0000950170-25-003338.txt : 20250108 0000950170-25-003338.hdr.sgml : 20250108 20250108125455 ACCESSION NUMBER: 0000950170-25-003338 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 69 CONFORMED PERIOD OF REPORT: 20241130 FILED AS OF DATE: 20250108 DATE AS OF CHANGE: 20250108 FILER: COMPANY DATA: COMPANY CONFORMED NAME: RADIUS RECYCLING, INC. CENTRAL INDEX KEY: 0000912603 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-MISC DURABLE GOODS [5090] ORGANIZATION NAME: 07 Trade & Services IRS NUMBER: 930341923 STATE OF INCORPORATION: OR FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-22496 FILM NUMBER: 25517564 BUSINESS ADDRESS: STREET 1: 222 SW COLUMBIA ST STREET 2: SUITE 1150 CITY: PORTLAND STATE: OR ZIP: 97201 BUSINESS PHONE: 5032249900 MAIL ADDRESS: STREET 1: P O BOX 10047 CITY: PORTLAND STATE: OR ZIP: 97296 FORMER COMPANY: FORMER CONFORMED NAME: SCHNITZER STEEL INDUSTRIES, INC. DATE OF NAME CHANGE: 20230808 FORMER COMPANY: FORMER CONFORMED NAME: RADIUS RECYCLING DATE OF NAME CHANGE: 20230727 FORMER COMPANY: FORMER CONFORMED NAME: SCHNITZER STEEL INDUSTRIES, INC. DATE OF NAME CHANGE: 20190214 10-Q 1 rdus-20241130.htm 10-Q 10-Q
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

 

   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the Quarterly Period Ended November 30, 2024

or

   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the Transition Period from __________ to __________

Commission File Number 000-22496

 

img246709850_0.jpg

RADIUS RECYCLING, INC.

(Exact name of registrant as specified in its charter)

 

Oregon

 

93-0341923

(State or other jurisdiction of incorporation or organization)

 

(I.R.S. Employer Identification No.)

 

 

 

222 SW Columbia Street, Suite 1150, Portland, Oregon

 

97201

(Address of principal executive offices)

 

(Zip Code)

(503) 224-9900

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Class A Common Stock, $1.00 par value

RDUS

The Nasdaq Stock Market LLC

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

 

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No ☒

The registrant had 27,955,384 shares of Class A common stock, par value of $1.00 per share, and 200,000 shares of Class B common stock, par value of $1.00 per share, outstanding as of January 6, 2025.

 

 


 

RADIUS RECYCLING, INC.

FORM 10-Q

TABLE OF CONTENTS

 

PAGE

FORWARD-LOOKING STATEMENTS

3

 

PART I. FINANCIAL INFORMATION

 

 

Item 1. Financial Statements (Unaudited)

4

 

Unaudited Condensed Consolidated Balance Sheets as of November 30, 2024 and August 31, 2024

4

 

Unaudited Condensed Consolidated Statements of Operations for the Three Months Ended November 30, 2024 and November 30, 2023

5

 

 

Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three Months Ended November 30, 2024 and November 30, 2023

6

 

Unaudited Condensed Consolidated Statements of Equity for the Three Months Ended November 30, 2024 and November 30, 2023

7

 

Unaudited Condensed Consolidated Statements of Cash Flows for the Three Months Ended November 30, 2024 and November 30, 2023

8

 

Notes to the Unaudited Condensed Consolidated Financial Statements

10

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

24

 

Item 3. Quantitative and Qualitative Disclosures about Market Risk

35

 

Item 4. Controls and Procedures

36

 

PART II. OTHER INFORMATION

 

 

Item 1. Legal Proceedings

37

 

Item 1A. Risk Factors

37

 

 

Item 5. Other Information

37

 

 

Item 6. Exhibits

38

 

SIGNATURES

39

 

 

 

 


FORWARD-LOOKING STATEMENTS

Statements and information included in this Quarterly Report on Form 10-Q by Radius Recycling, Inc. 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 to “we,” “our,” “us,” “the Company,” “Radius Recycling,” and “Radius” refer to Radius Recycling, Inc. and its consolidated subsidiaries.

Forward-looking statements in this Quarterly Report on Form 10-Q 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, volumes, and profitability; completion of acquisitions and integration of acquired businesses; the progression and impact of investments in processing and manufacturing technology improvements and information technology systems; 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; 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 and other projects, including investments in processing and manufacturing technology improvements and information technology systems; the cyclicality and impact of general economic conditions; the impact of inflation and interest rate 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; restrictions on our business and financial covenants under the agreement governing our bank credit facilities; potential limitations on our ability to access capital resources and existing credit facilities; the impact of impairment of goodwill and assets other than goodwill; the impact of pandemics, epidemics, or other public health emergencies; 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; the impact of consolidation in the steel industry; product liability claims; the impact of legal proceedings and legal compliance; the 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; the impact of increasing attention to environmental, social, and governance matters; translation risks associated with fluctuation in foreign exchange rates; the impact of hedging transactions; 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.

3


PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

RADIUS RECYCLING, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited, in thousands, except per share amounts)

 

 

November 30, 2024

 

 

August 31, 2024

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

15,223

 

 

$

5,552

 

Accounts receivable, net of allowance for credit losses of $2,376
   and $
1,918

 

 

212,496

 

 

 

258,157

 

Inventories

 

 

306,360

 

 

 

293,932

 

Refundable income taxes

 

 

666

 

 

 

923

 

Prepaid expenses and other current assets

 

 

53,519

 

 

 

50,563

 

Total current assets

 

 

588,264

 

 

 

609,127

 

Property, plant and equipment, net of accumulated depreciation of $990,432
   and $
970,237

 

 

658,487

 

 

 

672,192

 

Operating lease right-of-use assets

 

 

135,939

 

 

 

123,546

 

Investments in joint ventures

 

 

10,053

 

 

 

9,841

 

Goodwill

 

 

13,105

 

 

 

13,105

 

Intangibles, net of accumulated amortization of $19,152 and $17,552

 

 

27,056

 

 

 

28,656

 

Deferred income taxes

 

 

17,728

 

 

 

18,577

 

Other assets

 

 

60,162

 

 

 

58,725

 

Total assets

 

$

1,510,794

 

 

$

1,533,769

 

Liabilities and Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Short-term borrowings

 

$

5,573

 

 

$

5,688

 

Accounts payable

 

 

180,812

 

 

 

202,498

 

Accrued payroll and related liabilities

 

 

20,807

 

 

 

24,654

 

Environmental liabilities

 

 

13,305

 

 

 

13,232

 

Operating lease liabilities

 

 

20,802

 

 

 

19,262

 

Accrued income taxes

 

 

78

 

 

 

3

 

Other accrued liabilities

 

 

50,277

 

 

 

51,233

 

Total current liabilities

 

 

291,654

 

 

 

316,570

 

Deferred income taxes

 

 

7,768

 

 

 

4,472

 

Long-term debt, net of current maturities

 

 

439,872

 

 

 

409,082

 

Environmental liabilities, net of current portion

 

 

52,314

 

 

 

52,417

 

Operating lease liabilities, net of current maturities

 

 

115,283

 

 

 

104,246

 

Other long-term liabilities

 

 

20,996

 

 

 

21,242

 

Total liabilities

 

 

927,887

 

 

 

908,029

 

Commitments and contingencies (Note 4)

 

 

 

 

 

 

Radius Recycling, Inc. (“Radius”) shareholders’ equity:

 

 

 

 

 

 

Preferred stock – 20,000 shares $1.00 par value authorized, none issued

 

 

 

 

 

 

Class A common stock – 75,000 shares $1.00 par value authorized,
   
27,955 and 27,839 shares issued and outstanding

 

 

27,955

 

 

 

27,839

 

Class B common stock – 25,000 shares $1.00 par value authorized,
   
200 and 200 shares issued and outstanding

 

 

200

 

 

 

200

 

Additional paid-in capital

 

 

30,209

 

 

 

28,828

 

Retained earnings

 

 

563,770

 

 

 

606,417

 

Accumulated other comprehensive income (loss)

 

 

(41,704

)

 

 

(40,172

)

Total Radius shareholders’ equity

 

 

580,430

 

 

 

623,112

 

Noncontrolling interests

 

 

2,477

 

 

 

2,628

 

Total equity

 

 

582,907

 

 

 

625,740

 

Total liabilities and equity

 

$

1,510,794

 

 

$

1,533,769

 

The accompanying Notes to the Unaudited Condensed Consolidated Financial Statements are an integral part of these statements.

4


RADIUS RECYCLING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, in thousands, except per share amounts)

 

 

Three Months Ended November 30,

 

 

 

2024

 

 

2023

 

Revenues

 

$

656,537

 

 

$

672,897

 

Operating expense:

 

 

 

 

 

 

Cost of goods sold

 

 

623,132

 

 

 

633,420

 

Selling, general and administrative

 

 

56,684

 

 

 

63,102

 

(Income) from joint ventures

 

 

(448

)

 

 

(673

)

Asset impairment charges

 

 

184

 

 

 

 

Restructuring charges and other exit-related activities

 

 

1,897

 

 

 

35

 

Operating income (loss)

 

 

(24,912

)

 

 

(22,987

)

Interest expense

 

 

(8,862

)

 

 

(4,810

)

Other income (expense), net

 

 

636

 

 

 

(170

)

Income (loss) from continuing operations before income taxes

 

 

(33,138

)

 

 

(27,967

)

Income tax (expense) benefit

 

 

(3,791

)

 

 

10,170

 

Income (loss) from continuing operations

 

 

(36,929

)

 

 

(17,797

)

Income (loss) from discontinued operations, net of tax

 

 

 

 

 

(2

)

Net income (loss)

 

 

(36,929

)

 

 

(17,799

)

Net (income) loss attributable to noncontrolling interests

 

 

(244

)

 

 

(165

)

Net income (loss) attributable to Radius shareholders

 

$

(37,173

)

 

$

(17,964

)

 

 

 

 

 

 

Net income (loss) per share attributable to Radius shareholders:

 

 

 

 

 

 

Basic:

 

 

 

 

 

 

Income (loss) per share from continuing operations

 

$

(1.30

)

 

$

(0.64

)

Income (loss) loss per share

 

$

(1.30

)

 

$

(0.64

)

Diluted:

 

 

 

 

 

 

Income (loss) per share from continuing operations

 

$

(1.30

)

 

$

(0.64

)

Income (loss) per share

 

$

(1.30

)

 

$

(0.64

)

Weighted average number of common shares:

 

 

 

 

 

 

Basic

 

 

28,573

 

 

 

28,219

 

Diluted

 

 

28,573

 

 

 

28,219

 

The accompanying Notes to the Unaudited Condensed Consolidated Financial Statements are an integral part of these statements.

5


RADIUS RECYCLING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited, in thousands)

 

 

 

Three Months Ended November 30,

 

 

 

2024

 

 

2023

 

Net income (loss)

 

$

(36,929

)

 

$

(17,799

)

Other comprehensive income (loss), net of tax:

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

(2,109

)

 

 

(499

)

Cash flow hedges, net

 

 

712

 

 

 

(107

)

Pension obligations, net

 

 

(135

)

 

 

187

 

Total other comprehensive income (loss), net of tax

 

 

(1,532

)

 

 

(419

)

Comprehensive income (loss)

 

 

(38,461

)

 

 

(18,218

)

Less comprehensive (income) loss attributable to noncontrolling interests

 

 

(244

)

 

 

(165

)

Comprehensive income (loss) attributable to Radius shareholders

 

$

(38,705

)

 

$

(18,383

)

The accompanying Notes to the Unaudited Condensed Consolidated Financial Statements are an integral part of these statements.

6


RADIUS RECYCLING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited, in thousands, except per share amounts)

 

 

 

Common Stock

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

Class A

 

 

Class B

 

 

Additional

 

 

 

 

 

Other

 

 

Total Radius

 

 

 

 

 

 

 

Three Months Ended November 30, 2023

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Paid-in
Capital

 

 

Retained
Earnings

 

 

Comprehensive
Income (Loss)

 

 

Shareholders’
Equity

 

 

Noncontrolling
Interests

 

 

Total
Equity

 

Balance as of September 1, 2023

 

 

27,312

 

 

$

27,312

 

 

 

200

 

 

$

200

 

 

$

26,035

 

 

$

894,316

 

 

$

(39,683

)

 

$

908,180

 

 

$

3,479

 

 

$

911,659

 

Net income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(17,964

)

 

 

 

 

 

(17,964

)

 

 

165

 

 

 

(17,799

)

Other comprehensive income (loss), net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(419

)

 

 

(419

)

 

 

 

 

 

(419

)

Distributions to noncontrolling interests

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(362

)

 

 

(362

)

Issuance of restricted stock

 

 

562

 

 

 

562

 

 

 

 

 

 

 

 

 

(562

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restricted stock withheld for taxes

 

 

(211

)

 

 

(211

)

 

 

 

 

 

 

 

 

(4,591

)

 

 

 

 

 

 

 

 

(4,802

)

 

 

 

 

 

(4,802

)

Share-based compensation cost

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,376

 

 

 

 

 

 

 

 

 

1,376

 

 

 

 

 

 

1,376

 

Dividends ($0.1875 per common share)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5,377

)

 

 

 

 

 

(5,377

)

 

 

 

 

 

(5,377

)

Balance as of November 30, 2023

 

 

27,663

 

 

$

27,663

 

 

 

200

 

 

$

200

 

 

$

22,258

 

 

$

870,975

 

 

$

(40,102

)

 

$

880,994

 

 

$

3,282

 

 

$

884,276

 

 

 

Common Stock

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

Class A

 

 

Class B

 

 

Additional

 

 

 

 

 

Other

 

 

Total Radius

 

 

 

 

 

 

 

Three Months Ended November 30, 2024

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Paid-in
Capital

 

 

Retained
Earnings

 

 

Comprehensive
Income (Loss)

 

 

Shareholders’
Equity

 

 

Noncontrolling
Interests

 

 

Total
Equity

 

Balance as of September 1, 2024

 

 

27,839

 

 

$

27,839

 

 

 

200

 

 

$

200

 

 

$

28,828

 

 

$

606,417

 

 

$

(40,172

)

 

$

623,112

 

 

$

2,628

 

 

$

625,740

 

Net income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(37,173

)

 

 

 

 

 

(37,173

)

 

 

244

 

 

 

(36,929

)

Other comprehensive income (loss), net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,532

)

 

 

(1,532

)

 

 

 

 

 

(1,532

)

Distributions to noncontrolling interests

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(395

)

 

 

(395

)

Issuance of restricted stock

 

 

174

 

 

 

174

 

 

 

 

 

 

 

 

 

(174

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restricted stock withheld for taxes

 

 

(58

)

 

 

(58

)

 

 

 

 

 

 

 

 

(891

)

 

 

 

 

 

 

 

 

(949

)

 

 

 

 

 

(949

)

Share-based compensation cost

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,446

 

 

 

 

 

 

 

 

 

2,446

 

 

 

 

 

 

2,446

 

Dividends ($0.1875 per common share)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5,474

)

 

 

 

 

 

(5,474

)

 

 

 

 

 

(5,474

)

Balance as of November 30, 2024

 

 

27,955

 

 

$

27,955

 

 

 

200

 

 

$

200

 

 

$

30,209

 

 

$

563,770

 

 

$

(41,704

)

 

$

580,430

 

 

$

2,477

 

 

$

582,907

 

The accompanying Notes to the Unaudited Condensed Consolidated Financial Statements are an integral part of these statements.

7


RADIUS RECYCLING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)

 

 

Three Months Ended November 30,

 

 

 

2024

 

 

2023

 

Cash flows from operating activities:

 

 

 

 

 

 

Net income (loss)

 

$

(36,929

)

 

$

(17,799

)

Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities:

 

 

 

 

 

 

Asset impairment charges

 

 

184

 

 

 

219

 

Depreciation and amortization

 

 

24,034

 

 

 

23,471

 

Inventory write-downs

 

 

92

 

 

 

 

Deferred income taxes

 

 

3,305

 

 

 

(10,834

)

Undistributed equity in earnings of joint ventures

 

 

(448

)

 

 

(673

)

Share-based compensation expense

 

 

2,446

 

 

 

1,376

 

(Gain) loss on disposal of assets, net

 

 

289

 

 

 

(418

)

Other (gain) loss, net

 

 

2

 

 

 

356

 

Changes in assets and liabilities, net of acquisitions:

 

 

 

 

 

 

Accounts receivable

 

 

40,987

 

 

 

15,847

 

Inventories

 

 

(8,880

)

 

 

293

 

Income taxes

 

 

550

 

 

 

405

 

Prepaid expenses and other current assets

 

 

(3,918

)

 

 

(2,771

)

Other long-term assets

 

 

(2,063

)

 

 

(1,184

)

Operating lease assets and liabilities

 

 

245

 

 

 

(65

)

Accounts payable

 

 

(18,121

)

 

 

353

 

Accrued payroll and related liabilities

 

 

(3,813

)

 

 

(8,163

)

Other accrued liabilities

 

 

(615

)

 

 

(683

)

Environmental liabilities

 

 

76

 

 

 

(2,523

)

Other long-term liabilities

 

 

672

 

 

 

494

 

Distributed equity in earnings of joint ventures

 

 

 

 

 

1,000

 

Net cash provided by (used in) operating activities

 

 

(1,905

)

 

 

(1,299

)

Cash flows from investing activities:

 

 

 

 

 

 

Capital expenditures

 

 

(12,058

)

 

 

(24,808

)

Proceeds from insurance and sale of assets

 

 

279

 

 

 

609

 

Net cash used in investing activities

 

 

(11,779

)

 

 

(24,199

)

Cash flows from financing activities:

 

 

 

 

 

 

Borrowings from long-term debt

 

 

197,557

 

 

 

135,099

 

Repayment of long-term debt

 

 

(166,707

)

 

 

(100,568

)

Payment of debt issuance costs

 

 

(564

)

 

 

 

Taxes paid related to net share settlement of share-based payment awards

 

 

(949

)

 

 

(4,802

)

Distributions to noncontrolling interests

 

 

(395

)

 

 

(362

)

Dividends paid

 

 

(5,588

)

 

 

(5,551

)

Net cash provided by (used in) financing activities

 

 

23,354

 

 

 

23,816

 

Effect of exchange rate changes on cash

 

 

1

 

 

 

58

 

Net change in cash and cash equivalents

 

 

9,671

 

 

 

(1,624

)

Cash and cash equivalents as of beginning of period

 

 

5,552

 

 

 

6,032

 

Cash and cash equivalents as of end of period

 

$

15,223

 

 

$

4,408

 

The accompanying Notes to the Unaudited Condensed Consolidated Financial Statements are an integral part of these statements.

8


RADIUS RECYCLING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)

 

 

 

Three Months Ended November 30,

 

 

 

2024

 

 

2023

 

SUPPLEMENTAL DISCLOSURES:

 

 

 

 

 

 

Cash paid (received) during the period for:

 

 

 

 

 

 

Interest

 

$

7,143

 

 

$

4,428

 

Income taxes, net

 

$

(46

)

 

$

235

 

Schedule of noncash investing and financing transactions:

 

 

 

 

 

 

Purchases of property, plant and equipment included in liabilities

 

$

5,192

 

 

$

7,120

 

The accompanying Notes to the Unaudited Condensed Consolidated Financial Statements are an integral part of these statements.

9


 

 

RADIUS RECYCLING, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

PAGE

Note 1 - Summary of Significant Accounting Policies

11

 

Note 2 - Inventories

13

 

Note 3 - Goodwill

13

 

Note 4 - Commitments and Contingencies

13

 

Note 5 - Accumulated Other Comprehensive Income (Loss)

18

 

Note 6 - Revenue

19

 

Note 7 - Share-Based Compensation

19

 

 

Note 8 - Derivative Financial Instruments

20

 

 

Note 9 - Income Taxes

21

 

 

Note 10 - Net Income (Loss) Per Share

22

 

 

Note 11 - Related Party Transactions

22

 

 

Note 12 - Debt

22

 

 

10


Table of Contents

RADIUS RECYCLING, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1 - Summary of Significant Accounting Policies

Basis of Presentation

The accompanying Unaudited Condensed Consolidated Financial Statements of Radius Recycling, Inc. and its majority-owned and wholly-owned subsidiaries (the “Company”) have been prepared pursuant to generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information and the rules and regulations of the United States Securities and Exchange Commission (the “SEC”) for Form 10-Q, including Article 10 of Regulation S-X. The accompanying Unaudited Condensed Consolidated Financial Statements are presented in U.S. Dollars. The year-end condensed consolidated balance sheet data was derived from audited financial statements but does not include all disclosures required by U.S. GAAP. Certain information and note disclosures normally included in annual financial statements have been condensed or omitted pursuant to the rules and regulations of the SEC. Certain prior year amounts have been reclassified to conform with current year presentation. In the opinion of management, all normal, recurring adjustments considered necessary for a fair statement have been included. Management suggests that these Unaudited Condensed Consolidated Financial Statements be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended August 31, 2024. The results for the three months ended November 30, 2024 and November 30, 2023 are not necessarily indicative of the results of operations for the entire fiscal year.

Segment Reporting

The Company acquires and recycles ferrous and nonferrous scrap metal for sale to foreign and domestic metal producers, processors, and brokers, and it procures salvaged vehicles and sells serviceable used auto parts from these vehicles through a network of self-service auto parts stores. Most of these auto parts stores supply the Company’s shredding facilities with auto bodies that are processed into saleable recycled metal products. In addition to the sale of recycled metal products processed at its facilities, the Company provides a variety of recycling and related services. The Company also produces a range of finished steel long products at its electric arc furnace (“EAF”) steel mill using recycled ferrous metal sourced internally from its recycling and joint venture operations and other raw materials.

The accounting standards for reporting information about operating segments define an operating segment as a component of an enterprise that engages in business activities from which it may earn revenues and incur expenses for which discrete financial information is available that is evaluated regularly by the chief operating decision-maker in deciding how to allocate resources and in assessing performance. The Company’s internal organizational and reporting structure reflects a functionally based, integrated model and includes a single operating and reportable segment.

Cash and Cash Equivalents

Cash and cash equivalents include short-term securities that are not restricted by third parties and have an original maturity date of 90 days or less. Included in accounts payable are book overdrafts representing outstanding payments in excess of funds on deposit of $49 million and $59 million as of November 30, 2024 and August 31, 2024, respectively.

Accounts Receivable, net

Accounts receivable represent amounts primarily due from customers on product and other sales. These accounts receivable, which are reduced by an allowance for credit losses, are recorded at the invoiced amount and do not bear interest. The Company extends credit to customers under contracts containing customary and explicit payment terms, and payment is generally required within 30 to 60 days of shipment. Nonferrous export sales typically require a deposit prior to shipment. Historically, almost all of the Company’s ferrous export sales have been made with letters of credit. Ferrous and nonferrous metal sales to domestic customers and finished steel sales are generally made on open account, and a portion of these sales are covered by credit insurance.

The Company evaluates the collectibility of its accounts receivable based on a combination of factors, including whether sales were made pursuant to letters of credit or required deposits prior to shipment, the aging of customer receivable balances, the financial condition of the Company’s customers, historical collection rates, and economic trends. Management uses this evaluation to estimate the amount of customer receivables that may not be collected in the future and records a provision for expected credit losses. Accounts are written off when all efforts to collect have been exhausted.

Also included in accounts receivable are short-term advances to scrap metal suppliers used as a mechanism to acquire unprocessed scrap metal. The advances are generally repaid with scrap metal, as opposed to cash. Repayments of advances with scrap metal are treated as noncash operating activities in the Unaudited Condensed Consolidated Statements of Cash Flows and totaled $4 million and $3 million for the three months ended November 30, 2024 and November 30, 2023, respectively.

11


Table of Contents

RADIUS RECYCLING, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Prepaid Expenses

The Company’s prepaid expenses, reported within prepaid expenses and other current assets in the Unaudited Condensed Consolidated Balance Sheets, totaled $24 million and $22 million as of November 30, 2024 and August 31, 2024, respectively, and consisted primarily of deposits on capital projects and prepaid services, insurance, and property taxes.

Other Assets

The Company’s other assets, exclusive of prepaid expenses and assets relating to certain employee benefit plans, consisted primarily of receivables from insurers, advances to a supplier of metals recycling equipment, short-term certificates of deposit, capitalized implementation costs for cloud computing arrangements, major spare parts and equipment, assets held for sale, equity investments, debt issuance costs, and notes and other contractual receivables. Other assets are reported within either prepaid expenses and other current assets or other assets in the Unaudited Condensed Consolidated Balance Sheets based on their expected use either during or beyond the current operating cycle of one year from the reporting date.

Receivables from insurers represent the portion of insured losses expected to be recovered from the Company’s insurers under various insurance policies or from a Qualified Settlement Fund holding settlement amounts deposited by certain insurers of claims against the Company related to the Portland Harbor Superfund site. The receivables are recorded at an amount not to exceed the recorded loss and only if the terms of legally enforceable insurance contracts support that the insurance recovery will not be disputed and is deemed collectible, or if recovery of the loss by the Company from a Qualified Settlement Fund is probable. Receivables from insurers as of each reporting date relate to environmental claims, workers’ compensation claims, and third-party claims. As of November 30, 2024, receivables from insurers totaled $16 million, including $14 million relating to environmental claims. As of August 31, 2024, receivables from insurers totaled $15 million, including $13 million relating to environmental claims. See “Accounting for Impacts of Involuntary Events” below in this Note for further discussion of receivables and advance payments from insurers relating to property damage and business interruption claims.

Other assets as of November 30, 2024 and August 31, 2024 included $20 million and $18 million, respectively, representing advances to a supplier of metals recycling equipment.

Other assets as of November 30, 2024 and August 31, 2024 included $6 million related to funding remediation costs of a legacy environmental matter held in short-term certificates of deposit and is reported within prepaid expenses and other current assets.

Other assets as of November 30, 2024 and August 31, 2024 also included $6 million and $7 million, respectively, of capitalized cloud computing arrangement implementation costs. Amortization of capitalized implementation costs is recorded on a straight-line basis over the term of the cloud computing arrangement, which is the non-cancellable period of the agreement, together with periods covered by renewal options which the Company is reasonably certain to exercise. This amortization expense is reported within operating expense, separately from depreciation and amortization expense for property, plant, and equipment and intangible assets as reported on the Unaudited Condensed Consolidated Statements of Cash Flows.

Accounting for Impacts of Involuntary Events

Assets destroyed or damaged as a result of involuntary events are written off or reduced in carrying value to their salvage value. When recovery of all or a portion of the amount of property damage loss or other covered expenses through insurance proceeds is demonstrated to be probable, a receivable is recorded and offsets the loss or expense up to the amount of the total loss or expense. No gain is recorded until all contingencies related to the insurance claim have been resolved.

On December 8, 2021, the Company experienced a fire at its metals recycling facility in Everett, Massachusetts. Direct physical loss or damage to property from the incident was limited to the facility’s shredder building and equipment, with no bodily injuries and no physical loss or damage to property reported at other buildings or equipment. The repair and replacement of most property that experienced physical loss or damage, primarily buildings and improvements, was substantially completed by the end of fiscal 2023. The Company filed insurance claims for the property that experienced physical loss or damage and business income losses resulting from the matter. During the first quarter of fiscal 2024, the Company recognized a $4 million insurance receivable and related insurance recovery gain, reported within cost of goods sold on the Unaudited Condensed Consolidated Statements of Operations. In fiscal 2024, the Company reached a full and final settlement with its insurers for its claims, and all insurance proceeds and recovery gains in connection with the Company’s claims had been received and recognized, respectively, as of August 31, 2024.

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RADIUS RECYCLING, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Concentration of Credit Risk

Financial instruments that potentially subject the Company to significant concentration of credit risk consist primarily of cash and cash equivalents, accounts receivable, and derivative financial instruments. The majority of cash and cash equivalents is maintained with major financial institutions. Balances with these and certain other institutions exceeded the Federal Deposit Insurance Corporation insured amount of $250 thousand as of November 30, 2024. Concentration of credit risk with respect to accounts receivable is limited because a large number of geographically diverse customers make up the Company’s customer base. The Company controls credit risk through credit approvals, credit limits, credit insurance, letters of credit or other collateral, cash deposits, and monitoring procedures. The Company is exposed to a residual credit risk with respect to open letters of credit by virtue of the possibility of the failure of a bank providing a letter of credit. The counterparties to the Company’s derivative financial instruments are major financial institutions.

Recent Accounting Pronouncements

In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2024-03 (“ASU 2024-03”), Disaggregation of Income Statement Expenses, requiring additional disclosure of the nature of expenses included in the income statement. The new standard requires disclosures about specific types of expenses included in the expense captions presented on the face of the income statement as well as disclosures about selling expenses. The provisions in ASU 2024-03 are effective for the Company’s fiscal 2028, and interim periods within the Company’s fiscal 2029 and are applied prospectively. Early adoption and retrospective application of the new standard are permitted. As the provisions only apply to disclosures, the Company does not expect adoption to have a material impact on its consolidated financial statements.

Note 2 - Inventories

Inventories consisted of the following (in thousands):

 

 

November 30, 2024

 

 

August 31, 2024

 

Processed and unprocessed scrap metal

 

$

153,843

 

 

$

137,013

 

Semi-finished goods

 

 

16,070

 

 

 

14,846

 

Finished goods

 

 

65,539

 

 

 

72,225

 

Supplies

 

 

70,908

 

 

 

69,848

 

Inventories

 

$

306,360

 

 

$

293,932

 

 

Note 3 - Goodwill

As of each of November 30, 2024 and August 31, 2024, the balance of the Company’s goodwill was $13 million, all of which was allocated to one reporting unit, a recycling services operation. The Company evaluates goodwill for impairment annually on July 1 and upon the occurrence of certain triggering events or substantive changes in circumstances that indicate that the fair value of goodwill may be impaired. There were no triggering events identified during the first three months of fiscal 2025 requiring an interim goodwill impairment test, and the Company did not record a goodwill impairment charge in any of the periods presented.

Note 4 - Commitments and Contingencies

Contingencies - Environmental

The Company evaluates the adequacy of its environmental liabilities on a quarterly basis. Adjustments to the liabilities are made when additional information becomes available that affects the estimated costs to study or remediate any environmental issues or expenditures are made for which liabilities were established.

Changes in the Company’s environmental liabilities for the three months ended November 30, 2024 were as follows (in thousands):

 

Balance as of
September 1, 2024

 

 

Liabilities
Established
(Released), Net

 

 

Payments and
Other

 

 

Balance as of
November 30, 2024

 

 

Short-Term

 

 

Long-Term

 

$

65,649

 

 

$

569

 

 

$

(599

)

 

$

65,619

 

 

$

13,305

 

 

$

52,314

 

 

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RADIUS RECYCLING, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As of each of November 30, 2024 and August 31, 2024, the Company had environmental liabilities of $66 million for the potential remediation of locations where it has conducted business or has environmental liabilities from historical or recent activities. These liabilities relate to the investigation and potential remediation of waterways and soil and groundwater contamination and may also involve natural resource damages, governmental fines and penalties, and claims by third parties for personal injury and property damage. Except for Portland Harbor and certain liabilities discussed under “Other Legacy Environmental Loss Contingencies” below, such liabilities were not individually material at any site.

Portland Harbor

In December 2000, the Company was notified by the United States Environmental Protection Agency (“EPA”) under the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”) that it is one of the potentially responsible parties (“PRPs”) that own or operate or formerly owned or operated sites which are part of or adjacent to the Portland Harbor Superfund site (“Portland Harbor”).

The precise nature and extent of cleanup of any specific areas within Portland Harbor, the parties to be involved, the timing of any specific remedial action and the allocation of the costs for any cleanup among responsible parties have not yet been determined. The process of site investigation, remedy selection, identification of additional PRPs, and allocation of costs has been underway for a number of years, but significant uncertainties remain. It is unclear to what extent the Company will be liable for environmental costs or third-party contribution or damage claims with respect to Portland Harbor.

From 2000 to 2017, the EPA oversaw a remedial investigation/feasibility study (“RI/FS”) at Portland Harbor. The Company was not among the parties that performed the RI/FS, but it contributed to the costs through an interim settlement with the performing parties. The performing parties have indicated that they incurred more than $155 million in that effort.

In January 2017, the EPA issued a Record of Decision (“ROD”) that identif