Fortune Brands Innovations, Inc. Deutsche Bank’s Chicago Industrials Summit

Yeah. Excuse me. Thanks for the question and thanks for having me here. As you pointed out, it's been about six weeks that I've been on the job. I came into the role very excited about the opportunity of having really, really strong brands that have really good potential. Coming in, it's pretty obvious that that opportunity exists in a pretty meaningful way for the long term in particular. I think, as you pointed out, I highlighted a few things on the earnings call. I think number one, we've had a lot of change in the organization. We've obviously had some turnover in management, starting at the top.

We had some activity at a board level, but we also made some changes relative to how we're organized and our headquarters consolidation, and all that's led to a lot of internal discussions in the company and a focus on perhaps at times the wrong things for the right reasons, which is how we operate. I think we're trying to refocus the company back to just our great brands and our great customers and really being focused externally. As part of that, we can better align our organization to operate in a way that's more focused on the customer and more focused on enabling our businesses to deliver against our customers, deliver it in a more profitable way, and also do it in a more streamlined and responsive way.

Yeah, I think first, we've got to be oriented on the right customers and the right customer segments. We've got a lot of opportunity. There's areas where we've got good penetration. There's areas where we're under-penetrated, and product development is pretty straightforward, or innovation can be pretty straightforward, which is you need the right pipeline of opportunities. You need to understand where you have the right to win. You need to understand your internal capabilities, and then you need to make sure that you have the right processes to deliver against it. Coming in, over the last couple of years, we've probably under-indexed in terms of new product launches. I think with Dave at the helm over the last almost 6 months, we've been really focused on making sure that we restart our pipelines.

I think in each of our businesses, we've got a pretty good list of potential new products and things that are in flight. I think if you look objectively, I would say that there's opportunities to really speed up how fast we bring products to market, and then when we bring new products to market, just really making sure that we do it in the right way and the most impactful way. I think coming in, as you look at, obviously, innovations in our name, there's a lot of opportunity for that. I think part of the realignment against businesses is just making sure that we launch more products that are relevant to our customers and do it in a bigger way.

Well, first, as you pointed out, we've taken steps to realign. We've actually moved marketing back into the businesses. We had gone through a phase where we thought a more centralized organization in marketing would give us more scale and leverage. I think what we found in that centralization is we made it more complex. We became a bit slower, and we were less responsive to the opportunities. As we've realigned that back in the business, it should give us an opportunity to just be more responsive and execute in each of our businesses in a bigger way. I think it's going to be similar. We already talked about the new product side of things. I think it'll be similar in terms of our ability to execute on new products.

I'll just give you a tangible example, like why do I think it's going to be faster? We've got a terrific Yale locks business, right? It's an interconnected lock business. It's one of our smaller businesses, but I think it's got good potential. To get some of the products through development would've required five separate organizations to be involved in just moving a new product through the organization. These are five separate functions within R&D. Then you add to that, you would've had a separate marketing function. You've got a separate supply chain function. You may have had a separate PR function. You may have had a separate digital function. So you think about the complexity of trying to execute a new product launch. That consolidation back towards and aligned against the businesses should really give us a lot of speed.

The outcome to a customer should be better responsiveness, better service, and better engagement, especially from the channel side for more growth.

Yeah, I would say we're early days in terms of specifics, and I know it can be frustrating. We all want tangible things we can point to that are quantifiable. I would say if you think about what we talked about on the earnings call, some specifics, I think number one, when you think about our service levels, as we talked about, and I know you may have a question later on that, but as you think about our service levels, they have not been to the level that they should be. We are making changes, in particular on our Water business, to some of our processes, to make sure that we get back to the service levels that our customers expect and deserve. We would expect a lot of our service levels to come back to normal by the end of the year.

We should continue to see improvement beyond that as we move into next year. Now we're incurring some premium air freight to get there. We may have some incremental inventory that we need to carry to deliver that. Hopefully, the air freight won't carry into next year, but we may have some excess inventory that we need to carry as we work our way to improving the process. I think we've talked about cost down in the organization. I think Dave at the last two earnings calls has talked about a $70 million cost takeout. We should expect all of that to be effectively done by the end of the year. In terms of the impact to the business from a cost and margin standpoint, we're balancing realigning, taking some cost out, but yet reinvesting in our businesses for the long term.