SCHNITZER STEEL(SCHN) - 2025 Q1 - Quarterly Results

First Quarter Fiscal 2025 Financial Results 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 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] - Adjusted results for Q1 FY2025 exclude $2 million in insurance recovery gains related to a legacy environmental matter[2] Operational Performance Analysis 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] - 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] - 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] Management Commentary and Outlook 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] - Management expects improved demand in the second half of the fiscal year, driven by inventory rebuilding and seasonality[5] - 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] First Quarter Fiscal 2025 Financial Review 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] - 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][10] - 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] Declaration of Quarterly Dividend 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] - This marks the company's 123rd consecutive quarterly dividend since going public in November 1993[11][12] Financial Statements and Operating Data 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 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) | $(0.64) | Selected Operating Statistics Q1 FY2025 saw ferrous volumes of 1,106k LT and nonferrous volumes of 177 million lbs, with finished steel sales at 125k ST and an 81% mill utilization, showing declines in most metrics year-over-year Q1 FY2025 Key Operating Metrics | Metric | Value | | :--- | :--- | | Total Ferrous Volumes (k LT) | 1,106 | | Avg. Ferrous Selling Price ($/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 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 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 Non-GAAP measures, including adjusted EPS of $(1.33) and break-even adjusted EBITDA, are presented to clarify underlying business performance by excluding specific non-recurring items - Management believes non-GAAP measures provide a meaningful presentation of results from business operations by excluding items not related to underlying performance, thereby improving period-to-period comparability[28] Reconciliation of Reported to Adjusted EPS | ($ 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 This section provides a company profile and outlines important forward-looking statements and associated risk factors Company Profile 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] - Operations include facilities in 25 states, Puerto Rico, and Western Canada, 50 used auto parts stores, and steel manufacturing[15] Forward-Looking Statements 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][36] - Key risks that could affect future results include environmental cleanup costs, economic cyclicality, inflation, interest rate fluctuations, supply chain disruptions, and geopolitical instability[38][39]