Gross margin slid to 9.6% in 2027Q1 from 15.2% in 2025Q4, and SG&A escalated to $208.8M against $56.0M of operating income, leaving a negative $5.0M net result that suggests roughly $61M of non-operating charges now drive the bottom line.
Worthington Steel, Inc. (WS) annual income statement — 6-year revenue, gross profit & net income history
| Metric | TTM | May'26 | May'25 | May'24 | May'23 | May'22 | May'21 |
|---|
| Sales/Revenue | 5.3B | 3.44B | 3.09B | 3.43B | 3.61B | 4.07B | 2.13B |
| Revenue Growth % | 69.13% | 11.33% | -9.83% | -4.91% | -11.33% | 91.26% | - |
| Cost of Goods Sold | 4.75B | 3.04B | 2.7B | 2.99B | 3.27B | 3.67B | 1.76B |
| COGS % of Revenue | - | 88.31% | 87.44% | 87.18% | 90.67% | 90.28% | 82.57% |
| Gross Profit | 548.6M | 402.6M | 388.6M | 439.8M | 336.5M | 395.5M | 370.84M |
| Gross Margin % | 10.36% | 11.69% | 12.56% | 12.82% | 9.33% | 9.72% | 17.43% |
| Gross Profit Growth % | - | 3.6% | -11.64% | 30.7% | -14.92% | 6.65% | - |
| Operating Expenses | 434.8M | 297.5M | 241.6M | 245.3M | 216.2M | 168.9M | 149.32M |
| OpEx % of Revenue | - | 8.64% | 7.81% | 7.15% | 5.99% | 4.15% | 7.02% |
| Selling, General & Admin | 438.4M | 297.5M | 231.6M | 224.4M | 200.8M | 180.3M | 147.44M |
| SG&A % of Revenue | - | 8.64% | 7.49% | 6.54% | 5.57% | 4.43% | 6.93% |
| Research & Development | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| R&D % of Revenue | - | - | - | - | - | - | - |
| Other Operating Expenses | -1000K | 0 | 10M | 20.9M | 15.4M | -11.4M | 1.88M |
| Operating Income | 113.8M | 105.1M | 147M | 194.5M | 120.3M | 226.6M | 221.52M |
| Operating Margin % | 2.15% | 3.05% | 4.75% | 5.67% | 3.33% | 5.57% | 10.41% |
| Operating Income Growth % | - | -28.5% | -24.42% | 61.68% | -46.91% | 2.29% | - |
| EBITDA | 206.1M | 189.9M | 213M | 259.8M | 189.9M | 286.1M | 266.47M |
| EBITDA Margin % | 3.89% | 5.51% | 6.89% | 7.57% | 5.26% | 7.03% | 12.53% |
| EBITDA Growth % | -7.16% | -10.85% | -18.01% | 36.81% | -33.62% | 7.37% | - |
| D&A (Non-Cash Add-back) | 92.3M | 84.8M | 66M | 65.3M | 69.6M | 59.5M | 44.95M |
| EBIT | 132.5M | 105.1M | 155.2M | 222.2M | 131.7M | 257.3M | 223.41M |
| Net Interest Income | -62.8M | -26.9M | -7.1M | -6M | -3M | -3M | 12K |
| Interest Income | 0 | 0 | 0 | 0 | 0 | 0 | 12K |
| Interest Expense | 62.8M | 26.9M | 7.1M | 6M | 3M | 3M | 0 |
| Other Income/Expense | -128.3M | -79.6M | 1.1M | 21.7M | 8.4M | 27.7M | 15.63M |
| Pretax Income | -14.5M | 25.5M | 148.1M | 216.2M | 128.7M | 254.3M | 237.15M |
| Pretax Margin % | -0.27% | 0.74% | 4.79% | 6.3% | 3.57% | 6.25% | 11.15% |
| Income Tax | 21.3M | 22.6M | 28.8M | 46.1M | 29M | 54M | 48.48M |
| Effective Tax Rate % | -146.9% | 88.63% | 19.45% | 21.32% | 22.53% | 21.23% | 20.44% |
| Net Income | -29.5M | 17.3M | 110.7M | 154.7M | 87.1M | 180.4M | 171.01M |
| Net Margin % | -0.56% | 0.5% | 3.58% | 4.51% | 2.41% | 4.43% | 8.04% |
| Net Income Growth % | -124.87% | -84.37% | -28.44% | 77.61% | -51.72% | 5.49% | - |
| Net Income (Continuing) | -35.8M | 2.9M | 119.3M | 170.1M | 99.7M | 200.3M | 188.67M |
| Discontinued Operations | -1000K | 0 | 0 | 0 | 0 | 0 | 0 |
| Minority Interest | 668M | 206.7M | 123.8M | 132.2M | 125.6M | 133.21M | 153.5M |
| EPS (Diluted) | -0.59 | 0.35 | 2.19 | 3.11 | 1.77 | 3.66 | 3.42 |
| EPS Growth % | -124.68% | -84.02% | -29.58% | 75.71% | -51.64% | 7.02% | - |
| EPS (Basic) | - | 0.35 | 2.24 | 3.14 | 1.77 | 3.66 | 3.42 |
| Diluted Shares Outstanding | 50M | 49.8M | 49.5M | 49.8M | 50.03M | 50.03M | 50.03M |
| Basic Shares Outstanding | 50M | 49.8M | 49.5M | 49.3M | 50.03M | 50.03M | 50.03M |
| Dividend Payout Ratio | - | 188.44% | 28.82% | 5.11% | - | - | - |
Quick answers to the most common questions about buying WS stock.
For fiscal year 2026, Worthington Steel, Inc. (WS) reported total revenue of $3.44B. This represents a 61.9% increase compared to $2.13B in 2021.
Worthington Steel, Inc. (WS) is profitable, generating $17.3M in net income for the fiscal year ending 2026 with a net profit margin of 0.5%.
Worthington Steel, Inc. (WS) reported an operating income of $105.1M, resulting in an operating profit margin of 3.1%. This margin reflects the operational efficiency of the business before interest and taxes.
Worthington Steel, Inc. (WS) generated $402.6M in gross profit for the year, representing a gross profit margin of 11.7%. This demonstrates the company's core pricing power and production efficiency.
Key Metrics
Top Statement Risk
Thin margins and spread volatility
Metrics are mathematically derived from official filings.
Revenue Step-Up Overshadows Weak Growth Quality
Worthington Steel's quarterly revenue leapt to $2.7B in 2027Q1 from roughly $770-930M in each of the preceding six quarters, yet reported YoY growth of just 2.1%, per the company's SEC filings, implying the scale-up is inorganic or reflects a consolidation reclassification.
The near-tripling of the revenue base in 2027Q1, against a prior-year comparative of only $872.9M in 2026Q1, suggests a newly consolidated business or acquired entity rather than organic volume gains, which materially weakens the comparability of the ten-quarter history presented here. Growth quality looks mixed: trailing revenue growth of approximately 11.3% is largely explained by that step-change, while the latest quarter's 2.1% growth and -119.2% EPS growth indicate the top line has not translated into per-share earnings. Given the company's exposure to North American vehicle build rates and transformer demand, investors should watch whether the enlarged revenue base is accompanied by stable processing spreads in coming quarters.
Spread Compression Drives Gross Margin Slide
According to recent quarterly filings, Worthington's gross margin has compressed from 15.2% in 2025Q4 to 9.6% in 2027Q1, and its trailing ~11.7% gross margin trails Reliance's 26.8% and Steel Dynamics' 13.0%, indicating the processor's spread model is currently absorbing weaker pricing.
The gross margin trough of 9.9% in 2026Q3 and the still-subdued 9.6% in 2027Q1 appear consistent with a widening gap between hot-rolled coil input costs and realized processing fees, which is the structural risk inherent in a pass-through spread model. What is notable is that Worthington's gross margin sits only modestly below steelmaker peers such as Nucor (11.9%), yet its operating margin of roughly 3.1% trails the 6.7-8.2% peer band by a far wider margin, suggesting the earnings gap is driven as much by standalone overhead and mix as by the spread itself. If the electrical steel lamination mix does scale as targeted, the revenue mix may support structurally higher spreads, but the reported figures do not yet demonstrate that benefit.
Overhead Outgrew Profit in the Downturn Quarter
Based on Worthington Steel's reported figures, operating income of $56.0M in 2027Q1 remains below the $67.3M earned in 2024Q4 on a far larger revenue base, as SG&A escalated from $57-64M per quarter to $208.8M, pointing to negative operating leverage and unabsorbed standalone overhead.
The clearest illustration is 2026Q3, when SG&A of $77.5M exceeded gross profit of $76.1M entirely, producing a negative 0.2% operating margin — an outcome that suggests fixed corporate costs were not being covered by processing spreads at the trough of the cycle. However, SG&A as a percentage of revenue has stayed in a relatively narrow 7-10% band across the period, including 7.7% in 2027Q1 versus 7.8% in 2026Q1, which implies overhead discipline is not deteriorating on a relative basis and that the operating margin shortfall is predominantly a gross-margin problem. The key swing factor is whether the enlarged 2027 cost base scales sub-linearly; the 2.1% operating margin on $2.7B of revenue indicates it has not yet done so.
Non-Operating Items Now Swing the Bottom Line
According to the company's latest reported figures, net income of -$5.0M in 2027Q1 despite $56.0M of operating income implies roughly $61M of non-operating charges, and trailing net margin of about 0.5% sits far below the operating margin, signaling non-core items now drive bottom-line results.
The gap between operating and net income was even wider in 2026Q4, where $36.9M of operating income converted to a $48.7M net loss — a roughly $86M swing that appears consistent with acquisition, integration, interest, tax, or impairment charges, though the specific drivers are not identified in the data supplied and warrant review of the filings. Stock-based compensation is comparatively immaterial, ranging from $0.4M to $7.4M per quarter, so it cannot explain the volatility, which instead appears concentrated below the operating line and amplified by small EPS denominators. Cash flow specifics were not provided in this dataset, so the sustainability of these reported losses cannot be assessed here.
Gross Line, Not Overhead, Is the Cost Problem
As reported in Worthington Steel's income statements, COGS absorbed roughly 90% of revenue in 2027Q1 versus about 85% in 2025Q4, and with R&D reported at zero across all ten quarters, raw material pass-through and SG&A are effectively the only controllable cost levers available to management.
The absence of reported R&D expense is consistent with a processing-led business model, but it also means the claimed electrical steel differentiation is not visible as an investment line in the income statement, leaving SG&A as the only disclosed proxy for technical and commercial capability spend. Management's expense discipline appears reasonable in relative terms, since SG&A intensity has hovered near 7-9% of revenue for most of the period and did not spike in the enlarged 2027 revenue base. The exposure instead sits in COGS, where a company with essentially no pricing leverage at the input level is highly vulnerable to hot-rolled coil price swings, which would compress the spread regardless of internal cost control.
What a Skeptic Would Focus On
Relative to peer benchmarks compiled from public filings, a short-seller would note that Worthington's 3.1% trailing operating margin and 0.5% net margin remain roughly half of peers such as Nucor and Steel Dynamics, and that management's withdrawal of formal guidance on 2026-10-06 may signal uncertainty around spread durability.
The strongest challenge to the current narrative is that the apparent recovery in operating margin from the 2026Q3 trough may reflect favorable input-cost timing or inventory valuation effects rather than a durable improvement in processing economics, a distinction that cannot be resolved without the LIFO/FIFO election and inventory reconciliation disclosed in the 10-K. Compounding this, the 2027Q1 revenue discontinuity raises questions about how much of the top line is genuinely comparable, and a market capitalizing a 0.5% net margin is effectively underwriting a return to mid-single-digit spreads that has not yet been demonstrated. With negative net income in two of the last three reported quarters and no forward guidance, the burden of proof appears to sit with management to show that the electrical steel mix shift can lift margins structurally rather than cyclically.