Good day, and welcome to the Griffon Corporation Third Quarter 2013 Earnings Conference Call. Today's call is being recorded. And at this time, I would like to turn the conference over to Doug Wetmore, Chief Financial Officer. Please go ahead, sir.

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

Good afternoon, everyone, and thanks for joining us. Our third quarter financial performance was in line with our expectations. We're performing well in what continues to be a challenging environment. Our consolidated segment adjusted EBITDA was $46.8 million compared to $51.8 million in the prior year quarter. We're pleased with our results as our businesses are well positioned for long-term growth and are benefiting from more strategic operating initiatives we have implemented. I'll now make a few comments about each of our operating segments. Doug will then take you through the financial results in more detail. I'll start with Telephonics. Third quarter revenue totaled $130 million, increasing 29% compared to the prior year quarter. The increase was primarily related to higher shipments of ICREW units in the quarter. Excluding the contract manufacturing revenue for ICREW and CREW 3.1 programs in both periods, revenues increased 12%, primarily due to the timing of work related to several multimode surveillance radar contracts. Telephonics EBITDA was $13.1 million compared to $15.9 million in the prior year quarter. The decrease compared to the prior year quarter resulted from less favorable product mix. The effect of which was partially offset by lower expenditures associated with R&D initiatives and better proposal efforts. Remember that in the prior year quarter, Telephonics benefited from a favorable mix of products, most notably the LAMPS MMR. Our funded backlog remains strong, ending the quarter with $440 million compared to $451 million at the prior fiscal year end and $422 million at June 30, 2012. At present, defense budget cuts are clearly in focus, and the question on everyone's mind is the implementation of sequestration. Since our last update, not much has changed. In addition with our revenue and backlog, all exceeding prior year period levels, we do not believe that we've…

Thank you, Ron. Consolidated revenue was $510 million in the quarter, which was an increase of 6% compared to the prior year quarter. Net growth was driven by Telephonics revenue, which increased 29% to $130 million. The Telephonics current and prior year quarters included $20 million and $2.7 million of revenue related to electronic warfare programs where we serve as a contract manufacturer. Excluding revenue from these programs, Telephonics current quarter revenue increased to strong 12% from the prior year quarter. And on the same basis, the core revenue has increased 6% for the 9 months ended June 30. Telephonics segment adjusted EBITDA decreased to $13.1 million from the year ago quarter, and the margin was 10% in the quarter compared to 15.7% in the prior year quarter, with product mix being the key element influencing profitability. The prior year quarter also significantly benefited from higher gross profit and favorable manufacturing efficiencies, both of which were primarily due to an increased level of Multi-Mode Radar deliveries. Thus, making the comparison with the current quarter that much more difficult. Plastics third quarter revenue totaled $139 million, decreasing 2% compared to the prior year quarter. But EBITDA increased 20% to $12.2 million. Our focus on driving profitable business, coupled with the ongoing initiatives to improve operating efficiency in Europe and Brazil, resulted in segment adjusted EBITDA margin of 8.7% compared to 7.1% in the prior year quarter. We've also begun to see the benefits of the Plastics European restructuring initiative, which we announced in February of this year. These actions resulted in restructuring charges of $5 million in our second quarter, for onetime termination benefits and other personnel costs. And that program is essentially done. The impact of currency on the quarter was not significant nor was the impact of resin. We…

The results reflect the disciplined focus on profitable growth and the restructuring initiatives that Ames, our Plastics company and Clopay Doors. Our companies are extremely well positioned for enhanced operating performance as the global economy continues its recovery. We continue to work to drive incremental shareholder value through organic growth and through strategic acquisitions. We believe that over the long term, our businesses have room to grow, and they're going to continue to outperform. We have ample resources to invest in these businesses, and are optimistic about their prospects. As we look out over the next few years, we believe that from our solid foundation, we can sustain revenue growth, expand our EBITDA margin and significantly increase our earnings per share. I'm pleased with our performance to date and believe our future to be bright. With that, operator, why don't we open it up for questions?

[Operator Instructions] We'll take our first question from Robert Labick with CJS Securities.

I wanted to start with Ames, you obviously mentioned and we've all felt it ourselves, the weather impacts in the quarter. Can some of those sales be made up for in the current quarter? Or those going to impact inventories on a go-forward basis? How does that impact the inventory level out there and do you make that up or is that gone?

I think, Bob, this is Ron. The selling days that we have for spring are diminishing. And this is not something that we expect that you can make up. The inventory levels, we think we're well positioned going into next year for both fall and for winter. As a result of some of the odd weather that we experienced in the prior 2 years. But clearly, it's going to have an impact on the business. We fully think that over time, we'll get to some normal predictability and weather patterns. But we like the way the business is set up for the long term.

Okay, great. And on the plant consolidation in Ames, just sticking there for a minute. Has there been any impact on orders to customers or is that just a lot of extra work for you guys and a little cost for you, but the customers can't see anything going on there?

It's more along the lines of a lot of extra work and some incremental expense for us as we transition, because we are consolidating manufacturing equipment and so forth from one plant to the other. So you build a little inventory, you end up with some periods of time where you have under absorbed overhead while you transition. Those types of inefficiencies, not just similar to what we saw when we executed the mega plants for Doors a couple of years ago. So -- and as we said, facing the reality of the situation, we expect those inefficiencies to continue until the plant consolidation is done towards the latter part of fiscal 2014.

Okay, great. And then jumping over to films, you mentioned the European restructuring basically behind you now and it's certainly shown in an improvement in margins. What are the next steps to keep margins -- margin towards your goal of 10%-plus?

Well, Bob, we have to continue to work on the efficiencies in Germany and Brazil. As we've said, we've made substantial progress, but I think we know that Plastics management knows that there's further opportunity. It's not like peeling the onion, you see additional opportunities as you address certain things. That's an element of it. And then again, focusing on R&D development and new technologies that we can roll out with our valued customers.

Yes, I'll just add to it that macroeconomic environment in Europe, any improvement there, we should see some benefit of. North America continues to be strong. We clearly improved the Brazil part of the operation. We think quarter-over-quarter, year-over-year, it's going to be continual improvement in the business. But its problems are behind it, and we think the management, led by Alan Koblin has done a spectacular job of writing that business.

Okay, great. Last one on Telephonics, and I'll jump back in queue. Obviously, over the last several quarters, absent onetime things, you've had significant improvement in margin. And part of what -- that was, you said in the past, to be able to bid on more projects out there. What's the bidding environment like out there now? Are you able to put out more bids? How does it look out there and I know the sequestration overhang is certainly, as you addressed earlier, still an overhang.

Look, the core of the business is quite stable and we're an important part of a lot of very long-life programs. There's always things in the development hopper, the core of business and the backlog continues to improve. Sequestration and the cloud of uncertainty that's there is out of our control. We try to manage this business on the expectation that there's going to be budgetary pressure. We've taken our cost structure down and we continue to compete for new projects, both domestically and increasingly internationally. We've talked about the Mahindra joint venture, we expect that to kick in sometime in 2014. But these are things that we're doing for the long-term positioning. And short term, we think the business is well positioned for whatever the budgetary environment is going to be. But this is a core set of products in intelligence, surveillance and reconnaissance and radar-based maritime systems that are important to our customers and are well-documented in their performance, characteristics. So whether it ultimately translates into mobile security or into other forms of radar systems, we're going to continue to try to grow and diversify the business. What shouldn't be lost on you is over a 5-year period, top line of this business has grown better than 20% and the EBITDA line has grown better than 50%. We really like the business, we really think it's incredibly well run by Joe Battaglia and his team. And we're going to continue to invest and try to grow it in the years ahead, regardless of what the budgetary environment is.

[Operator Instructions] And at this time, we have no further questions from the queue. I'll turn things back over to Ron for any additional or closing remarks.

No, thank you. We're going to continue to grow and build Griffon, and we look forward to speaking to you in November.

Thank you, everybody.

Once again, this does conclude today's conference call. Thank you, all, for your participation. You may now disconnect.