A greater percentage of U.S. high-school graduates who took the ACT college-entrance exam aren’t ready for college-level coursework, with math readiness at a 14-year low.

ACT on Wednesday released its annual report, the Condition of College and Career Readiness, that shows only 40% of 2018 graduates taking the ACT met a benchmark indicating they could succeed in a first-year college algebra class. That is down from 41% last year and a high of 46% in 2012.

The...