Press Release

Segment adjusted EBITDA of $25.8 million
Continuing Operations Diluted EPS of $0.12

JERICHO, N.Y., August 6, 2009 – Griffon Corporation (NYSE:GFF) today reported operating results for the third quarter ended June 30, 2009.

Third Quarter of Fiscal 2009

Net sales from continuing operations for the third quarter of fiscal 2009 were $287.4 million, compared to $322.3 million in the third quarter of fiscal 2008. Income from continuing operations for the third quarter was $6.9 million, or $0.12 per diluted share, compared to $9.4 million, or $0.29 per diluted share, last year. Income from discontinued operations for the third quarter was essentially nil, compared to a loss of $19.2 million, or $0.59 per diluted share, last year. Net income for the quarter was $6.9 million, or $0.12 per diluted share, compared to a loss of $9.8 million, or $0.30 per diluted share, last year.

The Company’s segment adjusted EBITDA for the third quarter of 2009 was $25.8 million compared to $27.9 million in 2008. Segment adjusted EBITDA is defined as operating income excluding corporate overhead, interest, taxes, depreciation and amortization, restructuring charges and the impact of debt extinguishment.

As a result of the downturn in the residential housing market, in fiscal 2008 the Company exited substantially all of the operating activities of its former Installation Services segment. Operating results of substantially all of the Installation Services segment have been reported as discontinued operations in the condensed consolidated financial statements for all periods presented herein, and the Installation Services segment is excluded from segment reporting. The Company substantially concluded its disposal of the Installation Services segment in the second quarter of fiscal 2009.

As announced in June 2009, the Company plans to consolidate facilities in its Clopay Building Products segment, which is scheduled to be completed in early 2011. The consolidation is expected to produce annual cost savings of approximately $10 million. The Company estimates that it will incur pre-tax exit and restructuring costs of approximately $12 million, substantially all of which will be cash charges. In addition, the Company expects to invest approximately $11 million in capital expenditures in order to effectuate the restructuring plan. These charges and expenditures will occur primarily in fiscal 2010 and 2011.

In addition to organic growth, part of the Company's overall growth strategy calls for the Company to pursue acquisition and investment opportunities, both within its existing segments and outside of those segments. We regularly examine and explore such opportunities.

Telephonics

For the quarter ended June 30, 2009, Telephonics generated sales of $94.1 million, a 7% increase from the third quarter of fiscal 2008.

The sales increase was primarily attributable to homeland defense and border patrol projects. Segment operating profit increased $0.7 million, or 8%, compared to last year due to a favorable product mix partially offset by increased operating expenses related to research and development and additional administrative expenses to support sales growth.

Clopay Building Products

For the quarter ended June 30, 2009, Clopay Building Products generated sales of $98.5 million, a 13% decrease from the third quarter of fiscal 2008. Garage Door sales continued to be impacted by weakness in the residential housing and credit markets.

The sales decline was principally due to reduced unit volume, offset partially by product mix.

Segment operating profit decreased $1.6 million compared to last year, primarily as a result of reduced sales volume and the associated plant absorption loss, partially offset by ongoing cost reduction efforts.

Clopay Plastic Products

For the quarter ended June 30, 2009, Clopay Plastic Products generated sales of $94.8 million, a 22% decrease from the third quarter of fiscal 2008.

The lower sales were principally due to lower volume in our European business, foreign exchange translation and the pass through of lower resin costs. Segment operating profit decreased $0.7 million, or 13%. The 50 basis point margin increase benefited from cost reduction efforts, which were partially offset by the impact of lower volume.

Balance Sheet and Capital Expenditures

Through a September 2008 common stock rights offering and investment by GS Direct, L.L.C., an affiliate of Goldman Sachs, the Company substantially strengthened its balance sheet by raising an aggregate of $248.6 million in gross proceeds. The Company intends to use the proceeds for general corporate purposes and to fund acquisition and investment opportunities.

The Company’s total cash and equivalents balance at June 30, 2009 was $289.6 million. Total debt outstanding at June 30, 2009 was $179.8 million, including $79.4 million of convertible notes. Capital expenditures for the third quarter were $8.5 million.

In April 2009, the Company purchased $15.1 million face value of the convertible notes from certain noteholders for $14.3 million. The Company recorded a third quarter pre-tax gain of approximately $0.6 million from debt extinguishment, net of a proportionate reduction in the related deferred financing costs.

Conference Call Information

The Company will hold a conference call to discuss its results today, August 6, 2009, at 4:30 PM ET. The conference call can be accessed by dialing (800) 322-9079 (U.S. participants) or (973) 582-2717 (International participants). Callers should ask to be connected to Griffon Corporation’s third quarter fiscal 2009 teleconference and provide the conference ID number 22569921. A replay of the call will be available from August 6, 2009 at 7:30 PM ET by dialing (800) 642-1687 (U.S.) or (706) 645-9291 (International). The replay access code is 22569921. The replay will be available through August 20, 2009.

Forward-looking Statements

“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: All statements other than statements of historical fact included in this release, including without limitation statements regarding the Company’s financial position, business strategy and the plans and objectives of the Company’s management for future operations, are forward-looking statements. When used in this release, words such as “anticipate”, “believe”, “estimate”, “expect”, “intend”, and similar expressions, as they relate to the Company or its management, identify forward-looking statements. Such forward-looking statements are based on the beliefs of the Company’s management, as well as assumptions made by and information currently available to the Company’s management. Actual results could differ materially from those contemplated by the forward-looking statements as a result of certain factors, including but not limited to, business, financial market and economic conditions, including, but not limited to, the credit market, the housing market, results of integrating acquired businesses into existing operations, the results of the Company’s restructuring and disposal efforts, competitive factors and pricing pressures for resin and steel, and capacity and supply constraints. Such statements reflect the views of the Company with respect to future events and are subject to these and other risks, uncertainties and assumptions relating to the operations, results of operations, growth strategy and liquidity of the Company as previously disclosed in the Company’s SEC filings. Readers are cautioned not to place undue reliance on these forward-looking statements. The Company does not undertake to release publicly any revisions to these forward-looking statements to reflect future events or circumstances or to reflect the occurrence of unanticipated events.

Griffon Corporation

Griffon Corporation, headquartered in Jericho, New York, is a diversified holding company consisting of three distinct business segments: Telephonics Corporation, Clopay Building Products Company and Clopay Plastic Products Company.

• Telephonics’ high-technology engineering and manufacturing capabilities provide integrated information, communication and sensor system solutions to military and commercial markets worldwide.
• Clopay Building Products is a leading manufacturer and marketer of residential, commercial and industrial garage doors to professional installing dealers and major home center retail chains.
• Clopay Plastic Products 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 markets.

 

 

PRELIMINARY

GRIFFON CORPORATION AND SUBSIDIARIES

OPERATING HIGHLIGHTS

(Unaudited)

Unallocated amounts typically include general corporate expenses not attributable to any reportable segment.

 

 

PRELIMINARY

GRIFFON CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(Unaudited)

 

 

PRELIMINARY

GRIFFON CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(Unaudited)

 

 

PRELIMINARY

GRIFFON CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)

 

 

PRELIMINARY

The following is a reconciliation of operating income, which is a GAAP measure of our operating results, to segment operating income and segment adjusted EBITDA. Management believes that the presentation of segment operating income and segment adjusted EBITDA is appropriate to provide additional information about the Company’s reportable segments. Segment operating income and segment adjusted EBITDA are not presentations made in accordance with GAAP, are not measures of financial performance or condition, liquidity or profitability of the Company, and should not be considered as an alternative to (1) net income, operating income or any other performance measures determined in accordance with GAAP or (2) operating cash flows determined in accordance with GAAP. Additionally, segment operating income and segment adjusted EBITDA are not intended to be measures of free cash flow for management’s discretionary use, as they do not consider certain cash requirements such as interest payments, tax payments, capital expenditures and debt service requirements.

GRIFFON CORPORATION AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
SEGMENT ADJUSTED EBITDA - BY REPORTABLE SEGMENT
(Unaudited)

Unallocated amounts typically include general corporate expenses not attributable to any reportable segment.