- Diluted EPS of $.07 in 1Q 2009 versus $.04 loss in 1Q 2008
JERICHO, N.Y., Feb. 4 /PRNewswire-FirstCall/ -- Griffon Corporation
(NYSE: GFF) today reported operating results for the first quarter
ended December 31, 2008. First Quarter of Fiscal 2009 Net sales
from continuing operations for the first quarter of fiscal 2009
were $302.3 million, compared to $294.8 million in the first
quarter of fiscal 2008. Income from continuing operations for the
first quarter was $4.3 million, or $.07 per diluted share, compared
to $1.5 million, or $.05 per diluted share, last year. Results from
discontinued operations for the first quarter were break-even, or
nil per diluted share, compared to a loss of $2.9 million, or $.09
per diluted share, last year. Net income for the quarter was $4.3
million, or $.07 per diluted share, compared to a net loss of $1.4
million, or $.04 per diluted share, last year. In the first quarter
of fiscal 2009, the Company recorded a non-cash, pre-tax gain from
debt extinguishment of $6.7 million, net of a proportionate
write-off of deferred financing costs, associated with the October
2008 purchase of $35.5 million face value of its outstanding 4%
convertible notes from certain note holders for $28.4 million. The
Company's segment adjusted EBITDA for the first quarter of 2009 was
$17.0 million compared to $21.8 million in 2008. Segment adjusted
EBITDA is defined as operating income excluding allocations of
corporate overhead, interest, taxes, depreciation and amortization,
restructuring charges, goodwill charges and the impact of debt
extinguishment. As a result of the downturn in the residential
housing market, in fiscal 2008, the Company exited substantially
all of the operating activities of its Installation Services
segment. Operating results of substantially all of the Installation
Services segment have been reported as discontinued operations in
the condensed consolidated financial statements for all periods
presented herein, and the Installation Services segment is excluded
from segment reporting. The Company is winding down remaining
disposal activities in the first half of fiscal 2009 and does not
expect to incur significant expenses in the future. Telephonics
Results For the quarter ended December 31, 2008, Telephonics
generated sales of $80.8 million, a 6.5% increase from the first
quarter of fiscal 2008. The sales increase was primarily
attributable to growth in the Radar Systems Division driven by
increases in the Lamps MMR and ARPDD programs. Last year's first
quarter sales were favorably impacted by contracts with the
Syracuse Research Corporation (SRC) that were winding down in the
latter part of fiscal 2007. Excluding the prior-period sales
related to the SRC contracts, core business sales grew by
approximately $9.4 million, or 13%. However, operating income
decreased $.1 million as a result of decreased gross margin
performance attributable to program mix. Clopay Garage Doors
Results For the quarter ended December 31, 2008, the Company's
Garage Doors segment generated sales of $108.8 million, a 3.3%
decrease from the first quarter of fiscal 2008. Garage Doors' sales
continued to be impacted by weakness in the residential housing and
credit markets. The Garage Doors sales decline was principally due
to reduced unit volume, offset partially by higher selling prices
to pass through increased material costs and product mix. Operating
loss of the Garage Doors segment increased by approximately $3.0
million compared to last year, primarily as a result of reduced
sales volume and associated plant absorption loss, as well as an
increased mix of certain higher-priced, but lower-margin,
commercial products. The prior-year period was affected by
restructuring charges of approximately $1.7 million. Clopay
Specialty Plastic Films Results For the quarter ended December 31,
2008, the Company's Specialty Plastic Films segment generated sales
of $112.7 million, a 5.9% increase from the first quarter of fiscal
2008. Specialty Plastic Films achieved higher sales principally due
to a favorable product mix in North America and the impact of
increased selling prices to pass through increased resin costs,
partially offset by the unfavorable impact of exchange rates on
translated foreign sales. Operating income decreased by $.5 million
as the favorable contribution to gross margin from the pass through
of resin costs was more than offset by an unfavorable product mix
and foreign exchange translation. Balance Sheet and Capital
Expenditures In September 2008, the Company substantially
strengthened its balance sheet by raising $241.3 million in gross
proceeds from the sale of its common stock. The transaction was
effected through a common stock rights offering, along with an
investment by GS Direct, L.L.C., an affiliate of Goldman Sachs. An
additional $5.3 million of rights offering proceeds were received
in October 2008. The Company intends to use the proceeds for
general corporate purposes and to fund its growth. The Company's
total cash and cash equivalents balance at December 31, 2008 was
$276.0 million. Total debt outstanding at December 31, 2008 was
$199.5 million, including $94.5 million of convertible notes.
Capital expenditures were $4.8 million during the first quarter of
fiscal 2009. Conference Call Information The Company will hold a
conference call to discuss its results today, February 4, 2009, at
4:15 PM EST. The conference call can be accessed by dialing
1-800-322-9079 (U.S. participants) or 1-973-582-2717 (International
participants). Callers should ask to be connected to Griffon
Corporation's first quarter fiscal 2009 teleconference and provide
the conference ID number 83067804. A replay of the call will be
available from February 4, 2009 at 7:30 PM EST by dialing
1-800-642-1687 (U.S.) or 1-706-645-9291 (International). The replay
access code is 83067804. The replay will be available through
February 18, 2009. Forward-looking Statements "Safe Harbor"
Statement under the Private Securities Litigation Reform Act of
1995: All statements other than statements of historical fact
included in this release, including without limitation statements
regarding the Company's financial position, business strategy and
the plans and objectives of the Company's management for future
operations, are forward-looking statements. When used in this
release, words such as "anticipate," "believe," "estimate,"
"expect," "intend," and similar expressions, as they relate to the
Company or its management, identify forward-looking statements.
Such forward-looking statements are based on the beliefs of the
Company's management, as well as assumptions made by and
information currently available to the Company's management. Actual
results could differ materially from those contemplated by the
forward-looking statements as a result of certain factors,
including but not limited to, business, financial market and
economic conditions, including, but not limited to, the credit
market, the housing market, results of integrating acquired
businesses into existing operations, the results of the Company's
restructuring and disposal efforts, competitive factors and pricing
pressures for resin and steel, and capacity and supply constraints.
Such statements reflect the views of the Company with respect to
future events and are subject to these and other risks,
uncertainties and assumptions relating to the operations, results
of operations, growth strategy and liquidity of the Company as
previously disclosed in the Company's SEC filings. Readers are
cautioned not to place undue reliance on these forward-looking
statements. The Company does not undertake to release publicly any
revisions to these forward-looking statements to reflect future
events or circumstances or to reflect the occurrence of
unanticipated events. About Griffon Corporation Griffon
Corporation, headquartered in Jericho, New York, is a diversified
holding Company consisting of three distinct business segments:
Electronic Information and Communication Systems, through
Telephonics Corporation; Garage Doors, through Clopay Building
Products Company; and Specialty Plastic Films, through Clopay
Plastic Products Company. -- Telephonics Corporation's
high-technology engineering and manufacturing capabilities provide
integrated information, communication and sensor system solutions
to military and commercial markets worldwide. -- Clopay Building
Products Company is a leading manufacturer and marketer of
residential, commercial and industrial garage doors to professional
installing dealers and major home center retail chains. -- Clopay
Plastic Products Company 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 markets. For more information on the Company and its
operating subsidiaries, please see the Company's website at
http://www.griffoncorp.com/. Contact: Patrick L. Alesia Chief
Financial Officer (516) 938-5544 GRIFFON CORPORATION AND
SUBSIDIARIES OPERATING HIGHLIGHTS (Unaudited) For the Three Months
Ended December 31, PRELIMINARY (in thousands) 2008 2007 Net Sales:
Electronic Information and Communication Systems $80,827 $75,860
Garage Doors 108,818 112,544 Specialty Plastic Films 112,689
106,398 $302,334 $294,802 Operating Income (Loss): Electronic
Information and Communication Systems $5,378 $5,483 Garage Doors
(4,393) (1,375) Specialty Plastic Films 5,536 5,998 Segment
operating income 6,521 10,106 Unallocated amounts (4,449) (5,229)
Gain from debt extinguishment, net 6,714 - Interest, net (2,278)
(2,255) Income from continuing operations before income taxes
$6,508 $2,622 GRIFFON CORPORATION AND SUBSIDIARIES CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three Months
Ended December 31, PRELIMINARY (in thousands, except per share
data) 2008 2007 Net sales $302,334 $294,802 Cost of sales 243,377
230,044 Gross profit 58,957 64,758 Selling, general and
administrative expenses 56,528 58,987 Restructuring and other
related charges - 1,691 Total operating expenses 56,528 60,678
Income from operations 2,429 4,080 Other income (expense): Interest
expense (2,796) (3,136) Interest income 518 881 Gain from early
extinguishment of debt 6,714 - Other, net (357) 797 4,079 (1,458)
Income from continuing operations before income taxes 6,508 2,622
Provision for income taxes 2,237 1,083 Income from continuing
operations before discontinued operations 4,271 1,539 Discontinued
operations: Income (loss) from operations of the discontinued
Installation Services business 5 (5,015) Provision (benefit) for
income taxes 2 (2,121) Income (loss) from discontinued operations 3
(2,894) Net income (loss) $4,274 $(1,355) Basic earnings (loss) per
share: Continuing operations $.07 $.05 Discontinued operations -
(.09) $.07 $(.04) Diluted earnings (loss) per share: Continuing
operations $.07 $.05 Discontinued operations - (.09) $.07 $(.04)
Weighted-average shares outstanding - basic 58,853 32,478
Weighted-average shares outstanding - diluted 58,918 32,741 GRIFFON
CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited) PRELIMINARY (in thousands) December 31, September 30,
2008 2008 ASSETS Current Assets: Cash and cash equivalents $276,024
$311,921 Accounts receivable, net 146,595 163,586 Contract costs
and recognized income not yet billed 64,194 69,001 Inventories
169,379 167,158 Prepaid expenses and other current assets 54,943
52,430 Assets of discontinued operations 4,793 9,495 Total current
assets 715,928 773,591 Property, plant and equipment, at cost, net
of depreciation and amortization 228,400 239,003 Costs in excess of
fair value of net assets of businesses acquired 88,300 93,782
Intangible assets, net 33,484 34,777 Other assets 23,007 22,067
Assets of discontinued operations 8,816 8,346 $1,097,935 $1,171,566
LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Notes
payable and current portion of long-term debt $4,594 $2,258
Accounts payable 107,088 129,823 Accrued liabilities 59,816 64,450
Liabilities of discontinued operations 11,849 14,917 Total current
liabilities 183,347 211,448 Long-term debt 194,902 230,930 Other
liabilities 61,960 59,460 Liabilities of discontinued operations
9,689 10,048 Shareholders' equity 648,037 659,680 $1,097,935
$1,171,566 GRIFFON CORPORATION AND SUBSIDIARIES CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Three Months
Ended December 31, PRELIMINARY (in thousands) 2008 2007 CASH FLOWS
FROM OPERATING ACTIVITIES - CONTINUING OPERATIONS: Net income
(loss) $4,274 $(1,355) Loss (income) from discontinued operations
(3) 2,894 Adjustments to reconcile net income (loss) to net cash
(used in) provided by operating activities of continuing
operations: Depreciation and amortization 10,553 10,370 Stock-based
compensation 814 624 Recovery of losses on accounts receivable
(346) (17) Amortization of deferred financing costs 726 222 Gain
from debt extinguishment, net (6,714) - Deferred income taxes (376)
412 Change in assets and liabilities: Decrease in accounts
receivable and contract costs and recognized income not yet billed
20,190 36,799 Increase in inventories (2,934) (4,208) Increase in
prepaid expenses and other assets (1,341) (5,047) Increase
(decrease) in accounts payable, accrued liabilities and income
taxes payable (27,402) 1,492 Other changes, net (2,267) (1,211)
(9,100) 42,330 Net cash (used in) provided by operating activities
- continuing operations (4,826) 40,975 CASH FLOWS FROM INVESTING
ACTIVITIES - CONTINUING OPERATIONS: Acquisition of property, plant
and equipment (4,831) (6,445) Acquired businesses - (1,750)
Proceeds from sale of investment - 1,000 Decrease (increase) in
equipment lease deposits (231) 4,332 Net cash used in investing
activities - continuing operations (5,062) (2,863) CASH FLOWS FROM
FINANCING ACTIVITIES - CONTINUING OPERATIONS: Proceeds from
issuance of shares from rights offering 5,274 - Purchase of shares
for treasury - (579) Proceeds from issuance of long-term debt 4,908
- Payments of long-term debt (33,761) (13,818) Increase in
short-term borrowings 2,021 787 Financing costs (93) - Purchase of
ESOP shares (4,370) - Other, net 419 177 Net cash used in financing
activities - continuing operations (25,602) (13,433) CASH FLOWS
FROM DISCONTINUED OPERATIONS: Net cash provided by (used in)
operating activities (323) 181 Net cash used in investing
activities - (95) Net cash provided by (used in) discontinued
operations (323) 86 Effect of exchange rate changes on cash and
cash equivalents (84) 240 NET (DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS (35,897) 25,005 CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 311,921 44,747 CASH AND CASH EQUIVALENTS AT END OF PERIOD
$276,024 $69,752 GRIFFON CORPORATION AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES SEGMENT OPERATING INCOME AND
SEGMENT ADJUSTED EBITDA (Unaudited) The following is a
reconciliation of operating income, which is a GAAP measure of our
operating results, to segment operating income and segment adjusted
EBITDA. Management believes that the presentation of segment
operating income and segment adjusted EBITDA is appropriate to
provide additional information about the Company's reportable
segments. Segment operating income and segment adjusted EBITDA are
not presentations made in accordance with GAAP, are not measures of
financial performance or condition, liquidity or profitability of
the Company, and should not be considered as an alternative to (1)
net income, operating income or any other performance measures
determined in accordance with GAAP or (2) operating cash flows
determined in accordance with GAAP. Additionally, segment operating
income and segment adjusted EBITDA are not intended to be measures
of free cash flow for management's discretionary use, as they do
not consider certain cash requirements such as interest payments,
tax payments, capital expenditures and debt service requirements.
For the Three Months Ended December 31, PRELIMINARY (in thousands)
2008 2007 Operating income - as reported $2,429 $4,080 Corporate
and related charges 4,449 5,229 Other income (expense) (357) 797
Segment operating income 6,521 10,106 Depreciation and amortization
10,482 10,296 Restructuring charges - 1,691 Segment adjusted EBITDA
$17,003 $22,093 GRIFFON CORPORATION AND SUBSIDIARIES RECONCILIATION
OF NON-GAAP MEASURES SEGMENT ADJUSTED EBITDA - BY REPORTABLE
SEGMENT (Unaudited) For the Three Months Ended December 31,
PRELIMINARY (in thousands) 2008 2007 Electronic Information and
Communication Systems: Segment operating income $5,378 $5,483
Depreciation and amortization 1,487 1,453 Segment adjusted EBITDA
$6,865 $6,936 Garage Doors: Segment operating income $(4,393)
$(1,375) Depreciation and amortization 3,232 3,259 Restructuring
charges - 1,691 Segment adjusted EBITDA $(1,161) $3,575 Specialty
Plastic Films: Segment operating income $5,536 $5,998 Depreciation
and amortization 5,763 5,584 Segment adjusted EBITDA $11,299
$11,582 All segments: Segment operating income $6,521 $10,106
Depreciation and amortization 10,482 10,296 Restructuring charges -
1,691 Segment adjusted EBITDA $17,003 $22,093 DATASOURCE: Griffon
Corporation CONTACT: Patrick L. Alesia, Chief Financial Officer,
+1-516-938-5544 Web Site: http://www.griffoncorp.com/
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