Acquisitions

9 Months Ended

Feb. 28, 2026

Business Combination [Abstract]

Acquisitions

Note 2 – Acquisitions

Proposed Acquisition of Kloeckner

On January 15, 2026, the Company entered into a Business Combination Agreement (“BCA”) with Klöckner & Co SE (“Kloeckner”). Following execution of the BCA, the Company, through its wholly owned indirect subsidiary Worthington Steel GmbH (the “Bidder”), launched a voluntary public cash takeover offer to all Kloeckner shareholders to tender each issued and outstanding share of Kloeckner (each, a “Kloeckner Share”) to the Bidder. Subject to the terms and conditions of the offer document (the “Offer Document”) relating to the Offer (as defined below), upon settlement of the Offer (the “Offer Closing”) the Company will pay cash consideration equal to €11.00 (subject to any increases either made voluntarily or in accordance with applicable German law) for each Kloeckner Share validly tendered by Kloeckner shareholders (such tender offer, the “Offer,” and such acquisition of Kloeckner Shares, the “Proposed Acquisition”). The initial acceptance period for the Offer began on February 5, 2026, upon publication of the Offer Document following its approval by the German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht, “BaFin”). The Proposed Acquisition has not been completed as of February 28, 2026, and, accordingly, the Company has not applied acquisition accounting. The results of operations and financial position of Kloeckner are not included in the Company’s financial statements.

On March 10, 2026, the Company executed an amendment (the “Offer Amendment”) to the Offer Document. Pursuant to the Offer Amendment, Bidder reduced the minimum acceptance threshold of the Kloeckner Shares required as a condition to the closing of the Offer from at least 65% to at least 57.5% of the Kloeckner Shares at the expiry of the acceptance period for the Offer (the “Acceptance Period”). As a result of the Offer Amendment, the Acceptance Period was extended by two weeks pursuant to the German Securities Acquisition and Takeover Act (Wertpapiererwerbs- und Übernahmegesetz) (“WpÜG”), and expired on March 26, 2026.

On March 31, 2026, the Company announced that it had achieved the minimum acceptance threshold of Kloeckner’s issued share capital. Following the expiration, an additional, statutory two-week acceptance period began on April 1, 2026, which will conclude on April 14, 2026, after which, the Company will announce the final results for the Offer. Subject to the Regulatory Condition (as defined below in Part II, Item 1A), the Company expects the Offer Closing to occur in the second half of calendar 2026. On March 27, 2026, Worthington Steel informed Kloeckner about its firm intention to enter into a domination and profit and loss transfer agreement (“DPLTA”) with Kloeckner immediately after completion of the Offer. At the time of the completion of the DPLTA, any outstanding Kloeckner Shares not owned by the Company will be minority shareholders of Kloeckner.

If completed, the Proposed Acquisition is expected to have a material impact on the Company, results of operations and financial condition.

Equity Securities

As of February 28, 2026, the Company owns Kloeckner Shares, but does not have a controlling interest or the ability to exercise significant influence. Accordingly, the Company has not recognized Kloeckner’s assets or liabilities in the accompanying consolidated financial statements. Upon closing of the Proposed Acquisition, the Company expects to obtain a controlling financial interest and account for the transaction as a business combination. For additional information, see “Note 4 – Investments.”

Sitem Group (Fiscal 2026)

On June 3, 2025, Tempel completed its acquisition of 52% of Sitem Group. Sitem Group produces electric motor laminations and accessory products primarily for automotive and industrial applications in Europe.

The total purchase price as of the acquisition date for the Sitem Group acquisition consisted of the following:

(1)Cash consideration for stock acquired from shareholders of €43.1 million ($48.9 million);

(2)Cash capital contribution of €10.0 million ($11.3 million) related to the purchase for newly issued shares, of which €4.8 million ($5.4 million) is attributable to minority interest; and

(3)Contribution of Tempel’s electrical steel subsidiary in Nagold, Germany (“Tempel Nagold”), which was valued at €22.0 million ($25.0 million) at the time of acquisition, of which €10.6 million ($12.0 million) is attributable to minority interest.

The cash consideration included cash that is contingent on certain customary conditions, of which €4.2 million ($4.7 million) relates to the purchase of existing shares and €0.6 million ($0.7 million) relates to the purchase of newly issued shares. As of February 28, 2026, the contingent cash consideration had not yet been paid. The acquisition was funded primarily with restricted cash held in escrow at May 31, 2025. The difference between the contributed fair value of Tempel Nagold at the time of the acquisition and the noncontrolling interest in Tempel Nagold, which was at the Company’s historical cost, was $0.7 million and was recorded as an adjustment to APIC.

For the third quarter of fiscal 2026, there were no material acquisition-related expenses incurred compared to $1.2 million for the third quarter of fiscal 2025. For the nine months ended February 28, 2026 and February 28, 2025, such expenses were $0.7 million and $3.2 million, respectively. These costs are included in selling, general and administrative expense (“SG&A”) in the consolidated statements of earnings, consisting primarily of legal, advisory, and valuation services. There was a one-time bonus of €4.0 million ($4.6 million) that was paid in the first quarter of fiscal 2026 to key individuals at Sitem Group as a result of the successful closing, which was recorded in SG&A in the consolidated statements of earnings. There was a deferred tax asset adjustment of €0.7 million ($0.8 million) related to the disallowance of deferred tax assets located within Germany as a result of the contribution of Tempel Nagold. This adjustment was recorded in income tax expense in the consolidated statements of earnings.

The Sitem Group transaction includes a series of put options and call options. The net put/call was valued at €9.4 million ($10.7 million) using a Monte Carlo simulation in a risk-neutral framework and is recorded within Mezzanine Equity. The fair value of the remaining noncontrolling interest of 48% after the acquisition was determined using the implied enterprise value based on the purchase price. For additional information, see “Note 11 – Equity and Mezzanine Equity.”

The following table summarizes the consideration transferred and the estimated fair value assigned to the assets acquired and liabilities assumed at the acquisition date. These amounts reflect various preliminary fair value estimates and assumptions, including preliminary work performed by a third-party valuation specialist, and are subject to change within the measurement period as the valuation is finalized. The primary areas of preliminary purchase price allocation subject to change relate to the final net financial position adjustment calculation and the resulting valuation of residual goodwill. During the second quarter of fiscal 2026, the Company recognized certain tax-related measurement period adjustments shown due to changes in the underlying calculation. No measurement period adjustments were recorded in the third quarter of fiscal 2026.

							Revised
							Valuation
				Measurement			as of
	Preliminary			Period			February 28,
(In millions)	Valuation			Adjustments			2026
Consideration Transferred
Cash Consideration	$	44.2		$	-		$	44.2
Contingent Consideration - Cash		4.7			-			4.7
Subtotal		48.9			-			48.9
Cash Capital Contribution		5.1			-			5.1
Contingent Capital Contribution - Cash		0.3			-			0.3
Subtotal		5.4			-			5.4
Contribution of Tempel’s electrical steel subsidiary in Nagold, Germany		12.0			-			12.0
Total Consideration Transferred	$	66.3			-		$	66.3
Recognized amounts of identifiable assets acquired and liabilities assumed
Cash and cash equivalents	$	42.6		$	-		$	42.6
Receivables		39.6			-			39.6
Inventories		40.4			-			40.4
Deferred income tax assets		3.2			-			3.2
Prepaid expenses		4.9			-			4.9
Operating lease right-of-use assets		16.5			-			16.5
Finance lease right-of-use assets		8.6			-			8.6
Property, plant and equipment		98.8			-			98.8
Intangible assets		24.0			-			24.0
Other assets		1.0			-			1.0
Total identifiable assets		279.6			-			279.6
Accounts payable		(34.7	)		-			(34.7	)
Accrued compensation and related taxes		(9.3	)		-			(9.3	)
Current operating lease liabilities		(2.7	)		-			(2.7	)
Current finance lease liabilities		(2.4	)		-			(2.4	)
Noncurrent operating lease liabilities		(13.9	)		-			(13.9	)
Noncurrent finance lease liabilities		(6.2	)		-			(6.2	)
Current maturities of long-term debt and short-term borrowings		(25.9	)		-			(25.9	)
Deferred income tax liabilities		(16.9	)		0.5			(16.4	)
Long-term debt		(25.3	)		-			(25.3	)
Pension and other postretirement benefit obligations		(14.3	)		-			(14.3	)
Other non-current liabilities		(1.9	)		-			(1.9	)
Total identifiable liabilities		(153.5	)		0.5			(153.0	)
Sitem Group - Net identifiable assets		126.1			0.5			126.6
Goodwill		22.0			(0.5	)		21.5
Total – Sitem Group		148.1			-			148.1
Redeemable NCI - Net Put option		(10.7	)		-			(10.7	)
Redeemable NCI		(71.1	)		-			(71.1	)
Total - Redeemable NCI		(81.8	)		-			(81.8	)
Total	$	66.3		$	-		$	66.3

In addition to the Redeemable NCI above of $81.8 million, the Company recorded $17.4 million of Redeemable NCI related to the cash capital contribution and the contribution of Tempel Nagold.

The Company recognized goodwill related to this acquisition of $21.5 million, which is not expected to be deductible for income tax purposes. The goodwill recognized in this acquisition was attributable to the acquired assembled workforce, expected synergies, expanded market opportunities, and economies of scale, none of which qualify for recognition as a separate intangible asset. Goodwill and intangible assets associated with foreign subsidiaries are translated at the applicable reporting period end exchange rates, with translation adjustments recorded in AOCI.

Acquired intangible assets are being amortized over the estimated useful lives on a straight-line basis. The following table summarizes the purchase price allocation and weighted average remaining useful lives for identifiable intangible assets acquired as of the acquisition date:

			Weighted Average
(In millions)			Estimated Useful	Valuation
Category	Amount		Life (Years)	Methodology
Customer relationships	$	12.3	13	Multi-period Excess Earnings Method
Technological know-how		7.7	8	Relief-from-Royalty Method
Favorable right-of-use lease asset		2.7	7	Discounted Cash Flow Method
Software		1.3	3	Cost
Total acquired identifiable intangible assets	$	24.0

Operating results of Sitem Group have been included in the Company’s consolidated statements of earnings since June 3, 2025, the date of acquisition. For the three months ended February 28, 2026, Sitem Group contributed net sales of $41.8 million and net loss of $4.5 million. For the nine months ended February 28, 2026, Sitem Group contributed net sales of $133.8 million and net loss of $8.2 million.

The following unaudited pro forma information presents consolidated financial information as if Sitem Group had been acquired at the beginning of fiscal 2025. Depreciation and amortization expenses included in the pro forma results reflect the preliminary acquisition-date fair values assigned to the definite-lived intangible assets and fixed assets of Sitem Group assuming a June 1, 2024, acquisition date. Adjustments have been made to remove acquisition-related costs and the acquisition date fair value adjustment to acquired inventories. The pro forma adjustments noted below have been adjusted for the applicable income tax impact. The pro forma information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place on June 1, 2024.

	Three Months Ended				Nine Months Ended
	February 28,		February 28,		February 28,		February 28,
(In millions, except per share amounts)	2026		2025		2026		2025
Net Sales	$	769.8	$	734.6	$	2,514.6	$	2,428.8
Net earnings attributable to controlling interest	$	10.3	$	9.2	$	66.7	$	48.8
Diluted earnings per share attributable to controlling interest	$	0.20	$	0.19	$	1.33	$	0.97