Press Release
Griffon Corporation Announces Second Quarter Results
Revenue totaled
Segment adjusted EBITDA totaled
Net loss totaled
Segment Operating Results
Home & Building Products
Revenue totaled
Segment adjusted EBITDA was
On
Telephonics
Revenue totaled
Segment adjusted EBITDA was
Contract backlog totaled
Plastic Products
Revenue totaled
Segment adjusted EBITDA was
Taxes
In the quarter and six-month periods ended
The current quarter and six-month periods include
Excluding discrete items, the effective tax benefit rates for the
quarter and six month periods ended
Restructuring
In
In the second quarter of 2014 and 2013, HBP recognized
In
Balance Sheet and Capital Expenditures
At
Financing
On
In connection with these transactions, Griffon capitalized
On
In
Stock Repurchases
In the second quarter of 2014, Griffon purchased 532,781 shares of
common stock under the
Conference Call Information
The Company will hold a conference call today,
The call can be accessed by dialing 1-800-930-1344 (U.S. participants)
or 1-913-312-0862 (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,
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 Loss before taxes: |
GRIFFON CORPORATION AND SUBSIDIARIES | |||||||||||||||||||
OPERATING HIGHLIGHTS | |||||||||||||||||||
(in thousands) | |||||||||||||||||||
(Unaudited) | |||||||||||||||||||
For the Three Months Ended March 31, |
For the Six Months Ended March 31, |
||||||||||||||||||
REVENUE |
2014 | 2013 | 2014 | 2013 | |||||||||||||||
Home & Building Products: | |||||||||||||||||||
Ames | $ | 160,705 | $ | 136,237 | $ | 257,313 | $ | 213,546 | |||||||||||
CBP | 90,838 | 89,499 | 212,680 | 202,366 | |||||||||||||||
Home & Building Products | 251,543 | 225,736 | 469,993 | 415,912 | |||||||||||||||
Telephonics | 104,185 | 121,631 | 200,210 | 217,681 | |||||||||||||||
Plastics | 151,959 | 141,376 | 290,942 | 278,899 | |||||||||||||||
Total consolidated net sales | $ | 507,687 | $ | 488,743 | $ | 961,145 | $ | 912,492 | |||||||||||
Segment adjusted EBITDA: | |||||||||||||||||||
Home & Building Products | $ | 17,124 | $ | 17,555 | $ | 36,191 | $ | 34,794 | |||||||||||
Telephonics | 12,535 | 15,505 | 24,931 | 31,869 | |||||||||||||||
Plastics | 16,216 | 12,352 | 28,959 | 21,671 | |||||||||||||||
Total Segment adjusted EBITDA | 45,875 | 45,412 | 90,081 | 88,334 | |||||||||||||||
Net interest expense | (12,361 | ) | (12,909 | ) | (25,462 | ) | (25,988 | ) | |||||||||||
Segment depreciation and amortization | (16,336 | ) | (17,572 | ) | (33,032 | ) | (34,828 | ) | |||||||||||
Unallocated amounts | (8,391 | ) | (7,980 | ) | (16,374 | ) | (15,567 | ) | |||||||||||
Loss from debt extinguishment, net | (38,890 | ) | - | (38,890 | ) | - | |||||||||||||
Restructuring charges | (692 | ) | (9,336 | ) | (1,534 | ) | (10,444 | ) | |||||||||||
Acquisition costs | - | - | (798 | ) | - | ||||||||||||||
Loss on pension settlement | - | - | - | (2,142 | ) | ||||||||||||||
Loss before taxes | $ | (30,795 | ) | $ | (2,385 | ) | $ | (26,009 | ) | $ | (635 | ) |
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, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Home & Building Products | |||||||||||||||
Segment operating profit | $ | 8,818 | $ | 3,835 | $ | 18,211 | $ | 11,106 | |||||||
Depreciation and amortization | 7,614 | 9,157 | 15,648 | 18,017 | |||||||||||
Restructuring charges | 692 | 4,563 | 1,534 | 5,671 | |||||||||||
Acquisition costs | - | - | 798 | - | |||||||||||
Segment adjusted EBITDA | 17,124 | 17,555 | 36,191 | 34,794 | |||||||||||
Telephonics | |||||||||||||||
Segment operating profit | 10,677 | 13,753 | 21,329 | 28,398 | |||||||||||
Depreciation and amortization | 1,858 | 1,752 | 3,602 | 3,471 | |||||||||||
Segment adjusted EBITDA | 12,535 | 15,505 | 24,931 | 31,869 | |||||||||||
Clopay Plastic Products | |||||||||||||||
Segment operating profit | 9,352 | 916 | 15,177 | 3,558 | |||||||||||
Depreciation and amortization | 6,864 | 6,663 | 13,782 | 13,340 | |||||||||||
Restructuring charges | - | 4,773 | - | 4,773 | |||||||||||
Segment adjusted EBITDA | 16,216 | 12,352 | 28,959 | 21,671 | |||||||||||
All segments: | |||||||||||||||
Income from operations - as reported | 19,673 | 10,102 | 36,654 | 24,445 | |||||||||||
Unallocated amounts | 8,391 | 7,980 | 16,374 | 15,567 | |||||||||||
Other, net | 783 | 422 | 1,689 | 908 | |||||||||||
Loss on pension settlement | - | - | - | 2,142 | |||||||||||
Segment operating profit | 28,847 | 18,504 | 54,717 | 43,062 | |||||||||||
Depreciation and amortization | 16,336 | 17,572 | 33,032 | 34,828 | |||||||||||
Restructuring charges | 692 | 9,336 | 1,534 | 10,444 | |||||||||||
Acquisition costs | - | - | 798 | - | |||||||||||
Segment adjusted EBITDA | $ | 45,875 | $ | 45,412 | $ | 90,081 | $ | 88,334 | |||||||
|
|||||||||||||||
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, | ||||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||||
Revenue | $ | 507,687 | $ | 488,743 | $ | 961,145 | $ | 912,492 | |||||||||||
Cost of goods and services | 397,700 | 383,246 | 745,655 | 709,325 | |||||||||||||||
Gross profit | 109,987 | 105,497 | 215,490 | 203,167 | |||||||||||||||
Selling, general and administrative expenses | 89,622 | 86,059 | 177,302 | 168,278 | |||||||||||||||
Restructuring and other related charges | 692 | 9,336 | 1,534 | 10,444 | |||||||||||||||
Total operating expenses | 90,314 | 95,395 | 178,836 | 178,722 | |||||||||||||||
Income from operations | 19,673 | 10,102 | 36,654 | 24,445 | |||||||||||||||
Other income (expense) | |||||||||||||||||||
Interest expense | (12,389 | ) | (13,060 | ) | (25,523 | ) | (26,167 | ) | |||||||||||
Interest income | 28 | 151 | 61 | 179 | |||||||||||||||
Loss from debt extinguishment, net | (38,890 | ) | - | (38,890 | ) | - | |||||||||||||
Other, net | 783 | 422 | 1,689 | 908 | |||||||||||||||
Total other expense, net | (50,468 | ) | (12,487 | ) | (62,663 | ) | (25,080 | ) | |||||||||||
Loss before taxes | (30,795 | ) | (2,385 | ) | (26,009 | ) | (635 | ) | |||||||||||
Benefit for income taxes | (4,970 | ) | (1,566 | ) | (3,420 | ) | (374 | ) | |||||||||||
Net loss | $ | (25,825 | ) | $ | (819 | ) | $ | (22,589 | ) | $ | (261 | ) | |||||||
Basic loss per common share | $ | (0.53 | ) | $ | (0.02 | ) | $ | (0.44 | ) | $ | (0.00 | ) | |||||||
Weighted-average shares outstanding | 48,990 | 54,345 | 50,872 | 54,749 | |||||||||||||||
Diluted loss per common share | $ | (0.53 | ) | $ | (0.02 | ) | $ | (0.44 | ) | $ | (0.00 | ) | |||||||
Weighted-average shares outstanding | 48,990 | 54,345 | 50,872 | 54,749 | |||||||||||||||
Net loss | $ | (25,825 | ) | $ | (819 | ) | $ | (22,589 | ) | $ | (261 | ) | |||||||
Other comprehensive income (loss), net of taxes: | |||||||||||||||||||
Foreign currency translation adjustments | 1,224 | (5,924 | ) | (1,913 | ) | (2,921 | ) | ||||||||||||
Pension and other post retirement plans | 1,099 | 489 | 1,415 | 4,349 | |||||||||||||||
Gain on cash flow hedge | - | 171 | - | 171 | |||||||||||||||
Total other comprehensive income (loss), net of taxes | 2,323 | (5,264 | ) | (498 | ) | 1,599 | |||||||||||||
Comprehensive income (loss) | $ | (23,502 | ) | $ | (6,083 | ) | $ | (23,087 | ) | $ | 1,338 |
GRIFFON CORPORATION AND SUBSIDIARIES | ||||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||||
(in thousands) | ||||||||||
(Unaudited) | ||||||||||
At March 31, 2014 |
At September 30, 2013 |
|||||||||
CURRENT ASSETS | ||||||||||
Cash and equivalents | $ | 69,933 | $ | 178,130 | ||||||
Accounts receivable, net of allowances of $6,481 and $6,136 | 309,162 | 256,215 | ||||||||
Contract costs and recognized income not yet billed, | ||||||||||
net of progress payments of $ 13,173 and $6,941 | 107,825 | 109,828 | ||||||||
Inventories, net | 256,690 | 230,120 | ||||||||
Prepaid and other current assets | 51,212 | 48,903 | ||||||||
Assets of discontinued operations | 1,217 | 1,214 | ||||||||
Total Current Assets | 796,039 | 824,410 | ||||||||
PROPERTY, PLANT AND EQUIPMENT, net | 357,882 | 353,593 | ||||||||
GOODWILL | 370,172 | 357,730 | ||||||||
INTANGIBLE ASSETS, net | 224,226 | 221,391 | ||||||||
OTHER ASSETS | 30,774 | 28,580 | ||||||||
ASSETS OF DISCONTINUED OPERATIONS | 3,107 | 3,075 | ||||||||
Total Assets | $ | 1,782,200 | $ | 1,788,779 | ||||||
CURRENT LIABILITIES | ||||||||||
Notes payable and current portion of long-term debt | $ | 13,393 | $ | 10,768 | ||||||
Accounts payable | 182,505 | 163,610 | ||||||||
Accrued liabilities | 82,472 | 106,743 | ||||||||
Liabilities of discontinued operations | 3,069 | 3,288 | ||||||||
Total Current Liabilities | 281,439 | 284,409 | ||||||||
LONG-TERM DEBT, net of debt discount of $11,454 and $13,246 | 773,579 | 678,487 | ||||||||
OTHER LIABILITIES | 165,071 | 170,675 | ||||||||
LIABILITIES OF DISCONTINUED OPERATIONS | 4,359 | 4,744 | ||||||||
Total Liabilities | 1,224,448 | 1,138,315 | ||||||||
COMMITMENTS AND CONTINGENCIES | ||||||||||
SHAREHOLDERS' EQUITY | ||||||||||
Total Shareholders' Equity | 557,752 | 650,464 | ||||||||
Total Liabilities and Shareholders' Equity | $ | 1,782,200 | $ | 1,788,779 |
GRIFFON CORPORATION AND SUBSIDIARIES | ||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||||
(in thousands) | ||||||||||||
(Unaudited) | ||||||||||||
Six Months Ended March 31, | ||||||||||||
2014 | 2013 | |||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||||
Net loss | $ | (22,589 | ) | $ | (261 | ) | ||||||
Adjustments to reconcile net loss to |
||||||||||||
Depreciation and amortization | 33,232 | 35,038 | ||||||||||
Stock-based compensation | 4,996 | 6,298 | ||||||||||
Asset impairment charges - restructuring | 169 | 3,122 | ||||||||||
Provision for losses on accounts receivable | 132 | 440 | ||||||||||
Amortization of deferred financing costs and debt discounts | 3,188 | 3,102 | ||||||||||
Loss from debt extinguishment, net | 38,890 | - | ||||||||||
Deferred income taxes | (57 | ) | (592 | ) | ||||||||
(Gain) loss on sale/disposal of assets | 180 | (801 | ) | |||||||||
Change in assets and liabilities, net of assets and liabilities acquired: | ||||||||||||
Increase in accounts receivable and contract costs and recognized income not yet billed |
(46,834 | ) | (87,531 | ) | ||||||||
(Increase) decrease in inventories | (23,858 | ) | 90 | |||||||||
Decrease in prepaid and other assets | 3,482 | 411 | ||||||||||
(Decrease) increase in accounts payable, accrued liabilities and income taxes payable |
(18,713 | ) | 7,080 | |||||||||
Other changes, net | 1,145 | (379 | ) | |||||||||
Net cash used in operating activities | (26,637 | ) | (33,983 | ) | ||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||||
Acquisition of property, plant and equipment | (34,845 | ) | (30,995 | ) | ||||||||
Acquired business, net of cash acquired | (22,720 | ) | - | |||||||||
Proceeds from sale of assets | 294 | 1,216 | ||||||||||
Net cash used in investing activities | (57,271 | ) | (29,779 | ) | ||||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||||
Proceeds from issuance of common stock | 584 | - | ||||||||||
Dividends paid | (3,290 | ) | (2,938 | ) | ||||||||
Purchase of shares for treasury | (63,370 | ) | (22,109 | ) | ||||||||
Proceeds from issuance of long-term debt | 644,514 | 303 | ||||||||||
Payments of long-term debt | (586,310 | ) | (5,400 | ) | ||||||||
Change in short-term borrowings | 4,908 | 2,157 | ||||||||||
Financing costs | (10,687 | ) | (759 | ) | ||||||||
Purchase of ESOP shares | (10,000 | ) | - | |||||||||
Tax benefit from exercise/vesting of equity awards, net | 273 | 150 | ||||||||||
Other, net | 144 | 242 | ||||||||||
Net cash used in financing activities | (23,234 | ) | (28,354 | ) | ||||||||
CASH FLOWS FROM DISCONTINUED OPERATIONS: | ||||||||||||
Net cash used in operating activities | (640 | ) | (478 | ) | ||||||||
Net cash used in discontinued operations | (640 | ) | (478 | ) | ||||||||
Effect of exchange rate changes on cash and equivalents | (415 | ) | (138 | ) | ||||||||
NET DECREASE IN CASH AND EQUIVALENTS | (108,197 | ) | (92,732 | ) | ||||||||
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD | 178,130 | 209,654 | ||||||||||
CASH AND EQUIVALENTS AT END OF PERIOD | $ | 69,933 | $ | 116,922 |
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) to adjusted net income and earnings (loss) per share to Adjusted earnings per share: |
GRIFFON CORPORATION AND SUBSIDIARIES | |||||||||||||||||||
RECONCILIATION OF NET LOSS TO ADJUSTED NET INCOME | |||||||||||||||||||
(in thousands, except per share data) | |||||||||||||||||||
(Unaudited) | |||||||||||||||||||
For the Three Months Ended |
For the Six Months Ended |
||||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||||
Net loss | $ | (25,825 | ) | $ | (819 | ) | $ | (22,589 | ) | $ | (261 | ) | |||||||
Adjusting items, net of tax: | |||||||||||||||||||
Loss from debt extinguishment, net | 24,964 | - | 24,964 | - | |||||||||||||||
Restructuring and related | 429 | 5,788 | 951 | 6,508 | |||||||||||||||
Acquisition costs | - | - | 495 | - | |||||||||||||||
Loss on pension settlement | - | - | - | 1,392 | |||||||||||||||
Extinguishment impact on period tax ratea | 5,848 | - | 5,848 | - | |||||||||||||||
Discrete tax provisions (benefits) | 609 | (309 | ) | 320 | (364 | ) | |||||||||||||
Adjusted net income | $ | 6,025 | $ | 4,660 | $ | 9,989 | $ | 7,275 | |||||||||||
Diluted loss per common share | $ | (0.53 | ) | $ | (0.02 | ) | $ | (0.44 | ) | $ | (0.00 | ) | |||||||
Adjusting items, net of tax: | |||||||||||||||||||
Loss from debt extinguishment, net | 0.51 | - | 0.49 | - | |||||||||||||||
Restructuring | 0.01 | 0.10 | 0.02 | 0.11 | |||||||||||||||
Acquisition costs | - | - | 0.01 | - | |||||||||||||||
Loss on pension settlement | - | - | - | 0.02 | |||||||||||||||
Extinguishment impact on period tax ratea | 0.12 | - | 0.12 | - | |||||||||||||||
Discrete tax provisions (benefits) | 0.01 | (0.01 | ) | 0.01 | (0.01 | ) | |||||||||||||
Adjusted earnings per common share | $ | 0.12 | $ | 0.08 | $ | 0.20 | $ | 0.13 | |||||||||||
Weighted-average shares outstanding (in thousands) | 48,990 | 54,345 | 50,872 | 54,749 |
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%. As a result of the loss from debt extinguishment, the Company anticipates it will now incur a pretax loss for the full year 2014, and recognize a corresponding tax benefit at an effective rate approximating 13.0%. In the current quarter, the impact of debt extinguishment on the full year effective tax rate was estimated to be a benefit of $5,848 or $0.12 per share. |
Source:
Griffon Corporation
Douglas J. Wetmore, 212-957-5000
Chief
Financial Officer
or
Investor Relations:
ICR
Inc.
Anthony Gerstein, 646-277-1242
Senior Vice President