Shares of Worthington Steel (NYSE: WS) plummeted 6.39% in after-hours trading on Wednesday following the release of the company's first quarter fiscal 2026 earnings report. The steep decline suggests that investors were disappointed with the results, despite the company reporting year-over-year growth in several key metrics.
For the quarter ended August 31, 2025, Worthington Steel reported net earnings of $36.8 million, or $0.72 per diluted share, compared to $28.4 million, or $0.56 per diluted share, in the same quarter last year. On an adjusted basis, earnings per diluted share came in at $0.77, slightly above the $0.76 estimate from one analyst. Net sales for the quarter rose 5% year-over-year to $872.9 million, beating the single analyst estimate of $834.6 million.
Despite the apparent beat on both top and bottom lines, investors seemed to focus on other aspects of the report. The company's direct volumes increased by 6%, with the Sitem Group acquisition contributing about 1% to this growth. However, toll volumes declined by 22%, which the company attributed to softening demand from mill customers and the closure of a toll processing facility in Cleveland, Ohio. This significant drop in toll volumes may have raised concerns about the overall demand environment for Worthington Steel's services. Additionally, while the gross margin benefited from a $22.2 million favorable change in inventory holding gains, this non-operational factor may not be viewed as sustainable improvement in the company's core business performance.
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