BUSINESS
Overview
Griffon Corporation (the "Company", "Griffon", "we" or "us") is a diversified management and holding company that conducts business through wholly-owned subsidiaries. The Company was founded in 1959, is aDelaware corporation headquartered inNew York, N.Y. and is listed on theNew York Stock Exchange (NYSE:GFF). Business Strategy We own and operate, and seek to acquire, businesses in multiple industries and geographic markets. Our objective is to maintain leading positions in the markets we serve by providing innovative, branded products with superior quality and industry-leading service. We place emphasis on our iconic and well-respected brands, which helps to differentiate us and our offerings from our competitors and strengthens our relationship with our customers and those who ultimately use our products. Through operating a diverse portfolio of businesses, we expect to reduce variability caused by external factors such as market cyclicality, seasonality, and weather. We achieve diversity by providing various product offerings and brands through multiple sales and distribution channels and conducting business across multiple countries which we consider our home markets. Griffon oversees the operations of its subsidiaries, allocates resources among them and manages their capital structures. Griffon provides direction and assistance to its subsidiaries in connection with acquisition and growth opportunities as well as in connection with divestitures. As long-term investors, having substantial experience in a variety of industries, our intent is to continue the growth and strengthening of our existing businesses, and to diversify further through investments in our businesses and through acquisitions. Over the past three years, we have undertaken a series of transformative transactions. We divested our specialty plastics business in 2018 to focus on our core markets and improve our free cash flow conversion. Also in 2018, we expanded the scope ofThe AMES Companies, Inc. ("AMES") andClopay Corporation ("Clopay") through the acquisitions ofClosetMaid, LLC ("ClosetMaid") andCornellCookson, Inc. ("CornellCookson"), respectively. CornellCookson has been integrated intoClopay , so that our leading company in residential garage doors and sectional commercial doors now includes a leading manufacturer of rolling steel doors and grille products.ClosetMaid was combined with AMES, and we established an integrated headquarters for AMES inOrlando, Florida . AMES is now positioned to fulfill its mission of Bringing Brands Together™ with the leading brands in home and garage organization, outdoor décor, and lawn, garden and cleaning tools. As a result of the expanded scope of the AMES andClopay businesses, in 2019 we began reporting each as a separate segment. Griffon now reports its operations through three segments.Clopay remains in the Home and Building Products ("HBP") segment, AMES now constitutes our new Consumer and Professional Products ("CPP") segment and our Defense Electronics segment which continues to consist ofTelephonics Corporation . Update of COVID-19 on Our Business The health and safety of our employees, our customers and their families is a high priority for Griffon. As of the date of this filing, all of Griffon's facilities are fully operational. We have implemented a variety of new policies and procedures, including additional cleaning, social distancing, staggered shifts and prohibiting or significantly restricting on-site visitors, to minimize the risk to our employees of contracting COVID-19. We manufacture a substantial majority of the products that we sell, with the majority of our manufacturing activities conducted inthe United States . As a result, we have been able to mitigate the adverse impact of the COVID-19 pandemic on the global supply chain. During the quarter and through the date of this filing, all of our businesses have experienced normal or better order patterns compared with the same time period last year. Our supply chains have not experienced significant disruption, and at this time we do not anticipate any such significant disruption in the near term. Although manyU.S. states lifted initial executive orders issued earlier in the 2020 calendar year requiring all workers to remain at home unless their work is critical, essential, or life-sustaining, some states and localities have recently put in place new restrictions regarding the operation of many types of businesses, or have tightened up restrictions already in place, in response to the recent worsening of the COVID-19 outbreak. Regardless, we believe that, based on the various standards published to date, the work our employees are performing are either critical, essential and/or life-sustaining for the following reasons: 1) Our Defense Electronics segment ("DE") is a defense and national security-related operation supporting theU.S. Government , with a portion of its business being directly with theU.S. 31 -------------------------------------------------------------------------------- Table of Contents Government; 2) HBP residential and commercial garage doors, rolling steel doors and related products that (a) provide protection and support for the efficient and safe movement of people, goods, and equipment in and out of residential and commercial facilities, (b) help prevent fires from spreading from one location to another, and (c) protect warehouses and homes, and their contents, from damage caused by strong weather events such as hurricanes and tornadoes; and 3) CPP tools and storage products provide critical support for the national infrastructure including construction, maintenance, manufacturing and natural disaster recovery, and is part of the essential supply base to many of its largest customers including Home Depot, Lowe's and Menards. Our AMES international facilities are currently fully operational, as they meet the applicable standards in their respective countries. Griffon believes it has adequate liquidity to invest in its existing businesses and execute its business plan, while managing its capital structure on both a short-term and long-term basis. InJanuary 2020 , Griffon increased total borrowing capacity under its revolving credit facility ("Credit Agreement") by$50,000 , to$400,000 (of which$369,807 was available atDecember 31, 2020 ), and extended maturity of the facility to 2025. In addition, the Credit Agreement has a$100,000 accordion feature (subject to lender consent). InFebruary 2020 , Griffon refinanced$850,000 of its$1,000,000 of senior notes due 2022 with new 5.75% senior notes with a maturity of 2028, and inJune 2020 refinanced the remaining$150,000 under the same terms and indenture as the$850,000 senior notes due 2028. InAugust 2020 , we completed a public offering of 8,700,000 shares of our common stock for total net proceeds of$178,165 (the "Public Offering"); a portion of these net proceeds were used to repay outstanding borrowing under our Credit Agreement. AtDecember 31, 2020 Griffon had cash and equivalents of$233,807 . We will continue to actively monitor the situation and may take further actions that impact our operations as may be required by federal, state or local authorities or that we determine are in the best interests of our employees, customers, suppliers and shareholders. While we are unable to determine or predict the nature, duration or scope of the overall impact the COVID-19 pandemic will have on our businesses, results of operations, liquidity or capital resources, we believe it is important to discuss where our company stands today, how our response to COVID-19 is progressing and how our operations and financial condition may change as the fight against COVID-19 progresses.
Business Highlights
InAugust 2020 , we completed a public offering of 8,700,000 shares of our common stock for total net proceeds of$178,165 ; a portion of these proceeds were used to repay outstanding borrowing under our Credit Agreement. The Company intends to use the remainder of the proceeds for general corporate purposes, including to expand its current business through acquisitions of, or investments in, other businesses or products.
On
InNovember 2019 , Griffon announced the development of a next-generation business platform for CPP to enhance the growth, efficiency, and competitiveness of itsU.S. operations, and onNovember 12, 2020 , Griffon announced that CPP is broadening this strategic initiative to include additional North American facilities, the AMESUK andAustralia businesses, and a manufacturing facility inChina . The expanded focus of this initiative leverages the same three key development areas being executed within ourU.S. operations. First, certain AMES global operations will be consolidated to optimize facilities footprint and talent. Second, strategic investments in automation and facilities expansion will be made to increase the efficiency of our manufacturing and fulfillment operations, and support e-commerce growth. Third, multiple independent information systems will be unified into a single data and analytics platform, which will serve the whole AMES global enterprise. Expanding the roll-out of the new business platform from our AMESU.S. operations to include AMES' global operations will extend the duration of the project by one year, with completion now expected by the end of calendar year 2023. When fully implemented, these actions will result in annual cash savings of$30,000 to$35,000 and a reduction in inventory of$30,000 to$35,000 , both based on fiscal 2020 operating levels. The cost to implement this new business platform, over the duration of the project, will include one-time charges of approximately$65,000 and capital investments of approximately$65,000 . The one-time charges are comprised of$46,000 of cash charges, which includes$26,000 of personnel-related costs such as training, severance, and duplicate personnel costs as well as$20,000 of facility and lease exit costs. The remaining$19,000 of charges are non-cash and are primarily related to asset write-downs. 32 -------------------------------------------------------------------------------- Table of Contents InJune 2018 ,Clopay acquired CornellCookson, a leading provider of rolling steel service doors, fire doors, and grilles, for an effective purchase price of approximately$170,000 . This transaction strengthenedClopay's strategic portfolio with a line of commercial rolling steel door products to complementClopay's sectional door offerings in the commercial sector, and expands theClopay network of professional dealers focused on the commercial market. CornellCookson generated over$200,000 in revenue in its first full year of operations. InMarch 2018 , we announced the combination of theClosetMaid operations with those of AMES.ClosetMaid generated over$300,000 in revenue in the first twelve months after the acquisition, and we anticipate the integration with AMES will unlock additional value given the complementary products, customers, warehousing and distribution, manufacturing, and sourcing capabilities of the two businesses. InFebruary 2018 , we closed on the sale of our Clopay Plastics Products ("Plastics") business toBerry Global, Inc. ("Berry") for approximately$465,000 , net of certain post-closing adjustments, thus exiting the specialty plastics industry that the Company had entered when it acquiredClopay Corporation in 1986. This transaction provided immediate liquidity and positions the Company to improve its cash flow conversion given the historically higher capital needs of the Plastics operations as compared to Griffon's remaining businesses. InOctober 2017 , we acquiredClosetMaid from Emerson Electric Co. (NYSE:EMR) for an effective purchase price of approximately$165,000 .ClosetMaid , founded in 1965, is a leading North American manufacturer and marketer of wood and wire closet organization, general living storage and wire garage storage products, and sells to some of the largest home center retail chains, mass merchandisers, and direct-to-builder professional installers inNorth America . We believe thatClosetMaid is the leading brand in its category, with excellent consumer recognition.
We believe these actions have established a solid foundation for continuing organic growth in sales, profit, and cash generation and bolsters Griffon's platforms for opportunistic strategic acquisitions.
Other Acquisitions and Dispositions
OnDecember 22, 2020 , AMES acquiredQuatro Design Pty Ltd ("Quatro"), a leading Australian manufacturer and supplier of glass fiber reinforced concrete landscaping products for residential, commercial, and public sector projects for a purchase price of AUD$3,500 (approximately$2,700 ) in cash, subject to customary final working capital adjustments. The purchase price is subject to additional contingent consideration of approximately AUD$1,000 (approximately$760 ) based on Quatro exceeding certain EBITDA performance targets in the first year. Quatro is expected to contribute approximately$5,000 in annualized revenue in the first twelve months after the acquisition. OnDecember 18, 2020 , Defense Electronics completed the sale of itsSystems Engineering Group, Inc. ("SEG") business for$15,000 , subject to customary closing net working capital adjustments. SEG provides sophisticated, highly technical engineering and analytical support to theMissile Defense Agency and variousU.S. military commands. SEG had sales of approximately$7,000 for the first fiscal quarter endedDecember 31, 2020 and$31,000 for the fiscal year endedSeptember 30, 2020 . OnNovember 29, 2019 , AMES acquiredVatre Group Limited ("Apta"), a leadingUnited Kingdom supplier of innovative garden pottery and associated products sold to leadingUK andIreland garden centers for approximately$10,500 (GBP 8,750 ), inclusive of a post-closing working capital adjustment, net of cash acquired. This acquisition broadens AMES' product offerings in theUK market and increases its in-country operational footprint. Apta contributed approximately$20,000 in revenue in the first twelve months after the acquisition. OnFebruary 13, 2018 , AMES acquired Kelkay, a leadingUnited Kingdom manufacturer and distributor of decorative outdoor landscaping products sold to garden centers, retailers and grocers in theUK andIreland . This acquisition broadened AMES' product offerings in the market and increased its in-country operational footprint.
In
During fiscal 2017, Griffon also completed a number of other acquisitions to expand and enhance AMES' global footprint. In theUnited Kingdom , Griffon acquired La Hacienda, an outdoor living brand of unique heating and garden décor products, inJuly 2017 . The acquisition of La Hacienda, together with theFebruary 2018 acquisition of Kelkay andNovember 2020 33 -------------------------------------------------------------------------------- Table of Contents acquisition of Apta, provides AMES with additional brands and a platform for growth in theUK market and access to leading garden centers, retailers, and grocers in theUK andIreland . InAustralia , Griffon acquired Hills Home Living, the iconic brand of clotheslines and home products, from Hills Limited (ASX:HIL) inDecember 2016 and inSeptember 2017 , Griffon acquired Tuscan Path, an Australian provider of pots, planters, pavers, decorative stone, and garden décor products. The Hills and Tuscan Path acquisitions broadened AMES' outdoor living and lawn and garden business, strengthening AMES' portfolio of brands and its market position inAustralia and New Zealand .
Further Information
Griffon posts and makes available, free of charge through its website at www.griffon.com, its annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) of the Securities Exchange Act of 1934, as well as press releases, as soon as reasonably practicable after such materials are published or filed with or furnished to theSecurities and Exchange Commission (the "SEC"). The information found on Griffon's website is not part of this or any other report it files with or furnishes to theSEC .
For information regarding revenue, profit and total assets of each segment, see the Reportable Segments footnote in the Notes to Consolidated Financial Statements.
Reportable Segments:
Griffon currently conducts its operations through three reportable segments:
•CPP conducts its operations through AMES. Founded in 1774, AMES is the leading North American manufacturer and a global provider of branded consumer and professional tools and products for home storage and organization, landscaping, and enhancing outdoor lifestyles. CPP sells products globally through a portfolio of leading brands including True Temper, AMES, andClosetMaid . •HBP conducts its operations throughClopay . Founded in 1964,Clopay is the largest manufacturer and marketer of garage doors and rolling steel doors inNorth America . Residential and commercial sectional garage doors are sold through professional dealers and leading home center retail chains throughoutNorth America under the brandsClopay , Ideal, andHolmes . Rolling steel door and grille products designed for commercial, industrial, institutional, and retail use are sold under the CornellCookson brand. •DE conducts its operations throughTelephonics Corporation , founded in 1933, a globally recognized leading provider of highly sophisticated intelligence, surveillance and communications solutions for defense, aerospace and commercial customers. OVERVIEW Revenue for the quarter endedDecember 31, 2020 was$609,291 compared to$548,438 in the prior year comparable quarter, an increase of approximately 11%, driven by increased revenue at CPP, HBP and DE of 21%, 4% and 3%, respectively. Net income was$29,500 or$0.55 per share, compared to$10,612 , or$0.24 per share, in the prior year quarter. The current year quarter results from operations included the following: - Restructuring charges of$10,800 ($8,300 , net of tax, or$0.16 per share); - Gain on sale ofSystems Engineering Group ("SEG") business$6,240 ($6,017 , net of tax, or$0.11 per share); - Discrete and certain other tax benefits, net, of$2,028 or$0.04 per share. The prior quarter results included restructuring charges of$6,434 ($4,148 , net of tax, or$0.09 per share) and discrete and certain other tax provisions, net, of$833 or$0.02 per share. Excluding these items from the respective quarterly results, net income would have been$29,755 , or$0.56 per share, in the current year quarter compared to$15,593 , or$0.36 per share in the prior year quarter. 34 -------------------------------------------------------------------------------- Table of Contents Griffon evaluates performance based on Net income and the related Earnings per share excluding restructuring charges, loss from debt extinguishment, acquisition related expenses and discrete and certain other tax items, as well as other items that may affect comparability, as applicable. Griffon believes this information is useful to investors for the same reason. The following table provides a reconciliation of Net income to Adjusted net income and Earnings per share to Adjusted earnings per share: For the Three Months Ended December 31, 2020 2019 (Unaudited) Net income$ 29,500 $ 10,612 Adjusting items: Restructuring charges 10,800 6,434 Gain on sale of SEG business (6,240) - Tax impact of above items (2,277) (2,286) Discrete and certain other tax provisions (benefits), net (2,028) 833 Adjusted net income$ 29,755 $ 15,593 Diluted earnings per common share
Adjusting items, net of tax: Restructuring charges 0.16 0.09 Gain on sale of SEG business (0.11) - Discrete and certain other tax provisions (benefits), net (0.04) 0.02 Adjusted earnings per common share
Weighted-average shares outstanding (in thousands) 53,192 43,895
Note: Due to rounding, the sum of earnings per common share and adjusting items, net of tax, may not equal adjusted earnings per common share.
The tax impact for the above reconciling adjustments from GAAP to non-GAAP Net income and EPS is determined by comparing the Company's tax provision, including the reconciling adjustments, to the tax provision excluding such adjustments. 35 -------------------------------------------------------------------------------- Table of Contents RESULTS OF OPERATIONS
Three months ended
Griffon evaluates performance and allocates resources based on each segment's operating results before interest income and expense, income taxes, depreciation and amortization, unallocated amounts (primarily corporate overhead), restructuring charges, loss on debt extinguishment and acquisition related expenses, as well as other items that may affect comparability, as applicable ("Adjusted EBITDA", a non-GAAP measure). Griffon believes this information is useful to investors for the same reason.
See table provided in Note 13 - Business Segments for a reconciliation of Segment Adjusted EBITDA to Income before taxes.
36 -------------------------------------------------------------------------------- Table of Contents Consumer and Professional Products For the
Three Months Ended
2020 2019 Revenue$ 291,042 $ 241,076 Adjusted EBITDA 32,713 11.2 % 21,926 9.1 % Depreciation and amortization 8,199 8,231 For the quarter endedDecember 31, 2020 , revenue increased$49,966 or 21%, compared to the prior year period, primarily due to increased volume of 18%, driven by continued consumer demand for home improvement initiatives across all geographies, earlyU.S. spring orders and expansion of the home organization product line. Improved revenue also reflected incremental revenue from the Apta acquisition of 1% and a favorable foreign exchange impact of 2%. Organic growth was 20% (revenue growth adjusted to exclude acquisitions). For the quarter endedDecember 31, 2020 , Adjusted EBITDA increased 49% to$32,713 compared to$21,926 in the prior year period. The favorable variance resulted primarily from the increased revenue noted above, partially offset by increased COVID-19 related inefficiencies. For the quarter endedDecember 31, 2020 , EBITDA reflects a favorable foreign exchange impact of 5%.
Segment depreciation and amortization remained consistent with the prior year comparable quarter.
OnDecember 22, 2020 , AMES acquiredQuatro Design Pty Ltd ("Quatro"), a leading Australian manufacturer and supplier of glass fiber reinforced concrete landscaping products for residential, commercial, and public sector projects. Quatro is expected to contribute approximately$5,000 in annualized revenue in the first twelve months under AMES' ownership. OnNovember 29, 2019 , AMES acquiredVatre Group Limited ("Apta"), a leadingUnited Kingdom supplier of innovative garden pottery and associated products sold to leadingUK andIreland garden centers. This acquisition broadens AMES' product offerings in theUK market and increases its in-country operational footprint. Apta contributed approximately$20,000 in revenue in the first twelve months after the acquisition. Strategic Initiative and Restructuring Charges InNovember 2019 , Griffon announced the development of a next-generation business platform for CPP to enhance the growth, efficiency, and competitiveness of itsU.S. operations, and onNovember 12, 2020 , Griffon announced that CPP is broadening this strategic initiative to include additional North American facilities, the AMESUK andAustralia businesses, and a manufacturing facility inChina . The expanded focus of this initiative leverages the same three key development areas being executed within ourU.S. operations. First, certain AMES global operations will be consolidated to optimize facilities footprint and talent. Second, strategic investments in automation and facilities expansion will be made to increase the efficiency of our manufacturing and fulfillment operations, and support e-commerce growth. Third, multiple independent information systems will be unified into a single data and analytics platform, which will serve the whole AMES global enterprise. Expanding the roll-out of the new business platform from our AMESU.S. operations to include AMES' global operations will extend the duration of the project by one year, with completion now expected by the end of calendar year 2023. When fully implemented, these actions will result in annual cash savings of$30,000 to$35,000 and a reduction in inventory of$30,000 to$35,000 both based on fiscal 2020 operating levels. The cost to implement this new business platform, over the duration of the project, will include one-time charges of approximately$65,000 and capital investments of approximately$65,000 . The one-time charges are comprised of$46,000 of cash charges, which includes$26,000 of personnel-related costs such as training, severance, and duplicate personnel costs as well as$20,000 of facility and lease exit costs. The remaining$19,000 of charges are non-cash and are primarily related to asset write-downs. In connection with this initiative, during the year endedSeptember 30, 2020 and during the three months endedDecember 31, 2020 , CPP incurred pre-tax restructuring and related exit costs approximating$13,669 and$3,079 , respectively. Since inception of this initiative, total cumulative charges totaled$16,748 , comprised of cash charges of$11,863 and non-cash, asset-related charges of$4,885 ; the cash charges included$5,982 for one-time termination benefits and other personnel-related costs 37 -------------------------------------------------------------------------------- Table of Contents and$5,881 for facility exit costs. During the year ended September, 30, 2020 and during the quarter endedDecember 31, 2020 , capital expenditures of 6,733 and$2,236 , respectively, were driven by investment in CPP business intelligence systems and e-commerce facility. Non-Cash Cash Charges Charges Personnel Facilities, exit Facility and Capital related costs costs and other other Total Investments Phase I$ 12,000 $ 4,000 $ 19,000 $ 35,000 $ 40,000 Phase II 14,000 16,000 - 30,000 25,000 Total Anticipated Charges 26,000 20,000 19,000 65,000 65,000 Total 2020 restructuring charges (5,620) (3,357) (4,692) (13,669) (6,733) Q1 FY2021 Activity (362) (2,524) (193) (3,079) (2,236) Total cumulative charges (5,982) (5,881) (4,885) (16,748) (8,969) Estimate to Complete$ 20,018 $ 14,119 $ 14,115 $ 48,252 $ 56,031 38
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Table of Contents Home and Building Products For the Three Months Ended December 31, 2020 2019 Revenue$ 250,481 $ 241,381 Adjusted EBITDA 48,369 19.3 % 40,701 16.9 % Depreciation and amortization 4,341 4,800
For the quarter ended
For the quarter endedDecember 31, 2020 , Adjusted EBITDA increased 19% to$48,369 compared to$40,701 in the prior year period. EBITDA benefited from increased revenue noted above including volume related benefits on absorption and operational efficiency improvements, partially offset by COVID-19 related inefficiencies.
Segment depreciation and amortization decreased
Defense Electronics For the Three Months Ended December 31, 2020 2019 Revenue$ 67,768 $ 65,981 Adjusted EBITDA 5,585 8.2 % 4,475 6.8% Depreciation and amortization 2,676 2,644 For the quarter endedDecember 31, 2020 , revenue increased$1,787 , or 3%, compared to the prior year quarter. The increase was due to increased volume for Naval and Cyber systems driven by multi-mode airborne maritime surveillance systems, partially offset by timing of work performed on Communication systems and commercial custom integrated circuits. For the quarter endedDecember 31, 2020 , Adjusted EBITDA increased$1,110 , or 25%, compared to the prior year comparable period, driven by the increase in revenue and reduced headcount related to the reduction in force during the current quarter, partially offset by the timing of research and development expenses.
Segment depreciation and amortization remained consistent with the prior year comparable quarter-to-date period.
OnDecember 18, 2020 , DE completed the sale of its SEG business. SEG provides sophisticated, highly technical engineering and analytical support to theMissile Defense Agency and variousU.S. military commands. SEG had sales of approximately$7,000 for the first fiscal quarter endedDecember 31, 2020 and$31,000 for the fiscal year endedSeptember 30, 2020 . During the three months endedDecember 31, 2020 , DE was awarded several new contracts and received incremental funding on existing contracts approximating$85,000 . Contract backlog was$388,700 atDecember 31, 2020 with 66% expected to be fulfilled in the next 12 months. Backlog was$380,000 atSeptember 30, 2020 , of which approximately$8,500 was related to the SEG business which was sold inDecember 2020 . Backlog is defined as unfilled firm orders for products and services for which funding has been both authorized and appropriated by the customer, or byCongress , in the case of US government agencies. Restructuring Charges and Divestiture InSeptember 2020 , a Voluntary Employee Retirement Plan was initiated, which was subsequently followed by a reduction in force inNovember 2020 , to improve efficiencies by combining functions and responsibilities. The reduction in force initiative resulted in severance charges of$2,120 during current quarter. These actions reduced headcount by approximately 90 people.
In addition, charges of
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We recorded a pre-tax gain of
Unallocated
For the quarter endedDecember 31, 2020 , unallocated amounts, excluding depreciation, consisted primarily of corporate overhead costs totaling$12,027 compared to$11,942 in the prior year quarter. The increase in the current quarter compared to the respective prior year quarter primarily relates to increases in compensation and incentive costs, partially offset by consulting fees, travel and administrative office costs.
Segment Depreciation and Amortization
Segment depreciation and amortization decreased
Other Income (Expense) For the quarters endedDecember 31, 2020 and 2019, Other income (expense) of$(41) and$778 , respectively, includes$(699) and ($376 ), respectively, of net currency exchange losses in connection with the translation of receivables and payables denominated in currencies other than the functional currencies of Griffon and its subsidiaries, net periodic benefit plan income of$227 and$389 , respectively, as well as$330 and$81 , respectively, of net investment income. Additionally, Other income (expense) also includes a one-time technology recognition award for$700 in the quarter endedDecember 31, 2019 . Provision for income taxes During the quarter endedDecember 31, 2020 , the Company recognized a tax provision of$9,669 on income before taxes from operations of$39,169 , compared to a tax provision of$6,339 on income before taxes from operations of$16,951 in the comparable prior year quarter. The current year quarter results included restructuring charges of$10,800 ($8,300 , net of tax), gain on sale of SEG business$6,240 ($6,017 , net of tax) and discrete and certain other tax benefits, net, that affect comparability of$2,028 . The prior year quarter results included restructuring charges of$6,434 ($4,148 , net of tax) and discrete and certain other tax provisions, net, that affect comparability of$833 . Excluding these items, the effective tax rates for the quarters endedDecember 31, 2020 and 2019 were 32.0% and 33.3%, respectively. Stock based compensation For the quarters endedDecember 31, 2020 and 2019, stock based compensation expense, which includes expenses for both restricted stock grants and the ESOP, totaled$4,208 and$3,982 , respectively.
Comprehensive income (loss)
For the quarter endedDecember 31, 2020 , total other comprehensive income, net of taxes, of$13,141 included a gain of$12,123 from foreign currency translation adjustments primarily due to the strengthening of the Euro, British Pound, and Canadian and Australian Dollars all in comparison to the US Dollar; a$1,706 benefit from pension amortization; and a$688 loss on cash flow hedges. For the quarter endedDecember 31, 2019 , total other comprehensive income, net of taxes, of$6,841 included a gain of$6,470 from foreign currency translation adjustments primarily due to the strengthening of the Euro, British Pound, and Canadian and Australian Dollars all in comparison to the US Dollar; a$672 benefit from pension amortization; and a$301 loss on cash flow hedges.
Discontinued operations
AtDecember 31, 2020 , Griffon's assets and liabilities are primarily for the Installations Services and other discontinued operations primarily related to insurance claims, income tax and product liability, warranty reserves and environmental reserves. See Note 16, Discontinued Operations. 40 -------------------------------------------------------------------------------- Table of Contents LIQUIDITY AND CAPITAL RESOURCES Management assesses Griffon's liquidity in terms of its ability to generate cash to fund its operating, investing and financing activities. Significant factors affecting liquidity are: cash flows from operating activities, capital expenditures, acquisitions, dispositions, bank lines of credit and the ability to attract long-term capital under satisfactory terms. Griffon believes it has sufficient liquidity available to invest in its existing businesses and execute strategic acquisitions, while managing its capital structure on both a short-term and long-term basis.
The following table is derived from the Condensed Consolidated Statements of Cash Flows:
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