Griffon Gains From Business Strength & Buyouts Amid Headwinds

Griffon Corporation GFF is benefiting from solid demand in the residential market, supported by the resiliency of repair and remodeling activity in the residential construction sector. The recovery in the commercial construction market, driven by several projects undertaken by customers, also augurs well for the company.

Griffon has been strengthening its business through acquisitions. In July 2024, it acquired an Australia-based company, Pope (a provider of residential watering products), through its subsidiary, The AMES Companies. Pope, which has been added to Griffon’s Consumer and Professional Products (CPP) segment, expanded its product portfolio in the Australian market. In the third-quarter fiscal 2025 (ended June 2025), the Pope acquisition contributed 1% to the CPP segment’s revenues.

Also, in January 2022, Griffon acquired Hunter, a provider of residential ceiling, commercial and industrial fans. Hunter, which has been integrated into the CPP segment, expanded its portfolio of consumer products.

GFF is committed to rewarding its shareholders handsomely through dividend payments and share buybacks. For instance. in the first nine months of fiscal 2025, it paid dividends worth $31.6 million and repurchased shares for $113 million. Also, in fiscal 2024 (ended September 2024), the company rewarded its shareholders with $35.8 million in dividends and $309.9 million in buybacks. Also, in November 2024, the company hiked its quarterly dividend by 20%.

Few Near-Term Headwinds

Despite the positives, Griffon has been grappling with persistent weakness in the CPP segment. Reduced consumer demand across most regions, except Australia, has been weighing on the segment’s performance. Demand for products in the Hunter Fan business has been particularly weak. The CPP segment’s revenues declined 16% year over year in the third quarter of fiscal 2025.

GFF’s highly leveraged balance sheet is an added concern. It exited the fiscal third quarter with a long-term debt of $1.44 billion. Its current liabilities were at $338 million, higher than the cash equivalents of $107.3 million. This implies that the company does not have sufficient cash to meet its short-term debt obligations.

Griffon, which belongs to the Zacks Diversified Operations industry, faces stiff competition from several peers including 3M Company MMM, Carlisle Companies Incorporated CSL and Builders FirstSource, Inc. BLDR.

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This article originally published on Zacks Investment Research (zacks.com).

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