Griffon Corporation Reports Operating Results for the Second Quarter of Fiscal 1999, Announces Restructuring and Acquisition for Building Products
Jericho, New York, April 29, 1999—Griffon Corporation (NYSE: GFF) today reported operating results for the second quarter of fiscal 1999, ended March 31, 1999, including charges related to restructuring and consolidation of certain of the company’s building products operations in order to reduce costs and improve efficiencies.
In the building products division, significant price competition continues, and the commercial business has been operating at less than desirable margins. In response, the company, since the last half of 1998 and continuing into 1999 has consolidated or closed several facilities, including certain manufacturing and distribution operations of recently acquired businesses. A related restructuring charge aggregating $3,500,000 has been reflected in the operating results for the quarter ended March 31, 1999. Also, in March 1999 building products completed the sale, at approximately book value, of a peripheral commercial product line, which was operating at a loss. These actions eliminated approximately 400,000 square feet of space and an unprofitable business line, and resulted in a 10% workforce reduction. The company anticipates the reorganization will generate annual cost savings of approximately $2,000,000.
Net sales for the quarter increased 18% to $236,360,000 compared to $199,859,000 for the second quarter of fiscal 1998. Net loss for the quarter was $2,461,000 compared to net income of $3,118,000 for the second quarter of last year. Diluted and basic loss per share were $.08 for the quarter (including $.07 per share related to the restructuring charge) compared to income of $.10 for the second quarter of last year. Net sales for the six months ended March 31, 1999 were $494,917,000, an increase of 15% compared to $428,890,000 for the first six months of fiscal 1998. Net income for the first six months of fiscal 1999 was $4,691,000 compared to $11,633,000 for the first six months of last year. Diluted earnings per share for the six months ended March 31, 1999 including the restructuring charge were $.15 compared to $.37 for the first six months of last year. Basic earnings per share for the first six months of fiscal 1999 were $.15 compared to $.38 for the first six months of last year.
Each of the company’s divisions achieved sales growth. Improved earnings in the company’s electronic information and communication systems division were more than offset by reduced earnings in the building products division and an operating loss in specialty plastic films. Pricing in specialty plastic films has been competitive for some time. This division also experienced lower than anticipated sales volume in Finotech, its German joint venture. Finotech is presently operating below capacity due to delay in the ramp-up of new programs but expects higher volumes will be achieved later this year. The specialty plastic film division’s other European operation, Clopay Böhme Verpackungsfolien, is performing well, and the company remains optimistic about prospects for growth in Europe and other opportunities in South America and the Far East. New programs for the division’s hygienic products, both anticipated and already awarded, should contribute to improving margins toward the end of the year.
Though the current results in specialty plastic films and building products are disappointing, the company is confident about their prospects and growth potential, evidenced by the acquisition of Böhme in late 1998 and continuing investments in the building products division. In February 1999 the company acquired an operation with annual sales of approximately $50 million which sells and installs a range of specialty products to the new residential construction market in Phoenix and Las Vegas.
Telephonics, the company’s information and communication systems operation, is performing as expected, enjoying solid growth in sales and earnings. Telephonics announced today that it has received a contract of over $13 million from Kawasaki Rail Car Inc., Yonkers, New York for communications equipment to be installed on 212 new R-143 subway cars recently purchased by the New York City Transit Authority. The current R-143 order brings to over 2,000 the number of various manufacturers’ subway and rail cars in which Telephonics’ transit systems have been installed over the last six years.
Griffon Corporation—
- is a leading manufacturer and marketer of residential garage doors, as well as a major supplier of commercial and industrial garage doors and a range of related products and services for the home building and replacement markets;
- is a leader in the development and production of embossed and laminated specialty plastic films used in the baby diaper, feminine napkin, adult incontinent, surgical and patient care markets; and
- develops and manufactures information and communication systems for government and commercial markets worldwide.
“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: All statements other than statements of historical fact included in this release, including without limitation statements regarding the company’s financial position, business strategy, Year 2000 readiness and the plans and objectives of the company’s management for future operations, are forward-looking statements. When used in this release, words such as “anticipate”, “believe”, “estimate”, “expect”, “intend” and similar expressions, as they relate to the company or its management, identify forward-looking statements. Such forward-looking statements are based on the beliefs of the company’s management, as well as assumptions, made by and information currently available to the company’s management. Actual results could differ materially from those contemplated by the forward-looking statements as a result of certain factors, including but not limited to, business and economic conditions, competitive factors and pricing pressures, capacity and supply constraints and the impact of any disruption or failure in normal business activities at the company and its customers and suppliers as a consequence of Year 2000 related problems. Such statements reflect the views of the company with respect to future events and are subject to these and other risks, uncertainties and assumptions relating to the operations, results of operations, growth strategy and liquidity of the company. |
