Worthington Steel, Inc.

Fiscal Years Ended May 31, 2026, 2025, and 2024

(Amounts in millions, except per common share amounts)

Note 1 –Description of Business, The Separation, and Basis of Presentation

Description of the Business

The Company is one of North America’s premier value-added steel processors with the ability to provide a diversified range of products and services that span a variety of end markets. The Company maintains market leading positions in the North American carbon flat-rolled steel and tailor welded blank industries and is one of the largest global producers of electrical steel laminations. For over 70 years, the Company has been delivering high quality steel processing capabilities across a variety of end markets including automotive, heavy truck, agriculture, construction, and energy. The Company 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 sells 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 Company’s manufacturing facilities further benefit from the flexibility to scale between direct and tolling services based on demand dynamics throughout the year.

Fiscal Periods

The Company’s fiscal year and fourth quarter end on May 31, with fiscal 2026 ending on May 31, 2026, fiscal 2025 ending on May 31, 2025, and fiscal 2024 ending on May 31, 2024. The Company’s other quarterly periods end on the final day of August (first quarter), November (second quarter) and February (third quarter).

The Separation

Separation from Former Parent

On the Separation Date at 12:01 a.m. Eastern Time, Worthington Enterprises completed the Separation and Worthington Steel became a stand-alone publicly traded company. The Separation was achieved through the Distribution. Each holder of record of Worthington Enterprises common shares received one common share of Worthington Steel for every one Worthington Enterprises common share held at the close of business on the Record Date. In connection with the Separation, Worthington Steel made a cash distribution to Worthington Enterprises of $150.0 million from the issuances of the Credit Facility (see Note 9 – Debt). Additionally, as part of the Separation, Worthington Enterprises made a contribution of certain assets and liabilities, including $3.8 million of cash and cash equivalents, to Worthington Steel. Worthington Enterprises retained no ownership interest in Worthington Steel following the Separation. Also on the Separation Date, Worthington Steel’s common shares began trading on the NYSE under the ticker symbol WS.

Agreements with the Former Parent and Separation Costs

On November 30, 2023, in connection with the Separation, the Company entered into several agreements with the Former Parent that govern the relationship between the Former Parent and the Company following the Distribution, including the Separation and Distribution Agreement, Tax Matters Agreement, Employee Matters Agreement, Steel Supply and Services Agreement, and Transition Services Agreement.

Direct and incremental costs incurred in connection with the Separation, including (a) fees paid to third parties for audit, advisory, and legal services to effect the Separation, (b) non-recurring employee-related costs, such as retention bonuses, and (c) non-recurring functional costs associated with shared corporate functions (collectively, the “Separation Costs”) are presented separately in the Company’s consolidated and combined statements of earnings. Separation Costs totaled$19.5 million for fiscal 2024. No Separation Costs were incurred during fiscal 2025 or fiscal 2026.

Basis of Presentation – Subsequent to Separation

The Company’s financial statements for the periods until the Separation on December 1, 2023, are combined financial statements prepared on a carve-out basis as discussed below. The Company’s financial statements for the periods beginning on and after December 1, 2023, are consolidated financial statements based on the reported results of the Company as a stand-alone company. Accordingly, the third quarter of fiscal 2024 and onward include consolidated and combined financial statements, whereas all prior periods included combined financial statements.

The accompanying consolidated and combined financial statements have been prepared in conformity with GAAP. The consolidated and combined financial statements may not be indicative of the Company’s future performance and do not necessarily reflect what the financial position, results of operations, and cash flows would have been had it operated as an independent company during all of the periods presented.

Basis of Presentation– Prior to Separation

Prior to the Separation on December 1, 2023, the Company operated as a business of the Former Parent. Accordingly, the combined historical financial statements for the periods presented prior to and as of November 30, 2023, are prepared on a “carve-out” basis.

The Company’s combined financial statements are prepared on a carve-out basis using the consolidated financial statements and accounting records of the Former Parent in accordance with GAAP. The Company’s combined financial statements include the historical operations that comprise its business and reflect significant assumptions and allocations as well as certain assets and liabilities that have historically been held at the Former Parent’s corporate level but are specifically identifiable or otherwise attributable to the Company. The carve-out combined financial statements may not include all expenses that would have been incurred had it existed as a separate, stand-alone entity during the periods presented.

The income tax provision in the carve-out combined statements of earnings has been calculated as if the Company was operating on a stand-alone basis and filed separate tax returns in the jurisdictions in which it operates. Therefore, cash tax payments and items of current and deferred taxes may not be reflective of the Company’s actual tax balances prior to or subsequent to the carve-out.

Transactions and accounts which have occurred within the Company have been eliminated, based on historical intracompany activity. The Former Parent’s net investment in these operations, including intercompany transactions between the Former Parent and the Company, is reflected as Net Investment by the Former Parent on the accompanying consolidated and combined financial statements.

The Company’s consolidated and combined financial statements include certain costs of doing business incurred by the Former Parent at the corporate level. These costs are for (1) corporate support functions provided on a centralized basis, including information technology, human resources, finance, and corporate operations, among others, (2) profit sharing and bonuses, and (3) respective surpluses and shortfalls of various planned insurance expenses. These costs are included in the consolidated and combined statements of earnings, primarily within SG&A. These expenses were allocated to the Company on the basis of direct usage when identifiable, with the remaining allocated using related drivers associated with the nature of the business, such as headcount or profitability, considering the characteristics of each respective cost. Management believes the assumptions regarding the allocation of the Former Parent’s general corporate expenses are reasonable.

All other third-party debt and related interest expense not directly attributable to the Company have been excluded from the consolidated and combined financial statements because the Company is not the legal obligor of the debt and the borrowings are not specifically identifiable to the Company. Additionally, as described in “Note 19 – Related Party Transactions,” debt and related interest expense between the Former Parent and TWB have been attributed to the Company, as the Company is both the legal obligor and directly benefited from the borrowings.

Additionally, the Former Parent incurred Separation Costs that have been directly attributed to the Company to the extent incurred to its direct benefit and are presented separately in the Company’s consolidated and combined statements of earnings.

The Company’s consolidated and combined financial statements may not include all of the actual expenses that would have been incurred and may not reflect its consolidated and combined results of earnings, balance sheet, and cash flows had it operated as a stand-alone company during the periods presented. Management considers these cost allocations to be reasonably reflective of the Company’s utilization of the Former Parent’s corporate support services. Actual costs that would have been incurred if the Company had been a stand-alone company may have been different than these estimates during the periods presented.

The Former Parent utilized a centralized cash management program to manage cash for the majority of its entities. For entities that were enrolled in the program, all cash was swept into a cash pool. Accordingly, the cash and cash equivalents held by the Former Parent at the corporate level were not attributed to the Company for any of the periods presented. The Company’s foreign operations did not participate in the centralized cash management program. These cash amounts are specifically attributable to the Company and therefore are reflected in the accompanying consolidated balance sheets. Transfers of cash, both to and from the Former Parent’s centralized cash management program, are reflected as a component of Net Investment by the Former Parent on the accompanying consolidated balance sheets and as a financing activity on the accompanying consolidated and combined statements of cash flows.

Net Investment by the Former Parent

Net Investment by the Former Parent in the consolidated and combined statements of equity and mezzanine equity represents the Former Parent’s historical investment in the Company, the net effect of transactions with and allocations from the Former Parent, and the Company’s retained earnings. All transactions reflected in Net Investment by the Former Parent have been considered as financing activities for purposes of the consolidated and combined statements of cash flows. For additional information, see “Basis of Presentation – Prior to Separation” above and “Note 19 – Related Party Transactions”.

Consolidation, Consolidated Subsidiaries and Investment in Unconsolidated Affiliate

The consolidated and combined financial statements include the accounts of Worthington Steel and its consolidated subsidiaries. Material intercompany accounts and transactions are eliminated.

On June 3, 2025, the Company, through Tempel, completed its acquisition of 52% of the issued and outstanding capital stock of Sitem Group. The results of Sitem Group are included in the Company’s consolidated financial statements on a one-month reporting lag to allow for the timely completion of its financial reporting process. The Company did not identify any material events during the most recent lag period that would require adjustment to the consolidated financial statements. For additional information, see “Note 2 – Acquisitions”.

The Company participates in several business arrangements commonly referred to as “joint ventures”. These include both consolidated and unconsolidated entities, as described below. While the Company refers to all such arrangements as “joint ventures” for ease of reference and to align with external naming conventions, the Company consolidates Spartan, TWB, WSCP, Sitem Group, and WSP, as it has a controlling financial interest under applicable accounting guidance. The Company’s investment in its unconsolidated affiliate, Serviacero Worthington, is accounted for using the equity method. Material intercompany accounts and transactions are eliminated.

The Company owns controlling interests in the following four operating joint ventures: Spartan (52%); TWB (55%); WSCP (63%); and Sitem Group (52%). The Company also owns a controlling interest (51%) in WSP, which became a non-operating joint venture on October 31, 2022, when its remaining net assets were sold. These joint ventures are consolidated with the equity owned by the other joint venture members shown as Noncontrolling interests or, in the case of Sitem Group, Redeemable NCI, in the Company’s consolidated balance sheets, and their portions of net earnings and other comprehensive income (loss) (“OCI”) are shown as net earnings or comprehensive income attributable to noncontrolling interests in the Company’s consolidated and combined statements of earnings and comprehensive income, respectively.

The Company owns a noncontrolling interest (50%) in an unconsolidated joint venture, Serviacero Worthington. The investment in the Company’s unconsolidated affiliate is accounted for using the equity method based upon financial information reported on a one-month lag with the Company’s proportionate share of income or loss recognized within equity in net income of unconsolidated affiliate (“equity income”) in its consolidated and combined statements of earnings. For additional information, see “Note 4 – Investments”.

Organizational Structure and Operating Segment

The Company’s operations are managed principally on a products and services basis under a single group organizational structure. The Company has determined that it has onlyone operating segment and thereforeone reportable segment after considering several sources of information, including the Company’s internal organizational structure, the basis on which budgets and forecasts are prepared, the financial information that the Company’s 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 Company’s CODM is Worthington Steel’s CEO. For additional information, see “Note 20 – Segment Information and Geographic Data”.

Summary of Significant Accounting Policies

New Accounting Policy - Redeemable Noncontrolling Interest:

During fiscal 2026, the Company finalized an agreement with certain minority interest holders of Sitem Group that provides them with redemption rights (i.e., put options) that could require the Company to purchase the minority interest holders’ remaining 48% noncontrolling interest in Sitem Group upon the occurrence of specified events. These redemption rights represent a new type of transaction for the Company, and accordingly the following accounting policy is being disclosed.

The put and call rights are embedded in the noncontrolling interest and are not separately bifurcated or accounted for. Accordingly, the 48% noncontrolling interest and the related redemption features are accounted for as a single unit of account. As these redemption rights are not solely within the control of the Company, such interests are classified as Redeemable NCI outside of permanent equity, or mezzanine equity, on the Company’s consolidated balance sheets.

At initial recognition, Redeemable NCI are recorded at their issuance-date, or acquisition date, fair value. In subsequent periods, the carrying amount is first adjusted for the redeemable noncontrolling interest holders’ share of Sitem Group’s net earnings or loss, other comprehensive income or loss, distributions and other applicable changes. Accordingly, net losses attributable to the redeemable noncontrolling interest may reduce its carrying amount, including to an amount below its initial carrying amount.

After giving effect to those adjustments, Redeemable NCI that are currently redeemable, or probable of becoming redeemable, are adjusted to the greater of (i) current redemption value or (ii) carrying amount. Adjustments to redemption value are recorded through retained earnings or, in the absence of retained earnings, through APIC. Upward adjustments are considered a deemed dividend and would result in a reduction to earnings available to common shareholders for the calculation of earnings per common share. For additional information, see “Note 11 – Equity and Mezzanine Equity”.

Prior-period financial statements were not recast, as these redemption rights were not applicable in prior periods.

New Accounting Policy - Equity Securities:

During fiscal 2026, the Company purchased equity securities of Kloeckner, which is a publicly held company traded on the Frankfurt Stock Exchange. These equity securities represent a new type of asset for the Company, and accordingly the following accounting policy is being disclosed. For additional information, see “Note 2 – Acquisitions” and “Note 4 – Investments”.

The Company may make investments in both privately and publicly held equity securities in which the Company does not have a controlling interest or significant influence. Equity securities with readily determinable fair values are measured at fair value with changes in fair value recognized in net earnings via miscellaneous income, net, which is below operating income. Transaction costs associated with the acquisition and disposition of equity securities are expensed as incurred and recorded in miscellaneous income, net.

The Company elected to record equity securities without readily determinable fair values at cost, less impairment, plus or minus subsequent adjustments for observable price changes in orderly transactions for the identical or a similar investment of the same issuer. Changes resulting from impairments and observable price adjustments are recognized in net earnings.

Equity securities are classified as current or noncurrent based upon management’s intent and expected timing of sale. Investments held for strategic or long-term business purposes are classified as noncurrent.

Prior-period financial statements were not recast, as there were no equity securities in prior periods.

Use of Estimates: The preparation of consolidated and combined financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated and combined financial statements and accompanying notes and the reported amounts of revenues and expenses during the reporting period, as well as the related disclosure of contingent assets and liabilities at the date of the consolidated and combined financial statements and accompanying notes. Actual results could differ from those estimates.

Cash and Cash Equivalents: The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. At May 31, 2026, cash and cash equivalents included cash held in banks, and short-term, highly liquid investments. Short-term investments are measured at fair value using the net asset value per share practical expedient, and therefore, are not classified in the fair value hierarchy. Cash held in banks is measured in the fair value hierarchy using Level 1 inputs.

Restricted Cash: Restricted cash consists of amounts held in escrow accounts and other funds that are legally restricted for specific purposes. These amounts are included as a separate line on the consolidated balance sheet. At May 31, 2025, restricted cash resulted from routine pre-closing procedures related to funds designated for the Sitem Group acquisition, which occurred in the first quarter of fiscal 2026.

Receivables: The Company reviews its receivables on an ongoing basis to ensure that they are properly valued and collectible. Expected lifetime credit losses on receivables are recognized at the time of origination. The Company estimates the allowance for credit losses based on the expected future credit losses using the internal historical loss information and observable and forecasted macroeconomic data.

The allowance for credit losses is used to record the estimated risk of loss related to customers’ inability to pay. This allowance is maintained at a level that the Company considers appropriate based on factors that affect collectability, such as the financial health of customers, historical trends of charge-offs and recoveries and current economic and market conditions. As the Company monitors its receivables, it identifies customers that may have payment problems and adjusts the allowance accordingly, with the offset to SG&A. Account balances are charged off against the allowance when recovery is considered remote. The allowance for credit losses was$1.1 million at May 31, 2026, a decrease of$2.7 million as compared to$3.8 million at May 31, 2025.

While the Company believes its allowance for credit losses is adequate, changes in economic conditions, the financial health of customers and bankruptcy settlements could impact its future earnings. If the economic environment and market conditions deteriorate, particularly in the automotive and construction end markets where the Company’s exposure is greatest, additional reserves may be required.

Inventories: Inventories are valued at the lower of cost or net realizable value. Cost is determined using the first-in, first-out method for all inventories. The assessment of net realizable value requires the use of estimates to determine cost to complete, normal profit margin and the ultimate selling price of inventory. The Company believes its inventories were valued appropriately as of May 31, 2026, and May 31, 2025.

Property, plant and equipment, and Depreciation: Property, plant and equipment are carried at cost and depreciated using the straight-line method. Buildings and improvements are depreciated over 10 to 40 years and machinery and equipment are depreciated over 3 to 20 years. Depreciation expense was$73.1 million,$59.4 million and$58.5 million during fiscal 2026, fiscal 2025, and fiscal 2024, respectively. Accelerated depreciation methods are used for income tax purposes.

Goodwill and Other Long-Lived Assets: The Company uses the purchase method of accounting for all business combinations and recognizes amortizable and indefinite-lived intangible assets separately from goodwill. The acquired assets and assumed liabilities in an acquisition are measured and recognized based on their estimated fair values at the date of acquisition, with goodwill representing the excess of the purchase price over the fair value of the identifiable net assets. A bargain purchase may occur, wherein the fair value of identifiable net assets exceeds the purchase price, and a gain is then recognized in the amount of that excess. Goodwill and intangible assets with indefinite lives are not amortized, but instead are tested for impairment annually, during the fourth quarter of each fiscal year, or more frequently if events or changes in circumstances indicate that impairment may be present. Application of goodwill impairment testing involves judgment, including but not limited to, the identification of reporting units and estimation of the fair value of each reporting unit. A reporting unit is defined as either an operating segment or one level below an operating segment. The Company’s operations are organized as a single component, or operating segment. The Company’s reporting units, which are one level below the single operating segment, consist of: (1) Flat-Rolled Steel Processing; (2) Electrical Steel; and (3) Laser Welding.

For goodwill and indefinite-lived intangible assets, the Company either first performs a qualitative assessment to determine whether a quantitative impairment test is necessary or the Company may elect to proceed directly to the quantitative test. The qualitative assessment considers the totality of relevant events and circumstances, including macroeconomic conditions, industry and market considerations, cost factors, financial performance and other entity- and asset-specific factors. If, based on the Company’s qualitative assessment, the Company concludes that it is not more likely than not that the fair value of a reporting unit or indefinite-lived intangible asset, as applicable, is less than its carrying amount, a quantitative impairment test is not required. If the Company elects to bypass the qualitative assessment or concludes that it is more likely than not that the applicable fair value is less than its carrying amount, the Company performs a quantitative impairment test. For goodwill, the quantitative test compares the fair value of each reporting unit with assigned goodwill to its carrying amount, including goodwill, and an impairment loss is recognized for the amount by which the carrying amount exceeds fair value, limited to the amount of goodwill assigned to the reporting unit. For indefinite-lived intangible assets, the quantitative test compares the fair value of each asset, or applicable unit of accounting, with its carrying amount, and an impairment loss is recognized for any excess of carrying amount over fair value. Fair value is determined by using valuation techniques appropriate in the circumstances, which may include income and market approaches. The Company’s policy is to perform a quantitative analysis of each reporting unit every three to five years unless performance indicates otherwise.

The Company reviews long-lived assets to be held and used, including property, plant and equipment and intangible assets with finite useful lives, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group, as applicable, may not be recoverable. Long-lived assets are grouped at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. Recoverability is assessed by comparing the carrying amount of the asset or asset group with the sum of the undiscounted cash flows expected to result from its use and eventual disposition. If the undiscounted cash flows equal or exceed the carrying amount, the asset or asset group is considered recoverable and no impairment loss is recognized. If the carrying amount exceeds the undiscounted cash flows, the asset or asset group is not recoverable, and an impairment loss, if any, is measured as the amount by which its carrying amount exceeds its fair value. Any impairment loss for an asset group is allocated to the long-lived assets of the asset group on a pro rata basis using their relative carrying amounts, except that an individual long-lived asset is not reduced below its fair value when that fair value is determinable without undue cost and effort.

The Company classifies a long-lived asset or disposal group as held for sale when the applicable criteria for such classification are met, including when management commits to a plan to sell, the asset or disposal group is available for immediate sale in its present condition, an active program to locate a buyer has been initiated, and the sale is probable and generally expected to be completed within one year. Long-lived assets classified as held for sale are measured at the lower of carrying amount or fair value less cost to sell and are not depreciated or amortized while classified as held for sale.

When goodwill and another asset or asset group within a reporting unit are tested for impairment at the same time, the Company first tests the asset or asset group for impairment under the applicable accounting guidance. Any resulting impairment loss is recognized before goodwill is tested, and the adjusted carrying amounts of those assets are included in the carrying amount of the reporting unit used in the goodwill impairment test.

When a quantitative goodwill impairment test or a long-lived-asset impairment test is required, the analysis may involve cash-flow models and other valuation techniques that require significant judgment. Significant assumptions may include future sales volumes, revenue and expense growth rates, expected cash flows, economic and market conditions and, when fair value is estimated using a discounted cash-flow model, discount rates and other market-participant assumptions. Significant changes in these assumptions could affect the results of the impairment analyses.

The Company performed its annual impairment evaluation of goodwill and other indefinite-lived intangible assets during the fourth quarter of fiscal 2026. During fiscal 2026, the Company recognized impairment charges related to goodwill and other long-lived assets. In fiscal 2025 and 2024, the Company concluded that the fair value of the reporting units tested for impairment exceeded the carrying value. For additional information, see “Note 5 – Goodwill, Long-Lived Assets, and Other Assets”.

Equity method investments: Inve stments in affiliated companies that the Company does not control, either through majority ownership or otherwise, are accounted for using the equity method. The Company reviews its equity method investment in Serviacero Worthington for impairment whenever events or changes in circumstances indicate that the carrying value of the investment might not be recoverable. Events and circumstances can include, but are not limited to: evidence the Company does not have the ability to recover the carrying value; the inability of the investee to sustain earnings; the current fair value of the investment is less than the carrying value; and other investors cease to provide support or reduce their financial commitment to the investee. If the fair value of the investment is less than the carrying value, and the fair value of the investment will not recover in the near term, then other-than-temporary impairment may exist. When the loss in value of an investment is determined to be other-than-temporary, the Company recognizes an impairment in the period the conclusion is made.

Leases: The Company accounts for leases in accordance with GAAP, ASU Leases (Topic 842) (“Topic 842”). Under Topic 842, leases are categorized as operating or finance leases at inception. Lease assets represent the Company’s right to use an underlying asset for the lease term, and lease liabilities represent obligations to make lease payments arising from the lease. Right-of-use (“ROU”) assets for both operating and finance leases are initially measured at the amount of the lease liability, adjusted for any initial direct costs and prepayments less lease incentives. Lease terms include options to renew or terminate the lease when it is reasonably certain that the Company will exercise such options. As most of the Company’s leases do not include an implicit rate, the Company uses its collateralized incremental borrowing rate based on the information available at the lease commencement date, in determining the present value of lease payments. Operating lease expense is recognized on a straight-line basis over the lease term, unless the related ROU asset has been impaired, and is included in cost of goods sold or SG&A, depending on the underlying nature of the leased assets. Finance lease expense consists of amortization of the ROU asset on a straight-line basis over the shorter of the asset’s useful life or lease term, together with interest expense on the lease liability. If a finance lease ROU asset is impaired, subsequent amortization is based on the reduced carrying amount of the ROU asset over the shorter of its remaining useful life or the remaining lease term. Amortization expense related to finance lease ROU assets is included in cost of goods sold or SG&A, depending on the nature of the leased assets, while interest expense is included in interest expense, net. For leases with variable payments dependent upon an index or rate that commenced subsequent to adoption of Topic 842, the Company applies the active index or rate as of the lease commencement date. Variable lease payments not based on an index or rate are not included in the lease liability as they cannot be reasonably estimated and are recognized in the period in which the obligation for those payments is incurred. Leases with a term of twelve months or less upon the commencement date are considered short-term leases, are not included on the Company’s consolidated balance sheets and are expensed on a straight-line basis over the lease term. For additional information, see “Note 18 – Leases”.

Stock-Based Compensation: As of May 31, 2026, the Company had stock-based compensation plans for its employees as well as its non-employee directors. All share-based awards, including grants of stock options and restricted common shares, are recognized as expense over the vesting period based on their grant date fair values. Forfeitures are recognized as they occur. Refer to “Note 12 – Stock-Based Compensation” for additional information regarding the Company’s stock-based compensation plans.

Derivative Financial Instruments: The Company utilizes derivative financial instruments to manage exposures to certain risks related to its ongoing operations, including commodity price, foreign currency exchange rate and interest rate risks. The Company recognizes all derivative financial instruments as assets or liabilities at fair value. The accounting for changes in the fair value of a derivative depends on whether the derivative has been designated and qualifies as part of a hedging relationship and, if so, the type of hedge.

For derivative financial instruments designated and qualifying as fair value hedges, changes in the fair value of the derivative and changes in the fair value of the hedged item attributable to the hedged risk are recognized in earnings in the same financial statement line item. For derivative financial instruments designated and qualifying as cash flow hedges, changes in fair value included in the assessment of hedge effectiveness are recorded in other comprehensive income and subsequently reclassified into earnings in the same financial statement line item and in the same period or periods during which the hedged transaction affects earnings.

The Company uses cross-currency swaps designated as net investment hedges to manage foreign currency exposure associated with portions of its net investments in foreign operations. The Company applies the spot method to assess the effectiveness of these hedging relationships. Changes in the fair value of the hedging instrument attributable to changes in spot foreign exchange rates are recorded in the currency translation adjustment component of other comprehensive income. The Company excludes the component of the change in fair value attributable to interest-rate differentials from the assessment of hedge effectiveness. The initial value of the excluded component is recognized in interest expense, net, using a systematic and rational method over the life of the hedging instrument, and any difference between the change in fair value of the excluded component and the amount recognized in earnings is recorded in the currency translation adjustment component of other comprehensive income. Net periodic interest settlements and accruals are recognized in interest expense, net. Amounts accumulated in the currency translation adjustment component of accumulated other comprehensive income (loss) (“AOCI”) related to a net investment hedge are reclassified to earnings when the currency translation adjustment associated with the related foreign operation is required to be reclassified under the applicable foreign currency translation guidance.

Changes in the fair value of derivative financial instruments that are not designated or do not qualify as hedging instruments are recognized in earnings. Classification of derivative gains and losses in the statements of earnings is based on the nature and underlying purpose of the instruments. Cash flows associated with derivative financial instruments are classified in the statements of cash flows based on the nature of the instruments and the related hedged items, as applicable.

At hedge inception, the Company formally documents the hedging relationship and its risk management objective and strategy, including identification of the hedging instrument, the hedged item or transaction, the nature of the risk being hedged and the method used to assess hedge effectiveness. Derivative financial instruments are executed only with highly rated counterparties. No credit loss is anticipated on existing instruments, and no material credit losses have been experienced to date. The Company monitors its positions, as well as the credit ratings of counterparties to those positions. The Company discontinues hedge accounting prospectively when a derivative no longer qualifies for hedge accounting, is terminated, expires or is sold, or is dedesignated. If a derivative is retained after hedge accounting is discontinued, subsequent changes in its fair value are recognized in earnings unless the derivative is redesignated in another qualifying hedging relationship. For a cash flow hedge, amounts deferred in accumulated other comprehensive income are reclassified immediately into earnings if it becomes probable that the forecasted transaction will not occur.

Refer to “Note 16 – Derivative Financial Instruments and Hedging Activities” for additional information regarding the consolidated balance sheet location and the risk classification of the Company’s derivative financial instruments.

Foreign Currency Transactions and Translations: Foreign currency balance sheet accounts are translated into U.S. dollars at the current exchange rates at the balance sheet date. Income and expenses are translated at the average exchange rates in effect during the period for the foreign subsidiaries where the local currency is the functional currency.

Revenue Recognition: Revenue is recognized in accordance with GAAP, ASU 2014-09, Revenue from Contracts with Customers (Topic 606)(“Topic 606”). Under this accounting guidance, the Company recognizes revenue upon transfer of control of promised goods or services to customers in an amount that reflects the consideration the Company expects to receive for those goods or services, including any variable consideration.

Returns and allowances are used to record estimates of returns or other allowances resulting from quality, delivery, discounts or other issues and are estimated based on historical trends and current market conditions, with the offset to net sales.

Shipping and handling costs charged to customers are treated as fulfillment activities and are recorded in both net sales and cost of goods sold at the time control is transferred to the customer. Due to the short-term nature of the Company’s contracts with customers, it has elected to apply the practical expedients under Topic 606 to: (1) expense as incurred, incremental costs of obtaining a contract; and (2) not adjust the consideration for the effects of a significant financing component for contracts with an original expected duration of one year or less. When the Company satisfies, or partially satisfies, a performance obligation, prior to being able to invoice the customer, the Company recognizes an unbilled receivable when the right to consideration is unconditional and a contract asset when the right to consideration is conditional. Unbilled receivables and contract assets are included in receivables and prepaid expenses and other current assets, respectively, on the consolidated balance sheets. Additionally, contract liabilities primarily relate to payments received from customers in advance of performance under the contract. Payments from customers are generally due within 30 to 60 daysof invoicing, which generally occurs upon shipment or delivery of the goods.

Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction that the Company collects from a customer, are excluded from revenue.

Certain contracts with customers include warranties associated with the delivered goods or services. These warranties are not considered to be separate performance obligations, and accordingly, the Company records an estimated liability for potential warranty costs as the goods or services are transferred.

With the exception of toll processing revenue, the Company recognizes revenue at the point in time the performance obligation is satisfied and control of the product is transferred to the customer upon shipment or delivery. Generally, the Company receives and acknowledges purchase orders from customers, which define the quantity, pricing, payment and other applicable terms and conditions (as defined in a master sales agreement, where applicable). In some cases, the Company receives a blanket purchase order from customers, which includes pricing, payment and other terms and conditions, with quantities defined at the time each customer subsequently issues periodic releases against the blanket purchase order.

Toll processing revenues are recognized over time and are primarily measured using the cost-to-cost method, which the Company believes best depicts the transfer of control to the customer. Under the cost-to-cost method, the extent of progress towards completion is measured based on the ratio of actual costs incurred to the total estimated costs expected upon satisfying the identified performance obligation. Revenues are recorded proportionally as costs are incurred. The Company has elected to not disclose the value of unsatisfied performance obligations for contracts with an original expected duration of one year or less.

Certain contracts contain variable consideration, which is not constrained, and primarily include estimated sales returns, customer rebates, and sales discounts which are recorded on an expected value basis. These estimates are based on historical returns, analysis of credit memo data and other known factors. The Company accounts for rebates by recording reductions to revenue for rebates in the same period the related revenue is recorded. The amount of these reductions is based upon the terms agreed to with the customer. The Company does not exercise significant judgments in determining the timing of satisfaction of performance obligations or the transaction price. For additional information, see “Note 3 – Revenue Recognition”.

Cost of Goods Sold: Cost of goods sold is primarily comprised of direct materials and supplies consumed in the manufacturing of product, as well as manufacturing labor, depreciation expense, repair and maintenance expense and direct overhead expenses associated with manufacturing products for sale. Cost of goods sold also includes the cost to distribute products to customers and inbound freight costs.

Selling, General and Administrative Expense: SG&A is primarily comprised of payroll and benefit expenses, administrative and other indirect overhead costs and other miscellaneous operating items not specifically categorized elsewhere in the consolidated and combined statements of earnings.

Advertising Expense: Advertising costs are expensed to SG&A as incurred. Advertising expense was$0.4 million,$1.0 million, and$0.8 million for fiscal 2026, fiscal 2025 and fiscal 2024, respectively.

Income Taxes: The Company accounts for income taxes using the asset and liability method. The asset and liability method requires the recognition of deferred tax assets and liabilities for expected future tax consequences of temporary differences that currently exist between the tax basis and the financial reporting basis of the Company’s assets and liabilities. The Company evaluates the deferred tax assets to determine whether it is more likely than not that all, or a portion, of the deferred tax assets will not be realized and provides a valuation allowance as appropriate.

Tax benefits from uncertain tax positions that are recognized in the consolidated and combined financial statements are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement.

The Company has reserves for income taxes and associated interest and penalties that may become payable in future years as a result of audits by taxing authorities. It is the Company’s policy to record these in income tax expense. While the Company believes the positions taken on previously filed tax returns are appropriate, the Company has established the tax and interest/penalties reserves in recognition that various taxing authorities may challenge the Company’s positions. These reserves are analyzed periodically, and adjustments are made as events occur to warrant adjustment to the reserves, such as lapsing of applicable statutes of limitations, conclusion of tax audits, additional exposure based on current calculations, identification of new issues and release of administrative guidance or court decisions affecting a particular tax issue. For additional information, see “Note 14 – Income Taxes”.

Employee Pension Plans: Defined benefit pension and OPEB plan obligations are remeasured at least annually as of reporting period end based on the present value of projected future benefit payments for all participants for services rendered to date. The measurement of projected future benefits is dependent on the provisions of each specific plan, demographics of the group covered by the plan, and other key measurement assumptions. Net periodic benefit costs, including service cost, interest cost, and expected return on assets, are determined using assumptions regarding the benefit obligation and the fair value of plan assets as of the beginning of each year. The funded status of the benefit plans, which represents the difference between the benefit obligation and the fair value of plan assets, is calculated on a plan-by-plan basis. The benefit obligation and related funded status are determined using assumptions as of reporting period end. Net periodic benefit cost is included in other income (expense) in the consolidated and combined statements of earnings, except for the service cost component, which is recorded in cost of goods sold or SG&A. For additional information, see “Note 13 – Employee Retirement Plans”.

Business Combinations: The Company accounts for business combinations using the acquisition method of accounting, which requires that once control is obtained, all the assets acquired and liabilities assumed are recorded at their respective fair values at the date of acquisition. The determination of fair values of identifiable assets and liabilities requires significant judgments and estimates and the use of valuation techniques when market value is not readily available. For the valuation of intangible assets acquired in a business combination, the Company typically uses an income approach. The purchase price allocated to the intangible assets is based on unobservable assumptions, inputs and estimates, including but not limited to, forecasted revenue growth rates, projected expenses, discount rates, customer attrition rates, royalty rates, and useful lives. The excess of the purchase price over the fair values of identifiable assets acquired and liabilities assumed is recorded as goodwill. During the measurement period, which is up to one year from the acquisition date, the Company may record adjustments to the fair value of assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the measurement period, any subsequent adjustments are recorded to earnings.

Self-Insurance Reserves: The Company self-insures most of its risks for product, cyber, environmental, workers’ compensation, general and automobile, property liabilities, and for employee medical claims. However, in order to reduce risk and better manage overall loss exposure for these liabilities, the Company purchases stop-loss insurance that covers individual claims in excess of the deductible amounts. The Company establishes and reassesses reserves for the estimated cost to resolve open claims that have been made against the Company, as well as an estimate of the cost of claims that have been incurred but not reported (“IBNR”). Loss exposure related to known events is established based on the Company’s assessment of the likelihood of an unfavorable outcome and the estimated range of potential loss. IBNR reserves are established based on actuarial valuations that take into consideration the historical average claim volume, the average cost for settled claims, current trends in claim costs, changes in the Company’s business and workforce, general economic factors and other assumptions believed to be reasonable under the circumstances. The estimated reserves for these liabilities could be affected if future occurrences and claims differ from the assumptions used and historical trends. Exposures for employee medical costs and workers’ compensation have had and will continue to have a material impact on the Company’s operations. All other loss exposures were immaterial for the periods presented.

Statements of Cash Flows: The Company uses the “cumulative earnings” approach for determining cash flow presentation of distributions from unconsolidated joint ventures. Distributions received are included in the consolidated and combined statements of cash flows as operating activities, unless the cumulative distributions exceed the portion of the cumulative equity in the net earnings of the joint venture, in which case the excess distributions are deemed to be returns of the investment and are classified as investing activities in the consolidated and combined statements of cash flows.

Supplemental cash flow information was as follows for the prior three fiscal years:

(1)

The amount of interest paid, net of amount capitalized in fiscal 2024 for the period prior to the Separation was not distinguishable for the Company. These amounts were combined with the Former Parent. Due to the legal organizational structure and capital structure, the amounts for the Company were indivisible from those that were included with the Former Parent.

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated and combined balance sheets that sum to the total of the same amounts shown in the consolidated and combined statements of cash flows as of May 31, 2026, 2025, and 2024:

Risks and Uncertainties:

Facilities Locations

As of May 31, 2026, excluding joint ventures, the Company operated 14 manufacturing facilities worldwide. Thefive operating joint ventures operated 23 additional manufacturing facilities worldwide as of May 31, 2026.

Concentration of Net Sales

The Company sells its products and services to a diverse customer base and a broad range of end markets. The automotive industry is the largest end market for the Company, which is largely driven by the production schedules of the Detroit Three automakers. While the Company’s business is not dependent on any one customer, net sales to certain customers were at least 10% of the Company’s consolidated and combined net sales for the periods presented. A significant loss of, or decrease in, business from any of these customers could have an adverse effect on the Company’s consolidated and combined net sales and financial results if the Company was not able to obtain replacement business. Also, the Company’s sales may be increasingly sensitive to deterioration in the financial condition of, or other adverse developments with respect to, one or more of the Company’s largest customers.

The following table summarizes the concentration percentage of consolidated and combined net sales for the periods presented:

Equity Securities

As of May 31, 2026, the Company’s equity securities were comprised exclusively of Kloeckner shares. The fair value of these securities may fluctuate based on market conditions and issuer-specific developments.

Labor Force

As of May 31, 2026, approximately 20% of the Company’s consolidated labor force was represented by collective bargaining units, all of which are located in jurisdictions outside of the U.S. where collective bargaining arrangements are customary.

Credit Risk

The concentration of credit risks from financial instruments related to the markets the Company serves is not expected to have a material adverse effect on the Company’s consolidated and combined financial position, cash flows or future results of operations.

Raw Materials

The Company’s principal raw material is flat-rolled steel, which is purchased from multiple primary steel producers. The steel industry as a whole has been cyclical, and at times availability and pricing can be volatile due to a number of factors beyond the Company’s control. This volatility can significantly affect the Company’s steel costs. In an environment of increasing prices for steel and other raw materials, in general, competitive conditions or contractual obligations may impact how much of the price increases the Company can pass on to customers. To the extent the Company is unable to pass on future price increases in raw materials to customers, financial results could be adversely affected. Also, if steel prices decrease, in general, competitive conditions or contractual obligations may impact how quickly the Company must reduce prices to customers, and the Company could be forced to use higher-priced raw materials to complete orders for which the selling prices have decreased, resulting in inventory holding losses. Declining steel prices could also require the Company to write down the value of inventories to reflect current net realizable value. Further, the number of suppliers has decreased in recent years due to industry consolidation and the financial difficulties of certain suppliers, and consolidation may continue. Accordingly, if delivery from a major steel supplier is disrupted, it may be more difficult to obtain an alternative supply than in the past.

Reclassifications: The Company has reclassified the presentation of certain prior-year information to conform to the current presentation.

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 Company’s 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 early adoption permitted. Adoption may be applied either prospectively to financial statements issued for reporting periods after the effective date of ASU 2024-03 or retrospectively to any or all prior periods presented in the financial statements. The Company is evaluating the impact of adoption, and it expects the adoption of this ASU will result in additional disclosures, but that it will not result in a material impact on its consolidated financial statements.

Targeted Improvements to the Accounting for Internal-Use Software – In September 2025, the FASB issued ASU No. 2025-06, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software (“ASU 2025-06”). This guidance modernizes the accounting for internal-use software. ASU 2025-06 removes all references to prescriptive and sequential software development stages and clarifies the threshold for beginning capitalization of eligible internal-use software costs. Under the amended guidance, capitalization begins when management has authorized and committed to funding the software project and it is probable that the project will be completed and the software will be used to perform the function intended. It is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2027, with early adoption permitted. The ASU can be applied prospectively to new software costs incurred as of the beginning of the adoption period for all projects, prospectively to new software costs incurred only for projects that meet the new capitalization requirements, or retrospectively by recasting comparative periods and recognizing a cumulative-effect adjustment to the opening balance of retained earnings of the first period presented. The Company is currently evaluating the timing and method of its adoption of ASU 2025-06 and has not selected a transition method, and the impact of adoption is not yet reasonably estimable.

Hedge Accounting Improvements – In September 2025, the FASB issued ASU No. 2025-09, Derivatives and Hedging (Topic 815): Hedge Accounting Improvements (“ASU 2025-09”). This guidance amends existing guidance to simplify the application of hedge accounting, enhance alignment between risk management activities and financial reporting, and provide additional flexibility in the designation and measurement of certain hedging relationships. The amendments included in the five matters addressed in this ASU are intended to better reflect those strategies in financial reporting by enabling entities to achieve and maintain hedge accounting for highly effective economic hedges of forecasted transactions. It is effective for annual periods beginning after December 15, 2026, and interim periods within those annual periods, with early adoption permitted. The Company is currently evaluating the impact that adoption of

ASU 2025-09 will have on its consolidated financial statements and related disclosures. The impact of adoption is not yet reasonably estimable.

Accounting for Government Grants Received by Business Entities – In December 2025, the FASB issued ASU No. 2025-10, Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities (“ASU 2025-10”). This guidance establishes authoritative guidance for the recognition, measurement, presentation, and disclosure of government grants received by business entities. It is effective for annual periods beginning after December 15, 2028, including interim periods within those annual periods. ASU 2025-10 allows for modified prospective, modified retrospective, or full retrospective application. Early adoption in interim or annual periods is permitted, with adoption in an interim period to be applied as of the beginning of the annual period that includes that interim period. The Company has begun evaluating the guidance, including its application to government financing arrangements containing potential forgiveness provisions, and has not selected a transition method. The impact of adoption is not yet reasonably estimable.

Interim Reporting: Narrow-Scope Improvements – In December 2025, the FASB issued ASU No. 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements (“ASU 2025-11”). This guidance enhances consistency in interim reporting for all entities by clarifying interim disclosure requirements and the form and content of interim financial statements in accordance with GAAP. It is effective for interim periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted and must be applied either prospectively or retrospectively to any or all prior periods presented in the financial statements. The Company is currently evaluating the impact of ASU 2025-11 on its consolidated financial statements and disclosures.

Environmental Credits and Environmental Credit Obligations– In May 2026, the FASB issued ASU No. 2026-02, Environmental Credits and Environmental Credit Obligations (Topic 818). This guidance establishes recognition, measurement, presentation and disclosure guidance for environmental credits and related regulatory compliance obligations. It is effective for interim periods within annual reporting periods beginning after December 15, 2027. The guidance will be applied through a cumulative-effect adjustment to opening retained earnings at the beginning of the annual period of adoption, without recasting prior periods. Given the recent issuance of the guidance, the Company has initiated a preliminary assessment of its applicability to the Company’s operations. The impact of adoption is not yet reasonably estimable.

The significant accounting policies discussed herein are not intended to represent a comprehensive list of all of the Company’s accounting policies. In many cases, the accounting treatment of a particular transaction is specifically dictated by GAAP, with a lesser need for the Company’s judgment in its application. There are also areas in which the Company’s judgment in selecting an available alternative would not produce a materially different result.

Note 2 –Acquisitions

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 Kloeckner’s 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 following:

(1)

Cash consideration for stock acquired from Sitem shareholders of €43.1 million (approximately $48.9 million);

(2)

Cash capital contribution of €10.0 million (approximately $11.3 million) related to the purchase of newly issued shares, of which €4.8 million (approximately $5.4 million) is attributable to minority interest; and

(3)

Contribution of Tempel’s electrical steel subsidiary in Nagold, Germany (“Tempel Nagold”), which was valued at €22.0 million (approximately $25.0 million) at the time of acquisition, of which €10.6 million (approximately $12.0 million) is attributable to minority interest.

The cash consideration included cash that is contingent on certain customary conditions, of which €4.2 million (approximately $4.7 million) relates to the purchase of existing Sitem shares and €0.6 million (approximately $0.7 million) relates to the purchase of newly issued Sitem shares. During the fourth quarter of 2026, the net financial position adjustment calculation was finalized for an amount that differed from the preliminary valuation, which resulted in a change in the resulting valuation of residual goodwill. As of May 31, 2026,€1.2 million (approximately $1.4 million) ofremaining contingent cash consideration had not yet been paid. The acquisition was funded primarily with restricted cash held in escrow at May 31, 2025. The difference between the contributed fair value of Tempel Nagold at the time of the acquisition and the noncontrolling interest in Tempel Nagold, which was at the Company’s historical cost, was $0.7 million and was recorded as an adjustment to APIC.

Total acquisition-related expenses, consisting primarily of legal, advisory, and valuation services were $5.4 million, of which $0.8 million and $4.6 million were incurred in fiscal 2026 and fiscal 2025, respectively. These costs are included in SG&A expense in the consolidated and combined statements of earnings. There was a one-time bonus of €4.0 million (approximately $4.6 million) that was paid to key individuals at the Sitem Group as a result of the successful closing, which was recorded in SG&A expense in the consolidated and combined statements of earnings during fiscal 2026. There was a deferred tax asset adjustment of €0.7 million (approximately $0.8 million) related to the disallowance of deferred tax assets located within Germany as a result of the contribution of Tempel Nagold. This adjustment was recorded in income tax expense in the consolidated and combined statements of earnings.

The Sitem Group transaction includes a series of put options and call options. The net put/call was valued at €9.4 million (approximately $10.7 million) using a Monte Carlo simulation in a risk-neutral framework and is recorded within Mezzanine Equity. The fair value of the remaining noncontrolling interest of 48% after the acquisition was determined using the implied enterprise value based on the purchase price. For additional information, see “Note 11 – Equity and Mezzanine Equity”.

The following table summarizes the consideration transferred and the fair values assigned to the assets acquired and liabilities assumed at the acquisition date. The fair values reflect valuation analyses performed with the assistance of a third-party valuation specialist and incorporate information available through the date of these consolidated and combined financial statements. During fiscal 2026, the Company finalized the valuation of the assets acquired and liabilities assumed and recognized certain net financial position adjustment and tax-related measurement period adjustments resulting from changes in the underlying calculations. These adjustments, including the related impact on residual goodwill, are reflected in the table below.

In addition to the Redeemable NCI above of $81.8 million, the Company recorded $17.4 million of redeemable noncontrolling interest related to the cash capital contribution and the contribution of Tempel Nagold, in the preliminary valuation, which was adjusted by $1.9 million as a result of final purchase accounting adjustments.

The Company recognized goodwill related to this acquisition of $17.5 million, which is not deductible for income tax purposes. The goodwill recognized in this acquisition was attributable to the acquired assembled workforce, expected synergies, expanded market opportunities, and economies of scale, none of which qualify for recognition as a separate intangible asset. Goodwill and intangible assets associated with foreign subsidiaries are translated at the applicable reporting period end exchange rates, with translation adjustments recorded in AOCI.

Acquired intangible assets are being amortized over the estimated useful lives on a straight-line basis. The following table summarizes the purchase price allocation and weighted average remaining useful lives for identifiable intangible assets acquired as of the acquisition date:

Operating results of the Sitem Group have been included in the Company’s consolidated and combined statements of earnings since June 3, 2025, the date of acquisition. For fiscal 2026, Sitem Group, including Tempel Nagold which was contributed in the acquisition, contributed net sales of $186.8 million and net loss attributable to controlling interest of $41.2 million.

The following unaudited pro forma information presents consolidated financial information as if the Sitem Group had been acquired on June 1, 2024, the beginning of fiscal 2025. Depreciation and amortization expense included in the pro forma results reflect the preliminary acquisition-date fair values assigned to the definite-lived intangible assets and fixed assets of the Sitem Group. Adjustments have been made to remove acquisition-related costs and the acquisition date fair value adjustment to acquired inventories. The pro forma adjustments noted below have been adjusted for the applicable income tax impact. The Company consolidates Sitem Group on a one-month reporting lag. Accordingly, the supplemental pro forma information for fiscal 2026 reflects eleven months of Sitem Group operating results, while the comparative fiscal 2025 pro forma information reflects a full year of operations as if the acquisition had occurred at the beginning of that fiscal year. The pro forma information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place on June 1, 2024.

Fiscal 2024

Voestalpine Automotive Components Nagold GmbH & Co. KG (“Voestalpine Nagold”)

On November 16, 2023, the Company acquired Voestalpine Nagold, including its lamination stamping facility in Nagold, Germany and related assets, for net cash consideration of$21.0 million and the assumption of a$0.9 million pension liability. Voestalpine Nagold produces automotive and electrical steel lamination stampings in Europe. The total purchase consideration was preliminarily allocated primarily to tangible assets, consisting of$12.3 million of property, plant and equipment and$9.0 million of net working capital, with$0.6 million recognized as goodwill.

The information included in the preliminary allocation of the purchase price was derived using estimates of the fair value and useful lives of the assets acquired. As a result of final purchase accounting adjustments, the total purchase consideration was updated. The purchase consideration consisted of$12.6 million of property, plant and equipment and$8.2 million of net working capital, with$1.1 million recognized as goodwill. Thus, the final purchase accounting adjustments consisted of$0.3 million of property, plant and equipment and$(0.8) million of net working capital, with$0.5 million to goodwill. There wasno change in the valuation of the pension liability.

The purchase price included the fair values of other assets that were not identifiable, not separately recognizable under accounting rules (e.g., assembled workforce) or of immaterial value. The purchase price also included strategic benefits specific to the Company, which resulted in a purchase price in excess of the fair value of the identifiable net assets. The goodwill resulting from the acquisition will be deductible for income tax purposes.

The results of operations of Voestalpine Nagold have been included in the consolidated and combined statements of earnings since the date of acquisition. Pro forma results, including the acquired business since the beginning of fiscal 2024, would not be materially different from the reported results.

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:

The following table summarizes the unbilled receivables and contract assets at the end of fiscal 2026 and fiscal 2025:

The following table summarizes the changes in contract liabilities during fiscal 2026 and fiscal 2025:

Note 4 –Investments

Investment in Unconsolidated Affiliate

Investments in affiliated companies that the Company does not control, either through majority ownership or otherwise, are accounted for using the equity method. As of May 31, 2026, the Company owns a noncontrolling interest (50%) inone unconsolidated joint venture, Serviacero Worthington. The Company accounts for its investment in Serviacero Worthington using the equity method of accounting. Serviacero Worthington provides steel processing services, such as pickling, blanking, slitting, multi-blanking and cutting-to-length, to customers in a variety of industries including automotive, appliance and heavy equipment.

The Company accounts for its investment in Serviacero Worthington under the equity method using financial information on a one-month lag. Accordingly, the summarized financial information included below does not reflect events occurring in the subsequent one-month period.

The Company received distributions from Serviacero Worthington totaling$23.5 million in fiscal 2026,$12.8 million in fiscal 2025, and$2.0 million in fiscal 2024.

The following table presents the summarized financial position of Serviacero Worthington as of the fiscal years ended May 31:

The following table presents summarized financial information for Serviacero Worthington for the fiscal years ended May 31:

The following table presents the net earnings of Serviacero Worthington attributable to the Company for the fiscal years ended May 31:

At May 31, 2026, and 2025,$61.7 million and$64.9 million, respectively, of the Company’s consolidated retained earnings represented undistributed earnings of Serviacero Worthington, net of tax.

Equity Securities

The following table summarizes the equity securities, all of which are Kloeckner shares, as of the fiscal years ended May 31:

Amounts presented as net gains (losses) on equity securities reflect changes in fair value and exclude transaction costs, which are expensed as incurred. During fiscal 2026, the Company recognized dividend income of $1.9 million related to its equity securities, which is included inmiscellaneous income, net. The Kloeckner shares have a readily determinable fair value and are measured at fair value on a recurring basis, with changes in fair value recognized in miscellaneous income, net.

The following table summarizes the net gains recognized inmiscellaneous income, net for the fiscal years ended May 31:

For additional information, see “Note 2 – Acquisitions,” “Note 17 – Fair Value” and “Note 21 – Subsequent Events”.

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:

(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 from 3 to 20 years. The following table summarizes other intangible assets by class as of the fiscal years ended May 31:

(1)

Other amortizable intangible assets primarily include favorable lease-related intangible assets and acquired software.

Intangible asset amortization expense totaled$8.2 million, $6.0 million, and$6.3 million in fiscal 2026, fiscal 2025, and fiscal 2024, respectively.

Intangible asset amortization expense for each of the next five fiscal years is estimated to be:

Impairment of Goodwill, Long-Lived Assets, and Other Assets

Fiscal 2026

Long-Lived and Other Assets

During fiscal 2026, the Company identified impairment indicators within the Electrical Steel reporting unit. These indicators included weakened demand in certain end markets, particularly industrial motors in both Europe and the United States, due to increased foreign competition, and in automotive, some delayed program launches, which negatively impacted the expected future cash flows of the related asset groups. These conditions resulted in revised expectations regarding future demand and cash flows for certain asset groups within the Electrical Steel reporting unit.

As a result, the Company performed a recoverability test for the affected asset groups by comparing the carrying amounts of the asset groups to the undiscounted cash flows expected to result from their use and eventual disposition. For asset groups whose carrying amounts were not recoverable, the Company measured impairment losses as the excess of the carrying amounts over their estimated fair values. The estimated fair values of the affected long-lived asset groups were determined using a discounted cash flow method, market approach, cost approach, or a combination thereof, which included significant unobservable inputs, including forecasted volumes, operating margins, capital expenditure requirements, working capital assumptions discount rates, replacement cost assumptions, and/or expected proceeds from asset dispositions. The fair value of the long-lived asset group was estimated using an income approach based on projected cash flows developed using market-participant assumptions and discounted at a market-participant rate of 11%. These fair value measurements were classified within Level 3 of the fair value hierarchy. As a result of this analysis, the Company recognized a pre-taximpairment charge of $58.4 million related to long-lived assets within impairment of long-lived assets and other assets in the consolidated and combined statements of earnings. The impairment charges were allocated to the long-lived assets within the respective asset groups on a pro rata basis, subject to the limitation that no individual long-lived asset was reduced below its determinable fair value.

The following table summarizes the long-lived asset impairment:

During the third quarter of fiscal 2026, the Company determined that certain internal-use software assets associated with a project at Tempel Canada were impaired. It was determined that it was no longer probable that the software being developed would be completed and placed in service. As the assessment of impairment for uncompleted software is performed at the module level, the assets associated with specific modules of the internal-use software assets were determined to have no value and were written down to zero, which resulted in a pre-tax impairment charge of $1.5 million for assets previously recorded in construction in progress.

During the second quarter of fiscal 2026, the Company evaluated the fair value of certain machinery at a manufacturing facility in Taylor, Michigan as a result of reclassifying the machinery out of assets held for sale. During the impairment test, the Company determined that the undiscounted cash flows were less than the carrying value of the asset. The book value of the remaining machinery and equipment and other long-lived assets was determined to be in excess of fair value, resulting in a non-cash impairment charge of $0.6 million.

Goodwill

The Company tests goodwill for impairment annually and whenever events or changes in circumstances indicate that the carrying amount of a reporting unit may exceed its fair value. During the fourth quarter of fiscal 2026, the Company identified indicators of impairment related to its Electrical Steel reporting unit, including weaker-than-expected demand in certain end markets, lower forecasted volumes and profitability, increased foreign competition, delayed customer program launches, and revised expectations regarding future cash flows. As a result, the Company performed a quantitative impairment test for the Electrical Steel reporting unit.

The fair value of the reporting unit was determined using an income approach. The income approach was based on a discounted cash flow model using management’s current projections of revenue, operating margins, capital expenditures, working capital requirements, terminal growth rates, and discount rates. The fair value measurement was classified within Level 3 of the fair value hierarchy because it included significant unobservable inputs.

Based on the results of the quantitative impairment test, the carrying amount of the Electrical Steel reporting unit exceeded its estimated fair value. Accordingly, the Company recognized a pre-tax goodwill impairment charge of$53.8 million during fiscal 2026, which was recorded in impairment of goodwill in the consolidated and combined statements of earnings. The impairment was measured as the excess of the reporting unit’s carrying amount over its estimated fair value, limited to the carrying amount of goodwill assigned to the Electrical Steel reporting unit. The carrying amount of the goodwill of the Electrical Steel reporting unit was fully impaired. The impairment charge reduced the carrying amount of goodwill to$44.5 million as of May 31, 2026. The impairment charge was non-cash and did not affect the Company’s liquidity or cash flows from operating activities.

Fiscal 2025

During fiscal 2025, the Company identified an impairment indicator for the in-process research and development intangible asset of TWB. The indefinite-lived in-process research and development intangible asset with a net book value of $1.3 million was deemed to be fully impaired as the technology was unable to be commercialized, resulting in a pre-tax impairment charge of $1.3 million recognized in the third quarter of fiscal 2025 and isreflected in impairment of long-lived assets and other assets in the consolidated and combined statements of earnings.

During fiscal 2025, the Company announced plans to combine WSCP’s Cleveland, Ohio toll processing manufacturing facility into its existing manufacturing facility in Twinsburg, Ohio. Operations at the Cleveland, Ohio toll processing manufacturing facility ceased by the end of fiscal 2025. As a result, the Company tested the long-lived assets of the combined asset group for impairment at the lowest level for which there were largely independent cash flows when identifiable, and grouped at a higher level when largely independent cash flows do not exist at a lower level. Other assets were evaluated with applicable accounting guidance outside of long-lived asset guidance.

During the impairment test, the Company determined that the undiscounted cash flows of the finance lease assets along with certain other fixed assets encumbered to the land and building of the finance lease assets were greater than the current carrying value of the asset group. As a result, no impairment was recognized for the finance lease assets along with building and improvements, net assets.

The book values of the remaining machinery and equipment and other long-lived assets were determined to be in excess of fair value, resulting in an impairment charge of $3.8 million and is reflected in impairment of long-lived assets and other assets in the consolidated and combined statements of earnings. Additionally, the customer list intangible asset, which was recorded on the balance sheet in other intangible assets, net, was deemed to be fully impaired and written off.

Due to the closure of the WSCP toll processing manufacturing facility in Cleveland, Ohio, the Company evaluated the impact on goodwill of the Flat-Rolled Steel Processing reporting unit, in which the entity was included. As a result of the Company’s evaluation, no meaningful amount of goodwill was attributed to the disposal group, and thus, no goodwill impairment was recognized.

The disposal group consisted of the following:

(1)

Fair value was determined using unobservable Level 3 inputs.

(2)

Impairment recognized using applicable accounting guidance outside of long-lived asset guidance.

Following fourth quarter fiscal 2025, depreciation and amortization and transfers to the remaining WSCP toll processing facility, the remaining assets, totaling $10.4 million, were classified as assets held for sale on the consolidated balance sheet as of May 31, 2025. During fiscal 2026, the Company completed the sale of these assets as part of the facility closure activities.

Fiscal 2024

During fiscal 2024, the Company committed to plans to liquidate certain fixed assets at a WSCP toll processing facility in Cleveland, Ohio. During the first quarter of fiscal 2024, in accordance with the applicable accounting guidance, the Company lowered the estimate of fair value less costs to sell to reflect the expected scrap value of the WSCP toll processing equipment to $0.2 million, resulting in a pre-tax impairment charge of $1.4 million.

Assets Held for Sale

At May 31, 2026 and 2025, the Company had assets held for sale of $9.1 million and $11.5 million, respectively, primarily consisting of property, plant and equipment. The fiscal 2026 balance related tothree unrelated assets, including the manufacturing site Tempel Canada, which includes the building and land, with a carrying amount of $8.6 million. Due to the strategic investment in the Tempel Canada manufacturing location, the Company is actively marketing the previous Tempel Canada property and expects to complete the sales within one year. The estimated fair value less cost to sell exceeded its carrying amount; therefore, no impairment loss was recognized. The fiscal 2025 balance included $10.4 million of assets associated with the WSCP toll processing facility disposal group, which were measured at fair value less cost to sell following recognition the impairment losses previously described. For additional information regarding the fiscal 2025 nonrecurring fair value measurement, see “Note 17 – Fair Value Measurements”.

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 torestructuring and other (income) expense, net, financial statement caption in the Company’s consolidated statements of earnings for fiscal 2026, is summarized below:

During fiscal 2026, the following actions were taken related to the Company’s 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 doesnot expect to incur additional material severance expenses in fiscal 2027 or beyond due to these announced plans.

•

The Company made severance payments of $0.5 million associated with its announced plans to consolidate WSCP’s remaining Cleveland, Ohio, toll processing manufacturing facility into WSCP’s existing manufacturing facility in Twinsburg, Ohio. The Company doesnot expect to incur additional material severance expenses in fiscal 2027 or beyond due to these announced plans.

•

During the first quarter of fiscal 2026, the Company sold machinery and equipment with a net book value of $0.3 million that was reported within assets held for sale for net cash proceeds of $1.3 million, resulting in a pre-tax gain of $1.0 million.

•

During the third quarter of fiscal 2026, the Company sold substantially all of the remaining net assets of WSCP’s remaining Cleveland, Ohio, toll processing manufacturing facility, which were reported in assets held for sale prior to the sale. Finance lease assets and buildings and improvements, net, with a net book value of $9.7 million were sold for $14.7 million, which included net cash proceeds of $14.1 million, resulting in a pre-tax gain of $5.0 million. Machinery and equipment with a net book value of $0.3 million were sold for net cash proceeds of $1.3 million, resulting in a pre-tax gain of $1.0 million.

The total liability as of May 31, 2026 is expected to be paid in fiscal 2027.

A progression of liabilities associated with restructuring activities, together with a reconciliation to restructuring and other (income) expense, net, financial statement caption in the Company’s consolidated statements of earnings for fiscal 2025 is summarized below:

During fiscal 2025, the following actions were taken related to the Company’s restructuring activities:

•

The Company recognized $1.8 million of severance expense associated with a TWB VRP.

•

In connection with the consolidation and closure of WSCP’s remaining Cleveland, Ohio toll processing manufacturing facility, the Company recognized $0.8 million in severance expense during fiscal 2025.

During fiscal 2024, the Company did not record material restructuring and other (income) expense, net.

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 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. The Company will continue to monitor the dispute and will record a reserve if a loss becomes probable and reasonably estimable.

Commitments

In February 2026, the Bidder entered into a binding agreement with a single Kloeckner shareholder to purchaseone million Kloeckner shares at €11.00 per share. The agreement required delivery of these Kloeckner shares at closing of the binding agreement. No voting or economic rights are transferred until closing. As of May 31, 2026, the agreement remained executory; therefore, no asset or liability was recorded. The total contractual purchase price under the agreement is €11.0 million ($12.8 million as of May 31, 2026). On June 15, 2026, the acquisition of theone million Kloeckner shares was completed in accordance with the binding agreement forapproximately $12.7 million. For additional information, see “Note 2 – Acquisitions” and “Note 21 – Subsequent Events”.

Note 8 –Guarantees

The Company does not have guarantees that it believes are reasonably likely to have a material current or future effect on its consolidated and combined financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

At May 31, 2026, the Company had in place outstanding stand-by letters of credit in the aggregate amount of$2.4 million issued to third-party service providers. The fair value of these guarantee instruments, based on premiums paid, was not material andno amounts were drawn against them at May 31,2026. These guarantee instruments are subject to annual renewal.

Note 9 –Debt

The following table summarizes the Company’s long-term debt and short-term borrowings outstanding at May 31,2026 and 2025:

Foreign currency-denominated borrowings are translated at the applicable reporting period exchange rates, with translation adjustments recorded in AOCI.

The following table provides the maturities of long-term debt in the next five fiscal years and the remaining years thereafter as of May 31, 2026:

As of May 31, 2026, there are$185.4 million of short-term borrowings under the Credit Facility due in fiscal 2027.

Revolving Credit Facility

On November 30, 2023, the Company entered into the Credit Facility, which is scheduled to mature on November 30, 2028, with a group of lenders. The Credit Facility provides capacity of up to $550.0 million, to the extent secured by eligible accounts receivable and inventory balances at period end, which consist primarily of U.S. dollar denominated account balances. At May 31, 2026 and May 31, 2025, there were$185.4 million and$149.2 million, respectively, of outstanding borrowings drawn against the Credit Facility. After accounting for the eligible borrowing base, at May 31, 2026 and May 31, 2025, availability under the Credit Facility was$219.5 million and$260.9 million, respectively. Amounts drawn under the Credit Facility accrue interest at rates equal to an applicable margin over the one-, three-, or six-month term Secured Overnight Financing Rate (“SOFR Rate”), plus a SOFR adjustment. The Company incurred approximately $2.7 million of issuance costs, of which $2.5 million will be amortized to interest expense over the expected five-year Credit Facility term and are reflected in other assets.

The Credit Facility permits borrowings under two types of borrowing mechanisms: (1) Term SOFR Rate Loans and (2) a swing loan. The Term SOFR Rate Loans permit the Company to draw a specific principal amount for a defined maturity of up tosix months with the interest rate determined at the time of the draw, which equals an applicable margin over the applicable term SOFR Rate plus a SOFR adjustment. Each Term SOFR Rate Loan has an individual, unique identifier and is distinguishable from the other Term SOFR Rate Loan drawn by the Company. At the end of each relevant interest period, the Company has the option to continue the same interest period for such Term SOFR Rate Loan or it may request a conversion to a new interest period for such Term SOFR Rate Loan. If no notice is given by the Company, the Term SOFR Rate Loan is deemed to continue with the same interest period.

The swing loan permits the Company to draw on the Credit Facility at any time up to a maximum of the greater of (1) $55 million and (2)10% of the then-maximum amount of the Credit Facility. The swing loan interest rate is variable based upon the interest rate market. As of May 31, 2026 and May 31, 2025, the swing loan rate was 7.25% and 8.0%, respectively. Any amounts drawn on the swing loan mature on the same date as the maturity of the Credit Facility; however, it has been the practice of the Company to repay the outstanding draws on the swing loan within a short-term period.

The Credit Facility is secured by a first priority lien (subject to permitted liens and certain other exceptions) on certain working capital assets of the Company and the guarantors, including accounts and inventory, but excluding intellectual property, real property and equity interests, and subject to customary exceptions.

On January 15, 2026, the Company amended the Credit Facility when it entered into the Second Amendment to the Company’s Revolving Credit and Security Agreement (“Second Amendment to the Credit Facility”). The Second Amendment to the Credit Facility, among other things, permitted the Company to consummate the Offer. The Company incurred immaterial costs associated with the amendment. For additional information, see “Note 2 – Acquisitions”.

As of May 31, 2026, the Company had 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. As of May 31, 2026, the Company was in compliance with the financial covenants of the Credit Facility.

As of May 31, 2026, and May 31, 2025, the weighted average interest rate on the outstanding interest-bearing debt under the Credit Facility was 5.22% and 5.98%, respectively.

Subsequent to May 31, 2026, the Company replaced the Credit Facility. For additional information, see “Note 21 – Subsequent Events”.

Long-Term Debt

Canadian Government Regional Economic Growth Loan

On December 17, 2024, Tempel Canada entered into an agreement with the Federal Economic Development Agency for Southern Ontario, Canada, through the Canadian Government’s Regional Economic Growth Innovation program, which provided a 0% interest loan of up to CAD$3.5 million (approximately USD$2.5 million as of May 31, 2026) to be used for the purchase and installation of advanced manufacturing equipment at Tempel Canada’s Burlington, Ontario location. The first distribution to Tempel Canada was received in the third quarter of fiscal 2025 in the amount of CAD$3.2 million (approximately USD $2.2 million), or 90% of the total available through the program. The remaining 10% is expected to be received upon project completion. The FED DEV Loan is scheduled to be paid off insixty equal installments beginning April 1, 2027, with the final payment due March 1, 2032. There wereno debt issuance costs associated with the loan.

As of May 31, 2026 and May 31, 2025, the amount outstanding under the FED DEV Loan was$2.3 million and$2.3 million, respectively.

Business Development Bank of Canada Canadian Loan

On March 25, 2025, Tempel Canada entered into the BDC Letter with BDC. Pursuant to the terms of the BDC Letter, BDC has committed to lend Tempel Canada up to CAD $57.5 million (approximately USD $41.7 million as of May 31, 2026), subject to the satisfaction of customary closing conditions and deliverables. The purpose of the BDC Loan is to fund the construction of a new manufacturing facility to be located in Burlington, Ontario, Canada.

The BDC Loan is structured as a construction draw loan. As extended in fiscal 2026, the draw period for the BDC Loan was set to lapse on June 30, 2026, unless further extended by BDC. Subsequent to May 31, 2026, the draw period was extended until August 31, 2026. Monthly interest only payments will be due until July 1, 2026, at which point the BDC Loan will also be subject to monthly amortization payments until maturity. The BDC Loan will accrue interest (1) during the construction period, at a per annum rate equal to BDC’s Floating Base Rate minus 1.75%, and (2) at all times thereafter, at a per annum rate equal to BDC’s Floating Base Rate minus 1.75% or BDC’s Base Rate minus 1.75%, at Tempel Canada’s election. The BDC Loan matures on June 1, 2051.

Worthington Steel guarantees the payment obligations of Tempel Canada in respect of the BDC Loan. As amended in fiscal 2026, the guarantee is for the full amount of the BDC Loan on the date of any demand. Provided that there has never been a breach of certain default conditions, the guarantee is reduced to 50% of the outstanding BDC Loan balance once the principal amount outstanding is less than CAD$40.0 million (approximately USD$29.0 million as of May 31, 2026), subject to the satisfaction of certain conditions. The Company will also provide customary cost overrun and completion guarantees in respect of the construction of the Burlington Property. The obligations of Tempel Canada under the BDC Letter are secured by a mortgage on the Burlington Property, an assignment of rents relating to the Burlington Property, and a lien on certain equipment and other personal property located on or used in connection with the Burlington Property.

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 May 31, 2026, the amount outstanding under the BDC Loan was$36.4 million, while there wereno amounts outstanding under the BDC Loan as of May 31, 2025.

Canadian Advanced Manufacturing and Innovation Competitiveness Loan

On May 12, 2025, Tempel Canada entered into an agreement with the Province of Ontario’s Minister of Economic Development, Job Creation and Trade for the AMIC Loan to support building and equipment expansion at the Burlington Property. The AMIC Loan provided a loan for up to CAD$5.0 million (approximately USD$3.6 million as of May 31, 2026) During fiscal 2026, the Company received total distributions of CAD$2.5 million (approximately USD$1.8 million as of May 31, 2026). The remaining amount of the loan is expected to be received in steps as project spending progresses. The AMIC Loan is interest free until June 1, 2028, at which point it will bear interest at a fixed rate of 5.97% per annum with interest due annually. The AMIC Loan is scheduled to be paid off infour equal annual installments beginning June 30, 2029, with the final payment due June 30, 2032. The AMIC Loan is structured with an incentive component that states up to CAD$0.5 million (approximately USD$0.4 million as of May 31, 2026) of the principal may be forgiven if certain performance targets are met. The Company will continue to recognize the full liability until such time as the conditions for forgiveness are satisfied. There were no debt issuance costs associated with the AMIC Loan.

As of May 31, 2026, the amount outstanding under the AMIC Loan was$1.8 million, while there wereno amounts outstanding under the AMIC Loan as of May 31, 2025.

Sitem Group

The Company assumed the liabilities of Sitem Group as part of the acquisition and recorded the Sitem Group liabilities within the Company’s consolidated balance sheets. The Sitem Group’s obligations include various Euro-denominated term loans, which have varying maturities, interest rates, interest rate mechanisms, and have periodic payments due until maturity. The obligations, along with the relevant loan terms, are included in the summary table within this footnote. Sitem Group was in compliance with its financial covenants as of May 31, 2026.

During fiscal 2026, Sitem Group fully repaid four of its loan agreements totaling €12.4 million (approximately USD $14.3 million at the time of payment) prior to maturity with cash on hand. Upon repayment of one of the loan agreements, the associated interest rate swap was terminated. For additional information, see “Note 16 – Derivative Financial Instruments and Hedging Activities”. Additionally, during fiscal 2026, a fifth loan was fully repaid at the scheduled maturity date.

Standstill Agreement – Sitem Group

Sitem Group, through its subsidiary Stanzwerk AG, entered into the Standstill Agreement with UBS Switzerland AG, as agent and a syndicate of lenders in April 2025. The agreement relates to bilateral credit facilities originally provided to Stanzwerk AG in the aggregate principal amount of CHF 17.1 million (approximately USD$21.7 million as of May 31, 2026). Under the terms of the Standstill Agreement, the lenders agreed to maintain availability under the credit lines through June 30, 2026, and to forbear from exercising termination, enforcement, or acceleration rights with respect to scheduled repayments or collateral during the standstill period, subject to customary extraordinary termination rights upon events of default.

The Standstill Agreement provides for continued use of the facilities solely for loan advances and requires pro rata utilization of the credit lines across participating lenders. Borrowings bear interest at the applicable reference rate (which is based on the Swiss Average Rate Overnight and has a floor of zero) plus a 500-basis point margin, with an additional 0.25% quarterly commission on overdraft balances.

The Standstill Agreement contains financial covenants requiring Stanzwerk AG to maintain (1) a minimum equity ratio of 15%, tested quarterly beginning June 30, 2025, and (2) minimum liquidity of CHF 4.0 million (approximately USD$5.1 million as of May 31, 2026), tested monthly beginning April 30, 2025. Stanzwerk AG was in compliance with these covenants as of May 31, 2026.

Subsequent to May 31, 2026, Stanzwerk AG entered into an Amended and Restated Standstill Agreement with UBS Switzerland AG maintaining the credit facility through August 31, 2028. See “Note 21 – Subsequent Events” for additional information regarding the amended terms.

Term Loan Facility with the Former Parent

On June 8, 2021, TWB entered into a $50.0 million term loan agreement (the “TWB Term Loan”) with a subsidiary of the Former Parent that matured in annual installments through May 31, 2024. The proceeds were used by TWB to finance the Shiloh U.S. BlankLight purchase price in June 2021. This note accrued interest at a rate of 5.0% per annum. The borrowings were the legal obligation of TWB. As such, the debt and related interest have been attributed to the Company in the consolidated and combined financial statements prior to the Separation.

The Former Parent’s note receivable associated with the TWB Term Loan was contributed to the Company in connection with the Separation on December 1, 2023. As a result, the TWB Term Loan balance was eliminated in consolidation following the Separation.

Other Debt

Other– Debt Financing Commitment

In connection with and concurrently with the entry into the Offer for the Kloeckner Acquisition, the Company obtained debt financing commitments (“Bridge Nonrevolving Loan Commitment”) in an aggregate amount not to exceed $1.9 billion from a group of lenders, with Wells Fargo Bank, National Association, as administrative agent, to support the expected permanent financing.

In connection with the Bridge Nonrevolving Loan Commitment, the Company incurred approximately $17.8 million of fees and costs, which were initially capitalized in prepaid expenses and other current assets, and were left unamortized until funding (in whole or in part) or until the commitment expires or is no longer applicable. As of May 31, 2026, approximately $14.8 million of the fees remained accrued and were yet to be paid. Excluding any ongoing commitment fees, the Company will pay the substantial balance of those fees once the Bridge Nonrevolving Loan Commitment has been terminated, the Kloeckner Acquisition has closed, or the amounts available under the Bridge Nonrevolving Loan Commitment remain undrawn upon expiration.

During May 2026, the Company announced that it had priced an offering (the “Offering”) of the 2033 Notes. Accordingly, as of May 31, 2026, the Company determined it was not probable that the Bridge Nonrevolving Loan Commitment would be drawn upon given the permanent financing had been priced, which resulted in the immediate expensing of the previously capitalized cost. The Company recorded the costs to interest expense, net for the fiscal year ended May 31, 2026. After May 31, 2026, on June 1, 2026, the Company issued the 2033 Notes, which eliminated its ability to draw on the Bridge Nonrevolving Loan Commitment. For additional information, see “Note 2 – Acquisitions”.

Other– Tempel China

Tempel owns a subsidiary in China, Tempel China, which utilizes multiple short-term loan facilities, which are used to finance raw material purchases, and are collateralized by Tempel China property and equipment. There wereno borrowings outstanding under the facilities at May 31, 2026, and May 31, 2025.

As of May 31, 2026, Tempel China has two active facilities, for an aggregate facility size of CNY 90.0 million (approximately USD$13.3 million and$12.5 million as of May 31, 2026, and May 31, 2025, respectively). The first facility is for CNY 40.0 million (approximately USD$5.9 million as of May 31, 2026) and matures on September 10, 2026. The second facility is for CNY 50.0 million (approximately USD$7.4 million as of May 31, 2026) and matures on July 29, 2026. The maturity of the second facility was extended after fiscal 2026, with the facility now scheduled to mature on July 27, 2027.

Other– Tempel India

Tempel owns a subsidiary in India (“Tempel India”) which hastwo individual credit facilities with separate financial institutions, each of which contains a line of credit and standby letters of credit/letters of guarantee secured by applicable Tempel India current assets and fixed assets. The facilities are subject to annual renewals, which are effective as of the date of the annual renewal letter.

The aggregate size of the Tempel India credit facilities is INR 1,150.0 million (approximately USD$12.1 million and USD$14.0 million as of May 31, 2026 and May 31, 2025, respectively), subject to adjustment pursuant to the security noted above. One credit facility is for INR 500.0 million (approximately USD$5.3 million as of May 31, 2026) and matures on January 7, 2027. The other credit facility is for INR 650.0 million (approximately USD$6.8 million as of May 31, 2026) and matures on December 15, 2026.

Both the credit facilities allow for borrowing on the lines of credit up to a sublimit of the total facility size, which was equal to an aggregate of INR 550.0 million (approximately USD$5.8 million and USD$7.0 million, as of May 31, 2026, and May 31, 2025, respectively). Interest is payable monthly and will accrue on the outstanding balance according to the lender’s base lending rate plus an applicable margin as determined by the lender. As of May 31, 2026, and May 31, 2025, there wereno borrowings outstanding under Tempel India line of credit facilities.

Letters of credit may be drawn against the aggregate limit of these credit facilities, excluding any amounts drawn by the lines of credit. As of May 31, 2026, and May 31, 2025, no amounts under the Tempel India credit facilities were due to the financial institutions. The purchases, made in the normal course of business that are supported by the letters of credit, are recorded in accounts payable in the consolidated balance sheets as of May 31, 2026, and May 31, 2025.

Other– Sitem Slovakia

Tempel owns a majority interest in a subsidiary in Slovakia (“Sitem Slovakia”), and Sitem Slovakia has an overdraft line of credit in the amount of€0.3 million (approximately USD$0.4 million as of May 31, 2026), which is secured by Sitem Slovakia’s trade receivables. The overdraft line of credit matures in February 2027, and is reviewed annually for renewal. Outstanding borrowings carry an interest rate of one-month Euribor plus 1.75%. There wereno borrowings outstanding under the facility as of May 31, 2026.

Accounts Receivable Securitization

On June 29, 2023, the Company terminated the revolving trade accounts receivable securitization facility (the “AR Facility”) because it was no longer needed. No early termination or other similar fees or penalties were paid in connection with the termination of the AR Facility.

Note 10 –Comprehensive Income (Loss)

Other Comprehensive Income (Loss): The following table summarizes the tax effects of each component of other comprehensive income (loss) for fiscal 2026, 2025, and 2024.

Accumulated Other Comprehensive Income (Loss): The components of the changes in AOCI at the end of fiscal 2026, 2025, and 2024.

(1)

The statements of earnings classification of amounts reclassified to net income include:

a.

Cash flow hedges – disclosed in “Note 16 – Derivative Financial Instruments and Hedging Activities”; and

b.

Pension liability adjustment – reflects the following pension liability adjustments as disclosed in “Note 13 – Employee Retirement Plans”

i.

Amortization of net (gain) loss of the Pension Benefits and Other Benefits.

ii.

The acceleration of deferred pension costs in AOCI related to the pension plan lift-out transaction to transfer a portion of the total projected benefit obligation of the Tempel pension plan to a third-party insurance company.

iii.

Recognition of a gain in fiscal 2026 related to a pension settlement due to net lump sum payments being higher than the settlement threshold.

Note 11 –Equity and Mezzanine Equity

Common Shares: Worthington Steel was formed as an Ohio corporation on February 28, 2023, with 100 common shares authorized of which 100 common shares were issued and outstanding. As a result of the Separation, on November 22, 2023, Worthington Steel filed a certificate of amendment to the Articles of Incorporation of the Worthington Steel, Inc. (the “Amendment”) with the Secretary of State of the State of Ohio. The Amendment (1) effected a stock split of the 100 then-outstanding common shares of Worthington Steel to provide a sufficient capitalization for the Former Parent to complete the pro rata distribution of 100% of Worthington Steel’s outstanding common shares to Former Parent’s shareholders, with each Former Parent shareholder as of November 21, 2023 (the “Record Date”) receiving one common share of Worthington Steelfor every one common share of the Former Parent held as of the Record Date, and (2) eliminated Worthington Steel’s stated capital. On November 30, 2023, Worthington Steel distributed 49.3 million outstanding common shares to the Former Parent. The Former Parent retainedno ownership interest in Worthington Steel following the Separation.

The Amendment authorized one class of common shares and its relative voting rights.

During fiscal 2026, fiscal 2025, and fiscal 2024, the Company did not repurchase any common shares.

Preferred Shares: The Amendment authorized one class of preferred shares and its relative voting rights. The Board is empowered to determine the issue prices, dividend rates, amounts payable upon liquidation and other terms of the preferred shares when issued. At May 31, 2026, and May 31, 2025,1,000,000 preferred shares are authorized, andno preferred shares are issued or outstanding.

Theoretical Common Shares: The non-qualified deferred compensation plans for employees require that any portion of a participant’s current account credited to the theoretical common share option, which reflects the fair value of the common shares with dividends reinvested, and any new contributions credited to the theoretical common share option remain credited to the theoretical common share option until distributed. For amounts credited to the theoretical common share option, payouts are required to be made in the form of whole common shares and cash in lieu of fractional common shares. As a result, the Company accounts for the deferred compensation obligation credited to the theoretical common share option within equity. The amounts recorded in equity totaled$0.2 million at May 31, 2026. The amounts recorded in equity totaled less than$0.1 million at May 31, 2025. There wasno amount recorded in equity at May 31, 2024, as the Company’s eligible employees participated in the Former Parent’s plan prior to the Separation.

Mezzanine Equity: The Sitem Group purchase agreement includes a series of put options and call options. The put options are held by the minority investors of Sitem Group, which provide the right to sell up to 100% of their remaining interest collectively, a 48% interest, in Sitem Group to the Company. The call options are held by the Company and provide it with the right to acquire from the minority investors of Sitem Group up to 100% of their remaining interest (i.e., a 48% interest) in Sitem Group. The call options require the achievement of certain EBITDA-based milestones. There aretwo put options held by the minority investors andtwo call options held by the Company, with the first and second put option periods occurring in fiscal 2030 and fiscal 2032, respectively, and the first and second call option period occurring in fiscal 2031 and 2033, respectively.

The put and call options are considered a redeemable noncontrolling interest as: (1) the minority shareholders can put Sitem Group shares to the Company; (2) the put is outside of the Company’s control; and (3) redemption is possible as it is based upon specified financial metrics. As a result, the redeemable noncontrolling interest is presented as mezzanine equity.

The put and call options cannot be separated from the noncontrolling interest. Due to the redemption features, the minority interest is classified as a Redeemable NCI within mezzanine equity on the Company’s consolidated balance sheets. For additional information, see “Note 2 – Acquisitions”.

Redeemable noncontrolling interests are initially recorded at the issuance date fair value, which is the acquisition date for the Sitem Group transaction. When redeemable noncontrolling interest is currently redeemable, or probable of becoming redeemable, it is subsequently adjusted to the greater of current redemption value or carrying value. The redemption value is determined via a contractual-based formula using certain EBITDA adjusted metrics.

For the roll forward of mezzanine equity, see the Company’s consolidated and combined statements of equity and mezzanine equity.

Shortfall Recovery Arrangement: During fiscal 2026, the Company and the minority interest member of Spartan quantified an economic shortfall of $5.9 million arising from certain performance expectations previously agreed to that were not achieved, as contemplated by the amended Spartan operating agreement. The amended operating agreement provides for a temporary recovery mechanism (the “Shortfall Recovery Arrangement”) pursuant to which (1) profits and cash distributions otherwise payable to the minority interest member of Spartan are paid to the Company and applied against the shortfall until it is satisfied and (2) a $9.0 million distribution was authorized, of which $4.3 million was applied to the shortfall. As of May 31, 2026, the remaining income shortfall was$5.5 million and the remaining cash shortfall was$1.6 million.

Upon full recovery of the shortfall, allocations of profits and distributions will revert to the stated ownership percentages of 52% to the Company and 48% for the minority interest owner, as specified in the operating agreement.

The Shortfall Recovery Arrangement does not affect the recognition of consolidated and combined net earnings of the consolidated joint venture. However, the Company concluded that the arrangement represents a substantive profit-sharing arrangement, as it temporarily reallocates economic participation in the joint venture’s earnings during the recovery period. Accordingly, during the recovery period, consolidated and combined net earnings and comprehensive income of the joint venture are attributed between the controlling interest and the noncontrolling interest in accordance with the amended profit-sharing provisions rather than the stated ownership percentages. Net earnings attributable to noncontrolling interest presented in the consolidated and combined statements of earnings also include amounts attributed to noncontrolling interests for other consolidated subsidiaries.

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 Parent’s 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 shares 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 vesting periods. The Company didnot recognize any incremental compensation cost related to the adjustment of outstanding awards.

The Company classifies share-based compensation expense within either SG&A or cost of goods sold to correspond with the same financial statement caption as the cash compensation paid to employees who have been awarded common shares. A total of 7.8 million common shares were authorized and available for issuance in connection with the Plans in place at May 31, 2026.

The Company recognized pre-tax stock-based compensation expense of$13.9 million ($12.1 million after-tax),$11.0 million ($8.7 million after-tax) and$10.3 million ($8.0 million after-tax) under the Plans and Former Parent’s Plans during fiscal 2026, fiscal 2025 and fiscal 2024, respectively. At May 31, 2026, the total unrecognized compensation cost related to non-vested stock-based compensation awards was$15.6 million, which is expected to be recognized over a weighted-average period of 1.7 years. The remaining expense will be recognized over the next three fiscal years with original expense periods of up tofive years.

Non-Qualified Stock Options

Stock options may be granted to purchase common shares at not less than 100% of the fair market value of the underlying common shares on the grant date. All outstanding stock options are non-qualified stock options. The exercise price of all stock options granted has been set at 100% of the fair market value of the underlying common shares on the grant date. Generally, stock options granted to employees vest and become exercisable at the rate ofone-third per year beginning one year from the grant date, and expire 10 years after the grant date. Non-qualified stock options granted to non-employee directors vest and become exercisable on the earlier of (a) the first anniversary of the grant date or (b) the date on which the next annual meeting of shareholders of Worthington Steel is held following the grant date for any stock option granted as of the date of an annual meeting of shareholders of Worthington Steel. Stock options can be exercised through net-settlement, at the election of the option holder. The source of the shares issued when exercised and held is out of new shares.

GAAP requires that all share-based awards be recorded as expense in the statements of earnings based on their grant date fair value. The Company calculates the fair value of its non-qualified stock options using the Black-Scholes option pricing model and certain assumptions.

Stock-based compensation expense recognized for the stock option awards (pre-tax) during fiscal 2026, fiscal 2025 and fiscal 2024 was$0.6 million,$0.6 million, and$0.4 million, respectively.

As of May 31, 2026, there was$0.4 million of total unrecognized compensation cost related to unvested stock options. This cost is expected to be recognized over a weighted-average period of 0.8 years. As of May 31, 2026, there were 0.2 million outstanding unvested stock options, with a total intrinsic value of$4.8 million. As of May 31, 2026, there were 0.2 million outstanding exercisable stock options. As of May 31, 2025, there were 0.3 million outstanding unvested stock options, with a total intrinsic value of $1.4 million.

Service-Based Restricted Common Shares

Restricted common shares that contain service-based vesting conditions may be awarded to certain employees and non-employee directors. Service-based restricted common shares granted to employees generally vest in full three years after the date of grant. Service-based restricted common shares granted to non-employee directors vest under the same parameters as discussed above with respect to non-qualified stock option grants. All service-based restricted common shares are valued at the closing market price of the common shares on the date of the grant.

The table below sets forth the service-based restricted common shares activity under the Plans forfiscal 2026, fiscal 2025, and fiscal 2024. Stock-based compensation expense for these restricted common shares is recognized on a straight-line basis over their respective three-year service periods.

Market-Based Restricted Common Shares

On April 1, 2024, the Company granted 149,000 market-based restricted common shares to six key employees under one of the Plans. Vesting of these restricted common shares is contingent upon the completion of a three-year service vesting period and the Company’s annualized absolute total shareholder return (“ATSR”) reaching a certain threshold during the three-year performance period ending on March 31, 2027. If the annualized ATSR is between 5% and 20%, as measured using the 40 consecutive trading days ending on March 28, 2024, as the starting price and the 40 consecutive trading days ending on March 31, 2027, as the ending price, participants will receive 50-150% of their targeted performance shares. The grant date fair value of these restricted common shares, as determined by a Monte Carlo simulation model, was $34.83 per common share. The pre-tax stock-based compensation expense for these market-based restricted common shares of $5.4 million will be recognized on a graded basis over thefive-year service period, net of any forfeitures. The following assumptions were used to determine the grant date fair value and the derived service period for these restricted common shares:

On June 25, 2020, the Former Parent granted an aggregate of 35,000 market-based restricted common shares to two key employees under one of the Former Parent Plans. Vesting of these restricted common share awards is contingent upon the average closing price of the common shares reaching $65.00 during any 90 consecutive day period during the five-year period following the date of grant and completion of a three-year service vesting period. The grant date fair value of these restricted common shares, as determined by a Monte Carlo simulation model, was $20.87 per common share. The calculated pre-tax stock-based compensation expense for these restricted common shares was$0.7 million; these awards fully vested on June 25, 2023. The following assumptions were used to determine the grant date fair value and the derived service period for these restricted common shares:

Performance Shares

Performance shares may be awarded to certain key employees and are contingent (i.e., vest) based upon the level of achievement with respect to corporate targets for cumulative economic value added and earnings per share growth for the three-fiscal-year periods ended or ending May 31, 2026, 2027 and 2028. These performance share awards will be paid, to the extent earned, in common shares in the fiscal quarter following the end of the applicable three-fiscal-year performance period. The fair value of performance share awards is determined by the closing market price of the underlying common shares at the respective grant dates of the awards and the pre-tax stock-based compensation expense is based on the periodic assessment of the probability of the targets being achieved and the estimate of the number of common shares that will ultimately vest and be issued.

The table below summarizes the Company’s performance share award activity under the Plans for fiscal 2026, fiscal 2025, and fiscal 2024:

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 Parent’s 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 Parent’s 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 contributions, annual or monthly employer contributions and discretionary contributions, based on individual plan provisions. The Company matches 50 cents per dollar on contributions of the first 4% of the 401(k) Plan participants’ compensation. The Company also makes an employer contribution of 3% of compensation on behalf of eligible participants irrespective of the amounts deferred by such participants. As a safe harbor plan, the Company guarantees a minimum contribution of at least 3% of participants’ eligible compensation.

The following table summarizes the defined contribution plan expense for the prior three fiscal years:

Defined Benefit Pension Plans

Defined benefit pension and OPEB plan obligations are remeasured at least annually as of reporting period end based on the present value of projected future benefit payments for all participants for services rendered to date. The measurement of projected future benefits is dependent on the provisions of each specific plan, demographics of the group covered by the plan, and other key measurement assumptions.

Net periodic benefit costs, including service cost, interest cost, and expected return on assets, are determined using assumptions regarding the benefit obligation and the fair value of plan assets as of the beginning of each fiscal year. The funded status of the benefit plans, which represents the difference between the benefit obligation and the fair value of plan assets, is calculated on a plan-by-plan basis. The benefit obligation and related funded status are determined using assumptions as of the reporting period end. Net periodic benefit cost is included in other income (expense) in the Company’s consolidated and combined statements of earnings, except for the service cost component, which is recorded in cost of goods sold and SG&A.

Through prior acquisitions, the Company sponsors various defined benefit pension and similar plans. Tempel’s obligations include a defined benefit domestic funded pension plan, an unfunded supplemental executive retirement (SERP) plan, and a domestic unfunded postretirement plan. Effective December 31, 2010, Tempel froze its defined benefit domestic funded pension plan. No further benefits will be earned by participants of this plan after December 31, 2010.

As part of the Company’s acquisition of the Sitem Group on June 3, 2025, it assumed approximately$14.3 million of net pension benefit obligations. The Stanzwerk AG pension plan was assumed in connection with the acquisition of the Sitem Group. The acquired Stanzwerk AG pension plan is a funded defined benefit pension plan in Switzerland covering eligible employees, the plan’s assets are managed by a collective trust. During fiscal 2026, the Company recognized curtailment and settlement gains related to the acquired Stanzwerk AG pension plan. The curtailment resulted from a restructuring initiative that significantly reduced expected future service for certain plan participants. In addition, a settlement was triggered because lump-sum benefit payments exceeded the applicable threshold. A portion of the curtailment gain will be recognized in future periods as affected employees terminate employment. See “Note 2 – Acquisitions” for additional information related to the acquisition of the Sitem Group.

In fiscal 2025, primarily in the second quarter, the Company, through Tempel, recorded a non-cash pension settlement gain of $2.7 million reflected in miscellaneous income (expense), net, as a result of transferring $18.7 million, or approximately 26%, of the total projected benefit obligation and related plan assets of the Tempel Employees Pension Plan as of the purchase date, to an insurance company. The purchase of the annuity contract as well as the lump sums paid prior to the pension risk transfer required remeasurement of the plan prior to the calculation of the settlement charge. Additional lump sums paid out after the pension risk transfer but prior to the end of the fiscal year, resulted in a second settlement gain. The net impact of the pension risk transfer and lump sum settlements, and the second quarter fiscal 2025 remeasurement was a decrease of approximately $2.0 million in the non-current liability for pensions (and corresponding decrease in accumulated other comprehensive loss, before income taxes), and is included within the actuarial (gain)/loss with thereconciliation of the changes in the projected benefit obligation and plan assets disclosure below. In the reconciliation of the changes in the projected benefit obligation and plan assets, the cash paid for the purchase of the annuity contracts as well as the lump sum payments that resulted in settlements is recorded within settlements. As a result of this transaction: 1) the Company was relieved of all responsibility for these pension obligations, subject to customary administrative adjustments, and 2) the insurance company is now required to pay and administer the retirement benefits owed to 472 beneficiaries. Assumptions used for this remeasurement included discount rates determined using September 2024 market conditions and calculated using the same methodology as discussed above. Due to the settlement, the Company determined that a discount rate of 5.55% was used from June 1, 2024 up until September 2024. A discount rate of 4.79% was used from September 2024 up until May 31, 2025. A discount rate of 5.40% was used as of May 31, 2025. All other assumptions were consistent with the fiscal 2025 disclosures.

As a result of the Company’s acquisition of Voestalpine Nagold in fiscal 2024, it assumed approximately$0.9 million of net pension benefit obligations under a pre-existing pension obligation of the former company that resulted from a previous contractual arrangement with a prior owner before the Company’s acquisition. No further pension benefit will be earned by participants of this plan, and participants will begin to receive benefits upon reaching age 65. See “Note 2 – Acquisitions” for additional information related to the acquisition of Voestalpine Nagold.

Prior-year non-U.S. pension information has been reclassified to conform to the current-year presentation following the acquisition of a material non-U.S. defined benefit plan. The reclassification had no impact on previously reported results.

Net Periodic Pension Costs (Income) and Weighted Average Rates

The following table summarizes the components of net periodic pension income for the Company’s defined benefit pension plans along with the assumptions used to determine the benefit obligation and net periodic benefit cost for the prior three fiscal years:

(1)

Relates to only the Stanzwerk AG pension plan, which was assumed in connection with the Sitem Group acquisition.

During fiscal 2026, fiscal 2025, and fiscal 2024, the Company also incurred less than$0.1 million,$0.1 million, and$0.1 million, respectively, in net periodic benefit cost related to the Tempel Steel Company Postretirement Benefit Plan.

The discount rates used to measure plan liabilities as of the measurement date are determined individually for each plan using actuarially developed yield curves. The discount rates are determined by matching the projected cash flows used to determine the plan liabilities to a projected yield curve of high-quality corporate bonds available at the measurement date. The expected return on plan assets assumption is determined by reviewing the investment returns, as well as longer-term historical returns of an asset mix approximating the Company’s asset allocation targets, and periodically comparing these returns to the expectations of investment advisors and actuaries to determine whether long-term future returns are expected to differ significantly from the past.

Funded Status

The following tables provide a reconciliation of the changes in the projected benefit obligation and the fair value of plan assets and the funded status for the Company’s defined benefit plans:

(1)

The fiscal 2026 non-U.S. benefits paid amount reflects both benefit payments and insurance-related transactions. During the year, insurance reserves were transferred to the plan in an amount that exceeded annuity benefit payments and insurance premiums, resulting in a net increase in the line item.

The accumulated benefit obligation for all of the defined benefit pension and OPEB plan obligations was$94.9 million and$52.4 million as of May 31, 2026, and May 31, 2025, respectively.

The following table shows other changes in plan assets and benefit obligations recognized in OCI during the prior two fiscal years:

Pension plan assets are required to be disclosed at fair value in the Company’s consolidated and combined financial statements. Fair value is defined in “Note 17 – Fair Value Measurements”. The pension plan assets’ fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.

Fair Value Hierarchy Categories

There are three measurement input levels for determining fair value. The three levels of inputs used to measure fair value are as follows:

Cash is valued at cost, which approximates fair value. There were no Level 3 plan assets at May 31, 2026, or May 31, 2025, as shown in the table below. The table below presents plan assets by fair value hierarchy level. See “Note 17 – Fair Value Measurements”.

Fair Value of Plan Assets

The following table sets forth, by level within the fair value hierarchy, a summary of the defined benefit plans’ assets measured at fair value on a recurring basis at May 31, 2026, and May 31, 2025:

(1)

Investments that are measured at fair value using the net asset value per share (or its equivalent) as a practical expedient have not been categorized in the fair value hierarchy.

Plan assets for the defined benefit plans consisted principally of the following as of the respective measurement dates:

(1)

Includes cash and cash equivalents and other alternative investments.

Equity securities include no employer stock. The investment policy and strategy for the defined benefit plans is: (i) long-term in nature with liquidity requirements that are anticipated to be minimal due to the projected normal retirement date of the average employee and the current average age of participants; (ii) to earn nominal returns, net of investment fees, equal to or in excess of the defined benefit plans’ respective liability growth rate; and (iii) to include a diversified asset allocation of domestic and international equities and fixed income investments. The Company expects to contribute approximately$2.8 million to the defined benefit and OPEB plans during fiscal 2027. However, the Company reserves the right to make additional contributions.

Estimated Future Benefits Payments

The following estimated future benefits, which reflect expected future service, as appropriate, are expected to be paid under the defined benefit and other postretirement plans during future fiscal years as follows:

(1)

Estimated Non-U.S. pension benefit payments for fiscal 2027 include approximately $5.8 million of payments related to employees affected by the restructuring initiative associated with the acquired Stanzwerk AG pension plan.

Note 14 –Income Taxes

Earnings before income taxes for the prior three fiscal years included the following components:

Significant components of income tax expense (benefit) for the prior three fiscal years were as follows:

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:

(1)

State and local taxes in Illinois, Michigan, and Kentucky make up the majority (greater than 50%) of the tax effect in this category.

The above effective tax rate attributable to controlling interest excludes any impact from the inclusion of net earnings attributable to noncontrolling interests in the Company’s consolidated and combined statements of earnings for fiscal 2025 and 2024. The effective tax rates upon inclusion of net earnings attributable to noncontrolling interests are 19.4% and 21.3% for fiscal 2025 and fiscal 2024, respectively. Net earnings attributable to noncontrolling interests are a result of the Company’s consolidated joint ventures. The net earnings attributable to the noncontrolling interests in the U.S. operations of the Company’s consolidated joint ventures do not generate tax expense to the Company since the investors are taxed directly based on the earnings attributable to the investors. The tax expense of TWB’s wholly owned foreign subsidiaries and the Sitem Group is reported in the consolidated and combined income tax expense.

The Company recognizes the benefit of a tax position only when it is more likely than not that the position will be sustained upon examination by the relevant taxing authority, including the resolution of any related appeals or litigation, based on the technical merits of the position. The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement.

A tabular reconciliation of unrecognized tax benefits follows:

At May 31, 2026, the Company had $2.6 million of gross unrecognized tax benefits. If recognized, approximately $2.1 million would affect the Company’s effective tax rate. The amount of unrecognized tax benefits that would affect the Company’s effective tax rate if recognized was not material at May 31, 2025, and 2024.

During the fiscal year ended May 31, 2026, the Company recognized $0.4 million of interest expense and $0.4 million of penalties in income tax expense related to uncertain tax positions. At May 31, 2026, the Company had accrued $0.4 million of interest and $0.4 million of penalties related to uncertain tax positions in the consolidated balance sheet. Interest and penalties recognized in income tax expense and accrued in the consolidated balance sheet were not material at May 31, 2025, and 2024.

The following is a summary of the tax years open to examination by major tax jurisdiction:

•

U.S. Federal –2020,2022 and forward

•

U.S. State and Local –2021 and forward

•

Canada –2022 and forward

•

China –2023 and forward

•

France –2022 and forward

•

Germany –2023 and forward

•

India –2021 and forward

•

Italy –2020 and forward

•

Mexico –2021 and forward

•

Slovakia –2020 and forward

•

Switzerland –2025 and forward.

The components of the Company’s deferred tax assets and liabilities as of May 31 were as follows:

At May 31, 2026, the Company had taxable temporary differences related to investments in certain foreign subsidiaries and foreign corporate joint ventures for whichno deferred tax liability was recognized because the temporary differences are considered indefinitely reinvested. Determination of the amount of the related unrecognized deferred tax liability is not practicable.

At May 31, 2026, the Company had tax benefits for non-U.S. net operating loss carryforwards of $21.5 million that begin expiring in fiscal 2030 and U.S. net operating loss carryforwards of $0.1 million that begin expiring in fiscal 2043.

During fiscal 2026, the Company recorded valuation allowances of $11.0 million, including $3.3 million related to acquired entities and $7.7 million related to current-year changes in management’s assessment of realizability. The valuation allowances relate to deferred tax assets in Switzerland, Slovakia, Germany, and Pennsylvania, consisting primarily of net operating loss carryforwards, interest carryforward, and other deductible temporary differences. Management evaluated positive and negative evidence, including recent operating results, projected future taxable income, reversal of taxable temporary differences, and available tax-planning strategies.

As part of the Company’s adoption of ASU 2023-09 in fiscal 2026 on a prospective basis, a reconciliation of income taxes paid in fiscal 2026 is as follows:

Income taxes paid, net in fiscal 2025 and fiscal 2024 were $26.2 million and $37.6 million(1), respectively.

(1)

The amount of cash paid for income taxes paid, net of refunds, in fiscal 2024 for the period prior to the Separation was not distinguishable for the Company. These amounts were combined with the Former Parent. Due to the legal organizational structure, capital structure, and income tax compliance requirements, the amounts for the Company were indivisible from those that were included with the Former Parent. The amounts disclosed for income taxes paid, net of refunds represent all distinguishable amounts, which includes domestic taxes paid after the Separation and foreign taxes paid for the entire fiscal year.

Note 15 –Earnings Per Common Share

The following table sets forth the computation of basic and diluted earnings per common share for the prior three fiscal years:

(1)

These non-qualified stock options and restricted common share awards were excluded from the calculation of diluted earnings per share because their inclusion would have been anti-dilutive. There wereno anti-dilutive non-qualified stock options and restricted common share awards prior to the Separation. The number of anti-dilutive non-qualified stock options and restricted common share awards for 2024 was less than 0.1 million.

Earnings per common share was calculated based on the weighted-average number of common shares outstanding. Earnings per diluted common share included the weighted-average effect of dilutive restricted common shares and non-qualified stock options on the weighted-average shares outstanding. Prior to the third quarter of fiscal 2024, earnings per common share was based on the 49.3 million Worthington Steel common shares distributed to the Former Parent’s shareholders on December 1, 2023. The same number of common shares is being utilized for the calculation of basic and diluted earnings per common share for all periods presented prior to the Separation. After the Separation, actual outstanding common shares are used to calculate both basic and diluted weighted-average number of common shares outstanding.

Note 16 –Derivative Financial Instruments and Hedging Activities

The Company utilizes derivative financial instruments primarily to manage exposure to certain risks related to the Company’s ongoing operations. The primary risks managed through the use of derivative financial instruments are commodity price risk and foreign currency exchange risk. While certain of the Company’s derivative financial instruments are designated as hedging instruments, the Company also enters into derivative financial instruments that are designed to hedge a risk, but are not designated as hedging instruments and, therefore, do not qualify for hedge accounting. These derivative financial instruments are adjusted to current fair value through earnings at the end of each period.

Commodity Price Risk Management – The Company is exposed to changes in the price of certain commodities, including steel, zinc and other raw materials, and the Company’s utility requirements. The Company’s objective is to reduce earnings and cash flow volatility associated with forecasted purchases and sales of these commodities to allow management to focus its attention on business operations. Accordingly, the Company enters into derivative financial instruments to manage the associated price risk.

Interest Rate Risk Management– The Company is exposed to the impact of interest rate changes. The Company’s objective is to manage the impact of interest rate changes on cash flows and the market value of borrowings. The Company utilizes a mix of debt maturities along with both fixed-rate and variable-rate debt to manage changes in interest rates. In addition, the Company enters into interest rate swaps to further manage exposure to interest rate variations related to borrowings and to lower overall borrowing costs.

Foreign Currency Exchange Risk Management – The Company conducts business in several major international currencies and is, therefore, subject to risks associated with changing foreign currency exchange rates. The Company uses foreign currency forward contracts to protect against exchange rate movements.

•

Foreign currency forward contracts – these contracts are used to protect against exchange rate movements for forecasted cash flows, primarily operating expenses denominated in currencies other than the functional currency. Such contracts limit exposure to both favorable and unfavorable foreign currency exchange rate fluctuations.

•

Cross-currency swap contract – the Company uses a cross-currency swap to manage the impact of foreign currency exposure related to a portion of the Company’s Euro net investment in certain foreign subsidiaries against changes in Euro/USD exchange rates.

The Company entered into foreign currency forward contracts during fiscal 2026 in order to hedge a portion of the expected purchase price of the Kloeckner Acquisition. For more information, see the “Foreign currency exchange derivatives for the Kloeckner Acquisition”section below.

The translation of foreign currencies into U.S. dollars also subjects the Company to exposure related to fluctuating foreign currency exchange rates; however, derivative financial instruments are not used to manage this risk.

The Company is exposed to counterparty credit risk on all of its derivative financial instruments. Accordingly, the Company has established and maintained strict counterparty credit guidelines. The Company has credit support agreements in place with certain counterparties to limit the Company’s credit exposure. These agreements require either party to post cash collateral if its cumulative market position exceeds a predefined liability threshold. Amounts posted to the margin accounts accrue interest at market rates and are required to be refunded in the period in which the cumulative market position falls below the required threshold. The Company does not have significant exposure to any one counterparty, and management believes the overall risk of loss is remote and, in any event, would not be material.

Refer to “Note 17 – Fair Value Measurements” for additional information regarding the accounting treatment for the Company’s derivative financial instruments, as well as how fair value is determined.

The following table summarizes the fair value of the derivative financial instruments and the respective lines in which they were recorded in theconsolidated balance sheet at May 31, 2026 and May 31, 2025:

As permitted under GAAP, the Company’s policy is to record derivative financial instruments, with the exception of cross-currency swaps, on a net basis where the Company has an executed master netting arrangement with counterparties as well as where the right of offset exists. The cross-currency swap is reflected on a gross basis in the consolidated balance sheet as the Company has not entered into any master netting arrangements. The amounts in the table above reflect the fair value of the derivative financial instruments on a net basis, where allowable under master netting arrangements and/or where the right of offset exists. Had these amounts been recognized on a gross basis, the impact would have been a $1.6 million increase in receivables with a corresponding increase in accounts payableat May 31, 2026, and a $0.6 million increase in receivables with a corresponding increase in accounts payable at May 31, 2025.

The fair value of the Company’s interest rate contracts was less than $0.1 million at May 31, 2026, and there wereno interest rate contracts at May 31, 2025. Accordingly, these were not presented in the table above.

Cash Flow Hedges

The Company enters into derivative financial instruments to hedge its exposure to changes in cash flows attributable to interest rate, foreign currency exchange rates, and commodity price fluctuations associated with certain forecasted transactions. Purchases of commodities are hedged for periods of up to 24 months and certain forecasted foreign currency transactions for periods generally up to 12 months. These derivative financial instruments are designated and qualify as cash flow hedges. Accordingly, the effective portion of the gain or loss on each of these derivative financial instruments is reported as a component of OCI and reclassified into earnings in the same line associated with the forecasted transaction and in the same period during which the hedged transaction affects earnings. The ineffective portion of the gain or loss on the derivative financial instrument is recognized in earnings immediately.

The following table summarizes the Company’s cash flow hedges outstanding at May 31, 2026:

The following table summarizes the Company’s cash flow hedges outstanding at May 31, 2025:

Net Investment Hedge– Cross-Currency Swap

During fiscal 2026, the Company entered into a cross-currency swap to hedge foreign currency risk on a portion of the Company’s Euro net investment in the Sitem Group against fluctuations in Euro/U.S. Dollar exchange rates. As part of the hedge contract, the Company receives a fixed rate of U.S. dollar interest on a monthly basis. The Company has elected the spot method for assessing the effectiveness of the contract. The Company excludes from the assessment of hedge effectiveness the portion of the fair value of the cross-currency swap attributable to interest rate differentials. The Company recognizes the initial value of the excluded component in earnings within interest expense, net, using a systematic and rational method over the life of the hedging instrument. The change in fair value of the swap and related income tax are recorded within other comprehensive income, net of tax on the consolidated and combined statements of comprehensive income and as a net investment hedge, as a component within currency translation adjustments of AOCI. Amounts recorded in AOCI include both (1) changes attributable to spot exchange rates and (2) amounts related to excluded components that are deferred in other comprehensive income. Amounts related to the cross-currency swaps recognized directly in net earnings represent amounts associated with components excluded from the assessment of hedge effectiveness, including the net periodic interest settlements and accruals, which are recognized in interest expense, net. The Company recognized interest income within interest expense, net in the consolidated and combined statements of earnings of $0.4 million during fiscal 2026.

Amounts deferred in AOCI related to the net investment hedge will be reclassified into earnings upon a partial or full disposition of the hedged net investment during the period of change. During fiscal 2026, no amounts related to the net investment hedge were reclassified from AOCI into earnings, and the Company did not discontinue, de-designate or terminate any portion of the hedging relationship.

The following table summarizes the Company’s net investment hedge outstanding at May 31, 2026. There wereno net investment hedges outstanding at May 31, 2025.

The following table summarizes the gain (loss) recognized in OCI and the gain (loss) reclassified from AOCI into earnings for derivative financial instruments designated as cash flow hedges and net investment hedges during fiscal 2026, 2025, and 2024:

As of May 31, 2026, for the net investment hedge, the Company has recognized amounts in net earnings related to excluded components as described above. Refer to “Note 10 – Comprehensive Income (Loss)” for additional information regarding the use of derivative financial instruments and the recognized amounts within OCI and AOCI.

For the cash flow hedges, the estimated net amount of the gains recognized in AOCI at May 31, 2026, expected to be reclassified into net earnings within the succeeding twelve months is$2.4 million (net of tax of$0.7 million). This amount was computed using the fair value of the cash flow hedges at May 31, 2026, and will change before actual reclassification from OCI to net earnings during fiscal 2027. Given the maturity of the net investment hedge is greater than 12 months, no amount is estimated to be reclassified into net earnings within the succeeding twelve months.

Economic (Non-designated) Hedges

The Company enters into foreign currency exchange contracts to manage its foreign currency exchange rate exposure related to intercompany and financing transactions that do not meet the requirements for hedge accounting treatment. The Company also enters into certain commodity contracts that do not qualify for hedge accounting treatment. Accordingly, these derivative financial instruments are adjusted to current market value at the end of each period through earnings.

The following table summarizes the Company’s economic (non-designated) derivative financial instruments outstanding at May 31, 2026:

The following table summarizes the Company’s economic (non-designated) derivative financial instruments outstanding at May 31, 2025:

The following table summarizes thegain (loss) recognized in earnings for economic (non-designated) derivative financial instruments during fiscal 2026, 2025, and 2024:

Foreign currency exchange derivatives for the Kloeckner Acquisition

In January 2026, the Company executed a Euro/U.S. Dollar foreign currency forward contract to hedge a portion of the expected purchase price of the Kloeckner Acquisition. The contract was initially entered into with a notional amount of €550.0 million and was subsequently increased to €570.0 million ($664.6 million as of May 31, 2026), with a maturity date in the second quarter of fiscal 2027. This economic (non-designated) cash flow derivative was entered into to hedge a portion of the expected purchase price of the Kloeckner Acquisition. As the expected closing date of the Kloeckner Acquisition was accelerated, the Company entered into additional foreign currency contracts during May 2026 to effectively accelerate the settlement date of its hedge from the second quarter of fiscal 2027 to the first quarter of fiscal 2027. The Company subsequently settled the related foreign currency forward contracts in the first quarter of fiscal 2027. As of May 31, 2026, the fair value of this Euro/U.S. Dollar foreign currency forward contracts was a liability of $2.4 million, which was recorded within accounts payable in the consolidated balance sheet. The change in the fair value was recorded in miscellaneous income, net, and resulted in a loss of $2.4 million during fiscal 2026. For additional information, see “Note 2 – Acquisitions”.

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:

Recurring Fair Value Measurements

At May 31, 2026, the Company’s assets and liabilities measured at fair value on a recurring basis were as follows:

(1)

The fair value of the Company’s derivative financial instruments was based on the present value of the expected future cash flows considering the risks involved, including non-performance risk, and using discount rates appropriate for the respective maturities. Market observable, Level 2 inputs are used to determine the present value of the expected future cash flows. Refer to “Note 16 – Derivative Financial Instruments and Hedging Activities” for additional information regarding the use of derivative financial instruments.

(2)

The fair value of the Company’s equity securities instruments is based upon quoted market prices in active markets.

At May 31, 2025, the Company’s assets and liabilities measured at fair value on a recurring basis were as follows:

(1)

The fair value of the Company’s derivative financial instruments was based on the present value of the expected future cash flows considering the risks involved, including non-performance risk, and using discount rates appropriate for the respective maturities. Market observable, Level 2 inputs are used to determine the present value of the expected future cash flows. Refer to “Note 16 – Derivative Financial Instruments and Hedging Activities” for additional information regarding the use of derivative financial instruments.

Non-Recurring Fair Value Measurements

At May 31, 2026, the Company’s assets measured at fair value on a non-recurring basis were as follows:

(1)

During fiscal 2026, the Company measured the fair values of certain long-lived asset groups and the Electrical Steel reporting unit in connection with the impairment analyses performed. These fair value measurements were classified within Level 3 of the fair value hierarchy because they included significant unobservable inputs. The fair values of the affected long-lived asset groups were determined using a discounted cash flow method, market approach, cost approach, or combination thereof, which included significant unobservable inputs. The affected long-lived asset groups were written down to the estimated fair value of $76.8 million. The fair value of the Electrical Steel reporting unit was estimated using an income approach based on discounted projected cash flows. Based on the results of the quantitative impairment test, the carrying amount of the Electrical Steel reporting unit exceeded its estimated fair value. The impairment was measured as the excess of the reporting unit’s carrying amount over its estimated fair value, limited to the carrying amount of goodwill assigned to the Electrical Steel reporting unit. The carrying amount of the goodwill of the Electrical Steel reporting unit was fully impaired. Refer to “Note 5 – Goodwill, Long-Lived Assets, and Other Assets” for additional information regarding the valuation methodology, significant unobservable inputs and impairment charges recognized.

(2)

During fiscal 2026, the net asset value of certain machinery at the manufacturing facility in Taylor, Michigan was lowered to $0.5 million based on prices for similar assets. Refer to “Note 5 – Goodwill, Long-Lived Assets, and Other Assets” for additional information.

At May 31, 2025, the Company’s assets measured at fair value on a non-recurring basis were as follows:

(1)

During the third quarter of fiscal 2025, the Company announced plans to combine WSCP’s Cleveland, Ohio toll processing manufacturing facility into its existing manufacturing facility in Twinsburg, Ohio. At that time, the Company determined there wasno impairment related to finance lease assets along with certain other fixed assets encumbered to the land and building of the finance lease assets. Certain machinery and equipment fixed assets and other long-lived assets were written down to their estimated fair value of $1.3 million based on estimated replacement costs and/or prices for similar assets. During the fourth quarter of fiscal 2025, the Company transferred the remaining $10.4 million to assets held for sale, which represented the remaining net assets prior to the held for sale criteria being met. The assets held for sale are expected to be disposed of primarily by sales within the next twelve months.

The fair value of non-derivative financial instruments, including cash and cash equivalents, receivables, income taxes receivable, other assets, accounts payable, accrued compensation, contributions to employee benefit plans and related taxes, other accrued items, income taxes payable and other liabilities, approximates carrying value due to their short-term nature.

The carrying value of the Credit Facility debt was$185.4 million and$149.2 million at May 31, 2026, and May 31, 2025, respectively, which due to its short-term nature, approximates fair value.

The following table provides a summary of the carrying value and estimated fair value of the Company’s outstanding debt, excluding the Credit Facility, reported on the balance sheets within total liabilitiesat May 31, 2026, and May 31, 2025, respectively.

(1)

The estimated fair value of long-term debt, including current maturities, was calculated based upon models utilizing market observable (Level 2) inputs and credit risk. For long-term variable rate debt, the carrying amount approximates fair value as the variable rates reset frequently at market rates. For the current maturities of long-term debt for fixed rate debt, the carrying amount approximates fair value due to its short-term nature.

Note 18 –Leases

The Company leases office space, warehouses, vehicles, and equipment. Leases have remaining lease terms of 1 year to 15 years, some of which have renewal and termination options. Termination options are exercisable at the Company’s option. The lease terms used to recognize ROU assets and lease liabilities include periods covered by options to extend the lease where the Company is reasonably certain to exercise that option and periods covered by an option to terminate the lease if the Company is reasonably certain not to exercise that option.

The Company determines if an arrangement meets the definition of a lease at inception. For both operating and financing lease ROU assets, any initial direct costs and prepayments less lease incentives are included in the initial measurement. Lease terms include options to renew or terminate the lease when it is reasonably certain the Company will exercise such options. As most of the leases do not include an implicit rate, the Company uses its collateralized incremental borrowing rate based on the information available at the lease commencement date, in determining the present value of lease payments. Operating lease expense is recognized on a straight-line basis over the lease term and is included in cost of goods sold or SG&A, depending on the underlying nature of the leased assets. Finance lease expense consists of amortization of ROU assets and interest expense on lease liabilities. Amortization expense related to finance lease ROU assets is included in cost of goods sold or SG&A, depending on the nature of the leased assets, while interest expense is included in interest expense, net

Prior to fiscal 2026, the Company did not have finance leases that were considered material to the consolidated and combined financial statements. During fiscal 2026, the Company assumed finance leases as part of the acquisition of the Sitem Group, resulting in material finance lease assets and liabilities presented on the face of the consolidated and combined financial statements beginning in fiscal 2026.

The Company leases certain property and equipment from third parties under non-cancellable operating lease agreements. Certain lease agreements require the Company to pay property taxes, maintenance and insurance. Under Topic 842, the Company elected the practical expedient to account for lease and non-lease components as a single component for all asset classes. Certain leases include variable lease payments based on usage, an index, or a rate.

The components of lease expense for fiscal 2026, fiscal 2025, and fiscal 2024 were as follows:

Supplemental cash flow and other information related to the Company’s leases as of and for the fiscal years ended May 31, 2026, May 31, 2025, and May 31, 2024 is provided below:

Future minimum lease payments for non-cancelable leases having an initial or remaining term in excess of one year at May 31, 2026, were as follows:

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 the remainder allocated considering the characteristics of each respective cost (e.g., on the basis of headcount or profitability). Management believes the assumptions regarding the allocation of the Former Parent’s general corporate expenses are reasonable. Nevertheless, the consolidated and combined financial statements may not include all of the actual expenses that would have been incurred and may not reflect consolidated and combined results of operations, financial position and cash flows had the Company operated as a stand-alone public company during the periods presented. Substantially all of the allocated corporate costs are included in SG&A in the consolidated and combined statements of earnings.

Following the Separation, the Company independently incurs expenses as a stand-alone company and corporate expenses from the Former Parent are no longer allocated to the Company; therefore, no related amounts were reflected on the Company’s consolidated and combined financial statements following the Separation. The allocated expenses from the Former Parent were $38.5 million for fiscal 2024, all of which were incurred prior to the Separation, and there wereno allocated expenses for fiscal 2025 or fiscal 2026.

Attribution of Separation Costs

The Former Parent incurred Separation Costs that were directly attributed to the Company to the extent incurred to its direct benefit and are presented separately in the consolidated and combined statements of earnings.

Following the Separation, the Company incurred incremental costs related to the Separation, which are reflected on the Company’s consolidated and combined statements of earnings. See “Note 1 – Description of Business, The Separation, and Basis of Presentation” for additional information.

Net Sales to the Former Parent and Transactions with Affiliated Companies

Prior to the Separation, the Company’s net sales to the Former Parent were considered sales on a carve-out basis, and were included within net sales in the combined statements of earnings. Following the Separation, the Company’s net sales to the Former Parent are subject to the long-term Steel Supply and Services Agreement and are included within net sales in the consolidated and combined statements of earnings. Net sales to the Former Parent for fiscal 2026, fiscal 2025 and fiscal 2024 totaled$76.0 million, $65.4 million, and$82.1 million, respectively.

The Company purchases from, and sells to, affiliated companies and individuals, which would include the unconsolidated joint ventures of the Former Parent prior to the Separation, certain raw materials and services. Net sales to affiliated companies and individuals, excluding transactions with the Former Parent, during fiscal 2026, fiscal 2025, and fiscal 2024 totaled$18.1 million,$22.6 million and$14.7 million, respectively. Purchases from affiliated companies and individuals totaled$9.0 million,$3.2 million and$17.4 million during fiscal 2026, fiscal 2025 and fiscal 2024, respectively. Included in the fiscal 2026 purchases from affiliated companies and individuals is a one-time bonus of €4.0 million ($4.6 million) that was paid to key individuals at the Sitem Group, refer to “Note 2 – Acquisitions” for additional information. Receivables from and accounts payable to affiliated companies werenot significant at either May 31, 2026 or May 31, 2025.

Due to/from the Former Parent

Given that cash was managed centrally by the Former Parent prior to the Separation, long-term intercompany financing arrangements were used to fund expansion or certain working capital needs. Excluding the TWB Term Loan discussed in “Note 9 – Debt”, debt resulting from these long-term intercompany financing arrangements has been reflected in Net Investment by the Former Parent within equity.

The Former Parent’s note receivable associated with the TWB Term Loan was contributed to the Company in connection with the Separation on December 1, 2023. As a result, the TWB Term Loan balance was eliminated in consolidation following the Separation. The corresponding interest expense, which accrued at a rate of 5.0% per annum, was $0.5 million for fiscal 2024. The interest expense for fiscal 2024 reflects only the amount prior to the contribution of the loan on December 1, 2023. Refer to“Note 9 – Debt” for additional information.

At May 31, 2026 and May 31, 2025, the outstanding receivable balance with the Former Parent equaled$7.0 million and$9.2 million, respectively, as a result of the net sales to the Former Parent described above.

Net Investment by the Former Parent

Prior to the Separation, related party transactions between the Former Parent and the Company were included within Net Investment by the Former Parent as these related party transactions were part of the centralized cash management program and were not settled in cash. Net Investment by the Former Parent in consolidated and combined statements of equity and mezzanine equity represents the Former Parent’s historical investment in the Company, the net effect of transactions with and allocations from the Former Parent, and its retained earnings.

Net transfers from/(to) the Former Parent, excluding the $150.0 million distribution, are included within Net Investment by the Former Parent. The reconciliation of total net transfers to the Former Parent to the corresponding amount presented in the consolidated and combined statements of cash flows are as follows:

Note 20 –Segment Information and Geographic Data

Segment Information

The Company’s CODM is Worthington Steel’s 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 Company’s internal organizational structure, the basis on which budgets and forecasts are prepared, the financial information that the Company’s 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 onlyone operating segment and thereforeone reportable segment.

The Company’s 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 described in the Summary of Significant Accounting Policies (refer to “Note 1 – Description of Business, The Separation, and Basis of Presentation”). As the one reportable segment is managed on a consolidated basis, the measure of segment profit or loss is consolidated net income. The CODM uses consolidated net income to assess the performance of the Company’s one segment and decide how and where to allocate resources and reinvest profits into the business in areas such as capital expenditures, business and/or asset acquisitions, investments in market share expansion with our existing and potential new customers, talent, technology, the repurchase of the Company’s common shares, and/or the payment of dividends. Net earnings, and components of net earnings, are used to monitor actual performance and are compared to budgeted and forecasted results to assess the performance of the Company’s one reportable segment, set targets, and establish management’s incentive compensation. The measure of consolidated segment assets is reported on the Balance Sheets as total assets.

The Company regularly provides the CODM with a reporting package that is structured similarly to the statements of earnings, andthe CODM reviews consolidated net earnings (loss) as a key performance measure of profit (loss) for the Company’s single reportable segment and reviews significant expenses on a consolidated basis consistent with the presentation on the consolidated statements of earnings, with the exception of cost of goods sold, which is further disaggregated. The CODM’s review is focused on the consolidated results for the Company.

The following table presents the significant expenses that are regularly provided to the CODM for theone reportable segment and the required disclosable amounts that are included in consolidated and combined net earnings for the past three fiscal years.

(1)

Includes expenses related to manufacturing profit sharing and bonus.

Geographic Data

Net sales are attributed to geographic areas based on the destination to which products are shipped. The following table presents net sales by geographic region for the past three fiscal years:

The following table presents long-lived assets, excluding intangible assets, equity securities, investments in unconsolidated affiliates and deferred tax assets, by geographic region as of the end of the past two fiscal years:

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 Company’s 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 Kloeckner’s 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 additionalone million Kloeckner shares at €11 per share (approximately $12.7 million), bringing our total ownership to 61,710,791 Kloeckner shares representing approximately 61.87% of Kloeckner’s total outstanding share capital.

The combination of Worthington Steel and Kloeckner will broaden the value-added product offering beyond carbon-flat rolled steel products, diversify end-market exposure, and expand geographic footprint.

The net proceeds of the 2033 Notes and the Term Loan Facility, together with cash on hand, were used to fund the Kloeckner Acquisition, repay certain existing indebtedness of the Company and Kloeckner, pay related transaction fees and expenses, and for general working capital purposes.

The initial accounting for our acquisition of Kloeckner is not complete as of the date of this filing. Accordingly, the Company has not finalized the determination of the fair values of the assets acquired and liabilities assumed, and the related disclosures under ASC 805. These estimates have not been completed due to the timing of the transaction. The Company is in the process of gathering and evaluating the information necessary to finalize the accounting for this transaction. The Company expects to complete the purchase accounting during the first quarter of fiscal year 2027 within the measurement period.

In June 2026, the Company entered into a cross-currency swap to hedge foreign currency risk on a portion of the Company’s Euro net investment in Kloeckner against fluctuations in the Euro/U.S. Dollar exchange rates. The cross-currency swap has a notional value of €700.0 million to $809.8 million with a maturity date of May 31, 2031. Additionally in June 2026, the Company entered into a €100 million to $114.7 million float-for-float fair value cross currency swap with a maturity date of December 23, 2027.

On June 24, 2026, the Board declared a quarterly cash dividend of $0.16 per common share payable on September 29, 2026, to the shareholders of record at the close of business on September 15, 2026.

On June 29, 2026, Sitem Group, through its subsidiary Stanzwerk AG, entered into an Amended and Restated Standstill Agreement with UBS Switzerland AG, as agent and a syndicate of lenders, amending the original Standstill Agreement dated April 2025. Under the amended agreement, the lenders agreed to maintain the availability of the bilateral credit facilities through August 31, 2028, subject to customary events of default and other termination provisions. The amended agreement requires principal repayments of CHF 6.0 million (approximately USD $7.6 million as of May 31, 2026) on June 30, 2026 and CHF 4.0 million (approximately USD $5.1 million as of May 31, 2026) on December 31, 2026, followed by quarterly principal repayments equal to the greater of CHF 0.2 million (approximately USD $0.3 million as of May 31, 2026) or 25% of operating cash flow. Borrowings continue to bear interest at the applicable reference rate, which is based on Swiss Average Rate Overnight and has a floor of zero, plus a 500-basis point margin through December 31, 2026, decreasing to a 400-basis point margin beginning January 1, 2027. The amended agreement continues to require Stanzwerk AG to maintain a minimum equity ratio of 15% and a minimum liquidity balance of CHF 4.0 million (approximately USD $5.1 million as of May 31, 2026) through December 31, 2026, decreasing to CHF 2.0 million (approximately USD $2.5 million as of May 31, 2026) thereafter.

On July 15, 2026, the Company launched a public delisting tender offer for all outstanding Kloeckner shares not already held by the Company at a price of €11.00 per share. The delisting tender offer is not subject to any closing conditions and does not include a minimum acceptance threshold. The acceptance period runs from July 15, 2026 to August 12, 2026, 24:00 hrs (Frankfurt am Main local time) / 18:00 hrs (New York local time). The delisting tender offer provides remaining Kloeckner shareholders with an additional opportunity to tender their shares for cash consideration. Following the effectiveness of the delisting, Kloeckner shares will be removed from trading on the Regulated Market (Prime Standard) of the Frankfurt Stock Exchange, which may result in significantly reduced liquidity and limited price discovery for Kloeckner shares. The Company was required by the public delisting tender offer rules to guarantee the availability of certain funds sufficient to satisfy the potential acceptance of all outstanding Kloeckner shares not already held by the Company. The Company fulfilled this requirement using funds available from the financing transactions outlined above. Once the public delisting tender offer settles, the unallocated funds, if any, become unrestricted and available for use.

WORTHINGTON STEEL, INC. AND SUBSIDIARIES

SCHEDULE II – VALUATION AND QUALIFYING ACCOUNTS

See accompanying Report of Independent Registered Public Accounting Firm.