Good day, and welcome to the Griffon Corporation Fourth Quarter 2016 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Brian Harris, Chief Financial Officer. Please go ahead.

Thank you, Kevin. Good afternoon, everyone. With me on the call is Ron Kramer, our 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 and on our website. As in the past, our comments will include forward-looking statements about the company's performance based on our view of Griffon's businesses and 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 various Securities and Exchange Commission filings. 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. Now I will turn the call over to Ron.

Good afternoon. We're pleased with our performance in the fourth quarter and full year 2016 as we delivered solid results and consistent performance throughout the year. Our fourth quarter and full-year 2016 adjusted earnings per share was $0.27 and $0.84 respectively, an increase of 17% and 15% compared to the prior year period. This performance was the result of strong operational execution in a difficult macro environment, which resulted in Q4 revenue of $501 million, which was consistent with the prior year quarter and full-year revenue of $1.96 billion, which decreased 3% from the prior year, excluding the negative impact of foreign exchange full-year revenue decreased 1%. Despite sluggish revenues, our fourth quarter and full-year segment adjusted EBITDA was $60 million and $218 million, an increase of 8% and 7% respectively from the prior year periods. Excluding the negative impact of foreign exchange, full-year segment adjusted EBITDA increased 8%. Before discussing the segment, I would like to provide an update on our capital performance activities and return of cash to shareholders. In fiscal 2016, we continue to execute on our Board-authorized share repurchase program and bought over 3.5 million shares for a total of $56.3 million or $15.86 per share. As of September 30, 2016, 51.6 million remains of our repurchase authorization. In addition earlier today, I am pleased to say that we announced a 20% increase to $0.06 in our quarterly dividend. In the last five years, we've repurchased 20.3 million shares, which is nearly a third of our outstanding common stock for a total $259 million or $12.78 per share. Our buybacks and dividends have been accomplished while maintaining balance sheet liquidity and strength. Looking forward over the next few years, we expect increasing free cash flow generation as our businesses continue to improve margin performance and capital…

Thank you, Ron. Consolidated fourth quarter revenue was $501 million which is essentially flat compared to 2015. Current quarter segment adjusted EBITDA of $60 million increased 8% over the prior year. Full year revenue of $1.96 billion decreased 3% from the prior year. Excluding a $32 million unfavorable foreign currency impact revenue decreased 1%. Full year segment adjusted EBITDA was $218 million, an increase of 7% over the prior year or 8% excluding a $3 million unfavorable foreign exchange impact. By segment, home building product's fourth quarter revenue of $245 million was consistent with the prior year. Full year revenue of $1 billion decreased 1% from the prior year but was consistent with prior year when excluding a $15 million unfavorable foreign currency impact. AMES' fourth quarter revenue increased 4% to $208 million but decreased 4% for the full year. The quarter increase was due to improved U.S. lawn tool and pot and planter sales and increased product offerings in Australia, partially offset by the impact of unfavorable weather on Canadian sales. For the full-year the decrease was mainly driven by a combination of a warm winter and a cold wet spring, both in the U.S. and Canada resulting in reduced snow tool and spring tool category sales, partially offset by improved sales of North American pots and planters and increased product offerings in Australia. The full year included a 2% unfavorable currency impact. In our doors business, fourth quarter revenue decreased 3% to $138 million, but increased 2% to $527 million for the full year both compared to prior year periods. The quarter decrease was due to reduced volume, partially offset by favorable product mix and the full increases due to both improved volume and favorable product mix. Home building products fourth quarter segment EBITDA -- adjusted EBITDA of…

Thanks. I am very pleased with our performance for 2016. 2017 is off to a good start and we remain committed to shareholder value creation. Looking to the future we're excited about the progress we've made in improving our margins and we look to build on that momentum. We're hopeful that increased spending on infrastructure and defense will benefit our business. We've positioned Griffon very well over the past eight years that I've been CEO but we're nowhere near the peak performance for our companies. I am very optimistic about our future. Finally I want to thank our 6000 employees in North America and around the world for their extraordinary efforts as we close out another successful year. Thank you and with that operator we'll open it up for questions.

Thank you. [Operator Instructions] We'll take our first question from Bob Labick with CJS securities. Go ahead please.

Thank you. Good afternoon and congratulations on a nice quarter and year.

Thank you.

Just wanted to start off I think as it's a good quarter very straightforward, why don’t you start like thinking about some of the growth opportunities going ahead and start with doors, could you talk about the opportunity, I know it's small for you right now in terms of commercial doors, but the opportunity to grow that organically or potentially through M&A and why that market maybe attractive over the next five to 10 years?

Look, we have always focused on being a dominant high-end residential garage door manufacturer and we have a very nice commercial and industrial door piece to that. We think there is significant growth in all of our categories with the main driver being continued residential housing recovery and while the housing markets have come significantly off where they were off the bottom from 2008, homeownership in the United States is at a 50-year low. So we've got plenty of room to go and we see volume increases in the residential business, but we see a continued growth in the commercial door business. Retailing is clearly going through a transformation. Commercial warehouses are going to continue to grow as the Internet continues to be a way that consumers purchase goods. The storing of those goods requires commercial doors. We believe that both organically we're going to address the commercial door market and we're very opportunistic and very active in looking for ways to grow through acquisition our commercial door business.

Great. Thank you. And then on the AMES side, you talked about for some time the potential opportunity out there for the U.K. lawn and garden market. Can you talk about where you stand positioned relative to that market now and what are opportunities again over the next three to five years there?

We've enjoyed a very good relationship with Bunnings in Australia and they purchased Homebase in the U.K., which they will be converting into Bunnings stores and we're very much following our customer into the U.K. market and we're hopeful that we're going to be able to supply them successfully in their efforts there as we have been in Australia. So it's an organic growth story for us and then from an acquisition standpoint, we continue to believe the U.K. market is opportunistic and we're actively looking at some targets.

Okay. Super. Switching over to the film side, can you just give us an update on Sof-Flex? Is it out yet or when does that start hit the market and if it has hit the market, what's been the reception so far?

Sof-Flex has not been rolled out to the market yet. We continue to work with our first customer on that product and expect rollout sometime during '17 and we continue to see interest from other customers as well.

Okay. Great. And then just lastly over on the Telephonics side, can you give us a sense of some of the drivers there? You obviously, you're looking for 2% to 4% growth. You have some products that they have certainly used or having used in border patrol already. Is there an increasing interest in that or what are some of the growth drivers that you're looking for on the Telephonics side?

We continue to believe that we are a irrelevant solution for custom and border patrol and our ability to adapt our maritime radar systems or use on border patrol is something that we think with increased defense spending, with an increased focus on seeing that happen, that Telephonics should be a beneficiary of it/ If there is obviously a lot of flux going on politically and the one thing that I'll comment is the worst thing that’s happened in the defense industry was sequestration and getting a government that's going to provide funds for continued expansion of the defense industry and particularly the custom and border patrol, homeland security initiative is something that we think will be very beneficial to Telephonics.

I'll just add to that. We continue to see international opportunities for our products as well in Telephonics and extensions from our base products into other markets.

Great. All right. Thank you very much.

We'll go next to Michael Conti with Sidoti. Go ahead please.

Hey, good afternoon.

Hi Mike.

Mike, how are you doing?

Good, good. Yes, so can you just talk a bit about your unit volume within doors, I am surprised to see that decline year-over-year that’s more of a timing issue or a end customer string issue there.

I don't see any particular issue with any end customer. We’ve seen fluctuations in the past quarter-to-quarters. So, if you look back last year, fourth quarter was pretty much flat with the year before that and then going into '16 we saw Q1 with a 3% increase over that prior year quarter and then an 8% increase in Q2. So we see these fluctuations. There is nothing particular that we're seeing out there.

Got it. Okay. And then you talk about the opportunity within the commercial doors, but can you just give us an idea on the margin profile on commercial doors first, the residential side.

Sure. Commercial doors have a slightly lower margin, but they're higher dollar products generally. Their industrial people are willing to pay more for that type of stronger product and that’s a profile that’s what we generally see, but not significantly lower.

Got it. Okay. And then just on the EBITDA guidance for next year looking around the $7 million increase, I guess which segment will be the highest contributor there.

Well we see contributions really from all our segments, of course our home and building products space has been a large contributor to us. We continue to expect that and additionally we expect better results out of plastics now that volumes from our major customers have normalized.

Got it. Okay. And then just switching over to Telephonics, just looking at the EBITDA margin there, the highest it's been in couple of quarters, how we should think about the margins there over the next several quarters just given the backlog should stay elevated at these levels in the near term before leveling down to more normalized levels?

I think we will tract more in the 12% range where we tracted historically. We have movements up and down quarter to quarter, but 12% is where we generally land over time.

Got it. Okay. Then just last one for me with the swings in steel pricing over the last couple of months, can you just remind us if any lag time between passing any price increases in raw material cost to customers in the form of higher selling prices.

For resin you said or steel. We don’t necessarily pass steel through to our customers by contract. Of course if our cost go up we will go to our customers if the market can take a price increase and implement a price increase. But there is -- it's not a set timeline that would occur unlike resin where we do pass it through on a regular lag.

Got it. Thank you.

Sure, thanks Mike.

[Operator Instructions] We'll go next to Justin Bergner with Gabelli & Company. Go ahead please.

Good afternoon, Ron. Good afternoon, Brain.

Hi Justin.

Thanks for taking my questions. I guess to start, given that you had stronger than 5% EBITDA growth in the fiscal year just ended and you’re guiding a little bit less than that, should we think that there was a few million of raw material tailwind in '16 that’s going to reverse in '17 any ability to frame those numbers for us?

Justin, we’ve always tried to be conservative and balance a lot of the things that are going to happen and giving guidance by definition is, we look into the future. We have consistently tried to set expectations at levels that take all the rest of all the things that we have to worry about across geographies, across weather patterns, across raw materials and the bottom line to it is that we see that this as an improving environment. We think that the political environment may turn into something substantially more robust going into next year. But based on everything that we look at, when we start a fiscal year on October 1, we saw that this is an improved year from 2016 and I would rather under promise and over deliver.

Okay. But it's safe to assume that there was some raw material tailwind in '16 that’s becoming some raw material headwind in '17, is that fair calculation?

We assume that’s already baked into our expectations.

Okay. Great and then on the guidance for '17, within home and building products, that 2% to 4%, could you maybe frame where AMES and Clopay Doors are going to fall out relative to that 2% to 4%?

We see similar growth for both. It's really -- we don't expect much variation between the two.

Okay. And then I guess my final question would be given the move up in your stock along with other stocks that have followed the election, does that change how you think about capital deployment with your stock at $20 when clearly you're repurchasing shares at a much lower price in both the fiscal year and the fourth quarter?

Look we continue to believe that our stock is a compelling opportunity and we have a buyback plan in place that we will look at as the day-to-day market presents opportunities to us. Our goal has been to grow the company, position it, improve its operations. I think we've done that effectively. There are moments where the market recognizes that and there are moments where it doesn’t. I think you should look at the pattern that we've established over a period of years, look at the fact that we've been in a difficult macroeconomic environment and in spite of sluggish revenues, we've dramatically increased both our EBITDA and our EPS not this year, but over a period of years. In a better economy, you should expect higher revenues, higher EBITDA and higher EPS and what the stock market does, I can't begin to tell you, but I believe that our stock is still very, very much a compelling value.

Okay. And then just one other question, on a related front which is you talked about the potential defense and border tailwind post-election. Are there other election effects on your business may be second order that you've talked about and that we should think about here and is there anything that changes your view towards M&A today versus a week ago as use of capital?

There is still a robust M&A environment that we're a participant in. It is very difficult to find things that are value enhancing that we see the continued pattern for us of looking at tuck-in acquisitions around the businesses, particularly home and building products that we'll be able to accelerate our growth, but our organic growth story is what you should be focused on. We don’t need M&A, it's opportunistic and we can do something. We clearly have a desire and capacity to do things and the political environment, a lot is going to happen come January 20 and afterwards, but you've got to let the clock burn-off. You have to see what's going to actually go from being conversation to reality. But big picture we believe that increased defense spending, we think that more infrastructure spending, remember the gray shovel ready, we've got the shovels when they finally start to open America. We've been doing it for a long time and we think that that's very beneficial to our company. In addition, a stronger U.S. economy which we haven't been in for many, many years is going to create higher consumer spending that spills over into our housing market related businesses. So look there is a lot to be hopeful and optimistic about, about the macro environment here. Corporate tax reform, our tax rate as a reflection has got a lot of leverage to the bottom line. So we're very encouraged about what we see going on and we're hopeful that the government is going to do a lot of things that we thought might have happened over the last eight years.

Okay. Thanks for that description and for taking my questions.

Okay.

Thank you.

And at this time, I would like to turn the conference back over to you presenters for any additional or closing comments.

Thanks very much. We'll be working very hard on making 2017 a success. Bye-bye.