GFF - Earnings call 4 2023 | Griffon Corporation

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Operator

Greetings, and welcome to the Griffon Corporation Fiscal Fourth Quarter 2023 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Brian Harris, Chief Financial Officer. Thank you. Mr. Harris, you may begin.

Brian Harris

you. Thank morning. Good to Fiscal pleasure to Fourth Griffon's It's Earnings welcome Call. and XXXX Quarter my everybody

Joining this and Chief me Griffon's Executive Kramer, for Officer. morning's call Ron is Chairman

available earlier Our was recorded, earnings and are Today's this release. on instructions being our replay in morning call press is website issued and included release the www.griffon.com. at is our

changes. cautionary that Our subject to are in performance. These can as release our comments change statements and will the include SEC forward-looking statements Please the press today's filings. world and statements Griffon's uncertainties see about in risks

for Finally, items that some of non-GAAP press today's remarks, in the explained I'll comparability we'll reconciliations These Ron. adjust call periods. that, in to our items release. With between our included affect are turn over

Ronald Kramer

for with deliver continue of performance drove HBP operating Thank margins. We're quarter our us. Clopay fourth the results everyone. Products, our CornellCookson cash for Home the morning, fiscal to The pleased and as segment strong and and free Building Good you flow year. results our record joining and

and segment fourth optimistic improved we're and for in its Consumer Professional CPP repositioning quarter, future. about Products the the Our or

For the billion, commercial by $X.X X% year, increased in growth revenue to volume. continued driven HBP

premium and reduced backlog normalized. manufacturing and Ohio including HBP to residential and across elevated Troy, adding commercial and times. expected, expanding also productivity growth, residential capacity demand decreased fourth and for satisfy innovation door customer equipment both to favorable from marketing due drive in lead advanced activity sales of manufacturing as for backlog better products increased sectional to further products. HBP price continue channels, and extended benefited As X to mix invest and Clopay's performance had levels all quarter HBP's channels. investment years in following

the Turning inventory elevated reduced were to and levels. CPP's channels revenue conditions market Products demand billion. with to and for customer $X.X consumer continue geographies affected decreasing results by XX% Professional reflect year to All challenging segment, Consumer and

key global by model. over X progress As we made at operations strategy and square at certain operations feet impact more on sourcing and to expansion customers cost-effective an XXXX. The global of expansion XXXX, strategy, The facilities sourcing asset-light pleased our space improve transitioned product the market The announced position year be would expanding structure, project calendar segment, serve U.S. lines, to a conditions sourcing affected of within budget. wood X December be will previously we these and of utilizing representing of X flexible CPP to address AMES locations will a by global mills element with manufacturing the global far. the remaining sourcing on its remains will better U.S. end CPP's are margins the cease. during By is AMES CPP's million schedule and so of the

will We milestones achieve additional in as the to provide continue updates we throughout year process. the

total, year million shares total and X.X purchased for bringing a shareholder more $XXX quarterly dividend per maintaining Since XX, we authorization, to value the repurchased morning, returned and to allocation. paid Turning increase share to authorization million. $XXX repurchase our $X during to increased XXXX, In our an through stock These announced debt share, by April, we share September then million to shareholder leverage the repurchase million fiscal $XXX per through Griffon Griffon XX, $XX.XX and dividend, XX% sheet repayment. May, million a XXXX. of for to 'XX, yesterday, repurchased capital current we of total the this through regular of end the a X.X repurchases. dividends, value cash dividend million million. dividends significant note shares. to of as strengthen March our shares $XXX payment Board repurchases X.Xx. Since and XX, to share million fiscal X.X than announced deliver our And actions a It's buybacks the increase also special deliver took million balance this fiscal At we $X.XXX In additional XXXX. $XXX share or important able share XX, share $XXX to September In per bringing has we're $XXX to at total its the X.X% of outstanding November shares million. authorization, represent we've while

dividend. allocation Griffon repurchasing XX strategy the to quarterly to quarterly our $X.XX quarterly XX% credit to we Also quarterly strengthen fiscal extended revolver a shareholders share on and with the this regular balance XXth shareholders. million payable reducing of maturity the to action dividend authorized use improve also in increased a and flexibility focus a of capital morning, to of November the dividend marking financial of sheet, to XX% a increase repaid December took our facility revolving our our During on 'XX, quarter, supporting Loan we million compared $XXX to increase Also the is dividend. record per 'XX, November and to debt our Board facility. In Term $XXX million we B dividend regular fiscal shares, This over flow and continue XX, from size XXXX our our we cash support August consecutive fourth free X, will on our last the opportunistically $XX of XXXX.

it Our update outlook. I'll dividend These dividends since our actions Brian our of our about compound of provide and and confidence an guidance. strength back in at we as in to well financial details strategic XX% to has XXXX the grown business XXXX. as our rate initiated the our reflect turn for annualized plan

Brian Harris

was guidance $XXX fourth prior to XX%, $XXX for year points with fourth unallocated in performance, and to our before both $XXX the Thank EBITDA quarter quarter was our was quarter. Gross by fiscal EBITDA I'll $XXX margin the over of you, review the then basis quarter decreased GAAP prior compared in year. a The adjusted increase year XXX profit quarter. million an on and Ron. million related amount for by decreased the start million prior XX%, basis comparison of of 'XX. Fourth revenue X%, million

that affect items to $XXX selling, the prior Normalized year-over-year compared prior year profit $XXX million million increased XXX and $XXX million current million points quarter prior to general the and gross in period, margin was basis in Excluding Fourth year year. administrative GAAP by from $XXX the the were compared to gross expenses quarter. current quarter in XX.X%. comparator

of periods, million to from $XXX SG&A adjusting continuing prior Excluding compared operations prior the share quarter driven GAAP of compared from XX.X% of charges. XX.X% which $X.XX loss both to per $XXX year year CPP million, were million or or revenue expenses $XXX revenue. Fourth income million $XX or of by was was the items impairment

Ocala, periods, $XX $XX the acquisition headquarters were adjusted $X.XX Net $X expenses, in current facility share. Corporate $XX was net to the net items that year income million Ohio, $XX.X in year $XX year. were million operations and the $X.XX in per share per prior a manufacturing million to was increase all of driven to capital in million from prior compared quarter continuing primarily unallocated in the Florida. affect fourth million related excluding from or by expenditures in prior HBP for Excluding the quarter, the ClosetMaid both of million Mason, facility the the compared or million compared $XX.X quarter comparability the depreciation, to quarter

to market for on to and million $XX.X totaled capitalize critical the opportunity the we the to acquire fourth these low value. Depreciation $XX.X amortization facilities in year. quarter As million compared prior

quarter reduced all by global $X million attributable XX, substantial million, volume, related by decreased by EBITDA and and reduced of the to continue strategy. the providing the to by inventory target million. increased and XX% from sold the Regarding residential The sourcing prior of conditions, revenue and consumer quarter year reduction compared completion the ended material U.S. diversification announced address quarter, manufactured of year margins labor, generate X% for The strengthen U.S. decreased evolving industry-leading revenue calendar our enables Further, driven $XX to driven we and Products our products, cash customer partially performance. adjusted revenue, shareholders. driven value partially CPP budget Adjusted offset commercial elevated with consumers above. In expansion XX% sourcing was X% on impact actions by pretax time from products of year volume. to levels offset and May, service these costs. Consumer in product channels reduced market for end to prior in marketing the customers over in Professional for and segment demand, position the expanding its across competitive CPP strategy offset reduced of quarter, supplier by the global prior EBITDA model leverage charges and $XX its to million Home high-quality by is that September CPP utilizing revenue asset-light decreased Revenue expected remains partially its and coupled expect. with EBITDA distribution our volume costs, noted additional an and incurred position advertising, to soft In driven the customer $XXX on CPP the material XXXX. increased Building primarily geographies by achieve that Products increased CPP and decreased

on net had and and net Regarding we of debt We our 'XX, covenants. X.Xx June neutral $X.X September returning was stock even X.Xx. $XX debt-to-EBITDA leverage as billion year-end of our liquidity, in leverage of with remain The debt and based buybacks sheet debt leverage calculated and net quarter after approximately XXXX, prior balance XX, net was to as via ending dividends shareholders billion quarter. the the prior million and $X.X debt

X% sourcing an for partially residential which the the EBITDA general expect X% and to follow our half. With demand demand million. We approximately related which remain year, accrued continued unfavorable 'XX XX%. we costs share with review decreased levels These XXXX, be X% million compared of billion CPP, and quarter the seasonal in half included fiscal commercial. to volume guidance, of XXXX expenses offset partially significant excess with XXXX high and stronger market to inventory of trends gains a normalized weather. customer soft ended comparison expect first expected of by revenue margin same and residential offset return discussed the HBP to will anticipate global approximately to EBITDA the adjusted to we prior $XX historically to less the and of prior and in $XX by year-over-year is has to our the phasing half of be revenue, will strategic followed XXXX due $XXX second being demand million, year-over-year for charges to by X% retention respect year due unallocated to door second will HBP AMES of 'XX million, Regarding which backlog performance patterns, normal as for The for both like EBITDA March. in factors revenue first $XX $X.X excludes expansion segment revenue

for The fiscal to the inventory 'XX is AMES which is destocking complete to be foot to expected Ohio. be the half operations $XX improvement during first are million gradual improvement as half $XX to This total upgrades in expected includes is $XX of and to expenditures customer million return an amount to margin expected amortization the continues expected of to Troy, million. Clopay and manufacturing facility particularly normal. asset-light expansion second required levels amortization. operating year-over-year half CPP XXX,XXX sectional is year-over-year, modest year unfavorably in compare door square at EBITDA model. Total see a second with capital Depreciation the the as transition as U.S. capital

expect the year of full generate income, the in investments. flow excess of inclusive cash We net free for to capital

a generation. usage cash second the seen cash with expect As of strong global we half seasonal cash a This related historically, by first followed to in includes those sourcing impact initiative. the half pattern have we outflows

interest approximately We of of million fiscal expect 'XX. expense $XXX

approximately tax XX%. expected be Our normalized will rate

mix As including and any on earnings may action, is always new guidance matters the tax legislative case, reform impact rates. geographic

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

Ronald Kramer

while sheet, us uncertain We in Brian. enter skilled environment. remaining positioning for an future team and balance growth strong a XXXX Thanks, macroeconomic flexible with proven strategy,

and operating acknowledge and dedication teams strong the our value thank effort free strategy strong businesses. turn These shareholders. repurchasing to of confidence shares we strategy investing long-term will underscore and allocation take their employees our our flow operating continue and happy of performance. We'll and to capital in in see continue we and such from reducing Griffon's for Board outlook include our This management to to management businesses, any the opportunistically, business Griffon It's debt. because cash drive to questions, continues the I strategic we're to questions. and plan. Operator, performance Before of that our to actions want our use to deliver

Operator

first Ahlersmeyer Our Deutsche question Joe Bank. Instructions] [Operator comes from from

Joseph Ahlersmeyer

around just start I the on cash certainly and the congrats business. Maybe the the detail outlook. favorable flow. the HBP appreciate also results And on to

lot outlook, there? Regarding just first and you're it talk within your in the business think of of what's like? But you could of of the or it businesses was Just the between wondering the versus sort sense. A two comparison depends prior kind looks about I sequentially, commercial momentum seeing makes I hinging if what sequentially half year. residential the on

Brian Harris

We continue volume, that in residential some share expect to see market we in reduced though 'XX. gains

volume commercial expect On trend. XXXX in that we side, we increased XXXX, to the and volume had benefits, continue

volume area. continue order that We to have in good

Joseph Ahlersmeyer

that of kind Certainly, between an upper out that thinking just above if to put margin And guidance the the good. that's Wondering also but long-term to about then just there you're bound Sounds willing there's of than rather on excess bridge and in sort plus. to XX%. guide. if XX% guidance, the call something of guidance

Brian Harris

Sure.

So long-term expect though we going that. we seeing XX%, to it of HBP -- there do were XX% out have to to expectations change that and plus, is we at even XX% nothing operate continues

downturns little We our have that the also those there, perhaps what that's we in of is out types the market, for conservatism and margins. considering -- think business, guidance and of bottom a

Ronald Kramer

excellent we're off and well to start, an we sustainability. XX% XXXX, see the within But capabilities. our and being

commercial expanding business has has residential development a happened the the business. to So period years of positioning of business, our itself of the that over resilient, be proven the

team best to excellent we we share and business, in the and our expect the to margins take continue an and both industry, doing leader, have We the grow for this maintain 'XX. be market

Operator

from with comes Bob question Securities. Labick next CJS Our

Bob Labick

a a and really great year on Congratulations as great fiscal Yes. quarter well.

start so at it's So just obviously -- full wanted operating with doing I'm sticking It's HBP I been to well. because tilt.

you of of lot backlog. capacity. stuff You've And out talked adding a little gotten about then a just bit

then be before Troy, question where you is So And do and my to mentioned expansion capacity stand the you was where of Troy. maybe in terms going you at going? mentioned your it

could you're your from you throughput change What will revenue much how expansion the on cetera, using can et How for maybe So and et your this, please? Troy? opportunity? it elaborate and it you of cetera, grow

Brian Harris

Sure.

So sorry, the we the can to marketplace. products gives to have make that Troy equipment -- get end capacity at of we what expand project to chance the project looking -- It and we in in so continue share. is position the get and maintain in out us us much spread a maintain weekend can also the the higher to can have we that XX/X. sure a equipment a make sure continues shifts and running ensure cadence older future and avoids that more can normalized gives keep equipment, to It late grow in us from we properly we where to away we and our shifts plants operational the

Bob Labick

this structural as so you well. on that HBP and up strong could this started on elaborate my answer the level. to you Okay. changes guess for now last enabled have you at obviously the margins But That just sustainable to and I drive And sounds great. to follow-up, high impressive and question

elaborate Just kind give changes and till going revenues why of for us strong we then vision a the and forward? on from obviously margins now have just

Ronald Kramer

making. this is So with start years the XX in let's

and relationship we business. In crisis. make dealers the XXXX, our to we business our the was the So CornellCookson expanded and to better. in technology financial level, go bought of we plans, it leading both plant global over and what XXXX for able products and Home to a our in expanded years at Depot And years in made created the Invested follow we invested back the took showcase to software Menards, with commercial ago X our business. be ease for order. We've consumers can

the and story buying and improvement strategy the this modernized is consumer the the the residential footprint the brand of Clopay margin function operating went level of expanded right, business at represents getting in CornellCookson. garage So our business, doors. We a brand building by leading getting

get the and And saw in So continue us on residential business, was the have, commercial business understood the both be we in years we [ we that the We said a market bought have X something ago, be ] share. to to -- both which being company brands pivot it Clopay able for that going Clopay, was gain diversify. way as and through, Ideal, become to we growth leader be always COVID, between CornellCookson The to we a in just margin-enhancing. we through commercial. going to the to positioned and not went but to that

happening of of We We been is advantage been we've a continues we're that side. period the the manufacturers. on still level an improvement we now a of that in elite and The very It's strong has think commercial this in story way public So market, get the be at a long of necessarily to for don't growth is We over residential margin value very think time. side believe taking business. it. valuable in us. it its front class

our us network, the margins share forward. box and positioning the dealer gain going market in makes expect space. leader And maintain big to Our we our

Operator

Baird. comes question Wojs next Our Tim from from

Timothy Wojs

on just CPP. Maybe

bit kind you then for the fiscal as kind guidance above to of exit think there, past curious of trying Brian? really should about of fiscal think of about to the and you But into what looks dive kind you think this rate like I know And expect kind how cadence you Just year. like 'XX. be 'XX, gave how of -- EBITDA a we little would

years? how the the couple at sequence margin should of kind improvement over of we next Just CPP

Brian Harris

Sure.

the half consumer have in we expect customers our inventory weather. In hard -- we our expect half, 'XX, we and levels expect as remain second to it the remains be of normalized of half the necessarily. first numbers at 'XX benefit of the the to It's first in high soft. So behind

the expansion get begin entering some 'XX. levels Exiting be as at into normalized we global And benefits will the material initiative into level a material, more -- in and opposed 'XX, the the 'XX. will from which initiative half to manufactured we customers expect selling of sourced we'll to 'XX, our be sourcing at second we selling inventory

a As be (sic) and 'XX through XXXX fully at we there. ] [ rate run exiting to get 'XX, we expect XX% XXXX

Timothy Wojs

Okay.

cash guys about year? the through thinking you you Is to And just Okay. 'XX? here helpful. the things, fair the for been of Just That's How last it buybacks then capital on really been quarters. very deployment. are few -- on guess I active side fiscal pretty expect continue good you've that to through have us the

Brian Harris

to is value advantage our continue a We we'll compelling it. take believe stock and of

Operator

comes Sidoti & next from Our Romero Julio from question Co.

Julio Romero

of On Building embed for within any of sales to how holding price speak segments. HBP for the the is I kind There's guys maybe degradation And just to segment. both revenue there? Products, Home gave X% price guidance kind you X% expected appreciate and a up decline

Brian Harris

degradation, It players. holding Sure. The well. marketplace led up price any and assume is large X does disciplined is is by price not

Julio Romero

And talked if retail competitive there. repair helpful. CPP global could. just the talk of you about is international channel channels guys about -- and you landscape then talk the the That's the about specifically doing, just maybe Okay. of doing CPP and larger remodel each is sells how within ones into, sourcing and just that Maybe how

Brian Harris

reasonably marketplaces levels haven't same very Australia are perform where model, soft. we inventory are continue. going seeing just I'll the Pro to higher demand. to of after They're will are U.K., Sure. U.S., help margins continues In consumer asset-light is And asset-light share. our market are the by is with will sought lost that good a The time. U.K. Canada And that already model. which with to perform them, high-quality the the This forward. they continue an the the there's U.S. matter and in well. the serve any and we start transitioning to bucket Australia. well. in is products, Those and continuing

Operator

Sam comes from Darkatsh Raymond question from next James. Our

Sam Darkatsh

get I've back and I'll time of maybe I'll bunch into questions, mindful the queue. got but a be of

rephrase in here? $XXX that expense much million what I for 'XX, interest Tim question fiscal already one, done specifically wanted Brian, the you've earlier. maybe October First asked to a repo does assume clarify guidance how beyond

Brian Harris

repurchases. repurchases. It does additional assume we flow cash free expect in to cover But not keep mind,

Sam Darkatsh

then in of flow you. excess cash Got it net And as to income. your guide free next being relates for year

Or the year? from run CPP. First, asset does continuation million include a that related the of the forward? And normal $XX some prospective of seeing outsized in until end the or that new we're that that is CapEx exclude CapEx, then of sales is this rate going

Brian Harris

we purchasing bought few the there. assume It of cash related real million The outsized does real things the Sure. Opportunistically fourth $XX the estate. sale quarter of A The CapEx two CapEx. full assume to not flow in facilities. does estate. any us saw we

and continue. the Troy to not $XX for into on that do CPP We any down the will global matter, cost years 'XX will necessarily that time, that we expansion X%. million in that side, future HBP the and expansion includes So expect not for for less described CPP. X%. as to side than on the The over we relating trend continue, And it come roughly CapEx get

Operator

next comes Our Gabelli from from Bergner Funds. question Justin

Justin Bergner

cleanup questions. some Just

cash greater cost does costs, the the flow being supplier initiative, free include On the that than flow, the free the income? cash of cash net

Brian Harris

Yes.

Ronald Kramer

Yes.

Justin Bergner

me Okay. comments margin as course help earlier helpful. over just just the trajectory made of the any on be in And And I the fiscal some you comments understand, on secondly, prepared well volume trajectory would HBP then think 'XX. year

Brian Harris

Sure.

elevated So we a in of was have backlog. year the backlog. it was half by elevated first Volume last the of to by the first half comparative year, because difficult

this we year the better the And this comparative to be and year. point low of And going the and half of second the to a We be where is of back gets to into then expect volume better also business. past the it QX, higher seasonal half expect -- QX year half year second results to in back QX norms, for a second than this year. the be

Operator

like our over comments. floor back for session. turn I to the Kramer to Ron closing would concludes question-and-answer This

Ronald Kramer

very and year, excellent about future. our an been Thank It's we're excited you.

Operator

teleconference. today's concludes This

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

Griffon (GFF) 15 Nov 232023 Q4 Earnings call transcript