XML 28 R18.htm IDEA: XBRL DOCUMENT

BUSINESS SEGMENTS

9 Months Ended

Jun. 30, 2019

Griffon’s reportable segments from continuing operations are as follows:

•

HBP is a global provider of long-handled tools and landscaping products for homeowners and professionals; a leading North American manufacturer and marketer of wood and wire closet organization, general living storage and wire garage storage products to home center retail chains, mass merchandisers, and direct-to builder professional installers; a leading manufacturer and marketer of residential and commercial garage doors to professional dealers and to some of the largest home center retail chains in North America; as well as a leading U.S. manufacturer and marketer of rolling steel door and grille products designed for commercial, industrial, institutional, and retail use.


•	Defense Electronics segment consists of Telephonics, a globally recognized leading provider of highly sophisticated intelligence, surveillance and communications solutions for defense, aerospace and commercial customers.

On November 16, 2017, Griffon announced it entered into a definitive agreement to sell Clopay Plastics Products Company, Inc. ("PPC") and on February 6, 2018, completed the sale to Berry Global Group, Inc. ("Berry") . As a result, Griffon classified the results of operations of the PPC business as discontinued operations in the Consolidated Statements of Operations for all periods presented and classified the related assets and liabilities associated with the discontinued operations in the consolidated balance sheets. All results and information presented exclude PPC unless otherwise noted. See Note 15, Discontinued Operations to the Notes of the Financial Statements.

On June 4, 2018, CBP acquired CornellCookson, a leading US manufacturer and marketer of rolling steel door and grille products designed for commercial, industrial, institutional and retail use. The accounts, affected for preliminary adjustments to reflect fair market values assigned to assets purchased and liabilities assumed, and results of operations of CornellCookson, are included in the Company’s consolidated financial statements from the date of acquisition.

Information on Griffon’s reportable segments from continuing operations is as follows:



	For the Three Months Ended June 30,				For the Nine Months Ended June 30,
REVENUE	2019		2018		2019		2018
Home & Building Products:
AMES	$	273,710	$	262,398	$	777,916	$	737,336
CBP	221,521		177,723		631,615		470,071
Home & Building Products	495,231		440,121		1,409,531		1,207,407
Defense Electronics	79,739		76,429		225,594		225,006
Total consolidated net sales	$	574,970	$	516,550	$	1,635,125	$	1,432,413

Disaggregation of Revenue

Revenue from contracts with customers is disaggregated by end markets, segments and geographic location, as it more accurately depicts the nature and amount of the Company’s revenue.

The following table presents revenue disaggregated by end market and segment:



	For the Three Months Ended June 30, 2019		For the Nine Months Ended June 30, 2019
Residential repair and remodel	$	148,148	$	417,384
Retail	148,596		424,537
Commercial construction	83,382		243,939
Residential new construction	40,754		114,470
Industrial	12,880		34,054
International excluding North America	61,471		175,147
Total Home and Building Products segment	495,231		1,409,531
U.S. Government	46,579		138,515
International	30,120		75,348
Commercial	3,040		11,731
Total Defense Electronics segment	79,739		225,594
Total Consolidated Revenue	$	574,970	$	1,635,125

The following table presents revenue disaggregated by geography based on the location of the Company's customer:



	For the Three Months Ended June 30, 2019
Revenue by Geographic Area - Destination	Home & Building Products		Defense Electronics		Total
United States	$	400,437	$	49,379	$	449,816
Europe	25,695		8,387		34,082
Canada	26,113		2,855		28,968
Australia	35,992		838		36,830
All other countries	6,994		18,280		25,274
Consolidated revenue	$	495,231	$	79,739	$	574,970



	For the Nine Months Ended June 30, 2019
Revenue by Geographic Area - Destination	Home & Building Products		Defense Electronics		Total
United States	$	1,133,570	$	148,853	$	1,282,423
Europe	53,949		27,188		81,137
Canada	82,288		8,542		90,830
Australia	122,230		2,426		124,656
All other countries	17,494		38,585		56,079
Consolidated revenue	$	1,409,531	$	225,594	$	1,635,125

The following table reconciles segment operating profit to Income (loss) before taxes from continuing operations:



	For the Three Months Ended June 30,						For the Nine Months Ended June 30,
INCOME BEFORE TAXES FROM CONTINUING OPERATIONS	2019			2018			2019			2018
Segment operating profit:
Home & Building Products	$	45,037		$	38,753		$	120,603		$	94,982
Defense Electronics	4,611			6,084			9,075			8,866
Segment operating profit from continuing operations	49,648			44,837			129,678			103,848
Net interest expense	(17,087		)	(15,796		)	(50,723		)	(48,482		)
Unallocated amounts	(12,175		)	(12,016		)	(34,920		)	(32,993		)
Acquisition costs	—			(3,598		)	—			(5,217		)
Special dividend ESOP charges	—			(3,220		)	—			(3,220		)
Secondary equity offering costs	—			(1,205		)	—			(1,205		)
Cost of life insurance benefit	—			—			—			(2,614		)
Income before taxes from continuing operations	$	20,386		$	9,002		$	44,035		$	10,117

Griffon evaluates performance and allocates resources based on each segment's operating results before interest income and expense, income taxes, depreciation and amortization, unallocated amounts (mainly corporate overhead), restructuring charges, loss on debt extinguishment and acquisition related expenses, as well as other items that may affect comparability, as applicable (“Segment adjusted EBITDA”). Griffon believes this information is useful to investors for the same reason.

The following table provides a reconciliation of Segment adjusted EBITDA to Income (loss) before taxes from continuing operations:



	For the Three Months Ended June 30,						For the Nine Months Ended June 30,
	2019			2018			2019			2018
Segment adjusted EBITDA:
Home & Building Products	$	57,821		$	50,004		$	158,434		$	129,250
Defense Electronics	7,280			8,760			17,001			16,956
Total Segment adjusted EBITDA	65,101			58,764			175,435			146,206
Net interest expense	(17,087		)	(15,796		)	(50,723		)	(48,482		)
Segment depreciation and amortization	(15,453		)	(13,927		)	(45,757		)	(39,978		)
Unallocated amounts	(12,175		)	(12,016		)	(34,920		)	(32,993		)
Acquisition costs	—			(3,598		)	—			(7,597		)
Special dividend ESOP charges	—			(3,220		)	—			(3,220		)
Secondary equity offering costs	—			(1,205		)	—			(1,205		)
Cost of life insurance benefit	—			—			—			(2,614		)
Income before taxes from continuing operations	$	20,386		$	9,002		$	44,035		$	10,117

Unallocated amounts typically include general corporate expenses not attributable to a reportable segment.



	For the Three Months Ended June 30,				For the Nine Months Ended June 30,
DEPRECIATION and AMORTIZATION	2019		2018		2019		2018
Segment:
Home & Building Products	$	12,784	$	11,251	$	37,831	$	31,888
Defense Electronics	2,669		2,676		7,926		8,090
Total segment depreciation and amortization	15,453		13,927		45,757		39,978
Corporate	142		120		415		340
Total consolidated depreciation and amortization	$	15,595	$	14,047	$	46,172	$	40,318

CAPITAL EXPENDITURES
Segment:
Home & Building Products	$	8,275	$	9,761	$	21,750	$	24,611
Defense Electronics	2,064		1,632		5,797		6,017
Total segment	10,339		11,393		27,547		30,628
Corporate	37		127		247		2,520
Total consolidated capital expenditures	$	10,376	$	11,520	$	27,794	$	33,148



ASSETS	At June 30, 2019		At September 30, 2018
Segment assets:
Home & Building Products	$	1,691,211	$	1,631,631
Defense Electronics	328,241		346,907
Total segment assets	2,019,452		1,978,538
Corporate	88,789		103,112
Total continuing assets	2,108,241		2,081,650
Assets of discontinued operations	3,218		3,240
Consolidated total	$	2,111,459	$	2,084,890