v3.26.1
INCOME TAXES
 12 Months Ended
Sep. 30, 2025
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
Income taxes have been based on the following components of Income before taxes:
For the Years Ended September 30,
202520242023
Domestic$83,154 $329,276 $263,215 
Non-U.S.90 2,817 4,110 
$83,244 $332,093 $267,325 
Provision (benefit) for income taxes on income was comprised of the following:
For the Years Ended September 30,
202520242023
Current$95,218 $88,449 $84,638 
Deferred(32,221)(1,952)(6,694)
Total$62,997 $86,497 $77,944 
U.S. Federal$45,395 $68,788 $56,261 
State and local17,507 16,974 17,932 
Non-U.S.95 735 3,751 
Total provision$62,997 $86,497 $77,944 

Differences between the effective income tax rate applied to Income before taxes and the U.S. Federal statutory income tax rate are presented in the table below.
For the Years Ended September 30,
202520242023
U.S. Federal statutory income tax rate21.0 %21.0 %21.0 %
State and local taxes, net of Federal benefit8.0 %3.7 %4.6 %
Non-U.S. taxes - foreign permanent items and taxes0.1 %— %0.1 %
Change in tax contingency reserves— %(0.5)%(0.2)%
Tax Reform-Repatriation of Foreign Earnings and GILTI(1.4)%(0.3)%0.3 %
Change in valuation allowance— %— %1.0 %
Other non-deductible/non-taxable items, net1.4 %— %— %
Non-deductible officer's compensation8.5 %1.7 %2.2 %
Research and U.S. foreign tax credits(1.1)%(0.2)%(0.3)%
Goodwill impairment41.8 %— %— %
Share based compensation(3.4)%(0.2)%0.5 %
Other0.8 %0.8 %— %
Effective tax rate75.7 %26.0 %29.2 %
The tax effect of temporary differences that give rise to future deferred tax assets and liabilities are as follows:
At September 30,
20252024
Deferred tax assets:
Bad debt reserves$2,103 $2,491 
Inventory reserves8,219 7,086 
Deferred compensation (equity compensation and defined benefit plans)6,739 7,036 
Compensation benefits6,121 5,052 
Insurance reserve1,918 2,411 
Restructuring reserve826 2,616 
Warranty reserve4,392 5,130 
Lease liabilities46,454 47,824 
Net operating loss27,750 25,299 
Tax credits5,933 5,933 
Research & development
10,329 4,510 
Other reserves and accruals5,160 5,167 
125,944 120,555 
Valuation allowance(30,703)(26,989)
Total deferred tax assets95,241 93,566 
Deferred tax liabilities:
Goodwill and intangibles(99,174)(126,523)
Property, plant and equipment(19,872)(19,903)
Right-of-use assets(43,498)(45,112)
Unremitted foreign earnings
(1,514)(1,896)
Other(1,068)(723)
Total deferred tax liabilities(165,126)(194,157)
Net deferred tax liabilities$(69,885)$(100,591)

The components of the net deferred tax liability, by balance sheet account, were as follows:
At September 30,
20252024
Other assets$— $— 
Assets held for sale209 495 
Other liabilities(65,066)(99,864)
Liabilities held for sale(5,028)(1,222)
Net deferred liability$(69,885)$(100,591)

In 2025 and 2024, the net increases in the valuation allowance of $3,714 and $8,997, respectively are the result of a determination that certain state and foreign net operating losses of the AMES U.S. and U.K. operations will not be realized.

At September 30, 2025 and 2024, Griffon's policy election under APB 23 is to indefinitely reinvest the undistributed earnings of certain non-U.S. subsidiaries. As of September 30, 2025, we have approximately $122,964 of undistributed earnings of non-U.S. subsidiaries. Of these undistributed earnings, $38,703 were previously subjected to U.S. federal income tax. The Company has not provided deferred taxes on the outside basis differences in its continuing operations investments in the non-U.S. subsidiaries as these outside basis differences are currently considered indefinitely reinvested. Under ASC 740-30, the Company is no longer permanently reinvested in the discontinued operations of AMES Canada, Australia and U.K. The Company may repatriate earnings of its discontinued operations non-U.S. subsidiaries where excess cash has accumulated and may be subject to additional non-U.S. withholding taxes and U.S. state income taxes.
At September 30, 2025, Griffon had no loss carryforwards for U.S. tax purposes and $75,849 for non-U.S. tax purposes. At September 30, 2024, Griffon had no loss carryforwards for U.S. tax purposes and $63,217 for non-U.S. tax purposes. The non-U.S. loss carryforwards expire in varying amounts beginning in 2027 to indefinite carryforward.

At September 30, 2025 and 2024, Griffon had state and local loss carryforwards of $221,855 and $228,485, respectively. The state and local loss carryforwards expire in varying amounts beginning in 2026 to indefinite carryforward.

At September 30, 2025 and 2024, Griffon had federal tax credit carryforwards of $5,933 in both years, which expire in 2028.

We believe it is more likely than not that the benefit from certain federal, state, and non-U.S. tax attributes will not be realized. In recognition of this risk, we have provided a valuation allowance as of September 30, 2025 and 2024 of $30,703 and $26,989, respectively, on the deferred tax assets. As it becomes probable that the benefits of these attributes will be realized, the reversal of valuation allowance will be recognized as a reduction of income tax expense.
Griffon files U.S. Federal, state and local tax returns, as well as applicable returns in Canada, Australia, U.K. and other non-U.S. jurisdictions. Griffon’s U.S. Federal income tax returns are no longer subject to income tax examination for years before 2022. Griffon's major U.S. state and other non-U.S. jurisdictions are no longer subject to income tax examinations for years before 2017. Various U.S. state and statutory tax audits are currently underway.

The following is a roll forward of unrecognized tax benefits:
Balance at September 30, 2023$6,292 
Additions based on tax positions related to the current year154 
Additions based on tax positions related to prior years
35 
Reductions based on tax positions related to prior years(2,735)
Lapse of Statutes(140)
Balance at September 30, 2024$3,606 
Additions based on tax positions related to the current year39 
Additions based on tax positions related to prior years11 
Reductions based on tax positions related to prior years(130)
Lapse of Statutes(440)
Balance at September 30, 2025
$3,086 
If recognized, the amount of potential unrecognized tax benefits that would impact Griffon’s effective tax rate is $1,603. Griffon recognizes potential accrued interest and penalties related to unrecognized tax benefits in income tax expense. At September 30, 2025 and 2024, the combined amount of accrued interest and penalties related to tax positions taken or to be taken on Griffon’s tax returns and recorded as part of the reserves for uncertain tax positions was $402 and $310, respectively. Griffon cannot reasonably estimate the extent to which other existing liabilities for uncertain tax positions may increase or decrease within the next twelve months as a result of the progression of ongoing tax audits or other events. Griffon believes that it has adequately provided for all open tax years by tax jurisdiction.

The Organization for Economic Co-operation and Development released the Global Anti-base Erosion Model Rules for Pillar Two (“Pillar Two”), which defined a 15% global minimum tax. Australia, Canada, U.K., Ireland, and other countries have enacted or are considering changes in their tax laws and regulations based on Pillar Two, some of which became effective for the Company in 2025. The Company has evaluated the impact of Pillar Two under the safe harbor provisions and currently there is no impact to the Company's financial statements.

On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was enacted in the U.S. The OBBBA includes significant tax related provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in the Company's fiscal year 2025 and others to be implemented
through 2027. The Company evaluated the OBBBA and there is no material impact on its financial position or results of operations in the current year.