UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 30, 2015
GRIFFON CORPORATION
(Exact Name of Registrant as Specified in Charter)
Delaware 1-06620 11-1893410
(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification Number)
712 Fifth Avenue, 18th Floor
New York, New York 10019
(Address of Principal Executive Offices) (Zip Code)
(212) 957-5000
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act
(17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act
(17 CFR 240.13e-4(c))
1
Item 2.02. Results of Operations and Financial Condition.
On April 30, 2015 Griffon Corporation (the “Registrant”) issued a press release announcing the Registrant’s financial results for the fiscal second quarter ended March 31, 2015. A copy of the Registrant’s press release is attached hereto as Exhibit 99.1.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
99.1 Press Release, dated April 30, 2015
The information filed as an exhibit to this Form 8-K is being furnished in accordance with Item 2.02 and shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of such section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
GRIFFON CORPORATION
By: /s/ Douglas J. Wetmore
Douglas J. Wetmore
Executive Vice President and
Chief Financial Officer
Date: April 30, 2015
3
Exhibit Index
99.1 | Press release, dated April 30, 2015 |
Griffon Corporation Announces Second Quarter Results
NEW YORK, NEW YORK, April 30, 2015 – Griffon Corporation (“Griffon” or the “Company”) (NYSE: GFF) today reported results for the fiscal second quarter ended March 31, 2015.
Revenue totaled $500.0 million, decreasing 2% from the prior year quarter; excluding the impact of foreign currency, revenue increased 2%, primarily due to the contribution from acquisitions. Home & Building Products (“HBP”) revenue increased 5% over the prior year quarter, while Clopay Plastics (“Plastics”) and Telephonics revenue decreased 9% and 5%, respectively.
Segment adjusted EBITDA totaled $44.7 million, decreasing 3% from the prior year quarter; excluding the impact of foreign currency, segment adjusted EBITDA increased 3%, primarily due to the contribution from acquisitions. Segment adjusted EBITDA is defined as net income excluding interest income and expense, income taxes, depreciation and amortization, unallocated amounts (mainly corporate overhead), restructuring charges and acquisition-related expenses.
Net income totaled $5.1 million, or $0.11 per share, compared to a net loss of $25.8 million, or $0.53 per share, in the prior year quarter. Current quarter results included discrete tax provisions of $0.2 million. The prior year quarter included a charge related to debt extinguishment of $38.9 million ($25.0 million, net of tax or $0.51 per share), restructuring costs of $0.7 million ($0.4 million, net of tax, or $0.01 per share), benefit of debt extinguishment on full year effective tax rate of $5.8 million or $0.12 per share and discrete tax provisions of $0.6 million, or $0.01 per share. Excluding these items from both periods, current quarter adjusted net income was $5.3 million, or $0.11 per share, compared to $6.0 million, or $0.12 per share, in the prior year quarter. Excluding the unfavorable impact of foreign currency, current quarter net income would have been $6.6 million, a 10% increase over the prior year quarter, or $0.14 per share.
Ronald J. Kramer, Chief Executive Officer, commented, “We are very pleased with our solid performance this quarter, despite the impact of foreign currency on our results, and are confident in our ability to meet our 2015 financial targets. Our businesses are poised for continued growth in earnings through the execution of our strategic initiatives. We are optimistic about our prospects to continue to generate attractive returns for our shareholders.”
Segment Operating Results
Home & Building Products
Revenue totaled $263.6 million, increasing 5% compared to the prior year quarter, reflecting a 6% contribution from the Cyclone acquisition, partially offset by a 1% unfavorable foreign currency impact. The AMES Companies, Inc. (“AMES”) revenue decreased 1% due to reduced sales of snow tools, and reduced sales of lawn tools and North American pots and planters due to a late spring, partially offset by the inclusion of Cyclone results contributing 8%; foreign currency was 2% unfavorable. Clopay Building
1
Products ("CBP") revenue increased 15%, primarily due to increased volume contributing 10% with the balance primarily due to product mix; foreign currency was 1% unfavorable.
Segment adjusted EBITDA was $17.3 million, increasing 1% compared to the prior year quarter, reflecting a 9% contribution from the Cyclone acquisition, favorable mix and increased volume at CBP, partially offset by the impact of reduced sales at AMES and a 5% unfavorable foreign currency impact.
HBP recognized $0.7 million in restructuring and related exit costs for the quarter ended March 31, 2014; such charges primarily related to one-time termination benefits, facility and other personnel costs, and asset impairment charges related to the AMES U.S. plant consolidation initiative undertaken in January 2013 and completed at the end of the 2015 first quarter. There were no such charges in the current year. Management continues to estimate that AMES' initiative will result in annualized cash savings exceeding $10.0 million; realization of expected savings began in the current quarter.
Telephonics
Revenue totaled $98.7 million, decreasing 5% from the prior year quarter, primarily due to the timing of awards and work performed on Communications and Surveillance Systems, specifically Communication Open System Architecture and Secure Digital Intercommunications product sales, partially offset by the timing of work performed on the Multi-Mode ASW radar.
Segment adjusted EBITDA was $11.6 million, decreasing 7% from the prior year quarter, primarily due to reduced revenue.
Contract backlog totaled $482 million at March 31, 2015, compared to $494 million at September 30, 2014, with approximately 73% expected to be fulfilled within the next twelve months.
Plastic Products
Revenue totaled $137.7 million, decreasing 9% compared to the prior year quarter, reflecting an unfavorable foreign currency impact of 7% and a 4% unfavorable mix impact, partially offset by the benefit of increased volume contributing 2%. Resin had no material impact on revenue in the quarter. Plastics adjusts selling prices based on underlying resin costs on a delayed basis.
Segment adjusted EBITDA was $15.8 million, decreasing 3% from the prior year quarter, with the impact of the revenue decrease and unfavorable mix more than offset by the change in the impact of resin pricing pass through of 27% and the benefit from improved operations. The unfavorable foreign currency impact was 12%.
Taxes
In both the quarter and six months ended March 31, 2015, the Company reported pretax income compared to losses in the prior year respective periods. The Company recognized tax provisions of 37.5% and 37.7% for the quarter and six months ended March 31, 2015, respectively, compared to benefits of 16.1% and 13.2%, respectively, in the comparable prior year periods.
The current quarter and six months include $0.2 million and $0.5 million, respectively, of provisions for discrete items resulting primarily from the provision for taxes on repatriation of foreign earnings, partially offset by the benefit of the retroactive extension of the federal R&D credit signed into law December 19, 2014, and release of a valuation allowance. The comparable prior year periods included provisions of $0.6 million and $0.3 million, respectively, from discrete items resulting primarily from the conclusion of tax
2
audits in certain jurisdictions and the impact of enacted tax law changes. Excluding discrete items, the effective tax rates for the quarter and six months ended March 31, 2015 were 35.7% and 35.2%, respectively, compared to benefit rates of 18.1% and 14.4% in the comparable prior year periods, respectively.
Balance Sheet and Capital Expenditures
At March 31, 2015, the Company had cash and equivalents of $42.6 million, total debt outstanding of $867.5 million, net of discounts and deferred costs, and $134 million available for borrowing under its revolving credit facility. Capital expenditures were $21 million in the current quarter.
Share Repurchases
On May 1, 2014, Griffon’s Board of Directors authorized the repurchase of up to $50 million of Griffon’s outstanding common stock; on March 20, 2015, an additional $50 million was authorized. Under these programs, the Company may purchase shares in the open market, including pursuant to a 10b5-1 plan, or in privately negotiated transactions. During the quarter ended March 31, 2015, Griffon purchased 1,581,200 shares of common stock under the May 1, 2014 program, for a total of $24.2 million or $15.31 per share. At March 31, 2015, $52.4 million remains under existing Board authorizations.
From August 2011 to March 31, 2015, Griffon repurchased 14,045,547 shares of its common stock for a total of $158.7 million or $11.30 per share.
Conference Call Information
The Company will hold a conference call today, April 30, 2015, at 4:30 PM ET.
The call can be accessed by dialing 1-888-596-2569 (U.S. participants) or 1-913-312-0380 (International participants). Callers should ask to be connected to the Griffon Corporation teleconference or provide conference ID number 1672773.
A replay of the call will be available starting on April 30, 2015 at 7:30 PM ET by dialing 1-877-870-5176 (U.S.) or 1-858-384-5517 (International), and entering the conference ID number: 1672773. The replay will be available through May 14, 2015.
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 the United States and global economies that are not historical are hereby identified as “forward-looking statements” and may be indicated by words or phrases such as “anticipates,” “supports,” “plans,” “projects,” “expects,” “believes,” “should,” “would,” “could,” “hope,” “forecast,” “management is of the opinion,” “may,” “will,” “estimates,” “intends,” “explores,” “opportunities,” the negative of these expressions, use of the future tense and similar words or phrases. Such forward-looking statements are subject to inherent risks and uncertainties that could cause actual results to differ materially from those expressed in any forward-looking statements. These risks and uncertainties include, among others: current economic conditions and uncertainties in the housing, credit and capital markets; the Griffon's ability to achieve expected savings from cost control, integration and disposal initiatives; the ability to identify and successfully consummate and integrate value-adding acquisition opportunities; increasing competition and pricing pressures in the markets served by Griffon’s operating companies; the ability of Griffon’s operating companies to expand into new geographic and product markets, and to anticipate and meet customer demands for new products and product enhancements and innovations;
3
reduced military spending by the government on projects for which Griffon’s Telephonics Corporation supplies products, including as a result of sequestration at such time as the budgetary cuts mandated by sequestration begin to take effect; the ability of the federal government to fund and conduct its operations; increases in the cost of raw materials such as resin, wood and steel; changes in customer demand or loss of a material customer at one of Griffon's operating companies; the potential impact of seasonal variations and uncertain weather patterns on certain of Griffon’s businesses; political events that could impact the worldwide economy; a downgrade in the Griffon’s credit ratings; changes in international economic conditions including interest rate and currency exchange fluctuations; the reliance by certain of Griffon’s businesses on particular third party suppliers and manufacturers to meet customer demands; the relative mix of products and services offered by Griffon’s businesses, which could impact margins and operating efficiencies; short-term capacity constraints or prolonged excess capacity; unforeseen developments in contingencies, such as litigation and environmental matters; unfavorable results of government agency contract audits of Telephonics Corporation; Griffon’s ability to adequately protect and maintain the validity of patent and other intellectual property rights; the cyclical nature of the businesses of certain Griffon’s operating companies; and possible terrorist threats and actions and their impact on the global economy. Such statements reflect the views of the Company with respect to future events and are subject to these and other risks, as previously disclosed in the Company’s Securities and Exchange Commission filings. Readers are cautioned not to place undue reliance on these forward-looking statements. These forward-looking statements speak only as of the date made. Griffon undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
About Griffon Corporation
Griffon Corporation 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.
Griffon currently conducts its operations through three reportable segments:
• | Home & Building Products consists of two companies, The AMES Companies, Inc. and Clopay Building Products Company, Inc.: |
• | 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. |
4
For more information on Griffon and its operating subsidiaries, please see the Company’s website at www.griffoncorp.com.
Company Contact: Investor Relations Contact:
Douglas J. Wetmore Michael Callahan
EVP & Chief Financial Officer Senior Vice President
Griffon Corporation ICR Inc.
(212) 957-5000 (203) 682-8311
712 Fifth Avenue, 18th Floor
New York, NY 10019
5
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 and acquisition-related expenses, 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 March 31, | For the Six Months Ended March 31, | ||||||||||||||
REVENUE | 2015 | 2014 | 2015 | 2014 | |||||||||||
Home & Building Products: | |||||||||||||||
AMES | $ | 159,092 | $ | 160,705 | $ | 292,202 | $ | 257,313 | |||||||
CBP | 104,513 | 90,838 | 243,113 | 212,680 | |||||||||||
Home & Building Products | 263,605 | 251,543 | 535,315 | 469,993 | |||||||||||
Telephonics | 98,687 | 104,185 | 189,345 | 200,210 | |||||||||||
Plastics | 137,728 | 151,959 | 277,520 | 290,942 | |||||||||||
Total consolidated net sales | $ | 500,020 | $ | 507,687 | $ | 1,002,180 | $ | 961,145 | |||||||
Segment adjusted EBITDA: | |||||||||||||||
Home & Building Products | $ | 17,330 | $ | 17,124 | $ | 41,800 | $ | 36,191 | |||||||
Telephonics | 11,616 | 12,535 | 21,648 | 24,931 | |||||||||||
Plastics | 15,764 | 16,216 | 30,315 | 28,959 | |||||||||||
Total Segment adjusted EBITDA | 44,710 | 45,875 | 93,763 | 90,081 | |||||||||||
Net interest expense | (11,857 | ) | (12,361 | ) | (23,494 | ) | (25,462 | ) | |||||||
Segment depreciation and amortization | (17,078 | ) | (16,336 | ) | (34,225 | ) | (33,032 | ) | |||||||
Unallocated amounts | (7,580 | ) | (8,391 | ) | (15,844 | ) | (16,374 | ) | |||||||
Loss from debt extinguishment, net | — | (38,890 | ) | — | (38,890 | ) | |||||||||
Restructuring charges | — | (692 | ) | — | (1,534 | ) | |||||||||
Acquisition costs | — | — | — | (798 | ) | ||||||||||
Income (loss) before taxes | $ | 8,195 | $ | (30,795 | ) | $ | 20,200 | $ | (26,009 | ) | |||||
6
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, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Home & Building Products | |||||||||||||||
Segment operating profit | $ | 8,651 | $ | 8,818 | $ | 25,020 | $ | 18,211 | |||||||
Depreciation and amortization | 8,679 | 7,614 | 16,780 | 15,648 | |||||||||||
Restructuring charges | — | 692 | — | 1,534 | |||||||||||
Acquisition costs | — | — | — | 798 | |||||||||||
Segment adjusted EBITDA | 17,330 | 17,124 | 41,800 | 36,191 | |||||||||||
Telephonics | |||||||||||||||
Segment operating profit | 9,114 | 10,677 | 16,631 | 21,329 | |||||||||||
Depreciation and amortization | 2,502 | 1,858 | 5,017 | 3,602 | |||||||||||
Segment adjusted EBITDA | 11,616 | 12,535 | 21,648 | 24,931 | |||||||||||
Clopay Plastic Products | |||||||||||||||
Segment operating profit | 9,867 | 9,352 | 17,887 | 15,177 | |||||||||||
Depreciation and amortization | 5,897 | 6,864 | 12,428 | 13,782 | |||||||||||
Segment adjusted EBITDA | 15,764 | 16,216 | 30,315 | 28,959 | |||||||||||
All segments: | |||||||||||||||
Income from operations - as reported | 20,809 | 19,673 | 44,902 | 36,654 | |||||||||||
Unallocated amounts | 7,580 | 8,391 | 15,844 | 16,374 | |||||||||||
Other, net | (757 | ) | 783 | (1,208 | ) | 1,689 | |||||||||
Segment operating profit | 27,632 | 28,847 | 59,538 | 54,717 | |||||||||||
Depreciation and amortization | 17,078 | 16,336 | 34,225 | 33,032 | |||||||||||
Restructuring charges | — | 692 | — | 1,534 | |||||||||||
Acquisition costs | — | — | — | 798 | |||||||||||
Segment adjusted EBITDA | $ | 44,710 | $ | 45,875 | $ | 93,763 | $ | 90,081 | |||||||
Unallocated amounts typically include general corporate expenses not attributable to any reportable segment.
7
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, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Revenue | $ | 500,020 | $ | 507,687 | $ | 1,002,180 | $ | 961,145 | |||||||
Cost of goods and services | 385,645 | 397,700 | 769,816 | 745,655 | |||||||||||
Gross profit | 114,375 | 109,987 | 232,364 | 215,490 | |||||||||||
Selling, general and administrative expenses | 93,566 | 89,622 | 187,462 | 177,302 | |||||||||||
Restructuring and other related charges | — | 692 | — | 1,534 | |||||||||||
Total operating expenses | 93,566 | 90,314 | 187,462 | 178,836 | |||||||||||
Income from operations | 20,809 | 19,673 | 44,902 | 36,654 | |||||||||||
Other income (expense) | |||||||||||||||
Interest expense | (12,012 | ) | (12,389 | ) | (23,766 | ) | (25,523 | ) | |||||||
Interest income | 155 | 28 | 272 | 61 | |||||||||||
Loss from debt extinguishment, net | — | (38,890 | ) | — | (38,890 | ) | |||||||||
Other, net | (757 | ) | 783 | (1,208 | ) | 1,689 | |||||||||
Total other expense, net | (12,614 | ) | (50,468 | ) | (24,702 | ) | (62,663 | ) | |||||||
Income (loss) before taxes | 8,195 | (30,795 | ) | 20,200 | (26,009 | ) | |||||||||
Provision (benefit) for income taxes | 3,073 | (4,970 | ) | 7,607 | (3,420 | ) | |||||||||
Net income (loss) | $ | 5,122 | $ | (25,825 | ) | $ | 12,593 | $ | (22,589 | ) | |||||
Basic income per common share | $ | 0.11 | $ | (0.53 | ) | $ | 0.27 | $ | (0.44 | ) | |||||
Weighted-average shares outstanding | 45,349 | 48,990 | 45,829 | 50,872 | |||||||||||
Diluted income per common share | $ | 0.11 | $ | (0.53 | ) | $ | 0.26 | $ | (0.44 | ) | |||||
Weighted-average shares outstanding | 47,669 | 48,990 | 47,682 | 50,872 | |||||||||||
Net income (loss) | $ | 5,122 | $ | (25,825 | ) | $ | 12,593 | $ | (22,589 | ) | |||||
Other comprehensive income (loss), net of taxes: | |||||||||||||||
Foreign currency translation adjustments | (30,384 | ) | 1,224 | (45,884 | ) | (1,913 | ) | ||||||||
Pension and other post retirement plans | 353 | 1,099 | 706 | 1,415 | |||||||||||
Loss on cash flow hedge | (80 | ) | — | (154 | ) | — | |||||||||
Gain (loss) on available-for-sale securities | 92 | — | (870 | ) | — | ||||||||||
Total other comprehensive income (loss), net of taxes | (30,019 | ) | 2,323 | (46,202 | ) | (498 | ) | ||||||||
Comprehensive income (loss), net | $ | (24,897 | ) | $ | (23,502 | ) | $ | (33,609 | ) | $ | (23,087 | ) | |||
8
GRIFFON CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(Unaudited) At March 31, 2015 | At September 30, 2014 | |||||||
CURRENT ASSETS | ||||||||
Cash and equivalents | $ | 42,602 | $ | 92,405 | ||||
Accounts receivable, net of allowances of $6,121 and $7,336 | 286,452 | 258,436 | ||||||
Contract costs and recognized income not yet billed, net of progress payments of $14,592 and $16,985 at March 31, 2015 and September 30, 2014, respectively. | 94,844 | 109,930 | ||||||
Inventories, net | 320,297 | 290,135 | ||||||
Prepaid and other current assets | 44,525 | 62,569 | ||||||
Assets of discontinued operations | 1,638 | 1,624 | ||||||
Total Current Assets | 790,358 | 815,099 | ||||||
PROPERTY, PLANT AND EQUIPMENT, net | 361,200 | 370,565 | ||||||
GOODWILL | 358,695 | 371,846 | ||||||
INTANGIBLE ASSETS, net | 220,811 | 233,623 | ||||||
OTHER ASSETS | 13,943 | 13,302 | ||||||
ASSETS OF DISCONTINUED OPERATIONS | 2,246 | 2,126 | ||||||
Total Assets | $ | 1,747,253 | $ | 1,806,561 | ||||
CURRENT LIABILITIES | ||||||||
Notes payable and current portion of long-term debt | $ | 9,162 | $ | 7,886 | ||||
Accounts payable | 182,369 | 218,703 | ||||||
Accrued liabilities | 84,494 | 101,292 | ||||||
Liabilities of discontinued operations | 2,528 | 3,282 | ||||||
Total Current Liabilities | 278,553 | 331,163 | ||||||
LONG-TERM DEBT, net | 858,315 | 791,301 | ||||||
OTHER LIABILITIES | 142,229 | 148,240 | ||||||
LIABILITIES OF DISCONTINUED OPERATIONS | 3,524 | 3,830 | ||||||
Total Liabilities | 1,282,621 | 1,274,534 | ||||||
COMMITMENTS AND CONTINGENCIES | ||||||||
SHAREHOLDERS’ EQUITY | ||||||||
Total Shareholders’ Equity | 464,632 | 532,027 | ||||||
Total Liabilities and Shareholders’ Equity | $ | 1,747,253 | $ | 1,806,561 | ||||
9
GRIFFON CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
Six Months Ended March 31, | ||||||||
2015 | 2014 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net income (loss) | $ | 12,593 | $ | (22,589 | ) | |||
Adjustments to reconcile net income to net cash used in operating activities: | ||||||||
Depreciation and amortization | 34,453 | 33,232 | ||||||
Stock-based compensation | 5,372 | 4,996 | ||||||
Asset impairment charges - restructuring | — | 169 | ||||||
Provision for losses on accounts receivable | 242 | 132 | ||||||
Amortization of debt discounts and issuance costs | 3,265 | 3,188 | ||||||
Loss from debt extinguishment, net | — | 38,890 | ||||||
Deferred income taxes | 1,282 | (57 | ) | |||||
(Gain) loss on sale/disposal of assets and investments | (315 | ) | 180 | |||||
Change in assets and liabilities, net of assets and liabilities acquired: | ||||||||
Increase in accounts receivable and contract costs and recognized income not yet billed | (23,424 | ) | (46,834 | ) | ||||
Increase in inventories | (39,252 | ) | (23,858 | ) | ||||
Decrease in prepaid and other assets | 754 | 3,482 | ||||||
Decrease in accounts payable, accrued liabilities and income taxes payable | (40,244 | ) | (18,713 | ) | ||||
Other changes, net | 2,223 | 1,206 | ||||||
Net cash used in operating activities | (43,051 | ) | (26,576 | ) | ||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Acquisition of property, plant and equipment | (39,713 | ) | (34,845 | ) | ||||
Acquired businesses, net of cash acquired | — | (22,781 | ) | |||||
Proceeds from sale of assets | 177 | 294 | ||||||
Proceeds from sale of investments | 8,891 | — | ||||||
Net cash used in investing activities | (30,645 | ) | (57,332 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Proceeds from issuance of common stock | 285 | 584 | ||||||
Dividends paid | (3,911 | ) | (3,290 | ) | ||||
Purchase of shares for treasury | (37,577 | ) | (63,370 | ) | ||||
Proceeds from long-term debt | 99,556 | 644,514 | ||||||
Payments of long-term debt | (29,425 | ) | (586,310 | ) | ||||
Change in short-term borrowings | (572 | ) | 4,908 | |||||
Financing costs | (590 | ) | (10,687 | ) | ||||
Purchase of ESOP shares | — | (10,000 | ) | |||||
Tax benefit from exercise/vesting of equity awards, net | 345 | 273 | ||||||
Other, net | 95 | 144 | ||||||
Net cash provided by (used in) financing activities | 28,206 | (23,234 | ) | |||||
CASH FLOWS FROM DISCONTINUED OPERATIONS: | ||||||||
Net cash used in operating activities | (545 | ) | (640 | ) | ||||
Net cash used in discontinued operations | (545 | ) | (640 | ) | ||||
Effect of exchange rate changes on cash and equivalents | (3,768 | ) | (415 | ) | ||||
NET DECREASE IN CASH AND EQUIVALENTS | (49,803 | ) | (108,197 | ) | ||||
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD | 92,405 | 178,130 | ||||||
CASH AND EQUIVALENTS AT END OF PERIOD | $ | 42,602 | $ | 69,933 | ||||
10
Griffon evaluates performance based on Earnings per share and Net income excluding restructuring charges, acquisition-related expenses, 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 per share to Adjusted earnings per share:
GRIFFON CORPORATION AND SUBSIDIARIES
RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED NET INCOME
(in thousands, except per share data)
(Unaudited)
For the Three Months Ended March 31, | For the Six Months Ended March 31, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Net income (loss) | $ | 5,122 | $ | (25,825 | ) | $ | 12,593 | $ | (22,589 | ) | |||||
Adjusting items, net of tax: | |||||||||||||||
Loss from debt extinguishment, net | — | 24,964 | — | 24,964 | |||||||||||
Restructuring charges | — | 429 | — | 951 | |||||||||||
Acquisition costs | — | — | — | 495 | |||||||||||
Extinguishment impact on period tax rate (a) | — | 5,848 | — | 5,848 | |||||||||||
Discrete tax provisions | 145 | 609 | 494 | 320 | |||||||||||
Adjusted net income | $ | 5,267 | $ | 6,025 | $ | 13,087 | $ | 9,989 | |||||||
Diluted income (loss) per common share | $ | 0.11 | $ | (0.53 | ) | 0.26 | $ | (0.44 | ) | ||||||
Adjusting items, net of tax: | |||||||||||||||
Loss from debt extinguishment, net | — | 0.51 | — | 0.49 | |||||||||||
Restructuring charges | — | 0.01 | — | 0.02 | |||||||||||
Acquisition costs | — | — | — | 0.01 | |||||||||||
Extinguishment impact on period tax rate (a) | — | 0.12 | — | 0.12 | |||||||||||
Discrete tax provisions | — | 0.01 | 0.01 | 0.01 | |||||||||||
Adjusted earnings per common share | $ | 0.11 | $ | 0.12 | 0.27 | $ | 0.20 | ||||||||
Weighted-average shares outstanding (in thousands) | 47,669 | 48,990 | 47,682 | 50,872 | |||||||||||
11