- Segment adjusted EBITDA of $25.8 million - Continuing Operations
Diluted EPS of $0.12 JERICHO, N.Y., Aug. 6 /PRNewswire-FirstCall/
-- Griffon Corporation (NYSE: GFF) today reported operating results
for the third quarter ended June 30, 2009. Third Quarter of Fiscal
2009 Net sales from continuing operations for the third quarter of
fiscal 2009 were $287.4 million, compared to $322.3 million in the
third quarter of fiscal 2008. Income from continuing operations for
the third quarter was $6.9 million, or $0.12 per diluted share,
compared to $9.4 million, or $0.29 per diluted share, last year.
Income from discontinued operations for the third quarter was
essentially nil, compared to a loss of $19.2 million, or $0.59 per
diluted share, last year. Net income for the quarter was $6.9
million, or $0.12 per diluted share, compared to a loss of $9.8
million, or $0.30 per diluted share, last year. The Company's
segment adjusted EBITDA for the third quarter of 2009 was $25.8
million compared to $27.9 million in 2008. Segment adjusted EBITDA
is defined as operating income excluding corporate overhead,
interest, taxes, depreciation and amortization, restructuring
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
former 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 substantially concluded its disposal of the
Installation Services segment in the second quarter of fiscal 2009.
As announced in June 2009, the Company plans to consolidate
facilities in its Clopay Building Products segment, which is
scheduled to be completed in early 2011. The consolidation is
expected to produce annual cost savings of approximately $10
million. The Company estimates that it will incur pre-tax exit and
restructuring costs of approximately $12 million, substantially all
of which will be cash charges. In addition, the Company expects to
invest approximately $11 million in capital expenditures in order
to effectuate the restructuring plan. These charges and
expenditures will occur primarily in fiscal 2010 and 2011. In
addition to organic growth, part of the Company's overall growth
strategy calls for the Company to pursue acquisition and investment
opportunities, both within its existing segments and outside of
those segments. We regularly examine and explore such
opportunities. Telephonics For the quarter ended June 30, 2009,
Telephonics generated sales of $94.1 million, a 7% increase from
the third quarter of fiscal 2008. The sales increase was primarily
attributable to homeland defense and border patrol projects.
Segment operating profit increased $0.7 million, or 8%, compared to
last year due to a favorable product mix partially offset by
increased operating expenses related to research and development
and additional administrative expenses to support sales growth.
Clopay Building Products For the quarter ended June 30, 2009,
Clopay Building Products generated sales of $98.5 million, a 13%
decrease from the third quarter of fiscal 2008. Garage Door sales
continued to be impacted by weakness in the residential housing and
credit markets. The sales decline was principally due to reduced
unit volume, offset partially by product mix. Segment operating
profit decreased $1.6 million compared to last year, primarily as a
result of reduced sales volume and the associated plant absorption
loss, partially offset by ongoing cost reduction efforts. Clopay
Plastic Products For the quarter ended June 30, 2009, Clopay
Plastic Products generated sales of $94.8 million, a 22% decrease
from the third quarter of fiscal 2008. The lower sales were
principally due to lower volume in our European business, foreign
exchange translation and the pass through of lower resin costs.
Segment operating profit decreased $0.7 million, or 13%. The 50
basis point margin increase benefited from cost reduction efforts,
which were partially offset by the impact of lower volume. Balance
Sheet and Capital Expenditures Through a September 2008 common
stock rights offering and investment by GS Direct, L.L.C., an
affiliate of Goldman Sachs, the Company substantially strengthened
its balance sheet by raising an aggregate of $248.6 million in
gross proceeds. The Company intends to use the proceeds for general
corporate purposes and to fund acquisition and investment
opportunities. The Company's total cash and equivalents balance at
June 30, 2009 was $289.6 million. Total debt outstanding at June
30, 2009 was $179.8 million, including $79.4 million of convertible
notes. Capital expenditures for the third quarter were $8.5
million. In April 2009, the Company purchased $15.1 million face
value of the convertible notes from certain noteholders for $14.3
million. The Company recorded a third quarter pre-tax gain of
approximately $0.6 million from debt extinguishment, net of a
proportionate reduction in the related deferred financing costs.
Conference Call Information The Company will hold a conference call
to discuss its results today, August 6, 2009, at 4:30 PM ET. The
conference call can be accessed by dialing (800) 322-9079 (U.S.
participants) or (973) 582-2717 (International participants).
Callers should ask to be connected to Griffon Corporation's third
quarter fiscal 2009 teleconference and provide the conference ID
number 22569921. A replay of the call will be available from August
6, 2009 at 7:30 PM ET by dialing (800) 642-1687 (U.S.) or (706)
645-9291 (International). The replay access code is 22569921. The
replay will be available through August 20, 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:
Telephonics Corporation, Clopay Building Products Company and
Clopay Plastic Products Company. -- Telephonics' high-technology
engineering and manufacturing capabilities provide integrated
information, communication and sensor system solutions to military
and commercial markets worldwide. -- Clopay Building Products 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 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/. PRELIMINARY
GRIFFON CORPORATION AND SUBSIDIARIES OPERATING HIGHLIGHTS
(Unaudited) Three Months Ended Nine Months Ended (in thousands)
June 30, June 30, ---------------------------- ----------------
------------------- 2009 2008 2009 2008 ------- ------- -------
------- NET SALES --------- Telephonics $94,126 $88,251 $271,520
$262,508 Clopay Building Products 98,497 112,869 286,566 310,912
Clopay Plastic Products 94,762 121,147 307,720 342,220 -------
------- ------- ------- Total consolidated net sales $287,385
$322,267 $865,806 $915,640 ======= ======= ======= ======= INCOME
(LOSS) FROM CONTINUING OPERATIONS ------------------------------
Segment operating profit (loss): Telephonics $9,908 $9,173 $23,538
$21,795 Clopay Building Products 639 2,252 (15,595) (8,069) Clopay
Plastic Products 4,780 5,506 16,894 15,856 ------- ------- -------
------- Total segment operating profit 15,327 16,931 24,837 29,582
Unallocated amounts (6,281) (5,335) (15,489) (15,692) Gain from
debt extinguishment, net 646 - 7,360 - ------- ------- -------
------- Net interest expense (1,814) (2,312) (6,780) (7,466)
------- ------- ------- ------- Income from continuing operations
before provision for income taxes and discontinued operations
$7,878 $9,284 $9,928 $6,424 ======= ======= ======= =======
Unallocated amounts typically include general corporate expenses
not attributable to any reportable segment. PRELIMINARY GRIFFON
CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (in thousands, except per share data) (Unaudited) Three
Months Ended Nine Months Ended June 30, June 30, 2009 2008 2009
2008 ------- ------- ------- ------- Net sales $287,385 $322,267
$865,806 $915,640 Cost of sales 221,099 248,887 686,588 720,052
------- ------- ------- ------- Gross profit 66,286 73,380 179,218
195,588 Selling and administrative expenses 58,376 62,550 170,449
181,651 Restructuring and other related charges 38 180 38 2,572
------- ------- ------- ------- Total operating expenses 58,414
62,730 170,487 184,223 Income from operations 7,872 10,650 8,731
11,365 Other income (expense) Interest expense (2,157) (2,588)
(7,790) (9,222) Interest income 343 276 1,010 1,756 Gain from debt
extinguishment, net 646 - 7,360 - Other, net 1,174 946 617 2,525
------- ------- ------- ------- Total other income (expense) 6
(1,366) 1,197 (4,941) ------- ------- ------- ------- Income before
taxes and discontinued operations 7,878 9,284 9,928 6,424 Provision
(benefit) for income taxes 986 (72) 268 (325) ------- -------
------- ------- Income before discontinued operations 6,892 9,356
9,660 6,749 Discontinued operations: Income (loss) from operations
of the discontinued Installation Services business 4 (28,113) 1,055
(52,336) Provision (benefit) for income taxes (45) (8,957) 354
(13,063) ------- ------- ------- ------- Income (loss) from
discontinued operations 49 (19,156) 701 (39,273) ------- -------
------- ------- Net Income (loss) $6,941 $(9,800) $10,361 $(32,524)
======= ======= ======= ======= Basic earnings (loss) per common
share: Income from continuing operations $0.12 $0.29 $0.17 $0.21
Income (loss) from discontinued operations 0.00 (0.59) 0.01 (1.21)
Net income (loss) 0.12 (0.30) 0.18 (1.00) Weighted-average shares
outstanding 58,700 32,490 58,673 32,485 ======= ======= =======
======= Diluted earnings (loss) per common share: Income from
continuing operations $0.12 $0.29 $0.17 $0.21 Income (loss) from
discontinued operations 0.00 (0.59) 0.01 (1.21) Net income (loss)
0.12 (0.30) 0.18 (1.00) Weighted-average shares outstanding 59,097
32,689 58,862 32,657 ======= ======= ======= ======= PRELIMINARY
GRIFFON CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE
SHEETS (in thousands) (Unaudited) At June 30, 2009 At September 30,
2008 ---------------- ---------------- CURRENT ASSETS Cash and
equivalents $289,563 $311,921 Accounts receivable, net of
allowances of $5,012 and $5,609 153,799 163,586 Contract costs and
recognized income not yet billed 62,972 69,001 Inventories, net
150,333 167,158 Prepaid and other current assets 36,030 52,430
Assets of discontinued operations 4,384 9,495 ---------- ----------
Total Current Assets 697,081 773,591 ---------- ----------
PROPERTY, PLANT AND EQUIPMENT, net 230,867 239,003 GOODWILL 93,094
93,782 INTANGIBLE ASSETS, net 32,949 34,777 OTHER ASSETS 24,276
22,067 ASSETS OF DISCONTINUED OPERATIONS 9,011 8,346 ----------
---------- Total Assets $1,087,278 $1,171,566 ========== ==========
CURRENT LIABILITIES Notes payable and current portion of long-term
debt $2,084 $2,258 Accounts payable 99,515 129,823 Accrued
liabilities 63,167 64,450 Liabilities of discontinued operations
5,252 14,917 ---------- ---------- Total Current Liabilities
170,018 211,448 ---------- ---------- LONG-TERM DEBT 177,739
230,930 OTHER LIABILITIES 61,552 59,460 LIABILITIES OF DISCONTINUED
OPERATIONS 9,096 10,048 ---------- ---------- Total Liabilities
418,405 511,886 ---------- ---------- COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY Total Shareholders' Equity 668,873 659,680
---------- ---------- Total Liabilities and Shareholders' Equity
$1,087,278 $1,171,566 ========== ========== PRELIMINARY GRIFFON
CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS (in thousands) (Unaudited) Nine Months Ended June 30,
2009 2008 -------- -------- CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $10,361 $(32,524) Adjustments to reconcile net
income (loss) to net cash provided by operating activities: Loss
(income) from discontinued operations (701) 39,273 Depreciation and
amortization 31,404 31,602 Stock-based compensation 3,042 2,012
Provision for losses on account receivable 646 447
Amortization/write-off of deferred financing costs 1,426 1,118 Gain
from debt extinguishment, net (7,360) - Deferred income taxes (548)
874 Change in assets and liabilities: Decrease in accounts
receivable and contract costs and recognized income not yet billed
14,785 17,650 Decrease (increase) in inventories 16,412 (18,746)
Decrease (increase) in prepaid and other assets 14,647 (18,231)
Increase (decrease) in accounts payable, accrued liabilities and
income taxes payable (42,299) 29,327 Other changes, net 511 (3,260)
-------- -------- 31,965 82,066 -------- -------- Net cash provided
by operating activities 42,326 49,542 -------- -------- CASH FLOWS
FROM INVESTING ACTIVITIES: Acquisition of property, plant and
equipment (20,563) (49,101) Acquired businesses - (1,829) Proceeds
from sale of investment - 1,000 Decrease (increase) in equipment
lease deposits (330) 3,235 -------- -------- Net cash used in
investing activities (20,893) (46,695) -------- -------- CASH FLOWS
FROM FINANCING ACTIVITIES Proceeds from issuance of shares from
rights offering 7,257 - Purchase of shares for treasury - (579)
Proceeds from issuance of long-term debt 10,879 84,600 Payments of
long-term debt (56,191) (82,130) Decrease in short-term borrowings
(796) (896) Financing costs (559) (2,779) Purchase of ESOP shares
(4,370) - Tax benefit from vesting of restricted stock - 909 Other,
net 465 (879) -------- -------- Net cash used in financing
activities (43,315) (1,754) -------- -------- CASH FLOWS FROM
DISCONTINUED OPERATIONS: Net cash used in discontinued operations
(1,111) (3,842) Net cash provided by investing activities - 3,928
-------- -------- Net cash provided by (used in) discontinued
operations (1,111) 86 -------- -------- Effect of exchange rate
changes on cash and cash equivalents 635 1,113 -------- --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (22,358) 2,292
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 311,921 44,747
-------- -------- CASH AND CASH EQUIVALENTS AT END OF PERIOD
$289,563 $47,039 ======== ======== PRELIMINARY 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.
GRIFFON CORPORATION AND SUBSIDIARIES RECONCILIATION OF NON-GAAP
MEASURES SEGMENT ADJUSTED EBITDA - BY REPORTABLE SEGMENT
(Unaudited) Three Months Nine Months (in thousands) Ended June 30,
Ended June 30, --------------------------------- ---------------
--------------- 2009 2008 2009 2008 ------- ------- ------- -------
Telephonics Segment operating income $9,908 $9,173 $23,538 $21,795
Depreciation and amortization 1,620 1,712 4,650 4,630 -------
------- ------- ------- Segment adjusted EBITDA 11,528 10,885
28,188 26,425 Clopay Building Products Segment operating income
(loss) 639 2,252 (15,595) (8,069) Depreciation and amortization
3,546 3,331 10,032 9,811 Restructuring charges 38 180 38 2,572
------- ------- ------- ------- Segment adjusted EBITDA 4,223 5,763
(5,525) 4,314 Clopay Plastic Products Segment operating income
4,780 5,506 16,894 15,856 Depreciation and amortization 5,239 5,770
16,248 16,940 ------- ------- ------- ------- Segment adjusted
EBITDA 10,019 11,276 33,142 32,796 All segments: Income from
operations - as reported 7,872 10,650 8,731 11,365 Unallocated
amounts 6,281 5,335 15,489 15,692 Other, net 1,174 946 617 2,525
------- ------- ------- ------- Segment operating income 15,327
16,931 24,837 29,582 Depreciation and amortization 10,405 10,813
30,930 31,381 Restructuring charges 38 180 38 2,572 ------- -------
------- ------- Segment adjusted EBITDA $25,770 $27,924 $55,805
$63,535 ======= ======= ======= ======= Unallocated amounts
typically include general corporate expenses not attributable to
any reportable segment. Contact: Patrick L. Alesia Chief Financial
Officer (516) 938-5544 DATASOURCE: Griffon Corporation CONTACT:
Patrick L. Alesia, Chief Financial Officer, +1-516-938-5544 Web
Site: http://www.griffoncorp.com/
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