What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-08-03 compared with 2022-04-29 · 169 added, 149 removed, 381 unchanged (45% of the section changed)

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and products that enhance indoor and outdoor lifestyles.

On September 27, 2021, we announced we are exploring strategic alternatives for our Defense Electronics ("DE") segment, which consists of our Telephonics Corporation ("Telephonics") subsidiary;

and on April 18, 2022, Griffon entered into a definitive agreement to sell Telephonics to TTM Technologies, Inc.

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

The transaction is expected to close within the second calendar quarter of 2022, subject to certain closing conditions and regulatory approvals.

Since September 2021, Griffon has 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, we announced we were exploring strategic alternatives for our Defense Electronics ("DE") segment, which consisted of our Telephonics Corporation ("Telephonics") subsidiary.

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

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

Since September 2021, 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.

On January 24, 2022, Griffon acquired Hunter Fan Company (“Hunter”), a market leader in residential ceiling, commercial, and industrial fans, from MidOcean Partners (“MidOcean”) for a contractual purchase price of $845,000, subject to customary post-closing adjustments.

Hunter, part of Griffon's CPP segment, complements and diversifies our portfolio of leading consumer brands and products.

The acquisition of Hunter was 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.

On January 24, 2022, we acquired Hunter Fan Company (“Hunter”), a market leader in residential ceiling, commercial, and industrial fans, from MidOcean Partners (“MidOcean”) for a contractual purchase price of $845,000.

Hunter, part of our CPP segment, complements and diversifies our portfolio of leading consumer brands and products.

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 revolver borrowings to fund the balance of the purchase price and related acquisition and debt expenditures.

Update of COVID-19 on Our Business

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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 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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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.

At March 31, 2022, $233,039 of revolver capacity was available under Griffon's Credit Agreement and Griffon had cash and equivalents of $122,293.

At June 30, 2022, $289,897 of revolver capacity was available under Griffon's Credit Agreement and Griffon had cash and equivalents of $144,687.

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

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Business Highlights

On September 27, 2021, we announced we are exploring strategic alternatives for our DE segment, which consists of our 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.

Griffon believes this will increase long-term value for Griffon shareholders, while creating enhanced growth opportunities for Telephonics.

On September 27, 2021, we announced we were exploring strategic alternatives for our DE segment, which consists of our Telephonics subsidiary, and on June 27, 2022, Griffon completed the sale of Telephonics to TTM for $330,000, subject to customary post-closing adjustments.

We believe that selling Telephonics will increase long-term value for Griffon shareholders, while creating enhanced growth opportunities for Telephonics.

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.

On January 24, 2022, Griffon acquired Hunter, a market leader in residential ceiling, commercial, and industrial fans, for a contractual purchase price of $845,000, subject to customary post-closing adjustments.

On January 24, 2022, Griffon acquired Hunter, a market leader in residential ceiling, commercial, and industrial fans, for a contractual purchase price of $845,000.

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

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

The Company intends to use the remainder of the proceeds for general corporate purposes, including to expand its current business through acquisitions of, or investments in, other businesses or products.

The Company used the remainder of the proceeds for general corporate purposes, including to expand its current business through acquisitions of, or investments in, other businesses or products.

During 2020, Griffon issued, at par, $1,000,000 of 5.75% Senior Notes due in 2028 (the “2028 Senior Notes”).

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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.

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

market and increased its in-country operational footprint.

On February 13, 2018, AMES acquired Kelkay, a leading U.K.

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

Defense Electronics, classified as a discontinued operation, 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.

Revenue for the quarter ended March 31, 2022 was $779,617 compared to $574,682 in the prior year comparable quarter, an increase of 36%.

Revenue for the quarter ended June 30, 2022 was $768,179 compared to $584,218 in the prior year comparable quarter, an increase of 31%.

Revenue increased at HBP and CPP by 56% and 12%, respectively.

Excluding the Hunter acquisition on January 24, 2022, revenue increased 13% to $662,405.

Hunter contributed $70,849.

Hunter contributed $105,774 of revenue for the quarter.

Income from continuing operations was $52,782 or $0.98 per share, compared to $14,815, or $0.28 per share, in the prior year quarter.

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– Restructuring charges of $5,909 ($4,359, net of tax, or $0.08 per share);

– Acquisition costs of $6,708 ($6,146, net of tax, or $0.12 per share);

– Proxy expenses of $4,661 ($3,591, net of tax, or $0.07 per share);

– Fair value step-up of acquired inventory sold of $2,700 ($2,005, net of tax, or $0.04 per share);

– Discrete and certain other tax benefits, net, of $693 or $0.01 per share.

– Strategic review - retention and other $3,220 ($2,416, net of tax, or $0.04 per share);

– Debt extinguishment, net $5,287 ($4,022, net of tax, or $0.07 per share);

– Discrete and certain other tax provisions, net, of $913 or $0.02 per share.

The prior year quarter results from operations included the following:

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Excluding these items from the respective quarterly results, Income from continuing operations would have been $66,497, or $1.23 per share, in the current year quarter compared to $20,793, or $0.39 per share in the prior year quarter.

Revenue for the six months ended March 31, 2022 was $1,371,366 compared to $1,116,205 in the prior year period, an increase of 23%.

Revenue for the nine months ended June 30, 2022 was $2,139,545 compared to $1,700,423 in the prior year period, an increase of 26%.

Revenue increased at HBP and CPP by 44% and 12%, respectively.

Revenue, excluding the Hunter acquisition, increased 17% to $1,300,517.

Excluding the Hunter acquisition, revenue increased 15% to $1,962,922.

Hunter contributed $176,623 of revenue during the year to date period.

Income from continuing operations was $127,646 or $2.38 per share, compared to $57,678, or $1.08 per share, in the prior year period.

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– Fair value step-up of acquired inventory sold of $5,401 ($4,012, net of tax, or $0.07 per share);

– Strategic review - retention and other of $3,220 ($2,416, net of tax, or $0.04 per share);

– Debt extinguishment, net $5,287 ($4,022, net of tax, or $0.07 per share);

– Discrete and certain other tax benefits, net, of $661 or $0.01 per share.

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– Discrete and certain other tax provisions, net, of $3,219 or $0.06 per share.

Excluding these items from the respective periods, Income from continuing operations would have been $94,243, or $1.76 per share in the current year period ended March 31, 2022 compared to $51,824, or $0.97 per share, in the comparable prior year period.

Excluding these items from the respective periods, Income from continuing operations would have been $160,128, or $2.98 per share in the current year period ended June 30, 2022 compared to $71,931, or $1.35 per share, in the comparable prior year period.

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

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The following table provides a reconciliation of Income from continuing operations to Adjusted income from continuing operations and Earnings per share from continuing operations to Adjusted earnings per share from continuing operations:

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

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

Debt extinguishment, net 5,287 — 5,287 —

Acquisition costs — — 9,303 —

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

Proxy expenses — — 6,952 —

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Restructuring charges 0.08 0.06 0.17 0.21

Debt extinguishment, net 0.07 — 0.07 —

Acquisition costs — — 0.15 —

Strategic review - retention and other 0.04 — 0.04 —

Proxy expenses — — 0.10 —

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RESULTS OF OPERATIONS

Three and six months ended March 31, 2022 and 2021

Three and nine months ended June 30, 2022 and 2021

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

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Consumer and Professional Products

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

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

2022 2021 2022 2021

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Depreciation and amortization 13,434 8,781 $ 33,831 $ 25,600

For the quarter ended March 31, 2022, revenue increased $79,141, or 24%, compared to the prior year period primarily resulting from a 21% or $70,849 contribution from the January 24, 2022 Hunter acquisition, and price and mix of 15%, partially offset by an 11% reduction in volume, primarily in the U.S.

due to reduced consumer demand and customer supplier diversification, and an unfavorable impact of foreign exchange of 1%.

For the quarter ended March 31, 2022, Adjusted EBITDA increased 28% to $47,844 compared to $37,423 in the prior year quarter, due to EBITDA of $14,339 from the Hunter acquisition.

Excluding the Hunter contribution, EBITDA of $33,505 decreased 10% primarily due to the unfavorable impact of reduced U.S.

For the quarter ended June 30, 2022, revenue increased $37,808, or 12%, compared to the prior year period primarily resulting from a 33% or $105,774 contribution from the January 24, 2022 Hunter acquisition, and price and mix of 10%, partially offset by a 28% reduction in volume, primarily in North America and the United Kingdom (U.K.), due to reduced consumer demand and rebalancing of customer inventory levels, and an unfavorable impact of foreign exchange of 3%.

For the quarter ended June 30, 2022, Adjusted EBITDA decreased 3% to $28,373 compared to $29,388 in the prior year quarter.

Excluding the $16,792 contributed from the Hunter acquisition, EBITDA of $11,581 decreased 61% primarily due to the unfavorable impact of the reduced North American and U.K.

volume and increased material, labor and transportation costs, partially offset by the benefits of price and mix.

For the six months ended March 31, 2022, revenue increased $71,272, or 11%, compared to the prior year period primarily resulting from a 12% or $70,849 contribution from the Hunter acquisition and price and mix of 13%, partially offset by a 13% reduction in volume, primarily in the U.S.

due to reduced consumer demand and customer supplier diversification and an unfavorable impact of foreign exchange of 1%.

For the six months ended March 31, 2022, Adjusted EBITDA decreased 9% to $64,058 compared to $70,136 in the prior year period.

Excluding the Hunter contribution of EBITDA of $14,339, EBITDA of $49,719 decreased 29% primarily due to the unfavorable impact of reduced US volume coupled with the lag in realization of price increases (Q1) and increased material, labor and transportation costs, partially offset by the benefits of price and mix.

For the quarter and six months ended March 31, 2022, segment depreciation and amortization increased $3,171 and $3,578, respectively, compared to the prior year comparable periods, due to new assets placed in service.

The current quarter included increased demurrage and detention costs, primarily related to COVID and global supply chain disruptions, of approximately $6,548, primarily related to Hunter.

For the nine months ended June 30, 2022, revenue increased $109,080, or 12%, compared to the prior year period primarily resulting from a 19% or $176,623 contribution from the Hunter acquisition, and price and mix of 12%, partially offset by an 18% reduction in volume, primarily in North America and the U.K.

due to reduced consumer demand and rebalancing of customer inventory levels, and an unfavorable impact of foreign exchange of 1%.

For the nine months ended June 30, 2022, Adjusted EBITDA decreased 7% to $92,431 compared to $99,524 in the prior year period.

Excluding the Hunter contribution of $31,131, EBITDA of $61,300 decreased 38% primarily due to the unfavorable impact of the reduced North American and U.K.

volume and increased material, labor and transportation costs, partially offset by the benefits of price and mix.

The nine month period ended June 30, 2022, included increased demurrage and detention costs, primarily related to COVID and global supply chain disruptions, of approximately $13,482 ($7,699 related to Hunter).

For the quarter and nine months ended June 30, 2022, segment depreciation and amortization increased $4,653 and $8,231, respectively, compared to the prior year comparable periods, due to new assets placed in service and the Hunter assets acquired.

On January 24, 2022, Griffon completed the acquisition of Hunter Fan Company (“Hunter”), a market leader in residential ceiling, commercial, and industrial fans for a contractual purchase price of $845,000, subject to customary post-closing adjustments.

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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 connection with this initiative, during the three and six months ended March 31, 2022, CPP incurred pre-tax restructuring and related exit costs approximating $4,766 and $6,482, respectively.

In connection with this initiative, during the three and nine months ended June 30, 2022, CPP incurred pre-tax restructuring and related exit costs approximating $5,909 and $12,391, respectively.

Since inception of this initiative in fiscal 2020, total cumulative charges totaled $47,478, comprised of cash charges of $33,637 and non-cash, asset-related charges of $13,841;

the cash charges included $12,561 for one-time termination benefits and other personnel-related costs and $21,076 for facility exit costs.

Since inception of this initiative in fiscal 2020 and during the six months ended March 31, 2022, capital expenditures of $18,058 and $2,551, respectively, were driven by investment in CPP business intelligence systems and an e-commerce facility.

Since inception of this initiative in fiscal 2020 and during the nine months ended June 30, 2022, capital expenditures of $21,844 and $6,337, respectively, were driven by investment in CPP business intelligence systems and an e-commerce facility.

Cash Charges Non-Cash Charges

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Phase II 14,000 16,000 — 30,000 25,000

Reduction in Scope (9,500) (1,000) (4,500) (15,000) (50,000)

Increase (Reduction) in Scope (12,400) 2,100 (4,700) (15,000) (50,000)

Total Anticipated Charges 13,600 22,100 14,300 50,000 15,000

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Q2 FY2022 Activity (1,878) (1,122) (1,766) (4,766) (861)

Q3 FY2022 Activity $ (1,613) $ (3,857) $ (439) (5,909) $ (3,786)

Total 2022 restructuring charges (3,751) (6,146) (2,494) (12,391) (6,337)

Total cumulative charges (12,561) (21,076) (13,841) (47,478) $ (21,844)

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Home and Building Products

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

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

2022 2021 2022 2021

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Depreciation and amortization 4,116 4,375 $ 12,778 $ 13,095

For the quarter ended March 31, 2022, HBP revenue increased $125,794, or 52%, compared to the prior year period due to favorable mix and pricing with increased commercial volume offset by reduced residential volume due to labor and supply chain disruptions.

For the quarter ended March 31, 2022, Adjusted EBITDA increased 161% to $104,474 compared to $40,060 in the prior year period.

EBITDA benefited from the increased revenue noted above, partially offset by increased material, labor and transportation costs.

For the six months ended March 31, 2022, revenue increased $183,889, or 37%, compared to the prior year period, due to favorable mix and pricing of 43% driven by both residential and commercial, partially offset by reduced volume of 6% driven by decreased residential volume due to labor and supply chain disruptions.

For the six months ended March 31, 2022, Adjusted EBITDA increased 82% to $160,771 compared to $88,429 in the prior year period.

For the quarter ended June 30, 2022, HBP revenue increased $146,153, or 56%, compared to the prior year period due to favorable pricing and mix for both residential and commercial products.

Increased commercial volume was offset by reduced residential volume due to labor and supply chain disruptions.

For the quarter ended June 30, 2022, Adjusted EBITDA increased 184% to $119,847 compared to $42,156 in the prior year period.

Adjusted EBITDA benefited from the increased revenue noted above, partially offset by increased material, labor and transportation costs.

For the nine months ended June 30, 2022, revenue increased $330,042, or 44%, compared to the prior year period, due to favorable pricing and mix of 48% driven by both residential and commercial, partially offset by reduced volume of 4% driven by decreased residential volume due to labor and supply chain disruptions.

For the nine months ended June 30, 2022, Adjusted EBITDA increased 115% to $280,618 compared to $130,585 in the prior year period.

The favorable variance resulted from the increased revenue noted above, partially offset by increased material, labor and transportation costs.

For the quarter and six months ended March 31, 2022, segment depreciation and amortization remained consistent with the prior year comparable periods.

For the quarter ended March 31, 2022, unallocated amounts, excluding depreciation, consisted primarily of corporate overhead costs totaling $12,750 compared to $12,104 in the prior year quarter;

for the six months ended March 31, 2022, unallocated amounts totaled $25,707 compared to $24,733 in the prior year period.

The increase in both the current quarter and six month periods, compared to their respective comparable prior year periods, primarily relates to increased medical claims, travel and stock compensation (Q1) expenses.

For the quarter and nine months ended June 30, 2022, segment depreciation and amortization decreased slightly compared with the prior year comparable periods.

For the quarter ended June 30, 2022, unallocated amounts, excluding depreciation, consisted primarily of corporate overhead costs totaling $13,405 compared to $11,464 in the prior year quarter;

for the nine months ended June 30, 2022, unallocated amounts totaled $39,724 compared to $36,810 in the prior year period.

The increase in both the current quarter and nine month periods, compared to their respective comparable prior year periods, primarily relates to increased incentive and equity compensation, medical claims, and travel expenses.

Proxy expenses

During the three and six months ended March 31, 2022, we incurred $4,661 and $6,952, respectively, of proxy expenses (including legal and advisory fees) in unallocated amounts as a result of a proxy contest initiated by a shareholder during the most recently completed fiscal quarter.

During the nine months ended June 30, 2022, we incurred $6,952 of proxy expenses (including legal and advisory fees) in SG&A as a result of a proxy contest initiated by a shareholder during the most recently completed fiscal quarter.

In the three months ended June 30, 2022, we did not incur any proxy expenses.

There were no similar costs in the comparable period of the prior year.

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Segment Depreciation and Amortization

Segment depreciation and amortization increased $3,116 and $3,520 for the quarter and six months ended March 31, 2022, respectively, compared to the comparable prior year periods, primarily due to depreciation and amortization on new assets placed in service and assets acquired in acquisitions.

Segment depreciation and amortization increased $4,394 and $7,914 for the quarter and nine months ended June 30, 2022, respectively, compared to the comparable prior year periods, primarily due to depreciation and amortization on new assets placed in service and assets acquired in acquisitions.

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.

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.

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.

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 $1,444 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.

Provision for 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.

Stock based compensation

For the quarters ended March 31, 2022 and 2021, stock based compensation expense, which includes expenses for both restricted stock grants and the ESOP, totaled $5,092 and $5,293, respectively.

For the six months ended March 31, 2022 and 2021, stock based compensation expense totaled $9,959 and $9,501, respectively.

For the quarters ended June 30, 2022 and 2021, stock based compensation expense, which includes expenses for both restricted stock grants and the ESOP, totaled $6,019 and $5,590, respectively.

For the nine months ended June 30, 2022 and 2021, stock based compensation expense totaled $15,978 and $15,091, respectively.

Comprehensive income (loss)

For the quarter ended March 31, 2022, total other comprehensive income (loss), net of taxes, of $4,949 included a gain of $6,049 from foreign currency translation adjustments primarily due to the strengthening of the Euro, Canadian Dollar and British Pound, offset by the weakening of the Australian Dollar, all in comparison to the US Dollar;

For the quarter ended June 30, 2022, total other comprehensive loss, net of taxes, of $14,177 included a loss of $17,823 from foreign currency translation adjustments primarily due to the weakening of the Euro, Canadian and Australian Dollars and British Pound, all in comparison to the US Dollar;

a $1,196 benefit from pension amortization;

and a $1,240 loss on cash flow hedges.

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

and a $2,450 a gain on cash flow hedges.

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

a $1,245 benefit from pension amortization;

and a $334 gain on cash flow hedges.

For the six months ended March 31, 2022, total other comprehensive income, net of taxes, of $2,198 included a gain of $3,730 from foreign currency translation adjustments primarily due to the strengthening of the Canadian and Australian Dollars, offset by the weakening of the Euro and the British Pound, all in comparison to the US Dollar;

For the nine months ended June 30, 2022, total other comprehensive loss, net of taxes, of $11,979 included a loss of $14,093 from foreign currency translation adjustments primarily due to the weakening of the Euro, Canadian and Australian Dollars and British Pound, all in comparison to the US Dollar;

a $2,004 benefit from pension amortization of actuarial losses;

and a $2,340 loss on cash flow hedges.

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

and a $110 gain on cash flow hedges.

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

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

2 unchanged sentences

Defense Electronics

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

Griffon believes this will increase long-term value for Griffon shareholders, while creating enhanced growth opportunities for Telephonics.

On September 27, 2021, Griffon announced that 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.

Griffon believes the sale of Telephonics will increase long-term value for Griffon shareholders, while creating enhanced growth opportunities for Telephonics.

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

For the quarter ended March 31, 2022, DE revenue decreased 6% to $56,273 from $60,150 compared to the prior year quarter, and Adjusted EBITDA increased by 23% to $2,729 from $2,220.

For the six months ended March 31, 2022, revenue decreased by 14% to $110,266 from $127,918 compared to the prior year period, and Adjusted EBITDA decreased by 8% to $7,201 from $7,805.

The six months ended March 31, 2021 included $6,713 of revenue and $412 of EBITDA from the SEG business divested in December 2020.

Other Discontinued Operations

At March 31, 2022, Griffon's other discontinued assets and liabilities are primarily related to insurance claims, product liability, warranty reserves, environmental reserves and related income taxes.

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 in discontinued operations.

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

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

See Note 16, Discontinued Operations.

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Griffon's primary sources of liquidity are cash flows generated from operations, cash on hand and our January 2022 secured $400,000 Credit Agreement.

At March 31, 2022 , $233,039 of revolver capacity was available under the Credit Agreement and we had cash and cash equivalents of $122,293.

At June 30, 2022, $289,897 of revolver capacity was available under the Credit Agreement and we had cash and cash equivalents of $144,687.

Management assesses Griffon’s liquidity in terms of its ability to generate cash to fund its operating, investing and financing activities.

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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.

As of March 31, 2022, the amount of cash, cash equivalents and marketable securities held by foreign subsidiaries was $53,700.

As of June 30, 2022, the amount of cash, cash equivalents and marketable securities held by foreign subsidiaries was $66,325.

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.

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

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

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

Net Cash Flows Provided by (Used In):

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Financing activities 513,762 (14,327)

Cash used in operating activities from continuing operations for the six months ended March 31, 2022 was $172,633 compared to cash used in continuing operations of $44,411 in the comparable prior year period.

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

Cash used in operating activities from continuing operations for the nine months ended June 30, 2022 was $65,001 compared to cash provided by continuing operations of $13,314 in the comparable prior year period.

Cash provided by income from continuing operations, adjusted for non-cash expenditures, was more than offset by a net increase in working capital predominately consisting of increased inventory and accounts receivable primarily driven by reduced consumer demand and rebalancing of customer inventory levels in North America and the United Kingdom.

Cash flows used in 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 the six months ended March 31, 2022, Griffon used $858,539 in investing activities from continuing operations compared to $22,106 used in the prior year comparable period.

Griffon used $851,464 to acquire Hunter during the six months ended March 31, 2022.

Griffon used $2,242 in the prior year comparable period to acquire Quatro.

Capital expenditures, net of proceeds from the sale of assets, for the six months ended March 31, 2022 totaled $21,998, an increase of $4,245 from the prior year period.

Proceeds from the sale of investments totaled $14,923 during the six months ended March 31, 2022 compared to cash used to purchase investments of $2,138 in the prior year comparable period.

During the six months ended March 31, 2022, cash provided by financing activities from continuing operations totaled $899,924 compared to cash used of $5,916 used in the prior year comparable period.

During the nine months ended June 30, 2022, Griffon used $574,256 in investing activities from continuing operations compared to $31,705 used in the prior year comparable period.

Griffon used $851,464 to acquire Hunter during the nine months ended June 30, 2022 as compared to the $2,242 used in the prior year comparable period to acquire Quatro.

Capital expenditures, net of proceeds from the sale of assets, for the nine months ended June 30, 2022 totaled $33,427, an increase of $8,594 from the prior year period.

Proceeds from the sale of investments totaled $14,923 during the nine months ended June 30, 2022 compared to cash used to purchase investments of $4,658 in the prior year comparable period.

During the nine months ended June 30, 2022, cash provided by financing activities from continuing operations totaled $513,762 compared to cash used of $14,327 used in the prior year comparable period.

Cash provided by financing activities in the current period consisted primarily of net proceeds from long-term debt of $556,431, partially offset by financing costs of $17,065, purchases of treasury shares to satisfy vesting of restricted stock of $10,886 and the payment of dividends of $14,906.

During the current period Griffon prepaid $300,000 aggregate principal amount of its Term Loan B, which permanently reduces the outstanding balance.

In connection with the prepayment of the Term Loan B, Griffon recognized a $6,296 charge related to the write-off of capitalized debt issuance costs.

In addition, during the current period Griffon purchased $15,225 of its 2028 Senior Notes in the open market at a weighted average discount of 92.19% of par and recognized a net gain of $1,009 on the early extinguishment.

Cash used in financing activities in the prior year comparable period consisted primarily of payments of dividends of 12,907 and purchases of treasury shares to satisfy vesting of restricted stock of $2,909, partially offset by net proceeds from long-term debt of $2,332.

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, 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.

During 2021, the Company declared and paid regular cash dividends totaling $0.32 per share, or $0.08 per share each quarter.

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

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

The Company currently intends to pay dividends each quarter;

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

On April 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 June 27, 2022, the Board of Directors declared a special 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.

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

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.

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

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

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

No shares were repurchased during the six months ended March 31, 2022 under these share repurchase programs.

During the six months ended March 31, 2022, cash provided by discontinued operations from operating activities of $9,846 primarily related to DE operations and the settling of certain liabilities and environmental costs associated with the former Installations Services business.

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

No shares were repurchased during the nine months ended June 30, 2022 under these share repurchase programs.

During the nine months ended June 30, 2022, cash provided by discontinued operations from operating activities of $26,889 primarily related to DE operations partially offset by the settling of certain liabilities and environmental costs associated with the former Installations Services business.

Cash provided by discontinued operations from investing activities related to DE operations capital expenditures.

During the six months ended March 31, 2021, Griffon used cash for discontinued operations from operating activities of $17,058 primarily related to DE operations and the settling of certain liabilities and environmental costs associated with other discontinued operations.

During the nine months ended June 30, 2021, cash provided by discontinued operations from operating activities of $27,035 primarily related to DE operations and the settling of certain liabilities and environmental costs associated with other discontinued operations.

Cash provided by discontinued operations from investing activities of $8,155 primarily related to net proceeds received of $14,725 from DE's sale of its SEG business less capital expenditures of $6,151.

Cash and Equivalents and Debt March 31, September 30,

Cash and Equivalents and Debt June 30, September 30,

Cash and equivalents $ 144,687 $ 248,653

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During 2020, Griffon issued, at par, $1,000,000 of 5.75% Senior Notes due in 2028 (the “2028 Senior Notes”).

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

As of March 31, 2022, the outstanding 5.75% Senior Notes due totaled $1,000,000;

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

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, for $14,036.

In connection with this transaction Griffon recognized a $1,009 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.

The Senior Notes are senior unsecured obligations of Griffon guaranteed by certain domestic subsidiaries, and subject to certain covenants, limitations and restrictions and are registered under the Securities Act.

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

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

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%.

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;

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, for $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 $888,759 on June 30, 2022 based upon quoted market prices (level 1 inputs).

In connection with 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.

("Revolver"), and replaced LIBOR with SOFR (Secured Overnight Financing Rate).

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 first of which was achieved at June 30, 2022.

The decreased spread, effective in the fourth quarter of 2022, is 2.50%.

The Original Issue Discount (OID) 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;

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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.

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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 of outstanding borrowings under the Revolver;

outstanding standby letters of credit were $12,287;

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

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

During the period ended March 31, 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.

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

During the 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.

Griffon exercised the one dollar buyout option in November 2021.

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).

(“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.

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.

On March 30, 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.

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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 Sap 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.

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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) and was renewed in June 2021.

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 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 it 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 of the assets of AMES UK and its subsidiaries.

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

On February 14, 2022, AMES UK entered into a $8,500 trade facility agreement.

The trade 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.

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 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).

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

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

Gross Debt to EBITDA (Leverage), as calculated in accordance with the definition in the Credit Agreement, was 4.4x at March 31, 2022.

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

Gross Debt to EBITDA (Leverage), as calculated in accordance with the definition in the Credit Agreement, was 3.2x at June 30, 2022.

Capital Resource Requirements

Griffon's debt requirements include principal on our outstanding debt, most notably our Senior Notes totaling $984,775 payable in 2028 and related annual interest payments of approximately $57,246.

As noted above, Griffon entered into a new $800,000 seven year Term Loan B facility with initial pricing of SOFR floor of 50 basis points plus a spread of 275 basis points, for a total interest rate of 325 basis points.

As noted above, Griffon entered into a new $800,000 seven year Term Loan B facility with initial pricing of SOFR floor of 50 basis points plus a spread of 275 basis points.

The OID was 99.75%.

The Term Loan B facility requires quarterly payments equal to 0.25% of the outstanding principal amount, with a balloon payment due at maturity.

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.

The Term Loan B facility requires quarterly payments equal to 0.25% of the outstanding principal amount, or $2,000, which began with the quarter ended June 30, 2022 and a balloon payment due at maturity.

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

For the six months ended March 31, 2022, The Home Depot represented 13% of Griffon’s consolidated revenue, 19% of CPP's revenue and 8% of HBP’s revenue.

For the nine months ended June 30, 2022, The Home Depot represented 14% of Griffon’s consolidated revenue, 20% of CPP's revenue and 8% of HBP’s revenue.

No other customer exceeded 10% of consolidated revenue.

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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., Clopay AMES Holding Corp., ClosetMaid LLC, AMES Hunter Holdings Corporation, Hunter Fan Company, CornellCookson, LLC and Cornell Real Estate Holdings, LLC, all of which are indirectly 100% owned by Griffon.

In accordance with Rule 3-10 of Regulation S-X promulgated under the Securities Act, presented below are summarized financial information of the Parent (Griffon) subsidiaries and the Guarantor subsidiaries as of March 31, 2022 and September 30, 2021 and for the six months ended March 31, 2022 and for the year ended September 30, 2021.

Griffon’s Senior Notes are fully and unconditionally guaranteed, jointly and severally by Clopay Corporation, The AMES Companies, Inc., Clopay AMES Holding Corp., ClosetMaid LLC, AMES Hunter Holdings Corporation, Hunter Fan Company, 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 June 30, 2022 and September 30, 2021 and for the nine months ended June 30, 2022 and for the year ended September 30, 2021.

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

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Summarized Statements of Operations and Comprehensive Income (Loss)

For the Six Months Ended For the Year Ended

March 31, 2022 September 30, 2021

For the Nine Months Ended For the Year Ended

June 30, 2022 September 30, 2021

Parent Company Guarantor Companies Parent Company Guarantor Companies

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Summarized Balance Sheet Information

For the Six Months Ended For the Year Ended

March 31, 2022 September 30, 2021

For the Nine Months Ended For the Year Ended

June 30, 2022 September 30, 2021

Parent Company Guarantor Companies Parent Company Guarantor Companies

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This Quarterly Report on Form 10-Q, especially “Management’s Discussion and Analysis”, contains certain “forward-looking statements” within the meaning of the Securities Act, the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995.

Such statements relate to, among other things, income (loss), earnings, cash flows,

revenue, changes in operations, operating improvements, the impact of the Hunter Fan transaction, industries in which Griffon Corporation (the “Company” or “Griffon”) operates and the United States and global economies.

Such statements relate to, among other things, income (loss), earnings, cash flows, revenue, changes in operations, operating improvements, the impact of the Hunter Fan transaction, industries in which Griffon Corporation (the “Company” or “Griffon”) operates and the United States and global economies.

Statements in this Form 10-Q that are not historical are hereby identified as “forward-looking statements” and may be indicated by words or phrases such as “anticipates,” “supports,” “plans,” “projects,” “expects,” “believes,” “should,” “would,” “could,” “hope,” “forecast,” “management is of the opinion,” “may,” “will,” “estimates,” “intends,” “explores,” “opportunities,” the negative of these expressions, use of the future tense and similar words or phrases.

1 unchanged sentence

These risks and uncertainties include, among others:

impact of the strategic alternatives review process announced in May 2022;

current economic conditions and uncertainties in the housing, credit and capital markets;

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the ability of Griffon’s operating companies to expand into new geographic and product markets, and to anticipate and meet customer demands for new products and product enhancements and innovations;

reduced military spending by the government on projects for which Griffon’s Telephonics Corporation supplies products, including as a result of defense budget cuts or other government actions;

the ability of the federal government to fund and conduct its operations;

increases in the cost or lack of availability of raw materials such as resin, wood and steel, components or purchased finished goods, including any potential impact on costs or availability resulting from tariffs;

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unforeseen developments in contingencies, such as litigation, regulatory and environmental matters;

unfavorable results of government agency contract audits of Telephonics Corporation;

our strategy, future operations, prospects and the plans of our businesses, including the closing of the disposition of Telephonics Corporation;

Griffon’s ability to adequately protect and maintain the validity of patent and other intellectual property rights;

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis