What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2021-11-17 compared with 2020-11-13 · 312 added, 325 removed, 313 unchanged (67% of the section changed)

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and is listed on the New York Stock Exchange (NYSE:GFF).

On September 27, 2021, Griffon announced it is exploring strategic alternatives, including a sale, for its Defense Electronics (DE) segment, which consists of its subsidiary Telephonics Corporation ("Telephonics").

As a result, Griffon classified the results of operations of the Telephonics business as a discontinued operation in the Consolidated Statements of Operations for all periods presented and classified the related assets and liabilities associated with the discontinued operation as held for sale in the consolidated balance sheets.

Accordingly, all references made to results and information in this Annual Report on Form 10-K are to Griffon's continuing operations, unless specifically noted.

Telephonics is recognized globally as a leading provider of highly sophisticated intelligence, surveillance and communications solutions that are deployed across a wide range of land, sea and air applications.

Telephonics designs, develops, manufactures and provides logistical support and lifecycle sustainment services to defense, aerospace and commercial customers worldwide.

Griffon now conducts its operations through two reportable segments:

• Consumer and Professional Products ("CPP") conducts its operations through AMES.

Founded in 1774, AMES is the leading North American manufacturer and a global provider of branded consumer and professional tools and products for home storage and organization, landscaping, and enhancing outdoor lifestyles.

CPP sells products globally through a portfolio of leading brands including True Temper, AMES, and ClosetMaid.

CPP revenue was 54%, 55%, and 53% of Griffon’s consolidated revenue in 2021, 2020 and 2019, respectively.

• Home and Building Products ("HBP") conducts its operations through Clopay.

Founded in 1964, Clopay is the largest manufacturer and marketer of garage doors and rolling steel doors in North America.

Residential and commercial sectional garage doors are sold through professional dealers and leading home center retail chains throughout North America under the brands Clopay, Ideal, and Holmes.

Rolling steel door and grille products designed for commercial, industrial, institutional, and retail use are sold under the CornellCookson brand.

HBP revenue was 46%, 45% and 47% of Griffon’s consolidated revenue in 2021, 2020 and 2019, respectively.

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.

Quatro is expected

to contribute approximately $5,000 in annualized revenue in the first twelve months under AMES' ownership.

In August 2020 Griffon Corporation completed the public offering of 8,700,000 shares of our common stock for total net proceeds of $178,165 (the "Public Offering").

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This acquisition broadens AMES' product offerings in the UK market and increases its in-country operational footprint.

On June 4, 2018, Clopay Corporation ("Clopay") acquired CornellCookson, Inc.

("CornellCookson"), a leading US manufacturer and marketer of rolling steel door and grille products designed for commercial, industrial, institutional and retail use, for an effective purchase price of approximately $170,000.

CornellCookson, as expected, generated over $200,000 in revenue in the first full year of operations.

The accounts, affected for adjustments to reflect fair market values assigned to assets purchased and liabilities assumed, and results of operations of CornellCookson, are included in the Company’s consolidated financial statements from the date of acquisition of June 4, 2018.

See Note 3, Acquisitions.

On November 16, 2017, Griffon announced it entered into a definitive agreement to sell Clopay Plastic Products Company, Inc.

("Plastics") and on February 6, 2018, completed the sale to Berry Global, Inc.

("Berry") for approximately $465,000, net of certain post-closing adjustments.

As a result, Griffon classified the results of operations of the Plastics business as discontinued operations in the Consolidated Statements of Operations for all periods presented and classified the related assets and liabilities associated with the discontinued operations in the consolidated balance sheets.

All results and information presented exclude Plastics unless otherwise noted.

See Note 7, Discontinued Operations.

On October 2, 2017, Griffon acquired ClosetMaid LLC ("ClosetMaid") for approximately $185,700, inclusive of post-closing adjustments, or $165,000 net of the estimated present value of tax benefits resulting from the transaction.

ClosetMaid, founded in 1965, is a leading North American manufacturer and marketer of wood and wire closet organization, general living storage and wire garage storage products and sells to some of the largest home center retail chains, mass merchandisers, and direct-to-builder professional installers in North America.

ClosetMaid, as expected, generated over $300,000 in revenue in the first twelve months after the acquisition.

The accounts, affected for adjustments to reflect fair market values assigned to assets purchased and liabilities assumed, and results of operations of ClosetMaid are included in the Company’s consolidated financial statements from the date of acquisition of October 2, 2017.

See Note 3, Acquisitions.

Impact of COVID-19 on Our Business

Apta contributed approximately $20,000 in revenue in the first 12 months after the acquisition.

Update of COVID-19 on Our Business

The health and safety of our employees, our customers and their families is a high priority for Griffon.

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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 fiscal 2020 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, with the exception of HBP's sectional door business, which experienced an 18% decline in orders in April but subsequently rebounded.

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

Although many U.S.

states lifted initial executive orders issued earlier in the year requiring all workers to remain at home unless their work is critical, essential, or life-sustaining, some states and localities have recently put in place new restrictions regarding the operation of many types of businesses, or have tightened up restrictions already in place, in response to the recent worsening of the COVID-19 outbreak .

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 by these disruptions.

Our supply chain has experienced certain disruptions which, together with other factors such as a shortage of labor, has resulted in longer delivery lead times and restricted manufacturing capacity for certain of our products.

Commodity prices have increased during COVID-19 and may continue to increase, and we may not be able to pass off all or any of such price increases to our customers on a timely basis, or at all.

It is difficult to predict whether the supply chain disruptions that impact us will improve, worsen or remain the same in the near term.

Our suppliers could be required by government authorities to temporarily cease operations in accordance with the various restrictions discussed above;

might be limited in their production capacity due to complying with restrictions relating to the operation of businesses during the COVID-19 pandemic;

or could suffer their own supply chain disruptions, impacting their ability to continue to supply us with the quantity of materials required by us.

During fiscal 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.

executive orders issued in 2020, which required workers to remain at home unless their work is critical, essential, or life-sustaining, have been lifted.

Regardless, we believe that, based on the various standards published to date, the work our employees are performing are either critical, essential and/or life-sustaining for the following reasons:

1) Our Defense Electronics segment ("DE") is a defense and national security-related operation supporting the U.S.

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

1) 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;

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Our AMES international facilities are currently fully operational, as they meet the applicable standards in their respective countries.

On September 9, 2021, President Biden announced a proposed new rule requiring that all employers with at least 100 employees require that their employees be fully vaccinated or tested weekly.

Department of Labor’s Occupational Safety and Health Administration (“OSHA”) issued an emergency temporary standard regulation to carry out this mandate.

On November 6, 2021, the Unites States Court of Appeals for the Fifth Circuit granted a stay of the emergency temporary standard, and on November 12, 2021 the Court upheld its stay and barred OSHA from enforcing the mandate “pending adequate judicial review” of a motion for permanent injunction.

At this time, it is unclear, among other things, when the vaccine mandate will go into effect (or if it will go into effect at all);

whether it will apply to all employees or only to employees who work in the office;

and how compliance will be documented.

As a company with more than 100 employees, it is anticipated that, should the vaccine mandate go into effect, we would be subject to the OSHA regulation concerning COVID-19 vaccination and the vaccine mandate.

Should the mandate apply to us, we may be required to implement a requirement that all of our employees get vaccinated, subject to limited exceptions.

At this time, it is not possible to predict the impact that a vaccine mandate, or a vaccine requirement should we adopt one, will have on us or on our workforce.

Any vaccine requirement or vaccine mandate, if implemented, may result in employee attrition, which could materially and adversely affect our business and results of operations.

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.

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

In February 2020, Griffon refinanced $850,000 of its $1,000,000 of senior notes due 2022 with new 5.75% senior notes with a maturity of 2028, and in June 2020 refinanced the remaining $150,000 under the same terms and indenture as the $850,000 senior notes due 2028.

In August 2020, we completed a Public Offering of 8,700,000 shares of our common stock for total net proceeds of $178,165;

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While we are unable to determine or predict the nature, duration or scope of the overall impact the COVID-19 pandemic will have on our businesses, results of operations, liquidity or capital resources, we believe it is important to discuss where our company stands today, how our response to COVID-19 is progressing and how our operations and financial condition may change as the fight against COVID-19 progresses.

Griffon conducts its operations through three reportable segments:

Consumer and Professional Products ("CPP") conducts its operations through AMES.

CPP sells products globally through a portfolio of leading brands including True Temper, AMES, and ClosetMaid.

CPP revenue was 47% , 45% , and 48% of Griffon’s consolidated revenue in 2020 , 2019 and 2018, respectively.

Home and Building Products ("HBP") conducts its operations through Clopay.

Founded in 1964, Clopay is the largest manufacturer and marketer of garage doors and rolling steel doors in North America.

Residential and commercial sectional garage doors are sold through professional dealers and leading home center retail chains throughout North America under the brands Clopay, Ideal, and Holmes.

Rolling steel door and grille products designed for commercial, industrial, institutional, and retail use are sold under the CornellCookson brand.

HBP revenue was 39% , 40% and 35% of Griffon’s consolidated revenue in 2020 , 2019 and 2018, respectively.

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

Telephonics’ revenue was 14% , 15% and 17% of Griffon’s consolidated revenue in 2020 , 2019 and 2018, respectively.

CONSOLIDATED RESULTS OF OPERATIONS

2021 Compared to 2020

Revenue from continuing operations for the year ended September 30, 2020 of $2,407,522 increased 9% compared to $2,209,289 in the year ended September 30, 2019, primarily driven by increased consumer demand for home improvement projects at both CPP and HBP, and increased revenue at DE.

Organic growth was 8%.

Gross profit for 2020 was $641,426 compared to $583,474 in 2019, with gross margin as a percent of sales (“gross margin”) of 26.6% in 2020, compared to 26.4% in 2019.

In 2020, Gross profit included restructuring charges of $4,159.

Excluding restructuring charges in 2020, Gross profit would have been $645,586 or 26.8% of revenue compared to $583,474 or 26.4% in the prior year.

Selling, general and administrative (“SG&A”) expenses from continuing operations in 2020 of $486,398 increased 9% from 2019 of $447,163 .

The 2020 SG&A expenses included restructuring charges of $11,630 , acquisition costs of $2,960 and the reversal of contingent consideration related to the Kelkay acquisition of $1,733 .

The 2019 SG&A expenses include income from the reversal of contingent consideration related to the Kelkay acquisition of $1,646 .

Excluding these items from both periods, the 2020 SG&A expenses would have been $473,541, or 19.7% of revenue compared to $448,809 or 20.3%, with the increase in expenses primarily due to the Apta acquisition and increased management incentives, partially offset by COVID-19 related reduced travel expenses.

Interest expense from continuing operations in 2020 of $66,544 decreased 2% compared to 2019 of $68,066 , primarily as a result of decreased outstanding borrowings and variable interest rates on our Revolving Credit Facility.

Other income (expense) from continuing operations of $1,445 and $3,127 in 2020 and 2019 , respectively, includes $915 and $438 , respectively, of net currency exchange transaction losses from receivables and payables held in non-functional currencies, $184 and $(40) , respectively, of net gains or (losses) on investments, and $1,559 and $3,148 , respectively, of net periodic benefit plan income.

Additionally, in 2020 , Other income (expense) also includes a one-time technology recognition award for $700 .

Griffon reported pretax income from continuing operations for 2020 of $82,757 compared to $72,178 for 2019.

In 2020, the Company recognized an effective income tax rate of 35.4% compared to 36.8% in 2019 .

Revenue for the year ended September 30, 2021 of $2,270,626 compared to $2,066,546 in the year ended September 30, 2020 increased 10% resulting from increased revenue at HBP and CPP of 12% and 8%, respectively.

Gross profit for 2021 was $641,113 compared to $583,994 in 2020.

Gross margin as a percent of sales (“gross margin”) for 2021 and 2020 was 28.2% and 28.3%, respectively.

In the years ended 2021 and 2020, gross profit included restructuring charges of $7,923 and $4,159, respectively.

Excluding restructuring charges from both years, gross profit would have been $649,036 or 28.6% of revenue, compared to $588,153 or 28.5% in the prior year.

Selling, general and administrative (“SG&A”) expenses in 2021 of $470,530 increased 6% from $444,454 in 2020.

The 2021 SG&A expenses included restructuring charges of $13,495.

The 2020 SG&A expenses included restructuring charges of $9,510, acquisition costs of $2,960 and income from the reversal of contingent consideration related to the Kelkay acquisition of $1,733.

Excluding these items from both periods, the 2021 SG&A expenses would have been $457,035, or 20.1% of revenue compared to $433,717 or 21.0%, with the increase in expenses primarily due to increased distribution and shipping costs.

Interest expense in 2021 of $63,175 decreased 5% compared to 2020 of $66,544, primarily as a result of decreased outstanding borrowings and decreased variable interest rates on our Revolving Credit Facility.

Other income (expense) of $3,331 and $2,885 in 2021 and 2020, respectively, includes $81 and $915, respectively, of net currency exchange transaction losses from receivables and payables held in non-functional currencies, $283 and $184, respectively, of net gains on investments, and $907 and $1,559, respectively, of net periodic benefit plan income.

Other income (expense) also includes rental income of $1,848 in 2021 and 2020.

Griffon reported Income before tax from continuing operations for 2021 of $111,179 compared to $68,705 for 2020.

In 2021, the Company had an effective income tax rate of 35.9% compared to 38.2% in 2020.

The 2021 tax rate included $3,245 of discrete and certain other tax provisions, net, and other items that affect comparability, as listed below.

The 2019 tax rate included $2,035 of discrete and certain other tax provisions, net.

The 2020 tax rate included $965 of discrete and certain other tax provisions, net, and other items that affect comparability, as listed below.

Excluding the discrete and certain other tax provisions, net, and other items that affect comparability, as listed below, the effective income tax rates for 2021 and 2020 were 31.7% and 33.7%, respectively.

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– Restructuring charges of $21,418 ($16,131, net of tax, or 0.30 per share);

– Discrete and certain other tax provision, net, of $3,245 or 0.06 per share.

The 2020 income from continuing operations included the following:

– Restructuring charges of $13,670 ($10,177, net of tax, or $0.23 per share);

– Loss from debt extinguishment $7,925 ($6,167, net of tax, or $0.14 per share);

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– Discrete and certain other tax provision, net, of $965 or $0.02 per share.

The 2019 Income from continuing operations included a benefit from the reversal of contingent consideration related to the Kelkay acquisition of $1,646 ( $1,333 , net of tax, or $0.03 per share) and discrete and certain other tax provisions, net, of $2,035 or $0.05 per share.

Excluding these items from both reporting periods, 2021 Income from continuing operations would have been $90,615, or $1.70 per share compared to $60,646, or $1.35 per share, in 2020.

2020 Compared to 2019

Revenue from continuing operations for the year ended September 30, 2019 was $2,209,289, compared to $1,977,918 in the year ended September 30, 2018, an increase of 12%, primarily driven by increased revenue at CPP and HBP from both recent acquisitions and organic growth, and increased revenue at Defense Electronics.

Revenue for the year ended September 30, 2020 of $2,066,546 increased 10% compared to $1,874,248 in the year ended September 30, 2019, primarily driven by increased consumer demand for home improvement projects at both CPP and HBP.

Organic growth was 9%.

Gross profit for 2020 was $583,994 compared to $516,845 in 2019, with gross margin of 28.3% in 2020, compared to 27.6% in 2019.

SG&A expenses from continuing operations in 2019 of $447,163 increased 7% from 2018 of $418,517 .

In 2020, gross profit included restructuring charges of $4,159.

Excluding restructuring charges in 2020, gross profit would have been $588,153 or 28.5% of revenue compared to $516,845 or 27.6% in the prior year.

Selling, general and administrative (“SG&A”) expenses in 2020 of $444,454 increased 9% from $408,339 in 2019.

The 2020 SG&A expenses included restructuring charges of $9,510, acquisition costs of $2,960 and the reversal of contingent consideration related to the Kelkay acquisition of $1,733.

The 2019 SG&A expenses include income from the reversal of contingent consideration related to the Kelkay acquisition of $1,646.

The 2018 SG&A expenses included acquisition costs of $6,097, special dividend ESOP charges of $3,220, cost of a life insurance benefit of $2,614 and secondary offering costs of $1,205.

Excluding these items from both periods the 2019 SG&A expenses increased 11% over 2018 primarily related to the June 4, 2018 acquisition of CornellCookson and increased distribution and related freight costs at HBP due to increased sales volume.

SG&A for 2019, as a percent of revenue, was 20.3% compared to 20.5% in 2018, excluding the items detailed above.

Interest expense from continuing operations in 2019 of $68,066 increased 4% compared to 2018 of $65,568, primarily as a result of increased outstanding borrowings and interest rates on our Revolving Credit Facility.

Other income (expense) from continuing operations of $3,127 in 2019 and $4,880 in 2018, includes $438 and $200 , respectively, of currency exchange transaction losses from receivables and payables held in non-functional currencies, and $(40) and $1,184 , respectively, of net gains or (losses) on investments.

Additionally, Other income (expense) included net periodic benefit plan income of $3,148 and $3,649 in 2019 and 2018, respectively.

Griffon reported pretax income from continuing operations for 2019 of $72,178 compared to $33,810 for 2018.

Excluding these items from both periods, the 2020 SG&A expenses would have been $433,717 or 21.0% of revenue compared to $409,985 or 21.9%, with the increase in expenses primarily due to the Apta acquisition and increased management incentives, partially offset by COVID-19 related reduced travel expenses.

Interest expense in 2020 of $66,544 decreased 3% compared to 2019 of $68,312, primarily as a result of decreased outstanding borrowings and variable interest rates on our Revolving Credit Facility.

Other income (expense) of $2,885 and $5,230 in 2020 and 2019, respectively, includes $915 and $438, respectively, of net currency exchange transaction losses from receivables and payables held in non-functional currencies, $184 and $(40), respectively, of net gains or (losses) on investments, and $1,559 and $3,148, respectively, of net periodic benefit plan income.

Other income (expense) also includes rental income of $1,848 in 2020 and 2019.

Griffon reported Income before tax from continuing operations for 2020 of $68,705 compared to $46,223 for 2019.

In 2020, the Company recognized an effective income tax rate of 38.2% compared to 44.9% in 2019.

The 2020 tax rate included $965 of discrete and certain other tax provisions, net, and other items that affect comparability, as listed below.

The 2019 tax rate included $1,786 of discrete and certain other tax provisions, net.

The 2018 tax rate included $9,384 of discrete and certain other tax benefits, net, primarily from the revaluation of deferred tax liabilities and the provisional amount recorded for the IRC section 965 transition tax on the untaxed foreign earnings net of foreign tax credits, related to the TCJA.

Excluding the discrete and certain other tax benefits, net, and certain other items from continuing operations, as listed below, the effective tax rates for 2019 and 2018 were 34.3% and 33.8%, respectively.

Excluding the discrete and certain other tax provisions, net, and other items that affect comparability, as listed below, the effective income tax rates for 2020 and 2019 were 33.7% and 41.8%, respectively.

These rates reflect the impact of tax reserves and changes in earnings mix between U.S.

Income from continuing operations for 2020 was $42,443, or $0.94 per share, compared to $25,470, or $0.59 per share in 2019.

The 2019 Income from continuing operations included a benefit from the reversal of contingent consideration related to the Kelkay acquisition of $1,646 ($1,333, net of tax, or $0.03 per share) and discrete and certain other tax provisions, net, of $2,035 or $0.05 per share.

The 2020 income from continuing operations included the following:

– Restructuring charges of $13,670 ($10,177, net of tax, or $0.23 per share);

– Loss from debt extinguishment $7,925 ($6,167, net of tax, or $0.14 per share);

– Acquisition costs of $2,960 ($2,297, net of tax, or $0.05 per share);

– Special dividend ESOP charges of $3,220 ($2,125, net tax, or $0.05);

– Secondary equity offering costs of $1,205 ($795, net tax, or $0.02);

– Cost of life insurance benefit of $2,614 ($248, net tax, or $0.01);

– Discrete and certain other tax benefits, net, of $9,384 or $0.22 per share, primarily from the revaluation of deferred

tax liabilities and the provisional amount recorded for the IRC section 965 transition tax on the untaxed foreign earnings net of foreign tax credits related to the TCJA.

Excluding these items from both reporting periods, 2019 Income from continuing operations would have been $46,324, or $1.08 per share compared to $32,086, or $0.76 per share, in 2018.

– Acquisition contingent consideration benefit of $1,733 ($1,403, net of tax, or $0.03 per share);

– Discrete and certain other tax provision, net, of $965 or $0.02 per share.

The 2019 Income from continuing operations included a benefit from the reversal of contingent consideration related to the Kelkay acquisition of $1,646 ($1,333, net of tax, or $0.03 per share) and discrete and certain other tax provisions, net, of $1,786 or $0.04 per share.

Excluding these items from both reporting periods, 2020 Income from continuing operations would have been $60,646, or $1.35 share compared to $25,923, or $0.60 per share, in 2019.

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

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For the Years Ended September 30,

2021 2020 2019

Income from continuing operations $ 71,239 $ 42,443 $ 25,470

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Acquisition contingent consideration — (1,733) (1,646)

Special dividend ESOP charges

Secondary equity offering costs

Cost of life insurance benefit

Tax impact of above items (5,287) (5,584) 313

Discrete and other certain tax provisions (benefits)

Discrete and other certain tax provisions 3,245 965 1,786

Adjusted income from continuing operations $ 90,615 $ 60,646 $ 25,923

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Acquisition contingent consideration — (0.03) (0.03)

Special dividend ESOP charges

Secondary equity offering costs

Cost of life insurance benefit

Discrete and other certain tax provisions (benefits)

Discrete and other certain tax provisions 0.06 0.02 0.04

Adjusted earnings per share from continuing operations $ 1.70 1.35 $ 0.60

Weighted-average shares outstanding (in thousands) 53,369 45,015 42,888

Due to rounding, the sum of earnings per common share and adjusting items, net of tax, may not equal adjusted earnings per common share.

The tax impact for the above reconciling adjustments from GAAP to non-GAAP Income from continuing operations and the related EPS is determined by comparing the Company's tax provision, including the reconciling adjustments, to the tax provision excluding such adjustments.

REPORTABLE SEGMENTS

Griffon evaluates performance and allocates resources based on each segment's operating results from continuing operations 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).

Griffon believes this information is useful to investors for the same reason.

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For the Years Ended September 30,

2021 2020 2019

United States $ 766,150 $ 769,100 $ 690,772

Europe 123,607 85,339 63,284

Canada 85,676 74,072 72,327

Australia 244,674 203,012 165,291

All other countries 9,411 7,710 8,934

Total Revenue $ 1,229,518 $ 1,139,233 $ 1,000,608

Adjusted EBITDA $ 115,673 9.4 % $ 104,053 9.1 % $ 90,677 9.1 %

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2021 Compared to 2020

CPP revenue in 2020 increased $138,625 , or 14% , compared to 2019, primarily from a 12% increase in volume, due to increased consumer demand for home improvement initiatives across most of our geographic regions supplemented by COVID-19 stay at home orders, favorable price and mix of 1% and an incremental 2% revenue contribution from the Apta acquisition, partially offset by an unfavorable impact of foreign exchange of 1%.

Organic growth was 12%.

CPP revenue in 2021 increased $90,285, or 8%, compared to 2020, comprised of a 3% increase in volume, driven by increased consumer demand across all international geographies, partially offset by reduced volume in the U.S.

due to labor, transportation and supply chain disruptions.

Revenue also benefited from favorable price and mix of 1%, and a favorable impact from foreign exchange of 4%.

CPP Adjusted EBITDA in 2021 increased $11,620 or 11% to $115,673 compared to $104,053 in 2020.

The favorable variance resulted primarily from the increased revenue noted above, partially offset by increased tariffs, COVID-19 related inefficiencies and direct costs, and an unfavorable foreign exchange impact of 1%.

Direct COVID-19 related expenses totaled approximately $5,000 in 2020.

The favorable variance resulted primarily from the increased revenue noted above and a favorable foreign exchange impact of 5%, partially offset by increased U.S.

material costs coupled with the lag in realization of price increases and COVID-19 related inefficiencies.

Segment depreciation and amortization increased $1,645 from the comparable prior year period primarily due to the onset of depreciation for new assets placed in service.

On November 29, 2019, AMES acquired Vatre Group Limited ("Apta"), a leading United Kingdom supplier of innovative garden pottery and associated products sold to leading UK and Ireland garden centers for approximately $10,500 (GBP 8,750 ), inclusive of a post-closing working capital adjustment, net of cash acquired.

This acquisition broadens AMES' product offerings in the UK market and increases its in-country operational footprint.

Apta is expected to contribute $15,000 in revenue in the first 12 months after the acquisition.

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.

Quatro is expected

to contribute approximately $5,000 in annualized revenue in the first twelve months under AMES' ownership.

On November 29, 2019, AMES acquired Vatre Group Limited ("Apta"), a leading U.K.

supplier of innovative garden pottery and associated products sold to leading UK and Ireland garden centers for approximately $10,500 (GBP 8,750), inclusive of a post-closing working capital adjustment, net of cash acquired.

This acquisition broadens AMES' product offerings in the U.K.

market and increases its in-country operational footprint.

Apta contributed approximately $20,000 in revenue in the first 12 months after the acquisition.

Strategic Initiative and Restructuring Charges

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The expanded focus of this initiative leverages the same three key development areas being executed within our U.S.

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

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

Third, 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.

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

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.

Expanding the roll-out of the new business platform from our AMES U.S.

operations to include AMES’ global operations will extend the duration of the project by one year, with completion now expected by the end of calendar year 2023.

When fully implemented, these actions will result in annual cash savings of $30,000 to $35,000 (increased from $15,000 to $20,000 ) and a reduction in inventory of $30,000 to $35,000 (increased from $20,000 to $25,000 ), both based on fiscal 2020 operating levels.

The cost to implement this new business platform, over the duration of the project, will include one-time charges of approximately $65,000 (increased from $35,000 ) and capital investments of approximately $65,000 (increased from $40,000 ).

The one-time charges are comprised of $46,000 of cash charges, which includes $26,000 of personnel-related costs such as training, severance,

and duplicate personnel costs as well as $20,000 of facility and lease exit costs.

When fully implemented, these actions will result in annual cash savings of $30,000 to $35,000 and a reduction in inventory of $30,000 to $35,000 both based on fiscal 2020 operating levels.

The cost to implement this new business platform, over the duration of the project, will include one-time charges of approximately $65,000 and capital investments of approximately $65,000.

The one-time charges are comprised of $46,000 of cash charges, which includes $26,000 of personnel-related costs such as training, severance, and duplicate personnel costs as well as $20,000 of facility and lease exit costs.

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 CPP incurred pre-tax restructuring and related exit costs approximating $13,669, comprised of cash charges of $8,977 and non-cash, asset-related charges of $4,692;

the cash charges included $5,620 for one-time termination benefits and other personnel-related costs and $3,357 for facility exit costs.

During the year ended September 30, 2020, capital expenditures of $6,733 were driven by investment in CPP business intelligence systems and e-commerce facility.

Non-Cash Charges

Personnel related costs

Facilities, exit costs and other

Facility and other

Capital Investments

In connection with this initiative, during the years ended September 30, 2021 and 2020, CPP incurred pre-tax restructuring and related exit costs approximating $21,418 and $13,669, respectively.

Since inception of this initiative in fiscal 2020, total cumulative charges totaled $35,087, comprised of cash charges of $23,740 and non-cash, asset-related charges of $11,347;

the cash charges included $8,810 for one-time termination benefits and other personnel-related costs and $14,930 for facility and lease exit costs primarily driven by the consolidation of distribution facilities and system optimization.

During the years ended September, 30, 2021 and 2020, capital expenditures of $8,774 and $6,733, respectively, were driven by investment in CPP business intelligence systems and e-commerce facility.

Cash Charges Non-Cash Charges

Personnel related costs Facilities, exit costs and other Facility and other Total Capital Investments

Domestic Expansion $ 12,000 $ 4,000 $ 19,000 35,000 $ 40,000

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Total 2020 restructuring charges (5,620) (3,357) (4,692) (13,669) (6,733)

Total 2021 restructuring charges (3,190) (11,573) (6,655) (21,418) (8,774)

Total cumulative charges $ (8,810) $ (14,930) $ (11,347) $ (35,087) $ (15,507)

Estimate to Complete $ 17,190 $ 5,070 $ 7,653 $ 29,913 $ 49,493

2020 Compared to 2019

CPP revenue in 2019 increased $46,996, or 5%, compared to 2018, driven by increased revenue from pricing and mix of 3% and volume of 4%, partially offset by a 2% unfavorable impact due to foreign exchange.

CPP Adjusted EBITDA in 2019 was $90,677 compared to $77,061 in 2018, primarily driven by the increased revenue as noted above, partially offset by increased material and tariff costs.

Depreciation and amortization increased $1,473 from 2018, primarily from acquisitions.

2018 Acquisitions

On February 13, 2018, AMES acquired Kelkay, a leading United Kingdom manufacturer and distributor of decorative outdoor landscaping products sold to garden centers, retailers and grocers in the UK and Ireland for approximately $56,118 (GBP 40,452) and contingent consideration of approximately GBP 7,000 , of which approximately GBP 2,200 was earned.

This acquisition broadened AMES' product offerings in the market and increased its in-country operational footprint.

Kelkay contributed approximately $35,000 in revenue in the first twelve months after the acquisition.

On November 6, 2017, AMES acquired Harper Brush Works (“Harper”), a division of Horizon Global, for approximately $5,000.

Harper is a leading U.S.

manufacturer of cleaning products for professional, home, and industrial use.

The acquisition will broaden AMES’ long-handle tool offering in North America to include brooms, brushes, and other cleaning tools and accessories.

Harper, as expected, generated approximately $10,000 in revenue in the first twelve months after the acquisition.

On October 2, 2017, Griffon completed the acquisition of ClosetMaid, a market leader of home storage and organization products, for approximately $185,700, inclusive of post-closing adjustments, or $165,000 net of the estimated present value of tax benefits resulting from the transaction.

ClosetMaid adds to Griffon's Home and Building Products segment, complementing and diversifying Griffon's portfolio of leading consumer brands and products.

ClosetMaid, as expected, generated over $300,000 in revenue in the first twelve months after the acquisition.

CPP revenue in 2020 increased $138,625, or 14%, compared to 2019, primarily from a 12% increase in volume, due to increased consumer demand for home improvement initiatives across most of our geographic regions supplemented by COVID-19 stay at home orders, favorable price and mix of 1% and an incremental 2% revenue contribution from the Apta acquisition, partially offset by an unfavorable impact of foreign exchange of 1%.

Organic growth was 12%.

CPP Adjusted EBITDA in 2020 increased $13,376 or 15% to $104,053 compared to $90,677 in 2019.

Direct COVID-19 related expenses totaled approximately $5,000 in 2020.

Home and Building Products

For the Years Ended September 30,

2021 2020 2019

Residential $ 633,523 $ 572,397 $ 538,301

Commercial 407,585 354,916 335,339

Total Revenue $ 1,041,108 $ 927,313 $ 873,640

Adjusted EBITDA $ 181,015 17.4 % $ 153,631 16.6 % $ 120,161 13.8 %

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2021 Compared to 2020

HBP revenue in 2020 increased $53,673 , or 6%, compared to 2019, with 4% from volume and 2% from favorable mix and pricing.

HBP Adjusted EBITDA in 2020 increased 33,470, or 28% to $153,631 compared to $120,161 in 2019, The favorable variance resulted from the increased revenue noted above and general operational efficiency improvements, partially offset by COVID-19 related inefficiencies and direct costs.

Direct COVID-19 related expenses totaled approximately $2,000 in 2020.

Depreciation and amortization remained consistent with the prior year.

On January 31, 2019, Clopay announced a $14,000 investment in facilities infrastructure and equipment at its rolling steel manufacturing location in Mountain Top, Pennsylvania.

This project includes a 95,000 square foot expansion to the already existing 184,000 square foot facility, along with the addition of state-of-the-art manufacturing equipment.

Through this expansion, the Mountain Top location improved its manufacturing efficiency and shipping operations, as well as increased manufacturing capacity to support full-rate production of new and core products.

The project was completed at the end of calendar 2019.

2019 Compared to 2018

HBP revenue in 2019 increased $175,671, or 25%, compared to 2018, with 19% due to the acquisition of CornellCookson, 5% from favorable mix and pricing and 1% from increased volume.

Organic growth was 6%.

CornellCookson revenue was $202,742.

HBP Adjusted EBITDA in 2019 increased 20% to $120,161 compared to $100,339 in 2018, primarily driven by the increased revenue as noted above, partially offset by increased material and tariff costs.

Depreciation and amortization increased $4,617 from 2018, primarily from acquisitions.

2018 Acquisition

On June 4, 2018, Clopay completed the acquisition of CornellCookson, a leading US manufacturer and marketer of rolling steel door and grille products designed for commercial, industrial, institutional and retail use, for $180,000, excluding certain post-closing adjustments primarily related to working capital.

After taking into account the net of the estimated present value of tax benefits resulting from the transaction, the effective purchase price is approximately $170,000.

The acquisition of CornellCookson substantially expanded Clopay’s non-residential product offerings, and added an established professional dealer network focused on rolling steel door and grille products for commercial, industrial, institutional and retail use.

CornellCookson, as expected, generated over $200,000 in revenue in the first full year of operations.

Defense Electronics

For the Years Ended September 30,

Adjusted EBITDA

Depreciation and amortization

HBP revenue in 2021 increased $113,795, or 12%, compared to 2020, primarily due to favorable mix and pricing of 8% driven by both residential and commercial, and increased volume of 4% equally driven by both residential and commercial.

HBP Adjusted EBITDA in 2021 increased $27,384, or 18% to $181,015 compared to $153,631 in 2020.

EBITDA benefited 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.

Segment depreciation and amortization decreased $991from the comparable prior year period primarily due to fully depreciated assets.

2020 Compared to 2019

DE revenue in 2020 increased $5,935, or 2%, compared to 2019, primarily due to increased deliveries and increased volume on airborne and ground communications systems as well as airborne surveillance systems, partially offset by reduced volume on Multi-Mode airborne maritime surveillance radar systems.

DE Adjusted EBITDA in 2020 decreased $9,876, or 28% to $25,228 , compared to $35,104 in 2019, primarily due to program inefficiencies associated with certain radar programs, unfavorable program mix and increased operating expenses primarily due to bid and proposal activities and timing of research and development initiatives, partially offset by program efficiencies within airborne intercommunication surveillance systems.

HBP revenue in 2020 increased $53,673, or 6%, compared to 2019, with 4% from volume and 2% from favorable mix and pricing.

HBP Adjusted EBITDA in 2020 increased 33,470, or 28% to $153,631 compared to $120,161 in 2019.

The favorable variance resulted from the increased revenue noted above and general operational efficiency improvements, partially offset by COVID-19 related inefficiencies and direct costs.

Direct COVID-19 related expenses totaled approximately $2,000 in 2020.

Segment depreciation and amortization remained consistent with the prior year period.

During 2020, DE was awarded new contracts and incremental funding on existing contracts approximating $331,700 .

Contract backlog was $380,000 at September 30, 2020 with 67% expected to be fulfilled in the next 12 months;

backlog was $389,300 at September 30, 2019.

Backlog is defined as unfilled firm orders for products and services for which funding has been both authorized and appropriated by the customer or Congress, in the case of U.S.

government agencies.

2019 Compared to 2018

DE revenue in 2019 increased $8,704, or 3%, compared to 2018, primarily due to increased volume of ground and airborne maritime surveillance radars, partially offset by Multi-Mode airborne maritime surveillance systems.

DE Adjusted EBITDA in 2019 decreased $959, or 3%, compared to 2018, primarily due to unfavorable mix and efficiencies associated with Multi-Mode maritime surveillance systems, partially offset by reduced operating expenses.

Restructuring

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

The combined actions are expected to incur severance charges of approximately $4,500 , with $2,120 recognized in the fourth quarter, and the balance to be recognized in the first quarter of 2021.

At the conclusion of these actions, headcount is expected to be reduced by approximately 90 people.

In addition, during fiscal 2020 Telephonics commenced a facility project to consolidate three Long Island based facilities into two company owned facilities with a total cost of approximately $4.0 million primarily comprised of capital expenditures in 2021.

Unallocated Amounts

For 2021, unallocated amounts, excluding depreciation, consisted primarily of corporate overhead costs, totaled $49,054 compared to $48,262 in 2020, with the increase primarily due to compensation and incentive costs.

For 2019, unallocated amounts, excluding depreciation, consisted primarily of corporate overhead costs, totaled $46,302 compared to $45,343 in 2018, with the increase primarily due to compensation, incentive and relocation costs.

For 2020, unallocated amounts, excluding depreciation, consisted primarily of corporate overhead costs, totaled $48,262 compared to $47,231 in 2019, with the increase primarily due to compensation and incentive costs.

Depreciation and Amortization

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Depreciation and amortization of $52,100 in 2020 compared to $51,517 in 2019;

the increase was primarily due to depreciation and amortization on assets acquired in acquisitions.

the increase was primarily due to depreciation for new assets placed in service.

Comprehensive Income (Loss)

During 2021, total other comprehensive income (loss), net of taxes, of $26,115 included a gain of $6,433 from foreign currency translation adjustments primarily due to the strengthening of the Canadian, British and Australian currencies, all in comparison to the U.S.

a $17,796 gain from Pension and other post-retirement benefits, primarily related to the change between actual and expected return on assets compared to 2020;

and a $1,886 gain on cash flow hedges.

During 2020, total other comprehensive income (loss), net of taxes, of $(6,176) included a gain of $5,601 from foreign currency translation adjustments primarily due to the strengthening of the Euro, Canadian, British and Australian currencies, all in comparison to the U.S.

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and a $7 gain on cash flow hedges.

During 2019, total other comprehensive income (loss), net of taxes, of $(31,804) included a loss of $8,460 from foreign currency translation adjustments primarily due to the weakening of the Euro, Canadian, British and Australian currencies, all in comparison to the U.S.

a $23,055 loss from Pension and other post-retirement benefits, primarily associated with a decrease in the assumed discount rate compared to 2018;

and a $289 loss on cash flow hedges.

DISCONTINUED OPERATIONS

On November 16, 2017, Griffon announced it entered into a definitive agreement to sell Plastics and on February 6, 2018, completed the sale to Berry for approximately $465,000, net of certain post-closing adjustments.

All results and information presented exclude Plastics unless otherwise noted.

Plastics is a global leader in the development and production of embossed, laminated and printed specialty plastic films for hygienic, health-care and industrial products and sells to some of the world's largest consumer products companies.

Defense Electronics

On September 27, 2021, Griffon announced it will explore strategic alternatives for its DE segment, which consists of its Telephonics subsidiary.

As a result, the DE segment results have been classified as a discontinued operation.

For the Years Ended September 30,

2021 2020 2019

Revenue $ 271,060 $ 340,976 $ 335,041

Adjusted EBITDA $ 20,486 7.6 % $ 25,228 7.4 % $ 35,104 10.5 %

Depreciation and amortization $ 10,762 $ 10,645 $ 10,667

2021 Compared to 2020

DE revenue in 2021 decreased $69,916, or 21%, compared to 2020.

The current and prior year results include revenue from the SEG business of $6,713 and $31,758, respectively.

Excluding SEG from both years, revenue decreased $44,871, or 15%.

The decrease was driven by reduced volume due to delayed awards for Surveillance Systems and decreased deliveries for Communications Systems, partially offset by increased Radar Systems volume.

DE Adjusted EBITDA in 2021 decreased $4,742, or 19% to $20,486, compared to $25,228 in 2020.

The current and prior year results include Adjusted EBITDA from the SEG business of $412 and $1,491, respectively.

Excluding SEG from both years, Adjusted EBITDA decreased $3,663, or 15%.

The decrease was due to the reduced revenue noted above and cost growth primarily for Surveillance Systems, partially offset by favorable program performance for Radar Systems and reduced operating expenses.

DE's depreciation and amortization remained consistent with the prior year period.

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

SEG provides sophisticated, highly technical engineering and analytical support to the Missile Defense Agency and various U.S.

military commands.

SEG had sales of approximately $7,000 for the first fiscal quarter ended December 31, 2020 and $32,000 for the fiscal year ended September 30, 2020.

During 2021, DE was awarded new contracts and incremental funding on existing contracts approximating $246,500 (excludes $5,500 of SEG awards).

Contract backlog was $352,200 at September 30, 2021 with 62% expected to be fulfilled in the next 12 months;

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

The decrease in backlog is primarily due to awards delayed until 2022.

Backlog is defined as unfilled firm orders for products and services for which funding has been both authorized and appropriated by the customer or Congress, in the case of U.S.

government agencies.

2020 Compared to 2019

DE Adjusted EBITDA in 2020 decreased $9,876, or 28% to $25,228, compared to $35,104 in 2019, primarily due to program inefficiencies associated with certain radar programs, unfavorable program mix and increased operating expenses primarily due to bid and proposal activities and timing of research and development initiatives, partially offset by program efficiencies within airborne intercommunication surveillance systems.

Direct COVID-19 related expenses totaled approximately $1,000 in 2020.

Restructuring Charges and Divestiture

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 approximately $2,200, recorded in the first quarter of fiscal 2021.

These actions reduced headcount by approximately 90 people.

In addition, in the first quarter of fiscal 2021, 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 ($5,443, including a net tax benefit of $152) during the year ended September 30, 2021 related to the divestiture of SEG.

Other Discontinued Activities

In fiscal 2018, Griffon completed the sale of Plastics to Berry for approximately $465,000, net of certain post-closing adjustments.

During 2019, Griffon recorded an $11,050 charge ($8,335, net of tax) to discontinued operations.

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Griffon believes it has sufficient liquidity available to invest in existing businesses and strategic acquisitions while managing its capital structure on both a short-term and long-term basis.

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

Cash Flows from Continuing Operations

Years Ended September 30,

As of September 30, 2021, the amount of cash, cash equivalents and marketable securities held by foreign subsidiaries was $65,000.

Our intent is to permanently reinvest these funds outside the U.S., and we do not currently anticipate that we will need funds generated from foreign operations to fund our domestic operations.

In the event we determine that funds from foreign operations are needed to fund operations in the U.S., we will be required to accrue and pay U.S.

taxes to repatriate these funds (unless applicable U.S.

taxes have already been paid).

Griffon's primary sources of liquidity are cash flows generated from operations, cash on hand and our January 2020 five-year secured $400,000 revolving credit facility ("Credit Facility").

During the fiscal year ended September 30, 2021, the Company generated $71,032 of net cash from continuing operating activities and had $370,927 available, subject to certain loan covenants, for borrowing at that date.

The table below provides a summary of the Consolidated Statements of Cash Flows for the periods indicated.

Cash Flows from Continuing Operations Years Ended September 30,

(in thousands) 2021 2020

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Financing activities (28,245) 68,190

Cash provided by operating activities from continuing operations for 2020 was $137,029 compared to $113,958 in 2019 .

Cash provided by income from continuing operations, adjusted for non-cash expenditures, was offset by a net increase in working

capital, primarily driven by increased accounts receivable and prepaid and other current assets, partially offset by decreases in inventory and increases in accrued liabilities.

Cash provided by operating activities from continuing operations for 2021 was $71,032 compared to $107,803 in 2020, a decrease of $36,771.

The variance was primarily due to increased working capital, primarily inventory, partially offset by increased in accounts payable and income from continuing operations, adjusted for non-cash expenditures.

Cash flows from investing activities from continuing operations is primarily comprised of capital expenditures and business acquisitions as well as proceeds from the sale of businesses, investments and property, plant and equipment.

During 2021, Griffon used $56,167 in investing activities from continuing operations compared to $51,477 in 2020.

Capital expenditures, net of proceeds from the sale of assets, totaled $36,714 in 2021 compared to $40,816 in 2020.

Payments for acquired businesses totaled $2,242 in 2021 compared to $10,531 in 2020.

On November 29, 2019, AMES acquired 100% of the outstanding stock of Apta, a leading United Kingdom supplier of innovative garden pottery and associated products sold to leading UK and Ireland garden centers for approximately $10,500 (GBP 8,750), inclusive of a post-closing working capital adjustment, net of cash acquired.

Payments for acquired businesses in the prior year consisted solely of a final purchase price adjustment for CornellCookson.

Payments in the prior year comparable period also included $9,500 related to a purchase price adjustment to resolve a claim related to the $465,000 PPC divestiture and an insurance payment of $10,604 pertaining to the settlement of a certain life insurance benefit.

In 2020 , capital expenditures, net, totaled $48,646 compared to $45,081 in 2019.

Cash provided by financing activities from continuing operations in 2020 totaled $68,190 compared to cash used in 2019 of $34,976 .

In August 2020, Griffon Corporation completed the Public Offering of 8,700,000 shares of our common stock for total net proceeds of $178,165 .

The Company used a portion of the net proceeds to repay outstanding borrowings under its Credit Agreement.

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

On November 29, 2019, AMES acquired Apta, a leading United Kingdom supplier of innovative garden pottery and associated products sold to leading UK and Ireland garden centers for approximately $10,500 (GBP 8,750), inclusive of a post-closing working capital adjustment, net of cash acquired.

During 2021, Griffon also invested $17,211, primarily in marketable debt and equity securities.

During 2021, Griffon used cash of $28,245 in financing activities from continuing operations compared to cash provided by of $68,190 in 2020.

During 2021, cash flows from financing activities from continuing operations primarily consisted of the payment of dividends of $17,139, purchase of treasury shares to satisfy vesting of restricted stock of $(3,357) and net repayments of long-term debt and lease payments of $6,921.

During 2020, cash flows from financing activities from continuing operations primarily consisted of proceeds from the issuance of common stock, partially offset by the payment of dividends of $14,529 and net repayments of long-term debt and lease payments of $68,835.

At September 30, 2021, there were $13,483 in outstanding borrowings under the Credit Agreement, compared to 12,858 in outstanding borrowings at the same date in 2020.

In 2020, Griffon Corporation completed the Public Offering of 8,700,000 shares of our common stock for total net proceeds of $178,165.

The Company used a portion of the net proceeds to repay outstanding borrowings under its Credit Agreement.

Additionally, on June 22, 2020, Griffon completed an add-on offering through a private placement of $150,000 aggregate principal amount of its 5.75% Senior Notes, at 100.25% of par, to Griffon's previously issued $850,000 principal amount of its 5.75% Senior Notes, at par, completed on February 19, 2020.

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

Cash provided by financing activities in the current period also included financing payments of $17,384 primarily associated with the redemption of the $1,000,000 of 2022 Senior Notes;

Cash provided by financing activities in 2020 also included financing costs of $571 primarily associated with the redemption of the $1,000,000 of 2022 Senior Notes;

and the amendment and extension of the Company's revolving credit facility which increased the maximum borrowing availability from $350,000 to $400,000 and extended its maturity date from March 22, 2021 to March 22, 2025.

During the year ended September, 30, 2020, COVID-19 did not had a material impact on our operations, and we anticipate our current cash balances, cash flows from operations and sources of liquidity including proceeds received from the August 2020 Public Offering will be sufficient to meet our cash requirements for the foreseeable future.

During 2021, the Board of Directors approved four quarterly cash dividends each for $0.08 per share, totaling $0.32.

On November 15, 2021, the Board of Directors declared a cash dividend of $0.09 per share, payable on December 16, 2021 to shareholders of record as of the close of business on November 29, 2021.

During 2021, 152,435 shares, with a market value of $3,222, or $21.14 per share were withheld to settle employee taxes due upon the vesting of restricted stock, and were added to treasury stock.

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

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At September 30, 2021, $57,955 remains under Griffon's Board authorized repurchase programs.

During 2020 , 340,775 shares, with a market value of $7,409 , or $21.74 per share, were withheld to settle employee taxes due upon the vesting of restricted stock and were added to treasury stock.

Furthermore, during 2020, an additional 3,307 shares, with a market value of $70 , or $21.22 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 Board of Directors approved four quarterly cash dividends each for $0.0750 per share, totaling $0.30.

On November 12, 2020, the Board of Directors declared a cash dividend of $0.08 per share, payable on December 17, 2020 to shareholders of record as of the close of business on November 25, 2020.

As of September 30, 2020, the amount of cash, cash equivalents and marketable securities held by foreign subsidiaries was $55,000 .

Our intent is to permanently reinvest these funds outside the U.S., and we do not currently anticipate that we will need funds generated from foreign operations to fund our domestic operations.

In the event we determine that funds from foreign operations are needed to fund operations in the U.S., we will be required to accrue and pay U.S taxes to repatriate these funds (unless applicable U.S.

taxes have already been paid).

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

certain of such receipts are progress or performance based payments.

With respect to CPP and HBP, there have been no material adverse impacts on payment for sales.

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

Government and its agencies, through prime and subcontractor relationships, represented 10% of Griffon’s consolidated revenue and 69% of DE revenue.

Home Depot represented 17% of Griffon’s consolidated revenue, 27% of CPP's revenue and 12% of HBP's revenue.

No other customer exceeded 10% or more of consolidated revenue.

Future operating results will continue to substantially depend on the success of Griffon’s largest customers and our relationships with them.

Orders from these customers are subject to change and may fluctuate materially.

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

At September 30, 2020 , Griffon had debt, net of cash and equivalents, as follows:

Cash and Equivalents and Debt

At September 30,

During 2021, cash provided by discontinued operations from operating activities of $40,737 primarily related to DE operations and the settling of certain Installation services and environmental liabilities.

Cash provided by discontinued operations from investing activities of $6,751 primarily related to net proceeds received of $14,345 from DE's sale of its SEG business less capital expenditures of $10,343 and a recovery of insurance proceeds received of $2,748 associated with other discontinued operations.

At September 30, 2021 and 2020, Griffon had debt, net of cash and equivalents, as follows:

Cash and Equivalents and Debt At September 30, At September 30,

(in thousands) 2021 2020

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Debt discount and issuance costs 14,823 17,458

Total debt 1,060,506 1,064,422

Debt, net of cash and equivalents $ 811,853 $ 846,333

On June 22, 2020, in an unregistered offering through a private placement, Griffon completed the add-on offering of $150,000 principal amount of its 5.75% Senior Notes, at 100.25% of par, to Griffon's previously issued $850,000 principal amount of its 5.75% Senior Notes, at of par, completed on February 19, 2020.

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

On June 22, 2020, in an unregistered offering through a private placement, Griffon completed the add-on offering of $150,000 principal amount of its 5.75% senior notes due 2028, at 100.25% of par, to Griffon's previously issued $850,000 principal amount of its 5.75% senior notes due 2028, at of par, completed on February 19, 2020 (collectively, the "Senior Notes").

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

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

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On January 30, 2020, Griffon amended its Credit Agreement to increase the maximum borrowing availability from $350,000 to $400,000, extend its maturity from March 22, 2021 to March 22, 2025 and modify certain other provisions of the facility.

The facility includes a letter of credit sub-facility with a limit of $100,000 (increased from $50,000 );

and a multi-currency sub-facility of $100,000 .

The Credit Agreement provides for same day borrowings of base rate loans.

The facility includes a letter of credit sub-facility with a limit of $100,000 and a multi-currency sub-facility of $200,000;

and contains a customary accordion feature that permits the Company to request, subject to each lender's consent, an increase in the maximum aggregate amount that can be borrowed up to an additional $100,000.

Borrowings under the Credit Agreement may be repaid and re-borrowed at any time.

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Net Debt to EBITDA (Leverage), as calculated in accordance with the definition in the Credit Agreement, was 2.8x at September 30, 2021.

In August 2016 and as amended on June 30, 2017, Griffon’s ESOP entered into a Term Loan with a bank (the "ESOP Agreement").

The Term Loan interest rate was LIBOR plus 3.00% .

The Term Loan required quarterly principal payments of $569 with a balloon payment due at maturity.

The Term Loan was secured by shares purchased with the proceeds of the loan and with a lien on a specific amount of Griffon assets (which ranked pari passu with the lien granted on such assets under the Credit Agreement) and was guaranteed by Griffon.

On March 13, 2019, the ESOP Term Loan was refinanced with an internal loan from Griffon which was funded with cash and a draw under its Credit Agreement.

The internal loan interest rate is fixed at 2.91% , matures in June 2033 and requires quarterly payments of principal, currently $635 , and interest.

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

The amount outstanding on the internal loan at September 30, 2020 was $29,878 .

Two Griffon 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 in the first fiscal quarter of 2022.

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

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In November 2012, Garant G.P.

(“Garant”), a Griffon wholly owned subsidiary, entered into a CAD 15,000 ( $11,210 as of September 30, 2020) revolving credit facility.

The facility accrues interest at LIBOR (USD) or the Bankers Acceptance Rate (CDN) plus 1.3% per annum ( 1.44% LIBOR USD and 1.55% Bankers Acceptance Rate CDN as of September 30, 2020 ).

(“Garant”), a Griffon subsidiary, entered into a CAD 15,000 ($11,798 as of September 30, 2021) revolving credit facility.

The facility accrues interest at LIBOR (USD) or the Bankers Acceptance Rate (CDN) plus 1.3% per annum (1.38% LIBOR USD and 1.51% Bankers Acceptance Rate CDN as of September 30, 2021 and September 29, 2021, respectively).

The revolving facility matures in October 2022.

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

the agreement was amended in March 2019.

As amended, 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 ( 2.09% at September 30, 2020 ).

During the year ended September 30, 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 .

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 September 30, 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 September 30, 2021, the term loan had an outstanding balance of AUD 10,875 ($7,847 as of September 30, 2021).

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The revolving facility and receivable purchase facility accrue interest at BBSY plus 1.9% and 1.35%, respectively, per annum (1.97% and 1.41%, respectively, at September 30, 2021).

At September 30, 2020, there were no balances outstanding under the revolver and the receivable purchase facility.

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

The revolver, receivable purchase facility and 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 loan accrue interest at the GBP LIBOR Rate plus 2.25% and 1.8% , respectively ( 2.30% and 1.85% at September 30, 2020, respectively).

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% ( 1.85% as of September 30, 2020).

As of September 30, 2020, the revolver had no outstanding balance while the term and mortgage loan balances amounted to GBP 15,398 ( $19,799 as of September 30, 2020).

The term loan and mortgage loan accrue interest at the GBP LIBOR Rate plus 1.8% (1.85% at September 30, 2021, respectively).

The revolving facility matures in June 2022, but is renewable upon mutual agreement with the lender, and accrues interest at the Bank of England Base Rate plus 3.25% (3.35% as of September 30, 2021).

As of September 30, 2021, the revolver had an outstanding balance of GBP 2,234 ($3,012 as of September 30, 2021), while the term and mortgage loan balances amounted to GBP 13,229 ($17,837 as of September 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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An invoice discounting arrangement was canceled and replaced by the above loan facilities.

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

During 2020 , Griffon used cash for discontinued operations from operating activities of $2,577 , primarily related insurance claims, warranty and environmental reserves.

Contractual Obligations

At September 30, 2020 , payments to be made pursuant to significant contractual obligations are as follows:

Payments Due by Period

(in thousands)

Less Than 1 Year

Long-term debt (a)

Interest expense

Operating lease obligations

Purchase obligations (b)

Capital expenditures

Supplemental & post-retirement benefits (c)

Uncertain tax positions (d)

Total obligations

______________

Included in long-term debt are finance leases of:

$4,282 (less than 1 year), $5,070 (1-3 years), $4,193 (3-5 years) and $9,850 (more than 5 years).

Purchase obligations are generally for the purchase of goods and services in the ordinary course of business.

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

In August 2016 and as amended on June 30, 2017, Griffon’s ESOP entered into a Term Loan with a bank (the "ESOP Agreement").

The Term Loan interest rate was LIBOR plus 3.00%.

The Term Loan required quarterly principal payments of $569 with a balloon payment due at maturity.

On March 13, 2019, the ESOP Term Loan was refinanced with an internal loan from Griffon which was funded with cash and a draw under its Credit Agreement.

The internal loan interest rate is fixed at 2.91%, matures in June 2033 and requires quarterly payments of principal, currently $620, and interest.

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

The amount outstanding on the internal loan at September 30, 2021 was $27,368.

Capital Resource Requirements

In November 2019, Griffon announced the development of a next-generation business platform for CPP to enhance the growth, efficiency, and competitiveness of its U.S.

operations, and on November 12, 2020, Griffon announced that CPP is broadening this strategic initiative to include additional North American facilities, the AMES UK and Australia businesses, and a manufacturing facility in China.

The project is expected to be completed by the end of calendar year 2023.

For additional information, see CPP reportable segments discussion.

Griffon's debt requirements include principal on our outstanding debt, most notably our Senior Notes totaling $1,000,000 payable in 2028 and related annual interest payments of approximately $57,500.

Griffon's purchase obligations, which are generally for the purchase of goods and services in the ordinary course of business over the next twelve months is approximately $255,661.

Griffon uses blanket purchase orders to communicate expected requirements to certain vendors.

Purchase obligations reflect those purchase orders in which the commitment is considered to be firm.

Purchase obligations that extend beyond 2020 are principally related to long-term contracts received from customers of Telephonics.

Griffon funds required payouts under its non-qualified supplemental defined benefit plan from its general assets and the expected payments are included in each period, as applicable.

Due to the uncertainty of the potential settlement of future uncertain tax positions, management is unable to estimate the timing of related payments, if any, that will be made subsequent to 2020 .

These amounts do not include any potential indirect benefits resulting from deductions or credits for payments made to other jurisdictions.

Griffon rents real property and equipment under operating leases expiring at various dates.

Operating lease obligations over the next twelve months is approximately $36,109.

Refer to Note 21 - Leases.

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

In 2021, Home Depot represented 19% of Griffon’s consolidated revenue, 26% of CPP's revenue and 10% of HBP's revenue.

No other customer exceeded 10% or more of consolidated revenue.

Future operating results will continue to substantially depend on the success of Griffon’s largest customers and our relationships with them.

Orders from these customers are subject to change and may fluctuate materially.

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

Off-Balance Sheet Arrangements

Except for operating leases and purchase obligations as disclosed herein, Griffon is not a party to any off-balance sheet arrangements.

Off-Set Agreements

Telephonics may enter into industrial cooperation agreements, sometimes referred to as offset agreements, as a condition to obtaining orders for its products and services from customers in foreign countries.

These agreements promote investment in the applicable country, and Telephonics' obligations under these agreements may be satisfied through activities that do not require Griffon to use its cash, including transferring technology, providing manufacturing and other consulting support.

The obligations under these agreements may also be satisfied through the use of cash for such activities as purchasing supplies from in-country vendors, setting up support centers, research and development investments, acquisitions, and building or leasing facilities for in-country operations, if applicable.

The amount of the offset requirement is determined by contract value awarded and negotiated percentages with customers.

At September 30, 2020 , Telephonics had outstanding offset agreements approximating $27,000, primarily related to its Radar Systems division, some of which extend through 2029.

Offset programs usually extend over several years and in some cases provide for penalties in the event Telephonics fails to perform in accordance with contract requirements.

Historically, Telephonics has not been required to pay any such penalties and as of September 30, 2020 , no such penalties are estimable or probable.

Except for purchase obligations as disclosed herein, Griffon is not a party to any off-balance sheet arrangements.

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 September 30, 2021 and September 30, 2020 and for the years ended September 30, 2021 and 2020.

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

The information presented below excludes eliminations necessary to arrive at the information on a consolidated basis.

The summarized information excludes financial information of the Non-Guarantors, including earnings from and investments in these entities.

The financial information may not necessarily be indicative of the results of operations or financial position of the guarantor companies or non-guarantor companies had they operated as independent entities.

The guarantor companies and the non-guarantor companies include the consolidated financial results of their wholly-owned subsidiaries accounted for under the equity method.

The indentures relating to the Senior Notes (the “Indentures”) contain terms providing that, under certain limited circumstances, a guarantor will be released from its obligations to guarantee the Senior Notes.

These circumstances include (i) a sale of at least a majority of the stock, or all or substantially all the assets, of the subsidiary guarantor as permitted by the Indentures;

(ii) a public equity offering of a subsidiary guarantor that qualifies as a “Minority Business” as defined in the Indentures (generally, a business the EBITDA of which constitutes less than 50% of the segment adjusted EBITDA of the Company for the most recently ended four fiscal quarters), and that meets certain other specified conditions as set forth in the Indentures;

(iii) the designation of a guarantor as an “unrestricted subsidiary” as defined in the Indentures, in compliance with the terms of the Indentures;

(iv) Griffon exercising its right to defease the Senior Notes, or to otherwise discharge its obligations under the Indentures, in each case in accordance with the terms of the Indentures;

and (v) upon obtaining the requisite consent of the holders of the Senior Notes.

Summarized Statements of Operations and Comprehensive Income (Loss)

For the Year Ended For the Year Ended

September 30, 2021 September 30, 2020

Parent Company Guarantor Companies Parent Company Guarantor Companies

Net sales $ — $ 1,991,434 $ — $ 1,938,972

Gross profit $ — $ 497,829 $ — $ 488,048

Income (loss) from operations $ (22,321) $ 132,870 $ (24,876) $ 130,147

Equity in earnings of Guarantor subsidiaries $ 79,055 $ — $ 58,455 $ —

Net income (loss) $ (40,035) $ 79,055 $ (48,546) $ 58,455

Summarized Balance Sheet Information

For the Year Ended For the Year Ended

September 30, 2021 September 30, 2020

Parent Company Guarantor Companies Parent Company Guarantor Companies

Current assets $ 114,377 $ 951,609 $ 140,003 $ 776,069

Non-current assets 17,665 1,069,540 23,069 1,046,225

Total assets $ 132,042 $ 2,021,149 $ 163,072 $ 1,822,294

Current liabilities $ 41,334 $ 397,121 $ 39,130 $ 296,293

Long-term debt 998,787 14,482 995,636 $ 15,992

Other liabilities 43,337 164,122 38,024 $ 195,792

Total liabilities $ 1,083,458 $ 575,725 $ 1,072,790 $ 508,077

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

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These estimates can also affect supplemental information contained in public disclosures of Griffon, including information regarding contingencies, risk and its financial condition.

These estimates, assumptions and judgments are evaluated on an ongoing basis and based on historical experience, current conditions and various other assumptions, and form the basis for estimating the carrying values of assets and liabilities, as well as identifying

and assessing the accounting treatment for commitments and contingencies.

Actual results may materially differ from these estimates.

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Revenue Recognition

Effective October 1, 2018, the Company adopted Accounting Standard Codification (“ASC”) Topic 606, Revenue from Contracts with Customers.

Our statement of operations for the year ended September 30, 2020 and 2019 and our balance sheet as of September 30, 2020 and 2019 are presented under ASC 606, while our statement of operations for the year ended September 30, 2018 is presented under ASC 605, Revenue Recognition.

Under ASC Topic 606, performance obligation is a promise in a contract to transfer a distinct good or service, or a bundle of goods or services, to the customer, and is the unit of accounting under ASC Topic 606.

The Company recognizes revenue when performance obligations identified under the terms of contracts with its customers are satisfied.

A performance obligation is a promise in a contract to transfer a distinct good or service, or a bundle of goods or services, to the customer, and is the unit of accounting.

A contract with a customer is an agreement which both parties have approved, that creates enforceable rights and obligations, has commercial substance and with respect to which payment terms are identified and collectability is probable.

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Variable consideration is determined using either the expected value or the most likely amount of consideration to be received based on historical experience and the specific facts and circumstances at the time of evaluation.

Revenue from CPP and HBP Segments

Approximately 86% of the Company’s performance obligations are recognized at a point in time related to the manufacture and sale of a broad range of products and components primarily within the CPP and HBP Segments, and revenue is recognized when title, and risk and rewards of ownership, have transferred to the customer, which is generally upon shipment.

A majority of CPP's and HBP's revenue is short cycle in nature with shipments occurring within one year from order and does not include a material long-term financing component, implicitly or explicitly.

The Company’s performance obligations are recognized at a point in time related to the manufacture and sale of a broad range of products and components, and revenue is recognized when title, and risk and rewards of ownership, have transferred to the customer, which is generally upon shipment.

A majority of the Company's revenue is short cycle in nature with shipments occurring within one year from order and does not include a material long-term financing component, implicitly or explicitly.

Payment terms generally range between 15 to 90 days and vary by the location of the business, the type of products manufactured to be sold and the volume of products sold, among other factors.

The Company’s CPP and HBP Segments recognize revenue from product sales when all factors are met, including when control of a product transfers to the customer upon its shipment, completion of installation, testing, certification or other substantive acceptance required under the contract.

The Company recognizes revenue from product sales when all factors are met, including when control of a product transfers to the customer upon its shipment, completion of installation, testing, certification or other substantive acceptance required under the contract.

Other than standard product warranty provisions, sales arrangements provide for no other significant post-shipment obligations on the Company.

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Griffon provides for sales returns and allowances based upon historical returns experience.

The Company includes shipping costs billed to customers in revenue and the related shipping costs in Cost of Goods and Services.

The majority of the Company’s contracts in the CPP and HBP Segments offer assurance-type warranties in connection with the sale of a product to a customer.

The Company includes shipping costs billed to customers in revenue and the related shipping costs in either Cost of Goods and Services and Selling, general and administrative expenses, as applicable.

The majority of the Company’s contracts offer assurance-type warranties in connection with the sale of a product to a customer.

Assurance-type warranties provide a customer with assurance that the related product will function as the parties intended because it complies with agreed-upon specifications.

Such warranties do not represent a separate performance obligation.

Payment terms in the CPP and HBP Segments vary depending on the type and location of the customer and the products or services offered.

Payment terms vary depending on the type and location of the customer and the products or services offered.

Generally, the period between the time revenue is recognized and the time payment is due is not significant.

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Additionally, all taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction and collected from a customer (e.g., sales, use, value added, and some excise taxes) are excluded from revenue.

Revenue from Defense Electronics Segment

Approximately 14% of the Company’s performance obligations are recognized over time and relate to prime or subcontractors from contract awards with the U.S.

Government, as well as foreign governments and other commercial customers within our DE Segment.

Revenue recognized over time is generally accounted for using an input measure to determine progress completed at the end of the period.

We believe that cumulative costs incurred to date as a percentage of estimated total contract costs at completion (cost-to-cost method) is an appropriate measure of progress towards satisfaction of performance obligations recognized over time, as it most accurately depicts the progress of our work and transfer of control to our customers.

The Company’s DE Segment earns a substantial portion of its revenue as either a prime contractor or subcontractor from contract awards with the U.S.

Government, as well as foreign governments and other commercial customers to design, develop and manufacture highly sophisticated intelligence, surveillance and communications solutions.

These contracts are typically long-term in nature, usually greater than one year, and do not include a material long-term financing component, either implicitly or explicitly.

Revenue and profits from such contracts are recognized over time as work is performed because control of the work in process transfers continuously to the customer.

Government contracts, the continuous transfer of control to the customer is supported by contract clauses that provide for:

(i) progress or performance-based payments or (ii) the unilateral right of the customer to terminate the contract for convenience, in which case we have the right to receive payment for costs incurred plus a reasonable profit for products and services that do not have alternative use to us.

Foreign government and certain commercial contracts contain similar termination for convenience clauses, or we have a legally enforceable right to receive payment for costs incurred and a reasonable profit for product or services that do not have alternative use to us.

Revenue and profits on fixed-price and cost-plus contracts that include performance obligations satisfied over time are recorded at amounts equal to the ratio of actual cumulative costs incurred divided by total estimated costs at completion, multiplied by the total estimated contract revenue, less the cumulative revenue recognized in prior periods.

The profit recorded on a contract using this method is equal to the current estimated total profit margin multiplied by the cumulative revenue recognized, less the amount of cumulative profit previously recorded for the contract in prior periods.

Accounting for the sales and profits on performance obligations for which progress is measured using the cost-to-cost method relies on the substantial use of estimates, these projections may be revised throughout the life of a contract.

Components of this formula and ratio that may be estimated include gross profit margin and total costs at completion.

The cost performance and estimates to complete long-term contracts are reviewed, at a minimum, on a quarterly basis, as well as when information becomes available that would necessitate a review of the current estimate.

Adjustments to estimates for a contract's estimated costs at completion and estimated profit or loss are often required as experience is gained, more information is obtained (even though the scope of work required under the contract may or may not change) and contract modifications occur.

The impact of such adjustments to estimates is made on a cumulative basis in the period when such information has become known.

The 2020, 2019, and 2018 income from operations included net favorable/(unfavorable) catch-up adjustments approximating $(10,650) , $(4,500) and $1,400 , respectively.

Gross profit is impacted by a variety of factors, including the mix of products, systems and services, production efficiencies, price competition and general economic conditions.

Under fixed-price contracts, the Company agrees to perform the specified work for a pre-determined price.

To the extent actual costs vary from the estimates upon which the price was negotiated, more or less profit will be generated, or a loss could be incurred.

Cost-reimbursable type contracts provide for the payment of allowable costs incurred on the contract plus the estimated profit on those costs.

We provide our products and services under cost-plus-fixed-fee arrangements.

The fixed fee is negotiated at the inception of the contract and that fixed-fee does not vary with actual costs.

For contracts in which anticipated total costs exceed the total expected revenue, an estimated loss is recognized in the period when identifiable.

A provision for the entire amount of the estimated loss is recorded on a cumulative basis.

The estimated remaining costs to complete loss contracts as of September 30, 2020 was $10,800 and is recorded as a reduction to gross margin on the Consolidated Statements of Operations and Comprehensive Income (Loss).

This loss had an immaterial impact on Griffon's Consolidated Financial Statements.

Contract modifications routinely occur to account for changes in contract specifications or requirements.

Depending on the nature of the modification, we consider whether to account for the modification as an adjustment to the existing contract or as a separate contract.

Contract modifications for goods or services that are not distinct are accounted for as part of the existing contract on a cumulative catch-up basis.

From time to time, Telephonics may combine contracts if they are negotiated together, have specific requirements to combine, or are otherwise closely related.

Inventories, stated at the lower of cost (first-in, first-out or average) or market, include material, labor and manufacturing overhead costs.

Griffon’s businesses typically do not require inventory that is susceptible to becoming obsolete or dated.

In general, Telephonics sells products in connection with programs authorized and approved under contracts awarded by the U.S.

Government or agencies thereof, and in accordance with customer specifications.

HBP produces residential and commercial sectional garage doors, commercial rolling steel door and grille products, and CPP produces long-handled tools and landscaping products, and storage

and organizational products, both in response to orders from customers of retailers and dealers or based on expected orders, as applicable.

In general, HBP produces residential and commercial sectional garage doors, commercial rolling steel door and grille products, and CPP produces long-handled tools and landscaping products, and storage and organizational products, both in response to orders from customers of retailers and dealers or based on expected orders, as applicable.

Warranty Accruals

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The Company recognizes forfeitures as they occur.

Allowances for Discount, Doubtful Account and Returns

Expected Loss Allowances for Discount, Doubtful Account and Returns

Trade receivables are recorded at their stated amount, less allowances for discounts, doubtful accounts and returns.

The allowances represent estimated uncollectible receivables associated with potential customer defaults on contractual obligations (usually due to customers’ potential insolvency), discounts related to early payment of accounts receivables by customers and estimates for returns.

The allowance for doubtful accounts includes amounts for certain customers in which a risk of default has been specifically identified, as well as an amount for customer defaults, based on a formula, when it is determined the risk of some default is probable and estimable, but cannot yet be associated with specific customers.

The expected loss allowance represents estimated uncollectible receivables associated with potential customer defaults on contractual obligations (usually due to customers’ potential insolvency), discounts related to early payment of accounts receivables by customers and estimates for returns.

The expected loss allowance for doubtful accounts includes amounts for certain customers in which a risk of default has been specifically identified, as well as an amount for customer defaults, based on a formula, when it is determined the risk of some default is probable and estimable, but cannot yet be associated with specific customers.

Allowance for discounts and returns are recorded as a reduction of revenue and the provision related to the allowance for doubtful accounts is recorded in SG&A expenses.

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We review goodwill and indefinite-lived intangibles for impairment at least annually in the fourth quarter, or more frequently whenever events or circumstances change that would more likely than not reduce the fair value of a reporting unit below the carrying amount.

events or changes in circumstance include significant deterioration in overall economic conditions, changes in the business climate in which our reporting units operate, a decline in our market capitalization, operating performance indicators, when some portion of a reporting unit is disposed of or classified as held for sale, or when a change in the composition of reporting units occurs for other reasons, such as a change in operating segments.

We had three reporting units at September 30, 2020 and 2019, which are our operating segments.

Such events or changes in circumstance include significant deterioration in overall economic conditions, changes in the business climate in which our reporting units operate, a decline in our market capitalization, operating performance indicators, when some portion of a reporting unit is disposed of or classified as held for sale, or when a change in the composition of reporting units occurs for other reasons, such as a change in operating segments.

We had two reporting units as of September 30, 2021 and three reporting units as of September 30, 2020, which are our operating segments.

The change in reporting units was a result of classifying our Defense Electronics segment as a discontinued operation as of September 30, 2021.

We use both qualitative and quantitative approaches when testing goodwill and indefinite-lived intangibles for impairment.

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However, if a quantitative assessment is necessary, we use the income approach methodology of valuation that includes the present value of expected future cash flows.

We performed a quantitative annual impairment test as of September 30, 2019, and an interim quantitative impairment test as of March 31, 2020, to assess the impact of the global outbreak of COVID-19, using discounted future cash flows for each reporting unit, which did not result in impairments to goodwill.

The more significant assumptions used for the interim impairment test as of March 31, 2020 were a five-year cash flow projection and a 3.0% terminal value to which discount rates between 7.1% and 9.0% were applied to calculate each unit’s fair value.

We performed a quantitative annual impairment test as of September 30, 2019, and a quantitative impairment test as of March 31, 2020, to assess the impact of the global outbreak of COVID-19, using discounted future cash flows for each reporting unit, which did not result in impairments to goodwill.

The more significant assumptions used for the impairment test as of March 31, 2020 were a five-year cash flow projection and a 3.0% terminal value to which discount rates between 7.1% and 9.0% were

applied to calculate each unit’s fair value.

To substantiate fair values derived from the income approach methodology of valuation, the implied fair value was compared to the marketplace fair value of a comparable industry grouping for reasonableness.

Further, the fair values were reconciled to Griffon’s market capitalization.

We performed a qualitative assessment as of September 30, 2020, as the estimated fair values of each reporting unit significantly exceeded the carrying value based on our most recent quantitative assessment, which was performed as of March 31, 2020.

We performed a qualitative assessment as of September 30, 2021 and 2020, as the estimated fair values of each reporting unit significantly exceeded the carrying value based on our most recent quantitative assessment, which was performed as of March 31, 2020.

Our qualitative assessment determined that indicators that the fair value of each reporting unit was less than the carrying value were not present.

With respect to indefinite-lived intangibles we performed a quantitative annual impairment test as of September 30, 2019, and an interim quantitative impairment test as of March 31, 2020, to assess the impact of the global outbreak of COVID-19, using a relief from royalty method, neither of which resulted in an impairment.

We performed a qualitative assessment as of September 30, 2020 considering all the above factors and determined that indefinite-lived intangibles fair values were greater than their book values.

In addition, we performed a qualitative assessment as of September 30 2021 of the Defense Electronics discontinued operation goodwill and determined that an indicator that the fair value was less than the carrying value of the business was not present.

With respect to indefinite-lived intangibles we performed a quantitative annual impairment test as of September 30, 2019, and a quantitative impairment test as of March 31, 2020, to assess the impact of the global outbreak of COVID-19, using a relief from royalty method, neither of which resulted in an impairment.

We performed a qualitative assessment as of September 30, 2021 and 2020 considering all the above factors and determined that indefinite-lived intangibles fair values were greater than their book values.

Long-lived amortizable intangible assets, such as customer relationships and software, and tangible assets, primarily property, plant and equipment, are amortized over their expected useful lives, which involve significant assumptions and estimates.

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The Company applied the modified retrospective approach, whereby the cumulative effect of adoption is recognized as of the date of adoption and comparative prior periods are not retrospectively adjusted.

As a result, upon adoption, we have recognized ROU assets of $163,552 and lease liabilities of $163,676 associated with our operating leases.

As a result, upon adoption, we recognized ROU assets of $163,552 and lease liabilities of $163,676 associated with our operating leases.

The standard had no material impact to retained earnings or on our Consolidated Statements of Income or Consolidated Statements of Cash Flows.

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Favorable resolution of an unrecognized tax benefit could be recognized as a reduction in Griffon’s tax provision and effective tax rate in the period of resolution.

Unfavorable settlement of an unrecognized tax benefit could increase the tax provision and effective tax rate and may require the use of cash in the period of resolution.

Unfavorable settlement of an unrecognized tax benefit may require the use of cash in the period of resolution.

The liability for unrecognized tax benefits is generally presented as non-current.

However, if it is anticipated that a cash settlement will occur within one year, that portion of

the liability is presented as current.

However, if it is anticipated that a cash settlement will occur within one year, that portion of the liability is presented as current.

Interest and penalties recognized on the liability for unrecognized tax benefits is recorded as income tax expense.

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The expected return on plan assets is determined based on the nature of the plans’ investments and expectations for long-term rates of return.

The discount rate used to measure obligations is based on a corporate bond spot-rate yield curve that matches projected future benefit payments, with the appropriate spot rate applicable to the timing of the projected future benefit payments.

Assumptions used in determining Griffon’s obligations under the defined benefit pension plans are believed to be reasonable, based on experience and advice from independent actuaries;

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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-K

Item 7. Management’s Discussion and Analysis