Worthington Industries(WOR) - 2026 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Revenue in Q2 increased by over 19% year-over-year, reaching $327 million compared to $274 million in the prior year quarter [5][18] - Adjusted EBITDA grew by 8% year-over-year, totaling $60 million, with an adjusted EBITDA margin of 18.5% [5][19] - Adjusted earnings per share rose to $0.65 from $0.60 in the prior year quarter [17][18] - Gross profit increased to $85 million, with a gross margin of 25.8%, down from 27% in the prior year quarter [19] Business Line Data and Key Metrics Changes - Consumer products net sales were $120 million, up 3% year-over-year, with adjusted EBITDA flat at $15 million [24] - Building products net sales grew 32% year-over-year to $208 million, driven by higher volumes and contributions from the Elgen acquisition [26][28] - Excluding Elgen, building products net sales increased by 16% year-over-year [26] Market Data and Key Metrics Changes - The company noted mixed market conditions, with cautious consumers and muted construction activity impacting performance [14] - The acquisition of LSI is expected to enhance the company's position in engineered building systems and add resilient revenue streams [12][14] Company Strategy and Development Direction - The company aims to optimize its business through organic growth and strategic acquisitions while increasing margins [6][8] - The planned acquisition of LSI, a leader in metal roofing components, aligns with the strategy of adding market leaders in niche markets [12][13] - The company continues to focus on innovation and transformation as key growth drivers [8][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the current environment and gaining market share despite challenging conditions [5][14] - The company is well-positioned for growth as it enters its seasonally strongest quarters [29] - Management highlighted the importance of their workforce and recognized the company for its workplace culture and responsibility [15] Other Important Information - The company reported a net debt to trailing adjusted EBITDA ratio of approximately 0.4 times, indicating strong financial flexibility [22] - Capital expenditures totaled $12 million in the quarter, with plans for continued investment in operations [20][21] Q&A Session Summary Question: Can you expand on the strategy for growth from the acquisition of LSI? - Management emphasized the complementary nature of acquisitions and the focus on leveraging manufacturing expertise and innovation [32][33] Question: What are the opportunities related to data centers? - Management noted that several business segments provide products for data centers, contributing to growth, though it represents less than 10% of total sales [39][40] Question: How sustainable is LSI's margin profile? - Management highlighted LSI's strong reputation and resilient demand, indicating a sustainable margin profile driven by retrofit opportunities [46][48] Question: What is the outlook for ClarkDietrich? - Management acknowledged challenges in the new construction environment but expressed confidence in maintaining flat performance moving forward [56][58] Question: How does the company plan to balance capital allocation? - Management indicated a balanced approach to capital structure, including strategic M&A and returning capital to shareholders [58]