RDUS - Radius Recycling Reports Third Quarter Fiscal 2024 Financial Results | Benzinga

July, 02 2024 12:00 PM Radius Health Inc.

Ferrous, Nonferrous and Finished Steel Sales Volumes Up Sequentially

Radius Board Declares Quarterly Dividend

PORTLAND, Ore., July 02, 2024 (GLOBE NEWSWIRE) -- Radius Recycling, Inc. (NASDAQ:RDUS) today reported results for the third quarter of fiscal 2024 ended May 31, 2024.

The Company's reported and adjusted results differed significantly this quarter. Due primarily to a non-cash goodwill impairment charge reflecting the challenging market conditions for recycled metals experienced during the last year, the Company reported a loss per share from continuing operations of $(6.97) and a net loss of $(199) million in the third quarter. These results included a goodwill impairment charge of $216 million or $(6.21) per share net of taxes and compared to a reported loss per share of $(1.19) and net loss of $(34) million in the second quarter of fiscal 2024.

Adjusted EBITDA in the third quarter was $9 million, an improvement from $3 million in the prior quarter. The sequential improvement reflected higher nonferrous and ferrous sales volumes, benefits from cost reduction and productivity improvements, and higher insurance recoveries, partially offset by lower ferrous selling prices and compressed metal spreads resulting from continuing tight ferrous supply flows. Adjusted loss per share from continuing operations was $(0.59) in the third quarter compared to an adjusted loss per share of $(1.04) in the second quarter of fiscal 2024.

Nonferrous and ferrous market conditions reflected diverging trends in the third quarter. Global demand for nonferrous recycled metals strengthened throughout the quarter, leading to a 10% sequential increase in average net selling prices and 4% higher sales volumes. However, global demand for ferrous recycled metals was softer sequentially, due in part to continued elevated levels of Chinese steel exports, which led to a 9% decline in average net selling prices. Ferrous sales volumes increased 13% sequentially, benefiting from seasonally higher flows and the sales of cargoes delayed at the end of the prior quarter. Driven by seasonally stronger construction activity, finished steel sales volumes increased 11% sequentially, and rolling mill utilization was 88% compared to 81% in the prior quarter.

Tamara Lundgren, Chairman and Chief Executive Officer, said, "Although market conditions continued to remain challenging during the quarter, our operating performance reflected the benefits from delivering our cost reduction and productivity improvement programs and successfully increasing sales volumes for all of our products and services."

"In the current market environment, the constrained supply of unprocessed recycled metals is the main driver leading to compressed margins. We expect that as manufacturing activity improves and construction activity picks up, supply flows should expand. Independent of the timing of that recovery, we are continuing to see benefits from progress on our strategic initiatives which include investments in advanced nonferrous metal recovery technologies and expansion of our recycling services platform." Ms. Lundgren continued, "With our 100+ operating facilities producing annual recycled ferrous volumes of over four million tons, nonferrous volumes of over 700 million pounds, and low carbon and net zero carbon emission GRN^TM finished steel products of more than 500 thousand tons, and our 3PR^TM service and supply chain solution that enables our customers to increase their recycling rates, we are well-positioned to benefit from demand associated with decarbonization, infrastructure investment, stronger global manufacturing activity, and declines in interest rates."

Summary Results
















($ in millions, except per share and per ferrous ton amounts)


















Quarter



Nine Months Ended



3Q24


2Q24


3Q23



2024


2023

Revenues

$
674


$
621


$
810



$
1,968


$
2,164

Gross margin

$
46


$
40


$
96



$
125


$
218

Selling, general and administrative expense

$
62


$
62


$
69



$
187


$
197

Net (loss) income

$
(199
)

$
(34
)

$
14



$
(250
)

$
—

Net (loss) income per ferrous ton⁽⁵⁾

$
(178
)

$
(35
)

$
12



$
(77
)

$
—

Diluted (loss) income per share from continuing operations attributable to Radius shareholders
















Reported

$
(6.97
)

$
(1.19
)

$
0.48



$
(8.82
)

$
—

Adjusted⁽¹⁾

$
(0.59
)

$
(1.04
)

$
0.67



$
(2.28
)

$
0.38

Adjusted EBITDA⁽¹⁾

$
9


$
3


$
56



$
12


$
96

Adjusted EBITDA per ferrous ton⁽¹⁾ ⁽⁵⁾

$
8


$
3


$
48



$
4


$
29

Cash flows from operating activities

$
(1
)

$
(55
)

$
(21
)


$
(57
)

$
5


















Ferrous sales volumes (LT, in thousands)⁽²⁾


1,112



980



1,157




3,244



3,270

Avg. net ferrous sales prices ($/LT)⁽³⁾

$
350


$
384


$
413



$
361


$
376

Nonferrous sales volumes (pounds, in millions)^{(2) (4)}


183



176



208




541



535

Avg. nonferrous sales prices ($/pound)^{(3) (4)}

$
1.04


$
0.94


$
1.01



$
0.97


$
0.97

Finished steel average net sales price ($/ST)⁽³⁾

$
817


$
832


$
924



$
827


$
959

Finished steel sales volumes (ST, in thousands)


126



114



142




369



369

Rolling mill utilization (%)


88
%


81
%


97
%



88
%


84
%

_{LT = Long Ton, which is equivalent to 2,240 pounds}
_{ST = Short Ton, which is equivalent to 2,000 pounds}

_{⁽¹⁾See Non-GAAP Financial Measures for reconciliation to U.S. GAAP.}
_{⁽²⁾Ferrous and nonferrous volumes sold externally and delivered to our steel mill for finished steel production.}
_{⁽³⁾Price information is shown after netting the cost of freight incurred to deliver the product to the customer.}
_{⁽⁴⁾Nonferrous sales volumes and average nonferrous prices excludes platinum group metals ("PGMs") in catalytic converters.}
_{⁽⁵⁾May not foot due to rounding.}

Third Quarter Fiscal 2024 Financial Review and Analysis

Due to the decline in ferrous prices during the quarter, metal spreads compressed and contributed to an average inventory accounting detriment of approximately $3 per ferrous ton. The Company recognized insurance recoveries of $7 million in the third quarter, compared to $2 million in the second quarter of fiscal 2024, reflecting final settlement of certain property damage and business interruption matters that had occurred in prior periods.

During the third quarter, the Company achieved approximately three-quarters of the quarterly run rate of benefits associated with its previously announced $70 million annual cost reduction and productivity improvement plan. The Company incurred related restructuring charges and other exit-related costs of approximately $3 million during the quarter.

Operating cash outflow in the third quarter was $1 million. Total debt was $411 million and debt, net of cash was $386 million at the end of the quarter. Capital expenditures were $16 million in the third quarter. The effective tax rate for the third quarter was a benefit of 18% on GAAP results and 27% on adjusted non-GAAP results.

During the third quarter, the Company returned capital to shareholders through its 121st consecutive quarterly dividend.

Subsequent Event

As previously reported, on June 17, 2024, the Company and its lenders executed an amendment to the Company's existing credit agreement, which provides for secured revolving credit facilities of up to $800 million and C$15 million that mature in August 2027. The amendment provides for, among other things, a relaxation of the financial maintenance covenants applicable to the four fiscal quarter periods ending May 31, 2024 through February 28, 2025 by replacing the covenant requiring compliance with a minimum fixed charge coverage ratio with a covenant requiring compliance with minimum permitted interest coverage and asset coverage ratios.

Declaration of Quarterly Dividend

The Board of Directors declared a cash dividend of $0.1875 per common share, payable August 5, 2024 to shareholders of record on July 22, 2024. The Company has paid a dividend every quarter since going public in November 1993.

Analysts' Conference Call: Third Quarter Fiscal 2024 Results

A conference call and slide presentation to discuss results will be held today, July 2, 2024, at 11:30 a.m. Eastern and will be hosted by Tamara Lundgren, Chairman and Chief Executive Officer, and Stefano Gaggini, Senior Vice President and Chief Financial Officer. The call and accompanying slide presentation will be webcast and accessible under the Events Calendar on the Company's website at: www.radiusrecycling.com/company/investors. Summary financial data is provided in the following pages. The slide presentation and related materials will be available prior to the call on the Company's website.

About Radius Recycling, Inc.

Radius Recycling, Inc. (formerly Schnitzer Steel Industries, Inc.) is one of the largest manufacturers and exporters of recycled metal products in North America with operating facilities located in 25 states, Puerto Rico, and Western Canada. Radius has seven deep water export facilities located on both the East and West Coasts and in Hawaii and Puerto Rico. The Company's integrated operating platform also includes 50 stores which sell serviceable used auto parts from salvaged vehicles and receive over 4 million annual retail visits. The Company's steel manufacturing operations produce finished steel products, including rebar, wire rod, and other specialty products. The Company began operations in 1906 in Portland, Oregon.


RADIUS RECYCLING, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS ($ in thousands, except per share amounts) (Unaudited)



Three Months Ended


Nine Months Ended



May 31, 2024


February 29, 2024


May 31, 2023


May 31, 2024


May 31, 2023

Revenues

$
673,920


$
621,059


$
809,610


$
1,967,876


$
2,164,293

Cost of goods sold


628,390



580,996



713,685



1,842,806



1,946,633

Selling, general and administrative expense


62,100



62,160



68,527



187,362



196,712

Income from joint ventures


(300
)


(30
)


(285
)


(1,003
)


(1,386
)
Goodwill impairment charges


215,941



—



—



215,941



—

Other asset impairment charges


—



1,476



—



1,476



—

Restructuring charges and other exit-related activities


3,275



3,175



169



6,485



2,589

Operating (loss) income


(235,486
)


(26,718
)


27,514



(285,191
)


19,745

Interest expense


(7,368
)


(5,803
)


(5,146
)


(17,981
)


(13,378
)
Other loss, net


(187
)


(263
)


(1,306
)


(620
)


(5,289
)
(Loss) income from continuing operations before income taxes


(243,041
)


(32,784
)


21,062



(303,792
)


1,078

Income tax benefit (expense)


44,551



(1,195
)


(7,221
)


53,526



(676
)
(Loss) income from continuing operations


(198,490
)


(33,979
)


13,841



(250,266
)


402

Loss from discontinued operations, net of tax


(21
)


(31
)


(233
)


(54
)


(78
)
Net (loss) income


(198,511
)


(34,010
)


13,608



(250,320
)


324

Net loss (income) attributable to noncontrolling interests


121



31



(148
)


(13
)

Full story available on Benzinga.com

Company Name:	Radius Health Inc.
Stock Symbol:	RDUS
Market:	NASDAQ
Website:	schnitzersteel.com

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