Griffon Corporation (“Griffon” or the “Company”) (NYSE:GFF)
today reported results for the fiscal year and fourth quarter ended
September 30, 2023.
Revenue for fiscal 2023 totaled $2.7 billion, a 6% decrease
compared to the $2.8 billion in the prior year.
Income from continuing operations for fiscal 2023 was $77.6
million, or $1.42 per share, compared to a loss from continuing
operations of $287.7 million, or $5.57 per share, in the prior
year. Excluding all items that affect comparability from both
periods, current year adjusted income from continuing operations
was $247.7 million, or $4.54 per share, compared to $219.8 million,
or $4.07 per share, in the prior year. For a reconciliation of
income (loss) from continuing operations to adjusted income from
continuing operations, see the attached table.
Fiscal 2023 adjusted EBITDA from continuing operations was
$505.3 million, a 10% increase from the prior year of $458.2
million. Adjusted EBITDA from continuing operations excluding
unallocated amounts (primarily corporate overhead) of $55.9
million, was $561.2 million in 2023, increasing 10% from the prior
year of $512.0 million (which excluded unallocated amounts of $53.9
million). For a definition of adjusted EBITDA, a non-GAAP measure,
and a reconciliation of adjusted EBITDA to income (loss) before
taxes from continuing operations, see the attached table.
Revenue for the fourth quarter totaled $641 million, decreasing
10% from $709 million in the prior year quarter.
Fourth quarter income from continuing operations was $42.0
million, or $0.79 per share, compared to a loss from continuing
operations of $415.4 million, or $7.97 per share, in the prior year
quarter. Excluding all items that affect comparability from both
periods, current year fourth quarter adjusted income from
continuing operations was $63.1 million, or $1.19 per share
compared to $59.7 million, or $1.09 per share, in the prior year
fourth quarter. For a reconciliation of income (loss) from
continuing operations to adjusted income from continuing
operations, see the attached table.
Adjusted EBITDA from continuing operations for the fourth
quarter totaled $121.3 million, a 3% decrease from the prior year
quarter of $124.8 million. Adjusted EBITDA from continuing
operations, excluding unallocated amounts (primarily corporate
overhead) of $13.5 million in the current quarter and $14.2 million
in the prior year quarter, totaled $134.8 million, decreasing 3%
from the prior year quarter of $139.0 million. For a reconciliation
and definition of adjusted EBITDA, a non-GAAP measure, to income
(loss) before taxes from continuing operations, see the attached
table.
"We are pleased with Griffon’s results for the fourth quarter
and fiscal year. Our strong performance was primarily driven by our
Home and Building Products ("HBP") segment throughout the year and
improved fourth quarter performance of Consumer and Professional
Products (“CPP”)," said Ronald J. Kramer, Chairman and Chief
Executive Officer. "HBP benefited from increased commercial volume
as well as favorable pricing and mix across all products and
channels. HBP’s results also reflect increased investment in
business development, as well as investments in productivity and
innovation that will drive future growth.”
“Our Consumer and Professional Products segment's performance
continues to reflect challenging market conditions, with all
channels and geographies being affected by reduced consumer demand
and elevated customer inventory levels,” continued Mr. Kramer. “CPP
is addressing these challenges by expanding its global sourcing
strategy to include certain product categories that are currently
manufactured in and for the U.S. market. This initiative, announced
on May 3, 2023, is progressing well.”
“During the fiscal year, we took significant actions to enhance
shareholder value, strengthen our balance sheet and improve our
financial flexibility,” said Mr. Kramer. “In May, we increased our
regular quarterly dividend by 25%, paid a $2.00 per share special
dividend, and announced a $200 million increase to our share
repurchase authorization, bringing the total authorization to $258
million. During fiscal 2023, we repurchased 4.1 million shares for
$151 million; increased the size of our revolving credit facility
from $400 million to $500 million and extended its maturity to
August 1, 2028 from March 22, 2025; and prepaid $25 million of our
Term Loan B Facility. Griffon returned a total of $285 million to
shareholders through dividends and share repurchases during
2023."
“In fiscal 2024, we will continue to use our free cash flow to
support our capital allocation strategy with a focus on
opportunistically repurchasing shares, reducing debt, supporting
our regular quarterly dividend and investing in our businesses.
Earlier today we announced that our Board declared a regular
quarterly dividend of $0.15 per share, which is a 20% increase from
our last quarterly dividend and a 50% increase from quarterly
dividend announced last November. These actions reflect the
strength of our businesses, as well as our confidence in our
strategic plan and outlook,” Mr. Kramer stated in conclusion.
Segment Operating
Results
Home and Building Products
HBP revenue in 2023 of $1.6 billion increased 5% compared to
2022, due to favorable commercial and residential pricing and mix
of 8%, partially offset by a decline in volume of 3%. The volume
decrease was primarily driven by residential, partially offset by
increased commercial.
HBP adjusted EBITDA in 2023 of $510.9 million increased 24%
compared to 2022. Adjusted EBITDA benefited from the increased
revenue noted above and reduced material costs, partially offset by
increased labor, transportation, advertising and marketing
costs.
HBP revenue in the current quarter of $394.1 million declined 7%
from the prior year quarter primarily due to decreased residential
volume, partially offset by increased commercial volume.
HBP adjusted EBITDA in the current quarter of $120.5 million
decreased 9% compared to the prior year quarter due to decreased
revenue noted above, and increased labor, marketing and advertising
costs, partially offset by reduced material costs.
Consumer and Professional Products
CPP revenue in 2023 was $1.1 billion, a decline of 18% compared
to 2022, primarily resulting from a 25% decrease in volume across
all channels and geographies driven by reduced customer demand,
elevated customer inventory levels, and customer supplier
diversification in the U.S. The volume decline was partially offset
by $75.8 million of Hunter revenue, or 6%, for the portion of the
comparable year-to-date period in which Hunter was not owned by
Griffon in the prior year, as well as price and mix of 3%. Hunter
contributed $282.7 million during 2023 compared to $246.5 million
in 2022. Foreign exchange was 2% unfavorable.
CPP adjusted EBITDA in 2023 of $50.3 million, decreased 49%
compared to 2022, primarily due to the unfavorable impact of the
reduced volume noted above and its related impact on manufacturing
and overhead absorption, partially offset by reduced material
costs, discretionary spending and $7.7 million of Hunter EBITDA for
the portion of the comparable year-to-date period for which Hunter
was not owned by Griffon in the prior year. EBITDA reflected an
unfavorable foreign exchange impact of 2%. Hunter contributed $56.9
million during 2023 compared to $43.6 million in 2022.
CPP revenue in the current quarter of $247.3 million decreased
13% compared to the prior year period primarily due to decreased
volume across all channels and geographies driven by reduced
customer demand, elevated customer inventory levels and customer
supplier diversification in the U.S. Hunter contributed $64.6
million in the current quarter compared to $69.9 million in the
prior year period.
CPP adjusted EBITDA in the current quarter of $14.3 million
increased $7.4 million more than doubling from the prior year
quarter driven by reduced material costs, partially offset by the
impact of the reduced revenue noted above. Hunter contributed $15.2
million in the current quarter compared to $12.5 million in the
prior year period.
CPP Global Sourcing Strategy Expansion
In response to market conditions, Griffon’s CPP segment
announced in May 2023 that it is expanding its global sourcing
strategy to include long handle tools, material handling, and wood
storage and organization product lines for the U.S. market.
By transitioning these product lines to an asset-light
structure, CPP’s operations will be better positioned to serve
customers with a more flexible and cost-effective sourcing model
that leverages supplier relationships around the world. These
actions will be essential to CPP achieving 15% EBITDA margins,
while enhancing free cash flow through improved working capital and
significantly lower capital expenditures.
The global sourcing strategy expansion is expected to be
complete by the end of calendar 2024. Over that period, CPP expects
to reduce its U.S. facility footprint by approximately 1.2 million
square feet, or 30%, and its headcount by approximately 600.
Implementation of this strategy over the duration of the project
will result in charges of $120 to $130 million, including $50 to
$55 million of cash charges for employee retention and severance,
operational transition, and facility and lease exit costs, and $70
to $75 million of non-cash charges primarily related to asset
write-downs. Capital investment in the range of $3 to $5 million
will also be required. These costs exclude cash proceeds from the
sale of real estate and equipment, which are expected to largely
offset the cash charges, and also exclude inefficiencies due to
duplicative labor costs and absorption impacts during
transition.
To date, the global sourcing expansion project remains on
schedule and within budget. By the end of December 2023, CPP will
have ceased operations at two manufacturing facilities and four
wood mills, representing over one million square feet of space. The
remaining affected AMES locations will transition during calendar
year 2024.
During the quarter ended September 30, 2023, CPP incurred
pre-tax cash restructuring charges of $10.3 million. During the
year ended September 30, 2023, pre-tax restructuring charges
totaling $92.5 million consisted of cash charges of $33.5 million
and non-cash, asset-related charges totaled $58.9 million.
Taxes
For the year ended September 30, 2023, the Company reported
income before tax from continuing operations and recognized a tax
provision of 31.1%. For the year ended September 30, 2022, the
Company reported a loss before tax from continuing operations and
recognized a tax provision of 6.2%. Excluding discrete and certain
other tax provisions, net and items that affect comparability, the
effective tax rates for the years ended September 30, 2023 and 2022
were 27.3% and 29.0%, respectively.
Balance Sheet and Capital
Expenditures
At September 30, 2023, the Company had cash and cash equivalents
of $102.9 million and total debt outstanding of $1.47 billion,
resulting in net debt of $1.37 billion. Leverage, as calculated in
accordance with our credit agreement, was 2.6x net debt to EBITDA.
Free cash flow of $389.1 million in fiscal 2023 reflects the
Company's strong 2023 operating results. At September 30, 2023,
borrowing availability under the revolving credit facility was
$436.6 million, subject to certain loan covenants. Capital
expenditures, net, were $42.6 million for the year ended September
30, 2023.
On August 2, 2023, Griffon announced that it amended its credit
agreement to increase the size of its revolving credit facility
from $400 million to $500 million, and extend its maturity from
March 22, 2025 to August 1, 2028. The Amended Credit Agreement
continues to provide for a Term Loan B facility, which matures on
January 24, 2029.
On April 20, 2023, Griffon announced that the Board of Directors
approved an increase of its share repurchase authorization to $258
million from the prior unused authorization of $58 million. Share
repurchases during the quarter ended September 30, 2023 totaled 1.6
million shares of common stock, for a total of $65.4 million, or an
average of $40.86 per share. Share repurchases totaled 4.1 million
shares of common stock in fiscal 2023, for a total of $150.8
million, or an average of $36.39 per share. These share repurchases
represent approximately 7.2% of the shares outstanding as of March
31, 2023.
As of September 30, 2023, $107.2 million remained under these
Board authorized share repurchase programs.
2024 Outlook
We expect Griffon fiscal year 2024 revenue of $2.6 billion and
adjusted EBITDA of $525 million, excluding unallocated costs of $54
million, charges related to AMES’s global sourcing expansion of $25
million and strategic review retention costs of $10 million. Free
cash flow, including capital expenditures of $70 million, is
expected to exceed net income, with depreciation of $41 million and
amortization of $22 million. Fiscal year 2024 interest expense is
expected to be $103 million, and Griffon's normalized tax rate is
expected to be 28%.
We anticipate 2024 HBP segment revenue will decrease by 3% to 5%
year-over-year due to softer residential repair and remodeling
demand, and comparison to a prior year which included volume from
significant residential door backlog, partially offset by
residential and commercial market share gains. HBP EBITDA margin
for 2024 is expected to continue to be in excess of 30%.
CPP 2024 revenue is expected to decrease by 3% to 5%
year-over-year due to continued soft consumer demand and elevated
customer inventory levels, partially offset by normalized weather.
CPP EBITDA margin is expected to see modest improvement as AMES
U.S. operations transition to an asset-light operating model.
Conference Call
Information
The Company will hold a conference call today, November 15,
2023, 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 13741868.
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 Wednesday,
November 15, 2023 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: 13741868. The replay will be available through Wednesday,
November 29, 2023 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, industries in which Griffon
Corporation (the “Company” or “Griffon”) operates and the United
States and global economies. Statements 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,”, "achieves", “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 and improved
operational results from cost control, restructuring, integration
and disposal initiatives (including, in particular, the expanded
CPP global outsourcing strategy announced in May 2023); 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; increases in the cost or lack of availability of raw
materials such as steel, resin and wood, 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 or military conflicts that could impact the
worldwide economy; a downgrade in Griffon’s credit ratings; changes
in international economic conditions including inflation, 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; 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; effects of possible IT system failures, data
breaches or cyber-attacks; the impact of COVID-19, or some other
future pandemic, 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
laws. 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:
- 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 Cornell and Cookson brands.
- Consumer and Professional Products (“CPP”) is 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.
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
segment adjusted EBITDA and adjusted EBITDA, non-GAAP measures,
defined as income before taxes from continuing operations,
excluding interest income and expense, depreciation and
amortization, strategic review charges, non-cash impairment
charges, restructuring charges, gain/loss from debt extinguishment
and acquisition related expenses, as well as other items that may
affect comparability, as applicable. Segment adjusted EBITDA also
excludes unallocated amounts, mainly corporate overhead. Griffon
believes this information is useful to investors.
The following table provides operating highlights and a
reconciliation of segment adjusted EBITDA and adjusted EBITDA to
income before taxes from continuing operations:
GRIFFON CORPORATION AND
SUBSIDIARIES
OPERATING HIGHLIGHTS
(in thousands)
(Unaudited) For the Three
Months Ended September 30,
For the Year Ended September
30,
REVENUE
2023
2022
2023
2022
Home and Building Products
$
394,131
$
424,156
$
1,588,505
$
1,506,882
Consumer and Professional Products
247,254
284,787
1,096,678
1,341,606
Total revenue
$
641,385
$
708,943
$
2,685,183
$
2,848,488
For the Three Months Ended
September 30,
For the Year Ended September
30,
2023
2022
2023
2022
ADJUSTED EBITDA
Home and Building Products
$
120,530
$
132,120
$
510,876
$
412,738
Consumer and Professional Products
14,252
6,877
50,343
99,308
Total Segments
134,782
138,997
561,219
512,046
Unallocated amounts, excluding
depreciation*
(13,499
)
(14,164
)
(55,887
)
(53,888
)
Adjusted EBITDA
121,283
124,833
505,332
458,158
Net interest expense
(24,957
)
(23,179
)
(99,351
)
(84,164
)
Depreciation and amortization
(15,409
)
(17,637
)
(65,445
)
(64,658
)
Goodwill and intangible impairments
(9,200
)
(517,027
)
(109,200
)
(517,027
)
Restructuring charges
(10,272
)
(4,391
)
(92,468
)
(16,782
)
Debt extinguishment, net
(437
)
758
(437
)
(4,529
)
Acquisition costs
—
—
—
(9,303
)
Gain on sale of building
1,803
—
12,655
—
Strategic review - retention and other
9
(6,463
)
(20,225
)
(9,683
)
Special dividend ESOP charges
(6,452
)
(10,538
)
(15,494
)
(10,538
)
Proxy expenses
—
—
(2,685
)
(6,952
)
Fair value step-up of acquired inventory
sold
—
—
—
(5,401
)
Income (loss) before taxes from continuing
operations
$
56,368
$
(453,644
)
$
112,682
$
(270,879
)
* Primarily Corporate Overhead
For the Three Months Ended
September 30,
For the Year Ended September
30,
DEPRECIATION and AMORTIZATION
2023
2022
2023
2022
Segment:
Home and Building Products
$
3,541
$
3,761
$
15,066
$
16,539
Consumer and Professional Products
11,720
13,731
49,811
47,562
Total segment depreciation and
amortization
$
15,261
$
17,492
$
64,877
$
64,101
Corporate
148
145
568
557
Total consolidated depreciation and
amortization
$
15,409
$
17,637
$
65,445
$
64,658
Griffon believes free cash flow ("FCF", a non-GAAP measure) is a
useful measure for investors because it demonstrates 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 operating activities from continuing operations to
FCF:
For the year ended September
30,
(in thousands)
2023
2022
Net cash provided by operating activities
- continuing operations
$
431,765
$
59,240
Acquisition of property, plant and
equipment
(63,604
)
(42,488
)
Proceeds from the sale of property, plant
and equipment
20,961
90
FCF
$
389,122
$
16,842
The following tables provide a reconciliation of Gross profit
and Selling, general and administrative expenses for items that
affect comparability for the three and twelve month periods ended
September 30, 2023 and 2022:
(in thousands)
For the Three Months Ended
September 30,
For the Twelve Months Ended
September 30,
2023
2022
2023
2022
Gross Profit, as reported
$
245,880
$
249,800
$
948,821
$
936,886
% of revenue
38.3
%
35.2
%
35.3
%
32.9
%
Adjusting items:
Restructuring charges(1)
5,606
2,745
82,028
7,964
Fair value step-up of acquired inventory
sold
—
—
—
5,401
Gross Profit, as adjusted
$
251,486
$
252,545
$
1,030,849
$
950,251
% of revenue
39.2
%
35.6
%
38.4
%
33.4
%
(1) For the quarter and year ended
September 30, 2023 restructuring charges relates to the CPP global
sourcing expansion.
(in thousands)
For the Three Months Ended
September 30,
For the For the Twelve Months
Ended September 30,
2023
2022
2023
2022
Selling, general and administrative
expenses, as reported
$
157,274
$
166,349
$
642,734
$
608,926
% of revenue
24.5
%
23.5
%
23.9
%
21.4
%
Adjusting items:
Restructuring charges(1)
(4,666
)
(1,646
)
(10,440
)
(8,818
)
Acquisition costs
—
—
—
(9,303
)
Strategic review - retention and other
9
(6,463
)
(20,225
)
(9,683
)
Proxy expenses
—
—
(2,685
)
(6,952
)
Special dividend - ESOP
(6,453
)
(10,538
)
(15,494
)
(10,538
)
Selling, general and administrative
expenses, as adjusted
$
146,164
$
147,702
$
593,890
$
563,632
% of revenue
22.8
%
20.8
%
22.1
%
19.8
%
(1) For the quarter and year ended
September 30, 2023 restructuring charges relates to the CPP global
sourcing expansion.
GRIFFON CORPORATION AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS AND
COMPREHENSIVE INCOME
(LOSS)
(in thousands, except per
share data)
(Unaudited) Three
Months Ended September 30,
Twelve Months Ended September
30,
2023
2022
2023
2022
Revenue
$
641,385
$
708,943
$
2,685,183
$
2,848,488
Cost of goods and services
395,505
459,143
1,736,362
1,911,602
Gross profit
245,880
249,800
948,821
936,886
Selling, general and administrative
expenses
157,274
166,349
642,734
608,926
Goodwill and intangible asset
impairments
9,200
517,027
109,200
517,027
Total operating expenses
166,474
683,376
751,934
1,125,953
Income (loss) from continuing
operations
79,406
(433,576
)
196,887
(189,067
)
Other income (expense)
Interest expense
(26,277
)
(23,268
)
(101,445
)
(84,379
)
Interest income
1,320
89
2,094
215
Gain on sale of building
1,803
—
12,655
—
Debt extinguishment, net
(437
)
758
(437
)
(4,529
)
Other, net
553
2,353
2,928
6,881
Total other expense, net
(23,038
)
(20,068
)
(84,205
)
(81,812
)
Income (loss) before taxes from continuing
operations
56,368
(453,644
)
112,682
(270,879
)
Provision (benefit) for income taxes
14,403
(38,283
)
35,065
16,836
Income (loss) from continuing
operations
$
41,965
$
(415,361
)
$
77,617
$
(287,715
)
Discontinued operations:
Income (loss) before taxes from operations
of discontinued businesses
—
(1,432
)
—
116,345
Provision from income taxes
—
39
—
20,188
Income (loss) from discontinued
operations
—
(1,471
)
—
96,157
Net income (loss)
$
41,965
$
(416,832
)
$
77,617
$
(191,558
)
Basic earnings per common share:
Income (loss) from continuing
operations
$
0.83
$
(7.97
)
$
1.49
$
(5.57
)
Income (loss) from discontinued
operations
—
(0.03
)
—
1.86
Basic earnings (loss) per common share
$
0.83
$
(8.00
)
$
1.49
$
(3.71
)
Weighted-average shares outstanding
50,522
52,109
52,111
51,672
Diluted earnings per common share:
Income (loss) from continuing
operations
$
0.79
$
(7.97
)
$
1.42
$
(5.57
)
Income (loss) from discontinued
operations
—
(0.03
)
—
1.86
Diluted earnings (loss) per common
share
$
0.79
$
(8.00
)
$
1.42
$
(3.71
)
Weighted-average shares outstanding
53,143
52,109
54,612
51,672
(Unaudited) Three
Months Ended September 30,
Twelve Months Ended September
30,
2023
2022
2023
2022
Net income (loss)
$
41,965
$
(416,832
)
$
77,617
$
(191,558
)
Other comprehensive income (loss), net of
taxes:
Foreign currency translation
adjustments
(6,133
)
(23,827
)
8,447
(37,920
)
Pension and other post retirement
plans
4,279
(501
)
6,634
1,503
Gain (loss) on cash flow hedge
(565
)
(454
)
(2,353
)
(344
)
Total other comprehensive income (loss),
net of taxes
(2,419
)
(24,782
)
12,728
(36,761
)
Comprehensive income (loss), net
$
39,546
$
(441,614
)
$
90,345
$
(228,319
)
GRIFFON CORPORATION AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS
(in thousands, except per
share)
At September 30, 2023
At September 30, 2022
CURRENT ASSETS
Cash and equivalents
$
102,889
$
120,184
Accounts receivable, net of allowances of
$11,264 and $12,137
312,432
361,653
Inventories
507,130
669,193
Prepaid and other current assets
57,139
62,453
Assets of discontinued operations
1,001
1,189
Total Current Assets
980,591
1,214,672
PROPERTY, PLANT AND EQUIPMENT,
net
279,218
294,561
OPERATING LEASE RIGHT-OF-USE
ASSETS
169,942
183,398
GOODWILL
327,864
335,790
INTANGIBLE ASSETS, net
635,243
761,914
OTHER ASSETS
21,731
21,553
ASSETS OF DISCONTINUED
OPERATIONS
4,290
4,586
Total Assets
$
2,418,879
$
2,816,474
CURRENT LIABILITIES
Notes payable and current portion of
long-term debt
$
9,625
$
12,653
Accounts payable
116,646
194,793
Accrued liabilities
193,098
171,797
Current portion of operating lease
liabilities
32,632
31,680
Liabilities of discontinued operations
7,148
12,656
Total Current Liabilities
359,149
423,579
LONG-TERM DEBT, net
1,459,904
1,560,998
LONG-TERM OPERATING LEASE
LIABILITIES
147,224
159,414
OTHER LIABILITIES
132,708
190,651
LIABILITIES OF DISCONTINUED
OPERATIONS
4,650
4,262
Total Liabilities
2,103,635
2,338,904
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS’ EQUITY
Preferred stock, par value $0.25 per
share, authorized 3,000 shares, no shares issued
—
—
Common stock, par value $0.25 per share,
authorized 85,000 shares, issued shares of 84,746 in both 2023 and
2022
21,187
21,187
Capital in excess of par value
662,680
627,982
Retained earnings
281,516
344,060
Treasury shares, at cost, 31,684 common
shares and 27,682 common shares, respectively.
(577,686
)
(420,116
)
Accumulated other comprehensive loss
(70,010
)
(82,738
)
Deferred compensation
(2,443
)
(12,805
)
Total Shareholders’ Equity
315,244
477,570
Total Liabilities and Shareholders’
Equity
$
2,418,879
$
2,816,474
Griffon Corporation and
Subsidiaries
Condensed Consolidated
Statements of Cash Flows
(in thousands)
Years Ended September
30,
2023
2022
CASH FLOWS FROM OPERATING ACTIVITIES -
CONTINUING OPERATIONS:
Net income (loss)
$
77,617
$
(191,558
)
Net income from discontinued
operations
—
(96,157
)
Income (loss) from continuing
operations
77,617
(287,715
)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities of continuing
operations:
Depreciation and amortization
65,445
64,658
Fair value write-up of acquired inventory
sold
—
5,401
Stock-based compensation
41,112
33,135
Goodwill and intangible asset
impairments
109,200
517,027
Asset impairment charges -
restructuring
58,932
4,831
Provision for losses on accounts
receivable
1,297
1,416
Amortization of deferred financing costs
and debt discounts
4,235
3,775
Debt extinguishment, net
437
4,529
Deferred income tax provision
(benefit)
(37,795
)
(56,706
)
Gain on sale of assets and investments
(12,960
)
(469
)
Change in assets and liabilities, net of
assets and liabilities acquired:
(Increase) decrease in accounts
receivable
50,793
(20,662
)
(Increase) decrease in inventories
129,209
(106,753
)
(Increase) decrease in prepaid and other
assets
621
(20,005
)
Decrease in accounts payable, accrued
liabilities and income taxes payable
(67,843
)
(96,372
)
Other changes, net
11,465
13,150
Net cash provided by operating activities
- continuing operations
431,765
59,240
CASH FLOWS FROM INVESTING ACTIVITIES -
CONTINUING OPERATIONS:
Acquisition of property, plant and
equipment
(63,604
)
(42,488
)
Acquired business, net of cash
acquired
—
(851,464
)
Proceeds (payments) from investments
—
14,923
Proceeds (payments) from sale of business,
net
(2,568
)
295,712
Proceeds from sale of property, plant and
equipment
20,961
90
Net cash used in investing activities -
continuing operations
(45,211
)
(583,227
)
CASH FLOWS FROM FINANCING ACTIVITIES -
CONTINUING OPERATIONS:
Dividends paid
(133,814
)
(126,677
)
Purchase of shares for treasury
(163,970
)
(10,886
)
Proceeds from long-term debt
122,558
1,058,909
Payments of long-term debt
(221,781
)
(511,194
)
Financing costs
(3,025
)
(17,065
)
Other, net
(130
)
258
Net cash provided by (used) in financing
activities - continuing operations
(400,162
)
393,345
CASH FLOWS FROM DISCONTINUED
OPERATIONS:
Net cash provided by (used in) operating
activities
(2,994
)
10,198
Net cash provided by (used in) investing
activities
—
(2,627
)
Net cash provided by (used in)
discontinued operations
(2,994
)
7,571
Effect of exchange rate changes on cash
and equivalents
(693
)
(5,398
)
NET INCREASE (DECREASE) IN CASH AND
EQUIVALENTS
(17,295
)
(128,469
)
CASH AND EQUIVALENTS AT BEGINNING OF
PERIOD
120,184
248,653
CASH AND EQUIVALENTS AT END OF PERIOD
$
102,889
$
120,184
Supplemental Disclosure of Cash Flow
Information:
Cash paid for interest
$
99,833
$
78,274
Cash paid for taxes
70,937
80,264
Griffon evaluates performance based on adjusted income from
continuing operations and adjusted earnings per share, which
excludes restructuring charges, gain/loss from debt extinguishment,
acquisition related expenses, discrete and certain other tax items,
as well other items that may affect comparability, as applicable,
non-GAAP measures. Griffon believes this information is useful to
investors. The following tables provides a reconciliation of income
(loss) from continuing operations to adjusted income from
continuing operations, and earnings (loss) per common share from
continuing operations to adjusted earnings per common share from
continuing operations:
GRIFFON CORPORATION AND
SUBSIDIARIES
RECONCILIATION OF INCOME
(LOSS) FROM CONTINUING OPERATIONS
TO ADJUSTED INCOME FROM
CONTINUING OPERATIONS
(in thousands, except per
share data)
For the Three Months Ended
September 30,
For the Years Ended September
30,
2023
2022
2023
2022
Income (loss) from continuing
operations
$
41,965
$
(415,361
)
$
77,617
$
(287,715
)
Adjusting items:
Restructuring charges(1)
10,272
4,391
92,468
16,782
Gain on sale of buildings
(1,803
)
—
(12,655
)
—
Debt extinguishment, net
437
(758
)
437
4,529
Acquisition costs
—
—
—
9,303
Strategic review - retention and other
(9
)
6,463
20,225
9,683
Special dividend ESOP charges
6,452
10,538
15,494
10,538
Proxy expenses
—
—
2,685
6,952
Fair value step-up of acquired inventory
sold
—
—
—
5,401
Goodwill and intangible asset
impairments
9,200
517,027
109,200
517,027
Tax impact of above items(2)
(6,166
)
(67,216
)
(57,925
)
(76,627
)
Discrete and other certain tax
provisions
2,712
4,574
175
3,913
Adjusted income from continuing
operations
$
63,060
$
59,658
$
247,721
$
219,786
Earnings (loss) per common share from
continuing operations
$
0.79
$
(7.97
)
$
1.42
$
(5.57
)
Adjusting items, net of tax:
Anti-dilutive share impact(3)
—
0.38
—
0.24
Restructuring charges(1)
0.14
0.06
1.26
0.23
Gain on sale of buildings
(0.02
)
—
(0.18
)
—
Debt extinguishment, net
0.01
(0.01
)
0.01
0.06
Acquisition costs
—
—
—
0.15
Strategic review - retention and other
—
0.09
0.28
0.13
Special dividend ESOP charges
0.09
0.15
0.22
0.15
Proxy expenses
—
—
0.04
0.10
Fair value step-up of acquired inventory
sold
—
—
—
0.07
Goodwill and intangible asset
impairments
0.13
8.31
1.49
8.43
Discrete and other certain tax
provisions
0.05
0.08
—
0.07
Adjusted earnings per share from
continuing operations
$
1.19
$
1.09
$
4.54
$
4.07
Weighted-average shares outstanding
50,522
52,109
52,111
51,672
Diluted weighted average shares
outstanding(3)
53,143
54,725
54,612
53,966
Note: Due to rounding, the sum of earnings
per common share and adjusting items, net of tax, may not equal
adjusted earnings per common share.
(1) For the quarter and year ended
September 30, 2023, restructuring charges relate to the CPP global
sourcing expansion, of which $5,606 and $82,028, respectively, is
included in Cost of goods and services and $4,666 and $10,440,
respectively, is included in SG&A.
(2) Tax impact for the above reconciling
adjustments from GAAP to non-GAAP Income from continuing operations
and the related adjusted EPS is determined by comparing the
Company's tax provision, including the reconciling adjustments, to
the tax provision excluding such adjustments.
(3) In fiscal 2022, loss from continuing
operations is calculated using basic shares on the face of the
income statement. Per share impact of using diluted shares
represents the impact of converting from the basic shares used in
calculating earnings per share from the loss from continuing
operations to the diluted shares used in calculating earnings per
share from the adjusted income from continuing operations.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231114219652/en/
Company: Brian G. Harris SVP &
Chief Financial Officer Griffon Corporation (212) 957-5000
IR@Griffon.com
Investor Relations: Michael
Callahan Managing Director ICR Inc. (203) 682-8311
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