RESTRUCTURING CHARGES

6 Months Ended

Mar. 31, 2022

Restructuring and Related Activities [Abstract]

In November 2019, Griffon announced the development of a next-generation business platform for CPP to enhance the growth, efficiency, and competitiveness of its U.S. operations, and on November 12, 2020, Griffon announced that CPP is broadening this strategic initiative to include additional North American facilities, the AMES United Kingdom (U.K.) and Australia businesses, and a manufacturing facility in China. On April 28, 2022, Griffon announced an accelerated timeline and reduced scope for the initiative, which will now be completed by the end of fiscal 2022. These changes reflect the rapid progress made with the initiative, and reduced investment in facilities expansion and equipment given recent significant increases in construction and equipment costs. Any remaining expenditures, after the end of fiscal 2022, including those related to the deployment of AMES' global information systems, will be included in the continuing operations of the business. Future investments in equipment, particularly for automation, will be part of normal-course annual capital expenditures.

This initiative includes three key development areas. First, certain AMES U.S. and global operations will be consolidated to optimize facilities footprint and talent. Second, strategic investments in automation and facilities expansion will be made to increase the efficiency of our manufacturing and fulfillment operations, and support e-commerce growth. Third, multiple independent information systems will be unified into a single data and analytics platform, which will serve the whole AMES global enterprise.

When fully implemented and the efficiencies are fully realized, we expect annual cash savings of $25,000 (previously $30,000 to $35,000). The cost to implement this new business platform, over the duration of the project, will now include one-time charges of approximately $50,000 (previously $65,000) and capital investments of approximately $15,000 (previously $65,000), net of future proceeds from the sale of exited facilities.

In the quarter and six months ended March 31, 2022, CPP incurred pre-tax restructuring and related exit costs approximating $4,766 and $6,482, respectively. During the six months ended March 31, 2022, cash charges totaled $4,427 and non-cash, asset-related charges totaled $2,055; the cash charges included $2,138 for one-time termination benefits and other personnel-related costs and $2,289 for facility exit costs. Non-cash charges included a $1,766 impairment charge related to certain fixed assets at several manufacturing locations and $289 of inventory that have no recoverable value. During the six months ended March 31, 2022, headcount was reduced by 20.

In the quarter and six months ended March 31, 2021, CPP incurred pre-tax restructuring and related exit costs approximating $7,502 and $10,581, respectively. During the six months ended March 31, 2021, cash charges totaled $7,891 and non-cash, asset-related charges totaled $2,690; the cash charges included $1,084 for one-time termination benefits and other personnel related costs and $6,807 for facility and lease exit costs primarily driven by the consolidation of distribution facilities. Non-cash charges of $2,690 predominantly related to inventory that have no recoverable value.

A summary of the restructuring and other related charges included in Cost of goods and services and SG&A expenses in the Company's Condensed Consolidated Statements of Operations were as follows:


	For the Three Months Ended March 31,				For the Six Months Ended March 31,
	2022		2021		2022		2021
Cost of goods and services	$	2,455	$	3,337	$	2,777	$	3,878
Selling, general and administrative expenses	2,311		4,165		3,705		6,703
Total restructuring charges	$	4,766	$	7,502	$	6,482	$	10,581


	For the Three Months Ended March 31,				For the Six Months Ended March 31,
	2022		2021		2022		2021
Personnel related costs	$	1,878	$	722	$	2,138	$	1,084
Facilities, exit costs and other	1,122		4,283		2,289		6,807

Non-cash facility and other	1,766		2,497		2,055		2,690
Total	$	4,766	$	7,502	$	6,482	$	10,581

The following table summarizes the accrued liabilities of the Company's restructuring actions:


	Cash Charges				Non-Cash
	Personnel related costs		Facilities & Exit Costs		Facility and Other Costs		Total
Accrued liability at September 30, 2021	$	418	$	264	$	—	$	682
Q1 Restructuring charges	260		1,167		289		1,716
Q1 Cash payments	(275)		(1,167)		—		(1,442)
Q1 Non-cash charges	—		—		(289)		(289)
Accrued liability at December 31, 2021	$	403	$	264	$	—	$	667
Q2 Restructuring charges	1,878		1,122		1,766		4,766
Q2 Cash payments	(1,883)		(1,122)		—		(3,005)
Q2 Non-cash charges	—		—		(1,766)		(1,766)
Accrued liability at March 31, 2022	$	398	$	264	$	—	$	662