Tariffs pressure consumers but boost Worthington Enterprises' domestic edge

Consumer Products: Modest growth in cautious spending environment

On the consumer side, Worthington’s brands, spanning outdoor living, celebration, and tools, held their ground in a cautious retail climate. Sales edged up with a favorable mix, but volumes softened and tariff costs pinched margins, according to executives speaking on a conference call Wednesday to discuss quarterly earnings results.

Even so, the company said distribution wins are stacking up: its Balloon Time Mini helium tanks are expanding shelf space at CVS, Walgreens, and Target, while its HALO griddles deepen placement at Walmart ahead of the 2026 spring season.

“The broader consumer environment remains cautious, and demand continues to be closely correlated to point-of-sale activities,” President and CEO Joe Hayek commented on the call.

“Our brands are strong, our channels are stable, and our products are not large ticket items. They are affordable, essential, and play a meaningful role in elevating everyday experiences around outdoor living, celebration, and home improvement,” he added.

Building Products: Strong performance on HVAC momentum

The Building Products segment experienced volume growth, with revenue surging 32% year-over-year to $185 million. Adjusted EBITDA hit 31.3%, helped by strong execution in cooling, construction, heating, and cooking.

The June acquisition of Elgen Manufacturing, which expanded Worthington’s commercial HVAC and building envelope reach, also contributed to the growth.

“The commercial HVAC market, we believe, is attractive, and it’s resilient over time, providing above-GDP type growth,” noted CFO Colin Souza.

A shift to lower-GWP refrigerants is fueling demand for A2L cylinders. Worthington’s Paducah, Ky., plant nearly tripled output to 900,000 units last year.

“It’s those kinds of market-driven opportunities that we’re trying really hard to take advantage of, and that’s what you’re really seeing in a lot of momentum in building products,” Hayek noted.

The segment additionally benefited from rising contributions from the company’s WAVE joint venture, which specializes in suspended ceiling systems. Executives said WAVE continues to thrive in institutional end markets, including education, healthcare, transportation, and data centers.

On the tariff front

“Tariffs are complex for everybody,” Hayek said on the call, noting multiple touch points for the Columbus, Ohio-based manufacturer.

On one hand, tariffs raise landed costs for imported consumer goods, including Consumer Product tools that the company has manufactured offshore. Noting near-term pressure margin, Souza said the company had to “write a check for a couple million dollars in the quarter to Uncle Sam.”

On the other hand, tariffs tighten price gaps where Worthington is the primary or only domestic manufacturer, sharpening competitiveness against imports.

“Having a more level playing field with respect to pricing is helpful,” Hayek said, adding that domestic supply chains and ease of doing business are winning themes as customers prize reliability.

Outlook

Worthington sees healthy, seasonally stronger volumes in the back half of the year for its Building Products segment, with A2L adoption offering a runway beyond just a one-year bump.

It also expects consumer volumes to stabilize as retailer sell-through normalizes and distribution expands.

“Even though reshoring is a priority, people are still a little hesitant to spend money and to put things into the ground and to invest in capex,” Hayek commented.

He noted that hesitant consumers might be less willing to stay at a hotel or travel internationally, but they are more likely to spend more time camping and being outdoors in nature. And for Worthington Enterprises, that translates into more cylinder sales.

Should the economy worsen further, Hayek believes, “We’ll do just fine, and probably outperform.”