FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended May 31, 2025 Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 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 RADIUS RECYCLING, INC. (Exact name of registrant as specified in its charter) (State or other j ...

Group 1 - Radius Recycling reported a quarterly loss of $0.39 per share, significantly better than the Zacks Consensus Estimate of a loss of $0.87, representing an earnings surprise of +55.17% [1] - The company posted revenues of $726.99 million for the quarter ended May 2025, exceeding the Zacks Consensus Estimate by 7.38% and showing an increase from $673.92 million year-over-year [2] - Radius Recycling shares have increased approximately 95.1% since the beginning of the year, outperforming the S&P 500's gain of 5.5% [3] Group 2 - The earnings outlook for Radius Recycling is mixed, with the current consensus EPS estimate for the coming quarter at -$0.56 on revenues of $663 million, and -$3.84 on revenues of $2.62 billion for the current fiscal year [7] - The Zacks Industry Rank indicates that the Waste Removal Services sector is currently in the bottom 30% of over 250 Zacks industries, which may impact the stock's performance [8]

[Sixth Amendment to Third Amended and Restated Credit Agreement](index=1&type=section&id=Sixth%20Amendment%20to%20Third%20Amended%20and%20Restated%20Credit%20Agreement) This document details the Sixth Amendment to the Third Amended and Restated Credit Agreement, modifying terms for Radius Recycling and its lenders [Introduction and Parties](index=1&type=section&id=Introduction%20and%20Parties) This section introduces the Sixth Amendment to the credit agreement, effective June 16, 2025, involving Radius Recycling, its Canadian subsidiary, and various lenders - The agreement, effective **June 16, 2025**, is the sixth amendment to the credit agreement originally dated April 6, 2016[1](index=1&type=chunk)[3](index=3&type=chunk) - Key parties include **Radius Recycling, Inc.** and its Canadian subsidiary as Borrowers, with **Bank of America, N.A.** as the Administrative Agent[1](index=1&type=chunk) [Amendments to Existing Credit Agreement](index=1&type=section&id=1.%20Amendments%20to%20Existing%20Credit%20Agreement) This section details specific modifications to the existing credit agreement, including revised definitions, new terms, stricter reporting, and adjusted financial covenants [Amended Definitions](index=1&type=section&id=1(a).%20Amended%20Definitions) This subsection revises key definitions, updating aggregate commitment amounts and modifying EBITDA calculations to include or exclude specific non-recurring items Revised Aggregate Commitments | Commitment Type | Aggregate Principal Amount | | :--- | :--- | | Aggregate Commitments A-1 | $585,937,500 | | Aggregate Commitments A-2 | $39,062,500 | - The definition of EBITDA is amended to allow add-backs, including up to **$50 million** for Environmental Liabilities, **$50 million** for Productivity Improvement Expenses, and all direct expenses for the RDUS Merger Transaction after December 1, 2024[6](index=6&type=chunk) - Up to **$75 million** in gains from certain asset dispositions may be included in EBITDA during the remaining term[6](index=6&type=chunk) [New Definitions](index=3&type=section&id=1(b).%20New%20Definitions) This subsection introduces new definitions for the "RDUS Merger Transaction," formalizing the acquisition by Toyota Tsusho America, Inc., and the "Sixth Amendment Effective Date" - The **"RDUS Merger Transaction"** is defined as the acquisition of the US Borrower by **Toyota Tsusho America, Inc.**, per the merger agreement dated March 13, 2025[9](index=9&type=chunk) - The **"Sixth Amendment Effective Date"** is established as **June 16, 2025**[10](index=10&type=chunk) [New Reporting and Cooperation Requirements](index=3&type=section&id=1(c)%20%26%201(e).%20New%20Reporting%20and%20Cooperation%20Requirements) This subsection introduces stricter reporting, requiring monthly financial statements, weekly cash flow forecasts, long-term projections, and cooperation with a financial advisor - Commencing **September 30, 2025**, the US Borrower must provide monthly condensed consolidated financial statements within **30-40 days** of month-end[10](index=10&type=chunk) - Starting **December 31, 2025**, a rolling **13-week cash flow forecast** with variance analysis is required monthly[11](index=11&type=chunk) - A new requirement mandates cooperation with a financial advisor engaged by the Administrative Agent, with costs reimbursed by the US Borrower starting **October 1, 2025**[12](index=12&type=chunk) [Amended Financial Covenants](index=4&type=section&id=1(f)%20%26%201(g).%20Amended%20Financial%20Covenants) This subsection modifies key financial covenants, setting the Consolidated Asset Coverage Ratio and adjusting the Consolidated Interest Coverage Ratio for specific fiscal quarters Updated Financial Covenant Ratios | Covenant | Requirement | As of Fiscal Quarter Ending | | :--- | :--- | :--- | | Consolidated Asset Coverage Ratio | Must be ≥ 1.00 to 1.00 | Any fiscal quarter | | Consolidated Interest Coverage Ratio | Must be ≥ 2.00 to 1.00 | May 31, 2024 | | Consolidated Interest Coverage Ratio | Must be ≥ 1.25 to 1.00 | Feb 28, 2025 & Feb 28, 2026 | [Conditions Precedent](index=5&type=section&id=2.%20Conditions%20Precedent) This section outlines conditions for the Sixth Amendment's effectiveness, including executed documents, loan prepayments, fee payments, and satisfactory lender due diligence - The amendment requires receipt of executed counterparts from each Loan Party, the Required Lenders, and the Administrative Agent[17](index=17&type=chunk) - Commitments are permanently reduced, requiring the US Borrower to make prepayments to align with new Aggregate Commitments A-1 of **$585.9 million** and A-2 of **$39.1 million**[18](index=18&type=chunk) - Effectiveness is contingent on payment of all required fees, reimbursement of Administrative Agent's expenses, and satisfactory completion of lender due diligence, including KYC and Patriot Act compliance[19](index=19&type=chunk)[20](index=20&type=chunk) [Miscellaneous Provisions](index=6&type=section&id=3.%20%26%204.%20Miscellaneous%20Provisions) This section covers legal clauses, affirming the original Loan Documents, ratifying obligations, providing representations and warranties, and releasing claims against the Lender Group - The Loan Parties ratify and confirm that all Loan Documents and Collateral Documents remain in full force and effect[24](index=24&type=chunk)[25](index=25&type=chunk) - Each Loan Party represents and warrants its authority to enter the amendment and confirms no Default has occurred or is continuing after its effect[27](index=27&type=chunk) - The amendment and any related disputes are governed by the laws of the **State of New York**[33](index=33&type=chunk) - The Loan Parties provide a general release of all claims against the Lender Group up to the amendment date, explicitly waiving rights under **Section 1542 of the California Civil Code**[35](index=35&type=chunk)[36](index=36&type=chunk) [Signatories and Schedules](index=9&type=section&id=Signatories%20and%20Schedules) This final section contains signature pages formally executing the amendment by Borrowers, Guarantors, the Administrative Agent, and all Lenders, also amending Schedule 2.01 - The amendment is executed by the Borrowers, Guarantor subsidiaries, the Administrative Agent, and all US and Canadian lenders party to the agreement[38](index=38&type=chunk)[50](index=50&type=chunk)[51](index=51&type=chunk)[65](index=65&type=chunk) - **Schedule 2.01**, listing lender commitments, is formally amended and restated as part of this agreement[17](index=17&type=chunk)[66](index=66&type=chunk)

Core Viewpoint - Radius Recycling, Inc. reported significant improvements in its financial performance for the third quarter of fiscal 2025, with higher sales volumes across ferrous, nonferrous, and finished steel products, leading to a notable reduction in losses compared to previous quarters [2][3][4]. Financial Performance - The company reported a loss per share from continuing operations of $(0.59) and a net loss of $(16) million for the third quarter, an improvement from $(1.15) and $(33) million in the second quarter [2][3]. - Adjusted EBITDA was $22 million in the third quarter, a significant improvement from approximately break-even in the prior quarter [3][33]. - The adjusted loss per share from continuing operations was $(0.39) in the third quarter, compared to $(0.99) in the second quarter [3][32]. Sales Volumes and Market Conditions - Nonferrous sales volumes increased by 23% sequentially, driven by strong domestic demand and higher average net selling prices, which rose by 7% [4][5]. - Ferrous sales volumes were up 4% sequentially, with average net selling prices increasing by 3% despite a volatile market environment [5][6]. - Finished steel sales volumes increased by 15% sequentially, attributed to stronger construction activity and healthy demand in Western markets [6][7]. Operational Metrics - Rolling mill utilization reached 107%, significantly higher than 88% in the prior quarter, contributing to improved operating leverage and margin expansion [6][7]. - The company generated positive operating cash flow of $3 million during the third quarter [7]. Debt and Capital Management - Total debt at the end of the quarter was $454 million, with net debt (debt minus cash) at $438 million [7][35]. - Capital expenditures for the quarter were $10 million [7]. Dividend Declaration - The Board of Directors declared a cash dividend of $0.1875 per common share, marking the 125th consecutive quarterly dividend [9][10]. Merger Activity - The company is in the process of merging with Toyota Tsusho America, Inc., with shareholder approval already obtained, and the merger expected to close in the second half of calendar year 2025, pending regulatory approvals [10][11].

Transaction Overview - Toyota Tsusho will acquire Radius Recycling to accelerate investment in future growth[1] - The transaction delivers significant, immediate cash value to Radius shareholders[8] - The purchase price is $3000 per share in cash[32] - This represents a premium of approximately 115% to Radius' closing share price on March 12, 2025[33] - It also represents a premium of approximately 102% over the 90-day VWAP of Radius common stock[33] - The implied total enterprise value is approximately $134 billion, including net debt[33] - The transaction is expected to close in the second half of calendar year 2025[32] Strategic Rationale - Radius Recycling generated $27 billion in revenue in 2024[12] - Toyota Tsusho generated $65 billion in revenue in 2024[18] - Toyota Tsusho will invest in the development of Radius' infrastructure and manufacturing capabilities across its operating sites[10] - Radius will operate as a wholly-owned subsidiary of Toyota Tsusho, retaining its teams, facilities, strategy, and brands[22]

Core Viewpoint - The Schall Law Firm is investigating potential breaches of fiduciary duty by the directors and management of Radius Recycling, Inc. in relation to a merger agreement with Toyota Tsusho America, Inc. [1][2] Group 1: Investigation Details - The investigation aims to determine if the Radius board acted in the best interests of shareholders during the merger process [2] - Radius announced a definitive merger agreement on March 13, 2025, where Toyota Tsusho America will acquire all shares of Radius for $30.00 per share in cash [2] - The acquisition price represents an approximate 115% premium to Radius' closing share price on March 12, 2025, and an approximate 102% premium over the 90-day volume-weighted average share price [2]

Financial Performance - In Q2 fiscal 2025, average net selling prices for ferrous products decreased by 14% compared to the prior year quarter, influenced by high levels of Chinese steel exports[151]. - Average net selling prices for finished steel products in Q2 fiscal 2025 were 9% lower than the prior year quarter, contributing to lower metal spreads[151]. - The net loss for Q2 fiscal 2025 was $33 million, a slight improvement from a net loss of $34 million in the prior year quarter[154]. - Adjusted EBITDA for Q2 fiscal 2025 was break-even, compared to $3 million in the prior year quarter[154]. - Net loss for Q2 2025 was $32,965,000, a 3% improvement from $34,010,000 in Q2 2024, and for the first six months, the loss was $69,894,000 compared to $51,808,000 in the prior year[162]. - Adjusted EBITDA for the six months ended February 28, 2025, was $(452) thousand, a decrease from $3,858 thousand for the same period in 2024[202]. - Diluted loss per share from continuing operations attributable to Radius shareholders was $(1.15) for the three months ended February 28, 2025, compared to $(1.19) for the same period in 2024[206]. Revenue and Sales - Ferrous revenues for Q2 2025 were $318,955,000, a 1% increase from $316,097,000 in Q2 2024, while nonferrous revenues increased by 9% to $179,012,000 from $164,481,000[157]. - Total revenues for the first six months of fiscal 2025 were $1,299,045,000, remaining flat compared to $1,293,956,000 in the prior year[161]. - Average net selling prices for nonferrous products increased by 10% in both Q2 and the first six months of fiscal 2025, while ferrous product prices decreased by 14% and 9%, respectively[161]. Cash Flow and Operating Activities - For the first six months of fiscal 2025, net cash provided by operating activities was $18 million, a significant improvement from net cash used of $56 million in the prior year period[155]. - Net cash provided by operating activities in the first six months of fiscal 2025 was $18,000,000, a significant improvement from a net cash used of $56,000,000 in the same period of fiscal 2024[170]. - Net cash provided by financing activities was $1,000,000 in the first six months of fiscal 2025, a decrease from $108,000,000 in the prior year[175]. Debt and Capital Expenditures - Debt increased to $430 million as of February 28, 2025, up from $415 million as of August 31, 2024, primarily due to increased borrowings for working capital and capital expenditures[155]. - Capital expenditures in the first six months of fiscal 2025 were $23,000,000, focused on upgrading equipment and investing in advanced technologies[174]. - Capital expenditures for the first six months of fiscal 2025 totaled $23 million, down from $40 million in the prior year, with a planned investment of approximately $60 million for the full fiscal year[187]. Cost Management - The company implemented productivity and cost reduction initiatives that led to a 12% reduction in selling, general and administrative expenses in Q2 fiscal 2025 compared to the prior year quarter[151]. - Selling, general and administrative (SG&A) expenses decreased by 12% in Q2 2025 and 11% in the first six months, reflecting cost reduction measures[163]. - Interest expense increased to $9,000,000 in Q2 2025 from $6,000,000 in Q2 2024, primarily due to higher average borrowings and interest rates[165]. Shareholder Actions - The Board of Directors declared a dividend of $0.1875 per common share for the second quarter of fiscal 2025, equating to an annual cash dividend of $0.75 per common share[190]. - The company had remaining authorization to repurchase up to 2.8 million shares of Class A common stock as of February 28, 2025, but did not repurchase any shares during the second quarter of fiscal 2025[191]. Risk Management - The company actively manages commodity price risk, with a 10% decrease in estimated selling price of inventory not having a material impact on net realizable value as of February 28, 2025[210]. - As of February 28, 2025, 17% of accounts receivable was covered by letters of credit, compared to 28% as of August 31, 2024[214]. Other Significant Events - The company entered into a Merger Agreement with Toyota Tsusho America, Inc., with each share of Radius Common Stock to be converted into $30.00 in cash upon closing[142]. - The company experienced a fire at its Everett facility in December 2021, with insurance claims resulting in an additional $6 million recognized in the first half of fiscal 2024[143]. - Business development costs for the three months ended February 28, 2025, were $2,541 thousand, compared to $140 thousand for the same period in 2024[202]. - Restructuring charges and other exit-related activities amounted to $1,422 thousand for the three months ended February 28, 2025, down from $3,175 thousand in the same period in 2024[202].

Core Viewpoint - Radius Recycling reported a quarterly loss of $0.99 per share, which was better than the Zacks Consensus Estimate of a loss of $1.08, indicating an earnings surprise of 8.33% [1] - The company has shown mixed trends in earnings estimate revisions, currently holding a Zacks Rank 3 (Hold) [6] Financial Performance - For the quarter ended February 2025, Radius Recycling posted revenues of $642.51 million, surpassing the Zacks Consensus Estimate by 3.30% and showing an increase from $621.06 million year-over-year [2] - The company has surpassed consensus EPS estimates three times over the last four quarters [2] Stock Performance - Radius Recycling shares have increased by approximately 91.3% since the beginning of the year, contrasting with the S&P 500's decline of -8.3% [3] Future Outlook - The current consensus EPS estimate for the upcoming quarter is -$0.87 on revenues of $677 million, and for the current fiscal year, it is -$3.84 on revenues of $2.62 billion [7] - The outlook for the Waste Removal Services industry, where Radius Recycling operates, is currently in the bottom 26% of over 250 Zacks industries, which may impact the stock's performance [8]

Financial Performance - Radius Recycling reported a net loss of $(33) million in Q2 2025, compared to $(34) million in Q2 2024, with an adjusted loss per share of $(0.99) versus $(1.04) year-over-year[3]. - Adjusted EBITDA was approximately break-even in Q2 2025, a decline from $3 million in Q2 2024[3]. - Net income for Q2 2025 was a loss of $33 million, compared to a loss of $34 million in Q2 2024[30]. - Adjusted diluted earnings per share for Q2 2025 were $(0.99), compared to $(1.33) in Q2 2024[28]. - Net income per share for Q2 2025 was $(1.15), compared to $(1.30) in Q1 2025 and $(1.19) in Q2 2024[16]. Sales and Volumes - Ferrous sales volumes increased by 12% year-over-year, totaling 1,094 thousand long tons, while average net ferrous sales prices decreased by 14% to $330 per long ton[5][11]. - Finished steel sales volumes rose by 15% year-over-year, reaching 131 thousand short tons, despite a 9% decline in average net selling prices to $756 per short ton[5][12]. - Total ferrous volumes for Q2 2025 were 1,094 thousand LT, down from 1,106 thousand LT in Q1 2025[18]. - Total nonferrous volumes for Q2 2025 were 174,323 thousand pounds, compared to 177,255 thousand pounds in Q1 2025[18]. - Average ferrous selling price for domestic sales in Q2 2025 was $353 per LT, a decrease from $331 per LT in Q1 2025[18]. - Finished steel average sales price in Q2 2025 was $756 per ST, down from $775 per ST in Q1 2025[18]. Cash Flow and Debt - The company generated positive operating cash flow of $20 million and free cash flow of $13 million in Q2 2025, with total debt at $430 million[4]. - Free cash flow for Q2 2025 was $12.9 million, with cash flow from operating activities at $19.95 million[33]. - Total debt as of February 2025 was $429.9 million, a decrease from $445.4 million in November 2024[32]. Operational Efficiency - Radius Recycling's SG&A expenses decreased by 12% year-over-year to $55 million, driven by productivity initiatives[5]. - The mill utilization rate improved to 88% in Q2 2025, compared to 81% in the prior year's second quarter[12]. - Rolling mill utilization for Q2 2025 was 88%, compared to 81% in Q1 2025[18]. - Adjusted selling, general and administrative expenses for Q2 2025 were $53 million, down from $62 million in Q2 2024[31]. Future Outlook and Strategic Initiatives - Radius Recycling entered into a merger agreement with Toyota Tsusho America, Inc., expected to close in the second half of calendar 2025[8]. - The company is pursuing a merger with TAI, a subsidiary of Toyota Tsusho Corporation, which may impact future operations and growth strategies[37]. - The company is investing in processing and manufacturing technology improvements to enhance operational efficiency[37]. - The company anticipates potential impacts from supply chain disruptions and inflation on its financial performance[40]. - The company is focused on compliance with environmental regulations and managing associated costs[40]. Tax and Equity - The effective tax rate for Q2 2025 was a benefit of 11% on a pre-tax loss, reflecting a favorable true-up from changes in estimates[5]. - Total current assets as of February 28, 2025, were $546,161 thousand, down from $609,127 thousand as of August 31, 2024[25]. - Total liabilities as of February 28, 2025, were $913,179 thousand, compared to $908,029 thousand as of August 31, 2024[26]. - Total equity as of February 28, 2025, was $545,004 thousand, down from $625,740 thousand as of August 31, 2024[26].

Core Insights - Radius Recycling, Inc. reported a net loss of $33 million for the second quarter of fiscal 2025, slightly improved from a loss of $34 million in the same quarter of the previous year [3][11] - The company generated positive operating cash flow of $20 million and free cash flow of $13 million during the quarter [4][11] - The company declared a quarterly dividend of $0.1875 per share, marking its 124th consecutive quarterly dividend [7][11] Financial Performance - The adjusted loss per share from continuing operations was $(0.99) in Q2 2025, compared to $(1.04) in Q2 2024 [3][11] - Revenues for Q2 2025 were $643 million, up from $621 million in Q2 2024 [11][13] - The gross margin decreased to $27 million in Q2 2025 from $40 million in Q2 2024 [11][13] Sales and Pricing - Ferrous sales volumes increased by 12% year-over-year, while average net selling prices for ferrous products were 14% lower [6][11] - Nonferrous average net selling prices rose by 10%, although nonferrous sales volumes were down by 1% year-over-year [6][11] - Finished steel sales volumes increased by 15% year-over-year, despite a 9% decline in average net selling prices [6][11] Operational Metrics - The mill utilization rate improved to 88% in Q2 2025 from 81% in Q2 2024 [6][11] - The company implemented productivity initiatives that led to a 12% reduction in consolidated Selling, General, and Administrative (SG&A) costs compared to the prior year [6][11] - Capital expenditures for the quarter were $11 million [4][11] Debt and Cash Flow - Total debt at the end of Q2 2025 was $430 million, with net debt (debt minus cash) at $424 million [4][11] - The effective tax rate for the quarter was a benefit of 11% on a pre-tax loss, influenced by a favorable true-up from changes in performance estimates [5][11] Merger Update - Radius Recycling entered into a Merger Agreement with Toyota Tsusho America, Inc., anticipating the merger to close in the second half of calendar 2025 [8][11] - The company will not hold a second quarter earnings conference call due to the pending merger [9][11]