SEC Filing | Griffon Corporation

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gff-20220630

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, 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 was 57,063,936.

Griffon Corporation and Subsidiaries

Contents


			Page
PART I - FINANCIAL INFORMATION

Item 1 – Financial Statements

Condensed Consolidated Balance Sheets at June 3 0 , 2022 (unaudited) and September 30, 2021			1

Condensed Consolidated Statement of Shareholders’ Equity for the Three and Nine Months Ended June 3 0 , 2022 and 2021 (unaudited)			2

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the Three and Nine Months Ended June 3 0 , 2022 and 2021 (unaudited)			4

Condensed Consolidated Statements of Cash Flows for the Nine Months Ended June 3 0 , 2022 and 2021 (unaudited)			5

Notes to Condensed Consolidated Financial Statements (unaudited)			7

Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations			36

Item 3 - Quantitative and Qualitative Disclosures about Market Risk			52

Item 4 - Controls & Procedures			53

PART II – OTHER INFORMATION

Item 1 – Legal Proceedings			53

Item 1A – Risk Factors			53

Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds			53

Item 3 – Defaults Upon Senior Securities			54

Item 4 – Mine Safety Disclosures			54

Item 5 – Other Information			54

Item 6 – Exhibits			55

Signatures			56

Table of Contents

Part I – Financial Information

Item 1 – Financial Statements

GRIFFON CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)


	(Unaudited)
	June 30, 2022		September 30, 2021
CURRENT ASSETS
Cash and equivalents	$	144,687	$	248,653
Accounts receivable, net of allowances of $13,541 and $8,787	429,683		294,804

Inventories	708,178		472,794
Prepaid and other current assets	59,111		76,009
Assets of discontinued operations held for sale	—		275,814
Assets of discontinued operations	487		605
Total Current Assets	1,342,146		1,368,679
PROPERTY, PLANT AND EQUIPMENT, net	299,844		290,222
OPERATING LEASE RIGHT-OF-USE ASSETS	193,448		144,598
GOODWILL	705,356		426,148
INTANGIBLE ASSETS, net	939,024		350,025
OTHER ASSETS	21,791		21,589
ASSETS OF DISCONTINUED OPERATIONS	2,623		3,424
Total Assets	$	3,504,232	$	2,604,685

CURRENT LIABILITIES
Notes payable and current portion of long-term debt	$	13,085	$	12,486
Accounts payable	212,038		260,038
Accrued liabilities	306,282		144,928
Current portion of operating lease liabilities	32,426		29,881
Liabilities of discontinued operations held for sale	—		81,023
Liabilities of discontinued operations	30,806		3,280
Total Current Liabilities	594,637		531,636
LONG-TERM DEBT, net	1,574,697		1,033,197
LONG-TERM OPERATING LEASE LIABILITIES	167,549		119,315
OTHER LIABILITIES	257,209		109,585
LIABILITIES OF DISCONTINUED OPERATIONS	3,825		3,794
Total Liabilities	2,597,917		1,797,527
COMMITMENTS AND CONTINGENCIES - See Note 22
SHAREHOLDERS’ EQUITY
Total Shareholders’ Equity	906,315		807,158
Total Liabilities and Shareholders’ Equity	$	3,504,232	$	2,604,685

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, 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, 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
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		—		—		—



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

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,
	2022		2021		2022		2021
Revenue	$	768,179	$	584,218	$	2,139,545	$	1,700,423
Cost of goods and services	507,578		424,316		1,452,459		1,215,179
Gross profit	260,601		159,902		687,086		485,244

Selling, general and administrative expenses	157,387		117,796		442,577		347,138



Income from operations	103,214		42,106		244,509		138,106

Other income (expense)
Interest expense	(24,022)		(15,849)		(61,111)		(47,370)
Interest income	61		49		126		397

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

Income before taxes from continuing operations	76,050		26,893		182,765		92,546
Provision for income taxes	23,268		12,078		55,119		34,868
Income from continuing operations	$	52,782	$	14,815	$	127,646	$	57,678

Discontinued operations:
Income from operations of discontinued operations	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
Net income	$	140,287	$	16,707	$	225,274	$	63,319

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

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

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

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

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

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

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

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 OPERATING ACTIVITIES:
Net income	$	225,274	$	63,319
Net income from discontinued operations	(97,628)		(5,641)
Adjustments to reconcile net income to net cash (used in) provided by operating activities of continuing operations:

Depreciation and amortization	47,021		39,118
Stock-based compensation	15,978		15,091
Asset impairment charges - restructuring	2,494		3,882
Provision for losses on accounts receivable	1,008		173
Amortization of debt discounts and issuance costs	2,753		1,984
Debt extinguishment, net	5,287		—
Fair value step-up of acquired inventory sold	5,401		—
Deferred income taxes	1,465		7,232
(Gain) loss on sale of assets and investments	(303)		155

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 in prepaid and other assets	(13,388)		(4,359)
Increase (decrease) in accounts payable, accrued liabilities, income taxes payable and operating lease liabilities	(44,864)		27,180
Other changes, net	1,799		1,647
Net cash (used in) provided by operating activities - continuing operations	(65,001)		13,314

CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property, plant and equipment	(33,516)		(24,949)
Acquired businesses, net of cash acquired	(