Griffon Corporation Q1 FY2026 earnings call

• Announced the creation of a joint venture involving AMES North America and Venanpri Tools, along with other strategic actions. - Home and Building Products had 3% revenue increase with 30.1% EBITDA margin; Consumer and Professional Products had 2% revenue increase with 19% higher EBITDA. - Repurchased $18 million of stock, authorized $0.22 per share dividend. - Strategic actions include joint venture, review of strategic alternatives for AMES Australia and U.K., and combination of Hunter Fan with Home and Building Products segment.

Home and Building Products (HBP): Revenue increased 3% compared to prior year, with EBITDA margin of 30.1%. Revenue benefited 7% from strong price and mix across residential and commercial products, partially offset by reduced residential volumes. Consumer and Professional Products (CPP): First quarter revenue increased 2%, driven by price and mix with increased volume in Australia and Canada, offset by reduced volume in the U.S. CPP EBITDA in the quarter increased by 19% to $22 million, driven by the increase in revenue.

• Expected full year fiscal 2026 continuing operations revenue to be $1.8 billion and adjusted EBITDA to be $520 million, excluding unallocated costs of $62 million. - Free cash flow from continuing operations, including capital expenditures of $50 million, is expected to exceed net income. - JV expected to close by the end of June.

• Market uncertainties affecting consumer demand. - Potential impact of economic conditions on business performance.

Q: Tim Wojs asks about the timing and thought process behind the joint venture.

A: Ronald Kramer explains that there was a disconnect between the market value of the stock and the intrinsic value of the businesses, and the JV allows unlocking value and leveraging a global partner.

Q: Bob Labick's question about the EBITDA contribution from the JV and Hunter's revenue.

A: Brian Harris states that the combined entity results of the JV are not disclosed, and Hunter Fan had $211 million of revenue in fiscal '25 with a margin of roughly 29%.

Q: Collin Verron asks about the EV to EBITDA multiple and JV timing.

A: Brian Harris says the cash from the JV is at a roughly 4x multiple, and the JV is expected to close by the end of June.

Q: Sam Darkatsh asks about why a JV instead of an outright sale, Hunter not being in the JV, and strategic review.

A: Brian Harris explains the JV unlocks value now and in the future, Hunter has stronger alignment with Home and Building Products, and they like their company and plan to build it.

Q: Julio Romero asks about Hunter and HBP collaboration and cash conversion.

A: Brian Harris gives examples of collaboration between Hunter and HBP, and says the business is expected to have positive cash flow.

Q: Collin Verron follows up on HBP mix sustainability and margin pressure.

A: Brian Harris says HBP guidance remains unchanged, with residential volume pressure on the lower end and commercial volume flat.