UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, ~~2021~~2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 1-06620

GRIFFON CORPORATION

(Exact name of registrant as specified in its charter)


Delaware			11-1893410
(State or other jurisdiction of			(I.R.S. Employer
incorporation or organization)			Identification No.)

712 Fifth Ave, 18th Floor	New York	New York	10019
(Address of principal executive offices)			(Zip Code)

(212) 957-5000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.25 par value

GFF

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act:

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

The number of shares of common stock outstanding at June 30, ~~2021~~2022 was ~~56,676,975.~~57,063,936.

Griffon Corporation and Subsidiaries

Contents


			Page
PART I - FINANCIAL INFORMATION

Item 1 – Financial Statements

Condensed Consolidated Balance Sheets at June 3 0 , ~~2021~~2022 (unaudited) and September 30, ~~2020~~2021			1

Condensed Consolidated Statement of Shareholders’ Equity for the Three and Nine Months Ended June 3 0 , ~~2021~~2022 and ~~2020~~2021 (unaudited)			2

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the Three and NNine ~~ine Mo~~ Months Ended ~~nths Ended~~ June 3 0 , ~~2021~~2022 and ~~2020~~2021 (unaudited)			4

Condensed Consolidated Statements of Cash Flows for the Nine Months Ended June 3 0 , ~~2021~~2022 and ~~2020~~2021 (unaudited)			5

Notes to Condensed Consolidated Financial Statements (unaudited)			7

Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations			36

Item 3 - Quantitative and Qualitative Disclosures about Market Risk			52

Item 4 - Controls & Procedures			5253

PART II – OTHER INFORMATION

Item 1 – Legal Proceedings			53

Item 1A – Risk Factors			53

Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds			53

Item 3 – Defaults Upon Senior Securities			5354

Item 4 – Mine Safety Disclosures			5354

Item 5 – Other Information			5354

Item 6 – Exhibits			5455

Signatures			5556

Table of Contents

Part I – Financial Information

Item 1 – Financial Statements

GRIFFON CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)


		(Unaudited)					(Unaudited)
		June 30, 2021		September 30, 2020			June 30, 2022		September 30, 2021
CURRENT ASSETS	CURRENT ASSETS					CURRENT ASSETS
Cash and equivalents	Cash and equivalents	$	220,697	$	218,089	Cash and equivalents	$	144,687	$	248,653
Accounts receivable, net of allowances of $9,542 and $8,505		363,046		340,546
Contract assets, net of progress payments of $20,821 and $24,175		74,341		84,426
Accounts receivable, net of allowances of $13,541 and $8,787						Accounts receivable, net of allowances of $13,541 and $8,787	429,683		294,804

Inventories	Inventories	510,309		413,825		Inventories	708,178		472,794
Prepaid and other current assets	Prepaid and other current assets	57,770		46,897		Prepaid and other current assets	59,111		76,009

Assets of discontinued operations held for sale						Assets of discontinued operations held for sale	—		275,814
Assets of discontinued operations	Assets of discontinued operations	695		2,091		Assets of discontinued operations	487		605
Total Current Assets	Total Current Assets	1,226,858		1,105,874		Total Current Assets	1,342,146		1,368,679
PROPERTY, PLANT AND EQUIPMENT, net	PROPERTY, PLANT AND EQUIPMENT, net	338,762		343,964		PROPERTY, PLANT AND EQUIPMENT, net	299,844		290,222
OPERATING LEASE RIGHT-OF-USE ASSETS	OPERATING LEASE RIGHT-OF-USE ASSETS	150,924		161,627		OPERATING LEASE RIGHT-OF-USE ASSETS	193,448		144,598
GOODWILL	GOODWILL	445,749		442,643		GOODWILL	705,356		426,148
INTANGIBLE ASSETS, net	INTANGIBLE ASSETS, net	355,488		355,028		INTANGIBLE ASSETS, net	939,024		350,025
OTHER ASSETS	OTHER ASSETS	27,275		32,897		OTHER ASSETS	21,791		21,589
ASSETS OF DISCONTINUED OPERATIONS	ASSETS OF DISCONTINUED OPERATIONS	3,607		6,406		ASSETS OF DISCONTINUED OPERATIONS	2,623		3,424
Total Assets	Total Assets	$	2,548,663	$	2,448,439	Total Assets	$	3,504,232	$	2,604,685

CURRENT LIABILITIES	CURRENT LIABILITIES					CURRENT LIABILITIES
Notes payable and current portion of long-term debt	Notes payable and current portion of long-term debt	$	13,024	$	9,922	Notes payable and current portion of long-term debt	$	13,085	$	12,486
Accounts payable	Accounts payable	258,914		232,107		Accounts payable	212,038		260,038
Accrued liabilities	Accrued liabilities	160,002		163,994		Accrued liabilities	306,282		144,928
Current portion of operating lease liabilities	Current portion of operating lease liabilities	30,896		31,848		Current portion of operating lease liabilities	32,426		29,881
Liabilities of discontinued operations held for sale						Liabilities of discontinued operations held for sale	—		81,023
Liabilities of discontinued operations	Liabilities of discontinued operations	3,641		3,797		Liabilities of discontinued operations	30,806		3,280
Total Current Liabilities	Total Current Liabilities	466,477		441,668		Total Current Liabilities	594,637		531,636
LONG-TERM DEBT, net	LONG-TERM DEBT, net	1,042,612		1,037,042		LONG-TERM DEBT, net	1,574,697		1,033,197
LONG-TERM OPERATING LEASE LIABILITIES	LONG-TERM OPERATING LEASE LIABILITIES	124,588		136,054		LONG-TERM OPERATING LEASE LIABILITIES	167,549		119,315
OTHER LIABILITIES	OTHER LIABILITIES	124,933		126,510		OTHER LIABILITIES	257,209		109,585
LIABILITIES OF DISCONTINUED OPERATIONS	LIABILITIES OF DISCONTINUED OPERATIONS	4,712		7,014		LIABILITIES OF DISCONTINUED OPERATIONS	3,825		3,794
Total Liabilities	Total Liabilities	1,763,322		1,748,288		Total Liabilities	2,597,917		1,797,527
COMMITMENTS AND CONTINGENCIES - See Note 22	COMMITMENTS AND CONTINGENCIES - See Note 22	0		0		COMMITMENTS AND CONTINGENCIES - See Note 22	0		0
SHAREHOLDERS’ EQUITY	SHAREHOLDERS’ EQUITY					SHAREHOLDERS’ EQUITY
Total Shareholders’ Equity	Total Shareholders’ Equity	785,341		700,151		Total Shareholders’ Equity	906,315		807,158
Total Liabilities and Shareholders’ Equity	Total Liabilities and Shareholders’ Equity	$	2,548,663	$	2,448,439	Total Liabilities and Shareholders’ Equity	$	3,504,232	$	2,604,685

The accompanying notes to condensed consolidated financial statements are an integral part of these statements.

Table of Contents

GRIFFON CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

For the Three and Nine Months Ended June 30, 2022 and 2021

(Unaudited)


		COMMON STOCK			CAPITAL IN EXCESS OF PAR VALUE				RETAINED EARNINGS				TREASURY SHARES						ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)			DEFERRED COMPENSATION																						COMMON STOCK						CAPITAL IN EXCESS OF PAR VALUE		RETAINED EARNINGS	TREASURY SHARES		ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)		DEFERRED COMPENSATION
(in thousands)	(in thousands)	SHARES	PAR VALUE								SHARES			COST							TOTAL																		(in thousands)	SHARES				PAR VALUE							SHARES		COST			TOTAL
Balance at September 30, 2020		83,739	$	20,935			$	583,008			$	607,518		27,610			$	(413,493)				$	(72,092)	$	(25,725)	$	700,151
Balance at September 30, 2021																												Balance at September 30, 2021	84,375	$	21,094	$	602,181	$	669,998	27,762	$	(416,850)			$	(45,977)			$	(23,288)		$	807,158
Net income	Net income	—	—		—				29,500				—		—				—			—		29,500																			Net income	—			—			—		19,298	—	—	—		—	19,298

Dividend	Dividend	—	—		—				(4,469)				—		—				—			—		(4,469)																			Dividend	—			—			—		(4,739)	—	—	—		—	(4,739)
Shares withheld on employee taxes on vested equity awards	Shares withheld on employee taxes on vested equity awards	—	—		—				—				133		(2,909)				—			—		(2,909)																			Shares withheld on employee taxes on vested equity awards	—			—			—		—	422	(10,886)	—		—	(10,886)
Amortization of deferred compensation	Amortization of deferred compensation	—	—		—				—				—		—				—			609		609																			Amortization of deferred compensation	—			—			—		—	—	—	—		591	591

Equity awards granted, net	Equity awards granted, net	494	123		(123)				—				—		—				—			—		0																			Equity awards granted, net	113			28			(28)		—	—	—	—		—	—

ESOP allocation of common stock	ESOP allocation of common stock	—	—		596				—				—		—				—			—		596																			ESOP allocation of common stock	—			—			848		—	—	—	—		—	848
Stock-based compensation	Stock-based compensation	—	—		3,428				—				—		—				—			—		3,428																			Stock-based compensation	—			—			2,866		—	—	—	—		—	2,866

Other comprehensive income, net of tax	Other comprehensive income, net of tax	—	—		—				—				—		—				13,141			—		13,141																			Other comprehensive income, net of tax	—			—			—		—	—	—	(2,751)		—	(2,751)
Balance at December 31, 2020		84,233	$	21,058	$	586,909			$	632,549			27,743		$	(416,402)			$	(58,951)		$	(25,116)	740,047
Balance at December 31, 2021																												Balance at December 31, 2021	84,488	$	21,122	$	605,867	$	684,557	28,184	$	(427,736)			$	(48,728)			$	(22,697)		$	812,385
Net income	Net income	—	—		—				17,112				—		—				—			—		17,112																			Net income	—			—			—		65,689	—	—	—		—	65,689

Dividend	Dividend	—	—		—				(3,217)				—		—				—			—		(3,217)																			Dividend	—			—			—		(5,352)	—	—	—		—	(5,352)

Amortization of deferred compensation	Amortization of deferred compensation	—	—		—				—				—		—				—			609		609																			Amortization of deferred compensation	—			—			—		—	—	—	—		591	591

Equity awards granted, net	Equity awards granted, net	194	48		(48)				—				—		—				—			—		0																			Equity awards granted, net	258			65			(7,195)		—	(470)	7,130	—		—	—

ESOP allocation of common stock	ESOP allocation of common stock	—	—		756				—				—		—				—			—		756																			ESOP allocation of common stock	—			—			638		—	—	—	—		—	638
Stock-based compensation	Stock-based compensation	—	—		4,349				—				—		—				—			—		4,349																			Stock-based compensation	—			—			4,314		—	—	—	—		—	4,314

Other comprehensive income, net of tax	Other comprehensive income, net of tax	—	—		—				—				—		—				4,775			—		4,775																			Other comprehensive income, net of tax	—			—			—		—	—	—	4,949		—	4,949
Balance at March 31, 2021		84,427	$	21,106	$	591,966			$	646,444			27,743		$	(416,402)			$	(54,176)		$	(24,507)	$	764,431
Balance at March 31, 2022																												Balance at March 31, 2022	84,746	$	21,187	$	603,624	$	744,894	27,714	$	(420,606)			$	(43,779)			$	(22,106)		$	883,214
Net income	Net income	—	—		—				16,707				—		—				—			—		16,707																			Net income	—			—			—		140,287	—	—	—		—	140,287

Dividend	Dividend	—	—						(4,546)				—		—				—			—		(4,546)																			Dividend	—			—			—		(109,487)	—	—	—		—	(109,487)

Amortization of deferred compensation	Amortization of deferred compensation	—	—		—				—				—		—				—			610		610																			Amortization of deferred compensation	—			—			—		—	—	—	—		591	591

Equity awards granted, net	Equity awards granted, net	(7)	(2)		2				—				—		—				—			—		0																			Equity awards granted, net	—			—			(484)		—	(32)	484	—		—	—

ESOP allocation of common stock	ESOP allocation of common stock	—	—		856				—				—		—				—			—		856																			ESOP allocation of common stock	—			—			757		—	—	—	—		—	757
Stock-based compensation	Stock-based compensation	—	—		4,544				—				—		—				—			—		4,544																			Stock-based compensation	—			—			5,130		—	—	—	—		—	5,130

Other comprehensive income, net of tax	Other comprehensive income, net of tax	—	—		—				—				—		—				2,739			—		2,739																			Other comprehensive income, net of tax	—			—			—		—	—	—	(14,177)		—	(14,177)
Balance at June 30, 2021		84,420	$	21,104	$	597,368			$	658,605			27,743		$	(416,402)			$	(51,437)		$	(23,897)	$	785,341
Balance at June 30, 2022																												Balance at June 30, 2022	84,746	$	21,187	$	609,027	$	775,694	27,682	$	(420,122)			$	(57,956)			$	(21,515)		$	906,315

Table of Contents

GRIFFON CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

For the Three and Nine Months Ended June 30, 2022 and 2021

(Unaudited)


	COMMON STOCK			CAPITAL IN EXCESS OF PAR VALUE		RETAINED EARNINGS		TREASURY SHARES			ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)		DEFERRED COMPENSATION
(in thousands)	SHARES	PAR VALUE						SHARES	COST						TOTAL
Balance at September 30, 2020	83,739	$	20,935	$	583,008	$	607,518	27,610	$	(413,493)	$	(72,092)	$	(25,725)	$	700,151
Net income	—	—		—		29,500		—	—		—		—		29,500

Dividend	—	—		—		(4,469)		—	—		—		—		(4,469)
Shares withheld on employee taxes on vested equity awards	—	—		—		—		133	(2,909)		—		—		(2,909)
Amortization of deferred compensation	—	—		—		—		—	—		—		609		609


Equity awards granted, net	494	123		(123)		—		—	—		—		—		—



ESOP allocation of common stock	—	—		596		—		—	—		—		—		596
Stock-based compensation	—	—		3,428		—		—	—		—		—		3,428

Other comprehensive income, net of tax	—	—		—		—		—	—		13,141		—		13,141
Balance at December 31, 2020	84,233	$	21,058	$	586,909	$	632,549	27,743	$	(416,402)	$	(58,951)	$	(25,116)	740,047
Net income	—	—		—		17,112		—	—		—		—		17,112

Dividend	—	—		—		(3,217)		—	—		—		—		(3,217)

Amortization of deferred compensation	—	—		—		—		—	—		—		609		609


Equity awards granted, net	194	48		(48)		—		—	—		—		—		—



ESOP allocation of common stock	—	—		756		—		—	—		—		—		756
Stock-based compensation	—	—		4,349		—		—	—		—		—		4,349

Other comprehensive income, net of tax	—	—		—		—		—	—		4,775		—		4,775
Balance at March 31, 2021	84,427	$	21,106	$	591,966	$	646,444	27,743	$	(416,402)	$	(54,176)	$	(24,507)	$	764,431
Net income	—	—		—		16,707		—	—		—		—		16,707

Dividend	—	—				(4,546)		—	—		—		—		(4,546)

Amortization of deferred compensation	—	—		—		—		—	—		—		610		610


Equity awards granted, net	(7)	(2)		2		—		—	—		—		—		—



ESOP allocation of common stock	—	—		856		—		—	—		—		—		856
Stock-based compensation	—	—		4,544		—		—	—		—		—		4,544

Other comprehensive income, net of tax	—	—		—		—		—	—		2,739		—		2,739
Balance at June 30, 2021	84,420	$	21,104	$	597,368	$	658,605	27,743	$	(416,402)	$	(51,437)	$	(23,897)	$	785,341

The accompanying notes to condensed consolidated financial statements are an integral part of these statements.

~~Table of Contents~~

~~GRIFFON CORPORATION~~

~~CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY~~

~~For the Three and Nine Months Ended June 30, 2020~~

~~(Unaudited)~~

COMMON STOCK CAPITAL IN
EXCESS OF
PAR VALUE RETAINED
EARNINGS TREASURY SHARES ACCUMULATED
OTHER
COMPREHENSIVE
INCOME (LOSS) DEFERRED
COMPENSATION
(in thousands) SHARES PAR VALUE SHARES COST TOTAL
Balance at September 30, 2019 82,775 $ 20,694 $ 519,017 $ 568,516 35,969 $ (536,308) $ (65,916) $ (28,240) $ 477,763
Net income — — — 10,612 — — — — 10,612
Dividend — — — (3,392) — — — — (3,392)
Shares withheld on employee taxes on vested equity awards — — — — 80 (1,758) — — (1,758)
Amortization of deferred compensation — — — — — — — 629 629
Equity awards granted, net 182 45 (45) — — — — — 0
ESOP allocation of common stock — — 609 — — — — — 609
Stock-based compensation — — 3,150 — — — — — 3,150
Stock-based consideration — — 239 — — — — — 239
Other comprehensive income, net of tax — — — — — — 6,841 — 6,841
Balance at December 31, 2019 82,957 $ 20,739 $ 522,970 $ 575,736 36,049 $ (538,066) $ (59,075) $ (27,611) $ 494,693
Net income — — — 895 — — — — 895
Dividend — — — (3,422) — — — — (3,422)
Shares withheld on employee taxes on vested equity awards — — — — 261 (5,721) — — (5,721)
Amortization of deferred compensation — — — — — — — 629 629
Equity awards granted, net 784 196 (196) — — — — — 0
ESOP allocation of common stock — — 435 — — — — — 435
Stock-based compensation — — 3,662 — — — — — 3,662
Stock-based consideration — — 117 — — — — — 117
Other comprehensive income, net of tax — — — — — — (14,834) — (14,834)
Balance at March 31, 2020 83,741 $ 20,935 $ 526,988 $ 573,209 36,310 $ (543,787) $ (73,909) $ (26,982) $ 476,454
Net income — — — 21,831 — — — — 21,831
Dividend — — — (3,558) — — — — (3,558)
Amortization of deferred compensation — — — — — — — 628 628
Equity awards granted, net (6) (1) 1 — — — — — 0
ESOP allocation of common stock — — 352 — — — — — 352
Stock-based compensation — — 3,930 — — — — — 3,930
Stock-based consideration — — 116 — — — — — 116
Other comprehensive income, net of tax — — — — — — 8,702 — 8,702
Balance at June 30, 2020 83,735 $ 20,934 $ 531,387 $ 591,482 36,310 $ (543,787) $ (65,207) $ (26,354) $ 508,455

~~The accompanying notes to condensed consolidated financial statements are an integral part of these statements.~~

Table of Contents

GRIFFON CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(in thousands, except per share data)

(Unaudited)


		Three Months Ended June 30,				Nine Months Ended June 30,					Three Months Ended June 30,				Nine Months Ended June 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Revenue	Revenue	$	646,792	$	632,061	$	1,890,915	$	1,746,849	Revenue	$	768,179	$	584,218	$	2,139,545	$	1,700,423
Cost of goods and services	Cost of goods and services	476,727		467,058		1,380,362		1,279,893		Cost of goods and services	507,578		424,316		1,452,459		1,215,179
Gross profit	Gross profit	170,065		165,003		510,553		466,956		Gross profit	260,601		159,902		687,086		485,244

Selling, general and administrative expenses	Selling, general and administrative expenses	125,579		113,509		373,963		357,774		Selling, general and administrative expenses	157,387		117,796		442,577		347,138

Income from operations	Income from operations	44,486		51,494		136,590		109,182		Income from operations	103,214		42,106		244,509		138,106

Other income (expense)	Other income (expense)									Other income (expense)
Interest expense	Interest expense	(15,849)		(16,725)		(47,370)		(49,807)		Interest expense	(24,022)		(15,849)		(61,111)		(47,370)
Interest income	Interest income	50		140		399		711		Interest income	61		49		126		397
Gain on sale of business		0		0		5,291		0
Loss from debt extinguishment, net		0		(1,235)		0		(7,925)

Debt extinguishment, net										Debt extinguishment, net	(5,287)		—		(5,287)		—
Other, net	Other, net	386		806		1,192		2,199		Other, net	2,084		587		4,528		1,413
Total other expense, net	Total other expense, net	(15,413)		(17,014)		(40,488)		(54,822)		Total other expense, net	(27,164)		(15,213)		(61,744)		(45,560)

Income before taxes		29,073		34,480		96,102		54,360
Income before taxes from continuing operations										Income before taxes from continuing operations	76,050		26,893		182,765		92,546
Provision for income taxes	Provision for income taxes	12,366		12,649		32,783		21,022		Provision for income taxes	23,268		12,078		55,119		34,868
Income from continuing operations										Income from continuing operations	$	52,782	$	14,815	$	127,646	$	57,678

Discontinued operations:										Discontinued operations:
Income from operations of discontinued operations										Income from operations of discontinued operations	113,457		2,180		117,777		3,556
Provision (benefit) for income taxes										Provision (benefit) for income taxes	25,952		288		20,149		(2,085)
Income from discontinued operations										Income from discontinued operations	87,505		1,892		97,628		5,641
Net income	Net income	$	16,707	$	21,831	$	63,319	$	33,338	Net income	$	140,287	$	16,707	$	225,274	$	63,319

Basic earnings per common share:										Basic earnings per common share:
Income from continuing operations										Income from continuing operations	$	1.02	$	0.29	$	2.48	$	1.14
Income from discontinued operations										Income from discontinued operations	1.69		0.04		1.89		0.11
Basic earnings per common share	Basic earnings per common share	$	0.33	$	0.52	$	1.25	$	0.80	Basic earnings per common share	$	2.71	$	0.33	$	4.37	$	1.25

Basic weighted-average shares outstanding	Basic weighted-average shares outstanding	50,903		41,712		50,779		41,483		Basic weighted-average shares outstanding	51,734		50,903		51,527		50,779

Diluted earnings per common share:										Diluted earnings per common share:
Income from continuing operations										Income from continuing operations	$	0.98	$	0.28	$	2.38	$	1.08
Income from discontinued operations										Income from discontinued operations	1.62		0.04		1.82		0.11
Diluted earnings per common share	Diluted earnings per common share	$	0.31	$	0.50	$	1.19	$	0.76	Diluted earnings per common share	$	2.60	$	0.31	$	4.19	$	1.19

Diluted weighted-average shares outstanding	Diluted weighted-average shares outstanding	53,504		43,774		53,306		43,818		Diluted weighted-average shares outstanding	53,914		53,504		53,704		53,306

Dividends paid per common share	Dividends paid per common share	$	0.08	$	0.075	$	0.24	$	0.225	Dividends paid per common share	$	0.09	$	0.08	$	0.27	$	0.24

Net income	Net income	$	16,707	$	21,831	$	63,319	$	33,338	Net income	$	140,287	$	16,707	$	225,274	$	63,319
Other comprehensive income (loss), net of taxes:	Other comprehensive income (loss), net of taxes:									Other comprehensive income (loss), net of taxes:
Foreign currency translation adjustments	Foreign currency translation adjustments	1,160		9,508		15,022		(493)		Foreign currency translation adjustments	(17,823)		1,160		(14,093)		15,022
Pension and other post retirement plans	Pension and other post retirement plans	1,245		1,139		4,196		2,480		Pension and other post retirement plans	1,196		1,245		2,004		4,196
Change in cash flow hedges	Change in cash flow hedges	351		(1,945)		1,454		(1,278)		Change in cash flow hedges	2,450		334		110		1,437
Change in available-for-sale securities		(17)		0		(17)		0
Total other comprehensive income, net of taxes		2,739		8,702		20,655		709

Total other comprehensive income (loss), net of taxes										Total other comprehensive income (loss), net of taxes	(14,177)		2,739		(11,979)		20,655
Comprehensive income, net	Comprehensive income, net	$	19,446	$	30,533	$	83,974	$	34,047	Comprehensive income, net	$	126,110	$	19,446	$	213,295	$	83,974

The accompanying notes to condensed consolidated financial statements are an integral part of these statements.

Table of Contents

GRIFFON CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)


		Nine Months Ended June 30,					Nine Months Ended June 30,
		2021		2020			2022		2021
CASH FLOWS FROM OPERATING ACTIVITIES:	CASH FLOWS FROM OPERATING ACTIVITIES:					CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	Net income	$	63,319	$	33,338	Net income	$	225,274	$	63,319

Adjustments to reconcile net income to net cash provided by operating activities:
Net income from discontinued operations						Net income from discontinued operations	(97,628)		(5,641)
Adjustments to reconcile net income to net cash (used in) provided by operating activities of continuing operations:						Adjustments to reconcile net income to net cash (used in) provided by operating activities of continuing operations:

Depreciation and amortization	Depreciation and amortization	46,955		47,067		Depreciation and amortization	47,021		39,118
Stock-based compensation	Stock-based compensation	15,092		12,809		Stock-based compensation	15,978		15,091
Asset impairment charges - restructuring	Asset impairment charges - restructuring	9,483		4,692		Asset impairment charges - restructuring	2,494		3,882
Provision for losses on accounts receivable	Provision for losses on accounts receivable	173		512		Provision for losses on accounts receivable	1,008		173
Amortization of debt discounts and issuance costs	Amortization of debt discounts and issuance costs	2,019		2,871		Amortization of debt discounts and issuance costs	2,753		1,984
Loss from debt extinguishment, net		0		7,925
Debt extinguishment, net						Debt extinguishment, net	5,287		—
Fair value step-up of acquired inventory sold						Fair value step-up of acquired inventory sold	5,401		—
Deferred income taxes						Deferred income taxes	1,465		7,232
(Gain) loss on sale of assets and investments						(Gain) loss on sale of assets and investments	(303)		155

Deferred income taxes		7,351		448
Loss (gain) on sale of assets and investments		155		(261)
Gain on sale of business		(5,291)		0
Change in assets and liabilities, net of assets and liabilities acquired:	Change in assets and liabilities, net of assets and liabilities acquired:					Change in assets and liabilities, net of assets and liabilities acquired:
Increase in accounts receivable and contract assets, net		(9,684)		(81,718)
(Increase) decrease in inventories		(100,536)		34,518
Increase in accounts receivable						Increase in accounts receivable	(81,825)		(34,914)
Increase in inventories						Increase in inventories	(135,473)		(101,553)
Increase in prepaid and other assets	Increase in prepaid and other assets	(2,449)		(17,393)		Increase in prepaid and other assets	(13,388)		(4,359)
Increase in accounts payable, accrued liabilities, income taxes payable and operating lease liabilities		13,821		10,536
Increase (decrease) in accounts payable, accrued liabilities, income taxes payable and operating lease liabilities						Increase (decrease) in accounts payable, accrued liabilities, income taxes payable and operating lease liabilities	(44,864)		27,180
Other changes, net	Other changes, net	1,611		600		Other changes, net	1,799		1,647
Net cash provided by operating activities		42,019		55,944
Net cash (used in) provided by operating activities - continuing operations						Net cash (used in) provided by operating activities - continuing operations	(65,001)		13,314

CASH FLOWS FROM INVESTING ACTIVITIES:	CASH FLOWS FROM INVESTING ACTIVITIES:					CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property, plant and equipment	Acquisition of property, plant and equipment	(33,889)		(34,751)		Acquisition of property, plant and equipment	(33,516)		(24,949)
Acquired businesses, net of cash acquired	Acquired businesses, net of cash acquired	(2,242)		(10,531)		Acquired businesses, net of cash acquired	(851,464)		(2,242)

Proceeds from sale of business, net	Proceeds from sale of business, net	14,345		0		Proceeds from sale of business, net	295,712		—

Investment purchases		(4,658)		0
Proceeds (payments) from investments						Proceeds (payments) from investments	14,923		(4,658)
Proceeds from the sale of property, plant and equipment	Proceeds from the sale of property, plant and equipment	116		339		Proceeds from the sale of property, plant and equipment	89		116
Other, net	Other, net	28		(130)		Other, net	—		28
Net cash used in investing activities		(26,300)		(45,073)
Net cash used in investing activities - continuing operations						Net cash used in investing activities - continuing operations	(574,256)		(31,705)

CASH FLOWS FROM FINANCING ACTIVITIES:	CASH FLOWS FROM FINANCING ACTIVITIES:					CASH FLOWS FROM FINANCING ACTIVITIES:

Dividends paid	Dividends paid	(12,907)		(10,639)		Dividends paid	(14,906)		(12,907)
Purchase of shares for treasury	Purchase of shares for treasury	(2,909)		(7,479)		Purchase of shares for treasury	(10,886)		(2,909)
Proceeds from long-term debt	Proceeds from long-term debt	20,587		1,230,618		Proceeds from long-term debt	984,314		20,587
Payments of long-term debt	Payments of long-term debt	(18,255)		(1,205,231)		Payments of long-term debt	(427,883)		(18,255)

Financing costs	Financing costs	(571)		(16,543)		Financing costs	(17,065)		(571)

Other, net	Other, net	(272)		(31)		Other, net	188		(272)
Net cash used in financing activities		(14,327)		(9,305)
Net cash provided by (used in) financing activities - continuing operations						Net cash provided by (used in) financing activities - continuing operations	513,762		(14,327)

The accompanying notes to condensed consolidated financial statements are an integral part of these statements.

Table of Contents

GRIFFON CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)


		Nine Months Ended June 30,					Nine Months Ended June 30,
		2021		2020			2022		2021

CASH FLOWS FROM DISCONTINUED OPERATIONS:	CASH FLOWS FROM DISCONTINUED OPERATIONS:					CASH FLOWS FROM DISCONTINUED OPERATIONS:
Net cash used in operating activities		(1,669)		(2,899)
Net cash provided by investing activities		2,749		418
Net cash provided by operating activities						Net cash provided by operating activities	26,889		27,035
Net cash provided by (used in) investing activities						Net cash provided by (used in) investing activities	(2,627)		8,155

Net cash provided by (used in) discontinued operations		1,080		(2,481)
Net cash provided by discontinued operations						Net cash provided by discontinued operations	24,262		35,190

Effect of exchange rate changes on cash and equivalents	Effect of exchange rate changes on cash and equivalents	136		537		Effect of exchange rate changes on cash and equivalents	(2,733)		136

NET DECREASE IN CASH AND EQUIVALENTS		2,608		(378)
NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS						NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS	(103,966)		2,608
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD	CASH AND EQUIVALENTS AT BEGINNING OF PERIOD	218,089		72,377		CASH AND EQUIVALENTS AT BEGINNING OF PERIOD	248,653		218,089
CASH AND EQUIVALENTS AT END OF PERIOD	CASH AND EQUIVALENTS AT END OF PERIOD	$	220,697	$	71,999	CASH AND EQUIVALENTS AT END OF PERIOD	$	144,687	$	220,697

The accompanying notes to condensed consolidated financial statements are an integral part of these statements.

Table of Contents

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(US dollars and non US currencies in thousands, except per share data)

(Unaudited)

(Unless otherwise indicated, references to years or year-end refer to Griffon’s fiscal period ending September 30)

NOTE 1 – DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

About Griffon Corporation

Griffon Corporation (the “Company”, “Griffon”, "we" or "us") is a diversified management and holding company that conducts business through wholly-owned subsidiaries. Griffon oversees the operations of its subsidiaries, allocates resources among them and manages their capital structures. Griffon provides direction and assistance to its subsidiaries in connection with acquisition and growth opportunities as well as in connection with divestitures. In order to further diversify, Griffon also seeks out, evaluates and, when appropriate, will acquire additional businesses that offer potentially attractive returns on capital.

The Company was founded in 1959, is a Delaware corporation headquartered in New York, N.Y. and is listed on the New York Stock Exchange (NYSE:GFF).

On May 16, 2022, we announced that our Board of Directors initiated a process to review a comprehensive range of strategic alternatives to maximize shareholder value including a sale, merger, divestiture, recapitalization or other strategic transaction. There is no timeline for this review and there is no assurance that the Board of Director's review will result in any transaction being entered into or consummated. As previously announced, we do not intend to disclose further developments until our Board of Directors approves a specific transaction or otherwise concludes its review of strategic alternatives.

On September 27, 2021, Griffon ~~currently~~announced it was exploring strategic alternatives for its Defense Electronics ("DE") segment, which consists of its Telephonics subsidiary. On June 27, 2022, we completed the sale of Telephonics to TTM Technologies, Inc. ("TTM") for $330,000 in cash, subject to customary post-closing adjustments. As a result, we have classified the results of operations of our Telephonics business as a discontinued operation in the Consolidated Statements of Operations for all periods presented and classified the related assets and liabilities associated with the discontinued operation as held for sale in the consolidated balance sheets.Accordingly, all references made to results and information in this Quarterly Report on Form 10-Q are to Griffon's continuing operations,unless noted otherwise. Telephonics is recognized globally as a leading provider of highly sophisticated intelligence, surveillance and communications solutions that are deployed across a wide range of land, sea and air applications. Telephonics designs, develops, manufactures and provides logistical support and lifecycle sustainment services to defense, aerospace and commercial customers worldwide.

On January 24, 2022, Griffon acquired Hunter Fan Company (“Hunter”), a market leader in residential ceiling, commercial, and industrial fans, from MidOcean Partners (“MidOcean”) for a contractual purchase price of approximately $845,000, subject to customary post-closing adjustments. Hunter, which is part of Griffon's Consumer and Professional Products segment, complements and diversifies our portfolio of leading consumer brands and products. We financed the acquisition of Hunter with a new $800,000 seven year Term Loan B facility; we used a combination of cash on hand and revolving credit facility borrowings to fund the balance of the purchase price and related acquisition and debt expenditures.

Griffon conducts its operations through 32 reportable segments:

•Consumer and Professional Products ~~("CPP"~~(“CPP”) ~~conducts its operations through The AMES Companies, Inc. ("AMES"). Founded in 1774, AMES~~ is ~~the~~a leading North American manufacturer and a global provider of branded consumer and professional ~~tools~~tools; residential, industrial and ~~products for~~commercial fans; home storage and organization ~~landscaping,~~products; and ~~enhancing~~products that enhance indoor and outdoor lifestyles. CPP sells products globally through a portfolio of leading brands including AMES, since 1774, Hunter, since 1886, True Temper, ~~AMES,~~ and ClosetMaid.

•Home and Building Products ("HBP") conducts its operations through Clopay Corporation ("Clopay"). Founded in 1964, Clopay is the largest manufacturer and marketer of garage doors and rolling steel doors in North America. Residential and commercial sectional garage doors are sold through professional dealers and leading home center retail chains throughout North America under the brands Clopay, Ideal, and Holmes. Rolling steel door and grille products designed for commercial, industrial, institutional, and retail use are sold under the CornellCookson brand.

•Defense Electronics ("DE") conducts its operations through Telephonics Corporation ("Telephonics"), founded in 1933, a globally recognized leading provider of highly sophisticated intelligence, surveillance and communications solutions for defense, aerospace and commercial customers.

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(US dollars and non US currencies in thousands, except per share data)

(Unaudited)

In March 2020, the World Health Organization declared the outbreak of COVID-19 a pandemic, which continues to spread throughout the U.S. and the world. The impact from the rapidly changing U.S. and global market and economic conditions due to the COVID-19 outbreak is uncertain, with disruptions to the business of our customers and suppliers, which has impacted, and could continue to impact, our business and consolidated results of operations and financial condition. As of the date of this filing, all of Griffon's facilities are fully operational. We have implemented a variety of new policies and procedures, including additional cleaning, social distancing ~~staggered shifts~~ and ~~prohibiting or significantly~~ restricting on-site visitors, to minimize the risk to our employees of contracting COVID-19. In the United States, we manufacture a substantial majority of the products that we sell. While this helps mitigate the effects of global supplier and transportation disruptions, we are still impacted and are unable to accurately predict the impact COVID-19 will have due to numerous uncertainties, including the severity of the disease, the duration of the outbreak, actions that may be taken by governmental authorities, the impact to our customers’ and suppliers’ businesses and other factors identified in Part II, Item 1A “Risk Factors” in this Form 10-Q. We will continue to evaluate the nature and extent of the impact to our business, consolidated results of operations, and financial condition.

~~GRIFFON CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(US dollars and non US currencies in thousands, except per share data)~~

~~(Unaudited)~~

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) for interim financial information, and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, these financial statements do not include all the information and footnotes required by US GAAP for complete financial statements. As such, they should be read together with Griffon’s Annual Report on Form 10-K for the year ended September 30, ~~2020,~~2021, which provides a more complete explanation of Griffon’s accounting policies, financial position, operating results, business, properties and other matters. In the opinion of management, these financial statements reflect all adjustments considered necessary for a fair statement of interim results. Griffon’s CPP operations are seasonal; for this and other reasons, the financial results of the Company for any interim period are not necessarily indicative of the results for the full year.

The condensed consolidated balance sheet information at September 30, ~~2020~~2021 was derived from the audited financial statements included in Griffon’s Annual Report on Form 10-K for the year ended September 30, ~~2020.~~2021.

The condensed consolidated financial statements include the accounts of Griffon and all subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting periods. These estimates may be adjusted due to changes in economic, industry or customer financial conditions, as well as changes in technology or demand. Significant estimates include expected loss allowances for doubtful accounts receivable and returns, net realizable value of inventories, restructuring reserves, valuation of goodwill and intangible assets, sales, ~~profits and loss recognition for performance obligations satisfied over time,~~ assumptions associated with pension benefit obligations and income or expenses, useful lives associated with depreciation and amortization of intangible and fixed assets, warranty reserves, sales incentive accruals, assumption associated with stock based compensation valuation, income taxes and tax valuation reserves, environmental reserves, legal reserves, insurance reserves, the valuation of assets and liabilities of discontinued operations, assumptions associated with valuation of acquired assets and assumed liabilities of acquired companies and the accompanying disclosures. These estimates are based on management’s best knowledge of current events and actions Griffon may undertake in the future. Actual results may ultimately differ from these estimates.

Certain amounts in the prior year have been reclassified to conform to current year presentation.

NOTE 2 – FAIR VALUE MEASUREMENTS

The carrying values of cash and equivalents, accounts receivable, accounts and notes payable, and revolving credit and variable interest rate debt approximate fair value due to either the short-term nature of such instruments or the fact that the interest rate of the revolving credit and variable rate debt is based upon current market rates.

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(US dollars and non US currencies in thousands, except per share data)

(Unaudited)

Applicable accounting guidance establishes a fair value hierarchy requiring the Company to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the hierarchy is based on the lowest level of input that is significant to the fair value measurement. The accounting guidance establishes three levels of inputs that may be used to measure fair value, as follows:

•Level 1 inputs are measured and recorded at fair value based upon quoted prices in active markets for identical assets.

•Level 2 inputs include inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in active markets for similar assets and liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of assets or liabilities.

~~GRIFFON CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(US dollars and non US currencies in thousands, except per share data)~~

~~(Unaudited)~~

•Level 3 inputs are unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

~~The~~On June 30, 2022, the fair values of Griffon’s 2028 senior notes and Term Loan B facility approximated ~~$1,061,250 on June 30, 2021.~~$888,759 and $473,100, respectively. Fair values were based upon quoted market prices (level 1 inputs).

Insurance contracts with values of ~~$3,924~~$3,742 at June 30, ~~2021~~2022 are measured and recorded at fair value based upon quoted prices in active markets for similar assets (level 2 inputs) and are included in Prepaid and other current assets on the Consolidated Balance Sheets.

Items Measured at Fair Value on a Recurring Basis

At June 30, ~~2021, available-for-sale securities, measured at fair value based on quoted prices in active markets for the underlying assets (level 1 inputs),~~2022, marketable debt and ~~trading~~equity securities, measured at fair value based on quoted prices in active markets for similar assets (level 2 inputs), with a fair value of ~~$1,316~~$525 ($~~1,339~~333 cost basis) ~~and $2,196 ($1,000 cost basis), respectively,~~ were included in Prepaid and other current assets on the Consolidated Balance Sheets. ~~Unrealized gains and losses, net of deferred taxes, on available-for-sale securities are included in our Consolidated Balance Sheets as a component of AOCI.~~ Realized and unrealized gains and losses on ~~trading securities~~marketable debt and ~~realized gains and losses on available-for-sale~~equity securities are included in Other income in the Consolidated Statements of Operations and Comprehensive Income (Loss).

In the normal course of business, Griffon’s operations are exposed to the effects of changes in foreign currency exchange rates. To manage these risks, Griffon may enter into various derivative contracts such as foreign currency exchange contracts, including forwards and options. As of June 30, ~~2021,~~2022, Griffon entered into several such contracts in order to lock into a foreign currency rate for planned settlements of trade and inter-company liabilities payable in USU.S. dollars.

At June 30, ~~2021,~~2022, Griffon had ~~$36,000~~$27,000 of Australian dollar contracts at a weighted average rate of ~~$1.28~~$1.33 which qualified for hedge accounting (level 2 inputs). These hedges were all deemed effective as cash flow hedges with gains and losses related to changes in fair value deferred and recorded in Accumulated other comprehensive income (loss) ("AOCI") and Prepaid and other current assets, or Accrued liabilities, until settlement. Upon settlement, gains and losses are recognized in the Consolidated Statements of Operations and Comprehensive Income (Loss) in Cost of goods and services ("COGS"). AOCI included deferred gains of $2,116 ($1,482, net of tax) at June 30, 2022. Upon settlement, gains of $936 and $3,199 were recorded in COGS during the three and nine months ended June 30, 2022, respectively. All contracts expire in 29 to 90 days.

At June 30, 2022, Griffon had 61,000 of Chinese Yuan contracts at a weighted average rate of $6.57 which qualified for hedge accounting (level 2 inputs). These hedges were all deemed effective as cash flow hedges with gains and losses related to changes in fair value deferred and recorded in Accumulated other comprehensive income (loss) ("AOCI") and Prepaid and other current assets, or Accrued liabilities, until settlement. Upon settlement, gains and losses are recognized in the Consolidated Statements of Operations and Comprehensive Income (Loss) in Cost of goods and services ("COGS"). AOCI included deferred losses of ~~$1,317~~$1,216 ($~~922,~~887, net of tax) at June 30, ~~2021.~~2022. Upon settlement, ~~losses~~(losses)/gains of ~~$413~~$(220) and ~~$2,812~~$434 were recorded in COGS during the three and nine months ended June 30, ~~2021,~~2022, respectively. All contracts expire in 1 to ~~119~~243 days.

At June 30, ~~2021,~~2022, Griffon had ~~$8,425~~$10,450 of Canadian dollar contracts at a weighted average rate of ~~$1.27.~~$1.26. The contracts, which protect Canadian operations from currency fluctuations for USU.S. dollar based purchases, do not qualify for hedge accounting. For the three and nine months ended June 30, ~~2021,~~2022, fair value ~~(losses)~~ gains of ~~$(106)~~$223 and ~~$138,~~$225, respectively, were recorded to Other

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(US dollars and non US currencies in thousands, except per share data)

(Unaudited)

liabilities and to Other income for the outstanding contracts, based on similar contract values (level 2 inputs). Realized ~~losses~~gains of ~~$124~~$76 and ~~$285~~$74 were recorded in Other income during the three and nine months ended June 30, ~~2021,~~2022, respectively for all settled contracts. All contracts expire in 305 to ~~420 days.~~

At June 30, 2021, Griffon had $950 of British Pound dollar contracts at a weighted average rate of $0.75. The contracts, which protect United Kingdom operations from currency fluctuations for US dollar based purchases, do not qualify for hedge accounting. For the three and nine months ended June 30, 2021, fair value (losses) gains of $(111) and $30, respectively, were recorded to Other assets and to Other income for the outstanding contracts, based on similar contract values (level 2 inputs). Realized losses of $224 and $505 were recorded in Other income during the three and nine months ended June 30, 2021, respectively. All contracts expire in 6 to 21480 days.

NOTE 3 – REVENUE

The Company recognizes revenue when performance obligations identified under the terms of contracts with its customers are satisfied.A performance obligation is a promise in a contract to transfer a distinct good or service, or a bundle of goods or services, to the customer, and is the unit of accounting. A contract with a customer is an agreement which both parties have approved, that creates enforceable rights and obligations, has commercial substance and with respect to which payment terms

~~GRIFFON CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(US dollars and non US currencies in thousands, except per share data)~~

~~(Unaudited)~~

are identified and collectability is probable.Once the Company has entered into a contract or purchase order, it is evaluated to identify performance obligations.For each performance obligation, revenue is recognized when control of the promised products is transferred to the customer, or services are satisfied under the contract or purchase order, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those products or services (the transaction price).

~~Approximately 86% of the~~The Company’s performance obligations are recognized at a point in time related to the manufacture and sale of a broad range of products and components, ~~primarily within the CPP and HBP Segments,~~ and revenue is recognized when title, and risk and rewards of ownership, have transferred to the customer, which is generally upon shipment.

Approximately 14% of the Company’s performance obligations are recognized over time and relate to prime or subcontractors from contract awards with the U.S. Government, as well as foreign governments and other commercial customers within our DE Segment. Revenue recognized over time are generally accounted for using an input measure to determine progress completed at the end of the period. We believe that cumulative costs incurred to date as a percentage of estimated total contract costs at completion (cost-to-cost method) is an appropriate measure of progress towards satisfaction of performance obligations recognized over time, as it most accurately depicts the progress of our work and transfer of control to our customers.

~~Accounting for the sales and profits on performance obligations for which progress is measured using the cost-to-costmethod relies on the substantial use of estimates; these projections may be revised throughout the life of a contract.~~Adjustments to estimates for a contract's estimated costs at completion and estimated profit or loss are often required as experience is gained, more information is obtained (even though the scope of work required under the contract may or may not change) and contract modifications occur. The impact of such adjustments to estimates is made on a cumulative basis in the period when such information has become known. For the three and nine months ended June 30, 2021, income from operations included net unfavorable catch up adjustments approximating $1,131 and $4,351, respectively. For the three and nine months ended June 30, 2020, income from operations included net unfavorable catch up adjustments of $2,805 and $3,228, respectively. Gross profit is impacted by a variety of factors, including the mix of products, systems and services, production efficiencies, price competition and general economic conditions.

For contracts in which anticipated total costs exceed the total expected revenue, an estimated loss is recognized in the period when identifiable. A provision for the entire amount of the estimated loss is recorded on a cumulative basis, and is recorded as a reduction to gross margin on the Consolidated Statements of Operations and Comprehensive Income (Loss). These provisions had an immaterial impact on Griffon's Consolidated Financial Statements. The estimated remaining costs to complete loss contracts as of June 30, 2021 and September 30, 2020 were approximately $12,500 and $10,800, respectively.

For a complete explanation of Griffon’s revenue accounting policies, this note should be read in conjunction with Griffon’s Annual Report on Form 10-K for the year ended September 30, ~~2020.~~2021. See Note 13 - Business Segments for revenue from contracts with customers disaggregated by end markets, segments and geographic location.

~~Transaction Price Allocated~~

NOTE 4 – ACQUISITIONS

Griffon continually evaluates potential acquisitions that strategically fit within its portfolio or expand its portfolio into new product lines or adjacent markets. Griffon has completed a number of acquisitions that have been accounted for as business combinations, in which assets acquired and liabilities assumed are recorded at fair value as of the date of acquisition and have resulted in the recognition of goodwill. The operating results of the business acquisitions are included in Griffon’s consolidated financial statements from the date of acquisition; in each instance, Griffon is in the process of finalizing the initial purchase price allocation unless otherwise noted.

On January 24, 2022, Griffon completed the acquisition of Hunter, a market leader in residential ceiling, commercial, and industrial fans, for a contractual purchase price of $845,000, subject to customary post-closing adjustments. The acquisition was primarily financed with a new $800,000 seven year Term Loan B facility; we used a combination of cash on hand and revolver borrowings to fund the balance of the purchase price and related acquisition and debt expenditures. Hunter complements and diversifies Griffon's portfolio of leading consumer brands and products. Since the date of acquisition through June 30, 2022, Hunter's revenue was $176,623. The goodwill recognized was $281,668, which was assigned to the ~~Remaining Performance Obligations~~

~~On June 30, 2021, we had $375,039 of remaining performance obligations,~~CPP segment, and is not expected to be deductible for income tax purposes. The final purchase price allocation, which ~~we also refer to as total backlog. We expect to recognize approximately 66% of our remaining performance obligations as revenue within one year, with the balance~~is expected to be completed ~~thereafter.~~

Backlog represents the dollar value of funded orders for which work has not been performed. Backlog generally increases with bookings, and converts into revenue as we incur costs related to contractual commitments or the shipment of product. Given the nature of our business and a larger dependency on international customers, our bookings, and therefore our backlog, is impacted by the longer maturation cycles resulting in delays in the ~~timing~~first quarter of fiscal 2023, will be based on final appraisals and ~~amounts~~other analysis of ~~such awards, which are subject to numerous factors, including fiscal constraints placed~~fair values of acquired assets and liabilities. The following unaudited proforma summary from continuing operations presents consolidated information as if the Company acquired Hunter on ~~customer budgets; political uncertainty; the timing of customer negotiations; and the timing of governmental approvals.~~

~~Contract Balances~~October 1, 2020:

Contract assets were $74,341 as of June 30, 2021 compared to $84,426 as of September 30, 2020. The $10,085 net decrease in our contract assets balance was primarily due to the timing of billings and work performed in Communications and Surveillance


	Proforma For the Three Months Ended June 30, (unaudited)				Proforma For the Nine Months Ended June 30, (unaudited)
	2022		2021		2022		2021

Revenue	$	768,179	$	669,199	$	2,230,056	$	1,984,377
Income from continuing operations	52,782		11,149		127,299		65,811

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(US dollars and non US currencies in thousands, except per share data)

(Unaudited)

~~programs and decrease associated with the sale of Systems Engineering Group, Inc. ("SEG"), partially offset by timing of work performed on Naval & Cyber Systems. Contract assets primarily relate~~Griffon did not include any material, nonrecurring proforma adjustments directly attributable to the ~~Company's right to consideration for work completed but not billed at the reporting date and are recorded in Contract costs and recognized income not yet billed, net of progress payments~~business combination in the ~~Consolidated Balance Sheets. Contract~~proforma revenue and earnings. These proforma amounts have been compiled by adding the historical results from continuing operations of Griffon, restated for classifying the results of operations of the Telephonics business as a discontinued operation, to the historical results of Hunter after applying Griffon’s accounting policies and the following proforma adjustments:

•Depreciation and amortization that would have been charged assuming the preliminary fair value adjustments to property, plant, and equipment, and intangible assets ~~are transferred~~had been applied from October 1, 2021.

•Additional interest and related expenses from the new $800,000 seven year Term Loan B facility that Griffon used to ~~receivables when~~acquire Hunter Fan reduced by historical Hunter interest expense.

•The tax effects on the ~~right to consideration becomes unconditional. Contract costs~~above adjustments using the statutory tax rate of 25.7% for Griffon and ~~recognized income~~27.1% for Hunter.

The calculation of the preliminary purchase price allocation is as follows:



Accounts receivable (1)	$	64,602
Inventories(2)	110,299
Other current assets	7,940
Property, plant and equipment	15,007
Operating lease right-of-use assets	12,447
Goodwill	281,668
Intangible assets	606,000

Total assets acquired	$	1,097,963

Accounts payable and accrued liabilities	$	71,205
Current portion of operating lease liabilities	3,323
Deferred tax liability(3)	161,381
Long-term operating lease liabilities	9,123
Other long-term liabilities	1,467
Total liabilities assumed	$	246,499
Total net assets acquired	$	851,464

(1)Includes $67,201 of gross accounts receivable of which $2,599 was not yet billed consists of amounts accounted for under the percentage of completion method of accounting, and represent recoverable costs and accrued profit that cannot yet be invoiced under the terms of certain long-term contracts. Amounts will be invoiced when applicable contract terms, such as the achievement of specified milestones or product delivery, are met. At June 30, 2021 and September 30, 2020, approximately $9,600 and $7,500, respectively, of contract costs and recognized income not yet billed were expected to be ~~collected after one year.~~collected. The fair value of accounts receivable approximated book value acquired.

(2) Includes $113,287 of gross inventory of which $2,988 was reserved for obsolete items.

(3) Deferred tax liability recorded on intangibles assets.

~~Contract liabilities were $23,757~~The amounts assigned to goodwill and major intangible asset classifications for the Hunter acquisition are as of June 30, 2021 compared to $24,386 as of September 30, 2020. The $629 decrease in the contract liabilities balance was primarily due to recognition of revenue in Naval & Cyber systems, partially offset by billings in Surveillance and Communications programs. Contract liabilities relate to advance consideration received from customers for which revenue has not been recognized. The Company often receives cash payments from customers in advance of the Company’s performance resulting in contract liabilities. These contract liabilities are classified as current on the Consolidated Balance Sheets based on the timing of when the Company expects to recognize revenue. Current contract liabilities are recorded in Accounts payable on the Consolidated Balance Sheets. Contract liabilities are reduced when the associated revenue from the contract is recognized.follows:

~~NOTE 4 – ACQUISITIONS AND DISPOSITIONS~~

~~Acquisitions~~

Griffon accounts for acquisitions under the acquisition method, in which assets acquired and liabilities assumed are recorded at fair value as of the date of acquisition using a method substantially similar to the goodwill impairment test methodology (level 3 inputs). The operating results of the acquired companies are included in Griffon’s consolidated financial statements from the date of acquisition; in each instance, Griffon is in the process of finalizing the initial purchase price allocation unless otherwise noted.


	Average Life (Years)
Goodwill		$	281,668	N/A
Indefinite-lived intangibles (Hunter and Casablanca brands)	356,000	N/A
Definite-lived intangibles (Customer relationships)	250,000	20
Total goodwill and intangible assets		$	887,668

On December 22, 2020, AMES acquired Quatro Design Pty Ltd (“Quatro”), a leading Australian manufacturer and supplier of glass fiber reinforced concrete landscaping products for residential, commercial, and public sector projects for a net purchase price of AUD $3,500 (approximately $2,700) in cash. The final purchase price ~~is subject~~allocated to ~~additional contingent consideration of approximately AUD $1,000 (approximately $760) based on Quatro exceeding certain EBITDA performance targets in the first year. The preliminary~~ goodwill and acquired intangibles ~~allocated to this acquisition~~ was AUD $1,038 (approximately $784) and AUD $2,755 (approximately $2,082), respectively, which was assigned to the CPP segment, and is not deductible for income tax purposes.

On November 29, 2019, AMES acquired 100% of the outstanding stock of Vatre Group Limited ("Apta"), a leading United Kingdom supplier of innovative garden pottery and associated products sold to leading UK and Ireland garden centers for approximately $10,500 (GBP 8,750), inclusive of a post-closing working capital adjustment, net of cash acquired. This acquisition broadens AMES' product offerings in the UK market and increases its in-country operational footprint. The excess of the purchase price over the fair value of the net tangible and intangible assets was recorded as goodwill and is deductible for tax purposes. The purchase price allocation was finalized and allocated to goodwill of GBP 3,449, acquired intangible assets of GBP 3,454, inventory of GBP 2,914, accounts receivable and other assets of GBP 2,492 and accounts payable and other accrued liabilities of GBP 3,765, which was assigned to the CPP segment.

During the three and nine months ended June 30, 2021, acquisition costs were de minimis. During the nine months ended June 30, 2020, the Company incurred acquisition costs of $2,960. The Company did 0t incur acquisition costs in the three months ended June 30, 2020.

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(US dollars and non US currencies in thousands, except per share data)

(Unaudited)

During the nine months ended June 30, 2022, the Company incurred acquisition costs of $9,303. During the three months ended June 30, 2022, there were no acquisition costs. During the three and nine months ended June 30, 2021, acquisition costs were de minimis.

~~Dispositions~~

On December 18, 2020, Defense Electronics completed the sale of its SEG business for $15,000. SEG provides sophisticated, highly technical engineering and analytical support to the Missile Defense Agency and various U.S. military commands. SEG had sales of approximately $7,000 for the first fiscal quarter ended December 31, 2020 and $31,000 for the fiscal year ended September 30, 2020. DE recorded a pre-tax gain of $5,291 ($5,251, net of tax, or $0.10 per share) related to the divestiture of SEG. The sale does not represent a strategic shift that will have a major effect on operations and financial results.

NOTE 5 – INVENTORIES

Inventories are stated at the lower of cost (first-in, first-out or average cost) or market.

The following table details the components of inventory:


		At June 30, 2021		At September 30, 2020			At June 30, 2022		At September 30, 2021
Raw materials and supplies	Raw materials and supplies	$	163,639	$	146,351	Raw materials and supplies	$	169,606	$	133,684
Work in process	Work in process	87,109		83,697		Work in process	51,673		48,531
Finished goods	Finished goods	259,561		183,777		Finished goods	486,899		290,579
Total	Total	$	510,309	$	413,825	Total	$	708,178	$	472,794

NOTE 6 – PROPERTY, PLANT AND EQUIPMENT

The following table details the components of property, plant and equipment, net:


		At June 30, 2021		At September 30, 2020			At June 30, 2022		At September 30, 2021
Land, building and building improvements	Land, building and building improvements	$	169,588	$	167,005	Land, building and building improvements	$	154,187	$	155,574
Machinery and equipment	Machinery and equipment	615,780		595,126		Machinery and equipment	550,899		520,110
Leasehold improvements	Leasehold improvements	55,507		53,386		Leasehold improvements	44,435		39,913
		840,875		815,517			749,521		715,597
Accumulated depreciation and amortization	Accumulated depreciation and amortization	(502,113)		(471,553)		Accumulated depreciation and amortization	(449,677)		(425,375)
Total	Total	$	338,762	$	343,964	Total	$	299,844	$	290,222

Depreciation and amortization expense for property, plant and equipment was ~~$13,371~~$12,173 and ~~$13,142~~$10,896 for the quarters ended June 30, ~~2021~~2022 and ~~2020,~~2021, respectively, and ~~$39,709~~$34,650 and ~~$39,890~~$31,950 for the nine months ended June 30, ~~2021~~2022 and ~~2020,~~2021, respectively. Depreciation included in Selling, general and administrative ("SG&A") expenses was ~~$5,044~~$4,578 and ~~$4,852~~$3,724 for the quarters ended June 30, ~~2021~~2022 and ~~2020,~~2021, respectively, and ~~$14,764~~$12,234 and ~~$14,713~~$10,672 for the nine months ended June 30, ~~2021~~2022 and ~~2020,~~2021, respectively. Remaining components of depreciation, attributable to manufacturing operations, are included in Cost of goods and services.

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(US dollars and non US currencies in thousands, except per share data)

(Unaudited)

NOTE 7 – CREDIT LOSSES

Effective October 1, 2020, the Company adopted accounting guidance related to accounting for credit losses on financial instruments, including trade receivables (ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments). The guidance requires companies to consider forward-looking information to estimate expected credit losses, resulting in earlier recognition of losses for receivables that are current or not yet due, which were not considered under the previous accounting guidance.

The Company is exposed to credit losses primarily through sales of products and services. Trade receivables are recorded at their stated amount, less allowances for discounts, doubtful accounts and returns. The Company’s expected loss allowance methodology for trade receivables is primarily based on the aging method of the accounts receivables balances and the financial condition of its customers. The allowances represent estimated uncollectible receivables associated with potential customer defaults on contractual obligations (usually due to customers’ potential insolvency), discounts related to early payment of accounts receivables by customers and estimates for returns. The allowance for doubtful accounts includes amounts for certain customers in which a risk of default has been specifically identified, as well as an amount for customer defaults, based on a formula, when it is determined the risk of some default is probable and estimable, but cannot yet be associated with specific customers. Allowance for discounts and returns are recorded as a reduction of revenue and the provision related to the allowance for doubtful accounts is recorded in SG&A expenses.

The Company also considers current and expected future economic and market conditions, such as the COVID-19 pandemic, when determining any estimate of credit losses. Generally, estimates used to determine the allowance are based on assessment of anticipated payment and all other historical, current and future information that is reasonably available. All accounts receivable amounts are expected to be collected in less than one year.

Based on a review of the Company's policies and procedures across all segments, including the aging of its trade receivables, recent write-off history and other factors related to future macroeconomic conditions, Griffon determined that its method to determine credit losses and the amount of its allowances for bad debts is in accordance with ~~this~~the accounting guidance for credit losses on financial instruments, including trade receivables, in all material respects.

The following table provides a roll-forward of the allowance for credit losses that is deducted from the amortized cost basis of accounts receivable to present the net amount expected to be collected:


~~Beginning Balance, October 1, 2020~~	$	~~8,505~~
~~Provision for expected credit losses~~	~~1,254~~
~~Amounts written off charged against the allowance~~	~~(237)~~
~~Other, primarily foreign currency translation~~	20
~~Ending Balance, June 30, 2021~~	$	~~9,542~~


	Nine months ended June 30,
	2022		2021
Beginning Balance, October 1	$	8,787	$	8,178
Allowance for credit losses acquired	2,599		—
Provision for expected credit losses	2,430		1,287
Amounts written off charged against the allowance	(159)		(238)
Other, primarily foreign currency translation	(116)		20
Ending Balance, June 30	$	13,541	$	9,247

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(US dollars and non US currencies in thousands, except per share data)

(Unaudited)

NOTE 8 – GOODWILL AND OTHER INTANGIBLES

The following table provides changes in the carrying value of goodwill by segment during the nine months ended June 30, ~~2021:~~2022:

At September 30, 2020 Business Acquisitions (a) Business Divestitures (b) Foreign
currency
translations adjustments At June 30, 2021
Consumer and Professional Products $ 232,845 $ 784 $ 0 $ 3,133 $ 236,762
Home and Building Products 191,253 0 0 0 191,253
Defense Electronics 18,545 0 (811) 0 17,734
Total $ 442,643 $ 784 $ (811) $ 3,133 $ 445,749

~~(a) The increase in the CPP segment was due to the acquisition of Quatro.~~

~~(b) The decrease in the DE segment was due to the divestiture of SEG.~~


	At September 30, 2021		Hunter Acquisition		Foreign currency translations adjustments		At June 30, 2022
Consumer and Professional Products	$	234,895	$	281,668	$	(2,460)	$	514,103
Home and Building Products	191,253		—		—		191,253


Total	$	426,148	$	281,668	$	(2,460)	$	705,356

The following table provides the gross carrying value and accumulated amortization for each major class of intangible assets:


		At June 30, 2021					At September 30, 2020					At June 30, 2022					At September 30, 2021
		Gross Carrying Amount		Accumulated Amortization		Average Life (Years)	Gross Carrying Amount		Accumulated Amortization			Gross Carrying Amount		Accumulated Amortization		Average Life (Years)	Gross Carrying Amount		Accumulated Amortization
Customer relationships & other	Customer relationships & other	$	189,511	$	74,233	23	$	185,940	$	66,656	Customer relationships & other	$	435,724	$	87,009	23	$	187,732	$	75,794
Technology and patents	Technology and patents	19,568		8,237		13	19,464		8,360		Technology and patents	13,859		2,851		13	13,429		2,439
Total amortizable intangible assets	Total amortizable intangible assets	209,079		82,470			205,404		75,016		Total amortizable intangible assets	449,583		89,860			201,161		78,233
Trademarks	Trademarks	228,879		—			224,640		—		Trademarks	579,301		—			227,097		—
Total intangible assets	Total intangible assets	$	437,958	$	82,470		$	430,044	$	75,016	Total intangible assets	$	1,028,884	$	89,860		$	428,258	$	78,233

The gross carrying amount of intangible assets was impacted by ~~approximately $5,832~~$4,630 related to foreign currency translation.

Amortization expense for intangible assets was ~~$2,435~~$5,514 and ~~$2,381~~$2,409 for the quarters ended June 30, ~~2021~~2022 and ~~2020,~~2021, respectively, and ~~$7,246~~$12,371 and ~~$7,177~~$7,168 for the nine months ended June 30, 2022 and 2021, respectively. The increase in intangible assets and ~~2020.~~ amortization is related to the Hunter acquisition.

Amortization expense for the remainder of ~~2021~~2022 and the next five fiscal years and thereafter, based on current intangible balances and classifications, is estimated as follows: ~~2021 - $2,139;~~ 2022 - ~~$9,376;~~$5,462; 2023 - ~~$9,224;~~$22,000; 2024 - ~~$9,198;~~$22,000; 2025 - ~~$9,198;~~$22,000; 2026 - ~~$9,198;~~$22,000; 2027 - $22,000; thereafter ~~$78,276.~~$244,261.

Griffon performs its annual goodwill impairment testing in the fourth quarter of each year. The 2020 impairment testing resulted in all 3 reporting units having fair values substantially in excess of their carrying values. In addition to the annual impairment test, the Company is required to regularly assess whether a triggering event has occurred which would require interim impairment testing. In connection with the sale of the SEG business, the Company assessed the remaining DE reporting unit for impairment. The assessment determined that the fair value of the DE reporting unit substantially exceeded its carrying value and no impairment existed. During the nine months ended June 30, ~~2021,~~2022, the Company determined that there were no ~~other~~ triggering events and, as a result, there was 0no impairment to either its goodwill or indefinite-lived intangible assets at June 30, ~~2021.~~2022.

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(US dollars and non US currencies in thousands, except per share data)

(Unaudited)

NOTE 9 – INCOME TAXES

During the quarter ended June 30, ~~2021,~~2022, the Company recognized a tax provision of ~~$12,366~~$23,268 on ~~Income~~income before taxes from continuing operations of ~~$29,073,~~$76,050, compared to a tax provision of ~~$12,649~~$12,078 on ~~Income~~income before taxes from continuing operations of ~~$34,480~~$26,893 in the comparable prior year quarter. The current year quarter results included restructuring charges of ~~$4,082~~$5,909 ($~~3,129,~~4,359, net of tax), fair value step-up of acquired inventory sold of $2,700 ($2,005, net of tax), strategic review (retention and other) of $3,220 ($2,416, net of tax), debt extinguishment, net of $5,287 ($4,022, net of tax), and discrete and certain other tax provisions, net, that affect comparability of ~~$2,979, primarily due to the impact of UK tax rate changes on deferred liabilities.~~ $913.The prior year quarter results included restructuring charges of ~~$1,633~~$4,081 ($~~1,224,~~3,128, net of tax), ~~loss from debt extinguishment of $1,235 ($969, net of tax)~~ and discrete tax and certain other tax provisions, net, that affect comparability of ~~$1,828.~~$2,850. Excluding these items, the effective tax rates for the quarters ended June 30, 2022 and 2021 were 28.6% and ~~2020 were 31.2% and 30.8%~~32.9%, respectively.

During the nine months ended June 30, ~~2021,~~2022, the Company recognized a tax provision of ~~$32,783~~$55,119 on ~~Income~~income before taxes of ~~$96,102,~~$182,765, compared to a tax provision of ~~$21,022~~$34,868 on ~~Income~~income before taxes of ~~$54,360~~$92,546 in the comparable prior year period. The nine month period ended June 30, ~~2021~~2022 included restructuring charges of ~~$22,444~~$12,391 ($~~17,080,~~9,185, net of tax), ~~gain on sale~~acquisition costs of ~~the SEG business of $5,291~~$9,303 ($~~5,251,~~8,149, net of tax), proxy expenses of $6,952 ($5,359, net of tax), fair value step-up of acquired inventory sold of $5,401 ($4,012, net of tax), strategic review (retention and other) of $3,220 ($2,416, net of tax), debt extinguishment, net $5,287 ($4,022, net of tax), and discrete and certain other tax ~~provisions,~~benefits, net, that affect comparability of ~~$2,864, primarily due to the impact of UK tax rate changes on deferred liabilities.~~ $661. The nine month period ended June 30, ~~2020~~2021 included restructuring charges of ~~$11,171~~$14,662 ($~~8,377,~~11,034, net of tax), ~~acquisition costs of $2,960 ($2,321, net of tax), loss from debt extinguishment of $7,925 ($6,214, net of tax)~~ and discrete tax and certain other tax provisions, net, that affect comparability of ~~$1,248.~~$3,219. Excluding these items, the effective tax rates for the nine months ended June 30, 2022 and 2021 were 28.9% and ~~2020 were 31.1% and 32.6%~~32.9%, respectively.

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(US dollars and non US currencies in thousands, except per share data)

(Unaudited)

NOTE 10 – LONG-TERM DEBT


			At June 30, 2021										At September 30, 2020												At June 30, 2022																At September 30, 2021
			Outstanding Balance		Original Issuer Premium		Capitalized Fees & Expenses		Balance Sheet		Coupon Interest Rate			Outstanding Balance		Original Issuer Premium		Capitalized Fees & Expenses		Balance Sheet			Coupon Interest Rate						Outstanding Balance			Original Issuer Premium/(Discount)			Capitalized Fees & Expenses			Balance Sheet				Coupon Interest Rate		Outstanding Balance				Original Issuer Premium/(Discount)			Capitalized Fees & Expenses			Balance Sheet			Coupon Interest Rate
Senior notes due 2028	Senior notes due 2028	(a)	$	1,000,000	$	327	(13,811)		$	986,516	5.75	%		$	1,000,000	$	363	$	(15,376)	$	984,987		5.75		%	Senior notes due 2028		(a)	$	984,775		$	278		(11,562)			$	973,491			5.75	%	$	1,000,000			$	315		$	(13,293)		$	987,022		5.75	%

Term Loan B due 2029																						Term Loan B due 2029		(b)			498,000				(1,187)			(9,174)			487,639			Variable			—			—	—			—			—			n/a
Revolver due 2025	Revolver due 2025	(b)	20,775		0		(1,841)		18,934		Variable			12,858		0		(2,209)		10,649			Variable			Revolver due 2025		(b)	97,816			—			(1,350)			96,466				Variable		13,483				—			(1,718)			11,765			Variable

Finance lease - real estate	Finance lease - real estate	(c)	15,265		0		(11)		15,254		5.60	%		17,218		0		(30)		17,188			5.60		%	Finance lease - real estate		(c)	13,426			—			—			13,426				Variable		14,594				—			(4)			14,590			Variable
Non US lines of credit	Non US lines of credit	(d)	2,871		0		(21)		2,850		Variable			0		0		(30)		(30)			Variable			Non US lines of credit		(d)	—			—			(6)			(6)				Variable		3,012				—			(17)			2,995			Variable
Non US term loans	Non US term loans	(d)	28,204		0		(113)		28,091		Variable			31,086		0		(160)		30,926			Variable			Non US term loans		(d)	14,193			—			(39)			14,154				Variable		25,684				—			(91)			25,593			Variable
Other long term debt	Other long term debt	(e)	4,006		0		(15)		3,991		Variable			3,260		0		(16)		3,244			Variable			Other long term debt		(e)	2,625			—			(13)			2,612				Variable		3,733				—			(15)			3,718			Variable
Totals	Totals		1,071,121		327		(15,812)		1,055,636					1,064,422		363		(17,821)		1,046,964						Totals			1,610,835			(909)			(22,144)			1,587,782						1,060,506				315			(15,138)			1,045,683
less: Current portion	less: Current portion		(13,024)		0		—		(13,024)					(9,922)		0		—		(9,922)						less: Current portion			(13,085)			—			—			(13,085)						(12,486)				—			—			(12,486)
Long-term debt	Long-term debt		$	1,058,097	$	327	$	(15,812)	$	1,042,612				$	1,054,500	$	363	$	(17,821)	$	1,037,042					Long-term debt			$	1,597,750		$	(909)		$	(22,144)		$	1,574,697					$	1,048,020			$	315		$	(15,138)		$	1,033,197

Three Months Ended June 30, 2021 Three Months Ended June 30, 2020
Effective Interest Rate Cash Interest Amort. Debt
Premium Amort. Debt Issuance Costs
& Other Fees Total Interest Expense Effective Interest Rate Cash Interest Amort. Debt
Premium Amort.
Debt Issuance Costs
& Other Fees Total Interest Expense
Senior notes due 2028 (a) 6.0 % $ 14,375 $ (12) $ 496 $ 14,859 5.8 % $ 12,219 $ 0 $ 277 $ 12,496
Senior notes due 2022 (a) — 0 0 0 0 5.7 % 1,960 11 155 2,126
Revolver due 2025 (b) Variable 344 0 123 467 Variable 1,597 0 134 1,731
Finance lease - real estate (c) 5.8 % 215 0 6 221 6.3 % 33 0 6 39
Non US lines of credit (d) Variable 4 0 4 8 Variable 4 0 (1) 3
Non US term loans (d) Variable 169 0 18 187 Variable 222 0 21 243
Other long term debt (e) Variable 107 0 0 107 Variable 102 0 1 103
Capitalized interest 0 — — 0 (16) — — (16)
Totals $ 15,214 $ (12) $ 647 $ 15,849 $ 16,121 $ 11 $ 593 $ 16,725

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(US dollars and non US currencies in thousands, except per share data)

(Unaudited)


			Nine Months Ended June 30, 2021								Nine Months Ended June 30, 2020											Three Months Ended June 30, 2022																	Three Months Ended June 30, 2021
			Effective Interest Rate		Cash Interest		Amort. Debt Premium		Amort. Debt Issuance Costs & Other Fees			Total Interest Expense		Effective Interest Rate		Cash Interest		Amort. Debt Premium					Amort. Debt Issuance Costs & Other Fees			Total Interest Expense					Effective Interest Rate			Cash Interest			Amort. Debt (Premium)/Discount				Amort. Debt Issuance Costs & Other Fees			Total Interest Expense			Effective Interest Rate			Cash Interest			Amort. Debt Premium		Amort. Debt Issuance Costs & Other Fees		Total Interest Expense
Senior notes due 2028	Senior notes due 2028	(a)	6.0	%	$	43,125	$	(35)	$	1,566		$	44,656	5.9	%	$	17,785	$	0				$	412		$	18,197	Senior notes due 2028	(a)		6.0	%		$	14,340		$	(12)			$	516		$	14,844		6.0	%		$	14,375		$	(12)	$	496	$	14,859
Senior notes due 2022		(a)	—		0		0		0			0		5.7	%	23,125		123					1,734			24,982
Term Loan B due 2029																				Term Loan B due 2029	(b)			3.9	%		7,129			61			485			7,675				n/a			—			—			—			—
Revolver due 2025	Revolver due 2025	(b)	Variable		760		0		368			1,128		Variable		4,798		0					531			5,329		Revolver due 2025	(b)		Variable			1,056			—				123			1,179			Variable			344			—		123		467

Finance lease - real estate	Finance lease - real estate	(c)	5.8	%	671		0		19			690		6.1	%	146		0					19			165		Finance lease - real estate	(c)		5.6	%		187			—				—			187			5.7	%		215			—		6		221
Non US lines of credit	Non US lines of credit	(d)	Variable		11		0		12			23		Variable		11		0					11			22		Non US lines of credit	(d)		Variable			4			—				5			9			Variable			4			—		4		8
Non US term loans	Non US term loans	(d)	Variable		503		0		53			556		Variable		786		0					40			826		Non US term loans	(d)		Variable			141			—				9			150			Variable			169			—		18		187
Other long term debt	Other long term debt	(e)	Variable		329		0		1			330		Variable		394		0					1			395		Other long term debt	(e)		Variable			54			—				—			54			Variable			107			—		—		107
Capitalized interest	Capitalized interest				(13)		—		—			(13)				(109)		—					—			(109)		Capitalized interest						(76)			—				—			(76)						—			—		—		—
Totals	Totals				$	45,386	$	(35)	$	2,019		$	47,370			$	46,936	$	123				$	2,748		$	49,807	Totals						$	22,835		$	49			$	1,138		$	24,022					$	15,214		$	(12)	$	647	$	15,849


		Nine Months Ended June 30, 2022										Nine Months Ended June 30, 2021
		Effective Interest Rate		Cash Interest		Amort. Debt (Premium)/Discount		Amort. Debt Issuance Costs & Other Fees		Total Interest Expense		Effective Interest Rate		Cash Interest		Amort. Debt Premium		Amort. Debt Issuance Costs & Other Fees		Total Interest Expense
Senior notes due 2028	(a)	6.0	%	$	43,090	$	(36)	$	1,552	$	44,606	6.0	%	$	43,125	$	(35)	$	1,566	$	44,656
Term Loan B due 2029	(b)	3.7	%	11,896		91		717		12,704		n/a		—		—		—		—
Revolver due 2025	(b)	Variable		2,307		—		368		2,675		Variable		760		—		368		1,128
Finance lease - real estate	(c)	5.6	%	577		—		4		581		5.4	%	671		—		19		690
Non US lines of credit	(d)	Variable		14		—		12		26		Variable		11		—		12		23
Non US term loans	(d)	Variable		492		—		44		536		Variable		503		—		53		556
Other long term debt	(e)	Variable		212		—		1		213		Variable		329		—		1		330
Capitalized interest				(230)		—		—		(230)				(13)		—		—		(13)
Totals				$	58,358	$	55	$	2,698	$	61,111			$	45,386	$	(35)	$	2,019	$	47,370

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(US dollars and non US currencies in thousands, except per share data)

(Unaudited)

(a) ~~On June 22,~~During 2020, ~~in an unregistered offering through a private placement,~~ Griffon ~~completed the add-on offering~~issued, at par, $1,000,000 of ~~$150,000 principal amount of its~~ 5.75% Senior Notes ~~at 100.25% of par, to Griffon's previously issued $850,000 principal amount of its 5.75%~~due in 2028 (the “2028 Senior ~~Notes, at par, completed on February 19, 2020 (collectively, the “Senior~~ Notes”). Proceeds from the 2028 Senior Notes were used to redeem ~~the~~ $1,000,000 of 5.25% Senior Notes due 2022. During the period ended June 30, 2022, ~~senior notes.~~Griffon purchased $15,225 of 2028 Senior Notes in the open market at a weighted average discount of 92.19% of par, or $14,036. In connection with these purchases, Griffon recognized a $1,009 net gain on the early extinguishment of debt comprised of $1,189 of face value in excess of purchase price, offset by $180 related to the write-off of underwriting fees and other expenses. As of June 30, ~~2021,~~2022, outstanding 2028 Senior Notes due totaled ~~$1,000,000;~~$984,775; interest is payable semi-annually on March 1 and September 1. Subsequent to June 30, 2022, Griffon purchased $10,000 of 2028 Senior Notes in the open market at a weighted average discount of 91.25% of par, or $9,125.

The 2028 Senior Notes are senior unsecured obligations of Griffon guaranteed by certain domestic subsidiaries, and subject to certain covenants, limitations and restrictions. ~~On April 22, 2020 and August 3, 2020, Griffon exchanged substantially all of the~~The 2028 Senior Notes ~~for substantially identical Senior Notes~~were registered under the Securities Act of 1933, as amended (the "Securities Act"), via an exchange offer. The fair value of the 2028 Senior Notes approximated ~~$1,061,250~~$888,759 on June 30, ~~2021~~2022 based upon quoted market prices (level 1 inputs).

In connection with ~~these transactions,~~the issuance and exchange of the 2028 Senior Notes, Griffon capitalized $16,448 of underwriting fees and other expenses incurred, ~~related to the issuance and exchange of the 2028 Senior Notes,~~ which is being amortized over the term of ~~the 2028 Senior Notes. Furthermore, all of the obligations associated with the~~such notes, and at June 30, 2022, Senior Notes were discharged. Additionally, Griffon recognized a $7,925 loss on the early extinguishment of debt of the $1,000,000 principal amount of 2022 Senior Notes, comprised primarily of the write-off of $6,725 of remaining deferred financing fees, $607 of tender offer net premium expense and $593 of redemption interest expense.$11,562 remained to be amortized.

(b) On January ~~30, 2020,~~24, 2022, Griffon amended and restated its Revolving Credit Facility (as amended, "Credit Agreement") to provide for a new $800,000 Term Loan B facility, due January 24, 2029, in addition to its current $400,000 revolving credit facility ~~(as amended,~~("Revolver"), and replaced LIBOR with SOFR (Secured Overnight Financing Rate). The Term Loan B contains a SOFR floor of 0.50% and a current spread of 2.75%. Additionally, there are 2 interest rate step-downs tied to achieving decreased secured leverage ratio thresholds. The Original Issue Discount for the ~~"Credit Agreement")~~Term Loan B was 99.75%. In connection with this amendment, Griffon capitalized $15,466 of underwriting fees and other expenses incurred, which are being amortized over the term of the loan.

The Term Loan B facility requires nominal quarterly principal payments of $2,000, beginning with the quarter ended June 30, 2022; potential additional annual principal payments based on a percentage of excess cash flow and certain secured leverage thresholds starting with the fiscal year ending September 30, 2023; and a final balloon payment due at maturity. Term Loan B borrowings may generally be repaid without penalty but may not be re-borrowed. During the period ended June 30, 2022, Griffon prepaid $300,000 aggregate principal amount of the Term Loan B, which permanently reduced the outstanding balance. In connection with the prepayment of the Term Loan B Griffon recognized a $6,296 charge on the prepayment of debt, $5,575 related to ~~increase~~ the write-off of underwriting fees and other expenses and $721 of the original issuer discount. The Term Loan B facility is subject to the same affirmative and negative covenants that apply to the Revolver, but is not subject to any financial maintenance covenants. Term Loan B borrowings are secured by the same collateral as the Revolver. The fair value of the Term Loan B facility approximated $473,100 on June 30, 2022 based upon quoted market prices (level 1 inputs). At June 30, 2022, $9,174 of underwriting fees and other expenses incurred, remained to be amortized.

The Revolver's maximum borrowing availability ~~from $350,000 to~~is $400,000 and ~~extend its maturity date from~~it matures on March 22, ~~2021 to March 22, 2025 and modify certain other provisions of the facility.~~2025. The ~~facility~~Revolver includes a letter of credit sub-facility with a limit of $100,000; a multi-currency sub-facility of $200,000; and contains a customary accordion feature that permits us to request, subject to each lender's consent, an increase in the maximum aggregate amount that can be borrowed by up to an additional $100,000.

In addition, on December 9, 2021, Griffon replaced the Revolver GBP LIBOR benchmark rate with a Sterling Overnight Index Average ("SONIA"). Borrowings under the ~~Credit Agreement~~Revolver may be repaid and re-borrowed at any time. Interest is payable on borrowings at either a ~~LIBOR~~SOFR, SONIA or base rate benchmark rate, plus an applicable margin, which adjusts based on financial performance. Current margins are ~~0.50%~~0.75% for base rate loans, 1.75% for SOFR loans and ~~1.50%~~1.75% for ~~LIBOR~~SONIA loans. The ~~Credit Agreement~~Revolver has certain financial maintenance tests including a maximum total leverage ratio, a maximum senior secured leverage ratio and a minimum interest coverage ratio, as well as customary affirmative and negative covenants and events of default. The negative covenants place limits on Griffon's ability to, among other things, incur indebtedness, incur liens, and make restricted payments and investments. ~~Borrowings~~Both the Revolver and Term Loan B borrowings under the Credit Agreement are guaranteed by Griffon’s material domestic subsidiaries and are secured, on a first priority basis, by substantially all domestic assets of the Company and the guarantors, and a pledge of not greater than 65% of the equity interest in Griffon’s material, first-tier foreign subsidiaries. At June 30, ~~2021,~~2022, there were $20,775 of outstanding borrowings under the Credit Agreement; outstanding standby letters of credit were $17,007; and $362,218 was available, subject to certain loan covenants, for borrowing at that date.

(c) Two Griffon subsidiaries have finance leases outstanding for real estate located in Troy, Ohio and Ocala, Florida. The leases mature in November 2021 and 2025, respectively, and bear interest at fixed rates of approximately 5.0% and 5.6%, respectively. The Troy, Ohio lease is secured by a mortgage on the real estate, which is guaranteed by Griffon, and has a 1 dollar buyout at the end of the lease. The Ocala, Florida lease contains 2 ~~five-year renewal options. At June 30, 2021, $15,254 was outstanding, net of issuance costs. Refer to Note 21- Leases for further details.~~

(d) In November 2012, Garant G.P. (“Garant”), a Griffon wholly owned subsidiary, entered into a CAD 15,000 ($12,126 as of June 30, 2021) revolving credit facility. The facility accrues interest at LIBOR (USD) or the Bankers Acceptance Rate (CDN) plus 1.3% per annum (1.40% LIBOR USD and 1.48% Bankers Acceptance Rate CDN as of June 30, 2021). The revolving facility matures in October 2022. Garant is required to maintain a certain minimum equity. At June 30, 2021, there were 0 outstanding borrowings under the revolving credit facility with CAD 15,000 ($12,126 as of June 30, 2021) available.

$97,816

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(US dollars and non US currencies in thousands, except per share data)

(Unaudited)

of outstanding borrowings under the Revolver; outstanding standby letters of credit were $12,287; and $289,897 was available, subject to certain loan covenants, for borrowing at that date.

(c) Griffon has one finance lease outstanding for real estate located in Ocala, Florida. The lease matures in 2025 and bears interest at a fixed rate of approximately 5.6%. The Ocala, Florida lease contains 2 five-year renewal options. At June 30, 2022, $13,426 was outstanding. During the year-to-date period ended June 30, 2022, the financing lease on the Troy, Ohio location expired. The lease bore interest at a rate of approximately 5.0%, was secured by a mortgage on the real estate, which was guaranteed by Griffon, and had a 1 dollar buyout at the end of the lease. Griffon exercised the 1 dollar buyout option in November 2021. Refer to Note 21- Leases for further details.

(d) In ~~July 2016,~~November 2012, Garant G.P. (“Garant”), a Griffon wholly owned subsidiary, entered into a CAD 15,000 ($11,666 as of June 30, 2022) revolving credit facility. The facility accrues interest at LIBOR (USD) or the Bankers Acceptance Rate (CDN) plus 1.3% per annum (3.09% LIBOR USD and 3.86% Bankers Acceptance Rate CDN as of June 30, 2022). The revolving facility matures in October 2022, but is renewable upon mutual agreement with the lender. Garant is required to maintain a certain minimum equity. At June 30, 2022, there were no outstanding borrowings under the revolving credit facility with CAD 15,000 ($11,666 as of June 30, 2022) available.

During the period ended March 31,2022, Griffon Australia Holdings Pty Ltd and its Australian subsidiaries (collectively, "Griffon Australia") ~~entered into an~~amended its AUD ~~29,625~~18,375 term loan, AUD 20,000 revolver and AUD ~~10,000~~15,000 receivable purchase facility ~~agreement. The~~agreement that was entered into in July 2016 and further amended in fiscal 2020. Griffon Australia paid off the term loan ~~requires quarterly principal payments of AUD 1,250 plus interest with a balloon payment~~in the amount of AUD 9,625 ~~due upon maturity in March 2022,~~ and ~~accrues interest at Bank Bill Swap Bid Rate “BBSY” plus 1.95% per annum (2.01% at June 30, 2021). During fiscal 2020,~~canceled the ~~term loan balance was reduced by~~ AUD ~~5,000, from~~20,000 revolver. The amendment refinanced the existing AUD ~~23,375 to AUD 18,375 with proceeds from an AUD 5,000 increase in the commitment of the receivables~~15,000 receivable purchase ~~line from AUD 10,000 to AUD 15,000. As of June 30, 2021, the term loan had an outstanding balance of AUD 12,125 ($9,131 as of June 30, 2021).~~facility. The ~~revolving facility and~~ receivable purchase facility ~~mature~~matures in March ~~2022,~~2023, but ~~are~~is renewable upon mutual agreement with the lender. The ~~revolving facility and~~ receivable purchase facility ~~accrue~~accrues interest at BBSY (Bank Bill Swap Rate) plus ~~1.9% and 1.35%~~1.25%, respectively, per annum ~~(1.98% and 1.41%, respectively,~~(2.39% at June 30, ~~2021)~~2022). At June 30, ~~2021,~~2022, there ~~were 0 balances~~was no balance outstanding under the ~~revolver and the receivable purchase facility. The revolver,~~ receivable purchase facility ~~and the term loan are all~~with AUD 15,000 ($10,392 as of June 30, 2022) available. The receivable purchase facility is secured by substantially all of the assets of Griffon Australia and its subsidiaries. Griffon Australia is required to maintain a certain minimum equity ~~level and is subject to a maximum leverage ratio and a minimum fixed charges cover ratio.~~level.

In July 2018, The AMES Companies UK Ltd and its subsidiaries (collectively, "AMES UK") entered into a GBP 14,000 term loan, GBP 4,000 mortgage loan and GBP 5,000 revolver. The term loan and mortgage loan require quarterly principal payments of GBP 438 and GBP 105 plus interest, respectively, and have balloon payments due upon maturity, July 2023, of GBP 7,088 and GBP 2,349, respectively. Effective in January 2022, the Term Loan and Mortgage Loan were amended to replace GBP LIBOR with SONIA. The Term Loan and Mortgage Loans each accrue interest at the ~~GBP LIBOR~~SONIA Rate plus ~~1.8% ( 1.86%~~1.92% (3.11% at June 30, ~~2021)~~2022). The revolving facility accrues interest at the Bank of England Base Rate plus ~~1.8% (1.90%~~3.25% (4.50% as of June 30, ~~2021) and was renewed in June 2021.~~2022). The revolving credit facility matures in ~~April~~September 2022, but it is renewable upon mutual agreement with the lender. As of June 30, ~~2021,~~2022, the revolver had anno outstanding balance ~~of GBP $2,073 ($2,871 as of June 30, 2021)~~ while the term and mortgage loan balances amounted to GBP ~~13,771~~11,603 ($~~19,073~~14,193 as of June 30, ~~2021)~~2022). The revolver and the term loan are both secured by substantially all of the assets of AMES UK and its subsidiaries. AMES UK is subject to a maximum leverage ratio and a minimum fixed charges cover ratio. ~~An invoice discounting arrangement was canceled~~During the period ended March 31, 2022, AMES UK entered into a $8,500 trade loan facility agreement. The trade loan facility has a maximum loan period of 135 days and ~~replaced by~~expired on June 30, 2022. The trade facility accrues interest at the ~~above loan facilities.~~Mid-point of the FED Target Range plus 2.50% (4.13% as of June 30, 2022).

(e) Other long-term debt primarily consists of a loan with the Pennsylvania Industrial Development Authority, with the balance consisting of finance leases.

On March 13, 2019, Griffon's Employee Stock Ownership Plan entered into an agreement that refinanced a term loan with a bank with an internal loan from Griffon. The internal loan interest rate is fixed at 2.91%, matures in June 2033 and requires quarterly payments of principal, currently $620, and interest. The internal loan is secured by shares purchased with the proceeds of the loan. The amount outstanding on the internal loan at June 30, 2021 was $27,988.

At June 30, ~~2021,~~2022, Griffon and its subsidiaries were in compliance with the terms and covenants of all credit and loan agreements.

NOTE 11 — SHAREHOLDERS’ EQUITY

During the nine months ended June 30, 2022, the Company paid three quarterly cash dividends of $0.09 per share each. During 2021, the Company paid a quarterly cash dividend of $0.08 per share, ~~in each quarter,~~ totaling ~~$0.24~~$0.32 per share for the ~~nine months ended~~year.

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(US dollars and non US currencies in thousands, except per share data)

(Unaudited)

On June ~~30, 2021. During 2020,~~27, 2022, the ~~Company paid~~Board of Directors declared a special cash dividend of $2.00 per share, payable on July 20, 2022 to shareholders of record as of the close of business on July 8, 2022. On July 27, 2022, the Board of Directors declared a quarterly cash dividend of ~~$0.075~~$0.09 per share, ~~totaling $0.30 per share for~~payable on September 15, 2022 to shareholders of record as of the ~~year. A~~close of business on August 18, 2022. As of June 30, 2022, the Company accrued $104,053 in connection with the declaration of the special dividend. For all dividends, a dividend payable ~~was~~is established for the holders of restricted shares; such dividends will be released upon vesting of the underlying restricted shares.

~~On July 29, 2021, the Board of Directors declared a quarterly cash dividend of $0.08 per share, payable on September 16, 2021 to shareholders of record as of the close of business on August 19, 2021.~~

On January 29, 2016, shareholders approved the Griffon Corporation 2016 Equity Incentive Plan ("(the "Original Incentive Plan") ~~under~~pursuant to which, among other things, awards of performance shares, performance units, stock options, stock appreciation rights, restricted shares, restricted stock units, deferred shares and other stock-based awards may be granted. On January 31, 2018, shareholders approved Amendment No. 1 to the Original Incentive Plan pursuant to which, among other things, 1,000,000 shares were added to the Original Incentive Plan; and on January 30, 2020, shareholders approved Amendment No. 2 to the Original Incentive Plan, pursuant to which 1,700,000

~~GRIFFON CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(US dollars and non US currencies in thousands, except per share data)~~

~~(Unaudited)~~

shares were added to the Original Incentive Plan. On February 17, 2022, shareholders approved the Amended and Restated 2016 Equity Incentive Plan (the “Amended Incentive Plan”), which amended and restated the Original Incentive Plan and pursuant to which, among other things, 1,200,000 shares were added to the Original Incentive Plan. Options granted under the Amended Incentive Plan may be either “incentive stock options” or nonqualified stock options, generally expire ten years after the date of grant and are granted at an exercise price of not less than 100% of the fair market value at the date of grant. The maximum number of shares of common stock available for award under the Amended Incentive Plan is ~~5,050,000~~6,250,000 (600,000 of which may be issued as incentive stock options), plus (i) any shares that were reserved for issuance under the ~~2011 Equity~~Original Incentive Plan as of the effective date of the Original Incentive Plan, and (ii) any shares underlying awards outstanding on such ~~effective~~ date under the 2011 Incentive Plan that ~~are~~were subsequently canceled or forfeited. As of June 30, ~~2021,~~2022, there were ~~443,820~~835,517 shares available for grant.

Compensation expense for restricted stock and restricted stock units is recognized ratably over the required service period based on the fair value of the grant, calculated as the number of shares granted multiplied by the stock price on the date of grant and, for performance shares, the likelihood of achieving the performance criteria. Compensation expense for restricted stock granted to two senior executives is calculated as the maximum number of shares granted, upon achieving certain performance criteria, multiplied by the stock price as valued by a Monte Carlo Simulation Model. Compensation cost related to stock-based awards with graded vesting, generally over a period of three to four years, is recognized using the straight-line attribution method and recorded within SG&A expenses.

During the first quarter of ~~2021,~~2022, Griffon granted ~~511,624~~236,973 shares of restricted stock and restricted stock units. This included ~~226,811~~218,162 shares of restricted stock and restricted stock units, subject to certain performance conditions, with vesting periods of ~~three years,~~thirty-four months, with a total fair value of ~~$5,500,~~$6,285, or a weighted average fair value of ~~$24.25~~$28.81 per share. Furthermore, this included ~~284,813~~an 18,811 shares of restricted stock ~~awards~~award granted to ~~5 executives,~~1 executive, with a vesting ~~periods~~period of three years and a total fair value of ~~$5,913~~$507 or a weighted average fair value of ~~$20.76~~$26.97 per share.

During the second quarter of ~~2021,~~2022, Griffon granted ~~731,282~~711,725 shares of restricted stock. This included 199,195 shares of restricted stock to ~~6 executives. This included 203,282 shares~~9 executives with a vesting period of ~~restricted stock to 4 executives, subject to certain performance conditions, with vesting periods ranging from 34 months to 60 months,~~three years, with a total fair value of ~~$4,923,~~$1,494, or a weighted average fair value of ~~$24.22~~$22.50 per share. This also included ~~528,000~~454,146 shares of restricted stock granted to 2 senior executives with a vesting period of ~~four~~ ~~years~~thirty-four months and a two-year post-vesting holding period, subject to the achievement of certain ~~absolute and relative~~ performance conditions relating to required levels of return on invested capital and the ~~price~~relative total shareholder return of Griffon's common ~~stock.~~stock as compared to a market index. So long as the minimum performance condition is attained, the amount of shares that can vest will range from ~~384,000~~113,538 to ~~528,000.~~454,146. The total fair value of these restricted shares, ~~using~~assuming achievement of the ~~Monte Carlo Simulation model~~performance conditions at target, is approximately ~~$7,824,~~$5,456, or a weighted average fair value of ~~$14.82~~$24.03 per share. Additionally, Griffon granted ~~44,424~~58,384 restricted shares to the non-employee directors of Griffon with a vesting period of ~~three years~~one year and a fair value of ~~$1,080,~~$1,375, or a weighted average fair value of ~~$24.31~~$23.55 per share. During the nine months ended June 30, 2022, 501,718 shares granted were issued out of treasury stock.

During the third quarter of ~~2021, 0 grants were issued.~~2022, Griffon granted 31,663 shares of restricted stock. This included 31,208 shares of restricted stock, subject to certain performance conditions, with vesting periods of thirty-two months, with a total fair value of $700, or a weighted average fair value of $22.43 per share. Furthermore, this included 455 shares of a restricted stock award granted to one executive, with a vesting period of 3 years and a total fair value of $9 or a weighted average fair value of $18.89 per share.

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(US dollars and non US currencies in thousands, except per share data)

(Unaudited)

The following table summarizes the Company’s compensation expense relating to all stock-based incentive plans:


		For the Three Months Ended June 30,				For the Nine Months Ended June 30,					For the Three Months Ended June 30,				For the Nine Months Ended June 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Restricted stock	Restricted stock	$	4,544	$	3,930	$	12,321	$	10,742	Restricted stock	$	5,130	$	4,544	$	13,334	$	12,321
ESOP	ESOP	1,047		577		2,771		2,067		ESOP	889		1,046		2,644		2,770
Total stock based compensation	Total stock based compensation	$	5,591	$	4,507	$	15,092	$	12,809	Total stock based compensation	$	6,019	$	5,590	$	15,978	$	15,091

On each of August 3, 2016 and August 1, 2018, Griffon’s Board of Directors authorized the repurchase of up to $50,000 of Griffon’s outstanding common stock. Under this share repurchase program, the Company may purchase shares in the open market, including pursuant to a 10b5-1 plan, or in privately negotiated transactions. During the nine months ended June 30, ~~2021,~~2022, Griffon did not purchase any shares of common stock under these repurchase programs. As of June 30, ~~2021,~~2022, an aggregate of $57,955 remains under Griffon's Board authorized repurchase programs.

During the ~~third quarter ended June 30, 2021, 0 shares were withheld to settle employee taxes due upon the vesting of restricted stock. During the~~ nine months ended June 30, ~~2021, 133,027~~2022, 421,860 shares, with a market value of ~~$2,774,~~$10,742, or ~~$20.85 per~~

~~GRIFFON CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(US dollars and non US currencies in thousands, except~~$25.46 per share ~~data)~~

~~(Unaudited)~~

~~share, respectively,~~ were withheld to settle employee taxes due upon the vesting of restricted stock, and were added to treasury stock. Furthermore, during the nine months ended June 30, ~~2021,~~2022, an additional ~~6,507~~5,480 shares, with a market value of ~~$135,~~$144, or ~~$20.75~~$26.31 per share, were withheld from common stock issued upon the vesting of restricted stock units to settle employee taxes due upon vesting.

NOTE 12 – EARNINGS PER SHARE (EPS)

Basic EPS was calculated by dividing income available to common shareholders by the weighted average number of shares of common stock outstanding during the period. Diluted EPS was calculated by dividing income available to common shareholders by the weighted average number of shares of common stock outstanding plus additional common shares that could be issued in connection with stock based compensation.

The following table is a reconciliation of the share amounts (in thousands) used in computing earnings per share:


		Three Months Ended June 30,		Nine Months Ended June 30,			Three Months Ended June 30,		Nine Months Ended June 30,
		2021	2020	2021	2020		2022	2021	2022	2021
Common shares outstanding	Common shares outstanding	56,677	47,425	56,677	47,425	Common shares outstanding	57,064	56,677	57,064	56,677
Unallocated ESOP shares	Unallocated ESOP shares	(1,912)	(2,108)	(1,912)	(2,108)	Unallocated ESOP shares	(1,396)	(1,912)	(1,396)	(1,912)
Non-vested restricted stock	Non-vested restricted stock	(3,814)	(3,555)	(3,814)	(3,555)	Non-vested restricted stock	(3,565)	(3,814)	(3,565)	(3,814)
Impact of weighted average shares	Impact of weighted average shares	(48)	(50)	(172)	(279)	Impact of weighted average shares	(369)	(48)	(576)	(172)
Weighted average shares outstanding - basic	Weighted average shares outstanding - basic	50,903	41,712	50,779	41,483	Weighted average shares outstanding - basic	51,734	50,903	51,527	50,779
Incremental shares from stock based compensation	Incremental shares from stock based compensation	2,601	2,062	2,527	2,335	Incremental shares from stock based compensation	2,180	2,601	2,177	2,527
Weighted average shares outstanding - diluted	Weighted average shares outstanding - diluted	53,504	43,774	53,306	43,818	Weighted average shares outstanding - diluted	53,914	53,504	53,704	53,306

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(US dollars and non US currencies in thousands, except per share data)

(Unaudited)

NOTE 13 – BUSINESS SEGMENTS

Griffon reports its operations through 32 reportable segments, as follows:

•~~CPP conducts its operations through AMES. Founded in 1774, AMES~~Consumer and Professional Products (“CPP”) is ~~the~~a leading North American manufacturer and a global provider of branded consumer and professional ~~tools~~tools; residential, industrial and ~~products for~~commercial fans; home storage and organization ~~landscaping,~~products; and ~~enhancing~~products that enhance indoor and outdoor lifestyles. CPP sells products globally through a portfolio of leading brands including AMES, since 1774, Hunter, since 1886, True Temper, ~~AMES,~~ and ClosetMaid.

•~~HBP~~Home and Building Products ("HBP") conducts its operations through Clopay. Founded in 1964, Clopay is the largest manufacturer and marketer of garage doors and rolling steel doors in North America. Residential and commercial sectional garage doors are sold through professional dealers and leading home center retail chains throughout North America under the brands Clopay, Ideal, and Holmes. Rolling steel door and grille products designed for commercial, industrial, institutional, and retail use are sold under the CornellCookson brand.

•DE conducts its operations through Telephonics, founded in 1933, a globally recognized leading provider of highly sophisticated intelligence, surveillance and communications solutions for defense, aerospace and commercial customers.

~~GRIFFON CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(US dollars and non US currencies in thousands, except per share data)~~

~~(Unaudited)~~

Information on Griffon’s reportable segments from continuing operations is as follows:


		For the Three Months Ended June 30,				For the Nine Months Ended June 30,					For the Three Months Ended June 30,				For the Nine Months Ended June 30,
REVENUE	REVENUE	2021		2020		2021		2020		REVENUE	2022		2021		2022		2021
Consumer and Professional Products	Consumer and Professional Products	$	324,826	$	328,929	$	947,739	$	844,917	Consumer and Professional Products	$	362,634	$	324,826	$	1,056,819	$	947,739
Home and Building Products	Home and Building Products	259,392		219,164		752,684		670,374		Home and Building Products	405,545		259,392		1,082,726		752,684
Defense Electronics		62,574		83,968		190,492		231,558
Total consolidated net sales		$	646,792	$	632,061	$	1,890,915	$	1,746,849
Total revenue										Total revenue	$	768,179	$	584,218	$	2,139,545	$	1,700,423

Disaggregation of Revenue

Revenue from contracts with customers is disaggregated by end markets, segments and geographic location, as it more accurately depicts the nature and amount of the Company’s revenue. The following table presents revenue disaggregated by end market and segment:


		For the Three Months Ended June 30,				For the Nine Months Ended June 30,					For the Three Months Ended June 30,				For the Nine Months Ended June 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Residential repair and remodel	Residential repair and remodel	$	50,165	$	50,709	$	146,325	$	126,304	Residential repair and remodel	$	47,126	$	50,165	$	136,363	$	146,325
Retail	Retail	154,212		177,271		447,206		441,795		Retail	191,284		154,212		538,355		447,206
Residential new construction	Residential new construction	12,147		14,487		40,202		44,344		Residential new construction	11,387		12,147		33,733		40,202
Industrial	Industrial	12,708		9,303		32,197		30,461		Industrial	24,748		12,708		57,122		32,197
International excluding North America	International excluding North America	95,594		77,159		281,809		202,013		International excluding North America	88,089		95,594		291,246		281,809
Total Consumer and Professional Products	Total Consumer and Professional Products	324,826		328,929		947,739		844,917		Total Consumer and Professional Products	362,634		324,826		1,056,819		947,739
Residential repair and remodel	Residential repair and remodel	127,827		109,876		374,769		332,681		Residential repair and remodel	194,526		127,827		511,988		374,769
Commercial construction	Commercial construction	102,754		84,521		293,444		262,708		Commercial construction	167,173		102,754		455,338		293,444
Residential new construction	Residential new construction	28,811		24,767		84,471		74,985		Residential new construction	43,846		28,811		115,400		84,471
Total Home and Building Products	Total Home and Building Products	259,392		219,164		752,684		670,374		Total Home and Building Products	405,545		259,392		1,082,726		752,684
U.S. Government		45,275		54,802		127,644		151,126
International		15,141		24,779		53,533		68,333
Commercial		2,158		4,387		9,315		12,099
Total Defense Electronics		62,574		83,968		190,492		231,558

Total Consolidated Revenue	Total Consolidated Revenue	$	646,792	$	632,061	$	1,890,915	$	1,746,849	Total Consolidated Revenue	$	768,179	$	584,218	$	2,139,545	$	1,700,423

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(US dollars and non US currencies in thousands, except per share data)

(Unaudited)

The following table presents revenue disaggregated by geography based on the location of the Company's customer:


		For the Three Months Ended June 30,																	For the Three Months Ended June 30,
		2021								2020									2022						2021
		CPP		HBP		DE		Total		CPP		HBP		DE		Total			CPP		HBP		Total			CPP		HBP		Total
United States	United States	$	206,809	$	246,268	$	37,192	$	490,269	$	232,544	$	209,222	$	56,294	$	498,060	United States	$	248,068	$	384,265	$	632,333		$	206,809	$	246,268	$	453,077
Europe	Europe	43,767		31		6,908		50,706		29,267		81		8,636		37,984		Europe	31,113		7		31,120			43,767		31		43,798
Canada	Canada	20,547		10,724		1,719		32,990		18,231		7,729		3,012		28,972		Canada	19,592		15,683		35,275			20,547		10,724		31,271
Australia	Australia	51,437		0		207		51,644		47,614		0		1,012		48,626		Australia	55,142		—		55,142			51,437		—		51,437
All other countries	All other countries	2,266		2,369		16,548		21,183		1,273		2,132		15,014		18,419		All other countries	8,719		5,590		14,309			2,266		2,369		4,635
Consolidated revenue	Consolidated revenue	$	324,826	$	259,392	$	62,574	$	646,792	$	328,929	$	219,164	$	83,968	$	632,061	Consolidated revenue	$	362,634	$	405,545	$	768,179		$	324,826	$	259,392	$	584,218


		For the Nine Months Ended June 30,																	For the Nine Months Ended June 30, 2022
		2021								2020									2022						2021
		CPP		HBP		DE		Total		CPP		HBP		DE		Total			CPP		HBP		Total			CPP		HBP		Total
United States	United States	$	595,619	$	713,754	$	118,736	$	1,428,109	$	584,114	$	635,232	$	157,508	$	1,376,854	United States	$	677,714	$	1,031,650	$	1,709,364		$	595,619	$	713,754	$	1,309,373
Europe	Europe	95,888		72		19,604		115,564		60,609		109		24,501		85,219		Europe	96,226		51		96,277			95,888		72		95,960
Canada	Canada	64,440		32,009		5,473		101,922		53,527		26,849		9,795		90,171		Canada	73,249		41,574		114,823			64,440		32,009		96,449
Australia	Australia	184,668		0		648		185,316		140,874		0		1,807		142,681		Australia	191,679		—		191,679			184,668		—		184,668
All other countries	All other countries	7,124		6,849		46,031		60,004		5,793		8,184		37,947		51,924		All other countries	17,951		9,451		27,402			7,124		6,849		13,973
Consolidated revenue	Consolidated revenue	$	947,739	$	752,684	$	190,492	$	1,890,915	$	844,917	$	670,374	$	231,558	$	1,746,849	Consolidated revenue	$	1,056,819	$	1,082,726	$	2,139,545		$	947,739	$	752,684	$	1,700,423

Griffon evaluates performance and allocates resources based on each segment's operating results before interest income and expense, income taxes, depreciation and amortization, unallocated amounts (mainly corporate overhead), restructuring charges, loss from debt extinguishment and acquisition related expenses, as well as other items that may affect comparability, as applicable (“Segment adjusted EBITDA”). Griffon believes this information is useful to investors for the same reason. The following table provides a reconciliation of Segment adjusted EBITDA to Income before ~~taxes:~~taxes from continuing operations:

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(US dollars and non US currencies in thousands, except per share data)

(Unaudited)


		For the Three Months Ended June 30,				For the Nine Months Ended June 30,					For the Three Months Ended June 30,				For the Nine Months Ended June 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Segment adjusted EBITDA:	Segment adjusted EBITDA:									Segment adjusted EBITDA:
Consumer and Professional Products	Consumer and Professional Products	$	29,388	$	37,115	$	99,524	$	84,068	Consumer and Professional Products	$	28,373	$	29,388	$	92,431	$	99,524
Home and Building Products	Home and Building Products	42,156		39,299		130,585		110,635		Home and Building Products	119,847		42,156		280,618		130,585
Defense Electronics		4,140		4,122		11,945		12,845

Segment adjusted EBITDA	Segment adjusted EBITDA	75,684		80,536		242,054		207,548		Segment adjusted EBITDA	148,220		71,544		373,049		230,109
Unallocated amounts, excluding depreciation *	Unallocated amounts, excluding depreciation *	(10,924)		(11,080)		(34,873)		(34,969)		Unallocated amounts, excluding depreciation *	(13,405)		(11,464)		(39,724)		(36,810)
Adjusted EBITDA	Adjusted EBITDA	64,760		69,456		207,181		172,579		Adjusted EBITDA	134,815		60,080		333,325		193,299
Net interest expense	Net interest expense	(15,799)		(16,585)		(46,971)		(49,096)		Net interest expense	(23,961)		(15,800)		(60,985)		(46,973)
Depreciation and amortization	Depreciation and amortization	(15,806)		(15,523)		(46,955)		(47,067)		Depreciation and amortization	(17,688)		(13,306)		(47,021)		(39,118)

Loss from debt extinguishment		0		(1,235)		0		(7,925)
Debt extinguishment, net										Debt extinguishment, net	(5,287)		—		(5,287)		—
Restructuring charges	Restructuring charges	(4,082)		(1,633)		(22,444)		(11,171)		Restructuring charges	(5,909)		(4,081)		(12,391)		(14,662)
Acquisition costs	Acquisition costs	0		0		0		(2,960)		Acquisition costs	—		—		(9,303)		—
Gain on sale of SEG business		0		0		5,291		0

Income before taxes		$	29,073	$	34,480	$	96,102	$	54,360
Strategic review - retention and other										Strategic review - retention and other	(3,220)		—		(3,220)		—
Proxy expenses										Proxy expenses	—		—		(6,952)		—
Fair value step-up of acquired inventory sold										Fair value step-up of acquired inventory sold	(2,700)		—		(5,401)		—
Income before taxes from continuing operations										Income before taxes from continuing operations	$	76,050	$	26,893	$	182,765	$	92,546

* Unallocated amounts typically include general corporate expenses not attributable to a reportable segment.


		For the Three Months Ended June 30,				For the Nine Months Ended June 30,					For the Three Months Ended June 30,				For the Nine Months Ended June 30,
DEPRECIATION and AMORTIZATION	DEPRECIATION and AMORTIZATION	2021		2020		2021		2020		DEPRECIATION and AMORTIZATION	2022		2021		2022		2021
Segment:	Segment:									Segment:
Consumer and Professional Products	Consumer and Professional Products	$	8,781	$	8,197	$	25,600	$	24,650	Consumer and Professional Products	$	13,434	$	8,781	$	33,831	$	25,600
Home and Building Products	Home and Building Products	4,375		4,507		13,095		13,975		Home and Building Products	4,116		4,375		12,778		13,095
Defense Electronics		2,501		2,666		7,911		7,986

Total segment depreciation and amortization	Total segment depreciation and amortization	15,657		15,370		46,606		46,611		Total segment depreciation and amortization	17,550		13,156		46,609		38,695
Corporate	Corporate	149		153		349		456		Corporate	138		150		412		423
Total consolidated depreciation and amortization	Total consolidated depreciation and amortization	$	15,806	$	15,523	$	46,955	$	47,067	Total consolidated depreciation and amortization	$	17,688	$	13,306	$	47,021	$	39,118

CAPITAL EXPENDITURES	CAPITAL EXPENDITURES									CAPITAL EXPENDITURES
Segment:	Segment:									Segment:
Consumer and Professional Products	Consumer and Professional Products	$	5,365	$	7,029	$	19,085	$	14,561	Consumer and Professional Products	$	8,558	$	5,365	$	24,742	$	19,085
Home and Building Products	Home and Building Products	1,723		3,640		5,836		15,135		Home and Building Products	2,891		1,723		8,643		5,836
Defense Electronics		2,789		1,538		8,940		4,748

Total segment	Total segment	9,877		12,207		33,861		34,444		Total segment	11,449		7,088		33,385		24,921
Corporate	Corporate	26		25		28		307		Corporate	37		26		131		28
Total consolidated capital expenditures	Total consolidated capital expenditures	$	9,903	$	12,232	$	33,889	$	34,751	Total consolidated capital expenditures	$	11,486	$	7,114	$	33,516	$	24,949

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(US dollars and non US currencies in thousands, except per share data)

(Unaudited)


ASSETS	ASSETS	At June 30, 2021		At September 30, 2020		ASSETS	At June 30, 2022		At September 30, 2021
Segment assets:	Segment assets:					Segment assets:
Consumer and Professional Products	Consumer and Professional Products	$	1,375,959	$	1,255,127	Consumer and Professional Products	$	2,575,836	$	1,377,618
Home and Building Products	Home and Building Products	627,704		606,785		Home and Building Products	741,386		666,422
Defense Electronics		280,195		329,128

Total segment assets	Total segment assets	2,283,858		2,191,040		Total segment assets	3,317,222		2,044,040
Corporate	Corporate	260,503		248,902		Corporate	183,900		280,802
Total continuing assets	Total continuing assets	2,544,361		2,439,942		Total continuing assets	3,501,122		2,324,842
Assets of discontinued operations		4,302		8,497
Discontinued operations - held for sale						Discontinued operations - held for sale	—		275,814
Other discontinued operations						Other discontinued operations	3,110		4,029
Consolidated total	Consolidated total	$	2,548,663	$	2,448,439	Consolidated total	$	3,504,232	$	2,604,685

NOTE 14 – EMPLOYEE BENEFIT PLANS

Defined benefit pension expense (income) included in Other Income (Expense), net was as follows:

Three Months Ended June 30, Nine Months Ended June 30,
2021 2020 2021 2020
Interest cost $ 745 $ 1,148 $ 2,234 $ 3,450
Expected return on plan assets (2,544) (2,585) (7,633) (7,757)
Amortization:
Prior service cost 0 3 0 11
Recognized actuarial loss 1,573 1,042 4,719 3,126
Net periodic expense (income) $ (226) $ (392) $ (680) $ (1,170)


	Three Months Ended June 30,				Nine Months Ended June 30,
	2022		2021		2022		2021

Interest cost	$	943	$	745	$	2,650	$	2,234
Expected return on plan assets	(2,905)		(2,544)		(8,329)		(7,633)
Amortization:

Recognized actuarial loss	844		1,573		2,534		4,719

Net periodic expense (income)	$	(1,118)	$	(226)	$	(3,145)	$	(680)

NOTE 15 – RECENT ACCOUNTING PRONOUNCEMENTS

Issued but not yet effective accounting pronouncements

In ~~August 2018,~~October 2021, the Financial Accounting Standards Board ("FASB") issued ASU No. 2021-08, Business Combinations (Topic 805); Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. This new guidance ~~to clarify disclosure requirements related to defined benefit pension~~affects all entities that enter into a business combination within the scope of ASC 805-10. Under this new guidance, the acquirer should determine what contract assets and/or liabilities it would have recorded under ASC 606 (Revenue Guidance) as of the acquisition date, as if the acquirer had entered into the original contract at the same date and ~~other post-retirement plans. The guidance is effective for fiscal years beginning after December 15, 2020, with early adoption permitted,~~on the same terms as the acquirer. Under current U.S. GAAP, contract assets and contract liabilities acquired in a business combination are recorded by the acquirer at fair value. This update is effective for the Company ~~in our fiscal year~~ beginning in ~~October 1, 2021. We are~~fiscal 2023. Early adoption is permitted. The Company is currently evaluating the effects that the adoption of this guidance will have on our consolidated financial statements and related ~~pension~~ disclosures.

New Accounting Standards Implemented

In December 2019, the FASB issued guidance on simplifying the accounting for income taxes by clarifying and amending existing guidance related to the recognition of franchise tax, the evaluation of a step up in the tax basis of goodwill, and the effects of enacted changes in tax laws or rates in the effective tax rate computation, among other clarifications. Our effective date for adoption of this Accounting Standards Update ("ASU") is our fiscal year beginning October 1, 2021 with early adoption permitted. We are currently evaluating the effects that the adoption of this guidance will have on our consolidated financial statements and the related disclosures.

~~New Accounting Standards Implemented~~

~~In April 2019, the FASB issued guidance relating to accounting for credit losses on financial instruments, including trade receivables, and derivatives and hedging.~~ This guidance isbecame effective for the Company beginning in fiscal ~~2021.~~2022. We adopted the recognition of non-income taxes on the modified retrospective basis. Adoption of this standard did not have a material impact on our consolidated financial statements and the related disclosures.

In August 2018, the FASB issued guidance which modifies the disclosures on fair value measurements by removing the requirement to disclose the amount and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy and the policy for timing of such transfers. This guidance expands the disclosure requirements for Level 3 fair value measurements,

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(US dollars and non US currencies in thousands, except per share data)

(Unaudited)

~~primarily focused on changes in unrealized gains~~In August 2018, the FASB issued guidance to clarify disclosure requirements related to defined benefit pension and ~~losses included in~~ other ~~comprehensive income (loss). This~~post-retirement plans. The guidance is effective for fiscal years beginning after December 15, 2020, with early adoption permitted, and was effective for the Company in our fiscal year beginning in ~~fiscal~~October 1, 2021. Adoption of this standard did not have a material impact on our consolidated financial statements and the related disclosures.

In March 2020, the SEC adopted amendments to the financial disclosure requirements for guarantors and issuers of guaranteed securities registered or being registered in Rule 3-10 of Regulation S-X, and affiliates whose securities collateralize securities registered or being registered in Rule 3-16 of Regulation S-X (SEC Release No. 33-10762). The amendment replaces the requirement to present condensed consolidating financial statements, comprised of balance sheets and statements of operations, comprehensive income and cash flows for all periods presented, with summarized financial information of the guarantor only for the most recently completed fiscal year and any subsequent interim period. We adopted the amendments to the disclosure requirements during the first quarter of fiscal 2021. This amendment did not have an impact on our consolidated financial statements as this amendment simplifies the financial disclosures required in our guarantor and non-guarantor financial information. See Part I, Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations—Supplemental Guarantor Financial Information.

The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements, and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

NOTE 16 – DISCONTINUED OPERATIONS

On September 27, 2021, Griffon announced it was exploring strategic alternatives for its DE segment, which consists of its Telephonics subsidiary. On June 27, 2022, Griffon completed the sale of Telephonics to TTM for $330,000 in cash, subject to customary post-closing adjustments. In connection with the sale of Telephonics, the Company recorded a gain of $108,949 ($88,977, net of tax) during the quarter ended June 30, 2022. The gain and related tax for the sale of Telephonics is preliminary and is subject to finalization.

In accordance with ASC 205-20 Presentation of Financial Statements: Discontinued Operations, a disposal of a component of an entity or a group of components of an entity is required to be reported as discontinuedoperations if the disposal represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results when the component of an entity meets the criteria in paragraph 205-20-45-10. In the period in which the component meets held-for-sale or discontinuedoperations criteria, the major current assets, other assets, current liabilities, and noncurrent liabilities shall be reported as components of total assets and liabilities separate from those balances of the continuing operations. At the same time, the results of all discontinued operations, less applicable income taxes (benefit), shall be reported as components of net income (loss) separate from the net income (loss) of continuing operations.

Defense Electronics (DE or Telephonics)

The following amounts related to Telephonics have been segregated from Griffon's continuing operations and are reported as a discontinued operation:


	For the Three Months Ended June 30,				For the Nine Months Ended June 30,
	2022		2021		2022		2021
Revenue	$	50,795	$	62,574	$	161,061	$	190,492
Cost of goods and services	39,059		52,780		125,208		166,292
Gross profit	11,736		9,794		35,853		24,200
Selling, general and administrative expenses	6,114		7,875		26,423		27,102


Income (loss) from discontinued operations	5,622		1,919		9,430		(2,902)
Other income (expense)

Interest income, net	—		—		2		1
Gain on sale of business	108,949		—		108,949		5,291
Other, net	(1,114)		261		(604)		1,166
Total other income (expense)	107,835		261		108,347		6,458
Income from discontinued operations before taxes	$	113,457	$	2,180	$	117,777	$	3,556
Provision (benefit) for income taxes	25,952		288		20,149		(2,085)
Income from discontinued operations	$	87,505	$	1,892	$	97,628	$	5,641

Depreciation and amortization was excluded from the current year results since DE is classified as a discontinued operation and, accordingly, the Company ceased depreciation and amortization in accordance with discontinued operations accounting guidelines. Depreciation and amortization would have been approximately $2,342 and $7,442 in the three and nine months ended June 30, 2022, respectively.

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(US dollars and non US currencies in thousands, except per share data)

(Unaudited)

The Company completed the sale of Telephonics on June 27, 2022. The following amounts related to Telephonics that were classified as assets and liabilities of discontinued operations held for sale in the consolidated balance sheet as of September 30, 2021:


	At September 30,
	2021
CURRENT ASSETS

Accounts receivable, net	$	42,020
Contract assets, net of progress payments	72,983
Inventories	83,970
Prepaid and other current assets	4,409
PROPERTY, PLANT AND EQUIPMENT, net	47,771
OPERATING LEASE RIGHT-OF-USE ASSETS	1,167
GOODWILL	17,734
INTANGIBLE ASSETS, net	131
OTHER ASSETS	5,629
Total Assets	$	275,814
CURRENT LIABILITIES

Accounts payable	60,588
Accrued liabilities	15,326
Current portion of operating lease liabilities	287

LONG-TERM OPERATING LEASE LIABILITIES	867
OTHER LIABILITIES	3,955
Total Liabilities	$	81,023

The following amounts summarize the total assets and liabilities related to ~~the~~Telephonics, Installation Services and other discontinued activities which have been segregated from Griffon’s continuing operations, and are reported as assets and liabilities of discontinued operations in the Condensed Consolidated Balance Sheets:


		At June 30, 2021		At September 30, 2020			At June 30, 2022		At September 30, 2021
Assets of discontinued operations:	Assets of discontinued operations:					Assets of discontinued operations:
Prepaid and other current assets	Prepaid and other current assets	$	695	$	2,091	Prepaid and other current assets	$	487	$	605
Other long-term assets	Other long-term assets	3,607		6,406		Other long-term assets	2,623		3,424
Total assets of discontinued operations	Total assets of discontinued operations	$	4,302	$	8,497	Total assets of discontinued operations	$	3,110	$	4,029

Liabilities of discontinued operations:	Liabilities of discontinued operations:					Liabilities of discontinued operations:
Accrued liabilities, current	Accrued liabilities, current	$	3,641	$	3,797	Accrued liabilities, current	$	30,806	$	3,280
Other long-term liabilities	Other long-term liabilities	4,712		7,014		Other long-term liabilities	3,825		3,794
Total liabilities of discontinued operations	Total liabilities of discontinued operations	$	8,353	$	10,811	Total liabilities of discontinued operations	$	34,631	$	7,074

Accrued liabilities as of June 30, 2022 includes the Company's obligation of $27,703 in connection with the sale of Telephonics primarily related to income taxes payable. At June 30, 2022 and September 30, 2021, ~~Griffon's assets~~Griffon’s liabilities for Installations Services and ~~liabilities consist~~other discontinued operations primarily ofrelate to insurance claims, ~~income tax, product liability, and~~ warranty and environmental ~~reserves.~~reserves total $6,928 and $7,074, respectively.

There was no reported revenue in the quarter and nine month period ended June 30, 2022 and 2021 for Installations Services and other discontinued operations.

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(US dollars and non US currencies in thousands, except per share data)

(Unaudited)

NOTE 17 – RESTRUCTURING CHARGES

In November 2019, Griffon announced the development of a next-generation business platform for CPP to enhance the growth, efficiency, and competitiveness of its U.S. operations, and on November 12, 2020, Griffon announced that CPP is broadening this strategic initiative to include additional North American facilities, the AMES UKUnited Kingdom (U.K.) and Australia businesses, and a manufacturing facility in China. On April 28, 2022, Griffon announced an accelerated timeline and reduced scope for the initiative, which will now be completed by the end of fiscal 2022. These changes reflect the rapid progress made with the initiative, and reduced investment in facilities expansion and equipment given recent significant increases in construction and equipment costs. Any remaining expenditures, after the end of fiscal 2022, including those related to the deployment of AMES' global information systems, will be included in the continuing operations of the business. Future investments in equipment, particularly for automation, will be part of normal-course annual capital expenditures.

~~The expanded focus of this~~This initiative ~~leverages the same~~includes three key development ~~areas being executed within our U.S. operations.~~ areas. First, certain AMES U.S. and global operations will be consolidated to optimize facilities footprint and talent. Second, strategic investments in automation and facilities expansion will be made to increase the efficiency of our manufacturing and fulfillment operations, and support e-commerce growth. Third, multiple independent information systems will be unified into a single data and analytics platform, which will serve the whole AMES global enterprise.

~~GRIFFON CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(US dollars and non US currencies in thousands, except per share data)~~

~~(Unaudited)~~

Expanding the roll-out of the new business platform from our AMES U.S. operations to include AMES’ global operations will extend the duration of the project by one year, with completion now expected by the end of calendar year 2023.When fully implemented ~~these actions will result in~~and the efficiencies are fully realized, we expect annual cash savings of $25,000 (previously $30,000 to ~~$35,000 and a reduction in inventory of $30,000 to $35,000, both based on fiscal 2020 operating levels.~~

In the quarter and nine months ended June 30, 2022, CPP incurred pre-tax restructuring and related exit costs approximating $5,909 and $12,391, respectively. During the nine months ended June 30, 2022, cash charges ~~which includes $26,000 of~~totaled $9,897 and non-cash, asset-related charges totaled $2,494; the cash charges included $3,751 for one-time termination benefits and other personnel-related costs ~~such as training, severance,~~ and ~~duplicate personnel costs as well as $20,000 of~~$6,146 for facility ~~and lease~~ exit costs. ~~The remaining $19,000 of~~Non-cash charges ~~are non-cash and are primarily~~included a $1,766 impairment charge related to ~~asset write-downs.~~certain fixed assets at several manufacturing locations and $728 of inventory that have no recoverable value. During the nine months ended June 30, 2022, headcount was reduced by 20.

In the quarter and nine months ended June 30, 2021, CPP incurred pre-tax restructuring and related exit costs approximating ~~$4,082~~$4,081 and ~~$14,663,~~$14,662, respectively. During the nine months ended June 30, 2021, cash charges totaled ~~$10,781~~$10,780 and non-cash, asset-related charges totaled $3,882; the cash charges included ~~$1,784~~$1,783 for one-time termination benefits and other ~~personnel-related~~personnel related costs and $8,997 for facility and lease exit costs primarily driven by the consolidation of distribution facilities. Non-cash charges of $3,882 predominantly related to inventory that have no recoverable value. ~~During the nine months ended June 30, 2021, headcount was reduced by 65.~~

In the quarter and nine months ended June 30, 2020, CPP incurred pre-tax restructuring and related exit costs approximating $1,633 and $11,171, respectively. During the nine months ended June 30, 2020, cash charges totaled $6,479 and non-cash, asset-related charges totaled $4,692; the cash charges included $4,842 for one-time termination benefits and other personnel-related costs and $1,637 for facility exit costs. Non-cash charges included a $1,968 impairment charge related to a facility's operating lease as well as $671 of leasehold improvements made to the leased facility and $304 of inventory that have no recoverable value, and a $1,749 impairment charge related to machinery and equipment that have no recoverable value at one of the Company's owned manufacturing locations.

In September 2020, the DE Voluntary Employee Retirement Plan was initiated, which was subsequently followed by a reduction in force in November 2020, to improve efficiencies by combining functions and responsibilities. The combined actions resulted in severance charges of approximately $4,300, with $2,120 recognized in the fourth quarter of fiscal 2020, and the remaining $2,180 was recognized during the nine months ended June 30, 2021.~~These actions reduced headcount by approximately 90 people.~~

~~In addition, charges of $5,601 were recorded during the quarter ended December 31, 2020, primarily related to exiting our older weather radar product lines.~~

A summary of the restructuring and other related charges included in Cost of goods and services and SG&A expenses in the Company's Condensed Consolidated Statements of Operations were as follows:

For the Three Months Ended June 30, For the Nine Months Ended June 30,
2021 2020 2021 2020
Cost of goods and services $ 696 $ 20 $ 10,458 $ 4,096
Selling, general and administrative expenses 3,386 1,613 11,986 7,075
Total restructuring charges $ 4,082 $ 1,633 $ 22,444 $ 11,171


	For the Three Months Ended June 30,				For the Nine Months Ended June 30,
	2022		2021		2022		2021
Cost of goods and services	$	2,441	$	696	$	5,218	$	4,574
Selling, general and administrative expenses	3,468		3,385		7,173		10,088
Total restructuring charges	$	5,909	$	4,081	$	12,391	$	14,662

2728

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(US dollars and non US currencies in thousands, except per share data)

(Unaudited)


		For the Three Months Ended June 30,				For the Nine Months Ended June 30,					For the Three Months Ended June 30,				For the Nine Months Ended June 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Personnel related costs	Personnel related costs	$	700	$	1,050	$	3,964	$	4,842	Personnel related costs	$	1,613	$	698	$	3,751	$	1,782
Facilities, exit costs and other	Facilities, exit costs and other	2,190		583		8,997		1,637		Facilities, exit costs and other	3,857		2,190		6,146		8,997

Non-cash facility and other	Non-cash facility and other	1,192		0		9,483		4,692		Non-cash facility and other	439		1,193		2,494		3,883
Total	Total	$	4,082	$	1,633	$	22,444	$	11,171	Total	$	5,909	$	4,081	$	12,391	$	14,662

The following table summarizes the accrued liabilities of the Company's restructuring actions:


		Cash Charges				Non-Cash					Cash Charges				Non-Cash
		Personnel related costs		Facilities & Exit Costs		Facility and Other Costs		Total			Personnel related costs		Facilities & Exit Costs		Facility and Other Costs		Total
Accrued liability at September 30, 2020		$	2,701	$	264	$	0	$	2,965
Accrued liability at September 30, 2021										Accrued liability at September 30, 2021	$	418	$	264	$	—	$	682
Q1 Restructuring charges	Q1 Restructuring charges	2,482		2,524		5,794		10,800		Q1 Restructuring charges	260		1,167		289		1,716
Q1 Cash payments	Q1 Cash payments	(1,598)		(2,534)		0		(4,132)		Q1 Cash payments	(275)		(1,167)		—		(1,442)
Q1 Non-cash charges	Q1 Non-cash charges	0		0		(5,794)		(5,794)		Q1 Non-cash charges	—		—		(289)		(289)
Accrued liability at December 31, 2020		$	3,585	$	254	$	0	$	3,839
Accrued liability at December 31, 2021										Accrued liability at December 31, 2021	$	403	$	264	$	—	$	667
Q2 Restructuring charges	Q2 Restructuring charges	782		4,283		2,497		7,562		Q2 Restructuring charges	1,878		1,122		1,766		4,766
Q2 Cash payments	Q2 Cash payments	(3,840)		(4,273)		0		(8,113)		Q2 Cash payments	(1,883)		(1,122)		—		(3,005)
Q2 Non-cash charges	Q2 Non-cash charges	0		0		(2,497)		(2,497)		Q2 Non-cash charges	—		—		(1,766)		(1,766)
Accrued liability at March 31, 2021		$	527	$	264	$	0	$	791
Accrued liability at March 31, 2022										Accrued liability at March 31, 2022	$	398	$	264	$	—	$	662
Q3 Restructuring charges	Q3 Restructuring charges	700		2,190		1,192		4,082		Q3 Restructuring charges	1,613		3,857		439		5,909
Q3 Cash payments	Q3 Cash payments	(799)		(2,190)		0		(2,989)		Q3 Cash payments	(1,619)		(3,857)		—		(5,476)
Q3 Non-cash charges	Q3 Non-cash charges	0		0		(1,192)		(1,192)		Q3 Non-cash charges	—		—		(439)		(439)
Accrued liability at June 30, 2021		$	428	$	264	$	0	$	692
Accrued liability at June 30, 2022										Accrued liability at June 30, 2022	$	392	$	264	$	—	$	656

NOTE 18 – OTHER INCOME (EXPENSE)

For the quarters ended June 30, ~~2021~~2022 and ~~2020,~~2021, Other income (expense) of ~~$386~~$2,084 and ~~$806,~~$587, respectively, includes ~~$77~~$265 and ~~$72,~~$77, respectively, of net currency exchange ~~gains~~losses in connection with the translation of receivables and payables denominated in currencies other than the functional currencies of Griffon and its subsidiaries, net periodic benefit plan income of ~~$226~~$1,118 and ~~$392,~~$226, respectively, as well as ~~$249~~$(91) and ~~$499,~~$111, respectively, of net investment income (loss). Other income (expense) also includes rental income of $156 in both of the three months ended June 30, 2022 and 2021. Additionally, it includes royalty income of $828 for the three months ended June 30, 2022.

For the nine months ended June 30, ~~2021~~2022 and ~~2020,~~2021, Other income (expense) of ~~$1,192~~$4,528 and ~~2,199~~$1,413, respectively, includes ~~$(302)~~$297 and ~~$441,~~$302, respectively, of net currency exchange ~~gains (losses)~~losses in connection with the translation of receivables and payables denominated in currencies other than the functional currencies of Griffon and its subsidiaries, net periodic benefit plan income of ~~$680~~$3,145 and ~~$1,170,~~$680, respectively, as well as ~~$877~~$(328) and ~~$216,~~$496, respectively, of net investment income (loss). ~~Additionally, in the prior year period,~~ Other income (expense) also ~~included a one-time technology recognition award~~includes rental income of $468 in both of the nine months ended June 30, 2022 and 2021. Additionally, it includes royalty income of $1,444 for ~~$700.~~

the nine months ended June 30, 2022.

2829

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(US dollars and non US currencies in thousands, except per share data)

(Unaudited)

NOTE 19 – WARRANTY LIABILITY

~~DE offers warranties against product defects for periods generally ranging from~~ ~~one~~ ~~to two years, depending on the specific product and terms of the customer purchase agreement.~~ CPP and HBP ~~also~~ offer warranties against product defects for periods generally ranging from one to ten years, with limited lifetime warranties on certain door and fan models. Typical warranties require CPP ~~HBP~~ and DEHBP to repair or replace the defective products during the warranty period at no cost to the customer. At the time revenue is recognized, Griffon records a liability for warranty costs, estimated based on historical experience, and periodically assesses its warranty obligations and adjusts the liability as necessary. CPP offers an express limited warranty for a period of ninety days on all products from the date of original purchase unless otherwise stated on the product or packaging from the date of original purchase.

Changes in Griffon’s warranty liability, included in Accrued liabilities, were as follows:


		Three Months Ended June 30,				Nine Months Ended June 30,					Three Months Ended June 30,				Nine Months Ended June 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Balance, beginning of period	Balance, beginning of period	$	12,678	$	7,789	$	10,843	$	7,894	Balance, beginning of period	$	17,958	$	7,920	$	7,818	$	6,268
Warranties issued and changes in estimated pre-existing warranties	Warranties issued and changes in estimated pre-existing warranties	4,806		5,773		16,022		14,000		Warranties issued and changes in estimated pre-existing warranties	5,119		3,579		14,368		12,088
Actual warranty costs incurred	Actual warranty costs incurred	(4,304)		(3,661)		(13,685)		(11,993)		Actual warranty costs incurred	(4,937)		(2,952)		(10,399)		(9,809)

Other warranty liabilities assumed from acquisitions										Other warranty liabilities assumed from acquisitions	—		—		6,353		—
Balance, end of period	Balance, end of period	$	13,180	$	9,901	$	13,180	$	9,901	Balance, end of period	$	18,140	$	8,547	$	18,140	$	8,547

2930

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(US dollars and non US currencies in thousands, except per share data)

(Unaudited)

NOTE 20 – OTHER COMPREHENSIVE INCOME (LOSS)

The amounts recognized in other comprehensive income (loss) were as follows:


		For the Three Months Ended June 30,													For the Three Months Ended June 30,
		2021						2020							2022						2021

		Pre-tax		Tax		Net of tax		Pre-tax		Tax		Net of tax			Pre-tax		Tax		Net of tax		Pre-tax		Tax		Net of tax
Foreign currency translation adjustments	Foreign currency translation adjustments	$	1,160	$	0	$	1,160	$	9,508	$	0	$	9,508	Foreign currency translation adjustments	$	(17,823)	$	—	$	(17,823)	$	1,160	$	—	$	1,160
Pension and other defined benefit plans	Pension and other defined benefit plans	1,576		(331)		1,245		1,443		(304)		1,139		Pension and other defined benefit plans	1,511		(315)		1,196		1,576		(331)		1,245
Cash flow hedges	Cash flow hedges	501		(150)		351		(2,779)		834		(1,945)		Cash flow hedges	3,500		(1,050)		2,450		478		(144)		334
Available-for-sale securities		(23)		6		(17)		0		0		0

Total other comprehensive income (loss)	Total other comprehensive income (loss)	$	3,214	$	(475)	$	2,739	$	8,172	$	530	$	8,702	Total other comprehensive income (loss)	$	(12,812)	$	(1,365)	$	(14,177)	$	3,214	$	(475)	$	2,739

For the Nine Months Ended June 30,
2021 2020
Pre-tax Tax Net of tax Pre-tax Tax Net of tax
Foreign currency translation adjustments $ 15,022 $ 0 $ 15,022 $ (493) $ 0 $ (493)
Pension and other defined benefit plans 5,311 (1,115) 4,196 3,137 (657) 2,480
Cash flow hedges 2,077 (623) 1,454 (1,826) 548 (1,278)
Available-for-sale securities (23) $ 6 (17) 0 0 0
Total other comprehensive income (loss) $ 22,387 $ (1,732) $ 20,655 $ 818 $ (109) $ 709


	For the Nine Months Ended June 30,
	2022						2021
	Pre-tax		Tax		Net of tax		Pre-tax		Tax		Net of tax
Foreign currency translation adjustments	$	(14,093)	$	—	$	(14,093)	$	15,022	$	—	$	15,022
Pension and other defined benefit plans	2,534		(530)		2,004		5,311		(1,115)		4,196
Cash flow hedges	158		(48)		110		2,054		(617)		1,437

Total other comprehensive income (loss)	$	(11,401)	$	(578)	$	(11,979)	$	22,387	$	(1,732)	$	20,655

The components of Accumulated other comprehensive income (loss) are as follows:


		At June 30, 2021		At September 30, 2020			At June 30, 2022		At September 30, 2021
Foreign currency translation adjustments	Foreign currency translation adjustments	$	(10,661)	$	(25,683)	Foreign currency translation adjustments	$	(33,343)	$	(19,250)
Pension and other defined benefit plans	Pension and other defined benefit plans	(42,402)		(46,598)		Pension and other defined benefit plans	(26,798)		(28,802)
Change in Cash flow hedges	Change in Cash flow hedges	1,643		189		Change in Cash flow hedges	2,185		2,075
Available-for-sale securities		(17)		0
		$	(51,437)	$	(72,092)
							$	(57,956)	$	(45,977)

Amounts reclassified from accumulated other comprehensive income (loss) to income were as follows:


		For the Three Months Ended June 30,				For the Nine Months Ended June 30,					For the Three Months Ended June 30,				For the Nine Months Ended June 30,
Gain (Loss)	Gain (Loss)	2021		2020		2021		2020		Gain (Loss)	2022		2021		2022		2021

Pension amortization	Pension amortization	$	(1,573)	$	(1,045)	$	(4,719)	$	(3,137)	Pension amortization	$	(844)	$	(1,573)	$	(2,534)	$	(4,719)
Cash flow hedges	Cash flow hedges	(413)		556		(2,812)		1,550		Cash flow hedges	716		(413)		3,633		(2,812)

Total gain (loss)	Total gain (loss)	$	(1,986)	$	(489)	(7,531)		(1,587)		Total gain (loss)	$	(128)	$	(1,986)	$	1,099	$	(7,531)
Tax benefit (expense)	Tax benefit (expense)	417		102		1,582		333		Tax benefit (expense)	27		417		(230)		1,582
Total	Total	$	(1,569)	$	(387)	$	(5,949)	$	(1,254)	Total	$	(101)	$	(1,569)	$	869	$	(5,949)

~~GRIFFON CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(US dollars and non US currencies in thousands, except per share data)~~

~~(Unaudited)~~

NOTE 21 — LEASES

The Company recognizes right-of-use ("ROU") assets and lease liabilities on the balance sheet, with the exception of leases with a term of twelve months or less. The Company determines if an arrangement is a lease at inception. The ROU assets and short and long-term liabilities associated with our Operating leases are shown as separate line items on our Condensed

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(US dollars and non US currencies in thousands, except per share data)

(Unaudited)

Consolidated Balance Sheets. Finance leases are included in property, plant, and equipment, net, other accrued liabilities, and other non-current liabilities. The Company's finance leases are immaterial. ROU assets, along with any other related long-lived assets, are periodically evaluated for impairment.

ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. Lease payments primarily include rent and insurance costs (lease components). The Company's leases also include non-lease components such as real estate taxes and common-area maintenance costs. The Company elected the practical expedient to account for lease and non-lease components as a single component. In certain of the Company's leases, the non-lease components are variable and in accordance with the standard are therefore excluded from lease payments to determine the ROU asset. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. We use the implicit rate when readily determinable. Our determination of the lease term may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option.

For operating leases, fixed lease payments are recognized as operating lease cost on a straight-line basis over the lease term. For finance leases and impaired operating leases, the ROU asset is depreciated on a straight-line basis over the remaining lease term, along with recognition of interest expense associated with accretion of the lease liability. For leases with a lease term of 12 months or less (a "Short-term" lease), any fixed lease payments are recognized on a straight-line basis over such term, and are not recognized on the Condensed Consolidated Balance Sheets. Variable lease cost for both operating and finance leases, if any, is recognized as incurred. The Company has lease agreements that contain both lease and non-lease components. For real estate leases, we account for lease components together with non-lease components (e.g., common-area maintenance). Components of operating lease costs are as follows:


		For the Three Months Ended June 30,				For the Nine Months Ended June 30,					For the Three Months Ended June 30,				For the Nine Months Ended June 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Fixed	Fixed	$	9,940	$	9,909	$	29,950	$	28,648	Fixed	$	13,021	$	9,664	$	32,674	$	28,841
Variable (a), (b)	Variable (a), (b)	3,012		2,032		6,146		5,608		Variable (a), (b)	2,742		1,877		6,278		5,690
Short-term (b)	Short-term (b)	933		1,280		3,100		4,103		Short-term (b)	1,741		897		4,576		2,952
Total	Total	$	13,885	$	13,221	$	39,196	$	38,359	Total	$	17,504	$	12,438	$	43,528	$	37,483

(a) Primarily relates to common-area maintenance and property taxes.

(b) Not recorded on the balance sheet.

Supplemental cash flow information were as follows:


	For the Nine Months Ended June 30,
	2022		2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	34,759	$	32,336
Financing cash flows from finance leases	1,936		2,824
Total	$	36,695	$	35,160

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(US dollars and non US currencies in thousands, except per share data)

(Unaudited)

Supplemental ~~cash flow information were as follows:~~

For the Nine Months Ended June 30,
2021 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases $ 33,492 $ 32,882
Financing cash flows from finance leases 2,824 3,202
Total $ 36,316 $ 36,084

~~Supplemental~~ Condensed Consolidated Balance Sheet information related to leases were as follows:


		June 30, 2021		September 30, 2020			June 30, 2022		September 30, 2021
Operating Leases:	Operating Leases:					Operating Leases:
Right of use assets:	Right of use assets:					Right of use assets:
Operating right-of-use assets	Operating right-of-use assets	$	150,924	$	161,627	Operating right-of-use assets	$	193,448	$	144,598

Lease Liabilities:	Lease Liabilities:					Lease Liabilities:
Current portion of operating lease liabilities	Current portion of operating lease liabilities	$	30,896	$	31,848	Current portion of operating lease liabilities	$	32,426	$	29,881
Long-term operating lease liabilities	Long-term operating lease liabilities	124,588		136,054		Long-term operating lease liabilities	167,549		119,315
Total operating lease liabilities	Total operating lease liabilities	$	155,484	$	167,902	Total operating lease liabilities	$	199,975	$	149,196

Finance Leases:	Finance Leases:					Finance Leases:
Property, plant and equipment, net(1)	Property, plant and equipment, net(1)	$	17,326	$	18,774	Property, plant and equipment, net(1)	$	14,386	$	16,466

Lease Liabilities:	Lease Liabilities:					Lease Liabilities:
Notes payable and current portion of long-term debt	Notes payable and current portion of long-term debt	$	2,782	$	3,352	Notes payable and current portion of long-term debt	$	2,214	$	2,347
Long-term debt, net	Long-term debt, net	14,564		15,339		Long-term debt, net	12,484		14,120
Total financing lease liabilities	Total financing lease liabilities	$	17,346	$	18,691	Total financing lease liabilities	$	14,698	$	16,467

(1) Finance lease assets are recorded net of accumulated depreciation of ~~$5,258~~$4,689 and ~~$2,383~~$6,136 as of June 30, ~~2021~~2022 and September 30, ~~2020,~~2021, respectively.

Griffon has one finance lease outstanding for real estate located in Ocala, Florida. The lease matures in 2025 and bears interest at a fixed rate of approximately 5.6%. The Ocala, Florida lease contains 2 five-year renewal options. At June 30, 2022, $13,426 was outstanding. During the nine months ended June 30, 2022, the financing lease on the Troy, Ohio location expired. The lease bore interest at a rate of approximately 5.0%, was secured by a mortgage on the real estate, which was guaranteed by Griffon, and had a 1 dollar buyout at the end of the lease. Griffon exercised the 1 dollar buyout option in November 2021.

The aggregate future maturities of lease payments for operating leases and finance leases as of June 30, 2022 are as follows (in thousands):


	Operating Leases		Finance Leases
2022(a)	$	10,292	$	754
2023	41,315		2,837
2024	33,727		2,308
2025	30,938		2,130
2026	22,586		2,106
2027	18,474		2,074
Thereafter	96,648		5,702
Total lease payments	$	253,980	$	17,911
Less: Imputed Interest	(54,005)		(3,213)
Present value of lease liabilities	$	199,975	$	14,698

(a) Excluding the nine months ended June 30, 2022.

Average lease terms and discount rates at June 30, 2022 were as follows:

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(US dollars and non US currencies in thousands, except per share data)

(Unaudited)

~~Two Griffon subsidiaries have finance leases outstanding for real estate located in Troy, Ohio and Ocala, Florida.The leases mature in November 2021 and 2025, respectively, and bear interest at fixed rates of approximately 5.0% and 5.6%, respectively.The Troy, Ohio lease is secured by a mortgage on the real estate, which is guaranteed by Griffon, and has a 1 dollar buyout at the end of the lease. The Ocala, Florida lease contains 2~~ ~~five-year renewal options.As of June 30, 2021 and September 30, 2020, $15,254 and $17,188, respectively, was outstanding, net of issuance costs.The remaining lease liability balance relates to finance equipment leases.~~

~~The aggregate future maturities of lease payments for operating leases and finance leases as of June 30, 2021 are as follows (in thousands):~~

Operating Leases Finance Leases
2021(a)
$ 9,771 $ 1,227
2022 35,363 3,166
2023 27,677 2,832
2024 20,719 2,244
2025 18,673 2,077
2026 12,689 2,075
Thereafter 64,282 7,777
Total lease payments 189,174 21,398
Less: Imputed Interest (33,690) (4,052)
Present value of lease liabilities $ 155,484 $ 17,346

~~(a) Excluding the nine months ended June 30, 2021.~~

~~Average lease terms and discount rates at June 30, 2021 were as follows:~~


Weighted-average remaining lease term (years):
Operating leases	~~8.0~~8.5
Finance Leases	~~8.1~~7.6

Weighted-average discount ~~rate~~rate:
Operating Leases	~~4.46~~5.07	%
Finance Leases	~~5.48~~5.50	%

NOTE 22 — COMMITMENTS AND CONTINGENCIES

Legal and environmental

Peekskill Site.Lightron Corporation (“Lightron”), a wholly-owned subsidiary of Griffon, once conducted operations at a location inthe Town of Cortlandt, New York, just outside the city of Peekskill, New York (the “Peekskill Site”) which was owned by ISC Properties, Inc. (“ISCP”), a wholly-owned subsidiary of Griffon, for approximately three years. The operations, which included plating, may have involved the use of certain chemicals and solvents. ISCP sold the Peekskill Site in November 1982.

~~Subsequently, ISCP was advised by the Department of Environmental Conservation of New York State (the "DEC")that sampling at the Peekskill Site and in a creek near the Peekskill Site indicated concentrations of solvents and other chemicals common to prior plating operations by a Lightron subsidiary.In 1996, ISCP entered into a consent order with the DEC (the “Consent Order”), pursuant to which ISCP was required to perform a remedial investigation and prepare a feasibility study (the~~

~~GRIFFON CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(US dollars and non US currencies in thousands, except per share data)~~

~~(Unaudited)~~

~~“Feasibility Study”).~~After completing the initial remedial investigation, ISCP conducted supplemental remedial investigations over the next several years, including soil vapor investigations, as required by the Consent Order.

In April 2009, the DEC advised ISCP that both the DEC and the New York State Department of Health had reviewed and accepted an August 2007 Remedial Investigation Report and an Additional Data Collection Summary Report dated January 30, 2009. ISCP submitted to the DEC a draft Feasibility Study which was accepted and approved by the DEC in February 2011.~~ISCP satisfied its obligations under the Consent Order when DEC approved the Remedial Investigation and Feasibility Study for the Peekskill Site.~~In June 2011 the DEC issued a Record of Decision that set forth a Remedial Action Plan for the Peekskill Site that identified the specific remedies selected and responded to public comments. The cost of the remedy proposed by DEC in its Remedial Action Plan was approximately $10,000.

Following issuance of the Remedial Action Plan, the DEC implemented a portion of its plan, and performed additional investigation for the presence of metals in soils and sediments downstream from the Peekskill Site. During this investigation metals were found to be present in sediments further downstream from the Peekskill site than previously detected.

On May 15, 2019 the United States Environmental Protection Agency ("EPA") added the Peekskill Site to the National Priorities List ~~under CERCLA~~ and ~~has since announced that it is performing a Remedial Investigation/Feasibility Study ("RI/FS"). On~~on August 25, 2020, the EPA sent a letter to several parties, including Lightron and ISCP, requesting that each such party inform the EPA as to whether it would be willing to enter into discussions ~~regarding implementation~~to perform certain studies to determine the nature and extent of ~~the RI/FS.~~any possible contamination. The EPA also sent a request for information under Section 104(e) of CERCLA to each party. Lightron and ISCP have informed the EPA that they are willing to participate in discussions regarding ~~implementation of the RI/FS.~~performing these studies. Lightron and ISCP have also submitted responses to certain items contained in the Section 104(e) information request, with additional responses to follow. ~~The current owner~~Lightron and ISCP are currently in negotiations with the EPA regarding the scope of the ~~property,~~aforementioned studies, which ~~acquired~~will address the Peekskill ~~Site~~site and certain areas downstream from ISCP in 1982 and has no relationship with Lightron or ISCP, has also informed the EPA that it is willing to discuss implementation of the RI/FS, and has also received, and submitted certain information in response to, a Section 104(e) information request. The EPA may decide to implement the RI/FS, on its own or through the use of consultants, may reach agreement with one or more parties to perform the RI/FS, or may offer to negotiate with one or more parties to accept a settlement addressing the potential liability of such parties for investigation and/or remediation at the Peekskill Site. Should the EPA implement the RI/FS, or perform further studies and/or subsequently remediate the site, without first reaching agreement with one or more relevant parties, the EPA would likely seek reimbursement for the costs incurred from such parties.

Lightron has not engaged in any operations in over three decades. ISCP functioned solely as a real estate holding company, and has not held any real property in over three decades. Griffon does not acknowledge any responsibility to perform any investigation or remediation at the Peekskill Site. One of Griffon’s insurers is defending Lightron, ISCP and Griffon subject to a reservation of rights.

Union Fork and Hoe, Frankfort, NY site. The former Union Fork and Hoe property in Frankfort, New York was acquired by AMES in 2006 as part of a larger acquisition, and has historic site contamination involving chlorinated solvents, petroleum hydrocarbons and metals. AMES entered into an Order on Consent with the New York State Department of Environmental Conservation (“DEC”). While the Order is without admission or finding of liability or acknowledgment that there has been a release of hazardous substances at the site, the Order required AMES to perform a remedial investigation of certain portions of the property and to recommend a remediation option. In 2011, remediation of chlorinated solvents in the groundwater was completed to the satisfaction of DEC. In 2018, AMES submitted a Feasibility Study recommending that the remaining soil contamination involving metals and petroleum be covered, excavated and removed to a licensed off-site location or placed under a cover on-site. DEC approved the selection of this remedy in 2019 by issuing a Record of Decision (“ROD”). In June 2020, AMES completed the remediation required by the ~~ROD~~Record of Decision issued by DEC in 2019 ("ROD") and filed a Construction Completion Report, a Site Management Plan and an environmental easement with DEC. While AMES was implementing the remediation required by the ROD, DEC requested additional investigation of a small area on the site and of an area adjacent to the site perimeter. AMES investigated the on-site area and has completed remediation of that small area under a workplan approved by DEC. ~~At the request of DEC,~~ AMES ~~has~~ also ~~submitted (and DEC has approved)~~completed a workplan approved by DEC to investigate the areas adjacent to the site ~~perimeter. The workplan~~perimeter, and is ~~expected~~now performing a statistical analysis to determine the area, if any, required to be ~~completed by October 1, 2021.~~remediated. AMES has a number of defenses to liability in this matter, including its rights under a previous Consent Judgment entered into between DEC and a predecessor of AMES relating to the site.AMES’ insurer has accepted AMES’ claim for a substantial portion of the costs incurred and to be incurred for both the on-site and off-site activities.

Memphis, TN site.Hunter Fan Company (“Hunter”) operated its headquarters and a production plant in Memphis, Tennessee for over 50 years (the “Memphis Site”).While Hunter completed certain on-site remediation of PCB-contaminated soils, Hunter did not investigate the extent to which PCBs existed beneath the building itself nor determine whether off-site areas had

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(US dollars and non US currencies in thousands, except per share data)

(Unaudited)

been impacted.Hunter vacated the Memphis Site approximately twenty years ago, and the on-site buildings have now been demolished.

~~U.S. Government investigations~~The State of Tennessee Department of Environment and ~~claims~~Conservation (“TDEC”) identified the Memphis Site as being potentially contaminated, raising the possibility that site operations could have resulted in soil and groundwater contamination involving volatile organic compounds and metals.The TDEC performed a preliminary assessment of the site and recommended to the United States Environmental Protection Agency (“EPA”) that the site be listed on the National Priorities List established under CERCLA.The TDEC further recommended that the EPA fund an investigation of potential soil gas contamination in receptors near the site.The TDEC has also indicated that it will proceed with this investigation if the EPA does not act.

~~Defense contracts~~It is unknown whether the EPA will add the Memphis Site to the National Priorities List, whether a site investigation will reveal contamination and, ~~subcontracts, including Griffon’s contracts and subcontracts, are subject to audit and review by various agencies and instrumentalities~~if there is contamination, the extent of such contamination. However, given that certain PCB work was not completed in the ~~United States government, including among others, the Defense Contract Audit Agency, the Defense Criminal Investigative Service,~~past and the ~~Department~~TDEC’s stated intent for the EPA to perform an investigation (and the statement by the TDEC that it will perform the investigation if the EPA will not), liability is probable in this matter.There are other potentially responsible parties for this site, including a former owner of ~~Justice~~Hunter; Hunter has notified such former owner of this matter, which ~~has responsibility~~may have certain liability for ~~asserting claims on behalf of the U.S. Government.~~any required remediation.

~~In general, departments and agencies of~~If the ~~U.S. Government have~~EPA decides to add this site to the ~~authority~~National Priorities List, a Remedial Investigation/Feasibility Study (“RI/FS”) will be required.Hunter expects that EPA will ask it to ~~investigate various transactions and operations of Griffon, and~~perform this work.If Hunter does not reach an agreement with the ~~results of~~EPA to perform this work, the EPA will implement the RI/FS on its own.Should the EPA implement the RI/FS or perform further studies and/or subsequently remediate the site without first reaching an agreement with one or more relevant parties, the EPA would likely seek from such ~~investigations may lead to administrative, civil or criminal proceedings,~~parties, including Hunter, reimbursement for the ultimate outcome of which could be fines, penalties, repayments or compensatory or treble damages. U.S. Government regulations provide that certain findings against a contractor may lead to suspension or debarment from future U.S. Government contracts or the loss of export privileges for a company or an operating division or subdivision. Suspension or debarment could have a material adverse effect on Telephonics because of its reliance on government contracts.costs incurred.

General legal

Griffon is subject to various laws and regulations relating to the protection of the environment and is a party to legal proceedings arising in the ordinary course of business. Management believes, based on facts presently known to it, that the resolution of the matters above and such other matters will not have a material adverse effect on Griffon’s consolidated financial position, results of operations or cash flows.

Table of Contents

(Unless otherwise indicated, US dollars and non US currencies are in thousands, except per share data)

Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations

BUSINESS

Overview

Griffon Corporation (the “Company”, “Griffon”, "we" or "us") is a diversified management and holding company that conducts business through wholly-owned subsidiaries. The Company was founded in 1959, is a Delaware corporation headquartered in New York, N.Y. and is listed on the New York Stock Exchange (NYSE:GFF).

Business Strategy

We own and operate, and seek to acquire, businesses in multiple industries and geographic markets. Our objective is to maintain leading positions in the markets we serve by providing innovative, branded products with superior quality and industry-leading service. We place emphasis on our iconic and well-respected brands, which helps to differentiate us and our offerings from our competitors and strengthens our relationship with our customers and those who ultimately use our products.

Through operating a diverse portfolio of businesses, we expect to reduce variability caused by external factors such as market cyclicality, seasonality, and weather. We achieve diversity by providing various product offerings and brands through multiple sales and distribution channels and conducting business across multiple countries which we consider our home markets.

Griffon oversees the operations of its subsidiaries, allocates resources among them and manages their capital structures. Griffon provides direction and assistance to its subsidiaries in connection with acquisition and growth opportunities as well as in connection with divestitures. As long-term investors, having substantial experience in a variety of industries, our intent is to continue the growth and strengthening of our existing businesses, and to diversify further through investments in our businesses and through acquisitions.

Over the past ~~three~~four years, we have undertaken a series of transformative transactions. We divested our specialty plastics business in 2018 to focus on our core markets and improve our free cash flow conversion. ~~Also in 2018,~~In our Consumer and Professional Products ("CPP") segment, we expanded the scope of ~~The AMES Companies, Inc. ("AMES") and Clopay Corporation ("Clopay")~~our brands through the ~~acquisitions~~acquisition of Hunter Fan Company ("Hunter") on January 24, 2022 and ClosetMaid, LLC ("ClosetMaid") in 2018. In our Home and Building Products ("HBP") segment, we acquired CornellCookson, Inc. ("CornellCookson"), ~~respectively. CornellCookson~~which has been integrated into Clopay ~~so that~~Corporation ("Clopay") in our Home and Building Products ("HBP") segment, creating a leading ~~company in~~North American manufacturer and marketer of residential garage doors and sectional commercial doors, ~~now includes a leading manufacturer of~~and rolling steel doors and grille ~~products. ClosetMaid was combined with AMES,~~products under brands that include Clopay, Ideal and weCornellCookson. We established an integrated headquarters for ~~AMES~~CPP in Orlando, ~~Florida.~~Florida, for our portfolio of leading brands that includes AMES, Hunter, True Temper and ClosetMaid. CPP is now positioned to fulfill its mission of Bringing Brands Together™ with the leading brands in consumer and professional tools; residential, industrial and commercial fans; home storage and ~~garage~~ organization products; and products that enhance indoor and outdoor ~~décor,~~lifestyles.

On May 16, 2022, we announced that our Board of Directors initiated a process to review a comprehensive range of strategic alternatives to maximize shareholder value including a sale, merger, divestiture, recapitalization or other strategic transaction. There is no timeline for this review and ~~lawn, garden and cleaning tools.~~there is no assurance that the Board of Director's review will result in any transaction being entered into or consummated. As previously announced, we do not intend to disclose further developments until our Board of Directors approves a ~~result~~specific transaction or otherwise concludes its review of ~~the expanded scope of the AMES and Clopay businesses, in 2019~~strategic alternatives.

On September 27, 2021, we began reporting each as a separate segment. Griffon now reports its operations through three segments. Clopay remains in the Home and Building Products ("HBP") segment, AMES now constitutes our new Consumer and Professional Products ("CPP") segment andannounced we were exploring strategic alternatives for our Defense Electronics ("DE") segment, which ~~continues to consist~~consisted of our Telephonics Corporation ("Telephonics") subsidiary. On June 27, 2022, we completed the sale of Telephonics ~~Corporation.~~to TTM Technologies, Inc. (NASDAQ:TTMI) ("TTM") for $330,000 in cash, subject to customary post-closing adjustments. Since September 2021, we have classified the results of operations of our Telephonics business as a discontinued operation in the Consolidated Statements of Operations for all periods presented and classified the related assets and liabilities associated with the discontinued operation as held for sale in the consolidated balance sheets.Accordingly, all references made to results and information in this Quarterly Report on Form 10-Q are to Griffon's continuing operations, unless noted otherwise.

On January 24, 2022, we acquired Hunter Fan Company (“Hunter”), a market leader in residential ceiling, commercial, and industrial fans, from MidOcean Partners (“MidOcean”) for a contractual purchase price of $845,000. Hunter, part of our CPP segment, complements and diversifies our portfolio of leading consumer brands and products. We financed the acquisition of Hunter with a new $800,000 seven year Term Loan B facility; we used a combination of cash on hand and revolver borrowings to fund the balance of the purchase price and related acquisition and debt expenditures.

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Update of COVID-19 on Our Business

The health and safety of our employees, our customers and their families is a high priority for Griffon. As of the date of this filing, all of Griffon's facilities are fully operational. We have implemented a variety of new policies and procedures, including additional cleaning, social distancing ~~staggered shifts~~ and ~~prohibiting or significantly~~ restricting on-site visitors, to minimize the risk to our employees of contracting COVID-19.In the United States, we manufacture a substantial majority of the products that we sell.While this helps mitigate the effects of global supplier and transportation disruptions, we are still ~~impacted.~~impacted by these disruptions.Our supply chain has experienced certain disruptions which, together with other factors such asa shortage of labor, has resulted in longer delivery lead times and restricted manufacturing capacity for certain of our products.Commodity prices have increased during COVID-19 and may continue to increase, and we may not be able to pass off all or any of such price increases to our customers on a timely basis, or at all.It is difficult to predict whether the supply chain disruptions that impact us will improve, worsen or remain the same in the near term.Our suppliers could be required by government authorities to temporarily cease operations in accordance with the various restrictions discussed above; might be limited in their production capacity due to complying with restrictions relating to the operation of businesses during the COVID-19 pandemic; or could suffer their own supply chain disruptions, impacting their ability to continue to supply us with the quantity of materials required by us.

During the nine months ended June 30, 2021 and through the date of this filing, all of our businesses have experienced normal or better order patterns compared with the same time period last year. Most U.S. states lifted initial executive orders issued during the 2020 calendar year requiring all workers to remain at home unless their work is critical, essential, or life-sustaining.~~Regardless, we~~We believe that, based on the various standards published to date, the work our employees are performing are either critical, essential and/or life-sustaining for the following reasons:1) ~~Our Defense Electronics segment ("DE") is a defense and national security-related operation supporting the U.S. Government, with a portion of its business being directly with the U.S. Government; 2)~~ HBP residential and commercial garage doors, rolling steel doors and related products ~~that~~ (a) provide protection and support for the efficient and safe movement of people, goods, and equipment in and out of residential and commercial facilities, (b) help prevent fires from spreading from one location to another, and (c) protect warehouses and homes,

~~Table of Contents~~

and their contents, from damage caused by strong weather events such as hurricanes and tornadoes; and 3)2) CPP tools and storage products provide critical support for the national infrastructure including construction, maintenance, manufacturing and natural disaster recovery, and is part of the essential supply base to many of its largest customers including Home Depot, Lowe's and Menards. Our AMES international facilities are currently fully operational, as they meet the applicable standards in their respective countries.

Griffon believes it has adequate liquidity to invest in its existing businesses and execute its business plan, while managing its capital structure on both a short-term and long-term basis. In January 2020, Griffon increased total borrowing capacity under its revolving credit facility ("Credit Agreement") by $50,000, to $400,000 (of which $362,218 was available at June 30, 2021), and extended maturity of the facility to 2025. In addition, the Credit Agreement has a $100,000 accordion feature (subject to lender consent). In February 2020, Griffon refinanced $850,000 of its $1,000,000 of senior notes due 2022 with new 5.75% senior notes with a maturity of 2028, and in June 2020 refinanced the remaining $150,000 under the same terms and indenture as the $850,000 senior notes due 2028. In August 2020, we completed a public offering of 8,700,000 shares of our common stock for total net proceeds of $178,165 (the "Public Offering"); a portion of these net proceeds were used to repay outstanding borrowing under our Credit Agreement.At June 30, ~~2021,~~2022, $289,897 of revolver capacity was available under Griffon's Credit Agreement and Griffon had cash and equivalents of ~~$220,697.~~$144,687.

We will continue to actively monitor the situation and may take further actions that impact our operations as may be required by federal, state or local authorities or that we determine are in the best interests of our employees, customers, suppliers and shareholders. While we are unable to determine or predict the nature, duration or scope of the overall impact the COVID-19 pandemic will have on our businesses, results of operations, liquidity or capital resources, we believe it is important to discuss where our company stands today, how our response to COVID-19 is progressing and how our operations and financial condition may change as the fight against COVID-19 progresses.

Business Highlights

On September 27, 2021, we announced we were exploring strategic alternatives for our DE segment, which consists of our Telephonics subsidiary, and on June 27, 2022, Griffon completed the sale of Telephonics to TTM for $330,000, subject to customary post-closing adjustments. We believe that selling Telephonics will increase long-term value for Griffon shareholders, while creating enhanced growth opportunities for Telephonics. Telephonics is recognized globally as a leading provider of highly sophisticated intelligence, surveillance and communications solutions that are deployed across a wide range of land, sea and air applications. Telephonics designs, develops, manufactures and provides logistical support and lifecycle sustainment services to defense, aerospace and commercial customers worldwide.

On January 24, 2022, Griffon acquired Hunter, a market leader in residential ceiling, commercial, and industrial fans, for a contractual purchase price of $845,000. The acquisition of Hunter was financed primarily with a new $800,000 seven year Term Loan B facility; a combination of cash on hand and revolver borrowings was used to fund the balance of the purchase price and related acquisition and debt expenditures. Hunter is expected to contribute approximately $360,000 in revenue in the first twelve months of operation after the acquisition.

In August 2020 weGriffon completed athe public offering of 8,700,000 shares of our common stock for total net proceeds of ~~$178,165;~~$178,165. The Company used a portion of ~~these~~the net proceeds ~~were used~~ to repay outstanding ~~borrowing~~borrowings under ~~our~~its Credit Agreement. The Company ~~intends to use~~used the remainder of the proceeds for general corporate purposes, including to expand its current business through acquisitions of, or investments in, other businesses or products.

~~On February 19,~~

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During 2020, Griffon issued, at par, ~~$850,000~~$1,000,000 of 5.75% Senior Notes due in 2028 (the “2028 Senior Notes”) ~~and on June 8, 2020 Griffon issued an additional $150,000 of 2028 Senior Notes at 100.25% of par under the same indenture.~~. Proceeds from the 2028 Senior Notes were used to redeem the $1,000,000 of 5.25% Senior Notes due 2022.

In January 2020, Griffon amended its Credit Agreement to increase the total amount available for borrowing from $350,000 to $400,000, extend its maturity date from March 22, 2021 to March 22, 2025 and modify certain other provisions of the facility.

$35,000). The cost to implement this new business platform, over the duration of the project, will now include one-time charges of approximately ~~$65,000~~$50,000 (previously $65,000) and capital investments of approximately $65,000. The one-time charges are comprised of $46,000 of cash charges, which includes $26,000 of personnel-related costs such as training, severance, and duplicate personnel costs as well as $20,000 of facility and lease exit costs. The remaining $19,000 of charges are non-cash and are primarily related to asset write-downs.$15,000 (previously $65,000).

In June 2018, Clopay acquired CornellCookson, a leading provider of rolling steel service doors, fire doors, and grilles, for an effective purchase price of approximately $170,000. This transaction strengthened Clopay's strategic portfolio with a line of commercial rolling steel door products to complement Clopay's sectional door offerings in the commercial sector, and expands

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the Clopay network of professional dealers focused on the commercial market. ~~CornellCookson generated over $200,000 in revenue in its first full year of operations.~~

In March 2018, we announced the combination of the ClosetMaid operations with those of AMES. ClosetMaid generated over $300,000 in revenue in the first twelve months after the acquisition, and we anticipate the integration with AMES will unlock additional value given the complementary products, customers, warehousing and distribution, manufacturing, and sourcing capabilities of the two businesses.

In February 2018, we closed on the sale of our Clopay Plastics Products ("Plastics") business to Berry Global, Inc. ("Berry") for approximately $465,000, net of certain post-closing adjustments, thus exiting the specialty plastics industry that the Company had entered when it acquired Clopay Corporation in 1986. This transaction provided immediate liquidity and ~~positions the Company to improve its~~improved Griffon's cash flow ~~conversion~~ given the historically higher capital needs of the Plastics operations as compared to Griffon’s remaining businesses.

In October 2017, we acquired ClosetMaid from Emerson Electric Co. (NYSE:EMR) for an effective purchase price of approximately $165,000. ClosetMaid, founded in 1965, is a leading North American manufacturer and marketer of wood and wire closet organization, general living storage and wire garage storage products, and sells to some of the largest home center retail chains, mass merchandisers, and direct-to-builder professional installers in North America. We believe that ClosetMaid is the leading brand in its category, with excellent consumer recognition.

We believe these actions have established a solid foundation for ~~continuing organic~~ growth in sales, profit, and cash generation and ~~bolsters~~bolster Griffon’s platforms for opportunistic strategic acquisitions.

Other Acquisitions and Dispositions

On December 22, 2020, AMES acquired Quatro Design Pty Ltd (“Quatro”), a leading Australian manufacturer and supplier of glass fiber reinforced concrete landscaping products for residential, commercial, and public sector projects for a purchase price of AUD $3,500 (approximately $2,700). ~~The purchase price is subject to additional contingent consideration of approximately AUD $1,000 (approximately $760) based on~~ Quatro ~~exceeding certain EBITDA performance targets in the first year. Quatro is expected to contribute~~contributed approximately $5,000 in ~~annualized~~ revenue in the first twelve months after the acquisition.

On December 18, 2020, Defense Electronics completed the sale of its Systems Engineering Group, Inc. (“SEG”) business for $15,000. SEG provides sophisticated, highly technical engineering and analytical support to the Missile Defense Agency and various U.S. military commands. SEG had sales of approximately $7,000 for the first fiscal quarter ended December 31, 2020 and $31,000 for the fiscal year ended September 30, 2020.

On November 29, 2019, AMES acquired Vatre Group Limited ("Apta"), a leading ~~United Kingdom~~U.K. supplier of innovative garden pottery and associated products sold to leading UKU.K. and Ireland garden centers for approximately $10,500 (GBP 8,750), inclusive of a post-closing working capital adjustment, net of cash acquired. This acquisition ~~broadens~~broadened AMES' product offerings in the UKU.K. market and ~~increases~~increased its in-country operational footprint. ~~Apta contributed approximately $20,000 in revenue in the first twelve months after the acquisition.~~

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On February 13, 2018, AMES acquired Kelkay, a leading ~~United Kingdom~~U.K. manufacturer and distributor of decorative outdoor landscaping products sold to garden centers, retailers and grocers in the UKU.K. and Ireland. This acquisition broadened AMES' product offerings in the market and increased its in-country operational footprint.

In November 2017, Griffon acquired Harper Brush Works, a leading U.S. manufacturer of cleaning products for professional, home, and industrial use, from Horizon Global (NYSE:HZN). This acquisition expanded the AMES line of long-handle tools in North America to include brooms, brushes, and other cleaning products.

During fiscal 2017, Griffon also completed a number of other acquisitions to expand and enhance AMES' global footprint. In the United Kingdom, Griffon acquired La Hacienda, an outdoor living brand of unique heating and garden décor products, in July 2017. The acquisition of La Hacienda, together with the February 2018 acquisition of Kelkay and November 2020 acquisition of Apta, provides AMES with additional brands and a platform for growth in the UKU.K. market and access to leading garden centers, retailers, and grocers in the UK and Ireland. In Australia, Griffon acquired Hills Home Living, the iconic brand of clotheslines and home products, from Hills Limited (ASX:HIL) in December 2016, and in September 2017 Griffon acquired Tuscan Path, an Australian provider of pots, planters, pavers, decorative stone, and garden décor products.The Hills, ~~and~~

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Tuscan Path and December, 2020 Quatro acquisitions broadened AMES' outdoor living and lawn and garden business, strengthening AMES’ portfolio of brands and its market position in Australia and New Zealand.

Further Information

Griffon posts and makes available, free of charge through its website at www.griffon.com, its annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) of the Securities Exchange Act of 1934, as well as press releases, as soon as reasonably practicable after such materials are published or filed with or furnished to the Securities and Exchange Commission (the “SEC”). The information found on Griffon's website is not part of this or any other report it files with or furnishes to the SEC.

For information regarding revenue, profit and total assets of each segment, see the Reportable Segments footnote in the Notes to Consolidated Financial Statements.

Reportable Segments:

Griffon ~~currently~~ conducts its operations through ~~three~~two reportable segments:

•~~HBP~~Home and Building Products ("HBP") conducts its operations through Clopay.Founded in 1964, Clopay is the largest manufacturer and marketer of garage doors and rolling steel doors in North America. Residential and commercial sectional garage doors are sold through professional dealers and leading home center retail chains throughout North America under the brands Clopay, Ideal, and Holmes. Rolling steel door and grille products designed for commercial, industrial, institutional, and retail use are sold under the CornellCookson brand.

•DE conducts its operations through Telephonics Corporation, founded in 1933, a globally recognized leading provider of highly sophisticated intelligence, surveillance and communications solutions for defense, aerospace and commercial customers.

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OVERVIEW

Revenue for the quarter ended June 30, ~~2021~~2022 was ~~$646,792~~$768,179 compared to ~~$632,061~~$584,218 in the prior year comparable quarter, an increase of ~~2% (4% excluding the prior year revenue of $7,931 related to the Systems Engineering Group (SEG) disposition), primarily driven by~~31%. Revenue increased ~~revenue~~ at HBP ~~of 18%, partially offset~~and CPP by ~~reduced revenue at CPP~~56% and ~~DE of 1% and 25%~~12%, respectively. ~~Net income~~Excluding the Hunter acquisition on January 24, 2022, revenue increased 13% to $662,405. Hunter contributed $105,774 of revenue for the quarter. Income from continuing operations was ~~$16,707~~$52,782 or ~~$0.31~~$0.98 per share, compared to ~~$21,831,~~$14,815, or ~~$0.50~~$0.28 per share, in the prior year quarter.

The current year quarter results from operations included the following:

– Restructuring charges of ~~$4,082~~$5,909 ($~~3,129,~~4,359, net of tax, or ~~$0.06~~$0.08 per share);

– Fair value step-up of acquired inventory sold of $2,700 ($2,005, net of tax, or $0.04 per share);

– Strategic review - retention and other $3,220 ($2,416, net of tax, or $0.04 per share);

– Debt extinguishment, net $5,287 ($4,022, net of tax, or $0.07 per share);

– Discrete and certain other tax provisions, net, of ~~$2,979~~$913 or ~~$0.06~~$0.02 per share.

The prior year quarter results from operations included the following:

– Restructuring charges of ~~$1,633~~$4,081 ($~~1,224,~~3,128, net of tax, or ~~$0.03~~$0.06 per share);

–~~Loss from debt extinguishment $1,235 ($969, net of tax, or $0.02 per share);~~

– Discrete and certain other tax provisions, net, of ~~$1,828~~$2,850 or ~~$0.04~~$0.05 per share.

Excluding these items from the respective quarterly results, ~~Net income~~Income from continuing operations would have been ~~$22,815,~~$66,497, or ~~$0.43~~$1.23 per share, in the current year quarter compared to ~~$25,852,~~$20,793, or ~~$0.59~~$0.39 per share in the prior year quarter.

Revenue for the nine months ended June 30, ~~2021~~2022 was ~~$1,890,915~~$2,139,545 compared to ~~$1,746,849~~$1,700,423 in the prior year period, an increase of ~~8% (9% excluding~~26%. Revenue increased at HBP and CPP by 44% and 12%, respectively. Excluding the ~~current~~Hunter acquisition, revenue increased 15% to $1,962,922. Hunter contributed $176,623 of revenue during the year ~~and prior year revenue of $6,713 and 21,939, respectively, related~~ to ~~the SEG disposition), primarily driven by increased revenue at CPP and HBP of 12% each, partially offset by reduced revenue at DE of 18%. Net income~~date period. Income from continuing operations was ~~$63,319~~$127,646 or ~~$1.19~~$2.38 per share, compared to ~~$33,338,~~$57,678, or ~~$0.76~~$1.08 per share, in the prior year period.

The current year-to-date results from operations included the following:

– Restructuring charges of ~~$22,444~~$12,391 ($~~17,080,~~9,185, net of tax, or ~~$0.32~~$0.17 per share);

– ~~Gain on sale~~Acquisition costs of ~~Systems Engineering Group ("SEG") business $5,291~~$9,303 ($~~5,251,~~8,149, net of tax, or $0.15 per share); and

– Proxy expenses of $6,952 ($5,359, net of tax, or $0.10 per share);

– Fair value step-up of acquired inventory sold of $5,401 ($4,012, net of tax, or $0.07 per share);

– Strategic review - retention and other of $3,220 ($2,416, net of tax, or $0.04 per share);

– Debt extinguishment, net $5,287 ($4,022, net of tax, or $0.07 per share);

– Discrete and certain other tax ~~provisions,~~benefits, net, of ~~$2,864~~$661 or ~~$0.05~~$0.01 per share.

The prior year-to-date results from operations included the following:

– Restructuring charges of ~~$11,171~~$14,662 ($~~8,377,~~11,034, net of tax, or ~~$0.19~~$0.21 per share);

–~~Loss from debt extinguishment $7,925 ($6,214, net of tax, or $0.14 per share);~~

–~~Acquisition costs of $2,960 ($2,321, net of tax, or $0.05 per share); and~~

– Discrete and certain other tax provisions, net, of ~~$1,248~~$3,219 or ~~$0.03~~$0.06 per share.

Excluding these items from the respective periods, ~~Net income~~Income from continuing operations would have been ~~$78,012,~~$160,128, or ~~$1.46~~$2.98 per share in the current year period ended June 30, ~~2021~~2022 compared to ~~$51,498,~~$71,931, or ~~$1.18~~$1.35 per share, in the comparable prior year period.

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Griffon evaluates performance based on Net income and the related Earnings per share excluding restructuring charges, loss from debt extinguishment, acquisition related expenses and discrete and certain other tax items, as well as other items that may affect comparability, as applicable. Griffon believes this information is useful to investors for the same reason. The following table provides a reconciliation of ~~Net income~~Income from continuing operations to Adjusted ~~net~~ income from continuing operations and Earnings per share from continuing operations to Adjusted earnings per ~~share:~~share from continuing operations:

For the Three Months Ended June 30, For the Nine Months Ended June 30,
2021 2020 2021 2020
(Unaudited)
Net income $ 16,707 $ 21,831 $ 63,319 $ 33,338
Adjusting items:
Restructuring charges 4,082 1,633 22,444 11,171
Gain on sale of SEG business — — (5,291) —
Loss from debt extinguishment — 1,235 — 7,925
Acquisition costs — — — 2,960
Tax impact of above items (953) (675) (5,324) (5,144)
Discrete and certain other tax provisions, net 2,979 1,828 2,864 1,248
Adjusted net income $ 22,815 $ 25,852 $ 78,012 $ 51,498
Diluted earnings per common share $ 0.31 $ 0.50 $ 1.19 $ 0.76
Adjusting items, net of tax:
Restructuring charges 0.06 0.03 0.32 0.19
Gain on sale of SEG business — — (0.10) —
Loss from debt extinguishment — 0.02 — 0.14
Acquisition costs — — — 0.05
Discrete and certain other tax provisions, net 0.06 0.04 0.05 0.03
Adjusted earnings per common share $ 0.43 $ 0.59 $ 1.46 $ 1.18
Weighted-average shares outstanding (in thousands) 53,504 43,774 53,306 43,818


	For the Three Months Ended June 30,				For the Nine Months Ended June 30,
	2022		2021		2022		2021
	(Unaudited)

Income from continuing operations	$	52,782	$	14,815	$	127,646	$	57,678

Adjusting items:
Restructuring charges	5,909		4,081		12,391		14,662

Debt extinguishment, net	5,287		—		5,287		—
Acquisition costs	—		—		9,303		—


Strategic review - retention and other	3,220		—		3,220		—
Proxy expenses	—		—		6,952		—
Fair value step-up of acquired inventory sold	2,700		—		5,401		—
Tax impact of above items	(4,314)		(953)		(9,411)		(3,628)
Discrete and certain other tax provisions (benefits), net	913		2,850		(661)		3,219

Adjusted income from continuing operations	$	66,497	$	20,793	$	160,128	$	71,931

Earnings per common share from continuing operations	$	0.98	$	0.28	$	2.38	$	1.08

Adjusting items, net of tax:
Restructuring charges	0.08		0.06		0.17		0.21

Debt extinguishment, net	0.07		—		0.07		—
Acquisition costs	—		—		0.15		—

Strategic review - retention and other	0.04		—		0.04		—
Proxy expenses	—		—		0.10		—
Fair value step-up of acquired inventory sold	0.04		—		0.07		—
Discrete and certain other tax provisions (benefits), net	0.02		0.05		(0.01)		0.06

Adjusted earnings per common share from continuing operations	$	1.23	$	0.39	$	2.98	$	1.35

Weighted-average shares outstanding (in thousands)	53,914		53,504		53,704		53,306

Note: Due to rounding, the sum of earnings per common share from continuing operations and adjusting items, net of tax, may not equal adjusted earnings per common ~~share.~~share from continuing operations.

The tax impact for the above reconciling adjustments from GAAP to non-GAAP Net income and EPS is determined by comparing the Company's tax provision, including the reconciling adjustments, to the tax provision excluding such adjustments.

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RESULTS OF OPERATIONS

Three and ~~Nine~~nine months ended June 30, ~~2021~~2022 and ~~2020~~2021

Griffon evaluates performance and allocates resources based on each segment's operating results before interest income and expense, income taxes, depreciation and amortization, unallocated amounts (primarily corporate overhead), restructuring charges, loss on debt extinguishment and acquisition related expenses, as well as other items that may affect comparability, as applicable (“Adjusted EBITDA”, a non-GAAP measure). Griffon believes this information is useful to investors for the same reason.

See table provided in Note 13 - Business Segments for a reconciliation of Segment Adjusted EBITDA to Income before ~~taxes.~~taxes from continuing operations.

Consumer and Professional Products


		For the Three Months Ended June 30,								For the Nine Months Ended June 30,									For the Three Months Ended June 30,								For the Nine Months Ended June 30,
		2021				2020				2021				2020					2022				2021				2022				2021
Revenue		$	324,826			$	328,929			$	947,739			$	844,917
United States																		United States	$	248,068			$	206,809			$	677,714			$	595,619
Europe																		Europe	31,113				43,767				96,226				95,888
Canada																		Canada	19,592				20,547				73,249				64,440
Australia																		Australia	55,142				51,437				191,679				184,668
All other countries																		All other countries	8,719				2,266				17,951				7,124
Total Revenue																		Total Revenue	$	362,634			$	324,826			$	1,056,819			$	947,739
Adjusted EBITDA	Adjusted EBITDA	29,388		9.0	%	37,115		11.3	%	99,524		10.5	%	84,068		9.9	%	Adjusted EBITDA	28,373		7.8	%	29,388		9.0	%	$	92,431	8.7	%	$	99,524	10.5	%
Depreciation and amortization	Depreciation and amortization	8,781				8,197				25,600				24,650				Depreciation and amortization	13,434				8,781				$	33,831			$	25,600

For the quarter ended June 30, ~~2021,~~2022, revenue ~~decreased $4,103,~~increased $37,808, or 1%12%, compared to the prior year period primarily resulting from a 33% or $105,774 contribution from the January 24, 2022 Hunter acquisition, and price and mix of 10%, partially offset by a 28% reduction in volume, primarily in North America and the United Kingdom (U.K.), due to reduced ~~volume~~consumer demand and rebalancing of ~~9%, primarily in the U.S., due to shipping delays related to availability of transportation, partially offset by favorable mix of 3%~~customer inventory levels, and ~~a favorable foreign currency~~an unfavorable impact of 5%foreign exchange of 3%.

For the quarter ended June 30, ~~2021,~~2022, Adjusted EBITDA decreased ~~21%~~3% to ~~$29,388~~$28,373 compared to ~~$37,115~~$29,388 in the prior year ~~quarter,~~quarter. Excluding the $16,792 contributed from the Hunter acquisition, EBITDA of $11,581 decreased 61% primarily due to the ~~decreased revenue noted above,~~unfavorable impact of the reduced North American and U.K. volume and increased ~~distribution~~material, labor and ~~material~~transportation costs, ~~coupled with~~partially offset by the ~~lag in realization~~benefits of price ~~increases,~~ and ~~COVID-19 related inefficiencies.~~mix. The current quarter included increased demurrage and detention costs, primarily related to COVID and global supply chain disruptions, of approximately $6,548, primarily related to Hunter.

For the nine months ended June 30, 2022, revenue increased $109,080, or 12%, compared to the prior year period primarily resulting from a ~~favorable foreign currency~~19% or $176,623 contribution from the Hunter acquisition, and price and mix of 12%, partially offset by an 18% reduction in volume, primarily in North America and the U.K. due to reduced consumer demand and rebalancing of customer inventory levels, and an unfavorable impact of 4%foreign exchange of 1%.

For the nine months ended June 30, ~~2021, revenue increased $102,822, or 12%,~~2022, Adjusted EBITDA decreased 7% to $92,431 compared to ~~the prior year period, primarily due to increased volume of 8%, driven by increased consumer demand across all geographies, and a favorable foreign currency impact of 4%.~~

~~For the nine months ended June 30, 2021, Adjusted EBITDA increased 18% to~~ $99,524 ~~compared to $84,068~~ in the prior year period. ~~The favorable variance resulted~~Excluding the Hunter contribution of $31,131, EBITDA of $61,300 decreased 38% primarily ~~from~~due to the unfavorable impact of the reduced North American and U.K. volume and increased ~~revenue noted above~~material, labor and transportation costs, partially offset by the benefits of price and mix. The nine month period ended June 30, 2022, included increased ~~distribution~~demurrage and ~~material~~detention costs, primarily related to COVID and ~~COVID-19~~global supply chain disruptions, of approximately $13,482 ($7,699 related ~~inefficiencies. The current year-to-date period included a favorable currency impact of 6%,~~to Hunter).

For the quarter and nine months ended June 30, ~~2021,~~2022, segment depreciation and amortization increased ~~$584~~$4,653 and ~~$950,~~$8,231, respectively, compared to the prior year comparable periods, due to new assets placed in ~~service.~~service and the Hunter assets acquired.

On January 24, 2022, Griffon completed the acquisition of Hunter Fan Company (“Hunter”), a market leader in residential ceiling, commercial, and industrial fans for a contractual purchase price of $845,000, subject to customary post-closing adjustments. Hunter adds to Griffon's CPP segment, complementing and diversifying our portfolio of leading consumer brands and products.

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On December 22, 2020, AMES acquired Quatro Design Pty Ltd (“Quatro”), a leading Australian manufacturer and supplier of glass fiber reinforced concrete landscaping products for residential, commercial, and public sector projects. ~~Quatro is expected to contribute approximately $5,000 in annualized revenue in the first twelve months under AMES' ownership.~~

On November 29, 2019, AMES acquired Vatre Group Limited ("Apta"), a leading United Kingdom supplier of innovative garden pottery and associated products sold to leading UK and Ireland garden centers. This acquisition broadens AMES' product offerings in the UK market and increases its in-country operational footprint. Apta contributed approximately $20,000 in revenue in the first twelve months after the acquisition.

Strategic Initiative and Restructuring Charges

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$35,000). The cost to implement this new business platform, over the duration of the project, will now include one-time charges of approximately ~~$65,000~~$50,000 (previously $65,000) and capital investments of approximately ~~$65,000. The one-time charges are comprised~~$15,000 (previously $65,000), net of ~~$46,000~~future proceeds from the sale of cash charges, which includes $26,000 of personnel-related costs such as training, severance, and duplicate personnel costs as well as $20,000 of facility and lease exit costs. The remaining $19,000 of charges are non-cash and are primarily related to asset write-downs.exited facilities.

In connection with this initiative, during the ~~year ended September 30, 2020~~three and ~~during the~~ nine months ended June 30, ~~2021,~~2022, CPP incurred pre-tax restructuring and related exit costs approximating ~~$13,669~~$5,909 and ~~$14,663,~~$12,391, respectively. Since inception of this initiative in fiscal 2020, total cumulative charges totaled ~~$28,332,~~$47,478, comprised of cash charges of ~~$19,758~~$33,637 and non-cash, asset-related charges of ~~$8,574;~~$13,841; the cash charges included ~~$7,404~~$12,561 for one-time termination benefits and other personnel-related costs and ~~$12,354~~$21,076 for facility exit costs. ~~During the year ended September, 30,~~Since inception of this initiative in fiscal 2020 and during the nine months ended June 30, ~~2021,~~2022, capital expenditures of ~~6,733~~$21,844 and ~~$8,145,~~$6,337, respectively, were driven by investment in CPP business intelligence systems and an e-commerce facility.


		Cash Charges				Non-Cash Charges							Cash Charges				Non-Cash Charges
		Personnel related costs		Facilities, exit costs and other		Facility and other		Total		Capital Investments			Personnel related costs		Facilities, exit costs and other		Facility and other		Total		Capital Investments
Phase I	Phase I	$	12,000	$	4,000	$	19,000	$	35,000	$	40,000	Phase I	$	12,000	$	4,000	$	19,000	$	35,000	$	40,000
Phase II	Phase II	14,000		16,000		—		30,000		25,000		Phase II	14,000		16,000		—		30,000		25,000
Increase (Reduction) in Scope												Increase (Reduction) in Scope	(12,400)		2,100		(4,700)		(15,000)		(50,000)
Total Anticipated Charges	Total Anticipated Charges	26,000		20,000		19,000		65,000		65,000		Total Anticipated Charges	13,600		22,100		14,300		50,000		15,000

Total 2020 restructuring charges	Total 2020 restructuring charges	(5,620)		(3,357)		(4,692)		(13,669)		(6,733)		Total 2020 restructuring charges	(5,620)		(3,357)		(4,692)		(13,669)		(6,733)
Q1 FY2021 Activity		(362)		(2,524)		(193)		(3,079)		(2,236)
Q2 FY2021 Activity		(722)		(4,283)		(2,497)		(7,502)		$	(3,209)
Q3 FY2021 Activity		(700)		(2,190)		(1,192)		(4,082)		(2,700)

Total 2021 restructuring charges	Total 2021 restructuring charges	(1,784)		(8,997)		(3,882)		(14,663)		(8,145)		Total 2021 restructuring charges	(3,190)		(11,573)		(6,655)		(21,418)		(8,774)
Q1 FY2022 Activity												Q1 FY2022 Activity	(260)		(1,167)		(289)		(1,716)		(1,690)
Q2 FY2022 Activity												Q2 FY2022 Activity	(1,878)		(1,122)		(1,766)		(4,766)		(861)
Q3 FY2022 Activity												Q3 FY2022 Activity	$	(1,613)	$	(3,857)	$	(439)	(5,909)		$	(3,786)
Total 2022 restructuring charges												Total 2022 restructuring charges	(3,751)		(6,146)		(2,494)		(12,391)		(6,337)
Total cumulative charges	Total cumulative charges	(7,404)		(12,354)		(8,574)		(28,332)		(14,878)		Total cumulative charges	(12,561)		(21,076)		(13,841)		(47,478)		$	(21,844)
Estimate to Complete	Estimate to Complete	$	18,596	$	7,646	$	10,426	$	36,668	$	50,122	Estimate to Complete	$	1,039	$	1,024	$	459	$	2,522	$	(6,844)	(a)

(a) Includes future proceeds from the sale of exited facilities.

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Home and Building Products


		For the Three Months Ended June 30,								For the Nine Months Ended June 30,									For the Three Months Ended June 30,								For the Nine Months Ended June 30,
		2021				2020				2021				2020					2022				2021				2022				2021
Revenue		$	259,392			$	219,164			$	752,684			$	670,374
Residential																		Residential	$	238,372			$	156,638			$	627,388			$	459,240
Commercial																		Commercial	167,173				102,754				455,338				293,444
Total Revenue																		Total Revenue	$	405,545			$	259,392			$	1,082,726			$	752,684
Adjusted EBITDA	Adjusted EBITDA	42,156		16.3	%	39,299		17.9	%	130,585		17.3	%	110,635		16.5	%	Adjusted EBITDA	119,847		29.6	%	42,156		16.3	%	$	280,618	25.9	%	$	130,585	17.3	%
Depreciation and amortization	Depreciation and amortization	4,375				4,507				13,095				13,975				Depreciation and amortization	4,116				4,375				$	12,778			$	13,095

For the quarter ended June 30, ~~2021,~~2022, HBP revenue increased ~~$40,228~~$146,153, or ~~18%~~56%, compared to the prior year period ~~driven~~due to favorable pricing and mix for both residential and commercial products. Increased commercial volume was offset by ~~increased~~reduced residential volume ~~of 5%,~~due to labor and ~~favorable mix and pricing of 13%.~~supply chain disruptions.

For the quarter ended June 30, ~~2021,~~2022, Adjusted EBITDA increased 7%184% to ~~$42,156~~$119,847 compared to ~~$39,299~~$42,156 in the prior year period. Adjusted EBITDA benefited from the increased revenue noted above, partially offset by increased material, ~~costs coupled with the lag in realization of price increases,~~labor and ~~COVID-19 related inefficiencies.~~transportation costs.

For the nine months ended June 30, ~~2021,~~2022, revenue increased ~~$82,310~~$330,042, or ~~12%~~44%, compared to the prior year period, due to favorable pricing and mix of 48% driven by ~~increased~~both residential and commercial, partially offset by reduced volume of ~~8%,~~4% driven by decreased residential volume due to labor and ~~favorable mix and pricing of 4%.~~supply chain disruptions.

For the nine months ended June 30, ~~2021,~~2022, Adjusted EBITDA increased ~~18%~~115% to ~~$130,585~~$280,618 compared to ~~$110,635~~$130,585 in the prior year period. The favorable variance resulted from the increased revenue noted above, partially offset by increased material, ~~costs coupled with the lag in realization of price increases,~~labor and ~~COVID-19 related inefficiencies.~~transportation costs.

For the quarter and nine months ended June 30, ~~2021,~~2022, segment depreciation and amortization decreased ~~$132 and $880, respectively,~~slightly compared ~~to the prior year comparable periods, due to fully depreciated assets.~~

~~Defense Electronics~~

For the Three Months Ended June 30, For the Nine Months Ended June 30,
2021 2020 2021 2020
Revenue $ 62,574 $ 83,968 $ 190,492 $ 231,558
Adjusted EBITDA 4,140 6.6 % 4,122 4.9 % 11,945 6.3 % 12,845 5.5%
Depreciation and amortization 2,501 2,666 7,911 7,986

For the quarter ended June 30, 2021, revenue decreased $21,394, or 25%, compared to the prior year quarter. The prior year results include revenue from the SEG business of $7,931. Excluding the divestiture of SEG from prior year results, revenue decreased $13,463, or 18%. The decrease was driven by reduced volume due to the timing of deliveries on Communications and Radar systems, partially offset by volume increases on Naval & Cyber Systems.

~~For the quarter ended June 30, 2021, Adjusted EBITDA of $4,140 remained consistent~~ with the prior year comparable period. Excluding the divestiture of SEG from the prior year results, Adjusted EBITDA increased 9% primarily due to reduced operating expenses, including the benefit from the first quarter reduction in force, and improved Naval & Cyber Systems program performance, partially offset by cost growth for Radar systems.

For the nine months ended June 30, 2021, revenue decreased $41,066, or 18%, compared to the prior year period. The current and prior year results include revenue from the SEG business of $6,713 and $21,939, respectively. Excluding the divestiture of SEG from current and prior year results, revenue decreased $25,840, or 12%. The decline in revenue was driven by reduced volume related to the timing of work performed and deliveries on Communications, Surveillance and Radar programs, partially offset by increased Naval & Cyber Systems volume.

For the nine months ended June 30, 2021, Adjusted EBITDA decreased $900, or 7%, compared to the prior year comparable period. Excluding the divestiture of SEG from current and prior year results, Adjusted EBITDA decreased 6% primarily driven by the reduced revenue noted above and cost growth on Radar systems, partially offset by improved Naval & Cyber Systems program performance and reduced operating expenses, including the benefit from the first quarter reduction in force.

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For the quarter and nine months ended June 30, 2021, segment depreciation and amortization decreased $165 and $75, respectively, compared to the prior year comparable periods, related to the sale of SEG.

On December 18, 2020, DE completed the sale of its SEG business. SEG provides sophisticated, highly technical engineering and analytical support to the Missile Defense Agency and various U.S. military commands. SEG had sales of approximately $7,000 for the first fiscal quarter ended December 31, 2020 and $31,000 for the fiscal year ended September 30, 2020.

During the nine months ended June 30, 2021, DE was awarded several new contracts and received incremental funding on existing contracts approximating $189,000 (excludes $5,500 of SEG awards). Contract backlog was $375,039 at June 30, 2021 compared to $341,003 at June 30, 2020 (excludes $9,440 of SEG related backlog) with 66% expected to be fulfilled in the next 12 months. Backlog was approximately $370,000 at September 30, 2020 (excludes approximately $10,000 of SEG related backlog). Backlog is defined as unfilled firm orders for products and services for which funding has been both authorized and appropriated by the customer, or by Congress, in the case of US government agencies.

~~Restructuring Charges and Divestiture~~

In September 2020, a Voluntary Employee Retirement Plan was initiated, which was subsequently followed by a reduction in force in November 2020, to improve efficiencies by combining functions and responsibilities.~~The reduction in force initiative resulted in severance charges of $2,180, recorded in the first quarter, during the nine months ended June 30, 2021.These actions reduced headcount by approximately 90 people.~~

~~In addition, in the first quarter ended December 31, 2020, charges of $5,601 were recorded primarily related to exiting our older weather radar product lines.~~

~~DE recorded a pre-tax gain of $5,291 ($5,251, net of tax) during the nine months ended June 30, 2021 related to the divestiture of SEG.~~periods.

Unallocated

For the quarter ended June 30, ~~2021,~~2022, unallocated amounts, excluding depreciation, consisted primarily of corporate overhead costs totaling ~~$10,924~~$13,405 compared to ~~$11,080~~$11,464 in the prior year quarter; for the nine months ended June 30, ~~2021,~~2022, unallocated amounts totaled ~~$34,873~~$39,724 compared to ~~$34,969~~$36,810 in the prior year period. The ~~decrease~~increase in both the current quarter and nine month periods, compared to their respective comparable prior year periods, primarily relates to ~~decreases~~increased incentive and equity compensation, medical claims, and travel expenses.

Proxy expenses

During the nine months ended June 30, 2022, we incurred $6,952 of proxy expenses (including legal and advisory fees) in ~~travel and administrative office costs.~~SG&A as a result of a proxy contest initiated by a shareholder during the most recently completed fiscal quarter. In the three months ended June 30, 2022, we did not incur any proxy expenses. There were no similar costs in the comparable period of the prior year. The proxy contest was completed at the shareholder meeting on February 17, 2022.

Segment Depreciation and Amortization

Segment depreciation and amortization increased ~~$287~~$4,394 and $7,914 for the quarter and nine months ended June 30, ~~2021~~2022, respectively, compared to the comparable prior year ~~quarter,~~periods, primarily due to depreciation and amortization on new assets placed in ~~service. Segment depreciation~~service and ~~amortization for the nine months ended June 30, 2021 remained consistent with the comparable prior year period.~~assets acquired in acquisitions.

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Other Income (Expense)

For the quarters ended June 30, ~~2021~~2022 and ~~2020,~~2021, Other income (expense) of ~~$386~~$2,084 and ~~$806,~~$587, respectively, includes ~~$77~~$265 and ~~$72,~~$77, respectively, of net currency exchange ~~gains~~losses in connection with the translation of receivables and payables denominated in currencies other than the functional currencies of Griffon and its subsidiaries, net periodic benefit plan income of ~~$226~~$1,118 and ~~$392,~~$226, respectively, as well as ~~$249~~$(91) and ~~$499,~~$111, respectively, of net investment income. Other income ~~(loss).~~(expense) also includes rental income of $156 in both of the three months ended June 30, 2022 and 2021. Additionally, it includes royalty income of $1,444 for the three months ended June 30, 2022.

For the nine months ended June 30, ~~2021~~2022 and ~~2020,~~2021, Other income (expense) of ~~$1,192~~$4,528 and ~~2,199~~$1,413, respectively, includes ~~$(302)~~$297 and ~~$441,~~$(302), respectively, of net currency exchange ~~gains (losses)~~losses in connection with the translation of receivables and payables denominated in currencies other than the functional currencies of Griffon and its subsidiaries, net periodic benefit plan income of ~~$680~~$3,145 and ~~$1,170,~~$680, respectively, as well as ~~$877~~$(328) and ~~$216,~~$496, respectively, of net investment income (loss). ~~Additionally, in the prior year period,~~ Other income (expense) also includes ~~a one-time technology recognition award~~rental income of $468 in both of the nine months ended June 30, 2022 and 2021. Additionally, it includes royalty income of $1,444 for ~~$700.~~the nine months ended June 30, 2022.

Provision for income taxes

During the quarter ended June 30, ~~2021,~~2022, the Company recognized a tax provision of ~~$12,366~~$23,268 on income before taxes from continuing operations of ~~$29,073,~~$76,050, compared to a tax provision of ~~$12,649~~$12,078 on income before taxes from continuing operations of ~~$34,480~~$26,893 in the comparable prior year quarter. The current year quarter results included restructuring charges of ~~$4,082~~$5,909 ($~~3,129,~~4,359, net of tax), fair value step-up of acquired inventory sold of $2,700 ($2,005, net of tax), strategic review (retention and other) of $3,220 ($2,416, net of tax), debt extinguishment, net of $5,287 ($4,022, net of tax), and discrete and certain other tax provisions, net, that affect comparability of ~~$2,979, primarily due to the impact of UK tax rate changes on deferred liabilities.~~$913. The prior year quarter results included restructuring charges of ~~$1,633~~$4,081 ($~~1,224,~~3,128, net of tax), ~~loss from debt extinguishment of~~

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~~$1,235 ($969, net of tax)~~ and discrete tax and certain other tax provisions, net, that affect comparability of ~~$1,828.~~$2,850. Excluding these items, the effective tax rates for the quarters ended June 30, 2022 and 2021 were 28.6% and ~~2020 were 31.2% and 30.8%~~32.9%, respectively.

During the nine months ended June 30, ~~2021,~~2022, the Company recognized a tax provision of ~~$32,783~~$55,119 on ~~Income~~income before taxes of ~~$96,102,~~$182,765, compared to a tax provision of ~~$21,022~~$34,868 on income before taxes of ~~$54,360~~$92,546 in the comparable prior year period. The nine month period ended June 30, ~~2021~~2022 included restructuring charges of ~~$22,444~~$12,391 ($~~17,080,~~9,185, net of tax), ~~gain on sale~~acquisition costs of ~~the SEG business of $5,291~~$9,303 ($~~5,251,~~8,149, net of tax), proxy expenses of $6,952 ($5,359, net of tax), fair value step-up of acquired inventory sold of $5,401 ($4,012, net of tax), strategic review (retention and other) of $3,220 ($2,416, net of tax), debt extinguishment, net $5,287 ($4,022, net of tax), and discrete and certain other tax ~~provisions,~~benefits, net, that affect comparability of ~~$2,864 primarily due to the impact of UK tax rate changes on deferred liabilities.~~$661. The nine month period ended June 30, ~~2020~~2021 included restructuring charges of ~~$11,171~~$14,662 ($~~8,377,~~11,034, net of tax), ~~acquisition costs of $2,960 ($2,321, net of tax), loss from debt extinguishment of $7,925 ($6,214, net of tax)~~ and discrete tax and certain other tax provisions, net, that affect comparability of ~~$1,248.~~$3,219. Excluding these items, the effective tax rates for the nine months ended June 30, 2022 and 2021 were 28.9% and ~~2020 were 31.1% and 32.6%~~32.9%, respectively.

Stock based compensation

For the quarters ended June 30, ~~2021~~2022 and ~~2020,~~2021, stock based compensation expense, which includes expenses for both restricted stock grants and the ESOP, totaled ~~$5,591~~$6,019 and ~~$4,507,~~$5,590, respectively. For the nine months ended June 30, ~~2021~~2022 and ~~2020,~~2021, stock based compensation expense totaled ~~$15,092~~$15,978 and ~~$12,809,~~$15,091, respectively.

Comprehensive income (loss)

For the quarter ended June 30, 2022, total other comprehensive loss, net of taxes, of $14,177 included a loss of $17,823 from foreign currency translation adjustments primarily due to the weakening of the Euro, Canadian and Australian Dollars and British Pound, all in comparison to the US Dollar; a $1,196 benefit from pension amortization; and a $2,450 a gain on cash flow hedges.

For the quarter ended June 30, 2021, total other comprehensive income, net of taxes, of $2,739 included a gain of $1,160 from foreign currency translation adjustments primarily due to the strengthening of the Euro, British Pound and Canadian Dollar, partially offset by the weakening of the Australian Dollar, all in comparison to the US Dollar; a $1,245 benefit from pension amortization; and a ~~$351~~$334 gain on cash flow hedges.

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For the nine months ended June 30, 2022, total other comprehensive loss, net of taxes, of $11,979 included a loss of $14,093 from foreign currency translation adjustments primarily due to the weakening of the Euro, Canadian and Australian Dollars and British Pound, all in comparison to the US Dollar; a $2,004 benefit from pension amortization of actuarial losses; and a $110 gain on cash flow hedges.

For the nine months ended June 30, 2021, total other comprehensive income, net of taxes, of $20,655 included a gain of $15,022 from foreign currency translation adjustments primarily due to the strengthening of the Euro, British Pound, Canadian and Australian Dollars, all in comparison to the US Dollar; a $4,196 benefit from pension amortization of actuarial losses; and a ~~$1,454~~$1,437 gain on cash flow hedges.

~~For~~

DISCONTINUED OPERATIONS

Defense Electronics

On September 27, 2021, Griffon announced that it was exploring strategic alternatives for its DE segment, which consists of its Telephonics subsidiary. On June 27, 2022, Griffon completed the sale of Telephonics to TTM for $330,000 in cash, subject to customary post-closing adjustments. Griffon believes the sale of Telephonics will increase long-term value for Griffon shareholders, while creating enhanced growth opportunities for Telephonics. Telephonics is recognized globally as a leading provider of highly sophisticated intelligence, surveillance and communications solutions that are deployed across a wide range of land, sea and air applications. Telephonics designs, develops, manufactures and provides logistical support and lifecycle sustainment services to defense, aerospace and commercial customers worldwide. In connection with the sale of Telephonics, the Company recorded a gain of $108,949 ($88,977, net of tax) during the quarter ended June 30, ~~2020, total other comprehensive income, net~~2022 in discontinued operations. The gain and related tax for the sale of ~~taxes, of $8,702 included income of $9,508 from foreign currency translation adjustments primarily due~~Telephonics is preliminary and is subject to the strengthening of the Euro, British Pound, and Canadian and Australian Dollars all in comparison to the US Dollar; a $1,139 benefit from pension amortization of actuarial losses; and a $1,945 loss on cash flow hedges.finalization.

For the nine months ended June 30, 2020, total other comprehensive income, net of taxes, of $709, included a loss of $493 from foreign currency translation adjustments primarily due to the weakening of the Canadian Dollar, partially offset by the strengthening of the Euro, British Pound and Australian Dollar currencies, all in comparison to the US Dollar, a $2,480 benefit from pension amortization of actuarial losses and a $1,278 loss on cash flow hedges.

~~Discontinued operations~~

At June 30, ~~2021,~~2022, Griffon's discontinued assets and liabilities ~~are~~includes the Company's obligation of $27,703 in connection with the sale of Telephonics primarily related to income taxes payable. At June 30, 2022, Griffon’s liabilities for ~~the~~ Installations Services and other discontinued operations primarily ~~related~~relate to insurance claims, ~~income tax and product liability,~~ warranty ~~reserves~~ and environmental ~~reserves.~~reserves total $6,928. See Note 16, Discontinued Operations.

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LIQUIDITY AND CAPITAL RESOURCES

Liquidity

Griffon believes it has adequate liquidity to invest in its existing businesses and execute its business plan, while managing its capital structure on both a short-term and long-term basis. Griffon's primary sources of liquidity are cash flows generated from operations, cash on hand and our January 2022 secured $400,000 Credit Agreement. At June 30, 2022, $289,897 of revolver capacity was available under the Credit Agreement and we had cash and cash equivalents of $144,687.

Management assesses Griffon’s liquidity in terms of its ability to generate cash to fund its operating, investing and financing activities. Significant factors affecting liquidity ~~are:~~include cash flows from operating activities, capital expenditures, acquisitions, dispositions, bank lines of credit and the ability to attract long-term capital under satisfactory terms. Griffon believes it has sufficient liquidity available to invest in ~~its~~ existing businesses and ~~execute~~ strategic acquisitions while managing its capital structure on both a short-term and long-term basis.

As of June 30, 2022, the amount of cash, cash equivalents and marketable securities held by foreign subsidiaries was $66,325. Our intent is to permanently reinvest these funds outside the U.S., and we do not currently anticipate that we will need funds generated from foreign operations to fund our domestic operations. In the event we determine that funds from foreign operations are needed to fund operations in the U.S., we will be required to accrue and pay U.S. taxes to repatriate these funds (unless applicable U.S. taxes have already been paid).

The following table is derived from the Condensed Consolidated Statements of Cash Flows:


Cash Flows from Operations	Cash Flows from Operations	For the Nine months ended June 30,				Cash Flows from Operations	For the Nine months ended June 30,
		2021		2020			2022		2021
Net Cash Flows Provided by (Used In):	Net Cash Flows Provided by (Used In):					Net Cash Flows Provided by (Used In):
Operating activities	Operating activities	$	42,019	$	55,944	Operating activities	$	(65,001)	$	13,314
Investing activities	Investing activities	(26,300)		(45,073)		Investing activities	(574,256)		(31,705)
Financing activities	Financing activities	(14,327)		(9,305)		Financing activities	513,762		(14,327)

Cash ~~provided by~~used in operating activities from continuing operations for the nine months ended June 30, ~~2021~~2022 was ~~$42,019~~$65,001 compared to ~~$55,944~~cash provided by continuing operations of $13,314 in the comparable prior year period. Cash provided by income from continuing operations, adjusted for non-cash expenditures, was ~~partially~~more than offset by a net increase in working capital predominately consisting of increased inventory and accounts receivable primarily ~~related to a net increase~~driven by reduced consumer demand and rebalancing of customer inventory levels in ~~inventory.~~North America and the United Kingdom.

Cash flows used in investing activities from continuing operations is primarily comprised of capital expenditures and business acquisitions as well as proceeds from the sale of businesses, investments and property, plant and equipment. During the nine months ended June 30, ~~2021, Griffon's use of cash from~~2022, Griffon used $574,256 in investing activities ~~was $26,300~~from continuing operations compared to ~~$45,073~~$31,705 used in the prior year comparable period. ~~On December 18, 2020, DE completed~~Griffon used $851,464 to acquire Hunter during the ~~sale of its SEG business and received net proceeds from the sale of $14,345. Payments for acquired businesses totaled $2,242~~nine months ended June 30, 2022 as compared to ~~$10,531~~the $2,242 used in the prior year comparable period. On December 22, 2020, AMES acquired Quatro, a leading Australian manufacturer and supplier of glass fiber reinforced concrete landscaping products for residential, commercial, and public sector projects. On November 29, 2019, AMES acquired 100% of the outstanding stock of Apta, a leading United Kingdom supplier of innovative garden pottery and associated products soldperiod to ~~leading UK and Ireland garden centers for approximately $10,500 (GBP 8,750), inclusive of a post-closing working capital adjustment, net of cash acquired. We had an increase in investments of $4,658.~~acquire Quatro. Capital expenditures, net of proceeds from the sale of assets, for the nine months ended June 30, ~~2021~~2022 totaled ~~$33,773, a decrease~~$33,427, an increase of ~~$639~~$8,594 from the prior year period. Proceeds from the sale of investments totaled $14,923 during the nine months ended June 30, 2022 compared to cash used to purchase investments of $4,658 in the prior year comparable period.

During the nine months ended June 30, ~~2021,~~2022, cash ~~used~~provided by financing activities from continuing operations totaled ~~$14,327~~$513,762 compared to ~~$9,305~~cash used of $14,327 used in the prior year comparable period. Cash ~~used in~~provided by financing activities in the current period consisted primarily of ~~the payment~~net proceeds from long-term debt of ~~dividends and purchase~~$556,431, partially offset by financing costs of $17,065, purchases of treasury shares to satisfy vesting of restricted stock of $10,886 and the payment of dividends of $14,906. During the current period Griffon prepaid $300,000 aggregate principal amount of its Term Loan B, which permanently reduces the outstanding balance. In connection with the prepayment of the Term Loan B, Griffon recognized a $6,296 charge related to the write-off of capitalized debt issuance costs. In addition, during the current period Griffon purchased $15,225 of its 2028 Senior Notes in the open market at a weighted average discount of 92.19% of par and recognized a net gain of $1,009 on the early extinguishment. Cash used in financing activities in the prior year comparable period consisted primarily of payments of dividends of 12,907 and purchases of treasury shares to satisfy vesting of restricted stock of $2,909, partially offset by net ~~borrowings~~proceeds from long-term debt of ~~long-term debt.~~$2,332.

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During the nine months ended June 30, ~~2021, 133,027~~2022, 421,860 shares, with a market value of ~~$2,774,~~$10,742, or ~~$20.85~~$25.46 per share were withheld to settle employee taxes due upon the vesting of restricted stock and were added to treasury stock. Furthermore, during the nine months ended June 30, ~~2021,~~2022, an additional ~~6,507~~5,480 shares, with a market value of ~~$135,~~$144, or ~~$20.75~~$26.31 per share, were withheld from common stock issued upon the vesting of restricted stock units to settle employee taxes due upon vesting.

During ~~2020,~~2021, the Company declared and paid regular cash dividends totaling ~~$0.30~~$0.32 per share, or ~~$0.075~~$0.08 per share each quarter. During the nine months ended June 30, ~~2021,~~2022, the Board of Directors approved and paid three quarterly cash ~~dividend~~dividends of ~~$0.08~~$0.09 per share each. The Company currently intends to pay dividends each quarter; however, payment of dividends is determined by the Board of Directors at its discretion based on various factors, and no assurance can be provided as to the payment of future dividends. On June 27, 2022, the Board of Directors declared a special dividend of $2.00 per share, payable on July ~~29, 2021,~~20, 2022 to shareholders of record as of the close of business on July 8, 2022. As of June 30, 2022, the Company accrued $104,053 in connection with the declaration of the special dividend. On July 27, 2022, the Board of Directors declared a quarterly cash dividend of ~~$0.08~~$0.09 per share, payable on September ~~16, 2021~~15, 2022 to shareholders of record as of the close of business on August ~~19, 2021.~~18, 2022.

On each of August 3, 2016 and August 1, 2018, Griffon’s Board of Directors authorized the repurchase of $50,000 of Griffon’s outstanding common stock. Under these share repurchase programs, the Company may, from time to time, purchase shares of its common stock in the open market, including pursuant to a 10b5-1 plan, or in privately negotiated transactions. As of June 30, ~~2021,~~2022, an aggregate of $57,955 remains under Griffon's Board authorized repurchase programs. No shares were repurchased during the nine months ended June 30, ~~2021~~2022 under these share repurchase programs.

During the nine months ended June 30, 2022, cash provided by discontinued operations from operating activities of $26,889 primarily related to DE operations partially offset by the settling of certain liabilities and environmental costs associated with the former Installations Services business. Cash provided by discontinued operations from investing activities related to DE operations capital expenditures.

During the nine months ended June 30, 2021, ~~COVID-19 has not had a material impact on our~~cash provided by discontinued operations from operating activities of $27,035 primarily related to DE operations and ~~we anticipate our~~the settling of certain liabilities and environmental costs associated with other discontinued operations. Cash provided by discontinued operations from investing activities of $8,155 primarily related to net proceeds received of $14,725 from DE's sale of its SEG business less capital expenditures of $6,151.


Cash and Equivalents and Debt	June 30,		September 30,
	2022		2021
Cash and equivalents	$	144,687	$	248,653
Notes payables and current portion of long-term debt	13,085		12,486
Long-term debt, net of current maturities	1,574,697		1,033,197
Debt discount/premium and issuance costs	23,053		14,823
Total debt	1,610,835		1,060,506
Debt, net of cash and equivalents	$	1,466,148	$	811,853

During 2020, Griffon issued, at par, $1,000,000 of 5.75% Senior Notes due in 2028 (the “2028 Senior Notes”). Proceeds from the 2028 Senior Notes were used to redeem $1,000,000 of 5.25% Senior Notes due 2022. During the period ended June 30, 2022, Griffon purchased $15,225 of 2028 Senior Notes in the open market at a weighted average discount of 92.19% of par, for $14,036. In connection with this transaction Griffon recognized a $1,009 gain on the early extinguishment of debt comprised of $1,189 of face value in excess of purchase price, offset by $180 related to the write-off of underwriting fees and other expenses. As of June 30, 2022, outstanding 2028 Senior Notes due totaled $984,775; interest is payable semi-annually on March 1 and September 1. Subsequent to June 30, 2022, Griffon purchased $10,000 of 2028 Senior Notes in the open market at a weighted average discount of 91.25% of par, for $9,125.

The 2028 Senior Notes are senior unsecured obligations of Griffon guaranteed by certain domestic subsidiaries, and subject to certain covenants, limitations and restrictions. The 2028 Senior Notes were registered under the Securities Act of 1933, as amended (the "Securities Act") via an exchange offer. The fair value of the 2028 Senior Notes approximated $888,759 on June 30, 2022 based upon quoted market prices (level 1 inputs). In connection with issuance and exchange of the 2028 Senior Notes, Griffon capitalized $16,448 of underwriting fees and other expenses incurred, which is being amortized over the term of such notes, and at June 30, 2022, $11,562 remained to be amortized.

On January 24, 2022, Griffon amended and restated its Revolving Credit Facility (as amended, "Credit Agreement") to provide for a new $800,000 Term Loan B facility, due January 24, 2029, in addition to its current ~~cash balances, cash flows from operations and sources of liquidity will be sufficient to meet our cash requirements.~~$400,000 revolving credit facility

4748

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("Revolver"), and replaced LIBOR with SOFR (Secured Overnight Financing Rate). The Term Loan B contains a SOFR floor of 0.50% and a current spread of 2.75%. Additionally, there are two interest rate step-downs tied to achieving decreased secured leverage ratio thresholds, the first of which was achieved at June 30, 2022. The decreased spread, effective in the fourth quarter of 2022, is 2.50%. The Original Issue Discount (OID) for the Term Loan B was 99.75%. In connection with this amendment, Griffon capitalized $15,466 of underwriting fees and other expenses incurred, which are being amortized over the term of the loan.

The Term Loan B facility requires nominal quarterly principal payments of $2,000, beginning with the quarter ended June 30, 2022; potential additional annual principal payments based on a percentage of excess cash flow and certain secured leverage thresholds starting with the fiscal year ending September 30, 2023; and a final balloon payment due at maturity. Term Loan B borrowings may generally be repaid without penalty but may not be re-borrowed. During the period ended June 30, 2022, Griffon prepaid $300,000 aggregate principal amount of the Term Loan B, which permanently reduced the outstanding balance. In connection with the prepayment of the Term Loan B Griffon recognized a $6,296 charge on the prepayment of debt, $5,575 related to the write-off of underwriting fees and other expenses and $721 of the original issuer discount. The Term Loan B facility is subject to the same affirmative and negative covenants that apply to the Revolver, but is not subject to any financial maintenance covenants. Term Loan B borrowings are secured by the same collateral as the Revolver. The fair value of the Term Loan B facility approximated $473,100 on June 30, 2022 based upon quoted market prices (level 1 inputs). At June 30, 2022, $9,174 of underwriting fees and other expenses incurred, remained to be amortized.

~~Payments related~~The Revolver's maximum borrowing availability is $400,000 and it matures on March 22, 2025. The Revolver includes a letter of credit sub-facility with a limit of $100,000; a multi-currency sub-facility of $200,000; and contains a customary accordion feature that permits us to ~~DE revenue~~request, subject to each lender's consent, an increase in the maximum aggregate amount that can be borrowed by up to an additional $100,000.

In addition, on December 9, 2021, Griffon replaced the Revolver GBP LIBOR benchmark rate with a Sterling Overnight Index Average ("SONIA"). Borrowings under the Revolver may be repaid and re-borrowed at any time. Interest is payable on borrowings at either a SOFR, SONIA or base rate benchmark rate, plus an applicable margin, which adjusts based on financial performance. Current margins are ~~received~~0.75% for base rate loans, 1.75% for SOFR loans and 1.75% for SONIA loans. The Revolver has certain financial maintenance tests including a maximum total leverage ratio, a maximum senior secured leverage ratio and a minimum interest coverage ratio, as well as customary affirmative and negative covenants, and events of default. The negative covenants place limits on Griffon's ability to, among other things, incur indebtedness, incur liens, and make restricted payments and investments. Both the Revolver and Term Loan B borrowings under the Credit Agreement are guaranteed by Griffon’s material domestic subsidiaries and are secured, on a first priority basis, by substantially all domestic assets of the Company and the guarantors, and a pledge of not greater than 65% of the equity interest in Griffon’s material, first-tier foreign subsidiaries. At June 30, 2022, there were $97,816 of outstanding borrowings under the Revolver; outstanding standby letters of credit were $12,287; and $289,897 was available, subject to certain loan covenants, for borrowing at that date.

Griffon has one finance lease outstanding for real estate located in Ocala, Florida. The lease matures in 2025 and bears interest at a fixed rate of approximately 5.6%. The Ocala, Florida lease contains two five-year renewal options. At June 30, 2022, $13,426 was outstanding. During the period ended June 30, 2022, the financing lease on the Troy, Ohio location expired.The lease bore interest at a rate of approximately 5.0%, was secured by a mortgage on the real estate, which was guaranteed by Griffon, and had a one dollar buyout at the end of the lease. Griffon exercised the one dollar buyout option in November 2021.

In November 2012, Garant G.P. (“Garant”), a Griffon wholly owned subsidiary, entered into a CAD 15,000 ($11,666 as of June 30, 2022) revolving credit facility. The facility accrues interest at LIBOR (USD) or the Bankers Acceptance Rate (CDN) plus 1.3% per annum (3.09% LIBOR USD and 3.86% Bankers Acceptance Rate CDN as of June 30, 2022). The revolving facility matures in October 2022. Garant is required to maintain a certain minimum equity. At June 30, 2022, there were no outstanding borrowings under the revolving credit facility with CAD 15,000 ($11,666 as of June 30, 2022) available.

On March 30, 2022, Griffon Australia Holdings Pty Ltd and its Australian subsidiaries (collectively, "Griffon Australia") amended its AUD 18,375 term loan, AUD 20,000 revolver and AUD 15,000 receivable purchase facility agreement that was entered into in July 2016 and further amended in fiscal 2020. Griffon Australia paid in full and canceled the term loan in the amount of AUD 9,625 and canceled the AUD 20,000 revolver. The amendment refinanced the existing AUD 15,000 receivable purchase facility. The receivable purchase facility matures in March 2023, but is renewable upon mutual agreement with the lender. The receivable purchase facility accrues interest at BBSY (Bank Bill Sap Rate) plus 1.25%, respectively, per annum (2.39% at June 30, 2022). At June 30, 2022, there was no balance outstanding under the receivable purchase facility with AUD 15,000 ($10,392 as of June 30, 2022) available. The receivable purchase facility is secured by substantially all of the assets of Griffon Australia and its subsidiaries.

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In July 2018, The AMES Companies UK Ltd and its subsidiaries (collectively, "AMES UK") entered into a GBP 14,000 term loan, GBP 4,000 mortgage loan and GBP 5,000 revolver. The term loan and mortgage loan require quarterly principal payments of GBP 438 and GBP 105 plus interest, respectively, and have balloon payments due upon maturity, July 2023, of GBP 7,088 and GBP 2,349, respectively. Effective in January 2022, the Term Loan and Mortgage Loan were amended to replace GBP LIBOR with SONIA. The Term Loan and Mortgage Loans each accrue interest at the SONIA Rate plus 1.92% (3.11% at June 30, 2022). The revolving facility accrues interest at the Bank of England Base Rate plus 3.25% (4.50% as of June 30, 2022). The revolving credit facility matures in September 2022, but it is renewable upon mutual agreement with the lender. As of June 30, 2022, the revolver had no outstanding balance while the term and mortgage loan balances amounted to GBP 11,603 ($14,193 as of June 30, 2022). The revolver and the term loan are both secured by substantially all of the assets of AMES UK and its subsidiaries. AMES UK is subject to a maximum leverage ratio and a minimum fixed charges cover ratio. During the period ended March 31, 2022, AMES UK entered into a $8,500 trade loan facility agreement. The trade loan facility has a maximum loan period of 135 days and expired on June 30, 2022. The trade facility accrues interest at the Mid-point of the FED Target Range plus 2.50% (4.13% as of June 30, 2022).

Other long-term debt primarily consists of a loan with the Pennsylvania Industrial Development Authority, with the balance consisting of capital leases.

At June 30, 2022, Griffon and its subsidiaries were in compliance with the terms and covenants of its credit and loan agreements. Gross Debt to EBITDA (Leverage), as calculated in accordance with the ~~terms~~definition in the Credit Agreement, was 3.2x at June 30, 2022.

Capital Resource Requirements

Griffon's debt requirements include principal on our outstanding debt, most notably our Senior Notes totaling $984,775 payable in 2028 and related annual interest payments of ~~development~~approximately $57,246. As noted above, Griffon entered into a new $800,000 seven year Term Loan B facility with initial pricing of SOFR floor of 50 basis points plus a spread of 275 basis points. The OID was 99.75%. During the period ended June 30, 2022, Griffon prepaid $300,000 aggregate principal amount of the Term Loan B, which permanently reduced the outstanding balance. The Term Loan B facility requires quarterly payments equal to 0.25% of the outstanding principal amount, or $2,000, which began with the quarter ended June 30, 2022 and ~~production subcontracts; certain of such receipts are progress or performance-based payments. With respect to CPP and HBP, there have been no material adverse impacts on~~a balloon payment ~~for sales.~~due at maturity.

Customers

A small number of customers account for, and are expected to continue to account for, a substantial portion of Griffon’s consolidated revenue. For the nine months ended June 30, ~~2021:~~

•2022, The ~~United States Government and its agencies, through either prime or subcontractor relationships,~~Home Depot represented 7%14% of Griffon’s consolidated revenue, ~~and 67% of DE revenue.~~

•~~The Home Depot represented 17% of Griffon’s consolidated revenue, 25%~~20% of CPP's revenue and ~~11%~~8% of HBP’s revenue.

No other customer exceeded 10% of consolidated revenue. Future operating results will continue to depend substantially on the success of Griffon’s largest customers and our ongoing relationships with them. Orders from these customers are subject to change and may fluctuate materially. The loss of all or a portion of the volume from any one of these customers could have a material adverse impact on Griffon’s liquidity and results of operations.

Cash and Equivalents and Debt June 30, September 30,
2021 2020
Cash and equivalents $ 220,697 $ 218,089
Notes payables and current portion of long-term debt 13,024 9,922
Long-term debt, net of current maturities 1,042,612 1,037,042
Debt discount/premium and issuance costs 15,485 17,458
Total debt 1,071,121 1,064,422
Debt, net of cash and equivalents $ 850,424 $ 846,333

On June 22, 2020, in an unregistered offering through a private placement, Griffon completed the add-on offering of $150,000 principal amount of its 5.75% Senior Notes, at 100.25% of par, to Griffon's previously issued $850,000 principal amount of its 5.75% Senior Notes, at par, completed on February 19, 2020 (collectively, the “Senior Notes”). Proceeds from the Senior Notes were used to redeem the $1,000,000 of 5.25% 2022 senior notes. As of June 30, 2021, outstanding Senior Notes due totaled $1,000,000; interest is payable semi-annually on March 1 and September 1.

The Senior Notes are senior unsecured obligations of Griffon guaranteed by certain domestic subsidiaries, and subject to certain covenants, limitations and restrictions. On April 22, 2020 and August 3, 2020, Griffon exchanged substantially all of the Senior Notes for substantially identical Senior Notes registered under the Securities Act of 1933, as amended (the "Securities Act"), via an exchange offer. The fair value of the Senior Notes approximated $1,061,250 on June 30, 2021 based upon quoted market prices (level 1 inputs).

In connection with these transactions, Griffon capitalized $16,448 of underwriting fees and other expenses incurred related to the issuance and exchange of the 2028 Senior Notes, which will amortize over the term of the 2028 Senior Notes. Furthermore, all of the obligations associated with the 2022 Senior Notes were discharged. Additionally, Griffon recognized a $7,925 loss on the early extinguishment of debt of the $1,000,000 principal amount of 2022 Senior Notes, comprised primarily of the write-off of $6,725 of remaining deferred financing fees, $607 of tender offer net premium expense and $593 of redemption interest expense.

On January 30, 2020, Griffon amended its revolving credit facility (as amended, the "Credit Agreement") to increase the maximum borrowing availability from $350,000 to $400,000, and extend its maturity date from March 22, 2021 to March 22, 2025 and modify certain other provisions of the facility. The facility includes a letter of credit sub-facility with a limit of $100,000; a multi-currency sub-facility of $200,000; and contains a customary accordion feature that permits us to request, subject to each lender's consent, an increase in the maximum aggregate amount that can be borrowed by up to an additional $100,000.

Borrowings under the Credit Agreement may be repaid and re-borrowed at any time. Interest is payable on borrowings at either a LIBOR or base rate benchmark rate, plus an applicable margin, which adjusts based on financial performance. Current margins are 0.50% for base rate loans and 1.50% for LIBOR loans. The Credit Agreement has certain financial maintenance tests including a maximum total leverage ratio, a maximum senior secured leverage ratio and a minimum interest coverage

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ratio, as well as customary affirmative and negative covenants, and events of default. The negative covenants place limits on Griffon's ability to, among other things, incur indebtedness, incur liens, and make restricted payments and investments. Borrowings under the Credit Agreement are guaranteed by Griffon’s material domestic subsidiaries and are secured, on a first priority basis, by substantially all domestic assets of the Company and the guarantors, and a pledge of not greater than 65% of the equity interest in Griffon’s material, first-tier foreign subsidiaries. At June 30, 2021, there were $20,775 of outstanding borrowings under the Credit Agreement; outstanding standby letters of credit were $17,007; and $362,218 was available, subject to certain loan covenants, for borrowing at that date.

Two of Griffon's subsidiaries have finance leases outstanding for real estate located in Troy, Ohio and Ocala, Florida. The leases mature in November 2021 and 2025, respectively, and bear interest at fixed rates of approximately 5.0% and 5.6%, respectively. The Troy, Ohio lease is secured by a mortgage on the real estate, which is guaranteed by Griffon, and has a one dollar buyout at the end of the lease. The Ocala, Florida lease contains two five-year renewal options. At June 30, 2021, $15,254 was outstanding, net of issuance costs.

In November 2012, Garant G.P. (“Garant”), a Griffon wholly owned subsidiary, entered into a CAD 15,000 ($12,126 as of June 30, 2021) revolving credit facility. The facility accrues interest at LIBOR (USD) or the Bankers Acceptance Rate (CDN) plus 1.3% per annum (1.40% LIBOR USD and 1.48% Bankers Acceptance Rate CDN as of June 30, 2021). The revolving facility matures in October 2022. Garant is required to maintain a certain minimum equity. At June 30, 2021, there were no outstanding borrowings under the revolving credit facility with CAD 15,000 ($12,126 as of June 30, 2021) available.

In July 2016, Griffon Australia Holdings Pty Ltd and its Australian subsidiaries (collectively, "Griffon Australia") entered into an AUD 29,625 term loan, AUD 20,000 revolver and AUD 10,000 receivable purchase facility agreement. The term loan requires quarterly principal payments of AUD 1,250 plus interest with a balloon payment of AUD 9,625 due upon maturity in March 2022, and accrues interest at Bank Bill Swap Bid Rate “BBSY” plus 1.95% per annum (2.01% at June 30, 2021). During fiscal 2020, the term loan balance was reduced by AUD 5,000, from AUD 23,375 to AUD 18,375 with proceeds from an AUD 5,000 increase in the commitment of the receivables purchase line from AUD 10,000 to AUD 15,000. As of June 30, 2021, the term loan had an outstanding balance of AUD 12,125 ($9,131 as of June 30, 2021). The revolving facility and receivable purchase facility mature in March 2022, but are renewable upon mutual agreement with the lender. The revolving facility and receivable purchase facility accrue interest at BBSY plus 1.9% and 1.35%, respectively, per annum (1.98% and 1.41%, respectively, at June 30, 2021). At June 30, 2021, there were no balances outstanding under the revolver and the receivable purchase facility. The revolver, receivable purchase facility and the term loan are all secured by substantially all of the assets of Griffon Australia and its subsidiaries. Griffon Australia is required to maintain a certain minimum equity level and is subject to a maximum leverage ratio and a minimum fixed charges cover ratio.

In July 2018, The AMES Companies UK Ltd and its subsidiaries (collectively, "AMES UK") entered into a GBP 14,000 term loan, GBP 4,000 mortgage loan and GBP 5,000 revolver. The term loan and mortgage loan require quarterly principal payments of GBP 438 and GBP 105 plus interest, respectively, and have balloon payments due upon maturity, July 2023, of GBP 7,088 and GBP 2,349, respectively. The Term Loan and Mortgage Loans each accrue interest at the GBP LIBOR Rate plus 1.8%, (1.86% at June 30, 2021). The revolving facility accrues interest at the Bank of England Base Rate plus 1.8% (1.90% as of June 30, 2021) and was renewed in June 2021. The revolving credit facility matures in April 2022, but it is renewable upon mutual agreement with the lender. As of June 30, 2021, the revolver had an outstanding balance of GBP $2,073 ($2,871 as of June 30, 2021) while the term and mortgage loan balances amounted to GBP 13,771 ($19,073 as of June 30, 2021). The revolver and the term loan are both secured by substantially all of the assets of AMES UK and its subsidiaries. AMES UK is subject to a maximum leverage ratio and a minimum fixed charges cover ratio. An invoice discounting arrangement was canceled and replaced by the above loan facilities.

~~Other long-term debt primarily consists of a loan with the Pennsylvania Industrial Development Authority, with the balance consisting of capital leases.~~

At June 30, 2021, Griffon and its subsidiaries were in compliance with the terms and covenants of its credit and loan agreements. Gross Debt to EBITDA (Leverage), as calculated in accordance with the definition in the Credit Agreement, was 2.9x at June 30, 2021.

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During the nine months ended June 30, 2021, cash provided by discontinued operations from operating activities of $1,080 primarily related to insurance proceeds received, partially offset by the settling of certain liabilities and environmental costs associated with the Installations Services.

During the nine months ended June 30, 2020, Griffon used cash for discontinued operations from operating activities of $2,481 primarily related to the settling of certain liabilities and environmental costs associated with the Plastics business and Installations Services.

SUPPLEMENTAL GUARANTOR FINANCIAL INFORMATION

Griffon’s Senior Notes are fully and unconditionally guaranteed, jointly and severally by Clopay Corporation, ~~Telephonics Corporation,~~ The AMES Companies, Inc., ~~ATT Southern LLC,~~ Clopay AMES Holding Corp., ClosetMaid LLC, AMES Hunter Holdings Corporation, Hunter Fan Company, CornellCookson, LLC and Cornell Real Estate Holdings, LLC, all of which are indirectly 100% owned by Griffon. In accordance with Rule 3-10 of Regulation S-X promulgated under the Securities Act, presented below are summarized financial information of the Parent (Griffon) subsidiaries and the Guarantor subsidiaries as of June 30, ~~2021~~2022 and September 30, ~~2020~~2021 and for the ~~three and~~ nine months ended June 30, ~~2021~~2022 and for the year ended September 30, ~~2020.~~2021. All intercompany balances and transactions between subsidiaries under Parent and subsidiaries under the Guarantor have been eliminated. The information presented below excludes eliminations necessary to arrive at the information on a consolidated basis. The summarized information excludes financial information of the Non-Guarantors, including earnings from and investments in these entities. The financial information may not necessarily be indicative of the results of operations or financial position of the guarantor companies or non-guarantor companies had they operated as independent entities. The guarantor companies and the non-guarantor companies include the consolidated financial results of their wholly-owned subsidiaries accounted for under the equity method.

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The indentures relating to the Senior Notes (the “Indentures”) contain terms providing that, under certain limited circumstances, a guarantor will be released from its obligations to guarantee the Senior Notes. These circumstances include (i) a sale of at least a majority of the stock, or all or substantially all the assets, of the subsidiary guarantor as permitted by the Indentures; (ii) a public equity offering of a subsidiary guarantor that qualifies as a “Minority Business” as defined in the Indentures (generally, a business the EBITDA of which constitutes less than 50% of the segment adjusted EBITDA of the Company for the most recently ended four fiscal quarters), and that meets certain other specified conditions as set forth in the Indentures; (iii) the designation of a guarantor as an “unrestricted subsidiary” as defined in the Indentures, in compliance with the terms of the Indentures; (iv) Griffon exercising its right to defease the Senior Notes, or to otherwise discharge its obligations under the Indentures, in each case in accordance with the terms of the Indentures; and (v) upon obtaining the requisite consent of the holders of the Senior Notes.

Summarized Statements of Operations and Comprehensive Income (Loss)


		For the Nine Months Ended				For the Year Ended					For the Nine Months Ended				For the Year Ended
		June 30, 2021				September 30, 2020					June 30, 2022				September 30, 2021
		Parent Company		Guarantor Companies		Parent Company		Guarantor Companies			Parent Company		Guarantor Companies		Parent Company		Guarantor Companies
Net sales	Net sales	$	—	$	1,473,169	$	—	$	1,938,972	Net sales	$	—	$	1,717,178	$	—	$	1,991,434
Gross profit	Gross profit	$	—	$	372,389	$	—	$	488,048	Gross profit	$	—	$	541,082	$	—	$	497,829
Income (loss) from operations	Income (loss) from operations	$	(15,953)	$	102,339	$	(24,876)	$	130,147	Income (loss) from operations	$	(32,474)	$	232,275	$	(22,321)	$	123,870
Equity in earnings of Guarantor subsidiaries	Equity in earnings of Guarantor subsidiaries	$	57,490	$	—	$	58,455	$	—	Equity in earnings of Guarantor subsidiaries	$	144,389	$	—	$	79,055	$	—
Net income (loss)	Net income (loss)	$	(29,487)	$	38,021	$	(48,546)	$	58,455	Net income (loss)	$	(47,947)	$	144,389	$	(40,035)	$	79,055

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Summarized Balance Sheet Information


		For the Nine Months Ended				For the Year Ended					For the Nine Months Ended				For the Year Ended
		June 30, 2021				September 30, 2020					June 30, 2022				September 30, 2021
		Parent Company		Guarantor Companies		Parent Company		Guarantor Companies			Parent Company		Guarantor Companies		Parent Company		Guarantor Companies
Current assets	Current assets	$	124,800	$	871,491	$	140,003	$	776,069	Current assets	$	57,281	$	1,026,662	$	114,377	$	951,609
Non-current assets	Non-current assets	17,805		1,075,871		23,069		1,046,225		Non-current assets	14,086		1,950,570		17,665		1,069,540
Total assets	Total assets	$	142,605	$	1,947,362	$	163,072	$	1,822,294	Total assets	$	71,367	$	2,977,232	$	132,042	$	2,021,149

Current liabilities	Current liabilities	$	51,125	$	332,094	$	39,130	$	296,293	Current liabilities	$	200,229	$	331,146	$	41,334	$	397,121
Long-term debt	Long-term debt	1,005,450		14,735		995,636		15,992		Long-term debt	1,549,596		13,294		998,787		14,482
Other liabilities	Other liabilities	36,339		183,331		38,024		195,792		Other liabilities	31,923		366,433		43,337		164,122
Total liabilities	Total liabilities	$	1,092,914	$	530,160	$	1,072,790	$	508,077	Total liabilities	$	1,781,748	$	710,873	$	1,083,458	$	575,725

CRITICAL ACCOUNTING POLICIES

The preparation of Griffon’s consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires the use of estimates, assumptions, judgments and subjective interpretations of accounting principles that have an impact on assets, liabilities, revenue and expenses. These estimates can also affect supplemental information contained in public disclosures of Griffon, including information regarding contingencies, risk and its financial condition. These estimates, assumptions and judgments are evaluated on an ongoing basis and based on historical experience, current conditions and various other assumptions, and form the basis for estimating the carrying values of assets and liabilities, as well as identifying and assessing the accounting treatment for commitments and contingencies. Actual results may materially differ from these estimates. There have been no changes in Griffon’s critical accounting policies from September 30, ~~2020.~~2021.

Griffon’s significant accounting policies and procedures are explained in the Management Discussion and Analysis section in the Annual Report on Form 10-K for the year ended September 30, ~~2020.~~2021. In the selection of the critical accounting policies, the objective is to properly reflect the financial position and results of operations for each reporting period in a consistent manner that can be understood by the reader of the financial statements. Griffon considers an estimate to be critical if it is subjective and if changes in the estimate using different assumptions would result in a material impact on the financial position or results of operations of Griffon.

RECENT ACCOUNTING PRONOUNCEMENTS

The FASB issues, from time to time, new financial accounting standards, staff positions and emerging issues task force consensus. See the Notes to Condensed Consolidated Financial Statements for a discussion of these matters.

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q, especially “Management’s Discussion and Analysis”, contains certain “forward-looking statements” within the meaning of the Securities Act, the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. Such statements relate to, among other things, income (loss), earnings, cash flows, revenue, changes in operations, operating improvements, the impact of the Hunter Fan transaction, industries in which Griffon Corporation (the “Company” or “Griffon”) operates and the United States and global economies. Statements in this Form 10-Q that are not historical are hereby identified as “forward-looking statements” and may be indicated by words or phrases such as “anticipates,” “supports,” “plans,” “projects,” “expects,” “believes,” “should,” “would,” “could,” “hope,” “forecast,” “management is of the opinion,” “may,” “will,” “estimates,” “intends,” “explores,” “opportunities,” the negative of these expressions, use of the future tense and similar words or phrases. Such forward-looking statements are subject to inherent risks and uncertainties that could cause actual results to differ materially from those expressed in any forward-looking statements. These risks and uncertainties include, among others: impact of the strategic alternatives review process announced in May 2022; current economic conditions and uncertainties in the housing, credit and capital markets; Griffon’s ability to achieve expected savings from cost control, restructuring, integration and disposal initiatives; the ability to identify and successfully consummate, and integrate, value-adding acquisition ~~opportunities;~~opportunities (including, in particular, integration of the Hunter Fan acquisition); increasing competition and pricing pressures in the markets served by Griffon’s operating companies; the ability of Griffon’s operating companies to expand into new geographic and product markets, and to anticipate and meet customer demands for new products and product enhancements and innovations; reduced military spending by the government on projects for which Telephonics supplies products, including as a result of defense budget cuts or other government actions; the ability of the federal government to fund and conduct its operations;

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increases in the cost or lack of availability of raw materials such as resin, wood and steel, components or purchased finished goods, including any potential impact on costs or availability resulting from tariffs; changes in customer demand or loss of a material customer at one of Griffon’s operating companies; the potential impact of seasonal variations and uncertain weather patterns on certain of Griffon’s businesses; political events that could impact the worldwide economy; a downgrade in Griffon’s credit ratings; changes in international economic conditions including interest rate and currency exchange fluctuations; the reliance by certain of Griffon’s businesses on particular third party suppliers and manufacturers to meet customer demands; the relative mix of products and services offered by Griffon’s businesses, which impacts margins and operating efficiencies; short-term capacity constraints or prolonged excess capacity; unforeseen developments in contingencies, such as litigation, regulatory and environmental matters; ~~unfavorable results of government agency contract audits of Telephonics;~~ Griffon’s ability to adequately protect and maintain the validity of patent and other intellectual property rights; the cyclical nature of the businesses of certain of Griffon’s operating companies; possible terrorist threats and actions and their impact on the global economy; the impact of COVID-19 on the U.S. and the global economy, including business disruptions, reductions in employment and an increase in business and operating facility failures, specifically among our customers and suppliers; ~~Griffon's~~Griffon’s ability to service and refinance its debt; and the impact of recent and future legislative and regulatory changes, including, without limitation, changes in tax laws. Additional important factors that could cause the statements made in this Quarterly Report on Form 10-Q or the actual results of operations or financial condition of Griffon to differ are discussed under the caption “Item 1A. Risk Factors” and “Special Notes Regarding Forward-Looking Statements” in Griffon’s Annual Report on Form 10-K for the year ended September 30, ~~2020.~~2021. Readers are cautioned not to place undue reliance on these forward-looking statements. These forward-looking statements speak only as of the date made. Griffon undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Such statements reflect the views of the Company with respect to future events and are subject to these and other risks, as previously disclosed in the Company's Securities and Exchange Commission filings. Readers are cautioned not to place undue reliance on these forward-looking statements. These forward-looking statements speak only as of the date made. Griffon undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Item 3 - Quantitative and Qualitative Disclosure About Market Risk

Griffon’s ~~business’~~business activities necessitate the management of various financial and market risks, including those related to changes in interest rates, foreign currency rates and commodity prices.

Interest Rates

Griffon’s exposure to market risk for changes in interest rates relates primarily to variable interest rate debt and investments in cash and equivalents.

~~The~~

Griffon's amended and restated Credit Agreement ~~and~~references a benchmark rate with SONIA or SOFR. In addition, certain other of Griffon’s credit facilities have a ~~LIBOR-based~~LIBOR and BBSY (Bank Bill Swap Rate) based variable interest rate. Due to the current and expected level of borrowings under these facilities, a 100 basis point change in SONIA, SOFR, BBSY, or LIBOR would not have a material impact on Griffon’s results of operations or liquidity.

Foreign Exchange

Griffon conducts business in various non-US countries, primarily in Canada, Australia, the United Kingdom, ~~Mexico~~Ireland, New Zealand and China; therefore, changes in the value of the currencies of these countries affect Griffon's financial position and cash flows when translated into US Dollars. Griffon has generally accepted the exposure to exchange rate movements relative to its non-US operations. Griffon may, from time to time, hedge its currency risk exposures. A change of 10% or less in the value of all applicable foreign currencies would not have a material effect on Griffon’s financial position and cash flows.

Item 4 - Controls and Procedures

Under the supervision and with the participation of Griffon’s Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), Griffon’s disclosure controls and procedures, as defined by Exchange Act Rule 13a-15(e) and 15d-15(e), were evaluated as of the end of the period covered by this report. Based on that evaluation, Griffon’s CEO and CFO concluded that Griffon’s disclosure controls and procedures were effective at the reasonable assurance level.

~~During~~In connection with the Hunter acquisition, Griffon is in the process of integrating its controls and procedures with respect to Hunter's operations. Griffon expects to include the internal controls with respect to Hunter operations in its assessment of the effectiveness of its internal controls over financial reporting as of the end of fiscal year 2023. Other than the acquisition of Hunter, during the period covered by this report, there were no changes in Griffon’s internal control over financial reporting which materially affected, or are reasonably likely to materially affect, Griffon’s internal control over financial reporting.

Limitations on the Effectiveness of Controls

Griffon believes that a control system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the control system are met, and no evaluation of controls can provide absolute assurance that all controls issues and instances of fraud, if any, within a company have been detected. Griffon’s disclosure controls and procedures, as defined by Exchange Act Rule 13a-15(e) and 15d-15(e), are designed to provide reasonable assurance of achieving their objectives.

~~Table of Contents~~

PART II - OTHER INFORMATION

Item 1 Legal Proceedings

None

Item 1A Risk Factors

In addition to the other information set forth in this report, carefully consider the factors in Item 1A to Part I in Griffon’s Annual Report on Form 10-K for the year ended September 30, ~~2020,~~2021, which could materially affect Griffon’s business, financial condition or future results. The risks described in Griffon’s Annual Report on Form 10-K are not the only risks facing Griffon. Additional risks and uncertainties not currently known to Griffon or that Griffon currently deems to be immaterial also may materially adversely affect Griffon’s business, financial condition and/or operating results.

Item 2 Unregistered Sales of Equity Securities and Use of Proceeds


Period	(a) Total Number of Shares (or Units) Purchased	(b) Average Price Paid Per Share (or Unit)		(c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs (1)	(d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) That May Yet Be Purchased Under the Plans or Programs (1)
April 1 - 30, ~~2021~~2022	—	$	—	—
May 1 - 31, ~~2021~~2022	—	—		—
June 1 - 30, ~~2021~~2022	—	—		—
Total	—	$	—	—	$	57,955

1.On each of August 3, 2016 and August 1, 2018, the Company’s Board of Directors authorized the repurchase of up to $50,000 of Griffon common stock; as of June 30, ~~2021,~~2022, an aggregate of $57,955 remained available for the purchase of Griffon common stock under these repurchase programs.

Item 3 Defaults Upon Senior Securities

None

Item 4 Mine Safety Disclosures

None

Item 5 Other Information

~~None~~

None

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Item 6			Exhibits


2.1*			Share Purchase Agreement by and among TTM Technologies, Inc., Exphonics, Inc. and Griffon Corporation, dated as of April 18, 2022 (incorporated by reference to Exhibit 2.1 of Current Report on Form 8-K filed April 21, 2022 (Commission File No. 1-06620)).

2.2			First Amendment to Share Purchase Agreement, dated as of June 11, 2022, to that certain Share Purchase Agreement, dated as of April 18, 2022, by and among TTM Technologies, Inc., Exphonics, Inc. and Griffon Corporation.
2.3*			Letter Agreement, dated as of June 11, 2022, modifying that certain Share Purchase Agreement, dated as of April 18, 2022, by and among TTM Technologies, Inc., Exphonics, Inc. and Griffon Corporation.

10.1**			Amendment No. 3 to Employment Agreement, dated March 16, 2008, by and between Griffon Corporation and Ronald J. Kramer, made as of April 28, 2022 (incorporated by reference to Exhibit 10.4 of Quarterly Report on Form 10-Q for the quarter ended March 31, 2022).

10.2**			Amendment No. 1 to Severance Agreement, dated July 30, 2015, by and between Griffon Corporation and Brian G. Harris, made as of April 28, 2022 (incorporated by reference to Exhibit 10.5 of Quarterly Report on Form 10-Q for the quarter ended March 31, 2022).

10.3**			Amendment No. 1 to Severance Agreement, dated April 27, 2010, by and between Griffon Corporation and Seth L. Kaplan, made as of April 28, 2022 (incorporated by reference to Exhibit 10.6 of Quarterly Report on Form 10-Q for the quarter ended March 31, 2022).


31.1			Certification pursuant to Rule 13a-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2			Certification pursuant to Rule 13a-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32			Certifications pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.


101.INS			XBRL Instance Document

101.SCH			XBRL Taxonomy Extension Schema Document

101.CAL			XBRL Taxonomy Extension Calculation Document

101.DEF			XBRL Taxonomy Extension Definitions Document

101.LAB			XBRL Taxonomy Extension Labels Document

101.PRE			XBRL Taxonomy Extension Presentations Document

			*The registrant has omitted schedules and similar attachments to the subject agreement pursuant to Item 601(b)(2) of Regulation S-K. The registrant will furnish a copy of any omitted schedule or similar attachment to the Securities and Exchange Commission upon request.
			** Indicates a management contract or compensatory plan or arrangement.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


			GRIFFON CORPORATION

			/s/ Brian G. Harris
			Brian G. Harris
			Senior Vice President and Chief Financial Officer
			(Principal Financial Officer)

			/s/ W. Christopher Durborow
			W. Christopher Durborow
			Vice President and Chief Accounting Officer
			(Principal Accounting Officer)

Date: ~~July 29, 2021~~August 3, 2022

5556


	At September 30, 2020		Business Acquisitions (a)		Business Divestitures (b)		Foreign currency translations adjustments		At June 30, 2021
Consumer and Professional Products	$	232,845	$	784	$	0	$	3,133	$	236,762
Home and Building Products	191,253		0		0		0		191,253
Defense Electronics	18,545		0		(811)		0		17,734

Total	$	442,643	$	784	$	(811)	$	3,133	$	445,749


		Three Months Ended June 30, 2021								Three Months Ended June 30, 2020
		Effective Interest Rate		Cash Interest		Amort. Debt Premium		Amort. Debt Issuance Costs & Other Fees			Total Interest Expense		Effective Interest Rate		Cash Interest		Amort. Debt Premium		Amort. Debt Issuance Costs & Other Fees		Total Interest Expense
Senior notes due 2028	(a)	6.0	%	$	14,375	$	(12)	$	496		$	14,859	5.8	%	$	12,219	$	0	$	277	$	12,496
Senior notes due 2022	(a)	—		0		0		0			0		5.7	%	1,960		11		155		2,126
Revolver due 2025	(b)	Variable		344		0		123			467		Variable		1,597		0		134		1,731



Finance lease - real estate	(c)	5.8	%	215		0		6			221		6.3	%	33		0		6		39
Non US lines of credit	(d)	Variable		4		0		4			8		Variable		4		0		(1)		3
Non US term loans	(d)	Variable		169		0		18			187		Variable		222		0		21		243
Other long term debt	(e)	Variable		107		0		0			107		Variable		102		0		1		103
Capitalized interest				0		—		—			0				(16)		—		—		(16)
Totals				$	15,214	$	(12)	$	647		$	15,849			$	16,121	$	11	$	593	$	16,725


	Operating Leases		Finance Leases
2021(a)	$	9,771	$	1,227
2022	35,363		3,166
2023	27,677		2,832
2024	20,719		2,244
2025	18,673		2,077
2026	12,689		2,075
Thereafter	64,282		7,777
Total lease payments	189,174		21,398
Less: Imputed Interest	(33,690)		(4,052)
Present value of lease liabilities	$	155,484	$	17,346