ACQUISITIONS

6 Months Ended

Mar. 31, 2022

Business Combination and Asset Acquisition [Abstract]

Griffon continually evaluates potential acquisitions that strategically fit within its portfolio or expand its portfolio into new product lines or adjacent markets. Griffon has completed a number of acquisitions that have been accounted for as business combinations, in which assets acquired and liabilities assumed are recorded at fair value as of the date of acquisition and have resulted in the recognition of goodwill . The operating results of the business acquisitions are included in Griffon’s consolidated financial statements from the date of acquisition; in each instance, Griffon is in the process of finalizing the initial purchase price allocation unless otherwise noted.

On January 24, 2022, Griffon completed the acquisition of Hunter, a market leader in residential ceiling, commercial, and industrial fans, for a contractual purchase price of $845,000, subject to customary post-closing adjustments. The acquisition was primarily financed with a new $800,000 seven year Term Loan B facility; a combination of cash on hand and revolver borrowings was used to fund the balance of the purchase price and related acquisition and debt expenditures. Hunter complements and diversifies Griffon's portfolio of leading consumer brands and products. The goodwill recognized was $279,658, which was assigned to the CPP segment, and is not expected to be deductible for income tax purposes. The final purchase price allocation, which is expected to be completed in the first quarter of fiscal 2023, will be based on final appraisals and other analysis of fair values of acquired assets and liabilities. The following unaudited proforma summary from continuing operations presents consolidated information as if the Company acquired Hunter on October 1, 2020:


	Proforma For the Three Months Ended March 31, (unaudited)				Proforma For the Six Months Ended March 31, (unaudited)
	2022		2021		2022		2021

Revenue	$	791,038	$	673,597	$	1,461,877	$	1,277,382
Income from continuing operations	55,151		24,419		75,125		50,514

Griffon did not include any material, nonrecurring proforma adjustments directly attributable to the business combination in the proforma revenue and earnings. These proforma amounts have been compiled by adding the historical results from continuing operations of Griffon, restated for classifying the results of operations of the Telephonics Corporate business as a discontinued operation, to the historical results of Hunter after applying Griffon’s accounting policies and the following proforma adjustments:

•Additional depreciation and amortization that would have been charged assuming the preliminary fair value adjustments to property, plant, and equipment, and intangible assets had been applied from October 1, 2021.

•Additional interest and related expenses from the new $800,000 seven year Term Loan B facility that Griffon used to acquire Hunter Fan.

•The consequential tax effects of the above adjustments using a 21.9% tax rate for the year ended September 30, 2021.

The calculation of the preliminary purchase price allocation is as follows:



Accounts receivable (1)	$	64,602
Inventories(2)	110,299
Other current assets	9,513
Property, plant and equipment	15,007
Operating lease right-of-use assets	12,447
Goodwill	279,658
Intangible assets	606,000

Total assets acquired	$	1,097,526

Accounts payable and accrued liabilities	$	70,768
Current portion of operating lease liabilities	3,323
Deferred tax liability(3)	161,381
Long-term operating lease liabilities	9,123
Other long-term liabilities	1,467
Total liabilities assumed	$	246,062
Total net assets acquired	$	851,464

(1) Includes $67,201 of gross accounts receivable of which $2,599 was not expected to be collected. The fair value of accounts receivable approximated book value acquired.

(2) Includes $113,287 of gross inventory of which $2,988 was reserved for obsolete items.

(3) Deferred tax liability recorded on intangibles assets.

The amounts assigned to goodwill and major intangible asset classifications for the Hunter acquisition are as follows:


	Average Life (Years)
Goodwill		$	279,658	N/A
Indefinite-lived intangibles	356,000	N/A
Definite-lived intangibles	250,000	20
Total goodwill and intangible assets		$	885,658

On December 22, 2020, AMES acquired Quatro Design Pty Ltd (“Quatro”), a leading Australian manufacturer and supplier of glass fiber reinforced concrete landscaping products for residential, commercial, and public sector projects for a net purchase price of AUD $3,500 (approximately $2,700) in cash. The final purchase price allocated to goodwill and acquired intangibles was AUD $1,038 (approximately $784) and AUD $2,755 (approximately $2,082), respectively, which was assigned to the CPP segment, and is not deductible for income tax purposes. During the three and six months ended March 31, 2022, the Company incurred acquisition costs of $6,708 and $9,303, respectively. During the three and six months ended March 31, 2021, acquisition costs were de minimis.