Financial Analysis

Note 2 Acquisition s Kloeckner Acquisition In January 2026, the Company entered into a BCA with Kloeckner and launched a voluntary public cash takeover offer for all outstanding Kloeckner shares at 11.00 per share. As of May 31, 2026, the Company owned Kloeckner shares, but did not have a controlling interest or the ability to exercise significant influence. Accordingly, the Company has not recognized Kloeckners assets or liabilities in the accompanying consolidated and combined financial statements. On June 3, 2026, subsequent to the end of fiscal 2026, the transaction closed, and the Company acquired a controlling equity stake in Kloeckner. For additional information, see Note 4 Investments and Note 21 Subsequent Events. Kloeckner acquisition-related expenses, consisting primarily of advisory, legal, accounting, valuation, regulatory and other professional fees, as well as certain integration expenses, were $ 35.8 million, fiscal 2026. These costs are included in SG&A in the consolidated and combined statements of earnings. For additional information on debt financing and related costs, see Note 9 Debt and Note 21 Subsequent Events. Fiscal 2026 Sitem Group On June 3, 2025 , Tempel completed its acquisition of 52 % of the Sitem Group . The Sitem Group produces electric motor laminations and accessory products primarily for automotive and industrial applications in Europe. The total purchase price as of the acquisition date for the Sitem Group acquisition consisted of the …

BusinessCombinationDisclosureTextBlock · excerpt; the full note is in the filing

Note 7 Contingent Liabilities and Commitments Contingent Liabilities The Company accrues for loss contingencies when losses are probable and reasonably estimable. Otherwise, the Company discloses the matter if there is a reasonable possibility that a loss may have occurred. The Company is a defendant in certain legal proceedings that are incidental to its business. In the opinion of management, the outcome of these legal proceedings, which is not clearly determinable at the present time, individually and in the aggregate, would not have a material adverse effect on the Company, its consolidated and combined financial position, future results of operations or cash flows. The Company has recorded a liability, as necessary, to provide for the anticipated costs, including legal defense costs, associated with the resolution of these legal proceedings. However, the possibility exists that the costs to resolve these legal proceedings could differ materially from the recorded estimates and, therefore, could have a material effect on the Company, its consolidated and combined financial position, future results of operations or cash flows for the periods in which they are resolved. For matters for which a loss or additional loss is reasonably possible, the Company cannot reasonably estimate the possible loss or range of loss in excess of amounts accrued, if any. The Company is currently involved in a dispute relating to the import of steel across international borders. Based on current …

CommitmentsAndContingenciesDisclosureTextBlock · excerpt; the full note is in the filing

Note 9 Debt The following table summarizes the Companys long-term debt and short-term borrowings outstanding at May 31, 2026 and 2025: Rate (In millions) Security Type Rate Maturity 2026 2025 Long-term debt: Canadian Expansion Loans: FED DEV Loan Unsecured March 2032 2.3 2.3 BDC Loan Secured Variable BDC Floating Base Rate minus 1.75 % June 2051 36.4 - AMIC Loan Unsecured Fixed 0 % until June 2028, 5.97 % thereafter June 2032 1.8 - Sitem Group Term Loans: Sitem Group Term Loan 2 Unsecured Fixed 1.50 % March 2027 0.8 - Sitem Group Term Loan 3 Secured Fixed 1.94 % September 2030 3.8 - Sitem Group Term Loan 4 Unsecured Fixed 0.36 % February 2029 0.4 - Sitem Group Term Loan 6 Unsecured Fixed 0.55 % December 2028 0.7 - Sitem Group Term Loan 8 Secured Variable Euribor 1m/360 + 1.65 % May 2026 0.1 - Sitem Group Term Loan 10 Secured Variable Euribor 3m/360 + 1.20 % September 2026 0.2 - Sitem Group Term Loan 11 Unsecured Variable Euribor 3m/360 + 1.65 % March 2028 3.1 - Sitem Group Term Loan 13 Secured Fixed 0.90 % October 2026 0.1 - Standstill Agreement Sitem Group Secured Variable SARON (subject to 0 % floor) + 5.0 % June 2026 21.7 - Total 71.4 2.3 Less: current maturities of long-term debt 27.0 - Long-term debt, net of current maturities $ 44.4 $ 2.3 Short-term borrowings and current maturities: Revolving credit facility Secured Variable Various November 2028 $ 185.4 $ 149.2 Current maturities of long-term debt 27.0 - Total short-term borrowings and current maturities 212.4 149.2 T …

DebtDisclosureTextBlock · excerpt; the full note is in the filing

The following table summarizes net sales by product class for fiscal 2026, fiscal 2025, and fiscal 2024: (In millions) 2026 2025 2024 Product class Direct $ 3,323.7 $ 2,943.4 $ 3,269.4 Toll 120.1 149.9 161.2 Total $ 3,443.8 $ 3,093.3 $ 3,430.6

DisaggregationOfRevenueTableTextBlock

Note 12 Stock-Based Compensation Prior to the Separation, certain Company employees and non-employee directors participated in the stock-based compensation plans of the Former Parent (Former Parents Plans). In connection with the Separation, the Board approved the Worthington Steel, Inc. 2023 Long-Term Incentive Plan and Worthington Steel, Inc. 2023 Equity Incentive Plan for Non-Employee Directors (the Plans). Under the Plans, the Company may grant incentive or non-qualified stock options, restricted common shares and performance shares to employees and non-qualified stock options and restricted common shares to non-employee directors. Under the terms of the Employee Matters Agreement between the Company and the Former Parent, in connection with the Separation, restricted stock and stock option equity awards granted to Company employees under the Former Parent's Plans were converted to awards representing appro ximately 1.3 million share s of the Company's common stock under the Plans. Adjustments to the underlying shares and terms of outstanding restricted stock and stock options were made to preserve the intrinsic value of the awards immediately before the Separation. The adjustment of the underlying shares and exercise prices, as applicable, was determined using a conversion ratio of 3.228 based on the relative values of the Former Parent's pre-Separation stock price and the Company's post-Separation stock price. The outstanding awards continue to vest over their original …

DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock · excerpt; the full note is in the filing

Note 17 Fair Value Measurements Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is an exit price concept that assumes an orderly transaction between willing market participants and is required to be based on assumptions that market participants would use in pricing an asset or a liability. Current accounting guidance establishes a three-tier fair value hierarchy as a basis for considering such assumptions and for classifying the inputs used in the valuation methodologies. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair values are as follows: Level 1 Quoted prices (unadjusted) in active markets for identical assets and liabilities that the reporting entity can access at the measurement date. Level 2 Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3 Unobservable inputs for the asset or liability, and includes situations where there is little, if any, market activity for the asset or liability and that are significant to the fair value of the assets and liabilities (i.e., allowing for situations in which there is little or no market activity for the asset or liability at the measurement date). Recurring Fair Value Measuremen …

FairValueDisclosuresTextBlock · excerpt; the full note is in the filing

Note 5 Goodwill, Long-Lived Assets, and Other Assets Goodwill The following table summarizes the changes in the carrying amount of goodwill during fiscal 2026 and fiscal 2025: (In millions) Total Balance at May 31, 2024 Goodwill $ 79.6 Accumulated impairment losses - 79.6 Translation adjustments - - Balance at May 31, 2025 Goodwill 79.6 Accumulated impairment losses - 79.6 Acquisitions and purchase accounting adjustments (1) 17.5 Translation adjustments 1.2 Impairment losses (2) ( 53.8 ) ( 35.1 ) Balance at May 31, 2026 Goodwill 98.3 Accumulated impairment losses ( 53.8 ) $ 44.5 (1) For additional information regarding acquisitions, refer to Note 2 Acquisitions. (2) A pre-tax goodwill impairment charge of $ 53.8 million that fully impaired the goodwill assigned to the Electrical Steel reporting unit. Other Intangible Assets Intangible assets with definite lives are amortized on a straight-line basis over their estimated useful lives, which range f rom 3 to 20 years. The following table summarizes other intangible assets by class as of the fiscal years ended May 31: 2026 2025 Accumulated Accumulated (In millions) Cost Amortization Cost Amortization Indefinite-lived intangible assets: Trademarks $ 5.2 $ - $ 5.2 $ - In-process research & development - - - - Total indefinite-lived intangible assets 5.2 - 5.2 - Definite-lived intangible assets: Customer relationships $ 112.8 $ 52.8 $ 100.0 $ 43.5 Non-compete agreements 2.0 2.0 2.0 2.0 Technology/know-how 19.0 8.1 11.0 4.8 Othe …

GoodwillAndIntangibleAssetsDisclosureTextBlock · excerpt; the full note is in the filing

Note 14 Income Taxes Earnings before income taxes for the prior three fiscal years included the following components: (In millions) 2026 2025 2024 U.S.-based operations $ 47.3 $ 114.6 $ 166.3 Non-U.S.-based operations ( 40.2 ) 33.5 49.9 Earnings before income taxes 7.1 148.1 216.2 Less: Net earnings (loss) attributable to noncontrolling interests ( 21.4 ) 8.6 15.4 Earnings before income taxes attributable to controlling interest $ 28.5 $ 139.5 $ 200.8 Significant components of income tax expense (benefit) for the prior three fiscal years were as follows: (In millions) 2026 2025 2024 Current Federal $ 21.2 $ 24.6 $ 25.3 State and local 7.3 3.3 6.3 Foreign 1.9 4.0 13.4 Subtotal 30.4 31.9 45.0 Deferred Federal ( 7.3 ) 0.4 4.7 State and local ( 0.9 ) 0.2 ( 0.8 ) Foreign ( 2.2 ) ( 3.7 ) ( 2.8 ) Subtotal ( 10.4 ) ( 3.1 ) 1.1 Total $ 20.0 $ 28.8 $ 46.1 The Company adopted ASU 2023-09 in fiscal 2026 on a prospective basis. A reconciliation of the federal statutory corporate income tax rate to total tax provision for the prior three fiscal years follows: 2026 (In millions) Amount Percent Income tax at U.S. federal statutory tax rate $ 1.5 21.0 % State and local income taxes, net of federal (1) 3.0 42.4 Foreign tax effects: Canada Tax credits ( 2.7 ) ( 37.9 ) Nondeductible goodwill impairment 0.9 13.4 Foreign currency translation and rate effects 0.7 9.5 Other ( 0.1 ) ( 1.1 ) China Nondeductible goodwill impairment 0.5 7.5 Other - ( 0.4 ) Germany Changes in valuation allowances 7.7 108 …

IncomeTaxDisclosureTextBlock · excerpt; the full note is in the filing

Recent Accounting Pronouncements Recently Adopted Accounting Pronouncements Improvements to Income Tax Disclosures In December 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2023-09, Improvements to Income Tax Disclosures (ASU 2023-09), which expands disclosure requirements for income taxes, specifically related to the rate reconciliation and income taxes paid. The ASU is effective for fiscal years beginning after December 15, 2024. The Company adopted ASU 2023-09 on a prospective basis for the fiscal year ended May 31, 2026, which modified its annual disclosures but did not have a material impact on the Companys consolidated and combined financial statements. For additional information, see Note 14 Income Taxes. New Accounting Pronouncements Not Yet Adopted Disaggregation of Income Statement Expenses In November 2024, the FASB issued Accounting Standards Update ASU No. 2024-03, Income Statement Reporting Comprehensive Income Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (ASU 2024-03). This guidance requires the disaggregation of certain expense captions into specified categories in disclosures within the notes to the financial statements to provide enhanced transparency into the expense captions presented on the statements of earnings. It is effective for annual reporting periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with …

NewAccountingPronouncementsPolicyPolicyTextBlock · excerpt; the full note is in the filing

Note 13 Employee Retirement Plans Defined Contribution Retirement Plan The Company provides retirement benefits to eligible employees primarily through the Worthington Steel, Inc. 401(k) Retirement Savings Plan (the 401(k) Plan), a defined contribution retirement plan. Prior to the Separation, eligible employees of Worthington Steel had historically received benefits through the Former Parents defined contribution retirement plans. As a result of the Separation, the 401(k) Plan was established, and new accounts within the 401(k) Plan were created for each of the qualifying plan participants of the Former Parents defined contribution retirement plan. As of the Separation date, all future qualifying plan participants contributions were attributed to the 401(k) Plan. The 401(k) Plan is a defined contribution plan covering all non-union U.S. employees of Worthington Steel (and its subsidiaries who are participating employers under the 401(k) Plan) on U.S. payroll who meet the tenure, hour and age requirements specified in the 401(k) Plan. The 401(k) Plan is subject to the provisions of the ERISA. The trustee for the 401(k) Plan is Fidelity Management Trust Company. Worthington Steel is the sponsor of the 401(k) Plan. Eligible participants make contributions based on elected percentages of eligible compensation, subject to annual addition and other limitations imposed by the Internal Revenue Code and the various plans provisions. Company contributions consist of employer matching …

PensionAndOtherPostretirementBenefitsDisclosureTextBlock · excerpt; the full note is in the filing

Note 19 Related Party Transactions Prior to the Separation, the Company was managed and operated in the normal course of business by the Former Parent. Transactions through November 30, 2023, between the Former Parent and the Company have been accounted for as related party transactions in the accompanying consolidated and combined financial statements, as described below. Subsequent to the Separation, transactions between the Former Parent and the Company were accounted for under the applicable GAAP, including those subject to agreements entered into with the Former Parent. See Note 1 Description of Business, The Separation, and Basis of Presentation for additional information. The material related party transactions have been disclosed below. Allocation of General Corporate Costs The Company had historically operated as part of the Former Parent and not as a stand-alone company. Prior to the Separation, the Former Parent provided certain support functions were provided to, and incurred other corporate costs on behalf of, the Company on a centralized basis, including (1) information technology, human resources, finance, and corporate operations, among others, (2) profit sharing and bonuses, and (3) respective surpluses and shortfalls related to various planned insurance expenses. For purposes of these consolidated and combined financial statements, these corporate and other shared costs have been attributed to the Company on the basis of direct usage when identifiable, with …

RelatedPartyTransactionsDisclosureTextBlock · excerpt; the full note is in the filing

Note 6 Restructuring and Other (Income) Expense, Net The Company considers restructuring activities to be programs whereby it fundamentally changes its operations, such as divestitures, closing or consolidating facilities, employee severance (including rationalizing headcount or other significant changes in personnel), and realignment of existing operations (including changes to management structure in response to underlying performance and/or changing market conditions). A progression of liabilities associated with restructuring activities, together with a reconciliation to restructuring and other (income) expense, net, financial statement caption in the Companys consolidated statements of earnings for fiscal 2026, is summarized below: Beginning Expense Ending (In millions) Balance (Income) Payments Adjustments Balance Early retirement and severance $ 2.1 $ - $ ( 1.7 ) $ - $ 0.4 Net gain on sale of assets ( 7.0 ) Restructuring and other (income) expense, net $ ( 7.0 ) During fiscal 2026, the following actions were taken related to the Companys restructuring activities: The Company made early retirement and severance payments of $ 1.2 million associated with a TWB VRP. Under the terms of the VRP, eligible TWB employees in the U.S. who chose to participate in the program were offered severance based on their years of service. The VRP was closed to employee acceptance during the fourth quarter of fiscal 2025. The Company does no t expect to incur additional material severance e …

RestructuringAndRelatedActivitiesDisclosureTextBlock · excerpt; the full note is in the filing

Note 3 Revenue Recognition The Company recognizes revenue upon transfer of control of promised goods or services to customers in an amount that reflects the consideration it expects to receive for those goods or services, including any variable consideration. The Company generates revenue by processing steel to the precise type, thickness, length, width, shape, and surface quality required by customer specifications. The Company can also toll process steel for steel mills, large end-users and service centers. Toll processing revenue is recognized over time. All other revenue is recognized at a point in time, generally upon shipment. The following table summarizes net sales by product class for fiscal 2026, fiscal 2025, and fiscal 2024: (In millions) 2026 2025 2024 Product class Direct $ 3,323.7 $ 2,943.4 $ 3,269.4 Toll 120.1 149.9 161.2 Total $ 3,443.8 $ 3,093.3 $ 3,430.6 The following table summarizes the unbilled receivables and contract assets at the end of fiscal 2026 and fiscal 2025: (In millions) Balance Sheet Classification 2026 2025 Unbilled receivables Receivables $ 4.2 $ 4.0 Contract assets Prepaid expenses and other current assets $ 12.7 $ 7.0 The following table summarizes the changes in contract liabilities during fiscal 2026 and fiscal 2025: (In millions) Balance at May 31, 2024 $ 7.6 Unearned revenue from cash received during the period 6.5 Revenue recognized related to contract liability balance ( 8.9 ) Balance at May 31, 2025 5.2 Unearned revenue from cash re …

RevenueFromContractWithCustomerTextBlock · excerpt; the full note is in the filing

Note 20 Segment Information and Geographic Data Segment Information The Companys CODM is Worthington Steels CEO . The Company has determined that it has only one operating segment and therefore one reportable segment after considering several sources of information, including the Companys internal organizational structure, the basis on which budgets and forecasts are prepared, the financial information that the Companys CODM reviews in evaluating company performance and determining how resources should be allocated, and how the Company releases information to the public and analysts. The CODM manages all business activities on a consolidated basis, and as a result, the Company has concluded that as of May 31, 2026 , there is only one operating segment and therefore one reportable segment. The Companys one reportable segment serves its customers primarily by processing flat-rolled steel coils, which are sourced primarily from various North American steel mills, into the precise type, thickness, length, width, shape, and surface quality required by customer specifications. The Company generates a substantial percentage of its revenue from selling steel on a direct basis, whereby it is exposed to the risks and rewards of ownership of the material while in its possession. Additionally, the Company toll processes steel under a fee for service arrangement whereby it processes customer-owned material. The accounting policies of the one reportable segment are the same as those descri …

SegmentReportingDisclosureTextBlock · excerpt; the full note is in the filing

Note 21 Subsequent Events On June 1, 2026, the Company completed financing transactions in connection with the Kloeckner Acquisition and refinanced and replaced the prior revolving credit facility. These transactions included (1) the issuance of the 2033 Notes ($ 700.0 million aggregate principal amount 7.750 % Senior Secured Notes due June 1, 2033) and (2) the incurrence of the Term Loans ($ 700.0 million aggregate principal amount seven-year Term Loan Facility, due June 1, 2033), bearing interest, at the Companys option, at a rate per annum equal to Term SOFR plus 4.00 %, Daily Simple SOFR plus 4.00 %, or the base rate plus 3.00 % under the Term Loan Facility due June 1, 2033 . Additionally, on June 25, 2026, the Company entered into the 2031 Revolving Credit Facility, an asset-based revolving credit agreement in the aggregate principal amount of up to $ 550.0 million subject to borrowing base availability and other conditions, that matures on June 25, 2031 , which refinanced and replaced the Credit Facility. On June 3, 2026, the Company completed the acquisition of Kloeckner. Together with the Kloeckner shares already held by the Company prior to the Settlement Date, as of the Settlement Date, the Company held a total of 60,710,791 Kloeckner shares, representing approximately 60.86 % of Kloeckners total outstanding share capital. The total aggregate consideration for the Tendered Shares was 576.3 million (approximately $ 668.3 million). On June 15, 2026, we acquired an add …

SubsequentEventsTextBlock · excerpt; the full note is in the filing

Note 2 Acquisitions Proposed Acquisition of Kloeckner On January 15, 2026, the Company entered into a Business Combination Agreement (BCA) with Klockner & Co SE (Kloeckner). Following execution of the BCA, the Company, through its wholly owned indirect subsidiary Worthington Steel GmbH (the Bidder), launched a voluntary public cash takeover offer to all Kloeckner shareholders to tender each issued and outstanding share of Kloeckner (each, a Kloeckner Share) to the Bidder. Subject to the terms and conditions of the offer document (the Offer Document) relating to the Offer (as defined below), upon settlement of the Offer (the Offer Closing) the Company wi ll pay cash consideration equal to 11.00 (subject to any increases either made voluntarily or in accordance with applicable German law) for each Kloeckner Share validly tendered by Kloeckner shareholders (such tender offer, the Offer, and such acquisition of Kloeckner Shares, the Proposed Acquisition). The initial acceptance period for the Offer began on February 5, 2026, upon publication of the Offer Document following its approval by the German Federal Financial Supervisory Authority (Bundesanstalt fur Finanzdienstleistungsaufsicht, BaFin). The Proposed Acquisition has not been completed as of February 28, 2026, and, accordingly, the Company has not applied acquisition accounting. The results of operations and financial position of Kloeckner are not included in the Companys financial statements. On March 10, 2026, the Co …

BusinessCombinationDisclosureTextBlock · excerpt; the full note is in the filing

Note 7 Contingent Liabilities and Commitments Contingent Liabilities The Company accrues for loss contingencies when losses are probable and reasonably estimable. Otherwise, the Company discloses the matter if there is a reasonable possibility that a loss may have occurred. The Company is a defendant in certain legal proceedings that are incidental to its business. In the opinion of management, the outcome of these legal proceedings, which is not clearly determinable at the present time, individually and in the aggregate, would not have a material adverse effect on the Company, its consolidated financial position, future results of operations or cash flows. The Company has recorded a liability, as necessary, to provide for the anticipated costs, including legal defense costs, associated with the resolution of these legal proceedings. However, the possibility exists that the costs to resolve these legal proceedings could differ materially from the recorded estimates and, therefore, have a material effect on the Company, its consolidated financial position, future results of operations or cash flows for the periods in which they are resolved. The Company is currently involved in a dispute relating to the import of steel across international borders. Based on currently available information, the Company believes a loss is not probable and therefore has not recorded a reserve. The Company estimates that a reasonably possible loss could range from $ 2.0 million to $ 4.0 million. T …

CommitmentsAndContingenciesDisclosureTextBlock · excerpt; the full note is in the filing

Note 9 Debt The following table summarizes the Companys debt outstanding at the dates presented: Rate February 28, May 31, (In millions) Security Type Rate Maturity 2026 2025 Long-term debt: Canadian Expansion Loans: FED DEV Loan Unsecured March 2032 $ 2.3 $ 2.3 BDC Loan Secured Variable BDC Floating Base Rate minus 1.75 % June 2051 21.8 - AMIC Loan Unsecured Fixed 0 % until June 2028, 5.97 % thereafter May 2032 1.8 - Sitem Group Term Loans: Sitem Group Term Loan 2 Unsecured Fixed 1.50 % March 2027 1.0 - Sitem Group Term Loan 3 Secured Fixed 1.94 % September 2030 4.1 - Sitem Group Term Loan 4 Unsecured Fixed 0.36 % February 2029 0.5 - Sitem Group Term Loan 6 Unsecured Fixed 0.55 % December 2028 0.7 - Sitem Group Term Loan 8 Secured Variable Euribor 1m/360 + 1.65 % May 2026 0.5 - Sitem Group Term Loan 10 Secured Variable Euribor 3m/360 + 1.20 % September 2026 0.3 - Sitem Group Term Loan 11 Unsecured Variable Euribor 3m/360 + 1.65 % March 2028 3.5 - Sitem Group Term Loan 13 Secured Fixed 0.90 % October 2026 0.1 - Standstill Agreement Sitem Group Secured Variable SARON (subject to 0 % floor) + 5.0 % June 2026 22.1 - Total 58.7 2.3 Less: current maturities of long-term debt 27.1 - Long-term debt, net of current maturities $ 31.6 $ 2.3 Short-term borrowings and current maturities: Revolving credit facility Secured Variable Various November 2028 $ 192.7 $ 149.2 Current maturities of long-term debt 27.1 - Total short-term borrowings and current maturities 219.8 149.2 Total Debt $ 25 …

DebtDisclosureTextBlock · excerpt; the full note is in the filing

The following table summarizes net sales by product class for the periods presented: Three Months Ended Nine Months Ended February 28, February 28, February 28, February 28, (In millions) 2026 2025 2026 2025 Product class Direct $ 743.0 $ 653.8 $ 2,426.6 $ 2,144.6 Toll 26.8 33.6 88.0 115.8 Total $ 769.8 $ 687.4 $ 2,514.6 $ 2,260.4

DisaggregationOfRevenueTableTextBlock

Note 15 Fair Value Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is an exit price concept that assumes an orderly transaction between willing market participants and is required to be based on assumptions that market participants would use in pricing an asset or a liability. Current accounting guidance establishes a three-tier fair value hierarchy as a basis for considering such assumptions and for classifying the inputs used in the valuation methodologies. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair values are as follows: Level 1 Quoted prices (unadjusted) in active markets for identical assets and liabilities that the reporting entity can assess at the measurement date. Level 2 Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3 Unobservable inputs for the asset or liability, and includes situations where there is little, if any, market activity for the asset or liability and that are significant to the fair value of the assets and liabilities (i.e., allowing for situations in which there is little or no market activity for the asset or liability at the measurement date). Recurring Fair Value Measurements At Februar …

FairValueDisclosuresTextBlock · excerpt; the full note is in the filing

Note 12 Income Taxes The Companys effective income tax rate (ETR) was 25.6 % and 26.7 % for the third quarter of fiscal 2026 and fiscal 2025, respectively, and 24.2 % and 18.7 % for the nine months ended February 28, 2026 and February 28, 2025, respectively. The ETR for the third quarter of fiscal 2026 differed from the statutory rate primarily due to income from the Companys unconsolidated joint venture recognized net of tax, partially offset by a valuation allowance recorded on foreign deferred tax assets and the impact of additional state tax nexus. The ETR for the nine months ended February 28, 2026 did not differ materially from the statutory rate. Variances due to foreign operations and compensation-related items were largely offset for the year-to-date period. The ETR for the third quarter of fiscal 2025 differed from the statutory rate primarily due to non-deductible executive compensation expense. The ETR for the nine months ended February 28, 2025 differed from the statutory rate primarily due to a pre-acquisition tax matter at Tempel. The provision for income taxes is based on the Companys current estimate of its annual ETR, adjusted to reflect the impact of discrete items, and excludes any impact from net earnings attributable to NCI in the consolidated statements of earnings. Net earnings attributable to NCI primarily relate to the Companys consolidated joint ventures. Earnings attributable to noncontrolling interests in the U.S. operations of the consolidated jo …

IncomeTaxDisclosureTextBlock · excerpt; the full note is in the filing

Recent Accounting Pronouncements Recently Adopted Accounting Pronouncements There have been no new accounting standards adopted since the filing of the 2025 Form 10-K that have significance, or potential significance, to the interim condensed consolidated financial statements. New Accounting Pronouncements Not Yet Adopted Improvements to Income Tax Disclosures In December 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2023-09, Improvements to Income Tax Disclosures , which expands disclosure requirements for income taxes, specifically related to the rate reconciliation and income taxes paid. The ASU is effective for fiscal years beginning after December 15, 2024. The Company expects the adoption of this ASU will result in enhanced disclosures but will not impact its consolidated financial statements. Disaggregation of Income Statement Expenses In November 2024, the FASB issued ASU 2024-03, Income Statement Reporting Comprehensive Income Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (ASU 2024-03). This guidance requires the disaggregation of certain expense captions into specified categories in disclosures within the notes to the financial statements to provide enhanced transparency into the expense captions presented on the statement of earnings. It is effective for annual reporting periods beginning after December 15, 2026, and interim periods beginning after December 15, …

NewAccountingPronouncementsPolicyPolicyTextBlock · excerpt; the full note is in the filing

Note 16 Related Party Transactions Subsequent to the Separation, transactions between the Former Parent and the Company are considered related party transactions, including those subject to agreements entered into with the Former Parent. The material related party transactions have been disclosed below. Transactions with the Former Parent The majority of the Companys net sales to the Former Parent are subject to the Steel Supply and Services Agreement and are included within net sales in the consolidated statements of earnings. Net sales to the Former Parent were $ 19.0 million and $ 16.5 million for the three months ended February 28, 2026, and February 28, 2025, respectively, and $ 56.1 million and $ 47.3 million for the nine months ended February 28, 2026 and February 28, 2025, respectively. As of February 28, 2026 and May 31, 2025, the outstanding accounts receivable balance with the Former Parent equaled $ 10.7 million and $ 9.2 million , respectively, as a result of the net sales to the Former Parent described above. …

RelatedPartyTransactionsDisclosureTextBlock · excerpt; the full note is in the filing

Note 6 Restructuring and Other (Income) Expense, Net The Company considers restructuring activities to be programs whereby it fundamentally changes its operations, such as divestitures, closing or consolidating facilities, employee severance (including rationalizing headcount or other significant changes in personnel), and realignment of existing operations (including changes to management structure in response to underlying performance and/or changing market conditions). A progression of the liabilities associated with the restructuring activities, combined with a reconciliation to the restructuring and other (income) expense, net financial statement caption in the Companys consolidated statements of earnings as of the dates presented, is summarized below: Balance, as of Expense Balance, as of (In millions) May 31, 2025 (Income) Payments Adjustments February 28, 2026 Early retirement and severance $ 2.1 $ - $ ( 1.5 ) $ - $ 0.6 Net gain on sale of assets ( 7.0 ) Restructuring and other (income) expense, net $ ( 7.0 ) During the nine months ended February 28, 2026, the following actions were taken related to our restructuring activities: The Company made early retirement and severance payments of $ 1.0 million associated with a TWB voluntary retirement program (VRP). Under the terms of the VRP, eligible TWB employees in the U.S. who chose to participate in the program were offered severance based on their years of service. The VRP was closed to employee acceptance during the f …

RestructuringAndRelatedActivitiesDisclosureTextBlock · excerpt; the full note is in the filing

Note 3 Revenue Recognition The Company recognizes revenue upon transfer of control of promised goods or services to customers in an amount that reflects the consideration it expects to receive for those goods or services, including any variable consideration. The Company generates revenue by processing steel to the precise type, thickness, length, width, shape, and surface quality required by customer specification. The Company can also toll process steel for steel mills, large end-users, and service centers. Toll processing revenue is recognized over time. All other revenue is recognized at a point in time, generally upon shipment to the customer. The following table summarizes net sales by product class for the periods presented: Three Months Ended Nine Months Ended February 28, February 28, February 28, February 28, (In millions) 2026 2025 2026 2025 Product class Direct $ 743.0 $ 653.8 $ 2,426.6 $ 2,144.6 Toll 26.8 33.6 88.0 115.8 Total $ 769.8 $ 687.4 $ 2,514.6 $ 2,260.4 The following table summarizes the unbilled receivables and contract assets at the dates indicated: February 28, May 31, (In millions) Balance Sheet Classification 2026 2025 Unbilled receivables Receivables $ 4.1 $ 4.0 Contract assets Prepaid expenses and other current assets $ 11.1 $ 7.0 The following table summarizes the changes in contract liabilities for the periods presented: (In millions) Balance at May 31, 2025 $ 5.2 Unearned revenue from cash received during the period 4.1 Revenue recognized relat …

RevenueFromContractWithCustomerTextBlock · excerpt; the full note is in the filing

Note 17 Segment Information Segment Information The Companys CODM is Worthington Steels CEO . The Company has determined that it has only one operating segment and therefore one reportable segment after considering several sources of information, including the Companys internal organizational structure, the basis on which budgets and forecasts are prepared, the financial information that the Companys CODM reviews in evaluating company performance and determining how resources should be allocated, and how the Company releases information to the public and analysts. The CODM manages all business activities on a consolidated basis, and as a result, the Company has concluded that there is only one operating segment and therefore one reportable segment. The Companys one reportable segment serves its customers primarily by processing flat-rolled steel coils, which are sourced primarily from various North American steel mills, into the precise type, thickness, length, width, shape, and surface quality required by customer specifications. The Company generates a substantial percentage of its revenue from selling steel on a direct basis, whereby it is exposed to the risk and rewards of ownership of the material while in its possession. Additionally, the Company toll processes steel under a fee for service arrangement whereby it processes customer-owned material. As the one reportable segment is managed on a consolidated basis, the measure of segment profit or loss is consolidated net …

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Note 18 Subsequent Events In March 2026, the Company received draw distributions from the BDC Loan of CAD $ 20.5 million (approximately $ 15.1 million USD). On March 25, 2026, Worthington Steel's Board of Directors (the Board) declared a quarterly cash dividend of $ 0.16 per common share payable on June 26, 2026 to shareholders of record at the close of business on June 12, 2026. …

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