Worthington Steel (WS) Q3 2025 earnings summary

Executive summary

• Net sales for Q3 FY2025 were $687.4 million, down 15% year-over-year due to lower volumes and selling prices.

• Net earnings attributable to controlling interest for Q3 FY2025 were $13.8 million ($0.27 per diluted share), a 72% decrease from $49.0 million ($0.98 per share) in Q3 FY2024, impacted by lower volumes, pricing, and asset impairments.

• Adjusted net earnings per diluted share were $0.35, excluding asset impairments and restructuring costs, compared to $0.99 last year.

• Signs of demand improvement appeared late in the quarter, especially in automotive, with optimism for the second half of 2025.

• The company completed its spin-off from Worthington Enterprises and announced a definitive agreement to acquire a controlling stake in Sitem Group, expected to close in early FY2026.

Financial highlights

• Gross margin for Q3 FY2025 was $81.2 million (11.8% of sales), down from $120.1 million (14.9%) in Q3 FY2024, mainly due to unfavorable direct spreads and lower volume.

• Adjusted EBIT for Q3 FY2025 was $25.3 million, down from $66.9 million in the prior year quarter.

• Free cash flow for the quarter was $25.2 million; trailing 12-month free cash flow was $82.3 million.

• Cash and cash equivalents at quarter-end were $63.3 million; net debt stood at $48.9 million.

• Quarterly dividend of $0.16 per share declared, payable June 27, 2025.

Outlook and guidance

• Management is cautiously optimistic for the remainder of 2025, expecting clarity and improvement in the second half, with inventory holding gains anticipated in Q4 due to higher steel prices.

• Automotive and construction markets are expected to be flat in H1 2025, with potential upside in H2.

• The Sitem Group acquisition is anticipated to close in early FY2026, expanding the company’s presence in electric motor laminations in Europe.