Griffon Corporation (NYSE:GFF) Q4 2017 Earnings Conference Call Transcript
Nov 16, 2017 • 08:30 am ET
Good day and welcome to the Griffon Corporation Fourth Quarter 2017 Earnings Conference Call. Today's conference is being recorded.
At this time, I would like to turn the conference over to Mr. Brian Harris, CFO. Please go ahead, sir.
Thank you, Tracy. Good morning, everyone. With me on the call is Ron Kramer, our CEO. Our call is being recorded and will be available for playback, the details of which are in our press release issued earlier today.
(Forward-Looking Cautionary Statements) Now I'll turn the call over to Ron.
Good morning. Thanks for joining us.
Fiscal 2017 has been a transformational year for Griffon. We're pleased with our results for the fourth quarter and the full year, reflecting the continued strength in our Home & Building Products segment. Telephonics, our defense electronics business, is positioned to benefit from the expected increase in defense spending in the next few years.
Overall, Griffon's full year revenue increased 3% on a continuing operations basis. Segment-adjusted EBITDA on a continuing basis was $173 million, increasing 3% over the prior year. Segment-adjusted EBITDA including Plastics was $225 million, in line with our guidance and an increase of 3% over the prior year.
Before turning to my segment-level comments, I'd like to provide an update on our process of evaluating strategic alternatives for our Clopay Plastics Products segment, our acquisition of ClosetMaid, along with some color on our capital deployment activities and our return of cash to shareholders.
Earlier today, we announced that Griffon has entered into a definitive agreement to sell our Clopay Plastics business to Berry Global for $475 million. The transaction is subject to customary closing conditions and is expected to close in the first calendar quarter of 2018. As Brian mentioned in his opening remarks, Plastics is now classified as a discontinued operation. So moving forward, we'll be reporting our business in 2 reportable segments: Home & Building Products, which includes AMES, Clopay Building Products and ClosetMaid businesses; and Telephonics. Expect more in the years to come.
The divestiture of Plastics will unlock value for Griffon shareholders while providing enhanced opportunities for growth and value creation for Plastics and its customers and employees under Berry's ownership. After the Plastics transaction closes, we'll evaluate the use of proceeds, which should provide a substantial amount of liquidity to either invest in opportunities that diversify Griffon's portfolio of companies, deleverage our balance sheet and/or return capital to Griffon shareholders.
On October 2, we completed the acquisition of ClosetMaid from Emerson for approximately $200 million or $175 million, inclusive of the net present value of the tax benefits. Griffon expects 2018 ClosetMaid revenue and segment-adjusted EBITDA of $300 million and $25 million, respectively.
ClosetMaid complements and diversifies our portfolio of leading consumer brands and products. We're proud to add the ClosetMaid brand to our family of iconic brands, including AMES, True Temper and Clopay. In addition to his Senior Vice President of Operations role at Griffon, Mike Sarrica has been appointed President of ClosetMaid. Mike, along with