Core Insights - Worthington Steel, Inc. reported quarterly earnings of $0.38 per share, missing the Zacks Consensus Estimate of $0.48 per share, but showing an increase from $0.19 per share a year ago, resulting in an earnings surprise of -20.83% [1] - The company posted revenues of $871.9 million for the quarter ended November 2025, exceeding the Zacks Consensus Estimate by 11.35% and up from $739 million year-over-year [2] - Worthington Steel's shares have increased by approximately 11.4% since the beginning of the year, compared to a 15.6% gain in the S&P 500 [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.68 on revenues of $803 million, and for the current fiscal year, it is $2.72 on revenues of $3.39 billion [7] - The estimate revisions trend for Worthington Steel was mixed ahead of the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market [6] Industry Context - The Steel - Specialty industry, to which Worthington Steel belongs, is currently ranked in the top 15% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Core Insights - Worthington Steel, Inc. reported its financial results for the fiscal 2026 second quarter ending November 30, 2025, indicating a significant performance update for stakeholders [1] Financial Performance - The company’s financial results reflect key metrics that are essential for evaluating its operational efficiency and market position [1]

Group 1 - The document provides details for a conference call scheduled for December 18, 2025, at 8:30 a.m. ET [1] - The conference ID for the call is 5714141 [1] - A toll-free dial-in number for participants is provided as 888.510.2553 [1]

Core Insights - Worthington Steel, Inc. is set to release its quarterly earnings on December 17, 2025, with anticipated earnings per share of $0.48 and revenue of approximately $797.25 million, which are critical for assessing the company's financial health [1][6] Group 1: Company Recognition - Worthington Steel has been recognized as one of the best places to work in IT, highlighting its commitment to a positive work environment that can enhance employee satisfaction and productivity [2][6] Group 2: Financial Metrics - The company has a price-to-earnings (P/E) ratio of 15.15, indicating reasonable market valuation in terms of earnings [3][6] - Worthington Steel's price-to-sales ratio is 0.59, suggesting that its market value is relatively low compared to its sales, which may attract value-seeking investors [3] - The enterprise value to sales ratio stands at 0.67, reflecting the company's total valuation in relation to its revenue [4] - An enterprise value to operating cash flow ratio of 12.28 indicates how the market values the company's cash flow and overall operations [4] Group 3: Financial Stability - The debt-to-equity ratio of 0.30 indicates a low level of debt compared to equity, suggesting that the company is not overly reliant on borrowing [5][6] - A current ratio of 1.66 reflects good liquidity, allowing the company to cover its short-term liabilities effectively [5]

Core Insights - Worthington Steel, Inc. has been recognized as one of the Best Places to Work in IT for 2026, ranking No. 33 among large organizations, marking its eighth consecutive year on this list [1][3] Company Achievements - The company’s IT team has modernized global systems and introduced AI-driven tools, enhancing operational efficiency and supporting growth through integration and modernization projects [1][2] - Worthington Steel implemented Oracle Fusion Cloud ERP and Analytics to modernize its electrical steel operations in Canada, significantly reducing capital project approval cycle times from weeks to days [1][2] Employee Engagement and Development - Worthington Steel received honorable mentions in the categories of "Training and Development" and "Retention and Engagement," highlighting its commitment to employee growth and satisfaction [1][3] - The company emphasizes a people-first philosophy, focusing on employee opportunities and community strengthening [7] Technological Advancements - The IT organization has advanced the use of AI tools across various business functions, improving accuracy and efficiency, allowing teams to concentrate on higher-value tasks [2] - Integration of the Sitem Group acquisition involved upgrading infrastructure and cybersecurity, reinforcing Worthington Steel's digital foundation [2]

Core Insights - Meros Investment Management has fully exited its position in Worthington Steel, resulting in a liquidation valued at nearly $5.3 million, which reflects a significant portfolio adjustment [2][10]. Company Overview - Worthington Steel, based in Columbus, Ohio, operates as a steel processor with a diversified product portfolio, serving various industrial sectors including automotive, heavy truck, agriculture, construction, and energy [6][9]. - As of the latest market close, Worthington Steel shares were priced at $35.92, with a market capitalization of $1.8 billion, revenue of $3.1 billion, and net income of $118.6 million for the trailing twelve months (TTM) [4][6]. Recent Performance - The company reported a 5% revenue growth to $872.9 million in the most recent quarter, alongside an increase in operating income to $48.3 million and net earnings of $36.8 million, all showing meaningful improvement from the previous year [7]. - Adjusted earnings per share rose to $0.77 from $0.56, indicating positive traction in core spreads despite some volume softness in certain categories [7]. Market Context - Worthington Steel's stock has underperformed, down 18% over the past year, while the S&P 500 has increased by 13% during the same period [3]. - The exit by Meros Investment Management raises questions about investor sentiment, especially as the company appears to be stabilizing after its spin-off [7][10]. Strategic Positioning - Worthington Steel's vertically integrated model, strong balance sheet, and recent acquisition of the Sitem Group contribute to its ongoing transformation efforts [10]. - The company continues to focus on dividend continuity and steady margin improvement, which are key factors for fundamentals-driven investors to monitor [10].

Group 1 - The German metals company is currently in discussions with Worthington Steel [1] - It remains uncertain whether an official offer will be made [1]

Core Viewpoint - Worthington Steel, Inc. is currently in negotiations with Klöckner & Co SE regarding a potential voluntary public takeover offer, but no investment decision has been made and discussions may not lead to a transaction [1] Company Summary - Worthington Steel, Inc. is a metals processor that collaborates with customers to deliver solutions [1]

Core Points - Worthington Steel, Inc. has been awarded the 2026 Military Friendly® Employer Gold designation, highlighting its commitment to hiring veterans and supporting military personnel [1] Company Summary - Worthington Steel, Inc. is recognized for its efforts in creating a military-friendly workplace, which is reflected in the Gold designation for 2026 [1]

[Cautionary Note Regarding Forward-Looking Statements](index=4&type=section&id=Cautionary%20Note%20Regarding%20Forward-Looking%20Statements) [Forward-Looking Statements Overview](index=4&type=section&id=Forward-Looking%20Statements%20Overview) This section identifies forward-looking statements in the Form 10-Q, covering future financial performance, operational strategies, and market conditions - Forward-looking statements are identified by specific words/phrases (e.g., 'believe,' 'expect,' 'anticipate') and cover future **financial performance**, **operational strategies**, **growth**, **profitability**, and **market conditions**[8](index=8&type=chunk) - Statements also include **anticipated benefits** from the **Separation** of Worthington Enterprises, Inc.'s steel processing business into Worthington Steel as a stand-alone company on December 1, 2023[8](index=8&type=chunk) [Risks and Uncertainties](index=5&type=section&id=Risks%20and%20Uncertainties) Forward-looking statements are subject to inherent risks and uncertainties, including market conditions, commodity prices, supply chain, and regulatory factors - Actual results may differ materially due to risks such as **public health emergencies**, **regulatory approvals** for the Separation, **financial market conditions** (inflation, interest rates, recession), and the **ability of financial institutions to provide capital**[9](index=9&type=chunk) - Other significant risks include **changing commodity prices and supply**, **product demand and pricing**, changes in product mix, volatility in raw material availability and quality, **supply chain constraints**, **critical equipment failures**, and **financial difficulties of customers or suppliers**[9](index=9&type=chunk) - The Company also faces risks from **international business operations** (economic/political instability, currency exchange rates), **tariffs and trade restrictions**, **inflation**, **interest rate increases**, **impairment of assets**, **competitive pressures**, **environmental regulations**, judicial rulings, healthcare/tax law changes, **cybersecurity**, and the **cyclical nature of the steel industry**[11](index=11&type=chunk) [Part I. Financial Information](index=7&type=section&id=Part%20I.%20Financial%20Information) [Item 1. Financial Statements](index=7&type=section&id=Item%201.%20Financial%20Statements) This section presents Worthington Steel's unaudited consolidated financial statements for Q1 fiscal 2026, including balance sheets, earnings, comprehensive income, cash flows, and equity [Consolidated Balance Sheets](index=7&type=section&id=Consolidated%20Balance%20Sheets) Consolidated Balance Sheet Highlights (August 31, 2025 vs. May 31, 2025) | Metric | August 31, 2025 (Millions) | May 31, 2025 (Millions) | Change (Millions) | | :----------------------------------- | :------------------------- | :-------------------- | :---------------- | | Total Assets | $2,243.3 | $1,961.8 | +$281.5 | | Total Current Assets | $1,148.5 | $1,048.5 | +$100.0 | | Cash and cash equivalents | $78.3 | $38.0 | +$40.3 | | Receivables, net | $490.3 | $438.7 | +$51.6 | | Total Inventories | $478.5 | $422.0 | +$56.5 | | Total Liabilities | $912.4 | $763.9 | +$148.5 | | Total Current Liabilities | $693.6 | $631.5 | +$62.1 | | Total Debt (Short-term + Long-term) | $233.4 | $151.5 | +$81.9 | | Total Equity | $1,233.2 | $1,197.9 | +$35.3 | | Redeemable noncontrolling interest | $97.7 | $- | +$97.7 | [Consolidated Statements of Earnings](index=9&type=section&id=Consolidated%20Statements%20of%20Earnings) Consolidated Statements of Earnings Highlights (Three Months Ended August 31, 2025 vs. 2024) | Metric | August 31, 2025 (Millions) | August 31, 2024 (Millions) | Change (Millions) | YoY Change (%) | | :------------------------------------------ | :------------------------- | :------------------------- | :---------------- | :------------- | | Net sales | $872.9 | $834.0 | +$38.9 | +4.7% | | Gross margin | $115.2 | $100.4 | +$14.8 | +14.7% | | Operating income | $48.3 | $43.4 | +$4.9 | +11.3% | | Earnings before income taxes | $52.0 | $36.2 | +$15.8 | +43.6% | | Net earnings attributable to Worthington Steel | $36.8 | $28.4 | +$8.4 | +29.6% | | Basic EPS attributable to Worthington Steel shareholders | $0.73 | $0.57 | +$0.16 | +28.1% | | Diluted EPS attributable to Worthington Steel shareholders | $0.72 | $0.56 | +$0.16 | +28.6% | [Consolidated Statements of Comprehensive Income](index=10&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) Consolidated Statements of Comprehensive Income Highlights (Three Months Ended August 31, 2025 vs. 2024) | Metric | August 31, 2025 (Millions) | August 31, 2024 (Millions) | Change (Millions) | | :------------------------------------------ | :------------------------- | :------------------------- | :---------------- | | Net earnings attributable to Worthington Steel | $36.8 | $28.4 | +$8.4 | | Other comprehensive income | $1.1 | $2.2 | -$1.1 | | Comprehensive income attributable to Worthington Steel | $37.9 | $30.6 | +$7.3 | [Consolidated Statements of Cash Flows](index=11&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Consolidated Statements of Cash Flows Highlights (Three Months Ended August 31, 2025 vs. 2024) | Metric | August 31, 2025 (Millions) | August 31, 2024 (Millions) | Change (Millions) | | :------------------------------------------ | :------------------------- | :------------------------- | :---------------- | | Net cash (used in) provided by operating activities | $(6.3) | $54.6 | -$60.9 | | Net cash used in investing activities | $(29.6) | $(21.5) | -$8.1 | | Net cash provided by (used in) financing activities | $21.0 | $(37.3) | +$58.3 | | Decrease in cash, cash equivalents and restricted cash | $(14.6) | $(4.2) | -$10.4 | | Cash, cash equivalents, and restricted cash at end of period | $78.3 | $36.0 | +$42.3 | [Consolidated Statements of Equity and Mezzanine Equity](index=12&type=section&id=Consolidated%20Statements%20of%20Equity%20and%20Mezzanine%20Equity) Consolidated Statements of Equity and Mezzanine Equity Highlights (August 31, 2025 vs. May 31, 2025) | Metric | August 31, 2025 (Millions) | May 31, 2025 (Millions) | Change (Millions) | | :------------------------------------------ | :------------------------- | :-------------------- | :---------------- | | Total Shareholders' equity – controlling interest | $1,104.9 | $1,074.1 | +$30.8 | | Retained Earnings | $192.5 | $164.2 | +$28.3 | | Accumulated other comprehensive loss, net | $(2.9) | $(4.0) | +$1.1 | | Redeemable noncontrolling interest | $97.7 | $- | +$97.7 | | Total equity | $1,233.2 | $1,197.9 | +$35.3 | [Note 1 – Description of Business and Basis of Presentation](index=13&type=section&id=Note%201%20%E2%80%93%20Description%20of%20Business%20and%20Basis%20of%20Presentation) - Worthington Steel is a **value-added steel processor** in North America, holding **market-leading positions** in **carbon flat-rolled steel**, **tailor welded blanks**, and **electrical steel laminations**[30](index=30&type=chunk) - On December 1, 2023, Worthington Steel completed its **spin-off** from Worthington Enterprises, Inc. to become a **stand-alone publicly traded company**[31](index=31&type=chunk) - On June 3, 2025, the Company acquired a **52% controlling interest** in S.I.T.E.M. S.p.A. (Sitem Group), whose results are included in consolidated financial statements with a one-month reporting lag[33](index=33&type=chunk) Concentration of Net Sales by End Market (Three Months Ended August 31) | End Market | August 31, 2025 (%) | August 31, 2024 (%) | | :------------------------- | :------------------ | :------------------ | | Automotive | 56% | 51% | | Detroit Three Automakers | 35% | 32% | | Largest Automotive Customers: | | | | Customer A | 13% | 13% | | Customer B | 15% | 13% | [Note 2 – Revenue Recognition](index=16&type=section&id=Note%202%20%E2%80%93%20Revenue%20Recognition) - Revenue is recognized upon transfer of control of goods or services, reflecting the expected consideration. The Company generates revenue from processing steel to customer specifications (**direct sales**) and toll processing customer-owned material (**fee-for-service**)[49](index=49&type=chunk)[5