Griffon Corporation

Greetings and welcome to Griffin Corporation's second quarter 2021 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. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Brian Harris. Thank you. You may begin.

Thank you, Rob. 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 our various Securities and Exchange Commission filings. Finally, from today's remarks, we'll 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. Good afternoon, everyone. We're off to a great start in the first half of fiscal 2021 with our second quarter revenue increasing 12 percent, adjusted EBITDA up 41 percent, and adjusted EPS up 109 percent compared to the prior year quarter. These results were driven by continued demand for our comprehensive consumer product categories and supported by a strong housing market and repair and remodel activity. Our strategic actions to optimize our business remain on plan, and we're realizing the early benefits of this work today. Highlighting this success is our increased cash generation profile, coupled with our EBITDA margin expansion in both CPP and HBP, which increased 220 and 190 basis points, respectively, over the prior year period. Our AIM strategic initiative is progressing on plan and on budget. As previously announced, this investment will consolidate operations, increase automation, support e-commerce growth, and create new data and analytics platform for AIMS globally by the end of 2023. We expect this to further improve margins in the years ahead. As we move into our second year of managing our business during a global pandemic, we've prioritized protecting our employees and will continue to do so as restrictions in the United States begin to ease. Turning to our segments in consumer and professional products, We saw continued retail demand across all geographies and product lines. The AIM strategic initiative remains on schedule for completion by the end of 2023. We reiterate our expectation to realize annual cash savings of $30 million to $35 million in inventory reductions of the same magnitude when the benefits of the initiative are fully realized. In home and building product segment, we continue to see healthy demand for both residential and commercial door products, and we continue to see demand outstripping supply. In defense electronics, telephonics revenue and profitability decreased from the prior year, primarily driven by reduced volume due to the timing of work performed and deliveries on certain communications and surveillance programs, as well as the divestiture of SEG. Telephonics actions to improve its operational efficiency continue with the work to consolidate three facilities into two, which will be completed in our fiscal fourth quarter. Earlier this month, Telephonics was awarded $162 million five-year support contract from Lockheed Martin for our multi-mode maritime surveillance radars for the US Navy's MHR-60 maritime helicopters. We continue to see additional opportunities for our products and domestic applications, as well as through the MH-60 Romeo foreign military sales to countries like South Korea and Greece. Backlog in the quarter was $354 million, with trailing 12-month book-to-bill of 1.1 times. Turning to our balance sheet, we continue to have excellent flexibility in our capital structure to execute on organic and acquisition opportunities, and return cash to shareholders through our quarterly dividends. We've delevered to 3.1 times net debt to EBITDA, marking two full turns of improvement over the prior year period. Additionally, we have $176 million in cash and $363 million available on our revolving credit facility, providing ample liquidity and putting us in an excellent position to capitalize on our active pipeline of acquisition opportunities. Earlier today, our board authorized an $0.08 per share dividend payable on June 17, 2021, to shareholders of record on May 20, 2021. This marks the 39th consecutive quarterly dividend to shareholders, which has grown at an annualized compound rate of 17% since we initiated in 2012. Griffin's evolved over the past decade from a decentralized holding company to a highly centralized operating focus conglomerate. We see growth through acquisitions driving our future, capitalizing on our strong bench of management talent. And regarding our management, Steve Lynch, the president of Clopay Corporation, will retire at the end of our fiscal year. Steve has served as the president of Clopay with distinction for the past 12 years and has been part of Clopay since 2001. During his tenure, Steve navigated Clopay through the financial crisis of 2009 and subsequently has transformed the business into the industry leader it is today through building the company's facilities, equipment, products, technologies, people, and culture. Steve will continue working with Clopay as a consultant after his retirement. And effective with Steve's retirement, Vic Weldon will be appointed the new president of Clopay. Vic is a 20-year veteran of Clopay, having served in leadership roles across the business, including supply chain, logistics, sales, and operations, and has been Clopay's chief operating officer since 2019. Vic has played an instrumental role in making Clopay the company that it is today, including leading the integration activities of the Cornell acquisition, which we completed in 2018. Vic is the ideal candidate to assume the role of president where he can apply his wealth of company, customer, and industry knowledge to the role. We're looking forward to Vic continuing Clopay's success. Let me turn it over to Brian, who will take you through some of the financials. Thank you, Ron.