Worthington Steel Reports $3.44 Billion in Net Sales for Fiscal Year 2026, Operating Loss of $1.4 Million

Worthington Steel, Inc. reported net sales of $3.44 billion for the fiscal year ended May 31, 2026, an increase of 11% compared to $3.09 billion in the prior fiscal year. The company's operating income for fiscal year 2026 was a loss of $1.4 million, a significant decrease from an operating income of $147.0 million in fiscal year 2025. Net earnings attributable to controlling interest for fiscal year 2026 were $8.5 million, down from $110.7 million in fiscal year 2025.

The company experienced a substantial increase in selling, general, and administrative expenses, which rose by 28.4% to $297.4 million in fiscal year 2026, compared to $231.6 million in fiscal year 2025. This increase was largely attributed to $35.8 million in professional and other fees related to the Kloeckner Acquisition and $19.0 million in expenses associated with the Sitem Group acquisition. Additionally, interest expense, net, increased significantly to $28.4 million in fiscal year 2026 from $7.1 million in fiscal year 2025, primarily due to fees and costs associated with temporary financing for the Kloeckner Acquisition.

Strategic developments during the fiscal year included the acquisition of a controlling equity stake in Germany-based Kloeckner & Co SE on June 3, 2026, through its subsidiary Worthington Steel GmbH. This acquisition, termed the Kloeckner Acquisition, involved the purchase of approximately 60.86% of Kloeckner's outstanding share capital. The company also completed the acquisition of 52% of S.I.T.E.M. S.p.A. (Sitem Group) on June 3, 2025, through its subsidiary Tempel Steel Company, LLC.

Operational highlights for fiscal year 2026 included a 6% increase in direct tons sold, with the legacy business contributing approximately 5% and the addition of Sitem Group accounting for the remaining 1%. Direct selling prices, excluding Sitem Group, increased by 3% year-over-year. Toll processing net sales decreased by 20% due to the closure of the WSCP facility in Cleveland and softer demand from mill customers. The company serviced approximately 1,500 customers across various end markets, with the automotive industry remaining the largest end market, representing 55% of net sales.

Looking ahead, Worthington Steel anticipates that its cash balances, cash generated from operating activities, and availability under its asset-based revolving credit facility will be adequate to fund its operations, working capital requirements, capital expenditures, integration and transaction-related costs, debt service obligations, and dividend payments for the next 12 months and the foreseeable future. The company also expects to incur significant integration and transaction-related costs associated with the Kloeckner Acquisition. The company's outlook is subject to various risks, including economic conditions, raw material price volatility, and the successful integration of Kloeckner.