Griffon Corporation Q3 FY2025 earnings call

• Segment Performance: HBP continued strong performance with EBITDA margin exceeding expectations; CPP was impacted by weak demand and tariffs but saw margin improvement due to asset-light model.
• Capital Allocation: Repurchased $40M of stock in Q3, $538M since April 2023; Board authorized $0.18 per share quarterly dividend.
• Financial Results: Third quarter revenue $614M, down 5%; adjusted EBITDA before unallocated $148M, up 5%. GAAP net loss $120M vs prior year net income $41M.
• Outlook: Reaffirmed EBITDA guidance $575M-$600M, reduced revenue guidance by $100M to $2.5B due to CPP weakness; HBP margin expected over 31%, CPP margin ~8%.

Home & Building Products (HBP) segment: Revenue of $400 million, increased 2% from prior year, driven by favorable price and mix (3%) partially offset by decreased volume (1%). Adjusted EBITDA $129 million, up 9%. For the first 9 months, HBP profitability had an EBITDA margin of 31.4%. Consumer and Professional Products (CPP) segment: Revenue $213 million, decreased 16% from prior year. Impacted by weak demand and tariffs. CPP EBITDA margin improved 270 basis points year-over-year. Adjusted EBITDA $19 million, down 14%. Revenue contribution: HBP was approximately 65.1% of total revenue ($614M), CPP was approximately 34.9% of total revenue.

• Reaffirmed full year EBITDA guidance of $575 million to $600 million.
• Reduced revenue expectation to $2.5 billion from $2.6 billion due to CPP consumer weakness.
• HBP segment margin expected to be over 31% versus prior guidance of over 30%; CPP margin now expected to be approximately 8% versus prior guidance of an excess of 9%.
• Net interest expense expected to be $95 million versus prior guidance of $102 million; capital expenditures expected to be $60 million versus prior guidance of $65 million.

• CPP impacted by weak consumer demand and tariffs disrupting historical customer ordering patterns.
• Uncertainties related to global economic conditions, tariffs, and consumer spending affecting segment performance.

Q: Talk to your pricing strategy in CPP and sell-through trends at retail A: Brian G. Harris said some price increases in certain instances but couldn't give detailed info due to sensitive customer discussions; retail continues to see reduced POS with weather, weak consumer, and concerns about tariffs and inflation being factors Q: On HBP, how price realization is tracking and demand by end markets A: Price realization tracking in line; new construction is a small part (<10%) of HBP; commercial is soft compared to past, residential high-end consumer is active Q: Timing of global sourcing initiative and CPP margin targets A: Ronald J. Kramer said global sourcing initiative is on track; CPP long-term margin target is 15% Q: Material costs impact on HBP and long-term margin targets A: Brian G. Harris said material costs provided tailwind this quarter; steel pricing expected stable; long-term HBP margin target is better than 30%, short-term 31% or better Q: Corporate guidance and inventory days A: Brian G. Harris said corporate EBITDA guidance is still $55 million; inventory higher due to slowed consumer and reduced customer orders Q: Confidence in EBITDA guidance and cost optimization initiatives A: Brian G. Harris said confidence in HBP performance; ongoing automation and efficiency projects, including a 2-year project on HBP