NEW YORK--(BUSINESS WIRE)-- Griffon Corporation (“Griffon” or the “Company”) (NYSE: GFF) today reported results for the second quarter of fiscal 2021 ended March 31, 2021.

Consolidated revenue for the second quarter totaled $634.8 million, a 12% increase compared to the prior year quarter revenue of $566.4 million.

Net income totaled $17.1 million, or $0.32 per share, compared to $0.9 million, or $0.02 per share, in the prior year quarter. Current year adjusted net income was $25.4 million, or $0.48 per share, compared to $10.1 million, or $0.23 per share, in the prior year quarter, a 109% increase (see reconciliation of Net income to Adjusted net income for details).

Adjusted EBITDA for the second quarter was $67.8 million, increasing 41% from the prior year quarter of $48.0 million. Unallocated amounts excluding depreciation (primarily corporate overhead) in each of the second quarter of 2021 and 2020 was $11.9 million. Adjusted EBITDA excluding unallocated amounts totaled $79.7 million in the second quarter of 2021, increasing 33% from the prior year of $59.9 million. Adjusted EBITDA is defined as net income excluding interest income and expense, income taxes, depreciation and amortization, restructuring charges, loss from debt extinguishment and acquisition related expenses, as well as other items that may affect comparability, as applicable (see reconciliation of Adjusted EBITDA to Income before taxes).

Ronald J. Kramer, Chairman and Chief Executive Officer, commented, “Our excellent performance in the fiscal second quarter is a result of our continued operating improvement and robust demand for our diverse portfolio of leading brands and essential products. Our team is poised to deliver further improvements in the years ahead as we optimize our businesses through strategic initiatives. Griffon is well-positioned to continue delivering long term shareholder value.”

Segment Operating Results

Consumer and Professional Products ("CPP")

CPP revenue in the current quarter totaling $331.9 million increased 21% compared to the prior year period, primarily due to increased volume of 17%, driven by continued consumer demand across all geographies, primarily for outdoor decor, landscaping and home organization products, and a favorable foreign currency impact of 4%.

CPP Adjusted EBITDA in the second quarter was $37.4 million, increasing 50% from the prior year quarter primarily from increased revenue noted above and a favorable foreign currency impact of 8%, partially offset by increased distribution and material costs, and COVID-19 related inefficiencies.

Strategic Initiative

In November 2019, Griffon announced the development of a next-generation business platform for CPP to enhance the growth, efficiency, and competitiveness of its U.S. operations, and on November 12, 2020, Griffon announced the broadening of this strategic initiative to include additional North American facilities, the AMES UK and Australia businesses, and a manufacturing facility in China.

The expanded focus of this initiative leverages the same three key development areas being executed within our U.S. operations. First, certain AMES global operations will be consolidated to optimize facilities footprint and talent. Second, strategic investments in automation and facilities expansion will be made to increase the efficiency of our manufacturing and fulfillment operations, and support e-commerce growth. Third, multiple independent information systems will be unified into a single data and analytics platform, which will serve the whole AMES global enterprise.

Expanding the roll-out of the new business platform from our AMES U.S. operations to include AMES’ global operations will extend the duration of the project by one year, with completion now expected by the end of calendar year 2023. When fully implemented, these actions will result in annual cash savings of $30 million to $35 million and a reduction in inventory of $30 million to $35 million, both based on fiscal 2020 operating levels.

The cost to implement this new business platform, over the duration of the project, will include one-time charges of approximately $65 million and capital investments of approximately $65 million. The one-time charges are comprised of $46 million of cash charges, which includes $26 million of personnel-related costs such as training, severance, and duplicate personnel costs as well as $20 million of facility and lease exit costs. The remaining $19 million of charges are non-cash and are primarily related to asset write-downs.

During the six months ended March 31, 2021 and 2020, CPP incurred pre-tax restructuring and related exit costs approximating $10.6 million and $9.5 million, respectively. During the six months ended March 31, 2021, cash charges totaled $7.9 million and non-cash, asset-related charges totaled $2.7 million; the cash charges included $1.1 million for one-time termination benefits and other personnel-related costs and $6.8 million for facility exit costs. During the six months ended March 31, 2020, cash charges totaled $4.8 million and non-cash, asset-related charges totaled $4.7 million; the cash charges included $3.8 million for one-time termination benefits and other personnel-related costs and $1.1 million for facility exit costs.

Home and Building Products ("HBP")

HBP revenue in the current quarter totaling $242.8 million increased 16% from the prior year quarter, driven by increased volume.

HBP Adjusted EBITDA in the current quarter was $40.1 million, increasing 31% compared to the prior year quarter. EBITDA benefited from increased revenue noted above and volume related benefits on absorption, partially offset by increased material costs and COVID-19 related inefficiencies.

Defense Electronics ("DE")

DE revenue in the current quarter totaled $60.2 million, decreasing 26% from the prior year quarter. The prior year results include revenue from the SEG business of $7.5 million. Excluding the divestiture of SEG from prior year results, revenue decreased $14.0 million, or 19%. The decrease was driven by reduced volume due to the timing of work performed and deliveries on Communication and Surveillance programs.

DE Adjusted EBITDA in the current quarter was $2.2 million, decreasing 48% from the prior year quarter, driven by the reduced revenue noted above and cost growth on Surveillance programs, partially offset by the reduced headcount related to the reduction in force that occurred in the first quarter.

Contract backlog was $353.9 million at March 31, 2021 compared to $320.2 million at March 31, 2020 (excludes $11.5 million of SEG related backlog) with 65% expected to be fulfilled in the next 12 months. Backlog was approximately $370.0 million at September 30, 2020 (excludes approximately $10.0 million of SEG related backlog). During the current quarter and year-to-date periods, DE was awarded several new contracts and received incremental funding on existing contracts approximating $25 million and $105 million (excludes $5.5 million of SEG awards from the first quarter), respectively; the trailing twelve month book-to-bill ratio was 1.1.

Taxes

The Company reported pretax income for the quarters ended March 31, 2021 and 2020, respectively, and recognized tax provisions of 38.6% and 69.4%, respectively. Excluding all items that affect comparability, the effective tax rates for the quarters ended March 31, 2021 and 2020 were 30.0% and 35.9%, respectively. The current year-to-date effective tax rate was 30.5% and the rate excluding all items that affect comparability was 31.1%.

Balance Sheet and Capital Expenditures

At March 31, 2021, the Company had cash and equivalents of $175.6 million and total debt outstanding of $1.06 billion, resulting in a net debt position of $0.9 billion. Borrowing availability under the revolving credit facility was $363.1 million subject to certain loan covenants. Capital expenditures were $12.1 million for the quarter ended March 31, 2021.

Share Repurchases

As of March 31, 2021, Griffon had $58 million remaining under its Board of Directors authorized repurchase program. There were no purchases under these authorizations during the quarter ended March 31, 2021.

Conference Call Information

The Company will hold a conference call today, April 29, 2021, at 4:30 PM ET.

The call can be accessed by dialing 1-877-407-0792 (U.S. participants) or 1-201-689-8263 (International participants). Callers should ask to be connected to the Griffon Corporation teleconference or provide conference ID number 13719101. Participants are encouraged to dial-in at least 10 minutes before the scheduled start time.

A replay of the call will be available starting on Thursday, April 29, 2021 at 7:30 PM ET by dialing 1-844-512-2921 (U.S.) or 1-412-317-6671 (International), and entering the conference ID number: 13719101. The replay will be available through Thursday, May 13, 2021 at 11:59 PM ET.

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; Griffon's ability to achieve expected savings from cost control, restructuring, 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 defense budget cuts or other government actions; the ability of the federal government to fund and conduct its operations; increases in the cost or lack of availability of raw materials such as resin, wood and steel, components or purchased finished goods, including the impact from tariffs; 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 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 impacts margins and operating efficiencies; short-term capacity constraints or prolonged excess capacity; unforeseen developments in contingencies, such as litigation, regulatory 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 of Griffon’s operating companies; and possible terrorist threats and actions and their impact on the global economy; the impact of COVID-19 on the U.S. and the global economy, including business disruptions, reductions in employment and an increase in business and operating facility failures, specifically among our customers; Griffon's ability to service and refinance its debt; and the impact of recent and future legislative and regulatory changes, including, without limitation, tax law changes 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 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:

• CPP conducts its operations through AMES. Founded in 1774, AMES is the leading North American manufacturer and a global provider of branded consumer and professional tools and products for home storage and organization, landscaping, and enhancing outdoor lifestyles. CPP sells products globally through a portfolio of leading brands including True Temper, AMES, and ClosetMaid.

• HBP conducts its operations through Clopay. Founded in 1964, Clopay is the largest manufacturer and marketer of garage doors and rolling steel doors in North America. Residential and commercial sectional garage doors are sold through professional dealers and leading home center retail chains throughout North America under the brands Clopay, Ideal, and Holmes. Rolling steel door and grille products designed for commercial, industrial, institutional, and retail use are sold under the CornellCookson brand.

• Defense Electronics conducts its operations through Telephonics Corporation, founded in 1933, a globally recognized leading provider of highly sophisticated intelligence, surveillance and communications solutions for defense, aerospace and commercial customers.

For more information on Griffon and its operating subsidiaries, please see the Company’s website at www.griffon.com.

Griffon evaluates performance and allocates resources based on operating results from continuing operations before interest income and expense, income taxes, depreciation and amortization, restructuring charges, loss from debt extinguishment and acquisition related expenses, as well as other items that may affect comparability, as applicable (“Adjusted EBITDA”, a non-GAAP measure). Griffon believes this information is useful to investors.

The following table provides operating highlights and a reconciliation of Adjusted EBITDA to Income before taxes:

Griffon believes Free Cash Flow ("FCF", a non-GAAP measure) is a useful measure for investors because it portrays the Company's ability to generate cash from operations for purposes such as repaying debt, funding acquisitions and paying dividends.

The following table provides a reconciliation of Net cash used in operating activities to FCF:

The following tables provide a reconciliation of Gross profit and Selling, general and administrative expenses for items that affect comparability for the three and six month periods ended March 31, 2021 and 2020:

Griffon evaluates performance based on Earnings per share and Net income excluding restructuring charges, loss from debt extinguishment, acquisition related expenses, discrete and certain other tax items, as well other items that may affect comparability, as applicable, a non-GAAP measure. Griffon believes this information is useful to investors. The following tables provides a reconciliation of Net income to Adjusted net income and Earnings per common share, a non-GAAP measure, to Adjusted earnings per common 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.

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Company Contact:

Brian G. Harris

SVP & Chief Financial Officer

Griffon Corporation

(212) 957-5000



Investor Relations Contact:

Michael Callahan

Managing Director

ICR Inc.

(203) 682-8311

Source: Griffon Corporation