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Metal Fabrication — industry outlook

  • Period: 2026-09-23 to 2026-10-14
  • Events: 1
  • Generated: 2026-10-14T06:30:00.004Z

Data Center Thermal Management Expansion

Worthington Enterprises (WOR) identifies liquid cooling ASME tanks as a primary growth vector, noting engineered tank revenue reached $13M in Q1 FY27 with a pipeline suggesting the market size could be 10x the legacy market over the next few years. Management projects sequential growth in these revenues through the balance of fiscal 2027, weighted toward the back half, citing accelerating adoption of liquid cooling by hyperscalers and data center builders. The company views this trend as a multi-year opportunity and is investing in new equipment, engineering talent, and production capacity via a hybrid model of in-house expansion and partner manufacturing.

Steel Supply Constraints and Pricing Dynamics

Worthington Enterprises (WOR) reports a tight steel supply market with extended lead times and rising prices following the doubling of 232 tariffs, with visibility beyond the current calendar year described as limited. While production disruptions caused cost impacts amounting to "a few million dollars" in Q1, management expects to navigate supply constraints better than competitors through supplier relationships and footprint flexibility. To offset increased input costs and reflect value, the company has implemented pricing actions and intends to maintain pricing discipline in its Trade and Specialty Solutions segment.

A2L Refrigerant Inventory Normalization

Worthington Enterprises (WOR) characterizes the current decline in cooling and construction revenue as a temporary timing issue driven by A2L refrigerant inventory normalization rather than a structural demand drop. Management expects this trend to clear in Q3 and Q4, though fiscal 2027 Q2 remains a "difficult comparison" regarding cooling and construction revenue. Guidance on the magnitude of this comparison impact for Q2 was revised upward to approximately $7 million. Management anticipates long-term service and replacement opportunities emerging as the installed base of A2L equipment grows.

Construction Market Divergence

Worthington Enterprises (WOR) observes a bifurcation in the construction sector where new home sales are muted and channel inventories are right-sized, negatively impacting cooling and construction segments. Conversely, repair and remodel activity remains resilient due to low unemployment and an aging housing stock, while commercial construction activity outside of data centers is soft. Within commercial construction, water treatment and specialized building performance segments show strength, and end markets for the Wallace joint venture—specifically education, healthcare, transportation, and data centers—are stable, though retail and office sectors remain muted.