Worthington Enterprises Q1 FY2027 sales rise 13.2%
Sales increased 13.2% year over year, while gross margin was 26.4%, compared with 27.1% in the prior-year quarter.
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Worthington Enterprises, Inc. (WOR) reported first-quarter fiscal 2027 net sales of $343.9 million for the three months ended August 31, 2026, up 13.2% from $303.7 million a year earlier. Building Performance Solutions sales were $215.1 million, up 16.4%, and Trade & Specialty Solutions sales were $128.8 million, up 8.3%. Net earnings were $42.6 million versus $34.8 million, and diluted EPS was $0.87 versus $0.70. Adjusted EBITDA, a non-GAAP measure, was $74.0 million versus $67.2 million, while adjusted operating income was $13.7 million versus $13.9 million. Gross margin was 26.4%, versus 27.1%.
Net cash provided by operating activities was $66.7 million versus $41.1 million. Worthington recognized an approximately $4.0 million net benefit related to IEEPA tariff refunds in cost of goods sold and SG&A; substantially all of its refund claim had been collected as of August 31, 2026. It amended its $500 million Credit Facility, extending final maturity from September 27, 2028, to August 31, 2031, while maintaining $500 million in aggregate commitments; no borrowings were outstanding as of August 31, 2026. It repurchased 335,000 common shares under its authorization, with 4,230,000 common shares available for repurchase as of August 31, 2026.
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Positive
- Moderate pointNet sales increased 13.2% to $343.9 million year over year.
- Moderate pointNet earnings were $42.6 million, compared with $34.8 million.
- Moderate pointOperating cash flow was $66.7 million, versus $41.1 million.
Negative
- None.
Filing Explained
The quarter included equity income from unconsolidated affiliates, a separately reported source of earnings.
This unaudited quarterly report covers the three months ended
Worthington Enterprises describes equity income as its share of net income from unconsolidated affiliates, so that line reflects income earned through those investees.
Key Figures
Key Terms
Adjusted EBITDA financial
equity method financial
cash flow hedges financial
destocking financial
IEEPA tariff refund requests regulatory
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
What were WOR's first-quarter sales and earnings?
How many shares did WOR repurchase?
What borrowing rates are available under WOR's credit facility?
What share of WOR's sales came from one customer?
AI-generated analysis. How Rhea-AI works. Not financial advice.
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the quarterly period ended
or
For the transition period from ___________ to ___________
Commission File Number
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization) |
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(I.R.S. Employer Identification No.) |
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(Address of principal executive offices) |
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(Zip Code) |
( |
(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 |
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.
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).
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.
☒ |
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Accelerated filer |
☐ |
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Non-accelerated filer |
☐ |
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Smaller reporting company |
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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 5, 2026, the number of common shares, without par value, of the registrant issued and outstanding was
Table of Contents
TABLE OF CONTENTS
Commonly Used or Defined Terms |
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ii |
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Cautionary Note Regarding Forward-Looking Statements |
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iv |
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Use of Non-GAAP Financial Measures and Definitions |
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1 |
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Part I. Financial Information |
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Item 1. |
Financial Statements |
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Consolidated Balance Sheets – August 31, 2026 and May 31, 2026 |
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3 |
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Consolidated Statements of Earnings – Three Months Ended August 31, 2026 and 2025 |
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4 |
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Consolidated Statements of Comprehensive Income – Three Months Ended August 31, 2026 and 2025 |
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5 |
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Consolidated Statements of Cash Flows – Three Months Ended August 31, 2026 and 2025 |
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6 |
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Condensed Notes to Consolidated Financial Statements (Unaudited) |
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7 |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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20 |
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Item 3. |
Quantitative and Qualitative Disclosures About Market Risk |
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28 |
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Item 4. |
Controls and Procedures |
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29 |
Part II. Other Information |
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Item 1. |
Legal Proceedings |
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30 |
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Item 1A. |
Risk Factors |
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30 |
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Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds |
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30 |
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Item 3. |
Defaults Upon Senior Securities |
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30 |
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Item 4. |
Mine Safety Disclosures |
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30 |
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Item 5. |
Other Information |
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31 |
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Item 6. |
Exhibits |
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31 |
Signatures |
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32 |
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i
Table of Contents
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 |
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 |
CPI |
|
U.S. Consumer Price Index |
Credit Facility |
|
Our $500,000,000 unsecured revolving credit facility with a group of lenders |
current year quarter |
|
Our fiscal quarter ended August 31, 2026 |
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 2027 |
|
Our fiscal quarter ended August 31, 2026 |
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, 2026 |
GAAP |
|
U.S. generally accepted accounting principles |
GDP |
|
U.S. gross domestic product |
Halo |
|
WH Products, LLC |
heiserTEC |
|
Our unconsolidated joint venture with Hexagon Composites, formerly our sustainable energy solutions joint venture |
HMI |
|
National Association of Home Builders/Wells Fargo Housing Market Index |
Hexagon Composites |
|
Hexagon Composites ASA, which is traded on the Euronext Oslo as HEX |
Hexagon Purus |
|
Hexagon Purus ASA, which is traded on the Euronext Oslo as HPUR |
HVAC |
|
Heating, ventilation, and air conditioning |
IEEPA |
|
International Emergency Economic Powers Act |
LIRA |
|
Leading Indicator of Remodeling Activity |
LSI |
|
LSI Group, LLC |
MD&A |
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
N.M. |
|
Not meaningful |
OCI |
|
Other comprehensive income (loss) |
prior year quarter |
|
Our fiscal quarter ended August 31, 2025 |
PSLRA |
|
Private Securities Litigation Reform Act of 1995, as amended |
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 |
Steel Supply and Services Agreement |
|
Steel Supply and Services Agreement, dated November 30, 2023, by and between Worthington Steel and Worthington Enterprises. |
Trademark License Agreement |
|
Trademark License Agreement, dated November 30, 2023, by and between Worthington Steel and Worthington Enterprises. |
ii
Table of Contents
Term |
|
Definition |
Transition Services Agreement |
|
Transition Services Agreement, dated November 30, 2023, by and between Worthington Steel and Worthington Enterprises. |
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. |
2026 Form 10-K |
|
Our Annual Report on Form 10-K for fiscal 2026 as filed with the SEC on July 30, 2026 |
iii
Table of Contents
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
Table of Contents
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
Table of Contents
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 enable 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.
1
Table of Contents
Consolidated Results – Selected Non-GAAP Adjusted Results
|
Three Months Ended August 31, 2026 |
|
|||||||||||||||||
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|
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Earnings |
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|
|
|
|
|
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|
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|||||
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Before |
|
|
Income |
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|||||
|
Operating |
|
|
Income |
|
|
Tax |
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|
Net |
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|
Diluted |
|
|||||
|
Income |
|
|
Taxes |
|
|
Expense |
|
|
Earnings (1) |
|
|
EPS (1) |
|
|||||
GAAP |
$ |
13,023 |
|
|
$ |
55,601 |
|
|
$ |
13,029 |
|
|
$ |
42,572 |
|
|
$ |
0.87 |
|
Restructuring and other expense, net |
|
717 |
|
|
|
717 |
|
|
|
(174 |
) |
|
|
543 |
|
|
|
0.01 |
|
Non-cash gains in miscellaneous income, net (2) |
|
- |
|
|
|
(4,020 |
) |
|
|
977 |
|
|
|
(3,043 |
) |
|
|
(0.06 |
) |
Non-GAAP |
$ |
13,740 |
|
|
$ |
52,298 |
|
|
$ |
12,226 |
|
|
$ |
40,072 |
|
|
$ |
0.82 |
|
|
Three Months Ended August 31, 2025 |
|
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|
|
|
Earnings |
|
|
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|
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|
|||||
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|
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Before |
|
|
Income |
|
|
|
|
|
|
|
|||||
|
Operating |
|
|
Income |
|
|
Tax |
|
|
Net |
|
|
Diluted |
|
|||||
|
Income |
|
|
Taxes |
|
|
Expense |
|
|
Earnings (1) |
|
|
EPS (1) |
|
|||||
GAAP |
$ |
9,243 |
|
|
$ |
45,681 |
|
|
$ |
10,860 |
|
|
$ |
35,148 |
|
|
$ |
0.70 |
|
Amortization of inventory step-up (3) |
|
2,151 |
|
|
|
2,151 |
|
|
|
(513 |
) |
|
|
1,638 |
|
|
|
0.04 |
|
Restructuring and other expense, net |
|
2,476 |
|
|
|
2,476 |
|
|
|
(377 |
) |
|
|
2,099 |
|
|
|
0.04 |
|
Non-GAAP |
$ |
13,870 |
|
|
$ |
50,308 |
|
|
$ |
11,750 |
|
|
$ |
38,885 |
|
|
$ |
0.78 |
|
Consolidated Results - Adjusted EBITDA
|
|
Three Months Ended |
|
|||||
|
|
August 31, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
Net earnings (GAAP) |
|
$ |
42,572 |
|
|
$ |
34,821 |
|
Plus: Net loss attributable to noncontrolling interest |
|
|
- |
|
|
|
327 |
|
Net earnings attributable to controlling interest |
|
|
42,572 |
|
|
|
35,148 |
|
Interest expense, net |
|
|
2,097 |
|
|
|
63 |
|
Income tax expense |
|
|
13,029 |
|
|
|
10,860 |
|
EBIT (4) |
|
|
57,698 |
|
|
|
46,071 |
|
Amortization of inventory step-up (3) |
|
|
- |
|
|
|
2,151 |
|
Restructuring and other expense, net |
|
|
717 |
|
|
|
2,476 |
|
Non-cash gains in miscellaneous income, net (2) |
|
|
(4,020 |
) |
|
|
- |
|
Adjusted EBIT (4) |
|
|
54,395 |
|
|
|
50,698 |
|
Depreciation and amortization |
|
|
15,628 |
|
|
|
13,086 |
|
Stock-based compensation |
|
|
3,996 |
|
|
|
3,427 |
|
Adjusted EBITDA (non-GAAP) |
|
$ |
74,019 |
|
|
$ |
67,211 |
|
|
2
Table of Contents
Item 1. – Financial Statements
WORTHINGTON ENTERPRISES, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
|
(Unaudited) |
|
|
|
|
||
|
August 31, |
|
|
May 31, |
|
||
|
2026 |
|
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2026 |
|
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Assets |
|
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Current assets: |
|
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|
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Cash and cash equivalents |
$ |
|
|
$ |
|
||
Receivables, less allowances of $ |
|
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Inventories: |
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Raw materials |
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Work in process |
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Finished products |
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Total inventories |
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Income taxes receivable |
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Prepaid expenses and other current assets |
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Total current assets |
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Investments in unconsolidated affiliates |
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Operating lease assets |
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Goodwill |
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Other intangible assets, net of accumulated amortization of $ |
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Other assets |
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Property, plant and equipment: |
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Land |
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Buildings and improvements |
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Machinery and equipment |
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Construction in progress |
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Total property, plant and equipment |
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|
||
Less: accumulated depreciation |
|
|
|
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|
||
Total property, plant and equipment, net |
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|
|
|
|
||
Total assets |
$ |
|
|
$ |
|
||
|
|
|
|
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|
||
Liabilities and equity |
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|
||
Current liabilities: |
|
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|
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Accounts payable |
$ |
|
|
$ |
|
||
Accrued compensation, contributions to employee benefit plans and related taxes |
|
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Dividends payable |
|
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Other accrued items |
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||
Current operating lease liabilities |
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Income taxes payable |
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Total current liabilities |
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Other liabilities |
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Distributions in excess of investment in unconsolidated affiliate |
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Long-term debt |
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Noncurrent operating lease liabilities |
|
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||
Deferred income taxes, net |
|
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||
Total liabilities |
|
|
|
|
|
||
Shareholders’ equity |
|
|
|
|
|
||
Total liabilities and equity |
$ |
|
|
$ |
|
||
See condensed notes to consolidated financial statements.
3
Table of Contents
WORTHINGTON ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except per common share amounts)
(Unaudited)
|
Three Months Ended |
|
|||||
|
August 31, |
|
|||||
|
2026 |
|
|
2025 |
|
||
Net sales |
$ |
|
|
$ |
|
||
Cost of goods sold |
|
|
|
|
|
||
Gross profit |
|
|
|
|
|
||
Selling, general and administrative expense |
|
|
|
|
|
||
Restructuring and other expense, net |
|
|
|
|
|
||
Operating income |
|
|
|
|
|
||
Other income (expense): |
|
|
|
|
|
||
Miscellaneous income (expense), net |
|
|
|
|
( |
) |
|
Interest expense, net |
|
( |
) |
|
|
( |
) |
Equity in net income of unconsolidated affiliates |
|
|
|
|
|
||
Earnings before income taxes |
|
|
|
|
|
||
Income tax expense |
|
|
|
|
|
||
Net earnings |
|
|
|
|
|
||
Net loss attributable to noncontrolling interest |
|
|
|
|
( |
) |
|
Net earnings attributable to controlling interest |
$ |
|
|
$ |
|
||
|
|
|
|
|
|
||
Basic |
|
|
|
|
|
||
Weighted average common shares outstanding |
|
|
|
|
|
||
Earnings per share attributable to controlling interest |
$ |
|
|
$ |
|
||
|
|
|
|
|
|
||
Diluted |
|
|
|
|
|
||
Weighted average common shares outstanding |
|
|
|
|
|
||
Earnings per share attributable to controlling interest |
$ |
|
|
$ |
|
||
|
|
|
|
|
|
||
Cash dividends declared per common share |
$ |
|
|
$ |
|
||
See condensed notes to consolidated financial statements.
4
Table of Contents
WORTHINGTON ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
(Unaudited)
|
Three Months Ended |
|
|||||
|
August 31, |
|
|||||
|
2026 |
|
|
2025 |
|
||
Net earnings |
$ |
|
|
$ |
|
||
Other comprehensive income (loss), net of tax |
|
|
|
|
|
||
Foreign currency translation |
|
( |
) |
|
|
|
|
Pension liability adjustment |
|
|
|
|
( |
) |
|
Cash flow hedges |
|
( |
) |
|
|
( |
) |
Other comprehensive income (loss), net of tax |
|
( |
) |
|
|
|
|
Comprehensive income |
|
|
|
|
|
||
Comprehensive loss attributable to noncontrolling interest |
|
|
|
|
( |
) |
|
Comprehensive income attributable to controlling interest |
$ |
|
|
$ |
|
||
See condensed notes to consolidated financial statements.
5
Table of Contents
WORTHINGTON ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
|
|
Three Months Ended |
|
|||||
|
|
August 31, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
Operating activities: |
|
|
|
|
|
|
||
Net earnings |
|
$ |
|
|
$ |
|
||
Adjustments to reconcile net earnings to net cash provided by operating activities: |
|
|
|
|
|
|
||
Depreciation and amortization |
|
|
|
|
|
|
||
Provision for deferred income taxes |
|
|
|
|
|
|
||
Bad debt income |
|
|
( |
) |
|
|
( |
) |
Equity in net income of unconsolidated affiliates, net of distributions |
|
|
( |
) |
|
|
( |
) |
Net gain on sale of assets |
|
|
( |
) |
|
|
- |
|
Stock-based compensation |
|
|
|
|
|
|
||
Unrealized gain on investment in marketable securities |
|
|
( |
) |
|
|
- |
|
Changes in assets and liabilities, net of impact of acquisitions: |
|
|
|
|
|
|
||
Receivables |
|
|
|
|
|
|
||
Inventories |
|
|
( |
) |
|
|
( |
) |
Accounts payable |
|
|
( |
) |
|
|
( |
) |
Accrued compensation and employee benefits |
|
|
( |
) |
|
|
( |
) |
Other operating items, net |
|
|
( |
) |
|
|
|
|
Net cash provided by operating activities |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Investing activities: |
|
|
|
|
|
|
||
Investment in property, plant and equipment |
|
|
( |
) |
|
|
( |
) |
Acquisitions, net of cash acquired |
|
|
( |
) |
|
|
( |
) |
Proceeds from sale of assets, net of selling costs |
|
|
|
|
|
- |
|
|
Net cash used by investing activities |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
||
Financing activities: |
|
|
|
|
|
|
||
Dividends paid |
|
|
( |
) |
|
|
( |
) |
Repurchase of common shares |
|
|
( |
) |
|
|
( |
) |
Principal payments on long-term obligations |
|
|
( |
) |
|
|
( |
) |
Proceeds from issuance of common shares, net of tax withholdings |
|
|
|
|
|
( |
) |
|
Net cash used by financing activities |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
||
Increase (decrease) in cash and cash equivalents |
|
|
|
|
|
( |
) |
|
Cash and cash equivalents at beginning of period |
|
|
|
|
|
|
||
Cash and cash equivalents at end of period |
|
$ |
|
|
$ |
|
||
See condensed notes to consolidated financial statements.
6
Table of Contents
WORTHINGTON ENTERPRISES, INC.
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
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 2027 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 2026 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 $
Activity under all other agreements between Worthington Steel and us related to the Separation was immaterial for the periods presented.
Recently Issued Accounting Pronouncements Not Yet Adopted
In November 2024, the FASB issued ASU 2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures,” which expands the 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 on our results of operations, cash flows and financial condition.
In September 2025, the FASB issued ASU 2025-06, “Intangibles - Goodwill and Other - Internal-Use Software,” which modernizes
7
Table of Contents
and clarifies the threshold entities apply to begin capitalizing development costs for internal-use software. This guidance is effective for interim and annual periods beginning after December 15, 2027. Early adoption is permitted. We are evaluating the impact the adoption of this ASU will have on our results of operations, cash flows and financial condition.
In December 2025, the FASB issued ASU 2025-11, “Interim Reporting (Topic 270): Narrow-Scope Improvements,” which clarifies the application, form and content, and required disclosures for interim financial statements prepared in accordance with GAAP. The ASU improves the organization and clarity of Topic 270 by specifying interim reporting requirements, consolidating required interim disclosures, and introducing a disclosure principle for events and changes occurring after the end of the most recent annual reporting period that have a material impact on the entity. This guidance is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027 for public business entities. Early adoption is permitted. The amendments in this ASU are not expected to have a material effect on our results of operations, cash flows or 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, 2026, we held investments in the following unconsolidated joint ventures: ClarkDietrich (
We received distributions from unconsolidated affiliates totaling $
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
Table of Contents
WAVE and ClarkDietrich are included within the Building Performance Solutions segment, while the heiserTEC and Workhorse joint ventures are reported within Other.
|
Three Months Ended |
|
|||||
|
August 31, |
|
|||||
|
2026 |
|
|
2025 |
|
||
WAVE |
|
|
|
|
|
||
Net sales |
$ |
|
|
$ |
|
||
Operating income |
|
|
|
|
|
||
Depreciation and amortization |
|
|
|
|
|
||
Interest expense, net |
|
|
|
|
|
||
Income tax expense |
|
|
|
|
|
||
Net earnings |
|
|
|
|
|
||
|
|
|
|
|
|
||
ClarkDietrich |
|
|
|
|
|
||
Net sales |
$ |
|
|
$ |
|
||
Operating income |
|
|
|
|
|
||
Depreciation and amortization |
|
|
|
|
|
||
Interest expense, net |
|
|
|
|
|
||
Income tax expense |
|
|
|
|
|
||
Net earnings |
|
|
|
|
|
||
|
|
|
|
|
|
||
Other |
|
|
|
|
|
||
Net sales |
$ |
|
|
$ |
|
||
Operating loss |
|
( |
) |
|
|
( |
) |
Depreciation and amortization |
|
|
|
|
|
||
Interest expense, net |
|
|
|
|
|
||
Income tax (benefit) expense |
|
( |
) |
|
|
|
|
Net loss |
|
( |
) |
|
|
( |
) |
9
Table of Contents
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 business that are discrete 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 current year quarter, is summarized below:
|
Balance at |
|
|
|
|
|
|
|
|
Balance at |
|
||||
|
May 31, 2026 |
|
|
Expense |
|
|
Payments |
|
|
August 31, 2026 |
|
||||
Early retirement and severance |
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
Other restructuring charges (1) |
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
|
The total liability associated with our restructuring activities as of August 31, 2026 is expected to be paid in the next 12 months.
Note D – Contingent Liabilities and Commitments
Legal Proceedings
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, 2026, we also had in place $
Note F – Debt
On August 31, 2026, we amended and restated the Credit Facility, extending the final maturity from
10
Table of Contents
Note G – Other Comprehensive Income (Loss)
The following table summarizes the tax effects on each component of OCI for the periods presented:
|
Three Months Ended |
|
|||||||||||||||||||||
|
August 31, |
|
|||||||||||||||||||||
|
2026 |
|
|
2025 |
|
||||||||||||||||||
|
Before-Tax |
|
|
Tax |
|
|
Net-of-Tax |
|
|
Before-Tax |
|
|
Tax |
|
|
Net-of-Tax |
|
||||||
Foreign currency translation |
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Pension liability adjustment |
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||||
Cash flow hedges |
|
( |
) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Other comprehensive income (loss) |
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
||||
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 |
|
|
AOCI |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Paid In |
|
|
Net of |
|
|
Retained |
|
|
|
|
|
Noncontrolling |
|
|
|
|
||||||
|
Capital |
|
|
Tax |
|
|
Earnings |
|
|
Subtotal |
|
|
Interest |
|
|
Total |
|
||||||
Balance at May 31, 2026 |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
- |
|
|
$ |
|
|||||
Net earnings |
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
- |
|
|
|
|
|||
Other comprehensive loss |
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
Common shares issued, net of withholding tax |
|
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
|||
Common shares in non-qualified plans |
|
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
|||
Stock-based compensation |
|
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
|||
Repurchase and retirement of common shares |
|
( |
) |
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
Cash dividends declared |
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
Balance at August 31, 2026 |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
- |
|
|
$ |
|
|||||
|
Controlling Interest |
|
|
|
|
|
|
|
|||||||||||||||
|
Additional |
|
|
AOCI |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Paid In |
|
|
Net of |
|
|
Retained |
|
|
|
|
|
Noncontrolling |
|
|
|
|
||||||
|
Capital |
|
|
Tax |
|
|
Earnings |
|
|
Subtotal |
|
|
Interest |
|
|
Total |
|
||||||
Balance at May 31, 2025 |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Net earnings (loss) |
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Other comprehensive income |
|
- |
|
|
|
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
|||
Common shares issued, net of withholding tax |
|
( |
) |
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
Common shares in non-qualified plans |
|
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
|||
Stock-based compensation |
|
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
|||
Repurchase and retirement of common shares |
|
( |
) |
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
Cash dividends declared |
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
Balance at August 31, 2025 |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
11
Table of Contents
The following table summarizes the changes in AOCI for the periods presented:
|
Foreign Currency Translation |
|
|
Pension Liability Adjustment |
|
|
Cash Flow Hedges |
|
|
AOCI |
|
||||
Balance at May 31, 2026 |
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|||
OCI before reclassifications |
|
( |
) |
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
Reclassification adjustments to net earnings (1) |
|
- |
|
|
|
- |
|
|
|
|
|
|
|
||
Income tax effect |
|
( |
) |
|
|
- |
|
|
|
|
|
|
|
||
Balance at August 31, 2026 |
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|||
|
Foreign Currency Translation |
|
|
Pension Liability Adjustment |
|
|
Cash Flow Hedges |
|
|
AOCI |
|
||||
Balance at May 31, 2025 |
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|||
OCI before reclassifications |
|
|
|
|
( |
) |
|
|
|
|
|
|
|||
Reclassification adjustments to net earnings (1) |
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
Income tax effect |
|
|
|
|
|
|
|
|
|
|
|
||||
Balance at August 31, 2025 |
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|||
——————————————————
On March 24, 2021, the Board authorized the repurchase of up to
Note I – Stock-Based Compensation
Service-Based Restricted Common Shares
During the current year quarter, we granted an aggregate of
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 granted in fiscal 2027 generally cover three-year performance periods ending May 31, 2027, 2028, and 2029.
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 will vary based on our periodic assessment of the probability of the targets being achieved. During the current year quarter, we granted performance share awards covering an aggregate of
12
Table of Contents
Note J – Income Taxes
Income tax expense for the current year quarter and prior year quarter reflected estimated annual ETRs of
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:
|
Three Months Ended |
|
|||||
|
August 31, |
|
|||||
|
2026 |
|
|
2025 |
|
||
Numerator (basic and diluted) |
|
|
|
|
|
||
Net earnings attributable to controlling interest |
$ |
|
|
$ |
|
||
Denominator (shares in thousands) |
|
|
|
|
|
||
Basic EPS - weighted average common shares |
|
|
|
|
|
||
Effect of dilutive securities |
|
|
|
|
|
||
Diluted EPS - weighted average common shares |
|
|
|
|
|
||
|
|
|
|
|
|
||
Basic EPS |
$ |
|
|
$ |
|
||
Diluted EPS |
$ |
|
|
$ |
|
||
Stock options and restricted common shares covering an aggregate of
Note L – Segment Operations
On September 15, 2026, we announced new names for our
Our segment structure reflects the manner in which internally reported financial information is regularly reviewed by our CODM, who is our President and CEO, to evaluate the performance and allocate resources. Operating segments are identified based on the nature of the products and services offered, the management reporting structure, similarity of economic characteristics and certain quantitative measures as prescribed by authoritative accounting guidance.
Activity outside of our
Other includes our share of the equity income of two of our unconsolidated joint ventures, heiserTEC 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.
13
Table of Contents
The following tables summarize 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.
|
Three Months Ended August 31, 2026 |
|
|||||||||||||||||||||
|
|
|
|
|
|
|
Total |
|
|
|
|
|
|
|
|
|
|
||||||
|
Building |
|
|
Trade & |
|
|
Reportable |
|
|
|
|
|
|
|
|
|
|
||||||
|
Performance |
|
|
Specialty |
|
|
Operating |
|
|
|
|
|
Unallocated |
|
|
|
|
||||||
|
Solutions |
|
|
Solutions |
|
|
Segments |
|
|
Other |
|
|
Corporate |
|
|
Consolidated |
|
||||||
Net sales |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
|
||||
Cost of goods sold |
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
|||||
SG&A |
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
|||||
Restructuring and other expense, net |
|
- |
|
|
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
||||
Other segment items (1) |
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
Equity in net income of unconsolidated affiliates |
|
|
|
|
- |
|
|
|
|
|
|
( |
) |
|
|
- |
|
|
|
|
|||
Earnings (loss) before income taxes |
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Reconciling items to adjusted EBITDA (2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
|||||
Interest (income) expense |
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
- |
|
|
|
|
|
|
|
||
Stock-based compensation |
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
|||||
Restructuring and other expense, net |
|
- |
|
|
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
||||
Non-cash gains in miscellaneous income, net (3) |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
Adjusted EBITDA |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||
|
Three Months Ended August 31, 2025 |
|
|||||||||||||||||||||
|
|
|
|
|
|
|
Total |
|
|
|
|
|
|
|
|
|
|
||||||
|
Building |
|
|
Trade & |
|
|
Reportable |
|
|
|
|
|
|
|
|
|
|
||||||
|
Performance |
|
|
Specialty |
|
|
Operating |
|
|
|
|
|
Unallocated |
|
|
|
|
||||||
|
Solutions |
|
|
Solutions |
|
|
Segments |
|
|
Other |
|
|
Corporate |
|
|
Consolidated |
|
||||||
Net sales |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
|
||||
Cost of goods sold |
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
|||||
SG&A |
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
|||||
Restructuring and other expense, net |
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
|||||
Other segment items (1) |
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
|||||
Equity in net income of unconsolidated affiliates |
|
|
|
|
- |
|
|
|
|
|
|
( |
) |
|
|
- |
|
|
|
|
|||
Earnings (loss) before income taxes |
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Reconciling items to adjusted EBITDA (2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Amortization of inventory step-up |
|
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
|||
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
|||||
Interest (income) expense |
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
- |
|
|
|
|
|
|
|
||
Stock-based compensation |
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
|||||
Restructuring and other expense, net |
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
|||||
Net loss attributable to noncontrolling interest |
|
- |
|
|
|
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
|||
Adjusted EBITDA |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||
|
14
Table of Contents
Total assets for each of our reportable operating segments at the dates indicated were as follows:
|
August 31, |
|
|
May 31, |
|
||
|
2026 |
|
|
2026 |
|
||
Building Performance Solutions |
$ |
|
|
$ |
|
||
Trade & Specialty Solutions |
|
|
|
|
|
||
Total reportable operating segments |
|
|
|
|
|
||
Unallocated Corporate and Other |
|
|
|
|
|
||
Total assets |
$ |
|
|
$ |
|
||
The following table presents capital expenditures for each of our reportable operating segments for the periods presented:
|
Three Months Ended |
|
|||||
|
August 31, |
|
|||||
|
2026 |
|
|
2025 |
|
||
Building Performance Solutions |
$ |
|
|
$ |
|
||
Trade & Specialty Solutions |
|
|
|
|
|
||
Total reportable operating segments |
|
|
|
|
|
||
Unallocated Corporate |
|
|
|
|
|
||
Total |
$ |
|
|
$ |
|
||
Note M – 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.
15
Table of Contents
Refer to “Note N – Fair Value Measurements” for additional information regarding the accounting treatment for our derivative financial instruments, as well as how fair value is determined.
|
Fair Value of Assets |
|
|
Fair Value of Liabilities |
|
||||||||||||||
|
Balance |
|
|
|
|
|
|
|
Balance |
|
|
|
|
|
|
||||
|
Sheet |
|
August 31, |
|
|
May 31, |
|
|
Sheet |
|
August 31, |
|
|
May 31, |
|
||||
|
Location |
|
2026 |
|
|
2026 |
|
|
Location |
|
2026 |
|
|
2026 |
|
||||
Derivatives designated as hedging instruments: |
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Commodity contracts |
Receivables |
|
$ |
|
|
$ |
|
|
Accounts payable |
|
$ |
|
|
$ |
|
||||
Commodity contracts |
Other assets |
|
|
|
|
|
|
|
Other liabilities |
|
|
- |
|
|
|
- |
|
||
Foreign currency exchange contracts |
Receivables |
|
|
|
|
|
- |
|
|
Accounts payable |
|
|
- |
|
|
|
|
||
Subtotal |
|
|
$ |
|
|
$ |
|
|
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Derivatives not designated as hedging instruments: |
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Commodity contracts |
Receivables |
|
$ |
|
|
$ |
- |
|
|
Accounts payable |
|
$ |
|
|
$ |
|
|||
Commodity contracts |
Other assets |
|
|
|
|
|
- |
|
|
Other liabilities |
|
|
- |
|
|
|
- |
|
|
Foreign currency exchange contracts |
Receivables |
|
|
|
|
|
- |
|
|
Accounts payable |
|
|
|
|
|
|
|||
Subtotal |
|
|
$ |
|
|
$ |
- |
|
|
|
|
$ |
|
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total derivative financial instruments |
|
|
$ |
|
|
$ |
|
|
|
|
$ |
|
|
$ |
|
||||
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 $
Cash Flow Hedges
We enter into derivative financial instruments to hedge our exposure to changes in cash flows attributable to interest rate, foreign currency 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, 2026:
|
|
Notional |
|
|
|
|
|
|
Amount |
|
|
Maturity Date(s) |
|
Commodity contracts |
|
$ |
|
|
September 2026 - December 2027 |
|
Foreign currency exchange contracts |
|
|
|
|
September 2026 - December 2026 |
|
16
Table of Contents
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) |
|
||
|
Gain (Loss) |
|
|
Gain (Loss) |
|
Reclassified |
|
||
|
Recognized |
|
|
Reclassified from AOCI |
|
from AOCI |
|
||
|
in OCI |
|
|
into Net Earnings |
|
into Net Earnings |
|
||
For the three months ended August 31, 2026 |
|
|
|
|
|
|
|||
Commodity contracts |
$ |
( |
) |
|
Cost of goods sold |
|
$ |
( |
) |
Interest rate contracts |
|
- |
|
|
Interest expense, net |
|
|
|
|
Foreign currency exchange contracts |
|
|
|
Miscellaneous income (expense), net |
|
|
|
||
Total |
$ |
( |
) |
|
|
|
$ |
( |
) |
|
|
|
|
|
|
|
|
||
For the three months ended August 31, 2025 |
|
|
|
|
|
|
|||
Commodity contracts |
$ |
|
|
Cost of goods sold |
|
$ |
|
||
Interest rate contracts |
|
- |
|
|
Interest expense, net |
|
|
|
|
Foreign currency exchange contracts |
|
|
|
Miscellaneous income (expense), net |
|
|
|
||
Total |
$ |
|
|
|
|
$ |
|
||
The estimated amount of net losses recognized in AOCI at August 31, 2026, expected to be reclassified into net earnings within the succeeding 12 months is $
Net Investment Hedges
We have designated our Euro-denominated debt held in the U.S. with an initial notional amount of €
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, 2026:
|
|
Notional |
|
|
|
|
|
|
Amount |
|
|
Maturity Date(s) |
|
Commodity contracts |
|
$ |
|
|
September 2026 - November 2027 |
|
Foreign currency exchange contracts |
|
|
|
|
September 2026 - November 2026 |
|
|
|
|
Three Months Ended |
|
|||||
|
Location of Gain (Loss) |
|
August 31, |
|
|||||
|
Recognized in Earnings |
|
2026 |
|
|
2025 |
|
||
Commodity contracts |
Cost of goods sold |
|
$ |
( |
) |
|
$ |
( |
) |
Foreign currency exchange contracts |
Miscellaneous income (expense), net |
|
|
( |
) |
|
|
|
|
Total |
|
|
$ |
( |
) |
|
$ |
|
|
17
Table of Contents
Note N – 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, 2026, our assets and liabilities measured at fair value on a recurring basis were as follows:
|
(Level 1) |
|
|
(Level 2) |
|
|
(Level 3) |
|
|
Totals |
|
||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
||||
Derivative financial instruments (1) |
$ |
- |
|
|
$ |
|
|
$ |
- |
|
|
$ |
|
||
Investment in marketable securities (2) |
|
|
|
|
- |
|
|
|
- |
|
|
|
|
||
Total assets |
$ |
|
|
$ |
|
|
$ |
- |
|
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
||||
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
||||
Derivative financial instruments (1) |
$ |
- |
|
|
$ |
|
|
$ |
- |
|
|
$ |
|
||
Total liabilities |
$ |
- |
|
|
$ |
|
|
$ |
- |
|
|
$ |
|
||
At May 31, 2026, our assets and liabilities measured at fair value on a recurring basis were as follows:
|
(Level 1) |
|
|
(Level 2) |
|
|
(Level 3) |
|
|
Totals |
|
||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
||||
Derivative financial instruments (1) |
$ |
- |
|
|
$ |
|
|
$ |
- |
|
|
$ |
|
||
Investment in marketable securities (2) |
|
|
|
|
- |
|
|
|
- |
|
|
|
|
||
Total assets |
$ |
|
|
$ |
|
|
$ |
- |
|
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
||||
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
||||
Derivative financial instruments (1) |
$ |
- |
|
|
$ |
|
|
$ |
- |
|
|
$ |
|
||
Total liabilities |
$ |
- |
|
|
$ |
|
|
$ |
- |
|
|
$ |
|
||
——————————————————
Non-Recurring Fair Value Measurements
There were
18
Table of Contents
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 $
19
Table of Contents
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 2026 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
On September 15, 2026, we announced new names for our two operating segments that better reflect the markets they serve, the value they provide to customers and the evolution of our product portfolio. The Building Products segment is now Building Performance Solutions and the Consumer Products segment is now Trade & Specialty Solutions. The changes are to the segment names only and do not affect the composition of the operating segments or our historical financial results. For additional information, see “Note L – Segment Operations.”
We are a designer and manufacturer of market-leading products and solutions serving building and specialty applications, organized around attractive end markets under two separate and distinct operating segments: Building Performance Solutions and Trade & Specialty Solutions. 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 innovative products and applications, and pursuing strategic investments and acquisitions.
Our Building Performance Solutions business delivers essential engineered products that support performance across the building systems and climate and comfort applications. Serving primarily OEMs and distributors, offerings include pressurized containment products for heating, cooling, construction and water applications, HVAC components, metal roofing clips, ceiling suspension systems (Worthington Armstrong Venture) and light gauge metal-framing products (ClarkDietrich).
Our Trade & Specialty Solutions business provides market-leading products used by professional tradespeople and consumers across tools, portable propane and helium, and other specialty categories. Offerings include cutting, siding and roofing tools, drywall, concrete and masonry hand tools, drywall finishing tools, fuel and torches, specialty hand tools and instruments, camping gas cylinders and portable helium tanks. Sales to one customer in Trade & Specialty Solutions accounted for 10.2% of our consolidated net sales in the first quarter of fiscal 2027.
Activity outside of our two operating segments is presented within Other and Unallocated Corporate as described below.
Other includes our share of the equity income of two of our unconsolidated joint ventures, heiserTEC 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.
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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.
During the first quarter of fiscal 2027, we operated in a macroeconomic environment marked by decelerating growth, still-elevated inflation, and cautious consumer sentiment. GDP increased at an annualized rate of 1.5% in the second quarter of calendar 2026, down from 2.1% in the preceding quarter, indicating slower economic growth. The CPI held at 3.4% year over year in August 2026, unchanged from July 2026, and above the 2.9% pace a year earlier, as a renewed rise in gasoline prices tied to geopolitical conflict in the Middle East offset moderation elsewhere. Inflation remained below its most recent peak of 4.2% reached in May 2026 but stayed well above the Federal Reserve’s 2% objective. During its September 2026 meeting, the Federal Reserve raised the target range by 25 basis points to a range of 3.75% to 4.00%, its first increase since 2023, citing persistently elevated inflation, and its projections indicated the potential for additional increases before the end of calendar year 2026. The average 30-year fixed mortgage rate remained elevated at 6.66% at the end of August 2026, relatively unchanged from 6.56% a year earlier.
Consumer confidence weakened during the quarter. The Conference Board’s Consumer Confidence Index fell to 89.4 in August 2026, its lowest level in seven months and down from 97.4 a year earlier, as elevated prices and gasoline costs weighed on household budgets, even as the labor market held steady with the unemployment rate at 4.1% in August 2026. We believe these dynamics, including persistent affordability pressure, elevated financing costs, and cautious discretionary spending, continued to weigh on both consumer and business sentiment during the first quarter of fiscal 2027. Within Trade & Specialty Solutions, inflation-driven cost consciousness influenced discretionary purchases and contributed to cautious buying patterns, while in Building Performance Solutions elevated financing costs constrained new construction demand. We expect demand across both operating segments 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 Trade & Specialty Solutions, where a large volume of products flow through big box retailers.
During the first quarter of fiscal 2027, inventory levels at most key retailer and distributor customers within Trade & Specialty Solutions remained aligned with end-consumer demand, and replenishment activity generally mirrored point-of-sale trends, with no material build-up in our distribution or retail channels. However, Building Performance Solutions benefited from a load-in effect that began toward the end of fiscal 2025 and continued through the first nine months of fiscal 2026, driven by federal regulations requiring the use of A2L refrigerants in newly manufactured residential and commercial HVAC systems. As contractors, distributors, and dealers positioned inventory to adjust to the regulatory transition, order volumes were temporarily elevated above underlying demand. While this dynamic provided a near-term tailwind throughout most of fiscal 2026, it began to normalize in the fourth quarter of fiscal 2026, as channel inventories reached desired levels and the transition matured. As new and replacement HVAC systems utilizing A2L refrigerants continue to enter service, we expect the installed base to grow, supporting meaningful long-term opportunities for our business.
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 and repair/remodel, which collectively drive demand for the Building Performance Solutions segment. These same end markets also drive demand for the trade-focused products within our Trade & Specialty Solutions segment, including professional tools, torches and other contractor-focused products. Demand for the specialty products within Trade & Specialty Solutions, including portable propane and helium products, such as helium-filled balloon kits, is generally driven by the general health of the consumer, including the macroeconomic and geopolitical conditions discussed above.
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We actively monitor the following publicly available economic data and select key indicators for our major end markets:
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. |
HMI |
|
Measures homebuilder sentiment on current and future single-family home sales and buyer traffic. |
ABI |
|
A leading economic indicator for non-residential construction, based on monthly billings reported by architecture firms. |
DMI |
|
Tracks the value of non-residential building projects in planning stages, serving as a leading indicator for future construction activity. |
LIRA |
|
Projects short-term trends in U.S. home improvement and repair spending, serving as a forward-looking gauge of residential remodeling activity. |
During the current year quarter, conditions across our key end markets remained soft and uneven, although residential construction showed tentative signs of stabilization late in the quarter. Single-family housing starts rebounded 7.6% in August 2026 to a seasonally adjusted annualized rate of 918,000, while total housing starts eased to 1.28 million, down 1.2% from a year earlier, as multifamily activity declined; authorized building permits totaled 1.39 million, up 3.5% year over year, pointing to a modestly firmer forward pipeline. Existing home sales, by contrast, slipped below 4 million for the first time since June 2025, easing 1.2% year over year to a 3.98 million annualized pace in August 2026, as elevated mortgage rates constrained turnover, and the median existing-home price rose to $429,100. Builder sentiment remained depressed, with the HMI at 35 in August 2026, up modestly from 32 a year earlier, but marking the 16th consecutive month below 40. In non-residential construction, the ABI registered 47.2 in August 2026, continuing to hold below the 50 mark that separates expanding from contracting billings, while the DMI stood at 282.0 in August 2026, up 4.2% from a year earlier though down slightly from July, supported by data center, healthcare, and institutional planning even as broader commercial activity stayed soft. Within repair and remodel, the latest LIRA projects year over year growth in homeowner improvement spending to decelerate from approximately 2.1% at mid-2026 to 0.5% by the second quarter of calendar 2027, reflecting flattening remodeling permits and persistently weak housing turnover. We believe near-term demand across our construction-facing end markets will remain constrained by the elevated rate environment, while the strengthening non-residential planning pipeline and the recurring purchase patterns of key product categories within our diversified portfolio may support overall volumes as we progress through fiscal 2027.
Factors Affecting Operating Costs
Raw Materials
Our largest raw material expenditures include cold rolled and hot rolled steel, aluminum, propane, and propylene. 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.
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Table of Contents
Steel: Steel is our most significant direct material cost across both Building Performance Solutions and Trade & Specialty Solutions. Steel prices continued the upward trend that began in the second half of fiscal 2026 and rose throughout the first quarter of fiscal 2027. Hot rolled steel prices averaged approximately $1,157 per ton during the first quarter of fiscal 2027, increasing from $1,120 per ton in June 2026 to $1,193 per ton in August 2026, compared to $834 per ton in August 2025. Cold rolled steel prices followed a similar trajectory, averaging $1,369 per ton during the first quarter of fiscal 2027 and increasing to approximately $1,415 per ton in August 2026, compared to $1,050 per ton in August 2025. In addition to higher benchmark prices, domestic steel availability was constrained, particularly for cold rolled steel, where lead times were extended and spot availability was limited. These conditions were most pronounced for highly specified products, for which qualified substitutes were not readily available in the spot market. We continue to work closely with our partners to protect existing supply and secure incremental tons. Our sourcing strategy is intended to mitigate near-term volatility associated with these pricing trends.
Aluminum: During the first quarter of fiscal 2027, aluminum costs were higher than the prior year quarter, reflecting higher global benchmark prices and elevated U.S. Midwest delivery premiums. The Section 232 tariffs on aluminum imports, which increased from 25% to 50% effective June 4, 2025, remained in effect throughout the quarter and continued to support elevated U.S. premiums, which held near the record levels reached earlier in calendar 2026. These costs affected aluminum-intensive components and finished good assemblies. Where possible, we mitigated these increases through strategic purchasing, but tariff-related cost pressure on aluminum is expected to persist through fiscal 2027.
Propane, propylene, and other gases: Propane and propylene costs were generally stable during the first quarter of fiscal 2027, supported by ample domestic supply conditions.
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.
IEEPA Tariffs
In February 2026, the U.S. Supreme Court ruled that tariffs imposed under IEEPA on goods imported into the U.S. were unauthorized. Following this ruling, and effective on April 20, 2026, the U.S. Customs and Border Protection launched a platform for importers of record to begin IEEPA tariff refund requests, where eligible. Following the ruling, we submitted claims with U.S. Customs and Border Protection seeking refunds for tariffs previously paid. During the current year quarter, we recognized a net benefit of approximately $4.0 million related to these refunds in cost of goods sold and SG&A in our consolidated statements of earnings. Substantially all of our refund claim has been collected as of August 31, 2026.
Seasonality
Net sales in both Building Performance Solutions and Trade & Specialty Solutions tend to be stronger in our third and fourth fiscal quarters. In Building Performance Solutions, this seasonality is generally driven by weather conditions, customer business cycles, and the timing of renovation and new construction projects, while in Trade & Specialty Solutions, it is driven by our facilities performing at seasonal peaks, matching consumer demand.
Results of Operations
The tables throughout this section present, on a comparative basis, our consolidated results of operations for the periods presented. For a discussion of the non-GAAP financial measures presented in the following table, as well as a reconciliation of the differences between each non-GAAP financial measure presented and the most directly comparable financial measure calculated and presented in accordance with GAAP, refer to the “Use of Non-GAAP Financial Measures and Definitions” section preceding Part I, Item 1 of this Form 10-Q.
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Table of Contents
|
Three Months Ended |
|
|
|
|
||||||
|
August 31, |
|
|
|
|
||||||
|
2026 |
|
|
2025 |
|
|
Change |
|
|||
GAAP Financial Measures |
|
|
|
|
|
|
|
|
|||
Net sales |
$ |
343.9 |
|
|
$ |
303.7 |
|
|
$ |
40.2 |
|
Operating income |
|
13.0 |
|
|
|
9.2 |
|
|
|
3.8 |
|
Earnings before income taxes |
|
55.6 |
|
|
|
45.7 |
|
|
|
9.9 |
|
Net earnings |
|
42.6 |
|
|
|
34.8 |
|
|
|
7.8 |
|
Equity income |
|
40.6 |
|
|
|
36.7 |
|
|
|
3.9 |
|
EPS - diluted |
|
0.87 |
|
|
|
0.70 |
|
|
|
0.17 |
|
|
|
|
|
|
|
|
|
|
|||
Non-GAAP Financial Measures |
|
|
|
|
|
|
|
|
|||
Adjusted operating income |
$ |
13.7 |
|
|
$ |
13.9 |
|
|
$ |
(0.2 |
) |
Adjusted EBITDA |
|
74.0 |
|
|
|
67.2 |
|
|
|
6.8 |
|
Adjusted EPS - diluted |
|
0.82 |
|
|
|
0.78 |
|
|
|
0.04 |
|
Net Sales
The following table provides a breakdown of our consolidated net sales by operating segment for the periods indicated:
|
Three Months Ended |
|
|
|
|
|
|
|
|||||||
|
August 31, |
|
|
Change |
|
||||||||||
|
2026 |
|
|
2025 |
|
|
$ |
|
|
% |
|
||||
Building Performance Solutions |
$ |
215.1 |
|
|
$ |
184.8 |
|
|
$ |
30.3 |
|
|
|
16.4 |
% |
Trade & Specialty Solutions |
|
128.8 |
|
|
|
118.9 |
|
|
|
9.9 |
|
|
|
8.3 |
% |
Consolidated |
$ |
343.9 |
|
|
$ |
303.7 |
|
|
$ |
40.2 |
|
|
|
13.2 |
% |
Gross Profit
|
Three Months Ended |
|
|
|
|
|
|
|
|||||||
|
August 31, |
|
|
Change |
|
||||||||||
|
2026 |
|
|
2025 |
|
|
$ |
|
|
% |
|
||||
Gross profit |
$ |
90.9 |
|
|
$ |
82.3 |
|
|
$ |
8.6 |
|
|
|
10.4 |
% |
Gross margin |
|
26.4 |
% |
|
|
27.1 |
% |
|
|
|
|
|
|
||
Gross profit for the current year quarter increased $8.6 million, or 10.4%, over the prior year quarter to $90.9 million, primarily driven by the net benefit of IEEPA tariff refunds and higher net sales, partially offset by higher conversion costs, primarily in the cooling and construction business within Building Performance Solutions.
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Table of Contents
SG&A
|
Three Months Ended |
|
|
|
|
|
|
|
|||||||
|
August 31, |
|
|
Change |
|
||||||||||
|
2026 |
|
|
2025 |
|
|
$ |
|
|
% |
|
||||
SG&A |
$ |
77.2 |
|
|
$ |
70.6 |
|
|
$ |
6.6 |
|
|
|
9.3 |
% |
Net Sales % |
|
22.4 |
% |
|
|
23.2 |
% |
|
|
|
|
|
|
||
SG&A increased $6.6 million, or 9.3%, from the prior year quarter, due primarily to the addition of LSI. As a percentage of net sales, SG&A was down from 23.2% in the prior year quarter to 22.4%.
Restructuring and Other Expense, Net
|
Three Months Ended |
|
|
|
|
|
|
||||||
|
August 31, |
|
|
Change |
|||||||||
|
2026 |
|
|
2025 |
|
|
$ |
|
|
% |
|||
Restructuring and other expense, net |
$ |
0.7 |
|
|
$ |
2.5 |
|
|
$ |
(1.8 |
) |
|
N.M. |
Restructuring and other expense, net in both periods consisted primarily of employee severance and transaction costs related to acquisitions and divestitures.
Other Non-Operating Items
|
Three Months Ended |
|
|
|
|
|
|
||||||
|
August 31, |
|
|
Change |
|||||||||
|
2026 |
|
|
2025 |
|
|
$ |
|
|
% |
|||
Miscellaneous income (expense), net |
$ |
4.1 |
|
|
$ |
(0.2 |
) |
|
$ |
4.3 |
|
|
N.M. |
Interest expense, net |
|
(2.1 |
) |
|
|
(0.1 |
) |
|
|
(2.0 |
) |
|
N.M. |
Miscellaneous income in the current year quarter was driven by a pre-tax gain of $4.0 million related to an earnout arrangement associated with the sale of our former oil and gas products business, which was divested in January 2021.
Interest expense, net increased $2.0 million in the current year quarter primarily due to lower interest income generated from cash on hand.
Equity Income
|
Three Months Ended |
|
|
|
|
|
|
|
|||||||
|
August 31, |
|
|
Change |
|
||||||||||
|
2026 |
|
|
2025 |
|
|
$ |
|
|
% |
|
||||
WAVE (1) |
$ |
35.1 |
|
|
$ |
32.4 |
|
|
$ |
2.7 |
|
|
|
8.3 |
% |
ClarkDietrich (1) |
|
7.4 |
|
|
|
5.9 |
|
|
|
1.5 |
|
|
|
25.4 |
% |
Other (2) |
|
(1.9 |
) |
|
|
(1.6 |
) |
|
|
(0.3 |
) |
|
|
(18.8 |
%) |
Equity income |
$ |
40.6 |
|
|
$ |
36.7 |
|
|
$ |
3.9 |
|
|
|
10.6 |
% |
——————————————————
Equity income increased $3.9 million over the prior year quarter to $40.6 million, driven by higher contributions from WAVE and ClarkDietrich, up $2.7 million and $1.5 million, respectively.
25
Table of Contents
Income Tax Expense
|
Three Months Ended |
|
|
|
|
|
|
|
|||||||
|
August 31, |
|
|
Change |
|
||||||||||
|
2026 |
|
|
2025 |
|
|
$ |
|
|
% |
|
||||
Income tax expense |
$ |
13.0 |
|
|
$ |
10.9 |
|
|
$ |
2.1 |
|
|
|
19.3 |
% |
Estimated Annual ETR |
|
24.1 |
% |
|
|
23.8 |
% |
|
|
|
|
|
|
||
Income tax expense was $13.0 million in the current year quarter compared to $10.9 million in the prior year quarter. The increase was primarily driven by higher pre-tax earnings.
Adjusted EBITDA
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.”
|
Three Months Ended |
|
|
|
|
|
|
|
|||||||||||||||
|
August 31, |
|
|
Change |
|
||||||||||||||||||
|
|
|
|
% of |
|
|
|
|
|
% of |
|
|
|
|
|
|
|
||||||
|
2026 |
|
|
Net Sales |
|
|
2025 |
|
|
Net Sales |
|
|
$ |
|
|
% |
|
||||||
Building Performance Solutions |
$ |
59.8 |
|
|
|
27.8 |
% |
|
$ |
59.9 |
|
|
|
32.4 |
% |
|
$ |
(0.1 |
) |
|
|
(0.2 |
%) |
Trade & Specialty Solutions |
|
24.0 |
|
|
|
18.6 |
% |
|
|
16.1 |
|
|
|
13.5 |
% |
|
|
7.9 |
|
|
|
49.1 |
% |
Total reportable operating segments |
|
83.8 |
|
|
|
24.4 |
% |
|
|
76.0 |
|
|
|
25.0 |
% |
|
|
7.8 |
|
|
|
10.3 |
% |
Other |
|
(1.8 |
) |
|
N.M. |
|
|
|
(1.7 |
) |
|
N.M. |
|
|
|
(0.1 |
) |
|
N.M. |
|
|||
Unallocated Corporate |
|
(8.0 |
) |
|
|
(2.3 |
%) |
|
|
(7.1 |
) |
|
|
(2.3 |
%) |
|
|
(0.9 |
) |
|
|
12.7 |
% |
Consolidated |
$ |
74.0 |
|
|
|
21.5 |
% |
|
$ |
67.2 |
|
|
|
22.1 |
% |
|
$ |
6.8 |
|
|
|
10.1 |
% |
26
Table of Contents
Liquidity and Capital Resources
During the current year quarter, we generated $66.7 million of cash from operating activities, invested $12.8 million in property, plant and equipment, paid $18.2 million to repurchase 335,000 common shares, and paid dividends of $9.4 million on the common shares.
The following table summarizes our consolidated cash flows for the periods presented:
|
|
|
|
|
Three Months Ended |
|
|||||
|
|
|
|
|
August 31, |
|
|||||
|
|
|
|
|
2026 |
|
|
2025 |
|
||
Net cash provided by operating activities |
|
|
|
|
$ |
66.7 |
|
|
$ |
41.1 |
|
Net cash used by investing activities |
|
|
|
|
|
(14.1 |
) |
|
|
(105.4 |
) |
Net cash used by financing activities |
|
|
|
|
|
(25.2 |
) |
|
|
(18.6 |
) |
Increase (decrease) in cash and cash equivalents |
|
|
|
|
|
27.4 |
|
|
|
(82.9 |
) |
Cash and cash equivalents at beginning of period |
|
|
|
|
|
27.7 |
|
|
|
250.1 |
|
Cash and cash equivalents at end of period |
|
|
|
|
$ |
55.1 |
|
|
$ |
167.2 |
|
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 as of August 31, 2026. On August 31, 2026, we amended and restated our Credit Facility to extend its maturity from September 27, 2028 to August 31, 2031, while maintaining aggregate commitments of $500.0 million.
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
Certain of our diversified end markets are cyclical, and cash flows from operating activities may fluctuate during the year and from year to year due to economic and industry conditions. We use operating cash flow and, when appropriate, short-term borrowings to manage normal fluctuations 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 $66.7 million during the current year quarter, up $25.7 million over the prior year quarter, driven by higher net earnings and more favorable changes in operating working capital, including accounts receivable, inventory, and accounts payable.
Investing Activities
Net cash used by investing activities was $14.1 million during the current year quarter compared to $105.4 million in the prior year quarter. Net cash used by investing activities during the current year quarter was driven primarily by capital expenditures, including $3.2 million related to ongoing facility modernization projects, and $2.4 million of acquisition-related payments, partially offset by $1.0 million of proceeds from asset sales. Net cash used by investing activities during the prior year quarter was primarily driven by cash paid to acquire the outstanding equity interests in Elgen.
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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 $25.2 million during the current year quarter, compared to $18.6 million in the prior year quarter. During the current year quarter, we paid $18.2 million to repurchase 335,000 common shares and paid dividends of $9.4 million on the common shares.
Common shares – On September 22, 2026, the Board declared a quarterly dividend of $0.20 per common share payable on December 29, 2026, to shareholders of record at the close of business on December 15, 2026.
On March 24, 2021, the Board authorized the repurchase of up to 10,000,000 common shares. At August 31, 2026, a total of 4,230,000 common shares remained available for repurchase under the authorization, which is not subject to a fixed expiration date. The common shares may be repurchased under this authorization 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, 2026, 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, 2026, leaving the full borrowing capacity of $500.0 million available for 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 2026 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 2026 Form 10-K.
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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.
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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 operations 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 2026 Form 10-K, we included a detailed discussion of our risk factors. Our risk factors have not changed significantly from those disclosed in the 2026 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 2026 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 2026 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, 2026 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 repurchases. 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, includes (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.
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Total Number |
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Maximum Number of |
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of Common Shares |
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Common Shares that |
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Total Number of |
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Average Price |
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Purchased as Part |
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May Yet Be |
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Common Shares |
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Paid per |
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of Publicly Announced |
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Purchased Under the |
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Period |
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Purchased |
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Common Share |
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Plans or Programs |
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Plans or Programs (1) |
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June 1-30, 2026 |
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220,777 |
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$ |
54.81 |
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190,140 |
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4,374,860 |
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July 1-31, 2026 |
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152,309 |
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53.56 |
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144,860 |
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4,230,000 |
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August 1-31, 2026 |
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212 |
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57.96 |
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- |
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4,230,000 |
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Total |
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373,298 |
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$ |
54.30 |
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335,000 |
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Item 3. – Defaults Upon Senior Securities
Not applicable.
Item 4. – Mine Safety Disclosures
Not applicable.
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Item 5. – Other Information
During the current year quarter, no director or officer (as defined under Rule 16a-1 of the Exchange Act)
Item 6. – Exhibits
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Incorporated by Reference |
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Exhibit No. |
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Exhibit Description |
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Form |
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Exhibit |
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Filing Date |
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3.1 |
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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.] |
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10-Q |
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3.1 |
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1/9/2024 |
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3.2 |
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Code of Regulations of Worthington Enterprises, Inc. [This document represents the code of regulations of Worthington Enterprises, Inc. in compiled form incorporating all amendments.] |
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10-Q |
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3(b) |
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10/16/2000 |
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4.1 |
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Fifth Amended and Restated Credit Agreement, dated as of August 31, 2026, among Worthington Enterprises, Inc.; the foreign subsidiary borrowers and lenders party thereto; PNC Bank, National Association, as a Lender, the Swingline Lender, an Issuing Bank and Administrative Agent; JPMorgan Chase Bank, N.A. and Bank of America, N.A., as Lenders and Syndication Agents; U.S. Bank National Association and The Huntington National Bank, as Lenders and Documentation Agents; Fifth Third Bank, National Association, The Northern Trust Company, First National Bank of Pennsylvania, Citibank, N.A. and Goldman Sachs Bank USA, as Lenders; with JPMorgan Chase Bank, N.A., PNC Capital Markets LLC and BofA Securities, Inc. serving as Joint Bookrunners and Joint Lead Arrangers. |
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8-K |
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4.1 |
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8/31/2026 |
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31.1 |
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Rule 13a - 14(a)/15d - 14(a) Certifications (Principal Executive Officer)* |
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31.2 |
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Rule 13a - 14(a)/15d - 14(a) Certifications (Principal Financial Officer)* |
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32.1 |
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Section 1350 Certification of Principal Executive Officer** |
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32.2 |
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Section 1350 Certification of Principal Financial Officer** |
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101 |
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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, 2026 and May 31, 2026; (ii) Consolidated Statements of Earnings for the three months ended August 31, 2026 and August 31, 2025; (iii) Consolidated Statements of Comprehensive Income for the three months ended August 31, 2026 and August 31, 2025; (iv) Consolidated Statements of Cash Flows for the three months ended August 31, 2026 and August 31, 2025 and (v) Condensed Notes to Consolidated Financial Statements.* |
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104 |
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The cover page from this Quarterly Report on Form 10-Q for the quarter ended August 31, 2026, formatted in Inline XBRL and included in Exhibit 101.* |
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* Filed herewith.
** Furnished herewith.
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Signatures
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.
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WORTHINGTON ENTERPRISES, INC. |
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Date: October 9, 2026 |
By: |
/s/ Colin J. Souza |
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Colin J. Souza, |
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Vice President and Chief Financial Officer |
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(On behalf of the registrant as Duly Authorized Officer and as Principal Financial Officer) |
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