Worthington Steel, Inc.

Condensed Notes to CONSOLIDATED Financial Statements

Note 1 – Description of Business and Basis of Presentation

Description of Business

Worthington Steel, Inc. (“Worthington Steel,” together with its consolidated subsidiaries, the “Company”) is a value-added metals processor and service center company with a diversified range of products and services serving customers across a variety of end markets. On June 3, 2026, the Company completed the acquisition of a controlling equity interest in German-based Kloeckner (the “Kloeckner Acquisition”), significantly expanding the Company’s scale, product and service offerings, end-market exposure and geographic footprint. For additional information, see “Note 2 – Acquisitions.”

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.

Worthington Steel became an independent, publicly traded company on December 1, 2023, following its separation from Worthington Enterprises, Inc., formerly known as Worthington Industries, Inc.

Basis of Presentation

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

These interim unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the SEC. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments that are of a normal and recurring nature necessary for a fair presentation of the consolidated financial statements for these interim periods have been included. Operating results for the first quarter of fiscal 2027 are not necessarily indicative of the results that may be expected for the entirety of fiscal 2027 or any other quarter. These interim unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the 2026 Form 10-K.

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates.

On June 3, 2026, the Company completed its acquisition of a controlling interest in Kloeckner, a Germany-based metals processor with operations primarily in the United States, Mexico, and Europe. Following the acquisition, the Company held approximately 60.86% of Kloeckner’s outstanding share capital and began consolidating Kloeckner’s results of operations and financial position. On June 15, 2026, the Company acquired additional Kloeckner shares, increasing its ownership to approximately 61.87% of Kloeckner’s outstanding share capital. For additional information, see “Note 2 – Acquisitions.”

The Company owns controlling interests in the following additional four operating joint ventures: Spartan Steel Coating, L.L.C. (“Spartan”) (52% interest); TWB Company, L.L.C. (“TWB”) (55% interest); Worthington Samuel Coil Processing, L.L.C. (“WSCP”) (63% interest); and S.I.T.E.M. S.p.A., a joint stock company incorporated under the laws of Italy (“Sitem” and, together with its subsidiaries, Stanzwerk AG, Decoup S.A.S. and Sitem Slovakia spol. s r.o., the “Sitem Group”) (52% interest). The Company also owns a controlling interest (51% interest) in Worthington Specialty Processing (“WSP”), which became a nonoperating 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’sconsolidated statements of earnings and comprehensive income, respectively.

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 owns a noncontrolling interest (50%) inone unconsolidated joint venture: Serviacero Planos, S. de R.L. de C.V. (“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 (loss) of unconsolidated affiliate (“equity income”) in its consolidated statements of earnings. Distributions received are recognized as a reduction in the carrying amount of the investment. The Company evaluates events occurring during the reporting lag to determine whether the effects of any material events should be reflected in its consolidated financial statements. The Company received a $22.0 million dividend from Serviacero Worthington during the current one-month lag reporting period that was reflected as a reduction in the carrying amount of the investment in the consolidated balance sheet. See further discussion of the Company’s unconsolidated affiliate in “Note 4 – Investments.”

Discontinued Operations

In connection with the Kloeckner Acquisition, the Company acquired certain Kloeckner business units that met the held-for-sale criteria under Accounting Standards Codification (“ASC”) Topic 360, Property, Plant, and Equipment (“ASC 360”) as of the acquisition date, including Becker Stahl-Service GmbH and its related steel service center operations (the “Kloeckner Disposal Group”). In accordance with ASC Topic 805, Business Combinations (“ASC 805”), the Kloeckner Disposal Group was classified and measured at fair value less costs to sell as of the acquisition date. Management has committed to a plan to sell the Kloeckner Disposal Group, and expects the sale to be completed before the end of fiscal 2027.

Unless otherwise indicated, amounts and disclosures included in the interim condensed consolidated financial statements relate to the Company’s continuing operations and exclude amounts attributable to discontinued operations. For additional information, see “Note 18 – Discontinued Operations and Assets and Liabilities Held for Sale.”

New Accounting Policies

The Company has updated the following significant accounting policies in the first quarter of fiscal 2027 following the acquisition of Kloeckner. There have not been any other material changes to the significant accounting policies included in the 2026 Form 10-K.

Inventories

Inventories are valued at the lower of cost or net realizable value. Cost for inventories of Worthington Steel is determined using the first-in, first-out method. Cost for inventories of Kloeckner is determined primarily using the monthly moving-average method, with specific identification used for certain 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.

Investments Measured at Net Asset Value

In connection with the Kloeckner Acquisition, the Company acquired investments in venture capital and growth equity funds. These are measured using net asset value (“NAV”) per share (or its equivalent) as a practical expedient under ASC Topic 820, Fair Value Measurement (“ASC 820”), where the investee's NAV is calculated consistent with ASC Topic 946, Financial Services—Investment Companies (“ASC 946”). Changes in NAV are recognized in net earnings within miscellaneous income (expense), net, consistent with the Company's policy for equity securities. Investments are classified as current or non-current based on management's intent and expected timing of sale. Prior-period financial statements were not recast, as the Company held no investments measured using the NAV practical expedient in prior periods. For additional information, see “Note 15 – Fair Value.”

Supplemental cash flow information

The following table summarizes supplemental cash flow information for the periods presented:

Concentration of Net Sales and Equity Securities

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 influenced by the production schedules of Ford, General Motors and Stellantis North America (the “Detroit Three Automakers”).

While the Company’s business is not dependent on any one customer, the Company has significant concentrations of net sales within the automotive end market and with the Detroit Three Automakers. A significant loss of, or decrease in, business from these customers could have an adverse effect on the Company’s consolidated net sales and financial results if the Company were not able to obtain replacement business.

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

No individual customer accounted for 10% or more of consolidated net sales during thethree months ended August 31, 2026. During the three months ended August 31, 2025, net sales totwo customers represented approximately 13% and 15% of consolidated net sales, respectively.

Equity Securities

As of May 31, 2026, the Company’s equity securities were comprised exclusively of Kloeckner shares. As a result of the Kloeckner Acquisition, the Company began consolidating Kloeckner’s results of operations and financial position. As of August 31, 2026, the Company is no longer subject to the fluctuation in the fair value of these securities based on market conditions and issuer-specific developments. Refer to “Note 2 – Acquisitions” for additional information.

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

Recent Accounting Pronouncements

There have been no new accounting standards adopted since the filing of the 2026 Form 10-K that have significance, or potential significance, to the interim condensed consolidated financial statements.

New Accounting Pronouncements Not Yet Adopted

Disaggregation of Income Statement Expenses – In November 2024, the FASB issued 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 statement 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. ASU 2025-06 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. 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

On June 3, 2026, the Company completed the acquisition of 52.52% of the issued and outstanding shares of Kloeckner, a German-based metals processor with operations in North America and Europe. The Company conducted a voluntary public cash takeover offer to all Kloeckner shareholders to tender each issued and outstanding share of Kloeckner to the Company for cash consideration of €11.00 per Kloeckner share, subject to increases made voluntarily or as required under applicable German law. Combined with the Company’s previously held equity interest in Kloeckner shares, the Company held approximately 60.86% of Kloeckner’s outstanding share capital immediately following the acquisition. As of the date of the Kloeckner Acquisition, the Company obtained a controlling financial interest and began consolidating Kloeckner’s results of operations and financial position. The Company accounted for the transaction as a business combination in accordance with ASC 805.

The acquisition advances the Company's growth strategy by broadening its value-added product offerings, diversifying its end-market exposure and geographic footprint, and significantly increasing the scale of its metals processing operations. The combination is also expected to provide opportunities for operational efficiencies and further growth.

Immediately prior to the Acquisition Date, the previously held Kloeckner shares were accounted for as an equity security investment (see Note 4 – “Investments” in the Company’s Form 10-K for the year ended May 31, 2026). The Company remeasured its previously held equity interest to fair value as of the acquisition date, resulting in a loss of $15.5 million, which is reflected within miscellaneous income (expense), net for the quarter ended August 31, 2026.

On June 15, 2026, an additionalone million Kloeckner shares were acquired at €11.00 per share (approximately $12.7 million), bringing the Company’s total ownership to 61.87% of Kloeckner’s total outstanding share capital.

On July 15, 2026, the Company commenced a public delisting tender offer for all outstanding Kloeckner shares not already held by the Company at a price of €11.00 per share (“Delisting Tender Offer”). The acceptance period ended on August 12, 2026, and Kloeckner’s shares were delisted from the regulated market of the Frankfurt Stock Exchange effective August 12, 2026. Upon settlement of the Delisting Tender Offer, the Company acquired 242,446 additional Kloeckner shares for aggregate consideration of approximately €2.7 million (approximately $3.2 million), increasing the Company’s total ownership interest to approximately 62.11%.

Consideration Transferred & Purchase Price Allocation

The following table summarizes the consideration transferred and the estimated fair value assigned to the assets acquired and liabilities assumed at the Kloeckner Acquisition. These amounts reflect various preliminary fair value estimates and assumptions, including preliminary work performed by a third-party valuation specialist, and are subject to change within the measurement period as the valuation is finalized. The primary areas of preliminary purchase price allocation subject to change relate to the valuation of acquired tangible assets and liabilities, identification and valuation of residual goodwill and tax effects of acquired assets and assumed liabilities.

The fair value of the previously held equity interest and the noncontrolling interest were both measured using the €11.00 per share price offered in the Delisting Tender Offer, a Level 2 input. Based on the preliminary purchase price allocation, the consideration transferred was fully allocated to the identifiable assets acquired and liabilities assumed. Accordingly, no goodwill or bargain purchase gain was recognized.

The Company incurred acquisition-related expenses for the Kloeckner Acquisition of $22.6 million during the three months ended August 31, 2026, which are included inselling, general and administrative expense (“SG&A”) in the condensed consolidated statements of earnings, consisting primarily of legal, advisory, and valuation services.

Operating results of Kloeckner have been included in the Company’s condensed consolidated statements of earnings since June 3, 2026, the Acquisition Date. For the three months ended August 31, 2026, Kloeckner contributed net sales of $1,772.7 million and net earnings attributable to controlling interest from continuing operations of $4.5 million, which includes the impact of the intercompany activity between Legacy Worthington Steel and Kloeckner that is eliminated in consolidation.

Pro Forma Information

The following unaudited pro forma information presents consolidated results as if the acquisition of Kloeckner had occurred on June 1, 2025, the beginning of fiscal 2026. The pro forma information reflects preliminary fair value adjustments, including depreciation and amortization of the fair value adjustments to property, plant and equipment and identifiable intangible assets, interest expense on the new financing, and the related tax effects, net of the portion attributable to noncontrolling interests. Pro forma net earnings attributable to controlling interest from continuing operations for the three months ended August 31, 2025 include nonrecurring acquisition-related transaction costs, net of tax. Pro forma net earnings attributable to controlling interest from continuing operations for the three months ended August 31, 2026 exclude transaction costs recognized in the current quarter and the remeasurement of the previously held equity interest, net of tax. The pro forma information is presented for informational purposes only and is not necessarily indicative of the results of operations that would have been achieved had the acquisition occurred on June 1, 2025, nor of future results.

Sitem Group (Fiscal 2026)

On June 3, 2025, the Company completed its acquisition of 52% of Sitem Group, a producer of electric motor laminations and accessory products primarily for automotive and industrial applications in Europe. During fiscal 2026, the Company finalized the valuation of the assets acquired and liabilities assumed, including the related net financial position and tax-related measurement period adjustments; no further measurement period adjustments were recorded in the current quarter. The Company incurred acquisition-related expenses for the Sitem Group acquisition of $0.4 million during the three months ended August 31, 2025, which are included in SG&A in the condensed consolidated statements of earnings, consisting primarily of legal, advisory, and valuation services. There was a one-time bonus of €4.0 million ($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 in the consolidated statement of earnings.

See the Company’s Annual Report on Form 10-K for the fiscal year ended May 31, 2026 for additional information regarding this acquisition. See also “Note 10 – Equity and Mezzanine Equity” for information regarding the redeemable noncontrolling interest and related put and call options associated with this transaction.

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 primarily by processing flat-rolled steel coils into the precise type, thickness, length, width, shape, and surface quality required by customer specifications, and by distributing steel and other metal products and providing related processing services to customers primarily in North America and Europe, sourcing material from a global network of steel mills and other producers. 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 fee-for-service arrangements on customer-owned material. Toll processing revenue is recognized over time. All other revenue is recognized at a point in time, generally upon shipment to the customer.

The following table summarizes net sales by product class for the periods presented:

The following table summarizes the unbilled receivables and contract assets at the dates indicated:

The following table summarizes the changes in contract liabilities for the periods presented:

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 August 31, 2026, the Company owns a noncontrolling interest (50%) inone unconsolidated joint venture, Serviacero Worthington. Serviacero Worthington provides steel processing services, such as pickling, blanking, slitting, multi-blanking andcutting-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 a distribution of $22.0 million from Serviacero Worthington during thethree months ended August 31, 2026. No distributions were received during thethree months ended August 31, 2025. The gross distribution to the members of Serviacero Worthington during the three months ended August 31, 2026 was $44.0 million, of which the Company received $22.0 million. This distribution was reported as a reduction of the Company’s investment in unconsolidated affiliate balance but is not reflected in the summarized financial information presented below because it occurred during the lag period.

The following tables summarize certain financial information of Serviacero Worthington as of the dates, and for the periods presented:

(1)

Excludes the impact of a $44.0 million distribution paid in cash to members in August 2026 due to reporting Serviacero Worthington on a one-month lag.

The following table presents the net earnings of Serviacero Worthington attributable to the Company for the periods presented:

Equity securities

The following table summarizes the equity securities, all of which were Kloeckner shares, at the dates indicated:

Amounts presented as net gains (losses) on equity securities reflect changes in fair value and exclude transaction costs, which are expensed as incurred. The following table summarizes the net gains and losses recognized in miscellaneous income (expense), net, for the periods presented:

(1)

The realized loss recognized during the three months ended August 31, 2026 relates to the remeasurement of the Company's previously held equity interest in Kloeckner to its acquisition-date fair value in connection with the Company's acquisition of a controlling interest in Kloeckner. The remeasurement resulted from the difference between the carrying value of the Company's previously held interest and its acquisition-date fair value.

For additional information, see “Note 2 – Acquisitions” and “Note 15 – Fair Value.”

Note 5 – Restructuring and Other (Income) Expense, Net

The Company considers restructuring activities to be programs whereby it fundamentally changes its operations, such as divestitures, closing or consolidating facilities, employee severance (including rationalizing headcount or other significant changes in personnel), and realignment of existing operations (including changes to management structure in response to underlying performance and/or changing market conditions).

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

During the three months ended August 31, 2026, the following actions were taken related to our restructuring activities:

•

The Company acquired a controlling interest in Kloeckner during the first quarter of fiscal 2027, which included pre-existing restructuring and other related activities. During the first quarter of fiscal 2027, restructuring and other related activities at Kloeckner included a net gain on the sale of certain assets associated with the closure of the Shreveport, Louisiana and Frenkendorf, Switzerland facilities, as well as employee-related costs and consulting and other professional fees associated with corporate restructuring activities. The $1.3 million of costs recognized relate to the costs incurred after the Kloeckner Acquisition, and the Company doesnot expect to incur additional material restructuring costs related to these activities.

•

The Company made early retirement and severance payments of $0.1 million associated with a TWB voluntary retirement program (“VRP”). Under the terms of the VRP, eligible TWB employees in the U.S. who chose to participate in the program were offered severance based on their years of service. The VRP was closed to employee acceptance during the fourth quarter of fiscal 2025. The Company doesnot expect to incur additional material severance expenses related to the VRP.

•

During the first quarter of fiscal 2027, the Company made the final severance payments associated with its previously announced plans to consolidate WSCP's remaining Cleveland, Ohio toll processing manufacturing facility into WSCP's existing manufacturing facility in Twinsburg, Ohio. No further material costs are expected in connection with these activities.

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 as of the dates presented, is summarized below:

During the three months ended August 31, 2025, the following actions were taken related to our restructuring activities:

•

The Company made early retirement and severance payments of $0.4 million associated with the TWB VRP during the first quarter of fiscal 2026.

•

The Company made severance payments of $0.4 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 2026 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.

The Company expects substantially all of the remaining restructuring liability as of August 31, 2026, to be paid in the next 12 months.

Note 6 – Contingent Liabilities and Commitments

Contingent Liabilities

The Company accrues for loss contingencies when losses are probable and reasonably estimable. Otherwise, the Company discloses the matter if there is a reasonable possibility that a loss may have occurred.

The Company is a defendant in certain legal proceedings that are incidental to its business. In the opinion of management, the outcome of these legal proceedings, which is not clearly determinable at the present time, individually and in the aggregate, would not have a material adverse effect on the Company, its consolidated financial position, future results of operations or cash flows. The Company has recorded a liability, as necessary, to provide for the anticipated costs, including legal defense costs, associated with the resolution of these legal proceedings. However, the possibility exists that the costs to resolve these legal proceedings could differ materially from the recorded estimates and, therefore, could have a material effect on the Company, its consolidated financial position, future results of operations or cash flows for the periods in which they are resolved. 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 loss is reasonably possible and the amount of such 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.

Note 7 – Guarantees

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

At August 31, 2026, the Company had in place outstanding stand-by letters of credit in the aggregate amount of approximately $40.9 million, issued as security for certain insurance, supply, and other contractual obligations of the Company. This amount represents the maximum potential undiscounted future payments the Company could be required to make under these instruments. These letters of credit would be drawn upon only if the Company failed to satisfy the underlying obligation to which the applicable letter of credit relates, which the Company considers remote. No amounts were drawn against any of these instruments at August 31, 2026, and these instruments are generally subject to annual renewal.

Note 8 – Debt

The following table summarizes the Company’s debt outstanding at the dates presented:

Foreign currency-denominated borrowings are translated at the applicable reporting period exchange rates, with translation adjustments recorded in accumulated other comprehensive income (loss) (“AOCI”).

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

As of August 31, 2026, there were $541.6 million of short-term borrowings and current maturities of long-term debt due in the next year.

Short-Term Borrowings

Revolving Credit Facility

On June 25, 2026, the Company entered into an asset-based revolving credit agreement (the “2031 Revolving Credit Facility”) which refinanced and replaced its previous revolving credit facility. The 2031 Revolving Credit Facility provides capacity of up to$550.0 million subject to borrowing base availability and other conditions, and matures on June 25, 2031. At August 31, 2026 there wereno outstanding borrowings drawn against the 2031 Revolving Credit Facility. After accounting for the eligible borrowing base, at August 31, 2026 availability under the 2031 Revolving Credit Facility was$418.4 million. The facility also provides for swingline loans and letters of credit. The Company incurred approximately $4.4 million of issuance costs which will be amortized to interest expense over the expected five-year term of the facility.

Borrowings under the 2031 Revolving Credit Facility bear interest, at the Company’s option, at a per annum rate equal to (A) (i) the base rate equal to the greatest of: (a) the prime rate, (b) the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System plus 0.50% and (c) 1-month term Secured Overnight Financing Rate (“SOFR”) plus 1.0%, subject to a floor of 1%, plus (ii) an applicable rate of 0.250% or 0.375% which fluctuates based on the average excess availability under the 2031 Revolving Credit Facility; or (B) 1, 3 or 6-month term SOFR or Daily Simple SOFR, subject to a floor of 0%, plus an applicable rate of 1.250% or 1.375% which fluctuates based on the average excess availability under the 2031 Revolving Credit Facility.

The 2031 Revolving Credit Facility is secured by a lien on substantially all of the assets of the Company and the guarantors, subject to permitted liens and certain other exceptions. The Company currently has no material contractual or regulatory restrictions on the payment of dividends under the 2031 Revolving Credit Facility, subject to compliance with the applicable conditions and limitations thereunder. As of August 31, 2026, the Company was in compliance with applicable covenants of the 2031 Revolving Credit Facility.

Prior Credit Facility

The Company’s prior senior secured revolving credit facility (the “2028 Revolving Credit Facility”) provided capacity of up to $550.0 million and was scheduled to mature on November 30, 2028. The 2028 Revolving Credit Facility was terminated and fully repaid on June 25, 2026 in connection with the Company’s entry into the 2031 Revolving Credit Facility.

At May 31, 2026, there was $185.4 million of outstanding borrowings drawn against the 2028 Revolving Credit Facility. After accounting for the eligible borrowing base, at May 31, 2026, availability under the 2028 Revolving Credit Facility was$219.5 million. Individual amounts drawn under the 2028 Revolving Credit Facility accrued interest at rates equal to an applicable margin over the one-, three-, or six-month term SOFR Rate, plus a SOFR adjustment. The Company incurred approximately $2.7 million of issuance costs in connection with the 2028 Revolving Credit Facility, of which $1.3 million remained unamortized at the time of its termination and were recognized in interest expense upon termination. As of May 31, 2026, the weighted average interest rate on the outstanding interest-bearing debt under the 2028 Revolving Credit Facility was 5.22%.

Kloeckner Short-term Debt

The Company assumed the liabilities of Kloeckner as part of the acquisition and recorded Kloeckner’s liabilities within the Company’s consolidated balance sheet. Kloeckner’s short-term obligations included various loans discussed below. Kloeckner was in compliance with its financial covenants as of August 31, 2026.

ABS Germany Program

Kloeckner maintains an asset-backed securitization program in Europe (the “ABS Germany Program”) under which eligible trade receivables originated by certain subsidiaries are sold to a securitization vehicle and financed through arrangements with Commerzbank. The program has been amended and extended from time to time and currently provides capacity of up to€60.0 million (approximately USD$69.7 million as of August 31, 2026). The ABS Germany Program matures on July 25, 2028 and provides the company with funds for refinancing of trade receivables. At August 31, 2026 there was€41.0 million (approximately USD$47.7 million as of August 31, 2026) of outstanding borrowings drawn against the ABS Germany Program. After accounting for the eligible borrowing base, availability under the ABS Germany Program was €2.6 million ($3.2 million) as of August 31, 2026.

Borrowings under the ABS Germany Program bear interest at EURIBOR plus a margin of 1.30% per annum. As of August 31, 2026, the weighted average interest rate on the outstanding interest-bearing debt under the program was 3.65%. The ABS Germany Program contains customary termination provisions, including certain receivables performance thresholds related to dilution, delinquency and default ratios, and includes financial covenants that, to the extent applicable, are consistent with those under the German RCF.

ABL USA

On November 16, 2020, Kloeckner, through its subsidiary Kloeckner Metals Corporation, entered into an asset-based lending credit agreement (the “ABL USA Facility”) with Bank of America, N.A. as administrative agent and collateral agent. During 2022, the facility was amended to increase the facility capacity to$650.0 million, and to extend the maturity to July 14, 2027. The ABL USA Facility is secured by a continuing lien on all personal property of each obligor under the facility, including, among other things, a lien on stock issued by the borrowers and certain subsidiaries, inventories and accounts receivable. At August 31, 2026, there were$465.0 million of outstanding borrowings drawn against the ABL USA Facility. After accounting for the eligible borrowing base and outstanding letters of credit, availability under the ABL USA Facility was $138.5 million as of August 31, 2026.

The ABL USA Facility includes base rate loans and term SOFR loans. Base rate loans bear interest at a base rate in effect from time to time plus a margin of up to 0.50%. Term SOFR loans bear interest at a rate per annum equal to term SOFR for the relevant interest period plus a margin of up to 1.50%. As of August 31, 2026, the weighted average interest rate on the outstanding interest-bearing debt under the facility was 5.17%.

Austria Bank Loans

Kloeckner, through its subsidiary Kloeckner Metals Austria GmbH & Co KG, maintains bilateral term loans (the “Austria Bank Loans”) with Oberbank AG. At August 31, 2026, the Austria Bank Loans were fully drawn with an aggregate outstanding balance of€15.7 million (approximately USD$18.2 million as of August 31, 2026). The loans have varying maturities ranging from September 2026 through December 2026. Borrowings under the Austria Bank Loans bear interest at a rate between 2.45% and 3.67%. As of August 31, 2026, the weighted average interest rate on the outstanding interest-bearing debt under the facility was 2.93%.

Long-Term Debt

Business Development Bank of Canada Canadian Loan

On March 25, 2025, Tempel Canada entered into a letter of offer (“BDC Letter”) with Business Development Bank of Canada (“BDC”). Pursuant to the terms of the BDC Letter, BDC committed to lend Tempel Canada up to CAD$57.5 million (approximately USD $41.2 million as of August 31, 2026) (“BDC Loan”), 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 (“Burlington Property”).

The BDC Loan is structured as a construction draw loan. The loan was fully drawn as of August 31, 2026. Monthly interest only payments were due until July 1, 2026, at which point the BDC Loan was also subject to monthly amortization payments until maturity. The BDC Loan will accrue interest 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 during the first quarter of fiscal 2026, the guarantee is for the full outstanding 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$28.9 million as of August 31, 2026), subject to the satisfaction of certain conditions. 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 August 31, 2026, the amount outstanding under the BDC Loan was $41.2 million, while the amount as of May 31, 2026 was$36.4 million.

Other Canadian Government Loans

Tempel Canada has entered into two interest-free loan arrangements with Canadian federal and provincial government agencies to support advanced manufacturing equipment purchases and facility expansion at its Burlington Property. These arrangements provide for aggregate funding commitments of up to CAD $8.5 million (approximately USD $6.1 million as of August 31, 2026), of which approximately USD $4.3 million and USD $4.1 million were outstanding as of August 31, 2026 and May 31, 2026, respectively. Additional funding is expected to be received as project milestones and eligible expenditures are completed.

The loans require repayment in various installments beginning in 2027 through 2032. One of the loan arrangements bears no interest until June 1, 2028, after which it accrues interest at a fixed rate of 5.97%. Certain amounts under this loan may be eligible for forgiveness upon achievement of specified performance targets; however, the Company will continue to recognize the full liability until the applicable forgiveness conditions are satisfied. No debt issuance costs were incurred in connection with these loan arrangements.

2033 Senior Notes

On June 1, 2026, the Company issued $700.0 million aggregate principal amount 7.75% senior secured notes due June 1, 2033 (the “2033 Senior Notes”). Interest on the 2033 Senior Notes is payable semi-annually on June 1 and December 1 of each year, beginning December 1, 2026. The 2033 Senior Notes and related guarantees are secured by liens on substantially all of the assets of the Company and the subsidiary guarantors, subject to certain exceptions, permitted liens and intercreditor arrangements. The indenture governing the 2033 Senior Notes contains customary restrictive covenants that, subject to specified exceptions, limit the Company's ability to incur additional indebtedness, create liens, make restricted payments and investments, dispose of assets and enter into certain other transactions. Certain permitted transactions are subject to incurrence-based financial tests. The Company was in compliance with the applicable covenants as of August 31, 2026. The net proceeds were used to fund a portion of the cash consideration for the Kloeckner Acquisition. The Company incurred approximately $13.0 million of debt issuance costs related to the offering, which are presented as a direct deduction from the carrying amount of the debt and are being amortized to interest expense over the term of the notes using the effective interest method.

Term Loan Facility

On June 1, 2026, the Company entered into a $700.0 million aggregate principal amount seven-year term loan facility due June 1, 2033 (the “Term Loan Facility”). The Term Loan Facility bears 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%. The Term Loan Facility is secured by liens on substantially all of the assets of the Company and its wholly owned material subsidiaries that are guarantors, subject to certain exceptions, permitted liens and intercreditor arrangements. The Term Loan Facility contains customary affirmative and negative covenants, including restrictions on indebtedness, liens, investments, restricted payments, asset dispositions and certain other transactions. The Term Loan Facility does not contain a financial maintenance covenant, although certain permitted transactions are subject to incurrence-based financial tests. The Company was in compliance with the applicable covenants as of August 31, 2026. The net proceeds were used to fund a portion of the cash consideration for the Kloeckner Acquisition. The Company incurred approximately $21.6 million of debt issuance costs related to the offering, which are presented as a direct deduction from the carrying amount of the debt and are being amortized to interest expense over the term of the Term Loan Facility using the effective interest method.

Under the terms of the Term Loan Facility, the Company may voluntarily prepay outstanding borrowings, in whole or in part, at any time without premium or penalty, subject to customary notice requirements. On August 19, 2026, the Company made a $200.0 million voluntary principal repayment, reducing the outstanding principal balance. Following the repayment, $500.0 million was outstanding under the Term Loan Facility as of August 31, 2026.

Kloeckner Long-term Debt

The Company assumed the liabilities of Kloeckner as part of the acquisition and recorded Kloeckner’s liabilities within the Company’s consolidated balance sheet. Kloeckner’s obligations included various long-term loans discussed below. Kloeckner was in compliance with its financial covenants as of August 31, 2026.

German Syndicated Revolving Credit Facility

On May 23, 2013, Kloeckner entered into a syndicated revolving credit facility agreement (the “German RCF”) with Commerzbank Aktiengesellschaft as agent. On May 8, 2026, Kloeckner entered into a fifth amendment and restatement agreement which reduced commitments under the facility to€150.0 million (approximately USD$174.3 million as of August 31, 2026). The German RCF also permits ancillary facilities (including overdraft, guarantee, bonding, documentary or stand-by letter of credit, derivatives and foreign exchange facilities) in an aggregate amount of up to €50.0 million. The German RCF matures on June 3, 2028 and provides the company with funds for general corporate purposes. At August 31, 2026 there was€110.1 million (approximately USD$127.9 million as of August 31, 2026) of outstanding borrowings drawn against the German RCF. After accounting for the eligible borrowing base, availability under the German RCF was €39.9 million ($46.4 million) as of August 31, 2026.

Borrowings under the German RCF bear interest at a rate per annum equal to EURIBOR for the relevant interest period (subject to a 0.00% floor) plus a margin of 3.50%. Kloeckner is required to pay a commitment fee of 1.225% per annum on each lender’s undrawn commitments, payable quarterly in arrears.

The German RCF contains financial covenants requiring Kloeckner to maintain (i) a gearing ratio, defined as consolidated net debt to consolidated equity, of no more than 1.50x, (ii) consolidated equity of at least €500.0 millionand (iii) compliance with a borrowing base, which would require that outstanding loans and other applicable amounts may not exceed a borrowing base determined principally by reference to eligible receivables and inventory, net of certain priority obligations. A breach of the gearing ratio or minimum consolidated equity covenant, or a borrowing base shortfall, may result in a mandatory prepayment obligation.

Swiss Syndicated Revolving Credit Facility

On January 7, 2025, Kloeckner, through its subsidiary Debrunner Koenig AG, entered into an unsecured syndicated loan agreement (the “Swiss RCF”) with Zürcher Kantonalbank as agent. The Swiss RCF provides capacity of up to CHF 200.0 million (approximately USD$247.4 million as of August 31, 2026) and matures on January 7, 2029. The facility is available in CHF and EUR (up to €50.0 million) and provides Kloeckner with funds for general corporate purposes. At August 31, 2026 there was CHF 155.0 million (approximately USD$191.8 million as of August 31, 2026) of outstanding borrowings drawn against the Swiss RCF. After accounting for the eligible borrowing base, availability under the Swiss RCF was CHF 45.0 million ($55.7 million) as of August 31, 2026.

Borrowings under the Swiss RCF bear interest at a rate per annum equal to compounded SARON for CHF and EURIBOR for EUR for the relevant interest period plus a margin of up to 3.30% depending on the net leverage ratio of the Swiss subgroup.

ABL Mexico

On September 4, 2024, Kloeckner, through its subsidiary Kloeckner Metals Service Centers De Mexico, S. De R.L. De C.V., entered into an asset-based lending credit agreement (the “ABL Mexico Facility”) with Banco Santander México, S.A. as

administrative agent and collateral agent. The ABL Mexico Facility provides capacity of up to$115.0 million and matures on September 4, 2027. The ABL Mexico Facility is secured by inventories and accounts receivable. At August 31, 2026 there was $112.0 million of outstanding borrowings drawn against the ABL Mexico Facility. After accounting for the eligible borrowing base, availability under the ABL Mexico Facility was $3.0 million as of August 31, 2026.

Borrowings under the ABL Mexico Facility bear interest at a rate per annum equal to Term SOFR for the relevant interest period plus a margin of up to 2.45% depending on the leverage ratio of the Mexican subgroup.

Subsequent to August 31, 2026, the Company amended its ABL Mexico Facility. For additional information, see “Note 19 – Subsequent Events”.

Term Loans – Sitem Group

Sitem Group’s obligations include various secured and unsecured Euro-denominated term loans with maturities ranging from September 2026 through September 2030. At August 31, 2026, there was an aggregate amount of€6.9 million (approximately USD$8.0 million as of August 31, 2026) of borrowing outstanding under the term loans. Borrowings under the term loans bear interest at varying rates, including fixed interest rates ranging from 0.36% to 1.94%, and variable interest rates ranging from Euribor 3m/360 +1.20% to Euribor 3m/360 +1.65%. The term loans have periodic payments due until maturity. During the first quarter of fiscal 2027, one loan was fully repaid at the expected maturity date. Sitem Group was in compliance with its financial covenants as of August 31, 2026.

Standstill Agreement – Sitem Group

In April 2025, Sitem Group, through its subsidiary Stanzwerk AG, entered into a standstill agreement (the "Standstill Agreement") with UBS Switzerland AG, as agent, and a syndicate of lenders, relating to bilateral credit facilities originally provided to Stanzwerk AG in the aggregate principal amount of CHF 17.1 million (approximately USD$21.1 million as of August 31, 2026).

On June 29, 2026, the parties entered into an Amended and Restated Standstill Agreement, which extended the availability of the bilateral credit facilities through August 31, 2028, subject to customary events of default and other termination provisions. The amended agreement also requires principal repayments of CHF 6.0 million (approximately USD$7.4 million as of August 31, 2026) on June 30, 2026 and CHF 4.0 million (approximately USD$4.9 million as of August 31, 2026) on December 31, 2026, followed by quarterly principal repayments equal to the greater of CHF 0.2 million (approximately USD$0.2 million as of August 31, 2026) or 25% of operating cash flow. After making the required principal repayment on June 30, 2026, the remaining principal outstanding as of August 31, 2026 amounted to CHF 11.1 million (approximately USD$13.7 million as of August 31, 2026).

The Standstill Agreement provides for the continued use of the facilities solely for loan advances and requires pro rata utilization of the credit lines across participating lenders. Borrowings continue to bear interest at the applicable reference rate, based on the Swiss Average Rate Overnight ("SARON"), subject to a zero floor, plus a 500-basis point margin through December 31, 2026, decreasing to a 400-basis point margin beginning January 1, 2027. The agreement also provides for a 0.25% quarterly commission on overdraft balances.

The Amended and Restated Standstill Agreement contains financial covenants requiring Stanzwerk AG to maintain (i) a minimum equity ratio of 15%, tested quarterly, and (ii) minimum liquidity of CHF 4.0 million (approximately USD$4.9 million as of August 31, 2026) through December 31, 2026, decreasing to CHF 2.0 million (approximately USD$2.5 million as of August 31, 2026) thereafter. Stanzwerk AG was in compliance with these covenants as of August 31, 2026.

Other Debt

The Company, through certain foreign subsidiaries, maintained short-term credit facilities and overdraft agreements with an aggregate borrowing capacity of$25.9 million and$25.8 million at August 31, 2026 and May 31, 2026, respectively. None of the Company’s foreign subsidiaries had outstanding borrowings under these agreements as of August 31, 2026 or May 31, 2026.

Note 9 – Other Comprehensive Income (Loss)

Other Comprehensive Income (Loss): The following table summarizes the tax effects on each component of OCI for the periods presented:

Accumulated Other Comprehensive Income (Loss): The following table summarizes the changes in AOCI for the periods presented:

(1)

Theconsolidated statements of earnings classification of amounts reclassified to net earnings include:

a.

Cash flow hedges – See the disclosure in “Note 14 – Derivative Financial Instruments and Hedging Activities”.

b.

Pension liability adjustment - During the first quarter of fiscal 2027, the Company recognizeda $1.2 million curtailment gain related to the Stanzwerk AG pension plan resulting from a restructuring initiative that significantly reduced expected future service for certain plan participants. A portion of the curtailment gain will be recognized in future periods as affected employees terminate employment.

Note 10–Equity and Mezzanine Equity

Equity

Shortfall Recovery Arrangement: During the third quarter of 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 August 31, 2026, the remaining income shortfall was $4.6 million and the cash shortfall had been fully recovered.

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 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 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 statements of earnings also include amounts attributed to noncontrolling interests for other consolidated subsidiaries.

Mezzanine Equity

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 period 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 statement of equity and mezzanine equity.

Note 11– Income Taxes

The Company’s effective income tax rate (“ETR”) was 100.7% and 26.6% for the first quarter of fiscal 2027 and fiscal 2026, respectively.

The ETR for the first quarter of fiscal 2027 differed from the statutory rate primarily due to tax effects associated with the acquisition of Kloeckner. The ETR for the first quarter of fiscal 2026 differed from the statutory rate primarily due to non-deductible executive compensation, revaluation of a German net operating loss carryforward due to the Sitem Group transaction, and income from unconsolidated joint ventures outside the U.S. recognized net of tax.

The provision for income taxes is based on the Company’s current estimate of its annual ETR, adjusted to reflect the impact of discrete items. Net earnings attributable to NCI primarily relate to the Company’s consolidated joint ventures. The income tax treatment of earnings attributable to noncontrolling interests depends on the tax classification of the underlying entity.

Certain of the Company’s U.S. joint ventures are treated as partnerships for U.S. income tax purposes and generally are not themselves subject to U.S. federal income tax. Accordingly, the Company recognizes income tax expense on its share of the taxable income of these joint ventures, while the portion attributable to noncontrolling interests is generally taxable directly to the other joint venture investors. In contrast, consolidated entities that are subject to corporate income tax recognize income tax expense at the entity level. Accordingly, the income tax expense of these entities is fully reflected in the Company’s consolidated income tax provision, including tax expense associated with earnings ultimately attributable to noncontrolling interests.

Management estimates the annual ETR based on its forecast of annual pre-tax income for domestic and foreign operations. The Company’s actual ETR for fiscal 2027 could differ materially from the estimated rate as of August 31, 2026.

Note 12 – Employee Retirement Plans

In connection with the acquisition of Kloeckner, the Company assumed sponsorship of various defined benefit pension plans covering certain current and former employees of Kloeckner, primarily located in the United States, Switzerland, Germany, Austria, and Mexico (the “Kloeckner Plans”).

The Kloeckner Plans were remeasured as of the Kloeckner Acquisition date. The Kloeckner Plans are accounted for in accordance with ASC Topic 715 Compensation—Retirement Benefits. The Company does not remeasure the Kloeckner Plans on an interim basis absent a triggering event, such as a plan amendment, curtailment, or settlement. During the first quarter of fiscal 2027, the Company did not identify triggering events that would have required the remeasurement of the Kloeckner Plans.

As of the Kloeckner Acquisition date, the Company assumed U.S. defined benefit pension plans with an overfunded status of $0.1 million and defined benefit pension and other postretirement benefit plans with an underfunded status of $10.3 million, and non-U.S. defined benefit pension plans with an overfunded status of $333.8 million and an underfunded status of $8.7 million.

The Stanzwerk AG pension plan, assumed in the Sitem Group acquisition, is a funded defined benefit pension plan in Switzerland covering eligible employees. The plan’s assets are managed by a collective trust. During the first quarter of fiscal 2027, the Company recognized a $1.2 million curtailment gain 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. A portion of the curtailment gain will be recognized in future periods as affected employees terminate employment.

There have been no material changes to the Company's previously existing defined benefit pension and other postretirement benefit plans, including the Stanzwerk AG pension plan assumed in the Sitem Group acquisition, the Tempel Employees Pension Plan, and the pension obligation assumed in the Voestalpine Nagold acquisition, since May 31, 2026. See “Note 12 – Defined Benefit Pension Plans” in the Company's Annual Report on Form 10-K for the fiscal year ended May 31, 2026 for additional information.

Net Periodic Benefit Cost

Net periodic pension and other postretirement benefit cost (benefit) for the periods presented below were as follows:

The service cost component is included in cost of goods sold and selling, general and administrative expense. The non-service cost components – interest cost, expected return on plan assets, and amortization of actuarial gains and losses – are included in miscellaneous income (expense), net.

Contributions

The Company contributed$2.9 million to its defined benefit pension plans during the three months ended August 31, 2026 and expects to contribute approximately$8.8 million during the remainder of fiscal 2027.

Note 13– Earnings per Common Share

The following table sets forth the computation of basic and diluted earnings per common share attributable to controlling interest for the periods presented:

(1)

These non-qualified stock options and restricted common share awards were excluded from the calculation of diluted earnings per common share because their inclusion would have been anti-dilutive.

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.

Note 14– Derivative Financial Instruments and Hedging Activities

The Company utilizes derivative financial instruments to primarily manage exposure to certain risks related to its ongoing operations. The primary risks managed through the use of derivative financial instruments are commodity price risk, foreign currency exchange risk, and interest rate 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 various methods 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 contracts – the Company uses cross-currency swaps to manage the impact of foreign currency exposure related to a portion of the Company’s Euro net investment and related transactions in certain foreign subsidiaries against changes in Euro/USD exchange rates.

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 maintains 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 15 – Fair Value” 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 the consolidated balance sheet at the dates presented:

As allowable 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 swaps are 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 an increase in receivables with a corresponding increase in accounts payable of $2.1 million and $1.6 million at August 31, 2026 and May 31, 2026, respectively.

The fair value of the Company’s interest rate contracts was less than $0.1 million at August 31, 2026 and at May 31, 2026. 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 August 31, 2026:

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

Net Investment Hedges– Cross-Currency Swaps

The Company uses cross-currency swaps to hedge foreign currency risk on portions of its Euro-denominated net investments in foreign subsidiaries against fluctuations in Euro/U.S. Dollar exchange rates. During the second quarter of fiscal 2026, the Company entered into a cross-currency swap to hedge a portion of its net investment in Sitem Group. During the first quarter of fiscal 2027, the Company entered into an additional cross-currency swap to hedge a portion of its net investment in Kloeckner. As part of the hedge contracts, 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 contracts. The Company excludes from the assessment of hedge effectiveness the portion of the fair value of the cross-currency swaps attributable to interest rate differentials. The Company recognizes the initial value of the excluded components in earnings within interest expense, net, using a systematic and rational method over the life of the hedging instruments. The change in fair value of the swaps and related income tax is recorded within other comprehensive income, net of tax, on the consolidated statements of comprehensive income and, as net investment hedges, as a component within currency translation adjustments of AOCI. Amounts recorded in AOCI include both (i) changes attributable to spot exchange rates and (ii) amounts related to excluded components that are deferred in other comprehensive income. The Company recognized interest income within interest expense, net, in the consolidated statements of earnings of $2.0 million during thethree months ended August 31, 2026. No amounts were recognized during thethree months ended August 31, 2025 as the cross-currency swap was executed during the second quarter of fiscal 2026.

During the three months ended August 31, 2026, the Company partially terminated and de-designated €15.0 million of the notional amount of the cross-currency swap entered into in November 2025, reducing the designated notional amount from €75.0 million to €60.0 million. The Company paid $0.2 million to the counterparty in connection with the partial termination. The remaining €60.0 million notional amount continues to be designated as a net investment hedge. The Company did not reclassify material amounts of deferred gains or losses related to the net investment hedges from AOCI into earnings during thethree months ended August 31, 2026. The Company did not have any ineffectiveness related to the net investment hedges.

The following table summarizes the Company’s net investment hedges outstanding at August 31, 2026.

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

The following table summarizes the gain (loss) recognized in OCI and the gain (loss) reclassified from AOCI into net earnings for derivative financial instruments designated as cash flow and net investment hedges for the periods presented:

As of August 31, 2026, for the net investment hedges, the Company has recognized amounts in net earnings related to excluded components as described above. Refer to “Note 9 – Other 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 August 31, 2026, expected to be reclassified into net earnings within the succeeding twelve months is $2.6 million (net of tax of $0.7 million). This amount was computed using the fair value of the cash flow hedges at August 31, 2026, and will change before actual reclassification from AOCI to net earnings during the fiscal years ending May 31, 2027 and May 31, 2028. Given the maturity of the net investment hedge is greater than twelve months, no amount is estimated to be reclassified into net earnings within the succeeding twelve months.

Fair Value Hedge– Cross Currency Swap

In June 2026, the Company entered into a €100.0 million to $114.7 million float-for-float cross-currency swap to hedge foreign currency risk associated with a portion of the principal amount of a Euro-denominated loan to Kloeckner against fluctuations in Euro/U.S. Dollar exchange rates. Under the swap, the Company pays Euro-denominated interest at one-month EURIBOR plus 3.000% and receives U.S. dollar-denominated interest at compounded SOFR plus 3.055%, with monthly settlements. The swap matures on December 23, 2027. The cross-currency swap was designated as a fair value hedge of the Company’s foreign currency exposure related to the hedged portion of the loan. Changes in the fair value of the cross-currency swap attributable to the hedged risk and the related foreign currency remeasurement gains and losses on the hedged portion of the loan are recognized in current earnings. The Company excludes interest rate differentials and cross-currency basis spreads from its assessment of hedge effectiveness. Amounts recognized in earnings related to these excluded components were not material during the three months ended August 31, 2026. Under the Company's amortization approach, differences between changes in the fair value of excluded components and amounts recognized in earnings are recorded in other comprehensive income.

Economic (Non-designated) Hedges

The Company enters into foreign currency exchange contracts to manage its foreign currency exchange rate exposure related to inter-company 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 August 31, 2026:

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

The following tables summarize the gain (loss) recognized in earnings for economic (non-designated) derivative financial instruments for the periods presented:

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 settled the related foreign currency forward contracts during the first quarter of fiscal 2027. As a result, the Company recognized a loss of $0.9 million in miscellaneous income (expense), net during the three months ended August 31, 2026. For additional information regarding the Kloeckner Acquisition, see “Note 2 – Acquisitions.”

Note 15 – Fair Value

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is an exit price concept that assumes an orderly transaction between willing market participants and is required to be based on assumptions that market participants would use in pricing an asset or a liability. Current accounting guidance establishes a three-tier fair value hierarchy as a basis for considering such assumptions and for classifying the inputs used in the valuation methodologies. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair values are as follows:

Level 1 – Quoted prices (unadjusted) in active markets for identical assets and liabilities that the reporting entity can assess at the measurement date.

Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3 – Unobservable inputs for the asset or liability, and includes situations where there is little, if any, market activity for the asset or liability and that are significant to the fair value of the assets and liabilities (i.e., allowing for situations in which there is little or no market activity for the asset or liability at the measurement date).

Recurring Fair Value Measurements

At August 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 is 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 14 – Derivative Financial Instruments and Hedging Activities” for additional information regarding the use of derivative financial instruments.

There were no transfers between Level 1 and Level 2 and no transfers in or out of Level 3 during the three months ended August 31, 2026.

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 is 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 14 – 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 is based upon quoted market prices in active markets.

Non-Recurring Fair Value Measurements

At August 31, 2026, there wereno assets measured at fair value on a non-recurring basis on the consolidated balance sheets.

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.

(2)

During fiscal 2026, the net book value of certain machinery at the manufacturing facility in Taylor, Michigan was lowered to $0.5 million based on prices for similar assets.

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, approximate carrying value due to their short-term nature.

The carrying value of the Company's short-term borrowings, consisting of the 2031 Revolving Credit Facility, the ABS Germany Program, ABL USA Facility, and the Austria Bank Loans (and, at May 31, 2026, the 2028 Revolving Credit Facility), approximates fair value due to their variable interest rates and/or short-term nature. See “Note 8 – Debt” for additional information regarding these facilities.

The following table provides a summary of the carrying value and estimated fair value of the Company's long-term debt, including current maturities, as of the dates presented:

(1)

The estimated fair value of long-term debt, excluding current maturities and variable rate debt, was determined using quoted market prices for the Company's fixed rate debt instruments. These fair value measurements are classified within Level 2 of the fair value hierarchy. 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.

Investments Measured at Net Asset Value

The Company acquired investments in certain venture capital and growth equity investment funds (the “Kloeckner Funds”) in connection with the Kloeckner Acquisition. The Kloeckner Funds primarily invest in early- and growth-stage technology companies across Germany, Western Europe, and North America. The Kloeckner Funds are closed-end vehicles; none of the Company's interests are redeemable, and the Company receives distributions only as the underlying fund investments are realized or the fund is liquidated. Transfers of the Company's interests in the Kloeckner Funds require the consent of the general partner of each fund. The timing of the liquidation of the underlying assets of the Kloeckner Funds has not been communicated to the Company by the general partners of the funds or announced publicly.

Certain investments measured at fair value using the NAV per share as a practical expedient, in accordance with ASC 820, have not been classified within the fair value hierarchy above. For additional information, see “Note 1 – Description of Business and Basis of Presentation.”

The following table summarizes these investments at August 31, 2026:

Note 16 – Related Party Transactions

Subsequent to the Separation of the Company from Worthington Enterprises, transactions between Worthington Enterprises and the Company are considered related party, including those subject to agreements entered into in connection with the Separation. Material related party transactions have been disclosed below.

Transactions with Worthington Enterprises

The majority of the Company’s net sales to Worthington Enterprises are subject to the Steel Supply and Services Agreement and are included within net sales in the consolidated statements of earnings. Net sales to Worthington Enterprises were$19.3 million and$18.2 million for the three months ended August 31, 2026, and August 31, 2025, respectively.

As of August 31, 2026 and May 31, 2026, the outstanding accounts receivable balance with Worthington Enterprises equaled$8.9 million and$7.0 million, respectively, as a result of the net sales to Worthington Enterprises described above.

Note 17 – Segment Information

The Company’s CODM is Worthington Steel’s CEO. 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 CODM manages all business activities on a consolidated basis, and as a result, the Company has concluded that there is only one operating segment and therefore one reportable segment.

The Company’sone reportable segment serves its customers primarily by processing flat-rolled steel coils, sourced primarily from various North American steel mills, into the precise type, thickness, length, width, shape, and surface quality required by customer specifications, and by distributing steel and other metal products and providing related processing services to customers primarily in North America and Europe, sourcing material from a global network of steel mills and other producers. 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 fee-for-service arrangements on customer-owned material.

The measure of segment profit or loss for the Company’s one reportable segment is net earnings, consistent with the measure the Company used for its single reportable segment prior to the Kloeckner Acquisition. The CODM uses net earnings to assess segment performance and to decide how and where to allocate resources and reinvest profits, including in capital expenditures, business and/or asset acquisitions, market share expansion, talent, technology, share repurchases, and dividends. The measure of segment assets for the Company's reportable segment is total assets, as reported on the Company's condensed consolidated balance sheets.

The Company regularly provides the CODM a reporting package structured similarly to the condensed consolidated statements of earnings. The CODM reviews net earnings as the key measure of profit or loss and reviews significant expenses on a basis consistent with the presentation in the condensed consolidated statements of earnings, with the exception of cost of goods sold, which is further disaggregated.

The following table presents the significant expenses that are regularly provided to the CODM for the reportable segment and the required disclosable amounts that are included in net earnings for thethree months ended August 31, 2026:

(1)

Includes expenses related to manufacturing profit sharing and bonus.

Note 18 – Discontinued Operations and Assets and Liabilities Held for Sale

In connection with the Kloeckner Acquisition, the Company acquired certain Kloeckner business units that met the held-for-sale criteria in ASC 360 as of the acquisition date. For additional information, see “Note 1 – Description of Business and Basis of Presentation.”The assets and liabilities of the Kloeckner Disposal Group were recorded at their acquisition-date fair value less costs to sell and have not been depreciated or amortized since the acquisition date. The Company did not allocate any consolidated interest expense that is not directly attributable to or related to the Kloeckner Disposal Group. The Kloeckner Disposal Group was identified for disposal as non-core to the Company’s post-acquisition strategy, and the Company expects to complete the sale by way of sale to a third-party purchaser, with completion expected by the end of fiscal 2027. No gain or loss has been recognized on the Kloeckner Disposal Group as of August 31, 2026, as the disposal group’s acquisition-date fair value less cost to sell continued to exceed its carrying value. See “Note 19–

Subsequent Events” for additional information regarding the Kloeckner Disposal Group.

In addition, in connection with the Kloeckner Acquisition, the Company acquired certain long-lived assets, primarily buildings and improvements, of Kloeckner business units that met the held-for-sale criteria in ASC 360 as of the acquisition date. These business units continue to operate, and the associated operations and cash flows have not been disposed of. As of August 31, 2026, these assets, consisting primarily of buildings and improvements, had a carrying value of $19.2 million and are presented within non-current assets held for sale on the consolidated balance sheets. These assets were identified for disposal because the Company does not intend to continue utilizing these facilities post-integration, while the associated operations will continue at other Company locations. The Company expects to complete the sale by way of sale to a third-party purchaser, with completion expected in the next twelve months.

The carrying amounts of the major classes of assets and liabilities of the Kloeckner Disposal Group classified as held for sale and included in discontinued operations as of August 31, 2026 were as follows:

Earnings (loss) from discontinued operations, net of tax, for thethree months ended August 31, 2026 was as follows:

No comparative amounts are presented for the three months ended August 31, 2025 given the date of the Kloeckner Acquisition.

Note 19 – Subsequent Events

On September 3, 2026, Kloeckner Metals Service Centers de Mexico, S. de R.L. de C.V. (“KMSCM”) and Kloeckner Specialty Metals de Mexico, S. de R.L. de C.V. (“KSM”), an indirect subsidiary of the Company acquired in connection with the Kloeckner Acquisition, entered into Amendment No. 2 to the Loan and Security Agreement governing the ABL Mexico Facility. The amendment increased aggregate commitments under the facility by $35.0 million, to $150.0 million, and added two additional locations to the borrowing base. The amendment also revised the applicable interest rate margin under the facility's pricing grid, which is based on the Company's Net Debt/EBITDA ratio and now ranges from 1.85% to 3.00% per annum, as compared to 1.75% to 2.45% under the prior grid. In connection with the amendment, KMSCM and KSM granted a security interest in certain U.S.-located accounts, inventory, and deposit accounts to HSBC Bank USA, National Association, as U.S. collateral agent.

On September 8, 2026, Worthington Steel GmbH entered into a DPLTA with Kloeckner. The DPLTA is not currently effective. An extraordinary general meeting of Kloeckner shareholders to vote on approval of the DPLTA is expected to take place on October 23, 2026. Its effectiveness remains subject to the required shareholder approvals and registration with the commercial register at Kloeckner’s registered seat and cannot occur before January 1, 2027. If and when the DPLTA becomes effective and subject to applicable law, Worthington Steel GmbH will be entitled to issue binding instructions to Kloeckner’s management board, Kloeckner generally will be required to transfer its annual profits to Worthington Steel GmbH and Worthington Steel GmbH generally will be required to absorb Kloeckner’s annual losses. Until the DPLTA becomes effective, Kloeckner continues to operate subject to applicable German law, which limits certain actions the Company may take with respect to its operations.

Under the DPLTA, once effective, each outside Kloeckner shareholder will be entitled to elect either to tender its shares for cash compensation of €11.00 per share or to receive recurring annual compensation of €0.67 per share on a gross basis for each full fiscal year of Kloeckner. The adequacy of both forms of compensation may be challenged by outside shareholders in appraisal proceedings under German law, which could result in higher compensation amounts.

On October 6, 2026, Worthington Steel's Board of Directors (the “Board”) declared a quarterly cash dividend of $0.16 per common share payable on December 28, 2026, to shareholders of record at the close of business on December 14, 2026.

On October 7, 2026, the Company terminatedtwo existing cross-currency swaps designated as net investment hedges with an aggregate notional amount of €760.0 million and simultaneously entered into replacement swaps effective October 9, 2026 with the same euro-denominated notional amounts, but with revised interest rates. One cross-currency swap has a notional value of €700.0 million to $781.8 million with an unchanged maturity date of May 31, 2031. The other cross-currency swap has a notional value of €60.0 million to $67.0 million with an unchanged maturity date of November 29, 2030. The replacement cross-currency swaps were designated as net investment hedges of the Company’s investments in Worthington Steel GmbH and Sitem Group. The terminations resulted in aggregate cash settlement proceeds of approximately $10.4 million.

In October 2026, the Company entered into a definitive agreement to sell its Becker operations, which are classified as discontinued operations in this filing, in a transaction expected to generate approximately €75 million (approximately $84 million) of total proceeds, consisting of approximately €48 million (approximately $54 million) in cash and €27 million (approximately $30 million) of deferred consideration. The transaction is expected to close in calendar year 2026, subject to customary closing conditions and adjustments.