GFF - Earnings call transcript Q3 2021

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Operator

Thank you for standing by. This is the conference operator. Welcome to the Griffon Corporation Third Quarter Fiscal 2021 Earnings Conference Call.

As a reminder, all participants are in a listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. now CFO. turn would to conference I Harris, Brian Instructions] like the to over [Operator ahead. go Please

Brian Harris

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

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

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

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

the turn I’ll Now call to Ron. over

Ron Kramer

We're transportation implement and price programs of pipe input spending. mitigate and in availability, unallocated to minute CPP moving supported operating disruptions rapidly adjusted our continually through and to work excluding was which well suppliers currently segments. Demand further category excluding spend EPS was the complex the both across to market, We're worked costs the with housing to levels to limited and X% year X% our everyone. and price labor to segments or million and by strong a afternoon, expectations. adjustments. backlog above ability disposition. adjustments product and Adjusted in due quarter which SEG discussing continue healthy over our customers HBP We're demand. very activity with environment. $X.XX. repair our to costs want the quarter before I executing implemented and a increased it very remained carrying record rising was third catch-up pleased remodel impact Good Revenue our $XX slightly consumer the prior Thanks. with EBITDA We performance, we'll of efficiency

have businesses we're and resilient our guidance. Our be full proven year to reiterating

initiative operations, consolidate e-commerce a is of and frames AMES increase analytics by Our on automation, growth will end the platform and data global track. XXXX strategic support new create that

We of in We expect inventory improve this our further of million annual magnitude years to to margins the $XX ahead. cash fully are to realize reductions reiterate same initiative realized. the the of $XX benefits and when million the expectation savings

pandemic, protecting through United in navigate States, we second global our managing to continue of evolving. the even the As as employees prioritize are and businesses Australia Canada, we year restrictions Kingdom during the our United the

ensure and closely to situation government spread responsive to guidelines the of make and are of adjustments Delta our employees needed COVID-XX safety we'll monitoring and customers. to the to We the due be variant as the

input and timing was sales to transportation Turning strong driven quarter adjustments continue mix. all of segments. prior the favorable also pricing by lines. Building increased and increased robust increases. and increased and implementation Sales Naval operating revenue excluding SEG over Professional demand offset expenses to and as actions partially Products as benefiting partially segment, product quarter prior decreased of XXXX reduced cyber products. EBITDA the US of Naval million performance year's cyber saw by residential driven system from In availability impacted divestiture see XX, year increases increased in we lagged the was from price June well book-to-bill and door Defense commercial volume year prior Electronics, the SEG $XXX with Consumer by timing In Shipping Backlog the of reduce primarily across both demand which XX-month the and $XXX the from compared on Home volume to geographies systems. cost adjustments and for volume taken increasing related communications revenue EBITDA from In to versus million at by Products, delays systems impacted in Telephonics effect improved. to resulting price increased a expected programs trailing input of deliveries costs. we by and the EBITDA on offset as the of took the radar times. and X.X

ahead. continue Telephonics see intelligence, reconnaissance in the to the bright future surveillance for a We and products years

balance the to sheet. Turning

structure We flexibility. excellent continue capital to have with a solid

quarterly million have our at growth of grown to prior dividend active the year today acquisition of compound to through the on rate capitalize on initiated revolving improvement organic $XXX Board returning share quarterly position on X.X in our period. initiatives an XX, XX% XXXX. X.X cash XXXX credit shareholders to we dividends. excellent We've putting of an Earlier dividend over which shareholders on September our and to an and consecutive to per in times of authorized delevered our available in while has million since turns We payable August XX. execute marks on shareholders an to opportunities, $X.XX XXth $XXX annualized marking facility cash us This it record pipeline

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

Brian Harris

Revenue profit EBITDA XXX our divestiture. increasing $XXX and compared $XXX adjusted X% Gross million X% by excluding GAAP when for Adjusted performance. to XX%. start prior margins or the points I'll decreased on quarter basis was Ron. year X% $XX a quarter X% to million the million you, basis to highlighting increased to third increased EBITDA SEG the Thank consolidated quarter. increased

prior increasing X.X% basis margin XX.X%. to compared $XXX gross points was XX charges year restructuring-related Excluding profit to the increasing gross with quarter million,

and selling, million year $XXX were the administrative GAAP compared general in to $XXX prior quarter. quarter expenses million Third

of to and selling, primarily charges driven prior general and restoration distribution restructuring-related the Excluding year XX.X% expenditures, expenses of or in marketing million costs. were or by and XX.X% million increased administrative $XXX transportation $XXX revenue compared selling and quarter

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

from $XX mind the per quarter $X.XX was current $XX net Corporate compared with income share. quarter. periods were prior affect share Keep adjusted quarter in items current million equity or comparability both Excluding $X.XX million approximately or $XX and year per to third in EBITDA the that depreciation in adjusted in prior unallocated August year $X.XX. the by line XXXX million expenses quarter impacted excluding offering of

third $XX.X compared effective Capital to year that Our year XX.X% in year-to-date compared affect was period $XX items $XX.X for million excluding spending totaled and prior $XX million in was for quarter. rate tax million the million, the quarter in the comparability quarter. the to amortization XX.X%. prior and quarter, was the Depreciation

liquidity. and sheet balance our Regarding

prior XX, debt debt year $XXX based quarter reduction of leverage covenants. is and net a of we reduction from a X.X times third As XXXX, turn is million had from turn calculated year-end. This of X.X June on X.X and our our XXXX our fiscal

of will second As the uses year, first six offset months more a half. significant its which fiscal of cash in by than in be generation flow the the Griffon reminder, cash

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

a strong repair continue and remodeling macro our behind third portfolio, guidance continuing recovering activity strong are focus Regarding homeowners constructive and projects. us, on housing see environment, a to our are with to for across market contributing demand living and we and to quarter products our consumer XXXX outdoor

one-time tight market, and and from of inflation, are those through expect of are EBITDA cost While excluding chain charges. labor supply revenue and expected of the adjusted disruptions headwinds we seeing unallocated in expect managing $X.X we and million continue we excess to billion a effects $XXX

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

Ron Kramer

Thanks Brian.

strong seeing we quarter we trends of As all segments. of the enter fiscal are our final demand year, across our

We X,XXX through this and continue to environment successfully exceptional driven perseverance by manage dedication, of performance dynamic our employees. the

our business and since CornellCookson, and the three sale fundamentally the last the we Griffon. ClosetMaid purchase Plastics of Over years strengthened of

earnings Most turns During is share flow XX% and times. to EBITDA free compound has annual this and $XXX which respectively. leverage on period, generated to XX% million trailing growth $X.XX we've of X.X have our by revenue $X.XX our reduced XX% Adjusted increased compound a from almost XX-month growth at period, grown adjusted over a basis, this rate. importantly full per three in a cash and annual rate

are value. with We long-term pleased creating very our shareholder progress

as in initiatives improve sheet our and additional execute to to margins take of benefits We come our balance businesses strategic we invest capitalize acquisition and significant expect on firepower our advantage opportunities. to on

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

Operator

you. Thank

We will CJS The with now session. the [Operator Please Securities. first Instructions] question-and-answer Bob from begin question Labick ahead. go comes

Bob Labick

Good strong congratulations and another afternoon, quarter. on

Ron Kramer

Bob. Thanks

Bob Labick

power. could headwind you in some further. we So can I nice the obviously been your you a little and from see also transportation a near Raw this touched dig maybe term. pricing on start And in results have wanted has and you to material

lags also we time. it know You over -- also

your increases. see should you the to how and a months next So out your margins, up XX maybe out terms progression? in inflations catch for there of you How think give just cost everybody? over margin us playing timing the that of to the of the And price when six about sense are ability we it

Ron Kramer

those happen the were in and our increases to discussed we along labor going with costs, as pace end ability second the raw pass was at material of Well, lag. the increases quarter, to a of and going freight up

and has business increases on is try We that been The to to are the our and consumer across strong. to for We're mitigate our remains to we're never going trying continue price control, deal going the demand more our in are is and us pass to stronger. the continuing economy, efficient. in are the trends to inflationary strong. market with to continuing things that along try view housing all The be

initiative a of a margin that in basis story AMES particular be XXX meant us. to is over journey front still in point improvement Our was always multi-year about

and evolutionary Most Brian? we're of along to costs demand we our to as this margins. and favor. take our strong to trends price to for as see improve ways our increases we in the pass and business find in business being order our out continue see So importantly, going

Brian Harris

they would I add rise after last Yes, rapidly. our to to continued The and rose just costs call that.

to quarter. the have continue through pass to pressure price we'll cost we'll So and price have still into some fourth

costs if stop -- by -- year. if expect fiscal our the that that next the in rising costs we'll resolve early We --

Bob Labick

Got it.

that Great. In with in obviously had regard. Okay. terms some you've medium-sized my word. the a ones And acquisitions lack type of nice follow-up past then and tuck-in better of for small international very in success

Can obviously of now. a obviously environment? You asset lot leverage prices have Because three highlighted of below about the you talk M&A turns risen.

Are are M&A out for how things there? you those the what's the still market, international in the like are looking you environment you? about And thinking or So environment?

Ron Kramer

that's happen. to first competition been capital is and to is will happening that higher prices, leading part continue is the and increasingly that's Well, expect something we unlimited therefore and

capital allocating and this have never always we at up has because at pay have make been to things are that strategy disappointed already that to quarter our think we things we we or acquisitions and ways come I'm that businesses incrementally anything lot We're and own. that best been along. to Our looking And didn't we as there better, are than pipeline buy of that of prepared announce, make. better. a better going incrementally what with better processes already run values we yet to that's improving can and prices that has continue what was the look weren't can ended don't they acquisition we own to The we to

balance diligence at level until And under understanding we're to clear that we our all and traveling the rush. that very enhanced that deploy even our still to find into want with is significant sheet liquidity. amount really cash due that at we things year-end. time. that buy buying is ahead hood and the we do visiting able position believe a that to We're happen continue to. we it's will the over to our uncomfortable in I'm We And the have of in we'll to and have more And no fiscal at level that businesses, to the heading the a be world We're quarter, we be us. that fourth looking good of way where can like capital ability on opened things get at our we're

the very the several increasing we're So our to to getting story, that per deliver time margin the been the free share able improvement over content story cash years. story and next spend earnings we've just flow

Operator

Julio question ahead. go next from The Romero Sidoti with Please Co. & comes

Julio Romero

me. And Brian. when Rob, seen is slowing about and we've afternoon, Griffon's think thing to plasma-made about segment products. in of sits Good that the professional signs initial think consumer Yes. product I portfolio, will DIY some be One that out I something and product

how about CPP the is and could you just exposure. demand maybe across some have Can So broadly talk trending DIY in plasma-made segment?

Ron Kramer

said that backlog same we you, just we've have seen opposite. levels commentary. We've say the the as to And

Julio Romero

hear. That's encouraging to

update my follow-up, some business guess And how you I been give guess can of maybe new segment, -- in in the Okay. that product for received? I an launches on have us HBP the

Ron Kramer

Sure.

launches Our new continue defender, several defender, entry perform with they well. just do Storm which what to things. defender We've product come and out say. store

fire have performed has micro-grill has the a -- fire that suppression suppression well. We market product received well that in products

trailing everything products of expansion The and So the our those the good a to Mountain is where we we the those XX revenue. hoped supply that continue had We're and to believe CornellCookson in we're in growth. to quarter and show and commercial in very people and residential, really over to we business made products in believe Clopay's the been billion innovation we acquisition executing expect Top with growth commercial $X are months we is facility in position. a investment. very, pipeline continue history both has the that first this strong in well business I

Julio Romero

Great. much. Thanks very

Operator

The Justin with G. from go ahead. next comes Research. Bergner Please question

Justin Bergner

Brian. Hi, Ron, good afternoon, good afternoon,

Ron Kramer

Justin. Hi,

Brian Harris

Justin. Hi,

Justin Bergner

Hi.

been Consumer business shipping had at to not put you shipping have and risk? And would levels, business. up record if on the So backlog Did follow-up Products the just delays? the at those experienced any in Professional delays still

Ron Kramer

would available necessarily the later pushed We I and well. hard risk. had as It's across So, date off would to say been transportation, being business not we their by has got pressure wouldn't more patterns what exactly original as from very HBP CPP demand at one revenue order the to people say strong certainly until across order got had as The product. that they because put a like.

So, very question. demand been strong. is I can't answer fully But your has the baseline

Justin Bergner

-- your deceleration ability mean, on are just not look then I to Why demand seeing trends put And it price? through on start any any in Okay. prices your imagine just doesn't demand is there maybe impacting And curious at? there? HBP. that commodity the a follow-up I there? you limitation could but perspective

Ron Kramer

has The be not continued strong. dropped demand It Sure. off. to has

as far, price. to as consumer that. accept So continues the simple It's

Justin Bergner

you. Thank Great.

Operator

with Securities. Please The Keith ahead. question comes Truist from next Hughes go

Denys Klimyentyev

for Hi. Good for afternoon. Thanks This Hughes. in is Denys question. taking Klimyentyev Keith my

at first question the particularly is HBP in the I'd regarding to So like seen XX% ask strong the pricing. quarter. We've

allocation, drive share in of some that are general can priorities? just the the in you that And give factors terms for that of can particularly -- of you some pricing behind like what driving question, and fundamentals falls -- to if about capital in the curious, forward then as list repurchases Thank segment? that strength going if where just the color So some the and I'd of the of other ask to share cadence priorities in the you.

Brian Harris

Sure.

price the transportation a we homes it's of commercial continue to new see doors pricing So costs. to in continue raw good result about of customers you rising where our are on us continue pricing insurance, labor, take to the price cover let XX% and its input good capital, higher And product that's costs which passing see that on us buy it's it's side mix demand, at a and want Ron? me demand start it's a such result through And rapidly with clear. and Do good their is to to to XX-XX steel, input And mix and higher the those it's people that at for two. level materials the are to result And as we be cost. between side, of margin. just a

Ron Kramer

Sure.

a $XX We quarter. believe any compelling buy our this value. share we authorization a stock and repurchases have didn't for We is stock million

Denys Klimyentyev

you. Thank Okay.

Operator

question Instructions] Please Grooms The [Operator Stephens. Trey next go from with comes ahead.

Trey Grooms

and Ron afternoon, good Hi, Brian.

Brian Harris

Hi.

Ron Kramer

How you doing?

Trey Grooms

Doing Thank well. you.

demand So I little front, strong. gears very Ron, the guess, still a you here. just bit switching clearly, mentioned on

does think mentioned you drop consumer commercial, on they relates You you're I seeing all the that, R&R to mentioned HBP about it healthy. on business? very, HBP Can housing be spending talk And and the very as specifically business it side. what you some commercial to have continued

Ron Kramer

ever personal growth. more expectation growth. my bill see is, door if strong an And infrastructure even Very commercial we'll we get

Brian Harris

in that. add this I'll and commercial is year-to-date were well. residential – Yeah, quarter seen growth in stronger even although particular quarter, good – this just they to In the both We've and than quarter. commercial actually they did both residential

Trey Grooms

Wow, that's encouraging. kind other just little And understand mechanics. the trying bit. I one housekeeping guess, to on of a I'm

the now excuse And how is around we then – strong to And But and have me, when both have that course, get very You the with that of with impacting we revenue. with flows head my and delays CPP now, on or trying dynamic transportation into transition how translates through expecting to you this backlog. guess, of mentioned, of I transitions are just kind revenue? typically shipping to that situation, into start this kind into backlog that? HBP

Brian Harris

Yeah.

transportation situation release the to It's really in. So keep issue. the hard say it's issue. is a Yeah, will just orders our not backlog when global the coming

can everything doing we transportation the are We situation. to mitigate

Ron Kramer

of the everything, categories the that believe to to is and are and of you'll are where doing the demand And ahead themselves underlying it, you're we in seeing clearly, is is through. are the we it, clearly of us. backlog products we across different strong. work bottlenecks we're The of Look, but see one trend predictability this timing meet can which going recovery is saying transportation just lots that our economy still

Brian Harris

year. the to add and give end more will I'll help situation, that start improves to people that. the clearing labor just will thing by the that of transportation hopefully, And one little the Yeah. Hopefully, as

Trey Grooms

thank for you're my Yeah. taking I very questions. right. much right. you're hope I well, you hope

Brian Harris

it. you. Appreciate Thank

Operator

Kramer closing would conference remarks. I for Ron session. any turn question-and-answer over back like to the concludes to the This

Ron Kramer

Bye-bye. Stay well Thank everyone. you.

Operator

call. today's conference This concludes

may lines. your day. pleasant You participating a for and Thank disconnect have you

Griffon (GFF) 1 Aug 212021 Q3 Earnings call transcript