Financial Performance - Net sales for Q3 2025 were $687.4 million, a decrease of 15% from $805.8 million in Q3 2024[5] - Operating income fell to $18.3 million, down 73% from $66.3 million in the prior year quarter[5] - Net earnings attributable to controlling interest decreased to $13.8 million, compared to $49.0 million in Q3 2024[10] - Adjusted EBIT for Q3 2025 was $25.3 million, down from $66.9 million in Q3 2024[5] - Gross margin decreased by $38.9 million to $81.2 million, primarily due to lower direct spreads[8] - Net sales for the three months ended February 28, 2025, were $687.4 million, a decrease of 14.7% compared to $805.8 million for the same period in 2024[22] - Operating income for the three months ended February 28, 2025, was $18.3 million, significantly lower than $66.3 million for the same period in 2024, representing a decline of 72.4%[22] - Net earnings attributable to controlling interest for the nine months ended February 28, 2025, were $55.0 million, compared to $101.5 million for the same period in 2024, a decrease of 45.9%[22] - Adjusted EBITDA for the nine months ended February 28, 2025, was $128.1 million, a decline of 37.0% from $203.2 million for the same period in 2024[37] - Adjusted EBIT for the nine months ended February 28, 2025, was $79.0 million, compared to $154.0 million for the same period in 2024[49] Cash Flow and Assets - Cash and cash equivalents as of February 28, 2025, were $63.3 million, with net cash provided by operating activities at $53.8 million[12] - Free cash flow for Q3 2025 was $25.2 million, compared to $22.3 million in the prior year quarter[12] - Total current assets as of February 28, 2025, were $912.6 million, down from $1,001.8 million as of May 31, 2024, a reduction of 8.9%[25] - Cash and cash equivalents increased to $63.3 million as of February 28, 2025, compared to $40.2 million as of May 31, 2024, an increase of 57.7%[25] - The company reported a net cash provided by operating activities of $176.4 million for the nine months ended February 28, 2025, compared to $163.9 million for the same period in 2024, an increase of 7.6%[29] - Net cash provided by operating activities for Q3 2025 was $53.8 million, down from $68.0 million in Q2 2025[43] Dividends and Shareholder Returns - A quarterly dividend of $0.16 per share was declared, payable on June 27, 2025[5] - Cash dividends declared per share remained consistent at $0.16 for both the three months ended February 28, 2025, and February 29, 2024[22] Debt and Liabilities - Total liabilities decreased to $656.6 million as of February 28, 2025, from $748.9 million as of May 31, 2024, a decline of 12.3%[27] - Total debt as of February 28, 2025, was $112.2 million, with net debt calculated at $48.9 million after accounting for cash and cash equivalents of $63.3 million[44] - The company’s interest expense, net, for the nine months ended February 28, 2025, was $6.1 million, an increase from $3.6 million in the same period last year[37] - Interest expense for Q3 2025 was $1.4 million, compared to $2.1 million in Q2 2025[40] Operational Metrics - Direct tons sold decreased by 7% and toll tons sold decreased by 15% compared to the prior year quarter[7] - The volume of steel sold for the three months ended February 28, 2025, was 881,410 tons, down 10.6% from 985,668 tons in the same period last year[37] - The adjusted EBIT margin for the three months ended February 28, 2025, was 3.7%, compared to 8.3% for the same period in 2024[37] Impairments and Costs - The company incurred impairment of assets totaling $7.4 million for the nine months ended February 28, 2025, compared to $1.4 million for the same period in 2024[22] - The company experienced an impairment of assets of $7.4 million for the three months ended February 28, 2025, which was excluded from non-GAAP measures[35] - For the nine months ended February 28, 2025, the company incurred $19.5 million in separation costs, which are excluded from non-GAAP measures[34] Other Notable Events - The company is progressing on acquiring a controlling equity stake in Italy-based Sitem S.p.A., with regulatory approval received[5] - The company reported a pension settlement gain of $(2.7) million for the nine months ended February 28, 2025[49] - Net earnings attributable to controlling interest for Q3 2025 were $13.8 million, up from $12.8 million in Q2 2025, and $28.4 million in Q1 2025[40] - Adjusted EBITDA for Q3 2025 was $41.9 million, compared to $30.6 million in Q2 2025 and $55.6 million in Q1 2025[40] - Free cash flow for Q3 2025 was $25.2 million, a decrease from $33.2 million in Q2 2025 and $33.1 million in Q1 2025[43] - The trailing 12 months adjusted EBITDA as of February 28, 2025, was $214.6 million[40] - The company reported a GAAP net earnings per diluted share of $0.27 for the three months ended February 28, 2025, compared to $0.98 for the same period in 2024[35]

Worthington Steel, Inc (NYSE:WS) Q3 2025 Results Conference Call March 20, 2025 8:30 AM ET Company Participants Melissa Dykstra - Vice President, Corporate Communications & Investor Relations Geoff Gilmore - President & Chief Executive Officer Tim Adams - Vice President & Chief Financial Officer Conference Call Participants Martin Englert - Seaport Research Partners Phil Gibbs - KeyBanc Capital Markets John Tumazos - John Tumazos Very Independent Research Operator Hello, and welcome to Worthington Steel's T ...

Financial Data and Key Metrics Changes - Adjusted EBITDA for the third quarter was $41.9 million, down from $82.8 million in the prior year quarter [5] - Earnings per share decreased to $0.27 from $0.98 in the same period last year, impacted by lower volumes and average selling prices [6] - Net sales were $687 million, a decrease of $118 million or 15% from the prior year quarter, primarily due to lower direct volumes and market pricing [24] Business Line Data and Key Metrics Changes - Shipments to the automotive market were down 3% year over year, with production cuts at a major OEM affecting results [25][27] - Construction market shipments decreased by 20% year over year, attributed to economic uncertainty and a prior year pivot to a construction-heavy mix [29] - Heavy truck market demand remained slow, but signs of improvement were noted, with expectations for GDP-type growth for the rest of 2025 [9] Market Data and Key Metrics Changes - The North American automotive market is forecasted to produce approximately 15.3 million units in 2025, showing flat builds year over year [7] - The construction market is expected to gain momentum in the second half of 2025, benefiting from anticipated interest rate cuts [8] - The agriculture market is expected to remain soft due to interest rates, commodity prices, and tariffs affecting farmers' purchasing decisions [9] Company Strategy and Development Direction - The company remains focused on investments in the electrical steel market, anticipating a 6% annual growth in power demand over the next 15 years [10] - Strategic capital expenditures and acquisitions are part of the growth strategy, with ongoing expansions in electrical steel capabilities in Canada and Mexico [12][13] - The company is exploring AI integration into its operating model to enhance efficiency and analytics [18] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the near term, with expectations for improved clarity in the second half of 2025 [18] - The company is closely monitoring macroeconomic conditions, including inflation and interest rates, which could impact demand [47] - Management noted that while there is uncertainty, they believe they are well-positioned for growth [19] Other Important Information - The company reported cash flow from operations of $54 million and free cash flow of $25 million for the quarter [31] - A quarterly dividend of $0.16 per share was announced, payable on June 27, 2025 [32] - The company is in the process of closing a transaction for a 52% ownership stake in a steel lamination manufacturer [11] Q&A Session Summary Question: Impact of tariff policy - Management anticipates very little impact on business from tariff policies, with localized strategies in place to mitigate risks [37][40] Question: TWB charges and performance - Special charges related to TWB included a write-off of R&D and early retirement program costs, impacting quarterly results [42][43] Question: Expectations for underlying EBITDA normalization - Management indicated that normalization of underlying EBITDA is uncertain and heavily driven by market demand and volume [46][47] Question: Performance of Servius Aero - Servius Aero faced demand compression similar to the U.S. market, with impacts from exchange rate movements and inventory holding losses [53][54] Question: Construction market share efforts - The company is actively pursuing more opportunities in the construction market to regain market share lost due to economic uncertainty [60] Question: New automotive customer awards - New automotive programs are expected to ramp up over the coming months, contributing positively to volume and margins [64][65]

Financial Data and Key Metrics Changes - Adjusted EBITDA for the third quarter was $41.9 million, down from $82.8 million in the prior year quarter [5] - Earnings per share decreased to $0.27 from $0.98 in the same period last year, impacted by lower volumes and average selling prices [6][21] - Net sales were $687 million, a decrease of $118 million or 15% from the prior year quarter, primarily due to lower direct volumes and market pricing [24] Business Line Data and Key Metrics Changes - Shipments to the automotive market were down 3% year over year, with production cuts at a major OEM affecting results [7][25] - Construction market shipments decreased by 20% year over year, attributed to economic uncertainty and a prior year pivot towards construction due to an automotive strike [29] - Heavy truck market demand remains slow, but signs of improvement are noted, with expectations for GDP-type growth for the remainder of 2025 [9] Market Data and Key Metrics Changes - The North American automotive market is forecasted to produce approximately 15.3 million units in 2025, showing flat builds year over year [7] - The construction market is expected to gain momentum in the second half of 2025, benefiting from anticipated interest rate cuts [8] - The agriculture market is expected to remain soft due to interest rates, commodity prices, and tariffs affecting purchasing decisions [9] Company Strategy and Development Direction - The company remains focused on investments in the electrical steel market, anticipating a 6% annual growth in power demand over the next 15 years [10][11] - Strategic capital expenditures and acquisitions are ongoing, with expansions in electrical steel capabilities in Canada and Mexico [13] - The company is pursuing a transformation strategy aimed at improving operational efficiency and reducing costs [14][15] Management's Comments on Operating Environment and Future Outlook - Management expresses cautious optimism about the near term, with expectations for improved clarity in the second half of 2025 [18] - The company is closely monitoring macroeconomic conditions, including inflation and interest rates, which could impact demand [47] - Management believes they are well-positioned for growth, with a strong focus on safety, quality, and customer service [19] Other Important Information - The company reported cash flow from operations of $54 million and free cash flow of $25 million for the quarter [31] - A quarterly dividend of $0.16 per share was announced, payable on June 27, 2025 [32] - The company is exploring AI integration into its operating model and expanding its advanced analytics portfolio [18] Q&A Session Summary Question: Impact of tariff policy - Management anticipates minimal impact on business from tariff policies, with localized strategies in place to mitigate risks [37][40] Question: TWB performance and charges - Special charges related to TWB included a write-off of R&D and early retirement program costs, impacting quarterly results [42][44] Question: Normalization of underlying EBITDA - Management indicates uncertainty in demand makes it difficult to predict when underlying EBITDA will normalize, but they are cautiously optimistic for the end of the calendar year [46][48] Question: Construction market share efforts - Management acknowledges a tough comparison in construction volumes but is actively pursuing opportunities to regain market share [61] Question: New automotive customer awards - The company has gained share in the automotive market, with expectations for increased volume and margin impact from new programs over the coming months [63][65]

Group 1: Earnings Performance - Worthington Steel, Inc. reported quarterly earnings of $0.35 per share, missing the Zacks Consensus Estimate of $0.67 per share, and down from $0.99 per share a year ago, representing an earnings surprise of -47.76% [1] - The company posted revenues of $687.4 million for the quarter ended February 2025, missing the Zacks Consensus Estimate by 6.09%, compared to year-ago revenues of $805.8 million [2] - Over the last four quarters, Worthington Steel has surpassed consensus EPS estimates two times and topped consensus revenue estimates three times [2] Group 2: Stock Performance and Outlook - Worthington Steel shares have lost about 18% since the beginning of the year, while the S&P 500 has declined by -4.5% [3] - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to these expectations [4] - The current consensus EPS estimate for the coming quarter is $0.94 on $776 million in revenues, and for the current fiscal year, it is $2.26 on $3.13 billion in revenues [7] Group 3: Industry Context - The Steel - Specialty industry, to which Worthington Steel belongs, is currently in the top 34% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact stock performance [5]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended November 30, 2024 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________ to ___________ Commission File Number: 001-41830 WORTHINGTON STEEL, INC. (Exact name of registrant as specified in its charte ...

Financial Performance - Net sales for Q2 fiscal 2025 were $739.0 million, a decrease of 9% from $808.0 million in Q2 fiscal 2024[2] - Operating income increased to $18.9 million compared to an operating loss of $8.8 million in the prior year quarter[2] - Net earnings attributable to controlling interest were $12.8 million, or $0.25 per diluted share, compared to a net loss of $6.0 million, or $0.12 per diluted share, in the prior year[2] - Adjusted net earnings per diluted share attributable to controlling interest were $0.19, up from $0.11 in the prior year quarter[2] - Net earnings for the six months ended November 30, 2024, were $48.3 million, a decrease from $60.0 million in the same period last year, representing a decline of approximately 19.0%[11] - Net sales for the three months ended November 30, 2024, were $739.0 million, a decrease of 8.5% compared to $808.0 million for the same period in 2023[17] - For the three months ended November 30, 2024, net earnings attributable to controlling interest were $12.8 million, compared to a loss of $6.0 million in the prior year, marking a significant turnaround[25] - For the six months ended November 30, 2024, net sales were $1,573.0 million, down from $1,713.8 million in 2023, a decrease of 8.2%[28] Cash Flow and Liquidity - Cash and cash equivalents as of November 30, 2024, were $52.0 million, with net cash provided by operating activities at $68.0 million[4] - Free cash flow for Q2 fiscal 2025 was $33.2 million, down from $121.0 million in the prior year quarter[4] - Net cash provided by operating activities increased to $122.6 million, compared to $119.2 million for the same period last year, reflecting a growth of about 2.9%[11] - Cash and cash equivalents at the end of the period were $52.0 million, down from $214.4 million, reflecting a decrease of approximately 75.7%[11] - The company reported a net cash provided by financing activities of $(55.6) million, a decrease from $118.9 million in the same period last year[11] - Free cash flow for the six months ended November 30, 2024, was $33.2 million, consistent with $33.1 million in the prior year, demonstrating stable cash generation[29] Assets and Liabilities - Total current assets decreased to $857.4 million as of November 30, 2024, down from $1,001.8 million as of May 31, 2024[18] - Total liabilities decreased to $594.2 million as of November 30, 2024, compared to $748.9 million as of May 31, 2024, indicating a reduction of 20.7%[18] - Total assets decreased to $1,739.3 million as of November 30, 2024, down from $1,866.4 million as of May 31, 2024[18] - The company had no long-term debt borrowings as of November 30, 2024, indicating a strong balance sheet position[29] Operational Highlights - Gross margin increased by $19.8 million to $80.0 million, driven by higher direct spreads despite lower volume[3] - Gross margin for the three months ended November 30, 2024, was $80.0 million, representing a gross margin percentage of 10.8%, down from 7.4% in the prior year[17] - Operating income for the six months ended November 30, 2024, was $62.3 million, compared to $60.9 million for the same period in 2023, reflecting a year-over-year increase of 2.3%[17] - Adjusted EBITDA for the three months ended November 30, 2024, increased to $30.6 million, up from $23.0 million in the same period of 2023, reflecting a growth of 33.0%[25] - The adjusted EBITDA margin for the six months ended November 30, 2024, was 5.5%, compared to 7.0% in the prior year, indicating a decrease in profitability[28] - The company reported a pension settlement gain of $2.7 million for the six months ended November 30, 2024, which positively impacted earnings[28] Strategic Initiatives - The company executed a definitive agreement to acquire a controlling equity stake in Italy-based Sitem S.p.A., enhancing its product offerings in electric motor laminations[2] - The company is focusing on future growth opportunities following its separation from Worthington Enterprises, Inc., with expectations for improved operational performance[16] - The company anticipates potential benefits from transformation and innovation efforts, aiming to enhance competitive positioning and market share[16] - Forward-looking statements indicate expectations for future cash positions and operational performance, with a focus on maintaining margins and improving profitability[16] Dividends - The company declared a quarterly dividend of $0.16 per share, payable on March 28, 2025[4] - The company declared cash dividends of $0.16 per share for the three months ended November 30, 2024[17]

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Financial Data and Key Metrics - Adjusted EBITDA for Q2 2025 was $30.6 million, up from $23 million in the prior year quarter [8] - Earnings per share (EPS) for Q2 2025 was $0.25, compared to a loss of $0.12 per share in the same period last year [8] - Net sales for the quarter were $739 million, down 9% from the prior year quarter due to lower volumes and lower average selling prices [35] - Shipments for the quarter were 936,000 tons, down 3% year-over-year [35] - Cash flow from operations was $68 million, and free cash flow was $33.2 million [42] Business Line Performance - Automotive market shipments were down 2% year-over-year, with a significant 30% decrease in volume from one major OEM customer [36][37] - Construction market volumes decreased by 20% year-over-year, influenced by a shift in market mix and unexpected automotive order cuts [40][41] - Heavy truck market is expected to remain slow in the first half of 2025 but could see growth in the second half due to regulatory changes [23] Market Performance - The US automotive market showed positive signs in November, with overall vehicle sales reaching their highest levels since May 2021 [22] - The construction market is expected to see moderate growth in 2025, particularly in data centers and manufacturing sectors [23] - Europe remains a high-growth market for electric vehicles, with 80% of vehicles produced expected to be battery electric or hybrids by 2030 [11] Strategic Developments and Industry Competition - The company announced the acquisition of a 52% stake in Sitem Group, strengthening its presence in Europe and expanding its electrical steel lamination business [11][12] - The company continues to implement its transformation strategy, focusing on continuous improvement in quality, service, and cost efficiency [14][15] - Worthington Steel was recognized as a military-friendly employer for the 10th consecutive year and included in Computerworld's list of Top Places to Work in IT [18][19] Management Commentary on Operating Environment and Future Outlook - Management expressed cautious optimism for the automotive market, expecting OEMs to adjust their commercial strategies and rebuild market share [21][61] - Lower interest rates and decreasing inflation are expected to provide positive momentum for the construction market [23] - The company remains positive about its long-term prospects, citing strong customer relationships, an experienced leadership team, and a sound strategy [24] Other Important Information - The company released its first Corporate Citizenship and Sustainability Report, highlighting achievements in safety, carbon emissions reduction, and community support [17] - A new member, Scott Kelly, was added to the Board of Directors, bringing expertise in operations and the energy industry [20] - Capital expenditures for fiscal 2025 are expected to increase to $125 million, up from the previous estimate of $110 million, due to timing changes and additional projects [43][44] Q&A Session Summary Question: What caused the significant drop in EBITDA per ton, and when will profitability return to previous levels? - The drop was primarily due to unexpected volume declines, increased SG&A expenses (including bad debt and professional fees), and underperformance at Serviacero [54] - Management expects profitability to stabilize as the automotive market recovers and the company adjusts to the current challenges [61] Question: What are the implications of potential US trade policy changes under a new administration? - The company does not expect significant disruptions from potential tariffs, as it sources locally and has operations in Canada and Mexico that mitigate risks [71] - Management believes that any trade policy changes will likely be negotiated without major disruptions to the North American supply chain [71] Question: Are there any signs of recovery in the company's end markets? - Management sees cautious optimism in the automotive market, with potential recovery in the latter half of 2025 driven by lower interest rates and regulatory changes [74][75] - The construction market is expected to see moderate growth, while the heavy truck market may pick up later in the year due to regulatory changes [74]

Company Performance - Worthington Steel, Inc. reported quarterly earnings of $0.19 per share, missing the Zacks Consensus Estimate of $0.70 per share, representing an earnings surprise of -72.86% [1] - The company posted revenues of $739 million for the quarter ended November 2024, surpassing the Zacks Consensus Estimate by 5.87%, but down from $808 million year-over-year [2] - Over the last four quarters, Worthington Steel has surpassed consensus EPS estimates three times and topped consensus revenue estimates four times [2] Stock Movement and Outlook - Worthington Steel shares have increased approximately 40.1% since the beginning of the year, outperforming the S&P 500's gain of 26.9% [3] - The company's earnings outlook is crucial for investors, with current consensus EPS estimates at $0.86 for the coming quarter and $2.95 for the current fiscal year [7] - The estimate revisions trend for Worthington Steel is mixed, resulting in a Zacks Rank 3 (Hold), indicating expected performance in line with the market [6] Industry Context - The Steel - Specialty industry, to which Worthington Steel belongs, is currently in the top 33% of over 250 Zacks industries, suggesting a favorable outlook compared to the bottom 50% [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]