Worthington Steel (WS) Q2 2026 earnings summary

Executive summary

• Net sales for Q2 FY2026 rose 18% year-over-year to $871.9 million, driven by higher direct volumes and prices, with automotive remaining the largest end market and notable contributions from the Sitem Group acquisition.

• Adjusted net earnings per diluted share grew to $0.38 from $0.19, and net earnings attributable to controlling interest increased to $18.8 million from $12.8 million.

• Strong execution in safety, customer service, and transformation, with market share gains in automotive and cold rolled strip, and all-time high shipments to a key D3 automotive customer.

• Sitem Group acquisition expanded European presence and contributed to growth, with $52.6 million in net sales and a net loss of $0.7 million for the quarter.

• Recognition for supply chain excellence and workplace culture, including Supplier of the Year and Military Friendly Employer Gold designations.

Financial highlights

• Adjusted EBIT for the quarter was $26.6 million, up from $14.3 million year-over-year, with gross margin increasing $13.2 million to $93.2 million.

• Free cash flow reached $74.6 million, more than doubling from $33.2 million in the prior year quarter; operating cash flow for the quarter was $99.3 million.

• Net earnings margin improved to 2.2%, and adjusted EBIT margin to 3.1%; adjusted EBITDA margin increased to 5.5% from 4.1%.

• Cash and cash equivalents stood at $89.8 million, with net debt at $92.3 million as of November 30, 2025.

• Dividend of $0.16 per share declared for the quarter, payable March 27, 2026.

Outlook and guidance

• Management remains focused on higher-value solutions, disciplined product mix, and inventory management to build resilience amid mixed market conditions.

• Cautious optimism for early 2026 and a positive outlook for the second half of the calendar year as macro conditions improve.

• Inventory holding gains/losses for Q3 expected to range from a pre-tax gain of $3 million to a pre-tax loss of $3 million.

• Fiscal 2026 CapEx expected to be approximately $110 million, focused on growth priorities.

• Strategic investments in electrical steel capacity in Mexico and Canada to meet growing demand for xEV and transformer cores, with production ramping up in early 2026.