Worthington's $13M Quarter: A Metal-Bender Crashes the AI Cooling Party

The ASME tank business doubled a full year's revenue in three months — and management now thinks the addressable market could grow 10x

WOR · Earnings Call · 2026-09-23

A tank maker wanders into the AI trade

Worthington Enterprises has spent its post-spinoff life trying to convince the market it is more than a cyclical metal-bender. Its fiscal Q1 2027 call — the first under freshly renamed segments — finally offers a hard proof point, and it happens to sit inside the market's favorite secular theme. CEO Joe Hayek opened by flagging the ASME tank opportunity: pressure vessels that manage coolant in liquid cooling and thermal management systems for next-gen computing infrastructure. The numbers are the story. “In fiscal '26, we shipped roughly $13 million of ASME tanks for data centers. In the first quarter of fiscal '27, we generated an additional $13 million of revenue from that value stream, essentially matching what we did in the entire prior fiscal year.” — Joseph Hayek, President and Chief Executive Officer · 2026-09-23 Hayek then frames the ceiling: the legacy market has been "plus or minus $200 million a year," but industry sources suggest liquid-cooling and thermal-management tanks alone "could be more than 10x the size of the legacy market in the next few years." This is a genuinely company-unique signal. Cross-checking the recent reporters, none owns an analogous tank franchise — SMIN.L merely cites broad "Data center exposure" and "Thermal Solutions." The keyword ASME tank sits atop Worthington's own Q3-2026 keyword board, a first, with liquid cooling and thermal management riding just behind it. "Data centers" has been drifting in and out of the company's keyword sets for years, but never with a dollar figure attached the way it does now.

If you think about the way people describe this market, they talk about hyperscalers, data center builders and then ultimately... the picks and shovels that make data centers work. It's oversimplifying, but you can think of our solutions as types of picks and shovels.
Joseph Hayek, President and Chief Executive Officer · 2026-09-23

The tariff refund reversal

Just two quarters ago, Hayek was openly dismissive of tariff refunds. On the March 25 call he argued the government was unlikely to hand back money: “I'm not sure that the government is going to readily suggest that they want to give a couple of hundred billion dollars back.” — Joseph Hayek, President and Chief Executive Officer · 2026-03-25 He was wrong — or at least early. This quarter Colin Souza disclosed “a net pretax benefit of approximately $4 million or $0.06 per share related to IEEPA tariff refunds” — Colin Souza, Chief Financial Officer · 2026-09-23, booking the very IEEPA tariff refunds the company had written off. Here Worthington is not special — it is riding a broad wave. The global Q3 2026 keyword board is saturated with "Net tariff refunds," "IEEPA refund" and "benefit of tariff refunds," and fellow reporters MLKN and CBRL both surfaced their own tariff refund language the same week. Management is quick to note the underlying business grew even excluding the refund, but a one-time, high-margin item flattering a segment's optics is worth flagging.

The drags: A2L and steel

The offset is a refrigerant-transition hangover. Building Performance's Cooling and Construction business faces a brutal comparison as channel inventories normalize after pre-transition stockpiling. The A2L transition headwind widened to roughly $7 million of EBITDA impact this quarter — worse than the $5 million hit management cited in June, and more than they had guided. Souza's framing is unchanged: “We continue to view this primarily as more of a timing and comparison issue rather than a change in the long-term fundamentals of the business.” — Colin Souza, Chief Financial Officer · 2026-09-23 A2L has now been a recurring drag for several quarters, so the market may be growing impatient with the "timing" framing. Layered on top is tight steel. Extended lead times disrupted scheduling "a few million dollars" worth, per Hayek, cutting across both the tank and Balloon businesses. That echoes the same steel-tightness discussion from June and March — a recurring, not new, theme.

The numbers and the tape

The cash machine is the quiet anchor of the story. Trailing-twelve-month free cash flow hit a record, with the quarterly figure near $55 million — nearly double the prior-year quarter. Gross margin held near 27%, down roughly two points on unfavorable Building Performance mix. Leverage remains modest at negative $279 million of effective net cash, and at roughly 15x price-to-free-cash-flow the equity is hardly priced for the liquid-cooling optionality. The tape agrees that something is shifting. Worthington is up ~10% over the last 90 days, sitting just 4.5% below its September high. That is a notable divergence from the broad AI data center complex, which has bled 30-day losses across dozens of tickers in the global tape. Either Worthington's tank niche is genuinely insulated from the AI-hardware wobble, or the market has not yet connected the dots.

What it means

The setup is clear. Worthington is a mid-cap metal fabricator ($2.7B) with a small but fast-growing, company-unique data-center growth vector, a tariff-refund boost shared with the whole market, and a persistent A2L comparison it keeps calling temporary. The pivot point is whether ASME tanks scale from a $13-million-per-quarter curiosity into the "10x legacy market" management keeps invoking. For now, the burden is on sequential delivery — and on the November 10 Investor Day — to prove the picks-and-shovels pitch.