Worthington Steel, Inc.

Our primary ongoing requirements for cash are expected to be for working capital, capital expenditures, integration and transaction-related costs, dividend payments, debt service, potential payments to Kloeckner’s remaining outside shareholders and other strategic initiatives. Following the Kloeckner Acquisition, our working capital requirements, consolidated indebtedness and debt service obligations have increased materially as a result of both the financing incurred in connection with the acquisition and certain preexisting Kloeckner indebtedness that remained outstanding following the acquisition.

Our primary sources of liquidity include cash and cash equivalents, cash generated from operating activities and available borrowings under the 2031 Revolving Credit Facility and other financing arrangements. Subsequent to the Kloeckner Acquisition, our debt profile provides for an increase in the number of available options for liquidity, with the material sources being the 2031 Revolving Credit Facility, ABL USA Facility, Swiss RCF, and German RCF. See “—Kloeckner Debt.”

As of August 31, 2026, our cash and cash equivalents balance was $248.2 million, compared to cash and cash equivalents balance of $84.6 million at May 31, 2026. As of August 31, 2026, our total consolidated debt balance was $2,196.4 million, an increase of $1,939.6 million, compared to the total consolidated debt balance of $256.8 million at May 31, 2026. The increase is primarily due to the financing of the Kloeckner Acquisition and the consolidation of certain preexisting Kloeckner indebtedness.

In connection with the Kloeckner Acquisition, we incurred $1.4 billion of secured indebtedness consisting of $700.0 million aggregate principal amount of 2033 Senior Notes and $700.0 million of borrowings under the Term Loan Facility. On August 19, 2026, we 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. On June 25, 2026, we also entered into the $550.0 million 2031 Revolving Credit Facility, which replaced the 2028 Revolving Credit Facility that was terminated concurrently.

Additionally, we assumed the liabilities of Kloeckner as part of the acquisition and recorded Kloeckner’s liabilities within our consolidated balance sheet. Kloeckner’s debt obligations included various loans. For additional information, see below for the material impacts discussed below as well as a summary of the Kloeckner debt instruments assumed. See “—Kloeckner Debt.”

The 2033 Senior Notes contain customary restrictive covenants, including incurrence-based restrictions on certain financing and capital allocation activities. As of August 31, 2026, we were in compliance with the applicable covenants, which are not currently expected to materially restrict our liquidity or access to capital. 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. We were in compliance with the applicable covenants as of August 31, 2026.

Our ability to borrow under the 2031 Revolving Credit Facility is subject to a borrowing base and satisfaction of customary borrowing conditions. In addition, the 2031 Revolving Credit Facility requires us to maintain a minimum consolidated fixed charge coverage ratio only during certain periods based on excess availability. Certain other financing arrangements of Kloeckner and its subsidiaries also contain financial and other customary covenants and are subject to borrowing base limits. Our financing arrangements also contain customary covenants and restrictions that may limit certain financing, investing and other activities. As of August 31, 2026, we were in compliance with the applicable covenants under our financing arrangements.

At August 31, 2026, after accounting for the eligible borrowing bases, as applicable, availability under the 2031 Revolving Credit Facility, ABL USA Facility, Swiss RCF, and German RCF, was $418.4 million, $138.5 million, $55.7 million, and $46.4 million, respectively. See “—Kloeckner Debt.”

During the first quarter of fiscal 2027, Stanzwerk AG entered into an Amended and Restated Standstill Agreement with UBS Switzerland AG maintaining the credit facility through August 31, 2028.

We believe our cash balances, cash expected to be generated from operating activities and available borrowing capacity under our revolving credit facilities and other borrowings provide adequate liquidity to fund our current operational needs, working capital requirements, capital expenditures, integration and transaction-related costs, debt service obligations and other current and long-term obligations and strategic initiatives. We may from time to time seek additional capital through debt or equity financings to refinance existing obligations, strengthen our liquidity or fund strategic initiatives. Our ability to access additional capital and the terms of any financing will depend on our financial performance, credit profile, prevailing interest rates, financial market and economic conditions and other factors, many of which are outside our control.

Although we successfully accessed the debt capital markets in connection with the Kloeckner Acquisition, our future ability to access the financial markets and the terms under which we may do so will depend on a number of factors, including our financial performance, credit profile, prevailing interest rates, financial market conditions, economic conditions and other factors, many of which are outside our control. There can be no assurance that additional debt or equity financing will be available on terms acceptable to us, if at all. Any additional debt financing could increase our interest expense, leverage and covenant obligations, and any additional equity financing could dilute the interests of our existing shareholders.

Our increased indebtedness has materially increased our interest and debt service requirements compared with prior periods, and the variable-rate Term Loan Facility exposes us to changes in market interest rates. We continue to prioritize debt reduction as part of our capital allocation strategy. For additional information, see “Note 8 – Debt.”

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

Operating Activities

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

Net cash used in operating activities was $6.0 million during the three months ended August 31, 2026, compared to $6.3 million net cash used in operating activities during the three months ended August 31, 2025. Net operating cash flows were generally consistent between periods. Both periods reflected increased working-capital requirements associated with higher average inventory prices. Working-capital cash usage was lower in the current year period, but this was offset by changes in other operating assets and liabilities.

Investing Activities

Net cash used in investing activities was $586.8 million during the three months ended August 31, 2026, compared to net cash used in investing activities of $29.6 million during the three months ended August 31, 2025. In the current year period, the main drivers of net cash used in investing activities were the Kloeckner Acquisition, and to a lesser extent, an increase in capital expenditures, partially offset by cash proceeds from asset sales. See “Note 2 – Acquisitions” for further information.

Investment activities are largely discretionary and future investment activities could be reduced significantly, or eliminated, as economic conditions warrant. We assess acquisition opportunities as they arise, and any such opportunities may require additional financing. However, there can be no assurance that any such opportunities will arise, that any such acquisition opportunities will be consummated, or that any additional financing will be available on satisfactory terms. Capital expenditures were $63.0 million during the three months ended August 31, 2026, compared to $29.4 million during the three months ended August 31, 2025. Following the Kloeckner Acquisition, our current planning estimate for combined capital expenditures is $160.0 million to $180.0 million for fiscal 2027, with the timing of project spending influencing where we finish within that range. Following DPLTA effectiveness, we will review capital priorities across the consolidated business.

Financing Activities

Net cash provided by financing activities was $735.6 million during the three months ended August 31, 2026, compared to net cash provided by financing activities of $21.0 million during the three months ended August 31, 2025.

Financing activities during the three months ended August 31, 2026 primarily reflected $1.4 billion of proceeds from the issuance of the 2033 Senior Notes and borrowings under the Term Loan Facility in connection with the Kloeckner Acquisition. These proceeds were partially offset by the repayment of certain existing indebtedness of Worthington Steel and Kloeckner, including the $200.0 million voluntary repayment under the Term Loan Facility. Financing activities also included €13.7 million ($15.9 million) used to acquire additional Kloeckner shares after obtaining control, including shares acquired in connection with the Delisting Tender Offer, and $8.2 million of dividends paid to holders of our common shares during the current year period compared to $8.1 million in the prior year period. Payments to noncontrolling interests during the current year period totaled $10.5 million compared to none in the prior year period.

Following the Kloeckner Acquisition, our consolidated debt includes the 2033 Senior Notes, Term Loan Facility and certain preexisting Kloeckner indebtedness that remained outstanding following the acquisition. Our increased indebtedness has materially increased our interest and debt service requirements compared with prior periods, and our variable-rate borrowings expose us to changes in market interest rates. We continue to prioritize debt reduction as part of our capital allocation strategy.

Standstill Agreement – Sitem Group– During the first quarter of fiscal 2027, Stanzwerk AG entered into an Amended and Restated Standstill Agreement with UBS Switzerland AG maintaining the credit facility through August 31, 2028. Stanzwerk AG was in compliance with these covenants as of August 31, 2026.

For additional information on our outstanding debt and other borrowing arrangements, see “Note 8 – Debt.”

Common shares – On October 6, 2026, 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.

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

Redeemable NCI – While redemption events are contingent, the existence of these features could require us to use available cash, debt capacity, or other resources to satisfy our obligations in the future. We continuously monitor our liquidity profile to ensure adequate capacity to fund potential redemptions, although no such obligations were triggered during the three months ended August 31, 2026.

Material Cash Requirements

Our material cash requirements include working capital, capital expenditures, interest and principal payments on indebtedness, dividends and other contractual and strategic commitments.

We, through the acquisition of Kloeckner, have an asset-based revolving credit facility that matures in July 2027, under which $465.0 million was outstanding as of August 31, 2026. The 2031 Revolving Credit Facility provides for committed incremental revolving capacity intended to facilitate the addition of certain Kloeckner U.S. operations and the repayment of this facility, subject to the satisfaction of specified conditions. We expect to address the July 2027 maturity through this arrangement or other available financing sources. For additional information, see “Note 8 – Debt.”

On September 8, 2026, subsequent to the end of the first quarter, Worthington Steel GmbH entered into a domination and profit and loss transfer agreement with Kloeckner. The DPLTA is not currently effective and remains subject to the required shareholder approvals and registration with the applicable commercial register.

If and when the DPLTA becomes 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 Kloeckner fiscal year. The compensation amounts may be challenged in appraisal proceedings under German law and could be increased. Accordingly, the amount and timing of future cash requirements associated with the DPLTA will depend on, among other factors, whether and when the DPLTA becomes effective, shareholder elections and the outcome of any appraisal proceedings.

If the DPLTA becomes effective, Kloeckner generally will also be required to transfer its annual profits to Worthington Steel GmbH, while Worthington Steel GmbH generally will be required to absorb Kloeckner’s annual losses, subject to applicable law and the terms of the DPLTA.

Refer to “Recent Business Developments,” “Note 8 – Debt” and “Note 19 – Subsequent Events” for additional information.

Dividend Policy

We currently have no material contractual or regulatory restrictions on the payment of dividends, provided that the applicable conditions and limitations under our debt agreements are satisfied, including applicable restrictions on restricted payments and, under the 2031

Revolving Credit Facility, minimum availability requirements. Dividends are declared at the discretion of the Board. The Board reviews the dividend quarterly and establishes the dividend rate based upon our consolidated financial condition, results of operations, capital requirements, current and projected cash flows, business prospects, and other relevant factors. There is no guarantee that we will continue the payments of dividends in the future or that any dividends declared by the Board in the future will be similar in amount or timing to any dividends previously declared by the Board.

Kloeckner Debt

In connection with the Kloeckner Acquisition, we assumed the liabilities of Kloeckner and recorded Kloeckner’s liabilities within our consolidated balance sheet. Kloeckner’s debt obligations include various loans and credit facilities, which, subsequent to the Kloeckner Acquisition, provide additional sources of liquidity. The material Kloeckner debt instruments assumed are summarized below.

Kloeckner’s 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 total commitments under the facility to €150.0 million (approximately USD $174.3 million as of August 31, 2026) and extended the maturity to June 3, 2028. The German RCF also permits ancillary facilities (including overdraft, guarantee, bonding, documentary or stand-by letter of credit, short term loan and foreign exchange facilities) in an aggregate amount of up to €50.0 million. 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 million and (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. The foregoing summary of the German RCF is qualified in its entirety by reference to the Fifth Amendment and Restatement Agreement, a copy of which is filed as an exhibit to this Form 10-Q.

Kloeckner’s Swiss Syndicated Revolving Credit Facility

On January 7, 2025, Debrunner Koenig AG, the holding company of Kloeckner’s Swiss country organization, entered into an unsecured syndicated loan agreement (the “Swiss RCF”) with Zürcher Kantonalbank as agent and the lenders from time to time party thereto. The Swiss RCF provides capacity of up to CHF 200.0 million (approximately USD $247.4 million as of August 31, 2026) which may be increased once by up to CHF 50.0 million, subject to lender participation, and matures on January 7, 2029. The facility is available in CHF and EUR (up to €50.0 million) and provides Debrunner Koenig AG and its subsidiaries with funds for general corporate purposes. 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. The foregoing summary of the Swiss RCF is qualified in its entirety by reference to the Credit Agreement (Kreditvertrag), dated as of January 7, 2025, an English translation of which is filed as an exhibit to this Form 10-Q.

Kloeckner’s U.S. ABL Facility

On November 16, 2020, Kloeckner Metals Corporation and certain of its subsidiaries entered into an asset-based lending credit agreement (the “ABL USA Facility”) with Bank of America, N.A. as administrative agent and collateral agent, and the lenders from time to time party thereto. On July 14, 2022, the ABL USA Facility was amended and extended, with a maturity date in July 2027. On December 19, 2022, the ABL USA Facility was amended to increase the capacity thereunder to $650.0 million. 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. 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%. The foregoing summary of the ABL USA Facility is qualified in its entirety by reference to the Loan and Security Agreement, as amended, copies of which are filed as exhibits to this Form 10-Q.

Kloeckner’s German ABS Program

Kloeckner maintains an asset-backed securitization program in Europe (the “ABS Germany Program”) under which eligible trade receivables originated by its subsidiary Kloeckner Metals Germany GmbH are sold to a securitization vehicle and financed through arrangements with Commerzbank Aktiengesellschaft. The program, which originally comprised further subsidiaries of Kloeckner as sellers of trade receivables and additional co-founders, has been amended and extended from time to time, and on May 8, 2026 was reduced to €60.0 million (approximately USD $69.7 million as of August 31, 2026), with one international bank providing the receivables financing under the ABS Program to one German subsidiary of Kloeckner. The ABS Germany Program matures on July 25, 2028 and provides Kloeckner with funds for refinancing of trade receivables. Borrowings under the ABS Germany Program bear interest at three-month EURIBOR plus a margin of 1.30% per annum. 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. The foregoing summary of the ABS Germany Program is qualified in its entirety by reference to the Exit and Amendment and Restatement Agreement, a copy of which is filed as an exhibit to this Form 10-Q.

Kloeckner’s Mexico ABL Facility

On September 4, 2024, 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, and the lenders from time to time party thereto. 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. 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. The foregoing summary of the ABL Mexico Facility is qualified in its entirety by reference to the Loan and Security Agreement, as amended, copies of which are filed as exhibits to this Form 10-Q.

Kloeckner Shareholder Loan

In May 2026, Kloeckner, as the borrower, entered into an unsecured revolving loan agreement with Worthington Steel, as the lender, pursuant to which, effective as of the closing of the Kloeckner Acquisition, Worthington Steel agreed to provide revolving loans to Kloeckner to finance the working capital needs of Kloeckner and its subsidiaries. The initial maximum principal amount of the Kloeckner Shareholder Loan is €200 million. In the event that Kloeckner loses access to the German RCF and/or its ABS Germany Program as a result of any event caused by or attributable to Worthington Steel, the maximum aggregate principal amount of the Kloeckner Shareholder Loan may be increased to up to €400 million. The Kloeckner Shareholder Loan bears interest at an interest rate of EURIBOR plus a margin of 3.0%. The Kloeckner Shareholder Loan matures in 2031.