Sign in
WE

WORTHINGTON ENTERPRISES, INC. (WOR)·Q1 2026 Earnings Summary

Executive Summary

  • Q1 FY2026 delivered double-digit growth and broad-based strength: net sales $303.7M (+18% YoY), GAAP diluted EPS $0.70 (+46% YoY), and adjusted EPS $0.74; adjusted EBITDA rose to $65.1M with a 21.4% margin .
  • Clear beat versus consensus: Revenue $303.7M vs ~$291.8M consensus*, and GAAP EPS $0.70 vs ~$0.70 consensus*; adjusted EPS of $0.74 also topped expectations as Building Products volumes and WAVE equity income offset tariff headwinds in Consumer Products .
  • Building Products drove the quarter: net sales $184.8M (+32% YoY) with adjusted EBITDA $57.8M (31.3% margin); Elgen contributed $20.9M to sales and is integrating well, though purchase accounting ($2.2M) muted its EBITDA in Q1 .
  • Cash generation remained solid (CFO $41.1M; FCF $27.9M); leverage low (net debt ~$139M, ~0.5x TTM adjusted EBITDA), with $500M revolver undrawn; Board declared a $0.19 dividend and repurchased 100,000 shares for ~$$6.3M .
  • Near-term stock reaction catalysts: strength in Building Products (A2L refrigerants), WAVE resilience, tariff-driven import parity, and ongoing facility modernization; watch Consumer tariff costs and ClarkDietrich exposure to new construction .

Consensus values marked with * were retrieved from S&P Global.

What Went Well and What Went Wrong

What Went Well

  • “We started the fiscal year with solid momentum led by strong performance in our Building Products segment,” with Building Products volumes, WAVE contributions, and resilient Consumer execution despite macro headwinds .
  • Gross margin expanded to 27.1% from 24.3% YoY despite a $2.2M purchase accounting charge on Elgen inventory; adjusted EBITDA margin reached 21.4% (TTM adj. EBITDA margin 23.3%) .
  • WAVE delivered strong equity earnings of ~$32M, supported by healthy end markets (education/healthcare/transport/data centers) despite office/retail weakness .

What Went Wrong

  • Consumer Products faced lower volumes and tariff costs; adjusted EBITDA fell to $16.1M (13.6% margin) from $17.8M (15.1%), with tariff expense “a couple of million dollars” impacting profitability .
  • ClarkDietrich equity income dipped to ~$5.9M from ~$8.7M on weaker smaller-project new construction; management sees near-term flat-to-down risk until momentum returns .
  • Seasonality and timing headwinds pressed sequential margins (Q1/Q2 seasonally weaker than Q3/Q4); gross margin was down sequentially vs Q4 despite YoY expansion .

Financial Results

MetricQ3 2025Q4 2025Q1 2026
Revenue ($USD Millions)$304.5 $317.9 $303.7
GAAP Diluted EPS ($USD)$0.79 $0.08 $0.70
Adjusted Diluted EPS ($USD)$0.91 $1.06 $0.74
Adjusted EBITDA ($USD Millions)$73.8 $85.1 $65.1
Adjusted EBITDA Margin (%)24.2% 26.8% 21.4%
Cash from Operations ($USD Millions)$57.1 $62.4 $41.1
Free Cash Flow ($USD Millions)$44.4 $49.3 $27.9

Segment breakdown – Q1 2026 vs Q1 2025:

SegmentNet Sales ($USD Millions)YoYAdjusted EBITDA ($USD Millions)YoYAdjusted EBITDA Margin (%)
Consumer Products (Q1 2026)$118.9 +$1.3M $16.1 -$1.6M 13.6%
Consumer Products (Q1 2025)$117.6 —$17.8 —15.1%
Building Products (Q1 2026)$184.8 +$45.1M $57.8 +$18.1M 31.3%
Building Products (Q1 2025)$139.7 —$39.7 —28.4%
WAVE equity income$32.386 +$4.485M ———
ClarkDietrich equity income$5.934 -$2.810M ———

KPIs – Q1 2026:

KPIQ1 2026Reference
Gross Margin (%)27.1%
Operating Income ($USD Millions)$9.2
Effective Tax Rate (estimated annual)23.8%
Cash & Equivalents ($USD Millions)$167.1
Total Debt ($USD Millions)$306.0
Net Debt ($USD Millions)~$138.9
Net Debt / TTM Adjusted EBITDA (x)~0.50x
Revolver Availability ($USD Millions)$500.0
Share Repurchases (Q1 2026)100,000 shares; $6.3M
Dividend (Declared)$0.19/share

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Dividend per shareQ1 FY2026 payout (Dec 29, 2025)$0.19 (raised in Q4 FY2025) $0.19 declared Maintained
Facility modernization capexFY2026~$29M spent TTM ~$35M remaining; majority to complete in FY2026 Clarified timing; remaining spend
Gross margin targetMedium termNorth of 30% target reiterated North of 30% (annual target); SG&A ≤20% of sales Maintained strategic target
Liquidity/leverageCurrent—$500M undrawn revolver; net debt/TTM adj. EBITDA ~0.5x Affirmed strong balance sheet
Tax rate (effective)FY2026 estimate26.1% (Q4 FY2025 reported) 23.8% estimated annual in Q1 FY2026 Lower effective rate

No quantitative revenue/EPS guidance was provided; management emphasized execution, integration of Elgen, continued innovation, and transformation initiatives .

Earnings Call Themes & Trends

TopicQ3 FY2025 (previous mentions)Q4 FY2025 (previous mentions)Q1 FY2026 (current period)Trend
Building Products momentumMix and volume drove growth; adj. EBITDA $53.2M Adj. EBITDA $71.3M; strong volumes Net sales +32% YoY; adj. EBITDA $57.8M; Elgen $20.9M sales contribution Strength sustained; acquisition synergies building
Consumer ProductsVolume growth and margin improvement; adj. EBITDA $28.6M Adj. EBITDA $20.8M; disciplined cost Volumes down; tariff costs; adj. EBITDA $16.1M Cautious consumer; tariff headwind
Tariffs & domestic footprintAnticipated uncertainty from tariffs —Tariff payments “couple of million dollars”; domestic manufacturing aids pricing parity Tariffs press consumer margins; strategic tailwinds vs imports
Refrigerant transition (A2L)——A2L cylinders ramp; Paducah facility production cited; supports growth in cooling/construction Structural tailwind in Building Products
WAVE/ClarkDietrichWAVE steady; ClarkDietrich moderated Both up YoY in Q4 WAVE up to ~$32M; ClarkDietrich down to ~$6M; new-construction softness WAVE resilient; ClarkDietrich cyclical softness
Seasonality——Q1/Q2 weaker; sequential margin down; Q3/Q4 stronger Seasonality normalizing
Cost/transformation (80/20)——Water business 80/20 pilot advancing; SG&A flat ex-Elgen Efficiency initiatives scaling
M&A pipelineRagasco in Q1 FY2025 Elgen acquired June 19, 2025 Pipeline solid; bolt-ons/adjacencies around Elgen Continued bolt-on strategy

Management Commentary

  • “We delivered strong year-over-year growth in sales, adjusted EBITDA, and earnings per share… despite numerous headwinds including cautious consumers… tariff costs and high interest rates.” – Joe Hayek, President & CEO .
  • “Gross margin was 27.1% in Q1 versus 24.3% last year… adjusted EBITDA margin 21.4% versus 18.8%… One-time $2.2M purchase accounting charge at Elgen negatively impacted profitability.” – Colin Souza, CFO .
  • “Elgen contributed $21M in sales; integration is progressing well; commercial HVAC is attractive and resilient.” – Colin Souza .
  • “We continue to leverage innovation (Balloon Time Mini, A2L cylinders, Halo griddles), transformation, and acquisitions to drive long-term value.” – Joe Hayek .

Q&A Highlights

  • Building Products margins and trajectory: EBITDA margin for wholly owned businesses at ~10.5%; management targets 12–13% over time as markets normalize and execution remains strong .
  • WAVE steady-state outlook: strong in education/healthcare/transport/data centers offsetting office/retail; Q1 equity contribution ~$32M; seasonally stronger in Q4/Q1 .
  • Tariffs/pricing dynamics: Consumer paid “a couple of million dollars” in tariffs; shelf pricing mixed; domestic manufacturing footprint supports competitive pricing and tighter supply chains .
  • Gross margin/seasonality: Q1/Q2 are seasonally weaker; medium-term gross margin target “north of 30%” and SG&A at ~20% of sales on an annual basis .
  • Operational efficiencies: 80/20 initiative in water business progressing; SG&A flat YoY excluding Elgen despite revenue/gross profit growth .

Estimates Context

How results compared to Wall Street consensus (S&P Global):

MetricQ3 2025Q4 2025Q1 2026
Revenue – Actual ($USD)$304.5M $317.9M $303.7M
Revenue – Consensus ($USD)$289.1M*$301.4M*$291.8M*
GAAP EPS – Actual ($USD)$0.79 $0.08 $0.70
GAAP EPS – Consensus ($USD)$0.706*$0.844*$0.702*

Consensus values marked with * were retrieved from S&P Global.
Worthington beat revenue and EPS in Q3 and Q1, and materially beat on adjusted EPS in Q4 despite GAAP EPS being affected by non-cash impairment and other items .

Where estimates may need to adjust:

  • Building Products momentum and WAVE resilience suggest upward bias to segment profitability assumptions, while tariff costs and cautious consumer may temper Consumer margin forecasts near term .
  • Effective tax rate trending lower (23.8% estimated) vs Q4 FY2025 (26.1%), which could lift EPS estimates marginally if sustained .

Key Takeaways for Investors

  • Building Products remains the primary growth and profit engine; Elgen expands HVAC footprint and provides adjacency opportunities across the building envelope .
  • WAVE continues to deliver strong equity income in resilient end markets; expect steadiness even amid office/retail softness .
  • Consumer Products is navigating tariffs and softer demand; mix (Celebrations/helium) and new retail wins (e.g., Walgreens, Target) support stabilization over time .
  • Free cash flow generation remains robust despite modernization capex; ~$35M remaining spend expected mostly in FY2026, implying FCF conversion improvement thereafter .
  • Balance sheet strength (net debt ~0.5x TTM adjusted EBITDA; $500M undrawn revolver) provides capacity for bolt-on M&A and continued buybacks/dividends .
  • Medium-term margin ambition (gross margin >30%, SG&A ≤20% of sales) underscores ongoing transformation and operational discipline; seasonality implies stronger conversion in Q3/Q4 .
  • Tactical watch items: tariff pass-through and competitor shelf pricing, ClarkDietrich exposure to small-project construction, and refrigerant transition pace driving A2L demand .

Consensus values marked with * were retrieved from S&P Global.