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Item 1. Financial Statements

2022-08-03 compared with 2022-04-29 · 256 added, 224 removed, 867 unchanged (36% of the section changed)

40 unchanged sentences

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

For the Three and Six Months Ended March 31, 2022 and 2021

For the Three and Nine Months Ended June 30, 2022 and 2021

COMMON STOCK CAPITAL IN

22 unchanged sentences

Balance at March 31, 2022 84,746 $ 21,187 $ 603,624 $ 744,894 27,714 $ ( 420,606 ) $ ( 43,779 ) $ ( 22,106 ) $ 883,214

Net income — — — 140,287 — — — — 140,287

Dividend — — — ( 109,487 ) — — — — ( 109,487 )

Amortization of deferred compensation — — — — — — — 591 591

Equity awards granted, net — — ( 484 ) — ( 32 ) 484 — — —

ESOP allocation of common stock — — 757 — — — — — 757

Stock-based compensation — — 5,130 — — — — — 5,130

Other comprehensive income, net of tax — — — — — — ( 14,177 ) — ( 14,177 )

Balance at June 30, 2022 84,746 $ 21,187 $ 609,027 $ 775,694 27,682 $ ( 420,122 ) $ ( 57,956 ) $ ( 21,515 ) $ 906,315

GRIFFON CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

For the Three and Nine Months Ended June 30, 2022 and 2021

COMMON STOCK CAPITAL IN

22 unchanged sentences

Balance at March 31, 2021 84,427 $ 21,106 $ 591,966 $ 646,444 27,743 $ ( 416,402 ) $ ( 54,176 ) $ ( 24,507 ) $ 764,431

Net income — — — 16,707 — — — — 16,707

Dividend — — ( 4,546 ) — — — — ( 4,546 )

Amortization of deferred compensation — — — — — — — 610 610

Equity awards granted, net ( 7 ) ( 2 ) 2 — — — — — —

ESOP allocation of common stock — — 856 — — — — — 856

Stock-based compensation — — 4,544 — — — — — 4,544

Other comprehensive income, net of tax — — — — — — 2,739 — 2,739

Balance at June 30, 2021 84,420 $ 21,104 $ 597,368 $ 658,605 27,743 $ ( 416,402 ) $ ( 51,437 ) $ ( 23,897 ) $ 785,341

The accompanying notes to condensed consolidated financial statements are an integral part of these statements.

2 unchanged sentences

(in thousands, except per share data)

Three Months Ended March 31, Six Months Ended March 31,

Three Months Ended June 30, Nine Months Ended June 30,

2022 2021 2022 2021

7 unchanged sentences

Interest income 61 49 126 397

Debt extinguishment, net ( 5,287 ) — ( 5,287 ) —

Other, net 2,084 587 4,528 1,413

4 unchanged sentences

Discontinued operations:

Income (loss) from operations of discontinued operations 694 ( 1,341 ) 3,708 690

Income from operations of discontinued operations 113,457 2,180 117,777 3,556

Provision (benefit) for income taxes 25,952 288 20,149 ( 2,085 )

Income (loss) from discontinued operations 7,118 ( 1,007 ) 9,511 3,063

Income from discontinued operations 87,505 1,892 97,628 5,641

Net income $ 140,287 $ 16,707 $ 225,274 $ 63,319

1 unchanged sentence

Income from continuing operations $ 1.02 $ 0.29 $ 2.48 $ 1.14

Income (loss) from discontinued operations 0.14 ( 0.02 ) 0.18 0.06

Income from discontinued operations 1.69 0.04 1.89 0.11

Basic earnings per common share $ 2.71 $ 0.33 $ 4.37 $ 1.25

2 unchanged sentences

Income from continuing operations $ 0.98 $ 0.28 $ 2.38 $ 1.08

Income (loss) from discontinued operations 0.13 ( 0.02 ) 0.18 0.06

Income from discontinued operations 1.62 0.04 1.82 0.11

Diluted earnings per common share $ 2.60 $ 0.31 $ 4.19 $ 1.19

6 unchanged sentences

Change in cash flow hedges 2,450 334 110 1,437

Total other comprehensive income, net of taxes 4,949 4,775 2,198 17,916

Total other comprehensive income (loss), net of taxes ( 14,177 ) 2,739 ( 11,979 ) 20,655

Comprehensive income, net $ 126,110 $ 19,446 $ 213,295 $ 83,974

3 unchanged sentences

(in thousands)

Six Months Ended March 31,

Nine Months Ended June 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

1 unchanged sentence

Net income from discontinued operations ( 97,628 ) ( 5,641 )

Adjustments to reconcile net income to net cash used in operating activities of continuing operations:

Adjustments to reconcile net income to net cash (used in) provided by operating activities of continuing operations:

Depreciation and amortization 47,021 39,118

3 unchanged sentences

Amortization of debt discounts and issuance costs 2,753 1,984

Debt extinguishment, net 5,287 —

Fair value step-up of acquired inventory sold 5,401 —

4 unchanged sentences

Increase in inventories ( 135,473 ) ( 101,553 )

(Increase) decrease in prepaid and other assets 6,063 ( 842 )

Increase in prepaid and other assets ( 13,388 ) ( 4,359 )

Increase (decrease) in accounts payable, accrued liabilities, income taxes payable and operating lease liabilities ( 44,864 ) 27,180

Other changes, net 1,799 1,647

Net cash used in operating activities - continuing operations ( 172,633 ) ( 44,411 )

Net cash (used in) provided by operating activities - continuing operations ( 65,001 ) 13,314

CASH FLOWS FROM INVESTING ACTIVITIES:

1 unchanged sentence

Acquired businesses, net of cash acquired ( 851,464 ) ( 2,242 )

Proceeds from sale of business, net 295,712 —

Proceeds (payments) from investments 14,923 ( 4,658 )

14 unchanged sentences

(in thousands)

Six Months Ended March 31,

Nine Months Ended June 30,

CASH FLOWS FROM DISCONTINUED OPERATIONS:

3 unchanged sentences

Effect of exchange rate changes on cash and equivalents ( 2,733 ) 136

NET DECREASE IN CASH AND EQUIVALENTS ( 126,360 ) ( 42,525 )

NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS ( 103,966 ) 2,608

CASH AND EQUIVALENTS AT BEGINNING OF PERIOD 248,653 218,089

13 unchanged sentences

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

On September 27, 2021, Griffon announced it is exploring strategic alternatives for its Defense Electronics ("DE") segment, which consists of its Telephonics subsidiary, and on April 18, 2022, Griffon entered into a definitive agreement to sell Telephonics to TTM Technologies, Inc.

("TTM") for $ 330,000 in cash.

The transaction is expected to close within the second calendar quarter of 2022.

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.

On May 16, 2022, we announced that our Board of Directors initiated a process to review a comprehensive range of strategic alternatives to maximize shareholder value including a sale, merger, divestiture, recapitalization or other strategic transaction.

There is no timeline for this review and there is no assurance that the Board of Director's review will result in any transaction being entered into or consummated.

As previously announced, we do not intend to disclose further developments until our Board of Directors approves a specific transaction or otherwise concludes its review of strategic alternatives.

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

On June 27, 2022, we completed the sale of Telephonics to TTM Technologies, Inc.

("TTM") for $ 330,000 in cash, subject to customary post-closing adjustments.

As a result, we have classified the results of operations of our 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 Quarterly Report on Form 10-Q are to Griffon's continuing operations, unless noted otherwise.

3 unchanged sentences

Hunter, which is part of Griffon's Consumer and Professional Products segment, complements and diversifies our portfolio of leading consumer brands and products.

The acquisition of Hunter was primarily financed with a new $ 800,000 seven year Term Loan B facility;

a combination of cash on hand and revolving credit facility borrowings was used to fund the balance of the purchase price and related acquisition and debt expenditures.

Griffon now conducts its operations through two reportable segments:

We financed the acquisition of Hunter with a new $ 800,000 seven year Term Loan B facility;

we used a combination of cash on hand and revolving credit facility borrowings to fund the balance of the purchase price and related acquisition and debt expenditures.

Griffon conducts its operations through two reportable segments:

• Consumer and Professional Products (“CPP”) is a leading North American manufacturer and a global provider of branded consumer and professional tools;

7 unchanged sentences

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

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(US dollars and non US currencies in thousands, except per share data)

In March 2020, the World Health Organization declared the outbreak of COVID-19 a pandemic, which continues to spread throughout the U.S.

3 unchanged sentences

As of the date of this filing, all of Griffon's facilities are fully operational.

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

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(US dollars and non US currencies in thousands, except per share data)

the risk to our employees of contracting COVID-19.

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

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

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The carrying values of cash and equivalents, accounts receivable, accounts and notes payable, and revolving credit and variable interest rate debt approximate fair value due to either the short-term nature of such instruments or the fact that the interest rate of the revolving credit and variable rate debt is based upon current market rates.

Applicable accounting guidance establishes a fair value hierarchy requiring the Company to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

A financial instrument’s categorization within the hierarchy is based on the lowest level of input that is significant to the fair value measurement.

The accounting guidance establishes three levels of inputs that may be used to measure fair value, as follows:

GRIFFON CORPORATION AND SUBSIDIARIES

1 unchanged sentence

(US dollars and non US currencies in thousands, except per share data)

Applicable accounting guidance establishes a fair value hierarchy requiring the Company to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

A financial instrument’s categorization within the hierarchy is based on the lowest level of input that is significant to the fair value measurement.

The accounting guidance establishes three levels of inputs that may be used to measure fair value, as follows:

• Level 1 inputs are measured and recorded at fair value based upon quoted prices in active markets for identical assets.

1 unchanged sentence

• Level 3 inputs are unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

On March 31, 2022, the fair values of Griffon’s 2028 senior notes and Term Loan B facility approximated $ 945,000 and $ 792,000 , respectively.

On June 30, 2022, the fair values of Griffon’s 2028 senior notes and Term Loan B facility approximated $ 888,759 and $ 473,100 , respectively.

Fair values were based upon quoted market prices (level 1 inputs).

Insurance contracts with values of $ 4,053 at March 31, 2022 are measured and recorded at fair value based upon quoted prices in active markets for similar assets (level 2 inputs) and are included in Prepaid and other current assets on the Consolidated Balance Sheets.

Insurance contracts with values of $ 3,742 at June 30, 2022 are measured and recorded at fair value based upon quoted prices in active markets for similar assets (level 2 inputs) and are included in Prepaid and other current assets on the Consolidated Balance Sheets.

Items Measured at Fair Value on a Recurring Basis

At March 31, 2022, marketable debt and equity securities, measured at fair value based on quoted prices in active markets for similar assets (level 2 inputs), with a fair value of $ 995 ($ 1,000 cost basis) were included in Prepaid and other current assets on the Consolidated Balance Sheets.

At June 30, 2022, marketable debt and equity securities, measured at fair value based on quoted prices in active markets for similar assets (level 2 inputs), with a fair value of $ 525 ($ 333 cost basis) were included in Prepaid and other current assets on the Consolidated Balance Sheets.

Realized and unrealized gains and losses on marketable debt and equity securities are included in Other income in the Consolidated Statements of Operations and Comprehensive Income (Loss).

1 unchanged sentence

To manage these risks, Griffon may enter into various derivative contracts such as foreign currency exchange contracts, including forwards and options.

As of March 31, 2022, Griffon entered into several such contracts in order to lock into a foreign currency rate for planned settlements of trade and inter-company liabilities payable in U.S.

At March 31, 2022, Griffon had $ 46,500 of Australian dollar contracts at a weighted average rate of $ 1.35 which qualified for hedge accounting (level 2 inputs).

As of June 30, 2022, Griffon entered into several such contracts in order to lock into a foreign currency rate for planned settlements of trade and inter-company liabilities payable in U.S.

At June 30, 2022, Griffon had $ 27,000 of Australian dollar contracts at a weighted average rate of $ 1.33 which qualified for hedge accounting (level 2 inputs).

These hedges were all deemed effective as cash flow hedges with gains and losses related to changes in fair value deferred and recorded in Accumulated other comprehensive income (loss) ("AOCI") and Prepaid and other current assets, or Accrued liabilities, until settlement.

Upon settlement, gains and losses are recognized in the Consolidated Statements of Operations and Comprehensive Income (Loss) in Cost of goods and services ("COGS").

AOCI included deferred losses of $ 773 ($ 541 , net of tax) at March 31, 2022.

Upon settlement, gains of $ 730 and $ 2,263 were recorded in COGS during the three and six months ended March 31, 2022, respectively.

AOCI included deferred gains of $ 2,116 ($ 1,482 , net of tax) at June 30, 2022.

Upon settlement, gains of $ 936 and $ 3,199 were recorded in COGS during the three and nine months ended June 30, 2022, respectively.

All contracts expire in 29 to 90 days.

At March 31, 2022, Griffon had 48,600 of Chinese Yuan contracts at a weighted average rate of $ 6.52 which qualified for hedge accounting (level 2 inputs).

At June 30, 2022, Griffon had 61,000 of Chinese Yuan contracts at a weighted average rate of $ 6.57 which qualified for hedge accounting (level 2 inputs).

Upon settlement, gains and losses are recognized in the Consolidated Statements of Operations and Comprehensive Income (Loss) in Cost of goods and services ("COGS").

AOCI included deferred gains of $ 1,140 ($ 832 , net of tax) at March 31, 2022.

Upon settlement, gains of $ 654 were recorded in COGS during the six months ended March 31, 2022.

AOCI included deferred losses of $ 1,216 ($ 887 , net of tax) at June 30, 2022.

Upon settlement, (losses)/gains of $( 220 ) and $ 434 were recorded in COGS during the three and nine months ended June 30, 2022, respectively.

All contracts expire in 1 to 243 days.

At March 31, 2022, Griffon had $ 6,950 of Canadian dollar contracts at a weighted average rate of $ 1.25 .

At June 30, 2022, Griffon had $ 10,450 of Canadian dollar contracts at a weighted average rate of $ 1.26 .

The contracts, which protect Canadian operations from currency fluctuations for U.S.

dollar based purchases, do not qualify for hedge accounting.

For the three and six months ended March 31, 2022, fair value (losses) gains of $( 136 ) and $ 2 , respectively, were recorded to Other liabilities and to Other income for the outstanding contracts, based on similar contract values (level 2 inputs).

Realized losses of $ 16 and $ 2 were recorded in Other income during the three and six months ended March 31, 2022, respectively for all settled contracts.

All contracts expire in 1 to 380 days.

For the three and nine months ended June 30, 2022, fair value gains of $ 223 and $ 225 , respectively, were recorded to Other

GRIFFON CORPORATION AND SUBSIDIARIES

1 unchanged sentence

(US dollars and non US currencies in thousands, except per share data)

liabilities and to Other income for the outstanding contracts, based on similar contract values (level 2 inputs).

Realized gains of $ 76 and $ 74 were recorded in Other income during the three and nine months ended June 30, 2022, respectively for all settled contracts.

All contracts expire in 5 to 480 days.

NOTE 3 – REVENUE

4 unchanged sentences

For each performance obligation, revenue is recognized when control of the promised products is transferred to the customer, or services are satisfied under the contract or purchase order, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those products or services (the transaction price).

The majority 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.

Within our discontinued operation, Defense Electronics, 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.

Revenue recognized over time are 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 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.

For a complete explanation of Griffon’s revenue accounting policies, this note should be read in conjunction with Griffon’s Annual Report on Form 10-K for the year ended September 30, 2021.

7 unchanged sentences

The acquisition was primarily financed with a new $ 800,000 seven year Term Loan B facility;

a combination of cash on hand and revolver borrowings was used to fund the balance of the purchase price and related acquisition and debt expenditures.

we used a combination of cash on hand and revolver borrowings to fund the balance of the purchase price and related acquisition and debt expenditures.

Hunter complements and diversifies Griffon's portfolio of leading consumer brands and products.

Since the date of acquisition through June 30, 2022, Hunter's revenue was $ 176,623 .

The goodwill recognized was $ 281,668 , which was assigned to the CPP segment, and is not expected to be deductible for income tax purposes.

1 unchanged sentence

The following unaudited proforma summary from continuing operations presents consolidated information as if the Company acquired Hunter on October 1, 2020:

Proforma For the Three Months Ended March 31, (unaudited) Proforma For the Six Months Ended March 31, (unaudited)

Proforma For the Three Months Ended June 30, (unaudited) Proforma For the Nine Months Ended June 30, (unaudited)

2022 2021 2022 2021

5 unchanged sentences

Griffon did not include any material, nonrecurring proforma adjustments directly attributable to the business combination in the proforma revenue and earnings.

These proforma amounts have been compiled by adding the historical results from continuing operations of Griffon, restated for classifying the results of operations of the Telephonics Corporate business as a discontinued operation, to the historical results of Hunter after applying Griffon’s accounting policies and the following proforma adjustments:

• Additional depreciation and amortization that would have been charged assuming the preliminary fair value adjustments to property, plant, and equipment, and intangible assets had been applied from October 1, 2021.

• Additional interest and related expenses from the new $ 800,000 seven year Term Loan B facility that Griffon used to acquire Hunter Fan.

• The consequential tax effects of the above adjustments using a 21.9 % tax rate for the year ended September 30, 2021.

These proforma amounts have been compiled by adding the historical results from continuing operations of Griffon, restated for classifying the results of operations of the Telephonics business as a discontinued operation, to the historical results of Hunter after applying Griffon’s accounting policies and the following proforma adjustments:

• Depreciation and amortization that would have been charged assuming the preliminary fair value adjustments to property, plant, and equipment, and intangible assets had been applied from October 1, 2021.

• Additional interest and related expenses from the new $ 800,000 seven year Term Loan B facility that Griffon used to acquire Hunter Fan reduced by historical Hunter interest expense.

• The tax effects on the above adjustments using the statutory tax rate of 25.7 % for Griffon and 27.1 % for Hunter.

The calculation of the preliminary purchase price allocation is as follows:

21 unchanged sentences

Goodwill $ 281,668 N/A

Indefinite-lived intangibles 356,000 N/A

Definite-lived intangibles 250,000 20

Indefinite-lived intangibles (Hunter and Casablanca brands) 356,000 N/A

Definite-lived intangibles (Customer relationships) 250,000 20

Total goodwill and intangible assets $ 887,668

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 for a net purchase price of AUD $ 3,500 (approximately $ 2,700 ) in cash.

The final purchase price allocated to goodwill and acquired intangibles was AUD $ 1,038 (approximately $ 784 ) and AUD $ 2,755 (approximately $ 2,082 ), respectively, which was assigned to the CPP segment, and is not deductible for income tax purposes.

GRIFFON CORPORATION AND SUBSIDIARIES

1 unchanged sentence

(US dollars and non US currencies in thousands, except per share data)

During the three and six months ended March 31, 2022, the Company incurred acquisition costs of $ 6,708 and $ 9,303 , respectively.

During the three and six months ended March 31, 2021, acquisition costs were de minimis.

During the nine months ended June 30, 2022, the Company incurred acquisition costs of $ 9,303 .

During the three months ended June 30, 2022, there were no acquisition costs.

During the three and nine months ended June 30, 2021, acquisition costs were de minimis.

NOTE 5 – INVENTORIES

1 unchanged sentence

The following table details the components of inventory:

At March 31, 2022 At September 30, 2021

At June 30, 2022 At September 30, 2021

Raw materials and supplies $ 169,606 $ 133,684

4 unchanged sentences

The following table details the components of property, plant and equipment, net:

At March 31, 2022 At September 30, 2021

At June 30, 2022 At September 30, 2021

Land, building and building improvements $ 154,187 $ 155,574

4 unchanged sentences

Total $ 299,844 $ 290,222

Depreciation and amortization expense for property, plant and equipment was $ 11,782 and $ 10,742 for the quarters ended March 31, 2022 and 2021, respectively, and $ 22,476 and $ 20,980 for the six months ended March 31, 2022 and 2021, respectively.

Depreciation included in Selling, general and administrative ("SG&A") expenses was $ 4,256 and $ 3,613 for the quarters ended March 31, 2022 and 2021, respectively, and $ 7,656 and $ 6,875 for the six months ended March 31, 2022 and 2021, respectively.

Depreciation and amortization expense for property, plant and equipment was $ 12,173 and $ 10,896 for the quarters ended June 30, 2022 and 2021, respectively, and $ 34,650 and $ 31,950 for the nine months ended June 30, 2022 and 2021, respectively.

Depreciation included in Selling, general and administrative ("SG&A") expenses was $ 4,578 and $ 3,724 for the quarters ended June 30, 2022 and 2021, respectively, and $ 12,234 and $ 10,672 for the nine months ended June 30, 2022 and 2021, respectively.

Remaining components of depreciation, attributable to manufacturing operations, are included in Cost of goods and services.

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The following table provides a roll-forward of the allowance for credit losses that is deducted from the amortized cost basis of accounts receivable to present the net amount expected to be collected:

Six months ended March 31,

Nine months ended June 30,

Beginning Balance, October 1 $ 8,787 $ 8,178

Accounts receivable, net acquired 2,599 —

Allowance for credit losses acquired 2,599 —

Provision for expected credit losses 2,430 1,287

1 unchanged sentence

Other, primarily foreign currency translation ( 116 ) 20

Ending Balance, March 31 $ 13,500 $ 9,274

Ending Balance, June 30 $ 13,541 $ 9,247

GRIFFON CORPORATION AND SUBSIDIARIES

2 unchanged sentences

NOTE 8 – GOODWILL AND OTHER INTANGIBLES

The following table provides changes in the carrying value of goodwill by segment during the six months ended March 31, 2022:

The following table provides changes in the carrying value of goodwill by segment during the nine months ended June 30, 2022:

At September 30, 2021 Hunter Acquisition Foreign

translations adjustments At March 31, 2022

translations adjustments At June 30, 2022

Consumer and Professional Products $ 234,895 $ 281,668 $ ( 2,460 ) $ 514,103

2 unchanged sentences

The following table provides the gross carrying value and accumulated amortization for each major class of intangible assets:

At March 31, 2022 At September 30, 2021

At June 30, 2022 At September 30, 2021

Gross Carrying Amount Accumulated

7 unchanged sentences

The gross carrying amount of intangible assets was impacted by $ 4,630 related to foreign currency translation.

Amortization expense for intangible assets was $ 4,470 and $ 2,407 for the quarters ended March 31, 2022 and 2021, respectively, and $ 6,857 and $ 4,759 for the six months ended March 31, 2022 and 2021, respectively.

Amortization expense for intangible assets was $ 5,514 and $ 2,409 for the quarters ended June 30, 2022 and 2021, respectively, and $ 12,371 and $ 7,168 for the nine months ended June 30, 2022 and 2021, respectively.

The increase in intangible assets and amortization is related to the Hunter acquisition.

7 unchanged sentences

thereafter $ 244,261 .

During the six months ended March 31, 2022, the Company determined that there were no triggering events and, as a result, there was no impairment to either its goodwill or indefinite-lived intangible assets at March 31, 2022.

During the nine months ended June 30, 2022, the Company determined that there were no triggering events and, as a result, there was no impairment to either its goodwill or indefinite-lived intangible assets at June 30, 2022.

GRIFFON CORPORATION AND SUBSIDIARIES

2 unchanged sentences

NOTE 9 – INCOME TAXES

During the quarter ended March 31, 2022, the Company recognized a tax provision of $ 24,533 on income before taxes from continuing operations of $ 83,104 , compared to a tax provision of $ 11,082 on income before taxes from continuing operations of $ 29,201 in the comparable prior year quarter.

The current year quarter results included restructuring charges of $ 4,766 ($ 3,496 , net of tax), acquisition costs of $ 6,708 ($ 6,146 , net of tax), proxy expenses of $ 4,661 ($ 3,591 , net of tax), fair value step-up of acquired inventory sold of $ 2,701 ($ 2,007 , net of tax), and discrete and certain other tax benefits, net, that affect comparability of $ 693 .

During the quarter ended June 30, 2022, the Company recognized a tax provision of $ 23,268 on income before taxes from continuing operations of $ 76,050 , compared to a tax provision of $ 12,078 on income before taxes from continuing operations of $ 26,893 in the comparable prior year quarter.

The current year quarter results included restructuring charges of $ 5,909 ($ 4,359 , net of tax), fair value step-up of acquired inventory sold of $ 2,700 ($ 2,005 , net of tax), strategic review (retention and other) of $ 3,220 ($ 2,416 , net of tax), debt extinguishment, net of $ 5,287 ($ 4,022 , net of tax), and discrete and certain other tax provisions, net, that affect comparability of $ 913 .

The prior year quarter results included restructuring charges of $ 4,081 ($ 3,128 , net of tax), and discrete tax and certain other tax provisions, net, that affect comparability of $ 2,850 .

Excluding these items, the effective tax rates for the quarters ended March 31, 2022 and 2021 were 28.3 % and 31.5 %, respectively.

During the six months ended March 31, 2022, the Company recognized a tax provision of $ 31,851 on income before taxes of $ 107,327 , compared to a tax provision of $ 22,790 on income before taxes of $ 66,339 in the comparable prior year period.

The six month period ended March 31, 2022 included restructuring charges of $ 6,482 ($ 4,826 , net of tax), acquisition costs of $ 9,303 ($ 8,149 , net of tax), proxy expenses of $ 6,952 ($ 5,359 , net of tax), fair value step-up of acquired inventory sold of $ 2,701 ($ 2,007 , net of tax), and discrete and certain other tax benefits, net, that affect comparability of $ 1,574 .

The six month period ended March 31, 2021 included restructuring charges of $ 10,581 ($ 7,906 , net of tax), and discrete tax and certain other tax provisions, net, that affect comparability of $ 369 .

Excluding these items, the effective tax rates for the six months ended March 31, 2022 and 2021 were 29.0 % and 32.6 %, respectively.

Excluding these items, the effective tax rates for the quarters ended June 30, 2022 and 2021 were 28.6 % and 32.9 %, respectively.

During the nine months ended June 30, 2022, the Company recognized a tax provision of $ 55,119 on income before taxes of $ 182,765 , compared to a tax provision of $ 34,868 on income before taxes of $ 92,546 in the comparable prior year period.

The nine month period ended June 30, 2022 included restructuring charges of $ 12,391 ($ 9,185 , net of tax), acquisition costs of $ 9,303 ($ 8,149 , net of tax), proxy expenses of $ 6,952 ($ 5,359 , net of tax), fair value step-up of acquired inventory sold of $ 5,401 ($ 4,012 , net of tax), strategic review (retention and other) of $ 3,220 ($ 2,416 , net of tax), debt extinguishment, net $ 5,287 ($ 4,022 , net of tax), and discrete and certain other tax benefits, net, that affect comparability of $ 661 .

The nine month period ended June 30, 2021 included restructuring charges of $ 14,662 ($ 11,034 , net of tax), and discrete tax and certain other tax provisions, net, that affect comparability of $ 3,219 .

Excluding these items, the effective tax rates for the nine months ended June 30, 2022 and 2021 were 28.9 % and 32.9 %, respectively.

GRIFFON CORPORATION AND SUBSIDIARIES

2 unchanged sentences

NOTE 10 – LONG-TERM DEBT

At March 31, 2022 At September 30, 2021

At June 30, 2022 At September 30, 2021

Outstanding Balance Original Issuer Premium/(Discount) Capitalized Fees & Expenses Balance Sheet Coupon Interest Rate Outstanding Balance Original Issuer Premium/(Discount) Capitalized Fees & Expenses Balance Sheet Coupon Interest Rate

Senior notes due 2028 (a) $ 984,775 $ 278 ( 11,562 ) $ 973,491 5.75 % $ 1,000,000 $ 315 $ ( 13,293 ) $ 987,022 5.75 %

Term Loan B 2029 (b) 800,000 ( 1,970 ) ( 15,235 ) 782,795 Variable — — — — — n/a

Term Loan B due 2029 (b) 498,000 ( 1,187 ) ( 9,174 ) 487,639 Variable — — — — — n/a

Revolver due 2025 (b) 97,816 — ( 1,350 ) 96,466 Variable 13,483 — ( 1,718 ) 11,765 Variable

9 unchanged sentences

(US dollars and non US currencies in thousands, except per share data)

Three Months Ended March 31, 2022 Three Months Ended March 31, 2021

Three Months Ended June 30, 2022 Three Months Ended June 30, 2021

Effective Interest Rate Cash Interest Amort.

13 unchanged sentences

Totals $ 22,835 $ 49 $ 1,138 $ 24,022 $ 15,214 $ ( 12 ) $ 647 $ 15,849

Six Months Ended March 31, 2022 Six Months Ended March 31, 2021

Nine Months Ended June 30, 2022 Nine Months Ended June 30, 2021

Effective Interest Rate Cash Interest Amort.

18 unchanged sentences

Proceeds from the 2028 Senior Notes were used to redeem $ 1,000,000 of 5.25 % Senior Notes due 2022.

As of March 31, 2022, outstanding 2028 Senior Notes due totaled $ 1,000,000 ;

During the period ended June 30, 2022, Griffon purchased $ 15,225 of 2028 Senior Notes in the open market at a weighted average discount of 92.19 % of par, or $ 14,036 .

In connection with these purchases, Griffon recognized a $ 1,009 net gain on the early extinguishment of debt comprised of $ 1,189 of face value in excess of purchase price, offset by $ 180 related to the write-off of underwriting fees and other expenses.

As of June 30, 2022, outstanding 2028 Senior Notes due totaled $ 984,775 ;

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

Subsequent to June 30, 2022, Griffon purchased $ 10,000 of 2028 Senior Notes in the open market at a weighted average discount of 91.25 % of par, or $ 9,125 .

The 2028 Senior Notes are senior unsecured obligations of Griffon guaranteed by certain domestic subsidiaries, and subject to certain covenants, limitations and restrictions.

The 2028 Senior Notes were registered under the Securities Act of 1933, as amended (the "Securities Act") via an exchange offer.

The fair value of the 2028 Senior Notes approximated $ 945,000 on March 31, 2022 based upon quoted market prices (level 1 inputs).

In connection with these transactions, Griffon capitalized $ 16,448 of underwriting fees and other expenses incurred related to the issuance and exchange of the 2028 Senior Notes, which is being amortized over the term of such notes, and at March 31, 2022, $ 12,257 remained to be amortized.

The fair value of the 2028 Senior Notes approximated $ 888,759 on June 30, 2022 based upon quoted market prices (level 1 inputs).

In connection with the issuance and exchange of the 2028 Senior Notes, Griffon capitalized $ 16,448 of underwriting fees and other expenses incurred, which is being amortized over the term of such notes, and at June 30, 2022, $ 11,562 remained to be amortized.

(b) On January 24, 2022, Griffon amended and restated its Revolving Credit Facility (as amended, "Credit Agreement") to provide for a new $ 800,000 Term Loan B facility, due January 24, 2029, in addition to its current $ 400,000 revolving credit facility ("Revolver"), and replaced LIBOR with SOFR (Secured Overnight Financing Rate).

The fair value of the Term Loan B facility approximated $ 792,000 on March 31, 2022 based upon quoted market prices (level 1 inputs).

The Term Loan B contains a SOFR floor of 0.50 % and a current spread of 2.75 %, for a total current interest rate of 3.25 %.

The Original Issue Discount for the Term Loan B was 99.75 %.

The Term Loan B contains a SOFR floor of 0.50 % and a current spread of 2.75 %.

Additionally, there are two interest rate step-downs tied to achieving decreased secured leverage ratio thresholds.

The Term Loan B facility requires nominal quarterly principal payments equal to 0.25 % of the original outstanding principal amount, beginning with the quarter ended June 30, 2022;

The Original Issue Discount for the Term Loan B was 99.75 %.

In connection with this amendment, Griffon capitalized $ 15,466 of underwriting fees and other expenses incurred, which are being amortized over the term of the loan.

The Term Loan B facility requires nominal quarterly principal payments of $ 2,000 , beginning with the quarter ended June 30, 2022;

potential additional annual principal payments based on a percentage of excess cash flow and certain secured leverage thresholds starting with the fiscal year ending September 30, 2023;

1 unchanged sentence

Term Loan B borrowings may generally be repaid without penalty but may not be re-borrowed.

During the period ended June 30, 2022, Griffon prepaid $ 300,000 aggregate principal amount of the Term Loan B, which permanently reduced the outstanding balance.

In connection with the prepayment of the Term Loan B Griffon recognized a $ 6,296 charge on the prepayment of debt, $ 5,575 related to the write-off of underwriting fees and other expenses and $ 721 of the original issuer discount.

The Term Loan B facility is subject to the same affirmative and negative covenants that apply to the Revolver, but is not subject to any financial maintenance covenants.

Term Loan B borrowings are secured by the same collateral as the Revolver.

In connection with this amendment, Griffon capitalized $ 15,466 of underwriting fees and other expenses incurred, which are being amortized over the term of the loan.

At March 31, 2022, $ 15,235 remained to be amortized.

The fair value of the Term Loan B facility approximated $ 473,100 on June 30, 2022 based upon quoted market prices (level 1 inputs).

At June 30, 2022, $ 9,174 of underwriting fees and other expenses incurred, remained to be amortized.

The Revolver's maximum borrowing availability is $ 400,000 and it matures on March 22, 2025.

9 unchanged sentences

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

At March 31, 2022, there were $ 153,146 of outstanding borrowings under the Revolver;

At June 30, 2022, there were $ 97,816

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(US dollars and non US currencies in thousands, except per share data)

of outstanding borrowings under the Revolver;

outstanding standby letters of credit were $ 12,287 ;

3 unchanged sentences

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

At March 31, 2022, $ 13,757 was outstanding, net of issuance costs.

During the year-to-date period ended March 31, 2022, the financing lease on the Troy, Ohio location expired.

At June 30, 2022, $ 13,426 was outstanding.

During the year-to-date period ended June 30, 2022, the financing lease on the Troy, Ohio location expired.

The lease bore interest at a rate of approximately 5.0 %, was secured by a mortgage on the real estate, which was guaranteed by Griffon, and had a one dollar buyout at the end of the lease.

1 unchanged sentence

Refer to Note 21- Leases for further details.

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(US dollars and non US currencies in thousands, except per share data)

(d) In November 2012, Garant G.P.

(“Garant”), a Griffon wholly owned subsidiary, entered into a CAD 15,000 ($ 12,018 as of March 31, 2022) revolving credit facility.

The facility accrues interest at LIBOR (USD) or the Bankers Acceptance Rate (CDN) plus 1.3 % per annum ( 1.75 % LIBOR USD and 2.38 % Bankers Acceptance Rate CDN as of March 31, 2022).

The revolving facility matures in October 2022.

(“Garant”), a Griffon wholly owned subsidiary, entered into a CAD 15,000 ($ 11,666 as of June 30, 2022) revolving credit facility.

The facility accrues interest at LIBOR (USD) or the Bankers Acceptance Rate (CDN) plus 1.3 % per annum ( 3.09 % LIBOR USD and 3.86 % Bankers Acceptance Rate CDN as of June 30, 2022).

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

Garant is required to maintain a certain minimum equity.

At March 31, 2022, there were no outstanding borrowings under the revolving credit facility with CAD 15,000 ($ 12,018 as of March 31, 2022) available.

At June 30, 2022, there were no outstanding borrowings under the revolving credit facility with CAD 15,000 ($ 11,666 as of June 30, 2022) available.

During the period ended March 31,2022, Griffon Australia Holdings Pty Ltd and its Australian subsidiaries (collectively, "Griffon Australia") amended its AUD 18,375 term loan, AUD 20,000 revolver and AUD 15,000 receivable purchase facility agreement that was entered into in July 2016 and further amended in fiscal 2020.

2 unchanged sentences

The receivable purchase facility matures in March 2023, but is renewable upon mutual agreement with the lender.

The receivable purchase facility accrues interest at BBSY (Bank Bill Sap Rate) plus 1.25 %, respectively, per annum ( 1.31 % at March 31, 2022).

At March 31, 2022, there was no balance outstanding under the receivable purchase facility with AUD 15,000 ($ 11,273 as of March 31, 2022) available.

The receivable purchase facility accrues interest at BBSY (Bank Bill Swap Rate) plus 1.25 %, respectively, per annum ( 2.39 % at June 30, 2022).

At June 30, 2022, there was no balance outstanding under the receivable purchase facility with AUD 15,000 ($ 10,392 as of June 30, 2022) available.

The receivable purchase facility is secured by substantially all of the assets of Griffon Australia and its subsidiaries.

3 unchanged sentences

Effective in January 2022, the Term Loan and Mortgage Loan were amended to replace GBP LIBOR with SONIA.

The Term Loan and Mortgage Loans each accrue interest at the SONIA Rate plus 1.92 % ( 2.61 % at March 31, 2022).

The revolving facility accrues interest at the Bank of England Base Rate plus 3.25 % ( 4.00 % as of March 31, 2022).

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

As of March 31, 2022, the revolver had an outstanding balance of GBP 2,827 ($ 3,713 as of March 31, 2022) while the term and mortgage loan balances amounted to GBP 12,145 ($ 15,948 as of March 31, 2022).

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

The Term Loan and Mortgage Loans each accrue interest at the SONIA Rate plus 1.92 % ( 3.11 % at June 30, 2022).

The revolving facility accrues interest at the Bank of England Base Rate plus 3.25 % ( 4.50 % as of June 30, 2022).

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

As of June 30, 2022, the revolver had no outstanding balance while the term and mortgage loan balances amounted to GBP 11,603 ($ 14,193 as of June 30, 2022).

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

AMES UK is subject to a maximum leverage ratio and a minimum fixed charges cover ratio.

During the period ended March 31, 2022, AMES UK entered into a $ 8,500 trade loan facility agreement.

The trade loan facility has a maximum loan period of 135 days and is due on June 29, 2022.

The trade facility accrues interest at the Mid-point of the FED Target Range plus 2.50 % ( 2.88 % as of March 31, 2022).

The trade facility had an outstanding balance of $ 8,000 as of March 31, 2022.

The trade loan facility has a maximum loan period of 135 days and expired on June 30, 2022.

The trade facility accrues interest at the Mid-point of the FED Target Range plus 2.50 % ( 4.13 % as of June 30, 2022).

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

At March 31, 2022, Griffon and its subsidiaries were in compliance with the terms and covenants of all credit and loan agreements.

At June 30, 2022, Griffon and its subsidiaries were in compliance with the terms and covenants of all credit and loan agreements.

NOTE 11 — SHAREHOLDERS’ EQUITY

During the six months ended March 31, 2022, the Company paid two quarterly cash dividends of $ 0.09 per share each.

During the nine months ended June 30, 2022, the Company paid three quarterly cash dividends of $ 0.09 per share each.

During 2021, the Company paid a quarterly cash dividend of $ 0.08 per share, totaling $ 0.32 per share for the year.

A dividend payable was established for the holders of restricted shares;

such dividends will be released upon vesting of the underlying restricted shares.

On April 27, 2022, the Board of Directors declared a quarterly cash dividend of $ 0.09 per share, payable on June 16, 2022 to shareholders of record as of the close of business on May 19, 2022.

On January 29, 2016, shareholders approved the Griffon Corporation 2016 Equity Incentive Plan (the "Original Incentive Plan") pursuant to which, among other things, under which awards of performance shares, performance units, stock options,

GRIFFON CORPORATION AND SUBSIDIARIES

1 unchanged sentence

(US dollars and non US currencies in thousands, except per share data)

stock appreciation rights, restricted shares, restricted stock units, deferred shares and other stock-based awards may be granted.

On June 27, 2022, the Board of Directors declared a special cash dividend of $ 2.00 per share, payable on July 20, 2022 to shareholders of record as of the close of business on July 8, 2022.

On July 27, 2022, the Board of Directors declared a quarterly cash dividend of $ 0.09 per share, payable on September 15, 2022 to shareholders of record as of the close of business on August 18, 2022.

As of June 30, 2022, the Company accrued $ 104,053 in connection with the declaration of the special dividend.

For all dividends, a dividend payable is established for the holders of restricted shares;

such dividends will be released upon vesting of the underlying restricted shares.

On January 29, 2016, shareholders approved the Griffon Corporation 2016 Equity Incentive Plan (the "Original Incentive Plan") pursuant to which, among other things, awards of performance shares, performance units, stock options, stock appreciation rights, restricted shares, restricted stock units, deferred shares and other stock-based awards may be granted.

On January 31, 2018, shareholders approved Amendment No.

5 unchanged sentences

The maximum number of shares of common stock available for award under the Amended Incentive Plan is 6,250,000 ( 600,000 of which may be issued as incentive stock options), plus (i) any shares that were reserved for issuance under the Original Incentive Plan as of the effective date of the Original Incentive Plan, and (ii) any shares underlying awards outstanding on such date under the 2011 Incentive Plan that were subsequently canceled or forfeited.

As of March 31, 2022, there were 867,180 shares available for grant.

As of June 30, 2022, there were 835,517 shares available for grant.

Compensation expense for restricted stock and restricted stock units is recognized ratably over the required service period based on the fair value of the grant, calculated as the number of shares granted multiplied by the stock price on the date of grant and, for performance shares, the likelihood of achieving the performance criteria.

10 unchanged sentences

Additionally, Griffon granted 58,384 restricted shares to the non-employee directors of Griffon with a vesting period of one year and a fair value of $ 1,375 , or a weighted average fair value of $ 23.55 per share.

During the six months ended March 31, 2022, 469,855 shares granted were issued out of treasury stock.

During the nine months ended June 30, 2022, 501,718 shares granted were issued out of treasury stock.

During the third quarter of 2022, Griffon granted 31,663 shares of restricted stock.

This included 31,208 shares of restricted stock, subject to certain performance conditions, with vesting periods of thirty-two months , with a total fair value of $ 700 , or a weighted average fair value of $ 22.43 per share.

Furthermore, this included 455 shares of a restricted stock award granted to one executive, with a vesting period of 3 years and a total fair value of $ 9 or a weighted average fair value of $ 18.89 per share.

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(US dollars and non US currencies in thousands, except per share data)

The following table summarizes the Company’s compensation expense relating to all stock-based incentive plans:

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

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

2022 2021 2022 2021

4 unchanged sentences

Under this share repurchase program, the Company may purchase shares in the open market, including pursuant to a 10b5-1 plan, or in privately negotiated transactions.

During the six months ended March 31, 2022, Griffon did not purchase any shares of common stock under these repurchase programs.

As of March 31, 2022, an aggregate of $ 57,955 remains under Griffon's Board authorized repurchase programs.

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(US dollars and non US currencies in thousands, except per share data)

During the six months ended March 31, 2022, 421,860 shares, with a market value of $ 10,742 , or $ 25.46 per share were withheld to settle employee taxes due upon the vesting of restricted stock, and were added to treasury stock.

Furthermore, during the six months ended March 31, 2022, an additional 5,480 shares, with a market value of $ 144 , or $ 26.31 per share, were withheld from common stock issued upon the vesting of restricted stock units to settle employee taxes due upon vesting.

During the nine months ended June 30, 2022, Griffon did not purchase any shares of common stock under these repurchase programs.

As of June 30, 2022, an aggregate of $ 57,955 remains under Griffon's Board authorized repurchase programs.

During the nine months ended June 30, 2022, 421,860 shares, with a market value of $ 10,742 , or $ 25.46 per share were withheld to settle employee taxes due upon the vesting of restricted stock, and were added to treasury stock.

Furthermore, during the nine months ended June 30, 2022, an additional 5,480 shares, with a market value of $ 144 , or $ 26.31 per share, were withheld from common stock issued upon the vesting of restricted stock units to settle employee taxes due upon vesting.

NOTE 12 – EARNINGS PER SHARE (EPS)

2 unchanged sentences

The following table is a reconciliation of the share amounts (in thousands) used in computing earnings per share:

Three Months Ended March 31, Six Months Ended March 31,

Three Months Ended June 30, Nine Months Ended June 30,

2022 2021 2022 2021

21 unchanged sentences

Information on Griffon’s reportable segments from continuing operations is as follows:

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

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

REVENUE 2022 2021 2022 2021

5 unchanged sentences

The following table presents revenue disaggregated by end market and segment:

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

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

2022 2021 2022 2021

14 unchanged sentences

The following table presents revenue disaggregated by geography based on the location of the Company's customer:

For the Three Months Ended March 31,

For the Three Months Ended June 30,

CPP HBP Total CPP HBP Total

5 unchanged sentences

Consolidated revenue $ 362,634 $ 405,545 $ 768,179 $ 324,826 $ 259,392 $ 584,218

For the Six Months Ended March 31, 2022

For the Nine Months Ended June 30, 2022

CPP HBP Total CPP HBP Total

8 unchanged sentences

The following table provides a reconciliation of Segment adjusted EBITDA to Income before taxes from continuing operations:

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

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(US dollars and non US currencies in thousands, except per share data)

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

2022 2021 2022 2021

7 unchanged sentences

Depreciation and amortization ( 17,688 ) ( 13,306 ) ( 47,021 ) ( 39,118 )

Debt extinguishment, net ( 5,287 ) — ( 5,287 ) —

Restructuring charges ( 5,909 ) ( 4,081 ) ( 12,391 ) ( 14,662 )

Acquisition costs — — ( 9,303 ) —

Strategic review - retention and other ( 3,220 ) — ( 3,220 ) —

Proxy expenses — — ( 6,952 ) —

2 unchanged sentences

* Unallocated amounts typically include general corporate expenses not attributable to a reportable segment.

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(US dollars and non US currencies in thousands, except per share data)

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

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

DEPRECIATION and AMORTIZATION 2022 2021 2022 2021

10 unchanged sentences

Total consolidated capital expenditures $ 11,486 $ 7,114 $ 33,516 $ 24,949

ASSETS At March 31, 2022 At September 30, 2021

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(US dollars and non US currencies in thousands, except per share data)

ASSETS At June 30, 2022 At September 30, 2021

Segment assets:

9 unchanged sentences

Defined benefit pension expense (income) included in Other Income (Expense), net was as follows:

Three Months Ended March 31, Six Months Ended March 31,

Three Months Ended June 30, Nine Months Ended June 30,

2022 2021 2022 2021

4 unchanged sentences

Net periodic expense (income) $ ( 1,118 ) $ ( 226 ) $ ( 3,145 ) $ ( 680 )

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(US dollars and non US currencies in thousands, except per share data)

NOTE 15 – RECENT ACCOUNTING PRONOUNCEMENTS

15 unchanged sentences

Adoption of this standard did not have a material impact on our consolidated financial statements and the related disclosures.

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(US dollars and non US currencies in thousands, except per share data)

In August 2018, the FASB issued guidance to clarify disclosure requirements related to defined benefit pension and other post-retirement plans.

3 unchanged sentences

NOTE 16 – DISCONTINUED OPERATIONS

On September 27, 2021, Griffon announced it is exploring strategic alternatives for its DE segment, which consists of its Telephonics subsidiary, and on April 18, 2022, Griffon entered into a definitive agreement to sell Telephonics to TTM for $ 330,000 in cash.

The transaction is expected to close within the second calendar quarter of 2022.

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

On June 27, 2022, Griffon completed the sale of Telephonics to TTM for $ 330,000 in cash, subject to customary post-closing adjustments.

In connection with the sale of Telephonics, the Company recorded a gain of $ 108,949 ($ 88,977 , net of tax) during the quarter ended June 30, 2022.

The gain and related tax for the sale of Telephonics is preliminary and is subject to finalization.

In accordance with ASC 205-20 Presentation of Financial Statements:

2 unchanged sentences

At the same time, the results of all discontinued operations, less applicable income taxes (benefit), shall be reported as components of net income (loss) separate from the net income (loss) of continuing operations.

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(US dollars and non US currencies in thousands, except per share data)

Defense Electronics (DE or Telephonics)

The following amounts related to Telephonics have been segregated from Griffon's continuing operations and are reported as a discontinued operation:

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

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

2022 2021 2022 2021

12 unchanged sentences

Income from discontinued operations $ 87,505 $ 1,892 $ 97,628 $ 5,641

During the three and six months ended March 31, 2022, Income from discontinued operations includes $ 2,422 and $ 4,214 , respectively, of costs associated with consulting and stay bonuses.

Depreciation and amortization was excluded from the current year results since DE is classified as a discontinued operation and, accordingly, the Company ceased depreciation and amortization in accordance with discontinued operations accounting guidelines.

Depreciation and amortization would have been approximately $ 2,400 and $ 5,100 in the three and six months ended March 31, 2022, respectively.

Provision (benefit) for income taxes includes $ 4,954 of estimated deferred tax benefits related to the anticipated disposition of the Telephonics subsidiary.

The gain on sale of business relates to the divestiture of the SEG business on December 18, 2020;

SEG had sales of $ 6,713 in the quarter ended December 31, 2020.

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 ended December 31, 2020.

These actions reduced headcount by approximately 90 people.

Income from discontinued operations includes charges of $ 5,601 recorded in fiscal 2021 primarily related to exiting older weather radar product lines.

Depreciation and amortization would have been approximately $ 2,342 and $ 7,442 in the three and nine months ended June 30, 2022, respectively.

GRIFFON CORPORATION AND SUBSIDIARIES

1 unchanged sentence

(US dollars and non US currencies in thousands, except per share data)

The following amounts related to Telephonics have been segregated from Griffon's continuing operations and are reported as assets and liabilities of discontinued operations held for sale in the consolidated balance sheets:

At March 31, At September 30,

The Company completed the sale of Telephonics on June 27, 2022.

The following amounts related to Telephonics that were classified as assets and liabilities of discontinued operations held for sale in the consolidated balance sheet as of September 30, 2021:

At September 30,

CURRENT ASSETS

8 unchanged sentences

OTHER ASSETS 5,629

Total Assets Held for Sale $ 264,861 $ 273,414

Total Assets $ 275,814

CURRENT LIABILITIES

4 unchanged sentences

OTHER LIABILITIES 3,955

Total Liabilities Held for Sale $ 73,218 $ 80,748

Installation Services and Other Discontinued Activities

The following amounts summarize the total assets and liabilities related to the Installation Services and other discontinued activities which have been segregated from Griffon’s continuing operations, and are reported as assets and liabilities of discontinued operations in the Condensed Consolidated Balance Sheets:

At March 31, 2022 At September 30, 2021

Total Liabilities $ 81,023

The following amounts summarize the total assets and liabilities related to Telephonics, Installation Services and other discontinued activities which have been segregated from Griffon’s continuing operations, and are reported as assets and liabilities of discontinued operations in the Condensed Consolidated Balance Sheets:

At June 30, 2022 At September 30, 2021

Assets of discontinued operations:

6 unchanged sentences

Total liabilities of discontinued operations $ 34,631 $ 7,074

At March 31, 2022 and September 30, 2021, Griffon’s liabilities for Installations Services and other discontinued operations primarily related to insurance claims, warranty and environmental reserves totaling liabilities of approximately $ 7,718 and $ 7,074 , respectively.

There was no reported revenue in the quarter and six month period ended March 31 2022 and 2021.

Accrued liabilities as of June 30, 2022 includes the Company's obligation of $ 27,703 in connection with the sale of Telephonics primarily related to income taxes payable.

At June 30, 2022 and September 30, 2021, Griffon’s liabilities for Installations Services and other discontinued operations primarily relate to insurance claims, warranty and environmental reserves total $ 6,928 and $ 7,074 , respectively.

There was no reported revenue in the quarter and nine month period ended June 30, 2022 and 2021 for Installations Services and other discontinued operations.

GRIFFON CORPORATION AND SUBSIDIARIES

15 unchanged sentences

The cost to implement this new business platform, over the duration of the project, will now include one-time charges of approximately $ 50,000 (previously $ 65,000 ) and capital investments of approximately $ 15,000 (previously $ 65,000 ), net of future proceeds from the sale of exited facilities.

In the quarter and six months ended March 31, 2022, CPP incurred pre-tax restructuring and related exit costs approximating $ 4,766 and $ 6,482 , respectively.

During the six months ended March 31, 2022, cash charges totaled $ 4,427 and non-cash, asset-related charges totaled $ 2,055 ;

In the quarter and nine months ended June 30, 2022, CPP incurred pre-tax restructuring and related exit costs approximating $ 5,909 and $ 12,391 , respectively.

During the nine months ended June 30, 2022, cash charges totaled $ 9,897 and non-cash, asset-related charges totaled $ 2,494 ;

the cash charges included $3,751 for one-time termination benefits and other personnel-related costs and $6,146 for facility exit costs.

Non-cash charges included a $ 1,766 impairment charge related to certain fixed assets at several manufacturing locations and $ 728 of inventory that have no recoverable value.

During the six months ended March 31, 2022, headcount was reduced by 20 .

In the quarter and six months ended March 31, 2021, CPP incurred pre-tax restructuring and related exit costs approximating $ 7,502 and $ 10,581 , respectively.

During the six months ended March 31, 2021, cash charges totaled $ 7,891 and non-cash, asset-related charges totaled $ 2,690 ;

During the nine months ended June 30, 2022, headcount was reduced by 20 .

In the quarter and nine months ended June 30, 2021, CPP incurred pre-tax restructuring and related exit costs approximating $ 4,081 and $ 14,662 , respectively.

During the nine months ended June 30, 2021, cash charges totaled $ 10,780 and non-cash, asset-related charges totaled $ 3,882 ;

the cash charges included $ 1,783 for one-time termination benefits and other personnel related costs and $ 8,997 for facility and lease exit costs primarily driven by the consolidation of distribution facilities.

1 unchanged sentence

A summary of the restructuring and other related charges included in Cost of goods and services and SG&A expenses in the Company's Condensed Consolidated Statements of Operations were as follows:

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

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

2022 2021 2022 2021

5 unchanged sentences

(US dollars and non US currencies in thousands, except per share data)

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

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

2022 2021 2022 2021

16 unchanged sentences

Accrued liability at March 31, 2022 $ 398 $ 264 $ — $ 662

Q3 Restructuring charges 1,613 3,857 439 5,909

Q3 Cash payments ( 1,619 ) ( 3,857 ) — ( 5,476 )

Q3 Non-cash charges — — ( 439 ) ( 439 )

Accrued liability at June 30, 2022 $ 392 $ 264 $ — $ 656

NOTE 18 – OTHER INCOME (EXPENSE)

For the quarters ended March 31, 2022 and 2021, Other income (expense) of $ 1,675 and $ 1,081 , respectively, includes $ 168 and $ 320 , respectively, of net currency exchange losses in connection with the translation of receivables and payables denominated in currencies other than the functional currencies of Griffon and its subsidiaries, net periodic benefit plan income of $ 1,079 and $ 227 , respectively, as well as $( 331 ) and $ 55 , respectively, of net investment income (loss).

Other income (expense) also includes rental income of $ 462 in each of the three months ended March 31, 2022 and 2021.

Additionally, it includes royalty income of $ 616 for the three months ended March 31, 2022.

For the six months ended March 31, 2022 and 2021, Other income (expense) of $ 3,056 and $ 1,438 , respectively, includes $ 562 and $ 379 , respectively, of net currency exchange losses in connection with the translation of receivables and payables denominated in currencies other than the functional currencies of Griffon and its subsidiaries, net periodic benefit plan income of $ 2,027 and $ 454 , respectively, as well as $( 238 ) and $ 386 , respectively, of net investment income (loss).

Other income (expense) also includes rental income of $ 924 in each of the six months ended March 31, 2022 and 2021.

Additionally, it includes royalty income of $ 616 for the six months ended March 31, 2022.

For the quarters ended June 30, 2022 and 2021, Other income (expense) of $ 2,084 and $ 587 , respectively, includes $ 265 and $ 77 , respectively, of net currency exchange losses in connection with the translation of receivables and payables denominated in currencies other than the functional currencies of Griffon and its subsidiaries, net periodic benefit plan income of $ 1,118 and $ 226 , respectively, as well as $( 91 ) and $ 111 , respectively, of net investment income (loss).

Other income (expense) also includes rental income of $ 156 in both of the three months ended June 30, 2022 and 2021.

Additionally, it includes royalty income of $ 828 for the three months ended June 30, 2022.

For the nine months ended June 30, 2022 and 2021, Other income (expense) of $ 4,528 and $ 1,413 , respectively, includes $ 297 and $ 302 , respectively, of net currency exchange losses in connection with the translation of receivables and payables denominated in currencies other than the functional currencies of Griffon and its subsidiaries, net periodic benefit plan income of $ 3,145 and $ 680 , respectively, as well as $( 328 ) and $ 496 , respectively, of net investment income (loss).

Other income (expense) also includes rental income of $ 468 in both of the nine months ended June 30, 2022 and 2021.

Additionally, it includes royalty income of $ 1,444 for the nine months ended June 30, 2022.

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(US dollars and non US currencies in thousands, except per share data)

NOTE 19 – WARRANTY LIABILITY

3 unchanged sentences

CPP offers an express limited warranty for a period of ninety days on all products from the date of original purchase unless otherwise stated on the product or packaging from the date of original purchase.

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(US dollars and non US currencies in thousands, except per share data)

(Unless otherwise indicated, references to years or year-end refer to Griffon’s fiscal period ending September 30)

Changes in Griffon’s warranty liability, included in Accrued liabilities, were as follows:

Three Months Ended March 31, Six Months Ended March 31,

Three Months Ended June 30, Nine Months Ended June 30,

2022 2021 2022 2021

4 unchanged sentences

Balance, end of period $ 18,140 $ 8,547 $ 18,140 $ 8,547

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(US dollars and non US currencies in thousands, except per share data)

NOTE 20 – OTHER COMPREHENSIVE INCOME (LOSS)

The amounts recognized in other comprehensive income (loss) were as follows:

For the Three Months Ended March 31,

For the Three Months Ended June 30,

Pre-tax Tax Net of tax Pre-tax Tax Net of tax

3 unchanged sentences

Total other comprehensive income (loss) $ ( 12,812 ) $ ( 1,365 ) $ ( 14,177 ) $ 3,214 $ ( 475 ) $ 2,739

For the Six Months Ended March 31,

For the Nine Months Ended June 30,

Pre-tax Tax Net of tax Pre-tax Tax Net of tax

4 unchanged sentences

The components of Accumulated other comprehensive income (loss) are as follows:

At March 31, 2022 At September 30, 2021

At June 30, 2022 At September 30, 2021

Foreign currency translation adjustments $ ( 33,343 ) $ ( 19,250 )

2 unchanged sentences

$ ( 57,956 ) $ ( 45,977 )

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(US dollars and non US currencies in thousands, except per share data)

Amounts reclassified from accumulated other comprehensive income (loss) to income were as follows:

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

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

Gain (Loss) 2022 2021 2022 2021

7 unchanged sentences

The Company determines if an arrangement is a lease at inception.

The ROU assets and short and long-term liabilities associated with our Operating leases are shown as separate line items on our Condensed Consolidated Balance Sheets.

The ROU assets and short and long-term liabilities associated with our Operating leases are shown as separate line items on our Condensed

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(US dollars and non US currencies in thousands, except per share data)

Consolidated Balance Sheets.

Finance leases are included in property, plant, and equipment, net, other accrued liabilities, and other non-current liabilities.

12 unchanged sentences

For finance leases and impaired operating leases, the ROU asset is depreciated on a straight-line basis over the remaining lease term, along with recognition of interest expense associated with accretion of the lease liability.

For leases with a lease term of 12 months or less (a "Short-term" lease), any fixed lease payments are recognized on a straight-line basis over such term, and are not recognized on the Condensed Consolidated Balance Sheets.Variable lease cost for both operating and finance leases, if any, is recognized as incurred.

Variable lease cost for both operating and finance leases, if any, is recognized as incurred.

Components of operating lease costs are as follows:

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

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

2022 2021 2022 2021

7 unchanged sentences

(b) Not recorded on the balance sheet.

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(US dollars and non US currencies in thousands, except per share data)

Supplemental cash flow information were as follows:

For the Six Months Ended March 31,

For the Nine Months Ended June 30,

Cash paid for amounts included in the measurement of lease liabilities:

2 unchanged sentences

Total $ 36,695 $ 35,160

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(US dollars and non US currencies in thousands, except per share data)

Supplemental Condensed Consolidated Balance Sheet information related to leases were as follows:

March 31, 2022 September 30, 2021

June 30, 2022 September 30, 2021

Operating Leases:

12 unchanged sentences

Total financing lease liabilities $ 14,698 $ 16,467

(1) Finance lease assets are recorded net of accumulated depreciation of $ 4,488 and $ 6,136 as of March 31, 2022 and September 30, 2021, respectively.

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(US dollars and non US currencies in thousands, except per share data)

(1) Finance lease assets are recorded net of accumulated depreciation of $ 4,689 and $ 6,136 as of June 30, 2022 and September 30, 2021, respectively.

Griffon has one finance lease outstanding for real estate located in Ocala, Florida.

1 unchanged sentence

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

At March 31, 2022, $ 13,757 was outstanding, net of issuance costs.

During the six months ended March 31, 2022, the financing lease on the Troy, Ohio location expired.

At June 30, 2022, $ 13,426 was outstanding.

During the nine months ended June 30, 2022, the financing lease on the Troy, Ohio location expired.

The lease bore interest at a rate of approximately 5.0 %, was secured by a mortgage on the real estate, which was guaranteed by Griffon, and had a one dollar buyout at the end of the lease.

Griffon exercised the one dollar buyout option in November 2021.

The aggregate future maturities of lease payments for operating leases and finance leases as of March 31, 2022 are as follows (in thousands):

The aggregate future maturities of lease payments for operating leases and finance leases as of June 30, 2022 are as follows (in thousands):

Operating Leases Finance Leases

9 unchanged sentences

Present value of lease liabilities $ 199,975 $ 14,698

(a) Excluding the six months ended March 31, 2022.

Average lease terms and discount rates at March 31, 2022 were as follows:

(a) Excluding the nine months ended June 30, 2022.

Average lease terms and discount rates at June 30, 2022 were as follows:

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(US dollars and non US currencies in thousands, except per share data)

Weighted-average remaining lease term (years):

9 unchanged sentences

(“ISCP”), a wholly-owned subsidiary of Griffon, for approximately three years .

The operations, which included plating, may have involved the use of certain chemicals and solvents.

ISCP sold the Peekskill Site in November 1982.

On May 15, 2019 the United States Environmental Protection Agency ("EPA") added the Peekskill Site to the National Priorities List under CERCLA and has since announced that it is performing a Remedial Investigation/Feasibility Study ("RI/FS").

On August 25, 2020, the EPA sent a letter to several parties, including Lightron and ISCP, requesting that each such party inform the EPA as to whether it would be willing to enter into discussions regarding implementation of the RI/FS.

On May 15, 2019 the United States Environmental Protection Agency ("EPA") added the Peekskill Site to the National Priorities List and on August 25, 2020, the EPA sent a letter to several parties, including Lightron and ISCP, requesting that each such party inform the EPA as to whether it would be willing to enter into discussions to perform certain studies to determine the nature and extent of any possible contamination.

The EPA also sent a request for information under Section 104(e) of CERCLA to each party.

Lightron and ISCP have informed the

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(US dollars and non US currencies in thousands, except per share data)

EPA that they are willing to participate in discussions regarding implementation of the RI/FS.

Lightron and ISCP have informed the EPA that they are willing to participate in discussions regarding performing these studies.

Lightron and ISCP have also submitted responses to certain items contained in the Section 104(e) information request, with additional responses to follow.

The current owner of the property, which acquired the Peekskill Site from ISCP in 1982 and has no relationship with Lightron or ISCP, has also informed the EPA that it is willing to discuss implementation of the RI/FS, and has also received, and submitted certain information in response to, a Section 104(e) information request.

The EPA may decide to implement the RI/FS, on its own or through the use of consultants, may reach agreement with one or more parties to perform the RI/FS, or may offer to negotiate with one or more parties to accept a settlement addressing the potential liability of such parties for investigation and/or remediation at the Peekskill Site.

Should the EPA implement the RI/FS, or perform further studies and/or subsequently remediate the site, without first reaching agreement with one or more relevant parties, the EPA would likely seek reimbursement for the costs incurred from such parties.

Lightron and ISCP are currently in negotiations with the EPA regarding the scope of the aforementioned studies, which will address the Peekskill site and certain areas downstream from the Peekskill Site.

Lightron has not engaged in any operations in over three decades.

15 unchanged sentences

Hunter Fan Company (“Hunter”) operated its headquarters and a production plant in Memphis, Tennessee for over 50 years (the “Memphis Site”).

While Hunter completed certain on-site remediation of PCB-contaminated soils, Hunter did not investigate the extent to which PCBs existed beneath the building itself nor determine whether off-site areas had been impacted.

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(US dollars and non US currencies in thousands, except per share data)

been impacted.

Hunter vacated the Memphis Site approximately twenty years ago, and the on-site buildings have now been demolished.

6 unchanged sentences

There are other potentially responsible parties for this site, including a former owner of Hunter;

Hunter has notified such former owner of this matter, which may have liability for any required remediation.

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(US dollars and non US currencies in thousands, except per share data)

Hunter has notified such former owner of this matter, which may have certain liability for any required remediation.

If the EPA decides to add this site to the National Priorities List, a Remedial Investigation/Feasibility Study (“RI/FS”) will be required.

7 unchanged sentences

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

What changed 10-Q

Item 1. Financial Statements