What caused WS's Q3 2025 earnings to miss forecasts?

Worthington Steel's (WS) Q3 2025 earnings fell short of forecasts due to a combination of factors:

1. **Revenue Decline**: Worthington Steel experienced a 15% year-over-year decrease in revenue, reaching $687.4 million in Q3 2025, compared to $805.8 million in the same quarter of the previous year. This reduction in revenue was primarily attributed to lower volume and lower direct selling prices.
2. **Reduced Sales Volume**: The company saw a 7% decrease in direct tons sold and a 15% decrease in toll tons sold compared to the previous year. This decline in sales volume contributed significantly to the revenue shortfall.
3. **Lower Direct Selling Prices**: Worthington Steel faced a 8% drop in direct selling prices and a 7% decrease in toll tons selling prices. These price reductions eroded the company's gross margin and profitability.
4. **Gross Margin Decrease**: The gross margin fell by $38.9 million to $81.2 million, influenced by the reduced sales volume and lower direct spreads. Gross margin is a critical indicator of a company's pricing power and operational efficiency, and its decline signaled challenges in these areas.
5. **Operating Income Plunge**: The operating income plummeted to $18.3 million from $66.3 million in the same quarter of the previous year. This significant drop was a direct consequence of the revenue decline and gross margin erosion.
6. **Asset Impairments and Increased Costs**: Worthington Steel incurred asset impairments amounting to $7.4 million and saw an increase in SG&A expenses. These additional costs further squeezed the company's already strained profitability.

In summary, Worthington Steel's Q3 2025 earnings miss was primarily due to a combination of revenue decline, reduced sales volume, lower direct selling prices, and increased costs, including asset impairments. These factors collectively led to a challenging financial performance for the company.