GFF Q2 Deep Dive: Tariffs and Consumer Weakness Pressure Revenue, Margins Hold Up

August 12, 2025 at 03:17 AM EDT

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Multi-industry consumer and professional products manufacturer Griffon Corporation (NYSE: GFF) fell short of the market’s revenue expectations in Q2 CY2025, with sales falling 5.3% year on year to $613.6 million. The company’s full-year revenue guidance of $2.5 billion at the midpoint came in 2.3% below analysts’ estimates. Its non-GAAP profit of $1.50 per share was in line with analysts’ consensus estimates.

Is now the time to buy GFF? Find out in our full research report (it’s free).

Griffon (GFF) Q2 CY2025 Highlights:

Revenue: $613.6 million vs analyst estimates of $650 million (5.3% year-on-year decline, 5.6% miss)
Adjusted EPS: $1.50 vs analyst estimates of $1.50 (in line)
Adjusted EBITDA: $134.7 million vs analyst estimates of $137.6 million (22% margin, 2.1% miss)
EBITDA guidance for the full year is $587.5 million at the midpoint, above analyst estimates of $532 million
Operating Margin: 19.2%, up from 16.7% in the same quarter last year
Market Capitalization: $3.25 billion

StockStory’s Take

Griffon’s second quarter was met with a significant negative market reaction, as revenue fell short of Wall Street’s expectations amid a 5.3% year-over-year decline. Management attributed underperformance primarily to weak demand in the Consumer and Professional Products segment, where increased tariffs disrupted customer ordering patterns, particularly at Hunter Fan. CEO Ronald Kramer noted that these pressures led to a sharp sales drop, while CFO Brian Harris cited reduced retail point-of-sale activity and cautious consumer behavior, especially in the Northeast, as key headwinds. The Home & Building Products segment continued to show resilience, driven by favorable pricing and mix, but this was not enough to offset the challenges in consumer-facing categories.

Looking ahead, Griffon’s guidance reflects ongoing caution regarding the trajectory of consumer demand and the broader impact of tariffs. Management reaffirmed their full-year EBITDA outlook, underpinned by strength in the Home & Building Products segment and ongoing cost optimization initiatives, but reduced revenue expectations due to persistent weakness in the Consumer and Professional Products segment. CFO Brian Harris emphasized, “It’s hard to really project when the consumer will come back,” pointing to uncertainty about the timing of demand recovery and the potential for further disruption if tariff issues remain unresolved. Investments in automation and efficiency projects, especially in Home & Building Products, are expected to support margins as the company navigates these headwinds.

Key Insights from Management’s Remarks

Management cited a combination of persistent consumer softness, tariff disruptions, and strategic cost actions as core influences on the latest quarter’s results and guidance revision.

Tariff-driven demand disruption: The Consumer and Professional Products segment was significantly impacted by increased tariffs, which altered historical customer buying patterns and contributed to a pronounced drop in U.S. sales, particularly for Hunter Fan.
Asset-light transformation progress: The company’s shift to an asset-light manufacturing and global sourcing model in the AMES U.S. business improved flexibility and reduced operating costs, aiding margin expansion even as volumes fell.
Home & Building Products resilience: The Home & Building Products segment benefited from favorable pricing and product mix, with high-end residential demand holding up and commercial markets remaining soft. Management highlighted that new construction exposure is minimal, limiting downside risk.
Ongoing cost optimization: Across segments, ongoing automation and efficiency projects were emphasized, particularly in Home & Building Products, where management sees further opportunity for margin improvement through new equipment and process innovation.
Capital allocation remains active: Griffon continued share repurchases and regular quarterly dividends, with $145 million returned to shareholders year-to-date. The company reduced leverage to 2.5x, supporting its capital allocation strategy despite uncertain demand conditions.

Drivers of Future Performance

Griffon’s outlook for the remainder of the year centers on persistent consumer softness, tariff-related headwinds, and a focus on operational efficiency to sustain margins.

Consumer demand uncertainty: Management expressed limited visibility on when consumer demand in the Consumer and Professional Products segment will recover, noting that resolution of tariff issues and improved consumer confidence are needed to stabilize and grow sales.
Margin support from automation: In Home & Building Products, continued investment in automation and efficiency projects is expected to support EBITDA margins above 31%. Management highlighted the potential for further gains as process improvements and new equipment come online.
Global sourcing optionality: The asset-light, global sourcing model provides flexibility to adjust supply chains in response to tariffs or other disruptions, but management acknowledged that achieving long-term margin targets in Consumer and Professional Products will require a return of consumer demand.

Catalysts in Upcoming Quarters

In upcoming quarters, the StockStory team will monitor (1) signs of demand stabilization or recovery in Consumer and Professional Products, especially as tariff impacts become clearer, (2) continued execution and margin support from automation and efficiency initiatives in Home & Building Products, and (3) Griffon’s ability to balance capital returns with further debt reduction. Progress in these areas will be critical for restoring investor confidence.

Griffon currently trades at $69.72, down from $82.37 just before the earnings. At this price, is it a buy or sell? Find out in our full research report (it’s free).

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