Greetings, and welcome to the Griffin Corporation's 4th Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Brian Harris, Senior Vice President, Chief Financial Officer.
Thank you. You may begin.
Thank you, Maria. Good afternoon, everyone. With me on the call is Ron Kramer, our Chairman and 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. As in the past, our comments will include forward looking statements about the company's performance based on our views of Clifton's businesses and the 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 our various Securities and Exchange Commission filings. Finally, during today's remarks, we'll 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'll turn the call over to Ron.
Thanks, and good afternoon, everyone. Griffin entered this year from a position of strength, both operationally and competitively. Our 2018 pivot out of the capital intensive commodity driven plastics business and continued focus on branded domestically manufactured products set the stage for strong revenue, earnings and cash flow growth. We've also captured additional market share as we continue to realize synergies across our businesses, innovate new products, maintain our exceptional product quality and deliver superior service to our customers. Our businesses were performing well before the pandemic, and the performance of our product portfolio has continued to show strength throughout this unprecedented year as consumers organize their living spaces, were paired and upgraded their homes and spent more time outdoors.
Our strong 4th quarter and fiscal year results reflect these trends as well as the actions we've taken over the last several years through our portfolio reshaping. We finished the year with revenue up 9%, adjusted EBITDA up 18% and adjusted EPS up 50% compared to the prior year results. We also generated strong free cash flow of $88,000,000 in 20.20 compared to $69,000,000 in 20 19. We continue to see consumers investing in home projects such as closet renovations, tending to their lawns and gardens, enhancing their enjoyment of the outdoors and upgrading the exterior of their homes, including their garage doors. We took action this year to fortify our already strong balance sheet.
In August, we completed a public offering of 8,700,000 shares of common stock with net proceeds of 178,000,000 This equity offering coupled with extending maturities on our unsecured bonds to 2028 and our credit facility to 2025 will help us execute on our growth strategy and continue to invest in our businesses and to reduce leverage while providing sufficient liquidity to weather any near term effects of the pandemic or other market uncertainties. To that end, achieving a leverage ratio of 3.5x is one of our key priorities coming into the year, and we're pleased to have executed on this target as our strong financial performance and free cash flow conversion during the year, coupled with our equity offering, brought our net debt to EBITDA leverage to 3.4 times. At the onset of the COVID-nineteen pandemic, ensuring the health and safety of our employees and our customers has been and continues to be our top priority. Since early March, we have proactively implemented health and safety measures across all of our global facilities As local and national authorities have circulated additional guidelines for employee health and safety, we've incorporated those as well. We reacted immediately, decisively and have spared no expense in dealing with the COVID-nineteen risk and will continue to do so.
All of our facilities are currently operational. However, we continue to be mindful of elevated case counts in Europe and now in the U. S. Again. In the previous shutdown, all of our U.
S. Facilities were deemed essential businesses, and we expect that to continue should another broad shutdown occur. Turning to the market update. Our segments beginning with Consumer and Professional Products, We saw a strong 4th quarter demand for seasonal lawn and garden products, tools, storage and organizational solutions at major retailers and home centers across all of our geographies, U. S, Canada, Australia, U.
K. And Ireland. We're excited about the progress we've made in our previously announced AIM strategic initiative. We recently broadened this strategic initiative across all of our AIMs businesses and will now include all the North American facilities, AIMS United Kingdom, AIMS Australasia and our manufacturing facility in China. The expanded focus of this initiative leverages the same three key development areas being executed within our U.
S. Operations. First, multiple independent information systems will be unified into a single data and analytics platform, which will now serve AIMS globally. Second, certain global operations will be consolidated to optimize facilities footprint and talent 3rd, strategic investments in automation and facilities expansion will be made to increase the efficiency of our manufacturing and fulfillment operations and support our growing e commerce initiative. Expanding the rollout of the new business platform beyond AIMS U.
S. To include our global operations will extend the project by 1 year, with completion now expected by the end of calendar year 2023. When fully implemented, these actions will result in annual cash savings of $30,000,000 to $35,000,000 which is $15,000,000 more than we planned with the original initiative and a $30,000,000 to $35,000,000 reduction in inventory, which is $10,000,000 more than we planned in the original initiative. These improvements are based on our fiscal 2020 operating results. Moving to Home and Building Products segment.
In 2020, we had strong residential section garage door demand resulting from the same drivers around investing in homes as our Consumer and Professional Products segment. Our commercial door business also had strong demand driven by the benefits of being combined with Cloteteg, e commerce warehouse construction and demand for security products. Telephonics twenty 20 revenue increased over the prior year and order demand was strong in the 4th quarter, increasing 22% compared to the prior year 4th quarter. Backlog ended the year at $380,000,000 We continue to have a good pipeline of opportunities, both domestically and internationally. We also announced today that Telefonix implemented an initiative to improve its operational efficiencies through streamlining its organization and consolidating facilities.
Brian will discuss this more as he goes through the financial details. Finally, earlier today, our Board authorized an $0.08 per share dividend payable on December 17, 2020, to shareholders of record on November 25, 2020. This marks the 37th consecutive quarterly dividend to shareholders, which has grown at an annualized compound rate of 17% since we initiated it in 2012. We're continuing to focus on managing our cost structure and improving operating efficiencies, strengthening our balance sheet and increasing value to our customers through better service and a broader branded product portfolio. We believe our 2020 results demonstrate we can do that successfully and more to come in 2021.
With that, let me turn it over to Brian to take you through a little more detail. Brian?
Thank you, Ant. I'll start by highlighting our 4th quarter consolidated performance. Revenue increased 15% to $661,000,000 and adjusted EBITDA increased 8% to $63,000,000 both in comparison to the prior year quarter. Normalized gross profit for the quarter was $175,000,000 increasing 10% over the prior quarter, while gross margin contracted 118 basis points to 26.4%. 4th quarter normalized selling, general and administrative expenses were $126,000,000 or 19 percent of revenue compared to $115,000,000 or 20.1 percent in the prior year 4th quarter.
4th quarter GAAP income from continuing operations was $20,100,000 or $0.41 per share compared to the prior year period of $16,000,000 or $0.37
per share.
Excluding items that affect comparability from both periods, current quarter adjusted net income from continuing operations was $22,000,000 or $0.44 per share compared to the prior year of $17,000,000 or $0.40 per share. Turning to our full year results. Consolidated revenue increased 9% to $2,400,000,000 and adjusted EBITDA increased 18% to $236,000,000 both in comparison to the prior year. Normalized gross profit for the year was $646,000,000 increasing 11%, while gross margin increased 41 basis points to 26.8 percent. 2020 normalized settling, general and administrative expenses were $474,000,000 or 19.7 percent of revenue compared to $449,000,000 or 20.3 percent in the prior year.
2020 GAAP income from continuing operations was 53,000,000 dollars or $1.19 per share compared to the prior year period of $46,000,000 or $1.06 per share. Again, excluding items that affect comparability from both periods, 20 20 adjusted net income from continuing operations was $73,000,000 or $1.62 per share compared to the prior year of $46,000,000 or $1.08 per share. Corporate and unallocated expenses excluding depreciation were $12,000,000 in the 4th quarter $47,000,000 for the full year. Our effective tax rate excluding items that affect comparability for the full fiscal year was 32.2% compared to 34.3% in the prior year. Capital spending was $14,000,000 in the 4th quarter compared to $18,000,000 in the prior year quarter.
For the full year, capital expenditures was $49,000,000 compared $45,000,000 in the prior year. The current year included $7,000,000 of capital expenditures related to the A and S strategic initiative. Depreciation and amortization totaled $15,000,000 for the 4th quarter $52,000,000 for the full year. Regarding our balance sheet and liquidity. As of September 30, 2020, we had a net debt position of 825,000,000 dollars and debt to EBITDA leverage of 3.4x as calculated based on our debt covenants.
This reflects 1.5 turns of deleveraging from the prior year period. Our cash and equivalents were $218,000,000 and total debt outstanding was 1,050,000,000 dollars Borrowing availability under the revolving credit facility was $370,000,000 subject to certain non covenants. Regarding Q1 in 2021. Regarding guidance, like many other companies, we withdrew our guidance in our fiscal Q2 because of uncertainties arising out of the COVID-nineteen pandemic. We reinstated it in our fiscal third quarter having gained a clearer picture of the effects of the pandemic's impact for this fiscal year.
Our regular practice has been to give guidance once a year and not to update that guidance during interim periods. We are returning to that practice. We are pleased that we exceeded both our revenue and adjusted EBITDA guidance. Our full year 2020 revenue guidance was approximately $2,300,000,000 and we achieved $2,400,000,000 Our full year 2020 adjusted EBITDA before an allocated expenses guidance was $270,000,000 plus and we achieved $283,000,000 It is also worth noting that our reinstated guidance in the 3rd quarter was significantly higher than our original guidance provided back in November 2019. That guidance was 2% to 3% revenue increase compared to 2019 and adjusted EBITDA before unallocated expenses of $250,000,000 plus Regarding our 2021 annual guidance.
Providing guidance for 2021 is particularly challenging given the unprecedented events in 2020 and the continued global uncertainty we all face as we enter 2021. Nevertheless, we intend to follow our policy providing guidance we feel is achievable at the beginning of the year and not providing updates to the guidance afterwards. We expect Gripen's overall revenue in 2021 to be approximately 2,400,000,000 In terms of profitability, we expect fiscal year 2021 adjusted EBITDA to be $285,000,000 or better, excluding both unallocated costs of $47,000,000 and one time charges related to the AIMS and Telephonics initiative. As Ron stated earlier, the expanded AIMS initiative will extend the project by 1 year, and we now expect completion by the end of calendar 2023. When fully implemented, these actions will result in annual cash savings of $30,000,000 to $35,000,000 and a reduction in inventory of $30,000,000 to $35,000,000 both based on fiscal 2020 operating levels.
The cost to implement this new business platform will include one time charges of approximately $65,000,000 which increased from $35,000,000 under the original initiative and capital investments of approximately $65,000,000 increased from $40,000,000 under the original initiative. The one time charges are comprised of $46,000,000 of cash charges, which includes $26,000,000 of personnel related costs, such as training, severance and duplicate personnel costs, as well as $20,000,000 of facility and lease segment costs. The remaining $19,000,000 of charges are non cash and are primarily related to asset write downs. During the Q4, Telefonica initiated a voluntary employee retirement plan, which was filed with reduction in force in order to streamline the organization and improve efficiencies. These actions will cost approximately 4,500,000 dollars 2,100,000 of which was recognized in Q4 and the remainder will be recognized in the Q1 of fiscal 'twenty one.
Telefonica is also consolidating its 3 Long Island based facilities into 2 company owned facilities. Total cost for the facility consolidation will be approximately $4,000,000 which primarily consists of capital expenditures occurring in 2021. Total capital expenditures for 2021 are expected to be $65,000,000 which includes $15,000,000 supporting the AIMS initiative and $4,000,000 supporting the Telefonica facilities consolidation. Depreciation and amortization is expected to be 64,000,000 dollars of which $10,000,000 is amortization. We expect to continue to generate free cash flow in excess of net income, inclusive of the capital investments and other investments we are making at approximately $63,000,000 for fiscal 2021.
Our expected normalized tax rate will be approximately 32%. As is always the case, geographic earnings mix and any legislative action, including new guidance on taxable matters, may impact rates. As a final comment, with our guidance for fiscal 'twenty one, attempts to factor in ex general variability, the potential impact from the global increase in COVID-nineteen cases and the related potential shutdowns combat the spread of the virus as well as a challenging global macroeconomic environment and the uncertain U. S. Political environment all make providing guidance challenging.
Our guidance also assumes that we will be able to offset wage and commodity inflation through a combination of cost mitigation actions and pricing. Now I'll turn the call back over to Ron.
Thanks, Brian. Griffin's 2020 total year performance is something we are proud of, considering how much was been achieved in just a few years since we began the portfolio repositioning and then adding the impact of the disruptions from the COVID-nineteen pandemic in 2020. We expect that the portfolio actions would provide opportunities for top line growth and margin expansion through the realization of efficiencies during the integration process of our acquired companies. Further, we expect it to become stronger competitively by providing increased value to our customers in terms of our broader product offerings, improved service levels and enhanced efficiency. Our results for 2020 are consistent with achieving those opportunities.
Total year revenues grew 9%, adjusted EBITDA increased 18% and earnings per share increased 50%. Free cash flow totaled $88,000,000 and we strengthened our financial position through better cash performance and paying down debt, achieving our net debt to EBITDA leverage goal with September 20 September 30, 2020 leverage of 3.4x. We continue to believe the diversity of our businesses, our emphasis on domestic manufacturing and our focus on leading brands provides a strong foundation for growth and a competitive advantage. We've made progress, but we know there is still considerable opportunity for improving the performance of all of our existing businesses. In addition, we remain committed to finding strategic acquisitions that expand and strengthen our product portfolio within each of our home markets.
Closing, I'd like to thank our workforce, has shown exceptional dedication and perseverance throughout this challenging period. We appreciate the importance of their work in order to deliver these excellent results. We know we will continue to face obstacles and are monitoring any new developments on COVID-nineteen, but we are committed to the safety and welfare of our 7,400 employees as well as our customers and all of our communities. With that operator, we're happy to take any questions.
Our first question is from Bob Lovett with CJS Securities. Please proceed with your question.
Thank you. Good afternoon and congratulations on a nice quarter and very strong year.
Thanks, Tom. Thanks, Tom.
Good stuff. I want to start with the AIMS initiative. It's exciting that you're expanding it at what looks to be strong incremental returns as well. The whole project looks really strong. You talked a little bit about one of the outcomes being enhancing your e commerce capabilities.
Wondering if you could just tell us a little bit about what you're doing in that regard, where you are now and where you'll be? And is this front facing? Is it all kind of on the back end on logistics or a combination of both?
Let me start by saying, I think it's our e commerce initiative is supporting the growth of each of our individual customers. So it's our ability to build the infrastructure in order to accommodate the order entry program as well as the automated delivery of product to the end customer. It's something that we believe is going to continue to be part of the growth of people like Home Depot and Lowe's, Menards and our ongoing support for people that are emerging like the Wayfair's and ultimately the Amazons of the brand, to be able to distinguish the type of leading market share essential products and then to be able to interface with the evolving retailer in e commerce to be able to deliver those directly to the consumer. Brian, you want to give some details on some of the other pieces of Bob's question?
Yes. I would just add to that, that completing orders for e commerce are generally different than doing it for large home centers. So you'll have just one set of products going through 1 individual. And our new automation on the distribution side as well as the manufacturing side will help us fulfill those orders while continuing to maintain excellent service to the larger customers such as the home centers.
Got it. Really helpful. Thank you. And then shifting gears a little bit, but obviously somewhat topical. Given what most people would say is the Biden presidency that's coming, does that have any impact on telephonics?
Can you give us an update on the international outlook for telephonics as well and how the that's ramping?
Telephonics has been going through a multiyear impact. That goes back to the sequestration programs that went from the Obama administration. The turn in defense spending that really was the 20 17 budget gives us visibility in that business. Clearly, the predictability of foreign military sales has happened slower than we would have liked. But in the core products that Telephonics represents, intelligent surveillance and reconnaissance, there is no question that there is an ongoing global demand for U.
S. Allies and the domestic funding for the programs that we're involved in, we continue to believe are strong. So while the 5 year cycle is not something that we're at all happy with seeing our revenues go down and profits go down in the business. It's a business that we've owned for a very long time. We have an appreciation for its cyclicality.
And we believe that the 5 year cycle in front of us is going to get us significantly back towards the level of both revenue and profitability that we were at before we went through this sequestration cycle. So we view the ongoing political movement as being factual. The reality is we make essential products that are cost effective, battle proven. And for the U. S.
Navy and for allies, we believe we'll continue to be a supplier.
Got it. Okay, great. And then last one for me, and I'll jump back in queue. Last year was generally a pretty weak snow season, particularly Northern Northeast and U. S.
And everything. And just wondering, I know you have significant market share in snow shovels and the like. Is this going to create any lumpiness in terms of inventory or anything like that going ahead? Or how do you plan and work through seasonal changes like that?
Yes. I would answer that snow is just a category of a very diversified, globally balanced, and it's a very different company than the aims that going all the way back 10 years that we've owned the business, that snow is just not nearly as seasonal an impact as it was. The company is far more diversified, far more balanced in its global countercyclical. And on any given season, both spring or winter, there is an impact of incremental demand. But what we're seeing and have been seeing is we have the leading market share in every product that we sell, not just snow, but lawn and garden, storage and organization.
And all of those different products gives us a far different impact on being able to control the outcome of any one snow season or any one spring planting season. But we've enjoyed robust demand throughout this year, all to the point that we're not the least bit concerned about any of the near term seasonal snow issues.
Our next question is with Julio Romero with Sidoti and Co. Please proceed with your question.
Hey, good afternoon, everyone. On the expansion of the AIM strategic initiative, how much restructuring should we layer into our models for fiscal 'twenty one?
Sure. I'll answer that. We were expecting about $15,000,000 of expenses as well as $15,000,000 capital expenditures.
Okay. Got it. And I guess, could you delve a little bit deeper into some of the offsets in consumer and professional products in the quarter, specifically the COVID-nineteen related inefficiencies? And is that kind of expected to kind of linger into the 1st and second quarters of this year?
Sure. So yes, we have seen inefficiencies related to keeping our facilities safe. And that will continue as long as the pandemic is continuing. We had some direct costs in the year of about $5,000,000 for the CPP business and $8,000,000 across all of our businesses. Those costs will diminish.
Most of the programs we put in place are in place, so we're expecting about $6,000,000 of costs on an annualized basis direct costs on an annualized basis to keep our protocols in place and our employees safe.
Julio, I'd just add to that, that we were clearly doing well going into the pandemic, and we haven't been the least bit concerned about what it costs. All we've been focused on is making sure that we were able to take care of our employees, take care of our customers and whatever that is going to impact financially, assume it's going to keep going because our view of this is that while there's a lot of very positive things on the horizon and ultimately this will be the triumph of science and being able to deliver the vaccine. Until that happens, it's we're still in the same crisis and we treat it that way on a daily basis.
Yes, absolutely. And I guess just switching gears to the guidance. I guess when I think about what you're guiding for, I mean, you're already at your targeted margin you're exceeding your targeted margin range in the garage door business, I believe. So I guess, is the implication that for 2021 you might expect a little bit of a pullback on the margins in that segment and then you might see some margin improvement in the Consumer and Professional Products. Would that be a fair assumption?
I wish it were that easy to give guidance and be clear. We've been operating in the most extraordinary period that anyone has ever operated a business is faced with. So when you talk about trying give guidance, we start by saying, look, we'd always like to underpromise and overdeliver, and that's what our track record has been over all the years that we've given guidance. We have so many things going on, on a daily basis that are going to impact what the next year, but we're 6 weeks into our fiscal year and all the trends that were positive last year are still doing the same thing in fiscal 'twenty one. So we try to be conservative.
We try to set expectations. But the broader comment that I've made over all the years that we've given guidance remains the same, which is that the earnings power of these businesses is far greater than any near term guidance that we give. And our goal in giving guidance is to set the bar more for our credit investors and our equity holders. We continue to believe that this is a compelling value story. We continue to believe that we have a lot of good things going our way and that the margin improvement story, particularly around aims and particularly around the recovery in telephonics is still ahead of us.
How much more the margins in our Home and Building Products group will be able to achieve? It's still early days on the integration of the CornellCookson business into Clopay. We continue to believe that the commercial door opportunity that we saw going back 5 years ago is going to play out. It's accelerated as a result of the change in retailing and the movement to e commerce. And I'll remind you that every time there's a package getting shipped to your door, it's coming out of a warehouse, those warehouses have rolling steel doors.
So the growth part of our business in home and building products is going to change over the next several years. We expect that. We continue to invest in it. And the margins are clearly reflective of all the good things that have gone on by Steve Lynch and his team in that business over the last several years. We think there's plenty more to come.
And so the big story for us is we set guidance, then we clearly are saying next year is going to be better than this year. And this year turned out to be a lot better than the guidance that we said a year ago.
Our next question is from Josh Chan with Baird. Please proceed with your question.
Baird.
I wanted to ask about the strong momentum in AIMs. And wondering if you're kind of continuing to see that momentum continuing into the current fiscal year just because recognizing that it's probably getting away from the long garden season, but at the same time, will you have some inventory kind of refilling type of opportunities?
We continue to see the trends in our business being strong to start this fiscal year. And I'm going to go back and simply make the comment that while the at home trend is clearly accelerating a lot of demand over a lot categories, we still believe the housing recovery is ahead of us in the United States, that this is not anywhere near the levels of both composed consumer spending that will come out of 2 things that I believe are on the horizon. 1 is a stimulus bill and 2 is an infrastructure spending bill. So we have so many people in this country that are going to get back into the workforce that the ability to have wage increases as a result of the recovery that will happen once the vaccine and once life goes into something resembling what was occurring before the pandemic started in March, those are positive trends. And as the AIM side of our business and consumer product, again, these are essential products and we have the leading brand, leading market share in every product that we sell.
So we feel really good about the trends that were going on in our business. We don't believe that there was any magic to that. And it was all as part of what we had been positioning over a period of years and the COVID effect of accelerating people spending in and around the house is a trend that we believe is going to continue even once we start to reengage.
That's good to hear. And then on the cost side, could you update us on sort of the phasing of the cost savings now that you're expecting kind of a higher number, but taking additional year to accomplish the other piece of this initiative?
Sure. So the original time frame was we'd be done with the first what we'll now call the first phase of the initiative by the end of calendar 'twenty two. And we still expect to hit that $15,000,000 to $20,000,000 by that time with the balance of it to come in the year after. So and along the way, we'll see incremental benefits.
Okay. And then I guess my last question is on the guidance. So $2,400,000,000 last year and $2,400,000,000 this year. So I mean, I'm sure there could be rounding there, but does the guidance kind of contemplate a little bit of a tougher comp in the back half of the year? I guess, could you just walk us through kind of the revenue line?
What you're thinking there in terms of the upside case and the downside case?
Sure. So we have better visibility for the first half of the year. Orders, as we just mentioned, are starting off in the year well, and we see good demand. When we get to as you said, and we agree, when we get to the second half of the year, we do see tougher comps. And there's a lot of unknowns, how long the virus is going to last, how successful any vaccines may be and the economic impacts of those items.
We like to be conservative.
Understood. That makes a lot of sense. Thank you.
Thank you.
Our next question is with Justin Bergner from G. Research.
I got dropped, so I missed some of the opening prepared remarks. So apologies if I hit 1 or 2 redundancies. Could you just remind me and there might be others that got dropped as well in terms of what the revenue and adjusted EBITDA guides were for fiscal year 2021?
Sure. Revenue was $2,400,000,000 and adjusted EBITDA excluding corporate unallocated costs, is $285,000,000 And corporate is the unallocated is expected to be 47
$1,000,000 $47,000,000 you said there?
Yes.
Okay. Maybe switching to the defense business, I guess, why now on this, I guess, restructuring facility consolidation program for Defense Electronics? And does a changing presidential administration lessen your appetite for M and A in telephonics? Well, I think the two parts of the question. One is getting the facilities right sized for the level of business and to be able to capture increased margin as we expect the recovery in both revenue and then the obvious proportionate profitability that will come from a better aligned, more efficient operating footprint.
And the M and A piece to it is, I wish it were as easy for us to find a business as good as the one we have at a price that would make any sense for us to add to Telefonica. So we like the business. So would most of the primes and an unlimited amount private equity capital. So the competition for value in that space is something that while we'd love to find opportunities, for us, it's about managing the business we have increasingly better and in doing that, being able to continue to generate good returns on invested capital and incremental free cash flow. Okay.
Understood. That makes sense. I'm sorry if I missed it. Did you quantify the expected savings in the restructuring and facility consolidation program? Or is that going to come later?
That will come later. You could expect $1,000,000 or so $1,000,000 to $1,000,000 on that.
Okay. And then just shifting back to the Home and Building Products sorry, sorry, the consumer and professional products business. It seems like you're spending an additional $30,000,000 of one time cash costs and additional $30,000,000 of CapEx in the new plan. And that is generating a relatively modest level of incremental savings of sort of annual cash savings of $15,000,000 $10,000,000 in reduction in inventory. So it's sort of like a, I guess, 3x to 4x sort of spend per return.
Should I interpret that as you want to go forward with this extra part of the program even though the returns aren't as great because they're still good enough? Or should I interpret that as the existing program was running a bit over time and budget perhaps because of COVID or macro considerations?
So a couple of things to unpack. The initial program is running on time, on budget, has not been affected significantly by COVID or anything else. As far as returns, the returns aren't that much different from our original projects. We look at it that we are making sort of an acquisition, but we're investing it in ourselves in a business we know very well. We have gained good insight from prior initiatives we've done both at Clopay and at Clopay's original facility in Troy and the mountaintop expansion that we did last year or end of last year.
And we think this is a really good investment. Secondly, the savings that we put out there are things we can touch and are direct, things we can calculate.
Beyond
that, we are going to be able to service our customers better. We're going to have better data, both for ourselves as to when to manufacture, where our inventory should be located and how much of it we should have as well as how our customers should take on inventory, having it at the right time as well. Those things are hard to know how much benefit we'll get from it, but it will be above and beyond the benefits we've stated.
Okay. That all makes a lot of sense. Just lastly, any idea in terms of the sell through type of demand in Consumer Professional Products versus that staggering 29% organic growth number?
I'm not sure exactly what you meant, but yes, point of sale has been very strong, if that's what you're asking.
Yes, point of sale. We continue to see that trend continuing. Okay. So maybe not quite as high as 29, it's still very strong. Yes.
Right. One reads to the other.
Right. All right. Thanks and good luck with all the initiatives. Thank you so much.
Thanks, Anthony.
Our next question is with Keith Hughes with Trus. Please proceed with your question.
Thank you. One of the big questions that I have from investors is around this good home related business, if it's going to fall off as we go into next year. And you seen wonderful, wonderful numbers on top line from Consumer Professional Products. But with this guidance, it sort of foretells something a lot of that business retracting. I understand being conservative, but is that something you expect in Consumer Professional Products as you guys go along?
No. We saw very good trends in our business going into the pandemic. We clearly have seen accelerating trends as a result of the pandemic. We and we're clearly telling you that we're off to a very good start for 2021. The whole process for us of setting expectations is to be able to that we're going to be able to meet all of the demand that's out there.
And our view is that there is an ongoing recovery. The timing and the predictability of what's going to happen as a result of the unprecedented situation that we're in just makes us look at this and say we view 2021 as being better than 2020. And I'll remind you that a year ago, we went into the year looking at guidance at $250,000,000 plus for this year. We suspended guidance in the depth of the crisis. We reinitiated in August at 270,000,000 dollars and we ended the year at 283,000,000 made, bought CornellCooks and we talked about being on a path to get from, I believe at the time was $225,000,000 of EBITDA to $300,000,000 over a 5 year period.
Well, we're 2 years into it and we're going to be knocking on the door of $300,000,000 in the not distant future. Whether that happens in 2021, that's just not how we run the business. We run the business to continue to grow both margins, build and invest around the products and the brands that we've been able to put together. And the earnings power of our business is really ahead of us. Peak earning power of our business is really ahead of us.
We've done very well during very difficult times. We truly believe that there's better times coming in the broader consumer economy. And when that happens, you'll see that in both our margins and incremental profitability.
Okay. And just another question on Consumer Products. You talked about some of the things that happened in the quarter. Even when I back out the COVID cost, the margins were still down a little bit year over year despite the strong revenue. Are those issues going to persist into the December quarter as well?
No. So in the quarter, we saw inefficiencies related to the facilities consolidations, closing down one distribution center and combining with another as well as inefficiencies related to supply in areas that were hit by natural disasters. Often what happens with those situations is you don't end up sending out full trucks because you're sending out smaller items directly to stores or to smaller areas and that causes inefficiencies in the distribution system. So no, I would not expect those 2 things to occur.
Okay. That's all for me. Thank you.
Thank
you.
Our next question is with Trey Grooms with Stephens. Please proceed with your question.
Hi, good afternoon. Thanks for taking my question. So the I guess the first one for me. You mentioned picking up some share. I believe you were talking about CPP specifically there.
Are there any specific products where you're seeing an outsized market share gain? Or was it pretty broad based there?
It was pretty broad based. We're seeing those results are across all of our product lines.
Okay. Got it. And then on the garage store business, So clearly, you guys are in both residential and then some commercial. And you touched on something that I think it sounds like a big opportunity for you guys is the fulfillment centers and things like that. Did that is that helping you guys or has it helped you in your fiscal 2020 that kind of dynamic of build out of the fulfillment centers?
And or is that more on the come here as we enter 2021? Just your thoughts around the commercial side there.
We're predominantly a residential business, and we've always talked about the ability to build our commercial door business. That was the big strategic initiative behind the purchase of CornellCookson to expand our ability to do both rolling steel, sectional, commercial. That is it's still small and it's still incrementally beneficial. It's an architectural sales channel, different than the big box retailer and the dealer network that we have. But we continue to see that as being a big part of our growth opportunity for the future in both replacement cycle and new construction.
The partition, the security level products that are clearly going to be part of what comes out of life after COVID, all are very good long term drivers of incremental demand. But no, none of that is played out meaningfully in 2020. That's really about the future.
Got it. And thanks for that. And then you mentioned in, I guess, one of your I guess, it
was a response to one of
the other questions that you kind of shoot for setting expectations to be at a level where you can meet all of the demand that's out there. So I guess that got me thinking about, are there any capacity constraints or is there any concern there, whether it be on your end or from any of your suppliers, since we have had such strong demand, getting that incremental demand or those incremental shipments, is that a concern of yours or risk as we look into 2021?
I would more call it that it's the challenge is always to be able to meet demand and we see unlimited demand in our product categories and we're working every day to make sure that we can be as efficient in manufacturing and in distributing to each of our customers. So we feel good about the environment. And the expectation part of the comment is just being level set that things change. And this year, more than ever, it shows you that things get thrown at you that are unexpected. But in the way we try to run our businesses, and I know, Trey, you're new to covering us and we really look at trying to be as open and transparent about setting the expectations for guidance.
We have always met or exceeded any levels that we've given out, and we see the world that we're in as being the most uncertain time that anyone's ever operated a business in. So we believe our earnings capability is far higher than any of our near term guidance. And over time, that will prove itself out. But it's 1 quarter at a time, 1 year at a time. And for us, setting the bar at we expect 2021 to be a better year than 2020, but from where we're sitting, it's been an exceptional year.
And if we do no worse at the EBITDA line than we did this year, we're going to generate a significant amount of free cash again. We're going to delever ourselves even more than we already have. We have no debt to pay down. Our bonds have a 2028 maturity, so we're going to continue to build cash on the balance sheet. The bigger part of our story is we are aggressive buyers of businesses.
And our ability to deploy capital, the substantial amount of both cash, credit, we have $400,000,000 revolver And our proven ability to go and grow through acquisition is really the part of our story that over time you'll be able to see as we continue to find opportunities.
Our next question is with Justin Bergner with G. Research. Please proceed with your question.
Thanks. Two quick follow ups. The $1,000,000 to $2,000,000 in savings for the Defense Electronics, was that just on facilities.
On the other side, we'll see a facilities on the other side. We'll see a couple of million from that as well.
Okay, great. And then the other question is, can you just remind us, have you articulated recently what the medium term EBITDA margin guidance for Homes and Building Products is? Mitch, if you refresh our memory?
Sure. So we have guidance up there of 15 plus. Obviously, this year, we outperformed that. We're in unusual times, to say the least, and there's a lot of uncertainty in general in the macroeconomics as well as from directly from COVID and as well as macroeconomic. So we're going to continue to work on that plus and continue to we'd like to lap it.
We haven't been there for very long, and we expect that there's still opportunity to improve the margin in that business.
Great. Thank you.
We have reached the end of our question and answer session. I would like to turn the floor back over to Ron Kramer, Chief Executive Officer, for concluding comments.
Thank you. Take care. Stay safe. Be well. We look forward to following up with you in January.
Bye bye.
This concludes today's conference. Thank you for your participation. You may disconnect your lines at this time.