Press Release
Griffon Corporation Announces Second Quarter Results
Second quarter revenue totaled
Segment adjusted EBITDA totaled
Net loss totaled
Segment Operating Results
Telephonics
Second quarter revenue totaled
Second quarter segment adjusted EBITDA was
Contract backlog totaled a record
Plastic Products
Second quarter revenue totaled
Second quarter segment adjusted EBITDA was
Home & Building Products
Second quarter revenue totaled
Second quarter segment adjusted EBITDA was
Taxes
Griffon’s current quarter effective tax rate was a benefit of 65.7% on
the pre-tax loss, compared to a tax rate of 57.4% in the prior year
quarter. 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
changes in earnings mix between domestic and non-domestic operations,
all of which are material relative to the level of pretax result. The
current quarter benefited
Restructuring
In
ATT anticipates incurring pre-tax restructuring and related exit costs
approximating
During the current quarter, BPC completed the consolidation of its
During the current quarter, HBP recognized
In
Balance Sheet
On
At
Stock Repurchases
During the second quarter, the Company purchased 0.9 million shares of
its common stock under an authorized stock repurchase plan, for
Conference Call Information
The Company will hold a conference call today,
The call can be accessed by dialing 1-888-437-9366 (U.S. participants)
or 1-719-325-2250 (International participants). Callers should ask to be
connected to the
A replay of the call will be available starting on
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 segments:
-
Home & Building Products consists of two companies,
Ames True Temper, Inc. (“ATT”) andClopay Building Products Company, Inc. (“CBP”):- ATT 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) before taxes:
GRIFFON CORPORATION AND SUBSIDIARIES | |||||||||||||||||
OPERATING HIGHLIGHTS | |||||||||||||||||
(in thousands) | |||||||||||||||||
(Unaudited) | |||||||||||||||||
For the Three Months Ended |
For the Six Months Ended |
||||||||||||||||
REVENUE |
2013 | 2012 | 2013 | 2012 | |||||||||||||
Home & Building Products: | |||||||||||||||||
ATT | $ | 136,237 | $ | 133,321 | $ | 213,546 | $ | 232,061 | |||||||||
CBP | 89,499 | 91,269 | 202,366 | 202,915 | |||||||||||||
Home & Building Products | 225,736 | 224,590 | 415,912 | 434,976 | |||||||||||||
Telephonics | 121,631 | 113,992 | 217,681 | 218,506 | |||||||||||||
Plastics | 141,376 | 143,849 | 278,899 | 279,980 | |||||||||||||
Total consolidated net sales | $ | 488,743 | $ | 482,431 | $ | 912,492 | $ | 933,462 | |||||||||
Segment adjusted EBITDA: | |||||||||||||||||
Home & Building Products | $ | 17,555 | $ | 15,853 | $ | 34,794 | $ | 33,603 | |||||||||
Telephonics | 15,505 | 15,336 | 31,869 | 31,024 | |||||||||||||
Plastics | 12,352 | 9,164 | 21,671 | 17,344 | |||||||||||||
Total Segment adjusted EBITDA | 45,412 | 40,353 | 88,334 | 81,971 | |||||||||||||
Net interest expense | (12,909 | ) | (12,919 | ) | (25,988 | ) | (25,919 | ) | |||||||||
Segment depreciation and amortization | (17,572 | ) | (16,222 | ) | (34,828 | ) | (31,640 | ) | |||||||||
Unallocated amounts | (7,980 | ) | (6,453 | ) | (15,567 | ) | (12,787 | ) | |||||||||
Restructuring charges | (9,336 | ) | - | (10,444 | ) | (1,795 | ) | ||||||||||
Acquisition costs | - | - | - | (178 | ) | ||||||||||||
Loss on pension settlement | - | - | (2,142 | ) | - | ||||||||||||
Income (loss) before taxes | $ | (2,385 | ) | $ | 4,759 | $ | (635 | ) | $ | 9,652 | |||||||
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 March 31, | Six Months Ended March 31, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Home & Building Products | |||||||||||||||
Segment operating profit | $ | 3,835 | $ | 8,096 | $ | 11,106 | $ | 17,930 | |||||||
Depreciation and amortization | 9,157 | 7,757 | 18,017 | 15,222 | |||||||||||
Restructuring charges | 4,563 | - | 5,671 | 273 | |||||||||||
Acquisition costs | - | - | - | 178 | |||||||||||
Segment adjusted EBITDA | 17,555 | 15,853 | 34,794 | 33,603 | |||||||||||
Telephonics | |||||||||||||||
Segment operating profit | 13,753 | 13,543 | 28,398 | 26,056 | |||||||||||
Depreciation and amortization | 1,752 | 1,793 | 3,471 | 3,446 | |||||||||||
Restructuring charges | - | - | - | 1,522 | |||||||||||
Segment adjusted EBITDA | 15,505 | 15,336 | 31,869 | 31,024 | |||||||||||
Clopay Plastic Products | |||||||||||||||
Segment operating profit | 916 | 2,492 | 3,558 | 4,372 | |||||||||||
Depreciation and amortization | 6,663 | 6,672 | 13,340 | 12,972 | |||||||||||
Restructuring charges | 4,773 | - | 4,773 | - | |||||||||||
Segment adjusted EBITDA | 12,352 | 9,164 | 21,671 | 17,344 | |||||||||||
All segments: | |||||||||||||||
Income from operations - as reported | 10,102 | 16,649 | 24,445 | 34,495 | |||||||||||
Unallocated amounts | 7,980 | 6,453 | 15,567 | 12,787 | |||||||||||
Other, net | 422 | 1,029 | 908 | 1,076 | |||||||||||
Loss on pension settlement | - | - | 2,142 | - | |||||||||||
Segment operating profit | 18,504 | 24,131 | 43,062 | 48,358 | |||||||||||
Depreciation and amortization | 17,572 | 16,222 | 34,828 | 31,640 | |||||||||||
Restructuring charges | 9,336 | - | 10,444 | 1,795 | |||||||||||
Acquisition costs | - | - | - | 178 | |||||||||||
Segment adjusted EBITDA | $ | 45,412 | $ | 40,353 | $ | 88,334 | $ | 81,971 | |||||||
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 March 31, | Six Months Ended March 31, | |||||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||||
Revenue | $ | 488,743 | $ | 482,431 | $ | 912,492 | $ | 933,462 | ||||||||||
Cost of goods and services | 383,246 | 379,630 | 709,325 | 727,953 | ||||||||||||||
Gross profit | 105,497 | 102,801 | 203,167 | 205,509 | ||||||||||||||
Selling, general and administrative expenses | 86,059 | 86,152 | 168,278 | 169,219 | ||||||||||||||
Restructuring and other related charges | 9,336 | - | 10,444 | 1,795 | ||||||||||||||
Total operating expenses | 95,395 | 86,152 | 178,722 | 171,014 | ||||||||||||||
Income from operations | 10,102 | 16,649 | 24,445 | 34,495 | ||||||||||||||
Other income (expense) | ||||||||||||||||||
Interest expense | (13,060 | ) | (13,005 | ) | (26,167 | ) | (26,068 | ) | ||||||||||
Interest income | 151 | 86 | 179 | 149 | ||||||||||||||
Other, net | 422 | 1,029 | 908 | 1,076 | ||||||||||||||
Total other income (expense) | (12,487 | ) | (11,890 | ) | (25,080 | ) | (24,843 | ) | ||||||||||
Income (loss) before taxes | (2,385 | ) | 4,759 | (635 | ) | 9,652 | ||||||||||||
Provision (benefit) for income taxes | (1,566 | ) | 2,732 | (374 | ) | 5,139 | ||||||||||||
Net income (loss) | $ | (819 | ) | $ | 2,027 | $ | (261 | ) | $ | 4,513 | ||||||||
Basic earnings (loss) per common share | $ | (0.02 | ) | $ | 0.04 | $ | (0.00 | ) | $ | 0.08 | ||||||||
Weighted-average shares outstanding | 54,345 | 56,037 | 54,749 | 56,031 | ||||||||||||||
Diluted earnings (loss) per common share | $ | (0.02 | ) | $ | 0.04 | $ | (0.00 | ) | $ | 0.08 | ||||||||
Weighted-average shares outstanding | 54,345 | 57,380 | 54,749 | 57,228 | ||||||||||||||
Net income (loss) | $ | (819 | ) | $ | 2,027 | $ | (261 | ) | $ | 4,513 | ||||||||
Other comprehensive income (loss), net of taxes: | ||||||||||||||||||
Foreign currency translation adjustments | (5,924 | ) | 9,620 | (2,921 | ) | 5,048 | ||||||||||||
Pension amortization | 489 | 523 | 4,349 | 1,040 | ||||||||||||||
Gain on cash flow hedge | 171 | - | 171 | - | ||||||||||||||
Total other comprehensive income (loss), net of taxes | (5,264 | ) | 10,143 | 1,599 | 6,088 | |||||||||||||
Comprehensive income (loss) | $ | (6,083 | ) | $ | 12,170 | $ | 1,338 | $ | 10,601 | |||||||||
GRIFFON CORPORATION AND SUBSIDIARIES | |||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||
(in thousands) | |||||||||
(Unaudited) | |||||||||
At March 31, 2013 | At September 30, 2012 | ||||||||
CURRENT ASSETS | |||||||||
Cash and equivalents | $ | 116,922 | $ | 209,654 | |||||
Accounts receivable, net of allowances of $5,538 and $5,433 | 302,281 | 239,857 | |||||||
Contract costs and recognized income not yet billed, net of progress payments of $3,199 and $3,748 | |||||||||
95,039 | 70,777 | ||||||||
Inventories, net | 257,047 | 257,868 | |||||||
Prepaid and other current assets | 54,911 | 47,472 | |||||||
Assets of discontinued operations | 556 | 587 | |||||||
Total Current Assets | 826,756 | 826,215 | |||||||
PROPERTY, PLANT AND EQUIPMENT, net | 350,832 | 356,879 | |||||||
GOODWILL | 358,334 | 358,372 | |||||||
INTANGIBLE ASSETS, net | 225,162 | 230,473 | |||||||
OTHER ASSETS | 28,060 | 31,317 | |||||||
ASSETS OF DISCONTINUED OPERATIONS | 2,665 | 2,936 | |||||||
Total Assets | $ | 1,791,809 | $ | 1,806,192 | |||||
CURRENT LIABILITIES | |||||||||
Notes payable and current portion of long-term debt | $ | 19,522 | $ | 17,703 | |||||
Accounts payable | 160,738 | 141,704 | |||||||
Accrued liabilities | 105,573 | 110,337 | |||||||
Liabilities of discontinued operations | 1,954 | 3,639 | |||||||
Total Current Liabilities | 287,787 | 273,383 | |||||||
LONG-TERM DEBT, net of debt discount of $14,962 and $16,607 | 678,773 | 681,907 | |||||||
OTHER LIABILITIES | 184,344 | 193,107 | |||||||
LIABILITIES OF DISCONTINUED OPERATIONS | 3,110 | 3,643 | |||||||
Total Liabilities | 1,154,014 | 1,152,040 | |||||||
COMMITMENTS AND CONTINGENCIES | |||||||||
SHAREHOLDERS' EQUITY | |||||||||
Total Shareholders' Equity | 637,795 | 654,152 | |||||||
Total Liabilities and Shareholders' Equity | $ | 1,791,809 | $ | 1,806,192 | |||||
GRIFFON CORPORATION AND SUBSIDIARIES |
|||||||||||
Six Months Ended March 31, | |||||||||||
2013 | 2012 | ||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||
Net income (loss) | $ | (261 | ) | $ | 4,513 | ||||||
Adjustments to reconcile net income (loss) to net cash used in operating activities: | |||||||||||
Depreciation and amortization | 35,038 | 31,836 | |||||||||
Stock-based compensation | 6,298 | 4,908 | |||||||||
Fixed asset impairment charges - restructuring | 3,122 | - | |||||||||
Provision for losses on accounts receivable | 440 | 611 | |||||||||
Amortization/write-off of deferred financing costs and debt discounts | 3,102 | 3,021 | |||||||||
Deferred income taxes | (592 | ) | (807 | ) | |||||||
(Gain) loss on sale/disposal of assets | (801 | ) | 29 | ||||||||
Change in assets and liabilities, net of assets and liabilities acquired: | |||||||||||
Increase in accounts receivable and contract costs and recognized income not yet billed | |||||||||||
(87,531 | ) | (14,648 | ) | ||||||||
(Increase) decrease in inventories | 90 | (17,003 | ) | ||||||||
Decrease in prepaid and other assets | 411 | 905 | |||||||||
Increase (decrease) in accounts payable, accrued liabilities and income taxes payable | |||||||||||
7,080 | (19,482 | ) | |||||||||
Other changes, net | (379 | ) | 3,909 | ||||||||
Net cash used in operating activities | (33,983 | ) | (2,208 | ) | |||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||
Acquisition of property, plant and equipment | (30,995 | ) | (40,205 | ) | |||||||
Acquired business, net of cash acquired | - | (22,432 | ) | ||||||||
Proceeds from sale of assets | 1,216 | 195 | |||||||||
Net cash used in investing activities | (29,779 | ) | (62,442 | ) | |||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||
Dividends paid | (2,938 | ) | (2,374 | ) | |||||||
Purchase of shares for treasury | (22,109 | ) | (2,350 | ) | |||||||
Proceeds from issuance of long-term debt | 303 | 4,000 | |||||||||
Payments of long-term debt | (5,400 | ) | (10,398 | ) | |||||||
Change in short-term borrowings | 2,157 | (3,331 | ) | ||||||||
Financing costs | (759 | ) | (4 | ) | |||||||
Tax effect from exercise/vesting of equity awards, net | 150 | 834 | |||||||||
Other, net | 242 | (29 | ) | ||||||||
Net cash used in financing activities | (28,354 | ) | (13,652 | ) | |||||||
CASH FLOWS FROM DISCONTINUED OPERATIONS: | |||||||||||
Net cash used in operating activities | (478 | ) | (764 | ) | |||||||
Net cash used in discontinued operations | (478 | ) | (764 | ) | |||||||
Effect of exchange rate changes on cash and equivalents | (138 | ) | 916 | ||||||||
NET DECREASE IN CASH AND EQUIVALENTS | (92,732 | ) | (78,150 | ) | |||||||
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD | 209,654 | 243,029 | |||||||||
CASH AND EQUIVALENTS AT END OF PERIOD | $ | 116,922 | $ | 164,879 | |||||||
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 Earnings (loss) per share and Net income (loss) to Adjusted earnings per share and Adjusted net income:
GRIFFON CORPORATION AND SUBSIDIARIES | |||||||||||||||||
RECONCILIATION OF INCOME (LOSS) TO ADJUSTED INCOME | |||||||||||||||||
(in thousands, except per share data) | |||||||||||||||||
(Unaudited) | |||||||||||||||||
For the Three Months Ended |
For the Six Months Ended |
||||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||||
Net income (loss) | $ | (819 | ) | $ | 2,027 | $ | (261 | ) | $ | 4,513 | |||||||
Adjusting items, net of tax: | |||||||||||||||||
Restructuring and related | 5,788 | - | 6,508 | 1,167 | |||||||||||||
Acquisition costs | - | - | - | 116 | |||||||||||||
Loss on pension settlement | - | - | 1,392 | - | |||||||||||||
Discrete tax benefits | (309 | ) | - | (364 | ) | - | |||||||||||
Adjusted net income | $ | 4,660 | $ | 2,027 | $ | 7,275 | $ | 5,796 | |||||||||
Earnings (loss) per common share | $ | (0.02 | ) | $ | 0.04 | $ | (0.00 | ) | $ | 0.08 | |||||||
Adjusting items, net of tax: | |||||||||||||||||
Restructuring | 0.10 | - | 0.11 | 0.02 | |||||||||||||
Acquisition costs | - | - | - | 0.00 | |||||||||||||
Loss on pension settlement | - | - | 0.02 | - | |||||||||||||
Discrete tax benefits | (0.01 | ) | - | (0.01 | ) | - | |||||||||||
Adjusted earnings per share | $ | 0.08 | $ | 0.04 | $ | 0.13 | $ | 0.10 | |||||||||
Weighted-average shares outstanding on loss |
54,345 |
|
|
54,749 |
|
||||||||||||
Weighted-average shares outstanding on income |
56,766 | 57,380 | 57,008 | 57,228 |
Source:
Griffon Corporation
Douglas J. Wetmore
Chief Financial Officer
212-957-5000
or
Investor
Relations
ICR Inc.
Anthony Gerstein
Senior Vice President
646-277-1242