Note 2 – Acquisitions

Kloeckner Acquisition

On June 3, 2026, the Company completed the acquisition of 52.52% of the issued and outstanding shares of Kloeckner, a German-based metals processor with operations in North America and Europe. The Company conducted a voluntary public cash takeover offer to all Kloeckner shareholders to tender each issued and outstanding share of Kloeckner to the Company for cash consideration of €11.00 per Kloeckner share, subject to increases made voluntarily or as required under applicable German law. Combined with the Company’s previously held equity interest in Kloeckner shares, the Company held approximately 60.86% of Kloeckner’s outstanding share capital immediately following the acquisition. As of the date of the Kloeckner Acquisition, the Company obtained a controlling financial interest and began consolidating Kloeckner’s results of operations and financial position. The Company accounted for the transaction as a business combination in accordance with ASC 805.

The acquisition advances the Company's growth strategy by broadening its value-added product offerings, diversifying its end-market exposure and geographic footprint, and significantly increasing the scale of its metals processing operations. The combination is also expected to provide opportunities for operational efficiencies and further growth.

Immediately prior to the Acquisition Date, the previously held Kloeckner shares were accounted for as an equity security investment (see Note 4 – “Investments” in the Company’s Form 10-K for the year ended May 31, 2026). The Company remeasured its previously held equity interest to fair value as of the acquisition date, resulting in a loss of $15.5 million, which is reflected within miscellaneous income (expense), net for the quarter ended August 31, 2026.

On June 15, 2026, an additional one million Kloeckner shares were acquired at €11.00 per share (approximately $12.7 million), bringing the Company’s total ownership to 61.87% of Kloeckner’s total outstanding share capital.

On July 15, 2026, the Company commenced a public delisting tender offer for all outstanding Kloeckner shares not already held by the Company at a price of €11.00 per share (“Delisting Tender Offer”). The acceptance period ended on August 12, 2026, and Kloeckner’s shares were delisted from the regulated market of the Frankfurt Stock Exchange effective August 12, 2026. Upon settlement of the Delisting Tender Offer, the Company acquired 242,446 additional Kloeckner shares for aggregate consideration of approximately €2.7 million (approximately $3.2 million), increasing the Company’s total ownership interest to approximately 62.11%.

Consideration Transferred & Purchase Price Allocation

The following table summarizes the consideration transferred and the estimated fair value assigned to the assets acquired and liabilities assumed at the Kloeckner Acquisition. 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 valuation of acquired tangible assets and liabilities, identification and valuation of residual goodwill and tax effects of acquired assets and assumed liabilities.

The fair value of the previously held equity interest and the noncontrolling interest were both measured using the €11.00 per share price offered in the Delisting Tender Offer, a Level 2 input. Based on the preliminary purchase price allocation, the consideration transferred was fully allocated to the identifiable assets acquired and liabilities assumed. Accordingly, no goodwill or bargain purchase gain was recognized.

The Company incurred acquisition-related expenses for the Kloeckner Acquisition of $22.6 million during the three months ended August 31, 2026, which are included in selling, general and administrative expense (“SG&A”) in the condensed consolidated statements of earnings, consisting primarily of legal, advisory, and valuation services.

Operating results of Kloeckner have been included in the Company’s condensed consolidated statements of earnings since June 3, 2026, the Acquisition Date. For the three months ended August 31, 2026, Kloeckner contributed net sales of $1,772.7 million and net earnings attributable to controlling interest from continuing operations of $4.5 million, which includes the impact of the intercompany activity between Legacy Worthington Steel and Kloeckner that is eliminated in consolidation.

Pro Forma Information

The following unaudited pro forma information presents consolidated results as if the acquisition of Kloeckner had occurred on June 1, 2025, the beginning of fiscal 2026. The pro forma information reflects preliminary fair value adjustments, including depreciation and amortization of the fair value adjustments to property, plant and equipment and identifiable intangible assets, interest expense on the new financing, and the related tax effects, net of the portion attributable to noncontrolling interests. Pro forma net earnings attributable to controlling interest from continuing operations for the three months ended August 31, 2025 include nonrecurring acquisition-related transaction costs, net of tax. Pro forma net earnings attributable to controlling interest from continuing operations for the three months ended August 31, 2026 exclude transaction costs recognized in the current quarter and the remeasurement of the previously held equity interest, net of tax. The pro forma information is presented for informational purposes only and is not necessarily indicative of the results of operations that would have been achieved had the acquisition occurred on June 1, 2025, nor of future results.

Sitem Group (Fiscal 2026)

On June 3, 2025, the Company completed its acquisition of 52% of Sitem Group, a producer of electric motor laminations and accessory products primarily for automotive and industrial applications in Europe. During fiscal 2026, the Company finalized the valuation of the assets acquired and liabilities assumed, including the related net financial position and tax-related measurement period adjustments; no further measurement period adjustments were recorded in the current quarter. The Company incurred acquisition-related expenses for the Sitem Group acquisition of $0.4 million during the three months ended August 31, 2025, which are included in SG&A in the condensed 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 to key individuals at the Sitem Group as a result of the successful closing, which was recorded in SG&A in the consolidated statement of earnings.

See the Company’s Annual Report on Form 10-K for the fiscal year ended May 31, 2026 for additional information regarding this acquisition. See also “Note 10 – Equity and Mezzanine Equity” for information regarding the redeemable noncontrolling interest and related put and call options associated with this transaction.