Worthington Steel, Inc. (WS)

Price$36.17Cached quoteAs of 2026-09-06 07:21 UTC

AI: Fair-priced

Price checkThe market price looks reasonable, but post-acquisition leverage makes simple trailing multiples unusually misleading.

Research confirms Worthington Steel, Inc. trades on the New York Stock Exchange as WS. The latest verified close implies an equity value near $1.76 billion, but trailing P/E is not very informative because fiscal 2026 GAAP profit was depressed by non-cash impairments and acquisition costs. The better test is post-Kloeckner cash generation against the enlarged debt load. On that basis, the stock looks neither clearly cheap nor clearly expensive until the first consolidated quarters establish sustainable EBITDA and free cash flow.

Big pictureKloeckner triples revenue scale, while heavy debt turns synergy delivery into the key equity driver.

Worthington bought control of Kloeckner in June using $700 million of 7.75% secured notes plus a $700 million term loan priced at SOFR plus 4%. An August pro forma filing showed roughly $2.36 billion of debt including short-term borrowings and current maturities, against about $489 million cash. Management originally targeted about 4.0x pro forma net leverage including synergies and below 2.5x within 24 months. Net leverage means net debt divided by EBITDA. That makes debt paydown, not revenue growth alone, the central valuation test.

Business strengthLegacy operations still produce cash, but steel cycles and customer concentration keep earnings inherently uneven.

Fiscal 2026 pre-Kloeckner revenue rose to $3.44 billion and adjusted EBITDA reached $245.6 million, while operating cash flow was $201.2 million and free cash flow was $80.0 million after capital spending. Cash generation therefore remained positive, although fourth-quarter free cash flow was only $7.8 million. The business is cyclical: steel prices and volumes move with industrial activity, and automotive is the largest end market; the top three customers represented 34.5% of sales. Kloeckner broadens customers and geography, but also adds integration complexity.

What could change the storyFaster deleveraging supports upside; weak margins, integration delays, or minority payouts would pressure the equity.

The bull case assumes most of $150 million annual synergies arrive by fiscal 2028, combined margins stay above 7%, and leverage falls below 2.5x within two years, allowing interest costs to decline and dividends to continue without equity issuance. The bear case assumes softer steel demand, Electrical Steel weakness, integration delays, or DPLTA minority cash obligations keep debt high and free cash flow thin. The transaction used debt rather than new WS shares, limiting immediate dilution; however, the 10-K warns future equity financing could dilute holders if funding needs rise.

AI: News

Kloeckner control agreement signedA September agreement advances operating control, but shareholder approval and minority-holder payments still create execution risk.

On September 8, Worthington Steel signed a domination and profit-and-loss transfer agreement with Kloeckner. If approved by at least 75% of represented share capital at the expected October 23 meeting and then registered, it can take effect no earlier than January 1, 2027. Worthington's German subsidiary would gain instruction rights, receive Kloeckner profits, and absorb losses. Outside shareholders may choose €11.00 cash per share or €0.67 gross annual compensation, with court challenges possible.

Pro forma finances filedThe August acquisition filing showed much higher combined debt and interest expense before any promised synergies.

On August 19, an SEC amendment supplied Kloeckner financials and an illustrative combined balance sheet. It showed $489.4 million of cash, $2.2648 billion of long-term debt, $63.8 million of short-term borrowings and $27.1 million of current debt maturities. For the pro forma nine months, combined net sales were $7.2217 billion and net interest expense was $121.0 million. These figures are not actual post-close results, but they show how strongly future equity returns depend on deleveraging and synergy capture.

Fiscal 2026 closes mixedJune results showed higher annual adjusted EBITDA, yet fourth-quarter margins weakened and cash generation slowed.

On June 24, Worthington reported fiscal fourth-quarter sales up 12%, but adjusted EBITDA fell to $75.2 million from $87.0 million as spreads compressed. Large non-cash Electrical Steel impairments and acquisition expenses produced a GAAP operating loss. For the full fiscal year, adjusted EBITDA increased to $245.6 million from $215.1 million, while free cash flow totaled $80.0 million. The release therefore showed a still-cash-generative legacy business entering a much more leveraged phase immediately after year-end.

Kloeckner acquisition completedThe June closing secured majority ownership and shifted Worthington from standalone processor to global consolidator.

On June 3, Worthington completed its voluntary takeover offer and secured about 62% of Kloeckner shares. The strategic logic is broader products, end markets and geography, with management targeting $150 million of annual run-rate synergies by fiscal 2028. The acquisition was financed primarily with new debt, so success now requires those savings and operating improvements to convert into cash. The later delisting and control agreement are steps toward tighter integration and access to Kloeckner economics.

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Revenue

2022

2023

2024

2025

2026

Net income

2022

2023

2024

2025

2026

Free cash flow

2022

2023

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2026

Total cash / debt

CashTotal debt

2022

2023

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2026

Financial statements

	2026	2025	2024	2023	2022
Revenue	$3.44B	$3.09B	$3.43B	$3.61B	$4.07B
Gross profit	$403.3M	$388.6M	$439.8M	$336.5M	$395.5M
Gross margin	11.71%	12.56%	12.82%	9.33%	9.72%
Operating expenses	$404.7M	$241.6M	$245.3M	$216.2M	$168.9M
Operating income	−$1.4M	$147.0M	$194.5M	$120.3M	$226.6M
Operating margin	−0.04%	4.75%	5.67%	3.33%	5.57%
EBITDA	$82.8M	$213.0M	$259.8M	$189.9M	$286.1M
EBITDA margin	2.40%	6.89%	7.57%	5.26%	7.03%
Net income	$8.5M	$110.7M	$154.7M	$87.1M	$180.4M
Net profit margin	0.25%	3.58%	4.51%	2.41%	4.43%
Basic EPSper basic share	$0.17	$2.24	$3.14	$1.77	$3.66
Diluted EPSper diluted share	$0.17	$2.19	$3.11	$1.77	$3.66

Review official source filings ↗

Owners

Reported shareholders

Reference date Jun 30, 2026

≈10.23%of listed shares

BlackRock, Inc.5.11M shares · Jun 30, 2026

View holders

Top 20 reported holders of WS
Holder	% owned
BlackRock, Inc.	≈10.23%5.11M shares
DIMENSIONAL FUND ADVISORS LP	≈5.14%2.57M shares
VANGUARD PORTFOLIO MANAGEMENT LLC	≈4.57%2.28M shares
STATE STREET CORP	≈4.16%2.08M shares
VANGUARD CAPITAL MANAGEMENT LLC	≈3.31%1.65M shares
T. Rowe Price Investment Management, Inc.	≈2.44%1.22M shares
ALLIANCEBERNSTEIN L.P.	≈1.89%943.74K shares
GEODE CAPITAL MANAGEMENT, LLC	≈1.78%890.5K shares
Fisher Asset Management, LLC	≈1.28%640.14K shares
CHARLES SCHWAB INVESTMENT MANAGEMENT INC	≈1.24%619.6K shares
TEACHER RETIREMENT SYSTEM OF TEXAS	≈1.18%589.22K shares
Invesco Ltd.	≈1.03%512.45K shares
MORGAN STANLEY	≈0.88%440.83K shares
GOLDMAN SACHS GROUP INC	≈0.80%398.03K shares
NORTHERN TRUST CORP	≈0.78%388.24K shares
BRIDGEWAY CAPITAL MANAGEMENT, LLC	≈0.77%386.5K shares
LSV ASSET MANAGEMENT	≈0.74%369.05K shares
Nuveen, LLC	≈0.73%363.82K shares
Bank of New York Mellon Corp	≈0.69%345.94K shares
GILMORE GEOFFREY G	≈0.69%344.93K shares

Percentages use 49.92M shares of this listed class outstanding on May 31, 2026. ≈ compares the latest reported holding with a share total from a different date; it is not a confirmed current stake.

Gray completes the 100% scale. Reported positions may overlap; holders have different reporting dates.

Source: SEC Form 13F ↗Updated Sep 29, 2026 · Quarterly data

Insider buys & sells

Jul 1, 2024–Jun 30, 2026

Buys2$374.1K disclosed value

Sells (SEC code S)6$1.43M disclosed value

Transaction	Insider	Type	Shares	Price	Value	Owned after
Jun 2, 2026Form 4 · 10b5-1	KLINGLER JEFFREY RChief Operating Officer	SellCommon Shares	6.0K	$44.53	$268.4K	93.2K
Jun 2, 2026Form 4 · 10b5-1	KLINGLER JEFFREY RChief Operating Officer	SellCommon Shares	14.0K	$43.52	$609.6K	99.2K
Jun 1, 2026Form 4 · 10b5-1	KLINGLER JEFFREY RChief Operating Officer	SellCommon Shares	200	$43.00	$8.6K	93.2K
Jun 1, 2026Form 4 · 10b5-1	ADAMS TIMOTHY AChief Financial Officer	SellCommon Shares	1.3K	$42.77	$54.2K	44.1K
Jun 1, 2026Form 4 · 10b5-1	ADAMS TIMOTHY AChief Financial Officer	SellCommon Shares	1.1K	$41.70	$45.9K	45.4K