Good day, everyone, and welcome to the Griffon Corporation's First Quarter 2015 Earnings Conference Call. As a reminder, today's conference is being recorded. And at this time, I'd like to turn the call over to Doug Wetmore, Chief Financial Officer. Please go ahead, sir.

Thank you, Aaron. Good afternoon, everybody. With me on the call is Ron Kramer, our Chief Executive Officer. Before we get into the details of the call, I want to bring to your attention that once again, as Aaron mentioned, our call is being recorded and will be available for playback. The details of that playback are available in our press release issued earlier today and are also available on our website. Secondly, during our call, we may make certain forward-looking statements about the company's performance. Such statements are subject to inherent risks and uncertainties that could cause actual results to differ materially from those expressed. And for additional information concerning factors that could cause those actual results to differ from those discussed in our forward-looking statements, please refer to the cautionary statements contained in today's press release as well as the risk factors that we discussed in our various filings with the Securities and Exchange Commission. And finally, some of today's prepared remarks adjust for items that affect comparability between reporting periods. All of these items are laid out in our non-GAAP reconciliations, which are included in our press release. Now with that, I'll turn the call over to Ron.

Good afternoon. Thanks for joining us today. First quarter was an excellent start to our year. Each of our businesses performed well, particularly Home & Building Products. We continue to see a steady improvement in the U.S. housing market. We also benefited from the Cyclone and Northcote acquisitions in Australia. The efficiency initiatives we've implemented in our company over the past few years are driving significant earnings growth. Our consolidated revenue increased 11% to $502 million, propelled by a nearly 25% increase in Home & Building Products. Our Plastics revenue increased 1%. And as expected, Telephonics revenue declined by 6%. Our segment adjusted EBITDA of $49.1 million increased 11% over the prior year. Of note, excluding foreign currency impact, our adjusted EBITDA increased 15% year-over-year. Adjusted earnings per share of $0.16 increased over 120% versus the prior year adjusted result of $0.07. And on a GAAP basis, earnings per share were $0.16 versus $0.06 in the prior year. Over the past few years, we've relentlessly worked to revitalize our businesses in order to maximize their earnings power. To date, we have already seen a significant improvement in both Telephonics and Plastics, and we estimate an additional annual cash savings of $10 million in Home & Building Products from prior operating levels beginning next quarter. In addition to our restructuring process, we have executed several corporate-level programs designed to improve our financial performance and to reward our shareholders. These initiatives have included the refinancing of our company's debt to reduce our overall interest expense, increasing our dividend and continue our share repurchase program. In the first quarter, we repurchased just over 1 million shares of common stock under our plan, for a total of $12.3 million. Since the -- since August of 2011, we've repurchased nearly 12.5 million shares of common…

Okay. Thank you, Ron. Again, consolidated revenue totaled $502 million in the quarter, an increase of 10.7% or $48.7 million in comparison to the prior year quarter. And Home & Building Products led that surge in revenue. HBP had revenue of $272 million, increasing 24% compared to the prior year quarter. AMES revenue increased 38% to $133 million, mainly due to the inclusion of the Cyclone and Northcote acquisitions, which were completed in the prior 12 months, coupled with stronger sales of snow tools in the United States and Canada as well as some increase in pots and planter sales. This increase in revenue was partially offset by a 3% unfavorable impact from foreign currency translation. Doors also had a strong quarter, as revenue of $139 million increased 14% against the prior year. Revenue was primarily driven by a 9% increase in volume, coupled with continued improvement in product mix. This performance was partially offset by a 1% unfavorable impact from foreign currency translation. Segment adjusted EBITDA was $24.5 million, increasing 28% compared to the prior year quarter. The increase was comprised of 22% improvement attributable to the contribution from Northcote and Cyclone acquisitions and 12% enabled by the improved volume at both AMES and doors. These growth factors were partially offset by a 6% unfavorable currency translation impact on EBITDA. For the balance of the year in Home & Building Products, there will be several factors impacting our growth rates and margins. First, at the start of the calendar year 2015, we've owned Northcote for a full 12 months and we'll lap the acquisition of Cyclone in May of 2015. This will reduce our year-over-year growth rates relative to what we achieved in the first quarter levels. With respect to our EBITDA margins, Home & Building Products efficiency initiatives…

Thanks. We're off to a great start in 2015. Our earnings this quarter reflect the success of our strategic initiatives. We expect to build and to have it accelerate throughout the year. We've ample resources to invest in each of our segments to support their growth, and we're quite optimistic about their prospects. We're committed to shareholder value creation and are confident that we can make investments for organic growth, pursue opportunistic acquisitions and return value to our shareholders via quarterly dividends and share repurchases. As we look out over the next few years, we believe that we can grow our revenues, expand our EBITDA margins and significantly increase our earnings per share. I'm very pleased with our performance this quarter, and I am very excited about where this company is headed. And with that, operator, we'll open it up and take questions.

[Operator Instructions] And we'll take our first call from Bob Labick with CJS Securities.

I want to start with Home & Building Products. Obviously, you've now strung together a number of quarters of not only nice growth from the acquisitions, and obviously, they're integrating well, but the organic growth has exceeded our expectations a few times. Could you just talk a little bit about the visibility on the organic growth and what you're seeing? Particularly the doors volume is very strong. Just tell us what you're seeing out there. And obviously, you raised your guidance. So what are the drivers there and stuff?

Okay. So Home & Building Products is made up of both Clopay and The AMES Companies. Both have been seeing steady recovery from housing. And we see no diminution over the last several quarters. We were very clear to talk about the slow pace of new home construction, and that we've been positioned in this segment for the last several years to benefit from repair and remodel. That repair and remodel business continues on track. New home construction has significantly improved year-over-year and quarter-over-quarter, and we're getting the benefit. We're the market leader. We have the only national business with distribution centers where we can sell and install a door in all 50 states. We're supported by 2,100 dealers. And in big-box retailing, we're exclusive through the Home Depot. So this is a very strong market-leading position. And as housing continues its recovery, which we had said and continue to believe is going to be measured in years not in quarters, this company is going to continue to benefit from it. In terms of the AMES business, we see continued growth, as the U.S. economy has improved and as our ability to execute some acquisitions in Australia. That has given us further growth in our top line. We're also the largest manufacturer and marketer of long-handled tools in Canada. That business, particularly our snow business, is doing well. So throughout all of the businesses, I would characterize it as we're getting growth at the top line. And we've spent the better part of the last several years refining, enhancing their operating strategies. We're seeing manufactured margins improving. We've done quite well year-over-year and quarter-over-quarter. We continue to believe we're at the early stages of our own efficiency initiatives flowing through to the bottom line. And we believe that the top line is going to continue to grow as consumer demand picks up in North America, in Australia and where you have a benefit of having a diversified business in both doors and tools, so that we are going to continue to benefit as the U.S. economy and as the global economy recovers.

Okay, great. That's very helpful color there. And then you started down this path, maybe this is too much of a pointed question, but without putting a time frame on it, the margin opportunity in Home & Building Products, is that still, do you think, north of 10% in addition to -- because of this growth and the leverage there? How should we think about that over the next few years?

Sure. We've been saying that our goal in this segment is to get to a 10% or better blended margin across that. And the revenues, which we've said for some time, that we thought we can get to $1 billion or better based on where we were. We're clearly within sight of that. And we continue to believe that this quarter highlights that a 10% margin in that business is achievable. And how much beyond that is a question of how efficient our manufacturing operations can become. Part of that is going to be skewed by volume. Part of the volume issue is going to be skewed quarter-over-quarter, year-over-year. There's going to be good winters. There's going to be bad winters for our snow business. There's going to be rainy springs and there's going to be sunny springs. We're in this business for the long run. We've been very disciplined about the capital that we've put into this business, and we think that the returns that we are able to generate from running these businesses, leading brands, leading market share are going to be able to drive very nice returns to us. And the opportunity for us, like what we've done with Southern Patio, with Northcote and with Cyclone, there are a number of tuck-in acquisitions that we've made and that we're going to continue to look at making in the years to come. So all of that helps us both organic growth on the top line, bolt-on acquisitions, cost containment, efficiencies lead to margin improvement.

Great. Jumping over to Telephonics. There was an article in the Journal Today, I guess, talking about the 2016 budget being 7% ahead of sequestration, with increased defense spending. Probably too early to tell, but how is the visibility there? Obviously, you have the record backlog. And what are you hearing? What are your expectations?

Telephonics has been in business since 1933. And so it is gone through cycles. In this cycle -- we've been saying for some time, we are committed to our core business, which is intelligence, surveillance, reconnaissance, particularly radar-based and particularly maritime-based systems. We're an incumbent supplier. We're cost effective. We're battle proven. And the political budgetary process is not something that we're in control of. What we are in control of is we deliver the best products to branches of the military, domestically and international sales prospectively, that we believe that there's going to be continued growth, regardless of what's going on in the U.S. budget. But this is a business that -- the world isn't getting any safer. The ability to build our defense is going to continue to be a priority. We believe that essential parts of the defense budget will always get over whatever political issues are out there. And I guess, the best thing I can say is in terms of visibility, our backlog is growing at a time when there is a cloud of uncertainty about budgetary constraints. So we are at a record backlog. We think this business is incredibly well positioned in terms of its products, its customers and our ability to both maintain and improve margins over time.

I think the backlog speaks to the strength of the company. There are quality products, and that's why we're building that backlog.

Okay, great. And then you mentioned in your opening comments as well some R&D for both films and Telephonics. I don't know if you are able to, but could you maybe just elaborate a little bit on that? And is there any capital spending associated with that as well? Or is it just -- will it be -- is that just being expensed now? What's it going towards, if you can tell us?

Bob, currently, it's -- we mentioned it on the call in November as well that we have some initiatives that are both underway in Plastics. And there's initiatives in each of the business, but there's some fairly significant initiatives in Telephonics and Plastics. And we said at that point in time, it was probably a little bit too premature to begin to discuss them. Telephonics has a longer tail to those projects than perhaps Plastics does. But it still, at this point in time, would be a bit premature to provide further details of those. But as it relates to capital, certainly within the context of the overall expectation for this year, which I mentioned was $80 million of CapEx that we expect, there is an element associated with those initiatives that we have in place.

[Operator Instructions] And we'll go next to Justin Bergner with Gabelli & Company.

And wanted to delve a bit more into the operating leverage in Home & Building Products. Maybe if you could just sort of choreograph when you expect that operating leverage to start to come through. And what's going to enable it to really pick up versus prior quarters?

Well, that's a very good question. And we expect, as we mentioned in our comments, that we'll begin to realize the savings from the AMES initiatives that we have underway this current quarter. And as we saw -- while they diminished a little bit in the quarter that we just completed, we continued to have some inefficiencies associated with that -- those manufacturing initiatives at AMES. So we'll begin to see those benefits right away, and I think you're beginning to see -- clearly, the acquisitions added a lot to the operating profit and to the top line. But there's a number of synergies associated with those acquisitions from a sourcing perspective and manufacturing supply chain perspective that will benefit Home & Building Products overall. So we were working towards the initial target of 10% EBITDA margin. It's kind of parallel to where we were with Plastics a couple of years ago. And we kind of said, "Well, let us get to 10 and then we'll tell you where we're going from there." And it's a very similar path that we're trying to follow. So we'll get us to 10, and then we'll build on that.

Okay. Do you think that -- I mean, the current revenue run rate for Building Products would certainly suggest that you're poised to do in excess of $1 billion in sales this year. Do you think that is still a appropriate sales level to achieve that 10% EBITDA margin? Or does the acquisitions sort of change the matching revenue for 10% EBITDA?

So we haven't established a 10% target for this year. We do know that, that is our initial goal. And we think it's within sight. We -- and certainly, we're going to scale up the profitability associated with the AMES initiatives, as I just mentioned. I think the key is, for clarity, for Home & Building Products, particularly the AMES business, we really need to see that the weather impact over the course of the next 3 or 4 months from right now, from like February till the end of May, because that's the peak lawn and garden season. And then that weather also has an impact on doors. If you have harsh weather, there's less people putting garage doors on their house during that period of inclement weather. So it's a little bit early on after 1 quarter to make a prognostication about the entire year publicly.

Okay, that's fair. Repurchases versus bolt-on acquisitions, where does sort of cash priorities lie at the present point in time?

Well, as you can see, we have been buying back our own stock continually and aggressively for the better part of 2 years. And we have an authorized share repurchase plan in place. So the only thing with certainty is I know that we can buy our own stock every day at 9:30 in the morning. Acquisitions sort of take much longer periods of time to gestate, and we're always looking at things. We think our stock is a compelling value. And we've been buying it, and expect us to continue to buy it.

And this concludes the question-and-answer portion of today's conference. I would like to turn the call back over to Ron Kramer for comments and closing remarks.

Thanks for joining us. We're very pleased about how our company is doing, and we're going to work very hard to deliver our shareholders an outstanding 2015 and beyond. Thank you.

Thank you.

And this does conclude today's conference call. We thank you all for your participation. You may now disconnect.