9/24/2025

speaker
Operator
Conference Operator

and Investor Relations Officer. Mr. Raji, you may begin.

speaker
Rob Raji
Investor Relations Officer

Thank you, Rob. Good morning, everyone, and thank you for joining us for Worthington Enterprise's first quarter fiscal 2026 earnings call. On the call today are Joe Hayek, our President and Chief Executive Officer, and Colin Souza, our Chief Financial Officer. Before I begin, I'd like to remind everyone that certain statements made during today's call are forward-looking in nature and subject to risk and uncertainties that could cause actual results to differ materially from those expressed or implied. For more information on these risk and uncertainties, please refer to our earnings release issued yesterday after the market closed, which is available on the investor relations section of our website. Additionally, our remarks today will include references to non-GAAP financial measures. Reconciliations of these measures to the most directly comparable GAAP measures can also be found in the earnings release. Today's call is being recorded, and a replay will be available later on our website at WorthingtonEnterprises.com. With that, I'll turn the call over to Joe for opening remarks.

speaker
Joe Hayek
President and Chief Executive Officer

Thank you, Marcus, and good morning, everyone. Welcome to Worthington Enterprises' fiscal 2026 first quarter earnings call. We had a very solid start to our fiscal year. due to the collective efforts of our teams. And I want to start by saying thank you to all my colleagues for their dedication to each other, our company, our customers, and our shareholders. In the quarter, we delivered strong year-over-year growth in sales, adjusted EBITDA, and earnings per share. Our sales in Q1 were up 18% over last year and up 10% year-over-year, excluding sales from recently acquired eligible. The gross margin was 27.1% in Q1 versus 24.3% last year. This improvement is after the adverse impact of a $2.2 million purchase accounting charge related to inventory acquired from Elgin. The adjusted EBITDA margin in the quarter was 21.4% versus 18.8% in Q1 a year ago. I said this related to our Q4 results when we were together in June, but our results in Q1 again reflect our strategy and action. Despite numerous headwinds, including cautious consumers and a hot summer that impacted outdoor activities, and tariff costs and high interest rates that are impacting residential and commercial repair, remodeling, and construction activity, we grew our year-over-year adjusted EBITDA by 34%. Our FCNA expenses were $4.5 million in the quarter, but flat, excluding the addition of Elgin, despite our organic growth in sales and gross profit. As we continue our efforts to optimize our current businesses and grow Worthington, we do so not just as stewards of Worthington's proud history, but as drivers of innovation and strategies that will power our future. We're committed to building a sustainable growth platform, and we will continue to leverage the Worthington business system and its three growth drivers, innovation, transformation, and acquisitions to maximize both our near and long-term success. We've generated tremendous momentum with new product launches, including the Balloon Time Mini, A2L refrigerant cylinders, and new Halo griddles. These new products are enabling us to take market share, grow new markets, and win new customers. Transformation efforts continue to be driven by value stream analysis, automation, and new ways of thinking, but our goals do not change. We prioritize safety, asset utilization, and cost optimization. The ongoing 80-20 initiative in our water business is having a positive impact, and we're planning for additional 80-20 work streams in other areas of our business. We believe our culture is a differentiator, and we're focused on acquiring companies with great teams that have developed sustainable competitive advantages in niche markets. Our acquisition of Elgin in June is an example of that. We're pleased with our integration of Elgin thus far, and we're excited about its growth prospects. That team has embraced our safety culture, and we're focused on capturing synergies and pursuing growth opportunities in multiple areas. Last June, we acquired Regasco, the pioneer and world leader in lightweight composite LPG cylinders. Regasco recently celebrated 25 years in business and has manufactured and sold over 25 million cylinders into over 100 countries around the world. Their people, culture, and ongoing initiatives around safety, innovation, and quality are second to none. We're very happy that they're part of Worthington, and a group of us is looking forward to celebrating with that team in person in Norway next week. Earlier in September, we published our second sustainability report as Worthington Enterprises, and the content of that report makes us proud. For instance, we continue to outperform our industry benchmarks in safety, with the total incident case rate 40% lower than our peers. We're constantly trying to improve, and in fiscal 25, we renamed our safety culture Live Safe. It is based on proactive mindsets, processes, and actions that ensure our teams can be the best version of themselves at work and at home. While many of our end markets continue to face headwinds, we're performing very well and believe our best days are ahead of us. Leveraging our people-first, performance-based culture, market-leading brands, a startup mindset, the Worthington business system, and our strong balance sheet, we will continue to improve everyday life by elevating spaces and experiences in a way that creates meaningful value for our employees, customers, and investors. I will now turn it over to Colin, who will take you through some details related to our financial performance in the court.

Disclaimer

This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.

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