On August 7, 2024, Griffon Corp (GFF, Financial) released its 8-K filing for the fiscal third quarter ended June 30, 2024. Griffon Corp, a manufacturer and marketer of residential, commercial, and industrial garage doors, as well as non-powered landscaping products, reported a revenue of $647.8 million, a 5% decrease from the prior year's $683.4 million. Net income for the quarter was $41.1 million, or $0.84 per share, down from $49.2 million, or $0.90 per share, in the same period last year.
Performance and Challenges
Griffon Corp's performance in the third quarter was marked by a decline in both revenue and net income. The company's revenue of $647.8 million fell short of the analyst estimate of $688.94 million. Similarly, the reported earnings per share (EPS) of $0.84 missed the analyst estimate of $1.25. The decline in revenue and net income can be attributed to decreased volumes in both the Home and Building Products (HBP) and Consumer and Professional Products (CPP) segments.
Financial Achievements
Despite the challenges, Griffon Corp achieved several financial milestones. The company generated strong free cash flow of $120 million, which allowed it to reduce debt by $80 million, repurchase $19 million of stock, and fund a $7 million regular quarterly dividend. These actions highlight Griffon's commitment to a capital allocation strategy that delivers value to shareholders.
Segment Performance
In the Home and Building Products (HBP) segment, revenue decreased by 2% to $394.2 million due to an unfavorable product mix. Adjusted EBITDA for HBP was $118.5 million, a 12% decrease from the prior year. The Consumer and Professional Products (CPP) segment saw a 10% decline in revenue to $253.6 million, primarily due to reduced consumer demand in North America. However, CPP's adjusted EBITDA increased by 22% to $22.3 million, driven by improved production costs and decreased discretionary spending.
Income Statement Highlights
| Metric | Q3 2024 | Q3 2023 |
|---|---|---|
| Revenue | $647.8 million | $683.4 million |
| Net Income | $41.1 million | $49.2 million |
| EPS | $0.84 | $0.90 |
| Adjusted EBITDA | $125.5 million | $138.6 million |
Balance Sheet and Cash Flow
As of June 30, 2024, Griffon Corp had cash and equivalents of $133.5 million and total debt outstanding of $1.51 billion, resulting in a net debt of $1.37 billion. The company's leverage ratio was 2.7x net debt to EBITDA. Free cash flow for the nine months ended June 30, 2024, was $273.7 million, reflecting strong operating results.
Commentary
"Griffon's third quarter results were highlighted by solid operating performance from Home and Building Products (HBP), improved profitability at Consumer and Professional Products (CPP), and strong free cash flow conversion," said Ronald J. Kramer, Chairman and Chief Executive Officer.
Analysis
Griffon Corp's third-quarter performance reflects the challenges faced by the conglomerate in a fluctuating market environment. The decline in revenue and net income underscores the impact of reduced consumer demand and increased costs. However, the company's strong free cash flow and strategic capital allocation efforts demonstrate its resilience and commitment to shareholder value. Moving forward, Griffon's ability to navigate market conditions and execute its global sourcing strategy will be crucial for sustained growth.
Explore the complete 8-K earnings release (here) from Griffon Corp for further details.
