BUSINESS SEGMENTS

Griffon’s reportable segments from continuing operations are as follows:

•

HBP is a leading manufacturer and marketer of residential and commercial garage doors to professional dealers and to some of the largest home center retail chains in North America; a global provider of long-handled tools and landscaping products for homeowners and professionals; and a leading North American manufacturer and marketer of closet organization, home storage, and garage storage products to home center retail chains, mass merchandisers, and direct-to builder professional installers.


•	Telephonics is recognized globally as a leading provider of highly sophisticated intelligence, surveillance and communications solutions for defense, aerospace and commercial customers.

On November 16, 2017, Griffon announced it entered into a definitive agreement to sell PPC and on February 6, 2018, completed the sale to Berry for $475,000 in cash, subject to certain post-closing adjustments. As a result, Griffon classified the results of operations of the PPC business as discontinued operations in the Consolidated Statements of Operations for all periods presented and classified the related assets and liabilities associated with the discontinued operations in the consolidated balance sheets. All results and information presented exclude PPC unless otherwise noted. PPC is a global leader in the development and production of embossed, laminated and printed specialty plastic films for hygienic, health-care and industrial products and sells to some of the world's largest consumer products companies. See Note 14, Discontinued Operations to the Notes of the Financial Statements.

On October 2, 2017, Griffon acquired ClosetMaid. ClosetMaid, founded in 1965, is a leading North American manufacturer and marketer of closet organization, home storage, and garage storage products, and sells to some of the largest home center retail chains, mass merchandisers, and direct-to-builder professional installers in North America. The accounts of ClosetMaid, affected for preliminary adjustments to reflect fair market values assigned to assets purchased and liabilities assumed, are included in the Company’s consolidated financial statements from the date of acquisition of October 2, 2017.

Information on Griffon’s reportable segments from continuing operations is as follows:



	For the Three Months Ended March 31,				For the Six Months Ended March 31,
REVENUE	2018		2017		2018		2017
Home & Building Products:
AMES	$	182,928	$	162,907	$	322,910	$	283,631
CBP	138,112		122,628		292,348		266,088
ClosetMaid	75,268		—		152,028		—
Home & Building Products	396,308		285,535		767,286		549,719
Telephonics	82,252		98,272		148,577		186,365
Total consolidated net sales	$	478,560	$	383,807	$	915,863	$	736,084

The following table reconciles segment operating profit to income before taxes from continuing operations:



	For the Three Months Ended March 31,						For the Six Months Ended March 31,
INCOME BEFORE TAXES FROM CONTINUING OPERATIONS	2018			2017			2018			2017
Segment operating profit:
Home & Building Products	$	28,478		$	18,314		$	56,229		$	40,954
Telephonics	1,302			9,015			2,782			14,406
Segment operating profit from continuing operations	29,780			27,329			59,011			55,360
Net interest expense	(16,044		)	(12,705		)	(32,686		)	(25,994		)
Unallocated amounts	(10,541		)	(10,455		)	(20,977		)	(20,766		)
Acquisition costs	(7		)	—			(1,619		)	—
Cost of life insurance benefit	—			—			(2,614		)	—
Income before taxes from continuing operations	$	3,188		$	4,169		$	1,115		$	8,600

Griffon evaluates performance and allocates resources based on each segment's operating results before interest income and expense, income taxes, depreciation and amortization, unallocated amounts (mainly corporate overhead), restructuring charges, loss on debt extinguishment and acquisition related expenses, as well as other items that may affect comparability, as applicable (“Segment adjusted EBITDA”). Griffon believes this information is useful to investors for the same reason.

The following table provides a reconciliation of Segment adjusted EBITDA to Income before taxes from continuing operations:



	For the Three Months Ended March 31,						For the Six Months Ended March 31,
	2018			2017			2018			2017
Segment adjusted EBITDA:
Home & Building Products	$	39,789		$	27,565		$	79,246		$	59,372
Telephonics	3,997			11,786			8,196			19,894
Total Segment adjusted EBITDA	43,786			39,351			87,442			79,266
Net interest expense	(16,044		)	(12,705		)	(32,686		)	(25,994		)
Segment depreciation and amortization	(13,199		)	(12,022		)	(26,051		)	(23,906		)
Unallocated amounts	(10,541		)	(10,455		)	(20,977		)	(20,766		)
Acquisition costs	(814		)	—			(3,999		)	—
Cost of life insurance benefit	—			—			(2,614		)	—
Income before taxes from continuing operations	$	3,188		$	4,169		$	1,115		$	8,600

Unallocated amounts typically include general corporate expenses not attributable to a reportable segment.



	For the Three Months Ended March 31,				For the Six Months Ended March 31,
DEPRECIATION and AMORTIZATION	2018		2017		2018		2017
Segment:
Home & Building Products	$	10,504	$	9,251	$	20,637	$	18,418
Telephonics	2,695		2,771		5,414		5,488
Total segment depreciation and amortization	13,199		12,022		26,051		23,906
Corporate	114		125		220		229
Total consolidated depreciation and amortization	$	13,313	$	12,147	$	26,271	$	24,135

CAPITAL EXPENDITURES
Segment:
Home & Building Products	$	8,192	$	3,768	$	14,850	$	10,159
Telephonics	2,442		1,817		4,385		3,113
Total segment	10,634		5,585		19,235		13,272
Corporate	209		2,263		2,393		2,266
Total consolidated capital expenditures	$	10,843	$	7,848	$	21,628	$	15,538



ASSETS	At March 31, 2018		At September 30, 2017
Segment assets:
Home & Building Products	$	1,478,951	$	1,084,103
Telephonics	332,551		343,445
Total segment assets	1,811,502		1,427,548
Corporate	266,518		71,980
Total continuing assets	2,078,020		1,499,528
Assets of discontinued operations	3,280		374,013
Consolidated total	$	2,081,300	$	1,873,541