Griffon(GFF) - 2025 Q3 - Quarterly Results

Third Quarter 2025 Financial Highlights Consolidated Performance 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][24] Management Commentary 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] - 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] - 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] 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 Home and Building Products (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] Consumer and Professional Products (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] - 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] Financial Position and Capital Allocation Balance Sheet and Liquidity 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][26] Cash Flow 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][26] - Net capital expenditures for the third quarter ended June 30, 2025, were $8.4 million[12] Share Repurchases 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] - 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] - As of June 30, 2025, $319.6 million remained available under the share repurchase authorization[13] Updated 2025 Outlook Full-Year Guidance 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] - The company continues to expect free cash flow to exceed net income for the full fiscal year[16] Appendix: Financial Statements and Reconciliations Non-GAAP Reconciliations 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][24] - A reconciliation of net cash provided by operating activities to Free Cash Flow (FCF) is included[25][26] - 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] Condensed Consolidated Financial Statements 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] - 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][33] - 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]