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 leading provider of residential and commercial building products. The Company is the largest manufacturer and marketer of garage doors and rolling steel doors in North America. Sectional garage doors for residential and commercial applications are sold 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. The Company is also a leading provider of residential, industrial, and commercial ceiling fans sold under the Hunter, Casablanca, and Jan Fan brands. The Company was founded in 1959, is organized as 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 strive to provide highly sought-after and differentiated products under well-regarded brands which clearly separate us from our competitors and strengthen our relationships with our customers and those who ultimately use our products. We have developed a diverse portfolio of product offerings and brands, sold through multiple sales and distribution channels, serving both residential and commercial end customers. This diversity provides stability to our operations and reduces the effects of external factors such as economic and construction cycles. In 2026, Griffon announced a series of strategic actions that, when completed, will transition the Company from a diversified industrial conglomerate into a pure-play provider of residential and commercial building 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 the end of June 2026, Griffon’s interest in the joint venture will be accounted for as an equity method investment. As of March 31, 2026, the Company recorded a loss of $22,648 on assets held for sale because the carrying value of the United States ("U.S.") and Canada businesses of the AMES Companies is greater than its estimated fair value less its cost to sell. Griffon also announced on February 5, 2026 the initiation of a comprehensive review of strategic alternatives for its AMES Australia and United Kingdom ("U.K.") operations. The strategic process for AMES Australia is active and ongoing and we expect to complete the process by the end of the calendar year. As of March 31, 2026, the Company ceased its AMES U.K. operations and will liquidate its assets and settle its liabilities. As a result of these actions, AMES’ U.S., Canada, Australia, and U.K. operations have been reported as discontinued operations in the Condensed Consolidated Statements of Operations for all periods presented. Except for certain U.K. assets and liabilities not held for sale, we classified the assets and liabilities associated with the AMES' U.S., Canada, Australia and U.K. discontinued operations as held for sale in the Condensed Consolidated Balance Sheets. The U.K. assets classified as held for sale relate to inventory and property, plant and equipment that will be sold in liquidation. Accordingly, all references made to results and information in this Quarterly Report on Form 10-Q are to Griffon's continuing operations, unless specifically noted otherwise. Refer to Note 15, Discontinued Operations, for further details. 29 Griffon now conducts its operations through one reportable segment, managed on a consolidated basis. All prior period comparative segment information presented has been applied retrospectively to reflect the new segment structure. For further information regarding our segment reporting, see Note 12, Reportable Segment. 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. CONSOLIDATED RESULTS OF OPERATIONS Three and Six Months ended March 31, 2026 and 2025 The following table summarizes our results of continuing operations for the three and six months ended March 31, 2026 and 2025: Three Months Ended March 31, For the Six Months Ended March 31, 2026 2025 2026 2025 Revenue: Residential $ 251,234 $ 258,297 $ 527,714 $ 530,994 Commercial 170,626 168,387 348,406 339,143 Total Revenue $ 421,860 $ 426,684 $ 876,120 $ 870,137 Gross Profit $ 191,989 45.5 % $ 198,347 46.5 % $ 400,722 45.7 % $ 409,734 47.1 % Selling, general and administrative expenses $ 104,643 $ 107,461 $ 213,963 $ 214,507 Depreciation and amortization $ 10,063 $ 9,593 $ 19,581 $ 19,091 Interest expense, net $ 21,133 $ 23,616 $ 42,889 $ 48,356 Other income (expense), net $ (1,238) $ 317 $ (2,616) $ 586 Provision for income taxes from continuing operations $ 18,038 $ 17,782 $ 38,189 $ 38,516 Income from continuing operations $ 46,937 $ 49,805 $ 102,509 $ 108,941 Adjusted EBITDA, continuing operations $ 97,780 23.2 % $ 101,685 23.8 % $ 206,942 23.6 % $ 216,682 24.9 % Revenue Revenue for the quarter ended March 31, 2026 totaled $421,860, a 1% decrease compared to $426,684 in the prior year quarter, due to decreased volume of 6% primarily driven by residential, partially offset by favorable price and mix of 5% driven by both residential and commercial. Revenue for the six months ended March 31, 2026 totaled $876,120, a 1% increase compared to $870,137 in the prior year, due to favorable price and mix of 6% driven by both residential and commercial, partially offset by decreased volume of 5% primarily driven by residential. 30 Gross Profit and Margin Gross profit for the quarter ended March 31, 2026 was $191,989 compared to $198,347 in the prior year quarter, a decrease of $6,358 or 3%. Gross profit as a percent of sales ("gross margin") for the quarters ended March 31, 2026 and 2025 was 45.5% and 46.5%, respectively. Gross profit for the six months ended March 31, 2026 was $400,722 compared to $409,734 in the prior year period, a decrease of $9,012 or 2%. Gross margin for the six months ended March 31, 2026 and 2025 was 45.7% and 47.1%, respectively. The unfavorable gross profit and margin in both the quarter and six month period was primarily due to the impact of the decreased volume on overhead absorption, and increased material costs. Selling, general and administrative Selling, general and administrative (“SG&A”) expenses for the quarter ended March 31, 2026 of $104,643, or 24.8% of revenue, decreased 3% from $107,461, or 25.2% of revenue, in the prior year quarter. In the quarter ended March 31, 2025, SG&A expenses included strategic review (retention and other) expenses of $889. Excluding this item in the prior year, SG&A expenses in the quarter ended March 31, 2026 of $104,643, or 24.8% of revenue, decreased $1,929 or 2% compared to $106,572, or 25.0% of revenue, in the prior year quarter. The decrease was primarily due to decreases in distribution and administrative costs, partially offset by increased stock compensation expenses. Selling, general and administrative expenses for the six months ended March 31, 2026 of $213,963, or 24.4% of revenue compared with the prior year of $214,507, or 24.7% of revenue. In the six months ended March 31, 2025, SG&A expenses included strategic review (retention and other) expenses of $1,778. Excluding this item in the prior year, SG&A expenses in the six months ended March 31, 2026 of $213,963, or 24.4% of revenue, increased $1,234 or 1%, compared to $212,729, or 24.4% of revenue, in the prior year period. The increase was primarily due to stock compensation expense, partially offset by decreases in distribution and administrative costs. For the quarters ended March 31, 2026 and 2025, SG&A expenses included stock based compensation expense related to restricted stock and restricted stock unit awards totaling $7,688 and $6,182, respectively. For the six months ended March 31, 2026 and 2025, stock based compensation expense related to restricted stock and restricted stock unit awards totaled $13,758 and $11,262, respectively. Depreciation and Amortization For the quarter ended March 31, 2026, depreciation and amortization of $10,063 increased $470 compared to $9,593 in the prior year quarter, and for the six months ended March 31, 2026, depreciation and amortization of $19,581 increased $490 compared to $19,091 in the prior year period. The increase in both the three and six months ended March 31, 2026, is primarily due to depreciation for new assets placed in service. Interest Expense, net For the quarter ended March 31, 2026, interest expense, net of $21,133 decreased $2,483 or 11% compared to $23,616 in the prior year quarter, and for the six months ended March 31, 2026, interest expense, net of $42,889 decreased $5,467 or 11% compared to $48,356 in the prior year quarter, primarily as a result of decreased outstanding borrowings and decreased variable interest rates on our Term Loan B and Revolver. 31 Other Income (Expense), net For the quarters ended March 31, 2026 and 2025, Other income (expense) of $(1,238) and $317, respectively, includes $134 and ($6), 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 $(1,908) and $(40), respectively, net gains (losses) on investments of $122 and $(16), respectively, and royalty income of $445 and $556, respectively. Net periodic benefit plan expense includes a charge of $1,609 recorded in the three months ended March 31, 2026 associated with the establishment of a new retiree medical plan. Refer to Note 13 - Employee Benefit Plans for additional details. For the six months ended March 31, 2026 and 2025, Other income (expense) of $(2,616) and $586, respectively, includes $283 and $(276), 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 $(3,815) and $(81), respectively, net gains (losses) on investments of $(7) and $54, respectively, and royalty income of $964 and $1,146, respectively. Net periodic benefit plan expense includes a charge of $3,218 recorded in the six months ended March 31, 2026 associated with the establishment of a new retiree medical plan. Refer to Note 13 - Employee Benefit Plans for additional details. Provision for income taxes from continuing operations During the quarter ended March 31, 2026, the Company recognized a tax provision of $18,038 on income before taxes from continuing operations of $64,975, compared to a tax provision of $17,782 on income before taxes from continuing operations of $67,587 in the prior year quarter. The current year quarter results included the impact of retirement plan events of $1,609 ($1,225, net of tax); and discrete and certain other tax benefits, net, that affect comparability of $14. The prior year quarter results included strategic review costs - retention and other of $889 ($670, net of tax); and discrete and certain other tax benefits, net, that affect comparability of $1,006. Excluding these items, the effective tax rates for the quarters ended March 31, 2026 and 2025 were 27.7% and 27.8%, respectively. During the six months ended March 31, 2026, the Company recognized a tax provision of $38,189 on income before taxes from continuing operations of $140,698, compared to a tax provision of $38,516 on income before taxes from continuing operations of $147,457 in the comparable prior year period. The six month period ended March 31, 2026 included the impact of retirement plan events of $3,218 ($2,451, net of tax); loss from debt extinguishment of $556, ($423, net of tax); and discrete and other tax provisions, net, that affect comparability of $215. The six month period ended March 31, 2025 included strategic review costs - retention and other of $1,778 ($1,339, net of tax); and discrete and other tax benefits, net, that affect comparability of $1,134. Excluding these items, the effective tax rate for both the six months ended March 31, 2026 and 2025 was 26.9%. Income from continuing operations Three Months ended March 31, 2026 and 2025 Income from continuing operations was $46,937 or $1.03 per share, compared to $49,805, or $1.06 per share, in the prior year quarter. The current year quarter results from continuing operations included the following: – Impact of retirement plan events of $1,609 ($1,225, net of tax, or $0.03 per share); and – Discrete and certain other tax benefits, net, of $14 or $0.00 per share. The prior year quarter results from continuing operations included the following: – Strategic review - retention and other of $889 ($670, net of tax, or $0.01 per share); and – Discrete and certain other tax benefits, net, of $1,006 or $0.02 per share. Excluding these items from the respective quarterly results, income from continuing operations would have been $48,148, or $1.05 per share in the quarter ended March 31, 2026 compared to $49,469, or $1.05 per share, in the prior year quarter. 32 Six Months ended March 31, 2026 and 2025 Income from continuing operations was $102,509 or $2.24 per share, compared to $108,941, or $2.31 per share, in the prior year. The current year-to-date results from continuing operations included the following: – Impact of retirement plan events of $3,218 ($2,451, net of tax, or $0.05 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 $215 or $0.00 per share. The prior year-to-date results from continuing operations included the following: – Strategic review - retention and other of $1,778 ($1,339, net of tax, or $0.03 per share); and – Discrete and certain other tax benefits, net, of $1,134 or $0.02 per share. Excluding these items from the respective periods, income from continuing operations would have been $105,598, or $2.31 per share in the six months ended March 31, 2026 compared to $109,146, or $2.31 per share, in the prior year period. Adjusted income from continuing operations and the related adjusted earnings per share from operations, which are non-GAAP measures, are key metrics used by Griffon in evaluating performance. For a reconciliation of income from continuing operations to adjusted income from continuing operations and earnings per share from continuing operations to adjusted earnings per share from continuing operations, refer to the Non-GAAP Financial Measures section below. Adjusted EBITDA For the quarter ended March 31, 2026, adjusted EBITDA of $97,780 decreased $3,905 or 4% compared to $101,685 in the prior year quarter; and for the six months ended March 31, 2026, adjusted EBITDA of $206,942 decreased $9,740 or 4%, compared to $216,682 in the prior year period. The decline in both the quarter and six month period was due to the decreased revenue noted above, the unfavorable impact of decreased volume on overhead absorption, and increased material costs. For a definition of adjusted EBITDA and a reconciliation of net income to adjusted EBITDA (a non-GAAP measure), refer to Non-GAAP Financial Measures section below. Comprehensive income (loss) For the quarter ended March 31, 2026, total other comprehensive income, net of taxes, of $ 2,174 included a gain of $ 1,020 from foreign currency translation adjustments primarily due to the strengthening of the Australian Dollar, partially offset by the weakening of the Euro, British Pound and Canadian Dollar, all in comparison to the U.S. Dollar; and a $ 1,927 benefit from pension amortization, partially offset by a $ 773 loss on cash flow hedges. For the quarter ended March 31, 2025, total other comprehensive income, net of taxes, of $ 2,417 included a gain of $ 2,970 from foreign currency translation adjustments primarily due to the strengthening of the Euro and British Pound, all in comparison to the U.S. Dollar; and a $ 541 benefit from pension amortization, partially offset by a $ 1,094 loss on cash flow hedges. For the six months ended March 31, 2026, total other comprehensive income, net of taxes, of $ 6,726 included a gain of $ 4,621 from foreign currency translation adjustments primarily due to the strengthening of the Australian and Canadian Dollar, partially offset by the weakening of the Euro and the British Pound, all in comparison to the U.S. Dollar; and a $ 3,855 benefit from pension amortization, partially offset by a $ 1,750 loss on cash flow hedges. For the six months ended March 31, 2025, total other comprehensive loss, net of taxes, of $15,282 included a loss of $17,048 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, partially offset by a $596 benefit from pension amortization and a $1,170 gain on cash flow hedges. 33 DISCONTINUED OPERATIONS As a result of the strategic actions announced on February 5, 2026, AMES’ U.S., Canada, Australia, and U.K. operations have been reported as discontinued operations in the Condensed Consolidated Statements of Operations for all periods presented. Except for certain U.K. assets and liabilities not held for sale, we classified the assets and liabilities associated with the AMES' U.S., Canada, Australia, and U.K. discontinued operations as held for sale in the Condensed Consolidated Balance Sheets. The U.K. assets classified as held for sale relate to inventory and property, plant and equipment that will be sold in liquidation. Accordingly, all references made to results and information in this Quarterly Report on Form 10-Q are to Griffon's continuing operations, unless specifically noted otherwise. At March 31, 2026 and September 30, 2025, Griffon’s assets held for sale totaled $695,755 and $735,816, respectively, and Griffon's liabilities held for sale totaled $226,923 and $250,390, respectively. Refer to Note 15 - Discontinued Operations for additional details. 34 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 March 31, 2026, the amount of cash, cash equivalents and marketable securities held by foreign subsidiaries was $51,500. Our intent is to permanently reinvest the funds of continuing operations 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 classified as discontinued operations. The Company has accrued a deferred tax liability for federal, state, and withholding taxes on previously taxed earnings and profit (PTEP) which are not considered permanently reinvested. Griffon's primary sources of liquidity are cash flows generated from operations, cash on hand and our secured $500,000 revolving credit facility ("Revolver"), which matures in August 2028. During the six months ended March 31, 2026, the Company generated $118,314 of net cash from operating activities and, as of March 31, 2026, the Company had $436,848 available, subject to certain loan covenants, for borrowing under the Revolver. The Company had cash and equivalents of $109,672 at March 31, 2026. The following table is derived from the Condensed Consolidated Statements of Cash Flows: Cash Flows from continuing operations For the Six Months Ended March 31, 2026 2025 Net Cash Flows Provided by (Used In): Operating activities $ 118,314 $ 139,697 Investing activities (17,652) (25,801) Financing activities (97,758) (133,932) Cash flows provided by operating activities from continuing operations for the six months ended March 31, 2026 was $118,314, compared to $139,697 in the prior year period. In both the six months ended March 31, 2026 and 2025, cash provided by operating activities benefited from increased cash generated from operations and a net increase in net working capital. The net increase in working capital for the six months ended March 31, 2026 was primarily driven by increased inventory and a decrease in accounts payable and accrued liabilities. The net increase in working capital for the six months ended March 31, 2025 was primarily driven by increased inventory and accounts receivable, partially offset by increases in accounts payable and accrued liabilities and a decrease in prepaid and other assets. During the six months ended March 31, 2026, cash flows used in investing activities from continuing operations were comprised of capital expenditures and totaled $17,652, compared to $25,801 in the prior year period. During the six months ended March 31, 2026, cash used in financing activities from continuing operations totaled $97,758 compared to $133,932 used in the prior year period. Cash flows used in financing activities from continuing operations 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 $64,459, the payment of dividends of $21,218, proceeds related to the Revolver of $50,000, and payments of long-term debt of $62,013 primarily related to the Term Loan B. Cash flows used in financing activities from continuing operations in the prior year period consisted primarily of net proceeds from long-term debt of $10,989, 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 $121,453, and the payment of dividends of $23,441. During the six months ended March 31, 2026, 166,160 shares, with a market value of $12,505, or an average of $75.26 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 $173. 35 During the six months ended March 31, 2026, the Board of Directors approved and paid two quarterly cash dividends of $0.22 per share each. 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 May 6, 2026, the Board of Directors declared a quarterly cash dividend of $0.22 per share, payable on June 17, 2026 to shareholders of record as of the close of business on May 29, 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 six months ended March 31, 2026 totaled 668,888 shares of common stock, for a total of $51,003, or an average of $76.25 per share, excluding excise taxes of $510. As of March 31, 2026, $247,010 remained under the Board authorized repurchase program. During the six months ended March 31, 2026 and 2025, cash provided by discontinued operations from operating activities was $10,913 and $19,437, respectively, related to the AMES’ U.S., Canada, Australia, and U.K. operations. During the six months ended March 31, 2026 and 2025, cash provided by (used in) discontinued operations from investing activities of $(2,148) and $12,341 relates to capital expenditures and proceeds from the sale of real estate. During the six months ended March 31, 2026 and 2025, cash used in discontinued operations from financing activities relates to financing lease payments of $60 and $68, respectively. Cash and Equivalents and Debt March 31, September 30, 2026 2025 Cash and equivalents $ 109,672 $ 99,045 Notes payable and current portion of long-term debt 8,018 8,033 Long-term debt, net of current maturities 1,394,836 1,404,276 Debt discount/premium and issuance costs 8,939 11,502 Total gross debt - continuing basis 1,411,793 1,423,811 Debt, net of cash and equivalents $ 1,302,121 $ 1,324,766 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 March 31, 2026, 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 $966,246 on March 31, 2026 based upon quoted market prices (Level 1 inputs). At March 31, 2026, $3,871 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% (5.66% as of March 31, 2026). 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 36 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 $387,484 on March 31, 2026 based upon quoted market prices (Level 1 inputs). During the six months ended March 31, 2026, Griffon prepaid $58,000 of the aggregate principal amount outstanding under the Term Loan B facility, in addition to the required principal payment of $4,000. 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 March 31, 2026, the Term Loan B outstanding balance was $387,000. At March 31, 2026, unamortized costs of $3,084 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% (5.51% at March 31, 2026); SONIA loans accrue interest at SONIA Base Rate plus a credit adjustment spread and a margin of 1.75% (5.51% at March 31, 2026); and base rate loans accrue interest at prime rate plus a margin of 0.75% (7.50% at March 31, 2026). At March 31, 2026, under the Credit Agreement, there was $50,000 in outstanding borrowings on the Revolver; outstanding standby letters of credit were $13,152; and $436,848 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. The balance in other long-term debt consists of finance leases. At March 31, 2026, Griffon and its subsidiaries were in compliance with the terms and covenants of its credit and loan agreements. Net Debt to EBITDA, a non-GAAP measure, was 2.4x at March 31, 2026. For a definition of Net debt to EBITDA, refer to the Non-GAAP financial measures section of the Quarterly Report on 10-Q. 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 $387,000 at March 31, 2026 and Revolver maturing in 2028 which had $50,000 in outstanding borrowings at March 31, 2026. The Term Loan B facility accrues interest at the Term SOFR plus a spread of 2.00% (5.66% as of March 31, 2026). 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% (5.51% at March 31, 2026); SONIA loans accrue interest at SONIA Base Rate plus a credit spread adjustment and a margin of 1.75% (5.51% at March 31, 2026); and base rate loans accrue interest at prime rate plus a margin of 0.75% (7.50% at March 31, 2026). 37 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 six months ended March 31, 2026, no customer exceeded 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. NON-GAAP FINANCIAL MEASURES Adjusted EBITDA Griffon uses adjusted EBITDA as a key metric in evaluating performance. Adjusted EBITDA, a non-GAAP measure, is defined as income before taxes from continuing operations, excluding interest income and expense, depreciation and amortization, strategic review charges, and non-cash impairment charges, as well as other items that may affect comparability, as applicable. Griffon believes this information is useful to investors. We track our non-GAAP financial measures to monitor and manage our underlying financial performance. See reconciliation of adjusted EBITDA to the applicable most comparable GAAP measure, net income, below. Adjusted EBITDA and adjusted EBITDA margin are key metrics used by management and our Board to assess our financial performance. Adjusted EBITDA and adjusted EBITDA margin are also frequently used by analysts, investors, and other interested parties to evaluate companies in our industry, when considered alongside other GAAP measures. We use adjusted EBITDA and adjusted EBITDA margin to supplement GAAP measures of performance to evaluate the effectiveness of our business strategies and to make budgeting decisions, and we use adjusted EBITDA as a significant performance metric in our annual management incentive bonus plan compensation, as well as to compare our performance against other companies using similar measures. We have presented adjusted EBITDA and adjusted EBITDA margin solely as supplemental disclosures because we believe they allow for a more complete analysis of results of operations and assist investors and analysts in comparing our operating performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance, such as depreciation and amortization, interest expense, net, income tax provision (benefit), (gain) loss on sale and disposal of property and equipment, restructuring charges, strategic retention costs, and intangible impairment. Adjusted EBITDA and adjusted EBITDA margin are non-GAAP financial measures and should not be considered as alternatives to net income as a measure of financial performance or any other performance measure derived in accordance with GAAP, and they should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. We encourage evaluation of these adjustments and believe they are appropriate for supplemental analysis. In evaluating adjusted EBITDA and adjusted EBITDA margin, be mindful that in the future we may incur expenses that are the same as or similar to some of the adjustments in this presentation. There can be no assurance that we will not modify the presentation of adjusted EBITDA and adjusted EBITDA margin in the future, and any such modification may be material. Our presentation of adjusted EBITDA and adjusted EBITDA margin should not be construed to imply that our future results will be unaffected by any such adjustments. In addition, other companies, including companies in our industry, may not calculate adjusted EBITDA and adjusted EBITDA margin at all or may calculate Adjusted EBITDA and Adjusted EBITDA margin differently and, accordingly, our calculations of EBITDA and adjusted EBITDA are not necessarily comparable to similar measures of other companies, which could reduce the usefulness of adjusted EBITDA and adjusted EBITDA margin as tools for comparison. The following table provides a reconciliation of net income to adjusted EBITDA for the periods presented and the calculation of adjusted EBITDA margin: Three Months Ended March 31, Six Months Ended March 31, 2026 2025 2026 2025 Net income $ 19,318 $ 56,762 $ 83,705 $ 127,613 Less: Income (loss) from discontinued operations (27,619) 6,957 (18,804) 18,672 Income from continuing operations $ 46,937 $ 49,805 $ 102,509 $ 108,941 Net interest expense 21,133 23,616 42,889 48,356 Depreciation and amortization 10,063 9,593 19,581 19,091 Provision for income taxes 18,038 17,782 38,189 38,516 Impact of retirement plan events 1,609 — 3,218 — Loss from debt extinguishment — — 556 — Strategic review - retention and other — 889 — 1,778 Adjusted EBITDA, continuing operations $ 97,780 $ 101,685 $ 206,942 $ 216,682 38 Adjusted income from continuing operations and adjusted earnings per share from continuing operations Griffon uses adjusted income from continuing operations, and the related adjusted earnings per share from continuing operations as key metrics in evaluating performance. These key metrics 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. The following table provides a reconciliation of net income to income from continuing operations, to adjusted income from continuing operations and earnings per share from continuing operations, to adjusted earnings per share from continuing operations: For the Three Months Ended March 31, For the Six Months Ended March 31, 2026 2025 2026 2025 (Unaudited) Net income $ 19,318 $ 56,762 $ 83,705 $ 127,613 Less: Income (loss) from discontinued operations (27,619) 6,957 (18,804) 18,672 Income from continuing operations $ 46,937 $ 49,805 $ 102,509 $ 108,941 Adjusting items: Impact of retirement plan events (1) 1,609 — 3,218 — Loss from debt extinguishment — — 556 — Strategic review - retention and other — 889 — 1,778 Tax impact of above items (2) (384) (219) (900) (439) Discrete and certain other tax provisions (benefits), net (3) (14) (1,006) 215 (1,134) Adjusted income from continuing operations $ 48,148 $ 49,469 $ 105,598 $ 109,146 Earnings per common share from continuing operations $ 1.03 $ 1.06 $ 2.24 $ 2.31 Adjusting items, net of tax: Impact of retirement plan events (1) 0.03 — 0.05 — Loss from debt extinguishment — — 0.01 — Strategic review - retention and other — 0.01 — 0.03 Discrete and certain other tax provisions (benefits), net (3) — (0.02) — (0.02) Adjusted earnings per common share from continuing operations $ 1.05 $ 1.05 $ 2.31 $ 2.31 Diluted weighted-average shares outstanding 45,690 46,900 45,727 47,226 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 and six months ended March 31, 2026, the impact of retirement plan events relates to non-cash charges of $1,609 and $3,218 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 income from continuing operations, and the related adjusted EPS from continuing operations, 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. 39 N et debt to EBITDA 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 in the below table) and TTM stock-based compensation expense, including discontinued operations. The following table provides a calculation of our net debt to EBITDA leverage ratio as calculated per our credit agreement: March 31, 2026 Cash and equivalents $ 109,672 Notes payable and current portion of long-term debt 8,018 Long-term debt, net of current maturities 1,394,836 Debt discount/premium and issuance costs 8,939 Total gross debt - continuing basis 1,411,793 Discontinued operations 332 Total gross debt including discontinued operations $ 1,412,125 Debt, net of cash and equivalents $ 1,302,453 TTM adjusted EBITDA, including discontinued operations $ 519,677 TTM stock based compensation, including discontinued operations 27,828 TTM EBITDA, per debt compliance (1) $ 547,505 Leverage ratio 2.4x (1) Griffon defines EBITDA per bank compliance as operating results including discontinued operations and excluding interest income and expense, income taxes, depreciation and amortization, restructuring charges, debt extinguishment, net and acquisition related expenses, as well as other items that may affect comparability, as applicable, plus stock based compensation. See following table for calculation of TTM EBITDA, per debt compliance for the six months ended March 31, 2026. The following table provides a reconciliation of adjusted EBITDA, including stock compensation to TTM EBITDA, per debt compliance: Year ended September 30, For the Six Months Ended March 31, TTM March 31, 2025 (1) 2026 (2) 2025 (1) 2026 Adjusted EBITDA 522,293 247,101 249,717 519,677 Add: Stock-based compensation expense 25,483 14,238 11,893 27,828 EBITDA, per debt compliance $ 547,776 $ 261,339 $ 261,610 $ 547,505 _____________________________ (1) As previously reported in the Company's earnings release on Form 8-K furnished to the SEC. (2) The following table provides a reconciliation of adjusted EBITDA from continuing operations, including stock compensation to EBITDA, per debt compliance for the six months ended March 31, 2026: 40 For the Six Months Ended March 31, 2026 Adjusted EBITDA: Continuing operations $ 206,942 Discontinued operations 40,159 Total $ 247,101 Stock Compensation: Continuing operations $ 13,758 Discontinued operations 480 Total $ 14,238 EBITDA, per debt compliance $ 261,339 SUPPLEMENTAL GUARANTOR FINANCIAL INFORMATION Griffon’s Senior Notes are fully and unconditionally guaranteed, jointly and severally by Clopay Corporation, The AMES Companies, LLC, Clopay AMES Holding Corp., ClosetMaid LLC, AMES Hunter Holdings Corporation, Hunter Fan Company, CornellCookson, LLC and Cornell Real Estate Holdings, LLC, all of which are indirectly 100% owned by Griffon. In accordance with Rule 3-10 of Regulation S-X promulgated under the Securities Act, presented below are summarized financial information of the Parent (Griffon) subsidiaries and the Guarantor subsidiaries as of March 31, 2026 and September 30, 2025 and for the six months ended March 31, 2026 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, 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. Upon the closing of the joint venture transaction discussed in Note 15 - Discontinued operations, the existing guarantees related to The Ames Companies, LLC, and ClosetMaid LLC, will be released. 41 Summarized Statements of Operations and Comprehensive Income (Loss) For the Six Months Ended For the Year Ended March 31, 2026 September 30, 2025 Parent Company Guarantor Companies Parent Company Guarantor Companies Net sales $ — $ 1,014,554 $ — $ 2,043,181 Gross profit $ — $ 421,961 $ — $ 897,806 Income (loss) from operations $ (17,283) $ 201,045 $ (27,185) $ 202,408 Equity in earnings of Guarantor subsidiaries $ 132,183 $ — $ 114,214 $ — Net income (loss) $ (39,080) $ 132,183 $ (80,101) $ 114,214 Summarized Balance Sheet Information As of March 31, 2026 As of September 30, 2025 Parent Company Guarantor Companies Parent Company Guarantor Companies Current assets $ 44,270 $ 634,648 $ 52,468 $ 615,705 Non-current assets 12,435 1,054,187 21,153 1,032,532 Total assets $ 56,705 $ 1,688,835 $ 73,621 $ 1,648,237 Current liabilities $ 53,464 $ 206,089 $ 57,620 $ 199,085 Long-term debt 1,394,836 248 1,404,272 149 Other liabilities 16,244 222,099 9,256 224,162 Total liabilities $ 1,464,544 $ 428,436 $ 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. 42 Table of Contents 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. Statements in this Form 10-Q that are not historical are hereby identified as “forward-looking statements” and may be indicated by words or phrases such as “anticipates,” “supports,” “plans,” “projects,” “expects,” “believes,” “achieves,” “should,” “would,” “could,” “hope,” “forecast,” “management is of the opinion,” “may,” “will,” “estimates,” “intends,” “explores,” “opportunities,” the negative of these expressions, use of the future tense and similar words or phrases. Such forward-looking statements are subject to inherent risks and uncertainties that could cause actual results to differ materially from those expressed in any forward-looking statements. 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; the ability of Griffon to expand into new geographic and/or 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; the potential impact of seasonal variations and uncertain weather patterns; political events or military conflicts that could impact the worldwide economy; a downgrade in Griffon’s credit ratings; changes in economic conditions in the United States ("U.S.") or internationally including inflation, interest rate and currency exchange fluctuations; the reliance on particular third party suppliers and manufacturers to meet customer demands; the relative mix of products and services , 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 certain products; 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.