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    GFF
    Earnings call· Jun 2026(Q3 FY26)

    GRIFFON Q3 FY26 earnings call GFF

    Aug 5, 2026 Source

    Executive summary

    Griffon Corporation Q3 FY26 — Strong Operational Performance and Strategic Transformation Completion

    Griffon Corporation delivered solid Q3 FY26 results, marked by organic revenue growth and increased adjusted EBITDA, despite challenging housing and commercial construction markets. The company successfully completed its strategic transformation into a pure-play building products entity, enhancing its financial flexibility. Management remains confident in its full-year outlook and is focused on leveraging operational improvements and a strong balance sheet for future growth and shareholder returns.

    Highlights

    5

    • Revenue increased organically by 7% to $481 million in Q3 FY26.

    • Adjusted EBITDA increased 2% to $125 million in Q3 FY26.

    • Completed Australasia JV, receiving $181 million cash and $49 million note receivable, concluding strategic transformation into a pure-play building products company.

    • Repurchased $53 million of stock (626,000 shares) at an average price of $85 per share in Q3 FY26, reducing outstanding shares by 21% since April 2023.

    • Net debt-to-EBITDA leverage reduced to 2.2x (2.0x pro forma for JV close) from 2.5x in Q3 FY25.

    Concerns

    4

    • Gross profit margin decreased to 47% from 48.7% in the prior year quarter.

    • EBITDA margin slightly decreased to 25.9% from 26.9% in the prior year quarter.

    • Year-to-date free cash flow from continuing operations decreased to $194 million from $202 million in the prior year.

    • Residential door volume was slightly down, offset by fan volume, reflecting soft U.S. housing market conditions.

    Guidance & targets

    9
    CategoryTargetConfidence
    Full-year 2026 revenue
    $1.8 billion
    high materiality
    High
    Full-year 2026 adjusted EBITDA
    $458 million
    high materiality
    High
    Full-year 2026 free cash flow from continuing operations
    exceed net income from continuing operations
    medium materiality
    High
    Full-year 2026 capital expenditures
    $50 million
    medium materiality
    High
    Full-year 2026 depreciation
    $27 million
    low materiality
    High
    Full-year 2026 amortization
    $15 million
    low materiality
    High
    Full-year 2026 interest expense
    $80 million
    medium materiality
    High
    Normalized tax rate
    28%
    low materiality
    High
    Net debt-to-EBITDA leverage target range
    1.5x to 2.5x
    high materiality
    High

    Operational metrics

    26
    Revenue
    $481 millionup 7% organically YoY
    Q3 FY26
    Adjusted EBITDA
    $125 millionup 2% YoY
    Q3 FY26
    EBITDA margin
    25.9%vs 26.9% prior year
    Q3 FY26
    Gross profit
    $226 millionvs $219 million prior year
    Q3 FY26
    Gross margin
    47%vs 48.7% prior year
    Q3 FY26
    Adjusted SG&A expenses
    $111 millionvs $106 million prior year
    Q3 FY26
    Adjusted SG&A expenses
    $106 million
    Q3 FY25

    Prior year comparative figure

    Adjusted net income from continuing operations
    $68 millionvs $64 million prior year
    Q3 FY26
    Adjusted EPS from continuing operations
    $1.51vs $1.39 prior year
    Q3 FY26
    Net capital expenditures
    $24 millionvs $32 million prior year
    YTD Q3 FY26
    Net debt
    $1.2 billion
    as of June 30, 2026
    Net debt-to-EBITDA leverage
    2.2xvs 2.5x prior year
    as of June 30, 2026

    Calculated based on debt covenants

    Share repurchases
    $53 million
    Q3 FY26
    Remaining share repurchase authorization
    $194 million
    as of June 30, 2026
    Total share repurchases
    $664 million
    since April 2023 through June 2026

    Reduced outstanding shares by 21% relative to total shares outstanding at the end of Q2 FY23

    Amount returned to shareholders
    $135 million
    YTD Q3 FY26
    Term Loan B balance repaid
    $285 million
    subsequent to Q3 FY26
    Quarterly dividend
    $0.2260th consecutive quarterly dividend
    Q3 FY26
    Dividend growth rate
    19%
    since 2012
    Door volume
    down slightly
    Q3 FY26

    driven by residential

    Fan volume
    offset
    Q3 FY26

    offset residential door volume decline

    Commercial volume
    flat
    Q3 FY26
    Commercial replacement cycle
    approximately 7 years
    ongoing

    depending on the product and location it's installed

    Price and mix contribution
    approximately equal
    Q3 FY26

    within the 6% price/mix benefit

    Price increase
    in place
    Q3 FY26

    to offset increases in raw material, labor, energy, distribution and logistics costs

    EBITDA margin target
    25% plus
    ongoing

    expected to be maintained by pricing actions

    Industry KPIs

    6
    MetricValueDetails
    Price cost6%%
    Order backlogcontinue to effectuate
    Data center hvac exposureplay in all those spaces
    Organic operating leveragesignificant operating leverage
    Order lead times placement horizonLonger lead time
    Orders bookings growth by verticaldown slightly

    Deals & partnerships

    1
    Undisclosed (joint venture partner)Formation of a joint venture for the Australasia business.$181 million cash, $49 million note receivable

    The closing of the Australasia transaction concludes a series of strategic actions that transformed Griffon into a pure-play building products company.

    Risks & headwinds

    2
    Soft U.S. housing and commercial construction marketsQ3 FY26, ongoing

    door volume for the quarter was down slightly, driven by residential

    Mitigation: Focus on premium repair and remodel, new product innovation, architectural sales force for emerging commercial markets, operating leverage for when activity improves.

    Increased material and SG&A costsQ3 FY26

    partially offset by increased material and SG&A costs

    Mitigation: Price increases implemented to offset these costs, expected to maintain 25%+ EBITDA margins.

    What to watch in Q4 FY26

    4

    Residential door volume

    next quarter
    Currentdown slightly
    Targetreturn to growth

    Why it matters

    Indicates recovery in the U.S. housing market, a key driver for the Clopay business.

    So door volume for the quarter was down slightly, driven by residential, and this was more than offset by the fan volume, leaving our commercial volume flat.

    Q&A highlights

    6

    Is Griffon seeing opportunities to gain market share due to a competitor's manufacturing and shipping issues in the overhead door business?

    Management confirmed they are capable of fulfilling demand and are always looking to increase market share, but did not directly confirm competitor issues.

    “We remain more than capable to fulfill demand that is out there. We continue to perform well in the market and trust our dealers, our customers to -- and sell our products well and continue to benefit from that.”

    asked by Timothy Wojs · answered by Brian Harris

    1 min read5 chapters

    Detailed Narrative

    01

    Strategic Transformation Completion

    Griffon successfully concluded its strategic transformation by closing the Australasia joint venture. This move positions the company as a pure-play building products entity, having generated $281 million in cash and $210 million in 10% PIK notes from these transactions, while retaining a 49% equity interest with a book value of $139 million in the Australasia business.

    02

    Capital Allocation Strategy

    The company continues its balanced capital allocation approach, returning $135 million to shareholders year-to-date through dividends and stock buybacks. Notably, $53 million was used to repurchase 626,000 shares at an average price of $85 per share in Q3 FY26, reducing outstanding shares by 21% since April 2023. The board also authorized the 60th consecutive quarterly dividend of $0.22 per share.

    03

    Debt Reduction and Leverage

    Subsequent to the quarter, Griffon repaid the remaining $285 million Term Loan B balance, utilizing proceeds from strategic actions and its revolver. This action, combined with prior efforts, reduced net debt-to-EBITDA leverage to 2.2x as of June 30, 2026, and approximately 2.0x pro forma for the Australasia transaction close. The new target leverage range is 1.5x to 2.5x.

    04

    Market Dynamics and Product Innovation

    Despite soft U.S. housing and commercial construction markets, Griffon's Clopay business continues to perform well, particularly in the premium repair and remodel segment. The company is focused on innovation, launching new products, and building an architectural sales force to capitalize on emerging secular growth markets like data centers, semiconductors, and pharma, where its doors provide entry, fire protection, and security solutions.

    05

    Commercial Replacement Cycle

    The commercial replacement cycle for doors is noted to be shorter, approximately 7 years, compared to residential. With new construction being relatively low, the company sees increased demand for replacement and refurbishment of existing facilities, leveraging its large installed base.

    AI-generated summary of the company’s earnings call. Not investment advice.