GRIFFON CORPORATION ANNOUNCES OPERATING RESULTS
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FOR THE SECOND QUARTER OF FISCAL 2006
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Jericho, New York, May 3, 2006 - Griffon Corporation (NYSE:GFF) today
reported operating results for the second quarter of fiscal 2006. Net sales for
the quarter ended March 31, 2006 increased to $366,151,000 up from $322,473,000
for the second quarter of fiscal 2005. Income before income taxes was
$11,468,000 compared to $6,101,000 last year. Net income was $7,208,000 in the
current quarter compared to $4,144,000 last year. Diluted earnings per share for
the quarter was $.23 compared to $.13 in last year's second quarter.
The improved operating results for the specialty plastic films segment in
the second quarter of fiscal 2006 reflected lower resin costs and a return to
normalized sales volume from its largest customer. Improved operating results in
our garage doors segment reflected stabilized steel costs, sales volume
increases and a more favorable product mix. Higher sales in the installation
services segment reflected volume growth in the Phoenix and Las Vegas markets.
The electronic information and communication systems segment, Telephonics,
reflected higher sales and profits principally due to the previously announced
subcontract award from Syracuse Research Corporation. Telephonics has now
received subcontracts in excess of $175,000,000. Approximately 70% of these
awards are expected to be completed by September 30, 2006 and the fulfillment of
the total award will be complete by the second quarter of fiscal 2007.
Net sales for the six months ended March 31, 2006 were $724,675,000
compared to $662,647,000 for the first six months of fiscal 2005. Income before
income taxes for the six months was $22,261,000 compared to $23,656,000 last
year. Net income was $13,984,000 compared to $13,336,000 for the first half of
2005. Diluted earnings per share for the six months was $.45 compared to $.43
last year.
Cash flow from operations was $3,800,000 for the quarter, which together
with existing cash, funded capital expenditures of $8,800,000. Also, during the
quarter $5,300,000 was used to acquire approximately 225,000 shares of the
company's common stock under its buyback program. Additional purchases will be
made from time to time, depending on market conditions, at prices deemed
appropriate by management or under a Rule 10b5-1 trading plan.
Griffon Corporation -
o is a leading manufacturer and marketer of residential, commercial and
industrial garage doors sold to professional installing dealers and
major home center retail chains;
o installs and services specialty building products and systems,
primarily garage doors, openers, fireplaces and cabinets, for new
construction markets through a substantial network of operations
located throughout the country;
o is an international leader in the development and production of
embossed and laminated specialty plastic films used in the baby
diaper, feminine napkin, adult incontinent, surgical and patient care
markets; and
o develops and manufactures information and communication systems for
government and commercial markets worldwide.
"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 and economic conditions, results of integrating acquired
businesses into existing operations, competitive factors and pricing pressures
for resin and steel, 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. 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.
GRIFFON CORPORATION AND SUBSIDIARIES
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OPERATING HIGHLIGHTS
(Unaudited)
(IN THOUSANDS)
PRELIMINARY
For the Three Months Ended For the Six Months Ended
March 31, March 31,
-------------------------- ------------------------
2006 2005 2006 2005
--------- --------- --------- ---------
Net sales:
Garage Doors $ 121,587 $ 110,174 $ 264,414 $ 245,881
Installation Services 81,621 66,508 163,775 138,797
Specialty Plastic Films 95,869 94,533 182,042 185,865
Electronic Information and Communication Systems 71,617 56,353 124,298 102,755
Intersegment eliminations (4,543) (5,095) (9,854) (10,651)
--------- --------- --------- ---------
$ 366,151 $ 322,473 $ 724,675 $ 662,647
========= ========= ========= =========
Operating income:
Garage Doors $ 3,637 $ 749 $ 17,207 $ 11,398
Installation Services 1,204 1,287 4,014 2,576
Specialty Plastic Films 8,910 6,220 7,274 14,818
Electronic Information and Communication Systems 4,751 3,397 7,718 5,921
--------- --------- --------- ---------
Segment operating income 18,502 11,653 36,213 34,713
Unallocated amounts (4,887) (4,067) (9,717) (8,047)
Interest expense, net (2,147) (1,485) (4,235) (3,010)
--------- --------- --------- ---------
Income before income taxes 11,468 6,101 22,261 23,656
Provision for income taxes 4,260 832 8,277 7,327
--------- --------- --------- ---------
Income before minority interest 7,208 5,269 13,984 16,329
Minority interest - (1,125) - (2,993)
--------- --------- --------- ---------
Net income $ 7,208 $ 4,144 $ 13,984 $ 13,336
========= ========= ========= =========
GRIFFON CORPORATION AND SUBSIDIARIES
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CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS EXCEPT FOR PER SHARE AMOUNTS)
PRELIMINARY
FOR THE THREE MONTHS ENDED
MARCH 31,
--------------------------
2006 2005
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Net sales $ 366,151 $ 322,473
Cost of sales 275,898 245,153
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Gross profit 90,253 77,320
Selling, general and administrative expenses 78,710 69,717
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Income from operations 11,543 7,603
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Other income (expense):
Interest expense (2,565) (2,057)
Interest income 418 572
Other, net 2,072 (17)
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(75) (1,502)
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Income before income taxes 11,468 6,101
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Provision for income taxes
Federal 1,622 (1,071)
State and foreign 2,638 1,903
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4,260 832 (1)
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Income before minority interest 7,208 5,269
Minority interest - (1,125)
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Net income $ 7,208 $ 4,144
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Basic earnings per share of common stock $ .24 $ .14
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Diluted earnings per share of common stock $ .23 $ .13
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Weighted average number of shares outstanding:
Basic 29,874,000 29,387,000
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Diluted 31,103,000 31,179,000
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<FN>
(1) Includes a reduced provision as a result of a lower projected annual
effective rate and the resolution of other income tax matters.
</FN>
GRIFFON CORPORATION AND SUBSIDIARIES
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CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS EXCEPT FOR PER SHARE AMOUNTS)
PRELIMINARY
FOR THE SIX MONTHS ENDED
MARCH 31,
------------------------
2006 2005
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Net sales $ 724,675 $ 662,647
Cost of sales 545,253 497,035
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Gross profit 179,422 165,612
Selling, general and administrative expenses 153,934 140,175
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Income from operations 25,488 25,437
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Other income (expense):
Interest expense (5,143) (4,165)
Interest income 908 1,155
Other, net 1,008 1,229
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(3,227) (1,781)
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Income before income taxes 22,261 23,656
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Provision for income taxes
Federal 4,429 3,017
State and foreign 3,848 4,310
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8,277 7,327(1)
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Income before minority interest 13,984 16,329
Minority interest - (2,993)
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Net income $ 13,984 $ 13,336
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Basic earnings per share of common stock $ .47 $ .45
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Diluted earnings per share of common stock $ .45 $ .43
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Weighted average number of shares outstanding:
Basic 30,039,000 29,318,000
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Diluted 31,302,000 31,172,000
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<FN>
(1) Includes a reduced provision as a result of a lower projected annual
effective rate and the resolution of other income tax matters.
</FN>
GRIFFON CORPORATION AND SUBSIDIARIES
------------------------------------
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
PRELIMINARY
MARCH 31, SEPTEMBER 30,
2006 2005
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ASSETS
------
Current Assets:
Cash and cash equivalents $ 31,871 $ 60,663
Accounts receivable, net 176,347 189,904
Contract costs and recognized income
not yet billed 55,240 43,065
Inventories 156,605 148,350
Prepaid expenses and other current assets 44,478 41,227
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Total current assets 464,541 483,209
Property, plant and equipment, at cost less
depreciation and amortization 214,868 216,900
Goodwill 97,832 96,098
Intangible and other assets 56,625 55,220
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$ 833,866 $ 851,427
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LIABILITIES AND SHAREHOLDERS' EQUITY
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Current Liabilities:
Notes payable and current portion of long-term debt $ 8,456 $ 16,625
Accounts payable 95,450 91,970
Accrued liabilities 67,344 78,849
Income taxes 16,630 22,599
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Total current liabilities 187,880 210,043
Long-term debt:
Convertible subordinated notes 130,000 130,000
Other 70,573 66,540
Other liabilities and deferred credits 82,072 82,890
Shareholders' equity 363,341 361,954
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$ 833,866 $ 851,427
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GRIFFON CORPORATION AND SUBSIDIARIES
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CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
PRELIMINARY
For the Six Months Ended
March 31,
------------------------
2006 2005
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 13,984 $ 13,336
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Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 16,951 15,272
Minority interest - 2,993
Provision for losses on accounts receivable 816 867
Change in assets and liabilities:
Decrease in accounts receivable and contract
costs and recognized income not yet billed 812 18,537
(Increase) decrease in inventories (8,003) 4,467
Decrease in prepaid expenses and other assets 257 2,497
Decrease in accounts payable, accrued liabilities and
income taxes (17,121) (27,040)
Other changes, net 838 3,586
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Total adjustments (5,450) 21,179
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Net cash provided by operating activities 8,534 34,515
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CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property, plant and equipment (13,442) (22,533)
Acquisition of minority interest in subsidiary (1,304) (3,883)
Acquired businesses - (9,235)
(Increase) decrease in equipment lease deposits (4,463) 3,314
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Net cash used in investing activities (19,209) (32,337)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Purchase of shares for treasury (15,573) (7,946)
Proceeds from borrowings under long-term debt arrangements 60,000 7,778
Payments of long-term debt (62,982) (9,040)
Payment of debt issuance costs (607) -
Decrease in short-term borrowings (1,181) (44)
Distributions to minority interests (354) (988)
Exercise of stock options 649 4,137
Tax benefit from exercise of stock options 1,863 -
---------- --------
Net cash used in financing activities (18,185) (6,103)
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Effect of exchange rate changes on cash and cash equivalents 68 533
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NET DECREASE IN CASH AND CASH EQUIVALENTS (28,792) (3,392)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 60,663 88,047
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CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 31,871 $ 84,655
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