Worthington Steel CFO Offers No Kloeckner Segment Data, Only A $43 Million Add-Back
The finance chief said no vetted pro forma exists and gave no regional split of the acquired business's earnings.
Worthington Steel Vice President and Chief Financial Officer Tim Adams told an analyst on the company's first-quarter fiscal 2027 earnings call that it is "not disclosing at this point any segment-type data" for the newly acquired Kloeckner. He also said no vetted pro forma exists, leaving one adjustment for investors to work from: a $43 million inventory charge that can be added back to $111 million of adjusted EBITDA.
What management said on the call
Pressed by an analyst on how Kloeckner's earnings divide between North America and Europe, Adams gave no regional breakdown. He said management is commenting on the legacy business and describing what Kloeckner adds.
CEO Geoff Gilmore, in prepared remarks, said net sales were $2.7 billion, adjusted EBITDA $111 million and adjusted earnings per share $0.57. Adams said results include 100% of Kloeckner following the June 3 acquisition. He reported a net loss from continuing operations attributable to Worthington Steel of $7 million, or $0.14 per diluted share, against net earnings of $36.8 million in the prior-year period, per the transcript.
Gilmore said this is the first quarter with Kloeckner in reported results, and that Adams would spend extra time on leverage, purchase accounting and comparability.
The one number investors were given
Adams confirmed that the $43 million inventory step-up from purchase accounting was not removed from adjusted EBITDA. His words: "you could add back the $43 million to the $111 to get to $150."
He also said the company is not reporting a trailing leverage ratio this quarter. Such a ratio would capture the acquisition debt but only three months of Kloeckner earnings. Net debt at quarter end was $1.95 billion, according to Yahoo Finance's account of the results.
The control agreement and what comes next
Gilmore laid out the steps so far: the deal closed June 3, Kloeckner shares were delisted from the Frankfurt Stock Exchange on August 12, and a domination and profit-and-loss transfer agreement was signed September 8. It remained subject to shareholder approval in October. If approved and effective, it would give a framework for operating control, with formal integration and synergy capture starting in the first quarter of calendar 2027.
Gilmore said shareholders who stay after the agreement takes effect would receive guaranteed annual cash compensation of 6%, or 0.66 euros per share, and can hold "as long as they like."
In the legacy business, Gilmore called this "one of the most challenging steel supply environments most of us have ever seen." He said agriculture shipments rose 40% from a year earlier, while construction demand fell in the quarter.
The open items are whether Kloeckner segment data appears once the control agreement takes effect, and when the first leverage ratio is reported.
Sources
- Worthington Steel Swings to 1Q Loss Despite Kloeckner Acquisition Tripling Revenue — MarketWatch
- Worthington Steel falls short on Q1 earnings estimates, shares edge lower — Yahoo Finance
- Worthington Steel Declares Quarterly Dividend – Company Announcement - FT.com — Financial Times
