Financial Data and Key Metrics Changes - Adjusted EBITDA for the quarter was $75.2 million, with earnings per share at $0.72, and net sales of $872.9 million, reflecting a year-over-year increase [4][13] - Earnings increased from $28.4 million or $0.56 per share in the prior year quarter to $36.8 million or $0.72 per share in the current quarter [13][15] - Estimated pre-tax inventory holding gains were $5.6 million compared to losses of $16.6 million in the prior year, marking a favorable swing of $22.2 million [16] Business Line Data and Key Metrics Changes - Automotive shipments increased by 17% year-over-year, with the Detroit 3 OEMs experiencing a 5% production increase while Worthington's shipments rose nearly 13% [21][22] - Direct sales volume constituted 63% of the mix, up from 56% in the prior year quarter, while toll processing volumes decreased by 22% year-over-year [20][23] - The construction market saw a modest decline of 3%, while agricultural volumes dropped nearly 50% due to ongoing challenges in the agricultural equipment market [22] Market Data and Key Metrics Changes - Current pricing for hot rolled coil is approximately $800 per ton, down from a peak of $950 per ton in March, reflecting softer market demand [18] - The market for transformers is expected to grow by up to 7% per year over the next decade, driven by the increasing need for electricity in the U.S. [7] - The company shipped approximately 929,000 tons during the quarter, down 7% compared to the prior year quarter, primarily due to decreased toll volume [19] Company Strategy and Development Direction - The company is focused on electrical steel investments and margin-accretive growth, with production in Canada expected to start in early calendar year 2026 [7][8] - The expansion of the facility in Mexico will begin production soon, supplying electrical steel laminations for hybrid and electric vehicles [8] - The company is leveraging artificial intelligence to enhance operations, including demand forecasting and predictive maintenance [9][10] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the automotive market for the remainder of calendar year 2025, despite ongoing market uncertainties [6][21] - The company is positioned to capitalize on opportunities arising from supply chain shifts and customer complexities [6] - Management noted that the current macro environment remains mixed, with limited visibility in several sectors expected to persist [5] Other Important Information - The company reported a cash flow from operations outflow of $5 million and a free cash flow outflow of $34 million, impacted by increases in working capital [24] - A quarterly dividend of $0.16 per share was announced, payable on December 26, 2025 [24] Q&A Session Summary Question: Can you provide more details on the Sedum transaction and mezzanine financing structure? - The Sedum purchase price was composed of $60 million in cash and the contribution of the NOG Gold facility, financed using ABL [31] Question: What are the future opportunities in the automotive sector? - Management is cautiously optimistic, projecting a unit build rate of $15 million and expecting further market share gains [33] Question: How does the company manage the impact of Section 232 tariffs on electrical steel laminations? - Management indicated minimal impact from tariffs, as customers are willing to pay them, and a significant portion of the customer base is USMCA compliant [36] Question: Will the closure of the Worthington Samuel facility impact toll processing volumes? - The majority of the toll volume decline is attributed to market conditions and the facility closure, with some reductions due to customer program changes [43] Question: What is the expectation for direct sales volume moving forward? - Direct sales volume is expected to remain in the 60%-65% range, with toll processing at 35%-40% [45]

Financial Data and Key Metrics Changes - Adjusted EBITDA for the first quarter was $75.2 million, with earnings per share at $0.72, and net sales reached $872.9 million, reflecting a year-over-year increase [4][13] - Earnings increased from $28.4 million or $0.56 per share in the prior year quarter to $36.8 million or $0.72 per share in the current quarter [13][15] - Estimated pre-tax inventory holding gains were $5.6 million compared to losses of $16.6 million in the prior year, marking a favorable swing of $22.2 million [16] Business Line Data and Key Metrics Changes - Automotive shipments increased by 17% year-over-year, with shipments to the Detroit Three OEMs growing nearly 13% against a 5% production increase [21][22] - Direct sales volume constituted 63% of the mix, up from 56% in the prior year quarter, while toll processing volumes decreased by 22% year-over-year [20][23] - The construction market saw a modest decline of 3%, while agricultural volumes dropped nearly 50% due to ongoing challenges in the agricultural equipment market [22] Market Data and Key Metrics Changes - Market pricing for hot rolled coil peaked at $950 per ton in March but has since decreased to approximately $800 per ton due to softer market demand [18] - The company shipped approximately 929,000 tons during the quarter, down 7% compared to the prior year quarter, primarily due to decreased toll volume [19][20] - The energy and container markets experienced modest increases, while the heavy truck market saw a 7% decline [22] Company Strategy and Development Direction - The company is focused on electrical steel investments and margin-accretive growth, with production in Canada expected to start in early calendar year 2026 [7][8] - The expansion of the facility in Mexico is set to begin production soon, supporting the electrification of transportation [8] - The company is leveraging artificial intelligence to enhance operations and back-office functions, aiming for improved efficiency and cost savings [9][10] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism despite market uncertainties, emphasizing the importance of agility and collaboration in navigating challenges [5][6] - The company anticipates continued growth in the automotive sector and is preparing for potential market recovery in 2026 [32] - Management highlighted a disciplined approach to capital allocation and a commitment to generating strong free cash flow [11][24] Other Important Information - The company reported a cash outflow of $5 million from operations and a free cash flow outflow of $34 million, impacted by increases in working capital [24][25] - A quarterly dividend of $0.16 per share was announced, payable on December 26, 2025 [24] Q&A Session Summary Question: Can you provide more details on the Sedum transaction and mezzanine financing structure? - The Sedum acquisition was financed with $60 million in cash and the contribution of a facility, with the minority interest classified as mezzanine equity due to its unique structure [30][31] Question: What are the future opportunities in the automotive sector? - Management remains cautiously optimistic about the automotive market, expecting to gain further market share and positive momentum in 2026 [32] Question: How does the company manage the impact of Section 232 tariffs on electrical steel laminations? - The company has seen little impact from the tariffs, as customers are willing to pay them, and a significant portion of the customer base is USMCA compliant [35] Question: Will the closure of the Worthington Samuel facility impact toll processing volumes? - The decline in toll processing volumes is primarily due to market conditions and the closure of the facility, with some additional impacts from customer decisions [42] Question: What is the expectation for direct sales volume moving forward? - Direct sales volume is expected to remain in the 60% to 65% range, with toll processing making up 35% to 40% [44]

Financial Data and Key Metrics Changes - Adjusted EBITDA for Q1 2026 was $75.2 million, with earnings per share at $0.72, and net sales of $872.9 million, reflecting a year-over-year increase in performance [4][13] - Earnings increased from $28.4 million or $0.56 per share in the prior year quarter to $36.8 million or $0.72 per share in the current quarter [13][16] - Adjusted EBIT rose to $54.9 million, up $15.5 million from $39.4 million in the prior year quarter, primarily due to higher gross margin and increased equity earnings [17] Business Line Data and Key Metrics Changes - Automotive shipments increased by 17% year-over-year, with the Detroit Three OEMs experiencing a 5% production increase while Worthington's shipments rose nearly 13% [21][22] - Direct sales volume constituted 63% of the mix in the current quarter, up from 56% in the prior year quarter, with a 6% increase in direct sales volume compared to the previous year [20][21] - Toll processing volumes decreased by 22% year-over-year, attributed to softer market conditions and the closure of the Worthington Samuel Coil Processing facility [23][40] Market Data and Key Metrics Changes - Market pricing for hot rolled coil peaked at $950 per ton in March but has since declined to approximately $800 per ton due to softer demand [19] - The agricultural market faced challenges, with volumes down nearly 50% compared to the prior year quarter, while construction market shipments fell modestly by 3% [22] - The energy and container markets saw modest increases, contrasting with declines in other sectors [22] Company Strategy and Development Direction - The company is focused on electrical steel investments and margin-accretive growth, with production in Canada expected to start in early 2026 [8] - Expansion of the facility in Mexico is set to begin production soon, aimed at supplying electrical steel laminations for hybrid and electric vehicles [9] - The integration of AI into operations is a key part of the company's transformation strategy, aimed at improving efficiency and productivity [10][11] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the automotive market for the remainder of 2025, despite ongoing market uncertainties [6][21] - The company is positioned to capitalize on opportunities arising from supply chain shifts and customer complexities [6] - Management anticipates potential inventory holding losses in Q2 2026, estimating losses between $5 million to $10 million [20] Other Important Information - The company reported a cash outflow of $5 million from operations and a free cash flow outflow of $34 million, impacted by increases in working capital [24] - A quarterly dividend of $0.16 per share was announced, payable on December 26, 2025 [24] - The company ended the quarter with $78 million in cash and $233 million in outstanding debt, resulting in net debt of $155 million [25] Q&A Session Summary Question: Can you provide more details on the Sedum transaction and mezzanine financing structure? - The Sedum acquisition cost $60 million in cash, financed through ABL, with a unique mezzanine equity structure due to foreign currency involvement [28][30] Question: What is the outlook for automotive and opportunities for market share in 2026? - Management is cautiously optimistic, projecting a unit build rate of $15 million and identifying further opportunities for market share growth [31] Question: How does the company manage the impact of Section 232 tariffs on electrical steel laminations? - The company has seen little impact from tariffs, with strong demand and a significant portion of customers being USMCA compliant [33] Question: Will the closure of Worthington Samuel affect toll processing volumes? - The decline in toll processing volumes is primarily due to market conditions and the closure of the facility, with some customer program changes also contributing [40] Question: What are the expectations for volumes in fiscal Q2? - Normal seasonality is expected, with Q2 typically being 3% to 4% below Q1, and no significant demand triggers anticipated [42]

Financial Performance - Worthington Steel's net sales for the trailing twelve months (TTM) were $3.132 billion[70, 104] - The adjusted EBITDA for the TTM period was $235 million, with a margin of 7.5%[11, 71, 104] - Free cash flow for the TTM period was $32.4 million[11, 104] - Capital expenditures for the TTM period were $138.3 million, representing 4.4% of sales[11] Market Position and Strategy - The company delivered 3.7 million tons of steel in the TTM period, with 2.2 million tons direct and 1.5 million tons toll[11] - Automotive accounts for 53% of net sales, followed by Construction at 11%[13, 34] - The company is targeting a 10%+ adjusted EBITDA margin through various strategies[76, 77] - The company has a strong balance sheet with net leverage at 0.66x and total liquidity of $355 million[88] Growth Initiatives - The company is investing $85 million in Mexico to increase motor lamination capacity for xEV demand, targeting production start in early CY 2026[55, 59] - The company is investing $85 million in Canada to increase transformer core making capacity, targeting production start in early CY 2026[56, 59] - The company acquired a 52% ownership in Sitem Group to strengthen its electrical steel business globally[62, 66]

Core Insights - Worthington Steel, Inc. reported quarterly earnings of $0.77 per share, exceeding the Zacks Consensus Estimate of $0.72 per share, and showing an increase from $0.56 per share a year ago, resulting in an earnings surprise of +6.94% [1] - The company achieved revenues of $872.9 million for the quarter ended August 2025, surpassing the Zacks Consensus Estimate by 18.60% and up from $834 million year-over-year [2] - Worthington Steel's stock has increased by approximately 3.9% since the beginning of the year, while the S&P 500 has gained 13.2% [3] Earnings Outlook - The future performance of Worthington Steel's stock will largely depend on management's commentary during the earnings call and the company's earnings outlook [4] - The current consensus EPS estimate for the upcoming quarter is $0.49 on revenues of $727 million, and for the current fiscal year, it is $2.77 on revenues of $3.1 billion [7] Industry Context - The Steel - Specialty industry, to which Worthington Steel belongs, is currently ranked in the top 20% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8] - Empirical research suggests 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 first quarter of fiscal 2026, which ended on August 31, 2025 [1] Financial Performance - The company disclosed its earnings and financial metrics for the specified quarter [1]

Earnings Report - Worthington Steel, Inc. is set to release its first-quarter earnings results on September 24, with analysts expecting earnings of 72 cents per share, an increase from 56 cents per share in the same period last year [1] - The company projects quarterly revenue of $736 million, down from $834 million reported a year earlier [1] Recent Performance - On June 25, Worthington Steel reported fourth-quarter earnings of $1.05 per share, surpassing the analyst consensus estimate of 82 cents per share [2] - Following this report, Worthington Steel shares increased by 0.3%, closing at $33.68 [2] Analyst Ratings - Keybanc analyst Matthew Gilmor maintained an Overweight rating and raised the price target from $34 to $36 on September 16, 2025, with an accuracy rate of 68% [7] - Seaport Global analyst Martin Englert initiated coverage on the stock with a Neutral rating on March 11, 2024, having an accuracy rate of 49% [7]

Group 1 - Worthington Steel (NYSE: WS) will host a webcast to discuss its First Quarter 2026 results [1] - The webcast is scheduled for September 25 at 8:30 a.m. ET [1]

Acquisition and Expansion - Worthington Steel acquired a 52% controlling equity stake in Italy-based Sitem Group on June 3, 2025, expanding its international presence[20] - Significant strategic capital investments are being made for large-scale plant expansions in Mexico and Canada to support anticipated growth in the electrical steel market[115] - The company purchased a new building in Columbus, Ohio, expected to serve as its corporate headquarters by fiscal 2027[164] Financial Performance - During fiscal 2025, Worthington Steel purchased approximately 2.44 million tons of steel, comprising 70% hot-rolled, 20% cold-rolled, and 10% galvanized[32] - The automotive industry represented the largest end market for Worthington Steel, with the top three customers accounting for approximately 33.0% of total net sales during fiscal 2025[21] - The automotive and construction industries account for approximately 52.0% and 11.0% of the company's net sales, respectively, indicating a significant reliance on these sectors[61] - Total capital expenditures for the fiscal year ended May 31, 2025, were approximately $130.4 million[114] - The company expects inventory holding gains of approximately $5 million to $10 million in the first quarter of fiscal 2026[212] Operations and Manufacturing - Worthington Steel operates 28 manufacturing facilities across the U.S., Canada, China, India, Germany, and Mexico, with 19 located in the U.S.[20] - The company employs over 20 metallurgical engineers to enhance its technical services and support, improving product quality and customer relationships[37] - Worthington Steel's manufacturing facilities hold ISO 14001 certifications, reflecting its commitment to effective environmental management[46] - The company operates four joint ventures, including a 63%-owned pickling facility and a 55%-owned joint venture supplying tailor welded solutions for the automotive industry[41] Market Conditions and Risks - The company has faced volatility in steel prices due to factors such as supplier consolidation and geopolitical events, which could adversely affect operating results[63] - Recent tariffs imposed by the U.S. government include a 50% duty on steel and aluminum imports, which may discourage foreign imports and impact domestic pricing[71] - The ongoing conflict between Russia and Ukraine has caused significant market disruptions, including volatility in commodity prices and supply chain interruptions[97] - Competition in the steel market is increasing, which may lead to decreased demand, reduced market share, and lower prices for the company's products[88] Employee and Workplace Culture - The company emphasizes a people-first philosophy, focusing on employee development and maintaining a diverse and inclusive workplace culture[50] - The company has established a Diversity, Equity, and Inclusion Council to strengthen its workforce and foster an inclusive culture[57] - As of May 31, 2025, the company employed approximately 4,800 individuals, with an additional 500 employees in an unconsolidated joint venture, and 22% of these employees are represented by collective bargaining units[49] Financial and Legal Considerations - The principal shareholder, John P. McConnell, owns approximately 34% of the outstanding common shares, potentially influencing shareholder votes and decisions[126] - The company self-insures most risks, including product liability and workers' compensation, which could adversely affect financial results if significant claims arise[124] - Legal proceedings or investigations could negatively affect the company's results of operations and liquidity[122] - The company is required to maintain effective internal controls over financial reporting, with potential consequences for non-compliance impacting investor confidence[142] Economic Environment - The company is sensitive to changes in economic conditions, with demand in key markets like automotive and construction being cyclical and influenced by broader economic factors[79] - U.S. GDP growth was 2.8% in fiscal 2025, slightly down from 3.0% in fiscal 2024[205] - The Detroit Three automakers produced 6,299 thousand vehicles in fiscal 2025, down from 6,799 thousand in fiscal 2024[205] Sustainability and Compliance - The company is actively working to comply with various climate-related regulations, which may lead to increased operational costs and compliance burdens[73] - The company is committed to sustainability initiatives, which may involve significant costs and evolving reporting standards[76] - The company may incur additional costs related to environmental compliance, which could negatively impact financial condition and results of operations[129] Shareholder Information - Worthington Steel had 5,797 registered shareholders as of July 25, 2025[180] - The company’s common shares began trading on the NYSE on December 1, 2023, with a starting value of $100[183] - As of May 31, 2025, the cumulative total shareholder return for Worthington Steel was $115.03, compared to $109.41 for the S&P Small Cap 600 Index[185]

Financial Performance - Net sales for Q4 2025 were $832.9 million, a decrease of 9% from $911.0 million in Q4 2024[5] - Operating income for Q4 2025 was $66.4 million, down from $67.3 million in the prior year quarter[5] - Net earnings attributable to controlling interest increased to $55.7 million, compared to $53.2 million in Q4 2024[5] - Adjusted net earnings per diluted share were $1.05, slightly down from $1.06 in the prior year quarter[5] - Gross margin decreased by $4.0 million to $127.0 million, primarily due to lower toll margins[8] - Net sales for the three months ended May 31, 2025, were $832.9 million, a decrease of 8.6% compared to $911.0 million for the same period in 2024[23] - Gross margin for the twelve months ended May 31, 2025, was $388.6 million, down from $439.8 million in 2024, reflecting a decrease of 11.6%[23] - Operating income for the twelve months ended May 31, 2025, was $147.0 million, a decline of 24.3% from $194.5 million in 2024[23] - Net earnings attributable to controlling interest for the twelve months ended May 31, 2025, were $110.7 million, down 28.5% from $154.7 million in 2024[23] - Adjusted EBITDA for the twelve months ended May 31, 2025, was $215.1 million, down 25.7% from $289.7 million for the twelve months ended May 31, 2024[37] - Adjusted EBIT for the twelve months ended May 31, 2025, was $149.1 million, compared to $224.4 million for the same period in 2024, reflecting a decline of 33.5%[49] Cash Flow and Debt - Free cash flow for Q4 2025 was $8.4 million, compared to negative free cash flow of $9.2 million in Q4 2024[12] - The company ended Q4 2025 with a net debt position of $113.5 million[13] - Cash, cash equivalents, and restricted cash at the end of the period were $92.9 million, up from $40.2 million at the beginning of the period, reflecting an increase of 131.7%[29] - The company reported a net cash provided by operating activities of $230.3 million for the twelve months ended May 31, 2025, compared to $199.5 million in 2024, an increase of 15.5%[29] - The trailing twelve months free cash flow as of May 31, 2025, was $99.9 million, indicating strong cash generation capabilities[43] - Total debt as of May 31, 2025, was $151.5 million, with net debt calculated at $113.5 million after accounting for $38.0 million in cash and cash equivalents[44] Dividends and Shareholder Returns - A quarterly dividend of $0.16 per share was declared, payable on September 26, 2025[14] - The company declared cash dividends of $0.64 per share for the twelve months ended May 31, 2025, compared to $0.32 per share in 2024, a 100% increase[23] Market Position and Recognition - The company gained market share in key sectors and was recognized as a top workplace for the 13th consecutive year[3] Operational Adjustments - The company incurred restructuring and other expenses of $1.0 million for the three months ended May 31, 2025, compared to none in the same period of 2024[37] - The company incurred restructuring and other expenses of $1.0 million in Q4 2025, compared to $0.5 million in Q3 2025, indicating ongoing operational adjustments[41] Performance Metrics - The volume of steel sold for the three months ended May 31, 2025, was 982,180 tons, a decrease of 4.6% from 1,029,565 tons in the same period of 2024[37] - The company reported a net earnings margin of 6.7% for the three months ended May 31, 2025, compared to 5.8% for the same period in 2024[37] - Interest expense for Q4 2025 was $1.0 million, a decrease from $1.4 million in Q3 2025, showing improved cost management[40] - The company reported an EBITDA of $89.8 million for Q4 2025, up from $36.8 million in Q3 2025, marking a 143% increase[40] - Adjusted EBITDA for Q4 2025 was $87.0 million, compared to $41.9 million in Q3 2025, reflecting a 107% quarter-over-quarter growth[40] - Net earnings attributable to controlling interest for Q4 2025 reached $55.7 million, a significant increase from $13.8 million in Q3 2025[40]