Worthington Steel Reports Q3 Fiscal 2026 Results: Acquisition Move, Profitability Pressures, and Dividend Declaration

Key Highlights from Q3 Fiscal 2026

• Net sales rose 12% year-over-year to \$769.8 million, up from \$687.4 million in Q3 FY2025.
• Operating income sharply declined to \$3.1 million, compared to \$18.3 million a year ago.
• Net earnings attributable to controlling interest fell to \$10.4 million, down from \$13.8 million in Q3 FY2025.
• Adjusted EBIT was \$20.0 million, versus \$25.3 million in the prior-year period.
• Net earnings per diluted share attributable to controlling interest was \$0.20, down from \$0.27; adjusted EPS was \$0.27, down from \$0.35.
• Free cash flow improved to \$33.3 million, compared to \$25.2 million in Q3 FY2025.
• Quarterly dividend of \$0.16 per share declared, payable June 26, 2026, to shareholders of record on June 12, 2026.

Major Strategic Move: Kloeckner Acquisition

In a potentially transformative deal, Worthington Steel has entered into a Business Combination Agreement to acquire Kloeckner & Co SE, a German-based metals processor with operations in Europe and North America.
Worthington Steel has launched a voluntary public tender offer for all outstanding shares of Kloeckner at €11 per share.

Completion of the acquisition is expected in the second half of calendar year 2026, pending the minimum acceptance threshold and regulatory approvals.

During the quarter, Worthington increased short-term borrowings to purchase \$101.4 million of Kloeckner equity securities. As of February 28, 2026, the company does not have a controlling interest or significant influence over Kloeckner.

This acquisition is significant and potentially price-sensitive as management believes it will be “transformational” for the company, supporting long-term value creation, improving scale, and broadening geographic and product reach.

Financial Performance Details

Balance Sheet and Capital Allocation

• Cash and cash equivalents: \$90.0 million as of Feb 28, 2026
• Total debt: \$251.4 million
• Net cash provided by operating activities: \$63.3 million in Q3 FY2026 (up from \$53.8 million in Q3 FY2025)
• Investment in property, plant, and equipment: \$30.0 million in Q3 FY2026
• Free cash flow: \$33.3 million in Q3 FY2026

Dividend Information

The Board of Directors declared a quarterly dividend of \$0.16 per share, payable on June 26, 2026, to shareholders of record as of June 12, 2026. This is consistent with the prior year’s quarterly dividend.

Management Commentary

“This was a challenging quarter from a macroeconomic standpoint, but our focus did not change. We remained grounded in our safety-first culture, executed with discipline and continued to serve customers well. We also took an important step forward with our proposed acquisition of Kloeckner, which we believe will be transformational for Worthington Steel and support long-term value creation.”
— Geoff Gilmore, President and CEO

Risks, Forward-Looking Statements, and Guidance

• The acquisition of Kloeckner is subject to minimum acceptance thresholds, regulatory approvals, and other customary closing conditions. There is no guarantee the transaction will close as planned.
• Worthington’s forward-looking statements highlight risks including: macroeconomic uncertainty, commodity price volatility, supply chain disruptions, regulatory changes, integration of acquisitions, and the ability to realize expected synergies and cost savings from the Kloeckner deal.
• Management expects the acquisition to be accretive to earnings per share and to deliver significant synergies, though exact figures and timelines will depend on successful closing and integration.
• The company maintains a healthy balance sheet and liquidity position, but increased leverage to fund the Kloeckner acquisition may impact future financial flexibility.

Outlook and Strategic Positioning

Worthington Steel positions itself as a leading value-added metals processor with expertise in carbon flat-roll steel, electrical steel laminations, and tailor-welded solutions. The acquisition of Kloeckner is expected to:

• Expand Worthington’s footprint in Europe and North America
• Diversify its product offerings and end markets
• Enhance scale and competitive position, supporting long-term growth and shareholder value

Investor Call Details

Management will discuss these results in detail during the quarterly conference call on March 26, 2026, at 8:30 a.m. Eastern Time. Details are available on the company’s Investor Relations website.

Conclusion

Investor Takeaways:

• While Worthington Steel delivered robust top-line growth and improved free cash flow, profitability came under pressure due to macroeconomic headwinds.
• The proposed acquisition of Kloeckner & Co SE is the most significant, price-sensitive event in this report, with the potential to materially affect Worthington’s strategy, scale, and future earnings. Investors should closely monitor updates on the deal’s progress and integration plans.
• The dividend remains steady, reinforcing management’s commitment to returning capital to shareholders.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. The information is derived from Worthington Steel’s official financial filings and press releases. Investors are encouraged to conduct their own due diligence and consult with professional advisors before making any investment decisions. The company’s forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those projected.

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