What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-02-07 compared with 2023-08-03 · 165 added, 307 removed, 237 unchanged (67% of the section changed)

9 unchanged sentences

We achieve diversity by providing various product offerings and brands through multiple sales and distribution channels and conducting business across multiple countries which we consider our home markets.

Griffon’s businesses, in particular its CPP operations, are seasonal;

for this and other reasons, the financial results of the Company for any interim period are not necessarily indicative of the results for the full year.

Griffon oversees the operations of its subsidiaries, allocates resources among them and manages their capital structures.

1 unchanged sentence

As long-term investors, having substantial experience in a variety of industries, our intent is to continue the growth and strengthening of our existing businesses, and to diversify further through investments in our businesses and through acquisitions.

Over the past five years, we have undertaken a series of transformative transactions.

We divested our specialty plastics business in 2018 to focus on our core markets and improve our free cash flow conversion.

Since 2017, we have undertaken a series of transformative transactions.

We divested our specialty plastics business in 2018 and our defense electronics (Telephonics) business in 2022 to focus on our core markets and improve our free cash flow conversion.

In our Home and Building Products ("HBP") segment, we acquired CornellCookson, Inc.

("CornellCookson") in 2018, which has been integrated into Clopay Corporation ("Clopay"), creating a leading North American manufacturer and marketer of residential garage doors and sectional commercial doors, and rolling steel doors and grille products, under brands that include Clopay, Ideal, Cornell and Cookson.

In our Consumer and Professional Products ("CPP") segment, we expanded the scope of our brands through the acquisition of Hunter Fan Company ("Hunter") on January 24, 2022 and ClosetMaid, LLC ("ClosetMaid") in 2018.

In our Consumer and Professional Products ("CPP") segment, we expanded the scope of our brands through the acquisition of Hunter Fan Company ("Hunter") in January 2022 and ClosetMaid, LLC ("ClosetMaid") in 2018.

We established an integrated headquarters for CPP in Orlando, Florida for our portfolio of leading brands that includes AMES, Hunter, True Temper and ClosetMaid.

CPP is well positioned to fulfill its ongoing mission of Bringing Brands Together™ with the leading brands in consumer and professional tools;

residential, industrial and commercial fans;

home storage and organization products;

and products that enhance indoor and outdoor lifestyles.

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.

Griffon classified the results of operations of our Telephonics business as a discontinued operation in the Consolidated Statements of Operations for all periods presented and the related assets and liabilities have been classified as assets and liabilities of the discontinued operation 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 May 16, 2022, Griffon announced that its 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, and on April 20, 2023, Griffon announced that its Board of Directors, after extensive evaluation and deliberation, determined that the ongoing execution of the Company’s strategic plan was the best way to maximize value for shareholders and unanimously decided to conclude its review.

On January 24, 2022, Griffon acquired 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.

On August 1, 2023, Griffon amended its credit agreement to increase the total amount available for borrowing under its revolving credit facility from $400,000 to $500,000, extend the maturity date of the revolving credit facility from March 22, 2025 to August 1, 2028 and modify certain other provisions of the facility (the "Credit Agreement").

See Note 10, Long-Term Debt for further details.

Update on COVID-19 on our Business

On May 11, 2023, the U.S.

Department of Health and Human Services declared the end of the Public Health Emergency for COVID-19;

however, the effects of COVID-19 continue to linger throughout the global economy and our businesses.

Though the severity of COVID-19 has subsided, new variants could interrupt business, cause renewed labor and supply chain disruptions, and negatively impact the global and US economy, which could materially and adversely impact our businesses.

CPP Global Sourcing Strategy Expansion and Restructuring Charges

On May 3, 2023, in response to changing market conditions, Griffon announced that its CPP segment will expand its global sourcing strategy to include long handled tools, material handling, and wood storage and organization product lines.

In response to changing market conditions, Griffon announced in May 2023 that CPP is expanding its global sourcing strategy to include long handled tools, material handling, and wood storage and organization product lines.

By transitioning these product lines to an asset-light structure, CPP’s operations will be better positioned to serve customers with a more flexible and cost-effective sourcing model that leverages supplier relationships around the world, while improving its competitive positioning in a post-pandemic marketplace.

1 unchanged sentence

The global sourcing strategy expansion is expected to be complete by the end of calendar 2024.

Over that period, CPP expects to reduce its facility footprint by approximately 1.2 million square feet, or approximately 15%, and its headcount by approximately 600.

The affected U.S.

locations will include Camp Hill and Harrisburg, Pennsylvania;

Grantsville, Maryland;

Fairfield, Iowa;

Over that period, CPP expects to reduce its facility footprint by approximately 1.2 million square feet, or approximately 15% of CPP's square footage, and its headcount by approximately 600.

Operations have ceased at Camp Hill and Harrisburg, PA;

Fairfield, IA;

and four wood mills.

The final facility, in Grantsville, MD, is expected to close by March 2024.

Implementation of this strategy over the duration of the project will result in charges of $120,000 to $130,000, including $50,000 to $55,000 of cash charges for employee retention and severance, operational transition, and facility and lease exit costs, and $70,000 to $75,000 of non-cash charges primarily related to asset write-downs.

Capital investment in the range of $3,000 to $5,000 will also be required.

These costs exclude cash proceeds from the sale of real estate and equipment, which are expected to largely offset the cash charges, and also exclude inefficiencies due to duplicative labor costs and absorption impacts during transition.

Other Business Highlights

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

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

The Company used the remainder of the proceeds for working capital and general corporate purposes.

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.

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

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

On April 28, 2022, Griffon announced a reduced scope and accelerated timeline for the initiative, which was completed in fiscal 2022.

We continue to expect that this initiative will result in annual cash savings of $25,000.

Realization of cash savings began in the first quarter of fiscal 2023.

The cost to implement this new business platform, over the duration of the project, included one-time charges of approximately $51,869 and capital investments of approximately $15,000, net of future proceeds from the sale of exited facilities.

In June 2018, Clopay acquired CornellCookson, a leading provider of rolling steel service doors, fire doors, and grilles.

This transaction strengthened Clopay's strategic portfolio with a line of commercial rolling steel door products to complement Clopay's sectional door offerings in the commercial sector, and expanded the Clopay network of professional dealers focused on the commercial market.

In March 2018, we announced the combination of the ClosetMaid operations with those of AMES, which improved operational efficiencies by leveraging the complementary products, customers, warehousing and distribution, manufacturing, and sourcing capabilities of the two businesses.

In February 2018, we closed on the sale of our Clopay Plastics Products ("Plastics") business to Berry Global, Inc.

("Berry"), thus exiting the specialty plastics industry that the Company had entered when it acquired Clopay Corporation in 1986.

This transaction provided immediate liquidity and improved Griffon's cash flow given the historically higher capital needs of the Plastics operations as compared to Griffon’s remaining businesses.

In October 2017, we acquired ClosetMaid from Emerson Electric Co.

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

We believe that ClosetMaid is the leading brand in its category, with excellent consumer recognition.

We believe these actions have established a solid foundation for growth in sales, profit, and cash generation and bolster Griffon’s platforms for opportunistic strategic acquisitions.

Other Acquisitions and Dispositions

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 purchase price of AUD $3,500 (approximately $2,700).

Quatro contributed approximately $5,000 in revenue in the first twelve months after the acquisition.

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

supplier of innovative garden pottery and associated products sold to leading U.K.

and Ireland garden centers.

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

market and increases its in-country operational footprint.

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

manufacturer and distributor of decorative outdoor landscaping products sold to garden centers, retailers and grocers in the U.K.

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

In November 2017, Griffon acquired Harper Brush Works, a leading U.S.

manufacturer of cleaning products for professional, home, and industrial use, from Horizon Global (NYSE:HZN).

This acquisition expanded the AMES line of long-handle tools in North America to include brooms, brushes, and other cleaning products.

During fiscal 2017, Griffon also completed a number of other acquisitions to expand and enhance AMES' global footprint, including the acquisitions of La Hacienda, an outdoor living brand of unique heating and garden décor products in the United Kingdom.

The acquisition of La Hacienda, together with the February 2018 acquisition of Kelkay and November 2020 acquisition of Apta, provides AMES with additional brands and a platform for growth in the U.K.

market and access to leading garden centers, retailers, and grocers in the UK and Ireland.

In Australia, Griffon acquired Hills Home Living, the iconic brand of clotheslines and home products, from Hills Limited (ASX:HIL) in December 2016, and in September 2017 Griffon acquired Tuscan Path, an Australian provider of pots, planters, pavers, decorative stone, and garden décor products.

The Hills, Tuscan Path and December, 2020 Quatro acquisitions broadened AMES' outdoor living and lawn and garden business, strengthening AMES’ portfolio of brands and its market position in Australia and New Zealand.

These costs exclude cash proceeds from the sale of real estate and equipment, which are

expected to largely offset the cash charges, and also exclude inefficiencies due to duplicative labor costs and absorption impacts during transition.

Further Information

8 unchanged sentences

Rolling steel door and grille products designed for commercial, industrial, institutional, and retail use are sold under the Cornell and Cookson brands.

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

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

residential, industrial and commercial fans;

2 unchanged sentences

CPP sells products globally through a portfolio of leading brands including AMES, since 1774, Hunter, since 1886, True Temper, and ClosetMaid.

Revenue for the quarter ended June 30, 2023 was $683,430 compared to $768,179 in the prior year quarter, a decrease of 11%.

Revenue decreased at CPP and HBP by 22% and 1%, respectively.

Income from continuing operations was $49,205 or $0.90 per share, compared to $52,782, or $0.98 per share, in the prior year quarter.

Revenue for the quarter ended December 31, 2023 was $643,153 compared to $649,384 in the prior year quarter, a decrease of 1%.

Revenue decreased at CPP by 2%, but remained consistent with the prior year at HBP.

Net income was $42,177 or $0.82 per share, compared to $48,702, or $0.88 per share, in the prior year quarter.

The current year quarter results from operations included the following:

– Strategic review - retention and other of $5,812 ($4,378, net of tax, or $0.08 per share);

– Restructuring charges of $12,400 ($9,213, net of tax, or $0.18 per share);

– Special dividend Employee Stock Ownership Plan ("ESOP") charges of $9,042 ($6,936, net of tax, or $0.13 per share);

– Proxy costs of $568 ($435, net of tax, or 0.01 per share);

– Discrete and certain other tax provisions, net, of $6,519 or $0.12 per share.

The prior year quarter results from operations included the following:

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

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

– Gain on sale of building of $547 ($406, net of tax, or $0.01 per share);

– Strategic review - retention and other of $4,658 ($3,500, net of tax, or $0.07 per share);

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

– Discrete and certain other tax provisions, net, of $783 or $0.02 per share.

Excluding these items from the respective quarterly results, Income from continuing operations would have been $70,304, or $1.29 per share, in the current year quarter compared to $66,497, or $1.23 per share in the prior year quarter.

Revenue for the nine months ended June 30, 2023 was $2,043,798 compared to $2,139,545 in the prior year period, a decrease of 4% driven by decreased revenue of 20% at CPP, partially offset by increased revenue of 10% at HBP.

Adjusting for the period Griffon did not own Hunter in the prior year quarter, organic revenue decreased 8% to $1,968,032.

Hunter contributed $75,766 of incremental revenue during the year-to-date period.

Income from continuing operations was $35,652 or $0.65 per share, compared to $127,646, or $2.38 per share, in the prior year period.

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

The prior year quarter results from operations included the following:

– Gain on the sale of building $10,852 ($8,323, net of tax, or $0.15 per share);

– Strategic review - retention and other of $8,232 ($6,222, net of tax, or $0.11 per share);

– Restructuring charges of $82,196 ($61,360, net of tax, or $1.11 per share);

– Intangible asset impairment charges of $100,000 ($74,256, net of tax, or $1.35 per share);

– Special dividend ESOP charges of $9,042 ($6,936, net of tax, or $0.13 per share);

– Proxy costs of $1,503 ($1,153, net of tax, or $0.02 per share);

– Gain on sale of building of $10,852 ($8,323, net of tax, or $0.15 per share);

– Discrete and certain other tax benefits, net, of $333 or $0.01 per share.

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

– Restructuring charges of $12,391 ($9,185, net of tax, or $0.17 per share);

– Acquisition costs of $9,303 ($8,149, net of tax, or $0.15 per share);

– Proxy costs of $6,952 ($5,359, net of tax, or $0.10 per share);

– 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, of $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.

Excluding these items from the respective periods, Income from continuing operations would have been $184,661, or $3.35 per share in the current year period ended June 30, 2023 compared to $160,128, or $2.98 per share, in the prior year period.

Griffon evaluates performance based on adjusted income from continuing operations and the related adjusted earnings per share, which excludes restructuring charges, non-cash impairment 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.

Excluding these items from the respective periods, net income would have been $55,267, or $1.07 per share in the current year period ended December 31, 2023 compared to $47,421, or $0.86 per share, in the prior year period.

Griffon evaluates performance based on adjusted net income and the related adjusted earnings per share, which excludes restructuring charges, non-cash impairment 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.

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

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 June 30, For the Nine Months Ended June 30,

2023 2022 2023 2022

Income from continuing operations $ 49,205 $ 52,782 $ 35,652 $ 127,646

The following table provides a reconciliation of net income from operations to adjusted net income and earnings per share to adjusted earnings per share:

For the Three Months Ended December 31,

Net income $ 42,177 $ 48,702

Adjusting items:

Restructuring charges (1)

3,862 5,909 82,196 12,391

Intangible asset impairment — — 100,000 —

Gain on sale of building (547) (10,852)

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

Acquisition costs — — — 9,303

Special dividend ESOP charges 9,042 — 9,042 —

Strategic review - retention and other 4,658 8,232

Proxy expenses — 1,503

Fair value step-up of acquired inventory sold (2)

— 2,700 — 5,401

Tax impact of above items (2)

(4,704) (4,314) (51,759) (9,411)

Discrete and certain other tax provisions (benefits), net (3)

6,519 913 (2,537) (661)

Adjusted income from continuing operations $ 70,304 $ 66,497 $ 184,661 $ 160,128

Earnings per common share from continuing operations $ 0.90 $ 0.98 $ 0.65 $ 2.38

Adjusted net income $ 55,267 $ 47,421

Earnings per common share $ 0.82 $ 0.88

Adjusting items, net of tax:

Restructuring charges (1)

0.05 0.08 1.11 0.17

Intangible asset impairment — — 1.35 —

Gain on sale of building (0.01) (0.15)

Debt extinguishment, net — 0.07 — 0.07

Acquisition costs — — — 0.15

Special dividend ESOP charges 0.13 — 0.13 —

Strategic review - retention and other 0.07 0.11

Proxy expenses — 0.02

Fair value step-up of acquired inventory sold — 0.04 — 0.07

Discrete and certain other tax provisions (benefits), net (3)

0.12 0.02 (0.05) (0.01)

Adjusted earnings per common share from continuing operations $ 1.29 $ 1.23 $ 3.35 $ 2.98

Adjusted earnings per common share $ 1.07 $ 0.86

Diluted weighted-average shares outstanding (in thousands) 51,467 55,298

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

(1) For the quarter and nine months ended June 30, 2023, restructuring charges relate to the CPP global sourcing expansion, of which $1,777 and $76,422, respectively, are included in Cost of goods and services and $2,085 and $5,774, respectively, are included in SG&A.

(2) The fair value step-up of acquired inventory sold is included in Cost of goods and services.

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

(1) For the quarter ended December 31, 2023, restructuring charges relate to the CPP global sourcing expansion, of which $11,646 are included in Cost of goods and services and $754 are included in SG&A.

(2) The tax impact for the above reconciling adjustments from GAAP to non-GAAP Net income and EPS is determined by comparing the Company's tax provision, including the reconciling adjustments, to the tax provision excluding such adjustments.

1 unchanged sentence

RESULTS OF OPERATIONS

Three and Nine Months ended June 30, 2023 and 2022

Griffon evaluates performance and allocates resources based on each segment adjusted EBITDA, a non-GAAP measure, which is defined as income before taxes from continuing operations, excluding interest income and expense, depreciation and amortization, unallocated amounts (mainly corporate overhead), strategic review charges, non-cash impairment charges, restructuring charges, and acquisition related expenses, as well as other items that may affect comparability, as applicable.

Three Months ended December 31, 2023 and 2022

Griffon evaluates performance and allocates resources based on each segment adjusted EBITDA, a non-GAAP measure, which is defined as income before taxes, excluding interest income and expense, depreciation and amortization, unallocated amounts (mainly corporate overhead), strategic review charges, non-cash impairment charges, restructuring charges, and acquisition related expenses, as well as other items that may affect comparability, as applicable.

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

See table provided in Note 13 - Business Segments for a reconciliation of adjusted EBITDA to income before taxes from continuing operations.

See table provided in Note 12 - Business Segments for a reconciliation of adjusted EBITDA to income before taxes.

Home and Building Products

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

2023 2022 2023 2022

For the Three Months Ended December 31,

Residential $ 218,798 $ 227,059

3 unchanged sentences

Depreciation and amortization $ 3,633 $ 3,846

For the quarter ended June 30, 2023, HBP revenue declined $4,403, or 1%, compared to the prior year period due to decreased volume of 5% driven by reduced residential volume partially offset by increased commercial volume, and favorable pricing and mix of 4% driven by both residential and commercial.

For the quarter ended June 30, 2023, adjusted EBITDA increased 12% to $134,330 compared to $119,847 in the prior year period.

Adjusted EBITDA benefited from reduced material costs, partially offset by reduced revenue noted above and increased labor, advertising and marketing costs.

For the nine months ended June 30, 2023, revenue increased $111,648 or 10%, compared to the prior year period due to favorable mix and pricing of 12% driven by both residential and commercial, partially offset by decreased volume of 2% driven by a decline in residential volume.

For the nine months ended June 30, 2023, adjusted EBITDA increased 39% to $390,346 compared to $280,618 in the prior year period.

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

For the quarter and nine months ended June 30, 2023, segment depreciation and amortization decreased $248 and $1,253, respectively, compared to the prior year periods, due to fully depreciated assets.

For the quarter ended December 31, 2023, HBP revenue was consistent with the prior year quarter reflecting improved customer orders, and favorable pricing and mix of 4%, offset by the prior year volume benefit from elevated backlog.

For the quarter ended December 31, 2023, adjusted EBITDA of $124,719 was consistent with the prior year quarter.

Adjusted EBITDA reflected reduced material costs and favorable pricing and mix offset by the unfavorable impact of reduced volume, noted above, and increased labor and distribution costs.

For the quarters ended December 31, 2023 and 2022, segment depreciation and amortization decreased $213 compared to the prior year period due to fully depreciated assets.

Consumer and Professional Products

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

2023 2022 2023 2022

For the Three Months Ended December 31,

United States $ 151,172 $ 153,667

6 unchanged sentences

Depreciation and amortization $ 11,057 $ 13,127

For the quarter ended June 30, 2023, revenue decreased $80,346, or 22%, compared to the prior year period primarily due to a 22% reduction in volume across all channels and geographies driven by reduced consumer demand and elevated customer inventory levels, and customer supplier diversification in the U.S.

In addition, unfavorable foreign exchange of 1% was offset by favorable price and mix of 1%.

Hunter contributed $87,779 in the current quarter compared to $105,774 in the prior year period.

For the quarter ended June 30, 2023, adjusted EBITDA was $18,265 compared to adjusted EBITDA of $28,373 in the prior year quarter.

The variance to prior year was primarily due to the unfavorable impact of the reduced volume noted above, and its related impact on manufacturing and overhead absorption, partially offset by reduced discretionary spending.

EBITDA reflected an unfavorable foreign exchange impact of 1%.

Hunter contributed $25,087 in the current quarter compared to $16,792 in the prior year period.

For the nine months ended June 30, 2023, revenue decreased $207,395, or 20%, compared to the prior year period due to a 28% reduction in volume across all channels and geographies driven by reduced customer demand, elevated customer inventory levels, primarily in the U.S., the impact of customer supplier diversification in the U.S., and an unfavorable foreign exchange impact of 2%.

These items were partially offset by $75,766 of Hunter revenue, or 7%, for the portion of the comparable nine month period in which Hunter was not owned by Griffon in the prior year, as well as price and mix of 3%, primarily in Canada and Australia.

Hunter contributed $218,105 during the nine months ended June 30, 2023 compared to $176,623 in the prior year period.

For the nine months ended June 30, 2023, adjusted EBITDA decreased 61% to $36,091 compared to $92,431 in the prior year period primarily due to the unfavorable impact of the reduced volume noted above and its related impact on manufacturing and overhead absorption, partially offset by reduced discretionary spending and $7,679 of Hunter EBITDA for the portion of the comparable nine month period in which Hunter was not owned by Griffon in the prior year.

EBITDA reflected an unfavorable foreign exchange impact of 2%.

Hunter contributed $41,746 during the nine months ended June 30, 2023 compared to $31,131 in the prior year period.

For the quarter ended June 30, 2023, segment depreciation and amortization decreased $1,773 compared to the prior year period, primarily related to fully depreciated assets and the write-down of certain fixed assets at several manufacturing facilities in connection with restructuring activities.

For the nine months ended June 30, 2023, segment depreciation and amortization increased $4,260 compared to the prior year period, primarily relate to depreciation and amortization on assets placed in service, including a full period of Hunter assets, partially offset by fully depreciated assets and the write-down of certain fixed assets at several manufacturing facilities in connection with CPP's restructuring activities.

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.

Hunter adds to Griffon's CPP segment, complementing and diversifying our portfolio of leading consumer brands and products.

For the quarter ended December 31, 2023, revenue decreased $5,449, or 2%, compared to the prior year period primarily due to decreased volume driven by reduced consumer demand in North America.

For the quarter ended December 31, 2023, adjusted EBITDA was $5,539 compared to $(1,809) in the prior year quarter, an increase of $7,348.

The variance to the prior year was primarily due to decreased North American production costs, partially offset by the unfavorable impact of the reduced volume, noted above.

For the quarter ended December 31, 2023, segment depreciation and amortization decreased $2,070 compared to the prior year period, primarily related to fully depreciated assets and the write-down of certain fixed assets at several manufacturing facilities in connection with restructuring activities.

CPP Global Sourcing Strategy Expansion and Restructuring Charges

2 unchanged sentences

Over that period, CPP expects to reduce its U.S.

facility footprint by approximately 1.2 million square feet, or 30%, and its headcount by approximately 600.

The affected U.S.

locations will include Camp Hill and Harrisburg, PA;

Grantsville, MD;

facility footprint by approximately 1.2 million square feet, or 15% of CPP's square footage, and its headcount by approximately 600.

Operations have ceased at Camp Hill and Harrisburg, PA;

Fairfield, IA;

and four wood mills.

The final facility, in Grantsville, MD, is expected to close by March 2024.

1 unchanged sentence

In the quarter and nine months ended June 30, 2023, CPP incurred pre-tax restructuring and related exit costs approximating $3,862 and $82,196, respectively.

During the nine months ended June 30, 2023, cash charges totaled $23,078 and non-cash, asset-related charges totaled $59,118;

In the quarter ended December 31, 2023, CPP incurred pre-tax restructuring charges of $12,400 consisting of cash charges of $3,918 and non-cash, asset related charges of $8,482 to adjust inventory to net realizable value.

The cash charges included $1,847 for one-time termination benefits and other personnel-related costs and $2,071 for facility exit and other related costs.

Since inception, cash charges totaled $37,454 and non-cash, asset-related charges totaled $67,414;

the cash charges included $18,619 for one-time termination benefits and other personnel-related costs and $18,835 for facility exit and other related costs.

Non-cash charges included a $22,018 impairment charge related to certain fixed assets at several manufacturing locations and $45,396 to adjust inventory to net realizable value.

3 unchanged sentences

$ 19,500 $ 35,500 $ 75,000 $ 130,000 $ 5,000

Q2 FY2023 Activity (8,050) (11,166) (59,118) (78,334) —

Q3 FY2023 Activity (2,234) (1,628) — (3,862) —

Total 2023 restructuring charges (16,772) (16,764) (58,932) (92,468) —

Q1 FY2024 Activity (1,847) (2,071) (8,482) (12,400) —

Total cumulative charges (18,619) (18,835) (67,414) (104,868) —

Estimate to Complete $ 881 $ 16,665 $ 7,586 $ 25,132 $ 5,000

Facility and equipment sales to date

$ — $ — $ 547 $ 547 $ (547)

________________________

(1)The above table represents the upper range of anticipated charges during the duration of the project.

For the quarter ended June 30, 2023, unallocated amounts, excluding depreciation, consisted primarily of corporate overhead costs totaling $13,982 compared to $13,405 in the prior year quarter;

for the nine months ended June 30, 2023, unallocated amounts totaled $42,388 compared to $39,724 in the prior year period.

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

For the quarter ended December 31, 2023, unallocated amounts, excluding depreciation, consisted primarily of corporate overhead costs totaling $13,907 compared to $13,776 in the prior year quarter.

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

Strategic review

During the three months ended December 31, 2023 and 2022, we incurred strategic review expenses of $4,658 ($3,500, net of tax) and $8,232 ($6,222, net of tax), respectively, primarily for retention payments and other associated costs related to the strategic review process that concluded in April 2023.

Proxy expenses

During the three and nine months ended June 30, 2023, we incurred $568 ($435, net of tax) and $2,685 ($2,059, net of tax) of proxy expenses (including legal and advisory fees) in SG&A, respectively.

During the quarter and nine months ended June 30, 2023, proxy expenses related to a settlement entered into with a shareholder that had submitted a slate of director nominees.

During nine months ended June 30, 2022, we incurred $6,952 of proxy expenses (including legal and advisory fees) in unallocated amounts as a result of a proxy contest initiated by a shareholder which was completed at the shareholder meeting on February 17, 2022.

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

During the three months ended December 31, 2023, we did not incur any non-recurring proxy expenses.

During the quarter ended December 31, 2022, non-recurring proxy expenses of $1,503 ($1,153, net of tax) related to a settlement entered into with a shareholder that had submitted a slate of director nominees.

Segment Depreciation and Amortization

Segment depreciation and amortization decreased $2,021 and increased $3,007 for the quarter and nine months ended June 30, 2023, respectively, compared to the prior year periods.

The decrease in the current quarter ended June 30, 2023 primarily relates to fully depreciated assets and the write-down of certain fixed assets at several manufacturing facilities in connection with CPP's restructuring activities.

The increase for the nine months ended June 30, 2023 primarily relate to depreciation and amortization on assets placed in service, including a full period of Hunter assets, partially offset by fully depreciated assets and the write-down of certain fixed assets at several manufacturing facilities in connection with CPP's restructuring activities.

For the quarter ended December 31, 2023, segment depreciation and amortization of $14,690 decreased $2,283 compared to $16,973 in the prior year quarter;

the decrease primarily relates to fully depreciated assets and the write-down of certain fixed assets at several manufacturing facilities in connection with CPP's restructuring activities.

Other Income (Expense)

For the quarters ended June 30, 2023 and 2022, Other income (expense) of $1,475 and $2,084, respectively, includes $590 and $265, respectively, of net currency exchange gains in connection with the translation of receivables and payables denominated in currencies other than the functional currencies of Griffon and its subsidiaries, net periodic benefit plan income (expense) of $(217) and $1,118, respectively, and $336 and $(91), respectively, of net investment income (loss).

Other income (expense) also includes rental income of $0 and $156 for the three months ended June 30, 2023 and 2022, respectively.

Additionally, it includes royalty income of $438 and $828 for the three months ended June 30, 2023 and 2022, respectively.

For the nine months ended June 30, 2023 and 2022, Other income (expense) of $2,375 and $4,528, respectively, includes $492 and $(297), respectively, of net currency exchange gains (losses) in connection with the translation of receivables and payables denominated in currencies other than the functional currencies of Griffon and its subsidiaries, net periodic benefit plan income (loss) of $(650) and $3,145, respectively, as well as $444 and $(328), respectively, of net investment income (loss).

Other income (expense) also includes rental income of $212 and $468 in the nine months ended June 30, 2023 and 2022, as well as royalty income of $1,463 and $1,444 for the nine months ended June 30, 2023 and 2022, respectively.

For the quarters ended December 31, 2023 and 2022, Other income (expense) of $632 and $607, respectively, includes $13 and $67, respectively, of net currency exchange gains in connection with the translation of receivables and payables denominated in currencies other than the functional currencies of Griffon and its subsidiaries, net periodic benefit plan expense of $34 and $216, respectively, and net investment income of $56 and $33, respectively.

Other income (expense) also includes rental income of $0 and $212 and royalty income of $592 and $549 for the three months ended December 31, 2023 and 2022, respectively.

Provision for income taxes

During the quarter ended June 30, 2023, the Company recognized a tax provision of $29,248 on income before taxes from continuing operations of $78,453, compared to a tax provision of $23,268 on income before taxes from continuing operations of $76,050 in the prior year quarter.

The current year quarter results included strategic review costs (retention and other) of $5,812 ($4,378, net of tax), restructuring charges of $3,862 ($2,831, net of tax), special dividend ESOP charges of $9,042 ($6,936, net of tax), proxy costs of $568 ($435, net of tax) and discrete and certain other tax provisions, net, that affect comparability of $6,519.

The prior 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.

Excluding these items, the effective tax rates for the quarters ended June 30, 2023 and 2022 were 28.1% and 28.6%, respectively.

During the nine months ended June 30, 2023, the Company recognized a tax provision of $20,662 on income before taxes from continuing operations of $56,314, compared to a tax provision of $55,119 on income before taxes from continuing operations of $182,765 in the prior year period.

The nine months ended June 30, 2023 included a gain on the sale of a building of $10,852 ($8,323, net of tax), strategic review costs (retention and other) of $20,234 ($15,258, net of tax), restructuring charges of $82,196 ($61,360, net of tax), special dividend ESOP charges of $9,042 ($6,936, net of tax), intangible asset impairment charges of $100,000 ($74,256, net of tax), proxy expenses of $2,685 ($2,059, net of tax) and discrete and certain other tax benefits, net, that affect comparability of $2,537.

The nine months 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 costs 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, of $5,287 ($4,022, net of tax), and discrete and certain other tax benefits, net, that affect comparability of $661.

Excluding these items, the effective tax rates for the nine months ended June 30, 2023 and 2022 were both 28.9%.

During the quarter ended December 31, 2023, the Company recognized a tax provision of $17,965 on income before taxes of $60,142, compared to $19,318 on income before taxes of $68,020 in the prior year quarter.

The current year quarter results included strategic review costs - retention and other of $4,658 ($3,500, net of tax), restructuring charges of $12,400 ($9,213, net of tax), gain on sale of building of $547 ($406, net of tax);

and discrete and certain other tax provisions, net, that affect comparability of $783.

The prior year quarter results included strategic review - retention and other of $8,232 ($6,222, net of tax);

proxy costs of $1,503 ($1,153, net of tax);

gain on the sale of building $10,852 ($8,323, net of tax);

and discrete and certain other tax benefits, net, that affect comparability of $333.

Excluding these items, the effective tax rates for the quarters ended December 31, 2023 and 2022 were 27.9% and 29.1%, respectively.

Stock-based compensation

For the quarters ended June 30, 2023 and 2022, stock based compensation expense, which includes expenses for both restricted stock grants and the ESOP, totaled $15,252 and $6,019, respectively.

For the nine months ended June 30, 2023 and 2022, stock based compensation expense totaled $28,587 and $15,978, respectively.

For the quarters ended December 31, 2023 and 2022, stock based compensation expense, which includes expense for both restricted stock grants and the ESOP, totaled $6,417 and $6,742, respectively.

Comprehensive income (loss)

For the quarter ended June 30, 2023, total other comprehensive income, net of taxes, of $315 included a gain of $2,309 from foreign currency translation adjustments primarily due to the strengthening of the Euro, British Pound and Canadian Dollar, all in comparison to the U.S.

For the quarter ended December 31, 2023, total other comprehensive income, net of taxes, of $10,475 included a gain of $10,238 from foreign currency translation adjustments primarily due to the strengthening of the Euro, British Pound and Australian and Canadian Dollars, all in comparison to the U.S.

a $532 benefit from pension amortization;

and a $295 loss on cash flow hedges.

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;

For the quarter ended December 31, 2022, total other comprehensive income, net of taxes, of $12,219 included a gain of $11,937 from foreign currency translation adjustments primarily due to the strengthening of the Euro, Australian Dollars and British Pound, all in comparison to the US Dollar;

a $862 benefit from pension amortization;

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

For the nine months ended June 30, 2023, total other comprehensive income, net of taxes, of $15,147 included a gain of $14,580 from foreign currency translation adjustments primarily due to the strengthening of the Euro, Canadian and Australian Dollars and British Pound, all in comparison to the US Dollar;

a $2,355 benefit from pension amortization of actuarial losses;

and a $580 loss on cash flow hedges.

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 $110 gain on cash flow hedges.

DISCONTINUED OPERATIONS

On September 27, 2021, Griffon announced it was exploring strategic alternatives for its Defense Electronics segment, which consisted of Telephonics Corporation ("Telephonics"), and on June 27, 2022, Griffon completed the sale of Telephonics to TTM for $330,000.

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 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.

At June 30, 2023 and September 30, 2022, Griffon's discontinued assets and liabilities includes the Company's obligation of $4,553 and $8,846, respectively, in connection with the sale of Telephonics primarily related to certain customary post-closing adjustments, primarily working capital and stay bonuses.

At June 30, 2023 and September 30, 2022, Griffon’s liabilities for Installations Services and other discontinued operations primarily relate to insurance claims, income taxes, product liability, warranty and environmental reserves totaling $8,357 and $8,072, respectively.

At December 31, 2023 and September 30, 2023, Griffon’s liabilities for discontinued operations primarily relate to insurance claims, income taxes, product liability, warranty and environmental reserves totaling $8,703 and $11,798, respectively.

Griffon's assets for discontinued operations primarily relates to insurance claims.

There was no reported revenues or costs in the three months ended December 31, 2023 and 2022 for discontinued operations.

LIQUIDITY AND CAPITAL RESOURCES

2 unchanged sentences

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 June 30, 2023, the amount of cash, cash equivalents and marketable securities held by foreign subsidiaries was $88,300.

As of December 31, 2023, the amount of cash, cash equivalents and marketable securities held by foreign subsidiaries was $64,100.

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.

The Company may repatriate cash from its non-U.S.

subsidiaries if the Company determines that it is beneficial to the Company and tax efficient.

The Company has accrued a deferred tax liability for withholding taxes on previously taxed earnings and profit (PTEP) which are not considered permanently reinvested.

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

1 unchanged sentence

taxes have already been paid).

Griffon's primary sources of liquidity are cash flows generated from operations, cash on hand and our January 2025 five-year secured $400,000 revolving credit facility ("Revolver").

At June 30, 2023, $300,493 of revolver capacity was available, subject to certain loan covenants, for borrowing under the Credit Agreement and we had cash and cash equivalents of $151,790.

Griffon's primary sources of liquidity are cash flows generated from operations, cash on hand and our secured $500,000 revolving credit facility ("Revolver"), which matures in August 2028.

During the quarter ended December 31, 2023, the Company generated $146,058 of net cash from operating activities and, as of December 31, 2023, the Company had $465,538 available, subject to certain loan covenants, for borrowing under the Revolver.

The Company had cash and cash equivalents of $110,546 at December 31, 2023.

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

Cash Flows from Operations For the Nine Months Ended June 30,

Cash Flows from Operations For the Three Months Ended December 31,

Net Cash Flows Provided by (Used In):

2 unchanged sentences

Financing activities (123,947) (78,363)

Cash provided by operating activities from continuing operations for the nine months ended June 30, 2023 was $309,003 compared to cash used in continuing operations of $65,001 in the prior year period.

The variance was due to increased cash generated from operations at HBP and a decrease in working capital across all businesses, primarily inventory and accounts receivable.

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 nine months ended June 30, 2023, cash used in investing activities from continuing operations was $10,911 compared to $574,256 in the prior year period.

In the current quarter, cash flows used in investing activities from continuing operations primarily consisted of a working capital adjustment payment of $2,568 related to the sale of Telephonics and capital expenditures of $20,183, partially offset by proceeds totaling $11,840 from the sale of a building.

In the prior year quarter, cash flows used in investing activities from continuing operations primarily consisted of a $851,464 payment to acquire Hunter on January 24, 2022 and capital expenditures of $33,516, partially offset by proceeds from the sale of Telephonics on June 27, 2022 totaling $295,712 and proceeds from the sale of investments totaling $14,923.

During the nine months ended June 30, 2023, cash used in financing activities from continuing operations totaled $262,560 compared to cash provided by financing activities from continuing operations of $513,762 in the prior year period.

Cash used in financing activities from continuing operations in the current period consisted of net repayments of long-term debt of $36,686, primarily related to the Revolver and the payoff of AMES UK loans, the purchase of treasury shares in connection with the board authorized share repurchase board program and to satisfy vesting of restricted stock totaling $98,350 and the payment of dividends of $127,372.

Cash provided by financing activities from continuing operations in the prior year 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 prior year comparable period Griffon prepaid $300,000 aggregate principal amount of its Term Loan B and recognized a $6,296 charge related to the write-off of capitalized debt issuance costs.

Furthermore, during the prior year 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.

During the nine months ended June 30, 2023, 365,739 shares, with a market value of $12,881, or $35.22 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, 2023, an additional 3,066 shares, with a market value of $108, or $35.31 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, 2023, the Board of Directors approved and paid two quarterly cash dividends of $0.10 per share each and one quarterly cash dividend of $0.125 per share.

Additionally, on April 19, 2023, the Board of Directors declared a special cash dividend of $2.00 per share, paid on May 19, 2023, to shareholders of record as of the close of business on May 9, 2023.

Cash provided by operating activities for the quarter ended December 31, 2023 was $146,058 compared to $75,480 in the prior year period.

The variance was due to increased cash generated from operations at HBP and a decrease in working capital across all businesses, primarily inventory and accounts receivable, and an increase in accounts payable and accrued liabilities.

Cash flows used in investing activities is primarily comprised of capital expenditures and proceeds from the sale of businesses, investments and property, plant and equipment.

During the quarter ended December 31, 2023, cash used in investing activities was $13,543 compared to cash provided by investing activities of $4,521 in the prior year period.

In the current quarter, cash flows used in investing activities primarily consisted of capital expenditures of $14,330, partially offset by proceeds totaling $787 primarily from the sale of a building.

In the prior year quarter, cash flows provided by investing activities consisted of proceeds totaling $11,815, primarily from the sale of a building, partially offset by capital expenditures of $4,726 and a working capital adjustment payment of $2,568 related to the sale of Telephonics.

During the quarter ended December 31, 2023, cash used in financing activities totaled $123,947 compared to $78,363 in the prior year period.

Cash used in financing activities in the current period consisted of net repayments of long-term debt of $32,360, primarily related to the Revolver, the purchase of shares of common stock in connection with the board authorized share repurchase program and the purchase of common stock withheld to satisfy tax obligations in connection with the vesting of restricted stock totaling $81,449 and the payment of dividends of $9,965.

Cash provided by financing activities in the prior year period consisted primarily of net repayments of long-term debt of $57,716, purchases of common stock withheld to satisfy tax obligations in connection with the vesting of restricted stock of $12,735 and the payment of dividends of $7,126 and financing costs of $744.

During the quarter ended December 31, 2023, 221,229 shares, with a market value of $11,604, or $52.45 per share, were withheld to settle employee taxes due upon the vesting of restricted stock, and were added to treasury stock.

During the quarter ended December 31, 2023, the Board of Directors approved and paid a quarterly cash dividend of $0.15 per share.

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 August 1, 2023, the Board of Directors declared a quarterly cash dividend of $0.125 per share, payable on September 14, 2023 to shareholders of record as of the close of business on August 23, 2023.

During 2022, the Company declared and paid regular cash dividends totaling $0.36 per share, or $0.09 per share each quarter.

Additionally, on June 27, 2022, the Board of Directors declared a special dividend of $2.00 per share, paid on July 20, 2022

During 2023, the Board of Directors approved two quarterly cash dividends of $0.10 per share and two quarterly cash dividends of $0.125 per share, totaling $0.45.

On February 6, 2024, the Board of Directors declared a quarterly cash dividend of $0.15 per share, payable on March 21, 2024 to shareholders of record as of the close of business on February 29, 2024.

On April 19, 2023, the Company's Board of Directors approved a $200,000 increase to Griffon's share repurchase program to $257,955 from the prior unused board authorizations from August 3, 2016 and August 1, 2018 of $57,955.

Under the authorized share repurchase program, the Company may, from time to time, purchase shares of its common stock in the open market, including pursuant to a 10b5-1 plan, pursuant to an accelerated share repurchase program or issuer tender offer, or in privately negotiated transactions.

During both the quarter and nine months ended June 30, 2023, Griffon purchased 2,541,932 shares of common stock under these repurchase programs, for a total of $85,361, or $33.58 per share, excluding excise taxes.

As of June 30, 2023, $172,594 remains under these Board authorized repurchase programs.

In connection with the share repurchases, excise taxes totaling $647 was accrued as of June 30, 2023.

During the nine months ended June 30, 2023, cash used in discontinued operations from operating activities of $2,799 primarily related to the settling of certain liabilities and environmental costs associated with DE and the former Installations Services businesses.

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

During the nine months ended June 30, 2022, Cash used by discontinued operations from investing activities of $2,627 related to DE operations capital expenditures.

Cash and Equivalents and Debt June 30, September 30,

Also, on November 15, 2023, Griffon announced that the Board of Directors approved an additional increase of $200,000 to its share repurchase authorization.

Share repurchases during the quarter ended December 31, 2023 totaled 1,634,454 shares of common stock, for a total of $69,640, or an average of $42.61 per share.

As of December 31, 2023, $237,543 remained under these Board authorized repurchase programs.

During the quarter ended and as of December 31, 2023, $696 and $1,997, respectively, were accrued for excise taxes for share repurchases.

During the quarter ended December 31, 2023 and 2022, cash used in discontinued operations from operating activities of $2,926 and $1,953, respectively, primarily related to the settling of certain liabilities and environmental costs.

Cash and Equivalents and Debt December 31, September 30,

Cash and equivalents $ 110,546 $ 102,889

8 unchanged sentences

During 2022, Griffon purchased $25,225 of 2028 Senior Notes in the open market at a weighted average discount of 91.82% of par, or $23,161.

In connection with these purchases, Griffon recognized a $1,767 net gain on the early extinguishment of debt comprised of $2,064 of face value in excess of purchase price, offset by $297 related to the write-off of underwriting fees and other expenses.

As of June 30, 2023, outstanding 2028 Senior Notes due totaled $974,775;

As of December 31, 2023, outstanding 2028 Senior Notes due totaled $974,775;

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

1 unchanged sentence

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

The fair value of the 2028 Senior Notes approximated $904,104 on June 30, 2023 based upon quoted market prices (level 1 inputs).

At June 30, 2023, $9,425 of underwriting fees and other expenses incurred 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 $400,000 Revolver, and replaced LIBOR with SOFR (Secured Overnight Financing Rate).

The Term Loan B accrues interest at the Term SOFR rate plus a credit adjustment spread with a floor of 0.50%, and a spread of 2.25% (7.64% as of June 30, 2023).

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

The fair value of the 2028 Senior Notes approximated $945,532 on December 31, 2023 based upon quoted market prices (level 1 inputs).

At December 31, 2023, $8,415 of underwriting fees and other expenses incurred remained to be amortized.

On August 1, 2023, Griffon amended and restated its Credit Agreement (as amended, "Credit Agreement").

The amendment increased the maximum borrowing availability on its revolving credit facility from $400,000 to $500,000 (the "Revolver") and extended the maturity date of the Revolver from March 22, 2025 to August 1, 2028.

In the event the 2028 Senior Notes are not repaid, refinanced, or replaced prior to December 1, 2027, the Revolver will mature on December 1, 2027.

The amendment also modified certain other provisions of the Credit Agreement, including increasing the letter of credit sub-facility under the Revolver from $100,000 to $125,000 and increasing the customary accordion feature from a minimum of $375,000 to a minimum of $500,000.

The Revolver includes a multi-currency sub-facility of $200,000.

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

Interest is payable on borrowings at either a Secured Overnight Financing Rate ("SOFR"), Sterling Overnight Index Average ("SONIA") or base rate benchmark rate, plus an applicable margin, which adjusts based on financial performance.

Griffon's SOFR loans accrue interest at TERM SOFR plus a credit adjustment spread and a margin of 2.00% (7.46% at December 31, 2023), SONIA loans accrue interest at SONIA Base

Rate plus a credit adjustment spread and a margin of 2.00% (7.22% at December 31, 2023) and base rate loans accrue interest at prime rate plus a margin of 1.00% (9.50% at December 31, 2023).

At December 31, 2023, under the Revolver, there were $21,500 in outstanding borrowings;

outstanding standby letters of credit were $12,962;

and $465,538 was available, subject to certain loan covenants, for borrowing at that date.

On January 24, 2022, Griffon amended and restated its Credit Agreement to provide for a new $800,000 Term Loan B facility, due January 24, 2029, in addition to the Revolver.

The Term Loan B accrues interest at the Term SOFR rate plus a credit adjustment spread with a floor of 0.50%, and a spread of 2.25% (7.75% as of December 31, 2023).

The Term Loan B was issued at 99.75% of par value.

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.

1 unchanged sentence

and a final balloon payment due at maturity.

At September 30, 2023, Griffon's secured leverage remained below the threshold set forth in the Credit Agreement that would, if exceeded, require Griffon to make an additional payment, and therefore no additional annual principal payment was required.

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

During 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.

During 2023 and 2022, Griffon prepaid $25,000 and $300,000, respectively, 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 charge of $437 and $6,296 on the prepayment of debt in 2023 and 2022, respectively.

The charges were comprised of write-offs of underwriting fees and other expenses of $386 and $5,575 for 2023 and 2022, respectively, and the original issue discount of $51 and $721 for 2023 and 2022, respectively.

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

Term Loan B borrowings are secured by the same collateral as the Revolver on an equal and ratable basis.

The fair value of the Term Loan B facility approximated $487,550 on June 30, 2023 based upon quoted market prices (level 1 inputs).

At June 30, 2023, $7,769 of underwriting fees and other expenses incurred, remained to be amortized.

At June 30, 2023 the Revolver's maximum borrowing availability was $400,000 with a maturity date of March 22, 2025.

The Revolver included a letter of credit sub-facility with a limit of $100,000 and a multi-currency sub-facility with a limit of of $200,000.

The Revolver and Term Loan B contained a customary accordion feature that permitted us to request, subject to each lender's consent, an incremental amount that can be borrowed by up to the greater of $375,000 or an amount based on the senior secured leverage ratio.

On August 1, 2023, Griffon amended its Credit Agreement.

The amendment increased the maximum borrowing availability on the Revolver from $400,000 to $500,000 and extended the maturity date of the Revolver from March 22, 2025 to August 1, 2028.

In the event the 2028 Senior Notes are not repaid, refinanced, or replaced prior to December 1, 2027, the Revolver will mature on December 1, 2027.

The amendment also modified certain other provisions of the Credit Agreement, including increasing the letter of credit sub-facility from $100,000 to $125,000 and increasing the customary accordion feature from a minimum of $375,000 to a minimum of $500,000.

During 2022, Griffon replaced the Revolver GBP LIBOR benchmark rate with a Sterling Overnight Index Average ("SONIA").

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

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

Griffon's SOFR loans accrue interest at Term SOFR plus a credit adjustment spread and a margin of 1.50% (6.75% at June 30, 2023), SONIA loans accrue interest at SONIA Base Rate plus a credit adjustment spread and a margin of 1.50% (6.46% at June 30, 2023) and base rate loans accrue interest at prime rate plus a margin of 0.50% (8.75% at June 30, 2023).

The fair value of the Term Loan B facility approximated $462,153 on December 31, 2023 based upon quoted market prices (level 1 inputs).

At December 31, 2023, $6,708 of underwriting fees and other expenses incurred, remained to be amortized.

At December 31, 2023, $461,000 of the Term Loan B was outstanding.

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

1 unchanged sentence

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 June 30, 2023, there were $86,705 of outstanding borrowings under the Revolver;

outstanding standby letters of credit were $12,802;

and $300,493 was available, subject to certain loan covenants, for borrowing at that date.

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

The lease matures in 2025 and bears interest at a fixed rate of approximately 5.6%.

The Ocala, Florida lease contains a five-year renewal option.

At June 30, 2023, $12,056 was outstanding.

During 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.

On September 28, 2023, the Company closed on the exercise of its lease purchase option, as permitted under the lease agreement, to acquire ownership of the manufacturing facility located in Ocala, Florida for a cash purchase price of $23,207.

The Ocala lease had a maturity date in 2025 and bore interest at a fixed rate of approximately 5.6%.

As a result of exercising the purchase option, the Company no longer has any future lease obligations related to this real estate.

The remaining lease liability balance relates to finance equipment leases.

Refer to Note 20-Leases for further details.

In November 2012, Garant G.P.

(“Garant”), a Griffon wholly owned subsidiary, entered into a CAD 15,000 ($11,334 as of June 30, 2023) revolving credit facility.

Effective in December 2022, the facility was amended to replace LIBOR (USD) with the Canadian Dollar Offer Rate ("CDOR").

The facility accrues interest at CDOR or the Bankers Acceptance Rate (CDN) plus 1.3% per annum (6.57% using CDOR and 6.32% using Bankers Acceptance Rate CDN as of June 30, 2023).

(“Garant”), a Griffon wholly owned subsidiary, entered into a CAD 15,000 ($11,363 as of December 31, 2023) revolving credit facility.

Effective in December 2023, the facility was amended to replace the Canadian Dollar Offer Rate with the Canadian Overnight Repo Rate Average ("CORRA").

The facility accrues interest at CORRA or the Bankers Acceptance Rate (CDN) plus 1.3% per annum (6.36% using CORRA and 6.53% using Bankers Acceptance Rate CDN as of December 31, 2023).

The revolving facility matures in December 2024, but is renewable upon mutual agreement with the lender.

Garant is required to maintain a certain minimum equity.

At June 30, 2023, there were no outstanding borrowings under the revolving credit facility with CAD 15,000 ($11,334 as of June 30, 2023) available.

At December 31, 2023, there were no outstanding borrowings under the revolving credit facility with CAD 15,000 ($11,363 as of December 31, 2023) available.

During 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 2024, but is renewable upon mutual agreement with the lender.

The receivable purchase facility accrues interest at BBSY (Bank Bill Swap Rate) plus 1.25% per annum (5.39% at June 30, 2023).

At June 30, 2023, there was no balance outstanding under the receivable purchase facility with AUD 30,000 ($19,878 as of June 30, 2023) available.

The receivable purchase facility accrues interest at BBSY (Bank Bill Swap Rate) plus 1.25% per annum (5.56% at December 31, 2023).

At December 31, 2023, there was no balance outstanding under the receivable purchase facility with AUD 30,000 ($20,511 as of December 31, 2023) available.

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

Griffon Australia is required to maintain a certain minimum equity level.

On June 30, 2023, The AMES Companies UK Ltd and its subsidiaries (collectively, "AMES UK") paid off and cancelled the GBP 14,000 term loan and GBP 4,000 mortgage loan that were entered into in July 2018 and further amended in January 2022 and that were maturing in July 2023.

The payoff amounts were GBP 7,525($9,543) and GBP 2,451($3,108), for the term loan and mortgage loan, respectively.

In July 2018, The AMES UK entered into a GBP 5,000 revolving facility that accrues interest at the Bank of England Base Rate plus 3.25% (8.25% as of June 30, 2023) and expires in July 2023.

The revolver had no outstanding balance as of June 30, 2023.

The revolver is secured by substantially all the assets of AMES UK and its subsidiaries, and subjects Ames UK to a maximum leverage ratio and a minimum fixed charges cover ratio.

In July 2018, the AMES Companies UK Ltd and its subsidiaries (collectively, "Ames UK") entered into a GBP 14,000 term loan, GBP 4,000 mortgage loan and GBP 5,000 revolver, which matured in July 2023.

Prior to maturity, on June 30, 2023, AMES UK paid off and cancelled the GBP 14,000 term loan and GBP 4,000 mortgage loan.

The payoff amounts were GBP 7,525 ($9,543) and GBP 2,451 ($3,108), respectively.

Upon maturity in July 2023, the GBP 5,000 revolver had no balance and was not renewed.

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

At June 30, 2023, Griffon and its subsidiaries were in compliance with the terms and covenants of its credit and loan agreements.

Gross Debt to EBITDA (Leverage), as calculated in accordance with the definition in the Credit Agreement, was 2.6x at June 30, 2023.

At December 31, 2023, Griffon and its subsidiaries were in compliance with the terms and covenants of its credit and loan agreements.

Gross Debt to EBITDA (Leverage), as calculated in accordance with the definition in the Credit Agreement, was 2.5x at December 31, 2023.

Capital Resource Requirements

3 unchanged sentences

For additional information, see CPP reportable segments discussion.

Griffon's debt requirements include principal on our outstanding debt, most notably our Senior Notes totaling $974,775 payable in 2028 and related annual interest payments of approximately $57,246, a Term Loan B facility maturing in 2029 with an outstanding balance of $490,000 on June 30, 2023 and Revolver maturing in 2025 with an outstanding balance of $86,705.

The Term Loan B accrues interest at the Term SOFR rate plus a credit adjustment spread with a floor of 0.50%, and a current spread of 2.25% (7.64% as of June 30, 2023).

Griffon's debt requirements include principal on our outstanding debt, most notably our Senior Notes totaling $974,775 payable in 2028 and related annual interest payments of approximately $56,050, a Term Loan B facility maturing in 2029 with an outstanding balance of $461,000 on December 31, 2023 and Revolver maturing in 2025 with an outstanding balance of $21,500.

The Term Loan B accrues interest at the Term SOFR rate plus a credit adjustment spread with a floor of 0.50%, and a current spread of 2.25% (7.75% as of December 31, 2023).

Additionally, the Term Loan B facility requires quarterly payments of $2,000 and a balloon payment due at maturity.

For the Revolver, interest is payable on borrowings at either a SOFR, SONIA or base rate benchmark rate, plus an applicable margin, which adjusts based on financial performance.

Griffon's SOFR loans accrue interest at Term SOFR plus a credit adjustment spread and a margin of 2.00% (7.46% at December 31, 2023);

SONIA loans accrue interest at SONIA Base Rate plus a credit adjustment spread and a margin of 2.00% (7.22% at December 31, 2023);

and base rate loans accrue interest at prime rate plus a margin of 1.00% (9.50% at December 31, 2023).

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 nine months ended June 30, 2023, our largest customer, The Home Depot, represented 12% of Griffon’s consolidated revenue, 16% of CPP's revenue and 9% of HBP’s revenue.

For the quarter ended December 31, 2023, our largest customer, The Home Depot, represented 11% of Griffon’s consolidated revenue, 16% of CPP's revenue and 8% of HBP’s revenue.

No other customer exceeded 10% of consolidated revenue.

4 unchanged sentences

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, 2023 and September 30, 2022 and for the nine months ended June 30, 2023 and for the year ended September 30, 2022.

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 December 31, 2023 and September 30, 2023 and for the three months ended December 31, 2023 and for the year ended September 30, 2023.

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

1 unchanged sentence

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

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

The financial information may not necessarily be indicative of the results of operations or financial position of

the guarantor companies or non-guarantor companies had they operated as independent entities.

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

6 unchanged sentences

Summarized Statements of Operations and Comprehensive Income (Loss)

For the Nine Months Ended For the Year Ended

June 30, 2023 September 30, 2022

For the Three Months Ended For the Year Ended

December 31, 2023 September 30, 2023

Parent Company Guarantor Companies Parent Company Guarantor Companies

5 unchanged sentences

Summarized Balance Sheet Information

For the Nine Months Ended For the Year Ended

June 30, 2023 September 30, 2022

As of December 31, 2023 As of September 30, 2023

Parent Company Guarantor Companies Parent Company Guarantor Companies

14 unchanged sentences

In the selection of the critical accounting policies, the objective is to properly reflect the financial position and results of operations for each reporting period in a consistent manner that can be understood by the reader of the financial statements.

Griffon considers an estimate to be critical if it is subjective and if changes in the estimate using different assumptions would result in a material impact on the financial position or results of operations of Griffon.

Griffon considers an estimate to be critical if it is subjective

and if changes in the estimate using different assumptions would result in a material impact on the financial position or results of operations of Griffon.

RECENT ACCOUNTING PRONOUNCEMENTS

3 unchanged sentences

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, 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.

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,” "achieves", “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.

Such forward-looking statements are subject to inherent risks and uncertainties that could cause actual results to differ materially from those expressed in any forward-looking statements.

1 unchanged sentence

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

Griffon’s ability to achieve expected savings and improved operational results from cost control, restructuring, integration and disposal initiatives (including, in particular, the expanded CPP outsourcing strategy announced in May 2023;

the ability to identify and successfully consummate, and integrate, value-adding acquisition opportunities;

1 unchanged sentence

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;

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;

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

changes in customer demand or loss of a material customer at one of Griffon’s operating companies;

the potential impact of seasonal variations and uncertain weather patterns on certain of Griffon’s businesses;

political events that could impact the worldwide economy;

political events or military conflicts that could impact the worldwide economy;

a downgrade in Griffon’s credit ratings;

14 unchanged sentences

Risk Factors” and “Special Notes Regarding Forward-Looking Statements” in Griffon’s Annual Report on Form 10-K for the year ended September 30, 2023.

Such statements reflect the views of the Company with respect to future events and are subject to these and other risks, as previously disclosed in the Company's Securities and Exchange Commission filings.

Readers are cautioned not to place undue reliance on these forward-looking statements.

1 unchanged sentence

Griffon undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

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