Shares of Fortune Brands Home & Security Inc (FBIN) tumbled 8.31% in pre-market trading on Friday, following the company's mixed fourth-quarter results and cautious outlook for 2025 amid ongoing macroeconomic headwinds.

The home products manufacturer reported a 5% year-over-year decline in Q4 2024 net sales to $1.1 billion, impacted by a third-party software outage, hurricanes in the southeast US, and continued softness in its China business. Adjusted earnings per share of $0.98 grew 3% from the prior year, while operating margin expanded 60 basis points to 16.4%, driven by cost optimization efforts and a more favorable product mix.

For fiscal 2025, Fortune Brands expects net sales to be flat to up 3%, with operating margins between 16.5% and 17.5%. The company cited potential headwinds from interest rate volatility and geopolitical uncertainties, which could dampen demand in the repair and remodel market. The guidance assumes modest growth in US single-family new construction and a relatively stable repair and remodel market.

Despite the challenges, Fortune Brands remains optimistic about its long-term growth prospects, fueled by its investments in digital and connected products. The company's digital sales, which include smart water leak detection systems like Flo, reached $214 million in 2024 and are expected to contribute 150 basis points to overall revenue growth in 2025.

CEO Nicholas Fink highlighted the company's progress in expanding its digital ecosystem, signing new partnerships with insurance companies and strengthening its connected product offerings across security and water segments. The company aims to accelerate growth in its Flo business, targeting annualized sales of $100 million in 2025 through new subscription-based pricing models and increased marketing efforts.

Additionally, Fortune Brands has taken steps to improve its operational efficiency and profitability. The company reported impressive free cash flow of approximately $475 million in 2024, with a cash conversion rate exceeding 100% of net income. Its board authorized a new $1 billion share repurchase program, reflecting confidence in the company's cash generation abilities and commitment to enhancing shareholder value.