FORM 10-Q [Cover Page Information](index=1&type=section&id=Cover%20Page%20Information) This section provides the cover page details for Radius Recycling, Inc.'s Form 10-Q for the quarter ended May 31, 2025, including company name, state of incorporation, stock ticker, exchange, filing status, and outstanding shares - Radius Recycling, Inc. filed its quarterly report (Form 10-Q) for the period ended May 31, 2025[2](index=2&type=chunk) - Cover Page Details | Indicator | Details | | :--- | :--- | | Registered Company Name | RADIUS RECYCLING, INC. | | State of Incorporation | OREGON | | Stock Ticker | RDUS | | Registered Exchange | The Nasdaq Stock Market LLC | | Filing Status | Accelerated filer | | Class A Common Stock Outstanding (as of June 27, 2025) | 28,057,661 shares | | Class B Common Stock Outstanding (as of June 27, 2025) | 200,000 shares | FORWARD-LOOKING STATEMENTS [Nature and Scope of Forward-Looking Statements](index=3&type=section&id=Nature%20and%20Scope%20of%20Forward-Looking%20Statements) This section defines forward-looking statements in the report, emphasizing their inherent uncertainties and potential for actual results to differ materially from expectations - Forward-looking statements involve future events, company expectations, intentions, beliefs, and strategies, including the proposed merger with Toyota Tsusho America, Inc. (TAI)[9](index=9&type=chunk) - The nature of forward-looking statements makes them uncertain, often containing words like "outlook," "target," "believe," and "expect"[10](index=10&type=chunk) - The company undertakes no obligation to update any forward-looking statements unless required by law[11](index=11&type=chunk) [Risks and Uncertainties](index=3&type=section&id=Risks%20and%20Uncertainties) This section details various risks and uncertainties, including those related to the proposed merger, operations, economy, market, environment, and regulations, that could cause actual results to differ significantly - Key risks include uncertainties regarding the completion, terms, timing, structure, benefits, costs, and failure of the merger; potential termination of the merger agreement; management distraction; impact of merger announcement on relationships; termination fees; shareholder opportunity cost; required approvals; potential stock price decline if merger fails; future TAI transactions; and inability to complete the merger within expected timeframe[11](index=11&type=chunk) - Other risks encompass potential environmental cleanup costs related to the Portland Harbor Superfund site; production impacts from equipment issues; unrealized capital project benefits; macroeconomic conditions; inflation, interest, and foreign exchange fluctuations; global market changes; rising USD value; economic and geopolitical instability; raw material supply/demand volatility; significant declines in recycled metal prices; global steel market imbalances; acquisition and integration difficulties; supply chain disruptions; reliance on third-party shippers; credit agreement covenants; limited capital access; goodwill impairment; pandemic effects; failure to achieve productivity benefits; lease non-renewal; customer contract performance; steel industry consolidation; product liability claims; legal and compliance impacts; climate change; deferred tax asset realization; tax increases; cybersecurity incidents; ESG focus; foreign exchange translation risk; hedging impacts; inability to obtain/renew licenses; environmental compliance costs; increased environmental regulation; labor shortages/costs; reliance on collective bargaining; and multi-employer plan underfunding[11](index=11&type=chunk)[12](index=12&type=chunk) PART I. FINANCIAL INFORMATION [Item 1. Financial Statements (Unaudited)](index=6&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents Radius Recycling, Inc.'s unaudited condensed consolidated financial statements, including balance sheets, statements of operations, comprehensive income (loss), equity, and cash flows, along with related notes [Unaudited Condensed Consolidated Balance Sheets](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) This balance sheet presents Radius Recycling, Inc.'s financial position, including assets, liabilities, and stockholders' equity, as of May 31, 2025, and August 31, 2024 - Condensed Consolidated Balance Sheets | Indicator | May 31, 2025 (Thousands of USD) | August 31, 2024 (Thousands of USD) | | :--------------------------------------- | :-------------------------- | :-------------------------- | | **Assets** | | | | Cash and cash equivalents | 16,214 | 5,552 | | Accounts receivable, net | 239,095 | 258,157 | | Inventories | 272,957 | 293,932 | | Total current assets | 573,987 | 609,127 | | Property, plant, and equipment, net | 640,578 | 672,192 | | Goodwill | 13,105 | 13,105 | | Total assets | 1,472,198 | 1,533,769 | | **Liabilities and Equity** | | | | Short-term borrowings | 5,403 | 5,688 | | Accounts payable | 193,936 | 202,498 | | Total current liabilities | 309,809 | 316,570 | | Long-term debt, net | 449,010 | 409,082 | | Total liabilities | 944,085 | 908,029 | | Total Radius Recycling, Inc. stockholders' equity | 525,609 | 623,112 | | Noncontrolling interests | 2,504 | 2,628 | | Total equity | 528,113 | 625,740 | | Total liabilities and equity | 1,472,198 | 1,533,769 | [Unaudited Condensed Consolidated Statements of Operations](index=7&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations) This statement presents Radius Recycling, Inc.'s revenues, operating expenses, and net income (loss) for the three and nine months ended May 31, 2025, and May 31, 2024 - Condensed Consolidated Statements of Operations | Indicator | Three Months Ended May 31, 2025 (Thousands of USD) | Three Months Ended May 31, 2024 (Thousands of USD) | Nine Months Ended May 31, 2025 (Thousands of USD) | Nine Months Ended May 31, 2024 (Thousands of USD) | | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | | Revenue | 726,991 | 673,920 | 2,026,036 | 1,967,876 | | Cost of sales | 677,444 | 628,390 | 1,915,587 | 1,842,806 | | Selling, general and administrative expenses | 56,350 | 62,100 | 167,977 | 187,362 | | Goodwill impairment charge | — | 215,941 | — | 215,941 | | Operating income (loss) | (7,203) | (235,486) | (60,795) | (285,191) | | Interest expense | (9,131) | (7,368) | (26,764) | (17,981) | | Income (loss) from continuing operations before income taxes | (16,734) | (243,041) | (87,114) | (303,792) | | Net income (loss) from continuing operations | (16,406) | (198,490) | (86,300) | (250,266) | | Net income (loss) | (16,406) | (198,511) | (86,300) | (250,320) | | Net income (loss) attributable to Radius stockholders | (16,964) | (198,390) | (87,114) | (250,333) | | Basic earnings (loss) per share | (0.59) | (6.97) | (3.04) | (8.82) | | Diluted earnings (loss) per share | (0.59) | (6.97) | (3.04) | (8.82) | [Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss)](index=8&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) This statement presents Radius Recycling, Inc.'s net income (loss) and other comprehensive income (loss) components for the three and nine months ended May 31, 2025, and May 31, 2024 - Condensed Consolidated Statements of Comprehensive Income (Loss) | Indicator | Three Months Ended May 31, 2025 (Thousands of USD) | Three Months Ended May 31, 2024 (Thousands of USD) | Nine Months Ended May 31, 2025 (Thousands of USD) | Nine Months Ended May 31, 2024 (Thousands of USD) | | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | | Net income (loss) | (16,406) | (198,511) | (86,300) | (250,320) | | Other comprehensive income (loss), net of tax | 3,100 | 616 | (259) | 615 | | Comprehensive income (loss) | (13,306) | (197,895) | (86,559) | (249,705) | | Comprehensive income (loss) attributable to Radius stockholders | (13,864) | (197,774) | (87,373) | (249,718) | [Unaudited Condensed Consolidated Statements of Equity](index=9&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Equity) This statement details changes in Radius Recycling, Inc.'s stockholders' equity, including common stock, additional paid-in capital, retained earnings, and accumulated other comprehensive income (loss), for the three and nine months ended May 31, 2025, and May 31, 2024 - Condensed Consolidated Statements of Equity (Three Months) | Indicator | Three Months Ended May 31, 2025 (Thousands of USD) | Three Months Ended May 31, 2024 (Thousands of USD) | | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | | Net income (loss) attributable to Radius stockholders | (16,964) | (198,390) | | Other comprehensive income (loss), net of tax | 3,100 | 616 | | Dividends (USD 0.1875 per share) | (5,488) | (5,369) | | Total Radius stockholders' equity at end of period | 525,609 | 643,271 | - Condensed Consolidated Statements of Equity (Nine Months) | Indicator | Nine Months Ended May 31, 2025 (Thousands of USD) | Nine Months Ended May 31, 2024 (Thousands of USD) | | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | | Net income (loss) attributable to Radius stockholders | (87,114) | (250,333) | | Other comprehensive income (loss), net of tax | (259) | 615 | | Dividends (USD 0.5625 per share) | (16,390) | (16,106) | | Total Radius stockholders' equity at end of period | 525,609 | 643,271 | [Unaudited Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This statement presents Radius Recycling, Inc.'s cash flows from operating, investing, and financing activities, and the net change in cash and cash equivalents, for the nine months ended May 31, 2025, and May 31, 2024 - Condensed Consolidated Statements of Cash Flows | Indicator | Nine Months Ended May 31, 2025 (Thousands of USD) | Nine Months Ended May 31, 2024 (Thousands of USD) | | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | | Net cash from operating activities | 21,229 | (57,218) | | Net cash from investing activities | (29,072) | (59,429) | | Net cash from financing activities | 18,482 | 135,760 | | Net change in cash and cash equivalents | 10,662 | 19,157 | | Cash and cash equivalents at end of period | 16,214 | 25,189 | - Supplemental Cash Flow Information | Supplemental Disclosures | Nine Months Ended May 31, 2025 (Thousands of USD) | Nine Months Ended May 31, 2024 (Thousands of USD) | | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | | Interest paid (received) during the period | 24,605 | 16,793 | | Income taxes paid (received), net during the period | (27) | 355 | | Purchases of property, plant, and equipment included in liabilities | 3,449 | 5,961 | [Notes to the Unaudited Condensed Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20the%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section provides supplementary information and explanations for the condensed consolidated financial statements, detailing significant accounting policies, specific account breakdowns, and contingencies [Note 1 - Summary of Significant Accounting Policies](index=14&type=section&id=Note%201%20-%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the basis of financial statement preparation, the company's single operating segment, details of the proposed merger with TAI, and accounting policies for cash, receivables, prepaid expenses, other assets, and involuntary events - The company prepared its unaudited condensed consolidated financial statements in accordance with U.S. GAAP and SEC regulations[37](index=37&type=chunk) - The company operates as a single operating and reporting segment, encompassing ferrous and nonferrous scrap metal recycling, end-of-life vehicle procurement, used auto parts sales, and finished steel product manufacturing from an electric arc furnace (EAF) mill[38](index=38&type=chunk)[39](index=39&type=chunk) - On March 13, 2025, the company entered into a merger agreement with Toyota Tsusho America, Inc. (TAI) and its wholly-owned subsidiary, TAI Merger Corporation, under which the company will continue as a wholly-owned subsidiary of TAI[40](index=40&type=chunk) - Insurance Receivables | Indicator | May 31, 2025 (Thousands of USD) | August 31, 2024 (Thousands of USD) | | :--------------------------------------- | :-------------------------- | :-------------------------- | | Total insurance receivables | 17,000 | 15,000 | | Of which: Environmental claims related insurance receivables | 14,000 | 13,000 | [Note 2 - Inventories](index=19&type=section&id=Note%202%20-%20Inventories) This note provides a detailed breakdown of the company's inventory composition, including processed and unprocessed scrap metal, work-in-process, finished goods, and supplies, as of May 31, 2025, and August 31, 2024 - Inventory Composition | Inventory Type | May 31, 2025 (Thousands of USD) | August 31, 2024 (Thousands of USD) | | :----------------------------- | :-------------------------- | :-------------------------- | | Processed and unprocessed scrap metal | 123,073 | 137,013 | | Work-in-process | 12,111 | 14,846 | | Finished goods | 63,713 | 72,225 | | Supplies | 74,060 | 69,848 | | **Total Inventories** | **272,957** | **293,932** | [Note 3 - Goodwill](index=19&type=section&id=Note%203%20-%20Goodwill) This note details the company's goodwill balance and impairment testing, including a **$216 million** impairment charge recognized in Q3 FY2024 due to declining financial performance and market capitalization of certain reporting units - As of May 31, 2025, and August 31, 2024, the company's goodwill balance was **$13 million**, entirely attributable to one recycling services operating unit[62](index=62&type=chunk) - In the third quarter of fiscal year 2024, the company identified triggering events and performed goodwill impairment tests on three reporting units (two regional metal recycling businesses and the auto parts store network), resulting in a **$216 million goodwill impairment charge**[63](index=63&type=chunk)[64](index=64&type=chunk) - The impairment test's income approach valuation considered prevailing scrap metal and retail auto parts market conditions, scrap supply costs, and operating cost trends, assuming operating margins would recover over several years, with a weighted average cost of capital (WACC) of **14.5% to 15.0%** and a terminal growth rate of **2%**[64](index=64&type=chunk) [Note 4 - Commitments and Contingencies](index=21&type=section&id=Note%204%20-%20Commitments%20and%20Contingencies) This note discusses the company's environmental liabilities, particularly those related to the Portland Harbor Superfund site and other historical environmental contingencies, as well as other legal proceedings, with total environmental liabilities of **$65 million** as of May 31, 2025 - Environmental Liabilities | Indicator | May 31, 2025 (Thousands of USD) | August 31, 2024 (Thousands of USD) | | :--------------------------------------- | :-------------------------- | :-------------------------- | | Total environmental liabilities | 64,593 | 65,649 | | Of which: Current environmental liabilities | 12,993 | 13,232 | | Of which: Long-term environmental liabilities | 51,600 | 52,417 | - The company is a Potentially Responsible Party (PRP) for the Portland Harbor Superfund site, with **$5 million** in environmental liabilities accrued for this matter as of May 31, 2025, and August 31, 2024; cleanup costs and allocation remain highly uncertain and could materially impact the company's financial condition[79](index=79&type=chunk)[83](index=83&type=chunk) - The company holds insurance policies and Qualified Settlement Funds (QSFs) expected to reimburse defense, remediation, and natural resource damage claims related to Portland Harbor, though full cost coverage is not guaranteed[84](index=84&type=chunk) - Other historical environmental contingencies include **$4 million** accrued in FY2018 (now **$5 million** as of May 31, 2025) for scrap metal shredder residue remediation; **$1 million** (as of May 31, 2025) for environmental matters at closed facilities; and **$10 million** (as of May 31, 2025) for metal contamination remediation at another site[88](index=88&type=chunk)[89](index=89&type=chunk)[90](index=90&type=chunk) - Legal proceedings include a Clean Air Act (CAA) lawsuit against the company's Oakland shredding facility, with plaintiffs seeking up to **$183 million** in penalties; additionally, Alameda County criminal grand jury charges against the company and two operating employees for environmental regulatory violations were dismissed on May 23, 2025[94](index=94&type=chunk)[95](index=95&type=chunk) [Note 5 - Accumulated Other Comprehensive Income (Loss)](index=27&type=section&id=Note%205%20-%20Accumulated%20Other%20Comprehensive%20Income%20(Loss)) This note details the components and changes in accumulated other comprehensive income (loss), including foreign currency translation adjustments, cash flow hedges, and pension obligations, for the three and nine months ended May 31, 2025, and May 31, 2024 - Accumulated Other Comprehensive Income (Loss) Components | Component | May 31, 2025 (Thousands of USD) | May 31, 2024 (Thousands of USD) | | :--------------------------------------- | :-------------------------- | :-------------------------- | | Foreign currency translation adjustments | (38,620) | (38,230) | | Cash flow hedges, net | (666) | 650 | | Pension obligations, net | (1,145) | (1,488) | | **Total Accumulated Other Comprehensive Income (Loss)** | **(40,431)** | **(39,068)** | [Note 6 - Revenue](index=28&type=section&id=Note%206%20-%20Revenue) This note disaggregates the company's revenue by major product type (ferrous, nonferrous, steel, retail & other) and sales destination (foreign, domestic) for the three and nine months ended May 31, 2025, and May 31, 2024 - Revenue Disaggregation | Revenue Type | Three Months Ended May 31, 2025 (Thousands of USD) | Three Months Ended May 31, 2024 (Thousands of USD) | Nine Months Ended May 31, 2025 (Thousands of USD) | Nine Months Ended May 31, 2024 (Thousands of USD) | | :----------------------------- | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | | Ferrous revenue | 320,746 | 334,425 | 966,805 | 999,419 | | Nonferrous revenue | 229,428 | 184,127 | 590,489 | 517,902 | | Steel revenue | 125,935 | 108,259 | 331,900 | 322,511 | | Retail and other revenue | 50,882 | 47,109 | 136,842 | 128,044 | | **Total Revenue** | **726,991** | **673,920** | **2,026,036** | **1,967,876** | | By sales destination: | | | | | | Foreign | 340,718 | 348,503 | 1,032,275 | 1,023,799 | | Domestic | 386,273 | 325,417 | 993,761 | 944,077 | - Net receivables from customer contracts constituted the vast majority of total accounts receivable on the consolidated balance sheets as of May 31, 2025, and August 31, 2024[101](index=101&type=chunk) - Contract liabilities, primarily customer deposits for recycled metal and finished steel sales contracts, were **$12 million** and **$10 million** as of May 31, 2025, and August 31, 2024, respectively[102](index=102&type=chunk) [Note 7 - Share-Based Compensation](index=28&type=section&id=Note%207%20-%20Share-Based%20Compensation) This note describes the equity incentive awards granted in fiscal year 2025, including Restricted Stock Units (RSUs), Performance Stock Units (PSUs) tied to Total Shareholder Return (TSR) and volume growth, and Deferred Stock Units (DSUs) for non-employee directors - In the first quarter of fiscal year 2025, the company granted **446,993 Restricted Stock Units (RSUs)** and **340,454 Performance Stock Units (PSUs)** to key employees and executives under the 2024 Omnibus Incentive Plan[103](index=103&type=chunk) - The aggregate fair value of RSUs was **$9 million**, with **334,042 units vesting over five years** and **112,951 units vesting over three years**, in annual installments[104](index=104&type=chunk) - PSUs were split into two tranches: approximately half based on the company's relative Total Shareholder Return (TSR) with a fair value of **$3 million**, and the other half based on company volume growth with a fair value of **$3 million**, both with performance periods of approximately three years[106](index=106&type=chunk)[107](index=107&type=chunk)[108](index=108&type=chunk) - In the second quarter of fiscal year 2025, the company granted **57,642 Deferred Stock Units (DSUs)** to non-employee directors, with a total fair value of **$1 million**, which will vest in full on the day prior to the 2025 Annual Meeting of Stockholders[111](index=111&type=chunk) [Note 8 - Derivative Financial Instruments](index=29&type=section&id=Note%208%20-%20Derivative%20Financial%20Instruments) This note discusses the company's use of interest rate swap agreements as cash flow hedges to manage interest rate risk on floating-rate debt, with a total notional amount of **$150 million** as of May 31, 2025 - The company entered into three fixed-rate interest rate swap transactions in fiscal year 2023 to hedge against fluctuations in interest cash flows on floating-rate borrowings under its bank revolving credit facility[113](index=113&type=chunk) - As of May 31, 2025, and August 31, 2024, the total notional amount of these interest rate swaps was **$150 million**, maturing in August 2026[116](index=116&type=chunk) - Derivative Financial Instruments on Balance Sheet | Derivative Instrument | Balance Sheet Location | May 31, 2025 (Thousands of USD) | August 31, 2024 (Thousands of USD) | | :----------------------------- | :----------------------------- | :-------------------------- | :-------------------------- | | Interest rate swap agreements | Other accrued liabilities | 497 | 174 | | Interest rate swap agreements | Other long-term liabilities | 363 | 1,667 | - In the third quarter and first nine months of fiscal year 2025, less than **$1 million** of interest rate swap derivative cash flow hedges were reclassified from Accumulated Other Comprehensive Income (AOCI) to interest expense in each period[117](index=117&type=chunk) [Note 9 - Income Taxes](index=31&type=section&id=Note%209%20-%20Income%20Taxes) This note explains the company's effective tax rate for the three and nine months ended May 31, 2025, which was lower than the U.S. federal statutory rate primarily due to increased valuation allowances on deferred tax assets in U.S. tax jurisdictions - Effective Tax Rate | Indicator | Three Months Ended May 31, 2025 | Three Months Ended May 31, 2024 | Nine Months Ended May 31, 2025 | Nine Months Ended May 31, 2024 | | :--------------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Effective tax rate (benefit on loss from continuing operations) | 2.0% | 18.3% | 0.9% | 17.6% | - The effective tax rate was lower than the U.S. federal statutory rate of **21%**, primarily due to the combined impact of the company's financial performance, including increased valuation allowances on deferred tax assets in U.S. tax jurisdictions[118](index=118&type=chunk) - The company continues to maintain valuation allowances against deferred tax assets in U.S. federal, state, and Canadian tax jurisdictions[119](index=119&type=chunk) [Note 10 - Net Income (Loss) Per Share](index=32&type=section&id=Note%2010%20-%20Net%20Income%20(Loss)%20Per%20Share) This note provides the calculation of basic and diluted net income (loss) per share attributable to Radius stockholders for the three and nine months ended May 31, 2025, and May 31, 2024 - Net Income (Loss) Per Share Calculation | Indicator | Three Months Ended May 31, 2025 (Thousands of USD) | Three Months Ended May 31, 2024 (Thousands of USD) | Nine Months Ended May 31, 2025 (Thousands of USD) | Nine Months Ended May 31, 2024 (Thousands of USD) | | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | | Income (loss) from continuing operations attributable to Radius stockholders | (16,964) | (198,369) | (87,114) | (250,279) | | Net income (loss) attributable to Radius stockholders | (16,964) | (198,390) | (87,114) | (250,333) | | Basic weighted-average common shares outstanding | 28,700 | 28,479 | 28,652 | 28,385 | | Diluted weighted-average common shares outstanding | 28,700 | 28,479 | 28,652 | 28,385 | | Basic earnings (loss) per share | (0.59) | (6.97) | (3.04) | (8.82) | | Diluted earnings (loss) per share | (0.59) | (6.97) | (3.04) | (8.82) | - For the three and nine months ended May 31, 2025, **513,938** and **272,997** common stock equivalents, respectively, were considered anti-dilutive and excluded from the diluted net income (loss) per share calculation[123](index=123&type=chunk) [Note 11 - Related Party Transactions](index=32&type=section&id=Note%2011%20-%20Related%20Party%20Transactions) This note discloses related party transactions where the company purchased recycled metal from a joint venture at near fair market value, with purchases totaling **$5 million** and **$13 million** for the three and nine months ended May 31, 2025, and May 31, 2024, respectively - The company purchases recycled metal from one of its joint ventures at prices approximating fair market value[124](index=124&type=chunk) - Related Party Purchases | Period | Purchases (Thousands of USD) | | :----------------------------- | :-------------------------- | | Three Months Ended May 31, 2025 | 5,000 | | Three Months Ended May 31, 2024 | 5,000 | | Nine Months Ended May 31, 2025 | 13,000 | | Nine Months Ended May 31, 2024 | 13,000 | [Note 12 - Debt](index=32&type=section&id=Note%2012%20-%20Debt) This note details the company's debt structure, primarily consisting of a bank revolving credit facility totaling **$454 million** as of May 31, 2025, which was amended on June 16, 2025, to reduce commitments and extend covenant suspension - Debt Composition | Debt Type | May 31, 2025 (Thousands of USD) | August 31, 2024 (Thousands of USD) | | :--------------------------------------- | :-------------------------- | :-------------------------- | | Bank revolving credit facility | 435,000 | 393,612 | | Finance lease obligations | 7,319 | 9,042 | | Other debt obligations | 12,094 | 12,116 | | **Total Debt** | **454,413** | **414,770** | | Less: Current portion of debt | (5,403) | (5,688) | | **Net Debt (excluding current portion)** | **449,010** | **409,082** | - On June 16, 2025, the company amended its credit agreement, reducing the total revolving commitments from **$800 million to $625 million** and extending the suspension period for the minimum fixed charge coverage ratio covenant by two fiscal quarters[125](index=125&type=chunk) - As of May 31, 2025, the weighted-average interest rate on the credit facility was **7.0%** (compared to **8.0%** as of August 31, 2024)[128](index=128&type=chunk) - As of May 31, 2025, the company was in compliance with the applicable financial covenants under its amended credit agreement[130](index=130&type=chunk) [Note 13 - Merger with TAI](index=33&type=section&id=Note%2013%20-%20Merger%20with%20TAI) This note details the definitive merger agreement with Toyota Tsusho America, Inc. (TAI) for TAI to acquire Radius Recycling for **$30.00 per share in cash**, with the merger having received HSR Act early termination and shareholder approval, expected to close in the second half of calendar year 2025 - On March 13, 2025, the company entered into a merger agreement with TAI, under which TAI will acquire the company for **$30.00 per share in cash**[131](index=131&type=chunk)[132](index=132&type=chunk) - Upon merger effectiveness, all unvested Restricted Stock Units (RSUs), Performance Stock Units (PSUs), and Deferred Stock Units (DSUs) will fully vest and convert into cash[133](index=133&type=chunk)[136](index=136&type=chunk) - The merger received early termination notice of the HSR Act waiting period on May 12, 2025, and company shareholder approval on June 5, 2025[139](index=139&type=chunk) - The merger is expected to close in the second half of calendar year 2025, subject to other customary closing conditions[141](index=141&type=chunk) - In certain specified circumstances, the company would be required to pay TAI a termination fee of **$27.2 million** if the merger agreement is terminated[142](index=142&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=36&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's discussion and analysis of the company's financial performance and condition for the three and nine months ended May 31, 2025, covering revenue, operating results, liquidity, capital resources, and market impacts [General](index=36&type=section&id=General) Radius Recycling, Inc. is a vertically integrated ferrous and nonferrous metal recycler and finished steel manufacturer, with operations dependent on market demand, prices, raw material supply, and operational efficiency - Radius Recycling, Inc. is one of North America's largest ferrous and nonferrous metal recyclers and a finished steel manufacturer[145](index=145&type=chunk) - The company operates a network of **50 retail self-service auto parts stores** (Pick-n-Pull brand), **53 metal recycling facilities**, and an electric arc furnace (EAF) steel mill[145](index=145&type=chunk)[146](index=146&type=chunk) - Operating results are primarily driven by domestic and international market demand and prices for recycled metals, raw material supply (including end-of-life vehicles), and efficient metal extraction from the shredding process[150](index=150&type=chunk) - Quarterly operating results are influenced by market conditions, scrap metal supply, auto parts demand, supply chain efficiency, production and operating cost fluctuations, seasonality, and trade actions like tariffs and sanctions[151](index=151&type=chunk) [Merger with TAI](index=37&type=section&id=Merger%20with%20TAI) This section reiterates the merger agreement with Toyota Tsusho America, Inc. (TAI) for TAI to acquire Radius Recycling for **$30.00 per share in cash**, with the transaction approved and expected to close in the second half of calendar year 2025 - The company entered into a merger agreement with Toyota Tsusho America, Inc. (TAI) on March 13, 2025, for TAI to acquire the company for **$30.00 per share in cash**[152](index=152&type=chunk) - The transaction has received company board and shareholder approval and is expected to close in the second half of calendar year 2025[152](index=152&type=chunk) [Everett Facility Shredder Fire](index=37&type=section&id=Everett%20Facility%20Shredder%20Fire) This section updates on the December 2021 Everett metal recycling facility fire, noting property restoration was largely complete by FY2023, and a **$7 million** insurance settlement was reached in Q3 FY2024, resolving all claims - On December 8, 2021, a fire occurred at the company's Everett metal recycling facility, with primary damage limited to the shredder building and equipment[153](index=153&type=chunk) - Most property restoration and replacement for the damaged assets were substantially completed by the end of fiscal year 2023[153](index=153&type=chunk) - In the third quarter of fiscal year 2024, the company reached a full and final settlement with its insurance carriers, recognizing **$7 million** in insurance recovery benefits, including business interruption income, with all claims resolved by August 31, 2024[153](index=153&type=chunk) [Use of Non-GAAP Financial Measures](index=38&type=section&id=Use%20of%20Non-GAAP%20Financial%20Measures) This section explains the company's use of non-GAAP financial measures like Adjusted EBITDA to provide a clearer view of operating and financial performance by excluding non-recurring or non-operating items - The company uses non-GAAP financial measures such as Adjusted EBITDA, Adjusted Selling, General and Administrative Expenses, Adjusted Net Income (Loss) from Continuing Operations, and Adjusted Diluted Earnings (Loss) Per Share[155](index=155&type=chunk) - These non-GAAP measures aim to provide a more meaningful presentation of operating and financial performance, liquidity, and capital structure by excluding items unrelated to core business operations[155](index=155&type=chunk) - Adjusted EBITDA is net income (loss) adjusted for discontinued operations, interest expense, income taxes, depreciation and amortization, restructuring charges, historical environmental matters (net of recoveries), amortization of capitalized cloud computing implementation costs, goodwill and other asset impairment charges, business development costs unrelated to continuing operations (including pre-acquisition and merger-related fees), and other items unrelated to core business operations[155](index=155&type=chunk) [Financial Highlights of Results of Operations for the Third Quarter of Fiscal 2025](index=39&type=section&id=Financial%20Highlights%20of%20Results%20of%20Operations%20for%20the%20Third%20Quarter%20of%20Fiscal%202025) In Q3 FY2025, the company saw significant financial improvement driven by stronger nonferrous markets, increased finished steel volumes, and productivity initiatives, leading to substantial Adjusted EBITDA growth and reduced SG&A expenses - Fiscal year 2025 third-quarter financial results significantly improved, driven by stronger nonferrous market conditions, increased finished steel volumes, and productivity enhancement initiatives[160](index=160&type=chunk) - Nonferrous volumes increased by **17% year-over-year**, with average net selling prices up **6%**; finished steel volumes grew by **20%**, benefiting from lower conversion costs due to higher mill utilization[160](index=160&type=chunk) - Selling, General and Administrative (SG&A) expenses decreased by **9% year-over-year** (adjusted **17%**), reflecting benefits from productivity and cost reduction measures implemented in fiscal year 2024[160](index=160&type=chunk) - Key Financial Highlights (Q3 FY2025) | Indicator | 2025 Fiscal Q3 | 2024 Fiscal Q3 | | :--------------------------------------- | :-------------------------- | :-------------------------- | | Diluted loss per share from continuing operations attributable to Radius stockholders | $(0.59) | $(6.97) | | Adjusted diluted loss per share from continuing operations attributable to Radius stockholders | $(0.39) | $(0.59) | | Net loss | $16 million | $199 million | | Adjusted EBITDA | $22 million | $9 million | - Key Financial Highlights (First Nine Months FY2025) | Indicator | First Nine Months FY2025 | First Nine Months FY2024 | | :--------------------------------------- | :-------------------------- | :-------------------------- | | Net cash from operating activities | $21 million | $(57) million | | Total debt (as of May 31/Aug 31) | $454 million | $415 million | | Net debt (excluding cash) (as of May 31/Aug 31) | $438 million | $409 million | [Results of Operations](index=40&type=section&id=Results%20of%20Operations) This section analyzes the company's revenue and operating performance for the three and nine months ended May 31, 2025, highlighting changes in volumes, prices, gross margins, and the impact of cost reduction measures - Revenue and Operating Performance | Indicator | Three Months Ended May 31, 2025 | Three Months Ended May 31, 2024 | Year-over-Year Change (%) | Nine Months Ended May 31, 2025 | Nine Months Ended May 31, 2024 | Year-over-Year Change (%) | | :--------------------------------------- | :-------------------------- | :-------------------------- | :-------------- | :-------------------------- | :-------------------------- | :-------------- | | Ferrous revenue (Thousands of USD) | 320,746 | 334,425 | (4)% | 966,805 | 999,419 | (3)% | | Nonferrous revenue (Thousands of USD) | 229,428 | 184,127 | 25% | 590,489 | 517,902 | 14% | | Steel revenue (Thousands of USD) | 125,935 | 108,259 | 16% | 331,900 | 322,511 | 3% | | Retail and other revenue (Thousands of USD) | 50,882 | 47,109 | 8% | 136,842 | 128,044 | 7% | | **Total Revenue (Thousands of USD)** | **726,991** | **673,920** | **8%** | **2,026,036** | **1,967,876** | **3%** | | Cost of sales (Thousands of USD) | 677,444 | 628,390 | 8% | 1,915,587 | 1,842,806 | 4% | | Gross profit (Thousands of USD) | 49,547 | 45,530 | 9% | 110,449 | 125,070 | (12)% | | Gross margin (%) | 6.8% | 6.8% | 0% | 5.5% | 6.4% | (14)% | | Selling, general and administrative expenses (Thousands of USD) | 56,350 | 62,100 | (9)% | 167,977 | 187,362 | (10)% | | Net income (loss) (Thousands of USD) | (16,406) | (198,511) | (92)% | (86,300) | (250,320) | (66)% | | Adjusted EBITDA (Thousands of USD) | 22,014 | 8,618 | 155% | 21,562 | 12,475 | 73% | | Average ferrous recycled metal selling price (USD/long ton) | 341 | 350 | (3)% | 336 | 361 | (7)% | | Ferrous volumes (Thousands of long tons) | 1,137 | 1,112 | 2% | 3,337 | 3,244 | 3% | | Average nonferrous selling price (USD/pound) | 1.10 | 1.04 | 6% | 1.05 | 0.97 | 8% | | Nonferrous volumes (Thousands of pounds) | 215,253 | 183,230 | 17% | 566,831 | 541,435 | 5% | | Average finished steel selling price (USD/short ton) | 787 | 817 | (4)% | 773 | 827 | (7)% | | Finished steel volumes (Thousands of short tons) | 151 | 126 | 20% | 407 | 369 | 10% | | Rolling mill utilization | 107% | 88% | 22% | 92% | 88% | 5% | - Total revenue increased by **8%** and **3%** for the three and nine months ended May 31, 2025, respectively; nonferrous product average net selling prices rose by **6%** and **8%**, with volumes up **17%** and **5%**; ferrous product average net selling prices decreased by **3%** and **7%**, with volumes up **2%** and **3%**; finished steel volumes increased by **20%** and **10%**, while average net selling prices declined by **4%** and **7%**[170](index=170&type=chunk) - Net loss significantly decreased, and Adjusted EBITDA increased, primarily due to higher volumes, reduced finished steel conversion costs from improved mill utilization, increased recycling services contributions, higher retail auto parts sales, and a **$3 million gain** from the sale of certain real estate assets[171](index=171&type=chunk) - Selling, General and Administrative (SG&A) expenses decreased by **9%** and **10%** (adjusted **17%** and **13%**) for the three and nine months ended May 31, 2025, respectively, reflecting the benefits of cost reduction initiatives[172](index=172&type=chunk) - Interest expense increased, mainly due to higher average borrowings; the effective tax rate was lower than the U.S. federal statutory rate, primarily due to increased valuation allowances on deferred tax assets[174](index=174&type=chunk)[175](index=175&type=chunk) [Liquidity and Capital Resources](index=41&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's liquidity, primarily relying on cash flow from operations and existing credit facilities; net cash from operating activities significantly improved in the first nine months of FY2025, but debt increased to meet working capital and capital expenditure needs - The company primarily relies on cash flow from operations, existing cash, and available credit facilities to meet its liquidity needs[176](index=176&type=chunk) - Liquidity Overview | Indicator | May 31, 2025 (Thousands of USD) | August 31, 2024 (Thousands of USD) | | :--------------------------------------- | :-------------------------- | :-------------------------- | | Cash balance | 16,000 | 6,000 | | Total debt | 454,000 | 415,000 | | Net debt (excluding cash) | 438,000 | 409,000 | - Net cash from operating activities was **$21 million** for the first nine months of fiscal year 2025, compared to a net cash outflow of **$57 million** in the prior-year period[179](index=179&type=chunk) - Net cash outflow from investing activities was **$29 million** for the first nine months of fiscal year 2025 (compared to **$59 million** in the prior-year period), with capital expenditures totaling **$34 million** (compared to **$56 million** in the prior-year period)[182](index=182&type=chunk)[183](index=183&type=chunk) - Net cash inflow from financing activities was **$18 million** for the first nine months of fiscal year 2025 (compared to **$136 million** in the prior-year period), with net borrowings of **$40 million** (compared to **$158 million** in the prior-year period)[184](index=184&type=chunk)[185](index=185&type=chunk) - The company plans to invest approximately **$60 million** in capital expenditures for fiscal year 2025, with approximately **$14 million** invested in environmental projects during the first nine months and a total planned investment of up to **$20 million** for such projects in fiscal year 2025[196](index=196&type=chunk)[197](index=197&type=chunk) - On April 4, 2025, the Board of Directors declared a quarterly dividend of **$0.1875 per share** of common stock for the third quarter of fiscal year 2025, paid on May 5, 2025[199](index=199&type=chunk) - As of May 31, 2025, the company retained authorization to repurchase **2.8 million shares** of Class A common stock, but no repurchases are expected while the merger agreement is pending due to its terms[200](index=200&type=chunk) [Contractual Obligations](index=46&type=section&id=Contractual%20Obligations) This section states that there have been no material changes to the company's contractual obligations and commitments since the FY2024 annual report, with **$9 million** in outstanding standby letters of credit as of May 31, 2025 - No material changes have occurred in contractual obligations and commitments since the fiscal year 2024 annual report (Form 10-K)[204](index=204&type=chunk) - As of May 31, 2025, the company had **$9 million** in outstanding standby letters of credit[204](index=204&type=chunk) [Critical Accounting Estimates](index=46&type=section&id=Critical%20Accounting%20Estimates) This section states that no material changes have occurred in critical accounting estimates since those described in the FY2024 annual report (Form 10-K) - No material changes have occurred in critical accounting estimates since those described in the fiscal year 2024 annual report (Form 10-K)[205](index=205&type=chunk) [Recently Issued Accounting Standards](index=46&type=section&id=Recently%20Issued%20Accounting%20Standards) This section refers to Note 1 for a description of recent accounting standards, specifically ASU 2024-03 on income statement expense disaggregation, effective FY2028, which is not expected to materially impact financial statements - Recently issued accounting standards include ASU 2024-03, "Disaggregation of Expenses in the Income Statement," which requires disclosure of the nature of expenses in the income statement[60](index=60&type=chunk)[206](index=206&type=chunk) - ASU 2024-03 will be effective for the company's fiscal year 2028 and is not expected to have a material impact on the consolidated financial statements as it applies only to disclosures[60](index=60&type=chunk) [Non-GAAP Financial Measures](index=46&type=section&id=Non-GAAP%20Financial%20Measures) This section provides reconciliation tables for non-GAAP financial measures, including net debt (excluding cash), net debt borrowings (repayments), Adjusted EBITDA, Adjusted Selling, General and Administrative Expenses, and Adjusted Diluted Loss Per Share, used by management to assess business performance - Net Debt (excluding cash) Reconciliation | Indicator | May 31, 2025 (Thousands of USD) | August 31, 2024 (Thousands of USD) | | :--------------------------------------- | :-------------------------- | :-------------------------- | | Short-term borrowings | 5,403 | 5,688 | | Long-term debt, net (excluding current portion) | 449,010 | 409,082 | | **Total Debt** | **454,413** | **414,770** | | Less: Cash and cash equivalents | 16,214 | 5,552 | | **Net Debt (excluding cash)** | **438,199** | **409,218** | - Net Debt Borrowings (Repayments) Reconciliation | Indicator | Nine Months Ended May 31, 2025 (Thousands of USD) | Nine Months Ended May 31, 2024 (Thousands of USD) | | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | | Long-term debt borrowings | 611,836 | 579,500 | | Long-term debt repayments | (572,026) | (421,414) | | **Net Debt Borrowings (Repayments)** | **39,810** | **158,086** | - Adjusted EBITDA and SG&A Reconciliation | Indicator | Three Months Ended May 31, 2025 (Thousands of USD) | Three Months Ended May 31, 2024 (Thousands of USD) | Nine Months Ended May 31, 2025 (Thousands of USD) | Nine Months Ended May 31, 2024 (Thousands of USD) | | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | | Net income (loss) | (16,406) | (198,511) | (86,300) | (250,320) | | Adjusted EBITDA | 22,014 | 8,618 | 21,562 | 12,475 | | Selling, general and administrative expenses (as reported) | 56,350 | 62,100 | 167,977 | 187,362 | | Adjusted selling, general and administrative expenses | 51,283 | 61,741 | 162,687 | 186,294 | - Adjusted Diluted Loss Per Share Reconciliation | Indicator | Three Months Ended May 31, 2025 | Three Months Ended May 31, 2024 | Nine Months Ended May 31, 2025 | Nine Months Ended May 31, 2024 | | :--------------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Diluted loss per share from continuing operations attributable to Radius stockholders (as reported) | (0.59) | (6.97) | (3.04) | (8.82) | | Adjusted diluted loss per share from continuing operations attributable to Radius stockholders | (0.39) | (0.59) | (2.71) | (2.28) | [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=50&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section discusses the company's various market risks, including commodity price risk, interest rate risk, credit risk, and foreign currency exchange rate risk, and how these risks are managed [Commodity Price Risk](index=50&type=section&id=Commodity%20Price%20Risk) The company faces commodity price volatility risk for ferrous and nonferrous metals and finished steel, managing it by adjusting purchase prices and monitoring spreads between sales and procurement costs; a **10%** decline in estimated inventory selling prices as of May 31, 2025, would not materially impact net realizable value - The company primarily faces commodity price risk from market price fluctuations of ferrous and nonferrous metals, scrap metal, finished steel, auto bodies, and other commodities[218](index=218&type=chunk) - The company manages commodity price risk by adjusting purchase prices in response to changes in forward selling prices and actively monitoring the spread between forward selling prices and procurement, processing, and transportation costs[218](index=218&type=chunk) - As of May 31, 2025, a **10%** decline in estimated inventory selling prices would not materially impact net realizable value (NRV)[218](index=218&type=chunk) [Interest Rate Risk](index=50&type=section&id=Interest%20Rate%20Risk) This section states that no material changes have occurred in interest rate risk disclosures since the FY2024 annual report (Form 10-K) - No material changes have occurred in interest rate risk disclosures since the fiscal year 2024 annual report (Form 10-K)[219](index=219&type=chunk) [Credit Risk](index=50&type=section&id=Credit%20Risk) This section explains credit risk arising from counterparty non-performance, managed through various methods including letters of credit, deposits, credit limits, and credit insurance; **24%** of accounts receivable were covered by letters of credit as of May 31, 2025 - Credit risk primarily arises from counterparties failing to fulfill contractual obligations, including not receiving scrap metal and finished steel and settling financially, or not providing sufficient quantities of scrap metal or paying advances, loans, and other contractual receivables[220](index=220&type=chunk) - The company manages credit risk through various methods, including credit approval, credit limits, credit insurance, letters of credit or other collateral, cash deposits, and monitoring procedures[220](index=220&type=chunk) - As of May 31, 2025, and August 31, 2024, **24%** and **28%**, respectively, of the company's accounts receivable balance were covered by letters of credit[222](index=222&type=chunk) [Foreign Currency Exchange Rate Risk](index=50&type=section&id=Foreign%20Currency%20Exchange%20Rate%20Risk) The company primarily faces foreign currency exchange rate risk from its Canadian subsidiary's USD-denominated sales transactions and related receivables, as the subsidiary's functional currency is the Canadian dollar - The company's primary foreign currency exchange rate risk relates to its Canadian subsidiary's USD-denominated sales transactions and associated accounts receivable, as the subsidiary's functional currency is the Canadian dollar[223](index=223&type=chunk) [Item 4. Controls and Procedures](index=51&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of the company's disclosure controls and procedures and reports no material changes in internal control over financial reporting during the quarter [Disclosure Controls and Procedures](index=51&type=section&id=Disclosure%20Controls%20and%20Procedures) Management, with the participation of the Chief Executive Officer and Chief Financial Officer, assessed and concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of May 31, 2025 - As of May 31, 2025, the company's disclosure controls and procedures were effective at a reasonable assurance level[225](index=225&type=chunk) [Changes in Internal Control Over Financial Reporting](index=51&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) No material changes in internal control over financial reporting occurred during the quarter ended May 31, 2025 - No material changes in internal control over financial reporting occurred during the quarter ended May 31, 2025[226](index=226&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=52&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to information on reportable legal proceedings incorporated by reference from the company's FY2024 annual report (Form 10-K) and Note 4 of this quarterly report - Information regarding reportable legal proceedings is incorporated by reference from "Item 3. Legal Proceedings" in the company's fiscal year 2024 annual report (Form 10-K) and "Note 4 - Commitments and Contingencies" in "Part I, Item 1" of this quarterly report[229](index=229&type=chunk) [Item 1A. Risk Factors](index=52&type=section&id=Item%201A.%20Risk%20Factors) This section states that no material changes or new risk factors have been identified since the company's FY2024 annual report (Form 10-K) submission, other than those disclosed in the February 28, 2025, quarterly report - No material changes or new risk factors have been identified since the submission of the fiscal year 2024 annual report (Form 10-K), other than those disclosed in the quarterly report dated February 28, 2025[230](index=230&type=chunk) [Item 5. Other Information](index=52&type=section&id=Item%205.%20Other%20Information) This section reports that no directors or officers adopted, terminated, or modified Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the three months ended May 31, 2025 - During the three months ended May 31, 2025, no directors or officers adopted, terminated, or modified Rule 10b5-1 or non-Rule 10b5-1 trading arrangements[231](index=231&type=chunk) [Item 6. Exhibits](index=53&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including the merger agreement, CEO and CFO certifications, and XBRL files - Exhibits include: the merger agreement dated March 13, 2025; certifications by the Chief Executive Officer and Chief Financial Officer pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act; and Inline XBRL documents[234](index=234&type=chunk) SIGNATURES [Signatures](index=54&type=section&id=Signatures) This section contains the authorized signatures for Radius Recycling, Inc., by Tamara L. Lundgren, Chairman, President, and Chief Executive Officer, and Stefano R. Gaggini, Senior Vice President and Chief Financial Officer, dated July 1, 2025 - The report was signed by Tamara L. Lundgren, Chairman, President, and Chief Executive Officer, and Stefano R. Gaggini, Senior Vice President, and Chief Financial Officer, on July 1, 2025[237](index=237&type=chunk)

Financial Commitments - The aggregate principal amount of Aggregate Commitments A-1 is $585,937,500 as of the Sixth Amendment Effective Date[4] - The aggregate principal amount of Aggregate Commitments A-2 is $39,062,500 as of the Sixth Amendment Effective Date[5] - The US Borrower must make prepayments to ensure that US A-1 Total Outstandings and US A-2 Total Outstandings do not exceed their respective Aggregate Commitments[18] Financial Ratios and Forecasts - The US Borrower is required to maintain a Consolidated Asset Coverage Ratio of no less than 1.00 to 1.00 at the end of any fiscal quarter[15] - The Consolidated Interest Coverage Ratio must be at least 2.00 to 1.00 by the end of the fiscal quarter ending May 31, 2024, and at least 1.25 to 1.00 for the quarters ending February 28, 2025, and February 28, 2026[15] - The US Borrower must provide a 13-week cash flow forecast starting December 31, 2025, including a reconciliation of actual cash receipts and disbursements[11] - The US Borrower is required to deliver monthly financial statements within 30 days after the end of each calendar month, starting with the month ending September 30, 2025[10] - The US Borrower must project financials for the fiscal years ending August 31, 2026, and August 31, 2027, by December 31, 2025[11] Administrative and Compliance Obligations - The US Borrower will reimburse the Administrative Agent for fees associated with a financial advisor engaged for operational and financial performance evaluation[12] - The Loan Parties agreed to reimburse the Administrative Agent and the Canadian Lender for all reasonable out-of-pocket expenses related to the Amendment[23] - Radius Recycling, Inc. confirmed the completion of due diligence investigations by lenders, ensuring compliance with applicable laws[20] - Each Loan Party affirmed its obligations under the Loan Documents and acknowledged that all security interests remain in effect[25] - The Loan Parties released the Lender Group from any claims arising in connection with the Loan Documents prior to the Amendment date[35] - The Loan Parties acknowledged that no approvals or consents from governmental authorities are required for the execution of the Amendment[27] Amendment and Legal Framework - The Amendment ratifies and confirms the Loan Documents and obligations of the Loan Parties, maintaining their full force and effect[24] - The Amendment allows for electronic signatures and records, ensuring the same legal effect as paper documents[30] - The Amendment is governed by the laws of the State of New York, incorporating terms related to jurisdiction and waiver of jury trial[33][34] - The Amendment does not alter or affect the rights and remedies of the holders of the Obligations under the Existing Credit Agreement[29] - Each Lender confirmed that their representations and warranties are true and correct as of the Amendment's effective date[28] Operational Structure and Management - Pick-N-Pull Auto Dismantlers operates multiple LLCs across various states, indicating a broad operational footprint in the auto dismantling industry[43] - Radius Recycling, Inc. has undergone a sixth amendment, suggesting potential changes in financial agreements or operational strategies[44] - Proleride Transport Systems, Inc. and its affiliated companies are managed by W. Brandon Peele, indicating a centralized management structure[45] - Schnitzer Steel Canadian Holdings, Inc. is involved in multiple LLCs, reflecting a diversified approach in the recycling sector[48] - The presence of multiple lenders, including Bank of America and JPMorgan Chase, suggests strong financial backing for Radius Recycling, Inc.[51][52] - The involvement of various banks as US A-1 and A-2 lenders indicates a robust financing structure for Radius Recycling, Inc.[53][54] - The management team across different entities is consistently led by W. Brandon Peele, highlighting leadership continuity[45][47] - The operational structure of multiple LLCs under Radius Recycling, Inc. indicates a strategy focused on regional market penetration[47] - The documentation reflects a complex financial network involving numerous lenders, which may enhance liquidity and operational flexibility for Radius Recycling, Inc.[60][61] - The amendments and agreements suggest ongoing strategic adjustments within Radius Recycling, Inc. to adapt to market conditions[46]

[FORWARD-LOOKING STATEMENTS](index=3&type=section&id=FORWARD-LOOKING%20STATEMENTS) This section provides a standard forward-looking statement disclaimer, highlighting inherent uncertainties and risks, including the proposed merger with Toyota Tsusho America, Inc. (TAI) and various operational, market, and financial risks - Forward-looking statements 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[10](index=10&type=chunk) - Key risks include the proposed Merger with Toyota Tsusho America, Inc. (TAI), the impact of equipment upgrades/failures, realization of insurance recoveries, the Company's outlook, growth initiatives, pricing, margins, volumes, profitability, acquisitions, technology investments, sanctions, tariffs, supply chain disruptions, inflation, rising interest rates, liquidity positions, ability to generate cash, market trends, strategic direction, tax rates, pandemics, labor shortages, and environmental compliance[9](index=9&type=chunk)[11](index=11&type=chunk)[12](index=12&type=chunk) [PART I. FINANCIAL INFORMATION](index=6&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements (Unaudited)](index=6&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents unaudited condensed consolidated financial statements, including balance sheets, statements of operations, comprehensive income (loss), equity, and cash flows, providing a snapshot of the Company's financial position and performance [Unaudited Condensed Consolidated Balance Sheets](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheet Highlights (in thousands) | Metric | February 28, 2025 | August 31, 2024 | Change (%) | | :-------------------------------- | :------------------ | :---------------- | :--------- | | Total Assets | $1,458,183 | $1,533,769 | -5.06% | | Total Liabilities | $913,179 | $908,029 | +0.57% | | Total Equity | $545,004 | $625,740 | -12.90% | | Cash and cash equivalents | $5,437 | $5,552 | -2.07% | | Accounts receivable, net | $216,365 | $258,157 | -16.27% | | Inventories | $281,757 | $293,932 | -4.00% | | Long-term debt, net of current maturities | $424,424 | $409,082 | +3.75% | [Unaudited Condensed Consolidated Statements of Operations](index=7&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations) Condensed Consolidated Statements of Operations Highlights (in thousands, except per share amounts) | Metric | 3 Months Ended Feb 28, 2025 | 3 Months Ended Feb 29, 2024 | Change (YoY) | 6 Months Ended Feb 28, 2025 | 6 Months Ended Feb 29, 2024 | Change (YoY) | | :------------------------------------------ | :-------------------------- | :-------------------------- | :----------- | :-------------------------- | :-------------------------- | :----------- | | Revenues | $642,508 | $621,059 | +3.45% | $1,299,045 | $1,293,956 | +0.39% | | Operating income (loss) | $(28,680) | $(26,718) | +7.34% | $(53,592) | $(49,705) | +7.82% | | Net income (loss) attributable to Radius shareholders | $(32,977) | $(33,979) | -2.95% | $(70,150) | $(51,943) | +35.06% | | Diluted Income (loss) per share | $(1.15) | $(1.19) | -3.36% | $(2.45) | $(1.83) | +33.88% | [Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss)](index=8&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) Condensed Consolidated Statements of Comprehensive Income (Loss) Highlights (in thousands) | Metric | 3 Months Ended Feb 28, 2025 | 3 Months Ended Feb 29, 2024 | Change (YoY) | 6 Months Ended Feb 28, 2025 | 6 Months Ended Feb 29, 2024 | Change (YoY) | | :---------------------------------------------------- | :-------------------------- | :-------------------------- | :----------- | :-------------------------- | :-------------------------- | :----------- | | Net income (loss) | $(32,965) | $(34,010) | -3.07% | $(69,894) | $(51,808) | +34.91% | | Total other comprehensive income (loss), net of tax | $(1,827) | $418 | -537.08% | $(3,359) | $(1) | +335800.00% | | Comprehensive income (loss) attributable to Radius shareholders | $(34,804) | $(33,561) | +3.69% | $(73,509) | $(51,944) | +41.52% | [Unaudited Condensed Consolidated Statements of Equity](index=9&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Equity) Condensed Consolidated Statements of Equity Highlights (in thousands) | Metric | Feb 28, 2025 | Dec 1, 2024 | Change | | :-------------------------------- | :----------- | :---------- | :----- | | Total Radius shareholders' equity | $542,716 | $580,430 | -6.50% | | Retained earnings | $525,365 | $563,770 | -6.81% | | Additional paid-in capital | $32,682 | $30,209 | +8.19% | | Class A common stock shares | 28,000 | 27,955 | +0.16% | Condensed Consolidated Statements of Equity Highlights (Six Months Ended, in thousands) | Metric | Feb 28, 2025 | Sep 1, 2024 | Change | | :-------------------------------- | :----------- | :---------- | :----- | | Total Radius shareholders' equity | $542,716 | $623,112 | -12.90% | | Retained earnings | $525,365 | $606,417 | -13.37% | | Additional paid-in capital | $32,682 | $28,828 | +13.37% | | Class A common stock shares | 28,000 | 27,839 | +0.58% | [Unaudited Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Condensed Consolidated Statements of Cash Flows Highlights (Six Months Ended, in thousands) | Metric | Feb 28, 2025 | Feb 29, 2024 | Change (YoY) | | :------------------------------------------ | :----------- | :----------- | :----------- | | Net cash provided by (used in) operating activities | $18,049 | $(56,393) | +132.00% | | Net cash used in investing activities | $(18,908) | $(43,658) | -56.68% | | Net cash provided by (used in) financing activities | $762 | $107,596 | -99.29% | | Net change in cash and cash equivalents | $(115) | $7,530 | -101.53% | | Cash and cash equivalents as of end of period | $5,437 | $13,562 | -59.93% | [Notes to the Unaudited Condensed Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20the%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) [Note 1 - Summary of Significant Accounting Policies](index=14&type=section&id=Note%201%20-%20Summary%20of%20Significant%20Accounting%20Policies) This note details the basis of financial statement presentation, segment reporting, and key accounting policies, including the subsequent merger with TAI and accounting for involuntary events and credit risk - The Company operates as a single operating and reportable segment, acquiring and recycling ferrous and nonferrous scrap metal, procuring salvaged vehicles, selling used auto parts, and producing finished steel long products[38](index=38&type=chunk)[39](index=39&type=chunk) - On March 13, 2025, the Company entered into a Merger Agreement with Toyota Tsusho America, Inc. (TAI), under which the Company will become a wholly-owned subsidiary of TAI; this merger is further detailed in Note 13[40](index=40&type=chunk) - Receivables from insurers for environmental claims, workers' compensation, and third-party claims totaled **$15 million** as of February 28, 2025, and August 31, 2024, including **$13 million** relating to environmental claims[48](index=48&type=chunk) - The FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses, effective for fiscal 2028, requiring additional expense disclosures; the Company does not expect a material impact on its consolidated financial statements[56](index=56&type=chunk) [Note 2 - Inventories](index=18&type=section&id=Note%202%20-%20Inventories) This note breaks down inventory components, including scrap metal, semi-finished goods, finished goods, and supplies, showing a slight decrease in total inventories from August 31, 2024, to February 28, 2025 Inventories (in thousands) | Category | February 28, 2025 | August 31, 2024 | | :-------------------------- | :------------------ | :---------------- | | Processed and unprocessed scrap metal | $131,376 | $137,013 | | Semi-finished goods | $16,085 | $14,846 | | Finished goods | $62,015 | $72,225 | | Supplies | $72,281 | $69,848 | | **Total Inventories** | **$281,757** | **$293,932** | [Note 3 - Goodwill](index=18&type=section&id=Note%203%20-%20Goodwill) The Company's goodwill balance remained stable at **$13 million**, allocated to one reporting unit, with no impairment charges recorded during the first half of fiscal 2025 - Goodwill balance remained **$13 million** as of both February 28, 2025, and August 31, 2024, allocated to one recycling services reporting unit[58](index=58&type=chunk) - No triggering events for impairment were identified, and no goodwill impairment charges were recorded in the first half of fiscal 2025[58](index=58&type=chunk) [Note 4 - Commitments and Contingencies](index=18&type=section&id=Note%204%20-%20Commitments%20and%20Contingencies) This note details environmental liabilities, primarily for the Portland Harbor Superfund site and other legacy contamination totaling **$65 million**, alongside other legal proceedings including a criminal indictment related to an Oakland facility fire Environmental Liabilities (in thousands) | Metric | September 1, 2024 | Established (Released), Net | Payments and Other | February 28, 2025 | | :---------------- | :------------------ | :-------------------------- | :----------------- | :---------------- | | Total Liabilities | $65,649 | $309 | $(1,080) | $64,878 | | Short-Term | | | | $12,706 | | Long-Term | | | | $52,172 | - The Company's environmental liabilities include **$5 million** relating to the Portland Harbor Superfund site, where the EPA estimated a total remedy cost of **$1.7 billion** in 2017[72](index=72&type=chunk)[65](index=65&type=chunk) - The Company is proceeding with early settlements for natural resource damages at Portland Harbor, with an environmental reserve of approximately **$2 million** and a corresponding receivable[73](index=73&type=chunk) - The Company faces a criminal indictment for alleged felony and misdemeanor environmental regulatory violations related to an August 2023 scrap metal fire at its Oakland, CA facility, which it intends to vigorously defend[88](index=88&type=chunk) [Note 5 - Accumulated Other Comprehensive Income (Loss)](index=27&type=section&id=Note%205%20-%20Accumulated%20Other%20Comprehensive%20Income%20(Loss)) This note details changes in accumulated other comprehensive income (loss), net of tax, for the three and six months ended February 28, 2025, showing a total comprehensive loss attributable to Radius shareholders of **$(43.5 million)** Accumulated Other Comprehensive Income (Loss) (in thousands) | Metric | Feb 28, 2025 | Sep 1, 2024 | Change | | :-------------------------------- | :----------- | :---------- | :----- | | Balances (End of period) | $(43,531) | $(40,172) | +8.36% | | Foreign currency translation adjustments (6M) | $(3,955) | N/A | N/A | | Cash flow hedges, net (6M) | $703 | N/A | N/A | | Pension obligations, net (6M) | $(107) | N/A | N/A | [Note 6 - Revenue](index=28&type=section&id=Note%206%20-%20Revenue) This note disaggregates the Company's revenues by major product categories and sales destination, showing total revenues of **$1.3 billion** for the six months ended February 28, 2025, with nonferrous revenues increasing by **8%** Revenues by Major Product (in thousands) | Product Category | 3 Months Ended Feb 28, 2025 | 3 Months Ended Feb 29, 2024 | Change (YoY) | 6 Months Ended Feb 28, 2025 | 6 Months Ended Feb 29, 2024 | Change (YoY) | | :----------------------- | :-------------------------- | :-------------------------- | :----------- | :-------------------------- | :-------------------------- | :----------- | | Ferrous revenues | $318,955 | $316,097 | +0.90% | $646,059 | $664,994 | -2.85% | | Nonferrous revenues | $179,012 | $164,481 | +8.83% | $361,061 | $333,775 | +8.17% | | Steel revenues | $104,114 | $100,721 | +3.37% | $205,965 | $214,252 | -3.87% | | Retail and other revenues | $40,427 | $39,760 | +1.68% | $85,960 | $80,935 | +6.21% | | **Total revenues** | **$642,508** | **$621,059** | **+3.45%** | **$1,299,045** | **$1,293,956** | **+0.39%** | Revenues by Sales Destination (in thousands) | Destination | 3 Months Ended Feb 28, 2025 | 3 Months Ended Feb 29, 2024 | Change (YoY) | 6 Months Ended Feb 28, 2025 | 6 Months Ended Feb 29, 2024 | Change (YoY) | | :---------- | :-------------------------- | :-------------------------- | :----------- | :-------------------------- | :-------------------------- | :----------- | | Foreign | $336,707 | $328,259 | +2.57% | $691,557 | $686,280 | +0.77% | | Domestic | $305,801 | $292,800 | +4.44% | $607,488 | $607,676 | -0.03% | | **Total revenues** | **$642,508** | **$621,059** | **+3.45%** | **$1,299,045** | **$1,293,956** | **+0.39%** | - Contract liabilities, primarily customer deposits for recycled metal and finished steel sales, totaled **$13 million** as of February 28, 2025, up from **$10 million** as of August 31, 2024[96](index=96&type=chunk) [Note 7 - Share-Based Compensation](index=29&type=section&id=Note%207%20-%20Share-Based%20Compensation) This note details share-based compensation granted in fiscal 2025, including RSUs, PSUs tied to TSR and volume growth, and DSUs for non-employee directors, outlining their fair values and vesting conditions - In Q1 fiscal 2025, **446,993 RSUs** and **340,454 PSUs** were granted to key employees and officers under the 2024 Omnibus Incentive Plan[97](index=97&type=chunk) - The aggregate fair value of RSUs granted was **$9 million**, with vesting over three or five years[98](index=98&type=chunk) - PSUs are split between relative TSR and volume growth metrics, with an estimated aggregate fair value of **$3 million** for each type of award[99](index=99&type=chunk)[100](index=100&type=chunk)[101](index=101&type=chunk) - In Q2 fiscal 2025, **57,642 DSUs** were granted to non-employee directors, with a total fair value of **$1 million**, vesting on the day before the Company's 2025 annual meeting[106](index=106&type=chunk) [Note 8 - Derivative Financial Instruments](index=31&type=section&id=Note%208%20-%20Derivative%20Financial%20Instruments) The Company uses pay-fixed interest rate swaps as cash flow hedges to manage interest rate risk on its variable-rate debt, with a total notional amount of **$150 million** maturing in August 2026 - The Company uses pay-fixed interest rate swap transactions, designated as cash flow hedges, to manage variability in interest cash flows associated with variable-rate loans under its bank revolving credit facilities[108](index=108&type=chunk) - The total notional amount of these interest rate swaps was **$150 million** as of February 28, 2025, and August 31, 2024, with contracts maturing in August 2026[108](index=108&type=chunk) Fair Value of Derivative Instruments (in thousands) | Balance Sheet Location | February 28, 2025 | August 31, 2024 | | :----------------------- | :------------------ | :---------------- | | Interest rate swap contracts (Other accrued liabilities) | $506 | $174 | | Interest rate swap contracts (Other long-term liabilities) | $428 | $1,667 | [Note 9 - Income Taxes](index=31&type=section&id=Note%209%20-%20Income%20Taxes) The effective tax rate from continuing operations for Q2 fiscal 2025 was an **11.5% benefit** on pre-tax loss, primarily due to an increased valuation allowance against deferred tax assets in the U.S. tax jurisdiction - The effective tax rate from continuing operations for Q2 fiscal 2025 was an **11.5% benefit** on pre-tax loss, compared to a **3.6% expense** on pre-tax loss in the comparable prior year quarter[110](index=110&type=chunk) - The lower effective tax rate in Q2 fiscal 2025 was primarily due to the aggregate effect of the Company's financial performance, including an increase in the valuation allowance against deferred tax assets in the U.S. tax jurisdiction[110](index=110&type=chunk) - The Company continues to maintain a valuation allowance against its deferred tax assets in the U.S. federal, state, and foreign tax jurisdictions[113](index=113&type=chunk) [Note 10 - Net Income (Loss) Per Share](index=33&type=section&id=Note%2010%20-%20Net%20Income%20(Loss)%20Per%20Share) This note provides the computation for basic and diluted net income (loss) per share attributable to Radius shareholders, showing a diluted loss per share of **$(1.15)** for the three months ended February 28, 2025 Net Income (Loss) Per Share Attributable to Radius Shareholders (in thousands, except per share amounts) | Metric | 3 Months Ended Feb 28, 2025 | 3 Months Ended Feb 29, 2024 | 6 Months Ended Feb 28, 2025 | 6 Months Ended Feb 29, 2024 | | :---------------------------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Income (loss) from continuing operations attributable to Radius shareholders | $(32,977) | $(33,948) | $(70,150) | $(51,910) | | Diluted Income (loss) per share from continuing operations | $(1.15) | $(1.19) | $(2.45) | $(1.83) | | Weighted average common shares outstanding, diluted | 28,684 | 28,454 | 28,628 | 28,337 | [Note 11 - Related Party Transactions](index=33&type=section&id=Note%2011%20-%20Related%20Party%20Transactions) The Company purchased recycled metal from a joint venture, with transactions totaling **$4 million** for the three months and **$8 million** for the six months ended February 28, 2025 Purchases from Joint Ventures (in thousands) | Period | Feb 28, 2025 | Feb 29, 2024 | | :-------------------- | :----------- | :----------- | | Three Months Ended | $4,000 | $5,000 | | Six Months Ended | $8,000 | $9,000 | [Note 12 - Debt](index=33&type=section&id=Note%2012%20-%20Debt) This note details the Company's debt, primarily bank revolving credit facilities totaling **$410 million** as of February 28, 2025, and its compliance with amended financial covenants Debt Composition (in thousands) | Category | February 28, 2025 | August 31, 2024 | | :-------------------------------- | :------------------ | :---------------- | | Bank revolving credit facilities | $410,000 | $393,612 | | Finance lease liabilities | $7,815 | $9,042 | | Other debt obligations | $12,089 | $12,116 | | **Total debt** | **$429,904** | **$414,770** | | Less current maturities | $(5,480) | $(5,688) | | **Debt, net of current maturities** | **$424,424** | **$409,082** | - The Company's senior secured revolving credit facilities provide for **$800 million** and **C$15 million** in revolving loans maturing in August 2027[119](index=119&type=chunk) - The Fifth Amendment to the credit agreement extended the temporary replacement of the maintenance covenant (fixed charge coverage ratio) with a minimum consolidated interest coverage ratio (**1.25 to 1.00**) and a minimum consolidated asset coverage ratio (**1.00 to 1.00**) through August 31, 2025[119](index=119&type=chunk)[122](index=122&type=chunk) - As of February 28, 2025, the Company was in compliance with all applicable financial covenants: interest coverage ratio was **1.56:1.00** (required **1.25:1.00**), asset coverage ratio was **1.17:1.00** (required **1.00:1.00**), and leverage ratio was **0.44:1.00** (required no more than **0.55:1.00**)[183](index=183&type=chunk) [Note 13 - Subsequent Events](index=35&type=section&id=Note%2013%20-%20Subsequent%20Events) On March 13, 2025, the Company entered into a Merger Agreement with Toyota Tsusho America, Inc. (TAI) for acquisition at **$30.00 per share** in cash, with closing expected in the second half of calendar year 2025 - On March 13, 2025, the Company entered into a Merger Agreement with TAI, where Merger Sub will merge into the Company, making it a wholly-owned subsidiary of TAI[124](index=124&type=chunk) - Each share of Radius Common Stock will be converted into the right to receive **$30.00** in cash (Merger Consideration), without interest and less applicable withholding taxes[127](index=127&type=chunk) - The merger is subject to customary closing conditions, including shareholder adoption, regulatory approvals (e.g., CFIUS), and compliance with covenants; it is expected to close in the second half of calendar year 2025[130](index=130&type=chunk)[131](index=131&type=chunk) - Upon termination of the Merger Agreement under certain specified circumstances, the Company may be required to pay TAI a termination fee of **$27.2 million**[132](index=132&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=38&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the Company's financial condition and results of operations for the three and six months ended February 28, 2025, covering business overview, financial highlights, and analysis of performance, liquidity, and capital resources [General Business Overview](index=38&type=section&id=General) This section provides a general overview of Radius Recycling, Inc.'s business operations as a major recycler of ferrous and nonferrous metal and a manufacturer of finished steel products - Radius Recycling, Inc. is one of North America's largest recyclers of ferrous and nonferrous metal and a manufacturer of finished steel products, operating **50** retail self-service auto parts stores and **53** metals recycling facilities[135](index=135&type=chunk) - The Company's results of operations depend on demand and prices for recycled metal and finished steel, supply of raw materials, operating leverage from processing higher volumes, and efficient metal extraction[140](index=140&type=chunk) - Quarterly operating results fluctuate due to market conditions, scrap metal supply, demand for used auto parts, supply chain efficiency, operating costs, seasonal changes, and trade actions (tariffs, sanctions)[141](index=141&type=chunk) [Merger with TAI](index=39&type=section&id=Merger%20with%20TAI) This section provides an overview of the Company's pending merger with Toyota Tsusho America, Inc. (TAI), including the acquisition price and expected closing timeline - On March 13, 2025, the Company entered into a Merger Agreement with Toyota Tsusho America, Inc. (TAI) to be acquired for **$30.00 per share** in cash[142](index=142&type=chunk) - The transaction has been unanimously approved by the Company's Board of Directors and is expected to close in the second half of calendar year 2025, subject to customary closing conditions[142](index=142&type=chunk) [Everett Facility Shredder Fire](index=39&type=section&id=Everett%20Facility%20Shredder%20Fire) This section confirms the full resolution of the December 2021 fire at the Everett, Massachusetts metals recycling facility, with all insurance proceeds and recovery gains recognized in fiscal 2024 - The December 2021 fire at the Everett, Massachusetts metals recycling facility, which caused physical damage to the shredder building and equipment, was fully resolved in fiscal 2024[143](index=143&type=chunk) - All insurance proceeds and recovery gains related to the property damage and business income losses from the fire were received and recognized as of August 31, 2024[143](index=143&type=chunk) [Use of Non-GAAP Financial Measures](index=39&type=section&id=Use%20of%20Non-GAAP%20Financial%20Measures) This section explains the Company's use of supplemental non-GAAP financial measures, such as Adjusted EBITDA, to provide a meaningful presentation of its operating and financial performance - The Company uses supplemental non-GAAP financial measures, such as Adjusted EBITDA, to provide a meaningful presentation of its operating and financial performance, liquidity, and capital structure[146](index=146&type=chunk) - Adjusted EBITDA is defined as net income before discontinued operations, interest expense, income taxes, depreciation and amortization, restructuring charges, legacy environmental matters (net of recoveries), cloud computing amortization, asset impairment, business development costs, and other non-operational items[146](index=146&type=chunk) [Financial Highlights of Results of Operations for the Second Quarter of Fiscal 2025](index=42&type=section&id=Financial%20Highlights%20of%20Results%20of%20Operations%20for%20the%20Second%20Quarter%20of%20Fiscal%202025) This section highlights the Company's financial performance for Q2 fiscal 2025, noting impacts from softer market conditions for recycled ferrous metal and finished steel, alongside stronger nonferrous demand - Financial performance in Q2 fiscal 2025 was impacted by softer market conditions for recycled ferrous metal and finished steel, leading to lower average net selling prices and compression of metal spreads[151](index=151&type=chunk) - Stronger nonferrous global demand led to higher average net selling prices for nonferrous products in Q2 fiscal 2025 compared to the prior year quarter[151](index=151&type=chunk) Key Financial Highlights (Q2 Fiscal 2025 vs. Prior Year Quarter) | Metric | Q2 FY25 | Q2 FY24 | Change | | :---------------------------------------------------- | :------ | :------ | :----- | | Diluted loss per share from continuing operations | $(1.15) | $(1.19) | -3.36% | | Adjusted diluted loss per share from continuing operations | $(0.99) | $(1.04) | -4.81% | | Net loss | $33M | $34M | -2.94% | | Adjusted EBITDA | Break-even | $3M | NM | | Net cash provided by operating activities (6M) | $18M | $(56)M | +132.14% | | Debt, net of cash | $424M | $409M | +3.67% | [Results of Operations](index=43&type=section&id=Results%20of%20Operations) [Revenues](index=44&type=section&id=Revenues) Revenues increased **3%** in Q2 fiscal 2025, driven by stronger nonferrous demand and higher ferrous sales volumes, despite decreased average net selling prices for ferrous products and finished steel Revenue and Volume Performance (YoY Change) | Metric | Q2 FY25 vs Q2 FY24 | 6M FY25 vs 6M FY24 | | :-------------------------------- | :----------------- | :----------------- | | Total revenues | +3% | 0% | | Average net selling prices (Ferrous) | -14% | -9% | | Average net selling prices (Nonferrous) | +10% | +10% | | Average net selling prices (Finished steel) | -9% | -8% | | Ferrous sales volumes | +12% | +3% | | Finished steel sales volumes | +15% | +5% | [Operating Performance](index=44&type=section&id=Operating%20Performance) Net loss improved slightly in Q2 fiscal 2025 but worsened for the six-month period, impacted by decreased ferrous metal spreads and lower finished steel contribution, partially offset by **12%** SG&A expense reduction Operating Performance Highlights (in millions) | Metric | Q2 FY25 | Q2 FY24 | Change (YoY) | 6M FY25 | 6M FY24 | Change (YoY) | | :-------------------- | :------ | :------ | :----------- | :------ | :------ | :----------- | | Net loss | $33 | $34 | -2.94% | $70 | $52 | +34.62% | | Adjusted EBITDA | $0 | $3 | NM | $0 | $4 | NM | | SG&A expense | $54.9 | $62.2 | -11.6% | $111.6 | $125.3 | -10.8% | - Ferrous metal spreads decreased due to lower average net selling prices for ferrous products[162](index=162&type=chunk) - The Company recognized a **$3 million** gain on the sale of certain real property assets in Q2 and first six months of fiscal 2025[162](index=162&type=chunk) - The prior year quarter and first six months included non-recurring insurance recovery gains of **$2 million** and **$6 million**, respectively, related to the Everett Facility shredder fire[162](index=162&type=chunk) [Interest Expense](index=44&type=section&id=Interest%20Expense) Interest expense increased significantly in Q2 and the first six months of fiscal 2025, primarily due to increased average borrowings and higher interest rates on bank credit facilities Interest Expense (in millions) | Period | FY25 | FY24 | Change (YoY) | | :-------------------- | :--- | :--- | :----------- | | Three Months Ended | $9 | $6 | +50.00% | | Six Months Ended | $18 | $11 | +63.64% | - The increase in interest expense was primarily due to increased average borrowings and higher interest rates on amounts outstanding under the bank credit facilities[165](index=165&type=chunk) [Income Tax](index=44&type=section&id=Income%20Tax) The effective tax rate from continuing operations for Q2 fiscal 2025 was an **11.5% benefit** on pre-tax loss, primarily due to an increased valuation allowance against deferred tax assets in the U.S. tax jurisdiction Effective Tax Rate from Continuing Operations | Period | FY25 | FY24 | | :-------------------- | :----- | :----- | | Three Months Ended | 11.5% benefit | 3.6% expense | | Six Months Ended | 0.7% benefit | 14.8% benefit | - The effective tax rate for Q2 fiscal 2025 was lower than the U.S. federal statutory rate of **21%** primarily due to an increase in the Company's valuation allowance against deferred tax assets in the U.S. tax jurisdiction[166](index=166&type=chunk) [Liquidity and Capital Resources](index=44&type=section&id=Liquidity%20and%20Capital%20Resources) [Sources and Uses of Cash](index=46&type=section&id=Sources%20and%20Uses%20of%20Cash) The Company relies on operating cash, current cash, and credit facilities for liquidity, with debt, net of cash, increasing to **$424 million** as of February 28, 2025, primarily due to increased borrowings Debt and Cash Balances (in millions) | Metric | Feb 28, 2025 | Aug 31, 2024 | Change | | :---------------- | :----------- | :----------- | :----- | | Cash balances | $5 | $6 | -16.67% | | Total Debt | $430 | $415 | +3.61% | | Debt, net of cash | $424 | $409 | +3.67% | - The increase in debt was primarily due to increased borrowings from credit facilities, mainly to fund working capital needs and capital expenditures[169](index=169&type=chunk) [Operating Activities](index=46&type=section&id=Operating%20Activities) Net cash provided by operating activities significantly improved to **$18 million** for the first six months of fiscal 2025, driven by decreases in accounts receivable and inventories Net Cash from Operating Activities (Six Months Ended, in millions) | Period | FY25 | FY24 | Change (YoY) | | :-------------------- | :--- | :--- | :----------- | | Net cash provided by (used in) operating activities | $18 | $(56) | +132.14% | | Decrease in accounts receivable | $33 | N/A | N/A | | Decrease in inventories | $19 | N/A | N/A | | Decrease in accounts payable | $(6) | N/A | N/A | [Investing Activities](index=46&type=section&id=Investing%20Activities) Net cash used in investing activities decreased to **$19 million** for the first six months of fiscal 2025, primarily due to lower capital expenditures Net Cash Used in Investing Activities (Six Months Ended, in millions) | Period | FY25 | FY24 | Change (YoY) | | :-------------------- | :--- | :--- | :----------- | | Net cash used in investing activities | $(19) | $(44) | -56.82% | | Capital expenditures | $(23) | $(40) | -42.50% | [Financing Activities](index=46&type=section&id=Financing%20Activities) Net cash provided by financing activities significantly decreased to **$1 million** for the first six months of fiscal 2025, mainly due to lower net borrowings of debt Net Cash from Financing Activities (Six Months Ended, in millions) | Period | FY25 | FY24 | Change (YoY) | | :-------------------- | :--- | :--- | :----------- | | Net cash provided by (used in) financing activities | $1 | $108 | -99.07% | | Net borrowings of debt | $15 | $124 | -87.90% | | Dividends paid | $11 | $11 | 0.00% | [Debt](index=46&type=section&id=Debt) The Company's senior secured revolving credit facilities provide **$800 million** and **C$15 million** in revolving loans, with compliance maintained for all financial covenants as of February 28, 2025 - Senior secured revolving credit facilities provide for **$800 million** and **C$15 million** in revolving loans, maturing in August 2027[177](index=177&type=chunk) - The Fifth Amendment to the credit agreement extended the temporary replacement of the fixed charge coverage ratio covenant through August 31, 2025[177](index=177&type=chunk) - Borrowings outstanding under credit facilities were **$410 million** as of February 28, 2025, with a weighted average interest rate of **6.9%**[181](index=181&type=chunk) - As of February 28, 2025, the Company was in compliance with financial covenants: consolidated interest coverage ratio was **1.56:1.00** (required **1.25:1.00**), consolidated asset coverage ratio was **1.17:1.00** (required **1.00:1.00**), and consolidated leverage ratio was **0.44:1.00** (required no more than **0.55:1.00**)[183](index=183&type=chunk) [Capital Expenditures](index=48&type=section&id=Capital%20Expenditures) Capital expenditures totaled **$23 million** for the first six months of fiscal 2025, with a full-year plan of approximately **$60 million** for growth, equipment upgrades, and IT systems Capital Expenditures (in millions) | Period | FY25 | FY24 | | :-------------------- | :--- | :--- | | Six Months Ended | $23 | $40 | | Fiscal Year 2025 Plan | ~$60 | N/A | - Planned capital expenditures for fiscal 2025 include investments in growth (new nonferrous processing technologies), equipment upgrades, IT systems, and environmental/safety-related assets[187](index=187&type=chunk) [Environmental Compliance](index=48&type=section&id=Environmental%20Compliance) The Company plans to invest approximately **$20 million** in fiscal 2025 environmental projects, with potential significant cash outflows related to legacy environmental loss contingencies Environmental Capital Expenditures (in millions) | Period | FY25 | FY24 | | :-------------------- | :--- | :--- | | Six Months Ended | $6 | N/A | | Fiscal Year 2025 Plan | ~$20 | N/A | - Significant cash outflows in the future related to Portland Harbor and other legacy environmental loss contingencies could reduce available borrowing amounts and potentially impact compliance with debt covenants[189](index=189&type=chunk) [Dividends](index=48&type=section&id=Dividends) On January 7, 2025, the Board declared a dividend of **$0.1875 per common share** for Q2 fiscal 2025, representing an annual cash dividend of **$0.75 per common share** - A dividend of **$0.1875 per common share** was declared for Q2 fiscal 2025, paid on February 18, 2025, representing an annual cash dividend of **$0.75 per common share**[190](index=190&type=chunk) [Share Repurchase Program](index=48&type=section&id=Share%20Repurchase%20Program) As of February 28, 2025, the Company had authorization to repurchase up to **2.8 million shares** of Class A common stock, but repurchases are restricted under the Merger Agreement - As of February 28, 2025, the Company had remaining authorization to repurchase up to **2.8 million shares** of Class A common stock[191](index=191&type=chunk) - Share repurchases are restricted under the terms of the Merger Agreement, and none are anticipated during the pendency of the Merger[191](index=191&type=chunk) [Assessment of Liquidity and Capital Resources](index=48&type=section&id=Assessment%20of%20Liquidity%20and%20Capital%20Resources) The Company believes its current cash, internally generated funds, existing credit facilities, and access to capital markets will provide adequate liquidity, though adverse market conditions could necessitate additional funding - The Company believes its current cash resources, internally generated funds, existing credit facilities, and access to capital markets will provide adequate short-term and long-term liquidity for various needs[194](index=194&type=chunk) - In the event market conditions fail to improve or other negative factors occur, the Company may need additional liquidity, which may not be obtainable or on acceptable terms[194](index=194&type=chunk) [Contractual Obligations](index=49&type=section&id=Contractual%20Obligations) No material changes to contractual obligations and commitments were reported since the Annual Report on Form 10-K for fiscal year ended August 31, 2024, with **$7 million** outstanding under stand-by letters of credit - No material changes to contractual obligations and commitments were reported since the Annual Report on Form 10-K for fiscal year ended August 31, 2024[195](index=195&type=chunk) - As of February 28, 2025, the Company had **$7 million** outstanding under stand-by letters of credit[195](index=195&type=chunk) [Critical Accounting Estimates](index=49&type=section&id=Critical%20Accounting%20Estimates) No material changes to critical accounting estimates were reported since the Annual Report on Form 10-K for fiscal year ended August 31, 2024 - No material changes to critical accounting estimates were reported since the Annual Report on Form 10-K for fiscal year ended August 31, 2024[196](index=196&type=chunk) [Recently Issued Accounting Standards](index=49&type=section&id=Recently%20Issued%20Accounting%20Standards) For a description of recent accounting pronouncements, refer to "Recent Accounting Pronouncements" in Note 1 - Summary of Significant Accounting Policies - For a description of recent accounting pronouncements, refer to "Recent Accounting Pronouncements" in Note 1 - Summary of Significant Accounting Policies[197](index=197&type=chunk) [Non-GAAP Financial Measures Reconciliations](index=49&type=section&id=Non-GAAP%20Financial%20Measures) This section provides detailed reconciliations for non-GAAP financial measures, including Debt, net of cash, Adjusted EBITDA, and Adjusted diluted (loss) earnings per share, offering a clearer view of operational performance Debt, net of cash (in thousands) | Metric | February 28, 2025 | August 31, 2024 | | :-------------------------- | :------------------ | :---------------- | | Short-term borrowings | $5,480 | $5,688 | | Long-term debt, net of current maturities | $424,424 | $409,082 | | Total debt | $429,904 | $414,770 | | Less cash and cash equivalents | $5,437 | $5,552 | | **Total debt, net of cash** | **$424,467** | **$409,218** | Net borrowings (repayments) of debt (in thousands) | Metric | Six Months Ended Feb 28, 2025 | Six Months Ended Feb 29, 2024 | | :-------------------------- | :---------------------------- | :---------------------------- | | Borrowings from long-term debt | $388,747 | $389,692 | | Repayments of long-term debt | $(373,432) | $(265,910) | | **Net borrowings (repayments) of debt** | **$15,315** | **$123,782** | Adjusted EBITDA (in thousands) | Metric | 3 Months Ended Feb 28, 2025 | 3 Months Ended Feb 29, 2024 | 6 Months Ended Feb 28, 2025 | 6 Months Ended Feb 29, 2024 | | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net income (loss) | $(32,965) | $(34,010) | $(69,894) | $(51,808) | | Interest expense | $8,771 | $5,803 | $17,633 | $10,613 | | Income tax expense (benefit) | $(4,277) | $1,195 | $(486) | $(8,975) | | Depreciation and amortization | $24,032 | $24,311 | $48,066 | $47,782 | | Business development costs | $2,541 | $140 | $2,551 | $230 | | Restructuring charges | $1,422 | $3,175 | $3,319 | $3,210 | | Charges (recoveries) for legacy environmental matters, net | $(244) | $156 | $(2,328) | $479 | | Amortization of cloud computing software costs | $240 | $247 | $503 | $327 | | Asset impairment charges | $0 | $1,748 | $184 | $1,967 | | **Adjusted EBITDA** | **$(480)** | **$2,796** | **$(452)** | **$3,858** | Adjusted Diluted Loss Per Share from Continuing Operations (in thousands, except per share data) | Metric | 3 Months Ended Feb 28, 2025 | 3 Months Ended Feb 29, 2024 | 6 Months Ended Feb 28, 2025 | 6 Months Ended Feb 29, 2024 | | :---------------------------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Income (loss) from continuing operations attributable to Radius shareholders (As reported) | $(32,977) | $(33,948) | $(70,150) | $(51,910) | | Business development costs | $2,541 | $140 | $2,551 | $230 | | Restructuring charges and other exit-related activities | $1,422 | $3,175 | $3,319 | $3,210 | | Charges (recoveries) for legacy environmental matters, net | $(244) | $156 | $(2,328) | $479 | | Asset impairment charges | $0 | $1,748 | $184 | $1,967 | | Income tax expense (benefit) allocated to adjustments | $832 | $(938) | $(103) | $(1,675) | | **Adjusted Income (loss) from continuing operations attributable to Radius shareholders** | **$(28,426)** | **$(29,667)** | **$(66,527)** | **$(47,699)** | | Diluted income (loss) per share from continuing operations (As reported) | $(1.15) | $(1.19) | $(2.45) | $(1.83) | | Business development costs, per share | $0.09 | $0.00 | $0.09 | $0.01 | | Restructuring charges and other exit-related activities, per share | $0.05 | $0.11 | $0.12 | $0.11 | | Charges (recoveries) for legacy environmental matters, net, per share | $(0.01) | $0.01 | $(0.08) | $0.02 | | Asset impairment charges, per share | $0.00 | $0.06 | $0.00 | $0.07 | | Income tax expense (benefit) allocated to adjustments, per share | $0.03 | $(0.03) | $0.00 | $(0.06) | | **Adjusted diluted (loss) earnings per share from continuing operations** | **$(0.99)** | **$(1.04)** | **$(2.32)** | **$(1.68)** | [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=53&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section outlines the Company's exposure to various market risks, including commodity price, interest rate, credit, and foreign currency exchange rate risks, primarily from its Canadian subsidiary's U.S. Dollar denominated sales - The Company is exposed to commodity price risk, mainly associated with variations in market prices for ferrous and nonferrous metals, which it manages by adjusting purchase prices in response to forward selling prices[210](index=210&type=chunk) - Credit risk from customer non-performance is managed through letters of credit, deposits, credit limits, and credit insurance, but reductions in credit insurance availability may increase exposure[212](index=212&type=chunk) - As of February 28, 2025, **17%** of accounts receivable balance was covered by letters of credit, down from **28%** as of August 31, 2024[214](index=214&type=chunk) - Foreign currency exchange rate risk is mainly associated with sales transactions and related accounts receivable denominated in the U.S. Dollar by the Company's Canadian subsidiary[215](index=215&type=chunk) [Item 4. Controls and Procedures](index=54&type=section&id=Item%204.%20Controls%20and%20Procedures) As of February 28, 2025, the Company's management concluded its disclosure controls and procedures were effective, with no material changes in internal control over financial reporting during the quarter - The Company's disclosure controls and procedures were effective at the reasonable assurance level as of February 28, 2025[217](index=217&type=chunk) - There was no change in internal control over financial reporting during the quarter ended February 28, 2025, that materially affected or is reasonably likely to materially affect it[218](index=218&type=chunk) [PART II. OTHER INFORMATION](index=55&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=55&type=section&id=Item%201.%20Legal%20Proceedings) Information regarding reportable legal proceedings is incorporated by reference from Note 4 - Commitments and Contingencies in Part I, Item 1 of this Quarterly Report on Form 10-Q - Information regarding reportable legal proceedings is contained in Note 4 - Commitments and Contingencies in Part I, Item 1 of this Quarterly Report on Form 10-Q[221](index=221&type=chunk) [Item 1A. Risk Factors](index=55&type=section&id=Item%201A.%20Risk%20Factors) This section highlights material changes to existing risk factors and new risks, focusing on adverse effects of changing global market conditions on international sales and significant risks related to the pending merger with TAI - Changing global market conditions, including sanctions, tariffs, quotas, and import restrictions, may adversely affect operating results, financial condition, and cash flows, especially given that **54% to 61%** of ferrous and **56% to 57%** of nonferrous sales volumes are exports[222](index=222&type=chunk) - The pending merger with TAI introduces risks such as potential non-completion, a **$27.2 million** termination fee, negative publicity, a decline in investor confidence, adverse impacts to relationships with employees, customers, and suppliers, and the diversion of management's attention[229](index=229&type=chunk)[230](index=230&type=chunk)[234](index=234&type=chunk) - Restrictions on business activities while the Merger Agreement is in effect could prevent the Company from pursuing strategic business opportunities or responding effectively to competitive pressures[232](index=232&type=chunk) - If the merger is completed, shareholders will forgo the opportunity to realize the potential long-term value of the successful execution of the Company's current strategy as an independent company[239](index=239&type=chunk) [Item 5. Other Information](index=58&type=section&id=Item%205.%20Other%20Information) During the three months ended February 28, 2025, no directors or officers adopted, terminated, or modified Rule 10b5-1 or non-Rule 10b5-1 trading arrangements - No directors or officers adopted, terminated, or modified Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the three months ended February 28, 2025[240](index=240&type=chunk) [Item 6. Exhibits](index=59&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including the Agreement and Plan of Merger with Toyota Tsusho America, Inc., and the Fifth Amendment to the Credit Agreement - Exhibit 2.1: Agreement and Plan of Merger, dated as of March 13, 2025, by and among Radius Recycling, Inc., Toyota Tsusho America, Inc. and TAI Merger Corporation[243](index=243&type=chunk) - Exhibit 10.3: Fifth Amendment, dated as of January 3, 2025, to Third Amended and Restated Credit Agreement[243](index=243&type=chunk) [SIGNATURES](index=60&type=section&id=SIGNATURES) This section contains the signatures of the Chairman, President, Chief Executive Officer, and Senior Vice President and Chief Financial Officer, dated April 4, 2025 - The report was signed on April 4, 2025, by Tamara L. Lundgren, Chairman, President and Chief Executive Officer, and Stefano R. Gaggini, Senior Vice President and Chief Financial Officer[248](index=248&type=chunk)

[Financial Performance](index=1&type=section&id=Financial%20Performance) [Q2 FY2025 Financial Highlights](index=1&type=section&id=Q2%20FY2025%20Financial%20Highlights) Radius Recycling reported a Q2 FY2025 net loss of $33 million, an improvement from prior year, with adjusted EBITDA near break-even Q2 FY2025 vs Q2 FY2024 Key Financials | Metric | Q2 FY2025 | Q2 FY2024 | | :--- | :--- | :--- | | Net Loss | $(33) million | $(34) million | | Loss per Share from Continuing Operations | $(1.15) | $(1.19) | | Adjusted Loss per Share from Continuing Operations | $(0.99) | $(1.04) | | Adjusted EBITDA | Approx. break-even | $3 million | Q2 FY2025 Cash Flow and Debt | Metric | Value | | :--- | :--- | | Operating Cash Flow | $20 million | | Free Cash Flow | $13 million | | Total Debt (end of quarter) | $430 million | | Debt, Net of Cash | $424 million | | Capital Expenditures | $11 million | [Operational Performance Analysis](index=1&type=section&id=Operational%20Performance%20Analysis) Operating performance declined due to lower ferrous and finished steel prices, partially offset by higher volumes and reduced SG&A - Ferrous average net selling prices were **14% lower** year-over-year, compressing metal spreads, however, ferrous sales volumes were **12% higher**, benefiting from a reduction in inventories[5](index=5&type=chunk) - Stronger nonferrous demand led to **10% higher** average net selling prices, while sales volumes were **1% lower** due to the timing of shipments[5](index=5&type=chunk) - Finished steel contribution was lower due to a **9% decline** in average net selling prices, partially offset by **15% higher** sales volumes, with the mill utilization rate increasing to **88%** from **81%** in the prior year's quarter[5](index=5&type=chunk) - Productivity initiatives resulted in a **12% reduction** in consolidated Selling, General, and Administrative (SG&A) costs compared to the prior year quarter[5](index=5&type=chunk) [Corporate Developments](index=2&type=section&id=Corporate%20Developments) [Merger Update](index=2&type=section&id=Merger%20Update) Radius entered a definitive merger agreement with Toyota Tsusho America, Inc. on March 13, 2025, expected to close in H2 2025 - The Company entered into an Agreement and Plan of Merger with Toyota Tsusho America, Inc. (TAI) on March 13, 2025[8](index=8&type=chunk) - Subject to closing conditions, the merger is anticipated to close in the second half of calendar 2025[8](index=8&type=chunk) - As a result of the pending merger, the company will not hold a second quarter earnings conference call[9](index=9&type=chunk) [Declaration of Quarterly Dividend](index=2&type=section&id=Declaration%20of%20Quarterly%20Dividend) The Board declared a quarterly cash dividend of $0.1875 per common share, marking the company's 124th consecutive quarterly payment - The Board of Directors declared a cash dividend of **$0.1875** per common share[7](index=7&type=chunk) - This represents the company's **124th** consecutive quarterly dividend payment[6](index=6&type=chunk) [Detailed Financial Statements](index=2&type=section&id=Detailed%20Financial%20Statements) [Summary Results](index=2&type=section&id=Summary%20Results) This section summarizes key financial and operational metrics, comparing Q2 FY25 with prior periods, including revenues, net income, and product data Q2 FY2025 Performance Summary | Metric | Q2 FY2025 | Q2 FY2024 | | :--- | :--- | :--- | | Revenues | $643M | $621M | | Net loss | $(33)M | $(34)M | | Diluted loss per share | $(1.15) | $(1.19) | | Ferrous sales volumes (LT, thousands) | 1,094 | 980 | | Avg. net ferrous sales prices ($/LT) | $330 | $384 | | Nonferrous sales volumes (lbs, millions) | 174 | 176 | | Avg. nonferrous sales prices ($/pound) | $1.03 | $0.94 | [Condensed Consolidated Statements of Operations](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This statement details revenues, costs, and net income for Q2 FY25, showing revenues of $642.5 million and a net loss of $(33.0) million Statement of Operations (Three Months Ended) | ($ in thousands) | Feb 28, 2025 | Feb 29, 2024 | | :--- | :--- | :--- | | Revenues | $642,508 | $621,059 | | Cost of goods sold | $615,011 | $580,996 | | SG&A expense | $54,943 | $62,160 | | Operating loss | $(28,680) | $(26,718) | | Net loss | $(32,965) | $(34,010) | [Selected Operating Statistics](index=4&type=section&id=Selected%20Operating%20Statistics) This section provides granular operating data for Q2 FY25, including ferrous volumes of 1.094 million long tons and 88% rolling mill utilization Q2 FY2025 Operating Statistics | Metric | Value | | :--- | :--- | | Total ferrous volumes (LT, thousands) | 1,094 | | Average ferrous selling price ($/LT) | $330 | | Total nonferrous volumes (pounds, thousands) | 174,323 | | Average nonferrous price ($/pound) | $1.03 | | Finished steel sales volume (ST, thousands) | 131 | | Rolling mill utilization | 88% | [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet shows total assets decreased to $1.46 billion, total liabilities increased, and total equity was $545.0 million as of February 28, 2025 Balance Sheet Summary ($ in thousands) | Account | Feb 28, 2025 | Aug 31, 2024 | | :--- | :--- | :--- | | Total current assets | $546,161 | $609,127 | | Total assets | $1,458,183 | $1,533,769 | | Total current liabilities | $302,069 | $316,570 | | Total liabilities | $913,179 | $908,029 | | Total equity | $545,004 | $625,740 | [Non-GAAP Financial Measures and Reconciliations](index=6&type=section&id=Non-GAAP%20Financial%20Measures%20and%20Reconciliations) [Explanation of Non-GAAP Measures](index=6&type=section&id=Explanation%20of%20Non-GAAP%20Measures) Management uses non-GAAP measures like adjusted EPS and EBITDA to provide a clearer view of operational performance by excluding non-recurring items - Management uses non-GAAP measures to present results from business operations excluding items not related to underlying performance, such as restructuring charges, legacy environmental matters, and asset impairment charges[27](index=27&type=chunk) - Free cash flow is defined as cash flow from operating activities, net of capital expenditures and proceeds from sales of property, plant, and equipment, and is considered a useful measure of liquidity[27](index=27&type=chunk) [Reconciliations](index=6&type=section&id=Reconciliations) This section provides detailed reconciliations of GAAP to non-GAAP measures, showing Q2 FY25 adjusted loss per share of $(0.99) and adjusted EBITDA of approximately zero Q2 FY2025 Adjusted EPS Reconciliation | Description | Per Share Amount | | :--- | :--- | | As reported loss per share | $(1.15) | | Adjustments (Restructuring, etc.) | $0.16 | | **Adjusted loss per share** | **$(0.99)** | Q2 FY2025 Adjusted EBITDA Reconciliation ($ in millions) | Description | Amount | | :--- | :--- | | Net loss | $(33) | | Adjustments (Interest, Taxes, D&A, etc.) | $33 | | **Adjusted EBITDA** | **$0** | Q2 FY2025 Free Cash Flow Reconciliation ($ in thousands) | Description | Amount | | :--- | :--- | | Cash flow from operating activities | $19,954 | | Capital expenditures | $(11,334) | | Proceeds from sales of PPE | $4,273 | | **Free cash flow** | **$12,893** | [Forward-Looking Statements](index=8&type=section&id=Forward-Looking%20Statements) This section contains forward-looking statements, cautioning that actual results may differ due to risks including the pending TAI merger, economic conditions, and environmental liabilities - Forward-looking statements include information regarding the proposed Merger with TAI, future outlook, pricing, volumes, profitability, and strategic goals[37](index=37&type=chunk) - The completion of the merger is subject to significant risks and uncertainties, including the potential for termination, disruption to business operations, and the need for shareholder and regulatory approvals[40](index=40&type=chunk) - Other major risks include potential environmental cleanup costs, economic cyclicality, inflation, supply chain disruptions, and geopolitical instability[40](index=40&type=chunk)

[Forward-Looking Statements](index=3&type=section&id=FORWARD-LOOKING%20STATEMENTS) [Forward-Looking Statements](index=3&type=section&id=FORWARD-LOOKING%20STATEMENTS) This section contains "safe harbor" statements under the Private Securities Litigation Reform Act of 1995, cautioning that future-looking statements are subject to risks and uncertainties that could cause actual results to differ materially, with no obligation to update these statements - Forward-looking statements cover topics such as the impact of equipment upgrades, pricing, volumes, profitability, acquisitions, supply chain disruptions, inflation, and interest rates[9](index=9&type=chunk) - Key risks that could affect results include environmental cleanup costs (e.g., Portland Harbor), economic cyclicality, inflation, interest rate fluctuations, supply and demand volatility, and cybersecurity incidents[11](index=11&type=chunk) [PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements for the quarterly period ended November 30, 2024, including Balance Sheets, Statements of Operations, Comprehensive Income, Equity, Cash Flows, and notes, reporting a net loss of $36.9 million, a significant increase from the $17.8 million loss in the prior-year period [Unaudited Condensed Consolidated Balance Sheets](index=4&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) The balance sheet as of November 30, 2024, shows a slight decrease in total assets to $1.51 billion from $1.53 billion, an increase in total liabilities to $927.9 million from $908.0 million primarily due to long-term debt, and a decrease in total equity from $625.7 million to $582.9 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | Nov 30, 2024 | Aug 31, 2024 | | :--- | :--- | :--- | | **Total current assets** | $588,264 | $609,127 | | **Total assets** | $1,510,794 | $1,533,769 | | **Total current liabilities** | $291,654 | $316,570 | | **Long-term debt, net** | $439,872 | $409,082 | | **Total liabilities** | $927,887 | $908,029 | | **Total equity** | $582,907 | $625,740 | [Unaudited Condensed Consolidated Statements of Operations](index=5&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations) For the three months ended November 30, 2024, the company reported a net loss of $36.9 million, or $(1.30) per diluted share, compared to a net loss of $17.8 million, or $(0.64) per diluted share, for the same period in 2023, with revenues slightly decreasing by 2.4% and operating loss widening Statement of Operations Summary (in thousands, except per share amounts) | Metric | Q1 FY2025 (3-mos ended Nov 30, 2024) | Q1 FY2024 (3-mos ended Nov 30, 2023) | | :--- | :--- | :--- | | **Revenues** | $656,537 | $672,897 | | **Operating income (loss)** | $(24,912) | $(22,987) | | **Net income (loss)** | $(36,929) | $(17,799) | | **Net income (loss) attributable to Radius shareholders** | $(37,173) | $(17,964) | | **Diluted loss per share** | $(1.30) | $(0.64) | [Unaudited Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the first three months of fiscal 2025, net cash used in operating activities was $1.9 million, investing activities used $11.8 million due to lower capital expenditures, and financing activities provided $23.4 million primarily from net borrowings of long-term debt Cash Flow Summary (in thousands) | Cash Flow Activity | Q1 FY2025 (3-mos ended Nov 30, 2024) | Q1 FY2024 (3-mos ended Nov 30, 2023) | | :--- | :--- | :--- | | **Net cash provided by (used in) operating activities** | $(1,905) | $(1,299) | | **Net cash used in investing activities** | $(11,779) | $(24,199) | | **Net cash provided by (used in) financing activities** | $23,354 | $23,816 | | **Net change in cash and cash equivalents** | $9,671 | $(1,624) | [Notes to the Unaudited Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20the%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) The notes provide detailed explanations of accounting policies and specific financial statement items, including the company's single reportable segment, significant environmental liabilities for the Portland Harbor Superfund site, disaggregation of revenue, and details on debt facilities and recent amendments - The company operates as a single, functionally based, integrated operating and reportable segment[32](index=32&type=chunk) - As of November 30, 2024, the company had accrued environmental liabilities of **$66 million**, including contingencies for the Portland Harbor Superfund site where the EPA's estimated total remedy cost is **$1.7 billion**, with the company's specific liability remaining uncertain and potentially material[53](index=53&type=chunk)[57](index=57&type=chunk)[70](index=70&type=chunk) - On January 3, 2025, the company amended its credit agreement, extending for two additional fiscal quarters the temporary replacement of its fixed charge coverage ratio covenant with an interest coverage ratio and an asset coverage ratio[108](index=108&type=chunk)[112](index=112&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q1 FY2025 financial results, noting that softer market conditions for finished steel and ferrous products led to a wider net loss, partially offset by stronger nonferrous metal prices and productivity initiatives that lowered SG&A expenses by 10%, while debt increased to fund working capital and capital expenditures Q1 FY2025 vs Q1 FY2024 Performance Highlights | Metric | Q1 FY2025 | Q1 FY2024 | | :--- | :--- | :--- | | **Diluted Loss Per Share** | $(1.30) | $(0.64) | | **Adjusted Diluted Loss Per Share** | $(1.33) | $(0.64) | | **Net Loss** | $37 million | $18 million | | **Adjusted EBITDA** | Break-even | $1 million | - Financial performance was negatively impacted by a **7% decrease** in average net selling prices for finished steel and a **5% decrease** for ferrous products, partially offset by a **12% increase** in average net selling prices for nonferrous products[130](index=130&type=chunk)[140](index=140&type=chunk) - Productivity and cost reduction initiatives led to a **10% decrease** in SG&A expense compared to the prior year quarter, substantially offsetting the impact of softer market conditions[130](index=130&type=chunk)[142](index=142&type=chunk) [Results of Operations](index=27&type=section&id=Results%20of%20Operations) Total revenues for Q1 FY2025 decreased 2% year-over-year to $656.5 million, driven by lower average selling prices and reduced sales volumes for ferrous, nonferrous, and finished steel products, leading to a contracted gross margin and a widened net loss of $37 million Revenue and Volume Changes (Q1 FY2025 vs Q1 FY2024) | Category | Revenue Change | Volume Change | | :--- | :--- | :--- | | Ferrous | -6% | -4% | | Nonferrous | +8% | -2% | | Steel | -10% | -3% | - The prior year quarter (Q1 FY2024) included a nonrecurring insurance recovery gain of **$4 million** related to the Everett Facility shredder fire, which was absent in the current quarter[141](index=141&type=chunk) [Liquidity and Capital Resources](index=28&type=section&id=Liquidity%20and%20Capital%20Resources) The company's primary liquidity sources are cash from operations and credit facilities, with net cash used in operations at $2 million in Q1 FY2025, total debt increasing to $445 million to fund working capital and capital expenditures, and a credit agreement amendment in January 2025 to extend temporary covenant relief - Total debt increased to **$445 million** as of November 30, 2024, with debt, net of cash, at **$430 million**[147](index=147&type=chunk) - Capital expenditures for Q1 FY2025 were **$12 million**, compared to **$25 million** in the prior year period, with the company planning to invest approximately **$60 million** in capital expenditures for the full fiscal year 2025[154](index=154&type=chunk)[167](index=167&type=chunk) - A quarterly dividend of **$0.1875 per common share** was paid on November 26, 2024[172](index=172&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=35&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company is exposed to commodity price, interest rate, credit, and foreign currency exchange rate risks, actively managing commodity price risk by adjusting scrap metal purchase prices and credit risk through letters of credit and credit insurance, with no material changes to interest rate risk - The company is exposed to commodity price risk from variations in metal prices; a hypothetical **10% decrease** in the estimated selling price of inventory would not have had a material impact on its Net Realizable Value (NRV) as of November 30, 2024[191](index=191&type=chunk) - To mitigate credit risk, **22%** of the accounts receivable balance was covered by letters of credit as of November 30, 2024, down from **28%** at August 31, 2024[195](index=195&type=chunk) [Item 4. Controls and Procedures](index=36&type=section&id=Item%204.%20Controls%20and%20Procedures) Based on an evaluation as of November 30, 2024, the company's CEO and CFO concluded that disclosure controls and procedures were effective at a reasonable assurance level, with no material changes in internal control over financial reporting during the quarter - Management concluded that disclosure controls and procedures were effective as of November 30, 2024[198](index=198&type=chunk) - No material changes to internal control over financial reporting occurred during the quarter ended November 30, 2024[199](index=199&type=chunk) [PART II. OTHER INFORMATION](index=37&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=37&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to the company's Annual Report on Form 10-K and Note 4 of this 10-Q for information on legal proceedings, including the Portland Harbor Superfund site and litigation related to the Oakland facility - Information regarding legal proceedings is incorporated by reference from the FY2024 Form 10-K and Note 4 of this Form 10-Q[201](index=201&type=chunk) [Item 1A. Risk Factors](index=37&type=section&id=Item%201A.%20Risk%20Factors) The company states that there have been no material changes to its risk factors since the filing of its Annual Report on Form 10-K for the fiscal year ended August 31, 2024 - No material changes to risk factors were identified since the last Annual Report on Form 10-K[202](index=202&type=chunk) [Item 5. Other Information](index=37&type=section&id=Item%205.%20Other%20Information) This section discloses that on January 3, 2025, the company entered into a fifth amendment to its credit agreement, extending the temporary replacement of a key financial covenant through August 31, 2025, and confirms no directors or officers adopted or modified a Rule 10b5-1 trading plan during the quarter - On January 3, 2025, the company amended its credit agreement to extend temporary covenant relief and make adjustments to the calculation of EBITDA[204](index=204&type=chunk)[205](index=205&type=chunk) [Item 6. Exhibits](index=38&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including new long-term incentive and restricted stock unit award agreements, the CEO's bonus program, and certifications by the CEO and CFO as required by the Sarbanes-Oxley Act - Exhibits filed include management compensation plans and Sarbanes-Oxley certifications[208](index=208&type=chunk) [Signatures](index=39&type=section&id=SIGNATURES) [Signatures](index=39&type=section&id=SIGNATURES) The report was signed on January 8, 2025, by Tamara L. Lundgren, Chairman, President and Chief Executive Officer, and Stefano R. Gaggini, Senior Vice President and Chief Financial Officer - The Form 10-Q was duly authorized and signed by the CEO and CFO on January 8, 2025[211](index=211&type=chunk)

[First Quarter Fiscal 2025 Financial Results](index=1&type=section&id=First%20Quarter%20Fiscal%202025%20Financial%20Results) Radius Recycling reported a net loss of $(37) million for Q1 FY2025, with a loss per share of $(1.30) and break-even Adjusted EBITDA, reflecting a significant increase in net loss year-over-year [Financial Highlights](index=1&type=section&id=Financial%20Highlights) Radius Recycling reported a net loss of **$(37) million** for Q1 FY2025, with a loss per share of **$(1.30)** and break-even Adjusted EBITDA, primarily due to an income tax detriment Q1 FY2025 vs. Q1 FY2024 Key Financial Metrics | Metric | Q1 FY2025 | Q1 FY2024 | | :--- | :--- | :--- | | Net Loss (million USD) | $(37) | $(18) | | Loss per Share from Continuing Operations (USD) | $(1.30) | $(0.64) | | Adjusted EBITDA (million USD) | Break-even | $1 | | Adjusted Loss per Share (USD) | $(1.33) | $(0.64) | - The year-over-year increase in net loss was substantially driven by a **detriment on income tax** in the current quarter[2](index=2&type=chunk) - Adjusted results for Q1 FY2025 exclude **$2 million** in insurance recovery gains related to a legacy environmental matter[2](index=2&type=chunk) [Operational Performance Analysis](index=1&type=section&id=Operational%20Performance%20Analysis) Operating results remained stable year-over-year, with improved recycled metals performance offsetting declines in finished steel due to price drops and lower mill utilization, though sequential performance declined Year-over-Year Price Changes (Q1 FY2025 vs. Q1 FY2024) | Product | Average Net Selling Price Change (%) | | :--- | :--- | | Nonferrous Metals | +12% | | Ferrous Metals | -5% | | Finished Steel | -7% | - Contribution from recycled metals **improved** year-over-year, driven by **productivity efficiencies** and **stronger nonferrous demand**[3](index=3&type=chunk) - Finished steel contribution was **lower** year-over-year due to **weaker domestic steel market conditions** and a scheduled maintenance outage, which contributed to **lower mill utilization**[3](index=3&type=chunk) - Sequentially, performance **declined** due to **seasonally lower sales volumes** and **compressed metal margins** from lower average selling prices for **ferrous (-3%)** and **nonferrous (-6%)** metals[4](index=4&type=chunk) [Management Commentary and Outlook](index=1&type=section&id=Management%20Commentary%20and%20Outlook) Management noted stable operating results despite challenging markets, with expectations for improved demand in the second half of the fiscal year driven by seasonality and inventory rebuilding, supported by positive long-term drivers - The company's steel mill utilization of **81%**, while down sequentially, was still higher than the U.S. average of **75%**[5](index=5&type=chunk) - Management expects **improved demand** in the **second half of the fiscal year**, driven by inventory rebuilding and seasonality[5](index=5&type=chunk) - Long-term demand drivers for recycled metals include **increased infrastructure investment**, **industrial reshoring**, **growth in U.S. electric arc furnace steelmaking**, and the **green energy transition**[5](index=5&type=chunk) [First Quarter Fiscal 2025 Financial Review](index=2&type=section&id=First%20Quarter%20Fiscal%202025%20Financial%20Review) Q1 FY2025 saw nearly break-even operating cash flow, total debt of **$445 million**, and a significant shift to an **11%** effective tax expense due to a valuation allowance on deferred tax assets - The company's mill utilization rate was **81%** in Q1 FY2025, down from **95%** in Q1 FY2024, partly due to a scheduled maintenance outage[9](index=9&type=chunk) - Operating cash flow was **nearly break-even at $(2) million**. **Total debt was $445 million**, and **debt, net of cash, was $430 million** at quarter-end[7](index=7&type=chunk)[10](index=10&type=chunk) - The effective tax rate was an **11% expense**, compared to a **36% benefit** in the prior year's first quarter, mainly due to the valuation allowance on deferred tax assets[11](index=11&type=chunk) [Declaration of Quarterly Dividend](index=2&type=section&id=Declaration%20of%20Quarterly%20Dividend) The Board of Directors declared the **123rd consecutive quarterly cash dividend** of **$0.1875 per common share**, payable on February 18, 2025 - A cash dividend of **$0.1875** per common share was declared[12](index=12&type=chunk) - This marks the company's **123rd consecutive quarterly dividend** since going public in November 1993[11](index=11&type=chunk)[12](index=12&type=chunk) [Financial Statements and Operating Data](index=3&type=section&id=Financial%20Statements%20and%20Operating%20Data) This section presents the condensed consolidated statements of operations, selected operating statistics, and condensed consolidated balance sheets for the first quarter of fiscal year 2025 [Condensed Consolidated Statements of Operations](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q1 FY2025 revenues were **$656.5 million**, resulting in an operating loss of **$(24.9) million** and a net loss of **$(36.9) million**, reflecting a decline from the prior-year period Q1 FY2025 Income Statement Highlights ($ in thousands) | Account | Nov 30, 2024 | Nov 30, 2023 | | :--- | :--- | :--- | | Revenues | $656,537 | $672,897 | | Gross Profit | $33,405 | $39,477 | | Operating Loss | $(24,912) | $(22,987) | | Net Loss | $(36,929) | $(17,799) | | Diluted Loss Per Share | $(1.30) | $(0.64) | [Selected Operating Statistics](index=4&type=section&id=Selected%20Operating%20Statistics) Q1 FY2025 saw ferrous volumes of **1,106k LT** and nonferrous volumes of **177 million lbs**, with finished steel sales at **125k ST** and an **81%** mill utilization, showing declines in most metrics year-over-year Q1 FY2025 Key Operating Metrics | Metric | Value | | :--- | :--- | | Total Ferrous Volumes (k LT) | 1,106 | | Avg. Ferrous Selling Price ($/LT) | $338 | | Total Nonferrous Volumes (k lbs) | 177,255 | | Avg. Nonferrous Price ($/lb) | $1.02 | | Finished Steel Sales Volume (k ST) | 125 | | Avg. Finished Steel Sales Price ($/ST) | $775 | | Rolling Mill Utilization (%) | 81% | Operating Metrics Comparison (Q1 FY2025 vs. Q1 FY2024) | Metric | Q1 FY2025 | Q1 FY2024 | | :--- | :--- | :--- | | Ferrous Volumes (k LT) | 1,106 | 1,152 | | Nonferrous Volumes (k lbs) | 177,255 | 181,728 | | Finished Steel Volumes (k ST) | 125 | 129 | | Avg. Ferrous Price ($/LT) | $338 | $354 | | Avg. Nonferrous Price ($/lb) | $1.02 | $0.91 | | Avg. Finished Steel Price ($/ST) | $775 | $831 | [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of November 30, 2024, total assets were **$1.51 billion**, total liabilities increased to **$927.9 million** due to long-term debt, and total equity decreased to **$582.9 million** Balance Sheet Summary ($ in thousands) | Account | Nov 30, 2024 | Aug 31, 2024 | | :--- | :--- | :--- | | Total Current Assets | $588,264 | $609,127 | | Total Assets | $1,510,794 | $1,533,769 | | Total Current Liabilities | $291,654 | $316,570 | | Long-term Debt | $439,872 | $409,082 | | Total Liabilities | $927,887 | $908,029 | | Total Equity | $582,907 | $625,740 | [Non-GAAP Financial Measures](index=6&type=section&id=Non-GAAP%20Financial%20Measures) This section provides reconciliations of non-GAAP financial measures, including adjusted EPS, adjusted EBITDA, and debt net of cash, to their most directly comparable GAAP measures [Reconciliation of Non-GAAP Measures](index=6&type=section&id=Reconciliation%20of%20Non-GAAP%20Measures) Non-GAAP measures, including adjusted EPS of **$(1.33)** and break-even adjusted EBITDA, are presented to clarify underlying business performance by excluding specific non-recurring items - Management believes non-GAAP measures provide a **meaningful presentation** of results from business operations by excluding items not related to underlying performance, thereby **improving period-to-period comparability**[28](index=28&type=chunk) Reconciliation of Reported to Adjusted EPS | ($ per share) | Q1 FY2025 | Q1 FY2024 | | :--- | :--- | :--- | | As reported | $(1.30) | $(0.64) | | Adjustments (net) | $(0.03) | $0.00 | | Adjusted | $(1.33) | $(0.64) | Reconciliation of Net Loss to Adjusted EBITDA ($ in millions) | ($ in millions) | Q1 FY2025 | Q1 FY2024 | | :--- | :--- | :--- | | Net Loss | $(37) | $(18) | | Adjustments | $37 | $19 | | Adjusted EBITDA | $0 | $1 | Debt, Net of Cash ($ in thousands) | ($ in thousands) | Nov 30, 2024 | Nov 30, 2023 | | :--- | :--- | :--- | | Total Debt | $445,445 | $283,921 | | Less: Cash | $15,223 | $4,408 | | Total debt, net of cash | $430,222 | $279,513 | [Other Information](index=3&type=section&id=Other%20Information) This section provides a company profile and outlines important forward-looking statements and associated risk factors [Company Profile](index=3&type=section&id=Company%20Profile) Radius Recycling, Inc. is a leading North American manufacturer and exporter of recycled metal products, operating extensive facilities, auto parts stores, and steel manufacturing operations - The company is a **major manufacturer and exporter** of recycled metal products in North America[15](index=15&type=chunk) - Operations include facilities in **25 states, Puerto Rico, and Western Canada**, **50 used auto parts stores**, and **steel manufacturing**[15](index=15&type=chunk) [Forward-Looking Statements](index=8&type=section&id=Forward-Looking%20Statements) This section contains forward-looking statements regarding future expectations, subject to risks including environmental costs, economic cyclicality, supply chain disruptions, and geopolitical instability - The press release includes **forward-looking statements** concerning the company's future expectations, intentions, and strategies[35](index=35&type=chunk)[36](index=36&type=chunk) - Key risks that could affect future results include **environmental cleanup costs**, **economic cyclicality**, **inflation**, **interest rate fluctuations**, **supply chain disruptions**, and **geopolitical instability**[38](index=38&type=chunk)[39](index=39&type=chunk)

Part I [Business](index=5&type=section&id=Item%201.%20Business) Radius Recycling, Inc. is a leading North American metal recycler and steel manufacturer, operating a vertically integrated business across auto parts, metals recycling, and steel production - The company officially changed its name from Schnitzer Steel Industries, Inc. to Radius Recycling, Inc. on **January 30, 2024**[17](index=17&type=chunk) - Radius Recycling operates as a single, vertically integrated reportable segment, combining metals recycling, auto parts retailing, and steel manufacturing[18](index=18&type=chunk)[203](index=203&type=chunk) - A major strategic initiative involves investing approximately **$140 million** in advanced nonferrous metal recovery technologies to increase recovery rates and create higher-quality products, with **$135 million incurred as of fiscal 2024**[24](index=24&type=chunk) - The company operates a network of **50 retail self-service auto parts stores** under the Pick-n-Pull brand, **53 metals recycling facilities**, and an EAF steel mill[18](index=18&type=chunk) - In fiscal 2023, the company launched its integrated recycling services under the trademarked **3PRTM brand**, encompassing scrap brokerage, certified destruction, and other services[29](index=29&type=chunk) - The company's steel mill has an effective annual production capacity of approximately **580 thousand tons** of finished steel products[26](index=26&type=chunk) [Risk Factors](index=17&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks from environmental cleanup costs, cyclical market conditions, volatile commodity prices, and extensive regulations - Potential costs related to the environmental cleanup of the Portland Harbor Superfund site could be material, with the EPA's estimated remedy cost at **$1.7 billion**[104](index=104&type=chunk) - The business is cyclical and sensitive to economic conditions, with higher inflation and interest rates in fiscal 2023 and 2024 leading to reduced scrap generation and decreased demand[111](index=111&type=chunk) - A significant portion of revenue comes from exports, making the company vulnerable to global market conditions; in fiscal 2024, **85% of ferrous export sales** were to Bangladesh, Turkey, and India[112](index=112&type=chunk) - The company is subject to increasing environmental regulations, including state and federal initiatives focused on air emissions, GHG emissions, and cleanup actions, which could increase compliance costs and capital expenditures[151](index=151&type=chunk)[154](index=154&type=chunk)[155](index=155&type=chunk) - Cybersecurity incidents pose a significant risk, though no material breaches have occurred to date, with the company investing in mitigation measures[139](index=139&type=chunk) - Approximately **24% of the full-time workforce is unionized**, and failure to negotiate acceptable collective bargaining agreements could lead to strikes or work stoppages[157](index=157&type=chunk) [Unresolved Staff Comments](index=28&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports that it has no unresolved staff comments from the SEC - None[159](index=159&type=chunk) [Cybersecurity](index=29&type=section&id=Item%201C.%20Cybersecurity) Radius Recycling manages cybersecurity risk through a comprehensive, multi-layered strategy based on the NIST framework, overseen by the Board's Audit Committee - The company's cybersecurity program is modeled on the National Institute of Standards and Technology (NIST) framework and employs a layered security approach[162](index=162&type=chunk) - Oversight is provided by the Board of Directors, with the Audit Committee responsible for ensuring management has processes to identify, evaluate, and manage cybersecurity risks, led by the CIO[166](index=166&type=chunk)[167](index=167&type=chunk) - To date, no identified risks from cybersecurity threats or incidents have materially affected, or are reasonably likely to materially affect, the company[165](index=165&type=chunk) [Properties](index=30&type=section&id=Item%202.%20Properties) As of August 31, 2024, the company operates 110 facilities and administrative offices, with 52 owned and 58 leased, across the U.S., Puerto Rico, and Western Canada Facility Ownership Status as of August 31, 2024 | Type | Owned | Leased | Total | | :--- | :--- | :--- | :--- | | **Operating Facilities & Admin Offices** | 52 | 58 | 110 | - The company's key operational assets include **7 deepwater port locations** and **7 large-scale shredding operations**, crucial for processing and exporting recycled metals[171](index=171&type=chunk) [Legal Proceedings](index=32&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in several significant legal and regulatory matters, including disputes with the California DTSC and litigation from The Athletics Investment Group LLC - The company is challenging a corrective action enforcement order from the California DTSC for its Oakland facility and has settled a similar matter in Fresno[175](index=175&type=chunk)[176](index=176&type=chunk) - The Athletics Investment Group LLC (A's) has filed a lawsuit alleging Clean Air Act violations at the Oakland facility, seeking up to approximately **$183 million in fines**, with trial set for November 2024[184](index=184&type=chunk)[496](index=496&type=chunk) - In June 2024, the Alameda County Criminal Grand Jury indicted the company and two employees on felony and misdemeanor charges for alleged mishandling of hazardous waste and destruction of evidence following an August 2023 fire at the Oakland facility, which the company disputes[188](index=188&type=chunk)[497](index=497&type=chunk) - The company resolved an enforcement matter with the Oregon DEQ regarding its Portland shredder facility by signing a Mutual Agreement and Order (MAO), paying a **$100 thousand penalty**, and contributing **$400 thousand** to a supplemental environmental project[179](index=179&type=chunk) [Mine Safety Disclosures](index=34&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[189](index=189&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities](index=35&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%2C%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Radius Recycling's Class A common stock trades on NASDAQ under RDUS, with a history of consistent dividends and an active share repurchase program - The company's Class A common stock is listed on NASDAQ under the symbol **RDUS**, changed from SCHN prior to September 1, 2023[192](index=192&type=chunk) - The company declared its **122nd consecutive quarterly dividend** in the fourth quarter of fiscal 2024[193](index=193&type=chunk) - As of August 31, 2024, approximately **2.8 million shares** were available for repurchase under the authorized share repurchase program, with no shares repurchased during fiscal 2024 or 2023[194](index=194&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=37&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In fiscal 2024, Radius Recycling faced weaker market conditions, resulting in a 5% revenue decrease and a significant net loss due to a goodwill impairment charge Fiscal 2024 vs. 2023 Performance | Metric | Fiscal 2024 | Fiscal 2023 | % Change | | :--- | :--- | :--- | :--- | | Total Revenues | $2,738.7M | $2,882.2M | (5)% | | Gross Margin | $177.1M | $307.7M | (42)% | | Net Loss | ($266.2M) | ($25.4M) | 947% | | Adjusted EBITDA | $29.3M | $144.3M | (80)% | | Diluted EPS (Reported) | ($9.37) | ($0.92) | 918% | | Diluted EPS (Adjusted) | ($2.68) | $0.85 | NM | - The company recorded a non-cash goodwill impairment charge of **$216 million** in fiscal 2024, driven by financial performance and a sustained decrease in market capitalization[220](index=220&type=chunk)[232](index=232&type=chunk) - Productivity and cost reduction initiatives targeting an annual benefit of approximately **$70 million** were implemented in fiscal 2024, helping to offset inflationary pressures[230](index=230&type=chunk) - Total debt increased from **$249 million at FYE 2023 to $415 million at FYE 2024**, primarily to fund working capital and capital expenditures[223](index=223&type=chunk)[239](index=239&type=chunk) - Capital expenditures were **$76 million in fiscal 2024**, down from **$130 million in fiscal 2023**, with plans to invest **$80 million to $90 million** in fiscal 2025[258](index=258&type=chunk) - The company amended its credit agreement in June 2024 to revise certain financial covenants, including removing the fixed charge coverage ratio through February 2025 and introducing minimum interest and asset coverage ratios[249](index=249&type=chunk)[464](index=464&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=53&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to significant market risks, including commodity price volatility, interest rate fluctuations, credit risk, and foreign currency exchange rate risk - The company is exposed to commodity price risk from fluctuations in ferrous and nonferrous metal prices, though a **10% decrease in selling prices** would not have had a material Net Realizable Value (NRV) impact on inventory as of August 31, 2024[306](index=306&type=chunk) - Interest rate risk from variable-rate debt is managed in part through interest rate swap derivatives[307](index=307&type=chunk) - Credit risk is managed via letters of credit, deposits, and credit insurance; as of August 31, 2024, **28% of accounts receivable** were covered by letters of credit, down from 38% in the prior year[308](index=308&type=chunk)[310](index=310&type=chunk) [Financial Statements and Supplementary Data](index=54&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the company's consolidated financial statements for fiscal years 2022-2024, along with the auditor's report highlighting critical audit matters Consolidated Balance Sheet Highlights (As of August 31) | (In thousands) | 2024 | 2023 | | :--- | :--- | :--- | | Total Current Assets | $609,127 | $550,340 | | Total Assets | $1,533,769 | $1,715,949 | | Total Current Liabilities | $316,570 | $323,930 | | Total Liabilities | $908,029 | $804,290 | | Total Equity | $625,740 | $911,659 | Consolidated Statement of Operations Highlights (Year Ended August 31) | (In thousands) | 2024 | 2023 | 2022 | | :--- | :--- | :--- | :--- | | Revenues | $2,738,692 | $2,882,224 | $3,485,815 | | Operating Income (Loss) | ($293,981) | ($3,925) | $225,906 | | Net Income (Loss) | ($266,224) | ($25,438) | $171,996 | - The independent auditor, PricewaterhouseCoopers LLP, identified two Critical Audit Matters for the fiscal 2024 audit: (1) the volume of ferrous metal inventory due to significant estimation, and (2) the goodwill impairment assessment due to significant management judgment in fair value estimates[331](index=331&type=chunk)[334](index=334&type=chunk) - Management concluded that the company's internal control over financial reporting was effective as of August 31, 2024[317](index=317&type=chunk) [Controls and Procedures](index=101&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of August 31, 2024 - The CEO and CFO concluded that as of August 31, 2024, the company's disclosure controls and procedures were effective at the reasonable assurance level[549](index=549&type=chunk) - There were no changes in the company's internal control over financial reporting during the most recent fiscal quarter that materially affected, or are reasonably likely to materially affect, these controls[551](index=551&type=chunk) Part III [Directors, Executive Officers, and Corporate Governance](index=102&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%2C%20and%20Corporate%20Governance) This section provides information about the company's directors, executive officers, and corporate governance practices, with details incorporated by reference from the proxy statement - Information regarding directors and corporate governance is incorporated by reference from the company's definitive proxy statement for the 2025 Annual Meeting of Shareholders[557](index=557&type=chunk) - The company's Code of Conduct applies to all directors and employees and is available on its website, with amendments or waivers for senior officers disclosed there[556](index=556&type=chunk) [Executive Compensation](index=102&type=section&id=Item%2011.%20Executive%20Compensation) Information concerning the compensation of the company's executive officers is incorporated by reference from the definitive proxy statement for the 2025 Annual Meeting of Shareholders - All information required by this item is incorporated by reference from the company's definitive proxy statement for its 2025 Annual Meeting of Shareholders[558](index=558&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=102&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Details regarding security ownership of certain beneficial owners, management, and related stockholder matters are incorporated by reference from the 2025 Annual Meeting of Shareholders proxy statement - All information required by this item is incorporated by reference from the company's definitive proxy statement for its 2025 Annual Meeting of Shareholders[559](index=559&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=102&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information concerning certain relationships, related party transactions, and director independence is incorporated by reference from the definitive proxy statement for the 2025 Annual Meeting of Shareholders - All information required by this item is incorporated by reference from the company's definitive proxy statement for its 2025 Annual Meeting of Shareholders[560](index=560&type=chunk) [Principal Accountant Fees and Services](index=102&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Details regarding fees paid to and services provided by the company's principal independent registered public accounting firm are incorporated by reference from the 2025 Annual Meeting of Shareholders proxy statement - All information required by this item is incorporated by reference from the company's definitive proxy statement for its 2025 Annual Meeting of Shareholders[561](index=561&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=103&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists all documents filed as part of the Form 10-K report, including financial statements, schedules, and various exhibits - This item lists the financial statements, financial statement schedules (Schedule II – Valuation and Qualifying Accounts), and all exhibits filed with the 10-K[563](index=563&type=chunk) - Key exhibits include the Fourth Amendment to the Credit Agreement (Exhibit 10.10), the 2024 Omnibus Incentive Plan (Exhibit 10.16), and various certifications by the CEO and CFO (Exhibits 31.1, 31.2, 32.1, 32.2)[563](index=563&type=chunk)[565](index=565&type=chunk) [Form 10-K Summary](index=108&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company has not provided a summary for this item - None[572](index=572&type=chunk)

[Financial and Operational Highlights](index=1&type=section&id=Financial%20and%20Operational%20Highlights) [Q4 & Fiscal 2024 Performance Summary](index=1&type=section&id=Q4%20%26%20Fiscal%202024%20Performance%20Summary) Radius Recycling reported a net loss of $16 million for Q4 fiscal 2024, a sequential improvement, with full fiscal year 2024 net loss at $266 million Q4 & Fiscal 2024 Performance Summary | Metric | Q4 2024 | Q3 2024 | Q4 2023 | Fiscal Year 2024 | Fiscal Year 2023 | | :--- | :--- | :--- | :--- | :--- | :--- | | **Revenues** | $771 Million | $674 Million | $718 Million | $2,739 Million | $2,882 Million | | **Net Loss** | $(16) Million | $(199) Million | $(26) Million | $(266) Million | $(25) Million | | **Diluted Loss Per Share** | $(0.56) | $(6.97) | $(0.92) | $(9.37) | $(0.92) | | **Adjusted Loss Per Share** | $(0.41) | $(0.59) | $0.47 | $(2.68) | $0.85 | | **Adjusted EBITDA** | $17 Million | $9 Million | $49 Million | $29 Million | $144 Million | [Key Performance Drivers](index=1&type=section&id=Key%20Performance%20Drivers) Improved sequential performance in Q4 was driven by higher sales volumes, stronger nonferrous markets, expanded metal spreads, and cost reduction benefits - Key drivers for sequential improvement included higher sales volumes, stronger nonferrous prices, expanded metal spreads, and benefits from a **$70 million annual cost reduction program**[4](index=4&type=chunk) Sequential Volume and Price Changes (Q4 vs Q3) | Product Category | Sequential Volume Change (Q4 vs Q3) | Sequential Price Change (Q4 vs Q3) | | :--- | :--- | :--- | | **Ferrous** | +12% | Flat | | **Nonferrous** | +13% | +4% | | **Finished Steel** | +11% | N/A | - Rolling mill utilization increased to **97% in Q4**, up from 88% in Q3, driven by seasonally stronger construction activity[6](index=6&type=chunk) [Management Commentary and Outlook](index=1&type=section&id=Management%20Commentary%20and%20Outlook) Management attributes Q4 results to cost savings and increased volumes, anticipating future benefits from strategic initiatives and potential interest rate declines - Management credits the cost savings program and increased sales volumes for the Q4 performance improvement[7](index=7&type=chunk) - Strategic initiatives, including investments in technology and expansion of the recycling services platform, are expected to continue contributing positively to results[7](index=7&type=chunk) - The company believes that declines in U.S. interest rates should improve scrap supply flows by boosting consumer, manufacturing, and construction activity[7](index=7&type=chunk) [Detailed Financial Results](index=3&type=section&id=Detailed%20Financial%20Results) [Consolidated Statements of Operations](index=3&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) Q4 2024 revenues were $770.8 million, resulting in an operating loss of $8.8 million and a net loss of $16.1 million, while fiscal year 2024 saw $2.74 billion in revenues and a $266.4 million net loss due to a goodwill impairment Condensed Consolidated Statements of Operations | ($ in thousands) | Q4 2024 | Fiscal Year 2024 | | :--- | :--- | :--- | | **Revenues** | $770,816 | $2,738,692 | | **Operating Loss** | $(8,790) | $(293,981) | | **Goodwill Impairment Charges** | $0 | $215,941 | | **Net Loss Attributable to Radius Shareholders** | $(16,078) | $(266,411) | | **Diluted Loss Per Share** | $(0.56) | $(9.37) | [Selected Operating Statistics](index=4&type=section&id=SELECTED%20OPERATING%20STATISTICS) For fiscal year 2024, ferrous volumes reached 4.5 million long tons, nonferrous volumes 748 million pounds, and finished steel sales 509 thousand short tons, with rolling mill utilization at 90% Operating Metrics (Fiscal Year 2024) | Operating Metric (Fiscal Year 2024) | Volume | Average Price | | :--- | :--- | :--- | | **Total Ferrous** | 4,493 thousand Long Tons | $358 / Long Ton | | **Total Nonferrous** | 748,178 thousand Pounds | $1.00 / Pound | | **Finished Steel** | 509 thousand Short Tons | $818 / Short Ton | - Rolling mill utilization was **97% in Q4 2024**, a significant increase from 88% in Q3 2024, and averaged **90% for the full fiscal year**[21](index=21&type=chunk) [Consolidated Balance Sheets](index=5&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) As of August 31, 2024, total assets decreased to $1.53 billion, total liabilities increased to $908.0 million due to higher long-term debt, and shareholders' equity declined to $623.1 million Condensed Consolidated Balance Sheets | ($ in thousands) | August 31, 2024 | August 31, 2023 | | :--- | :--- | :--- | | **Total Current Assets** | $609,127 | $550,340 | | **Total Assets** | $1,533,769 | $1,715,949 | | **Total Current Liabilities** | $316,570 | $323,930 | | **Long-term Debt** | $409,082 | $243,579 | | **Total Liabilities** | $908,029 | $804,290 | | **Total Radius Shareholders' Equity** | $623,112 | $908,180 | [Non-GAAP Financial Measures](index=6&type=section&id=Non-GAAP%20Financial%20Measures) [Reconciliation of Adjusted EPS](index=6&type=section&id=Reconciliation%20of%20adjusted%20diluted%20earnings%20(loss)%20per%20share) The company reconciled its GAAP diluted loss per share of $(0.56) for Q4 2024 to an adjusted loss per share of $(0.41), and for the full fiscal year, adjusted the GAAP loss of $(9.37) to $(2.68) Reconciliation of Adjusted Diluted Earnings (Loss) Per Share | ($ per share) | Q4 2024 | Fiscal Year 2024 | | :--- | :--- | :--- | | **As Reported (GAAP)** | $(0.56) | $(9.37) | | Goodwill impairment charges | — | $7.60 | | Restructuring charges | — | $0.24 | | Other adjustments | $0.14 | $(1.15) | | **Adjusted (Non-GAAP)** | $(0.41) | $(2.68) | [Reconciliation of Adjusted EBITDA](index=7&type=section&id=Reconciliation%20of%20Adjusted%20EBITDA) Adjusted EBITDA for Q4 2024 was $17 million, reconciled from a net loss of $16 million, while for fiscal year 2024, it was $29 million from a net loss of $266 million Reconciliation of Adjusted EBITDA | ($ in millions) | Q4 2024 | Fiscal Year 2024 | | :--- | :--- | :--- | | **Net Loss** | $(16) | $(266) | | Plus: Interest, Taxes, D&A | $32 | $69 | | Plus: Goodwill Impairment | $0 | $216 | | Plus: Other Adjustments | $0 | $10 | | **Adjusted EBITDA** | $17 | $29 | [Other Reconciliations](index=7&type=section&id=Other%20Reconciliations) Adjusted SG&A for fiscal 2024 was $247 million, and total debt, net of cash, significantly increased to $409.2 million as of August 31, 2024 - Adjusted selling, general and administrative expense for fiscal year 2024 was **$247 million**, compared to $255 million in fiscal 2023[31](index=31&type=chunk) Total Debt, Net of Cash | ($ in thousands) | Aug 31, 2024 | Aug 31, 2023 | | :--- | :--- | :--- | | **Total Debt** | $414,770 | $249,392 | | Less: Cash | $5,552 | $6,032 | | **Total Debt, Net of Cash** | $409,218 | $243,360 | [Other Information](index=2&type=section&id=Other%20Information) [Dividend Declaration](index=2&type=section&id=Declaration%20of%20Quarterly%20Dividend) The Board of Directors declared a quarterly cash dividend of $0.1875 per common share, marking the company's 122nd consecutive payment - The Board of Directors declared a cash dividend of **$0.1875 per common share**[14](index=14&type=chunk) - This is the company's **122nd consecutive quarterly dividend**, having paid one every quarter since November 1993[13](index=13&type=chunk)[14](index=14&type=chunk) [About Radius Recycling, Inc.](index=2&type=section&id=About%20Radius%20Recycling%2C%20Inc.) Radius Recycling is a leading North American recycled metal manufacturer and exporter, operating facilities across 25 states, Puerto Rico, and Western Canada, including used auto parts stores and steel manufacturing - Radius Recycling is one of the largest manufacturers and exporters of recycled metal products in North America[16](index=16&type=chunk) - The company's operations include **50 used auto parts stores** and steel manufacturing facilities in addition to its recycling operations[16](index=16&type=chunk)[17](index=17&type=chunk) [Forward-Looking Statements](index=8&type=section&id=Forward-Looking%20Statements) This section contains a standard "safe harbor" statement, indicating that the report includes forward-looking statements subject to various risks and uncertainties that could cause actual results to differ materially - The report contains forward-looking statements regarding future events, objectives, and expectations, which are not purely historical[33](index=33&type=chunk)[34](index=34&type=chunk) - These statements are subject to significant risks and uncertainties, including but not limited to economic conditions, market price volatility, supply chain disruptions, and environmental costs[36](index=36&type=chunk)[37](index=37&type=chunk)

[Forward-Looking Statements](index=4&type=section&id=FORWARD-LOOKING%20STATEMENTS) This section introduces the report's forward-looking statements, highlighting their inherent uncertainties and the potential for actual results to differ materially [Forward-Looking Statements](index=4&type=section&id=FORWARD-LOOKING%20STATEMENTS) This section clarifies the report's forward-looking statements, noting their inherent uncertainties and the company's non-obligation to update them, with actual results potentially differing due to various risks - Forward-looking statements are identified by words like "outlook," "expects," "plans," and similar expressions, and are subject to risks and uncertainties[11](index=11&type=chunk) - Key risks include, but are not limited to: potential environmental cleanup costs (e.g., Portland Harbor), equipment failures, economic cyclicality, inflation, rising interest rates, supply chain disruptions, and geopolitical instability[12](index=12&type=chunk) [PART I. FINANCIAL INFORMATION](index=6&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This part presents the company's unaudited financial statements and management's discussion and analysis of its financial performance [Financial Statements (Unaudited)](index=6&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements for the three and nine months ended May 31, 2024, including a significant goodwill impairment charge [Unaudited Condensed Consolidated Balance Sheets](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) This section provides a snapshot of the company's financial position, detailing assets, liabilities, and equity as of May 31, 2024, and August 31, 2023 Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | May 31, 2024 | August 31, 2023 | | :--- | :--- | :--- | | **Total current assets** | $616,643 | $550,340 | | **Goodwill** | $13,105 | $229,419 | | **Total assets** | $1,552,904 | $1,715,949 | | **Total current liabilities** | $311,418 | $323,930 | | **Long-term debt, net** | $405,514 | $243,579 | | **Total liabilities** | $906,879 | $804,290 | | **Total equity** | $646,025 | $911,659 | - Goodwill decreased significantly from **$229.4 million** to **$13.1 million** due to an impairment charge[15](index=15&type=chunk) - Long-term debt increased from **$243.6 million** to **$405.5 million**[15](index=15&type=chunk) [Unaudited Condensed Consolidated Statements of Operations](index=8&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations) This section details the company's financial performance, highlighting revenues, expenses, and net loss for the three and nine months ended May 31, 2024 Statement of Operations Highlights (in thousands, except per share amounts) | Metric | Q3 2024 | Q3 2023 | Nine Months 2024 | Nine Months 2023 | | :--- | :--- | :--- | :--- | :--- | | **Revenues** | $673,920 | $809,610 | $1,967,876 | $2,164,293 | | **Goodwill impairment charges** | $215,941 | $0 | $215,941 | $0 | | **Operating (loss) income** | ($235,486) | $27,514 | ($285,191) | $19,745 | | **Net (loss) income** | ($198,511) | $13,608 | ($250,320) | $324 | | **Diluted (loss) income per share** | ($6.97) | $0.47 | ($8.82) | $0.00 | - The company reported a net loss of **$198.5 million** for Q3 2024, a stark contrast to the **$13.6 million** net income in Q3 2023, primarily driven by a **$216 million** goodwill impairment charge[17](index=17&type=chunk) [Unaudited Condensed Consolidated Statements of Cash Flows](index=12&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section outlines the company's cash inflows and outflows from operating, investing, and financing activities for the nine months ended May 31, 2024 Cash Flow Summary (in thousands) | Cash Flow Activity | Nine Months Ended May 31, 2024 | Nine Months Ended May 31, 2023 | | :--- | :--- | :--- | | **Net cash (used in) provided by operating activities** | ($57,218) | $4,532 | | **Net cash used in investing activities** | ($59,429) | ($117,397) | | **Net cash provided by financing activities** | $135,760 | $73,628 | | **Net increase (decrease) in cash** | $19,157 | ($39,292) | | **Cash and cash equivalents at end of period** | $25,189 | $4,511 | - Operating activities used **$57.2 million** in cash for the first nine months of fiscal 2024, compared to providing **$4.5 million** in the prior year period[28](index=28&type=chunk) - Financing activities provided **$135.8 million**, largely from increased debt borrowings[28](index=28&type=chunk) [Notes to the Unaudited Condensed Consolidated Financial Statements](index=14&type=section&id=Notes%20to%20the%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the unaudited condensed consolidated financial statements, including significant accounting policies and contingent liabilities - **Goodwill Impairment:** A triggering event in Q3 2024, related to financial performance and a sustained decrease in market capitalization, led to a quantitative test, resulting in a non-cash goodwill impairment charge of **$216 million**, as the carrying amount of three reporting units exceeded their estimated fair value[64](index=64&type=chunk)[66](index=66&type=chunk)[67](index=67&type=chunk) - **Debt:** As of May 31, 2024, total debt was **$411 million**, up from **$249 million** at August 31, 2023, with a credit agreement amendment on June 17, 2024, temporarily replacing certain financial covenants[127](index=127&type=chunk)[128](index=128&type=chunk) - **Revenue Disaggregation:** For the nine months ended May 31, 2024, revenues were primarily from Ferrous metals (**$999.4 million**), Nonferrous metals (**$517.9 million**), and Steel products (**$322.5 million**), with foreign sales constituting **$1.02 billion** of the **$1.97 billion** total revenue[101](index=101&type=chunk) - **Environmental Contingencies:** The company has accrued **$65 million** for environmental liabilities as of May 31, 2024, including matters related to the Portland Harbor Superfund site, where ultimate costs are not yet reasonably estimable and could be material[72](index=72&type=chunk)[87](index=87&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=36&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the Q3 fiscal 2024 results, noting divergent market conditions with strong nonferrous demand but weaker ferrous and finished steel markets, leading to a significant net loss primarily due to a goodwill impairment charge [Results of Operations](index=40&type=section&id=Results%20of%20Operations) This section analyzes the company's operational performance for Q3 2024, detailing revenue trends, gross margin, net loss, and the impact of market conditions and impairment charges Q3 2024 vs Q3 2023 Performance | Metric | Q3 2024 | Q3 2023 | % Change | | :--- | :--- | :--- | :--- | | **Total Revenues** | $673.9M | $809.6M | (17)% | | **Gross Margin** | $45.5M | $95.9M | (53)% | | **Net (Loss) Income** | ($198.5M) | $13.6M | NM | | **Adjusted EBITDA** | $8.6M | $55.6M | (85)% | | **Ferrous Volumes (k LT)** | 1,112 | 1,157 | (4)% | | **Nonferrous Volumes (k lbs)** | 183,230 | 207,714 | (12)% | - Q3 2024 performance was negatively impacted by a **15% decrease** in average ferrous selling prices and a **12% decrease** in finished steel selling prices compared to the prior year, leading to compressed metal spreads[153](index=153&type=chunk)[163](index=163&type=chunk) - A non-cash goodwill impairment charge of **$216 million** was the primary driver of the **$199 million** net loss in Q3 2024[154](index=154&type=chunk)[165](index=165&type=chunk) - The company is implementing productivity and cost reduction initiatives targeting an aggregate annual benefit of approximately **$70 million**, achieving about three-quarters of the quarterly run rate for these benefits in Q3 2024[167](index=167&type=chunk)[169](index=169&type=chunk) [Liquidity and Capital Resources](index=43&type=section&id=Liquidity%20and%20Capital%20Resources) This section analyzes the company's cash flow, debt levels, and capital expenditure plans, highlighting strategies for managing liquidity and funding operations - Net cash used in operating activities was **$57 million** for the first nine months of fiscal 2024, compared to **$5 million** provided in the prior year period, mainly due to an increase in inventories[175](index=175&type=chunk)[176](index=176&type=chunk) - Total debt increased to **$411 million** as of May 31, 2024, from **$249 million** as of August 31, 2023, primarily to fund working capital and capital expenditures[174](index=174&type=chunk) - The company amended its credit agreement on June 17, 2024, modifying financial covenants to provide flexibility, and was in compliance with the new covenants as of May 31, 2024[184](index=184&type=chunk)[190](index=190&type=chunk) - Planned capital expenditures for fiscal 2024 are approximately **$75 million to $80 million**, down from **$101 million** spent in the first nine months of fiscal 2023[193](index=193&type=chunk) [Non-GAAP Financial Measures](index=49&type=section&id=Non-GAAP%20Financial%20Measures) This section provides reconciliations of non-GAAP financial measures, such as Adjusted EBITDA and Adjusted Diluted EPS, to their most directly comparable GAAP measures Reconciliation of Net (Loss) Income to Adjusted EBITDA (in thousands) | | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | **Net (loss) income** | ($198,511) | $13,608 | | **Adjustments** | | | | Interest, Taxes, D&A | ($12,777) | $34,907 | | Goodwill impairment charges | $215,941 | $0 | | Other adjustments | $3,948 | $7,095 | | **Adjusted EBITDA** | **$8,618** | **$55,610** | Reconciliation of Reported to Adjusted Diluted (Loss) EPS | | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | **Reported Diluted (Loss) EPS** | ($6.97) | $0.48 | | **Goodwill impairment** | $7.58 | $0.00 | | **Other adjustments** | $0.12 | $0.24 | | **Tax effect of adjustments** | ($1.34) | ($0.05) | | **Adjusted Diluted (Loss) EPS** | **($0.59)** | **$0.67** | [Quantitative and Qualitative Disclosures about Market Risk](index=42&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company details its exposure to several market risks: commodity price risk for metals, interest rate risk on variable-rate debt, credit risk from customer non-performance, and foreign currency risk, along with mitigation strategies - **Commodity Price Risk:** The company is exposed to price fluctuations in ferrous and nonferrous metals, managed by adjusting purchase prices in response to selling price changes, with a hypothetical **10% decrease** in selling prices not materially impacting inventory net realizable value as of May 31, 2024[225](index=225&type=chunk) - **Credit Risk:** Risk is managed through letters of credit, deposits, and credit insurance, with **50%** of accounts receivable covered by letters of credit as of May 31, 2024, an increase from **38%** at August 31, 2023[227](index=227&type=chunk)[229](index=229&type=chunk) - **Interest Rate Risk:** The company has not materially changed its interest rate risk profile since its last annual report[226](index=226&type=chunk) [Controls and Procedures](index=43&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, with the participation of the CEO and CFO, evaluated the company's disclosure controls and procedures, concluding their effectiveness and noting no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that as of May 31, 2024, the company's disclosure controls and procedures were effective at providing reasonable assurance[232](index=232&type=chunk) - No changes occurred during the quarter ended May 31, 2024, that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[233](index=233&type=chunk) [PART II. OTHER INFORMATION](index=44&type=section&id=PART%20II.%20OTHER%20INFORMATION) This part provides additional information on legal proceedings, risk factors, corporate updates, and exhibits [Legal Proceedings](index=55&type=section&id=Item%201.%20Legal%20Proceedings) The company reports a new legal matter where the Alameda County Criminal Grand Jury returned an indictment against the company and two employees on June 28, 2024, alleging environmental violations and destruction of evidence, which the company disputes - On June 28, 2024, an indictment was returned against the Company and two employees alleging felony and misdemeanor environmental violations[236](index=236&type=chunk) - The charges stem from an August 2023 fire at the Oakland, CA facility and the subsequent shredding of burned material, which prosecutors allege constituted destruction of evidence[236](index=236&type=chunk) - The Company disputes the allegations, stating regulators were on-site, found no evidence of hazardous waste, and did not object to the processing of the material, and intends to defend itself vigorously[236](index=236&type=chunk) [Risk Factors](index=55&type=section&id=Item%201A.%20Risk%20Factors) This section states that there have been no material changes to the company's risk factors since those disclosed in its Annual Report on Form 10-K for the fiscal year ended August 31, 2023 - There have been no material changes to risk factors since the filing of the Annual Report on Form 10-K for the year ended August 31, 2023[237](index=237&type=chunk) [Other Information](index=55&type=section&id=Item%205.%20Other%20Information) The company announced the retirement of Richard D. Peach, Executive Vice President and Chief Strategy Officer, effective July 2, 2024, with a consulting agreement for transition services - Richard D. Peach, EVP and Chief Strategy Officer, will retire effective July 2, 2024[239](index=239&type=chunk) - A consulting agreement was signed to facilitate the transition, under which Mr. Peach will receive continued vesting of his RSUs and a pro-rated FY24 bonus[240](index=240&type=chunk) [Exhibits](index=56&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q report, including CEO and CFO certifications and Inline XBRL data files - The filing includes CEO and CFO certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act[243](index=243&type=chunk) - Interactive Data Files (Inline XBRL) are included as exhibits 101 and 104[243](index=243&type=chunk) [Signatures](index=46&type=section&id=SIGNATURES) This section confirms the official signing of the Form 10-Q report by the company's key executives on July 2, 2024 [Signatures](index=46&type=section&id=SIGNATURES) The Form 10-Q report was duly authorized and signed on July 2, 2024, by Tamara L. Lundgren, Chairman, President and Chief Executive Officer, and Stefano R. Gaggini, Senior Vice President and Chief Financial Officer - The report was signed on July 2, 2024[246](index=246&type=chunk) - Signatories are Tamara L. Lundgren (CEO) and Stefano R. Gaggini (CFO)[246](index=246&type=chunk)

[Forward-Looking Statements](index=4&type=section&id=FORWARD-LOOKING%20STATEMENTS) This section outlines forward-looking statements regarding future events, financial outlooks, and growth initiatives, subject to various risks and uncertainties - This report contains forward-looking statements regarding future events, financial outlooks, growth initiatives, market trends, and capital expenditures[9](index=9&type=chunk)[10](index=10&type=chunk) - These statements are subject to various risks and uncertainties, including economic conditions, environmental costs, market volatility, and supply chain disruptions, which may cause actual results to differ materially[11](index=11&type=chunk)[12](index=12&type=chunk) [PART I. FINANCIAL INFORMATION](index=6&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This part presents the unaudited condensed consolidated financial statements and management's discussion and analysis of financial condition and results of operations [Item 1. Financial Statements (Unaudited)](index=6&type=section&id=Item%201.%20Financial%20Statements%20%28Unaudited%29) This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, comprehensive loss, equity, and cash flows, along with accompanying notes [Unaudited Condensed Consolidated Balance Sheets](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) This subsection provides a snapshot of the company's financial position, detailing assets, liabilities, and equity at specific reporting dates Condensed Consolidated Balance Sheet Highlights (in thousands) | Metric | Feb 29, 2024 | Aug 31, 2023 | | :--- | :--- | :--- | | Total Assets | $1,745,529 | $1,715,949 | | Total Liabilities | $898,063 | $804,290 | | Total Equity | $847,466 | $911,659 | [Unaudited Condensed Consolidated Statements of Operations](index=8&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations) This subsection presents the company's revenues, operating results, and net income or loss for the reported periods Condensed Consolidated Statements of Operations Highlights (in thousands, except per share amounts) | Metric | Q2 2024 | Q2 2023 | H1 2024 | H1 2023 | | :--- | :--- | :--- | :--- | :--- | | Revenues | $621,059 | $755,953 | $1,293,956 | $1,354,683 | | Operating (loss) income | $(26,718) | $8,542 | $(49,705) | $(7,769) | | Net (loss) income | $(34,010) | $4,272 | $(51,808) | $(13,284) | | Diluted (loss) income per share | $(1.19) | $0.15 | $(1.83) | $(0.48) | [Unaudited Condensed Consolidated Statements of Comprehensive Loss](index=9&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss) This subsection details the company's comprehensive loss, including net loss and other comprehensive income or loss items Condensed Consolidated Statements of Comprehensive (Loss) Income (in thousands) | Metric | Q2 2024 | Q2 2023 | H1 2024 | H1 2023 | | :--- | :--- | :--- | :--- | :--- | | Net (loss) income | $(34,010) | $4,272 | $(51,808) | $(13,284) | | Comprehensive (loss) income | $(33,592) | $2,969 | $(51,809) | $(16,800) | [Unaudited Condensed Consolidated Statements of Equity](index=10&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Equity) This subsection outlines changes in the company's total equity, reflecting net loss and dividend payments - Total Radius shareholders' equity decreased from **$908.2 million** to **$844.4 million** as of February 29, 2024, primarily due to a net loss of **$51.9 million** and **$10.7 million** in dividend payments[27](index=27&type=chunk) [Unaudited Condensed Consolidated Statements of Cash Flows](index=12&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This subsection summarizes the cash inflows and outflows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | Six Months Ended Feb 29, 2024 | Six Months Ended Feb 28, 2023 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(56,393) | $25,692 | | Net cash used in investing activities | $(43,658) | $(98,387) | | Net cash provided by financing activities | $107,596 | $40,415 | | Net increase (decrease) in cash and cash equivalents | $7,530 | $(32,344) | [Notes to the Unaudited Condensed Consolidated Financial Statements](index=15&type=section&id=Notes%20to%20the%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This subsection provides additional details and explanations for the financial statements, including corporate name change, credit covenant compliance, environmental liabilities, and debt levels - The company changed its corporate name from Schnitzer Steel Industries, Inc. to Radius Recycling, Inc. on **January 30, 2024**[37](index=37&type=chunk) - The company anticipates potential non-compliance with credit agreement financial covenants if challenging market conditions and compressed margins persist[36](index=36&type=chunk) - Total environmental liabilities were **$66 million** as of February 29, 2024, with **$6 million** related to the Portland Harbor Superfund site, for which full cost estimation is not possible and could be material[72](index=72&type=chunk)[88](index=88&type=chunk)[89](index=89&type=chunk) - Total debt increased to **$374 million** as of February 29, 2024, from **$249 million** as of August 31, 2023, with revolving credit facility borrowings rising to **$355 million** from **$230 million**[126](index=126&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=37&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses a significant year-over-year decline in Q2 FY2024 operating results due to lower sales volumes and compressed margins, leading to a net loss and prompting cost reduction initiatives Q2 FY2024 Financial Highlights vs. Q2 FY2023 | Metric | Q2 2024 | Q2 2023 | | :--- | :--- | :--- | | Diluted loss per share from continuing operations | $(1.19) | $0.14 | | Adjusted diluted loss per share from continuing operations | $(1.04) | $0.14 | | Net loss (income) | $(34 million) | $4 million | | Adjusted EBITDA | $3 million | $32 million | - Q2 FY2024 ferrous sales volumes decreased **22%** year-over-year due to tight scrap supply, with average ferrous selling prices increasing **5%** and nonferrous prices decreasing **5%**[151](index=151&type=chunk)[156](index=156&type=chunk) - The company is implementing new cost-saving measures targeting **$40 million** in annual benefits, in addition to **$30 million** from Q1 initiatives, through headcount reductions and expense decreases[164](index=164&type=chunk) - Management warns of potential non-compliance with credit agreement financial covenants if market conditions do not improve or cost-saving initiatives are not fully realized[187](index=187&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=54&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section outlines the company's primary market risks, including commodity price, interest rate, credit, and foreign currency exchange risks, and the strategies employed for their management - The company manages commodity price risk from fluctuating ferrous and nonferrous metal prices by adjusting purchase prices in response to selling price changes[214](index=214&type=chunk) - Credit risk is managed using methods like letters of credit, which covered **28%** of accounts receivable as of February 29, 2024, a decrease from **38%** at August 31, 2023[216](index=216&type=chunk)[218](index=218&type=chunk) - Foreign currency exchange risk primarily stems from U.S. Dollar denominated sales by the Canadian subsidiary[219](index=219&type=chunk) [Item 4. Controls and Procedures](index=55&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of February 29, 2024, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were **effective** as of **February 29, 2024**[221](index=221&type=chunk) - No material changes to internal control over financial reporting occurred during the quarter[222](index=222&type=chunk) [PART II. OTHER INFORMATION](index=56&type=section&id=PART%20II.%20OTHER%20INFORMATION) This part provides additional information, including legal proceedings, risk factors, recent appointments, and a list of exhibits [Item 1. Legal Proceedings](index=56&type=section&id=Item%201.%20Legal%20Proceedings) This section incorporates by reference information on legal proceedings from previous SEC filings and Note 5, detailing commitments and contingencies including environmental matters - Information regarding legal proceedings is incorporated by reference from the **FY2023 Form 10-K**, **Q1 FY2024 Form 10-Q**, and **Note 5** of this report[225](index=225&type=chunk) [Item 1A. Risk Factors](index=56&type=section&id=Item%201A.%20Risk%20Factors) The company reports no material changes to its risk factors since the filing of its Annual Report on Form 10-K for the fiscal year ended August 31, 2023 - There have been **no material changes** to the company's risk factors since the last Annual Report on Form 10-K was filed[226](index=226&type=chunk) [Item 5. Other Information](index=56&type=section&id=Item%205.%20Other%20Information) This section discloses the appointment of Erika Kelley as Vice President and Chief Accounting Officer and confirms no Rule 10b5-1 trading arrangement modifications by directors or officers - On **April 1, 2024**, the Board appointed Erika Kelley as the company's Vice President and Chief Accounting Officer, effective **April 8, 2024**[228](index=228&type=chunk) - No directors or officers adopted, terminated, or modified a **Rule 10b5-1** trading arrangement during the second quarter of fiscal 2024[227](index=227&type=chunk) [Item 6. Exhibits](index=57&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including corporate governance documents, compensatory plan details, and required Sarbanes-Oxley certifications - The exhibits filed with this report include updated corporate governance documents, compensatory plan details, and required **Sarbanes-Oxley certifications**[233](index=233&type=chunk)