Worthington Steel's Q3 Earnings Miss Estimates, Sales up Y/Y

Worthington Steel, Inc. WS reported adjusted earnings of 27 cents per share for the third quarter of fiscal 2026, missing the Zacks Consensus Estimate of 47 cents. It had posted adjusted earnings of 35 cents in the year-ago quarter. Including one-time items, earnings per share were 20 cents in the quarter compared with 27 cents in the year-ago quarter.

Net revenues increased 12% year over year to $770 million in the reported quarter. The figure, however, missed the Zacks Consensus Estimate of $857 million. The upside was driven by higher direct volumes and higher average direct selling prices. However, toll volumes decreased 22% in the reported quarter due to a combination of closing the Cleveland-area Worthington Samuel Coil Processing facility in May 2025 and weak demand from mill customers.

Worthington Steel, Inc. Price, Consensus and EPS Surprise

Worthington Steel, Inc. price-consensus-eps-surprise-chart | Worthington Steel, Inc. Quote

WS’ Q3 Operational Results

The cost of goods sold in the third quarter of fiscal 2026 moved up 14.4% year over year to $693.7 million. Gross profit decreased 6.3% year over year to $76.1 million. The gross margin came in at 9.9% compared with the prior-year quarter’s 11.8%. The decrease was driven by lower toll volumes and a $3.2 million unfavorable impact from Sitem Group.

The company reported an operating income of $3.1 million compared with the prior-year quarter’s $18.3 million. The operating margin in the quarter under review was 0.4% compared with 2.7% in the year-ago quarter. The decrease was driven primarily by an increase in selling, general and administrative expenses, and a decrease in gross margin. The SG&A expenses included expenses related to Sitem Group and professional fees related to the proposed acquisition of Kloeckner.

Adjusted operating income in the quarter stood at $14 million, 47% lower than the prior year quarter’s $26.6 million. Adjusted operating margin in the quarter was 1.8% compared with 3.9% in the prior year quarter.

WS’ Cash Flow & Balance Sheet Updates

Worthington Steel ended third-quarter fiscal 2026 with cash and cash equivalents of $90 million compared with $38 million at the end of t fiscal 2025. The long-term debt was $31.6 million at the end of the quarter, a substantial increase from $2.3 million as of the end of fiscal 2025.

Cash flow from operating activities was $156.3 million in the nine-month period ended Feb. 28, 2026, under review compared with $176.4 million in the prior-year comparable period.

The company has also entered into a business combination agreement with Kloeckner & Co SE, a Germany-based metals processor with operations across Europe and North America. As part of the deal, Worthington Steel has launched a voluntary public tender offer to acquire all outstanding shares of Kloeckner at €11 per share.

The transaction is expected to close in the second half of 2026, subject to meeting the minimum acceptance threshold, as well as clearing regulatory approvals and customary closing conditions.

WS’ Share Price Performance

Shares of the company have risen 12.2% in the past year compared with the industry’s growth of 89%.

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WS’ Zacks Rank

WS currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Peer Performance

Commercial Metals Company CMC reported adjusted earnings per share (EPS) of $1.16 in the second quarter of fiscal 2026 (ended Feb. 28, 2026), missing the Zacks Consensus Estimate of $1.28. Adjusted for one-time items, the company posted earnings of 31 cents per share in the prior-year quarter. Net sales in the reported quarter were $2.13 billion compared with $1.75 billion in the year-ago quarter. The reported figure beat the Zacks Consensus Estimate of $1.98 billion.

Carpenter Technology Corporation CRS reported adjusted earnings of $2.33 per share for the second quarter of fiscal 2026, beating the Zacks Consensus Estimate of $2.20. It had posted adjusted earnings of $1.66 in the year-ago quarter. The upside was driven by ongoing improvements in the product mix and expanding operating efficiencies.

ATI Inc. ATI recorded a profit of $96.6 million or 69 cents per share for the fourth quarter of 2025, down from the year-ago quarter's profit of $137.1 million or 94 cents. ATI posted adjusted earnings of 93 cents, up 18% from the year-ago quarter’s figure of 79 cents. Adjusted earnings exceeded the Zacks Consensus Estimate of 89 cents. The company’s net sales in the fourth quarter were $1,177.1 million, missing the Zacks Consensus Estimate of $1,197.7 million. Net sales were essentially flat year over year.

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