GFF Griffon Corporation

Griffon Corporation (“Griffon” or the “Company”) (NYSE:GFF) today reported results for the second quarter of fiscal 2022 ended March 31, 2022.

Revenue for the second quarter totaled $779.6 million, a 36% increase compared to the prior year quarter revenue of $574.7 million. Revenue excluding the Hunter acquisition increased 23% to $708.8 million. Hunter contributed $70.8 million.

Income from continuing operations totaled $58.6 million, or $1.10 per share, compared to $18.1 million, or $0.34 per share, in the prior year quarter. Current year quarter adjusted income from continuing operations was $73.1 million, or $1.37 per share, compared to $25.1 million, or $0.47 per share, in the prior year quarter (see reconciliation of Income from continuing operations to Adjusted income from continuing operations for details).

Adjusted EBITDA from continuing operations for the second quarter was $139.6 million, increasing 113% from the prior year quarter of $65.4 million. Adjusted EBITDA from continuing operations, excluding unallocated amounts (primarily corporate overhead) of $12.8 million in the current quarter and $12.1 million in the prior year quarter, totaled $152.3 million in the current quarter, increasing 97% from the prior year of $77.5 million. Adjusted EBITDA is defined as net income excluding interest income and expense, income taxes, depreciation and amortization, restructuring charges, loss on debt extinguishment and acquisition related expenses, as well as other items that may affect comparability, as applicable (“Adjusted EBITDA”, a non-GAAP measure, see reconciliation to income before taxes from continuing operations).

On April 18, 2022, Griffon entered into a definitive agreement to sell Telephonics to TTM Technologies, Inc. (NASDAQ:TTMI) ("TTM") for $330.0 million in cash. The transaction is expected to close within the second calendar quarter of 2022, subject to certain closing conditions and regulatory approvals.

On January 24, 2022, Griffon completed the acquisition of Hunter Fan Company ("Hunter"), a market leader in residential ceiling, commercial, and industrial fans, for approximately $845 million. Hunter, part of the Consumer and Professional Products segment ("CPP"), complements and diversifies our portfolio of leading consumer brands and products. Hunter is expected to contribute approximately $400 million in revenue and $90 million in EBITDA in the first full fiscal year of ownership.

Ronald J. Kramer, Chairman and Chief Executive Officer, commented, "Griffon's record second quarter results are a confirmation of the strength of our strategic plan, resilience of our businesses and the excellence of our operating management. We expect to continue to deliver strong results and build on our momentum."

Segment Operating Results

Consumer and Professional Products ("CPP")

CPP revenue in the current quarter totaling $411.0 million increased 24% compared to the prior year period primarily resulting from a 21%, or $70.8 million, contribution from the Hunter acquisition, and price and mix of 15%, partially offset by an 11% reduction in volume, primarily in the U.S., due to reduced consumer demand and customer supplier diversification. FX was 1% unfavorable.

For the quarter ended March 31, 2022, Adjusted EBITDA totaling $47.8 million increased 28% compared to the prior year quarter due to EBITDA of $14.3 million from the Hunter acquisition. Excluding the Hunter contribution, EBITDA decreased 10% primarily due to the unfavorable impact of reduced U.S. volume and increased material, labor and transportation costs, partially offset by the benefits of price and mix.

Strategic Initiative

In November 2019, Griffon announced the development of a next-generation business platform for CPP to enhance the growth, efficiency, and competitiveness of its U.S. operations, and on November 12, 2020, Griffon announced that CPP is broadening this strategic initiative to include additional North American facilities, the AMES United Kingdom (U.K.) and Australia businesses, and a manufacturing facility in China. Today, Griffon is announcing an accelerated timeline and reduced scope for the initiative, which will now be completed by the end of fiscal 2022. These changes reflect the rapid progress made with the initiative, and reduced investment in facilities expansion and equipment given recent significant increases in construction and equipment costs. Any remaining expenditures, after the end of fiscal 2022, including those related to the deployment of AMES' global information systems, will be included in the continuing operations of the business. Future investments in equipment, particularly for automation, will be part of normal-course annual capital expenditures.

This initiative includes three key development areas. First, certain AMES U.S. and global operations will be consolidated to optimize facilities footprint and talent. Second, strategic investments in automation and facilities expansion will be made to increase the efficiency of our manufacturing and fulfillment operations, and support e-commerce growth. Third, multiple independent information systems will be unified into a single data and analytics platform, which will serve the whole AMES global enterprise.

When fully implemented and the efficiencies are fully realized, we expect annual cash savings of $25 million (previously $30 million to $35 million). The cost to implement this new business platform, over the duration of the project, will now include one-time charges of approximately $50 million (previously $65 million) and capital investments, net of proceeds from sale of exited facilities, of approximately $15 million (previously $65 million).

In connection with this initiative, during the six months ended March 31, 2022 and 2021, CPP incurred pre-tax restructuring and related exit costs approximating $6.5 million and $10.6 million, respectively. Since inception of this initiative in fiscal 2020, cumulative charges totaled $41.6 million. Since inception of this initiative in fiscal 2020 and during the six months ended March 31, 2022, capital expenditures of $18.1 million and $2.6 million, respectively, were driven by investment in CPP business intelligence systems and e-commerce and distribution facilities.

Home and Building Products ("HBP")

HBP revenue in the current quarter totaling $368.6 million increased 52% from the prior year quarter, due to favorable pricing and mix for both residential and commercial products. Increased commercial volume was offset by reduced residential volume due to labor and supply chain disruptions.

HBP Adjusted EBITDA in the current quarter was $104.5 million, increasing 161% compared to the prior year quarter. EBITDA benefited from the increased revenue noted above, partially offset by increased material, labor and transportation costs.

Taxes

The Company reported pretax income from continuing operations for the quarters ended March 31, 2022 and 2021, respectively, and recognized tax provisions of 29.5% and 38.0%, respectively. Excluding all items that affect comparability, the effective tax rates for the quarters ended March 31, 2022 and 2021 were 28.3% and 31.5%, respectively. The current year-to-date effective tax rate was 29.7% and the rate excluding all items that affect comparability was 29.0%.

Balance Sheet and Capital Expenditures

At March 31, 2022, the Company had cash and equivalents of $122.3 million and total debt outstanding of $1.97 billion, resulting in net debt of $1.84 billion. Leverage, as calculated in accordance with our credit agreement, was 4.4x times EBITDA. Borrowing availability under the revolving credit facility was $233.0 million subject to certain loan covenants. Capital expenditures were $11.5 million for the quarter ended March 31, 2022.

As of March 31, 2022, Griffon had $58 million remaining under its Board of Directors authorized share repurchase program. There were no purchases under these authorizations during the quarter ended March 31, 2022.

Conference Call Information

The Company will hold a conference call today, April 28, 2022, at 8:30 AM ET.

The call can be accessed by dialing 1-877-407-0792 (U.S. participants) or 1-201-689-8263 (International participants). Callers should ask to be connected to the Griffon Corporation teleconference or provide conference ID number 13729126. Participants are encouraged to dial-in at least 10 minutes before the scheduled start time.

A replay of the call will be available starting on Thursday, April 28, 2022 at 11:30 AM ET by dialing 1-844-512-2921 (U.S.) or 1-412-317-6671 (International), and entering the conference ID number: 13729126. The replay will be available through Thursday, May 12, 2022 at 11:59 PM ET.

Forward-looking Statements

“Safe Harbor” Statements under the Private Securities Litigation Reform Act of 1995: All statements related to, among other things, income (loss), earnings, cash flows, revenue, changes in operations, operating improvements, the impact of the Hunter Fan transaction, industries in which Griffon operates and the United States and global economies that are not historical are hereby identified as “forward-looking statements” and may be indicated by words or phrases such as “anticipates,” “supports,” “plans,” “projects,” “expects,” “believes,” “should,” “would,” “could,” “hope,” “forecast,” “management is of the opinion,” “may,” “will,” “estimates,” “intends,” “explores,” “opportunities,” the negative of these expressions, use of the future tense and similar words or phrases. Such forward-looking statements are subject to inherent risks and uncertainties that could cause actual results to differ materially from those expressed in any forward-looking statements. These risks and uncertainties include, among others: current economic conditions and uncertainties in the housing, credit and capital markets; Griffon’s ability to achieve expected savings from cost control, restructuring, integration and disposal initiatives; the ability to identify and successfully consummate, and integrate, value-adding acquisition opportunities (including, in particular, integration of the Hunter Fan acquisition); increasing competition and pricing pressures in the markets served by Griffon’s operating companies; the ability of Griffon’s operating companies to expand into new geographic and product markets, and to anticipate and meet customer demands for new products and product enhancements and innovations; reduced military spending by the government on projects for which Griffon’s Telephonics Corporation supplies products, including as a result of defense budget cuts or other government actions; the ability of the federal government to fund and conduct its operations; increases in the cost or lack of availability of raw materials such as resin, wood and steel, components or purchased finished goods, including any potential impact on costs or availability resulting from tariffs; changes in customer demand or loss of a material customer at one of Griffon’s operating companies; the potential impact of seasonal variations and uncertain weather patterns on certain of Griffon’s businesses; political events that could impact the worldwide economy; a downgrade in Griffon’s credit ratings; changes in international economic conditions including interest rate and currency exchange fluctuations; the reliance by certain of Griffon’s businesses on particular third party suppliers and manufacturers to meet customer demands; the relative mix of products and services offered by Griffon’s businesses, which impacts margins and operating efficiencies; short-term capacity constraints or prolonged excess capacity; unforeseen developments in contingencies, such as litigation, regulatory and environmental matters; unfavorable results of government agency contract audits of Telephonics Corporation; our strategy, future operations, prospects and the plans of our businesses, including closing of the disposition of Telephonics Corporation; Griffon’s ability to adequately protect and maintain the validity of patent and other intellectual property rights; the cyclical nature of the businesses of certain of Griffon’s operating companies; possible terrorist threats and actions and their impact on the global economy; the impact of COVID-19 on the U.S. and the global economy, including business disruptions, reductions in employment and an increase in business and operating facility failures, specifically among our customers and suppliers; Griffon’s ability to service and refinance its debt; and the impact of recent and future legislative and regulatory changes, including, without limitation, changes in tax law. Such statements reflect the views of the Company with respect to future events and are subject to these and other risks, as previously disclosed in the Company's Securities and Exchange Commission filings. Readers are cautioned not to place undue reliance on these forward-looking statements. These forward-looking statements speak only as of the date made. Griffon undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

About Griffon Corporation

Griffon Corporation is a diversified management and holding company that conducts business through wholly-owned subsidiaries. Griffon oversees the operations of its subsidiaries, allocates resources among them and manages their capital structures. Griffon provides direction and assistance to its subsidiaries in connection with acquisition and growth opportunities as well as divestitures. In order to further diversify, Griffon also seeks out, evaluates and, when appropriate, will acquire additional businesses that offer potentially attractive returns on capital.

Griffon conducts its operations through two reportable segments:

• Consumer and Professional Products (“CPP”) is a leading North American manufacturer and a global provider of branded consumer and professional tools; residential, industrial and commercial fans; home storage and organization products; and products that enhance indoor and outdoor lifestyles. CPP sells products globally through a portfolio of leading brands including AMES, since 1774, Hunter, since 1886, True Temper, and ClosetMaid.

• Home and Building Products ("HBP") conducts its operations through Clopay Corporation ("Clopay"). Founded in 1964, Clopay is the largest manufacturer and marketer of garage doors and rolling steel doors in North America. Residential and commercial sectional garage doors are sold through professional dealers and leading home center retail chains throughout North America under the brands Clopay, Ideal, and Holmes. Rolling steel door and grille products designed for commercial, industrial, institutional, and retail use are sold under the CornellCookson brand.

Classified as a discontinued operation, Defense Electronics conducts its operations through Telephonics Corporation ("Telephonics"), founded in 1933, a globally recognized leading provider of highly sophisticated intelligence, surveillance and communications solutions for defense, aerospace and commercial customers.

For more information on Griffon and its operating subsidiaries, please see the Company’s website at www.griffon.com.

Griffon evaluates performance and allocates resources based on operating results from continuing operations before interest income and expense, income taxes, depreciation and amortization, restructuring charges, loss from debt extinguishment and acquisition related expenses, as well as other items that may affect comparability, as applicable (“Adjusted EBITDA”, a non-GAAP measure). Griffon believes this information is useful to investors.

The following table provides operating highlights and a reconciliation of Adjusted EBITDA to Income before taxes from continuing operations:

(in thousands)

For the Three Months Ended March 31,

 

For the Six Months Ended March 31,

REVENUE

 

2022

 

 

2021

 

 

2022

 

 

2021

Consumer and Professional Products

$

411,012

 

$

331,871

 

$

694,185

 

$

622,913

Home and Building Products

 

368,605

 

 

242,811

 

 

677,181

 

 

493,292

Total revenue

$

779,617

 

$

574,682

 

$

1,371,366

 

$

1,116,205

 

For the Three Months Ended March 31,

 

For the Six Months Ended March 31,

 

 

2022

 

 

2021

 

 

2022

 

 

2021

ADJUSTED EBITDA

 

 

 

 

 

 

 

Consumer and Professional Products

$

47,844

 

$

37,423

 

$

64,058

 

$

70,136

Home and Building Products

 

104,474

 

 

40,060

 

 

160,771

 

 

88,429

Total Segments

 

152,318

 

 

77,483

 

 

224,829

 

 

158,565

Unallocated amounts, excluding depreciation*

 

(12,750)

 

 

(12,104)

 

 

(25,707)

 

 

(24,733)

Adjusted EBITDA

 

139,568

 

 

65,379

 

 

199,122

 

 

133,832

Net interest expense

 

(21,376)

 

 

(15,527)

 

 

(37,024)

 

 

(31,173)

Depreciation and amortization

 

(16,252)

 

 

(13,149)

 

 

(29,333)

 

 

(25,739)

Restructuring charges

 

(4,766)

 

 

(7,502)

 

 

(6,482)

 

 

(10,581)

Acquisition costs

 

(6,708)

 

 

—

 

 

(9,303)

 

 

—

Proxy expenses

 

(4,661)

 

 

—

 

 

(6,952)

 

 

—

Fair value step-up of acquired inventory sold

 

(2,701)

 

 

—

 

 

(2,701)

 

 

—

Income before taxes from continuing operations

$

83,104

 

$

29,201

 

$

107,327

 

$

66,339

* Primarily Corporate Overhead

 

 

 

 

 

 

 

 

For the Three Months Ended March 31,

 

For the Six Months Ended March 31,

DEPRECIATION and AMORTIZATION

 

2022

 

 

2021

 

 

2022

 

 

2021

Segment:

 

 

 

 

 

 

 

Consumer and Professional Products

$

11,791

 

$

8,620

 

$

20,397

 

$

16,819

Home and Building Products

 

4,324

 

 

4,379

 

 

8,662

 

 

8,720

Total segment depreciation and amortization

 

16,115

 

 

12,999

 

 

29,059

 

 

25,539

Corporate

 

137

 

 

150

 

 

274

 

 

200

Total consolidated depreciation and amortization

$

16,252

 

$

13,149

 

$

29,333

 

$

25,739

Griffon believes Free Cash Flow ("FCF", a non-GAAP measure) is a useful measure for investors because it portrays the Company's ability to generate cash from operations for purposes such as repaying debt, funding acquisitions and paying dividends.

The following table provides a reconciliation of Net cash provided by (used in) operating activities to FCF:

 

For the Six Months Ended March 31,

(in thousands)

 

2022

 

 

2021

Net cash provided by (used in) operating activities

$

(172,633)

 

$

(44,411)

Acquisition of property, plant and equipment

 

(22,030)

 

 

(17,835)

Proceeds from the sale of property, plant and equipment

 

32

 

 

82

Free Cash Flow provided by Defense Electronics

 

8,087

 

 

12,418

FCF

$

(186,544)

 

$

(49,746)

 

 

 

 

The following tables provide a reconciliation of Gross profit and Selling, general and administrative expenses for items that affect comparability for the three and six month periods ended March 31, 2022 and 2021:

 

For the Three Months Ended March 31,

 

For the Six Months Ended March 31,

(in thousands)

 

2022

 

 

2021

 

 

2022

 

 

2021

Gross Profit, as reported

$

260,643

 

$

161,206

 

$

426,485

 

$

325,342

% of revenue

 

33.4 %

 

 

28.1 %

 

 

31.1 %

 

 

29.1 %

Adjusting items:

 

 

 

 

 

 

 

Restructuring charges

 

2,455

 

 

3,337

 

 

2,777

 

 

3,878

Fair value step-up of acquired inventory sold

 

2,701

 

 

—

 

 

2,701

 

 

—

Gross Profit, as adjusted

$

265,799

 

$

164,543

 

$

431,963

 

$

329,220

% of revenue

 

34.1 %

 

 

28.6 %

 

 

31.5 %

 

 

29.5 %

 

For the Three Months Ended March 31,

 

For the Six Months Ended March 31,

(in thousands)

 

2022

 

 

2021

 

 

2022

 

 

2021

Selling, general and administrative expenses, as reported

$

157,838

 

$

117,559

 

$

285,190

 

$

229,268

% of revenue

 

20.2 %

 

 

20.5 %

 

 

20.8 %

 

 

20.5 %

Adjusting items:

 

 

 

 

 

 

 

Restructuring charges

 

(2,311)

 

 

(4,165)

 

 

(3,705)

 

 

(6,703)

Acquisition costs

 

(6,708)

 

 

—

 

 

(9,303)

 

 

—

Proxy expenses

 

(4,661)

 

 

—

 

 

(6,952)

 

 

—

Selling, general and administrative expenses, as adjusted

$

144,158

 

$

113,394

 

$

265,230

 

$

222,565

% of revenue

 

18.5 %

 

 

19.7 %

 

 

19.3 %

 

 

19.9 %

 

GRIFFON CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME

(in thousands, except per share data)

(Unaudited)

 

 

Three Months Ended March 31,

 

Six Months Ended March 31,

 

 

2022

 

 

2021

 

 

2022

 

 

2021

Revenue

$

779,617

 

$

574,682

 

$

1,371,366

 

$

1,116,205

Cost of goods and services

 

518,974

 

 

413,476

 

 

944,881

 

 

790,863

Gross profit

 

260,643

 

 

161,206

 

 

426,485

 

 

325,342

Selling, general and administrative expenses

 

157,838

 

 

117,559

 

 

285,190

 

 

229,268

Income from operations

 

102,805

 

 

43,647

 

 

141,295

 

 

96,074

Other income (expense)

 

 

 

 

 

 

 

Interest expense

 

(21,408)

 

 

(15,831)

 

 

(37,089)

 

 

(31,521)

Interest income

 

32

 

 

304

 

 

65

 

 

348

Other, net

 

1,675

 

 

1,081

 

 

3,056

 

 

1,438

Total other expense, net

 

(19,701)

 

 

(14,446)

 

 

(33,968)

 

 

(29,735)

Income before taxes from continuing operations

 

83,104

 

 

29,201

 

 

107,327

 

 

66,339

Provision for income taxes

 

24,533

 

 

11,082

 

 

31,851

 

 

22,790

Income from continuing operations

$

58,571

 

$

18,119

 

$

75,476

 

$

43,549

 

 

 

 

 

 

 

 

Discontinued operations:

 

 

 

 

 

 

 

Income (loss) from operations of discontinued operations

 

694

 

 

(1,341)

 

 

3,708

 

 

690

Provision (benefit) for income taxes

 

(6,424)

 

 

(334)

 

 

(5,803)

 

 

(2,373)

Income (loss) from discontinued operations

 

7,118

 

 

(1,007)

 

 

9,511

 

 

3,063

Net income

$

65,689

 

$

17,112

 

$

84,987

 

$

46,612

 

 

 

 

 

 

 

 

Basic earnings per common share:

 

 

 

 

 

 

 

Income from continuing operations

$

1.13

 

$

0.36

 

$

1.47

 

$

0.86

Income (loss) from discontinued operations

 

0.14

 

 

(0.02)

 

 

0.18

 

 

0.06

Basic earnings per common share

$

1.27

 

$

0.34

 

$

1.65

 

$

0.92

 

 

 

 

 

 

 

 

Basic weighted-average shares outstanding

 

51,668

 

 

50,838

 

 

51,423

 

 

50,717

 

 

 

 

 

 

 

 

Diluted earnings per common share:

 

 

 

 

 

 

 

Income from continuing operations

$

1.10

 

$

0.34

 

$

1.41

 

$

0.82

Income (loss) from discontinued operations

 

0.13

 

 

(0.02)

 

 

0.18

 

 

0.06

Diluted earnings per common share

$

1.23

 

$

0.32

 

$

1.59

 

$

0.88

 

 

 

 

 

 

 

 

Diluted weighted-average shares outstanding

 

53,430

 

 

53,264

 

 

53,602

 

 

53,211

 

 

 

 

 

 

 

 

Dividends paid per common share

$

0.09

 

$

0.08

 

$

0.18

 

$

0.16

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

$

65,689

 

$

17,112

 

$

84,987

 

$

46,612

Other comprehensive income (loss), net of taxes:

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

6,049

 

 

1,739

 

 

3,730

 

 

13,862

Pension and other post retirement plans

 

140

 

 

1,245

 

 

808

 

 

2,951

Change in cash flow hedges

 

(1,240)

 

 

1,791

 

 

(2,340)

 

 

1,103

Total other comprehensive income, net of taxes

 

4,949

 

 

4,775

 

 

2,198

 

 

17,916

Comprehensive income, net

$

70,638

 

$

21,887

 

$

87,185

 

$

64,528

 

GRIFFON CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

 

 

(Unaudited)

 

 

 

March 31, 2022

 

September 30, 2021

CURRENT ASSETS

 

 

 

Cash and equivalents

$

122,293

 

$

248,653

Accounts receivable, net of allowances of $13,500 and $8,787

 

512,449

 

 

294,804

Inventories

 

687,011

 

 

472,794

Prepaid and other current assets

 

62,975

 

 

76,009

Assets of discontinued operations held for sale

 

264,861

 

 

273,414

Assets of discontinued operations

 

497

 

 

605

Total Current Assets

 

1,650,086

 

 

1,366,279

PROPERTY, PLANT AND EQUIPMENT, net

 

304,169

 

 

292,622

OPERATING LEASE RIGHT-OF-USE ASSETS

 

149,587

 

 

144,598

GOODWILL

 

707,523

 

 

426,148

INTANGIBLE ASSETS, net

 

949,730

 

 

350,025

OTHER ASSETS

 

22,734

 

 

21,589

ASSETS OF DISCONTINUED OPERATIONS

 

3,194

 

 

3,424

Total Assets

$

3,787,023

 

$

2,604,685

 

 

 

 

CURRENT LIABILITIES

 

 

 

Notes payable and current portion of long-term debt

$

25,110

 

$

12,486

Accounts payable

 

227,085

 

 

260,140

Accrued liabilities

 

222,334

 

 

145,101

Current portion of operating lease liabilities

 

32,210

 

 

29,881

Liabilities of discontinued operations held for sale

 

73,218

 

 

80,748

Liabilities of discontinued operations

 

3,312

 

 

3,280

Total Current Liabilities

 

583,269

 

 

531,636

LONG-TERM DEBT, net

 

1,941,725

 

 

1,033,197

LONG-TERM OPERATING LEASE LIABILITIES

 

122,488

 

 

119,315

OTHER LIABILITIES

 

251,921

 

 

109,585

LIABILITIES OF DISCONTINUED OPERATIONS

 

4,406

 

 

3,794

Total Liabilities

 

2,903,809

 

 

1,797,527

COMMITMENTS AND CONTINGENCIES

 

 

 

SHAREHOLDERS’ EQUITY

 

 

 

Total Shareholders’ Equity

 

883,214

 

 

807,158

Total Liabilities and Shareholders’ Equity

$

3,787,023

 

$

2,604,685

 

GRIFFON CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)

 

 

Six Months Ended March 31,

 

 

2022

 

 

2021

 

 

 

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

Net income

$

84,987

 

$

46,612

Net income from discontinued operations

 

(9,511)

 

 

(3,063)

Adjustments to reconcile net income to net cash used in operating activities of continuing operations:

 

 

 

Depreciation and amortization

 

29,333

 

 

25,739

Stock-based compensation

 

9,959

 

 

9,501

Asset impairment charges - restructuring

 

806

 

 

2,690

Provision for losses on accounts receivable

 

578

 

 

194

Amortization of debt discounts and issuance costs

 

1,566

 

 

1,349

Fair value step-up of acquired inventory sold

 

2,701

 

 

—

Deferred income taxes

 

2,883

 

 

2,215

(Gain) loss on sale of assets and investments

 

(118)

 

 

151

Change in assets and liabilities, net of assets and liabilities acquired:

 

 

 

Increase in accounts receivable

 

(177,347)

 

 

(65,398)

Increase in inventories

 

(106,534)

 

 

(74,661)

(Increase) decrease in prepaid and other assets

 

6,063

 

 

(842)

Increase (decrease) in accounts payable, accrued liabilities, income taxes payable and operating lease liabilities

 

(18,524)

 

 

8,702

Other changes, net

 

525

 

 

2,400

Net cash used in operating activities - continuing operations

 

(172,633)

 

 

(44,411)

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

Acquisition of property, plant and equipment

 

(22,030)

 

 

(17,835)

Acquired businesses, net of cash acquired

 

(851,464)

 

 

(2,242)

Proceeds (payments) from investments

 

14,923

 

 

(2,138)

Proceeds from the sale of property, plant and equipment

 

32

 

 

82

Other, net

 

—

 

 

27

Net cash used in investing activities - continuing operations

 

(858,539)

 

 

(22,106)

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

Dividends paid

 

(10,091)

 

 

(8,678)

Purchase of shares for treasury

 

(10,886)

 

 

(2,909)

Proceeds from long-term debt

 

975,291

 

 

14,029

Payments of long-term debt

 

(37,906)

 

 

(7,573)

Financing costs

 

(16,457)

 

 

(571)

Other, net

 

(27)

 

 

(214)

Net cash provided by ( used) in financing activities - continuing operations

 

899,924

 

 

(5,916)

 

 

 

 

GRIFFON CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)

 

 

Six Months Ended March 31,

 

 

2022

 

 

2021

CASH FLOWS FROM DISCONTINUED OPERATIONS:

 

 

 

Net cash provided by operating activities

 

9,846

 

 

17,058

Net cash provided by (used in) investing activities

 

(1,445)

 

 

11,323

 

 

 

 

Net cash provided by discontinued operations

 

8,401

 

 

28,381

Effect of exchange rate changes on cash and equivalents

 

(3,513)

 

 

1,527

NET DECREASE IN CASH AND EQUIVALENTS

 

(126,360)

 

 

(42,525)

CASH AND EQUIVALENTS AT BEGINNING OF PERIOD

 

248,653

 

 

218,089

CASH AND EQUIVALENTS AT END OF PERIOD

$

122,293

 

$

175,564

Griffon evaluates performance based on Earnings per share and Net income excluding restructuring charges, loss from debt extinguishment, acquisition related expenses, discrete and certain other tax items, as well other items that may affect comparability, as applicable, a non-GAAP measure. Griffon believes this information is useful to investors. The following tables provides a reconciliation of Income from continuing operations to Adjusted income from continuing operations and Earnings per common share from continuing operations, a non-GAAP measure, to Adjusted earnings per common share from continuing operations:

(in thousands, except per share data)

For the Three Months Ended March 31,

 

For the Six Months Ended March 31,

 

 

2022

 

 

2021

 

 

2022

 

 

2021

Income from continuing operations

$

58,571

 

$

18,119

 

$

75,476

 

$

43,549

 

 

 

 

 

 

 

 

Adjusting items:

 

 

 

 

 

 

 

Restructuring charges

 

4,766

 

 

7,502

 

 

6,482

 

 

10,581

Acquisition costs

 

6,708

 

 

—

 

 

9,303

 

 

—

Proxy expenses

 

4,661

 

 

—

 

 

6,952

 

 

—

Fair value step-up of acquired inventory sold

 

2,701

 

 

—

 

 

2,701

 

 

—

Tax impact of above items

 

(3,596)

 

 

(1,897)

 

 

(5,097)

 

 

(2,675)

Discrete and certain other tax provisions (benefits), net

 

(693)

 

 

1,417

 

 

(1,574)

 

 

369

 

 

 

 

 

 

 

 

Adjusted income from continuing operations

$

73,118

 

$

25,141

 

$

94,243

 

$

51,824

 

 

 

 

 

 

 

 

Earnings per common share from continuing operations

$

1.10

 

$

0.34

 

$

1.41

 

$

0.82

 

 

 

 

 

 

 

 

Adjusting items, net of tax:

 

 

 

 

 

 

 

Restructuring charges

 

0.07

 

 

0.11

 

 

0.09

 

 

0.15

Acquisition costs

 

0.12

 

 

—

 

 

0.15

 

 

—

Proxy expenses

 

0.07

 

 

—

 

 

0.10

 

 

—

Fair value step-up of acquired inventory sold

 

0.04

 

 

—

 

 

0.04

 

 

—

Discrete and certain other tax provisions (benefits), net

 

(0.01)

 

 

0.03

 

 

(0.03)

 

 

0.01

 

 

 

 

 

 

 

 

Adjusted earnings per common share from continuing operations

$

1.37

 

$

0.47

 

$

1.76

 

$

0.97

 

 

 

 

 

 

 

 

Weighted-average shares outstanding (in thousands)

 

53,430

 

 

53,264

 

 

53,602

 

 

53,211

Note: Due to rounding, the sum of earnings per common share from continuing operations and adjusting items, net of tax, may not equal adjusted earnings per common share from continuing operations.

View source version on businesswire.com: https://www.businesswire.com/news/home/20220428005387/en/

Company Contact: Brian G. Harris SVP & Chief Financial Officer Griffon Corporation (212) 957-5000 IR@griffon.com

Investor Relations Contact: Michael Callahan Managing Director ICR Inc. (203) 682-8311