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WORTHINGTON ENTERPRISES, INC. (WOR)·Q4 2025 Earnings Summary

Executive Summary

  • Q4 FY2025 delivered strong underlying performance: net sales $317.9M (+0.3% YoY; +4.4% vs Q3), adjusted EPS $1.06 and adjusted EBITDA $85.1M, with consolidated adjusted EBITDA margin expanding to 26.8% from 24.2% in Q3 and 19.8% a year ago .
  • Results beat Wall Street consensus: revenue $317.9M vs $301.4M consensus*, adjusted EPS $1.06 vs $0.84 consensus*; gross margin ran ahead of consensus at ~29.3% vs ~27.7%*; beats were driven by Building Products volume/mix and higher JV equity income (WAVE/ClarkDietrich), partially offset by SES JV impairment and GTI write-down .
  • GAAP diluted EPS was $0.08 due to non-cash intangible impairment at General Tools & Instruments; non-GAAP adjustments reconciled to $1.06 adjusted EPS, reflecting core operational strength .
  • Strategic actions: 12% dividend increase to $0.19, repurchase of 200k shares, and acquisition of Elgen Manufacturing (~$93M; LTM sales $114.9M, EBITDA $13.3M) to expand HVAC componentry in Building Products .

Values retrieved from S&P Global*

What Went Well and What Went Wrong

What Went Well

  • Building Products outperformed: net sales $192.3M (+25.2% YoY) and adjusted EBITDA $71.3M (+$19.6M YoY), driven by higher volumes and Ragasco contributions; JV equity income up $6.4M year-over-year .
  • Margin expansion: consolidated adjusted EBITDA margin improved to 26.8% (Q4) from 24.2% (Q3) and 19.8% (Q4 LY); gross margin ~29.3% (consistent with Q3), supported by volume/mix and cost discipline. “Our teams have been doing a fantastic job… conversion costs come down” — CEO Joe Hayek .
  • Cash generation and capital returns: operating cash flow $62.4M (+38% YoY), free cash flow $49.3M (+46% YoY); dividend raised 12% to $0.19, 200k shares repurchased for $9.8M .

What Went Wrong

  • GAAP EPS impacted by non-cash impairment: intangible write-down (~$50.8M pre-tax) at GTI pressured GAAP EPS to $0.08; SES JV recorded a $3.4M non-cash impairment in equity income .
  • SES deconsolidation continues to weigh on reported net sales YoY (prior-year quarter included $39.9M SES sales), though JV now reported in equity income .
  • ClarkDietrich faced mixed demand/competitive pressure; management cautioned Q1 may revert closer to flat YoY despite a strong Q4 equity income print ($12.8M) .

Financial Results

MetricQ2 2025Q3 2025Q4 2025
Net Sales ($M)$274.0 $304.5 $317.9
GAAP Diluted EPS$0.56 $0.79 $0.08
Adjusted EPS (Diluted)$0.60 $0.91 $1.06
Adjusted EBITDA ($M)$56.2 $73.8 $85.1
Adjusted EBITDA Margin %20.5% 24.2% 26.8%
Net Cash from Operations ($M)$49.1 $57.1 $62.4
Free Cash Flow ($M)$44.4 $44.4 $49.3

Segment breakdown (Q4 2025):

SegmentNet Sales ($M)Adjusted EBITDA ($M)Volume (000s units)Notes
Consumer Products$125.6 $20.8 15.7 “Driven by lower SG&A and favorable product mix”
Building Products$192.3 $71.3 4.3 Volume growth and Ragasco; JV equity income contributions increased
JV Equity Income (WAVE)———$32.6M
JV Equity Income (ClarkDietrich)———$12.8M
Other equity income———$(2.8)M (includes SES JV)

Key KPIs and balance sheet:

KPIQ4 2025
Cash and Cash Equivalents ($M)$250.1
Total Debt ($M)$302.9
Net Debt ($M)~$53 (management)
Revolver Availability ($M)$500.0
Free Cash Flow Conversion (Adj.)93%
Operating Cash Flow Conversion (GAAP)1,610%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Dividend per shareNext payment (Sep 29, 2025)$0.17 $0.19 Raised
Effective Tax Rate (annual)FY202552.6% (prior year) 26.1% GAAP; 23.0% adjusted N/A (reported change)
CapEx – modernization projectsFY2026–FY2027N/A~$40M remaining; majority in FY2026; completion early FY2027 New detail
Revenue/EPS/Segment guidanceFY2026Not providedNot provided; management does not give specific guidance Maintained stance

Earnings Call Themes & Trends

TopicQ2 2025 (Prev-2)Q3 2025 (Prev-1)Q4 2025 (Current)Trend
Tariffs/macroWell-positioned as domestic manufacturer; mild headwinds Fluid tariff environment; price increases planned; domestic positioning a benefit Continued uncertainty; expecting more data; flexibility with customers and suppliers Mixed/Cautious
Margin trajectoryAdj. EBITDA margin 20.5% Gross margin ~29.3%; adj. EBITDA margin 24.2% Gross margin ~29.3%; adj. EBITDA margin 26.8%; target >30% gross and ≤20% SG&A Improving
Product performance (Balloon Time, Halo)Consumer improved margins, brands strong New Balloon Time mini launch; Halo distribution expansion Balloon Time mini partnering with CVS; Halo accolades; POS tracking to shipments Positive
Supply chain / POSStrong retail relationships; inventory managed Prepared retailers for surge demand; destocking avoided POS tracking; domestic manufacturing capacity added Improving
JV performance (WAVE/ClarkDietrich)WAVE +$3.1M YoY; Clark down YoY WAVE steady; Clark impacted by steel, weather WAVE $32.6M; Clark $12.8M; caution for Q1 near flat Mixed
AI/tech / IoTNot highlightedIoT “Sure Sense” propane level sensing; embracing AI across facilities/back office Continued automation, technology; transformation initiatives progressing Scaling
M&A strategyRagasco integration driving benefits Healthy pipeline; long-term focus Elgen acquisition closed; synergies and margin uplift targeted Active

Management Commentary

  • “We closed fiscal 2025 with a strong fourth quarter, delivering year-over-year and sequential growth in adjusted EBITDA, adjusted EPS and free cash flow.” — CEO Joe Hayek .
  • “Building Products delivered robust top- and bottom-line growth, supported by improved volumes and steady contributions from WAVE and ClarkDietrich.” — CEO Joe Hayek .
  • “Gross margin was 29.3% versus 24.8%. Adjusted EBITDA margin in the quarter was 26.8% versus 19.8% in Q4 a year ago.” — CEO Joe Hayek (prepared remarks) .
  • “Cash flow from operations for the quarter was $62M… Net debt… less than a quarter turn [of trailing adjusted EBITDA].” — CFO Colin Souza .

Q&A Highlights

  • Margin drivers: ~450 bps gross margin expansion YoY; half from SES lap, half from volume/mix and conversion cost improvements in Building Products; SG&A down YoY due to initiatives .
  • JV outlook: WAVE steady across healthcare/education/transportation; ClarkDietrich Q4 viewed as near-term aberration with Q1 expected closer to flat vs prior year .
  • Ragasco contribution: ~$16.5M revenue and ~$2M EBITDA in Q4; organic volumes returning to seasonality in Building Products .
  • Elgen acquisition: HVAC components/structural framing; strong strategic fit; seasonally stronger in 2H calendar; targeted margin improvements via WBS operational efficiencies; no China sourcing .
  • Guidance stance: Management reiterated no specific revenue/EPS guidance; cautiously optimistic given macro/tariffs; aiming >30% gross margin and ≤20% SG&A over time .

Estimates Context

Metric (Q4 2025)Consensus*ActualSurprise
Revenue ($M)$301.4*$317.9 +$16.5M; +5.5%
Adjusted EPS (Diluted)$0.84*$1.06 +$0.22; +26%
Gross Margin (%)27.7%*~29.3% (company commentary) +160 bps

Values retrieved from S&P Global*

Implication: Strong beat on core revenue/EPS despite GAAP headwinds tied to non-cash impairment. Estimate revisions likely to trend higher in Building Products/JV contributions; caution remains for ClarkDietrich near-term .

Key Takeaways for Investors

  • Underlying earnings power is improving: sequential and YoY expansion in adjusted margins and cash conversion; consolidated adj. EBITDA margin reached 26.8% .
  • Building Products is the growth engine, supported by Ragasco and JV equity income; watch seasonality and ClarkDietrich normalization in Q1 .
  • Consumer Products profitability improved via mix and SG&A control; Balloon Time mini and Halo brand momentum expand distribution and channel opportunities .
  • Capital allocation remains balanced: dividend raised to $0.19, buybacks ongoing, capacity to fund M&A and modernization (net debt ~$53M; $500M revolver) .
  • Near-term trading: positive estimate revisions and dividend uplift are catalysts; monitor tariff headlines and JV updates (ClarkDietrich) for sentiment inflection .
  • Medium-term thesis: WBS-driven productivity, targeted M&A (Elgen) and margin targets (>30% gross, ≤20% SG&A) support compounding FCF and ROIC improvement .

Values retrieved from S&P Global*