{"id":727194,"date":"2023-01-31T08:51:36","date_gmt":"2023-01-31T13:51:36","guid":{"rendered":"https:\/\/www.marketnewsdesk.com\/index.php\/griffon-corporation-announces-first-quarter-results-3\/"},"modified":"2023-01-31T08:51:36","modified_gmt":"2023-01-31T13:51:36","slug":"griffon-corporation-announces-first-quarter-results-3","status":"publish","type":"post","link":"https:\/\/www.marketnewsdesk.com\/index.php\/griffon-corporation-announces-first-quarter-results-3\/","title":{"rendered":"Griffon Corporation Announces First Quarter Results"},"content":{"rendered":"

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Griffon Corporation Announces First Quarter Results<\/b><\/p>\n

NEW YORK–(BUSINESS WIRE<\/a>)–
\nGriffon Corporation (\u201cGriffon\u201d or the \u201cCompany\u201d) (NYSE:GFF) today reported results for the fiscal 2023 first quarter ended December 31, 2022.\n<\/p>\n

\nRevenue for the first quarter totaled $649.4 million, a 10% increase compared to $591.7 million in the prior year quarter. Excluding the Hunter acquisition, Revenue increased 1% to $595.3 million. Hunter contributed $54.1 million.\n<\/p>\n

\nIncome from continuing operations totaled $48.7 million, or $0.88 per share, compared to $16.7 million, or $0.31 per share, in the prior year quarter. Current year first quarter Adjusted income from continuing operations was $47.4 million, or $0.86 per share, compared to $20.9 million, or $0.39 per share, in the prior year quarter (see reconciliation of Income from continuing operations to Adjusted income from continuing operations for details).\n<\/p>\n

\nAdjusted EBITDA from continuing operations for the first quarter was $108.6 million, increasing 83% from the prior year quarter of $59.2 million. Adjusted EBITDA from continuing operations, excluding unallocated amounts (primarily corporate overhead) of $13.8 million in the current quarter and $13.3 million in the prior year quarter, totaled $122.3 million, increasing 69% from the prior year of $72.5 million. Adjusted EBITDA is defined as net income excluding interest income and expense, income taxes, depreciation and amortization, strategic review, restructuring charges, loss on debt extinguishment and acquisition related expenses, as well as other items that may affect comparability, as applicable (for a reconciliation of \u201cAdjusted EBITDA\u201d, a non-GAAP measure, to income before taxes from continuing operations, see the attached table).\n<\/p>\n

\nRonald J. Kramer, Chairman and Chief Executive Officer, commented, “We are off to a strong start to fiscal 2023 and are on track to meet our financial targets for the year. Our Home and Building Products segment’s record Q1 results reflect solid operating performance. Our Consumer and Professional Products segment’s performance was in line with our expectations, reflecting reduced consumer demand and rebalancing of customer inventory levels. Free cash flow performance of $82.6 million was also a highlight in this quarter which contributed to a 0.2x reduction in our net debt to EBITDA leverage of 2.7x at quarter end. Despite an uncertain macroeconomic environment, we remain confident in our business and ability to execute our operating strategy.\u201d\n<\/p>\n

Strategic Alternatives Process Update<\/span><\/b><\/p>\n

\nOn May 16, 2022, Griffon announced that its Board of Directors initiated a process to review a comprehensive range of strategic alternatives to maximize shareholder value including a sale, merger, divestiture, recapitalization or other strategic transaction. While the process remains ongoing, there is no assurance that the process will result in any transaction being entered into or consummated.\n<\/p>\n

Segment Operating Results<\/span><\/b><\/p>\n

Consumer and Professional Products (“CPP”)<\/b><\/p>\n

\nCPP revenue in the current quarter totaling $252.8 million decreased 11% compared to the prior year period due to a 34% reduction in volume primarily in the U.S., the United Kingdom (U.K.) and Australia and a 3% unfavorable currency impact, partially offset by a 19% or $54.1 million contribution from the Hunter acquisition, and favorable price and mix of 7%.\n<\/p>\n

\nFor the current quarter, Adjusted EBITDA loss of $1.8 million compared to Adjusted EBITDA of $16.2 million in the prior year quarter. The current quarter included Adjusted EBITDA of $4.4 million from the Hunter acquisition. Excluding the Hunter contribution, Adjusted EBITDA loss of $6.2 million compared to Adjusted EBITDA of $16.2 million in the prior year. The variance to prior year was primarily due to the unfavorable impact of the reduced volume noted above and the related impact on manufacturing absorption, and increased material costs in Australia and Canada, partially offset by the benefits of price and mix.\n<\/p>\n

Home and Building Products (“HBP”)<\/b><\/p>\n

\nHBP revenue in the current quarter totaling $396.6 million increased 29% from the prior year period, due to favorable pricing and mix of 23% and volume of 6% driven by both residential and commercial. Residential and commercial sectional backlog and overall lead times continued to normalize during the quarter.\n<\/p>\n

\nHBP Adjusted EBITDA in the current quarter was $124.1 million, increasing 121% compared to the prior year period. Adjusted EBITDA benefited from the increased revenue noted above and reduced material costs, partially offset by increased labor and transportation costs.\n<\/p>\n

Taxes<\/span><\/b><\/p>\n

\nThe Company reported pretax income from continuing operations for the quarters ended December 31, 2022 and 2021, respectively, and recognized tax provisions of 28.4% and 30.2%, respectively. Excluding all items that affect comparability, the effective tax rates for the quarters ended December 31, 2022 and 2021 were 29.1% and 31.5%, respectively.\n<\/p>\n

Balance Sheet and Capital Expenditures<\/span><\/b><\/p>\n

\nAt December 31, 2022, the Company had cash and equivalents of $120.6 million and total debt outstanding of $1.52 billion, resulting in net debt of $1.40 billion. Leverage, as calculated in accordance with our credit agreement, was 2.7x net debt to EBITDA. Borrowing availability under the revolving credit facility was $342.6 million subject to certain loan covenants. Capital expenditures were $4.7 million for the quarter ended December 31, 2022.\n<\/p>\n

\nAs of December 31, 2022, Griffon had $58 million remaining under its Board of Directors authorized share repurchase program. There were no share repurchases under these authorizations during the quarter ended December 31, 2022.\n<\/p>\n

2023 Outlook<\/span><\/b><\/p>\n

\nIn our annual and fourth quarter results release issued on November 17, 2022, we included 2023 expectations for revenue of $2.95 billion, adjusted EBITDA of at least $500 million excluding unallocated costs of $56 million and approximately $16 million of retention and other costs related to the strategic review process, capital expenditures of $50 million, free cash flow to exceed net income, depreciation of $50 million and amortization of $22 million, interest expense of $92 million and a normalized tax rate of 29%. With the exception of increasing our interest expense expectation to $103 million (from $92 million), driven by rising interest rates on variable rate debt, there are no other updates to our fiscal 2023 guidance.\n<\/p>\n

\nGiven the ongoing review of strategic alternatives, Griffon will not be hosting a conference call in connection with its first fiscal 2023 quarter results. For further details and discussion of our financial performance, please refer to our SEC filings.\n<\/p>\n

Forward-looking Statements<\/span><\/b><\/p>\n

\n\u201cSafe Harbor\u201d 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, the outcome of our strategic alternatives review process, industries in which Griffon Corporation (the \u201cCompany\u201d or \u201cGriffon\u201d) operates and the United States and global economies. Statements in this Form 10-K that are not historical are hereby identified as \u201cforward-looking statements\u201d and may be indicated by words or phrases such as \u201canticipates,\u201d \u201csupports,\u201d \u201cplans,\u201d \u201cprojects,\u201d \u201cexpects,\u201d \u201cbelieves,\u201d \u201cshould,\u201d \u201cwould,\u201d \u201ccould,\u201d \u201chope,\u201d \u201cforecast,\u201d \u201cmanagement is of the opinion,\u201d \u201cmay,\u201d \u201cwill,\u201d \u201cestimates,\u201d \u201cintends,\u201d \u201cexplores,\u201d \u201copportunities,\u201d 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: the impact of the strategic alternatives review process announced in May 2022, any transaction that may result from that process and the possibility that the process may not result in any transaction; current economic conditions and uncertainties in the housing, credit and capital markets; Griffon\u2019s 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\u2019s operating companies; the ability of Griffon\u2019s 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 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\u2019s operating companies; the potential impact of seasonal variations and uncertain weather patterns on certain of Griffon\u2019s businesses; political events that could impact the worldwide economy; a downgrade in Griffon\u2019s credit ratings; changes in international economic conditions including inflation, interest rate and currency exchange fluctuations; the reliance by certain of Griffon\u2019s businesses on particular third party suppliers and manufacturers to meet customer demands; the relative mix of products and services offered by Griffon\u2019s 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\u2019s 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\u2019s 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\u2019s 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\u2019s 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.\n<\/p>\n

About Griffon Corporation<\/span><\/b><\/p>\n

\nGriffon 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.\n<\/p>\n

\nGriffon conducts its operations through two reportable segments:\n<\/p>\n