Fiscal 2027 First Quarter
Filed Sep 25, 2026Worthington Enterprises reported 13% sales growth, 10% adjusted EBITDA growth and $54 million of free cash flow in fiscal 2027 first quarter.
Sales, adjusted EBITDA, adjusted EPS and free cash flow increased year over year, supported by Trade and Specialty Solutions, Water, acquisitions and joint ventures. Building Performance Solutions faced A2L-related cooling and construction comparisons, unfavorable mix, and steel-related production and shipment challenges.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| Consolidated salesGAAP | $344 million | – | 13% |
| Organic sales growthother | 7% | – | 7% |
| Acquisition contribution to net salesother | $19 million | – | – |
| Gross profitGAAP | nearly 11% | – | nearly 11% |
| Gross marginGAAP | 26.4% | – | – |
| GAAP earnings per shareGAAP | $0.87 per share | – | – |
| Adjusted earnings per sharenon-GAAP | $0.82 per share | – | – |
| Net pretax benefit from IEEPA tariff refundsnon-GAAP | approximately $4 million | – | – |
| IEEPA tariff refund benefit per sharenon-GAAP | $0.06 per share | – | – |
| Adjusted EBITDAnon-GAAP | $74 million | – | 10% |
| Adjusted EBITDA marginnon-GAAP | 21.5% | – | – |
| Trailing 12-month adjusted EBITDAnon-GAAP | $303 million | – | – |
| Operating cash flowGAAP | $67 million | – | – |
| Free cash flownon-GAAP | $54 million | – | – |
| Trailing 12-month free cash flownon-GAAP | $196 million | – | – |
| Free cash flow conversion relative to adjusted net earningsnon-GAAP | 116% | – | – |
| Capital expendituresGAAP | $13 million | – | – |
| Net debtother | $250 million | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Building Performance SolutionsRecent acquisitions contributed $19 million of net sales; organic sales increased 6%, driven primarily by Water and European businesses and partly offset by lower Cooling and Construction revenue. | $215 million | – | 16% |
| Trade and Specialty SolutionsGrowth reflected higher overall volumes and average selling prices. Portable propane and tools benefited from higher volumes, expanded distribution and pricing actions. | $129 million | – | 8% |
Capital returns
- $9 million in dividends
- $18 million to repurchase 335,000 shares of common stock
- Quarterly dividend of $0.20 per share payable in December 2026
- Joint ventures provided $36 million in dividends during the quarter, representing 88% of equity income
What drove it
- Consolidated sales increased 13% and organic sales increased 7%.
- Recent acquisitions added $19 million in net sales.
- Water and European businesses drove Building Performance Solutions organic sales growth.
- Trade and Specialty Solutions profitability improved through higher sales, pricing, manufacturing performance and IEEPA tariff refunds.
- WAVE equity income increased approximately $3 million year over year to $35 million.
- ClarkDietrich equity income increased more than $1 million year over year to $7 million.
- Engineered ASME tanks for data centers generated $13 million of revenue in the first quarter, matching roughly $13 million shipped in fiscal 2026.
Concerns
- Gross margin declined to 26.4% from 27.1%, primarily reflecting lower volumes and less favorable mix in Building Performance Solutions.
- Cooling and Construction faced a difficult prior-year comparison following the A2L refrigerant transition, while channel inventories were being rightsized and new home sales were muted.
- Tight steel availability and extended lead times disrupted production scheduling and shipment timing in Cooling and Construction and Balloon Time.
- Management estimated the year-over-year impact of the A2L comparison to adjusted EBITDA at approximately $7 million.
- Balloon Time volumes declined against a strong prior-year comparison.
- Management expects the second quarter to remain a difficult comparison because the prior-year quarter benefited from A2L-related volumes.
What to watch
- Sequential ASME tank revenue growth through the balance of fiscal 2027, with growth weighted toward the back half of the year.
- Normalization of Cooling and Construction channel inventories and A2L-related comparisons in the second half of the year.
- Steel availability, lead times and raw-material pricing.
- Sustainability of working-capital gains and free cash flow generation.
- Integration progress and commercial expansion at Elgen and LSI.
- Trade and Specialty Solutions margin improvement as 80/20 is applied to portable fuel and torch businesses.
Balance sheet and cash flow
- Operating cash flow was $67 million, up from $41 million a year ago.
- Free cash flow was $54 million, up from $28 million a year ago.
- Trailing 12-month free cash flow was $196 million.
- Capital expenditures totaled $13 million in the quarter.
- Trailing 12-month adjusted EBITDA was $303 million.
- Net debt was $250 million.
Analysis
Worthington Enterprises began fiscal 2027 with consolidated sales of $344 million, up 13%, including 7% organic growth. Recent acquisitions added $19 million in net sales. GAAP earnings were $0.87 per share versus $0.70 per share, while adjusted earnings were $0.82 per share versus $0.78 per share. Adjusted EBITDA increased 10% to $74 million and adjusted EBITDA margin was 21.5%. The quarter included a net pretax benefit of approximately $4 million, or $0.06 per share, from IEEPA tariff refunds.
Building Performance Solutions generated $215 million of sales, up 16%, but adjusted EBITDA was essentially flat at $60 million and adjusted EBITDA margin was 27.8%. The segment was affected by lower Cooling and Construction revenue, less favorable mix, A2L-related inventory normalization and extended steel lead times. Gross margin declined to 26.4% from 27.1%, with Building Performance Solutions mix cited as the primary factor. Management estimated the A2L comparison reduced adjusted EBITDA by approximately $7 million year over year and expects another difficult comparison in the second quarter.
Trade and Specialty Solutions delivered $129 million of sales, up 8%, and adjusted EBITDA of $24 million versus $16 million. Adjusted EBITDA margin expanded to 18.6% from 13.6%. Higher volumes, pricing and manufacturing performance supported the result, alongside the tariff-refund benefit. Portable propane and tools were highlighted for higher volumes, expanded distribution and price actions, while Balloon Time volume declined against a strong prior-year comparison.
Cash generation strengthened materially. Operating cash flow was $67 million versus $41 million and free cash flow was $54 million versus $28 million. Trailing 12-month free cash flow reached $196 million, representing 116% conversion relative to adjusted net earnings. The company spent $13 million on capital expenditures, paid $9 million in dividends and repurchased 335,000 shares for $18 million. Net debt was $250 million against trailing 12-month adjusted EBITDA of $303 million.
Data-center liquid cooling is the principal growth opportunity discussed in the filing. Engineered ASME tank revenue was $13 million in the first quarter, equal to roughly the amount shipped in all of fiscal 2026. Management expects sequential growth through the remainder of fiscal 2027, with growth weighted to the back half, while investing in equipment, engineering talent and production capacity. Joint ventures also contributed, as WAVE equity income rose approximately $3 million to $35 million and ClarkDietrich equity income rose more than $1 million to $7 million.
No formal numerical forward guidance was provided. Management's outlook centers on sequential ASME tank growth, second-half normalization in Cooling and Construction, continued 80/20 initiatives, acquisition integration and productivity improvements. The near-term risks identified in the filing are A2L comparison pressure, muted housing demand, steel supply constraints, longer lead times and product-mix pressure.
Management, verbatim
In Q1, we grew sales by 13% year-over-year including 7% organically. Adjusted EBITDA increased by 10% to $74 million, and we generated $54 million of free cash flow, nearly double the prior year quarter.
Joseph Hayek, President, Chief Executive Officer
We continue to view the A2L impact as a timing and comparison issue rather than a structural change in the business.
Colin Souza, Vice President, Chief Financial Officer
Near term, we believe that our ASME tank revenues will continue to grow sequentially quarter-over-quarter through the balance of this fiscal year.
Joseph Hayek, President, Chief Executive Officer
Not in the filing
stated, not guessed- Period-end date
- GAAP net income
- GAAP operating income
- GAAP operating margin
- GAAP diluted-share designation
- Total gross profit dollar amount
- Prior-quarter figures for reported metrics
- Cash balance
- Gross debt
- Formal numerical revenue guidance
- Formal numerical gross-margin guidance
- Formal numerical operating-expense guidance
- Formal numerical tax-rate guidance
- Formal numerical earnings or EBITDA guidance
- Prior outlook section for guidance comparison
AlphAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.