Worthington Industries(WOR) - 2026 Q1 - Quarterly Results

Executive Summary & First Quarter Highlights Recent Developments and First Quarter Highlights Worthington Enterprises reported strong Q1 FY26 results, with significant increases in sales, earnings, and EBITDA, driven by Building Products and the Elgen acquisition | Metric | 1Q 2026 | Change YoY | | :-------------------------- | :-------- | :--------- | | Net sales | $303.7 million | +18% | | Net earnings | $34.8 million | +45% | | Adjusted EBITDA | $65.1 million | +34% | | EPS – diluted | $0.70 | from $0.48 | | Adjusted EPS – diluted | $0.74 | from $0.50 | | Operating cash flow | $41.1 million | Flat | | Free cash flow | $27.9 million | -12% | - Repurchased 100,000 common shares for $6.3 million[4] - Declared a quarterly dividend of $0.19 per common share[4] - Acquired Elgen Manufacturing, a market-leading designer and manufacturer of HVAC parts and components, for $91.2 million on June 18, 2025[4] Financial Highlights (GAAP & Non-GAAP) Key Financial Highlights A comparative overview of Worthington Enterprises' key GAAP and Non-GAAP financial measures for Q1 FY26 versus FY25, showing significant improvements across most profitability metrics | (U.S. dollars in millions, except per share amounts) | 1Q 2026 | 1Q 2025 | | :---------------------------------- | :-------- | :-------- | | GAAP Financial Measures | | | | Net sales | $303.7 | $257.3 | | Operating income (loss) | $9.2 | $(4.7) | | Earnings before income taxes | $45.7 | $30.8 | | Net earnings | $34.8 | $24.0 | | EPS – diluted | $0.70 | $0.48 | | Net cash provided by operating activities | $41.1 | $41.1 | | Non-GAAP Financial Measures | | | | Adjusted operating income (loss) | $11.7 | $(3.5) | | Adjusted EBITDA | $65.1 | $48.4 | | Adjusted EPS – diluted | $0.74 | $0.50 | | Free cash flow | $27.9 | $31.5 | Consolidated Quarterly Results Analysis Net Sales Net sales for Q1 FY26 increased significantly, primarily due to higher volumes in Building Products, including contributions from the Elgen acquisition | Metric | 1Q 2026 | 1Q 2025 | Change | % Change | | :-------- | :-------- | :-------- | :------- | :--------- | | Net sales | $303.7M | $257.3M | +$46.4M | +18.0% | - Increase driven by higher volumes in Building Products, including contributions from Elgen[6] Operating Income Operating income improved from a prior-year loss to a positive figure in Q1 FY26, with adjusted operating income also growing strongly due to increased Building Products volumes | Metric | 1Q 2026 | 1Q 2025 | Change | | :-------------------------- | :-------- | :-------- | :------- | | Operating income (GAAP) | $9.2M | $(4.7)M | +$13.9M | | Adjusted operating income | $11.7M | $(3.5)M | +$15.3M | - Improvement driven by higher volumes within Building Products[7] Equity Income Equity income saw an increase in Q1, primarily boosted by higher contributions from WAVE, partially offset by a decrease from ClarkDietrich | Metric | 1Q 2026 | 1Q 2025 | Change | | :------------------------------------ | :-------- | :-------- | :------- | | Equity income | $36.7M | $35.5M | +$1.2M | - WAVE contributions up $4.5 million[8] - ClarkDietrich equity earnings decreased by $2.8 million[8] Income Tax Expense Income tax expense increased in Q1 FY26, reflecting higher pre-tax earnings, despite a slight decrease in the estimated annual effective tax rate | Metric | 1Q 2026 | 1Q 2025 | Change | | :---------------- | :-------- | :-------- | :------- | | Income tax expense | $10.9M | $6.8M | +$4.1M | - Increase driven by higher pre-tax earnings[9] - Estimated annual effective tax rate was 23.8% in 1Q FY26, compared to 24.5% in 1Q FY25[9] Balance Sheet and Cash Flow Analysis Cash and Debt Position Cash and cash equivalents decreased significantly from the previous quarter-end, mainly due to the Elgen acquisition, while total debt saw a slight increase | Metric | August 31, 2025 | May 31, 2025 | Change | | :------------------------ | :-------------- | :------------- | :------- | | Cash and cash equivalents | $167.1M | $250.1M | $(83.0)M | | Total debt | $306.0M | $302.9M | +$3.1M | - Cash decrease driven by the purchase of Elgen[10] - Total debt increase due to the remeasurement of the Company's euro denominated notes[11] - No borrowings under its revolving credit facility, leaving $500.0 million available[11] Operating and Free Cash Flow Operating cash flow remained consistent year-over-year, but free cash flow decreased due to increased capital expenditures, particularly for facility modernization projects | Metric | 1Q 2026 | 1Q 2025 | Change | | :-------------------------- | :-------- | :-------- | :------- | | Operating cash flow | $41.1M | $41.1M | Flat | | Free cash flow | $27.9M | $31.5M | $(3.6)M | | Capital expenditures | $13.2M | $9.6M | +$3.6M | - Free cash flow decreased driven by increased capital expenditures related to ongoing facility modernization projects ($8.6 million)[10] Quarterly Segment Results Consumer Products Segment The Consumer Products segment reported a modest increase in net sales due to a favorable product mix, largely offset by lower volumes, leading to a decline in adjusted EBITDA | Metric | 1Q 2026 | 1Q 2025 | Change | | :---------------- | :-------- | :-------- | :------- | | Net sales | $118.9M | $117.6M | +$1.3M | | Adjusted EBITDA | $16.1M | $17.8M | $(1.7)M | | Adjusted EBITDA margin | 13.6% | 15.1% | -1.5% | - Net sales increase due to favorable product mix, largely offset by lower volumes[12] - Adjusted EBITDA decrease primarily due to lower volumes and increased SG&A expense[12] Building Products Segment The Building Products segment achieved substantial growth in net sales and adjusted EBITDA, driven by higher volumes and the significant contribution from the Elgen acquisition | Metric | 1Q 2026 | 1Q 2025 | Change | % Change | | :---------------- | :-------- | :-------- | :------- | :--------- | | Net sales | $184.8M | $139.7M | +$45.1M | +32.2% | | Adjusted EBITDA | $57.8M | $39.7M | +$18.1M | +45.6% | | Adjusted EBITDA margin | 31.3% | 28.4% | +2.9% | - Net sales increase driven by higher volumes and $20.9 million contribution from Elgen[13] - Adjusted EBITDA increased primarily due to volume growth in wholly owned businesses[13] - Quarter included $2.2 million in incremental expenses related to the Elgen acquisition from purchase accounting step up in inventory to fair value[13] Outlook Outlook Statement Worthington Enterprises expresses confidence in its future positioning, emphasizing the strategic benefits of the Elgen acquisition and its commitment to long-term value creation - Strong start to the fiscal year and well positioned for the future[14] - Elgen acquisition strengthens presence in commercial HVAC and broadens reach within the building envelope[14] - Backed by a strong balance sheet, consistent free cash flow, and the Worthington Business System of innovation, transformation and acquisitions[14] - Teams remain focused on executing strategy and delivering long-term value for customers and shareholders[14] Company Information & Disclosures About Worthington Enterprises Worthington Enterprises is a designer and manufacturer of market-leading brands across two primary business segments, operating with a people-first philosophy and a focus on innovation and growth - Designer and manufacturer of market-leading brands that improve everyday life by elevating spaces and experiences[16] - Operates with two primary business segments: Building Products (heating and cooling, cooking, construction, water solutions, building systems) and Consumer Products (tools, outdoor living, celebrations)[17] - Headquartered in Columbus, Ohio, employing approximately 6,000 people throughout North America and Europe[18] - Follows a people-first Philosophy with earning money for its shareholders as its first corporate goal, achieved by empowering employees to innovate, thrive and grow[18] Conference Call Details Worthington Enterprises will host a conference call on September 24, 2025, to discuss its fiscal 2026 first-quarter results - The Company will review fiscal 2026 first quarter results during its quarterly conference call on September 24, 2025, at 8:30 a.m. Eastern Time[15] - Details regarding the conference call can be found on the Company website at www.WorthingtonEnterprises.com[15](index=15&type=chunk) Safe Harbor Statement This statement clarifies that the release contains forward-looking statements, which are subject to inherent risks and uncertainties that could cause actual results to differ materially from projections - Selected statements constitute "forward-looking statements" reflecting current expectations, estimates or projections concerning future results or events[19] - Often identified by words or phrases such as "believe," "expect," "anticipate," "may," "could," "should," "would," "intend," "plan," "will," "likely," "estimate," "project," "position," "strategy," "target," "aim," "seek," "foresee" and similar words or phrases[20] - Inherently subject to risks and uncertainties that could cause actual results to differ materially from those projected[21] - Readers are cautioned not to place undue reliance on any forward-looking statements, and the Company disclaims any obligation to update them, except as required by applicable law[23] Detailed Financial Statements Consolidated Statements of Earnings The consolidated statements of earnings present the company's revenues, expenses, and net income for the three months ended August 31, 2025, and 2024, showing a significant increase in net earnings year-over-year | (In thousands, except per common share amounts) | Three Months Ended August 31, 2025 | Three Months Ended August 31, 2024 | | :-------------------------------------------- | :--------------------------------- | :--------------------------------- | | Net sales | $303,707 | $257,308 | | Cost of goods sold | $221,423 | $194,813 | | Gross profit | $82,284 | $62,495 | | Selling, general and administrative expense | $70,565 | $66,036 | | Restructuring and other expense, net | $2,476 | $1,158 | | Operating income (loss) | $9,243 | $(4,699) | | Equity in net income of unconsolidated affiliates | $36,657 | $35,492 | | Earnings before income taxes | $45,681 | $30,790 | | Income tax expense | $10,860 | $6,782 | | Net earnings | $34,821 | $24,008 | | Diluted Earnings per share attributable to controlling interest | $0.70 | $0.48 | | Cash dividends declared per common share | $0.19 | $0.17 | Consolidated Balance Sheets The consolidated balance sheets provide a snapshot of the company's assets, liabilities, and equity as of August 31, 2025, compared to May 31, 2025, reflecting changes primarily driven by the Elgen acquisition and capital expenditures | (In thousands) | August 31, 2025 | May 31, 2025 | | :------------------------------------------------ | :-------------- | :------------- | | Assets | | | | Cash and cash equivalents | $167,122 | $250,075 | | Total current assets | $626,040 | $685,370 | | Investment in unconsolidated affiliates | $129,678 | $129,262 | | Goodwill | $412,304 | $376,480 | | Total property, plant and equipment, net | $286,743 | $270,226 | | Total assets | $1,738,137 | $1,695,152 | | Liabilities and equity | | | | Total current liabilities | $189,788 | $196,842 | | Long-term debt | $306,010 | $302,868 | | Total liabilities | $778,306 | $756,915 | | Total equity | $959,831 | $938,237 | | Total liabilities and equity | $1,738,137 | $1,695,152 | Consolidated Statements of Cash Flows The consolidated statements of cash flows detail the cash generated from operating, investing, and financing activities for the three months ended August 31, 2025, and 2024, showing a decrease in overall cash and cash equivalents primarily due to investing activities | (In thousands) | Three Months Ended August 31, 2025 | Three Months Ended August 31, 2024 | | :-------------------------------------------- | :--------------------------------- | :--------------------------------- | | Net cash provided by operating activities | $41,061 | $41,146 | | Net cash used by investing activities | $(105,430) | $(88,747) | | Net cash used by financing activities | $(18,584) | $(18,077) | | Decrease in cash and cash equivalents | $(82,953) | $(65,678) | | Cash and cash equivalents at end of period | $167,122 | $178,547 | Segment Information This section provides a detailed breakdown of net sales, adjusted EBITDA, and equity income for the Consumer Products and Building Products segments, highlighting the strong performance of Building Products | (Dollars in thousands) | Three Months Ended August 31, 2025 | Three Months Ended August 31, 2024 | | :-------------------------------- | :--------------------------------- | :--------------------------------- | | Net sales | | | | Consumer Products | $118,938 | $117,596 | | Building Products | $184,769 | $139,712 | | Consolidated | $303,707 | $257,308 | | Adjusted EBITDA | | | | Consumer Products | $16,148 | $17,775 | | Building Products | $57,793 | $39,729 | | Consolidated | $65,060 | $48,437 | | Adjusted EBITDA margin | | | | Consumer Products | 13.6% | 15.1% | | Building Products | 31.3% | 28.4% | | Consolidated | 21.4% | 18.8% | | Equity income by unconsolidated affiliate | | | | WAVE | $32,386 | $27,901 | | ClarkDietrich | $5,934 | $8,744 | | Consolidated | $36,657 | $35,492 | Non-GAAP Financial Measures & Reconciliations GAAP / Non-GAAP Reconciliations This section provides detailed reconciliations of non-GAAP financial measures such as Adjusted EPS, Adjusted EBITDA, and Free Cash Flow to their corresponding GAAP measures for the reported periods Consolidated Results – Adjusted Earnings per Share – Diluted | (Dollars in thousands, except per share amounts) | Three Months Ended August 31, 2025 | Three Months Ended August 31, 2024 | | :-------------------------------------------- | :--------------------------------- | :--------------------------------- | | GAAP Diluted EPS | $0.70 | $0.48 | | Restructuring and other expense, net (after tax) | $0.04 | $0.02 | | Non-GAAP Adjusted Diluted EPS | $0.74 | $0.50 | Consolidated Results – Adjusted EBITDA | (Dollars in thousands) | Three Months Ended August 31, 2025 | Three Months Ended August 31, 2024 | | :-------------------------------------------- | :--------------------------------- | :--------------------------------- | | Net earnings (GAAP) | $34,821 | $24,008 | | Interest expense, net | $63 | $489 | | Income tax expense | $10,860 | $6,782 | | EBIT | $46,071 | $31,524 | | Restructuring and other expense, net | $2,476 | $1,158 | | Adjusted EBIT | $48,547 | $32,682 | | Depreciation and amortization | $13,086 | $11,830 | | Stock-based compensation | $3,427 | $3,925 | | Adjusted EBITDA (non-GAAP) | $65,060 | $48,437 | Consolidated Results - Free Cash Flow | (Dollars in thousands) | Three Months Ended August 31, 2025 | Three Months Ended August 31, 2024 | | :-------------------------------------------- | :--------------------------------- | :--------------------------------- | | Net cash provided by operating activities (GAAP) | $41,061 | $41,146 | | Investment in property, plant, and equipment | $(13,195) | $(9,629) | | Free cash flow (non-GAAP) | $27,866 | $31,517 | | Free cash flow conversion (non-GAAP) | 75% | 125% | Use of Non-GAAP Financial Measures and Definitions This section explains that non-GAAP financial measures are used by management to evaluate ongoing performance, engage in financial planning, and determine incentive compensation, as they exclude items not reflective of ongoing operations - Non-GAAP financial measures typically exclude items that management believes are not reflective of, and thus should not be included when evaluating the performance of the Company's ongoing operations[39] - Management uses these non-GAAP financial measures to evaluate ongoing performance, engage in financial and operational planning, and determine incentive compensation[40] - Adjusted operating income (loss): Operating income (loss) excluding restructuring and other expense, net[41] - Adjusted net earnings: Net earnings attributable to controlling interest excluding the after-tax effect of excluded items[42] - Adjusted EPS - diluted: Adjusted net earnings divided by diluted weighted-average common shares outstanding[43] - Adjusted EBITDA: Earnings before interest, taxes, depreciation, and amortization, excluding additional items like restructuring and other expense, net, and stock-based compensation[44] - Adjusted EBITDA margin: Calculated by dividing adjusted EBITDA by net sales[45] - Free cash flow: Net cash flows from operating activities less investment in property, plant, and equipment[46] - Free cash flow conversion: Free cash flow divided by net earnings[46] - Exclusions from Non-GAAP Financial Measures: Impairment charges and restructuring activities are excluded because they do not occur in the ordinary course of ongoing business operations, are unpredictable, or are non-cash[46]