GRIFFON CORP (GFF)·Q3 2025 Earnings Summary

Executive Summary

• Q3 2025 revenue declined 5% to $613.6M and adjusted EPS was $1.50; GAAP net loss of $120.1M reflected a $217.2M after-tax impairment of Hunter Fan goodwill/intangibles in CPP, while adjusted EBITDA rose 7% to $134.7M .
• Versus estimates: revenue missed consensus ($650.0M vs $613.6M), EBITDA modestly missed ($137.6M vs $134.7M), and adjusted EPS was roughly in line/slightly above ($1.50 vs $1.498)*. The miss was driven by CPP weakness and tariff-driven order disruption .
• Guidance updated: FY25 revenue cut to $2.5B (from $2.6B), HBP margin target raised to >31%, CPP margin trimmed to ~8%; interest expense lowered to $95M and capex lowered to $60M .
• Capital allocation remained supportive: $40.3M buybacks in Q3, leverage reduced to 2.5x, and a $0.18 dividend declared; $319.6M remains on the repurchase authorization .
• Key stock narrative: impairment plus revenue guide-down in CPP vs continuing strength/margin expansion in HBP; tariff mitigation progress and HBP price/mix support frame medium-term resilience .

What Went Well and What Went Wrong

What Went Well

• HBP delivered revenue growth (+2% to $400.2M) with strong price/mix and reduced material costs; adjusted EBITDA rose 9% to $128.8M and full-year HBP margin guide increased to >31% .
• Consolidated adjusted EBITDA increased 7% to $134.7M despite CPP volume headwinds; normalized gross margin expanded 230 bps YoY to 43.2% .
• Balance sheet and cash flow: net debt/EBITDA improved to 2.5x; nine-month FCF of $260.5M; $87M debt reduction in the quarter .

Quote: “For the first nine-months of the year, HBP exceeded our expectations led by an EBITDA margin of 31.4% driven by favorable price and mix.” — Ronald J. Kramer .

What Went Wrong

• CPP revenue fell 16% to $213.4M on -19% volume from reduced consumer demand and tariff-driven order disruptions; adjusted EBITDA decreased 14% to $19.2M .
• GAAP loss of $120.1M due to the Hunter Fan impairment ($243.6M pretax; $217.2M after tax), reflecting weak demand and increased tariffs disrupting U.S. ordering .
• Revenue guidance lowered by $100M to $2.5B, entirely attributable to CPP; CPP margin guide reduced to ~8% from >9% .

Analyst concern: Timing of CPP demand rebound remains unclear; management acknowledged uncertainty and linked recovery to tariff clarity and consumer confidence .

Financial Results

Consolidated vs Prior Periods and Year, and vs Estimates

Segment Breakdown

KPIs

Estimates vs Actuals (Q3 2025)

Values marked with * retrieved from S&P Global.

Guidance Changes

Note: Prior values for interest, capex reflect company reference to previous guide in the Q3 release .

Earnings Call Themes & Trends

Management Commentary

• “We are reaffirming full year EBITDA guidance of $575,000,000 to $600,000,000 while reducing our revenue expectations by $100,000,000 to $2,500,000,000 as a result of the ongoing consumer weakness at CPP.” — Ronald J. Kramer .
• “Third quarter revenue of $614,000,000 decreased 5%… adjusted EBITDA… $148,000,000 increased 5%… EBITDA margin… was 24.1%.” — Brian Harris .
• “We view our stock as a compelling value… we have returned $145,000,000 to shareholders… while reducing leverage to 2.5x.” — Ronald J. Kramer .
• “We now expect HBP segment margin in excess of 31%… CPP margin of approximately 8%… interest expense $95M… capex $60M… normalized tax ~28%.” — Brian Harris .
• “Clopay is the leader in the both residential and commercial door business… we’re nowhere near full peak earnings of that business.” — Ronald J. Kramer .

Q&A Highlights

• CPP pricing and tariffs: Management has taken selective price actions, with sensitivity to ongoing customer discussions; tariff-driven order disruptions are weighing on sell-through trends .
• HBP price realization and demand: Price increases generally realized; high-end residential demand resilient, new construction <10% of HBP, commercial still soft vs prior years .
• CPP margin trajectory and supply chain: Long-term CPP margin target remains 15%; further benefits require consumer recovery; diversified supply chain optionality in place .
• Corporate items: Corporate EBITDA guidance ~$55M confirmed; inventory days elevated due to consumer slowdown .

Estimates Context

• Q3 2025 vs Wall Street consensus: revenue missed ($650.0M consensus vs $613.6M actual), EBITDA modestly missed ($137.6M vs $134.7M), and adjusted EPS was slightly above/in line ($1.498 vs $1.50)* .
• Expect estimate revisions: Lowered FY revenue and CPP margin guidance likely drive downward revenue/EBITDA revisions for CPP-heavy models; HBP margin raise offsets some negative drift .

Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

• HBP remains the anchor: price/mix strength and margin raise to >31% underpin consolidated profitability despite CPP weakness; watch for continued gross margin resilience .
• CPP is the swing factor: tariffs and weak consumer demand drove volume declines and a $100M revenue guide cut; long-term margin target intact but timing depends on demand normalization .
• Non-GAAP vs GAAP: impairment drove GAAP loss; adjusted metrics show operational strength—focus on adjusted EBITDA/EPS for core run-rate while monitoring impairment-related signals .
• Cash returns continuing: buybacks ($40.3M in Q3) and $0.18 dividend signal capital return commitment, supported by leverage at 2.5x and strong FCF .
• Guidance mix shift: revenue lowered but margins/interest/capex improved; net effect maintains FY EBITDA range, suggesting operational levers offset top-line pressure .
• Watch tariff developments and supply chain milestones: fan supply diversification by year-end and broader global sourcing may reduce tariff exposure in FY26; near-term mitigation continues .
• Trading implications: headline impairment and revenue guide-down may pressure near-term sentiment; HBP strength/margin raise and capital returns provide downside support; updates on CPP demand and tariffs are key catalysts .