Griffon(US:GFF)2021-11-16 17:13Financial Data and Key Metrics Changes - Griffon Corporation achieved record revenue of $2.5 billion in 2021, with record segment adjusted EBITDA of $317 million and adjusted earnings of $1.86 per share [7][19] - For Q4 2021, revenue increased by 3% to $570 million, and segment adjusted EBITDA increased by 6% to $67 million, with a margin increase of 30 basis points to 11.7% [22][23] - GAAP net income for Q4 was $16 million or $0.30 per share, compared to $20 million or $0.41 per share in the prior year [25][26] Business Line Data and Key Metrics Changes - Consumer and Professional Products (AMES) revenue increased by 8% year-over-year, with adjusted EBITDA up 11% [12] - Home & Building Products (Clopay) saw record revenue and EBITDA, increasing by 12% and 18% respectively, driven by strong demand in both residential and commercial products [14][15] - Telephonics revenue decreased by 15% year-over-year, with EBITDA also down by 15%, impacted by reduced volume and delayed awards [17] Market Data and Key Metrics Changes - The company reported unprecedented levels of backlog, indicating strong demand moving into 2022 [7][10] - Labor, transportation, and supply chain disruptions have created challenges, particularly in the second half of 2021, affecting the ability to meet market demand [10][12] Company Strategy and Development Direction - The company is exploring strategic alternatives for Telephonics, including a potential sale, to focus resources on areas with stronger growth potential [11] - Griffon is actively pursuing acquisitions that are value-enhancing and immediately accretive, with a robust pipeline of potential targets [11][40] - The company aims to capitalize on the strength of the housing market and homeowner activity through strategic investments and portfolio repositioning [8][9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the demand strength despite ongoing supply chain disruptions and inflationary pressures [38][39] - The company anticipates significant margin compression in the first half of fiscal 2022, with expectations of recovery in the latter half [32][51] - Management highlighted the importance of diversifying the supplier base to adapt to changing market dynamics [33][60] Other Important Information - The company reduced its leverage to 2.8 times net debt to EBITDA, below its target of 3.5 times, providing flexibility for acquisitions [18][19] - A dividend increase to $0.09 per share was announced, marking the 41st consecutive quarterly dividend [19] Q&A Session Summary Question: Guidance and Margin Expectations - Management expects the first half of the year to be more challenging due to inflationary input costs and supply chain disruptions, with price parity anticipated by the end of the second quarter [45][46] Question: Balance Sheet and M&A Focus - The company has significant buying power exceeding $1 billion and is actively looking for complementary acquisitions, particularly in the AMES and Clopay businesses [47][48] Question: Transportation Costs and Supply Chain Relief - Management expects relief from transportation and supply chain disruptions in the second half of fiscal 2022, with ongoing challenges anticipated in the first half [56] Question: Customer Diversification and Inventory Needs - Customers are diversifying their supplier base due to inventory shortages, which presents both opportunities and challenges for the company [53][60] Question: Long-term EBITDA Margins for HBP - Management believes the Clopay business has strong growth potential, with expectations for increased volume and improved margins in the long term [66]