Radius Recycling Reports First Quarter Fiscal 2024 Financial Results

PORTLAND, Ore.--(BUSINESS WIRE)--Schnitzer Steel Industries, Inc. dba Radius Recycling (NASDAQ: RDUS) today reported results for the first quarter of fiscal 2024 ended November 30, 2023.

The Company reported a loss per share from continuing operations of $(0.64) and a net loss of $(18) million. Adjusted loss per share from continuing operations was $(0.64) and adjusted EBITDA was $1 million.

Operating performance in the first quarter reflected sequentially tighter supply flows for recycled metals, which, together with lower average net selling prices for the Company’s products, resulted in a compression of metal spreads. Market conditions for recycled metals remained challenging during the quarter, primarily due to lower manufacturing activity in the U.S. and the impact across Asia of the economic slowdown in China, including elevated levels of Chinese steel exports.

Nonferrous production from the Company’s advanced nonferrous recovery technologies and from an acquisition made in fiscal 2023 contributed to a 12% increase in nonferrous sales volumes year-over-year. The Company’s mill utilization rate in the quarter was 95% and finished steel sales volumes were 10% higher year-over-year due to healthy non-residential demand in western U.S markets.

Tamara Lundgren, Chairman and Chief Executive Officer, said, “While the current market environment is challenging, we have demonstrated our ability to navigate effectively through periods of volatility and tight scrap availability by focusing on what we can control. This includes higher nonferrous volumes from our strategic investments and delivering on our $30 million productivity improvement program that we announced last October. We are well-positioned to benefit from near-term market improvements and the expected longer-term increased demand for recycled metals associated with decarbonization and low-carbon technologies.”

Ms. Lundgren continued, “Last month, we issued our tenth annual Sustainability Report, which details our work to advance the circular economy through the recovery, reuse, and recycling of the essential metals required to support global decarbonization efforts. The report showcases the progress towards our multi-year sustainability goals, including achieving our greenhouse gas emissions reduction target two years ahead of schedule. Additionally, we maintained our goal of 100% net carbon-free electricity usage at our operations for a third consecutive year.”

First Quarter Fiscal 2024 Financial Review and Analysis

First quarter average net selling prices for ferrous, nonferrous, and finished steel products were lower sequentially by 1%, 3%, and 3%, respectively. On a sequential basis, sales volumes for ferrous were higher by 4%, lower for nonferrous by 11% due to timing of sales, and lower for finished steel products by 15% due to seasonality. Results for the first quarter included an adverse impact from average inventory accounting of approximately $1 per ferrous ton, compared to a detriment of $5 per ferrous ton in the fourth quarter of fiscal 2023.

First quarter performance reflected initial benefits of approximately half the quarterly run rate associated with the $30 million annual productivity initiatives announced in October 2023, which more than offset cost inflation in the quarter. The Company recognized insurance recoveries of $4 million in the first quarter, compared to $41 million in the fourth quarter of fiscal 2023, in connection with previously submitted claims related to certain property damage and business interruption matters that had occurred in prior periods.

The first quarter had nearly break-even operating cash flow, benefiting from working capital management despite the typical seasonality headwinds. Total debt was $284 million at the end of the quarter, and debt, net of cash, was $280 million (for a reconciliation of adjusted results and debt, net of cash, to U.S. GAAP, see the table provided in the Non-GAAP Financial Measures section). Capital expenditures were $25 million in the quarter, including investments in advanced metal recovery technologies, maintaining the business, and environmental-related projects.

The effective tax rate for the first quarter was a benefit of approximately 36% on GAAP results and an expense of approximately 35% on adjusted non-GAAP results. During the first quarter, the Company returned capital to shareholders through its 119th consecutive quarterly dividend.

Declaration of Quarterly Dividend

The Board of Directors declared a cash dividend of $0.1875 per common share, payable February 20, 2024, to shareholders of record on February 5, 2024. The Company has paid a dividend every quarter since going public in November 1993.

Analysts’ Conference Call: First Quarter Fiscal 2024 Results

A conference call and slide presentation to discuss results will be held today, January 4, 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 Schnitzer Steel Industries, Inc. dba Radius Recycling

Schnitzer Steel Industries, Inc. dba Radius Recycling 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.