Investor Day 2026 - WORTHINGTON ENTERPRISES INC

Financial Performance:

• Revenue grew at a 6% CAGR, increasing from $1.2B in fiscal 2024 to $1.4B (TTM), despite deconsolidating $130M from the SCS business.
• Adjusted EBITDA grew at a 9% CAGR, rising from $251M to $303M (TTM), with consolidated margins expanding 115 bps to 21%.
• Free cash flow conversion reached 116% of adjusted net earnings (TTM), generating $196M in FCF, up 41% from the prior 12-month period.
• Adjusted Return on Assets (ROA) increased to 26.8%, up from 25.6%, reflecting improved asset productivity.
• Net leverage stands at 0.8x trailing 12-month adjusted EBITDA, with $250M in debt and $550M in liquidity (cash + $500M revolver).
• Gross margin expanded 430 bps to 27.2%, while SG&A as a percentage of sales improved 160 bps to 21.2%.
• Working capital cycle improved by 8 days, and net working capital as a % of sales declined ~300 bps over recent years.
• Capital expenditures are expected to normalize to ~3% of sales after the winding down of the $140M modernization program.

Guidance and Future Outlook:

• Long-term sales growth target remains 6-8% annually, driven by ~5% organic growth and discipline acquisitions.
• Long-term Adjusted EBITDA margin target raised from 24% to 25%, supported by a path to 30% gross margin and 20% SG&A.
• Segment margin targets set at 15% for Building Performance Solutions (BPS) and 21% for Trade and Specialty Solutions (TSS).
• Free cash flow conversion target set at 100% or better against adjusted net earnings.
• Adjusted ROA target set at 30% (up from 26.8% current).
• Management expects data center demand to grow, with liquid cooling markets potentially expanding 10x the legacy tank market over several years.
• Outlook assumes modest recovery in Clark-Dietrich's non-residential new construction market but does not rely on it for base targets.

Business Segments and Product Lines:

• Building Performance Solutions (BPS): Generated $892M sales and $240M EBITDA (TTM); wholly owned EBITDA margin improved to 10.8% (target 15%). Key growth drivers include data center liquid cooling (ASME tanks) and acquisitions like Elgin (HVAC/framing) and Logan (roofing).
• Trade and Specialty Solutions (TSS): Generated $530M sales and $99M EBITDA (TTM); EBITDA margin expanded to 18.7% (target 21%). Strong brands include Burns-O-Matic and Balloon Time.
• Innovations: Launched "Balloon Time Mini" expanding category sales 27% and door count 50%; introduced "FireShot" torch targeting tight spaces, expected to expand the category rather than cannibalize.
• Joint Ventures: Wave (50% owned) generated $519M sales and ~49% EBITDA margin; Clark-Dietrich (25% owned) generated $1.2B sales and $107M EBITDA, currently facing cyclical headwinds but benefiting from data center volume.
• Acquisitions: Recent deals include Elgin, Logan, and Rogasco, adding capabilities in HVAC, roofing, and commercial metal framing.

Market and Competitive Landscape:

• Over 80% of adjusted EBITDA derives from businesses with market-leading positions in niche categories.
• Demand is resilient with 57% tied to repair/replacement, 60% to non-residential activity, and 80% driven by contractors.
• Key secular trends include regulatory complexity, skilled labor scarcity, reshoring/domestic manufacturing (85% of revenue sourced/manufactured/sold in the US), and data center infrastructure.
• Competitive advantage relies on engineering expertise, code qualifications, tight supply chains, and trusted brands rather than price competition.
• Data center market is a major growth vector, with liquid cooling representing a significant new application for existing engineering capabilities.

Risks and Challenges:

• Macroeconomic headwinds including elevated interest rates, contraction in the Architectural Billings Index (ABI), and weak private non-residential construction.
• Clark-Dietrich remains exposed to volatile new commercial construction cycles, currently operating below historical earnings potential.
• Potential volatility in raw material costs (steel, diesel, freight) and labor inflation.
• Policy uncertainty following recent elections, though long-term market drivers are expected to remain stable.
• Execution risk in integrating acquisitions and applying the "Worthington Business System" to new platforms.

Management Commentary and Tone:

• Tone is confident and forward-looking, emphasizing "Proven Strength and Greater Ambition."
• Management highlights a "virtuous cycle" where innovation, transformation, and acquisitions reinforce one another.
• CEO Joe Hayek emphasized that the company is operating at a higher level than at separation three years ago, with strong cash generation and a scalable operating model.
• CFO Colin Souza stressed that long-term targets are achievable through controllable levers (productivity, pricing, innovation) rather than macro recovery.
• Management reiterated that they do not manage to trading multiples but focus on operating metrics to drive value.

Analyst Questions and Answers:

• Wave Growth: Organic growth expected to be steady; inorganic growth possible if it enhances capabilities or margins.
• Reshoring Benefits: Hard to quantify directly in financials but provides supply chain responsiveness, speed, and strong customer relationships, particularly in emergency heating/fueling applications.
• Data Center Trajectory: Amtrrol's data center tank sales grew from $13M (FY26) to $13M (Q1 FY27) with a doubling quote pipeline; management expects sequential growth and a 10x market expansion long-term.
• Asset-Light Strategy: Willing to outsource initial production (e.g., data center tanks) to ensure speed to market and capital efficiency; may insource later if demand scales.
• Portfolio Structure: No plans to split BPS and TSS segments; believes combined scale creates synergies in steel buying, distribution, and customer cross-selling.
• Clark-Dietrich Divestiture: Management stated "never say never" but currently views the JV as a great business with significant synergies and recovery upside; no divestiture planned.
• Wave Data Center Share: Early stage but growing; pipeline is expanding rapidly, though specific share data not disclosed.
• Balloon Time Margins: Focus on "return on assets" and category expansion; mini tank and FireShot are initially outsourced to lower capital requirements, targeting long-term margin targets of 25%+ consolidated.

Other Key Points:

• The "Worthington Business System" (WBS) is the core value driver, comprising three levers: Innovate (organic growth), Transform (margin expansion via 80-20, automation, AI), and Acquire (strategic add-ons).
• AI has freed up 25,000 hours in FY26, allowing redeployment to higher-value activities.
• The "80-20" initiative is being rolled out to focus resources on high-value customers and products, with early success at Amtrol water business.
• Capital allocation priority: Reinvest in businesses, pursue disciplined acquisitions, then return capital via dividends and opportunistic buybacks.
• Management thanked the manufacturing workforce, noting 86% of employees work in manufacturing settings.