On July 2, 2024, Radius Recycling Inc (RDUS, Financial) released its 8-K filing for the third quarter of fiscal 2024, ending May 31, 2024. Radius Recycling Inc is a North American company involved in recycling ferrous and nonferrous metals, including end-of-life vehicles, and manufacturing finished steel products. The company operates a network of fifty retail self-service auto parts stores, fifty-four metals recycling facilities, and an electric arc furnace steel mill.
Performance and Challenges
Radius Recycling Inc (RDUS, Financial) reported a loss per share from continuing operations of $(6.97) and a net loss of $(199) million for the third quarter. These results included a significant goodwill impairment charge of $216 million, or $(6.21) per share net of taxes. This compares to a reported loss per share of $(1.19) and a net loss of $(34) million in the second quarter of fiscal 2024. The adjusted loss per share from continuing operations was $(0.59), slightly worse than the analyst estimate of $(0.58).
The company faced challenging market conditions for recycled metals, leading to compressed metal spreads and lower ferrous selling prices. Despite these challenges, Radius Recycling Inc (RDUS, Financial) saw sequential improvements in nonferrous and ferrous sales volumes, cost reduction benefits, and higher insurance recoveries.
Financial Achievements
Adjusted EBITDA for the third quarter was $9 million, an improvement from $3 million in the prior quarter. This improvement was driven by higher nonferrous and ferrous sales volumes, cost reduction and productivity improvements, and higher insurance recoveries. However, these gains were partially offset by lower ferrous selling prices and compressed metal spreads.
"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," said Tamara Lundgren, Chairman and Chief Executive Officer.
Income Statement Highlights
| Metric | 3Q24 | 2Q24 | 3Q23 |
|---|---|---|---|
| Revenues | $674 million | $621 million | $810 million |
| Gross Margin | $46 million | $40 million | $96 million |
| Net (Loss) Income | $(199) million | $(34) million | $14 million |
| Adjusted EBITDA | $9 million | $3 million | $56 million |
Balance Sheet and Cash Flow
Operating cash outflow in the third quarter was $1 million. Total debt stood at $411 million, with debt net of cash at $386 million. Capital expenditures were $16 million for the quarter. The effective tax rate was a benefit of 18% on GAAP results and 27% on adjusted non-GAAP results.
Analysis
The third quarter results highlight the ongoing challenges faced by Radius Recycling Inc (RDUS, Financial) due to market conditions for recycled metals. The significant goodwill impairment charge underscores the impact of these conditions on the company's financial health. However, the sequential improvement in adjusted EBITDA and sales volumes indicates that the company's cost reduction and productivity improvement initiatives are yielding positive results.
Radius Recycling Inc (RDUS, Financial) remains well-positioned to benefit from future demand associated with decarbonization, infrastructure investment, and stronger global manufacturing activity. The company's strategic initiatives, including investments in advanced nonferrous metal recovery technologies and expansion of its recycling services platform, are expected to drive long-term growth.
Explore the complete 8-K earnings release (here) from Radius Recycling Inc for further details.
