Griffon (GFF) Q3 2024 earnings summary

Executive summary

• Third-quarter 2024 revenue was $647.8 million, down 5% year-over-year, with net income of $41.1 million ($0.84/share) and adjusted net income of $60.5 million ($1.24/share); adjusted EBITDA was $125.5 million, down 9% from the prior year.

• For the trailing twelve months ended June 30, 2024, revenue was $2.6 billion and adjusted EBITDA was $497 million, with a 19% margin; HBP contributed 61% of revenue and CPP 39%.

• Free cash flow for Q3 was $120 million, supporting $80 million in debt reduction, $19 million in share repurchases, and $7 million in dividends.

• Strategic portfolio reshaping, including acquisitions like Pope in Australia and divestitures, has positioned the company for growth and improved profitability.

• Strong brands and market leadership in both HBP and CPP segments, with a focus on innovation, operational efficiency, and global sourcing expansion.

Financial highlights

• Q3 2024 revenue was $647.8 million (down 5% year-over-year); adjusted EBITDA was $125.5 million (down 9%); gross profit margin was 38.5%, with adjusted gross margin at 40.9%.

• Q3 net income was $41.1 million ($0.84/share); adjusted net income was $60.5 million ($1.24/share).

• Free cash flow for the quarter was $120 million; cash and equivalents at June 30, 2024, were $133.5 million.

• Net debt at June 30, 2024, was $1.37 billion, with a net debt to EBITDA leverage ratio of 2.7x.

• Capital expenditures for Q3 were $2.3 million; for nine months, $47.8 million.

Outlook and guidance

• Full-year 2024 guidance reiterated: revenue of $2.65 billion and segment-adjusted EBITDA of $555 million.

• Guidance includes $22 million in amortization, $41 million in depreciation, $103 million in interest expense, a normalized tax rate of 28%, and free cash flow to exceed net income.

• CPP's global sourcing strategy expansion is expected to complete by end of 2024, targeting 15% EBITDA margins and improved free cash flow.

• HBP segment targets long-term EBITDA margins of 25–28%; CPP aims for 15% long-term EBITDA margins; total segment long-term EBITDA margin goal is 20%+.

• Management expects sufficient liquidity to invest in existing businesses and strategic acquisitions.