Worthington Steel (WS) Q3 2026 earnings summary

Executive summary

• Announced a transformative acquisition of Kloeckner & Co SE, the largest in company history, via a German tender offer, with expected closing in the second half of 2026 and anticipated to create the second largest service center in North America.

• Q3 net sales rose 12% year-over-year to $769.8 million, driven by higher direct volumes and selling prices, though operating income declined to $3.1 million due to increased SG&A from acquisition costs.

• Execution remained strong despite macro volatility, with notable market share gains in automotive and disciplined inventory management.

• Leading value-added metals processor with 37 locations and approximately 6,000 employees, holding top market positions in North America and recognized for supplier excellence.

• Strategic focus on growth through innovation, operational excellence, and disciplined capital allocation, supported by a strong management team.

Financial highlights

• Net sales for the trailing twelve months ended February 28, 2026, were $3.3 billion, with 3.6 million tons delivered.

• Q3 adjusted EBITDA was $41.6 million, adjusted EPS $0.27, and free cash flow for the quarter was $33.3 million.

• Net earnings attributable to controlling interest for Q3 were $10.4 million, down from $13.8 million year-over-year.

• Cash and cash equivalents stood at $90 million, with net debt at $161 million at quarter end, up due to Kloeckner share purchases.

• Adjusted EBITDA for the trailing twelve months was $257 million (7.7% margin), up from $215 million (7.0%) in FY2025.

Outlook and guidance

• Management expects the Kloeckner acquisition to be transformational, supporting long-term value creation and annual synergies of $150 million by end of FY2028.

• Cautiously optimistic for the second half of calendar 2026, expecting market expansion as economic indicators improve.

• CapEx for fiscal 2026 expected at $110–$115 million, prioritizing lightweighting and electrical steel initiatives.

• Targeting steady-state EBITDA margin accretion from recent capacity expansions and acquisitions.

• Well-positioned to benefit from increased electricity usage, data center growth, vehicle electrification, and grid modernization.