Griffon Q2 Earnings Call Highlights

Key Points

• Griffon held its fiscal 2026 outlook after Q2 results that showed softer residential demand, but stable commercial markets and pricing/mix benefits. Revenue from continuing operations fell 1% to $422 million, while adjusted EBITDA declined 4% to $98 million.
• The company is advancing its restructuring to become a pure-play North American building products company. Griffon expects the AMES U.S. and Canada joint venture with ONCAP to close by June 2026, is pursuing a sale/process for AMES Australia, and plans to exit the U.K. business.
• Capital returns remain a priority: Griffon repurchased $33 million of stock in Q2, has 59 straight quarterly dividends, and still has $247 million remaining on its buyback authorization. Management also said strong free cash flow should support further repurchases and debt reduction, with M&A “not on the table.”

Griffon NYSE: GFF said it maintained its fiscal 2026 outlook after reporting second-quarter results that reflected soft residential demand, stable commercial markets and continued benefits from pricing and mix in its continuing operations.

Chairman and Chief Executive Officer Ron Kramer said the company is progressing with previously announced strategic actions intended to focus Griffon into a “pure-play North American building products company.” As part of that plan, Griffon is now presenting its continuing operations as a single segment, while its global AMES businesses are reported as discontinued operations.

“We’re very pleased with our financial results at the halfway point of our fiscal year,” Kramer said on the earnings call. “Our team’s performance has been solid, showing resiliency, managing through uncertain global economic conditions.”

Second-Quarter Revenue Slips as Volume Declines

Chief Financial Officer Brian Harris said second-quarter revenue from continuing operations was $422 million, down 1% from the prior-year period. The decrease reflected a 6% reduction in volume, driven by residential markets, partially offset by a 5% improvement in price and mix.

Adjusted EBITDA from continuing operations was $98 million, down 4% year over year. Harris attributed the decline to lower revenue, weaker overhead absorption from reduced volume and higher material costs, including steel. Adjusted EBITDA margin was 23.2%, down 60 basis points from the year-earlier quarter.

Gross profit was $192 million, with a gross margin of 45.5%, compared with $198 million and a 46.5% gross margin in the prior-year quarter. Selling, general and administrative expenses were $105 million, or 24.8% of revenue, compared with $107 million, or 25% of revenue, a year earlier.

GAAP income from continuing operations was $47 million, or $1.03 per share, compared with $50 million, or $1.06 per share, in the prior-year quarter. Adjusted net income from continuing operations was $48 million, or $1.05 per share, compared with $49 million, or $1.05 per share, a year earlier.

Company Reaffirms Fiscal 2026 Guidance

Harris said Griffon is maintaining its fiscal 2026 guidance under the company’s new reporting structure. Griffon continues to expect revenue from continuing operations of $1.8 billion and adjusted EBITDA of $458 million for the fiscal year. The adjusted EBITDA guidance excludes certain charges affecting comparability.

The company also expects free cash flow from continuing operations to exceed income from continuing operations. Griffon projected capital expenditures of $50 million, depreciation of $27 million and amortization of $15 million. Fiscal 2026 interest expense is expected to be $93 million, excluding any interest income that may be recognized from the anticipated AMES joint venture. The company expects a normalized tax rate of 28%.

Harris said the guidance is unchanged from expectations previously outlined for the former Home and Building Products segment, Hunter Fan and unallocated costs.

During the question-and-answer portion of the call, Harris said the company expects the second half of the fiscal year to look similar to recent quarters, with residential volume remaining soft, commercial volume roughly flat and benefits from price and mix. He also noted that Clopay recently issued mid-single-digit price increases effective at the end of March and has started another price increase.

Strategic Review Advances, U.K. Exit Planned

Kramer said Griffon continues to expect to close its joint venture with ONCAP, which will include AMES U.S. and Canadian businesses, by the end of June 2026. Griffon expects to receive $100 million of cash proceeds when the joint venture is completed, along with $161 million of second-lien pay-in-kind notes from the joint venture. The company will own 43% of the joint venture and have representation on its board.

The strategic process for AMES Australia remains active and ongoing, Kramer said. For AMES United Kingdom, Griffon has decided to exit the business because of “persistent economic challenges.” Kramer said the company expects all of the strategic actions to be completed by the end of the calendar year.

In response to an analyst question about interest income from the joint venture, Kramer said Griffon will hold $161 million of pay-in-kind notes with a 10% interest rate.

Clopay Innovation Highlighted

Kramer highlighted Clopay’s product development pipeline, citing recognition at the International Builders’ Show for the second consecutive year. He said Clopay won a Best of IBS award in the window and door category for its Avante door with C-Power-enabled Click-to-Conceal panels.

The C-Power technology delivers electrical power directly to garage door panels, enabling features such as Click-to-Conceal panels that can transition windows from clear to opaque. Kramer said the product is designed for homeowners using garages as flexible living space and for commercial applications such as restaurants and automotive showrooms.

Asked about innovation and growth beyond the market, Kramer said Clopay remains supported by its brand, dealer network and big-box distribution. He said the residential business is driven largely by repair and remodel activity, with low exposure to new home construction. He also pointed to the company’s commercial rolling steel and security products business as an area with growth potential.

Buybacks Continue as Management Emphasizes Cash Flow

Griffon repurchased $33 million of stock during the second quarter, buying 422,000 shares at an average price of $78.03. As of March 31, the company had $247 million remaining under its repurchase authorization.

Kramer said that since April 2023 through March 2026, Griffon has repurchased $611 million of stock, totaling 11.5 million shares at an average price of $53.21. He said those repurchases reduced shares outstanding by 20% relative to the end of the second quarter of fiscal 2023.

The board also authorized a regular quarterly dividend of $0.22 per share, payable June 17 to shareholders of record as of May 29. Kramer said it marks Griffon’s 59th consecutive quarterly dividend.

Harris said year-to-date free cash flow from continuing operations was $101 million, compared with $114 million in the prior-year period. Net capital expenditures were $18 million, compared with $26 million a year earlier. Griffon ended the quarter with net debt of $1.3 billion and net debt-to-EBITDA leverage of 2.4 times, as calculated under its debt covenants, compared with 2.6 times at the end of last year’s second quarter.

Asked about capital allocation, Kramer said the company has streamlined its businesses and expects strong cash flow to support choices including share repurchases and debt reduction. He said mergers and acquisitions are “not on the table,” adding that management views the company’s own stock as the “cheapest and best acquisition” available.

About Griffon NYSE: GFF

Griffon Corporation NYSE: GFF is a diversified management and holding company whose subsidiaries design, manufacture and market products for residential, commercial and defense applications. Operating through three primary platforms—Home & Building Products, Defense Electronics and Specialty Industrial—Griffon's portfolio spans consumer and industrial brands with a focus on long-lived products and recurring aftermarket opportunities.

In the Home & Building Products segment, Griffon's Clopay Building Products division is a leading North American manufacturer of residential and commercial garage doors, specializing in steel, fiberglass and composite designs as well as decorative carriage-house styles.

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