Worthington Steel Reports 12% Net Sales Increase in Q3 Fiscal 2026

Worthington Steel, Inc. reported a net sales increase of 12% for the third quarter of fiscal 2026, reaching $769.8 million compared to $687.4 million in the same period last year. The growth was primarily driven by higher direct volumes and increased average selling prices, although this was partially offset by a 22% decline in toll volumes. The company's operating income fell to $3.1 million from $18.3 million year-over-year, reflecting challenges in the toll processing segment and increased selling, general, and administrative expenses, which rose to $77.5 million from $54.6 million.

For the nine months ending February 28, 2026, Worthington Steel's net sales totaled $2.514 billion, an 11% increase from $2.260 billion in the prior year. The company reported net earnings attributable to controlling interest of $66.0 million, up from $55.0 million, with diluted earnings per share increasing to $1.30 from $1.09. The gross margin for the nine-month period improved to $284.5 million, up from $261.6 million, driven by higher direct spreads and volumes, despite lower toll volumes.

Strategically, Worthington Steel is in the process of acquiring Kloeckner & Co SE, having launched a public cash takeover offer on January 15, 2026. The company aims to enhance its product offerings and geographic reach through this acquisition, which is expected to close in the second half of 2026, pending regulatory approvals. As of February 28, 2026, Worthington Steel had also completed the acquisition of a 52% stake in Sitem Group, contributing to its consolidated financial results.

Operationally, the company reported a decrease in total volume sold by 7% year-over-year, with direct tons sold increasing by 4% and toll volumes decreasing significantly. The automotive sector remains a key market, accounting for 54% of net sales, with direct shipments to the Detroit Three Automakers increasing by 13%. Worthington Steel's cash and cash equivalents stood at $90.0 million as of February 28, 2026, compared to $63.3 million a year earlier, reflecting strong cash generation from operations despite increased investment activities.

Looking ahead, Worthington Steel anticipates continued challenges in the market, particularly in the toll processing segment, while also focusing on integrating AI technologies to enhance operational efficiency. The company remains optimistic about the potential benefits of the Kloeckner acquisition and expects to leverage its expanded capabilities to drive future growth.