Group 1 - The Zacks Rank system focuses on earnings estimates and revisions to identify winning stocks, while also considering trends in value, growth, and momentum [1] - Value investing is a popular stock market trend that relies on traditional analysis of key valuation metrics to find undervalued stocks [2] - Zacks has developed the Style Scores system to highlight stocks with specific traits, particularly those with high grades in the "Value" category [3] Group 2 - Griffon (GFF) has a Zacks Rank of 2 (Buy) and an A grade for Value, with a current P/E ratio of 10.94 compared to the industry average of 16.46 [4] - GFF's PEG ratio is 0.68, significantly lower than the industry average of 1.91, indicating potential undervaluation [5] - The P/CF ratio for GFF is 11.20, which is attractive compared to the industry's average P/CF of 15.72, suggesting a solid cash outlook [6] - Overall, GFF appears to be undervalued based on various metrics and has a strong earnings outlook, making it a compelling value stock [7]

Core Insights - Griffon Corporation (GFF) reported adjusted earnings of $1.50 per share for Q3 fiscal 2025, aligning with estimates and reflecting a 21% year-over-year increase [1][9] - Total revenues were $613.6 million, missing the consensus estimate of $660 million and showing a 5% decline year over year [1][9] Segmental Performance - Home and Building Products segment, accounting for 65.2% of net revenues, generated $400.2 million, a 2% increase year over year, driven by favorable pricing and mix [2] - Consumer and Professional Products segment revenues totaled $213.4 million, down 16% year over year, primarily due to a 19% volume reduction across most regions [3][4] Financial Metrics - Adjusted EBITDA for Home and Building Products increased 9% to $128.8 million, while the Consumer and Professional Products segment saw a 14% decrease to $19.2 million [2][4] - The adjusted gross margin improved to 43.2% from 40.9% in the prior year, with cost of sales decreasing 12.6% to $348.4 million [5] Balance Sheet and Cash Flow - As of the end of Q3, cash and cash equivalents stood at $107.3 million, down from $114.4 million at the end of fiscal 2024, while long-term debt decreased to $1.44 billion [6] - In the first nine months of fiscal 2025, net cash generated from operating activities was $282.5 million, compared to $307.9 million in the previous year [7][8] Outlook - For fiscal 2025, management revised net sales expectations to $2.5 billion from a previous estimate of $2.6 billion, while maintaining segment adjusted EBITDA guidance of $575-$600 million [9][10] - The company anticipates an interest expense of $95 million and capital expenditures of $60 million for the fiscal year [10]

Core Insights - Griffon reported a mixed quarterly performance with total revenue of $613.6 million, missing the consensus estimate of $650.0 million, while adjusted EPS was $1.50, slightly exceeding the estimate of $1.49 [1][2] - The Home and Building Products segment showed growth in revenue and profitability, while the Consumer and Professional Products segment faced significant challenges, leading to an overall decline in revenue [1][5] Financial Performance - Total revenue (GAAP) was $613.6 million, down 5.3% year-over-year from $647.8 million [2] - Adjusted EBITDA was $134.7 million, up 7.3% from $125.5 million in the prior year [2] - Adjusted net income rose 14% to $69.2 million compared to the prior year quarter [7] - Gross margin improved by 470 basis points to 43.2% of revenue (GAAP) [7] Segment Analysis - Home and Building Products revenue increased by 2% to $400.2 million, benefiting from favorable pricing and product mix, despite a 1% decline in volume [5] - Consumer and Professional Products revenue fell 16% to $213.4 million due to weak demand and new tariffs impacting sales [6] Strategic Focus - The company has been optimizing operations through supply chain adjustments and an asset-light approach, particularly in the Consumer and Professional Products segment [4] - Management emphasized the importance of maintaining relationships with major retailers like Home Depot and Lowe's for long-term growth [4] Impairment and Future Guidance - A $217.2 million after-tax impairment related to the Hunter Fan acquisition significantly impacted net income [6][8] - For FY2025, Griffon reduced its revenue guidance by $100 million to $2.5 billion, primarily due to expected weakness in the Consumer and Professional Products segment [11] Capital Management - Griffon repurchased $40.3 million of stock and maintained its quarterly dividend at $0.18 per share, reflecting a 20% increase from the prior year [8][12] - The company reduced debt by $76 million in FY2025, improving its leverage ratio to 2.5 times net debt-to-adjusted EBITDA [7]

PART I - FINANCIAL INFORMATION This section presents Griffon Corporation's unaudited condensed consolidated financial statements and management's discussion and analysis of financial condition and results of operations [Item 1 – Financial Statements](index=3&type=section&id=Item%201%20%E2%80%93%20Financial%20Statements) This section presents Griffon Corporation's unaudited condensed consolidated financial statements and related notes, highlighting a net loss due to impairment charges and a decrease in shareholders' equity [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section provides a snapshot of Griffon Corporation's financial position at specific dates, detailing assets, liabilities, and shareholders' equity Condensed Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2025 | September 30, 2024 | | :-------------------------- | :-------------- | :----------------- | | Total Current Assets | $912,292 | $929,476 | | Property, Plant and Equipment, net | $292,385 | $288,297 | | Goodwill | $192,917 | $329,393 | | Intangible Assets, net | $493,843 | $618,782 | | Total Assets | $2,087,320 | $2,370,954 | | Total Current Liabilities | $337,961 | $348,990 | | Long-Term Debt, net | $1,442,855 | $1,515,897 | | Total Liabilities | $2,023,420 | $2,146,066 | | Total Shareholders' Equity | $63,900 | $224,888 | * Total Assets **decreased by $283,634 thousand (11.96%)** from September 30, 2024, to June 30, 2025, primarily due to reductions in goodwill and intangible assets[9](index=9&type=chunk) * Total Shareholders' Equity **significantly decreased by $160,988 thousand (71.59%)** from September 30, 2024, to June 30, 2025[9](index=9&type=chunk) [Condensed Consolidated Statement of Shareholders' Equity](index=4&type=section&id=Condensed%20Consolidated%20Statement%20of%20Shareholders'%20Equity) This statement details changes in Griffon Corporation's equity over time, reflecting net income, dividends, and share repurchases Shareholders' Equity Changes (in thousands) | Item | Nine Months Ended June 30, 2025 | | :-------------------------------- | :------------------------------ | | Balance at September 30, 2024 | $224,888 | | Net income (loss) | $70,851 (Q1), $56,762 (Q2), $(120,139) (Q3) | | Dividend | $(8,196) (Q1), $(8,494) (Q2), $(8,465) (Q3) | | Common stock acquired | $(42,963) (Q1), $(30,827) (Q2), $(40,652) (Q3) | | Other comprehensive income (loss) | $(17,699) (Q1), $2,417 (Q2), $12,446 (Q3) | | Balance at June 30, 2025 | $63,900 | * The net loss of **$120,139 thousand** for the quarter ended June 30, 2025, significantly contributed to the decrease in shareholders' equity[12](index=12&type=chunk) * Common stock acquired (repurchases) totaled **$114,442 thousand** for the nine months ended June 30, 2025, further reducing equity[12](index=12&type=chunk)[83](index=83&type=chunk)[197](index=197&type=chunk) [Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20(Loss)) This statement presents Griffon Corporation's financial performance, including revenues, expenses, net income or loss, and other comprehensive income Consolidated Statements of Operations Highlights (in thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Revenue | $613,627 | $647,814 | $1,857,744 | $1,963,847 | | Gross profit | $265,248 | $249,149 | $781,735 | $756,455 | | Goodwill and intangible asset impairments | $243,612 | — | $243,612 | — | | Income (loss) from operations | $(126,001) | $89,339 | $87,258 | $286,625 | | Net income (loss) | $(120,139) | $41,086 | $7,474 | $147,406 | | Basic earnings (loss) per common share | $(2.65) | $0.87 | $0.16 | $3.08 | | Diluted earnings (loss) per common share | $(2.65) | $0.84 | $0.16 | $2.94 | | Dividends paid per common share | $0.18 | $0.15 | $0.54 | $0.45 | * Revenue **decreased by 5.28%** for the three months and **5.40%** for the nine months ended June 30, 2025, compared to the prior year periods[18](index=18&type=chunk) * The company reported a net loss of **$120,139 thousand** for the three months ended June 30, 2025, primarily due to **$243,612 thousand** in goodwill and intangible asset impairments[18](index=18&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This statement summarizes Griffon Corporation's cash inflows and outflows from operating, investing, and financing activities Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------ | :------------------------------ | | Net cash provided by operating activities | $282,481 | $307,938 | | Net cash used in investing activities | $(21,972) | $(34,277) | | Net cash used in financing activities | $(269,538) | $(238,712) | | Net increase (decrease) in cash and equivalents | $(7,159) | $30,563 | | Cash and equivalents at end of period | $107,279 | $133,452 | * Net cash provided by operating activities **decreased by $25,457 thousand (8.26%)** for the nine months ended June 30, 2025, primarily due to an increase in net working capital[21](index=21&type=chunk)[191](index=191&type=chunk) * Cash used in financing activities **increased by $30,826 thousand (12.91%)** for the nine months ended June 30, 2025, driven by share repurchases and net repayments of long-term debt[21](index=21&type=chunk)[193](index=193&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes provide detailed explanations and additional information supporting the condensed consolidated financial statements [NOTE 1 – DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION](index=8&type=section&id=NOTE%201%20%E2%80%93%20DESCRIPTION%20OF%20BUSINESS%20AND%20BASIS%20OF%20PRESENTATION) This note describes Griffon Corporation's diversified business segments and the basis for preparing its financial statements * Griffon Corporation is a diversified management and holding company operating through two reportable segments: Home and Building Products (HBP) and Consumer and Professional Products (CPP)[22](index=22&type=chunk)[24](index=24&type=chunk)[27](index=27&type=chunk) * HBP is the largest manufacturer and marketer of garage doors and rolling steel doors in North America (Clopay, Ideal, Holmes, Cornell, Cookson brands)[27](index=27&type=chunk) * CPP is a global provider of branded consumer and professional tools, fans, home storage, and outdoor lifestyle products (AMES, Hunter, True Temper, ClosetMaid brands)[27](index=27&type=chunk) [NOTE 2 – FAIR VALUE MEASUREMENTS](index=9&type=section&id=NOTE%202%20%E2%80%93%20FAIR%20VALUE%20MEASUREMENTS) This note details the fair value measurements of financial instruments, including debt and derivative contracts, using a three-level hierarchy * Fair values of 2028 Senior Notes (**$971,120 thousand**) and Term Loan B facility (**$451,564 thousand**) at June 30, 2025, were based on Level 1 inputs (quoted market prices)[31](index=31&type=chunk) * Foreign currency exchange contracts for Australian Dollar (**$38,000 thousand**) and Chinese Yuan (**$19,000 thousand**) qualified for hedge accounting (Level 2 inputs), with deferred gains in AOCI[34](index=34&type=chunk)[35](index=35&type=chunk)[38](index=38&type=chunk) * Canadian Dollar contracts (**$8,565 thousand**) did not qualify for hedge accounting, resulting in fair value losses recorded to Other liabilities and Other income[39](index=39&type=chunk) [NOTE 3 – REVENUE](index=10&type=section&id=NOTE%203%20%E2%80%93%20REVENUE) This note outlines Griffon Corporation's revenue recognition policies, primarily recognizing revenue upon product shipment * Revenue is recognized at a point in time when control of promised products is transferred to the customer, generally upon shipment[41](index=41&type=chunk) [NOTE 4 – ACQUISITIONS](index=10&type=section&id=NOTE%204%20%E2%80%93%20ACQUISITIONS) This note details recent acquisitions, including AMES's purchase of Pope, expanding product portfolios and market presence * On July 1, 2024, AMES (CPP subsidiary) acquired Pope, an Australian residential watering products provider, for approximately **$14,500 thousand** in cash[44](index=44&type=chunk) * The Pope acquisition expanded AMES's product portfolio in the Australian market and generated over **$25,000 thousand** in revenue in its first full year[44](index=44&type=chunk)[146](index=146&type=chunk)[172](index=172&type=chunk) [NOTE 5 – INVENTORIES](index=11&type=section&id=NOTE%205%20%E2%80%93%20INVENTORIES) This note provides a breakdown of Griffon Corporation's inventory components and any related impairment charges Inventory Components (in thousands) | Component | June 30, 2025 | September 30, 2024 | | :-------------------- | :-------------- | :----------------- | | Raw materials and supplies | $91,659 | $92,366 | | Work in process | $13,581 | $13,923 | | Finished goods | $340,673 | $319,200 | | Total | $445,913 | $425,489 | * No inventory impairment charges were recorded during the nine months ended June 30, 2025, compared to **$22,979 thousand** in the prior year period due to restructuring[46](index=46&type=chunk) [NOTE 6 – PROPERTY, PLANT AND EQUIPMENT](index=11&type=section&id=NOTE%206%20%E2%80%93%20PROPERTY,%20PLANT%20AND%20EQUIPMENT) This note details Griffon Corporation's property, plant, and equipment, including depreciation policies and assets held for sale Property, Plant and Equipment, Net (in thousands) | Component | June 30, 2025 | September 30, 2024 | | :-------------------------- | :-------------- | :----------------- | | Land, building and building improvements | $156,690 | $153,076 | | Machinery and equipment | $496,265 | $472,030 | | Leasehold improvements | $37,813 | $37,833 | | Accumulated depreciation | $(398,383) | $(374,642) | | Total | $292,385 | $288,297 | * Depreciation and amortization expense for property, plant and equipment increased to **$9,974 thousand** (Q3 2025) from **$9,389 thousand** (Q3 2024) and to **$29,682 thousand** (9M 2025) from **$28,155 thousand** (9M 2024)[48](index=48&type=chunk) * Net book value of properties classified as held for sale (due to CPP's global sourcing strategy) was **$5,289 thousand** at June 30, 2025[49](index=49&type=chunk) [NOTE 7 – CREDIT LOSSES](index=12&type=section&id=NOTE%207%20%E2%80%93%20CREDIT%20LOSSES) This note outlines the allowance for doubtful accounts and the provision for expected credit losses Allowance for Doubtful Accounts Roll-Forward (in thousands) | Item | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------ | :------------------------------ | | Beginning Balance, October 1 | $10,986 | $11,264 | | Provision for expected credit losses | $731 | $874 | | Amounts written off | $(569) | $(1,155) | | Other, primarily foreign currency translation | $337 | $26 | | Ending Balance, June 30 | $11,485 | $11,009 | * The allowance for doubtful accounts increased to **$11,485 thousand** at June 30, 2025, from **$10,986 thousand** at October 1, 2024[54](index=54&type=chunk) [NOTE 8 – GOODWILL AND OTHER INTANGIBLES](index=13&type=section&id=NOTE%208%20%E2%80%93%20GOODWILL%20AND%20OTHER%20INTANGIBLES) This note details goodwill and intangible asset balances, including significant impairment charges recorded for the Hunter Fan reporting unit * A pre-tax, non-cash goodwill impairment charge of **$136,612 thousand** was recorded for the Hunter Fan reporting unit (CPP segment) for the quarter ended June 30, 2025[55](index=55&type=chunk) * An additional pre-tax, non-cash impairment charge of **$107,000 thousand** was recorded for Hunter Fan's indefinite-lived intangible asset (trademark)[57](index=57&type=chunk) Goodwill by Segment (in thousands) | Segment | At September 30, 2024 | Impairment Charges | At June 30, 2025 | | :-------------------------- | :-------------------- | :----------------- | :--------------- | | Home and Building Products | $191,253 | — | $191,253 | | Consumer and Professional Products | $138,140 | $(136,612) | $1,664 | | Total | $329,393 | $(136,612) | $192,917 | [NOTE 9 – INCOME TAXES](index=14&type=section&id=NOTE%209%20%E2%80%93%20INCOME%20TAXES) This note provides information on Griffon Corporation's income tax provisions, effective tax rates, and the impact of recent tax legislation * The Company recognized a tax benefit of **$29,061 thousand** on a loss before taxes of **$149,200 thousand** for the quarter ended June 30, 2025[59](index=59&type=chunk) * Excluding special items, the effective tax rates were **27.4%** for Q3 2025 and **27.9%** for Q3 2024[59](index=59&type=chunk) * The recently enacted One Big Beautiful Bill Act (OBBBA) is not expected to have a material impact on the Company's financial position or results of operations[61](index=61&type=chunk) [NOTE 10 – LONG-TERM DEBT](index=15&type=section&id=NOTE%2010%20%E2%80%93%20LONG-TERM%20DEBT) This note details Griffon Corporation's long-term debt obligations, including senior notes, term loans, and revolving credit facilities Long-Term Debt (in thousands) | Debt Type | June 30, 2025 Outstanding Balance | September 30, 2024 Outstanding Balance | | :-------------------- | :-------------------------------- | :----------------------------------- | | Senior notes due 2028 | $974,775 | $974,775 | | Term Loan B due 2029 | $451,000 | $457,000 | | Revolver due 2028 | $37,500 | $107,500 | | Total Gross Debt | $1,463,569 | $1,539,685 | * Interest expense for the nine months ended June 30, 2025, was **$72,954 thousand**, down from **$78,472 thousand** in the prior year period[65](index=65&type=chunk) * The Term Loan B facility was favorably repriced in June 2024, reducing the SOFR margin by **0.25%** and eliminating the SOFR floor[68](index=68&type=chunk)[202](index=202&type=chunk) [NOTE 11 – SHAREHOLDERS' EQUITY AND EQUITY COMPENSATION](index=18&type=section&id=NOTE%2011%20%E2%80%93%20SHAREHOLDERS'%20EQUITY%20AND%20EQUITY%20COMPENSATION) This note describes changes in shareholders' equity, dividend payments, share repurchases, and equity compensation plans * The Company paid quarterly cash dividends of **$0.18 per share** for the nine months ended June 30, 2025, an increase from **$0.15 per share** in fiscal 2024[18](index=18&type=chunk)[74](index=74&type=chunk)[195](index=195&type=chunk) * The ESOP was frozen as of September 30, 2024, with the final loan payment made in Q1 2025, leading to a decrease in ESOP expense[76](index=76&type=chunk)[182](index=182&type=chunk) * Share repurchases for the nine months ended June 30, 2025, totaled **1,611,454 shares** for **$113,125 thousand**, with **$319,568 thousand** remaining under the authorized program[83](index=83&type=chunk)[197](index=197&type=chunk) [NOTE 12 – EARNINGS PER SHARE (EPS)](index=20&type=section&id=NOTE%2012%20%E2%80%93%20EARNINGS%20PER%20SHARE%20(EPS)) This note presents the calculation of basic and diluted earnings per share, reflecting the company's profitability per share Earnings Per Share (EPS) (in thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Basic earnings (loss) per common share | $(2.65) | $0.87 | $0.16 | $3.08 | | Diluted earnings (loss) per common share | $(2.65) | $0.84 | $0.16 | $2.94 | | Weighted average shares outstanding - basic | 45,320 | 47,034 | 45,505 | 47,921 | | Weighted average shares outstanding - diluted | 45,320 | 48,851 | 46,911 | 50,085 | * Basic and diluted EPS for the three months ended June 30, 2025, were **$(2.65)**, reflecting the net loss for the period[18](index=18&type=chunk) [NOTE 13 – REPORTABLE SEGMENTS](index=21&type=section&id=NOTE%2013%20%E2%80%93%20REPORTABLE%20SEGMENTS) This note provides financial information by Griffon Corporation's reportable segments, Home and Building Products and Consumer and Professional Products Revenue by Reportable Segment (in thousands) | Segment | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Home and Building Products | $400,244 | $394,214 | $1,163,893 | $1,182,067 | | Consumer and Professional Products | $213,383 | $253,600 | $693,851 | $781,780 | | Total revenue | $613,627 | $647,814 | $1,857,744 | $1,963,847 | Segment Adjusted EBITDA (in thousands) | Segment | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Home and Building Products | $128,755 | $118,516 | $365,231 | $372,159 | | Consumer and Professional Products | $19,222 | $22,263 | $61,140 | $47,923 | | Total Segment Adjusted EBITDA | $147,977 | $140,779 | $426,371 | $420,082 | * HBP revenue increased **2%** for the quarter due to favorable price and mix, while CPP revenue decreased **16%** due to reduced consumer demand and tariffs[162](index=162&type=chunk)[167](index=167&type=chunk) [NOTE 14 – EMPLOYEE BENEFIT PLANS](index=24&type=section&id=NOTE%2014%20%E2%80%93%20EMPLOYEE%20BENEFIT%20PLANS) This note details information regarding Griffon Corporation's employee benefit plans, including pension plan terminations * The Hunter Fan Pension Plan was terminated effective April 30, 2024, and was fully funded at the time of termination[101](index=101&type=chunk) * Griffon expects to recognize a gain of approximately **$2,300 thousand**, net of excise taxes, on the termination of the Plan in the fourth quarter of 2025[101](index=101&type=chunk) [NOTE 15 – RECENT ACCOUNTING PRONOUNCEMENTS](index=25&type=section&id=NOTE%2015%20%E2%80%93%20RECENT%20ACCOUNTING%20PRONOUNCEMENTS) This note discusses the impact of recently issued accounting pronouncements on Griffon Corporation's financial reporting * ASU No 2023-07 (Segment Reporting) is effective for fiscal year 2025, expanding disclosures for reportable segments[103](index=103&type=chunk) * ASU No 2023-09 (Income Taxes) is effective for fiscal year 2026, requiring additional disaggregated income tax disclosures, but is not expected to have a material impact[104](index=104&type=chunk) * ASU 2024-03 (Income Statement—Expense Disaggregation) is effective for fiscal year 2027, requiring disclosures on specific costs, and is not expected to have a material impact[105](index=105&type=chunk) [NOTE 16 – DISCONTINUED OPERATIONS](index=25&type=section&id=NOTE%2016%20%E2%80%93%20DISCONTINUED%20OPERATIONS) This note provides information on assets and liabilities related to Griffon Corporation's discontinued operations Discontinued Operations Assets and Liabilities (in thousands) | Item | June 30, 2025 | September 30, 2024 | | :-------------------------------- | :-------------- | :----------------- | | Total assets of discontinued operations | $6,015 | $4,065 | | Total liabilities of discontinued operations | $9,035 | $7,768 | * Liabilities for discontinued operations primarily relate to insurance claims, income taxes, product liability, warranty, and environmental reserves[106](index=106&type=chunk) * No reported revenues or costs for discontinued operations in the nine months ended June 30, 2025 and 2024[106](index=106&type=chunk) [NOTE 17 – RESTRUCTURING CHARGES](index=26&type=section&id=NOTE%2017%20%E2%80%93%20RESTRUCTURING%20CHARGES) This note details restructuring charges incurred by Griffon Corporation, primarily related to the CPP global sourcing expansion initiative * CPP successfully completed its global sourcing expansion initiative by September 30, 2024, ahead of schedule[107](index=107&type=chunk) * The initiative resulted in a facility footprint reduction of approximately **1.2 million square feet** and a headcount reduction of approximately **600**[108](index=108&type=chunk) * Total charges for the initiative were **$133,777 thousand**, including **$51,082 thousand** in cash charges and **$82,695 thousand** in non-cash charges[110](index=110&type=chunk) [NOTE 18 – OTHER INCOME (EXPENSE)](index=27&type=section&id=NOTE%2018%20%E2%80%93%20OTHER%20INCOME%20(EXPENSE)) This note provides a breakdown of other income and expenses, including currency exchange, benefit plan income, and royalty income Other Income (Expense) (in thousands) | Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Net currency exchange transaction losses (gains) | $163 (losses) | $120 (losses) | $54 (gains) | $72 (gains) | | Net periodic benefit plan income (expense) | $302 (income) | $(34) (expense) | $902 (income) | $(103) (expense) | | Net investment income (loss) | $(424) (loss) | $10 (income) | $(370) (loss) | $95 (income) | | Royalty income | $501 | $549 | $1,647 | $1,649 | | Total Other, net | $247 | $350 | $2,591 | $1,608 | [NOTE 19 – WARRANTY LIABILITY](index=28&type=section&id=NOTE%2019%20%E2%80%93%20WARRANTY%20LIABILITY) This note details Griffon Corporation's warranty liabilities, including changes in estimates and actual costs incurred * The short-term warranty liability decreased to **$10,706 thousand** at June 30, 2025, from **$13,050 thousand** at September 30, 2024[119](index=119&type=chunk) * The long-term warranty liability remained stable at **$1,239 thousand** at both June 30, 2025, and September 30, 2024[119](index=119&type=chunk) Warranty Liability Changes (in thousands) | Item | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------ | :------------------------------ | | Balance, beginning of period | $13,050 | $20,781 | | Warranties issued and changes in estimated pre-existing warranties | $14,328 | $17,760 | | Actual warranty costs incurred | $(16,672) | $(22,888) | | Balance, end of period | $10,706 | $15,653 | [NOTE 20 – OTHER COMPREHENSIVE INCOME (LOSS)](index=29&type=section&id=NOTE%2020%20%E2%80%93%20OTHER%20COMPREHENSIVE%20INCOME%20(LOSS)) This note presents components of other comprehensive income or loss, such as foreign currency translation adjustments and cash flow hedges Total Other Comprehensive Income (Loss), Net of Taxes (in thousands) | Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Foreign currency translation adjustments | $12,244 | $(827) | $(4,804) | $2,212 | | Pension and other defined benefit plans | $897 | $532 | $1,493 | $1,595 | | Cash flow hedges | $(695) | $(927) | $475 | $550 | | Total | $12,446 | $(1,222) | $(2,836) | $4,357 | * For Q3 2025, total other comprehensive income was **$12,446 thousand**, primarily driven by foreign currency translation gains due to the strengthening of the Euro, British Pound, Australian Dollar, and Canadian Dollar[121](index=121&type=chunk)[183](index=183&type=chunk) [NOTE 21 — LEASES](index=30&type=section&id=NOTE%2021%20%E2%80%94%20LEASES) This note provides details on Griffon Corporation's operating leases, including right-of-use assets, lease liabilities, and lease costs * Operating right-of-use assets were **$162,819 thousand** and total operating lease liabilities were **$174,210 thousand** at June 30, 2025[128](index=128&type=chunk) * The weighted-average remaining lease term for operating leases is **6.7 years**, with a weighted-average discount rate of **6.37%** at June 30, 2025[131](index=131&type=chunk) Operating Lease Costs (in thousands) | Component | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Fixed | $11,878 | $11,555 | $35,463 | $34,992 | | Variable | $2,586 | $2,472 | $7,922 | $7,382 | | Short-term | $1,032 | $808 | $3,467 | $3,470 | | Total | $15,496 | $14,835 | $46,852 | $45,844 | [NOTE 22 — COMMITMENTS AND CONTINGENCIES](index=32&type=section&id=NOTE%2022%20%E2%80%94%20COMMITMENTS%20AND%20CONTINGENCIES) This note outlines Griffon Corporation's commitments and contingencies, including environmental liabilities and legal matters * The Peekskill Site is undergoing a Remedial Investigation/Feasibility Study (RI/FS) due to chlorinated solvents and metals contamination, with costs paid by an insurer[132](index=132&type=chunk)[133](index=133&type=chunk)[134](index=134&type=chunk) * The Memphis, TN site has potential PCB contamination, and the TDEC recommended EPA inclusion on the National Priorities List, with liability deemed probable[135](index=135&type=chunk)[136](index=136&type=chunk)[137](index=137&type=chunk) * Management believes the resolution of these legal and environmental matters will not have a material adverse effect on Griffon's consolidated financial position, results of operations, or cash flows[140](index=140&type=chunk) [Item 2 – Management's Discussion and Analysis of Financial Condition and Results of Operations](index=34&type=section&id=Item%202%20%E2%80%93%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's analysis of Griffon's financial performance, condition, and outlook, covering business strategy, segment results, liquidity, and critical accounting policies [BUSINESS](index=34&type=section&id=BUSINESS) This section describes Griffon Corporation's diversified business model, strategic focus, and operational segments * Griffon Corporation is a diversified management and holding company focused on maintaining leading market positions through innovative, branded products and strategic acquisitions[141](index=141&type=chunk)[142](index=142&type=chunk)[144](index=144&type=chunk) * The company operates through two segments: Home and Building Products (HBP) and Consumer and Professional Products (CPP)[149](index=149&type=chunk)[150](index=150&type=chunk) * Recent strategic transformations include divesting non-core businesses (specialty plastics, defense electronics) and expanding core segments through acquisitions like CornellCookson, Hunter Fan, ClosetMaid, and Pope[145](index=145&type=chunk)[146](index=146&type=chunk) [OVERVIEW](index=36&type=section&id=OVERVIEW) This section provides a high-level financial overview, highlighting key consolidated metrics and the impact of impairment charges Consolidated Financial Overview (in thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Revenue | $613,627 | $647,814 | $1,857,744 | $1,963,847 | | Net income (loss) | $(120,139) | $41,086 | $7,474 | $147,406 | | Basic EPS | $(2.65) | $0.87 | $0.16 | $3.08 | | Adjusted net income | $69,247 | $60,526 | $192,719 | $183,303 | | Adjusted EPS | $1.50 | $1.24 | $4.11 | $3.66 | * The net loss for Q3 2025 was primarily driven by **$243,612 thousand** in goodwill and intangible asset impairments[151](index=151&type=chunk)[155](index=155&type=chunk) * Adjusted net income for Q3 2025 increased to **$69,247 thousand** from **$60,526 thousand** in the prior year quarter, and adjusted EPS increased to **$1.50** from **$1.24**[152](index=152&type=chunk)[157](index=157&type=chunk) [RESULTS OF OPERATIONS](index=38&type=section&id=RESULTS%20OF%20OPERATIONS) This section analyzes the financial performance of Griffon Corporation's Home and Building Products and Consumer and Professional Products segments * Home and Building Products (HBP) revenue increased **2%** for the quarter ended June 30, 2025, due to favorable price and mix, while adjusted EBITDA increased **9%**[162](index=162&type=chunk)[163](index=163&type=chunk) * Consumer and Professional Products (CPP) revenue decreased **16%** for the quarter, primarily due to reduced consumer demand and disrupted customer ordering patterns from increased tariffs[167](index=167&type=chunk) * CPP adjusted EBITDA for the nine months ended June 30, 2025, increased **27.6%** to **$61,140 thousand**, benefiting from the U.S. global sourcing expansion initiative and increased volume in Australia[170](index=170&type=chunk) * Goodwill and intangible asset impairments of **$243,612 thousand** were recorded for the Hunter Fan reporting unit in Q3 2025[174](index=174&type=chunk) [LIQUIDITY AND CAPITAL RESOURCES](index=42&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) This section discusses Griffon Corporation's cash position, debt levels, and capital management strategies * Griffon had **$107,279 thousand** in cash and equivalents and **$449,510 thousand** available under its **$500,000 thousand** revolving credit facility at June 30, 2025[190](index=190&type=chunk)[199](index=199&type=chunk)[207](index=207&type=chunk) * Net cash provided by operating activities for the nine months ended June 30, 2025, was **$282,481 thousand**, a decrease from **$307,938 thousand** in the prior year[191](index=191&type=chunk) * Total gross debt decreased to **$1,463,569 thousand** at June 30, 2025, from **$1,539,685 thousand** at September 30, 2024, with a Net Debt to EBITDA leverage ratio of **2.5x**[199](index=199&type=chunk)[213](index=213&type=chunk) * The Board approved an additional **$400,000 thousand** increase to its share repurchase authorization in November 2024, with **$319,568 thousand** remaining available[197](index=197&type=chunk) [CRITICAL ACCOUNTING POLICIES](index=46&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES) This section outlines the significant estimates and judgments used in preparing Griffon Corporation's financial statements * The preparation of financial statements requires significant estimates and judgments, including allowances for credit losses, inventory valuation, goodwill and intangible asset valuations, and various reserves[221](index=221&type=chunk)[26](index=26&type=chunk)[29](index=29&type=chunk) * There have been no changes in Griffon's critical accounting policies from September 30, 2024[221](index=221&type=chunk) [RECENT ACCOUNTING PRONOUNCEMENTS](index=46&type=section&id=RECENT%20ACCOUNTING%20PRONOUNCEMENTS) This section references the discussion of new accounting standards and their potential impact on Griffon Corporation * This section refers to the discussion of recent accounting pronouncements in the Notes to Condensed Consolidated Financial Statements (Note 15)[223](index=223&type=chunk) [FORWARD-LOOKING STATEMENTS](index=46&type=section&id=FORWARD-LOOKING%20STATEMENTS) This section provides cautionary statements regarding forward-looking information, highlighting inherent risks and uncertainties * The report contains forward-looking statements regarding future financial performance, operations, and economic conditions, which are subject to inherent risks and uncertainties[224](index=224&type=chunk)[225](index=225&type=chunk) * Key risks include economic conditions, ability to achieve savings, competition, raw material costs, customer demand, political events, credit ratings, foreign exchange fluctuations, and regulatory changes[225](index=225&type=chunk) * Readers are cautioned not to place undue reliance on these statements, and Griffon undertakes no obligation to update them[225](index=225&type=chunk) [Item 3 - Quantitative and Qualitative Disclosures about Market Risk](index=47&type=section&id=Item%203%20-%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) Griffon manages market risks related to changes in interest rates, foreign currency rates, and commodity prices, concluding that a 100 basis point change or 10% currency fluctuation would not materially impact financials * Griffon's exposure to market risk primarily relates to variable interest rate debt and foreign currency exchange rates[226](index=226&type=chunk)[227](index=227&type=chunk)[229](index=229&type=chunk) * A **100 basis point change** in SONIA, SOFR, BBSY, or CORRA (variable interest rates) would not have a material impact on Griffon's results of operations or liquidity[228](index=228&type=chunk) * A change of **10% or less** in the value of all applicable foreign currencies would not have a material effect on Griffon's financial position and cash flows[229](index=229&type=chunk) [Item 4 - Controls & Procedures](index=48&type=section&id=Item%204%20-%20Controls%20%26%20Procedures) Griffon's disclosure controls and procedures were evaluated and deemed effective at a reasonable assurance level as of June 30, 2025, with no material changes in internal control over financial reporting * Griffon's disclosure controls and procedures were evaluated and deemed effective at a reasonable assurance level as of June 30, 2025[230](index=230&type=chunk) * No material changes in internal control over financial reporting occurred during the three months ended June 30, 2025[231](index=231&type=chunk) * The company acknowledges that a control system, no matter how well designed, cannot provide absolute assurance[232](index=232&type=chunk) PART II – OTHER INFORMATION This section provides additional information not covered in the financial statements, including legal proceedings, risk factors, and equity matters [Item 1 – Legal Proceedings](index=48&type=section&id=Item%201%20%E2%80%93%20Legal%20Proceedings) The company reported no legal proceedings under this item * No legal proceedings were reported[234](index=234&type=chunk) [Item 1A – Risk Factors](index=48&type=section&id=Item%201A%20%E2%80%93%20Risk%20Factors) This section directs readers to comprehensive risk factors in the Annual Report and highlights an updated risk concerning international sourcing from China * Readers are directed to Item 1A in the Annual Report on Form 10-K for September 30, 2024, for a comprehensive list of risk factors[235](index=235&type=chunk) * An updated risk factor, 'CPP is subject to risks from sourcing from international locations, especially China,' is highlighted from the Quarterly Report on Form 10-Q for March 31, 2025[235](index=235&type=chunk) * The company acknowledges that additional risks not currently known or deemed immaterial may also adversely affect its business[235](index=235&type=chunk) [Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds](index=49&type=section&id=Item%202%20%E2%80%93%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Griffon repurchased 581,082 shares of common stock during the quarter, with $319,568 thousand remaining under the repurchase program * The company repurchased **581,082 shares** of common stock during the quarter ended June 30, 2025[237](index=237&type=chunk) * The average price paid per share for repurchases during the quarter was **$69.28**[237](index=237&type=chunk) * As of June 30, 2025, **$319,568 thousand** remained available for common stock purchases under the Board-authorized repurchase program[237](index=237&type=chunk) [Item 3 – Defaults Upon Senior Securities](index=49&type=section&id=Item%203%20%E2%80%93%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities * No defaults upon senior securities were reported[238](index=238&type=chunk) [Item 4 – Mine Safety Disclosures](index=49&type=section&id=Item%204%20%E2%80%93%20Mine%20Safety%20Disclosures) No mine safety disclosures were reported * No mine safety disclosures were reported[238](index=238&type=chunk) [Item 5 – Other Information](index=50&type=section&id=Item%205%20%E2%80%93%20Other%20Information) No Rule 10b5-1 trading plans were adopted or terminated, and a retiree medical arrangement was approved for four senior executives * No Rule 10b5-1 trading plans were adopted or terminated by directors or executive officers during the quarter ended June 30, 2025[240](index=240&type=chunk) * A retiree medical arrangement (RMA) was approved for four senior executives, providing post-retirement medical coverage and up to **$35,000 annually** for qualified medical expenses (indexed **3% annually**)[241](index=241&type=chunk)[242](index=242&type=chunk) * Vesting for the RMA is contingent on age, years of service, and continued employment, with executives meeting requirements in August 2026[241](index=241&type=chunk) [Item 6 – Exhibits](index=51&type=section&id=Item%206%20%E2%80%93%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including various certifications and XBRL-related documents * The exhibits include certifications pursuant to Rule 13a-14(a) (Exhibits 31.1, 31.2) and 18 U.S.C Section 1350 (Exhibit 32)[244](index=244&type=chunk) * XBRL Instance Document and Taxonomy Extension Documents (Schema, Calculation, Definitions, Labels, Presentations) are also filed as exhibits[244](index=244&type=chunk) [Signatures](index=52&type=section&id=Signatures) The report is signed on behalf of Griffon Corporation by its Executive Vice President and Chief Financial Officer and Vice President and Chief Accounting Officer * The report was signed by Brian G Harris, Executive Vice President and Chief Financial Officer, and W Christopher Durborow, Vice President and Chief Accounting Officer[248](index=248&type=chunk) * The signing date for the report was August 6, 2025[248](index=248&type=chunk)

Financial Performance - Griffon reported quarterly earnings of $1.5 per share, matching the Zacks Consensus Estimate, and an increase from $1.24 per share a year ago [1] - The company posted revenues of $613.63 million for the quarter ended June 2025, missing the Zacks Consensus Estimate by 5.61%, and down from $647.81 million year-over-year [2] - Over the last four quarters, Griffon has surpassed consensus EPS estimates three times but has topped consensus revenue estimates only once [2] Stock Performance and Outlook - Griffon shares have increased approximately 15.5% since the beginning of the year, outperforming the S&P 500's gain of 7.1% [3] - The company's future stock performance will largely depend on management's commentary during the earnings call and the earnings outlook [4][6] - The current consensus EPS estimate for the upcoming quarter is $1.66 on revenues of $662.28 million, and for the current fiscal year, it is $5.70 on revenues of $2.56 billion [7] Industry Context - The Diversified Operations industry, to which Griffon belongs, is currently ranked in the top 20% of over 250 Zacks industries, indicating a favorable outlook [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact Griffon's stock performance [5]

Financial Data and Key Metrics Changes - Third quarter revenue decreased by 5% to $614 million, while adjusted EBITDA before unallocated amounts increased by 5% to $148 million, resulting in an EBITDA margin of 24.1%, an increase of 240 basis points [10][12] - Gross profit on a GAAP basis for the quarter was $265 million, compared to $249 million in the prior year quarter, with normalized gross margin increasing by 230 basis points to 43.2% [10][11] - The company recorded a pretax charge of $244 million for impairment on goodwill and investment lives related to the acquisition of Hunter Fan due to weak consumer demand and increased tariffs [11] Business Line Data and Key Metrics Changes - Home and Building Products (HBP) revenue increased by 2% to $400 million, with an adjusted EBITDA of $129 million, up 9% year-over-year, driven by favorable price and mix [13] - Consumer and Professional Products (CPP) revenue decreased by 16% to $213 million, primarily due to a 19% decrease in volume from weak consumer demand, although EBITDA decreased by 14% to $19 million [13][14] Market Data and Key Metrics Changes - The company reaffirmed full-year EBITDA guidance of $575 million to $600 million while reducing revenue expectations by $100 million to $2.5 billion due to ongoing consumer weakness in the CPP segment [6][15] - The company noted a 1% unfavorable impact from foreign currency [14] Company Strategy and Development Direction - The company is committed to a capital allocation strategy that includes investing in businesses, opportunistically repurchasing shares, and reducing debt, having returned $145 million to shareholders through dividends and stock buybacks [18] - The company aims for long-term margin targets of 15% in the CPP segment and over 30% in the HBP segment, with current expectations for HBP margins exceeding 31% [16][39] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery of the CPP segment, indicating that consumer confidence may return once tariffs stabilize [33][35] - The company expects to generate over $1 billion in free cash flow during the fiscal year and the next two years, despite current challenges [18] Other Important Information - The company repurchased $40 million of stock during the third quarter, reducing outstanding shares by 18.4% since April 2023 [6][7] - A quarterly dividend of $0.18 per share was authorized, marking the 56th consecutive quarterly dividend [8] Q&A Session Summary Question: Can you discuss the pricing strategy in the CPP segment and retailer reactions to tariffs? - Management indicated that they have implemented price increases in certain instances but could not provide detailed insights due to sensitive customer discussions [23] Question: What are the sell-through trends at retail? - Management noted reduced point-of-sale activity, particularly in the Northeast, influenced by weak consumer demand and concerns about tariffs and inflation [24] Question: How is pricing realization tracking in the HBP segment? - Pricing realization is generally tracking in line with expectations, and price increases are being accepted by the market [29] Question: What is the outlook for demand recovery in the CPP segment? - Management stated it is difficult to project when consumer demand will rebound, but they expect recovery once tariffs stabilize [33] Question: What are the long-term margin targets for the CPP segment? - The long-term target for CPP margins is 15%, but achieving this will require a return of consumer demand [44] Question: How is the global sourcing initiative progressing? - Management confirmed that all actions related to global sourcing are complete, and they have flexibility in sourcing locations [36]

Financial Data and Key Metrics Changes - Third quarter revenue decreased by 5% to $614 million, while adjusted EBITDA before unallocated amounts increased by 5% to $148 million, resulting in an EBITDA margin of 24.1%, an increase of 240 basis points [8][11] - GAAP net loss for the third quarter was $120 million or $2.65 per share, compared to net income of $41 million or $0.84 per share in the prior year quarter [11] - Free cash flow during the quarter was $115 million, slightly down from $120 million in the prior year quarter [11] Business Line Data and Key Metrics Changes - Home and Building Products (HBP) revenue increased by 2% to $400 million, with an adjusted EBITDA of $129 million, up 9% year-over-year [12] - Consumer and Professional Products (CPP) revenue decreased by 16% to $213 million, with adjusted EBITDA down 14% to $19 million, primarily due to decreased volume and weak consumer demand [12][13] Market Data and Key Metrics Changes - The overall consumer demand remains weak, particularly affecting the CPP segment, with ongoing tariff impacts disrupting historical customer ordering patterns [5][14] - The Australian market showed solid performance, contributing positively to the overall results [6] Company Strategy and Development Direction - The company is committed to a capital allocation strategy that includes investing in businesses, opportunistically repurchasing shares, and reducing debt [16] - The company reaffirmed its full-year EBITDA guidance of $575 million to $600 million while reducing revenue expectations by $100 million to $2.5 billion due to ongoing consumer weakness in the CPP segment [6][14] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the long-term recovery of the CPP segment, contingent on stabilization of tariffs and consumer confidence returning [27][28] - The company expects to generate over $1 billion in free cash flow during the fiscal year and the next two years [16] Other Important Information - The company repurchased $40 million of its stock during the third quarter, with a total of $538 million repurchased since April 2023, reducing outstanding shares by 18.4% [6][7] - A quarterly dividend of $0.18 per share was authorized, marking the 56th consecutive quarterly dividend [7] Q&A Session Summary Question: Can you discuss the pricing strategy for CPP and the impact of tariffs? - Management indicated that price increases have been implemented in certain instances, but detailed information is limited due to sensitive customer discussions [19] Question: What are the sell-through trends at retail? - Retail continues to see reduced point-of-sale activity, influenced by weak consumer demand and weather conditions [20] Question: How is pricing realization tracking in HBP? - Pricing realization is generally tracking in line with expectations, with positive price mix contributing to performance [22] Question: What is the outlook for CPP demand recovery? - Management noted that it is difficult to project the timing of a demand rebound, but stabilization of tariffs may help restore consumer confidence [27][28] Question: What are the long-term margin targets for CPP? - The long-term target for CPP margins is 15%, but achieving this will require a return of consumer demand [30][35] Question: Are there any new cost optimization initiatives underway? - Ongoing investments in automation and efficiency projects are in place, particularly in the home building product segment [43]

[Third Quarter 2025 Financial Highlights](index=1&type=section&id=Third%20Quarter%202025%20Financial%20Highlights) [Consolidated Performance](index=1&type=section&id=Consolidated%20Performance) Griffon's Q3 2025 revenue decreased 5% to $613.6 million, reporting a $120.1 million net loss due to impairment, yet adjusted net income grew 14.4% and adjusted EBITDA increased 7.3% Q3 2025 Consolidated Financial Results | Metric | Q3 2025 (USD) | Q3 2024 (USD) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | $613.6 million | $647.8 million | -5% | | Net Income (Loss) | ($120.1 million) | $41.1 million | N/A | | EPS (Loss) | ($2.65) | $0.84 | N/A | | Adjusted Net Income | $69.2 million | $60.5 million | +14.4% | | Adjusted EPS | $1.50 | $1.24 | +21.0% | | Adjusted EBITDA | $134.7 million | $125.5 million | +7.3% | - The net loss was driven by a pre-tax impairment charge of **$243.6 million** (**$217.2 million** after tax) related to the Hunter Fan acquisition goodwill and intangible assets within the Consumer and Professional Products (CPP) segment[3](index=3&type=chunk)[24](index=24&type=chunk) [Management Commentary](index=1&type=section&id=Management%20Commentary) Management noted strong HBP performance and improved CPP margins, reaffirming full-year EBITDA guidance, supported by free cash flow for capital allocation - The Home and Building Products (HBP) segment's performance exceeded expectations, driven by a **31.4% EBITDA margin** in the first nine months due to favorable price and mix[6](index=6&type=chunk) - The Consumer and Professional Products (CPP) segment's EBITDA margin improved by **270 basis points** year-over-year for the first nine months, despite weak demand, thanks to a shift to an asset-light model in the U.S[6](index=6&type=chunk) - In the first nine months of fiscal 2025, the company utilized its **$261 million** of free cash flow for significant capital return and deleveraging activities[6](index=6&type=chunk) Capital Allocation (First Nine Months of FY2025) | Activity | Amount (USD) | | :--- | :--- | | Share Repurchases | $113 million | | Debt Reduction | $76 million | | Dividends Paid | $32 million | [Segment Operating Results](index=2&type=section&id=Segment%20Operating%20Results) [Home and Building Products (HBP)](index=2&type=section&id=Home%20and%20Building%20Products%20(HBP)) HBP segment revenue increased 2% to $400.2 million in Q3, driven by favorable price and mix, with adjusted EBITDA growing 9% to $128.8 million HBP Q3 Performance | Metric | Q3 2025 (USD) | Q3 2024 (USD) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | $400.2 million | $394.2 million | +2% | | Adjusted EBITDA | $128.8 million | $118.5 million | +9% | - Revenue growth was attributed to a **3% positive impact** from price and mix, partially offset by a **1% decline** in volume[7](index=7&type=chunk) [Consumer and Professional Products (CPP)](index=2&type=section&id=Consumer%20and%20Professional%20Products%20(CPP)) CPP segment revenue declined 16% to $213.4 million in Q3 due to weak demand and tariffs, resulting in a 14% adjusted EBITDA decrease to $19.2 million, partially mitigated by sourcing CPP Q3 Performance | Metric | Q3 2025 (USD) | Q3 2024 (USD) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | $213.4 million | $253.6 million | -16% | | Adjusted EBITDA | $19.2 million | $22.3 million | -14% | - The revenue decrease was primarily driven by a **19% volume decline** resulting from reduced consumer demand and disrupted customer ordering patterns in the U.S. due to increased tariffs[8](index=8&type=chunk) - The negative impact of lower revenue on Adjusted EBITDA was partially offset by benefits from the U.S. global sourcing expansion, improved margins, and reduced administrative expenses[9](index=9&type=chunk) [Financial Position and Capital Allocation](index=2&type=section&id=Financial%20Position%20and%20Capital%20Allocation) [Balance Sheet and Liquidity](index=2&type=section&id=Balance%20Sheet%20and%20Liquidity) As of June 30, 2025, Griffon maintained strong liquidity with $107.3 million cash and $449.5 million revolver availability, reducing net debt to $1.34 billion and improving its leverage ratio to 2.5x Balance Sheet Summary (as of June 30, 2025) | Metric | Value (USD) | | :--- | :--- | | Cash and Equivalents | $107.3 million | | Total Debt Outstanding | $1.45 billion | | Net Debt | $1.34 billion | | Revolver Availability | $449.5 million | - The net debt to EBITDA leverage ratio improved to **2.5x**, compared to **2.6x** at September 30, 2024, and **2.7x** at June 30, 2024[11](index=11&type=chunk)[26](index=26&type=chunk) [Cash Flow](index=2&type=section&id=Cash%20Flow) The company generated strong cash flow, with free cash flow reaching $261 million for the first nine months of fiscal 2025, and Q3 capital expenditures totaling $8.4 million - Free cash flow for the first nine months of fiscal 2025 was **$261 million**, reflecting strong operating results[12](index=12&type=chunk)[26](index=26&type=chunk) - Net capital expenditures for the third quarter ended June 30, 2025, were **$8.4 million**[12](index=12&type=chunk) [Share Repurchases](index=2&type=section&id=Share%20Repurchases) Griffon repurchased 0.6 million shares for $40.3 million in Q3, totaling 18.4% of outstanding shares since April 2023, with $319.6 million remaining in the authorization - In Q3 2025, the company repurchased **0.6 million shares** for **$40.3 million**, at an average price of **$69.28 per share**[13](index=13&type=chunk) - From April 2023 through June 30, 2025, Griffon has purchased **10.5 million shares** (**18.4%** of outstanding shares) for a total of **$538.4 million**[13](index=13&type=chunk) - As of June 30, 2025, **$319.6 million** remained available under the share repurchase authorization[13](index=13&type=chunk) [Updated 2025 Outlook](index=3&type=section&id=Updated%202025%20Outlook) [Full-Year Guidance](index=3&type=section&id=Full-Year%20Guidance) Griffon updated its FY2025 outlook, lowering revenue guidance to $2.5 billion due to weak CPP demand, but maintained adjusted EBITDA guidance of $575 million to $600 million, supported by improved HBP margins Fiscal 2025 Guidance Update | Metric | New Guidance | Prior Guidance | | :--- | :--- | :--- | | Revenue | $2.5 billion | $2.6 billion | | Adjusted EBITDA | $575 million - $600 million | Maintained | | HBP EBITDA Margin | > 31% | > 30% | | CPP EBITDA Margin | ~ 8% | > 9% | | Interest Expense | $95 million | $102 million | | Capital Expenditures | $60 million | $65 million | - The **$100 million** revenue guidance reduction is attributed to the CPP segment, reflecting ongoing weak consumer demand and the impact of increased tariffs[14](index=14&type=chunk) - The company continues to expect free cash flow to exceed net income for the full fiscal year[16](index=16&type=chunk) [Appendix: Financial Statements and Reconciliations](index=6&type=section&id=Appendix%3A%20Financial%20Statements%20and%20Reconciliations) [Non-GAAP Reconciliations](index=6&type=section&id=Non-GAAP%20Reconciliations) This section provides detailed reconciliations of non-GAAP financial measures, such as Adjusted EBITDA and free cash flow, to their most directly comparable GAAP counterparts - Reconciliation of segment adjusted EBITDA and adjusted EBITDA to income (loss) before taxes is provided, detailing adjustments for interest, depreciation, amortization, impairments, and other items[23](index=23&type=chunk)[24](index=24&type=chunk) - A reconciliation of net cash provided by operating activities to Free Cash Flow (FCF) is included[25](index=25&type=chunk)[26](index=26&type=chunk) - A reconciliation of net income (loss) to adjusted net income and the corresponding earnings per share figures is presented, excluding items like restructuring charges and goodwill impairments[35](index=35&type=chunk) [Condensed Consolidated Financial Statements](index=9&type=section&id=Condensed%20Consolidated%20Financial%20Statements) This appendix presents the unaudited condensed consolidated financial statements, including Statements of Operations, Balance Sheets, and Statements of Cash Flows, for periods ended June 30, 2025, and 2024 - The Condensed Consolidated Statements of Operations details revenue, costs, operating expenses, and net income (loss) for the three and nine months ended June 30, 2025 and 2024[31](index=31&type=chunk) - The Condensed Consolidated Balance Sheets present the company's assets, liabilities, and shareholders' equity as of June 30, 2025, compared to September 30, 2024[32](index=32&type=chunk)[33](index=33&type=chunk) - The Condensed Consolidated Statements of Cash Flows outline the cash inflows and outflows from operating, investing, and financing activities for the nine months ended June 30, 2025 and 2024[34](index=34&type=chunk)

Company Performance - Griffon (GFF) ended the recent trading session at $82.65, demonstrating a +1.37% change from the preceding day's closing price, outperforming the S&P 500 which registered a daily gain of 0.4% [1] - Shares of Griffon had gained 13.36% over the past month, significantly outpacing the Conglomerates sector's gain of 0.51% and the S&P 500's gain of 4.61% [1] Earnings Projections - The company's earnings per share (EPS) are projected to be $1.5, reflecting a 20.97% increase from the same quarter last year, with quarterly revenue expected to be $660.03 million, up 1.89% from the year-ago period [2] - For the full year, the Zacks Consensus Estimates project earnings of $5.7 per share and revenue of $2.57 billion, representing changes of +11.33% and -1.88%, respectively, from the prior year [3] Analyst Estimates and Valuation - Recent changes to analyst estimates for Griffon are important as they signify the changing landscape of near-term business trends, with positive estimate revisions indicating optimism about the business outlook [3] - Griffon currently features a Zacks Rank of 4 (Sell), with a Forward P/E ratio of 14.3, which is a discount compared to the average Forward P/E of 18.99 of its industry [5] - The PEG ratio for Griffon is currently 0.89, compared to the average PEG ratio of 2.01 for the Diversified Operations industry [6] Industry Context - The Diversified Operations industry, part of the Conglomerates sector, currently has a Zacks Industry Rank of 74, placing it in the top 30% of all 250+ industries [6] - The strength of individual industry groups is measured by the Zacks Industry Rank, with top 50% rated industries outperforming the bottom half by a factor of 2 to 1 [7]

Core Insights - Griffon Corp (NYSE: GFF) is positioned at a cyclical and strategic inflection point in its core business segments, which include essential home products such as garage doors and garden tools [1] Company Overview - Griffon Corp is a US manufacturer specializing in everyday home products, indicating a focus on consumer needs and market demand [1] Investment Potential - The company presents a potential investment opportunity due to its current strategic positioning and the quality of its product offerings [1]