Core Viewpoint - The article discusses the performance and valuation of Griffon Corporation (GFF) following its Q3 earnings call, highlighting the stock's trading position and potential investment opportunities [1]. Summary by Relevant Sections - **Company Performance** - Griffon Corporation's stock was trading at approximately $76 per share during the analysis period, indicating a small discount based on its valuation metrics [1]. - **Analyst Background** - The analyst has over 10 years of experience in the investment field, with a master's degree in Analytics and a bachelor's degree in Accounting, emphasizing a strong analytical background [1]. - **Investment Focus** - The analyst expresses a personal interest in dividend investing, suggesting a focus on income-generating investments within the broader investment strategy [1].

Acquisition and Expansion - Griffon Corporation's subsidiary, The AMES Companies, acquired Pope for approximately AUD 21,800 (approximately $14,500), expanding its Australian operations[17] - The CPP segment's global sourcing strategy expansion resulted in a facility footprint reduction of approximately 1.2 million square feet, or about 15% of CPP's total square footage, and a headcount reduction of approximately 600[19] - The CPP segment expanded its product lines to include long-handled tools and material handling products for the U.S. market, completing this initiative by September 30, 2024[18] Financial Performance and Strategy - Griffon aims for a target of 15% EBITDA margin through an asset-light business model, enhancing free cash flow and reducing capital expenditures[20] - In 2025, Home Depot accounted for 10% of Griffon's consolidated revenue, with CPP specifically contributing 12%[68] - CPP's sales are highly seasonal, with 49% of sales occurring in the second and third quarters of 2025, down from 52% in 2024 and 54% in 2023[70] Product and Market Position - Clopay, a subsidiary, is the largest manufacturer and marketer of garage doors in North America, with a significant portion of sales driven by home remodeling and renovation projects[26] - Clopay operates a network of 57 distribution centers across the U.S. and Canada, providing just-in-time inventory and flexibility in delivery[42] - The company has a strong portfolio of brands, including AMES, True Temper, and ClosetMaid, which enhances its market position[45] Raw Materials and Supply Chain - The principal raw material for Clopay's manufacturing is galvanized steel, with all raw materials generally available from multiple sources[39] - CPP's primary raw materials include resin, hickory wood, and steel, which are generally available from multiple sources[56] - CPP employs approximately 2,000 employees worldwide[44] Innovation and Intellectual Property - Griffon has undertaken transformative transactions since 2017, including divesting its specialty plastics and defense electronics businesses to focus on core markets[16] - Griffon has approximately 1,564 registered trademarks and 149 pending trademark applications globally, emphasizing the importance of brand protection in its HBP and CPP businesses[76] - HBP holds around 65 issued patents and 27 pending patent applications in the U.S., while CPP has approximately 855 issued patents and 187 pending patent applications, highlighting the focus on innovation[77] Sustainability and ESG Commitment - The company aims for a 30% reduction in six key ESG metrics, including carbon emissions and water consumption, by 2030[79] - Approximately 70% of the steel used in HBP's garage doors is recycled steel, demonstrating a commitment to sustainable practices[80] - The company expects to file its 2024 Sustainability Report before the end of calendar 2025, continuing its commitment to transparency in ESG practices[78] Community Engagement and Employee Welfare - Griffon has invested over $1 million in employee welfare facilities, including improvements to break areas and cafeterias[82] - Griffon is involved in over 100 charitable and community organizations, reinforcing its commitment to community engagement[81] Risk Management - A 100 basis point change in benchmark interest rates like SONIA or SOFR would not materially impact Griffon's results of operations or liquidity[300] - A 10% change in the value of foreign currencies would not have a material effect on Griffon's financial position and cash flows, indicating a managed exposure to currency risk[301] Competitive Landscape - The long-handled tools and landscaping product industry is highly competitive, with many small, privately-held companies as competitors[58] - CPP's competitive advantages include a history of innovation, dependable supply chain, and high on-time delivery rates[61] Automation and E-commerce - The company has made significant investments in automation and fulfillment operations to support e-commerce growth[55] - CPP's product development focuses on new products and line extensions to meet consumer needs and expand revenue opportunities[54] Supplier Responsibility - The company has implemented a Supplier Code of Conduct that binds suppliers to the same ESG goals and criteria, enhancing its supply chain responsibility[79]

Core Viewpoint - Griffon (GFF) reported quarterly earnings of $1.54 per share, slightly missing the Zacks Consensus Estimate of $1.56 per share, but showing an increase from $1.47 per share a year ago, indicating a mixed performance in earnings despite a revenue beat [1][2]. Financial Performance - The company posted revenues of $662.18 million for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 5.16% and showing a year-over-year increase from $659.67 million [2]. - Over the last four quarters, Griffon has surpassed consensus EPS estimates two times and topped consensus revenue estimates just once [2]. Stock Performance - Griffon shares have declined approximately 6.2% since the beginning of the year, contrasting with the S&P 500's gain of 12.5%, indicating underperformance relative to the broader market [3]. Future Outlook - The company's earnings outlook will be crucial for determining the stock's immediate price movement, with current consensus EPS estimates at $1.61 for the coming quarter and $6.33 for the current fiscal year [4][7]. - The estimate revisions trend for Griffon was mixed ahead of the earnings release, resulting in a Zacks Rank 3 (Hold), suggesting the stock is expected to perform in line with the market in the near future [6]. Industry Context - The Diversified Operations industry, to which Griffon belongs, is currently ranked in the top 26% of over 250 Zacks industries, indicating a favorable industry outlook that could positively impact stock performance [8].

Financial Data and Key Metrics Changes - For fiscal year 2025, Griffon Corporation reported HBP revenue of $1.6 billion, consistent with the prior year, and an EBITDA margin of 31.2% [3] - Fourth quarter revenue was $662 million, with adjusted EBITDA of $138 million, both consistent with the prior year [9] - Fourth quarter GAAP net income was $44.95 million, compared to $62 million in the prior year, while adjusted net income was $71 million, or $1.54 per share, compared to $71 million, or $1.47 per share, in the prior year [10] Business Line Data and Key Metrics Changes - HBP segment revenue increased by 3% year-over-year, driven by a favorable price index, while volume remained consistent [11] - CPP segment revenue decreased by 10% to $936 million due to weak consumer demand in North America and the U.K., but profitability improved with an 18% increase in EBITDA [4][6] - CPP adjusted EBITDA was $24 million, a decrease of 1% from the prior year, primarily due to decreased volume offset by global sourcing benefits [12] Market Data and Key Metrics Changes - The U.S. and U.K. markets experienced reduced consumer demand, impacting CPP revenue, while Australia showed increased organic volume [5][11] - The company noted that 85% of its business is unaffected by tariffs, indicating resilience in its operations despite external pressures [31] Company Strategy and Development Direction - The company plans to leverage improving market conditions and a pipeline of product innovations to increase long-term volume and profit margins [17] - Capital allocation strategies include share repurchases, debt reduction, and dividend increases, reflecting confidence in the business's strength [8][17] - The company aims to maintain EBITDA margins above 30% for HBP and approximately 10% for CPP in fiscal 2026 [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to generate strong financial performance despite a challenging macroeconomic environment [16] - The outlook for fiscal 2026 includes expectations for revenue consistency with 2025 at $2.5 billion and adjusted EBITDA in the range of $580 million to $600 million [14][15] - Management anticipates a gradual recovery in consumer demand and housing market conditions, which could enhance future performance [16][39] Other Important Information - The company repurchased 1.9 million shares at an average price of $70.99, totaling $135 million for the year [14] - A quarterly dividend of $0.22 per share was announced, marking a 22% increase over the prior quarter [8] Q&A Session Summary Question: Can you discuss the drivers of the sequential EBITDA margin decline in HBP? - Management indicated that the margin decline was due to product mix variations and expected favorable price trends moving forward [20][21] Question: What is the outlook for CPP in terms of pricing and consumer acceptance? - Management noted that while pricing has been passed through, consumer acceptance remains weak, and they expect 2026 to mirror 2025 [39] Question: How do you see the competitive landscape in the garage door market? - Management highlighted their strong market position and innovation capabilities, indicating confidence in future growth despite current market challenges [37][38] Question: What is the status of retailer inventories in the CPP category? - Management stated that excess inventory levels are present due to weak consumer demand, with no immediate repurchasing expected [44] Question: How does the company reconcile the increase in dividends with share repurchase activity? - Management clarified that there is no conflict, as they intend to continue share repurchases while also increasing dividends and reducing debt [46]

Financial Data and Key Metrics Changes - For fiscal year 2025, Griffon Corporation reported HBP revenue of $1.6 billion, consistent with the prior year, and an EBITDA margin of 31.2% [3][4] - Fourth quarter revenue was $662 million, with adjusted EBITDA of $138 million, both consistent with the prior year [9] - Gross profit on a GAAP basis for the fourth quarter was $276 million, compared to $263 million in the prior year quarter, with a normalized gross margin increase of 60 basis points to 41.7% [9][10] - Fourth quarter GAAP net income was $44.95 million, or $1.54 per share, compared to $62 million, or $1.29 per share in the prior year [10] Business Line Data and Key Metrics Changes - Home and Building Products (HBP) revenue increased 3% year-over-year, driven by a favorable price index, while volume remained consistent [11] - Consumer and Professional Products (CPP) revenue decreased 10% to $936 million due to weak consumer demand in North America and the U.K., partially offset by increased organic volume in Australia [4][6] - CPP adjusted EBITDA increased 18%, with an EBITDA margin improvement of over 200 basis points despite lower sales volume [6] Market Data and Key Metrics Changes - The U.S. and U.K. markets experienced reduced consumer demand, impacting CPP revenue, while Australia showed increased organic volume [5][11] - The company noted that 85% of its business is unaffected by tariffs, indicating a strong position in the market despite external pressures [32] Company Strategy and Development Direction - The company plans to leverage improving market conditions and a pipeline of product innovations to increase long-term volume and profit margins [16][17] - Capital allocation strategies include share repurchases, paying down debt, and increasing dividends, reflecting confidence in the business outlook [7][8][17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to generate strong financial performance despite a challenging macroeconomic environment [16] - The outlook for fiscal year 2026 includes expectations for revenue consistency with 2025 at $2.5 billion and adjusted EBITDA in the range of $580 million to $600 million [14][15] Other Important Information - The company repurchased 1.9 million shares at an average price of $70.99, totaling $560 million since April 2023 [7][14] - A quarterly dividend of $0.22 per share was announced, marking a 22% increase over the prior quarter [8] Q&A Session Summary Question: HBP margin performance in the quarter - Management indicated that the sequential EBITDA margin decline was due to product mix rather than headwinds, with expectations for favorable price mix in the upcoming year [20][21] Question: CPP performance versus expectations - Management noted better-than-expected volume and favorable price index contributing to CPP's performance [28] Question: Tariffs and sourcing choices - Management confirmed that current tariff policies are reflected in guidance, with ongoing efforts to mitigate impacts through global sourcing and cost management [29][31] Question: Competitive changes in the market - Management highlighted the company's strong position in the market, emphasizing innovation and diversified channels as key competitive advantages [37][39] Question: Retailer inventory levels and purchasing patterns - Management stated that weak consumer demand has led to higher inventory levels, with no immediate repurchasing expected [44] Question: Dividend increase and share repurchase strategy - Management clarified that increasing dividends while continuing share repurchases and debt reduction reflects a strong financial position and commitment to shareholder value [45]

Financial Data and Key Metrics Changes - For fiscal year 2025, Griffon Corporation reported HBP revenue of $1.6 billion, consistent with the prior year, and an EBITDA margin of 31.2% [3] - Fourth quarter revenue was $662 million, with adjusted EBITDA of $138 million, both consistent with the prior year [9] - Gross profit on a GAAP basis for the fourth quarter was $276 million, compared to $263 million in the prior year quarter, with normalized gross margin increasing by 60 basis points to 41.7% [9][10] - Fourth quarter GAAP net income was $44.95 million, or $1.54 per share, compared to $62 million, or $1.29 per share in the prior year [10] Business Line Data and Key Metrics Changes - Home and Building Products (HBP) revenue increased by 3% over the prior year quarter, driven by a favorable price index, while volume remained consistent [11] - Consumer and Professional Products (CPP) revenue decreased by 4% from the prior year quarter, primarily due to an 8% decrease in volume, partially offset by a 4% benefit from price index [11] - CPP adjusted EBITDA of $24 million decreased by 1% from the prior year period, primarily due to decreased volume, offset by benefits from global sourcing initiatives [12] Market Data and Key Metrics Changes - The U.S. and U.K. markets experienced persistently weak consumer demand, impacting CPP revenue, while Australia showed increased organic volume [5][12] - The company noted that 85% of its business is unaffected by tariffs, indicating a strong position despite external pressures [29] Company Strategy and Development Direction - The company plans to leverage improving market conditions and a pipeline of product innovations to increase long-term volume and profit margins [15] - Capital allocation strategy includes share repurchases, debt reduction, and dividend increases, reflecting confidence in the business outlook [8][16] - The company aims to generate over $1 billion of free cash flow over the next three years to support its strategic initiatives [16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to generate strong financial performance despite challenging macroeconomic conditions [15] - The outlook for fiscal 2026 includes expectations for revenue to be consistent with 2025 at $2.5 billion and adjusted EBITDA in the range of $580 million to $600 million [13][14] - Management anticipates a gradual recovery in consumer demand and housing market conditions, which could enhance performance in the coming years [15][39] Other Important Information - The company repurchased 1.9 million shares at an average price of $70.99 during fiscal 2025, totaling $135 million [6][13] - A quarterly dividend of $0.22 per share was announced, marking a 22% increase over the prior quarter [7][8] Q&A Session Summary Question: What were the drivers of the sequential EBITDA margin decline in HBP? - Management indicated that the margin decline was due to product mix variations and expected favorable price index trends moving forward [19] Question: How does the guidance weight toward the back half of the year? - Management expects a slight decrease in the first half of the year, with a pickup in the second half, consistent with normal seasonality [22] Question: What was better than expected in the CPP segment? - Favorable price index and slightly better volume than anticipated contributed to better performance in the CPP segment [26] Question: What are the specific drivers for EBITDA growth in CPP despite flat sales? - Management highlighted the benefits of global sourcing and cost management as key drivers for EBITDA growth [28] Question: How does the company view competitive changes in the market? - Management noted that despite macroeconomic challenges, the company has maintained strong performance and market share, particularly in the garage door segment [36] Question: What is the status of retailer inventories in the CPP category? - Management indicated that weak consumer demand has led to higher inventory levels, with no immediate repurchasing expected [42] Question: How does the company reconcile the increase in dividends with share repurchases? - Management clarified that there is no conflict, as the company intends to continue share repurchases, debt reduction, and dividend increases simultaneously [44]

Copyright © 2025 Griffon Corporation. All rights reserved. Q4 FY25 INVESTOR PRESENTATION November 2025 GRIFFON OVERVIEW B R E A K D O W N B Y O P E R A T I N G S E G M E N T $2.5B $522M $3.2B 21% $1.3B 5,111 Revenue Adj. EBITDA Market Cap1 Adj. EBITDA Net debt2 CPP 37% 1. Closing price of $69.7/share on 11/14/2025 and 46,231,089 shares outstanding as of 10/31/25. 2. Net debt is defined as long-term debt less cash per Griffon's balance sheet Adjusted EBITDA (excl. unallocated) $millions) Revenue U.S. 81% Int ...

Financial Performance - Fiscal 2025 revenue totaled $2.5 billion, a 4% decrease from $2.6 billion in the prior year[2] - Fiscal 2025 net income was $51.1 million, or $1.09 per share, down from $209.9 million, or $4.23 per share, in the prior year[2] - Adjusted net income for fiscal 2025 was $263.6 million, or $5.65 per share, compared to $254.2 million, or $5.12 per share, in the prior year[3] - Fiscal 2025 adjusted EBITDA was $522.3 million, a 2% increase from $513.6 million in the prior year[4] - Fourth quarter revenue was $662.2 million, slightly up from $659.7 million in the prior year quarter[5] - Fourth quarter adjusted EBITDA totaled $137.9 million, compared to $137.5 million in the prior year quarter[7] - Net income for Q4 2025 was $43,636 thousand, a decrease from $62,491 thousand in Q4 2024, while net income for the year was $51,110 thousand, down from $209,897 thousand in 2024[34] - Total revenue for Q4 2025 was $662,182 thousand, a slight increase from $659,673 thousand in Q4 2024, while total revenue for the year ended September 30, 2025, was $2,519,926 thousand, down from $2,623,520 thousand in 2024[28] - Adjusted EBITDA for Q4 2025 was $137,863 thousand, compared to $137,526 thousand in Q4 2024, with total adjusted EBITDA for the year at $522,293 thousand, up from $513,602 thousand in 2024[28] Cash Flow and Dividends - Free cash flow for fiscal 2025 was $323 million, supporting $174 million returned to shareholders through dividends and share repurchases[9] - Free cash flow (FCF) for the year ended September 30, 2025, was $323,011 thousand, slightly down from $326,122 thousand in 2024[30] - The company paid dividends of $39,692 million in 2025, compared to $35,806 million in 2024, an increase of 10.5%[38] - A 22% increase in the regular quarterly dividend to $0.22 per share was announced, reflecting confidence in the business outlook[9] Assets and Liabilities - Cash and equivalents as of September 30, 2025, were $99,045 thousand, down from $114,438 thousand in 2024[30] - Total current assets decreased from $929,476 million in 2024 to $890,594 million in 2025, a decline of approximately 4.2%[36] - Total liabilities decreased from $2,146,066 million in 2024 to $1,989,665 million in 2025, a reduction of approximately 7.3%[36] - Cash and equivalents at the end of the period decreased to $99,045 million from $114,438 million, a decline of 13.4%[40] - Total shareholders' equity decreased significantly from $224,888 million in 2024 to $73,972 million in 2025, a decline of approximately 67.1%[36] Operational Efficiency and Strategic Focus - The company plans to continue focusing on operational efficiency and strategic reviews to enhance profitability and cash flow generation[28] - The net debt to EBITDA leverage ratio improved to 2.4x in 2025 from 2.6x in 2024, indicating a stronger borrowing capacity[30] Impairments and Expenses - The company reported goodwill and intangible asset impairments of $243,612 thousand for the year ended September 30, 2025[34] - Selling, general and administrative expenses for Q4 2025 were $157,251 thousand, or 23.7% of revenue, compared to $151,808 thousand or 23.0% in Q4 2024[32] - The company reported a goodwill impairment of $243,612 million for the year ended September 30, 2025, with no such impairment recorded in 2024[41] Future Projections - In fiscal 2026, revenue is expected to remain at $2.5 billion, with adjusted EBITDA projected between $580 million and $600 million[19] - Home and Building Products segment revenue for 2025 was $1.6 billion, consistent with the prior year, while Consumer and Professional Products segment revenue was $0.9 billion, a 10% decline[10][12]

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