# Worthington Steel, Inc. (WS) FY 2026 MD&A

Verbatim Item 7 Management's Discussion and Analysis from Worthington Steel, Inc.'s 10-K for fiscal year 2026.

SEC filing source: https://www.sec.gov/Archives/edgar/data/1968487/000196848726000026/ws-20260531.htm
Accession: 0001968487-26-000026
Filing date: 2026-07-30
Report date: 2026-05-31
Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary. Published MD&A gate trimmed front/tail over-capture.
Confidence: high

Company profile: /company/WS/
All MD&A years: /company/WS/mda/
Previous year: /company/WS/mda/fy2025/ (FY 2025)

Item 7. – Management’s Discussion and Analysis of Financial Condition and Results of Operations

[[GREPCENT_TABLE]]
[["ITEM","PAGE"],["","Introduction","32"],["","Basis of Presentation","32"],["","Business Overview","32"],["","Recent Business Developments","33"],["","Trends and Factors Impacting our Performance","34"],["","Results of Operations","37"],["","Liquidity and Capital Resources","42"],["","Critical Accounting Estimates","46"]]
[[/GREPCENT_TABLE]]

Introduction

This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) should be read in conjunction with our consolidated and combined financial statements and the related Notes in this Form 10-K. This MD&A is designed to provide a reader with material information relevant to an assessment of our financial condition and results of operations and to allow investors to view the Company from the perspective of management.

The MD&A included in this report discusses our fiscal 2026 and fiscal 2025 financial condition and results of operations. For a comparison and discussion of our results of operations and financial condition for fiscal 2025 and fiscal 2024, see “Part II – Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Results of Operations – Fiscal 2025 Compared to Fiscal 2024” of our Annual Report on Form 10-K for the fiscal year ended May 31, 2025, filed with the SEC on July 29, 2025.

Basis of Presentation

Worthington Steel was formed as an Ohio corporation on February 28, 2023, for the purpose of receiving, pursuant to a reorganization, all of the outstanding equity interests of the steel processing business of Worthington Enterprises. On December 1, 2023, the Separation was completed and Worthington Steel became an independent, publicly traded company. Our financial statements for the periods until the Separation on December 1, 2023, are combined financial statements prepared on a carve-out basis. Our financial statements for the periods beginning on and after December 1, 2023, are consolidated financial statements based on our reported results as a stand-alone company. Accordingly, the third quarter of fiscal 2024 and onward included consolidated and combined financial statements, whereas all prior periods included combined financial statements. For additional information, see “Note 1 – Description of Business, The Separation, and Basis of Presentation”.

Business Overview

We are one of North America’s premier value-added metals processors with the ability to provide a diversified range of products and services that span a variety of end markets. We maintain market-leading positions in the North American carbon flat-rolled steel and tailor welded blank industries and are one of the largest global producers of electrical steel laminations. For over 70 years, we have been delivering high-quality steel processing capabilities across a variety of end markets including automotive, heavy truck, agriculture, construction, and energy. With the ability to produce customized steel solutions, we aim to be the preferred value-added steel processor in the markets we serve by delivering highly technical, customer-specific solutions, while also providing advanced materials support. Our scale allows us to achieve an advantaged cost structure and service platform supported by a strategic operating footprint. We serve our customers by processing flat-rolled steel coils, which we source primarily from various North American steel mills, into the precise type, thickness, length, width, shape, and surface quality required by customer specifications. We sell steel on a direct basis, whereby we are exposed to the risks and rewards of ownership of the material while in our possession. Additionally, we toll process steel under a fee for service arrangement whereby we process customer-owned material. Our manufacturing facilities further benefit from the flexibility to scale between direct and tolling services based on demand dynamics throughout the year.

32

Table of Contents

Our operations are managed principally on a products and services basis under a single group organizational structure. We own controlling interests in the following operating joint ventures: Spartan, TWB, WSCP, and Sitem Group. We also own a controlling interest in WSP, which became a nonoperating joint venture in October 2022, when we completed the divestiture of its remaining net assets. The net assets and operating results of these joint ventures are consolidated with the equity owned by the minority joint venture member shown as “Noncontrolling interests”, or, in the case of Sitem Group, “Redeemable noncontrolling interest” in our consolidated balance sheets, and the noncontrolling interest in net earnings and Other Comprehensive Income (“OCI”) shown as net earnings or comprehensive income attributable to noncontrolling interests in our consolidated and combined statements of earnings and consolidated and combined statements of comprehensive income, respectively. Our remaining joint venture, Serviacero Worthington, is unconsolidated and accounted for using the equity method.

AI in Transformation

During fiscal 2026, we continued integrating commercially available AI technologies into our long-term transformation strategy. Through these efforts, we use AI to generate insights, evaluate strategies, and automate routine tasks, improving productivity and strengthening internal decision-making. We are developing and refining AI solutions in areas such as predictive maintenance and intelligent reporting, which drive greater value through smarter, more connected systems. Expanding the use of AI across operations and the back-office functions enables our teams to devote more time to the highest-value aspects of their roles.

Recent Business Developments

•
On June 1, 2026, we incurred indebtedness in the form of (1) the 2033 Notes, due June 1, 2033, and (2) the seven-year Term Loans under the Term Loan Facility.

•
On June 3, 2026, we closed the Kloeckner Acquisition, at which date we owned approximately 60.86% of Kloeckner’s total outstanding share capital.

•
On June 15, 2026, we settled our binding agreement to acquire one million additional Kloeckner shares at €11.00 per share (approximately $12.7 million), bringing our total ownership to approximately 61.87% of Kloeckner’s total outstanding share capital.

•
On June 24, 2026, the Board declared a quarterly dividend of $0.16 per common share payable on September 29, 2026, to shareholders of record at the close of business on September 15, 2026. Refer to “Note 21 – Subsequent Events” for additional information.

•
On June 25, 2026, we entered into the 2031 Revolving Credit Facility, an asset-based revolving credit agreement that matures on June 25, 2031, which refinanced and replaced the Credit Facility.

•
On July 15, 2026, we launched a public delisting tender offer for all outstanding Kloeckner shares not already held by us at a price of €11.00 per share. The delisting tender offer is not subject to any closing conditions and does not include a minimum acceptance threshold; however, there can be no assurance as to how many Kloeckner shares, if any, will be tendered.

Kloeckner Acquisition

On January 15, 2026, we entered into a BCA with Kloeckner. Following execution of the BCA, we launched a voluntary public cash takeover offer to all Kloeckner shareholders to tender each Kloeckner share to us. Subject to the terms and conditions of the Offer Document, upon the Offer Closing, we committed to pay cash consideration equal to €11.00 per tendered share (subject to any increases either made voluntarily or in accordance with applicable German law) for the Offer.

As of April 14, 2026, 52,389,508 Kloeckner shares had been tendered for acceptance under the Offer and not withdrawn (the “Tendered Shares”). On June 3, 2026, (the “Settlement Date”), we accepted the transfer of Tendered Shares for consideration of €11.00 per Tendered Share. Together with the Kloeckner shares already held by us prior to the Settlement Date, as of the Settlement Date, we held a total of 60,710,791 Kloeckner shares, representing approximately 60.86% of Kloeckner’s total outstanding share capital. The total aggregate consideration for the Tendered Shares was €576.3 million (approximately $668.3 million). On June 15, 2026, we consummated the acquisition of an additional one million Kloeckner shares at €11 per share (approximately $12.7 million), bringing our total ownership to 61,710,791 Kloeckner shares representing approximately 61.87% of Kloeckner’s total outstanding share capital. We used the net proceeds from the 2033 Notes and Term Loans, together with cash on hand, to fund the Kloeckner Acquisition and pay related fees and expenses. For more information, see the “Kloeckner Acquisition and Other Capital Subsequent Events” section within the “Liquidity and Capital Resources” Section below.

On March 27, 2026, we informed Kloeckner about our firm intention to enter into a DPLTA, and Kloeckner published an ad hoc announcement to this effect on the same day. From the Settlement Date until the execution of the DPLTA (the “Transition Period”), we, on the one hand, and Kloeckner, on the other hand, will continue to operate as independent companies. The DPLTA would provide us with the right to issue binding instructions to the management board of Kloeckner with respect to the management of Kloeckner’s

33

Table of Contents

business and would obligate Kloeckner to transfer its annual profits to us. In return, we would be required, under the terms of the DPLTA, to (i) compensate Kloeckner for any annual losses, (ii) compensate the remaining minority shareholders of Kloeckner through a guaranteed annual recurring payment and (iii) offer to acquire the remaining Kloeckner shares held by such minority shareholders in exchange for adequate exit cash compensation, in each case as determined in accordance with applicable German law.

The execution and effectiveness of the DPLTA is subject to a number of conditions and procedural requirements under German law, including: (1) approval by the management board and supervisory board of Kloeckner, (2) approval at the general shareholders’ meeting of Kloeckner by a vote of at least 75% of the share capital represented at such meeting, (3) a valuation of Kloeckner confirmed by a court-appointed independent auditor to determine the adequate amount of the recurring compensation and the exit compensation to be offered to minority shareholders, and (4) registration of the DPLTA with the commercial register of the competent local German court. At this time, we have not satisfied any of these conditions. There can be no assurance that the DPLTA will be executed or become effective, or as to the timing thereof.

Trends and Factors Impacting our Performance

The steel processing industry is fragmented and highly competitive. Given the broad base of products and services offered, specific competitors vary based on the target industry, product type, service type, size of program and geography. Competition is primarily on the basis of price, product quality and the ability to meet delivery requirements. Our processed steel products are priced competitively, primarily based on market factors, including, among other things, market pricing, the cost and availability of raw materials, transportation and shipping costs, and overall economic conditions in the U.S. and abroad.

General Economic and Market Conditions

We sell our products and services to a diverse customer base and a broad range of end markets. The breakdown of net sales by end market for fiscal 2026 and fiscal 2025 is illustrated below:

[[GREPCENT_TABLE]]
[["","2026","","","2025"],["Automotive","","55","%","","","52","%"],["Construction","","10","%","","","11","%"],["Machinery & Equipment","","10","%","","","9","%"],["Heavy Trucks","","4","%","","","5","%"],["Energy","","3","%","","","3","%"],["Agriculture","","3","%","","","3","%"],["Other","","15","%","","","17","%"],["Total","","100","%","","","100","%"]]
[[/GREPCENT_TABLE]]

The automotive industry is one of the largest consumers of flat-rolled steel in North America, and the largest end market for us and our unconsolidated joint venture, Serviacero Worthington. North American vehicle production, including the Detroit Three automakers, is a leading indicator of automotive demand. North American vehicle production was up 1% in fiscal 2026 compared to fiscal 2025, and the Detroit Three automakers’ vehicle production was up 2% in fiscal 2026 compared to fiscal 2025.

Our remaining net sales are to other markets such as agricultural, appliance, construction, container, energy, generator, heavy truck, HVAC, industrial electric motor, service center, and transformer. Given the many different products that make up our net sales and the wide variety of end markets we serve, it is difficult to isolate the key market indicators that drive this portion of our business. However, we believe that the trend in U.S. gross domestic product growth (“U.S. GDP”) is a reasonable macroeconomic indicator for analyzing the demand of our end markets other than the automotive industry. U.S. GDP data reflect continued expansion through fiscal 2026, but with a less uniform trajectory in the second half of the fiscal year. While overall economic activity has remained resilient, continued uncertainty, including geopolitical developments, contributed to elevated inflation and uneven demand conditions across industrial sectors. Consistent with these trends, in our non-automotive end markets, customers remained deliberate and inventory-disciplined, and demand continued to reflect sensitivity to interest rates, trade policy developments and broader macroeconomic uncertainty.

Total volume (tons) decreased 6% compared to the prior year. Direct tons sold increased 6%, with the increase driven primarily by the legacy business, or approximately 5%, and the balance of the increase, or approximately 1%, due to the addition of Sitem Group. Direct shipments to the automotive market increased 14% compared to the prior year. Toll volumes decreased 21% compared to the prior year. The decrease in toll volumes was due to a combination of closing the Cleveland-area WSCP facility in May 2025, as well as softer demand from mill customers.

34

Table of Contents

The Detroit Three automakers represented 35% and 33% of our consolidated net sales during fiscal 2026 and fiscal 2025, respectively. Shipments to the Detroit Three automakers increased 17% in fiscal 2026 as compared to fiscal 2025, which significantly outpaced the reported 2% growth in the Detroit Three automakers production for the same period. The increase in automotive volume reflects share gains from new programs plus the impact of a key automotive original equipment manufacturer customer returning to a more normal build schedule after curtailing production in fiscal 2025. Energy and container volumes were up 15% and 14%, respectively, during fiscal 2026 compared to fiscal 2025. The increase in energy volume was driven by project-based solar programs. These gains were partially offset by softness in other markets, with construction, heavy truck, agriculture, and service center volumes down 8%, 10%, 10%, and 33%, respectively. The decrease in construction and service center volumes was largely driven by increased competition, while heavy truck and agriculture volumes were impacted by ongoing market weakness.

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

[[GREPCENT_TABLE]]
[["(Percentage of Net Sales)","2026","","","2025"],["End market \u2013 automotive","","55","%","","","52","%"],["Detroit Three automakers","","35","%","","","33","%"],["Largest automotive customers:"],["Customer A","","14","%","","","12","%"],["Customer B","","14","%","","","14","%"]]
[[/GREPCENT_TABLE]]

While our automotive business is largely driven by the production schedules of the Detroit Three automakers, our customer base is much broader and includes other domestic manufacturers and many of their suppliers.

During fiscal 2026, U.S. inflation rates have largely stabilized compared to the peaks seen in recent years, however, the U.S. inflation rate remains somewhat elevated above the U.S. Federal Reserve targeted rate of 2%. During fiscal 2026, the U.S. Federal Reserve lowered the benchmark interest rate on three occasions, with the most recent being in December 2025, before holding rates steady through the remainder of the fiscal year. These reductions lowered borrowing costs compared to the beginning of fiscal 2026, and we benefited from lower rates on borrowings under our Credit Facility. However, interest rates remained elevated, and U.S. Federal Reserve commentary during and shortly after our fourth quarter emphasized that future policy decisions remain dependent on economic data, inflation trends, labor market conditions and broader geopolitical developments. Further easing in inflation and interest rates could support improved economic activity and demand across our end markets, although the pace and timing of any improvement remain uncertain.

We use the following information from the past three fiscal years to monitor our costs and demand in our major end markets:

[[GREPCENT_TABLE]]
[["","","2026","","","2025 (1)","","","2024 (1)","","","2026 vs. 2025","","","2025 vs. 2024"],["U.S. GDP (% growth year-over-year)","","","2.2","%","","","2.6","%","","","3.0","%","","","(0.4","%)","","","(0.4","%)"],["Hot-Rolled Steel ($ per ton) (2)","","$","915","","","$","754","","","$","866","","","$","161","","","$","(112",")"],["Detroit Three Auto Build (000s vehicles) (3)","","","6,454","","","","6,313","","","","6,799","","","","141","","","","(486",")"],["No. America Auto Build (000s vehicles) (3)","","","15,157","","","","15,069","","","","15,889","","","","88","","","","(820",")"],["Zinc ($ per pound) (4)","","$","1.40","","","$","1.29","","","$","1.15","","","$","0.11","","","$","0.14"],["Natural Gas ($ per mcf) (5)","","$","3.42","","","$","3.08","","","$","2.47","","","$","0.34","","","$","0.61"],["On-Highway Diesel Fuel Prices ($ per gallon) (6)","","$","4.09","","","$","3.61","","","$","4.09","","","$","0.48","","","$","(0.48",")"]]
[[/GREPCENT_TABLE]]

(1)
Fiscal 2025 and 2024 figures based on revised actuals

(2)
CRU Hot-Rolled Coil (“HRC”) Index; period average

(3)
S&P Global

(4)
LME Zinc; period average

(5)
NYMEX Henry Hub Natural Gas; period average

(6)
Energy Information Administration; period average

Sales for most of our products are generally strongest in our fiscal fourth quarter when our facilities operate at seasonal peaks. Historically, sales have been weaker in our fiscal third quarter, primarily due to reduced seasonal activity in the construction industry, as well as customer plant shutdowns due to holidays, particularly in the automotive industry. We do not believe backlog is a significant indicator of our business.

35

Table of Contents

Industry Developments

In 2025, the U.S. government continued to modify its tariff policy, including those related to imports of steel and aluminum among other items such as automobiles and automotive parts as well as universal tariffs. In June 2025, the U.S. government announced tariff increases to steel and aluminum from 25% to 50% under section 232 of the Trade Expansion Act (“Section 232”). While exemptions for certain allied countries remain, many prior country-specific exemptions have expired or are undergoing renegotiation. Other governments, including the Chinese government, have responded with reciprocal tariffs on U.S. imports. Additional measures from the U.S. government as well as other foreign governments have occurred since that time, however, many of the measures on steel and aluminum have remained in place. The scope and duration of these tariffs continue to evolve, which creates sustained uncertainty in global trade policy. While the February 2026 U.S. Supreme Court ruling on the International Emergency Economic Powers Act is separate from and does not repeal Section 232 tariffs on steel and aluminum, the decision increases overall tariff-related marketplace volatility. As a result, our customers’ supply chain decisions may abruptly shift, potentially impacting our financial performance. While tariffs have been a reality for some time, the potential for tariff changes has caused some continued trepidation in markets, including the metals markets. Recent evidence suggests that imports of steel have decreased. U.S. Department of Commerce data reflects a decrease of approximately 38% in fiscal 2026 compared to fiscal 2025 in the average import tonnage of U.S. import of flat (carbon and alloy) steel mill products. Lower imports of steel coupled with constrained domestic supply have put upward pressure on domestic steel and steel products prices and reduced the availability of steel in the U.S. market. This has resulted in lower than normal inventory levels and slightly higher operating costs to expedite shipments from our suppliers or to our customers. While we believe this is a temporary market dynamic, with both supply and demand expected to normalize, the ultimate impact tariffs will have on our financial position, results of operations, and cash flows remains to be determined.

In July 2025, the U.S. government enacted the One Big Beautiful Bill Act (“OBBBA”) into law, which ushers in a broad set of changes to the U.S. law and regulatory environments. The OBBBA did not materially impact our income tax expense for fiscal 2026. While the bonus depreciation and domestic research and development provisions reduced fiscal 2026 cash tax payments and benefited operating cash flows, the impact was immaterial.

Impact of Raw Material Prices

Our principal raw material is flat-rolled steel, including electrical steel, which we purchase in coils from primary steel producers. The steel industry has been cyclical, and at times availability and pricing can be volatile due to a number of factors beyond our control. This volatility can significantly affect our steel costs. In an environment of increasing prices for steel and other raw materials, competitive conditions may impact how much of the price increases we can pass on to our customers. To the extent we are able to pass future price increases in raw materials to our customers, this could positively affect our financial results, leading to inventory holding gains. To the extent we are unable to pass future price increases in raw materials to our customers, our financial results could be adversely affected. Also, if steel prices decrease, in general, competitive conditions may impact how quickly we must reduce our prices to our customers, and we could be forced to use higher-priced raw materials already in our inventory to complete orders for which the selling prices have decreased, which results in inventory holding losses. Declining steel prices could also require us to write down the value of our inventories to reflect current market pricing. Industry consolidation in recent years has reduced the number of steel suppliers, and further consolidation, and lower steel imports, could make it more difficult or costly to obtain alternate supply in the event of a disruption.

The market price of our products is closely correlated to the price of HRC, which is largely driven by the demand for steel and the cost of raw materials. Over fiscal 2025, HRC prices declined in the first quarter and then increased throughout the rest of fiscal 2025, with a significant increase in the fourth quarter of 2025. In fiscal 2026, prices fell in the first and second quarters, before increasing in the third and fourth quarters. The average price of HRC for fiscal 2026 remains higher than fiscal 2025. For the fiscal year, due to the increasing price over the period, direct spreads (calculated as sales less material costs) were favorably impacted by a $25.6 million change from $10.4 million of inventory holding losses in fiscal 2025 to an estimated $15.2 million of inventory holding gains in fiscal 2026. With the recent upward HRC price movements, we expect inventory holding gains to be between $10.0 million and $15.0 million in the first quarter of fiscal 2027.

To manage our exposure to market risk, we attempt to negotiate the best prices for commodities and to competitively price products and services to reflect fluctuations in market prices. Derivative financial instruments have been used to manage a portion of our exposure to fluctuations in the cost of our raw materials; steel is the most significant. These contracts covered periods commensurate with known or expected exposures throughout the periods presented. The derivative financial instruments were executed with highly rated financial institutions.

36

Table of Contents

The following table presents the average quarterly market price per ton of HRC steel during each of the past three fiscal years.

[[GREPCENT_TABLE]]
[["(Dollars per ton) (1)","","2026","","","2025","","","2024"],["1st Quarter","","$","857","","","$","690","","","$","879"],["2nd Quarter","","$","825","","","$","690","","","$","747"],["3rd Quarter","","$","938","","","$","702","","","$","1,030"],["4th Quarter","","$","1,040","","","$","933","","","$","809"],["Annual Avg.","","$","915","","","$","754","","","$","866"]]
[[/GREPCENT_TABLE]]

(1)
CRU Hot-Rolled Index

No matter how efficient, our operations, which use steel as a raw material, create some amount of scrap. The expected price of scrap compared to the price of the steel raw material is factored into pricing. Generally, as the price of steel increases, the price of scrap increases by a similar amount and vice versa. When increases in scrap prices do not keep pace with the increases in the price of the steel raw material, it can have a negative impact on our margins.

Results of Operations

Fiscal 2026 Compared to Fiscal 2025

The tables throughout this section present, on a comparative basis, our results of operations for the past two fiscal years.

[[GREPCENT_TABLE]]
[["(In millions, except volume and per common share amounts)","","2026","","","2025","","","Change"],["Volume (in tons)","","","3,586,817","","","","3,793,752","","","","(206,935",")"],["Net sales","","$","3,443.8","","","$","3,093.3","","","$","350.5"],["Operating income (loss)","","","(1.4",")","","","147.0","","","","(148.4",")"],["Equity income","","","20.3","","","","4.4","","","","15.9"],["Net earnings attributable to controlling interest","","","8.5","","","","110.7","","","","(102.2",")"],["Earnings per diluted share attributable to controlling interest","","$","0.17","","","$","2.19","","","$","(2.02",")"]]
[[/GREPCENT_TABLE]]

Net sales in fiscal 2026 were $3,443.8 million, an increase of $350.5 million, or 11%, compared to fiscal 2025. The increase was driven primarily by higher direct volumes, including the $165.7 million impact of the addition of Sitem Group and, to a lesser extent, higher average direct selling prices. Direct tons sold increased 6%, with legacy business increasing 5% and the remaining increase due to the addition of Sitem Group. Direct selling prices, excluding the impact of Sitem Group, increased 3% in fiscal 2026 compared to fiscal 2025. Toll processing net sales decreased 20% in fiscal 2026 compared to fiscal 2025. The decrease in toll volumes was due to a combination of closing the Cleveland-area WSCP facility in May 2025 as well as softening demand from mill customers as they required less outside processing to meet their production requirements. Toll selling prices increased 1% in fiscal 2026 compared to fiscal 2025. The mix of direct versus toll volumes was 64% to 36% in fiscal 2026, compared to 57% to 43% in fiscal 2025.

Gross Margin

[[GREPCENT_TABLE]]
[["","","","","","","","","","","","","","","Change"],["(In millions)","","2026","","","% of Net sales","","","2025","","","% of Net sales","","","$","","","%"],["Gross margin","","$","403.3","","","","11.7","%","","$","388.6","","","","12.6","%","","$","14.7","","","","3.8","%"]]
[[/GREPCENT_TABLE]]

Gross margin in fiscal 2026 was $403.3 million, an increase of $14.7 million, compared to fiscal 2025. The increase was primarily driven by higher direct spreads, and to a lesser extent, a $2.0 million favorable impact from Sitem Group, which was partially offset by lower toll spreads. Direct spreads increased by $49.0 million, primarily due to the $32.2 million impact of higher direct volume, as well as a $25.6 million change from $10.4 million in estimated inventory holding losses in fiscal 2025 compared to estimated holding gains of $15.2 million in fiscal 2026. These gains in direct spreads were partially offset by an $8.8 million unfavorable impact due to value-added market spread compression compared to the prior year. Toll spreads, down $30.6 million, were negatively impacted by $24.9 million due to lower volumes and $5.7 million due to an unfavorable change in toll price, primarily due to mix.

37

Table of Contents

Selling, General and Administrative Expense

[[GREPCENT_TABLE]]
[["","","","","","","","","","","","","","","Change"],["(In millions)","","2026","","","% of Net sales","","","2025","","","% of Net sales","","","$","","","%"],["Selling, general and administrative expense","","$","297.4","","","","8.6","%","","$","231.6","","","","7.5","%","","$","65.8","","","","28.4","%"]]
[[/GREPCENT_TABLE]]

Selling, general and administrative expense (“SG&A”) in fiscal 2026 was $297.4 million, an increase of $65.8 million compared to fiscal 2025. The increase in SG&A expense included $19.0 million related to Sitem Group, which includes a one-time bonus of €4.0 million ($4.6 million) paid to key individuals at Sitem Group as a result of the closing of the Sitem Group acquisition. Professional and other fees increased $29.4 million in fiscal 2026 compared to fiscal 2025, excluding Sitem Group expenses, primarily attributable to $35.8 million of professional and other fees related to the Kloeckner Acquisition. Additionally, compared to fiscal 2025, compensation expense increased by $10.8 million, including a $3.8 million increase in incentive compensation.

Other Operating Items

[[GREPCENT_TABLE]]
[["","","","","","","","","Change"],["(In millions)","","2026","","","2025","","","$","","","%"],["Impairment of goodwill","","$","53.8","","","$","-","","","$","53.8","","","-"],["Impairment of long-lived assets and other assets","","$","60.5","","","$","7.4","","","$","53.1","","","","717.6","%"],["Restructuring and other (income) expense, net","","$","(7.0",")","","$","2.6","","","$","(9.6",")","","","(369.2","%)"]]
[[/GREPCENT_TABLE]]

Impairment of goodwill and long-lived assets in fiscal 2026 was driven by:

•
A pre-tax goodwill impairment charge of $53.8 million on goodwill and a pre-tax long-lived asset impairment charge of $58.4 million recorded in the fourth quarter of fiscal 2026 within the Electrical Steel reporting unit whose carrying amounts exceeded their estimated fair values. The impairments resulted from weakened demand in certain end markets, particularly industrial motors in both Europe and the United States, due to increased foreign competition, and in automotive, some delayed program launches.

•
A pre-tax long-lived asset impairment charge of $1.5 million was recorded during the third quarter of fiscal 2026 related to certain internal-use software assets at Tempel Canada determined to have no value.

•
A pre-tax long-lived asset impairment charge of $0.6 million on certain machinery at our manufacturing facility in Taylor, Michigan.

Impairment of goodwill, long-lived assets, and other assets in fiscal 2025 was driven by:

•
Pre-tax impairment charges of $7.4 million were recorded during the third quarter of fiscal 2025. Due to the announced plans to combine WSCP’s Cleveland, Ohio toll processing manufacturing facility into its existing manufacturing facility in Twinsburg, Ohio, we recognized a $6.1 million pre-tax impairment charge on the disposal group assets. Additionally, we recognized a $1.3 million pre-tax impairment charge related to an indefinite-lived in-process research and development intangible asset that was determined to be fully impaired.

Refer to “Note 5 – Goodwill, Long-Lived Assets, and Other Assets” for more information.

Restructuring and other (income) expense, net in fiscal 2026, was driven by the sale of substantially all remaining net assets of WSCP’s Cleveland toll processing manufacturing facility, which had been reported within assets held for sale in connection with the previously announced plan to consolidate operations into our Twinsburg, Ohio facility. These transactions resulted in pre-tax gains of $6.0 million and included finance lease assets, buildings and improvements, and machinery and equipment. Additionally, in fiscal 2026, we recorded a $1.0 million gain on the sale of an asset previously classified as held for sale.

Restructuring and other (income) expense, net in fiscal 2025 was driven by the $1.8 million of severance expense associated with a TWB voluntary retirement program (“VRP”), which is expected to accelerate the normal retirement attrition process and result in future cost savings. Additionally, in connection with the consolidation and closure of WSCP’s remaining Cleveland, Ohio toll processing manufacturing facility, we recognized $0.8 million in severance expense during fiscal 2025. Refer to “Note 6 – Restructuring and Other (Income) Expense, Net” for additional information.

38

Table of Contents

Miscellaneous Income, Net

[[GREPCENT_TABLE]]
[["","","","","","","","","Change"],["(In millions)","","2026","","","2025","","","$","","","%"],["Miscellaneous income, net","","$","16.6","","","$","3.8","","","$","12.8","","","","336.8","%"]]
[[/GREPCENT_TABLE]]

Miscellaneous income, net in fiscal 2026 was $16.6 million, an increase of $12.8 million compared to fiscal 2025. The increase was primarily due to:

•
Net investment income of $17.4 million related to our investment in Kloeckner equity securities, consisting of mark-to-market gains, dividend income, and other costs, recorded in miscellaneous income, net.

•
A $1.4 million gain recognized in the fourth quarter of fiscal 2026, primarily associated with a pension curtailment resulting from headcount reductions.

•
As a result of rulings in one of the jurisdictions in which Tempel operates, there was a $4.6 million increase in miscellaneous income, net, from fiscal 2025 to fiscal 2026. During fiscal 2025, there was $4.6 million of expense as a result of the recognition of tax indemnity payables associated with a final tax year favorable ruling and associated interest charge true-up due to an indemnification agreement with the former owners of Tempel.

The increases were partially offset by:

•
In fiscal 2026, we recognized a $2.4 million pre-tax mark-to-market loss on the economic (non-designated) cash flow derivative that was entered to hedge a portion of the expected purchase price of the outstanding shares of Kloeckner in connection with the Kloeckner Acquisition.

•
In fiscal 2025, we recognized a $4.0 million pre-tax mark-to-market gain on the economic (non-designated) cash flow derivative that was entered to hedge the purchase price for Sitem Group.

•
In fiscal 2025, the annuitization of a portion of the total projected benefit obligation of the inactive Tempel Steel Pension Plan resulted in a pre-tax, non-cash settlement gain of $2.7 million to accelerate a portion of deferred pension cost.

•
In fiscal 2025, we recognized a pre-tax gain of $1.5 million related to the sale of unused land in China.

Interest Expense, Net

[[GREPCENT_TABLE]]
[["","","","","","","","","Change"],["(In millions)","","2026","","","2025","","","$","","","%"],["Interest expense, net","","$","28.4","","","$","7.1","","","$","21.3","","","","300.0","%"]]
[[/GREPCENT_TABLE]]

Interest expense, net in fiscal 2026 was $28.4 million, an increase of $21.3 million compared to fiscal 2025. The increase was primarily due to $17.8 million of fees and costs associated with temporary financing arrangements entered into in connection with the Kloeckner Acquisition, including bridge financing commitment fees, related lender fees, and other financing costs. These costs primarily include amounts initially deferred during the period and subsequently recognized in interest expense, net, when the related bridge financing was no longer applicable, which was determined at the end of fiscal 2026. Additionally, interest related to Sitem Group debt, approximately $1.8 million, higher interest expense on the Credit Facility (due to higher average debt levels offset by lower average interest rates), and higher debt levels on the BDC loan contributed to the increase in fiscal 2026. These increases were offset by higher interest income, including the interest income from the net investment hedge. Refer to “Note 9 – Debt” for additional information.

Equity Income

[[GREPCENT_TABLE]]
[["","","","","","","","","Change"],["(In millions)","","2026","","","2025","","","$","","","%"],["Serviacero Worthington","","$","20.3","","","$","4.4","","","$","15.9","","","","361.4","%"]]
[[/GREPCENT_TABLE]]

Equity earnings at Serviacero Worthington in fiscal 2026 were $20.3 million, an increase of $15.9 million compared to fiscal 2025. The increase was due to higher direct spreads, including inventory holding gains, and favorable foreign currency exchange rate impacts during fiscal 2026. The increase was partially offset by lower volumes. We received cash distributions of $23.5 million from Serviacero Worthington during fiscal 2026 as compared to $12.8 million during fiscal 2025. Refer to “Note 4 – Investments” for additional information.

39

Table of Contents

Income Taxes

[[GREPCENT_TABLE]]
[["","","","","","","","","","","","","","","Change"],["(In millions)","","2026","","","ETR","","","2025","","","ETR","","","$","","","%"],["Income tax expense","","$","20.0","","","","282.7","%","","$","28.8","","","","20.6","%","","$","(8.8",")","","","(30.6","%)"]]
[[/GREPCENT_TABLE]]

Income tax expense in fiscal 2026 was $20.0 million, a decrease of $8.8 million from fiscal 2025. The decrease was due to lower pre-tax earnings and the tax impact of Tempel impairments in fiscal 2026, partially offset by the absence of a benefit recognized in fiscal 2025 related to 2008 and 2009 court rulings at Tempel Mexico and an increase in uncertain tax position reserves in fiscal 2026. Fiscal 2026 income tax expense reflected an estimated annual effective income tax rate (“ETR”) of 282.7% compared to 20.6% in fiscal 2025. Refer to “Note 14 – Income Taxes” for additional information.

Adjusted EBIT

We evaluate operating performance on the basis of adjusted earnings before interest and taxes (“adjusted EBIT”). EBIT, a non-GAAP financial measure, is calculated by adding interest expense and income tax expense to net earnings attributable to controlling interest. Adjusted EBIT, a non-GAAP financial measure, excludes impairment of goodwill and long-lived assets and restructuring expense (income), net, but may also exclude other items, as described below, that management believes are not reflective of, and thus should not be included when evaluating the performance of our ongoing operations. Adjusted EBIT is used by management to evaluate operating performance and engage in financial and operational planning, because we believe that this financial measure provides additional perspective on the performance of our ongoing operations. Additionally, management believes these non-GAAP financial measures provide useful information to investors because they allow for meaningful comparisons and analysis of trends in our businesses and enable investors to evaluate operations and future prospects in the same manner as management.

The following table provides a reconciliation of net earnings attributable to controlling interest (the most comparable GAAP financial measure) to adjusted EBIT for the periods presented:

[[GREPCENT_TABLE]]
[["(In millions)","","2026","","","2025"],["Net earnings attributable to controlling interest","","$","8.5","","","$","110.7"],["Interest expense, net","","","28.4","","","","7.1"],["Income tax expense","","","20.0","","","","28.8"],["EBIT","","","56.9","","","","146.6"],["Impairment of goodwill, long-lived assets, and other assets (1)","","","85.2","","","","4.6"],["Restructuring and other (income) expense, net (2)","","","(4.4",")","","","1.5"],["Kloeckner purchase derivative (3)","","","2.4","","","","-"],["Kloeckner acquisition-related expenses (4)","","","35.8","","","","-"],["Kloeckner securities investment income, net (5)","","","(17.4",")","","","-"],["Pension adjustments (6)","","","(0.7",")","","","(2.7",")"],["Sitem Group acquisition completion bonus payment (7)","","","3.0","","","","-"],["Gain on Sitem Group purchase derivative (8)","","","-","","","","(4.0",")"],["Tax indemnification adjustment (9)","","","-","","","","4.6"],["Gain on land sale (10)","","","-","","","","(1.5",")"],["Other loss, net (11)","","","0.3","","","","-"],["Adjusted EBIT","","$","161.1","","","$","149.1"]]
[[/GREPCENT_TABLE]]

(1)
Impairment charges are excluded because they do not occur in the ordinary course of our ongoing business operations, are inherently unpredictable in timing and amount, and are non-cash, so their exclusion facilitates the comparison of historical, current and forecasted financial results. Non-cash impairment charges in fiscal 2026 were driven by: (1) pre-tax long-lived asset impairment charges of $58.4 million, of which $19.6 million was attributable to noncontrolling interest, related to certain asset groups within the Electrical Steel reporting unit; (2) a pre-tax goodwill impairment charge of $53.8 million, of which $9.5 million was attributable to noncontrolling interest, that fully impaired the goodwill assigned to the Electrical Steel reporting unit; (3) $0.6 million on certain machinery at our manufacturing facility in Taylor, Michigan; and (4) $1.5 million related to internal-use software module assets that were determined to have no value and written down to zero. Non-cash impairment charges in fiscal 2025 were due to (1) $1.3 million for an indefinite-lived in-process research and development intangible asset that was determined to be fully impaired and (2) $6.1 million related to our plans to combine WSCP’s Cleveland toll processing manufacturing facility into its existing manufacturing facility in Twinsburg, Ohio, excluding the $2.8 million noncontrolling interest portion. Refer to “Note 5 – Goodwill, Long-Lived Assets, and Other Assets”.

40

Table of Contents

(2)
Restructuring activities consist of established programs that are not part of our ongoing 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). These restructuring activities are excluded to facilitate period-to-period comparability of our operating performance. In fiscal 2025, we announced plans to combine WSCP’s Cleveland toll processing manufacturing facility into WSCP’s existing manufacturing facility in Twinsburg, Ohio. In fiscal 2026, we sold substantially all of the remaining net assets of WSCP’s Cleveland toll processing manufacturing facility, which were reported in assets held for sale prior to the sale. The sales resulted in pre-tax gains of $7.0 million, of which $2.6 million was attributable to noncontrolling interest, and included finance lease assets and buildings and improvements, net, and machinery and equipment. In fiscal 2025, TWB announced a VRP. In connection with the VRP, we recognized $1.0 million in severance expenses during fiscal 2025, which is recorded in restructuring and other (income) expense, net and excludes the noncontrolling interest portion of restructuring and other (income) expense, net of $0.8 million. Additionally, in connection with the consolidation and closure of WSCP’s remaining Cleveland, Ohio toll processing manufacturing facility, we recognized $0.5 million in severance expense during fiscal 2025, which is recorded in restructuring and other (income) expense, net, and excludes the noncontrolling interest portion of restructuring and other (income) expense, net of $0.3 million. Refer to “Note 6 – Restructuring and Other (Income) Expense, Net” for additional information.

(3)
Kloeckner purchase derivative represents the change in the fair value of an economic (non-designated) cash flow derivative that was entered into to hedge a portion of the expected purchase price of the outstanding shares of Kloeckner in connection with the Kloeckner Acquisition. The change in the fair value is recorded in miscellaneous income (expense), net, and it is excluded from adjusted results to facilitate period-to-period comparability of our operating performance as it reflects non-operational activity.

(4)
Kloeckner acquisition-related expenses consists of the acquisition-related costs incurred in connection with the Kloeckner Acquisition, consisting primarily of advisory, legal, accounting, valuation, regulatory and other professional fees, as well as certain integration expenses, and are expensed to SG&A, as incurred, in accordance with GAAP. Exclusion of these costs is appropriate because they are directly attributable to a specific strategic transaction that management expects to be transformative to our portfolio, scale and long-term operating profile and are not reflective of our ongoing operating performance for the periods presented. Exclusion facilitates period-over-period comparisons, and assessment of performance excluding the impact of transaction-specific activities.

(5)
Kloeckner securities investment income, net reflects the impact associated with our investment in Kloeckner equity securities, consisting of mark-to-market gains, dividend income, and other costs, recorded in miscellaneous income, net. Management excludes these items from adjusted results to improve comparability of our operating performance across periods.

(6)
Pension adjustments relate to pension-related impacts associated with discrete events impacting our pension plans, reported in miscellaneous income, net, including a $1.4 million gain, of which $0.7 million was attributable to noncontrolling interest, recognized in fiscal 2026, primarily associated with a pension curtailment resulting from headcount reductions. The fiscal 2025 gain related to a settlement resulting from a pension lift-out transaction to transfer a portion of the total projected benefit obligation of the pension plan to a third-party insurance company. The exclusion from adjusted results facilitates period-to-period comparability of our operating performance as these gains reflect discrete pension-related events.

(7)
Sitem Group acquisition completion bonus payment consists of the one-time bonus payment paid to key individuals upon the successful acquisition closing of Sitem Group and excludes the noncontrolling interest portion of $1.6 million. The acquisition completion bonus payment was included within SG&A expense.

(8)
Gain on Sitem Group purchase derivative consists of the mark-to-market gain on the economic (non-designated) foreign currency exchange contract entered into related to the purchase price for Sitem Group, which resulted in a pre-tax gain in miscellaneous income, net, and is excluded as it is not part of our ongoing operations.

(9)
Tax indemnification adjustments reported in miscellaneous income, net, related to an indemnification agreement with the former owners of Tempel. These adjustments are the result of a fiscal 2025 favorable tax ruling and an interest charge true-up. The indemnification agreement, which was entered into with the former Tempel owners at the time we acquired Tempel, provides protection to us from rulings by tax authorities through the acquisition date.

(10)
Gain on land sale reflects the sale of unused land on the campus of Tempel China, which resulted in a pre-tax gain reported in miscellaneous income, net, and is excluded from adjusted results to facilitate period-to-period comparability of our operating performance as it reflects the non-operational disposal of real property.

(11)
Other loss, net, reflects the following fiscal 2026 items reported in miscellaneous income, net, which are excluded as they are not part of ongoing operations:

o
Net insured loss incurred for damage as a result of a small, quickly contained fire at Tempel Canada. We recognized a $0.5 million pre-tax loss equal to the amount of the insurance deductible.

41

Table of Contents

o
Environmental reserve settlement pre-tax gain of $0.2 million recognized by Tempel Canada as the result of a prior indemnification from the former owners of the Canadian facility.

Adjusted EBIT in fiscal 2026 was $161.1 million, an increase of $12.0 million compared to fiscal 2025. The increase was primarily due to a $15.9 million increase in equity earnings at Serviacero Worthington, a $14.7 million increase in gross margin and a $6.5 million reduction in earnings attributable to noncontrolling interests, primarily due to losses associated with Sitem Group. The increase was partially offset by the adjusted increase in SG&A of $25.4 million, including the $14.4 million impact of Sitem Group, compared to fiscal 2025.

Legal Proceedings and Contingencies

We are currently involved in a dispute relating to the import of steel across international borders. Based on currently available information, we believe a loss is not probable and, therefore, have not recorded a reserve. We estimate that a reasonably possible loss could range from $2.0 million to $4.0 million. We will continue to monitor the dispute and will record a reserve if a loss becomes probable and reasonably estimable.

Liquidity and Capital Resources

Our primary ongoing requirements for cash are expected to be for working capital, including the working capital requirements of our expanded operations following the Kloeckner Acquisition, which closed subsequent to May 31, 2026, capital expenditures, integration and transaction-related costs, interest and principal payments on indebtedness, dividend payments, potential future acquisitions and other strategic initiatives.

As of May 31, 2026, our sources of liquidity included cash and cash equivalents, cash generated from operating activities and availability under our then-existing revolving credit facility.

As of May 31, 2026, our cash, cash equivalents, and restricted cash balance was $84.6 million. As of May 31, 2026, the Credit Facility had availability of $219.5 million, after accounting for the eligible borrowing base.

During fiscal 2026, we generated $201.2 million of cash from operating activities, and we used $213.4 million of cash in investing activities, which primarily related to $121.2 million invested in property, plant and equipment and $106.2 million in purchases of equity securities. Additionally, we had net debt proceeds of $51.9 million, and we paid dividends of $32.6 million. The following table summarizes our consolidated and combined cash flows for the periods presented:

[[GREPCENT_TABLE]]
[["(In millions)","","2026","","","2025","","","2024"],["Net cash provided by operating activities","","$","201.2","","","$","230.3","","","$","199.5"],["Net cash used in investing activities","","","(213.4",")","","","(129.1",")","","","(123.2",")"],["Net cash provided by (used in) financing activities","","","3.0","","","","(48.5",")","","","(68.8",")"],["Effects of exchange rate changes on cash, cash equivalents, and restricted cash","","","0.9","","","","-","","","","-"],["Increase (decrease) in cash, cash equivalents and restricted cash","","","(8.3",")","","","52.7","","","","7.5"],["Cash, cash equivalents, and restricted cash at beginning of year","","","92.9","","","","40.2","","","","32.7"],["Cash, cash equivalents, and restricted cash at end of year","","$","84.6","","","$","92.9","","","$","40.2"]]
[[/GREPCENT_TABLE]]

Kloeckner Acquisition and Other Capital Subsequent Events

Subsequent to fiscal year-end, we completed certain financing transactions in connection with the Kloeckner Acquisition and refinanced and replaced the Credit Facility. These transactions included, on June 1, 2026, (1) the issuance of the 2033 Notes ($700.0 million aggregate principal amount 7.750% Senior Secured Notes due June 1, 2033) and (2) the incurrence of the Term Loans ($700.0 million aggregate principal amount seven-year Term Loan Facility, due June 1, 2033), bearing interest, at our option, at a per annum rate equal to Term SOFR plus 4.00%, Daily Simple SOFR plus 4.00%, or the base rate plus 3.00% under the Term Loan Facility. On June 3, 2026, we completed the Kloeckner Acquisition and held a total of 60,710,791 Kloeckner shares. Additionally, on June 25, 2026, we entered into the 2031 Revolving Credit Facility, an asset-based revolving credit agreement providing for an aggregate principal amount of up to $550.0 million, subject to borrowing base availability and other conditions. The 2031 Revolving Credit Facility, maturing on June 25, 2031, replaced the prior Credit Facility.

The net proceeds of the 2033 Notes and the Term Loan Facility described above, together with cash on hand, were used to fund the Kloeckner Acquisition, repay certain of our and Kloeckner’s existing indebtedness, pay transaction fees and expenses, and for general working capital purposes. Specifically, the net proceeds and cash on hand were used to purchase the 52,389,508 Tendered Shares on the Settlement Date as well as the additional purchase of one million Kloeckner shares on June 15, 2026. Additional uses of the net proceeds

42

Table of Contents

included repayment of a portion of Kloeckner’s pre-acquisition indebtedness. We were required by the public delisting tender offer rules to guarantee the availability of certain funds sufficient to satisfy the potential acceptance of all outstanding Kloeckner shares not already held by us. We fulfilled this requirement using funds available from the financing transactions outlined above. Once the public delisting tender offer settles, the unallocated funds, if any, become unrestricted and available for use.

These financing and acquisition transactions occurred after May 31, 2026, and are thus not reflected in net cash provided by financing activities for fiscal 2026. However, these transactions meaningfully increased our indebtedness and debt service obligations, changed the mix and relative cost of our capital resources and will affect financing cash flows beginning in fiscal 2027. Kloeckner debt that was not repaid in connection with the acquisition will be reflected in our consolidated debt profile once Kloeckner is consolidated in our financial statements.

Subsequent to May 31, 2026, Stanzwerk AG entered into an Amended and Restated Standstill Agreement with UBS Switzerland AG maintaining the credit facility through August 31, 2028.

After giving effect to these subsequent financing and acquisition transactions, our sources of liquidity consist primarily of cash and cash equivalents, cash generated from operating activities and availability under our asset-based revolving credit facility. We believe that these sources of liquidity will be adequate to fund our operations, working capital requirements, capital expenditures, integration and transaction-related costs, debt service obligations, dividend payments and other current and long-term obligations and strategic initiatives for the next 12 months following May 31, 2026, and the foreseeable future.

Our ability to borrow under the asset-based revolving credit facility is subject to a borrowing base and satisfaction of customary borrowing conditions. In addition, the asset-based revolving credit facility requires us to maintain a minimum consolidated fixed charge coverage ratio only during a trigger period based on excess availability. Our senior secured notes, term loan facility and asset-based revolving credit facility also contain covenants and restrictions that, subject to customary exceptions and baskets, may limit our ability to incur additional indebtedness, pay dividends, make investments, dispose of assets or engage in other transactions, with certain restrictions becoming more limiting during periods of reduced availability or covenant trigger events. There can be no assurance that our sources of liquidity and capital resources will continue to be sufficient for our needs or that we will be able to obtain additional debt or equity financing on acceptable terms in the future.

We routinely monitor our current and expected operational requirements, financial market conditions, credit relationships, capital structure and liquidity needs.

We believe that our cash balances, cash generated from operating activities and availability under our asset-based revolving credit facility provide adequate capital for 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 the issuance of debt and/or equity securities or other financing arrangements to strengthen our liquidity, fund strategic initiatives, refinance existing obligations or otherwise support our capital structure.

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.

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 provided by operating activities was $201.2 million during fiscal 2026 compared to $230.3 million in fiscal 2025, a decrease of $29.1 million. This change was primarily due to incremental professional and other fees paid in connection with the Kloeckner Acquisition in the amount of $21.4 million and a $19.7 million reduction in the releases of cash from net operating working capital (accounts receivable, inventories, and accounts payable), partially offset by a $10.7 million increase in dividends from Serviacero Worthington. The reduction in the release of net operating working capital is driven by higher average steel prices in fiscal 2026 over fiscal 2025, partially offset by lower-than-normal inventory levels at the end of fiscal 2026 due to tightness in the steel market supply.

43

Table of Contents

Investing Activities

Net cash used in investing activities was $213.4 million during fiscal 2026 compared to $129.1 million in fiscal 2025. In the current year period, the driver of net cash used in investing activities was primarily related to capital expenditures of $121.2 million, which were substantially related to the previously announced strategic expansions of our electrical steel operations in Canada and Mexico to service the transformer and automotive markets, respectively, as well as certain other assets. Additionally, in fiscal 2026, we purchased $106.2 million of Kloeckner equity securities, and paid $2.9 million for Acquisitions, net of cash acquired, in fiscal 2026, due to the acquisition of Sitem Group. See “Note 2 – Acquisitions” for further information.

Capital expenditures reflect cash used for investment in property, plant and equipment and are presented below (this information excludes cash flows related to acquisition and divestiture activity) for each of the prior three fiscal years:

[[GREPCENT_TABLE]]
[["(In millions)","","2026","","","2025","","","2024"],["Capital Expenditures","","$","121.2","","","$","130.4","","","$","103.4"]]
[[/GREPCENT_TABLE]]

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. We estimate our annual maintenance capital needs to be between approximately $40.0 million and $45.0 million, which excludes capital expenditures related to strategic initiatives, including, but not limited to, manufacturing capacity expansions, corporate headquarters, and other technology upgrades. This amount is reflective of our estimated needs prior to the Kloeckner Acquisition. We expect that our annual maintenance capital needs will be approximately 1% of net sales subsequent to the Kloeckner Acquisition.

Financing Activities

Net cash provided by financing activities was $3.0 million in fiscal 2026 compared to net cash used in financing activities of $48.5 million in fiscal 2025. The increase in net cash provided by financing activities in fiscal 2026 was primarily due to $36.2 million in incremental revolver debt drawn to purchase Kloeckner shares and $38.1 million in new debt associated with the Tempel Canada facility. In fiscal 2026, we paid $32.6 million of dividends to our shareholders compared to $31.9 million in fiscal 2025.

Revolving credit facility – On November 30, 2023, we entered into a senior secured Credit Facility. The Credit Facility allows for borrowings of up to $550.0 million, to the extent secured by eligible accounts receivable and inventory balances at period end. The Credit Facility does not include credit rating triggers. As of May 31, 2026, there were $185.4 million of outstanding borrowings drawn against the Credit Facility with $219.5 million available under the Credit Facility after accounting for the eligible borrowing base. As of May 31, 2026, we were in compliance with the financial covenants of the Credit Facility.

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

Canadian Government Regional Economic Growth Loan – Tempel owns a subsidiary in Canada (“Tempel Canada”) that entered into an agreement with the Federal Economic Development Agency for Southern Ontario, Canada, through the Canadian Government’s Regional Economic Growth Innovation program, which provided a 0% interest loan of up to CAD $3.5 million (approximately USD $2.5 million as of May 31, 2026) (“FED DEV Loan”). The FED DEV Loan is to be used for the purchase and installation of advanced manufacturing equipment at Tempel Canada’s Burlington, Ontario location. As of May 31, 2026, $2.3 million was outstanding under the FED DEV Loan.

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 has committed to lend Tempel Canada up to CAD $57.5 million (approximately USD $41.7 million as of May 31, 2026) (“BDC Loan”) to fund the construction of a new manufacturing facility to be located in Burlington, Ontario, Canada (“Burlington Property”). As extended in the third quarter of fiscal 2026, the draw period for the BDC Loan was set to lapse on June 30, 2026, unless further extended by BDC. Subsequent to May 31, 2026, the draw period was extended until August 31, 2026.

Worthington Steel guarantees the payment obligations of Tempel Canada in respect of the BDC Loan. As amended, the guarantee is for the full amount of the BDC Loan on the date of any demand. The BDC Loan contains representations, covenants and events of default customary for transactions of this nature, including that Tempel Canada will maintain a total debt to tangible equity ratio of 1.0 to 1.0 and a fixed charge coverage ratio of 1.15 to 1.0, each tested annually beginning May 31, 2026. As of May 31, 2026, we were in compliance with the financial covenants of the BDC Loan. As of May 31, 2026, $36.4 million was outstanding under the BDC Loan.

44

Table of Contents

Canadian Advanced Manufacturing and Innovation Competitiveness Loan – On May 12, 2025, Tempel Canada entered into an agreement with the Province of Ontario’s Minister of Economic Development, Job Creation and Trade, which provided a loan for up to CAD $5.0 million (approximately USD $3.6 million as of May 31, 2026) (“AMIC Loan”) to support building and equipment expansion at the Burlington Property. During fiscal 2026, we received total distributions of CAD $2.5 million (approximately USD $1.8 million as of May 31, 2026). The AMIC Loan is structured with an incentive component that states up to CAD $0.5 million (approximately USD $0.4 million as of May 31, 2026) of the principal may be forgiven if certain performance targets are met. As of May 31, 2026, $1.8 million was outstanding under the AMIC Loan.

Sitem Group Term Loans – We assumed liabilities of Sitem Group as part of the acquisition and recorded the liabilities within the consolidated balance sheet as part of the opening balance sheet. Sitem Group’s obligations included various term loans (“Sitem Group Term Loans”), which spanned maturities and had varying interest rates and interest rate mechanisms. As of May 31, 2026, the aggregate amount outstanding of the Sitem Group Term Loans was $30.9 million, which includes the Sitem Group Standstill Agreement described below. The obligations, along with the relevant loan terms, are included in the summary table within “Note 9 – Debt”.

Standstill Agreement – Sitem Group – 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 in April 2025.

The agreement relates to bilateral credit facilities originally provided to Stanzwerk AG in the aggregate principal amount of CHF 17.1 million (approximately USD $21.7 million as of May 31, 2026). Under the terms of the standstill, the lenders agreed to maintain availability under the credit lines through June 30, 2026. The Standstill Agreement contains financial covenants requiring Stanzwerk AG to maintain (i) a minimum equity ratio of 15%, tested quarterly beginning June 30, 2025, and (ii) minimum liquidity of CHF 4.0 million (approximately USD $5.1 million as of May 31, 2026), tested monthly beginning April 30, 2025. Stanzwerk AG was in compliance with these covenants as of May 31, 2026. A detailed discussion of all debt obligations and their associated terms is provided in “Note 9 – Debt”.

As of May 31, 2026, prior to the subsequent financing transactions described below, we had total debt outstanding of $256.8 million, consisting of $185.4 million of short-term borrowings, $27.0 million of current maturities of long-term debt and $44.4 million of long-term debt. Our debt as of May 31, 2026, included amounts outstanding under our then-existing revolving credit facility, Canadian expansion-related loan arrangements, Sitem Group Term Loans and other debt arrangements. We were in compliance with the applicable covenants under our debt arrangements as of May 31, 2026.

Common shares – Prior to the Separation, our common shares were owned by the Former Parent. After the Separation was completed, as described in “Note 11 – Equity and Mezzanine Equity”, there were 49.3 million shares issued and outstanding. On December 1, 2023, the common shares began trading on the NYSE under the ticker symbol WS.

During fiscal 2026, we declared cash dividends totaling $0.64 per common share at a quarterly rate of $0.16 per common share. During fiscal 2025, we declared cash dividends totaling $0.64 per common share at a quarterly rate of $0.16 per common share.

On June 24, 2026, during the first quarter of fiscal 2027, the Board declared a quarterly cash dividend of $0.16 per common share payable on September 29, 2026, to the shareholders of record at the close of business on September 15, 2026.

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

Dividend Policy

We currently have no material contractual or regulatory restrictions on the payment of dividends provided that no event of default exists under the 2031 Revolving Credit Facility and the applicable payment conditions, including the minimum availability threshold, are satisfied. 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.

Recent Accounting Pronouncements

Refer to “Note 1 – Description of Business, The Separation, and Basis of Presentation” for further information.

45

Table of Contents

Environmental

We do not believe that compliance with environmental laws has or will have a material effect on our capital expenditures, future results of operations, or financial position or competitive position.

Critical Accounting Estimates

The discussion and analysis of our financial condition and results of operations are based upon our consolidated and combined financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of our financial statements and the reported amounts of revenues and expenses during the reporting periods. We base our estimates on historical experience and various other assumptions that we believe to be reasonable under the circumstances. These results form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Critical accounting estimates are defined as those estimates made in accordance with generally accepted accounting principles that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on the financial condition or results of operations. Although actual results historically have not deviated significantly from those determined using our estimates, our financial position or results of operations could be materially different if we were to report under different conditions or to use different assumptions in the application of such estimates. The following accounting estimates are considered to be the most critical to us, as these are the primary areas where financial information is subject to our estimates, assumptions and judgment in the preparation of our consolidated and combined financial statements.

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

Critical estimate: Goodwill and intangible assets with indefinite lives are not amortized, but instead are tested for impairment annually, during the fourth fiscal quarter, or more frequently if events or changes in circumstances indicate that impairment may be present. Application of goodwill impairment testing involves judgment, including but not limited to, the identification of reporting units and estimation of the fair value of each reporting unit. A reporting unit is defined as either an operating segment or one level below an operating segment. Our operations are organized as a single component, or operating segment, and therefore one reportable segment. Our reporting units, which are one level below our single operating segment, consist of: (1) Flat-Rolled Steel Processing; (2) Electrical Steel; and (3) Laser Welding.

For goodwill and indefinite-lived intangible assets, we either first perform a qualitative assessment to determine whether a quantitative impairment test is necessary or we may elect to proceed directly to a quantitative test. The qualitative assessment considers the totality of relevant events and circumstances, including macroeconomic conditions, industry and market considerations, cost factors, financial performance and other entity- and asset-specific factors. If, based on our qualitative assessment, we conclude that it is not more likely than not that the fair value of a reporting unit or indefinite-lived intangible asset, as applicable, is less than its carrying amount, a quantitative impairment test is not required. If we elect to bypass the qualitative assessment or conclude that it is more likely than not that the applicable fair value is less than the carrying amount, we perform a quantitative impairment test. For goodwill, the quantitative test compares the fair value of each reporting unit with assigned goodwill to its carrying amount, including goodwill, and an impairment loss is recognized for the amount by which the carrying amount exceeds fair value, limited to the amount of goodwill assigned to the reporting unit. For indefinite-lived intangible assets, the quantitative test compares the fair value of each asset, or applicable unit of accounting, with its carrying amount, and an impairment loss is recognized for any excess of carrying amount over fair value.

Assumptions and judgments: When performing a qualitative assessment, judgment is required when considering relevant events and circumstances that could affect the fair value of the indefinite-lived intangible asset or reporting unit to which goodwill is assigned. Management considers whether events and circumstances such as a change in strategic direction and changes in business climate would impact the fair value of the indefinite-lived intangible asset or reporting unit to which goodwill is assigned. If a quantitative analysis is required, assumptions are required to estimate the fair value to compare against the carrying value. Fair value is determined by using valuation techniques appropriate in the circumstances, which may include income and market approaches. Significant assumptions that form the basis of fair value can include discount rates, underlying forecast assumptions and royalty rates. These assumptions are forward-looking and can be affected by future economic and market conditions.

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

During the fourth quarter of fiscal 2026, we identified indicators of impairment related to our Electrical Steel reporting unit, including weaker-than-expected demand in certain end markets, lower forecasted volumes and profitability, increased foreign competition,

46

Table of Contents

delayed customer program launches, and revised expectations regarding future cash flows. As a result, we performed a quantitative impairment test for the Electrical Steel reporting unit.

The fair value of the Electrical Steel reporting unit was estimated using an income approach. The income approach was based on a discounted cash flow model using management’s current projections of revenue, operating margins, capital expenditures, working capital requirements, terminal growth rates, and discount rates. The fair value measurement was classified within Level 3 of the fair value hierarchy because it included significant unobservable inputs. The key assumptions used in the fair value calculation were projected cash flows and the discount rate, which represent unobservable Level 3 inputs. These assumptions are forward-looking and could be affected by changes in market demand, competitive conditions, customer program timing, steel pricing, input costs, operating performance, capital costs and broader economic conditions. Actual results may differ from those assumed in our forecasts. Refer to “Note 5 – Goodwill, Long-Lived Assets, and Other Assets” for additional information regarding the valuation methodology, significant unobservable inputs and impairment charges recognized.

Based on this analysis, we determined that the carrying amount of the Electrical Steel reporting unit exceeded the fair value. Accordingly, a pre-tax goodwill impairment charge of $53.8 million was recorded within impairment of goodwill on the consolidated and combined income statements. The impairment charge represented all goodwill assigned to the Electrical Steel reporting unit. Given the goodwill assigned to the Electrical Steel reporting unit was fully impaired, reasonably possible changes in the discount rate or other key valuation assumptions would not have resulted in an additional goodwill impairment charge for that reporting unit. We will continue to monitor the Electrical Steel reporting unit and its related long-lived asset groups for changes in facts and circumstances that could result in additional impairment charges in future periods.

We also evaluated the Flat-Rolled Steel Processing and Laser Welding reporting units for impairment based on certain qualitative factors, including macroeconomic conditions, industry and market considerations, cost factors, operating performance, forecasted cash flows, capital expenditure requirements, product mix and market-based indicators. Based on those assessments, we determined that it was not more likely than not that the fair values of the Flat-Rolled Steel Processing and Laser Welding reporting units were less than their respective carrying amounts. Accordingly, no quantitative goodwill impairment test was required for those reporting units.

The impairment indicators identified for the Electrical Steel reporting unit were specific to that reporting unit’s exposure to electrification-related end markets, including EV applications. The Flat-Rolled Steel Processing and Laser Welding reporting units serve different end markets and applications, including broader steel processing, automotive production, tailor welded blanks, and automotive lightweighting applications. As a result, we did not identify similar adverse changes in demand, expected cash flows, or operating performance for those reporting units.

Impairment of Definite-Lived Long-Lived Assets

Critical estimate: We review long-lived assets to be held and used, including property, plant and equipment and intangible assets with finite useful lives, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group, as applicable, may not be recoverable. Long-lived assets are grouped at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. Recoverability is assessed by comparing the carrying amount of the asset or asset group with the sum of the undiscounted cash flows expected to result from its use and eventual disposition. If the undiscounted cash flows equal or exceed the carrying amount, the asset or asset group is considered recoverable and no impairment loss is recognized. If the carrying amount exceeds the undiscounted cash flows, an impairment loss is measured as the amount by which the carrying amount of the asset group exceeds its fair value.

Assumptions and judgments: When performing the comparison of the sum of the undiscounted cash flows of the asset or asset group to its respective carrying amount, judgment is required when forming the basis for underlying cash flow forecast assumptions. Management considers whether events and circumstances such as a change in strategic direction and changes in business climate would impact the recoverability of the definite-lived long-lived asset or asset group. If the asset or asset group is not recoverable based on the undiscounted cash flow comparison, assumptions are required to estimate the fair value and measure any impairment loss. Significant assumptions that form the basis of fair value can include discount rates and other underlying forecast assumptions. These assumptions are forward-looking and can be affected by future economic and market conditions.

During the second quarter of fiscal 2026, the net asset value on certain machinery at our manufacturing facility in Taylor, Michigan, was lowered to $0.5 million, resulting in a pre-tax impairment charge of $0.6 million.

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

47

Table of Contents

As a result, we performed a recoverability test for the affected asset groups by comparing the carrying amounts of the asset groups to the undiscounted cash flows expected to result from their use and eventual disposition. For asset groups whose carrying amounts were not recoverable, we measured impairment losses as the excess of the carrying amounts over their estimated fair values. The estimated fair values of the affected long-lived asset groups were determined using a discounted cash flow method, market approach, cost approach, or combination thereof, which included significant unobservable inputs, including forecasted volumes, operating margins, capital expenditure requirements, working capital assumptions, discount rates, replacement cost assumptions, and/or expected proceeds from asset dispositions. These fair value measurements were classified within Level 3 of the fair value hierarchy. As a result of this analysis, we recognized a pre-tax impairment charge of $58.4 million related to long-lived assets within impairment of long-lived assets and other assets in the consolidated and combined statements of earnings. The impairment charges were allocated to the long-lived assets within the respective asset groups on a pro rata basis, subject to the limitation that no individual long-lived asset was reduced below its determinable fair value. Refer to “Note 5 – Goodwill, Long-Lived Assets, and Other Assets” for additional information regarding the valuation methodology, significant unobservable inputs and impairment charges recognized.

The impairment indicators identified for the Electrical Steel reporting unit were specific to that reporting unit’s exposure to electrification-related end markets, including EV applications. The Flat-Rolled Steel Processing and Laser Welding reporting units serve different end markets and applications, including broader steel processing, automotive production, tailor welded blanks, and automotive lightweighting applications. As a result, we did not identify similar adverse changes in demand, expected cash flows, or operating performance for those reporting units.

Income Taxes

Critical estimate: We account for income taxes using the asset and liability method, which requires the recognition of deferred tax assets and deferred tax liabilities for expected future tax consequences of temporary differences that currently exist between the tax basis and financial reporting basis of our assets and liabilities. We evaluate the deferred tax assets to determine whether it is more likely than not that some, or a portion, of the deferred tax assets will not be realized, and provide a valuation allowance as appropriate. Changes in existing tax laws or rates could significantly impact the estimate of our tax liabilities. Significant judgment is required in estimating our income tax provision, assessing the realizability of deferred tax assets, evaluating valuation allowances and measuring uncertain tax positions.

GAAP contains a two-step approach to recognize and measure uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the available evidence indicates it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount which is more than 50% likely of being realized upon ultimate settlement. We consider many factors when evaluating and estimating our tax positions and tax benefits, which may require periodic adjustments and for which actual outcomes may differ from forecasted outcomes. Our policy is to include interest and penalties related to uncertain tax positions in income tax expense.

Assumptions and judgments: Significant judgment is required in determining our tax expense and in evaluating our tax positions. Tax benefits from uncertain tax positions that are recognized in our consolidated financial statements are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. Valuation allowances are recorded if it is more likely than not that some portion of the deferred income tax assets will not be realized. In evaluating the need for a valuation allowance, we consider various factors, including the expected level of future taxable income and available tax planning strategies. Any changes in judgment about the valuation allowance are recorded through Income tax expense and are based on changes in facts and circumstances regarding realizability of deferred tax assets.

We have reserves for income taxes and associated interest and penalties that may become payable in future years as a result of audits by taxing authorities. It is our policy to record these in income tax expense. While we believe the positions taken on previously filed tax returns are appropriate, we have established the tax and interest reserves in recognition that various taxing authorities may challenge our positions. These reserves are analyzed periodically, and adjustments are made as events occur to warrant adjustment to the reserves, such as lapsing of applicable statutes of limitations, conclusion of tax audits, additional exposure based on current calculations, identification of new issues, and release of administrative guidance or court decisions affecting a particular tax issue. We have provided for the amounts we believe will ultimately result from these changes; however, due to the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from our current estimate of the tax liabilities. Such differences will be reflected as increases or decreases to income tax expense in the period in which they are determined.

During fiscal 2026, income tax estimates were affected by the Sitem Group acquisition, including the recognition and measurement of acquired deferred tax assets and liabilities, the tax effects of purchase accounting adjustments, the tax treatment of goodwill and identifiable intangible assets. We recorded valuation allowances of $11.0 million, of which $3.3 million related to acquired entities, and $7.7 million related to current year changes in management’s estimates of realizability, primarily relating to net operating loss carryforwards, interest carryforward and other deductible temporary differences. We further recognized $2.6 million associated with gross uncertain tax positions.

48

Table of Contents

See “Note 14 – Income Taxes” for further information.

Employee Pension Plans

Critical estimate: Defined benefit pension and other post-employment benefit (“OPEB”) plan obligations are remeasured at least annually as of reporting period end based on the present value of projected future benefit payments for all participants for services rendered to date. The measurement of projected future benefits is dependent on the provisions of each specific plan, demographics of the group covered by the plan and other key measurement assumptions. The funded status of these benefit plans, which represents the difference between the benefit obligation and the fair value of plan assets, is calculated on a plan-by-plan basis. The benefit obligation and related funded status are determined using assumptions as of the end of each fiscal year. Net periodic benefit cost is included in other income (expense) in our consolidated and combined statements of earnings, except for the service cost component, which is recorded in SG&A.

Assumptions and judgments: Certain actuarial assumptions used in developing the pension and post-retirement accounting estimates include expected long-term rate of return on plan assets, discount rates, projected health care cost trend rates, cost of living adjustments, and mortality rates. We believe discount rates and expected return on assets are the most critical assumptions. The discount rates used to measure plan liabilities as of the measurement date are determined individually for each plan. The discount rates are determined by matching the projected cash flows used to determine the plan liabilities to the projected yield curve of high-quality corporate bonds available at the measurement date.

In developing future long-term return expectations for our benefit plans’ assets, we formulate views on the future economic environment. We evaluate general market trends and historical relationships among a number of key variables that impact asset class returns such as expected earnings growth, inflation, valuations, yields, and spreads. We also consider expected volatility by asset class and diversification across classes to determine expected overall portfolio results given current and target allocations. Net periodic benefit costs, including service cost, interest cost, and expected return on assets, are determined using assumptions regarding the benefit obligation and the fair value of plan assets as of the beginning of each fiscal year.

Holding all other factors constant, a decrease in the discount rate by 0.25% would have increased the projected benefit obligation at May 31, 2026, by approximately $2.8 million. Also, holding all other factors constant, a decrease in the expected long-term rate of return on plan assets by 0.25% would have increased fiscal 2026 pension expense by approximately $0.2 million.

See “Note 13 – Employee Retirement Plans” for further information.

Business Combinations

Critical estimate: We account for business combinations using the acquisition method of accounting, which requires that once control is obtained, all the assets acquired and liabilities assumed are recorded at their respective fair values at the date of acquisition. The determination of fair values of identifiable assets and liabilities requires significant judgments and estimates and the use of valuation techniques when market value is not readily available. For the valuation of intangible assets acquired in a business combination, we typically use an income approach. The purchase price allocated to the intangible assets is based on unobservable assumptions, inputs and estimates, including but not limited to, forecasted revenue growth rates, projected expenses, discount rates, customer attrition rates, royalty rates, and useful lives.

Assumptions and judgments: Significant assumptions, which vary by the class of asset or liability, are forward-looking and could be affected by future economic and market conditions. We engage third-party valuation specialists who review our critical assumptions and prepare the calculation of the fair value of acquired intangible assets in connection with significant business combinations. The excess of the purchase price over the fair values of identifiable assets acquired and liabilities assumed is recorded as goodwill. During the measurement period, which is up to one year from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the measurement period, any subsequent adjustments are recorded to earnings.

During fiscal 2026, Tempel completed the acquisition of a 52% ownership interest in Sitem Group. The preliminary purchase price allocation required significant estimates and assumptions related to the valuation of acquired tangible assets, identifiable intangible assets, right-of-use assets and lease liabilities, deferred taxes, pension and other postretirement obligations, debt, redeemable noncontrolling interests and residual goodwill. The identifiable intangible assets acquired included customer relationships, technological know-how, a favorable right-of-use lease asset and software. The valuation of these assets required management to estimate, among other items, forecasted revenue growth, customer attrition, operating margins, royalty rates, replacement cost, discount rates and useful lives. During fiscal 2026, we finalized the valuation of the assets acquired and liabilities assumed and recognized certain net financial position adjustments and tax-related measurement period adjustments resulting from changes in the underlying calculations.

49

Table of Contents

On June 3, 2026, subsequent to fiscal 2026, we completed the acquisition of a majority interest in Kloeckner. Because the acquisition closed after May 31, 2026, the related acquisition accounting did not affect our fiscal 2026 consolidated balance sheet. However, the acquisition is expected to require significant estimates in future periods, including the identification and valuation of acquired assets and assumed liabilities, fair value measurement of any previously held equity interests, identifiable intangible assets, deferred taxes, debt and financing arrangements, noncontrolling interests and goodwill.

See “Note 2 – Acquisitions” and “Note 21 – Subsequent Events” for further information.

Redeemable noncontrolling interest

Critical estimate: Redeemable noncontrolling interests are initially recorded at their issuance-date, or acquisition date, fair value. After initial measurement, redeemable noncontrolling interests that are currently redeemable, or probable of becoming redeemable, are adjusted to the greater of (i) current redemption value or (ii) carrying amount. Any remeasurement of the redeemable noncontrolling interest is accounted for as a deemed dividend of redeemable noncontrolling interest and recorded as an adjustment to retained earnings, which also reduces earnings available to common shareholders for the calculation of earnings per common share.

Assumptions and judgments: The determination of whether redemption is probable requires significant judgment, including evaluating contractual terms, market conditions, and the intent of minority holders. If redemption becomes probable, the carrying amount is adjusted to redemption value, which could increase volatility in retained earnings and additional paid-in capital in future periods. The redemption value is updated at least annually based on a third-party valuation. For interim periods, we update the valuation on a roll-forward approach unless events or circumstances indicate that a material change has occurred, in which case a reassessment is performed.

During fiscal 2026, in connection with the Sitem Group acquisition, we entered into arrangements with certain minority interest holders that provide redemption rights that could require us to purchase the minority holders’ remaining interests upon the occurrence of specified events. As the redemption features are not solely within our control, the related interests are classified outside permanent equity as redeemable noncontrolling interests.

The redemption value is based on specified financial metrics and valuation assumptions. The estimate may be affected by changes in Sitem Group’s actual or forecasted earnings, working capital, debt, applicable valuation multiples, foreign currency exchange rates, discount rates and other market participant assumptions. Changes in the estimated redemption value are recorded as adjustments to retained earnings, or in the absence of retained earnings, additional paid-in capital, and may reduce earnings available to common shareholders for purposes of earnings per share.

See “Note 2 – Acquisitions” and “Note 11 – Equity and Mezzanine Equity” for further information.