Press Release
Griffon Corporation Announces Third Quarter Results
- Consolidated Revenue Increases 5% to
$480 million - EPS of
$0.16 vs.$0.08 in Prior Year Quarter - Adjusted EPS of
$0.13 vs.$0.05 in Prior Year Quarter
Third quarter revenue totaled
Third quarter net income totaled
Mr. Kramer continued, "Our businesses are well-positioned for continued growth and improved profitability. We remain committed to driving shareholder value through a range of opportunities including organic improvement, a disciplined approach to capital investment and, in the longer term, our ongoing evaluation of additional strategic transactions."
For the current quarter, Segment adjusted EBITDA totaled
Segment Operating Results
Telephonics
Revenue in the 2012 quarter decreased
Segment adjusted EBITDA in the 2012 quarter was
Contract backlog totaled
Plastic Products
Revenue in the 2012 third quarter increased
Segment adjusted EBITDA in the 2012 quarter increased
Home & Building Products
Revenue in the 2012 quarter increased
Segment adjusted EBITDA in the 2012 quarter was
Taxes
The tax rate for the current quarter was a provision of 39.7%, compared to a benefit of 81.3% in the prior year quarter. The current quarter's rate reflects the benefit from the release of previously established reserves for uncertain tax positions on conclusion of certain tax audits. The prior year effective rate included benefits arising on the filing of tax returns in various jurisdictions and the impact of tax planning initiatives related to unremitted foreign earnings. Excluding discrete items, the current quarter's rate was 50.5%, which reflects the impact of permanent differences not deductible in determining taxable income, mainly limited deductibility of restricted stock, as well as the impact of tax reserves and a change in earnings mix between domestic and non-domestic operations. Excluding discrete items, the prior year quarter's rate was 77.7%, which reflected the combined effects of the nominal pretax income in the quarter with a forecast full year pretax loss for 2011, as well as fluctuations in the full year expected effective tax rate driven by changes in earnings mix between domestic and non-domestic operations.
Balance Sheet and Capital Expenditures
At
Conference Call Information
The Company will hold a conference call today,
The call can be accessed by dialing 1-888-359-3610 (U.S. participants) or 1-719-325-2161 (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 .
Griffon evaluates performance and allocates resources based on each segments' operating results before interest income or expense, income taxes, depreciation and amortization, gain (losses) from debt extinguishment, unallocated amounts, restructuring charges, acquisition costs and costs related to the fair value of inventory for acquisitions ("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 |
For the Nine Months | ||||||||||||||||||||
Ended June 30, |
Ended June 30, | ||||||||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||||||||
REVENUE | |||||||||||||||||||||
Home & Building Products: | |||||||||||||||||||||
ATT | $ | 130,311 | $ | 114,144 | $ | 362,374 | $ | 353,985 | |||||||||||||
CBP | 106,910 | 100,099 | 309,825 | 290,840 | |||||||||||||||||
Home & Building Products | 237,221 | 214,243 | 672,199 | 644,825 | |||||||||||||||||
Telephonics | 101,116 | 103,530 | 319,621 | 315,334 | |||||||||||||||||
Plastics | 141,909 | 137,509 | 421,889 | 385,654 | |||||||||||||||||
Total consolidated net sales | $ | 480,246 | $ | 455,282 | $ | 1,413,709 | $ | 1,345,813 | |||||||||||||
Segment operating profit (loss): | |||||||||||||||||||||
Segment profit before depreciation, amortization, restructuring, fair value write-up of acquired inventory sold and acquisition costs: | |||||||||||||||||||||
Home & Building Products | $ | 25,831 | $ | 22,487 | $ | 59,434 | $ | 59,640 | |||||||||||||
Telephonics | 15,886 | 12,122 | 46,912 | 37,457 | |||||||||||||||||
Plastics | 10,117 | 6,048 | 27,462 | 27,065 | |||||||||||||||||
Total Segment profit before depreciation, amortization, restructuring, fair value write-up of acquired inventory sold and acquisition costs | 51,834 | 40,657 | 133,808 | 124,162 | |||||||||||||||||
Unallocated amounts, less acquisition costs | (7,253 | ) | (7,781 | ) | (20,041 | ) | (19,468 | ) | |||||||||||||
Loss from debt extinguishment, net | - | - | - | (26,164 | ) | ||||||||||||||||
Net interest expense | (12,855 | ) | (12,463 | ) | (38,775 | ) | (34,839 | ) | |||||||||||||
Segment depreciation and amortization | (16,733 | ) | (15,607 | ) | (48,373 | ) | (44,817 | ) | |||||||||||||
Restructuring charges | - | (2,118 | ) | (1,795 | ) | (4,723 | ) | ||||||||||||||
Fair value write-up of acquired inventory sold | - | - | - | (15,152 | ) | ||||||||||||||||
Acquisition costs | - | - | (178 | ) | - | ||||||||||||||||
Income (loss) before taxes | $ | 14,993 | $ | 2,688 | $ | 24,646 | $ | (21,001 | ) | ||||||||||||
Unallocated amounts typically include general corporate expenses not attributable to a reportable segment. | |||||||||||||||||||||
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 | ||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||
For the Three Months | For the Nine Months | |||||||||||||||||||
Ended June 30, | Ended June 30, | |||||||||||||||||||
2012 | 2011 | 2012 | 2011 | |||||||||||||||||
Home & Building Products | ||||||||||||||||||||
Segment operating profit | $ | 17,482 | $ | 13,512 | $ | 35,412 | $ | 18,820 | ||||||||||||
Depreciation and amortization | 8,349 | 7,460 | 23,571 | 21,548 | ||||||||||||||||
Fair value write-up of acquired inventory sold | - | - | - | 15,152 | ||||||||||||||||
Restructuring charges | - | 1,515 | 273 | 4,120 | ||||||||||||||||
Acquisition costs | - | - | 178 | - | ||||||||||||||||
Segment adjusted EBITDA | 25,831 | 22,487 | 59,434 | 59,640 | ||||||||||||||||
Telephonics | ||||||||||||||||||||
Segment operating profit | 14,113 | 9,725 | 40,171 | 31,643 | ||||||||||||||||
Depreciation and amortization | 1,773 | 1,794 | 5,219 | 5,211 | ||||||||||||||||
Restructuring charges | - | 603 | 1,522 | 603 | ||||||||||||||||
Segment adjusted EBITDA | 15,886 | 12,122 | 46,912 | 37,457 | ||||||||||||||||
Clopay Plastic Products | ||||||||||||||||||||
Segment operating profit | 3,506 | (305 | ) | 7,879 | 9,007 | |||||||||||||||
Depreciation and amortization | 6,611 | 6,353 | 19,583 | 18,058 | ||||||||||||||||
Segment adjusted EBITDA | 10,117 | 6,048 | 27,462 | 27,065 | ||||||||||||||||
All segments: | ||||||||||||||||||||
Income from operations - as reported | 28,202 | 15,006 | 62,698 | 36,595 | ||||||||||||||||
Unallocated amounts | 7,253 | 7,781 | 20,041 | 19,468 | ||||||||||||||||
Other, net | (354 | ) | 145 | 723 | 3,407 | |||||||||||||||
Segment operating profit | 35,101 | 22,932 | 83,462 | 59,470 | ||||||||||||||||
Depreciation and amortization | 16,733 | 15,607 | 48,373 | 44,817 | ||||||||||||||||
Fair value write-up of acquired inventory sold | - | - | - | 15,152 | ||||||||||||||||
Restructuring charges | - | 2,118 | 1,795 | 4,723 | ||||||||||||||||
Acquisition costs | - | - | 178 | - | ||||||||||||||||
Segment adjusted EBITDA | $ | 51,834 | $ | 40,657 | $ | 133,808 | $ | 124,162 | ||||||||||||
GRIFFON CORPORATION AND SUBSIDIARIES | |||||||||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||||||||||
(in thousands, except per share data) | |||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||
Three Months Ended June 30, | Nine Months Ended June 30, | ||||||||||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||||||||||
Revenue | $ | 480,246 | $ | 455,282 | $ | 1,413,709 | $ | 1,345,813 | |||||||||||||||
Cost of goods and services | 364,601 | 356,113 | 1,092,555 | 1,057,642 | |||||||||||||||||||
Gross profit | 115,645 | 99,169 | 321,154 | 288,171 | |||||||||||||||||||
Selling, general and administrative expenses | 87,443 | 82,045 | 256,661 | 246,853 | |||||||||||||||||||
Restructuring and other related charges | - | 2,118 | 1,795 | 4,723 | |||||||||||||||||||
Total operating expenses | 87,443 | 84,163 | 258,456 | 251,576 | |||||||||||||||||||
Income from operations | 28,202 | 15,006 | 62,698 | 36,595 | |||||||||||||||||||
Other income (expense) | |||||||||||||||||||||||
Interest expense | (12,932 | ) | (12,569 | ) | (39,000 | ) | (35,111 | ) | |||||||||||||||
Interest income | 77 | 106 | 225 | 272 | |||||||||||||||||||
Loss from debt extinguishment, net | - | - | - | (26,164 | ) | ||||||||||||||||||
Other, net | (354 | ) | 145 | 723 | 3,407 | ||||||||||||||||||
Total other income (expense) | (13,209 | ) | (12,318 | ) | (38,052 | ) | (57,596 | ) | |||||||||||||||
Income (loss) before taxes | 14,993 | 2,688 | 24,646 | (21,001 | ) | ||||||||||||||||||
Provision (benefit) for income taxes | 5,945 | (2,184 | ) | 11,083 | (10,192 | ) | |||||||||||||||||
Net income (loss) | $ | 9,048 | $ | 4,872 | $ | 13,563 | $ | (10,809 | ) | ||||||||||||||
Basic earnings (loss) per common share | $ | 0.16 | $ | 0.08 | $ | 0.24 | $ | (0.18 | ) | ||||||||||||||
Weighted-average shares outstanding | 56,034 | 59,606 | 56,032 | 59,387 | |||||||||||||||||||
Diluted earnings (loss) per common share | $ | 0.16 | $ | 0.08 | $ | 0.24 | $ | (0.18 | ) | ||||||||||||||
Weighted-average shares outstanding | 57,495 | 60,525 | 57,311 | 59,387 | |||||||||||||||||||
GRIFFON CORPORATION AND SUBSIDIARIES | |||||||||||
CONSOLIDATED BALANCE SHEETS | |||||||||||
(in thousands) | |||||||||||
(Unaudited) |
|||||||||||
|
|||||||||||
At June 30, 2012 | At September 30, 2011 | ||||||||||
CURRENT ASSETS | |||||||||||
Cash and equivalents | $ | 171,912 | $ | 243,029 | |||||||
Accounts receivable, net of allowances of $5,212 and $6,072 | 261,854 | 267,471 | |||||||||
Contract costs and recognized income not yet billed, | |||||||||||
net of progress payments of $1,969 and $9,697 | 65,537 | 74,737 | |||||||||
Inventories, net | 269,878 | 263,809 | |||||||||
Prepaid and other current assets | 49,897 | 48,828 | |||||||||
Assets of discontinued operations | 1,303 | 1,381 | |||||||||
Total Current Assets | 820,381 | 899,255 | |||||||||
PROPERTY, PLANT AND EQUIPMENT, net | 357,627 | 350,050 | |||||||||
GOODWILL | 357,916 | 357,888 | |||||||||
INTANGIBLE ASSETS, net | 230,176 | 223,189 | |||||||||
OTHER ASSETS | 27,812 | 31,197 | |||||||||
ASSETS OF DISCONTINUED OPERATIONS | 2,974 | 3,675 | |||||||||
Total Assets | $ | 1,796,886 | $ | 1,865,254 | |||||||
CURRENT LIABILITIES | |||||||||||
Notes payable and current portion of long-term debt | $ | 17,581 | $ | 25,164 | |||||||
Accounts payable | 145,608 | 186,290 | |||||||||
Accrued liabilities | 94,671 | 99,631 | |||||||||
Liabilities of discontinued operations | 3,077 | 3,794 | |||||||||
Total Current Liabilities | 260,937 | 314,879 | |||||||||
LONG-TERM DEBT, net of debt discount of $17,406 and $19,693 | 685,355 | 688,247 | |||||||||
OTHER LIABILITIES | 193,523 | 204,434 | |||||||||
LIABILITIES OF DISCONTINUED OPERATIONS | 4,033 | 5,786 | |||||||||
Total Liabilities | 1,143,848 | 1,213,346 | |||||||||
COMMITMENTS AND CONTINGENCIES | |||||||||||
SHAREHOLDERS' EQUITY | |||||||||||
Total Shareholders' Equity | 653,038 | 651,908 | |||||||||
Total Liabilities and Shareholders' Equity | $ | 1,796,886 | $ | 1,865,254 | |||||||
GRIFFON CORPORATION AND SUBSIDIARIES | |||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||
(in thousands) | |||||||||||||
(Unaudited) | |||||||||||||
Nine Months Ended June 30, | |||||||||||||
2012 | 2011 | ||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||||
Net income (loss) | $ | 13,563 | $ | (10,809 | ) | ||||||||
Adjustments to reconcile net income (loss) to | |||||||||||||
net cash provided by operating activities: | |||||||||||||
Depreciation and amortization | 48,668 | 45,078 | |||||||||||
Fair value write-up of acquired inventory sold | - | 15,152 | |||||||||||
Stock-based compensation | 7,599 | 6,767 | |||||||||||
Provision for losses on accounts receivable | 532 | 734 | |||||||||||
Amortization/write-off of deferred financing costs and debt discounts | 4,497 | 5,203 | |||||||||||
Loss from debt extinguishment, net | - | 26,164 | |||||||||||
Deferred income taxes | (1,185 | ) | (3,550 | ) | |||||||||
(Gain) loss on sale/disposal of assets | 59 | (240 | ) | ||||||||||
Change in assets and liabilities, net of assets and liabilities acquired: | |||||||||||||
Decrease in accounts receivable and contract costs | |||||||||||||
and recognized income not yet billed | 10,601 | 1,243 | |||||||||||
Increase in inventories | (4,171 | ) | (19,994 | ) | |||||||||
Increase in prepaid and other assets | (3,970 | ) | (2,243 | ) | |||||||||
Decrease in accounts payable, accrued liabilities | |||||||||||||
and income taxes payable | (49,574 | ) | (51,075 | ) | |||||||||
Other changes, net | 3,728 | 625 | |||||||||||
Net cash provided by operating activities | 30,347 | 13,055 | |||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||||
Acquisition of property, plant and equipment | (57,695 | ) | (64,974 | ) | |||||||||
Acquired business, net of cash acquired | (22,432 | ) | (855 | ) | |||||||||
Change in funds restricted for capital projects | - | 3,875 | |||||||||||
Change in equipment lease deposits | - | - | |||||||||||
Proceeds from sale of assets | 281 | 1,333 | |||||||||||
Net cash used in investing activities | (79,846 | ) | (60,621 | ) | |||||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||||
Dividend | (3,564 | ) | - | ||||||||||
Purchase of shares for treasury | (5,670 | ) | - | ||||||||||
Proceeds from issuance of long-term debt | 4,000 | 640,963 | |||||||||||
Payments of long-term debt | (14,563 | ) | (495,209 | ) | |||||||||
Change in short-term borrowings | (1,262 | ) | 12,730 | ||||||||||
Financing costs | (97 | ) | (21,343 | ) | |||||||||
Purchase of ESOP shares | - | (15,674 | ) | ||||||||||
Exercise of stock options | - | 20 | |||||||||||
Tax effect from exercise/vesting of equity awards, net | 834 | 2,334 | |||||||||||
Other, net | 67 | 22 | |||||||||||
Net cash provided by (used in) financing activities | (20,255 | ) | 123,843 | ||||||||||
CASH FLOWS FROM DISCONTINUED OPERATIONS: | |||||||||||||
Net cash used in operating activities | (1,690 | ) | (829 | ) | |||||||||
Net cash used in discontinued operations | (1,690 | ) | (829 | ) | |||||||||
Effect of exchange rate changes on cash and equivalents | 327 | 1,304 | |||||||||||
NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS | (71,117 | ) | 76,752 | ||||||||||
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD | 243,029 | 169,802 | |||||||||||
CASH AND EQUIVALENTS AT END OF PERIOD | $ | 171,912 | $ | 246,554 | |||||||||
Griffon evaluates performance based on Earnings per share and Net income (loss) excluding restructuring charges, loss from debt extinguishment, discrete tax items, acquisition costs and costs related to the fair value of inventory for acquisitions. 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 (LOSS) | |||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||
For the Three Months Ended | For the Nine Months Ended | ||||||||||||||||||||||
June 30, | June 30, | ||||||||||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||||||||||
Net income (loss) | $ | 9,048 | $ | 4,872 | $ | 13,563 | $ | (10,809 | ) | ||||||||||||||
Adjusting items, net of tax: | |||||||||||||||||||||||
Loss from debt extinguishment, net | - | - | - | 16,813 | |||||||||||||||||||
Fair value write-up of acquired inventory sold | - | - | - | 9,849 | |||||||||||||||||||
Restructuring and related | - | 1,377 | 1,167 | 3,070 | |||||||||||||||||||
Acquisition costs | - | - | 116 | - | |||||||||||||||||||
Discrete tax benefits | (1,626 | ) | (3,077 | ) | (1,626 | ) | (4,513 | ) | |||||||||||||||
Adjusted net income | $ | 7,422 | $ | 3,172 | $ | 13,220 | $ | 14,410 | |||||||||||||||
Earnings (loss) per common share | $ | 0.16 | $ | 0.08 | $ | 0.24 | $ | (0.18 | ) | ||||||||||||||
Adjusting items, net of tax: | |||||||||||||||||||||||
Loss from debt extinguishment, net | - | - | - | 0.28 | |||||||||||||||||||
Fair value write-up of acquired inventory sold | - | - | - | 0.17 | |||||||||||||||||||
Restructuring | - | 0.02 | 0.02 | 0.05 | |||||||||||||||||||
Acquisition costs | - | - | 0.00 | - | |||||||||||||||||||
Discrete tax benefits | (0.03 | ) | (0.05 | ) | (0.03 | ) | (0.08 | ) | |||||||||||||||
Adjusted earnings per share | $ | 0.13 | $ | 0.05 | $ | 0.23 | $ | 0.24 | |||||||||||||||
Weighted-average shares outstanding (in thousands) | 57,495 | 60,525 | 57,311 | 59,387 |
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