Griffon Corporation Announces Second Quarter Operating Results

Share Name	Share Symbol	Market	Type	Share ISIN	Share Description
Griffin Grp.	LSE:GFF	London	Ordinary Share	GB0009530188	ORD 0.1P

Industry Sector	Turnover	Profit	EPS - Basic	PE Ratio	Market Cap
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Griffin (LSE:GFF)
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- Diluted EPS of $.02 loss in 2Q 2009 versus $.66 loss in 2Q 2008 JERICHO, N.Y., May 7 /PRNewswire-FirstCall/ -- Griffon Corporation (NYSE: GFF) today reported operating results for the second quarter ended March 31, 2009. Second Quarter of Fiscal 2009 Net sales from continuing operations for the second quarter of fiscal 2009 were $276.1 million, compared to $298.6 million in the second quarter of fiscal 2008. Loss from continuing operations for the second quarter was $1.5 million, or $.03 per diluted share, compared to $4.1 million, or $.13 per diluted share, last year. Income from discontinued operations for the second quarter was $.6 million, or $.01 per diluted share, compared to a loss of $17.2 million, or $.53 per diluted share, last year. Net loss for the quarter was $.9 million, or $.02 per diluted share, compared to $21.4 million, or $.66 per diluted share, last year. The Company's segment adjusted EBITDA for the second quarter of 2009 was $13.0 million compared to $13.5 million in 2008. Segment adjusted EBITDA is defined as operating income excluding allocations of corporate overhead, interest, taxes, depreciation and amortization, restructuring charges, goodwill charges and the impact of debt extinguishment. As a result of the downturn in the residential housing market, in fiscal 2008, the Company exited substantially all of the operating activities of its Installation Services segment. Operating results of substantially all of the Installation Services segment have been reported as discontinued operations in the condensed consolidated financial statements for all periods presented herein, and the Installation Services segment is excluded from segment reporting. The Company substantially concluded its remaining disposal activities in the second quarter of fiscal 2009. Telephonics Results For the quarter ended March 31, 2009, Telephonics generated sales of $96.6 million, a 1.9% decrease from the second quarter of fiscal 2008. Despite the sales decrease, core business sales grew by approximately $11.8 million, or 14%. The sales decrease was primarily attributable to the favorable impact on the prior year's second quarter sales from contracts with the Syracuse Research Corporation (SRC) that were winding down, partially offset by core business growth in the Radar Systems Division driven by increases in the Lamps MMR, CP-140 and ARPDD programs. Operating income increased $1.1 million, or 15.6%, compared to last year due to a favorable product mix and reduced operating expenses related to research and development. Clopay Garage Doors Results For the quarter ended March 31, 2009, the Company's Garage Doors segment generated sales of $79.3 million, a 7.3% decrease from the second quarter of fiscal 2008. Garage Doors' sales continued to be impacted by weakness in the residential housing and credit markets. The Garage Doors sales decline was principally due to reduced unit volume, offset partially by higher selling prices to pass through increased material costs and product mix. Operating loss of the Garage Doors segment increased by approximately $2.9 million compared to last year, primarily as a result of reduced sales volume and associated plant absorption loss, higher material costs and the unfavorable impact of foreign translation on Canadian-dollar denominated sales. The prior-year period was affected by restructuring charges of approximately $.7 million. The segment continues to develop and implement initiatives to reduce its operating costs. Clopay Specialty Plastic Films Results For the quarter ended March 31, 2009, the Company's Specialty Plastic Films segment generated sales of $100.3 million, a 12.6% decrease from the second quarter of fiscal 2008. Specialty Plastic Films' lower sales were principally due to the impact of lower exchange rates on translated foreign sales, the negative impact from the pass through of lower resin pricing and lower unit volumes, partially offset by a favorable product mix. However, operating income increased $2.2 million, or 51.1%, as the favorable contribution to gross margin from lower resin costs and from an improving product mix more than offset the impact of foreign exchange translation and lower unit volumes. Balance Sheet and Capital Expenditures The Company substantially strengthened its balance sheet by raising an aggregate of $248.6 million in gross proceeds from the sale of its common stock. The September 2008 transaction was effected through a common stock rights offering, along with an investment by GS Direct, L.L.C., an affiliate of Goldman Sachs. The Company intends to use the proceeds for general corporate purposes and to fund its growth. The Company's total cash and cash equivalents balance at March 31, 2009 was $274.3 million. Total debt outstanding at March 31, 2009 was $196.4 million, including $94.5 million of convertible notes. Capital expenditures were $7.3 million during the second quarter of fiscal 2009. In April 2009, the Company purchased $15.1 million face value of the convertible notes from certain noteholders for $14.3 million. The Company expects to record a pre-tax gain of approximately $.8 million from debt extinguishment, offset by a $.1 million proportionate reduction in the related deferred financing costs, for a net gain of $.7 million in the third quarter of fiscal 2009. Conference Call Information The Company will hold a conference call to discuss its results today, May 7, 2009, at 4:30 PM ET. The conference call can be accessed by dialing 1-800-322-9079 (U.S. participants) or 1-973-582-2717 (International participants). Callers should ask to be connected to Griffon Corporation's second quarter fiscal 2009 teleconference and provide the conference ID number 97233508. A replay of the call will be available from May 7, 2009 at 7:30 PM ET by dialing 1-800-642-1687 (U.S.) or 1-706-645-9291 (International). The replay access code is 97233508. The replay will be available through May 21, 2009. Forward-looking Statements "Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: All statements other than statements of historical fact included in this release, including without limitation statements regarding the Company's financial position, business strategy and the plans and objectives of the Company's management for future operations, are forward-looking statements. When used in this release, words such as "anticipate", "believe", "estimate", "expect", "intend", and similar expressions, as they relate to the Company or its management, identify forward-looking statements. Such forward-looking statements are based on the beliefs of the Company's management, as well as assumptions made by and information currently available to the Company's management. Actual results could differ materially from those contemplated by the forward-looking statements as a result of certain factors, including but not limited to, business, financial market and economic conditions, including, but not limited to, the credit market, the housing market, results of integrating acquired businesses into existing operations, the results of the Company's restructuring and disposal efforts, competitive factors and pricing pressures for resin and steel, and capacity and supply constraints. Such statements reflect the views of the Company with respect to future events and are subject to these and other risks, uncertainties and assumptions relating to the operations, results of operations, growth strategy and liquidity of the Company as previously disclosed in the Company's SEC filings. Readers are cautioned not to place undue reliance on these forward-looking statements. The Company does not undertake to release publicly any revisions to these forward-looking statements to reflect future events or circumstances or to reflect the occurrence of unanticipated events. About Griffon Corporation Griffon Corporation, headquartered in Jericho, New York, is a diversified holding Company consisting of three distinct business segments: Electronic Information and Communication Systems, through Telephonics Corporation; Garage Doors, through Clopay Building Products Company; and Specialty Plastic Films, through Clopay Plastic Products Company. -- Telephonics Corporation's high-technology engineering and manufacturing capabilities provide integrated information, communication and sensor system solutions to military and commercial markets worldwide. -- Clopay Building Products Company is a leading manufacturer and marketer of residential, commercial and industrial garage doors to professional installing dealers and major home center retail chains. -- Clopay Plastic Products Company is an international leader in the development and production of embossed, laminated and printed specialty plastic films used in a variety of hygienic, health-care and industrial markets. For more information on the Company and its operating subsidiaries, please see the Company's website at http://www.griffoncorp.com/. Contact: Patrick L. Alesia Chief Financial Officer (516)938-5544 GRIFFON CORPORATION AND SUBSIDIARIES OPERATING HIGHLIGHTS (Unaudited) For the Three For the Six Months Ended Months Ended March 31, March 31, PRELIMINARY (in thousands) 2009 2008 2009 2008 Net Sales: Electronic Information and Communication Systems $96,567 $98,397 $177,394 $174,257 Garage Doors 79,251 85,499 188,069 198,043 Specialty Plastic Films 100,269 114,675 212,958 221,073 $276,087 $298,571 $578,421 $593,373 Operating Income (Loss): Electronic Information and Communication Systems $8,252 $7,139 $13,630 $12,622 Garage Doors (11,841) (8,946) (16,234) (10,321) Specialty Plastic Films 6,578 4,352 12,114 10,350 Segment operating income 2,989 2,545 9,510 12,651 Unallocated amounts (4,759) (5,128) (9,208) (10,357) Gain from debt extinguishment, net - - 6,714 - Interest, net (2,688) (2,899) (4,966) (5,154) Income (loss) from continuing operations before income taxes $(4,458) $(5,482) $2,050 $(2,860) GRIFFON CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) (Unaudited) PRELIMINARY Three Months Six Months Ended March 31, Ended March 31, 2009 2008 2009 2008 Net sales $276,087 $298,571 $578,421 $593,373 Cost of sales 222,112 241,121 465,489 471,165 Gross profit 53,975 57,450 112,932 122,208 Selling, general and administrative expenses 55,545 60,114 112,073 119,101 Restructuring and other related charges - 701 - 2,392 Total operating expenses 55,545 60,815 112,073 121,493 Income (loss) from operations (1,570) (3,365) 859 715 Other income (expense): Interest expense (2,919) (3,498) (5,633) (6,634) Interest income 231 599 667 1,480 Gain from debt extinguishment, net - - 6,714 - Other, net (200) 782 (557) 1,579 Total other income (expense) (2,888) (2,117) 1,191 (3,575) Income (loss) from continuing operations before income taxes (4,458) (5,482) 2,050 (2,860) Benefit for income taxes (2,955) (1,336) (718) (253) Income (loss) from continuing operations before discontinued operations (1,503) (4,146) 2,768 (2,607) Discontinued operations: Income (loss) from operations of the discontinued Installation Services business 1,046 (19,208) 1,051 (24,223) Provision (benefit) for income taxes 397 (1,985) 399 (4,106) Income (loss) from discontinued operations 649 (17,223) 652 (20,117) Net income (loss) $(854) $(21,369) $3,420 $(22,724) Basic earnings (loss) per common share: Continuing operations $(.03) $(.13) $.05 $(.08) Discontinued operations .01 (.53) .01 (.62) $(.02) $(.66) $.06 $(.70) Diluted earnings (loss) per common share: Continuing operations $(.03) $(.13) $.05 $(.08) Discontinued operations .01 (.53) .01 (.62) $(.02) $(.66) $.06 $(.70) Weighted-average shares outstanding - basic 58,467 32,485 58,660 32,482 Weighted-average shares outstanding - diluted 58,467 32,485 58,745 32,482 GRIFFON CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) (Unaudited) PRELIMINARY March 31, September 30, 2009 2008 ASSETS Current Assets: Cash and cash equivalents $274,315 $311,921 Accounts receivable, net 154,113 163,586 Contract costs and recognized income not yet billed 59,777 69,001 Inventories 155,908 167,158 Prepaid expenses and other current assets 54,190 52,430 Assets of discontinued operations 4,417 9,495 Total current assets 702,720 773,591 Property, plant and equipment, at cost, net of depreciation and amortization 222,515 239,003 Costs in excess of fair value of net assets of businesses acquired 86,450 93,782 Intangible assets, net 31,664 34,777 Other assets 24,147 22,067 Assets of discontinued operations 9,025 8,346 $1,076,521 $1,171,566 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Notes payable and current portion of long-term debt $3,508 $2,258 Accounts payable 101,295 129,823 Accrued liabilities 60,776 64,450 Liabilities of discontinued operations 7,586 14,917 Total current liabilities 173,165 211,448 Long-term debt 192,918 230,930 Other liabilities 60,872 59,460 Liabilities of discontinued operations 9,462 10,048 Shareholders' equity 640,104 659,680 $1,076,521 $1,171,566 GRIFFON CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (Unaudited) Six Months Ended March 31, PRELIMINARY 2009 2008 CASH FLOWS FROM OPERATING ACTIVITIES - CONTINUING OPERATIONS: Net income (loss) $3,420 $(22,724) Loss (income) from discontinued operations (652) 20,117 Adjustments to reconcile net income (loss) to net cash provided by operating activities of continuing operations: Depreciation and amortization 20,910 21,149 Stock-based compensation 1,841 1,194 Recovery of losses on accounts receivable 379 246 Amortization of deferred financing costs 1,071 495 Gain from debt extinguishment, net (6,714) - Deferred income taxes (1,975) 707 Change in assets and liabilities: Decrease in accounts receivable and contract costs and recognized income not yet billed 14,680 18,312 Decrease (increase) in inventories 9,582 (8,492) Decrease (increase) in prepaid expenses and other assets 1,277 (8,692) Increase (decrease) in accounts payable, accrued liabilities and income taxes payable (36,914) 11,438 Other changes, net (1,618) (4,159) 1,867 52,315 Net cash provided by operating activities - continuing operations 5,287 29,591 CASH FLOWS FROM INVESTING ACTIVITIES - CONTINUING OPERATIONS: Acquisition of property, plant and equipment (12,088) (11,796) Acquired businesses - (1,750) Proceeds from sale of investment - 1,000 Decrease (increase) in equipment lease deposits (345) 4,024 Net cash used in investing activities - continuing operations (12,433) (8,522) CASH FLOWS FROM FINANCING ACTIVITIES - CONTINUING OPERATIONS: Proceeds from issuance of shares from rights offering 5,274 - Purchase of shares for treasury - (579) Proceeds from issuance of long-term debt 10,431 50,000 Payments of long-term debt (41,240) (76,716) Increase in short-term borrowings 904 377 Financing costs (227) (1,044) Purchase of ESOP shares (4,370) - Other, net 629 480 Net cash used in financing activities - continuing operations (28,599) (27,482) CASH FLOWS FROM DISCONTINUED OPERATIONS: Net cash provided by (used in) operating activities (759) 340 Net cash used in investing activities - (254) Net cash provided by (used in) discontinued operations (759) 86 Effect of exchange rate changes on cash and cash equivalents (1,102) 981 NET DECREASE IN CASH AND CASH EQUIVALENTS (37,606) (5,346) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 311,921 44,747 CASH AND CASH EQUIVALENTS AT END OF PERIOD $274,315 $39,401 GRIFFON CORPORATION AND SUBSIDIARIES RECONCILIATION OF NON-GAAP MEASURES SEGMENT OPERATING INCOME AND SEGMENT ADJUSTED EBITDA (Unaudited) The following is a reconciliation of operating income, which is a GAAP measure of our operating results, to segment operating income and segment adjusted EBITDA. Management believes that the presentation of segment operating income and segment adjusted EBITDA is appropriate to provide additional information about the Company's reportable segments. Segment operating income and segment adjusted EBITDA are not presentations made in accordance with GAAP, are not measures of financial performance or condition, liquidity or profitability of the Company, and should not be considered as an alternative to (1) net income, operating income or any other performance measures determined in accordance with GAAP or (2) operating cash flows determined in accordance with GAAP. Additionally, segment operating income and segment adjusted EBITDA are not intended to be measures of free cash flow for management's discretionary use, as they do not consider certain cash requirements such as interest payments, tax payments, capital expenditures and debt service requirements. For the Three For the Six Months Ended Months Ended March 31, March 31, PRELIMINARY (in thousands) 2009 2008 2009 2008 Operating income - as reported $(1,570) $(3,365) $859 $715 Corporate and related charges 4,759 5,128 9,208 10,357 Other income (expense) (200) 782 (557) 1,579 Segment operating income 2,989 2,545 9,510 12,651 Depreciation and amortization 10,044 10,272 20,526 20,568 Restructuring charges - 701 - 2,392 Segment adjusted EBITDA $13,033 $13,518 $30,036 $35,611 GRIFFON CORPORATION AND SUBSIDIARIES RECONCILIATION OF NON-GAAP MEASURES SEGMENT ADJUSTED EBITDA - BY REPORTABLE SEGMENT (Unaudited) For the Three For the Six Months Ended Months Ended March 31, March 31, PRELIMINARY (in thousands) 2009 2008 2009 2008 Electronic Information and Communication Systems: Segment operating income $8,252 $7,139 $13,630 $12,622 Depreciation and amortization 1,543 1,465 3,030 2,918 Segment adjusted EBITDA $9,795 $8,604 $16,660 $15,540 Garage Doors: Segment operating income $(11,841) $(8,946) $(16,234) $(10,321) Depreciation and amortization 3,254 3,221 6,486 6,480 Restructuring charges - 701 - 2,392 Segment adjusted EBITDA $(8,587) $(5,024) $(9,748) $(1,449) Specialty Plastic Films: Segment operating income $6,578 $4,352 $12,114 $10,350 Depreciation and amortization 5,247 5,586 11,010 11,170 Segment adjusted EBITDA $11,825 $9,938 $23,124 $21,520 All segments: Segment operating income $2,989 $2,545 $9,510 $12,651 Depreciation and amortization 10,044 10,272 20,526 20,568 Restructuring charges - 701 - 2,392 Segment adjusted EBITDA $13,033 $13,518 $30,036 $35,611 DATASOURCE: Griffon Corporation CONTACT: Patrick L. Alesia, Chief Financial Officer of Griffon Corporation, +1-516-938-5544 Web Site: http://www.griffoncorp.com/

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GFF Griffin Grp.