What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2021-07-30 compared with 2021-04-30 · 127 added, 127 removed, 369 unchanged (41% of the section changed)

27 unchanged sentences

We have implemented a variety of new policies and procedures, including additional cleaning, social distancing, staggered shifts and prohibiting or significantly restricting on-site visitors, to minimize the risk to our employees of contracting COVID-19.

We manufacture a substantial majority of the products that we sell, with the majority of our manufacturing activities conducted in the United States.

As a result, we have been able to mitigate the adverse impact of the COVID-19 pandemic on the global supply chain.

During the six months ended March 31, 2021 and through the date of this filing, all of our businesses have experienced normal or better order patterns compared with the same time period last year.

Our supply chains have not experienced significant disruption, and at this time we do not anticipate any such significant disruption in the near term.

In the United States, we manufacture a substantial majority of the products that we sell.

While this helps mitigate the effects of global supplier and transportation disruptions, we are still impacted.

During the nine months ended June 30, 2021 and through the date of this filing, all of our businesses have experienced normal or better order patterns compared with the same time period last year.

states lifted initial executive orders issued during the 2020 calendar year requiring all workers to remain at home unless their work is critical, essential, or life-sustaining.

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Government, with a portion of its business being directly with the U.S.

2) HBP residential and commercial garage doors, rolling steel doors and related products that (a) provide protection and support for the efficient and safe movement of people, goods, and

equipment in and out of residential and commercial facilities, (b) help prevent fires from spreading from one location to another, and (c) protect warehouses and homes, and their contents, from damage caused by strong weather events such as hurricanes and tornadoes;

2) HBP residential and commercial garage doors, rolling steel doors and related products that (a) provide protection and support for the efficient and safe movement of people, goods, and equipment in and out of residential and commercial facilities, (b) help prevent fires from spreading from one location to another, and (c) protect warehouses and homes,

and their contents, from damage caused by strong weather events such as hurricanes and tornadoes;

and 3) CPP tools and storage products provide critical support for the national infrastructure including construction, maintenance, manufacturing and natural disaster recovery, and is part of the essential supply base to many of its largest customers including Home Depot, Lowe's and Menards.

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Griffon believes it has adequate liquidity to invest in its existing businesses and execute its business plan, while managing its capital structure on both a short-term and long-term basis.

In January 2020, Griffon increased total borrowing capacity under its revolving credit facility ("Credit Agreement") by $50,000, to $400,000 (of which $363,068 was available at March 31, 2021), and extended maturity of the facility to 2025.

In January 2020, Griffon increased total borrowing capacity under its revolving credit facility ("Credit Agreement") by $50,000, to $400,000 (of which $362,218 was available at June 30, 2021), and extended maturity of the facility to 2025.

In addition, the Credit Agreement has a $100,000 accordion feature (subject to lender consent).

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a portion of these net proceeds were used to repay outstanding borrowing under our Credit Agreement.

At March 31, 2021 Griffon had cash and equivalents of $175,564.

At June 30, 2021, Griffon had cash and equivalents of $220,697.

We will continue to actively monitor the situation and may take further actions that impact our operations as may be required by federal, state or local authorities or that we determine are in the best interests of our employees, customers, suppliers and shareholders.

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In June 2018, Clopay acquired CornellCookson, a leading provider of rolling steel service doors, fire doors, and grilles, for an effective purchase price of approximately $170,000.

This transaction strengthened Clopay's strategic portfolio with a line of

commercial rolling steel door products to complement Clopay's sectional door offerings in the commercial sector, and expands the Clopay network of professional dealers focused on the commercial market.

This transaction strengthened Clopay's strategic portfolio with a line of commercial rolling steel door products to complement Clopay's sectional door offerings in the commercial sector, and expands

the Clopay network of professional dealers focused on the commercial market.

CornellCookson generated over $200,000 in revenue in its first full year of operations.

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• DE conducts its operations through Telephonics Corporation, founded in 1933, a globally recognized leading provider of highly sophisticated intelligence, surveillance and communications solutions for defense, aerospace and commercial customers.

Revenue for the quarter ended March 31, 2021 was $634,832 compared to $566,350 in the prior year comparable quarter, an increase of 12%;

primarily driven by increased revenue at CPP and HBP of 21% and 16%, respectively, partially offset by reduced revenue at DE of 26%.

Revenue for the quarter ended June 30, 2021 was $646,792 compared to $632,061 in the prior year comparable quarter, an increase of 2% (4% excluding the prior year revenue of $7,931 related to the Systems Engineering Group (SEG) disposition), primarily driven by increased revenue at HBP of 18%, partially offset by reduced revenue at CPP and DE of 1% and 25%, respectively.

Net income was $16,707 or $0.31 per share, compared to $21,831, or $0.50 per share, in the prior year quarter.

1 unchanged sentence

– Restructuring charges of $4,082 ($3,129, net of tax, or $0.06 per share);

– Reduction to gain on sale of Systems Engineering Group ("SEG") business $949 ($766, net of tax, or $0.01 per share);

– Discrete and certain other tax provisions, net, of $2,979 or $0.06 per share.

2 unchanged sentences

– Loss from debt extinguishment $1,235 ($969, net of tax, or $0.02 per share);

– Acquisition costs of $2,960 ($2,321, net of tax, or $0.05 per share);

– Discrete and certain other tax benefits, net, of $1,413 or $0.03 per share.

– Discrete and certain other tax provisions, net, of $1,828 or $0.04 per share.

Excluding these items from the respective quarterly results, Net income would have been $22,815, or $0.43 per share, in the current year quarter compared to $25,852, or $0.59 per share in the prior year quarter.

Revenue for the six months ended March 31, 2021 was $1,244,123 compared to $1,114,788 in the prior year period, an increase of 12%;

primarily driven by increased revenue at CPP and HBP of 21% and 9%, respectively, partially offset by reduced revenue at DE of 13%.

Revenue for the nine months ended June 30, 2021 was $1,890,915 compared to $1,746,849 in the prior year period, an increase of 8% (9% excluding the current year and prior year revenue of $6,713 and 21,939, respectively, related to the SEG disposition), primarily driven by increased revenue at CPP and HBP of 12% each, partially offset by reduced revenue at DE of 18%.

Net income was $63,319 or $1.19 per share, compared to $33,338, or $0.76 per share, in the prior year period.

2 unchanged sentences

– Gain on sale of Systems Engineering Group ("SEG") business $5,291 ($5,251, net of tax, or $0.10 per share);

– Discrete and certain other tax benefits, net, of $115 or $0.00 per share.

– Discrete and certain other tax provisions, net, of $2,864 or $0.05 per share.

The prior year-to-date results from operations included the following:

2 unchanged sentences

– Acquisition costs of $2,960 ($2,321, net of tax, or $0.05 per share);

– Discrete and certain other tax benefits, net, of $580 or $0.01 per share.

Excluding these items from the respective periods, Net income would have been $55,197, or $1.04 per share in the current year period ended March 31, 2021 compared to $25,646, or $0.59 per share, in the comparable prior year period.

– Discrete and certain other tax provisions, net, of $1,248 or $0.03 per share.

Excluding these items from the respective periods, Net income would have been $78,012, or $1.46 per share in the current year period ended June 30, 2021 compared to $51,498, or $1.18 per share, in the comparable prior year period.

Griffon evaluates performance based on Net income and the related Earnings per share excluding restructuring charges, loss from debt extinguishment, acquisition related expenses and discrete and certain other tax items, as well as other items that may affect comparability, as applicable.

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The following table provides a reconciliation of Net income to Adjusted net income and Earnings per share to Adjusted earnings per share:

For the Three Months Ended March 31, For the Six Months Ended March 31,

For the Three Months Ended June 30, For the Nine Months Ended June 30,

2021 2020 2021 2020

2 unchanged sentences

Restructuring charges 4,082 1,633 22,444 11,171

(Gain) adjustment on sale of SEG business 949 — (5,291) —

Gain on sale of SEG business — — (5,291) —

Loss from debt extinguishment — 1,235 — 7,925

1 unchanged sentence

Tax impact of above items (953) (675) (5,324) (5,144)

Discrete and certain other tax provisions (benefits), net 1,913 (1,413) (115) (580)

Discrete and certain other tax provisions, net 2,979 1,828 2,864 1,248

Adjusted net income $ 22,815 $ 25,852 $ 78,012 $ 51,498

2 unchanged sentences

Restructuring charges 0.06 0.03 0.32 0.19

(Gain) adjustment on sale of SEG business 0.01 — (0.10) —

Gain on sale of SEG business — — (0.10) —

Loss from debt extinguishment — 0.02 — 0.14

Acquisition costs — — — 0.05

Discrete and certain other tax provisions (benefits), net 0.04 (0.03) — (0.01)

Discrete and certain other tax provisions, net 0.06 0.04 0.05 0.03

Adjusted earnings per common share $ 0.43 $ 0.59 $ 1.46 $ 1.18

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RESULTS OF OPERATIONS

Three and Six months ended March 31, 2021 and 2020

Three and Nine months ended June 30, 2021 and 2020

Griffon evaluates performance and allocates resources based on each segment's operating results before interest income and expense, income taxes, depreciation and amortization, unallocated amounts (primarily corporate overhead), restructuring charges, loss on debt extinguishment and acquisition related expenses, as well as other items that may affect comparability, as applicable (“Adjusted EBITDA”, a non-GAAP measure).

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Consumer and Professional Products

For the Three Months Ended March 31, For the Six Months Ended March 31,

For the Three Months Ended June 30, For the Nine Months Ended June 30,

2021 2020 2021 2020

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Depreciation and amortization 8,781 8,197 25,600 24,650

For the quarter ended March 31, 2021, revenue increased $56,959, or 21%, compared to the prior year period, primarily due to increased volume of 17%, driven by continued consumer demand across all geographies, primarily for outdoor decor, landscaping and home organization products, and a favorable foreign currency impact of 4%.

For the quarter ended March 31, 2021, Adjusted EBITDA increased 50% to $37,423 compared to $25,027 in the prior year quarter.

The favorable variance resulted primarily from the increased revenue noted above and a favorable foreign currency impact of 8%, partially offset by increased distribution and material costs and COVID-19 related inefficiencies.

For the six months ended March 31, 2021, revenue increased $106,925, or 21%, compared to the prior year period, primarily due to increased volume of 17%, driven by increased consumer demand across all geographies and all product categories, and a favorable foreign currency impact of 4%.

For the six months ended March 31, 2021, Adjusted EBITDA increased 49% to $70,136 compared to $46,953 in the prior year period.

The favorable variance resulted primarily from the increased revenue noted above and a favorable currency impact of 6%, partially offset by increased distribution and material costs and COVID-19 related inefficiencies.

For the quarter and six months ended March 31, 2021, segment depreciation and amortization increased $398 and $366, respectively, compared to the prior year comparable periods, due to new assets placed in service.

For the quarter ended June 30, 2021, revenue decreased $4,103, or 1%, compared to the prior year period, due to reduced volume of 9%, primarily in the U.S., due to shipping delays related to availability of transportation, partially offset by favorable mix of 3% and a favorable foreign currency impact of 5%.

For the quarter ended June 30, 2021, Adjusted EBITDA decreased 21% to $29,388 compared to $37,115 in the prior year quarter, primarily due to the decreased revenue noted above, increased distribution and material costs coupled with the lag in realization of price increases, and COVID-19 related inefficiencies.

The current quarter included a favorable foreign currency impact of 4%.

For the nine months ended June 30, 2021, revenue increased $102,822, or 12%, compared to the prior year period, primarily due to increased volume of 8%, driven by increased consumer demand across all geographies, and a favorable foreign currency impact of 4%.

For the nine months ended June 30, 2021, Adjusted EBITDA increased 18% to $99,524 compared to $84,068 in the prior year period.

The favorable variance resulted primarily from the increased revenue noted above partially offset by increased distribution and material costs and COVID-19 related inefficiencies.

The current year-to-date period included a favorable currency impact of 6%,

For the quarter and nine months ended June 30, 2021, segment depreciation and amortization increased $584 and $950, respectively, compared to the prior year comparable periods, due to new assets placed in service.

On December 22, 2020, AMES acquired Quatro Design Pty Ltd (“Quatro”), a leading Australian manufacturer and supplier of glass fiber reinforced concrete landscaping products for residential, commercial, and public sector projects.

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First, certain AMES global operations will be consolidated to optimize facilities footprint and talent.

strategic investments in automation and facilities expansion will be made to increase the efficiency of our manufacturing and fulfillment operations, and support e-commerce growth.

Second, strategic investments in automation and facilities expansion will be made to increase the efficiency of our manufacturing and fulfillment operations, and support e-commerce growth.

Third, multiple independent information systems will be unified into a single data and analytics platform, which will serve the whole AMES global enterprise.

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The remaining $19,000 of charges are non-cash and are primarily related to asset write-downs.

In connection with this initiative, during the year ended September 30, 2020 and during the six months ended March 31, 2021, CPP incurred pre-tax restructuring and related exit costs approximating $13,669 and $10,581, respectively.

In connection with this initiative, during the year ended September 30, 2020 and during the nine months ended June 30, 2021, CPP incurred pre-tax restructuring and related exit costs approximating $13,669 and $14,663, respectively.

Since inception of this initiative in fiscal 2020, total cumulative charges totaled $28,332, comprised of cash charges of $19,758 and non-cash, asset-related charges of $8,574;

the cash charges included $7,404 for one-time termination benefits and other personnel-related costs and $12,354 for facility exit costs.

During the year ended September, 30, 2020 and during the six months ended March 31, 2021, capital expenditures of 6,733 and $5,445, respectively, were driven by investment in CPP business intelligence systems and e-commerce facility.

During the year ended September, 30, 2020 and during the nine months ended June 30, 2021, capital expenditures of 6,733 and $8,145, respectively, were driven by investment in CPP business intelligence systems and e-commerce facility.

Cash Charges Non-Cash Charges

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Q2 FY2021 Activity (722) (4,283) (2,497) (7,502) $ (3,209)

Q3 FY2021 Activity (700) (2,190) (1,192) (4,082) (2,700)

Total 2021 restructuring charges (1,784) (8,997) (3,882) (14,663) (8,145)

2 unchanged sentences

Home and Building Products

For the Three Months Ended March 31, For the Six Months Ended March 31,

For the Three Months Ended June 30, For the Nine Months Ended June 30,

2021 2020 2021 2020

2 unchanged sentences

Depreciation and amortization 4,375 4,507 13,095 13,975

For the quarter ended March 31, 2021, revenue increased $32,982 or 16%, compared to the prior year period, driven by increased volume.

For the quarter ended March 31, 2021, Adjusted EBITDA increased 31% to $40,060 compared to $30,635 in the prior year period.

EBITDA benefited from increased revenue noted above and volume related benefits on absorption, partially offset by increased material costs and COVID-19 related inefficiencies.

For the six months ended March 31, 2021, revenue increased $42,082 or 9%, compared to the prior year period, driven by increased volume.

For the six months ended March 31, 2021, Adjusted EBITDA increased 24% to $88,429 compared to $71,336 in the prior year period.

The favorable variance resulted from the increased revenue noted above and volume related benefits on absorption, partially offset by COVID-19 related inefficiencies.

For the quarter and six months ended March 31, 2021, segment depreciation and amortization decreased $289 and $748, respectively, compared to the prior year comparable periods, due to fully depreciated assets.

For the quarter ended June 30, 2021, revenue increased $40,228 or 18%, compared to the prior year period, driven by increased volume of 5%, and favorable mix and pricing of 13%.

For the quarter ended June 30, 2021, Adjusted EBITDA increased 7% to $42,156 compared to $39,299 in the prior year period.

EBITDA benefited from increased revenue noted above, partially offset by increased material costs coupled with the lag in realization of price increases, and COVID-19 related inefficiencies.

For the nine months ended June 30, 2021, revenue increased $82,310 or 12%, compared to the prior year period, driven by increased volume of 8%, and favorable mix and pricing of 4%.

For the nine months ended June 30, 2021, Adjusted EBITDA increased 18% to $130,585 compared to $110,635 in the prior year period.

The favorable variance resulted from the increased revenue noted above, partially offset by increased material costs coupled with the lag in realization of price increases, and COVID-19 related inefficiencies.

For the quarter and nine months ended June 30, 2021, segment depreciation and amortization decreased $132 and $880, respectively, compared to the prior year comparable periods, due to fully depreciated assets.

Defense Electronics

For the Three Months Ended March 31, For the Six Months Ended March 31,

For the Three Months Ended June 30, For the Nine Months Ended June 30,

2021 2020 2021 2020

2 unchanged sentences

Depreciation and amortization 2,501 2,666 7,911 7,986

For the quarter ended March 31, 2021, revenue decreased $21,459, or 26%, compared to the prior year quarter.

For the quarter ended June 30, 2021, revenue decreased $21,394, or 25%, compared to the prior year quarter.

The prior year results include revenue from the SEG business of $7,931.

Excluding the divestiture of SEG from prior year results, revenue decreased $13,463, or 18%.

The decrease was driven by reduced volume due to the timing of work performed and deliveries on Communication and Surveillance programs.

For the quarter ended March 31, 2021, Adjusted EBITDA decreased $2,028, or 48%, compared to the prior year comparable period, driven by the reduced revenue noted above and cost growth on Surveillance programs, partially offset by the reduced headcount related to the reduction in force that occurred in the first quarter.

For the six months ended March 31, 2021, revenue decreased $19,672, or 13%, compared to the prior year period.

The decrease was driven by reduced volume due to the timing of deliveries on Communications and Radar systems, partially offset by volume increases on Naval & Cyber Systems.

For the quarter ended June 30, 2021, Adjusted EBITDA of $4,140 remained consistent with the prior year comparable period.

Excluding the divestiture of SEG from the prior year results, Adjusted EBITDA increased 9% primarily due to reduced operating expenses, including the benefit from the first quarter reduction in force, and improved Naval & Cyber Systems program performance, partially offset by cost growth for Radar systems.

For the nine months ended June 30, 2021, revenue decreased $41,066, or 18%, compared to the prior year period.

The current and prior year results include revenue from the SEG business of $6,713 and $21,939, respectively.

Excluding the divestiture of SEG from current and prior year results, revenue decreased $25,840, or 12%.

The decline in revenue was driven by reduced volume related to the timing of work performed and deliveries on Communication and Surveillance programs, partially offset by Naval and Cyber systems.

For the six months ended March 31, 2021, Adjusted EBITDA decreased $918, or 11%, compared to the prior year comparable period driven by the reduced revenue noted above, partially offset by the benefit of reduced headcount related to the reduction in force that occurred in the first quarter.

Segment depreciation and amortization remained consistent with the prior year comparable quarter-to-date and year-to-dates periods.

The decline in revenue was driven by reduced volume related to the timing of work performed and deliveries on Communications, Surveillance and Radar programs, partially offset by increased Naval & Cyber Systems volume.

For the nine months ended June 30, 2021, Adjusted EBITDA decreased $900, or 7%, compared to the prior year comparable period.

Excluding the divestiture of SEG from current and prior year results, Adjusted EBITDA decreased 6% primarily driven by the reduced revenue noted above and cost growth on Radar systems, partially offset by improved Naval & Cyber Systems program performance and reduced operating expenses, including the benefit from the first quarter reduction in force.

For the quarter and nine months ended June 30, 2021, segment depreciation and amortization decreased $165 and $75, respectively, compared to the prior year comparable periods, related to the sale of SEG.

On December 18, 2020, DE completed the sale of its SEG business.

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SEG had sales of approximately $7,000 for the first fiscal quarter ended December 31, 2020 and $31,000 for the fiscal year ended September 30, 2020.

During the six months ended March 31, 2021, DE was awarded several new contracts and received incremental funding on existing contracts approximating $105,000 (excludes $5,500 of SEG awards).

Contract backlog was $353,870 at March 31, 2021 compared to $320,214 at March 31, 2020 (excludes $11,526 of SEG related backlog) with 65% expected to be fulfilled in the next 12 months.

During the nine months ended June 30, 2021, DE was awarded several new contracts and received incremental funding on existing contracts approximating $189,000 (excludes $5,500 of SEG awards).

Contract backlog was $375,039 at June 30, 2021 compared to $341,003 at June 30, 2020 (excludes $9,440 of SEG related backlog) with 66% expected to be fulfilled in the next 12 months.

Backlog was approximately $370,000 at September 30, 2020 (excludes approximately $10,000 of SEG related backlog).

2 unchanged sentences

In September 2020, a Voluntary Employee Retirement Plan was initiated, which was subsequently followed by a reduction in force in November 2020, to improve efficiencies by combining functions and responsibilities.

The reduction in force initiative resulted in severance charges of $2,180 during the six months ended March 31, 2021.

The reduction in force initiative resulted in severance charges of $2,180, recorded in the first quarter, during the nine months ended June 30, 2021.

These actions reduced headcount by approximately 90 people.

In addition, in the first quarter ended December 31, 2020, charges of $5,601 were recorded primarily related to exiting our older weather radar product lines.

DE recorded a pre-tax gain of $5,291 ($5,251, net of tax) during the six months ended March 31, 2021 related to the divestiture of SEG.

For the quarter ended March 31, 2021, unallocated amounts, excluding depreciation, consisted primarily of corporate overhead costs totaling $11,922 compared to $11,947 in the prior year quarter;

for the six months ended March 31, 2021, unallocated amounts totaled $23,949 compared to $23,889 in the prior year period.

The current quarter remained consistent with the prior year comparable quarter.

The increase in the six months compared to the respective prior year period primarily relates to increases in compensation and incentive costs and consulting costs, partially offset by travel and administrative office costs.

DE recorded a pre-tax gain of $5,291 ($5,251, net of tax) during the nine months ended June 30, 2021 related to the divestiture of SEG.

For the quarter ended June 30, 2021, unallocated amounts, excluding depreciation, consisted primarily of corporate overhead costs totaling $10,924 compared to $11,080 in the prior year quarter;

for the nine months ended June 30, 2021, unallocated amounts totaled $34,873 compared to $34,969 in the prior year period.

The decrease in both the current quarter and nine month periods, compared to their respective comparable prior year periods, primarily relates to decreases in travel and administrative office costs.

Segment Depreciation and Amortization

Segment depreciation and amortization increased $167 for the quarter ended March 31, 2021 compared to the comparable prior year quarter, primarily due to depreciation and amortization on new assets placed in service.

Segment depreciation and amortization decreased $292 for the six months ended March 31, 2021 compared to the comparable prior year period, primarily due to fully depreciated assets, partially offset by assets acquired in acquisitions.

Segment depreciation and amortization increased $287 for the quarter ended June 30, 2021 compared to the comparable prior year quarter, primarily due to depreciation and amortization on new assets placed in service.

Segment depreciation and amortization for the nine months ended June 30, 2021 remained consistent with the comparable prior year period.

Other Income (Expense)

For the quarters ended March 31, 2021 and 2020, Other income (expense) of $847 and $615, respectively, includes $320 and $745, respectively, of net currency exchange gains in connection with the translation of receivables and payables denominated in currencies other than the functional currencies of Griffon and its subsidiaries, net periodic benefit plan income of $227 and $389, respectively, as well as $55 and $(230), respectively, of net investment income (loss).

For the six months ended March 31, 2021 and 2020, Other income (expense) of $806 and 1,393 includes $(379) and $369, respectively, of net currency exchange gains (losses) in connection with the translation of receivables and payables denominated in currencies other than the functional currencies of Griffon and its subsidiaries, net periodic benefit plan income of $454 and $778, respectively, as well as $386 and $(149), respectively, of net investment income (loss).

Additionally, Other income (expense) also includes a one-time technology recognition award for $700.

For the quarters ended June 30, 2021 and 2020, Other income (expense) of $386 and $806, respectively, includes $77 and $72, respectively, of net currency exchange gains in connection with the translation of receivables and payables denominated in currencies other than the functional currencies of Griffon and its subsidiaries, net periodic benefit plan income of $226 and $392, respectively, as well as $249 and $499, respectively, of net investment income (loss).

For the nine months ended June 30, 2021 and 2020, Other income (expense) of $1,192 and 2,199 includes $(302) and $441, respectively, of net currency exchange gains (losses) in connection with the translation of receivables and payables denominated in currencies other than the functional currencies of Griffon and its subsidiaries, net periodic benefit plan income of $680 and $1,170, respectively, as well as $877 and $216, respectively, of net investment income (loss).

Additionally, in the prior year period, Other income (expense) also includes a one-time technology recognition award for $700.

Provision for income taxes

During the quarter ended March 31, 2021, the Company recognized a tax provision of $10,748 on income before taxes of $27,860, compared to a tax provision of $2,034 on income before taxes of $2,929 in the comparable prior year quarter.

The current year quarter results included restructuring charges of $7,562 ($5,651, net of tax), reduction to gain on sale of the SEG business of $949 ($766, net of tax) and discrete and certain other tax provisions, net, that affect comparability of $1,913.

The prior year quarter results included restructuring charges of $3,104 ($3,005, net of tax), acquisition costs of $2,960 ($2,321, net of tax), loss from debt extinguishment of $6,690 ($5,245, net of tax) and discrete tax and certain other tax benefits, net, that

affect comparability of $1,413.

Excluding these items, the effective tax rates for the quarters ended March 31, 2021 and 2020 were 30.0% and 35.9%, respectively.

During the six months ended March 31, 2021, the Company recognized a tax provision of $20,417 on Income before taxes of $67,029, compared to a tax provision of $8,373 on income before taxes of $19,880 in the comparable prior year period.

The six month period ended March 31, 2021 included restructuring charges of $18,362 ($13,951, net of tax), gain on sale of the SEG business of $5,291 ($5,251, net of tax) and discrete and certain other tax benefits, net, that affect comparability of $115.

The six month period ended March 31, 2020 included restructuring charges of $9,538 ($7,153, net of tax), acquisition costs of $2,960 ($2,321, net of tax), loss from debt extinguishment of $6,690 ($5,245, net of tax) and discrete tax and certain other tax benefits, net, that affect comparability of $580.

Excluding these items, the effective tax rates for the six months ended March 31, 2021 and 2020 were 31.1% and 34.4%, respectively.

During the quarter ended June 30, 2021, the Company recognized a tax provision of $12,366 on income before taxes of $29,073, compared to a tax provision of $12,649 on income before taxes of $34,480 in the comparable prior year quarter.

The current year quarter results included restructuring charges of $4,082 ($3,129, net of tax) and discrete and certain other tax provisions, net, that affect comparability of $2,979, primarily due to the impact of UK tax rate changes on deferred liabilities.

The prior year quarter results included restructuring charges of $1,633 ($1,224, net of tax), loss from debt extinguishment of

$1,235 ($969, net of tax) and discrete tax and certain other tax provisions, net, that affect comparability of $1,828.

Excluding these items, the effective tax rates for the quarters ended June 30, 2021 and 2020 were 31.2% and 30.8%, respectively.

During the nine months ended June 30, 2021, the Company recognized a tax provision of $32,783 on Income before taxes of $96,102, compared to a tax provision of $21,022 on income before taxes of $54,360 in the comparable prior year period.

The nine month period ended June 30, 2021 included restructuring charges of $22,444 ($17,080, net of tax), gain on sale of the SEG business of $5,291 ($5,251, net of tax) and discrete and certain other tax provisions, net, that affect comparability of $2,864 primarily due to the impact of UK tax rate changes on deferred liabilities.

The nine month period ended June 30, 2020 included restructuring charges of $11,171 ($8,377, net of tax), acquisition costs of $2,960 ($2,321, net of tax), loss from debt extinguishment of $7,925 ($6,214, net of tax) and discrete tax and certain other tax provisions, net, that affect comparability of $1,248.

Excluding these items, the effective tax rates for the nine months ended June 30, 2021 and 2020 were 31.1% and 32.6%, respectively.

Stock based compensation

For the quarters ended March 31, 2021 and 2020, stock based compensation expense, which includes expenses for both restricted stock grants and the ESOP, totaled $5,293 and $4,320, respectively.

For the six months ended March 31, 2021 and 2020, stock based compensation expense totaled $9,501 and $8,302, respectively.

For the quarters ended June 30, 2021 and 2020, stock based compensation expense, which includes expenses for both restricted stock grants and the ESOP, totaled $5,591 and $4,507, respectively.

For the nine months ended June 30, 2021 and 2020, stock based compensation expense totaled $15,092 and $12,809, respectively.

Comprehensive income (loss)

For the quarter ended March 31, 2021, total other comprehensive income, net of taxes, of $4,775 included a gain of $1,739 from foreign currency translation adjustments primarily due to the strengthening of the British Pound and Canadian Dollar, partially offset by the weakening of the Euro, all in comparison to the US Dollar;

For the quarter ended June 30, 2021, total other comprehensive income, net of taxes, of $2,739 included a gain of $1,160 from foreign currency translation adjustments primarily due to the strengthening of the Euro, British Pound and Canadian Dollar, partially offset by the weakening of the Australian Dollar, all in comparison to the US Dollar;

a $1,245 benefit from pension amortization;

and a $351 gain on cash flow hedges.

For the six months ended March 31, 2021, total other comprehensive income, net of taxes, of $17,916 included a gain of $13,862 from foreign currency translation adjustments primarily due to the strengthening of the British Pound and Canadian and Australian Dollars, all in comparison to the US Dollar;

For the nine months ended June 30, 2021, total other comprehensive income, net of taxes, of $20,655 included a gain of $15,022 from foreign currency translation adjustments primarily due to the strengthening of the Euro, British Pound, Canadian and Australian Dollars, all in comparison to the US Dollar;

a $4,196 benefit from pension amortization of actuarial losses;

and a $1,454 gain on cash flow hedges.

For the quarter ended March 31, 2020, total other comprehensive loss, net of taxes, of $14,834 included a loss of $16,471 from foreign currency translation adjustments primarily due to the weakening of the British Pound, and Canadian and Australian Dollars, all in comparison to the US Dollar;

For the quarter ended June 30, 2020, total other comprehensive income, net of taxes, of $8,702 included income of $9,508 from foreign currency translation adjustments primarily due to the strengthening of the Euro, British Pound, and Canadian and Australian Dollars all in comparison to the US Dollar;

a $1,139 benefit from pension amortization of actuarial losses;

and a $968 gain on cash flow hedges.

For the six months ended March 31, 2020, total other comprehensive loss, net of taxes, of $7,993, included a loss of $10,001 from foreign currency translation adjustments primarily due to the weakening of the Canadian and Australian Dollars, all in comparison to the US Dollar, a $1,341 benefit from pension amortization of actuarial losses and a $667 gain on cash flow hedges.

and a $1,945 loss on cash flow hedges.

For the nine months ended June 30, 2020, total other comprehensive income, net of taxes, of $709, included a loss of $493 from foreign currency translation adjustments primarily due to the weakening of the Canadian Dollar, partially offset by the strengthening of the Euro, British Pound and Australian Dollar currencies, all in comparison to the US Dollar, a $2,480 benefit from pension amortization of actuarial losses and a $1,278 loss on cash flow hedges.

Discontinued operations

At March 31, 2021, Griffon's assets and liabilities are primarily for the Installations Services and other discontinued operations primarily related to insurance claims, income tax and product liability, warranty reserves and environmental reserves.

At June 30, 2021, Griffon's assets and liabilities are primarily for the Installations Services and other discontinued operations primarily related to insurance claims, income tax and product liability, warranty reserves and environmental reserves.

See Note 16, Discontinued Operations.

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The following table is derived from the Condensed Consolidated Statements of Cash Flows:

Cash Flows from Operations For the Six Months Ended March 31,

Cash Flows from Operations For the Nine months ended June 30,

Net Cash Flows Provided by (Used In):

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Financing activities (14,327) (9,305)

Cash used by operating activities for the six months ended March 31, 2021 was $25,841 compared to cash used of $60,843 in the comparable prior year period.

Cash provided by income from operations, adjusted for non-cash expenditures, was more than offset by a net increase in working capital predominately consisting of a net increase in accounts receivable and an increase in inventory, primarily to meet seasonal demands.

During the six months ended March 31, 2021, Griffon's use of cash from investing activities was $13,532 compared to $32,760 used in the prior year comparable period.

Cash provided by operating activities for the nine months ended June 30, 2021 was $42,019 compared to $55,944 in the comparable prior year period.

Cash provided by income from operations, adjusted for non-cash expenditures, was partially offset by a net increase in working capital primarily related to a net increase in inventory.

During the nine months ended June 30, 2021, Griffon's use of cash from investing activities was $26,300 compared to $45,073 in the prior year comparable period.

On December 18, 2020, DE completed the sale of its SEG business and received net proceeds from the sale of $14,345.

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We had an increase in investments of $4,658.

Capital expenditures, net of proceeds from the sale of assets, for the six months ended March 31, 2021 totaled $23,904, an increase of $1,675 from the prior year period.

During the six months ended March 31, 2021, cash used by financing activities from operations totaled $5,916 as compared to $94,351 provided by in the comparable prior year period.

Capital expenditures, net of proceeds from the sale of assets, for the nine months ended June 30, 2021 totaled $33,773, a decrease of $639 from the prior year period.

During the nine months ended June 30, 2021, cash used by financing activities from operations totaled $14,327 compared to $9,305 in the prior year comparable period.

Cash used in financing activities in the current period consisted primarily of the payment of dividends and purchase of treasury shares to satisfy vesting of restricted stock, partially offset by net borrowings of long-term debt.

During the nine months ended June 30, 2021, 133,027 shares, with a market value of $2,774, or $20.85 per share were withheld to settle employee taxes due upon the vesting of restricted stock, and were added to treasury stock.

Furthermore, during the nine months ended June 30, 2021, an additional 6,507 shares, with a market value of $135, or $20.75 per share, were withheld from common stock issued upon the vesting of restricted stock units to settle employee taxes due upon vesting.

During 2020, the Company declared and paid regular cash dividends totaling $0.30 per share, or $0.075 per share each quarter.

During the six months ended March 31, 2021, the Board of Directors approved and paid two quarterly cash dividend of $0.08 per share each.

During the nine months ended June 30, 2021, the Board of Directors approved and paid three quarterly cash dividend of $0.08 per share each.

The Company currently intends to pay dividends each quarter;

however, payment of dividends is determined by the Board of Directors at its discretion based on various factors, and no assurance can be provided as to the payment of future dividends.

On April 29, 2021, the Board of Directors declared a quarterly cash dividend of $0.08 per share, payable on June 17, 2021 to shareholders of record as of the close of business on May 20, 2021.

During the six months ended March 31, 2021, 133,027 shares, with a market value of $2,774, or $20.85 per share were withheld to settle employee taxes due upon the vesting of restricted stock, and were added to treasury stock.

Furthermore, during the six months ended March 31, 2021, an additional 6,507 shares, with a market value of $135, or $20.75 per share, were withheld from common stock issued upon the vesting of restricted stock units to settle employee taxes due upon vesting.

On July 29, 2021, the Board of Directors declared a quarterly cash dividend of $0.08 per share, payable on September 16, 2021 to shareholders of record as of the close of business on August 19, 2021.

On each of August 3, 2016 and August 1, 2018, Griffon’s Board of Directors authorized the repurchase of $50,000 of Griffon’s outstanding common stock.

Under these share repurchase programs, the Company may, from time to time, purchase shares of its common stock in the open market, including pursuant to a 10b5-1 plan, or in privately negotiated transactions.

As of March 31, 2021, an aggregate of $57,955 remains under Griffon's Board authorized repurchase programs.

No shares were repurchased during the six months ended March 31, 2021 under these share repurchase programs.

During the six months ended March 31, 2021, COVID-19 has not had a material impact on our operations, and we anticipate our current cash balances, cash flows from operations and sources of liquidity will be sufficient to meet our cash requirements.

As of June 30, 2021, an aggregate of $57,955 remains under Griffon's Board authorized repurchase programs.

No shares were repurchased during the nine months ended June 30, 2021 under these share repurchase programs.

During the nine months ended June 30, 2021, COVID-19 has not had a material impact on our operations, and we anticipate our current cash balances, cash flows from operations and sources of liquidity will be sufficient to meet our cash requirements.

Payments related to DE revenue are received in accordance with the terms of development and production subcontracts;

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A small number of customers account for, and are expected to continue to account for, a substantial portion of Griffon’s consolidated revenue.

For the six months ended March 31, 2021:

For the nine months ended June 30, 2021:

• The United States Government and its agencies, through either prime or subcontractor relationships, represented 7% of Griffon’s consolidated revenue and 67% of DE revenue.

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The loss of all or a portion of the volume from any one of these customers could have a material adverse impact on Griffon’s liquidity and results of operations.

Cash and Equivalents and Debt March 31, September 30,

Cash and Equivalents and Debt June 30, September 30,

Cash and equivalents $ 220,697 $ 218,089

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Proceeds from the Senior Notes were used to redeem the $1,000,000 of 5.25% 2022 senior notes.

As of March 31, 2021, outstanding Senior Notes due totaled $1,000,000;

As of June 30, 2021, outstanding Senior Notes due totaled $1,000,000;

interest is payable semi-annually on March 1 and September 1.

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On April 22, 2020 and August 3, 2020, Griffon exchanged substantially all of the Senior Notes for substantially identical Senior Notes registered under the Securities Act of 1933, as amended (the "Securities Act"), via an exchange offer.

The fair value of the Senior Notes approximated $1,060,000 on March 31, 2021 based upon quoted market prices (level 1 inputs).

The fair value of the Senior Notes approximated $1,061,250 on June 30, 2021 based upon quoted market prices (level 1 inputs).

In connection with these transactions, Griffon capitalized $16,448 of underwriting fees and other expenses incurred related to the issuance and exchange of the 2028 Senior Notes, which will amortize over the term of the 2028 Senior Notes.

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Interest is payable on borrowings at either a LIBOR or base rate benchmark rate, plus an applicable margin, which adjusts based on financial performance.

margins are 0.50% for base rate loans and 1.50% for LIBOR loans.

The Credit Agreement has certain financial maintenance tests including a maximum total leverage ratio, a maximum senior secured leverage ratio and a minimum interest coverage ratio, as well as customary affirmative and negative covenants, and events of default.

Current margins are 0.50% for base rate loans and 1.50% for LIBOR loans.

The Credit Agreement has certain financial maintenance tests including a maximum total leverage ratio, a maximum senior secured leverage ratio and a minimum interest coverage

ratio, as well as customary affirmative and negative covenants, and events of default.

The negative covenants place limits on Griffon's ability to, among other things, incur indebtedness, incur liens, and make restricted payments and investments.

Borrowings under the Credit Agreement are guaranteed by Griffon’s material domestic subsidiaries and are secured, on a first priority basis, by substantially all domestic assets of the Company and the guarantors, and a pledge of not greater than 65% of the equity interest in Griffon’s material, first-tier foreign subsidiaries.

At March 31, 2021, there were $20,622 of outstanding borrowings under the Credit Agreement;

At June 30, 2021, there were $20,775 of outstanding borrowings under the Credit Agreement;

outstanding standby letters of credit were $17,007;

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Two of Griffon's subsidiaries have finance leases outstanding for real estate located in Troy, Ohio and Ocala, Florida.

The leases mature in 2021 and 2025, respectively, and bear interest at fixed rates of approximately 5.0% and 5.6%, respectively.

The Troy, Ohio lease is secured by a mortgage on the real estate and is guaranteed by Griffon.

The leases mature in November 2021 and 2025, respectively, and bear interest at fixed rates of approximately 5.0% and 5.6%, respectively.

The Troy, Ohio lease is secured by a mortgage on the real estate, which is guaranteed by Griffon, and has a one dollar buyout at the end of the lease.

The Ocala, Florida lease contains two five-year renewal options.

At March 31, 2021, $15,907 was outstanding, net of issuance costs.

At June 30, 2021, $15,254 was outstanding, net of issuance costs.

In November 2012, Garant G.P.

(“Garant”), a Griffon wholly owned subsidiary, entered into a CAD 15,000 ($11,894 as of March 31, 2021) revolving credit facility.

The facility accrues interest at LIBOR (USD) or the Bankers Acceptance Rate (CDN) plus 1.3% per annum (1.41% LIBOR USD and 1.47% Bankers Acceptance Rate CDN as of March 31, 2021).

(“Garant”), a Griffon wholly owned subsidiary, entered into a CAD 15,000 ($12,126 as of June 30, 2021) revolving credit facility.

The facility accrues interest at LIBOR (USD) or the Bankers Acceptance Rate (CDN) plus 1.3% per annum (1.40% LIBOR USD and 1.48% Bankers Acceptance Rate CDN as of June 30, 2021).

The revolving facility matures in October 2022.

Garant is required to maintain a certain minimum equity.

At March 31, 2021, there were no borrowings under the revolving credit facility with CAD 15,000 ($11,894 as of March 31, 2021) available for borrowing.

At June 30, 2021, there were no outstanding borrowings under the revolving credit facility with CAD 15,000 ($12,126 as of June 30, 2021) available.

In July 2016, Griffon Australia Holdings Pty Ltd and its Australian subsidiaries (collectively, "Griffon Australia") entered into an AUD 29,625 term loan, AUD 20,000 revolver and AUD 10,000 receivable purchase facility agreement.

The term loan requires quarterly principal payments of AUD 1,250 plus interest with a balloon payment of AUD 9,625 due upon maturity in March 2022, and accrues interest at Bank Bill Swap Bid Rate “BBSY” plus 1.95% per annum (2.01% at March 31, 2021).

During fiscal 2020, the term loan balance was reduced by AUD 5,000, from AUD 23,375 to AUD 18,375 with proceeds from an AUD 5,000 increase in the commitment of the receivables purchase line from AUD 10,000 to AUD 15,000.

As of March 31, 2021, the term loan had an outstanding balance of AUD 13,375 ($10,192 as of March 31, 2021).

As of June 30, 2021, the term loan had an outstanding balance of AUD 12,125 ($9,131 as of June 30, 2021).

The revolving facility and receivable purchase facility mature in March 2022, but are renewable upon mutual agreement with the lender.

The revolving facility and receivable purchase facility accrue interest at BBSY plus 1.9% and 1.35%, respectively, per annum (1.98% and 1.41%, respectively, at March 31, 2021).

At March 31, 2021, there were no balances outstanding under the revolver and the receivable purchase facility.

The revolving facility and receivable purchase facility accrue interest at BBSY plus 1.9% and 1.35%, respectively, per annum (1.98% and 1.41%, respectively, at June 30, 2021).

At June 30, 2021, there were no balances outstanding under the revolver and the receivable purchase facility.

The revolver, receivable purchase facility and the term loan are all secured by substantially all of the assets of Griffon Australia and its subsidiaries.

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The term loan and mortgage loan require quarterly principal payments of GBP 438 and GBP 105 plus interest, respectively, and have balloon payments due upon maturity, July 2023, of GBP 7,088 and GBP 2,349, respectively.

The Term Loan and Mortgage Loans each accrue interest at the GBP LIBOR Rate plus 1.8%, (1.85% at March 31, 2021).

The revolving facility matures in May 2021, but is renewable upon mutual agreement with the lender, and accrues interest at the Bank of England Base Rate plus 1.5% (1.60% as of March 31, 2021).

As of March 31, 2021, the revolver had an outstanding balance of GBP $3,204 ($4,405 as of March 31, 2021) while the term and mortgage loan balances amounted to GBP 14,313 ($19,678 as of March 31, 2021).

The Term Loan and Mortgage Loans each accrue interest at the GBP LIBOR Rate plus 1.8%, (1.86% at June 30, 2021).

The revolving facility accrues interest at the Bank of England Base Rate plus 1.8% (1.90% as of June 30, 2021) and was renewed in June 2021.

The revolving credit facility matures in April 2022, but it is renewable upon mutual agreement with the lender.

As of June 30, 2021, the revolver had an outstanding balance of GBP $2,073 ($2,871 as of June 30, 2021) while the term and mortgage loan balances amounted to GBP 13,771 ($19,073 as of June 30, 2021).

The revolver and the term loan are both secured by substantially all of the assets of AMES UK and its subsidiaries.

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The internal loan is secured by shares purchased with the proceeds of the loan.

The amount outstanding on the internal loan at March 31, 2021 was $28,608.

The amount outstanding on the internal loan at June 30, 2021 was $27,988.

Other long-term debt primarily consists of a loan with the Pennsylvania Industrial Development Authority, with the balance consisting of capital leases.

At March 31, 2021, Griffon and its subsidiaries were in compliance with the terms and covenants of its credit and loan agreements.

Gross Debt to EBITDA (Leverage), as calculated in accordance with the definition in the Credit Agreement, was 3.1x at March 31, 2021.

During the six months ended March 31, 2021, cash provided by discontinued operations from operating activities of $1,237 primarily related to insurance proceeds received, partially offset by the settling of certain liabilities and environmental costs associated with the Installations Services.

During the six months ended March 31, 2020, Griffon used cash for discontinued operations from operating activities of $1,994 primarily related to the settling of certain liabilities and environmental costs associated with the Plastics business and Installations Services.

At June 30, 2021, Griffon and its subsidiaries were in compliance with the terms and covenants of its credit and loan agreements.

Gross Debt to EBITDA (Leverage), as calculated in accordance with the definition in the Credit Agreement, was 2.9x at June 30, 2021.

During the nine months ended June 30, 2021, cash provided by discontinued operations from operating activities of $1,080 primarily related to insurance proceeds received, partially offset by the settling of certain liabilities and environmental costs associated with the Installations Services.

During the nine months ended June 30, 2020, Griffon used cash for discontinued operations from operating activities of $2,481 primarily related to the settling of certain liabilities and environmental costs associated with the Plastics business and Installations Services.

SUPPLEMENTAL GUARANTOR FINANCIAL INFORMATION

Griffon’s Senior Notes are fully and unconditionally guaranteed, jointly and severally by Clopay Corporation, Telephonics Corporation, The AMES Companies, Inc., ATT Southern LLC, Clopay AMES Holding Corp., ClosetMaid LLC, CornellCookson, LLC and Cornell Real Estate Holdings, LLC, all of which are indirectly 100% owned by Griffon.

In accordance with Rule 3-10 of Regulation S-X promulgated under the Securities Act, presented below are summarized financial information of the Parent (Griffon) subsidiaries and the Guarantor subsidiaries as of March 31, 2021 and September 30, 2020 and for the three and six months ended March 31, 2021 and for the year ended September 30, 2020.

In accordance with Rule 3-10 of Regulation S-X promulgated under the Securities Act, presented below are summarized financial information of the Parent (Griffon) subsidiaries and the Guarantor subsidiaries as of June 30, 2021 and September 30, 2020 and for the three and nine months ended June 30, 2021 and for the year ended September 30, 2020.

All intercompany balances and transactions between subsidiaries under Parent and subsidiaries under the Guarantor have been eliminated.

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Summarized Statements of Operations and Comprehensive Income (Loss)

For the Six Months Ended For the Year Ended

March 31, 2021 September 30, 2020

For the Nine Months Ended For the Year Ended

June 30, 2021 September 30, 2020

Parent Company Guarantor Companies Parent Company Guarantor Companies

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Summarized Balance Sheet Information

For the Six Months Ended For the Year Ended

March 31, 2021 September 30, 2020

For the Nine Months Ended For the Year Ended

June 30, 2021 September 30, 2020

Parent Company Guarantor Companies Parent Company Guarantor Companies

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the impact of COVID-19 on the U.S.

and the global economy, including business disruptions, reductions in employment and an increase in business and operating facility failures, specifically among our customers;

and the global economy, including business disruptions, reductions in employment and an increase in business and operating facility failures, specifically among our customers and suppliers;

Griffon's ability to service and refinance its debt;

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis