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 other than the Proposed Acquisition, as discussed below. However, there can be no assurances that our current sources of liquidity and capital resources will continue to be sufficient for our needs, including the Proposed Acquisition, or that we will be able to obtain additional debt or equity financing on acceptable terms in the future.

As of February 28, 2026, our cash, cash equivalents, and restricted cash balance was $90.0 million, compared to cash, cash equivalents, and restricted cash balance of $92.9 million at May 31, 2025.

During the nine months ended February 28, 2026, we generated cash of $156.3 million in operating activities and used $170.1 million in investing activities, which included $101.4 million in purchases of equity securities, $84.1 million invested in property, plant and equipment, partially offset by proceeds from sale of assets, net of selling costs of $16.6 million. Acquisitions, net of cash acquired, during the current year period was $1.6 million due to the acquisition of Sitem Group. Additionally, including the cash paid for debt issuance costs, we had net debt proceeds of $41.6 million, and we paid cash dividends of $24.6 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 February 28, 2026, the Credit Facility had availability of $150.5 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, including the Proposed Acquisition, 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, including but not limited to, funding the Proposed Acquisition. 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 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. We believe we currently have adequate capital for our current operational needs.

We intend to fund the consideration and related transaction costs for the Proposed Acquisition with a combination of cash on hand and new debt financing expected to consist of senior secured indebtedness, which will be issued subject to market conditions and other factors. While we obtained the Bridge Nonrevolving Loan Commitment of $1.9 billion to support the expected permanent financing, there can be no assurance that we will be able to obtain additional capital, including permanent acquisition-related financing, 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.

Given the permanent financing structure has not yet been finalized, the ultimate amount of indebtedness incurred, and the applicable interest rates remain subject to market conditions at the time of issuance.

A more detailed description regarding our capital structure changes, including the impacts of Proposed Acquisition, can be found elsewhere in this MD&A as well as in the “Financing Activities” section below.

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 $156.3 million during the nine months ended February 28, 2026, compared to $176.4 million net cash provided by operating activities during the nine months ended February 28, 2025. In the current year period, the driver of this change was a $42.2 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 $12.8 million related to lower compensation, including incentive compensation, payments, 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 $170.1 million during the nine months ended February 28, 2026, compared to net cash used in investing activities of $83.8 million during the nine months ended February 28, 2025. In the current year period, the main drivers of net cash used in investing activities were the $101.4 million in purchases of equity securities, as well as capital expenditures, including the previously announced strategic expansion of our electrical steel operations in Canada and Mexico to service the transformer and automotive markets, respectively. This was partially offset by proceeds from sale of assets, net of selling costs of $16.6 million, primarily related to the sale of assets at WSCP’s remaining Cleveland toll processing manufacturing facility. Acquisitions, net of cash acquired, during the current year period, was $1.6 million due to the acquisition of Sitem Group. See Note 2 – “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 strategic initiatives, including, but not limited to, manufacturing capacity expansions, corporate headquarters, and other technology upgrades.

Financing Activities

Net cash provided by financing activities was $11.0 million during the nine months ended February 28, 2026, compared to net cash used in financing activities of $69.5 million during the nine months ended February 28, 2025. In the current year period, the main driver of net cash provided by financing activities was net debt proceeds, including debt issuance costs, of $41.6 million as compared to net debt repayments of $35.8 million in the prior year period. During the nine months ended February 28, 2026, our net incremental short-term borrowings under the Credit Facility were $43.5 million. During the first and second quarters of fiscal 2026, net repayments on short-term borrowings were $39.2 million, whereas we had net borrowings of $82.7 million during the third quarter of fiscal 2026. We used a portion of the gross proceeds in the third quarter of fiscal 2026 to acquire $101.4 million of Kloeckner Shares.

There were $1.9 million of net payments on long-term debt and debt issuance costs during the nine months ended February 28, 2026, compared to $2.2 million of net proceeds during the nine months ended February 28, 2025. There were increased draws on the BDC Loan, which totaled $21.8 million during the nine months ended February 28, 2026. This was offset by the repayment of four of Sitem Group’s loans prior to the maturity date totaling €12.4 million (approximately $14.3 million at the time of payment) with cash on hand. Additionally, during the current year period, a fifth loan was fully repaid at the expected maturity date.

Dividends of $24.6 million to holders of our common shares were paid during the current year period. There were no payments to noncontrolling interest during the current year period compared to $6.9 million in the prior year 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 February 28, 2026, there was $192.7 million of outstanding borrowings drawn against the Credit Facility with $150.5 million available under the Credit Facility after accounting for the eligible borrowing base. As of February 28, 2026, we were in compliance with the financial covenants of the Credit Facility.

On January 15, 2026, we amended the Credit Facility to, among other things, permit us to consummate the Offer. We incurred immaterial costs associated with the amendment. For additional information, see “Note 2 – Acquisitions.”

Canadian Government Regional Economic Growth Loan – The FED DEV Loan is for an amount of up to CAD $3.5 million (approximately USD $2.6 million as of February 28, 2026) and is to be used for the purchase and installation of advanced manufacturing equipment at Tempel Canada’s Burlington, Ontario location. As of February 28, 2026, $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 $42.2 million as of February 28, 2026), to fund the construction of a new manufacturing facility in Burlington, Ontario, Canada. As extended in the third quarter of fiscal 2026, the draw period for the BDC Loan will lapse on June 30, 2026, unless further extended by 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 February 28, 2026, $21.8 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 $3.7 million as of February 28, 2026) to support building and equipment expansion at Tempel Canada’s Burlington, Ontario location. During fiscal 2026, we have received total distributions of CAD $2.5 million (approximately USD $1.8 million as of February 28, 2026). The AMIC Loan is structured with an incentive component that states up to CAD $0.5 million (approximately USD $0.4 million as of February 28, 2026) of the principal may be forgiven if certain performance targets are met. As of February 28, 2026, $1.8 million was outstanding under the AMIC Loan.

Sitem Group Term Loans– We assumed 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. 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 February 28, 2026, the aggregate amount outstanding of the Sitem Group Term Loans was $32.8 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 9 – Debt.”

During the third quarter of fiscal 2026, Sitem Group fully repaid four of its loan agreements prior to the maturity date totaling €12.4 million (approximately $14.3 million) with cash on hand. Upon repayment of one of the loan agreements, the associated interest rate swap was terminated. Additionally, during the third quarter of fiscal 2026, a fifth loan was fully repaid at the expected maturity date. For additional information, see “Note 9 – Debt” and “Note 14 – Derivative Financial Instruments and Hedging Activities.”

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 $22.1 million as of February 28, 2026). 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 $5.2 million as of February 28, 2026), tested monthly beginning April 30, 2025. Stanzwerk AG was in compliance with these covenants as of February 28, 2026. A detailed discussion of all debt obligations and their associated terms is provided in “Note 9 – Debt.”

Common shares – On March 25, 2026, 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.

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 nine months ended February 28, 2026.

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.