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]

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 August 31, 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 charter) ...

EXHIBIT 99.1 Melissa Dykstra Vice President Corporate Communications and Investor Relations Phone: 614-840-4144 Melissa.Dykstra@worthingtonsteel.com 100 W. Old Wilson Bridge Rd. Columbus, OH 43085 WorthingtonSteel.com Worthington Steel Reports First Quarter Fiscal 2025 Results COLUMBUS, Ohio, September 25, 2024 – Worthington Steel, Inc. (NYSE: WS), a market-leading, value-added metals processing company, today reported financial results for the fiscal 2025 first quarter ended August 31, 2024. First Quarter ...

Worthington Steel, Inc. (NYSE:WS) Q1 2025 Earnings Conference Call September 26, 2024 8:30 AM ET Company Participants Melissa Dykstra - VP of Corporate Communications and IR Geoffrey Gilmore - President and CEO Jeffrey Klingler - EVP and COO Timothy Adams - VP and CFO Conference Call Participants Martin Englert - Seaport Research Philip Gibbs - KeyBanc Capital Markets John Tumazos - John Tumazos Very Independent Research Operator Thank you for standing by and welcome to the Worthington Steel’s First Quarter ...

September 25th ended up being a disappointing day for shareholders of Worthington Steel (NYSE: WS ). This is because shares of the company dropped as much as 6.5% in after-hours trading. This was in response to management Crude Value Insights offers you an investing service and community focused on oil and natural gas. We focus on cash flow and the companies that generate it, leading to value and growth prospects with real potential. Subscribers get to use a 50+ stock model account, in-depth cash flow analy ...

Separation and Corporate Structure - Worthington Steel completed the separation from Worthington Enterprises on December 1, 2023, with a tax-free distribution of 100% of its common shares[9]. - Worthington Steel's common shares began trading on the NYSE under the ticker symbol "WS" following the separation[18]. - The company paid a $150.0 million distribution to the Former Parent in connection with the Separation completed on December 1, 2023[164]. - Following the separation from the Former Parent, the company may face higher costs of capital and increased operational expenses[101]. - The Distribution is contingent upon the Former Parent receiving a tax opinion regarding its qualification as a reorganization under Sections 355 and 368(a)(1)(D) of the Code[107]. - If the Distribution does not qualify, it could result in significant U.S. federal income tax liabilities for the Former Parent and its shareholders[108]. - The company may face restrictions on equity transactions for two years post-Distribution to maintain tax qualification[109]. - The Separation is expected to allow investors to value the Former Parent and the company separately, facilitating unique growth opportunities[113]. - The company may not achieve the expected benefits from the Separation, which could adversely affect its business and financial condition[114]. Financial Performance - Net sales for fiscal 2024 totaled $3,430.6 million, a decrease of $177.1 million compared to fiscal 2023, despite a volume increase of 52,798 tons (1.3%)[178]. - Operating income increased to $194.5 million in fiscal 2024, up $74.2 million from $120.3 million in fiscal 2023[177]. - Gross margin improved by $103.3 million to $439.8 million, representing 12.8% of net sales in fiscal 2024, compared to 9.3% in fiscal 2023[179]. - Selling, general and administrative expenses rose by $23.6 million to $224.4 million, accounting for 6.5% of net sales in fiscal 2024[180]. - Interest expense increased by $3.0 million to $6.0 million in fiscal 2024, primarily due to higher average debt levels[185]. - Income tax expense rose by $17.1 million to $46.1 million, reflecting a higher pre-tax earnings and a tax expense related to a pre-acquisition matter[187]. - Adjusted EBIT for fiscal 2024 was $224.4 million, an increase of $88.3 million from fiscal 2023, primarily due to favorable direct spreads[192]. - Fiscal 2024 generated $199.5 million in cash from operating activities, a decrease of 36.7% from $315.0 million in fiscal 2023[201]. - Net cash used in investing activities was $123.2 million in fiscal 2024, significantly higher than $22.2 million in fiscal 2023, primarily due to $103.4 million in capital expenditures[202]. - Net cash used in financing activities decreased to $68.8 million in fiscal 2024 from $280.2 million in fiscal 2023, mainly due to lower transfers to the Former Parent[205]. - Cash and cash equivalents at the end of fiscal 2024 were $40.2 million, up from $32.7 million at the end of fiscal 2023[197]. - The company declared cash dividends totaling $0.32 per common share during fiscal 2024, with a quarterly rate of $0.16 per share[207]. Market and Industry Conditions - The company serviced approximately 1,400 customers in fiscal 2024, with the automotive industry representing the largest end market, accounting for 32.0% of total net sales[11]. - The automotive and construction industries account for approximately 52.0% and 13.0% of the company's net sales, respectively[42]. - The automotive sector accounted for 52% of net sales in fiscal 2024, up from 50% in fiscal 2023[166]. - North American vehicle production increased to 15,900,000 units in fiscal 2024, compared to 14,910,000 units in fiscal 2023[169]. - Sales to the Detroit Three automakers represented 32.0% of consolidated net sales in fiscal 2024, compared to 30.2% in fiscal 2023[169]. - The average price of hot-rolled steel decreased to $866 per ton in fiscal 2024, down from $889 per ton in fiscal 2023[169]. - The company expects continued fluctuations in steel prices, with a decline noted in the first quarter of fiscal 2025[174]. - The company has experienced volatility in steel prices due to various factors, including the war in Ukraine and tariffs on foreign steel[45]. - The ongoing conflict between Russia and Ukraine has caused significant market disruptions, including volatility in commodity prices and supply chain interruptions[73]. Operational and Supply Chain Factors - Worthington Steel operates 29 manufacturing facilities across the U.S., Canada, China, India, Germany, and Mexico[10]. - The company has a controlling interest in three consolidated joint ventures and a non-controlling interest in one unconsolidated joint venture[10]. - The company faces risks related to economic downturns, particularly in its heavily concentrated automotive and construction markets[42]. - The company faces potential financial impacts due to fluctuations in raw material prices, particularly flat-rolled steel, which is subject to volatility from various external factors[46]. - Manufacturing costs and customer demand may be negatively affected by interruptions in the supply of key raw materials, including flat-rolled steel and zinc[47]. - An increase in the spread between steel and scrap prices can adversely impact margins, especially if scrap prices do not keep pace with rising steel prices[48]. - Excess global steel-making capacity may lead to downward pressure on U.S. steel prices due to excessive imports[49]. - The U.S. has imposed a 25% tariff on certain imported steel products, which may affect international demand for U.S. steel and the company's financial results[50]. - Future tariff changes could lead to increased imports of foreign steel, potentially lowering U.S. steel prices and adversely affecting revenues[51]. - Climate change regulations may increase operational costs, impacting the company's ability to pass these costs onto customers[52]. - Increased government fuel efficiency and emissions standards may negatively impact demand for steel products due to the automotive industry's shift towards lighter materials and electric motors[68]. - Dependence on third-party freight services poses risks; delays in raw material delivery could hinder manufacturing and negatively affect customer relationships[71]. Employee and Safety Practices - The company has approximately 4,600 employees, with 19% represented by collective bargaining units located outside the United States[31]. - The company maintains a strong safety record and offers competitive employee benefits, including parental leave and wellness programs[33]. - The company is focused on maintaining a strong culture that supports personal and professional development for employees[32]. - The company is committed to diversity, equity, and inclusion, with a dedicated council to strengthen these efforts across the organization[34]. Risks and Compliance - Financial difficulties and bankruptcy filings by customers could adversely impact the company's business operations and cash flows[43]. - Legal proceedings or investigations could adversely affect the company's results of operations and liquidity, with potential claims related to various compliance risks[92]. - The company self-insures most risks, and adverse claims experience not covered by insurance may negatively impact financial results[93]. - The company faces uncertainties in accounting and tax-related estimates, which could lead to material differences from actual results and adversely affect financial condition[94]. - The principal shareholder holds approximately 34% of the outstanding common shares, potentially exerting significant influence over shareholder votes[96]. - The company is subject to the Foreign Corrupt Practices Act, which requires compliance to avoid civil and criminal penalties[130]. - Changes in tax laws, such as proposed increases in the federal corporate income tax rate, could adversely impact the company's financial results[125]. - Proposed legislation regarding greenhouse gas emissions may increase operational costs and adversely affect the company's profitability[127]. Capital and Financing - The company entered into a multi-year senior secured revolving credit facility of up to $550.0 million, maturing on November 30, 2028[18]. - The company expects to finance growth initiatives through borrowings under its ABL Credit Facility, which matures on November 30, 2028, but may need additional funding sources[86]. - Increased leverage and borrowing rates could adversely impact the company's business and financial results if new indebtedness is incurred[87]. - The company must generate significant cash flows from operations to meet debt service requirements, as insufficient cash flow may necessitate seeking additional capital or restructuring existing debt[88]. - Rising interest rates in 2023 have increased the company's interest expense on its Revolving Credit Facility, potentially impacting its ability to service debt[89]. - The company currently has cash reserves and adequate borrowing availability, but tighter financial markets could negatively affect its access to capital[90]. - The company has a Credit Facility allowing borrowings of up to $550.0 million, with $148.0 million drawn as of May 31, 2024, leaving a borrowing capacity of $402.0 million[206][207].

[Executive Summary & Company Overview](index=1&type=section&id=Executive%20Summary%20%26%20Company%20Overview) Worthington Steel delivered strong fiscal 2024 results, highlighting strategic execution, industry recognition, and its core identity as a leading metals processor focused on customer solutions and sustainability [Fourth Quarter & Full Year Fiscal 2024 Highlights](index=1&type=section&id=Fourth%20Quarter%20%26%20Full%20Year%20Fiscal%202024%20Highlights) Worthington Steel reported a solid performance in Q4 and finished fiscal 2024 strong, with a focus on executing strategy, driving organic growth, and strategic M&A. The company achieved notable industry recognition and declared a quarterly dividend - Worthington Steel's President and CEO, Geoff Gilmore, highlighted solid Q4 performance and a strong finish to fiscal 2024, attributing momentum to employees and their continuous improvement efforts. The company remains focused on executing its strategy and driving shareholder value through organic growth and strategic M&A[2](index=2&type=chunk) Fourth Quarter & Full Year Fiscal 2024 Financial Highlights (Millions) | Metric | 4Q 2024 (Millions) | 4Q 2023 (Millions) | 12M 2024 (Millions) | 12M 2023 (Millions) | | :------------------------------------------------------------------ | :----------------- | :----------------- | :------------------ | :------------------ | | Net sales | $911.0 | $884.0 | $3,430.6 | $3,607.7 | | Operating income | $67.3 | $89.8 | $194.5 | $120.3 | | Net earnings attributable to controlling interest | $53.2 | $67.3 | $154.7 | $87.1 | | Net earnings per diluted share attributable to controlling interest | $1.06 | $1.37 | $3.11 | $1.77 | | Adjusted EBIT (Non-GAAP) | $70.4 | $98.4 | $224.4 | $136.1 | - Worthington Steel earned the **2023 Supplier of the Year by General Motors** for the third time in four years and was recognized as a **John Deere Partner-level Supplier** for the 12th consecutive year[9](index=9&type=chunk) - A quarterly dividend of **$0.16 per share** was declared, payable on September 27, 2024, to shareholders of record on September 13, 2024[9](index=9&type=chunk) [Company Profile & Strategy](index=2&type=section&id=Company%20Profile%20%26%20Strategy) Worthington Steel is a leading North American metals processor, specializing in value-added steel processing and customized solutions. The company operates 32 facilities globally, driven by a 'people-first Philosophy' and a commitment to sustainability, aiming to generate positive returns through innovation and community strengthening - Worthington Steel (NYSE:WS) is a metals processor that partners with customers to deliver highly technical and customized solutions, specializing in carbon flat-roll steel processing, electrical steel laminations, and tailor welded solutions[31](index=31&type=chunk) - The company, headquartered in Columbus, Ohio, operates **32 facilities** in seven states and six countries, employing **4,600 individuals**[14](index=14&type=chunk) - 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, guided by a 'people-first Philosophy' and a system of continuous improvement[2](index=2&type=chunk)[32](index=32&type=chunk) [Consolidated Financial Results](index=2&type=section&id=Consolidated%20Financial%20Results) This section details Worthington Steel's financial performance for both the fourth quarter and the full fiscal year 2024, covering net sales, operating income, and net earnings [Fourth Quarter Financial Performance](index=2&type=section&id=Fourth%20Quarter%20Financial%20Performance) In the fourth quarter of fiscal 2024, Worthington Steel experienced a 3% increase in net sales, primarily driven by higher direct selling prices and a favorable mix. However, operating income and gross margin decreased due to lower direct spreads and an inventory holding loss, leading to a decline in net earnings attributable to controlling interest [Net Sales and Volume](index=2&type=section&id=Net%20Sales%20and%20Volume%20(Q4)) Fourth quarter fiscal 2024 net sales increased by 3% to $911.0 million, driven by higher direct selling prices and a favorable mix, despite a slight decrease in direct and toll tons sold - Net sales for Q4 fiscal 2024 were **$911.0 million**, an increase of **$27.0 million (3%)** compared to the prior year quarter[3](index=3&type=chunk) - The increase in net sales was primarily driven by a **4% increase in direct selling prices** and a more favorable mix within toll processing, partially offset by a **1% decrease in direct tons** and a **3% decrease in toll tons sold**[3](index=3&type=chunk) - The mix of direct tons versus toll tons processed was **58% to 42%** in Q4 fiscal 2024, compared to **57% to 43%** in the prior year quarter[3](index=3&type=chunk) [Operating Income and Gross Margin](index=2&type=section&id=Operating%20Income%20and%20Gross%20Margin%20(Q4)) Operating income decreased by $22.5 million to $67.3 million in Q4 fiscal 2024, primarily due to a $19.2 million decline in gross margin and increased SG&A expenses, impacted by an inventory holding loss - Operating income decreased by **$22.5 million** to **$67.3 million** in Q4 fiscal 2024 compared to the prior year quarter[4](index=4&type=chunk) - The decrease in operating income was primarily due to a **$19.2 million decline in gross margin** and a **$10.6 million increase in selling, general and administrative (SG&A) expense**, driven by higher wage and benefit costs, other costs of being a stand-alone public company, and increased bad debt expense[4](index=4&type=chunk) - Gross margin decreased by **$19.2 million** to **$131.0 million**, primarily due to lower direct spreads, which were impacted by a **$36.0 million unfavorable change** from an estimated **$32.6 million inventory holding gain** in the prior year quarter to an an estimated **$3.4 million inventory holding loss** in Q4 fiscal 2024[11](index=11&type=chunk) [Net Earnings and EPS](index=2&type=section&id=Net%20Earnings%20and%20EPS%20(Q4)) Net earnings attributable to controlling interest for Q4 fiscal 2024 were $53.2 million, or $1.06 per diluted share, a decrease from the prior year quarter - Net earnings attributable to controlling interest for Q4 fiscal 2024 were **$53.2 million**, or **$1.06 per diluted share**, compared to **$67.3 million**, or **$1.37 per diluted share**, in Q4 fiscal 2023[12](index=12&type=chunk) - Adjusted net earnings attributable to controlling interest were **$53.2 million**, or **$1.06 per diluted share**, in Q4 fiscal 2024, compared to **$72.4 million**, or **$1.47 per diluted share**, in the prior year quarter[5](index=5&type=chunk) [Full Year Financial Performance](index=1&type=section&id=Full%20Year%20Financial%20Performance) For the full fiscal year 2024, Worthington Steel reported a decrease in net sales but a significant increase in operating income and net earnings attributable to controlling interest compared to fiscal 2023. Adjusted EBIT also saw a substantial rise Full Year Financial Performance (Millions) | Metric | 12M 2024 (Millions) | 12M 2023 (Millions) | Change (Millions) | Change (%) | | :------------------------------------------------------------------ | :------------------ | :------------------ | :---------------- | :--------- | | Net sales | $3,430.6 | $3,607.7 | $(177.1) | -4.9% | | Operating income | $194.5 | $120.3 | $74.2 | 61.7% | | Net earnings attributable to controlling interest | $154.7 | $87.1 | $67.6 | 77.6% | | Net earnings per diluted share attributable to controlling interest | $3.11 | $1.77 | $1.34 | 75.7% | | Adjusted EBIT (Non-GAAP) | $224.4 | $136.1 | $88.3 | 64.9% | [Financial Position & Cash Flow](index=2&type=section&id=Financial%20Position%20%26%20Cash%20Flow) This section reviews Worthington Steel's balance sheet, cash flow activities, and capital allocation strategies, including debt levels, capital expenditures, and dividend declarations [Balance Sheet Overview](index=2&type=section&id=Balance%20Sheet%20Overview) As of May 31, 2024, Worthington Steel reported a net debt position of $107.8 million, with $148.0 million in debt under its revolving credit facility and $40.2 million in cash and cash equivalents. Total assets increased to $1,866.4 million, while total liabilities rose to $748.9 million - The Company ended Q4 fiscal 2024 with debt of **$148.0 million** under its revolving credit facility and **$40.2 million** in cash and cash equivalents, resulting in a **net debt position of $107.8 million**[13](index=13&type=chunk) Balance Sheet Summary (Millions) | Metric | May 31, 2024 (Millions) | May 31, 2023 (Millions) | | :------------------------------------ | :---------------------- | :---------------------- | | Total assets | $1,866.4 | $1,764.4 | | Total liabilities | $748.9 | $609.8 | | Total Shareholders' equity - controlling interest | $985.3 | $1,029.0 | | Cash and cash equivalents | $40.2 | $32.7 | | Short-term borrowings | $148.0 | $2.8 | [Cash Flow Activities](index=2&type=section&id=Cash%20Flow%20Activities) Cash flow from operations decreased in Q4 fiscal 2024 compared to the prior year, while capital expenditures significantly increased, primarily due to strategic expansions in electrical steel operations. This resulted in negative free cash flow for the quarter - During Q4 fiscal 2024, the Company generated cash flow from operations of **$35.6 million**, a decrease from **$79.2 million** in the prior year period[29](index=29&type=chunk) - Capital expenditures for Q4 fiscal 2024 equaled **$44.8 million**, a significant increase from **$9.0 million** in the prior year quarter, primarily related to strategic expansions in electrical steel operations in Mexico and Canada[29](index=29&type=chunk) - The Company had **negative free cash flow of $9.2 million** in Q4 fiscal 2024, compared to **$70.2 million** in the prior year quarter[29](index=29&type=chunk) Cash Flow Summary (Millions) | Cash Flow Item (Millions) | 3 Months Ended May 31, 2024 | 3 Months Ended May 31, 2023 | 12 Months Ended May 31, 2024 | 12 Months Ended May 31, 2023 | | :---------------------------------------- | :-------------------------- | :-------------------------- | :--------------------------- | :--------------------------- | | Net cash provided by operating activities | $35.6 | $79.2 | $199.5 | $315.0 | | Net cash used in investing activities | $(44.4) | $(8.9) | $(123.2) | $(22.2) | | Net cash used in financing activities | $(11.8) | $(70.3) | $(68.8) | $(280.2) | | Cash and cash equivalents at end of period| $40.2 | $32.7 | $40.2 | $32.7 | [Capital Allocation & Dividends](index=2&type=section&id=Capital%20Allocation%20%26%20Dividends) The Board of Directors declared a quarterly dividend of $0.16 per common share, reflecting the company's commitment to returning value to shareholders - The Board of Directors declared a quarterly dividend of **$0.16 per common share**, payable on September 27, 2024, to shareholders of record on September 13, 2024[13](index=13&type=chunk) [Non-GAAP Financial Measures & Reconciliations](index=9&type=section&id=Non-GAAP%20Financial%20Measures%20%26%20Reconciliations) This section defines and reconciles Worthington Steel's non-GAAP financial measures, including adjusted operating income, EBIT, EBITDA, free cash flow, and net debt, providing clarity on performance metrics [Non-GAAP Definitions and Purpose](index=9&type=section&id=Non-GAAP%20Definitions%20and%20Purpose) Worthington Steel utilizes various non-GAAP financial measures, such as adjusted operating income, EBIT, EBITDA, free cash flow, and net debt, to provide investors with a clearer view of the company's ongoing operational performance by excluding non-recurring or non-cash items like impairments, restructuring, and separation costs - The Company presents non-GAAP financial measures including adjusted operating income, adjusted earnings before income taxes, adjusted net earnings attributable to controlling interest, adjusted net earnings per diluted share, EBIT, adjusted EBIT, EBITDA, adjusted EBITDA, free cash flow, net debt, and pro forma adjusted EBIT[21](index=21&type=chunk) - Management uses these non-GAAP measures to evaluate performance, engage in financial and operational planning, and determine incentive compensation, believing they provide useful information to investors by offering additional perspective on ongoing operations and enabling meaningful comparisons and trend analysis[41](index=41&type=chunk) - Key exclusions from GAAP measures for non-GAAP adjustments include impairment of long-lived assets, restructuring activities, separation costs, and tax indemnification adjustments, as these are considered not reflective of ordinary course business operations[22](index=22&type=chunk) [Adjusted Operating Income, Net Earnings & EPS](index=9&type=section&id=Adjusted%20Operating%20Income%2C%20Net%20Earnings%20%26%20EPS) Reconciliations for adjusted operating income, net earnings, and EPS are provided for quarterly and full-year periods, demonstrating the impact of specific adjustments like impairment of long-lived assets, separation costs, and tax indemnification on reported GAAP figures GAAP vs. Non-GAAP 4Q 2024 (Millions) | Metric | GAAP 4Q 2024 (Millions) | Non-GAAP 4Q 2024 (Millions) | | :------------------------------------------------------------------ | :---------------------- | :-------------------------- | | Operating Income | $67.3 | $67.3 | | Earnings Before Income Taxes | $75.3 | $72.5 | | Income Tax Expense | $17.6 | $14.8 | | Net Earnings Attributable to Controlling Interest | $53.2 | $53.2 | | Net Earnings per Diluted Share Attributable to Controlling Interest | $1.06 | $1.06 | GAAP vs. Non-GAAP 4Q 2023 (Millions) | Metric | GAAP 4Q 2023 (Millions) | Non-GAAP 4Q 2023 (Millions) | | :------------------------------------------------------------------ | :---------------------- | :-------------------------- | | Operating Income | $89.8 | $97.1 | | Earnings Before Income Taxes | $95.0 | $102.3 | | Income Tax Expense | $23.4 | $21.2 | | Net Earnings Attributable to Controlling Interest | $67.3 | $72.4 | | Net Earnings per Diluted Share Attributable to Controlling Interest | $1.37 | $1.47 | GAAP vs. Non-GAAP 12M 2024 (Millions) | Metric | GAAP 12M 2024 (Millions) | Non-GAAP 12M 2024 (Millions) | | :------------------------------------------------------------------ | :----------------------- | :--------------------------- | | Operating Income | $194.5 | $215.4 | | Earnings Before Income Taxes | $216.2 | $234.3 | | Income Tax Expense | $46.1 | $38.8 | | Net Earnings Attributable to Controlling Interest | $154.7 | $170.5 | | Net Earnings per Diluted Share Attributable to Controlling Interest | $3.11 | $3.42 | [Adjusted EBIT & Adjusted EBITDA](index=11&type=section&id=Adjusted%20EBIT%20%26%20Adjusted%20EBITDA) Reconciliations for Adjusted EBIT and Adjusted EBITDA are provided for quarterly and full-year periods, highlighting adjustments for interest, taxes, depreciation, amortization, impairments, and separation costs. For Q4 FY2024, Adjusted EBIT was $70.4 million and Adjusted EBITDA was $86.5 million, while for the full year FY2024, these figures were $224.4 million and $289.7 million, respectively Adjusted EBIT & EBITDA (Millions) | Metric (Millions) | 3 Months Ended May 31, 2024 | 3 Months Ended May 31, 2023 | | :-------------------------- | :-------------------------- | :-------------------------- | | Net earnings attributable to controlling interest | $53.2 | $67.3 | | EBIT | $73.2 | $91.1 | | Adjusted EBIT | $70.4 | $98.4 | | Adjusted EBITDA | $86.5 | $115.5 | Full Year Adjusted EBIT & EBITDA (Millions) | Metric (Millions) | 12 Months Ended May 31, 2024 | 12 Months Ended May 31, 2023 | | :-------------------------- | :--------------------------- | :--------------------------- | | Net earnings attributable to controlling interest | $154.7 | $87.1 |\ | EBIT | $206.8 | $119.1 | | Adjusted EBIT | $224.4 | $136.1 | | Adjusted EBITDA | $289.7 | $205.7 | Quarterly and Trailing Twelve Months Adjusted EBITDA (Millions) | Metric (Millions) | 4Q 2024 | 3Q 2024 | 2Q 2024 | 1Q 2024 | 4Q 2023 | | :-------------------------- | :------ | :------ | :------ | :------ | :------ | | EBITDA | $89.3 | $81.8 | $8.1 | $92.9 | $108.2 | | Adjusted EBITDA | $86.5 | $82.8 | $23.0 | $97.4 | $115.5 | | Trailing twelve months adjusted EBITDA | $289.7 | $318.7 | | | | [Free Cash Flow](index=12&type=section&id=Free%20Cash%20Flow) Free cash flow, a non-GAAP measure indicating cash generated beyond operational and capital expenditure needs, was negative $(9.2) million in Q4 fiscal 2024, a decrease from $70.2 million in the prior year quarter. The trailing twelve months free cash flow was $96.1 million - Free cash flow is defined as net cash provided by (used in) operating activities less investment in property, plant and equipment[53](index=53&type=chunk) Quarterly and Trailing Twelve Months Free Cash Flow (Millions) | Metric (Millions) | 4Q 2024 | 3Q 2024 | 2Q 2024 | 1Q 2024 | 4Q 2023 | | :----------------------------------------------- | :------ | :------ | :------ | :------ | :------ | | Net cash provided by (used in) operating activities | $35.6 | $44.7 | $139.9 | $(20.7) | $79.2 | | Investment in property, plant and equipment | $(44.8) | $(22.4) | $(18.9) | $(17.3) | $(9.0) | | Free cash flow | $(9.2) | $22.3 | $121.0 | $(38.0) | $70.2 | | Trailing twelve months free cash flow | $96.1 | | | | | [Net Debt](index=12&type=section&id=Net%20Debt) Net debt, calculated as total debt less cash and cash equivalents, increased to $107.8 million as of May 31, 2024, from $86.4 million as of February 29, 2024 - Net debt is calculated by subtracting cash and cash equivalents from total debt (aggregate of short-term borrowings, current maturities of long-term debt, and long-term debt)[28](index=28&type=chunk) Net Debt Reconciliation (Millions) | Metric (Millions) | May 31, 2024 | February 29, 2024 | | :-------------------------------- | :----------- | :---------------- | | Total debt | $148.0 | $147.2 | | Less: cash and cash equivalents | $(40.2) | $(60.8) | | Net debt | $107.8 | $86.4 | [Pro Forma Adjusted EBIT](index=12&type=section&id=Pro%20Forma%20Adjusted%20EBIT) Pro forma adjusted EBIT is presented to illustrate the financial impact of operating as a stand-alone public company, assuming the Separation occurred on June 1, 2022. For Q4 FY2024, Pro Forma Adjusted EBIT was $70.4 million, and for the full year FY2024, it was $217.8 million, incorporating adjustments for incremental steel supply agreement margin and stand-alone corporate costs - Pro forma adjusted EBIT is a non-GAAP financial measure that management believes includes incremental and ongoing impacts to the Company's operating results as a stand-alone public company resulting from the Separation from Former Parent[54](index=54&type=chunk) Pro Forma Adjusted EBIT (Millions) | Metric (Millions) | 3 Months Ended May 31, 2024 | 3 Months Ended May 31, 2023 | | :-------------------------- | :-------------------------- | :-------------------------- | | Adjusted EBIT | $70.4 | $98.4 | | Total Pro Forma Adjustments | - | $(2.4) | | Pro Forma Adjusted EBIT | $70.4 | $96.0 | Full Year Pro Forma Adjusted EBIT (Millions) | Metric (Millions) | 12 Months Ended May 31, 2024 | 12 Months Ended May 31, 2023 | | :-------------------------- | :--------------------------- | :--------------------------- | | Adjusted EBIT | $224.4 | $136.1 | | Total Pro Forma Adjustments | $(6.6) | $(9.5) | | Pro Forma Adjusted EBIT | $217.8 | $126.6 | - Pro forma adjustments include incremental margin on sales to Former Parent under the steel supply agreement and an increase in SG&A expense for recurring stand-alone corporate functions and public company costs, offset by lower corporate profit sharing and bonus expense post-separation[58](index=58&type=chunk) [Forward-Looking Statements & Risks](index=3&type=section&id=Forward-Looking%20Statements%20%26%20Risks) This section outlines the inherent uncertainties and potential risk factors associated with Worthington Steel's forward-looking statements, emphasizing the possibility of actual results differing materially from projections [Safe Harbor Statement](index=3&type=section&id=Safe%20Harbor%20Statement) This section provides a safe harbor statement for forward-looking statements, as defined by the Private Securities Litigation Reform Act of 1995, indicating that such statements are subject to inherent risks and uncertainties that could cause actual results to differ materially from projections - Selected statements in the release constitute 'forward-looking statements' under the Private Securities Litigation Reform Act of 1995, reflecting the Company's current expectations, estimates, or projections concerning future results or events[33](index=33&type=chunk) - Forward-looking statements are inherently subject to risks and uncertainties that could cause actual results to differ materially from those projected[16](index=16&type=chunk) [Risk Factors](index=3&type=section&id=Risk%20Factors) Numerous factors could impact actual results, including financial market conditions, trade policies, raw material volatility, supply chain disruptions, operational challenges, strategic integration risks, and regulatory changes. Readers are cautioned against undue reliance on these forward-looking statements due to the impossibility of predicting all potential risk factors - Factors affecting actual results include the ability to realize anticipated benefits of the Separation, conditions in national and worldwide financial markets (**inflation, interest rates, recession**), and the impact of **tariffs and trade restrictions**[16](index=16&type=chunk) - Risks also involve volatility in pricing, quality, or availability of raw materials (particularly steel), supplies, transportation, utilities, and labor, as well as effects of sourcing and supply chain constraints[16](index=16&type=chunk) - Other risks include financial difficulties of business partners, the ability to realize targeted expense reductions and operational improvements, the overall success and integration of newly acquired businesses, capacity levels, business disruptions due to various causes, changes in customer demand, international business risks, environmental laws and regulations, and tax laws[16](index=16&type=chunk)[34](index=34&type=chunk) [Financial Statements](index=5&type=section&id=Financial%20Statements) This section provides Worthington Steel's detailed consolidated and combined financial statements, including statements of earnings, balance sheets, and cash flows, for the specified periods [Consolidated and Combined Statements of Earnings](index=5&type=section&id=Consolidated%20and%20Combined%20Statements%20of%20Earnings) This section presents the detailed Consolidated and Combined Statements of Earnings for the three and twelve months ended May 31, 2024, and May 31, 2023, outlining revenue, cost of goods sold, gross margin, operating expenses, and net earnings attributable to controlling interest, along with earnings per share Consolidated and Combined Statements of Earnings (Millions) | Metric (Millions) | 3 Months Ended May 31, 2024 | 3 Months Ended May 31, 2023 | 12 Months Ended May 31, 2024 | 12 Months Ended May 31, 2023 | | :-------------------------------------------------- | :-------------------------- | :-------------------------- | :--------------------------- | :--------------------------- | | Net sales | $911.0 | $884.0 | $3,430.6 | $3,607.7 | | Cost of goods sold | $780.0 | $733.8 | $2,990.8 | $3,271.2 | | Gross margin | $131.0 | $150.2 | $439.8 | $336.5 | | Operating income | $67.3 | $89.8 | $194.5 | $120.3 | | Net earnings attributable to controlling interest | $53.2 | $67.3 | $154.7 | $87.1 | | Diluted Earnings per share attributable to controlling interest | $1.06 | $1.37 | $3.11 | $1.77 | [Consolidated and Combined Balance Sheets](index=6&type=section&id=Consolidated%20and%20Combined%20Balance%20Sheets) This section provides the Consolidated and Combined Balance Sheets as of May 31, 2024, and May 31, 2023, detailing the company's assets, liabilities, and equity, offering a snapshot of its financial position Consolidated and Combined Balance Sheets (Millions) | Asset/Liability/Equity (Millions) | May 31, 2024 | May 31, 2023 | | :------------------------------------------------ | :----------- | :----------- | | Cash and cash equivalents | $40.2 | $32.7 | | Total current assets | $1,001.8 | $980.9 | | Total property, plant and equipment, net | $474.8 | $414.4 | | Total assets | $1,866.4 | $1,764.4 | | Accounts payable | $380.4 | $402.2 | | Short-term borrowings | $148.0 | $2.8 | | Total current liabilities | $618.4 | $478.4 | | Total liabilities | $748.9 | $609.8 | | Total Shareholders' equity - controlling interest | $985.3 | $1,029.0 | | Total equity | $1,117.5 | $1,154.6 | [Consolidated and Combined Statements of Cash Flows](index=8&type=section&id=Consolidated%20and%20Combined%20Statements%20of%20Cash%20Flows) This section presents the Consolidated and Combined Statements of Cash Flows for the three and twelve months ended May 31, 2024, and May 31, 2023, categorizing cash movements into operating, investing, and financing activities Consolidated and Combined Statements of Cash Flows (Millions) | Cash Flow Activity (Millions) | 3 Months Ended May 31, 2024 | 3 Months Ended May 31, 2023 | 12 Months Ended May 31, 2024 | 12 Months Ended May 31, 2023 | | :---------------------------------------- | :-------------------------- | :-------------------------- | :--------------------------- | :--------------------------- | | Net cash provided by operating activities | $35.6 | $79.2 | $199.5 | $315.0 | | Net cash used in investing activities | $(44.4) | $(8.9) | $(123.2) | $(22.2) | | Net cash used in financing activities | $(11.8) | $(70.3) | $(68.8) | $(280.2) | | Increase (decrease) in cash and cash equivalents | $(20.6) | - | $7.5 | $12.6 | | Cash and cash equivalents at end of period| $40.2 | $32.7 | $40.2 | $32.7 |

Financial Data and Key Metrics Changes - The company reported fourth quarter earnings of $53.2 million, or $1.06 per share, compared to $67.3 million, or $1.37 per share in the prior year quarter [17] - Adjusted EBIT for the fourth quarter was $70.4 million, down $28 million from $98.4 million in the prior year quarter, primarily due to lower gross margins [41] - Net sales in the fourth quarter were $911 million, up 3% from the prior year quarter, driven by slightly higher direct pricing and a favorable mix within toll processing [43] Business Line Data and Key Metrics Changes - Sales to the automotive market constituted 52% of fourth quarter sales, consistent with the same period in the previous year [11] - The construction market accounted for 14% of sales in the fourth quarter, up from 12% in the prior year quarter, with strength noted in fencing, metal building, and culvert markets [35] - Direct sales volume to the automotive market decreased by 1% compared to the prior year quarter, attributed to several programs reaching their end of life [64] Market Data and Key Metrics Changes - The hot roll steel prices experienced volatility, peaking at $1,100 per ton in January, dropping to $750 per ton in March, and further decreasing to around $675 per ton recently [20] - Direct sales volume made up 58% of the mix in the fourth quarter, down 1% year-over-year, with a noted increase in construction-related volume [21] Company Strategy and Development Direction - The company aims to focus on investments in the rapidly growing electrical steel market, which is expected to grow faster than GDP, and to pursue margin-accretive growth through disciplined capital expenditures and selective acquisitions [7] - The company is committed to maintaining its unique positioning in the steel processing industry by offering value-added solutions and continuous improvement processes [6][9] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the automotive sector, anticipating a modest increase of 1% to 2% in vehicle builds over 2023, despite potential challenges from inflation and interest rates [51] - The company expects to release working capital as steel prices decline, which is typical in such market conditions [87] Other Important Information - The company announced a quarterly dividend of $0.16 per share payable on September 27, 2024 [22] - The company achieved a 25% reduction in recordable injuries in fiscal year 2024, reflecting its commitment to safety [34] Q&A Session Summary Question: What is the sustainability of the underlying EBITDA? - Management indicated that the strong EBITDA was driven by a favorable mix and higher margins, but it may not be sustainable as it was a good quarter [47] Question: How is the automotive planned downtime looking? - Management confirmed that they anticipate roughly two weeks of downtime for most automotive manufacturers, consistent with previous years [52] Question: Can you provide an update on the electrical steel lamination business? - Management reported that they are pleased with the commercial activity and have secured orders for 50% of the new capacity, with production expected to start at the end of 2025 [54] Question: How will working capital evolve in the next quarters? - Management confirmed that as steel prices decrease, they expect to release working capital over time [80] Question: What initiatives are being taken for cost or efficiency relief? - Management discussed their transformation process aimed at identifying and eliminating waste across the organization, which is expected to improve efficiency and reduce costs [82]

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. 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 February 29, 2024 (Exact name of registrant as specified in its charter ...