Worthington Steel Reports 14.7% Decline in Q3 Fiscal 2025 Net Sales

Worthington Steel, Inc. reported a significant decline in financial performance for the third quarter of fiscal 2025, with net sales totaling $687.4 million, down 14.7% from $805.8 million in the same period last year. The decrease was attributed to lower volumes and reduced direct selling prices, with direct tons sold decreasing by 7% and toll tons sold down by 15%. The company's operating income also fell sharply to $18.3 million from $66.3 million, while net earnings attributable to controlling interest dropped to $13.8 million, compared to $49.0 million in the prior year quarter. Earnings per diluted share were $0.27, down from $0.98.

In comparison to the previous fiscal period, Worthington Steel's nine-month results also reflected a downturn, with net sales of $2.26 billion, a decrease of 10.3% from $2.52 billion. The gross margin for the nine months ended February 28, 2025, was $261.6 million, down from $308.8 million, primarily due to lower direct volumes and unfavorable direct spreads. The company reported a net income of $55.0 million for the nine months, a decline from $101.5 million in the same period last year.

Strategically, Worthington Steel has made significant moves, including the completion of its spin-off from Worthington Enterprises, which occurred on December 1, 2023. This separation has allowed Worthington Steel to operate as an independent publicly traded company. The company is also progressing on its acquisition of a controlling stake in the Sitem Group, which produces electric motor laminations and accessory products for automotive and industrial applications in Europe. Regulatory approval for this acquisition has been received, with the closing expected in early fiscal 2026.

Operationally, Worthington Steel's total volume decreased by 11% compared to the prior quarter, with toll shipments down 15% and automotive shipments down 3%. The automotive sector remains a key market, accounting for 52% of net sales, with the Detroit Three Automakers representing 32% of total sales. The company has also seen a shift in its customer base, with new programs increasing its market share in the automotive sector. Employee headcount has remained stable, with no significant changes reported.

Looking ahead, Worthington Steel anticipates continued challenges due to fluctuating market conditions and raw material prices. The company is focused on maintaining its competitive position and improving operational efficiencies. Management has expressed confidence in the company's ability to generate positive cash flow and meet its financial obligations, although they acknowledge the potential for economic volatility to impact future performance. The company declared a quarterly cash dividend of $0.16 per common share, payable on June 27, 2025, reflecting its commitment to returning value to shareholders.