Filing update · Worthington Enterprises (WOR)

Worthington Enterprises earns most of its profit through partners, and steel is getting dearer

Worthington grew fiscal first-quarter 2027 sales 13.2% to $343.9 million with acquisitions, but adjusted operating income was flat at $13.7 million. Equity income from its WAVE and ClarkDietrich joint ventures, $40.6 million, was about three times operating income, while steel prices rose more than 30% and a refrigerant-driven tailwind faded.

Published
October 24, 2026
Data through
August 31, 2026
Latest filing used
October 23, 2026
Key numbers
Net sales, Q1 FY27
$343.9M
Up 6.9% excluding acquisitions [3]
Adjusted operating income
$13.7M
Against $13.9M a year earlier [3]
Equity income
$40.6M
From WAVE, ClarkDietrich and others [2]
Free cash flow
$54.0M
Against $27.9M a year earlier [3]
What changed

Worthington Enterprises, the building products and consumer products company spun out of the old steel business, opened fiscal 2027 with higher sales and much better cash flow, but no growth in the profit of its consolidated operations.

  • Net sales were $343.9 million against $303.7 million, up 6.9% excluding acquisitions [3].
  • Operating income was $13.0 million, and adjusted operating income $13.7 million against $13.9 million [3].
  • Equity income from joint ventures rose to $40.6 million from $36.7 million [2].
  • EPS was $0.87 against $0.70, and adjusted EPS $0.82 against $0.78 [3].
  • Free cash flow nearly doubled to $54.0 million [3].
  • Since then: on October 23 Worthington furnished a Regulation FD disclosure [1].
The trajectory

Sales peaked in the third and fourth quarters of fiscal 2026, when the refrigerant load-in was strongest, and operating income followed them down.

Charts: net sales, operating income
Net sales
$0M$200M$400M$600MQ1 FY26: $304M$304MQ1FY26Q2 FY26: $328MQ2FY26Q3 FY26: $379MQ3FY26Q4 FY26: $372MQ4FY26Q1 FY27: $344M$344MQ1FY27
Operating income
$0M$20M$40M$60MQ1 FY26: $9M$9MQ1FY26Q2 FY26: $12MQ2FY26Q3 FY26: $32MQ3FY26Q4 FY26: $23MQ4FY26Q1 FY27: $13M$13MQ1FY27

Five fiscal quarters as Worthington reported them; its fiscal year ends on May 31. Operating income excludes equity income from joint ventures. Hover over or tab to a column for its value.

The numbers and their sources
Quarter Net sales Operating income
Q1 FY26 $303.7M [3] $9.2M [3]
Q2 FY26 $327.5M [9] $12.3M [9]
Q3 FY26 $378.7M [7] $31.5M [7]
Q4 FY26 $371.5M [5] $23.2M [5]
Q1 FY27 $343.9M [3] $13.0M [3]
Where the profit comes from

Equity income from the joint ventures dwarfs operating income from the consolidated business.

Chart: Where the quarter's profit came from
Where the quarter's profit came from
$0M$20M$40M$60MOperating income: Q1 FY26 $9M, Q1 FY27 $13M$13MOperating incomeEquity income: Q1 FY26 $37M, Q1 FY27 $41M$41MEquity income
Operating income [3] and equity income from unconsolidated joint ventures [2], as reported.
Show the numbers
ItemQ1 FY26Q1 FY27
Operating income$9M$13M
Equity income$37M$41M
Segments

Both segments grew, Building Performance helped by acquisitions.

Chart: Net sales by segment, first quarter
Net sales by segment, first quarter
$0M$100M$200M$300MBuilding Performance: Q1 FY26 $185M, Q1 FY27 $215M$215MBuilding PerformanceTrade & Specialty: Q1 FY26 $119M, Q1 FY27 $129M$129MTrade & Specialty
As Worthington reported them [2]. Building Performance includes acquisitions.
Show the numbers
ItemQ1 FY26Q1 FY27
Building Performance$185M$215M
Trade & Specialty$119M$129M
Anomalies worth a closer look

Five things in the filings that change how the headline numbers should be read.

Anomalies (5)
Two ways to read it

The same filings support two different conclusions. We set out both; this is not a view on whether to buy or sell the stock.

The two readings

The case that Worthington is a cash-generative building-products platform

On this reading strong joint ventures and steady acquisitions are compounding, and cash flow is improving.

  1. 01
    Cash flow doubled
    Free cash flow was $54.0 million against $27.9 million a year earlier [3].
  2. 02
    The JVs keep growing
    Equity income rose 10.6% to $40.6 million, with ClarkDietrich up 25.4% [2].
  3. 03
    Organic growth is positive
    Excluding acquisitions, net sales rose 6.9% [3], and Trade & Specialty grew 8.3% on volume and price [3].
  4. 04
    Building products are the growing core
    Building Products rose to about 62% of fiscal 2026 sales, from 57% and 50% in the two prior years [4].
  5. 05
    A clean balance sheet
    Debt is $305.6 million, all long-term, with nothing drawn on a $500.0 million revolver extended to August 2031 [3].

The case that the consolidated business is struggling to earn its keep

On this reading acquisitions buy revenue, not profit, while costs rise and a tailwind fades.

  1. 01
    Flat adjusted profit
    Adjusted operating income was $13.7 million against $13.9 million despite 13.2% sales growth (calculated from [3]).
  2. 02
    Volume is soft
    Building Performance saw lower overall volume and unfavourable mix [3], and Worthington expects demand to "remain uneven in the near term" [2].
  3. 03
    Input inflation
    Steel prices are up 35% to 43% year on year (calculated from [2]) and aluminium tariff pressure is expected to persist through fiscal 2027 [2].
  4. 04
    Acquisitions are getting bigger
    Worthington paid about $206 million for LSI in January 2026 [6] and about $90.7 million for Elgen in 2025 [6]; cash fell by $222.4 million over fiscal 2026 [5].
  5. 05
    Construction is weak
    Worthington expects construction-facing demand to stay constrained by elevated interest rates [2].
Hypotheses: short, medium and long term

Testable statements, each with what would support or contradict it and when the next evidence arrives. Thresholds marked "our marker" are ours, not Worthington's.

Hypotheses (3)
  1. Short termH1
    Next quarter: Q2 FY27 results

    Consolidated operating income grows again despite steel costs

    Operating income was $13.0 million in the first quarter [3] and $12.3 million in last year's second quarter [9].
    What would support it
    Second-quarter operating income above $12.3 million [9] with adjusted operating income up year on year.
    What would contradict it
    Operating income falling year on year as steel costs and soft volume bite.
    Next check: Q2 FY27 results, likely mid-December 2026 (last year's came on December 16 [9]).
  2. Medium termH2
    Fiscal 2027

    Acquisitions start adding to operating profit, not just sales

    Acquisitions added $121.7 million of sales in fiscal 2026 [5], but first-quarter adjusted operating income was flat [3].
    What would support it
    Adjusted operating income growing faster than sales over the year, with Building Performance EBITDA up.
    What would contradict it
    Another year of flat adjusted operating income on rising sales.
    Next check: Fiscal 2027 results, likely late June 2027 (last year's came on June 23 [5]).
  3. Long termH3
    Three years and more

    The HVAC and building-products bet pays off after the load-in fades

    Worthington expects the installed base of A2L-refrigerant systems to grow and support "meaningful long-term opportunities" [2].
    What would support it
    Building Performance growing organically after the load-in normalises, with JV income still rising.
    What would contradict it
    Building Performance sales flat or down organically once the load-in is fully lapped.
    Next check: Each annual report.
Risks and contrary evidence
  • Raw materials. Steel and aluminium prices are volatile and tariff-driven [2].
  • Housing and construction. Elevated rates are expected to keep construction-facing demand constrained [2].
  • Credit ratings. A downgrade would raise borrowing costs on the credit facility [4].
  • Tax status of the separation. Worthington could face consequences if the assumptions behind the tax opinion on its separation prove wrong [4].
What would change the view
  • Adjusted operating income growing faster than sales for two quarters running.
  • A fall in WAVE or ClarkDietrich equity income, which would hit earnings far more than any consolidated line.
  • Steel prices easing back toward the 2025 levels shown in the filings.
Next check

Second-quarter fiscal 2027 results. Last year's came on December 16, 2025 [9], so expect the next update in mid-December 2026.

How this report was made

Every figure comes from Worthington Enterprises' own SEC filings, listed below; no market prices or third-party data were used. Statements were extracted from the filings with the help of an AI model, each quoted passage was matched against the filing text, and this report was written by Claude (Anthropic) from that evidence. Every figure was checked against the quoted filing text before publication. Figures marked "calculated" are simple arithmetic on reported numbers.

AI-Inflect screen

The deterministic screen's current reading for this company, market data through October 23, 2026. It is separate from the filing analysis above and can change daily; it is not a view on the stock. Open in AI-Inflect

Stage and setup
Stage
Confirmed Inflection
Fundamentals
Strong
Inflection type
Revenue inflection
Technical setup
Base building
Sector
Industrials materials
Condition matrix · 8 true, 9 false, 0 unknown
  • Revenue growth positiveTrue
  • Revenue growth improvingTrue
  • Revenue growth acceleratingFalse
  • Revenue zero-crossing (loss→growth)True
  • Revenue improved 2 straight qtrsFalse
  • Revenue improved 3 straight qtrsFalse
  • Revenue improved 4 straight qtrsFalse
  • EPS improvingTrue
  • EPS loss→profit crossingFalse
  • Earnings acceleratingFalse
  • Gross margin expandingFalse
  • Operating margin expandingTrue
  • Operating leverageTrue
  • FCF improvingTrue
  • FCF negative→positive crossingFalse
  • FCF margin expandingTrue
  • Cash conversion improvingFalse
Sources

Company filings with the U.S. Securities and Exchange Commission (SEC).

  1. [1]Current report (items 7.01, 9.01), October 2026 · Form 8-K, filed October 23, 2026 · accession 0001193125-26-429531
  2. [2]Quarterly report, quarter ended August 31, 2026 (Q1 fiscal 2027) · Form 10-Q, filed October 9, 2026 · accession 0001193125-26-418645
  3. [3]First-quarter fiscal 2027 earnings release · Form 8-K, filed September 22, 2026 · accession 0001193125-26-397953
  4. [4]Annual report for fiscal 2026 · Form 10-K, filed July 30, 2026 · accession 0001193125-26-325872
  5. [5]Fourth-quarter fiscal 2026 earnings release · Form 8-K, filed June 23, 2026 · accession 0001193125-26-279469
  6. [6]Quarterly report, quarter ended February 28, 2026 · Form 10-Q, filed April 9, 2026 · accession 0001193125-26-149137
  7. [7]Third-quarter fiscal 2026 earnings release · Form 8-K, filed March 24, 2026 · accession 0001193125-26-121855
  8. [8]Quarterly report, quarter ended November 30, 2025 · Form 10-Q, filed January 9, 2026 · accession 0001193125-26-008430
  9. [9]Second-quarter fiscal 2026 earnings release · Form 8-K, filed December 16, 2025 · accession 0001193125-25-320934

This report is general information and education, not a recommendation to buy or sell any security and not personalised financial advice. It follows our editorial principles: every figure traces to the sources above, and figures we calculated are marked as such.

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