Financial Data and Key Metrics Changes - Second quarter revenue was $612 million, a decrease of 9% compared to the prior year quarter [13] - Adjusted EBITDA before unallocated amounts was $133 million, down 11% year over year, with an EBITDA margin of 21.8%, a decrease of 40 basis points [13] - GAAP net income for the second quarter was $57 million, or $1.21 per share, compared to $64 million, or $1.28 per share, in the prior year [14] Business Segment Performance - Home and Building Products (HPP) segment maintained an EBITDA margin above 30%, but revenue decreased due to a seasonal decline in residential volume [5][16] - Consumer and Professional Products (CPP) revenue decreased 13% to $243 million, driven by reduced consumer demand in North America and the UK, partially offset by growth in Australia [17] - Adjusted EBITDA for CPP increased by 18% to $24 million, attributed to global sourcing initiatives and improved margins in Australia [17] Market Data and Key Metrics Changes - Approximately 85% of Griffin's total segment EBITDA is generated by HPP, which is primarily U.S.-based [9] - CPP represents about 15% of total segment EBITDA, with a portion affected by U.S.-China tariff policies [10] - The company expects to mitigate inflationary effects from trade policies through various strategies, including supplier negotiations and cost management [21] Company Strategy and Industry Competition - The company is committed to maintaining its fiscal 2025 guidance of $2.6 billion in revenue and $575 million to $600 million in segment adjusted EBITDA [20] - The focus remains on leveraging an asset-light business model to enhance flexibility and reduce operating costs [7] - The company aims to achieve a long-term adjusted EBITDA margin target of 15% for CPP, despite current tariff challenges [26][29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to manage increased costs due to tariffs and maintain performance amid economic uncertainties [9][21] - The housing market in the U.S. is expected to recover, benefiting the HPP segment, which is largely insulated from tariff impacts [28] - The company anticipates continued solid operating performance in HPP and improved profitability in CPP for the remainder of the fiscal year [21] Other Important Information - The company repurchased $31 million of stock during the second quarter, with a total of $498 million repurchased since April 2023 [11][12] - A quarterly dividend of $0.18 per share was authorized, marking the 55th consecutive quarterly dividend [12] Q&A Session Summary Question: Clarification on CPP revenue exposed to tariffs - The annualized revenue exposed to Chinese tariffs is approximately $325 million, which is lower than expected [25] Question: Long-term EBITDA margin target for CPP - The long-term target of a 15% adjusted EBITDA margin for CPP remains achievable, depending on U.S. economic conditions [26][29] Question: Impact of tariffs on future costs - Management stated it is premature to speculate on fiscal year 2026 costs but emphasized the ability to mitigate tariff impacts [31][32] Question: Market position and pricing strategy in CPP - The company is sensitive to pricing impacts and is working on plans to mitigate tariff-related price increases while maintaining product quality [36] Question: Demand trends in different geographies for CPP - Demand in North America and the UK remains weak, while Australia shows good demand, particularly from the Pope acquisition [48]

Griffon Corporation Overview - Griffon Corporation's revenue is $2.6 billion and adjusted EBITDA is $528 million[5] - The company's market capitalization is $3.5 billion[5] - The adjusted EBITDA margin is 20%[5] - Net debt stands at $1.3 billion, and the company employs 5,160 people[5] Segment Breakdown - Consumer and Professional Products (CPP) accounts for 39% and Home and Building Products (HBP) accounts for 61% of adjusted EBITDA (excluding unallocated)[7] - CPP adjusted EBITDA is $85 million and HBP adjusted EBITDA is $503 million[7,33,26] - U.S. revenue constitutes 82% and international revenue 18% of the total revenue[7] Financial Performance and Strategy - Revenue has grown at a CAGR of 4.4% from FY21 to TTM 1Q25[19] - Adjusted EPS from continuing operations has grown at a CAGR of 43.5% from FY21 to TTM 1Q25[21] - Adjusted EBITDA has grown at a CAGR of 26.5% from FY21 to TTM 1Q25[22] - Net debt to EBITDA leverage has reduced by approximately 8% from FY21 to 1Q25[24,25]

[Griffon Corporation Second Quarter 2025 Earnings Release](index=1&type=section&id=Griffon%20Corporation%20Second%20Quarter%202025%20Earnings%20Release) [Financial Highlights](index=1&type=section&id=Financial%20Highlights) The company reported a decline in key financial metrics for Q2 2025 but maintained its full-year guidance as performance met expectations Q2 2025 Key Financial Metrics (YoY Comparison) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Revenue | $611.7M | $672.9M | -9% | | Net Income | $56.8M | $64.1M | -11% | | Diluted EPS | $1.21 | $1.28 | -5% | | Adjusted Net Income | $57.6M | $67.5M | -15% | | Adjusted Diluted EPS | $1.23 | $1.35 | -9% | | Adjusted EBITDA | $118.5M | $134.2M | -12% | - CEO Ronald J. Kramer stated that first-half performance met expectations and the company is maintaining its full-year financial guidance despite economic uncertainty[5](index=5&type=chunk) - The company anticipates the **Home and Building Products (HBP) segment will generate approximately 85% of total segment EBITDA** for the year[5](index=5&type=chunk) [Segment Performance](index=1&type=section&id=Segment%20Performance) The company's segments showed divergent trends, with HBP declining while CPP's Adjusted EBITDA grew due to sourcing and operational initiatives Segment Revenue and Adjusted EBITDA (Q2 2025 vs Q2 2024) | Segment | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | :--- | | **HBP** | Revenue | $368.2M | $392.1M | -6% | | | Adj. EBITDA | $109.4M | $128.9M | -15% | | **CPP** | Revenue | $243.5M | $280.8M | -13% | | | Adj. EBITDA | $23.7M | $20.1M | +18% | [Home and Building Products (HBP)](index=1&type=section&id=Home%20and%20Building%20Products%20(HBP)) HBP's revenue and Adjusted EBITDA declined due to lower residential volume, though the segment maintained a strong EBITDA margin - Revenue decreased 6% due to a **7% volume decline**, primarily from residential sales returning to normal seasonality[6](index=6&type=chunk) - Adjusted EBITDA decreased 15% due to lower revenue, reduced overhead absorption, and higher labor/distribution costs, partially offset by lower material costs[7](index=7&type=chunk) - The HBP segment maintained a **strong 30% EBITDA margin** during the quarter[5](index=5&type=chunk) [Consumer and Professional Products (CPP)](index=2&type=section&id=Consumer%20and%20Professional%20Products%20(CPP)) CPP's revenue fell due to lower volume, but Adjusted EBITDA grew significantly driven by global sourcing benefits and Australian performance - Revenue decreased 13% primarily due to reduced consumer demand in North America and the UK, with an unfavorable foreign currency impact of 2%[8](index=8&type=chunk) - **Adjusted EBITDA grew 18%**, credited to the benefits of the global sourcing expansion and strong performance in Australia[9](index=9&type=chunk) - The company is leveraging its global supply chain and taking actions like supplier negotiations, cost management, and pricing to mitigate tariff impacts[5](index=5&type=chunk) [Financial Position and Capital Management](index=2&type=section&id=Financial%20Position%20and%20Capital%20Management) The company maintained a solid financial position with improved leverage, strong free cash flow, and $1.41 billion in net debt Balance Sheet and Leverage Summary (as of March 31, 2025) | Metric | March 31, 2025 | March 31, 2024 | | :--- | :--- | :--- | | Cash and equivalents | $127.8M | $123.0M | | Total Debt Outstanding | $1.54B | $1.60B | | Net Debt | $1.41B | $1.48B | | Net Debt to EBITDA Leverage | 2.6x | 2.8x | - Free cash flow for the six months ended March 31, 2025, was **$145.8 million**, compared to $153.8 million in the prior year period[11](index=11&type=chunk)[21](index=21&type=chunk) - Borrowing availability under the revolving credit facility was **$364.5 million** at the end of the quarter[11](index=11&type=chunk) [Shareholder Returns](index=2&type=section&id=Shareholder%20Returns) The company continued returning capital to shareholders, repurchasing 0.4 million shares for $30.5 million in the second quarter - In Q2 2025, repurchased **0.4 million shares for $30.5 million** at an average price of $72.64 per share[12](index=12&type=chunk) - From April 2023 through March 31, 2025, the company has repurchased **9.9 million shares (17.4% of outstanding shares)** for a total of $498.1 million[12](index=12&type=chunk) - As of March 31, 2025, **$359.8 million remained available** under the Board-authorized share repurchase program[12](index=12&type=chunk) [Consolidated Financial Statements](index=8&type=section&id=Consolidated%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for the three and six months ended March 31, 2025, and 2024 [Condensed Consolidated Statements of Operations](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Income Statement Highlights (in thousands, except per share data) | | Three Months Ended Mar 31, 2025 | Three Months Ended Mar 31, 2024 | Six Months Ended Mar 31, 2025 | Six Months Ended Mar 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | **Revenue** | **$611,746** | **$672,880** | **$1,244,117** | **$1,316,033** | | Gross profit | $252,211 | $270,665 | $516,487 | $507,306 | | Income from operations | $101,164 | $113,448 | $213,259 | $197,286 | | **Net income** | **$56,762** | **$64,143** | **$127,613** | **$106,320** | | Diluted EPS | $1.21 | $1.28 | $2.70 | $2.10 | [Condensed Consolidated Balance Sheets](index=9&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Balance Sheet Highlights (in thousands) | | March 31, 2025 | September 30, 2024 | | :--- | :--- | :--- | | Cash and equivalents | $127,821 | $114,438 | | Total Current Assets | $920,495 | $929,476 | | **Total Assets** | **$2,343,941** | **$2,370,954** | | Total Current Liabilities | $330,833 | $348,990 | | Long-term debt, net | $1,528,838 | $1,515,897 | | **Total Liabilities** | **$2,129,199** | **$2,146,066** | | **Total Shareholders' Equity** | **$214,742** | **$224,888** | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash Flow Highlights (in thousands, Six Months Ended March 31) | | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $159,425 | $185,860 | | Net cash used in investing activities | ($13,599) | ($32,017) | | Net cash used in financing activities | ($134,000) | ($132,043) | | **Net increase in cash and equivalents** | **$13,383** | **$20,141** | | Cash and equivalents at end of period | $127,821 | $123,030 | [Reconciliation of GAAP to Non-GAAP Measures](index=5&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Measures) This section reconciles non-GAAP measures like Adjusted EBITDA and Adjusted Net Income to their comparable GAAP counterparts Reconciliation of Net Income to Adjusted Net Income (Q2) | (in thousands) | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net income | $56,762 | $64,143 | | Adjusting items (net of tax) | $837 | $3,367 | | **Adjusted net income** | **$57,599** | **$67,510** | Reconciliation of Diluted EPS to Adjusted Diluted EPS (Q2) | | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Diluted EPS | $1.21 | $1.28 | | Adjusting items, net of tax | $0.02 | $0.07 | | **Adjusted Diluted EPS** | **$1.23** | **$1.35** | Reconciliation of Income Before Taxes to Adjusted EBITDA (Q2) | (in thousands) | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Income before taxes | $78,637 | $88,573 | | Net interest expense | $23,222 | $25,512 | | Depreciation and amortization | $15,650 | $15,080 | | Other adjustments | $1,016 | $5,077 | | **Adjusted EBITDA** | **$118,525** | **$134,231** | [Company Information](index=2&type=section&id=Company%20Information) Griffon Corporation is a diversified holding company with segments in Home and Building Products (HBP) and Consumer and Professional Products (CPP) - **Home and Building Products (HBP):** Operates through Clopay, the largest manufacturer of garage and rolling steel doors in North America, with brands like Clopay, Ideal, Holmes, Cornell, and Cookson[18](index=18&type=chunk) - **Consumer and Professional Products (CPP):** A global provider of branded tools, fans, and storage products, featuring brands such as AMES, Hunter, True Temper, and ClosetMaid[18](index=18&type=chunk) - A conference call to discuss the results was scheduled for May 8, 2025, at 8:30 AM ET[13](index=13&type=chunk)

Company Performance - Griffon (GFF) closed at $68.11, reflecting a +0.41% change from the previous trading day's close, outperforming the S&P 500's daily gain of 0.15% [1] - Over the past month, Griffon's shares have depreciated by 7.18%, underperforming the Conglomerates sector's loss of 2.37% and the S&P 500's loss of 0.21% [1] Earnings Expectations - The upcoming earnings release is anticipated, with expected EPS of $1.13, down 16.3% from the prior-year quarter [2] - Revenue is forecasted to be $615.7 million, indicating an 8.5% decline compared to the same quarter of the previous year [2] Full Year Projections - For the full year, earnings are projected at $5.71 per share and revenue at $2.59 billion, representing changes of +11.52% and -1.16% from the prior year, respectively [3] - Recent changes to analyst estimates for Griffon indicate the evolving nature of near-term business trends, with positive revisions reflecting analysts' confidence in the company's performance [3] Valuation Metrics - Griffon has a Forward P/E ratio of 11.89, indicating a discount compared to its industry's Forward P/E of 16.22 [6] - The company holds a PEG ratio of 0.69, which is lower than the Diversified Operations industry's average PEG ratio of 1.43 [6] Industry Context - The Diversified Operations industry, part of the Conglomerates sector, has a Zacks Industry Rank of 89, placing it in the top 36% of over 250 industries [7] - Strong individual industry groups, as measured by the Zacks Industry Rank, tend to outperform weaker groups by a factor of 2 to 1 [7]

Core Viewpoint - Growth stocks are appealing due to their potential for above-average financial growth, but identifying strong candidates can be challenging due to inherent volatility and risks [1] Group 1: Company Overview - Griffon (GFF) is highlighted as a recommended growth stock with a favorable Growth Score and a top Zacks Rank [2] - The company has a historical EPS growth rate of 37.9%, with projected EPS growth of 11.5% this year, surpassing the industry average of 10.4% [4] Group 2: Financial Metrics - Cash flow growth is crucial for growth-oriented companies, and Griffon currently shows a year-over-year cash flow growth of 0.6%, compared to an industry average of -16.8% [5] - The historical annualized cash flow growth rate for Griffon over the past 3-5 years is 25.3%, significantly higher than the industry average of 6.3% [6] Group 3: Earnings Estimates - Positive trends in earnings estimate revisions are correlated with stock price movements, and Griffon's current-year earnings estimates have increased by 0.5% over the past month [7][8] - Griffon has achieved a Growth Score of A and a Zacks Rank 1 due to favorable earnings estimate revisions, indicating strong potential for growth investors [10]

Core Viewpoint - 3M Company (MMM) faces challenges in its consumer retail segment, while Griffon Corporation (GFF) shows strong growth potential in its Home and Building Products segment, making GFF a more attractive investment option currently [20][21]. 3M Company (MMM) - 3M is experiencing solid momentum in its Safety and Industrial segment, with organic sales improving approximately 2.4% year over year in Q4 2024, driven by demand in roofing granules and electrical markets [3]. - The Transportation and Electronics segment benefits from strong aerospace and electronics markets, with adjusted organic revenues growing 2% in Q4 2024 [4]. - In 2024, 3M paid $2 billion in dividends and repurchased shares worth $1.8 billion, with $2.4 billion remaining under the share repurchase program [5]. - The Consumer segment saw a decline of 1.9% in 2024 due to decreased consumer discretionary spending, particularly in packaging, home care, and consumer safety [6]. - 3M's long-term debt was $11.1 billion at the end of 2024, with interest expenses increasing 26.5% year over year to $1.2 billion [7]. - Ongoing litigations, including a $6 billion settlement related to earplug lawsuits, may lead to additional expenses [8]. - The Zacks Consensus Estimate for 3M's 2025 sales implies a year-over-year decline of 10%, while EPS indicates growth of 6.7% [14]. - 3M shares have lost 5.7% in the past six months, trading at a forward P/E ratio of 15.97X, above its three-year median of 12.03X [16][17]. Griffon Corporation (GFF) - Griffon is witnessing strong momentum in its Home and Building Products segment, with flat revenues year-over-year in Q1 fiscal 2025, supported by resilient residential construction activity [9]. - The recovery in the U.S. residential construction market, aided by lower interest rates, is expected to benefit Griffon's segment in the coming quarters [10]. - The Consumer and Professional Products segment faced a revenue decline of 4.2% year-over-year in Q1 fiscal 2025 due to weak consumer demand [11]. - Griffon is investing in the expansion and modernization of its manufacturing facilities, including the expansion of Clopay's Troy facility and sectional door manufacturing capacity in Ohio [12]. - The acquisition of Australia-based Pope is expected to generate annual revenues of around $25 million and positively impact earnings in the first full year [13]. - The Zacks Consensus Estimate for Griffon's fiscal 2025 sales implies a year-over-year decline of 1.2%, while EPS indicates growth of 11.5% [14]. - Griffon stock has increased by 0.4% in the past six months, trading at a forward P/E ratio of 10.80X, close to its three-year median of 10.58X [16][17].

Core Viewpoint - Value investing remains a preferred strategy for identifying strong stocks, focusing on companies believed to be undervalued based on fundamental analysis [2]. Group 1: Value Investing Metrics - Zacks has developed a Style Scores system to identify stocks with specific traits, particularly in the "Value" category, which is of interest to value investors [3]. - Stocks with "A" grades in the Value category and high Zacks Ranks are considered among the strongest value stocks currently available [3]. Group 2: Griffon (GFF) Analysis - Griffon (GFF) is currently rated with a Zacks Rank of 2 (Buy) and holds a Value grade of A, indicating strong potential [4]. - GFF has a P/E ratio of 11.67, significantly lower than the industry average of 16.37, suggesting it may be undervalued [4]. - Over the past 52 weeks, GFF's Forward P/E has fluctuated between 9.47 and 14.95, with a median of 12.29 [4]. - GFF's P/CF ratio stands at 11.42, compared to the industry's average of 13.84, further indicating potential undervaluation [5]. - The P/CF for GFF has ranged from 7.47 to 15.24 over the past year, with a median of 10.67 [5]. - These metrics contribute to GFF's strong Value grade and suggest it is likely undervalued, supported by a positive earnings outlook [6].

Core Viewpoint - Growth investors are interested in stocks with above-average financial growth, but identifying such stocks can be challenging due to inherent risks and volatility [1] Group 1: Company Overview - Griffon (GFF) is currently recommended as a growth stock by the Zacks Growth Style Score system, which evaluates a company's real growth prospects beyond traditional metrics [2] - The stock has a favorable Growth Score and a top Zacks Rank, indicating strong potential for performance [2] Group 2: Earnings Growth - Historical EPS growth rate for Griffon is 37.9%, but projected EPS growth for this year is 10.9%, surpassing the industry average of 10.7% [4] - Double-digit earnings growth is preferred by growth investors as it signals strong future prospects [3] Group 3: Cash Flow Growth - Griffon's year-over-year cash flow growth is 0.6%, which is significantly better than the industry average of -15.6% [5] - The company's annualized cash flow growth rate over the past 3-5 years is 25.3%, compared to the industry average of 6.9% [6] Group 4: Earnings Estimate Revisions - Current-year earnings estimates for Griffon have been revised upward, with the Zacks Consensus Estimate increasing by 2.4% over the past month [7] - Positive trends in earnings estimate revisions are correlated with near-term stock price movements [7] Group 5: Investment Positioning - Griffon has achieved a Zacks Rank of 2 (Buy) and a Growth Score of A, positioning it well for potential outperformance in the market [9]

Group 1 - Zacks Premium offers various tools for investors, including daily updates on Zacks Rank and Industry Rank, access to the Zacks 1 Rank List, Equity Research reports, and Premium stock screens to enhance investment confidence [1][2] - The Zacks Style Scores rate stocks based on value, growth, and momentum characteristics, providing complementary indicators to the Zacks Rank [2][3] Group 2 - The Value Score identifies attractive and discounted stocks using ratios like P/E, PEG, and Price/Sales, appealing to value investors [3] - The Growth Score focuses on a company's financial strength and future outlook, analyzing projected and historic earnings, sales, and cash flow [4] - The Momentum Score helps traders capitalize on price trends, utilizing factors like one-week price change and monthly earnings estimate changes [5] Group 3 - The VGM Score combines all Style Scores, offering a comprehensive indicator for investors seeking the best value, growth, and momentum [6] - The Zacks Rank employs earnings estimate revisions to simplify portfolio building, with 1 (Strong Buy) stocks achieving an average annual return of +25.41% since 1988, outperforming the S&P 500 [7][8] Group 4 - Griffon Corporation (GFF) is highlighted as a 1 (Strong Buy) stock with a VGM Score of A, indicating strong potential for investors [12] - GFF is projected to have year-over-year earnings growth of 10.9% for the current fiscal year, with upward revisions in earnings estimates and an average earnings surprise of 14.7% [13]

Griffon Corporation (GFF) stands to benefit from strength across its businesses, focus on operational excellence and shareholder-friendly policies. The company remains focused on investing in growth opportunities and strengthening its long-term market position. GFF, which has a market capitalization of nearly $3.4 billion, currently sports a Zacks Rank #1 (Strong Buy). Let's delve into the factors that have been aiding the firm for a while now. End-Market Strength: Griffon is witnessing strong momentum in t ...