GFF Griffon Corporation

Griffon Corporation (“Griffon” or the “Company”) (NYSE:GFF) today reported results for the fiscal 2024 third quarter ended June 30, 2024.

Revenue for the third quarter totaled $647.8 million, a 5% decrease compared to $683.4 million in the prior year quarter.

Net income totaled $41.1 million, or $0.84 per share, compared to $49.2 million, or $0.90 per share, in the prior year quarter. Excluding all items that affect comparability from both periods, adjusted net income was $60.5 million, or $1.24 per share, in the current year quarter compared to $70.3 million, or $1.29 per share, in the prior year quarter. For a reconciliation of net income to adjusted net income, and earnings per share to adjusted earnings per share, see the attached table.

Adjusted EBITDA for the third quarter was $125.5 million, a 9% decrease from the prior year quarter of $138.6 million. Adjusted EBITDA, excluding unallocated amounts (primarily corporate overhead) of $15.3 million in the current quarter and $14.0 million in the prior year quarter, totaled $140.8 million, decreasing 8% from the prior year of $152.6 million. For a reconciliation and definition of adjusted EBITDA, a non-GAAP measure, to income before taxes, see the attached table.

“Griffon's third quarter results were highlighted by solid operating performance from Home and Building Products (“HBP”), improved profitability at Consumer and Professional Products (“CPP”) and strong free cash flow conversion,” said Ronald J. Kramer, Chairman and Chief Executive Officer.

“HBP continues to generate strong EBITDA margin while CPP's profitability is benefiting from its global sourcing expansion strategy. With third quarter financial performance meeting our expectations, we are on track to achieve our previously provided, full-year guidance.”

“During the third quarter, we generated strong free cash flow of $120 million allowing us to reduce debt by $80 million, repurchase $19 million of stock and fund our $7 million regular quarterly dividend. These actions underscore our commitment to a capital allocation strategy that delivers value to our shareholders.”

Segment Operating Results

Home and Building Products ("HBP")

HBP's third quarter revenue of $394.2 million decreased 2% from the prior year quarter due to unfavorable product mix with increased residential volume being offset by decreased commercial volume.

Adjusted EBITDA of $118.5 million decreased 12% from $134.3 million in the prior year quarter resulting from the decreased revenue noted above and increased material, labor and distribution costs.

Consumer and Professional Products ("CPP")

CPP's third quarter revenue of $253.6 million decreased 10% compared to the prior year quarter, primarily due to decreased volume driven by reduced consumer demand in North America, partially offset by increased volume in Australia.

Adjusted EBITDA of $22.3 million increased 22% from $18.3 million in the prior year quarter, primarily due to improved North American production costs and decreased discretionary spending, partially offset by the unfavorable impact of the reduced volume noted above.

CPP Global Sourcing Strategy Expansion

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

By transitioning these product lines to an asset-light structure, CPP’s operations will be better positioned to serve customers with a more flexible and cost-effective sourcing model that leverages supplier relationships around the world. These actions will be essential to CPP achieving 15% EBITDA margins, while enhancing free cash flow through improved working capital and significantly lower capital expenditures.

The global sourcing strategy expansion is expected to be complete by the end of calendar 2024 and remains on budget. Manufacturing operations have ceased at all affected sites.

Taxes

The Company reported pretax income from operations for the quarters ended June 30, 2024 and June 30, 2023, and recognized effective tax rates of 32.7% and 37.3%, respectively. Excluding all items that affect comparability, the effective tax rates for the quarters ended June 30, 2024 and 2023 were 27.9% and 28.1%, respectively.

Balance Sheet and Capital Expenditures

As of June 30, 2024, the Company had cash and equivalents of $133.5 million and total debt outstanding of $1.51 billion, resulting in net debt of $1.37 billion. Leverage, as calculated in accordance with our credit agreement (see the attached table), was 2.7x net debt to EBITDA compared to 2.6x at both June 30, and September 30, 2023. The nine months ended June 30, 2024 free cash flow of $273.7 million reflects the strong operating results through the third quarter of 2024. At June 30, 2024, borrowing availability under the revolving credit facility was $397.1 million subject to certain loan covenants. Capital expenditures, net of asset sales, were $2.3 million for the quarter ended June 30, 2024. For a reconciliation and definition of free cash flow, a non-GAAP measure, to net cash provided by operating activities, see the attached table.

Share Repurchases

Share repurchases during the quarter ended June 30, 2024 totaled 0.3 million shares of common stock, for a total of $19.1 million, or an average of $67.31 per share. Since April 2023 and through June 30, 2024, share repurchases totaled 7.9 million shares of common stock or 13.7% of the outstanding shares, for a total of $356.9 million or an average of $45.38 per share. As of June 30, 2024, $101.1 million remained under the Board authorized share repurchase programs.

2024 Outlook

We continue to expect 2024 revenue of $2.65 billion and Adjusted EBITDA of $555 million, excluding unallocated costs of $59 million and charges related to the former strategic review and AMES’s global sourcing expansion.

Other guidance for 2024 remains unchanged, including amortization of $22 million, depreciation $41 million, interest expense of $103 million, a normalized tax rate of 28% and free cash flow to exceed net income.

Conference Call Information

The Company will hold a conference call today, August 7, 2024, at 8:30 AM ET.

The call can be accessed by dialing 1-877-407-0792 (U.S. participants) or 1-201-689-8263 (International participants). Callers should ask to be connected to the Griffon Corporation teleconference or provide conference ID number 13747578. Participants are encouraged to dial-in at least 10 minutes before the scheduled start time.

A replay of the call will be available starting on Wednesday, August 7, 2024 at 11:30 AM ET by dialing 1-844-512-2921 (U.S.) or 1-412-317-6671 (International), and entering the conference ID number: 13747578. The replay will be available through Wednesday, August 21, 2024 at 11:59 PM ET.

Forward-looking Statements

“Safe Harbor” Statements under the Private Securities Litigation Reform Act of 1995: All statements related 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 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 (including, in particular, the expanded CPP outsourcing strategy announced in May 2023); the ability to identify and successfully consummate, and integrate, value-adding acquisition opportunities; 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 COVID-19, or some other future pandemic, 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. 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.

About Griffon Corporation

Griffon Corporation is a diversified management and holding company that conducts business through wholly-owned subsidiaries. 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. In order to further diversify, Griffon also seeks out, evaluates and, when appropriate, will acquire additional businesses that offer potentially attractive returns on capital.

Griffon conducts its operations through two reportable segments:

• Home and Building Products ("HBP") conducts its operations through 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 Cornell and Cookson brands.
• Consumer and Professional Products (“CPP”) is a leading 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.

For more information on Griffon and its operating subsidiaries, please see the Company’s website at www.griffon.com.

Griffon evaluates performance and allocates resources based on segment adjusted EBITDA and adjusted EBITDA, non-GAAP measures, which are defined as income before taxes from operations, excluding interest income and expense, depreciation and amortization, strategic review charges, non-cash impairment charges, restructuring charges, gain/loss from debt extinguishment and acquisition related expenses, as well as other items that may affect comparability, as applicable. Segment adjusted EBITDA also excludes unallocated amounts, mainly corporate overhead. Griffon believes this information is useful to investors.

The following table provides operating highlights and a reconciliation of segment adjusted EBITDA and adjusted EBITDA to income before taxes:

(in thousands)

For the Three Months Ended June 30,

 

For the Nine Months Ended June 30,

REVENUE

 

2024

 

 

2023

 

 

2024

 

 

2023

 

 

 

 

 

 

 

 

Home and Building Products

$

394,214

 

$

401,142

 

$

1,182,067

 

$

1,194,374

Consumer and Professional Products

 

253,600

 

 

282,288

 

 

781,780

 

 

849,424

Total revenue

$

647,814

 

$

683,430

 

$

1,963,847

 

$

2,043,798

 

For the Three Months Ended June 30,

 

For the Nine Months Ended June 30,

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

ADJUSTED EBITDA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Home and Building Products

$

118,516

 

 

$

134,330

 

 

$

372,159

 

 

$

390,346

 

Consumer and Professional Products

 

22,263

 

 

 

18,265

 

 

 

47,923

 

 

 

36,091

 

Segment adjusted EBITDA

 

140,779

 

 

 

152,595

 

 

 

420,082

 

 

 

426,437

 

Unallocated amounts, excluding depreciation*

 

(15,285

)

 

 

(13,982

)

 

 

(44,006

)

 

 

(42,388

)

Adjusted EBITDA

 

125,494

 

 

 

138,613

 

 

 

376,076

 

 

 

384,049

 

Net interest expense

 

(26,255

)

 

 

(25,207

)

 

 

(76,642

)

 

 

(74,394

)

Depreciation and amortization

 

(15,247

)

 

 

(15,669

)

 

 

(45,150

)

 

 

(50,036

)

Loss from debt extinguishment

 

(1,700

)

 

 

—

 

 

 

(1,700

)

 

 

—

 

Restructuring charges

 

(18,688

)

 

 

(3,862

)

 

 

(33,489

)

 

 

(82,196

)

Gain (loss) on sale of buildings

 

(725

)

 

 

—

 

 

 

(167

)

 

 

10,852

 

Strategic review - retention and other

 

(1,870

)

 

 

(5,812

)

 

 

(9,204

)

 

 

(20,234

)

Proxy expenses

 

—

 

 

 

(568

)

 

 

—

 

 

 

(2,685

)

Intangible asset impairment

 

—

 

 

 

—

 

 

 

—

 

 

 

(100,000

)

Special dividend ESOP charges

 

—

 

 

 

(9,042

)

 

 

—

 

 

 

(9,042

)

Income before taxes

$

61,009

 

 

$

78,453

 

 

$

209,724

 

 

$

56,314

 

* Primarily Corporate Overhead

 

 

 

 

 

 

 

 

For the Three Months Ended June 30,

 

For the Nine Months Ended June 30,

DEPRECIATION and AMORTIZATION

 

2024

 

 

2023

 

 

2024

 

 

2023

Segment:

 

 

 

 

 

 

 

Home and Building Products

$

3,883

 

$

3,868

 

$

11,288

 

$

11,525

Consumer and Professional Products

 

11,225

 

 

11,661

 

 

33,453

 

 

38,091

Total segment depreciation and amortization

 

15,108

 

 

15,529

 

 

44,741

 

 

49,616

Corporate

 

139

 

 

140

 

 

409

 

 

420

Total consolidated depreciation and amortization

$

15,247

 

$

15,669

 

$

45,150

 

$

50,036

Griffon believes free cash flow ("FCF", a non-GAAP measure) is a useful measure for investors because it portrays the Company's ability to generate cash from operations for purposes such as repaying debt, funding acquisitions and paying dividends. FCF is defined as net cash provided by operating activities less capital expenditures, net of proceeds.

The following table provides a reconciliation of net cash provided by (used in) operating activities to FCF:

 

For the Nine Months Ended June 30,

(in thousands)

 

2024

 

 

 

2023

 

Net cash provided by operating activities

$

307,938

 

 

$

309,003

 

Acquisition of property, plant and equipment

 

(47,849

)

 

 

(20,183

)

Proceeds from the sale of property, plant and equipment

 

13,572

 

 

 

11,840

 

FCF

$

273,661

 

 

$

300,660

 

Net debt to EBITDA (Leverage ratio), a non-GAAP measure, is a key financial measure that is used by management to assess the borrowing capacity of the Company. The Company has defined its net debt to EBITDA leverage ratio as net debt (total principal debt outstanding net of cash and equivalents) divided by the sum of trailing twelve-month (“TTM”) adjusted EBITDA (as defined above) and TTM stock-based compensation expense. The following table provides a calculation of our net debt to EBITDA leverage ratio as calculated per our credit agreement:

(in thousands)

 

June 30, 2024

 

September 30, 2023

 

June 30, 2023

Cash and equivalents

 

$

133,452

 

 

$

102,889

 

 

$

151,790

 

Notes payables and current portion of long-term debt

 

 

8,138

 

 

 

9,625

 

 

 

10,043

 

Long-term debt, net of current maturities

 

 

1,499,211

 

 

 

1,459,904

 

 

 

1,536,415

 

Debt discount/premium and issuance costs

 

 

16,663

 

 

 

20,283

 

 

 

18,861

 

Total gross debt

 

 

1,524,012

 

 

 

1,489,812

 

 

 

1,565,319

 

Debt, net of cash and equivalents

 

$

1,390,560

 

 

$

1,386,923

 

 

$

1,413,529

 

 

 

 

 

 

 

 

TTM Adjusted EBITDA (1)

 

$

497,359

 

 

$

505,332

 

 

$

508,882

 

Special dividend ESOP Charges

 

 

(6,452

)

 

 

(15,494

)

 

 

(19,580

)

TTM Stock and ESOP-based compensation

 

 

32,251

 

 

 

41,112

 

 

 

45,744

 

TTM Adjusted EBITDA

 

$

523,158

 

 

$

530,950

 

 

$

535,046

 

 

 

 

 

 

 

 

Leverage ratio

 

2.7x

 

2.6x

 

2.6x

 

 

 

 

 

 

 

1. Griffon defines Adjusted EBITDA as operating results before 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.

The following tables provide a reconciliation of gross profit and selling, general and administrative expenses for items that affect comparability for the three and nine months ended June 30, 2024, and 2023:

(in thousands)

For the Three Months Ended June 30,

 

For the Nine Months Ended June 30,

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Gross profit, as reported

$

249,149

 

 

$

274,624

 

 

$

756,455

 

 

$

702,941

 

% of revenue

 

38.5

%

 

 

40.2

%

 

 

38.5

%

 

 

34.4

%

Adjusting items:

 

 

 

 

 

 

 

Restructuring charges(1)

 

15,744

 

 

 

1,777

 

 

 

28,724

 

 

 

76,422

 

Gross profit, as adjusted

$

264,893

 

 

$

276,401

 

 

$

785,179

 

 

$

779,363

 

% of revenue

 

40.9

%

 

 

40.4

%

 

 

40.0

%

 

 

38.1

%

(1) For the quarter and nine months ended June 30, 2024 and 2023, restructuring charges relate to the CPP global sourcing expansion.

(in thousands)

For the Three Months Ended June 30,

 

For the Nine Months Ended June 30,

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Selling, general and administrative expenses, including intangible asset impairment, as reported

$

159,810

 

 

$

172,439

 

 

$

469,830

 

 

$

585,460

 

% of revenue

 

24.7

%

 

 

25.2

%

 

 

23.9

%

 

 

28.6

%

Adjusting items:

 

 

 

 

 

 

 

Restructuring charges(1)

 

(2,944

)

 

 

(2,085

)

 

 

(4,765

)

 

 

(5,774

)

Intangible asset impairment

 

—

 

 

 

—

 

 

 

—

 

 

 

(100,000

)

Proxy expenses

 

—

 

 

 

(568

)

 

 

—

 

 

 

(2,685

)

Strategic review - retention and other

 

(1,870

)

 

 

(5,812

)

 

 

(9,204

)

 

 

(20,234

)

Special dividend ESOP charges

 

—

 

 

 

(9,042

)

 

 

—

 

 

 

(9,042

)

Selling, general and administrative expenses, as adjusted

$

154,996

 

 

$

154,932

 

 

$

455,861

 

 

$

447,725

 

% of revenue

 

23.9

%

 

 

22.7

%

 

 

23.2

%

 

 

21.9

%

(1) For the quarter and nine months ended June 30, 2024 and 2023, restructuring charges relate to the CPP global sourcing expansion.

GRIFFON CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(in thousands, except per share data)

(Unaudited)

 

 

Three Months Ended June 30,

 

Nine Months Ended June 30,

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Revenue

$

647,814

 

 

$

683,430

 

 

$

1,963,847

 

 

$

2,043,798

 

Cost of goods and services

 

398,665

 

 

 

408,806

 

 

 

1,207,392

 

 

 

1,340,857

 

Gross profit

 

249,149

 

 

 

274,624

 

 

 

756,455

 

 

 

702,941

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

159,810

 

 

 

172,439

 

 

 

469,830

 

 

 

485,460

 

Intangible asset impairment

 

—

 

 

 

—

 

 

 

—

 

 

 

100,000

 

Total operating expenses

 

159,810

 

 

 

172,439

 

 

 

469,830

 

 

 

585,460

 

 

 

 

 

 

 

 

 

Income from operations

 

89,339

 

 

 

102,185

 

 

 

286,625

 

 

 

117,481

 

 

 

 

 

 

 

 

 

Other income (expense)

 

 

 

 

 

 

 

Interest expense

 

(27,024

)

 

 

(25,641

)

 

 

(78,472

)

 

 

(75,168

)

Interest income

 

769

 

 

 

434

 

 

 

1,830

 

 

 

774

 

Gain (loss) on sale of buildings

 

(725

)

 

 

—

 

 

 

(167

)

 

 

10,852

 

Loss from debt extinguishment

 

(1,700

)

 

 

—

 

 

 

(1,700

)

 

 

—

 

Other, net

 

350

 

 

 

1,475

 

 

 

1,608

 

 

 

2,375

 

Total other expense, net

 

(28,330

)

 

 

(23,732

)

 

 

(76,901

)

 

 

(61,167

)

 

 

 

 

 

 

 

 

Income before taxes

 

61,009

 

 

 

78,453

 

 

 

209,724

 

 

 

56,314

 

Provision for income taxes

 

19,923

 

 

 

29,248

 

 

 

62,318

 

 

 

20,662

 

Net income

$

41,086

 

 

$

49,205

 

 

$

147,406

 

 

$

35,652

 

 

 

 

 

 

 

 

 

Basic earnings per common share

$

0.87

 

 

$

0.94

 

 

$

3.08

 

 

$

0.68

 

 

 

 

 

 

 

 

 

Basic weighted-average shares outstanding

 

47,034

 

 

 

52,304

 

 

 

47,921

 

 

 

52,640

 

 

 

 

 

 

 

 

 

Diluted earnings per common share

$

0.84

 

 

$

0.90

 

 

$

2.94

 

 

$

0.65

 

 

 

 

 

 

 

 

 

Diluted weighted-average shares outstanding

 

48,851

 

 

 

54,602

 

 

 

50,085

 

 

 

55,087

 

 

 

 

 

 

 

 

 

Dividends paid per common share

$

0.15

 

 

$

2.125

 

 

$

0.45

 

 

$

2.325

 

 

 

 

 

 

 

 

 

Net income

$

41,086

 

 

$

49,205

 

 

$

147,406

 

 

$

35,652

 

Other comprehensive income (loss), net of taxes:

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

(827

)

 

 

2,309

 

 

 

2,212

 

 

 

14,580

 

Pension and other post retirement plans

 

532

 

 

 

747

 

 

 

1,595

 

 

 

2,355

 

Change in cash flow hedges

 

(927

)

 

 

(2,741

)

 

 

550

 

 

 

(1,788

)

Total other comprehensive income (loss), net of taxes

 

(1,222

)

 

 

315

 

 

 

4,357

 

 

 

15,147

 

Comprehensive income, net

$

39,864

 

 

$

49,520

 

 

$

151,763

 

 

$

50,799

 

GRIFFON CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

 

 

(Unaudited)

 

 

 

June 30, 2024

 

September 30, 2023

CURRENT ASSETS

 

 

 

Cash and equivalents

$

133,452

 

$

102,889

Accounts receivable, net of allowances of $11,009 and $11,264

 

320,385

 

 

312,432

Inventories

 

430,708

 

 

507,130

Prepaid and other current assets

 

65,797

 

 

57,139

Assets held for sale

 

14,747

 

 

—

Assets of discontinued operations

 

1,310

 

 

1,001

Total Current Assets

 

966,399

 

 

980,591

PROPERTY, PLANT AND EQUIPMENT, net

 

274,980

 

 

279,218

OPERATING LEASE RIGHT-OF-USE ASSETS

 

159,865

 

 

169,942

GOODWILL

 

327,864

 

 

327,864

INTANGIBLE ASSETS, net

 

619,867

 

 

635,243

OTHER ASSETS

 

25,115

 

 

21,731

ASSETS OF DISCONTINUED OPERATIONS

 

4,774

 

 

4,290

Total Assets

$

2,378,864

 

$

2,418,879

 

 

 

 

CURRENT LIABILITIES

 

 

 

Notes payable and current portion of long-term debt

$

8,138

 

$

9,625

Accounts payable

 

156,564

 

 

116,646

Accrued liabilities

 

185,218

 

 

193,098

Current portion of operating lease liabilities

 

32,572

 

 

32,632

Liabilities of discontinued operations

 

4,216

 

 

7,148

Total Current Liabilities

 

386,708

 

 

359,149

LONG-TERM DEBT, net

 

1,499,211

 

 

1,459,904

LONG-TERM OPERATING LEASE LIABILITIES

 

138,665

 

 

147,224

OTHER LIABILITIES

 

124,969

 

 

132,708

LIABILITIES OF DISCONTINUED OPERATIONS

 

5,801

 

 

4,650

Total Liabilities

 

2,155,354

 

 

2,103,635

COMMITMENTS AND CONTINGENCIES

 

 

 

SHAREHOLDERS’ EQUITY

 

 

 

Total Shareholders’ Equity

 

223,510

 

 

315,244

Total Liabilities and Shareholders’ Equity

$

2,378,864

 

$

2,418,879

GRIFFON CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)

 

Nine Months Ended June 30,

 

 

2024

 

 

 

2023

 

 

 

 

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

Net income

$

147,406

 

 

$

35,652

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

Depreciation and amortization

 

45,150

 

 

 

50,036

 

Stock-based compensation

 

19,726

 

 

 

28,587

 

Intangible asset impairments

 

—

 

 

 

100,000

 

Asset impairment charges - restructuring

 

22,979

 

 

 

59,118

 

Provision for losses on accounts receivable

 

874

 

 

 

689

 

Amortization of debt discounts and issuance costs

 

3,169

 

 

 

3,068

 

Loss from debt extinguishment

 

1,700

 

 

 

—

 

Deferred income tax benefit

 

—

 

 

 

(25,744

)

Gain on sale of assets and investments

 

(1,448

)

 

 

(10,852

)

Change in assets and liabilities:

 

 

 

(Increase) decrease in accounts receivable

 

(6,051

)

 

 

6,236

 

Decrease in inventories

 

55,939

 

 

 

84,190

 

(Increase) decrease in prepaid and other assets

 

(3,351

)

 

 

1,887

 

Increase (decrease) in accounts payable, accrued liabilities, income taxes payable and operating lease liabilities

 

19,454

 

 

 

(36,945

)

Other changes, net

 

2,391

 

 

 

13,081

 

Net cash provided by operating activities

 

307,938

 

 

 

309,003

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

Acquisition of property, plant and equipment

 

(47,849

)

 

 

(20,183

)

Payments related to sale of business

 

—

 

 

 

(2,568

)

Proceeds from the sale of property, plant and equipment

 

13,572

 

 

 

11,840

 

 

 

 

 

Net cash used in investing activities

 

(34,277

)

 

 

(10,911

)

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

Dividends paid

 

(28,770

)

 

 

(127,372

)

Purchase of shares for treasury

 

(241,501

)

 

 

(98,350

)

Proceeds from long-term debt

 

179,500

 

 

 

102,558

 

Payments of long-term debt

 

(146,727

)

 

 

(139,244

)

Financing costs

 

(907

)

 

 

—

 

Other, net

 

(307

)

 

 

(152

)

Net cash used in financing activities

 

(238,712

)

 

 

(262,560

)

GRIFFON CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - continued

(in thousands)

(Unaudited)

 

 

Nine Months Ended June 30,

 

 

2024

 

 

 

2023

 

CASH FLOWS FROM DISCONTINUED OPERATIONS:

 

 

 

Net cash used in operating activities

 

(3,707

)

 

 

(2,799

)

 

 

 

 

Net cash used in discontinued operations

 

(3,707

)

 

 

(2,799

)

Effect of exchange rate changes on cash and equivalents

 

(679

)

 

 

(1,127

)

NET INCREASE IN CASH AND EQUIVALENTS

 

30,563

 

 

 

31,606

 

CASH AND EQUIVALENTS AT BEGINNING OF PERIOD

 

102,889

 

 

 

120,184

 

CASH AND EQUIVALENTS AT END OF PERIOD

$

133,452

 

 

$

151,790

 

Griffon evaluates performance based on adjusted net income and the related adjusted earnings per share, which excludes restructuring charges, gain/loss from debt extinguishment, acquisition related expenses, discrete and certain other tax items, as well other items that may affect comparability, as applicable, non-GAAP measures. Griffon believes this information is useful to investors. The following tables provides a reconciliation of net income to adjusted net income and earnings per common share to adjusted earnings per common share:

(in thousands, except per share data)

For the Three Months Ended June 30,

 

For the Nine Months Ended June 30,

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Net income

$

41,086

 

 

$

49,205

 

 

$

147,406

 

 

$

35,652

 

 

 

 

 

 

 

 

 

Adjusting items:

 

 

 

 

 

 

 

Restructuring charges(1)

 

18,688

 

 

 

3,862

 

 

 

33,489

 

 

 

82,196

 

Intangible asset impairment

 

—

 

 

 

—

 

 

 

—

 

 

 

100,000

 

Loss from debt extinguishment

 

1,700

 

 

 

—

 

 

 

1,700

 

 

 

—

 

(Gain) loss on sale of buildings

 

725

 

 

 

—

 

 

 

167

 

 

 

(10,852

)

Special dividend ESOP charges

 

—

 

 

 

9,042

 

 

 

—

 

 

 

9,042

 

Strategic review - retention and other

 

1,870

 

 

 

5,812

 

 

 

9,204

 

 

 

20,234

 

Proxy expenses

 

—

 

 

 

568

 

 

 

—

 

 

 

2,685

 

Tax impact of above items(2)

 

(5,790

)

 

 

(4,704

)

 

 

(11,303

)

 

 

(51,759

)

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

 

2,247

 

 

 

6,519

 

 

 

2,640

 

 

 

(2,537

)

 

 

 

 

 

 

 

 

Adjusted net income

$

60,526

 

 

$

70,304

 

 

$

183,303

 

 

$

184,661

 

 

 

 

 

 

 

 

 

Earnings per common share

$

0.84

 

 

$

0.90

 

 

$

2.94

 

 

$

0.65

 

 

 

 

 

 

 

 

 

Adjusting items, net of tax:

 

 

 

 

 

 

 

Restructuring charges(1)

 

0.29

 

 

 

0.05

 

 

 

0.50

 

 

 

1.11

 

Intangible asset impairment

 

—

 

 

 

—

 

 

 

—

 

 

 

1.35

 

Loss from debt extinguishment

 

0.03

 

 

 

—

 

 

 

0.03

 

 

 

—

 

(Gain) loss on sale of buildings

 

0.01

 

 

 

—

 

 

 

—

 

 

 

(0.15

)

Special dividend ESOP charges

 

—

 

 

 

0.13

 

 

 

—

 

 

 

0.13

 

Strategic review - retention and other

 

0.03

 

 

 

0.08

 

 

 

0.14

 

 

 

0.28

 

Proxy expenses

 

—

 

 

 

0.01

 

 

 

—

 

 

 

0.04

 

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

 

0.05

 

 

 

0.12

 

 

 

0.05

 

 

 

(0.05

)

 

 

 

 

 

 

 

 

Adjusted earnings per common share

$

1.24

 

 

$

1.29

 

 

$

3.66

 

 

$

3.35

 

 

 

 

 

 

 

 

 

Diluted weighted-average shares outstanding (in thousands)

 

48,851

 

 

 

54,602

 

 

 

50,085

 

 

 

55,087

 

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 June 30, 2024 and 2023, restructuring charges relate to the CPP global sourcing expansion, of which $15.7 million and $1.8 million, respectively, is included in Cost of goods and services and $2.9 million and $2.1 million, respectively, is included in SG&A in the Company's Condensed Consolidated Statements of Operations. For the nine months ended June 30, 2024 and 2023, restructuring charges relate to the CPP global sourcing expansion, of which $28.7 million and $76.4 million, respectively, are included in Cost of goods and services and $4.8 million and $5.8 million, respectively, are included in SG&A in the Company's Condensed Consolidated Statements of Operations.

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

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

View source version on businesswire.com: https://www.businesswire.com/news/home/20240806090370/en/

Company Brian G. Harris SVP & Chief Financial Officer Griffon Corporation (212) 957-5000 IR@griffon.com Investor Relations Tom Cook Managing Director ICR Inc. (203) 682-8250