Worthington's ASME tanks help to cool AI computing infrastructure.
The company's data center business could grow exponentially in the coming years.
Shares of Worthington Enterprises (NYSE: WOR) rose on Wednesday after the industrial manufacturer highlighted its attractive artificial intelligence (AI)-driven growth prospects.
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Worthington's net sales climbed 13% year over year to $344 million in its fiscal 2027 first quarter, which ended on Aug. 31.
Recent acquisitions drove six percentage points of that growth, while organic sales gains accounted for the rest. Worthington completed its purchase of LSI Group, a leading supplier of metal roof components, in January.
Worthington is seeing particularly strong growth in its data center-related sales. The company's ASME tanks, which are designed to meet strict standards set by the American Society of Mechanical Engineers, are increasingly being used in liquid cooling systems inside AI data centers.
Worthington believes the market for these tanks could grow more than 10x in the coming years, driven by soaring demand for AI infrastructure.
All told, Worthington's adjusted net earnings grew 3% to $40 million. Its adjusted earnings per share, boosted by stock buybacks, rose 5% to $0.82. That bested Wall Street's estimates, which had called for per-share profits of $0.75.
Better still, Worthington's free cash flow nearly doubled to $54 million. Management indicated that this cash would enable it to acquire more businesses, while also rewarding investors with dividends and share repurchases.
"With growing free cash flow generation and a healthy balance sheet, we have the flexibility to invest in and pursue additional growth opportunities that fit our strategy," CEO Joe Hayek said.
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Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.