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Item 2. Management’s Discussion and Analysis

2025-02-05 compared with 2024-08-07 · 142 added, 273 removed, 203 unchanged (67% of the section changed)

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Business Strategy

We own and operate, and seek to acquire, businesses in multiple industries and geographic markets.

Our objective is to maintain leading positions in the markets we serve by providing innovative, branded products with superior quality and industry-leading service.

Our strategic objective is to maintain leading positions in the markets we serve by providing innovative, branded products with superior quality and industry-leading service.

We place emphasis on our iconic and well-respected brands, which helps to differentiate us and our offerings from our competitors and strengthens our relationship with our customers and those who ultimately use our products.

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

Griffon provides direction and assistance to its subsidiaries in connection with acquisition and growth opportunities as well as in connection with divestitures.

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.

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

Griffon provides direction and assistance to its subsidiaries in connection with acquisition and growth opportunities as well as divestitures.

As long-term investors, we intend to continue to grow and strengthen our existing businesses, and to diversify further through investments in our businesses and acquisitions.

Since 2017, we have undertaken a series of transformative transactions to strengthen our core businesses and increase shareholder value.

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.

("CornellCookson") in 2018, which has helped establish us as 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") in January 2022 and ClosetMaid, LLC ("ClosetMaid") in 2018.

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 for the U.S.

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.

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.

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

By that time, 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.

Manufacturing operations have ceased at all affected sites:

Camp Hill and Harrisburg, PA;

Fairfield, IA;

Grantsville, MD and four wood mills.

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.

On July 1, 2024, Griffon announced that its subsidiary, The AMES Companies, Inc., ("AMES") expanded the scope of its Australian operations by acquiring substantially all the assets of Pope, a leading Australian provider of residential watering products, from The Toro Company (NYSE:TTC) for a purchase price of approximately AUD 21,800 (approximately $14,500) in cash.

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 this acquisition.

Further Information

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The information found on Griffon's website is not part of this or any other report it files with or furnishes to the SEC.

For information regarding revenue, profit and total assets of each segment, see the Business Segments footnote in the Notes to Consolidated Financial Statements.

For information regarding revenue, profit and total assets of each segment, see the Reportable Segments footnote in the Notes to Consolidated Financial Statements.

Reportable Segments:

Griffon conducts its operations through two reportable segments:

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

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

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

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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 global provider of branded consumer and professional tools;

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

residential, industrial and commercial fans;

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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 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.

Revenue for the quarter ended December 31, 2024 was $632,371 compared to $643,153 in the prior year quarter, a decrease of $10,782 or 2%.

The decrease was primarily due to a 4 % decline in revenue at CPP, while HBP's revenue remained consistent with the prior year.

Net income was $70,851 or $1.49 per share, compared to $42,177, or $0.82 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);

– 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);

– Gain on sale of real estate of $7,974 ($5,943, net of tax, or $0.13 per share);

– Strategic review - retention and other of $1,651 ($1,215, net of tax, or $0.03 per share);

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

– Discrete and certain other tax benefits, net, of $250 or $0.01 per share.

The prior year quarter results from operations included the following:

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– Strategic review - retention and other of $4,658 ($3,500, net of tax, or $0.07 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 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 real estate of $547 ($406, net of tax, or $0.01 per share);

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

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

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

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

– 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);

– Strategic review - retention and other of $20,234 ($15,258, net of tax, or $0.28 per share);

– 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 $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.

Excluding these items from the respective quarterly results, net income would have been $65,873, or $1.39 per share in the three months ended December 31, 2024 compared to $55,267, or $1.07 per share, in the prior year quarter.

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.

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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

For the Three Months Ended December 31,

Net income $ 70,851 $ 42,177

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Restructuring charges (1)

18,688 3,862 33,489 82,196

Intangible asset impairment — — — 100,000

(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

Gain on sale of real estate (7,974) (547)

Strategic review - retention and other 1,651 4,658

Proxy expenses — 568 — 2,685

Tax impact of above items (2)

1,595 (4,204)

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

2,247 6,519 2,640 (2,537)

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

Adjusted net income $ 65,873 $ 55,267

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Restructuring charges (1)

0.29 0.05 0.50 1.11

Intangible asset impairment — — — 1.35

(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

Gain on sale of real estate (0.13) (0.01)

Strategic review - retention and other 0.03 0.07

Proxy expenses — 0.01 — 0.04

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

0.05 0.12 0.05 (0.05)

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

Adjusted earnings per common share $ 1.39 $ 1.07

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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 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.

(1) For the three months ended December 31, 2023, restructuring charges relate to the CPP global sourcing expansion, of which $11,646, is included in Cost of goods and services and $754 is 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.

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RESULTS OF OPERATIONS

Three and Nine Months ended June 30, 2024 and 2023

Three Months ended December 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 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.

See table provided in Note 13 - Reportable 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,

2024 2023 2024 2023

For the Three Months Ended December 31,

Residential $ 228,534 $ 218,798

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Depreciation and amortization $ 4,275 $ 3,633

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.

For the quarter ended December 31, 2024, HBP revenue remained consistent with the prior year quarter reflecting increased residential volume, offset by reduced commercial volume.

For the quarter ended December 31, 2024, adjusted EBITDA of $127,042 increased $2,323 or 2%, compared to $124,719 in the prior year quarter, resulting from reduced material costs, partially offset by increased labor and distribution costs.

For the quarter ended December 31, 2024, segment depreciation and amortization increased $642 compared with the prior year quarter due to new assets placed in service.

Consumer and Professional Products

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

2024 2023 2024 2023

For the Three Months Ended December 31,

United States $ 128,823 $ 151,172

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Depreciation and amortization $ 11,218 $ 11,057

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).

For the quarter ended December 31, 2024, revenue decreased $10,392, or 4%, compared to the prior year quarter, primarily driven by decreased volume of 8% due to reduced consumer demand in North America and the United Kingdom, partially offset by organic growth in Australia.

The Pope acquisition contributed 4%.

For the quarter ended December 31, 2024, adjusted EBITDA of $18,192 increased $12,653 compared to $5,539 in the prior year quarter, primarily due to the benefits from the global sourcing expansion initiative and increased revenue in Australia as noted above.

For the quarter ended December 31, 2024, segment depreciation and amortization increased $161 compared to the prior year period due to new assets placed in service.

On July 1, 2024 Griffon announced that its subsidiary, AMES expanded the scope of its Australian operations by acquiring substantially all the assets of Pope, a leading Australian provider of residential watering products, from The Toro Company (NYSE:TTC) for a purchase price of approximately AUD 21,800 (approximately $14,500) in cash.

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

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.

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

By that time, CPP expects to have reduced its U.S.

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

Manufacturing operations have ceased at all affected sites:

Camp Hill and Harrisburg, PA;

Fairfield, IA;

Grantsville, MD;

and four wood mills.

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

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.

Since inception, cash charges totaled $44,046 and non-cash, asset-related charges totaled $81,911;

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 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

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

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

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

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

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)

Total cumulative charges (19,810) (24,236) (81,911) (125,957) (2,400)

Estimate to Complete $ 190 $ 1,764 $ 2,089 $ 4,043 $ 2,600

Facility and equipment sales to date (gain / cash proceeds)

$ — $ — $ 1,805 $ 1,805 $ 13,002

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.

For the quarter ended December 31, 2024, unallocated amounts, excluding depreciation, consisted primarily of corporate overhead costs totaling $14,042, remained consistent with the prior year quarter of $13,907.

Strategic review

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 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.

During the three months ended December 31, 2024 and 2023, we incurred strategic review expenses of $1,651 ($1,215, net of tax) and $4,658 ($3,500, net of tax), respectively, primarily for retention payments and other costs related to the strategic review process that concluded in April 2023.

Segment Depreciation and Amortization

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.

For the three months ended December 31, 2024, segment depreciation and amortization of $15,493 increased $803 compared to $14,690 in the prior year quarter;

the increase primarily relates to new assets placed in service.

Other Income (Expense)

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.

For the quarters ended December 31, 2024 and 2023, Other income (expense) of $1,832 and $632, respectively, includes $440 and $13, 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 $301 and $(34), respectively, and net investment income of $70 and $56, respectively.

Other income (expense) also includes royalty income of $590 and $592 for the three months ended December 31, 2024 and 2023, respectively.

Provision for income taxes

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);

During the quarter ended December 31, 2024, the Company recognized a tax provision of $26,569 on income before taxes of $97,420, compared to a tax provision of $17,965 on income before taxes of $60,142 in the prior year quarter.

The current year quarter results included strategic review costs - retention and other of $1,651 ($1,215, net of tax);

gain on sale of real estate of $7,974 ($5,943, net of tax);

and discrete and certain other tax benefits, net, that affect comparability of $250.

The prior 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);

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 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);

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

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

gain on sale of real estate of $547 ($406 net of tax);

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

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 a building of $10,852 ($8,323, 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 tax and certain other tax benefits, net, that affect comparability of $2,537.

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

Excluding these items, the effective tax rates for the quarters ended December 31, 2024 and 2023 were 27.7% and 27.9%, respectively.

Stock-based compensation

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.

For the quarters ended December 31, 2024 and 2023, stock based compensation expense, which includes expense for both restricted stock grants and the ESOP, totaled $5,378 and $6,417, respectively.

The decrease in stock compensation expense is primarily due to the ESOP being frozen as of September 30, 2024 (meaning that, for plan years after this date, no additional employees will become participants under the ESOP and no new voluntary contributions will be made to the ESOP).

Additionally, during the three months ended December 31, 2024 the final loan payment was made by the ESOP to the Company and compensation expense for the period was fully offset by dividends paid.

As of December 31, 2024 there were 4,166,038 shares of common stock in the ESOP, all of which were allocated to participant accounts.

Comprehensive income (loss)

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 $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 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 $1,788 loss on cash flow hedges.

For the quarter ended December 31, 2024, total other comprehensive loss, net of taxes, of $17,699 included a loss of $20,018 from foreign currency translation adjustments primarily due to the weakening of the Euro, British Pound and Australian and Canadian Dollar, all in comparison to the U.S.

a $2,264 gain on cash flow hedges;

and a $55 benefit from pension amortization.

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 Dollar, all in comparison to the U.S.

a $295 loss on cash flow hedges;

and a $532 benefit from pension amortization.

DISCONTINUED OPERATIONS

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.

At December 31, 2024 and September 30, 2024, Griffon’s liabilities for discontinued operations primarily relate to insurance claims, income taxes, product liability, warranty and environmental reserves totaling $7,604 and $7,768, respectively.

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

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

There was no reported revenues or costs in the three months ended December 31, 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 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.

may be subject to foreign withholding taxes if repatriated to the U.S.

Funds held outside the U.S.

are typically used for foreign operating needs or reinvested to fund expansion of existing non-U.S.

As of December 31, 2024, the amount of cash, cash equivalents and marketable securities held by foreign subsidiaries was $65,700.

Our intent is to permanently reinvest these funds, except in limited circumstances, 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 for 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 additional funds from non-U.S.

operations are needed to fund operations in the U.S., we will be required to accrue and pay U.S.

taxes to repatriate these additional funds.

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 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.

During the three months ended December 31, 2024, the Company generated $142,922 of net cash from operating activities and, as of December 31, 2024, the Company had $427,510 available, subject to certain loan covenants, for borrowing under the Revolver.

The Company had cash and cash equivalents of $151,952 at December 31, 2024.

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):

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Financing activities (108,121) (123,947)

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 provided by operating activities for the three months ended December 31, 2024 was $142,922, compared to $146,058 in the prior year period.

In both the three months ended December 31, 2024 and 2023, cash provided by operating activities reflected increased cash generated primarily from operations at HBP and a decrease in net working capital, primarily driven by a decrease in 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 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 $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.

During the three months ended December 31, 2024, cash flows used in investing activities was $236 compared to $13,543 in the prior year period.

Cash flows used in investing activities in the current period primarily consisted of capital expenditures of $17,456, partially offset by proceeds totaling $17,220 primarily from the sale of real estate.

In the prior year period, cash flows used in investing activities consisted primarily of capital expenditures of $14,330, partially offset by proceeds totaling $787 from the sale of real estate.

During the three months ended December 31, 2024, cash used in financing activities totaled $108,121 compared to $123,947 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 $49,083, the payment of dividends of $9,037 and payments of long-term debt of $50,000, 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 $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 of $81,449, and the payment of dividends of $9,965.

During the three months ended December 31, 2024, 64,249 shares, with a market value of $5,417, or $84.31 per share, were withheld to settle employee taxes due upon the vesting of restricted stock, and were added to treasury stock.

During the three months ended December 31, 2024, the Board of Directors approved and paid a quarterly cash dividend of $0.18 per share.

During fiscal 2024, the Board of Directors approved four quarterly cash dividends each for $0.15 per share, totaling $0.60 per share for the year.

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.

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 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 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 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,

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 February 4, 2025, the Board of Directors declared a quarterly cash dividend of $0.18 per share, payable on March 18, 2025 to shareholders of record as of the close of business on February 25, 2025.

On November 13, 2024, Griffon announced that the Board of Directors approved an additional increase of $400,000 to its share repurchase authorization.

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.

Share repurchases during the three months ended December 31, 2024 totaled 610,172 shares of common stock, for a total of $42,344, or an average of $69.40 per share.

As of December 31, 2024, $390,348 remained under the Board authorized repurchase program.

During the three months ended and as of December 31, 2024, $413 and $2,220, respectively, were accrued for excise taxes for share repurchases.

During the three months ended December 31, 2024 and 2023, cash used in discontinued operations from operating activities was $180 and $2,926, respectively, primarily related to the settling of certain liabilities and environmental costs.

Cash and Equivalents and Debt December 31, September 30,

Cash and equivalents $ 151,952 $ 114,438

Notes payables and current portion of long-term debt 8,138 9,625

Notes payable and current portion of long-term debt 8,143 8,155

Long-term debt, net of current maturities 1,466,889 1,515,897

Debt discount/premium and issuance costs 14,604 15,633

Total debt 1,524,012 1,489,812

Total gross debt 1,489,636 1,539,685

Debt, net of cash and equivalents $ 1,337,684 $ 1,425,247

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

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

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

In connection with the issuance and exchange of the 2028 Senior Notes, Griffon capitalized $16,448 of underwriting fees and other expenses incurred, which is being amortized over the term of such notes.

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

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

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

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

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

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.

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

The fair value of the 2028 Senior Notes approximated $950,406 on December 31, 2024 based upon quoted market prices (Level 1 inputs).

At December 31, 2024, $6,395 of underwriting fees and other expenses incurred remained to be amortized.

The Term Loan B facility 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.

As of December 31, 2024, the Term Loan B outstanding balance was $455,000.

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 amendment reduced the margin above Secured Overnight Financing Rate ("SOFR") by 0.25%, eliminated the credit spread adjustment and reduced the SOFR floor from 0.50% to 0%.

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

At December 31, 2024, unamortized costs of $5,107 related to existing and new Term Loan B facility lenders will continue to be amortized over the term of the loan.

The Term Loan B bears interest at the Term SOFR rate plus a spread of 2.25% (6.58% as of December 31, 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 and a final balloon payment due at maturity.

Term Loan B borrowings may generally be repaid without penalty.

Once repaid, Term Loan B borrowings may not be reborrowed.

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.

The fair value of the Term Loan B facility approximated $457,275 on December 31, 2024 based upon quoted market prices (Level 1 inputs).

On August 1, 2023, Griffon amended and restated 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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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% (7.44% 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;

Interest is payable on borrowings at either a 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% (6.43% at December 31, 2024);

SONIA loans accrue interest at SONIA Base Rate plus a credit adjustment spread and a margin of 2.00% (6.73% at December 31, 2024);

and base rate loans accrue interest at prime rate plus a margin of 1.00% (8.50% at December 31, 2024).

At December 31, 2024, under the Credit Agreement, there were $59,500 in outstanding borrowings on the Revolver;

outstanding standby letters of credit were $12,990;

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Both the Revolver and Term Loan B borrowings under the Credit Agreement are guaranteed by Griffon’s material domestic subsidiaries and are secured, on a first priority basis, by substantially all domestic assets of the Company and the guarantors.

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 21-Leases for further details.

In November 2012, Garant G.P.

(“Garant”), a Griffon wholly owned subsidiary, entered into a CAD 15,000 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 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.

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

The facility accrues interest at CORRA plus 1.3% per annum (4.60% as of December 31, 2024).

The revolving facility matured in December 2024.

In January 2025, Garant entered into a new CAD 20,000 revolving credit facility.

The facility accrues interest at CORRA plus a credit adjustment spread and margin of 1.2%.

Garant is required to maintain a certain minimum equity.

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 (5.56% 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 accrues interest at Bank Bill Swap Rate plus 1.25% per annum (5.57% at December 31, 2024).

At December 31, 2024, there was no balance outstanding under the receivable purchase facility with AUD 30,000 ($18,645 as of December 31, 2024) 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.

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.

In February 2024, Griffon repaid in full a loan with the Pennsylvania Industrial Development Authority.

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

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

At December 31, 2024, Griffon and its subsidiaries were in compliance with the terms and covenants of all its 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.

Net Debt to EBITDA, as calculated in accordance with the definition in the Credit Agreement, was 2.4x at December 31, 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 for the U.S.

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 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.

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 $455,000 on December 31, 2024 and Revolver maturing in 2028 with an outstanding balance of $59,500.

The Term Loan B accrues interest at the Term SOFR plus a spread of 2.25% (6.58% as of December 31, 2024).

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 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).

Griffon's SOFR loans accrue interest at Term SOFR plus a credit spread adjustment and a margin of 2.00% (6.43% at December 31, 2024);

SONIA loans accrue interest at SONIA Base Rate plus a credit spread adjustment and a margin of 2.00% (6.73% at December 31, 2024);

and base rate loans accrue interest at prime rate plus a margin of 1.00% (8.50% at December 31, 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 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.

For the three months ended December 31, 2024, our largest customer, The Home Depot, represented 10% of Griffon’s consolidated revenue, 9% of HBP’s revenue and 12% of CPP's revenue.

No other customer are expected to exceed 10% of consolidated revenue.

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

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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 June 30, 2024 and September 30, 2023 and for the nine months ended June 30, 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 December 31, 2024 and September 30, 2024 and for the three months ended December 31, 2024 and for the year ended September 30, 2024.

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

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Summarized Statements of Operations and Comprehensive Income (Loss)

For the Nine Months Ended For the Year Ended

June 30, 2024 September 30, 2023

For the Three Months Ended For the Year Ended

December 31, 2024 September 30, 2024

Parent Company Guarantor Companies Parent Company Guarantor Companies

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Summarized Balance Sheet Information

As of June 30, 2024 As of September 30, 2023

As of December 31, 2024 As of September 30, 2024

Parent Company Guarantor Companies Parent Company Guarantor Companies

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

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

“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.

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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 global outsourcing strategy announced in May 2023);

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

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

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effects of possible IT system failures, data breaches or cyber-attacks;

the impact of COVID-19, or some other future pandemic, on the U.S.

the impact of pandemics, such as COVID-19, on the U.S.

and the global economy, including business disruptions, reductions in employment and an increase in business and operating facility failures, specifically among our customers and suppliers;

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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, 2024.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis