July 2018, we publicly announced an internal reorganization to combine our Doors and Security segments under common leadership to drive innovation, accelerate product development, and enhance investments and business processes for the combined segment. In conjunction with the reorganization, we changed how our chief operating decision maker evaluates and allocates the resources across our businesses. As a result, beginning in the third quarter of 2018, weWe have three business segments: Cabinets, Plumbing, Outdoors & Security and Doors & Security. The following table shows net sales for each of these segments and key brands within each segment:

Cabinets.Our segments compete on the basis of innovation, fashion, quality, price, service and responsiveness to distributor, retailer and installer needs, as well asend-user consumer preferences. Our markets are very competitive. Approximately 16% of 20182021 net sales were to international markets, and sales to two of the Company’s customers, The Home Depot, Inc. (“The Home Depot”) and Lowe’s Companies, Inc. (“Lowe’s”), each accounted for more than 10%14% of the Company’s net sales in 2018.2021. Sales to all U.S. home centers in the aggregate were approximately 26%35% of net sales in 2018.

Cabinets.    Our Cabinets segment manufactures custom, semi-custom and stock cabinetry, as well as vanities, for the kitchen, bath and other parts of the home through a regional supply chain footprint to deliver high quality cabinets and service2021. In 2021, sales to our customers. This segment sells a portfoliotop ten customers representedless than half of brands that enables our customers to differentiate themselves against competitors. This portfolio includes brand names such as Aristokraft, Diamond,Mid-Continent, Kitchen Craft, Schrock, Homecrest, Omega, Thomasville, Kemper, StarMark and Ultracraft. Substantially all of this segment’s sales are in North America. This segment sells directly to kitchen and bath dealers, home centers, wholesalers and large builders. In aggregate, sales to The Home Depot and Lowe’s comprised approximately 36% of net sales of the Cabinets segment in 2018. This segment’s competitors include Masco and American Woodmark, as well as a large number of overseas, regional and local suppliers.total sales.

Plumbing. Our Plumbing segment manufactures or assembles and sells faucets, accessories, kitchen sinks and waste disposals, predominantly under the Moen, ROHL, Riobel, Victoria+Albert, Perrin & Rowe Victoria + Albert and Shaws brands. Although this segment sells products principally in the U.S., China and Canada, this segment also sells in Mexico, Southeast Asia, Europe and South America. Approximately 28%32% of 20182021 net sales were to international markets. This segment sells directly through its own sales force and indirectly through independent manufacturers’ representatives, primarily to wholesalers, home centers, mass merchandisers and industrial distributors. This segment is increasingly investing in digital trends and “smart” home capabilities. In aggregate, sales to The Home Depot and Lowe’s comprised approximately 23% 21%of net sales of the Plumbing segment in 2018.2021 . This segment’s chief competitors include

Masco, Kohler, Spectrum Brands, LIXIL Group, InSinkErator (owned by Emerson Electronic Company), Huida, Hgill, and Jomooand imported private-label brands.

Doors4

Outdoors & Security. Our DoorsOutdoors & Security segment manufactures and sells fiberglass and steel entry door systems under theTherma-Tru brand, name,storm, screen and security doors under the Larson brand, composite decking, railing and fencingcladding under the Fiberon brand, name, and urethane millwork under the Fypon brand name.brand. It also manufactures, sources and distributes locks, safety and security devices, and electronic security products under the Master Lock brandand American Lock brands and fire resistant safes, security containers and commercial cabinets under the SentrySafe brand. Larson, a North American market leading brand of storm, screen and security doors, was acquired in December 2020. This segment sells products principally in the U.S., Canada, Europe, Central America, Japan and Australia. Approximately 14%10% of 20182021 net sales were to international markets. This segment’s principal customers are home centers, hardware and other retailers, millwork building products and wholesale distributors, and specialty dealers that provide products to the residential new construction market, as well as to the remodeling and renovation markets. In addition, it sells lock systems and fire resistant safes to locksmiths, industrial and institutional users, and original equipment manufacturers. In aggregate, sales to The Home Depot and Lowe’s comprised approximately 19%30% of net sales of the DoorsOutdoors & Security segment in 2018.2021. Therma-Tru, Larson, Fiberon and Fypon brands compete with Masonite,JELD-WEN, Andersen, Trex, Azek, Plastpro, Pella and various regional and local suppliers. The Master Lock brand competes with Abus, W.H. Brady, Hampton, Spectrum Brands, Allegion, Assa Abloy and various imports. The SentrySafe brands competebrand competes with Magnum, Fortress Interlocks andStack-On. Interlocks.

AnnualCabinets. Our Cabinets segment manufactures high quality stock, semi-custom and custom cabinetry, as well as vanities, for the kitchen, bath and other parts of the home with a regional and international supply chain footprint. This segment sells a portfolio of brands, including AOK, Diamond Brands, KitchenCraft, Homecrest, Omega and EVE, that enable our customers to differentiate themselves against competitors. Substantially all of this segment’s sales are in North America. Approximately 6% of 2021 net sales for eachwere to international markets. This segment sells directly to kitchen and bath dealers, home centers, wholesalers, large builders and through e-commerce. In aggregate, sales to The Home Depot and Lowe’s comprised approximately 39% of net sales of the last three fiscal years for eachCabinets segment in 2021. This segment’s competitors include Cabinetworks Group (formerly ACPI) and American Woodmark, as well as a large number of our business segments were as follows:overseas, regional and local competitors.

For additional financial information for each of our business segments, refer to Note 19, “Information on Business Segments,” to the Consolidated Financial Statements in Item 8 of this Annual Report on Form10-K.

Other Information

Raw materials. The table below indicates the principal raw materials used by each of our segments. These materials are available from a number of sources. Volatility in the prices of commodities and energy used in making and distributing our products impacts the cost of manufacturing our products.

Intellectual property. Product innovation and branding are important to the success of our business. In addition to the brand protection offered by our trademarks, patent protection helps distinguish our unique product features in the market by preventing copying and making it more difficult for competitors to benefit unfairly from our design innovation. We hold U.S. and foreign patents covering various features used in products sold within all of our business segments. Although each of our segments relies on a number of patents and patent groups that, in the aggregate, provide important protections to the Company, no single patent or patent group is material to any of the Company’s segments.

Employees.Human Capital Resources. As of December 31, 2018, we2021, Fortune Brands had approximately 25,300more than 28,000 full-time employees.and part-time employees worldwide (excluding contract workers). Approximately 3,20077% of theseour workforce is composed of hourly production and distribution associates and the remaining population is composed of

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Safety is a critical element to Fortune Brands’ growth strategy, integral to Company culture and one of our core values. This is reflected in our goal of zero safety incidents and through our efforts to create an injury-free workplace. Our Employee relationsSafety & Environmental Stewardship Principles set standards for how we maintain a safe work environment and guides our business operations. The Company also has an Environmental, Health & Safety Leadership council comprised of representatives from across the Company’s businesses that share best practices and is responsible for driving environmental, health and safety strategy. This helps drive our best-in-class programs designed to reinforce positive behaviors, to empower our employees to actively take part in maintaining a safe work environment, to heighten awareness and to mitigate risk on critical safety components. Within each of our manufacturing and distribution facilities, we have site-specific safety and environmental plans designed to reduce risk. Through a continued commitment to improve our safety performance, we have historically been successful in reducing the number of injuries sustained by our employees. Two of our primary safety measures are generally good.the Total Recordable Incidence Rate ("TRIR") and Lost Time Rate ("LTR"). For the year ended December 31, 2021, our TRIR was 1.34, compared to 1.20 for the year ended December 31, 2020 and our LTR was 0.48, compared to 0.40 for the year ended December 31, 2020. The year over year increases in in these numbers are reflective of the addition of Larson to our 2021 results.

Our safety focus was demonstrated in our continued response to the COVID-19 pandemic. In 2021, we supplemented our enhanced safety protocols and implemented a mandatory mask mandate in our facilities when a location hits a positivity rate of 1% or more. We continue to offer flexibility to work remotely, with most office locations working on a hybrid schedule, but allowing for flexibility in that schedule where possible to minimize potential exposure of our employees. We also emphasized the importance of vaccines, by offering over 40 onsite vaccine clinics to employees, implementing flexible leave policies to allow people to get vaccinated, and offering educational opportunities on the safety and efficacy of vaccines. The Company also encouraged vaccinations and rewarded employees who were already vaccinated through a vaccine sweepstakes.

Attracting and Retaining Superior Talent

Fortune Brands is committed to investing in the physical, emotional and financial well-being of our employees and we believe that this is a critical component of our business strategy. To attract and retain superior talent at all levels of the Company, our total rewards are designed to be market competitive, align employee incentives with Company performance and support our employees across many aspects of their lives. We have a strong pay-for-performance culture that is supported by incentive programs that take into consideration business results and employee performance. We also offer a range of benefits including retirement savings plans, comprehensive healthcare and mental-health benefits including medical, dental and vision coverage, health savings and spending accounts, and employee assistance services. In 2021, we took steps to enhance our benefit plans starting in 2022 to further enhance

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Seasonality. All of our operating segments traditionally experience lower sales in the first quarter of the year when new home construction,repair-and-remodel repair and remodel activity and security buying are at their lowest. As a result of sales seasonality and associated timing of working capital fluctuations, our cash flow from operating activities is typically higher in the second half of the year.

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Environmental matters.    We are involved in remediation activities to clean up hazardous wastes as required by federal and state laws. Liabilities for remediation costs of each site are based on our best estimate of undiscounted future costs, excluding possible insurance recoveries or recoveries from other third parties. Uncertainties about the status of laws, regulations, technology and information related to individual sites make it difficult to develop estimates of environmental remediation exposures. Some of the potential liabilities relate to sites we own, and some relate to sites we no longer own or never owned. Several of our subsidiaries have been designated as potentially responsible parties (“PRP”) under “Superfund” or similar state laws. As of December 31, 2018, ten such instances have not been dismissed, settled or otherwise resolved. In 2018, none of our subsidiaries were identified as a PRP in a new instance and no instances were settled, dismissed or otherwise resolved. In most instances where our subsidiaries are named as a PRP, we enter into cost-sharing arrangements with other PRPs. We give notice to insurance carriers of potential PRP liability, but very rarely, if ever, receive reimbursement from insurance for PRP costs. We believe that the cost of complying with the present environmental protection laws, before considering estimated recoveries either from other PRPspotentially responsible parties under Superfund or similar state laws or from insurance, will not have a material adverse effect on our competitive position, results of operations, cash flows or financial condition. At December 31, 2018 and 2017, we had accruals of $0.6 and $0.7 million, respectively, relating to environmental compliance and cleanup including, but not limited to, the above mentioned Superfund sites.

Legal structure.    Fortune Brands Home & Security, Inc. is a holding company that was initially organized as a Delaware corporation in 1988. Wholly-owned subsidiaries of the Company include MasterBrand Cabinets, Inc., Fortune Brands Global Plumbing Group LLC, Fortune Brands Doors, Inc. and Fortune Brands Storage & Security LLC. As a holding company, we are a legal entity separate and distinct from our subsidiaries. Accordingly, the rights of the Company, and thus the rights of our creditors (including holders of debt securities and other obligations) and stockholders to participate in any distribution of the assets or earnings of any subsidiary is subject to the claims of creditors of the subsidiary, except to the extent that claims of the Company itself as a creditor of such subsidiary may be recognized, in which event the Company’s claims may in certain circumstances be subordinate to certain claims of others. In addition, as a holding company, the source of our unconsolidated revenues and funds is dividends and other payments from subsidiaries. Our subsidiaries are not limited by long-term debt or other agreements in their abilities to pay cash dividends or to make other distributions with respect to their capital stock or other payments to the Company.

Available Information. The Company’s website address is www.FBHS.com. The Company’s annual report onForm 10-K, quarterly reports onForm 10-Q, current reports onForm 8-K and any amendments to these reports are available free of charge on the Company’s website as soon as reasonably practicable after the reports are filed or furnished electronically with the SEC. Reports filed with the SEC are also made available on its website at www.sec.gov. We also make available on our website, or in printed form upon request, free of charge, our Corporate Governance Principles, Code of Business Conduct and Ethics, Code of Ethics for Senior Financial Officers, Charters for the Committees of our Board of Directors and certain other information related to the Company.

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Item 1A. Risk Factors.

There are inherent risks and uncertainties associated with our business that could adversely affect our business, financial condition or operating results. Set forth below are descriptions of those risks and

uncertainties that we currently believe to be material, but the risks and uncertainties described below are not the only risks and uncertainties that could adversely affect our business, financial condition or operating results. If any of these risks materialize, our business, financial condition or operating results could suffer. In this case, the trading price of our common stock could decline, and you may lose all or part of your investment.

Industry Risks Relating to Our Business

Our business primarily relies on North American and Chinese home improvement, repair and remodel and new home construction activity levels, all of which are impacted by risks associated with fluctuations in the housing market. Downward changes in the general economy, the housing market, unfavorable interest rates or other business conditions could adversely affect our results of operations, cash flows and financial condition.

Our business primarily relies on home improvement, repair and remodel, and new home construction activity levels, principally in North America.America and China. The housing market is 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 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 demand and could adversely impact our businesses by: causing consumers to delay or decrease homeownership; 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 large kitchen and bath repair and remodel projects; or making it more difficult to secure loans for major renovations.

We operate in very competitive consumer and trade brand categories.

The markets in which we operate are very competitive. Although we believe that competition in our businesses is based largely on product quality, consumer and trade brand reputation, customer service and product features, as well as fashion trends, innovation and ease of installation, price is a significant factor for consumers as well as our trade customers. Some of our competitors may resort to price competition to sustain or grow market share and manufacturing capacity utilization. Also, certain large customers continue to offer private-label brands that compete with some of our product offerings as a lower-cost alternative. We also face increasing pressure from imported ‘flat pack’ cabinets. The strong competition that we face in all of our businesses may adversely affect our profitability and revenue levels, as well as our results of operations, cash flows and financial condition.

Risks associated with our ability to improve organizational productivity and global supply chain efficiency and flexibility could adversely affect our results of operations, cash flows and financial condition.

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 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 demand. Import tariffs could potentially lead to increases in prices of raw materials or components which are critical to our business. Failure to achieve the desired level of quality, capacity or cost reductions could impair our results of operations, cash flows and financial condition.

We may not successfully develop new products or processes or improve existing products or processes.

Our success depends on meeting consumer needs and anticipating changes in consumer preferences with successful new products and product improvements. We aim to introduce products and new or

improved production processes proactively to offset obsolescence and decreases in sales of existing products. We may not be successful in product development and our new products may not be commercially successful. In addition, it is possible that competitors may improve their products or processes more rapidly or effectively, which could adversely affect our sales. Furthermore, market demand may decline as a result of consumer preferences trending away from our categories or trending down within our brands or product categories, which could adversely impact our results of operations, cash flows and financial condition.

Our businesses rely on the performance of wholesale distributors and dealers, retailers and other marketing arrangements and could be adversely affected by poor performance or other disruptions in our distribution channels and customers.

We rely on a distribution network comprised of consolidating customers. Any disruption to the existing distribution channels could adversely affect our results of operations, cash flows and financial condition.

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Risks associated with global commodity and energy availability and price volatility, as well as the possibility of sustained inflation, could adversely affect our results of operations, cash flows and financial condition.

We are exposed to risks associated with global commodity price volatility arising from restricted or uneven supply conditions, the sustained expansion and volatility of demand from emerging markets, potentially unstable geopolitical and economic variables, severe weather and other unpredictable external factors. We buy raw materials that contain commodities such as brass, zinc, steel, wood, and glass and petroleum-based products such as resins. In addition, our distribution costs are significantly impacted by the price of oil and diesel fuel. Decreased availability and increased or volatile prices for these commodities, as well as energy used in making, distributing and transporting our products, could increase the costs of our products. While in the past we have been able to mitigate the impact of these cost increases through productivity improvements and passing on increasing costs to our customers over time, there is no assurance that we will be able to offset such cost increases in the future, and the risk of potentially sustained high levels of inflation could adversely impact our results of operations, cash flows and financial condition. While we may use derivative contracts to limit our short-term exposure to commodity price volatility, the commodity exposures under these contracts could still be material to our results of operations, cash flows and financial condition. In addition, in periods of declining commodity prices, these derivative contracts may have the short-term effect of increasing our expenditures for these raw materials.

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We manufacture, source and sell products internationally and are exposed to risks associated with doing business globally.globally, including risks associated with uncertain trade environments.

We manufacture, source or sell our products in a number of locations throughout the world, predominantly in the U.S., Mexico, Europe, Africa, Canada China, Europe and Mexico.Asia. Accordingly, we are subject to risks associated with potential disruption caused by changes in political, economic and social environments, including civil and political unrest, illnesses declared as a public health emergency (including viral pandemics such as COVID-19), terrorism, possible 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 international trade regulations, including duties, tariffs 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, economic policies or health emergencies and difficulty enforcing contracts. 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. In addition, we source certain raw materials, components and finished goods from ChinaAsia where we have experienced higher manufacturing costs and longer lead times due to higher tariffs, currency fluctuations, higher wage rates, labor shortages and higher raw material costs.

Changes in government and industry regulatory standards11

Disruption of operations could adversely affect our results of operations, cash flows and financial condition.

Government regulations and policies pertaining to trade agreements, health and safety (including protectionWe manufacture a significant portion of employees as well as consumers), taxes and environmental concerns continue to emerge

domestically, as well as internationally. In particular, there may be additional tariffs or taxes related to our imported inputs and finished goods. It is necessary for us to comply with current requirements (including requirements that do not become effective until a future date), and even more stringent requirements could be imposed on ourthe products or processeswe sell. Any prolonged disruption in the future. Compliance with changes in taxes, tariffs and other regulations may require us to alter our manufacturing operations, whether due to technical or labor difficulties, continued labor shortages, transportation-related shortages, supply chain constraints, COVID-19, weather conditions (including due to the impacts of climate change, particularly for those facilities near any shorelines or in any other area traditionally impacted by extreme weather), lack of raw material or component availability, startup inefficiencies for new operations, destruction of or damage to any facility (as a result of natural disasters, fires and installation processesexplosions, use and storage of hazardous materials or other events) or other reasons, could negatively impact our sourcing. Such actions could increase our capital expendituresprofitability and competitive position and adversely impactaffect our results of operations, cash flows and financial condition.

Our inability to obtain raw materials and finished goods in a timely and cost-effective manner from suppliers could adversely affect our ability to manufacture and market our products.

We purchase raw materials to be used in manufacturing our products and also rely on third-party manufacturers to produce certain of the finished goods we sell. We often do not enter into long-term contracts with our suppliers or sourcing partners. Instead, most raw materials and sourced goods are obtained on a “purchase order” basis. In addition, in some instances we maintain single-source or limited-source sourcing relationships, either because multiple sources are not available or the relationship is advantageous due to performance, quality, support, delivery, capacity or price considerations. Financial, operating or other difficulties encountered by our suppliers or sourcing partners or changes in our relationships with them could result in manufacturing or sourcing interruptions, delays and inefficiencies, and prevent us from manufacturing or obtaining the finished goods necessary to meet customer demand. If we are unable to meet customer demand, there could be an adverse effect on our results of operations, cash flows and financial condition.

Risks associated with strategic acquisitions and joint ventures could adversely affect our results of operations, cash flows and financial condition.

We consider acquisitions and joint ventures as a means of enhancing shareholderstockholder value. Acquisitions and joint ventures involve risks and uncertainties, including difficulties integrating acquired companies and operating joint ventures; difficulties retaining the acquired businesses’ customers and brands;customers; the inability to achieve the expected financial results and benefits of transactions; the loss of key employees from acquired companies; implementing and maintaining consistent standards, controls, policies and information systems; and diversion of management’s attention from other business and strategic matters. Future acquisitions could cause us to incur additional debt or issue additional shares, resulting in dilution in earnings per share and return on capital.

Our inabilityImpairment charges could have a material adverse effect on the Company’s financial results.

Goodwill and other acquired intangible assets expected to secure and protect our intellectual property rights could negatively impact revenues and brand reputation.

We have many patents, trademarks, brand names and trade names that are importantcontribute indefinitely to our business. Unauthorized usecash flows are not amortized, but must be evaluated for impairment by management at least annually. If the carrying value exceeds the implied fair value of these intellectual property rightsgoodwill, the goodwill is considered impaired and is reduced to fair value via a non-cash charge to earnings. If the carrying value of an indefinite-lived intangible asset is greater than its fair value, the intangible asset is considered impaired and is reduced to fair value via a non-cash charge to earnings. No impairments were recorded during the year ended December 31, 2021. During the years ended December 31, 2020 and 2019, we recorded non-cash impairment charges related to indefinite-lived intangible assets of $22.5 million and $41.5 million, respectively. Future events may not only erode salesoccur that would adversely affect the fair value of our products,goodwill or other acquired intangible assets and require impairment charges. Such events may include, but may also cause significant damageare not limited to, lower than forecasted revenues, actual new construction and repair and remodel growth rates that fall below our brand nameassumptions, actions of key customers, increases in discount rates, continued economic uncertainty, higher levels of unemployment, weak consumer confidence, lower levels of discretionary consumer spending, a decrease in royalty rates and reputation, interfere witha decline in the trading price of our abilitycommon stock. We continue to effectively representevaluate the Companyimpact of economic and other developments to our customers, contractors and suppliers, and increase litigation costs. There can be no assurance that our efforts to protect our brands and trademark 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 productsassess whether impairment indicators are orpresent. Accordingly, we may be developed, manufactured or sold may not fully protect our intellectual property from infringement by others. There can be no assurance that our effortsrequired to assess possible third party intellectual property rights will ensure the Company’s 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.

Our businesses relyperform impairment tests based on the performance of wholesale distributors, dealers and other marketing arrangements and could be adversely affected by poor performance or other disruptions in our distribution channels and customers.

We rely on a distribution network comprised of consolidating customers. Any disruption to the existing distribution channels could adversely affect our results of operations, cash flows and financial condition. The consolidation of distributors or the financial instability or default of a distributor or one of its major customers could potentially cause such a disruption. In addition to our own sales force, we offer our products through a variety of third-party distributors, representatives and retailers. Certain of our distributors, representatives or retailers may also market other products that compete with our products. The loss or termination of one or more of our major distributors, representatives or retailers, the failure of one or more of our distributors, representatives or retailers to effectively promote our products, or changes in the financial or business conditioneconomic environment and other factors, and these tests could result in impairment charges in the future. Given the

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Company’s recent impairment charges, there is minimal difference between the estimated fair values and the carrying values of these distributors, representatives or retailers could effectsome our ability to bring products to market.indefinite-lived intangible assets, increasing the possibility of future impairment charges.

Our pension costs and funding requirements could increase as a result of volatility in the financial markets and changes in interest rates and actuarial assumptions.

Increases in the costs of pension benefits may continue and negatively affect our business as a result of: the effect of potential declines in the stock and bond markets on the performance of our pension plan

assets; potential reductions in the discount rate used to determine the present value of our benefit obligations; and changes to our investment strategy that may impact our expected return on pension plan assets assumptions. U.S. generally accepted accounting principles require that we calculate income or expense for the plans using actuarial valuations. These valuations reflect assumptions about financial markets and interest rates, which may change based on economic conditions. Our accounting policy for defined benefit plans may subject earnings to volatility due to the recognition of actuarial gains and losses, particularly due to the change in the fair value of pension assets and interest rates. Funding requirements for our U.S. pension plans may become more significant. However, the ultimate amounts to be contributed are dependent upon, among other things, interest rates, underlying asset returns and the impact of legislative or regulatory changes related to pension funding obligations.

Legal, Regulatory and People Risks associated with the disruption of operations could adversely affect

COVID-19 has impacted our business and may cause further disruptions to our business, results of operations cash flows and financial condition.

We manufacture a significant portionThe COVID-19 pandemic has had an impact on many aspects of the Company’s business and operations and may continue to impact the Company in the future, including impacting our ability to efficiently operate our facilities across the globe, the ability of our suppliers to supply and manufacture key inputs, availability and cost of transportation and logistics, customer behaviors, our employees, the distributors, dealers and retailers who sell our products, we sell. Anyand the market generally. Our business could be negatively impacted over the longer term if the disruptions related to COVID-19 decrease consumer confidence and housing investments; or precipitate a prolonged disruptioneconomic downturn and/or an extended rise in unemployment or tempering of wage growth, any of which could lower demand for our operations, whether dueproducts. The COVID-19 pandemic may also exacerbate certain of the other risks described in this “Risk Factors” section.

The COVID-19 pandemic has also resulted in and is expected to technicalcontinue to result in operational challenges in the manufacturing of our products and the operation of the related domestic and international supply chains supporting our ability to manufacture our products and distribute them through our channels. Restrictions on or labor difficulties, weather, lackdisruptions of raw materialtransportation or component availability, startup inefficiencies for new operations, destruction ofincreased border controls or damage to any facility (as a result of natural disasters, fires and explosions, use and storage of hazardous materialsclosures, or other events)impacts on domestic and global supply chains or other reasons,distribution channels, could negatively impactincrease our profitability and competitive position and adversely affect our results of operations, cash flows and financial condition.

Our inability to obtain raw materials and finished goods in a timelycommodity costs, increase demand for raw materials and cost-effective mannercommodities from suppliers could adversely affectcompeting purchasers, limit our ability to manufacture and market our products.

We purchase raw materials to be used in manufacturing ourdistribute products and also rely on third-party manufacturers as a source for finished goods. We typically do not enter into long-term contracts with our suppliers or sourcing partners. Instead, most raw materials and sourced goods are obtained on a “purchase order” basis. In addition, in some instances we maintain single-source or limited-source sourcing relationships, either because multiple sources are not available or the relationship is advantageous due to performance, quality, support, delivery, capacity or price considerations. Financial, operating or other difficulties encountered by our suppliers or sourcing partners or changes in our relationships with them could result in manufacturing or sourcing interruptions, delays and inefficiencies, and prevent us from manufacturing or obtaining the finished goods necessary to meet customer demand. If we are unable to meet customer demand there could be anor otherwise have a material adverse effect on our business, results of operations cash flows and financial condition.

Our failure to attract and retain qualified personnel and other labor constraints could adversely affect our results of operations, cash flows and financial condition.

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. With low

Low unemployment rates in the U.S., rising wages, competition for qualified talent and attracting and retaining personnel in remote locations could result in the failure to attract, motivate and retain personnel. This has 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.

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Future tax law changes or the interpretation of existing tax laws may materially impact our effective income tax rate, the resolution of unrecognized tax benefits and cash tax payments.

Our businesses are subject to income taxation in the U.S., as well as internationally. Weinternationally, including income tax, value-added tax and property tax. Our total tax expense could be affected by changes in tax rates in the jurisdictions in which our businesses are subject to taxation, changes in the valuation of deferred tax assets and liabilities or changes in tax laws or the interpretation of such laws by tax authorities which may have a material impact on our financial results. In addition, we are routinely audited by income tax authorities in many jurisdictions. Although we believe that the recordedwe record and accrue tax estimates that are reasonable and appropriate, these estimates are based on assumptions and require the exercise of significant judgment, and there are significant uncertainties in these estimates. As a

result, the ultimate outcome from any audit could be materially different from amounts reflected in our income tax provisions and accruals. Future settlements of income tax audits may have a material adverse effect on earnings between the period of initial recognition of tax estimates in our financial statements and the point of ultimate tax audit settlement.

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Our inability to secure and protect our intellectual property rights could negatively impact revenues and brand reputation.

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 may also cause us to incur substantial significant damage to our brand name and reputation, interfere with our ability to effectively represent the Company to our customers, contractors and suppliers, and increase litigation costs. There can be no assurance that our efforts to protect our brands and trademark rights will prevent violations. In addition, significant judgement is required in determining our provision for income taxes. Our total income tax expense could be affected by changes in taxexisting patent, trade secret and trademark laws rates inoffer only limited protection, and the jurisdictionslaws of some countries in which our businessesproducts are subjector 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 taxation, changesassess possible third party intellectual property rights will ensure the Company’s ability to manufacture, distribute, market or sell in the valuation of deferred tax assets and liabilitiesany given country or changes in tax lawsterritory. Furthermore, others may assert intellectual property infringement claims against us or the interpretation ofour customers which may require us to incur significant expense to defend such laws by tax authorities.litigation or indemnify our customers.

Potential liabilities and costs from claims and litigation could adversely affect our results of operations, cash flows and financial condition.

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, product recalls, personal injury claims, construction defects and home warranty claims, warranty disputes, environmental claims or proceedings, other tort claims, employment and tax matters and other proceedings and litigation, including class actions. 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.

We are subject to product safety regulations, recalls and direct claims for product liability that can result in significant liability and, regardless of the ultimate outcome, can be costly to defend. As a result of the difficulty of controlling the quality of products or components sourced from other manufacturers, we are exposed to risks relating to the quality of such products and to limitations on our recourse against such suppliers.

An impairment in the carrying value of goodwill or other acquired intangible assets could negatively affect our results of operations and financial condition.

The carrying value of goodwill represents the fair value of acquired businesses in excess of identifiable assets and liabilities as of the acquisition date. The carrying value of other intangible assets represents the fair value of customer relationships, tradenames and other acquired intangible assets as of the acquisition date. Goodwill and other acquired intangible assets expected to contribute indefinitely to our cash flows are not amortized, but must be evaluated for impairment by management at least annually. If the carrying value exceeds the implied fair value of goodwill, the goodwill is considered impaired and is reduced to fair value via anon-cash charge to earnings. If the carrying value of an indefinite-lived intangible asset is greater than its fair value, the intangible asset is considered impaired and is reduced to fair value via anon-cash charge to earnings. Events or circumstances that could have a potential negative effect on the estimated fair value of our reporting units and indefinite-lived tradenames include: actual new construction and repair and remodel growth rates that fall below our assumptions, actions of key customers, increases in discount rates, continued economic uncertainty, higher levels of unemployment, weak consumer confidence, lower levels of discretionary consumer spending, a decrease in royalty rates and decline in the trading price of our common stock . If the value of goodwill or other acquired intangible assets is impaired, our results of operations and financial condition could be adversely affected.

We may experience delays or outages in our information technology systems and computer networks. We may be subject to breaches of our information technology systems, which could damage our reputation and consumer relationships. Such breaches could subject us to significant financial, legal and operational consequences.

We, like most companies, may be subject to information technology system failures and network disruptions caused by delays or disruptions due to system updates, natural disasters, malicious attacks, accidents, power disruptions, telecommunications failures, acts of terrorism or war, computer viruses, physical or electronicbreak-ins, or similar events or disruptions. Our businesses may implement enterprise

resource planning systems or add applications to replace outdated systems and to operate more efficiently. We may not be able to successfully implement the projects without experiencing difficulties. In addition, any expected benefits of implementing projects might not be realized or the costs of implementation might outweigh the benefits realized. In addition, information security risks have generally increased in recent years because of the proliferation of new technologies and the increased sophistication and activities of perpetrators of cyber-attacks. We believe we devote appropriate resources to network security, data encryption, and other security measures to protect our systems and data, but these security measures cannot provide absolute security. In the event of a breach, we would be exposed to a risk of loss or litigation and possible liability, which could have an adverse effect on our business, results of operations, cash flows and financial condition.

There can be no assurance that we will have access to the capital markets on terms acceptable to us.

From time to time we may need to access the long-term and short-term capital markets to obtain financing. Although we believe that the sources of capital currently in place permit us to finance our operations for the foreseeable future on acceptable terms and conditions, our access to, and the availability of, financing on acceptable terms and conditions in the future will be impacted by many factors, including, but not limited to: our financial performance, our credit ratings, the liquidity of the overall capital markets and the state of the economy, including the U.S. housing market. There can be no assurance that we will have access to the capital markets on terms acceptable to us. In addition, a prolonged global economic downturn may also adversely impact our access to long-term capital markets, result in increased interest rates on our corporate debt, and weaken operating cash flow and liquidity. Decreased cash flow and liquidity could potentially adversely impact our ability to pay dividends, fund acquisitions and repurchase shares in the future.

Item 1B. Unresolved Staff Comments.

None.

Item 2. Properties.

Our principal executive office is located at 520 Lake Cook Road,in Deerfield, Illinois 60015.Illinois. We operate 3035 U.S. manufacturing facilities in 1618 states and have 2221 manufacturing facilities in international locations (9(8 in Mexico, 32 in Asia, 4 in Europe, 4 in Africa, and 23 in Canada). In addition, we have 5371 distribution centers and warehouses worldwide, of which 4256 are leased. The following table provides additional information with respect to these properties.

We are of the opinion that the properties are suitable to our respective businesses and have production capacities adequate to meet the current needs of our businesses.

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Item 3. Legal Proceedings.

The Company is a defendant in lawsuits that are ordinary routine litigation matters incidental to its businesses. It is not possible to predict the outcome of the pending actions, and, as with any litigation, it is possible that these actions could be decided unfavorably to the Company. The Company believes that

there are meritorious defenses to these actions and that these actions will not have a material adverse effect upon the Company’s results of operations, cash flows or financial condition, and, where appropriate, these actions are being vigorously contested. Accordingly, the Company believes the likelihood of material loss is remote.

Item 4. Mine Safety Disclosures.

Not applicable.

Information about our current Executive Officers of the Registrant.Officers.

Our current executive officers are:

Christopher J. Klein has

Nicholas I. Fink has served as Chief Executive Officer since January 2020. From March 2019 to January 2020, Mr. Fink served as President and Chief Operating Officer of Fortune Brands since January 2010.Brands. From July 2016 to March 2019, Mr. Fink served as President of the Company’s Plumbing business.

Patrick D. Hallinanhas served as Senior Vice President and& Chief Financial Officer of Fortune Brands since July 2017. From January 2017 to July 2017, Mr. Hallinan served as Senior Vice President of Finance of Fortune Brands. Prior to joining Fortune Brands’ executive team, Mr. Hallinan served as chief financial officer of Moen Incorporated, a subsidiary of Fortune Brands, from November 2013 to January 2017.

Nicholas I. FinkCheri M. Phyfer has served as President of the Plumbing segment since August 2016. From June 2015 to August 2016, Mr. FinkMarch 2019. Ms. Phyfer served as Senior Vice President-Global GrowthPresident of Moen’s U.S. business from February 2018 to March 2019. Prior to that, Ms. Phyfer held various positions at the Sherwin-Williams Company, a manufacturer of paint and Developmentcoatings products, including President of Fortune Brands. From June 2006 to May 2015, Mr. Fink worked at Beam Suntory, Inc., a global spirits company, and its predecessor entities in various senior positions including as Senior Vice Presidentthe Consumer Brands Group (2017) and President Asia-Pacific/South America.& General Manager – Diversified Brands from 2013 to 2017.

Brett E. Finleyhas served as President of the DoorsOutdoors & Security segment since July 2018. From February 2016 to July 2018, Mr. Finley served as the President of Fortune Brands Doors, Inc. From February 2008 to February 2016, Mr. Finley held various leadership positions at IDEX Corporation, a global manufacturer of fluidics systems and specialty engineered products, including Senior Vice President, Group Executive, Fluid & Metering Technologies Segment and President- IDEX-Asia.

R. David M. RandichBanyard, Jr. has served as President of the Cabinets segment since October 2012.

Tracey L. Belcourt hasNovember 2019. Mr. Banyard served as Senior Vice President and Chief Executive Officer of Global GrowthMyer Industries, an international manufacturer of packaging, storage, and Development of Fortune Brands sincesafety products and specialty molding, from December 2016. From 20122015 to 2016, Ms. Belcourt served as Executive Vice President, Strategy of Mondelez International, Inc. a confectionary, food and beverage company.October 2019.

Robert K. BiggartHiranda S. Donoghue has served as Senior Vice President, General Counsel and& Secretary of Fortune Brands since December 2013.2021. Ms. Donoghue served as Vice President & Deputy General Counsel of Baxter International Inc., a healthcare company, from November 2018 to December 2021. Prior to that, Ms. Donoghue held various positions as a legal advisor at Walgreen Co., from October 2007 to

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Sheri R. Grissomhas served as Senior Vice President, —Chief Human Resources Officer of Fortune Brands since February 2015. Ms. Grissom served as Executive Vice President — Global Human Resources of Actuant Corporation, a diversified industrial company, from October 2010 to February 2015.

Brian C. LantzJohn D. Lee has served as Senior Vice President, CommunicationsGlobal Growth & Corporate AdministrationDevelopment of Fortune Brands since January 2017.2020. Mr. Lantz joinedLee served as Senior Vice President, Global Growth & Development of the Plumbing segment from July 2016 to January 2020.

May Russell has served as Senior Vice President & Chief Digital Officer of Fortune Brands since February 2022. Ms. Russell served in June 2011various positions with Ford Motor Company, a manufacturer of vehicles, since 2009, most recently serving as Vice PresidentChief Technology/Product Officer of Investor Relations.Ford Digital Solutions, a division of Ford Motor Company, from November 2018 to January 2022.

Marty Thomashas served as Senior Vice President, Operations and& Supply Chain Strategy of Fortune Brands since September 2017. Mr. Thomas served as Senior Vice President of Global Operations and Engineering Services at Rockwell Automation, Inc., a provider of industrial automation and information products, from 2006 to 2016.prior thereto.

Dan Luburichas served as Vice President and Corporate Controller of Fortune Brands since October 2011.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Market Information, Dividends and Holders of Record

Our common stock is listed on the New York Stock Exchange (the “NYSE”) under the ticker symbol “FBHS”.

In December 2018,2021, our Board of Directors increased the quarterly cash dividend by 10%8% to $0.22$0.28 per share of our common stock. Our Board of Directors will continue to evaluate dividend payment opportunities on a quarterly basis. There can be no assurance as to when and if future dividends will be paid, or at what level, because the payment of dividends is dependent upon our financial condition, results of operations, capital requirements and other factors deemed relevant by our Board of Directors.

As a holding company, we are a legal entity separate and distinct from our subsidiaries. Accordingly, the source of our unconsolidated revenues and funds is dividends and other payments from subsidiaries. Our subsidiaries are not limited by long-term debt or other agreements in their abilities to pay cash dividends or to make other distributions with respect to their capital stock or other payments to the Company.

On February 1, 2019,11, 2022, there were 9,9468,055 record holders of the Company’s common stock, par value $0.01 per share. A substantially greater number of holders of the Company’s common stock are “street name” or beneficial holders, whose shares of record are held by banks, brokers or other financial institutions.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

Below are the repurchases of common stock by the Company or any “affiliated purchaser” (as defined inRule 10b-18(a)(3) under the Exchange Act) for the three months ended December 31, 2018:2021:

Stock Performance

The above graph compares the relative performance of our common stock, the S&P 500 Index and a Peer Group Index. This graph covers the period from December 31, 20132016 through December 31, 2018.2021. This graph assumes $100 was invested in the stock or the index on December 31, 20132016 and also assumes the reinvestment of dividends. The foregoing performance graph is being furnished as part of this Annual Report on Form10-K solely in accordance with the requirement under Rule14a-3(b)(9) to furnish our stockholders with such information, and therefore, shall not be deemed to be filed or incorporated by reference into any filings by the Company under the Securities Act or the Exchange Act.

Peer Group Index.The 20182021 peer group is composed of the following publicly traded companies corresponding to the Company’s core businesses:

American Woodmark Corporation, Armstrong World Industries, Inc., Fastenal Company, Leggett & Platt Incorporated, Lennox International Inc., Masco Corporation, Masonite International Corporation, Mohawk Industries, Inc., Newell Brands Inc., The Sherwin-Williams Company, Stanley Black & Decker, Inc. and USG Corporation.Fastenal Company.

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Calculation of Peer Group Index

The weighted-average total return of the entire peer group, for the period of December 31, 20132016 through December 31, 2018,2021, is calculated in the following manner:

Item 6. Reserved.

Five-year Consolidated Selected

Item 7. Management’s Discussion and Analysis of Financial DataCondition and Results of Operations.

Introduction

This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is a supplement to the accompanying consolidated financial statements and provides additional information on our business, recent developments, financial condition, liquidity and capital resources, cash flows and results of operations. MD&A is organized as follows:

Overview

Overview

The Company is a leader in home and security products focused on the design, manufacture and sale of market-leading branded products in the following categories: kitchen and bath cabinetry, plumbing and accessories, entry door and storm door systems, security products, and outdoor performance materials used in decking and railing products, and fencing products.kitchen and bath cabinetry.

For the year ended December 31, 2018,2021, net sales based on country of destination were:

We believe the Company has certain competitive advantages including market-leading brands, a diversified mix of customer channels, lean and flexible supply chains, a decentralized business model 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 shareholderstockholder value. We believe the Company’s track record reflects the long-term attractiveness and potential of our categories and our leading brands. As consumer demand and the housing market continue to grow, we expect the benefits of operating leverage and strategic spending to support increased manufacturing capacity and long-term growth initiatives will help us to continue to achieve profitable organic growth.

We continue to believe our most attractive opportunities are to invest in profitable organic growth initiatives. We also believe that as the market grows, we have the potential to generate additional growth from leveraging our cash flows and balance sheet strength by pursuinginitiatives, pursue accretive strategic acquisitions,non-controlling equity investments, and joint ventures, and by returningreturn cash to shareholdersstockholders through a combination of dividends and repurchases of shares of our common stock under our share repurchase program as explained in further detail under “Liquidity and Capital Resources” below.

The U.S. market for our home products consists of spending on both new home construction and repair and remodel activities within existing homes, with the substantial majority of the markets we serve consisting of repair and remodel spending. Continued growth in the U.S. market for our home products will largely depend on consumer confidence, employment, wage growth, home prices, stable mortgage rates and credit availability.

We may be impacted by fluctuations in raw materials, component costs, labor costs, tariffs, transportation costs, foreign exchange rates, inflation, interest rates and promotional activity among our competitors.competitors, among other things. We strive to offset the potential unfavorable impact of these items with productivity improvements and price increases.

During the threetwo years ended December 31, 2018,2021, our net sales grew at a compounded annual rate of 6.2%15.2% as we benefited from an improvinga growing U.S. home products market, acquisitions, and growth in international markets. Operating income grew at a compounded annual rate of 7.4%24.9% with consolidated operating margins improvingbetween 12% and 14% from 10% in 20152019 to 11% in 2018.2021. Growth in operating income was primarily due to higher sales volume, changes to our portfolio of businesses, control and leverage ofover our operating expenses and the benefits of manufacturing productivity programs.

During 2018,the first half of 2020, in response to the COVID-19 pandemic, a number of countries and U.S. states issued orders requiring nonessential businesses to close (“closure orders”) and persons who were not engaged in essential businesses to stay at home. Generally, states and jurisdictions designated our products, our retail channel partners and residential construction as essential business activities. While our financial results were negatively impacted during the second quarter of 2020 by these closure orders, sales volumes increased as these restrictions were relaxed benefiting our third and fourth quarter 2020 results.

During 2021, the U.S. home products market grew due to increases in repair and remodel and new home construction and repair and remodel activities.activity. We believe new housing construction experienced approximately 5% growth in 2018 compared to 2017 and spending for home repair and remodeling increased approximately 4%.14%and new housing construction experienced approximately 11% growth in 2021 compared to2020. In 2018,2021, net sales grew 4% 25.7%due to higher sales volume including the favorable comparison to 2020 when our volumes were impacted by the COVID-19 pandemic, the benefit from the Larson acquisition ($403.4 million), price increases to help mitigate the impact of cumulative raw materialcommodity and transportation cost increases the acquisitions in our Plumbing and Doors & Security segments, higher sales volume primarily resulting from U.S. home products market growth, and the effect offavorable mix, as well as favorable foreign exchange. exchange of approximately $63 million. These benefits were partially offset by higher promotion and volume-based rebate costs.In 2018,2021, operating income decreased 12.8%increased 36.1% over 2020 primarily due to unfavorable mix,higher net sales, the benefit from the Larson acquisition, manufacturing productivity improvements, the absence of the 2020 asset impairment charges higher employee-related costs and lower restructuring charges.

During 2017, the U.S. home products market grew due to increases in new home construction and repair and remodel activities. We believe new housing construction experienced approximately 7% growth in 2017 compared to 2016 and spending for home repair and remodeling increased by approximately 5%. In 2017, net sales grew 6% and operating income increased 9% due to higher sales volume primarily resulting from U.S. home products market growth, the acquisitions in our Plumbing segments, price increases to help mitigate cumulative raw material cost increases, the effect ofother charges, as well as favorable foreign exchange of approximately $17 million. These benefits were partially offset by higher commodity, employee-related and productivity improvements.transportation costs, higher amortization of intangible assets principally due to the Larson acquisition, higher advertising costs, higher promotion and volume-based rebate costs and higher tariffs.

DuringIn December 2020, we acquired 100% of the fourth quarteroutstanding equity of 2018,Larson, the North American market leading brand of storm, screen and security doors, for a total purchase price of approximately $717.5 million, net of cash acquired. We financed the transaction with borrowings under our Plumbing segment entered into strategic partnerships with several companies who incorporate emerging technology into plumbing-related products,existing credit facilities. The results of operations are included in the Outdoors & Security segment. The financial results of Larson were included in the Company’s December 31, 2021 and 2020 consolidated balance sheets and the Company's consolidated statements of income and of cash flows beginning January 2021. Larson's net sales, operating income and cash flows from the date of acquisition to December 31, 2020 were not material to the Company.

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In June 2020, we repaid all amounts outstanding on the 3.000% Senior Notes issued in June 2015 at the same time acquirednon-controlling equity interests in two oftheir maturity date using borrowings under our partners. This includes an investment in Flo Technologies, Inc.

2019 Revolving Credit Agreement (as defined below). In September 2018, we2019, the Company issued $600$700 million of unsecured senior notes3.25% Senior Notes due 2029 (“2018 Senior2019 Notes”) in a registered public offering. The 2018 Senior Notes are due in 2023 with a coupon rate of 4%. All other terms and conditions of the 2018 Senior Notes are substantially consistent with our other senior notes issued in June 2015 (“2015 Senior Notes”, and collectively with the 2018 Senior Notes, the “Senior Notes”). WeCompany used the proceeds from the 2018 Senior2019 Notes offering to repay in full a $350 million term loan and to pay down our revolving credit facility.

In September 2018, we acquired 100% of the membership interests of Fiber Composites LLC (“Fiberon”), a leading U.S. manufacturer of outdoor performance materials used in decking, railing and fencing products

for a total purchase price of approximately $470.0 million, subject to certain post-closing adjustments. The acquisition of Fiberon provides category expansion and product extension opportunities into the outdoor living space for our Doors & Security segment. We financed the transaction using cash on hand and borrowingsoutstanding balances under our revolving credit and term loan facilities. Fiberon’s results of operations are included in the Doors & Security segment from the date of acquisition.2019 Revolving Credit Agreement.

In July 2018, we publicly announced an internal reorganization to combine our historical Doors and Security segments under common leadership to drive innovation, accelerate product development, and enhance investments and business processes. In connection with the reorganization, we changed how our chief operating decision maker evaluates and allocates the resources for the combined business. Reporting for the new Doors & Security segment began in the third quarter of 2018 and historical financial segment information has been restated to conform to the new segment presentation.

In March 2018,November 2021, the Company entered into a $350364-day, $400 million term loan credit agreement (“2021 Term Loan”) for general corporate purposes that matures in March 2019. In August 2018, the Company amended its existing $350 million term loan to increase the borrowings under the term loan from $350 million to $525 million. All terms and conditions on the amended term loan remain the same as the previous $350 million term loan.November 2022. Interest rates under the term loan2021 Term Loan are variable based on LIBOR at the time of the borrowing and the Company’s long-term credit rating and can range from LIBOR + 0.625% to LIBOR + 1.25%. Covenants under the term loan are the same as the existing $1.25 billion revolving credit agreement.

In October 2017, we2018 our Plumbing segment entered into a strategic partnership with, and acquired Domotec Holdings Limitednon-controlling equity interests in, Flo Technologies, Inc. (“Victoria + Albert”), aUK-based premium brand of standalone bathtubs, sinks, tub fillers, faucets and other accessories. In July 2017, we acquired Shaws Since1897 Limited (“Shaws”), aUK-based luxury plumbing products company that specializes in manufacturing and selling fireclay sinks and selling brassware and accessories. The total combined consideration paid was approximately $146 million, subject to certain post-closing adjustments and deferred acquisition payments. We financed both of the acquisitions using cash on hand and borrowings under our revolving credit facility. These transactions broadened our plumbing portfolio.

During the third quarter of 2016, we announced the creation of GPG, which was designed to support the growth of multiple plumbing brands with an enhanced set of products and brands, while leveraging Moen’s existing global supply chain and broad distribution network.

In September 2016, we acquired ROHL LLC (“ROHL”Flo”), a California-based luxury plumbing companyU.S. manufacturer of comprehensive water monitoring and shut-off systems with leak detection technologies. In January 2020, we entered into an agreement to acquire 100% of the outstanding shares of Flo in a multi-phase transaction, which was completed in January 2022. The minority shareholders' substantive participating rights expired on January 1, 2021, at which time we obtained control of, and began consolidating, Flo in our results of operations and statements of financial positions and cash flows. Immediately prior to consolidating Flo, we recognized a non-cash loss of $4.5 million within other expense for the year-ended December 31, 2021, related transaction,to the remeasurement of our previously existing investment in Flo. During the fourth quarter of 2021 we acquired TCL Manufacturing Ltd, which gave us ownershiprecorded a mark-to-market expense of Perrin & Rowe, a UK manufacturer and designer of luxury kitchen and bathroom plumbing products. The total combined purchase price was approximately $166$2.2 million subjectrelated to certain post-closing adjustments. We financed both acquisitions using cash on hand and borrowings under our existing credit facility. These transactions broadened the plumbing portfolio and enhanced future growth opportunities.remaining shares held by the minority shareholders.

In June 2016, we amended and restated our credit agreement to combine and rollover the existing revolving credit facility and term loan into a new standalone $1.25 billion revolving credit facility. Terms and conditions of the credit agreement, including the total commitment amount, essentially remained the same as our previous credit assesment. The revolving credit facility will mature in June 2021 and borrowings thereunder will be used for general corporate purposes.

In May 2016, we acquired Riobel Inc (“Riobel”), a Canadian plumbing company specializing in premium showroom bath and shower fittings, for a total purchase price of $94.6 million, subject to certain post-closing adjustments. We financed the transaction using cash on hand and borrowings under our existing credit facilities.

Basis of Presentation

The consolidated financial statements in this Annual Report on Form10-K have been derived from the accounts of the Company and its wholly-owned subsidiaries. The Company’s consolidated financial

statements are based on a fiscal year ending December 31. Certain of the Company’s subsidiaries operate on a 52 or 53 week fiscal year ending during the month of December. In December 2017, there were certain transactions that resulted in approximately $38 million of net cash outflows relating to payments made to third parties in the normal course of business during the period between theyear-end of our wholly-owned subsidiaries and the Company’syear-end (in 2018, amounts were immaterial).

In September 2018, we acquired Fiber Composites LLC (“Fiberon”). The financial results of Fiberon were included in the Company’s consolidated statements of income and statements of cash flow beginning in September 2018 and the consolidated balance sheet as of December 31, 2018. The results of operations are included in the Doors & Security segment.

In October 2017, we acquired Victoria + Albert. In July 2017, we acquired Shaws. The financial results of both of the acquisitions were included in the Company’s consolidated balance sheets as of December 31, 2017 and in the Company’s consolidated statements of income and statements of cash flow beginning in October 2017 and July 2017, respectively. The results of operations are included in the Plumbing segment.

In September 2016, we acquired ROHL and in a related transaction, we acquired TCL Manufacturing Ltd., which gave us ownership of Perrin & Rowe and in May 2016, we acquired Riobel. The financial results of ROHL and Riobel were included in the Company’s consolidated balance sheets as of December 31, 2016 and in the Company’s consolidated statements of income and statements of cash flow beginning in September 2016 and May 2016, respectively. The results of operations are included in the Plumbing segment.

Results of Operations

The following discussion of both consolidated results of operations and segment results of operations refers to the year ended December 31, 20182021 compared to the year ended December 31, 2017, and the year ended December 31, 2017 compared to the year ended December 31, 2016.2020. 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 Form10-K. Unless otherwise noted, all discussion of results of operations are for continuing operations.

Years Ended December 31, 2018, 20172021 and 20162020

Certain items had a significant impact on our results in 2018, 20172021 and 2016.2020. These included the acquisitions of Fiberon, Victoria + Albert, Shaws, Riobel, ROHL and Perrin & Rowe, restructuring and other charges, asset impairment charges and the impact of changes in foreign currency exchange rates.

In 2018,2021, financial results included:

In 2017,2020, financial results included:

In 2016, financial results included:

2018 Compared to 2017

during 2017 and 2018 in our Plumbing and Doors & Security segments, higher sales volume primarily from the growth in the U.S. home products market, the benefit from new product introductions andfavorable mix, as well as favorable foreign exchange of approximately $9$63 million. These benefits were partially offset by more moderate industry growth during the second half of 2018, unfavorable mixhigher promotion and higher promotions and rebates.volume-based rebate costs.

Cost of products sold

Cost of products sold increased $167.4by $983.2 million, or 5.0%25.0%, due to higher net sales, increased commodity costs, higher restructuring and other charges related to costs associated with our initiatives to consolidate and rationalize our manufacturing footprint and discontinue certain product lines in our Cabinets segment, andthe impact of the Larson acquisition including higher amortization of the acquisition-relatedacquisition related inventory fair value adjustment ($3.3 million in our Plumbing2021), commodity cost inflation, product mix, labor inflation, and Doors & Security segments. These factors werehigher tariffs, partially offset by the benefit offrom manufacturing productivity improvements.

Selling, general and administrative expenses

Selling, general and administrative expenses increased $44.5by $296.4 million, or 3.7%23.1%,due to higher transportation and employee-related costs, the impact from our acquisitions during 2017of the Larson acquisition and 2018 in our Plumbing and Doors & Security segments and higher transportation costs partially offset by the benefit from restructuring actions.advertising costs.

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Amortization of intangible assets

Amortization of intangible assets increased $4.4by $22.1 million primarily due to the Larson acquisition in our acquisitions during 2017Outdoors & Security segment ($18.2 million) and 2018the 2021 consolidation of Flo in our Plumbing and Doors & Security segments offset by a decrease related to a definite-lived customer relationship intangible that was fully amortized during the second quarter of 2017.segment ($2.6 million).

Loss on sale of product line

In April 2017, we completed the sale of Field ID, our cloud-based inspection and safety compliance software product line included in our Doors & Security segment. We recorded apre-tax loss of $2.4 million as the result of this sale.

Asset impairment charges

Asset impairment charges of $62.6$22.5 million in 20182020 related to two indefinite-lived tradenames within our Plumbing and Cabinets segment. During the third quarter of 2018, we recognized an impairment of $27.1 million related to one tradename, which was primarily the result of reduced revenue growth expectations associated with Cabinets operations in Canada, including the announced closure of Company-owned retail locations during the third quarter of 2018. During the fourth quarter of 2018, we recognized an impairment of $35.5 million related to another tradename, which was primarily the result of lower than forecasted sales during the fourth quarter of 2018 as well as projected changes in the mix of revenue across our tradenames in future periods, including the impact of more moderate industry growth expectations, which were finalized during our annual planning process conducted during the fourth quarter. Asset impairment charges of $3.2 million in the first quarter of 2017 related to our decision to sell Field ID.segments.

Restructuring charges

Restructuring charges of $24.1$13.5 million in 2018 primarily2021 largely related to severance costs associated with the relocation of manufacturing facilities within allour Outdoor & Security and Cabinets segments.Restructuring charges of our$15.9 million in 2020 largely related to headcount actions associated with COVID-19 across all segments and costs associated with our initiatives to consolidatechanges in our manufacturing footprint and product lines in our Cabinets segment. Restructuring charges of $8.3 million in 2017 primarily related to severance costs across all segments and charges associated with the relocation of a manufacturing facilityprocesses within our CabinetsPlumbing segment.

Operating income

Operating income decreased $87.3increased by $289.0 million, or 12.8%. Operating income decreased36.1%, primarily due to unfavorable mix,higher net sales, the benefit from the Larson acquisition, manufacturing productivity improvements, the absence of the 2020 asset impairment charges and lower restructuring and other charges, as well as favorable foreign exchange of approximately $17 million. These benefits were partially offset by higher commodity, employee-related and transportation costs, higher amortization of intangible assets principally due to the Larson acquisition, higher advertising costs, higher promotion and volume-based rebate costs and restructuring charges partially offset by

higher net sales, including the benefit from acquisitions in our Plumbing segment and productivity improvements.

Interest expense

Interest expense increased $25.1by $0.5 million to $74.5$84.4 million, due to higher average borrowings to finance share repurchases and acquisitions and higherpartially offset by lower average interest rates.

Other income,expense (income), net

Other income,expense (income), net, was $16.3expense of $0.9 million in the twelve months ended December 31, 2018,2021, compared to $1.7income of $13.3 million in the twelve months ended December 31, 2017.2020. The increase in otherdecrease of $14.2 million of income net, is primarily due to hedgelosses of $5.0 million in 2021 and gains associated withof $11.0 million in 2020 related to our September 2018 debt issuance, favorableinvestment in Flo prior to its consolidation and unfavorable foreign currency adjustments and various tax credits within our Plumbing businesslosses, partially offset by lowerhigher defined benefit plan income in 2018 ($3.07.8 million decrease)increase). In addition, 2017 reflects a $7.0 million impairment charge related to a cost method investment.

Income taxes

The effective income tax rates for 20182021 and 20172020 were 27.4%23.2% and 25.1%23.1%, respectively. The 2018 effective income tax rate was favorably impacted by the corporate tax rate reduction from 35% to 21% under The Tax Cuts and Jobs Act of 2017 (the “Tax Act”). The 20182021 effective income tax rate was unfavorably impacted by the repeal of the Domestic Production Activity (Internal Revenue Code Section 199) Deduction,state and local income taxes, foreign income taxed at higher rates and a valuation allowance increase ($3 million), an adjustment toincrease. This expense was offset by favorable benefits for the provisional net benefit recorded in 2017 under the Tax Act ($5.5 million), state and local taxes, unfavorable tax rates in foreign jurisdictions ($3.5 million), and increases inrelease of uncertain tax positions, ($4.1 million).primarily related to statute of limitation lapses, and share-based compensation.

The 20172020 effective income tax rate was favorablyunfavorably impacted by the Tax Act. The effectivestate and local income tax rate for 2017taxes and foreign income taxed at higher rates. This expense was favorably impactedoffset by a tax benefit related to share-based compensation ($23.9 million), the tax benefitcompensation.

Net income attributable to the Domestic Production Activity (Internal Revenue Code Section 199) Deduction ($10.9 million)Fortune Brands

Net income attributable to Fortune Brands was $772.4 million in 2021 compared to $553.1 million in 2020. The increase of $219.3 million was due to higher operating income, lower equity in losses of affiliate and favorable tax rates in foreign jurisdictions ($8.3 million), partiallylower noncontrolling interests, partly offset by state and local taxes and increases to uncertain tax positions ($11.6 million).

The Tax Act made significant changes to the U.S. Internal Revenue Code including a reduction in the corporate tax rate from 35% to 21% for tax years beginning after December 31, 2017, generally providing for an exemption from federalhigher income tax for dividends received from foreign subsidiaries,expenses, higher other expense and imposing aone-time transition tax on the deemed repatriation of cumulative foreign earnings and profits as of December 31, 2017. On December 22, 2017, Staff Accounting Bulletin No. 118 (“SAB 118”) was issued, which deals with the application of U.S. GAAP to situations where a registrant does not have the necessary information available, preparedhigher interest expense.

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Net sales increased by $559.1 million, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Tax Act. In accordance with SAB 118, we calculated our best estimate of the impact of the Tax Act on our 2017 effective income tax rate. As a result, the Company recorded a provisional net benefit of $25.7 million in the fourth quarter of 2017, the period in which the Tax Act was enacted. This provisional amount included an estimated reduction in the Company’s net deferred tax liabilities of $62.4 million resulting from the decrease in the federal income tax rate; an estimated deemed repatriation tax liability of $28.5 million; and an estimated net increase to our provision for taxes on foreign earnings not considered permanently reinvested of $8.2 million. During the fourth quarter of 2018, the Company completed its analysis in conjunction with the SAB 118 measurement period ending on December 22, 2018. The total tax provision impact for the year ended December 31, 2018 was an unfavorable adjustment of $5.5 million related primarily to certain deferred tax assets and liabilities.

Income from continuing operations

Net income from continuing operations was $390.0 million in 2018 compared to $475.3 million in 2017. The decrease of $85.3 million was primarily25.4%, due to lower operating income.

Loss from discontinued operations

The loss from discontinued operations was $0.2 millionhigher sales volume across all brands and $2.6 millionmarkets, including showroom customers whose locations were negatively impacted in 2018 and 2017, respectively and is related to the prior sale of the Waterloo tool storage and Simonton window businesses.

Results By Segment

Cabinets

Net sales decreased $48.5 million, or 2.0%, predominantly due to the impact of exiting a customer relationship and unfavorable mix. These factors were partially offset2020 by the benefit from new product introductionsCOVID-19 pandemic, and price increases to help mitigate the impact of cumulative raw materialcommodity and transportation cost increases.increases, as well as favorable foreign exchange of approximately $53 million. These benefits were partially offset by higher volume-based rebate costs.

Operating income decreased $123.7increased by $161.8 million, or 46.3%34.6%, primarily due to lowerhigher net sales, tradenamethe benefit from manufacturing productivity improvements, the absence of the 2020 asset impairment charges of $62.6 million, highercharge ($13.0 million) and favorable restructuring and other charges, incurred to consolidate our manufacturing footprint and discontinue certain product lines and increased employee-related costs due to inflation,as well as favorable foreign exchange of approximately $21 million. These benefits were partially offset by the benefit from productivity improvements.impact of higher employee-related, freight, commodity, advertising and tariff costs, higher amortization of intangible assets related to the Flo acquisition and higher volume-based rebate costs.

PlumbingOutdoors & Security

Net sales increased $162.5by $620.7 million, or 9.4% 43.7%,due to higher sales unit volume in the U.S. China and Canada, new product introductions across our distribution channels, the benefit from the 2017 acquisitions of Victoria + Albert and Shaws andLarson acquisition ($403.4 million), higher sales volume including the favorable comparison to 2020 when our volumes were impacted by the COVID-19 pandemic, price increases to help mitigate the impact of cumulative raw materialcommodity and transportation cost increases and lower rebate costs due to timing of sales in 2021 versus prior year period, as well as favorable foreign exchange of approximately $1 million. These benefits were partially offset by higher rebates. Foreign exchange was favorableunfavorable mix primarily driven by approximately $5 million.materials availability.

Operating income increased $16.8by $90.6 million, or 4.7%45.0%,due to the higher net sales, the benefit from the Larson acquisition and benefits frommanufacturing productivity improvements. These benefits were partially offset by commodity cost inflation, higher freight and employee-related costs and higher restructuring charges, as well as unfavorable mix, amortization of the acquisition-related inventory fair value adjustments ($5.5 million) related to our 2017 acquisitions and increased marketing and advertising costs. In addition, 2017 operating income reflects the impact of adopting ASU2017-07 during 2018 and the reclassificationforeign exchange of approximately $5.1 million from Plumbing operating income to other income, net.$1 million.

Doors & SecurityCabinets

Net sales increased $87.8by $386.0 million, or 8.0%15.6%, due to higher sales volume resulting fromin both our stock and make-to-order products, including the benefit from new product introductions,favorable comparison to 2020 when our volumes were impacted by the acquisition of Fiberon in 2018,COVID-19 pandemic, price increases to help mitigate the impact of cumulative raw materialcommodity and transportation cost increases and the impact of favorable foreign exchange, which were partly offset by increasednon-repeating sales promotions and unfavorable mix.

Operating income increased $8.7 million, or 5.9%, due to higher net sales and an inventory valuation accounting change benefit of $12.8 million, which were partially offset bynon-repeating sales promotions and inventory step up amortization related to the Fiberon acquisition.

Corporate

Corporate expenses decreased by $10.9 million mainly due to lower employee-related costs. In addition, 2017 corporate expense reflects the impact of adopting ASU2017-07 during the first quarter of 2018 and the related reclassification of approximately $4.5 million of 2017 income from Corporate expenses to other income, net.

2017 Compared to 2016

Total Fortune Brands

Net sales

Net sales increased $298.4 million, or 6.0%. The increase was due to higher sales volume primarily from improvement in U.S. market conditions for home products, new product introductions, the benefit from the acquisitions in our Plumbing segment and price increases to help mitigate cumulative raw material cost increasesmix, as well as the benefit from favorable foreign exchange of approximately $4$8 million. These benefits were partially offset by unfavorable mix, higher sales promotions, and sales rebates.volume-based rebate costs.

Cost of products sold

Cost of products soldOperating income increased $169.5by $43.6 million, or 5.3%18.5%, due to higher net sales, including the impactbenefit from manufacturing productivity improvements, the absence of the acquisitions in our Plumbing segment2020 asset impairment charge ($9.5 million) and raw material cost increases, partiallylower advertising, tariff and restructuring costs. These factors were partly offset by the benefit of productivity improvements.

Selling, generalhigher freight, commodity, and administrative expenses

Selling, general and administrative expenses increased $61.4 million, or 5.4%, due to higher employee-related costs and advertisinghigher volume-based rebate costs, as well as the impactunfavorable foreign exchange of the acquisitions in our Plumbing segment.approximately $3 million.

Amortization of intangible assetsCorporate

Amortization of intangible assetsCorporate expenses increased $3.6by $7.0 million, primarilyor 6.8%, due to the acquisitions in our Plumbing segment, partiallyhigher employee-related and consulting costs. These factors were partly offset by a decrease relating to a definite-lived customer relationship intangible in our Doors & Security segment that was fully amortized during the second quarterabsence of 2017.

Loss on sale of product line

In April 2017, we completed the sale of Field ID, our cloud-based inspection and safety compliance software product line included in our Doors & Security segment. We recorded apre-tax loss of $2.4 million as the result of this sale.

Asset impairment charges

Asset impairment charges of $3.2 million relate to our decision in the first quarter of 2017 to sell Field ID.

Restructuring charges

Restructuring charges of $8.3 million in 2017 primarily related to severancetransaction costs within all of our segments as well as charges associated with a plant relocation in our Cabinets segment. Restructuring charges of $13.9 million in 2016 primarily related to the severance costs and charges associated with the relocation of a manufacturing facility within our Doors & Security segment.

Operating income

Operating income increased $63.9 million or 10.3%. Operating income increased due to higher net sales, including the benefit from acquisitionsLarson acquisition in our Plumbing segment and productivity improvements. These benefits were partially offset by unfavorable mix, higher employee-related costs, raw material, labor inflation and advertising costs. 2017 and 2016 were adjusted to reflect the impact of adopting ASU2017-07 and reclassification of $9.6 million and $14.1 million, respectively from operating income to other income, net.

Interest expense

Interest expense of $49.4 million was $0.3 million higher as compared to last year primarily due to higher average interest rates which was partially offset by lower average borrowings2020 ($4.5 million) and the absence of thewrite-off of debt issuance costs incurred in 2016.