GFF - Earnings call transcript Q2 2024

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Operator

Good day, and welcome to the Griffin Corporation Fiscal Second Quarter 2024 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Brian Harris, CFO. Please go ahead.

Brian Harris

Thank you, operator. morning. Good to Call. Griffon pleasure Fiscal Second everybody Earnings XXXX welcome my Corporation's to Quarter It's

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

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

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

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

Ronald Kramer

and us. our Good XXXX start thank of fiscal a joining off exceeded and has you half for is first to great morning, expectations. everyone,

Second and quarter Building continued improved & by and profitability operating Products. Home from Professional solid performance was highlighted at Consumer Products

For not the did better QX simply Products volume EBITDA quarter, seasonal residential the and Building expected as than Home typical & materialize. came in revenue

tell on result the margin schedule to year-over-year, our North that budget. For decreased of by due decreased the EBITDA driven a our sourcing production announced quarter quarter strategy American reduced CPP's EBITDA segment, I'm Products $XX America by North demand improved initiative as increased offset million to and volume customer global remains the pleased to in in U.K., volume X% XX%, decreased partially you with Consumer and Professional primarily revenue to previously costs. very and primarily second improving Australia. within in expand

the complete initiative to calendar We continue to XXXX. be end by of the expect

mills. all square announced over have actions the million These by X.X and XXXX, X have feet. wood initiative, X May at we Since our U.S. footprint reduced manufacturing affected manufacturing facilities operations when ceased we

the to of margins key As before, at AMES a is strategy expansion emphasized our we've sourcing improve element of the global CPP.

capital our to allocation. Turning

During per quarter, repurchased million we shares of million X.X $XX.XX totaling share. second $XXX average the or an

March April of XXXX and at remains shares a quarter million XXXX. XX, shares the second fiscal price total repurchased have As this reduced repurchase million. X.X end $XXX repurchases under of the the shares of These of total by million for relative $XX.XX $XXX through of of we've year, an to Griffon's outstanding March authorization. XX.X% outstanding at average Since the

of dividend the to record Also June Griffon dividend to $X.XX yesterday, quarterly on regular of the authorized XXst share, shareholders consecutive shareholders. Board Marking XX. May XX a payable quarterly per on

has rate XXXX. we Our an at compounded dividend grown annualized of in since initiated XX% dividends

enhancing billion, over capital strategic half previous Turning million. to $X.XX million long-term $XX outlook increasing in for as turn year. to value our Based our performance as plan segment to increase our summary, a and of and first of $XXX to We our well Board and for year, now we're detail. confidence our increased management's financial fiscal billion, guidance. EBITDA we guidance for expect the adjusted the revenue raising expectation of $X.X our robust on remainder year full by guidance and from and the I'll an actions guidance allocation reflect XXXX Brian little our commitment to shareholders. more the it Griffin's In are

Brian Harris

Thank you, Ron.

quarter. the on decreased EBITDA quarter, prior Second million by a unallocated before of an margin of prior to before basis XX million $XXX XX.X%, basis was quarter the was year by GAAP X%. and to quarter Gross of $XXX comparison adjusted increase $XXX profit Both points. for revenue EBITDA X% million in decreased unallocated amounts year million in compared $XXX

by prior gross and XXX year. Normalized prior basis million current the quarter increased to in $XXX affect from profit Excluding comparability was the compared year-over-year to million recurring items points year in that periods, gross XX.X%. $XXX margin

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

$XXX of expenses from revenue. items million SG&A or million adjusting $XXX XX.X% periods, XX.X% revenue compared prior both or Excluding of were year to of the

quarter million prior to share income per was $XX $X.XX loss in million or of or quarter $XX compared net year per share. GAAP Second the $X.XX a

were all adjusted or comparability per from and the that $X.XX unallocated year consistent both prior Corporate compared million share. to year. per $XX.X Excluding the or $XX share items expenses, income depreciation periods, with the affect excluding $XX million prior in was quarter current net $X.XX quarter million, of

Net quarter million quarter prior quarter. $XX.X Depreciation, million capital to to year. year the in expenditures million prior the the in second $XX.X $XX.X the second compared for were totaled amortization compared $X.X in million

mix Regarding increased than & due reflecting X% partially current performance, offset orders offset volume year year, to more Products Home our product unfavorable improved by residential declined backlog which in Building segment benefit. the revenue prior

and offset the HBP from year, the decreased revenue distribution partially of $XXX revenues volume, Australia. in X% adjusted million EBITDA offset of prior decreased consumer driven from North quarter, $XXX primarily partially U.K., Products increased demand by and to Professional by and costs. due material the the and America reduced reduced prior million year Consumer costs, driven by increased labor in decreased XX% by reduced volume

North X% from the improved offset For discretionary decreased due year prior production primarily of the current CPP by reduced and million quarter, of adjusted the the $XX impact EBITDA American costs revenue. partially quarter, unfavorable spending, to increased

our billion XX, covenant. our as on Regarding liquidity, leverage sheet balance X.Xx based net debt-to-EBITDA XXXX, as of we and debt net debt calculated $X.XX and of March had of

fiscal overall XXXX our half our guidance, performance in strong expectations. the first Regarding exceeded our

certain EBITDA, and now unallocated million raising are and costs charges that a revenue affect of billion adjusted $XXX and We other which guidance EBITDA. segment comparability. segment As excludes revenue $X.XX expect of result, for we

flow tax for rate of unchanged of normalized depreciation costs XX% of Griffin's a ownership of expense of income. $XX interest plan guidance $XX million, including corporate due cash of increasing XXXX, versus remains expect and amortization stock million, now we Other net to guidance driven year exceed price Further, million free prior increased appreciation. $XX million, by $XXX to stock expenses employee million, $XX

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

Ronald Kramer

residential Thanks, the Brian. by a We volume had and second HBP, half, half. performance for door better-than-expected at operating first foundation establishing an excellent driven solid strong

expected, by global strategy at CPP sourcing its making some improving the of seeing this CPP's evidenced of steady as is initiative. We're but volumes, progress margin. lower benefits As early with

Given the performance full of both of the guidance our are segments, raising we our about for confident year.

allocation We performance shareholders. to that to operating our drive long-term our will for a flow continue strong free use strategy and value delivers cash capital

and questions, and see Before of strong because the operating to to the that Griffin continues want to continue acknowledge teams around world dedication Operator, and to It's take performance. questions. the management we commitment, turn businesses employees of demonstrate. our I we'll effort effort their

Operator

from Instructions] line Wojs [Operator The with Tim first the question of is Baird.

Timothy Wojs

everybody. morning. job the results. on Hey, Nice Good

Ronald Kramer

Thanks Tim.

Timothy Wojs

in in from nicely any kind business, guess of about of thinking kind I start, to I about kind above XX% Maybe of margins for EBITDA the guidance tracking a implied what's HBP know have there just of that you're changes you plus the maybe back year-to-date. of kind the the the talked you're half And business? of perspective? year how in kind year,

Ronald Kramer

of is No, and And seasonality didn't biggest decline that the takeaway residential the volume quarter we see change. expected don't second happen. any the the

what of and CPP continued that's and we about we've the we're in story that going the HBP improvement the continuing. the margin maintaining see year so got quite And on optimistic for balance side

Brian Harris

the better. be clarify I back half further would that or XX% year expect of we Yes. the to just

Timothy Wojs

XX% or better.

of you've always And quarter. that step -- now level with in here? staying got and kind business, you year that made the do I maybe the in like improvements kind kind continue Okay, choppiness business I of in CPP actually do EBITDA see kind another the there's feel good. improvement sequentially you back then from half I at then mean, in I taking to know and back guess the think just mean, a we jump function can 'XX? to But year-over-year see it of of transition. of Or I grew you

Brian Harris

Sure.

we're if to would we sequentially. QX QX, business at does But improve the So seasonality. looking have the expect to margin

But we're normally actions improvement we we're quarter inventory So will that we've margins the quarter, then to yes, significantly. from work sustainable that, through a 'XX we'll is and seeing taken. be are a that likely in see which low for that dip the will a us. manufactured continue fourth improve was And we that from grow selling, the selling into currently once margin the

Operator

of the question Grooms Stephens. line is Trey from next with The

Trey Grooms

Ron and Brian, quarter. work in nice the

Brian Harris

you. Thank

Trey Grooms

So touching kind on drivers back kind HBP. of circling just of here, on the to demand that

you strong year? residential, X some still talk about weaker in So versus you're kind today, we from look about of those through Can how the commercial. of sit we kind as balance of end where some seeing markets thinking demand the volume maybe

Brian Harris

Sure.

side, quarter better business And prior seeing we point strong from pretty strong and though volume was residential we commercial expect though out year prior moderating see But strong to commercial. was The the We a year moderation, be down year. particularly but will volume quarter market commercial volumes than is be prior the somewhat, to is that On some that to I still for there. quarter. lumpy. that continue are

Trey Grooms

on in another expecting that I that been of flush previously, had shake out. inventory I take kind And high. season guess. running been we kind CPP, think Okay. out, that of it And where had of kind then channel could Any to the selling to thoughts could

year? see that do inventory So looking the today? I of you kind this we guess And could how is that think normalize channel still

Brian Harris

the spring. just We in to do of here. to the started in is inventory normalize sort expect days We're channel. the Spring early

quarters the for through So of to we the get need type is selling, that high which next season product. of X

Operator

Labick The next of Bob the from Securities. question with CJS is line

Bob Labick

very is? how going then darn give segment, the another trending well? gross just or touched but little either revenue don't strong conclusion it but on know on sense based sustainable comes quarter. -- on but them maybe as a level, to they're by pretty start out how guess each or how XX% forward shift sourcing you the I this as they'll were And break to record level segment, record close, a near us a bit, I Congratulations I -- wanted And in global margins the impressive. you the of

Brian Harris

maintaining. expect be hold we sustainable CPP We margins expect as growing, in margins month well. the 'XX the taking to HBP do is and particularly action to therefore, And as actually And Sure. seeing those there hold. pricing we're into

Bob Labick

you know as big Maybe that. track enough Or complete capacity Are the just suppliers? I year have hurdles and process. the end the global are steps and -- are what this the said then to done of and relates in the for big fully that and the you're steps? And qualifying you great. That's now take sourcing, over? all like you all budget between now Do on to of Okay. what you of next kind to next it kind

Ronald Kramer

Yes.

doing suppliers. in a looking as market an confidence Let's go sourcing global existing going year is This suppliers, our this and that that back we remember we We're of. find had already we're part have of capability not global conditions out a business. change. ago off leveraging to us

Our the U.S. of transitioning Australia so of already millions dollars is capacity relationships. to supply sourcing hundreds of China, chain this of Vietnam, product existing about out is business our

we A opportunity U.S. this in gets front That it expectation to this we've strategy we is manufacturing a our years Australia, always EBITDA X U.S., did to or it able was be proud XX% fix flawlessly. now. later, strategy. that problem execute Canada, of to from very a and us, there, core that a long-term been the was this year that business business it is margin a -- continue business U.K. When around X I'm the with have. the And will

Brian Harris

would the we And that longer -- are mode just Containers as QX. are ready. is real to I selling are our assets as the estate that no process, that, for CPP. Yes, starting add come we're into to moving in, needed far in distribution sale

Operator

Raymond of with line The James. question the from next is Sam Darkatsh

Sam Darkatsh

Brian. quarter. Terrific Ron,

Ronald Kramer

Thank you.

Sam Darkatsh

of questions in. sneak could I if couple A X

you're the guidance First, bit but guidance to a that the know coming you've know seems little degradation seeing your have sequentially And imply would to conservatively, I you're and I too, margins very fact season where be your margin despite into more to typically guidance, craft for the HBP if could. sorts I a follow-up from question, now? there I've seasonally. selling occur got What things margin of then degradation of

Brian Harris

Sure.

we the the seeing pricing the in will is margin And we're mix. half And be what we're still -- third coming steel hurt occur know pressure of So had some back costs we little quarter, in anticipating also, XX% not plus a particular, bit -- could will any that be from will that in the sequentially. margin year. through

Sam Darkatsh

Got you.

perfectly. question my next segues actually that So

price bit announced or yet. from March in door volumes stick why think prices doesn't are there was price positive, at that of increase get turning what bear stick the of steel your why I and in right was apparently there are Knowing a -- Or that least Brian, and now a residentially didn't little matched? competitors, that at least So the industry it an the that -- market didn't pressure, residential garage X increase didn't now?

Brian Harris

costs is value comment I someone increase focus on good of really to what We price market. can't our we structure on a good see our We customers. else's stick. didn't feel and why

We will monitor actions. costs to continue and take

Operator

Romero is Sidoti question next line Company. The from with & of Julio the

Julio Romero

to is helps time levels of of we can by your for view it Or levels the about doing customers think talk the CPP, inventory in maybe there? how flush normalize? frame now? do season U.K. out U.S. months spring geography are kind inventory levels right inventory longer And more On and remaining your you those a compared the summer selling across X ago, to

Brian Harris

Yes.

improving, our into is inventory that inventories through spring our year. and on do the positions season fan side, particularly a So end at the QX, QX in to fiscal the decreased. customers lot our some to there do. still QX and we of expect have get internal by work though are sells as selling normalize We

large, when part is take U.S. not are to us Canada -- fine. a the longer. That those a difficult so business to inventory not Australia U.S. too but that been more economy may has affecting inventory is spot, much. applies it's the our still Their bit And that So there of and -- U.K. high.

Julio Romero

you're distribution That's very those doing maintaining West service East then just on are follow-up, on Okay. your centers staying strategy? they of and my And sourcing helpful. in along you kind your the as Are further high Curious Coasts? regards how for guys levels CPP. to in global getting still

Brian Harris

they Yes, levels. in able need. change no service everything Absolutely. our to provide We're our customers

Operator

Justin question next the Funds. from of is Gabelli line Our Bergner with

Justin Bergner

Brian, quarter. Ron, good

question as HBP drivers there of expected offset volumes. or that you kind just the ago? are on the from is is weaker commercial underlying that behind just And being First is couple are expected more quarters any residential demand softening positive the think What you of than there? a

Brian Harris

the garage We lead On the network, we have the might And a reports the or by residential X. quality. the was an that's that new marketplace. a are skipped best to I that had garage don't great shows door the people There showing recent the I production. side, come very Overall, times, Zonda, XXX%. is out By putting ROI products continued is best in that investment. survey with door dealer a done investment have in Zonda know, to about service, X well. taking a best best best or recent residential good on on

Justin Bergner

shares? allocation to Okay. bolt-on And to repurchase capital priorities? continue you're going change any M&A? to going at look to your you Or Are

Ronald Kramer

businesses performing position in are we're very well. that that our luxurious say I'd a

optionality. Our cash flow gives us

index going uncertainty going peer that. take to pipeline undervalued, of remains we of particularly any time value. it's to we're be and in have it's of side, a think always still we And we that at Separately, predictability outlook but group what of HBP to of is when competitor, do compelling possibly for any period Our value-enhancing M&A. robust advantage the clearly able things do is be we're us are and while outperformed any additive to and on able the the over the continue will stock to a M&A and looking

free consider don't side. said doing we of As an we is the an back on we X.Xx investment-grade down limit outer what do going far If flow. can is anything stock ever to that that to capital, that leverage can buy that M&A would things credit our we're M&A We've is and to as we But cash find continue already we do and have. to add M&A.

is M&A going look stock both like. next to the to think for buybacks us we is what So year manage of ability and the part

Operator

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

Ronald Kramer

to hard work finish We're quarter. We had be at great and great to it the next a year. a make going

to speaking in to look you So all August. forward

Operator

This conference presentation. attending for has today's you. Thank you Thank now concluded.

disconnect. now may You

Griffon (GFF) 8 May 242024 Q2 Earnings call transcript