Recent Developments and First Quarter Highlights (all comparisons to the first quarter of fiscal 2026)
- Net sales were
$343.9 million , an increase of$40.2 million , or 13%, including 6% from recent acquisitions and 7% from organic growth. - Net earnings increased 22% to
$42.6 million , while adjusted net earnings increased 3% to$40.1 million and adjusted EBITDA grew 10% to$74.0 million . - Earnings per share on a fully diluted basis (“EPS – diluted”) improved to
$0.87 from$0.70 per share, while adjusted EPS – diluted increased to$0.82 per share compared to$0.78 . - Operating cash flow increased
$25.7 million to$66.7 million , while free cash flow increased$26.1 million to$54.0 million . - Repurchased 335,000 common shares for
$18.2 million , leaving 4,230,000 common shares available under the existing repurchase authorization. - Declared a quarterly dividend of
$0.20 per share payable onDecember 29, 2026 , to shareholders of record at the close of business onDecember 15, 2026 . - Renamed two business segments to better reflect their markets and applications: Building Products is now
Building Performance Solutions , and Consumer Products is now Trade & Specialty Solutions.
“We started fiscal 2027 with solid performance as our teams continued to execute well and deliver for our customers,” said
Financial highlights for the current year and prior year quarters are as follows:
| ( | 1Q 2027 | 1Q 2026 | |||||
| GAAP Financial Measures | |||||||
| Net sales | $ | 343.9 | $ | 303.7 | |||
| Operating income | 13.0 | 9.2 | |||||
| Earnings before income taxes | 55.6 | 45.7 | |||||
| Net earnings | 42.6 | 34.8 | |||||
| EPS – diluted | 0.87 | 0.70 | |||||
| Net cash provided by operating activities | 66.7 | 41.1 | |||||
| Non-GAAP Financial Measures (1) | |||||||
| Adjusted operating income | $ | 13.7 | $ | 13.9 | |||
| Adjusted EBITDA | 74.0 | 67.2 | |||||
| Adjusted net earnings | 40.1 | 38.9 | |||||
| Adjusted EPS – diluted | 0.82 | 0.78 | |||||
| Free cash flow | 54.0 | 27.9 | |||||
(1) Refer to the “GAAP / Non-GAAP Reconciliations” and the “Use of Non-GAAP Financial Measures and Definitions” sections of this release for additional information regarding the use of non-GAAP financial measures and reconciliations to the most directly comparable financial measures calculated and presented in accordance with GAAP.
Consolidated Quarterly Results
Net sales for the first quarter of fiscal 2027 increased
Operating income increased
Equity in net income of unconsolidated affiliates increased
Miscellaneous income, net was favorable by
Income tax expense was
Balance Sheet and Cash Flow
Total debt of
The company ended the quarter with cash of
Quarterly Segment Results
On
Building Performance Solutions generated net sales of
Trade & Specialty Solutions generated net sales of
Outlook
“We're very encouraged by our start to fiscal 2027 and the opportunities we see across our businesses, including rapidly growing demand for our engineered ASME tanks used in liquid cooling systems for data centers,” Hayek said. “Our teams remain focused on innovation, operational improvement and developing new ways to create value for our customers. With growing free cash flow generation and a healthy balance sheet, we have the flexibility to invest in and pursue additional growth opportunities that fit our strategy."
Conference Call
The company will review fiscal 2027 first quarter results during its quarterly conference call on
Upcoming Investor and Analyst Day –
The event will begin at
Investors and analysts interested in participating virtually may register at this link: https://worthington-enterprises-investor-day-2026-11-10.open-exchange.net. In-person attendance is limited. Investors and analysts interested in attending in person should contact
About
Headquartered in
Founded in 1955 as
Safe Harbor Statement
Selected statements contained in this release constitute “forward-looking statements,” as that term is used in the Private Securities Litigation Reform Act of 1995 (the “Act”). We wish to take advantage of the safe harbor provisions included in the Act. Forward-looking statements reflect our current expectations, estimates or projections concerning future results or events. These statements are often identified by the use of forward-looking 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. These forward-looking statements include, without limitation, statements relating to: future or expected cash positions, liquidity and ability to access financial markets and capital; outlook, strategy or business plans; future or expected growth, growth potential, forward momentum, performance, competitive position, sales, volumes, cash flows, earnings, margins, balance sheet strengths, debt, financial condition or other financial measures; pricing trends for raw materials and finished goods and the impact of pricing changes; the ability to improve or maintain margins; expected demand or demand trends; additions to product lines and opportunities to participate in new markets; expected benefits from transformation and innovation efforts; the ability to improve performance and competitive position; anticipated working capital needs, capital expenditures and asset sales; anticipated improvements and efficiencies in costs, operations, sales, inventory management, sourcing and the supply chain and the results thereof; projected profitability potential; the ability to make acquisitions and the projected timing, results, benefits, costs, charges and expenditures related to acquisitions, joint ventures, headcount reductions and facility dispositions, shutdowns and consolidations; projected capacity and the alignment of operations with demand; the ability to operate profitably and generate cash in down markets; the ability to capture and maintain market share and to develop or take advantage of future opportunities, customer initiatives, new businesses, new products and new markets; expectations for inventories, jobs and orders; expectations for the economy and markets or improvements therein; expectations for generating improving and sustainable earnings, earnings potential, margins or shareholder value; effects of judicial rulings; effects of pandemics and widespread health crises and the various responses of governmental and nongovernmental authorities thereto on economies and markets, and on our customers, counterparties, employees and third-party service providers; and other non-historical matters.
Because they are based on beliefs, estimates and assumptions, forward-looking statements are inherently subject to risks and uncertainties that could cause actual results to differ materially from those projected. Any number of factors could affect actual results, including, without limitation, those that follow: the effect of conditions in national and worldwide financial markets, including inflation, increases in interest rates and economic recession, and with respect to the ability of financial institutions to provide capital; the impact of tariffs, the adoption of trade restrictions affecting our products or suppliers, a
Forward-looking statements should be construed in the light of such risks. We note these factors for investors as contemplated by the Act. It is impossible to predict or identify all potential risk factors. Consequently, readers should not consider the foregoing list to be a complete set of all potential risks and uncertainties. Readers are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date made. We do not undertake, and hereby disclaim, any obligation to update any forward-looking statements, whether as a result of new information, future developments or otherwise, except as required by applicable law.
CONSOLIDATED STATEMENTS OF EARNINGS (In thousands, except per common share amounts) | ||||||||
| Three Months Ended | ||||||||
| 2026 | 2025 | |||||||
| Net sales | $ | 343,886 | $ | 303,707 | ||||
| Cost of goods sold | 252,988 | 221,423 | ||||||
| Gross profit | 90,898 | 82,284 | ||||||
| Selling, general and administrative expense | 77,158 | 70,565 | ||||||
| Restructuring and other expense, net | 717 | 2,476 | ||||||
| Operating income | 13,023 | 9,243 | ||||||
| Other income (expense): | ||||||||
| Miscellaneous income (expense), net | 4,081 | (156 | ) | |||||
| Interest expense, net | (2,097 | ) | (63 | ) | ||||
| Equity in net income of unconsolidated affiliates | 40,594 | 36,657 | ||||||
| Earnings before income taxes | 55,601 | 45,681 | ||||||
| Income tax expense | 13,029 | 10,860 | ||||||
| Net earnings | 42,572 | 34,821 | ||||||
| Net loss attributable to noncontrolling interest | - | (327 | ) | |||||
| Net earnings attributable to controlling interest | $ | 42,572 | $ | 35,148 | ||||
| Basic | ||||||||
| Weighted average common shares outstanding | 48,568 | 49,264 | ||||||
| Earnings per share attributable to controlling interest | $ | 0.88 | $ | 0.71 | ||||
| Diluted | ||||||||
| Weighted average common shares outstanding | 49,165 | 50,026 | ||||||
| Earnings per share attributable to controlling interest | $ | 0.87 | $ | 0.70 | ||||
| Cash dividends declared per common share | $ | 0.20 | $ | 0.19 | ||||
CONSOLIDATED BALANCE SHEETS (In thousands) | ||||||||
| 2026 | 2026 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 55,067 | $ | 27,725 | ||||
| Receivables, less allowances of | 185,659 | 228,168 | ||||||
| Inventories | ||||||||
| Raw materials | 119,778 | 110,536 | ||||||
| Work in process | 11,292 | 9,490 | ||||||
| Finished products | 91,515 | 87,270 | ||||||
| Total inventories | 222,585 | 207,296 | ||||||
| Income taxes receivable | 10,342 | 20,016 | ||||||
| Prepaid expenses and other current assets | 49,054 | 41,269 | ||||||
| Total current assets | 522,707 | 524,474 | ||||||
| Investments in unconsolidated affiliates | 119,639 | 118,048 | ||||||
| Operating lease assets | 40,979 | 42,888 | ||||||
| 499,116 | 500,784 | |||||||
| Other intangible assets, net of accumulated amortization of | 317,172 | 322,761 | ||||||
| Other assets | 28,009 | 28,215 | ||||||
| Property, plant and equipment: | ||||||||
| Land | 8,728 | 8,732 | ||||||
| Buildings and improvements | 136,370 | 136,441 | ||||||
| Machinery and equipment | 406,857 | 411,030 | ||||||
| Construction in progress | 75,275 | 66,509 | ||||||
| Total property, plant and equipment | 627,230 | 622,712 | ||||||
| Less: accumulated depreciation | 314,102 | 311,818 | ||||||
| Total property, plant and equipment, net | 313,128 | 310,894 | ||||||
| Total assets | $ | 1,840,750 | $ | 1,848,064 | ||||
| Liabilities and equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 105,525 | $ | 115,203 | ||||
| Accrued compensation, contributions to employee benefit plans and related taxes | 36,635 | 41,728 | ||||||
| Dividends payable | 10,194 | 9,814 | ||||||
| Other accrued items | 34,572 | 45,832 | ||||||
| Current operating lease liabilities | 7,970 | 7,982 | ||||||
| Income taxes payable | 1,151 | 867 | ||||||
| Total current liabilities | 196,047 | 221,426 | ||||||
| Other liabilities | 56,834 | 56,657 | ||||||
| Distributions in excess of investment in unconsolidated affiliate | 102,293 | 105,349 | ||||||
| Long-term debt | 305,552 | 305,896 | ||||||
| Noncurrent operating lease liabilities | 34,028 | 35,883 | ||||||
| Deferred income taxes, net | 98,804 | 95,813 | ||||||
| Total liabilities | 793,558 | 821,024 | ||||||
| Shareholders’ equity | 1,047,192 | 1,027,040 | ||||||
| Total liabilities and equity | $ | 1,840,750 | $ | 1,848,064 | ||||
CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) | ||||||||
| Three Months Ended | ||||||||
| 2026 | 2025 | |||||||
| Operating activities: | ||||||||
| Net earnings | $ | 42,572 | $ | 34,821 | ||||
| Adjustments to reconcile net earnings to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 15,628 | 13,086 | ||||||
| Provision for deferred income taxes | 3,030 | 2,957 | ||||||
| Bad debt income | (134 | ) | (21 | ) | ||||
| Equity in net income of unconsolidated affiliates, net of distributions | (4,743 | ) | (181 | ) | ||||
| Net gain on sale of assets | (3,972 | ) | - | |||||
| Stock-based compensation | 3,996 | 3,427 | ||||||
| Unrealized gain on investment in marketable securities | (20 | ) | - | |||||
| Changes in assets and liabilities, net of impact of acquisitions: | ||||||||
| Receivables | 41,900 | 14,107 | ||||||
| Inventories | (15,289 | ) | (15,816 | ) | ||||
| Accounts payable | (8,874 | ) | (11,946 | ) | ||||
| Accrued compensation and employee benefits | (5,092 | ) | (10,399 | ) | ||||
| Other operating items, net | (2,271 | ) | 11,026 | |||||
| Net cash provided by operating activities | 66,731 | 41,061 | ||||||
| Investing activities: | ||||||||
| Investment in property, plant and equipment | (12,754 | ) | (13,195 | ) | ||||
| Acquisitions, net of cash acquired | (2,393 | ) | (92,235 | ) | ||||
| Proceeds from sale of assets, net of selling costs | 1,030 | - | ||||||
| Net cash used by investing activities | (14,117 | ) | (105,430 | ) | ||||
| Financing activities: | ||||||||
| Dividends paid | (9,402 | ) | (8,576 | ) | ||||
| Purchase of common shares | (18,212 | ) | (6,259 | ) | ||||
| Principal payments on long-term obligations | (318 | ) | (197 | ) | ||||
| Proceeds from issuance of common shares, net of tax withholdings | 2,660 | (3,552 | ) | |||||
| Net cash used by financing activities | (25,272 | ) | (18,584 | ) | ||||
| Increase (decrease) in cash and cash equivalents | 27,342 | (82,953 | ) | |||||
| Cash and cash equivalents at beginning of period | 27,725 | 250,075 | ||||||
| Cash and cash equivalents at end of period | $ | 55,067 | $ | 167,122 | ||||
SEGMENT INFORMATION (Dollars in thousands) | ||||||||
| Three Months Ended | ||||||||
| 2026 | 2025 | |||||||
| Net sales | ||||||||
| Building Performance Solutions | $ | 215,087 | $ | 184,769 | ||||
| Trade & Specialty Solutions | 128,799 | 118,938 | ||||||
| Consolidated | $ | 343,886 | $ | 303,707 | ||||
| Adjusted EBITDA | ||||||||
| Building Performance Solutions | $ | 59,782 | $ | 59,944 | ||||
| Trade & Specialty Solutions | 24,014 | 16,148 | ||||||
| Total reportable segments | 83,796 | 76,092 | ||||||
| Other (1) | (1,839 | ) | (1,663 | ) | ||||
| Unallocated Corporate | (7,938 | ) | (7,218 | ) | ||||
| Consolidated | $ | 74,019 | $ | 67,211 | ||||
| Adjusted EBITDA margin | ||||||||
| Building Performance Solutions | 27.8 | % | 32.4 | % | ||||
| Trade & Specialty Solutions | 18.6 | % | 13.6 | % | ||||
| Consolidated | 21.5 | % | 22.1 | % | ||||
| Equity income by unconsolidated affiliate | ||||||||
| WAVE (1) | $ | 35,051 | $ | 32,386 | ||||
| ClarkDietrich (1) | 7,382 | 5,934 | ||||||
| Other (2) | (1,839 | ) | (1,663 | ) | ||||
| Consolidated | $ | 40,594 | $ | 36,657 | ||||
| _______________ | ||||||||
(1) Equity income contributed by the WAVE and ClarkDietrich joint ventures is included in
(2) Other includes the equity in net income of unconsolidated affiliates of the Workhorse and heiserTEC (formerly referred to as the Sustainable Energy Solutions joint venture) joint ventures.
GAAP / NON-GAAP RECONCILIATIONS (Dollars in thousands, except per share amounts) |
For more information regarding the non-GAAP financial measures, refer to the “Use of Non-GAAP Financial Measures and Definitions” section of this release.
Consolidated Results – Adjusted Earnings per Share – Diluted
| Three Months Ended | |||||||||||||||||||
| Operating Income | Earnings Before Income Taxes | Income Tax Expense | Net Earnings (1) | Diluted EPS (1) | |||||||||||||||
| GAAP | $ | 13,023 | $ | 55,601 | $ | 13,029 | $ | 42,572 | $ | 0.87 | |||||||||
| Restructuring and other expense, net | 717 | 717 | (174 | ) | 543 | 0.01 | |||||||||||||
| Non-cash gains in miscellaneous income, net (2) | - | (4,020 | ) | 977 | (3,043 | ) | (0.06 | ) | |||||||||||
| Non-GAAP | $ | 13,740 | $ | 52,298 | $ | 12,226 | $ | 40,072 | $ | 0.82 | |||||||||
| Three Months Ended | |||||||||||||||||||
| Operating Income | Earnings Before Income Taxes | Income Tax Expense | Net Earnings (1) | Diluted EPS (1) | |||||||||||||||
| GAAP | $ | 9,243 | $ | 45,681 | $ | 10,860 | $ | 35,148 | $ | 0.70 | |||||||||
| Amortization of inventory step-up (3) | 2,151 | 2,151 | (513 | ) | 1,638 | 0.04 | |||||||||||||
| Restructuring and other expense, net | 2,476 | 2,476 | (377 | ) | 2,099 | 0.04 | |||||||||||||
| Non-GAAP | $ | 13,870 | $ | 50,308 | $ | 11,750 | $ | 38,885 | $ | 0.78 | |||||||||
Consolidated Results – Adjusted EBITDA
| Three Months Ended | ||||||||
| 2026 | 2025 | |||||||
| Net earnings (GAAP) | $ | 42,572 | $ | 34,821 | ||||
| Plus: Net loss attributable to noncontrolling interest | - | 327 | ||||||
| Net earnings attributable to controlling interest | 42,572 | 35,148 | ||||||
| Interest expense, net | 2,097 | 63 | ||||||
| Income tax expense | 13,029 | 10,860 | ||||||
| EBIT (4) | 57,698 | 46,071 | ||||||
| Amortization of inventory step-up (3) | - | 2,151 | ||||||
| Restructuring and other expense, net | 717 | 2,476 | ||||||
| Non-cash gains in miscellaneous income, net (2) | (4,020 | ) | - | |||||
| Adjusted EBIT (4) | 54,395 | 50,698 | ||||||
| Depreciation and amortization | 15,628 | 13,086 | ||||||
| Stock-based compensation | 3,996 | 3,427 | ||||||
| Adjusted EBITDA (non-GAAP) | $ | 74,019 | $ | 67,211 | ||||
| Net earnings margin (GAAP) | 12.4 | % | 11.5 | % | ||||
| Adjusted EBITDA margin (non-GAAP) | 21.5 | % | 22.1 | % | ||||
| _______________ | ||||||||
(1) Excludes the impact of noncontrolling interest.
(2) Includes a pre-tax gain of
(3) Reflects the amortization of the step-up to fair market value of acquired inventory related to the Elgen acquisition in fiscal 2026.
(4) EBIT and adjusted EBIT are non-GAAP financial measures. However, these measures are not used by management to evaluate our performance, engage in financial and operational planning, or to determine incentive compensation. Instead, they are included as subtotals in the reconciliation of net earnings to adjusted EBITDA, which is a non-GAAP financial measure used by management.
Consolidated Results – Free Cash Flow
The following table provides a reconciliation of net cash provided by operating activities to free cash flow and the calculation of operating cash flow conversion and free cash flow conversion for the periods presented.
| Three Months Ended | ||||||||
| 2026 | 2025 | |||||||
| Net cash provided by operating activities (GAAP) | $ | 66,731 | $ | 41,061 | ||||
| Investment in property, plant, and equipment | (12,754 | ) | (13,195 | ) | ||||
| Free cash flow (non-GAAP) | $ | 53,977 | $ | 27,866 | ||||
| Net earnings attributable to controlling interest (GAAP) | $ | 42,572 | $ | 35,148 | ||||
| Adjusted net earnings attributable to controlling interest (non-GAAP) | $ | 40,072 | $ | 38,885 | ||||
| Operating cash flow conversion (GAAP) (1) | 157 | % | 117 | % | ||||
| Free cash flow conversion (non-GAAP) | 135 | % | 72 | % | ||||
| _______________ | ||||||||
(1) Operating cash flow conversion is defined as net cash provided by operating activities divided by net earnings attributable to controlling interest.
USE OF NON-GAAP FINANCIAL MEASURES AND DEFINITIONS |
NON-GAAP FINANCIAL MEASURES. These materials include certain financial measures that are not calculated and presented in accordance with accounting principles generally accepted in
The following provides an explanation of each non-GAAP financial measure presented in these materials:
Adjusted operating income (loss) is defined as operating income (loss) excluding the items listed below, to the extent naturally included in operating income (loss).
Adjusted net earnings is defined as net earnings attributable to controlling interest excluding the after-tax effect of the excluded items outlined below.
Adjusted EPS – diluted is defined as adjusted net earnings divided by diluted weighted-average common shares outstanding for the applicable period.
Adjusted EBITDA is the measure by which we evaluate segment performance and our overall profitability. EBITDA is defined as earnings before interest, taxes, depreciation, and amortization. Adjusted EBITDA excludes additional items including, but not limited to, those listed below, as well as other items that management believes are not reflective of, and thus should not be included when evaluating the performance of our ongoing operations. Adjusted EBITDA also excludes stock-based compensation due to its non-cash nature, which is consistent with how management assesses operating performance and determines incentive compensation. At the segment level, adjusted EBITDA includes expense allocations for centralized corporate back-office functions that exist to support the day-to-day business operations. Public company and other governance costs are held at the corporate level within the unallocated corporate and other category.
Adjusted EBITDA margin is calculated by dividing adjusted EBITDA by net sales.
Free cash flow is a non-GAAP financial liquidity measure that is used to assess our ability to generate cash beyond what is required for our business operations and capital expenditures. We define free cash flow as net cash flows from operating activities less investment in property, plant, and equipment.
Free cash flow conversion is a non-GAAP financial measure that is used to measure how much of our adjusted net earnings attributable to controlling interest is converted into cash. We define free cash flow conversion as free cash flow divided by adjusted net earnings.
EXCLUSIONS FROM NON-GAAP FINANCIAL MEASURES
Management believes it is useful to exclude the following items from its non-GAAP financial measures for its own and investors’ assessment of the business for the reasons identified below. Additionally, management may exclude other items from non-GAAP financial measures that do not occur in the ordinary course of our ongoing business operations and note them in the reconciliation from net earnings to the non-GAAP financial measure adjusted EBITDA.
- Amortization of inventory step-up represents the increase in inventory fair value associated with our acquisitions. The increase in inventory fair value is amortized to cost of sales over the period that the related inventory is sold. The amortization of inventory step-up is excluded because it is a non-cash expense that is not indicative of ongoing operating results.
- Impairment charges are excluded because they do not occur in the ordinary course of our ongoing business operations, are inherently unpredictable in timing and amount, and are non-cash, which management believes facilitates the comparison of historical, current and forecasted financial results.
- Restructuring activities consist of established programs that are intended to fundamentally change our operations, and as such are excluded from its non-GAAP financial measures. Our restructuring programs may include closing or consolidating production facilities or moving manufacturing of a product to another location, realignment of the management structure of a business unit in response to changing market conditions or general rationalization of headcount. Our restructuring activities generally give rise to employee-related costs, such as severance pay, and facility-related costs, such as exit costs and gains or losses on asset disposals but may include other incremental costs associated with our restructuring activities. Restructuring and other expense, net, may also include other nonrecurring items included in operating income but incremental to our normal business activities. These items are excluded because they are not indicative of the ongoing operations of our underlying business.
- Non-cash (gains) losses in miscellaneous (income) expense are excluded due to their non-cash nature and the fact that they do not occur in the normal course of business and may obscure analysis of trends and financial performance.
Senior Vice President
Chief of Corporate Affairs, Communications and Sustainability
614.438.7391
sonya.higginbotham@wthg.com
Treasurer and Investor Relations Officer
614.840.4663
marcus.rogier@wthg.com
WorthingtonEnterprises.com
