ワーシントン・スチール（WS）2027年度第1四半期決算説明会：クレックナーと負債に焦点

重要なポイント

• ワーシントン・スチール（Worthington Steel）が発表した2027年度第1四半期の売上高は27億ドル、調整後EBITDAは1億1,100万ドル、調整後希薄化後1株当たり利益（EPS）は0.57ドルとなりました。6月3日の買収に伴い、当四半期には初めてクレックナー・メタルズ（Kloeckner Metals）が含まれました。
• 米国会計基準（GAAP）に基づく業績には、前年同期の純利益3,680万ドル（1株当たり0.73ドル）に対し、ワーシントン・スチールに帰属する継続事業からの純損失700万ドル（希薄化後1株当たり0.14ドル）が含まれています。
• クレックナーの在庫に関する取得原価配分（購買会計）の影響により、第1四半期の売上総利益率と調整後EBITDAは推定4,300万ドル押し下げられました。経営陣は、この非現金支出の影響を足し戻すと、EBITDAは概ね1億5,000万ドルになると述べています。
• 従来のワーシントン・スチールの売上高は前年同期比9%増の9億5,400万ドルとなった一方、出荷量は1%減少しました。自動車、農業、その他の輸送機器向けの出荷量が増加したものの、エネルギーおよび建設向けの減少により相殺されました。
• 買収に伴い資金調達コストが大幅に増加しました。純利息費用は前年同期の290万ドルから3,880万ドルに増加し、四半期末の純有利子負債は19億ドルに達しました。
• 経営陣は、2027年度の連結設備投資額を1億6,000万〜1億8,000万ドル、第2四半期における従来事業の在庫保有利益を推定1,000万〜1,500万ドルと見込んでいます。

主要財務データ

公表された業績には、税引前の買収関連費用2,260万ドル、以前所有していたクレックナー株式の再評価による税引前損失1,550万ドル、および買収に関連する繰延税金資産の取り崩し560万ドルが含まれています。

事業および業績の動向

クレックナーは連結売上高の前年同期比19億ドルの増加に貢献し、ワーシントン・スチールの加工能力、最終市場へのリーチ、および地理的拠点を拡大しました。同社は本格的な統合に向けて準備を進めていますが、業務上の支配権およびシナジー効果の獲得は、支配権および損益通算協定（DPLTA）の発効にかかっています。

従来のワーシントン・スチールの売上高は9億5,400万ドル（8,100万ドル、率にして9%の増加）となりました。従来事業の総出荷量は約92万1,000トンで1%減少しました。直接販売量は3%増加した一方、受託加工量は8%減少しました。

自動車向けの直接出荷量は前年同期比4%増加しました。経営陣は、北米の自動車生産が2026年暦年末まで堅調に推移し、業界全体の生産高は2025年暦年と比べてほぼ横ばいになると予想しています。

農業向けの出荷量は、OEM機器や穀物サイロの需要に支えられて40%増加しました。大型トラックを含むその他の輸送機器向け出荷量は、主に市場シェアの拡大と新規ビジネスの獲得により39%増加しました。

これらのプラス要因は、顧客の調達先変更を反映したエネルギー向け出荷の31%減少や、建設向け出荷の9%減少によって大幅に相殺されました。鋼材の供給逼迫により、短期の建設見積もりの提出能力が制限されました。

従来事業の直接販売スプレッドは、直接販売量の増加により760万ドル、在庫保有損益の好転により650万ドルの増益効果を受けました。税引前在庫保有利益は前年同期の560万ドルに対し、合計1,210万ドルとなりました。数量および在庫の影響を除くと、直接販売スプレッドは前年同期比でほぼ横ばいでした。

従来事業の製造費用は、主に人件費、福利厚生費、および運賃の上昇により、約1,100万ドル（6%）増加しました。買収手数料および前年のCDEM決算ボーナスを除くと、従来事業の販売管理費（SG&A）は主に賃金と福利厚生費により290万ドル増加しました。

経営陣の見通し

経営陣は、2027年度第2四半期におけるクレックナー在庫の公正価値ステップアップに伴う残存影響は限られたものにとどまると見込んでいます。

熱延鋼板価格、製鉄所の供給逼迫、および指数ベースの契約価格のタイムラグに基づき、同社は2027年度第2四半期の従来事業における税引前在庫保有利益を1,000万〜1,500万ドルと試算しています。

2027年度の連結設備投資額は合計で1億6,000万〜1億8,000万ドルとなる見込みです。経営陣は、第1四半期の支出は進行中のプロジェクトに偏っていたが、年度が進むにつれて落ち着くはずだと説明しました。

以前発表された同社のシナジー創出目標およびデレバレッジ（負債削減）目標に変更はありません。経営陣は、シナジーの獲得、運転資本の改善、および提案されているベッカー・シュタールの売却と並行して負債削減が進むと見込んでいます。クレックナーは売却益の大部分を負債削減に充てる予定です。

DPLTAが株主の承認を受けて発効した場合、本格的な統合とシナジーの獲得は2027年暦年の第1四半期に開始される見込みです。

リスクと注目点

鋼材の供給は引き続き逼迫しており、輸入の制限、リードタイムの延長、生産スケジュールの変更、製鉄所の定期修繕による稼働停止が影響しています。経営陣は、サプライチェーンの制約により、当四半期に約3万トンの追加出荷機会が損なわれたと推計しています。

需要には依然としてばらつきがあり、顧客は在庫や新規注文に対して慎重な姿勢を維持しました。建設活動は、金利、消費者マインド、および地政学的リスクによる圧力を受け続けています。

買収によりレバレッジと支払利息が増加しました。ワーシントン・スチールが直近12ヶ月（TTM）のレバレッジ比率を開示しなかったのは、算出にあたり買収資金調達およびクレックナーの負債が含まれる一方で、クレックナーのEBITDAが3ヶ月分しか反映されないためです。

統合とシナジー創出は引き続きDPLTAの発効を前提条件としています。また、同社はクレックナーの事業全体で運転資金要件を管理し、在庫を削減する必要があります。

アナリスト質疑応答のハイライト

経営陣は、従来のワーシントン・スチールにおける前期比での予想以上の出荷実績について、自動車、農業、および大型トラック分野での市場シェア拡大によるものと説明しました。また、供給上の制約がさらなる数量増加を制限したとも指摘しました。

亜鉛めっき鋼板のスプレッドについて、経営陣は供給逼迫と輸入制限を理由に持続可能性への自信を示しました。しかし、同社ビジネスの90%以上が契約ベースであるため、当四半期にはその効果が完全には反映されませんでした。経営陣は、1月1日に新しい契約シーズンが始まれば見通しがより明確になると予想しています。

経営陣によると、クレックナーは調達の約99%を地元の製鉄所から行っており、これはワーシントン・スチールの地域調達戦略と一致しています。

ワーシントン・スチールが亜鉛めっきや酸洗などの高付加価値加工を多く行っているため、クレックナーのマージンは構造的に低くなっています。経営陣は、クレックナーへの亜鉛めっき鋼板の供給や同社の在庫効率改善を潜在的なシナジーの機会として挙げました。同社は以前、1億5,000万ドルの運転資金シナジーを特定しています。

提案されているDPLTAに基づき、クレックナーの小口株主は1株あたり11ユーロでワーシントン・スチールに株式を売却できるプット・オプションを受け取ることになります。株式の保有を継続することを選択した株主には、6%（1株あたり0.66ユーロ）の年間現金補償が保証され、株式を無期限に保有し続けることができます。

業績発表電話会議トランスクリプト全文

決算説明会の完全なトランスクリプト

経営陣による説明

Operator

Thank you. Good morning, and welcome to Worthington Steel's First Quarter Fiscal Year 2027 Earnings Call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press *1 to raise your hand. To withdraw your question, press *1 again. I will now hand the conference over to Melissa Dykstra, Vice President of Corporate Communications and Investor Relations. Melissa, please go ahead.

Melissa Dykstra

Thank you, operator. Good morning and welcome to Worthington Steel's First Quarter Fiscal Year 2027 Earnings Call. On our call today we have Jeff Gilmore, Worthington Steel's President and Chief Executive Officer, and Tim Adams, Vice President and Chief Financial Officer. Before we begin, 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 materially from those suggested. We issued our earnings release yesterday after the market closed. Please refer to more detail on factors that could cause actual results to differ materially. Unless noted as reported, today's discussion will reference non-GAAP financial measures, which adjust for certain items included in our GAAP results and are presented on a stand-alone basis. You can find definitions of each non-GAAP measure and GAAP to non-GAAP reconciliations within our earnings release. The call is being recorded and a replay will be available later today on worthingtonsteel.com. Now I'll turn it over to Jeff Gilmore.

Geoffrey Gilmore

Good morning and thanks for joining us. Today marks another major milestone for Worthington Steel as we report Kloeckner Metals as part of our results for the first time. This achievement follows several important steps over the last few months. We closed the transaction on June 3. Kloeckner's shares were delisted from the Frankfurt Stock Exchange on August 12, and the Domination and Profit and Loss Transfer Agreement, or DPLTA, was signed on September 8. The DPLTA remains subject to shareholder approval in October. If approved and effective, it would provide a clear framework for operating control, as well as formal integration and synergy capture, beginning in the first quarter of calendar year 2027.

Planning for that phase is already underway on our side. Teams from Worthington Steel and Kloeckner are spending time together, learning each other's business, processes, and cultures. The better we understand each other now, the better prepared we will be to move with discipline when we have operational control. These early interactions continue to reinforce what we believed when we announced the transaction. These are two strong companies with talented people, deep customer relationships, and cultures that value performance. We have more work ahead, but we are encouraged by the foundation we are building. Before I move to our results and end markets, I want to take time to thank our team.

In addition to the work happening to ensure the successful integration with Kloeckner, they've been navigating difficult market conditions. Simply put, this is one of the most challenging steel supply environments most of us have ever seen. Supply remains tight, lead times are long, production schedules are shifting, and securing the right material for customers has been difficult. Through it all, our employees continue to shine in their unwavering commitment to our customers and our company. With that, let's turn to the quarter. Net sales were $2.7 billion. Adjusted EBITDA was $111 million, and adjusted earnings per share was $0.57.

Because this is the first quarter that includes Kloeckner and their reported results, I will spend a bit more time on the financial details including leverage, purchase accounting, and the items investors should consider when comparing results to prior periods. From my perspective, the bigger point is straightforward. Kloeckner changes the size, shape, and reach of our company. It expands our product and processing capabilities, broadens the markets we serve, and extends our geographic footprint. This is the kind of high-quality scale we have talked about for some time. This scale gives us more ways to serve customers, more balance across cycles, and more opportunities to create long-term value. From a macro standpoint, the quarter remained dynamic.

Demand was uneven across end markets, and customers continued to be careful with inventories and commitments. Supply also remained tight in the U.S. with imports down and lead times extended in many parts of the market. In an environment like this, execution makes a real difference. Across the business, our teams work constructively with customers and supply partners, adjusted plans, and help customers secure the material they needed. This is one of the ways Worthington Steel earns trust. Customers need communication, problem solving, and a team that stays engaged when conditions are difficult. That has always been part of who we are and it will remain a strength as we operate as a larger company. Let me walk through what we saw across our key markets, comparing legacy Worthington Steel for both periods and what we were watching in the months ahead.

North American automotive production has remained resilient so far in calendar year 2026, and we expect that to continue through year end. Based on the latest industry forecast, North American production is expected to be essentially flat compared to calendar year 2025. Regardless of the overall build environment, our commercial and technical teams continue to win new business by helping customers solve challenges, support key programs, and develop new products. Our teams really shine in this sector. One example from the quarter was TWB, our joint venture, being recognized with two supplier awards from Subaru. It reflects strong execution, expertise and the customer focus that helps us build long-term relationships. Congratulations to the entire TWB team.

Overall, we remain optimistic that automotive will remain solid through the end of calendar year 2026. We are not assuming a significant near-term inflection in builds, but we believe Worthington Steel is well positioned to grow through targeted customer wins, technical solutions, and longer-term localization and near-shoring trends. Demand in the construction market was down in the first quarter. Residential construction continues to support demand, but broader construction activity remains more sensitive to interest rates and consumer confidence. We are also watching interest rates and broader geopolitical stability closely. The recent Fed action reinforces that rates may remain a headwind for longer than many expected, particularly in markets tied to construction, equipment purchases, and larger capital decisions. At the same time, the economy continues to show resilience.

And we believe demand can improve as inflation moderates, uncertainty eases, and consumers gain more confidence in the rate environment. So our posture is practical. We're not counting on a quick macro tailwind, but we are staying close to customers, managing what we can control, and positioning the business to respond as conditions improve. Agriculture was a bright spot this quarter with a 40% year-over-year increase in shipments that was mostly driven by the OEM and grain bin markets. We have strong customer relationships in this space and we are staying focused on where we can add value. We will remain disciplined while positioning the business to benefit if demand continues to improve. Heavy truck and trailer continue to show signs of stabilizing. The market started slowly in calendar year 2023, but we saw benefits from share gains and new business wins. We would not characterize the market as fully recovered, but the direction is more constructive than it was earlier in the year.

For us, the priority is readiness. We will manage the current environment carefully and stay prepared to capture opportunities as activity strengthens. As we bring Kloeckner into our reported results, our market discussion will also evolve. We will continue to talk about the end markets investors know well for Worthington Steel, including automotive, construction, agriculture, and heavy truck and trailer. Over time, we also expect to add more perspective on other industrial sectors where Kloeckner has meaningful exposure. Turning to strategic priorities, Kloeckner is clearly at the top of the list. We are focused on preparing for integration.

That means learning the businesses, reviewing processes, and building relationships while protecting customer service and respecting the strengths of both organizations. We want to move with discipline, not just speed. We want to capture value, but we want to do it thoughtfully and with the same operating discipline that has guided Worthington Steel for decades. We continue to believe in the long-term demand drivers tied to electrification, grid investment, and higher efficiency applications. We are taking a disciplined view of the business under current market conditions and we remain focused on improving performance and building value from the capabilities we have developed. We also continue to find practical ways to make the business better. Some of that comes through technology and AI, and some of it comes from disciplined problem solving by our teams.

Regardless of the technology involved, our approach is consistent. Simplify the work, improve the process, where it makes sense and apply AI to enhance decision-making. In indirect purchasing, for example, we've been simplifying workflows, reducing manual effort, and giving our buyers better information to make decisions. Last year, that work allowed buyers to spend more time on supplier negotiations, sourcing strategy, and commodity management. This led to significant cost avoidance across the company. This year, we built on that foundation by applying AI to improve inventory decisions across our maintenance, repair, and operations network. Our buyers now have better visibility across the enterprise.

While AI helps evaluate demand patterns, identify duplicate purchasing opportunities, recommend transfers between facilities, and support inventory-level decisions. Importantly, our people remain in control, but they have a new tool to help make better decisions. Buyers and maintenance teams confirm recommendations before decisions are made, avoiding unnecessary purchases. We have identified and validated the value. Now the work is converting that into financial results over time to disciplined operating reviews and better inventory management. Longer term, we also see this as a capability that can scale across a larger footprint as we move through Kloeckner integration. Another good example is our Monroe, Ohio facility where the team unlocked capacity by taking a fresh look at how work was being done.

Through disciplined problem solving, internal engineering expertise, and better use of existing assets, the team identified work that could move from a bottleneck press to a previously underutilized asset. By thinking differently, the team increased production using in-house capabilities, allowing us to better support customer demand without additional capital investment. Together, these examples show how we are creating value in complementary ways. Through digital transformation and AI-enabled decision-making, and through operational excellence led by the experience and problem-solving capabilities of our people. Before I close, I want to come back to my earlier comments about the challenging market we are operating in today. It takes relationships, experience, persistence, and innovative thinking to serve customers well in this kind of environment. Our employees continue to excel in this area. Ultimately, this is what sets us apart in the industry. While managing through tough market conditions, Worthington Steel teams also continued preparing for the next phase of the Kloeckner transaction.

I appreciate the focus, discipline, and commitment from everyone at Worthington Steel. So to our commercial purchasing supply chain and teams who work with customers and supply partners to keep material moving, thank you. You are helping customers navigate a difficult supply environment. We appreciate your efforts and so do I. To the teams preparing for Kloeckner integration, thank you. The learning and relationship building underway will help shape our future. And to our Kloeckner colleagues, we are glad to be moving forward together.

We are still early in this process, but we are excited about the company we are building. Kloeckner Steel is larger, broader, and more diversified than it was a year ago. We have meaningful work ahead and we will approach it the way we always do. With discipline, care for our people, commitment to customers, and a focus on long-term value creation. With that, I'll turn the call over to Tim for more detail on the quarter and the financials.

Timothy Adams

Thank you, Jeff, and good morning, everyone. Our first quarter results include 100% of Kloeckner following the June 3 acquisition. I will begin with our consolidated results and the items affecting comparability and then discuss the legacy Worthington Steel business where year-over-year comparisons are meaningful. I will finish with a summary with cash flow, capital spending, and our balance sheet. The earnings figures I will discuss are from continuing operations. This continued operations primarily reflect the results of Becker Stahl, which Kloeckner is marketing for sale. In the first quarter, we reported a net loss from continuing operations attributable to Worthington Steel of $7 million, or $0.14 per diluted share.

This compares with net earnings of $36.8 million, or $0.73 per diluted share, in the prior year quarter. The reported results included several items affecting comparability. The largest were $22.6 million of pre-tax acquisition-related expenses, a $15.5 million pre-tax loss from re-measuring our previously held Kloeckner shares at closing, a $5.6 million deferred tax asset write-off related to the Kloeckner acquisition. These and the other adjustments for both periods are detailed in our earnings release. Excluding these items, adjusted earnings were $0.57 per diluted share compared with $0.77 in the prior year quarter. Adjusted EBIT was $78.5 million, up $23 million from the prior year quarter. While adjusted EBIT increased, higher interest expense following the acquisition weighed on adjusted earnings per share. Net interest expense was $38.8 million compared with $2.9 million a year ago.

Adjusted EBITDA was $111 million. Beginning this quarter, our measure includes 100% of the adjusted EBITDA of our consolidated operations before allocation to non-controlling interest. We believe this change enhances comparability to our balance sheet measures. Earnings per share continues to reflect earnings attributable to Worthington Steel shareholders. There's one additional item that is important to understanding our results for the current quarter. Purchase accounting required us to record Kloeckner's acquired inventory at fair value. As that inventory was sold, the step-up reduced first quarter gross margin and adjusted EBITDA by an estimated $43 million. We expect only a limited residual impact in the second quarter.

Net sales in the quarter were $2.7 billion, up approximately $1.9 billion from the prior year quarter, primarily due to the addition of Kloeckner. Total shipments were approximately 1.9 million tons, a consolidated mix with 77% direct sale and 23% toll processing, compared with 63% direct sales and 37% toll processing a year ago. Turning to Legacy Worthington Steel, net sales were $954 million, up $81 million or 9% from the prior year quarter. The increase reflected higher direct volumes and selling prices. Total legacy shipments were approximately 921,000 tons, down 1% year-over-year. Direct sale volumes increased 3% while toll volumes declined 8%. As Jeff discussed, automotive remained a bright spot.

Our direct shipments to automotive increased 4% year-over-year. Agriculture shipments increased 40% supported by OEM equipment and grain bin demand. Shipments to other transportation, which now includes heavy truck, increased 39%, primarily due to share gains as new business was layered in. As a reminder, these are references to legacy markets and do not include the impact of Kloeckner. These gains were substantially offset by lower energy and construction shipments. Energy shipments declined 31%, reflecting a shift in customer sourcing to another supplier. Construction shipments declined 9%, reflecting increased competition in tight steel availability, which limited our ability to quote short-term contract business.

Higher direct volumes increased legacy direct spreads by $7.6 million. In addition, the favorable change in inventory holding gains added $6.5 million. Estimated pre-tax inventory holding gains were $12.1 million this quarter, compared with $5.6 million a year ago. Excluding the effects of volume and inventory holding gains, direct spreads were approximately flat year-over-year. Lower toll volumes reduced legacy toll spreads by $2.3 million. This was partially offset by $1.4 million of improved mix, including spot tolling business at higher spreads. Turning to operating expenses, manufacturing expenses in the legacy business increased approximately $11 million or 6%, primarily due to higher labor, benefits, and freight costs.

Legacy SG&A increased $17.6 million, primarily reflecting the addition of acquisition-related expenses. Excluding acquisition-related fees and the prior year's CDEM closing bonus, Legacy SG&A increased $2.9 million, primarily due to wages and benefits. Finally, equity earnings from Servi Acero, our Mexico-based joint venture, decreased approximately $1 million due to lower direct volumes, partially offset by improved direct spreads. Hot-roll coil prices ended the quarter around $1,200 per ton. Mill supply remains tight, and expected mill maintenance outages are likely to keep lead times extended in the near future. Given the lagging index-based pricing mechanisms in many of our contracts, we currently estimate pre-tax inventory holding gains in the legacy Worthington Steel business of $10 million to $15 million in the second quarter of fiscal 2027. Turning to consolidated Worthington Steel had operating cash outflow of $6 million for the quarter.

Capital expenditures were $63 million, resulting in negative free cash flow of $69 million. The principal factors affecting total cash flow included the Kloeckner acquisition and the issuance of our term loan B and senior notes. The capital expenditures in the first quarter were roughly split evenly between Legacy Worthington Steel and Kloeckner. Spending in our legacy business is weighted toward the earlier part of the fiscal year, reflecting the timing of several projects already underway. We expect that spending to moderate as the year progresses, though the first quarter pace should not be viewed as representative of the full year. Our current planning estimate for combined capital expenditures is $160 million to $180 million for fiscal 2027, with the timing of the project spending influencing where we finish within that range. Following the DPLTA effectiveness, we will review capital priorities across the combined business.

Our focus remains completing key projects, maintaining operating discipline, and generating cash to reduce debt. At August 31, we had approximately $248 million of cash and $1.9 billion of net debt following the Kloeckner acquisition. We are not reporting a trailing 12-month leverage ratio this quarter because it would include the acquisition financing and all of Kloeckner's debt, but only three months of Kloeckner's EBITDA. We expect to report the ratio once we have a full year of Kloeckner results. Our previously communicated synergy and deleveraging targets remain unchanged. We expect debt reduction to progress alongside synergy capture and working capital improvement. As I mentioned earlier, Becker Stahl is also being marketed for sale and we expect Kloeckner will use the majority of the net proceeds for debt reduction.

Our board also declared a quarterly dividend of $0.16 per share payable on December 28, 2026. To close, our financial priorities are clear. We are focused on completing the DPLTA, which is necessary for us to fully integrate Kloeckner and capture synergies, reducing leverage, and advancing our strategic growth projects. Across the business, we will maintain operating and capital discipline with a focus on generating cash and reducing debt. I want to thank our teams for their continued focus on safety, customer service, and execution. At this point, we would be happy to take your questions.

Operator

[Operator Instructions]

質疑応答

Samuel McKinney

Despite the tight supply environment, Legacy Worthington direct tons were down less than 1% sequentially in the first quarter, much better than normal seasonality. I assume some of that has to do with continued market share wins in auto and heavy trucks, but any more details you guys can share around that volume beat would be helpful.

Geoffrey Gilmore

That's a very good performance. And as you said, even more so with the seasonality and Sam, your assumptions, right. It's definitely the market share gains that have continued to grow, you know, be laid in here over time, whether it be heavy truck, agriculture, as well as automotive. And Sam, in fact, we probably missed out on another 30,000 tons of shipment this quarter just due to the supply chain constraints.

Samuel McKinney

Okay. And then Galvanized continue to get better. They averaged over $200 in your fiscal first quarter. I mean, that's much better than the long-term average and the trough levels earlier this year. What's your stance on the sustainability of these spreads as hot roll pricing continues to rise?

Geoffrey Gilmore

You know, I mean, again, today we saw CRU tick up both hot rolled and coated and coated more. And I, we feel pretty strongly that sustainability is an absolute go. I mean, at this point, the market's going to remain tight. You got very limited imports coming in. So the longevity of it is strong. And, you know, for us, we weren't able to experience a lot of that spread expansion here over this quarter. And the reason for that is there's not much spot tonnage available, Sam, as you know. And predominantly, you know, 90% or more of our business is contractual. So we feel pretty strongly on the sustainability piece as we move to this new contract season that would start January 1. And so from that point on is where you would start to see that reflected in our numbers.

Samuel McKinney

Okay, got it. Thanks, Jeff.

Geoffrey Gilmore

Got it, Sam. Thank you.

Operator

Your next question comes from the line of John Tomazos with John Tomazos Very Independent Research. John, your line is now open. Please go ahead.

John Tumazos

Thank you very much. Could you explain the details of the German or European law where the 38% minority holders retain their shares and how long they can retain them? And could you explain the difference in inventory turnover and gross margin between the two? Between the Kloeckner and Worthington legacy businesses.

Geoffrey Gilmore

John, I'll take the first part and Tim, please jump in if I miss anything on timeframe. Specifically to that 38% and the minority shareholders. First of all, once the DPLTA is approved by shareholders and declared effective by the German courts, minority shareholders are granted a put option and they could sell their shares to Worthington for €11 per share, which is what we negotiated. Now to your question, should minority shareholders choose to remain? The DPLTA states they would receive an annual guaranteed cash compensation of 6% or €0.66 per share. Specific to the timeline, Tim, I can't remember the exact timeline on how long they can hold their shares. I'm not sure that it's clear that there is, right? So, John, hopefully you heard that. We had a little discussion amongst us. They could hold on to the shares as long as they like. Yes, forever if they choose to.

Timothy Adams

John, as far as your second part of the question, as far as gross margins, so this should come as no surprise, gross margins for Worthington Steel will be higher because we have higher value-added processes, including galvanized and pickling. So we make galvanized and Kloeckner buys galvanized. So the starting point is just different. So their margins are going to be a little bit lower than ours, but it's one of the synergies that we pointed out. We'll start making galvanized for them once we're able to capture the synergies. And it's the same thing on the inventory turnovers. I don't have a specific number for you with respect to how they performed in the past, but we've put out 150 million of working capital synergies.

So we know a big chunk of that is related to inventory and how we manage the business versus how they manage the business. And it goes back to transformation, right? We've transformed and you can see in the data that we put out there, kind of where we started 15 years ago on inventory days and where we are today, we're looking to put similar improvements at Kloeckner down inventory.

Operator

Your next question comes from the line of Martin Englert with Seaport. Martin, your line is open. Please go ahead.

Martin Englert

Hello, good morning everyone.

Geoffrey Gilmore

Hi, Martin.

Martin Englert

I wanted to see, can you give us a clearer view of Kloeckner's normalized EBITDA on Q1, excluding the purchase accounting, the inventory step up that was the previous $43 million fair value, and anything else that might be in there. Also any type of color on how earnings looked across the Kloeckner business in North America and Europe, and footprint, respectively.

Timothy Adams

Martin, this is Tim. We're not disclosing at this point, I'll call it segment type data. We're not at that point in the process of being able to talk about that. And then looking back at the, you know, how they performed in the past, you know, we haven't done a pro forma. There's no pro forma available that's been vetted. So we're just kind of looking at Kloeckner. We're making comments about the legacy business. And then we're explaining Kloeckner, kind of what they add to the business.

Martin Englert

Right, but the reported results for the quarter, what you did infer within the release, the $43 million, and this was prepared remarks. The $43 million was purchased accounting. That would be non-cash, correct? And that would be additive to what was reported and it was not adjusted out of the $111 million of EBITDA, correct?

Timothy Adams

That is correct. That is correct. When we say adjusted out of, like what I would say it this way. You could add back the $43 million to the $111 million to get to, you know, $150 million that's more representative of EBITDA.

Martin Englert

Okay, excellent. Thanks for clarifying that. For the Kloeckner business, this is maybe a little bit more specific to the U.S., but how much did they source from within the U.S. market from domestic mills versus import?

Geoffrey Gilmore

Martin, this is Jeff. So Kloeckner and Worthington Steel have very similar strategies. We support our local mills. We buy where we produce. It's going to be 99% of their purchases would have come from domestic mills. So that's certainly something. We're excited about, I've talked about the footprint being highly complimentary, being us big in the Midwest and then much bigger in the Southeast and pushing Southwest. And that's going to be great for our supplier base as well because, you know, I say we buy, you know, locally. We truly do buy predominantly most of our steels regionally, and we're in the Midwest, and they're in a similar situation. So we'll have jointly new suppliers in the mix. But same strategy as Worthington Steel.

Martin Englert

Okay, understood. That's all I have. Thank you very much.

Operator

Thank you, Martin. We have reached the end of the Q&A session. I will now turn the call back to Jeff Gilmore, President and CEO, for closing remarks.

Geoffrey Gilmore

Thank you and a lot of progress obviously this quarter. Another important milestone coming up. I want to again say how proud I am of the Worthington Steel and Kloeckner employees for their efforts and work to date. And then thank you for listening in and showing interest in Worthington Steel. We look forward to talking again next quarter.

Operator

This concludes today's call. Thank you for attending. You may now disconnect.

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