WOR 10-K & 10-Q changes, risk factors and insider trading

Our net sales are heavily concentrated in the consumer products and construction end markets, including residential and non-residential construction, and repair and remodel, and a decline in those end markets may have an adverse impact on our results of operations and cash flows. The consumer products and construction industries account for a significant portion of our net sales, and reduced demand from these industries could adversely affect our business. An overallA downturn in the general economy, a disruption in capital and credit markets, high inflation, high unemployment, reduced consumer confidence or other factors, could cause reductions in demand from our end markets in general and, in particular, the consumer products and construction end markets. If demand for the products we sell to the end markets which we supply were to be reduced, our sales, financial results and cash flows could be negatively affected.

Financial difficulties and bankruptcy filings by our customers could have an adverse impact on our businesses. The financial difficulties of certain customers and/or their failure to obtain credit or otherwise improve their overall financial condition could result in changes within the markets we serve, including plant closings, decreased production, reduced demand, changes in product mix, unfavorable changes in the prices, terms or conditions we are able to obtain and other changes that may result in decreased purchases from us and otherwise negatively impact our businesses. These conditions also increase the risk that our customers may delay or default on their payment obligations to us. If the general economy or any of our markets decline, the risk of bankruptcy filings by and financial difficulties of our customers may increase. While we have taken and will continue to take steps intended to mitigate the impact of financial difficulties and potential bankruptcy filings by our customers, these matters could have a negative impact on our businesses.

Our operating results may be adversely affected by continued volatility in steel prices. Over the past threeseveral years, steel prices have increasedexperienced significantlysignificant duevolatility todriven by supplier consolidation, tighttrade millpolicy orders due to the COVID-19 pandemic, the war in Ukrainedevelopments, and tariffsglobal onmacroeconomic foreign steel.conditions. More recently, thean volatilityevolving intariff theenvironment has been a particularly significant driver of domestic steel marketpricing, resultedas inreduced access to competitively priced imported steel priceshas rapidlycontributed decreasingto beforeunpredictable increasingdomestic again.price levels. If steel prices or other raw material prices were to decrease, competitive conditions or contractual obligations may impact how quickly we must reduce our prices to our customers, and we could be forced to use higher-priced raw materials then on hand to complete orders for which the selling prices have decreased. This could result in losses or a write-down of the value of our inventory, and our financial results could be adversely affected.

Our operating results may be affected by fluctuations in raw material prices and our ability to pass on increases in raw material costs to our customers. Our principal raw material is flat-rolled steel, which we purchase from multiple primary steel producers. Our businesses also utilize aluminum, propane, copper and other materials. The steel industry as a whole has been cyclical, and at times availability and pricing can be volatile due to a number of factors beyond our control. These factors include general economic conditions, domestic and worldwide supply and demand, high inflation, the influence of hedge funds and other investment funds participating in commodity markets, curtailed production from major suppliers due to factors such as the closing or idling of facilities, pandemics, international conflicts, accidents or equipment breakdowns, repairs or catastrophic events, labor costs, shortages, strikes or other problems, competition, new laws and regulations, import duties, tariffs, energy costs, availability and cost of steel inputs (e.g., ore, scrap, coal and energy), foreign currency exchange rates and other factors described in the immediately following paragraph. This volatility, as well as any increases in raw material costs, could significantly affect our steel costs and adversely impact our financial results. To manage our exposure to market risk, where possible, we match our customer pricing terms to the pricing terms offered to us by our suppliers in order to minimize the impact of market fluctuations on our margins. However, should our suppliers increase the prices of our critical raw materials, we may not have alternative sources of supply. In addition, in an environment of increasing prices for steel and other raw materials, competitive conditions or contractual obligations may impact how much of the price increases we can pass on to our customers. To the extent we are unable to pass on future price increases in our raw materials to our customers, our financial results could be adversely affected.

Many of our key end markets, such as residential and non-residential construction, repair and remodel, general consumer, and outdoor living are cyclicalinfluenced inby nature.consumer spending, interest rates, and broader economic conditions. Many of our key end markets are cyclical and can be impacted by both market demand and raw material supply, particularly with respect to steel. The demand for our products is directly related to, and quickly impacted by, customer demand in our end markets, which can change as the result of changes in the general U.S. or global economies and other factors beyond our control. Adverse changes in demand or pricing can have a negative effect on our businesses and results of operations.

The closing or idling of steel manufacturing facilities could have a negative impact on us. As steel makers have reduced their production capacities by closing or idling production lines, whether due to thegeopolitical war in Ukraineconflict or otherwise, the number of facilities from which we can purchase steel, in particular certain specialty steels, has decreased. Accordingly, if delivery from a supplier is disrupted, particularly with respect to certain types of specialty steel, it may be more difficult to obtain an alternate supply than in the past. These closures and disruptions could also have an adverse effect on our suppliers’ on-time delivery performance, which could have an adverse effect on our ability to meet our own delivery commitments and may have other adverse effects on our businesses.

The loss of key supplier relationships could adversely affect us. Over the years, we have developed relationships with certain steel and other suppliers which have been beneficial to us by providing more assured delivery and a more favorable all-in cost, which includes price and shipping costs. If any of those relationships were disrupted, it could have an adverse effect on delivery times and the overall cost, quality and availability of our products or raw materials, which could have a negative impact on our businesses. If, in the future, we are unable to obtain sufficient amounts of raw materials at competitive prices and on a timely basis from our traditional suppliers, we may be unable to obtain these materials from alternative sources at competitive prices to meet our delivery schedules, which could have a material adverse impact on our results of operations.

We face intense competition which may cause decreased demand, decreased market share and/or reduced prices for our products and services, which could have an adverse effect on our financial results. Our businesses operate in industries that are highly competitive and have been subject to increasing consolidation of customers. Because of the range of the products and services we sell and the variety of markets we serve, we encounter a wide variety of domestic and foreign competitors in all major markets. Competition for most of our products is primarily on the basis of price, product quality and our ability to meet delivery requirements. Competition may also be based on product innovation, breadth of product offering, and service levels. If we fail to develop, source or commercialize new or enhanced products and solutions, or if competitors are more successful in doing so, our market position and financial results could be adversely affected. Our failure to compete effectively and/or pricing pressures resulting from competition may adversely impact our businesses and financial results. Depending on a variety of factors, including raw material, energy, labor and capital costs, freight availability, government control of foreign currency exchange rates and government subsidies of foreign steel producers or competitors, our businesses may be materially adversely affected by competitive forces. Competition may also increase if suppliers to our customers begin to more directly compete with our businesses through new facilities, acquisitions or otherwise. As noted above, we can have conflicts with our customers or suppliers who, in some cases, supply the same products and services as we do. Increased competition could cause us to lose market share, increase expenditures, lower our margins or offer additional services at a higher cost to us, which could adversely impact our businesses and financial results.

ThePandemics, COVID-19 pandemic, as well as similar pandemicsepidemics and other public health emergencies in the future, could have a material adverse effect on our business financial position, results of operations and cash flows. Our operations expose us to risks associated with pandemics, epidemics and other public health emergencies, such as the COVID-19 pandemic.emergencies. The impacts of public health emergencies may include, without limitation, potential significant volatility or continued decreases in the demand for our products, changes in customer and consumer behavior and preferences, disruptions in or additional closures of our manufacturing operations or those of our customers and suppliers, disruptions within our supply chain, limitations on our employees’ ability to work and travel, potential financial difficulties of customers and suppliers, significant changes in economic or political conditions, and related volatility in the financial and commodity markets, including volatility in raw material and other input costs. Future disruption to the global economy, as well as to the end markets our business serves, could result in material adverse effects on our business, financial position, results of operations and cash flows.

Economic, political and other risks associated with foreign operations could adversely affect our financial results. Although the substantial majority of our business activity takes place in the U.S., we derive a portion of our revenues and earnings from operations in foreign countries, and we are subject to risks associated with doing business internationally. We have wholly-owned facilities in Portugal and Norway, and joint venture facilities in Austria, Germany and PolandAustria and are active in exploring other foreign opportunities. The risks of doing business in foreign countries include, among other factors: the potential for adverse changes in the local political climate, in diplomatic relations between foreign countries and the U.S. or in government policies, laws or regulations; international conflicts; terrorist activity that may cause social disruption; logistical and communications challenges; costs of complying with a variety of laws and regulations; difficulty in staffing and managing geographically diverse operations; deterioration of foreign economic conditions; inflation and fluctuations in interest rates; foreign currency exchange rate fluctuations; foreign exchange restrictions; differing local business practices and cultural considerations; restrictions on imports and exports or sources of supply, including energy and raw materials; changes in duties, quotas, tariffs, taxes or other protectionist measures; and potential issues related to matters covered by the Foreign Corrupt Practices Act, regulations related to import/export controls, the Office of Foreign Assets Control sanctions program, anti-boycott provisions or similar laws. We believe that our business activities outside of the U.S. involve a higher degree of risk than our domestic activities, and any one or more of these factors could adversely affect our operating results and financial condition. In addition, global and regional economic conditions and the volatility of worldwide capital and credit markets have significantly impacted and may continue to significantly impact our foreign customers and markets. These factors may result in decreased demand in our foreign operations and have had significant negative impacts on our business. Refer to the “General Economic or Industry Downturns and Weakness” risk factors herein for additional information concerning the impact of the global economic conditions and the volatility of capital and credit markets on our business.

Our business requires capital investment and maintenance expenditures, and our capital resources may not be adequate to provide for all of our cash requirements. Many of our operations are capital intensive. For the five-year period ended May 31, 2025,2026, our total capital expenditures, including acquisitions and investment activity, were approximately $604,623.$727,035. Additionally, as of May 31, 2025,2026, we were obligated to make aggregate operating and financing lease payments of $26,318$54,124 and $6,329,$9,515, respectively, under lease agreements. Our businesses also require expenditures for maintenance of our facilities. We currently believe that we have adequate resources (including cash and cash equivalents, cash provided by operating activities, and availability under the Credit Facility) to meet our cash needs for normal operating costs, capital expenditures, debt repayments, dividend payments, future acquisitions and working capital for our existing businesses. However, given the potential for challenges, uncertainty and volatility in the domestic and global economies and financial markets, there can be no assurance that our capital resources will be adequate to provide for all of our cash requirements.

The loss of senior management or other key employees, or effective succession planning strategies may have a material adverse impact on our business. We cannot ensure that we will be able to retain our existing senior management personnel or other key employees or attract additional qualified personnel when needed. The loss of any member of our management team and the failure to find qualified replacements and effectively transition any successors could adversely impact our business and operations. We have not entered into any formal employment contracts with or other stand-alone change in control agreements relative to our executive officers. However, we do have certain change in control provisions in our various compensation plans. We may modify our management structure from time to time or reduce our overall workforce, which may create marketing, operational and other business risks.

Our operations have historically been subject to seasonal fluctuations that may impact our cash flows for a particular period. Our sales are generally strongest in the third and fourth quarter of the fiscal year for our Consumer Products operating segment when our facilities perform at seasonal peaks, matching consumer demand. Sales in our Building Products operating segment are generally stronger in the first and fourth quarters of our fiscal year duefor toboth the Building Products and Consumer Products operating segments. In Building Products, this seasonality is generally driven by weather conditions, customer business cycles, and the timing of renovation and new construction projects.projects, while in Consumer Products, it is driven by our facilities performing at seasonal peaks, matching consumer demand. Our quarterly results may also be affected by the timing of large customer orders. Consequently, our cash flow from operations may fluctuate significantly from quarter to quarter. If, as a result of any such fluctuation, our quarterly cash flows were significantly reduced, we may be unable to service our indebtedness or maintain compliance with certain covenants under the documents governing our indebtedness. A default under any of the documents governing our indebtedness could prevent us from borrowing additional funds, limit our ability to pay interest or principal and allow our lenders to declare the amounts outstanding to be immediately due and payable and to exercise certain other remedies.

OurDemand industriesin areportions of our end markets is cyclical and weakness or downturns in the general economy or certain industries could have an adverse effect on our business. If the domestic or global economies, or certain industry sectors of those economies that are key to our sales, contract or deteriorate, it could result in a corresponding decrease in demand for our products and negatively impact our results of operations and financial conditions.

Volatility in the U.S. and worldwide capital and credit markets could impact our end markets and result in negative impacts on demand, increased credit and collection risks and other adverse effects on our businesses. The domestic and worldwide capital and credit markets have experienced periods of significant volatility, disruptions and dislocations with respect to price and credit availability. TheseGeopolitical factorsconflicts, causedhigh diminished availability of creditinflation and otherrising or volatile interest rates have contributed to disruption in world financial markets and increased volatility in U.S. capital in our end markets, andwhich for participants in, and the customers of, those markets. The effects of the financial crisis, recent bank failures, concerns over the economic impact of COVID-19, the war in Ukraine and inflationary pressures, continue to presentpresents risks to us, our customers orand our suppliers.suppliers, In particular,and there is no guarantee that the credit markets or liquidity will not oncebecome againrestricted bein restricted.the future. Stricter lending standards may make it more difficult and costly for some firms to access the credit markets. Further,When uncertaintiescredit markets deteriorate or are disrupted, our ability to incur additional indebtedness to fund a portion of our working capital needs and other general corporate purposes, or to refinance maturing obligations as they become due, may be constrained, and this risk could be exacerbated by future deterioration in Europe,our especiallycredit in light of the war in Ukraine, regarding the financial sector and sovereign debt and the potential impact on banks in other regions of the world will continue to weigh on global and domestic growth.ratings. Although we believe we have adequate access to several sources of contractually committed borrowings and other available credit facilities, these risks could restrict our ability to borrow money on acceptable terms in the credit markets and potentially affect our ability to draw on the Credit Facility. In addition, restricted access to the credit markets could make it difficult, or in some cases, impossible for our suppliers and customers to borrow money to fund their operations. Lack of, or limited access to, capital would adversely affect our suppliers’ ability to produce the materials we need for our operations and our customers’ ability to purchase our products or, in some cases, to pay for our products on a timely basis.

This MD&A should be read in conjunction with our consolidated financial statements and the related Notes in this Form 10-K. It is intended to provide insight into the financial condition and results of operations to allow investors to view theour Companybusiness from the perspective of management. The historical results discussed herein include the operations of Worthington Steel, which are presented as discontinued operations in all periods prior to the Separation, as further described in “Note A – Summary of Significant Accounting Policies.”

We are a market-leading designer and manufacturer of innovative products and services, including manufactured metal products, organized around attractive end markets under two separate and distinct reportable operating segments: ConsumerBuilding Products and BuildingConsumer Products. Our primary goal is to create value for our shareholders. Built on the successful foundation of the Worthington Business System, we apply a disciplined approach to capital deployment and seek to grow earnings by optimizing our operations and supply chain, developing and commercializing newinnovative products and applications, and pursuing strategic investments and acquisitions.

Our Building Products business is a market-leading provider of pressurized containment solutions, providing critical components in the residential, non-residential, and repair and remodel end markets through essential categories, suchincluding: as(i) pressurized containment solutions for heating, cooking, cooling and water,water and,applications; (ii) HVAC systems; (iii) metal roofing clips; and (iv), through our unconsolidated joint ventures, WAVE and ClarkDietrich, ceiling suspension systems and light gauge metal framing products, respectively.products. Our pressurized containment solutions include refrigerant and LPG cylinders, well water and expansion tanks, and other specialty products which are generally sold to gas producers and distributors.

Unallocated Corporate includes certain assets and liabilities (e.g.e.g., cash and cash equivalents and public debt) held at the corporate level as well as general corporate expenses that are not directly attributable to our business operations and are administrative in nature, such as public company and other governance-related costs that benefit the organization as a whole, have not been allocated to our operating segments and are held at the corporate level, including direct and incremental costs incurred in connection with the Separation but not attributed to discontinued operations in fiscal 2024 and fiscal 2023.2024.

On December 1, 2023, we completed the Separation of our former steel processing business into a separate public company in a transaction intended to qualify as tax free to our shareholders, which was accomplished via the Distribution. Worthington Steel is an independent public company trading on the NYSE under the symbol “WS” on the NYSE.. Following the Separation, Worthington Industries, Inc. changed its name to Worthington Enterprises, Inc. and its common shares continue trading on the NYSE under the ticker symbol “WOR.” In connection with the Separation, we received a one-time cash dividend of $150.0 million from Worthington Steel, the proceeds of which were used to pay off in full the 2024 Notes. The dividend was funded by cash drawn on the Worthington Steel Credit Facility of $175.0 million immediately prior to the Distribution.

We believe these dynamicsdynamics, —including tightpersistent creditinflationary conditions,pressure, softeningan industrialextended activity,pause in monetary easing, and globalelevated uncertaintymortgage —rates near 6.5%, continued to weigh on both consumer and business sentiment throughout fiscal 20252026 and may impact new activity across our key end markets entering fiscal 2026.2027. In Building Products, elevated financing costs constrained new construction demand, while geopolitical uncertainty and energy price volatility introduced additional headwinds for contractor and distributor confidence. Within our Consumer Products segment, inflation-driven cost consciousness and elevated interest rates influenced discretionary purchases and contributed to cautious buying patterns. In Building Products, rising financing costs constrained new construction demand, while slowing industrial activity impacted select commercial and infrastructure-related channels. We expect demand within both operating segments to remain uneven in the near term.

Demand for our products is influenced by the inventory management strategies of our retail and distribution partners. Periods of customer destocking, when our customers reduce their own inventories, can lead to lower order volumes, even when consumer sell-through remains steady. Conversely, customers’customers' restocking can temporarily elevate shipments above underlying end-user demand. As a result, shifts in customers’ inventory levels can meaningfully impact our reported revenue and margin performance, particularly in the Consumer Products segment,Products, where a large volume of products flow through big box retailers.

We offer a wide range of products and services to a diverse, primarily domestic, customer base across several end markets, including U.S. residential and non-residential construction, repair/remodel, which collectively drive overall demand for the Building Products segment. These end markets also drive demand for many of our consumer products sold in the tools and outdoor living categories. Demand for our remaining consumer products, including helium-filled balloon kits sold into the celebrations category, is generally driven by the general health of the consumer, including the macroeconomic and geopolitical conditions discussed above.

Our largest raw material expenditures include cold-rolled and hot-rolled steel, propane, propylene, and aluminum. Fluctuations in the prices of these inputs have a direct impact on our cost of goods sold and overall financial performance.

Historically, net sales in both Building Products and Consumer Products tend to be stronger in theour fiscal third and fourth quartersquarters. of our fiscal year for our Consumer Products businesses when our facilities perform at seasonal peaks, matching consumer demand. Sales in ourIn Building ProductsProducts, businessesthis areseasonality is generally strongerdriven in the first and fourth quarters of our fiscal year due toby weather conditions, customer business cycles, and the timing of renovation and new construction projects.projects, while in Consumer Products, it is driven by our facilities performing at seasonal peaks, matching consumer demand.

Net Sales and Volume

ConsumerBuilding Products – Net sales totaled $499.7$861.5 million in fiscal 2025,2026, an increase of $4.4$207.4 million, or 0.9%,31.7%, fromover the prior fiscal year, primarilydriven dueby higher overall volume and the impact of acquisitions, which contributed $121.7 million to highernet volumessales andin afiscal slightly favorable product mix.2026.

BuildingConsumer Products – Net sales totaled $654.1$519.8 million in fiscal 2025,2026, an increase of $35.1$20.1 million, or 5.7%,4.0%, compared toover the prior fiscal year, whichas washigher largelyaverage drivenselling byprices contributionsmore from Ragasco and favorable product mix, partiallythan offset bythe impact of lower overall volumes, excluding Ragasco.volume.

Impairment activity in fiscal 2025 primarily reflects the non-cash write-down of intangible assets associated with GTI, totaling $50.1 million. Impairment charges in the prior fiscal year related primarily to the impairment of goodwill and other assets immediately prior to the deconsolidation of our Sustainable Energy Solutions business in May 2024. Refer to “Note D – Goodwill and Other Long-Lived Assets” for additional information.

Restructuring and other expense, net duringin fiscal 20252026 consisted primarily of transaction costs related to acquisitions and divestitures, as well as employee severance. Restructuring activity in the prior fiscal year included a $4.5 million increase in the fair value of the contingent liability associated with the Ragasco earnout arrangement, as well as stock-based compensation expense of $2.6 million related to the accelerated vesting of certain equity awards upon the retirement of our former CEO. Restructuring charges in the prior fiscal year were primarily related to the deconsolidation of our Sustainable Energy Solutions business.

Equity income contributed by WAVE and ClarkDietrich is reported within our Building Products segment.Products.

Includes our share of the equity earnings offrom the Workhorse and the Sustainable Energy SolutionsSES joint ventures.

Income tax expense totaled $33.8$46.3 million in fiscal 2025,2026, compared to $39.0$33.8 million in the prior fiscal year. The decreaseincrease was primarily due to the impact of one-time discrete tax charges related to the Separation and charges associated with the deconsolidation of our Sustainable Energy Solutions business in the prior fiscal year, partially offsetdriven by higher pre-tax earnings in fiscal 2025.earnings. The effective tax rate for fiscal 20252026 was 26.1%,22.9%, compared to 52.6%26.1% in the prior fiscal year.year, which was impacted by certain discrete items. On an adjusted basis, the annual effective tax rate was 23.0%23.3% in fiscal 2025,2026, compared to 23.5%23.0% in the prior fiscal year. Refer to the “Use of Non-GAAP Financial Measures and Definitions” section preceding Part I, Item 1 of this Form 10-K for additional information regarding our use of non-GAAP financial measures. Refer to “Note M – Income Taxes” for additional information.

Consumer Products – Adjusted EBITDA from continuing operations totaled $82.7$91.2 million in fiscal 2025,2026, an increase of $13.1$8.5 million, or 18.8%,10.3%, compared to the prior fiscal year. The increase was primarily driven by favorable product mix and higher overallgross volume.margin, partially offset by an increase in SG&A.

We are a market-leading designer and manufacturer of innovative products and services, including manufactured metal products, organized around attractive end markets under two separate and distinct reportable operating segments: ConsumerBuilding Products and BuildingConsumer Products. Our primary goal is to create value for our shareholders. Built on the successful foundation of the Worthington Business System, we apply a disciplined approach to capital deployment and seek to grow earnings by optimizing our operations and supply chain, developing and commercializing innovative products and applications, and pursuing strategic investments and acquisitions.

Our Building Products business is a market-leading provider of pressurized containment solutions, providing critical components in essential end markets, such as heating, cooking, cooling and water, HVAC systems and components, metal roofing clips and components and, through our unconsolidated joint ventures, WAVE and ClarkDietrich, ceiling suspension systems and light gauge metal framing products. Our pressurized containment solutions include refrigerant and LPG cylinders, well water and expansion tanks, and other specialty products which are generally sold to gas producers and distributors. Refrigerant gas cylinders are used to hold refrigerant gases for commercial, residential, and automotive air conditioning and refrigeration systems. LPG cylinders hold fuel for residential and light commercial heating systems, barbeque grills and recreational vehicle equipment, industrial forklifts and commercial/residential cooking (the latter, generally outside North America). Well water tanks and expansion tanks are used primarily in the residential market with certain products also sold to commercial markets. Specialty products include a variety of fire suppression tanks, chemical tanks, and foam and adhesive tanks. With the acquisition of Elgen on June 18, 2025, we expanded our portfolio to include HVAC parts and components, further strengthening our position across the end markets we serve.

On JuneJanuary 18,16, 2025,2026, we acquired Elgen,LSI, a leading providerone of HVACthe partslargest U.S. manufacturers of standing-seam metal roof clips and components.retrofit components in the commercial roof market. The purchase price was approximately $91.2 million,$206.1, net of cash acquired.acquired, Elgenincluding beganan operatingestimated astax partequalization payment of Buildingapproximately Products$3.0 inmillion, thesubject firstto quartercustomary ofpost-closing fiscal 2026.adjustments. Refer to “Note M – Acquisitions” for additional information.

On June 3, 2024, we completed the acquisition of Ragasco, a leading global manufacturer of composite propane cylinders based in Norway. The purchase price consisted of cash consideration of $108.6 million, including an earnout that was settled in March 2025. Ragasco began operating as part of Building Products in the first quarter of fiscal 2025. Changes in the fair value of this earnout were reflected in Restructuring and other expense, net.

ThisIn Consumer Products, this macroeconomic environment is expected to continue weighing on the consumer in the form of reducedpressuring discretionary spendingspending, as elevated interest rates and cautious buyingsentiment patterns,weigh whichon islarge-ticket anticipatedpurchases toand continueproject hinderingtiming. As a result, we expect point-of-sale activity. We expect demandactivity to remain uneven as marketconsumers participants awaitseek clearer signalsdirection on inflation,inflation trends, interest rates,rate stability, and broaderoverall economic momentum.

Throughout the first sixnine months of fiscal 2026, inventory levels at most key retailer and distributor customers remained aligned with end-consumer demand, and replenishment activity generally mirrored point-of-sale trends, with no material build-up in our distribution or retail channels. Customers maintained a cautious approach in managing tariff-related cost pressures, continuing to trim orders for lower-volume items.

Steel: Steel is our most significant direct material cost across both ConsumerBuilding Products and BuildingConsumer Products. During the second quarter of fiscalFebruary 2026, hot-rolled steel prices increased from late-summer lows, risingmeaningfully from $834late-fiscal 2026 second quarter levels, averaging approximately $984 per ton in August 2025compared to $855 per ton in November 2025, drivenreflecting bya firmerclear orderfirming activityin andmarket mill-announcedconditions price increases. Even with this sequential increase, pricing remains meaningfully belowversus the Aprilsecond 2025 peakquarter of $945fiscal per ton.2026. Cold-rolled steel pricingalso wasmoved morehigher, stable,averaging edgingapproximately down from $1,050$1,126 per ton in AugustFebruary 20252026 compared to $1,040 per ton in November 2025,2025. reflectingOverall, steadythe demandsequential move and the strength late in keythe endquarter markets.indicate that steel has shifted from a period of softness into a firmer pricing environment. Our balanced sourcing strategy, combining firm-price contracts for select inputs with index-based agreements for others, enabled us to effectively manage these pricing trends and support margin stability.

Aluminum: During the secondthird quarter of fiscal 2026, aluminum costs increased tomeaningfully recordon levels,a sequential basis, reflecting botha tighterfirming marketin supplyglobal base metal pricing. In addition to higher global benchmark pricing, U.S. delivered aluminum costs continue to be influenced by regional premiums and atrade Junepolicy 2025dynamics, increaseincluding in U.Sthe Section 232 tariffs to 50%,tariffs, which drovecan U.Saffect Midwestoverall aluminumtransaction premiumsprices to elevated levels. These changes impacted components such as fuel cylinder valves and otherfor aluminum-intensive assemblies.components. Where possible, we mitigated these increases through forward purchasing and supplier negotiations, but tariff-related cost pressure on aluminum is expected to persist through the remainder of fiscal 2026.

Propane, propylene, and other gases: Propane and propylene costs were generally stable to modestly favorable through the first sixnine months of fiscal 2026, with market prices trending below the prior year period. This trend was driven by strong overall supply levels and softer end-market demand. A portion of our propane and propylene requirements are secured under fixed-price supply agreements, which limited our exposure to spot fluctuations. Costs for helium and other industrial gases declined from the prior year quarter, providing a margin benefit in select consumer-facing product lines, particularly within Consumer Products.

Historically, net sales in both Building Products and Consumer Products tend to be stronger in our fiscal third and fourth quartersquarters. for Consumer Products when our facilities perform at seasonal peaks, matching consumer demand. Sales inIn Building ProductsProducts, arethis seasonality is generally strongerdriven in the first and fourth quarters of our fiscal year due toby weather conditions, customer business cycles, and the timing of renovation and new construction projects.projects, while in Consumer Products, it is driven by our facilities performing at seasonal peaks, matching consumer demand.

The following discussion provides an overview of results for the three months and sixnine months ended NovemberFebruary 30,28, 20252026 and 2024.2025:

Building Products – Net sales totaled $207.5$223.9 million in the current year quarter, up $50.2$59.1 million, or 31.9%,35.9%, over the prior year quarter, driven by higher overall volume and the additionimpact of Elgen.acquisitions, which contributed $32.2 million to net sales in the current year quarter.

BuildingConsumer Products – Net sales totaled $392.3$154.8 million in the current year period,quarter, up $95.3$15.1 million, or 32.1%,10.8% over the prior year period,quarter, driven by higher overall volume,volume and thehigher additionaverage ofselling Elgen.prices.

Gross profit for the current year quarter increased $10.5$20.3 million, or 14.2%,22.8%, over the prior year quarter to $84.6$109.5 million, driven by the impact of higher overall volumevolume, inincluding thecontributions whollyfrom ownedour businessesfiscal of2026 Buildingacquisitions, Products. These improvements were partially offset by a $2.5 million decline in Consumer Products, driven byand higher conversionaverage costsselling and slightly lower volume.prices. While gross profit was up over the prior year quarter, gross margin declineddecreased 120slightly, basisprimarily pointsdue asto mixthe shiftedamortization towardof lower-margina valueportion streamsof andthe unfavorableinventory conversionstep-up costsassociated morewith thanthe offsetLSI higher overall volume.acquisition.

Gross profit was $166.9$276.4 million for the current year period, an increase of $30.3$50.6 million, or 22.2%22.4% over the prior year period on higher volumeoverall involume, Building Products andincluding contributions from Elgen,our partiallyfiscal offset2026 byacquisitions, slightly lower contributions from Consumer Products, down $3.1 million, driven byand higher conversionaverage costsselling and lower overall volume.prices.

SG&A increased $2.8$12.7 million, or 4.1%,20.2%, from the prior year quarter, primarily due to the addition of Elgen,LSI partiallyand offsetElgen. by lower bad debt expense due toAs a customerpercentage bankruptcyof net sales, SG&A was down from 20.7% in the prior year quarter.quarter to 20.0%.

SG&A increased $7.3$20.0 million, or 5.4%,10.2%, from the prior year period, primarily due to the addition of Elgen,LSI partiallyand offsetElgen. by lower bad debt expense due toAs a customerpercentage bankruptcyof net sales, SG&A was down from 23.6% in the prior year period.period to 21.5%.

Restructuring and other expense, net in the current year quarter and current year period consisted primarily of transaction costs related to acquisitions and divestitures, as well as employee severance. Restructuring activity in the prior year quarter and prior year period was driven by the accelerated vesting of certain outstanding equity awards upon the retirement of our former CEO.CEO and a change in fair value of an earnout associated with the Ragasco acquisition.

Miscellaneous expense in both the threecurrent year quarter and sixcurrent monthyear periods ended November 30, 2025,period was driven by the divestiture of our 49% interest in the composite business of our SES joint venture on October 16, 2025, and the related mark-to-market loss on the marketable securities received in exchange for our interest in the divested assets.

Includes our share of the equity earnings offrom the Workhorse and the SES joint venture.ventures.

Equity income was down $4.3$5.6 million from the prior year period, driven by lower contributions from ClarkDietrich, which were down $12.2 million as continued pricing pressure and an unfavorable shift in project mix led to lower gross profit.profit, partially offset by higher contributions from WAVE, up $8.4 million.

Income tax expense was $8.8$15.0 million in the current year quarter compared to $9.1$13.2 million in the prior year quarter. The decreaseincrease was primarily driven by lowerhigher pre-tax earnings.

Building Products – Adjusted EBITDA was $53.0$58.8 million, an increase of $5.8$5.6 million, or 12.3%10.5% compared to the prior year quarter, primarilydriven due to volume growth inby the whollyimpact ownedof businesses,higher net sales, partially offset by lower overall contributions of equity income, driven by a $5.6 million decline at ClarkDietrich.income.

BuildingConsumer Products – Adjusted EBITDA was $110.8$35.5 million in the current year period,million, an increase of $23.9$6.9 millionmillion, or 24.1% over the prior year period,quarter, primarily duedriven toby volumethe growthimpact of higher net sales and gross margin improvement, partially offset by higher SG&A. Adjusted EBITDA in the wholly owned businesses. The currentprior year periodquarter was negatively impacted by $2.2$1.1 million of nonrecurringbad itemsdebt expense related to the Elgen acquisition, reflecting a purchasecustomer accounting step up in inventory to fair value.bankruptcy.

Other – Adjusted EBITDA decreasedincreased $2.1$0.3 million compared to the prior year period,quarter, drivenas by lower contributions ofhigher equity earnings from theWorkhorse SESoffset jointlower ventureequity andearnings Workhorse.from SES.

Unallocated Corporate – Unallocated SG&A decreasedincreased $0.9$2.0 million, or 6.2%,35.7%, from the prior year period,quarter, primarily driven by lowerhigher profit sharing and bonus accruals, as well as an increase in costs recovered through the Transition Services Agreement with Worthington Steel.accruals.

During the sixcurrent monthsyear ended November 30, 2025,period, we generated $92.6$154.5 million of cash from operating activities, invested $25.6$39.4 million in property, plant and equipment, and spent approximately $92.0$303.4 million to acquire 100% of the outstanding equity interests in Elgen.Elgen and LSI, and the propane and distribution assets of Hydrostat. Additionally, we paid $20.0$25.3 million to repurchase 350,000450,000 common shares and paid dividends of $18.2$27.5 million on the common shares during the sixcurrent monthsyear ended November 30, 2025.period.

We believe we have access to adequate resources to meet the needs of our existing businesses for normal operating costs, mandatory capital expenditures, debt redemptions, dividend payments, and working capital, to the extent not funded by cash provided by operating activities, for at least 12 months and for the foreseeable future thereafter. These resources include cash and cash equivalents and unused committed lines of credit under our Credit Facility, which had a total of $500.0$495.2 million of borrowing capacity available to be drawn as of NovemberFebruary 30, 2025. On December 16, 2025, we signed an agreement to acquire LSI with the transaction expected to close in January28, 2026. The transaction is expected to be funded primarily with cash on hand, supplemented by modest borrowings under the Credit Facility.

Net cash provided by operating activities was $92.6$154.5 million during the sixcurrent monthsyear ended November 30, 2025,period, up $2.4$7.2 million over the prior year period as higher net earnings in the current year quarterperiod was partially offset by an increase in operating working capital requirements (accounts receivable, inventory, and accounts payable) and a $7.1$7.5 million decrease in distributions received from unconsolidated affiliates.

Net cash used by investing activities was $117.9$343.9 million during the sixcurrent monthsyear ended November 30, 2025period compared to $101.6$115.1 million from the prior year period. Net cash used by investing activities during the sixcurrent monthsyear ended November 30, 2025period was driven primarily by cash paid to acquire the outstanding equity interests in Elgen and LSI, and capital expenditures, including $14.4$18.5 million related to ongoing facility modernization projects.

Net cash used by financing activities was $44.5$54.7 million during the sixcurrent monthsyear ended November 30, 2025,period, compared to $39.0$53.6 million in the prior year period. During the sixcurrent monthsyear ended November 30, 2025,period, we paid $20.0$25.3 million to repurchase 350,000450,000 common shares and paid dividends of $18.2$27.5 million on the common shares.

Common shares – On DecemberMarch 16,24, 2025,2026, the Board declared a quarterly dividend of $0.19 per common share payable on MarchJune 27,29, 2026, to shareholders of record at the close of business on MarchJune 13,15, 2026.

On March 24, 2021, the Board authorized the repurchase of up to 5,618,464 common shares. As of NovemberFebruary 30,28, 2025,2026, 5,015,0004,915,000 common shares remained available for repurchase under this authorization. The common shares may be repurchased under these authorizations from time to time, with consideration given to the market price of the common shares, the nature of other investment opportunities, cash flows from operations, general economic conditions and other relevant considerations. Repurchases may be made on the open market or through privately negotiated transactions.

Long-term debt and short-term borrowings – As of NovemberFebruary 30,28, 2025,2026, we were in compliance with the financial covenants of our short-term and long-term debt agreements. Our debt agreements do not include credit rating triggers or material adverse change provisions. ThereWe werehad no$4.8 million outstanding borrowings drawn againstunder the Credit Facility atas Novemberof 30,February 2025,28, 2026, leaving the full borrowing capacity of $500.0$495.2 million available for future use.