Griffon Corporation Q2 FY2025 earnings call

• Home and Building Products: HBP has a leading position in garage doors, with Clopay's VertiStack Avante garage door recognized at the NAHB International Builders Show. The product utilizes a unique design with glass panels that stack, revolutionizing door incorporation in projects. - Consumer and Professional Products: CPT's U.S. operations transition to an asset-light model increased flexibility and reduced costs, and the Pope acquisition boosted Australia performance. - Capital Allocation: Repurchased $31 million of stock in the second quarter, with $360 million remaining under repurchase authorization. Authorized a regular quarterly dividend of $0.18 per share. - Financials: Second quarter revenue was $612 million, down 9%; adjusted EBITDA before unallocated amounts was $133 million, down 11%; net debt was $1.4 billion as of March 31, 2025, with net debt-to-EBITDA leverage of 2.6x.

Home and Building Products (HBP): Second quarter revenue was $368 million, down 6% year-over-year, with adjusted EBITDA of $109 million, down 15% year-over-year. The segment maintained a better than 30% EBITDA margin through the first half, driven by steady residential performance and favorable mix. Consumer and Professional Products (CPT): Revenue was $243 million, down 13% year-over-year, while adjusted EBITDA increased 18% year-over-year to $24 million. This was driven by the transition to an asset-light business model in the U.S. and strong performance in Australia including the Pope acquisition.

• Maintained fiscal 2025 guidance: $2.6 billion of revenue and $575 million to $600 million of segment adjusted EBITDA. - Expected tariff impact on EBITDA to be manageable through supplier negotiations, cost management, leveraging existing inventory, and price actions where necessary.

• Impact of U.S. trade policy/tariffs on Consumer and Professional Products, though the company expects to mitigate effects through various levers like supplier negotiations, cost management, and inventory leveraging.

Q: Trey Grooms asked about CPP revenue exposed to China tariffs and long-term margin target for CPP.

A: Ron Kramer stated $325 million of CPP revenue is annualized and exposed, but CPP has a long-term 15% adjusted EBITDA margin target, with HBP having a 30% margin.

Q: Collin Verron inquired about quantifying tariff impact beyond fiscal 2025 and strategy differences between fan and long-handled tool businesses.

A: Ron Kramer said speculating on 2026 is premature, and Brian Harris discussed global supply chain expansion for lawn and garden tools and fan business supply chain diversification.

Q: Lee Jagoda asked about CPP market position, price leverage, and fan business supply chain diversification.

A: Ron Kramer talked about CPP's price sensitivity and supply chain mitigation, and Brian Harris mentioned fan business supply chain diversification plans.

Q: Tim Wojs asked about HBP price increases and seasonality.

A: Brian Harris said HBP saw good realization on price increases, and seasonally Q2 is the lowest, with Q4 and Q1 being strongest.

Q: Justin (for Julio Romero) asked about free cash flow cadence and CPP demand trends by geography.

A: Brian Harris said free cash flow expected to be greater than net income, and CPP demand was weak in North America and UK, but strong in Australia.

Q: Jeff Stevenson asked about inventory ahead of tariffs and fan exemptions, and HBP market resilience.

A: Brian Harris talked about inventory leveraging and no exemption details yet, and Brian and Ron Kramer said HBP's high-end market remained resilient.