Worthington Enterprises, Inc. — Form 10-Q Summary
Reporting period: Three months ended August 31, 2026, the first quarter of fiscal 2027. Comparisons are with the three months ended August 31, 2025 unless stated otherwise. Amounts are in millions, except per-share data.
Business context
Worthington designs and manufactures products for building and specialty markets through Building Performance Solutions and Trade & Specialty Solutions. The company also reports equity-method income from unconsolidated affiliates, including WAVE and ClarkDietrich. On September 15, 2026, it renamed its two segments; the changes did not affect segment composition or historical results.
Financial performance
| Metric | Q1 FY2027 | Q1 FY2026 | Change |
|---|---|---|---|
| Net sales | $343.9 | $303.7 | +13.2% |
| Gross profit / margin | $90.9 / 26.4% | $82.3 / 27.1% | Profit +10.4%; margin down 0.7 percentage points |
| Operating income | $13.0 | $9.2 | +$3.8 |
| Net earnings attributable to controlling interest | $42.6 | $35.1 | +$7.4 |
| Diluted EPS | $0.87 | $0.70 | +$0.17 |
| Adjusted operating income (non-GAAP) | $13.7 | $13.9 | Down $0.2 |
| Adjusted EBITDA (non-GAAP) | $74.0 | $67.2 | +10.1%; margin 21.5% vs. 22.1% |
| Adjusted diluted EPS (non-GAAP) | $0.82 | $0.78 | +$0.04 |
- Segment sales: Building Performance Solutions sales rose 16.4% to $215.1, including $19.2 from acquisitions and strength in water products; lower cooling and construction volumes and less favorable mix partly offset growth. Trade & Specialty Solutions sales increased 8.3% to $128.8 on higher volume and average selling prices.
- Segment adjusted EBITDA: Building Performance Solutions was nearly flat at $59.8, as affiliate income and acquisitions were offset by lower volume and mix. Trade & Specialty Solutions rose 49.1% to $24.0, helped by sales and tariff refunds.
- Other earnings drivers: Equity income increased 10.6% to $40.6, led by WAVE and ClarkDietrich. SG&A rose 9.3% to $77.2, primarily due to LSI, but declined as a share of sales to 22.4% from 23.2%. Net interest expense increased to $2.1 from $0.1, primarily because of lower interest income on cash.
- Cash flow: Operating cash flow was $66.7, up from $41.1, reflecting higher earnings and more favorable working-capital changes. Investing used $14.1, including $12.8 of capital expenditures and $2.4 of acquisition payments; prior-year investing outflow was $105.4, mainly for Elgen. Financing used $25.3, including $18.2 of share repurchases and $9.4 of dividends.
- Balance sheet and liquidity: Cash was $55.1 at August 31, versus $27.7 at May 31, 2026. Long-term debt was $305.6; no Credit Facility borrowings were outstanding, leaving $500.0 available. The company amended and restated the facility, extending maturity to August 31, 2031. Total assets were $1,840.8 and shareholders’ equity was $1,047.2. The company reported compliance with debt covenants and believes available resources are sufficient for at least 12 months.
- Capital returns: The company repurchased 335,000 shares for $18.2 during the quarter, with 4.23 million shares remaining under its authorization. The Board declared a quarterly dividend of $0.20 per share, payable December 29, 2026.
Material changes, outlook and risks
- Gross margin fell despite higher sales, with higher conversion costs in cooling and construction partly offset by tariff refunds. Steel prices increased sharply year over year, and cold-rolled steel availability was constrained. Aluminum costs also remained elevated amid import tariffs.
- The company recognized an approximately $4.0 net benefit from IEEPA tariff refunds in cost of goods sold and SG&A; substantially all of the refund claim had been collected by quarter-end. It also recorded a separate $4.0 pre-tax earnout gain related to the 2021 divestiture of its former oil and gas products business. These unusual benefits support reported results; adjusted measures treat the earnout gain as an exclusion.
- Management expects demand across both segments to remain uneven in the near term. Elevated financing costs are weighing on construction demand, while cautious consumer spending affects discretionary purchases. The company noted that prior A2L-refrigerant-related HVAC channel loading had normalized, while the growing installed base could provide longer-term opportunity. No specific full-year earnings or revenue guidance is provided in the filing.
- Results are seasonal, with sales generally stronger in the third and fourth fiscal quarters. Principal risks include economic and interest-rate uncertainty, tariffs and trade restrictions, raw-material cost and availability, customer inventory cycles, competition, supply-chain disruption, and execution of acquisitions and cost initiatives.
- Management said ordinary-course legal proceedings are not expected to materially affect the company. Risk factors were reported as not significantly changed from the 2026 Form 10-K. Disclosure controls were assessed as effective at a reasonable assurance level.
Important facts for investors to verify
- How much of the sales and earnings improvement is durable versus attributable to the $4.0 tariff-refund benefit, the separate $4.0 earnout gain, acquisitions, or equity-method income.
- Whether gross-margin pressure, higher steel and aluminum costs, and the fading A2L channel-loading tailwind persist or are offset by pricing, sourcing, and operating actions.
- The contribution and cash-distribution profile of joint ventures, particularly WAVE: distributions in excess of its investment were reported as a $102.3 liability at quarter-end.
- How cash generation, share repurchases, dividends, and capital spending evolve given $305.6 of long-term debt and the newly extended $500.0 revolving facility.
- Whether market conditions and customer inventories support management’s expectation of uneven near-term demand; the filing provides no quantified full-year guidance.