Worthington Steel, Inc.

Our primary ongoing requirements for cash are expected to be for working capital, funding of acquisitions, dividend payments, debt redemptions and capital expenditures. We believe that our sources of liquidity, including our cash balances, the funds generated by our operating activities and the funds accessible to us, primarily through the Credit Facility, are adequate to fund our operations for the next 12 months and for the foreseeable future and will allow us to meet our current and long-term obligations and strategic initiatives. However, there can be no assurances that our current sources of liquidity and capital resources will continue to be sufficient for our needs, including our strategic initiatives, or that we will be able to obtain additional debt or equity financing on acceptable terms in the future. A more detailed description regarding our capital structure changes can be found elsewhere in this MD&A as well as in the “Financing Activities” section below.

As of November 30, 2025, our cash, cash equivalents, and restricted cash balance was $89.8 million, compared to cash, cash equivalents, and restricted cash balance of $92.9 million at May 31, 2025.

During the six months ended November 30, 2025, we generated cash of $93.0 million in operating activities and used $54.3 million in investing activities, which primarily related to $54.1 million invested in property, plant and equipment. Acquisitions, net of cash acquired, during the current year period was $1.6 million due to the acquisition of Sitem Group. Additionally, we made net debt repayments of $20.6 million, and we paid cash dividends of $16.5 million.

The following table summarizes our consolidated cash flows for the periods presented:

We believe we have access to adequate resources to meet the needs of our existing businesses for normal operating costs, mandatory capital expenditures, debt redemptions, dividend payments, and working capital, to the extent not funded by cash provided by operating activities, for at least 12 months and for the foreseeable future. These resources include cash and cash equivalents and unused capacity available under the Credit Facility. As of November 30, 2025, the Credit Facility had availability of $306.1 million, after accounting for the eligible borrowing base. The additional credit extended to us primarily relates to strategic capital expenditure projects. A more detailed description regarding our capital structure changes can be found elsewhere in this MD&A as well as in the “Financing Activities” section below.

We believe we could access the financial markets to be in a position to sell long-term debt or equity securities. However, the continuation of uncertain economic conditions and a heightened interest rate environment could create volatility in the financial markets, which may impact our ability to access capital and the terms under which we can do so. We will continue to monitor the economic environment and its impact on our operations and liquidity needs.

We routinely monitor current operational requirements, financial market conditions, and credit relationships and we may choose to seek additional capital by issuing new debt and/or equity securities to strengthen our liquidity or capital structure. We entered into additional financing arrangements during fiscal 2025 to take advantage of favorable financing terms available through those instruments to fund certain of our strategic capital expenditure projects. Debt financing increased in the current year period due to the incremental debt assumed in the Sitem Group acquisition and a draw on the BDC Loan. While we believe we currently have adequate capital, should we seek additional capital, there can be no assurance that we would be able to obtain such additional capital on terms acceptable to us, if at all, and such additional equity or debt financing could dilute the interests of our existing shareholders and/or increase our interest costs.

Operating Activities

Our business is cyclical and cash flows from operating activities may fluctuate during the year and from year to year due to economic and industry conditions. We rely on cash and short-term borrowings to meet cyclical increases in working capital needs. These needs generally rise during periods of increased economic activity or increasing raw material prices, requiring higher levels of inventory and accounts receivable. During economic slowdowns, or periods of decreasing raw material costs, working capital needs generally decrease as a result of the reduction of inventories and accounts receivable.

Net cash provided by operating activities was $93.0 million during the six months ended November 30, 2025, compared to $122.6 million net cash provided by operating activities during the six months ended November 30, 2024. In the current year period the driver of this change was a $66.7 million increase in cash consumed due to an increase in net operating working capital (accounts receivable, inventories, and accounts payable), which was driven by the increase in average steel prices over the prior year period. These increases were partially offset by the reduction of $17.1 million related to lower compensation and benefit payments, primarily incentive compensation, and higher net earnings in the current year period as compared with the prior year period.

Investing Activities

Net cash used in investing activities was $54.3 million during the six months ended November 30, 2025, compared to net cash used in investing activities of $55.2 million during the six months ended November 30, 2024. In the current year period, the main driver of net cash used in investing activities was related to capital expenditures, primarily due to the previously announced strategic expansion of our electrical steel operations in Canada and Mexico to service the transformer and automotive markets, respectively. Acquisitions, net of cash acquired, during the current year period, was $1.6 million due to the acquisition of Sitem Group. See Note 12 – “Acquisitions” for further information.

Investment activities are largely discretionary and future investment activities could be reduced significantly, or eliminated, as economic conditions warrant. We assess acquisition opportunities as they arise, and any such opportunities may require additional financing. However, there can be no assurance that any such opportunities will arise, that any such acquisition opportunities will be consummated, or that any additional financing needed will be available on satisfactory terms. We estimate our annual maintenance capital needs to be between approximately $40.0 million and $45.0 million, which excludes capital expenditures related to manufacturing capacity expansions, corporate headquarters and other technology upgrades.

Financing Activities

Net cash used in financing activities was $41.9 million during the six months ended November 30, 2025, compared to net cash used in financing activities of $55.6 million during the six months ended November 30, 2024. The decrease in net cash used in financing activities in the current year period was primarily due to net debt repayments of $20.6 million, as compared to debt repayments of $33.0 million in the prior year period. The decrease in net debt repayments was primarily related to an increased draw on the BDC Loan, which had debt outstanding of $21.2 million at November 30, 2025, and increased net repayments of $6.2 million on the Credit Facility. Dividends of $16.5 million to shareholders of our common shares were paid during current period.

Revolving credit facility – The Credit Facility allows for borrowings of up to $550.0 million, to the extent secured by eligible accounts receivable and inventory balances at period end. The Credit Facility does not include credit rating triggers. At November 30, 2025, there were $110.0 million of outstanding borrowings drawn against the Credit Facility with $306.1 million available under the Credit Facility after accounting for the eligible borrowing base. As of November 30, 2025, we were in compliance with the financial covenants of the Credit Facility.

Canadian Government Regional Economic Growth Loan – The FED DEV Loan is for an amount of up to CAD $3.5 million (approximately USD $2.5 million as of November 30, 2025) and is to be used for the purchase and installation of advanced manufacturing equipment at Tempel Canada’s Burlington, Ontario location. As of November 30, 2025, $2.3 million was outstanding under the FED DEV Loan.

Business Development Bank of Canada Canadian Loan – Pursuant to the terms of the BDC Letter, the BDC has committed to provide Tempel Canada the BDC Loan, up to CAD $57.5 million (approximately USD $41.1 million as of November 30, 2025), to fund the construction of a new manufacturing facility in Burlington, Ontario, Canada. The draw period for the BDC Loan will lapse on March 21, 2026, unless extended by the BDC. Worthington Steel guarantees the payment obligations of Tempel Canada in respect of the BDC Loan. The BDC Loan contains representations, covenants and events of default customary for transactions of this nature, including that Tempel Canada will maintain a total debt to tangible equity ratio of 1.0 to 1.0 and a fixed charge coverage ratio of 1.15 to 1.0, each tested annually beginning May 31, 2026. As of November 30, 2025, $21.2 million was outstanding under the BDC Loan, while there were no amounts drawn and outstanding as of May 31, 2025.

Canadian Advanced Manufacturing and Innovation Competitiveness Loan– Tempel Canada entered into the AMIC Loan, which provided a loan of up to CAD $5.0 million (approximately USD $3.6 million as of November 30, 2025) to support building and equipment expansion at Tempel Canada’s Burlington, Ontario location. During the six months ended November 30, 2025, we have received total distributions of CAD $2.5 million (approximately USD $1.8 million as of November 30, 2025). The AMIC Loan is structured with an incentive component that states up to CAD $0.5 million (approximately USD $0.4 million as of November 30, 2025) of the principal may be forgiven if certain performance targets are met. As of November 30, 2025, $1.8 million was outstanding under the AMIC Loan.

Sitem Group Term Loans– We assumed the liabilities of Sitem Group as part of the acquisition and recorded the liabilities within the consolidated balance sheet as part of the opening balance sheet. The Sitem Group’s obligations included various term loans (“Sitem Group Term Loans”), which spanned maturities and had varying interest rates and interest rate mechanism. As of November 30, 2025, the aggregate amount outstanding of the Sitem Group Term Loans was $46.8 million, which includes the Sitem Group standstill agreement described below. The obligations, along with the relevant loan terms, are included in the summary table within “Note 7 – Debt.”

Standstill Agreement – Sitem Group– The agreement relates to bilateral credit facilities originally provided to Stanzwerk AG in the aggregate principal amount of CHF 17.1 million (approximately USD $21.2 million as of November 30, 2025). Under the terms of the standstill, the lenders agreed to maintain availability under the credit lines through June 30, 2026. The standstill agreement contains financial covenants requiring Stanzwerk AG to maintain (i) a minimum equity ratio of 15%, tested quarterly beginning June 30, 2025, and (ii) minimum liquidity of CHF 4.0 million (approximately USD $5.0 million as of November 30, 2025), tested monthly beginning April 30, 2025. Stanzwerk AG was in compliance with these covenants as of November 30, 2025. A detailed discussion of all debt obligations and their associated terms is provided in “Note 7 – Debt.”

Common shares – On December 17, 2025, the Board declared a quarterly cash dividend of $0.16 per common share payable on March 27, 2026, to shareholders of record at the close of business on March 13, 2026.

There were no common shares purchased by Worthington Steel during the period presented as part of publicly announced plans or programs.

Redeemable NCI – While redemption events are contingent, the existence of these features could require us to use available cash, debt capacity, or other resources to satisfy our obligations in the future. We continuously monitor our liquidity profile to ensure adequate capacity to fund potential redemptions, although no such obligations were triggered during the six months ended November 30, 2025.

Dividend Policy

We currently have no material contractual or regulatory restrictions on the payment of dividends provided that no event of default exists under the Credit Facility and it meets the minimum availability threshold thereunder. Dividends are declared at the discretion of the Board. The Board reviews the dividend quarterly and establishes the dividend rate based upon our consolidated financial condition, results of operations, capital requirements, current and projected cash flows, business prospects, and other relevant factors. There is no guarantee that we will continue the payment of dividends in the future or that any dividends declared by the Board in the future will be similar in amount or timing to any dividends previously declared by the Board.