Griffon Corporation

Greetings and welcome to the Griffin Corporation second quarter 2020 earnings conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. Should anyone require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Brian Harris, Chief Financial Officer. Please go ahead. 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 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 in 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. Let me start by saying I hope that all of you and your families are safe and healthy. Griffin entered this unprecedented COVID-19 pandemic from a position of strength on an operational and a competitive basis. Our positive momentum, along with enhanced liquidity and a strengthened balance sheet, enable us to manage the near-term effects of the current environment while continuing to make the necessary investments in our business to execute our strategic growth plan and drive long-term shareholder value. Our top priority has been and will continue to be ensuring the health and safety of our employees and our customers. Since early March, we've been proactively implementing health and safety measures across our global workforce. As local and national authorities have circulated additional guidelines for employee health and safety, we've incorporated those as well. As almost all of our facilities have been open and remain operational, our additional safety measures include increasing the cleaning frequency and enhancing the sanitation of all of our facilities, restricting external visitor access to our facilities, adjusting production schedules and hours of operation to promote distancing between employees in the workplace, implementing work from home programs wherever possible, and canceling all travel and unnecessary work travel. These are samplings of the broad actions we've taken across all of our businesses to protect our workers while maintaining critical operations. In mid-March, we also began an Appreciation Award program to hourly U.S. employees on the front lines working at our manufacturing and distribution sites as recognition of the difficulties they've been facing. This situation has put a tremendous strain on our entire workforce, but they've done an exceptional job keeping our operations running while simultaneously keeping everyone safe. We owe them our gratitude, not just for doing an outstanding job, but also for supporting operations that are critical to our country. Let's go through some of the specific businesses. In consumer and professional products and home and building products, all of our U.S., Canadian, and Australian facilities are operational, This includes all AIMS, ClosetMaid, Clopay, and Cornell-Cookson facilities. Each of these businesses provide critical products supporting national infrastructure. To the extent practical, we are permitting our employees in these segments to work remotely. As I mentioned before, all of our manufacturing and distribution facilities have implemented strict protocols to ensure employee health and safety while at the workplace. In the United Kingdom, in accordance with UK government directives in late March, our AIMS UK facilities are not operating at this time and employees have been directed to stay home until what we expect to be a reopening the end of June. In Mexico, our closet-made manufacturing facility closed earlier in April at the direction of Mexican authorities. This facility supports closet-made sales principally in the U.S. and Canada and is expected to resume operations imminently. Telephonics, our defense electronics business, continues to operate at all of its sites as it provides critical manufacturing and services. Supporting the U.S. military and its operations are essential for maintaining our national security. Let me go through an update on the second quarter performance. Starting with consumer and professional products, we saw a steady demand through the entire quarter for seasonal lawn and garden products, tools and storage and organizational solutions. at major retailers and home centers across North America and in Australia. The UK was impacted by the March COVID-related shutdown. In home and building products, strong demand for sectional residential and commercial doors continued through the end of the quarter. We also saw increasing demand for rolling steel products in the quarter. At telephonics, the long-anticipated Lockheed Martin MH60R FMS program with India was signed. Telephonics received an initial $5 million booking in March, which is the first part of the $50 million in total bookings expected from this production contract. We expect the balance of this contract to be booked in this fiscal year. Across all of our segments, our suppliers have largely been able to support us, and we've not experienced any meaningful supply chain issues to date. Currently, we have sufficient components and material on hand to sustain our operations without major interruptions. Let's talk about our balance sheet. While the COVID-19 pandemic clearly has elipsed our typical business update, I want to call out attention to some of the recent developments. In January 2020, we expanded the capacity and extended the term of our revolving credit facility to 2025. We increased the revolver by $50 million to $400 million and have an additional $100 billion of availability through its accordion feature. On our last call on January 30th, we discussed our intent to refinance a portion of our 2022 bonds. Shortly thereafter, on February 4th, we completed a private placement, refinancing $850 million of our $1 billion of 5.25 bonds due in 2022, with 5.75% notes due in 2028. Substantially, all of these bonds were exchanged for registered bonds on April 22nd. We're pleased by the success and the timing of the bond offering and revolver expansion and with how these actions position us for the future. These transactions enhance our liquidity and extend our maturities, reinforcing our balance sheet to weather the unpredictable conditions we're operating in today. Lastly, we expect to continue our dividend program. We understand how important our dividend is to shareholders, and it reflects the resilience of our business, even in difficult times. To that end, earlier today, our board authorized a 7.5 cent per share dividend payable on June 18, 2020, to shareholders of record on May 21, 2020. This marks the 35th consecutive quarterly dividend to shareholders, which has grown at an annualized compound rate of 17% since we initiated it in 2012. Let me turn it over to Brian for a closer look at the results. Brian?