Press Release
Griffon Corporation Announces Fourth Quarter and Annual Results
Fourth quarter revenue totaled
For the current quarter, Segment adjusted EBITDA totaled
Fourth quarter net income from continuing operations totaled
Mr. Kramer added, "We are entering 2015 on solid footing as a result of the actions taken over the past few years. Improving our operating margin remains a key focus of our strategic plan. We expect to drive improved profitability in 2015."
For the full year 2014, revenue totaled
For the full year 2014, Segment adjusted EBITDA totaled
For the full year 2014, loss from continuing operations totaled
Segment Operating Results
Home & Building Products
Revenue in the current quarter totaled
Fourth quarter Segment adjusted EBITDA was
Revenue in 2014 totaled
Segment adjusted EBITDA for 2014 was
On
On
Telephonics
Revenue in the current quarter totaled
Fourth quarter Segment adjusted EBITDA was
Revenue in 2014 totaled
Segment adjusted EBITDA for 2014 was
Contract backlog totaled a record
Plastic Products
Revenue in the current quarter totaled
Segment adjusted EBITDA was
Revenue in 2014 totaled
Segment adjusted EBITDA for 2014 was
Taxes
The Company reported a pretax loss for the year ended
The 2014 and 2013 rates reflected net discrete benefits of
Excluding discrete tax items, the 2014 rate would have been a benefit of 15.1%, and the 2013 rate would have been a provision of 54.9%. In both years, the effective rates reflect the impact of permanent differences not deductible in determining taxable income, mainly limited deductibility of restricted stock, tax reserves and of changes in earnings mix between domestic and non-domestic operations, all of which are material relative to the level of pretax result.
Restructuring
In
In 2014 and 2013, HBP recognized
In 2014, Telephonics recognized
In
Balance Sheet and Capital Expenditures
At September 30, 2014, the Company had cash and equivalents of
Stock Repurchases
In 2014, Griffon purchased 1,906,631 shares of common stock under Board
authorized programs, for a total of
Conference Call Information
The Company will hold a conference call today, November 12, 2014, at
The call can be accessed by dialing 1-800-289-0572 (U.S. participants)
or 1-913-312-1428 (International participants). Callers should ask to be
connected to the
A replay of the call will be available starting on November 12, 2014 at
Forward-looking Statements
“Safe Harbor” Statements under the Private Securities Litigation Reform
Act of 1995: All statements related to, among other things, income,
earnings, cash flows, revenue, changes in operations, operating
improvements, industries in which
About
Griffon currently conducts its operations through three reportable segments:
-
Home & Building Products consists of two companies,
The AMES Companies, Inc. (“AMES”) andClopay Building Products Company, Inc. (“CBP”):-
AMES is a global provider of non-powered landscaping products that make work easier for homeowners and professionals. - CBP is a leading manufacturer and marketer of residential, commercial and industrial garage doors to professional installing dealers and major home center retail chains.
-
-
Telephonics Corporation designs, develops and manufactures high-technology, integrated information, communication and sensor system solutions for use in military and commercial markets worldwide. -
Clopay Plastic Products Company, Inc. is an international leader in the development and production of embossed, laminated and printed specialty plastic films used in a variety of hygienic, health-care and industrial applications.
For more information on Griffon and its operating subsidiaries, please see the Company’s website at www.griffoncorp.com.
Griffon evaluates performance and allocates resources based on each segment's operating results before interest income and expense, income taxes, depreciation and amortization, unallocated amounts (mainly corporate overhead), restructuring charges, acquisition-related expenses, and gains (losses) from pension settlement and debt extinguishment, as applicable ("Segment adjusted EBITDA"). Griffon believes this information is useful to investors.
The following table provides a reconciliation of Segment adjusted EBITDA to Income (loss) from continuing operations before taxes:
GRIFFON CORPORATION AND SUBSIDIARIES OPERATING HIGHLIGHTS (in thousands) |
||||||||||||||||
(Unaudited) September 30, |
Years Ended September 30, |
|||||||||||||||
REVENUE | 2014 | 2013 | 2014 | 2013 | ||||||||||||
Home & Building Products: | ||||||||||||||||
AMES | $ | 114,195 | $ | 77,671 | $ | 503,687 | $ | 419,549 | ||||||||
CBP | 141,262 | 120,765 | 475,756 | 435,416 | ||||||||||||
Home & Building Products | 255,457 | 198,436 | 979,443 | 854,965 | ||||||||||||
Telephonics | 116,349 | 105,673 | 419,005 | 453,351 | ||||||||||||
Plastics | 153,821 | 144,900 | 593,363 | 563,011 | ||||||||||||
Total consolidated net sales | $ | 525,627 | $ | 449,009 | $ | 1,991,811 | $ | 1,871,327 | ||||||||
Segment adjusted EBITDA: | ||||||||||||||||
Home & Building Products | $ | 21,384 | $ | 13,792 | $ | 77,171 | $ | 70,064 | ||||||||
Telephonics | 17,507 | 18,184 | 57,525 | 63,199 | ||||||||||||
Plastics | 12,410 | 14,268 | 56,291 | 48,100 | ||||||||||||
Total Segment adjusted EBITDA | 51,301 | 46,244 | 190,987 | 181,363 | ||||||||||||
Net interest expense | (11,141 | ) | (13,042 | ) | (48,144 | ) | (52,167 | ) | ||||||||
Segment depreciation and amortization | (17,255 | ) | (17,839 | ) | (66,978 | ) | (70,306 | ) | ||||||||
Unallocated amounts | (10,499 | ) | (7,013 | ) | (33,394 | ) | (29,153 | ) | ||||||||
Loss from debt extinguishment | — | — | (38,890 | ) | — | |||||||||||
Restructuring charges | (4,244 | ) | (1,214 | ) | (6,136 | ) | (13,262 | ) | ||||||||
Acquisition costs | (763 | ) | — | (3,161 | ) | — | ||||||||||
Loss on pension settlement | — | — | — | (2,142 | ) | |||||||||||
Income (loss) before taxes from continuing operations | $ | 7,399 | $ | 7,136 | $ | (5,716 | ) | $ | 14,333 | |||||||
The following is a reconciliation of each segment's operating results to Segment adjusted EBITDA:
GRIFFON CORPORATION AND SUBSIDIARIES RECONCILIATION OF NON-GAAP MEASURES BY REPORTABLE SEGMENT (in thousands) |
|||||||||||||||
(Unaudited) September 30, |
Years Ended September 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Home & Building Products | |||||||||||||||
Segment operating profit | $ | 12,580 | $ | 3,475 | $ | 40,538 | $ | 26,130 | |||||||
Depreciation and amortization | 8,041 | 9,103 | 31,580 | 36,195 | |||||||||||
Restructuring charges | — | 1,214 | 1,892 | 7,739 | |||||||||||
Acquisition costs | 763 | — | 3,161 | — | |||||||||||
Segment adjusted EBITDA | 21,384 | 13,792 | 77,171 | 70,064 | |||||||||||
Telephonics | |||||||||||||||
Segment operating profit | 10,830 | 16,086 | 45,293 | 55,076 | |||||||||||
Depreciation and amortization | 2,433 | 2,098 | 7,988 | 7,373 | |||||||||||
Restructuring charges | 4,244 | — | 4,244 | 750 | |||||||||||
Segment adjusted EBITDA | 17,507 | 18,184 | 57,525 | 63,199 | |||||||||||
Clopay Plastic Products | |||||||||||||||
Segment operating profit | 5,629 | 7,630 | 28,881 | 16,589 | |||||||||||
Depreciation and amortization | 6,781 | 6,638 | 27,410 | 26,738 | |||||||||||
Restructuring charges | — | — | — | 4,773 | |||||||||||
Segment adjusted EBITDA | 12,410 | 14,268 | 56,291 | 48,100 | |||||||||||
All segments: | |||||||||||||||
Income from operations - as reported | 19,696 | 19,047 | 78,164 | 63,854 | |||||||||||
Unallocated amounts | 10,499 | 7,013 | 33,394 | 29,153 | |||||||||||
Other, net | (1,156 | ) | 1,131 | 3,154 | 2,646 | ||||||||||
Loss on pension settlement | — | — | — | 2,142 | |||||||||||
Segment operating profit | 29,039 | 27,191 | 114,712 | 97,795 | |||||||||||
Depreciation and amortization | 17,255 | 17,839 | 66,978 | 70,306 | |||||||||||
Restructuring charges | 4,244 | 1,214 | 6,136 | 13,262 | |||||||||||
Acquisition costs | 763 | — | 3,161 | — | |||||||||||
Segment adjusted EBITDA | $ | 51,301 | $ | 46,244 | $ | 190,987 | $ | 181,363 | |||||||
Unallocated amounts typically include general corporate expenses not attributable to any reportable segment.
GRIFFON CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (in thousands, except per share data) |
||||||||||||||||
(Unaudited) September 30, |
Years Ended September 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Revenue | $ | 525,627 | $ | 449,009 | $ | 1,991,811 | $ | 1,871,327 | ||||||||
Cost of goods and services | 400,025 | 342,902 | 1,532,412 | 1,453,742 | ||||||||||||
Gross profit | 125,602 | 106,107 | 459,399 | 417,585 | ||||||||||||
Selling, general and administrative expenses | 101,662 | 85,846 | 375,099 | 340,469 | ||||||||||||
Restructuring and other related charges | 4,244 | 1,214 | 6,136 | 13,262 | ||||||||||||
Total operating expenses | 105,906 | 87,060 | 381,235 | 353,731 | ||||||||||||
Income from operations | 19,696 | 19,047 | 78,164 | 63,854 | ||||||||||||
Other income (expense) | ||||||||||||||||
Interest expense | (11,263 | ) | (13,074 | ) | (48,447 | ) | (52,520 | ) | ||||||||
Interest income | 122 | 32 | 303 | 353 | ||||||||||||
Loss from debt extinguishment | — | — | (38,890 | ) | — | |||||||||||
Other, net | (1,156 | ) | 1,131 | 3,154 | 2,646 | |||||||||||
Total other expense, net | (12,297 | ) | (11,911 | ) | (83,880 | ) | (49,521 | ) | ||||||||
Income (loss) before taxes | 7,399 | 7,136 | (5,716 | ) | 14,333 | |||||||||||
Provision (benefit) for income taxes | (549 | ) | 3,688 | (5,539 | ) | 7,543 | ||||||||||
Income (loss) from continuing operations | $ | 7,948 | $ | 3,448 | $ | (177 | ) | $ | 6,790 | |||||||
Discontinued operations: | ||||||||||||||||
Loss from operations of discontinued businesses | — | (4,651 | ) | — | (4,651 | ) | ||||||||||
Benefit from income taxes | — | 1,628 | — | 1,628 | ||||||||||||
Loss from discontinued operations | — | (3,023 | ) | — | (3,023 | ) | ||||||||||
Net income (loss) | $ | 7,948 | $ | 425 | $ | (177 | ) | $ | 3,767 | |||||||
Income (loss) from continuing operations | $ | 0.17 | $ | 0.06 | $ | 0.00 | $ | 0.12 | ||||||||
Loss from discontinued operations | 0.00 | (0.06 | ) | 0.00 | (0.06 | ) | ||||||||||
Basic income (loss) per common share | $ | 0.17 | $ | 0.01 | $ | 0.00 | $ | 0.07 | ||||||||
Weighted-average shares outstanding | 47,354 | 53,950 | 49,367 | 54,428 | ||||||||||||
Income (loss) from continuing operations | $ | 0.16 | $ | 0.06 | $ | 0.00 | $ | 0.12 | ||||||||
Loss from discontinued operations | 0.00 | (0.05 | ) | 0.00 | (0.05 | ) | ||||||||||
Diluted income (loss) per common share | $ | 0.16 | $ | 0.01 | $ | 0.00 | $ | 0.07 | ||||||||
Weighted-average shares outstanding | 49,077 | 56,043 | 49,367 | 56,563 | ||||||||||||
Net income (loss) | $ | 7,948 | $ | 425 | $ | (177 | ) | $ | 3,767 | |||||||
Other comprehensive income (loss), net of taxes: | ||||||||||||||||
Foreign currency translation adjustments | (24,829 | ) | 7,715 | (23,933 | ) | (3,090 | ) | |||||||||
Pension and other post retirement plans | (5,646 | ) | 14,471 | (3,914 | ) | 19,310 | ||||||||||
Gain on available-for-sale securities | 870 | — | 870 | — | ||||||||||||
Gain (loss) on cash flow hedge | 252 | (13 | ) | 252 | — | |||||||||||
Total other comprehensive income (loss), net of taxes | (29,353 | ) | 22,173 | (26,725 | ) | 16,220 | ||||||||||
Comprehensive income (loss), net | $ | (21,405 | ) | $ | 22,598 | $ | (26,902 | ) | $ | 19,987 | ||||||
GRIFFON CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) |
|||||||
2014 |
At September 30, 2013 |
||||||
CURRENT ASSETS | |||||||
Cash and equivalents | $ | 92,405 | $ | 178,130 | |||
Accounts receivable, net of allowances of $7,336 and $6,136 | 258,436 | 256,215 | |||||
Contract costs and recognized income not yet billed, net of progress payments of $16,985 and $6,941 | 109,930 | 109,828 | |||||
Inventories, net | 290,135 | 230,120 | |||||
Prepaid and other current assets | 62,569 | 41,003 | |||||
Assets of discontinued operations | 1,624 | 1,214 | |||||
Total Current Assets | 815,099 | 816,510 | |||||
PROPERTY, PLANT AND EQUIPMENT, net | 370,565 | 353,593 | |||||
GOODWILL | 371,846 | 354,459 | |||||
INTANGIBLE ASSETS, net | 233,623 | 221,391 | |||||
OTHER ASSETS | 27,102 | 28,580 | |||||
ASSETS OF DISCONTINUED OPERATIONS | 2,126 | 3,075 | |||||
Total Assets | $ | 1,820,361 | $ | 1,777,608 | |||
CURRENT LIABILITIES | |||||||
Notes payable and current portion of long-term debt | $ | 7,886 | $ | 10,768 | |||
Accounts payable | 218,703 | 163,610 | |||||
Accrued liabilities | 101,292 | 106,743 | |||||
Liabilities of discontinued operations | 3,282 | 3,288 | |||||
Total Current Liabilities | 331,163 | 284,409 | |||||
LONG-TERM DEBT, net of debt discount of $9,584 and $13,246 | 805,101 | 678,487 | |||||
OTHER LIABILITIES | 148,240 | 159,504 | |||||
LIABILITIES OF DISCONTINUED OPERATIONS | 3,830 | 4,744 | |||||
Total Liabilities | 1,288,334 | 1,127,144 | |||||
COMMITMENTS AND CONTINGENCIES | |||||||
SHAREHOLDERS’ EQUITY | |||||||
Total Shareholders’ Equity | 532,027 | 650,464 | |||||
Total Liabilities and Shareholders’ Equity | $ | 1,820,361 | $ | 1,777,608 | |||
GRIFFON CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) |
||||||||
Years Ended September 30, | ||||||||
2014 | 2013 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net income (loss) | $ | (177 | ) | $ | 3,767 | |||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||
Loss from discontinued operations | — | 3,023 | ||||||
Depreciation and amortization | 67,396 | 70,748 | ||||||
Stock-based compensation | 11,473 | 12,495 | ||||||
Asset impairment charges - restructuring | 191 | 4,316 | ||||||
Provision for losses on accounts receivable | 359 | 1,813 | ||||||
Amortization of deferred financing costs and debt discounts | 6,427 | 6,232 | ||||||
Loss from debt extinguishment | 38,890 | — | ||||||
Deferred income taxes | (5,131 | ) | 5,075 | |||||
(Gain) loss on sale/disposal of assets | 244 | (498 | ) | |||||
Change in assets and liabilities, net of assets and liabilities acquired: | ||||||||
(Increase) decrease in accounts receivable and contract costs and recognized income not yet billed | 6,009 | (58,038 | ) | |||||
(Increase) decrease in inventories | (50,461 | ) | 26,887 | |||||
(Increase) decrease in prepaid and other assets | (4,278 | ) | 6,678 | |||||
Increase in accounts payable, accrued liabilities and income taxes payable | 21,304 | 652 | ||||||
Other changes, net | 1,055 | 2,533 | ||||||
Net cash provided by operating activities | 93,301 | 85,683 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Acquisition of property, plant and equipment | (77,094 | ) | (64,441 | ) | ||||
Acquired businesses, net of cash acquired | (62,306 | ) | — | |||||
Purchase of securities | (8,402 | ) | — | |||||
Proceeds from sale of property, plant and equipment | 552 | 1,573 | ||||||
Net cash used in investing activities | (147,250 | ) | (62,868 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Proceeds from issuance of common stock | 584 | — | ||||||
Dividends paid | (6,273 | ) | (5,825 | ) | ||||
Purchase of shares for treasury | (79,614 | ) | (32,521 | ) | ||||
Proceeds from long-term debt | 691,943 | 303 | ||||||
Payments of long-term debt | (603,094 | ) | (16,867 | ) | ||||
Change in short-term borrowings | (749 | ) | 2,950 | |||||
Financing costs | (11,298 | ) | (833 | ) | ||||
Purchase of ESOP shares | (20,000 | ) | — | |||||
Tax benefit from exercise/vesting of equity awards, net | 273 | 150 | ||||||
Other, net | 298 | 394 | ||||||
Net cash used in financing activities | (27,930 | ) | (52,249 | ) | ||||
CASH FLOWS FROM DISCONTINUED OPERATIONS: | ||||||||
Net cash used in operating activities | (1,528 | ) | (2,090 | ) | ||||
Net cash used in discontinued operations | (1,528 | ) | (2,090 | ) | ||||
Effect of exchange rate changes on cash and equivalents | (2,318 | ) | — | |||||
NET DECREASE IN CASH AND EQUIVALENTS | (85,725 | ) | (31,524 | ) | ||||
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD | 178,130 | 209,654 | ||||||
CASH AND EQUIVALENTS AT END OF PERIOD | $ | 92,405 | $ | 178,130 | ||||
Griffon evaluates performance based on Earnings (loss) per share and Net income (loss) excluding restructuring charges, acquisition-related expenses, gains (losses) from pension settlement and debt extinguishment, and discrete tax items, as applicable. Griffon believes this information is useful to investors. The following table provides a reconciliation of Net income (loss) from continuing operations to adjusted net income from continuing operations and earnings (loss) per share from continuing operations to Adjusted earnings per share from continuing operations:
GRIFFON CORPORATION AND SUBSIDIARIES RECONCILIATION OF NET INCOME (LOSS) FROM CONTINUING OPERATIONS TO ADJUSTED NET INCOME FROM CONTINUING OPERATIONS (in thousands, except per share data) |
||||||||||||||||
(Unaudited) September 30, |
Years Ended September 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Net income (loss) from continuing operations | $ | 7,948 | $ | 3,448 | $ | (177 | ) | $ | 6,790 | |||||||
Adjusting items, net of tax: | ||||||||||||||||
Loss from debt extinguishment | — | — | 24,964 | — | ||||||||||||
Restructuring charges | 2,631 | 763 | 3,804 | 8,266 | ||||||||||||
Acquisition costs | 473 | — | 1,960 | — | ||||||||||||
Loss on pension settlement | — | — | — | 1,392 | ||||||||||||
Extinguishment impact on period tax rate (a) | (1,491 | ) | — | — | — | |||||||||||
Discrete tax benefits | (3,134 | ) | 1,534 | (4,674 | ) | (325 | ) | |||||||||
Adjusted net income from continuing operations | $ | 6,427 | $ | 5,745 | $ | 25,877 | $ | 16,123 | ||||||||
Earnings (loss) per common share from continuing operations | $ | 0.16 | $ | 0.06 | $ | 0.00 | $ | 0.12 | ||||||||
Adjusting items, net of tax: | ||||||||||||||||
Loss from debt extinguishment | — | — | 0.49 | — | ||||||||||||
Restructuring charges | 0.05 | 0.01 | 0.07 | 0.15 | ||||||||||||
Acquisition costs | 0.01 | — | 0.04 | — | ||||||||||||
Loss on pension settlement | — | — | — | 0.02 | ||||||||||||
Extinguishment impact on period tax rate (a) | (0.03 | ) | — | — | — | |||||||||||
Discrete tax benefits | (0.06 | ) | 0.03 | (0.09 | ) | (0.01 | ) | |||||||||
Adjusted earnings per common share from continuing operations | $ | 0.13 | $ | 0.10 | $ | 0.51 | $ | 0.29 | ||||||||
a) Prior to refinancing the debt and resultant loss on debt
extinguishment, the Company anticipated its full year 2014 effective tax
rate to approximate 40%. In the current quarter, the impact of debt
extinguishment on the full year effective tax rate was estimated to be a
benefit of
Source:
Griffon Corporation
Douglas J. Wetmore, 212-957-5000
EVP &
Chief Financial Officer
or
Investor Relations:
ICR Inc.
Michael
Callahan, 203-682-8311
Senior Vice President