Sep 23, 2026 earnings call — Data center ASME tanks drive organic growth
In Q1 the company generated an additional $13 million of ASME tank revenue, matching fiscal '26 shipments.
Revenue $0.3B (est $0.3B) · EPS $0.82 (est $0.75)
Key quotes
"Engineered tanks like ours help manage the cooling fluids used in liquid cooling systems and as such, are a critical component of those data centers and the cooling infrastructure."
"Free cash flow remains one of our most important operating metrics and Q1 demonstrated the strength of our cash generation."
"We estimate the year-over-year impact to adjusted EBITDA this quarter was approximately $7 million, which is more than we anticipated a quarter ago."
Analyst Q&A 6
tight steel market and WAVE performance
Q (Brian Biros · Thompson Research Group): Where does the steel market stand today and what can Worthington do better than competitors to navigate it? Also, what drove WAVE's 8% gain and is data center demand part of it?
A: Management said the steel market has tightened with longer lead times and higher prices. They said Worthington is a sophisticated buyer with strong supplier relationships and a broad manufacturing footprint to manage constrained supply, and that WAVE delivered record equity income of $35 million with healthy end markets like data centers, education and healthcare, though Q2 may moderate seasonally.
"We have very strong supplier relationships, and we have a broad manufacturing footprint, gives us additional options to manage through periods of constrained supply." — Joseph Hayek (CEO)
ASME tanks and capacity plans
Q (Walter Liptak · Seaport): How was the quarter for the data center ASME tanks — any ramp costs or productivity issues — and can you get visibility to the $13 million per quarter run rate? Also, what capacity and engineering actions are you taking?
A: Management said ASME tanks are used for liquid cooling and they hit $13 million in Q1. They expect sequential growth in Q2–Q4 with more growth in the back half of the year, see the market as developing with variability, and are investing in engineering, equipment, production capacity and manufacturing partners.
"We do think that we should grow sequentially in Q2, Q3 and Q4, more of that growth being weighted on the back half of the year, the back part of the year." — Joseph Hayek (CEO)
consumer demand and acquisitions
Q (Susan Maklari · Goldman Sachs): What are you seeing in the consumer/home-related end markets and what does that imply for near-term growth? Also, how are the recent acquisitions integrating and what is the M&A pipeline outlook?
A: Management said Trade and Specialty demand has been steady with repairs and remodeling resilient, good pricing discipline, and new products expected in the back half of the fiscal year. They said the M&A pipeline is healthy, they have financial flexibility, and the recent acquisitions (Elgen and LSI) contributed approximately $19 million of sales in Q1 with ongoing integration work.
"In the quarter, the acquisitions contributed approximately $19 million of sales just in Q1." — Colin Souza (CFO)
working capital moves and A2L inventory impact
Q (Walter Liptak · Seaport): What programs improved working capital and was the cash inflow one-time or sustainable? Also, how long will the A2L-related inventory correction take to clear and when will comps turn positive?
A: Management said working capital improvements are intentional and sustainable, with the cash conversion cycle down about 8–9 days and net working capital as a percent of sales down nearly 3%, supporting ongoing free cash flow generation. On A2L, they said the prior-year build created a tough comparison, estimated an approximately $7 million hit to adjusted EBITDA this quarter, expect Q2 to remain difficult but normalization in Q3–Q4, and view it as a timing/comparison issue rather than a long-term change.
"And we estimate the year-over-year impact to adjusted EBITDA this quarter was approximately $7 million, which is more than we anticipated a quarter ago." — Colin Souza (CFO)
data center demand beyond ASME tanks
Q (Brian McNamara · Canaccord Genuity): Can you quantify growth in data centers outside ASME tanks (WAVE, Elgen, LSI)? Are you bundling solutions or selling a la carte, and is the overall data center business multiplying this year?
A: Management said many Worthington businesses (WAVE, ClarkDietrich, Elgen, LSI) serve data centers and that revenues are growing with the proliferation of data centers. They said bundling would be an overstatement but cross-value-stream collaboration and referrals are increasing, and the ASME tanks growth suggests the broader market is accelerating.
"Across those value streams, data centers are a very important part of the growth that we're seeing." — Joseph Hayek (CEO)
Trade & Specialty drivers and steel costs
Q (Will Gildea · CJS): What parts of Trade and Specialty showed strength this quarter? And how quickly can you mitigate raw material cost headwinds, and will that headwind worsen or improve?
A: Management said Trade and Specialty sales rose about 8% from higher volumes and selling prices, with portable propane and tools notably strong due to higher volumes, expanded distribution and pricing; Balloon Time volumes lagged due to a strong prior year. On raw materials, they said steel is more expensive than a year ago, they have taken price actions and will use supplier relationships and optionality to address costs, and they expect to be in better shape near term while raw materials remain more expensive overall.
"Sales increased approximately 8%, driven by a combination of higher overall volumes and selling prices." — Colin Souza (CFO)