Worthington Steel’s first quarter of fiscal 2027 was transformed by its majority acquisition of Klöckner, with net sales jumping to $2.73 billion from $872.9 million a year earlier, a gain of 212%.
The company shipped 1.94 million tons in the quarter, up from 928,866 tons in the prior-year period. Direct volume rose to 1.50 million tons from 585,073 tons, while toll volume increased to 441,391 tons from 343,793 tons.
Operating income increased to $56.0 million from $48.3 million. Gross margin rose to $261.2 million from a prior-year level implied by the $146.0 million increase. Adjusted EBIT climbed to $78.5 million from $55.5 million, and adjusted EBITDA increased to $111.0 million from $78.8 million.
Despite the higher revenue and operating profit, Worthington Steel posted a net loss attributable to controlling interest of $7.0 million, compared with net earnings of $36.8 million in the same quarter last year. Diluted loss per share was $0.14, versus diluted earnings per share of $0.73 a year ago. Adjusted diluted EPS came in at $0.57, down from $0.77.
Excluding Klöckner, net sales increased $81.0 million, or 9%, driven mainly by higher direct volumes and, to a lesser extent, higher direct pricing. Direct net sales rose $81.7 million, with direct tons sold up 3% and direct selling prices up 6%. Toll processing net sales fell $0.7 million, or 2%, as toll volumes declined 8% even though toll selling prices rose 6%.
The mix shifted toward direct business. Consolidated direct tons accounted for 77% of processed volume, versus 63% a year earlier. Excluding Klöckner, direct tons made up 66% of volume, up from 63% in the prior-year quarter.
Klöckner contributed $1.77 billion of the quarter’s net sales, $144.0 million of gross margin, and $24.2 million of operating income. Excluding Klöckner, gross margin rose just $2.0 million, while operating income fell $16.5 million, pressured by a $17.6 million increase in SG&A, including an $18.6 million jump in professional fees tied to the acquisition.
On the cash side, Worthington Steel used $6.0 million in operating activities, slightly better than the $6.3 million used a year ago. Capital spending rose sharply to $63.0 million from $29.4 million, pushing free cash flow to negative $69.0 million from negative $35.7 million.
The quarter ended with $248.2 million in cash and cash equivalents and total debt of $2.20 billion, leaving net debt at $1.95 billion.
The board declared a quarterly dividend of $0.16 per share, unchanged from the newly stated payout level in the release. As a result of these announcements, the company's shares have moved -2.38% on the market, and are now trading at a price of $38.19. For more information, read the company's full 8-K submission here.
