GFF - Earnings call transcript Q2 2019

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Operator

Greetings, and welcome to the Griffon Corporation's Second Quarter 2019 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Brian Harris. Please go ahead.

Brian Harris

Thank you. everyone. afternoon, Good the Chief on Rom Griffon's Kramer, With Officer. call and Executive Chairman me is The recorded our is details earlier call being of playback, available today. which the for are in press issued and release will be

world risks in change operate. statements the Please forward-looking today's subject Such changes. views Griffon's statements company's will environments as the inherent our about businesses on are and the and in cautionary past, and based Exchange in the As can statements comments release of filings. press include the our uncertainties our that performance Securities which various see to Commission they in and

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

over I'll Ron. the Now call to turn

Ron Kramer

reshaping a the Thanks. fiscal of continue as first everyone. off Welcome, of We're benefits start our efficiency to in the quarter half great portfolio our and results reflect initiatives. second XXXX to strategic

Our by a and for Home execution offerings demand performance was product across & Products, solid team's our driven businesses. our in Building diversified our robust

Across cross-sell ClosetMaid, X% CornellCookson revenue, was excellent our the efforts. effects executing balance to as strategy increased organic integration and the and improvements Second market to XX% identify benefits resources optimize period, also acquisition our the which Home the to and prior new $XX productivity CornellCookson and nature increased EBITDA that and in quarter of invest product EBITDA segment-adjusted a acquisition. X is segment, its earlier, $XXX revenue its in capture increased XX% are & productivity were EBITDA we opportunities Segment-adjusted efficiency as of revenue have businesses driven to the continue beginning of Both chain, Products XXXX compared increase by by year To had to resources making see reflects Building ample gain leveraging through our as Clopay our million. to in innovation. supply segment increased the quarter improving of million XX% our in improve scale well mentioned with the which June our organization, XXXX the opportunities. to to to our to I from these share complementary AMES seeing sales the businesses while the from initiative businesses. across continuing we investments end, results. At combining leveraging we and the opportunities AMES, of finding our and in products the

bring facility the expansion Pennsylvania of in of Mountain our volume speaks operational our look and space, and on into years. remains an new Our improve CornellCookson on products to track pipeline the of commitment facility project to deliver as previously that. will to growth, invest additional square we feet manufacturing support us the Top, which realize announced XX,XXX our business over efficiencies This opportunity X to ahead next

allocation. capital to on Moving

years. long-term Our efficiency which contribute generation, integration few the business our free will deleveraging enhanced cash over plans to initiatives and will drive next efforts flow

evaluate acquisitions long-term drive to bolt-on strategic continue We to growth.

focused accretive. immediately approach businesses existing However, remain within aligned on and disciplined in highly any our are our be will and that we acquisition ensuring

remaining $XX payable consecutive at grown XX, XXXX. on announced quarterly May marks share we our and still million a has earlier it on an to record XXth rate compound XX% our annualized since shareholders per authorized shareholders XXXX. to have today, dividend buyback As authorizations. $X.XXXX XX, paid board dividend under Board-approved of existing We June This of XXXX, the

our laser will the X.Xx years on our flow delever focused profitability continue strategic to over story We stock coming compelling a which on to plan, cash and is value believe higher to we're drive our free target. executing but

some provide additional Let segments. me and now with each & comments few of Products. our Starting Building operating on spend Home a minutes

acquisition X% driven by to CornellCookson XX% increased from contributions quarter product to by the and to partially XX% driven $XXX growth effects Second input EBITDA pricing. primarily revenue due raw $XX by organic million tariffs. million increased introductions cost, increased offset increased of and the including and Segment-adjusted the revenue volume, new materials

in demand We we our from in products continue diversity for and to the see which across strong the of operate. segment our realize benefits markets products the

to our Telephonics, Electronics business. Defense Turning

million. end Segment-adjusted to $X million increased of $X.X Second prior continuing compared million operations period the of $XXX $XX decreased was XX quarter the in March prior Backlog to million. at million EBITDA revenue the year from to from $XX year.

confident continue for in remain to outlook Telephonics. the We

international in to healthy a sales quarter, opportunity over have systems This for increased XXXX. seeing turn bidding. of resulting X.XXx. We results. to MH-XXR quotes we return I'm of going And that million-plus We're on in support backlog a the expectation India. $XX conversion it rising communication activity opportunities, more Brian details pipeline a radar the increased military in financial and Telephonics a of will book-to-bill during with including strong activity and U.S. saw foreign with Brian? continues growth our to for to

Brian Harris

million, compared a with the quarter. quarter. second year prior Gross basis XX recap In in of brief consolidated our quarter, performance. revenue to margin and comparison increased profit of year XX% to XX% to to million the the increased decreased Continuing Ron. gross both XX% prior points $XXX $XXX Thanks,

selling, affect the general administrative due quarter from up acquisitions. primarily Second comparability, to million, prior excluding X% year expenses, were and that $XXX items

that of basis percentage items SG&A, affect XXX XX.X%. for a year-over-year comparability, As points decreased to adjusted sales,

to or year $X.XX per per Second quarter compared share. $X $X.XX continuing operations from XXXX GAAP million million income prior period of $X.X was the or share

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

items $X the XX%. affect was $XX compared was comparability, spending that quarter. Our effective prior rate, to the million for tax excluding Capital million quarter in year

million. $XX XXXX approximate Depreciation to continue and totaled the quarter. expect for We million to amortization fiscal $XX.X CapEx second for

total for borrowing $XX and under $X.XX resulting certain cash had approximately of of unallocated a credit covenants. billion, XXXX, the available million $X.XX XX, had debt to in depreciation, We was debt Corporate million the in net loan revolving billion. $XXX in facility, $XX.X million excluding March subject quarter. expenses, and position outstanding of As we

our to earnings in guidance given for $XXX unchanged still EBITDA call remains billion expect annual million XXXX We November the during flow revenue. $X.X for at Our plus income free of cash year. exceed net and

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

Ron Kramer

second continued very value. all and trends recent our the of take executing shareholder I'm well improvement fiscal We're Operator, long-term margin the quarter We're consolidation any to XXXX. our We see initiatives businesses. of driving confident the are excited on performance through across our we calls. see we're with of about pleased in efficiency we acquisitions outlook. and our happy

Operator

from question Bob first CJS Labick, Your Instructions] Securities. [Operator comes

Rob Labick

versus nice new what kind that's bit about than a we dig could us start with little Wanted down going that's on share a growth. product kind how nice How number gains and I a we kind introduction of And Congratulations your pricing? of Obviously, hoping organic you in? very think should give and certainly of areas quarter. is anticipating. Because sense of X% to is was and a higher attractive. were what much that forward?

Brian Harris

Sure.

business, the the So of It mostly the the year. business this in excluding new was those related organic comp was to things, the quarter. quarter, all for growth was CornellCookson, combination by AMES tough mix. a product volume, frankly, flat driven prior CBP and

Looking space growth Home change forward, X% we Products of continue to there. No our to X% the & expect organic in year. Building for

Rob Labick

progress remarks. facility? your I about us on Okay. over, prepared the in that Great. and this timing you quickly the if of talk expansion, touched out when you'll And you have products remind then But could and there think, just Mountain of Top new benefits moving the of the just

Brian Harris

started. planned. has It's Construction as progressing Sure.

enhancing, As enhancing, as this and looking to we're of those that. new effort they'll XXXX products rollout. rolled about These very products, multiyear are the new far course, products margin and We're forward excited a out. is and to their in get start revenue

Rob Labick

one Great. Okay. me Last then. for

the guess, margin over lot on months. given that of to next, synergy XX a of have update, kind I XX you in-hand opportunities the Just

your integration management commodities sense and give teams, a to us in can looking synergies map If other on have road you together that you of purchase ahead?

Ron Kramer

ClosetMaid CornellCookson multiyear we're those to very at in to and both confident the journeys get and line, we're of that's that, of days. EBITDA businesses. AMES It's better the Clopay integration We as early view or headed XX% into into where

Operator

Your next question & Co. Sidoti from Julio comes Romero,

Julio Romero

back CBP. half maybe wanted of I that? in the year? So to fair ask the of Can seasonality revenues on the you speak for estimate what's a about just And

Brian Harris

Sure.

quarter second is quarter. CBP, generally slowest For its

into So we QX progresses, trend. as expect and their more QX the increased general into year revenue is so even

Julio Romero

AMES could? just you quarter business, Okay. the you to the if maybe And in price-volume speak mix could in maybe

Brian Harris

Sure.

But with in quarter specifics. give don't roughly the business, contributed it's, AMES I other. contributed. I'd line volume all mostly each We with the should the all other. significantly, were and in significant was say, things those in X actually line other they For But and each

XX% So let's call of other the balance the with volume X. it

Operator

Bergner, question Research. next from Your comes Justin G.

Justin Bergner

lapping mentioned was products, comp. within you tough Clopay that building it it but guess organically a I flat, was

Beyond seeing organically, Because was for or garage probably volumetrically, little it remodeling it demand sort if you the doors? a deceleration any tough there was probably flat comp, was are a of price, some new negative. in

maybe clarity help. a little there would So

Ron Kramer

we're business quarter. big impact your We're encouraged were excellent start. is, the to question the a trends spring an we're very The is seeing April for the and off no, answer not. about The weather that patterns for in to

Justin Bergner

to respect With Top are the are expansion? product the I ramp customers? the capacity-constrained to among able good. to evaluate Mountain mean, commercial prior CornellCookson, you Or for of you effectively That's Okay. sort

Brian Harris

So products products. rolling expecting to we capacity on increased current and currently the both have demand. new demand out capacity, we're current enough We're meet our

be the more staging help operationally addition, facility adding to In and expanding space. bays us by we're efficient

Ron Kramer

a has to profitability level ahead will get of that to that have in further the facility efficiency drive a we that Coast segment. we And of think Goodyear, much and of Arizona it operating West work

an So business has We more top we leading going CornellCookson it improvements are this very we revenue levels profitability Clopay of own substantially And operational optimistic as we improve that more over the residential about stream. to the that and the and the much the being done do story XX from to acquired integration us of having what is than revenue. grow think can applying in the efficient by business over about in to when things business. grow the on of existing able addition, is become make years many last we to line think be money to about its time, we're it

Justin Bergner

to EBITDA Okay. you where margins any out for makes metrics, the directionally Are this at? qualitatively, able quarter? CornellCookson financial break discuss sense. Maybe revenues is That or business

Ron Kramer

to continue we path see it back said at less were it, when and bought margin, not XX%, Well, while going historically, or we it than we X% better I we're we a EBITDA being on there think to and buying yet.

Brian Harris

year, $XX We still revenue for believe I million. the million expect was quarter and $XXX the

Justin Bergner

Okay.

acquisitions, looking there In in types what is change might bolt-on there at, to of terms be terms any But a seems debt in? they present, strategy? your paydown. Obviously, preference buckets to you what for of at of be fall do

Ron Kramer

Broadly, our going We're economy be what's be acquisition. Australian business some that of host other there's home and UK. to able landscapes do whole a in from thing And on and we living. products. a to are there. there. consumer what's, to of substantially a lifestyles, outdoor off to through difficult intend opportunistic And expanded us for pressures, be a Brexit good like investor obviously, both start We the businesses could dollar into same that the improvement, We've the

and challenge. we about proven feel how and we that our out see that our businesses. against ability businesses are that that the Pricing an to chasing better. other over competition different So equity And other unlimited to And time, of products performing make of a against. is But there. are, different categories of competing take a and expect we where to businesses them really we think that bought they're of good is I private apply something interest, number number a companies actually capital we're assets constantly always amount are

Operator

from Wojs Your Tim next from question comes Baird.

Tim Wojs

season questions. I a curious you. I job. developed mean first maybe for you if couple AMES Nice any of I the was color had the business. how just had just in on

snow or Just a call of, last know whirlwinds you to here we if weather I in don't week had want Milwaukee. it, whatever, lot

April, POS kind sellout you developed on to not I'm of you how season you could of And you're the see a as sure get kind for So March, any if what then frames? time sort perspective access get maybe the just May type but there? of seeing or data, into from comments

Brian Harris

Sure.

a in this when the then the POS that key I a drive early, good but weather we'll rather. say, necessarily second, is don't see that, did progresses, quarter better month load-in, which We see the the volume So is, good and we of May as some will occurs May, which see drove third if quarter. should replenishment, quarter, the in and

Tim Wojs

Okay.

And the then are raw the, from steel and oil of a going is materials any How Okay. balancing Great. bit a you here? the material raw of come I And of as kind perspective, expectation year has off highs. through from the might forward? that of there benefit guys look material of kind you think on bit calendar kind be raw little kind the there of side

Brian Harris

fluctuate here a raw little there, So always bit possible. it's year-over-year, materials Whether still or up. are they'll

We have input many costs.

companies many different many across locations down goes one up, goes geography-wise. and different one So

benefit particular item. from given expect any I So any don't

Ron Kramer

add And $XX-plus potential outlook. I'm talked million you tariffs longer all remember is, the worked that's that things. would from this we've a we our I about negative if that say of of and And our no it and going happy other into to had through concern of thing way other impact year,

Tim Wojs

hear. That's encouraging to great. That's

good here. half luck So the second on

Operator

comes from Your Bank. Nishu Deutsche from next question Sood

Marius Morar

in Marius on Nishu. actually question quick Clopay. is A for This

of You it mix, mentioned What a it? about is is unfavorable lower-priced or...? us kind volume more products Could it Is it? you product tell mix. mix

Brian Harris

Yes.

right, products. exactly lower that's So priced

weather to had the February generally QX. begin of with. as So basically, particularly the Midwest. quarter our Ron earlier, in mentioned prior a we we lightest impact, tougher bit in And had year to a comp It's

Marius Morar

And see market towards more lower dealers of are do given starting some the build the the you in construction new that more that end?

Ron Kramer

Yes.

I as overall, tried is looked of have to than throughout of our our you home think we've and explain, businesses, less construction all new XX% related.

really the bit weather purchases So of into we third is a that that very a quarter. It have that back deferred had in see, the month. quarter this just snapped impact a was positive

Marius Morar

ClosetMaid. on then And Great.

by impact. last the would And I mentioned you driven this of imagine timing I wanted strength strong just that? a quarter, the confirm. think quarter, I now that to some growth was given

Brian Harris

was the timing there. in volume seeing did it and second and The Yes. we're through nice correct quarter, come

Operator

Fargo. Donovan Wells [Operator comes Instructions] question next from Your Chaney,

Donovan Chaney

guys just that's extent minute? usage business? higher, to in this you working like receivables capital Could a come to talk good-sized that the perhaps a year understand a investment was bit about should I'm looks just versus assuming. later usage debt It a of quarter for that I want kind more seasonal there back what permanent drove the normal in

Brian Harris

Sure.

it So you just have about right.

to of So we continue,is half the cash-usage second it our we expect is significant In us. year flow. half and history free of for cash in the the expect the a first year, period

via So again business receivables to you'll years and into those cycle again continue cash. see will And come. the come the in that back

Operator

There to at yourself, floor are like questions no time. Brian. I back to further this would hand the

Brian Harris

you next joining. speak to year, we the for we'll everyone, half Thanks, quarter. great to forward second of And and look a

Griffon (GFF) 5 May 192019 Q2 Earnings call transcript