WORTHINGTON STEEL, INC.

2023 LONG-TERM INCENTIVE PLAN

PERFORMANCE SHARE AWARD AGREEMENT

This Performance Share Award Agreement (this “Agreement”) is made effective as of _________ (the “Grant Date”) by and between Worthington Steel, Inc. (“Worthington”) and ___________ (the “Participant”).

Section 1. Award of Performance Shares.

Worthington hereby grants the Participant a number of Performance Shares (the “Performance Shares”) determined based on a target number of ________ Performance Shares and as further described on the attached Appendix A. Each Performance Share granted pursuant to this Agreement gives the Participant an unfunded, unsecured right to receive payment, following the satisfaction of vesting conditions set forth in this Agreement, of one Share in the manner set forth in Section 6 below. The Performance Shares are subject to the terms and conditions described in the Worthington Steel, Inc. 2023 Long-Term Incentive Plan, as amended from time to time (the “Plan”), and this Agreement.

Section 2. Vesting.

(a) General. Subject to Section 3, the Performance Shares will vest if both the Performance Conditions and the Time Based Vesting Conditions are met.

(b) Performance Based Vesting Conditions. Appendix A sets forth the Performance Conditions that must be satisfied in order for the Performance Shares to be eligible for vesting. The Performance Conditions are based on Worthington’s annualized absolute total shareholder return (“ATSR”) during the period beginning on _____________ and ending on __________ (the “Performance Period”), all as set forth on Appendix A. The Committee shall certify in writing the extent to which the Performance Conditions have been achieved and the number of Performance Shares eligible for vesting based on the Performance Conditions as soon as administratively practicable, but no later than 60 days, following the end of the Performance Period (the “Certification Date”). The Performance Shares that become eligible for vesting under this Section 2(b) are hereinafter referred to as the “Eligible Performance Shares.” Any unvested Performance Shares which are not eligible for vesting based on the Performance Conditions shall be automatically forfeited, terminated and cancelled effective as of the Certification Date without payment of any consideration by the Company, and the Participant or the Participant’s beneficiary or representative, as the case may be, shall have no further rights with respect to such Performance Shares under this Agreement.

(c) Time Based Vesting Conditions. Provided that the Participant has continuously remained employed by the Company from the Grant Date through the applicable vesting date, one-third of the Eligible Performance Shares shall vest on the third anniversary of the Grant Date, one-third of the Eligible Performance Shares shall vest on the fourth anniversary of the Grant Date, and one-third of the Eligible Performance Shares shall vest on the fifth anniversary of the Grant Date (the “Time Based Vesting Conditions”).

The Performance Shares will be forfeited if the conditions for vesting set forth in Section 2 or Section 3 are not met.

Section 3. Accelerated Vesting.

(a) Death or Disability. If the Participant’s employment terminates due to the Participant’s death or disability (as defined in Treasury Regulation Section 1.409A-3(i)(4)) during the Performance Period, the Performance Shares will vest on the last day of the Performance Period (if at all) based on the extent to which the Performance Conditions have been actually achieved. If the Participant’s employment terminates due to the Participant’s death or disability after the Performance Period, any unvested, outstanding Eligible Performance Shares will fully vest as of the date of such termination of employment.

(b) Change in Control. If there is a Change in Control and within two years thereafter the Participant’s employment is terminated by the applicable Company without Cause (as defined below) or by the Participant due to “an adverse change in the terms of the Participant’s employment” (as defined below), any unvested, outstanding Performance Shares will become fully vested on the date employment is terminated. The provisions of this Section 3(b) will apply in lieu of the provisions of Section 10 of the Plan. For purposes of this Section 3(b): (i) the Performance Conditions will be treated as satisfied at the greater of (A) actual performance during the Performance Period through the date of the Change in Control and (B) target performance; and (ii) “an adverse change in the terms of the Participant’s employment” means, without the Participant’s consent, the occurrence of one or both of the following conditions: (A) a material diminution in the Participant’s base compensation or (B) a material diminution in the Participant’s authority, duties or responsibilities; provided that, in order to constitute an adverse change in the terms of the Participant’s employment, the Participant must provide written notification to the Company of the condition within 45 days of the initial existence of the condition, upon the notice of which the Company shall have a period of 30 days during which it may remedy the condition.

(c) Termination Without Cause. If the applicable Company terminates the Participant’s employment without Cause after the Performance Conditions have been met, but before all of the Time Based Vesting Conditions have been met, any unvested, outstanding Eligible Performance Shares will fully vest as of the date of such termination of employment. “Cause” means the Participant’s (i) willful and continued failure to substantially perform assigned duties; (ii) gross misconduct; (iii) material breach of any term of any material agreement with Worthington or any other Company, including this Agreement; (iv) conviction of (or plea of no contest or nolo contendere to) (A) a felony or (B) a crime other than a felony, which involves a breach of trust or fiduciary duty owned to Worthington or any other Company; or (v) material violation of Worthington’s code of conduct or any other policy of Worthington or any other Company that applies to the Participant.

Section 4. Restrictions on Transferability.

No Performance Shares, and no Shares underlying the Performance Shares which have not been issued, may be sold, assigned, transferred, pledged or otherwise encumbered, except by will or by the laws of descent and distribution or to the Participant’s beneficiary upon the death of the Participant.

Section 5. Rights Before Settlement; Dividend Equivalents.

The Participant shall not be, and shall not have any of the rights or privileges of, a shareholder of Worthington, including, without limitation, voting rights and rights to dividends and other distributions, in respect of the Performance Shares and any Shares underlying the Performance Shares unless and until such Shares shall have been issued by Worthington. Notwithstanding the foregoing, if Worthington declares and pays dividends on Shares and, on the record date of such dividend, the Participant holds Performance Shares granted pursuant to this Agreement that have not been settled, the Participant will be credited with an additional amount in cash equal to the dividends the Participant would have received if the Participant was the holder of record, as of such record date, of a number of Shares equal to the number of Performance Shares held by the Participant that have not been settled as of such record date (the “Dividend Equivalents”).

The Dividend Equivalents shall be subject to the same restrictions, terms and conditions as the Performance Share to which they relate. For purposes of clarity, in the event that a Performance Share is forfeited under this Agreement, the related Dividend Equivalent will also be forfeited.

Section 6. Settlement.

As soon as administratively practicable following the vesting of any Performance Shares pursuant to this Agreement, but in no event later than 60 days following such vesting date, Worthington shall deliver to the Participant a number of Shares equal to the number of Performance Shares that vested on the applicable vesting date, less, to the extent applicable, the number of Shares withheld in accordance with Section 7. Any fractional Performance Shares will be settled in cash based upon the Fair Market Value of a Share on the settlement date.

The issuance of Shares will be subject to the satisfaction of Worthington’s counsel that such issuance will be in compliance with applicable Federal and state securities laws. Any Shares delivered under the Plan will be subject to such stock-transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations and other requirements of the Securities and Exchange Commission, any stock exchange upon which the Shares are then listed and any applicable Federal or state securities law, and the Committee may cause a legend or legends to be put on any certificates evidencing such Shares to make appropriate reference to such restrictions.

Section 7. Withholding.

The Company is authorized to withhold in respect of the Performance Shares, the amount of withholding taxes due in respect of vesting or settlement of such Performance Shares and to take such other action as may be necessary in the opinion of the Company to satisfy all obligations for the payment of such taxes. The Committee may establish procedures for election by the Participant to satisfy such withholding taxes by delivery of, or directing the Company to retain, Shares that would otherwise be deliverable upon settlement of the Performance Shares. The authority provided in this Section 7 includes authority to determine the amounts to be withheld (including Shares) in satisfaction of the Participant’s withholding obligations, or in satisfaction of other tax obligations, either on a mandatory or elective basis, as permitted in the discretion of the Committee.

Section 8. Non-Competition.

In the event that the Participant terminates employment with the Company for any reason whatsoever, and within 18 months after the date thereof becomes associated with, employed by, renders services to, or owns any interest in (other than any nonsubstantial interest, as determined by the Committee), any business that is in competition with the Company or with any business in which the Company has a substantial interest as determined by the Committee, the Committee, in its sole discretion, may require the Participant to return to Worthington the economic value of the Performance Shares which is realized or obtained (measured as of the date on which the Performance Shares vested) by the Participant at any time during the period beginning on that date which is six months prior to the date of the Participant’s termination of employment with the Company plus any Dividend Equivalents paid with respect to the Performance Shares.

Section 9. Other Terms and Conditions.

(a) Beneficiaries. The Participant may designate a beneficiary to receive any Performance Shares that are outstanding but unsettled in the event of the Participant’s death. If no beneficiary is designated, the Participant’s beneficiary will be the Participant’s surviving spouse and, if there is no surviving spouse, the Participant’s estate.

(b) No Guarantee of Employment. The granting of Performance Shares will not confer upon the Participant any right to continued employment with any Company, nor will it interfere in any way with the right of any Company to terminate the employment of the Participant at any time, with or without Cause.

(c) Governing Law. The validity, construction and effect of this Agreement shall be determined in accordance with the laws of the State of Ohio (other than laws governing conflicts of laws) and applicable Federal law.

(d) Rights and Remedies Cumulative. All rights and remedies of the Company and of the Participant enumerated in this Agreement will be cumulative and, except as expressly provided otherwise in this Agreement, none will exclude any other rights or remedies allowed at law or in equity, and each of said rights or remedies may be exercised and enforced concurrently.

(e) Captions. The captions contained in this Agreement are included only for convenience of reference and do not define, limit, explain or modify this Agreement or its interpretation, construction or meaning and are in no way to be construed as a part of this Agreement.

(f) Severability. If any provision of this Agreement or the application of any provision hereof to any Person or any circumstance will be determined to be invalid or unenforceable, then such determination will not affect any other provision of this Agreement or the application of said provision to any other Person or circumstance, all of which other provisions will remain in full force and in effect.

(g) Entire Agreement. This Agreement, together with the Plan, which is incorporated herein by reference, constitutes the entire agreement between the Company and the Participant in respect of the subject matter of this Agreement, and this Agreement supersedes all prior and contemporaneous agreements between the parties hereto in connection with the subject matter of this Agreement. No officer, director, employee or other servant or agent of the Company, and no servant or agent of the Participant, is authorized to make any representation, warranty or other promise not contained in this Agreement. No change, termination or attempted waiver of any of the provisions of this Agreement will be binding upon any party hereto unless contained in a writing signed by the party to be charged.

(h) Performance Shares Subject to the Plan. The Performance Shares are subject to the terms and conditions described in this Agreement and the Plan, which is incorporated by reference into and made a part of this Agreement. In the event of a conflict between the terms of the Plan and the terms of this Agreement, the terms of the Plan will govern except as specifically provided in this Agreement. The Committee has the sole responsibility for interpreting the Plan and this Agreement, and the Committee’s determination of the meaning of any provision in the Plan or this Agreement will be binding on the Participant. Capitalized terms that are not defined in this Agreement have the same meaning as in the Plan.

(i) Section 409A of the Code. This Agreement and the Performance Shares granted hereunder are intended to be exempt from, or otherwise comply with, Section 409A of the Code and the Treasury Regulations promulgated thereunder (collectively, “Section 409A”), and shall be interpreted, administered and operated accordingly. For purposes of this Agreement, termination of employment means a “separation from service” within the meaning of Treasury Regulations Section 1.409A-1(h). If the Participant is a “specified employee” within the meaning of Section 409A at the time of the Participant’s separation from service, then any payment otherwise required to be made to the Participant under this Agreement on account of the Participant’s separation from service, to the extent such payment (after taking into account all exclusions applicable to such payment under Section 409A) is properly treated as deferred compensation subject to Section 409A, shall not be made until the first business day after (i) the expiration of six months from the date of the Participant’s separation from service or (ii) if earlier, the date of the Participant’s death. Nothing in this Agreement should be construed as a guarantee or entitlement of any particular tax treatment

to the Participant. None of the Company, the Board, the Committee or any other Person shall have liability with respect to the Participant in the event this Agreement or the Performance Shares granted hereunder fail to comply with the requirements of Section 409A.

Section 10. Application of Section 280G of the Code.

If Worthington determines that any payment or benefit, including any accelerated vesting, due to the Participant under this Agreement in connection with a Change in Control, when combined with any other payment or benefit due to the Participant from the Company or any other entity in connection with such Change in Control, would be considered an “excess parachute payment” within the meaning of Section 280G of the Code, the payments and benefits due to the Participant under this Agreement may be reduced by the Company to the minimum extent necessary to avoid the imposition of an excise tax under Section 4999 of the Code or a loss of deduction under Section 280G of the Code, in accordance with rules and procedures which may be established by the Committee and, to the extent applicable, in compliance with Section 409A.

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed effective as of the Grant Date set forth above.

PARTICIPANT WORTHINGTON STEEL, INC.

______________________________________ By: ________________________________
[Printed Name] [Printed Name]
Its: [Title]

Dated: ____________________________ Dated: ________________________

Appendix A

Performance Conditions

This Appendix A sets forth the Performance Conditions for the Performance Shares and shall determine the extent to which the Performance Conditions are achieved and the extent to which the Performance Shares will be eligible for vesting under the Agreement. The Performance Conditions shall be based on Worthington’s Annualized ATSR (as defined below).

Calculation to Determine Performance Shares Eligible for Vesting

The Participant will be eligible to vest in a number of Shares underlying the corresponding number of Performance Shares (at a rate of one Share for each Performance Share), ranging from 0% to % of the target number of Performance Shares granted to the Participant (the “Target Performance Shares”), based on Worthington’s Annualized ATSR and determined based on the table below. For Annualized ATSR performance between the values listed in the table below, the number of Performance Shares that become eligible for vesting shall be determined by straight-line interpolation:

In no event shall more than % of the Target Performance Shares become eligible for vesting.

Determination of Annualized ATSR

For purposes of this Agreement:

Ending Price + Cumulative Value of All Dividends Paid Over the Performance Period

Starting Price

Adjustments to the Annualized ATSR and the Total Performance Period ATSR may be made in accordance with Section 12(e) of the Plan.

Worthington Steel Reports Third Quarter Fiscal 2024 Results

COLUMBUS, Ohio, March 21, 2024 – Worthington Steel, Inc. (NYSE: WS) today reported financial results for the fiscal 2024 third quarter ended February 29, 2024.

The Company reported net sales of $805.8 million and net earnings attributable to controlling interest of $49.0 million, or $0.98 per diluted share, for its fiscal 2024 third quarter. For the third quarter of fiscal 2023 ended February 28, 2023, the Company recorded net sales of $780.7 million and net earnings attributable to controlling interest of $5.4 million, or $0.11 per diluted share. Results in both the current year quarter and prior year quarter were impacted by certain items, as summarized in the table below and as further discussed in the Non-GAAP Financial Measures / Supplemental Data section later in this release.

(U.S. dollars in millions, except per share amounts)

Financial highlights for the current and comparative periods are as follows:

(U.S. dollars in millions, except per share amounts)

“The Worthington Steel team delivered a strong third quarter and I want to thank and congratulate our employees on their great performance in our first quarter as a standalone company,” said Geoff Gilmore, president and chief executive officer of Worthington Steel. “We saw improvements in sales, operating income and net income over the same quarter in 2023, and our teams are laser-focused on finishing the fiscal year strong.”

Consolidated Quarterly Results

Net sales for the third quarter of fiscal 2024 were $805.8 million, an increase of $25.1 million, or 3%, compared to the prior year quarter. The increase was driven primarily by a 1% increase in direct selling prices and an 11% increase in toll selling prices. Additionally, there was a 1% increase in direct tons and a 9% increase in toll tons sold in the current year quarter compared to the prior year quarter. Correspondingly, the mix of direct tons versus toll tons processed was 55% to 45% in the current year quarter, compared to 56% to 44% in the prior year quarter.

Gross margin increased by $56.9 million over the prior year quarter to $120.1 million. The increase was driven primarily by improved direct spreads and higher volume. Direct spreads, up $52.9 million, benefited from a $45.9 million favorable change from an estimated $26.6 million inventory holding loss in the prior year quarter to an estimated $19.3 million inventory holding gain in the current year quarter.

Operating income improved by $56.8 million over the prior year quarter to $66.3 million, primarily due to the improved gross margin. Operating income incrementally benefited from a $3.0 million decrease in costs associated with the Company's December 1, 2023 separation from Worthington Enterprises, Inc. (“Separation”) compared to the prior year quarter. These increases were offset by higher selling, general and administrative (“SG&A”) expense, up $3.1 million, primarily due to increased wage and benefit costs resulting from a combination of higher headcount after the Separation as well as continued inflationary pressures.

Recent Developments

Outlook

“Our company is performing well,” Gilmore said. “Our team is aligned and focused on creating value for our shareholders and working with our customers to ensure the products the world uses every day are stronger, better performing and more durable. I’m optimistic about our future and confident in our team, our growth plans and our strategy.”

Conference Call

The Company will review fiscal 2024 third quarter results during its quarterly conference call on March 22, 2024, beginning at 8:30 a.m., Eastern Time. Details regarding the conference call are located in the investor section of the Company's website at www.WorthingtonSteel.com.

About Worthington Steel

Worthington Steel (NYSE:WS) is a metals processor that partners with customers to deliver highly technical and customized solutions. Worthington Steel’s expertise in carbon flat-roll steel processing, electrical steel laminations and tailor welded solutions are driving steel toward a more sustainable future.

As one of the most trusted metals processors in North America, Worthington Steel and its 4,600 employees harness the power of steel to advance our customers’ visions through value-added processing capabilities including galvanizing, pickling, configured blanking, specialty cold reduction, lightweighting and electrical lamination. Headquartered in Columbus, Ohio, Worthington Steel operates 32 facilities in seven states and six countries. Following a people-first Philosophy, commitment to sustainability and proven business system, Worthington Steel’s purpose is to generate positive returns by providing trusted and innovative solutions for customers, creating opportunities for employees, and strengthening its communities.

Safe Harbor Statement

Selected statements contained in this release constitute “forward-looking statements,” as that term is used in the Private Securities Litigation Reform Act of 1995 (the “Act”). The Company to take advantage of the safe harbor provisions included in the Act. Forward-looking statements reflect the Company’s current expectations, estimates or projections concerning future results or events. These statements are often identified by the use of forward-looking words or phrases such as “believe,” “anticipate,” “may,” “could,” “should,” “would,” “intend,” “plan,” “will,” “likely,” “expect,” “estimate,” “project,” “position,” “strategy,” “target,” “aim,” “seek,” “foresee” and similar words or phrases. These forward-looking statements include, without limitation, statements relating to: future or expected cash positions, liquidity and ability to access financial markets and capital; outlook, strategy or business plans; the anticipated benefits of the Company’s separation from Worthington Enterprises, Inc. (the “Separation”); the expected financial and operational performance of, and future opportunities for, the Company following the Separation; the tax treatment of the Separation transaction; the leadership of the Company following the Separation; future or expected growth, growth potential, forward momentum, performance, competitive position, sales, volumes, cash flows, earnings, margins, balance sheet strengths, debt, financial condition or other financial measures; pricing trends for raw materials and finished goods and the impact of pricing changes; the ability to improve or maintain margins; expected demand or demand trends for the Company or its markets; additions to product lines and opportunities to participate in new markets; expected benefits from transformation and innovation efforts; the ability to improve performance and competitive position at the Company’s operations; anticipated working capital needs, capital expenditures and asset sales; anticipated improvements and efficiencies in costs, operations, sales, inventory management, sourcing and the supply chain and the results thereof; projected profitability potential; the ability to make acquisitions and the projected timing, results, benefits, costs, charges and expenditures related to acquisitions, joint ventures, headcount reductions and facility dispositions, shutdowns and consolidations; projected capacity and the alignment of operations with demand; the ability to operate profitably and generate cash in down markets; the ability to capture and maintain market share and to develop or take advantage of future opportunities, customer initiatives, new businesses, new products and new markets; expectations for Company and customer inventories, jobs and orders; expectations for the economy and markets or improvements therein; expectations for generating improving and sustainable earnings, earnings potential, margins or shareholder value; effects of judicial rulings; the ever-changing effects of the novel coronavirus (“COVID-19”) pandemic and the various responses of governmental and nongovernmental authorities thereto on economies and markets, and on our customers, counterparties, employees and third-party service providers; and other non-historical matters.

Because they are based on beliefs, estimates and assumptions, forward-looking statements are inherently subject to risks and uncertainties that could cause actual results to differ materially from those projected. Any number of factors could affect actual results, including, without limitation, those that follow: our ability to successfully realize the anticipated benefits of the Separation; the effect of conditions in national and worldwide financial markets, including inflation, increases in interest rates and economic recession, and with respect to the ability of financial institutions to provide capital; the impact of tariffs, the adoption of trade restrictions affecting the Company’s products or suppliers, a United States withdrawal from or significant renegotiation of trade agreements, the occurrence of trade wars, the closing of border crossings, and other changes in trade regulations or relationships; changing oil prices and/or supply; product demand and pricing; changes in product mix, product substitution and market acceptance of the Company’s products; volatility or fluctuations in the pricing, quality or availability of raw materials (particularly steel), supplies, transportation, utilities, labor and other items required by operations (especially in light of Russia’s invasion of Ukraine); effects of sourcing and supply chain constraints; the outcome of adverse claims experience with respect to workers’ compensation, product recalls or product liability, casualty events or other matters; effects of facility closures and the consolidation of operations; the effect of financial difficulties, consolidation and other changes within the steel, automotive, construction and other industries in which the Company participates; failure to maintain appropriate levels of inventories; financial difficulties (including bankruptcy filings) of original equipment manufacturers, end-users and customers, suppliers, joint venture partners and others with whom the Company does business; the ability to realize targeted expense reductions from headcount reductions, facility closures and other cost reduction efforts; the ability to realize cost savings and operational, sales and sourcing improvements and efficiencies, and other expected benefits from transformation initiatives, on a timely basis; the overall success of, and the ability to integrate, newly acquired businesses and joint ventures, maintain and develop their customers, and achieve synergies and other expected benefits and cost savings therefrom; capacity levels and efficiencies, within facilities, within major product markets and within the industries in which the Company participates as a whole; the effect of disruption in the business of suppliers, customers, facilities and shipping operations due to adverse weather, casualty events, equipment breakdowns, labor shortages, interruption in utility services, civil unrest, international conflicts (especially in light of Russia’s invasion of Ukraine), terrorist activities or other causes; changes in customer demand, inventories, spending patterns, product choices, and supplier choices; risks associated with doing business internationally, including economic, political and social instability (especially in light of Russia’s invasion of Ukraine), foreign currency exchange rate exposure and the acceptance of the Company’s products in global markets; the ability to improve and maintain processes and business practices to keep pace with the economic, competitive and technological environment; the effect of inflation, interest rate increases and economic recession, as well as potential adverse impacts as a result of the Inflation Reduction Act of 2022, which may negatively impact the Company’s operations and financial results; deviation of actual results from estimates and/or assumptions used by the Company in the application of its significant accounting policies; the level of imports and import prices in the Company’s markets; the impact of environmental laws and regulations or the actions of the United States Environmental Protection Agency or similar regulators which increase costs or limit the Company’s ability to use or sell certain products; the impact of increasing environmental, greenhouse gas emission and sustainability regulations and considerations; the impact of judicial rulings and governmental regulations, both in the United States and abroad, including those adopted by the United States Securities and Exchange Commission (“SEC”) and other governmental agencies as contemplated by the Coronavirus Aid, Relief and Economic Security (CARES) Act, the Consolidated Appropriations Act, 2021, the American Rescue Plan Act of 2021, and the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010; the effect of healthcare laws in the United States and potential changes for such laws, which may increase the Company’s healthcare and other costs and negatively impact the Company’s operations and financial results; the effect of tax laws in the United States and potential changes for such laws, which may increase the Company's costs and negatively impact its operations and financial results; cyber security risks; the effects of privacy and information security laws and standards; and other risks described from time to time in the Company’s filings with the SEC, including those described in the “Risk Factors” section of the information statement filed as Exhibit 99.1 to the Company’s Amendment No. 3 to its registration statement on Form 10 filed with the SEC on November 14, 2023.

Forward-looking statements should be construed in the light of such risks. The Company notes these factors for investors as contemplated by the Act. It is impossible to predict or identify all potential risk factors. Consequently, you should not consider the foregoing list to be a complete set of all potential risks and uncertainties. Readers are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date made. The Company does not undertake, and hereby disclaims, any obligation to update any forward-looking statements, whether as a result of new information, future developments or otherwise, except as required by applicable law.

WORTHINGTON STEEL, INC.
CONSOLIDATED AND COMBINED STATEMENTS OF EARNINGS
(In millions, except per share amounts)

(Unaudited)

WORTHINGTON STEEL, INC.
CONSOLIDATED AND COMBINED BALANCE SHEETS
(In millions, except share amounts)

(Unaudited)

WORTHINGTON STEEL, INC.
CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS
(In millions)

(Unaudited)

WORTHINGTON STEEL, INC.
NON-GAAP FINANCIAL MEASURES / SUPPLEMENTAL DATA
(In millions, except volume and per share amounts)

The Company reports its financial results in accordance with accounting principles generally accepted in the United States (“GAAP”). The Company also presents certain non-GAAP financial measures including (a) adjusted operating income, (b) adjusted earnings before income taxes, (c) adjusted income tax expense (benefit), (d) adjusted net earnings attributable to controlling interest, (e) adjusted net earnings per diluted share attributable to controlling interest, (f) adjusted net earnings before interest and taxes attributable to controlling interest (“adjusted EBIT”), (g) adjusted net earnings before interest, taxes, depreciation and amortization attributable to controlling interest (“adjusted EBITDA”), (h) pro forma adjusted net earnings before interest and taxes attributable to controlling interest ("pro forma adjusted EBIT") and (i) free cash flow.

These non-GAAP financial measures typically exclude impairment and restructuring charges (gains), but may also exclude other items that management believes are not reflective of, and thus should not be included when evaluating the performance of the Company’s ongoing operations. Management uses these non-GAAP financial measures to evaluate the Company’s performance, engage in financial and operational planning, and determine incentive compensation and believes these non-GAAP financial measures provide useful information to investors because they provide additional perspective on the performance of the Company’s 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 the Company’s business and enable investors to evaluate operations and future prospects in the same manner as management.

For the purposes of the subsequent tables, the non-GAAP measures have been adjusted for the reasons identified below:

The following provides a reconciliation to adjusted operating income, adjusted earnings before income taxes, adjusted income tax expense (benefit), adjusted net earnings attributable to controlling interest and adjusted net earnings per diluted share attributable to controlling interest from the most comparable GAAP measures for the three- and nine-month periods ended February 29, 2024 and February 28, 2023.

To further assist in the analysis of results for the periods presented, the following volume and net sales information for three- and nine-month periods ended February 29, 2024 and February 28, 2023 has been provided along with a reconciliation of adjusted EBIT and adjusted EBITDA to the most comparable GAAP measure, which is net earnings attributable to controlling interests. Adjusted EBIT margin is calculated by dividing adjusted EBIT by net sales. Adjusted EBITDA margin is calculated by dividing adjusted EBITDA by net sales.

The table below provides a reconciliation from net earnings (loss) attributable to controlling interest (the most comparable GAAP financial measure) to the non-GAAP financial measures, EBITDA and adjusted EBITDA, for each of the past five fiscal quarters and the twelve months ended February 29, 2024.

The following provides a reconciliation of net cash provided by (used in) operating activities (the most comparable GAAP financial measure) to free cash flow each of the past four fiscal quarters and the twelve months ended February 29, 2024. Free cash flow is a non-GAAP financial measure that management believes measures the Company's ability to generate cash beyond what is required for its business operations and capital expenditures.

To further assist in the analysis of results for the periods presented, the following information for the three- and nine-month periods ended February 29, 2024 and February 28, 2023 has been provided along with a reconciliation of net earnings attributable to controlling interest (the most comparable GAAP financial measure) to pro forma adjusted EBIT. Pro forma adjusted EBIT is a non-GAAP financial measure that management believes includes incremental and on-going impacts to the Company's operating results as a stand-alone public company resulting from the Separation from Former Parent. The pro forma financial information assumes the Separation occurred on June 1, 2022, the first day of the Company's 2023 fiscal year..

The pro forma financial information has been prepared based upon the best available information and management estimates and is subject to assumptions and adjustments described in the accompanying footnotes. It is not intended to be a complete presentation of the Company’s financial position or results of operations had the Separation occurred as of and for the periods indicated. In addition, the pro forma financial information is being provided for informational purposes only, and is not necessarily indicative of the Company’s future results of operations or financial condition had the Separation and related transactions been completed on the dates assumed. Management believes these assumptions and estimates are reasonable, given the information available on the date of this release.

There were no incremental pro forma adjustments made for the three months ended February 29, 2024 given this period included the actual results of operating as a stand-alone public company. For the nine months ended February 29, 2024, the adjustments included in the information below represent only the adjustments for the period prior to the Separation.

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03 - 22 - 2024

Worthington Steel

Q3 2024 Earnings Call

TOTAL PAGES: 18

CORPORATE SPEAKERS:

Melissa Dykstra

Worthington Steel, Inc.; VP of Corporate Communications and Investor Relations

Geoff Gilmore

Worthington Steel, Inc.; President, CEO

Jeff Klingler

Worthington Steel, Inc.; EVP, COO

Tim Adams

Worthington Steel, Inc.; VP, CFO

PARTICIPANTS:

Phil Gibbs

KeyBanc Capital Markets; Analyst

John Tumazos

John Tumazos Very Independent Research; Analyst

Martin Englert

Seaport Research Partners; Analyst

PRESENTATION:

Operator^ Good morning, ladies and gentlemen. My name is Abby, and I will be your conference operator today. At this time, I would like to welcome everyone to the Worthington Steel's Third Quarter 2024 Earnings Conference Call.

Today's conference is being recorded and all lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. (Operator Instructions)

Thank you.

And I will now turn the conference over to Melissa Dykstra, Vice President of Corporate Communications and Investor Relations. You may begin.

Melissa Dykstra^ Thank you, Operator. Good morning, and welcome to Worthington Steel's third quarter fiscal 2024 earnings call. On our call today, we have Geoff Gilmore, Worthington Steel's President and Chief Executive Officer; Jeff Klingler, Executive Vice President and Chief Operating Officer; and Tim Adams, Vice President and Chief Financial Officer.

Before we get started, I'd like to remind everyone that certain statements made today are forward-looking within the meaning of the 1995 Private Securities Litigation Reform Act. These statements are subject to risks and uncertainties that could cause actual results to differ from those suggested. We issued our earnings release yesterday after the market close. Please refer to it for more detail on those factors that could cause actual results to differ materially.

Unless noted as reported, today's discussion will reference non-GAAP financial measures, which adjusts for certain items included in our GAAP results and which are presented on a standalone basis. You can find definitions of each non-GAAP measure and GAAP to non-GAAP reconciliations within our earnings release.

Today's call is being recorded and a replay will be made available on worthingtonsteel.com.

At this time, I’ll turn the call over to Geoff Gilmore.

Geoff Gilmore^ Thanks Melissa. Good morning, everyone, and welcome.

I’d like to start the call today by thanking our 4,600 Worthington Steel employees for the work they do every day to support our customers, shareholders, community, and each other.

Their hard work and dedication led to a great third quarter for Worthington Steel.

Over the quarter, I had the opportunity to visit several of our facilities where I experienced our focus on safety and saw transformation in action.

Transformation, our system of continuous improvement to increase margins, reduce working capital, and add capacity, is integral to our strategy. Our teams clearly recognize this and incorporate it daily into their work. I’ve talked with dozens of employees around the company. I am energized by the pride each of them takes in their work and their role in our company.

We have a team that is focused and intent on creating value for our shareholders. Together, we continue to help our customers ensure the products the world uses every day are stronger, better performing, and more durable.

In our first quarter as a standalone company, our teams executed on our strategy and continue to make progress on our safety, quality, productivity, and sales goals. We are off to a great start, but we have much more to accomplish. I am confident in our team and our strategy and look forward to sharing updates in the future on how we perform.

Now I’ll turn it over to COO, Jeff Klingler, for a look at some of the highlights of the quarter.

Jeff Klingler^ Thanks, Geoff.

I'd like to begin my remarks by thanking our employees for their continued commitment to safety.

As Geoff said, we continue to see positive trends in our safety metrics supported by our SafeWorks program. We use data analytics, ergonomic measurement tools, best practice sharing, and daily involvement from our entire team to continuously improve our performance.

The same kind of commitment and focus on metrics helps us improve our quality as well, ensuring our customers receive the best possible product and service with every interaction. An example of that, in January, Tempel received the zero PPM Award from Mahle Electric Drives India, recognizing our commitment to manufacturing excellence and quality assurance. Tempel provides electrical steel laminations to Mahle for use in the electrical motors they supply to Ather Energy's EV two-wheelers. Congratulations to our Tempel team for this achievement.

Our integration at Nagold, Germany is going well, and we're making great progress in many areas. Along those lines, we are already seeing commitments from our customers for when our recently announced expansions in Canada and Mexico come online. We kicked off a multi-year ERP implementation at Tempel, moving to a solution that's consistent across all divisions. Similar to what we've seen with the rest of our business, we believe this move will help us reduce risk, improve processes, and better drive decision-making with more real-time, effective operational and financial data. This is another example of our long-term commitment to transformation.

On the technology front, TWB has signed a licensing agreement with ArcelorMittal Tailored Blanks for the use of its patented ablation technology in the production of hot formed tailored blanks. We will install a fully automated ablation line at the TWB facility in Monroe, Michigan, making Worthington Steel one of the only two companies in North America to offer this technology to our customers. Congratulations to all our teams on these impressive achievements.

Now I'll turn it over to Tim Adams.

Tim Adams^ Thanks, Jeff, and good morning, everyone.

I would also like to thank our employees for staying focused on safety, as well as serving our customers during the third quarter, our first as an independent public company. As a reminder, with this being our first quarter reporting results as a standalone company, our consolidated results for the third quarter are compared with the prior year data, which were prepared on a carve-out basis.

For our third quarter, we reported net earnings of $49 million or $0.98 per share, as compared with $5.4 million or $0.11 per share, in the prior year quarter. Our third quarter results included pre-tax separation expenses of $1 million, or $0.01 per share, as compared with $4 million, or $0.06 per share, in the prior year quarter. I expect this will be the last quarter we recognize expense associated with the separation.

Excluding these items, we generated earnings of $0.99 per share in the third quarter, compared to $0.17 per share in the prior year quarter. In addition, in the third quarter, we had estimated pre-tax inventory holding gains of $19.3 million, or $0.29 per share, compared to estimated pre-tax inventory holding losses of $26.6 million, or $0.40 per share, in the prior year quarter.

A favorable pre-tax swing of $45.9 million, or $0.69 per share.

In the third quarter, we reported adjusted EBIT of $66.9 million, which was up $56.2 million from the prior year quarter of $10.7 million. This increase is primarily due to higher gross margin, which benefited from increased material spreads, including the impact of estimated pre-tax inventory holding gains. Our SG&A was up $3.1 million from the prior year, primarily due to incremental costs associated with being a standalone company.

Next, I'll provide some content on the market and our shipments. Similar to what we experienced over recent history, steel market pricing was volatile over the quarter. Steel prices increased from $700 per ton in October to $1,100 per ton in January, then decreased sharply throughout March. The current price for hot roll steel is approximately $750 per ton. We expect estimated inventory holding gains in the third quarter will flip to inventory holding losses in the fourth quarter, and we estimate those losses could be approximately $5 million to $10 million on a pre-tax basis.

Net sales in the third quarter were $806 million, up 3% from the prior year quarter, primarily due to slightly higher direct pricing, combined with increased volumes in both direct and toll. We shipped 986,000 tons during the third quarter, which was up 4% compared with the prior year quarter.

Direct sale tons were up 1% over the prior year quarter. Volumes were up in construction and energy, primarily due to spot orders and continued ramp-up of certain business. Direct sale volume to the automotive market was down 4% compared to the prior year quarter. The decrease was primarily due to several programs reaching their end of life, combined with the replacement platforms experiencing launch delays.

Our automotive book of business continues to be healthy. Our technical and commercial teams work closely with our customers to help them overcome challenges and provide solutions that meet their needs, resulting in increased collaboration and a strong partnership. We expect to continue growing our leadership position within the automotive industry.

Toll tons were up 9% year-over-year, primarily due to increased tolling with the mills, as well as several new automotive programs. Direct sale tons made up 55% of our mix in the third quarter, compared with 56% in the prior year quarter.

Turning to cash flows and the balance sheet, cash flow from operations was $44.7 million, and free cash flow was $22.3 million. During the third quarter, we spent $22.4 million on capital expenditures related to a variety of projects, including the previously announced electrical steel expansions in Mexico and Canada. On a trailing 12-month basis, we have generated $175 million of free cash flow. Thursday, we announced a quarterly dividend of $0.16 per share, payable on June 28, 2024.

In regard to our balance sheet, operating working capital increased $41.5 million during the third quarter, as receivables and inventory increased as a result of higher steel prices, partially offset by an increase in accounts payable. We ended the quarter with $60.8 million of cash, which is down from the second quarter, due to the $150 million dividend we paid to our former parent, in connection with the separation. Our ABL debt at February 29, was $147 million, down $28 million from the second quarter.

In summary, Worthington Steel had an excellent third quarter, and all our teams performed well. Everyone at Worthington Steel continues to be focused on driving stakeholder value, on both a near-term and long-term basis. I'm proud of our teams for their dedication and for their continued commitment to safety.

At this point, we would be happy to take your questions.

Operator^ Thank you. (Operator Instructions)

And we will take our first question from Phil Gibbs with KeyBanc Capital Markets. Your line is open.

Phil Gibbs^ Hey, good morning.

Geoff Gilmore^ Good morning, Phil.

Phil Gibbs^ What's the typical volume seasonality for the May quarter? I know it's usually your strongest from a volume perspective, given the timing of your customer buying patterns?

Tim Adams^ Yes, I think you kind of answered your own question. You're right. It tends to be higher. It's usually our strongest quarter, from a volume perspective. Q3 tends to be on the lower side, because you've got automotive shutdowns in December, and Q4 tends to be on the higher side.

Phil Gibbs^ More so just curious on the historical magnitude. Is this plus or minus high single-digits, low double-digits in terms of what you expect from a volume pickup?

Tim Adams^ I would say it's low single-digits. It's not huge.

Phil Gibbs^ Okay. And then from the spin, is your commentary effectively pointed to the fact that we should use 3Q as a good baseline for the adjustments in your go-forward cost structure?

Tim Adams^ Yes, I think what you see in there is SG&A is probably a little light. Q3, tends to be a little light, because you've got that December month in there. So, travels down, you have vacations in there. So, Q3 from an SG&A perspective is usually down a little bit. Plus, we had some things that hadn't quite ramped up fully, from an SG&A standpoint. So, if you look at a go-forward basis, probably on a little bit higher than what it was in Q3.

Phil Gibbs^ And then as we think about net working capital in the fourth quarter, is that expected to be a user source of cash? And then just update us on the CapEx outlook, maybe for the fourth quarter and year?

Tim Adams^ Yeah, typically what happens when you have inventory holding gains, you're going to build working capital, and when you have inventory holding losses, you're going to release. So, we would expect to release some working capital in Q4.

Phil Gibbs^ And then on the CapEx side, for the fourth quarter and then maybe for 2025, as we think about some of these growth projects that you're working on in the next few years? Tim Adams^ So, what we've been signaling is $100 million for 2024, 2025, and 2026.

We've run about $60 million to-date in 2024. Depending on how the projects come in, in Q4, I think we're actually going to get pretty close to that $100 million number. We've got some additional CapEx. We've got the ablation project that we announced last week. We've got an ERP project that we're doing at Tempel.

It's probably going to add another $10 million to the $100 million estimate we had in 2025, as well as another $10 million to the $100 million estimate, we had for 2026.

Phil Gibbs^ That's really helpful. And then on the ablation business win and the operational piece in Monroe, what could it mean for you all in terms of the investment and timing? It sounds like it's spliced a bit into this $20 million pickup in CapEx, along with the ERP over the next two years following this one. But what does it mean for you financially, and how big of a differentiator is it? Just trying to figure out what this possibly means from a mix, or a profitability standpoint as you guys put it in play.

Jeff Klingler^ Sure. Good morning, Phil. This is Jeff Klingler. We're obviously very excited about this project. We are only one of two companies now that are able to offer this product in North America. We do believe that this market opens up new products and new opportunities, by about 30% to our existing welded blank market. So, again, very excited about this technology and this project.

It's going to take, from a timing standpoint, by the time you install the equipment and win an award, it's a typical automotive type award cycle that takes about 24 months to get to full production. So, it's a little bit out there, but - we're pretty excited about all the activity that's happening right now, and pretty confident we'll fill that line. In years three and four, we expect to feel the full benefit.

Phil Gibbs^^ Thank you.

Operator^ (Operator Instructions)

And we will take our next question from John Tumazos with John Tumazos Very Independent Research. Your line is open.

John Tumazos^ Thank you very much for taking my question. And thank you for your good efforts for the company. Just for explanation, could you explain, what is ablation and what ERP stands for?

Jeff Klingler^ Good morning, John. Jeff Klingler again. I'll take those very quickly. I'm not going to fully explain ablation, but I will tell you it is a patented process that uses lasers to remove the silicone coating prior to welding the press-hardened steels, so that the weld remains intact.

John Tumazos^ That's for electrical steel?

Jeff Klingler^ No, no. That is for tailor-welded blanks for press-hardened steel for automotive parts. ERP simply stands for Enterprise Resource Planning system. So, it's our computer system.

John Tumazos^ How big of a hit is the computer system?

Tim Adams^ I think in total, those two projects, I'm just going to add them up both together. They're probably $15 million to $20 million in total. I don't have the breakout for each, but we were using, when I was given the CapEx numbers going forward, John, that's basically adding $10 million to the next two years, to cover both those projects.

John Tumazos^ Is ablation part of what you're licensing from ArcelorMittal, or is it a separate item?

Jeff Klingler^ It is exactly what we are licensing from. It's their process. We are licensing the ablation process, the patented process, for the removal of the aluminum silicone coating.

John Tumazos^ You made reference to four good projects, hopefully, to add revenue and profits. Germany, expansions in Canada and Mexico, and the TWB license for ablation, if I'm saying it correctly? John Tumazos^ Real roughly, in terms of a range, how much are the revenue impacts of these items? We, as listeners, might not comprehend whether they're $10 million in annual sales or $50 million in annual sales, or $100 million.

Jeff Klingler^ Yes.

I'd love to get excited and think that they're going to double the company, but I probably need a cold shower?

Tim Adams^ No, I understand. It's a good question. I think, at the end of the day, as we ramp these things up, it's going to take a few years to ramp all of them up. It's going to be more than $100 million a year in revenue for us, once they're fully ramped up.

John Tumazos^ In terms of each one individually, so we can get an idea where the buck singles versus the big ones?

Tim Adams^ Yeah, I'm talking about in terms of overall. I would say that the Tempel projects, are the two big ones. The ablation is going to be a little bit smaller. We're going to start small there and ramp up. I mean, the ablation line is going to be under $10 million, whereas you've got those other two projects in Canada and Mexico, are $80 million plus each. So right now, we're comfortable saying more than $100 million a year, when they're fully ramped up.

John Tumazos^ So the Tempel projects are Canada and Mexico. In Germany, how much is the revenue impact of that expansion?

Tim Adams^ That's relatively small. That's probably around $40 million per year. And then, what we're going to do with that Nagold facility in Germany, is we're also going to put growth plans in place there as well. We don't have those plans done yet, but we didn't buy it, just to buy it for what it was. It was also to grow our presence in Europe in electrical steel.

Jeff Klingler^ I would just add that the customer activity and excitement, around our acquisition in Germany has exceeded our expectations, after just only a few months. So, we're pretty optimistic. We're going to do some good things there.

John Tumazos^ They're very green there, but I love everything. It's finally better.

Geoff Gilmore^ They certainly are.

John Tumazos^ They got rid of nuclear and coal faster than anybody and jumped right into Putin's arms. In terms of the specific machinery, could you just give us a flavor of what kind of machines you're putting in place in Germany, in Canada, and Mexico to better understand the nuts and bolts?

Geoff Gilmore^ Jeff, why don't you answer that?

Jeff Klingler^ Sure. I'll start with Germany. Germany will be lamination presses so to stamp electrical steel laminations for traction motors, for hybrids and battery electric vehicles. In Mexico, it is more of that same. Then, of course, all the automation equipment that comes along with that, as we're making rotors and stator stacks. That requires some downstream equipment, but the primary addition in Mexico will be EV presses.

These are very high-end, very technical, very specific pieces of equipment. Then, in Canada, it's a little more of a range. We've got furnaces. We've got a slitter that is specifically designed for grain-orientated steel, to process grain-orientated steel. Slitter, furnaces, Tranco Machines, things that support the production of distributed gap cores, and wide miter cut lines for large miter transformer cores as well.

Geoff Gilmore^ And John, I just want to add, and you're probably already familiar with this, this is machinery and equipment we're already very familiar with. It is part of our core competency. And we are making these expansions just due to increased demand. We have the know-how.

John Tumazos^ Worthington has come a long way from 1955 and buying a slitter machine. Which of the 10 or more processes that Worthington does are most competitive, and which of them are highest value-added, better profits?

Geoff Gilmore^ In terms of - first of all, I'm glad you recognized we truly are a niche value-add producer. So, if we're looking at what's most value-add, I think definitely Tempel and electrical steel laminations, certainly very high value-add. A lot of engineering expertise needed to implement that equipment and run it. Hence, higher margins. I think tailor-welded blanks and light-weighting solutions.

That's also a very unique niche-type high value-add market, very similar to Tempel, again, hence the higher margins. And then certainly, John, there's galvanizing that you're familiar with. Ours is a bit different. It's hot-rolled substrate. That's a differentiator. Cold-rolled strip, is also very high value-add. And why these are all niche-type markets that we play in and a big part of our strategy.

And then, of course, you're very familiar with our pickling operations and slitting operations. And obviously, those would be markets that would be a bit more competitive. But what we're proud of, your comment on 1955, is we really think we have a great story on innovation. It's often not recognized, but we've continued to march up the value-add chain over the years. And it's why the company has performed so strongly, and why we will well into the future.

John Tumazos^ I could understand a mill or an auto company, with a very large volume tolling utilizing a particular process like a pickler where they might have a bottleneck or need. For something like galvanizing your customers or end customers, why would they buy from Worthington rather than buying from Nucor Corp, Steel Dynamics, Cliffs, US Steel, or independent is a few small independent galvanizers? I guess you're going right to HVAC companies and other galvanized users for those sales?

Geoff Gilmore^ So, why would they buy from us specifically? Of course, we're going to be cost-competitive with the mills, but why would they buy specifically from us? I'm going to tell you what we hear from the customers. And what we would hear from the customers, it's our service. We're very responsive. We're able to be probably a bit more flexible with scheduling and help.

Clearly, we have premier quality, or we wouldn't continue to see the orders, but I really do think it's our speed, it's our service, and it's our flexibility. And John that's - I'm just telling you what I hear from the customers.

John Tumazos^ And forgive me if I'm asking too many questions and there's 30 people after me in the queue. I don't want to hog the meeting. Would your galvanized customers tend to be in a relatively close radius to your facility? And maybe those big mills would have national customers scattered all over the place.

That would better lend itself to service and relationships with their neighbors?

Jeff Klingler^ The answer to that is really no. We do tend to sell locally, of course. That makes a lot of sense, but more specifically with our galvanized products, we do ship that product all over the country.

John Tumazos^ I should stop and give other people a chance. Thank you very much.

Jeff Klingler^ Thank you, John.

Geoff Gilmore^ John, thanks for your support.

Operator^ We will take our next question from Martin Englert with Seaport Research Partners. Your line is open.

Martin Englert^ Hello. Good morning, everyone.

Tim Adams^ Hi, Martin.

Martin Englert^ Couple questions on the expansions for electrical steel laminations in Canada and Mexico. If you could just provide an update on any pending equipment deliveries, and whether those are on time and how the environment is for staffing up headcount once you start, to ramp things in the respective locations?

Jeff Klingler^ Sure. Good morning. This is Jeff Klingler. I'll be happy to take that. Just maybe from an overall quick general update, in Mexico, that project is on time and on budget. To-date, we've spent about $17 million. The building expansion really should be complete here by late spring or early summer. And we'll be installing the first presses here in just the next couple of months.

We've seen, and this is really true around all of our expansions, we've seen very positive staffing, ability to staff up, and a lot of excitement around these projects internally. So that's a lot - we don't see any problems there. In Canada this expansion, similar thing, on time, on budget, maybe a little bit delayed due to some land, but we think we're going to be able to catch up.

We're talking a month or two.

And then to-date, we've spent about $5 million, but the ramping is going to start to - but the spending is going to start to ramp up here, through the next few quarters. We're not going to see production at that facility until towards the end of next calendar year, but again, there's an awful lot of excitement about the project internally and in the community. So, we don't foresee any problems at this point, with being able to staff up appropriately.

Martin Englert^ Of the remainder of the cap, sorry, was there more to add there?

Geoff Gilmore^ No, go ahead, Martin. You're fine.

Martin Englert^ Okay. Sorry about that. Of the remainder of the CapEx spend for the respective projects, how much of that is fixed pricing versus is there any component that, whether it would be incremental equipment buys, all within the scope of what's planned that might still have some variability, or inflation risk to the price?

Tim Adams^ I think, this is Tim, Martin. I think most everything is locked in terms of price. We negotiated the price and we locked those things in, so I don't think there's much variability there.

Martin Englert^ Okay. Any comments or updates on the backlog for transformers in Canada and how that's looking?

Geoff Gilmore^ Martin, Geoff Gilmore, it continues to be two years or greater backlog for transformers, so we're still quite bullish on that market. Again, you've heard me say, it's a market we feel will grow much faster than GDP out the next seven to 10 years and a big driver, of why we're making that expansion in Canada. So nothing is slowing down on that front.

Martin Englert^ Okay. Anything, when you think about the pure EVs or the hybrids, as far as what you're seeing with activity and demand, just reviewing some of the headlines in recent history, it seems like there's a little bit of a pause, but I know you have a diverse mix on legacy platforms, as well as hybrid and EV, but still curious what you're seeing?

Geoff Gilmore^ Great question. And you're spot on. I mean, there's a lot of headlines and certainly these things get a bit politicized, especially in an election year, but - we still are bullish that the market is going to move away from ICE to hybrid and BEVs. Martin, you hit the nail on the head. There's just not a lot of talk about, how much momentum hybrids are getting. We didn't enter this business thinking there was going to be a straight line growth curve from ICE to BEV. We figured there'd be a growth slope.

It was going to be bumpy at times, because it's a significant innovation. It's a supply chain that needs to be built out, but that's going to happen and costs will come down, but there is a lot more attention and a lot of automotive companies that are feeling that hybrid needs to be a bigger piece of that portfolio. And more importantly, if it's internal combustion engine, we produce cold rolled strip. It's great.

If it's hybrid, you need cold rolled strip for clutch plates. You need electrical steel lamination for electrification. If it's BEV, you need electrical steel laminations. My point in sharing that is, I don't know that there's anybody else globally that's better positioned, to take advantage of that.

Martin Englert^ And how - when you're looking at a hybrid vehicle versus battery EV, how does the electrical steel intensity change from a typical platform? Is it some multiple one versus the other, or is it not markedly different?

Jeff Klingler^ Martin, this is Jeff Klingler. That's a tough one. It does get marginally more electrical steel intensive, as you go to a full electric vehicle. But, we have some data it definitely varies by program. It's going to evolve, but any number of traction motors is a good thing for us in the transition.

Martin Englert^ Okay. All right. Appreciate the color. Thank you very much.

Geoff Gilmore^ Thank you, Martin.

Operator^ And we will take follow-up questions from Phil Gibbs with KeyBanc Capital Markets. Your line is open.

Phil Gibbs^ Thanks very much. Are the payments to the parent company done following this quarter? Is there any residual moving ahead?

Tim Adams^ We paid the $150 million dividend on December 1. There's nothing else that we have to do. I mean, we've got some TSAs and some long-term agreements. We share a campus and we've got some of those types of things, but - if you're talking about the dividends specifically, that is done. It's paid and we moved on.

Phil Gibbs^ Following the payments in the quarter, can you just remind us what your current liquidity is?

Tim Adams^ Yes. We've got ample liquidity. I think you noted it in your note. Our leverage is pretty low, and we've got ample liquidity, to pursue any of these growth projects from the ABL we put in place.

Phil Gibbs^ And what's the size of the ABL? Can you just remind us of that?

Tim Adams^ $550 million ABL.

Phil Gibbs^ And what's the rate on that right now, just given all the volatility and interest rates?

Tim Adams^ Just under 7%. It's a SOFR plus type arrangement.

Phil Gibbs^ The last one from me, is just kind of a broad question. I know you're just getting your sea legs as a standalone company, but given the historical consistency of free cash flow and operating cash flow, is there any thoughts over the midterm to put in a buyback or remain active in the M&A channel, or both under consideration?

Tim Adams^ Buybacks, we talked a little bit about during Investor Day. It's going to be a way that we return capital to shareholders along with dividends. We have not put anything formal in place. We are still discussing that. So at some point, we would expect to have a buyback program in place.

And we are continuing to look at M&A opportunities. We haven't really stopped.

We've got these big growth CapEx projects, but as we talked about, we're pretty selective in who we want to buy, right. We're looking for high value-added companies that we can bolt on, and complement what we have or enter new niches. So, we're not out of M&A. We've just paused a little bit to get through the spin, and we'll crank that effort up and continue to look, for companies that match us from a culture standpoint, and match us from a high-value-add standpoint.

Phil Gibbs^ I did actually have one more. You mentioned in your release that the tolling pricing was up quite nicely year-over-year. Is that a good baseline to use moving forward, or is that just a mix and timing thing?

Tim Adams^ It's a mixed thing. I mean - you've got to think about this in two ways. So, if you do a straight high-value-added process like galvanizing, it's going to command a higher price per ton than, say, a slit. But then we report ship tons for tolling. So, if you do multiple processes to a coil of steel, so you pickle, you galv, then you slit it, that's going to show up as a high invoice, or a high-priced item, right. So, it really is a mixed situation for us.

Phil Gibbs^ Thank you.

Tim Adams^ Hi Phil, I want to circle back on your question, about Q4 and automotive. Our automotive or our volume typically is up in the high single-digits. I said low single-digits. It's probably closer to high single-digits.

Phil Gibbs^ Thank you for the clarification. Appreciate it.

Tim Adams^ You bet.

Operator^ And ladies and gentlemen, that is all of the time we have for questions today. So, I will now turn the call back to Mr. Geoff Gilmore, for closing remarks.

Geoff Gilmore^ Thank you, everybody. Appreciate the participation and the interest in Worthington Steel. Again, very proud of our employees, excited about the progress this quarter, and even more excited about what's to come. And we'll look forward to our next call and sharing our progress on our strategy. Have a great weekend, everybody. Thank you.

Operator^ Ladies and gentlemen, this concludes today's call. And we thank you for your participation. You may now disconnect.

COLUMBUS, Ohio, March 21, 2024 – The board of directors of Worthington Steel, Inc. (NYSE: WS) has declared a quarterly dividend of $0.16 per common share. The dividend is payable on June 28, 2024, to shareholders of record June 14, 2024.

Worthington Steel will host a conference call to discuss its fiscal third quarter results at 8:30 a.m. ET on Friday, March 22, 2024. A live webcast of the call will be available on the Investor Relations section of the Company’s website at www.WorthingtonSteel.com and will be archived for one year.