WOR — Q1 FY2027 (Jun–Aug 2026) Financial Report Analysis

Worthington Enterprises' fiscal first quarter (June–August 2026) showed sales up 13.2% to $343.9 million and diluted EPS up 24% to $0.87. Most of that came from acquisitions, a one-off $4.0 million tariff refund, a $4.0 million earnout gain and the company's two joint ventures. The products Worthington makes and sells itself earned less underlying profit than a year ago.

Fiscal-year note: Worthington's fiscal year ends May 31, so this quarter (ended August 31, 2026) is the company's "first quarter of fiscal 2027". We file it here as Q1 2026 because the period falls in calendar 2026. The year-ago comparison is the quarter ended August 31, 2025.

Worthington Enterprises is the company left after the steel-processing business was spun off as Worthington Steel (WS) in December 2023. It makes products, not steel: propane, water and HVAC cylinders, HVAC parts, roofing clips, professional hand tools, camping gas and helium balloon kits. It also owns large stakes in two joint ventures: WAVE (ceiling systems, with Armstrong) and ClarkDietrich (metal framing). On September 15, 2026 it renamed its two segments. Building Products is now Building Performance Solutions and Consumer Products is now Trade & Specialty Solutions. Only the names changed. What is in each segment is the same.

At a glance

• $40.6 million of equity income, which is Worthington's share of its joint ventures' profits. That is 73% of the $55.6 million pre-tax profit. The businesses Worthington runs itself made only $13.0 million of operating income on $343.9 million of sales.
• Sales up 13.2%, but only about 6.9% without acquisitions. Acquired businesses added $19.2 million of the $40.2 million increase. Cooling and construction volumes fell as HVAC customers worked through stock they had built up the year before.
• Trade & Specialty Solutions profit up 49%. Adjusted EBITDA rose to $24.0 million (an 18.6% margin, up from 13.5%) on higher volume, higher prices and a share of a $4.0 million tariff refund. Building Performance Solutions profit was flat even though its sales grew 16.4%.

Key figures

Operating margin is the share of sales left after the costs of running the business, before interest, taxes and the joint-venture income. Adjusted EBITDA is profit before interest, tax, depreciation and amortization, also leaving out items the company treats as one-offs and stock-based pay. Adjusted figures are the company's own non-GAAP numbers. GAAP refers to the standard accounting rules.

Segment performance

Building Performance Solutions. Sales rose $30.3 million. Of that, $19.2 million came from acquisitions; the rest came from "strength in the water business". Without acquisitions, sales grew about 6%. That growth was partly offset by "lower volume and a less favorable mix in the cooling and construction business". The cause was a change in refrigerant rules. Federal rules require new HVAC systems to use A2L refrigerants, so contractors and distributors stocked up on compatible products from late fiscal 2025 through most of fiscal 2026. The filing says this "load-in" lifted orders "temporarily... above underlying demand" and started to fade in the fourth quarter of fiscal 2026. Customers are now running those stocks down, which management calls "destocking".

Segment adjusted EBITDA stayed at $59.8 million only because the joint ventures did better: WAVE's contribution rose $2.7 million to $35.1 million and ClarkDietrich's rose $1.5 million to $7.4 million. Both are reported in this segment. That $4.2 million gain, together with profit from the acquired businesses, was used up by lower volume and weaker mix in the businesses Worthington runs itself. The 4.6-point drop in segment margin is the clearest sign of how much the A2L effect has reversed.

Trade & Specialty Solutions (tools, camping gas, helium kits). Sales rose 8.3% on "higher overall volume and higher average selling prices". This was achieved while consumer confidence fell to a seven-month low. The 49% jump in adjusted EBITDA came from higher sales and "the net benefit of IEEPA tariff refunds". The filing does not say how much of the $4.0 million refund was booked in this segment, so the underlying improvement cannot be measured exactly. It is still large without the refund: even if the whole $4.0 million sat here, EBITDA would be about $20.0 million, up 24%. One customer in this segment accounted for 10.2% of total company sales.

Takeaway: Worthington's reported profit relies more on its joint ventures each quarter. The businesses it runs itself produced $13.0 million of operating income, about 3.8% of sales. That figure includes a one-off tariff refund that will not repeat. Without the refund, adjusted operating income would have been roughly $9.7 million, against $13.9 million a year ago (our calculation). WAVE and ClarkDietrich, the joint ventures, contributed $42.5 million together, more than three times the operating income.

What the headline numbers hide

• Much of the GAAP earnings growth is one-off. Net earnings rose $7.4 million, but company-adjusted net earnings rose only $1.2 million, to $40.1 million. The $4.0 million pre-tax earnout gain ($3.0 million after tax) from the oil and gas business sold in January 2021 is in miscellaneous income. The company removes it from its adjusted figures, cutting $0.06 from adjusted EPS. That explains most of the gap between GAAP EPS of $0.87 and adjusted EPS of $0.82.
• The tariff refund is not removed from adjusted figures. After the U.S. Supreme Court ruled in February 2026 that tariffs imposed under IEEPA (an emergency-powers law) were unlawful, Worthington claimed refunds. It booked a net benefit of about $4.0 million in cost of goods sold and SG&A (selling, general and administrative costs) this quarter and says "substantially all" of the claim has been collected. The refund is still counted in adjusted operating income, adjusted EBITDA and adjusted EPS. At the company's estimated 24.1% tax rate it is worth roughly $0.06 per share after tax (our calculation). Without it, adjusted EPS would be about $0.76, below last year's $0.78. Adjusted operating income was $13.7 million against $13.9 million, flat even with the refund included.
• Gross margin fell despite the refund. It dropped from 27.1% to 26.4%. The company blames "higher conversion costs" (factory labor and overhead) in cooling and construction. Raw materials are also getting more expensive. Hot-rolled steel averaged about $1,157 per ton in the quarter and reached $1,193 in August, against $834 in August 2025, a 43% rise. Cold-rolled steel reached about $1,415, against $1,050. Section 232 tariffs keep aluminum costs high, and the company expects that pressure to "persist through fiscal 2027". Trade & Specialty raised prices. The filing does not say whether Building Performance kept up with steel costs, but its lower margin points to a lag.
• Cash conversion was strong, partly for seasonal reasons. Operating cash flow was $66.7 million, 1.57 times net earnings, and free cash flow (operating cash flow minus $12.8 million of capital spending) was about $54.0 million, against about $27.9 million a year ago. The largest single factor was a $41.9 million cash inflow from collecting receivables, which dropped from $228.2 million at May 31 to $185.7 million. Receivables usually shrink in this seasonally slower quarter, so expect less help from them later in the year.
• Inventory rose during the quarter. Inventory grew $15.3 million (7.4%) in three months to $222.6 million. Raw materials made up $9.2 million of the increase. With steel prices rising and supply tight, the company may be buying ahead or simply paying more per ton. Watch whether this turns into lower margins later.
• Buybacks and taxes added a little to EPS. Diluted shares fell 1.7% to 49.2 million. The company spent $18.2 million on 335,000 shares, nearly three times last year's $6.3 million. That explains about 3 points of the gap between EPS growth (24.3%) and net earnings growth (21.1%). The GAAP tax rate was 23.4% against 23.8%, a minor effect. Interest went the other way: net interest expense rose to $2.1 million from $0.1 million because the company had less cash earning interest. Cash fell from $250.1 million at the start of fiscal 2026 to $55.1 million now, after paying for acquisitions such as Elgen ($92.2 million last year).
• Restructuring is small: $0.7 million, down from $2.5 million, mostly severance and deal costs.

Balance sheet

Long-term debt was $305.6 million against $55.1 million of cash. Nothing was drawn on the $500 million credit facility. On August 31 its maturity was extended from 2028 to August 2031. The board declared a $0.20 quarterly dividend, up from $0.19 a year ago. 4.23 million shares remain under the buyback authorization.

Outlook

The 10-Q gives no numerical guidance. Management says it expects "demand across both operating segments to remain uneven in the near term". It blames high mortgage rates (6.66% for a 30-year loan at the end of August), weak builder sentiment and cautious consumers. It points to stronger planning for non-residential projects, such as data centers and healthcare, and to regular repeat purchases in parts of the portfolio as possible support. Sales in both segments are normally stronger in fiscal Q3 and Q4 (December–May), so this quarter is a seasonally weak one.

Our read: the next two quarters depend on three things. First, whether the A2L destocking in cooling and construction ends, which would show up as Building Performance's own profit, excluding the joint ventures, stabilizing. Second, whether price increases keep up with steel costs that are up about 40% from a year ago. Third, how much of Trade & Specialty's margin gain holds once the tariff refund has been booked. The joint ventures, especially WAVE, are likely to keep carrying reported earnings. Not all of that income arrives as cash right away: distributions received this quarter were $4.7 million less than the equity income booked. But that income depends on commercial construction activity that Worthington does not control.

Source: Worthington Enterprises Form 10-Q for the quarter ended August 31, 2026, filed with the SEC on October 9, 2026. Figures marked "our calculation" are derived from the filing's reported numbers and are not company-reported.