Core Insights - Worthington Steel, Inc. (NYSE: WS) has experienced a strong performance following its separation from Worthington Enterprises (WOR) in the spring of last year [1]. Group 1 - The investing group "Value In Corporate Events" focuses on providing members with opportunities related to IPOs, mergers & acquisitions, earnings reports, and changes in corporate capital allocation [1]. - The service covers approximately 10 major events each month, aiming to identify the best investment opportunities [1].

Core Insights - The previous investment stance on Worthington Enterprises, Inc. (NYSE: WOR) was a hold rating due to concerns over earnings growth amid macroeconomic weakness and declining steel prices [1] Group 1: Company Analysis - The 4Q25 results indicated some performance metrics that may influence future investment decisions, although specific details were not provided [1] - The investment strategy focuses on long-term investments while also considering short-term opportunities to uncover alpha [1] - The approach is centered on bottom-up analysis, assessing the fundamental strengths and weaknesses of individual companies [1] Group 2: Investment Strategy - The investment duration is medium to long-term, aiming to identify companies with solid fundamentals, sustainable competitive advantages, and growth potential [1]

Group 1 - Worthington Enterprises, Inc. held its Fourth Quarter Fiscal 2025 Earnings Call on June 25, 2025, featuring key executives including the CEO and CFO [1][2][3] - The call was introduced by Marcus Rogier, the Treasurer and Investor Relations Officer, who welcomed participants and outlined the agenda [2][3] - The company emphasized that certain statements made during the call are forward-looking and subject to risks and uncertainties [4] Group 2 - The earnings call included references to non-GAAP financial measures, with reconciliations available in the earnings release [5] - Joseph B. Hayek, the President and CEO, was set to provide opening remarks following the introduction [6]

Financial Data and Key Metrics Changes - In Q4, the company reported a revenue increase of 14% year-over-year, excluding the deconsolidation of SCS, and an 8% increase when excluding both SCS and revenues at Bradesco [5] - Gross margin improved to 29.3% from 24.8% year-over-year, while adjusted EBITDA margin rose to 26.8% from 19.8% [5][16] - Adjusted earnings from continuing operations were $1.06 per share, up from $0.74 per share in the prior year quarter [15] Business Line Data and Key Metrics Changes - Consumer Products Q4 net sales were $126 million, essentially flat compared to the prior year, with adjusted EBITDA of $21 million and a margin of 16.6%, up from 13.6% [20] - Building Products Q4 net sales grew 25% year-over-year to $192 million, with adjusted EBITDA of $71 million, representing a margin of 37% compared to 33.6% in the prior year [21][22] Market Data and Key Metrics Changes - The company noted that volumes in the consumer segment remain closely tied to point of sale activity, with cautious consumer behavior impacting overall demand [20] - The building products segment experienced a strong seasonal quarter, with volumes up 19% both sequentially and year-over-year [21] Company Strategy and Development Direction - The company continues to leverage its business system focusing on innovation, transformation, and M&A to drive growth [5][8] - The recent acquisition of LG Manufacturing is seen as a strategic fit that complements the existing building products business and is expected to enhance margins and cash flows [9][50] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding future growth, citing ongoing tariff and economic uncertainties but emphasizing a strong focus on customer care and operational efficiency [12][44] - The company aims to achieve a gross margin over 30% and maintain SG&A as a percentage of sales at 20% or less in the coming years [29] Other Important Information - The company announced a quarterly dividend increase of 12% to $0.19 per share, reflecting strong earnings and a commitment to returning capital to shareholders [19] - Free cash flow for the full fiscal year totaled $159 million, representing a 103% conversion rate relative to adjusted net earnings [18] Q&A Session Summary Question: Can you break down margin growth? - Management indicated that half of the margin expansion was due to the deconsolidation of SES, with the rest driven by volume growth and product mix improvements [26][27] Question: What were the drivers for Wave's contributions? - Contributions were attributed to a mix of volume demand, project timing, and pricing, with steady performance expected moving forward [30][32] Question: What are the expectations for organic growth? - Management noted that while visibility is limited due to macroeconomic factors, they remain cautiously optimistic about organic growth in both consumer and building products [44][49] Question: How does the company approach pricing amid input cost inflation? - The company is actively working on price risk mitigation strategies and hedging to manage input cost volatility, particularly in steel [59] Question: What are the objectives for the next year? - Management emphasized a focus on long-term growth, investing in culture, automation, and strategic M&A while navigating economic uncertainties [99]

Financial Data and Key Metrics Changes - In Q4 2025, the company reported a revenue increase of 14% year-over-year, excluding the deconsolidation of SCS, and an 8% increase when excluding both SCS and revenues at Bradesco [6][15] - Gross margin improved to 29.3% from 24.8% year-over-year, while adjusted EBITDA margin rose to 26.8% from 19.8% [6][17] - Adjusted earnings from continuing operations were $1.06 per share, up from $0.74 per share in the prior year quarter [16] Business Line Data and Key Metrics Changes - Consumer Products segment reported Q4 net sales of $126 million, essentially flat compared to the prior year, with adjusted EBITDA of $21 million and a margin of 16.6% [21] - Building Products segment saw Q4 net sales grow 25% year-over-year to $192 million, with adjusted EBITDA of $71 million and a margin of 37% [22][23] Market Data and Key Metrics Changes - The company noted that volumes in the Building Products segment were up 19% both sequentially and year-over-year, indicating strong seasonal demand [22] - The consumer environment remains cautious, but the company believes its market-leading brands position it well for long-term growth as conditions normalize [21] Company Strategy and Development Direction - The company continues to leverage its business system focusing on innovation, transformation, and strategic M&A to drive growth [6][10] - The recent acquisition of LG Manufacturing is seen as a strategic fit that complements the existing building products business and is expected to enhance margins and cash flows [10][51] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's positioning for long-term growth despite current tariff and economic uncertainties [13][50] - The focus remains on optimizing operations and investing in future growth opportunities while managing through economic challenges [13][99] Other Important Information - The company announced a quarterly dividend increase of 12% to $0.19 per share, reflecting strong earnings and a commitment to returning capital to shareholders [20][66] - Free cash flow for the full fiscal year totaled $159 million, representing a 103% conversion rate relative to adjusted net earnings [19] Q&A Session Summary Question: Margin growth breakdown - Management indicated that half of the margin expansion was due to the deconsolidation of SES, with the rest driven by volume growth and product mix improvements [28][30] Question: Wave contributions - Contributions from Wave were attributed to a mix of volume demand and pricing, with steady performance expected moving forward [32][34] Question: Regasco revenue and EBITDA contributions - Regasco contributed approximately $16.5 million in revenue and about $2 million in EBITDA during the quarter [43] Question: Steel input costs and pricing - Management noted that steel prices have fluctuated, but efforts are in place to mitigate price risks and manage costs effectively [61] Question: Elgin acquisition details - The acquisition of Elgin is expected to create synergies in operational efficiency and customer overlap, with a focus on improving margins [51][82] Question: Tariff impacts on building products - Management acknowledged the challenges posed by tariffs but emphasized the company's strong domestic manufacturing position and ability to respond to market demands [88][92]

Financial Performance - Consolidated net sales were \$318 million, flat year-over-year, with a gross margin increase to 29.3% from 24.8% and Adj EBITDA margin rising to 26.8% from 19.8%[9] - Building Products Adj EBITDA was \$71 million with a margin of 37.0%, improving from \$52 million and 33.7% in the prior year quarter[9, 10] - Consumer Products Adj EBITDA was \$21 million with a margin of 16.6%, improving from \$17 million and 13.7% in the prior year quarter[9, 10] - Free cash flow for Q4 was \$49 million, with capital expenditure of \$13 million, including \$8 million for facility modernization projects[9] - Adjusted EPS increased to \$1.06 from \$0.74 year-over-year[10] - Net sales for Building Products were \$192 million, up from \$154 million, and for Consumer Products were \$126 million, slightly up from \$125 million[10] Capital Allocation - The company repurchased 200 thousand shares of common stock for \$10 million at an average price of \$49.16, with 5.4 million shares remaining on the repurchase authorization[9] - A dividend of \$0.19 per share was declared, representing a 12% increase or \$0.02 per share compared to the prior quarter[9] - Elgen Manufacturing was acquired for approximately \$93 million on June 19, 2025[9] Key Financial Metrics (TTM as of Q4 FY25) - Net sales reached \$1.154 billion, with adjusted EBITDA of \$263 million and free cash flow of \$159 million[48]

Company Performance - Worthington Enterprises (WOR) reported quarterly earnings of $1.06 per share, exceeding the Zacks Consensus Estimate of $0.76 per share, and up from $0.74 per share a year ago, representing an earnings surprise of +39.47% [1] - The company posted revenues of $317.88 million for the quarter ended May 2025, surpassing the Zacks Consensus Estimate by 3.65%, although this is a slight decrease from year-ago revenues of $318.8 million [2] - Over the last four quarters, Worthington Enterprises has surpassed consensus EPS estimates two times and topped consensus revenue estimates once [2] Stock Performance - Worthington Enterprises shares have increased approximately 47.6% since the beginning of the year, significantly outperforming the S&P 500's gain of 2.4% [3] - The current consensus EPS estimate for the upcoming quarter is $0.50 on revenues of $260.1 million, and for the current fiscal year, it is $3.14 on revenues of $1.17 billion [7] Industry Outlook - The Building Products - Wood industry, to which Worthington Enterprises belongs, is currently ranked in the bottom 18% of over 250 Zacks industries, indicating potential challenges ahead [8] - The performance of Worthington Enterprises may be influenced by the overall outlook for the industry, as research shows that the top 50% of Zacks-ranked industries outperform the bottom 50% by more than 2 to 1 [8]

Core Insights - Worthington Enterprises Inc. reported strong fourth quarter results for fiscal 2025, showing year-over-year and sequential growth in adjusted EBITDA, adjusted EPS, and free cash flow, driven by effective cost management and execution in its Consumer and Building Products segments [3][4][6]. Financial Performance - Net sales for Q4 2025 were $317.9 million, a slight decrease of 0.3% compared to Q4 2024, primarily due to the deconsolidation of the Sustainable Energy Solutions segment [5][6][8]. - The operating loss improved to $30.4 million from $56.1 million in the prior year, with adjusted operating income rising to $21.8 million, an increase of $16.0 million [5][9]. - Net earnings from continuing operations increased by 111% to $3.6 million, with adjusted EBITDA growing 35% to $85.1 million [6][9]. - Earnings per share from continuing operations improved from a loss of $(0.64) to a profit of $0.08, while adjusted EPS rose from $0.74 to $1.06 [6][28]. Cash Flow and Capital Management - Operating cash flow increased by 38% to $62.4 million, and free cash flow rose by 46% to $49.3 million [6][12]. - The company repurchased 200,000 shares for $9.8 million and declared a quarterly dividend of $0.19 per share, a 12% increase from the previous quarter [6][12]. Segment Performance - Consumer Products segment generated net sales of $125.6 million, remaining flat year-over-year, while adjusted EBITDA increased by $3.7 million to $20.8 million [14]. - Building Products segment saw net sales rise by 25.2% to $192.3 million, with adjusted EBITDA increasing by $19.6 million to $71.3 million, driven by higher volumes and contributions from the Ragasco acquisition [15][18]. Strategic Developments - The acquisition of Elgen Manufacturing for approximately $93 million was completed on June 19, 2025, aligning with the company's growth strategy in niche markets [6][16]. - The company expressed confidence in its ability to drive sustainable growth and long-term value heading into fiscal 2026 [16].

Core Points - Worthington Enterprises Inc. declared a quarterly dividend of $0.19 per share, marking a 12% increase from the previous quarter [1] - The dividend will be payable on September 29, 2025, to shareholders of record on September 15, 2025 [1] - The company has consistently paid quarterly dividends since its IPO in 1968 [1] Company Overview - Worthington Enterprises operates in two primary business segments: Building Products and Consumer Products [5] - The Building Products segment includes solutions for cooking, heating, cooling, water, architectural ceilings, and metal framing [5] - The Consumer Products segment offers tools, outdoor living, and celebration solutions [5] - The company employs approximately 6,000 people across North America and Europe [6] Corporate Philosophy and Community Engagement - Founded in 1955, Worthington Enterprises follows a people-first philosophy, prioritizing shareholder earnings [7] - The company emphasizes employee empowerment and innovation within attractive markets [7] - Worthington engages with local communities through volunteer efforts and workforce development programs [7]

Core Viewpoint - Worthington Enterprises has acquired Elgen Manufacturing for approximately $93 million, enhancing its position in the HVAC market and aligning with its strategy to build leadership in niche markets [1][4]. Company Overview - Worthington Enterprises is a designer and manufacturer of brands that improve everyday life, operating primarily in two segments: Building Products and Consumer Products [5][6]. - The Building Products segment includes solutions for heating, cooling, construction, and water applications, while the Consumer Products segment covers tools and outdoor living [5]. Acquisition Details - Elgen Manufacturing, based in Closter, New Jersey, specializes in HVAC parts and components, generating net sales of $114.9 million and EBITDA of $13.3 million for the trailing 12 months ended April 30, 2025 [4]. - The acquisition is expected to create synergies and growth opportunities by leveraging Worthington's manufacturing expertise and distribution model [2][3]. Strategic Fit - The acquisition aligns with Worthington's strategy to acquire businesses with strong market positions, as Elgen's manufacturing processes and sales strategies complement those of Worthington [2][3]. - Elgen's products are used in commercial buildings, and its sales strategy focuses on direct sales to contractors and partnerships with distributors, enhancing customer service and lead times [2]. Leadership and Integration - Elgen's leadership team, including CEO David Young, will remain with the company, ensuring continuity and commitment to customer service and innovation [3].