Worthington Industries delivered a resilient QQ3 2025 performance, supported by strategic acquisitions and ongoing transformation initiatives. Consolidated net sales reached $304.5 million, down 3.9% YoY primarily due to the deconsolidation of the Sustainable Energy Solutions (SES) segment, which contributed $35 million in the prior-year period. Excluding SES, revenues grew over 8%, aided by the Ragasco acquisition and higher volumes. Gross margin expanded to 29.3% (up ~620 basis points YoY), with a GAAP operating margin of 6.85% and adjusted EBITDA margin above 24%. Net income was $39.7 million, and GAAP earnings per share (EPS) were $0.80, with adjusted ongoing earnings of $0.91 per share excluding restructuring charges and legacy items. Free cash flow stood at $44.4 million for the quarter, and trailing-12-month free cash flow reached $144 million, reflecting a 104% FCF conversion relative to adjusted net earnings.
Segment dynamics show Consumer Products delivering 5% net sales growth to $140 million and Building Products up 11% to $165 million, underpinned by share gains, favorable product mix, and the Ragasco contribution. However, equity earnings from joint ventures moderated YoY due to ClarkDietrich margin compression from lower steel prices, while WAVE remained steady in a flat market. Management underscored a continuing program of automation, AI adoption, and facility modernization, with early results from transformative initiatives such as 80/20 targeting in the Water segment and ongoing capacity to pursue accretive acquisitions. The company ended the quarter with a healthy balance sheet, reporting $223 million cash, $294 million long-term debt, and net debt of $71 million, with a leverage ratio of ~0.25x trailing EBITDA and an undrawn $500 million credit facility. Management signaled continued focus on M&A and a balanced capital strategy, including a quarterly dividend of $0.17 per share and a $6 million buyback of 150,000 shares.
Looking ahead, management highlighted that Q4 tends to be seasonally stronger and reiterated a target to sustain margins in the high-20s with an aspirational long-term gross margin near 30% and SG&A in the mid-60% range as a percentage of sales, supported by ongoing cost takeout and productivity programs. The company expects to fund capex (~$50 million in the next 6â8 quarters, most of which will occur in fiscal 2026) through cash flow as it advances modernization projects and seeks accretive bolt-on acquisitions. Overall, Worthington remains well-positioned in the Industrials space, with a diversified portfolio, strong cash generation, and a disciplined pursuit of growth through organic expansion and M&A.