Worthington Steel Reports Second Quarter Fiscal 2026 Results

Worthington Steel, Inc. (NYSE:WS), a market-leading, value-added metals processing company, today reported financial results for the fiscal 2026 second quarter ended November 30, 2025.

Second Quarter Highlights (all comparisons to the second quarter of fiscal 2025):

• Net sales of $871.9 million increased 18% compared to $739.0 million.
• Operating income of $21.7 million compared to $18.9 million.
• Net earnings attributable to controlling interest of $18.8 million compared to $12.8 million.
• Net earnings per diluted share attributable to controlling interest of $0.37 compared to $0.25; adjusted net earnings per diluted share attributable to controlling interest of $0.38 compared to $0.19.
• Adjusted EBIT of $26.6 million compared to $14.3 million.
• Declared a quarterly dividend of $0.16 per share payable on March 27, 2026, to shareholders of record at the close of business on March 13, 2026.

"Our results this quarter reinforce that our strategy is working," said Geoff Gilmore, president and CEO of Worthington Steel. "By staying focused on higher-value solutions, disciplined product mix, inventory management, and outstanding service, we are building a stronger, more resilient earnings profile even as markets remain mixed. We believe that focus will continue to serve us well as conditions evolve heading into calendar 2026."

Quarterly Results

Net sales for the second quarter of fiscal 2026 were $871.9 million, an increase of $132.9 million, or 18%, compared to the prior year quarter. The increase was driven primarily by higher direct volumes and, to a lesser extent, higher average direct selling prices. The increases were partially offset by lower toll volumes as well as slightly lower average toll selling prices. Direct tons sold increased by 13%, of which the Sitem Group accounted for approximately 2% of the increase. Toll volumes decreased 24% in the second quarter of fiscal 2026 compared to the prior year quarter. The decrease in toll volumes was primarily related to lower volumes from Worthington Samuel Coil Processing ("WSCP") due to the closure of the toll processing manufacturing facility in Cleveland, Ohio in May 2025, as well as softening demand from mill customers. Direct selling prices increased 7% and toll selling prices decreased 4% in the second quarter of fiscal 2026 compared to the prior year quarter. The mix of direct tons versus toll tons processed was 65% to 35% in the second quarter of fiscal 2026 compared to 55% to 45% in the prior year quarter.

Gross margin in the second quarter of fiscal 2026 increased by $13.2 million over the prior year quarter to $93.2 million. The increase was driven primarily by higher direct volumes and higher direct spreads, partially offset by lower toll margins. Higher direct volumes favorably impacted gross margin by $16.5 million. Direct spreads, up $6.5 million, were impacted by a $6.2 million favorable change from an estimated $13.4 million inventory holding loss in the prior year quarter to an estimated $7.2 million inventory holding loss in the second quarter of fiscal 2026. Toll margins, down $10.5 million, were negatively impacted by $7.7 million due to lower volumes and by $2.7 million due to an unfavorable change in toll mix. Sitem Group contributed $1.6 million in gross margin.

Operating income increased $2.8 million from the prior year quarter to $21.7 million. The increase was driven primarily by a $13.2 million increase in gross margin, partially offset by higher selling, general and administrative ("SG&A") expense, and a $0.6 million impairment of assets. The $9.8 million increase in SG&A expense, which included $2.5 million due to Sitem Group, was primarily attributable to an increase in compensation expense and professional fees partially offset by lower bad debt expense. The impairment of assets during the second quarter of fiscal 2026 represents an impairment on machinery at our manufacturing facility in Taylor, Michigan.

Net earnings attributable to controlling interest of $18.8 million in the second quarter of fiscal 2026 compares to $12.8 million in the prior year quarter. Net earnings per diluted share attributable to controlling interest of $0.37 per diluted share for its fiscal 2026 second quarter compares to $0.25 per diluted share in the prior year quarter.

Adjusted net earnings attributable to controlling interest of $19.4 million in the second quarter of fiscal 2026 compares to $9.7 million in the prior year quarter. Adjusted net earnings per diluted share attributable to controlling interest of $0.38 per diluted share compares to $0.19 per diluted share in the prior year quarter. The second quarter of fiscal 2026 adjusted results exclude a $0.4 million after-tax impairment, or $0.01 per diluted share, and a $0.2 million after-tax other loss, net, which did not result in an impact to adjusted net earnings per diluted share. The prior year quarter adjusted results exclude a $2.0 million after-tax pension settlement gain, or $0.04 per diluted share, and a $1.1 million after-tax gain on land sale, or $0.02 per diluted share.

Certain amounts disclosed within the Company's quarterly results have been adjusted to conform to the current presentation due to the removal of the deemed dividend on noncontrolling interest recorded in the first quarter of fiscal 2026. The adjustment had an immaterial impact to the presented results.

Balance Sheet, Cash Flow and Capital Allocation

As of November 30, 2025, the Company had cash and cash equivalents of $89.8 million. During the second quarter of fiscal 2026, net cash provided by operating activities was $99.3 million compared to $68.0 million in the prior year quarter. Investment in property, plant and equipment during the second quarter of fiscal 2026 was $24.7 million compared to $34.8 million in the prior year quarter. The Company generated free cash flow (as defined in the Non-GAAP Financial Measures / Supplemental Data section later in this release) of $74.6 million in the second quarter of fiscal 2026 compared to $33.2 million in the prior year quarter.

The Company ended the second quarter of fiscal 2026 with debt of $182.1 million and $89.8 million in cash and cash equivalents, resulting in a net debt (as defined in the Non-GAAP Financial Measures / Supplemental Data section later in this release) position of $92.3 million.

The Company's board of directors declared a quarterly dividend of $0.16 per common share. The dividend is payable on March 27, 2026, to shareholders of record at the close of business on March 13, 2026.

Conference Call

The Company will review fiscal 2026 second quarter results during its quarterly conference call on December 18, 2025, beginning at 8:30 a.m., Eastern Time. Conference call details are available in the investor section of the Company's website at www.WorthingtonSteel.com.

About Worthington Steel

Worthington Steel (NYSE:WS) is a metals processor that partners with customers to deliver highly technical and customized solutions. Worthington Steel's expertise in carbon flat-roll steel processing, electrical steel laminations and tailor welded solutions is driving steel toward a more sustainable future.

As one of the most trusted metals processors in North America, Worthington Steel and its approximately 6,000 employees harness the power of steel to advance our customers' visions through value-added processing capabilities including galvanizing, pickling, configured blanking, specialty cold reduction, lightweighting and electrical lamination. Headquartered in Columbus, Ohio, Worthington Steel operates 37 facilities in seven states and 10 countries. Following a people-first Philosophy, commitment to sustainability and proven business system, Worthington Steel's purpose is to generate positive returns by providing trusted and innovative solutions for customers, creating opportunities for employees and strengthening its communities.

Safe Harbor Statement

Selected statements contained in this release constitute "forward-looking statements," as that term is used in the Private Securities Litigation Reform Act of 1995 (the "Act"). The Company wishes to take advantage of the safe harbor provisions included in the Act. Forward-looking statements reflect the Company's current expectations, estimates or projections concerning future results or events. These statements are often identified by the use of forward-looking words or phrases such as "believe," "anticipate," "may," "could," "should," "would," "intend," "plan," "will," "likely," "expect," "estimate," "project," "position," "strategy," "target," "aim," "seek," "foresee" and similar words or phrases. These forward-looking statements include, without limitation, statements relating to: future or expected cash positions, liquidity and ability to access financial markets and capital; outlook, strategy or business plans; the anticipated benefits of the Company's separation from Worthington Enterprises, Inc. (the "Separation"); the expected financial and operational performance of, and future opportunities for, the Company following the Separation; the tax treatment of the Separation transaction; the leadership of the Company following the Separation; future or expected growth, growth potential, forward momentum, performance, competitive position, sales, volumes, cash flows, earnings, margins, balance sheet strengths, debt, financial condition or other financial measures; pricing trends for raw materials and finished goods and the impact of pricing changes; the ability to improve or maintain margins; expected demand or demand trends for the Company or its markets; additions to product lines and opportunities to participate in new markets; expected benefits from transformation and innovation efforts; the ability to improve performance and competitive position at the Company's operations; anticipated working capital needs, capital expenditures and asset sales; anticipated improvements and efficiencies in costs, operations, sales, inventory management, sourcing and the supply chain and the results thereof; projected profitability potential; the ability to make acquisitions and the projected timing, results, benefits, costs, charges and expenditures related to acquisitions, joint ventures, headcount reductions and facility dispositions, shutdowns and consolidations; projected capacity and the alignment of operations with demand; the ability to operate profitably and generate cash in down markets; the ability to capture and maintain market share and to develop or take advantage of future opportunities, customer initiatives, new businesses, new products and new markets; expectations for Company and customer inventories, jobs and orders; expectations for the economy and markets or improvements therein; expectations for generating improving and sustainable earnings, earnings potential, margins or shareholder value; effects of judicial rulings; the ever-changing effects of the novel coronavirus ("COVID-19") pandemic and the various responses of governmental and nongovernmental authorities thereto on economies and markets, and on our customers, counterparties, employees and third-party service providers; and other non-historical matters.

Because they are based on beliefs, estimates and assumptions, forward-looking statements are inherently subject to risks and uncertainties that could cause actual results to differ materially from those projected. Any number of factors could affect actual results, including, without limitation, those that follow: our ability to successfully realize the anticipated benefits of the Separation; the effect of conditions in national and worldwide financial markets, including inflation, increases in interest rates and economic recession, and with respect to the ability of financial institutions to provide capital; the impact of tariffs, the adoption of trade restrictions affecting the Company's products or suppliers, a United States withdrawal from or significant renegotiation of trade agreements, the occurrence of trade wars, the closing of border crossings, and other changes in trade regulations or relationships; changing oil prices and/or supply; product demand and pricing; changes in product mix, product substitution and market acceptance of the Company's products; volatility or fluctuations in the pricing, quality or availability of raw materials (particularly steel), supplies, transportation, utilities, labor and other items required by operations (especially in light of Russia's invasion of Ukraine); effects of sourcing and supply chain constraints; the outcome of adverse claims experience with respect to workers' compensation, product recalls or product liability, casualty events or other matters; effects of facility closures and the consolidation of operations; the effect of financial difficulties, consolidation and other changes within the steel, automotive, construction and other industries in which the Company participates; failure to maintain appropriate levels of inventories; financial difficulties (including bankruptcy filings) of original equipment manufacturers, end-users and customers, suppliers, joint venture partners and others with whom the Company does business; the ability to realize targeted expense reductions from headcount reductions, facility closures and other cost reduction efforts; the ability to realize cost savings and operational, sales and sourcing improvements and efficiencies, and other expected benefits from transformation initiatives, on a timely basis; the overall success of, and the ability to integrate, newly acquired businesses and joint ventures, maintain and develop their customers, and achieve synergies and other expected benefits and cost savings therefrom; the ability to realize expected benefits of strategically deployed capital expenditures; capacity levels and efficiencies, within facilities, within major product markets and within the industries in which the Company participates as a whole; the effect of disruption in the business of suppliers, customers, facilities and shipping operations due to adverse weather, casualty events, equipment breakdowns, labor shortages, interruption in utility services, civil unrest, international conflicts (especially in light of Russia's invasion of Ukraine), terrorist activities or other causes; changes in customer demand, inventories, spending patterns, product choices, and supplier choices; risks associated with doing business internationally, including economic, political and social instability (especially in light of Russia's invasion of Ukraine), foreign currency exchange rate exposure and the acceptance of the Company's products in global markets; the ability to improve and maintain processes and business practices to keep pace with the economic, competitive and technological environment; the effect of inflation, interest rate increases and economic recession, as well as potential adverse impacts as a result of the Inflation Reduction Act of 2022, which may negatively impact the Company's operations and financial results; deviation of actual results from estimates and/or assumptions used by the Company in the application of its significant accounting policies; the level of imports and import prices in the Company's markets; the impact of environmental laws and regulations or the actions of the United States Environmental Protection Agency or similar regulators which increase costs or limit the Company's ability to use or sell certain products; the impact of increasing environmental, greenhouse gas emission and sustainability regulations and considerations; the impact of judicial rulings and governmental regulations, both in the United States and abroad, including those adopted by the United States Securities and Exchange Commission ("SEC") and other governmental agencies as contemplated by the Coronavirus Aid, Relief and Economic Security (CARES) Act, the Consolidated Appropriations Act, 2021, the American Rescue Plan Act of 2021, and the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010; the effect of healthcare laws in the United States and potential changes for such laws, which may increase the Company's healthcare and other costs and negatively impact the Company's operations and financial results; the effect of tax laws in the United States and potential changes for such laws, which may increase the Company's costs and negatively impact its operations and financial results; cyber security risks; risks associated with artificial intelligence technologies; the effects of privacy and information security laws and standards; the cyclical nature of the steel industry; the Company's safety performance; the effects of competition and price pressures from competitors; and other risks described from time to time in the Company's filings with the SEC, including those described in "Part I – Item 1A. – Risk Factors" of the Company's Annual Report on Form 10-K for the fiscal year ended May 31, 2025.

Forward-looking statements should be construed in the light of such risks. The Company notes these factors for investors as contemplated by the Act. It is impossible to predict or identify all potential risk factors. Consequently, you should not consider the foregoing list to be a complete set of all potential risks and uncertainties. Readers are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date made. The Company does not undertake, and hereby disclaims, any obligation to update any forward-looking statements, whether as a result of new information, future developments or otherwise, except as required by applicable law.

WORTHINGTON STEEL, INC.

NON-GAAP FINANCIAL MEASURES / SUPPLEMENTAL DATA

(In millions, except volume and per share amounts)

The Company reports its financial results in accordance with accounting principles generally accepted in the United States ("GAAP"). The Company also presents certain non-GAAP financial measures including (a) adjusted operating income, (b) adjusted earnings before income taxes, (c) adjusted income tax expense, (d) adjusted net earnings attributable to controlling interest, (e) adjusted net earnings per diluted share attributable to controlling interest, (f) net earnings before interest and taxes attributable to controlling interest ("EBIT"), (g) adjusted net earnings before interest and taxes attributable to controlling interest ("adjusted EBIT"), (h) net earnings before interest, taxes, depreciation and amortization attributable to controlling interest ("EBITDA"), (i) adjusted net earnings before interest, taxes, depreciation and amortization attributable to controlling interest ("adjusted EBITDA"), (j) free cash flow, and (k) total debt less cash and cash equivalents ("net debt").

These non-GAAP financial measures typically exclude impairment and restructuring charges (gains) but may also exclude other items that management believes are not reflective of, and thus should not be included when evaluating the performance of, the Company's ongoing operations. Management uses these non-GAAP financial measures to evaluate the Company's performance, engage in financial and operational planning, and determine incentive compensation and believes these non-GAAP financial measures provide useful information to investors because they provide additional perspective on the performance of the Company's ongoing operations. Additionally, management believes these non-GAAP financial measures provide useful information to investors because they allow for meaningful comparisons and analysis of trends in the Company's business and enable investors to evaluate operations and future prospects in the same manner as management.

For the purposes of the subsequent tables, the non-GAAP measures have been adjusted for the items identified below:

• Impairment of assets – impairments of assets are excluded because they do not occur in the ordinary course of the Company's ongoing business operations, are inherently unpredictable in timing and amount, and are non-cash, so their exclusion facilitates the comparison of historical and current financial results.
• Restructuring – restructuring activities consist of items that are not part of the Company's ongoing operations, such as divestitures, closing or consolidating facilities, employee severance (including rationalizing headcount or other significant changes in personnel), and realignment of existing operations (including changes to management structure in response to underlying performance and/or changing market conditions).
• Acquisition completion bonus payment – consists of the one-time bonus payment paid to key individuals upon the successful acquisition closing of Sitem Group. The acquisition completion bonus payment was included within SG&A expense.
• Deferred tax asset adjustment – Tempel's electrical steel facility in Nagold, Germany, was included as part of the purchase consideration for the Sitem Group acquisition. The contribution resulted in the future disallowance of deferred tax assets located within certain foreign certain tax jurisdictions and resulted in the write-off of the deferred tax assets as well as the recognition of incremental income tax expense. As this impacts income tax, the adjustment does not impact EBIT, EBITDA, adjusted EBIT, or adjusted EBITDA.
• Tax indemnification adjustment – tax and indemnification adjustments reported in income tax expense and miscellaneous income, net, related to an indemnification agreement with the former owners of Tempel. These adjustments are the result of a first quarter fiscal 2025 favorable tax ruling. The indemnification agreement, which was entered into with the former Tempel owners at the time the Company acquired Tempel, provides protection to the Company from rulings by tax authorities through the acquisition date.
• Pension settlement gain – pension lift-out transaction to transfer a portion of the total projected benefit obligation of the Tempel pension plan to a third-party insurance company, which resulted in a pre-tax non-cash gain reported in miscellaneous income (expense), net, is excluded as it is not part of the Company's ongoing operations.
• Gain on land sale – sale of unused land on the campus of the Tempel subsidiary in China, which resulted in a pre-tax gain in miscellaneous income (expense), net, is excluded as it is not part of the Company's ongoing operations.
• Other loss, net – includes the following items reported in miscellaneous income (expense), net, which are excluded as they are not part of ongoing operations:
  • Net insured loss incurred for damage as a result of a contained fire at Tempel's subsidiary in Canada ("Tempel Canada"). The Company recognized a $0.5 million pre-tax loss equal to the amount of the insurance deductible.
  • Environmental reserve settlement gain of $0.2 million pre-tax recognized by Tempel Canada as the result of a prior indemnification with the former owners of the Canadian facility.

The following provides a reconciliation to the non-GAAP financial measures adjusted operating income, adjusted earnings before income taxes, adjusted income tax expense, adjusted net earnings attributable to controlling interest and adjusted net earnings per diluted share attributable to controlling interest from the most comparable GAAP measures for the three- and six-month periods ended November 30, 2025, and November 30, 2024.

To further assist in the analysis of results for the periods presented, the following volume and net sales information for the three- and six-month periods ended November 30, 2025, and November 30, 2024, has been provided along with a reconciliation of the non-GAAP financial measures, EBIT, adjusted EBIT and adjusted EBITDA to the most comparable GAAP measure, which is net earnings attributable to controlling interest. Net earnings margin is calculated by dividing net earnings attributable to controlling interest by net sales. Adjusted EBIT margin is calculated by dividing adjusted EBIT by net sales. Adjusted EBITDA margin is calculated by dividing adjusted EBITDA by net sales.

The table below provides a reconciliation from net earnings attributable to controlling interest (the most comparable GAAP financial measure) to the non-GAAP financial measures, EBITDA and adjusted EBITDA, for each of the past five fiscal quarters, the 12 months ended November 30, 2025, and the 12 months ended August 31, 2025.

The following provides a reconciliation of net cash provided by operating activities (the most comparable GAAP financial measure) to free cash flow for each of the past five fiscal quarters and the 12 months ended November 30, 2025. Free cash flow is a non-GAAP financial measure that management believes measures the Company's ability to generate cash beyond what is required for its business operations and capital expenditures.

The following provides a reconciliation of total debt (the most comparable GAAP financial measure) to the non-GAAP financial measure net debt. Net debt is calculated by subtracting cash and cash equivalents from total debt (defined as the aggregate of short-term borrowings, current maturities of long-term debt, and long-term debt). The calculation of net debt as of November 30, 2025, is outlined below.

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Melissa Dykstra

Vice President

Corporate Communications and Investor Relations

Phone: 614-840-4144

[email protected]