GFF - Earnings call transcript Q1 2021

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Operator

Greetings and welcome to the Griffon Corporation First Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host Mr. Officer. Financial Chief Harris, Brian Thank you begin. you may sir,

Brian Harris

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

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

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

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

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

Ronald Kramer

We're EPS consumer morning, with adjusted a Thanks supported demand adjusted and our everyone. and our compared saw and across quarter. a repair all by quarter strong categories We start 'XX, remodel EBITDA revenue a first and off housing increasing XX%, market to the robust up to healthy XX% fiscal activity. a prior-year product to good XX% up great

enhanced initiatives improvements and portfolio as Our strategic repositioning, flow continue free to generation, expansion our operational quarter cash exceptional. the was drive and cash margin well as performance for

the $XX compared $XX year a in our This of we our of our in million all cash quarter. usage in free three cash prior EBITDA increased free to cash the Recall businesses, flow to improved adjusted usage seasonality compared segments in $X generation. typically to cash quarter, first our first the During results the performance prior-year by cash flow also generating significantly year increased and margin million, period. quarter million improved of resulted this EBITDA due

progress to EBITDA down now leverage the X.X X.X We've turns net is times the end compared made is budget. of consolidate the create increase quarter and times for growth which XXXX. when strategic data on XXXX. good investment by will September the e-Commerce automation, at first of XX, and and the fiscal globally end support AMES remains compared XXXX platform X.X analytics by Our X.X on to and AMES operations, leverage in at initiative, a with schedule new times This

expect ahead. In quarter, we We in portfolio years executed improve also X further this to the margins actions. strategic the

Sale Telephonics Group, for team we resources systems electronics First, business with parent the more Engineering core for a SEG, them divestiture value a SEG business Griffon an SEG growing lines its shareholders, government product future. to of allows non-core systems. this and defense technical immediate Telephonics, that's on our closed did provides services. the was of of growing well defense The focused job of Telephonics primary of System creates being and in on more its outstanding part products as organization which wish of focus SEG electronics we to benefit and part and their

measures Design safety spared in X and priority. pandemic Quatro health the safety. products years, continues in a Australia supplier We last made to and operations an action acquisition the Xth AMES March, no products more. facilities large in quarter Australia, COVID-XX circulated of diversify across safety expense This expect are incorporated of helping with employee and and we've expanded concrete. and implemented have local We've products be additional the sales with Health our of risk. and projects, health fiber-reinforced since landscaping was ensuring authorities residential, sector immediately, of portfolio onset guidelines and glass health our for dealing channels. public of as the employees all manufacturer in our Australia second set national safety the Our and COVID-XX global leading of to new and the is commercial decisively These acquisition used in and last our and been top in and our customers updates, the has our proactively reacted from

of All operational. are facilities our

However, United we essential were expect remain In mindful our Europe continued of previous the of that the and situation both shutdown US in the we continue. facilities and of seriousness to the deemed States. all businesses

cash including Professional and schedule early demand in in for segments; America Products, retail from AMES initiative XXXX Turning customers we remains end of reiterate all magnitude benefits will across the Brian realize by the reductions to detail The the realized. status about fully we initiative on the and initiative of more inventory million completion Consumer expectation saw Australia. $XX provide of North and and to spring to continued same increased demand orders geographies strategic the during million the of are when annual our his savings $XX of comments. the

and will Telephonics quarter to we residential and a the door improve its was by and discuss a to well is efficiencies in demand favorable book demand streamlining healthy products segment; Defense revenue and taking consolidating In for Backlog continue with steel Home as Telephonics bill detail. for to Electronics, the little increased strong prior over Building organization the ending a water the Brian Moving at see of which in and times. Products quarter in also commercial $XXX rolling mix particular. operational more profitability products and both actions facilities X.X almost increased year its million. to

acquisitions to in the our pursuing to position our times. excellent leverage X.X fund ample sheet, opportunistic all Turning while down of balance an liquidity in with to financial we're and with segments, growth

share quarterly at in our per we This rate an shareholders since XXXX. to which XXth, record authorized February an on consecutive of has compound shareholders, Finally, XXth, payable XXXX. XXXX $X.XX of earlier XX% grown annualized the dividend initiated to on marks XXth today, Board March dividend

financials. Brian, will Let it some me turn who over through of you to take the

Brian Harris

to increased million, increasing prior $XX comparison to XX% gross over gross Normalized both quarter the adjusted quarter. points our expanded highlighting by XX% quarter, I'll Ron. quarter $XXX and increased Revenue first in prior start XX%. XXX consolidated year the to was margin to XX% million, while EBITDA for $XXX basis performance. you, million year profit the Thank

normalized the administrative XX.X% general, selling, $XXX million year expenses or quarter. or prior in to of $XXX were compared XX.X% million quarter revenue First

quarter First $XX.X GAAP $X.XX prior-year per share net income was or of the million million to per compared $XX.X share. or period $X.XX

was $X.XX with in prior both the or depreciation million was $XX in million affect the compared expenses quarter Excluding were quarter for tax that in comparability first that fiscal Capital the quarter. Effective $XX.X totaled compared affect the $XX.X $XX first XX.X% and the for was excluding quarter XX% prior to $X.XX net the comparability Corporate amortization million to compared adjusted million first current XXXX. first items Depreciation the or $XX.X excluding the prior items compared share in unallocated year million year from million million to year to prior $XX $XX.X for at in quarter. quarter share. income per full quarter. per year spending rate line year the quarter, periods,

HBP for XX% with increases prior X% our Adjusted increased CPP, for and increased XX% and XX%, year and CPP, DE XX%, increases with prior of performance, DE HBP the Regarding respectively. also over X% of over and year EBITDA the respectively. segment revenue

of As XXXX actions expected $XX business end this million with cash of project When $XX by November new initiative one completion will each. The million extend operating Ron XXXX year the stated fully to in earlier, -- in savings capital result in by the extended reduction implement approximately implemented, announced based $XX annual million cost will equivalent both the XXXX. now AMES one-time inventory and include with platform levels. an charges fiscal of on investments these will

efficiency headcount supporting approximately incurred AMES supporting costs product a strategic in of expected radar pre-tax first coupled initiatives severance in in quarter of initiative, due in a the related had additional fourth fourth capital Telephonics lines. restructuring-related an and to primarily weather to Voluntary initiative million, XX consolidation charges quarter million we announced which year. exiting footprint $X the the recovery began million quarter. During Retirement AMES the We Employee Plan people. quarter, valuing $X first were amounts on last $X.X last incurred the executing of implemented subsequent resulted year, the At $X.X enforced we quarter, million charge older reduction and In exit of total with expenditure reduction inventory our

which we Additionally, cost based total consolidating X on capital primarily Long the -- the million, facilities facility Island are of facilities. company-owned be working of expenditures in XXXX. consist $X into approximately These cost consolidation will total occurring two

prior year of This on turns had XXXX, balance XX, quarter. and of our X.X X.X times and debt Dec our covenants. of Regarding from $XXX liquidity net delevering of the sheet reflects million as calculated based as leverage debt first we

under cash billion. the covenants. debt and outstanding $XXX was equivalents were loan was availability certain revolving facility and credit million $XXX $X.XX Our million subject to Borrowing

our our 'XX $XXX adjusted $X.X believe or EBITDA With call approximately and know, Regarding the revenue earnings during our The year. guidance most year do November that as call not course at was of during provided we last give update the guidance guidance, of once financial you guidance our related January our is we looking we're first charges to better. there to quarter us AMES billion potential November a Telephonics initiative and upside to behind and if unallocated and 'XX, to million of guidance. excluding and continue of one-time

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

Ronald Kramer

Brian. Thanks,

our published to program and like are an to I'd commitment First, recently sustainable website. drive environmental growth. on we important social believe our governance highlight to We ESG practices and that long-term

process our incredibly as while health to We us customers a to operations, safe of that hear will our helped business thanks efforts topic. Griffon I'd the efforts, to closing, team In communication XXXX world. shape and is our this continues very who a and and organizing have priority excellent a more are special further and top reporting uncertain ensuring ESG emphasize continue their I give to appreciated. like formalizing in our us and employees working safety to the employees, from our be a in to maintaining in are Griffon's expect and on enhance environment continue of our communities.

sheet, our to We enhance taken strengthened strategic and balance streamline actions our portfolio. have we've

continue in be clear initiatives, path our potential emphasis growth advantages. actionable has We the on essential and US shareholder realize manufacturing sustainable capitalize cash for we're to creating to on created believe competitive platform our compelling the brands value. focus deploying our strategic and the to a we products continues businesses, with embedded of our sheet significantly a coupled on Griffon diversity acquisitions, investment increase opportunistic balance on to leading margin and story, a and

is best come. Operator, to any yet questions. we'll Our take

Operator

from Thank CJS you. Please Securities. morning first this ahead. Labick Bob of coming Instructions] question Our is [Operator go

Bob Labick

fiscal a to on start 'XX. great Congratulations morning. Good

expansion margin both the a first and obviously really little ask for CPP I you've to top the HBP very to question, and So CPP in On and have what's us keep wanted going been on how primary current this, are dig margins levers the you could drivers well? AMES bit, of CPP's significant as impressive. initiative we come had but to they thinking of to kind the still and a sense that's strength Just you you HBP pull been give of margins do about showed? where strong have sustainable, and you're if behind

Ronald Kramer

improvement that our has I'll continuation we've and the last several has things steady been margin of years. evolving last story about remind talking this over years for several the been you a been that

well. our doing businesses were pre-COVID So

over purchase a been out and the the to This evolving of Clopay of into in AMES few significant last journey the multi-year the this businesses over CornellCookson were that margins lot has in years starting Clopay. story quarter-over-quarter. showcase want and years. with both We improving both to we things purchase levels already were integrating about getting about That near we next business being of get X the we've a process is and to the to we're of have into talking nowhere finished ClosetMaid a laid business been AMES margin acquisitions, in and and continuous improvement improvement that the

Bob Labick

the behind And where approached well? to Can about that the that X.X bookings just of margins you said then over Telephonics, book-to-bill as times. just you business great. taking kind strong kind of in and can go Okay, drivers talk

Brian Harris

Sure. Bob. I'll on, take this

So evidenced by we healthy in bookings have quarter. a good a pipeline Telephonics

there exit sunsetting, to to it some call we'll challenging and the sunset the as As in and coupled an programs optimize should far believe XX% annualized the continues more mentioned this year in taken margin as margins the see the initiatives last that year, are at that we continue continued margin sunset some case, headcount year improvement be and to throughout business, we we've several we've last with reduce year. this the

Operator

Thank you.

& Sidoti of Romero Julio from Please coming Company. is go question next Our ahead.

Julio Romero

a think there some Hey, of good XX% EBITDA think just into in you could talk target to there your know more Ron you away to you continue could for quarters. in drivers margins is and above a that still dig it's the are little wanted bring past the in been I I and of heard margin think about well if going to you upside I margins potentially up morning. you've HBP, out I HBP, And HBP. tracking what called couple I mention forward maybe

Ronald Kramer

We mitigate as to of going continue and story the both the in remodel, investments as is this manufacturing. and is improvement what for believe of for successfully, as input obviously increases by continue margins in We continue see is to support can to the into costs a going like to the to CornellCookson robust maintain that to to be we do is always that make We're demand still us will business there residential the our based those along footprint for going that there that it. And of doing take that cost that on of continue and a building, We result business. of and is one the integration will recovering margin balance look both ability the the across both inflation. we the year There volume evolve days improve business going the to Clopay are be we early price item to and the And economy pass-through of see be America. and/or as repair like. mix pressures the well steel to most commercial. input for homebuilding demand pass corporate is issues positive a price are that the commercial

Brian Harris

to we commercial that. to by Mountain in this the facility reason did that demand, mix our things only are accepted just Yes, but a was XX% the of the entry well we add which good of investment is core made the marketplace rollout support product. like us like by to defender such allow and saw quarter, our expanding particularly result the product meet side I'd We to not new on really the Top products being to

Julio Romero

profile any general? refresher on you Got I Thanks. And design you talk then into Australian the guess there. a could follow-up, And the it. my Quatro color if just attracts acquisition, to just about in quick margin the market what

Brian Harris

Sure.

there. or So business Australian a X last to we've investing in business years million million marketplace. In acquisition diversifies in general, since excellent the market or so customers. Australian purging started Australian dollar dollar, so $XXX $XX been for do the about went from years It's to expanding this dollar X million since we our It case, an a business that's business. $XXX this X

And that it at margins park their the business we'll they the facilities. yes, beginning a So generally generally planters with least reason this at customer residential buildings and the put of our large parts at and of and is more the businesses. is improve for why built, our and construction other benches government or they margin

Operator

Thank you.

Wojs is Baird. coming Our go Please next of ahead. from question Tim

Tim Wojs

good and Hi, a on morning, congrats good Brian, Ron quarter.

Brian Harris

you How doing Wojs? Thanks,

Tim Wojs

Good, doing well.

is at versus So a question currently? on rates the where little is very AMES bit Could through my retail sense sell growth. first any about of in the inventory talk sell-in you strong channel business

Brian Harris

supply. demand Sure, and very general it's is high outstripping

been in rates home in and say is would marketplace have sell-through low. So, very the Generally, relatively out I the centers at inventory strong.

Tim Wojs

hear. that's All good to right,

the kind of of as presumably kind there quarters opportunity just be [ph]? in re-still coming an So you will

Brian Harris

you we and to to to continue demand business go things second then strong but quarter the only of least the and and at Exactly, if should occurring even saw core beyond. the remainder not in not January as in out the yes, in continue be to see through first continue through customers as quarter restocking the see we occur back those

Tim Wojs

-- the takes kind my price that I long great. to through walk you alluded what pricing that's is, match it the my you and And kind steel steel question kind hit for higher earlier and through about businesses follow-up you the to how kind this of right, be just P&L expect think All just then of a guess Ron, just your there increases or of from that the and walk dynamic what price will the of to extent there lag, can could timing different would there? Thanks. you could

Brian Harris

be but we general by be in able a through will bit pass it in by you Sure, product past, that and the a of know increases little of there we'll to has do price in point has as time. product in at because varies a result of lag but or significant expect and been increases don't amount time well through price amount of pass reasonable steel reasonable increases price increases of this and least we a at price expect as a impact the line,

Ronald Kramer

demand this add starts ultimately both the going optimistic the side spending, and the been pass with talked increased recovery better very for will in to on. them building economy, people is to And We input is the component and to of starts we to for the get recovery pass to do put we decade improve about part and them the have last to and everything the going along I are to policy work to just our consumer cost fruition. prices as see can the products has to up to to back we'll along what customers continue is we'll consumer we're going stimulus the fiscal of actually about to part which as infrastructure believe throughout come the it,

Operator

you. Thank

Research. is next question go of ahead. coming Bergner Our from G Please Justin

Justin Bergner

Brian. Good Ron. morning, morning, Good

Brian Harris

Justin. morning, Good

Ronald Kramer

Good morning.

Justin Bergner

Home Products couple commercial just delve you if higher there. with into acquired you mixed it's had margin the that if the it commercial and On Nice doors business you strong is Building business quarter, in sold mentioned the doors have is things, rolling analysts of than to asked typical because CornellCookson the CornellCookson portfolio, that or setting other about. mixed business to the steel just into that much up obviously much wanted be that that's

Brian Harris

Yes.

the businesses been the operations, products are both driven new being had business and margins of the year out improvement so. of new it's last over we as in integration it's overall or improved the well by products, by seeing and as rolled the the So CornellCookson CornellCookson the

Justin Bergner

I to Products consider XX% cause point and number, using margin plus some some Home some And you lift future. target but you publish would guess the would might at Okay. realize to for in the of be hesitancy what point? target a to high Building that at there I

Ronald Kramer

we improving continue that We're X% EBITDA or we investments over never long-term and margin I will time. done had talked happens the make bought was our when about bought think X% the to margin. it, businesses an at running expansion story we one and it for build We CornellCookson,

on was story target years We're a still to XX% opportunity our ago aspirational. We're business, and this you us the And the Our about them our year, time that getting this moment. buy XX not is is a increasingly building fix and last capital clearly been in improvement last of few story is about has but years and operate above we've adding and mark that over investing the ability quarter at and story of has edge better. plus than ahead operational acquisitions, just in improvement. moments margin a Clopay over world with done them businesses, to not more what

be to it better. money knew business, but there time businesses each to We is steady, the these slow, the to of believe make be we that will spending continue will it upside and

Operator

Thank you.

go Hughes Our is Keith ahead. next coming question Please of Truist. from

Keith Hughes

to on it's doors questions talked on a in your Building how -- did you. they on year? and prior Thank and here commercial positive commercial comments units doors, to this, compare but some you total

Brian Harris

vary look how So, business units those. commercial in the at you and

were but much units stronger. the slightly, up was So, mix overall the

the were side volume So of but some business. there mostly benefited mix benefit, that

Keith Hughes

feel picking the And Okay. storage when third of future for you feel you in but of orders we've the Have residential you orders come the this think you in we pick-up, if case? something is of go do did quarter to the if up. and doors, homebuilding side this do -- that's of to the the feel any like and influence you that seen the would or is home all

Brian Harris

that quarters for going to on It's few first and continues and through continue We in business. quite quarter good January. into demand see the been a

need So that fact then for for matter are those certainly, the and business door overall the really, Consumer healthy all that to home and housing housing market contribute garage economy strength steady prices well. a and growing the and Professional Products as and

Keith Hughes

you. thank Okay,

Operator

from Our Trey next Grooms go ahead. Please of Instructions] question Stephens. [Operator coming is

Unidentified Analyst

is This [ph] morning. good Trey. Hi, actually for Calstrone Noamar

on Just quarter. wanted congrats to say a great

Ronald Kramer

Thank you.

Unidentified Analyst

to here, in impressive. I wanted was a on So XX% more organic and my little AMES sales the first question dig really growth, CCP bit

forward talked out, strong I good You just the business was any you for I'm that kind really believe that of put about still forward? opportunity correctly continue you to sell-through, if going demand of channel. growth break about if feel wondering do retail heard do I you fill the or that think

Brian Harris

the got we see home have but started to we expect whether urban up, actually out finger are We into the products a the before the confidence demand continue. not, before during very can't homes, homes pandemic, up, formations to in So, in sub-urban, all demand the they put overall to those pandemic prices will strong, forward people for household cities, products or we pull marketplace a things our are demand for is suburbs, investing moving started is people continue. when their invest the overall. and stronger to good their

Ronald Kramer

things of demand drivers. out be happen we to are going all And those that COVID to going to a economy, of infrastructure come when recovering I add are just spending it, incremental

for argument pull the the don't I of economy. So for forward most or us buy

Unidentified Analyst

steel follow-up other that? cost Clopay whether in or anything any materials, of right, a And quick freight, of labor it's either inflation, here, if sense. the other like All or inflation but AMES seeing wondering talk that business, then there's been buckets makes about you're a I'm lot

Brian Harris

a So in yes. word,

Ronald Kramer

Yes. And something. always, is there is always there

part and over So the is an we've automate been labor to facilities, something years, many and that expensive clearly that's challenge. and freight, in of ongoing that's is scarce streamline dealing initiative with that

part and through costs input have year costs been building, across part pass board we you the of as do then of mitigation ongoing the year. each go challenge us the this those so that to is the And try of into balance that's for

Operator

Ladies our to any Kramer, and gentlemen, brings us end that turn Q&A like for session. to the would Mr. I to comments. of over the floor you back closing

Ronald Kramer

safe, Bye-bye. Stay everyone. stay healthy. Thanks,

Operator

Ladies you off may webcast thank participation, this your a the time or your and disconnect gentlemen, and wonderful lines for day. log you at have

Griffon (GFF) 28 Jan 212021 Q1 Earnings call transcript