WORTHINGTON ENTERPRISES, INC.
For the period ended Aug 31, 2025. Filed Oct 8, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Aug 31, 2025 · Filed Oct 8, 2025
WOR$60.50-1.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-02-28; filed 2025-04-09.
0000950170-25-052413
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-08-31; filed 2025-10-08.
0001193125-25-234399
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 91 previous paragraphs and 83 current paragraphs.
29 unchanged; 20 reworded; 34 added; 40 removed; 2 previous and 0 current paragraphs rearranged.
Tables are not compared: 13 previous and 10 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (34)
Current report
Activity outside of our two reportable operating segments is presented within Other and Unallocated Corporate as described further below.
Current report
Other includes our share of the equity earnings of two of our unconsolidated joint ventures, Sustainable Energy Solutions and Workhorse and the related investments in these businesses.
Current report
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, have not been allocated to our operating segments and are held at the corporate level.
Current report
Fiscal 2026
Current report
On June 18, 2025, we acquired Elgen, a leading provider of HVAC parts and components. The purchase price was approximately $91.2 million, net of cash acquired. Elgen began operating as part of Building Products in the first quarter of fiscal 2026. Refer to “Note M – Acquisitions” for additional information.
Current report
Fiscal 2025
Current report
On June 3, 2024, we completed the acquisition of Ragasco, a leading global manufacturer of composite propane cylinders based in Norway. The purchase price consisted of cash consideration of $108.6 million, including an earnout that was settled in March 2025. Ragasco began operating as part of Building Products in the first quarter of fiscal 2025.
Current report
Demand Trends
Current report
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.
Current report
The macroeconomic environment during the first quarter of fiscal 2026 was mixed, as easing inflation was offset by elevated borrowing costs and continued policy uncertainty. U.S. GDP rebounded in June 2025 (the latest available release), increasing at a 3.3% annualized rate following a 0.5% decline in March 2025. Inflation remained near 3%, and the CPI increased 3.1% year-over-year in August 2025, while the Federal Reserve lowered the federal funds target range to 4.00%–4.25% at its September 2025 meeting. Mortgage costs eased late in the first quarter of fiscal 2026, but remained high by historical standards, with the average 30-year fixed rate at 6.56% at August 31, 2025.
Current report
We believe these dynamics, including tight credit conditions, softening industrial activity, and global uncertainty, continued to weigh on both consumer and business sentiment during the first quarter of fiscal 2026. Within Consumer Products, inflation-driven cost consciousness and elevated interest rates influenced discretionary purchases and contributed to cautious buying patterns. In Building Products, rising financing costs constrained new construction demand, while slowing industrial activity impacted certain commercial and infrastructure-related channels. We expect demand to remain uneven in the near term. Other key end market trends are described below in the “End Market Trends” section.
Current report
Inventory Demand Cycles
Current report
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 Consumer Products, where a large volume of products flow through big box retailers.
Current report
During the first quarter of fiscal 2026, inventory levels at most key retailer and distributor customers remained aligned with end-user demand, and replenishment activity generally mirrored point-of-sale trends, with no material build-up in our distribution or retail channels. Customers maintained a cautious approach in managing tariff-related cost pressures, selectively trimming orders for lower-volume items.
Current report
During the first quarter of fiscal 2026, conditions across our key end markets remained uneven. U.S residential and non-residential construction spending trended lower. Housing indicators suggested modest improvements in existing home sales and private housing starts, while authorized permits declined on a year-over-year basis, driven by weakness in multifamily activity. In August 2025, the HMI weakened further to 32, the lowest level since December 2022, reflecting a notably subdued new home pipeline. The non-residential end market was mixed, as the ABI remained in contraction, while the DMI rose 7.5% in August 2025 to a record of 301.4, signaling stronger project planning activity despite current spending softness. Within repair and remodel, the latest LIRA projects approximately 1.2% growth in homeowner improvement spending through the second quarter of calendar year 2026. We believe these conditions support stable near-term demand for tools and DIY products in Consumer Products, while Building Products remain exposed to mixed construction end markets where planning activity is improving but spending remains subdued, leading us to expect overall demand across our key end markets to remain uneven in the near term.
Current report
Factors Affecting Operating Costs
Current report
Raw Materials
Current report
Our largest raw material expenditures include cold-rolled and hot-rolled steel, propane, propylene, and aluminum. 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.
Current report
Steel: Steel raw material is the most significant direct cost across both the Consumer Products and Building Products segments. During the first quarter of fiscal 2026, prices for both hot-rolled and cold-rolled steel moderated from the peak levels reached in April 2025. This decline contributed to improved spread as we maintained consistent pricing discipline across our product portfolio. Our sourcing strategy, combining firm-price contracts for select inputs with index-based agreements for others, allowed us to manage volatility and capture cost advantages as prices declined.
Current report
Aluminum: During the first quarter of fiscal 2026, aluminum costs increased compared to the prior year quarter, reflecting both higher global benchmark prices and a June 2025 increase in U.S Section 232 tariffs to 50% which drove U.S Midwest aluminum premiums to elevated levels. These changes impacted components such as fuel cylinder valves and other aluminum-intensive assemblies. Where possible, we mitigated these increases through forward purchasing and supplier negotiations, but tariff-related cost pressure on aluminum is expected to persist into the second quarter of fiscal 2026.
Current report
Propane, propylene, and other gases: Propane and propylene costs were stable during the first quarter of fiscal 2026, consistent with broader commodity trends. A portion of our propane and propylene requirements are secured under fixed-price supply agreements, which limited our exposure to spot fluctuations. Costs for helium and other industrial gases declined from the prior year quarter, providing a margin benefit in select consumer-facing product lines, particularly within the Consumer Products segment.
Current report
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.
Current report
Net Sales
Current report
Building Products – Net sales totaled $184.8 million in the current year quarter, up $45.1 million, or 32.2%, over the prior year quarter, driven by higher overall volume and $20.9 million in contributions from Elgen.
Current report
Gross profit for the current year quarter increased $19.8 million, or 31.7%, over the prior year quarter to $82.3 million driven primarily by the impact of higher overall volumes in the wholly owned businesses of Building Products.
Current report
SG&A increased $4.6 million, or 7.0%, from the prior year quarter, due primarily to the addition of Elgen. As a percentage of net sales, SG&A was down from 25.7% in the prior year quarter to 23.2% on slightly lower overall corporate overhead expenses.
Current report
Restructuring and Other Expense, Net
Current report
Restructuring and other expense, net in both periods consisted primarily of employee severance and transaction costs related to acquisitions and divestitures.
Current report
Equity income increased $1.2 million over the prior year quarter to $36.7 million, driven by higher contributions from WAVE, up $4.5 million over the prior year quarter, partially offset by a decline at ClarkDietrich, down $2.8 million, as pricing pressure led to lower gross profit.
Current report
Adjusted EBITDA
Current report
Consumer Products –Adjusted EBITDA decreased $1.7 million from the prior year quarter, driven by the impact of lower volume, and to a lesser extent higher SG&A.
Current report
Building Products–Adjusted EBITDA was $57.8 million, an increase of $18.1 million, or 45.6% compared to the prior year quarter, primarily due to volume growth in the wholly owned businesses. The current quarter was negatively impacted by $2.2 million of nonrecurring items related to the Elgen acquisition, reflecting a purchase accounting step up in inventory to fair value, which resulted in a nominal Adjusted EBITDA contribution from Elgen.
Current report
Net cash used by investing activities was $105.4 million during the three months ended August 31, 2025 compared to $88.7 million from the prior year quarter. Net cash used by investing activities during the three months ended August 31, 2025 was driven primarily by cash paid to acquire the outstanding equity interests in Elgen and capital expenditures, including $8.6 million related to ongoing facility modernization projects.
Current report
Net cash used by financing activities was $18.6 million during the three months ended August 31, 2025, compared to $18.1 million in the prior year quarter. During the three months ended August 31, 2025, we paid $6.3 million to repurchase 100,000 common shares and paid dividends of $8.6 million on the common shares.
Removed paragraphs (40)
Previous report
Separation of the Steel Processing Business
Previous report
On December 1, 2023, we completed the Separation of our former steel processing business into a separate public company in a transaction intended to qualify as tax free to our shareholders, which was accomplished via the Distribution. Worthington Steel is an independent public company trading under the symbol “WS” on the NYSE. Following the Separation, Worthington Industries, Inc. changed its name to Worthington Enterprises, Inc. and its common shares continue trading on the NYSE under the ticker symbol “WOR.” In connection with the Separation, we received a one-time cash dividend of $150.0 million from Worthington Steel, the proceeds of which were used to pay off in full the 2024 Notes. The dividend was funded by cash drawn on the Worthington Steel Credit Facility of $175.0 million immediately prior to the Distribution.
Previous report
On June 3, 2024, we acquired Ragasco, a leading global manufacturer of composite propane cylinders based in Norway. The purchase price included cash consideration of approximately $101.4 million and contingent consideration in the form of an earnout agreement with an estimated fair value of $11.2 million at February 28, 2025. See “Note N – Acquisitions” for additional information.
Previous report
On May 29, 2024, we became a noncontrolling equity partner in a new unconsolidated joint venture with Hexagon, a leading global manufacturer of Type 4 composite cylinders used for storing gas under high-pressure, by selling 51% of the nominal share capital of our former Sustainable Energy Solutions operating segment in Europe. Pursuant to the transaction, Hexagon acquired a 49% stake in the joint venture for approximately $11.5 million, after adjusting for closing cash and preliminary net working capital, with an additional 2% sold to members of the existing management team for an additional $0.5 million. Post-closing, we hold a 49%, noncontrolling interest in the joint venture, which is accounted for under the equity method due to our significant influence. The newly formed joint venture, which combines two of Europe’s market leaders in composite high-pressure storage technology, focuses on capitalizing on the global clean energy transition specific to the storage, transport and distribution of hydrogen and compressed natural gas.
Previous report
On February 1, 2024, we acquired an 80% ownership stake in Halo, an affiliate of HPG, an asset-light business with technology-enabled solutions in the outdoor cooking space. The total purchase price was approximately $9.6 million.
Previous report
The macroeconomic and geopolitical outlook remains complex and continues to evolve amid persistent inflationary pressures, high interest rates, and escalating trade tensions. While the U.S. economy continues to expand at a modest pace, growth slowed in the fourth quarter of calendar 2024 with GDP increasing at an annual rate of 2.4%, down sequentially from 3.1% in the third quarter of calendar 2024. Inflationary pressures have proven more resilient than anticipated, with the CPI rising 3.1% year-over-year in February 2025, down sequentially from 3.3% in January 2025 and 3.8% in February 2024 aided by cuts in the federal funds rate of 0.50% in September 2024 and 0.25% in November 2024. However, interest rates remain high, with the 30-year mortgage rate relatively unchanged from the prior year at 6.8% as of February 28, 2025, and future rate cuts remain uncertain with the Federal Reserve opting to maintain the federal funds rate in March 2025, citing uncertainty surrounding the inflationary effects of recently imposed tariffs on Canadian, Mexican, and European imports. The recent uptick in inflation, coupled with geopolitical risks, including heightened trade tensions and financial market volatility, has further weighed on consumer sentiment, with consumer sentiment falling for a third straight month in March 2025 to its lowest level since November 2022. As a result, we expect ongoing economic uncertainty and tighter financial conditions to continue negatively influencing consumer purchasing behavior and overall market demand in the near term.
Previous report
Federal Reserve Bank of St. Louis; figures based on seasonally adjusted annual rates
Previous report
2024 figures based on revised actuals
Previous report
Joint Center for Housing Studies of Harvard University; four quarter moving rate of change
Previous report
Residential Construction: The near-term outlook for the residential construction end market remains uncertain as economic headwinds continue to weigh on both builders and buyers. In February 2025, residential construction spending grew a modest 1.6% year-over-year. However, this increase largely follows inflationary trends, rather than organic expansion in the housing market. Key leading indicators suggest that underlying demand remains tepid. Housing starts and authorized permits declined from the prior year period, signaling that both builders and prospective buyers are approaching the market with caution. From a demand perspective, affordability challenges persist. Elevated mortgage rates have kept many potential buyers on the sidelines, while existing homeowners, many of which are locked into historically low interest rates, are reluctant to sell, further constraining inventory turnover. In February 2025, existing home sales declined by 2.7% year-over-year to 4.3 million units, highlighting the persistent supply challenges. Additionally, homebuilder sentiment, as measured by HMI, weakened to 42.0, falling below the neutral threshold of 50, suggesting that more builders view conditions as poor than favorable. This decline in builder confidence reflects uncertainty around elevated construction costs and mortgage rates. We believe that builders and buyers will likely remain in a holding pattern in the near-term, navigating high material costs, elevated mortgage rates, a slow-moving resale market, and geopolitical developments.
Previous report
Non-Residential Construction: The near-term outlook for non-residential construction is mixed with key indicators signaling both caution and long-term potential. The ABI fell to 45.5 in February 2025, marking a contraction in demand for architectural services. Further reinforcing this sentiment, inquiries into new projects declined in February 2025 for the first time since the peak of the COVID-19 pandemic. This signals that clients are exercising caution amid economic uncertainty, holding back on new project commitments as they navigate concerns about broader macroeconomic conditions. The soft ABI and declining inquiries suggest the near-term construction pipeline will likely be subdued. In contrast, the DMI climbed to 225.6, up from 180.5 in February 2024, suggesting a robust long-term pipeline. This rise was broad-based due to a surge of warehouse, data center, and industrial facility plans. The DMI’s strength, contrasted with the weak ABI, implies a timing gap – while many projects are still in the concept and design phase, they have yet to translate into active architectural billings or construction starts. While industrial and data center projects remain bright spots, we believe the participants in this end market will take a wait-and-see approach as developers and investors assess economic risks before committing to large-scale builds.
Previous report
Repair and Remodel: Spending on home improvement continues to show signs of softness as the market remains under pressure from multi-decade lows in existing home sales, driven by elevated mortgage rates, high prices, and limited supply. With many homeowners locked into historically low interest rates, mobility in the housing market remains stalled, dampening turnover-driven renovation activity. Despite this pullback, the January 2025 LIRA report from Harvard’s Joint Center for Housing Studies projects a 1.2% annual increase in home renovation and maintenance expenditures, reaching $509 billion by the end of calendar year 2025. This upward revision from prior forecasts reflects stronger-than expected late calendar year 2024 spending. Near-term activity is expected to remain concentrated on essential maintenance projects, rather than large-scale, discretionary remodels. Uncertainty around recent and potential future tariffs, particularly on construction materials like steel, aluminum, and lumber, could create headwinds and pressure margins for both contractors and DIY consumers. We believe this end market is transitioning from the pandemic fueled highs into a more normalized, sustainable growth phase, supported by long-term fundamentals such as rising home equity, energy efficiency upgrades, and the need to modernize older homes.
Previous report
Net Sales and Volume
Previous report
The following table provides volume (in units) by operating segment for the periods presented:
Previous report
Building Products – Net sales totaled $164.8 million in the current year quarter, up $16.6 million, or 11.2%, over the prior year quarter, driven by contributions from Ragasco and favorable product mix, particularly in the large-format heating business which returned to more seasonally normal levels following a prolonged destocking cycle.
Previous report
Other – Net sales in the prior year quarter are related to our former Sustainable Energy Solutions operating segment, which was deconsolidated on May 29, 2024, when we sold a 51% interest in the business. In periods subsequent to the sale transaction, our retained 49% interest is accounted for under the equity method as discussed in “Note C – Investments in Unconsolidated Affiliates.”
Previous report
Consumer Products – Net sales totaled $374.1 million in the current year period, an increase of $4.2 million over the prior year period primarily due to higher overall volume.
Previous report
Building Products – Net sales totaled $461.8 million in the current year period, down $3.6 million, or 0.8%, from the prior year period, as contributions from Ragasco and a favorable product mix were more than offset by lower overall volume.
Previous report
Other– Net sales in the prior year period are related to our former Sustainable Energy Solutions operating segment, which was deconsolidated on May 29, 2024, when we sold a 51% interest in the business. In periods subsequent to the sales transaction, our 49% retained interest is accounted for under the equity method as discussed in “Note C – Investments in Unconsolidated Affiliates.”
Previous report
Gross profit for the current year quarter was $89.2 million, an increase of $16.1 million, or 22.0%, over the prior year quarter, driven by higher contributions from both Consumer Products and Building Products. In Consumer Products, the increase resulted from higher volume, particularly in our more profitable product categories. In Building Products, gross profit benefited from contributions by Ragasco, a favorable product mix, and a lower of cost or net realizable value charge in the prior year quarter that did not repeat, partially offsetting lower volume excluding Ragasco. Additionally, gross profit improved $0.9 million due to the deconsolidation of the former Sustainable Energy Solutions segment.
Previous report
Gross profit was $225.8 million for the current year period, an increase of $19.8 million, or 9.6% over the prior year period, primarily due to improvements in Consumer Products, up $15.7 million, on the combined impact of higher volume and a $3.1 million reserve related to the voluntary recall of our Balloon Time® Mini helium tank in the prior year period. In Building Products, gross profit was positively impacted by contributions from Ragasco, favorable product mix, and a lower of cost or net realizable value charge in the prior year quarter that did not repeat, partially offsetting the impact of lower volume.
Previous report
SG&A decreased $13.3 million, or 6.3%, from the prior year period, largely driven by the elimination of certain corporate overhead costs that no longer exist post-Separation, but have been presented within net earnings from continuing operations in our consolidated statements of earnings, partially offset by an $8.1 million increase due to the acquisition of Ragasco on June 3, 2024 and an increase in bad debt expense of $3.2 million.
Previous report
Other Consolidated Results
Previous report
Restructuring and other expense, net in the current year quarter was primarily driven by a $4.5 million increase in the fair value of the contingent liability associated with the Ragasco earnout.
Previous report
Separation costs in the prior year quarter reflect direct and incremental costs incurred in connection with the Separation.
Previous report
Restructuring and other expense, net in the current year period was driven primarily by the accelerated vesting of certain outstanding equity awards upon retirement of our former CEO and a change in fair value of an earnout associated with the acquisition of Ragasco.
Previous report
Separation costs in the prior year period reflect direct and incremental costs incurred in connection with the Separation.
Previous report
Loss on extinguishment of debt of $1.5 million in the prior year period resulted from the July 28, 2023 early redemption of the 2026 Notes and consisted primarily of unamortized debt issuance costs and the remaining loss deferred in AOCI associated with an interest rate swap executed prior to the issuance of the 2026 Notes.
Previous report
Income tax expense was $29.1 million in the current year period compared to $34.0 million in the prior year period. The decrease was primarily driven by one-time discrete tax charges from the Separation, which were recognized in the prior year period, partially offset by higher pre-tax earnings in the current year period. Income expense in the current year period reflects an estimated annual ETR of 24.4% compared to 30.8% in the prior year period.
Previous report
Equity income decreased $11.1 million from the prior year quarter to $32.1 million, primarily driven by lower contributions from ClarkDietrich, which decreased $8.3 million compared to the prior year quarter, as declining year-over-year steel prices compressed margin.
Previous report
Equity income was down $25.3 million from the prior year period, driven by lower contributions from ClarkDietrich and lower contributions from Workhorse, which benefited from a $2.8 million gain in the prior year period.
Previous report
Adjusted EBITDA from Continuing Operations
Previous report
Consumer Products –Adjusted EBITDA from continuing operations was $28.6 million in the current year quarter, an increase of $3.0 million over the prior year quarter, primarily driven by higher volumes and gross margin improvement, partially offset by higher SG&A. Adjusted EBITDA from continuing operations in the current year quarter includes incremental bad debt expense of $1.1 million related to a customer bankruptcy.
Previous report
Building Products –Adjusted EBITDA from continuing operations increased slightly over the prior year quarter to $53.2 million as contributions from Ragasco and a favorable product mix were largely offset by lower equity income contributions from ClarkDietrich and WAVE, which decreased by $9.3 million compared to the prior year quarter. Adjusted EBITDA from continuing operations in the prior year quarter was negatively impacted by a $1.9 million lower of cost or net realizable value charge.
Previous report
Unallocated Corporate and Other –Adjusted EBITDA from continuing operations increased $3.8 million over the prior year quarter, primarily driven by lower SG&A and lower losses related to the deconsolidation of our former Sustainable Energy Solutions in May 2024, partially offset by lower contributions of equity income from Workhorse.
Previous report
Consumer Products –Adjusted EBITDA from continuing operations was $61.9 million, an increase of $9.4 million over the prior year quarter, primarily due to the favorable impact of higher volume in gross profit. Adjusted EBITDA from continuing operations in the current year period included $2.5 million of incremental bad debt related to customer bankruptcies. The prior year period was negatively impacted by a $3.1 million reserve related to the recall of our Balloon Time® Mini helium tank.
Previous report
Building Products –Adjusted EBITDA from continuing operations decreased $18.4 million from the prior year period as equity income was down $25.3 million partially offset by contributions from Ragasco and a favorable product mix. Equity income declined primarily from lower contributions from ClarkDietrich. Adjusted EBITDA from continuing operations in the prior year quarter was negatively impacted by a $1.9 million lower of cost or net realizable value charge which did not repeat in the current year quarter.
Previous report
Activity related to our discontinued operations has not been segregated in our consolidated statements of cash flows. See “Note B – Discontinued Operations” for a summarization of significant non-cash items related to discontinued operations.
Previous report
Net cash used by investing activities was $115.1 million during the nine months ended February 28, 2025 compared to $116.5 million from the prior year period. Net cash used by investing activities during the nine months ended February 28, 2025 was driven primarily by the acquisition of Ragasco and capital expenditures partially offset by proceeds from the sale of 51% of the nominal share capital of our former Sustainable Energy Solutions operating segment on May 29, 2024.
Previous report
Net cash used by financing activities was $53.6 million during the nine months ended February 28, 2025, compared to $355.9 million in the prior year period. During the nine months ended February 28, 2025, we paid $21.1 million to repurchase 500,000 common shares and paid dividends of $25.5 million on the common shares. During the nine months ended February 29, 2024, we received $172.2 million in net proceeds of short-term borrowings and repaid $243.8 million of long-term debt associated with the redemption of the 2026 Notes and $150.0 million for the redemption of our 2024 Notes.
Reworded paragraphs (20)
Previous wording
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 2024 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. The results of operations contained in this MD&A include all of our operations, including our former steel processing business. Our historical results have been restated to reflect the operations of Worthington Steel as a discontinued operation in periods prior to the Separation as discussed in “Note A – Basis of Presentation.”
Current wording
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 2025 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.
Previous wording
Worthington Enterprises is a market-leading designer and manufacturer of innovative products and services, including manufactured metal products, organized around attractive end markets under two separate and distinct reportable operating segments: Consumer Products and Building Products. 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 new products and applications, and pursuing strategic investments and acquisitions.
Current wording
We are a market-leading designer and manufacturer of innovative products and services, including manufactured metal products, organized around attractive end markets under two separate and distinct reportable operating segments: Consumer Products and Building Products. 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 new innovative products and applications, and pursuing strategic investments and acquisitions.
Previous wording
Our Consumer Products business has a diverse product offering in the tools, outdoor living and celebrations categories, including propane-filled cylinders for torches and related accessories, handheld torches, specialized hand tools and instruments, drywall tools (collectively, tools), propane-filled camping cylinders helium-filled balloon kits, and accessories and gas grills and pizza ovens sold primarily to mass merchandisers, retailers and distributors. Sales to one customer in Consumer Products accounted for 13.0% of our consolidated net sales in the third quarter of fiscal 2025.
Current wording
Our Consumer Products business has a diverse product offering in the tools, outdoor living and celebrations categories, including propane-filled cylinders for torches and related accessories, handheld torches, specialized hand tools and instruments, drywall tools, propane-filled camping cylinders, helium-filled balloon kits, and accessories and gas griddles and pizza ovens sold primarily to mass merchandisers, retailers and distributors. Sales to one customer in Consumer Products accounted for 11.2% of our consolidated net sales in the first quarter of fiscal 2026.
Previous wording
Our Building Products business is a market-leading provider of pressurized containment solutions, providing critical components in the residential, non-residential, and repair and remodel end markets through essential categories, such as heating, cooking, cooling and water, and, through our unconsolidated joint ventures, WAVE and ClarkDietrich, ceiling suspension systems and light gauge metal framing products, respectively. Our pressurized containment solutions include refrigerant and LPG cylinders, well water and expansion tanks, and other specialty products which are generally sold to gas producers and distributors.
Current wording
Our Building Products business is a market-leading provider of pressurized containment solutions, providing critical components in essential end markets, such as heating, cooking, cooling and water, and, through our unconsolidated joint ventures, WAVE and ClarkDietrich, ceiling suspension systems and light gauge metal framing products. Our pressurized containment solutions include refrigerant and LPG cylinders, well water and expansion tanks, and other specialty products which are generally sold to gas producers and distributors. Refrigerant gas cylinders are used to hold refrigerant gases for commercial, residential, and automotive air conditioning and refrigeration systems. LPG cylinders hold fuel for residential and light commercial heating systems, barbeque grills and recreational vehicle equipment, industrial forklifts and commercial/residential cooking (the latter, generally outside North America). Well water tanks and expansion tanks are used primarily in the residential market with certain products also sold to commercial markets. Specialty products include a variety of fire suppression tanks, chemical tanks, and foam and adhesive tanks. With the acquisition of Elgen on June 18, 2025, we expanded our portfolio to include HVAC parts and components, further strengthening our position across the end markets we serve.
Previous wording
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, repair/remodel, which collectively drive overall demand for the Building Products segment. These end markets also drive demand for many of our consumer products sold in the tools and outdoor living categories. Demand for our remaining consumer products, including helium-filled balloon kits sold into the celebrations category, is generally driven by the general health of the consumer, including the macroeconomic and geopolitical conditions discussed above.
Current wording
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, repair/remodel, which collectively drive overall demand for Building Products. These end markets also drive demand for many of our consumer products sold in the tools and outdoor living categories. Demand for our remaining consumer products, including helium-filled balloon kits sold into the celebrations category, is generally driven by the general health of the consumer, including the macroeconomic and geopolitical conditions discussed above. We actively monitor the following publicly available economic data and selected key indicators for our major end markets:
Previous wording
Historically, sales tend to be stronger in the third and fourth quarters of our fiscal year for our Consumer Products businesses when our facilities perform at seasonal peaks, matching consumer demand. Sales in our Building Products businesses are generally stronger in the first and fourth quarters of our fiscal year due to weather conditions, customer business cycles, and the timing of renovation and new construction projects.
Current wording
Historically, net sales tend to be stronger in our fiscal third and fourth quarters for Consumer Products when our facilities perform at seasonal peaks, matching consumer demand. Sales in Building Products are generally stronger in the first and fourth quarters of our fiscal year due to weather conditions, customer business cycles, and the timing of renovation and new construction projects.
Previous wording
The following discussion provides a review of results for the three and nine months ended February 28, 2025 and February 29, 2024:
Current wording
The following discussion provides an overview of results for the three months ended August 31, 2025 and August 31, 2024:
Previous wording
Reconciliations for each of these non-GAAP financial measures to their most comparable GAAP financial measure is provided in the “Use of Non-GAAP Financial Measures and Definitions” section.
Current wording
Reconciliations for each of these non-GAAP financial measures to their most comparable GAAP financial measure are provided in the “Use of Non-GAAP Financial Measures and Definitions” section.
Previous wording
Consumer Products – Net sales totaled $139.7 million in the current year quarter, up $6.5 million, or 4.9% over the prior year quarter, primarily driven by higher volumes.
Current wording
Consumer Products – Net sales totaled $118.9 million in the current year quarter, up $1.3 million, or 1.1% over the prior year quarter, driven by favorable product mix, substantially offset by lower overall volume.
Previous wording
Includes our share of equity earnings of the Workhorse and the Sustainable Energy Solutions joint ventures.
Current wording
Includes our share of the equity earnings of the Workhorse and the Sustainable Energy Solutions joint venture.
Previous wording
Income tax expense was $13.2 million in the current year quarter compared to $18.5 million in the prior year quarter. The decrease was primarily driven by one-time discrete tax charges from the Separation, which were recognized in the prior year quarter, partially offset by higher pre-tax earnings in the current year quarter. Income expense in the current year quarter reflects an estimated annual ETR of 24.4% compared to 30.8% in the prior year quarter.
Current wording
Income tax expense was $10.9 million in the current year quarter compared to $6.8 million in the prior year quarter. The increase was primarily driven by higher pre-tax earnings.
Previous wording
The following table provides a summary of adjusted EBITDA from continuing operations, a non-GAAP financial measure, by reportable segment and on a consolidated basis, along with the respective percentage of net sales for each reportable 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 from continuing operations is provided in “Note M – Segment Operations.”
Current wording
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.”
Previous wording
Unallocated Corporate and Other –Adjusted EBITDA from continuing operations was down $0.4 million from the prior year period, primarily driven by lower equity earnings from Workhorse, which benefited from a $2.8 million gain related to the divestiture of its Brazilian operations in the prior year period, and higher SG&A, partially offset by lower losses due to the deconsolidation of our former Sustainable Energy Solutions operating segment in May 2024.
Current wording
Other –Adjusted EBITDA decreased $0.5 million compared to the prior year quarter, driven by lower equity earnings from Workhorse.
Previous wording
SG&A decreased $2.1 million, or 3.2%, from the prior year quarter, primarily driven by lower profit sharing and bonus expense and costs recovered from Worthington Steel through the Transition Services Agreement, partially offset by an increase of incremental bad debt expense of $1.1 million related to a customer bankruptcy in Consumer Products.
Current wording
Unallocated Corporate – Unallocated SG&A decreased $0.7 million, or 8.9%, from the prior year quarter, primarily driven by lower profit sharing and bonus accruals in the current quarter as well as an increase in costs recovered through the Transition Services Agreement with Worthington Steel.
Previous wording
During the nine months ended February 28, 2025, we generated $147.3 million of cash from operating activities, invested $37.5 million in property, plant and equipment, spent $88.2 million to acquire Ragasco, and received $11.4 million for the sale of 51% of our former Sustainable Energy Solutions operating segment. Additionally, we paid $21.1 million to repurchase 500,000 common shares and paid dividends of $25.5 million on the common shares during the nine months ended February 28, 2025.
Current wording
During the three months ended August 31, 2025, we generated $41.1 million of cash from operating activities, flat from the prior year quarter, invested $13.2 million in property, plant and equipment, and spent approximately $92.0 million to acquire 100% of the outstanding equity interests in Elgen. Additionally, we paid $6.3 million to repurchase 100,000 common shares and paid dividends of $8.6 million on the common shares during the three months ended August 31, 2025.
Previous wording
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.
Current wording
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.
Previous wording
Net cash provided by operating activities was $147.3 million during the nine months ended February 28, 2025, down from $244.8 million from the prior year period. The decrease was primarily due to lower net earnings in the current year period driven by the Separation and a $31.4 million decrease in dividends received from unconsolidated joint ventures.
Current wording
Net cash provided by operating activities was $41.1 million during the three months ended August 31, 2025, flat compared to the prior year quarter as higher net earnings in the current year quarter was offset by an increase in operating working capital requirements (accounts receivable, inventory, and accounts payable) and a $2.5 million decrease in dividends received from unconsolidated affiliates.
Previous wording
Common shares – On March 25, 2025, the Board declared a quarterly dividend of $0.17 per common share payable on June 27, 2025, to shareholders of record at the close of business on June 13, 2025.
Current wording
Common shares – On September 23, 2025, the Board declared a quarterly dividend of $0.19 per common share payable on December 29, 2025, to shareholders of record at the close of business on December 15, 2025.
Previous wording
On March 24, 2021, the Board authorized the repurchase of up to an additional 5,618,464 common shares, increasing the total number of common shares then authorized for repurchase to 10,000,000. As of February 28, 2025, 5,565,000 common shares remained available for repurchase under these two authorizations.
Current wording
On March 24, 2021, the Board authorized the repurchase of up to 5,618,464 common shares. As of August 31, 2025, 5,265,000 common shares remained available for repurchase under this authorization.
Previous wording
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 policies 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 such 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 policies 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 2024 Form 10-K.
Current wording
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 2025 Form 10-K.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
We actively monitor the following publicly available economic data and selected key indicators for our major end markets:
Previous report — wording carried elsewhere
On March 20, 2019, the Board authorized the repurchase of up to 6,600,000 common shares.