Worthington Enterprises (NYSE:WOR) reported a 13% increase in fiscal 2027 first-quarter sales to $344 million, supported by 7% organic growth and $19 million of revenue from recent acquisitions. Adjusted earnings per share rose to $0.82 from $0.78 a year earlier, while adjusted EBITDA increased 10% to $74 million.
President and Chief Executive Officer Joe Hayek said the company began the fiscal year strongly despite market and operating pressures, including cooling and construction comparisons related to the A2L refrigerant transition, muted new-home sales and constrained steel availability.
Cash Flow and Capital Allocation
Operating cash flow increased to $67 million from $41 million in the prior-year quarter, while free cash flow nearly doubled to $54 million from $28 million. On a trailing 12-month basis, free cash flow reached a record $196 million, representing a 116% conversion rate relative to adjusted net earnings, according to Chief Financial Officer Colin Souza.
The company spent $13 million on capital expenditures during the quarter, paid $9 million in dividends and repurchased 335,000 shares for $18 million. Worthington ended the quarter with net debt of $250 million and trailing 12-month adjusted EBITDA of $303 million. Its board declared a quarterly dividend of $0.20 per share, payable in December 2026.
Souza said working-capital measures helped support the cash-flow performance. The company reduced its cash conversion cycle by roughly eight to nine days over the prior year and lowered net working capital as a percentage of sales by nearly 3% over the past couple of years.
Building Performance Solutions Faces A2L and Steel Pressures
Building Performance Solutions, formerly called Building Products, reported a 16% increase in sales to $215 million. Acquisitions contributed $19 million of sales, while organic sales rose 6%, driven by the company’s water and European businesses. Those gains were partly offset by lower revenue in cooling and construction.
Segment adjusted EBITDA was essentially flat at $60 million, and the adjusted EBITDA margin was 27.8%. Worthington said the year-over-year comparison was affected by the normalization of A2L refrigerant-cylinder demand after a period of unusually strong inventory building ahead of the regulatory transition.
Souza said the A2L-related comparison reduced first-quarter adjusted EBITDA by approximately $7 million, more than the company had expected a quarter earlier. Channel inventories are taking longer to normalize, particularly amid a muted housing market, and the company expects the second quarter to remain a difficult comparison. However, management expects improvement in the seasonally stronger third and fourth quarters.
Hayek described A2L as a timing and comparison issue rather than a structural change in the business. He said new residential equipment is now largely using A2L refrigerants, expanding the installed base for service and replacement demand over time.
Tight steel supply and extended lead times also disrupted production schedules and shipments in cooling, construction and Balloon Time during the quarter. Hayek said the issue likely cost the company “a few million dollars” in the period. Worthington has taken pricing actions where appropriate and expects to be better positioned through the end of the calendar year, though management said visibility beyond that point remains limited.
Data Center Opportunity Gains Momentum
Worthington highlighted accelerating demand for engineered ASME tanks used in liquid-cooling and thermal-management systems for data centers. The company shipped approximately $13 million of those tanks for data centers during fiscal 2026, then generated another $13 million in related revenue during the first quarter alone.
Management expects ASME tank revenue from this value stream to grow sequentially in each of the remaining fiscal 2027 quarters, with more growth weighted toward the back half of the year. Hayek cautioned that the company’s opportunity pipeline is not revenue and that data-center projects can take 18 to 24 months to move from an announced project to equipment demand.
Still, Hayek said industry sources indicate that the market for liquid-cooling and thermal-management ASME tanks could become more than 10 times the size of the legacy market over the next several years. Worthington is investing in engineering talent, equipment and production capacity, while also working with manufacturing partners to supplement internal capacity.
The company also said data-center construction benefits other operations, including WAVE, ClarkDietrich, Elgen and LSI Group. Management said it is increasingly coordinating among its businesses and making introductions across product lines, though Hayek said describing the approach as formal bundling would be an overstatement.
Trade and Specialty Solutions Expands Margins
Trade and Specialty Solutions, formerly Consumer Products, posted an 8% increase in sales to $129 million. Adjusted EBITDA rose to $24 million from $16 million, and the segment’s adjusted EBITDA margin expanded to 18.6% from 13.6%.
Souza attributed the improvement to higher volumes, average selling prices, stronger manufacturing performance and a benefit from IEEPA tariff refunds. The company recorded a net pretax benefit of about $4 million, or $0.06 per share, from those refunds during the quarter.
Portable propane and tools recorded broad-based growth, supported by higher volumes, expanded distribution and pricing actions, according to Souza. Balloon Time was the primary exception, with lower volume reflecting a strong prior-year comparison as well as steel-related supply constraints.
Worthington said it is extending its 80/20 operating discipline from the water business into portable fuel and torch products, aiming to simplify the portfolio, improve mix and support sustainable margin improvement. The company also said it continues to pursue acquisitions where it sees strategic and cultural fit, citing ongoing integration progress at Elgen and LSI Group.
About Worthington Enterprises (NYSE:WOR)
Worthington Enterprises, Inc (NYSE: WOR) is a diversified manufacturer and branded products company focused primarily on consumer and building-product markets. The company develops, manufactures and markets products used by consumers, contractors and other professional customers.
Its consumer products activities include outdoor living, lawn and garden, tools and related products. Its portfolio has included brands such as Bernzomatic, Balloon Time, Mag-Torch and General Tools, although its product portfolio may change as the company manages its businesses and brands.
Worthington Enterprises also participates in the building-products industry, supplying products used in commercial and residential construction.
