Griffon Corporation

Greetings and welcome to Griffin Corporation's first quarter 2020 earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note that this conference is being recorded. I would now like to turn the conference over to your host, Mr. Brian Harris, Chief Financial Officer. Thank you. You may begin.

Thank you. Good afternoon, everyone. With me on the call is Ron Kramer, our Chairman and Chief Executive Officer. Our call is being recorded, and it will be available for playback, the details of which are in our press release issued earlier today. As in the past, our comments will include forward-looking statements about the company's performance based on our views of Griffin's businesses and the environments in which they operate. Such statements are subject to inherent risks and uncertainties that can change as the world changes. Please see the cautionary statements in today's press release and our various securities and exchange commission filings. Finally, some of today's remarks will adjust for those items that affect comparability between reporting periods. These items are explained in our non-GAAP reconciliations included in our press release. Now I'll turn the call over to Ron.

Thanks and good afternoon, everyone. We're off to an excellent start for fiscal year 2020. I want to start by discussing the enhanced reporting of our three segments in our public filings. We believe this change provides our shareholders increased transparency and further highlights the significant opportunities for each of our businesses by demonstrating the positive impacts of the operational improvements and strategic investments we've undertaken. Our segments are consumer and professional products, consisting primarily of our AIMS business, inclusive of the ClosetMaid brand. Home and building products, which is our Clopay business, which includes the Cornell Cookson brand. Our defense electronics segment, telephonics, which is unchanged. Our results, as we're discussing today, reflect this new segmentation. So let's move to the quarter. Couldn't be happier with the start of our fiscal year. First quarter revenue increased 7% to $548 million. and our adjusted EBITDA increased 21.5% to $55 million. This was driven by growth across our Clopay and AIMS businesses. We continue to make progress on the AIMS Strategic Initiative announced in November. This is a multi-year investment in the AIMS Next Generation Business Platform to enhance the growth, efficiency, and competitiveness in our AIMS and closet-made U.S. businesses. This platform will improve business tracking, enable faster decision-making, and improve AIM's ability to predict and respond to external factors with improved lead times. During the quarter, we began the rationalization process of the distribution and manufacturing facilities. We continue to make strong progress, and our internal milestones for this project remain on track. Additionally, we completed construction on our $14 million mountaintop Pennsylvania expansion project that serves our Cornell cooks in line. The team has moved into the expanded facility and is now transitioning operations to take advantage of the new equipment and space. This facility will increase our manufacturing capacity to support organic volume growth, improve operational efficiencies, and enable us to bring new products to market. Earlier this month, our telephonics business was awarded first place in the US Navy MUX Prize Challenge for our Mosaic AESA radar system. This award is recognition of the strong technical innovation of the next-generation radar currently under development at telephonics and also is an indication of the significant value proposition this technology provides to our customers. Moreover, shortly after receiving this prize, we began flight testing the new radar technology with the U.S. Navy on their MH-60S Seahawk helicopters, and initial feedback has been positive. Further, we continue to see progress with the Indian government regarding our MH-60R radar systems, and discussions between the parties are highly encouraging. We continue to expect a formal contract award in excess of $50 million for this program within this fiscal year. Overall, telephonics continues to see a strong pipeline of opportunities on a foreign and domestic basis leaving us highly optimistic about the organic growth through the balance of the year and beyond. Let's turn to capital allocation. We continue to benefit from an enhanced free cash flow profile driven by our portfolio reshaping and efficiency initiatives. I'm pleased to report that even with the cash usage required to meet our seasonal demands in our first quarter, our leverage ratio remained the same as last quarter at 4.8 times. We continue to focus on deleveraging, working towards our three and a half times net debt to EBITDA goal. In December, we acquired APTA, a leading UK supplier of innovative garden pottery and associated products sold to UK and Ireland garden centers. APTA strengthens the diversification of our product offerings while increasing our operational footprint in the region. We expect APTA to be accretive to our earnings in fiscal 2020. We are active in sourcing and evaluating strategic bolt-on acquisitions like APTA to further drive long-term growth. We remain disciplined in our approach and are focused on ensuring that any acquisition would be both value-enhancing and immediately accretive. Additionally, earlier today, our board authorized a $0.75 per share dividend payable on March 19, 2020, shareholders of record, on February 20, 2020. This marks the 34th consecutive quarterly dividend to shareholders, which has grown at an annualized compound rate of 18% since we initiated it in 2012. Earlier today, we announced the amendment of our revolving credit facility, which now extends until March 2025. The amended and extended agreement has lower borrowing costs with a reduced spread over LIBOR and reduced fees. Additionally, the amount available was increased to $400 million. All of the terms are substantially the same. At quarter end, we had approximately $229 million available for borrowing under the revolver, subject to certain loan covenants. With the extension of the bank agreement, you could expect us to refinance our $1 billion of five-and-a-quarter notes sometime this year. With that, I'm going to turn it over to Brian for details on the financial results.