Earnings Recap — Q1 FY2027
CY Q3 2026 · Reported September 22, 2026 · Beat 5 of last 7 quarters
Worthington Industries, Inc. reported Q1 FY2027 revenue of $344M, a beat of 3.8% against consensus, and EPS of $0.82, a beat of 9.2%.
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Worthington's data center ASME tank revenue of $13 million in Q1 alone matched its entire prior fiscal year, and management expects sequential growth through FY27, signaling that liquid cooling infrastructure demand is translating into real orders for thermal management components. The company's view that the liquid cooling and thermal management ASME tank market could be more than 10x the legacy market in the next few years, alongside capacity and engineering investment, suggests a broadening set of picks-and-shovels suppliers benefiting from data center construction. Tight steel availability and extended lead times, however, remain a reminder that upstream material constraints can disrupt even well-positioned suppliers.
Worthington opened fiscal 2027 with consolidated sales up 13% to $344 million, including 7% organic growth and $19 million from recent acquisitions, while adjusted EBITDA rose 10% to $74 million and adjusted EPS came in at $0.82 versus $0.78 a year ago. Building Performance Solutions sales grew 16% to $215 million with organic growth of 6%, but adjusted EBITDA was essentially flat at $60 million as Cooling and Construction faced an A2L-driven comparison and unfavorable mix, a roughly $7 million YoY EBITDA headwind, compounded by tight steel availability and extended lead times. Trade and Specialty Solutions sales rose 8% to $129 million and adjusted EBITDA jumped to $24 million from $16 million, with margin expanding to 18.6% from 13.6% on higher volumes, pricing, improved manufacturing and a tariff refund benefit. WAVE posted record equity income of $35 million, up about $3 million, and ClarkDietrich equity income rose more than $1 million to $7 million. Free cash flow was $54 million, the second strongest quarter since becoming Worthington Enterprises, and the company repurchased 335,000 shares for $18 million while paying $9 million in dividends.
Management expects ASME tank revenue for data centers to grow sequentially quarter-over-quarter through the balance of fiscal 2027, weighted toward the back half, after matching the full prior fiscal year's $13 million in Q1 alone. They believe the liquid cooling and thermal management ASME tank market could be more than 10x the legacy ~$200 million market in the next few years, and are investing in equipment, engineering talent and production capacity, including third-party manufacturing partners. Cooling and Construction is expected to face a difficult A2L comparison again in Q2, with normalization in the seasonally stronger second half; the $7 million YoY EBITDA impact in Q1 was more than anticipated a quarter ago. Steel availability is expected to be better through the end of the calendar year, with limited visibility beyond, and price actions have been taken. WAVE is expected to see normal sequential moderation in Q2 after a record Q1. Management reiterated a healthy M&A pipeline with a slight uptick in activity and said higher rates relatively favor Worthington's balance sheet in competitive processes. An Investor Day is scheduled for November 10 in New York.
“In the first quarter of fiscal '27, we generated an additional $13 million of revenue from that value stream, essentially matching what we did in the entire prior fiscal year.”
on Data center ASME tank growth
“Given the projected growth in data centers and increasing adoption of liquid cooling in those data centers, industry sources suggest the market for liquid cooling and thermal management ASME tanks alone could be more than 10x the size of the legacy market in the next few years.”
on Liquid cooling market opportunity
“We estimate the year-over-year impact to adjusted EBITDA this quarter was approximately $7 million, which is more than we anticipated a quarter ago.”
on A2L comparison impact
How is the tight steel market and extended lead times affecting Worthington, and what can the company do that competitors cannot?
Joe Hayek said steel tightened after the 232 tariffs on imported raw steel doubled last fall, chilling imports and pushing prices and lead times up. He said Worthington is a sophisticated buyer with strong supplier relationships and a broad manufacturing footprint, has taken pricing actions where appropriate, and expects to be better positioned through the end of the calendar year with limited visibility beyond. The availability issue cost a few million dollars in the quarter, particularly in Cooling and Construction and Balloon Time.
Can you discuss the data center ASME tank ramp, any productivity costs, and visibility beyond the $13 million quarterly run rate?
Joe Hayek said the tanks are purpose-built vessels for liquid cooling and thermal management, building on 80 years of pressure and hydronic systems experience, and that revenue should grow sequentially in Q2, Q3 and Q4 with more growth weighted to the back half. He noted opportunities can be 18 to 24 months from a data center announcement, so quarterly variability is possible, but called it a multiyear, accelerating opportunity with the liquid cooling and thermal management market potentially 10x the legacy market. Worthington is investing in engineering talent, equipment and production capacity, including third-party manufacturing partners, and aims to get spec-ed into designs.
What are you seeing in the broader consumer and housing environment, and how is the M&A pipeline and integration of recent acquisitions progressing?
Joe Hayek said Trade and Specialty products largely end up with contractors, the team has good pricing discipline and new products are expected in the back half; interest rates are high but repair and remodel activity continues, unemployment remains low and point of sale is holding in. Colin Souza said the M&A pipeline is healthy with a slight uptick in activity, recent acquisitions contributed about $19 million of Q1 sales, Elgen integration is over a year in with commercial HVAC markets healthy, and LSI is earlier but performing well with attractive margins in a specialized metal roofing niche. Joe added that higher rates relatively favor Worthington's balance sheet in competitive acquisition situations.