Radius Recycling (RDUS) Q3 2024 earnings summary

Executive summary

• Reported a net loss of $199 million for Q3 FY24, primarily due to a $216 million non-cash goodwill impairment charge, while adjusted EBITDA improved to $9 million from $3 million in Q2, reflecting higher sales volumes, cost reductions, and insurance recoveries.

• Adjusted loss per share from continuing operations improved to $(0.59) from $(1.04) in Q2 FY24, excluding the goodwill impairment.

• Ferrous sales volumes rose 13% and nonferrous sales volumes increased 4% sequentially; finished steel sales volumes up 11%, with mill utilization at 88%.

• Achieved approximately three-quarters of the targeted $70 million annual cost reduction and productivity plan run rate by Q3.

• Board declared a quarterly dividend of $0.1875 per share, marking the 121st consecutive quarterly dividend.

Financial highlights

• Revenues were $674 million, up from $621 million in Q2 FY24 but down from $810 million in Q3 FY23; gross margin was $46 million, up sequentially but down year-over-year.

• Adjusted EBITDA reached $9 million, up from $3 million in Q2, but down from $56 million in the prior year quarter.

• Adjusted loss per share was $(0.59), a significant improvement over the prior quarter.

• Operating cash flow was near break-even, a significant sequential improvement; operating cash outflow was $1 million.

• Capital expenditures totaled $16 million in Q3; full-year guidance is $75–80 million.

Outlook and guidance

• Substantially full quarterly run-rate benefits of the $70 million cost reduction plan expected in Q4 FY24, with advanced metal recovery investments projected to deliver over $40 million in annual EBITDA once fully deployed.

• Management expects supply flows to expand as manufacturing and construction activity improve, with ongoing benefits from strategic initiatives and investments in advanced recovery technologies.

• Q4 cash flow from operations is expected to be positive based on current sales and demand levels.

• Too early to provide quantitative Q4 outlook, but positioned to benefit from future recovery in manufacturing, infrastructure, and lower interest rates.

• Anticipate increased finished steel demand from U.S. infrastructure and clean energy legislation.