Worthington Steel Q1 2027 Earnings Results & Report

Worthington Steel EPS Results

• Actual EPS: $0.57
• Consensus EPS: $1.16
• Beat/Miss: Missed by -$0.59
• One Year Ago EPS: $0.77
• EPS Beat Rate: 3 of last 8 quarters

Worthington Steel Revenue Results

• Actual Revenue: $2.73 billion
• Expected Revenue: $3.14 billion
• Beat/Miss: Missed by -$410.25 million
• YoY Revenue Growth: +212.40%

Worthington Steel (NYSE:WS) is a steel processing company that produces value-added flat-rolled steel products for manufacturers in the automotive, construction, energy, industrial and consumer markets. Its offerings include electrical steel, laser-welded and tailor-welded blanks, and other processed steel products designed to meet specific customer requirements.

The company provides services such as slitting, blanking, cold reduction, welding and other steel processing capabilities. Its products are used in applications including automotive components, electrical motors and transformers, building products, pressure vessels and industrial equipment.

Worthington Steel was separated from Worthington Industries as an independent public company in December 2023. The company serves customers through operations in the United States and Mexico and is headquartered in Columbus, Ohio. Geoff Gilmore serves as president and chief executive officer.

Worthington Steel Q1 2027 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Kloeckner acquisition expands Worthington Steel’s scale and reach, adding $1.9 billion of quarterly sales, broader processing capabilities, greater geographic coverage, and increased market diversification. Management expects formal integration and synergy capture to begin in the first quarter of calendar 2027, subject to shareholder approval of the DPLTA.
• Negative Sentiment: Reported results were pressured by acquisition-related items and higher financing costs. The company posted a $7 million net loss and $0.57 in adjusted EPS versus $0.77 a year earlier, while net interest expense rose to $38.8 million and purchase-accounting inventory step-up reduced adjusted EBITDA by an estimated $43 million.
• Positive Sentiment: Legacy Worthington Steel benefited from market-share gains and stronger demand in key segments. Agriculture shipments rose 40% year over year, automotive direct shipments increased 4%, and other transportation shipments rose 39%, while direct spreads were supported by higher volumes and inventory holding gains.
• Neutral Sentiment: Market conditions remain uneven, with tight steel supply, limited imports, extended lead times, and cautious customer inventories. Automotive is expected to remain resilient through the end of 2026, agriculture is improving, and heavy truck is stabilizing, but construction and energy shipments declined.
• Negative Sentiment: Leverage and cash generation are major priorities following the acquisition. The company ended the quarter with approximately $1.9 billion of net debt and negative free cash flow of $69 million, although management plans to reduce debt through operating cash flow, working-capital improvements, synergies, and potential proceeds from the sale of Becker Stahl-Service.

Presentation

[Operator]

After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to Melissa Dykstra, Vice President of Corporate Communications and Investor Relations. Melissa, please go ahead.

[Melissa Dykstra, VP of Corporate Communications and Investor Relations at Worthington Steel]

Thank you, operator. Good morning and Welcome to Worthington Steel's first quarter fiscal year 2027 earnings call. On our call today, we have Geoff G. Gilmore, Worthington Steel's President and Chief Executive Officer, and Tim Adams, Vice President and Chief Financial Officer. Before we begin, I'd like to remind everyone that certain statements made today are forward-looking within the meaning of the 1995 Private Securities Litigation Reform Act. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those suggested. We issued our earnings release yesterday after the market closed. Please refer to it for more detail on factors that could cause actual results to differ materially. Unless noted as reported, today's discussion will reference non-GAAP financial measures, which adjust for certain items included in our GAAP results and are presented on a standalone basis.

[Melissa Dykstra, VP of Corporate Communications and Investor Relations at Worthington Steel]

You can find definitions of each non-GAAP measure and GAAP to non-GAAP reconciliations within our earnings release. Today's call is being recorded, and a replay will be available later today on worthingtonsteel.com. Now, I'll turn it over to Geoff G. Gilmore.

[Geoff G. Gilmore, President and CEO at Worthington Steel]

Good morning and thanks for joining us. Today marks another major milestone for Worthington Steel as we report Kloeckner financials as part of our results for the first time. This achievement follows several important steps over the last few months. We closed the transaction on June 3rd. Kloeckner's shares were delisted from the Frankfurt Stock Exchange on August 12, and the Domination and Profit and Loss Transfer Agreement, or DPLTA, was signed on September 8. The DPLTA remains subject to shareholder approval in October. If approved and effective, it would provide a clear framework for operating control as well as formal integration and synergy capture beginning in the first quarter of calendar year 2027. Planning for that phase is already underway on our side. Teams from Worthington Steel and Kloeckner are spending time together learning each other's business, processes, and cultures.

[Geoff G. Gilmore, President and CEO at Worthington Steel]

The better we understand each other now, the better prepared we will be to move with discipline when we have operational control. These early interactions continue to reinforce what we believed when we announced the transaction. These are two strong companies with talented people, deep customer relationships, and cultures that value performance. We have more work ahead, but we are encouraged by the foundation we are building. Before I move to our results and end markets, I want to take time to thank our team. In addition to the work happening to ensure the successful integration with Kloeckner, they have been navigating difficult market conditions. Simply put, this is one of the most challenging steel supply environments most of us have ever seen. Supply remains tight, lead times are long, production schedules are shifting, and securing the right material for customers has been difficult.

[Geoff G. Gilmore, President and CEO at Worthington Steel]

Through it all, our employees continue to shine in their unwavering commitment to our customers and our company. With that, let us turn to the quarter. Net sales were $2.7 billion. Adjusted EBITDA was $111 million, and an adjusted earnings per share was $0.57. Because this is the first quarter that includes Kloeckner in our reported results, Tim will spend a bit more time on the financial details, including leverage, purchase accounting, and the items investors should consider when comparing results to prior periods. From my perspective, the bigger point is straightforward. Kloeckner changes the size, shape, and reach of our company. It expands our product and processing capabilities, broadens the markets we serve, and extends our geographic footprint. This is the kind of high-quality scale we have talked about for some time.

[Geoff G. Gilmore, President and CEO at Worthington Steel]

This scale gives us more ways to serve customers, more balance across cycles, and more opportunities to create long-term value. From a macro standpoint, the quarter remained dynamic. Demand was uneven across end markets, and customers continued to be careful with inventories and commitments. Steel supply also remained tight in the U.S., with imports down and lead times extended in many parts of the market. In an environment like this, execution makes a real difference. Across the business, our teams worked constructively with customers and supply partners, adjusted plans, and helped customers secure the material they needed. This is one of the ways Worthington Steel earns trust. Customers need communication, problem-solving, and a team that stays engaged when conditions are difficult. That has always been part of who we are, and it will remain a strength as we operate as a larger company.

[Geoff G. Gilmore, President and CEO at Worthington Steel]

Let me walk through what we saw across our key markets, comparing legacy Worthington Steel for both periods and what we are watching in the months ahead. North American automotive production has remained resilient so far in calendar year 2026, and we expect that to continue through year-end. Based on the latest industry forecast, North American production is expected to be essentially flat compared to calendar year 2025. Regardless of the overall build environment, our commercial and technical teams continue to win new business by helping customers solve challenges, support key programs, and develop new products. Our teams really shine in this sector. One example from the quarter was TWB, our joint venture, being recognized with two supplier awards from Subaru. It reflects strong execution, technical expertise, and the customer focus that helps us build long-term relationships. Congratulations to the entire TWB team.

[Geoff G. Gilmore, President and CEO at Worthington Steel]

Overall, we remain optimistic that automotive will remain solid through the end of calendar year 2026. We are not assuming a significant near-term inflection in builds, but we believe Worthington Steel is well-positioned to grow through targeted customer wins, technical solutions, and longer-term localization and nearshoring trends. Demand in the construction market was down in the first quarter. Data center construction continues to support demand, but broader construction activity remains more sensitive to interest rates and consumer confidence. We are also watching interest rates and broader geopolitical stability closely. The recent Fed action reinforces that rates may remain a headwind for longer than many expected, particularly in markets tied to construction, equipment purchases, and larger capital decisions. At the same time, the economy continues to show resilience, and we believe demand can improve as inflation moderates, uncertainty eases, and consumers gain more confidence in the rate environment.

[Geoff G. Gilmore, President and CEO at Worthington Steel]

Our posture is practical. We're not counting on a quick macro tailwind, but we are staying close to customers, managing what we can control, and positioning the business to respond as conditions improve. Agriculture was a bright spot this quarter, with a 40% year-over-year increase in shipments. That was mostly driven by the OEM and grain bin markets. We have strong customer relationships in this space, and we are staying focused on where we can add value. We will remain disciplined while positioning the business to benefit if demand continues to improve. Heavy truck and trailer continue to show signs of stabilizing. The market started slowly in calendar year 2026, but we saw benefits from share gains and new business wins. We would not characterize the market as fully recovered, but the direction is more constructive than it was earlier in the year. For us, the priority is readiness.

[Geoff G. Gilmore, President and CEO at Worthington Steel]

We will manage the current environment carefully and stay prepared to capture opportunities as activity strengthens. As we bring Kloeckner into our reported results, our market discussion will also evolve. We will continue to talk about the end markets investors know well for Worthington Steel, including automotive construction, agriculture, and heavy truck and trailer. Over time, we also expect to add more perspective on other industrial sectors where Kloeckner has meaningful exposure. Turning to strategic priorities, Kloeckner is clearly at the top of the list. We are focused on preparing for integration. That means learning the businesses, reviewing processes, and building relationships while protecting customer service and respecting the strengths of both organizations. We want to move with discipline, not just speed. We want to capture value, but we want to do it thoughtfully and with the same operating discipline that has guided Worthington Steel for decades.

[Geoff G. Gilmore, President and CEO at Worthington Steel]

We continue to believe in the long-term demand drivers tied to electrification, grid investment, and higher-efficiency applications. We are taking a disciplined view of the business under current market conditions, and we remain focused on improving performance and building value from the capabilities we have developed. We also continue to find practical ways to make the business better. Some of that comes through technology and AI, and some of it comes from disciplined problem-solving by our teams. Regardless of the technology involved, our approach is consistent: simplify the work, improve the process, automate where it makes sense, and apply AI to enhance decision-making. In indirect purchasing, for example, we've been simplifying workflows, reducing manual effort, and giving our buyers better information to make decisions. Last year, that work allowed buyers to spend more time on supplier negotiations, sourcing strategy, and commodity management.

[Geoff G. Gilmore, President and CEO at Worthington Steel]

This led to significant cost avoidance across the company. This year, we built on that foundation by applying AI to improve inventory decisions across our maintenance, repair, and operations network. Our buyers now have better visibility across the enterprise, while AI helps evaluate demand patterns, identify duplicate purchasing opportunities, recommend transfers between facilities, and support inventory level decisions. Importantly, our people remain in control, but they have a new tool to help make better decisions. Buyers and maintenance teams confirm recommendations before decisions are made, avoiding unnecessary purchases. We have identified and validated the value. Now, the work is converting that into financial results over time through disciplined operating reviews and better inventory management. Longer term, we also see this as a capability that can scale across a larger footprint as we move through Kloeckner integration.

[Geoff G. Gilmore, President and CEO at Worthington Steel]

Another good example is our Monroe, Ohio facility where the team unlocked capacity by taking a fresh look at how work was being done. Through disciplined problem-solving, internal engineering expertise, and better use of existing assets, the team identified work that could move from a bottleneck press to a previously underutilized asset. By thinking differently, the team increased production using in-house capabilities, allowing us to better support customer demand without additional capital investment. Together, these examples show how we are creating value in complementary ways. Through digital transformation and AI-enabled decision-making, and through operational excellence led by the experience and problem-solving capabilities of our people. Before I close, I want to come back to my earlier comments about the challenging market we are operating in today.

[Geoff G. Gilmore, President and CEO at Worthington Steel]

It takes relationships, experience, persistence, and innovative thinking to serve customers well in this kind of environment, and our employees continue to excel in this area. Ultimately, this is what sets us apart in the industry. While managing through tough market conditions, Worthington Steel teams also continued preparing for the next phase of the Kloeckner transaction. I appreciate the focus, discipline, and commitment from everyone at Worthington Steel. To our commercial purchasing supply chain and teams who work with customers and supply partners to keep material moving, thank you. You are helping customers navigate a difficult supply environment. They appreciate your efforts, and so do I. To the teams preparing for Kloeckner integration, thank you. The learning and relationship building underway will help shape our future. To our Kloeckner colleagues, we are glad to be moving forward together.

[Geoff G. Gilmore, President and CEO at Worthington Steel]

We are still early in this process, but we are excited about the company we are building. Worthington Steel is larger, broader, and more diversified than it was a year ago. We have meaningful work ahead, and we will approach it the way we always do, with discipline, care for our people, commitment to customers, and a focus on long-term value creation. With that, I'll turn the call over to Tim for more detail on the quarter and the financials.

[Tim Adams, VP and CFO at Worthington Steel]

Thank you, Geoff, and good morning, everyone. Our first quarter results include 100% of Kloeckner following the June 3rd acquisition. I will begin with our consolidated results and the items affecting comparability and then discuss the legacy Worthington Steel business, where year-over-year comparisons are meaningful. I will finish with cash flow, capital spending, and our balance sheet. The earnings figures I will discuss are from continuing operations. Discontinued operations primarily reflect the results of Becker Stahl-Service, which Kloeckner is marketing for sale. In the first quarter, we reported a net loss from continuing operations attributable to Worthington Steel of $7 million, or $0.14 per diluted share. This compares with net earnings of $36.8 million or $0.73 per diluted share in the prior year quarter. Reported results included several items affecting comparability.

[Tim Adams, VP and CFO at Worthington Steel]

The largest were $22.6 million of pre-tax acquisition-related expenses, a $15.5 million pre-tax loss from remeasuring our previously held Kloeckner shares at closing, and a $5.6 million deferred tax asset write-off related to the Kloeckner acquisition. These and the other adjustments for both periods are detailed in our earnings release. Excluding these items, adjusted earnings were $0.57 per diluted share, compared with $0.77 in the prior year quarter. Adjusted EBIT was $78.5 million, up $23 million from the prior year quarter. While adjusted EBIT increased, higher interest expense following the acquisition weighed on adjusted earnings per share. Reported net interest expense was $38.8 million, compared with $2.9 million a year ago. Adjusted EBITDA was $111 million. Beginning this quarter, our measure includes 100% of the adjusted EBITDA of our consolidated operations before allocation to non-controlling interests. We believe this change enhances comparability to our balance sheet measures.

[Tim Adams, VP and CFO at Worthington Steel]

Earnings per share continues to reflect earnings attributable to Worthington Steel shareholders. There is one additional item that is important to understanding our results for the current quarter. Purchase accounting required us to record Kloeckner's acquired inventory at fair value. As that inventory was sold, the step-up reduced first quarter gross margin and adjusted EBITDA by an estimated $43 million. We expect only a limited residual impact in the second quarter. Net sales in the quarter were $2.7 billion, up approximately $1.9 billion from the prior year quarter, primarily due to the addition of Kloeckner. Total shipments were approximately 1.9 million tons. Our consolidated mix was 77% direct sale and 23% toll processing, compared with 63% direct sales and 37% toll processing a year ago. Turning to legacy Worthington Steel, net sales were $954 million, up $81 million or 9% from the prior year quarter.

[Tim Adams, VP and CFO at Worthington Steel]

The increase reflected higher direct volumes and selling prices. Total legacy shipments were approximately 921,000 tons, down 1% year-over-year. Direct sale volumes increased 3%, while toll volumes declined 8%. As Geoff discussed, automotive remained a bright spot. Our direct shipments to automotive increased 4% year-over-year. Agriculture shipments increased 40%, supported by OEM equipment and grain bin demand. Shipments to other transportation, which now includes heavy truck, increased 39%, primarily due to share gains as new business was layered in. As a reminder, these are references to legacy markets and do not include the impact of Kloeckner. These gains were substantially offset by lower energy and construction shipments. Energy shipments declined 31%, reflecting a shift in customer sourcing to another supplier. Construction shipments declined 9%, reflecting increased competition and tight steel availability, which limited our ability to quote short-term contract business.

[Tim Adams, VP and CFO at Worthington Steel]

Higher direct volumes increased legacy direct spreads by $7.6 million. In addition, the favorable change in inventory holding gains added $6.5 million. Estimated pre-tax inventory holding gains were $12.1 million this quarter, compared with $5.6 million a year ago. Excluding the effects of volume and inventory holding gains, direct spreads were approximately flat year-over-year. Lower toll volumes reduced legacy toll spreads by $2.3 million. This was partially offset by $1.4 million of improved mix, including spot tolling business at higher spreads. Turning to operating expenses, manufacturing expenses in the legacy business increased approximately $11 million, or 6%, primarily due to higher labor, benefits, and freight costs. Legacy SG&A increased $17.6 million, primarily reflecting the addition of acquisition-related expenses. Excluding acquisition-related fees and the prior year CEDAM closing bonus, legacy SG&A increased $2.9 million, primarily due to wages and benefits.

[Tim Adams, VP and CFO at Worthington Steel]

Finally, equity earnings from Serviacero, our Mexico-based joint venture, decreased approximately $1 million due to lower direct volumes, partially offset by improved direct spreads. Hot-rolled coil prices ended the quarter around $1,200 per ton. Steel supply remains tight and expected mill maintenance outages are likely to keep lead times extended in the near future. Given the lagging index-based pricing mechanisms in many of our contracts, we currently estimate pre-tax inventory holding gains in the legacy Worthington Steel business of $10 million-$15 million in the second quarter of fiscal 2027. Turning to cash flow, consolidated Worthington Steel had operating cash outflow of $6 million for the quarter. Capital expenditures were $63 million, resulting in negative free cash flow of $69 million. The principal factors affecting total cash flow included the Kloeckner acquisition and the issuance of our Term Loan B and senior notes.

[Tim Adams, VP and CFO at Worthington Steel]

The capital expenditures in the first quarter were roughly split evenly between legacy Worthington Steel and Kloeckner. Spending in our legacy business is weighted toward the earlier part of the fiscal year, reflecting the timing of several projects already underway. We expect that spending to moderate as the year progresses, though the first quarter pace should not be viewed as representative of the full year. Our current planning estimate for combined capital expenditures is $160 million-$180 million for fiscal 2027, with the timing of the project spending influencing where we finish within that range. Following the DPLTA effectiveness, we will review capital priorities across the combined business. Our focus remains completing key projects, maintaining operating discipline, and generating cash to reduce debt. At August 31st, we had approximately $248 million of cash and $1.9 billion of net debt following the Kloeckner acquisition.

[Tim Adams, VP and CFO at Worthington Steel]

We are not reporting a trailing 12-month leverage ratio this quarter because it would include the acquisition financing in all of Kloeckner's debt, but only three months of Kloeckner's EBITDA. We expect to report the ratio once we have a full year of Kloeckner results. Our previously communicated synergy and deleveraging targets remain unchanged. We expect debt reduction to progress alongside synergy capture and working capital improvement. As I mentioned earlier, Becker Stahl-Service is also being marketed for sale, and we expect Kloeckner will use the majority of the net proceeds for debt reduction. Our board also declared a quarterly dividend of $0.16 per share, payable on December 28th, 2026. To close, our financial priorities are clear. We are focused on completing the DPLTA, which is necessary for us to fully integrate Kloeckner and capture synergies, reducing leverage, and advancing our strategic growth projects.

[Tim Adams, VP and CFO at Worthington Steel]

Across the business, we will maintain operating and capital discipline with a focus on generating cash and reducing debt. I want to thank our teams for their continued focus on safety, customer service, and execution. At this point, we would be happy to take your questions.

[Operator]

We will now begin the question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Samuel McKinney with KeyBanc Capital Markets. Samuel, your line is open. Please go ahead.

[Samuel McKinney, Analyst at KeyBanc Capital Markets]

Despite the tight supply environment, Legacy Worthington direct tons were down less than 1% sequentially in the first quarter, much better than normal seasonality. I assume some of that has to do with continued market share wins in auto and heavy trucks, but any more details you guys can share around that volume beat would be helpful.

[Geoff G. Gilmore, President and CEO at Worthington Steel]

Very good performance, and as you said, even more so with the seasonality. Sam, your assumption's right. It's definitely the market share gains that have continued to be laid in here over time, whether it be heavy truck, agriculture, as well as automotive. Sam, in fact, we probably missed out on another 30,000 tons of shipments this quarter just due to the supply chain constraints.

[Samuel McKinney, Analyst at KeyBanc Capital Markets]

Okay. Galvanized continued to get better. They averaged over $200 in your fiscal first quarter. That is much better than the long-term average and the trough levels earlier this year. What is your stance on the sustainability of these spreads as hot-rolled pricing continues to rise?

[Geoff G. Gilmore, President and CEO at Worthington Steel]

Again, today, we saw CRU tick up both hot-rolled and coated and coated more, and we feel pretty strongly that sustainability is an absolute go. At this point, the market is going to remain tight. You got very limited imports coming in, so the longevity of it is strong. For us, we were not able to experience a lot of that spread expansion here over this quarter. The reason for that is there is not much spot tonnage available, Sam, as you know, and predominantly, 90% or more of our business is contractual. So we feel pretty strongly on the sustainability piece as we move to this new contract season that would start January 1st. From that point on is where you would start to see that reflected in our numbers.

[Samuel McKinney, Analyst at KeyBanc Capital Markets]

Okay. Got it. Thanks, Geoff.

[Geoff G. Gilmore, President and CEO at Worthington Steel]

Got it, Sam. Thank you.

[Operator]

Your next question comes from the line of John Tumazos with John Tumazos Very Independent Research. John, your line is now open. Please go ahead.

[John Tumazos, Analyst at John Tumazos Very Independent Research]

Thank you. Thank you very much. Could you explain the details of the German or European law where the 38% minority holders retain their shares and how long they can retain them? Could you explain the difference in inventory turnover and gross margin between the Kloeckner and Worthington Legacy businesses?

[Geoff G. Gilmore, President and CEO at Worthington Steel]

John, I'll take the first part, and Tim, please jump in if I miss anything on timeframe. Specifically to that 38% and the minority shareholders. First of all, once the DPLTA is approved by shareholders and declared effective by the German courts, minority shareholders are granted a put option, and they could sell their shares to Worthington for EUR 11 per share, which is what we negotiated. Now to your question, should minority shareholders choose to remain, the DPLTA states they would receive an annual guaranteed cash compensation of 6% or EUR 0.66 per share. Specific to the timeline, Tim, I can't remember the exact timeline on how long they can hold their shares. I'm not sure that it's clear. There is, right?

[Tim Adams, VP and CFO at Worthington Steel]

They can hold forever if they choose to, sure.

[Geoff G. Gilmore, President and CEO at Worthington Steel]

John, hopefully you heard that. We had a little discussion amongst us. They could hold on to the shares as long as they like.

[Tim Adams, VP and CFO at Worthington Steel]

John, as far as your second part of the question, as far as gross margins. This should come as no surprise. Gross margins for Worthington Steel will be higher because we have higher value-added processes, including galvanized and pickling. We make galvanized and Kloeckner buys galvanized, so the starting point is just different. Their margins are going to be a little bit lower than ours, but it is one of the synergies that we pointed out. We will start making galvanized for them once we are able to capture the synergies. It is the same thing on the inventory turnovers. I do not have a specific number for you with respect to how they performed in the past, but we put out $150 million of working capital synergies.

[Tim Adams, VP and CFO at Worthington Steel]

We know a big chunk of that is related to inventory and how we manage the business versus how they manage the business, and it goes back to transformation, right? We have transformed, and you can see in the data that we put out there, kind of where we started 15 years ago on inventory days and where we are today. We are looking to put similar improvements at Kloeckner to drive down inventory.

[Operator]

Your next question comes from the line of Martin Englert with Seaport. Martin, your line is open. Please go ahead.

[Martin Englert, Analyst at Seaport]

Hello. Good morning, everyone.

[Geoff G. Gilmore, President and CEO at Worthington Steel]

Hi, Martin.

[Martin Englert, Analyst at Seaport]

Wanted to see, can you give us a clear view of Kloeckner's normalized EBITDA in 1Q, excluding the purchase accounting, the inventory step-up that was a $43 million fair value, and anything else that might be in there? Also, any type of color on how earnings looked across the Kloeckner business in North America and Europe footprint, respectively?

[Tim Adams, VP and CFO at Worthington Steel]

Martin, this is Tim. We're not disclosing, at this point, any, I'll call it, segment type data. We're not at that point in the process of being able to talk about that. Looking back at how they performed in the past, we haven't done a pro forma. There's no pro forma available that's been vetted. We're just kind of looking at Kloeckner, we're making comments about the legacy business, and then we're explaining Kloeckner, kind of what they add to the business.

[Martin Englert, Analyst at Seaport]

Right. The reported results for the quarter, what you did infer within the release, the $43 million-

[Tim Adams, VP and CFO at Worthington Steel]

Yeah.

[Martin Englert, Analyst at Seaport]

This was prepared remarks. The $43 million, with purchase accounting, that would be non-cash, correct? That would be additive to what was reported and it was not adjusted out of the $111 million of EBITDA, correct?

[Tim Adams, VP and CFO at Worthington Steel]

That is correct. When we say "adjusted out of," I would say it this way, you could add back the $43 million to the $111 million to get to-

[Martin Englert, Analyst at Seaport]

Yeah

[Tim Adams, VP and CFO at Worthington Steel]

$150 million. That is more representative of EBITDA.

[Martin Englert, Analyst at Seaport]

Okay, excellent. Thanks for clarifying that. For the legacy Kloeckner business, this is maybe a little bit more specific to the U.S., but how much did they source from within the U.S. market from domestic mills versus import?

[Geoff G. Gilmore, President and CEO at Worthington Steel]

Martin, this is Geoff. Kloeckner and Worthington Steel have very similar strategies. We support our local mills, okay? We buy where we produce. So, it's going to be 99% of their purchases would've come from domestic mills. That's certainly something we're excited about. I've talked about the footprint being highly complimentary, being us big in the Midwest and them much bigger in the Southeast and pushing Southwest. And that's going to be great for our supplier base as well because, I say we buy locally, we truly do buy predominantly most of our steels regionally, and we're in the Midwest, and they're in a similar situation. We'll have, jointly, new suppliers in the mix. But same strategy as Worthington Steel.

[Martin Englert, Analyst at Seaport]

Okay. Understood. That's all I have. Thank you very much.

[Geoff G. Gilmore, President and CEO at Worthington Steel]

Thanks, Martin.

[Operator]

We have reached the end of the Q&A session. I will now turn the call back to Geoff G. Gilmore, President and CEO, for closing remarks.

[Geoff G. Gilmore, President and CEO at Worthington Steel]

Thank you, and a lot of progress, obviously, this quarter. Another important milestone coming up. Want to again say how proud I am of the Worthington Steel and Kloeckner employees for their efforts and work to date. Thank you for listening in and showing interest in Worthington Steel. We look forward to talking again next quarter.

[Operator]

This concludes today's call. Thank you for attending. You may now disconnect.

Participants

Executives

• Melissa Dykstra, VP of Corporate Communications and Investor Relations
• Geoff G. Gilmore, President and CEO
• Tim Adams, VP and CFO

Analysts

• Samuel McKinney, Analyst at KeyBanc Capital Markets
• John Tumazos, Analyst at John Tumazos Very Independent Research
• Martin Englert, Analyst at Seaport