Transcript: Griffon Q3 2026 Earnings Conference Call

Griffon (NYSE: GFF ) reported third-quarter financial results on Wednesday. The transcript from the company's third-quarter earnings call has been provided below. APIs provide real-time access to earnings call transcripts and financial data. Visit to learn more.

View the webcast at Summary Griffon Corporation reported a 7% organic increase in revenue and a 2% increase in EBITDA for the third quarter of fiscal 2026, with strong year-to-date free cash flow of $194 million. The company completed the closing of its Australasia joint venture, receiving $181 million in cash and a 49% equity interest, marking its transformation into a pure-play building products company. Griffon repurchased $53 million of its stock during the quarter and repaid the remaining Term Loan B balance of $285 million, highlighting its focus on capital allocation and debt reduction.

Third quarter revenue reached $481 million, with adjusted EBITDA of $125 million. 8 billion and $458 million, respectively. Management expressed confidence in the company's strategic initiatives and financial outlook, emphasizing the potential for growth in residential and commercial markets as economic conditions improve. Full Transcript OPERATOR Good day and welcome to the Griffon Corporation fiscal third quarter 2026 earnings conference call.

All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one, on your telephone keypad.

To withdraw your question, please press star, then two. Please note this event is being recorded. I would now like to turn the conference over to Brian Harris, CFO. Please go ahead.

Brian Harris — Executive Vice President & Chief Financial Officer Thank you. Good morning and welcome to Griffon Corporation's third quarter fiscal 2026 earnings call. Joining me for this morning's call is Ron Kramer, Griffon Corporation Chairman and Chief Executive Officer. Our press release was issued earlier this morning and is available on our website at Today's call is being recorded and the replay instructions are included in our earnings release.

Our comments will include forward-looking statements about Griffon's performance. These statements are subject to risks and uncertainties that can change as the world changes. Please see the cautionary statement in today's press release and in our SEC filings. Finally, some of today's remarks will adjust for items that affect comparability between periods.

These items are explained in our non-GAAP reconciliations included in our press release. With that, I'll turn the call over to Ron. Ron Kramer — Chairman and Chief Executive Officer Thanks, Brian. Good morning everyone and thanks for joining us.

Griffon has executed particularly well this quarter, which is reflected in today's solid operational and financial results. In the quarter, revenue increased organically by 7% and EBITDA by 2% while generating strong year-to-date free cash flow of $194 million. 8 billion and $458 million, respectively. S.

housing and commercial construction markets. Regarding our strategic actions, earlier this week we were very pleased to announce the closing of the joint venture for our Australasia business. At closing, we received $181 million in cash, a $49 million note receivable, and a 49% equity interest. The closing of the Australasia transaction concludes a series of strategic actions that have transformed Griffon into a pure-play building products company.

From these transactions, we received a total of $281 million in cash, $210 million in 10% PIK notes, while retaining minority interests with a book value of $139 million and an opportunity for further value creation. Turning to capital allocation, during the third quarter we repurchased $53 million of our stock, or 626,000 shares, at an average price of $85 per share. At June 30, $194 million remained under the repurchase authorization. We continue to believe our stock is a compelling value.

86. These repurchases have reduced Griffon's outstanding shares by 21% relative to the total shares outstanding at the end of the second quarter of fiscal 2023. Subsequent to the June quarter, we repaid the remaining Term Loan B balance of $285 million using a combination of proceeds from our strategic actions and our revolver. 22 per share, payable on September 16 to shareholders of record on August 31, marking the 60th consecutive quarterly dividend to shareholders.

Our dividend has grown at an annualized compounded rate of 19% since we initiated dividends in 2012. These actions reflect the strength of our business, the successful execution of our strategic initiatives, and our continued confidence in our strategic plan and outlook. I'll turn it over to Brian for more details on the financial results. Brian Harris — Executive Vice President & Chief Financial Officer Thank you, Ron.

Third quarter revenue of $481 million represents an increase of 7% compared to the prior-year quarter, benefiting from favorable price and mix of 6% and increased volume of 1%. Third quarter adjusted EBITDA of $125 million increased 2% compared to the prior-year quarter, benefiting from the increased revenue, partially offset by increased material and SG&A costs. 9%. 7%.

7% of revenue. 40 per share, primarily due to prior-year third quarter goodwill and intangible impairment charges. 39 per share. Year to date, free cash flow from continuing operations was $194 million compared to $202 million in the prior year.

Year to date, net capital expenditures were $24 million compared to $32 million in the prior year. We expect free cash flow from continuing operations for the full fiscal year will be in excess of income from continuing operations. 5 times leverage at the end of last year's third quarter. 2 times at the end of June.

All leverage amounts exclude notes receivable from the transaction. 0 times. 5x. Regarding our expectations for the year, we are maintaining our fiscal 2026 revenue and EBITDA guidance based on the results we have seen year to date.

8 billion for fiscal 2026 on a continuing operations basis and adjusted EBITDA of $458 million, which excludes certain charges that affect comparability. We continue to expect free cash flow from continuing operations to exceed net income from continuing operations. We also continue to expect capital expenditures to be $50 million, depreciation to be $27 million and amortization to be $15 million. Fiscal year 2026 interest expense is now expected to be $80 million, reflecting a $13 million reduction from prior guidance resulting from debt paydown and the benefit of interest income from the transaction PIK note receivable.

Normalized tax rate is expected to be 28%. Now I'll turn the call back over to Ron. Ron Kramer — Chairman and Chief Executive Officer Thanks, Brian. Our fiscal 2026 remains on track with our guidance.

Our teams are executing well as evidenced by our solid operating performance this quarter and year to date. We remain confident in our financial outlook. We're optimistic that residential and commercial markets will return to growth and expect to realize substantial operating leverage as activity improves. With respect to capital allocation, we are committed to using our strong operating performance and free cash flow to drive a capital allocation strategy that delivers long-term value for our shareholders.

This includes supporting our quarterly dividend, opportunistically repurchasing shares, and reducing debt. As always, I'd like to recognize the outstanding efforts of the teams across our business. It's their dedication and performance that drive our success. We're grateful for all of their contributions.

Operator, we'll take any questions. OPERATOR We will now begin the question and answer session. To ask a question, you may press star, then one, on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys.

If at any time your question has been addressed and you would like to withdraw your question, please press star, then two. Please note, we ask that you ask just one question and one follow-up, please. At this time, we will pause momentarily to assemble our roster. The first question is from Tim Wojes with Baird.

Please go ahead. Tim Wojes — Analyst at Baird Hey everybody, good morning. Nice job. Ron Kramer — Chairman and Chief Executive Officer Thanks, Tim.

Tim Wojes — Analyst at Baird Hey, maybe just on the first one, first question I had, I think in the overhead door business, one of your competitors is going through some consolidation efforts and our understanding is they've had some issues manufacturing and shipping. Is that anything that I guess, is that something that you're seeing in the marketplace and is that an opportunity for you from a share perspective? Ron Kramer — Chairman and Chief Executive Officer We remain more than capable to fulfill demand that is out there. We continue to perform well in the market and trust our dealers, our customers, to install our products well and continue to benefit from that.

We're always looking to increase market share. Tim Wojes — Analyst at Baird Okay. And then I guess on the business, I mean, 6% price/mix, it sounds like volume's up a little bit. Just any additional color on just how kind of the individual pieces performed, whether it's kind of replacement in residential or the commercial market just performed better versus the overall average.

Brian Harris — Executive Vice President & Chief Financial Officer Sure. So door volume for the quarter was down slightly, driven by residential, and this was more than offset by the fan volume, leaving our commercial volume flat. OPERATOR The next question is from Bob Rybik with CJS Securities. Please go ahead.

UNKNOWN — Analyst at CJS Securities (for Bob Rybik) Hey, it's legit Godo for Bob this morning. Just starting on the residential side, what are some of the growth drivers within your control to drive potentially some top line while we wait for housing starts and the macro? Ron Kramer — Chairman and Chief Executive Officer Yeah, we continue to execute on innovation, coming out with new products that have had good take in the market. Our designs over the last decade have brought our company and the entire door industry upscale, and we continue to on that basis.

And we are ready for any turn in volume that comes with a better housing market. And I'd also add that Clopay is best in class, both in terms of product, service and national footprint. And part of the dichotomy in the economy is the premium market continues to do well. S.

housing market. We continue to believe that there's upside in both transaction volume and ultimately new home construction that we'll be a beneficiary of, but it's a small part of our overall picture today. UNKNOWN — Analyst at CJS Securities (for Bob Rybik) And then on the commercial side, can you speak to how the commercial replacement cycle is similar or different to the residential side and where we stand in that cycle today? Brian Harris — Executive Vice President & Chief Financial Officer Generally, the replacement cycle on the commercial side is shorter.

So we deem it as approximately seven years depending on the product and location it's installed. New construction is relatively low compared to prior years, but we have a large installed base. And when new construction is lower, generally replacement and refurbishment of existing facilities is higher. OPERATOR The next question is from Colin Baron with Deutsche Bank.

Please go ahead. Colin Baron — Analyst at Deutsche Bank Good morning. Thank you for taking my questions. I just wanted to dive a little bit further into the price/mix.

In the quarter it was very strong at 6%. Again, can you just break out the benefit in between price versus mix and sort of how you're thinking about those components going forward? I know mix can be a little bit volatile quarter to quarter. Brian Harris — Executive Vice President & Chief Financial Officer Yeah.

So for the quarter, price and mix were approximately equal. And looking forward, we had a price increase during the quarter, so that will continue to effectually as we get through backlog. Mix is hard to predict, but as we continue to bring new products to market, we continue to expect good mix. Colin Baron — Analyst at Deutsche Bank Very good.

And then just on the cost side, any help in thinking about the magnitude of COGS inflation that you guys are seeing and your expectations as you look out into the September quarter and maybe the beginning parts of fiscal year 27? Brian Harris — Executive Vice President & Chief Financial Officer Sure. So obviously all our expectations are in our guidance. We had the price increase, as I just mentioned, that was to offset increases in raw material, labor, energy, distribution, logistics costs.

And we expected that price increase and our margin—the price increase will keep our margins at 25%. OPERATOR The next question is from Trey Grooms with Stephens. Please go ahead. Trey Grooms — Analyst at Stephens Hey, good morning everyone and congrats on the nice results.

Ron Kramer — Chairman and Chief Executive Officer Good morning. Trey Grooms — Analyst at Stephens Good morning. And yeah, so I wanted to kind of follow up with the price/cost question and, you know, you've got the price increase in place. Raw materials, you know, there has been some fluctuation.

I know there's typically a lag there. I think we have a decent idea of how you're thinking about 4Q. But all else equal, now that we have these things in place, as we look into next year, do you expect to see, you know, maybe a little more catch up, you know, as we get into the fiscal 1Q or 1Q? Or do you feel like most of that kind of price/cost catch up is going to occur in 4Q?

Brian Harris — Executive Vice President & Chief Financial Officer So most of that should occur in 4Q. But of course, you're lapping as the year goes into next year. We feel like we've put an appropriate price increase based on the inflationary cost and we'll provide further guidance in November. Trey Grooms — Analyst at Stephens Okay, fair enough.

Just trying to get an idea for the trajectory there. Maybe we look a little bit further out, but that's fair enough. So maybe thinking about this a little bit longer term, you know, now as a pure play building products company, I know there's going to be leverage in the business as we kind of look forward over the longer term and as we get into a position where demand begins to improve.

How are you thinking about these businesses over the longer term, kind of the incremental margin as we are looking at the business as it stands today, pure play building products within those two, how do you think about the longer term kind of incremental margin opportunities as demand improves? Because you guys are putting up good results in a market that's operationally demanding, the demand is relatively challenged. Ron Kramer — Chairman and Chief Executive Officer Look, I think you have to look at where we've come from, the evolution of the business.

And Clopay is now both residential, commercial and the drivers of both of those engines are going to be better in a better economy and a better housing market. Our results are both excellent given the circumstances and the environment that we've been operating in. And what you should take away is that our balance sheet is positioned for us to continue to grow the business. We have modest leverage on the company today and we have significant operating leverage in the businesses.

So with any incremental growth in volume, you should expect us to have significantly higher free cash flow.