Griffon Q3 Earnings Call Highlights

Griffon NYSE: GFF reported fiscal third-quarter revenue growth and higher adjusted earnings as the company continued its transformation into a pure-play building products business, while maintaining its full-year outlook amid soft U.S. housing and commercial construction markets. For the quarter, revenue increased 7% year over year to $481 million, driven by 6% favorable price and mix and a 1% increase in volume. Adjusted EBITDA rose 2% to $125 million, producing an adjusted EBITDA margin of 25.9%.

Chairman and Chief Executive Officer Ron Kramer said the company’s teams had executed well despite “dynamic global economic conditions,” including weakness in housing and commercial construction. Griffon generated $194 million of year-to-date free cash flow from continuing operations through June 30, compared with $202 million in the prior-year period.

Third-quarter gross profit was $226 million, compared with $219 million a year earlier, though gross margin declined to 47.0% from 48.7%. Adjusted selling, general and administrative expense increased to $111 million from $106 million, while declining as a percentage of sales to 23.0% from 23.7%. GAAP income from continuing operations totaled $66 million, or $1.47 per share, compared with a loss of $109 million, or $2.40 per share, in the prior-year quarter. The prior-year result was primarily affected by goodwill and intangible impairment charges. Adjusted net income from continuing operations rose to $68 million, or $1.51 per share, from $64 million, or $1.39 per share, a year earlier.

Griffon reaffirmed its fiscal 2026 guidance for $1.8 billion in revenue and $458 million in adjusted EBITDA from continuing operations. The company also expects free cash flow from continuing operations to exceed income from continuing operations. The company continues to project $50 million in capital expenditures, $27 million in depreciation and $15 million in amortization for the fiscal year. It reduced its expected interest expense to $80 million, down $13 million from prior guidance, reflecting debt repayment and interest income from transaction-related payment-in-kind notes receivable. Griffon expects a normalized tax rate of 28%.

Kramer said Griffon closed its Australasia joint venture earlier in the week. At closing, the company received $181 million in cash, a $49 million note receivable and a 49% equity interest. The transaction completed a series of strategic actions that Kramer said transformed Griffon into a pure-play building products company. Across the transactions, Griffon received $281 million in cash and $210 million in 10% payment-in-kind notes, while retaining minority interests with a book value of $139 million. Following the quarter, Griffon repaid the remaining $285 million bal...