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1. Company Snapshot

1.a. Company Description

Worthington Industries, Inc., an industrial manufacturing company, focuses on value-added steel processing, manufactured consumer, building, and sustainable mobility products in North America and internationally.It operates through Steel Processing, Consumer Products, Building Products, and Sustainable Energy Solutions segments.The Steel Processing segment processes flat-rolled steel for customers primarily in the automotive, aerospace, agricultural, appliance, construction, container, energy, hardware, heavy-truck, HVAC, lawn and garden, leisure and recreation, office furniture, and office equipment markets.


It also toll processes steel for steel mills, large end-users, service centers, and other processors.The Consumer Products segment sells tools, outdoor living, and celebrations products under the Coleman, Bernzomatic, Balloon Time, Mag-Torch, General, Garden-Weasel, Pactool International, Hawkeye, Worthington Pro Grade, and Level5 brand names.The Building Products segment sells refrigerant and LPG cylinders, well water and expansion tanks, and other specialty products to gas producers and distributors.


The Sustainable Energy Solutions segment offers on-board fueling systems and services, as well as gas containment solutions and services for the storage, transport, and distribution of industrial gases.The company was founded in 1955 and is headquartered in Columbus, Ohio.

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1.b. Last Insights on WOR

Worthington Enterprises' recent performance was negatively impacted by its Q1 earnings miss, with quarterly earnings of $0.74 per share falling short of the Zacks Consensus Estimate of $0.8 per share. Despite an 18% increase in net sales to $303.7 million, the company's earnings lagged expectations. Additionally, the company's dividend payout of $0.19 per share, although a steady income source for shareholders, did not offset the earnings disappointment. The company's sustainability report and upcoming dividend increases may not be enough to counterbalance the negative earnings surprise.

1.c. Company Highlights

2. Worthington Enterprises' Strong Q2 FY2026 Earnings: A Closer Look

Worthington Enterprises reported a robust financial performance in Q2 FY2026, with revenues surging 19% year-over-year to $327 million. Adjusted EBITDA grew by 8% to $60 million, resulting in an adjusted EBITDA margin of 18.5%. The company's adjusted earnings per share (EPS) came in at $0.65, slightly below analyst estimates of $0.704. The revenue growth was driven by a combination of organic growth and strategic acquisitions, with the company's Building Products segment posting mid-teens organic growth.

Publication Date: Dec -20

📋 Highlights
  • Revenue and Adjusted EBITDA Growth:: Q2 revenue rose 19% YoY to $327M, with adjusted EBITDA up 8% to $60M ($284M trailing 12M).
  • LSI Acquisition:: Acquired LSI for $205M, offering $22.4M adjusted EBITDA and $51.1M sales in LTM, expected to boost margins and free cash flow.
  • SG&A Efficiency:: SG&A declined 320 bps as a % of sales, excluding Elgen, with 10% organic revenue growth and flat SG&A.
  • Strong Liquidity and Leverage:: Closed Q2 with $180M cash, $305M long-term debt, and a net debt/EBITDA ratio of 0.4x, ensuring financial flexibility.
  • Data Center Growth Potential:: Products across portfolio (e.g., ASME tanks) cater to data centers, a fast-growing segment contributing <10% to each business but driving innovation and placements.

Segmental Performance

The Building Products segment was a key driver of growth, with revenues increasing due to volume contributions across the portfolio. ClarkDietrich, a market leader in its space, faced a challenging environment with increased competition, leading to margin compression. However, the business is expected to perform no worse than sequentially flat, with a focus on cost savings initiatives and a shift in mix towards larger projects. As Joe Hayek noted, "ClarkDietrich is operating in a tough environment, but we're focused on cost savings initiatives and a shift in mix towards larger projects."

Growth Prospects and M&A

Worthington Enterprises is well-positioned for future growth, with a strong pipeline of opportunities in areas such as data centers and metal roofing components. The company's recently announced acquisition of LSI, a market leader in metal roofing components, is expected to be accretive to adjusted EBITDA margins, adjusted EPS, and free cash flows. LSI's healthy margin profile, with over 40% adjusted EBITDA margin, is driven by its market-leading position and ability to provide retrofit solutions.

Valuation

Using the company's current valuation multiples, we can assess what's priced in. The P/E Ratio stands at 24.31, EV/EBITDA at 16.64, and P/S Ratio at 2.08. With analysts estimating revenue growth of 17.3% next year, the current valuation multiples suggest that the market is pricing in a significant growth premium. The company's Net Debt / EBITDA ratio of 0.99 indicates a healthy balance sheet, providing financial flexibility to pursue growth opportunities.

Capital Allocation

Worthington Enterprises is committed to balancing its capital structure, opportunistically looking at strategic M&A, and returning capital to shareholders. The company has a bias towards growth, with a focus on innovation and adding value to customers. With a strong track record of executing on its strategic pillars, Worthington Enterprises is well-positioned for future success.

3. NewsRoom

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Campbell & CO Investment Adviser LLC Invests $562,000 in Worthington Enterprises, Inc. $WOR

Jan -22

Source: defenseworld.net

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Worthington Enterprises Completes Acquisition of LSI Group

Jan -16

Source: globenewswire.com

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Worthington Enterprises Participating in CJS Securities New Ideas for the New Year Conference

Jan -07

Source: globenewswire.com

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Worthington Enterprises: Upgrade To Buy On Improved Fundamentals

Dec -26

Source: seekingalpha.com

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Worthington Enterprises After Earnings

Dec -18

Source: seekingalpha.com

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Worthington Enterprises, Inc. (WOR) Q2 2026 Earnings Call Transcript

Dec -17

Source: seekingalpha.com

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Worthington Enterprises (WOR) Lags Q2 Earnings Estimates

Dec -16

Source: zacks.com

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Worthington Enterprises Reports Second Quarter Fiscal 2026 Results

Dec -16

Source: globenewswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (1.83%)

6. Segments

Steel Processing

Expected Growth: 1.8%

Worthington Industries' Steel Processing segment growth of 1.8% is driven by increasing demand from automotive and construction industries, supported by rising infrastructure spending and vehicle production. Additionally, the company's focus on value-added products, such as coated and painted steel, contributes to growth.

Consumer Products

Expected Growth: 1.5%

Worthington Industries, Inc.'s Consumer Products segment growth of 1.5% is driven by increasing demand for outdoor recreational products, such as camping gear and BBQ accessories, as well as a growing trend towards DIY home improvement projects, which boosts sales of its pressure cylinders and propane tanks.

Building Products

Expected Growth: 2.2%

Worthington Industries' Building Products segment growth of 2.2% is driven by increasing demand for sustainable and energy-efficient building solutions, rising construction activities in the residential and commercial sectors, and strategic acquisitions expanding product offerings and geographic reach.

Sustainable Energy Solutions

Expected Growth: 2.5%

Worthington Industries' Sustainable Energy Solutions segment growth is driven by increasing demand for clean energy, government incentives for renewable energy adoption, and rising energy efficiency standards. Additionally, the company's strategic acquisitions and partnerships, such as its joint venture with Nikola Motor, position it for growth in the alternative fuel and electric vehicle markets.

7. Detailed Products

Pressure Cylinders

Worthington Industries, Inc. manufactures high-pressure cylinders for the storage and transportation of industrial gases, medical oxygen, and compressed natural gas (CNG) for vehicles.

Industrial Gas Tanks

The company designs and manufactures industrial gas tanks for the storage of liquefied gases, including propane, butane, and anhydrous ammonia.

Cryogenic Tanks

Worthington Industries, Inc. produces cryogenic tanks for the storage of liquefied gases, including liquid nitrogen, oxygen, and argon.

Alternative Fuel Systems

The company offers alternative fuel systems, including compressed natural gas (CNG) and liquefied petroleum gas (LPG) fuel systems for vehicles.

Oil and Gas Equipment

Worthington Industries, Inc. manufactures oil and gas equipment, including wellhead tanks, oilfield trailers, and production equipment.

Consumer Products

The company produces consumer products, including propane cylinders, torches, and accessories for outdoor recreation and household use.

8. Worthington Industries, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Worthington Industries, Inc. operates in a industry where substitutes are available, but they are not a significant threat to the company's operations. The company's products are highly specialized and are not easily substitutable.

Bargaining Power Of Customers

Worthington Industries, Inc. has a diverse customer base, which reduces the bargaining power of individual customers. The company's products are also highly customized, which makes it difficult for customers to switch to alternative suppliers.

Bargaining Power Of Suppliers

Worthington Industries, Inc. relies on a few key suppliers for raw materials, which gives them some bargaining power. However, the company's large scale of operations and diversified supply chain mitigate this risk.

Threat Of New Entrants

The steel processing industry has high barriers to entry, including significant capital requirements and regulatory hurdles. This makes it difficult for new entrants to enter the market and compete with Worthington Industries, Inc.

Intensity Of Rivalry

The steel processing industry is highly competitive, with several large players competing for market share. Worthington Industries, Inc. faces intense competition from rivals, which puts pressure on prices and margins.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 31.93%
Debt Cost 4.32%
Equity Weight 68.07%
Equity Cost 10.53%
WACC 8.54%
Leverage 46.90%

11. Quality Control: Worthington Industries, Inc. passed 9 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

56.82$

Current Price

56.82$

Potential

-0.00%

Expected Cash-Flows