Griffon Corp (GFF) 2022 Q2 法說會逐字稿

Greetings, and welcome to Griffon Corporation's Second Quarter 2022 Earnings Conference Call. (Operator Instructions) As a reminder, this conference is being recorded. I'd now like to turn the conference over to your host, Brian Harris, Chief Financial Officer of Griffon Corporation. Please go ahead.

您好，歡迎來到 Griffon Corporation 的 2022 年第二季度收益電話會議。 （操作員說明）提醒一下，正在錄製此會議。我現在想把會議轉交給你的主持人，Griffon Corporation 的首席財務官 Brian Harris。請繼續。

Thank you, Vikram. Good morning, everyone. With me on the call is Ron Kramer, our Chairman and Chief Executive Officer. Our call is being recorded and will be available for playback, the details of which are in our press release issued earlier today.

謝謝你，維克拉姆。大家，早安。與我通話的是我們的董事長兼首席執行官羅恩·克萊默 (Ron Kramer)。我們的通話正在錄音中，可以回放，有關詳細信息，請參閱我們今天早些時候發布的新聞稿。

As in the past, our comments will include forward-looking statements about the company's performance based on our views of Griffon's businesses and the environments in which they operate. Such statements are subject to inherent risks and uncertainties that can change as the world changes. Please see the cautionary statements in today's press release and in our various Securities and Exchange Commission filings.

與過去一樣，我們的評論將包括基於我們對 Griffon 業務及其運營環境的看法而作出的有關公司業績的前瞻性陳述。此類聲明受固有風險和不確定性的影響，這些風險和不確定性可能會隨著世界的變化而變化。請參閱今天的新聞稿和我們提交給美國證券交易委員會的各種文件中的警示性聲明。

Finally, some of today's remarks will adjust for those items that affect comparability between reporting periods. These items are explained in our non-GAAP reconciliations included in our press release.

最後，今天的一些評論將針對那些影響報告期之間可比性的項目進行調整。這些項目在我們的新聞稿中包含的非 GAAP 調節中進行了解釋。

Now I'll turn the call over to Ron.

現在我會把電話轉給羅恩。

Thank you, and good morning, everyone. We had record sales, adjusted EBITDA and adjusted EPS in the second quarter. Our performance was driven by pricing and product mix, led by our Home and Building Products segment and the contribution from the January 24, 2022, acquisition of Hunter Fan. We've made significant progress with price realization during this quarter. These pricing actions, along with fixed cost leverage, have resulted in increases in sales and profitability. Revenue has increased by 36%, adjusted EBITDA more than doubled, and adjusted EPS has almost tripled on a year-over-year basis.

謝謝大家，早上好。我們在第二季度實現了創紀錄的銷售額、調整後的 EBITDA 和調整後的每股收益。我們的業績受到定價和產品組合的推動，其中以我們的家居和建築產品部門為首，以及 2022 年 1 月 24 日收購 Hunter Fan 的貢獻。本季度我們在價格實現方面取得了重大進展。這些定價行為，連同固定成本槓桿，導致了銷售額和盈利能力的增加。收入增長了 36%，調整後的 EBITDA 翻了一番多，調整後的每股收益同比增長了近兩倍。

Our businesses in the global economy continue to navigate a challenging environment with regard to labor, supply chain, transportation issues, and inflation. Our employees have worked tirelessly to manage through these obstacles and generated outstanding results. We thank all of them for their efforts.

我們在全球經濟中的業務在勞動力、供應鏈、運輸問題和通貨膨脹方面繼續應對充滿挑戰的環境。我們的員工孜孜不倦地克服了這些障礙，並取得了出色的成績。我們感謝他們所有人的努力。

From a strategic perspective, we closed the acquisition of Hunter Fan this quarter. There was strong demand in our new term loan B facility, and as a result, we were able to finance the acquisition on favorable terms. We're in the early stages of integrating Hunter into the rest of the CPP segment, and we're pleased with the Hunter team's performance. The businesses have been performing as expected, and we continue to be enthusiastic about the strategic fit of Hunter.

從戰略角度來看，本季度我們完成了對亨特範的收購。我們的新定期貸款 B 融資需求強勁，因此，我們能夠以優惠條件為收購融資。我們正處於將 Hunter 整合到 CPP 細分市場其餘部分的早期階段，我們對 Hunter 團隊的表現感到滿意。這些業務的表現一直如預期，我們繼續對 Hunter 的戰略契合充滿熱情。

Last week, we announced that we entered into a definitive agreement to sell Telephonics to TTM Technologies for $330 million or approximately $300 million after tax. Pending regulatory approvals and certain closing conditions, we expect to close the transaction by June 30. The sale of Telephonics will increase long-term value for our shareholders by strengthening our balance sheet.

上週，我們宣布達成最終協議，以 3.3 億美元或稅後約 3 億美元的價格將 Telephonics 出售給 TTM Technologies。在等待監管部門批准和某些成交條件的情況下，我們預計將在 6 月 30 日之前完成交易。出售 Telephonics 將通過加強我們的資產負債表來增加我們股東的長期價值。

Turning to our segments. During the quarter, Consumer and Professional Products made progress in reaching price cost parity. These efforts, coupled with our focus on more attractive products and categories, resulted in strong price and mix for the quarter. Unfavorable weather conditions year-to-date have resulted in a slow start to our spring selling season as expected. Volume has also declined from customer supplier diversification. On an organic basis, these declines mostly offset the benefits from improved pricing mix during the quarter.

轉向我們的細分市場。本季度，消費品和專業產品在實現價格成本平價方面取得了進展。這些努力，加上我們專注於更具吸引力的產品和類別，導致本季度的價格和組合強勁。今年迄今不利的天氣條件導致我們的春季銷售旺季如預期般緩慢開始。由於客戶供應商多元化，銷量也有所下降。從有機的角度來看，這些下降主要抵消了本季度定價組合改善帶來的好處。

Our AMES strategic initiative, which we initiated in November 2019, has made steady progress. We consolidated 5 manufacturing and distribution facilities, rationalizing approximately 800,000 square feet of facility footprint in the process. We recently consolidated 2 other facilities in Reno, Nevada, into a new expanded West Coast distribution and digital commerce fulfillment center. We opened an East Coast digital commerce fulfillment center in Carlisle, Pennsylvania, and successfully implemented a new business system and business intelligence platform. Building out the new and upgraded East Coast and West Coast fulfillment distribution centers was a big step for positioning us for the future, and the successful initial implementation of the business system and business intelligence capabilities in the United States establishes a solid foundation for our global operations.

我們於 2019 年 11 月啟動的 AMES 戰略計劃已取得穩步進展。我們整合了 5 個製造和分銷設施，在此過程中合理化了大約 800,000 平方英尺的設施足跡。我們最近將位於內華達州里諾的另外 2 家設施合併為一個新的擴展西海岸配送和數字商務履行中心。我們在賓夕法尼亞州卡萊爾開設了東海岸數字商務執行中心，並成功實施了新的業務系統和商業智能平台。新建和升級東海岸和西海岸配送中心是我們為未來定位邁出的一大步，業務系統和商業智能能力在美國的初步成功實施為我們的全球運營奠定了堅實的基礎.

The fact that the team was able to accomplish all this during the course of the pandemic is quite remarkable and speaks volumes about their skills and commitments to making the initiative of success. According to our original plan, the next major step with the AMES initiative was to establish a new manufacturing and distribution facility and further consolidate existing facilities into that new operation. Keep in mind, we originally blueprinted these strategic actions before COVID. As planning activities progressed, untenable construction schedules and equipment procurement lead times, along with a significant increase in costs for the build-out of a new facility and the procurement of specialized manufacturing equipment, resulted in just an unacceptable return on investment.

該團隊能夠在大流行期間完成所有這一切，這一事實非常了不起，充分說明了他們的技能和對取得成功的主動性的承諾。根據我們最初的計劃，AMES 計劃的下一個主要步驟是建立一個新的製造和分銷設施，並將現有設施進一步整合到新的運營中。請記住，我們最初在 COVID 之前製定了這些戰略行動藍圖。隨著規劃活動的推進，難以為繼的施工進度和設備採購提前期，以及新設施建設和專業製造設備採購成本的顯著增加，導致了無法接受的投資回報。

In light of these evolving factors, we've decided to reduce the scope of the AMES strategic initiative. We'll conclude the current activities by September 30 of this year, which is 1 year earlier than originally anticipated. At its conclusion, the initiative will have a cost of $65 million, which is half of the original $130 million. When fully implemented and the efficiencies are realized, we now anticipate annual savings of $25 million compared to the original expectation of $30 million to $35 million. By any measure, this is a more efficient strategy for improving our cost structure and competitiveness.

鑑於這些不斷變化的因素，我們決定縮小 AMES 戰略計劃的範圍。我們將在今年 9 月 30 日之前結束當前的活動，這比原先預計的時間提前了 1 年。最終，該計劃的成本為 6500 萬美元，是最初 1.3 億美元的一半。完全實施並實現效率後，我們現在預計每年可節省 2500 萬美元，而最初的預期為 3000 萬至 3500 萬美元。無論如何，這是改善我們成本結構和競爭力的更有效戰略。

Let's shift to our Home and Building Products businesses. Continued customer demand, along with the team's successful efforts to address price cost parity, led to the strong results for the quarter. Our residential door business, demand continues to be healthy, thanks to sustained repair and remodeling activity, higher home prices and continued builder activity. Price and mix were particularly strong with these products. Due to the ongoing labor shortages and supply chain disruptions, residential door volume decreased in the quarter, and the backlog continues to be significantly greater than historical levels.

讓我們轉向我們的家庭和建築產品業務。持續的客戶需求，以及團隊為解決價格成本平價問題所做的成功努力，促成了本季度的強勁業績。由於持續的維修和改造活動、較高的房價和持續的建築活動，我們的住宅門業務需求繼續保持健康。這些產品的價格和組合特別強勁。由於持續的勞動力短缺和供應鏈中斷，本季度住宅上門量有所下降，積壓訂單繼續明顯高於歷史水平。

The commercial door business continues to see favorable pricing and mix as well as increased volume. I'll remind you that our acquisition of CornellCookson in 2018 diversified and strengthened our commercial offerings in anticipation of volume growth and margin improvement. Fast forward, our leading commercial door business today is performing well, and we expect further growth.

商用門業務繼續看到有利的定價和組合以及增加的數量。我會提醒您，我們在 2018 年對 CornellCookson 的收購多樣化並加強了我們的商業產品，以期實現銷量增長和利潤率提高。快進，我們今天領先的商業門業務表現良好，我們預計會進一步增長。

Let's go to the balance sheet. We continue to have excellent flexibility in our capital structure to execute on organic and acquisition opportunities and return cash to shareholders through quarterly dividends. Our net debt-to-EBITDA currently stands at 4.4x. Using proceeds from the anticipated sale of Telephonics, coupled with strong second half operating results and the free cash flow generation, we expect to significantly delever and end the year with leverage less than 3x. Additionally, we have ample liquidity with $122 million in cash and $233 million available on our revolving credit facility.

讓我們來看看資產負債表。我們的資本結構繼續具有出色的靈活性，可以執行有機和收購機會，並通過季度股息向股東返還現金。我們目前的淨債務與 EBITDA 比為 4.4 倍。利用預期出售 Telephonics 的收益，加上強勁的下半年經營業績和自由現金流的產生，我們預計將大幅去槓桿化，並在年底槓桿率低於 3 倍。此外，我們擁有充足的流動資金，包括 1.22 億美元的現金和 2.33 億美元的循環信貸額度。

Finally, yesterday, our Board authorized a $0.09 per share dividend payable on June 15, 2022, to shareholders of record on May 19, 2022. This marks the 43rd consecutive quarterly dividend to shareholders, which has grown at an annualized compound rate of 17% since we first initiated it in 2012.

最後，昨天，我們的董事會授權於 2022 年 6 月 15 日向 2022 年 5 月 19 日登記在冊的股東派發每股 0.09 美元的股息。這標誌著連續第 43 個季度向股東派發股息，年化複合增長率為 17%自從我們在 2012 年首次啟動它以來。

Let me turn it over to Brian, who'll take you through some of the financials.

讓我把它交給布賴恩，他會帶你了解一些財務信息。

Thank you, Ron. I'll start by highlighting our second quarter consolidated performance on a continuing basis.

謝謝你，羅恩。首先，我將持續強調我們第二季度的綜合業績。

Revenue increased by 36% to $780 million, and adjusted EBITDA more than doubled to $140 million, both in comparison to the prior year quarter. Adjusted EBITDA margin was 17.9%. Gross profit on a GAAP basis for the quarter was $261 million compared to $161 million in the prior year quarter. Excluding restructuring-related charges and acquisition write-up of inventory as applicable from both years, gross profit was $266 million in the current quarter, increasing 62% over the prior year quarter with a gross margin of 34.1%.

與去年同期相比，收入增長 36% 至 7.8 億美元，調整後的 EBITDA 翻了一番以上，達到 1.4 億美元。調整後的 EBITDA 利潤率為 17.9%。本季度按 GAAP 計算的毛利潤為 2.61 億美元，而去年同期為 1.61 億美元。不包括重組相關費用和兩年適用的庫存收購增記，本季度毛利潤為 2.66 億美元，比去年同期增長 62%，毛利率為 34.1%。

Second quarter GAAP selling, general and administrative expenses were $158 million compared to $118 million in the prior year. Excluding adjusting items from both periods, selling, general and administrative expenses were $144 million or 18.5% of revenue compared to $113 million or 19.7% in the prior year quarter. Second quarter GAAP income from continuing operations was $59 million or $1.10 per share compared to the prior year period of $18 million or $0.34 per share. Excluding adjusting items from both periods, current quarter adjusted net income was $73 million or $1.37 per share compared to the prior year of $25 million or $0.47 per share on a continuing basis.

第二季度 GAAP 銷售、一般和管理費用為 1.58 億美元，而去年同期為 1.18 億美元。排除兩個時期的調整項目，銷售、一般和管理費用為 1.44 億美元或占收入的 18.5%，而去年同期為 1.13 億美元或 19.7%。第二季度來自持續經營業務的 GAAP 收入為 5900 萬美元或每股 1.10 美元，而去年同期為 1800 萬美元或每股 0.34 美元。剔除這兩個時期的調整項目，本季度調整後的淨收入為 7300 萬美元或每股 1.37 美元，而去年同期為 2500 萬美元或每股 0.47 美元。

Corporate and unallocated expenses, excluding depreciation, was $12.8 million in the quarter compared to $12.1 million in the prior year. Our normalized effective tax rate, excluding adjusted items, for the quarter was 28.3% and for the year-to-date period was 29%. Capital spending was $11.5 million in the second quarter compared to $8.8 million in the prior year. Depreciation and amortization totaled $16.3 million for the second quarter compared to $13.1 million in the prior year.

本季度公司和未分配費用（不包括折舊）為 1280 萬美元，而去年同期為 1210 萬美元。我們本季度的標準化有效稅率（不包括調整後的項目）為 28.3%，年初至今為 29%。第二季度的資本支出為 1150 萬美元，而去年同期為 880 萬美元。第二季度的折舊和攤銷總額為 1630 萬美元，而去年同期為 1310 萬美元。

Regarding our segment performance, revenue for CPP increased over the prior year by 24%. Hunter Fan contributed $71 million or 21%. Excluding Hunter, revenue increased 3% due to favorable price and mix of 15%, partially offset by unfavorable volume of 11%, primarily due to U.S. demand and unfavorable foreign exchange. Adjusted EBITDA increased over the prior year by 28% due to the $14 million contribution from Hunter and favorable price and mix, partially offset by the unfavorable impact of reduced U.S. volumes and increased costs for labor, materials and transportation.

關於我們的部門業績，CPP 的收入比上一年增長了 24%。 Hunter Fan 貢獻了 7100 萬美元或 21%。不包括 Hunter，由於有利的價格和 15% 的組合，收入增長了 3%，部分被 11% 的不利銷量所抵消，這主要是由於美國需求和不利的外匯。調整後的 EBITDA 較上年增長 28%，這歸因於 Hunter 的 1,400 萬美元貢獻以及優惠的價格和組合，部分被美國銷量下降以及勞動力、材料和運輸成本增加的不利影響所抵消。

HBP revenue increased 52% over the prior year quarter due to favorable pricing and mix for both commercial and residential products. Increased commercial volume was offset by decreased residential volume. Adjusted EBITDA increased 161% compared to the prior year quarter, driven by increased revenue and fixed cost leverage, partially offset by increased costs for labor, materials and transportation.

由於商業和住宅產品的優惠定價和組合，HBP 收入比去年同期增長了 52%。商業量的增加被住宅量的減少所抵消。調整後的 EBITDA 與去年同期相比增長了 161%，這主要受收入和固定成本槓桿增加的推動，部分被勞動力、材料和運輸成本的增加所抵消。

As Ron mentioned earlier, we are accelerating the AMES strategic initiative and concluding the effort at the end of fiscal '22. Our revised forecast for the initiative will be approximately $50 million of onetime charges and $15 million in capital expenditures, net of expected proceeds from the sale of exited facilities, compared to the original expectation of $65 million in expenses and $65 million of capital investments or in total, half the cost.

正如 Ron 之前提到的，我們正在加速 AMES 戰略計劃，並在 22 財年結束時完成這項工作。我們對該計劃的修改後預測為一次性費用約為 5,000 萬美元，資本支出約為 1,500 萬美元，扣除出售現有設施的預期收益，相比之下，最初預期的支出為 6,500 萬美元，資本投資為 6,500 萬美元，或合計，成本減半。

When fully implemented and the efficiencies are fully realized, we now expect annual savings of $25 million compared to the original expectation of $30 million to $35 million. Remaining expenditures after the end of fiscal '22, including those related to the deployment of AMES global information systems, will be included in the continuing operations of the business. Future investments in equipment, particularly for automation, will be included as part of normal course annual capital expenditures. During the second quarter, AMES incurred pretax restructuring-related charges of approximately $4.8 million and capital expenditures of $900,000 supporting the AMES initiative.

完全實施並充分實現效率後，我們現在預計每年可節省 2500 萬美元，而最初的預期為 3000 萬至 3500 萬美元。 22 財年結束後的剩餘支出，包括與部署 AMES 全球信息系統相關的支出，將納入業務的持續運營。未來對設備的投資，特別是自動化設備，將作為正常課程年度資本支出的一部分。第二季度，AMES 產生了大約 480 萬美元的稅前重組相關費用和 900,000 美元的資本支出以支持 AMES 計劃。

Regarding our balance sheet and liquidity, as of March 31, 2022, we had net debt of $1.8 billion and leverage of 4.4x as calculated based on our debt covenants. The increased leverage from the prior quarter of 3.3x is related to the Hunter acquisition that we closed in January and the $800 million term loan B facility that we secured to finance the transaction. We plan to use the $300 million of net proceeds from the sale of Telephonics to pay down debt, and that contribution, along with free cash flow generated in the second half of our year and our expected EBITDA results, should result in a leverage ratio less than 3x, which is below our target of 3.5x. As a reminder, Griffon uses cash in the first 6 months of its fiscal year, which will be more than offset by the generation of significant cash flow in the second half.

關於我們的資產負債表和流動性，截至 2022 年 3 月 31 日，根據我們的債務契約計算，我們的淨債務為 18 億美元，槓桿率為 4.4 倍。與上一季度相比增加 3.3 倍的槓桿率與我們在 1 月份完成的 Hunter 收購以及我們為交易融資而獲得的 8 億美元定期貸款 B 融資有關。我們計劃使用出售 Telephonics 的 3 億美元淨收益來償還債務，該貢獻連同我們下半年產生的自由現金流和我們預期的 EBITDA 結果，應該會導致槓桿率降低3 倍，低於我們 3.5 倍的目標。提醒一下，Griffon 在其財政年度的前 6 個月使用現金，這將被下半年產生的大量現金流所抵消。

Regarding our 2022 guidance. In February, we provided updated guidance for revenue of $2.75 billion and segment adjusted EBITDA of $355 million for fiscal 2022. That reflected also the additional contribution of Hunter Fan for only 8 months of fiscal '22.

關於我們的 2022 年指南。 2 月，我們為 2022 財年提供了 27.5 億美元的收入和 3.55 億美元的部門調整後 EBITDA 的最新指導。這也反映了 Hunter Fan 在 22 財年僅 8 個月的額外貢獻。

As a result of our outperformance in the first half of the year, and with consideration to current market conditions, we are updating our fiscal '22 guidance. We now expect, on a continuing operations basis, which includes the 8-month contribution from Hunter and excludes Telephonics, revenue of $2.85 billion and segment adjusted EBITDA of $475 million.

由於我們在今年上半年的出色表現，並考慮到當前的市場狀況，我們正在更新我們的 22 財年指南。我們現在預計，在持續經營的基礎上，包括 Hunter 的 8 個月貢獻，不包括 Telephonics，收入為 28.5 億美元，部門調整後的 EBITDA 為 4.75 億美元。

The increase in revenue and EBITDA guidance is driven by the continued price -- continued benefit of price and mix of HBP in the second half, partially offset by softer demand at AMES in the CPP segment. Included in our guidance and consistent with the Q1 update, we continue to expect the Hunter contribution for the 8 months of fiscal '22, in which we own the business, to be $250 million of revenue and $55 million of EBITDA. Excluding the effects of the acquisition-related costs and purchase accounting, we continue to expect Hunter to contribute $400 million of revenue and $90 million of EBITDA for fiscal '23.

收入和 EBITDA 指引的增加是由持續的價格驅動的——下半年 HBP 的價格和組合持續受益，部分被 AMES 在 CPP 領域的需求疲軟所抵消。包括在我們的指導中並與第一季度更新一致，我們繼續預計 Hunter 在我們擁有該業務的 22 財年的 8 個月中的貢獻為 2.5 億美元的收入和 5500 萬美元的 EBITDA。排除收購相關成本和採購會計的影響，我們繼續預計 Hunter 將為 23 財年貢獻 4 億美元的收入和 9000 萬美元的 EBITDA。

The EBITDA guidance excludes unallocated costs of approximately $49 million and onetime charges of approximately $15 million related to the AMES initiative as well as charges related to proxy Hunter-related acquisitions, expenses and Telephonics-related divestiture expenses.

EBITDA 指南不包括與 AMES 計劃相關的約 4900 萬美元的未分配成本和約 1500 萬美元的一次性費用，以及與代理 Hunter 相關的收購、費用和電話相關的資產剝離費用。

Total capital expenditures for fiscal year '22 are expected to be $55 million, which now includes approximately $5 million supporting AMES initiatives and $5 million for the addition of Hunter. Depreciation and amortization are expected to be $68 million, of which $18 million is amortization. These are inclusive of approximately $5 million of depreciation and $8 million of amortization related to Hunter. We expect net interest expense inclusive of the financing for Hunter of approximately $83 million for fiscal '22. Our expected normalized continuing operations tax rate, including Hunter, will be approximately 29%. As is always the case, geographic earnings mix and any legislative action, including new guidance on tax reform matters, may impact rates.

'22 財年的總資本支出預計為 5500 萬美元，其中現在包括大約 500 萬美元用於支持 AMES 計劃和 500 萬美元用於增加 Hunter。折舊和攤銷預計為 6800 萬美元，其中 1800 萬美元為攤銷。其中包括與 Hunter 相關的約 500 萬美元折舊和 800 萬美元攤銷。我們預計 22 財年的淨利息支出（包括 Hunter 的融資）約為 8300 萬美元。我們預計包括亨特在內的標準化持續經營稅率約為 29%。與往常一樣，地域收益組合和任何立法行動（包括稅制改革問題的新指南）都可能影響利率。

Now I'll turn the call back over to Ron.

現在我會把電話轉回給羅恩。

Thanks, Brian. The Griffon team continues to be extremely active, executing on our strategic actions to build shareholder value. At the halfway point in the year, we have already completed the largest acquisition in Griffon's history with the Hunter Fan Company, a highly complementary business to our CPP segment. Financed the Hunter acquisition with new debt secured at attractive terms, accelerated the AMES strategic initiative to fundamentally strengthen the CPP business and signed a definitive agreement to divest Telephonics for $330 million, which will strengthen our balance sheet and allow us to focus on our resources.

謝謝，布萊恩。 Griffon 團隊繼續非常活躍，執行我們的戰略行動以建立股東價值。今年年中，我們已經完成了 Griffon 歷史上最大的收購 Hunter Fan Company，這是我們 CPP 部門的一項高度互補的業務。通過以有吸引力的條款擔保的新債務為 Hunter 收購提供資金，加速 AMES 戰略計劃以從根本上加強 CPP 業務，並簽署最終協議以 3.3 億美元剝離 Telephonics，這將加強我們的資產負債表並使我們能夠專注於我們的資源。

In closing, our management teams continue to successfully navigate an unprecedented set of challenges in the current environment. Despite these challenges, we're raising our guidance as a direct result of the efforts of our talented teams. Our performance this quarter is confirmation of the strength of our strategic plan, resilience of our businesses and excellence of our operating management.

最後，我們的管理團隊繼續成功應對當前環境中前所未有的一系列挑戰。儘管存在這些挑戰，但由於我們才華橫溢的團隊的努力，我們正在提高我們的指導意見。我們本季度的業績證明了我們戰略計劃的實力、我們業務的彈性以及我們卓越的運營管理。

Operator, we'll take any questions.

接線員，我們會回答任何問題。

(Operator Instructions) We have a first question from the line of Bob Labick with CJS Securities.

（操作員說明）我們有來自 CJS 證券的 Bob Labick 的第一個問題。

Congratulations on outstanding results.

祝賀你取得優異成績。

Thanks, Bob.

謝謝，鮑勃。

Yes, I'm still trying to wrap my head around all this. It's fantastic. But maybe we can start with HBP. And could you dig in a little on the primary strength in commercial and the outlook there and kind of the drivers? And -- I mean this is such a huge increase. What changed? And how sustainable is this outlook? Because obviously, the guidance is materially higher, including in the second half as well. So maybe just dig in a little on HBP, commercial and residential here, please.

是的，我仍在努力解決所有這些問題。這是夢幻般的。但也許我們可以從 HBP 開始。你能否深入了解一下商業領域的主要優勢、前景以及驅動因素的種類？而且 - 我的意思是這是一個巨大的增長。什麼改變了？這種前景的可持續性如何？因為很明顯，指導要高得多，包括下半年。因此，請在這裡深入了解 HBP、商業和住宅。

Sure. So I'll start by saying this quarter reflects price cost benefit after multiple quarters of price cost lag. The commercial business continues to see very good demand. Look at the landscape with increasing warehouse space being built, that, of course, will also lead to future replacements in those types of facilities. Our manufacturing facilities have -- that we expanded back in 2019 have definitely been paid off and placed and positioned to meet the demand that we're seeing.

當然。因此，我首先要說本季度反映了價格成本滯後多個季度後的價格成本收益。商業業務繼續看到非常好的需求。看看正在建造的倉庫空間不斷增加的景觀，當然，這也將導致未來對這些類型的設施進行更換。我們的製造設施——我們在 2019 年擴建的設施肯定已經得到回報、安置和定位以滿足我們所看到的需求。

Got it. Okay. Great. And then obviously, with the strong results, the cash flow and the favorable proceeds from Telephonics, the targeted leverage at the end of this year is, as you said, below 3x. It's just remarkable how fast you're paying down the debt and reducing leverage. Are there other targets for M&A on your horizon right now? Is share repurchase, obviously, given valuation, a consideration? Or how are you thinking about kind of capital allocation going forward with the rapid deleveraging that's occurring right now?

知道了。好的。偉大的。然後很明顯，由於 Telephonics 的強勁業績、現金流和有利的收益，正如您所說，今年年底的目標槓桿率低於 3 倍。您償還債務和降低杠桿率的速度非常快。您眼下還有其他併購目標嗎？顯然，考慮到估值，股票回購是一個考慮因素嗎？或者您如何考慮隨著目前正在發生的快速去槓桿化而進行的某種資本配置？

We've always looked at building long-term value, and the acceleration of our cash flow generation is part of what we viewed as a series of acquisitions that were meant to grow the company, delever and position us for future growth. What's clear is that the price of our stock, there is no relationship to the value of our business. We closed on Telephonics in this quarter, and everything is on the table. We'll take a look at where our cash is. And stock buybacks, dividends, we see ourselves as being the cheapest alternative. M&A is always topical for us, but we look at ourselves as being far more opportunistic.

我們一直在著眼於建立長期價值，我們的現金流生成的加速是我們認為的一系列收購的一部分，這些收購旨在發展公司、去槓桿化並為我們的未來增長定位。很明顯，我們股票的價格與我們的業務價值沒有任何關係。我們在本季度關閉了 Telephonics，一切都擺在桌面上。我們會看看我們的現金在哪裡。股票回購、股息，我們認為自己是最便宜的選擇。併購對我們來說一直是熱門話題，但我們認為自己更加投機取巧。

We have next question from the line of Julio Romero with Sidoti.

我們有 Julio Romero 和 Sidoti 的下一個問題。

Obviously, HBP was very strong performance, but maybe on CPP, if you could talk about what you're seeing in terms of demand by product line and maybe talk a little bit about interest rates and how they're -- if they're having any effect on current demand at this time.

顯然，HBP 的表現非常強勁，但也許在 CPP 上，如果你能談談你在產品線需求方面看到的情況，也許可以談談利率以及它們的情況——如果它們是此時對電流需求有任何影響。

Sure. So we are seeing a little softness in the demand. And the season -- the spring season was off to a slow start with weather, particularly in the Northeast. The demand has definitely softened a bit, but we do feel that, that's something that's more seasonal this year or temporary, and we look forward to the balance of the year and what will happen there.

當然。所以我們看到需求有點疲軟。而這個季節 - 春季因天氣而開始緩慢，特別是在東北部。需求肯定有所減弱，但我們確實認為，這是今年更具季節性或暫時性的事情，我們期待著今年的平衡以及那裡會發生什麼。

As far as interest rates, interest rates, though higher, are still historically low. Housing demand continues to be strong. There's still a significant shortage of housing. So the longer-term outlook or the future outlook of the business still is very strong.

就利率而言，利率雖然較高，但仍處於歷史低位。住房需求繼續強勁。住房仍然嚴重短缺。因此，該業務的長期前景或未來前景仍然非常強勁。

And I'd add to that, that our strategy has been built around leading brands and essential products. So the long-term ability for us to grow with the U.S. economy, it is proven this cycle that we're in remains unclear what's going to happen with both monetary policy, the impact of interest rates.

我還要補充一點，我們的戰略是圍繞領先品牌和基本產品製定的。因此，我們與美國經濟一起增長的長期能力證明，我們所處的這個週期仍然不清楚貨幣政策和利率的影響會發生什麼。

But if you look at our housing business as a reflection, we've seen no drop-off in demand. We continue to believe that the housing market is constructive from a shortage of housing. And the things that go in and around the house that are CPP business has been built around long-term demand drivers. We continue to be very optimistic about the long-term view of the CPP segment.

但是，如果您將我們的住房業務視為一種反映，我們就會發現需求沒有下降。我們仍然相信，住房市場因住房短缺而具有建設性。 CPP 業務是圍繞長期需求驅動因素建立的。我們繼續對 CPP 部分的長期觀點非常樂觀。

Hunter, in particular, there's been no change in our view of what that business looks like, both near term and long term. And these are, again, products that go into the home, that go into commercial use, that have essential positioning. And we are always the leading brand in every product that we sell.

尤其是亨特，我們對這項業務的看法沒有改變，無論是短期還是長期。同樣，這些產品進入家庭，進入商業用途，具有重要的定位。我們始終是我們銷售的每種產品的領先品牌。

Okay. Very helpful. And then I guess for my follow-up, back to the HBP business. You did see increased commercial volume reduced residential volume due to labor and supply chain. But I'm just curious if on the resi side, despite the supply chain issues, if you're seeing more inquiries from the new construction channel. And would that be a potential opportunity for Griffon?

好的。非常有幫助。然後我想我的後續行動，回到 HBP 業務。您確實看到，由於勞動力和供應鏈，商業量的增加減少了住宅量。但我只是很好奇，如果在 resi 方面，儘管存在供應鏈問題，你是否會看到來自新建築渠道的更多詢問。這對格里芬來說是一個潛在的機會嗎？

Sure. Yes. New construction certainly is an opportunity for the business. Though we are primarily repair and remodel, we certainly do serve the new construction space. And as well, we don't always actually know where our doors go, particularly from smaller builders. They buy doors from dealers, and we don't know where they ultimately end up. But a strong housing market is certainly a positive for the overall HBP residential side of the business.

當然。是的。新建築無疑是企業的機會。雖然我們主要是維修和改造，但我們確實為新的建築空間服務。而且，我們並不總是真正知道我們的門在哪裡，尤其是來自較小的建築商。他們從經銷商那裡購買門，我們不知道他們最終會去哪裡。但強勁的房地產市場肯定對整個 HBP 住宅業務有利。

(Operator Instructions) We have next question from the line of Justin Bergner with Gabelli Funds.

（操作員說明）我們有來自 Gabelli Funds 的 Justin Bergner 的下一個問題。

Congratulations on the good quarter and improved outlook. I guess to start, I just wanted to make sure I heard a couple of numbers correctly. So the after-tax proceeds from Defense Electronics sale, that's about $300 million?

祝賀良好的季度和改善的前景。我想首先，我只是想確保我正確地聽到了幾個數字。那麼國防電子產品銷售的稅後收益約為 3 億美元？

That's correct.

這是正確的。

Correct.

正確的。

Okay. And then the new segment adjusted EBITDA guide is $475 million, and there's a $55 million contribution from the 8 months of Hunter?

好的。然後新的部門調整後的 EBITDA 指南為 4.75 億美元，Hunter 的 8 個月貢獻了 5500 萬美元？

The $55 million is included in the $475 million.

5500萬美元包含在4.75億美元中。

Okay. Got it. All right. So now on to the substantive questions. With respect to your new segment adjusted EBITDA guide, I guess you did $150 million -- a little over $150 million in the first quarter. That puts the remaining 3 quarters at about $325 million. Should I think of the step-down from sort of the $150 million this quarter to the implied, call it, $105 million, $110 million in each of the next few quarters as demand-driven? Or is this just a function of the short-term price cost dynamics and inventory accounting sort of getting sorted out in the $105 million to $110 million as more representative of segment EBITDA at current demand levels?

好的。知道了。好的。現在談談實質性問題。關於您新的細分調整後的 EBITDA 指南，我猜您在第一季度做了 1.5 億美元——略高於 1.5 億美元。這使得剩下的 3 個季度約為 3.25 億美元。我是否應該考慮從本季度的 1.5 億美元減少到隱含的，稱之為 1.05 億美元，未來幾個季度的 1.1 億美元是需求驅動的？或者這只是短期價格成本動態和庫存核算的函數，在 1.05 億美元到 1.1 億美元之間被分類為更能代表當前需求水平的細分市場 EBITDA？

Sure. So on the AMES business, we have taken a more conservative posture for the second half of the year on demand. On the HBP business, we expect continued good revenue and EBITDA with margin looking like the first half of the year.

當然。所以在AMES業務上，我們對下半年的需求採取了比較保守的姿態。在 HBP 業務方面，我們預計收入和 EBITDA 將持續保持良好狀態，利潤率與今年上半年相似。

Got it. So look at the first half margins rather than the second quarter is representative for the go forward.

知道了。因此，看上半年利潤率而不是第二季度利潤率是前進的代表。

Yes.

是的。

Margins Okay. And just 1 last question on the HBP side. Obviously, you're unable to fully deliver on the residential demand. Do you effectively have a backlog there that sort of priced a few quarters out at this point, given the strong demand? Or how does the next couple of quarters look in terms of catching up the demand at both from a volume point of view and sort of a price cost point of view?

邊距好。 HBP 方面只有最後一個問題。顯然，您無法完全滿足住宅需求。鑑於強勁的需求，您是否有效地積壓了幾個季度的價格？或者從數量的角度和某種價格成本的角度來看，接下來的幾個季度如何追趕需求？

Sure. So yes, we do have significant backlog that we expect to make progress against as we go through the balance of this year and into next year, fiscal '23. Price is -- there is some lag in price in that backlog, but it is mostly priced at the right level.

當然。所以是的，我們確實有大量積壓工作，我們希望在我們完成今年的餘額和進入明年的 23 財年時取得進展。價格是——積壓訂單的價格有些滯後，但大部分價格都在合適的水平。

Got it. So the sort of price and margin for HBP is pretty visible for the next couple of quarters. It's only when you get to the next fiscal year that you're going to be sort of filling material, new backlog and I guess pricing that anew?

知道了。因此，在接下來的幾個季度中，HBP 的價格和利潤率非常明顯。只有當你進入下一個財政年度時，你才會成為填充材料、新的積壓訂單，我想重新定價？

You're thinking about it correctly. That's correct.

你在想它是正確的。這是正確的。

Ladies and gentlemen, we have reached the end of the question-and-answer session. And I'd like to turn the call back to Ron Kramer, CEO, for closing remarks. Over to you, sir.

女士們，先生們，我們的問答環節已經結束。我想把電話轉回給首席執行官羅恩克萊默，讓他發表結束語。交給你了，先生。

We're doing very well, and we expect to continue to do better, and we're all hard at work to continue to build shareholder value. Thank you.

我們做得很好，我們希望繼續做得更好，我們都在努力工作，繼續創造股東價值。謝謝你。

Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.

謝謝你。今天的會議到此結束。此時您可以斷開線路。感謝您的參與。