Full-Year Sales Growth
Consolidated net sales for fiscal 2026 increased 20% year-over-year to $1.4 billion, including 9% organic growth, demonstrating both portfolio strength and organic momentum.
Worthington Industries
· WOR
June 23rd, 2026
Summary
- Earnings Call Date:
- 2026-06-23
- Change Since:
- -6.11%
- Next Earnings Date:
- 2026-09-30
Earnings Call Sentiment
PositiveThe call conveyed a largely positive view: the company delivered strong full-year top-line growth (20%), adjusted EBITDA expansion (12%), record free cash flow ($170M), improved SG&A efficiency, and strategic M&A and product momentum (notably ASME tanks into data centers). Near-term headwinds include margin compression from mix and inventory step-up (LSI), lower equity income from ClarkDietrich, A2L-related tough comps, and elevated modernization capex, but management framed many issues as timing or comparison-driven rather than structural. Balance sheet metrics and liquidity remain strong, supporting continued execution and M&A optionality.
Company Guidance
The company gave limited but specific forward-looking pointers: it expects to ship at least $13 million of ASME water tanks into data centers in Q1 FY2027 (matching the $13M shipped in fiscal 2026), expects to complete its consumer facility modernization by mid‑FY2027 with approximately $16 million of modernization spend remaining (after funding $25M of elevated capex in FY2026), and anticipates capital expenditures will return to more normalized levels thereafter; management said A2L-related comparison headwinds should moderate by Q2, believes ClarkDietrich is at a trough with upside potential, and reiterated a long‑term target for wholly‑owned Building Products EBITDA margins in the low‑teens (roughly 12–13%). Key financial context and balance‑sheet flexibility cited alongside that guidance included FY2026 adjusted EBITDA of $296M (up 12%), adjusted EPS of $3.37 (up 9%), free cash flow of $170M (102% conversion), Q4 free cash flow of $55M, Q4 net sales of $371M (FY sales $1.4B, +20% including 9% organic), net debt of $278M (net debt/ttm adjusted EBITDA <1x), a $500M undrawn revolver, and a quarterly dividend of $0.20/share (up 5%).
Adjusted EBITDA and EPS Expansion
Adjusted EBITDA for fiscal 2026 increased 12% to $296 million. Adjusted earnings per share rose 9% to $3.37 for the year; GAAP EPS improved to $3.14 from $1.92 the prior year.
Record Free Cash Flow and Strong Conversion
Generated $170 million of free cash flow for fiscal 2026 and $55 million in the quarter (company's highest quarterly FCF), representing a 102% conversion rate relative to adjusted net earnings.
Improved SG&A Efficiency
SG&A as a percentage of sales was reduced materially (company cites a 200 basis point reduction for the year and a 150 basis point reduction in the quarter) driven by productivity, automation, and AI-enabled initiatives.
Balance Sheet Strength and Liquidity
Closed the quarter with net debt of $278 million and a net debt to trailing adjusted EBITDA ratio of less than 1.0x. Company maintains a $500 million undrawn revolving credit facility for flexibility.
Strategic M&A and Integration Progress
Completed acquisitions of Elgen and LSI and reported integrations are on track; acquisitions contributed $44 million in net sales in Q4.
Data Center Opportunity and Product Traction
Shipped approximately $13 million of ASME water tanks for liquid cooling into data centers in 2026 and expect to ship at least $13 million in Q1 FY2027, positioning the company in an emerging multi-year growth market.
Segment-Level Wins — Wholly Owned Margin Expansion
Wholly owned Building Products adjusted EBITDA increased 62% in fiscal 2026 to $100 million and expanded margin by 220 basis points to 11.7%. Consumer Products adjusted EBITDA grew 10% to $91 million with margin expansion of ~100 basis points to 17.5%.
Quarterly Operational Performance
Q4 consolidated net sales were $371 million, up 17% year-over-year (organic growth 3%). Q4 adjusted EBITDA was $83.5 million and net earnings rose to $48 million from $4 million a year ago.
Shareholder Returns and Capital Allocation
Returned capital through a 5% increase in quarterly dividend to $0.20 per share, $9 million in dividends paid in the quarter, and $18 million used to repurchase 350,000 shares during Q4.
Operator
Hello, everyone. Thank you for joining us, and welcome to the Worthington Enterprises fourth quarter fiscal 2026 earnings call. After today's prepared remarks, we will host a question and answer session. I will now hand the conference over to Marcus Rogier, Treasurer and Investor Relations Officer.
Marcus Rogier
Thank you, Paige. Good morning, everyone, and thank you for joining us for Worthington Enterprises fourth quarter fiscal 2026 earnings call. On the call today are Joseph Hayek, our President and Chief Executive Officer, and Colin Souza, our Chief Financial Officer. Before we begin, I'd like to remind everyone that certain statements made during today's call are forward-looking in nature and subject to risks and uncertainties. For more information, please refer to our earnings release issued yesterday after the market close. Our remarks today will include references to non-GAAP financial measures, and reconciliations can be found in the earnings release. Today's call is being recorded, and a replay will be available on our website at worthingtonenterprises.com. With that, I'll turn the call over to Joe.
Joe Hayek
Thank you, Marcus. Good morning, everybody. Fiscal 2026 was an important year for Worthington Enterprises. We delivered 20% sales growth — 9% of that was organic — and 12% adjusted EBITDA growth. We generated $170 million of free cash flow while successfully reducing SG&A as a percentage of sales by 200 basis points. We acquired and began the integration of both Elgen and LSI. These results demonstrate the strength of our portfolio, our strategy, and most importantly, our people. We...
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