Radius Recycling Inc (RDUS, Financial) released its 8-K filing on January 7, 2025, reporting financial results for the first quarter of fiscal 2025, which ended on November 30, 2024. The company, a major player in the recycling of ferrous and nonferrous metals and a manufacturer of finished steel products, faced significant challenges during the quarter.
Financial Performance and Challenges
Radius Recycling Inc reported a loss per share from continuing operations of $(1.30), which was significantly below the analyst estimate of -$0.66. The net loss for the quarter was $(37) million, compared to a net loss of $(18) million in the same quarter last year. This increase in losses was primarily due to a detriment on income tax in the current quarter. The company's adjusted EBITDA was break-even, compared to $1 million in the prior year.
The company's performance was impacted by diverging market conditions for ferrous, nonferrous, and steel products. While the contribution from recycled metals improved due to productivity efficiencies and stronger nonferrous demand, the global ferrous markets were softer, leading to a 5% decline in average net ferrous prices. Additionally, the finished steel contribution was lower year-over-year due to weaker domestic steel market conditions and a scheduled maintenance outage.
Financial Achievements and Industry Context
Despite the challenges, Radius Recycling Inc achieved a 10% year-over-year reduction in consolidated Selling, General, and Administrative (SG&A) costs. This cost reduction is crucial for maintaining competitiveness in the steel industry, which is characterized by fluctuating demand and pricing pressures.
Key Financial Metrics
Revenues for the quarter were $657 million, slightly below the analyst estimate of $665.90 million and down from $673 million in the prior year. The gross margin was $33 million, compared to $39 million in the previous year. The company's operating cash flow was nearly break-even, and total debt stood at $445 million at the end of the quarter.
| Metric | 1Q25 | 4Q24 | 1Q24 |
|---|---|---|---|
| Revenues ($ million) | 657 | 771 | 673 |
| Net Income (Loss) ($ million) | (37) | (16) | (18) |
| Gross Margin ($ million) | 33 | 52 | 39 |
| SG&A Expense ($ million) | 57 | 61 | 63 |
Analysis and Commentary
The company's rolling mill utilization was 81%, down from 95% in the prior year's first quarter, reflecting the impact of a scheduled maintenance outage. Despite these challenges, the company maintained a higher utilization rate than the U.S. average of 75%, indicating relatively stronger markets for long products.
“While market conditions during the quarter were more challenging than a year ago, our year-over-year consolidated operating results withstood the additional headwinds. The contribution from our recycled metals business improved versus a year ago, driven by benefits realized from our cost reduction and productivity measures and stronger nonferrous demand,” said Tamara Lundgren, Chairman and Chief Executive Officer.
Radius Recycling Inc's strategic initiatives focused on increased metal extraction and 3PRTM are expected to support expanded margins and volumes in the future. The company continues to pay dividends, with the Board of Directors declaring a cash dividend of $0.1875 per common share, payable on February 18, 2025.
Explore the complete 8-K earnings release (here) from Radius Recycling Inc for further details.
