UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~June 30,~~December 31, 2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 1-06620

GRIFFON CORPORATION

(Exact name of registrant as specified in its charter)


Delaware			11-1893410
(State or other jurisdiction of			(I.R.S. Employer
incorporation or organization)			Identification No.)

712 Fifth Ave, 18th Floor	New York	New York	10019
(Address of principal executive offices)			(Zip Code)

(212) 957-5000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.25 par value

GFF

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act:

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

The number of shares of common stock outstanding at ~~June 30, 2022~~January 27, 2023 was ~~57,063,936.~~57,186,222.

Griffon Corporation and Subsidiaries

Contents


			Page
PART I - FINANCIAL INFORMATION

Item 1 – Financial Statements

Condensed Consolidated Balance Sheets at ~~June~~ December 3 01 , 2022 (unaudited) and September 30, ~~2021~~20 2 2			1

Condensed Consolidated Statement of Shareholders’ Equity for the Three ~~and~~ ~~Nine~~Months Ended ~~June~~December 3 01 , 2022 and 2021 (unaudited)			2

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the Three ~~and~~ ~~Nine~~ ~~Months Ended~~ ~~June~~Months Ended December 3 01 , 2022 and 2021 (unaudited)			43

Condensed Consolidated Statements of Cash Flows for the ~~Nine~~ Three Months Ended ~~June~~December 3 01 , 2022 and 2021 (unaudited)			54

Notes to Condensed Consolidated Financial Statements (unaudited)			76

Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations			3632

Item 3 - Quantitative and Qualitative Disclosures about Market Risk			5246

Item 4 - Controls & Procedures			5347

PART II – OTHER INFORMATION

Item 1 – Legal Proceedings			5347

Item 1A – Risk Factors			5347

Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds			5347

Item 3 – Defaults Upon Senior Securities			5448

Item 4 – Mine Safety Disclosures			5448

Item 5 – Other Information			5448

Item 6 – Exhibits			5549

Signatures			5650

Table of Contents

Part I – Financial Information

Item 1 – Financial Statements

GRIFFON CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)


		(Unaudited)					(Unaudited)
		June 30, 2022		September 30, 2021			December 31, 2022		September 30, 2022
CURRENT ASSETS	CURRENT ASSETS					CURRENT ASSETS
Cash and equivalents	Cash and equivalents	$	144,687	$	248,653	Cash and equivalents	$	120,558	$	120,184
Accounts receivable, net of allowances of $13,541 and $8,787		429,683		294,804
Accounts receivable, net of allowances of $13,636 and $12,137						Accounts receivable, net of allowances of $13,636 and $12,137	350,625		361,653

Inventories	Inventories	708,178		472,794		Inventories	646,352		669,193
Prepaid and other current assets	Prepaid and other current assets	59,111		76,009		Prepaid and other current assets	64,108		62,453
Assets of discontinued operations held for sale		—		275,814

Assets of discontinued operations	Assets of discontinued operations	487		605		Assets of discontinued operations	1,122		1,189
Total Current Assets	Total Current Assets	1,342,146		1,368,679		Total Current Assets	1,182,765		1,214,672
PROPERTY, PLANT AND EQUIPMENT, net	PROPERTY, PLANT AND EQUIPMENT, net	299,844		290,222		PROPERTY, PLANT AND EQUIPMENT, net	290,505		294,561
OPERATING LEASE RIGHT-OF-USE ASSETS	OPERATING LEASE RIGHT-OF-USE ASSETS	193,448		144,598		OPERATING LEASE RIGHT-OF-USE ASSETS	182,799		183,398
GOODWILL	GOODWILL	705,356		426,148		GOODWILL	333,982		335,790
INTANGIBLE ASSETS, net	INTANGIBLE ASSETS, net	939,024		350,025		INTANGIBLE ASSETS, net	761,126		761,914
OTHER ASSETS	OTHER ASSETS	21,791		21,589		OTHER ASSETS	21,490		21,553
ASSETS OF DISCONTINUED OPERATIONS	ASSETS OF DISCONTINUED OPERATIONS	2,623		3,424		ASSETS OF DISCONTINUED OPERATIONS	4,571		4,586
Total Assets	Total Assets	$	3,504,232	$	2,604,685	Total Assets	$	2,777,238	$	2,816,474

CURRENT LIABILITIES	CURRENT LIABILITIES					CURRENT LIABILITIES
Notes payable and current portion of long-term debt	Notes payable and current portion of long-term debt	$	13,085	$	12,486	Notes payable and current portion of long-term debt	$	12,840	$	12,653
Accounts payable	Accounts payable	212,038		260,038		Accounts payable	160,441		194,793
Accrued liabilities	Accrued liabilities	306,282		144,928		Accrued liabilities	178,154		171,797
Current portion of operating lease liabilities	Current portion of operating lease liabilities	32,426		29,881		Current portion of operating lease liabilities	31,283		31,680
Liabilities of discontinued operations held for sale		—		81,023

Liabilities of discontinued operations	Liabilities of discontinued operations	30,806		3,280		Liabilities of discontinued operations	8,141		12,656
Total Current Liabilities	Total Current Liabilities	594,637		531,636		Total Current Liabilities	390,859		423,579
LONG-TERM DEBT, net	LONG-TERM DEBT, net	1,574,697		1,033,197		LONG-TERM DEBT, net	1,507,681		1,560,998
LONG-TERM OPERATING LEASE LIABILITIES	LONG-TERM OPERATING LEASE LIABILITIES	167,549		119,315		LONG-TERM OPERATING LEASE LIABILITIES	160,664		159,414
OTHER LIABILITIES	OTHER LIABILITIES	257,209		109,585		OTHER LIABILITIES	186,977		190,651
LIABILITIES OF DISCONTINUED OPERATIONS	LIABILITIES OF DISCONTINUED OPERATIONS	3,825		3,794		LIABILITIES OF DISCONTINUED OPERATIONS	4,209		4,262
Total Liabilities	Total Liabilities	2,597,917		1,797,527		Total Liabilities	2,250,390		2,338,904
COMMITMENTS AND CONTINGENCIES - See Note 22	COMMITMENTS AND CONTINGENCIES - See Note 22	0		0		COMMITMENTS AND CONTINGENCIES - See Note 22
SHAREHOLDERS’ EQUITY	SHAREHOLDERS’ EQUITY					SHAREHOLDERS’ EQUITY
Total Shareholders’ Equity	Total Shareholders’ Equity	906,315		807,158		Total Shareholders’ Equity	526,848		477,570
Total Liabilities and Shareholders’ Equity	Total Liabilities and Shareholders’ Equity	$	3,504,232	$	2,604,685	Total Liabilities and Shareholders’ Equity	$	2,777,238	$	2,816,474

The accompanying notes to condensed consolidated financial statements are an integral part of these statements.

Table of Contents

GRIFFON CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

For the Three ~~and Nine~~ Months Ended ~~June 30,~~December 31, 2022 and 2021

(Unaudited)


		COMMON STOCK			CAPITAL IN EXCESS OF PAR VALUE				RETAINED EARNINGS				TREASURY SHARES						ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)			DEFERRED COMPENSATION							COMMON STOCK					CAPITAL IN EXCESS OF PAR VALUE			RETAINED EARNINGS		TREASURY SHARES			ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)			DEFERRED COMPENSATION
(in thousands)	(in thousands)	SHARES	PAR VALUE								SHARES			COST							TOTAL			(in thousands)	SHARES				PAR VALUE							SHARES			COST					TOTAL
Balance at September 30, 2021		84,375	$	21,094			$	602,181			$	669,998		27,762			$	(416,850)				$	(45,977)			$	(23,288)			$	807,158
Balance at September 30, 2022																												Balance at September 30, 2022	84,746			$	21,187	$	627,982		$	344,060	27,682	$	(420,116)	$	(82,738)		$	(12,805)	$	477,570
Net income	Net income	—	—		—				19,298				—		—				—			—				19,298		Net income	—			—		—			48,702		—	—		—			—		48,702

Dividend	Dividend	—	—		—				(4,739)				—		—				—			—				(4,739)		Dividend	—			—		—			(6,145)		—	—		—			—		(6,145)
Shares withheld on employee taxes on vested equity awards	Shares withheld on employee taxes on vested equity awards	—	—		—				—				422		(10,886)				—			—				(10,886)		Shares withheld on employee taxes on vested equity awards	—			—		(180)			—		333	(12,554)		—			—		(12,734)
Amortization of deferred compensation	Amortization of deferred compensation	—	—		—				—				—		—				—			591				591		Amortization of deferred compensation	—			—		—			—		—	—		—			571		571

Equity awards granted, net	Equity awards granted, net	113	28		(28)				—				—		—				—			—				—		Equity awards granted, net	—			—		(6,902)			—		(455)	6,902		—			—		—

ESOP allocation of common stock	ESOP allocation of common stock	—	—		848				—				—		—				—			—				848		ESOP allocation of common stock	—			—		1,127			—		—	—		—			—		1,127
Stock-based compensation	Stock-based compensation	—	—		2,866				—				—		—				—			—				2,866		Stock-based compensation	—			—		5,538			—		—	—		—			—		5,538

Other comprehensive income, net of tax	Other comprehensive income, net of tax	—	—		—				—				—		—				(2,751)			—				(2,751)		Other comprehensive income, net of tax	—			—		—			—		—	—		12,219			—		12,219
Balance at December 31, 2021		84,488	$	21,122	$	605,867			$	684,557			28,184		$	(427,736)			$	(48,728)		$	(22,697)			$	812,385
Net income		—	—		—				65,689				—		—				—			—				65,689

Dividend		—	—		—				(5,352)				—		—				—			—				(5,352)

Amortization of deferred compensation		—	—		—				—				—		—				—			591				591

Equity awards granted, net		258	65		(7,195)				—				(470)		7,130				—			—				—
Balance at December 31, 2022																												Balance at December 31, 2022	84,746			$	21,187	$	627,565		$	386,617	27,560	$	(425,768)	$	(70,519)		$	(12,234)	$	526,848

ESOP allocation of common stock		—	—		638				—				—		—				—			—				638
Stock-based compensation		—	—		4,314				—				—		—				—			—				4,314

Other comprehensive income, net of tax		—	—		—				—				—		—				4,949			—				4,949
Balance at March 31, 2022		84,746	$	21,187	$	603,624			$	744,894			27,714		$	(420,606)			$	(43,779)		$	(22,106)			$	883,214
Net income		—	—		—				140,287				—		—				—			—				140,287

Dividend		—	—		—				(109,487)				—		—				—			—				(109,487)

Amortization of deferred compensation		—	—		—				—				—		—				—			591				591

Equity awards granted, net		—	—		(484)				—				(32)		484				—			—				—

ESOP allocation of common stock		—	—		757				—				—		—				—			—				757
Stock-based compensation		—	—		5,130				—				—		—				—			—				5,130

Other comprehensive income, net of tax		—	—		—				—				—		—				(14,177)			—				(14,177)
Balance at June 30, 2022		84,746	$	21,187	$	609,027			$	775,694			27,682		$	(420,122)			$	(57,956)		$	(21,515)			$	906,315


	COMMON STOCK			CAPITAL IN EXCESS OF PAR VALUE		RETAINED EARNINGS		TREASURY SHARES			ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)		DEFERRED COMPENSATION
(in thousands)	SHARES	PAR VALUE						SHARES	COST						TOTAL
Balance at September 30, 2021	84,375	$	21,094	$	602,181	$	669,998	27,762	$	(416,850)	$	(45,977)	$	(23,288)	$	807,158
Net income	—	—		—		19,298		—	—		—		—		19,298

Dividend	—	—		—		(4,739)		—	—		—		—		(4,739)
Shares withheld on employee taxes on vested equity awards	—	—		—		—		422	(10,886)		—		—		(10,886)
Amortization of deferred compensation	—	—		—		—		—	—		—		591		591


Equity awards granted, net	113	28		(28)		—		—	—		—		—		—



ESOP allocation of common stock	—	—		848		—		—	—		—		—		848
Stock-based compensation	—	—		2,866		—		—	—		—		—		2,866

Other comprehensive income, net of tax	—	—		—		—		—	—		(2,751)		—		(2,751)
Balance at December 31, 2021	84,488	$	21,122	$	605,867	$	684,557	28,184	$	(427,736)	$	(48,728)	$	(22,697)	$	812,385

~~Table of~~ ~~Contents~~

~~GRIFFON CORPORATION~~

~~CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY~~

~~For the Three and Nine Months Ended June 30, 2022 and 2021~~

~~(Unaudited)~~

COMMON STOCK CAPITAL IN
EXCESS OF
PAR VALUE RETAINED
EARNINGS TREASURY SHARES ACCUMULATED
OTHER
COMPREHENSIVE
INCOME (LOSS) DEFERRED
COMPENSATION
(in thousands) SHARES PAR VALUE SHARES COST TOTAL
Balance at September 30, 2020 83,739 $ 20,935 $ 583,008 $ 607,518 27,610 $ (413,493) $ (72,092) $ (25,725) $ 700,151
Net income — — — 29,500 — — — — 29,500
Dividend — — — (4,469) — — — — (4,469)
Shares withheld on employee taxes on vested equity awards — — — — 133 (2,909) — — (2,909)
Amortization of deferred compensation — — — — — — — 609 609
Equity awards granted, net 494 123 (123) — — — — — —
ESOP allocation of common stock — — 596 — — — — — 596
Stock-based compensation — — 3,428 — — — — — 3,428
Other comprehensive income, net of tax — — — — — — 13,141 — 13,141
Balance at December 31, 2020 84,233 $ 21,058 $ 586,909 $ 632,549 27,743 $ (416,402) $ (58,951) $ (25,116) 740,047
Net income — — — 17,112 — — — — 17,112
Dividend — — — (3,217) — — — — (3,217)
Amortization of deferred compensation — — — — — — — 609 609
Equity awards granted, net 194 48 (48) — — — — — —
ESOP allocation of common stock — — 756 — — — — — 756
Stock-based compensation — — 4,349 — — — — — 4,349
Other comprehensive income, net of tax — — — — — — 4,775 — 4,775
Balance at March 31, 2021 84,427 $ 21,106 $ 591,966 $ 646,444 27,743 $ (416,402) $ (54,176) $ (24,507) $ 764,431
Net income — — — 16,707 — — — — 16,707
Dividend — — (4,546) — — — — (4,546)
Amortization of deferred compensation — — — — — — — 610 610
Equity awards granted, net (7) (2) 2 — — — — — —
ESOP allocation of common stock — — 856 — — — — — 856
Stock-based compensation — — 4,544 — — — — — 4,544
Other comprehensive income, net of tax — — — — — — 2,739 — 2,739
Balance at June 30, 2021 84,420 $ 21,104 $ 597,368 $ 658,605 27,743 $ (416,402) $ (51,437) $ (23,897) $ 785,341

The accompanying notes to condensed consolidated financial statements are an integral part of these statements.

Table of Contents

GRIFFON CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(in thousands, except per share data)

(Unaudited)


		Three Months Ended June 30,				Nine Months Ended June 30,					Three Months Ended December 31,
		2022		2021		2022		2021				2022		2021
Revenue	Revenue	$	768,179	$	584,218	$	2,139,545	$	1,700,423	Revenue		$	649,384	$	591,749
Cost of goods and services	Cost of goods and services	507,578		424,316		1,452,459		1,215,179		Cost of goods and services		415,559		425,907
Gross profit	Gross profit	260,601		159,902		687,086		485,244		Gross profit		233,825		165,842

Selling, general and administrative expenses	Selling, general and administrative expenses	157,387		117,796		442,577		347,138		Selling, general and administrative expenses		152,720		127,352

Income from operations	Income from operations	103,214		42,106		244,509		138,106		Income from operations		81,105		38,490

Other income (expense)	Other income (expense)									Other income (expense)
Interest expense	Interest expense	(24,022)		(15,849)		(61,111)		(47,370)		Interest expense		(24,648)		(15,681)
Interest income	Interest income	61		49		126		397		Interest income		104		33
Gain on sale of building										Gain on sale of building		10,852		—

Debt extinguishment, net		(5,287)		—		(5,287)		—
Other, net	Other, net	2,084		587		4,528		1,413		Other, net		607		1,075
Total other expense, net	Total other expense, net	(27,164)		(15,213)		(61,744)		(45,560)		Total other expense, net		(13,085)		(14,573)

Income before taxes from continuing operations	Income before taxes from continuing operations	76,050		26,893		182,765		92,546		Income before taxes from continuing operations		68,020		23,917
Provision for income taxes	Provision for income taxes	23,268		12,078		55,119		34,868		Provision for income taxes		19,318		7,213
Income from continuing operations	Income from continuing operations	$	52,782	$	14,815	$	127,646	$	57,678	Income from continuing operations		$	48,702	$	16,704

Discontinued operations:	Discontinued operations:									Discontinued operations:
Income from operations of discontinued operations	Income from operations of discontinued operations	113,457		2,180		117,777		3,556		Income from operations of discontinued operations		—		3,320
Provision (benefit) for income taxes		25,952		288		20,149		(2,085)
Provision for income taxes										Provision for income taxes		—		726
Income from discontinued operations	Income from discontinued operations	87,505		1,892		97,628		5,641		Income from discontinued operations		—		2,594
Net income	Net income	$	140,287	$	16,707	$	225,274	$	63,319	Net income		$	48,702	$	19,298

Basic earnings per common share:	Basic earnings per common share:									Basic earnings per common share:
Income from continuing operations	Income from continuing operations	$	1.02	$	0.29	$	2.48	$	1.14	Income from continuing operations		$	0.93	$	0.33
Income from discontinued operations	Income from discontinued operations	1.69		0.04		1.89		0.11		Income from discontinued operations		—		0.05
Basic earnings per common share	Basic earnings per common share	$	2.71	$	0.33	$	4.37	$	1.25	Basic earnings per common share		$	0.93	$	0.38

Basic weighted-average shares outstanding	Basic weighted-average shares outstanding	51,734		50,903		51,527		50,779		Basic weighted-average shares outstanding		52,579		51,178

Diluted earnings per common share:	Diluted earnings per common share:									Diluted earnings per common share:
Income from continuing operations	Income from continuing operations	$	0.98	$	0.28	$	2.38	$	1.08	Income from continuing operations		$	0.88	$	0.31
Income from discontinued operations	Income from discontinued operations	1.62		0.04		1.82		0.11		Income from discontinued operations		—		0.05
Diluted earnings per common share	Diluted earnings per common share	$	2.60	$	0.31	$	4.19	$	1.19	Diluted earnings per common share		$	0.88	$	0.36

Diluted weighted-average shares outstanding	Diluted weighted-average shares outstanding	53,914		53,504		53,704		53,306		Diluted weighted-average shares outstanding		55,298		53,753

Dividends paid per common share	Dividends paid per common share	$	0.09	$	0.08	$	0.27	$	0.24	Dividends paid per common share		$	0.10	$	0.09

Net income	Net income	$	140,287	$	16,707	$	225,274	$	63,319	Net income		$	48,702	$	19,298
Other comprehensive income (loss), net of taxes:	Other comprehensive income (loss), net of taxes:									Other comprehensive income (loss), net of taxes:
Foreign currency translation adjustments	Foreign currency translation adjustments	(17,823)		1,160		(14,093)		15,022		Foreign currency translation adjustments		11,937		(2,319)
Pension and other post retirement plans	Pension and other post retirement plans	1,196		1,245		2,004		4,196		Pension and other post retirement plans		862		668
Change in cash flow hedges	Change in cash flow hedges	2,450		334		110		1,437		Change in cash flow hedges		(580)		(1,100)

Total other comprehensive income (loss), net of taxes	Total other comprehensive income (loss), net of taxes	(14,177)		2,739		(11,979)		20,655		Total other comprehensive income (loss), net of taxes		12,219		(2,751)
Comprehensive income, net	Comprehensive income, net	$	126,110	$	19,446	$	213,295	$	83,974	Comprehensive income, net		$	60,921	$	16,547

The accompanying notes to condensed consolidated financial statements are an integral part of these statements.

Table of Contents

GRIFFON CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)


		Nine Months Ended June 30,					Three Months Ended December 31,
		2022		2021			2022		2021
CASH FLOWS FROM OPERATING ACTIVITIES:	CASH FLOWS FROM OPERATING ACTIVITIES:					CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	Net income	$	225,274	$	63,319	Net income	$	48,702	$	19,298
Net income from discontinued operations	Net income from discontinued operations	(97,628)		(5,641)		Net income from discontinued operations	—		(2,594)
Adjustments to reconcile net income to net cash (used in) provided by operating activities of continuing operations:
Adjustments to reconcile net income to net cash provided by (used in) operating activities of continuing operations:						Adjustments to reconcile net income to net cash provided by (used in) operating activities of continuing operations:

Depreciation and amortization	Depreciation and amortization	47,021		39,118		Depreciation and amortization	17,113		13,081
Stock-based compensation	Stock-based compensation	15,978		15,091		Stock-based compensation	6,742		4,867
Asset impairment charges - restructuring	Asset impairment charges - restructuring	2,494		3,882		Asset impairment charges - restructuring	—		289
Provision for losses on accounts receivable	Provision for losses on accounts receivable	1,008		173		Provision for losses on accounts receivable	482		352
Amortization of debt discounts and issuance costs	Amortization of debt discounts and issuance costs	2,753		1,984		Amortization of debt discounts and issuance costs	1,023		654
Debt extinguishment, net		5,287		—
Fair value step-up of acquired inventory sold		5,401		—

Deferred income taxes	Deferred income taxes	1,465		7,232		Deferred income taxes	—		2,883
(Gain) loss on sale of assets and investments		(303)		155
Gain on sale of assets and investments						Gain on sale of assets and investments	(10,923)		(154)

Change in assets and liabilities, net of assets and liabilities acquired:	Change in assets and liabilities, net of assets and liabilities acquired:					Change in assets and liabilities, net of assets and liabilities acquired:
Increase in accounts receivable		(81,825)		(34,914)
Increase in inventories		(135,473)		(101,553)
(Increase) decrease in accounts receivable						(Increase) decrease in accounts receivable	13,689		(53,030)
(Increase) decrease in inventories						(Increase) decrease in inventories	22,931		(59,478)
Increase in prepaid and other assets	Increase in prepaid and other assets	(13,388)		(4,359)		Increase in prepaid and other assets	100		329
Increase (decrease) in accounts payable, accrued liabilities, income taxes payable and operating lease liabilities		(44,864)		27,180
Decrease in accounts payable, accrued liabilities, income taxes payable and operating lease liabilities						Decrease in accounts payable, accrued liabilities, income taxes payable and operating lease liabilities	(26,333)		(12,164)
Other changes, net	Other changes, net	1,799		1,647		Other changes, net	1,954		662
Net cash (used in) provided by operating activities - continuing operations		(65,001)		13,314
Net cash provided by (used in) operating activities - continuing operations						Net cash provided by (used in) operating activities - continuing operations	75,480		(85,005)

CASH FLOWS FROM INVESTING ACTIVITIES:	CASH FLOWS FROM INVESTING ACTIVITIES:					CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property, plant and equipment	Acquisition of property, plant and equipment	(33,516)		(24,949)		Acquisition of property, plant and equipment	(4,726)		(10,573)
Acquired businesses, net of cash acquired		(851,464)		(2,242)

Proceeds from sale of business, net		295,712		—

Proceeds (payments) from investments		14,923		(4,658)

Payments related to sale of Telephonics						Payments related to sale of Telephonics	(2,568)		—
Proceeds from investments						Proceeds from investments	—		575
Proceeds from the sale of property, plant and equipment	Proceeds from the sale of property, plant and equipment	89		116		Proceeds from the sale of property, plant and equipment	11,815		29
Other, net		—		28
Net cash used in investing activities - continuing operations		(574,256)		(31,705)

Net cash provided by (used in) investing activities - continuing operations						Net cash provided by (used in) investing activities - continuing operations	4,521		(9,969)

CASH FLOWS FROM FINANCING ACTIVITIES:	CASH FLOWS FROM FINANCING ACTIVITIES:					CASH FLOWS FROM FINANCING ACTIVITIES:

Dividends paid	Dividends paid	(14,906)		(12,907)		Dividends paid	(7,126)		(5,260)
Purchase of shares for treasury	Purchase of shares for treasury	(10,886)		(2,909)		Purchase of shares for treasury	(12,735)		(10,886)
Proceeds from long-term debt	Proceeds from long-term debt	984,314		20,587		Proceeds from long-term debt	29,823		10,815
Payments of long-term debt	Payments of long-term debt	(427,883)		(18,255)		Payments of long-term debt	(87,539)		(2,500)

Financing costs	Financing costs	(17,065)		(571)		Financing costs	(744)		(753)

Other, net	Other, net	188		(272)		Other, net	(42)		(28)
Net cash provided by (used in) financing activities - continuing operations		513,762		(14,327)
Net cash used in financing activities - continuing operations						Net cash used in financing activities - continuing operations	(78,363)		(8,612)

The accompanying notes to condensed consolidated financial statements are an integral part of these statements.

Table of Contents

GRIFFON CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)

Nine Months Ended June 30,
2022 2021
CASH FLOWS FROM DISCONTINUED OPERATIONS:
Net cash provided by operating activities 26,889 27,035
Net cash provided by (used in) investing activities (2,627) 8,155
Net cash provided by discontinued operations 24,262 35,190
Effect of exchange rate changes on cash and equivalents (2,733) 136
NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS (103,966) 2,608
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD 248,653 218,089
CASH AND EQUIVALENTS AT END OF PERIOD $ 144,687 $ 220,697


	Three Months Ended December 31,
	2022		2021















































CASH FLOWS FROM DISCONTINUED OPERATIONS:
Net cash provided by (used in) operating activities	(1,953)		7,916
Net cash used in investing activities	—		(853)


Net cash provided by (used in) discontinued operations	(1,953)		7,063

Effect of exchange rate changes on cash and equivalents	689		(910)

NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS	374		(97,433)
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD	120,184		248,653
CASH AND EQUIVALENTS AT END OF PERIOD	$	120,558	$	151,220

The accompanying notes to condensed consolidated financial statements are an integral part of these statements.

Table of Contents

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(US dollars and non US currencies in thousands, except per share data)

(Unaudited)

(Unless otherwise indicated, references to years or year-end refer to Griffon’s fiscal period ending September 30)

NOTE 1 – DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

About Griffon Corporation

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 in connection with acquisition and growth opportunities as well as in connection with divestitures. In order to further diversify, Griffon also seeks out, evaluates and, when appropriate, will acquire additional businesses that offer potentially attractive returns on capital.

The Company was founded in 1959, is a Delaware corporation headquartered in New York, N.Y. and is listed on the New York Stock Exchange (NYSE:GFF).

On May 16, 2022, we announced that our Board of Directors initiated a process to review a comprehensive range of strategic alternatives to maximize shareholder value including a sale, merger, divestiture, recapitalization or other strategic transaction. There is no timeline for this review and there is no assurance that the Board of Director's review will result in any transaction being entered into or consummated. As previously announced, we do not intend to disclose further developments until our Board of Directors approves a specific transaction or otherwise concludes its review of strategic alternatives.

~~On September 27, 2021, Griffon announced it was exploring strategic alternatives for its Defense Electronics ("DE") segment, which consists of its Telephonics subsidiary.~~ On June 27, 2022, we completed the sale of our Defense Electronics segment which consisted of our Telephonics ~~to TTM Technologies, Inc. ("TTM")~~subsidiary for $330,000 in ~~cash, subject to customary post-closing adjustments.~~cash. As a result, ~~we have classified~~ 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 classified the related assets and liabilities associated with the discontinued operation ~~as held for sale~~ in the consolidated balance sheets. Accordingly, all references made to results and information in this Quarterly Report on Form 10-Q are to Griffon's continuing operations, unless noted otherwise. Telephonics is recognized globally as a leading provider of highly sophisticated intelligence, surveillance and communications solutions that are deployed across a wide range of land, sea and air applications. Telephonics designs, develops, manufactures and provides logistical support and lifecycle sustainment services to defense, aerospace and commercial customers worldwide.

On May 16, 2022, Griffon announced that its Board of Directors initiated a process to review a comprehensive range of strategic alternatives to maximize shareholder value including a sale, merger, divestiture, recapitalization or other strategic transaction. While the process remains ongoing, there is no assurance that the process will result in any transaction being entered into or consummated.

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 approximately ~~$845,000, subject to customary post-closing adjustments.~~$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. We financed the acquisition of Hunter with a new $800,000 seven year Term Loan B facility; we used a combination of cash on hand and revolving credit facility borrowings to fund the balance of the purchase price and related acquisition and debt expenditures.

Griffon conducts its operations through 2two reportable segments:

•Consumer and Professional Products (“CPP”) is a leading North American manufacturer and a 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.

•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 ~~CornellCookson brand.~~Cornell and Cookson brands.

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(US dollars and non US currencies in thousands, except per share data)

(Unaudited)

~~In March 2020, the World Health Organization declared the outbreak~~Update on COVID-19 on our Business

The health and safety of COVID-19 a pandemic, which continues to spread throughout the U.S. and the world. The impact from the rapidly changing U.S. and global market and economic conditions due to the COVID-19 outbreak is uncertain, with disruptions to the business ofour employees, our customers and ~~suppliers, which has impacted, and could continue to impact, our business and consolidated results of operations and financial condition.~~their families is always a high priority for Griffon. As of the date of this filing, all of Griffon's facilities are fully operational. ~~We have~~When COVID-19 struck, we implemented a variety of new policies and procedures, including additional cleaning, social distancing, staggered shifts and prohibiting or significantly restricting on-site visitors, to minimize the risk to our employees of contracting COVID-19. While many of these precautions have been relaxed or eliminated as the health risk of COVID-19 has decreased, we would not hesitate to reinstitute and/or modify these policies and procedures as necessary should the health risk return to an unacceptable level. In such event, our businesses or our suppliers could be required by government authorities to temporarily cease operations; might be limited in their production capacity due to complying with restrictions relating to the ~~United States, we manufacture a substantial majority~~operation of ~~the products that we sell. While this helps~~businesses to mitigate the ~~effects~~impacts of ~~global supplier and transportation~~COVID-19; or could suffer their own supply chain disruptions, impacting their ability to continue to supply us with the quantity of materials required by us. While we ~~are still impacted and~~ are unable to ~~accurately~~determine or predict the nature, duration or scope of the overall impact COVID-19 will have ~~due~~on our businesses, results of operations, liquidity or capital resources, we believe it is important to ~~numerous uncertainties, including the severity of the disease, the duration of the outbreak, actions that~~discuss where our company stands today, how we have responded (and will continue to respond) to COVID 19 and how our operations and financial condition may ~~be taken by governmental authorities, the impact to our customers’ and suppliers’ businesses and other factors identified~~change as COVID-19 evolves. See information provided in Part ~~II,~~1, Item 1A, “Risk Factors” ~~in this~~our Form ~~10-Q. We will continue to evaluate the nature and extent of the impact to our business, consolidated results of operations, and financial condition.~~10-K filed on November 18, 2022.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) for interim financial information, and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, these financial statements do not include all the information and footnotes required by US GAAP for complete financial statements. As such, they should be read together with Griffon’s Annual Report on Form 10-K for the fiscal year ended September 30, ~~2021,~~2022, which provides a more complete explanation of Griffon’s accounting policies, financial position, operating results, business, properties and other matters. In the opinion of management, these financial statements reflect all adjustments considered necessary for a fair statement of interim results. Griffon’s businesses, in particular its CPP operations, are seasonal; for this and other reasons, the financial results of the Company for any interim period are not necessarily indicative of the results for the full year.

The condensed consolidated balance sheet information at September 30, ~~2021~~2022 was derived from the audited financial statements included in Griffon’s Annual Report on Form 10-K for the year ended September 30, ~~2021.~~2022.

The condensed consolidated financial statements include the accounts of Griffon and all subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation.

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~~credit losses and returns, net realizable value of inventories, restructuring reserves, valuation of goodwill and intangible assets, sales, 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.

Certain amounts in the prior year have been reclassified to conform to current year presentation.

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(US dollars and non US currencies in thousands, except per share data)

(Unaudited)

NOTE 2 – FAIR VALUE MEASUREMENTS

The carrying values of cash and equivalents, accounts receivable, accounts and notes payable, and revolving credit and variable interest rate 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 and variable rate debt is based upon current market rates.

~~GRIFFON CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(US dollars and non US currencies in thousands, except per share data)~~

~~(Unaudited)~~

Applicable accounting guidance establishes a fair value hierarchy requiring 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 1 inputs are measured and recorded at fair value based upon quoted prices in active markets for identical assets.

•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.

•Level 3 inputs are unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

On ~~June 30,~~December 31, 2022, the fair values of Griffon’s 2028 senior notes and Term Loan B facility approximated ~~$888,759~~$877,298 and ~~$473,100,~~$485,355, respectively. Fair values were based upon quoted market prices (level 1 inputs).

Insurance contracts with values of ~~$3,742~~$3,466 at ~~June 30,~~December 31, 2022 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 on the Consolidated Balance Sheets.

Items Measured at Fair Value on a Recurring Basis

At ~~June 30,~~December 31, 2022, marketable debt and equity securities, measured at fair value based on quoted prices in active markets for similar assets (level 2 inputs), with a fair value of ~~$525~~$67 ($~~333~~83 cost basis) were included in Prepaid and other current assets on the Consolidated Balance Sheets. Realized and unrealized gains and losses on marketable debt and equity securities are included in Other income in the Consolidated Statements of Operations and Comprehensive Income (Loss).

In the normal course of business, Griffon’s operations are exposed to the effects 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. As of ~~June 30,~~December 31, 2022, 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 U.S. dollars.

At ~~June 30,~~December 31, 2022, Griffon had ~~$27,000~~$15,000 of Australian dollar contracts at a weighted average rate of ~~$1.33~~$1.46 which qualified for hedge accounting (level 2 inputs). These hedges were all deemed effective as cash flow hedges with gains and losses related to changes in fair value deferred and recorded in Accumulated other comprehensive income (loss) ("AOCI") and Prepaid and other current assets, or Accrued liabilities, until settlement. Upon settlement, gains and losses are recognized in the Consolidated Statements of Operations and Comprehensive Income (Loss) in Cost of goods and services ("COGS"). AOCI included deferred gains of ~~$2,116~~$188 ($~~1,482,~~132, net of tax) at ~~June 30,~~December 31, 2022. Upon settlement, gains of ~~$936 and $3,199~~$2,261 were recorded in COGS during the ~~three and nine months~~quarter ended ~~June 30,~~December 31, 2022, respectively. All contracts expire in 2930 to 90 days.

At ~~June 30,~~December 31, 2022, Griffon had ~~61,000~~$71,500 of Chinese Yuan contracts at a weighted average rate of ~~$6.57~~$6.88 which qualified for hedge accounting (level 2 inputs). These hedges were all deemed effective as cash flow hedges with gains and losses related to changes in fair value deferred and recorded in Accumulated other comprehensive income (loss) ("AOCI") and Prepaid and other current assets, or Accrued liabilities, until settlement. Upon settlement, gains and losses are recognized in the Consolidated Statements of Operations and Comprehensive Income (Loss) in Cost of goods and services ("COGS"). AOCI

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(US dollars and non US currencies in thousands, except per share data)

(Unaudited)

included deferred ~~losses~~gains of ~~$1,216~~$109 ($~~887,~~79, net of tax) at ~~June 30,~~December 31, 2022. Upon settlement, ~~(losses)/gains~~losses of ~~$(220) and $434~~$1,257 were recorded in COGS during the ~~three and nine months~~quarter ended ~~June 30, 2022, respectively.~~December 31, 2022. All contracts expire in 14 to ~~243~~334 days.

At ~~June 30,~~December 31, 2022, Griffon had ~~$10,450~~$6,900 of Canadian dollar contracts at a weighted average rate of $1.26. The contracts, which protect Canadian operations from currency fluctuations for U.S. dollar based purchases, do not qualify for hedge accounting. For the three ~~and nine~~ months ended ~~June 30,~~December 31, 2022, fair value gains of ~~$223 and $225,~~$217, respectively, were recorded to Other

~~GRIFFON CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(US dollars and non US currencies in thousands, except per share data)~~

~~(Unaudited)~~

liabilities and to Other income for the outstanding contracts, based on similar contract values (level 2 inputs). Realized gains of ~~$76 and $74 were~~$174 was recorded in Other income during the three ~~and nine~~ months ended ~~June 30,~~December 31, 2022, respectively for all settled contracts. All contracts expire in 530 to ~~480~~300 days.

NOTE 3 – REVENUE

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.

For a complete explanation of Griffon’s revenue accounting policies, this note should be read in conjunction with Griffon’s Annual Report on Form 10-K for the year ended September 30, ~~2021.~~2022. See Note 13 - Business Segments for revenue from contracts with customers disaggregated by end markets, segments and geographic location.

NOTE 4 – ACQUISITIONS

Griffon continually evaluates potential acquisitions that 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; in each instance, Griffon is in the process of finalizing the initial purchase price allocation unless otherwise noted.

On January 24, 2022, Griffon ~~completed the acquisition of~~acquired Hunter, a market leader in residential ceiling, commercial, and industrial fans, from MidOcean for a contractual purchase price of ~~$845,000, subject to customary post-closing adjustments.~~$845,000. The acquisition was primarily financed with a new $800,000 seven year Term Loan B facility; we used a combination of cash on hand and revolver borrowings to fund the balance of the purchase price and related acquisition and debt expenditures. Hunter complements and diversifies Griffon's portfolio of leading consumer brands and products. ~~Since~~For the ~~date of acquisition through June 30,~~three months ended December 31, 2022, Hunter's revenue and Segment Adjusted EBITDA was ~~$176,623.~~$54,117 and $4,428, respectively. The goodwill recognized was ~~$281,668,~~$256,728, which was assigned to the CPP segment, and is not ~~expected to be~~ deductible for income tax purposes. The ~~final~~preliminary purchase price allocation ~~which~~ is ~~expected to be completed in the first quarter of fiscal 2023, will be~~ based on ~~final~~ appraisals and other analysis of fair values of acquired assets and liabilities. The following unaudited proforma summary from continuing operations presents consolidated information as if the Company acquired Hunter on October 1, 2020:

Proforma For the Three Months Ended June 30, (unaudited) Proforma For the Nine Months Ended June 30, (unaudited)
2022 2021 2022 2021
Revenue $ 768,179 $ 669,199 $ 2,230,056 $ 1,984,377
Income from continuing operations 52,782 11,149 127,299 65,811

109

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(US dollars and non US currencies in thousands, except per share data)

(Unaudited)


	Proforma For the Three Months Ended December 31, (unaudited)
	2021

Revenue	$	670,839
Income from continuing operations	19,974

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:

•Depreciation and amortization that would have been charged assuming the preliminary fair value adjustments to property, plant, and equipment, and intangible assets had been applied from October 1, 2021.

•Additional interest and related expenses from the new $800,000 seven year Term Loan B facility that Griffon used to acquire Hunter Fan reduced by historical Hunter interest expense.

•The tax effects on the above adjustments using the statutory tax rate of 25.7% for Griffon and 27.1% for Hunter.

The calculation of the preliminary purchase price allocation is as follows:



Accounts receivable (1)	$	64,602
Inventories(2)	110,299
Other current assets	7,940
Property, plant and equipment	15,007
Operating lease right-of-use assets	12,447
Goodwill	~~281,668~~256,728
Intangible assets	~~606,000~~616,000

Total assets acquired	$	~~1,097,963~~1,083,023

Accounts payable and accrued liabilities	$	~~71,205~~69,789
Current portion of operating lease liabilities	3,323
Deferred tax ~~liability(3)~~liability(3)	~~161,381~~145,486
Long-term operating lease liabilities	9,123
Other long-term liabilities	~~1,467~~3,848
Total liabilities assumed	$	~~246,499~~231,569
Total net assets acquired	$	~~851,464~~851,454

(1) Includes $67,201 of gross accounts receivable of which $2,599 was not expected to be collected. The fair value of accounts receivable approximated book value acquired.

(2) Includes $113,287 of gross inventory of which $2,988 was reserved for obsolete items.

(3) Deferred tax liability recorded on intangibles assets.

~~The amounts assigned to goodwill and major intangible asset classifications for the Hunter acquisition are as follows:~~

Average Life (Years)
Goodwill $ 281,668 N/A
Indefinite-lived intangibles (Hunter and Casablanca brands) 356,000 N/A
Definite-lived intangibles (Customer relationships) 250,000 20
Total goodwill and intangible assets $ 887,668

On December 22, 2020, AMES acquired Quatro Design Pty Ltd (“Quatro”), a leading Australian manufacturer and supplier of glass fiber reinforced concrete landscaping products for residential, commercial, and public sector projects for a net purchase price of AUD $3,500 (approximately $2,700) in cash. The final purchase price allocated to goodwill and acquired intangibles was AUD $1,038 (approximately $784) and AUD $2,755 (approximately $2,082), respectively, which was assigned to the CPP segment, and is not deductible for income tax purposes.

1110

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(US dollars and non US currencies in thousands, except per share data)

(Unaudited)

The amounts assigned to goodwill and major intangible asset classifications for the Hunter acquisition are as follows:


	Average Life (Years)
Goodwill		$	256,728	N/A
Indefinite-lived intangibles (Hunter and Casablanca brands)	356,000	N/A
Definite-lived intangibles (Customer relationships)	250,000	20
Total goodwill and intangible assets		$	862,728

During the ~~nine months~~quarter ended ~~June 30, 2022, the Company incurred acquisition costs of $9,303. During the three months ended June 30,~~December 31, 2022, there were no acquisition costs. During the ~~three and nine months~~quarter ended ~~June 30,~~December 31, 2021, the Company incurred acquisition costs ~~were de minimis.~~of $2,595.

NOTE 5 – INVENTORIES

Inventories are stated at the lower of cost (first-in, first-out or average cost) or ~~market.~~net realizable value.

The following table details the components of inventory:


		At June 30, 2022		At September 30, 2021			At December 31, 2022		At September 30, 2022
Raw materials and supplies	Raw materials and supplies	$	169,606	$	133,684	Raw materials and supplies	$	163,118	$	173,520
Work in process	Work in process	51,673		48,531		Work in process	34,484		50,963
Finished goods	Finished goods	486,899		290,579		Finished goods	448,750		444,710
Total	Total	$	708,178	$	472,794	Total	$	646,352	$	669,193

NOTE 6 – PROPERTY, PLANT AND EQUIPMENT

The following table details the components of property, plant and equipment, net:


		At June 30, 2022		At September 30, 2021			At December 31, 2022		At September 30, 2022
Land, building and building improvements	Land, building and building improvements	$	154,187	$	155,574	Land, building and building improvements	$	157,626	$	159,693
Machinery and equipment	Machinery and equipment	550,899		520,110		Machinery and equipment	518,478		511,779
Leasehold improvements	Leasehold improvements	44,435		39,913		Leasehold improvements	35,814		35,489
		749,521		715,597			711,918		706,961
Accumulated depreciation and amortization	Accumulated depreciation and amortization	(449,677)		(425,375)		Accumulated depreciation and amortization	(421,413)		(412,400)
Total	Total	$	299,844	$	290,222	Total	$	290,505	$	294,561

Depreciation and amortization expense for property, plant and equipment was ~~$12,173~~$11,489 and ~~$10,896~~$10,694 for the quarters ended ~~June 30, 2022 and 2021, respectively, and $34,650 and $31,950 for the nine months ended June 30,~~December 31, 2022 and 2021, respectively. Depreciation and amortization expense included in Selling, general and administrative ("SG&A") expenses was ~~$4,578~~$4,239 and ~~$3,724~~$3,400 for the quarters ended ~~June 30, 2022 and 2021, respectively, and $12,234 and $10,672 for the nine months ended June 30,~~December 31, 2022 and 2021, respectively. Remaining components of depreciation, attributable to manufacturing operations, are included in Cost of goods and services.

1211

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(US dollars and non US currencies in thousands, except per share data)

(Unaudited)

NOTE 7 – CREDIT LOSSES

The Company is exposed to credit losses primarily through sales of products and services. Trade receivables are recorded at their stated amount, less allowances for discounts, ~~doubtful accounts~~credit losses and returns. 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~~credit losses 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. Allowance for discounts and returns are recorded as a reduction of revenue and the provision related to the allowance for ~~doubtful accounts~~credit losses is recorded in SG&A expenses.

The Company also considers current and expected future economic and market conditions ~~such as the COVID-19 pandemic,~~ when determining any estimate of credit losses. 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 the accounting guidance for credit losses on financial instruments, including trade receivables, in all material respects.

The following table provides a roll-forward of the allowance for credit losses that is deducted from the amortized cost basis of accounts receivable to present the net amount expected to be collected:


		Nine months ended June 30,					Three months ended December 31,
		2022		2021			2022		2021
Beginning Balance, October 1	Beginning Balance, October 1	$	8,787	$	8,178	Beginning Balance, October 1	$	12,137	$	8,787
Allowance for credit losses acquired		2,599		—

Provision for expected credit losses	Provision for expected credit losses	2,430		1,287		Provision for expected credit losses	1,457		1,039
Amounts written off charged against the allowance	Amounts written off charged against the allowance	(159)		(238)		Amounts written off charged against the allowance	(48)		(4)
Other, primarily foreign currency translation	Other, primarily foreign currency translation	(116)		20		Other, primarily foreign currency translation	90		(35)
Ending Balance, June 30		$	13,541	$	9,247
Ending Balance, December 31						Ending Balance, December 31	$	13,636	$	9,787

1312

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(US dollars and non US currencies in thousands, except per share data)

(Unaudited)

NOTE 8 – GOODWILL AND OTHER INTANGIBLES

The following table ~~provides changes in~~provide a summary of the carrying value of goodwill by segment ~~during the nine months ended June~~as of September 30, ~~2022:~~2022 and December 31, 2022, as follows:


		At September 30, 2021		Hunter Acquisition		Foreign currency translations adjustments		At June 30, 2022			At September 30, 2022		Hunter Acquisition (1)		At December 31, 2022
Consumer and Professional Products	Consumer and Professional Products	$	234,895	$	281,668	$	(2,460)	$	514,103	Consumer and Professional Products	$	144,537	$	(1,808)	$	142,729
Home and Building Products	Home and Building Products	191,253		—		—		191,253		Home and Building Products	191,253		—		191,253

Total	Total	$	426,148	$	281,668	$	(2,460)	$	705,356	Total	$	335,790	$	(1,808)	$	333,982
(1) The decrease is due to the preliminary allocation of the purchase price for the Hunter acquisition.										(1) The decrease is due to the preliminary allocation of the purchase price for the Hunter acquisition.

The following table provides the gross carrying value and accumulated amortization for each major class of intangible assets:


		At June 30, 2022					At September 30, 2021					At December 31, 2022					At September 30, 2022
		Gross Carrying Amount		Accumulated Amortization		Average Life (Years)	Gross Carrying Amount		Accumulated Amortization			Gross Carrying Amount		Accumulated Amortization		Average Life (Years)	Gross Carrying Amount		Accumulated Amortization
Customer relationships & other	Customer relationships & other	$	435,724	$	87,009	23	$	187,732	$	75,794	Customer relationships & other	$	443,915	$	97,316	23	$	442,085	$	91,143
Technology and patents	Technology and patents	13,859		2,851		13	13,429		2,439		Technology and patents	14,648		3,197		13	14,326		3,022
Total amortizable intangible assets	Total amortizable intangible assets	449,583		89,860			201,161		78,233		Total amortizable intangible assets	458,563		100,513			456,411		94,165
Trademarks	Trademarks	579,301		—			227,097		—		Trademarks	403,076		—			399,668		—
Total intangible assets	Total intangible assets	$	1,028,884	$	89,860		$	428,258	$	78,233	Total intangible assets	$	861,639	$	100,513		$	856,079	$	94,165

The gross carrying amount of intangible assets was impacted by ~~$4,630~~$5,560 related to favorable foreign currency translation.

Amortization expense for intangible assets was ~~$5,514~~$5,624 and ~~$2,409~~$2,387 for the quarters ended ~~June 30, 2022 and 2021, respectively, and $12,371 and $7,168 for the nine months ended June 30,~~December 31, 2022 and 2021, respectively. The increase in intangible assets and amortization is related to the Hunter acquisition.

Amortization expense for the remainder of ~~2022~~2023 and the next five fiscal years and thereafter, based on current intangible balances and classifications, is estimated as follows: ~~2022 - $5,462;~~remaining in 2023 - ~~$22,000;~~$16,161; 2024 - ~~$22,000;~~$21,305; 2025 - ~~$22,000;~~$21,305; 2026 - ~~$22,000;~~$21,305; 2027 - ~~$22,000;~~$21,305; 2028 - $21,305; thereafter ~~$244,261.~~$235,364.

During the ~~nine months~~quarter ended ~~June 30,~~December 31, 2022, the Company determined that there were no triggering events and, as a result, there was no impairment to either its goodwill or indefinite-lived intangible assets at ~~June 30,~~December 31, 2022.

~~GRIFFON CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(US dollars and non US currencies in thousands, except per share data)~~

~~(Unaudited)~~

NOTE 9 – INCOME TAXES

During the quarter ended ~~June 30,~~December 31, 2022, the Company recognized a tax provision of ~~$23,268~~$19,318 on income before taxes from continuing operations of ~~$76,050,~~$68,020, compared to a tax provision of ~~$12,078~~$7,213 on income before taxes from continuing operations of ~~$26,893~~$23,917 in the comparable prior year quarter. The current year quarter results ~~included restructuring charges~~include a gain on the sale of ~~$5,909~~a building of $10,852 ($~~4,359, net of tax), fair value step-up of acquired inventory sold of $2,700 ($2,005,~~8,323, net of tax), strategic review (retention and other) of ~~$3,220~~$8,232 ($~~2,416, net of tax), debt extinguishment, net of $5,287 ($4,022, net of tax), and discrete and certain other tax provisions, net, that affect comparability of $913.~~The prior year quarter results included restructuring charges of $4,081 ($3,128, net of tax), and discrete tax and certain other tax provisions, net, that affect comparability of $2,850. Excluding these items, the effective tax rates for the quarters ended June 30, 2022 and 2021 were 28.6% and 32.9%, respectively.

During the nine months ended June 30, 2022, the Company recognized a tax provision of $55,119 on income before taxes of $182,765, compared to a tax provision of $34,868 on income before taxes of $92,546 in the comparable prior year period. The nine month period ended June 30, 2022 included restructuring charges of $12,391 ($9,185, net of tax), acquisition costs of $9,303 ($8,149,6,222, net of tax), proxy ~~expenses~~costs of ~~$6,952~~$1,503 ($5,359, net of tax), fair value step-up of acquired inventory sold of $5,401 ($4,012, net of tax), strategic review (retention and other) of $3,220 ($2,416, net of tax), debt extinguishment, net $5,287 ($4,022,1,153, net of tax), and discrete and certain other tax benefits, net, that affect comparability of ~~$661.~~ $333. The ~~nine month period ended June 30, 2021~~prior year quarter results included restructuring charges of ~~$14,662~~$1,716 ($~~11,034,~~1,330, net of tax), acquisition costs of $2,595 ($2,003, net of tax), proxy contest costs of $2,291 ($1,768, net of tax) and discrete ~~tax~~ and certain other tax ~~provisions,~~benefits, net, that affect comparability of ~~$3,219.~~$891. Excluding these items, the effective tax rates for the ~~nine months~~quarters ended ~~June 30,~~December 31, 2022 and 2021 were ~~28.9%~~29.1% and ~~32.9%~~31.5%, respectively.

1513

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(US dollars and non US currencies in thousands, except per share data)

(Unaudited)

NOTE 10 – LONG-TERM DEBT


			At June 30, 2022										At September 30, 2021											At December 31, 2022											At September 30, 2022
			Outstanding Balance		Original Issuer Premium/(Discount)		Capitalized Fees & Expenses		Balance Sheet		Coupon Interest Rate			Outstanding Balance		Original Issuer Premium/(Discount)			Capitalized Fees & Expenses		Balance Sheet		Coupon Interest Rate				Outstanding Balance		Original Issuer Premium/(Discount)		Capitalized Fees & Expenses		Balance Sheet			Coupon Interest Rate		Outstanding Balance		Original Issuer Premium/(Discount)		Capitalized Fees & Expenses		Balance Sheet		Coupon Interest Rate
Senior notes due 2028	Senior notes due 2028	(a)	$	984,775	$	278	(11,562)		$	973,491	5.75	%		$	1,000,000	$	315		$	(13,293)	$	987,022	5.75	%	Senior notes due 2028	(a)	$	974,775	$	254	(10,434)		$	964,595		5.75	%	$	974,775	$	266	$	(10,939)	$	964,102	5.75	%
Term Loan B due 2029	Term Loan B due 2029	(b)	498,000		(1,187)		(9,174)		487,639		Variable			—		—		—	—		—		n/a		Term Loan B due 2029	(b)	494,000		(1,101)		(8,472)		484,427			Variable		496,000		(1,144)		(8,823)		486,033		Variable
Revolver due 2025	Revolver due 2025	(b)	97,816		—		(1,350)		96,466		Variable			13,483		—			(1,718)		11,765		Variable		Revolver due 2025	(b)	45,100		—		(1,104)		43,996			Variable		97,328		—		(1,227)		96,101		Variable
Finance lease - real estate	Finance lease - real estate	(c)	13,426		—		—		13,426		Variable			14,594		—			(4)		14,590		Variable		Finance lease - real estate	(c)	12,751		—		—		12,751			Variable		13,091		—		—		13,091		Variable
Non US lines of credit	Non US lines of credit	(d)	—		—		(6)		(6)		Variable			3,012		—			(17)		2,995		Variable		Non US lines of credit	(d)	—		—		(4)		(4)			Variable		—		—		(2)		(2)		Variable
Non US term loans	Non US term loans	(d)	14,193		—		(39)		14,154		Variable			25,684		—			(91)		25,593		Variable		Non US term loans	(d)	12,663		—		(21)		12,642			Variable		12,090		—		(27)		12,063		Variable
Other long term debt	Other long term debt	(e)	2,625		—		(13)		2,612		Variable			3,733		—			(15)		3,718		Variable		Other long term debt	(e)	2,127		—		(13)		2,114			Variable		2,276		—		(13)		2,263		Variable
Totals	Totals		1,610,835		(909)		(22,144)		1,587,782					1,060,506		315			(15,138)		1,045,683				Totals		1,541,416		(847)		(20,048)		1,520,521					1,595,560		(878)		(21,031)		1,573,651
less: Current portion	less: Current portion		(13,085)		—		—		(13,085)					(12,486)		—			—		(12,486)				less: Current portion		(12,840)		—		—		(12,840)					(12,653)		—		—		(12,653)
Long-term debt	Long-term debt		$	1,597,750	$	(909)	$	(22,144)	$	1,574,697				$	1,048,020	$	315		$	(15,138)	$	1,033,197			Long-term debt		$	1,528,576	$	(847)	$	(20,048)	$	1,507,681				$	1,582,907	$	(878)	$	(21,031)	$	1,560,998

1614

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(US dollars and non US currencies in thousands, except per share data)

(Unaudited)


			Three Months Ended June 30, 2022										Three Months Ended June 30, 2021												Three Months Ended December 31, 2022										Three Months Ended December 31, 2021
			Effective Interest Rate		Cash Interest		Amort. Debt (Premium)/Discount		Amort. Debt Issuance Costs & Other Fees		Total Interest Expense		Effective Interest Rate		Cash Interest		Amort. Debt Premium		Amort. Debt Issuance Costs & Other Fees		Total Interest Expense				Effective Interest Rate		Cash Interest		Amort. Debt (Premium)/Discount		Amort. Debt Issuance Costs & Other Fees		Total Interest Expense		Effective Interest Rate		Cash Interest		Amort. Debt Premium		Amort. Debt Issuance Costs & Other Fees		Total Interest Expense
Senior notes due 2028	Senior notes due 2028	(a)	6.0	%	$	14,340	$	(12)	$	516	$	14,844	6.0	%	$	14,375	$	(12)	$	496	$	14,859	Senior notes due 2028	(a)	5.9	%	$	14,012	$	(12)	$	505	$	14,505	5.9	%	$	14,375	$	(12)	$	518	$	14,881
Term Loan B due 2029	Term Loan B due 2029	(b)	3.9	%	7,129		61		485		7,675		n/a		—		—		—		—		Term Loan B due 2029	(b)	Variable		7,808		43		351		8,202		n/a		—		—		—		—
Revolver due 2025	Revolver due 2025	(b)	Variable		1,056		—		123		1,179		Variable		344		—		123		467		Revolver due 2025	(b)	Variable		1,344		—		123		1,467		Variable		261		—		122		383
Finance lease - real estate	Finance lease - real estate	(c)	5.6	%	187		—		—		187		5.7	%	215		—		6		221		Finance lease - real estate	(c)	5.6	%	178		—		—		178		5.6	%	198		—		4		202
Non US lines of credit	Non US lines of credit	(d)	Variable		4		—		5		9		Variable		4		—		4		8		Non US lines of credit	(d)	Variable		155		—		13		168		Variable		3		—		4		7
Non US term loans	Non US term loans	(d)	Variable		141		—		9		150		Variable		169		—		18		187		Non US term loans	(d)	Variable		—		—		—		—		Variable		166		—		17		183
Other long term debt	Other long term debt	(e)	Variable		54		—		—		54		Variable		107		—		—		107		Other long term debt	(e)	Variable		130		—		—		130		Variable		97		—		1		98
Capitalized interest	Capitalized interest				(76)		—		—		(76)				—		—		—		—		Capitalized interest				(2)		—		—		(2)				(73)		—		—		(73)
Totals	Totals				$	22,835	$	49	$	1,138	$	24,022			$	15,214	$	(12)	$	647	$	15,849	Totals				$	23,625	$	31	$	992	$	24,648			$	15,027	$	(12)	$	666	$	15,681

Nine Months Ended June 30, 2022 Nine Months Ended June 30, 2021
Effective Interest Rate Cash Interest Amort. Debt (Premium)/Discount Amort. Debt Issuance Costs & Other Fees Total Interest Expense Effective Interest Rate Cash Interest Amort. Debt
Premium Amort.
Debt Issuance Costs
& Other Fees Total Interest Expense
Senior notes due 2028 (a) 6.0 % $ 43,090 $ (36) $ 1,552 $ 44,606 6.0 % $ 43,125 $ (35) $ 1,566 $ 44,656
Term Loan B due 2029 (b) 3.7 % 11,896 91 717 12,704 n/a — — — —
Revolver due 2025 (b) Variable 2,307 — 368 2,675 Variable 760 — 368 1,128
Finance lease - real estate (c) 5.6 % 577 — 4 581 5.4 % 671 — 19 690
Non US lines of credit (d) Variable 14 — 12 26 Variable 11 — 12 23
Non US term loans (d) Variable 492 — 44 536 Variable 503 — 53 556
Other long term debt (e) Variable 212 — 1 213 Variable 329 — 1 330
Capitalized interest (230) — — (230) (13) — — (13)
Totals $ 58,358 $ 55 $ 2,698 $ 61,111 $ 45,386 $ (35) $ 2,019 $ 47,370

1715

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(US dollars and non US currencies in thousands, except per share data)

(Unaudited)

(a) During 2020, Griffon issued, at par, $1,000,000 of 5.75% Senior Notes due in 2028 (the “2028 Senior Notes”). Proceeds from the 2028 Senior Notes were used to redeem $1,000,000 of 5.25% Senior Notes due 2022. ~~During~~In connection with the ~~period ended June 30,~~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 ~~$15,225~~$25,225 of 2028 Senior Notes in the open market at a weighted average discount of ~~92.19%~~91.82% of par, or ~~$14,036.~~$23,161. In connection with these purchases, Griffon recognized a ~~$1,009~~$1,767 net gain on the early extinguishment of debt comprised of ~~$1,189~~$2,064 of face value in excess of purchase price, offset by ~~$180~~$297 related to the write-off of underwriting fees and other expenses. As of ~~June 30,~~December 31, 2022, outstanding 2028 Senior Notes due totaled ~~$984,775;~~$974,775; interest is payable semi-annually on March 1 and September 1. ~~Subsequent to June 30, 2022, Griffon purchased $10,000 of 2028 Senior Notes in the open market at a weighted average discount of 91.25% of par, or $9,125.~~

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 ~~$888,759~~$877,298 on ~~June 30,~~December 31, 2022 based upon quoted market prices (level 1 inputs). ~~In connection with the issuance and exchange of the 2028 Senior Notes, Griffon capitalized $16,448~~At December 31, 2022, $10,434 of underwriting fees and other expenses incurred ~~which is being amortized over the term of such notes, and at June 30, 2022, $11,562~~ remained to be amortized.

(b) On January 24, 2022, Griffon amended and restated its Revolving Credit Facility (as amended, "Credit Agreement") to provide for a new $800,000 Term Loan B facility, due January 24, 2029, in addition to its ~~current~~ $400,000 revolving credit facility ("Revolver"), and replaced LIBOR with SOFR (Secured Overnight Financing Rate). The Term Loan B ~~contains~~accrues interest at the Term SOFR rate plus a ~~SOFR~~credit adjustment spread with a floor of 0.50%, and a current spread of ~~2.75%~~2.50% (7.01% as of December 31, 2022). Additionally, there are 2two interest rate step-downs tied to achieving decreased secured leverage ratio ~~thresholds.~~thresholds, the first of which was achieved during 2022. The Original Issue Discount for the Term Loan B was 99.75%. In connection with this amendment, Griffon capitalized $15,466 of underwriting fees and other expenses incurred, which are being amortized over the term of the loan.

The Term Loan B facility requires nominal quarterly principal payments of $2,000, ~~beginning~~which began with the quarter ended June 30, 2022; potential additional annual principal payments based on a percentage of excess cash flow and certain secured leverage thresholds starting with the fiscal year ending September 30, 2023; and a final balloon payment due at maturity. Term Loan B borrowings may generally be repaid without penalty but may not be re-borrowed. During the ~~period ended June 30,~~third quarter of 2022, Griffon prepaid $300,000 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 a $6,296 charge on the prepayment of ~~debt,~~debt; $5,575 related to the write-off of underwriting fees and other expenses and $721 of the original issuer discount. The Term Loan B facility is subject to the same affirmative and negative covenants that apply to the Revolver, but is not subject to any financial maintenance covenants. Term Loan B borrowings are secured by the same collateral as the ~~Revolver.~~Revolver on an equal and ratable basis. The fair value of the Term Loan B facility approximated ~~$473,100~~$485,355 on ~~June 30,~~December 31, 2022 based upon quoted market prices (level 1 inputs). At ~~June 30,~~December 31, 2022, ~~$9,174~~$8,472 of underwriting fees and other expenses incurred, remained to be amortized.

The Revolver's maximum borrowing availability is $400,000 and it matures on March 22, 2025. The Revolver includes a letter of credit sub-facility with a limit of $100,000; a multi-currency sub-facility of $200,000; and contains a customary accordion feature that permits us to request, subject to each lender's consent, an increase in the maximum aggregate amount that can be borrowed by up to an additional $100,000.

~~In addition, on December 9, 2021,~~During 2022, Griffon replaced the Revolver GBP LIBOR benchmark rate with a Sterling Overnight Index Average ("SONIA"). Borrowings under the Revolver may be repaid and re-borrowed at any time. 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. ~~Current margins are 0.75% for base rate loans, 1.75% for~~Griffon's SOFR loans accrue interest at Term SOFR plus a credit adjustment spread and ~~1.75% for~~a margin of 1.50% (5.91% at December 31, 2022) and SONIA ~~loans.~~loans accrue interest at SONIA Base Rate plus a credit adjustment spread and a margin of 1.50% (4.96% at December 31, 2022). 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

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(US dollars and non US currencies in thousands, except per share data)

(Unaudited)

material domestic subsidiaries and are secured, on a first priority basis, by substantially all domestic assets of the Company and the guarantors, and a pledge of not greater than 65% of the equity interest in Griffon’s material, first-tier foreign subsidiaries. At ~~June 30,~~December 31, 2022, there were ~~$97,816~~

~~GRIFFON CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(US dollars and non US currencies in thousands, except per share data)~~

~~(Unaudited)~~

$45,100 of outstanding borrowings under the Revolver; outstanding standby letters of credit were $12,287; and ~~$289,897~~$342,613 was available, subject to certain loan covenants, for borrowing at that date.

(c) Griffon has one finance lease outstanding for real estate located in Ocala, Florida. The lease matures in 2025 and bears interest at a fixed rate of approximately 5.6%. The Ocala, Florida lease contains 2 ~~five-year~~two five-year renewal options. At ~~June 30,~~December 31, 2022, ~~$13,426~~$12,751 was outstanding. During ~~the year-to-date period ended June 30,~~ 2022, the financing lease on the Troy, Ohio location expired. The 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 1one dollar buyout at the end of the lease. Griffon exercised the 1one dollar buyout option in November 2021. Refer to Note 21- Leases for further details.

(d) In November 2012, Garant G.P. (“Garant”), a Griffon wholly owned subsidiary, entered into a CAD 15,000 ($~~11,666~~11,072 as of ~~June 30,~~December 31, 2022) revolving credit facility. Effective in December 2022, the facility was amended to replace LIBOR (USD) with the Canadian Dollar Offer Rate ("CDOR"). The facility accrues interest at ~~LIBOR (USD)~~CDOR or the Bankers Acceptance Rate (CDN) plus 1.3% per annum ~~(3.09% LIBOR USD~~(6.04% using CDOR and ~~3.86%~~5.79% using Bankers Acceptance Rate CDN as of ~~June 30,~~December 31, 2022). The revolving facility matures in ~~October 2022,~~December 2023, but is renewable upon mutual agreement with the lender. Garant is required to maintain a certain minimum equity. At ~~June 30,~~December 31, 2022, there were no outstanding borrowings under the revolving credit facility with CAD 15,000 ($~~11,666~~11,072 as of ~~June 30,~~December 31, 2022) available.

During ~~the period ended March 31,2022,~~2022, Griffon Australia Holdings Pty Ltd and its Australian subsidiaries (collectively, "Griffon Australia") amended its AUD 18,375 term loan, AUD 20,000 revolver and AUD 15,000 receivable purchase facility agreement that was entered into in July 2016 and further amended in fiscal 2020. Griffon Australia paid off the term loan in the amount of AUD 9,625 and canceled the AUD 20,000 revolver. The amendment refinanced the existing AUD 15,000 receivable purchase facility. The receivable purchase facility matures in March 2023, but is renewable upon mutual agreement with the lender. The receivable purchase facility accrues interest at BBSY (Bank Bill Swap Rate) plus 1.25%~~, respectively,~~ per annum ~~(2.39%~~(4.51% at ~~June 30,~~December 31, 2022). At ~~June 30,~~December 31, 2022, there was no balance outstanding under the receivable purchase facility with AUD 15,000 ($~~10,392~~10,134 as of ~~June 30,~~December 31, 2022) 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. The term loan and mortgage loan require quarterly principal payments of GBP 438 and GBP 105 plus interest, respectively, and have balloon payments due upon maturity, July 2023, of GBP 7,088 and GBP 2,349, respectively. Effective in January 2022, the Term Loan and Mortgage Loan were amended to replace GBP LIBOR with SONIA. The Term Loan and Mortgage Loans each accrue interest at the SONIA Rate plus ~~1.92% (3.11%~~1.80% (5.23% at ~~June 30,~~December 31, 2022). The revolving facility accrues interest at the Bank of England Base Rate plus 3.25% ~~(4.50%~~(6.75% as of ~~June 30,~~December 31, 2022). The revolving credit facility matures in ~~September 2022,~~July 2023, but is renewable upon mutual agreement with the lender. As of ~~June 30,~~December 31, 2022, the revolver had no outstanding balance while the term and mortgage loan balances amounted to GBP ~~11,603~~10,519 ($~~14,193~~12,663 as of ~~June 30,~~December 31, 2022). The revolver and the term loan are both secured by substantially all the assets of AMES UK and its subsidiaries. AMES UK is subject to a maximum leverage ratio and a minimum fixed charges cover ratio. During the period ended March 31, 2022, AMES UK entered into a $8,500 trade loan facility agreement. The trade loan facility has a maximum loan period of 135 days and expired on June 30, 2022. The trade facility accrues interest at the Mid-point of the FED Target Range plus 2.50% (4.13% as of June 30, 2022).

(e) Other long-term debt primarily consists of a loan with the Pennsylvania Industrial Development Authority, with the balance consisting of finance leases.

At ~~June 30,~~December 31, 2022, Griffon and its subsidiaries were in compliance with the terms and covenants of all credit and loan agreements.

~~NOTE 11 — SHAREHOLDERS’ EQUITY~~

During the nine months ended June 30, 2022, the Company paid three quarterly cash dividends of $0.09 per share each. During 2021, the Company paid a quarterly cash dividend of $0.08 per share, totaling $0.32 per share for the year.

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(US dollars and non US currencies in thousands, except per share data)

(Unaudited)

NOTE 11 — SHAREHOLDERS’ EQUITY AND EQUITY COMPENSATION

During the three months ended December 31, 2022, the Company paid a quarterly cash dividend of $0.10 per share. 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, ~~payable~~paid on July 20, ~~2022 to shareholders of record as of the close of business on July 8,~~ 2022. On July 27, 2022, the Board of Directors declared a quarterly cash dividend of $0.09 per share, payable on September 15, 2022 to shareholders of record as of the close of business on August 18, 2022. As of June 30, 2022, the Company accrued $104,053 in connection with the declaration of the special dividend. 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.

On January 30, 2023, the Board of Directors declared a quarterly cash dividend of $0.10 per share, payable on March 23, 2023 to shareholders of record as of the close of business on February 23, 2023.

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; and 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. Options granted under the Amended Incentive Plan may be either “incentive stock options” or nonqualified stock options, 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 6,250,000 (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 ~~June 30,~~December 31, 2022, there were ~~835,517~~368,445 shares 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 the 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 two senior executives is calculated as the maximum 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 expenses.

The following table summarizes the Company’s compensation expense relating to all stock-based incentive plans:


	For the Three Months Ended December 31,
	2022		2021
Restricted stock	$	5,538	$	3,890
ESOP	1,204		977
Total stock-based compensation	$	6,742	$	4,867

During the first quarter of ~~2022,~~2023, Griffon granted ~~236,973 shares of restricted stock and restricted stock units. This included 218,162~~466,677 shares of restricted stock and restricted stock units ("RSUs"). This includes 249,480 shares of restricted stock and 11,901 RSUs granted to 44 executives and key employees, subject to certain performance conditions, with a vesting ~~periods~~period of ~~thirty-four~~thirty-six months ~~with~~and a total fair value of ~~$6,285,~~$8,385, or a weighted average fair value of $28.81 per share. Furthermore, this included an 18,811 shares of restricted stock award granted to 1 executive, with a vesting period of three years and a total fair value of $507 or a weighted average fair value of $26.97 per share.

During the second quarter of 2022, Griffon granted 711,725 shares of restricted stock. This included 199,195 shares of restricted stock to 9 executives with a vesting period of three years, with a total fair value of $1,494, or a weighted average fair value of $22.50$33.61 per share. This also ~~included 454,146~~includes205,296 shares of restricted stock granted to 2two senior executives with a vesting period of ~~thirty-four~~thirty-six months and a ~~two-year~~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 ~~condition is~~conditions are attained, the amount of shares that can vest will range from ~~113,538~~a minimum of 51,324 to ~~454,146.~~a maximum of 205,296, with the target number of shares being 102,648. The total fair value of these restricted shares, assuming achievement of the performance conditions at target, is ~~approximately $5,456,~~$3,555, or a weighted average fair value of $24.03 per share. Additionally, Griffon granted 58,384 restricted shares to the non-employee directors of Griffon with a vesting period of one year and a fair value of $1,375, or a weighted average fair value of $23.55 per share. During the nine months ended June 30, 2022, 501,718 shares granted were issued out of treasury stock.

During the third quarter of 2022, Griffon granted 31,663 shares of restricted stock. This included 31,208 shares of restricted stock, subject to certain performance conditions, with vesting periods of thirty-two months, with a total fair value of $700, or a weighted average fair value of $22.43 per share. Furthermore, this included 455 shares of a restricted stock award granted to one executive, with a vesting period of 3 years and a total fair value of $9 or a weighted average fair value of $18.89 per share.

2018

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(US dollars and non US currencies in thousands, except per share data)

(Unaudited)

~~The following table summarizes~~weighted average fair value of$34.63 per share. During the ~~Company’s compensation expense relating to all stock-based incentive plans:~~

For the Three Months Ended June 30, For the Nine Months Ended June 30,
2022 2021 2022 2021
Restricted stock $ 5,130 $ 4,544 $ 13,334 $ 12,321
ESOP 889 1,046 2,644 2,770
Total stock based compensation $ 6,019 $ 5,590 $ 15,978 $ 15,091
three months ended December 31, 2022, 454,776 shares granted were issued out of treasury stock.

On each of August 3, 2016 and August 1, 2018, Griffon’s Board of Directors authorized the repurchase of up to $50,000 of Griffon’s outstanding common stock. Under this share repurchase program, the Company may purchase shares in the open market, including pursuant to a 10b5-1 plan, or in privately negotiated transactions. During the ~~nine~~three months ended ~~June 30,~~December 31, 2022, Griffon did not purchase any shares of common stock under these repurchase programs. As of ~~June 30,~~December 31, 2022, an aggregate of $57,955 remains under Griffon's Board authorized repurchase programs.

During the ~~nine~~three months ended ~~June 30,~~December 31, 2022, ~~421,860~~345,051 shares, with a market value of ~~$10,742,~~$12,627, or ~~$25.46~~$36.59 per share were withheld to settle employee taxes due upon the vesting of restricted stock, and were added to treasury stock. Furthermore, during the ~~nine~~three months ended ~~June 30,~~December 31, 2022, an additional ~~5,480~~3,066 shares, with a market value of ~~$144,~~$108, or ~~$26.31~~$35.31 per share, were withheld from common stock issued upon the vesting of restricted stock units to settle employee taxes due upon vesting.

NOTE 12 – EARNINGS PER SHARE (EPS)

Basic EPS 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~~stock-based compensation.

The following table is a reconciliation of the share amounts (in thousands) used in computing earnings per share:

Three Months Ended June 30, Nine Months Ended June 30,
2022 2021 2022 2021
Common shares outstanding 57,064 56,677 57,064 56,677
Unallocated ESOP shares (1,396) (1,912) (1,396) (1,912)
Non-vested restricted stock (3,565) (3,814) (3,565) (3,814)
Impact of weighted average shares (369) (48) (576) (172)
Weighted average shares outstanding - basic 51,734 50,903 51,527 50,779
Incremental shares from stock based compensation 2,180 2,601 2,177 2,527
Weighted average shares outstanding - diluted 53,914 53,504 53,704 53,306


	Three Months Ended December 31,
		2022	2021
Common shares outstanding		57,186	56,304
Unallocated ESOP shares		(979)	(1,816)
Non-vested restricted stock		(3,230)	(2,869)
Impact of weighted average shares		(398)	(441)
Weighted average shares outstanding - basic		52,579	51,178
Incremental shares from stock-based compensation		2,719	2,575
Weighted average shares outstanding - diluted		55,298	53,753

2119

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(US dollars and non US currencies in thousands, except per share data)

(Unaudited)

NOTE 13 – BUSINESS SEGMENTS

Griffon reports its operations through 2two reportable segments, as follows:

•Home and Building Products ("HBP") conducts its operations through Clopay. Founded in 1964, Clopay is the largest manufacturer and marketer of garage doors and rolling steel doors in North America. Residential and commercial sectional garage doors are sold through professional dealers and leading home center retail chains throughout North America under the brands Clopay, Ideal, and Holmes. Rolling steel door and grille products designed for commercial, industrial, institutional, and retail use are sold under the ~~CornellCookson brand.~~Cornell and Cookson brands.

Information on Griffon’s reportable segments from continuing operations is as follows:


		For the Three Months Ended June 30,				For the Nine Months Ended June 30,					For the Three Months Ended December 31,
REVENUE	REVENUE	2022		2021		2022		2021		REVENUE	2022		2021
Consumer and Professional Products	Consumer and Professional Products	$	362,634	$	324,826	$	1,056,819	$	947,739	Consumer and Professional Products	$	252,811	$	283,173
Home and Building Products	Home and Building Products	405,545		259,392		1,082,726		752,684		Home and Building Products	396,573		308,576
Total revenue	Total revenue	$	768,179	$	584,218	$	2,139,545	$	1,700,423	Total revenue	$	649,384	$	591,749

Disaggregation of Revenue

Revenue from contracts with customers is disaggregated by end markets, segments and geographic location, as it more accurately depicts the nature and amount of the Company’s revenue. The following table presents revenue disaggregated by end market and segment:


		For the Three Months Ended June 30,				For the Nine Months Ended June 30,					For the Three Months Ended December 31,
		2022		2021		2022		2021			2022		2021
Residential repair and remodel	Residential repair and remodel	$	47,126	$	50,165	$	136,363	$	146,325	Residential repair and remodel	$	81,706	$	38,759
Retail	Retail	191,284		154,212		538,355		447,206		Retail	68,497		130,235
Residential new construction	Residential new construction	11,387		12,147		33,733		40,202		Residential new construction	12,487		10,327
Industrial	Industrial	24,748		12,708		57,122		32,197		Industrial	17,093		11,306
International excluding North America	International excluding North America	88,089		95,594		291,246		281,809		International excluding North America	73,028		92,546
Total Consumer and Professional Products	Total Consumer and Professional Products	362,634		324,826		1,056,819		947,739		Total Consumer and Professional Products	252,811		283,173
Residential repair and remodel	Residential repair and remodel	194,526		127,827		511,988		374,769		Residential repair and remodel	190,730		145,085
Commercial construction	Commercial construction	167,173		102,754		455,338		293,444		Commercial construction	169,514		130,789
Residential new construction	Residential new construction	43,846		28,811		115,400		84,471		Residential new construction	36,329		32,702
Total Home and Building Products	Total Home and Building Products	405,545		259,392		1,082,726		752,684		Total Home and Building Products	396,573		308,576

Total Consolidated Revenue	Total Consolidated Revenue	$	768,179	$	584,218	$	2,139,545	$	1,700,423	Total Consolidated Revenue	$	649,384	$	591,749

2220

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(US dollars and non US currencies in thousands, except per share data)

(Unaudited)

The following table presents revenue disaggregated by geography based on the location of the Company's customer:


		For the Three Months Ended June 30,											For the Three Months Ended December 31,
		2022						2021					2022								2021
		CPP		HBP		Total			CPP		HBP			Total			CPP		HBP			Total		CPP		HBP		Total
United States	United States	$	248,068	$	384,265	$	632,333		$	206,809	$	246,268		$	453,077	United States	$	153,667	$	379,300		$	532,967	$	164,899	$	294,576	$	459,475
Europe	Europe	31,113		7		31,120			43,767		31			43,798		Europe	4,696		16			4,712		18,330		37		18,367
Canada	Canada	19,592		15,683		35,275			20,547		10,724			31,271		Canada	23,116		15,355			38,471		22,628		12,013		34,641
Australia	Australia	55,142		—		55,142			51,437		—			51,437		Australia	66,217		—			66,217		74,349		—		74,349
All other countries	All other countries	8,719		5,590		14,309			2,266		2,369			4,635		All other countries	5,115		1,902			7,017		2,967		1,950		4,917
Consolidated revenue	Consolidated revenue	$	362,634	$	405,545	$	768,179		$	324,826	$	259,392		$	584,218	Consolidated revenue	$	252,811	$	396,573		$	649,384	$	283,173	$	308,576	$	591,749

For the Nine Months Ended June 30, 2022
2022 2021
CPP HBP Total CPP HBP Total
United States $ 677,714 $ 1,031,650 $ 1,709,364 $ 595,619 $ 713,754 $ 1,309,373
Europe 96,226 51 96,277 95,888 72 95,960
Canada 73,249 41,574 114,823 64,440 32,009 96,449
Australia 191,679 — 191,679 184,668 — 184,668
All other countries 17,951 9,451 27,402 7,124 6,849 13,973
Consolidated revenue $ 1,056,819 $ 1,082,726 $ 2,139,545 $ 947,739 $ 752,684 $ 1,700,423

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(US dollars and non US currencies in thousands, except per share data)

(Unaudited)

Griffon evaluates performance and allocates resources based on each segment's operating results before interest income and expense, income taxes, depreciation and amortization, unallocated amounts (mainly corporate overhead), restructuring charges, loss from debt extinguishment and acquisition related expenses, as well as other items that may affect comparability, as applicable (“Segment adjusted EBITDA”). Griffon believes this information is useful to investors for the same reason. The following table provides a reconciliation of Segment adjusted EBITDA to Income before taxes from continuing operations:


	For the Three Months Ended December 31,
	2022		2021
Segment adjusted EBITDA:
Consumer and Professional Products	$	(1,809)	$	16,214
Home and Building Products	124,145		56,297



Segment adjusted EBITDA	122,336		72,511
Unallocated amounts, excluding depreciation *	(13,776)		(13,263)
Adjusted EBITDA	108,560		59,248
Net interest expense	(24,544)		(15,648)
Depreciation and amortization	(17,113)		(13,081)


Gain on sale of building	10,852		—
Strategic review - retention and other	(8,232)		—
Proxy expenses	(1,503)		(2,291)
Acquisition costs	—		(2,595)
Restructuring charges	—		(1,716)
Income before taxes from continuing operations	$	68,020	$	23,917

* Unallocated amounts typically include general corporate expenses not attributable to a reportable segment.


	For the Three Months Ended December 31,
DEPRECIATION and AMORTIZATION	2022		2021
Segment:
Consumer and Professional Products	$	13,127	$	8,606
Home and Building Products	3,846		4,338



Total segment depreciation and amortization	16,973		12,944
Corporate	140		137
Total consolidated depreciation and amortization	$	17,113	$	13,081

CAPITAL EXPENDITURES
Segment:
Consumer and Professional Products	$	2,658	$	7,130
Home and Building Products	2,068		3,349



Total segment	4,726		10,479
Corporate	—		94
Total consolidated capital expenditures	$	4,726	$	10,573

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(US dollars and non US currencies in thousands, except per share data)

(Unaudited)

For the Three Months Ended June 30, For the Nine Months Ended June 30,
2022 2021 2022 2021
Segment adjusted EBITDA:
Consumer and Professional Products $ 28,373 $ 29,388 $ 92,431 $ 99,524
Home and Building Products 119,847 42,156 280,618 130,585
Segment adjusted EBITDA 148,220 71,544 373,049 230,109
Unallocated amounts, excluding depreciation * (13,405) (11,464) (39,724) (36,810)
Adjusted EBITDA 134,815 60,080 333,325 193,299
Net interest expense (23,961) (15,800) (60,985) (46,973)
Depreciation and amortization (17,688) (13,306) (47,021) (39,118)
Debt extinguishment, net (5,287) — (5,287) —
Restructuring charges (5,909) (4,081) (12,391) (14,662)
Acquisition costs — — (9,303) —
Strategic review - retention and other (3,220) — (3,220) —
Proxy expenses — — (6,952) —
Fair value step-up of acquired inventory sold (2,700) — (5,401) —
Income before taxes from continuing operations $ 76,050 $ 26,893 $ 182,765 $ 92,546

* Unallocated amounts typically include general corporate expenses not attributable to a reportable segment.

For the Three Months Ended June 30, For the Nine Months Ended June 30,
DEPRECIATION and AMORTIZATION 2022 2021 2022 2021
Segment:
Consumer and Professional Products $ 13,434 $ 8,781 $ 33,831 $ 25,600
Home and Building Products 4,116 4,375 12,778 13,095
Total segment depreciation and amortization 17,550 13,156 46,609 38,695
Corporate 138 150 412 423
Total consolidated depreciation and amortization $ 17,688 $ 13,306 $ 47,021 $ 39,118
CAPITAL EXPENDITURES
Segment:
Consumer and Professional Products $ 8,558 $ 5,365 $ 24,742 $ 19,085
Home and Building Products 2,891 1,723 8,643 5,836
Total segment 11,449 7,088 33,385 24,921
Corporate 37 26 131 28
Total consolidated capital expenditures $ 11,486 $ 7,114 $ 33,516 $ 24,949

~~GRIFFON CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(US dollars and non US currencies in thousands, except per share data)~~

~~(Unaudited)~~


ASSETS	ASSETS	At June 30, 2022		At September 30, 2021		ASSETS	At December 31, 2022		At September 30, 2022
Segment assets:	Segment assets:					Segment assets:
Consumer and Professional Products	Consumer and Professional Products	$	2,575,836	$	1,377,618	Consumer and Professional Products	$	1,908,749	$	1,914,529
Home and Building Products	Home and Building Products	741,386		666,422		Home and Building Products	707,309		737,860

Total segment assets	Total segment assets	3,317,222		2,044,040		Total segment assets	2,616,058		2,652,389
Corporate	Corporate	183,900		280,802		Corporate	155,487		158,310
Total continuing assets	Total continuing assets	3,501,122		2,324,842		Total continuing assets	2,771,545		2,810,699
Discontinued operations - held for sale		—		275,814
Other discontinued operations		3,110		4,029

Discontinued operations						Discontinued operations	5,693		5,775
Consolidated total	Consolidated total	$	3,504,232	$	2,604,685	Consolidated total	$	2,777,238	$	2,816,474

NOTE 14 – EMPLOYEE BENEFIT PLANS

Defined benefit pension expense (income) included in Other Income (Expense), net was as follows:


		Three Months Ended June 30,				Nine Months Ended June 30,					Three Months Ended December 31,
		2022		2021		2022		2021			2022		2021

Interest cost	Interest cost	$	943	$	745	$	2,650	$	2,234	Interest cost	$	1,825	$	796
Expected return on plan assets	Expected return on plan assets	(2,905)		(2,544)		(8,329)		(7,633)		Expected return on plan assets	(2,553)		(2,589)
Amortization:	Amortization:									Amortization:

Recognized actuarial loss	Recognized actuarial loss	844		1,573		2,534		4,719		Recognized actuarial loss	944		845

Net periodic expense (income)	Net periodic expense (income)	$	(1,118)	$	(226)	$	(3,145)	$	(680)	Net periodic expense (income)	$	216	$	(948)

NOTE 15 – RECENT ACCOUNTING PRONOUNCEMENTS

~~Issued but not yet effective accounting pronouncements~~

In October 2021, the Financial Accounting Standards Board ("FASB") issued ASU No. 2021-08, Business Combinations (Topic 805); Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. This new guidance affects all entities that enter into a business combination within the scope of ASC 805-10. Under this new guidance, the acquirer should determine what contract assets and/or liabilities it would have recorded under ASC 606 (Revenue Guidance) as of the acquisition date, as if the acquirer had entered into the original contract at the same date and on the same terms as the acquirer. Under current U.S. GAAP, contract assets and contract liabilities acquired in a business combination are recorded by the acquirer at fair value. This update is effective for the Company beginning in fiscal 2023. ~~Early adoption is permitted. The Company is currently evaluating the effects that the adoption of this guidance will have on our consolidated financial statements and related disclosures.~~

~~New Accounting Standards Implemented~~

In December 2019, the FASB issued guidance on simplifying the accounting for income taxes by clarifying and amending existing guidance related to the recognition of franchise tax, the evaluation of a step up in the tax basis of goodwill, and the effects of enacted changes in tax laws or rates in the effective tax rate computation, among other clarifications. This guidance became effective for the Company beginning in fiscal 2022. We adopted the recognition of non-income taxes on the modified retrospective basis. Adoption of this standard did not have a material impact on our consolidated financial statements and the related disclosures.

~~GRIFFON CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(US dollars and non US currencies in thousands, except per share data)~~

~~(Unaudited)~~

In August 2018, the FASB issued guidance to clarify disclosure requirements related to defined benefit pension and other post-retirement plans. The guidance is effective for fiscal years beginning after December 15, 2020, with early adoption permitted, and was effective for the Company in our fiscal year beginning in October 1, 2021. Adoption of this standard did not have a material impact on our consolidated financial statements and the related disclosures.

The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements, and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(US dollars and non US currencies in thousands, except per share data)

(Unaudited)

NOTE 16 – DISCONTINUED OPERATIONS

On September 27, 2021, Griffon announced it was exploring strategic alternatives for its DE segment, which ~~consists~~consisted of its Telephonics subsidiary. On June 27, 2022, Griffon completed the sale of Telephonics to TTM for $330,000 in cash, ~~subject to customary~~excluding $2,568 for post-closing working capital adjustments. In connection with the sale of Telephonics, the Company recorded a gain of ~~$108,949~~$107,517 ($~~88,977,~~89,241, net of tax) ~~during~~for the ~~quarter~~year ended ~~June~~September 30, 2022. The gain and related tax for the sale of Telephonics is preliminary and is subject to finalization.

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 operations 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 operations 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 operations, less applicable income taxes (benefit), shall be reported as components of net income (loss) separate from the net income (loss) of continuing operations.

Defense Electronics (DE or Telephonics)

The following amounts related to Telephonics have been segregated from Griffon's continuing operations and are reported as a discontinued operation:

For the Three Months Ended June 30, For the Nine Months Ended June 30,
2022 2021 2022 2021
Revenue $ 50,795 $ 62,574 $ 161,061 $ 190,492
Cost of goods and services 39,059 52,780 125,208 166,292
Gross profit 11,736 9,794 35,853 24,200
Selling, general and administrative expenses 6,114 7,875 26,423 27,102
Income (loss) from discontinued operations 5,622 1,919 9,430 (2,902)
Other income (expense)
Interest income, net — — 2 1
Gain on sale of business 108,949 — 108,949 5,291
Other, net (1,114) 261 (604) 1,166
Total other income (expense) 107,835 261 108,347 6,458
Income from discontinued operations before taxes $ 113,457 $ 2,180 $ 117,777 $ 3,556
Provision (benefit) for income taxes 25,952 288 20,149 (2,085)
Income from discontinued operations $ 87,505 $ 1,892 $ 97,628 $ 5,641


	For the Three Months Ended December 31, 2021

Revenue		$	53,993
Cost of goods and services		40,961
Gross profit		13,032
Selling, general and administrative expenses		10,020


Income from discontinued operations		3,012
Other income (expense)

Interest income, net		—

Other, net		308
Total other income (expense)		308
Income from discontinued operations before taxes		$	3,320
Provision for income taxes		726
Income from discontinued operations		$	2,594

Depreciation and amortization was excluded from the ~~current~~prior year results since DE iswas classified as a discontinued operation and, accordingly, the Company ceased depreciation and amortization in accordance with discontinued operations accounting guidelines. Depreciation and amortization would have been approximately ~~$2,342 and $7,442 in~~$2,700 for the ~~three and nine months~~quarter ended ~~June 30, 2022, respectively.~~December 31, 2021.

2624

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(US dollars and non US currencies in thousands, except per share data)

(Unaudited)

The Company completed the sale of Telephonics on June 27, 2022. The following amounts related to Telephonics that were classified as assets and liabilities of discontinued operations held for sale in the consolidated balance sheet as of September 30, 2021:

~~At September 30,~~

~~2021~~

~~CURRENT ASSETS~~

~~Accounts receivable, net~~

~~42,020~~

~~Contract assets, net of progress payments~~

~~72,983~~

~~Inventories~~

~~83,970~~

~~Prepaid and other current assets~~

~~4,409~~

~~PROPERTY, PLANT AND EQUIPMENT, net~~

~~47,771~~

~~OPERATING LEASE RIGHT-OF-USE ASSETS~~

~~1,167~~

~~GOODWILL~~

~~17,734~~

~~INTANGIBLE ASSETS, net~~

~~131~~

~~OTHER ASSETS~~

~~5,629~~

~~Total Assets~~

~~275,814~~

~~CURRENT LIABILITIES~~

~~Accounts payable~~

~~60,588~~

~~Accrued liabilities~~

~~15,326~~

~~Current portion of operating lease liabilities~~

~~287~~

~~LONG-TERM OPERATING LEASE LIABILITIES~~

~~867~~

~~OTHER LIABILITIES~~

~~3,955~~

~~Total Liabilities~~

~~81,023~~

The following amounts summarize the total assets and liabilities related to Telephonics, 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 Condensed Consolidated Balance Sheets:


		At June 30, 2022		At September 30, 2021			At December 31, 2022		At September 30, 2022
Assets of discontinued operations:	Assets of discontinued operations:					Assets of discontinued operations:
Prepaid and other current assets	Prepaid and other current assets	$	487	$	605	Prepaid and other current assets	$	1,122	$	1,189
Other long-term assets	Other long-term assets	2,623		3,424		Other long-term assets	4,571		4,586
Total assets of discontinued operations	Total assets of discontinued operations	$	3,110	$	4,029	Total assets of discontinued operations	$	5,693	$	5,775

Liabilities of discontinued operations:	Liabilities of discontinued operations:					Liabilities of discontinued operations:
Accrued liabilities, current	Accrued liabilities, current	$	30,806	$	3,280	Accrued liabilities, current	$	8,141	$	12,656
Other long-term liabilities	Other long-term liabilities	3,825		3,794		Other long-term liabilities	4,209		4,262
Total liabilities of discontinued operations	Total liabilities of discontinued operations	$	34,631	$	7,074	Total liabilities of discontinued operations	$	12,350	$	16,918

~~Accrued liabilities as of June~~At December 31, 2022 and September 30, 2022, Griffon's discontinued assets and liabilities includes the Company's obligation of ~~$27,703~~$5,288 and $8,846, respectively, in connection with the sale of Telephonics primarily related to ~~income taxes payable.~~certain customary post-closing adjustments, primarily working capital and stay bonuses. At ~~June 30,~~December 31, 2022 and September 30, ~~2021,~~2022, Griffon’s liabilities for Installations Services and other discontinued operations primarily relate to insurance claims, income taxes, product liability, warranty and environmental reserves total ~~$6,928~~$7,062 and ~~$7,074,~~$8,072, respectively.

There was no reported revenue in the ~~quarter and nine month period~~quarters ended ~~June 30,~~December 31, 2022 and 2021 for Installations Services and other discontinued operations.

~~GRIFFON CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(US dollars and non US currencies in thousands, except per share data)~~

~~(Unaudited)~~

NOTE 17 – RESTRUCTURING CHARGES

In November 2019, Griffon announced the development of a next-generation business platform for CPP to enhance the growth, efficiency, and competitiveness of its U.S. operations, and on November 12, 2020, Griffon announced that CPP iswas broadening this strategic initiative to include additional North American facilities, the AMES United Kingdom (U.K.) and Australia businesses, and a manufacturing facility in China. On April 28, 2022, Griffon announced ana reduced scope and accelerated timeline ~~and reduced scope~~ for the initiative, which ~~will now be~~was completed ~~by the end of~~in fiscal 2022. These changes reflect the rapid progress made with the initiative, and reduced investment in facilities expansion and equipment given recent significant increases in construction and equipment costs. Any remaining expenditures, after the end of fiscal 2022, including those related to the deployment of AMES' global information systems, will be included in the continuing operations of the business. Future investments in equipment, particularly for automation, will be part of normal-course annual capital expenditures.

This initiative includes three key development areas. First, certain AMES U.S. and global operations will be consolidated to optimize facilities footprint and talent. Second, strategic investments in automation and facilities expansion will be made to increase the efficiency of our manufacturing and fulfillment operations, and support e-commerce growth. Third, multiple independent information systems will be unified into a single data and analytics platform, which will serve the whole AMES global enterprise.

~~When fully implemented and the efficiencies are fully realized, we expect annual cash savings of $25,000 (previously $30,000 to $35,000).~~ The cost to implement this new business platform, over the duration of the project, ~~will now include~~included one-time charges of approximately ~~$50,000 (previously $65,000)~~$51,869 and capital investments of approximately $15,000, ~~(previously $65,000),~~ net of future proceeds from the sale of exited facilities.

In the quarter and nine months ended June 30, 2022, CPP incurred pre-tax restructuring and related exit costs approximating $5,909 and $12,391, respectively. During the nine months ended June 30, 2022,Total cumulative charges of $51,869 consisted of cash charges ~~totaled $9,897~~totaling $35,691 and non-cash, asset-related charges ~~totaled $2,494;~~totaling $16,178; the cash charges included ~~$3,751~~$12,934 for one-time termination benefits and other personnel-related costs and ~~$6,146~~$22,757 for facility exit costs. ~~Non-cash charges included~~As a ~~$1,766 impairment charge related to certain fixed assets at several manufacturing locations and $728~~result of ~~inventory that have no recoverable value. During the nine months ended June 30, 2022,~~these transactions, headcount was reduced by ~~20.~~approximately 420.

In the quarter ~~and nine months~~ ended ~~June 30,~~December 31, 2021, CPP incurred pre-tax restructuring and related exit costs approximating ~~$4,081 and $14,662, respectively.~~$1,716. During the ~~nine months~~quarter ended ~~June 30,~~December 31, 2021, cash charges totaled ~~$10,780~~$1,427 and non-cash, asset-related charges totaled ~~$3,882;~~$289; the cash charges included ~~$1,783~~$260 for one-time termination benefits and other ~~personnel related~~personnel-related costs and ~~$8,997~~$1,167 for facility ~~and lease~~ exit ~~costs primarily driven by the consolidation of distribution facilities. Non-cash charges of $3,882 predominantly related to inventory that have no recoverable value.~~costs.

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(US dollars and non US currencies in thousands, except per share data)

(Unaudited)

A summary of the restructuring and other related charges included in Cost of goods and services and SG&A expenses in the Company's Condensed Consolidated Statements of Operations were as follows:

For the Three Months Ended June 30, For the Nine Months Ended June 30,
2022 2021 2022 2021
Cost of goods and services $ 2,441 $ 696 $ 5,218 $ 4,574
Selling, general and administrative expenses 3,468 3,385 7,173 10,088
Total restructuring charges $ 5,909 $ 4,081 $ 12,391 $ 14,662


	For the Three Months Ended December 31,
	2021
Cost of goods and services	$	322
Selling, general and administrative expenses	1,394
Total restructuring charges	$	1,716


	For the Three Months Ended December 31,
	2021
Personnel related costs	$	260
Facilities, exit costs and other	1,167

Non-cash facility and other	289
Total	$	1,716

The following table summarizes the accrued liabilities of the Company's restructuring actions:


	Cash Charges				Non-Cash
	Personnel related costs		Facilities & Exit Costs		Facility and Other Costs(1)		Total
Accrued liability at September 30, 2021	$	418	$	264	$	—	$	682
Q1 Restructuring charges	260		1,167		289		1,716
Q1 Cash payments	(275)		(1,167)		—		(1,442)
Q1 Non-cash charges	—		—		(289)		(289)
Accrued liability at December 31, 2021	$	403	$	264	$	—	$	667

___________________

(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


	Cash Charges
	Personnel related costs		Facilities & Exit Costs		Total
Accrued liability at September 30, 2022	$	386	$	264	$	650

Q1 Cash payments	(74)		(93)		(167)

Accrued liability at December 31, 2022	$	312	$	171	$	483

NOTE 18 – OTHER INCOME (EXPENSE)

For the quarters ended December 31, 2022 and 2021, Other income (expense) of $607 and $1,075, respectively, includes $67 and ($394), respectively, of net currency exchange gains (losses) in connection with the translation of receivables and payables denominated in currencies other than the functional currencies of Griffon and its subsidiaries, net periodic benefit plan income (expense) of $(216) and $948, respectively, and $33 and $374, respectively, of net investment income. Other income (expense) also includes rental income of $212 and $156 for the three months ended December 31, 2022 and 2021, respectively. Additionally, it includes royalty income of $549 for the three months ended December 31, 2022.

2826

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(US dollars and non US currencies in thousands, except per share data)

(Unaudited)

For the Three Months Ended June 30, For the Nine Months Ended June 30,
2022 2021 2022 2021
Personnel related costs $ 1,613 $ 698 $ 3,751 $ 1,782
Facilities, exit costs and other 3,857 2,190 6,146 8,997
Non-cash facility and other 439 1,193 2,494 3,883
Total $ 5,909 $ 4,081 $ 12,391 $ 14,662

~~The following table summarizes the accrued liabilities of the Company's restructuring actions:~~

Cash Charges Non-Cash
Personnel related costs Facilities &
Exit Costs Facility and Other Costs Total
Accrued liability at September 30, 2021 $ 418 $ 264 $ — $ 682
Q1 Restructuring charges 260 1,167 289 1,716
Q1 Cash payments (275) (1,167) — (1,442)
Q1 Non-cash charges — — (289) (289)
Accrued liability at December 31, 2021 $ 403 $ 264 $ — $ 667
Q2 Restructuring charges 1,878 1,122 1,766 4,766
Q2 Cash payments (1,883) (1,122) — (3,005)
Q2 Non-cash charges — — (1,766) (1,766)
Accrued liability at March 31, 2022 $ 398 $ 264 $ — $ 662
Q3 Restructuring charges 1,613 3,857 439 5,909
Q3 Cash payments (1,619) (3,857) — (5,476)
Q3 Non-cash charges — — (439) (439)
Accrued liability at June 30, 2022 $ 392 $ 264 $ — $ 656

~~NOTE 18 – OTHER INCOME (EXPENSE)~~

For the quarters ended June 30, 2022 and 2021, Other income (expense) of $2,084 and $587, respectively, includes $265 and $77, respectively, of net currency exchange losses in connection with the translation of receivables and payables denominated in currencies other than the functional currencies of Griffon and its subsidiaries, net periodic benefit plan income of $1,118 and $226, respectively, as well as $(91) and $111, respectively, of net investment income (loss). Other income (expense) also includes rental income of $156 in both of the three months ended June 30, 2022 and 2021. Additionally, it includes royalty income of $828 for the three months ended June 30, 2022.

For the nine months ended June 30, 2022 and 2021, Other income (expense) of $4,528 and $1,413, respectively, includes $297 and $302, respectively, of net currency exchange losses in connection with the translation of receivables and payables denominated in currencies other than the functional currencies of Griffon and its subsidiaries, net periodic benefit plan income of $3,145 and $680, respectively, as well as $(328) and $496, respectively, of net investment income (loss). Other income (expense) also includes rental income of $468 in both of the nine months ended June 30, 2022 and 2021. Additionally, it includes royalty income of $1,444 for the nine months ended June 30, 2022.

~~GRIFFON CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(US dollars and non US currencies in thousands, except per share data)~~

~~(Unaudited)~~

NOTE 19 – WARRANTY LIABILITY

CPP and HBP offer warranties against product defects for periods generally ranging from one to ten years, with limited lifetime warranties on certain door and fan 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 original purchase unless otherwise stated on the product or packaging from the date of original purchase.

Changes in Griffon’s warranty liability, included in Accrued liabilities, were as follows:


		Three Months Ended June 30,				Nine Months Ended June 30,					Three Months Ended December 31,
		2022		2021		2022		2021			2022		2021
Balance, beginning of period	Balance, beginning of period	$	17,958	$	7,920	$	7,818	$	6,268	Balance, beginning of period	$	16,786	$	7,818
Warranties issued and changes in estimated pre-existing warranties	Warranties issued and changes in estimated pre-existing warranties	5,119		3,579		14,368		12,088		Warranties issued and changes in estimated pre-existing warranties	4,667		3,461
Actual warranty costs incurred	Actual warranty costs incurred	(4,937)		(2,952)		(10,399)		(9,809)		Actual warranty costs incurred	(3,754)		(1,707)
Other warranty liabilities assumed from acquisitions		—		—		6,353		—

Balance, end of period	Balance, end of period	$	18,140	$	8,547	$	18,140	$	8,547	Balance, end of period	$	17,699	$	9,572

NOTE 20 – OTHER COMPREHENSIVE INCOME (LOSS)

The amounts recognized in other comprehensive income (loss) were as follows:


	For the Three Months Ended December 31,
	2022						2021

	Pre-tax		Tax		Net of tax		Pre-tax		Tax		Net of tax
Foreign currency translation adjustments	$	11,937	$	—	$	11,937	$	(2,319)	$	—	$	(2,319)
Pension and other defined benefit plans	1,088		(226)		862		846		(178)		668
Cash flow hedges	(829)		249		(580)		(1,571)		471		(1,100)

Total other comprehensive income (loss)	$	12,196	$	23	$	12,219	$	(3,044)	$	293	$	(2,751)

The components of Accumulated other comprehensive income (loss) are as follows:


	At December 31, 2022		At September 30, 2022
Foreign currency translation adjustments	$	(45,233)	$	(57,170)
Pension and other defined benefit plans	(26,437)		(27,299)
Change in Cash flow hedges	1,151		1,731

	$	(70,519)	$	(82,738)

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(US dollars and non US currencies in thousands, except per share data)

(Unaudited)

~~NOTE 20 – OTHER COMPREHENSIVE INCOME (LOSS)~~

~~The amounts recognized in other comprehensive income (loss) were as follows:~~

For the Three Months Ended June 30,
2022 2021
Pre-tax Tax Net of tax Pre-tax Tax Net of tax
Foreign currency translation adjustments $ (17,823) $ — $ (17,823) $ 1,160 $ — $ 1,160
Pension and other defined benefit plans 1,511 (315) 1,196 1,576 (331) 1,245
Cash flow hedges 3,500 (1,050) 2,450 478 (144) 334
Total other comprehensive income (loss) $ (12,812) $ (1,365) $ (14,177) $ 3,214 $ (475) $ 2,739

For the Nine Months Ended June 30,
2022 2021
Pre-tax Tax Net of tax Pre-tax Tax Net of tax
Foreign currency translation adjustments $ (14,093) $ — $ (14,093) $ 15,022 $ — $ 15,022
Pension and other defined benefit plans 2,534 (530) 2,004 5,311 (1,115) 4,196
Cash flow hedges 158 (48) 110 2,054 (617) 1,437
Total other comprehensive income (loss) $ (11,401) $ (578) $ (11,979) $ 22,387 $ (1,732) $ 20,655

~~The components of Accumulated other comprehensive income (loss) are as follows:~~

At June 30, 2022 At September 30, 2021
Foreign currency translation adjustments $ (33,343) $ (19,250)
Pension and other defined benefit plans (26,798) (28,802)
Change in Cash flow hedges 2,185 2,075
$ (57,956) $ (45,977)

Amounts reclassified from accumulated other comprehensive income (loss) to income were as follows:


		For the Three Months Ended June 30,				For the Nine Months Ended June 30,					For the Three Months Ended December 31,
Gain (Loss)	Gain (Loss)	2022		2021		2022		2021		Gain (Loss)	2022		2021

Pension amortization	Pension amortization	$	(844)	$	(1,573)	$	(2,534)	$	(4,719)	Pension amortization	$	(944)	$	(845)
Cash flow hedges	Cash flow hedges	716		(413)		3,633		(2,812)		Cash flow hedges	1,004		1,533

Total gain (loss)	Total gain (loss)	$	(128)	$	(1,986)	$	1,099	$	(7,531)	Total gain (loss)	$	60	$	688
Tax benefit (expense)	Tax benefit (expense)	27		417		(230)		1,582		Tax benefit (expense)	(13)		(144)
Total	Total	$	(101)	$	(1,569)	$	869	$	(5,949)	Total	$	47	$	544

NOTE 21 — LEASES

The Company recognizes right-of-use ("ROU") assets and lease liabilities on the balance sheet, with the exception of leases with a term of twelve months or less. 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 Condensed

~~GRIFFON CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(US dollars and non US currencies in thousands, except per share data)~~

~~(Unaudited)~~

Consolidated Balance Sheets. Finance leases are included in property, plant, and equipment, net, other accrued liabilities, and other non-current liabilities. The Company's finance leases are immaterial. ROU assets, along with any other related long-lived assets, are periodically evaluated for impairment.

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. 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.

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 Condensed Consolidated Balance Sheets. Variable lease cost for both operating and finance leases, if any, is recognized as incurred. Components of operating lease costs are as follows:


		For the Three Months Ended June 30,				For the Nine Months Ended June 30,					For the Three Months Ended December 31,
		2022		2021		2022		2021				2022		2021
Fixed	Fixed	$	13,021	$	9,664	$	32,674	$	28,841	Fixed		$	11,294	$	9,747
Variable (a), (b)	Variable (a), (b)	2,742		1,877		6,278		5,690		Variable (a), (b)		2,772		1,852
Short-term (b)	Short-term (b)	1,741		897		4,576		2,952		Short-term (b)		2,204		1,349
Total	Total	$	17,504	$	12,438	$	43,528	$	37,483	Total		$	16,270	$	12,948

(a) Primarily relates to common-area maintenance and property taxes.

(b) Not recorded on the balance sheet.

~~Supplemental cash flow information were as follows:~~

For the Nine Months Ended June 30,
2022 2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases $ 34,759 $ 32,336
Financing cash flows from finance leases 1,936 2,824
Total $ 36,695 $ 35,160

3228

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(US dollars and non US currencies in thousands, except per share data)

(Unaudited)

Supplemental cash flow information were as follows:


	For the Three Months Ended December 31,
	2022		2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	9,623	$	10,844
Financing cash flows from finance leases	744		753
Total	$	10,367	$	11,597

Supplemental Condensed Consolidated Balance Sheet information related to leases were as follows:


		June 30, 2022		September 30, 2021			December 31, 2022		September 30, 2022
Operating Leases:	Operating Leases:					Operating Leases:
Right of use assets:	Right of use assets:					Right of use assets:
Operating right-of-use assets	Operating right-of-use assets	$	193,448	$	144,598	Operating right-of-use assets	$	182,799	$	183,398

Lease Liabilities:	Lease Liabilities:					Lease Liabilities:
Current portion of operating lease liabilities	Current portion of operating lease liabilities	$	32,426	$	29,881	Current portion of operating lease liabilities	$	31,283	$	31,680
Long-term operating lease liabilities	Long-term operating lease liabilities	167,549		119,315		Long-term operating lease liabilities	160,664		159,414
Total operating lease liabilities	Total operating lease liabilities	$	199,975	$	149,196	Total operating lease liabilities	$	191,947	$	191,094

Finance Leases:	Finance Leases:					Finance Leases:
Property, plant and equipment, net(1)	Property, plant and equipment, net(1)	$	14,386	$	16,466	Property, plant and equipment, net(1)	$	13,334	$	13,696

Lease Liabilities:	Lease Liabilities:					Lease Liabilities:
Notes payable and current portion of long-term debt	Notes payable and current portion of long-term debt	$	2,214	$	2,347	Notes payable and current portion of long-term debt	$	2,011	$	2,065
Long-term debt, net	Long-term debt, net	12,484		14,120		Long-term debt, net	11,623		11,995
Total financing lease liabilities	Total financing lease liabilities	$	14,698	$	16,467	Total financing lease liabilities	$	13,634	$	14,060

(1) Finance lease assets are recorded net of accumulated depreciation of ~~$4,689~~$5,568 and ~~$6,136~~$4,972 as of ~~June 30,~~December 31, 2022 and September 30, ~~2021,~~2022, respectively.

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(US dollars and non US currencies in thousands, except per share data)

(Unaudited)

Griffon has one finance lease outstanding for real estate located in Ocala, Florida. The lease matures in 2025 and bears interest at a fixed rate of approximately 5.6%. The Ocala, Florida lease contains 2 ~~five-year~~two five-year renewal options. At ~~June 30,~~December 31, 2022, ~~$13,426~~$12,751 was outstanding. During ~~the nine months ended June 30,~~ 2022, the financing lease on the Troy, Ohio location expired. The 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 1one dollar buyout at the end of the lease. Griffon exercised the 1one dollar buyout option in November 2021. The remaining lease liability balance relates to finance equipment leases.

The aggregate future maturities of lease payments for operating leases and finance leases as of ~~June 30,~~December 31, 2022 are as follows (in thousands):


		Operating Leases		Finance Leases			Operating Leases		Finance Leases
2022(a)		$	10,292	$	754
2023		41,315		2,837
2023(a)						2023(a)	$	31,784	$	2,074
2024	2024	33,727		2,308		2024	35,893		2,344
2025	2025	30,938		2,130		2025	33,183		2,169
2026	2026	22,586		2,106		2026	24,262		2,112
2027	2027	18,474		2,074		2027	20,101		2,074
2028						2028	16,439		2,074
Thereafter	Thereafter	96,648		5,702		Thereafter	83,397		3,629
Total lease payments	Total lease payments	$	253,980	$	17,911	Total lease payments	$	245,059	$	16,476
Less: Imputed Interest	Less: Imputed Interest	(54,005)		(3,213)		Less: Imputed Interest	(53,112)		(2,842)
Present value of lease liabilities	Present value of lease liabilities	$	199,975	$	14,698	Present value of lease liabilities	$	191,947	$	13,634

(a) Excluding the ~~nine~~three months ended ~~June 30,~~December 31, 2022.

Average lease terms and discount rates at ~~June 30,~~December 31, 2022 were as follows:

~~GRIFFON CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(US dollars and non US currencies in thousands, except per share data)~~

~~(Unaudited)~~


Weighted-average remaining lease term (years):
Operating leases	~~8.5~~8.3
Finance Leases	~~7.6~~7.2

Weighted-average discount rate:
Operating Leases	~~5.07~~5.68	%
Finance Leases	~~5.50~~5.54	%

NOTE 22 — COMMITMENTS AND CONTINGENCIES

Legal and environmental

Peekskill Site. 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”) which was owned by ISC Properties, Inc. (“ISCP”), a wholly-owned subsidiary of Griffon, for approximately three years. ~~The operations, which included plating, may have involved the use of certain chemicals and solvents.~~ ISCP sold the Peekskill Site in November 1982.

Based upon studies conducted by ISCP and the New York Department of Environmental Conservation, soils and groundwater beneath the Peekskill Site contain chlorinated solvents and metals.Stream sediments downgradient fromthe Peekskill Site also contain metals.On May 15, 2019 the United States Environmental Protection Agency ("EPA") added the Peekskill Site to the National Priorities List under CERCLA and ~~on August 25, 2020, the EPA sent a letter to several parties, including~~has since reached agreement with Lightron and ISCP requesting that each such party inform the EPA as to whether it would be willing to enter into discussions to perform certain studies to determine the nature and extent of any possible contamination. The EPA also sent a request for information under Section 104(e) of CERCLA to each party.wherein Lightron and ISCP have informed the EPA that they are willing to participate in discussions regarding performing these studies. Lightron and ISCP have also submitted responses to certain items contained in the Section 104(e) information request, with additional responses to follow. Lightron and ISCP are currently in negotiations with the EPA regarding the scope of the aforementioned studies, which will ~~address the Peekskill site and certain areas downstream from the Peekskill Site.~~perform a Remedial Investigation/Feasibility Study (“RI/FS”).

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(US dollars and non US currencies in thousands, except per share data)

(Unaudited)

Lightron has not engaged in any operations in over three decades.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. One of Griffon’s insurers is defending Lightron, ISCP and Griffon subject to a reservation of ~~rights.~~

~~Union Fork~~rights and ~~Hoe, Frankfort, NY site.~~The former Union Fork and Hoe property in Frankfort, New York was acquired by AMES in 2006 as part of a larger acquisition, and has historic site contamination involving chlorinated solvents, petroleum hydrocarbons and metals. AMES entered into an Order on Consent withis paying the New York State Department of Environmental Conservation (“DEC”). While the Order is without admission or finding of liability or acknowledgment that there has been a release of hazardous substances at the site, the Order required AMES to perform a remedial investigation of certain portionscosts of the property and to recommend a remediation option. In 2011, remediation of chlorinated solvents in the groundwater was completed to the satisfaction of DEC. In June 2020, AMES completed the remediation required by the Record of Decision issued by DEC in 2019 ("ROD") and filed a Construction Completion Report, a Site Management Plan and an environmental easement with DEC. While AMES was implementing the remediation required by the ROD, DEC requested additional investigation of a small area on the site and of an area adjacent to the site perimeter. AMES investigated the on-site area and has completed remediation of that small area under a workplan approved by DEC. AMES also completed a workplan approved by DEC to investigate the areas adjacent to the site perimeter, and is now performing a statistical analysis to determine the area, if any, required to be remediated. AMES has a number of defenses to liability in this matter, including its rights under a previous Consent Judgment entered into between DEC and a predecessor of AMES relating to the site.~~AMES’ insurer has accepted AMES’ claim for a substantial portion of the costs incurred and to be incurred for both the on-site and off-site activities.~~RI/FS.

Memphis, TN site. Hunter Fan Company (“Hunter”) operated ~~its~~ headquarters and a production plant in Memphis, ~~Tennessee~~TN for over 50 years (the “Memphis Site”). 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

~~GRIFFON CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(US dollars and non US currencies in thousands, except per share data)~~

~~(Unaudited)~~

been impacted. Hunter vacated the ~~Memphis Site~~site approximately twenty years ago, and the on-site buildings have now been demolished.

The State of Tennessee Department of Environment and Conservation (“TDEC”) identified the Memphis ~~Site~~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.~~The~~ In 2021, the TDEC performed a preliminary assessment of the site and recommended to the United States Environmental Protection Agency (“EPA”) that the site be listed on the National Priorities List established under CERCLA.The TDEC further recommended that the EPA fund an investigation of potential soil gas contamination in receptors near the site.The TDEC has also indicated that it will proceed with this investigation if the EPA does not act.

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 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. There are other potentially responsible parties for this site, including a former owner of Hunter; Hunter has notified such former owner of this matter, which may have certain liability for any required remediation.

If the EPA decides to add this site to the National Priorities List, a Remedial Investigation/Feasibility Study (“RI/FS”) will be required. Hunter expects that the EPA will ask it to perform this work. If Hunter does not reach an agreement with the EPA to perform this work, the EPA will implement the RI/FS on its own. 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 from such parties, including Hunter, reimbursement for the costs incurred.

General legal

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.

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(Unless otherwise indicated, US dollars and ~~non US~~non-US currencies are in thousands, except per share data)

Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations

BUSINESS

Overview

Griffon Corporation (the “Company”, “Griffon”, "we" or "us") is a diversified management and holding company that conducts business through wholly-owned subsidiaries. The Company was founded in 1959, is a Delaware corporation headquartered in New York, N.Y. and is listed on the New York Stock Exchange (NYSE:GFF).

Business Strategy

We own and operate, and seek to acquire, businesses in multiple industries and geographic markets. Our 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’s businesses, in particular its CPP operations, are seasonal; for this and other reasons, the financial results of the Company for any interim period are not necessarily indicative of the results for the full year.

Griffon oversees the operations of its subsidiaries, allocates resources among them and manages their capital structures. Griffon provides direction and assistance to its subsidiaries in connection with acquisition and growth opportunities as well as in connection with divestitures. As long-term investors, having substantial experience in a variety of industries, our intent is to continue the growth and strengthening of our existing businesses, and to diversify further through investments in our businesses and through acquisitions.

Over the past ~~four~~five years, we have undertaken a series of transformative transactions. We divested our specialty plastics business in 2018 to focus on our core markets and improve our free cash flow conversion. In our Consumer and Professional Products ("CPP") segment, we expanded the scope of our brands through the acquisition of Hunter Fan Company ("Hunter") on January 24, 2022 and ClosetMaid, LLC ("ClosetMaid") in 2018. In our Home and Building Products ("HBP") segment, we acquired CornellCookson, Inc. ("CornellCookson"), in 2018, which has been integrated into Clopay Corporation ("Clopay") ~~in our Home and Building Products ("HBP") segment,~~, creating 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 ~~CornellCookson.~~Cookson. We established an integrated headquarters for CPP in Orlando, Florida for our portfolio of leading brands that includes AMES, Hunter, True Temper and ClosetMaid. CPP is ~~now~~well positioned to fulfill its ongoing mission of Bringing Brands Together™ with the leading brands in consumer and professional tools; residential, industrial and commercial fans; home storage and organization products; and products that enhance indoor and outdoor lifestyles.

On September 27, 2021, we announced we were exploring strategic alternatives for our Defense Electronics ("DE") segment, which consisted of our Telephonics Corporation ("Telephonics") subsidiary. On June 27, 2022, we completed the sale of Telephonics to TTM Technologies, Inc. (NASDAQ:TTMI) ("TTM") for $330,000 in ~~cash, subject to customary post-closing adjustments. Since September 2021, we have~~cash. Griffon classified the results of operations of our Telephonics business as a discontinued operation in the Consolidated Statements of Operations for all periods presented and classified the related assets and liabilities associated with the discontinued operation ~~as held for sale~~ in the consolidated balance sheets. Accordingly, all references made to results and information in this Quarterly Report on Form 10-Q are to Griffon's continuing operations, unless noted otherwise.

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On January 24, 2022, weGriffon 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. We financed the acquisition of Hunter with a new $800,000 seven year Term Loan B facility; we used a combination of cash on hand and revolver borrowings to fund the balance of the purchase price and related acquisition and debt expenditures.

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Update ofon COVID-19 on ~~Our~~our Business

The health and safety of our employees, our customers and their families is always a high priority for Griffon. As of the date of this filing, all of Griffon's facilities are fully operational. ~~We have~~When COVID-19 struck, we implemented a variety of new policies and procedures, including additional cleaning, social distancing, staggered shifts and prohibiting or significantly restricting on-site visitors, to minimize the risk to our employees of contracting COVID-19. While many of these precautions have been relaxed or eliminated as the health risk of COVID-19 has decreased, we would not hesitate to reinstitute and/or modify these policies and procedures as necessary should the health risk return to an unacceptable level. In ~~the United States, we manufacture a substantial majority of the products that we sell.While this helps mitigate the effects of global supplier and transportation disruptions, we are still impacted by these disruptions.Our supply chain has experienced certain disruptions which, together with other factors~~ such as~~a shortage of labor, has resulted in longer delivery lead times and restricted manufacturing capacity for certain of~~event, our ~~products.Commodity prices have increased during COVID-19 and may continue to increase, and we may not be able to pass off all~~businesses or ~~any of such price increases to~~ our ~~customers on a timely basis, or at all.It is difficult to predict whether the supply chain disruptions that impact us will improve, worsen or remain the same in the near term.Our~~ suppliers could be required by government authorities to temporarily cease ~~operations in accordance with the various restrictions discussed above;~~operations; might be limited in their production capacity due to complying with restrictions relating to the operation of businesses ~~during~~to mitigate the ~~COVID-19 pandemic;~~impacts of COVID-19; or could suffer their own supply chain disruptions, impacting their ability to continue to supply us with the quantity of materials required by us.

~~We believe that, based on~~ While we are unable to determine or predict the ~~various standards published to date, the work our employees are performing are either critical, essential and/~~nature, duration or ~~life-sustaining for the following reasons:~~1) HBP residential and commercial garage doors, rolling steel doors and related products (a) provide protection and support for the efficient and safe movement of people, goods, and equipment in and out of residential and commercial facilities, (b) help prevent fires from spreading from one location to another, and (c) protect warehouses and homes, and their contents, from damage caused by strong weather events such as hurricanes and tornadoes; and 2) CPP tools and storage products provide critical support for the national infrastructure including construction, maintenance, manufacturing and natural disaster recovery, and is partscope of the ~~essential supply base~~overall impact COVID-19 will have on our businesses, results of operations, liquidity or capital resources, we believe it is important to ~~many of its largest customers including Home Depot, Lowe's~~discuss where our company stands today, how we have responded (and will continue to respond) to COVID 19 and ~~Menards. Our AMES international facilities are currently fully operational,~~how our operations and financial condition may change as ~~they meet the applicable standards in their respective countries.~~COVID-19 evolves.

Griffon believes it has adequate liquidity to invest in its existing businesses and execute its business plan, while managing its capital structure on both a short-term and long-term basis. At ~~June 30,~~December 31, 2022, ~~$289,897~~$342,613 of revolver capacity was available under Griffon's Credit Agreement and Griffon had cash and equivalents of ~~$144,687.~~$120,558.

We will continue to actively monitor the situation and may take further actions that impact our operations as may be required by federal, state or local authorities or that we determine are in the best interests of our employees, customers, suppliers and shareholders. While we are unable to determine or predict the nature, duration or scope of the overall impact the COVID-19 pandemic will have on our businesses, results of operations, liquidity or capital resources, we believe it is important to discuss where our company stands today, how our response to COVID-19 is progressing and how our operations and financial condition may change as the fight against COVID-19 progresses.

Other Business Highlights

On September 27, 2021, we announced we were exploring strategic alternatives for our DE segment, which consists of our Telephonics subsidiary, and on June 27, 2022, Griffon completed the sale of Telephonics to TTM for $330,000, subject to customary post-closing adjustments. We believe that selling Telephonics will increase long-term value for Griffon shareholders, while creating enhanced growth opportunities for Telephonics. Telephonics is recognized globally as a leading provider of highly sophisticated intelligence, surveillance and communications solutions that are deployed across a wide range of land, sea and air applications. Telephonics designs, develops, manufactures and provides logistical support and lifecycle sustainment services to defense, aerospace and commercial customers worldwide.

On January 24, 2022, Griffon acquired Hunter, a market leader in residential ceiling, commercial, and industrial fans, for a contractual purchase price of $845,000. The acquisition of Hunter was financed primarily with a new $800,000 seven year Term Loan B facility; a combination of cash on hand and revolver borrowings was used to fund the balance of the purchase price and related acquisition and debt expenditures. Hunter is expected to contribute approximately $360,000 in revenue in the first twelve months of operation after the acquisition.

In August 2020 Griffon completed the ~~public offering~~Public Offering of 8,700,000 shares of our common stock for total net proceeds of $178,165.The Company used a portion of the net proceeds to repay outstanding borrowings under its Credit Agreement.The Company used the remainder of the proceeds for working capital and general corporate ~~purposes, including to expand its current business through acquisitions of, or investments in, other businesses or products.~~purposes.

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During 2020, Griffon issued, at par, $1,000,000 of 5.75% Senior Notes due in 2028 (the “2028 Senior Notes”).Proceeds from the 2028 Senior Notes were used to redeem the $1,000,000 of 5.25% Senior Notes due 2022.

In January 2020, Griffon amended its ~~Credit Agreement~~credit agreement to increase the total amount available for borrowing from $350,000 to $400,000, extend its maturity date from March 22, 2021 to March 22, 2025 and modify certain other provisions of the ~~facility.~~facility (the "Credit Agreement").

In November 2019, Griffon announced the development of a next-generation business platform for CPP to enhance the growth, efficiency, and competitiveness of its U.S. operations, and on November 12, 2020, Griffon announced that CPP is broadening this strategic initiative to include additional North American facilities, the AMES United Kingdom (U.K.) and Australia businesses, and a manufacturing facility in China. On April 28, 2022, Griffon announced ana reduced scope and accelerated timeline ~~and reduced scope~~ for the initiative, which ~~will now be~~was completed ~~by the end of~~in fiscal 2022. ~~These changes reflect the rapid progress made with the~~We continue to expect that this initiative ~~and reduced investment~~will result in facilities expansion and equipment given recent significant increases in construction and equipment costs. Any remaining expenditures, after the end of fiscal 2022, including those related to the deployment of AMES' global information systems, will be included in the continuing operations of the business. Future investments in equipment, particularly for automation, will be part of normal-course annual capital expenditures.

~~When fully implemented and the efficiencies are fully realized, we expect~~ annual cash savings of ~~$25,000 (previously $30,000 to $35,000).~~ $25,000.Realization of expected cash savings began in the current quarter.The cost to implement this new business platform, over the duration of the project, ~~will now include~~included one-time charges of approximately ~~$50,000 (previously $65,000)~~$51,869 and capital investments of approximately $15,000, ~~(previously $65,000).~~net of future proceeds from the sale of exited facilities.

In June 2018, Clopay acquired CornellCookson, a leading provider of rolling steel service doors, fire doors, and ~~grilles, for an effective purchase price of approximately $170,000.~~grilles. This transaction strengthened Clopay's strategic portfolio with a line of commercial rolling steel door products to complement Clopay's sectional door offerings in the commercial sector, and ~~expands~~expanded the Clopay network of professional dealers focused on the commercial market.

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In March 2018, we announced the combination of the ClosetMaid operations with those of AMES, which improved operational efficiencies by leveraging the complementary products, customers, warehousing and distribution, manufacturing, and sourcing capabilities of the two businesses.

In February 2018, we closed on the sale of our Clopay Plastics Products ("Plastics") business to Berry Global, Inc. ("Berry") ~~for approximately $465,000, net of certain post-closing adjustments,~~, thus exiting the specialty plastics industry that the Company had entered when it acquired Clopay Corporation in 1986. This transaction provided immediate liquidity and improved Griffon's cash flow given the historically higher capital needs of the Plastics operations as compared to Griffon’s remaining businesses.

In October 2017, we acquired ClosetMaid from Emerson Electric Co. (NYSE:EMR) ~~for an effective purchase price of approximately $165,000.~~. ClosetMaid, founded in 1965, is a leading North American manufacturer and marketer of wood and wire closet organization, general living storage and wire garage storage products, and sells to some of the largest home center retail chains, mass merchandisers, and direct-to-builder professional installers in North America. We believe that ClosetMaid is the leading brand in its category, with excellent consumer recognition.

We believe these actions have established a solid foundation for growth in sales, profit, and cash generation and bolster Griffon’s platforms for opportunistic strategic acquisitions.

Other Acquisitions and Dispositions

On December 22, 2020, AMES acquired Quatro Design Pty Ltd (“Quatro”), a leading Australian manufacturer and supplier of glass fiber reinforced concrete landscaping products for residential, commercial, and public sector projects for a purchase price of AUD $3,500 (approximately $2,700).Quatro contributed approximately $5,000 inrevenue in the first twelve months after the acquisition.

On November 29, 2019, AMES acquired Vatre Group Limited ("Apta"), a leading U.K. supplier of innovative garden pottery and associated products sold to leading U.K. and Ireland garden ~~centers for approximately $10,500 (GBP 8,750), inclusive of a post-closing working capital adjustment, net of cash acquired.~~centers. This acquisition ~~broadened~~broadens AMES' product offerings in the U.K. market and ~~increased~~increases its in-country operational footprint.

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On February 13, 2018, AMES acquired Kelkay, a leading U.K. manufacturer and distributor of decorative outdoor landscaping products sold to garden centers, retailers and grocers in the U.K. and Ireland. This acquisition broadened AMES' product offerings in the market and increased its in-country operational footprint.

In November 2017, Griffon acquired Harper Brush Works, a leading U.S. manufacturer of cleaning products for professional, home, and industrial use, from Horizon Global (NYSE:HZN). This acquisition expanded the AMES line of long-handle tools in North America to include brooms, brushes, and other cleaning products.

During fiscal 2017, Griffon also completed a number of other acquisitions to expand and enhance AMES' global ~~footprint. In~~footprint, including the ~~United Kingdom, Griffon acquired~~acquisitions of La Hacienda, an outdoor living brand of unique heating and garden décor products in ~~July 2017.~~the United Kingdom. The acquisition of La Hacienda, together with the February 2018 acquisition of Kelkay and November 2020 acquisition of Apta, provides AMES with additional brands and a platform for growth in the U.K. market and access to leading garden centers, retailers, and grocers in the UK and Ireland.In Australia, Griffon acquired Hills Home Living, the iconic brand of clotheslines and home products, from Hills Limited (ASX:HIL) in December 2016, and in September 2017 Griffon acquired Tuscan Path, an Australian provider of pots, planters, pavers, decorative stone, and garden décor products.The Hills, Tuscan Path and December, 2020 Quatro acquisitions broadened AMES' outdoor living and lawn and garden business, strengthening AMES’ portfolio of brands and its market position in Australia and New Zealand.

Further Information

Griffon posts and makes available, free of charge through its website at www.griffon.com, its annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) of the Securities Exchange Act of 1934, as well as press releases, as soon as reasonably practicable after such materials are published or filed with or furnished to the 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.

For information regarding revenue, profit and total assets of each segment, see the ~~Reportable~~Business Segments footnote in the Notes to Consolidated Financial Statements.

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Reportable Segments:

Griffon conducts its operations through two reportable segments:

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OVERVIEW

Revenue for the quarter ended ~~June 30,~~December 31, 2022 was ~~$768,179~~$649,384 compared to ~~$584,218~~$591,749 in the prior year comparable quarter, an increase of ~~31%~~10%. Revenue increased at HBP ~~and~~by 29% but decreased at CPP by ~~56% and 12%, respectively. Excluding the Hunter acquisition on January 24, 2022, revenue increased 13% to $662,405.~~11%. Hunter contributed ~~$105,774~~$54,117 of revenue for the ~~quarter.~~quarter, excluding Hunter revenue increased 1% to $595,267. Income from continuing operations was ~~$52,782~~$48,702 or ~~$0.98~~$0.88 per share, compared to ~~$14,815,~~$16,704, or ~~$0.28~~$0.31 per share, in the prior year quarter.

The current year quarter results from operations included the following:

– ~~Restructuring charges of $5,909 ($4,359, net of tax, or $0.08 per share);~~

~~– Fair value step-up of acquired inventory sold of $2,700 ($2,005, net of tax, or $0.04 per share);~~

– Strategic review - retention and other ~~$3,220~~of $8,232 ($~~2,416,~~6,222, net of tax, or ~~$0.04~~$0.11 per share);

– ~~Debt extinguishment, net $5,287~~Proxy contest costs of $1,503 ($~~4,022,~~1,153, net of tax, or ~~$0.07~~$0.02 per share);

– Gain on sale of building of $10,852 ($8,323, net of tax, or $0.15 per share);

– Discrete and certain other tax ~~provisions,~~benefits, net, of ~~$913~~$333 or ~~$0.02~~$0.01 per share.

The prior year quarter results from operations included the following:

– Restructuring charges of ~~$4,081~~$1,716 ($~~3,128,~~1,330, net of tax, or ~~$0.06~~$0.02 per share);

– Acquisition costs of $2,595 ($2,003, net of tax, or $0.04 per share); and

–Proxy contest costs of $2,291 ($1,768, net of tax, or $0.03 per share);

– Discrete and certain other tax ~~provisions,~~benefits, net, of ~~$2,850~~$891 or ~~$0.05~~$0.02 per share.

Excluding these items from the respective quarterly results, Income from continuing operations would have been ~~$66,497,~~$47,421, or ~~$1.23~~$0.86 per share, in the current year quarter compared to ~~$20,793,~~$20,914, or $0.39 per share in the prior year quarter.

Revenue for the nine months ended June 30, 2022 was $2,139,545 compared to $1,700,423 in the prior year period, an increase of 26%. Revenue increased at HBP and CPP by 44% and 12%, respectively. Excluding the Hunter acquisition, revenue increased 15% to $1,962,922. Hunter contributed $176,623 of revenue during the year to date period. Income from continuing operations was $127,646 or $2.38 per share, compared to $57,678, or $1.08 per share, in the prior year period.

~~The current year-to-date results from operations included the following:~~

~~– Restructuring charges of $12,391 ($9,185, net of tax, or $0.17 per share);~~

~~– Acquisition costs of $9,303 ($8,149, net of tax, or $0.15 per share); and~~

~~– Proxy expenses of $6,952 ($5,359, net of tax, or $0.10 per share);~~

~~– Fair value step-up of acquired inventory sold of $5,401 ($4,012, net of tax, or $0.07 per share);~~

~~– Strategic review - retention and other of $3,220 ($2,416, net of tax, or $0.04 per share);~~

~~– Debt extinguishment, net $5,287 ($4,022, net of tax, or $0.07 per share);~~

~~– Discrete and certain other tax benefits, net, of $661 or $0.01 per share.~~

~~The prior year-to-date results from operations included the following:~~

–~~Restructuring charges of $14,662 ($11,034, net of tax, or $0.21 per share);~~

–~~Discrete and certain other tax provisions, net, of $3,219 or $0.06 per share.~~

Excluding these items from the respective periods, Income from continuing operations would have been $160,128, or $2.98 per share in the current year period ended June 30, 2022 compared to $71,931, or $1.35 per share, in the comparable prior year period.

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Griffon evaluates performance based on Net income and the related Earnings per share excluding restructuring charges, loss from debt extinguishment, acquisition related expenses and discrete and certain other tax items, as well as other items that may affect comparability, as applicable. Griffon believes this information is useful to investors for the same reason. The following table provides a reconciliation of Income from continuing operations to Adjusted income from continuing operations and Earnings per share from continuing operations to Adjusted earnings per share from continuing operations:


		For the Three Months Ended June 30,				For the Nine Months Ended June 30,					For the Three Months Ended December 31,
		2022		2021		2022		2021					2022		2021
		(Unaudited)										(Unaudited)

Income from continuing operations	Income from continuing operations	$	52,782	$	14,815	$	127,646	$	57,678	Income from continuing operations			$	48,702	$	16,704

Adjusting items:	Adjusting items:									Adjusting items:
Restructuring charges	Restructuring charges	5,909		4,081		12,391		14,662		Restructuring charges			—		1,716
Gain on sale of building										Gain on sale of building			(10,852)		—

Debt extinguishment, net		5,287		—		5,287		—
Acquisition costs	Acquisition costs	—		—		9,303		—		Acquisition costs			—		2,595

Strategic review - retention and other	Strategic review - retention and other	3,220		—		3,220		—		Strategic review - retention and other			8,232		—
Proxy expenses	Proxy expenses	—		—		6,952		—		Proxy expenses			1,503		2,291
Fair value step-up of acquired inventory sold		2,700		—		5,401		—

Tax impact of above items	Tax impact of above items	(4,314)		(953)		(9,411)		(3,628)		Tax impact of above items			169		(1,501)
Discrete and certain other tax provisions (benefits), net		913		2,850		(661)		3,219
Discrete and certain other tax benefits, net										Discrete and certain other tax benefits, net			(333)		(891)

Adjusted income from continuing operations	Adjusted income from continuing operations	$	66,497	$	20,793	$	160,128	$	71,931	Adjusted income from continuing operations			$	47,421	$	20,914

Earnings per common share from continuing operations	Earnings per common share from continuing operations	$	0.98	$	0.28	$	2.38	$	1.08	Earnings per common share from continuing operations			$	0.88	$	0.31

Adjusting items, net of tax:	Adjusting items, net of tax:									Adjusting items, net of tax:
Restructuring charges	Restructuring charges	0.08		0.06		0.17		0.21		Restructuring charges			—		0.02
Gain on sale of building										Gain on sale of building			(0.15)		—

Debt extinguishment, net		0.07		—		0.07		—
Acquisition costs	Acquisition costs	—		—		0.15		—		Acquisition costs			—		0.04

Strategic review - retention and other	Strategic review - retention and other	0.04		—		0.04		—		Strategic review - retention and other			0.11		—
Proxy expenses	Proxy expenses	—		—		0.10		—		Proxy expenses			0.02		0.03
Fair value step-up of acquired inventory sold		0.04		—		0.07		—
Discrete and certain other tax provisions (benefits), net		0.02		0.05		(0.01)		0.06

Discrete and certain other tax benefits, net										Discrete and certain other tax benefits, net			(0.01)		(0.02)

Adjusted earnings per common share from continuing operations	Adjusted earnings per common share from continuing operations	$	1.23	$	0.39	$	2.98	$	1.35	Adjusted earnings per common share from continuing operations			$	0.86	$	0.39

Weighted-average shares outstanding (in thousands)	Weighted-average shares outstanding (in thousands)	53,914		53,504		53,704		53,306		Weighted-average shares outstanding (in thousands)			55,298		53,753

Note: Due to rounding, the sum of earnings per common share from continuing operations and adjusting items, net of tax, may not equal adjusted earnings per common share from continuing operations.

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

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RESULTS OF OPERATIONS

Three ~~and nine~~ months ended ~~June 30,~~December 31, 2022 and 2021

Griffon evaluates performance and allocates resources based on each segment's operating results before interest income and expense, income taxes, depreciation and amortization, unallocated amounts (primarily corporate overhead), restructuring charges, loss on debt extinguishment and acquisition related expenses, as well as other items that may affect comparability, as applicable (“Adjusted EBITDA”, a non-GAAP measure). Griffon believes this information is useful to investors for the same reason.

See table provided in Note 13 - Business Segments for a reconciliation of Segment Adjusted EBITDA to Income before taxes from continuing operations.

Consumer and Professional Products


		For the Three Months Ended June 30,								For the Nine Months Ended June 30,									For the Three Months Ended December 31,
		2022				2021				2022				2021					2022				2021
United States	United States	$	248,068			$	206,809			$	677,714			$	595,619			United States	$	153,667			$	164,899
Europe	Europe	31,113				43,767				96,226				95,888				Europe	4,696				18,330
Canada	Canada	19,592				20,547				73,249				64,440				Canada	23,116				22,628
Australia	Australia	55,142				51,437				191,679				184,668				Australia	66,217				74,349
All other countries	All other countries	8,719				2,266				17,951				7,124				All other countries	5,115				2,967
Total Revenue	Total Revenue	$	362,634			$	324,826			$	1,056,819			$	947,739			Total Revenue	$	252,811			$	283,173
Adjusted EBITDA	Adjusted EBITDA	28,373		7.8	%	29,388		9.0	%	$	92,431	8.7	%	$	99,524	10.5	%	Adjusted EBITDA	(1,809)		(0.7)	%	16,214		5.7	%
Depreciation and amortization	Depreciation and amortization	13,434				8,781				$	33,831			$	25,600			Depreciation and amortization	13,127				8,606

For the quarter ended ~~June 30,~~December 31, 2022, revenue ~~increased $37,808,~~decreased $30,362, or ~~12%~~11%, compared to the prior year period ~~primarily resulting from~~due to a ~~33% or $105,774 contribution from the January 24, 2022 Hunter acquisition, and price and mix of 10%, partially offset by a 28%~~34% reduction in volume primarily in ~~North America and~~the U.S., the United Kingdom (U.K.)~~, due to reduced consumer demand~~ and ~~rebalancing~~Australia and a 3% unfavorable currency impact, partially offset by a 19% or $54,117 contribution from the Hunter acquisition, and favorable price and mix of ~~customer inventory levels, and an unfavorable impact of foreign exchange of 3%~~7%.

For the quarter ended ~~June 30,~~December 31, 2022, Adjusted EBITDA ~~decreased 3% to $28,373~~loss of $1,809 compared to ~~$29,388~~Adjusted EBITDA of $16,214 in the prior year quarter. ~~Excluding the $16,792 contributed~~The current quarter included Adjusted EBITDA of $4,428 from the Hunter ~~acquisition,~~acquisition. Excluding the Hunter contribution, Adjusted EBITDA loss of $6,237 compared to Adjusted EBITDA of ~~$11,581 decreased 61%~~$16,214 in the prior year quarter. The variance to prior year was primarily due to the unfavorable impact of the reduced ~~North American~~volume noted above and ~~U.K. volume~~the related impact on manufacturing absorption, and increased material ~~labor~~costs in Australia and ~~transportation costs,~~Canada, partially offset by the benefits of price and mix. ~~The current quarter included increased demurrage and detention costs, primarily related to COVID and global supply chain disruptions, of approximately $6,548, primarily related to Hunter.~~

For the nine months ended June 30, 2022, revenue increased $109,080, or 12%, compared to the prior year period primarily resulting from a 19% or $176,623 contribution from the Hunter acquisition, and price and mix of 12%, partially offset by an 18% reduction in volume, primarily in North America and the U.K. due to reduced consumer demand and rebalancing of customer inventory levels, and an unfavorable impact of foreign exchange of 1%.

For the nine months ended June 30, 2022, Adjusted EBITDA decreased 7% to $92,431 compared to $99,524 in the prior year period. Excluding the Hunter contribution of $31,131, EBITDA of $61,300 decreased 38% primarily due to the unfavorable impact of the reduced North American and U.K. volume and increased material, labor and transportation costs, partially offset by the benefits of price and mix. The nine month period ended June 30, 2022, included increased demurrage and detention costs, primarily related to COVID and global supply chain disruptions, of approximately $13,482 ($7,699 related to Hunter).

For the quarter ~~and nine months~~ ended ~~June 30,~~December 31, 2022, segment depreciation and amortization increased ~~$4,653 and $8,231, respectively,~~$4,521 compared to the prior year comparable periods, due to the Hunter assets acquired and new assets placed in ~~service and the Hunter assets acquired.~~service.

On January 24, 2022, Griffon completed the acquisition of Hunter Fan Company (“Hunter”), a market leader in residential ceiling, commercial, and industrial fans for a contractual purchase price of ~~$845,000, subject to customary post-closing adjustments.~~$845,000. Hunter adds to Griffon's CPP segment, complementing and diversifying our portfolio of leading consumer brands and products.

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~~Strategic Initiative and Restructuring Charges~~

In November 2019, Griffon announced the development of a next-generation business platform for CPP to enhance the growth, efficiency, and competitiveness of its U.S. operations, and on November 12, 2020, Griffon announced that CPP is broadening this strategic initiative to include additional North American facilities, the AMES United Kingdom (U.K.) and Australia businesses, and a manufacturing facility in China. On April 28, 2022, Griffon announced an accelerated timeline and reduced scope for the initiative, which will now be completed by the end of fiscal 2022. These changes reflect the rapid progress made with the initiative, and reduced investment in facilities expansion and equipment given recent significant increases in construction and equipment costs. Any remaining expenditures, after the end of fiscal 2022, including those related to the deployment of AMES' global information systems, will be included in the continuing operations of the business. Future investments in equipment, particularly for automation, will be part of normal-course annual capital expenditures.

When fully implemented and the efficiencies are fully realized, we expect annual cash savings of $25,000 (previously $30,000 to $35,000). The cost to implement this new business platform, over the duration of the project, will now include one-time charges of approximately $50,000 (previously $65,000) and capital investments of approximately $15,000 (previously $65,000), net of future proceeds from the sale of exited facilities.

In connection with this initiative, during the three and nine months ended June 30, 2022, CPP incurred pre-tax restructuring and related exit costs approximating $5,909 and $12,391, respectively. Since inception of this initiative in fiscal 2020, total cumulative charges totaled $47,478, comprised of cash charges of $33,637 and non-cash, asset-related charges of $13,841; the cash charges included $12,561 for one-time termination benefits and other personnel-related costs and $21,076 for facility exit costs. Since inception of this initiative in fiscal 2020 and during the nine months ended June 30, 2022, capital expenditures of $21,844 and $6,337, respectively, were driven by investment in CPP business intelligence systems and an e-commerce facility.

Cash Charges Non-Cash Charges
Personnel related costs Facilities, exit costs and other Facility and other Total Capital Investments
Phase I $ 12,000 $ 4,000 $ 19,000 $ 35,000 $ 40,000
Phase II 14,000 16,000 — 30,000 25,000
Increase (Reduction) in Scope (12,400) 2,100 (4,700) (15,000) (50,000)
Total Anticipated Charges 13,600 22,100 14,300 50,000 15,000
Total 2020 restructuring charges (5,620) (3,357) (4,692) (13,669) (6,733)
Total 2021 restructuring charges (3,190) (11,573) (6,655) (21,418) (8,774)
Q1 FY2022 Activity (260) (1,167) (289) (1,716) (1,690)
Q2 FY2022 Activity (1,878) (1,122) (1,766) (4,766) (861)
Q3 FY2022 Activity $ (1,613) $ (3,857) $ (439) (5,909) $ (3,786)
Total 2022 restructuring charges (3,751) (6,146) (2,494) (12,391) (6,337)
Total cumulative charges (12,561) (21,076) (13,841) (47,478) $ (21,844)
Estimate to Complete $ 1,039 $ 1,024 $ 459 $ 2,522 $ (6,844) (a)

~~(a) Includes future proceeds from the sale of exited facilities.~~

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Home and Building Products


		For the Three Months Ended June 30,								For the Nine Months Ended June 30,									For the Three Months Ended December 31,
		2022				2021				2022				2021						2022	2021
Residential	Residential	$	238,372			$	156,638			$	627,388			$	459,240			Residential			$	227,059			$	177,787
Commercial	Commercial	167,173				102,754				455,338				293,444				Commercial			169,514				130,789
Total Revenue	Total Revenue	$	405,545			$	259,392			$	1,082,726			$	752,684			Total Revenue			$	396,573			$	308,576
Adjusted EBITDA	Adjusted EBITDA	119,847		29.6	%	42,156		16.3	%	$	280,618	25.9	%	$	130,585	17.3	%	Adjusted EBITDA			$	124,145	31.3	%	$	56,297	18.2	%
Depreciation and amortization	Depreciation and amortization	4,116				4,375				$	12,778			$	13,095			Depreciation and amortization			$	3,846			$	4,338

For the quarter ended ~~June 30,~~December 31, 2022, HBP revenue increased ~~$146,153,~~$87,997, or ~~56%~~29%, compared to the prior year period due to favorable pricing and mix ~~for~~of 23% and volume of 6% driven by both residential and commercial. Residential and commercial ~~products. Increased commercial volume was offset by reduced residential volume due~~sectional backlog and overall lead times continued to ~~labor and supply chain disruptions.~~normalize during the quarter.

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For the quarter ended ~~June 30,~~December 31, 2022, Adjusted EBITDA increased ~~184%~~121% to ~~$119,847~~$124,145 compared to ~~$42,156~~$56,297 in the prior year period. Adjusted EBITDA benefited from the increased revenue noted above and reduced material costs, partially offset by increased ~~material, labor and transportation costs.~~

For the nine months ended June 30, 2022, revenue increased $330,042, or 44%, compared to the prior year period, due to favorable pricing and mix of 48% driven by both residential and commercial, partially offset by reduced volume of 4% driven by decreased residential volume due to labor and supply chain disruptions.

For the nine months ended June 30, 2022, Adjusted EBITDA increased 115% to $280,618 compared to $130,585 in the prior year period. The favorable variance resulted from the increased revenue noted above, partially offset by increased material, labor and transportation costs.

For the quarter ~~and nine months~~ ended ~~June 30,~~December 31, 2022, segment depreciation and amortization decreased ~~slightly~~ compared with the prior year comparable ~~periods.~~period due to fully depreciated assets.

Unallocated

For the quarter ended ~~June 30,~~December 31, 2022, unallocated amounts, excluding depreciation, consisted primarily of corporate overhead costs totaling ~~$13,405~~$13,776 compared to ~~$11,464~~$13,263 in the prior year ~~quarter; for the nine months ended June 30, 2022, unallocated amounts totaled $39,724 compared to $36,810 in the prior year period.~~quarter. The increase in ~~both~~ the current quarter, ~~and nine month periods,~~ compared to ~~their~~the respective comparable prior year ~~periods,~~period, primarily relates to increased incentive and equity ~~compensation, medical claims, and travel expenses.~~compensation.

Proxy expenses

During the ~~nine months~~quarters ended ~~June 30,~~December 31, 2022 and 2021, we incurred ~~$6,952~~$1,503 ($1,153, net of tax) and $2,291 ($1,768, net of tax) of proxy expenses (including legal and advisory fees) in SG&A, ~~as a result of~~respectively. During the quarter ended December 31, 2021, proxy expenses related to a proxy contest initiated by a shareholder during the most recently completed fiscal quarter. In the three months ended June 30, 2022, we did not incur any proxy expenses. There were no similar costs in the comparable period of the prior year. The proxy contestwhich was completed at the shareholder meeting on February 17, 2022. During the quarter ended December 31, 2022, proxy expenses related to a settlement entered into with a shareholder that had submitted a slate of director nominees.

Segment Depreciation and Amortization

Segment depreciation and amortization increased ~~$4,394 and $7,914~~$4,029 for the quarter ~~and nine months~~ ended ~~June 30,~~December 31, 2022 ~~respectively,~~ compared to the comparable prior year ~~periods,~~period, primarily due to depreciation and amortization on the Hunter assets acquired and new assets placed in ~~service and assets acquired in acquisitions.~~

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service.

Other Income (Expense)

For the quarters ended ~~June 30,~~December 31, 2022 and 2021, Other income (expense) of ~~$2,084~~$607 and ~~$587,~~$1,075, respectively, includes ~~$265~~$67 and ~~$77,~~($394), respectively, of net currency exchange ~~losses~~gains (losses) in connection with the translation of receivables and payables denominated in currencies other than the functional currencies of Griffon and its subsidiaries, net periodic benefit plan income (expense) of ~~$1,118~~$(216) and ~~$226,~~$948, respectively, ~~as well as $(91)~~ and ~~$111,~~$33 and $374, respectively, of net investment income. Other income (expense) also includes rental income of $212 and $156 ~~in both of~~for the three months ended ~~June 30,~~December 31, 2022 and ~~2021.~~2021, respectively. Additionally, it includes royalty income of ~~$1,444~~$549 for the three months ended ~~June 30, 2022.~~

For the nine months ended June 30, 2022 and 2021, Other income (expense) of $4,528 and $1,413, respectively, includes $297 and $(302), respectively, of net currency exchange losses in connection with the translation of receivables and payables denominated in currencies other than the functional currencies of Griffon and its subsidiaries, net periodic benefit plan income of $3,145 and $680, respectively, as well as $(328) and $496, respectively, of net investment income (loss). Other income (expense) also includes rental income of $468 in both of the nine months ended June 30, 2022 and 2021. Additionally, it includes royalty income of $1,444 for the nine months ended June 30,December 31, 2022.

Provision for income taxes

~~Stock based~~Stock-based compensation

For the quarters ended ~~June 30,~~December 31, 2022 and 2021, stock based compensation expense, which includes expenses for both restricted stock grants and the ESOP, totaled ~~$6,019~~$6,742 and ~~$5,590, respectively. For the nine months ended June 30, 2022 and 2021, stock based compensation expense totaled $15,978 and $15,091,~~$4,867, respectively.

Comprehensive income (loss)

For the quarter ended ~~June 30,~~December 31, 2022, total other comprehensive gain, net of taxes, of $12,219 included a gain of $11,937 from foreign currency translation adjustments primarily due to the strengthening of the Euro, Australian Dollars and British Pound, all in comparison to the US Dollar; a $862 benefit from pension amortization; and a $580 loss on cash flow hedges.

For the quarter ended December 31, 2021, total other comprehensive loss, net of taxes, of ~~$14,177~~$2,751 included a loss of ~~$17,823~~$2,319 from foreign currency translation adjustments primarily due to the weakening of the Euro ~~Canadian and Australian Dollars~~ and British Pound, all in comparison to the US Dollar; a ~~$1,196~~$668 benefit from pension amortization; and a ~~$2,450 a gain~~$1,100 loss on cash flow hedges.

For the quarter ended June 30, 2021, total other comprehensive income, net of taxes, of $2,739 included a gain of $1,160 from foreign currency translation adjustments primarily due to the strengthening of the Euro, British Pound and Canadian Dollar, partially offset by the weakening of the Australian Dollar, all in comparison to the US Dollar; a $1,245 benefit from pension amortization; and a $334 gain on cash flow hedges.

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For the nine months ended June 30, 2022, total other comprehensive loss, net of taxes, of $11,979 included a loss of $14,093 from foreign currency translation adjustments primarily due to the weakening of the Euro, Canadian and Australian Dollars and British Pound, all in comparison to the US Dollar; a $2,004 benefit from pension amortization of actuarial losses; and a $110 gain on cash flow hedges.

For the nine months ended June 30, 2021, total other comprehensive income, net of taxes, of $20,655 included a gain of $15,022 from foreign currency translation adjustments primarily due to the strengthening of the Euro, British Pound, Canadian and Australian Dollars, all in comparison to the US Dollar; a $4,196 benefit from pension amortization of actuarial losses; and a $1,437 gain on cash flow hedges.

DISCONTINUED OPERATIONS

Defense Electronics

On September 27, 2021, Griffon announced ~~that~~ it was exploring strategic alternatives for its DEDefense Electronics segment, which ~~consists~~consisted of ~~its~~ Telephonics ~~subsidiary. On~~Corporation ("Telephonics"), and on June 27, 2022, Griffon completed the sale of Telephonics to TTM for ~~$330,000 in cash, subject to customary post-closing adjustments.~~$330,000. Griffon ~~believes~~classified the ~~sale~~results of operations of the Telephonics ~~will increase long-term value for Griffon shareholders, while creating enhanced growth opportunities for Telephonics. Telephonics is recognized globally~~business as a ~~leading provider~~discontinued operation in the Consolidated Statements of ~~highly sophisticated intelligence, surveillance~~Operations for all periods presented and ~~communications solutions that are deployed across a wide range of land, sea~~classified the related assets and ~~air applications. Telephonics designs, develops, manufactures and provides logistical support and lifecycle sustainment services to defense, aerospace and commercial customers worldwide. In connection~~liabilities associated with the ~~sale of Telephonics,~~discontinued operation in the ~~Company recorded a gain of $108,949 ($88,977, net of tax) during the quarter ended June 30, 2022~~consolidated balance sheets.Accordingly, all references made to results and information in ~~discontinued operations. The gain and related tax for the sale of Telephonics is preliminary and is subject~~this Quarterly Report on Form 10-Q are to ~~finalization.~~Griffon's continuing operations unless noted otherwise.

At ~~June~~December 31, 2022 and September 30, 2022, Griffon's discontinued assets and liabilities includes the Company's obligation of ~~$27,703~~$5,288 and $8,846, respectively, in connection with the sale of Telephonics primarily related to ~~income taxes payable.~~certain customary post-closing adjustments, primarily working capital and stay bonuses. At ~~June~~December 31, 2022 and September 30, 2022, Griffon’s liabilities for Installations Services and other discontinued operations primarily relate to insurance claims, income taxes, product liability, warranty and environmental reserves total ~~$6,928. See Note 16, Discontinued Operations.~~$7,062 and $8,072, respectively.

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LIQUIDITY AND CAPITAL RESOURCES

Liquidity

Griffon believes it has adequate liquidity to invest in its existing businesses and execute its business plan, while managing its capital structure on both a short-term and long-term basis. Griffon's primary sources of liquidity are cash flows generated from operations, cash on hand and our January 2022 secured $400,000 Credit Agreement. At June 30, 2022, $289,897 of revolver capacity was available under the Credit Agreement and we had cash and cash equivalents of $144,687.

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 ~~June 30,~~December 31, 2022, the amount of cash, cash equivalents and marketable securities held by foreign subsidiaries was ~~$66,325.~~$49,600. Our intent is to permanently reinvest these funds outside the U.S., and we do not currently anticipate that we will need funds generated from foreign operations to fund our domestic operations. In the event we determine that funds from foreign operations are needed to fund operations in the U.S., we will be required to accrue and pay U.S. taxes to repatriate these funds (unless applicable U.S. taxes have already been paid).

Griffon's primary sources of liquidity are cash flows generated from operations, cash on hand and our January 2025 five-year secured $400,000 revolving credit facility ("Credit Facility").At December 31, 2022, $342,613 of revolver capacity was available, subject to certain loan covenants, for borrowing under the Credit Agreement and we had cash and cash equivalents of $120,558.

The following table is derived from the Condensed Consolidated Statements of Cash Flows:


Cash Flows from Operations	Cash Flows from Operations	For the Nine months ended June 30,				Cash Flows from Operations	For the Three Months Ended December 31,
		2022		2021			2022		2021
Net Cash Flows Provided by (Used In):	Net Cash Flows Provided by (Used In):					Net Cash Flows Provided by (Used In):
Operating activities	Operating activities	$	(65,001)	$	13,314	Operating activities	$	75,480	$	(85,005)
Investing activities	Investing activities	(574,256)		(31,705)		Investing activities	4,521		(9,969)
Financing activities	Financing activities	513,762		(14,327)		Financing activities	(78,363)		(8,612)

Cash ~~used in~~provided by operating activities from continuing operations for the ~~nine~~three months ended ~~June 30,~~December 31, 2022 was ~~$65,001~~$75,480 compared to cash ~~provided by~~used in continuing operations of ~~$13,314~~$85,005 in the comparable prior year period. ~~Cash provided by income~~The variance was due to increased cash generated from ~~continuing~~ operations ~~adjusted for non-cash expenditures, was more than offset by~~at HBP and a ~~net increase~~decrease in working capital ~~predominately consisting of increased inventory and~~across all businesses, primarily accounts receivable ~~primarily driven by reduced consumer demand~~ and ~~rebalancing of customer inventory levels in North America and the United Kingdom.~~inventory.

During the quarter ended December 31, 2022, Cash provided by investing activities from continuing operations was $4,521 compared to cash used in investing activities from continuing operations of $9,969 in the comparable prior year period. In the current quarter, cash flows provided by investing activities from continuing operations primarily consisted of proceeds totaling $11,815 from the sale of a building, partially offset by capital expenditures of $4,726 and a working capital adjustment payment of $2,568 related to the sale of Telephonics. In the prior year comparable quarter, cash flows used in investing activities from continuing operations is primarily ~~comprised~~consisted of capital expenditures ~~and business acquisitions as well as~~of $10,573, partially offset by proceeds from the sale of ~~businesses,~~ investments and property, plant and equipment. During the nine months ended June 30, 2022, Griffon used $574,256 in investing activities from continuing operations compared to $31,705 used in the prior year comparable period. Griffon used $851,464 to acquire Hunter during the nine months ended June 30, 2022 as compared to the $2,242 used in the prior year comparable period to acquire Quatro. Capital expenditures, net of proceeds from the sale of assets, for the nine months ended June 30, 2022 totaled $33,427, an increase of $8,594 from the prior year period. Proceeds from the sale of investments totaled $14,923 during the nine months ended June 30, 2022 compared to cash used to purchase investments of $4,658 in the prior year comparable period.totaling $575.

During the ~~nine~~three months ended ~~June 30,~~December 31, 2022, ~~cash provided by~~Cash used in financing activities from continuing operations totaled ~~$513,762~~$78,363 compared to ~~cash used of $14,327~~$8,612 used in the comparable prior year ~~comparable~~ period. Cash ~~provided by~~used in financing activities from continuing operations in the current period consisted ~~primarily~~ of net ~~proceeds from~~repayments of long-term debt of ~~$556,431, partially offset by~~$57,716, primarily related to the Credit Facility, the purchase of treasury shares to satisfy vesting of restricted stock of $12,735, the payment of dividends of $7,126 and the payment of financing costs of ~~$17,065, purchases~~$744. Cash used in financing activities from continuing operations in the prior year period consisted primarily of the purchase of treasury shares to satisfy vesting of restricted stock of $10,886 and the payment of dividends of $14,906. During the current period Griffon prepaid $300,000 aggregate principal amount of its Term Loan B, which permanently reduces the outstanding balance. In connection with the prepayment of the Term Loan B, Griffon recognized a $6,296 charge related to the write-off of capitalized debt issuance costs. In addition, during the current period Griffon purchased $15,225 of its 2028 Senior Notes in the open market at a weighted average discount of 92.19% of par and recognized a net gain of $1,009 on the early extinguishment. Cash used in financing activities in the prior year comparable period consisted primarily of payments of dividends of 12,907 and purchases of treasury shares to satisfy vesting of restricted stock of $2,909,$5,260, partially offset by net proceeds from long-term debt of ~~$2,332.~~$8,315.

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During ~~2021,~~2022, the Company declared and paid regular cash dividends totaling ~~$0.32~~$0.36 per share, or ~~$0.08~~$0.09 per share each quarter. Additionally, on June 27, 2022, the Board of Directors declared a special dividend of $2.00 per share, paid on July 20, 2022. During the ~~nine~~three months ended ~~June 30,~~December 31, 2022, the Board of Directors approved and paid ~~three~~a quarterly cash ~~dividends~~dividend of ~~$0.09~~$0.10 per ~~share each.~~share. 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 ~~June 27, 2022,~~January 30, 2023, the Board of Directors declared a ~~special~~quarterly cash dividend of ~~$2.00~~$0.10 per share, payable on ~~July 20, 2022~~March 23, 2023 to shareholders of record as of the close of business on July 8, 2022. As of June 30, 2022, the Company accrued $104,053 in connection with the declaration of the special dividend. On July 27, 2022, the Board of Directors declared a quarterly cash dividend of $0.09 per share, payable on September 15, 2022 to shareholders of record as of the close of business on August 18, 2022.February 23, 2023.

On each of August 3, 2016 and August 1, 2018, Griffon’s Board of Directors authorized the repurchase of $50,000 of Griffon’s outstanding common stock. Under these share repurchase programs, the Company may, from time to time, purchase shares of its common stock in the open market, including pursuant to a 10b5-1 plan, or in privately negotiated transactions. As of ~~June 30,~~December 31, 2022, an aggregate of $57,955 remains under Griffon's Board authorized repurchase programs. No shares were repurchased during the ~~nine~~three months ended ~~June 30,~~December 31, 2022 under these share repurchase programs.

During the ~~nine~~three months ended ~~June 30,~~December 31, 2022, cash ~~provided by~~used in discontinued operations from operating activities of ~~$26,889~~$1,953 primarily related to ~~DE operations partially offset by~~ the settling of certain liabilities and environmental costs associated with the former Installations Services business. ~~Cash provided by discontinued operations from investing activities related to DE operations capital expenditures.~~

During the ~~nine~~three months ended ~~June 30,~~December 31, 2021, cash provided by discontinued operations from operating activities of ~~$27,035~~$7,916 primarily related to DE operations and the settling of certain liabilities and environmental costs associated with ~~other discontinued operations.~~the former Installations Services business. During the three months ended December 31, 2021, Cash provided by discontinued operations from investing activities of ~~$8,155 primarily~~$853 related to ~~net proceeds received of $14,725 from DE's sale of its SEG business less~~DE operations capital ~~expenditures of $6,151.~~expenditures.


Cash and Equivalents and Debt	Cash and Equivalents and Debt	June 30,		September 30,		Cash and Equivalents and Debt	December 31,		September 30,
		2022		2021			2022		2022
Cash and equivalents	Cash and equivalents	$	144,687	$	248,653	Cash and equivalents	$	120,558	$	120,184
Notes payables and current portion of long-term debt	Notes payables and current portion of long-term debt	13,085		12,486		Notes payables and current portion of long-term debt	12,840		12,653
Long-term debt, net of current maturities	Long-term debt, net of current maturities	1,574,697		1,033,197		Long-term debt, net of current maturities	1,507,681		1,560,998
Debt discount/premium and issuance costs	Debt discount/premium and issuance costs	23,053		14,823		Debt discount/premium and issuance costs	20,895		21,909
Total debt	Total debt	1,610,835		1,060,506		Total debt	1,541,416		1,595,560
Debt, net of cash and equivalents	Debt, net of cash and equivalents	$	1,466,148	$	811,853	Debt, net of cash and equivalents	$	1,420,858	$	1,475,376

During 2020, Griffon issued, at par, $1,000,000 of 5.75% Senior Notes due in 2028 (the “2028 Senior Notes”). Proceeds from the 2028 Senior Notes were used to redeem $1,000,000 of 5.25% Senior Notes due 2022. ~~During~~In connection with the ~~period ended June 30,~~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 ~~$15,225~~$25,225 of 2028 Senior Notes in the open market at a weighted average discount of ~~92.19%~~91.82% of par, ~~for $14,036.~~or $23,161. In connection with ~~this transaction~~these purchases, Griffon recognized a ~~$1,009~~$1,767 net gain on the early extinguishment of debt comprised of ~~$1,189~~$2,064 of face value in excess of purchase price, offset by ~~$180~~$297 related to the write-off of underwriting fees and other expenses. As of ~~June 30,~~December 31, 2022, outstanding 2028 Senior Notes due totaled ~~$984,775;~~$974,775; interest is payable semi-annually on March 1 and September 1. ~~Subsequent to June 30, 2022, Griffon purchased $10,000 of 2028 Senior Notes in the open market at a weighted average discount of 91.25% of par, for $9,125.~~

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 ~~$888,759~~$877,298 on ~~June 30,~~December 31, 2022 based upon quoted market prices (level 1 inputs). ~~In connection with issuance and exchange of the 2028 Senior Notes, Griffon capitalized $16,448~~At December 31, 2022, $10,434 of underwriting fees and other expenses incurred ~~which is being amortized over the term of such notes, and at June 30, 2022, $11,562~~ remained to be amortized.

On January 24, 2022, Griffon amended and restated its Revolving Credit Facility (as amended, "Credit Agreement") to provide for a new $800,000 Term Loan B facility, due January 24, 2029, in addition to its current $400,000 revolving credit facility

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("Revolver"), and replaced LIBOR with SOFR (Secured Overnight Financing Rate). The Term Loan B ~~contains~~accrues interest at the Term SOFR rate plus a ~~SOFR~~credit adjustment spread with a floor of 0.50%, and a current spread of ~~2.75%~~2.50% (7.01% as of December 31, 2022). Additionally, there are two interest rate step-downs tied to achieving decreased secured leverage ratio thresholds, the first of which was achieved ~~at June 30,~~during 2022. ~~The decreased spread, effective in the fourth quarter of 2022, is 2.50%.~~ The Original Issue Discount ~~(OID)~~ for the Term Loan B was 99.75%. In connection with this amendment, Griffon capitalized $15,466 of underwriting fees and other expenses incurred, which are being amortized over the term of the loan.

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The Term Loan B facility requires nominal quarterly principal payments of $2,000, ~~beginning~~which began with the quarter ended June 30, 2022; potential additional annual principal payments based on a percentage of excess cash flow and certain secured leverage thresholds starting with the fiscal year ending September 30, 2023; and a final balloon payment due at maturity. Term Loan B borrowings may generally be repaid without penalty but may not be re-borrowed. During ~~the period ended June 30,~~ 2022, Griffon prepaid $300,000 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 a $6,296 charge on the prepayment of ~~debt,~~debt; $5,575 related to the write-off of underwriting fees and other expenses and $721 of the original issuer discount. The Term Loan B facility is subject to the same affirmative and negative covenants that apply to the Revolver, but is not subject to any financial maintenance covenants. Term Loan B borrowings are secured by the same collateral as the ~~Revolver.~~Revolver on an equal and ratable basis. The fair value of the Term Loan B facility approximated ~~$473,100~~$485,355 on ~~June 30,~~December 31, 2022 based upon quoted market prices (level 1 inputs). At ~~June 30,~~December 31, 2022, ~~$9,174~~$8,472 of underwriting fees and other expenses incurred, remained to be amortized.

~~In addition, on December 9, 2021,~~During 2022, Griffon replaced the Revolver GBP LIBOR benchmark rate with a Sterling Overnight Index Average ("SONIA"). Borrowings under the Revolver may be repaid and re-borrowed at any time. 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. ~~Current margins are 0.75% for base rate loans, 1.75% for~~ SOFR loans accrue interest at Term SOFR plus a credit adjustment spread and ~~1.75% for~~a margin of 1.50% (5.91% at December 31, 2022) and SONIA ~~loans.~~loans accrue interest at SONIA Base Rate plus a credit adjustment spread and a margin of 1.50% (4.96% at December 31, 2022). 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, and a pledge of not greater than 65% of the equity interest in Griffon’s material, first-tier foreign subsidiaries. At ~~June 30,~~December 31, 2022, there were ~~$97,816~~$45,100 of outstanding borrowings under the Revolver; outstanding standby letters of credit were $12,287; and ~~$289,897~~$342,613 was available, subject to certain loan covenants, for borrowing at that date.

Griffon has one finance lease outstanding for real estate located in Ocala, Florida. The lease matures in 2025 and bears interest at a fixed rate of approximately 5.6%. The Ocala, Florida lease contains two five-year renewal options. At ~~June 30,~~December 31, 2022, ~~$13,426~~$12,751 was outstanding. During ~~the period ended June 30,~~ 2022, the financing lease on the Troy, Ohio location ~~expired.The~~expired. The 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 21- Leases for further details.

In November 2012, Garant G.P. (“Garant”), a Griffon wholly owned subsidiary, entered into a CAD 15,000 ($~~11,666~~11,072 as of ~~June 30,~~December 31, 2022) revolving credit facility. Effective in December 2022, the facility was amended to replace LIBOR (USD) with the Canadian Dollar Offer Rate ("CDOR"). The facility accrues interest at ~~LIBOR (USD)~~CDOR or the Bankers Acceptance Rate (CDN) plus 1.3% per annum ~~(3.09% LIBOR USD~~(6.04% CDOR and ~~3.86%~~5.79% Bankers Acceptance Rate CDN as of ~~June 30,~~December 31, 2022). The revolving facility matures in ~~October 2022.~~December 2023, but is renewable upon mutual agreement with the lender. Garant is required to maintain a certain minimum equity. At ~~June 30,~~December 31, 2022, there were no outstanding borrowings under the revolving credit facility with CAD 15,000 ($~~11,666~~11,072 as of ~~June 30,~~December 31, 2022) available.

~~On March 30,~~During 2022, Griffon Australia Holdings Pty Ltd and its Australian subsidiaries (collectively, "Griffon Australia") amended its AUD 18,375 term loan, AUD 20,000 revolver and AUD 15,000 receivable purchase facility agreement that was entered into in July 2016 and further amended in fiscal 2020. Griffon Australia paid ~~in full and canceled~~off the term loan in the amount of AUD 9,625 and canceled the AUD 20,000 revolver. The amendment refinanced the existing AUD 15,000 receivable purchase facility. The receivable purchase facility matures in March 2023, but is renewable upon mutual agreement with the lender. The receivable purchase facility accrues interest at BBSY (Bank Bill ~~Sap~~Swap Rate) plus 1.25%~~, respectively,~~ per annum ~~(2.39%~~(4.51% at ~~June 30,~~December 31, 2022). At ~~June 30,~~December 31, 2022, there was no balance outstanding under the receivable purchase facility with AUD 15,000 ($~~10,392~~10,134 as of ~~June 30,~~December 31, 2022) 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.

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of GBP 438 and GBP 105 plus interest, respectively, and have balloon payments due upon maturity, July 2023, of GBP 7,088 and GBP 2,349, respectively. Effective in January 2022, the Term Loan and Mortgage Loan were amended to replace GBP LIBOR with SONIA. The Term Loan and Mortgage Loans each accrue interest at the SONIA Rate plus ~~1.92% (3.11%~~1.80% (5.23% at ~~June 30,~~December 31, 2022). The revolving facility accrues interest at the Bank of England Base Rate plus 3.25% ~~(4.50%~~(6.75% as of ~~June 30,~~December 31, 2022). The revolving credit facility matures in ~~September 2022,~~July 2023, but it is renewable upon mutual agreement with the lender. As of ~~June 30,~~December 31, 2022, the revolver had no outstanding balance while the term and mortgage loan balances amounted to GBP ~~11,603~~10,519 ($~~14,193~~12,663 as of ~~June 30,~~December 31, 2022). The revolver and the term loan are both secured by substantially all of the assets of AMES UK and its subsidiaries. AMES UK is subject to a maximum leverage ratio and a minimum fixed charges cover ratio. During the period ended March 31, 2022, AMES UK entered into a $8,500 trade loan facility agreement. The trade loan facility has a maximum loan period of 135 days and expired on June 30, 2022. The trade facility accrues interest at the Mid-point of the FED Target Range plus 2.50% (4.13% as of June 30, 2022).

Other long-term debt primarily consists of a loan with the Pennsylvania Industrial Development Authority, with the balance consisting of ~~capital~~finance leases.

At ~~June 30,~~December 31, 2022, Griffon and its subsidiaries were in compliance with the terms and covenants of its credit and loan agreements. Gross Debt to EBITDA (Leverage), as calculated in accordance with the definition in the Credit Agreement, was ~~3.2x~~2.7x at ~~June 30,~~December 31, 2022.

Capital Resource Requirements

Griffon's debt requirements include principal on our outstanding debt, most notably our Senior Notes totaling ~~$984,775~~$974,775 payable in 2028 and related annual interest payments of approximately ~~$57,246. As noted above, Griffon entered into~~$57,246, a ~~new $800,000 seven year~~ Term Loan B facility maturing in 2029 with ~~initial pricing~~an outstanding balance of ~~SOFR floor~~$494,000 on December 31, 2022 and revolving credit facility maturing in 2025 with an outstanding balance of ~~50 basis points plus a spread of 275 basis points.~~$45,100. The ~~OID was 99.75%. During the period ended June 30, 2022, Griffon prepaid $300,000 aggregate principal amount of the~~ Term Loan B ~~which permanently reduced~~accrues interest at the ~~outstanding balance. The~~Term SOFR rate plus a credit adjustment spread with a floor of 0.50%, and a current spread of 2.50% (7.01% as of December 31, 2022). Additionally, the Term Loan B facility requires quarterly payments ~~equal to 0.25%~~ of ~~the outstanding principal amount, or~~ $2,000 ~~which began with the quarter ended June 30, 2022~~ and a balloon payment due at maturity. For the revolving credit facility 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 1.50% (5.91% at December 31, 2022) and SONIA loans accrue interest at SONIA Base Rate plus a credit adjustment spread and a margin of 1.50% (4.96% at December 31, 2022).

Customers

A small number of customers account for, and are expected to continue to account for, a substantial portion of Griffon’s consolidated revenue. For the ~~nine~~three months ended ~~June 30,~~December 31, 2022, our largest customer, The Home Depot, represented ~~14%~~11% of Griffon’s consolidated revenue, ~~20%~~14% of CPP's revenue and 8% of HBP’s revenue.

No other customer exceeded 10% of consolidated revenue. Future operating results will continue to depend substantially on the success of Griffon’s largest customers and our ongoing relationships with them. Orders from these customers are subject to change and may fluctuate materially. The loss of all or a portion of the volume from any one of these customers could have a material adverse impact on Griffon’s liquidity and results of operations.

SUPPLEMENTAL GUARANTOR FINANCIAL INFORMATION

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 ~~June 30,~~December 31, 2022 and September 30, ~~2021~~2022 and for the ~~nine~~three months ended ~~June 30,~~December 31, 2022 and for the year ended September 30, ~~2021.~~2022. 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.

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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.

Summarized Statements of Operations and Comprehensive Income (Loss)


		For the Nine Months Ended				For the Year Ended					For the Three Months Ended				For the Year Ended
		June 30, 2022				September 30, 2021					December 31, 2022				September 30, 2022
		Parent Company		Guarantor Companies		Parent Company		Guarantor Companies			Parent Company		Guarantor Companies		Parent Company		Guarantor Companies
Net sales	Net sales	$	—	$	1,717,178	$	—	$	1,991,434	Net sales	$	—	$	532,317	$	—	$	2,301,215
Gross profit	Gross profit	$	—	$	541,082	$	—	$	497,829	Gross profit	$	—	$	191,989	$	—	$	752,982
Income (loss) from operations	Income (loss) from operations	$	(32,474)	$	232,275	$	(22,321)	$	123,870	Income (loss) from operations	$	(11,656)	$	83,127	$	(43,492)	$	(127,982)
Equity in earnings of Guarantor subsidiaries	Equity in earnings of Guarantor subsidiaries	$	144,389	$	—	$	79,055	$	—	Equity in earnings of Guarantor subsidiaries	$	51,576	$	—	$	(184,618)	$	—
Net income (loss)	Net income (loss)	$	(47,947)	$	144,389	$	(40,035)	$	79,055	Net income (loss)	$	(18,245)	$	51,576	$	(74,423)	$	(184,618)

Summarized Balance Sheet Information


		For the Nine Months Ended				For the Year Ended					For the Three Months Ended				For the Year Ended
		June 30, 2022				September 30, 2021					December 31, 2022				September 30, 2022
		Parent Company		Guarantor Companies		Parent Company		Guarantor Companies			Parent Company		Guarantor Companies		Parent Company		Guarantor Companies
Current assets	Current assets	$	57,281	$	1,026,662	$	114,377	$	951,609	Current assets	$	56,386	$	883,327	$	49,238	$	915,329
Non-current assets	Non-current assets	14,086		1,950,570		17,665		1,069,540		Non-current assets	14,810		1,389,550		15,571		1,393,864
Total assets	Total assets	$	71,367	$	2,977,232	$	132,042	$	2,021,149	Total assets	$	71,196	$	2,272,877	$	64,809	$	2,309,193

Current liabilities	Current liabilities	$	200,229	$	331,146	$	41,334	$	397,121	Current liabilities	$	55,416	$	243,269	$	78,635	$	275,165
Long-term debt	Long-term debt	1,549,596		13,294		998,787		14,482		Long-term debt	1,485,018		12,453		1,538,235		12,886
Other liabilities	Other liabilities	31,923		366,433		43,337		164,122		Other liabilities	3,779		350,218		4,331		322,224
Total liabilities	Total liabilities	$	1,781,748	$	710,873	$	1,083,458	$	575,725	Total liabilities	$	1,544,213	$	605,940	$	1,621,201	$	610,275

CRITICAL ACCOUNTING POLICIES

The preparation of Griffon’s consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires the use of estimates, assumptions, judgments and subjective interpretations of accounting principles that have an impact on assets, liabilities, revenue and expenses. These estimates can also affect supplemental information contained in public disclosures of Griffon, including information regarding contingencies, risk and its financial condition. These estimates, assumptions and judgments are evaluated on an ongoing basis and based on historical experience, current conditions and various other assumptions, and form the basis for estimating the carrying values of assets and liabilities, as well as identifying and assessing the accounting treatment for commitments and contingencies. Actual results may materially differ from these estimates. There have been no changes in Griffon’s critical accounting policies from September 30, ~~2021.~~2022.

Griffon’s significant accounting policies and procedures are explained in the Management Discussion and Analysis section in the Annual Report on Form 10-K for the year ended September 30, ~~2021.~~2022. In the selection of the critical accounting policies, the objective is to properly reflect the financial position and results of operations for each reporting period in a consistent manner that can be understood by the reader of the financial statements. Griffon considers an estimate to be critical if it is subjective and if changes in the estimate using different assumptions would result in a material impact on the financial position or results of operations of Griffon.

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RECENT ACCOUNTING PRONOUNCEMENTS

The FASB issues, from time to time, new financial accounting standards, staff positions and emerging issues task force consensus. See the Notes to Condensed Consolidated Financial Statements for a discussion of these matters.

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q, especially “Management’s Discussion and Analysis”, contains certain “forward-looking statements” within the meaning of the Securities Act, the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. Such statements relate to, among other things, income (loss), earnings, cash flows, revenue, changes in operations, operating improvements, ~~the impact of the Hunter Fan transaction,~~ industries in which Griffon Corporation (the “Company” or “Griffon”) operates and the United States and global economies. Statements in this Form 10-Q that are not historical are hereby identified as “forward-looking statements” and may be indicated by words or phrases such as “anticipates,” “supports,” “plans,” “projects,” “expects,” “believes,” “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: the outcome (if any) and impact of the strategic alternatives review process announced in May 2022; current economic conditions and uncertainties in the housing, credit and capital markets; Griffon’s ability to achieve expected savings from cost control, restructuring, integration and disposal initiatives; the ability to identify and successfully consummate, and integrate, value-adding acquisition opportunities (including, in particular, integration of the Hunter Fan acquisition); 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 resin, wood and steel, 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 that could impact the worldwide economy; a downgrade in Griffon’s credit ratings; changes in international economic conditions including inflation, interest rate and currency exchange fluctuations; the reliance by certain of Griffon’s businesses on particular third party suppliers and manufacturers to meet customer demands; the relative mix of products and services offered by Griffon’s businesses, which impacts margins and operating efficiencies; short-term capacity constraints or prolonged excess capacity; unforeseen developments in contingencies, such as litigation, regulatory and environmental matters; Griffon’s ability to adequately protect and maintain the validity of patent and other intellectual property rights; the cyclical nature of the businesses of certain of Griffon’s operating companies; possible terrorist threats and actions and their impact on the global economy; effects of possible IT system failures, data breaches or cyber-attacks; the impact of COVID-19, or some other future pandemic, on the U.S. and the global economy, including business disruptions, reductions in employment and an increase in business and operating facility failures, specifically among our customers and suppliers; Griffon’s ability to service and refinance its debt; and the impact of recent and future legislative and regulatory changes, including, without limitation, changes in tax laws. Additional important factors that could cause the statements made in this Quarterly Report on Form 10-Q or the actual results of operations or financial condition of Griffon to differ are discussed under the caption “Item 1A. Risk Factors” and “Special Notes Regarding Forward-Looking Statements” in Griffon’s Annual Report on Form 10-K for the year ended September 30, ~~2021.~~2022. 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. 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.

Item 3 - Quantitative and Qualitative Disclosure About Market Risk

Griffon’s business activities necessitate the management of various financial and market risks, including those related to changes in interest rates, foreign currency rates and commodity prices.

Interest Rates

Griffon’s exposure to market risk for changes in interest rates relates primarily to variable interest rate debt and investments in cash and equivalents.

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 LIBOR and BBSY (Bank Bill Swap Rate) based variable interest rate. Due to the current and expected level of borrowings under these facilities, a 100 basis point change in SONIA, SOFR, BBSY, or LIBOR would not have a material impact on Griffon’s results of operations or liquidity.

Foreign Exchange

Griffon conducts business in various non-US countries, primarily in Canada, Australia, the United Kingdom, Ireland, New Zealand and China; therefore, changes in the value of the currencies of these countries affect Griffon's financial position and cash flows when translated into US Dollars. Griffon has generally accepted the exposure to exchange rate movements relative to its non-US operations. Griffon may, from time to time, hedge its currency risk exposures. A change of 10% or less in the value of all applicable foreign currencies would not have a material effect on Griffon’s financial position and cash flows.

Item 4 - Controls and Procedures

Under the supervision and with the participation of Griffon’s Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), Griffon’s disclosure controls and procedures, as defined by Exchange Act Rule 13a-15(e) and 15d-15(e), were evaluated as of the end of the period covered by this report. Based on that evaluation, Griffon’s CEO and CFO concluded that Griffon’s disclosure controls and procedures were effective at the reasonable assurance level.

~~In connection with~~SEC guidance permits the ~~Hunter acquisition, Griffon is in~~exclusion of an evaluation of the ~~process~~effectiveness of ~~integrating its~~a registrant's disclosure controls and procedures ~~with respect~~as they relate to ~~Hunter's operations.~~the internal control over financial reporting for an acquired business during the first year following such acquisition. As discussed in Note 3 to the consolidated financial statements contained in this Report, the Company acquired Hunter Fan Company ("Hunter"). The acquisition represents approximately 9.0% of the Company's consolidated revenue for the year ended September 30, 2022, and approximately 31.0% of the Company's consolidated assets at September 30, 2022. Management's evaluation and conclusion as to the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of December 31, 2022 and September 30, 2022 excludes any evaluation of the internal control over financial reporting of Hunter. Griffon expects to include the internal controls with respect to Hunter operations in its assessment of the effectiveness of its internal controls over financial reporting as of the end of fiscal year 2023. ~~Other than the acquisition of Hunter, during~~During the period covered by this report, there were no changes in Griffon’s internal control over financial reporting which materially affected, or are reasonably likely to materially affect, Griffon’s internal control over financial reporting.

Limitations on the Effectiveness of Controls

Griffon believes that a control system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the control system are met, and no evaluation of controls can provide absolute assurance that all controls issues and instances of fraud, if any, within a company have been detected. Griffon’s disclosure controls and procedures, as defined by Exchange Act Rule 13a-15(e) and 15d-15(e), are designed to provide reasonable assurance of achieving their objectives.

PART II - OTHER INFORMATION

Item 1 Legal Proceedings

None

Item 1A Risk Factors

In addition to the other information set forth in this report, carefully consider the factors in Item 1A to Part I in Griffon’s Annual Report on Form 10-K for the year ended September 30, ~~2021,~~2022, which could materially affect Griffon’s business, financial condition or future results. The risks described in Griffon’s Annual Report on Form 10-K are not the only risks facing Griffon. Additional risks and uncertainties not currently known to Griffon or that Griffon currently deems to be immaterial also may materially adversely affect Griffon’s business, financial condition and/or operating results.

5347

Item 2 Unregistered Sales of Equity Securities and Use of Proceeds

~~Period~~

(a) Total Number
of Shares (or
Units) Purchased

(b) Average Price
Paid Per Share (or
Unit)

~~(c) Total Number of~~

~~Shares (or Units)~~

~~Purchased as Part of~~

~~Publicly Announced~~

~~Plans or Programs~~ ~~(1)~~

~~(d) Maximum Number (or~~

~~Approximate Dollar~~

~~Value) of Shares (or Units)~~

~~That May Yet Be~~

~~Purchased Under the~~

~~Plans or Programs~~ ~~(1)~~

~~April 1 - 30, 2022~~

—

~~May 1 - 31, 2022~~

—

~~June 1 - 30, 2022~~

—

~~Total~~

—

~~57,955~~


Period	(a) Total Number of Shares (or Units) Purchased (1)	(b) Average Price Paid Per Share (or Unit)		(c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs (2)	(d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) That May Yet Be Purchased Under the Plans or Programs (2)
October 1 - 31, 2022	—	$	—	—
November 1 - 30, 2022	78,770	42.01		—
December 1 - 31, 2022	266,281	34.99		—
Total	345,051	$	36.59	—	$	57,955

1.Shares acquired by the Company from holders of restricted stock upon vesting of the restricted stock, to satisfy tax-withholding obligations of the holders.

2.On each of August 3, 2016 and August 1, 2018, the Company’s Board of Directors authorized the repurchase of up to $50,000 of Griffon common stock; as of ~~June 30,~~December 31, 2022, an aggregate of $57,955 remained available for the purchase of Griffon common stock under these repurchase programs.

Item 3 Defaults Upon Senior Securities

None

Item 4 Mine Safety Disclosures

None

Item 5 Other Information

None

5448

Table of Contents


Item 6			Exhibits


2.1*			Share Purchase Agreement by and among TTM Technologies, Inc., Exphonics, Inc. and Griffon Corporation, dated as of April 18, 2022 (incorporated by reference to Exhibit 2.1 of Current Report on Form 8-K filed April 21, 2022 (Commission File No. 1-06620)).

~~2.2~~			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.
2.3*3.2			~~Letter Agreement, dated~~Amended and Restated By-laws, as ~~of June 11, 2022, modifying that certain Share Purchase Agreement, dated as of April 18, 2022, by and among TTM Technologies, Inc., Exphonics, Inc. and Griffon Corporation.~~

10.1**			~~Amendment No. 3 to Employment Agreement, dated March 16, 2008, by and between Griffon Corporation and Ronald J. Kramer, made as of April 28, 2022 (incorporated by reference to Exhibit 10.4~~amended (Exhibit 3.1 of Quarterly Report on Form 10-Q for the quarter ended March 31, ~~2022)~~2013 (Commission File No. 1-06620),Exhibit 3.2 of Current Report on Form 8-K dated February 18, 2022 (Commission File No. 1-06620), and Exhibit 3.1 of Current Report on Form 8-K dated October 6, 2022 (Commission File No. 1-06620)).

10.1*			Amendment No. 4 to Employment Agreement made as of November 14, 2022 by and between Griffon Corporation and Ronald J. Kramer (Exhibit 10.9 to Annual Report on Form 10-K dated November 17, 2022 (Commission File No. 1-06620)).

10.2**			Amendment No. 1 to Employment Agreement made as of November 14, 2022 by and between Griffon Corporation and Robert F. Mehmel (Exhibit 10.15 to Annual Report on Form 10-K dated November 17, 2022 (Commission File No. 1-06620)).

10.3*			Amendment No. 2 to Severance Agreement ~~dated July 30, 2015,~~made as of November 14, 2022 by and between Griffon Corporation and Brian G. Harris ~~made as of April 28, 2022 (incorporated by reference~~(Exhibit 10.19 to ~~Exhibit 10.5 of Quarterly~~Annual Report on Form ~~10-Q for the quarter ended March 31, 2022)~~10-K dated November 17, 2022 (Commission File No. 1-06620)).

10.3*10.4			Amendment No. 1 2 to Severance Agreement ~~dated April 27, 2010,~~made as of November 14, 2022 by and between Griffon Corporation and Seth L. Kaplan ~~made~~(Exhibit 10.13 to Annual Report on Form 10-K dated November 17, 2022 (Commission File No. 1-06620)).

10.5			Cooperation Agreement, dated as of ~~April 28, 2022~~January 8, 2023, by and among Voss Value Master Fund, L.P., Voss Value-Oriented Special Situations Fund, L.P., Voss Advisors GP, LLC, Voss Capital, LLC and Griffon Corporation (incorporated by reference to Exhibit ~~10.6~~10.1 of ~~Quarterly~~Current Report on Form ~~10-Q for the quarter ended March 31, 2022)~~8-K filed January 9, 2023).


31.1			Certification pursuant to Rule 13a-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2			Certification pursuant to Rule 13a-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32			Certifications pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.


101.INS			XBRL Instance Document

101.SCH			XBRL Taxonomy Extension Schema Document

101.CAL			XBRL Taxonomy Extension Calculation Document

101.DEF			XBRL Taxonomy Extension Definitions Document

101.LAB			XBRL Taxonomy Extension Labels Document

101.PRE			XBRL Taxonomy Extension Presentations Document

			*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.
			** Indicates a management contract or compensatory plan or arrangement.

5549

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


			GRIFFON CORPORATION

			/s/ Brian G. Harris
			Brian G. Harris
			Senior Vice President and Chief Financial Officer
			(Principal Financial Officer)

			/s/ W. Christopher Durborow
			W. Christopher Durborow
			Vice President and Chief Accounting Officer
			(Principal Accounting Officer)

Date: ~~August 3, 2022~~January 31, 2023

5650


	Proforma For the Three Months Ended June 30, (unaudited)				Proforma For the Nine Months Ended June 30, (unaudited)
	2022		2021		2022		2021

Revenue	$	768,179	$	669,199	$	2,230,056	$	1,984,377
Income from continuing operations	52,782		11,149		127,299		65,811


		Nine Months Ended June 30, 2022										Nine Months Ended June 30, 2021
		Effective Interest Rate		Cash Interest		Amort. Debt (Premium)/Discount		Amort. Debt Issuance Costs & Other Fees		Total Interest Expense		Effective Interest Rate		Cash Interest		Amort. Debt Premium		Amort. Debt Issuance Costs & Other Fees		Total Interest Expense
Senior notes due 2028	(a)	6.0	%	$	43,090	$	(36)	$	1,552	$	44,606	6.0	%	$	43,125	$	(35)	$	1,566	$	44,656
Term Loan B due 2029	(b)	3.7	%	11,896		91		717		12,704		n/a		—		—		—		—
Revolver due 2025	(b)	Variable		2,307		—		368		2,675		Variable		760		—		368		1,128
Finance lease - real estate	(c)	5.6	%	577		—		4		581		5.4	%	671		—		19		690
Non US lines of credit	(d)	Variable		14		—		12		26		Variable		11		—		12		23
Non US term loans	(d)	Variable		492		—		44		536		Variable		503		—		53		556
Other long term debt	(e)	Variable		212		—		1		213		Variable		329		—		1		330
Capitalized interest				(230)		—		—		(230)				(13)		—		—		(13)
Totals				$	58,358	$	55	$	2,698	$	61,111			$	45,386	$	(35)	$	2,019	$	47,370


	For the Nine Months Ended June 30, 2022
	2022						2021
	CPP		HBP		Total			CPP		HBP		Total
United States	$	677,714	$	1,031,650	$	1,709,364		$	595,619	$	713,754	$	1,309,373
Europe	96,226		51		96,277			95,888		72		95,960
Canada	73,249		41,574		114,823			64,440		32,009		96,449
Australia	191,679		—		191,679			184,668		—		184,668
All other countries	17,951		9,451		27,402			7,124		6,849		13,973
Consolidated revenue	$	1,056,819	$	1,082,726	$	2,139,545		$	947,739	$	752,684	$	1,700,423


	Cash Charges				Non-Cash Charges
	Personnel related costs		Facilities, exit costs and other		Facility and other		Total		Capital Investments
Phase I	$	12,000	$	4,000	$	19,000	$	35,000	$	40,000
Phase II	14,000		16,000		—		30,000		25,000
Increase (Reduction) in Scope	(12,400)		2,100		(4,700)		(15,000)		(50,000)
Total Anticipated Charges	13,600		22,100		14,300		50,000		15,000




Total 2020 restructuring charges	(5,620)		(3,357)		(4,692)		(13,669)		(6,733)




Total 2021 restructuring charges	(3,190)		(11,573)		(6,655)		(21,418)		(8,774)
Q1 FY2022 Activity	(260)		(1,167)		(289)		(1,716)		(1,690)
Q2 FY2022 Activity	(1,878)		(1,122)		(1,766)		(4,766)		(861)
Q3 FY2022 Activity	$	(1,613)	$	(3,857)	$	(439)	(5,909)		$	(3,786)
Total 2022 restructuring charges	(3,751)		(6,146)		(2,494)		(12,391)		(6,337)
Total cumulative charges	(12,561)		(21,076)		(13,841)		(47,478)		$	(21,844)
Estimate to Complete	$	1,039	$	1,024	$	459	$	2,522	$	(6,844)	(a)