Given the business restructuring, how does the pro forma cash generation profile compare to the prior cumulative free cash flow targets?

The cash flow will continue to be primarily generated by the Clopay and Hunter businesses. While slightly less than historical due to the exit of AMES tools (which were not significant cash generators), the balance sheet impact from discontinued operations will contribute to continued deleveraging. “So the cash flow of our businesses was and is primarily generated by the Clopay business, and we still have the Hunter business, and we'll get the cash flow from that as well. It will be slightly less than historical as we've taken out the AMES tools businesses, but those were not significant cash generators.”

How does the current innovation pipeline, including VertiStack and C-Power, compare to past cycles and how will it help the company outpace the market in growth?

The fundamentals of the business remain unchanged, with Clopay leveraging its leading brand, dealer network, and big box distribution. The focus is on repair and remodel for residential, with low exposure to new home construction, and a growing commercial business. The company has a low CapEx model (2%) and will continue executing its plan to drive profitability. “So I'd just say that the fundamentals of our business have not changed. And our execution of the plan that we've laid out over the last several years continues. Clopay is the leading brand with the best dealer network and the best big box distribution.”

Can you elaborate on the impact of steel prices, inventory turns, and the company's ability to price, including any timing lags?

There is generally a 4- to 5-month lag from the purchase of steel to the actual realization of that cost in the financials. “There generally is a 4- or 5-month lag of purchase to actual realization of the cost.”

GFF

Griffon (GFF) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Mar 2026 (Q2 FY26)· Materials· May 7, 2026

Source: earnings call transcript

Executive summary

Griffon Q2 FY26 — Strong Performance in Soft Market & Strategic Focus on Building Products

Griffon Corporation is strategically focusing on its North American building products business, reporting its continuing operations as a single segment following the planned joint venture and divestitures of its AMES businesses. The company delivered solid Q2 FY26 results, demonstrating resilience in soft U.S. housing and commercial construction markets, supported by strong pricing and product innovation. Management remains confident in its full-year guidance and capital allocation strategy, prioritizing share repurchases, debt reduction, and dividends.

Highlights

Q2 revenue decreased only 1% YoY to $422M despite a 6% volume reduction, supported by a 5% price and mix improvement.
Adjusted EBITDA margin was 23.2%, a strong performance despite a 4% decrease in absolute EBITDA to $98M.
Repurchased $33M of stock (422,000 shares at $78.03/share) in Q2, contributing to a 20% reduction in outstanding shares since April 2023.
Clopay recognized for pioneering innovation at the International Builders Show for the second consecutive year, winning an award for its Avante door with C-Power enabled click-to-conceal panels.
Net debt-to-EBITDA leverage improved to 2.4x from 2.6x in the prior year quarter, even after returning $72M to shareholders in H1 FY26.

Concerns

Q2 revenue decreased 1% YoY to $422M, driven by a 6% reduction in volume.
Adjusted EBITDA decreased 4% YoY to $98M, impacted by decreased volume, overhead absorption, and increased material costs, including steel.
Gross profit margin decreased 100 basis points to 45.5% from 46.5% in the prior year quarter.
Year-to-date free cash flow from continuing operations was $101M, down from $114M in the prior year.

Guidance & targets

Category	Target	Timeline	Confidence
Full-year FY26 Revenue	$1.8B high materiality	FY26	High
Full-year FY26 Adjusted EBITDA	$458M high materiality	FY26	High
Full-year FY26 Free Cash Flow from Continuing Operations	in excess of income from continuing operations medium materiality	FY26	High
Full-year FY26 Capital Expenditures	$50M medium materiality	FY26	High
Full-year FY26 Depreciation	$27M low materiality	FY26	High
Full-year FY26 Amortization	$15M low materiality	FY26	High
Full-year FY26 Interest Expense	$93M medium materiality	FY26	High
Full-year FY26 Normalized Tax Rate	28% low materiality	FY26	High
Clopay Price Increases	mid-single digit medium materiality	Q3 · FY26	High
AMES JV Closing	end of June 2026 high materiality	Q3 · FY26	High
AMES Australia Strategic Process	active and ongoing medium materiality	Ongoing	Medium
AMES United Kingdom Business Exit	completed by the end of the calendar year medium materiality	CY26	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Continuing Operations Reflects the new reporting structure as a single segment, with prior periods restated. Revenue decrease driven by residential volume softness partially offset by price and mix improvements. Adjusted EBITDA decreased 4% YoY to $98M, impacted by decreased volume, overhead absorption, and increased material costs. Volume reduction: 6%Price and mix improvement: 5%	$422M	-1%	—	23.2% Adjusted EBITDA margin

Product announcements

Product	Type	Timeline	Details
Avante door with C-Power enabled click-to-conceal panels	launch	this year

Deals & partnerships

ONCAP Formation of a joint venture involving AMES U.S. and Canadian businesses. Griffon to receive $100M cash proceeds and $161M second lien paid-in-kind notes.

The joint venture will include Griffon's AMES U.S. and Canadian businesses. Griffon will receive cash proceeds and paid-in-kind notes upon completion.

AMES Australia Strategic review of the AMES Australia business.

The strategic process for AMES Australia is active and ongoing, with updates to be provided as available.

AMES United Kingdom Decision to exit the AMES United Kingdom business due to persistent economic challenges.

After careful consideration, the company decided to exit the AMES UK business. This action is expected to be completed by the end of the calendar year.

Risks & headwinds

Soft U.S. housing and commercial construction markets continuing

6% reduction in volume (Q2 revenue impact)

Mitigation:Resiliency managing through uncertain global economic conditions; benefits from price and mix; focus on repair and remodel for residential.

Increased material costs (steel) Q2 FY26

Contributed to 4% adjusted EBITDA decrease in Q2 FY26

Mitigation:Ability to price, with a 4-5 month lag for cost realization.

Weak consumer demand at the lower end last 18 months (for Hunter fan business)

Weakness in the consumer, particularly at the lower end

Mitigation:Clopay addresses the higher end of repair and remodel; Hunter fan business is stable and ready for when the consumer returns.

What to watch in Q3 FY26

AMES JV Closing

Q3 FY26

Current Expected by end of June 2026

Target JV closed

Why it matters

Completion of the joint venture will provide $100M cash proceeds and $161M in PIK notes, significantly impacting liquidity and balance sheet structure.

We continue to expect to close our joint venture with ONCAP, which will include our AMES U.S. and Canadian businesses by the end of June 2026.

Find out whether GFF delivers this. Inve re-checks your case every morning.

Q&A highlights

What are the underlying assumptions for end markets in the fiscal second half, especially regarding residential and commercial volume, and how will pricing impact the top-line cadence given prior year pricing laps?

Management expects second half quarters to be similar to recent trends, with soft residential volume and roughly flat commercial volume. Benefits from price and mix are anticipated, noting that Clopay implemented mid-single-digit price increases effective at the end of March. The second half is also expected to be the strongest free cash flow period.

“We expect the second half quarters to be similar to what we've seen over the last several quarters. As you mentioned, residential volume will continue to be soft. Commercial roughly flat, and we'll see benefits from price and mix. I will point out that Clopay had price increases recently issued, mid-single digit that were effective at the end of March.”

asked by Unknown Analyst · answered by Brian Harris

2 min read 5 chapters

Detailed narrative

Strategic Realignment to Pure-Play Building Products

Griffon is undergoing a significant strategic transformation to become a pure-play North American building products company. This involves the formation of a joint venture for its AMES U.S. and Canadian businesses, a strategic review of AMES Australia, and the decision to exit the AMES United Kingdom business due to economic challenges.

As a result, the company's financial performance is now presented as a single segment for continuing operations, with the Global AMES businesses reported as discontinued operations.

Clopay's Continued Product Innovation Leadership

Clopay, a key part of Griffon's continuing operations, has maintained its position as a leader in garage door innovation. For the second consecutive year, Clopay received a 'Best of IBS' award at the International Builders Show. This year's recognition was for its Avante door featuring C-Power enabled click-to-conceal panels, which allows windows to instantly transition from clear to opaque, offering enhanced privacy and flexibility for residential and commercial spaces.

Resilient Performance Amidst Soft Market Conditions

Despite facing soft U.S. housing and commercial construction markets, Griffon's continuing operations demonstrated solid performance in Q2 FY26. Revenue decreased only 1% year-over-year to $422 million, primarily due to a 6% reduction in volume, which was largely offset by a 5% improvement in price and mix.

The business benefits from its focus on the repair and remodel segment in residential markets, which has low exposure to new home construction, and a growing commercial segment.

Consistent Capital Allocation Strategy

Griffon remains committed to a capital allocation strategy focused on delivering long-term shareholder value. This includes supporting a quarterly dividend, which has grown at an annualized compounded rate of over 19% since 2012, and opportunistic share repurchases. Since April 2023, the company has repurchased $611 million worth of stock, reducing outstanding shares by 20%, while also prioritizing debt reduction, as evidenced by an improved net debt-to-EBITDA leverage ratio of 2.4x.

Operational Execution and Margin Management

The company's operational teams are executing well, leading to a Q2 FY26 adjusted EBITDA of $98 million, representing a 23.2% margin. While adjusted EBITDA decreased 4% year-over-year, the strong margin reflects effective management of decreased volume, overhead absorption, and increased material costs, including steel. The company anticipates realizing substantial operating leverage as market activity improves in the future.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.