Executive Summary
Worthington Industries delivered a solid cash-generative QQ1 2025 despite a challenging macro backdrop characterized by high interest rates and a sluggish near-term demand environment. Reported revenue of $257.3 million declined 17.5% year over year, driven by the deconsolidation of the Sustainable Energy Solutions (SES) segment and softer volumes/mix in Building Products, partially offset by the addition of Hexagon Ragasco. Adjusted EBITDA reached $48.0 million, with trailing-twelve-month EBITDA of $234 million and a 19.6% TTM EBITDA margin, indicating a high-quality cash flow base even as GAAP operating income remained negative at $(4.7) million. Net income of $24.3 million and diluted EPS of $0.48–$0.50 reflect a combination of lower volumes, purchase accounting impacts from the Hexagon acquisition, and ongoing fixed-cost discipline. The balance sheet remains robust, with net debt of approximately $149 million and a trailing EBITDA ratio near 0.5x, supported by a $500 million undrawn revolver and $179 million of cash. Management signaled a disciplined strategic stance focused on M&A and innovation (Worthington Business System), with a measured approach to capital allocation given macro uncertainty. Management highlighted meaningful near-term drivers including: (1) continued integration of Hexagon Ragasco and the scalable Sustainable Energy Solutions JV, (2) modernization initiatives such as the Chilton facility, and (3) a strong qualitative outlook on large-scale projects in construction and data-center buildouts that could bolster ClarkDietrich’s addressable market. The company also underscored that destocking in heating and cooking segments has largely run its course and expects a seasonally stronger winter quarter.
Key Performance Indicators
QoQ: -19.29% | YoY:-78.44%
QoQ: -19.98% | YoY:-68.36%
QoQ: -196.09% | YoY:-106.05%
QoQ: 176.30% | YoY:-74.76%
QoQ: 176.56% | YoY:-75.13%
Key Insights
Revenue: $257.308 million, down 17.5% YoY from $312.0 million; Gross profit: $62.495 million (gross margin 24.29%), down from $70.0 million YoY; Operating income: $(4.70) million (margin -1.83%); EBITDA: $43.161 million (margin 16.77%); Net income: $24.253 million (net margin 9.42%); GAAP EPS: $0.49, Diluted EPS: $0.48; Adjusted EBITDA: $48.0 million; Trailing 12 months Adjusted EBITDA: $234 million; TTM EBITDA margin: 19.6%; Cash flow from operations: $41.146 million; Free cash flow: $31.517 mi...
Financial Highlights
Revenue: $257.308 million, down 17.5% YoY from $312.0 million; Gross profit: $62.495 million (gross margin 24.29%), down from $70.0 million YoY; Operating income: $(4.70) million (margin -1.83%); EBITDA: $43.161 million (margin 16.77%); Net income: $24.253 million (net margin 9.42%); GAAP EPS: $0.49, Diluted EPS: $0.48; Adjusted EBITDA: $48.0 million; Trailing 12 months Adjusted EBITDA: $234 million; TTM EBITDA margin: 19.6%; Cash flow from operations: $41.146 million; Free cash flow: $31.517 million; Capex: $9.629 million; Cash at period-end: $178.547 million; Total assets: $1.645 billion; Total debt: $327.528 million; Net debt: $148.981 million; Net debt to TTM EBITDA: ~0.5x; Undrawn revolver: $500 million.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
257.31M |
-78.44% |
-19.29% |
| Gross Profit |
62.50M |
-68.36% |
-19.98% |
| Operating Income |
-4.70M |
-106.05% |
-196.09% |
| Net Income |
24.25M |
-74.76% |
176.30% |
| EPS |
0.49 |
-75.13% |
176.56% |
Key Financial Ratios
operatingProfitMargin
-1.83%
operatingCashFlowPerShare
$0.83
freeCashFlowPerShare
$0.64
dividendPayoutRatio
33.5%
Management Commentary
Management and operations themes from the QQ1 2025 earnings call:
- Strategy and growth: 'The Worthington Business System of transformation, innovation and M&A will enable us to achieve accelerated growth and earnings.' Andy Rose emphasized a strong M&A pipeline and a focus on integrating sustainability tech into product lines. Hexagon Ragasco integration and the Sustainable Energy Solutions JV with Hexagon Composites have progressed well.
- Operating performance: 'ClarkDietrich down $8 million and the heating and cooking business… at the bottom of its post-COVID de-stocking cycle.' Management noted margin compression from steel price declines but highlighted improvement in other markets and stability in demand. Hexagon Ragasco contributed $16 million in sales and $2 million in EBITDA in Q1 (with $1.5 million of purchase accounting/deal costs not repeated).
- Market and product mix: WAVE continued to deliver strength with equity earnings of $28 million despite lower volumes in some segments; consumer products showed resilience with flat net sales and improved EBITDA margins year-over-year; building products saw pressure from heating/cooking mix and ClarkDietrich headwinds, though destocking is largely complete and winter quarters could be stronger.
- Balance sheet and capital allocation: The company ended the quarter with net debt to trailing EBITDA ~0.5x and $179 million of cash; undrawn $500 million revolver. Share repurchases totaled $9.96 million alongside $12 million from SES stake sale and $39 million in JV dividends. The board declared a $0.17 per share quarterly dividend for December 2024.
"Despite a tough environment of high interest rates and macroeconomic uncertainty, our team delivered another respectable quarter with adjusted EBITDA of $48 million and adjusted earnings per share of $0.50 versus $0.75 in the prior year."
— Andy Rose
"The Worthington Business System of transformation, innovation and M&A will enable us to achieve accelerated growth and earnings."
— Andy Rose
Forward Guidance
Management did not provide explicit EPS or revenue guidance for QQ2 QQ3 2025, but outlined a constructive near-term outlook driven by:
- Ongoing integration and scaling of Hexagon Ragasco within Building Products and the Sustainable Energy Solutions JV, with expected operating leverage as volumes normalize post-acquisition accounting adjustments.
- A continued M&A pipeline under the Worthington Business System, aimed at expanding market reach, accelerating product development, and embedding sustainable technologies.
- An anticipated improvement in demand as macro conditions stabilize and long-cycle projects (including data centers and large infrastructure) progress, aided by a potential moderation in interest rates and capital availability. Management cautioned that steel price volatility remains a factor, but fixed-price contracts and supplier relationships help mitigate near-term price risk.
- Monitoring of inventory and backlogs in ClarkDietrich and the heating segment. A normalization of steel prices and stabilization of contractor backlogs could unlock margin expansion in the near term. Investors should monitor: (1) progression of the Hexagon Ragasco and SES JV integration, (2) pipeline activity and execution of M&A opportunities, (3) stabilization of ClarkDietrich margins as steel prices stabilize, and (4) working capital dynamics tied to the heating and cooking businesses.