Griffon(US:GFF)2025-05-08 20:37Part I - Financial Information Financial Statements This section presents the unaudited condensed consolidated financial statements for the quarterly period ended March 31, 2025, including Balance Sheets, Statements of Operations, Shareholders' Equity, and Cash Flows, with explanatory notes Condensed Consolidated Balance Sheets Balance Sheet Summary (in thousands) | Balance Sheet Items | March 31, 2025 | September 30, 2024 | | :--- | :--- | :--- | | Total Current Assets | $920,495 | $929,476 | | Total Assets | $2,343,941 | $2,370,954 | | Total Current Liabilities | $330,833 | $348,990 | | Total Liabilities | $2,129,199 | $2,146,066 | | Total Shareholders' Equity | $214,742 | $224,888 | Condensed Consolidated Statements of Operations Statement of Operations Summary (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | 6 Months 2025 | 6 Months 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 Statements of Cash Flows Cash Flow Summary for Six Months Ended March 31 (in thousands) | Cash Flow Activity | 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 | Notes to Condensed Consolidated Financial Statements This section provides detailed disclosures on accounting policies and specific financial items, covering business segments, acquisitions, debt, equity, segment performance, restructuring, and legal contingencies - The company operates through two reportable segments: Home and Building Products (HBP) and Consumer and Professional Products (CPP)2691 - On July 1, 2024, the company's subsidiary AMES acquired Pope, an Australian residential watering products provider, for approximately AUD 21,800 thousand ($14,500 thousand) in cash, assigned to the CPP segment43 - The company's Employee Stock Ownership Plan (ESOP) was frozen as of September 30, 2024, with no new participants or contributions, and the final loan payment made in Q1 20257478 - The CPP segment's global sourcing expansion, completed by September 30, 2024, resulted in the closure of four manufacturing sites and four wood mills, reducing its facility footprint by approximately 1.2 million square feet106107 - The company is involved in environmental investigations at two sites: Peekskill, NY, where an RI/FS is underway, and Memphis, TN, recommended for potential inclusion on the National Priorities List under CERCLA129132 Management's Discussion and Analysis (MD&A) Management discusses the company's Q2 and H1 FY2025 financial performance, highlighting revenue decline, improved CPP profitability from global sourcing, and details on liquidity, capital resources, and debt structure Overall Financial Performance Q2 2025 vs Q2 2024 Performance (in millions, except per share data) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Revenue | $611.7M | $672.9M | -9.0% | | Net Income | $56.8M | $64.1M | -11.4% | | Diluted EPS | $1.21 | $1.28 | -5.5% | Six Months 2025 vs Six Months 2024 Performance (in millions, except per share data) | Metric | 6M 2025 | 6M 2024 | Change | | :--- | :--- | :--- | :--- | | Revenue | $1,244.1M | $1,316.0M | -5.5% | | Net Income | $127.6M | $106.3M | +20.0% | | Diluted EPS | $2.70 | $2.10 | +28.6% | - Adjusted net income for Q2 2025 was $57.6 million ($1.23 per share), compared to $67.5 million ($1.35 per share) in the prior year quarter148153 Results of Operations by Segment Home and Building Products (HBP) Performance (Q2 2025 vs Q2 2024, in millions) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Revenue | $368.2M | $392.1M | -6% | | Adjusted EBITDA | $109.4M | $128.9M | -15% | | Adjusted EBITDA Margin | 29.7% | 32.9% | -320 bps | - HBP's revenue decline was driven by a 7% decrease in volume, primarily due to residential sales activity returning to normal seasonality158 Consumer and Professional Products (CPP) Performance (Q2 2025 vs Q2 2024, in millions) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Revenue | $243.5M | $280.8M | -13% | | Adjusted EBITDA | $23.7M | $20.1M | +18% | | Adjusted EBITDA Margin | 9.7% | 7.2% | +250 bps | - CPP's revenue decreased due to a 13% volume decline from reduced consumer demand in North America and the UK; however, adjusted EBITDA increased due to benefits from the global sourcing initiative and improved performance in Australia164165 Liquidity and Capital Resources - As of March 31, 2025, the company had $127.8 million in cash and equivalents and $364.5 million available for borrowing under its Revolver186 - Net cash provided by operating activities was $159.4 million for the six months ended March 31, 2025, a decrease from $185.9 million in the prior year period, primarily due to an increase in net working capital187 - During the six months ended March 31, 2025, the company repurchased 1,030,372 shares for $72.9 million; as of March 31, 2025, $359.8 million remained available under the share repurchase authorization193 - The company's Net Debt to EBITDA leverage ratio, as calculated per its Credit Agreement, was 2.6x at March 31, 2025207 Market Risk Disclosures The company faces market risks from interest rate fluctuations on variable-rate debt and foreign currency exchange rates across its international operations, with management assessing no material effect from typical changes - The company's primary market risk exposures are related to variable interest rate debt (SOFR, SONIA, BBSY, CORRA based) and foreign currency fluctuations from its international operations221222223 Controls and Procedures The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting during the quarter - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report224 Part II - Other Information Risk Factors This section updates risk factors, emphasizing increased risks for the CPP segment from international sourcing, particularly from China, due to tariffs, forced labor regulations, and geopolitical tensions - The CPP segment's expanded global sourcing strategy has increased its reliance on suppliers in China, heightening the potential impact of tariffs and trade disputes230 - In May 2024, the USTR continued Section 301 tariffs on Chinese goods and announced additional tariffs to be implemented from 2024-2026, creating ongoing risk for CPP's revenue and performance232 - The Uyghur Forced Labor Prevention Act (UFLPA) creates a risk of shipment detentions by U.S. Customs, even for goods not directly sourced from the Xinjiang region, which could impact CPP's operating performance233235 Issuer Purchases of Equity Securities This section details the company's common stock repurchases during Q2 FY2025, including shares bought under its publicly announced repurchase program Share Repurchases for Q2 2025 (Jan 1 - Mar 31, 2025) | Metric | Value | | :--- | :--- | | Total Shares Purchased | 939,844 | | Average Price Paid Per Share | $74.89 | | Shares Purchased Under Plan | 420,200 | | Remaining Authorization | $359,825,000 | Other Information This section discloses that CEO and Chairman Ronald J. Kramer adopted a Rule 10b5-1 trading plan during the quarter - On February 12, 2025, CEO Ronald J. Kramer adopted a Rule 10b5-1 trading plan to sell up to 200,000 shares of common stock between May 13, 2025, and May 13, 2027243244