Financial Data and Key Metrics Changes - The company reported record third quarter adjusted earnings per share of $2.59, nearly double the second quarter and 18% higher year-over-year [14] - Adjusted EBITDA for the third quarter was $119 million, representing $105 per ferrous ton, the highest Q3 in the company's history [39] - Operating cash flow was positive at $45 million, with net debt increasing to $306 million primarily due to the acquisition of Encore Recycling [49][50] Business Line Data and Key Metrics Changes - Non-ferrous sales volumes increased sequentially by 37% and year-over-year by 29%, reflecting contributions from Columbus Recycling and Encore Recycling [46] - Finished steel sales volumes rose by 27% sequentially, driven by strong construction demand, with average selling prices up 41% year-over-year [48] - Ferrous sales volumes increased by 5% sequentially but were down 7% year-over-year due to slower export demand [43] Market Data and Key Metrics Changes - Average selling prices for recycled ferrous metals reached historically high levels exceeding $650 per ton at the start of the quarter but fell to $450-$500 per ton by the end [22][23] - Non-residential and infrastructure projects on the West Coast showed strong growth, with total U.S. construction spending rising by almost 13% year-over-year [19] - The company expects robust demand in construction markets to continue, supported by the U.S. Infrastructure Bill [20] Company Strategy and Development Direction - The company is focused on technology investments in advanced metal recovery systems to enhance non-ferrous metal extraction [29] - Strategic priorities include ferrous volume growth, expansion of products and services, and productivity initiatives to offset inflationary pressures [30][31] - The company is well-positioned to benefit from structural trends in EAF steelmaking capacity and decarbonization efforts [59] Management's Comments on Operating Environment and Future Outlook - Management acknowledged headwinds from China's COVID lockdowns and the Russian war in Ukraine but emphasized strong underlying demand trends for recycled metals [27] - The outlook for the fourth quarter includes expectations for increased ferrous and non-ferrous sales volumes year-over-year, with finished steel sales volumes expected to more than double compared to the previous year [53] - The company highlighted its resilience in various market conditions, supported by a diversified sales platform and integrated operations [56] Other Important Information - The company achieved ISO certification for six sites as part of its environmental management system goals [13] - Capital expenditures for fiscal 2022 are expected to be in the range of $130 million to $150 million, focusing on growth projects and environmental-related initiatives [51] Q&A Session Summary Question: Criteria for M&A Evaluation - Management evaluates acquisitions on a through-the-cycle basis, considering historical multiples and operational synergies [68] Question: Strategy for Southeast Region Expansion - The company targets strong industrial activity in the Southeast and seeks to acquire operations that provide operational leverage and synergies [72] Question: Logistics Constraints and Easing - Management noted improvements in container availability and freight costs, attributing some easing to China's slowdown [74]
Radius Recycling(RDUS) - 2022 Q3 - Earnings Call Transcript