Worthington Enterprises, Inc. WOR used its fourth-quarter fiscal 2026earnings callto emphasize the growing contribution of innovation, acquisitions, and cash generation despite a quarter that fell short of Wall Street expectations.
Management pointed to expanding opportunities in data center infrastructure, improving profitability across wholly owned businesses, and continued integration of recent acquisitions as key themes shaping fiscal 2027.
Data Centers Become a Larger Growth Platform
President and chief executive officer Joseph Hayek described liquid-cooling infrastructure for data centers as one of the company’s most promising growth opportunities.
Worthington shipped approximately $13 million of ASME water tanks used in data center cooling systems during fiscal 2026 and expects to ship at least that much in the first quarter of fiscal 2027. Management said demand continues to increase, prompting additional investment in equipment and capacity.
Hayek also noted that several businesses across the portfolio participate in data center construction and operation, including WAVE, ClarkDietrich, Elgen, LSI, and portions of the water business. He characterized the market as an emerging, multiyear opportunity with growing cross-selling potential.
WOR Leans on Innovation Across Markets
Hayek repeatedly highlighted innovation as the company’s primary organic growth driver.
One example was Balloon Time Mini, which recently secured placement in a majority of Walmart stores. Management said consumer adoption continues to build and supports growth in the celebrations business.
Innovation is also being applied to mature product categories. Executives pointed to new product development efforts across consumer businesses and said the company has a growing pipeline of launches scheduled for fiscal 2027.
Worthington Expands Building Products Portfolio
Acquisitions remained a central part of the growth strategy.
Hayek said integration efforts for Elgen and LSI are progressing as planned and that both businesses are performing well. The acquisitions expanded the company’s building products capabilities and strengthened its position across the building envelope market.
Chief financial officer Colin Souza said Building Products sales rose 28% in the quarter, with acquisitions contributing $44 million of revenues. Excluding acquisitions, sales increased 5% on higher volumes.
Margin Pressure Tied to Temporary Factors
While fourth-quarter results were solid, management spent considerable time addressing factors that weighed on profitability.
Souza said adjusted EBITDA declined modestly from the prior-year quarter because of lower contributions from ClarkDietrich and a difficult comparison in the cooling and construction business. The prior-year period benefited from unusually strong demand tied to the industry transition toward A2L refrigerants.
During the Q&A session, a CJS Securities analyst asked whether those headwinds would persist. Souza responded that the impact was primarily a comparison issue rather than a deterioration in business fundamentals. He said inventory normalization related to the A2L transition could affect the next couple of quarters, but the pressure should moderate by the second quarter of fiscal 2027.
Ticker Highlights Cash Flow and Balance Sheet
Another recurring theme was cash generation.
Worthington produced $55 million of free cash flow during the quarter, its strongest quarterly performance since becoming Worthington Enterprises. For fiscal 2026, free cash flow reached $170 million, representing a conversion rate of 102% relative to adjusted net earnings.
Souza said modernization spending is nearing completion, with roughly $16 million remaining. He added that capital expenditures should return to more normal levels after the project concludes, supporting future cash generation.
The company ended the year with net debt of $278 million and a net leverage ratio below 1x, while maintaining a fully undrawn $500 million revolving credit facility.
WOR Sees Pricing and Procurement Advantages
Executives also addressed inflation and commodity costs.
Souza said the company experienced higher costs across steel, aluminum, brass, freight, and diesel but has implemented pricing actions and contractual adjustments to protect profitability.
Hayek added that tight steel markets can create a competitive advantage for Worthington because of its procurement and supply-chain capabilities. He said the company’s purchasing expertise helps differentiate it from competitors when material availability becomes constrained.
Management Enters Fiscal 2027 With Confidence
The tone from management remained constructive despite the earnings miss versus the Zacks Consensus Estimate. WOR’s adjusted earnings per share of $0.97 missed the consensus estimate of $1.04, delivering a negative surprise of 6.7%. Revenues of approximately $371.50 million also trailed expectations of $385.70 million, delivering a negative surprise of 3.7%.
Worthington Enterprises, Inc. Price, Consensus and EPS Surprise
Worthington Enterprises, Inc. price-consensus-eps-surprise-chart | Worthington Enterprises, Inc. Quote
Executives emphasized that fiscal 2026 delivered 20% sales growth, 12% adjusted EBITDA growth, strong free cash flow generation, and successful acquisition integration.
Hayek said the company enters fiscal 2027 with leading brands, multiple growth avenues, financial flexibility, and an expanding innovation engine that management believes positions the business for long-term value creation.
What Zacks Signals Suggest
WOR currently carries a Zacks Rank #3 (Hold). Under the Zacks framework, a Rank #3 generally indicates balanced earnings estimate trends and suggests performance more in line with the broader market over the near term. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The stock also holds a Value Score of B, Growth Score of D, Momentum Score of C, and VGM Score of C. According to Zacks methodology, stronger Style Scores can enhance the prospects of highly ranked stocks, while the VGM Score provides a combined view of value, growth, and momentum characteristics. Investors should note that the Zacks Rank can change as analysts revise earnings estimates following the latest quarterly results.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
