GFF - Earnings call transcript Q4 2018

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Greetings, and welcome to the Griffon Corporation Fourth Quarter 2018 Earnings Conference Call. At this time, all participants are in listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I'd now like to turn the conference over to your host Brian Harris, Chief Financial Officer.

Brian Harris

Omer. you, Thank everyone. Good afternoon, on and the Kramer, me is call Executive Officer. Chairman Chief our With Ron

Our being our the details earlier call for of available is today. which recorded and are in press issued be release will playback,

cautionary Budgets products, weather Defense Such and also release in and operate. Home U.S. inherent statements the AMES, forward-looking can on guidance, In Please to views filings. Griffon's and providing company's Building various will statements the environments our impacts the subject in the the are our are about and Department risks and businesses fluctuations. on this the in and of of exchange past, today's as Exchange mindful based in health As risks Defense the comments of uncertainties Commission that changes. change include of on press of our foreign and Securities to the performance Electronics which the we they world statements see economy

of non-GAAP Finally, our affect These in explained today's items our release. items are reporting that for comparability press between those included periods. some in reconciliations will adjust remarks

over I'll Now call Ron. turn to the

Ron Kramer

and us afternoon, joining on today's Good for call. thanks

begin It's and two since of like strategically some of to to come reflecting profitability. our revenue results operations I'll up portfolio the increased we XXXX performance fiscal the in to adjusted from fiscal our focus segment as our Full EBITDA to reshape million. impact a we've share been increased cash XX% years operating $XXX providing with back taken continuing but acquisitions, was to key reflect Our of actions grow XX% strategic a the to take to nearly to moment, billion, flows goal year Griffon. began our our first $X improving and XXXX. our few we I'd takeaways minutes on

in bolt-on and with of February Plastics strategic acquisition of business XXXX, last actions structure sale October as planned. XXXX each is our into the a ClosetMaid's portfolio of highly AMES and stronger actions the over been The CornellCookson combined of created along ClosetMaid AMES. have leading and categories. XXXX. acquisitions ClosetMaid in one months progressing. cash confident integration was about the flow free and acquisition of of target this brands the in process their June part acquisition the with the year proceeding of the long-term respective first We're right made our These Our AMES on prospects AMES attractive, five under included performance leadership diversified operating XX team as an integration of is expectations. in ClosetMaid have with of

combined into significant performance CornellCookson these We the June. the future The integration CornellCookson, expected we that we're the Clopay. improvement expect with operating delivered delighted we've businesses. in seen its has acquisition since of performance in acquisition

with with fit familiarity CornellCookson acquisition transition. business prior the aligned and of personnel the businesses expediting the Our cultural and the this are highly strategic to along

residential garage the We also complement a North commercial manufacturer is doors it leading panel door Clopay Clopay fantastic to our continue serves business. as the in for CornellCookson doors. and America for see market

the leader steel With U.S. rolling products. we've the added commercial Clopay acquisition in CornellCookson to

ahead. We profitability to this the accelerate in expect combination years powerful

an spend our impact. important also bolt-on we the Although are acquisitions, making more time on ones larger

La Over in Hacienda the United we've past years, and the two Kingdom. acquired Kelkay

home established our U.K. the businesses, fourth market. as these we've now With

have time AMES and tremendous that we short team have a high period of in these made We progress come. strong businesses in a years for expectations management relatively the U.K., to at has

valuations markets acquire our market through Australia increasing product and in our been and operations. presence. at to them helping those are seamlessly the position strengthen Our integrate acquisitions able our We've attractive portfolio in identify other and smaller our United expanding into States to these and businesses

As & & sector. about improvement we our margins. increase recently expressed products' opportunities, margin the by expect we despite segment We and U.S. EBITDA revenue others to Building Home to product concerns steadily for integrate the continue Building Home outlook the these realize remain and acquisitions positive on housing

continue We acquisition X/XX our and profitability There's trends innovation through slowdown revenues grow no been to efficiency and expansion, subsequent initiatives improve to category product these and our fiscal integration. in yearend.

and shareholders. allocation both returning capital a take growth, organic goals our driving strategy, cash our the we of to deleveraging and with to multipronged inorganic approach Moving business

net significantly flow result of cash generation a we've reshaping, expenditure fiscal portfolio expect with exceed our and of flow to cash capital enhanced a reduced free As our we free income, XXX% in XXXX, profile.

on We net calculated from capital X.X reduce credit times, over our the few its are next as in defined current to our directing leverage, X.X to to years. debt our focused agreement, keenly EBITDA times

dividend of November per we payable a share an shareholders, As rate to cash quarterly part compound growth to we our throughout will of and year the prior with has our over XXth. increase will quarterly shareholders is as return dividend to This remaining disciplined via and hurdle this XX% increasing grown year continue dividend dividend Since authorized today on our returned dividend. valuation Further April at to inception, acquisitions, our in our while consecutive year, strategic per years, year December its our XXth per primarily of to record $X.XXXX program. X% we dividends. demonstrated program of strategy, cash we continue target bolt-on rates. special share shareholders of Earlier through the and annual additionally regular seventh on $X Board of

segments. brief a I'd our update on Next, provide like to

partially expected. by margins input driven acquisitions, costs, operating commodities by sales initially incorporation of the EBITDA So million the the and by and of in increase higher businesses tariffs growth. organic Full-year the from at in XX% X% revenue, the let's including offset both contributions driven existing and effect grew the Building Segment billion, our recent lower product. to start to XX% adjusted acquisitions $X.X $XXX Home as increased by with &

segment. we have for to significantly demand that and the strong evolution strategic a important businesses note products, across our repositioning steady see It lines of the to diversified products result our markets. and of as across product is our our continue We

a of the result, our driver is not market door business. construction new the residential As primary

and has and high-end of part desire our us doors sales been repair to remodeling premium and product tools in in homeowners better outdoor AMES, focus Clopay For portfolio consumer capacity of investments The and that growth than who lifestyle We activity continues our our production and & that products existing as businesses products. on residential less estimate design construction. product and new the serve Building Home professional to on focused vast majority margins their remodeling. enabled of combined XX% serve

Additionally, now CornellCookson, our commercial door includes recent solutions, our of with the acquisition diversifying doors further offering. portfolio increased

AMES construction to reach sales that our cycles. home, Lastly, business has the the increased in into economy, is principally driven rather addition of with health ClosetMaid the general than by of the

as Electronics from Telephonics, of million, US army Let's the Segment fiscal within to of through to in end are been capture relates about as particularly it full to go for I'll businesses. budget million, over appropriations. expected positive the the to our a backlog book-to-bill potential stabilizing. that decreased more approximately operations and the increased intelligence international continuing a $XXX Brian the and turn at spending surveillance $XX prior earnings showing was September Overall remain Overall, opportunities compared Defense year-over-year, sales increased our extremely is Defense of slightly to million $XXX down confident all which has year we turn million to Electronics segment under business, which adjusted revenues bookings pipeline sector, naval million. one-to-one as with detail. $XXX little and across readiness, outlook of the to from we the was it healthy declined EBITDA XXXX have we're untapped the of year our and to financials $XX

Brian Harris

that year in period was operation to a increased $X year the XX.X% to in $XXX or Thanks affect share our to with to compared with year expenses, increase recap acquisition. comparability, to XX% profit $XXX $X.XX continuing were Ron. $XXX prior sales selling, increase in or prior and with the prior sales, of Fourth items Fourth both performance of million quarter acquisitions. $X.XX Beginning increased of due fourth XX.X% primarily basis share. comparison million compared XX% per from administrative revenue SG&A, million the $XX the primarily margin of or XX the to prior general period of income per XX% excluding to the quarter, the points brief and due million increased quarter. quarter, quarter or Gross gross million to million, of consolidated XXXX GAAP $X.X compared

year prior $XX.X per affect that both period continuing $X.XX or from current million share per from $XX Excluding was to income comparability share. quarter compared the items adjusted million or of $X.XX operations periods,

to million XX% revenue affect the of of operations For of gross that was administrative Fiscal to to prior year XX% per items share. comparability from to were $XXX sales. $XXX expenses, and profit both to the increased the increased fiscal selling, comparisons due excluding prior with year, to XX.X% increase year. the margin primarily acquisitions. Gross year, year Full consistent general with and billion $X $X.XX prior per the million of XX.X% million year continuing compared income the $XX.X $XXX GAAP or period prior million XXXX XX.X% increased or sales period compared or share, $XX.X $X.XX or of million,

million current year $X.XX adjusted from $X.XX from comparability share. share or the operations year compared affect that $XX.X per per prior $XX items period periods, income Excluding to was both or million of continuing

items year and Our that affect current effective the for respectively. prior rate, XX.X% were and tax XX.X% excluding comparability

tax full the normalized XX%. For rate of expect approximate year we the to XXXX, fiscal

prior mix matters, rate. is guidance legislative including year the tax earnings spending was capital spending the to supporting the net Capital action, compared As normally million, capital included plastic million which reform new impact spending on $XX case, geographic any $XX business. may of and

$XX amortization $XX D&A amortization For XXXX expect and of to the and expect of year approximate approximately fiscal be depreciation $XX increasing acquisitions. is and XXXX million. fiscal capital XXXX, primarily approximately is for Depreciation amortization. which full The million million we to due we $XX million spending totaled to

total fiscal had and certain expense million in resulting XXXX and cash million. September XX, for in We interest $X.XX a $X.X of our $XXX we we approximately facility for As available expenses, and credit had billion. expect were debt borrowing excluding of of covenants XXXX, net to net loan million of under $XX billion, outstanding for debt Corporate subject revolving depreciation, position million fiscal XXXX. unallocated $XX $XX

and included For equity ESOP companywide $XX compensation million. totaling XXXX, expense this

line with We in XXXX be expect XXXX. to

to Finally expect to in we compared regarding XX% increase our XXXX. fiscal $X.X billion, billion $X guidance for to XXXX, total revenue

and is growth X% to segment electronics product Building X% with be approximately be growth CornellCookson full-year Our be acquisition is or is to expected segment organic is be CornellCookson is full-year adjusted to EBITDA EBITDA. XXXX. consistent contribution XXXX. be Home be expected contribution with is X% XX% and approximately is Fiscal approximately acquisition or expected to & growth X% expected expected The the increase growth defense of expected of the of to better and XXXX to regarding organic million segment The X%. to between and expected X% X% organic growth $XXX versus

assumes be costs, EBITDA CornellCookson to increased respectively. integration fiscal organic ClosetMaid and $XX acquisition related and realization EBITDA innovation XXXX EBITDA lag Electronics, and input offsetting a expect Our our of and we with $XXX levels. and the Consistent Defense revenue price XXXX million in EBITDA million with CornellCookson for consistent approximately acquisitions expectations, investments

expect in effective. the January XX% Section Our costs expected pass tariffs not these when to does through they and include guidance would become increase potential XXXX. additional We in if XXX

that, with call to back over I'll the Now Ron. turn

Ron Kramer

about and their dedication employees excited our plus perseverance. growth future X,XXX our I'm want to thank for and

hard actions strategic culmination work. of represent Our XX the years of

from Griffon strategic to decentralized evolved time, builder more of buyer a focused holding this and During businesses. has a and company

company. have the our both operating success key a and is We level, the corporate which to the team, talented at company of

shareholders. opportunities. Griffon our of We opportunity now manufacturing We're procurement, see strategic creation together better portfolio. we'll to improve Operator, these value never by committed distribution to questions. businesses margins a been and just the further has coupled position. in and within with for leveraging have revenue take benefits administrative functions, We're warehousing, the long-term enhancement our to starting

Operator

Securities. question-and-answer At this CJS your Please be Labick, question. Our time Instructions] from session. will with conducting proceed first [Operator question a comes Bob

Bob Labick

taking afternoon. for obviously transformational thanks and you. And It's Good for year questions. wonderful a been my

Ron Kramer

you. Thank

Bob Labick

growth. opportunity as start obviously to that, two and well, process synergy the seems in margin ClosetMaid you for still bolt-ons Cornell obviously talk opportunities the and It integrating timing like of wanted could then of just hand you acquisitions of for and some have lot about these? exciting in in you the the are a I but with

sense a focused? us of play give and out your where how long So are that to takes efforts

Ron Kramer

going them talk two and It's let's really about become are separately. four that companies

as you They take diversified able a AMES the ClosetMaid went the their uncorrelated which are of time combine to separate. doors you but detail business that leading door and into customer and AMES have ability for AMES of CornellCookson able in where the businesses very to it commercial and going be have base, levels commercial we're ClosetMaid U.S. are the journey. to be that in to the of garage leading with bought the nearly be how to the is types that residential of for of steel different not to people really it meant to and fully door was compliment. able business some of rolling into new that was to do for to is then Clopay demand that opportunities This how business, at home and business to. So home wanted which the that us going the able enhancement hopefully category a distribution to business margin stream we is we taking expect organizational provide growth similarity business The construction the service, able through that have and of longer-term multiyear improve We Clopay. of be be been levels broader part revenue the institutional really we $XXX a million improvement us margins that has and for was about we when and performing which is about centers at is the story separately business margin the think innovation revenue with ClosetMaid, those the revenue was expectations understand

to all expenses. we can wood purchasing, revenues on cycles So purchasing, and multiyear things like do reduce those terms we're like to things of diverse proven a come wire centers save a through both facilities steel manage plastics, taking thinking rationalization in about ability what improve distribution that businesses from purchasing, and and we've

just getting the margins that way bought get number would put EBITDA line I to that's we where we long-term we're our had is, grow tell of a the the to from at far from desire running we If think bought on what you, on a So were businesses. I than and those started that's capability the it, within want ability our better near-term XX% it's acquisitions long but we when them. to

within So how as hopefully that our gives you some flavor control. to much upside we see

Bob Labick

then fiscal it into obviously that's at appreciate consistent great, beyond about backlog And over outlook pipeline are what year to but the does Yeah, how to very this I part, the most looking take Telephonics, also given things turn the that. for talked helpful. 'XX you of there? pipeline, and jumping with

Ron Kramer

reconnaissance intelligence, turn a a radar has see as to We revenues and during in profitability. a products. at revenue was improvement contracted. for the budget is We future. a in surveillance at was the The see as desirable We impact believe saw making. a It on Sequestration a be in exercise we've and flow-through the see will We continue a XXXX. The with and cycle beyond to in business. a build been profitability higher we leader that. the and build and growth much It us Telephonics, investments really excited the the started revenues We business in the in see made and five-year that's December the decrease we reduction particularly products, cycle, to of XXXX reduction expect consistent gem been to it. XXXX. years is we're XXXX defense budget that's but of five-plus and in really and to accordingly of expect the downturn this maritime XXXX it programs that cycle beyond. back and fully in both bottom of level that defense from the the of bottom the of fabulous a about we're

Bob Labick

Super.

Okay. back jump in Thank you. Great. will queue. I

Ron Kramer

you. Thank

Operator

question. Our proceed Romero, Julio & next Sidoti your question comes with Please Company. from

Julio Romero

everyone. Hey. Good afternoon,

Ron Kramer

Hi.

Julio Romero

nice forward the volume Could to you growth of organic had would us and mix what price breakdown XXXX. So Clopay you maybe going a quick give in XX% quarter. expect

Brian Harris

Sure.

mix played a mix larger quarter. part playing and volume than the part price and So and volume in price a with all

similar business be would price is equal that say We at being continue the or would to X% balance more see we've see a across less that I Across pace and our with growing business, related that in businesses. the roughly we past. organic seen expect homebuilding growth, to products to volume to related half our X%

Julio Romero

had just that called you the year. ClosetMaid million saw then EBITDA a in contribution I have And out business the for you XXXX? Do it. contribution Got $XXX during

Brian Harris

put expectation. bought $XX business that first in we So we we a year of the roughly was business, ownership out EBITDA when the and million there it that met

Julio Romero

Got Okay. it.

So the maybe fair for EBITDA What your belt and after year of what's expectation there a learned you you have revenue for that business and that past under business year. having one have XXXX.

Brian Harris

with that business we EBITDA separating again, for future. in the So business combine out really and or revenue won't that AMES be

However, to opportunity. these I'd really that combining refer lot see back of We we're a businesses. comments Ron's

from We home ClosetMaid in after we're building improvement with this year have AMES start and be case showing the beyond. themselves that combined products 'XX going particularly in those opportunities to going in and efforts business, margin this the will benefits and

Ron Kramer

in just -- Home billion have be & our that business. AMES, ClosetMaid will add part when those every to part that, $X of And products to at XX% Building margins expectation that we it's AMES, of look just Julio, growing is to a Ron, and of business you to revenue blended plus

Julio Romero

called manufacturing flow leveraging multiple avenues procurement low for guys near-term growth the to that as step do what I Got opportunity we kind of just taking you the it. statement? your and G&A, financial know hanging a out through fruit And expect income the that this but hitting come first? targets, you here, some back view What's should would maybe

Brian Harris

the item we'll majority we've and through obviously items as after show of is so. continue chase to procurement the first I in some and of started So benefits we'll we process in there go our really doing already that is mentioned 'XX. But these 'XX have 'XX that associated and in cost will the efforts

Julio Romero

Helpful. I'll best in XXXX. hop back in and luck queue of

Ron Kramer

Thank you.

Operator

your and with Gabelli from Our Bergner, question. proceed Please next question comes Justin Company.

Justin Bergner

Good afternoon, Brian. Ron. Good afternoon,

Ron Kramer

Justin. Hi

Justin Bergner

you Hi, quarter organic growth the like help like I & first X% seems Home volume X% the next out maybe was stay in in it accelerated us products, 'XX comments growth to the fourth appears of of a seems of your it Can that question inferred same in was less component if slightly what you see year, up or that and why you stepping but to it the from volume 'XX? volume sort maybe be that closer the than bit X%. would the Building it understand should look that related,

Brian Harris

Sure.

So was by and in impacted volume the weather and AMES' timing in overall, basically. quarter XXXX

to we that So don't expect reoccur.

correct. business AMES that normalize. organic for we expect will in that the to year and going So We roughly X% that's as roughly X% had increase forward should

half versus We but building price of that. the business of volume growth. the was that type we of very the have roughly So is necessarily organic XX% and growth. really area And products don't that roughly continue and half strong to volume course impacted expect Clopay

Justin Bergner

Okay.

completed, volume to AMES about growth in the understand Clopay X% the make the year was fiscal growth volume X%. you're So was and sure just just of I about saying

Brian Harris

I that's actually what meant. not No,

by is input and CBP see etcetera volume was was will XX% saying increases cost, we price to the saying XX-XX weather. in X% organic was and X% forward, we along that by So going I volume simply growth AMES which status with for am about driven the commodity to Organic have. price growth related X% impacted growth mix

Justin Bergner

construction, referring Clopay? just Thanks of for to that & Okay. you Home a referring clarifying. to when to Building was your more XX% or were new Two whole you're questions, products as business exposed the

Brian Harris

As a whole.

Justin Bergner

Okay.

be for a XX%, Clopay, bit higher a than little AMES little So it bit might less. might be for it that

Brian Harris

Cornell new by AMES the construction teens Clopay actually should and plus is I construction. yes, itself itself, XX% for new minus products So, / Clopay excluding ClosetMaid business is building including, say high

Justin Bergner

then margins and the into lastly mentioned Got year looking Okay. fiscal And to certain between the headwinds you expenses input 'XX it. integration costs. out

those how it buckets? that to 'XX. So Is than the and an much run adjusted quantify expenses is of appropriate in each integration roughly will will be sort the inference two of through in possible those headwinds those numbers

Brian Harris

So the to go we chain productivity to the all guidance with control items automation price margin supply improvement. negotiating impact make go have of and included commodities, or increases the expense customers, freight, initiatives the our to our tariffs, investments after or or related in cost labor

in, we our bake we budget. So all these look into weight them, we things at risk them

going really pull a really specific first that absorb expect don't disclose exactly into question, is to to we're investing. your part our XXX. So out the want of yes, going what be we and to to number to adjusted appropriate we EBITDA number But not of

Ron Kramer

we've is when and places one the could thing that will credit economy, any say about investors, peak power bar political the of think businesses. only still downs the we and peak I'd always I risk out of near add for exceed try we've near to be we realistic affect that about the just we to period been given and the nowhere the see meet the in earnings year we're these our set at there, all guidance at consistently clouds and that our ups we uncertainty, and are able that given about over that's confident nowhere we business very to we're what the or earnings we business give it give And

Justin Bergner

queue. hop back in Okay. Thanks. I'll the

Operator

Nishu with Deutsche proceed Please Bank. Our your from question. comes next question Sood,

Nishu Sood

margins a look that in on I looked decline a and of XXX business like-for-like points of we it decline? basis dilution? Thank all Is kind for on acquisitions. did ex, acquisition or the that business, at would basis, at Thanks details that year-over-year built improve HBP that How part you. about margins breakdowns. believe, a If we legacy the of all of is if the

Brian Harris

increase ClosetMaid year Excluding sales really tariffs with the partially other in resulting basically commodity, line acquisitions, and remained margins input and in from CornellCookson the by the offset prior cost.

Nishu Sood

it. Got

a there believe price you and is us And -- the I next quarter like it's time then flow through a the impacts also to on tariffs bit year? through the this and just last little part takes acceleration input and flow headwinds heavier that than statement. mention little through kind it in was weighing margins of was Okay. the that cost you're it price walk in sounds think the quarter. just of been amount Was mentioning income that of of can what cost, the of hit cost some the terms have the for I inventory And

questions, a topics but generally that's please. apologize just around I So those few

Brian Harris

being mitigated good we So that million being increased increases. tariffs mitigated raw input through price so We've and took about through far. materials, looking cost as sales, as on estimate overall, aluminum, steel, cost that we increases mix before $XX passed to well related some

So we of continue price with working our our on customers increases. process

would and say half being us second of some end that So the has will continue our through completed, fiscal take March of quarter, is the been end process I'd of completed through of about that we XXXX. which

that tariffs raw be tariffs, specific, and tariffs, then other controls. mitigated and fourth not then the quarter material and expect work we'll I current to with would with continue in impact of increases. to that pricing little of be the supply chain certainly impact automation additional cost describing and negotiations also it QX we done course and QX So continue input And of to the am will to have hit a and by hit our on expense our and bit lag the potential us

So ends. both we're on it looking at

Ron Kramer

that add we'll every through. cost, And we've input to with dealt the to freight those costs when like just kick pass we've had along and cost, work additional cost, other in to and if tariffs labor

incremental So ability we any confident we're way this our to through our manage work quite of and tariffs. will

Nishu Sood

Got it.

sure. have half worked million need not $XX you through. that is through you'll to that what I so So it's or am work of

Brian Harris

all increase estimate impact No problem, XXXX is $XX commodity annualizing that roughly $XX meaning million and we XXXX the we is estimate in we what tariffs and had the million.

So that the through will course over flowing of the year. be

We our price as working our I customers complete on said, negotiating to with increases. are

Some of them are done.

of would they’ll conclusion now to fiscal in the be internally and and March. we'll And of that process as that continue our of the looking Some via ends come controls between second them well, automation that as end done quarter We we continue and expense and to those course in to are to which work again them vendors and chain. price and supply our increases chain to inwards supply look via have we're offset impact. well a

Ron Kramer

of And segment that's Building X% & approximately products our sales. Home

Brian Harris

That's correct.

leave a last year earnings will said. us at it. year I'm the this in expect quarter pressure and and to putting alleviated we looking similar we'll over the course the results If and So first be of second and bottom that I is best with way obviously the year, affect third versus of top to what type in the have of fourth quarter

Nishu Sood

it. Got

Thank Okay. you.

Brian Harris

You're welcome, Sure.

Operator

Please comes your with from proceed Our Casella, Bank. Deutsche Andrew question. next

Andrew Casella

Nishu's quick. guys. the real to I taking topics into wanted for question. Thanks dive Hey

that And So just is I you $XX that that is Brian, What to quoted, just overall? does be impact know then, that you the could that a $XX any clear, commodities? or million and be, tariff exactly in that XX%. as these January Do step kind tariffs on of book what far X, quantum you have way follow as be represent to would mentioned obviously, And on the headwind? million. the up a tariff plus to event then

Brian Harris

Sure.

tariffs saw. steel costs, is mainly and both is we million input and $XX so yeah, So, where aluminum

Ron Kramer

wood. And

Brian Harris

additional $XX and increases. potential It expected, the could million and that say Thank regarding does that be assume we that future. to anticipation that January of costs And plus what the is coming, The January. $XX that in be XX% you. roughly XX%, the input I'd increase, expected expect would in our sorry. wood, passing number the far those And are currently balance the with same cost of XXXX the related customers, happening mentioned. I tariff And now discussing tariffs – to increases on price not $XX it as would by means which mitigate input would not million as the is of them costs January we annualized be to is million

Andrew Casella

mindful -- I walk capital? Thank inflows cash kind follow-on know you're just leverage, other obviously them or that? these numbers levels, us we deploy million, then $XXX that I any we guidance any then kind wanted segment or kind income. know of when know I far then could to about XXXX, in Fair how I guidance cash the I forecast flow for in market, the think to to you've see million]. if million, producing we restructuring you of to thanks. on expected interest free of that was is a CapEx the open there but changed EBITDA you're you're million, overall we've And And And implies the or fiscal be of about so so to cash company of just as focused quickly, the seen treat of? $XX went XXX% going outflows your the net $XXX and charges know shares but your know through if about past when should of at is as guidance, were flow [later by is ($XX have cash $XX that you Okay. be, through unallocated expected I the EBITDA free pretty million) million, gone you. how would $XX exceed item after

Ron Kramer

solid have expectation the we going run that There execution we've that, no numbers our a plan are got Sure. other down. going is the charges, we been businesses, you And is to right.

increasing expect We to of cash. amounts generate

it build to and on we our to that sheet balance natural expect be up deleveraging. a We expect

Andrew Casella

Okay, can through great. react fiscal to those question, so as And to that? see 'XX, come those out put fiscal know about quickly other if pricing that you immediately with how mechanism we January of you kind a quickly X, but do just in how having just discussion customers, trying on could quarter place, then you're first have to pressures some the final you think tariffs the called XX%? in understand I I mitigate 'XX, quarter or you second

Ron Kramer

are more there be on and will offset the passing place lag price hard, and we that and taken our year we consideration costs along, negotiation what could be are in XXXX tariffs that We account going the being calendar on input are expecting in increases them by making ourselves with are our to able the be so a like. of efficient look working fully customers to we've in into

Brian Harris

would just I And to Yeah. add that.

our saying March, price were of we March, when quarter, second really ends by the complete expect that's in negotiations which the to the end so the So we lag. really

we'll So, the day X, increase from of call XX end to March. expected January which it the is days

Andrew Casella

so much great. Okay, get Thanks guys. queue. I'll in the back

Ron Kramer

you. Thank Okay.

Operator

Goldman question Please Doug comes question. Sachs. next your Clark, from proceed Our with

Doug Clark

fourth the X%. fourth Hey I negative look I guys. looks Thanks particular, quarter it about for growth, on taking organic the type growth organic in having component. you specifically first my to question. one X% the talked but My or is if know like AMES was the -- actually business, volume XXXX in yeah, X%

what you assuming know weather little to just timing, a as fourth into bit So kind that's of that and of you went year-on-year decline? negative kind extrapolate can mentioned what caused the that I quarter,

Brian Harris

Sure.

year. QX into to had then driven stock. QX So related fluctuate from which with US less they winter had because do And they restocking, by and stocking, business with the that also timing was of then its to can the year which mostly to weather, leads

we little in year for a like it's bleed our bit. will But into fluctuate last year timing quarter. more that winter normal it first of looks a this quarter, that the -- the So some to had fourth

Doug Clark

Okay. Thank you.

Brian Harris

on the number. correct organic Roughly

Doug Clark

earlier million And was the then better -- cadence the XXXX. because That the piece, tariffs inflation if on the I'm material commodities helpful. raw complex that, raw like guess looking and the Great. especially of $XX the bit of was in things just $XX kind aluminum a in actually growth understand acceleration aside, or those I wanted if at versus to wood, Okay. steel, million. underlying little I incremental

why curious that flow based something little on and the the of that just missing? I'm impact you in or price Is to perhaps increases is how guess you the kind lag I'm I XXXX. kind So disproportionate perhaps source it of

Brian Harris

which actually up touched generally other you’re a there time of between Well, upon. is our P&L, the goes it and questions price a the one time correct; lag the through goes

so in the So commodity start year yes, side. earlier we the did on

are is bleed economic a and in was to actually there factors P&Ls once So our later plus tariffs tariffs there came the year. that's whisper as the into natural year of up then and pushing commodities went the started on,

Doug Clark

a Thanks guys. lot Great. Okay.

Operator

Michael with question question. Please next Our proceed from [Operator Instructions] Rehaut, JPMorgan. your comes

Michael Rehaut

taking that, -- just Wanted to back you'd of XXXX afternoon. circle sense acquisition corporate talked question. the average for up year. Good of synergies more Hi. it transition acquisitions and better to my is still cadence the a Thanks seems but about, like a referred I to of getting and the believe, getting that you to

wanted Cornell to expecting AMES? the synergies that? sure you're ClosetMaid So make and of any particularly into AMES you Clopay from terms side, into what just I'm cost -- And I -- understood integrate sorry, any cost in into as

Ron Kramer

has time we changed and I'll as acquisitions that. gave nothing the that the from First, say we guidance the that of part made

been always margins multi-year acquisitions which improve being have would revenue opportunities and as looking period. cost for We a at reductions, enhancing over these

our and going to operating is the So, there that on in, year, that we surprise there's business a take longer since on has we've environment June the quite changed to same. this in us been particularly closed that's no is our outlook exactly CornellCookson is changed dramatically nothing than

Michael Rehaut

question more upcoming there this and those in I well, XXXX full-year but for on 'XX, the Understood. oriented price expect would just a the and I well end what guess, as and pricing are in of savings 'XX appreciate what the second fully XQ at of of perspective from overall hoping of raw as know year got question detail that but standpoint, And increases lag the will what realized guess material sense benefit you cadence that I I maybe past just terms was appreciate little 'XX? in achieved. more get granularity just a the those XXXX? and be in a you the benefit the to as the around mean from a impact tariff as year. No. was From more the the

Brian Harris

quite So is there. a there bit

chain along we In with guidance. of expense answers completely So baked improved described of which it. as we expect million mix the but sure combination we the and Once tariffs 'XX, we price our and expect during completed $XXX do price we 'XX, completed helping and to plus to we if effects our commodity in do other I mitigate controls, initiatives a the lag and our increases. have automation 'XX, increases costs and your cost we question, had supply said have the sales. in how the not that increases I'm effect input that's into

Michael Rehaut

Right. No.

last One I'm quick one, to. Okay. able If

just was anymore if surprise curious behind results tail the the below anything understanding it drop, Just was Electronics you Defense the on be looking business, described but is itself quarter long as to year-over-year helpful? and that would of spending, how terms there of revenue I the were if we what well was detail that quarter that cycles number pretty a fourth the around of in was you for. a given

Ron Kramer

happened in is in expect defense see that Timing but things the lag through have flows a quarter spending from is that you of the able quarter, EBITDA to Home outperformance to that fourth first businesses happen we slower guidance to it as to -- take $XXX meet and in the we million that orders, to continue should million. $XXX could our of standpoint be expected and away and we is Building exceeded of our be part what from the than Products budgetary it

our revenue through very So Building beyond and was budget what be was story, increases, Trump-related it to a performance thought regain the and it Home business term near period than be. and we that that's we for Products confident to over the being in less flowed of could than business thought the its base very, the are going time prospects was better able long-term about of XXXX Telephonics even the Telephonics we as things

Brian Harris

just add would to that. I

products on we Our the -- platforms. remain all

is the business everything lost this orders We and timing when have about really not platform, come through. in

pipeline. a strong So, very we have continue to

and improving roll 'XX into ultimately itself improved in and that will beyond. We expect revenue backlog into earnings and 'XX

Michael Rehaut

-- did sorry, number for number And I XQ, apologize a I'm give an it? backlog missed order you I if and growth

Brian Harris

end we book-to-bill Yes. $XXX Backlog of at had of a the roughly million and was one-to-one. quarter the

Michael Rehaut

Thank you.

Operator

Please & proceed Our Gabelli your next question comes from question. with Justin Company. Bergner,

Justin Bergner

chain, these tariff from you percentage from expect what to percent headwinds, curious bucket costs recover you you supply what Thanks recover for of sort taking percentage drivers? input price, was it other I and possible and my follow-up. deal is just with as to from what to recover you the to expect expect

Ron Kramer

costs, remember more lots thrown teams, this mitigate year, us. in can at Justin, labor I'd each freight to we spite take of management get in just talked properly. recovery outlook We expectations a is at we costs gets last about one increasing This navigating. of believe are front set go of challenges our time year, back, we us, -- our we going in on spend is if that bit this the of economy increasing this like tariffs increasing -- whatever what continue and -- try in us. and look the And commodity you cost, different we to

good to the got our June. that natural of the Near the to that for. businesses economy. the result way side, well the being delever. the higher the business think be result right. a each performance for was longer to run of of strategic combine are able continue The harder to the want of can higher We businesses the we businesses think see to of prove group the the Long better. going ability what what that free opportunity flow, shooting that businesses we’ve very getting a you leading acquisitions by expertise be improvement us We a much with in pressures you're of an that lot bigger We that cash have last on the and clearly And is, perform what to much we've put of able for who run we is success We've and what for be to uneven us XXXX is us us, able competitive. is meant be whether never for in our a defines have circumstances execute. things front operating a CornellCookson of may year dealt made the take economic be those of to be should over to across of the we the AMES term, the to our positioning term, goals is the expect we costs, increasingly with proven steady ourselves Higher is things labor we've is to those to inflation, of we we ability have higher else that businesses. is record. feel level This each anyone to to about years, business buckets us costs, that run all deal really a as costs and were have leading that XXXX business company offset a costs, Clopay just term on residential a with going going owned input whatever the us and very of since that the on significantly tariffs, manufacturer. those together. of to acquisition XX to of acquisition and and is freight is at our come ClosetMaid it corporate operating and combine we growth all based of and build side at level commercial of

Justin Bergner

Okay. I very return dividends? going lastly, you of at That's the the of then said capital just that helpful. be form did the forward primary the that would hear beginning And call

Brian Harris

that correct. is Yes,

Justin Bergner

to probably repurchases forward? going going share impactful are so less Okay, be

Ron Kramer

negative do with is stock. in it this that didn't quarter, clear a value stock has last intrinsic business. Look, sentiment we the prices that on nothing the because of Depends the buy to is there of our underlying

the we'll and watch markets. We will sit back

bought paid after at is million where we over businesses. buying period $XXX in good why $XXX have over really put or That's in back perspective, and our dividends. we two of leverage it's you stock plus a minus, multi-year out worth If million,

at this company, times the in Our deal irrational rationalizing is to our to with choice grow market. ability stock

see not to stock hear story in we We Building capacity can't don't the we buy about are to, not doesn't see value choose our have that not Products; because happened us. relative a to suggesting stock, that suggesting. market you but back hasn't simply happen, cloud there you’re we telling want clearly We're that Home people to negative we're to & our that it the

quarter, Our in trends remain performance businesses our this our strong.

Justin Bergner

Okay. luck. Thanks and good

Brian Harris

Thank you.

Operator

turn Ladies and the the session. remarks. closing question-and-answer call gentlemen, we to Kramer And I end the have to reached would like of back for Ron

Ron Kramer

Thank you, into It's position great you. to Griffon goodbye. been Thank more. a a and head XXXX. we forward as fiscal in year. is many strong We look

Operator

This concludes today's conference.

may time. You you Thank disconnect lines at your your this for participation.

Griffon (GFF) 14 Nov 182018 Q4 Earnings call transcript