Worthington Enterprises, Inc.: Form 10-Q for the period ended Feb 28, 2025

Unless otherwise indicated, all Note references contained in this MD&A refer to the Condensed Notes to Consolidated Financial Statements included in “Part I – Item 1. – Financial Statements” of this Form 10-Q. All amounts are presented in millions except common share and per common share amounts.

Introduction

The following discussion and analysis of market and industry trends, business developments, and the results of our operations and financial position should be read in conjunction with our consolidated financial statements and notes thereto included in “Part I – Item 1. – Financial Statements” of this Form 10-Q. The 2024 Form 10-K includes additional information about our business, operations and consolidated financial position and should be read in conjunction with this Form 10-Q. This MD&A is designed to provide a reader with material information relevant to an assessment of our financial condition and results of operations and to allow investors to view the Company from the perspective of management. The results of operations contained in this MD&A include all of our operations, including our former steel processing business. Our historical results have been restated to reflect the operations of Worthington Steel as a discontinued operation in periods prior to the Separation as discussed in “Note A – Basis of Presentation.”

Business Overview

Worthington Enterprises is 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: Consumer Products and Building 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 new products and applications, and pursuing strategic investments and acquisitions.

Our Consumer Products business has a diverse product offering in the tools, outdoor living and celebrations categories, including propane-filled cylinders for torches and related accessories, handheld torches, specialized hand tools and instruments, drywall tools (collectively, tools), propane-filled camping cylinders helium-filled balloon kits, and accessories and gas grills and pizza ovens sold primarily to mass merchandisers, retailers and distributors. Sales to one customer in Consumer Products accounted for 13.0% of our consolidated net sales in the third quarter of fiscal 2025.

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, such as heating, cooking, cooling and water, and, through our unconsolidated joint ventures, WAVE and ClarkDietrich, ceiling suspension systems and light gauge metal framing products, respectively. 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.

Separation of the Steel Processing Business

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 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.

Acquisitions and Divestitures

On June 3, 2024, we acquired Ragasco, a leading global manufacturer of composite propane cylinders based in Norway. The purchase price included cash consideration of approximately $101.4 million and contingent consideration in the form of an earnout agreement with an estimated fair value of $11.2 million at February 28, 2025. See “Note N – Acquisitions” for additional information.

On May 29, 2024, we became a noncontrolling equity partner in a new unconsolidated joint venture with Hexagon, a leading global manufacturer of Type 4 composite cylinders used for storing gas under high-pressure, by selling 51% of the nominal share capital of our former Sustainable Energy Solutions operating segment in Europe. Pursuant to the transaction, Hexagon acquired a 49% stake in the joint venture for approximately $11.5 million, after adjusting for closing cash and preliminary net working capital, with an additional 2% sold to members of the existing management team for an additional $0.5 million. Post-closing, we hold a 49%, noncontrolling interest in the joint venture, which is accounted for under the equity method due to our significant influence. The newly formed joint venture, which combines two of Europe’s market leaders in composite high-pressure storage technology, focuses on capitalizing on the global clean energy transition specific to the storage, transport and distribution of hydrogen and compressed natural gas.

On February 1, 2024, we acquired an 80% ownership stake in Halo, an affiliate of HPG, an asset-light business with technology-enabled solutions in the outdoor cooking space. The total purchase price was approximately $9.6 million.

General Economic Conditions

The macroeconomic and geopolitical outlook remains complex and continues to evolve amid persistent inflationary pressures, high interest rates, and escalating trade tensions. While the U.S. economy continues to expand at a modest pace, growth slowed in the fourth quarter of calendar 2024 with GDP increasing at an annual rate of 2.4%, down sequentially from 3.1% in the third quarter of calendar 2024. Inflationary pressures have proven more resilient than anticipated, with the CPI rising 3.1% year-over-year in February 2025, down sequentially from 3.3% in January 2025 and 3.8% in February 2024 aided by cuts in the federal funds rate of 0.50% in September 2024 and 0.25% in November 2024. However, interest rates remain high, with the 30-year mortgage rate relatively unchanged from the prior year at 6.8% as of February 28, 2025, and future rate cuts remain uncertain with the Federal Reserve opting to maintain the federal funds rate in March 2025, citing uncertainty surrounding the inflationary effects of recently imposed tariffs on Canadian, Mexican, and European imports. The recent uptick in inflation, coupled with geopolitical risks, including heightened trade tensions and financial market volatility, has further weighed on consumer sentiment, with consumer sentiment falling for a third straight month in March 2025 to its lowest level since November 2022. As a result, we expect ongoing economic uncertainty and tighter financial conditions to continue negatively influencing consumer purchasing behavior and overall market demand in the near term.

End Market Trends

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.

We actively monitor the following publicly available economic data and selected key indicators for our major end markets:

(Dollars and units in millions)

(1) Federal Reserve Bank of St. Louis; figures based on seasonally adjusted annual rates

(2) 2024 figures based on revised actuals

(3) Joint Center for Housing Studies of Harvard University; four quarter moving rate of change

Residential Construction: The near-term outlook for the residential construction end market remains uncertain as economic headwinds continue to weigh on both builders and buyers. In February 2025, residential construction spending grew a modest 1.6% year-over-year. However, this increase largely follows inflationary trends, rather than organic expansion in the housing market. Key leading indicators suggest that underlying demand remains tepid. Housing starts and authorized permits declined from the prior year period, signaling that both builders and prospective buyers are approaching the market with caution. From a demand perspective, affordability challenges persist. Elevated mortgage rates have kept many potential buyers on the sidelines, while existing homeowners, many of which are locked into historically low interest rates, are reluctant to sell, further constraining inventory turnover. In February 2025, existing home sales declined by 2.7% year-over-year to 4.3 million units, highlighting the persistent supply challenges. Additionally, homebuilder sentiment, as measured by HMI, weakened to 42.0, falling below the neutral threshold of 50, suggesting that more builders view conditions as poor than favorable. This decline in builder confidence reflects uncertainty around elevated construction costs and mortgage rates. We believe that builders and buyers will likely remain in a holding pattern in the near-term, navigating high material costs, elevated mortgage rates, a slow-moving resale market, and geopolitical developments.

Non-Residential Construction: The near-term outlook for non-residential construction is mixed with key indicators signaling both caution and long-term potential. The ABI fell to 45.5 in February 2025, marking a contraction in demand for architectural services. Further reinforcing this sentiment, inquiries into new projects declined in February 2025 for the first time since the peak of the COVID-19 pandemic. This signals that clients are exercising caution amid economic uncertainty, holding back on new project commitments as they navigate concerns about broader macroeconomic conditions. The soft ABI and declining inquiries suggest the near-term construction pipeline will likely be subdued. In contrast, the DMI climbed to 225.6, up from 180.5 in February 2024, suggesting a robust long-term pipeline. This rise was broad-based due to a surge of warehouse, data center, and industrial facility plans. The DMI’s strength, contrasted with the weak ABI, implies a timing gap – while many projects are still in the concept and design phase, they have yet to translate into active architectural billings or construction starts. While industrial and data center projects remain bright spots, we believe the participants in this end market will take a wait-and-see approach as developers and investors assess economic risks before committing to large-scale builds.

Repair and Remodel: Spending on home improvement continues to show signs of softness as the market remains under pressure from multi-decade lows in existing home sales, driven by elevated mortgage rates, high prices, and limited supply. With many homeowners locked into historically low interest rates, mobility in the housing market remains stalled, dampening turnover-driven renovation activity. Despite this pullback, the January 2025 LIRA report from Harvard’s Joint Center for Housing Studies projects a 1.2% annual increase in home renovation and maintenance expenditures, reaching $509 billion by the end of calendar year 2025. This upward revision from prior forecasts reflects stronger-than expected late calendar year 2024 spending. Near-term activity is expected to remain concentrated on essential maintenance projects, rather than large-scale, discretionary remodels. Uncertainty around recent and potential future tariffs, particularly on construction materials like steel, aluminum, and lumber, could create headwinds and pressure margins for both contractors and DIY consumers. We believe this end market is transitioning from the pandemic fueled highs into a more normalized, sustainable growth phase, supported by long-term fundamentals such as rising home equity, energy efficiency upgrades, and the need to modernize older homes.

Seasonality

Historically, sales tend to be stronger in the third and fourth quarters of our fiscal year for our Consumer Products businesses when our facilities perform at seasonal peaks, matching consumer demand. Sales in our Building Products businesses are generally stronger in the first and fourth quarters of our fiscal year due to weather conditions, customer business cycles, and the timing of renovation and new construction projects.

Results of Operations

The following discussion provides a review of results for the three and nine months ended February 28, 2025 and February 29, 2024:

(1) Reconciliations for each of these non-GAAP financial measures to their most comparable GAAP financial measure is provided in the “Use of Non-GAAP Financial Measures and Definitions” section.

Net Sales and Volume

The following table provides a breakdown of our consolidated net sales by operating segment for the periods indicated:

The following table provides volume (in units) by operating segment for the periods presented:

Quarterly Comparison

• Consumer Products – Net sales totaled $139.7 million in the current year quarter, up $6.5 million, or 4.9% over the prior year quarter, primarily driven by higher volumes.
• Building Products – Net sales totaled $164.8 million in the current year quarter, up $16.6 million, or 11.2%, over the prior year quarter, driven by contributions from Ragasco and favorable product mix, particularly in the large-format heating business which returned to more seasonally normal levels following a prolonged destocking cycle.
• Other – Net sales in the prior year quarter are related to our former Sustainable Energy Solutions operating segment, which was deconsolidated on May 29, 2024, when we sold a 51% interest in the business. In periods subsequent to the sale transaction, our retained 49% interest is accounted for under the equity method as discussed in “Note C – Investments in Unconsolidated Affiliates.”

Year-to-Date Comparison

• Consumer Products – Net sales totaled $374.1 million in the current year period, an increase of $4.2 million over the prior year period primarily due to higher overall volume.
• Building Products – Net sales totaled $461.8 million in the current year period, down $3.6 million, or 0.8%, from the prior year period, as contributions from Ragasco and a favorable product mix were more than offset by lower overall volume.
• Other – Net sales in the prior year period are related to our former Sustainable Energy Solutions operating segment, which was deconsolidated on May 29, 2024, when we sold a 51% interest in the business. In periods subsequent to the sales transaction, our 49% retained interest is accounted for under the equity method as discussed in “Note C – Investments in Unconsolidated Affiliates.”

Gross Profit

Quarterly Comparison

• Gross profit for the current year quarter was $89.2 million, an increase of $16.1 million, or 22.0%, over the prior year quarter, driven by higher contributions from both Consumer Products and Building Products. In Consumer Products, the increase resulted from higher volume, particularly in our more profitable product categories. In Building Products, gross profit benefited from contributions by Ragasco, a favorable product mix, and a lower of cost or net realizable value charge in the prior year quarter that did not repeat, partially offsetting lower volume excluding Ragasco. Additionally, gross profit improved $0.9 million due to the deconsolidation of the former Sustainable Energy Solutions segment.

Year-to-Date Comparison

• Gross profit was $225.8 million for the current year period, an increase of $19.8 million, or 9.6% over the prior year period, primarily due to improvements in Consumer Products, up $15.7 million, on the combined impact of higher volume and a $3.1 million reserve related to the voluntary recall of our Balloon Time® Mini helium tank in the prior year period. In Building Products, gross profit was positively impacted by contributions from Ragasco, favorable product mix, and a lower of cost or net realizable value charge in the prior year quarter that did not repeat, partially offsetting the impact of lower volume.

SG&A

Quarterly Comparison

• SG&A decreased $2.1 million, or 3.2%, from the prior year quarter, primarily driven by lower profit sharing and bonus expense and costs recovered from Worthington Steel through the Transition Services Agreement, partially offset by an increase of incremental bad debt expense of $1.1 million related to a customer bankruptcy in Consumer Products.

Year-to-Date Comparison

• SG&A decreased $13.3 million, or 6.3%, from the prior year period, largely driven by the elimination of certain corporate overhead costs that no longer exist post-Separation, but have been presented within net earnings from continuing operations in our consolidated statements of earnings, partially offset by an $8.1 million increase due to the acquisition of Ragasco on June 3, 2024 and an increase in bad debt expense of $3.2 million.

Other Consolidated Results

Quarterly Comparison

• Restructuring and other expense, net in the current year quarter was primarily driven by a $4.5 million increase in the fair value of the contingent liability associated with the Ragasco earnout.
• Separation costs in the prior year quarter reflect direct and incremental costs incurred in connection with the Separation.

Year-to-Date Comparison

• Restructuring and other expense, net in the current year period was driven primarily by the accelerated vesting of certain outstanding equity awards upon retirement of our former CEO and a change in fair value of an earnout associated with the acquisition of Ragasco.
• Separation costs in the prior year period reflect direct and incremental costs incurred in connection with the Separation.
• Loss on extinguishment of debt of $1.5 million in the prior year period resulted from the July 28, 2023 early redemption of the 2026 Notes and consisted primarily of unamortized debt issuance costs and the remaining loss deferred in AOCI associated with an interest rate swap executed prior to the issuance of the 2026 Notes.

Income Tax Expense

Quarterly Comparison

• Income tax expense was $13.2 million in the current year quarter compared to $18.5 million in the prior year quarter. The decrease was primarily driven by one-time discrete tax charges from the Separation, which were recognized in the prior year quarter, partially offset by higher pre-tax earnings in the current year quarter. Income expense in the current year quarter reflects an estimated annual ETR of 24.4% compared to 30.8% in the prior year quarter.

Year-to-Date Comparison

• Income tax expense was $29.1 million in the current year period compared to $34.0 million in the prior year period. The decrease was primarily driven by one-time discrete tax charges from the Separation, which were recognized in the prior year period, partially offset by higher pre-tax earnings in the current year period. Income expense in the current year period reflects an estimated annual ETR of 24.4% compared to 30.8% in the prior year period.

Equity Income

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

(2) Includes our share of equity earnings of the Workhorse and the Sustainable Energy Solutions joint ventures.

Quarterly Comparison

• Equity income decreased $11.1 million from the prior year quarter to $32.1 million, primarily driven by lower contributions from ClarkDietrich, which decreased $8.3 million compared to the prior year quarter, as declining year-over-year steel prices compressed margin.

Year-to-Date Comparison

• Equity income was down $25.3 million from the prior year period, driven by lower contributions from ClarkDietrich and lower contributions from Workhorse, which benefited from a $2.8 million gain in the prior year period.

Adjusted EBITDA from Continuing Operations

The following table provides a summary of adjusted EBITDA from continuing operations, a non-GAAP financial measure, by reportable segment and on a consolidated basis, along with the respective percentage of net sales for each reportable segment and on a consolidated basis. See the “Use of Non-GAAP Financial Measures and Definitions” section preceding Part I, Item 1 of this Form 10-Q for additional information regarding our use of non-GAAP financial measures. A reconciliation from earnings before income taxes to adjusted EBITDA from continuing operations is provided in “Note M – Segment Operations.”

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Quarterly Comparison

• Consumer Products – Adjusted EBITDA from continuing operations was $28.6 million in the current year quarter, an increase of $3.0 million over the prior year quarter, primarily driven by higher volumes and gross margin improvement, partially offset by higher SG&A. Adjusted EBITDA from continuing operations in the current year quarter includes incremental bad debt expense of $1.1 million related to a customer bankruptcy.
• Building Products – Adjusted EBITDA from continuing operations increased slightly over the prior year quarter to $53.2 million as contributions from Ragasco and a favorable product mix were largely offset by lower equity income contributions from ClarkDietrich and WAVE, which decreased by $9.3 million compared to the prior year quarter. Adjusted EBITDA from continuing operations in the prior year quarter was negatively impacted by a $1.9 million lower of cost or net realizable value charge.
• Unallocated Corporate and Other – Adjusted EBITDA from continuing operations increased $3.8 million over the prior year quarter, primarily driven by lower SG&A and lower losses related to the deconsolidation of our former Sustainable Energy Solutions in May 2024, partially offset by lower contributions of equity income from Workhorse.

Year-to-Date Comparison

• Consumer Products – Adjusted EBITDA from continuing operations was $61.9 million, an increase of $9.4 million over the prior year quarter, primarily due to the favorable impact of higher volume in gross profit. Adjusted EBITDA from continuing operations in the current year period included $2.5 million of incremental bad debt related to customer bankruptcies. The prior year period was negatively impacted by a $3.1 million reserve related to the recall of our Balloon Time® Mini helium tank.
• Building Products – Adjusted EBITDA from continuing operations decreased $18.4 million from the prior year period as equity income was down $25.3 million partially offset by contributions from Ragasco and a favorable product mix. Equity income declined primarily from lower contributions from ClarkDietrich. Adjusted EBITDA from continuing operations in the prior year quarter was negatively impacted by a $1.9 million lower of cost or net realizable value charge which did not repeat in the current year quarter.
• Unallocated Corporate and Other – Adjusted EBITDA from continuing operations was down $0.4 million from the prior year period, primarily driven by lower equity earnings from Workhorse, which benefited from a $2.8 million gain related to the divestiture of its Brazilian operations in the prior year period, and higher SG&A, partially offset by lower losses due to the deconsolidation of our former Sustainable Energy Solutions operating segment in May 2024.

Liquidity and Capital Resources

During the nine months ended February 28, 2025, we generated $147.3 million of cash from operating activities, invested $37.5 million in property, plant and equipment, spent $88.2 million to acquire Ragasco, and received $11.4 million for the sale of 51% of our former Sustainable Energy Solutions operating segment. Additionally, we paid $21.1 million to repurchase 500,000 common shares and paid dividends of $25.5 million on the common shares during the nine months ended February 28, 2025.

The following table summarizes our consolidated cash flows for the periods presented:

Activity related to our discontinued operations has not been segregated in our consolidated statements of cash flows. See “Note B – Discontinued Operations” for a summarization of significant non-cash items related to discontinued operations.

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 million of borrowing capacity available to be drawn as of February 28, 2025.

Although we do not currently anticipate a need, we believe that we could access the financial markets to sell long-term debt or equity securities. However, the continuation of uncertain economic conditions, including those caused by a high interest rate environment, could create volatility in the financial markets, which may impact our ability to access capital and the terms under which we can do so.

We routinely monitor current operational requirements, financial market conditions, and credit relationships and we may choose to seek additional capital by issuing new debt and/or equity securities to strengthen our liquidity or capital structure. Should we seek additional capital, there can be no assurance that we would be able to obtain such additional capital on terms acceptable to us, if at all, and such additional equity or debt financing could dilute the interests of our existing shareholders and/or increase our interest costs. We may also from time to time seek to retire or repurchase our outstanding debt through cash purchases, in open-market purchases, privately-negotiated transactions or otherwise. Such repurchases, if any, will be upon such terms and at such prices as we may determine, and will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors.

Operating Activities

Our business is cyclical and cash flows from operating activities may fluctuate during the year and from year to year due to economic and industry conditions. We rely on cash and short-term borrowings to meet cyclical increases in working capital needs. These needs generally arise during periods of increased economic activity or increasing raw material prices, requiring higher levels of inventory and accounts receivable. During economic slowdowns or periods of decreasing raw material costs, working capital needs generally decrease as a result of the reduction of inventories and accounts receivable.

Net cash provided by operating activities was $147.3 million during the nine months ended February 28, 2025, down from $244.8 million from the prior year period. The decrease was primarily due to lower net earnings in the current year period driven by the Separation and a $31.4 million decrease in dividends received from unconsolidated joint ventures.

Investing Activities

Net cash used by investing activities was $115.1 million during the nine months ended February 28, 2025 compared to $116.5 million from the prior year period. Net cash used by investing activities during the nine months ended February 28, 2025 was driven primarily by the acquisition of Ragasco and capital expenditures partially offset by proceeds from the sale of 51% of the nominal share capital of our former Sustainable Energy Solutions operating segment on May 29, 2024.

Investment activities are largely discretionary and future investment activities could be reduced significantly, or eliminated, as economic conditions warrant. We assess acquisition opportunities as they arise, and any such opportunities may require additional financing. However, there can be no assurance that any such opportunities will arise, that any such acquisition opportunities will be consummated, or that any additional financing will be available on satisfactory terms if required.

Financing Activities

Net cash used by financing activities was $53.6 million during the nine months ended February 28, 2025, compared to $355.9 million in the prior year period. During the nine months ended February 28, 2025, we paid $21.1 million to repurchase 500,000 common shares and paid dividends of $25.5 million on the common shares. During the nine months ended February 29, 2024, we received $172.2 million in net proceeds of short-term borrowings and repaid $243.8 million of long-term debt associated with the redemption of the 2026 Notes and $150.0 million for the redemption of our 2024 Notes.

Common shares – On March 25, 2025, the Board declared a quarterly dividend of $0.17 per common share payable on June 27, 2025, to shareholders of record at the close of business on June 13, 2025.

On March 20, 2019, the Board authorized the repurchase of up to 6,600,000 common shares.

On March 24, 2021, the Board authorized the repurchase of up to an additional 5,618,464 common shares, increasing the total number of common shares then authorized for repurchase to 10,000,000. As of February 28, 2025, 5,565,000 common shares remained available for repurchase under these two authorizations.

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 February 28, 2025, 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. There were no outstanding borrowings drawn against the Credit Facility at February 28, 2025, leaving the full borrowing capacity of $500.0 million available for future use.

Dividend Policy

We currently have no material contractual or regulatory restrictions on the payment of dividends. Dividends are declared at the discretion of the Board. The Board reviews the dividend quarterly and establishes the dividend rate based upon our consolidated financial condition, results of operations, capital requirements, current and projected cash flows, business prospects, and other relevant factors. While we have paid a dividend every quarter since becoming a public company in 1968, there is no guarantee that payments of dividends will continue in the future.

Critical Accounting Estimates

The discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements and related disclosure, which have been prepared in accordance with GAAP. The preparation of these consolidated financial statements requires us to use judgment and make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. We continually evaluate our estimates, including those related to our valuation of receivables, inventories, intangible assets, accrued liabilities, income and other tax accruals, contingencies and litigation, and business combinations. We base our estimates on historical experience, current trends and other factors that we believe to be relevant and reasonable under the circumstances at the time the estimate was made. These results form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Critical accounting policies are defined as those that reflect our significant judgments and uncertainties that could potentially result in materially different results under different assumptions and conditions. Although actual results historically have not deviated significantly from those determined using our estimates, our consolidated financial position or results of operations could be materially different if we were to report under different conditions or to use different assumptions in the application of such policies. We believe that our estimates, assumptions, and judgments are reasonable in that they were based on information available when the estimates, assumptions and judgments were made. However, because future events and their effects cannot be determined with certainty, actual results could differ materially from those implied by our assumptions and estimates. Our critical accounting policies have not significantly changed from those discussed in “Part II – Item 7. – Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Estimates” of the 2024 Form 10-K.

Market risks have not materially changed from those disclosed in “Part II – Item 7A. – Quantitative and Qualitative Disclosures About Market Risk” of the 2024 Form 10-K.

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) that are designed to provide reasonable assurance that information required to be disclosed in the reports that Worthington Enterprises files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including Worthington Enterprises’ principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

Management, under the supervision of and with the participation of Worthington Enterprises’ principal executive officer and principal financial officer, performed an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this Form 10-Q. Based on that evaluation, Worthington Enterprises’ principal executive officer and principal financial officer have concluded that such disclosure controls and procedures were designed at the reasonable assurance level and were effective at a reasonable assurance level as of the end of the quarterly period covered by this Form 10-Q.

Changes in Internal Control Over Financial Reporting

There were no changes that occurred during the period covered by this Form 10-Q in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

There are certain risks and uncertainties in our business that could cause our actual results to differ materially from those anticipated. In “PART I – Item 1A. – Risk Factors” of the 2024 Form 10-K, we included a detailed discussion of our risk factors. Our risk factors have not changed significantly from those disclosed in the 2024 Form 10-K. Those risk factors should be read carefully in connection with evaluating our business and investments in the common shares and in connection with the forward-looking statements and other information contained in this Form 10-Q. Any of the risks described in the 2024 Form 10-K could materially affect our business, consolidated financial condition or future results and the actual outcome of matters as to which forward-looking statements are made. The risk factors described in the 2024 Form 10-K are not the only risks we face. Additional risks and uncertainties not currently known to us, or that we currently deem to be immaterial, also may materially adversely affect our business, consolidated financial condition and/or future results.