Griffon(US:GFF)2025-08-06 13:30Financial 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]