Worthington Steel (WS) Q1 2026 earnings summary

Executive summary

• Achieved a strong start to fiscal 2026 with net sales of $872.9 million, up 5% year-over-year, driven by higher direct volumes and the completed acquisition of 52% of Sitem Group, which expanded reach in the global EV market and contributed to consolidated results.

• Adjusted EBITDA was $75.2 million, adjusted EBIT $54.9 million, and EPS $0.72, all up year-over-year, reflecting disciplined execution, improved gross margin, and equity income from joint ventures.

• Achieved the safest quarter on record through training and continuous improvement, with a focus on zero injuries.

• Positioned to benefit from rising electricity demand, data center growth, vehicle electrification, and grid modernization, supported by long-standing customer relationships and a strong balance sheet.

• Management team with extensive experience and a proven track record in value creation.

Financial highlights

• Net sales for Q1 FY2026 were $872.9 million, up $38.9 million year-over-year, with direct tons sold increasing 6% and Sitem Group contributing about 1% of the increase; toll volumes decreased 22% due to softening demand and facility closure.

• Gross margin increased by $14.8 million to $115.2 million (13.2% of sales), mainly due to higher direct spreads, volumes, and favorable inventory holding gains.

• Adjusted EBIT was $54.9 million, up from $39.4 million year-over-year, and adjusted EBITDA for the quarter was $75.2 million, up from $55.6 million.

• Net earnings attributable to shareholders rose to $36.8 million ($0.72 per share), compared to $28.4 million ($0.56 per share) in the prior year quarter.

• Negative free cash flow of $34.4 million, compared to positive $33.1 million in the prior year quarter, impacted by working capital increases.

Outlook and guidance

• Management expects continued benefit from the Sitem Group acquisition and ongoing transformation initiatives, including AI deployment for operational efficiency.

• Cautiously optimistic for the remainder of calendar 2025, especially in automotive, with further market share gains expected.

• Inventory holding losses of $5–10 million are anticipated in Q2 FY2026 due to recent steel price declines.

• CapEx forecast for fiscal 2026 remains at $100 million, with possible revision after Sitem review.

• The company believes it has sufficient liquidity and access to capital to fund operations and strategic initiatives for at least the next 12 months.