Operator: Ladies and gentlemen, good morning and welcome to the Griffon Corporation Annual and Fiscal Fourth Quarter Financial Results Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Brian Harris, Chief Financial Officer. Please go ahead.

Brian Harris: Thank you. Good morning and welcome to Griffon Corporation's fourth quarter fiscal 2024 earnings call. Joining me this morning is Ron Kramer, Griffin's Chairman and Chief Executive Officer. Our press release was issued earlier this morning is available on our website at www.griffon.com. Today's call is being recorded and the replay instructions are included in our earnings. Our comments will include forward-looking statements about Griffin's performance. These statements are subject to risks and uncertainties that can change as the world changes. Please see the cautionary statements in today's press release and in our SEC filings. Finally, during today's remarks will adjust for items that affect comparability between periods. These items are explained in our non-GAAP reconciliations included in our opportunities. With that, I'll turn the call over to Ron.

Ron Kramer: Good morning, everyone and thanks for joining us. We are very pleased with our results for the fourth quarter and the fiscal year which were driven by a consistently strong performance from our Home & Building Products segment and improved profitability at our Consumer and Professional Products segment. For the year, Home & Building Products, HBP, revenue of $1.6 billion was consistent with the prior year, driven by increased residential volume which was offset by reduced demand for commercial projects. HBP sustained strong EBITDA margin performance throughout the year, ending with an EBITDA margin of 31.5%. HBP's fourth quarter results confirmed the trends we saw throughout the year, with growth in residential volume more than offsetting reduced commercial volume. At HBP, we are continuing to invest in productivity and innovation to further drive growth. These investments include expanding Clopay's Troy, Ohio sectional door manufacturing capacity and adding advanced manufacturing equipment to better satisfy customer demand for premium products. We plan to make further investments in capacity expansion and technology in 2025. Turning to Consumer and Professional Products segment. CPP's results for the year continue to reflect challenging market conditions with revenue decreasing 6% to $1 billion. Reduced consumer demand in North America drove most of the revenue year-over-year, offset by increased volume in the Australian market. Volume in the U.K. increased year-over-year, indicating a potential market recovery for a region that has endured a significant drop-off in consumer demand over the last several years. CPP profitability significantly improved year-over-year despite the reduced consumer demand in North America. This was driven by improved North American production costs and increased profit from the additional volume in Australia. EBITDA increased 44% to $73 million which represented a margin improvement of 240 basis points to 7%. CPP successfully concluded its global sourcing expansion project ahead of schedule as of the end of September 2024. The positive effects of this initiative are already improving the profitability of CPP's U.S. operations, and the completion of the global sourcing initiative establishes a foundation for CPP to achieve its target of 15% EBITDA margin. Turning to capital allocation. In fiscal 2024, we took significant actions to deliver shareholder value through stock buybacks and cash dividends while maintaining a strong balance sheet. During the year, we repurchased 4.8 million shares at an average price of $57.52. Since September 30, we repurchased approximately 0.5 million shares at an average price of $67.91 which used the remaining authorization available under our share repurchase program. Since April 2023 and through November 12, 2024, our share repurchases totaled 9.4 million shares of common stock or 16.4% of the April 2023 outstanding shares for a total of $458 million or an average of $48.74 per share. We continue to believe that our shares are a compelling value, trading well below intrinsic value. And as a result, Griffon's Board of Directors has authorized an additional $400 million of share repurchases. Also this morning, we announced that the Griffon Board authorized a regular quarterly dividend of $0.18 per share payable on December 18 to shareholders of record on November 25, marking the 53rd consecutive quarterly dividend to shareholders. This dividend represents a 20% increase over the prior quarter dividend and since we began paying dividends in 2012 reflects growth at an annualized compound rate of 18%. During fiscal 2024, we also took action to improve our financial flexibility with the repricing of our $459 million Term Loan B facility which matures in 2029, thus reducing the cost of this financing. Utilizing our $326 million of fiscal 2024 free cash flow, Griffon returned a total of $310 million shareholders in 2024 through dividends and share repurchases, while also maintaining our year-over-year leverage at 2.6x, improving our financial flexibility, and making substantial investments in our businesses. These actions reflect the strength of our business as well as our confidence in our strategic plan and outlook. I'll turn it over to Brian for the financial update to provide some details about our 2025 guidance.

Brian Harris: Thank you, Ron. I'll start with our fourth quarter performance and then review our guidance for fiscal 2025. Fourth quarter revenue of $660 million increased by 3% and adjusted EBITDA increased 13% to $138 million, both in comparison to the prior year. EBITDA margin was 20.8%, an increase of 190 basis points over the prior year fourth quarter. Gross profit on a GAAP basis for the quarter was $263 million compared to $246 million in the prior year quarter. Excluding items that affect comparability from the current and prior periods, gross profit was $271 million in the current quarter compared to $251 million in the prior year quarter. Normalized gross margin increased year-over-year by 190 basis points to 41.1%. Fourth quarter GAAP selling, general and administrative expenses were $152 million compared to $157 million in the prior year quarter. Excluding adjusting items from both periods, SG&A expenses were $149 million or 22.6% of revenue compared to the prior year of $146 million or 22.8% of revenue. Fourth quarter GAAP net income was $62 million or $1.29 per share compared to the prior year of $42 million or $0.79 per share. Excluding all items that affect comparability from both periods, current quarter adjusted net income was $71 million or $1.47 per share compared to prior year of $62 million or $1.19 per share. Corporate and unallocated expenses, excluding depreciation, were $16 million in the quarter compared to $13.5 million in the prior year, primarily due to increased ESOP expense driven by the increase in Griffon share price. Net capital expenditures were $20 million in the fourth quarter compared to $33 million in the prior year quarter. Depreciation and amortization totaled $15.6 million for the fourth quarter compared to $15.4 million in the prior year. Regarding our segment performance. Revenue for homebuilding products increased 3% over the prior year quarter, driven by 2% of favorable mix and 1% from increased residential volume partially effect by decreased commercial volume. Adjusted EBITDA increased 7% compared to the prior year quarter, driven by the increased revenue and reduced material costs, partially offset by increased labor and distribution costs. Consumer and Professional Products revenue increased 2% from the prior year quarter to $253 million. The increase in revenue is due to increased volume in Australia, including a 3% contribution from the Pope acquisition as well as increased volume in the U.K. which was partially offset by decreased volume in North America due to reduced consumer demand. CPP adjusted EBITDA of $25 million increased $10 million from prior year driven by reduced North American production costs and increased revenue. The global sourcing strategy expansion has been successfully completed as of September 30, 2024, ahead of the previously announced date of December 31, 2024. As a result, manufacturing operations have concluded all affected sites with CPP reducing its facility footprint by approximately 1.2 million square feet or approximately 15% of CPP square footage. And its head count by approximately 600. These actions will be essential for CPP to achieve its target of 15% EBITDA margin while enhancing free cash flow through improved working capital and significant reduced capital expenditures. Given a more challenged macroeconomic environment since we commenced this initiative in May of '23, we now expect the full margin benefits to be realized in fiscal 2027. Regarding our balance sheet and liquidity. As of September 30, 2024, we had net debt of $1.4 billion and net debt-to-EBITDA leverage of 2.6x as calculated based on our debt covenants. Our leverage was consistent with the prior year ending September 2023, even after returning approximately $310 million to shareholders via stock buyback and dividends during the year. Regarding our guidance, we expect fiscal year 2025 revenue to be consistent with 2024 at $2.6 billion and adjusted EBITDA in a range of $575 million to $600 million excluding unallocated costs of $55 million and charges related to strategic review retention costs of approximately $5 million. From a segment perspective, we anticipate 2025 HBP and CPP revenue will both be in line with 2024. HBP sales are expected to benefit from increased revenue residential volume but will be offset by reduced demand for commercial projects and we expect to return to normal seasonal patterns which includes reduced volume during winter months. CPP sales are expected to reflect continued growth in Australia but offset by weakness in North America which is expected to persist through the first half of 2025. Regarding segment profitability, we anticipate continued strong performance at HBP with EBITDA margins in excess of 30%. CPP EBITDA margin should continue to reflect the ongoing incremental benefits of the completed global sourcing initiative and it is expected to be in excess of 9%. Free cash flow for 2025, including capital expenditures of $65 million, is expected to exceed net income with depreciation of $42 million and amortization of $23 million. Fiscal year 2025 interest expense is expected to be $102 million and Griffon's normalized tax rate is expected to be 28%. Now, I'll turn the call back over to Ron.

Ron Kramer: Thanks, Brian. We are extremely pleased with our team's performance in 2024, especially given the uncertain macroeconomic environment. The HBP team continued to capture market share and grow volume in residential products, offsetting weaker demand in commercial projects and did so while maintaining strong profitability. The CPP team has successfully completed their global sourcing expansion ahead of schedule and these efforts are already contributing to CPP's profit margin which will continue to improve in the coming years. I cannot say enough about how well our teams have positioned our company for 2025 and beyond. We firmly believe that we are in an excellent position as we enter fiscal 2025 with a proven strategy, skilled team, and robust balance sheet, giving us the ability to continue to generate strong financial performance. We will continue to use our strong operating performance and free cash flow to drive a capital allocation strategy that delivers long-term value for our shareholders. To put our cash generation capabilities into perspective, over the next 3 years, we expect to generate over $1 billion of free cash flow. We intend to use this cash to execute our ongoing share repurchase program, pay down debt, complete tuck-in acquisitions and make high-return investments in our business. This strategy underscores the confidence Griffon's Board and management has in our outlook and strategic plan. Before we take any questions, I'll also ask you to take a look at our new refreshed website, www.griffon.com. And with that, operator, we are happy to take questions.

Operator: [Operator Instructions] The first question comes from Bob Labick from CJS Securities.

Lee Jagoda: It's actually Lee Jagoda for Bob this morning. So just, I guess, starting with the door side, can you talk about the successes you've seen on the commercial door side, cross-selling through our dealer network and how much room there is to run there from here? And then on the resi side, maybe just talk about some of the key factors your customers look for when they're choosing a door and why you win versus your competition?

Brian Harris: Sure. On the commercial side and regarding selling Clopay, sectional commercial product to our commercial dealers, that is an ongoing process that will continue for likely years to come. We're seeing generally some softness in commercial this past year and expect that to continue through '25 and we expect it to generally turn in '26. But as far as that project goes, there's a lot of runway ahead of us. On the residential side of the business, we're able to win on many points. We have consistently come up with new designs that consumers are attracted to. For our direct customers--our dealers--we have the best-selling tools, and the best distribution that supports them. And all these factors together really help our products succeed in the marketplace.

Lee Jagoda: Great. And then I guess, given what's going on in the macro environment, I'll ask the obligatory tariff question. Maybe just speak to how you would be impacted directly from tariffs. And then from a competitive standpoint, whether it's a benefit or a headwind to you if we do see tariffs here?

Ron Kramer: No, I'll start by saying we're not going to speculate or assume What I will say is that our HBP business is an American-made business that's not subject to foreign competition and tariffs are irrelevant for that side of our business. For the CPP side, we've been here before and we know how to deal with the ability to pass along tariff increased costs. We have a global sourcing model that allows us the flexibility to move our manufacturing to whatever the cheapest cost and whatever the best way to deliver product to our customers in the United States. So we are very optimistic about the impact of the broader bullish business trends that we think are going to be emerging in 2025 and beyond. And the ongoing ability for us to navigate through a very foggy economic environment as we have over the last several years. We see rays of sunshine ahead and we think we'll be able to position our company regardless of what tariffs may or may not do to be able to improve both volume and profitability.

Operator: The next question comes from the line of Sam Darkatsh from Raymond James.

Sam Darkatsh: First question, as it relates to steel, as I recall, in the June quarter, Brian, I think you had a couple of hundred basis points of headwind specific to the HBP segment because of your -- the lag between when -- what happens in the stock markets versus when it hits your P&L. Can you help us with what the headwind, tailwind was in the September quarter and what you're anticipating for steel up or down and the effects of which in fiscal '25? And then I've got a follow-up.

Brian Harris: Sure. So for the fourth quarter, we saw a reversal in the trend we saw in the third quarter but not a complete reversal. So there was a little bit of overhang into the early months and then steel prices normalized. As far as '25, we expect the current levels to be maintained through -- that's our assumption for the year.

Sam Darkatsh: Maintain, meaning it will be a tailwind, '25 versus '24 when you look at the entire fiscal year?

Brian Harris: No. '24 was about flat with '23 for the whole fiscal year and we expect '25 to roughly be flat with '24.

Sam Darkatsh: Terrific. And then my follow-up question, it -- actually is a follow-up to the prior question around the tariffs. If I could ask you to be a little bit more specific. If we do see 60% tariffs from Chinese product, as it stands now, what would be the approximate dollar impact to CPP and how quickly could you move from China if such a development were to occur?

Brian Harris: Sure. I appreciate the question. The potential new tariff regime has a lot more questions than answers at this point. So we don't think it's appropriate to speculate on which products or geographies will be impacted and what those amounts will be. We've benefited from successfully managing tariffs from the past, as Ron mentioned, and believe this experience will serve us well going forward. We will work with our suppliers and customers as we have done in the past to mitigate the impact of the tariffs. And we expect to manage through any tariff policy and meet our long-term guidance for CPP of 15%.

Operator: The next question comes from the line of Trey Grooms from Stephens.

Trey Grooms: Congrats and well done in the quarter. So I wanted to touch on just CPP profitability next year, EBITDA margins to be in excess of 9%. And tariffs aside, how should we be thinking about the trajectory there? Maybe any update on how we could think about an exit rate in '25 for CPP?

Brian Harris: Sure. Yes. We expect the first half for CPP to continue to be muted; I would say, from the soft demand in the North America, the U.S. specifically. And we'll be selling more manufactured inventory as the year starts. As we go through the year, that will transition to sourced inventory. So we expect the margins to follow and improve as the year continues.

Trey Grooms: Okay. Got it. And just kind of along those lines, on HBP, as we think about -- I mean, you guys are -- have put up great margins there. You're projecting these strong margins to continue into next year. But what are you thinking on kind of the cost or price cost outlook for '25? Is there any expectation that you have there for any adjustments or foresee any kind of need to make any changes there?

Brian Harris: Yes. So we expect generally price - costs to remain similar to 2024. We will make any adjustments if that changes, if there's any changes in input costs. But at the moment, we expect that to be stable and price to remain stable.

Ron Kramer: And I'll just add, we've proven ourselves to be a resilient business throughout the development from residential to the inclusion of commercial at Clopay, and the management team has done an outstanding job of building this and we think there is an enormous amount of both market share gains and volume gains, particularly on the commercial side, in the years ahead. This is a sustainable business, a 30% margin business that has developed over a period of 15 years of investment and building, and we're clearly the leader in the garage door, rolling steel door, and commercial door business and we intend to grow it.

Operator: The next question comes from the line of Julio Romero from Sidoti & Company.

Julio Romero: Ron, Brian. Maybe to start on to CPP. When the shift to sourced inventory does kind of kick in, how would you have us think about the pace of the margin improvement that you should see when that happens, would they improve gradually? Or do you kind of expect a more pronounced step up?

Brian Harris: Yes. It really will happen gradually because the changeover from manufacturered to sourced will happen gradually as we work down one and ramp up the other. Generally, looking into '25 from '24 and then for the successive years beyond as we march to 15%, we would expect to see a similar type increase that we saw in '24, in '25 and then again in '26.

Julio Romero: Excellent. And for my follow-up, Ron, you mentioned a long-term goal to generate over $1 billion of free cash flow over the next 3 years. Can you kind of just talk about the assumptions that are embedded in that expectation and if you're going to be doing anything different over the next 3 years?

Ron Kramer: The assumption is we're just going to continue to run the company on the trajectory that it's on that does not have any acquisitions built into it. That is an organic story about continued growth and improvement on the businesses that we already own and it's assuming our ability to maintain the margins that we've built on the HBP side and enjoy the success of the global sourcing initiative on the CPP side. We are in a very strong position. We don't have a debt maturity until '28 and we expect to generate a significant amount of free cash flow that cash flow will go to either buy back stock or delever the company. We think our stock is materially undervalued and we'll continue to close the value gap from free cash flow.

Operator: Thank you. Ladies and gentlemen, this concludes the question-and-answer session. I would now hand the conference over to Ron Kramer, CEO, for closing comments.

Ron Kramer: Thank you, everyone. And again, I want to thank all of our 5,300 employees around the world for making this such a successful year and here's to making '25 better.

Operator: Thank you. The conference of Griffon Corporation has now concluded. Thank you for your participation. You may now disconnect your lines.