Worthington Enterprises, Inc. - 10-Q Summary (Q2 Fiscal 2026)
Business Context and Reporting Period
This report covers the quarterly period ended November 30, 2025 (Second Quarter of Fiscal 2026). Worthington Enterprises operates through two primary segments: Consumer Products (tools, outdoor living, celebrations) and Building Products (pressurized containment, HVAC components, metal framing). The company is a large accelerated filer with a fiscal year ending May 31.
Key Financial Metrics
| Metric | Q2 2025 (3 Months) | Q2 2024 (3 Months) | YTD 2025 (6 Months) | YTD 2024 (6 Months) |
|---|---|---|---|---|
| Net Sales | $327.5 million | $274.0 million | $631.2 million | $531.4 million |
| Operating Income | $12.3 million | $3.5 million | $21.5 million | $(1.2) million |
| Net Earnings (GAAP) | $27.0 million | $28.0 million | $61.9 million | $52.0 million |
| Diluted EPS (GAAP) | $0.55 | $0.56 | $1.25 | $1.04 |
| Adjusted EBITDA | $60.5 million | $56.2 million | $125.5 million | $104.6 million |
| Adjusted EBITDA Margin | 18.5% | 20.5% | 19.9% | 19.7% |
| Cash from Operations (YTD) | $92.6 million | |||
| Cash & Equivalents (Nov 30, 2025) | $180.3 million | |||
| Long-Term Debt | $305.3 million | |||
| Available Credit Facility | $500.0 million (Undrawn) |
Material Changes vs. Prior Period
- Revenue Growth: Consolidated net sales increased 19.5% quarter-over-quarter and 18.8% year-to-date. The Building Products segment drove this growth with a 31.9% quarterly increase, largely due to the acquisition of Elgen and higher volume. Consumer Products sales grew modestly by 2.7%.
- Profitability: Operating income improved significantly to $12.3 million from $3.5 million in the prior year quarter. However, GAAP net earnings decreased slightly ($27.0M vs $28.0M) due to non-operating items.
- Equity Income: Equity income from unconsolidated affiliates (primarily WAVE and ClarkDietrich) decreased $5.5 million quarter-over-quarter, driven by a $5.6 million decline at ClarkDietrich due to weak non-residential construction activity.
- Acquisitions: The June 2025 acquisition of Elgen (HVAC parts) contributed to Building Products revenue and incurred approximately $1.7 million in transaction costs.
- Divestitures: In October 2025, the company divested its 49% interest in the composite business of the SES joint venture, resulting in a $2.95 million loss recorded in miscellaneous expense.
Guidance, Outlook, and Risks
- Outlook: Management expects demand to remain uneven in a softer macroeconomic environment characterized by high mortgage rates and subdued commercial construction. The Federal Reserve's easing cycle is noted, but the "lock-in effect" in housing markets persists.
- Cost Pressures: Aluminum costs rose to record levels due to supply tightness and increased Section 232 tariffs (50%). Steel prices increased sequentially but remain below April 2025 peaks. Propane and propylene costs were favorable.
- Subsequent Events:
- Agreement signed (Dec 16, 2025) to acquire LSI (commercial metal roof clips) for approx. $205 million, expected to close in January 2026.
- Acquired Hydrostat's propane distribution assets (Dec 3, 2025) for approx. $9.6 million.
- Risks: Key risks include volatility in raw material prices (steel, aluminum), trade restrictions/tariffs, customer inventory destocking cycles, and general economic recession risks.
Investor Verification Checklist
- Elgen Integration: Verify the full-year impact of the Elgen acquisition on Building Products margins and volume.
- ClarkDietrich Performance: Monitor the recovery of the ClarkDietrich joint venture given the significant drop in equity income contribution.
- Raw Material Hedging: Assess the effectiveness of hedging strategies against rising aluminum tariffs and steel price volatility.
- LSI Acquisition Funding: Confirm the funding mix (cash vs. debt) for the pending $205 million LSI acquisition and its impact on leverage ratios.
- Non-GAAP Reconciliations: Review the specific exclusions in Adjusted EBITDA, particularly the $2.95 million loss on the SES divestiture and $1.24 million unrealized loss on marketable securities.