8K 2015 Q3 Earnings Release
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): July 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))
Item 2.02. Results of Operations and Financial Condition.
On July 30, 2015 Griffon Corporation (the “Registrant”) issued a press release announcing the Registrant’s financial results for the fiscal third quarter ended June 30, 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 July 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.
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: July 30, 2015
Exhibit Index
| |
99.1 | Press release, dated July 30, 2015 |
GFF Q3 2015 Exhibit 99.1
Griffon Corporation Announces Third Quarter Results
NEW YORK, NEW YORK, July 30, 2015 – Griffon Corporation (“Griffon” or the “Company”) (NYSE: GFF) today reported results for the fiscal third quarter ended June 30, 2015.
Revenue totaled $511.7 million, increasing 1% from the prior year quarter; excluding the impact of foreign currency, revenue increased 5%. Telephonics Corporation ("Telephonics") and Home & Building Products (“HBP”) revenue increased 13% and 7%, respectively, over the prior year quarter, while Clopay Plastic Products Company, Inc. (“Plastics”) revenue decreased 16%.
Segment adjusted EBITDA totaled $55.2 million, increasing 11% from the prior year quarter; the impact of foreign currency was not material. 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 $10.9 million, or $0.23 per share, compared to $14.5 million, or $0.29 per share, in the prior year quarter. Current quarter results included discrete tax benefits of $0.3 million. The prior year quarter included acquisition costs of $1.6 million ($1.0 million, net of tax or $0.02 per shares), restructuring costs of $0.4 million ($0.2 million, net of tax, or $0.00 per share), impact of debt extinguishment on full year effective tax rate of $(4.4) million or $(0.09) per share and discrete tax benefits of $1.9 million, or $0.04 per share. Excluding these items from both periods, current quarter adjusted net income was $10.6 million, or $0.23 per share, compared to $9.5 million, or $0.19 per share, in the prior year quarter. The impact of foreign currency was not material.
Ronald J. Kramer, Chief Executive Officer, commented, “We are pleased to report another quarter of adjusted EPS growth. As we realize the full benefit of our strategic initiatives, we anticipate gaining momentum into our fiscal year end and are optimistic about 2016.”
Segment Operating Results
Home & Building Products
Revenue totaled $272.2 million, increasing 7% compared to the prior year quarter, reflecting a 3% contribution from the Cyclone acquisition, partially offset by a 2% unfavorable foreign currency impact. The AMES Companies, Inc. (“AMES”) revenue increased 6% due to the inclusion of Cyclone results contributing 6% and increased wheelbarrow sales; foreign currency was 4% unfavorable. Clopay Building Products Company, Inc. ("CBP") revenue increased 8%, primarily due to increased volume contributing 5% with the balance primarily due to product mix; foreign currency was 1% unfavorable.
Segment adjusted EBITDA was $25.4 million, increasing 30% compared to the prior year quarter, driven by AMES operational efficiency improvements and cost control measures, a contribution from AMES acquisitions of 10%, and increased volume and favorable mix at CBP; foreign currency was 4% unfavorable.
HBP recognized $0.4 million in restructuring and related exit costs for the quarter ended June 30, 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 2015 second quarter.
Telephonics
Revenue totaled $115.3 million, increasing 13% from the prior year quarter, primarily due to timing of work performed on the Radar System Division Multi-Mode ASW product, partially offset by the timing of awards and work performed on Secure Digital Intercommunications products in Communications and Surveillance Systems.
Segment adjusted EBITDA was $15.7 million, increasing 4% from the prior year quarter, primarily due to the increased revenue and reduced operating expenses, offset by the impact of unfavorable program mix.
Contract backlog totaled $439 million at June 30, 2015, compared to $494 million at September 30, 2014, with approximately 79% expected to be fulfilled within the next twelve months.
Plastic Products
Revenue totaled $124.2 million, decreasing 16% compared to the prior year quarter, reflecting an unfavorable foreign currency impact of 9%, a 5% decrease in volume and a 2% unfavorable impact from the pass through of resin costs in customer selling prices. Plastics adjusts selling prices based on underlying resin costs on a delayed basis.
Segment adjusted EBITDA was $14.1million, decreasing 6% from the prior year quarter due to the change in the impact of resin pricing pass through of 9% and reduced volume, partially offset by favorable mix. The favorable impact of foreign currency was 5%.
Taxes
In both the quarter and nine months ended June 30, 2015, the Company reported pretax income compared to pretax income in the prior year quarter and a pretax loss in the prior year nine-month period. The Company recognized tax provisions of 34.7% and 36.3% for the quarter and nine months ended June 30, 2015, respectively, compared to benefits of 12.2% and 38.0%, respectively, in the comparable prior year periods.
The current quarter and nine months ended June 30, 2015 included a $0.3 million discrete benefit and $0.2 million discrete provision, respectively. The comparable prior year periods included benefits of $1.9 million and $1.5 million, respectively. In both years, the discrete items arose primarily from the filing of returns, conclusion of tax audits in various jurisdictions and the impact of enacted tax law changes. Excluding discrete items, and for the prior year also excluding the impact from debt extinguishment, the effective tax rates for the quarter and nine months ended June 30, 2015 were 36.3% and 35.7%, respectively, compared to 36.6% and 36.7%, respectively, in the comparable prior year periods.
Balance Sheet and Capital Expenditures
At June 30, 2015, the Company had cash and equivalents of $46.0 million, total debt outstanding of $840.5 million, net of discounts and deferred costs, and $168 million available for borrowing under its revolving credit facility. Capital expenditures were $16 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 June 30, 2015, Griffon purchased 1,234,214 shares of common stock under the programs, for a total of $20.6 million or $16.71 per share. At June 30, 2015, $31.7 million remains under existing Board authorizations.
From August 2011 to June 30, 2015, Griffon repurchased 15,279,761 shares of its common stock for a total of $179.3 million or $11.74 per share.
Conference Call Information
The Company will hold a conference call today, July 30, 2015, at 4:30 PM ET.
The call can be accessed by dialing 1-888-206-4916 (U.S. participants) or 1-913-312-0698 (International participants). Callers should ask to be connected to the Griffon Corporation teleconference or provide conference ID number 3009566.
A replay of the call will be available starting on July 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: 3009566. The replay will be available through August 13, 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; reduced military spending by the government on projects for which Griffon’s Telephonics Corporation supplies products, including as a result of continuing budgetary cuts resulting from sequestration and other government actions; 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, AMES and CBP: |
| |
• | AMES is a global provider of non-powered landscaping products for homeowners and professionals. |
| |
• | CBP is a leading manufacturer and marketer of residential, commercial and industrial garage doors to professional dealers and major home center retail chains. |
| |
• | Telephonics designs, develops and manufactures high-technology integrated information, communication and sensor system solutions for military and commercial markets worldwide. |
| |
• | Plastics 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.
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
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 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 June 30, | | For the Nine Months Ended June 30, |
REVENUE | 2015 | | 2014 | | 2015 | | 2014 |
Home & Building Products: | |
| | |
| | |
| | |
|
AMES | $ | 140,614 |
| | $ | 132,179 |
| | $ | 432,816 |
| | $ | 389,492 |
|
CBP | 131,577 |
| | 121,814 |
| | 374,690 |
| | 334,494 |
|
Home & Building Products | 272,191 |
| | 253,993 |
| | 807,506 |
| | 723,986 |
|
Telephonics | 115,340 |
| | 102,446 |
| | 304,685 |
| | 302,656 |
|
Plastics | 124,163 |
| | 148,600 |
| | 401,683 |
| | 439,542 |
|
Total consolidated net sales | $ | 511,694 |
| | $ | 505,039 |
| | $ | 1,513,874 |
| | $ | 1,466,184 |
|
| | | | | | | |
Segment adjusted EBITDA: | |
| | |
| | |
| | |
|
Home & Building Products | $ | 25,386 |
| | $ | 19,596 |
| | $ | 67,186 |
| | $ | 55,787 |
|
Telephonics | 15,712 |
| | 15,087 |
| | 37,360 |
| | 40,018 |
|
Plastics | 14,084 |
| | 14,922 |
| | 44,399 |
| | 43,881 |
|
Total Segment adjusted EBITDA | 55,182 |
| | 49,605 |
| | 148,945 |
| | 139,686 |
|
Net interest expense | (12,150 | ) | | (11,541 | ) | | (35,644 | ) | | (37,003 | ) |
Segment depreciation and amortization | (17,331 | ) | | (16,691 | ) | | (51,556 | ) | | (49,723 | ) |
Unallocated amounts | (9,008 | ) | | (6,521 | ) | | (24,852 | ) | | (22,895 | ) |
Loss from debt extinguishment, net | — |
| | — |
| | — |
| | (38,890 | ) |
Restructuring charges | — |
| | (358 | ) | | — |
| | (1,892 | ) |
Acquisition costs | — |
| | (1,600 | ) | | — |
| | (2,398 | ) |
Income (loss) before taxes | $ | 16,693 |
| | $ | 12,894 |
| | $ | 36,893 |
| | $ | (13,115 | ) |
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 June 30, | | Nine Months Ended June 30, |
| 2015 | | 2014 | | 2015 | | 2014 |
Home & Building Products | | | | | | | |
Segment operating profit | $ | 16,268 |
| | $ | 9,747 |
| | $ | 41,288 |
| | $ | 27,958 |
|
Depreciation and amortization | 9,118 |
| | 7,891 |
| | 25,898 |
| | 23,539 |
|
Restructuring charges | — |
| | 358 |
| | — |
| | 1,892 |
|
Acquisition costs | — |
| | 1,600 |
| | — |
| | 2,398 |
|
Segment adjusted EBITDA | 25,386 |
| | 19,596 |
| | 67,186 |
| | 55,787 |
|
| | | | | | | |
Telephonics | | | | | | | |
Segment operating profit | 13,284 |
| | 13,134 |
| | 29,915 |
| | 34,463 |
|
Depreciation and amortization | 2,428 |
| | 1,953 |
| | 7,445 |
| | 5,555 |
|
Segment adjusted EBITDA | 15,712 |
| | 15,087 |
| | 37,360 |
| | 40,018 |
|
| | | | | | | |
Clopay Plastic Products | | | | | | | |
Segment operating profit | 8,299 |
| | 8,075 |
| | 26,186 |
| | 23,252 |
|
Depreciation and amortization | 5,785 |
| | 6,847 |
| | 18,213 |
| | 20,629 |
|
Segment adjusted EBITDA | 14,084 |
| | 14,922 |
| | 44,399 |
| | 43,881 |
|
| | | | | | | |
All segments: | | | | | | | |
Income from operations - as reported | 27,914 |
| | 21,814 |
| | 72,816 |
| | 58,468 |
|
Unallocated amounts | 9,008 |
| | 6,521 |
| | 24,852 |
| | 22,895 |
|
Other, net | 929 |
| | 2,621 |
| | (279 | ) | | 4,310 |
|
Segment operating profit | 37,851 |
| | 30,956 |
| | 97,389 |
| | 85,673 |
|
Depreciation and amortization | 17,331 |
| | 16,691 |
| | 51,556 |
| | 49,723 |
|
Restructuring charges | — |
| | 358 |
| | — |
| | 1,892 |
|
Acquisition costs | — |
| | 1,600 |
| | — |
| | 2,398 |
|
Segment adjusted EBITDA | $ | 55,182 |
| | $ | 49,605 |
| | $ | 148,945 |
| | $ | 139,686 |
|
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 June 30, | | Nine Months Ended June 30, |
| 2015 | | 2014 | | 2015 | | 2014 |
Revenue | $ | 511,694 |
| | $ | 505,039 |
| | $ | 1,513,874 |
| | $ | 1,466,184 |
|
Cost of goods and services | 388,205 |
| | 386,732 |
| | 1,158,021 |
| | 1,132,387 |
|
Gross profit | 123,489 |
| | 118,307 |
| | 355,853 |
| | 333,797 |
|
| | | | | | | |
Selling, general and administrative expenses | 95,575 |
| | 96,135 |
| | 283,037 |
| | 273,437 |
|
Restructuring and other related charges | — |
| | 358 |
| | — |
| | 1,892 |
|
Total operating expenses | 95,575 |
| | 96,493 |
| | 283,037 |
| | 275,329 |
|
| | | | | | | |
Income from operations | 27,914 |
| | 21,814 |
| | 72,816 |
| | 58,468 |
|
| | | | | | | |
Other income (expense) | |
| | |
| | |
| | |
|
Interest expense | (12,169 | ) | | (11,661 | ) | | (35,935 | ) | | (37,184 | ) |
Interest income | 19 |
| | 120 |
| | 291 |
| | 181 |
|
Loss from debt extinguishment, net | — |
| | — |
| | — |
| | (38,890 | ) |
Other, net | 929 |
| | 2,621 |
| | (279 | ) | | 4,310 |
|
Total other expense, net | (11,221 | ) | | (8,920 | ) | | (35,923 | ) | | (71,583 | ) |
| | | | | | | |
Income (loss) before taxes | 16,693 |
| | 12,894 |
| | 36,893 |
| | (13,115 | ) |
Provision (benefit) for income taxes | 5,800 |
| | (1,570 | ) | | 13,407 |
| | (4,990 | ) |
Net income (loss) | $ | 10,893 |
| | $ | 14,464 |
| | $ | 23,486 |
| | $ | (8,125 | ) |
| | | | | | | |
Basic income (loss) per common share | $ | 0.25 |
| | $ | 0.30 |
| | $ | 0.52 |
| | $ | (0.16 | ) |
Weighted-average shares outstanding | 44,025 |
| | 48,370 |
| | 45,228 |
| | 50,038 |
|
| | | | | | | |
Diluted income (loss) per common share | $ | 0.23 |
| | $ | 0.29 |
| | $ | 0.50 |
| | $ | (0.16 | ) |
Weighted-average shares outstanding | 46,980 |
| | 49,836 |
| | 47,285 |
| | 50,038 |
|
| | | | | | | |
Net income (loss) | $ | 10,893 |
| | $ | 14,464 |
| | $ | 23,486 |
| | $ | (8,125 | ) |
Other comprehensive income (loss), net of taxes: | |
| | |
| | |
| | |
|
Foreign currency translation adjustments | 4,801 |
| | 2,809 |
| | (41,083 | ) | | 896 |
|
Pension and other post retirement plans | 353 |
| | 317 |
| | 1,059 |
| | 1,732 |
|
Gain on cash flow hedge | 209 |
| | — |
| | 55 |
| | — |
|
Change in available-for-sale securities | — |
| | — |
| | (870 | ) | | — |
|
Total other comprehensive income (loss), net of taxes | 5,363 |
| | 3,126 |
| | (40,839 | ) | | 2,628 |
|
Comprehensive income (loss), net | $ | 16,256 |
| | $ | 17,590 |
| | $ | (17,353 | ) | | $ | (5,497 | ) |
GRIFFON CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
|
| | | | | | | | |
| (Unaudited) At June 30, 2015 | | At September 30, 2014 | |
CURRENT ASSETS | | | | |
Cash and equivalents | $ | 45,955 |
| | $ | 92,405 |
| |
Accounts receivable, net of allowances of $6,411 and $7,336 | 240,189 |
| | 258,436 |
| |
Contract costs and recognized income not yet billed, net of progress payments of $16,834 and $16,985 | 104,011 |
| | 109,930 |
| |
Inventories, net | 318,193 |
| | 290,135 |
| |
Prepaid and other current assets | 46,747 |
| | 62,569 |
| |
Assets of discontinued operations | 1,625 |
| | 1,624 |
| |
Total Current Assets | 756,720 |
| | 815,099 |
| |
PROPERTY, PLANT AND EQUIPMENT, net | 366,364 |
| | 370,565 |
| |
GOODWILL | 362,745 |
| | 375,294 |
| |
INTANGIBLE ASSETS, net | 219,653 |
| | 233,623 |
| |
OTHER ASSETS | 14,139 |
| | 13,302 |
| |
ASSETS OF DISCONTINUED OPERATIONS | 2,131 |
| | 2,126 |
| |
Total Assets | $ | 1,721,752 |
| | $ | 1,810,009 |
| |
| | | | |
CURRENT LIABILITIES | |
| | |
| |
Notes payable and current portion of long-term debt | $ | 11,771 |
| | $ | 7,886 |
| |
Accounts payable | 175,569 |
| | 218,703 |
| |
Accrued liabilities | 99,029 |
| | 104,740 |
| |
Liabilities of discontinued operations | 2,392 |
| | 3,282 |
| |
Total Current Liabilities | 288,761 |
| | 334,611 |
| |
LONG-TERM DEBT, net | 828,699 |
| | 791,301 |
| |
OTHER LIABILITIES | 138,800 |
| | 148,240 |
| |
LIABILITIES OF DISCONTINUED OPERATIONS | 3,244 |
| | 3,830 |
| |
Total Liabilities | 1,259,504 |
| | 1,277,982 |
| |
COMMITMENTS AND CONTINGENCIES | | | | |
SHAREHOLDERS’ EQUITY | |
| | |
| |
Total Shareholders’ Equity | 462,248 |
| | 532,027 |
| |
Total Liabilities and Shareholders’ Equity | $ | 1,721,752 |
| | $ | 1,810,009 |
| |
| | | | |
GRIFFON CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
|
| | | | | | | | |
| Nine Months Ended June 30, | |
| 2015 | | 2014 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | |
| | |
| |
Net income (loss) | $ | 23,486 |
| | $ | (8,125 | ) | |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |
| | |
| |
Depreciation and amortization | 51,901 |
| | 50,027 |
| |
Stock-based compensation | 8,303 |
| | 8,133 |
| |
Asset impairment charges - restructuring | — |
| | 191 |
| |
Provision for losses on accounts receivable | 121 |
| | 420 |
| |
Amortization of debt discounts and issuance costs | 4,894 |
| | 4,789 |
| |
Loss from debt extinguishment, net | — |
| | 38,890 |
| |
Deferred income taxes | 1,111 |
| | (314 | ) | |
(Gain) loss on sale/disposal of assets and investments | (317 | ) | | 78 |
| |
Change in assets and liabilities, net of assets and liabilities acquired: | |
| | |
| |
Decrease in accounts receivable and contract costs and recognized income not yet billed | 14,977 |
| | 7,443 |
| |
Increase in inventories | (36,483 | ) | | (33,195 | ) | |
Increase in prepaid and other assets | (596 | ) | | (3,439 | ) | |
Decrease in accounts payable, accrued liabilities and income taxes payable | (39,864 | ) | | (15,754 | ) | |
Other changes, net | 2,053 |
| | 712 |
| |
Net cash provided by operating activities | 29,586 |
| | 49,856 |
| |
CASH FLOWS FROM INVESTING ACTIVITIES: | |
| | |
| |
Acquisition of property, plant and equipment | (55,365 | ) | | (54,859 | ) | |
Acquired businesses, net of cash acquired | (2,225 | ) | | (62,306 | ) | |
Proceeds from sale of assets | 275 |
| | 491 |
| |
Investment sales (purchases) | 8,891 |
| | (8,402 | ) | |
Net cash used in investing activities | (48,424 | ) | | (125,076 | ) | |
CASH FLOWS FROM FINANCING ACTIVITIES: | |
| | |
| |
Proceeds from issuance of common stock | 371 |
| | 584 |
| |
Dividends paid | (5,807 | ) | | (4,841 | ) | |
Purchase of shares for treasury | (58,218 | ) | | (72,518 | ) | |
Proceeds from long-term debt | 121,523 |
| | 682,913 |
| |
Payments of long-term debt | (80,495 | ) | | (602,134 | ) | |
Change in short-term borrowings | (81 | ) | | 3,138 |
| |
Financing costs | (592 | ) | | (10,928 | ) | |
Purchase of ESOP shares | — |
| | (10,000 | ) | |
Tax benefit from exercise/vesting of equity awards, net | 345 |
| | 273 |
| |
Other, net | 206 |
| | 194 |
| |
Net cash used in financing activities | (22,748 | ) | | (13,319 | ) | |
CASH FLOWS FROM DISCONTINUED OPERATIONS: | |
| | |
| |
Net cash used in operating activities | (830 | ) | | (1,018 | ) | |
Net cash used in discontinued operations | (830 | ) | | (1,018 | ) | |
Effect of exchange rate changes on cash and equivalents | (4,034 | ) | | (1,136 | ) | |
NET DECREASE IN CASH AND EQUIVALENTS | (46,450 | ) | | (90,693 | ) | |
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD | 92,405 |
| | 178,130 |
| |
CASH AND EQUIVALENTS AT END OF PERIOD | $ | 45,955 |
| | $ | 87,437 |
| |
| | | | |
Griffon evaluates performance based on Earnings per share and Net income excluding restructuring charges, acquisition-related expenses, gains (losses) from 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 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 June 30, | | For the Nine Months Ended June 30, |
| 2015 | | 2014 | | 2015 | | 2014 |
Net income (loss) | $ | 10,893 |
| | $ | 14,464 |
| | $ | 23,486 |
| | $ | (8,125 | ) |
| | | | | | | |
Adjusting items, net of tax: | |
| | |
| | |
| | |
|
Loss from debt extinguishment, net | — |
| | — |
| | — |
| | 24,964 |
|
Restructuring charges | — |
| | 222 |
| | — |
| | 1,173 |
|
Acquisition costs | — |
| | 992 |
| | — |
| | 1,487 |
|
Extinguishment impact on period tax rate (a) | — |
| | (4,357 | ) | | — |
| | 1,491 |
|
Discrete tax provisions (benefits) | (250 | ) | | (1,860 | ) | | 244 |
| | (1,540 | ) |
| | | | | | | |
Adjusted net income | $ | 10,643 |
| | $ | 9,461 |
| | $ | 23,730 |
| | $ | 19,450 |
|
| | | | | | | |
Diluted income (loss) per common share | $ | 0.23 |
| | $ | 0.29 |
| | 0.50 |
| | $ | (0.16 | ) |
| | | | | | | |
Adjusting items, net of tax: | |
| | |
| | |
| | |
|
Loss from debt extinguishment, net | — |
| | — |
| | — |
| | 0.50 |
|
Restructuring charges | — |
| | — |
| | — |
| | 0.02 |
|
Acquisition costs | — |
| | 0.02 |
| | — |
| | 0.03 |
|
Extinguishment impact on period tax rate (a) | — |
| | (0.09 | ) | | — |
| | 0.03 |
|
Discrete tax provisions (benefits) | (0.01 | ) | | (0.04 | ) | | 0.01 |
| | (0.03 | ) |
| | | | | | | |
Adjusted earnings per common share | $ | 0.23 |
| | $ | 0.19 |
| | 0.50 |
| | $ | 0.39 |
|
| | | | | | | |
Weighted-average shares outstanding (in thousands) | 46,980 |
| | 49,836 |
| | 47,285 |
| | 50,038 |
|
| | | | | | | |
a) In the prior year quarter ended June 30, 2014, the impact of debt extinguishment on the full year effective tax rate was estimated to be a benefit of $4,357 or $0.09 per share, and for the nine months ended June 30, 2014, a provision of $1,491 or $0.03 per share.
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.