Griffon Corp. Reports Operating Results (10-Q)

Griffon Corp. (NYSE:GFF) filed Quarterly Report for the period ended 2010-12-31.

Griffon Corp has a market cap of $731.2 million; its shares were traded at around $11.77 with a P/E ratio of 36.9 and P/S ratio of 0.6. Hedge Fund Gurus that owns GFF: Richard Pzena of Pzena Investment Management LLC, Jim Simons of Renaissance Technologies LLC. Mutual Fund and Other Gurus that owns GFF: Mario Gabelli of GAMCO Investors, Mario Gabelli of GAMCO Investors, NWQ Managers of NWQ Investment Management Co, Jean-Marie Eveillard of First Eagle Investment Management, LLC, Chuck Royce of Royce& Associates.

Highlight of Business Operations:

Revenue for the quarter ended December 31, 2010 was $414,402, compared to $305,157 last year. Loss from continuing operations was $1,680, or $0.03 per diluted share, for the December 2010 quarter compared to income of $4,180, or $0.07 per share, in the prior year quarter. The current quarter results included $7,387, or $0.12 per share, of cost related to the sale of inventory that was recorded at fair value in connection with acquisition accounting for ATT, $905, or $0.02 per share of restructuring charges primarily associated with the consolidation of facilities at CBP and discrete tax benefits of $320 or $0.01 per share. The prior year quarter included $657, or $0.01 per share related to the restructuring at CBP and $433, or $0.01 per share, related to discrete tax benefits. Excluding the ATT inventory item, and restructuring charges and discrete tax benefits in both periods, income from continuing operations would have been $6,292, or $0.11 per share compared to $4,405, or $0.07 per share, in the prior year quarter. Income from discontinued operations for the December 2010 quarter was nil, compared to $111 last year. Net loss for the first quarter of 2011 was $1,680, or $0.03 per share, compared to net income of $4,291, or $0.07 per share, in the prior year.

On a pro forma basis, as if ATT was purchased on October 1, 2009, first quarter revenue of $414,402, increased 5% in comparison to $396,286 in the 2010 quarter. The net loss from continuing operations was $1,680 or $0.03 per share compared to income of $6,208 or $0.10 per share in the prior year quarter. Adjusting these results for the same items discussed above, current year income from continuing operations would have been $6,292 or $0.11 per share

For the quarter ended December 31, 2010, Segment operating loss was $1,623 compared to income of $6,861 in the prior year quarter. The benefit from the inclusion of ATT in current year Segment results was more than offset by the impact of higher depreciation and amortization, and the cost related to the sale of inventory that was recorded at fair value in connection with acquisition accounting for ATT. On a pro forma basis, as if ATT was purchased on October 1, 2009, the segment operating profit in the prior year was $17,768 compared to the segment operating loss of $1,623 in the current year quarter. In addition to the ATT inventory item, the decrease was due to a combination of higher input costs and lower ATT receipts under the Byrd amendment (anti-dumping compensation from the US government).

During the quarter, Telephonics was awarded several new contracts and received incremental funding on current contracts totaling $115,200. Contract backlog was $424,010 at December 31, 2010 with 73% expected to be realized in the next 12 months. Backlog was $407,096 at September 30, 2010 and $375,555 at December 31, 2009.

Cash flows used in continuing operations for the quarter ended December 31, 2010 were $23,815 compared to $2,663 provided by operating activities in the prior year quarter. Current assets net of current liabilities, excluding short-term debt and cash, increased to $371,943 at December 31, 2010 compared to $326,692 at September 30, 2010, primarily as a result of decreases in accounts payable, accrued liabilities and income taxes payable. Operating cash flows were affected by decreases in accounts receivable and accounts payable and accrued liabilities as well as an increase in inventories and prepaid expenses.

During the quarter ended December 31, 2010, Griffon used cash for investing activities of $18,643 compared to $10,038 in the prior year period, primarily for capital expenditures. Griffon expects capital spending to be in the range of $50,000 to $60,000 for 2011.

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