Worthington Steel (WS) Fiscal Q1 2027 Earnings Call: Kloeckner and Debt Focus
Source Tradingkey
Key Takeaways
- Worthington Steel reported fiscal Q1 2027 net sales of $2.7 billion, adjusted EBITDA of $111 million, and adjusted earnings of $0.57 per diluted share. The quarter included Kloeckner Metals for the first time following the June 3 acquisition.
- GAAP results included a $7 million net loss from continuing operations attributable to Worthington Steel, or $0.14 per diluted share, compared with net earnings of $36.8 million, or $0.73 per share, a year earlier.
- Purchase accounting for Kloeckner inventory reduced first-quarter gross margin and adjusted EBITDA by an estimated $43 million. Management said adding back that non-cash impact would result in EBITDA of approximately $150 million.
- Legacy Worthington Steel sales rose 9% year over year to $954 million, while shipments declined 1%. Automotive, agriculture, and other transportation volumes increased, offset by lower energy and construction shipments.
- The acquisition significantly increased financing costs. Net interest expense rose to $38.8 million from $2.9 million, while quarter-end net debt reached $1.9 billion.
- Management expects fiscal 2027 combined capital expenditures of $160 million to $180 million and estimated legacy inventory holding gains of $10 million to $15 million in the second quarter.
Key Financial Data
| Metric | Fiscal Q1 2027 | Prior-year quarter | Commentary |
|---|---|---|---|
| Net sales | $2.7 billion | Approximately $0.8 billion | Increase primarily reflected Kloeckner consolidation |
| Adjusted EBITDA | $111 million | — | Includes 100% of consolidated adjusted EBITDA before allocation to non-controlling interests |
| Adjusted EBIT | $78.5 million | $55.5 million | Increased by $23 million |
| GAAP net income attributable to WS | $(7.0) million | $36.8 million | Continuing operations |
| GAAP diluted EPS | $(0.14) | $0.73 | Acquisition-related items affected comparability |
| Adjusted diluted EPS | $0.57 | $0.77 | Higher interest expense weighed on EPS |
| Net interest expense | $38.8 million | $2.9 million | Increased following the Kloeckner acquisition |
| Total shipments | Approximately 1.9 million tons | — | Consolidated mix was 77% direct sales and 23% toll processing |
| Operating cash flow | $(6) million | — | Consolidated result |
| Capital expenditures | $63 million | — | Roughly split between legacy Worthington Steel and Kloeckner |
| Free cash flow | $(69) million | — | Operating cash flow less capital expenditures |
| Cash at August 31 | Approximately $248 million | — | Following the acquisition |
| Net debt at August 31 | $1.9 billion | — | Following the acquisition |
Disclaimer: For information purposes only. Past performance is not indicative of future results.
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