Worthington Enterprises Inc Q1 2026 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Kathryn Thompson - Thompson Research Group LLC - Analyst : I just have a couple of operational at a bigger picture question. For your wholly owned building product segment, margins again were up in the quarter. I know that, that's an initiative that you've been working on. But could you help us understand the what drove the margin in the quarter and really kind of the glide path of where you see they're going and what would be a normalized level based on your current portfolio?

Question: Kathryn Thompson - Thompson Research Group LLC - Analyst : That's helpful. Shifting to Wave another great quarter and still up $30 million in terms of contribution. Touched again on the drivers for this outperformance? And is this a level to be expected for the next -- for out quarters?

Question: Kathryn Thompson - Thompson Research Group LLC - Analyst : Okay. And then a final question. -- This is the bigger picture question. So Worthington is often the only domestic manufacturer of some of your product lines. And tariffs are complicating the supply chain this year. And theoretically, Worthington should be in a better position relative to competitors with that domestic manufacturing footprint. In the last quarter, you touched briefly on having more conversations with customers, but it's difficult to quantify. Can you give an update on how that dynamic is progressing? Are there any further wins that where they can tie that to tariffs and just broader implications going forward?

Question: Daniel Moore - CJS Securities Inc - Analyst : So shift back to Building Products just for a second, very healthy organic growth. Can you just elaborate a little bit more on the pockets of strength. You mentioned cooling construction products, some of the heating products -- how much of it is market growth? How much of the share gains? And as we think about moving forward, talk about the potential to outpace the market over the next one, two, three years?

Question: Daniel Moore - CJS Securities Inc - Analyst : Okay. That is helpful. And then -- go ahead, I'm sorry.

Question: Daniel Moore - CJS Securities Inc - Analyst : All right. Shifting to consumer. Maybe just talk about the progress you're making in terms of new product lines and expanding distribution at retail, I'm thinking specifically about Balloon Time Mini, but you got some of the other new products and initiatives, where you're seeing the biggest increases in terms of retail customer penetration? And what's the runway for growth look like?

Question: Daniel Moore - CJS Securities Inc - Analyst : Very helpful. And Kathryn touched on WAVE. Maybe just quickly ClarkDetrich their contribution pulled back to lowest levels since the start of the pandemic Obviously, the environment is a little challenged there. Just talk about whether -- if this is the new normal, at least for now, where do we go from here over the next few quarters?

Question: Daniel Moore - CJS Securities Inc - Analyst : Okay. Last one, I'll jump back in queue. Just maybe talk about the M&A pipeline. As you described, free cash flow solid and poised to inflect higher as the CapEx cycle winds down. So priorities for capital allocation and the outlook for potential either whether it's bolt-ons around Elgen manufacturing, other areas that could be potential opportunities to deploy capital over the next kind of 12 plus months?

Question: Daniel Moore - CJS Securities Inc - Analyst : Super. Look forward to hearing more out here in New York in a couple of weeks.

Question: Susan Maklari - Goldman Sachs Group Inc - Analyst : My first question is going back to the operational efficiencies that you mentioned in your prepared remarks. You noted that you've seen some nice progress in the water business. I guess, can you talk a bit more about that? And how do we think about where else those efforts can go to across the business and what they could mean over time.

Question: Susan Maklari - Goldman Sachs Group Inc - Analyst : Yes. Okay. That's helpful color. And then turning to Elgen. Can you talk a bit about how that business can actually help in terms of hitting some of these targets that you've laid out, growing the business overall. And especially thinking about perhaps the less discretionary nature of HVAC and what that could mean in a tougher macro and especially if things slow further from here?

Question: Susan Maklari - Goldman Sachs Group Inc - Analyst : Yes. Okay. That's helpful, Joe. And then one more question, which is just when you think about the business broadly -- how are you balancing the investments in the growth and the cost efforts relative to the potential that we do end up in a tougher macro next year and maybe we see the consumer still really being under pressure there. And just how are you thinking about those various factors that are all coming through and noting that there's a lot of uncertainty around there, but just any thoughts generally on that positioning and how you're thinking -- how you're approaching that?

Question: Walt Liptak - Seaport Research - Analyst : Yes, great call so far. A lot of questions answered. I would like to try a follow-on on the HVAC refrigerant containers. And so I think it's been a couple of periods so far where you've been maybe doing well with your customers increasing penetration -- is this the kind of thing where it's like a one year bump where you start getting on to more difficult comparisons at some point? Or is there enough customers, a big enough market where you can just continue to serve those customers really well. and increase that penetration beyond like a one year bump in sales.

Question: Walt Liptak - Seaport Research - Analyst : Okay. I wondered you talked a lot on this about the different forms of seasonality and how they impact the business. So, -- I wonder if you could just go through maybe not in a huge amount of detail, but some detail about the fall of winter and especially going into kind of the spring selling season, when do you start selling product into this spring selling season, when's there inventory lift? And what are the indication in consumer -- from your larger consumer and then, maybe in building products too where does the seasonality look like over the next couple of quarters.