Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended August 31, 2025
or
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________
Commission File Number 001-08399
WORTHINGTON ENTERPRISES, INC.
(Exact name of registrant as specified in its charter)
Ohio
31-1189815
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer Identification No.)
200 West Old Wilson Bridge Road, Columbus, Ohio
43085
(Address of principal executive offices)
(Zip Code)
(614) 438-3210
(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Shares, Without Par Value
WOR
New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
☒
Accelerated filer
☐
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
APPLICABLE ONLY TO CORPORATE ISSUERS:
On October 1, 2025, the number of common shares, without par value, of the registrant issued and outstanding was 49,665,056.
TABLE OF CONTENTS
Commonly Used or Defined Terms
ii
Cautionary Note Regarding Forward-Looking Statements
iii
Use of Non-GAAP Financial Measures and Definitions
1
Part I. Financial Information
Item 1.
Financial Statements
Consolidated Balance Sheets – August 31, 2025 and May 31, 2025
3
Consolidated Statements of Earnings – Three Months Ended August 31, 2025 and 2024
4
Consolidated Statements of Comprehensive Income – Three Months Ended August 31, 2025 and 2024
5
Consolidated Statements of Cash Flows – Three Months Ended August 31, 2025 and 2024
6
Condensed Notes to Consolidated Financial Statements (Unaudited)
7
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
20
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
27
Item 4.
Controls and Procedures
28
Part II. Other Information
Legal Proceedings
29
Item 1A.
Risk Factors
Unregistered Sales of Equity Securities and Use of Proceeds
Defaults Upon Senior Securities
30
Mine Safety Disclosures
Item 5.
Other Information
Item 6.
Exhibits
Signatures
31
i
COMMONLY USED OR DEFINED TERMS
References in this Form 10-Q to “we,” “our,” “us” or the “Company” are collectively to Worthington Enterprises and its consolidated subsidiaries. In addition, the following terms, when used in this Form 10-Q, have the meanings set forth below:
Term
Definition
ABI
Architecture Billings Index
ATSR
Annualized absolute total shareholder return
AOCI
Accumulated other comprehensive income (loss)
ASU
Accounting Standards Update
Board
Board of Directors of Worthington Enterprises, Inc.
CARES Act
Coronavirus Aid, Relief and Economic Security Act
CEO
Chief Executive Officer
ClarkDietrich
Clarkwestern Dietrich Building Systems LLC
CODM
Chief Operating Decision Maker
common shares
The common shares, no par value, of Worthington Enterprises
COVID-19
The novel coronavirus disease first known to originate in December 2019
CPI
U.S. Core Consumer Price Index
Credit Facility
Our $500,000,000 unsecured revolving credit facility with a group of lenders
current year quarter
The three months ended August 31, 2025
DIY
Do-it-yourself
DMI
Dodge Momentum Index
EBIT
Earnings before interest and taxes
EBITDA
Earnings before interest, taxes, depreciation, and amortization
Elgen
Elgen Manufacturing Company, Inc.
EPS
Earnings per common share
equity income
Equity in net income of unconsolidated affiliates
ETR
Effective income tax rate
Exchange Act
Securities Exchange Act of 1934, as amended
FASB
Financial Accounting Standards Board
first quarter of fiscal 2026
Our fiscal quarter ended August 31, 2025
fiscal 2024
Our fiscal year ended May 31, 2024
fiscal 2025
Our fiscal year ended May 31, 2025
fiscal 2026
Our fiscal year ended May 31, 2026
Form 10-Q
This Quarterly Report on Form 10-Q for the quarterly period ended August 31, 2025
GAAP
U.S. generally accepted accounting principles
GDP
U.S. gross domestic product
Halo
WH Products, LLC
HMI
National Association of Home Builders/Wells Fargo Housing Market Index
HVAC
Heating, ventilation, and air conditioning
LIRA
Leading Indicator of Remodeling Activity
MD&A
N.M.
Not meaningful
OCI
Other comprehensive income (loss)
prior year quarter
The three months ended August 31, 2024
PSLRA
Private Securities Litigation Reform Act of 1995, as amended
Ragasco
Ragasco AS
SEC
Securities and Exchange Commission
Separation
The separation of our former steel processing business, effective December 1, 2023
SG&A
Selling, general and administrative expenses
simple SOFR
Simple Secured Overnight Financing Rate
U.S.
United States of America
WAVE
Worthington Armstrong Venture
Workhorse
Taxi Workhorse Holdings, LLC
Worthington Enterprises
Worthington Enterprises, Inc. (formerly known as Worthington Industries, Inc.)
Worthington Steel
Worthington Steel, Inc.
2025 Form 10-K
Our Annual Report on Form 10-K for fiscal 2025 as filed with the SEC on July 30, 2025
2026 Form 10-K
Our Annual Report on Form 10-K for fiscal 2026
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Selected statements contained in this Form 10-Q, including, without limitation, in MD&A and in “Note D – Contingent Liabilities and Commitments,” constitute “forward-looking statements,” as that term is used in the PSLRA. We wish to take advantage of the safe harbor provisions included in the PSLRA. Forward-looking statements reflect our current expectations, estimates or projections concerning future results or events. These statements are often identified by the use of forward-looking words or phrases such as “believe,” “expect,” “anticipate,” “may,” “could,” “should,” “would,” “intend,” “plan,” “will,” “likely,” “estimate,” “project,” “position,” “strategy,” “target,” “aim,” “seek,” “foresee,” and similar words or phrases. These forward-looking statements include, without limitation, statements relating to:
Because they are based on beliefs, estimates and assumptions, forward-looking statements are inherently subject to risks and uncertainties that could cause actual results to differ materially from those projected. Any number of factors could affect actual results, including, without limitation, those that follow:
iv
We note these risk factors for investors as contemplated by the PSLRA. Forward-looking statements should be construed in the light of such risks. It is impossible to predict or identify all potential risk factors. Consequently, readers should not consider the foregoing list to be a complete set of all potential risks and uncertainties. Readers are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date made. We do not undertake, and hereby disclaim, any obligation to update any forward-looking statements, whether as a result of new information, future developments or otherwise, except as required by applicable law.
v
USE OF NON-GAAP FINANCIAL MEASURES AND DEFINITIONS
(In thousands, except per common share amounts)
NON-GAAP FINANCIAL MEASURES. This Form 10-Q includes certain financial measures that are not calculated and presented in accordance with GAAP. Non-GAAP financial measures typically exclude items that management believes are not reflective of, and thus should not be included when evaluating the performance of our ongoing operations. Management uses these non-GAAP financial measures to evaluate ongoing performance, engage in financial and operational planning, and determine incentive compensation. Management believes these non-GAAP financial measures provide useful supplemental information regarding the performance of our ongoing operations and should not be considered as an alternative to the comparable GAAP financial measure. Additionally, management believes these non-GAAP financial measures allow for meaningful comparisons and analysis of trends in our business and enables investors to evaluate our operations and future prospects in the same manner as management.
The following provides an explanation of each non-GAAP financial measure presented in this Form 10-Q:
Adjusted operating income (loss) is defined as operating income (loss) excluding the items listed below, to the extent naturally included in operating income (loss).
Adjusted net earnings is defined as net earnings attributable to controlling interest excluding the after-tax effect of the excluded items outlined below.
Adjusted EPS - diluted is defined as adjusted net earnings divided by diluted weighted-average common shares outstanding for the applicable period.
Adjusted EBITDA is the measure by which management evaluates segment performance and overall profitability. EBITDA is defined as earnings before interest, taxes, depreciation, and amortization. Adjusted EBITDA excludes additional items including, but not limited to, those listed below, as well as other items that management believes are not reflective of, and thus should not be included when evaluating the performance of ongoing operations. Adjusted EBITDA also excludes stock-based compensation due to its non-cash nature, which is consistent with how management assesses operating performance and determines incentive compensation. At the segment level, adjusted EBITDA includes expense allocations for centralized corporate back-office functions that exist to support the day-to-day business operations. Public company and other governance costs are held at the corporate level within the unallocated corporate and other category.
EXCLUSIONS FROM NON-GAAP FINANCIAL MEASURES
Management believes it is useful to exclude the following items from its non-GAAP financial measures for its own and investors’ assessment of the business for the reasons identified below. Additionally, management may exclude other items from non-GAAP financial measures that do not occur in the ordinary course of our ongoing business operations and note them in the reconciliation from net earnings to the non-GAAP financial measure adjusted EBITDA.
Consolidated Results – Selected Non-GAAP Adjusted Results
Three Months Ended August 31, 2025
Earnings
Before
Income
Operating
Tax
Net
Diluted
Taxes
Expense
Earnings (1)
EPS (1)
$
9,243
45,681
10,860
35,148
0.70
Restructuring and other expense, net
2,476
(377
)
2,099
0.04
Non-GAAP
11,719
48,157
11,237
37,247
0.74
Three Months Ended August 31, 2024
Loss
(4,699
30,790
6,782
24,253
0.48
1,158
(290
868
0.02
(3,541
31,948
7,072
25,121
0.50
Consolidated Results - Adjusted EBITDA
Three Months Ended
August 31,
2025
2024
Net earnings (GAAP)
34,821
24,008
Plus: Net loss attributable to noncontrolling interest
327
245
Net earnings attributable to controlling interest
Interest expense, net
63
489
Income tax expense
EBIT (1)
46,071
31,524
Adjusted EBIT (1)
48,547
32,682
Depreciation and amortization
13,086
11,830
Stock-based compensation
3,427
3,925
Adjusted EBITDA (non-GAAP)
65,060
48,437
2
Item 1. – Financial Statements
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
May 31,
Assets
Current assets:
Cash and cash equivalents
167,122
250,075
Receivables, less allowances of $906 and $907, respectively
214,078
215,824
Inventories:
Raw materials
103,069
80,522
Work in process
9,660
9,408
Finished products
88,831
79,463
Total inventories
201,560
169,393
Income taxes receivable
4,579
12,720
Prepaid expenses and other current assets
38,701
37,358
Total current assets
626,040
685,370
Investments in unconsolidated affiliates
129,678
129,262
Operating lease assets
39,603
22,699
Goodwill
412,304
376,480
Other intangible assets, net of accumulated amortization of $92,988 and $88,887, respectively
222,889
190,398
Other assets
20,880
20,717
Property, plant and equipment:
Land
8,735
8,703
Buildings and improvements
134,797
132,742
Machinery and equipment
384,904
372,798
Construction in progress
45,688
33,326
Total property, plant and equipment
574,124
547,569
Less: accumulated depreciation
287,381
277,343
Total property, plant and equipment, net
286,743
270,226
Total assets
1,738,137
1,695,152
Liabilities and equity
Current liabilities:
Accounts payable
102,841
103,205
Accrued compensation, contributions to employee benefit plans and related taxes
33,479
43,864
Dividends payable
9,999
9,172
Other accrued items
35,842
34,478
Current operating lease liabilities
7,556
6,014
Income taxes payable
71
109
Total current liabilities
189,788
196,842
Other liabilities
57,465
53,364
Distributions in excess of investment in unconsolidated affiliate
103,166
103,767
Long-term debt
306,010
302,868
Noncurrent operating lease liabilities
32,694
17,173
Deferred income taxes, net
89,183
82,901
Total liabilities
778,306
756,915
Shareholders’ equity - controlling interest
959,108
937,187
Noncontrolling interest
723
1,050
Total equity
959,831
938,237
Total liabilities and equity
See condensed notes to consolidated financial statements.
CONSOLIDATED STATEMENTS OF EARNINGS
Net sales
303,707
257,308
Cost of goods sold
221,423
194,813
Gross profit
82,284
62,495
Selling, general and administrative expense
70,565
66,036
Operating income (loss)
Other income (expense):
Miscellaneous income (expense), net
(156
486
(63
(489
36,657
35,492
Earnings before income taxes
Net earnings
Net loss attributable to noncontrolling interest
(327
(245
Basic
Weighted average common shares outstanding
49,264
49,487
Earnings per share attributable to controlling interest
0.71
0.49
50,026
50,365
Cash dividends declared per common share
0.19
0.17
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Other comprehensive income (loss), net of tax
Foreign currency translation
1,407
541
Pension liability adjustment
(11
(7
Cash flow hedges
(313
(50
Other comprehensive income, net of tax
1,083
484
Comprehensive income
35,904
24,492
Comprehensive loss attributable to noncontrolling interest
Comprehensive income attributable to controlling interest
36,231
24,737
CONSOLIDATED STATEMENTS OF CASH FLOWS
Operating activities:
Adjustments to reconcile net earnings to net cash provided by operating activities:
Provision for (benefit from) deferred income taxes
2,957
(5,537
Bad debt income
(21
(8
Equity in net income of unconsolidated affiliates, net of distributions
(181
3,453
Net gain on sale of assets
-
(18
Changes in assets and liabilities, net of impact of acquisitions:
Receivables
14,107
28,166
Inventories
(15,816
(6,406
(11,946
(13,093
Accrued compensation and employee benefits
(10,399
(11,445
Other operating items, net
11,026
6,271
Net cash provided by operating activities
41,061
41,146
Investing activities:
Investment in property, plant and equipment
(13,195
(9,629
Acquisitions, net of cash acquired
(92,235
(88,887
Proceeds from sale of assets, net of selling costs
11,769
Investment in non-marketable equity securities
(2,000
Net cash used by investing activities
(105,430
(88,747
Financing activities:
Dividends paid
(8,576
(8,116
Repurchase of common shares
(6,259
(6,803
Proceeds from issuance of common shares, net of tax withholdings
(3,552
(3,158
Principal payments on long-term obligations
(197
Net cash used by financing activities
(18,584
(18,077
Decrease in cash and cash equivalents
(82,953
(65,678
Cash and cash equivalents at beginning of period
244,225
Cash and cash equivalents at end of period
178,547
CONDENSED Notes to Consolidated Financial Statements (UNAUDITED)
(In thousands, except common share and per common share amounts)
Note A – Basis of Presentation
Basis of Presentation
These interim unaudited consolidated financial statements include the accounts of Worthington Enterprises and its consolidated subsidiaries. Significant intercompany accounts and transactions have been eliminated.
We own an 80% controlling interest in Halo, which was acquired on February 1, 2024. Halo is consolidated with the equity owned by the other joint venture members shown as “noncontrolling interests” in our consolidated balance sheets, and the other joint venture members’ portions of net earnings and OCI are shown as net earnings or comprehensive income attributable to noncontrolling interests in our consolidated statements of earnings and consolidated statements of comprehensive income, respectively.
Investments in unconsolidated affiliates that we do not control are accounted for using the equity method with our proportionate share of income or loss recognized within equity income in our consolidated statements of earnings. See further discussion of our unconsolidated affiliates in “Note B – Investments in Unconsolidated Affiliates.”
These interim unaudited consolidated financial statements have been prepared in accordance with GAAP for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the SEC. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments, which are of a normal and recurring nature except those which have been disclosed elsewhere in this Form 10-Q, necessary for a fair presentation of the consolidated financial statements for these interim periods, have been included. Operating results for the first quarter of fiscal 2026 are not necessarily indicative of the results that may be expected for the full fiscal year. For further information, refer to the consolidated financial statements and notes thereto included in the 2025 Form 10-K.
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates.
Relationship with Worthington Steel
We are party to several agreements with Worthington Steel that govern our ongoing relationship following the Separation, including a Trademark License Agreement, both a short and long-term Transition Services Agreement, and a Steel Supply and Services Agreement. Transactions governed by these agreements are considered related party transactions.
Pursuant to the Steel Supply and Services Agreement, Worthington Steel manufactures and supplies to us, at reasonable market rates, certain flat rolled steel products, and will provide us with certain related support services such as design, engineering/technical services, price risk management, scrap management, steel purchasing, supply chain optimization and product rework services, and other services at our request that are ancillary to the supply of the flat rolled steel products. Purchases from Worthington Steel under the Steel Supply and Services Agreement totaled $37,036 and $28,431 for the three months ended August 31, 2025 and August 31, 2024, respectively. Accounts payable related to these purchases were $10,598 and $9,099 as of August 31, 2025 and May 31, 2025, respectively.
Activity under all other agreements between Worthington Steel and us related to the Separation was immaterial for the periods presented.
Recently Issued Accounting Pronouncements
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This standard requires enhanced income tax disclosures, including more detailed information in the effective tax rate reconciliation and disaggregated disclosures of income taxes paid by jurisdiction. The standard is effective for fiscal years beginning after December 15, 2024. Early adoption is permitted. While adoption of this ASU is not expected to have a material effect on our consolidated financial condition, results of operations, or cash flows, it will result in expanded income tax disclosures beginning in our 2026 Form 10-K.
In November 2024, the FASB issued ASU 2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures,” which expands disclosure of significant costs and expenses. This ASU requires expanded disclosures of significant costs and expenditures within cost of goods sold and SG&A, including amounts of inventory purchased, employee compensation, depreciation, amortization and selling expenses. This ASU also requires expanded qualitative disclosures, including a description of selling expenses and a description of non-disaggregated expenses. This standard is effective for annual periods beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. We expect this ASU to only impact our disclosures with no impact to our result of operations, cash flows and financial condition.
Note B – Investments in Unconsolidated Affiliates
Investments in joint ventures that we do not control, either through majority ownership or otherwise, are unconsolidated and accounted for using the equity method. At August 31, 2025, we held investments in the following unconsolidated joint ventures: ClarkDietrich (25%); Sustainable Energy Solutions (49%); WAVE (50%); and Workhorse (20%).
We received distributions from unconsolidated affiliates totaling $36,476 during the three months ended August 31, 2025. We have received cumulative distributions from WAVE in excess of our investment balance, which resulted in a negative asset balance of $103,166 and $103,767 at August 31, 2025 and May 31, 2025, respectively. In accordance with the applicable accounting guidance, we have reclassified the negative balances to distributions in excess of investment in unconsolidated affiliate within our consolidated balance sheets. We will continue to record our equity in the net income of WAVE as a debit to the investment account, and if it becomes positive, it will again be shown as an asset on our consolidated balance sheets. If it becomes probable that any excess distribution may not be returned (upon joint venture liquidation or otherwise), we will immediately recognize any balance classified as a liability as income.
We use the cumulative earnings approach to determine the cash flow presentation of distributions from our unconsolidated joint ventures. Distributions received are included in our consolidated statements of cash flows as operating activities unless the cumulative distributions exceed our share of the cumulative equity in the net earnings of the joint venture. In such cases, the excess distributions are considered returns of investment and are classified as investing activities in our consolidated statements of cash flows.
8
WAVE and ClarkDietrich are included within the Building Products segment, while the Sustainable Energy Solutions and Workhorse joint ventures are reported within Other. The following tables present summarized financial information for our unconsolidated affiliates for three months ended August 31, 2025 and 2024:
134,717
125,905
Operating income
67,683
60,065
1,638
1,470
3,960
4,409
134
64
63,597
56,209
289,991
301,855
22,789
34,081
4,495
3,873
Interest expense (income), net
80
(142
13
537
23,735
34,976
Other
72,485
87,913
(3,257
200
2,214
2,663
295
491
59
44
Net earnings (loss)
(3,623
(503
9
Note C – Restructuring and Other Expense, Net
Restructuring activities consist of established programs that are intended to fundamentally change our operations. Our restructuring programs may include closing or consolidating production facilities or moving manufacturing of a product to another location, realignment of the management structure of a business unit in response to changing market conditions or general rationalization of headcount. Our restructuring activities generally give rise to employee-related costs, such as severance pay, and facility-related costs, such as exit costs and gains or losses on asset disposals but may include other incremental operating items associated with our ongoing businesses that are nonrecurring in nature but incremental to our normal business activities.
A progression of the liabilities associated with our restructuring activities, combined with a reconciliation to the restructuring and other expense, net financial statement caption in our consolidated statement of earnings for the three months ended August 31, 2025, is summarized below:
Balance at
May 31, 2025
Payments
August 31, 2025
Early retirement and severance
585
775
(365
995
Other restructuring charges
100
1,701
(1,801
685
(2,166
The total liability associated with our restructuring activities as of August 31, 2025 is expected to be paid in the next 12 months.
Note D – Contingent Liabilities and Commitments
We are defendants in certain legal actions. In the opinion of management, the outcome of these actions, which is not clearly determinable at the present time, would not significantly affect our consolidated financial position or future results of operations. We also believe that environmental issues will not have a material effect on our capital expenditures, consolidated financial position or future results of operations.
Note E – Guarantees
We do not have guarantees that we believe are reasonably likely to have a material current or future effect on our consolidated financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
At August 31, 2025, we also had in place $9,204 of outstanding stand-by letters of credit issued to third-party service providers. The fair value of these guaranteed instruments, based on premiums paid, was not material and no amounts were drawn against them at August 31, 2025.
Note F – Debt
Our multi-year revolving Credit Facility is scheduled to mature on September 27, 2028. Borrowings under the Credit Facility have maturities of up to one year. We have the option to borrow at rates equal to an applicable margin over the overnight bank funding rate, the prime rate of PNC Bank, National Association or the adjusted daily simple SOFR. The applicable margin is determined by our total leverage ratio. There were no borrowings outstanding under the Credit Facility at August 31, 2025 or May 31, 2025, leaving $500,000 available for use.
10
Note G – Other Comprehensive Income (Loss)
The following table summarizes the tax effects on each component of OCI for the periods presented:
Before-Tax
Net-of-Tax
1,280
127
(12
553
(14
(439
126
(65
15
827
256
(84
568
Note H – Changes in Equity
The following tables summarize the changes in equity by component and in total for the periods presented:
Controlling Interest
Additional
Paid-in
AOCI,
Retained
Noncontrolling
Capital
Net of Tax
Subtotal
Interests
Total
Balance at May 31, 2025
308,608
4,050
624,529
Other comprehensive income
Common shares issued, net of withholding tax
Common shares in non-qualified plans
78
4,856
Repurchases and retirement of common shares
(623
(5,636
Cash dividends declared
(9,433
Balance at August 31, 2025
309,367
5,133
644,608
Balance at May 31, 2024
299,033
454
589,392
888,879
2,133
891,012
32
6,216
(884
(5,919
(8,550
Balance at August 31, 2024
301,239
938
599,176
901,353
1,888
903,241
The following table summarizes the changes in AOCI for the periods presented:
Foreign
Pension
Currency
Liability
Cash Flow
Translation
Adjustment
Hedges
2,581
1,834
OCI before reclassifications
334
1,600
Reclassification adjustments to net earnings (1)
(773
Income tax effect
3,988
(376
1,521
11
(669
(441
1,564
(398
(417
333
(128
(448
1,514
——————————————————
On March 24, 2021, the Board authorized the repurchase of up to 5,618,464 common shares. During the three months ended August 31, 2025, we repurchased a total of 100,000 common shares under this authorization leaving 5,265,000 common shares available for repurchase at August 31, 2025.
Common shares may be repurchased from time to time, with consideration given to the market price of the common shares, the nature of other investment opportunities, cash flows from operations, general economic conditions and other relevant considerations. Repurchases may be made on the open market or through privately-negotiated transactions.
Note I – Stock-Based Compensation
Service-Based Restricted Common Shares
During the three months ended August 31, 2025, we granted an aggregate of 63,330 service-based restricted common shares under our stock-based compensation plans, which cliff vest three years from the grant date. The weighted average grant date fair value of these restricted common shares, based on the weighted average closing price of the underlying common shares on the grant date, was $63.05 per share, or $3,993 in total, and will be recognized on a straight-line basis over the three-year vesting period, net of any forfeitures.
Market-Based Restricted Common Shares
On June 30, 2025, we granted market-based restricted common shares covering an aggregate of 92,500 common shares (at target levels) to certain members of executive management. Vesting of the awards is contingent on the achievement of specified levels of ATSR over a three-year service period ending June 30, 2028, in which annualized ATSR must exceed a threshold level in order to be satisfied. The fair value of these market-based restricted common shares was estimated using a Monte-Carlo simulation model that incorporates key assumptions such as the risk-free interest rate, expected volatility and expected dividends. Compensation expense is recognized on a straight-line basis over the three-year vesting period, net of forfeitures, regardless of whether the market condition is satisfied. The estimated grant date fair value of these market-based restricted common shares was $45.39 per common share or $4,199 in total (at target levels).
The following assumptions were used to determine the grant date fair value for our market-based restricted common shares during the three months ended August 31, 2025.
Dividend yield
1.19
%
Expected volatility
38.00
Risk-free interest rate
3.68
12
Performance Shares
Performance shares awarded under our stock-based compensation plans are earned based on the level of achievement with respect to a set of measurement criteria for corporate and business unit targets. The awards generally cover three-year performance periods ending May 31, 2026, 2027, and 2028.
These performance share awards will be paid, to the extent earned, in common shares in the fiscal quarter following the end of the applicable performance period. The fair values of our performance shares are determined by the closing market prices of the underlying common shares at the respective grant dates of the performance shares and the pre-tax stock-based compensation expense is based on our periodic assessment of the probability of the targets being achieved and our estimate of the number of common shares that will ultimately be issued. The ultimate pre-tax stock-based compensation expense to be recognized over the performance period on all tranches will vary based on our periodic assessment of the probability of the targets being achieved. During the three months ended August 31, 2025, we granted performance share awards covering an aggregate of 53,130 common shares (at target levels). The aggregate grant-date fair value at target for these performance shares is $3,395, which will be recognized over the performance period and adjusted based on our periodic assessment of the probability of achieving the performance targets. The ultimate pre-tax stock-based compensation expense to be recognized over the performance period on all tranches will vary based on our periodic assessment of the probability of the targets being achieved.
Note J – Income Taxes
Income tax expense for the three months ended August 31, 2025 and August 31, 2024 reflected estimated annual ETRs of 23.8% and 24.5%, respectively. Management is required to estimate the annual ETR based upon its forecast of annual pre-tax income for domestic and foreign operations. Our actual ETR for fiscal 2026 could be materially different from the forecasted rate as of August 31, 2025.
Note K – Earnings per Share
The following table sets forth the computation of basic and diluted EPS attributable to controlling interest for the periods presented:
Numerator (basic & diluted):
Denominator (shares in thousands):
Basic EPS – weighted average common shares
Effect of dilutive securities
762
878
Diluted EPS – weighted average common shares
Basic EPS
Diluted EPS
Stock options and restricted common shares covering an aggregate of 13,610 and 77,837 common shares for the three months ended August 31, 2025 and August 31, 2024, respectively have been excluded from the computation of diluted EPS because the effect would have been antidilutive for those periods.
Note L – Segment Operations
Our operating segments reflect the way in which internally-reported financial information is regularly reviewed by the CODM to analyze performance, make decisions and allocate resources. We have identified our CEO as our CODM. Our CODM evaluates segment performance on the basis of adjusted EBITDA, as described in the “Use of Non-GAAP Financial Measures and Definitions” section. Factors used to identify operating segments include the nature of the products provided by each business, the management reporting structure, similarity of economic characteristics and certain quantitative measures, as prescribed by GAAP. Our operations are organized under two operating segments: Consumer Products and Building Products. Unallocated Corporate and Other also includes certain assets and liabilities (e.g., cash and cash equivalents and public debt) held at the corporate level as well as general corporate expenses that are not directly attributable to our business operations and are administrative in nature, such as public company and other governance-related costs that benefit the organization as a whole. Activity outside of our two operating segments is presented within “Other” and “Unallocated Corporate” as described further below.
Other includes our share of the equity earnings of two of our unconsolidated joint ventures, Sustainable Energy Solutions and Workhorse.
Unallocated Corporate includes certain assets and liabilities (e.g. public debt) held at the corporate level as well as general corporate expenses that are not directly attributable to our business operations and are administrative in nature, such as public company and other governance-related costs that benefit the organization as a whole, have not been allocated to our operating segments and are held at the corporate level.
The following tables present summarized financial information for our reportable operating segments and Unallocated Corporate and Other for the periods indicated. A reconciliation from the GAAP financial measure of earnings (loss) before income taxes to the non-GAAP financial measure of adjusted EBITDA is provided directly following the summarized information below.
Consumer
Building
Reportable
Unallocated
Products
Segments
Corp
Consolidated
118,938
184,769
79,972
141,399
221,371
52
27,710
33,636
61,346
9,219
296
309
2,167
Other segment items (1)
18
98
116
103
219
38,320
(1,663
Earnings (loss) before income taxes
11,225
47,660
58,885
(11,541
Reconciling items to adjusted EBITDA
3,858
9,036
12,894
192
Interest expense (income)
(2
(20
83
727
819
1,546
1,881
Adjusted EBITDA
16,148
57,793
73,941
(7,218
117,596
139,712
78,113
116,647
194,760
53
26,861
28,050
54,911
11,125
289
869
(15
(225
(240
243
36,645
(1,153
12,637
31,596
44,233
(12,290
4,336
7,294
11,630
Interest expense
17
472
557
533
1,090
2,835
17,775
39,729
57,504
(7,914
14
Total assets for each of our reportable operating segments at the dates indicated were as follows:
Consumer Products
534,316
531,187
Building Products
928,012
795,837
Total reportable operating segments
1,462,328
1,327,024
Unallocated Corporate and Other
275,809
368,128
The following table presents capital expenditures for each of our reportable operating segments for the three months ended August 31, 2025 and August 31, 2024
9,041
4,943
3,509
3,709
12,550
8,652
Unallocated Corporate
645
977
13,195
9,629
Note M – Acquisitions
On June 18, 2025, we acquired Elgen, a leading provider of HVAC parts and components, ductwork, and structural framing used primarily in commercial building applications across North America. The purchase price was $91,185, net of cash acquired. Elgen operates as part of the Building Products operating segment and its results have been included in our consolidated statements of earnings since the date of acquisition. Pro forma results, including the acquired business since the beginning of fiscal 2024, would not be materially different from reported results.
The information included herein is based on the preliminary allocation of the purchase price using estimates of the fair value and useful lives of the assets acquired. The purchase price allocation is subject to further adjustment until all pertinent information regarding the assets acquired is fully evaluated by us, including but not limited to, the fair value accounting.
The assets acquired and liabilities assumed were recognized at their estimated acquisition-date fair values, with goodwill representing the excess of the purchase price over the fair value of the net identifiable assets acquired. The purchase price includes the fair values of other assets that were not identifiable, not separately recognizable under accounting rules (e.g., assembled workforce) or of immaterial value. The purchase price also includes strategic and synergistic benefits (i.e., investment value) specific to us, which resulted in a purchase price in excess of the fair value of the identifiable net assets. This additional investment value resulted in goodwill, which is not expected to be deductible for income tax purposes. During the three months ended August 31, 2025, we incurred approximately $1,700 of acquisition related expenses related to the transaction, which are recorded in restructuring and other expense, net in our consolidated statement of earnings.
In connection with the acquisition of Elgen, we identified and valued the following intangible assets:
Useful Life
Category
Amount
(Years)
Customer relationships
17,800
Trade name
7,900
Technological know-how
7,000
Non-compete agreement
1,700
Total acquired identifiable intangible assets
34,400
The following table summarizes the consideration paid and the final fair value assigned to the assets and liabilities assumed at the acquisition date.
Preliminary
Valuation
1,093
Accounts receivable
12,751
Inventory
16,351
Other current assets
1,605
Property, plant and equipment
11,941
21,196
Intangible assets
Total identifiable assets
99,337
(11,364
Current operating lease liability
(2,225
Accrued expenses
(4,465
Noncurrent operating lease liability
(19,041
Deferred income taxes
(3,582
Net identifiable assets
58,660
33,617
Total purchase price
92,277
Note N – Derivative Financial Instruments and Hedging Activities
We primarily utilize derivative financial instruments to manage exposure to certain risks related to our ongoing operations. The primary risks managed through the use of derivative financial instruments include interest rate risk, foreign currency exchange risk and commodity price risk. While certain of our derivative financial instruments are designated as hedging instruments, we also enter into derivative financial instruments that are designed to hedge a risk, but are not designated as hedging instruments and therefore do not qualify for hedge accounting. These derivative financial instruments are adjusted to current fair value through earnings at the end of each period.
Interest Rate Risk Management – We are exposed to the impact of interest rate changes. Our objective is to manage the impact of interest rate changes on cash flows and the market value of our borrowings. We utilize a mix of debt maturities along with both fixed-rate and variable-rate debt to manage changes in interest rates. In addition, we enter into interest rate swaps to further manage our exposure to interest rate variations related to our borrowings and to lower our overall borrowing costs.
Foreign Currency Exchange Rate Risk Management – We conduct business in several major international currencies and are, therefore, subject to risks associated with changing foreign currency exchange rates. We enter into various contracts that change in value as foreign currency exchange rates change to manage this exposure. Such contracts limit exposure to both favorable and unfavorable foreign currency exchange rate fluctuations. The translation of foreign currencies into U.S. dollars also subjects us to exposure related to fluctuating foreign currency exchange rates; however, derivative financial instruments are not used to manage this risk.
Commodity Price Risk Management – We are exposed to changes in the price of certain commodities, including steel, natural gas, copper, zinc, aluminum and other raw materials, and our utility requirements. Our objective is to reduce earnings and cash flow volatility associated with forecasted purchases and sales of these commodities to allow management to focus its attention on business operations. Accordingly, we enter into derivative financial instruments to manage the associated price risk.
We are exposed to counterparty credit risk on all of our derivative financial instruments. Accordingly, we have established and maintain strict counterparty credit guidelines. We have credit support agreements in place with certain counterparties to limit our credit exposure. These agreements require either party to post cash collateral if its cumulative market position exceeds a predefined liability threshold. Amounts posted to the margin accounts accrue interest at market rates and are required to be refunded in the period in which the cumulative market position falls below the required threshold. We do not have significant exposure to any one counterparty and management believes the risk of loss is remote and, in any event, would not be material.
Refer to “Note O – Fair Value Measurements” for additional information regarding the accounting treatment for our derivative financial instruments, as well as how fair value is determined. The following table summarizes the fair value of our derivative financial
16
instruments and the respective lines in which they were recorded in the consolidated balance sheet at August 31, 2025 and May 31, 2025:
Fair Value of Assets
Fair Value of Liabilities
Balance
Sheet
Location
Derivatives designated as hedging instruments:
Commodity contracts
441
478
51
35
Foreign currency exchange contracts
153
483
594
961
378
86
Derivatives not designated as hedging instruments:
36
81
101
7,541
7,360
7,642
7,375
Total derivative financial instruments
630
1,042
8,020
7,461
The amounts in the table above reflect the fair value of our derivative financial instruments on a net basis where allowed under master netting arrangements. Had these amounts been recognized on a gross basis, the impact would have been an increase in receivables with a corresponding increase in accounts payable of $548 and $356 at August 31, 2025 and May 31, 2025, respectively.
Cash Flow Hedges
We enter into derivative financial instruments to hedge our exposure to changes in cash flows attributable to interest rate and commodity price fluctuations associated with certain forecasted transactions. These derivative financial instruments are designated and qualify as cash flow hedges. Accordingly, the effective portion of the gain or loss on each of these derivative financial instruments is reported as a component of OCI and reclassified into earnings in the same line associated with the forecasted transaction and in the same period during which the hedged transaction affects earnings.
The following table summarizes the net notional positions of our cash flow hedges at August 31, 2025:
Notional
Maturity Date(s)
9,423
September 2025 - December 2027
6,895
September 2025 - April 2026
The following table summarizes the gain (loss) recognized in OCI and the gain (loss) reclassified from AOCI into net earnings for derivative financial instruments designated as cash flow hedges for the periods presented:
Location of
Gain (Loss)
Reclassified
Recognized
Reclassified from AOCI
from AOCI
in OCI
into Net Earnings
For the three months ended August 31, 2025:
77
393
Interest rate contracts
257
Miscellaneous expense, net
328
773
For the three months ended August 31, 2024:
(385
(333
The estimated amount of net gains recognized in AOCI at August 31, 2025, expected to be reclassified into net earnings within the succeeding 12 months is $559 (net of tax of $151). This amount was computed using the fair value of the cash flow hedges at August 31, 2025, and will change before actual reclassification from OCI to net earnings during the fiscal years ending May 31, 2026 and May 31, 2027.
Net Investment Hedges
At August 31, 2025, we designated our Euro-denominated debt held in the U.S. with an initial notional amount of €91,700 ($99,479) as a non-derivative net investment hedge of our foreign operations in Portugal. The full principal amount is considered fully effective. We did not reclassify any gains or losses related to the net investment hedge from AOCI into earnings during any of the fiscal years presented. The foreign currency loss recognized in OCI for the non-derivative instruments designated as net investment hedges during the three months ended August 31, 2025 and 2024 was $3,100 and $1,835, respectively.
Economic (Non-designated) Hedges
We enter into foreign currency exchange contracts to manage our foreign currency exchange rate exposure related to inter-company and financing transactions that do not meet the requirements for hedge accounting treatment. We also enter into certain commodity contracts that do not qualify for hedge accounting treatment. Accordingly, these derivative financial instruments are adjusted to current market value at the end of each period through gain (loss) recognized in earnings.
The following table summarizes the net notional positions of our economic (non-designated) derivative financial instruments outstanding at August 31, 2025:
1,308
September 2025 - November 2026
39,173
November 2025 - December 2025
The following table summarizes the gain (loss) recognized in earnings for economic (non-designated) derivative financial instruments for the periods presented:
Recognized in Earnings for the
Location of Gain (Loss)
Recognized in Earnings
(47
87
674
1,047
627
1,134
Note O – Fair Value Measurements
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is an exit price concept that assumes an orderly transaction between willing market participants and is required to be based on assumptions that market participants would use in pricing an asset or a liability. Current accounting guidance establishes a three-tier fair value hierarchy as a basis for considering such assumptions and for classifying the inputs used in the valuation methodologies. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair values are as follows:
Recurring Fair Value Measurements
At August 31, 2025, our assets and liabilities measured at fair value on a recurring basis were as follows:
(Level 1)
(Level 2)
(Level 3)
Totals
Derivative financial instruments (1)
Liabilities
At May 31, 2025, our assets and liabilities measured at fair value on a recurring basis were as follows:
Non-Recurring Fair Value Measurements
At August 31, 2025, there were no assets measured at fair value on a non-recurring basis on our consolidated balance sheet. See “Note R – Fair Value Measurements” in the fiscal 2025 Form 10-K for information regarding non-recurring fair value measurements as of May 31, 2025.
The fair value of non-derivative financial instruments included in the carrying amounts of cash and cash equivalents, receivables, income taxes receivable, other assets, accounts payable, accrued compensation, contributions to employee benefit plans and related taxes, other accrued items, income taxes payable and other liabilities approximate carrying value due to their short-term nature. The fair value of long-term debt, including current maturities, based upon models utilizing market observable (Level 2) inputs and credit risk, was $276,990 and $263,547 at August 31, 2025 and May 31, 2025, respectively. The carrying amount of long-term debt was $306,010 and $302,868 at August 31, 2025 and May 31, 2025, respectively.
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Item 2. – Management’s Discussion and Analysis of Financial Condition and Results of Operations
Unless otherwise indicated, all Note references contained in this MD&A refer to the Condensed Notes to Consolidated Financial Statements included in “Part I – Item 1. – Financial Statements” of this Form 10-Q. All amounts are presented in millions except common share and per common share amounts.
Introduction
The following discussion and analysis of market and industry trends, business developments, and the results of our operations and financial position should be read in conjunction with our consolidated financial statements and notes thereto included in “Part I – Item 1. – Financial Statements” of this Form 10-Q. The 2025 Form 10-K includes additional information about our business, operations and consolidated financial position and should be read in conjunction with this Form 10-Q. This MD&A is designed to provide a reader with material information relevant to an assessment of our financial condition and results of operations and to allow investors to view the Company from the perspective of management.
Business Overview
We are a market-leading designer and manufacturer of innovative products and services, including manufactured metal products, organized around attractive end markets under two separate and distinct reportable operating segments: Consumer Products and Building Products. Our primary goal is to create value for our shareholders. Built on the successful foundation of the Worthington Business System, we apply a disciplined approach to capital deployment and seek to grow earnings by optimizing our operations and supply chain, developing and commercializing new innovative products and applications, and pursuing strategic investments and acquisitions.
Our Consumer Products business has a diverse product offering in the tools, outdoor living and celebrations categories, including propane-filled cylinders for torches and related accessories, handheld torches, specialized hand tools and instruments, drywall tools, propane-filled camping cylinders, helium-filled balloon kits, and accessories and gas griddles and pizza ovens sold primarily to mass merchandisers, retailers and distributors. Sales to one customer in Consumer Products accounted for 11.2% of our consolidated net sales in the first quarter of fiscal 2026.
Our Building Products business is a market-leading provider of pressurized containment solutions, providing critical components in essential end markets, such as heating, cooking, cooling and water, and, through our unconsolidated joint ventures, WAVE and ClarkDietrich, ceiling suspension systems and light gauge metal framing products. Our pressurized containment solutions include refrigerant and LPG cylinders, well water and expansion tanks, and other specialty products which are generally sold to gas producers and distributors. Refrigerant gas cylinders are used to hold refrigerant gases for commercial, residential, and automotive air conditioning and refrigeration systems. LPG cylinders hold fuel for residential and light commercial heating systems, barbeque grills and recreational vehicle equipment, industrial forklifts and commercial/residential cooking (the latter, generally outside North America). Well water tanks and expansion tanks are used primarily in the residential market with certain products also sold to commercial markets. Specialty products include a variety of fire suppression tanks, chemical tanks, and foam and adhesive tanks. With the acquisition of Elgen on June 18, 2025, we expanded our portfolio to include HVAC parts and components, further strengthening our position across the end markets we serve.
Activity outside of our two reportable operating segments is presented within Other and Unallocated Corporate as described further below.
Other includes our share of the equity earnings of two of our unconsolidated joint ventures, Sustainable Energy Solutions and Workhorse and the related investments in these businesses.
Unallocated Corporate includes certain assets and liabilities (e.g., cash and cash equivalents and public debt) held at the corporate level as well as general corporate expenses that are not directly attributable to our business operations and are administrative in nature, such as public company and other governance-related costs that benefit the organization as a whole, have not been allocated to our operating segments and are held at the corporate level.
Acquisitions and Divestitures
Fiscal 2026
On June 18, 2025, we acquired Elgen, a leading provider of HVAC parts and components. The purchase price was approximately $91.2 million, net of cash acquired. Elgen began operating as part of Building Products in the first quarter of fiscal 2026. Refer to “Note M – Acquisitions” for additional information.
Fiscal 2025
On June 3, 2024, we completed the acquisition of Ragasco, a leading global manufacturer of composite propane cylinders based in Norway. The purchase price consisted of cash consideration of $108.6 million, including an earnout that was settled in March 2025. Ragasco began operating as part of Building Products in the first quarter of fiscal 2025.
Demand Trends
General Economic Conditions
Demand for our products is closely tied to broader macroeconomic conditions and overall consumer and business sentiment. Shifts in inflation, interest rates, disposable income, and construction activity directly influence purchase behavior, capital investment, and distributor inventory management.
The macroeconomic environment during the first quarter of fiscal 2026 was mixed, as easing inflation was offset by elevated borrowing costs and continued policy uncertainty. U.S. GDP rebounded in June 2025 (the latest available release), increasing at a 3.3% annualized rate following a 0.5% decline in March 2025. Inflation remained near 3%, and the CPI increased 3.1% year-over-year in August 2025, while the Federal Reserve lowered the federal funds target range to 4.00%–4.25% at its September 2025 meeting. Mortgage costs eased late in the first quarter of fiscal 2026, but remained high by historical standards, with the average 30-year fixed rate at 6.56% at August 31, 2025.
We believe these dynamics, including tight credit conditions, softening industrial activity, and global uncertainty, continued to weigh on both consumer and business sentiment during the first quarter of fiscal 2026. Within Consumer Products, inflation-driven cost consciousness and elevated interest rates influenced discretionary purchases and contributed to cautious buying patterns. In Building Products, rising financing costs constrained new construction demand, while slowing industrial activity impacted certain commercial and infrastructure-related channels. We expect demand to remain uneven in the near term. Other key end market trends are described below in the “End Market Trends” section.
Inventory Demand Cycles
Demand for our products is influenced by the inventory management strategies of our retail and distribution partners. Periods of customer destocking, when our customers reduce their own inventories, can lead to lower order volumes, even when consumer sell-through remains steady. Conversely, customers’ restocking can temporarily elevate shipments above underlying end-user demand. As a result, shifts in customers’ inventory levels can meaningfully impact our reported revenue and margin performance, particularly in Consumer Products, where a large volume of products flow through big box retailers.
During the first quarter of fiscal 2026, inventory levels at most key retailer and distributor customers remained aligned with end-user demand, and replenishment activity generally mirrored point-of-sale trends, with no material build-up in our distribution or retail channels. Customers maintained a cautious approach in managing tariff-related cost pressures, selectively trimming orders for lower-volume items.
End Market Trends
We offer a wide range of products and services to a diverse, primarily domestic, customer base across several end markets, including U.S. residential and non-residential construction, repair/remodel, which collectively drive overall demand for Building Products. These end markets also drive demand for many of our consumer products sold in the tools and outdoor living categories. Demand for our remaining consumer products, including helium-filled balloon kits sold into the celebrations category, is generally driven by the general health of the consumer, including the macroeconomic and geopolitical conditions discussed above. We actively monitor the following publicly available economic data and selected key indicators for our major end markets:
21
Key Indicator
Description
U.S. Residential Construction Spend
Represents total expenditures on residential construction projects, including new builds, renovations, and improvements.
U.S. Non-residential Construction Spend
Measures total spending on commercial, institutional, and industrial construction projects across the country.
Existing Home Sales
Reports the number of previously owned homes sold in a given period, reflecting demand in the housing market.
Authorized Housing Permits
Indicates the number of building permits issued for new housing construction, serving as a leading indicator for future housing starts.
U.S. Private Housing Starts
Measures the number of new residential construction projects that have begun, signaling housing market activity.
Measures homebuilder sentiment on current and future single-family home sales and buyer traffic.
A leading economic indicator for non-residential construction, based on monthly billings reported by architecture firms.
Tracks the value of non-residential building projects in planning stages, serving as a leading indicator for future construction activity.
Projects short-term trends in U.S. home improvement and repair spending, serving as a forward-looking gauge of residential remodeling activity.
During the first quarter of fiscal 2026, conditions across our key end markets remained uneven. U.S residential and non-residential construction spending trended lower. Housing indicators suggested modest improvements in existing home sales and private housing starts, while authorized permits declined on a year-over-year basis, driven by weakness in multifamily activity. In August 2025, the HMI weakened further to 32, the lowest level since December 2022, reflecting a notably subdued new home pipeline. The non-residential end market was mixed, as the ABI remained in contraction, while the DMI rose 7.5% in August 2025 to a record of 301.4, signaling stronger project planning activity despite current spending softness. Within repair and remodel, the latest LIRA projects approximately 1.2% growth in homeowner improvement spending through the second quarter of calendar year 2026. We believe these conditions support stable near-term demand for tools and DIY products in Consumer Products, while Building Products remain exposed to mixed construction end markets where planning activity is improving but spending remains subdued, leading us to expect overall demand across our key end markets to remain uneven in the near term.
Factors Affecting Operating Costs
Raw Materials
Our largest raw material expenditures include cold-rolled and hot-rolled steel, propane, propylene, and aluminum. Fluctuations in the prices of these inputs have a direct impact on our cost of goods sold and overall financial performance. Our primary raw material and energy inputs are subject to significant price volatility driven by global supply-demand imbalances, tariffs, and other external factors. We manage this risk through a combination of supply contracts, forward purchasing, and selective hedging strategies designed to reduce near-term cost swings and support margin stability.
Steel: Steel raw material is the most significant direct cost across both the Consumer Products and Building Products segments. During the first quarter of fiscal 2026, prices for both hot-rolled and cold-rolled steel moderated from the peak levels reached in April 2025. This decline contributed to improved spread as we maintained consistent pricing discipline across our product portfolio. Our sourcing strategy, combining firm-price contracts for select inputs with index-based agreements for others, allowed us to manage volatility and capture cost advantages as prices declined.
Aluminum: During the first quarter of fiscal 2026, aluminum costs increased compared to the prior year quarter, reflecting both higher global benchmark prices and a June 2025 increase in U.S Section 232 tariffs to 50% which drove U.S Midwest aluminum premiums to elevated levels. These changes impacted components such as fuel cylinder valves and other aluminum-intensive assemblies. Where possible, we mitigated these increases through forward purchasing and supplier negotiations, but tariff-related cost pressure on aluminum is expected to persist into the second quarter of fiscal 2026.
Propane, propylene, and other gases: Propane and propylene costs were stable during the first quarter of fiscal 2026, consistent with broader commodity trends. A portion of our propane and propylene requirements are secured under fixed-price supply agreements, which limited our exposure to spot fluctuations. Costs for helium and other industrial gases declined from the prior year quarter, providing a margin benefit in select consumer-facing product lines, particularly within the Consumer Products segment.
22
We continue to actively monitor commodity markets and maintain a diversified sourcing strategy to ensure continuity of supply and cost discipline. Our approach to material procurement supports margin stability and helps mitigate the impact of input price volatility on our results.
Seasonality
Historically, net sales tend to be stronger in our fiscal third and fourth quarters for Consumer Products when our facilities perform at seasonal peaks, matching consumer demand. Sales in Building Products are generally stronger in the first and fourth quarters of our fiscal year due to weather conditions, customer business cycles, and the timing of renovation and new construction projects.
Results of Operations
The following discussion provides an overview of results for the three months ended August 31, 2025 and August 31, 2024:
Change
GAAP Financial Measures
303.7
257.3
46.4
9.2
(4.7
13.9
45.7
30.8
14.9
34.8
24.0
10.8
Equity income
36.7
35.5
1.2
EPS - diluted
0.22
Non-GAAP Financial Measures (1)
Adjusted operating income (loss)
11.7
(3.5
15.2
65.1
48.4
16.7
Adjusted EPS – diluted
0.24
Net Sales
The following table provides a breakdown of our consolidated net sales by operating segment for the periods indicated:
118.9
117.6
1.3
1.1
184.8
139.7
45.1
32.3
18.0
23
Gross Profit
82.3
62.5
19.8
31.7
Gross margin
27.1
24.3
Gross profit for the current year quarter increased $19.8 million, or 31.7%, over the prior year quarter to $82.3 million driven primarily by the impact of higher overall volumes in the wholly owned businesses of Building Products.
70.6
66.0
4.6
7.0
Net Sales %
23.2
25.7
SG&A increased $4.6 million, or 7.0%, from the prior year quarter, due primarily to the addition of Elgen. As a percentage of net sales, SG&A was down from 25.7% in the prior year quarter to 23.2% on slightly lower overall corporate overhead expenses.
Restructuring and Other Expense, Net
$ Change
2.5
Restructuring and other expense, net in both periods consisted primarily of employee severance and transaction costs related to acquisitions and divestitures.
Equity Income
WAVE (1)
32.4
27.9
4.5
16.1
ClarkDietrich (1)
5.9
8.7
(2.8
(32.2
%)
Other (2)
(1.6
(1.1
(0.5
(45.5
3.4
Equity income increased $1.2 million over the prior year quarter to $36.7 million, driven by higher contributions from WAVE, up $4.5 million over the prior year quarter, partially offset by a decline at ClarkDietrich, down $2.8 million, as pricing pressure led to lower gross profit.
24
Income Tax Expense
10.9
6.8
4.1
Estimated Annual ETR
23.8
24.5
Income tax expense was $10.9 million in the current year quarter compared to $6.8 million in the prior year quarter. The increase was primarily driven by higher pre-tax earnings.
The following table provides a summary of adjusted EBITDA, a non-GAAP financial measure, by reportable operating segment and on a consolidated basis, along with the respective percentage of net sales for each reportable operating segment and on a consolidated basis. See the “Use of Non-GAAP Financial Measures and Definitions” section preceding Part I, Item 1 of this Form 10-Q for additional information regarding our use of non-GAAP financial measures. A reconciliation from earnings before income taxes to adjusted EBITDA is provided in “Note L – Segment Operations.”
% of
13.5
17.8
15.1
(1.7
(9.6
57.8
31.3
39.7
28.4
18.1
45.6
73.9
57.5
22.3
16.4
28.5
(1.2
41.7
(7.2
2.4
(7.9
3.1
0.7
8.9
65.0
21.4
18.8
16.6
34.3
25
Liquidity and Capital Resources
During the three months ended August 31, 2025, we generated $41.1 million of cash from operating activities, flat from the prior year quarter, invested $13.2 million in property, plant and equipment, and spent approximately $92.0 million to acquire 100% of the outstanding equity interests in Elgen. Additionally, we paid $6.3 million to repurchase 100,000 common shares and paid dividends of $8.6 million on the common shares during the three months ended August 31, 2025.
The following table summarizes our consolidated cash flows for the periods presented:
41.1
(105.4
(88.7
(18.6
(18.1
(82.9
(65.7
250.1
244.2
167.2
178.5
We believe we have access to adequate resources to meet the needs of our existing businesses for normal operating costs, mandatory capital expenditures, debt redemptions, dividend payments, and working capital, to the extent not funded by cash provided by operating activities, for at least 12 months and for the foreseeable future thereafter. These resources include cash and cash equivalents and unused committed lines of credit under our Credit Facility, which had a total of $500.0 million of borrowing capacity available to be drawn as of August 31, 2025.
Although we do not currently anticipate a need, we believe that we could access the financial markets to sell long-term debt or equity securities. However, the continuation of uncertain economic conditions, including those caused by a high interest rate environment, could create volatility in the financial markets, which may impact our ability to access capital and the terms under which we can do so.
We routinely monitor current operational requirements, financial market conditions, and credit relationships and we may choose to seek additional capital by issuing new debt and/or equity securities to strengthen our liquidity or capital structure. Should we seek additional capital, there can be no assurance that we would be able to obtain such additional capital on terms acceptable to us, if at all, and such additional equity or debt financing could dilute the interests of our existing shareholders and/or increase our interest costs. We may also from time to time seek to retire or repurchase our outstanding debt through cash purchases, in open-market purchases, privately-negotiated transactions or otherwise. Such repurchases, if any, will be upon such terms and at such prices as we may determine, and will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved in any such transaction may or may not be material.
Operating Activities
Our business is cyclical and cash flows from operating activities may fluctuate during the year and from year to year due to economic and industry conditions. We rely on cash and short-term borrowings to meet cyclical increases in working capital needs. These needs generally arise during periods of increased economic activity or increasing raw material prices, requiring higher levels of inventory and accounts receivable. During economic slowdowns or periods of decreasing raw material costs, working capital needs generally decrease as a result of the reduction of inventories and accounts receivable.
Net cash provided by operating activities was $41.1 million during the three months ended August 31, 2025, flat compared to the prior year quarter as higher net earnings in the current year quarter was offset by an increase in operating working capital requirements (accounts receivable, inventory, and accounts payable) and a $2.5 million decrease in dividends received from unconsolidated affiliates.
Investing Activities
Net cash used by investing activities was $105.4 million during the three months ended August 31, 2025 compared to $88.7 million from the prior year quarter. Net cash used by investing activities during the three months ended August 31, 2025 was driven primarily by cash paid to acquire the outstanding equity interests in Elgen and capital expenditures, including $8.6 million related to ongoing facility modernization projects.
26
Investment activities are largely discretionary and future investment activities could be reduced significantly, or eliminated, as economic conditions warrant. We assess acquisition opportunities as they arise, and any such opportunities may require additional financing. However, there can be no assurance that any such opportunities will arise, that any such acquisition opportunities will be consummated, or that any additional financing will be available on satisfactory terms if required.
Financing Activities
Net cash used by financing activities was $18.6 million during the three months ended August 31, 2025, compared to $18.1 million in the prior year quarter. During the three months ended August 31, 2025, we paid $6.3 million to repurchase 100,000 common shares and paid dividends of $8.6 million on the common shares.
Common shares – On September 23, 2025, the Board declared a quarterly dividend of $0.19 per common share payable on December 29, 2025, to shareholders of record at the close of business on December 15, 2025.
On March 24, 2021, the Board authorized the repurchase of up to 5,618,464 common shares. As of August 31, 2025, 5,265,000 common shares remained available for repurchase under this authorization.
The common shares may be repurchased under these authorizations from time to time, with consideration given to the market price of the common shares, the nature of other investment opportunities, cash flows from operations, general economic conditions and other relevant considerations. Repurchases may be made on the open market or through privately negotiated transactions.
Long-term debt and short-term borrowings – As of August 31, 2025, we were in compliance with the financial covenants of our short-term and long-term debt agreements. Our debt agreements do not include credit rating triggers or material adverse change provisions. There were no outstanding borrowings drawn against the Credit Facility at August 31, 2025, leaving the full borrowing capacity of $500.0 million available for future use.
Dividend Policy
We currently have no material contractual or regulatory restrictions on the payment of dividends. Dividends are declared at the discretion of the Board. The Board reviews the dividend quarterly and establishes the dividend rate based upon our consolidated financial condition, results of operations, capital requirements, current and projected cash flows, business prospects, and other relevant factors. While we have paid a dividend every quarter since becoming a public company in 1968, there is no guarantee that payments of dividends will continue in the future.
Critical Accounting Estimates
The discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements and related disclosure, which have been prepared in accordance with GAAP. The preparation of these consolidated financial statements requires us to use judgment and make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. We continually evaluate our estimates, including those related to our valuation of receivables, inventories, intangible assets, accrued liabilities, income and other tax accruals, contingencies and litigation, and business combinations. We base our estimates on historical experience, current trends and other factors that we believe to be relevant and reasonable under the circumstances at the time the estimate was made. These results form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Critical accounting estimates are defined as those that reflect our significant judgments and uncertainties that could potentially result in materially different results under different assumptions and conditions. Although actual results historically have not deviated significantly from those determined using our estimates, our consolidated financial position or results of operations could be materially different if we were to report under different conditions or to use different assumptions in the application of accounting policies. We believe that our estimates, assumptions, and judgments are reasonable in that they were based on information available when the estimates, assumptions and judgments were made. However, because future events and their effects cannot be determined with certainty, actual results could differ materially from those implied by our assumptions and estimates. Our critical accounting estimates have not significantly changed from those discussed in “Part II – Item 7. – Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Estimates” of the 2025 Form 10-K.
Item 3. – Quantitative and Qualitative Disclosures About Market Risk
Market risks have not materially changed from those disclosed in “Part II – Item 7A. – Quantitative and Qualitative Disclosures About Market Risk” of the 2025 Form 10-K.
Item 4. – Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) that are designed to provide reasonable assurance that information required to be disclosed in the reports that Worthington Enterprises files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including Worthington Enterprises’ principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.
Management, under the supervision of and with the participation of Worthington Enterprises’ principal executive officer and principal financial officer, performed an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this Form 10-Q. Based on that evaluation, Worthington Enterprises’ principal executive officer and principal financial officer have concluded that such disclosure controls and procedures were designed at the reasonable assurance level and were effective at a reasonable assurance level as of the end of the quarterly period covered by this Form 10-Q.
Changes in Internal Control Over Financial Reporting
There were no changes that occurred during the period covered by this Form 10-Q in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II. OTHER INFORMATION
Item 1. – Legal Proceedings
We are involved in various judicial and administrative proceedings, as both plaintiff and defendant, arising in the ordinary course of business. We do not believe that any such proceedings, individually and in the aggregate, will have a material adverse effect on our business, financial position, results of operation or cash flows.
Item 1A. – Risk Factors
There are certain risks and uncertainties in our business that could cause our actual results to differ materially from those anticipated. In “PART I – Item 1A. – Risk Factors” of the 2025 Form 10-K, we included a detailed discussion of our risk factors. Our risk factors have not changed significantly from those disclosed in the 2025 Form 10-K. Those risk factors should be read carefully in connection with evaluating our business and investments in the common shares and in connection with the forward-looking statements and other information contained in this Form 10-Q. Any of the risks described in the 2025 Form 10-K could materially affect our business, consolidated financial condition or future results and the actual outcome of matters as to which forward-looking statements are made. The risk factors described in the 2025 Form 10-K are not the only risks we face. Additional risks and uncertainties not currently known to us, or that we currently deem to be immaterial, also may materially adversely affect our business, consolidated financial condition and/or future results.
Item 2. – Unregistered Sales of Equity Securities and Use of Proceeds
Unregistered Sales of Equity Securities
There were no equity securities of Worthington Enterprises sold by Worthington Enterprises during the three months ended August 31, 2025 that were not registered under the Securities Act of 1933, as amended.
Issuer Purchases of Equity Securities
Common shares withheld to cover tax withholding obligations in connection with the vesting of restricted common shares are treated as common share purchases for purposes of the following table. However, those withheld common shares are not considered common share repurchases under an authorized common share repurchase plan or program. The total number of common shares purchased, as indicated in the table below, include (1) common shares withheld from our employees to satisfy minimum statutory tax withholding obligations arising from the vesting of restricted common shares and (2) common shares repurchased as part of publicly announced plans or programs.
Maximum Number of
Total Number of Common
Common Shares that
Total Number of
Average Price
Shares Purchased as Part
May Yet Be
Common Shares
Paid per
of Publicly Announced
Purchased Under the
Period
Purchased
Common Share
Plans or Programs
Plans or Programs (1)
June 1-30, 2025
40,862
60.46
5,365,000
July 1-31, 2025
124,730
62.93
100,000
5,265,000
August 1-31, 2025
317
67.05
165,909
62.33
Item 3. – Defaults Upon Senior Securities
Not applicable.
Item 4. – Mine Safety Disclosures
Item 5. – Other Information
During the quarter ended August 31, 2025, no director or officer (as defined under Rule 16a-1 of the Exchange Act) adopted or terminated any Rule 10b5-1 trading arrangements or any non-Rule 10b5-1 trading arrangements (in each case, as defined in Item 408(a) of Regulation S-K).
Item 6. – Exhibits
Incorporated by Reference
Exhibit No.
Exhibit Description
Form
Exhibit
Filing Date
Amended Articles of Incorporation of Worthington Enterprises, Inc. [This document represents the articles of incorporation of Worthington Enterprises, Inc. in compiled form incorporating all amendments.]
10-Q
1/09/2024
3.2
Code of Regulations of Worthington Enterprises, Inc. [This document represents the code of regulations of Worthington Enterprises, Inc. in compiled form incorporating all amendments.]
3(b)
10/16/2000
10.1
Worthington Enterprises, Inc. 2025 Equity Plan for Non-Employee Directors†
8-K
9/26/2025
31.1
Rule 13a - 14(a)/15d - 14(a) Certifications (Principal Executive Officer)*
31.2
Rule 13a - 14(a)/15d - 14(a) Certifications (Principal Financial Officer)*
32.1
Section 1350 Certification of Principal Executive Officer**
32.2
Section 1350 Certification of Principal Financial Officer**
Interactive Data Files Pursuant to Rule 405 of Regulation S-T, formatted in Inline XBRL (Extensible Business Reporting Language): (i) Consolidated Balance Sheets at August 31, 2025 and May 31, 2025; (ii) Consolidated Statements of Earnings for the three months ended August 31, 2025 and August 31, 2024; (iii) Consolidated Statements of Comprehensive Income for the three months ended August 31, 2025 and August 31, 2024; (iv) Consolidated Statements of Cash Flows for the three months ended August 31, 2025 and August 31, 2024 and (v) Condensed Notes to Consolidated Financial Statements.*
104
The cover page from this Quarterly Report on Form 10-Q for the quarter ended August 31, 2025, formatted in Inline XBRL and included in Exhibit 101.*
* Filed herewith.
** Furnished herewith.
† Indicates a management contract or compensatory plan or arrangement.
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Date: October 8, 2025
By:
/s/ Colin J. Souza
Colin J. Souza,
Vice President and Chief Financial Officer
(On behalf of the registrant as Duly Authorized Officer and as Principal Financial Officer)