Worthington Steel (WS) Q3 2026 earnings summary

Executive summary

• Net sales for Q3 FY2026 rose 12% year-over-year to $769.8 million, driven by higher direct volumes and prices, partially offset by lower toll volumes and Sitem Group impact.

• Net earnings attributable to controlling interest were $10.4 million for Q3 FY2026, down from $13.8 million in Q3 FY2025, with diluted EPS of $0.20.

• Adjusted net earnings per diluted share were $0.27, compared to $0.35 in the prior year quarter.

• The company is progressing with the proposed acquisition of Kloeckner & Co SE, having achieved the minimum acceptance threshold, with closing expected in the second half of 2026.

• Sitem Group acquisition contributed $41.8 million in net sales and a net loss of $4.5 million in Q3 FY2026.

Financial highlights

• Gross margin for Q3 FY2026 was $76.1 million (9.9% of sales), down from $81.2 million (11.8%) in Q3 FY2025, mainly due to lower toll volumes and Sitem Group impact.

• Adjusted EBIT for Q3 FY2026 was $20.0 million, down from $25.3 million in Q3 FY2025.

• Free cash flow for the quarter was $33.3 million, up from $25.2 million in the prior year quarter.

• Cash and cash equivalents stood at $90.0 million as of February 28, 2026; net debt was $161.4 million.

• SG&A expense increased to $77.5 million in Q3 FY2026, up $22.9 million year-over-year, including $15.4 million in professional fees for the Kloeckner acquisition.

Outlook and guidance

• Management expects inventory holding gains of $15–20 million in Q4 FY2026 due to recent steel price increases.

• The Kloeckner acquisition is expected to be transformational, materially impacting business scale, product offering, and financial condition.

• CapEx for fiscal 2026 expected at $110–$115 million as growth projects transition to production.

• Forward-looking statements highlight expectations for improved margins, synergies from acquisitions, and continued focus on operational discipline.

• The company anticipates continued benefit from lower interest rates on its credit facility.