Griffon Corporation

Greetings and welcome to the Griffin Corporation first quarter 2021 earnings conference call. At this time, all participants are on a listen-only mode. A question and answer session will follow the formal presentation. Any analysts that would like to ask a question may do so by pressing star 1 on their telephone keypad. If anyone should require operator assistance during the conference, please press star 0 on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Brian Harris, Chief Financial Officer of Thank you, sir. You may begin.

Thank you, Donna. Good morning, 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 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 morning, everyone. We're off to a great start to fiscal 21, with our first quarter revenue increasing 11%, adjusted EBITDA up 35%, and adjusted EPS up 56% compared to the prior year quarter. We saw a strong demand across all our consumer product categories, supported by a robust housing market and a healthy repair and remodel activity. Our portfolio repositioning, strategic initiatives, and operational improvements continue to drive enhanced free cash flow generation as well as margin expansion, and our cash performance for the quarter was exceptional. During the first quarter, all three of our segments increased adjusted EBITDA and EBITDA margin compared to the prior year quarter. This improved performance also resulted in significantly improved free cash flow generation, Recall our first quarter typically results in cash usage due to the seasonality of our businesses. This year we increased our free cash flow by $40 million, generating $9 million in cash compared to a cash usage of $31 million in the prior year period. Our net leverage is now 3.1 times EBITDA compared to 3.4 times at September 30, 2020, and is down by 1.7 turns when compared to the 4.8 times leverage at the end of the first quarter in fiscal 2020. We've made good progress with the AIM strategic initiative, which remains on schedule and on budget. This investment will consolidate operations, increase automation, support e-commerce growth, and create a new data and analytics platform for AIMS globally by the end of 2023. We expect this to further improve margins in the years ahead. In the quarter, we also executed two strategic portfolio actions. First, we closed the divestiture of our systems engineering group, SEG, which was non-core for telephonics, primary business of defense electronics products and systems. The sale of SEG creates immediate value to Griffin shareholders, allows telephonics to focus more of its resources on growing its core defense electronics and systems product lines, and provides SEG with the benefit of being part of a parent organization that's more focused on government technical services. The SEG team did an outstanding job growing this business as part of Telephonics, and we wish them well in their future. Our second portfolio action in the quarter was the acquisition of Quattro Design in Australia, a leading manufacturer and supplier of large landscaping products made from glass fiber reinforced concrete. These products are used in residential, commercial, and public sector projects, helping to diversify our AIMS Australia operations with an expanded set of products and new sales channels. This is our sixth acquisition in Australia in the last seven years. Expect more. Health and safety updates. Since the onset of the COVID-19 pandemic last March, ensuring the health and safety of our employees and our customers has been, continues to be our top priority. We've proactively implemented health and safety measures across all of our global facilities. And as local and national authorities have circulated and incorporated additional guidelines for employee health and safety, We reacted immediately, decisively, and we've spared no expense in dealing with the COVID-19 risk. All of our facilities are operational. However, we remain mindful of the continued seriousness of the situation in both Europe and the United States. In the previous shutdown, all of our U.S. facilities were deemed essential businesses, and we expect that to continue. Turning to the segments, consumer and professional products, we saw continued retail demand across all geographies, including early spring orders from customers in North America and increased demand in Australia. The AIM strategic initiative remains on schedule for completion by the end of 2023, and we reiterate our expectation to realize annual cash savings of $30 to $35 million in and inventory reductions of the same magnitude when the benefits of the initiative are fully realized. Brian will provide more detail about the status of the initiative during his comments. Moving to home and building product segment, we continue to see healthy demand for both residential and commercial door products and a favorable mix for rolling steel products in particular. In defense electronics, telephonics revenue and profitability increased over the prior year, and order demand was strong in the quarter with a book-to-bill of almost 1.3 times. Backlog increased as well, ending the quarter at $389 million. Telephonics is taking actions to improve its operational efficiencies by streamlining its organization and consolidating facilities, which Brian will also discuss in a little more detail. Turning to the balance sheet, we're in an excellent financial position with ample liquidity to fund our growth in all of our segments while pursuing opportunistic acquisitions and with leverage down to 3.1 times. Finally, earlier today, our board authorized an $0.08 per share dividend payable on March 18, 2021, to shareholders of record on February 18, 2021. This marks the 38th consecutive quarterly dividend to shareholders, which has grown at an annualized compound rate of 17% since we initiated in 2012. Let me turn it over to Brian. He'll take you through some of the financials.