GRIFFON CORP 10-Q

Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations BUSINESS Overview Griffon Corporation (the “Company,” “Griffon,” "we" or "us") is a diversified management and holding company that conducts business through wholly-owned subsidiaries. The Company was founded in 1959, is a Delaware corporation headquartered in New York, N.Y. and is listed on the New York Stock Exchange (NYSE:GFF). Business Strategy 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. Through operating a diverse portfolio of businesses, we expect to reduce variability caused by external factors such as market cyclicality, seasonality, and weather. We achieve diversity by providing various product offerings and brands through multiple sales and distribution channels and conducting business across multiple countries which we consider our home markets. Griffon 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 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 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 ClosetMaid, LLC ("ClosetMaid") in 2018 and Hunter Fan Company ("Hunter") in January 2022; and in 2024 we acquired substantially all the assets of Pope, a leading Australian provider of residential watering products. On February 5, 2026, Griffon announced it entered into a definitive agreement to form a joint venture with ONCAP, the mid-market private equity platform of Onex Corporation (TSX:ONEX), to create a leading global provider of hand tools, home organization solutions, and lawn and garden products for professionals and consumers. The joint venture will combine the United States and Canada businesses of Griffon’s AMES Companies (“AMES”) with the Bellota Tools, Corona, and Burgon & Ball businesses of Venanpri, an ONCAP majority-owned portfolio company. The joint venture will be managed as a subsidiary of Venanpri which, together with other affiliates of ONCAP, will hold a 57% equity interest. Upon closing of the transaction, Griffon will receive consideration of $100,000 in cash, subject to working capital adjustments, will enter into a credit agreement with the joint venture to evidence a $161,100 second-lien loan provided to the joint venture, and will participate in the governance and oversight of the joint venture as a 43% equity holder. Griffon will accrue interest receivable on the second-lien loan through the date of maturity. The joint venture will be financed through committed debt financing, in addition to the second-lien loan provided by Griffon. This transaction is subject to customary closing conditions and, after closing, which is expected to occur by June 2026, Griffon’s interest in the joint venture will be accounted for as an equity method investment. Any gain or loss as the result of this transaction will be determined at closing. Additionally, Griffon announced the initiation of a comprehensive review of strategic alternatives for its AMES Australia operations and AMES United Kingdom operations. As a result of these actions, beginning with Griffon’s second quarter 2026 reporting, AMES’ U.S., Canada, Australia, and U.K. operations, which are currently part of Griffon’s CPP segment, will be reported as discontinued operations. Furthermore, in connection with these actions, we announced that the remaining reporting unit within the CPP segment, the Hunter Fan Company, will be combined with Griffon’s HBP segment. 26 Table of Contents Available Information We are subject to the information and periodic reporting requirements of the Securities Exchange Act of 1934 and, in accordance therewith, file periodic reports, proxy statements, and other information, including our Code of Conduct, with the U.S. Securities and Exchange Commission (the “SEC”). Such periodic reports, proxy statements, and other information are available on the SEC's website at www.sec.gov. Griffon posts and makes available, free of charge through its website at www.griffon.com , its Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) of the Securities Exchange Act of 1934, as well as press releases, as soon as reasonably practicable after such materials are published or filed with or furnished to the SEC. The information found on Griffon's website is not incorporated into 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 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 Corporation ("Clopay"). Founded in 1964, Clopay is the largest manufacturer and marketer of garage doors and rolling steel doors in North America. Residential and commercial sectional garage doors are sold through professional dealers and leading home center retail chains throughout North America under the brands Clopay, Ideal, and Holmes. Rolling steel door and grille products designed for commercial, industrial, institutional, and retail use are sold under the Clopay, Cornell and Cookson brands. • Consumer and Professional Products (“CPP”) is a global provider of branded consumer and professional tools; residential, industrial and commercial fans; home storage and organization products; and products that enhance indoor and outdoor lifestyles. CPP sells products globally through a portfolio of leading brands including AMES, since 1774, Hunter, since 1886, True Temper, and ClosetMaid. 27 Table of Contents OVERVIEW Revenue for the quarter ended December 31, 2025 was $649,088 compared to $632,371 in the prior year quarter, an increase of $16,717, or 3%, primarily due to increased revenue at both HBP and CPP. Net income was $64,387 or $1.41 per share, compared to $70,851, or $1.49 per share, in the prior year quarter. The current year quarter results from operations included the following: – Impact of retirement plan events of $1,609 ($1,224, net of tax, or $0.03 per share); – Loss from debt extinguishment of $556 ($423, net of tax, or $0.01 per share); and – Discrete and certain other tax provisions, net, of $268 or $0.01 per share. The prior year quarter results from operations included the following: – 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); and – Discrete and certain other tax benefits, net, of $250 or $0.01 per share. Excluding these items from the respective quarterly results, net income would have been $66,302, or $1.45 per share in the quarter ended December 31, 2025 compared to $65,873, or $1.39 per share, in the prior year quarter. 28 Table of Contents Griffon evaluates performance based on adjusted net income and the related adjusted earnings per share, which are non-GAAP measures that exclude the impact of retirement plan events, 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 to adjusted net income and earnings per share to adjusted earnings per share: For the Three Months Ended December 31, 2025 2024 (Unaudited) Net income $ 64,387 $ 70,851 Adjusting items: Impact of retirement plan events (1) 1,609 — Loss from debt extinguishment 556 — Gain on sale of real estate — (7,974) Strategic review - retention and other — 1,651 Tax impact of above items (2) (518) 1,595 Discrete and certain other tax provisions (benefits), net (3) 268 (250) Adjusted net income $ 66,302 $ 65,873 Earnings per common share $ 1.41 $ 1.49 Adjusting items, net of tax: Impact of retirement plan events (1) 0.03 — Loss from debt extinguishment 0.01 — Gain on sale of real estate — (0.13) Strategic review - retention and other — 0.03 Discrete and certain other tax provisions (benefits), net (3) 0.01 (0.01) Adjusted earnings per common share $ 1.45 $ 1.39 Diluted weighted-average shares outstanding (in thousands) 45,765 47,541 Note: 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 December 31, 2025, the impact of retirement plan events relates to a non-cash charge of $1,609 included in Other, net associated with the establishment of a retiree medical plan. The Company will recognize a non-cash charge related to such plan of $5,362 ratably over the first 10 months of fiscal 2026. (2) The tax impact for the above reconciling adjustments from GAAP net income to non-GAAP adjusted net income and the related adjusted 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. 29 Table of Contents RESULTS OF OPERATIONS Three Months ended December 31, 2025 and 2024 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, 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 - Reportable Segments for a reconciliation of adjusted EBITDA to income before taxes. Home and Building Products For the Three Months Ended December 31, 2025 2024 Residential $ 234,590 $ 228,534 Commercial 173,414 166,867 Total Revenue $ 408,004 $ 395,401 Adjusted EBITDA $ 122,835 30.1 % $ 127,042 32.1 % Depreciation and amortization $ 4,401 $ 4,275 For the quarter ended December 31, 2025, HBP revenue increased $12,603, or 3%, compared to the prior year quarter primarily due to favorable pricing and mix of 7% for both residential and commercial, partially offset by reduced volume of 4% driven by residential. For the quarter ended December 31, 2025, adjusted EBITDA of $122,835 decreased $4,207 or 3%, compared to $127,042 in the prior year quarter, resulting from increased material costs, labor costs and operating expenses and the impact of reduced volume on absorption, partially offset by increased revenue noted above. For the quarter ended December 31, 2025, segment depreciation and amortization increased $126 compared with the prior year quarter due to new assets placed in service. Consumer and Professional Products For the Three Months Ended December 31, 2025 2024 United States $ 122,525 $ 128,823 Europe 4,161 4,540 Canada 21,330 16,004 Australia 89,826 83,131 All other countries 3,242 4,472 Total Revenue $ 241,084 $ 236,970 Adjusted EBITDA $ 21,730 9.0 % $ 18,192 7.7 % Depreciation and amortization $ 11,129 $ 11,218 For the quarter ended December 31, 2025, revenue increased $4,114, or 2%, compared to the prior year quarter, primarily driven by price and mix with increased volume in Australia and Canada, offset by decreased volume in the United States. For the quarter ended December 31, 2025, adjusted EBITDA of $21,730 increased $3,538 compared to $18,192 in the prior year quarter, primarily due to the net increase in revenue noted above. For the quarter ended December 31, 2025, segment depreciation and amortization remained consistent with the prior year quarter. 30 Table of Contents Unallocated For the quarter ended December 31, 2025, unallocated amounts, excluding depreciation, consisted primarily of corporate overhead costs of $14,984, increasing $942 compared to the prior year quarter of $14,042, due to an increase in equity compensation expense. Segment Depreciation and Amortization For the three months ended December 31, 2025, segment depreciation and amortization of $15,530 remained consistent with the prior year quarter. Other Income (Expense) For the quarters ended December 31, 2025 and 2024, Other income (expense) of $(1,090) and $1,832, respectively, includes $71 and $440, 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 of $137 and $301, respectively, net gains (losses) on investments of $(129) and $70, respectively, and royalty income of $518 and $590, respectively. Additionally, Other income (expense) includes a charge of $1,609 recorded in the three months ended December 31, 2025 associated with the establishment of a new retiree medical plan. Provision for income taxes During the quarter ended December 31, 2025, the Company recognized a tax provision of $25,579 on income before taxes of $89,966, compared to a tax provision of $26,569 on income before taxes of $97,420 in the prior year quarter. The current year quarter results included the impact of retirement plan events of $1,609 ($1,224, net of tax); loss from debt extinguishment of $556 ($423, net of tax); and discrete and certain other tax provisions, net, that affect comparability of $268. The prior year quarter results included a gain on the sale of real estate of $7,974 ($5,943, net of tax); strategic review costs - retention and other of $1,651 ($1,215, net of tax); and discrete and certain other tax benefits, net, that affect comparability of $250. Excluding these items, the effective tax rates for the quarters ended December 31, 2025 and 2024 were 28.0% and 27.7%, respectively. Stock-based compensation For the quarters ended December 31, 2025 and 2024, stock based compensation expense related to restricted stock and restricted stock unit awards totaled $6,427 and $5,378, respectively. Comprehensive income (loss) For the quarter ended December 31, 2025, total other comprehensive income, net of taxes, of $4,552 included a gain of $3,601 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. Dollar; a $977 loss on cash flow hedges; and a $1,928 benefit from pension amortization. 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. Dollar; a $2,264 gain on cash flow hedges; and a $55 benefit from pension amortization. DISCONTINUED OPERATIONS At December 31, 2025 and September 30, 2025, Griffon’s liabilities for discontinued operations primarily relate to insurance claims, income taxes, product liability, warranty and environmental reserves totaling $7,984 and $8,726, respectively. Griffon's assets for discontinued operations primarily relate to insurance claims. There were no reported revenues or costs in the three months ended December 31, 2025 and 2024 for discontinued operations. 31 Table of Contents LIQUIDITY AND CAPITAL RESOURCES Liquidity Management assesses Griffon’s liquidity in terms of its ability to generate cash to fund its operating, investing and financing activities. Significant factors affecting liquidity include cash flows from operating activities, capital expenditures, acquisitions, dispositions, bank lines of credit and the ability to attract long-term capital under satisfactory terms. 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 December 31, 2025, the amount of cash, cash equivalents and marketable securities held by foreign subsidiaries was $41,600. 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 three months ended December 31, 2025, the Company generated $106,992 of net cash from operating activities and, as of December 31, 2025, the Company had $485,672 available, subject to certain loan covenants, for borrowing under the Revolver. The Company had cash and equivalents of $95,280 at December 31, 2025. The following table is derived from the Condensed Consolidated Statements of Cash Flows: Cash Flows For the Three Months Ended December 31, 2025 2024 Net Cash Flows Provided by (Used In): Operating activities $ 106,992 $ 142,922 Investing activities (7,662) (236) Financing activities (101,554) (108,121) Cash flows provided by operating activities for the three months ended December 31, 2025 was $106,992, compared to $142,922 in the prior year period. In both the three months ended December 31, 2025 and 2024, cash provided by operating activities benefited from increased cash generated from operations at HBP and decreases in net working capital. The net working capital decrease for the three months ended December 31, 2025 was primarily driven by a decrease in accounts receivable, while the decrease for the three months ended December 31, 2024 was 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 property, plant and equipment. During the three months ended December 31, 2025, cash flows used in investing activities was $7,662 compared to $236 in the prior year period. Cash flows used in investing activities in the current period consisted of capital expenditures of $7,662. In the prior year period, cash flows used in investing activities consisted primarily of capital expenditures of $17,456, partially offset by proceeds totaling $17,220 from the sale of real estate. During the three months ended December 31, 2025, cash used in financing activities totaled $101,554 compared to $108,121 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, including excise taxes, and from common stock withheld to satisfy tax obligations in connection with the vesting of restricted stock, totaling $30,308, the payment of dividends of $11,196 and payments of long-term debt of $60,000 related to the Term Loan B. Cash flows used in financing activities in the prior year period consisted primarily of repayments of long-term debt of $50,000, primarily related to the Revolver, the purchase of shares of common stock in connection with the Board authorized share repurchase program and from common stock withheld to satisfy tax obligations in connection with the vesting of restricted stock, totaling $49,083, and the payment of dividends of $9,037. 32 Table of Contents During the quarter ended December 31, 2025, 159,856 shares, with a market value of $11,989, or an average of $75.00 per share, were withheld to settle employee taxes due upon the vesting of restricted stock, and were added to treasury stock. This excludes excise tax benefits of $143. During the three months ended December 31, 2025, the Board of Directors approved and paid a quarterly cash dividend of $0.22 per share. During fiscal 2025, the Board of Directors approved four quarterly cash dividends each for $0.18 per share, totaling $0.72 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. On February 4, 2026, the Board of Directors declared a quarterly cash dividend of $0.22 per share, payable on March 18, 2026 to shareholders of record as of the close of business on February 27, 2026. 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, 2025 totaled 246,737 shares of common stock, for a total of $18,063, or an average of $73.21 per share, excluding excise taxes of $181. As of December 31, 2025, $279,950 remained under the Board authorized repurchase program. During the three months ended December 31, 2025 and 2024, cash used in discontinued operations from operating activities was $730 and $180, respectively, primarily related to the settling of certain liabilities and environmental costs. Cash and Equivalents and Debt December 31, September 30, 2025 2025 Cash and equivalents $ 95,280 $ 99,045 Notes payable and current portion of long-term debt 8,119 8,103 Long-term debt, net of current maturities 1,346,110 1,404,387 Debt discount/premium and issuance costs 9,930 11,536 Total gross debt 1,364,159 1,424,026 Debt, net of cash and equivalents $ 1,268,879 $ 1,324,981 During 2020, Griffon issued, at par, $1,000,000 of 5.75% Senior Notes due 2028 (the “Senior Notes”). Proceeds from the 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 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 Senior Notes in the open market at a weighted average discount of 91.82% of par, or $23,161. As of December 31, 2025, outstanding Senior Notes due totaled $974,775; interest is payable semi-annually on March 1 and September 1. The Senior Notes are senior unsecured obligations of Griffon guaranteed by certain domestic subsidiaries, and subject to certain covenants, limitations and restrictions. The Senior Notes were registered under the Securities Act of 1933, as amended (the "Securities Act") via an exchange offer. The fair value of the Senior Notes approximated $972,338 on December 31, 2025 based upon quoted market prices (Level 1 inputs). At December 31, 2025, $4,376 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 revolving credit facility (the "Revolver") provided for under the Credit Agreement. The Term Loan B facility was issued at 99.75% of par value. Additionally, during 2024 Griffon further amended its Credit Agreement to favorably reprice the Term Loan B facility. 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%. The Term Loan B bears interest at the Term SOFR rate plus a spread of 2.00% (5.68% as of December 31, 2025). 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 33 Table of Contents (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 $390,459 on December 31, 2025 based upon quoted market prices (Level 1 inputs). During the quarter ended December 31, 2025, Griffon prepaid $58,000 of the aggregate principal amount outstanding under the Term Loan B facility, in addition to the required principal payment of $2,000. In connection with this prepayment Griffon recognized a $556 loss on debt extinguishment, $500 related to the write-off of underwriting fees and other expenses and $56 of the original issue discount. Since the inception of the loan, Griffon has prepaid $383,000 aggregate principal amount of the Term Loan B, which permanently reduced the outstanding balance. As of December 31, 2025, the Term Loan B outstanding balance was $389,000. At December 31, 2025, unamortized costs of $3,356 related to existing and new Term Loan B facility lenders will continue to be amortized over the term of the loan. 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 Senior Notes are not repaid, refinanced, or replaced prior to December 1, 2027, the Revolver will mature on December 1, 2027. The amendment also modified certain other provisions of the Credit Agreement, including increasing the letter of credit sub-facility under the Revolver from $100,000 to $125,000 and increasing the customary accordion feature from a minimum of $375,000 to a minimum of $500,000. The Revolver also includes a multi-currency sub-facility of $200,000. Borrowings under the Revolver may be repaid and re-borrowed at any time. Interest is payable on borrowings at either a 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 1.75% (5.53% at December 31, 2025); SONIA loans accrue interest at SONIA Base Rate plus a credit adjustment spread and a margin of 1.75% (5.51% at December 31, 2025); and base rate loans accrue interest at prime rate plus a margin of 0.75% (7.50% at December 31, 2025). At December 31, 2025, under the Credit Agreement, there were no outstanding borrowings on the Revolver; outstanding standby letters of credit were $14,328; and $485,672 was available, subject to certain loan covenants, for borrowing at that date. 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. In November 2012, Garant G.P. (“Garant”), a Griffon wholly owned subsidiary, entered into a CAD 15,000 revolving credit facility, which expired in December 2024. In January 2025, Garant entered into a new CAD 20,000 revolving credit facility that was renewed in January 2026 and is renewable annually upon mutual agreement with the lender. The new facility accrues interest at Canadian Overnight Repo Rate Average (“CORRA”) plus a credit adjustment spread and a margin of 1.2% (3.80% as of December 31, 2025). At December 31, 2025, there were no outstanding borrowings under the revolving credit facility with CAD 20,000 ($14,618 as of December 31, 2025) 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 March 2025 and now matures in March 2026, but is renewable annually upon mutual agreement with the lender. The receivable purchase facility accrues interest at Bank Bill Swap Rate plus 1.25% per annum (4.80% at December 31, 2025). At December 31, 2025, there was no balance outstanding under the receivable purchase facility with AUD 30,000 ($20,109 as of December 31, 2025) 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. The balance in other long-term debt consists of finance leases. At December 31, 2025, Griffon and its subsidiaries were in compliance with the terms and covenants of 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 Credit Agreement defines the Company's 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 this definition, was 2.3x at December 31, 2025. 34 Table of Contents Capital Resource Requirements 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 $389,000 at December 31, 2025 and Revolver maturing in 2028 which had no outstanding borrowings at December 31, 2025. The Term Loan B facility accrues interest at the Term SOFR plus a spread of 2.00% (5.68% as of December 31, 2025). 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 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 spread adjustment and a margin of 1.75% (5.53% at December 31, 2025); SONIA loans accrue interest at SONIA Base Rate plus a credit spread adjustment and a margin of 1.75% (5.51% at December 31, 2025); and base rate loans accrue interest at prime rate plus a margin of 0.75% (7.50% at December 31, 2025). Customers 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 three months ended December 31, 2025, our largest customer, The Home Depot, represented 12% of Griffon’s consolidated revenue, 9% of HBP’s revenue and 17% of CPP's revenue. No other customer is 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. Orders from these customers are subject to change and may fluctuate materially. The loss of all or a portion of the volume from any one of these customers could have a material adverse impact on Griffon’s liquidity and results of operations. SUPPLEMENTAL GUARANTOR FINANCIAL INFORMATION 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 December 31, 2025 and September 30, 2025 and for the three months ended December 31, 2025 and for the year ended September 30, 2025. All intercompany balances and transactions between subsidiaries under Parent and subsidiaries under the Guarantor have been eliminated. The information presented below excludes eliminations necessary to arrive at the information on a consolidated basis. The summarized information excludes financial information of the non-Guarantors, including earnings from and investments in these entities. The financial information may not necessarily be indicative of the results of operations or financial position of the guarantor companies or non-guarantor companies had they operated as independent entities. The 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. These circumstances include (i) a sale of at least a majority of the stock, or all or substantially all the assets, of the subsidiary guarantor as permitted by the Indentures; (ii) a public equity offering of a subsidiary guarantor that qualifies as a “Minority Business” as defined in the Indentures (generally, a business the EBITDA of which constitutes less than 50% of the segment adjusted EBITDA of the Company for the most recently ended four fiscal quarters), and that meets certain other specified conditions as set forth in the Indentures; (iii) the designation of a guarantor as an “unrestricted subsidiary” as defined in the Indentures, in compliance with the terms of the Indentures; (iv) Griffon exercising its right to defease the Senior Notes, or to otherwise discharge its obligations under the Indentures, in each case in accordance with the terms of the Indentures; and (v) upon obtaining the requisite consent of the holders of the Senior Notes. 35 Table of Contents Summarized Statements of Operations and Comprehensive Income (Loss) For the Three Months Ended For the Year Ended December 31, 2025 September 30, 2025 Parent Company Guarantor Companies Parent Company Guarantor Companies Net sales $ — $ 515,311 $ — $ 2,043,181 Gross profit $ — $ 216,782 $ — $ 897,806 Income (loss) from operations $ (6,398) $ 103,447 $ (27,185) $ 202,408 Equity in earnings of Guarantor subsidiaries $ 69,813 $ — $ 114,214 $ — Net income (loss) $ (15,321) $ 69,813 $ (80,101) $ 114,214 Summarized Balance Sheet Information As of December 31, 2025 As of September 30, 2025 Parent Company Guarantor Companies Parent Company Guarantor Companies Current assets $ 35,628 $ 614,346 $ 52,468 $ 615,705 Non-current assets 23,380 1,039,849 21,153 1,032,532 Total assets $ 59,008 $ 1,654,195 $ 73,621 $ 1,648,237 Current liabilities $ 80,218 $ 191,693 $ 57,620 $ 199,085 Long-term debt 1,345,854 265 1,404,272 149 Other liabilities 7,118 234,081 9,256 224,162 Total liabilities $ 1,433,190 $ 426,039 $ 1,471,148 $ 423,396 CRITICAL ACCOUNTING POLICIES The preparation of Griffon’s consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires the use of estimates, assumptions, judgments and subjective interpretations of accounting principles that have an impact on assets, liabilities, revenue and expenses. These estimates can also affect supplemental information contained in public disclosures of Griffon, including information regarding contingencies, risk and its financial condition. These estimates, assumptions and judgments are evaluated on an ongoing basis and based on historical experience, current conditions and various other assumptions, and form the basis for estimating the carrying values of assets and liabilities, as well as identifying and assessing the accounting treatment for commitments and contingencies. Actual results may materially differ from these estimates. There have been no changes in Griffon’s critical accounting policies from September 30, 2025. Griffon’s significant accounting policies and procedures are explained in the Management Discussion and Analysis section in the Annual Report on Form 10-K for the year ended September 30, 2025. 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. RECENT ACCOUNTING PRONOUNCEMENTS The FASB issues, from time to time, new financial accounting standards, staff positions and emerging issues task force consensus. See the Notes to Condensed Consolidated Financial Statements for a discussion of these matters. FORWARD-LOOKING STATEMENTS This Quarterly Report on Form 10-Q, especially “Management’s Discussion and Analysis”, contains certain “forward-looking statements” within the meaning of the Securities Act, the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. Such statements relate to, among other things, income (loss), earnings, cash flows, revenue, changes in operations, operating improvements, the 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,” 36 Table of Contents “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. These risks and uncertainties include, among others: 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; the ability to identify and successfully consummate, and integrate, value-adding acquisition opportunities; increasing competition and pricing pressures in the markets served by Griffon’s operating companies; the ability of Griffon’s operating companies to expand into new geographic and product markets, and to anticipate and meet customer demands for new products and product enhancements and innovations; increases in the cost or lack of availability of raw materials such as steel, resin and wood, components or purchased finished goods, including any potential impact on costs or availability resulting from tariffs; changes in customer demand or loss of a material customer at one of Griffon’s operating companies; the potential impact of seasonal variations and uncertain weather patterns on certain of Griffon’s businesses; political events or military conflicts that could impact the worldwide economy; a downgrade in Griffon’s credit ratings; changes in international economic conditions including inflation, interest rate and currency exchange fluctuations; the reliance by certain of Griffon’s businesses on particular third party suppliers and manufacturers to meet customer demands; the relative mix of products and services offered by Griffon’s businesses, which impacts margins and operating efficiencies; short-term capacity constraints or prolonged excess capacity; unforeseen developments in contingencies, such as litigation, regulatory and environmental matters; Griffon’s ability to adequately protect and maintain the validity of patent and other intellectual property rights; the cyclical nature of the businesses of certain of Griffon’s operating companies; possible terrorist threats and actions and their impact on the global economy; effects of possible IT system failures, data breaches or cyber-attacks; the impact of pandemics 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; Griffon’s ability to service and refinance its debt; 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. Risk Factors” and “Special Notes Regarding Forward-Looking Statements” in Griffon’s Annual Report on Form 10-K for the year ended September 30, 2025. Such statements reflect the views of the Company with respect to future events and are subject to these and other risks, as previously disclosed in the Company's Securities and Exchange Commission filings. Readers are cautioned not to place undue reliance on these forward-looking statements. These forward-looking statements speak only as of the date made. Griffon undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.