Press Release
Griffon Corporation Announces First Quarter Results
Revenue was
Income from continuing operations was
Segment adjusted EBITDA was
Segment Operating Results
Home & Building Products
Revenue was
Segment adjusted EBITDA was
On
On
During fiscal 2017,
Telephonics
Revenue was
Segment adjusted EBITDA was
Contract backlog was
Taxes
In the quarter ended
The quarters ended December 31, 2017 and 2016 tax rates included net tax
benefits that affect comparability of
U.S. Tax Reform: On
Clopay Plastics
On
Balance Sheet and Capital Expenditures
At
Share Repurchases
In
From
Conference Call Information
The Company will hold a conference call today,
The call can be accessed by dialing 1-888-378-4439 (U.S. participants) or 1-323-794-2149 (International participants). Callers should ask to be connected to the Griffon Corporation teleconference or provide conference ID number 2623292.
A replay of the call will be available starting on Wednesday, January 31, 2018 at 11:30 AM ET by dialing 1-844-512-2921 (U.S.) or 1-412-317-6671 (International), and entering the conference ID number: 2623292. The replay will be available through Wednesday, February 14, 2018 at 11:59 PM ET.
Forward-looking Statements
“Safe Harbor” Statements under the Private Securities Litigation Reform
Act of 1995: All statements related to, among other things, income
(loss), earnings, cash flows, revenue, changes in operations, operating
improvements, industries in which Griffon operates and
About
Griffon is a diversified management and holding company that conducts business through wholly-owned subsidiaries. Griffon oversees the operations of its subsidiaries, allocates resources among them and manages their capital structures. Griffon provides direction and assistance to its subsidiaries in connection with acquisition and growth opportunities as well as in connection with divestitures. In order to further diversify, Griffon also seeks out, evaluates and, when appropriate, will acquire additional businesses that offer potentially attractive returns on capital.
Headquartered in
Griffon currently conducts its operations through two reportable segments:
-
Home & Building Products consists of three companies,
AMES , CBP and ClosetMaid:
AMES , founded in 1774, is the leading US manufacturer and a global provider of long-handled tools and landscaping products for homeowners and professionals.-
CBP, since 1964, is a leading manufacturer and marketer of residential
and commercial garage doors and sells to professional dealers and some
of the largest home center retail chains in
North America . - ClosetMaid, founded in 1965, is a leading North American manufacturer and marketer of closet organization, home storage, and garage storage products and sells to some of the largest home center retail chains, mass merchandisers, and direct-to-builder professional installers.
- Telephonics, founded in 1933, is recognized globally as a leading provider of highly sophisticated intelligence, surveillance and communications solutions for defense, aerospace and commercial customers.
Classified as a discontinued operation, Clopay Plastics, incorporated in 1934, is a global leader in the development and production of embossed, laminated and printed specialty plastic films for hygienic, health-care and industrial products and sells to some of the world's largest consumer products companies.
For more information on Griffon and its operating subsidiaries, please see the Company’s website at www.griffon.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, loss on debt extinguishment and acquisition related expenses, as well as other items that may affect comparability, as applicable ("Segment adjusted EBITDA", a non-GAAP measure). Griffon believes this information is useful to investors for the same reason.
The following table provides a reconciliation of Segment adjusted EBITDA to Income before taxes:
GRIFFON CORPORATION AND SUBSIDIARIES | ||||||||||
OPERATING HIGHLIGHTS | ||||||||||
(in thousands) | ||||||||||
(Unaudited) | ||||||||||
For the Three Months Ended | ||||||||||
December 31, | ||||||||||
REVENUE | 2017 | 2016 | ||||||||
Home & Building Products: | ||||||||||
AMES | $ | 139,982 | $ | 120,724 | ||||||
CBP | 154,236 | 143,460 | ||||||||
ClosetMaid | 76,760 | — | ||||||||
Home & Building Products | 370,978 | 264,184 | ||||||||
Telephonics | 66,325 | 88,093 | ||||||||
Total consolidated net sales | $ | 437,303 | $ | 352,277 | ||||||
Segment adjusted EBITDA: | ||||||||||
Home & Building Products | $ | 39,457 | $ | 31,807 | ||||||
Telephonics | 4,199 | 8,108 | ||||||||
Segment adjusted EBITDA | 43,656 | 39,915 | ||||||||
Net interest expense | (16,642 | ) | (13,289 | ) | ||||||
Segment depreciation and amortization | (12,852 | ) | (11,884 | ) | ||||||
Unallocated amounts | (10,436 | ) | (10,311 | ) | ||||||
Acquisition costs | (3,185 | ) | — | |||||||
Cost of life insurance benefit | (2,614 | ) | — | |||||||
Income (loss) before taxes from continuing operations | $ | (2,073 | ) | $ | 4,431 | |||||
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) | ||||||||||
Three Months Ended December 31, | ||||||||||
2017 | 2016 | |||||||||
Home & Building Products | ||||||||||
Segment operating profit | $ | 27,751 | $ | 22,640 | ||||||
Depreciation and amortization | 10,133 | 9,167 | ||||||||
Acquisition costs | 1,573 | — | ||||||||
Segment adjusted EBITDA | 39,457 | 31,807 | ||||||||
Telephonics | ||||||||||
Segment operating profit | 1,480 | 5,391 | ||||||||
Depreciation and amortization | 2,719 | 2,717 | ||||||||
Segment adjusted EBITDA | 4,199 | 8,108 | ||||||||
All segments: | ||||||||||
Income from operations - as reported | 15,037 | 17,860 | ||||||||
Unallocated amounts | 10,436 | 10,311 | ||||||||
Other, net | (468 | ) | (140 | ) | ||||||
Corporate acquisition costs | 1,612 | — | ||||||||
Cost of life insurance benefit | 2,614 | — | ||||||||
Segment operating profit from continuing operations | 29,231 | 28,031 | ||||||||
Depreciation and amortization | 12,852 | 11,884 | ||||||||
Acquisition costs | 1,573 | — | ||||||||
Segment adjusted EBITDA | $ | 43,656 | $ | 39,915 | ||||||
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) | ||||||||||
Three Months Ended December 31, | ||||||||||
2017 | 2016 | |||||||||
Revenue | $ | 437,303 | $ | 352,277 | ||||||
Cost of goods and services | 316,459 | 255,533 | ||||||||
Gross profit | 120,844 | 96,744 | ||||||||
Selling, general and administrative expenses | 105,807 | 78,884 | ||||||||
Income from operations | 15,037 | 17,860 | ||||||||
Other income (expense) | ||||||||||
Interest expense | (16,839 | ) | (13,295 | ) | ||||||
Interest income | 197 | 6 | ||||||||
Other, net | (468 | ) | (140 | ) | ||||||
Total other expense, net | (17,110 | ) | (13,429 | ) | ||||||
Income (loss) before taxes from continuing operations | (2,073 | ) | 4,431 | |||||||
Benefit from income taxes |
(24,904 | ) | (2,613 | ) | ||||||
Income from continuing operations | $ | 22,831 | $ | 7,044 | ||||||
Discontinued operations: | ||||||||||
Income from operations of discontinued operations | $ | 11,466 | $ | 8,545 | ||||||
Provision for income taxes |
3,308 | 3,325 | ||||||||
Income from discontinued operations | $ | 8,158 | $ | 5,220 | ||||||
Net income | $ | 30,989 | $ | 12,264 | ||||||
Income from continuing operations | $ | 0.54 | $ | 0.18 | ||||||
Income from discontinued operations | 0.19 | 0.13 | ||||||||
Basic earnings per common share | $ | 0.74 | $ | 0.31 | ||||||
Weighted-average shares outstanding | 41,923 | 39,336 | ||||||||
Income from continuing operations | $ | 0.53 | $ | 0.17 | ||||||
Income from discontinued operations | 0.19 | 0.12 | ||||||||
Diluted earnings per common share | $ | 0.72 | $ | 0.29 | ||||||
Weighted-average shares outstanding | 43,336 | 42,312 | ||||||||
Net income | $ | 30,989 | $ | 12,264 | ||||||
Other comprehensive income (loss), net of taxes: | ||||||||||
Foreign currency translation adjustments | (1,289 | ) | (13,479 | ) | ||||||
Pension and other post retirement plans | 9,559 | 544 | ||||||||
Change in cash flow hedges | 88 | 1,623 | ||||||||
Total other comprehensive income (loss), net of taxes | 8,358 | (11,312 | ) | |||||||
Comprehensive income (loss), net | $ | 39,347 | $ | 952 | ||||||
GRIFFON CORPORATION AND SUBSIDIARIES | ||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
(in thousands) | ||||||||
(Unaudited) | ||||||||
December 31, | September 30, | |||||||
2017 | 2017 | |||||||
CURRENT ASSETS | ||||||||
Cash and equivalents | $ | 84,420 | $ | 47,681 | ||||
Accounts receivable, net of allowances of $6,291 and $5,966 | 212,023 | 208,229 | ||||||
Contract costs and recognized income not yet billed, net of progress payments of $5,165 and $4,407 | 120,200 | 131,662 | ||||||
Inventories, net | 359,844 | 299,437 | ||||||
Prepaid and other current assets | 64,837 | 40,067 | ||||||
Assets of discontinued operations held for sale | 377,275 | 370,724 | ||||||
Assets of discontinued operations not held for sale | 328 | 329 | ||||||
Total Current Assets | 1,218,927 | 1,098,129 | ||||||
PROPERTY, PLANT AND EQUIPMENT, net | 280,725 | 232,135 | ||||||
GOODWILL | 385,076 | 319,139 | ||||||
INTANGIBLE ASSETS, net | 277,160 | 205,127 | ||||||
OTHER ASSETS | 15,675 | 16,051 | ||||||
ASSETS OF DISCONTINUED OPERATIONS NOT HELD FOR SALE | 2,952 | 2,960 | ||||||
Total Assets | $ | 2,180,515 | $ | 1,873,541 | ||||
CURRENT LIABILITIES | ||||||||
Notes payable and current portion of long-term debt | $ | 12,593 | $ | 11,078 | ||||
Accounts payable | 197,814 | 183,951 | ||||||
Accrued liabilities | 117,482 | 83,258 | ||||||
Liabilities of discontinued operations held for sale | 85,737 | 84,450 | ||||||
Liabilities of discontinued operations not held for sale | 3,924 | 8,342 | ||||||
Total Current Liabilities | 417,550 | 371,079 | ||||||
LONG-TERM DEBT, net | 1,238,393 | 968,080 | ||||||
OTHER LIABILITIES | 84,534 | 132,537 | ||||||
LIABILITIES OF DISCONTINUED OPERATIONS NOT HELD FOR SALE | 5,225 | 3,037 | ||||||
Total Liabilities | 1,745,702 | 1,474,733 | ||||||
COMMITMENTS AND CONTINGENCIES | ||||||||
SHAREHOLDERS’ EQUITY | ||||||||
Total Shareholders’ Equity | 434,813 | 398,808 | ||||||
Total Liabilities and Shareholders’ Equity | $ | 2,180,515 | $ | 1,873,541 | ||||
GRIFFON CORPORATION AND SUBSIDIARIES | ||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||
(in thousands) | ||||||||||
(Unaudited) | ||||||||||
Three Months Ended | ||||||||||
December 31, | ||||||||||
2017 | 2016 | |||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||
Net income from continuing operations | $ | 30,989 | $ | 12,264 | ||||||
Net (income) from discontinued operations | (8,158 | ) | (5,220 | ) | ||||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities: |
||||||||||
Depreciation and amortization | 12,958 | 11,988 | ||||||||
Stock-based compensation | 2,555 | 2,452 | ||||||||
Provision (recovery) for losses on accounts receivable | (220 | ) | 112 | |||||||
Amortization of debt discounts and issuance costs | 1,243 | 1,892 | ||||||||
Deferred income taxes | (23,186 | ) | (196 | ) | ||||||
Gain on sale of assets and investments | 209 | — | ||||||||
Change in assets and liabilities, net of assets and liabilities acquired: | ||||||||||
Decrease in accounts receivable and contract costs and recognized income not yet billed | 38,909 | 18,667 | ||||||||
Increase in inventories | (28,073 | ) | (13,663 | ) | ||||||
Increase in prepaid and other assets | (8,459 | ) | (2,127 | ) | ||||||
Decrease in accounts payable, accrued liabilities and income taxes payable | (24,973 | ) | (27,423 | ) | ||||||
Other changes, net | 552 | 1,536 | ||||||||
Net cash provided by (used in) operating activities | (5,654 | ) | 282 | |||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||
Acquisition of property, plant and equipment | (10,785 | ) | (7,690 | ) | ||||||
Acquired businesses, net of cash acquired | (198,683 | ) | (6,051 | ) | ||||||
Proceeds from sale of assets | 439 | 86 | ||||||||
Net cash used in investing activities | (209,029 | ) | (13,655 | ) | ||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||
Dividends paid | (2,990 | ) | (2,499 | ) | ||||||
Purchase of shares for treasury | (4,332 | ) | (15,073 | ) | ||||||
Proceeds from long-term debt | 326,094 | 39,056 | ||||||||
Payments of long-term debt | (52,973 | ) | (7,295 | ) | ||||||
Change in short-term borrowings | 35 | — | ||||||||
Financing costs | (7,392 | ) | (172 | ) | ||||||
Purchase of ESOP shares | — | (9,213 | ) | |||||||
Other, net | 84 | (349 | ) | |||||||
Net cash provided by financing activities | 258,526 | 4,455 | ||||||||
CASH FLOWS FROM DISCONTINUED OPERATIONS: | ||||||||||
Net cash provided by operating activities | 1,261 | 6,841 | ||||||||
Net cash used in investing activities | (8,076 | ) | (14,756 | ) | ||||||
Net cash provided by (used in) financing activities | 396 | (2,234 | ) | |||||||
Net cash used in discontinued operations | (6,419 | ) | (10,149 | ) | ||||||
Effect of exchange rate changes on cash and equivalents | (685 | ) | (1,217 | ) | ||||||
NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS | 36,739 | (20,284 | ) | |||||||
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD | 47,681 | 72,553 | ||||||||
CASH AND EQUIVALENTS AT END OF PERIOD | $ | 84,420 | $ | 52,269 | ||||||
Griffon evaluates performance based on Earnings per share and Net income excluding restructuring charges, loss on debt extinguishment, acquisition related expenses and discrete and certain other tax items, as well as other items that may affect comparability, as applicable. Griffon believes this information is useful to investors for the same reason. The following table provides a reconciliation of Income from continuing operations to Adjusted income from continuing operations and earnings per share from continuing operations to Adjusted earnings per share from continuing operations:
GRIFFON CORPORATION AND SUBSIDIARIES | ||||||||||
RECONCILIATION OF INCOME FROM CONTINUING OPERATIONS | ||||||||||
TO ADJUSTED INCOME FROM CONTINUING OPERATIONS | ||||||||||
(in thousands, except per share data) | ||||||||||
(Unaudited) | ||||||||||
For the Three Months Ended December 31, | ||||||||||
2017 | 2016 | |||||||||
Income from continuing operations | $ | 22,831 | $ | 7,044 | ||||||
Adjusting items, net of tax: | ||||||||||
Acquisition costs | 2,348 | — | ||||||||
Cost of life insurance benefit | 248 | — | ||||||||
Discrete and certain other tax benefits | (23,018 | ) | (4,421 | ) | ||||||
Adjusted income from continuing operations | $ | 2,409 | $ | 2,623 | ||||||
Diluted earnings per common share from continuing operations | $ | 0.53 | $ | 0.17 | ||||||
Adjusting items, net of tax: | ||||||||||
Acquisition costs | 0.05 | — | ||||||||
Cost of life insurance benefit | 0.01 | — | ||||||||
Discrete and certain other tax benefits | (0.53 | ) | (0.10 | ) | ||||||
Adjusted earnings per common share from continuing operations | $ | 0.06 | $ | 0.06 | ||||||
Weighted-average shares outstanding (in thousands) | 43,336 | 42,312 | ||||||||
Note: Due to rounding, the sum of earnings per common share and adjusting items, net of tax, may not equal adjusted earnings per common share.
View source version on businesswire.com: http://www.businesswire.com/news/home/20180131005683/en/
Source:
Company:
Griffon Corporation
Brian
G. Harris, 212-957-5000
SVP & Chief Financial Officer
or
Investor
Relations:
ICR Inc.
Michael Callahan, 203-682-8311
Senior
Vice President