Worthington Steel Inc (NYSE:WS) Reports Mixed Q2 Earnings with Strong Revenue Beat

Worthington Steel Inc (NYSE:WS) reported financial results for its fiscal second quarter, which concluded on November 30, 2025. The metals processor posted revenue that surpassed Wall Street's expectations, while its adjusted earnings per share came in below analyst forecasts. The market's immediate reaction following the report was notably positive.

Quarterly Performance Versus Estimates

The company's second-quarter results presented a mixed picture relative to analyst consensus estimates. While the top-line figure showed strength, profitability on a per-share basis did not meet expectations.

• Revenue: Reported net sales were $871.9 million. This represents a significant 18% increase from the $739.0 million reported in the same quarter last year and exceeded the analyst estimate of approximately $821.2 million.
• Earnings Per Share (Adjusted): The company reported adjusted net earnings per diluted share of $0.38. This marks a substantial 100% increase from the $0.19 per share earned in the prior-year period. However, it fell short of the analyst consensus estimate of $0.479 per share.

Market Reaction and Price Action

The initial market response to the earnings release was decisively positive. In after-hours trading following the announcement, shares of Worthington Steel experienced an approximate 1.6% increase. This upward move suggests investors may be focusing on the robust revenue growth and the company's strategic execution, potentially viewing the earnings miss as less critical given the strong sales performance and operational improvements highlighted in the report.

This positive after-market shift contrasts with the stock's performance over recent weeks, which had seen a slight decline. The earnings report appears to have provided a catalyst, reversing near-term negative momentum.

Key Highlights from the Earnings Report

Beyond the headline numbers, Worthington Steel's earnings release detailed several important operational and financial developments for the quarter.

Strategic Execution and Mix Shift: President and CEO Geoff Gilmore attributed the results to the company's focused strategy on "higher-value solutions, disciplined product mix, inventory management, and outstanding service." This was evidenced in the sales composition, where the mix of direct tons sold versus toll processing shifted significantly to 65% direct from 55% a year ago, contributing to better margins.

Profitability and Cash Flow: Several profitability metrics showed marked improvement year-over-year:

• Gross margin increased to $93.2 million from $80.0 million.
• Adjusted EBIT (Earnings Before Interest and Taxes) nearly doubled to $26.6 million, compared to $14.3 million in Q2 fiscal 2025.
• The company generated strong operating cash flow of $99.3 million and free cash flow of $74.6 million.

Balance Sheet and Capital Allocation: Worthington Steel ended the quarter with a net debt position of $92.3 million. Demonstrating confidence in its financial position and commitment to shareholder returns, the Board of Directors declared a quarterly dividend of $0.16 per share, payable in March 2026.

Looking Ahead

The press release did not provide specific quantitative financial guidance for the coming quarters or full year. Management expressed confidence that its strategic focus would "continue to serve us well as conditions evolve heading into calendar 2026." For formal forward-looking metrics, investors will likely rely on analyst projections, which currently estimate third-quarter fiscal 2026 revenue near $824.4 million.

For a detailed breakdown of historical earnings and future analyst estimates for Worthington Steel, you can review the data here.

Disclaimer: This article is for informational purposes only and is not intended as investment advice. The analysis is based on publicly available data and should not be construed as a recommendation to buy or sell any security. Investors should conduct their own research and consult with a qualified financial advisor before making any investment decisions.