FinanceLooker

Excrept from filing document 2024-09-30

The aggregate market value of the voting and non voting common stock held by non affiliates of the registrant as of the close of business March 28 2024 the registrant s most recently completed second quarter was approximately 3 234 000 000 The registrant s closing price as reported by the New York Stock Exchange Composite Transactions for March 28 2024 was 73 34 The number of the registrant s outstanding shares was 47 821 861 as of October 31 2024
This Annual Report on Form 10 K 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 industries in which Griffon Corporation the Company or Griffon operates and the United States and global economies Statements in this Form 10 K 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 the expanded CPP global 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 pandemics such as COVID 19 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
Griffon Corporation the Company or Griffon we us is a diversified management and holding company that conducts business through wholly owned subsidiaries The Company founded in 1959 is a Delaware corporation headquartered in New York N Y and is listed on the New York Stock Exchange NYSE GFF
Our strategic objective is to maintain leading positions in the markets we serve by providing innovative branded products with superior quality and industry leading service We place emphasis on our iconic and well respected brands which helps to differentiate us and our offerings from our competitors and strengthens our relationship with our customers and those who ultimately use our products
Through operating a diverse portfolio of businesses we expect to reduce variability caused by external factors such as market cyclicality seasonality and weather We achieve diversity by providing various product offerings and brands through multiple sales and distribution channels and conducting business across multiple countries which we consider our home markets
Griffon oversees the operations of its subsidiaries allocates resources among them and manages their capital structures Griffon provides direction and assistance to its subsidiaries with acquisition and growth opportunities as well as divestitures As long term investors we intend to continue to grow and strengthen our existing businesses and to diversify further through investments in our businesses and acquisitions
Since 2017 we have undertaken a series of transformative transactions to strengthen our core business and increase shareholder value We divested our specialty plastics business in 2018 and our defense electronics Telephonics business in 2022 to focus on our core markets and improve our free cash flow conversion In our Home and Building Products HBP segment we acquired CornellCookson Inc CornellCookson in 2018 which has established us as a leading North American manufacturer and marketer of residential garage doors and sectional commercial doors and rolling steel doors and grille products under brands that include Clopay Ideal Cornell and Cookson In our Consumer and Professional Products CPP segment we expanded the scope of our brands through the acquisition of Hunter Fan Company Hunter in January 2022 and ClosetMaid LLC ClosetMaid in 2018
On July 1 2024 Griffon announced that its subsidiary The AMES Companies Inc AMES expanded the scope of its Australian operations by acquiring substantially all the assets of Pope a leading Australian provider of residential watering products from The Toro Company NYSE TTC for a purchase price of approximately AUD 21 800 approximately 14 500 in cash This is CPP s seventh acquisition in Australia since 2013 and further expands AMES s product portfolio in the Australian market Pope is expected to contribute approximately 25 000 in revenue in the first twelve months after this acquisition
On June 27 2022 we completed the sale of our Defense Electronics segment which consisted of our Telephonics subsidiary for 330 000 in cash excluding customary post closing adjustments As such the results of operations of our Telephonics business is classified as a discontinued operation in the Consolidated Statements of Operations for all periods presented and the related assets and liabilities have been classified as assets and liabilities of the discontinued operation in the Consolidated Balance Sheets Accordingly all references made to results and information in this Annual Report on Form 10 K are to Griffon s continuing operations unless noted otherwise
On January 24 2022 Griffon acquired Hunter a market leader in residential ceiling commercial and industrial fans from MidOcean Partners MidOcean for a contractual purchase price of 845 000 Hunter which is part of Griffon s Consumer and Professional Products segment complements and diversifies our portfolio of leading consumer brands and products
Griffon announced in May 2023 that CPP was expanding its global sourcing strategy to include long handled tools material handling and wood storage and organization product lines for the U S market This initiative was successfully completed as of September 30 2024 ahead of the previously announced date of December 31 2024
As a result of this global sourcing expansion initiative manufacturing operations have concluded at four manufacturing sites and four wood mills resulting in a total facility footprint reduction of approximately 1 2 million square feet or approximately 15 of CPP s square footage and a headcount reduction of approximately 600
The adoption of an asset light business model for these U S products has positioned CPP to better serve customers with a more flexible and cost effective sourcing model that leverages supplier relationships around the world and improved its competitive positioning These actions will be essential for CPP to achieve its target of 15 EBITDA margin while enhancing free cash flow through improved working capital and significantly reduced capital expenditures
Implementation of this strategy over the duration of the project resulted in charges of 133 777 which included 51 082 of cash charges for employee retention and severance operational transition and facility and lease exit costs and 82 695 of non cash charges primarily related to asset write downs In addition there were 2 678 of capital investments to effectuate the project This excludes cash proceeds from the sale of real estate and equipment which through September 30 2024 were 13 271 and excludes future proceeds from the sale of remaining real estate and equipment
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 Securities and Exchange Commission the SEC The information found on Griffon s website is not part of this or any other report it files with or furnishes to the SEC
Home and Building Products HBP conducts its operations through Clopay Corporation Clopay Founded in 1964 Clopay is the largest manufacturer and marketer of garage doors and rolling steel doors in North America Residential and commercial sectional garage doors are sold through professional dealers and leading home center retail chains throughout North America under the brands Clopay Ideal and Holmes Rolling steel door and grille products designed for commercial industrial institutional and retail use are sold under the 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
The HBP segment consists of Clopay Founded in 1964 and acquired by Griffon in 1986 Clopay has grown organically and through acquisitions to become the largest manufacturer and marketer of residential and commercial garage doors and rolling steel doors in North America The majority of Clopay s sales come from home remodeling and renovation projects with the balance from commercial construction and new residential housing construction Sales into the home remodeling market are driven by the aging of the housing stock existing home sales activity and the trends of improving both home appearance and energy efficiency Sales into the commercial market are driven by commercial construction and repair and replacement including the aging of nonresidential buildings warehouses and institutional and industrial facilities as well as increased business activity changes to building codes
Clopay brings over 50 years of experience and innovation to the residential and sectional garage door industry and has over 100 years of experience in the rolling steel industry Residential and commercial sectional products are sold under market leading brands including Clopay America s Favorite Garage Doors Holmes Garage Door Company and IDEAL Door Clopay commercial rolling steel door brands include Cornell Cookson and Clopay
Clopay manufactures a broad line of residential sectional garage doors with a variety of options at varying prices Clopay offers garage doors made primarily from steel aluminum plastic composite and wood and also sells related products such as garage door openers manufactured by third parties
Commercial door products manufactured and marketed by Clopay include rolling steel service doors fire doors shutters steel security grilles and room dividers Clopay also manufactures and markets commercial sectional doors which are similar to residential garage doors but are designed to meet the more demanding performance specifications of a commercial application
Clopay supports a diversity of customers ranging from local rural dealerships to national retail chains Clopay s customers include over 3 000 independent professional installing dealers and major home center retail chains including Home Depot and Menards Clopay maintains strong relationships with its installing dealers and believes it is the largest supplier of sectional garage doors to the retail and professional installing channels in North America and the largest supplier of rolling steel door products in North America
Clopay distributes its garage doors directly to customers from its manufacturing facilities and through its network of 56 distribution centers located throughout the U S and Canada These distribution centers allow Clopay to maintain an inventory of garage doors near installing dealers and provide quick ship service to retail and professional dealer customers
Clopay is currently the exclusive supplier of residential and commercial garage doors to Home Depot and Menards locations throughout North America and has had relationships with each for more than 25 years The loss of either of these customers would have a material adverse effect on Clopay and Griffon
Clopay operates technical development centers where its research engineers design and develop new products and technologies and perform durability and performance testing of new and existing products materials and finishes Clopay continually improves its door offerings through these development efforts focusing on characteristics such as strength design performance durability and energy efficiency The process engineering teams also work to develop new manufacturing processes and production techniques aimed at improving manufacturing efficiencies and ensuring quality made products
The Clopay sales and marketing organization supports our customers consults on new product development and aggressively markets door solutions with a primary focus on the North American market Clopay maintains a strong promotional presence in both traditional and digital media
Clopay provides a unique customer experience platform called MyClopay which delivers an array of sales order management analytical instructional and informational applications These applications empower Clopay s customers to provide the best solutions to their end customers and MyClopay has been widely adopted by Clopay s customers due to its feature rich intuitive and device agnostic software We believe this capability is unique to the industry
Within the MyClopay application suite Clopay customers use a proprietary residential door web application the MyDoor mobile enabled app that guides consumers through an easy to use door visualization and pricing process allowing them to select the optimal door for their home For Clopay s commercial products Clopay s Commercial Door Quoter CDQ and WebGen applications deliver a streamlined quoting and bid submittal process to our professional dealers providing improved close rates productivity and back office efficiency
The principal raw material used in Clopay s manufacturing is galvanized steel Clopay also utilizes certain hardware and plastic components as well as aluminum and insulated foam All raw materials are generally available from a number of sources
The sectional garage door and commercial rolling steel door industry includes several large national manufacturers and many smaller regional and local manufacturers Clopay competes on the basis of service quality brand awareness product design and price
Clopay brand names are widely recognized in the building products industry Clopay believes that it has earned a reputation among installing dealers and retailers for producing a broad range of innovative high quality doors with industry leading lead times supported by an extensive distribution network Clopay s market position brand recognition and proprietary software applications and systems are key marketing tools for expanding its customer base
Clopay s principal manufacturing facilities include 1 582 000 square feet in Troy and Russia Ohio 279 000 square feet in Mountain Top Pennsylvania and 163 000 square feet in Goodyear Arizona Clopay distributes its products through a wide range of distribution channels including a national network of 56 distribution centers with a total of approximately 1 200 000 square feet This network of manufacturing facilities and distribution centers is capable of providing just in time and prepositioned inventory across the U S and Canada and provides flexibility regarding how and where doors are delivered to customers in their local markets
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 Hunter and ClosetMaid
AMES founded in Massachusetts in 1774 has the distinction of being one of the oldest companies in continuous operation in the United States Over its long life AMES has grown organically and through the acquisition of other leading and historic tool businesses such as True Temper Union Tools and Garant Today AMES is a leading provider of long handled tools and landscaping products for homeowners and professionals in North America and also provides these products in key global markets including Canada Australia New Zealand the U K and Ireland Under the ClosetMaid brand CPP is a leading provider of wood and wire closet organization general living storage and wire garage storage products in the United States Under the Hunter brand since 1886 CPP is a leading provider of residential industrial and commercial fans in the United States
CPP s brands are among the most recognized across its primary product categories in North America Australia and the United Kingdom Its brand portfolio for long handled tools outdoor décor and landscaping product includes AMES True Temper Garant Harper UnionTools Westmix Cyclone Southern Patio Northcote Pottery Nylex Hills Kelkay Tuscan Path La Hacienda Kelso Dynamic Design Apta Quatro Design and Pope Contractor oriented tool brands include Razor Back Professional Tools and Jackson Professional Tools CPP s home organization general living storage and garage storage products are sold primarily under the ClosetMaid brand CPP s residential industrial and commercial fan products are sold under the Hunter Fan Hunter Industrial and Casablanca brands
This strong portfolio of brands enables CPP to build and maintain long standing relationships with leading retailers and distributors In addition given the breadth of its brand portfolio and product category depth CPP is able to offer specific differentiated branding strategies for key retail customers These strategies focus on enhancement of brand value with the goal of de commoditizing CPP products through identity and functionality elements that makes each top brand unique attractive and visually recognizable by the consumer
CPP markets a broad portfolio of long handled tools landscaping products home organization products and residential industrial and commercial fans This portfolio contains many iconic brands and is anchored by six core product categories seasonal outdoor tools project tools outdoor décor and watering home organization fans and cleaning products As a result of brand portfolio recognition outstanding product quality industry leading service and strong customer relationships CPP has earned market leading positions in its six core product categories The following is a brief description of CPP s primary product lines
An extensive line of engineered tools including shovels spades scoops rakes hoes cultivators weeders post hole diggers scrapers edgers and forks marketed under leading brand names including AMES True Temper UnionTools Garant Cyclone and Kelso as well as contractor oriented brands including Razor Back Jackson and Darby
AMES designs and develops a full line of wheelbarrows and lawn carts primarily under the AMES True Temper Jackson Professional Tools UnionTools Garant and Westmix brand names The products range in size material poly and steel tray form tire type handle length and color based on the needs of homeowners landscapers and contractors
Axes picks mattocks mauls wood splitters sledgehammers pry bars and repair handles make up the striking tools product line These products are marketed under the True Temper AMES Cyclone Garant Jackson Professional Tools and Razor Back Professional Tools brand names
Hammers screwdrivers pliers adjustable wrenches handsaws tape measures levels clamps and other traditional hand tools make up this product line These products are marketed under the Trojan Cyclone and Supercraft brand names In addition gardening hand tools such as trowels cultivators weeders and other specialty garden hand tools are marketed under the AMES brand name
AMES is a designer and distributor of indoor and outdoor planters and accessories sold under the Southern Patio Northcote Pottery Tuscan Path La Hacienda Hills Kelkay Quatro Design Pope and Dynamic Design brand names as well as various private label brands The range of planter sizes from 6 to 32 inches is available in various designs colors and materials
AMES designs manufactures and sells a comprehensive portfolio of wire and wood shelving containers storage cabinets and other closet and home organization accessories primarily under the highly recognized ClosetMaid brand name Wire products include wire shelving and hardware wire accessories and kitchen storage products Wire product brands include Maximum Load SuperSlide and ShelfTrack Wood solutions include closet systems cube storage storage furniture and cabinets Selected wood product brands include MasterSuite Suite Symphony ExpressShelf Style and SpaceCreations
CPP sells products throughout North America Australia New Zealand the U K and Ireland through 1 home centers such as The Home Depot Inc Home Depot Lowe s Companies Inc Lowe s Rona Inc Bunnings Warehouse Bunnings and Woodies with the average length of the relationship with these customers being approximately 30 years 2 mass market specialty and hardware retailers including Tractor Supply Corporation Tractor Supply Wal Mart Stores Inc Walmart Target Corporation Target Canadian Tire Corporation Limited Canadian Tire Costco Wholesale Corporation Costco Ace Do It Best and True Value Company 3 industrial distributors such as W W Grainger Inc and ORS Nasco 4 homebuilders such as D R Horton KB Home Lennar and NVR Inc and 5 E commerce platforms such as Amazon Inc Amazon Wayfair Inc Wayfair Hayneedle Inc Hayneedle Beyond Inc Beyond and Spreetail LLC Spreetail
CPP product development efforts focus on both new products and product line extensions CPP continually improves existing products as well as develops new products to satisfy consumer needs expand revenue opportunities maintain or extend competitive advantages increase market opportunity and reduce production costs Products are developed through in house industrial design and engineering staffs to introduce new products and product line extensions that are timely and cost effective
CPP s sales organization is structured by product line and distribution channel in the U S and by country internationally In the U S a dedicated team of sales professionals is provided for each of the large retail customers Offices are maintained adjacent to each of the two largest customers headquarters supported by a shared in house sales analyst In addition sales professionals are assigned to domestic wholesale and industrial distribution channels Sales teams located in Canada Australia the United Kingdom Mexico and Ireland handle sales in each of their respective regions In Australia a dedicated team of sales professionals is provided for the largest retail customer CPP has made significant investments in automation facilities expansion and fulfillment operations to support e commerce growth
CPP s primary raw material inputs include resin primarily polypropylene and high density polyethylene hickory wood and steel wire rod All raw materials are generally available from a number of sources CPP sources certain finished goods primarily in storage and organization outdoor décor residential industrial and commercial fans and tools
The long handled tools and landscaping product industry is highly competitive and fragmented Most competitors consist of small privately held companies focusing on a single product category Some competitors such as Fiskars Corporation in the hand tool and pruning tool market and Truper Herramientas S A de C V in the long handled and garden tool space compete in various tool categories Suncast Corporation competes in the hose reel and accessory market and in the long handled plastic snow shovel category In addition there is competition from imported or sourced products from China India and other low cost producing countries particularly in long handled tools wheelbarrows planters striking tools and pruning tools
The home storage and organizational solutions industry is also highly fragmented CPP primarily under the ClosetMaid brands sells through retail direct to consumer e commerce category and direct to installer building channels and competes with a significant number of companies across each of these unique channels Principal competition for retail wire products is from products sourced from China India and other low cost producing countries FirstService Brands Inc sells competing wood solutions under the brand California Closets but does not sell through the retail or direct to consumer channels
The residential industrial and commercial fan industry is fragmented CPP under the highly recognized Hunter brand sells through direct to consumer e commerce category retail and direct to installer industrial and commercial channels CPP s principal competitors in the consumer ceiling fan market are retailer house brands such as Hampton Bay in The Home Depot and Harbor Breeze in Lowe s followed by Minka Air In the industrial and commercial fan space principal competitors are Big Ass Fans Rite Hite Macro Air and Minka Air
CPP differentiates itself and provides the best value to customers through its successful history of innovation dependable supply chain and high on time delivery rates quality product performance and highly recognized product brands CPP s size depth and breadth of product offering category knowledge research and development R D investment service and its ability to react to sudden changes in demand from seasonal weather patterns especially during harsh winter months are competitive advantages
CPP sources products for sale through a combination of internal and external global manufacturing sources and supply chain partners Principal North American manufacturing facilities include a 676 000 square foot facility in Ocala Florida and a 353 000 square foot center in St Francois Quebec Canada CPP operates smaller manufacturing facilities including wood mills at several other locations in the United States and internationally in Jiangmen China and Grafton New South Wales and Wonthaggi Victoria both in Australia
CPP has three principal distribution facilities in the United States a 1 4 million square foot facility in Carlisle Pennsylvania a 997 000 square foot facility in Reno Nevada and a 600 000 square foot facility in Byhalia MS Finished goods are transported to these facilities by both an internal fleet as well as over the road trucking and rail Additionally light assembly is performed at the Carlisle and Reno locations Smaller distribution centers are also strategically located in the U S in Ocala Florida and internationally in Canada Australia the United Kingdom and Ireland
On June 27 2022 Griffon completed the sale of its Defense Electronics segment which consisted of Griffon s Telephonics subsidiary for 330 000 excluding certain customary post closing adjustments As such the results of operations of our Telephonics business is classified as a discontinued operation in the Consolidated Statements of Operations for the year ended September 30 2022 Accordingly all references made to results and information in this Annual Report on Form 10 K are to Griffon s continuing operations unless noted otherwise
As of September 30 2024 Griffon and its subsidiaries employ approximately 5 300 employees located primarily throughout North America the United Kingdom Australia and China Generally the total number of employees of Griffon and its subsidiaries does not significantly fluctuate throughout the year However acquisition activity or the opening of new branches or lines of business efficiency initiatives or other changes in the level of Griffon s business activity for instance based on actual or anticipated customer demand or other factors could require staffing level adjustments
In managing its human capital resources Griffon aims to attract a qualified workforce through an inclusive and accessible recruiting process that utilizes online recruiting platforms campus outreach internships and job fairs Griffon also seeks to retain employees by offering competitive wages benefits and training opportunities as well as promoting a safe and healthy workplace Griffon and all of its businesses strictly comply with all applicable state local and international laws governing nondiscrimination in employment in every location in which Griffon and its businesses have facilities This applies to all terms and conditions of employment including recruiting hiring placement promotion termination layoff recall transfer leaves of absence compensation and training All applicants and employees are treated with the same high level of respect regardless of their gender ethnicity religion national origin age marital status political affiliation sexual orientation gender identity disability or protected veteran status
Griffon s operations are subject to various environmental health and employee safety laws and regulations Griffon believes that it is in material compliance with these laws and regulations Historically compliance with environmental health and employee safety laws and regulations have not materially affected and are not expected to materially affect Griffon s capital expenditures earnings or competitive position Nevertheless Griffon cannot guarantee that in the future it will not incur additional costs for compliance or that such costs will not be material
A small number of customers account for and are expected to continue to account for a substantial portion of Griffon s consolidated revenue In 2024 Home Depot represented 11 of Griffon s consolidated revenue 8 of HBP s revenue and 15 of CPP s revenue
No other customer accounted for 10 or more of consolidated revenue Future operating results will continue to substantially depend on the success of Griffon s largest customers and Griffon s relationships with them Orders from these customers are subject to change and may fluctuate materially The loss of all or a portion of volume from any one of these customers could have a material adverse impact on Griffon s financial results liquidity and operations
Griffon s revenue and earnings are generally lowest in our first and fourth quarters ending December 31 and September 30 respectively and highest in the second and third quarters ending March 31 and June 30 respectively primarily due to the seasonality within the HBP and CPP businesses HBP s business is driven by renovation and construction during warm weather which is historically at reduced levels during the winter months generally in our second quarter In 2024 52 of CPP s sales occurred during the second and third quarters compared to 54 in 2023 and 58 in 2022
Demand for lawn and garden products is influenced by weather particularly weekend weather during peak gardening season AMES sales volume can be adversely affected by certain weather patterns such as unseasonably cool or warm temperatures hurricanes water shortages or floods In addition lack of snow or lower than average snowfall during the winter season may result in reduced sales of certain AMES products such as snow shovels and other snow tools As a result AMES results of operations financial results and cash flows could be adversely impacted
Griffon s businesses are encouraged to improve existing products as well as develop new products to satisfy customer needs expand revenue opportunities maintain or extend competitive advantages increase market share and reduce production costs R D costs not recoverable under contractual arrangements are charged to expense as incurred
Griffon follows a practice of actively protecting and enforcing its proprietary rights in the U S and throughout the world where Griffon s products are sold All intellectual property information presented in this section is as of September 30 2024
Trademarks are of significant importance to Griffon s HBP and CPP businesses With 50 years of experience and innovation in the garage door industry and over 100 years of experience in the rolling steel door industry HBP has a significant level of goodwill in its strong family of brands including Clopay America s Favorite Doors Holmes Garage Door Company IDEAL Door and the Cornell and Cookson commercial door brands Principal global and regional trademarks used by CPP for its tool and landscape products include AMES True Temper Garant Harper UnionTools Westmix Cyclone Southern Patio Northcote Pottery Nylex Hills Kelkay Tuscan Path Pope La Hacienda Kelso
and Dynamic Design as well as contractor oriented brands including Razor Back Professional Tools and Jackson Professional Tools Storage and home organization brands within CPP include ClosetMaid MasterSuite Suite Symphony Cubeicals ExpressShelf SpaceCreations Maximum Load SuperSlide and ShelfTrack CPP s Hunter Fan Company has over 135 years of experience in the ceiling fan industry with well recognized brands including Hunter Casablanca Hunter Industrial and Jan Fan
The HBP and CPP businesses have approximately 1 596 registered trademarks and approximately 140 pending trademark applications around the world Griffon s rights in these trademarks endure for as long as they are used and registered
Patents are also important to the HBP and CPP businesses HBP holds approximately 56 issued patents and 24 pending patent applications in the U S as well as approximately 18 and 108 corresponding foreign patents and patent applications primarily related to garage door system components and operation CPP protects its designs and product innovation through the use of patents and currently has approximately 782 issued patents and approximately 245 pending patent applications in the U S as well as approximately 346 and 82 corresponding foreign patents and patent applications respectively Design patents are generally valid for fourteen years and utility patents are generally valid for twenty years from the date of filing Griffon s patents are in various stages of their terms of validity
Griffon and its operating companies have always taken into account environmental social and governance ESG considerations in the management of our businesses Griffon is a subscriber to the United Nations Global Compact UNGC and published its inaugural annual ESG report in August 2022 in relation to fiscal 2021 benchmarked to both United Nations Global Compact UNGC Sustainable Development Goals and to the Sustainability Accounting Standards Board SASB criteria Since then Griffon published an annual ESG report in November 2023 in relation to calendar 2022 The Griffon ESG policy and annual ESG Report can be found on the Griffon website at www griffon com Beginning with the calendar 2023 report the report will be renamed as our annual Sustainability Report We expect to file our calendar year 2023 Sustainability report before the end of calendar 2024
The annual Sustainability reports discuss employee safety employee education and welfare carbon emissions air emissions energy consumption water consumption waste generation recycled raw materials and packaging initiatives as well as community involvement and charitable giving In our calendar 2022 report we set an overarching goal of 30 percent reduction across six key metrics by 2030 carbon emissions air emissions water consumption hazardous waste generated lost time rates and recordable injury rates In addition in 2023 in connection with the announcement of an expansion of CPP s global sourcing strategy in 2023 we adopted a Supplier Code of Conduct SCC that essentially binds our suppliers to the same ESG goals and criteria to which Griffon adheres
Griffon has assessed the environmental risk from its operations and focused its efforts to date on areas with the potential to have the greatest environmental impact Where available we use recycled materials to construct our products and we continuously improve our packaging to reduce both volume and environmental impact For example bags used to pack AMES Kelkay aggregate products in the UK are made from plant based materials and not from petroleum The AMES Companies use a box on demand system that reduces packaging size Approximately seventy percent of the steel used in HBP s garage doors is recycled steel AMES is a member of the Appalachian Hardwood Manufacturers Association which provides sustainable hardwoods for AMES tools and is committed to purchasing hardwoods through the Sustainable Forestry Initiative
Our operating companies are involved in the local communities in which they operate We are involved in more than 100 charitable and community organizations including well known national concerns such as Habitat for Humanity Boys and Girls Clubs the Home Depot Foundation Diamond Sponsor the Lowe s Foundation and the American Cancer Society as well as local groups such as garden clubs Our communities know they can count on our support
Over the last five years we have invested millions of dollars in capital improvements relating to employee safety and health These improvements include major upgrades to our loading and unloading operations which had been the source of a significant portion of our worker injuries ergonomic improvements machine guarding and elimination of certain high risk repetitive jobs through the use of robotics Griffon has also invested significant time and capital in reducing ergonomic injuries through better work positioning and lifting improvements Griffon has invested over one million dollars in improvements to employee welfare facilities such as break areas and cafeterias
More importantly we view our employees as more than just workers Through our Employee Stock Ownership Plan our U S employees own approximately nine percent of Griffon stock Our businesses engage in a variety of outreach programs in the various communities in which we operate to recruit new employees at all levels These programs involve high schools and vocational schools as well as colleges and universities and often include internships as a means for potential new employees to experience what it is like to be part of our team We also have a variety of onboarding programs onsite job training programs leadership development programs and tuition reimbursement and education assistance policies to further the development and advancement of our employees
In all of our geographies we use on site inspections of suppliers and specific contractual terms to manage our supply chains to ensure compliance with environmental and social laws and regulations as well as with our policies including with respect to human rights child labor slave labor and unsafe working conditions Our SCC requires that all new suppliers major volume suppliers and suppliers in higher risk areas submit a formal certification of compliance with our SCC All significant suppliers worldwide will be required to periodically submit to an SCC audit which evaluates not only quality control and vendor capabilities but assesses to what extent each supplier emphasizes environmental labor and social considerations in the operation of its business Griffon companies are phasing in the SCC over the next several years with the initial year to include training and program roll out
Honesty transparency and ethical practices have been ordinary course at Griffon for decades and we continue to review and upgrade our programs in these areas Our Code of Business Ethics and Conduct Code to which every employee certifies annually requires that each and every employee conduct business to the highest ethical standards Any acts of bribery are strictly prohibited as is human trafficking and activities supporting human trafficking such as the use of conflicts minerals The Code prohibits all business courtesies except for those with an insignificant value and even then only under limited circumstances Our SCC reinforces the same expectations from our suppliers Our Corporate Governance Guidelines are published on our website While the guidelines require that a majority of directors be independent currently all of our directors are independent except our CEO constituting over 92 of our directors Griffon has appointed a lead independent director and has four principal board committees Audit Compensation Nominating and Corporate Governance and Finance each of which has its responsibilities set forth in a charter available on the Griffon website
We expect each of our employees and suppliers around the world to work hard to deliver outstanding products to our customers and to deliver value to our shareholders And while doing so we expect them to respect and adhere to our environmental social and governance commitments and policies and to make our company a place where all employees are proud to come to work every day
Chief Executive Officer since April 2008 Chairman of the Board since January 2018 Director since 1993 Vice Chairman of the Board from November 2003 to January 2018 From 2002 through March 2008 President and a Director of Wynn Resorts Ltd Nasdaq WYNN a developer owner and operator of destination casino resorts From 1999 to 2001 Managing Director at Dresdner Kleinwort Wasserstein an investment banking firm and its predecessor Wasserstein Perella Co Member of the board of directors of Entain plc LSE ENT Franklin BSP Capital Corporation and Franklin BSP Private Credit Fund Former member of the board of directors of Douglas Elliman Inc NYSE DOUG from December 2021 to July 2024
President and Chief Operating Officer since December 2012 director from May 2018 to March 2022 From August 2008 to October 2012 President and Chief Operating Officer of DRS Technologies Formerly NYSE DRS DRS a supplier of integrated products services and support to military forces intelligence agencies and prime contractors worldwide From May 2006 to August 2008 Executive Vice President and Chief Operating Officer of DRS and from January 2001 to May 2006 Executive Vice President Business Operations and Strategy of DRS
Executive Vice President and Chief Financial Officer since November 13 2024 Senior Vice President and Chief Financial Officer from August 2015 to November 12 2024 From November 2012 to July 2015 Vice President and Controller of Griffon From July 2009 to July 2015 Griffon s Chief Accounting Officer From May 2005 to June 2009 Assistant Controller of Dover Corporation a diversified global manufacturer NYSE DOV Prior to this time held various finance and accounting roles with Hearst Argyle Television Formerly NYSE HTV John Wiley and Sons Inc NYSE WLY and Arthur Andersen LLP
Senior Vice President General Counsel and Secretary since May 2010 From July 2008 to May 2010 Assistant General Counsel and Assistant Secretary at Hexcel Corporation NYSE HXL a manufacturer of advanced composite materials for space and defense commercial aerospace and wind energy applications From 2000 to July 2008 Senior Corporate Counsel and Assistant Secretary at Hexcel From 1994 to 2000 associate at the law firm Winthrop Stimson Putnam Roberts now Pillsbury Winthrop Shaw Pittman LLP
Griffon s business financial condition operating results and cash flows can be impacted by a number of factors which could cause Griffon s actual results to vary materially from recent or anticipated future results The risk factors discussed in this section should be carefully considered with all of the information in this Annual Report on Form 10 K These risk factors should not be considered the only risk factors facing Griffon Additional risks and uncertainties not presently known or that are currently deemed immaterial may also materially impact Griffon s business financial condition operating results and cash flows in the future
In general Griffon is subject to the same general risks and uncertainties that impact other diverse manufacturing companies including but not limited to general economic industry and or market conditions and growth rates impact of natural disasters and pandemics and their effect on global markets possible future terrorist threats and their effect on the worldwide economy and changes in laws or accounting rules Griffon has identified the following specific risks and uncertainties that it believes have the potential to materially affect its business and financial condition
The current worldwide economic uncertainty and market volatility could continue to have an adverse effect on Griffon during 2025 within both the HBP and CPP segments which are linked to the U S housing and the commercial property markets and the U S economy in general Purchases of many HBP and CPP products are discretionary for consumers who are generally more willing to purchase products during periods in which favorable macroeconomic conditions prevail
These conditions could make it more difficult to obtain additional credit on favorable terms for investments in current businesses or for acquisitions or could render financing unavailable in addition while we do not have any near term debt maturities if these conditions persist we may have difficulty refinancing our debt when it comes due Griffon is also exposed to certain fundamental economic risks including a decrease in the demand for the products and services it offers or a higher likelihood of default on its receivables
The HBP and CPP businesses serve residential and commercial construction and renovation and are influenced by market conditions that affect these industries For the year ended September 30 2024 approximately 61 and 39 of Griffon s consolidated revenue was derived from the HBP and CPP segments respectively which were dependent on renovation of existing homes new home construction and commercial non residential construction repair and replacement The strength of the U S economy the age of existing home stock job growth interest rates consumer confidence and the availability of consumer credit as well as demographic factors such as migration into the U S and migration of the population within the U S have an effect on HBP and CPP To the extent market conditions for residential or commercial construction and renovation are weaker than expected this will likely have an adverse impact on the performance and financial results of the HBP and CPP businesses
Inflation rates particularly in the United States increased to historic levels in 2022 According to the U S Department of Labor the annual inflation rate for the United States decreased to 3 7 for the twelve months ended September 30 2023 and it further decreased to 3 5 for the twelve months ended September 30 2024 Although the past two fiscal years reflected a decrease in inflation rates since 2022 future increases in inflation may result in decreased demand for Griffon s operating company s products and services and increased operating costs and expenses including for labor raw materials and supplies Increases in interest rates especially if coupled with reduced government spending and volatility in financial markets may have the effect of further increasing economic uncertainty and heightening these risks which may result in economic recession As a result of fluctuations in inflation we may seek to increase the sales prices of our products and services in order to maintain satisfactory margins Any attempts to offset Griffon s cost increases with price increases may result in reduced sales increased customer dissatisfaction or harm to reputation Additionally Griffon s operating companies may be unable to raise the prices of their products and services at or above the rate at which their costs increase which may reduce operating margins and have a material adverse effect on financial results and future growth
Griffon s operating companies face intense competition in the markets they serve Griffon competes primarily on the basis of technical expertise product differentiation quality of products and services and price There are a number of competitors to Griffon some of which are larger and have greater resources than Griffon s operating companies Griffon s operating companies may face additional competition from companies that operate in countries with significantly lower operating costs
Many HBP and CPP customers are large mass merchandisers such as home centers warehouse clubs discount stores commercial distributors and e commerce companies The growing share of the market represented by these large mass merchandisers together with changes in consumer shopping patterns have contributed to the increase of multi category retailers and e commerce companies that have strong negotiating power with suppliers Many of these retailers import products directly from suppliers based in low cost countries to source and sell products under their own private label brands to compete with HBP and CPP products and brands which puts increasing price pressure on the products of these businesses In addition the intense competition in the retail and e commerce sectors combined with the overall increasingly competitive economic environment may result in a number of customers experiencing financial difficulty or failing in the future The loss of or a failure by one of HBP s or CPP s significant customers could adversely impact our sales and operating cash flows
To address all of these challenges HBP and CPP must be able to respond to these competitive pressures and the failure to respond effectively could result in a loss of sales reduced profitability and a limited ability to recover cost increases through price increases In addition there can be no assurance that Griffon will not encounter increased competition in the future which could have a material adverse effect on Griffon s financial results
A small number of customers account for and are expected to continue to account for a substantial portion of Griffon s consolidated revenue Home Depot and Menards are significant customers of HBP and Home Depot Lowe s and Bunnings are significant customers of CPP Home Depot accounted for approximately 11 of consolidated revenue 8 of HBP s revenue and 15 of CPP s revenue for the year ended September 30 2024 Future operating results will continue to substantially depend on the success of Griffon s largest customers as well as Griffon s relationships with them Orders from these customers are subject to fluctuation and may be reduced materially due to changes in customer needs or other factors Any reduction or delay in sales of products to one or more of these customers could significantly reduce Griffon s revenue Griffon s operating results will also depend on successfully developing relationships with additional key customers Griffon cannot ensure that its largest customers will be retained or that additional key customers will be recruited Also both HBP and CPP extend credit to its customers which exposes it to credit risk Our largest customer accounted for approximately 8 16 and 12 of the net accounts receivable of HBP CPP and Griffon as of September 30 2024 respectively If this customer were to become insolvent or otherwise unable to pay its debts the financial condition results of operations and cash flows of HBP CPP and Griffon could be adversely affected
HBP and CPP rely on a limited number of companies globally to supply components and manufacture certain of their products The percentage of HBP and CPP worldwide sourced finished goods as a percent of revenue approximated 6 and 33 respectively in 2024 The percentage of HBP and CPP s worldwide sourced components as a percent of cost of goods sold approximated 18 and 4 respectively in 2024 Reliance on third party suppliers and manufacturers may reduce control over the timing of deliveries and quality of both HBP and CPP products Reduced product quality or failure to deliver products timely may jeopardize relationships with certain of HBP s and CPP s key customers In addition reliance on third party suppliers or manufacturers may result in the failure to meet HBP and CPP customer demands Continued turbulence in the worldwide economy may affect the liquidity and financial condition of HBP and CPP suppliers Should any of these parties fail to manufacture sufficient supply go out of business or discontinue a particular component alternative suppliers may not be found in a timely manner if at all Such events may impact the ability of HBP and CPP to fill orders which could have a material adverse effect on customer relationships
Griffon announced in May 2023 that CPP was expanding its global sourcing strategy to include long handled tools material handling and wood storage and organization product lines for the U S market This has increased CPP s reliance on third party suppliers and therefore CPP s exposure to the risks relating to the use of third party suppliers See the risk below titled The expansion of CPP s global sourcing strategy may not achieve its intended results
HBP and CPP suppliers primarily provide resin wood steel and wire rod Both of these businesses could experience shortages of raw materials or components for products or be forced to seek alternative sources of supply If temporary shortages due to disruptions in supply caused by weather transportation production delays or other factors require raw materials to be secured from sources other than current suppliers the terms may not be as favorable as current terms or certain materials may not be available at all In recent years both HBP and CPP have experienced price increases for most of their raw materials
While most key raw materials used in Griffon s businesses are generally available from numerous sources raw materials are subject to price fluctuations Because raw materials in the aggregate constitute a significant component of the cost of goods sold price fluctuations could have a material adverse effect on Griffon s results of operations Griffon s ability to pass raw material price increases to customers is limited due to supply arrangements and competitive pricing pressure and there is generally a time lag between increased raw material costs and implementation of corresponding price increases for Griffon s products In particular sharp increases in raw material prices are more difficult to pass through to customers and may negatively affect short term financial performance
CPP s business is global with products and raw materials sourced from and manufactured and sold in multiple countries around the world There are risks associated with conducting a business that may be impacted by political and other developments associated with international trade In this regard certain products sold by CPP in the United States and elsewhere are currently sourced from suppliers in China with some of these products sourced exclusively from suppliers in China Certain raw materials used by CPP may be sourced from China and therefore may have their prices and availability impacted by tariffs imposed on trade between the United States and China Through the expanded sourcing strategy and the
closure of U S facilities CPP has increased the reliance on suppliers in China which could further the impact of tariffs CPP is taking steps to develop multiple suppliers outside of China to allow for supply chain sourcing pivot as needed in an effort to minimize this risk
The sourcing of CPP finished goods components and raw materials from China are generally subject to supply agreements with Chinese companies China does not have a well developed consolidated body of laws governing agreements with international customers Enforcement of existing laws or contracts based on existing law may be uncertain and sporadic and it may be difficult to obtain swift and equitable enforcement or to obtain enforcement of a judgment by a court of another jurisdiction including other jurisdictions within China itself The relatively limited Chinese judicial precedent on matters of international trade in many cases creates additional uncertainty as to the outcome of any litigation In addition interpretation of statutes and regulations in China may be subject to government policies or political changes
Because of the volume of sourcing by CPP from China the ongoing trade dispute between the U S and China including the imposition of tariffs on various Chinese imports into the U S at various times since March 2018 represents a continuing risk to CPP revenue and operating performance U S imports from China exceeded 425 billion in 2023 the majority of which were subject to the Section 301 tariffs In May 2024 the United States Trade Representative USTR completed a mandatory four year review of the tariffs under Section 301 of the Trade Act of 1974 In addition to continuing the tariffs rather than allowing them to terminate under the Trade Act the USTR announced additional tariffs on a number of products to be implemented over the two year period 2024 2026 These changes are expected to have a limited impact on current CPP products however the increases may complicate efforts to expand CPP s product portfolio under its new global sourcing strategy
In addition to tariffs an increased global focus on forced labor in supply chains has the potential to impact our business operations In June 2022 the Uyghur Forced Labor Prevention Act UFLPA went into effect and establishes a rebuttable presumption that goods made in whole or in part in the Xinjiang Uyghur Autonomous Region of the People s Republic of China are produced with forced labor and directs US Customs and Border Protection CBP to prevent entry of products made with forced labor into the U S market Importers whose shipments are detained by CBP under the UFLPA can rebut the presumption with clear and convincing evidence that the products were not produced with forced labor This requires that the importer submit detailed information regarding every supplier and sub supplier and all components and raw materials relating to the manufacturing and transportation of goods being detained Detention costs accrue during the pendency of CBP s evaluation
From October 1 2023 through September 30 2024 more than 4 200 shipments to U S importers valued at approximately 1 7 billion were targeted by CBP for further inspection Neither CPP nor its suppliers currently manufacture or source products components or raw materials from the Uyghur region of China however CBP takes a broad approach when targeting shipments it believes may have originated from the Uyghur region based on product definitions tariff codes and supplier names that lead them to suspect the goods come from the Uyghur region Additionally the Forced Labor Enforcement Task Force has determined that certain industry sectors including apparel cotton and cotton products silica based products PVC and aluminum products and countries of origin outside of China including Vietnam and Thailand have an inherently higher risk of forced labor such that CBP may detain goods within these sectors suspected of being manufactured with materials originating from Xinjiang or coming from a country identified as higher risk
As a result CPP shipments may be targeted for detention in which case they become subject to the rebuttable presumption that they were sourced from the Uyghur region or another high risk country even though they are not imported directly from China or are otherwise demonstrably outside the scope of the UFLPA In view of the increased enforcement of forced labor initiatives we are continuing to update our compliance measures and work with our supply base to validate their supply chains from raw materials through components to finished goods to ensure our goods are not made using forced labor We cannot be certain that our products will not be targeted or that our shipments will not be detained which may impact our operating performance
The continuing political and economic conflicts between U S and China have resulted in and may continue to result in retaliatory actions from both countries and it is unknown whether current US China relations over Taiwan including the signature of the US Taiwan Initiative on 21
Century Trade signed in May 2023 or the United States continuing commitment to support Taiwan with equipment and services for its self defense will impact the ongoing trade dispute with China We cannot predict what new retaliatory policies and regulations may be implemented by the Chinese government in response to the U S Taiwan engagement and any such policies and regulations or other responses may adversely affect our business operations in China
HBP and CPP operations are also subject to the effects of international trade agreements and regulations such as the United States Mexico Canada Agreement USMCA which will undergo a mandatory six year review in 2026 and the activities and regulations of the World Trade Organization Although these trade agreements generally have positive effects on trade
liberalization sourcing flexibility and the cost of goods by reducing or eliminating the duties and or quotas assessed on products manufactured in a particular country trade agreements can also adversely affect HBP and CPP For example trade agreements can result in setting quotas on products that may be imported from a particular country into key markets including the U S Canada Australia and the U K or may make it easier for other companies to compete by eliminating restrictions on products from countries in which HBP and CPP competitors source products With the expansion of its global sourcing strategy and the closure of numerous US manufacturing locations CPP is likely to experience a diminished ability to take advantage of the trade benefits of the USMCA
The ability of HBP and CPP to import products in a timely and cost effective manner may continue to be affected by conditions at ports or issues that otherwise affect transportation and warehousing providers such as port and shipping capacity fuel prices labor disputes severe weather or increased homeland security requirements in the U S and other countries as well as the potential for increased costs due to currency exchange fluctuations These issues along with the ongoing war between Russia and Ukraine could delay importation of products or require HBP and CPP to locate alternative ports or warehousing providers to avoid disruption to customers These alternatives may not be available on short notice or could result in higher transit costs which could have an adverse impact on the business and financial results of HBP and CPP
Griffon announced in May 2023 that CPP was expanding its global sourcing strategy to include long handled tools material handling and wood storage and organization product lines for the U S market This expansion of CPP s global sourcing strategy has increased Griffon s exposure to certain other risks to which it is subject including those related to the procurement of products from third party suppliers many of whom are located in China and other non U S jurisdictions CPP is also in the process of selling various U S facilities at which CPP formerly conducted operations and may not realize the proceeds it expects from the sale of these facilities
CPP s expanded global sourcing strategy may also increase its exposure to cybersecurity risks as discussed in the below risk factor titled Griffon s operations and reputation may be adversely impacted if our information technology IT systems or the IT systems of third parties with whom we do business fail to perform adequately or if we or such third parties are the subject of a data breach or cyber attack
The adoption of an asset light business model for these U S products has positioned CPP to better serve customers with a more flexible and cost effective sourcing model that leverages supplier relationships around the world which is in turn expected to improve CPP s competitive positioning and financial performance There is no guarantee that these intended results will be achieved
This initiative was successfully completed as of September 30 2024 ahead of the previously announced date of December 31 2024 As a result of this global sourcing expansion initiative manufacturing operations have concluded at four manufacturing sites and four wood mills resulting in a total its facility footprint reduction of approximately 1 2 million square feet or approximately 15 of CPP s square footage and a headcount reduction of approximately 600
If a future pandemic or similar outbreak such as something similar to COVID 19 occurs and governments take protective actions it may have a material adverse impact on Griffon s businesses and operating results for the reasons described above In such event the extent and duration of any impact on our businesses would be difficult to predict To the extent a new outbreak adversely affects our businesses operations financial condition and operating results it may also have the effect of heightening many of the other risks factors such as those relating to our high level of indebtedness our need to generate sufficient cash flows to service our indebtedness and our ability to comply with the covenants contained in the agreements that govern our indebtedness as described in more detail below
HBP s business is driven by renovation and construction during warm weather which is historically at reduced levels during the winter months generally in our second quarter In 2024 52 of CPP s sales occurred during the second and third quarters compared to 54 in 2023 and 58 in 2022
Demand for lawn and garden products is influenced by weather particularly weekend weather during the peak gardening season AMES sales volumes could be adversely affected by certain weather patterns such as unseasonably cool or warm
temperatures hurricanes water shortages or floods In addition lack of snow or lower than average snowfall during the winter season may result in reduced sales of certain AMES products such as snow shovels and other snow tools As a result AMES results of operations financial results and cash flows could be adversely impacted
At September 30 2024 Griffon employed approximately 5 300 people on a full time basis approximately 3 of whom are covered by collective bargaining or similar labor agreements If unionized employees engage in a strike or other work stoppage or if Griffon is unable to negotiate acceptable extensions of agreements with labor unions a significant disruption of operations and increased operating costs could occur In addition any renegotiation or renewal of labor agreements could result in higher wages or benefits paid to unionized employees which could increase operating costs and as a result have a material adverse effect on profitability
Griffon s operations and reputation may be adversely impacted if our information technology IT systems or the IT systems of third parties with whom we do business fail to perform adequately or if we or such third parties are the subject of a data breach or cyber attack
We rely on IT systems networks and services to conduct our business including communicating with employees and our key commercial customers ordering and managing materials and products from suppliers shipping products to customers and analyzing and reporting results of operations While we have taken steps to ensure the security of our information technology systems our systems may nevertheless be vulnerable to computer viruses security breaches and other disruptions from unauthorized users Cyber criminals are becoming more sophisticated and knowledgeable every day and as their tactics evolve it is a constant challenge to ensure that our IT security practices are sufficient to protect our IT systems and data If our IT systems are damaged or cease to function properly for an extended period of time whether as a result of a significant cyber incident or otherwise our ability to communicate internally as well as with our customers and suppliers could be significantly impaired which may adversely impact our business operations and reputation
In the normal course of our business we collect store and transmit proprietary and confidential information regarding our brands customers employees suppliers and others We also engage third parties that store process and transmit these types of information as well as personal information on our behalf An operational failure or breach of security from increasingly sophisticated cyber threats could lead to loss misuse or unauthorized disclosure of this information about our employees or customers which may result in regulatory or other legal proceedings and could have a material adverse effect on our business and reputation We also may not have the resources or technical sophistication to anticipate or prevent rapidly evolving types of cyber attacks Any such attacks or precautionary measures taken to prevent anticipated attacks may result in increasing costs including costs for additional technologies training and third party consultants The losses incurred from a breach of data security and operational failures as well as the precautionary measures required to address this evolving risk may adversely impact our financial condition results of operations and cash flows
We depend on our information systems to process orders manage inventory and accounts receivable collections purchase sell and ship products efficiently and on a timely basis maintain cost effective operations and provide superior service to our customers If these systems are damaged infiltrated shutdown or cease to function properly whether by planned upgrades force majeure telecommunications failures hardware or software break ins or viruses other cyber security incidents or otherwise we may suffer disruption in our ability to manage and operate our business
There can be no assurance that the precautions which we have taken against certain events that could disrupt the operations of our IT systems will prevent the occurrence of such a disruption Any such disruption could have a material adverse effect on our business and results of operations
Making strategic acquisitions is a part of Griffon s growth plans The ability to successfully complete acquisitions depends on identifying and acquiring on acceptable terms companies that either complement or enhance currently held businesses or expand Griffon into new profitable businesses and for certain acquisitions obtaining financing on acceptable terms Additionally Griffon must properly integrate acquired businesses in order to maximize profitability The competition for acquisition candidates is intense and Griffon cannot assure that it will successfully identify acquisition candidates and complete acquisitions at reasonable purchase prices in a timely manner or at all Further there is a risk that acquisitions will not be properly integrated into Griffon s existing structure In the past Griffon has consummated a group of acquisitions within a
An unsuccessful implementation of Griffon s acquisition growth strategy including the failure to properly integrate acquisitions could have an adverse impact on Griffon s results of operations cash flows and financial condition We may also incur debt or assume contingent liabilities in connection with acquisitions which could impose restrictions on our business operations and harm our operating results
Griffon s senior notes which have limited covenants are not due until 2028 its 800 million Term Loan B current balance of 457 million which also has limited covenants is not due until 2029 and its 500 million revolving line of credit which has greater covenant requirements does not mature until 2028 However in the event the 2028 Senior Notes are not repaid refinanced or replaced prior to December 1 2027 the Revolver will mature on December 1 2027 There are potential impacts from Griffon s use of debt to finance certain of its activities especially acquisitions and expansions as set forth below
The credit agreement entered into by and to a lesser extent the terms of the senior notes issued by Griffon each contain covenants that restrict the ability of Griffon and its subsidiaries to among other things incur additional debt pay dividends incur liens and make investments acquisitions dispositions restricted payments and capital expenditures Under the credit agreement Griffon is also required to comply with specific financial ratios and tests Griffon may not be able to comply in the future with these covenants or restrictions as a result of events beyond its control such as prevailing economic financial and industry conditions or a change in control of Griffon If Griffon defaults in maintaining compliance with the covenants and restrictions in its credit agreement or the senior notes its lenders could declare all of the principal and interest amounts outstanding due and payable and in the case of the credit agreement terminate the commitments to extend credit to Griffon in the future If Griffon or its subsidiaries are unable to secure credit in the future its business could be harmed
Griffon may need to raise additional financing in the future in order to implement its business plan refinance debt or acquire new or complimentary businesses or assets Any required additional financing may be unavailable or only available at unfavorable terms due to uncertainties in the credit markets If Griffon raises additional funds by issuing equity securities current holders of its common stock may experience significant ownership interest dilution and the holders of the new securities may have rights senior to the rights associated with current outstanding common stock
A substantial portion of cash flows from operations could be used to pay principal and interest on debt thereby reducing the funds available for working capital capital expenditures acquisitions product development and other general corporate purposes
The issuance of additional equity securities or securities convertible into equity securities would result in dilution to existing stockholders equity interests Griffon is authorized to issue without stockholder vote or approval 3 000 000 shares of preferred stock in one or more series and has the ability to fix the rights preferences privileges and restrictions of any such series Any such series of preferred stock could contain dividend rights conversion rights voting rights terms of redemption redemption prices liquidation preferences or other rights superior to the rights of holders of Griffon s common stock While there is no present intention of issuing any such preferred stock Griffon reserves the right to do so at any time In addition Griffon is authorized to issue without stockholder approval up to 85 000 000 shares of common stock of which 48 303 240 shares net of treasury shares were outstanding as of September 30 2024 Additionally Griffon is authorized to issue without stockholder approval securities convertible into either shares of common stock or preferred stock
The manufacturing facilities for each of Griffon s businesses are concentrated in just a few locations and in the case of CPP include third party manufacturing facilities some of which are abroad in low cost locations Any of Griffon s manufacturing facilities including those of Griffon s third party suppliers are subject to disruption for a variety of reasons such as natural or man made disasters pandemics terrorist activities disruptions of information technology resources and utility interruptions Such disruptions may cause delays in shipping products which could result in the loss of business or customer trust adversely affecting Griffon s businesses and operating results
Griffon s current manufacturing resources may be inadequate to meet significantly increased demand for some of its products Griffon s ability to increase its manufacturing capacity depends on many factors including the availability of capital steadily increasing consumer demand equipment delivery construction lead times installation qualification and permitting and other regulatory requirements Increasing capacity through the use of third party manufacturers may depend on Griffon s ability to develop and maintain such relationships and the ability of such third parties to devote additional capacity to fill its orders
A lack of sufficient manufacturing capacity to meet demand could cause customer service levels to decrease which may negatively affect customer demand for Griffon s products and customer relations generally which in turn could have a material adverse effect on Griffon s business results of operations financial condition and cash flows In addition operating facilities at or near capacity may also increase production and distribution costs and negatively impact relations with employees or contractors which could result in disruptions to operations
In addition manufacturing costs may increase significantly and Griffon may not be able to pass along all or any of such increase to its customers and when such increases are passed off to customers there will be a time lag which may be significant
The ability of HBP and CPP to compete successfully depends in part on the company s ability to develop and maintain leading brands so that retail and other customers will need its products to meet consumer demand Leading brands allow both CPP and HBP to realize economies of scale in its operations The development and maintenance of such brands require significant investment in brand building and marketing initiatives While HBP and CPP plan to continue to increase its expenditures for advertising and promotion and other brand building and marketing initiatives over the long term the initiatives may not deliver the anticipated results and the results of such initiatives may not cover the costs of the increased investment
Griffon is required to assess goodwill and indefinite lived intangible assets annually for impairment or on an interim basis if changes in circumstances or the occurrence of events suggest impairment exists If impairment testing indicates that the carrying amount of reporting units or indefinite lived intangible assets exceeds the respective fair value an impairment charge would be recognized If goodwill or indefinite lived intangible assets were to become impaired the results of operations could be materially and adversely affected
During the fiscal year ended September 30 2024 Griffon performed annual impairment testing of its goodwill and indefinite lived intangible assets The assessments did not result in any impairments to goodwill and indefinite lived intangible assets For the fiscal year ended September 30 2023 we recorded a non cash pre tax indefinite lived intangible assets impairment of 109 200 which resulted in an aggregate decrease of 1 49 in our earnings per share for the year ended September 30 2023 Should we have to record any impairment charges in the future it could have a significant negative impact on our earnings per share for the year in which any such impairment charge is recorded
Griffon relies on other companies to provide materials major components and products to fulfill contractual obligations Such arrangements may involve subcontracts teaming arrangements or supply agreements with other companies There is a risk that Griffon may have disputes regarding the quality and timeliness of work performed In addition changes in the economic environment including constraints on available financing may adversely affect the financial stability of Griffon s supply chain and their ability to meet their performance requirements or to provide needed supplies on a timely basis A disruption or failure of any supplier could have an adverse effect on Griffon s business resulting in an impact to profitability possible termination of a contract imposition of fines or penalties and harm to Griffon s reputation impacting its ability to secure future business
The markets for Griffon s products are characterized by rapid technological change evolving industry standards and continuous improvements in products Due to constant changes in Griffon s markets future success depends on Griffon s ability to develop new technologies products processes and product applications Griffon s long term success in the competitive retail environment and the industrial and commercial markets depends on its ability to develop and commercialize a continuing stream of innovative new products that are appealing to ultimate end users and create demand New product development and commercialization efforts including efforts to enter markets or product categories in which Griffon has limited or no prior experience have inherent risks These risks include the costs involved such as development and commercialization product development or launch delays and the failure of new products and line extensions to achieve anticipated levels of market acceptance or growth in sales or operating income
Griffon also faces the risk that its competitors will introduce innovative new products that compete with Griffon s products In addition sales generated by new products could cause a decline in sales of Griffon s other existing products If new product development and commercialization efforts are not successful Griffon s financial results could be adversely affected
Product and technological developments are accomplished both through internally funded R D projects as well as through strategic partnerships with customers Because it is not generally possible to predict the amount of time required and costs involved in achieving certain R D objectives actual development costs may exceed budgeted amounts and estimated product development schedules may be extended Griffon s financial condition and results of operations may be materially and adversely affected if
The success of Griffon is materially dependent upon the continued services of certain key officers and employees The loss of such key personnel could have a material adverse effect on Griffon s operating results or financial condition
Griffon and its companies conduct operations in Canada Australasia the U K and China and sell their products in many countries around the world Sales of products by non U S subsidiaries accounted for approximately 16 of consolidated revenue for the year ended September 30 2024 These sales could be adversely affected by changes in political and economic conditions trade protection measures such as tariffs the ability of the Company to enter into industrial cooperation agreements offset agreements differing intellectual property rights and laws and changes in regulatory requirements that restrict the sales of products or increase costs in such locations Enforcement of existing laws in such jurisdictions can be uncertain and the lack of a sophisticated body of laws can create various uncertainties including with respect to customer and supplier contracts Currency fluctuations between the U S dollar and the currencies in the non U S regions in which Griffon does business may also have an impact on future reported financial results
Griffon s international sales and operations are subject to applicable laws relating to trade export controls and foreign corrupt practices the violation of which could adversely affect operations Griffon is subject to various anti corruption laws that prohibit improper payments or offers of payments to foreign governments and their officials for the purpose of obtaining or retaining business In addition Griffon is subject to certain export controls laws and regulations as well as to economic sanctions laws and embargoes imposed by various governments or organizations including the U S and the European Union or member countries Violations of anti corruption export controls or sanctions laws may result in severe criminal or civil sanctions and penalties including loss of export privileges and loss of authorizations needed to conduct Griffon s international business Such violations could also result in Griffon being subject to other liabilities which could have a material adverse effect on Griffon s business results of operations and financial condition
Griffon relies on a combination of patent copyright and trademark laws common law trade secrets confidentiality and non disclosure agreements and other contractual provisions to protect proprietary rights Such measures do not provide absolute protection and Griffon cannot give assurance that measures for protecting these proprietary rights are and will be adequate or that competitors will not independently develop similar technologies
Griffon is regularly improving its technology and employing existing technologies in new ways Though Griffon takes reasonable precautions to ensure it does not infringe on the rights of others it is possible that Griffon may inadvertently infringe on or be accused of infringing on proprietary rights held by others If Griffon is found to have infringed on the propriety rights held by others any related litigation or settlement relating to such infringement may have a material effect on Griffon s business results of operations and financial condition
It is also possible that Griffon s suppliers may inadvertently infringe on or be accused of infringing on proprietary rights held by others Any such infringement or alleged infringement may have a material adverse effect on Griffon s business results of operations and financial condition For example in the past a supplier may not be able to develop an alternative design that meets Griffon s needs at a comparable cost or at all and the supply of certain products or components to Griffon may be interrupted
Griffon is subject to product liability and warranty claims in the ordinary course of business including with respect to former businesses now included within discontinued operations These claims relate to the conformity of its products with required specifications and to alleged or actual defects in Griffon s products or in end products in which Griffon s products were a component part that cause damage to property or persons There can be no assurance that the frequency and severity of product liability claims brought against Griffon will not increase which claims can be brought either by an injured customer of an end product manufacturer who used one of Griffon s products as a component or by a direct purchaser There is also no assurance that the number and value of warranty claims will not increase as compared to historical claim rates or that Griffon s warranty reserve at any particular time is sufficient No assurance can be given that indemnification from customers or coverage under insurance policies will be adequate to cover future product liability claims against Griffon for example product liability insurance typically does not cover claims for punitive damages Warranty claims are typically not covered by insurance at all Product liability insurance can be expensive difficult to maintain and may be unobtainable in the future on acceptable terms The amount and scope of any insurance coverage may be inadequate if a product liability claim is successfully asserted Furthermore if any significant claims are made the business and the related financial condition of Griffon may be adversely affected by negative publicity
Griffon s operations and assets are subject to environmental laws and regulations pertaining to the discharge of materials into the environment the handling and disposal of wastes including solid and hazardous wastes and otherwise relating to health safety and protection of the environment in the various jurisdictions in which it operates Griffon does not expect to make any expenditure with respect to ongoing compliance with or remediation under these environmental laws and regulations that would have a material adverse effect on its business operating results or financial condition However the applicable requirements under environmental laws and regulations may change at any time
Griffon can incur environmental costs related to sites that are no longer owned or operated as well as third party sites to which hazardous materials are sent Material expenditures or liabilities may be incurred in connection with such claims See the Commitment and Contingencies footnote in the Notes to Consolidated Financial Statements for further information on environmental contingencies Based on facts presently known the outcome of current environmental matters are not expected to have a material adverse effect on Griffon s results of operations and financial condition However presently unknown environmental conditions changes in environmental laws and regulations or other unanticipated events may give rise to claims that may involve material expenditures or liabilities
Griffon is subject to Federal state and local income taxes in the U S and in various taxing jurisdictions outside the U S Tax provisions and liabilities are subject to the allocation of income among various U S and international tax jurisdictions Griffon s effective tax rate could be adversely affected by changes in the mix of earnings in countries with differing statutory tax rates changes in any valuation allowance for deferred tax assets or the amendment or enactment of tax laws Further changes in the tax laws could arise as a result of the base erosion and profit shifting project Pillar Two undertaken by the Organization for Economic Co operation and Development OECD If the provisions of Pillar Two are adopted by taxing authorities in countries in which we do business such changes could increase the amount of taxes we pay and therefore decrease our results of operations and cash flows The amount of income taxes paid is subject to audits by U S Federal state and local tax authorities as well as tax authorities in the taxing jurisdictions outside the U S If such audits result in assessments different from recorded income tax liabilities Griffon s future financial results may include unfavorable adjustments to its income tax provision
Similar to the activist shareholder campaign initiated in 2021 activist shareholders may from time to time attempt to effect changes in our strategic direction and seek changes regarding Griffon s corporate governance or structure Our Board of Directors and management team strive to maintain constructive ongoing communications with all shareholders who wish to speak with us including activist shareholders and welcomes their views and opinions with the goal of working together constructively to enhance value for all shareholders However activist campaigns that contest or conflict with our strategic direction could have an adverse effect on us because
responding to actions by activist shareholders can disrupt our operations be costly and time consuming and divert the attention of our Board and senior management from the pursuit of our business strategies and
perceived uncertainties as to our future direction may cause i instability or lack of continuity which may be exploited by our competitors ii concern on the part of current or potential customers iii loss of business opportunities or iv difficulties in attracting and retain qualified personnel and business partners
Activist campaigns may also cause significant fluctuations in our stock price based on temporary or speculative market perceptions or other factors that do not necessarily reflect the fundamental underlying value of our businesses
Griffon relies on electronic information systems networks and technologies to conduct and support its operations and other functions and activities within the Company and with third parties We rely on commercially available systems software tools third party service providers and monitoring to provide security for processing transmission and storage of confidential information and data We have an enterprise grade cybersecurity management program designed to assess identify protect detect and respond to and manage material risks from cybersecurity threats To protect our information systems from cybersecurity threats we use various information technology and cybersecurity tools to safeguard our systems and data which help prevent identify escalate investigate remediate respond and recover from identified vulnerabilities and cybersecurity incidents
As part of the Company s cybersecurity risk management program we follow the National Institute of Standards and Technology NIST Cybersecurity Framework CSF to assess identify and manage material risks that arise from cybersecurity threats Griffon s cybersecurity risk management program is closely tied to and integrated with the Company s overall enterprise risk management processes
Griffon has a third party risk management program regarding the cybersecurity practices of its vendors and partners that is designed to oversee identify and minimize material risks from cybersecurity threats associated with the use of such third parties This program involves vetting of third parties before engagement Regular monitoring and reviews are conducted to ensure third party vendors and partners comply with Griffon s security standards
We also maintain a cyber incident response plan IRP with the objective of 1 providing a structured and systematic incident response process for cybersecurity threats that affect us 2 timely and effectively identifying resolving and communicating cybersecurity incidents and 3 managing internal and external communications and reporting
If a cybersecurity incident occurs our incident response team IRT is immediately notified and Griffon management is informed about and monitors the prevention detection mitigation and remediation of cybersecurity incidents impacting the Company The IRT also coordinates further notifications as applicable to senior executives and organizational leadership our Audit Committee and Board of Directors business partners or service providers and authorities
Like most organizations we and our third party service providers have experienced and expect to continue to experience actual or attempted cyber attacks of our information systems and networks During the reporting period Griffon has not identified any risks from cybersecurity threats including as a result of previous cybersecurity incidents that we believe have materially
affected or are reasonably likely to materially affect us including our business strategy operating results and financial condition However if any such event whether actual or perceived were to occur it could have a material adverse effect on our business strategy operating results and financial condition We continuously use threat models and cyber threat intelligence to identify relevant risks to our businesses and take active measures to mitigate these risks For more information regarding the risks we face from cybersecurity threats see Item 1A
The Audit Committee assists the Board of Directors in its oversight of risks related to cybersecurity and directly oversees risk management relating to cybersecurity The Audit Committee is also responsible for assessing the steps management has taken to monitor and control these risks and exposures and evaluating guidelines and policies with respect to our cybersecurity risk assessment and risk management The Audit Committee reviews our cybersecurity program with management and reports to the Board of Directors with respect to and its review of the program Cybersecurity reviews by the Audit Committee generally occur at least annually or more frequently as determined to be necessary or advisable From time to time third party subject matter experts present to the Audit Committee on contemporary cybersecurity topics of interest
Griffon also has a Cybersecurity Management Committee consisting of executives from Griffon and technology leaders from Griffon s business segments that monitors and assesses progress and performance by Griffon s business segments in the area of cybersecurity the results of such assessments are reported to the Audit Committee from time to time The Chief Information Officers of each of HBP and CPP regularly provide updates on material cybersecurity risks to our senior management and to our Audit Committee and along with their technology teams are responsible for assessing and managing cybersecurity risks Each of our business segment Chief Information Officers has over 20 years of experience in cybersecurity information security policy architecture engineering and incident response
Griffon occupies approximately 10 740 000 square feet of general office factory and warehouse space primarily throughout the U S Canada Mexico Australia U K Ireland New Zealand and China For a description of the encumbrances on certain of these properties refer to Note 22 Leases and Note 12 Long Term Debt footnotes in the Notes to Consolidated Financial Statements The following table sets forth certain information related to Griffon s major facilities
In addition to the facilities listed above HBP leases approximately 1 138 000 square feet of space for distribution centers in numerous facilities throughout the U S and in Canada HBP and CPP lease approximately 185 000 square feet of office space throughout the U S and various international locations and CPP owns approximately 118 000 square feet of additional space for operational wood mills in the U S As a part of CPP s global sourcing strategy expansion several facilities have concluded operations during fiscal 2024 and as a result these facilities which are approximately 1 242 000 square feet in the aggregate are classified as held for sale
Griffon is involved in litigation investigations and claims arising out of the normal conduct of business including those relating to commercial transactions product liability and warranty claims environmental employment and health and safety matters Griffon estimates and accrues liabilities resulting from such matters based on a variety of factors including the stage of the proceeding potential settlement value assessments by internal and external counsel and assessments by environmental engineers and consultants of potential environmental liabilities and remediation costs Such estimates are not discounted to reflect the time value of money due to the uncertainty in estimating the timing of the expenditures which may extend over several years
While it is impossible to ascertain the ultimate legal and financial liability with respect to certain contingent liabilities and claims Griffon believes based upon examination of currently available information experience to date and advice from legal counsel that the individual and aggregate liabilities resulting from the ultimate resolution of these contingent matters after taking into consideration existing insurance coverage and amounts already provided for will not have a material adverse impact on consolidated results of operations financial position or cash flows Refer to Note 16 Commitments and Contingent Liabilities for a discussion of the Company s litigation
During 2023 the Company declared and paid four regular quarterly cash dividends consisting of two cash dividends of 0 10 per share and two cash dividends of 0 125 per share totaling 0 45 per share for the year Additionally on April 19 2023 the Board of Directors declared a special cash dividend of 2 00 per share paid on May 19 2023 to shareholders of record as of the close of business on May 9 2023
During 2022 the Company paid a regular quarterly cash dividend of 0 09 per share totaling 0 36 per share for the year Additionally on June 27 2022 the Board of Directors declared a special cash dividend of 2 00 per share paid on July 20 2022
For all dividends a dividend payable is established for the holders of restricted shares such dividends will be released upon vesting of the underlying restricted shares 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
Excludes restricted shares and restricted stock units issued in connection with Griffon s equity compensation plans The total reflected in column c includes shares available for grant as any type of equity award under the Incentive Plan
On April 19 2023 the Company s Board of Directors approved a 200 000 increase to its share repurchase program to 257 955 from the prior unused authorization of 57 955 On November 15 2023 Griffon announced that the Board of Directors approved an additional increase of 200 000 to its share repurchase authorization Under the 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 As of September 30 2024 32 693 remained available for purchase under these Board authorized repurchase programs See
LIQUIDITY AND CAPITAL RESOURCES Liquidity for information regarding share repurchases in the first quarter of fiscal 2025 and the amount remaining available for purchase as of immediately prior to the filing of this Annual Report on Form 10 K
The performance graph does not constitute soliciting material is not deemed filed with the SEC and is not incorporated by reference in any of Griffon s filings under the Securities Act of 1933 or the Exchange Act of 1934 whether made before or after the date of this Annual Report on Form 10 K and irrespective of any general incorporation language in any such filings except to the extent Griffon specifically incorporates this performance graph by reference therein
The following graph sets forth the cumulative total return to Griffon s stockholders during the five years ended September 30 2024 as well as an overall stock market S P Small Cap 600 Index and Griffon s peer group index Dow Jones U S Diversified Industrials Index Assumes 100 was invested on September 30 2019 including the reinvestment of dividends in each category
Griffon Corporation the Company Griffon we or us 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 with acquisition and growth opportunities as well as divestitures As long term investors we intend to continue to grow and strengthen our existing businesses and to diversify further through investments in our businesses and acquisitions
Home and Building Products HBP conducts its operations through Clopay Corporation Clopay Founded in 1964 Clopay is the largest manufacturer and marketer of garage doors and rolling steel doors in North America Residential and commercial sectional garage doors are sold through professional dealers and leading home center retail chains throughout North America under the brands Clopay Ideal and Holmes Rolling steel door and grille products designed for commercial industrial institutional and retail use are sold under the Cornell and Cookson brands HBP revenue was 61 59 and 53 of Griffon s consolidated revenue in 2024 2023 and 2022 respectively
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 CPP revenue was 39 41 and 47 of Griffon s consolidated revenue in 2024 2023 and 2022 respectively
Griffon announced in May 2023 that CPP was expanding its global sourcing strategy to include long handled tools material handling and wood storage and organization product lines for the U S market This initiative was successfully completed as of September 30 2024 ahead of the previously announced date of December 31 2024 Refer to Note 10 Restructuring Charges for further detail
On July 1 2024 Griffon announced that its subsidiary The AMES Companies Inc AMES expanded the scope of its Australian operations by acquiring substantially all the assets of Pope a leading Australian provider of residential watering products from The Toro Company NYSE TTC for a purchase price of approximately AUD 21 800 approximately 14 500 in cash This is CPP s seventh acquisition in Australia since 2013 and further expands AMES s product portfolio in the Australian market Pope is expected to contribute approximately 25 000 in revenue in the first twelve months after this acquisition
On June 27 2022 we completed the sale of our Defense Electronics DE segment which consisted of our Telephonics Corporation Telephonics subsidiary for 330 000 in cash excluding customary post closing adjustments As such the results of operations of our Telephonics business is classified as a discontinued operation in the Consolidated Statements of Operations for all periods presented and the related assets and liabilities have been classified as assets and liabilities of the discontinued operation in the Consolidated Balance Sheets Accordingly all references made to results and information in this Annual Report on Form 10 K are to Griffon s continuing operations unless noted otherwise
On January 24 2022 Griffon acquired Hunter Fan Company Hunter a market leader in residential ceiling commercial and industrial fans from MidOcean Partners MidOcean for a contractual purchase price of 845 000 Hunter part of our CPP segment complements and diversifies our portfolio of leading consumer brands and products
Revenue for the year ended September 30 2024 of 2 623 520 decreased 2 compared to 2 685 183 for the year ended September 30 2023 The decrease was primarily due to a 6 decline in revenue at CPP while HBP s revenue remained consistent with the prior year
Gross profit for 2024 was 1 019 935 compared to 948 821 in 2023 Gross profit as a percent of sales gross margin for 2024 and 2023 was 38 9 and 35 3 respectively In the years ended 2024 and 2023 gross profit included restructuring charges of 35 806 and 82 028 respectively In 2024 gross profit also included amortization of 491 related to the fair value step up of acquired inventory sold in connection with the Pope acquisition Excluding these charges from both years gross profit would have been 1 056 232 or 40 3 of revenue compared to 1 030 849 or 38 4 in the prior year
Selling general and administrative SG A expenses in 2024 of 621 638 or 23 7 of revenue decreased 3 from 642 734 or 23 9 of revenue in 2023 2024 SG A expenses included restructuring charges of 5 503 strategic review retention and other of 10 594 and Pope acquisition costs of 441 2023 SG A expenses included restructuring charges of 10 440 strategic review retention and other of 20 225 special dividend ESOP charges of 15 494 and proxy expenses of 2 685 In 2023 proxy expenses of 2 685 related to a settlement entered into with a shareholder that had submitted a slate of director nominees Excluding these items from both periods 2024 SG A expenses would have been 605 100 or 23 1 of revenue compared to 593 890 or 22 1 with the increase in expenses primarily due to increased selling and administrative costs
In connection with the preparation of our financial statements for the fiscal years ended September 30 2024 and 2023 Griffon performed its annual impairment testing of its goodwill and indefinite lived intangibles Griffon performed a quantitative assessment of the CPP reporting units and indefinite lived intangible assets The assessments in both fiscal years did not result in an impairment to goodwill Also in 2024 the impairment test did not result in impairment charges to CPP s gross carrying amount of intangible assets however in 2023 the impairment tests did result in pre tax non cash impairment charges totaling 109 200 81 313 net of tax to CPP s gross carrying amount of intangible assets For HBP in both 2024 and 2023 Griffon performed qualitative assessments and determined that indicators that fair value was less than the carrying amount were not present
Interest expense in 2024 of 104 086 increased 3 compared to 2023 interest expense of 101 445 primarily as a result of increased outstanding borrowings and increased variable interest rates on both our Revolving Credit Facility and Term Loan B
Other income expense of 1 766 and 2 928 in 2024 and 2023 respectively includes 333 and 302 respectively of net currency exchange transaction gains losses from receivables and payables held in non functional currencies 148 and 469 respectively of net gains losses on investments and 137 and 866 respectively of net periodic benefit plan income expense Other income expense also includes royalty income of 2 198 and 2 104 in 2024 and 2023 respectively
Griffon reported income before tax from continuing operations for 2024 of 296 650 compared to 112 682 for 2023 The income tax provision recognized in 2024 and 2023 translated to an effective income tax rate of 29 2 and 31 1 respectively The 2024 and 2023 tax rates included discrete and certain other tax provisions net and other items that affect comparability as listed below Excluding the discrete and certain other tax provisions net and other items that affect comparability as listed below the effective income tax rates for 2024 and 2023 were 27 6 and 27 3 respectively These rates reflect the impact of tax reserves and changes in earnings mix between U S and non U S operations Income from continuing operations for 2024 was 209 897 or 4 23 per share compared to 77 617 or 1 42 per share in 2023 The 2024 income from continuing operations included the following
Revenue for the year ended September 30 2023 of 2 685 183 decreased 6 compared to 2 848 488 for the year ended September 30 2022 resulting from decreased revenue of 18 at CPP partially offset by increased revenue of 5 at HBP Adjusting for the period Griffon did not own Hunter in the prior year organic revenue decreased 8 to 2 609 417 Hunter contributed 75 766 of incremental revenue during 2023
Gross profit for 2023 was 948 821 compared to 936 886 in 2022 The gross margin for 2023 and 2022 was 35 3 and 32 9 respectively In the years ended 2023 and 2022 gross profit included restructuring charges of 82 028 and 7 964 respectively In the year ended 2022 gross profit also included amortization of 5 401 related to the fair value step up of acquired inventory sold in connection with the Hunter Fan acquisition Excluding these charges from both years gross profit would have been 1 030 849 or 38 4 of revenue compared to 950 251 or 33 4 in the prior year
SG A expenses in 2023 of 642 734 or 23 9 of revenue increased 6 from 608 926 or 21 4 of revenue in 2022 2023 SG A expenses included restructuring charges of 10 440 strategic review retention and other of 20 225 special dividend ESOP charges of 15 494 and proxy expenses of 2 685 2022 SG A expenses included restructuring charges of 8 818 acquisition costs of 9 303 strategic review retention and other of 9 683 special dividend ESOP charges of 10 538 and proxy expenses of 6 952 In 2023 proxy expenses of 2 685 related to a settlement entered into with a shareholder that had submitted a slate of director nominees In 2022 proxy expenses of 6 952 including legal and advisory fees were the result of a proxy contest initiated by a shareholder which was completed at the shareholder meeting on February 17 2022 Excluding these items from both periods 2023 SG A expenses would have been 593 890 or 22 1 of revenue compared to 563 632 or 19 8 with the increase in expenses primarily due to a full year of Hunter Fan expenses as well as increased management incentives marketing advertising and administrative expenses
In connection with the preparation of our financial statements for the fiscal years ended September 30 2023 and 2022 Griffon performed its annual impairment testing of its goodwill and indefinite lived intangibles For the fiscal year ended September 30 2023 Griffon performed a quantitative assessment of the CPP reporting units and indefinite lived intangible assets The assessments did not result in an impairment to goodwill However the impairment tests did result in pre tax non cash impairment charges totaling 109 200 81 313 net of tax to CPP s gross carrying amount of intangible assets For the fiscal year ended September 30 2022 indicators of impairment were present due to decreases in comparable company market multiples for the CPP reporting units and increased interest rates and the related impact on weighted average cost of capital rates Accordingly a quantitative assessment was performed which resulted in non cash pre tax impairment charges for goodwill and indefinite lived intangibles of 342 027 and 175 000 respectively For the HBP reporting units Griffon performed qualitative assessments and determined that indicators that fair value was less than the carrying amount were not present for the years ended September 30 2023 and 2022
Interest expense in 2023 of 101 445 increased 20 compared to 2022 interest expense of 84 379 primarily as a result of an increased effective interest rate related to the 800 000 Term Loan B facility entered into in fiscal 2022 in connection with the Hunter acquisition of which Griffon repaid 25 000 and 300 000 aggregate principal amount in 2023 and 2022 respectively
Other income expense of 2 928 and 6 881 in 2023 and 2022 respectively includes 302 and 305 respectively of net currency exchange transaction gains from receivables and payables held in non functional currencies 469 and 225 respectively of net gains losses on investments and 866 and 4 256 respectively of net periodic benefit plan income
Griffon reported income before tax from continuing operations for 2023 of 112 682 compared to a loss before tax from continuing operations of 270 879 in 2022 The income tax provision in 2023 and 2022 translated to an effective income tax rate of 31 1 and 6 2 respectively The 2023 and 2022 tax rates included discrete and certain other tax provisions net and other items that affect comparability as listed below Excluding the discrete and certain other tax provisions net and other items that affect comparability as listed below the effective income tax rates for 2023 and 2022 were 27 3 and 29 0 respectively These rates reflect the impact of tax reserves and changes in earnings mix between U S and non U S operations
Income from continuing operations for 2023 was 77 617 or 1 42 per share compared to a loss from continuing operations of 287 715 or 5 57 per share in 2022 The 2023 income from continuing operations included the following
Griffon evaluates performance based on adjusted income from continuing operations and the related adjusted earnings per common share which are non GAAP measures that exclude non cash impairment charges restructuring charges debt extinguishment acquisition related expenses and discrete and certain other tax items as well other items that may affect comparability as applicable Griffon believes this information is useful to investors for the same reason The following table provides a reconciliation of income loss from continuing operations to adjusted income from continuing operations and earnings loss per share from continuing operations to adjusted earnings per share from continuing operations
For the years ended September 30 2024 and 2023 restructuring charges relate to the CPP global sourcing expansion of which 35 806 and 82 028 respectively is included in Cost of goods and services and 5 503 and 10 440 respectively is included in SG A
Tax impact for the above reconciling adjustments from GAAP to non GAAP Income from continuing operations and the related EPS is determined by comparing the Company s tax provision including the reconciling adjustments to the tax provision excluding such adjustments
In fiscal 2022 loss from continuing operations is calculated using basic shares on the face of the income statement Per share impact of using diluted shares represents the impact of converting from the basic shares used in calculating earnings per share from the loss from continuing operations to the diluted shares used in calculating earnings per share from the adjusted income from continuing operations
Griffon evaluates performance and allocates resources based on each segment s adjusted EBITDA a non GAAP measure defined as income loss before taxes from continuing operations excluding interest income and expense depreciation and amortization unallocated amounts mainly corporate overhead strategic review charges non cash impairment charges restructuring charges and acquisition related expenses as well as other items that may affect comparability as applicable Griffon believes this information is useful to investors for the same reason
HBP revenue in 2023 increased 81 623 or 5 compared to 2022 due to favorable commercial and residential pricing and mix of 8 partially offset by a decline in volume of 3 The volume decrease was primarily driven by residential partially offset by commercial
HBP Adjusted EBITDA in 2023 increased 24 to 510 876 compared to 412 738 in 2022 Adjusted EBITDA benefited from the increased revenue noted above and reduced material costs partially offset by increased labor transportation advertising and marketing costs
CPP revenue in 2024 decreased 61 783 or 6 compared to 2023 primarily resulting from decreased volume driven by reduced consumer demand in North America partially offset by increased volume in Australia inclusive of the Pope acquisition 1
CPP adjusted EBITDA in 2024 increased 44 to 72 632 compared to 50 343 in 2023 primarily due to improved North American production costs and improved margins in Australia partially offset by the unfavorable impact of the reduced volume noted above
Segment depreciation and amortization decreased 5 014 compared to the prior year period primarily due to fully depreciated assets and the write down of certain fixed assets at several manufacturing facilities in connection with restructuring activities
On July 1 2024 Griffon announced that its subsidiary The AMES Companies Inc AMES expanded the scope of its Australian operations by acquiring substantially all the assets of Pope a leading Australian provider of residential watering products from The Toro Company NYSE TTC for a purchase price of approximately AUD 21 800 approximately 14 500 in cash This is CPP s seventh acquisition in Australia since 2013 and further expands AMES s product portfolio in the Australian market Pope is expected to contribute approximately 25 000 in revenue in the first twelve months after this acquisition
CPP revenue in 2023 decreased 244 928 or 18 compared to 2022 primarily resulting from a 25 decrease in volume across all channels and geographies driven by reduced customer demand elevated customer inventory levels customer supplier diversification in the U S and an unfavorable foreign exchange impact of 2 The volume decline was partially offset by 75 766 of Hunter revenue or 6 for the portion of the comparable year to date period in which Hunter was not owned by Griffon in the prior year as well as price and mix of 3 Hunter contributed 282 723 during 2023 compared to 246 474 in 2022
CPP Adjusted EBITDA in 2023 decreased 49 to 50 343 compared to 99 308 in 2022 primarily due to the unfavorable impact of the reduced volume noted above and its related impact on manufacturing and overhead absorption partially offset by reduced material costs discretionary spending and 7 679 of Hunter EBITDA for the portion of the comparable year to date period in which Hunter was not owned by Griffon in the prior year EBITDA reflected an unfavorable foreign exchange impact of 2 Hunter contributed 56 949 during 2023 compared to 43 579 in 2022
Segment depreciation and amortization increased 2 249 compared to the prior year period primarily due to depreciation and amortization on assets placed in service including a full period of Hunter assets partially offset by fully depreciated assets and the write down of certain fixed assets at several manufacturing facilities in connection with CPP s restructuring activities
As a result of this global sourcing expansion initiative manufacturing operations have concluded at four manufacturing sites and four wood mills resulting in a total facility footprint reduction of approximately 1 2 million square feet or approximately 15 of CPP s square footage and a headcount reduction of approximately 600
The adoption of an asset light business model for these U S products has positioned CPP to better serve customers with a more flexible and cost effective sourcing model that leverages supplier relationships around the world and improved its competitive positioning These actions will be essential for CPP to achieve its target of 15 EBITDA margin while enhancing free cash flow through improved working capital and significantly reduced capital expenditures
Implementation of this strategy over the duration of the project resulted in charges of 133 777 which included 51 082 of cash charges for employee retention and severance operational transition and facility and lease exit costs and 82 695 of non cash charges primarily related to asset write downs Cash charges included 22 628 for one time termination benefits and other personnel related costs and 28 454 for facility exit and other related costs Non cash charges included a 22 018 impairment charge related to certain fixed assets at several manufacturing locations and 60 677 to adjust inventory to net realizable value In addition there were 2 678 of capital investments to effectuate the project This excludes cash proceeds from the sale of real estate and equipment which through September 30 2024 were 13 271 and excludes future proceeds from the sale of remaining real estate and equipment
For 2024 unallocated amounts excluding depreciation consisted primarily of corporate overhead costs totaled 60 031 compared to 55 887 in 2023 with the increase primarily related to increases in Employee Stock Ownership Plan ESOP expenses driven by the increase in Griffon s share price partially offset by a decrease in other compensation related expenses
For 2023 unallocated amounts excluding depreciation consisted primarily of corporate overhead costs totaled 55 887 compared to 53 888 in 2022 with the increase primarily due to stock compensation expense
60 704 in 2024 compared to 65 445 in 2023 the decrease primarily relates to fully depreciated assets and the write down of certain fixed assets at several manufacturing facilities in connection with CPP s restructuring activities
65 445 in 2023 compared to 64 658 in 2022 the increase was primarily due to depreciation for new assets placed in service and a full year of depreciation and amortization related to the Hunter Fan acquisition
During 2024 total other comprehensive income loss net of taxes of 11 986 included a gain of 10 137 from foreign currency translation adjustments primarily due to the strengthening of the Euro British Pound and Australian Dollar all in comparison to the U S Dollar a 1 538 gain from pension and other post retirement benefits primarily related to asset returns and amortization and a 311 gain on cash flow hedges
During 2023 total other comprehensive income loss net of taxes of 12 728 included a gain of 8 447 from foreign currency translation adjustments primarily due to the strengthening of the Euro and British Pound all in comparison to the U S Dollar a 6 634 gain from pension and other post retirement benefits primarily associated with an increase in the assumed discount rate compared to 2022 and a 2 353 loss on cash flow hedges
On September 27 2021 Griffon announced it was exploring strategic alternatives for its Defense Electronics segment which consisted of Telephonics Corporation Telephonics and on June 27 2022 Griffon completed the sale of Telephonics for 330 000 excluding customary post closing adjustments primarily related to working capital As a result Griffon classified the results of operations of the Telephonics business as a discontinued operation in the Consolidated Statements of Operations in fiscal 2022 Accordingly all references made to results and information in this Annual Report on Form 10 K are to Griffon s continuing operations unless noted otherwise
At September 30 2024 and 2023 Griffon s discontinued assets and liabilities included the Company s obligation of 7 768 and 11 798 respectively primarily related to insurance claims income taxes product liability warranty claims and environmental reserves Griffon s assets for discontinued operations primarily relate to insurance claims See Note 8 Discontinued Operations
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 September 30 2024 the amount of cash cash equivalents and marketable securities held by non U S subsidiaries was 46 100 Our intent is to permanently reinvest these funds except in limited circumstances outside the U S and we do not currently anticipate that we will need funds generated from foreign operations to fund our domestic operations The Company may repatriate cash from its non U S subsidiaries if the Company determines that it is beneficial to the company and tax efficient The Company has accrued a deferred tax liability for withholding taxes on previously taxed earnings and profit PTEP which are not considered permanently reinvested In the event we determine that additional funds from non U S operations are needed to fund operations in the U S we will be required to accrue and pay U S taxes to repatriate these additional funds
Griffon s primary sources of liquidity are cash flows generated from operations cash on hand and our secured 500 000 revolving credit facility Revolver which matures in August 2028 During the fiscal year ended September 30 2024 the Company generated 380 042 of net cash from continuing operating activities and as of September 30 2024 the Company had 379 310 available subject to certain loan covenants for borrowing under the Revolver The Company had cash and cash equivalents of 114 438 at September 30 2024
Cash provided by operating activities from continuing operations for 2024 was 380 042 compared to 431 765 in 2023 a decrease of 51 723 In both 2024 and 2023 cash provided by operating activities reflected increased cash generated from operations at HBP and a net decrease in net working capital primarily driven by decreases in inventory
Cash flows from investing activities from continuing operations is primarily comprised of capital expenditures and business acquisitions as well as proceeds from the sale of businesses investments and property plant and equipment During 2024 Griffon used 64 999 in investing activities from continuing operations compared to 45 211 in 2023 During 2024 cash flows used in investing activities from continuing operations primarily consisted of capital expenditures of 68 399 and payments to acquire businesses net of cash acquired of 14 579 partially offset by 14 479 of proceeds primarily from the sale of buildings and equipment associated with CPP s restructuring activities and 3 500 escrow proceeds released from the sale of Telephonics During 2023 cash flows used in investing activities from continuing operations primarily consisted of a working capital adjustment payment of 2 568 related to the sale of Telephonics and capital expenditures of 63 604 that included the purchase of two buildings for approximately 29 207 partially offset by proceeds totaling 20 961 from the sale of two buildings
Cash used in financing activities from continuing operations was 298 748 in 2024 compared to 400 162 in 2023 During 2024 cash flows used in financing activities from continuing operations primarily consisted of the purchase of shares in connection with the board authorized share repurchase program and to satisfy withholding taxes on vesting of restricted stock totaling 309 916 and the payment of dividends of 35 806 partially offset by net proceeds from long term debt of 48 222 primarily related to the Revolver During 2023 cash flows used in financing activities from continuing operations primarily consisted of net repayments of long term debt of 99 223 primarily related to the Revolver the payoff of AMES UK loans and a prepayment of 25 000 aggregate principal amount of the Term Loan B the purchase of treasury shares in connection with the board authorized share repurchase program and to satisfy withholding taxes on vesting of restricted stock totaling 163 970 and the payment of dividends of 133 814
During 2024 the Board of Directors approved four quarterly cash dividends each for 0 15 per share totaling 0 60 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 November 12 2024 the Board of Directors declared a cash dividend of 0 18 per share payable on December 18 2024 to shareholders of record as of the close of business on November 25 2024
During 2024 Griffon purchased 4 771 959 shares of common stock under these repurchase programs for a total of 274 490 or 57 52 per share excluding excise taxes As of September 30 2024 32 693 remained under these Board authorized repurchase programs 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
During the year ended September 30 2024 we accrued 2 772 in connection with the share repurchases described above which was partially offset by the reversal of 462 of excise taxes to adjust for a benefit related to employee vesting and a 510 net benefit on ESOP contributions As of September 30 2024 3 101 was accrued for excise taxes related to employee share repurchases
Subsequent to September 30 2024 and through November 12 2024 Griffon purchased 481 379 shares of its common stock for a total of 32 693 or 67 91 per share under Board authorized share repurchase programs On November 13 2024 Griffon announced that the Board of Directors approved a new 400 000 share repurchase authorization
During 2024 cash used in discontinued operations from operating activities of 2 776 primarily related to the settling of certain liabilities primarily stay bonuses associated with the disposition of Telephonics and environmental and other costs related to
other discontinued businesses During 2023 cash used in discontinued operations from operating activities of 2 994 primarily related to the settling of certain liabilities primarily stay bonuses associated with the disposition of Telephonics and environmental and other costs related to other discontinued businesses
During 2020 Griffon issued at par 1 000 000 of 5 75 Senior Notes due 2028 the 2028 Senior Notes Proceeds from the 2028 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 2028 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 2028 Senior Notes in the open market at a weighted average discount of 91 82 of par or 23 161 In connection with these purchases Griffon recognized a 1 767 net gain on the early extinguishment of debt comprised of 2 064 of face value in excess of purchase price offset by 297 related to the write off of underwriting fees and other expenses As of September 30 2024 outstanding Senior Notes due totaled 974 775 interest is payable semi annually on March 1 and September 1
The 2028 Senior Notes are senior unsecured obligations of Griffon guaranteed by certain domestic subsidiaries and subject to certain covenants limitations and restrictions The 2028 Senior Notes were registered under the Securities Act of 1933 as amended the Securities Act via an exchange offer The fair value of the 2028 Senior Notes approximated 957 716 on September 30 2024 based upon quoted market prices level 1 inputs At September 30 2024 6 900 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 Since that time during 2023 and 2022 Griffon prepaid 25 000 and 300 000 respectively aggregate principal amount of the Term Loan B which permanently reduced the outstanding balance In connection with the prepayment of the Term Loan B Griffon recognized charges of 437 and 6 296 on the prepayment of debt in 2023 and 2022 respectively The charges were comprised of write offs of unamortized debt issuance costs of 386 and 5 575 for 2023 and 2022 respectively and the original issue discount of 51 and 721 for 2023 and 2022 respectively As of September 30 2024 the Term Loan B outstanding balance was 457 000
On June 26 2024 Griffon further amended its Credit Agreement to favorably reprice the Term Loan B facility The amendment reduced the margin above SOFR by 0 25 eliminated the credit spread adjustment and reduced the SOFR floor from 0 50 to 0 Furthermore the amendment stipulates that if Griffon prepays all or a portion of the Term Loan B within six months of the amendment date Griffon will be required to pay a premium equal to 1 of the amount prepaid In connection with the amendment Griffon recognized a 1 700 loss on debt extinguishment in the Company s Consolidated Statement of Operations primarily consisting of the write off of unamortized debt issuance costs and original issue discount related to portions of the Term Loan B facility that were repaid and then reborrowed from new lenders At September 30 2024 unamortized costs of 5 420 related to the existing and new Term Loan B facility lenders will continue to be amortized over the term of the loan
The Term Loan B bears interest at the Term SOFR rate plus a spread of 2 00 6 85 as of September 30 2024 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 subject to a prepayment premium of 1 in
connection with the above repricing transaction with respect to any prepayments within the six months following the closing date of June 26 2024 Once repaid Term Loan B borrowings may not be reborrowed The Term Loan B facility is subject to the same affirmative and negative covenants that apply to the Revolver 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 457 571 on September 30 2024 based upon quoted market prices level 1 inputs
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 2028 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 Secured Overnight Financing Rate 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 2 00 6 95 at September 30 2024 SONIA loans accrue interest at SONIA Base Rate plus a credit adjustment spread and a margin of 2 00 6 98 at September 30 2024 and base rate loans accrue interest at prime rate plus a margin of 1 00 9 00 at September 30 2024
At September 30 2024 under the Credit Agreement there were 107 500 in outstanding borrowings on the Revolver outstanding standby letters of credit were 13 190 and 379 310 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
On September 28 2023 the Company closed on the exercise of its lease purchase option as permitted under the lease agreement to acquire ownership of the manufacturing facility located in Ocala Florida for a cash purchase price of 23 207 The Ocala lease had a maturity date in 2025 and bore interest at a fixed rate of approximately 5 6 As a result of exercising the purchase option the Company no longer has any future lease obligations related to this real estate During 2022 the financing lease on the Troy Ohio location expired The Troy lease bore interest at a rate of approximately 5 0 was secured by a mortgage on the real estate which was guaranteed by Griffon and had a one dollar buyout at the end of the lease Griffon exercised the one dollar buyout option in November 2021 Refer to Note 22 Leases for further details
In November 2012 Garant G P Garant a Griffon wholly owned subsidiary entered into a CAD 15 000 revolving credit facility Effective in December 2023 the facility was amended to replace the Canadian Dollar Offer Rate CDOR with the Canadian Overnight Repo Rate Average CORRA The facility accrues interest at CORRA plus 1 3 per annum 5 46 as of September 30 2024 The revolving facility matures in December 2024 but is renewable upon mutual agreement with the lender Garant is required to maintain a certain minimum equity At September 30 2024 there were no outstanding borrowings under the revolving credit facility with CAD 15 000 11 135 as of September 30 2024 available
During 2023 Griffon Australia Holdings Pty Ltd and its Australian subsidiaries collectively Griffon Australia amended its AUD 15 000 receivable purchase facility to AUD 30 000 The receivable purchase facility was renewed in 2024 and now matures in March 2024 but is renewable upon mutual agreement with the lender The receivable purchase facility accrues interest at Bank Bill Swap Rate plus 1 25 per annum 5 55 at September 30 2024 At September 30 2024 there was no balance outstanding under the receivable purchase facility with AUD 30 000 20 619 as of September 30 2024 available The receivable purchase facility is secured by substantially all of the assets of Griffon Australia and its subsidiaries Griffon Australia is required to maintain a certain minimum equity level
In July 2018 the AMES Companies UK Ltd and its subsidiaries collectively Ames UK entered into a GBP 14 000 term loan GBP 4 000 mortgage loan and GBP 5 000 revolver which matured in July 2023 Prior to maturity on June 30 2023 AMES UK paid off and cancelled the GBP 14 000 term loan and GBP 4 000 mortgage loan The payoff amounts were GBP
At September 30 2024 Griffon and its subsidiaries were in compliance with the terms and covenants of its credit and loan agreements 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 adjusted EBITDA as defined above and stock based compensation expense Net Debt to EBITDA as calculated in accordance with the definition in the Credit Agreement was 2 6x at September 30 2024
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 457 000 on September 30 2024 and the Revolver which matures in 2028 and has an outstanding balance of 107 500 The Term Loan B accrues interest at the Term SOFR rate plus a spread of 2 00 6 85 as of September 30 2024 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 adjustment spread and a margin of 2 00 6 95 at September 30 2024 SONIA loans accrue interest at SONIA Base Rate plus a credit adjustment spread and a margin of 2 00 6 98 at September 30 2024 and base rate loans accrue interest at prime rate plus a margin of 1 00 9 00 at September 30 2024
Griffon s purchase obligations which are generally for the purchase of goods and services in the ordinary course of business over the next twelve months is approximately 195 227 Griffon uses blanket purchase orders to communicate expected requirements to certain vendors Purchase obligations reflect those purchase orders in which the commitment is considered to be firm
A small number of customers account for and are expected to continue to account for a substantial portion of Griffon s consolidated revenue In 2024 Home Depot represented 11 of Griffon s consolidated revenue 8 of HBP s revenue and 15 of CPP s revenue
No other customer exceeded 10 or more of consolidated revenue Future operating results will continue to substantially depend on the success of Griffon s largest customers and our relationships with them Orders from these customers are subject to change and may fluctuate materially The loss of all or a portion of volume from any one of these customers could have a material adverse impact on Griffon s liquidity and operations
Griffon s Senior Notes are fully and unconditionally guaranteed jointly and severally by Clopay Corporation The AMES Companies Inc Clopay AMES Holding Corp ClosetMaid LLC AMES Hunter Holdings Corporation Hunter Fan Company CornellCookson LLC and Cornell Real Estate Holdings LLC all of which are indirectly 100 owned by Griffon In accordance with Rule 3 10 of Regulation S X promulgated under the Securities Act presented below are summarized financial information of the Parent Griffon subsidiaries and the Guarantor subsidiaries as of September 30 2024 and September 30 2023 and for the years ended September 30 2024 and 2023 All intercompany balances and transactions between subsidiaries under Parent and subsidiaries under the Guarantor have been eliminated The information presented below excludes eliminations necessary to arrive at the information on a consolidated basis The summarized information excludes financial information of the Non Guarantors including earnings from and investments in these entities The financial information may not necessarily be indicative of the results of operations or financial position of the guarantor companies or non guarantor
companies had they operated as independent entities The guarantor companies and the non guarantor companies include the consolidated financial results of their wholly owned subsidiaries accounted for under the equity method
The indentures relating to the Senior Notes the Indentures contain terms providing that under certain limited circumstances a guarantor will be released from its obligations to guarantee the Senior Notes These circumstances include i a sale of at least a majority of the stock or all or substantially all the assets of the subsidiary guarantor as permitted by the Indentures ii a public equity offering of a subsidiary guarantor that qualifies as a Minority Business as defined in the Indentures generally a business the EBITDA of which constitutes less than 50 of the segment adjusted EBITDA of the Company for the most recently ended four fiscal quarters and that meets certain other specified conditions as set forth in the Indentures iii the designation of a guarantor as an unrestricted subsidiary as defined in the Indentures in compliance with the terms of the Indentures iv Griffon exercising its right to defease the Senior Notes or to otherwise discharge its obligations under the Indentures in each case in accordance with the terms of the Indentures and v upon obtaining the requisite consent of the holders of the Senior Notes
The preparation of Griffon s consolidated financial statements in conformity with accounting principles generally accepted in the U S 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
An estimate is considered to be critical if it is subjective and if changes in the estimate using different assumptions would result in a material impact on Griffon s financial position or results of operations The most significant areas involving management estimates are described below
As of September 30 2024 the balance of goodwill on our balance sheet is 329 393 and indefinite lived intangibles representing our trademarks is 291 803 We test goodwill and indefinite lived intangibles for impairment at least annually in the fourth quarter and more frequently whenever events or circumstances change that would more likely than not reduce the fair value below the carrying amount Such events or changes in circumstance include significant deterioration in overall economic conditions changes in the business climate in which our reporting units operate a decline in our market capitalization operating performance indicators when some portion of a reporting unit is disposed of or classified as held for sale or when a change in the composition of reporting units occurs for other reasons such as a change in operating segments To test goodwill and indefinite lived intangible assets for impairment we may perform both a qualitative assessment and quantitative assessment If we elect to perform a qualitative assessment we consider operating results as well as circumstances impacting the operations or cash flows of the reporting unit or indefinite lived intangible assets including macroeconomic conditions industry and market conditions and reporting unit events and circumstances For the quantitative test the assessment is based on both an income based and market based valuation approach If it is determined that an impairment exists we recognize an impairment loss for the amount by which the carrying amount of the reporting unit or indefinite lived intangible asset exceeds its estimated fair value
Under the income based approach we determine the fair value of a reporting unit by using discounted cash flows that require significant judgement and assumptions such as our best estimate of future revenue operating costs cash flows expected long term cash flow growth rates terminal value growth rates and risk adjusted discount rates Under the market based approach we determine the fair value of a reporting unit by applying those multiples exhibited by comparable publicly traded companies and those multiples paid in acquisitions of peer company transactions to the financial results of the reporting units We then compare the fair value estimates resulting from the income and market based valuations to the sum of Griffon s market capitalization and net debt position to assess the reasonableness of the implied control premium We determine the fair value of indefinite lived intangible assets by using the relief from royalty method which estimates the value of a trademark by discounting to present value the hypothetical royalty payments that are saved by owning the asset rather than licensing it
In connection with the preparation of our financial statements for the fiscal years ended September 30 2024 2023 and 2022 Griffon performed its annual impairment testing of its goodwill and indefinite lived intangibles Griffon performed a quantitative assessment of the CPP reporting units and indefinite lived intangible assets The assessments in both fiscal 2024 and 2023 did not result in an impairment to goodwill however for fiscal 2022 the impairment test resulted in a pre tax non cash goodwill impairment charge of 342 027 to the CPP reporting units For the HBP reporting unit we performed a qualitative assessment and determined that indicators that fair value was less than the carrying amount were not present in fiscal years 2024 2023 and 2022
Also in 2024 the impairment test did not result in impairment charges to CPP s gross carrying amount of intangible assets however in 2023 and 2022 the impairment tests did result in pre tax non cash impairment charges totaling 109 200 and 175 000 respectively to CPP s gross carrying amount of trademarks Griffon performed qualitative assessments for the HBP indefinite lived intangibles and determined that indicators that fair value was less than the carrying amount were not present in fiscal 2024 2023 and 2022 A 100 basis point increase in the discount rate would have resulted in an additional impairment charge to our indefinite lived intangible assets of 16 200 and no additional impairment to goodwill for the year ended September 30 2024
Long lived assets such as customer relationships and software and tangible assets primarily property plant and equipment are amortized over their expected useful lives which involve significant assumptions and estimates We assess the recoverability of the carrying amount of our long lived assets including amortizable intangible assets whenever events or changes in circumstances indicate the carrying amount of the assets may not be recoverable We evaluate the recoverability of such assets based on the expectations of undiscounted cash flows attributable to the asset group If the sum of the expected future undiscounted cash flows are less than the carrying amount of the asset group a loss would be recognized for the difference between the fair value and the carrying amount As of September 30 2024 and 2023 we tested long lived intangible and tangible assets for impairment by comparing estimated future undiscounted cash flows of each CPP asset group to the carrying amount of the asset group and determined that an impairment did not exist No event or indicator of impairment existed for the HBP assets groups as of September 30 2024 and 2023
Fair value estimates are based on assumptions believed to be reasonable at the time but such assumptions are subject to inherent uncertainty Actual results may differ materially from those estimates Any changes in key assumptions or management judgment with respect to a reporting unit or its prospects which may result from a decline in Griffon s stock price a change in market conditions market trends interest rates or other factors outside of Griffon s control or significant underperformance relative to historical or projected future operating results could result in a significantly different estimate of the fair value of Griffon s reporting units which could result in an impairment charge in the future
Griffon s effective tax rate is based on income statutory tax rates and tax planning opportunities available in the various jurisdictions in which Griffon operates For interim financial reporting the annual tax rate is estimated based on projected taxable income for the full year and a quarterly income tax provision is recorded in accordance with the anticipated annual rate As the year progresses the annual tax rate is refined as new information becomes available including year to date financial results This process often results in changes to the effective tax rate throughout the year Significant judgment is required in determining the effective tax rate and in evaluating tax positions
Deferred tax assets and liabilities are recognized based on the differences between the financial statement carrying amounts and the tax basis of assets and liabilities Deferred tax assets represent items to be used as a tax deduction or credit in future tax returns for which a tax benefit has been recorded in the income statement The Company assesses whether a valuation allowance should be established against its deferred tax assets based on consideration of all available evidence both positive and negative using a more likely than not standard This assessment considers among other matters the nature frequency and severity of recent losses a forecast of future profitability the duration of statutory carryback and carryforward periods the Company s experience with tax attributes expiring unused and tax planning alternatives The likelihood that the deferred tax asset balance will be recovered from future taxable income is assessed at least quarterly and the valuation allowance if any is adjusted accordingly
Tax benefits are recognized for an uncertain tax position when in management s judgment it is more likely than not that the position will be sustained upon examination by a taxing authority For a tax position that meets the more likely than not recognition threshold the tax benefit is measured as the largest amount that is judged to have a greater than 50 likelihood of being realized upon ultimate settlement with a taxing authority The liability associated with unrecognized tax benefits is adjusted periodically due to changing circumstances such as the progress of tax audits case law developments and new or emerging legislation Such adjustments are recognized in the period in which they are identified The effective tax rate includes the net impact of changes in the liability for unrecognized tax benefits and subsequent adjustments as considered appropriate by management A number of years may elapse before a particular matter for which Griffon has recorded a liability related to an unrecognized tax benefit is audited and finally resolved The number of years with open tax audits varies by jurisdiction While it is often difficult to predict the final outcome or the timing of resolution of any particular tax matter Griffon believes its liability for unrecognized tax benefits is adequate Favorable resolution of an unrecognized tax benefit could be recognized as a reduction in Griffon s tax provision and effective tax rate in the period of resolution Unfavorable settlement of an unrecognized tax benefit may require the use of cash in the period of resolution The liability for unrecognized tax benefits is generally presented as non current However if it is anticipated that a cash settlement will occur within one year that portion of the liability is presented as current Interest and penalties recognized on the liability for unrecognized tax benefits is recorded as income tax expense
Griffon sponsors defined and supplemental benefit pension plans for certain active and retired employees Annual amounts relating to these plans are recorded based on actuarial projections which include various actuarial assumptions including discount rates assumed rates of return compensation increases and turnover rates The actuarial assumptions used to determine pension liabilities assets and expense are reviewed annually and modified based on current economic conditions and trends The expected return on plan assets is determined based on the nature of the plans investments and expectations for long term rates of return The discount rate used to measure obligations is based on a corporate bond spot rate yield curve that matches projected future benefit payments with the appropriate spot rate applicable to the timing of the projected future benefit payments Assumptions used in determining Griffon s obligations under the defined benefit pension plans are believed to be reasonable based on experience and advice from independent actuaries however differences in actual experience or changes in the assumptions may materially affect Griffon s financial position or results of operations
Griffon s amended and restated Credit Agreement references a benchmark rate with SONIA or SOFR In addition certain other of Griffon s credit facilities have a Canadian Overnight Repo Rate Average rate CORRA and Bank Bill Swap rate BBSY based variable interest rate Due to the current and expected level of borrowings under these facilities a 100 basis point change in SONIA SOFR CORRA or BBSY would not have a material impact on Griffon s results of operations or liquidity
Griffon conducts business in various non U S countries primarily in Canada Australia United Kingdom Ireland New Zealand and China therefore changes in the value of the currencies of these countries affect the financial position and cash flows when translated into U S Dollars Griffon has generally accepted the exposure to exchange rate movements relative to its non U S operations Griffon may from time to time hedge its currency risk exposures A change of 10 in the value of all applicable foreign currencies would not have a material effect on Griffon s financial position and cash flows
We have audited the accompanying consolidated balance sheets of Griffon Corporation a Delaware corporation and subsidiaries the Company as of September 30 2024 and 2023 and the related consolidated statements of operations and comprehensive income loss changes in shareholders equity and cash flows for each of the three years in the period ended September 30 2024 and the related notes and financial statement schedule included under Item 15 a 2 collectively referred to as the financial statements We also have audited the Company s internal control over financial reporting as of September 30 2024 based on criteria established in the 2013
In our opinion the financial statements referred to above present fairly in all material respects the financial position of the Company as of September 30 2024 and 2023 and the results of its operations and its cash flows for each of the three years in the period ended September 30 2024 in conformity with accounting principles generally accepted in the United States of America Also in our opinion the Company maintained in all material respects effective internal control over financial reporting as of September 30 2024 based on criteria established in the 2013
The Company s management is responsible for these financial statements for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management s Report on Internal Control over Financial Reporting Our responsibility is to express an opinion on the Company s financial statements and an opinion on the Company s internal control over financial reporting based on our audits We are a public accounting firm registered with the Public Company Accounting Oversight Board United States PCAOB and are required to be independent with respect to the Company in accordance with the U S federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB
We conducted our audits in accordance with the standards of the PCAOB Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement whether due to error or fraud and whether effective internal control over financial reporting was maintained in all material respects
Our audits of the financial statements included performing procedures to assess the risks of material misstatement of the financial statements whether due to error or fraud and performing procedures that respond to those risks Such procedures included examining on a test basis evidence regarding the amounts and disclosures in the financial statements Our audits also included evaluating the accounting principles used and significant estimates made by management as well as evaluating the overall presentation of the financial statements Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting assessing the risk that a material weakness exists and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk Our audits also included performing such other procedures as we considered necessary in the circumstances We believe that our audits provide a reasonable basis for our opinions
A company s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles A company s internal control over financial reporting includes those policies and procedures that 1 pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company 2 provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company and 3 provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition use or disposition of the company s assets that could have a material effect on the financial statements
Because of its inherent limitations internal control over financial reporting may not prevent or detect misstatements Also projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate
arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that 1 relates to accounts or disclosures that are material to the financial statements and 2 involved our especially challenging subjective or complex judgments The communication of critical audit matters does not alter in any way our opinion on the financial statements taken as a whole and we are not by communicating the critical audit matter
As described further in notes 1 and 7 to the consolidated financial statements the Company tests goodwill and indefinite lived intangible assets for impairment at least annually in the fourth quarter and more frequently whenever events or circumstances change that would more likely than not reduce the fair value below the carrying amount The Company performed its annual impairment testing of goodwill and indefinite lived intangible assets as of September 30 2024 A quantitative assessment of the goodwill and indefinite lived intangible assets was performed for the Consumer and Professional Products CPP reporting units
The CPP reporting units goodwill was tested for impairment by comparing the estimated fair value of the reporting units to their respective carrying values The estimated fair value of the CPP reporting units was determined using a combination of the income based and market based valuation methodologies which include the present value of expected future cash flows and the use of market assumptions specific to the reporting units The Company used prospective financial information to which discount rates were applied to calculate the estimated fair value
Similarly to goodwill CPP s indefinite lived intangible assets were tested for impairment by comparing the estimated fair value of the indefinite lived intangible assets to their carrying value using a relief from royalty valuation method which estimates the value of a trademark by discounting to present value the hypothetical royalty payments that are saved by owning the asset rather than licensing it We identified the Company s annual impairment testing of the CPP reporting units goodwill and certain indefinite lived intangible assets as a critical audit matter
The principal considerations for our determination that the CPP annual impairment testing is a critical audit matter are as follows The determination of the fair value of reporting units and indefinite lived intangible assets require management to make significant estimates and assumptions related to forecasts of future cash flows such as revenue growth rates discount rates weighted average cost of capital and specifically for indefinite lived intangibles royalty rates This requires management to evaluate historical results and expectations of future operating performance based on relevant information available to them regarding expectations of industry performance as well as expectations for entity specific performance In addition determining the discount rates requires management to evaluate the appropriate risk premium based on their judgment of industry and entity specific risks Similarly determining the royalty rates requires management to evaluate hypothetical royalty payments that are saved by owning the asset rather than licensing it As disclosed by management changes in these assumptions could have a significant impact on the fair value of the reporting units and indefinite lived intangible assets In turn auditing these judgments and assumptions requires a high degree of auditor judgment
Our audit procedures related to the CPP quantitative impairment testing included the following We tested the design and operating effectiveness of controls relating to the impairment testing including the Company s ability to develop the estimates utilized in calculating the fair value of the CPP reporting units and certain indefinite lived intangible assets Such estimates included revenue growth rates discount rates weighted average cost of capital and specifically for indefinite lived intangible assets royalty rates With the assistance of valuation specialists we evaluated the appropriateness of the valuation methodologies utilized and assessed the appropriateness of inputs utilized We also evaluated the qualifications of those responsible for preparing the calculations of fair values We tested key inputs significant judgments and estimates utilized in performing the annual impairment test as follows a tested revenue growth rates by comparing to historical trends and industry expectations performed a sensitivity analysis over revenue growth rates and assessed management s historical ability to accurately forecast b tested discount rates by comparing to historical rates and industry expectations compared rates to market comparable companies independently calculated discount rates for comparison to those used by management performed a sensitivity analysis over discount rates and tested weighted average cost of capital by analyzing the implied discount rate and independently calculated a weighted average discount rate compared to the rate utilized by management and c for indefinite lived intangible assets tested royalty rates by comparing to comparable licensing agreements and performed a sensitivity analysis over royalty rates
Griffon Corporation the Company Griffon we or us 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 with acquisition and growth opportunities as well as divestitures As long term investors we intend to continue to grow and strengthen our existing businesses and to diversify further through investments in our businesses and acquisitions
Griffon announced in May 2023 that CPP was expanding its global sourcing strategy to include long handled tools material handling and wood storage and organization product lines for the U S market This initiative was successfully completed as of September 30 2024 ahead of the previously announced date of December 31 2024 Refer to Note 10 Restructuring Charges for further details
On July 1 2024 Griffon announced that its subsidiary The AMES Companies Inc AMES expanded the scope of its Australian operations by acquiring substantially all the assets of Pope a leading Australian provider of residential watering products from The Toro Company NYSE TTC for a purchase price of approximately AUD 21 800 approximately 14 500 in cash This is CPP s seventh acquisition in Australia since 2013 and further expands AMES s product portfolio in the Australian market
On June 27 2022 we completed the sale of our Defense Electronics DE segment which consisted of our Telephonics Corporation Telephonics subsidiary for 330 000 in cash excluding customary post closing adjustments As such the results of operations of our Telephonics business is classified as a discontinued operation in the Consolidated Statements of Operations for all periods presented and the related assets and liabilities have been classified as assets and liabilities of the discontinued operation in the Consolidated Balance Sheets Accordingly all references made to results and information in this Annual Report on Form 10 K are to Griffon s continuing operations unless noted otherwise
On January 24 2022 Griffon acquired Hunter Fan Company Hunter a market leader in residential ceiling commercial and industrial fans from MidOcean Partners MidOcean for a contractual purchase price of 845 000 Hunter part of our CPP segment complements and diversifies our portfolio of leading consumer brands and products
Home and Building Products HBP conducts its operations through Clopay Corporation Clopay Founded in 1964 Clopay is the largest manufacturer and marketer of garage doors and rolling steel doors in North America Residential and commercial sectional garage doors are sold through professional dealers and leading home center retail chains throughout North America under the brands Clopay Ideal and Holmes Rolling steel door and grille products designed for commercial industrial institutional and retail use are sold under the 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
The consolidated financial statements include the accounts of Griffon and all subsidiaries Intercompany accounts and transactions have been eliminated in consolidation The results of operations of acquired businesses are included from the dates of acquisitions
As of September 30 2024 and 2023 assets and liabilities of discontinued operations was associated with Installations Services and other discontinued activities which primarily consisted of insurance claims product liability warranty and environmental reserves For the year ended September 30 2022 discontinued operations included the Telephonics business in our Consolidated Statements of Operations and Comprehensive Income Loss which has been segregated from Griffon s continuing operations There was no reported revenue for the years ended September 30 2024 2023 and 2022 for Installations Services and other discontinued operations See Note 8 Discontinued Operations
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods These estimates may be adjusted due to changes in economic industry or customer financial conditions as well as changes in technology or demand Significant estimates include expected loss allowances for doubtful accounts receivable and returns net realizable value of inventories restructuring reserves valuation of goodwill and intangible assets assumptions associated with pension benefit obligations and income or expenses useful lives associated with depreciation and amortization of intangible and fixed assets warranty reserves sales incentive accruals assumption associated with stock based compensation valuation income taxes and tax valuation reserves environmental reserves legal reserves insurance reserves the valuation of assets and liabilities of discontinued operations assumptions associated with valuation of acquired assets and assumed liabilities of acquired companies and the accompanying disclosures These estimates are based on management s best knowledge of current events and actions Griffon may undertake in the future Actual results may ultimately differ from these estimates
Griffon considers all highly liquid investments purchased with an initial maturity of three months or less to be cash equivalents Cash equivalents primarily consist of overnight commercial paper highly rated liquid money market funds backed by U S Treasury securities and U S Agency securities Griffon had cash in non U S bank accounts of approximately 46 100 and 45 500 at September 30 2024 and 2023 respectively Substantially all U S cash and equivalents are in excess of FDIC insured limits Griffon regularly evaluates the financial stability of all institutions and funds that hold its cash and equivalents
The carrying values of cash and cash equivalents accounts receivable accounts and notes payable and revolving credit and Term Loan B debt approximate fair value due to either the short term nature of such instruments or the fact that the interest rate of the revolving credit debt is based upon current market rates
The fair value hierarchy as outlined in the applicable accounting guidance establishes a fair value hierarchy that requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value A
financial instrument s categorization within the hierarchy is based on the lowest level of input that is significant to the fair value measurement The accounting guidance establishes three levels of inputs that may be used to measure fair value as follows
Level 2 inputs include inputs other than Level 1 that are observable either directly or indirectly such as quoted prices in active markets for similar assets and liabilities quoted prices for identical or similar assets or liabilities in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of assets or liabilities
The fair values of Griffon s 2028 Senior Notes and Term Loan B facility approximated 957 716 and 457 571 respectively on September 30 2024 Fair values were based upon quoted market prices level 1 inputs
Insurance contracts with a value of 4 819 at September 30 2024 are measured and recorded at fair value based upon quoted prices in active markets for similar assets level 2 inputs and are included in Prepaid and other current assets and 634 are included in Other current assets on the Consolidated Balance Sheets
In the normal course of business Griffon s operations are exposed to the effect of changes in foreign currency exchange rates To manage these risks Griffon may enter into various derivative contracts such as foreign currency exchange contracts including forwards and options Griffon entered into several such contracts in order to lock into a foreign currency rate for planned settlements of trade and inter company liabilities payable in USD as discussed below
At September 30 2024 and 2023 Griffon had 67 500 and 11 000 of Australian dollar contracts at a weighted average rate of 1 47 and 1 45 respectively which qualified for hedge accounting These hedges were all deemed effective as cash flow hedges with gains and losses related to changes in fair value deferred and recorded in Other comprehensive income loss and Prepaid and other current assets or Accrued liabilities until settlement level 2 inputs Upon settlement gains and losses were recognized in the Consolidated Statements of Operations and Comprehensive Income Loss in Cost of goods and services COGS Accumulated Other Comprehensive Income AOCI included deferred losses of 660 462 net of tax at September 30 2024 and deferred gains of 765 536 net of tax at September 30 2023 Upon settlement gains of 1 120 3 991 and 5 477 were recognized in the Consolidated Statements of Operations and Comprehensive Income Loss in COGS during 2024 2023 and 2022 respectively All contracts expire in 30 days to 240 days
At September 30 2024 and 2023 Griffon had 20 500 and 52 000 of Chinese Yuan contracts at a weighted average rate of 7 11 and 7 00 respectively which qualified for hedge accounting These hedges were all deemed effective as cash flow hedges with gains and losses related to changes in fair value deferred and recorded in AOCI and Prepaid and other current assets or Accrued liabilities until settlement level 2 inputs Upon settlement gains and losses are recognized in the Consolidated Statements of Operations and Comprehensive Income Loss in COGS AOCI included deferred gains of 410 300 net of tax and deferred losses of 1 721 1 257 net of tax at September 30 2024 and 2023 respectively Upon settlement losses of 1 936 2 313 and 736 were recorded in COGS during 2024 2023 and 2022 respectively All contracts expire in 9 to 184 days
At September 30 2024 and 2023 Griffon had 13 497 and 3 700 respectively of Canadian dollar contracts at a weighted average rate of 1 35 and 1 36 respectively These contracts which protect Canadian operations from currency fluctuations for U S dollar based purchases do not qualify for hedge accounting and fair value losses of 67 and fair value gains of 60 were recorded in Other assets and to Other income for the outstanding contracts based on similar contract values level 2 inputs for the years ended September 30 2024 and 2023 respectively Realized gains losses of 98 336 and 247 were recorded in Other income during 2024 2023 and 2022 respectively All contracts expire in 1 to 359 days
Pension plan assets with a fair value of 158 705 at September 30 2024 are measured and recorded at fair value based upon quoted prices in active markets for identical assets level 1 inputs quoted market prices for similar assets level 2 inputs and fair value assumptions for unobservable inputs in which little or no market data exists level 3
The Company accounts for acquisitions under the acquisition method in which assets acquired and liabilities assumed are recorded at fair value as of the date of acquisition using a method substantially similar to the goodwill impairment test methodology level 3 inputs The operating results of the acquired companies are included in Griffon s consolidated financial statements from the date of acquisition in each instance
Assets and liabilities of non U S subsidiaries where the functional currency is not the U S dollar have been translated at year end exchange rates and profit and loss accounts have been translated using weighted average exchange rates during the applicable fiscal year Adjustments resulting from currency translation are recorded in AOCI as cumulative translation adjustments The Company recognized cumulative translation gains during 2024 and 2023 of 10 137 and 8 447 respectively As of September 30 2024 and 2023 the cumulative foreign currency translation recorded in AOCI was a loss of 38 586 and 48 723 respectively Assets and liabilities of an entity that are denominated in currencies other than that entity s functional currency are re measured into the functional currency using period end exchange rates or historical rates where applicable to certain balances Gains and losses arising on remeasurements are recorded within the Consolidated Statement of Operations and Comprehensive Income as a component of Other income expense
The Company recognizes revenue when performance obligations identified under the terms of contracts with its customers are satisfied A performance obligation is a promise in a contract to transfer a distinct good or service or a bundle of goods or services to the customer and is the unit of accounting A contract with a customer is an agreement which both parties have approved that creates enforceable rights and obligations has commercial substance and with respect to which payment terms are identified and collectability is probable Once the Company has entered into a contract or purchase order it is evaluated to identify performance obligations
For each performance obligation revenue is recognized when control of the promised products is transferred to the customer or services are satisfied under the contract or purchase order in an amount that reflects the consideration the Company expects to be entitled to in exchange for those products or services the transaction price
The Company s performance obligations are recognized at a point in time related to the manufacture and sale of a broad range of products and components and revenue is recognized when title and risk and rewards of ownership have transferred to the customer which is generally upon shipment
Accounts receivable is composed principally of trade accounts receivable that arise from the sale of goods or services on account and is stated at historical cost A substantial portion of Griffon s trade receivables are from Home Depot whose financial condition is dependent on the construction and related retail sectors of the economy As a percentage of consolidated accounts receivable Home Depot was 12 Griffon performs continuing evaluations of the financial condition of its customers and although Griffon generally does not require collateral letters of credit may be required from customers in certain circumstances
Trade receivables are recorded at the stated amount less expected loss allowance for doubtful accounts and when appropriate for customer program reserves and cash discounts The expected loss allowance represents estimated uncollectible receivables associated with potential customer defaults on contractual obligations usually due to customers potential insolvency The expected loss allowance for doubtful accounts includes amounts for certain customers where a risk of default has been specifically identified as well as an amount for customer defaults based on a formula when it is determined the risk of some default is probable and estimable but cannot yet be associated with specific customers The provision related to the expected loss allowance for doubtful accounts is recorded in Selling general and administrative SG A expenses The Company writes off accounts receivable when they are deemed to be uncollectible
Customer program reserves and cash discounts are netted against accounts receivable when it is customer practice to reduce invoices for these amounts The amounts netted against accounts receivable in 2024 and 2023 were 64 211 and 106 166 respectively
Griffon s businesses typically do not require inventory that is susceptible to becoming obsolete or dated In general HBP produces residential and commercial sectional garage doors commercial rolling steel door and grille products and CPP produces long handled tools and landscaping products and storage and organizational products both in response to orders from customers of retailers and dealers or based on expected orders as applicable
Property plant and equipment includes the historical cost of land buildings equipment and significant improvements to existing plant and equipment or in the case of acquisitions a fair market value appraisal of such assets completed at the time of acquisition Expenditures for maintenance repairs and minor renewals are expensed as incurred When property or equipment is sold or otherwise disposed of the related cost and accumulated depreciation is removed from the respective accounts and the gain or loss is recognized
Depreciation expense which includes amortization of assets under capital leases was 37 901 43 056 and 46 443 in 2024 2023 and 2022 respectively and was calculated on a straight line basis over the estimated useful lives of the assets Depreciation included in SG A expenses was 16 510 17 598 and 16 683 in 2024 2023 and 2022 respectively The remaining components of depreciation attributable to manufacturing operations are included in Cost of goods and services Estimated useful lives for property plant and equipment are as follows buildings and building improvements 25 to 40 years machinery and equipment 2 to 15 years and leasehold improvements over the term of the lease or life of the improvement whichever is shorter
Capitalized interest costs included in Property plant and equipment were 2 228 1 463 and 1 739 for the years ended September 30 2024 2023 and 2022 respectively The original cost of fully depreciated property plant and equipment remaining in use at September 30 2024 was approximately 232 857
Long lived assets including customer relationships and software and tangible assets primarily property plant and equipment are amortized over their expected useful lives generally eight to twenty five years and involves significant assumptions and estimates We assess the recoverability of the carrying amount of our long lived assets including amortizable intangible assets whenever events or changes in circumstances indicate the carrying amount of the assets may not be recoverable We evaluate the recoverability of such assets based on the expectations of undiscounted cash flows attributable to the asset group If the sum of the expected future undiscounted cash flows are less than the carrying amount of the asset group a loss would be recognized for the difference between the fair value and the carrying amount For the fiscal years ended September 30 2024 and 2023 we tested long lived definite intangible and tangible assets for impairment by comparing estimated future undiscounted cash flows of each CPP asset group to the carrying amount of the asset group and determined that an impairment did not exist No event or indicator of impairment existed for the HBP assets groups
Goodwill represents the excess of the cost of net assets acquired in business combinations over the fair value of the identifiable tangible and intangible assets acquired and liabilities assumed in a business combination
We test goodwill and indefinite lived intangibles for impairment at least annually in the fourth quarter and more frequently whenever events or circumstances change that would more likely than not reduce the fair value below the carrying amount Such events or changes in circumstance include significant deterioration in overall economic conditions changes in the business climate in which our reporting units operate a decline in our market capitalization operating performance indicators when some portion of a reporting unit is disposed of or classified as held for sale or when a change in the composition of reporting units occurs for other reasons such as a change in operating segments To test goodwill and indefinite lived intangible assets for impairment we may perform both a qualitative assessment and quantitative assessment If we elect to perform a qualitative assessment we consider operating results as well as circumstances impacting the operations or cash flows of the reporting unit or indefinite lived intangible assets including macroeconomic conditions industry and market conditions and reporting unit events and circumstances For the quantitative test the assessment is based on both an income based and market based valuation approach If it is determined that an impairment exists we recognize an impairment loss for the amount by which the carrying amount of the reporting unit or indefinite lived intangible asset exceeds its estimated fair value
Fair value estimates are based on assumptions believed to be reasonable at the time but such assumptions are subject to inherent uncertainty Actual results may differ materially from those estimates Any changes in key assumptions or management judgment with respect to a reporting unit or its prospects which may result from a decline in Griffon s stock price a change in market conditions market trends interest rates or other factors outside of Griffon s control or significant underperformance relative to historical or projected future operating results could result in a significantly different estimate of the fair value of Griffon s reporting units which could result in an impairment charge in the future
In connection with the preparation of our financial statements for the fiscal years ended September 30 2024 2023 and 2022 Griffon performed its annual impairment testing of its goodwill and indefinite lived intangibles Griffon performed a quantitative assessment of the CPP reporting units and indefinite lived intangible assets The assessments in both fiscal 2024 and 2023 did not result in an impairment to goodwill however for the fiscal 2022 the impairment tests resulted in a pre tax non cash goodwill impairment charge of 342 027 to the CPP reporting units For the HBP reporting unit we performed a qualitative assessment and determined that indicators that fair value was less than the carrying amount were not present in fiscal years 2024 2023 and 2022
During the years ended September 30 2024 2023 and 2022 the Company compared the estimated fair values of its CPP indefinite lived intangibles to their carrying amounts using a relief from royalty method which estimates the value of a trademark by discounting to present value the hypothetical royalty payments that are saved by owning the asset rather than licensing it The Company then compared the estimated fair values of each trademark to their carrying amounts For the year ended September 30 2024 the impairment test did not result in impairment charges to CPP s gross carrying amount of intangible assets however for the years ended September 30 2023 and 2022 the impairment tests resulted in pre tax non cash impairment charges of 109 200 and 175 000 respectively to the gross carrying amount of trademarks in the CPP segment Griffon performed qualitative assessments for the HBP indefinite lived intangibles and determined that indicators that fair value was less than the carrying amount were not present in fiscal 2024 2023 and 2022
ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease ROU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term As most of our leases do not provide an implicit rate we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments We use the implicit rate when readily determinable Our determination of the lease term may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option
The Company determines if an arrangement is a lease at inception The ROU assets and short and long term liabilities associated with our operating leases are shown as separate line items on our Consolidated Balance Sheets Finance leases are included in property plant and equipment net other accrued liabilities and other non current liabilities
For operating leases fixed lease payments are recognized as operating lease cost on a straight line basis over the lease term For finance leases and impaired operating leases the ROU asset is depreciated on a straight line basis over the remaining lease term along with recognition of interest expense associated with accretion of the lease liability For leases with a lease term of 12 months or less a Short term lease any fixed lease payments are recognized on a straight line basis over such term and are not recognized on the Consolidated Balance Sheets Variable lease cost for both operating and finance leases if any is recognized as incurred The Company has lease agreements that contain both lease and non lease components For real estate leases we account for lease components together with non lease components e g common area maintenance
We are subject to Federal state and local income taxes in the U S and in various taxing jurisdictions outside the U S We recognize deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns in accordance with applicable accounting guidance for accounting for income taxes using currently enacted tax rates in effect for the year in which the differences are expected to reverse
We record a valuation allowance when necessary to reduce deferred tax assets to the amount expected to be realized Deferred tax assets are reduced by a valuation allowance if based on the weight of available evidence it is more likely than not that some portion or all of the deferred tax assets will not be realized Both positive and negative evidence are considered in forming our judgment as to whether a valuation allowance is appropriate and more weight is given to evidence that can be objectively verified Valuation allowances are reassessed whenever there are changes in circumstances that may cause a change in judgment
The accounting for uncertainty in income taxes requires a more likely than not threshold for financial statement recognition of tax positions taken or expected to be taken in a tax return We record as needed a liability for the difference between the benefit recognized for financial statement purposes and the tax position taken or expected to be taken on our tax return To the extent that our assessment of such tax positions changes the change in estimate is recorded in the period in which the determination is made Interest and penalties recognized on the liability for unrecognized tax benefits is recorded as income tax expense
Total shipping and handling costs included in both COGS and SG A were 125 120 in 2024 123 100 in 2023 and 130 830 in 2022 of which 68 400 in 2024 67 300 in 2023 and 69 000 in 2022 were included in SG A Advertising costs which are expensed as incurred in SG A was 25 600 in 2024 28 400 in 2023 and 26 700 in 2022
Griffon s property and casualty insurance programs contain various deductibles that based on Griffon s experience are reasonable and customary for a company of its size and risk profile Griffon generally maintains deductibles for claims and liabilities related primarily to workers compensation general product and automobile liability as well as property damage and business interruption losses resulting from certain events Griffon does not consider any of the deductibles to represent a material risk to Griffon Griffon accrues for claim exposures that are probable of occurrence and can be reasonably estimated Insurance is maintained to transfer risk beyond the level of self retention and provides protection on both an individual claim and annual aggregate basis
Griffon sponsors defined and supplemental benefit pension plans for certain retired employees Annual amounts relating to these plans are recorded based on actuarial projections which include various actuarial assumptions including discount rates assumed rates of return compensation increases and turnover rates Actuarial assumptions used to determine pension liabilities assets and expense are reviewed annually and modified based on current economic conditions and trends The expected return on plan assets is determined based on the nature of the plan s investments and expectations for long term rates of return The discount rate used to measure obligations is based on a corporate bond spot rate yield curve that matches projected future benefit payments with the appropriate spot rate applicable to the timing of the projected future benefit payments Assumptions used in determining Griffon s obligations under the defined benefit pension plans are believed to be reasonable based on experience and advice from independent actuaries however differences in actual experience or changes in assumptions may materially impact Griffon s financial position or results of operations
In October 2023 the Financial Accounting Standards Board FASB issued ASU No 2023 06 Disclosure Improvements Amendments Codification Amendments in Response to the SEC s Disclosure Update and Simplification Initiative The FASB issued the standard to introduce changes to US GAAP that originate in either SEC Regulation S X or S K which are rules about the form and content of financial reports The provisions of the standard are contingent when the SEC removes the related disclosure provisions from Regulation S X and S K The company does not expect the provisions of the standard to have a material impact on the Company s financial statements and related disclosures
In November 2023 the Financial Accounting Standards Board FASB issued ASU No 2023 07 Segment Reporting Topic 280 Improvements to Reportable Segment Disclosures This standard expands disclosures regarding a public entity s reportable segments and requires additional information about a reportable segment s expenses interim segment profit or loss and how a public entity s chief operating decision maker uses reported segment profit or loss information in assessing segment performance and allocating resources The standard does not change the definition of operating segments This standard is effective for the Company beginning with our fiscal year 2025 with early adoption permitted The Company is currently evaluating the potential changes to its reportable segment disclosures and related impact on its business and financial reporting processes and information technology systems The Company does not expect the adoption of this standard to have a material impact on its financial position results of operations or cash flows
In December 2023 the FASB issued ASU No 2023 09 Income Taxes Topic 740 Improvements to Income Tax Disclosure The standard requires significant additional disclosures focused on income taxes paid and the rate reconciliation table Specifically the amendments in the standard require the Company to disclose disaggregated 1 income taxes paid by federal state and foreign 2 continuing operations pre tax income between domestic and foreign and 3 continuing operations income tax expense by federal state and foreign The standard also requires the Company to disclose specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold This standard is effective for the Company beginning with our fiscal year 2026 with retrospective application permitted The Company is currently evaluating the potential changes to its income tax disclosures and related impact on its financial reporting processes and information technology systems The Company does not expect the adoption of this standard to have a material impact on its financial position results of operations or cash flows
The Company recognizes revenue when performance obligations identified under the terms of contracts with its customers are satisfied A performance obligation is a promise in a contract to transfer a distinct good or service or a bundle of goods or services to the customer and is the unit of accounting A contract with a customer is an agreement which both parties have approved that creates enforceable rights and obligations has commercial substance and with respect to which payment terms are identified and collectability is probable Once the Company has entered into a contract or purchase order it is evaluated to identify performance obligations For each performance obligation revenue is recognized when control of the promised products is transferred to the customer or services are satisfied under the contract or purchase order in an amount that reflects the consideration the Company expects to be entitled to in exchange for those products or services the transaction price
A contract s transaction price is allocated to each distinct performance obligation and recognized as revenue when each performance obligation is satisfied A majority of the Company s contracts have a single performance obligation which represents in most cases the product being sold to the customer To a lesser extent some contracts include multiple performance obligations such as a product the related installation and extended warranty services These contracts require judgment in determining the number of performance obligations For contracts with multiple performance obligations judgment is required to determine whether performance obligations specified in these contracts are distinct and should be accounted for as separate revenue transactions for recognition purposes In these types of contracts the Company allocates the total transaction price to each performance obligation in an amount based on the estimated relative standalone selling prices of the promised goods or services underlying each performance obligation The Company uses an observable price to determine the stand alone selling price for separate performance obligations or a cost plus margin approach when one is not available The transaction price includes variable consideration such as discounts and volume rebates when it is probable that a
significant reversal of revenue recognized will not occur Variable consideration is determined using either the expected value or the most likely amount of consideration to be received based on historical experience and the specific facts and circumstances at the time of evaluation
The Company s performance obligations are recognized at a point in time related to the manufacture and sale of a broad range of products and components and revenue is recognized when title and risk and rewards of ownership have transferred to the customer which is generally upon shipment
A majority of the Company s revenue is short cycle in nature with shipments occurring within one year from order and does not include a material long term financing component implicitly or explicitly Payment terms generally range between 15 to 90 days and vary by the location of the business the type of products manufactured to be sold and the volume of products sold among other factors
The Company recognizes revenue from product sales when all factors are met including when control of a product transfers to the customer upon its shipment completion of installation testing certification or other substantive acceptance required under the contract Other than standard product warranty provisions sales arrangements provide for no significant post shipment obligations on the Company From time to time and for certain customers rebates and other sales incentives promotional allowances or discounts are offered typically related to customer purchase volumes all of which are fixed or determinable and are classified as a reduction of revenue and recorded at the time of sale Griffon provides for sales returns and allowances based upon historical returns experience The Company includes shipping costs billed to customers in revenue and the related shipping costs in either Cost of Goods and Services or Selling General and Administrative expenses
The majority of the Company s contracts offer assurance type warranties in connection with the sale of a product to a customer Assurance type warranties provide a customer with assurance that the related product will function as the parties intended because it complies with agreed upon specifications Such warranties do not represent a separate performance obligation
Payment terms vary depending on the type and location of the customer and the products or services offered Generally the period between the time revenue is recognized and the time payment is due is not significant Shipping and handling charges are not considered a separate performance obligation Additionally all taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue producing transaction and collected from a customer e g sales use value added and some excise taxes are excluded from revenue
Griffon continually evaluates potential acquisitions that either strategically fit within its portfolio or expand its portfolio into new product lines or adjacent markets Griffon has completed a number of acquisitions that have been accounted for as business combinations in which assets acquired and liabilities assumed are recorded at fair value as of the date of acquisition and have resulted in the recognition of goodwill The operating results of the business acquisitions are included in Griffon s consolidated financial statements from the date of acquisition
On July 1 2024 Griffon announced that its subsidiary AMES expanded the scope of its Australian operations by acquiring substantially all the assets of Pope a leading Australian provider of residential watering products from The Toro Company NYSE TTC for a purchase price of approximately AUD 21 800 approximately 14 500 in cash The purchase price was preliminarily allocated to inventory of AUD 16 581 approximately 11 051 goodwill of AUD 2 225 approximately 1 483 and acquired intangibles net of deferred taxes of AUD 2 940 approximately 1 960 which was assigned to the CPP segment and is not deductible for income tax purposes
On January 24 2022 Griffon acquired Hunter a market leader in residential ceiling commercial and industrial fans from MidOcean for a contractual purchase price of 845 000 The acquisition was primarily financed with a Term Loan B facility and a combination of cash on hand and revolver borrowings Hunter complements and diversifies Griffon s portfolio of leading consumer brands and products Based on the final purchase price allocation the goodwill recognized was 250 711 which was assigned to the CPP segment and is not deductible for income tax purposes The following unaudited proforma summary from continuing operations presents consolidated information as if the Company acquired Hunter on October 1 2020
Griffon did not include any material nonrecurring proforma adjustments directly attributable to the business combination in the proforma revenue and earnings These proforma amounts have been compiled by adding the historical results from continuing operations of Griffon restated for classifying the results of operations of the Telephonics business as a discontinued operation to the historical results of Hunter after applying Griffon s accounting policies and the following proforma adjustments
In connection with the Company s restructuring activities described in Note 10 Restructuring Charges during the years ended September 30 2024 and September 30 2023 CPP recorded inventory impairment charges of 23 763 and 37 100 respectively to adjust inventory to its net realizable value
In connection with the expansion of CPP s global sourcing strategy which has been completed as of September 30 2024 certain owned manufacturing locations which concluded operations have met the criteria to be classified as held for sale and the net book value of these properties as of September 30 2024 totaled 14 532
Except as described in Note 10 Restructuring Charges no event or indicator of impairment occurred during the years ended September 30 2024 and September 30 2023 which would require additional impairment testing of property plant and equipment
Trade receivables are recorded at their stated amount less allowances for credit losses The Company s expected loss allowance methodology for trade receivables is primarily based on the aging method of the accounts receivables balances and the financial condition of its customers The allowances represent estimated uncollectible receivables associated with potential customer defaults on contractual obligations usually due to customers potential insolvency discounts related to early payment of accounts receivables by customers and estimates for returns The allowance for doubtful accounts includes amounts for certain customers in which a risk of default has been specifically identified as well as an amount for customer defaults based on a formula when it is determined the risk of some default is probable and estimable but cannot yet be associated with specific customers Credit losses are recorded as a reduction of revenue and the provision related to the allowance for doubtful accounts is recorded in SG A expenses
Generally estimates used to determine the allowance are based on assessment of anticipated payment and all other historical current and future information that is reasonably available All accounts receivable amounts are expected to be collected in less than one year
Based on a review of the Company s policies and procedures across all segments including the aging of its trade receivables recent write off history and other factors related to future macroeconomic conditions Griffon determined that its method to determine credit losses and the amount of its allowances for bad debts is in accordance with this guidance in all material respects
Goodwill at September 30 2024 and 2023 was 329 393 and 327 864 respectively For the fiscal years ended September 30 2024 2023 and 2022 the Company performed a quantitative assessment of the CPP reporting units using both an income based and market based approach which did not result in a goodwill impairment in fiscal 2024 and 2023 however for the fiscal year ended September 30 2022 the impairment tests resulted in a pre tax non cash goodwill impairment charge of 342 027 to the CPP reporting units For the HBP reporting unit we performed a qualitative assessment and determined that indicators that fair value was less than the carrying amount were not present in fiscal years 2024 2023 and 2022
During the years ended September 30 2024 2023 and 2022 the Company compared the estimated fair values of its CPP indefinite lived intangibles to their carrying amounts using a relief from royalty method which estimates the value of a trademark by discounting to present value the hypothetical royalty payments that are saved by owning the asset rather than licensing it The Company then compared the estimated fair values of each trademark to their carrying amounts For the year ended September 30 2024 the impairment test did not result in impairment charges to CPP s gross carrying amount of intangible assets however for the years ended September 30 2023 and 2022 the impairment tests resulted in pre tax non cash impairment charges of 109 200 and 175 000 respectively to the gross carrying amount of our trademarks in the CPP segment Griffon performed qualitative assessments for the HBP indefinite lived intangibles and determined that indicators that fair value was less than the carrying amount were not present during 2024 2023 and 2022
1 On October 1 2023 the Company reclassified certain indefinite lived trademark intangible assets with a combined carrying value of 4 100 to definite lived intangible assets The change resulted from the anticipated future life of these trademarks We commenced amortizing these assets on a straight line basis over a five year useful life
Amortization expense for intangible assets subject to amortization was 22 803 22 389 and 18 215 in 2024 2023 and 2022 respectively Amortization expense for each of the next five years and thereafter based on current intangible balances and classifications is estimated as follows 2025 22 708 2026 22 107 2027 22 107 2028 22 107 and 2029 22 107 thereafter 215 843
On September 27 2021 Griffon announced it was exploring strategic alternatives for its DE segment which consisted of its Telephonics subsidiary On June 27 2022 Griffon completed the sale of Telephonics for 330 000 in cash excluding customary post closing adjustments primarily related to working capital In connection with the sale of Telephonics the Company recorded a gain of 107 517 89 241 net of tax for the year ended September 30 2022
In accordance with ASC 205 20 Presentation of Financial Statements Discontinued Operations a disposal of a component of an entity or a group of components of an entity is required to be reported as discontinued
if the disposal represents a strategic shift that has or will have a major effect on an entity s operations and financial results when the component of an entity meets the criteria in paragraph 205 20 45 10 In the period in which the component meets held for sale or discontinued
criteria the major current assets other assets current liabilities and noncurrent liabilities shall be reported as components of total assets and liabilities separate from those balances of the continuing operations At the same time the results of all discontinued
For the year ended September 30 2022 depreciation and amortization was excluded from the results since DE was classified as a discontinued operation and accordingly the Company ceased depreciation and amortization in accordance with discontinued operations accounting guidelines
The following amounts summarize the total assets and liabilities related to Installation Services and other discontinued activities which have been segregated from Griffon s continuing operations and are reported as assets and liabilities of discontinued operations in the Consolidated Balance Sheets
At September 30 2024 and 2023 Griffon s liabilities for discontinued operations primarily related to insurance claims income taxes product liability warranty claims and environmental reserves totaling 7 768 and 11 798 respectively The decrease in assets and liabilities was primarily associated with insurance claims receivable and payable
Except for revenue from the Telephonics business for the year ended September 30 2022 as noted above there was no reported revenue in 2024 2023 and 2022 for Installations Services and other discontinued operations
Griffon announced in May 2023 that CPP was expanding its global sourcing strategy to include long handled tools material handling and wood storage and organization product lines for the U S market This initiative was successfully completed as of September 30 2024 ahead of the previously announced date of December 31 2024
As a result of this global sourcing expansion initiative manufacturing operations have concluded at four manufacturing sites and four wood mills resulting in a total facility footprint reduction of approximately 1 2 million square feet or approximately 15 of CPP s square footage and a headcount reduction of approximately 600 The closed locations which have a total book value of 14 532 have met the held for sale criteria and have been classified as such on our Consolidated Balance Sheets as of September 30 2024
The adoption of an asset light business model for these U S products has positioned CPP to better serve customers with a more flexible and cost effective sourcing model that leverages supplier relationships around the world and improved its competitive positioning
Implementation of this strategy over the duration of the project resulted in charges of 133 777 which included 51 082 of cash charges for employee retention and severance operational transition and facility and lease exit costs and 82 695 of non cash charges primarily related to asset write downs In addition there were 2 678 of capital investments to effectuate the project This excludes cash proceeds from the sale of real estate and equipment which through September 30 2024 were 13 271 and excludes future proceeds from the sale of remaining real estate and equipment
In the year ended September 30 2024 CPP incurred pre tax restructuring and related exit costs approximating 41 309 Cash charges totaled 17 546 and non cash asset related charges totaled 23 763 the cash charges included 5 856 for one time termination benefits and other personnel related costs and 11 690 for facility exit costs Non cash charges related to 23 763 recorded to adjust inventory to net realizable value
In the year ended September 30 2023 CPP incurred pre tax restructuring and related exit costs approximating 92 468 Cash charges totaled 33 536 and non cash asset related charges totaled 58 932 the cash charges included 16 772 for one time termination benefits and other personnel related costs and 16 764 for facility exit costs Non cash charges included a 21 832 impairment charge related to certain fixed assets at several manufacturing locations and 37 100 to adjust inventory to net realizable value
In the year ended September 30 2022 CPP incurred pre tax restructuring and related exit costs approximating 16 782 Cash charges totaled 11 951 and non cash asset related charges totaled 4 831 the cash charges included 4 124 for one time termination benefits and other personnel related costs and 7 827 for facility exit costs Non cash charges included a 3 805 of inventory that have no recoverable value and 1 026 primarily related to disposal of fixed assets at several manufacturing locations These restructuring charges related to the development of CPP s next generation business platform which was completed in fiscal 2022
A summary of the restructuring and other related charges included in Cost of goods and services and Selling general and administrative expenses in the Company s Consolidated Statements of Operations were as follows
1 Non cash charges in Facility and Other Costs primarily represent the non cash write off of certain long lived assets and inventory that has no recoverable value in connection with certain facility closures
CPP and HBP offer warranties against product defects for periods generally ranging from one to ten years with limited lifetime warranties on certain door models Typical warranties require CPP and HBP to repair or replace the defective products during the warranty period at no cost to the customer At the time revenue is recognized Griffon records a liability for warranty costs estimated based on historical experience and periodically assesses its warranty obligations and adjusts the liability as necessary CPP offers an express limited warranty for a period of ninety days on all products from the date of the original purchase unless otherwise stated on the product or packaging from the date of original purchase Warranty costs expected to be incurred in the next 12 months are classified in accrued liabilities Warranty costs expected to be incurred beyond one year are classified in other long term liabilities The short term warranty liability was 13 050 as of September 30 2024 and 20 781 as of September 30 2023 The long term warranty liability was 1 239 at both September 30 2024 and 2023
During 2020 Griffon issued at par 1 000 000 of 5 75 Senior Notes due 2028 the 2028 Senior Notes Proceeds from the 2028 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 2028 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 In connection with these purchases Griffon recognized a 1 767 net gain on the early extinguishment of debt comprised of 2 064 of face value in excess of purchase price offset by 297 related to the write off of underwriting fees and other expenses As of September 30 2024 outstanding Senior Notes due totaled 974 775 interest is payable semi annually on March 1 and September 1
The 2028 Senior Notes were registered under the Securities Act of 1933 as amended the Securities Act via an exchange offer The fair value of the 2028 Senior Notes approximated 957 716 on September 30 2024 based upon quoted market prices level 1 inputs At September 30 2024 6 900 of underwriting fees and other expenses incurred remained to be amortized
b 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 Since that time during 2023 and 2022 Griffon prepaid 25 000 and 300 000 respectively aggregate principal amount of the Term Loan B which permanently reduced the outstanding balance In connection with the prepayment of the Term Loan B Griffon recognized charges of 437 and 6 296 on the prepayment of debt in 2023 and 2022 respectively The charges were comprised of write offs of unamortized debt issuance costs of 386 and 5 575 for 2023 and 2022 respectively and the original issue discount of 51 and 721 for 2023 and 2022 respectively As of September 30 2024 the Term Loan B outstanding balance was 457 000
On June 26 2024 Griffon further amended its Credit Agreement to favorably reprice the Term Loan B facility The amendment reduced the margin above SOFR by 0 25 eliminated the credit spread adjustment and reduced the SOFR floor from 0 50 to 0 Furthermore the amendment stipulates that if Griffon prepays all or a portion of the Term Loan B within six months of the amendment date Griffon will be required to pay a premium equal to 1 of the amount prepaid In connection with the amendment Griffon recognized a 1 700 loss on debt extinguishment in the Company s Consolidated Statements of Operations primarily consisting of the write off of unamortized debt issuance costs and original issue discount related to portions of the Term Loan B facility that were repaid and then reborrowed from new lenders At September 30 2024 unamortized costs of 5 420 related to the existing and new Term Loan B facility lenders will continue to be amortized over the term of the loan
The Term Loan B bears interest at the Term SOFR rate plus a spread of 2 00 6 85 as of September 30 2024 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 subject to a prepayment premium of 1 in connection with the above repricing transaction with respect to any prepayments within the six months following the closing date of June 26 2024 Once repaid Term Loan B borrowings may not be reborrowed The Term Loan B facility is subject to the same affirmative and negative covenants that apply to the Revolver 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 457 571 on September 30 2024 based upon quoted market prices level 1 inputs
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 2028 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 Secured Overnight Financing Rate 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 2 00 6 95 at September 30 2024 SONIA loans accrue interest at SONIA Base Rate plus a credit adjustment spread and a margin of 2 00 6 98 at September 30 2024 and base rate loans accrue interest at prime rate plus a margin of 1 00 9 00 at September 30 2024
At September 30 2024 under the Credit Agreement there were 107 500 in outstanding borrowings on the Revolver outstanding standby letters of credit were 13 190 and 379 310 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
c On September 28 2023 the Company closed on the exercise of its lease purchase option as permitted under the lease agreement to acquire ownership of the manufacturing facility located in Ocala Florida for a cash purchase price of
23 207 The Ocala lease had a maturity date in 2025 and bore interest at a fixed rate of approximately 5 6 As a result of exercising the purchase option the Company no longer has any future lease obligations related to this real estate During 2022 the financing lease on the Troy Ohio location expired
The Troy lease bore interest at a rate of approximately 5 0 was secured by a mortgage on the real estate which was guaranteed by Griffon and had a one dollar buyout at the end of the lease Griffon exercised the one dollar buyout option in November 2021 Refer to Note 22 Leases for further details
d In November 2012 Garant G P Garant a Griffon wholly owned subsidiary entered into a CAD 15 000 revolving credit facility Effective in December 2023 the facility was amended to replace the Canadian Dollar Offer Rate CDOR with the Canadian Overnight Repo Rate Average CORRA The facility accrues interest at CORRA plus 1 3 per annum 5 46 as of September 30 2024 The revolving facility matures in December 2024 but is renewable upon mutual agreement with the lender Garant is required to maintain a certain minimum equity At September 30 2024 there were no outstanding borrowings under the revolving credit facility with CAD 15 000 11 135 as of September 30 2024 available
During 2023 Griffon Australia Holdings Pty Ltd and its Australian subsidiaries collectively Griffon Australia amended its AUD 15 000 receivable purchase facility to AUD 30 000 The receivable purchase facility was renewed in 2024 and now matures in March 2024 but is renewable upon mutual agreement with the lender The receivable purchase facility accrues interest at Bank Bill Swap Rate plus 1 25 per annum 5 55 at September 30 2024 At September 30 2024 there was no balance outstanding under the receivable purchase facility with AUD 30 000 20 619 as of September 30 2024 available The receivable purchase facility is secured by substantially all of the assets of Griffon Australia and its subsidiaries Griffon Australia is required to maintain a certain minimum equity level
In July 2018 the AMES Companies UK Ltd and its subsidiaries collectively Ames UK entered into a GBP 14 000 term loan GBP 4 000 mortgage loan and GBP 5 000 revolver which matured in July 2023 Prior to maturity on June 30 2023 AMES UK paid off and cancelled the GBP 14 000 term loan and GBP 4 000 mortgage loan The payoff amounts were GBP 7 525 9 543 and GBP 2 451 3 108 respectively Upon maturity in July 2023 the GBP 5 000 revolver had no balance and was not renewed
Griffon offers defined contribution plans to most of its U S employees In addition to employee contributions to the plans Griffon makes contributions based upon various percentages of compensation and or employee contributions which were 10 319 in 2024 10 857 in 2023 and 11 080 in 2022
The Company also provides healthcare and life insurance benefits for certain groups of retirees through several plans For certain employees the benefits are at fixed amounts per retiree and are partially contributory by the retiree The post retirement benefit obligation was 1 670 and 1 679 as of September 30 2024 and 2023 The accumulated other comprehensive income for these plans was 306 and 420 as of September 30 2024 and 2023 respectively and the 2024 2023 and 2022 expense was 56 67 and 47 respectively It is the Company s practice to fund these benefits as incurred
Griffon also has qualified and non qualified defined benefit plans covering certain employees which provide benefits based on years of service and employee compensation Over time these amounts will be recognized as part of net periodic pension costs in the Consolidated Statements of Operations and Comprehensive Income Loss
Griffon is responsible for overseeing the management of the investments of two qualified defined benefit plans and uses the services of an investment manager to manage the plans assets based on agreed upon risk profiles The primary objective of the qualified defined benefit plan is to secure participant retirement benefits As such the key objective in this plan s financial management is to promote stability and to the extent appropriate growth in the funded status Financial objectives are established in conjunction with a review of current and projected plan financial requirements The fair values of a majority of the plan assets were determined by the plans trustee using quoted market prices for identical instruments level 1 inputs as of
September 30 2024 and 2023 The fair value of various other investments was determined by the plans trustees using direct observable market corroborated inputs including quoted market prices for similar assets level 2 inputs A small amount of plan assets are invested in private equity which consist primarily of investments in private companies which are valued using the net asset values provided by the underlying private investment companies as a practical expedient level 3 inputs
The Hunter Fan Pension Plan was terminated with an effective date of April 30 2024 This was communicated to plan participants in February 2024 The plan is fully funded and the company does not anticipate making an additional funding contribution as of the benefit distribution date The benefit distribution date will be determined once the company receives approval from certain regulatory agencies
Griffon uses judgment to establish the assumptions used in determining the future liability of the plan as well as the investment returns on the plan assets The expected return on assets assumption used for pension expense was developed through analysis of historical market returns current market conditions and past experience of plan investments The long term rate of return assumption represents the expected average rate of earnings on the funds invested or to be invested to provide for the benefits included in the benefit obligations The assumption is based on several factors including historical market index returns the anticipated long term asset allocation of plan assets and the historical return The discount rate assumption is determined by developing a yield curve based on high quality bonds with maturities matching the plans expected benefit payment stream The plans expected cash flows are then discounted by the resulting year by year spot rates A 10 change in the discount rate or return on assets would not have a material effect on the financial statements of Griffon
During 2025 Griffon is not required to and does not expect to contribute to the Defined Benefit plans and expects to contribute 1 823 to Supplemental Benefits that will be funded from the general assets of Griffon
The Clopay AMES Pension Plan and the Hunter Fan Pension Plan are covered by the Pension Protection Act of 2006 The Adjusted Funding Target Attainment Percent for the Clopay AMES Pension Plan and Hunter Fan Pension Plan as of January 1 2024 was 97 1 and 127 3 respectively Since the plans were in excess of the 80 funding threshold there were no plan restrictions There are no catch up contributions for either plan expected in 2025
When quoted market prices are available in an active market the investments are classified as Level 1 When quoted market prices are not available in an active market the investments are classified as Level 2
The fair values reflect the closing price reported on a major market where the individual mutual fund securities are traded in equity securities These investments are classified within Level 1 of the valuation hierarchy
The fair values are based on a compilation of primarily observable market information or a broker quote in a non active market where the individual mutual fund securities are invested in debt securities These investments are classified within Level 1 and Level 2 of the valuation hierarchy
The fair values are determined using NAV provided by the administrator of the fund The NAV is based on the value of the underlying assets owned by the trust entity minus its liabilities and then divided by the number of shares outstanding These investments are generally classified within Level 2 or 3 as appropriate of the valuation hierarchy and can be liquidated on demand
One limited partnership investment is a private equity fund and the fair value is determined by the fund managers based on the net asset values provided by the underlying private investment companies as a practical expedient These investments are classified within Level 2 of the valuation hierarchy
Griffon has an Employee Stock Ownership Plan ESOP that covers substantially all domestic employees All U S employees of Griffon who are not members of a collective bargaining unit automatically become eligible to participate in the plan on the October 1
following completion of one qualifying year of service as defined in the plan Securities are allocated to participants individual accounts based on the proportion of each participant s aggregate compensation not to exceed 330 for the plan year ended September 30 2024 to the total of all participants compensation Shares of the ESOP which have been allocated to employee accounts are charged to expense based on the fair value of the shares transferred and are treated as outstanding in determining earnings per share Dividends paid on shares held by the ESOP are used to offset debt service on ESOP Loans Dividends paid on shares held in participant accounts are utilized to allocate shares from the aggregate number of shares to be released equal in value to those dividends based on the closing price of Griffon common stock on the dividend payment date Compensation expense under the ESOP was 8 533 in 2024 20 583 in 2023 and 14 325 in 2022 The cost of the shares held by the ESOP and not yet allocated to employees is reported as a reduction of Shareholders Equity The fair value of the unallocated ESOP shares as of September 30 2024 and 2023 based on the closing stock price of Griffon s stock was 1 250 and 7 768 respectively The ESOP shares were as follows
Differences between the effective income tax rate applied to Income loss before taxes from continuing operations and the U S Federal statutory income tax rate are presented in the table below For the fiscal year ended September 30 2022 the Company reported a pre tax loss and income tax expense As a result unfavorable items to the US Federal statutory income tax rate are presented as negative amounts while favorable items are presented as positive amounts
Prior to fiscal year 2023 Griffon did not provide deferred U S income taxes of undistributed earnings on non U S subsidiaries as such earnings were intended to be reinvested indefinitely At September 30 2023 Griffon made a policy election to indefinitely reinvest the undistributed earnings of certain non U S subsidiaries As of September 30 2024 we have approximately 146 891 of undistributed earnings of non U S subsidiaries Of these undistributed earnings 80 914 were previously subjected to U S federal income tax As of September 30 2024 we recognized a deferred tax liability of 1 896 for estimated non U S withholding taxes on the non U S earnings that are not indefinitely reinvested The Company has not provided deferred taxes on any other outside basis differences in its investments in the non U S subsidiaries as these other outside basis differences are currently considered indefinitely reinvested The Company generates substantial cash flow in the
U S and does not have a current need for the cash to be returned to the U S from the foreign entities The Company may repatriate non indefinitely reinvested earnings of its non U S subsidiaries where excess cash has accumulated and the Company determines that it is appropriate and tax efficient Accordingly the Company continues to reinvest all other undistributed earnings of its non U S subsidiaries and may be subject to additional non U S withholding taxes and U S state income taxes if it reverses its indefinite reinvestment assertion in the future
At September 30 2024 Griffon had no loss carryforwards for U S tax purposes and 63 217 for non U S tax purposes At September 30 2023 Griffon had no loss carryforwards for U S tax purposes and 27 585 for non U S tax purposes The non U S loss carryforwards expire in varying amounts beginning in 2027 to indefinite carryforward
We believe it is more likely than not that the benefit from certain federal state and non U S tax attributes will not be realized In recognition of this risk we have provided a valuation allowance as of September 30 2024 and 2023 of 26 989 and 17 992 respectively on the deferred tax assets As it becomes probable that the benefits of these attributes will be realized the reversal of valuation allowance will be recognized as a reduction of income tax expense
Griffon files U S Federal state and local tax returns as well as applicable returns in Canada Australia U K and other non U S jurisdictions Griffon s U S Federal income tax returns are no longer subject to income tax examination for years before 2018 Griffon s major U S state and other non U S jurisdictions are no longer subject to income tax examinations for years before 2016 Various U S state and statutory tax audits are currently underway
If recognized the amount of potential unrecognized tax benefits that would impact Griffon s effective tax rate is 1 638 Griffon recognizes potential accrued interest and penalties related to unrecognized tax benefits in income tax expense At September 30 2024 and 2023 the combined amount of accrued interest and penalties related to tax positions taken or to be taken on Griffon s tax returns and recorded as part of the reserves for uncertain tax positions was 310 and 651 respectively During the year ended September 30 2024 the Company incurred a reduction in unrecognized tax benefits primarily due to the acceptance of previously filed amended returns by various jurisdictions along with a reduction in state tax rates Griffon cannot reasonably estimate the extent to which other existing liabilities for uncertain tax positions may increase or decrease within the next twelve months as a result of the progression of ongoing tax audits or other events Griffon believes that it has adequately provided for all open tax years by tax jurisdiction
In August 2022 the U S Government enacted the Inflation Reduction Act of 2022 IRA Included in the IRA was a provision to implement a 15 corporate alternative minimum tax CAMT on large corporations effective beginning with Griffon s 2024 fiscal year Griffon is currently not subject to the CAMT
The Organization for Economic Co operation and Development OECD released the Global Anti base Erosion Model Rules for Pillar Two Pillar Two in December 2021 which defined a 15 global minimum tax Australia Canada U K and other countries have enacted or are considering changes in their tax laws and regulations based on Pillar Two some of which become effective for the Company in 2025 The Company will continue to evaluate the impact of these proposed and enacted legislative changes as guidance becomes available The Company does not expect Pillar Two to have a material impact on the financial statements
During 2024 2023 and 2022 the Company declared and paid in quarterly increments cash dividends totaling 0 60 per share 0 45 per share and 0 36 per share respectively Additionally on April 19 2023 the Board of Directors declared a special cash dividend of 2 00 per share paid on May 19 2023 to shareholders of record as of the close of business on May 9 2023 On June 27 2022 the Board of Directors declared a special cash dividend of 2 00 per share paid on July 20 2022
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 Dividends paid on shares in the ESOP were used to offset ESOP loan payments and recorded as a reduction of debt service payments and compensation expense For all dividends a dividend payable was established for the holders of restricted shares such dividends will be released upon vesting of the underlying restricted shares At September 30 2024 accrued dividends were 9 147
On January 29 2016 shareholders approved the Griffon Corporation 2016 Equity Incentive Plan the Original Incentive Plan pursuant to which among other things awards of performance shares performance units stock options stock appreciation rights restricted shares restricted stock units deferred shares and other stock based awards may be granted On January 31 2018 shareholders approved Amendment No 1 to the Original Incentive Plan pursuant to which among other things 1 000 000 shares were added to the Original Incentive Plan on January 30 2020 shareholders approved Amendment No 2 to the Original Incentive Plan pursuant to which 1 700 000 shares were added to the Original Incentive Plan on February 17 2022 shareholders approved the Amended and Restated 2016 Equity Incentive Plan the Amended Incentive Plan which amended and restated the Original Incentive Plan and pursuant to which among other things 1 200 000 shares were added to the Original Incentive Plan and on March 20 2024 shareholders approved an amendment to add 2 600 000 shares to the Amended Incentive Plan Options granted under the Amended Incentive Plan may be either incentive stock options or nonqualified stock options which generally expire ten years after the date of grant and are granted at an exercise price of not less than 100 of the fair market value at the date of grant The maximum number of shares of common stock available for award under the Amended Incentive Plan is 8 850 000 600 000 of which may be issued as incentive stock options plus i any shares that were reserved for issuance under the Original Incentive Plan as of the effective date of the Original Incentive Plan and ii any shares underlying awards outstanding on such date under the 2011 Incentive Plan that were subsequently canceled or forfeited As of September 30 2024 2 377 532 shares were available for grant
Compensation expense for restricted stock and restricted stock units is recognized ratably over the required service period based on the fair value of the grant calculated as the number of shares or units granted multiplied by the stock price on date of grant and for performance shares including performance units the likelihood of achieving the performance criteria The Company recognizes forfeitures as they occur Compensation expense for restricted stock granted to four senior executives is calculated as the target number of shares granted upon achieving certain performance criteria multiplied by the stock price as valued by a Monte Carlo Simulation Model Compensation cost related to stock based awards with graded vesting generally over a period of three to four years is recognized using the straight line attribution method and recorded within SG A
During 2024 Griffon granted 561 326 shares of restricted stock and restricted stock units to its employees This included 166 272 shares of restricted stock and 7 832 restricted stock units granted to forty three executives and key employees subject to certain performance conditions with a vesting period of 36 months with a total fair value of 8 225 or a weighted average fair value of 47 24 per share This also included 387 222 shares of restricted stock granted to four senior executives with a vesting period of thirty three months and a two year post vesting holding period subject to the achievement of certain performance conditions relating to required levels of return on invested capital and the relative total shareholder return of Griffon s common stock as compared to a market index So long as the minimum performance conditions are attained the amount of shares that can vest will range from 64 539 to 387 222 with the target number of shares being 129 074 The total fair value of these restricted shares using the Monte Carlo Simulation model assuming achievement of the performance conditions at target is approximately 12 181 or a weighted average fair value of 94 37 per share Additionally Griffon granted 16 775 restricted shares to the non employee directors of Griffon with a vesting period of one year and a fair value of 1 210 or a weighted average fair value of 72 13 per share During the year ended September 30 2024 570 269 shares granted were issued out of treasury stock
On November 12 2024 Griffon granted 142 911 shares of restricted stock and restricted stock units to 43 executives and key employees subject to certain performance conditions with a vesting period of thirty six months with a total fair value of 9 735 or a weighted average fair value of 68 12 per share In addition Griffon also granted 436 947 shares of restricted stock to four senior executives with a vesting period of thirty six months and a two year post vesting holding period subject to the achievement of certain performance conditions relating to required levels of return on invested capital and the relative total shareholder return of Griffon s common stock as compared to a market index So long as the minimum performance conditions are attained the amount of shares that can vest will range from a minimum of 72 827 to a maximum of 436 947 with the target number of shares being 145 649 The total estimated fair value of these restricted shares assuming achievement of the performance conditions at target is 12 372 or a weighted average fair value of 84 95 per share
On April 19 2023 the Company s Board of Directors approved a 200 000 increase to Griffon s share repurchase program to 257 955 from the prior unused authorization of 57 955 Also on November 15 2023 Griffon announced that the Board of Directors approved an additional increase of 200 000 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 During the year ended September 30 2024 Griffon purchased 4 771 959 shares of common stock under these repurchase programs for a total of 274 490 or 57 52 per share excluding excise taxes The share repurchases during the year ended September 30 2024 include the repurchase of 1 500 000 shares of common stock by the Company on February 20 2024 pursuant to a stock purchase and cooperation agreement executed by the Company and Voss Value Master Fund L P Voss Value Oriented Special Situations Fund L P and four separately managed accounts of which Voss Capital LLC is the investment manager in a private transaction The purchase price per share was 65 50 for an aggregate purchase price of 98 250 As of September 30 2024 32 693 remained available for the purchase of common stock under these Board authorized repurchase programs Subsequent to September 30 2024 and through November 12 2024 Griffon purchased 481 379 shares of common stock for a total of 32 693 or 67 91 per share under these Board authorized repurchase programs On November 13 2024 Griffon announced that the Board of Directors approved an additional increase of 400 000 to its share repurchase program which prior to such increase had exhausted its availability
On September 5 2023 Griffon repurchased 400 000 shares of its common stock par value 0 25 per share beneficially owned by two separately managed accounts of which Voss Capital LLC is the investment manager the Selling Shareholders in a private transaction to facilitate redemptions by investors in the Selling Shareholders The purchase price per share was approximately 41 87 for an aggregate purchase price of 16 746 The Selling Shareholders are affiliates of Voss Capital LLC Travis W Cocke the Founder Chief Investment Officer and Managing Member of Voss Capital LLC was formerly a member of the Board of Directors of the Company These shares are included in the total shares purchased in the previous paragraph
During the year ended September 30 2024 595 464 shares with a market value of 34 330 or 57 65 per share were withheld to settle employee taxes due upon the vesting of restricted stock and were added to treasury stock
During the year ended September 30 2024 we accrued 2 772 in connection with the share repurchases described above which was partially offset by the reversal of 462 of excise taxes to adjust for a benefit related to employee vesting and a 510 net benefit on ESOP contributions As of September 30 2024 3 101 was accrued for excise taxes related to employee share repurchases
Purchase obligations are generally for the purchase of goods and services in the ordinary course of business Griffon uses blanket purchase orders to communicate expected requirements to certain vendors Purchase obligations reflect those purchase orders where the commitment is considered to be firm Amounts purchased under such commitments were 159 362 184 422 and 255 661 for the years ended September 30 2024 2023 and 2022 respectively Aggregate future minimum purchase obligations at September 30 2024 are 195 227 in 2025 2 309 in 2026 304 in 2027 165 in 2028 164 in 2029 and 468 thereafter
Lightron Corporation Lightron a wholly owned subsidiary of Griffon once conducted lamp manufacturing and metal finishing operations at a location in the Town of Cortlandt New York just outside the city of Peekskill New York the Peekskill Site ISC Properties Inc ISCP a wholly owned subsidiary of Griffon owned the Peekskill Site for approximately three years
On May 15 2019 the United States Environmental Protection Agency EPA added the Peekskill Site to the National Priorities List under CERCLA and has since reached agreement with Lightron and ISCP pursuant to which Lightron and ISCP will perform a Remedial Investigation Feasibility Study RI FS
ISCP functioned solely as a real estate holding company and has not held any real property in over three decades Griffon does not acknowledge any responsibility to perform any investigation or remediation at the Peekskill Site Lightron and ISCP are being defended by an insurance company subject to a reservation of rights and this insurer is paying the costs of the RI
While Hunter completed certain on site remediation of PCB contaminated soils Hunter did not investigate the extent to which PCBs existed beneath the building itself nor determine whether off site areas had been impacted
The State of Tennessee Department of Environment and Conservation TDEC identified the Memphis site as being potentially contaminated raising the possibility that site operations could have resulted in soil and groundwater contamination involving volatile organic compounds and metals In 2021 the TDEC performed a preliminary assessment of the site and recommended to the EPA that it include the site on the National Priorities List established under CERCLA
It is unknown whether the EPA will add the Memphis Site to the National Priorities List whether a site investigation will reveal contamination and if there is contamination the extent of any such contamination However given that certain PCB work was not completed in the past and the TDEC s stated intent for the EPA to perform an investigation and the statement by the TDEC that it will perform the investigation if the EPA will not liability is probable in this matter
Should the EPA implement the RI FS or perform further studies and or subsequently remediate the site without first reaching an agreement with one or more relevant parties the EPA would likely seek reimbursement from such parties including Hunter for the costs incurred
Griffon is subject to various laws and regulations relating to the protection of the environment and is a party to legal proceedings arising in the ordinary course of business Management believes based on facts presently known to it that the resolution of the matters above and such other matters will not have a material adverse effect on Griffon s consolidated financial position results of operations or cash flows
Basic EPS and diluted EPS in periods when a loss exists was calculated by dividing income available to common shareholders by the weighted average number of shares of common stock outstanding during the period Diluted EPS was calculated by dividing income available to common shareholders by the weighted average number of shares of common stock outstanding plus additional common shares that could be issued in connection with stock based compensation
On February 20 2024 Griffon entered into a stock purchase and cooperation agreement to repurchase and repurchased 1 500 000 shares of its common stock par value 0 25 per share beneficially owned by four separately managed accounts of which Voss Capital LLC is the investment manager the Selling Shareholders in a private transaction The purchase price per share was approximately 65 50 for an aggregate purchase price of 98 250 The Selling Shareholders are affiliates of Voss Capital LLC Travis W Cocke the Founder Chief Investment Officer and Managing Member of Voss Capital LLC was formerly a member of the Board of Directors of the Company Pursuant to the stock purchase and cooperation agreement Mr Cocke resigned as a member of the Board on February 20 2024
On September 5 2023 Griffon entered into a stock purchase agreement to repurchase 400 000 shares of its common stock par value 0 25 per share beneficially owned by two separately managed accounts of which Voss Capital LLC is the investment manager the Selling Shareholders in a private transaction to facilitate redemptions by investors in the Selling Shareholders The purchase price per share was approximately 41 87 for an aggregate purchase price of 16 746 The Selling Shareholders are affiliates of Voss Capital LLC Travis W Cocke the Founder Chief Investment Officer and Managing Member of Voss Capital LLC was formerly a member of the Board of Directors of the Company
Home and Building Products HBP conducts its operations through Clopay Corporation Clopay Founded in 1964 Clopay is the largest manufacturer and marketer of garage doors and rolling steel doors in North America Residential and commercial sectional garage doors are sold through professional dealers and leading home center retail chains throughout North America under the brands Clopay Ideal and Holmes Rolling steel door and grille products designed for commercial industrial institutional and retail use are sold under the 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
Griffon evaluates performance and allocates resources based on segment adjusted EBITDA and adjusted EBITDA non GAAP measures defined as income before taxes from continuing 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 other items that may affect comparability as applicable non GAAP measures Segment adjusted EBITDA also excludes unallocated amounts mainly corporate overhead Griffon believes this information is useful to investors for the same reason
1 In connection with the expansion of CPP s global sourcing strategy certain owned manufacturing locations which concluded operations have met the criteria to be classified as held for sale as of September 30 2024 The aggregate net book value of these properties as of September 30 2024 totaled 14 532
As a percentage of segment revenue HBP sales to The Home Depot approximated 8 9 and 7 in 2024 2023 and 2022 respectively CPP sales to The Home Depot approximated 15 15 and 19 in 2024 2023 and 2022 respectively
For the years ended September 30 2024 2023 and 2022 Other income expense from continuing operations of 1 766 2 928 and 6 881 respectively includes 333 302 and 305 respectively of net currency exchange transaction gains losses from receivables and payables held in non functional currencies 148 469 and 225 respectively of net gains or losses on investments and 137 866 and 4 256 respectively of net periodic benefit plan income expense Other income expense also includes rental income of 0 212 and 689 and royalty income of 2 198 2 104 and 2 250 for the years ended September 30 2024 2023 and 2022 respectively
ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease ROU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term Lease payments primarily include rent and insurance costs lease components The Company s leases also include non lease components such as real estate taxes and common area maintenance costs The Company elected the practical expedient to account for lease and non lease components as a single component In certain of the Company s leases the non lease components are variable and in accordance with the standard are therefore excluded from lease payments to determine the ROU asset As most of our leases do not provide an implicit rate we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments We use the implicit rate when readily determinable
For operating leases fixed lease payments are recognized as operating lease cost on a straight line basis over the lease term For finance leases and impaired operating leases the ROU asset is depreciated on a straight line basis over the remaining lease term along with recognition of interest expense associated with accretion of the lease liability For leases with a lease term of
On September 28 2023 the Company closed on the exercise of its lease purchase option as permitted under the lease agreement to acquire ownership of the manufacturing facility located in Ocala Florida for a cash purchase price of 23 207 The Ocala lease had a maturity date in 2025 and bore interest at a fixed rate of approximately 5 6 As a result of exercising the purchase option the Company no longer has any future lease obligations related to this real estate The remaining lease liability balance relates to finance equipment leases
On November 12 2024 the Board of Directors declared a cash dividend of 0 18 per share payable on December 18 2024 to shareholders of record as of the close of business on November 25 2024 Griffon 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
Subsequent to September 30 2024 and through November 12 2024 Griffon purchased 481 379 shares of its common stock for a total of 32 693 or 67 91 per share under Board authorized share repurchase programs On November 13 2024 Griffon announced a 400 000 increase to its share repurchase program which prior to such increase had exhausted its availability
On November 12 2024 Griffon granted 142 911 shares of restricted stock and restricted stock units to 43 executives and key employees subject to certain performance conditions with a vesting period of thirty six months with a total fair value of 9 735 or a weighted average fair value of 68 12 per share In addition Griffon also granted 436 947 shares of restricted stock to four senior executives with a vesting period of thirty six months and a two year post vesting holding period subject to the achievement of certain performance conditions relating to required levels of return on invested capital and the relative total shareholder return of Griffon s common stock as compared to a market index So long as the minimum performance conditions are attained the amount of shares that can vest will range from a minimum of 72 827 to a maximum of 436 947 with the target number of shares being 145 649 The total estimated fair value of these restricted shares assuming achievement of the performance conditions at target is 12 372 or a weighted average fair value of 84 95 per share
2 In connection with the Company s restructuring activities described in Note 10 Restructuring Charges during the years ended September 30 2024 and 2023 CPP recorded inventory impairment charges of 23 763 and 37 100 respectively to adjust inventory to its net realizable value
Griffon s management with the participation of its Chief Executive Officer and Chief Financial Officer conducted an evaluation of the effectiveness of the design and operation of Griffon s disclosure controls and procedures as defined by Exchange Act Rule 13a 15 e Based on that evaluation the Chief Executive Officer and Chief Financial Officer have concluded that as of September 30 2024 Griffon s disclosure controls and procedures were effective
Griffon s management is responsible for establishing and maintaining adequate internal control over financial reporting Griffon s internal control over financial reporting is a process designed under the supervision of its Chief Executive Officer and Chief Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of Griffon s financial statements for external reporting in accordance with accounting principles generally accepted in the United States of America Management evaluates the effectiveness of Griffon s internal control over financial reporting using the criteria set forth by the 2013 Committee of Sponsoring Organizations of the Treadway Commission COSO in Internal Control Integrated Framework Management under the supervision and with the participation of Griffon s Chief Executive Officer and Chief Financial Officer assessed the effectiveness of Griffon s internal control over financial reporting as of September 30 2024 and concluded that it is effective
Griffon s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles Griffon s internal control over financial reporting includes those policies and procedures that
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that Griffon s receipts and expenditures are being made only in accordance with authorizations of Griffon s management and directors and
Management including Griffon s Chief Executive Officer and Chief Financial Officer does not expect that Griffon s internal controls will prevent or detect all errors and all fraud A control system no matter how well designed and operated can provide only reasonable not absolute assurance that the objectives of the control system are met Further the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs Because of the inherent limitations in all control systems no evaluation of internal controls can provide absolute assurance that all control issues and instances of fraud if any have been detected Also any evaluation of the effectiveness of controls in future periods is subject to the risk that those internal controls may become inadequate because of changes in business conditions or that the degree of compliance with the policies or procedures may deteriorate
Griffon s independent registered public accounting firm Grant Thornton LLP has audited the effectiveness of Griffon s internal control over financial reporting as of September 30 2024 and has expressed an unqualified opinion in their report which appears in this Annual Report on Form 10 K
There were no changes in Griffon s internal control over financial reporting that occurred during the fourth quarter of the year ended September 30 2024 that have materially affected or are reasonably likely to materially affect the registrant s internal control over financial reporting
During the fiscal quarter ended September 30 2024 none of our directors or executive officers adopted or terminated any contract instruction or written plan for the purchase or sale of our securities to satisfy the affirmative defense conditions of Rule 10b5 1 c or any non Rule 10b5 1 trading arrangement
will be included in and is incorporated by reference to Griffon s definitive proxy statement in connection with its Annual Meeting of Stockholders scheduled to be held in March 2025 to be filed with the Securities and Exchange Commission within 120 days following the end of Griffon s fiscal year ended September 30 2024 Information required by Part III Item 10 relating to the executive officers of the Registrant appears under Item 1 of this report
Agreement and Plan of Merger dated as of December 17 2021 by and among MidOcean Hunter Holdings Inc The Ames Companies Inc Ames Hunter Holdings Corporation and MidOcean Partners III D L P as representative for the equity holders of MidOcean Hunter Holdings Inc
First Amendment to Share Purchase Agreement dated as of June 11 2022 to that certain Share Purchase Agreement dated as of April 18 2022 by and among TTM Technologies Inc Exphonics Inc and Griffon Corporation
Griffon Corporation 2016 Equity Incentive Plan Exhibit A to Proxy Statement relating to the 2016 Annual Meeting of Shareholders filed with the Securities and Exchange Commission on December 17 2015 Commission File No 1 06620
Amendment No 1 to the Griffon Corporation 2016 Equity Incentive Plan Annex B to Griffon s Proxy Statement relating to the 2018 Annual Meeting of Shareholders filed with the Securities and Exchange Commission on December 18 2017 Commission File No 1 06620
Amendment No 2 to the 2016 Equity Incentive Plan Annex B to Griffon s Proxy Statement relating to the 2020 Annual Meeting of Shareholders filed with the Securities and Exchange Commission on December 17 2019 Commission File No 1 06620
Amendment No 1 to the Griffon Corporation Amended and Restated 2016 Equity Incentive Plan dates as of March 20 2024 incorporated by reference to Appendix B to the Registrant s Proxy Statement relating to the 2024 Annual Meeting of Shareholders filed with the Securities and Exchange Commission on January 29 2024 Commission File No 001 06620
Fifth Amended and Restated Credit Agreement dated as of January 24 2022 among Griffon Corporation the several banks and other financial institutions or entities from time to time parties thereto Bank of America N A as administrative agent and the other agents party thereto Exhibit A to the Second Amendment to Fourth Amended and Restated Credit Agreement dated as of January 24 2022 among Griffon Corporation the several banks and other financial institutions or entities from time to time parties thereto Bank of America N A as administrative agent and the other agents party thereto filed as Exhibit 99 1 to Current Report on Form 8 K filed January 28 2022 Commission File No 1 06620
First Amendment to Fifth Amended and Restated Credit Agreement dated as of August 1 2023 to that certain Fifth Amended and Restated Credit Agreement dated as of January 24 2022 among Griffon Corporation the several banks and other financial institutions or entities from time to time parties thereto Bank of America N A as administrative agent and the other agents party thereto
Second Amendment to Fifth Amended and Restated Credit Agreement dated as of June 26 2022 by and among Griffon Corporation Bank of America N A as administrative agent and the several banks and other financial institutions or entities from time to time parties thereto dated June 26 2024
Amendment dated as of March 28 2013 to Guarantee and Collateral Agreement dated as of March 18 2011 by Griffon Corporation and certain of its subsidiaries in favor of JPMorgan Chase Bank N A as administrative agent
Second Amendment dated as of June 2 2017 to Guarantee and Collateral Agreement dated as of March 18 2011 as amended by the Amendment to Guarantee and Collateral Agreement dated as of March 28 2013 by Griffon Corporation and certain of its subsidiaries in favor of JPMorgan Chase Bank N A as administrative agent
Stock Purchase and Cooperation Agreement dated February 20 2024 by and among Griffon Corporation Travis W Cocke Voss Value Master Fund L P Voss Value Oriented Special Situations Fund L P and four separately managed accounts of which Voss Capital LLC is the investment manager the names of which are set forth on Schedule I thereto incorporated by reference to Exhibit 10 1 to Current Report on Form 8 K filed February 20 2024 Commission File No 1 06620
The registrant has omitted schedules and similar attachments to the subject agreement pursuant to Item 601 b 2 of Regulation S K The registrant will furnish a copy of any omitted schedule or similar attachment to the Securities and Exchange Commission upon request
Pursuant to the requirements of Section 13 or 15 d of the Securities Exchange Act of 1934 Griffon has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized on the 13th day of November 2024
Pursuant to the requirements of the Securities Exchange Act of 1934 this report has been signed below on November 13 2024 by the following persons on behalf of the Registrant in the capacities indicated

Company Name	GRIFFON CORP Vist SEC web-site
Category	METAL DOORS, SASH, FRAMES, MOLDING & TRIM
Trading Symbol	GFF