COLUMBUS, Ohio--(BUSINESS WIRE)--December 17, 2025--
Worthington Steel, Inc. (NYSE: WS), a market-leading, value-added metals processing company, today reported financial results for the fiscal 2026 second quarter ended November 30, 2025.
Second Quarter Highlights (all comparisons to the second quarter of fiscal 2025):
-- Net sales of $871.9 million increased 18% compared to $739.0 million.
-- Operating income of $21.7 million compared to $18.9 million.
-- Net earnings attributable to controlling interest of $18.8 million
compared to $12.8 million.
-- Net earnings per diluted share attributable to controlling interest of
$0.37 compared to $0.25; adjusted net earnings per diluted share
attributable to controlling interest of $0.38 compared to $0.19.
-- Adjusted EBIT of $26.6 million compared to $14.3 million.
-- Declared a quarterly dividend of $0.16 per share payable on March 27,
2026, to shareholders of record at the close of business on March 13,
2026.
"Our results this quarter reinforce that our strategy is working," said Geoff Gilmore, president and CEO of Worthington Steel. "By staying focused on higher-value solutions, disciplined product mix, inventory management, and outstanding service, we are building a stronger, more resilient earnings profile even as markets remain mixed. We believe that focus will continue to serve us well as conditions evolve heading into calendar 2026."
Financial highlights for the fiscal 2026 periods and the
comparative periods are as follows: (In millions, except volume and
per share amounts)
2Q 2026 2Q 2025 YTD 2026 YTD 2025
-------- --------- ----------- -------------
Volume (tons) 901,838 936,069 1,830,704 1,930,162
Net sales $ 871.9 $ 739.0 $ 1,744.8 $ 1,573.0
Operating income 21.7 18.9 70.0 62.3
Net earnings
attributable to
controlling
interest 18.8 12.8 55.6 41.2
Adjusted EBIT
(Non-GAAP)(1) 26.6 14.3 81.5 53.7
Equity in net
income (loss) of
unconsolidated
affiliate 6.8 (0.9) 13.2 0.4
Net earnings per
diluted share
attributable to
controlling
interest $ 0.37 $ 0.25 $ 1.10 $ 0.82
Impairment of
assets per
diluted share
(after-tax) 0.01 - 0.01 -
Restructuring
and other
(income), net
per diluted
share
(after-tax) - - (0.01) -
Pension
settlement
gain per
diluted share
(after-tax) - (0.04) - (0.04)
Gain on land
sale per
diluted share
(after-tax) - (0.02) - (0.02)
Acquisition
completion
bonus payment
per diluted
share
(after-tax) - - 0.04 -
Deferred tax
asset
adjustment per
diluted share
(after-tax) - - 0.01 -
Other loss,
net adjustment
per diluted
share
(after-tax) - - - -
------- ------- --------- ---------
Adjusted net
earnings per
diluted share
attributable to
controlling
interest
(Non-GAAP)(1) $ 0.38 $ 0.19 $ 1.15 $ 0.76
------- ------- --------- ---------
____________________
(1) Results in both the current year period and prior year period were
impacted by certain items, as further discussed in the Non-GAAP
Financial Measures / Supplemental Data section later in this release.
Quarterly Results
Net sales for the second quarter of fiscal 2026 were $871.9 million, an increase of $132.9 million, or 18%, compared to the prior year quarter. The increase was driven primarily by higher direct volumes and, to a lesser extent, higher average direct selling prices. The increases were partially offset by lower toll volumes as well as slightly lower average toll selling prices. Direct tons sold increased by 13%, of which the Sitem Group accounted for approximately 2% of the increase. Toll volumes decreased 24% in the second quarter of fiscal 2026 compared to the prior year quarter. The decrease in toll volumes was primarily related to lower volumes from Worthington Samuel Coil Processing ("WSCP") due to the closure of the toll processing manufacturing facility in Cleveland, Ohio in May 2025, as well as softening demand from mill customers. Direct selling prices increased 7% and toll selling prices decreased 4% in the second quarter of fiscal 2026 compared to the prior year quarter. The mix of direct tons versus toll tons processed was 65% to 35% in the second quarter of fiscal 2026 compared to 55% to 45% in the prior year quarter.
Gross margin in the second quarter of fiscal 2026 increased by $13.2 million over the prior year quarter to $93.2 million. The increase was driven primarily by higher direct volumes and higher direct spreads, partially offset by lower toll margins. Higher direct volumes favorably impacted gross margin by $16.5 million. Direct spreads, up $6.5 million, were impacted by a $6.2 million favorable change from an estimated $13.4 million inventory holding loss in the prior year quarter to an estimated $7.2 million inventory holding loss in the second quarter of fiscal 2026. Toll margins, down $10.5 million, were negatively impacted by $7.7 million due to lower volumes and by $2.7 million due to an unfavorable change in toll mix. Sitem Group contributed $1.6 million in gross margin.
Operating income increased $2.8 million from the prior year quarter to $21.7 million. The increase was driven primarily by a $13.2 million increase in gross margin, partially offset by higher selling, general and administrative ("SG&A") expense, and a $0.6 million impairment of assets. The $9.8 million increase in SG&A expense, which included $2.5 million due to Sitem Group, was primarily attributable to an increase in compensation expense and professional fees partially offset by lower bad debt expense. The impairment of assets during the second quarter of fiscal 2026 represents an impairment on machinery at our manufacturing facility in Taylor, Michigan.
Net earnings attributable to controlling interest of $18.8 million in the second quarter of fiscal 2026 compares to $12.8 million in the prior year quarter. Net earnings per diluted share attributable to controlling interest of $0.37 per diluted share for its fiscal 2026 second quarter compares to $0.25 per diluted share in the prior year quarter.
Adjusted net earnings attributable to controlling interest of $19.4 million in the second quarter of fiscal 2026 compares to $9.7 million in the prior year quarter. Adjusted net earnings per diluted share attributable to controlling interest of $0.38 per diluted share compares to $0.19 per diluted share in the prior year quarter. The second quarter of fiscal 2026 adjusted results exclude a $0.4 million after-tax impairment, or $0.01 per diluted share, and a $0.2 million after-tax other loss, net, which did not result in an impact to adjusted net earnings per diluted share. The prior year quarter adjusted results exclude a $2.0 million after-tax pension settlement gain, or $0.04 per diluted share, and a $1.1 million after-tax gain on land sale, or $0.02 per diluted share.
Certain amounts disclosed within the Company's quarterly results have been adjusted to conform to the current presentation due to the removal of the deemed dividend on noncontrolling interest recorded in the first quarter of fiscal 2026. The adjustment had an immaterial impact to the presented results.
Balance Sheet, Cash Flow and Capital Allocation
As of November 30, 2025, the Company had cash and cash equivalents of $89.8 million. During the second quarter of fiscal 2026, net cash provided by operating activities was $99.3 million compared to $68.0 million in the prior year quarter. Investment in property, plant and equipment during the second quarter of fiscal 2026 was $24.7 million compared to $34.8 million in the prior year quarter. The Company generated free cash flow (as defined in the Non-GAAP Financial Measures / Supplemental Data section later in this release) of $74.6 million in the second quarter of fiscal 2026 compared to $33.2 million in the prior year quarter.
The Company ended the second quarter of fiscal 2026 with debt of $182.1 million and $89.8 million in cash and cash equivalents, resulting in a net debt (as defined in the Non-GAAP Financial Measures / Supplemental Data section later in this release) position of $92.3 million.
The Company's board of directors declared a quarterly dividend of $0.16 per common share. The dividend is payable on March 27, 2026, to shareholders of record at the close of business on March 13, 2026.
Conference Call
The Company will review fiscal 2026 second quarter results during its quarterly conference call on December 18, 2025, beginning at 8:30 a.m., Eastern Time. Conference call details are available in the investor section of the Company's website at www.WorthingtonSteel.com.
About Worthington Steel
Worthington Steel (NYSE:WS) is a metals processor that partners with customers to deliver highly technical and customized solutions. Worthington Steel's expertise in carbon flat-roll steel processing, electrical steel laminations and tailor welded solutions is driving steel toward a more sustainable future.
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