TRG | The Bottom Line – 1/26

This week, TRG initiated coverage of Worthington Enterprises (WOR), a manufacturer of specified, niche industrial and consumer products with high barriers of entry driving leading share and superior cash generation in fast growing end markets. The company operates three business units: Building Products (BPG), Consumer Products (CPG) and Sustainable Energy Solutions (SES). BPG ops drive strong cash flows through the enterprise. CPG, in addition to also demonstrating strong cash generation, has been a key growth engine for WOR. Finally, SES drives additional growth and credibility for environmental initiatives globally. We believe each division should benefit from key drivers of a U.S. “Golden Era” for construction: 1) increased government stimulus and support (HVAC products, ceiling solutions, metal framing, tools); 2) environmental investment (CNG systems, refillable solutions, propane systems); 3) population shift (lawn & garden, grill products, foam adhesives); and 4) re-shoring/near shoring (industrial production, metal framing, HVAC products). Based on EV/EBITDA range of 12x-13x, WOR’s 12-month fair value range is $67-73, the mid-point being $70 implying 30% upside. We will be continuing TRG’s Fireside Chat Series with WOR CEO Andy Rose on Thursday, February 15th.