Breaking Down Worthington Industries, Inc. (WOR) Financial Health: Key Insights for Investors

You are looking at Worthington Industries, Inc. (WOR) and wondering if the recent operational strength is sustainable, especially with the macroeconomic uncertainty still in the air. The short answer is: their fiscal 2025 performance shows a deliberate, margin-focused pivot that is working. For the fourth quarter of fiscal 2025, the company reported adjusted earnings per share (EPS) of $1.06, a significant jump from the $0.74 in the prior year quarter, even as net sales remained nearly flat at $317.9 million. This tells you they are controlling what they can, driving adjusted EBITDA up 35% to $85.1 million, which is a clear signal of margin expansion (a good sign). Plus, they are putting cash to work: free cash flow surged 46% to $49.3 million, funding a 12% dividend increase to $0.19 per share and the strategic $93 million acquisition of Elgen Manufacturing in June 2025. This is a company with a current ratio of 3.56, showing strong liquidity, but the real question is how their Building Products and Consumer Products segments will navigate the next 12 months, particularly after the recent stock surge of 13.69% following their Q3 2025 earnings beat. Let's defintely dig into the segments to see where the next leg of growth comes from.

Revenue Analysis

You need to know where Worthington Industries, Inc. (WOR)'s sales are actually coming from, especially after the major corporate reorganization. The direct takeaway is that while the company's full fiscal year 2025 revenue saw a dip, the core segments showed resilience and growth in the back half of the year, largely offsetting the impact of a strategic divestiture.

For the fiscal year ending May 31, 2025, Worthington Industries, Inc. reported annual revenue of approximately $1.15 billion, representing a year-over-year decrease of about 7.38%. This decline wasn't just soft demand; it was primarily a structural change due to the deconsolidation of the former Sustainable Energy Solutions (SES) segment, which is now an unconsolidated joint venture. To be fair, SES contributed $39.9 million to the prior year's fourth-quarter revenue alone, so removing that chunk naturally skews the comparison.

Here's the quick math on the segment contributions for the latter half of the fiscal year, which shows where the real momentum is building:

The Building Products segment is defintely the growth engine right now. Its net sales jumped 25.2% to $192.3 million in the fourth quarter of fiscal 2025. This was driven by higher overall volumes and the contribution from the Hexagon Ragasco acquisition, which was completed in the first quarter of the fiscal year. That's a clear sign that strategic M&A (mergers and acquisitions) is starting to pay off.

The Consumer Products segment, which includes brands like Bernzomatic and Balloon Time, is holding steady. While Q4 net sales were essentially flat at $125.6 million, Q3 saw a respectable 4.9% increase to $139.7 million due to higher volumes. This segment operates in a more challenging macro environment, but a favorable product mix helped keep margins strong. It's a stable, cash-generative business, not a high-growth one.

Looking at the near-term, the company is actively shaping its revenue base through acquisitions. The June 2025 acquisition of Elgen Manufacturing, a designer of HVAC parts, is a clear move to bolster the already strong Building Products segment. This is a concrete action that maps to a clear opportunity: capitalizing on commercial construction demand.

The key risk, though, is that the historical five-year annualized sales rate declined by 16.2%, which is below industry standards. So, the recent growth in the continuing segments needs to be sustained to overcome that long-term trend. You can dive deeper into the forces driving these shifts by Exploring Worthington Industries, Inc. (WOR) Investor Profile: Who's Buying and Why?

• Building Products is the primary growth driver.
• Consumer Products provides steady, stable revenue.
• Divestiture masked underlying segment strength.

Profitability Metrics

You need to know if Worthington Industries, Inc. (WOR) is just moving metal or actually making money, and the fiscal 2025 numbers paint a clear picture of margin expansion driven by strategic shifts. The direct takeaway is that Worthington Industries, Inc.'s profitability, particularly its gross margin, is significantly outperforming the core Primary Metal Industries sector average, which points to a successful pivot toward higher-value products.

For the third quarter of fiscal 2025, which ended February 28, 2025, Worthington Industries, Inc. reported consolidated net sales of $304.5 million. This revenue translated into a robust set of profitability margins, especially when you consider the volatility in the broader steel and manufacturing markets.

Here's the quick math on the core profitability ratios for that quarter:

• Gross Profit: $89.11 million, giving a Gross Profit Margin of 29.3%.
• Operating Profit: $20.86 million, resulting in a GAAP Operating Margin of 6.85%.
• Net Profit: $39.7 million, for a Net Profit Margin of approximately 13.04%.

The gross margin is defintely the star here. It's what's left after the Cost of Goods Sold (COGS) is paid, and it shows the company has strong pricing power and cost control in its product mix. This is a key indicator of operational efficiency.

Profitability Trends and Operational Efficiency

The trend over fiscal 2025 shows a sharp turnaround in the company's underlying profitability. The full trailing-twelve-month (TTM) net profit margin recently jumped to 8.9%, a huge leap from 2.4% a year earlier. This growth isn't accidental; it's a direct result of management's focus on operational efficiency and strategic acquisitions.

Management is driving this margin expansion through several clear actions:

• Higher-Margin Acquisitions: Integrating businesses like Ragasco, which contributes to the Consumer Products segment, and Elgen Manufacturing, which bolsters the Building Products segment, pushes the overall margin higher.
• Cost Management: The Q4 2025 results showed a significant 35% jump in adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) to $85.1 million, despite sales being nearly flat at $317.9 million. That's a pure efficiency play.
• Modernization: Ongoing facility modernization and automation projects are reducing production costs over time, which directly improves the gross margin.

You can see the long-term strategic direction in the company's core values and focus on value-added solutions. For more on that, check out their Mission Statement, Vision, & Core Values of Worthington Industries, Inc. (WOR).

Comparison to Industry Averages

When you compare Worthington Industries, Inc.'s margins to the industry median, the company's strategic shift to value-added products and away from pure steel commodity processing shines. The Primary Metal Industries median is a tough, low-margin business, but Worthington Industries, Inc. is operating well above that baseline.

Here is how Worthington Industries, Inc.'s Q3 Fiscal 2025 performance stacks up against the median for the Primary Metal Industries sector and a key competitor, Steel Dynamics (STLD), for context:

What this comparison tells you is critical: Worthington Industries, Inc. is achieving a Gross Margin that is nearly double the industry median and more than double a major competitor like Steel Dynamics. This shows superior pricing power and a lower Cost of Goods Sold relative to their revenue, which is the whole point of a diversified manufacturing strategy. The Operating Margin is slightly below the median, but that's largely due to non-cash write-downs and higher Selling, General, and Administrative (SG&A) expenses from integrating new acquisitions and investing in modernization. This is a short-term investment for a long-term profit gain.

Action Item: Focus your next analysis on the SG&A line item to confirm the new acquisitions are integrating smoothly and that the non-cash charges are truly one-off events, not a sign of underlying asset quality issues.

Debt vs. Equity Structure

You are looking at Worthington Industries, Inc. (WOR)'s balance sheet to gauge its financial risk, and the short answer is that the company maintains a very conservative, equity-heavy financing structure. This is a deliberate, low-leverage approach that provides a substantial cushion against economic downturns, especially for a capital-intensive industrial manufacturer.

The company's debt-to-equity (D/E) ratio for the fiscal year ending May 2025 was approximately 34.8% (or 0.348). This is a five-year low for the company and is significantly below the average for the broader Diversified Metals & Mining industry, which typically sits around 0.45, and the Metal Mining median of 0.41. That's a strong signal of financial discipline.

Here's the quick math on Worthington Industries, Inc.'s debt profile as of the fiscal year-end:

• Total Debt: $302.9 million.
• Short-Term Debt: $0.
• Available Revolver: $500.0 million (with no borrowings).

The total debt of $302.9 million is composed entirely of long-term debt, which is a key stability factor. They have virtually no short-term debt to worry about, meaning no immediate, pressing principal payments are due within the next year, which is a very clean balance sheet. The company also ended the fiscal year with $500.0 million available on its revolving credit facility, which is dry powder for opportunistic acquisitions or weathering a sharp industry slowdown.

The company's approach clearly favors equity funding and retained earnings over debt financing, a long-term strategy that has served it well. To be fair, this conservative stance can sometimes mean a lower Return on Equity (ROE) compared to highly leveraged peers, but it dramatically reduces the risk of default. The only recent movement in their debt was a minor increase of $4.7 million, which was simply a remeasurement of their euro-denominated notes, not new borrowing to fund operations.

Following the spin-off of Worthington Steel in late 2023, S&P Global Ratings affirmed an investment-grade issuer credit rating of 'BBB-' with a Stable Outlook. This rating, while a slight downgrade post-separation, still confirms the market's view that Worthington Industries, Inc. will maintain a conservative financial policy with leverage remaining low. This financial strength is defintely a core part of their strategy, which you can see reflected in their long-term goals outlined in the Mission Statement, Vision, & Core Values of Worthington Industries, Inc. (WOR).

Liquidity and Solvency

You need to know if Worthington Industries, Inc. (WOR) can cover its near-term obligations, especially in a choppy economic environment. The short answer is a resounding yes. Their liquidity position is defintely strong, backed by high cash reserves and ample credit availability, a clear sign of conservative balance sheet management.

Assessing Worthington Industries, Inc. (WOR)'s Liquidity

When I look at a company's immediate financial health, I start with the current and quick ratios. These are your essential gauges of liquidity (the ability to meet short-term debt). For Worthington Industries, Inc. (WOR), the numbers for the most recent reporting period in fiscal year 2025 are excellent.

• Current Ratio: The company's current ratio sits at approximately 3.30. This means Worthington Industries, Inc. (WOR) has $3.30 in current assets (cash, receivables, inventory) for every $1.00 of current liabilities. Anything over 2.0 is generally considered very healthy.
• Quick Ratio: The quick ratio (or acid-test ratio), which strips out inventory-the least liquid current asset-is around 2.03. This is a fantastic number for an industrial manufacturer; they can cover all their immediate debts using only cash and receivables.

The working capital trend is also overwhelmingly positive. The high ratios mean the company has a significant buffer of working capital (current assets minus current liabilities). This is a strong indicator of operational efficiency and financial flexibility. Plus, they ended their fiscal year 2025 with cash and cash equivalents of over $250.1 million. That's a lot of dry powder.

Cash Flow Statement Overview and Strength

Cash flow tells the real story of financial strength, showing where money is actually coming from and where it's going. For the full fiscal year 2025, Worthington Industries, Inc. (WOR) demonstrated solid cash generation, even while funding strategic investments and returning capital to shareholders. This is a sign of a high-quality business model. Exploring Worthington Industries, Inc. (WOR) Investor Profile: Who's Buying and Why?

Here's the quick math on their three core cash flow activities for the 2025 fiscal year:

The net result is a clear picture of financial strength. The cash flow from operations (CFO) is more than enough to cover the capital expenditures and strategic acquisitions, which is the definition of healthy free cash flow. They have no potential liquidity concerns in the near-term. In fact, they have a massive safety net with a revolving credit facility of $500.0 million that was completely undrawn as of May 31, 2025.

Next Action: Portfolio Manager: Model a worst-case scenario where operating cash flow drops by 30% to confirm the $500 million credit line still provides a 12-month liquidity runway by the end of next quarter.

Valuation Analysis

You're looking at Worthington Industries, Inc. (WOR) and wondering if the market has gotten ahead of itself, especially after the stock's strong run. The short answer is that, based on current earnings, the stock looks pricey, but a forward-looking view suggests it's closer to being fairly valued. This is a classic industrial stock story: a high trailing multiple that gets rationalized by expected growth in the near term.

The key valuation multiples tell a mixed story for the 2025 fiscal year. The current Price-to-Earnings (P/E) ratio sits at about 24.31, which is notably higher than its 10-year historical average of 16.92. This suggests that, on a trailing basis, investors are paying a premium for every dollar of the company's past earnings. Here's the quick math on the major metrics:

• Trailing P/E Ratio: 24.31 (Significantly above its 10-year average.)
• Price-to-Book (P/B) Ratio: 2.72 (About 23% higher than its 5-year average of 2.21.)
• Enterprise Value-to-EBITDA (EV/EBITDA): 24.9x (A high figure, but the 1-year forward EV/EBITDA drops sharply to 9.24x, which is a much more reasonable 'Fairly Valued' range.)

The high trailing EV/EBITDA of 24.9x is a red flag, but the forward multiple of 9.24x indicates analysts are defintely pricing in a significant jump in earnings before interest, taxes, depreciation, and amortization (EBITDA) over the next 12 months. That's the core of the bull case right now.

The stock's performance over the last year has been impressive, which contributes to the stretched trailing multiples. Over the last 12 months, Worthington Industries, Inc. (WOR)'s stock price has climbed by over 34.27%, trading recently around the $54.27 mark. The 52-week trading range is wide, spanning from a low of $37.88 to a high of $70.91, showing significant volatility and a clear upward trend. This upward momentum is why the current valuation looks elevated-the price has moved faster than the reported trailing earnings.

From an income perspective, Worthington Industries, Inc. (WOR) offers a modest but sustainable dividend. The annual dividend payout is approximately $0.76 per share, translating to a dividend yield of about 1.45%. The payout ratio is a healthy 32.4%, which means the company is only using about a third of its earnings to cover the dividend, leaving plenty of room for reinvestment or future dividend growth.

Finally, Wall Street's consensus remains positive, which is a strong near-term signal. The analyst community, based on ratings from multiple firms, has a 'Moderate Buy' consensus on Worthington Industries, Inc. (WOR). Their average 12-month price target is set at approximately $68.50, suggesting a potential upside of over 20% from the current price. You can dive deeper into who is driving that consensus by Exploring Worthington Industries, Inc. (WOR) Investor Profile: Who's Buying and Why?

What this estimate hides is the risk in the commercial construction sector, where growth forecasts have been trimmed from 4-5% to about 3% for 2024, which could temper the expected EBITDA growth. So, while the forward multiples look good, you need to watch those segment-specific headwinds closely.

Risk Factors

You're looking at Worthington Industries, Inc. (WOR) and seeing a company that closed fiscal 2025 with strong bottom-line results-Adjusted EBITDA hit $85.1 million in Q4 2025, up 35% year-over-year. That's great, but a seasoned analyst knows to look past the headline numbers to the structural risks. The biggest takeaway here is that while management is executing well on efficiency, external market forces and long-term trends are creating significant headwinds you need to factor into your valuation.

The primary external risks for Worthington Industries, Inc. (WOR) center on the cyclical nature of its end markets and the current economic climate. The company's exposure to the commercial construction sector is a near-term worry. Analysts have already seen growth forecasts in that space reduced, which could impact future revenue for the Building Products segment. Plus, like many industrial manufacturers, Worthington Industries, Inc. (WOR) is directly exposed to the volatility of raw material pricing and availability, inflation, and interest rate increases. These factors directly squeeze margins, even if volume holds up.

On the internal and operational side, the long-term sales trend is a red flag. Honestly, sales have tumbled by an average of 16.2% annually over the last five years, which signals that market trends are working against the company over the long haul. This is a structural issue, not a one-off. Also, the combination of declining product selling prices and rising overhead costs, particularly in the lumber segment, poses a clear risk of low or even negative profits in certain product lines. Diminishing returns on capital from an already low starting point suggest that some past strategic bets haven't paid off as planned.

Here's the quick math on the financial position: Worthington Industries, Inc. (WOR) finished fiscal 2025 with total debt of $302.9 million. While they have strong liquidity, with $500.0 million available on their revolving credit facility as of May 31, 2025, the debt load still needs careful management in a high-interest-rate environment. You can see how the company is managing this trade-off by reviewing the full context in Breaking Down Worthington Industries, Inc. (WOR) Financial Health: Key Insights for Investors.

Management is defintely not sitting still, though. Their mitigation strategy is clear: focus on operational efficiency, facility modernization, and strategic mergers & acquisitions (M&A). For instance, they completed the acquisition of Elgen Manufacturing for approximately $93 million in June 2025 to bolster their HVAC components business, a move aimed at higher-margin growth. They are also concentrating on higher-margin products and cost management to counter the market pressures, which is why Adjusted EPS grew to $1.06 in Q4 2025.

The key risks for your investment thesis are:

• Market Slowdown: Reduced commercial construction growth forecasts.
• Margin Compression: Raw material cost inflation versus pressure on selling prices.
• Long-Term Trend: Five-year annual sales decline of 16.2%.
• Execution Risk: Successful integration of new acquisitions like Elgen Manufacturing.

The company's strong free cash flow of $49.3 million in Q4 2025 gives them a cushion to execute their strategy, but the market risks are real and near-term.

Growth Opportunities

You're looking past the last earnings report, which is smart; the real money is made by understanding the next three years, not the last three months. Worthington Industries, Inc. (WOR) is defintely positioning itself for a growth acceleration, even though its full-year fiscal 2025 revenue was down 7.4% to US$1.15 billion compared to the prior year. The key takeaway is that strategic shifts are driving margin expansion and future earnings, not just top-line volume.

The market is already projecting a rebound, with revenue forecast to grow at an average of 6.1% per annum over the next three years, outpacing the 4.3% growth expected for the US Machinery industry. For the near term, analysts are even more bullish, expecting revenue to grow by 10.4% over the next 12 months. This optimism is grounded in a focused strategy of targeted acquisitions and high-margin product innovation.

Strategic Acquisitions and Product Innovations

Worthington Industries, Inc.'s growth strategy is built on two pillars: buying niche market leaders and developing next-generation products. The acquisition of Elgen Manufacturing in June 2025 for approximately $93 million is a prime example. Elgen, a designer of HVAC parts and components, immediately bolsters the Building Products segment, which already contributed $654.1 million (57% of total TTM revenue) in fiscal 2025. This move is not just about scale; it's a direct play to capitalize on the green energy transition by expanding their offerings for commercial buildings.

On the innovation front, the company is using new product launches to grab market share. The introduction of A2L refrigerant cylinders is critical, as these are necessary for new, lower-Global Warming Potential (GWP) refrigerants mandated by environmental regulations. Other successful launches like Balloon Time Mini and Halo Griddles show their ability to innovate across the Consumer Products segment as well.

• Targeted M&A: Acquired Elgen Manufacturing for HVAC components.
• High-Value Products: Launched A2L refrigerant cylinders for new market standards.
• Operational Focus: Expanding the 80/20 initiative to boost efficiency.

Competitive Edge and Financial Discipline

Worthington Industries, Inc. holds a significant competitive advantage (economic moat) through its established portfolio of market-leading brands and a business model that generates high free cash flow. In fiscal 2025, the company generated a strong $159 million in free cash flow, underscoring its financial discipline. The company's management is focused on expanding adjusted EBITDA margins to a target of above 30%, a goal they are pursuing through operational improvements and a shift toward higher-margin products.

The company's balance sheet also provides a cushion and flexibility for more acquisitions. They ended the first quarter of fiscal 2026 with a low net debt to trailing adjusted EBITDA ratio of approximately a half turn. This financial strength allows them to continue their capital allocation priorities, including a 12% dividend increase to $0.19 per share in the fourth quarter of fiscal 2025. That's a clear signal of management's confidence in their future cash flow. You can dive deeper into who is betting on this strategy by Exploring Worthington Industries, Inc. (WOR) Investor Profile: Who's Buying and Why?