Griffon Corporation

Greetings and welcome to the Griffin Corporation Fiscal Fourth Quarter 2023 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. 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. It is now my pleasure to introduce your host, Brian Harris, Chief Financial Officer, Thank you, Mr. Harris. You may begin.

Thank you. Good morning. It's my pleasure to welcome everybody to Griffin's fourth quarter and fiscal 2023 earnings call. Joining me for this morning's call is Ron Kramer, Griffin's chairman and chief executive officer. Our press release was issued earlier this morning and is available on our website at www.griffin.com. Today's call is being recorded and the replay instructions are included in our earnings release. Our comments will include forward-looking statements about Griffin's performance. These statements are subject to risks and uncertainties that can change as the world changes. Please see the cautionary statements in today's press release and in our SEC filings. Finally, some of today's remarks will adjust for items that affect comparability between periods. These items are explained in our non-GAAP reconciliations included in our press release. With that, I'll turn the call over to Ron.

Good morning, everyone. Thank you for joining us. We're pleased with our results for the fourth quarter in the fiscal year. The record performance of our home and building products, HBP segment, drove our results as Clopay and Cornell Cookson continue to deliver strong free cash flow and operating margins. Our consumer and professional products, or CPP segment, improved in the fourth quarter and we're optimistic about its repositioning for the future. For the year, HBP revenue increased 5% to $1.6 billion, driven by continued growth in commercial volume. As expected, residential volume decreased as backlog levels normalized. HBP had favorable price and mix across all products and channels. HBP's fourth quarter performance benefited from increased investment in marketing and sales for both residential and commercial channels. following two years of reduced activity due to elevated backlog and extended lead times. HBP also continues to invest in productivity and innovation to further drive growth, including expanding Clopay's Troy, Ohio, sectional door manufacturing capacity and adding advanced manufacturing equipment to better satisfy customer demand for premium products. Turning to consumer and professional product segments, CPP's results for the year continue to reflect challenging market conditions with revenue decreasing 18% to $1.1 billion. All channels and geographies were affected by reduced consumer demand and elevated customer inventory levels. As we announced previously, to address the impact of these market conditions on certain U.S. product lines, CPP is expanding its global sourcing strategy. By utilizing an asset-light structure, CPP's U.S. operations will be better positioned to serve customers with a more flexible and cost-effective global sourcing model. The global sourcing expansion project remains on schedule and within budget. By the end of December 2023, operations at two manufacturing facilities and four wood mills representing over 1 million square feet of space will cease. The remaining affected AIMS locations will be transitioned during calendar year 2024. The global sourcing expansion at AIMS is a key element of our strategy to improve the margins of the CPP segment, and we are pleased by the progress made so far. We will continue to provide updates throughout the year as we achieve additional milestones in the process. Turning to capital allocation, in fiscal 23, we took significant actions to deliver shareholder value and strengthen our balance sheet through cash dividends, stock buybacks, and debt repayment. In May, we increased our regular quarterly dividend by 25% to 12.5 cents per share, paid a $2 per share of special dividend and announced a $200 million increase to our share repurchase authorization, bringing the total then to $258 million. At the end of fiscal year, September 30th, we've repurchased more than 4.1 million shares for $151 million. In total, during fiscal 23, we returned $285 million to shareholders through dividend payments and share repurchases. It's also important to note we were able to deliver this value while maintaining our leverage at 2.6 times. Since September 30th, we've purchased an additional 1.1 million shares. And this morning, the Griffin Board announced a $200 million increase to its share repurchase authorization bringing the current authorization to a total of $262 million. Since April, Griffin has repurchased 5.3 million shares for a total of $196 million, or $37.15 per share, through yesterday, November 14, 2023. The share repurchases represent 9.2% of the shares outstanding as of March 31, 2023. During fiscal 23, we also took action to improve our financial flexibility and strengthen our balance sheet. We increased the size of our revolving credit facility from 400 million to 500 million and extended the maturity of the revolver to August 1, 2028. Also in the fourth quarter, we repaid 25 million of our term loan B facility. In fiscal 24, we will continue to use our free cash flow to support our capital allocation strategy with a focus on opportunistically repurchasing shares, reducing debt, and supporting our regular quarterly dividend. Also this morning, the Griffin Board authorized a regular quarterly dividend of 15 cents per share payable on December 14th to shareholders of record on November 28th. marking the 49th consecutive quarterly dividend to shareholders. This is a 20% increase over our last quarterly dividend and a 50% increase compared to our November 2022 dividend. Our dividend has grown at an annualized compounded rate of 18% since we initiated dividends in 2012. These actions reflect the strength of our business as well as our confidence in our strategic plan and outlook. I'll turn it back to Brian for the financial update and to provide details about our 2024 guidance. Thank you, Ron.