Worthington Steel 2026年8月季度财报：净销售额增长212%，但净亏损500万美元

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

or

WORTHINGTON STEEL, INC.

(Exact name of registrant as specified in its charter)

Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

APPLICABLE ONLY TO CORPORATE ISSUERS:

On October 9, 2026, the number of common shares, without par value, of the registrant issued and outstanding was 51,217,234.

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Selected statements made by Worthington Steel, Inc. (“Worthington Steel” and, together with its consolidated subsidiaries, the “Company,” “we,” “us,” or “our”) contained in this Quarterly Report on Form 10-Q (this “Form 10-Q”), including, without limitation, the notes to the consolidated financial statements contained in Part I, Item 1 hereto, “Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Part II, Item 1A. Risk Factors—Proposed Acquisition-Related Risks,” constitute “forward-looking statements,” as that term is used in the Private Securities Litigation Reform Act of 1995, as amended (the “PSLRA”). Forward-looking statements reflect the Company’s current expectations, estimates or projections concerning future results or events. These statements are often identified by the use of forward-looking words or phrases such as “believe,” “expect,” “anticipate,” “may,” “could,” “should,” “would,” “intend,” “plan,” “will,” “likely,” “estimate,” “project,” “position,” “strategy,” “target,” “aim,” “seek,” “foresee,” or other similar words or phrases. These forward-looking statements include, without limitation, statements relating to:

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future or expected cash positions, liquidity and ability to access financial markets and capital;

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outlook, strategy or business plans;

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expected financial and operational performance, and future opportunities;

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the tax treatment of Worthington Enterprises, Inc.’s (“Worthington Enterprises”) separation of its steel processing business into Worthington Steel as a stand-alone, publicly traded company on December 1, 2023 (the “Separation”);

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future or expected growth, growth potential, forward momentum, performance, competitive position, sales, volumes, cash flows, earnings, margins, balance sheet strengths, debt, financial condition or other financial measures;

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pricing trends for raw materials and finished goods and the impact of pricing changes;

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the ability to improve or maintain margins;

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expected demand or demand trends;

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additions to product lines and opportunities to participate in new markets;

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expected benefits from transformation and innovation efforts;

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the ability to improve performance and competitive position;

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anticipated working capital needs, capital expenditures and asset sales;

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anticipated improvements and efficiencies in costs, operations, sales, inventory management, sourcing and the supply chain and the results thereof;

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projected profitability potential;

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the ability to make acquisitions, form joint ventures and consolidate operations, and the projected timing, results, benefits, costs, charges and expenditures related to acquisitions, joint ventures, headcount reductions and facility dispositions, shutdowns and consolidations;

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our plans, objectives, expectations and intentions related to the Kloeckner Acquisition (as defined in Note 1 to the consolidated financial statements contained in Part I, Item 1 hereto) and the benefits of the Kloeckner Acquisition;

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the expected outcomes of the Kloeckner Acquisition, including estimated cost, operations and commercial synergies and the timeline to realize such synergies;

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the impact of the Kloeckner Acquisition on our earnings;

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the expected timeline for the Domination and Profit and Loss Transfer Agreement (“DPLTA”) with Klöckner & Co SE (“Kloeckner”) becoming effective;

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the expected timing, proceeds and consideration of the pending sale of our Becker operations, including the deferred consideration;

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projected capacity and the alignment of operations with demand;

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the ability to operate profitably and generate cash in down markets;

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the ability to capture and maintain market share and to develop or take advantage of future opportunities, customer initiatives, new businesses, new products and new markets;

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expectations for inventories, jobs and orders;

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expectations for the economy and markets or improvements therein;

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expectations for generating improving and sustainable earnings, earnings potential, margins or shareholder value;

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effects of judicial rulings, laws and regulations;

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anticipated improvements in business and efficiencies to be gained from the use of artificial intelligence and machine learning (“AI”) and other technologies;

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effects of cybersecurity breaches and other disruptions to information technology infrastructure;

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effects of public health emergencies and the various responses of governmental and nongovernmental authorities thereto on economies and markets, and our customers, counterparties, and employees and third-party service providers; and

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other non-historical matters.

Because they are based on beliefs, estimates and assumptions, forward-looking statements are inherently subject to risks and uncertainties that could cause actual results to differ materially from those projected. Any number of factors could affect actual results, including, without limitation, those that follow:

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the effect of conditions in national and worldwide financial markets, including inflation, increases in interest rates, and economic recession, and with respect to the ability of financial institutions to provide capital;

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the risks, uncertainties and impacts related to public health emergencies – the duration, extent and severity of which are impossible to predict, and actions taken by governmental authorities or others in connection therewith;

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changing commodity prices and/or supply;

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product demand and pricing;

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changes in product mix, product substitution and market acceptance of our products;

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volatility or fluctuations in the pricing, quality or availability of raw materials (particularly steel), supplies, transportation, utilities, energy, labor and other items required by operations;

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effects of sourcing and supply chain constraints, including interruptions in deliveries of raw materials and supplies or the loss of key supplier relationships;

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the outcome of adverse claims experience with respect to workers’ compensation, product recalls or product liability, casualty events or other matters;

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effects of critical equipment failures, facility closures and the consolidation of operations;

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the effect of financial difficulties, consolidation and other changes within the steel, automotive, construction, and other industries in which we participate;

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failure to maintain appropriate levels of inventories;

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financial difficulties (including bankruptcy filings) of original equipment manufacturers, end-users and customers, suppliers, joint venture partners and others with whom we do business;

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the ability to realize targeted expense reductions from headcount reductions, facility closures and other cost reduction efforts;

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the ability to realize cost savings and operational, sales and sourcing improvements and efficiencies, and other expected benefits from transformation initiatives, on a timely basis;

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restrictions on our interactions with Kloeckner may delay the implementation of our integration strategy and could adversely impact our results of operations;

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the effects of the Kloeckner Acquisition on our and Kloeckner’s operations, including on our future financial condition and performance, operating results, strategy and plans, including anticipated tax treatment, unforeseen liabilities, future capital expenditures, revenues, expenses, earnings, synergies, economic performance, indebtedness, losses, future prospects, and business and management strategies for the management, expansion and growth of our operations;

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if a DPLTA is established, we will be subject to ongoing financial obligations to Kloeckner and its minority shareholders that could adversely affect our business, financial condition, results of operations or cash flows;

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the time and effort to successfully integrate our business and Kloeckner’s business in the expected timeframe may adversely affect our future results;

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the impact of limited financial flexibility and increased interest expense due to the Kloeckner Acquisition;

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risks associated with litigation or appraisal proceedings relating to the Kloeckner Acquisition and/or any DPLTA, including proceedings concerning the adequacy of compensation to minority shareholders, may result in management distraction or financial exposure;

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the ability to complete the pending sale of our Becker operations on the anticipated terms and timeline, and to realize the expected proceeds, including the deferred consideration;

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the adverse impact of failing to continue to retain, recruit and motivate executives and other key employees;

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the overall success of, and the ability to integrate, newly acquired businesses and joint ventures, maintain and develop their customers, and achieve synergies and other expected benefits and cost savings therefrom;

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the ability to realize expected benefits of strategically deployed capital expenditures;

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capacity levels and efficiencies, within facilities, within major product markets and within the industries in which the Company participates as a whole;

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the effect of disruption in the business of suppliers, customers, facilities and shipping operations due to adverse weather, casualty events, equipment breakdowns, labor shortages, interruption in utility services, civil unrest, international conflicts, terrorist activities, or other causes;

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changes in customer demand, inventories, spending patterns, product choices, and supplier choices;

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risks associated with doing business internationally, including economic, political and social instability, foreign currency exchange rate exposure and the acceptance of our products in global markets;

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the effect of national, regional and global economic conditions generally and within major product markets, including significant economic disruptions from public health emergencies, the actions taken in connection therewith and the implementation of related fiscal stimulus packages;

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the impact of tariffs, the adoption of trade restrictions affecting our products, suppliers or customers, a United States (“U.S.”) withdrawal from or significant renegotiation of trade agreements, the occurrence of trade wars, the closing of border crossings, and other changes in trade regulations or relationships;

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the ability to improve and maintain processes and business practices to keep pace with the economic, competitive and technological environment;

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the effect of inflation, interest rate increases and economic recession, which may negatively impact our operations and financial results;

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deviation of actual results from estimates and/or assumptions used by us in the application of our significant accounting policies;

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impairment of the recorded value of inventory, equity investments, fixed assets, goodwill and other assets;

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competitive pressure on sales and pricing, including pressure from imports and substitute materials;

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the level of imports and import prices in our markets and the foreign currency exchange rate exposure;

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the impact of environmental laws and regulations or the actions of the U.S. Environmental Protection Agency or similar regulators which increase costs or limit our ability to use or sell certain products;

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the impact of increasing environmental, greenhouse gas emission and sustainability regulations;

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the impact of judicial rulings and governmental regulations, both in the U.S. and abroad, including those adopted by the U.S. Securities and Exchange Commission (the “SEC”) and other governmental agencies;

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the effect of healthcare laws in the U.S. and potential changes to such laws, which may increase our healthcare and other costs and negatively impact our operations and financial results;

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the effect of tax laws in the U.S. and potential changes to such laws, which may increase our costs and negatively impact our operations and financial results;

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the operational, data privacy, security, regulatory and legal risks associated with our reliance on AI as well as our ability to stay abreast of technological advancements and our dependence on third parties who rely on AI technologies;

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cybersecurity risks;

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the effects of privacy and information security laws and standards;

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the cyclical nature of the steel industry;

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our safety performance;

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the effects of competition and price pressures from competitors; and

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other risks described from time to time in Worthington Steel’s filings with the SEC, including those described in “PART II, Item 1A. Risk Factors” hereto and “PART I, Item 1A. Risk Factors” of the annual report on Form 10-K of Worthington Steel for the fiscal year ended May 31, 2026 (the “2026 Form 10-K”).

We note these risk factors for investors as contemplated by the PSLRA. Forward-looking statements should be construed in the light of such risks. It is impossible to predict or identify all potential risk factors. Consequently, readers should not consider the foregoing list to be a complete set of all potential risks and uncertainties. Readers are cautioned not to place undue reliance on any forward-looking statements. Any forward-looking statements in this Form 10-Q are based on currently available information as of the date of this Form 10-Q, and we assume no obligation to correct or update any forward-looking statements, whether as a result of new information, future developments or otherwise, except as required by applicable law.

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PART I. FINANCIAL INFORMATION

Item 1. – Financial Statements

WORTHINGTON STEEL, INC.

CONSOLIDATED BALANCE SHEETS

(In millions, except share amounts)

See condensed notes to consolidated financial statements.

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WORTHINGTON STEEL, INC.

CONSOLIDATED BALANCE SHEETS

(In millions, except share amounts)

See condensed notes to consolidated financial statements.

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WORTHINGTON STEEL, INC.

CONSOLIDATED STATEMENTS OF EARNINGS

(In millions, except per share amounts)

(Unaudited)

See condensed notes to consolidated financial statements.

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WORTHINGTON STEEL, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions)

(Unaudited)

See condensed notes to consolidated financial statements.

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WORTHINGTON STEEL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)

See condensed notes to consolidated financial statements.

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WORTHINGTON STEEL, INC.

CONSOLIDATED STATEMENTS OF EQUITY AND MEZZANINE EQUITY

(In millions, except per common share amounts)

(Unaudited)

See condensed notes to consolidated financial statements.

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WORTHINGTON STEEL, INC.

Condensed Notes to CONSOLIDATED Financial Statements

(Unaudited)

Note 1 – Description of Business and Basis of Presentation

Description of Business

Worthington Steel, Inc. (“Worthington Steel,” together with its consolidated subsidiaries, the “Company”) is a value-added metals processor and service center company with a diversified range of products and services serving customers across a variety of end markets. On June 3, 2026, the Company completed the acquisition of a controlling equity interest in German-based Kloeckner (the “Kloeckner Acquisition”), significantly expanding the Company’s scale, product and service offerings, end-market exposure and geographic footprint. For additional information, see “Note 2 – Acquisitions.”

The Company sells steel on a direct basis, whereby it is exposed to the risks and rewards of ownership of the material while in its possession. Additionally, the Company toll processes steel under a fee for service arrangement whereby it processes customer-owned material. The Company’s manufacturing facilities further benefit from the flexibility to scale between direct and tolling services based on demand dynamics throughout the year.

Worthington Steel became an independent, publicly traded company on December 1, 2023, following its separation from Worthington Enterprises, Inc., formerly known as Worthington Industries, Inc.

Basis of Presentation

The unaudited consolidated financial statements include the accounts of Worthington Steel and its consolidated subsidiaries. Material intercompany accounts and transactions are eliminated.

These interim unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the SEC. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments that are of a normal and recurring nature necessary for a fair presentation of the consolidated financial statements for these interim periods have been included. Operating results for the first quarter of fiscal 2027 are not necessarily indicative of the results that may be expected for the entirety of fiscal 2027 or any other quarter. These interim unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the 2026 Form 10-K.

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates.

On June 3, 2026, the Company completed its acquisition of a controlling interest in Kloeckner, a Germany-based metals processor with operations primarily in the United States, Mexico, and Europe. Following the acquisition, the Company held approximately 60.86% of Kloeckner’s outstanding share capital and began consolidating Kloeckner’s results of operations and financial position. On June 15, 2026, the Company acquired additional Kloeckner shares, increasing its ownership to approximately 61.87% of Kloeckner’s outstanding share capital. For additional information, see “Note 2 – Acquisitions.”

The Company owns controlling interests in the following additional four operating joint ventures: Spartan Steel Coating, L.L.C. (“Spartan”) (52% interest); TWB Company, L.L.C. (“TWB”) (55% interest); Worthington Samuel Coil Processing, L.L.C. (“WSCP”) (63% interest); and S.I.T.E.M. S.p.A., a joint stock company incorporated under the laws of Italy (“Sitem” and, together with its subsidiaries, Stanzwerk AG, Decoup S.A.S. and Sitem Slovakia spol. s r.o., the “Sitem Group”) (52% interest). The Company also owns a controlling interest (51% interest) in Worthington Specialty Processing (“WSP”), which became a nonoperating joint venture on October 31, 2022, when its remaining net assets were sold. These joint ventures are consolidated with the equity owned by the other joint venture members shown as noncontrolling interests, or in the case of Sitem Group, Redeemable NCI, in the Company’s consolidated balance sheets, and their portions of net earnings and other comprehensive income (loss) (“OCI”) are shown as net earnings or comprehensive income attributable to noncontrolling interests in the Company’s consolidated statements of earnings and comprehensive income, respectively.

The results of Sitem Group are included in the Company’s consolidated financial statements on a one-month reporting lag to allow for the timely completion of its financial reporting process. The Company did not identify any material events during the most recent lag period that would require adjustment to the consolidated financial statements. For additional information, see “Note 2 – Acquisitions.”

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The Company owns a noncontrolling interest (50%) in one unconsolidated joint venture: Serviacero Planos, S. de R.L. de C.V. (“Serviacero Worthington”). The investment in the Company’s unconsolidated affiliate is accounted for using the equity method based upon financial information reported on a one-month lag with the Company’s proportionate share of income or loss recognized within equity in net income (loss) of unconsolidated affiliate (“equity income”) in its consolidated statements of earnings. Distributions received are recognized as a reduction in the carrying amount of the investment. The Company evaluates events occurring during the reporting lag to determine whether the effects of any material events should be reflected in its consolidated financial statements. The Company received a $22.0 million dividend from Serviacero Worthington during the current one-month lag reporting period that was reflected as a reduction in the carrying amount of the investment in the consolidated balance sheet. See further discussion of the Company’s unconsolidated affiliate in “Note 4 – Investments.”

Discontinued Operations

In connection with the Kloeckner Acquisition, the Company acquired certain Kloeckner business units that met the held-for-sale criteria under Accounting Standards Codification (“ASC”) Topic 360, Property, Plant, and Equipment (“ASC 360”) as of the acquisition date, including Becker Stahl-Service GmbH and its related steel service center operations (the “Kloeckner Disposal Group”). In accordance with ASC Topic 805, Business Combinations (“ASC 805”), the Kloeckner Disposal Group was classified and measured at fair value less costs to sell as of the acquisition date. Management has committed to a plan to sell the Kloeckner Disposal Group, and expects the sale to be completed before the end of fiscal 2027.

Unless otherwise indicated, amounts and disclosures included in the interim condensed consolidated financial statements relate to the Company’s continuing operations and exclude amounts attributable to discontinued operations. For additional information, see “Note 18 – Discontinued Operations and Assets and Liabilities Held for Sale.”

New Accounting Policies

The Company has updated the following significant accounting policies in the first quarter of fiscal 2027 following the acquisition of Kloeckner. There have not been any other material changes to the significant accounting policies included in the 2026 Form 10-K.

Inventories

Inventories are valued at the lower of cost or net realizable value. Cost for inventories of Worthington Steel is determined using the first-in, first-out method. Cost for inventories of Kloeckner is determined primarily using the monthly moving-average method, with specific identification used for certain inventories. The assessment of net realizable value requires the use of estimates to determine cost to complete, normal profit margin and the ultimate selling price of inventory.

Investments Measured at Net Asset Value

In connection with the Kloeckner Acquisition, the Company acquired investments in venture capital and growth equity funds. These are measured using net asset value (“NAV”) per share (or its equivalent) as a practical expedient under ASC Topic 820, Fair Value Measurement (“ASC 820”), where the investee's NAV is calculated consistent with ASC Topic 946, Financial Services—Investment Companies (“ASC 946”). Changes in NAV are recognized in net earnings within miscellaneous income (expense), net, consistent with the Company's policy for equity securities. Investments are classified as current or non-current based on management's intent and expected timing of sale. Prior-period financial statements were not recast, as the Company held no investments measured using the NAV practical expedient in prior periods. For additional information, see “Note 15 – Fair Value.”

Supplemental cash flow information

The following table summarizes supplemental cash flow information for the periods presented:

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Concentration of Net Sales and Equity Securities

Net Sales

The Company sells its products and services to a diverse customer base and a broad range of end markets. The automotive industry is the largest end market for the Company, which is influenced by the production schedules of Ford, General Motors and Stellantis North America (the “Detroit Three Automakers”).

While the Company’s business is not dependent on any one customer, the Company has significant concentrations of net sales within the automotive end market and with the Detroit Three Automakers. A significant loss of, or decrease in, business from these customers could have an adverse effect on the Company’s consolidated net sales and financial results if the Company were not able to obtain replacement business.

The following table summarizes the concentration percentage of consolidated net sales for the periods presented:

No individual customer accounted for 10% or more of consolidated net sales during the three months ended August 31, 2026. During the three months ended August 31, 2025, net sales to two customers represented approximately 13% and 15% of consolidated net sales, respectively.

Equity Securities

As of May 31, 2026, the Company’s equity securities were comprised exclusively of Kloeckner shares. As a result of the Kloeckner Acquisition, the Company began consolidating Kloeckner’s results of operations and financial position. As of August 31, 2026, the Company is no longer subject to the fluctuation in the fair value of these securities based on market conditions and issuer-specific developments. Refer to “Note 2 – Acquisitions” for additional information.

Reclassifications: The Company has reclassified the presentation of certain prior-year information to conform to the current presentation.

Recent Accounting Pronouncements

There have been no new accounting standards adopted since the filing of the 2026 Form 10-K that have significance, or potential significance, to the interim condensed consolidated financial statements.

New Accounting Pronouncements Not Yet Adopted

Disaggregation of Income Statement Expenses – In November 2024, the FASB issued ASU No. 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”). This guidance requires the disaggregation of certain expense captions into specified categories in disclosures within the notes to the financial statements to provide enhanced transparency into the expense captions presented on the statement of earnings. It is effective for annual reporting periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with early adoption permitted. Adoption may be applied either prospectively to financial statements issued for reporting periods after the effective date of ASU 2024-03 or retrospectively to any or all prior periods presented in the financial statements. The Company is evaluating the impact of adoption, and it expects the adoption of this ASU will result in additional disclosures, but that it will not result in a material impact on its consolidated financial statements.

Targeted Improvements to the Accounting for Internal-Use Software – In September 2025, the FASB issued ASU No. 2025-06, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software (“ASU 2025-06”). This guidance modernizes the accounting for internal-use software. ASU 2025-06 removes all references to prescriptive and sequential software development stages and clarifies the threshold for beginning capitalization of eligible internal-use software costs. Under the amended guidance, capitalization begins when management has authorized and committed to funding the software project and it is probable that the project will be completed and the software will be used to perform the function intended. It is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2027, with early adoption permitted. ASU 2025-06 can be applied prospectively to new software costs incurred as of the beginning of the adoption

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period for all projects, prospectively to new software costs incurred only for projects that meet the new capitalization requirements, or retrospectively by recasting comparative periods and recognizing a cumulative-effect adjustment to the opening balance of retained earnings of the first period presented. The Company is currently evaluating the timing and method of its adoption of ASU 2025-06 and has not selected a transition method, and the impact of adoption is not yet reasonably estimable.

Hedge Accounting Improvements – In September 2025, the FASB issued ASU No. 2025-09, Derivatives and Hedging (Topic 815): Hedge Accounting Improvements (“ASU 2025-09”). This guidance amends existing guidance to simplify the application of hedge accounting, enhance alignment between risk management activities and financial reporting, and provide additional flexibility in the designation and measurement of certain hedging relationships. The amendments included in the five matters addressed in this ASU are intended to better reflect those strategies in financial reporting by enabling entities to achieve and maintain hedge accounting for highly effective economic hedges of forecasted transactions. It is effective for annual periods beginning after December 15, 2026, and interim periods within those annual periods, with early adoption permitted. The Company is currently evaluating the impact that adoption of ASU 2025-09 will have on its consolidated financial statements and related disclosures. The impact of adoption is not yet reasonably estimable.

Accounting for Government Grants Received by Business Entities – In December 2025, the FASB issued ASU No. 2025-10, Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities (“ASU 2025-10”). This guidance establishes authoritative guidance for the recognition, measurement, presentation, and disclosure of government grants received by business entities. It is effective for annual periods beginning after December 15, 2028, including interim periods within those annual periods. ASU 2025-10 allows for modified prospective, modified retrospective, or full retrospective application. Early adoption in interim or annual periods is permitted, with adoption in an interim period to be applied as of the beginning of the annual period that includes that interim. The Company has begun evaluating the guidance, including its application to government financing arrangements containing potential forgiveness provisions, and has not selected a transition method. The impact of adoption is not yet reasonably estimable.

Interim Reporting: Narrow-Scope Improvements – In December 2025, the FASB issued ASU No. 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements (“ASU 2025-11”). This guidance enhances consistency in interim reporting for all entities by clarifying interim disclosure requirements and the form and content of interim financial statements in accordance with GAAP. It is effective for interim periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted and must be applied either prospectively or retrospectively to any or all prior periods presented in the financial statements. The Company is currently evaluating the impact of ASU 2025-11 on its consolidated financial statements and disclosures.

Environmental Credits and Environmental Credit Obligations – In May 2026, the FASB issued ASU No. 2026-02, Environmental Credits and Environmental Credit Obligations (Topic 818). This guidance establishes recognition, measurement, presentation and disclosure guidance for environmental credits and related regulatory compliance obligations. It is effective for interim periods within annual reporting periods beginning after December 15, 2027. The guidance will be applied through a cumulative-effect adjustment to opening retained earnings at the beginning of the annual period of adoption, without recasting prior periods. Given the recent issuance of the guidance, the Company has initiated a preliminary assessment of its applicability to the Company’s operations. The impact of adoption is not yet reasonably estimable.

The significant accounting policies discussed herein are not intended to represent a comprehensive list of all of the Company’s accounting policies. In many cases, the accounting treatment of a particular transaction is specifically dictated by GAAP, with a lesser need for the Company’s judgment in its application. There are also areas in which the Company’s judgment in selecting an available alternative would not produce a materially different result.

Note 2 – Acquisitions

Kloeckner Acquisition

On June 3, 2026, the Company completed the acquisition of 52.52% of the issued and outstanding shares of Kloeckner, a German-based metals processor with operations in North America and Europe. The Company conducted a voluntary public cash takeover offer to all Kloeckner shareholders to tender each issued and outstanding share of Kloeckner to the Company for cash consideration of €11.00 per Kloeckner share, subject to increases made voluntarily or as required under applicable German law. Combined with the Company’s previously held equity interest in Kloeckner shares, the Company held approximately 60.86% of Kloeckner’s outstanding share capital immediately following the acquisition. As of the date of the Kloeckner Acquisition, the Company obtained a controlling financial interest and began consolidating Kloeckner’s results of operations and financial position. The Company accounted for the transaction as a business combination in accordance with ASC 805.

The acquisition advances the Company's growth strategy by broadening its value-added product offerings, diversifying its end-market exposure and geographic footprint, and significantly increasing the scale of its metals processing operations. The combination is also expected to provide opportunities for operational efficiencies and further growth.

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Immediately prior to the Acquisition Date, the previously held Kloeckner shares were accounted for as an equity security investment (see Note 4 – “Investments” in the Company’s Form 10-K for the year ended May 31, 2026). The Company remeasured its previously held equity interest to fair value as of the acquisition date, resulting in a loss of $15.5 million, which is reflected within miscellaneous income (expense), net for the quarter ended August 31, 2026.

On June 15, 2026, an additional one million Kloeckner shares were acquired at €11.00 per share (approximately $12.7 million), bringing the Company’s total ownership to 61.87% of Kloeckner’s total outstanding share capital.

On July 15, 2026, the Company commenced a public delisting tender offer for all outstanding Kloeckner shares not already held by the Company at a price of €11.00 per share (“Delisting Tender Offer”). The acceptance period ended on August 12, 2026, and Kloeckner’s shares were delisted from the regulated market of the Frankfurt Stock Exchange effective August 12, 2026. Upon settlement of the Delisting Tender Offer, the Company acquired 242,446 additional Kloeckner shares for aggregate consideration of approximately €2.7 million (approximately $3.2 million), increasing the Company’s total ownership interest to approximately 62.11%.

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Consideration Transferred & Purchase Price Allocation

The following table summarizes the consideration transferred and the estimated fair value assigned to the assets acquired and liabilities assumed at the Kloeckner Acquisition. These amounts reflect various preliminary fair value estimates and assumptions, including preliminary work performed by a third-party valuation specialist, and are subject to change within the measurement period as the valuation is finalized. The primary areas of preliminary purchase price allocation subject to change relate to the valuation of acquired tangible assets and liabilities, identification and valuation of residual goodwill and tax effects of acquired assets and assumed liabilities.

The fair value of the previously held equity interest and the noncontrolling interest were both measured using the €11.00 per share price offered in the Delisting Tender Offer, a Level 2 input. Based on the preliminary purchase price allocation, the consideration transferred was fully allocated to the identifiable assets acquired and liabilities assumed. Accordingly, no goodwill or bargain purchase gain was recognized.

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The Company incurred acquisition-related expenses for the Kloeckner Acquisition of $22.6 million during the three months ended August 31, 2026, which are included in selling, general and administrative expense (“SG&A”) in the condensed consolidated statements of earnings, consisting primarily of legal, advisory, and valuation services.

Operating results of Kloeckner have been included in the Company’s condensed consolidated statements of earnings since June 3, 2026, the Acquisition Date. For the three months ended August 31, 2026, Kloeckner contributed net sales of $1,772.7 million and net earnings attributable to controlling interest from continuing operations of $4.5 million, which includes the impact of the intercompany activity between Legacy Worthington Steel and Kloeckner that is eliminated in consolidation.

Pro Forma Information

The following unaudited pro forma information presents consolidated results as if the acquisition of Kloeckner had occurred on June 1, 2025, the beginning of fiscal 2026. The pro forma information reflects preliminary fair value adjustments, including depreciation and amortization of the fair value adjustments to property, plant and equipment and identifiable intangible assets, interest expense on the new financing, and the related tax effects, net of the portion attributable to noncontrolling interests. Pro forma net earnings attributable to controlling interest from continuing operations for the three months ended August 31, 2025 include nonrecurring acquisition-related transaction costs, net of tax. Pro forma net earnings attributable to controlling interest from continuing operations for the three months ended August 31, 2026 exclude transaction costs recognized in the current quarter and the remeasurement of the previously held equity interest, net of tax. The pro forma information is presented for informational purposes only and is not necessarily indicative of the results of operations that would have been achieved had the acquisition occurred on June 1, 2025, nor of future results.

Sitem Group (Fiscal 2026)

On June 3, 2025, the Company completed its acquisition of 52% of Sitem Group, a producer of electric motor laminations and accessory products primarily for automotive and industrial applications in Europe. During fiscal 2026, the Company finalized the valuation of the assets acquired and liabilities assumed, including the related net financial position and tax-related measurement period adjustments; no further measurement period adjustments were recorded in the current quarter. The Company incurred acquisition-related expenses for the Sitem Group acquisition of $0.4 million during the three months ended August 31, 2025, which are included in SG&A in the condensed consolidated statements of earnings, consisting primarily of legal, advisory, and valuation services. There was a one-time bonus of €4.0 million ($4.6 million) that was paid to key individuals at the Sitem Group as a result of the successful closing, which was recorded in SG&A in the consolidated statement of earnings.

See the Company’s Annual Report on Form 10-K for the fiscal year ended May 31, 2026 for additional information regarding this acquisition. See also “Note 10 – Equity and Mezzanine Equity” for information regarding the redeemable noncontrolling interest and related put and call options associated with this transaction.

Note 3 – Revenue Recognition

The Company recognizes revenue upon transfer of control of promised goods or services to customers in an amount that reflects the consideration it expects to receive for those goods or services, including any variable consideration.

The Company generates revenue primarily by processing flat-rolled steel coils into the precise type, thickness, length, width, shape, and surface quality required by customer specifications, and by distributing steel and other metal products and providing related processing services to customers primarily in North America and Europe, sourcing material from a global network of steel mills and other producers. The Company generates a substantial percentage of its revenue from selling steel on a direct basis, whereby it is exposed to the risks and rewards of ownership of the material while in its possession. Additionally, the Company toll processes steel under fee-for-service arrangements on customer-owned material. Toll processing revenue is recognized over time. All other revenue is recognized at a point in time, generally upon shipment to the customer.

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The following table summarizes net sales by product class for the periods presented:

The following table summarizes the unbilled receivables and contract assets at the dates indicated:

The following table summarizes the changes in contract liabilities for the periods presented:

Note 4 – Investments

Investment in Unconsolidated Affiliate

Investments in affiliated companies that the Company does not control, either through majority ownership or otherwise, are accounted for using the equity method. As of August 31, 2026, the Company owns a noncontrolling interest (50%) in one unconsolidated joint venture, Serviacero Worthington. Serviacero Worthington provides steel processing services, such as pickling, blanking, slitting, multi-blanking and cutting-to-length, to customers in a variety of industries including automotive, appliance and heavy equipment.

The Company accounts for its investment in Serviacero Worthington under the equity method using financial information on a one-month lag. Accordingly, the summarized financial information included below does not reflect events occurring in the subsequent one-month period.

The Company received a distribution of $22.0 million from Serviacero Worthington during the three months ended August 31, 2026. No distributions were received during the three months ended August 31, 2025. The gross distribution to the members of Serviacero Worthington during the three months ended August 31, 2026 was $44.0 million, of which the Company received $22.0 million. This distribution was reported as a reduction of the Company’s investment in unconsolidated affiliate balance but is not reflected in the summarized financial information presented below because it occurred during the lag period.

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The following tables summarize certain financial information of Serviacero Worthington as of the dates, and for the periods presented:

(1)

Excludes the impact of a $44.0 million distribution paid in cash to members in August 2026 due to reporting Serviacero Worthington on a one-month lag.

The following table presents the net earnings of Serviacero Worthington attributable to the Company for the periods presented:

Equity securities

The following table summarizes the equity securities, all of which were Kloeckner shares, at the dates indicated:

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Amounts presented as net gains (losses) on equity securities reflect changes in fair value and exclude transaction costs, which are expensed as incurred. The following table summarizes the net gains and losses recognized in miscellaneous income (expense), net, for the periods presented: