Worthington Organic Growth Rebounds After a Slow Close
Organic sales growth accelerated to 7% in the fiscal 2027 first quarter as net sales reached $343.9 million.
Worthington Enterprises Inc. (WOR) posted 7% organic sales growth in the fiscal 2027 first quarter ended August 31, 2026, a rebound from 3% organic growth in the immediately preceding quarter.
Net sales were $343.9 million, up $40.2 million, or 13%, from a year earlier, including 6% from recent acquisitions. Recent acquisitions contributed $19.2 million to net sales. Excluding those deals, sales rose $21.0 million, or 6.9%.
The company started fiscal 2027 with solid performance as teams continued to execute and deliver for customers. President and CEO Joe Hayek said the company generated 7% organic growth, grew adjusted EBITDA by 10% and nearly doubled free cash flow.
Net earnings increased 22% to $42.6 million from $34.8 million a year earlier. Diluted earnings were $0.87 a share, compared with $0.70. Adjusted net earnings rose 3% to $40.1 million. Adjusted EBITDA grew 10% to $74.0 million. Adjusted diluted EPS was $0.82, compared with $0.78.
Operating income increased $3.8 million to $13.0 million. Adjusted operating income was relatively flat at $13.7 million. Adjusted EBITDA margin compressed to 21.5% from 22.1% a year earlier. The quarter benefited from $4.0 million in net IEEPA tariff refunds, contributions from recent acquisitions and higher overall volume within Trade & Specialty Solutions. Those benefits were offset by lower overall volume and unfavorable product mix within Building Performance Solutions.
Equity in net income of unconsolidated affiliates increased $3.9 million to $40.6 million, with WAVE up $2.7 million and ClarkDietrich up $1.4 million. Miscellaneous income, net, was favorable by $4.2 million, primarily due to a $4.0 million pre-tax gain related to an earnout on the former oil and gas products business sold in January 2021. Income tax expense was $13.0 million, reflecting an estimated annual effective tax rate of 24.1%.
On September 15, the company renamed Building Products to Building Performance Solutions and Consumer Products to Trade & Specialty Solutions. The changes were to names only and did not affect segment composition or historical results.
Building Performance Solutions generated net sales of $215.1 million, up $30.3 million, or 16.4%, including $19.2 million from acquisitions. Excluding acquisitions, sales increased $11.1 million, or 6.0%. Adjusted EBITDA was relatively flat at $59.8 million, with margin compressing to 27.8% from 32.4%. Higher contributions from WAVE and ClarkDietrich and earnings from recent acquisitions were offset by lower overall volume and unfavorable product mix.
Trade & Specialty Solutions generated net sales of $128.8 million, up $9.9 million, or 8.3%, driven by higher volume and higher average selling prices. Adjusted EBITDA increased $7.9 million to $24.0 million, with margin expanding to 18.6% from 13.6%, on higher net sales and the net benefit of IEEPA tariff refunds.
Operating cash flow increased $25.7 million to $66.7 million. Free cash flow increased $26.1 million to $54.0 million from $27.9 million a year earlier. Capital expenditures were $12.8 million.
Cash ended the quarter at $55.1 million, up $27.3 million from May 31, 2026, primarily driven by strong operating cash flow. Total debt of $305.6 million consisted entirely of long-term debt and was relatively unchanged. The company amended its revolving credit facility to extend the maturity date to August 31, 2031, with no borrowings outstanding and $500.0 million available.
The company repurchased 335,000 common shares for $18.2 million, leaving 4,230,000 shares available under the existing authorization. It declared a quarterly dividend of $0.20 a share, payable December 29, 2026.
Hayek said the company is encouraged by its start to fiscal 2027 and the opportunities it sees across its businesses, including rapidly growing demand for engineered ASME tanks used in liquid cooling systems for data centers. He said that with growing free cash flow generation and a healthy balance sheet, the company has flexibility to invest in and pursue additional growth opportunities that fit its strategy.
Worthington Enterprises will host an Investor and Analyst Day on November 10 in New York City, where leadership is scheduled to review strategy, financial performance and long-term growth opportunities, including perspectives on both renamed segments.