What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-08-07 compared with 2024-05-08 · 174 added, 165 removed, 302 unchanged (53% of the section changed)

17 unchanged sentences

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 Global Sourcing Strategy Expansion and Restructuring Charges

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.

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Grantsville, MD and four wood mills.

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.

Implementation of this strategy over the duration of the project will result in charges approximating $130,000, which now includes approximately $46,000 of cash charges for employee retention and severance, operational transition, and facility and lease exit costs, and approximately $84,000 of non-cash charges primarily related to asset write-downs.

Capital investment of approximately $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.

Further Information

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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 March 31, 2024 was $672,880 compared to $710,984 in the prior year quarter, a decrease of 5%, driven by decreased revenue of 1% and 11% at HBP and CPP, respectively.

Net income was $64,143 or $1.28 per share, compared to a net loss of $62,255, or $1.17 per share, in the prior year quarter.

Revenue for the quarter ended June 30, 2024 was $647,814 compared to $683,430 in the prior year quarter, a decrease of $35,616 or 5%, driven by decreased revenue of 2% and 10% at HBP and CPP, respectively.

Net income was $41,086 or $0.84 per share, compared to $49,205, or $0.90 per share, in the prior year quarter.

The current year quarter results from operations included the following:

– Restructuring charges of $18,688 ($13,991, net of tax, or $0.29 per share);

– Gain on sale of building of $11 ($9, net of tax, or $0.00 per share);

– Loss on sale of buildings of $725 ($520, net of tax, or $0.01 per share);

– Loss on debt extinguishment of $1,700 ($1,292, net of tax, or $0.03 per share);

– Strategic review - retention and other of $1,870 ($1,390, net of tax, or $0.03 per share);

– Discrete and certain other tax benefits, net, of $390 or $0.01 per share.

– Discrete and certain other tax provisions, net, of $2,247 or $0.05 per share.

The prior year quarter results from operations included the following:

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

– Intangible asset impairment charges of $100,000 ($74,256, net of tax, or $1.34 per share);

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

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

– Discrete and certain other tax benefits, net, of $8,723 or $0.16 per share.

Excluding these items from the respective quarterly results, net income would have been $67,510, or $1.35 per share in the current year quarter ended March 31, 2024 compared to $66,936, or $1.21 per share, in the prior year quarter.

Revenue for the six months ended March 31, 2024 was $1,316,033 compared to $1,360,368 in the prior year period, a decrease of 3% driven by decreased revenue of 1% and 7% at HBP and CPP, respectively.

Net income was $106,320 or $2.10 per share, compared to a net loss of $13,553, or $0.26 per share, in the prior year period.

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

Excluding these items from the respective quarterly results, net income would have been $60,526, or $1.24 per share in the three months ended June 30, 2024 compared to $70,304, or $1.29 per share, in the prior year quarter.

Revenue for the nine months ended June 30, 2024 was $1,963,847 compared to $2,043,798 in the prior year period, a decrease of $79,951 or 4% driven by decreased revenue of 1% and 8% at HBP and CPP, respectively.

Net income was $147,406 or $2.94 per share, compared to net income of $35,652, or $0.65 per share, in the prior year period.

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

– Restructuring charges of $33,489 ($24,973, net of tax, or $0.50 per share);

– Loss on sale of buildings of $167 ($105, net of tax, or $0.00 per share);

– Loss on debt extinguishment of $1,700 ($1,292, net of tax, or $0.03 per share);

– Strategic review - retention and other of $9,204 ($6,887, net of tax, or $0.14 per share);

– Gain on sale of building of $558 ($415, net of tax, or $0.01 per share);

– Discrete and certain other tax provisions, net, of $2,640 or $0.05 per share.

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

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

– Proxy expenses of $2,685 ($2,059, net of tax, or $0.04 per share);

1 unchanged sentence

– Discrete and certain other tax benefits, net, of $2,537 or $0.05 per share.

Excluding these items from the respective periods, net income would have been $122,777, or $2.42 per share in the current year period ended March 31, 2024 compared to $114,357, or $2.07 per share, in the prior year period.

Griffon evaluates performance based on adjusted net income (loss) and the related adjusted earnings (loss) 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, non-GAAP measures.

Excluding these items from the respective periods, net income would have been $183,303, or $3.66 per share in the nine months ended June 30, 2024 compared to $184,661, or $3.35 per share, in the prior year period.

Griffon evaluates performance based on adjusted net income and the related adjusted earnings per share, which are non-GAAP measures that exclude 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 net income (loss) from operations to adjusted net income and earnings (loss) per share to adjusted earnings per share:

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

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 June 30, For the Nine Months Ended June 30,

2024 2023 2024 2023

Net income (loss) $ 64,143 $ (62,255) $ 106,320 $ (13,553)

Net income $ 41,086 $ 49,205 $ 147,406 $ 35,652

Adjusting items:

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Intangible asset impairment — — — 100,000

Gain on sale of building (11) — (558) (10,852)

(Gain) loss on sale of buildings 725 — 167 (10,852)

Loss from debt extinguishment 1,700 — 1,700 —

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

Strategic review - retention and other 1,870 5,812 9,204 20,234

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Adjusted net income $ 60,526 $ 70,304 $ 183,303 $ 184,661

Earnings (loss) per common share $ 1.28 $ (1.17) $ 2.10 $ (0.26)

Earnings per common share $ 0.84 $ 0.90 $ 2.94 $ 0.65

Adjusting items, net of tax:

Anti-dilutive share impact (4)

— 0.05 — 0.02

Restructuring charges (1)

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Intangible asset impairment — — — 1.35

Gain on sale of building — — (0.01) (0.15)

(Gain) loss on sale of buildings 0.01 — — (0.15)

Loss from debt extinguishment 0.03 — 0.03 —

Special dividend ESOP charges — 0.13 — 0.13

Strategic review - retention and other 0.03 0.08 0.14 0.28

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Adjusted earnings per common share $ 1.24 $ 1.29 $ 3.66 $ 3.35

Weighted-average shares outstanding (in thousands) 47,946 53,038 48,365 52,809

Diluted weighted-average shares outstanding (in thousands) 48,851 54,602 50,085 55,087

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 three months ended March 31, 2024 and 2023, restructuring charges relate to the CPP global sourcing expansion, of which $1,334 and $74,645, respectively, is included in Cost of goods and services and $1,067 and $3,689, respectively, is included in SG&A.

For the six months ended March 31, 2024 and 2023, restructuring charges relate to the CPP global sourcing expansion, of which $12,980 and $74,645, respectively, are included in Cost of goods and services and $1,821 and $3,689, respectively, are included in SG&A.

(1) For the three months ended June 30, 2024 and 2023, restructuring charges relate to the CPP global sourcing expansion, of which $15,744 and $1,777, respectively, is included in Cost of goods and services and $2,944 and $2,085, respectively, is included in SG&A in the Company's Condensed Consolidated Statement of Operations.

For the nine months ended June 30, 2024 and 2023, restructuring charges relate to the CPP global sourcing expansion, of which $28,724 and $76,422, respectively, are included in Cost of goods and services and $4,765 and $5,774, respectively, are included in SG&A in the Company's Condensed Consolidated Statement of Operations.

(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.

(3) Discrete and certain other tax provisions (benefits) primarily relate to the impact of a rate differential between the statutory and annual effective tax rates on items impacting the quarter.

(4) In the three and six months ended March 31, 2023, Earnings (loss) per common share is calculated using basic shares on the face of the income statement.

The anti-dilutive share impact represents the impact of converting from basic shares to diluted shares used in calculating Earnings (loss) per common share.

RESULTS OF OPERATIONS

Three and Six Months ended March 31, 2024 and 2023

Griffon evaluates performance and allocates resources based on each segment adjusted EBITDA, a non-GAAP measure, which is defined as income (loss) 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.

Three and Nine Months ended June 30, 2024 and 2023

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 12 - Business Segments for a reconciliation of adjusted EBITDA to income (loss) before taxes.

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

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,

2024 2023 2024 2023

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Depreciation and amortization $ 3,883 $ 3,868 $ 11,288 $ 11,525

For the quarter ended March 31, 2024, HBP revenue decreased $4,597 or 1% from the prior year quarter due to unfavorable product mix of 2%, partially offset by a 1% increase in volume.

Increased residential volume in the quarter was partially offset by decreased commercial volume.

For the quarter ended March 31, 2024, adjusted EBITDA of $128,924 decreased $2,947 or 2%, compared to $131,871 in the prior year quarter.

The unfavorable variance to the prior year resulted from the decreased revenue noted above, and increased labor and distribution costs, partially offset by reduced material costs.

For the six months ended March 31, 2024, revenue decreased $5,379 or 1%, compared to the prior year period, driven by decreased volume of 3% reflecting decreased commercial volume, partially offset by increased residential volume and favorable product mix of 2%.

For the six months ended March 31, 2024, adjusted EBITDA of $253,643 decreased $2,373, or 1%, compared to $256,016 in the prior year period.

The unfavorable variance resulted from the decreased revenue noted above, and increased labor and distribution costs, partially offset by reduced material costs.

For the quarter ended March 31, 2024, segment depreciation and amortization remained consistent with the prior year quarter.

For the six months ended March 31, 2024, segment depreciation and amortization decreased $252 compared to the prior year period due to fully depreciated assets.

For the quarter ended June 30, 2024, HBP revenue decreased $6,928 or 2% from the prior year quarter due to unfavorable product mix with increased residential volume being offset by decreased commercial volume.

For the quarter ended June 30, 2024, adjusted EBITDA of $118,516 decreased $15,814 or 12%, compared to $134,330 in the prior year quarter resulting from the decreased revenue noted above and increased material, labor and distribution costs.

For the nine months ended June 30, 2024, revenue decreased $12,307 or 1%, compared to the prior year period, driven by decreased volume of 1% reflecting decreased commercial volume, partially offset by increased residential volume.

For the nine months ended June 30, 2024, adjusted EBITDA of $372,159 decreased $18,187, or 5%, compared to $390,346 in the prior year period resulted from the decreased revenue noted above, as well as increased labor and distribution costs.

For the quarter ended June 30, 2024, segment depreciation and amortization remained consistent with the prior year quarter.

For the nine months ended June 30, 2024, segment depreciation and amortization decreased $237 compared to the prior year period due to fully depreciated assets.

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,

2024 2023 2024 2023

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Depreciation and amortization $ 11,225 $ 11,661 $ 33,453 $ 38,091

For the quarter ended March 31, 2024, revenue decreased $33,507, or 11%, compared to the prior year quarter primarily due to decreased volume driven by reduced consumer demand in North America and the U.K., partially offset by increased volume in Australia.

For the quarter ended March 31, 2024, adjusted EBITDA of $20,121 increased $486 or 2% compared to $19,635 in the prior year quarter.

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

For the six months ended March 31, 2024, revenue decreased $38,956, or 7%, compared to the prior year period primarily due to decreased volume driven by reduced consumer demand in North America and the U.K., partially offset by increased volume in Australia and elevated customer inventory levels.

For the six months ended March 31, 2024, adjusted EBITDA of $25,660 increased $7,834 or 44% compared to $17,826 in the prior year period.

The variance to the prior year was primarily due to improved margins in Australia and reduced North American production costs, as well as decreased discretionary spending, partially offset by the unfavorable impact of the reduced volume noted above.

For the quarter and six months ended March 31, 2024, segment depreciation and amortization decreased $2,132 and $4,202, respectively, 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 quarter ended June 30, 2024, revenue decreased $28,688, or 10%, compared to the prior year quarter primarily due to decreased volume driven by reduced consumer demand in North America, partially offset by increased volume in Australia.

For the quarter ended June 30, 2024, adjusted EBITDA of $22,263 increased $3,998 or 22% compared to $18,265 in the prior year quarter.

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

For the nine months ended June 30, 2024, revenue decreased $67,644, or 8%, compared to the prior year period primarily due to decreased volume driven by reduced consumer demand in North America and the U.K., partially offset by increased volume in Australia.

For the nine months ended June 30, 2024, adjusted EBITDA of $47,923 increased $11,832 or 33% compared to $36,091 in the prior year period primarily due to improved margins in Australia and reduced U.S.

production costs, as well as decreased discretionary spending, partially offset by the unfavorable impact of the reduced volume noted above.

For the quarter and nine months ended June 30, 2024, segment depreciation and amortization decreased $436 and $4,638, respectively, 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.

On July 1, 2024 Griffon announced that its subsidiary, The AMES Companies, Inc., ("AMES") expanded the scope of its brand by substantially acquiring all the assets of Pope, a leading Australian provider of residential watering products, from The Toro Company (NYSE:TTC) for approximately AUD 22,000 (approximately $14,600).

This is CPP's seventh acquisition in Australia since 2013, and further expands AMES’s product portfolio in the Australian market.

Pope is expected to contribute approximately $25,000 in revenue in the first twelve months after the acquisition.

CPP Global Sourcing Strategy Expansion and Restructuring Charges

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and four wood mills.

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

Capital investment of approximately $5,000 will also be required.

In the six months ended March 31, 2024, CPP incurred pre-tax restructuring charges of $14,801 consisting of cash charges of $6,319 and non-cash, asset related charges of $8,482 to adjust inventory to net realizable value.

In the nine months ended June 30, 2024, CPP incurred pre-tax restructuring charges of $33,489 consisting of cash charges of $10,510 and non-cash, asset related charges of $22,979 to adjust inventory to net realizable value.

The cash charges included $3,038 for one-time termination benefits and other personnel-related costs and $7,472 for facility exit and other related costs.

1 unchanged sentence

the cash charges included $19,810 for one-time termination benefits and other personnel-related costs and $24,236 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.

Non-cash charges of $81,911 included $22,018 of impairment charges related to certain fixed assets at several manufacturing locations and $59,893 to adjust inventory to net realizable value.

Capital investments of $2,400 mainly consists of expansion of the manufacturing capacity in Ocala, Florida and tooling and molds at offshore vendors required to support the global sourcing strategy.

Cash Charges Non-Cash Charges

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Anticipated Charges $ 20,000 $ 26,000 $ 84,000 $ 130,000 $ 5,000

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

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

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Q2 FY2024 Activity (482) (1,919) — (2,401) $ —

Q3 FY2024 Activity $ (709) $ (3,482) (14,497) (18,688) (2,400)

Total 2024 restructuring charges (3,038) (7,472) (22,979) (33,489) (2,400)

3 unchanged sentences

$ — $ — $ 1,805 $ 1,805 $ 13,002

________________________

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

For the quarter ended March 31, 2024, unallocated amounts, excluding depreciation, consisted primarily of corporate overhead costs totaling $14,814 compared to $14,630 in the prior year quarter;

for the six months ended March 31, 2024, unallocated amounts totaled $28,721 compared to $28,406 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 increases in Employee Stock Ownership Plan (ESOP) expenses driven by the increase in Griffon's share price, partially offset by a decrease in other compensation related expenses.

For the quarter ended June 30, 2024, unallocated amounts, excluding depreciation, consisted primarily of corporate overhead costs totaling $15,285 compared to $13,982 in the prior year quarter;

for the nine months ended June 30, 2024, unallocated amounts totaled $44,006 compared to $42,388 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 increases in Employee Stock Ownership Plan (ESOP) expenses driven by the increase in Griffon's share price, partially offset by a decrease in other compensation related expenses.

Strategic review

During the three months ended March 31, 2024 and 2023, we incurred strategic review expenses of $2,676 ($1,997, net of tax) and $6,190 ($4,658, net of tax), respectively, and during the six months ended March 31, 2024 and 2023, we incurred strategic review expenses of $7,334 ($5,497, net of tax) and $14,422 ($10,880, net of tax), respectively, primarily for retention payments and other associated costs related to the strategic review process that concluded in April 2023.

During the three months ended June 30, 2024 and 2023, we incurred strategic review expenses of $1,870 ($1,390, net of tax) and $5,812 ($4,378, net of tax), respectively, and during the nine months ended June 30, 2024 and 2023, we incurred strategic review expenses of $9,204 ($6,887, net of tax) and $20,234 ($15,258, 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 six months ended March 31, 2024, we did not incur any non-recurring proxy expenses.

During the three and six months ended March 31, 2023, non-recurring proxy expenses of $614 ($471, net of tax) and $2,117 ($1,624, net of tax), respectively, were recorded in SG&A, and related to a settlement entered into with a shareholder that had submitted a slate of director nominees.

During the three and nine months ended June 30, 2024, we did not incur any non-recurring proxy expenses.

During the three and nine months ended June 30, 2023, non-recurring proxy expenses of $568 ($435, net of tax) and $2,685 ($2,059, net of tax), respectively, were recorded in SG&A in our Condensed Consolidated Statements of Operations, and related to a settlement entered into with a shareholder that had submitted a slate of director nominees.

Segment Depreciation and Amortization

For the three months ended March 31, 2024, segment depreciation and amortization of $14,943 decreased $2,171 compared to $17,114 in the prior year quarter, and for the six months ended March 31, 2024, segment depreciation and amortization of $29,633 decreased $4,454 compared to $34,087 in the prior year period.

The decrease in both the three and six months ended March 31, 2024, 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.

For the three months ended June 30, 2024, segment depreciation and amortization of $15,108 decreased $421 compared to $15,529 in the prior year quarter, and for the nine months ended June 30, 2024, segment depreciation and amortization of $44,741 decreased $4,875 compared to $49,616 in the prior year period.

The decrease in both the three and nine months ended June 30, 2024 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 March 31, 2024 and 2023, Other income (expense) of $626 and $293, respectively, includes $179 and ($164), 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 expense of $35 and $217, respectively, and net investment income of $29 and $74, respectively.

Other income (expense) also includes royalty income of $509 and $476 for the three months ended March 31, 2024 and 2023, respectively.

For the six months ended March 31, 2024 and 2023, Other income (expense) of $1,258 and $900, respectively, includes $191 and $(98), 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 expense of $69 and $433, respectively, as well as $85 and $107, respectively, of net investment income (loss).

Other income (expense) also includes rental income of $0 and $212 in the six months ended March 31, 2024 and 2023, as well as royalty income of $1,100 and $1,025 for the six months ended March 31, 2024 and 2023, respectively.

For the quarters ended June 30, 2024 and 2023, Other income (expense) of $350 and $1,475, respectively, includes $(120) and $590, 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 expense of $34 and $217, respectively, and net investment income of $10 and $336, respectively.

Other income (expense) also includes royalty income of $549 and $438 for the three months ended June 30, 2024 and 2023, respectively.

For the nine months ended June 30, 2024 and 2023, Other income (expense) of $1,608 and $2,375, respectively, includes $72 and $492, 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 $103 and $650, respectively, as well as $95 and $444, respectively, of net investment income.

Other income (expense) also includes royalty income of $1,649 and $1,463 for the nine months ended June 30, 2024 and 2023, respectively.

Provision for income taxes

During the quarter ended March 31, 2024, the Company recognized a tax provision of $24,430 on income before taxes of $88,573, compared to a tax benefit of $27,904 on a loss before taxes of $90,159 in the prior year quarter.

The current year quarter results included strategic review costs - retention and other of $2,676 ($1,997, net of tax), restructuring charges of $2,401 ($1,769, net of tax), gain on sale of building of $11 ($9, net of tax);

and discrete and certain other tax benefits, net, that affect comparability of $390.

During the quarter ended June 30, 2024, the Company recognized a tax provision of $19,923 on income before taxes of $61,009, compared to a tax provision of $29,248 on income before taxes of $78,453 in the prior year quarter.

The current year quarter results included restructuring charges of $18,688 ($13,991, net of tax);

strategic review costs - retention and other of $1,870 ($1,390, net of tax);

loss on debt extinguishment of $1,700 ($1,292, net of tax);

loss on sale of buildings of $725 ($520, net of tax);

and discrete and certain other tax provisions, net, that affect comparability of $2,247.

The prior year quarter results included strategic review - retention and other of $5,812 ($4,378, net of tax);

restructuring charges of $3,862 ($2,831, net of tax);

intangible asset impairment charges of $100,000 ($74,256, net of tax);

special dividend ESOP charges of $9,042 ($6,936, net of tax);

proxy expenses of $568 ($435, net of tax);

and discrete and certain other tax benefits, net, that affect comparability of $8,723.

Excluding these items, the effective tax rates for the quarters ended March 31, 2024 and 2023 were 27.9% and 29.5%, respectively.

During the six months ended March 31, 2024, the Company recognized a tax provision of $42,395 on income before taxes of $148,715, compared to a tax benefit of $8,586 on a loss before taxes of $22,139 in the comparable prior year period.

The six month period ended March 31, 2024 included restructuring charges of $14,801 ($10,982, net of tax);

and discrete and certain other tax provisions, net, that affect comparability of $6,519.

Excluding these items, the effective tax rates for the quarters ended June 30, 2024 and 2023 were 27.9% and 28.1%, respectively.

During the nine months ended June 30, 2024, the Company recognized a tax provision of $62,318 on income before taxes of $209,724, compared to a tax provision of $20,662 on income before taxes of $56,314 in the comparable prior year period.

The nine month period ended June 30, 2024 included restructuring charges of $33,489 ($24,973, net of tax);

strategic review - retention and other of $9,204 ($6,887, net of tax);

gain on sale of building of $558 ($415, net of tax);

loss on debt extinguishment of $1,700 ($1,292, net of tax);

loss on sale of buildings of $167 ($105, net of tax);

and discrete and certain other tax provisions, net, that affect comparability of $2,640.

The six month period ended March 31, 2023 included restructuring charges of $78,334 ($58,529, net of tax);

The nine month period ended June 30, 2023 included restructuring charges of $82,196 ($61,360, net of tax);

special dividend ESOP charges of $9,042 ($6,936, net of tax);

strategic review - retention and other of $20,234 ($15,258, net of tax);

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

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

intangible asset impairment charges of $100,000 ($74,256, net of tax);

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and discrete tax and certain other tax benefits, net, that affect comparability of $2,537.

Excluding these items, the effective tax rates for the six months ended March 31, 2024 and 2023 were 27.9% and 29.4%, respectively.

Excluding these items, the effective tax rates for the nine months ended June 30, 2024 and 2023 were 27.9% and 28.9%, respectively.

Stock-based compensation

For the quarters ended March 31, 2024 and 2023, stock based compensation expense, which includes expense for both restricted stock grants and the ESOP, totaled $6,257 and $6,593, respectively.

For the six months ended March 31, 2024 and 2023, stock based compensation expense totaled $12,674 and $13,335, respectively.

For the quarters ended June 30, 2024 and 2023, stock based compensation expense, which includes expense for both restricted stock grants and the ESOP, totaled $7,052 and $15,252, respectively.

For the nine months ended June 30, 2024 and 2023, stock based compensation expense totaled $19,726 and $28,587, respectively.

The prior year three and nine months included incremental ESOP expense due to the effects of a special dividend of $9,042.

Excluding the impact of the prior year special dividend, the increase in stock compensation expense is primarily due to the increase in Griffon's share price and the related impact on ESOP expense.

Comprehensive income (loss)

For the quarter ended March 31, 2024, total other comprehensive loss, net of taxes, of $4,896 included a loss of $7,199 from foreign currency translation adjustments primarily due to the weakening of the Euro, British Pound and Australian and Canadian Dollars, all in comparison to the U.S.

partially offset by a $531 benefit from pension amortization and a $1,772 gain on cash flow hedges.

For the quarter ended March 31, 2023, total other comprehensive income, net of taxes, of $2,613 included a gain of $334 from foreign currency translation adjustments primarily due to the strengthening of the Euro and British Pound, partially offset by the weakening of Australian Dollars, all in comparison to the U.S.

For the quarter ended June 30, 2024, total other comprehensive loss, net of taxes, of $1,222 included a $927 loss on cash flow hedges and a loss of $827 from foreign currency translation adjustments primarily due to the weakening of the Euro and Canadian Dollar, all in comparison to the U.S.

partially offset by a $532 benefit from pension amortization.

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.

a $747 benefit from pension amortization;

and a $1,533 gain on cash flow hedges.

For the six months ended March 31, 2024, total other comprehensive income, net of taxes, of $5,579 included a gain of $3,039 from foreign currency translation adjustments primarily due to the strengthening of the Euro, British Pound and Australian Dollars partially offset by the weakening of Canadian Dollars, all in comparison to the US Dollar;

and a $2,741 loss on cash flow hedges.

For the nine months ended June 30, 2024, total other comprehensive income, net of taxes, of $4,357 included a gain of $2,212 from foreign currency translation adjustments primarily due to the strengthening of the Euro, British Pound and Australian Dollar partially offset by the weakening of the Canadian Dollar, all in comparison to the US Dollar;

a $1,595 benefit from pension amortization;

and a $550 gain on cash flow hedges.

For the six months ended March 31, 2023, total other comprehensive income, net of taxes, of $14,832 included a gain of $12,271 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;

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 $953 gain on cash flow hedges.

and a $1,788 loss on cash flow hedges.

DISCONTINUED OPERATIONS

At March 31, 2024 and September 30, 2023, Griffon’s liabilities for discontinued operations primarily relate to insurance claims, income taxes, product liability, warranty and environmental reserves totaling $7,994 and $11,798, respectively.

At June 30, 2024 and September 30, 2023, Griffon’s liabilities for discontinued operations primarily relate to insurance claims, income taxes, product liability, warranty and environmental reserves totaling $10,017 and $11,798, respectively.

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

There was no reported revenues or costs in the three and six months ended March 31, 2024 and 2023 for discontinued operations.

There was no reported revenues or costs in the three and nine months ended June 30, 2024 and 2023 for discontinued operations.

LIQUIDITY AND CAPITAL RESOURCES

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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, 2024, the amount of cash, cash equivalents and marketable securities held by foreign subsidiaries was $69,900.

As of June 30, 2024, the amount of cash, cash equivalents and marketable securities held by foreign subsidiaries was $84,900.

Funds held outside the U.S.

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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 six months ended March 31, 2024, the Company generated $185,860 of net cash from operating activities and, as of March 31, 2024, the Company had $317,538 available, subject to certain loan covenants, for borrowing under the Revolver.

The Company had cash and cash equivalents of $123,030 at March 31, 2024.

During the nine months ended June 30, 2024, the Company generated $307,938 of net cash from operating activities and, as of June 30, 2024, the Company had $397,065 available, subject to certain loan covenants, for borrowing under the Revolver.

The Company had cash and cash equivalents of $133,452 at June 30, 2024.

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 (238,712) (262,560)

Cash flows provided by operating activities for the six months ended March 31, 2024 was $185,860 compared to $161,636 in the prior year period.

The variance was due to increased cash generated from operations and a decrease in net working capital across all businesses, primarily inventory, partially offset by an increase in accounts receivable.

Cash flows provided by operating activities for the nine months ended June 30, 2024 was $307,938 compared to $309,003 in the prior year period, due to increased cash generated from operations, primarily at HBP, and a net decrease in net working capital, primarily driven by decreases in inventory and increases 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 six months ended March 31, 2024, cash flows used in investing activities was $32,017 compared to $2,571 in the prior year period.

Cash flows used in investing activities in the current period primarily consisted of capital expenditures of $33,289, partially offset by proceeds totaling $1,272 primarily from the sale of a building.

In the prior year period, cash flows used in investing activities consisted of capital expenditures of $11,837 and a working capital adjustment payment of $2,568 related to the sale of Telephonics, partially offset by proceeds totaling $11,834, primarily from the sale of a building.

During the six months ended March 31, 2024, cash used in financing activities totaled $132,043 compared to $99,631 in the prior year period.

During the nine months ended June 30, 2024, cash flows used in investing activities was $34,277 compared to $10,911 in the prior year period.

Cash flows used in investing activities in the current period primarily consisted of capital expenditures of $47,849, partially offset by proceeds totaling $13,572 primarily from the sale of buildings and equipment mainly associated with CPP's restructuring activities.

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

During the nine months ended June 30, 2024, cash used in financing activities totaled $238,712 compared to $262,560 in the prior year period.

Cash flows used in financing activities in the current period consisted of 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 $241,501 and the payment of dividends of $28,770, partially offset by net proceeds of long-term debt of $32,773, primarily related to the Revolver.

Cash flows used in financing activities in the prior year period consisted primarily of net repayments of long-term debt of $73,691, purchases of common stock withheld to satisfy tax obligations in connection with the vesting of restricted stock of $12,989 and the payment of dividends of $12,824.

During the six months ended March 31, 2024, 595,929 shares, with a market value of $34,326, or $57.60 per share, were withheld to settle employee taxes due upon the vesting of restricted stock, and were added to treasury stock.

During the six months ended March 31, 2024, the Board of Directors approved and paid two quarterly cash dividends of $0.15 per share.

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

During the nine months ended June 30, 2024, 595,929 shares, with a market value of $34,326, or $57.60 per share, were withheld to settle employee taxes due upon the vesting of restricted stock, and were added to treasury stock.

During the nine months ended June 30, 2024, the Board of Directors approved and paid three quarterly cash dividends 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.

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.

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.

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.

On May 7, 2024, the Board of Directors declared a quarterly cash dividend of $0.15 per share, payable on June 20, 2024 to shareholders of record as of the close of business on May 29, 2024.

On August 6, 2024 the Board of Directors declared a quarterly cash dividend of $0.15 per share, payable on September 19, 2024 to shareholders of record as of the close of business on August 28, 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.

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 six months ended March 31, 2024 totaled 3,437,878 shares of common stock, for a total of $187,024, or an average of $54.40 per share.

Share repurchases during the nine months ended June 30, 2024, totaled 3,721,357 shares of common stock, for a total of $206,104, or an average of $55.38 per share.

This includes the repurchase of 1,500,000 shares repurchased by the Company on February 20, 2024 pursuant to a stock purchase and cooperation agreement executed by the Company and Voss Value Master Fund, L.P., Voss Value-Oriented Special Situations Fund, L.P and four separately managed accounts of which Voss Capital, LLC is the investment manager, in a private transaction.

The purchase price per share was $65.50, for an aggregate purchase price of $98,250.

As of March 31, 2024, $120,158 remained under these Board authorized repurchase programs.

During the six months ended and as of March 31, 2024, $1,411 and $2,712, respectively, were accrued for excise taxes for share repurchases.

During the six months ended March 31, 2024 and 2023, cash used in discontinued operations from operating activities of $3,273 and $2,598, respectively, primarily related to the settling of certain liabilities and environmental costs.

Cash and Equivalents and Debt March 31, September 30,

As of June 30, 2024, $101,078 remained under these Board authorized repurchase programs.

During the nine months ended and as of June 30, 2024, $1,116 and $2,417, respectively, were accrued for excise taxes for share repurchases.

During the nine months ended June 30, 2024 and 2023, cash used in discontinued operations from operating activities was $3,707 and $2,799, respectively, primarily related to the settling of certain liabilities and environmental costs.

Cash and Equivalents and Debt June 30, September 30,

Cash and equivalents $ 133,452 $ 102,889

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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.

As of March 31, 2024, outstanding 2028 Senior Notes due totaled $974,775;

As of June 30, 2024, outstanding 2028 Senior Notes due totaled $974,775;

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

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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 $950,406 on March 31, 2024 based upon quoted market prices (level 1 inputs).

At March 31, 2024, $7,910 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.

The fair value of the 2028 Senior Notes approximated $940,658 on June 30, 2024 based upon quoted market prices (Level 1 inputs).

At June 30, 2024, $7,405 of underwriting fees and other expenses incurred remained to be amortized.

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

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

Since that time, 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 charges 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.

As of June 30, 2024, the Term Loan B outstanding balance was $459,000.

On June 26, 2024, Griffon further amended its Credit Agreement to favorably reprice the Term Loan B facility.

The amendment reduced the margin above SOFR by 0.25%, eliminated the credit spread adjustment and reduced the SOFR floor from 0.50% to

Furthermore, the amendment stipulates that if Griffon prepays all or a portion of the Term Loan B within six months of the amendment date, Griffon will be required to pay a premium equal to 1% of the amount prepaid.

In connection with the amendment Griffon recognized a $1,700 loss on debt extinguishment in the Company's Condensed Consolidated Statements of Operations, primarily consisting of the write-off of unamortized debt issuance costs and original issue discount related to portions of the Term Loan B that were repaid and then reborrowed from new lenders.

At June 30, 2024, unamortized costs of $5,733 related to existing and new Term Loan B facility lenders will continue to be amortized over the term of the loan.

Prior to the amendment, the Term Loan B bore interest at the Term SOFR rate plus a credit spread adjustment with a floor of 0.50% and a spread of 2.50%.

Effective June 26, 2024 the Term Loan B bears interest at the Term SOFR rate plus a spread of 2.25% (7.59% as of June 30, 2024).

The Term Loan B facility continues to require nominal quarterly principal payments of $2,000, potential additional annual principal payments based on a percentage of excess cash flow and certain secured leverage thresholds starting with the fiscal year ended September 30, 2023;

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, subject to a prepayment premium of 1.0% in connection with the above repricing transaction within the six months following the closing date of June 26, 2024.

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 that secures borrowings under the Revolver, on an equal and ratable basis.

The fair value of the Term Loan B facility approximated $459,000 on June 30, 2024 based upon quoted market prices (Level 1 inputs).

On August 1, 2023, Griffon amended and restated its Credit Agreement (the "Credit Agreement") to increase the maximum borrowing availability under the Revolver from $400,000 to $500,000 and extend 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.

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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% (7.43% at March 31, 2024);

SONIA loans accrue interest at SONIA Base Rate

plus a credit adjustment spread and a margin of 2.00% (7.22% at March 31, 2024);

and base rate loans accrue interest at prime rate plus a margin of 1.00% (9.50% at March 31, 2024).

At March 31, 2024, under the Revolver, there were $169,500 in outstanding borrowings;

Griffon's SOFR loans accrue interest at Term SOFR plus a credit adjustment spread and a margin of 2.00% (7.44% at June 30, 2024);

SONIA loans accrue interest at SONIA Base Rate plus a credit adjustment spread and a margin of 2.00% (7.23% at June 30, 2024);

and base rate loans accrue interest at prime rate plus a margin of 1.00% (9.50% at June 30, 2024).

At June 30, 2024, there were $90,000 in outstanding borrowings under the Revolver;

outstanding standby letters of credit were $12,935;

and $397,065 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% (7.70% as of March 31, 2024).

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.

The Term Loan B facility requires nominal quarterly principal payments of $2,000, 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;

and a final balloon payment due at maturity.

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

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 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 $459,574 on March 31, 2024 based upon quoted market prices (level 1 inputs).

At March 31, 2024, $6,378 of underwriting fees and other expenses incurred remained to be amortized.

At March 31, 2024, $459,000 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.

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

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.

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.

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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 Canadian Bankers Acceptance Rate plus 1.3% per annum (6.30% using CORRA and 6.35% using the Canadian Bankers Acceptance Rate as of March 31, 2024).

The facility accrues interest at CORRA or the Canadian Bankers Acceptance Rate plus 1.3% per annum (6.04% using CORRA and 6.02% using the Canadian Bankers Acceptance Rate as of June 30, 2024).

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 March 31, 2024, there were no outstanding borrowings under the revolving credit facility with CAD 15,000 ($11,039 as of March 31, 2024) available.

At June 30, 2024, there were no outstanding borrowings under the revolving credit facility with CAD 15,000 ($10,955 as of June 30, 2024) available.

During 2023, Griffon Australia Holdings Pty Ltd and its Australian subsidiaries (collectively, "Griffon Australia") amended its AUD 15,000 receivable purchase facility to AUD 30,000.

The receivable purchase facility was renewed in 2024 and now matures in March 2025, 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 (5.55% at March 31, 2024).

At March 31, 2024, there was no balance outstanding under the receivable purchase facility with AUD 30,000 ($19,575 as of March 31, 2024) available.

The receivable purchase facility accrues interest at BBSY (Bank Bill Swap Rate) plus 1.25% per annum (5.56% at June 30, 2024).

At June 30, 2024, there was no balance outstanding under the receivable purchase facility with AUD 30,000 ($19,965 as of June 30, 2024) available.

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

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The balance in other long-term debt consists primarily of finance leases.

At March 31, 2024, 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 2.8x at March 31, 2024.

At June 30, 2024, Griffon and its subsidiaries were in compliance with the terms and covenants of all credit and loan agreements.

N et debt to EBITDA (Leverage ratio), a non-GAAP measure, is a key financial measure that is used by management to assess the borrowing capacity of the Company.

The Company has defined its net debt to EBITDA leverage ratio as net debt (total principal debt outstanding net of cash and equivalents) divided by the sum of trailing twelve-month (“TTM”) adjusted EBITDA (as defined above) and TTM stock-based compensation expense.

Net Debt to EBITDA, as calculated in accordance with the definition in the Credit Agreement, was 2.7x at June 30, 2024.

Capital Resource Requirements

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.

These actions will be essential to CPP achieving 15% EBITDA margins, while enhancing free cash flow through improved working capital and significantly lower capital expenditures.

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 $56,050, a Term Loan B facility maturing in 2029 with an outstanding balance of $459,000 on March 31, 2024 and Revolver maturing in 2028 with an outstanding balance of $169,500.

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% (7.70% as of March 31, 2024).

For additional information, see CPP reportable segments disclosure in Note 13 - Business Segments.

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 $459,000 on June 30, 2024 and Revolver maturing in 2028 with an outstanding balance of $90,000.

The Term Loan B accrues interest at the Term SOFR plus a current spread of 2.25% (7.59% as of June 30, 2024).

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% (7.43% at March 31, 2024);

SONIA loans accrue interest at SONIA Base Rate plus a credit adjustment spread and a margin of 2.00% (7.22% at March 31, 2024);

and base rate loans accrue interest at prime rate plus a margin of 1.00% (9.50% at March 31, 2024).

Griffon's SOFR loans accrue interest at Term SOFR plus a credit spread adjustment and a margin of 2.00% (7.44% at June 30, 2024);

SONIA loans accrue interest at SONIA Base Rate plus a credit spread adjustment and a margin of 2.00% (7.23% at June 30, 2024);

and base rate loans accrue interest at prime rate plus a margin of 1.00% (9.50% at June 30, 2024).

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, 2024, our largest customer, The Home Depot, represented 11% of Griffon’s consolidated revenue, 14% of CPP's revenue and 8% of HBP’s revenue.

For the nine months ended June 30, 2024, our largest customer, The Home Depot, represented 11% of Griffon’s consolidated revenue, 15% of CPP's revenue and 8% of HBP’s revenue.

No other customer exceeded 10% of consolidated revenue.

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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 March 31, 2024 and September 30, 2023 and for the three and six months ended March 31, 2024 and for the year ended September 30, 2023.

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, 2024 and September 30, 2023 and for the nine months ended June 30, 2024 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.

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

The guarantor companies and the non-

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

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

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

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Summarized Statements of Operations and Comprehensive Income (Loss)

For the Six Months Ended For the Year Ended

March 31, 2024 September 30, 2023

For the Nine Months Ended For the Year Ended

June 30, 2024 September 30, 2023

Parent Company Guarantor Companies Parent Company Guarantor Companies

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Summarized Balance Sheet Information

As of March 31, 2024 As of September 30, 2023

As of June 30, 2024 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

30 unchanged sentences

and the impact of recent and future legislative and regulatory changes, including, without limitation, changes in tax laws.

Additional important factors that could cause the statements made in this Quarterly Report on Form 10-Q or the actual results of operations or financial condition of Griffon to differ are discussed under the caption “Item 1A.

Additional important factors that could cause the statements made in this Quarterly Report on Form 10-Q or the

actual results of operations or financial condition of Griffon to differ are discussed under the caption “Item 1A.

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.

4 unchanged sentences

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis