Ferrous, Nonferrous and Finished Steel Sales
Volumes Up Year-Over-Year
Radius Board Declares Quarterly
Dividend
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 $30 million productivity
improvement program that we announced last October. We are
well-positioned to benefit from near-term market improvements and
the expected longer-term increased demand for recycled metals
associated with decarbonization and low-carbon technologies.”
Ms. Lundgren continued, “Last month, we issued our tenth annual
Sustainability Report, which details our work to advance the
circular economy through the recovery, reuse, and recycling of the
essential metals required to support global decarbonization
efforts. The report showcases the progress towards our multi-year
sustainability goals, including achieving our greenhouse gas
emissions reduction target two years ahead of schedule.
Additionally, we maintained our goal of 100% net carbon-free
electricity usage at our operations for a third consecutive
year.”
Summary Results
($ in millions, except per share and per
ferrous ton amounts)
Quarter
1Q24
4Q23
1Q23
Revenues
$
673
$
718
$
599
Gross margin
$
39
$
90
$
49
Selling, general and administrative
expense
$
63
$
69
$
64
Net loss
$
(18
)
$
(26
)
$
(18
)
Net loss per ferrous ton
$
(15
)
$
(23
)
$
(21
)
Diluted loss per share from continuing
operations attributable to Radius shareholders
Reported
$
(0.64
)
$
(0.92
)
$
(0.64
)
Adjusted(1)
$
(0.64
)
$
0.47
$
(0.44
)
Adjusted EBITDA(1)
$
1
$
49
$
8
Adjusted EBITDA per ferrous ton(1) (4)
$
1
$
44
$
10
Cash flows from operating activities
$
(1
)
$
135
$
(62
)
Ferrous sales volumes (LT, in
thousands)
1,152
1,105
851
Avg. net ferrous sales prices
($/LT)(2)
$
354
$
357
$
340
Nonferrous sales volumes (pounds, in
millions)(3)
182
204
163
Avg. nonferrous sales prices
($/pound)(2)(3)
$
0.91
$
0.94
$
0.90
Finished steel average net sales price
($/ST)(2)
$
831
$
861
$
1,015
Finished steel sales volumes (ST, in
thousands)
129
152
118
Rolling mill utilization (%)
95
%
102
%
81
%
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)
Price information is shown after netting
the cost of freight incurred to deliver the product to the
customer.
(3)
Nonferrous sales volumes and average
nonferrous prices excludes platinum group metals (“PGMs”) in
catalytic converters.
(4)
May not foot due to rounding.
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 $0.1875 per
common share, payable February 20, 2024, to shareholders of record
on February 5, 2024. The Company has paid a dividend every quarter
since going public in November 1993.
Analysts’ Conference Call: First Quarter Fiscal 2024
Results
A conference call and slide presentation to discuss results will
be held today, January 4, 2024, at 11:30 a.m. Eastern and will be
hosted by Tamara Lundgren, Chairman and Chief Executive Officer,
and Stefano Gaggini, Senior Vice President and Chief Financial
Officer. The call and accompanying slide presentation will be
webcast and accessible under the Events Calendar on the Company’s
website at: www.radiusrecycling.com/company/investors. Summary
financial data is provided in the following pages. The slide
presentation and related materials will be available prior to the
call on the Company's website.
About Schnitzer Steel Industries, Inc. dba Radius
Recycling
Schnitzer Steel Industries, Inc. dba Radius Recycling is one of
the largest manufacturers and exporters of recycled metal products
in North America with operating facilities located in 25 states,
Puerto Rico, and Western Canada. Radius has seven deep water export
facilities located on both the East and West Coasts and in Hawaii
and Puerto Rico. The Company’s integrated operating platform also
includes 50 stores which sell serviceable used auto parts from
salvaged vehicles and receive over 4 million annual retail visits.
The Company’s steel manufacturing operations produce finished steel
products, including rebar, wire rod, and other specialty products.
The Company began operations in 1906 in Portland, Oregon.
SCHNITZER STEEL INDUSTRIES,
INC. dba RADIUS RECYCLING
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
($ in thousands, except per share
amounts)
(Unaudited)
Three Months Ended
November 30, 2023
August 31, 2023
November 30, 2022
Revenues
$
672,897
$
717,931
$
598,730
Cost of goods sold
633,420
627,880
550,011
Selling, general and administrative
expense
63,102
69,217
64,228
Income from joint ventures
(673
)
(704
)
(790
)
Goodwill impairment charges
—
39,270
—
Other asset impairment charges
—
5,797
—
Restructuring charges and other
exit-related activities
35
141
1,592
Operating loss
(22,987
)
(23,670
)
(16,311
)
Interest expense
(4,810
)
(5,211
)
(3,324
)
Other loss, net
(170
)
(273
)
(3,884
)
Loss from continuing operations before
income taxes
(27,967
)
(29,154
)
(23,519
)
Income tax benefit
10,170
3,423
6,032
Loss from continuing operations
(17,797
)
(25,731
)
(17,487
)
Loss from discontinued operations, net of
tax
(2
)
(31
)
(69
)
Net loss
(17,799
)
(25,762
)
(17,556
)
Net income attributable to noncontrolling
interests
(165
)
(54
)
(232
)
Net loss attributable to Radius
shareholders
$
(17,964
)
$
(25,816
)
$
(17,788
)
Net loss per share attributable to Radius
shareholders:
Basic:
Loss per share from continuing
operations
$
(0.64
)
$
(0.92
)
$
(0.64
)
Net loss per share
$
(0.64
)
$
(0.92
)
$
(0.64
)
Diluted:
Loss per share from continuing
operations
$
(0.64
)
$
(0.92
)
$
(0.64
)
Net loss per share
$
(0.64
)
$
(0.92
)
$
(0.64
)
Weighted average number of common
shares:
Basic
28,219
28,108
27,723
Diluted
28,219
28,108
27,723
Dividends declared per common share
$
0.1875
$
0.1875
$
0.1875
SCHNITZER STEEL INDUSTRIES, INC. dba RADIUS RECYCLING
SELECTED OPERATING
STATISTICS
(Unaudited)
1Q24
Total ferrous volumes (LT, in
thousands)(1)
1,152
Total nonferrous volumes (pounds, in
thousands)(1)(2)
181,728
Ferrous selling prices ($/LT)(3)
Domestic
$
342
Foreign
$
359
Average
$
354
Ferrous sales volume (LT, in
thousands)
Domestic
535
Foreign
617
Total
1,152
Nonferrous average price
($/pound)(2)(3)
$
0.91
Cars purchased (in thousands)(4)
64
Auto stores at period end
50
Finished steel average sales price
($/ST)(3)
$
831
Sales volume (ST, in thousands)
Rebar
94
Coiled products
34
Merchant bar and other
1
Finished steel products sold
129
Rolling mill utilization(5)
95
%
(1)
Ferrous and nonferrous volumes sold
externally and delivered to our steel mill for finished steel
production.
(3)
Excludes PGMs in catalytic converters.
(3)
Price information is shown after netting
the cost of freight incurred to deliver the product to the
customer.
(4)
Cars purchased by auto parts stores
only.
(5)
Rolling mill utilization is based on
effective annual production capacity under current conditions of
580 thousand tons of finished steel products.
SCHNITZER STEEL INDUSTRIES, INC. dba RADIUS RECYCLING
SELECTED OPERATING
STATISTICS
(Unaudited)
FY
1Q23
2Q23
3Q23
4Q23
2023
Total ferrous volumes (LT, in
thousands)(1)
851
1,263
1,157
1,105
4,376
Total nonferrous volumes (pounds, in
thousands)(1)(2)
162,720
164,796
207,714
203,707
738,937
Ferrous selling prices ($/LT)(3)
Domestic
$
313
$
359
$
414
$
346
$
360
Foreign
$
356
$
368
$
414
$
363
$
376
Average
$
340
$
367
$
413
$
357
$
371
Ferrous sales volume (LT, in
thousands)
Domestic
432
444
548
528
1,952
Foreign
418
819
609
577
2,424
Total(6)
851
1,263
1,157
1,105
4,376
Nonferrous average price
($/pound)(2)(3)
$
0.90
$
0.99
$
1.01
$
0.94
$
0.96
Cars purchased (in thousands)(4)
69
72
78
67
286
Auto stores at period end
51
50
50
50
50
Finished steel average sales price
($/ST)(3)
$
1,015
$
943
$
924
$
861
$
930
Sales volume (ST, in thousands)
Rebar
101
84
97
108
390
Coiled products
16
24
43
43
126
Merchant bar and other
1
1
2
1
5
Finished steel products sold
118
109
142
152
521
Rolling mill utilization(5)
81
%
75
%
97
%
102
%
89
%
LT = Long Ton, which is equivalent to 2,240 pounds ST = Short
Ton, which is equivalent to 2,000 pounds
(1)
Ferrous and nonferrous volumes sold
externally and delivered to our steel mill for finished steel
production.
(2)
Excludes PGMs in catalytic converters.
(3)
Price information is shown after netting
the cost of freight incurred to deliver the product to the
customer.
(4)
Cars purchased by auto parts stores
only.
(5)
Rolling mill utilization is based on
effective annual production capacity under current conditions of
580 thousand tons of finished steel products.
(6)
May not foot due to rounding.
SCHNITZER STEEL INDUSTRIES, INC. dba RADIUS RECYCLING
CONDENSED CONSOLIDATED BALANCE
SHEETS
($ in thousands)
(Unaudited)
November 30, 2023
August 31, 2023
Assets
Current assets:
Cash and cash equivalents
$
4,408
$
6,032
Accounts receivable, net
191,415
210,442
Inventories
281,062
278,642
Other current assets
58,562
55,224
Total current assets
535,447
550,340
Property, plant and equipment, net
698,715
706,805
Operating lease right-of-use assets
114,965
115,686
Goodwill and other assets
343,527
343,118
Total assets
$
1,692,654
$
1,715,949
Liabilities
and Equity
Current liabilities:
Short-term borrowings
$
5,641
$
5,813
Operating lease liabilities
19,923
19,835
Environmental liabilities
11,891
13,743
Other current liabilities
267,704
284,539
Total current liabilities
305,159
323,930
Long-term debt, net of current
maturities
278,280
243,579
Environmental liabilities, net of current
portion
52,352
53,034
Operating lease liabilities, net of
current maturities
95,267
96,086
Other long-term liabilities
77,320
87,661
Total liabilities
808,378
804,290
Total Radius Recycling ("Radius")
shareholders' equity
880,994
908,180
Noncontrolling interests
3,282
3,479
Total equity
884,276
911,659
Total liabilities and equity
$
1,692,654
$
1,715,949
Non-GAAP Financial Measures
This press release contains performance based on adjusted
diluted earnings per share from continuing operations attributable
to Radius shareholders, adjusted EBITDA, adjusted EBITDA per
ferrous ton, and adjusted selling, general, and administrative
expense which are non-GAAP financial measures as defined under SEC
rules. As required by SEC rules, the Company has provided a
reconciliation of these measures for each period discussed to the
most directly comparable U.S. GAAP measure. Management believes
that providing these non-GAAP financial measures adds a meaningful
presentation of our results from business operations excluding
adjustments for charges for legacy environmental matters (net of
recoveries), asset impairment charges, business development costs
not related to ongoing operations including pre-acquisition
expenses, amortization of capitalized cloud computing
implementation costs, restructuring charges and other exit-related
activities, and the income tax benefit allocated to these
adjustments, items which are not related to underlying business
operational performance, and improves the period-to-period
comparability of our results from business operations. We believe
that presenting debt, net of cash is useful to investors as a
measure of our leverage, as cash and cash equivalents can be used,
among other things, to repay indebtedness. These non-GAAP financial
measures should be considered in addition to, but not as a
substitute for, the most directly comparable U.S. GAAP
measures.
Reconciliation of adjusted diluted
(loss) earnings per share from continuing operations attributable
to Radius shareholders
($ per share)
Three Months Ended
1Q24
4Q23
1Q23
As reported
$
(0.64
)
$
(0.92
)
$
(0.64
)
Charges for legacy environmental matters,
net, per share(1)
0.01
0.14
0.05
Other asset impairment charges, per
share(2)
0.01
0.21
0.14
Business development costs, per share
—
—
0.01
Restructuring charges and other
exit-related activities, per share
—
—
0.06
Goodwill impairment charges, per share
—
1.40
—
Income tax benefit allocated to
adjustments, per share(4)
(0.03
)
(0.35
)
(0.06
)
Effective of dilutive shares, per
share(5)
—
(0.01
)
—
Adjusted(6)
$
(0.64
)
$
0.47
$
(0.44
)
Reconciliation of adjusted EBITDA and
adjusted EBITDA per ferrous ton
($ in millions)
Three Months Ended
1Q24
4Q23
1Q23
Net loss
$
(18
)
$
(26
)
$
(18
)
Plus interest expense
5
5
3
Plus income tax benefit
(10
)
(3
)
(6
)
Plus depreciation and amortization
23
23
21
Plus charges for legacy environmental
matters, net(1)
—
4
1
Plus other asset impairment charges(2)
—
6
4
Plus business development costs
—
—
—
Plus amortization of cloud computing
software costs(3)
—
—
—
Plus restructuring charges and other
exit-related activities
—
—
2
Plus goodwill impairment charge
—
39
—
Adjusted EBITDA(6)
$
1
$
49
$
8
Ferrous sales volume (LT, in
thousands)
1,152
1,105
851
Adjusted EBITDA per ferrous ton sold
($/LT)
$
1
$
44
$
10
Reconciliation of Adjusted selling, general and administrative
expense:
($ in millions)
Three Months Ended
1Q24
4Q23
1Q23
As reported
$
63
$
69
$
64
Charges for legacy environmental matters,
net(1)
—
(4
)
(1
)
Business development costs
—
—
—
Adjusted
$
63
$
65
$
63
Reconciliation of debt, net of
cash
($ in thousands)
November 30, 2023
August 31, 2023
November 30, 2022
Short-term borrowings
$
5,641
$
5,813
$
6,379
Long-term debt, net of current
maturities
278,280
243,579
351,200
Total debt
283,921
249,392
357,579
Less: cash and cash equivalents
4,408
6,032
3,539
Total debt, net of cash
$
279,513
$
243,360
$
354,040
LT = Long Ton, which is equivalent to 2,240 pounds
(1)
Legal and environmental charges, net of
recoveries, for legacy environmental matters including those
related to the Portland Harbor Superfund site and to other legacy
environmental loss contingencies.
(2)
For the first quarters of fiscal 2024 and
2023, asset impairment charges included $219 thousand and $4
million, respectively, reported within "Other loss, net" on the
Unaudited Condensed Consolidated Statement of Operations.
(3)
Amortization of cloud computing software
costs consists of expense recognized in cost of goods sold and
selling, general, and administrative expense resulting from
amortization of capitalized implementation costs for cloud
computing IT systems. This expense is not included in depreciation
and amortization. No amortization of cloud computing software costs
was incurred prior to the first quarter of fiscal 2024; therefore,
prior period Adjusted EBITDA amounts are not impacted.
(4)
Income tax allocated to the aggregate
adjustments reconciling reported and adjusted diluted earnings per
share from continuing operations attributable to Radius
shareholders is determined based on a tax provision calculated with
and without the adjustments.
(5)
For the quarter and year ended August 31,
2023, adjusted diluted earnings (loss) per share from continuing
operations attributable to Radius shareholders reflects the
inclusion of an incremental 608 thousand and 652 thousand common
stock equivalent shares, respectively, attributable to dilutive
share-based compensation awards that were antidilutive for the
purpose of calculating the comparable GAAP loss per share
measure.
(6)
May not foot due to rounding.
Forward-Looking Statements
Statements and information included in this press release by
Schnitzer Steel Industries, Inc. dba Radius Recycling ("Radius")
that are not purely historical are forward-looking statements
within the meaning of Section 21E of the Securities Exchange Act of
1934 and are made pursuant to the “safe harbor” provisions of the
Private Securities Litigation Reform Act of 1995. Except as noted
herein or as the context may otherwise require, all references in
this press release to “we,” “our,” “us,” “the Company,” “SSI,”
"Schnitzer Steel," and "Radius" refer to Radius and its
consolidated subsidiaries.
Forward-looking statements in this press release include
statements regarding future events or our expectations, intentions,
beliefs, and strategies regarding the future, which may include
statements regarding the impact of equipment upgrades, equipment
failures, and facility damage on production, including timing of
repairs and resumption of operations; the realization of insurance
recoveries; the Company’s outlook, growth initiatives, or expected
results or objectives, including pricing, margins, sales volumes,
and profitability; completion of acquisitions and integration of
acquired businesses; the impacts of supply chain disruptions,
inflation, and rising interest rates; liquidity positions; our
ability to generate cash from continuing operations; trends,
cyclicality, and changes in the markets we sell into; strategic
direction or goals; targets; changes to manufacturing and
production processes; the realization of deferred tax assets;
planned capital expenditures; the cost of and the status of any
agreements or actions related to our compliance with environmental
and other laws; expected tax rates, deductions, and credits; the
impact of sanctions and tariffs, quotas, and other trade actions
and import restrictions; the impact of pandemics, epidemics, or
other public health emergencies, such as the coronavirus disease
2019 (“COVID-19”) pandemic; the impact of labor shortages or
increased labor costs; obligations under our retirement plans;
benefits, savings, or additional costs from business realignment,
cost containment, and productivity improvement programs; the
potential impact of adopting new accounting pronouncements; and the
adequacy of accruals.
Forward-looking statements by their nature address matters that
are, to different degrees, uncertain, and often contain words such
as “outlook,” “target,” “aim,” “believes,” “expects,”
“anticipates,” “intends,” “assumes,” “estimates,” “evaluates,”
“may,” “will,” “should,” “could,” “opinions,” “forecasts,”
“projects,” “plans,” “future,” “forward,” “potential,” “probable,”
and similar expressions. However, the absence of these words or
similar expressions does not mean that a statement is not
forward-looking.
We may make other forward-looking statements from time to time,
including in reports filed with the Securities and Exchange
Commission, press releases, presentations, and on public conference
calls. All forward-looking statements we make are based on
information available to us at the time the statements are made,
and we assume no obligation to update any forward-looking
statements, except as may be required by law. Our business is
subject to the effects of changes in domestic and global economic
conditions and a number of other risks and uncertainties that could
cause actual results to differ materially from those included in,
or implied by, such forward-looking statements. Some of these risks
and uncertainties are discussed in “Item 1A. Risk Factors” of Part
I of our most recent Annual Report on Form 10-K. Examples of these
risks include: potential environmental cleanup costs related to the
Portland Harbor Superfund site or other locations; the impact of
equipment upgrades, equipment failures, and facility damage on
production; failure to realize or delays in realizing expected
benefits from capital projects, including investments in processing
and manufacturing technology improvements; the cyclicality and
impact of general economic conditions; the impact of inflation,
rising interest rates, and foreign currency fluctuations; changing
conditions in global markets including the impact of sanctions and
tariffs, quotas, and other trade actions and import restrictions;
increases in the relative value of the U.S. dollar; economic and
geopolitical instability including as a result of military
conflict; volatile supply and demand conditions affecting prices
and volumes in the markets for raw materials and other inputs we
purchase; significant decreases in recycled metal prices;
imbalances in supply and demand conditions in the global steel
industry; difficulties associated with acquisitions and integration
of acquired businesses; supply chain disruptions; reliance on
third-party shipping companies, including with respect to freight
rates and the availability of transportation; the impact of
goodwill impairment charges; the impact of long-lived asset and
equity investment impairment charges; the impact of pandemics,
epidemics, or other public health emergencies, such as the COVID-19
pandemic; inability to achieve or sustain the benefits from
productivity, cost savings, and restructuring initiatives;
inability to renew facility leases; customer fulfillment of their
contractual obligations; potential limitations on our ability to
access capital resources and existing credit facilities;
restrictions on our business and financial covenants under the
agreement governing our bank credit facilities; the impact of
consolidation in the steel industry; product liability claims; the
impact of legal proceedings and legal compliance; the adverse
impact of climate change; the impact of not realizing deferred tax
assets; the impact of tax increases and changes in tax rules; the
impact of one or more cybersecurity incidents; translation risks
associated with fluctuation in foreign exchange rates; inability to
obtain or renew business licenses and permits; environmental
compliance costs and potential environmental liabilities; increased
environmental regulations and enforcement; compliance with climate
change and greenhouse gas emission laws and regulations; the impact
of labor shortages or increased labor costs; reliance on employees
subject to collective bargaining agreements; and the impact of the
underfunded status of multiemployer plans in which we
participate.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240104693916/en/
Investor Relations: Michael Bennett (503) 323-2811
mcbennett@rdus.com
Company Info: www.radiusrecycling.com ir@rdus.com
Radius Recycling (NASDAQ:RDUS)
Historical Stock Chart
From Mar 2024 to Apr 2024
Radius Recycling (NASDAQ:RDUS)
Historical Stock Chart
From Apr 2023 to Apr 2024
