Worthington Steel Posts $7.0 Million Quarterly Loss As Kloeckner Deal Costs Outweigh Tripled Sales
Sales rose 212% to $2,726.6 million with Kloeckner included, but acquisition expenses and fair-value charges produced a net loss versus a year-ago profit.
Worthington Steel lost $7.0 million attributable to controlling interest in its fiscal first quarter, or $0.14 a share, against net earnings of $36.8 million, or $0.73, a year earlier. The results, in an 8-K furnished with the company's earnings release, are the first to include Kloeckner, the German metals company in which it bought a majority stake.
What the earnings release says
Net sales for the quarter ended August 31, 2026 were $2,726.6 million, up 212% from $872.9 million. Kloeckner added $1,772.7 million of that. Without it, sales rose $81.0 million, or 9%, on higher direct volumes and, to a lesser extent, higher direct selling prices.
Operating income was $56.0 million versus $48.3 million. Adjusted earnings per share, which strips out one-time items, were $0.57 versus $0.77 a year earlier. Adjusted EBIT (earnings before interest and taxes) rose to $78.5 million from $55.5 million.
The reconciliation shows what separates the loss from the adjusted figure. Per share, Kloeckner acquisition-related expenses were $0.37 and a Kloeckner securities investment loss was $0.24. A deferred tax asset adjustment added $0.11.
CEO Geoff Gilmore said the quarter "marks an important milestone" and that the core business "delivered solid operating performance, driven by higher direct volumes and improved pricing."
Where the costs sit
Excluding Kloeckner, operating income fell $16.5 million. Selling, general and administrative costs rose $17.6 million, including an $18.6 million increase in professional fees tied mainly to the Kloeckner deal.
Kloeckner's gross margin was reduced by roughly $43 million of inventory fair-value step-up charges. The quarter also carried a $15.5 million remeasurement loss on the earlier Kloeckner stake.
Net debt, total debt less cash, was $1,948.2 million at August 31, 2026, versus $172.2 million at May 31, 2026, as acquisition financing took hold.
Control of Kloeckner is not complete
Worthington completed settlement on June 3, 2026, securing about 62% of Kloeckner's shares. A delisting tender offer at €11.00 per share, begun July 15, ended August 12 and lifted the stake to about 62.11%.
On September 8 the company signed a Domination and Profit and Loss Transfer Agreement, which cannot take effect before January 1, 2027. Until then, Kloeckner continues to operate independently, the company said.
The board also declared a quarterly dividend of $0.16 a share, payable December 28 to holders of record on December 14. Shares closed at $38.19 on Tuesday, according to market data.
What to watch
Kloeckner shareholders vote on the domination agreement at an October 23 meeting, per the investor presentation. Management plans to discuss its second-quarter outlook on Wednesday's 8:30 a.m. ET call.
The October 23 Kloeckner vote is the next dated step toward the operating control the company says it is seeking.
Sources
- 8-K Filing — Worthington Steel, Inc. (WS) — SEC EDGAR
- Exhibit ws-ex99_1.htm — Worthington Steel, Inc. 8-K exhibit — SEC EDGAR
- Exhibit ws-ex99_2.htm — Worthington Steel, Inc. 8-K exhibit — SEC EDGAR
- Exhibit ws-ex99_3.htm — Worthington Steel, Inc. 8-K exhibit — SEC EDGAR
- 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
