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Griffon sees steep revenue, profit drop

BY KEIKO MORRIS | keiko.morris@newsday.com

9:55 AM EDT, May 9, 2008

Griffon Corp., the struggling Jericho-based conglomerate which owns a defense-electronics company as well as a manufacturer of residential garage doors, reported a steep loss in net income and declining revenues for the second quarter.

Griffon, which saw its stock price tumble with the drop in housing prices over the last year, said sales in the quarter fell to $320.3 million from the $369.1 million in revenues for the same quarter in 2007. The company lost $21.4 million during the quarter or 71 cents per share compared to a gain of $255,000 or 1 cent per share last year.

The company, which received a $100 million commitment for a revolving line of credit from JPMorgan Bank in March, saw significant revenue decreases from its Telephonics Corp., the Farmingdale-based defense-electronics company, and Clopay Building Products Company, the garage door manufacturer.

Telephonics generated $98.4 million in sales for the second quarter ended March 31, but that was -- a 20.8 percent decrease from 2007 second quarter revenues, the company said. The drop was expected as certain large contracts were coming to an end, the company noted.

"The operating results declined as anticipated as a result of the wind-down in late fiscal 2007 of substantial contracts," Griffon said in a statement. "Core business sales grew by approximately $8.2 million or 11 percent."

The continued downturn in the housing market, weak consumer credit markets and seasonal factors affected revenues of Griffon's garage door segment, the company said. In response, management in the garage door business has been making reductions in the workforce, reducing or eliminating certain sales and marketing programs and consolidating facilities where possible. It will continue to focus on reducing costs, the company said.

Sales from its installation services business fell more than anticipated to about $26 million this quarter, a 41 percent drop from about $44 million in the same period last year, Griffon noted. The company attributed the steep decrease to the "continuing effect of the weakness in new home construction."

Griffon's specialty plastic films segment, however, saw an increase in sales, which the company attributed to a favorable product mix and the impact of the foreign exchange rate. The segment generated $114.7 million in sales, a 15 percent increase from the second quarter of last year.

In early trading Friday, Griffon shares were down 47 cents or 5 percent, to $8.43.