Worthington Steel, Inc.

Fourth-quarter net sales increased 12% to $929.2 million. Adjusted EBITDA was $75.2 million and adjusted earnings per share were $0.74. Reported net loss attributable to controlling interest was $48.7 million, or $0.98 per share, versus earnings of $55.7 million, or $1.10 per share, in the prior year quarter. Adjusted EBIT was $54 million, down $16.1 million year over year from $70.1 million. Total shipments were approximately 939,000 tons, down 44,000 tons, or 4%, year over year. Cash flow from operations was $45 million, free cash flow was $8 million, capital expenditures were $37.1 million, and the company ended the quarter with $85 million of cash and net debt of $172 million. For fiscal 2027, management expects legacy Worthington Steel capital expenditures of about $60 million and first-quarter inventory holding gains of $10 million to $15 million. The board also declared a quarterly dividend of $0.16 per share, payable September 29, 2026.

Jeff Gilmore focused on the strategic importance of completing the Klöckner deal, calling it a defining step that expands scale, capabilities, and end-market reach. He said the combined business should improve earnings quality through the cycle and create value through operating discipline, procurement scale, network efficiency, and best-practice sharing. His tone was constructive but measured: he described the macro backdrop as stable to soft, yet said the company remains cautiously optimistic on automotive, construction later in the year, and the longer-term electrical steel opportunity.

Tim Adams emphasized that reported results were distorted by acquisition-related expenses, financing costs, and a $94.5 million non-cash impairment in electrical steel. He quantified the Klöckner-related items at $15.5 million of pre-tax acquisition expenses, an $11.5 million foreign-currency forward loss, $17.2 million of income from Klöckner securities held during the quarter, and $16.2 million of deferred bridge financing costs expensed in interest expense. He said the impairment does not affect liquidity or cash generation, noted $45 million of operating cash flow and $8 million of free cash flow in the quarter, and highlighted $85 million of cash and $172 million of net debt at quarter-end. He also pointed to $10 million to $15 million of expected Q1 fiscal 2027 inventory holding gains and about $60 million of legacy capex for fiscal 2027.

Analysts pressed on whether wider metal spreads could lift results; management said galvanized spreads have moved from a low of about $95 per ton toward a little north of $200 and could be a tailwind over the next six to 12 months if sustained. Questions also focused on auto volume trends, aluminum substitution, reshoring from Mexico, construction demand, and the AI pilot. Management said it has not seen major auto sourcing shifts yet, expects no big reshoring decisions until USMCA clarity improves, sees construction constrained by interest rates and uncertainty, and said its AI order-management tool reached greater than 90% accuracy in testing. On Klöckner, management reaffirmed $150 million of EBITDA synergies and said it still expects another $150 million of working-capital opportunity, with roughly half of both expected in year one and year two.