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

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

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

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

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

The registrant had ~~27,254,958~~27,661,685 shares of Class A common stock, par value of $1.00 per share, and 200,000 shares of Class B common stock, par value of $1.00 per share, outstanding as of ~~April 5, 2023.~~January 2, 2024.

Statements and information included in this Quarterly Report on Form 10-Q by Schnitzer Steel Industries, Inc.dba Radius Recycling that are not purely historical are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 and are made pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. Except as noted herein or as the context may otherwise require, all references to “we,” “our,” “us,” “the Company,” “Radius Recycling,” and ~~“SSI”~~“Radius” refer to Schnitzer Steel Industries, Inc.dba Radius Recycling and its consolidated subsidiaries.

Forward-looking statements in this Quarterly Report on Form 10-Q include statements regarding future events or our expectations, intentions, beliefs, and strategies regarding the future, which may include statements regarding the impact of equipment upgrades, equipment failures, and facility damage on production, including timing of repairs and resumption of operations; the realization of insurance recoveries; the ~~impact of pandemics, epidemics, or other public health emergencies, such as the coronavirus disease 2019 (“COVID-19”) pandemic; the~~ Company’s outlook, growth initiatives, or expected results or objectives, including pricing, margins, ~~sales~~ volumes, and profitability; completion of acquisitions and integration of acquired businesses; the progression and impact of investments in processing and manufacturing technology improvements and information technology systems; the impacts of supply chain disruptions, inflation, and rising interest rates; liquidity positions; our ability to generate cash from continuing operations; trends, cyclicality, and changes in the markets we sell into; strategic direction or goals; targets; changes to manufacturing and production processes; the realization of deferred tax assets; planned capital expenditures; the cost of and the status of any agreements or actions related to our compliance with environmental and other laws; expected tax rates, deductions, and credits; the impact of sanctions and tariffs, quotas, and other trade actions and import restrictions; the impact of pandemics, epidemics, or other public health emergencies, such as the coronavirus disease 2019 (“COVID-19”) pandemic; the impact of labor shortages or increased labor costs; obligations under our retirement plans; benefits, savings, or additional costs from business realignment, cost containment, and productivity improvement programs; the potential impact of adopting new accounting pronouncements; and the adequacy of accruals.

Forward-looking statements by their nature address matters that are, to different degrees, uncertain, and often contain words such as “outlook,” “target,” “aim,” “believes,” “expects,” “anticipates,” “intends,” “assumes,” “estimates,” “evaluates,” “may,” “will,” “should,” “could,” “opinions,” “forecasts,” “projects,” “plans,” “future,” “forward,” “potential,” “probable,” and similar expressions. However, the absence of these words or similar expressions does not mean that a statement is not forward-looking.

We may make other forward-looking statements from time to time, including in reports filed with the Securities and Exchange Commission, press releases, presentations, and on public conference calls. All forward-looking statements we make are based on information available to us at the time the statements are made, and we assume no obligation to update any forward-looking statements, except as may be required by law. Our business is subject to the effects of changes in domestic and global economic conditions and a number of other risks and uncertainties that could cause actual results to differ materially from those included in, or implied by, such forward-looking statements. Some of these risks and uncertainties are discussed in “Item 1A. Risk Factors” of Part I of our most recent Annual Report on Form 10-K. Examples of these risks include: potential environmental cleanup costs related to the Portland Harbor Superfund site or other locations; the impact of goodwill impairment charges; the impact of equipment upgrades, equipment failures, and facility damage on production; failure to realize or delays in realizing expected benefits from capital and other projects, including investments in processing and manufacturing technology ~~improvements;~~improvements and information technology systems; the cyclicality and impact of general economic conditions; the impact of inflation, rising interest rates, and foreign currency fluctuations; changing conditions in global markets including the impact of sanctions and tariffs, quotas, and other trade actions and import restrictions; increases in the relative value of the U.S. dollar; economic and geopolitical instability including as a result of military conflict; volatile supply and demand conditions affecting prices and volumes in the markets for raw materials and other inputs we purchase; significant decreases in recycled metal prices; imbalances in supply and demand conditions in the global steel industry; difficulties associated with acquisitions and integration of acquired businesses; supply chain disruptions; reliance on third-party shipping companies, including with respect to freight rates and the availability of transportation; the impact of ~~goodwill~~ impairment ~~charges; the impact~~ of ~~long-lived asset and equity investment impairment charges;~~assets other than goodwill; the impact of pandemics, epidemics, or other public health emergencies, such as the COVID-19 pandemic; inability to achieve or sustain the benefits from productivity, cost savings, and restructuring initiatives; inability to renew facility leases; customer fulfillment of their contractual obligations; potential limitations on our ability to access capital resources and existing credit facilities; restrictions on our business and financial covenants under the agreement governing our bank credit facilities; the impact of consolidation in the steel industry; product liability claims; the impact of legal proceedings and legal compliance; the ~~adverse~~ impact of climate change; the impact of not realizing deferred tax assets; the impact of tax increases and changes in tax rules; the impact of one or more cybersecurity incidents; the impact of increasing attention to environmental, social, and governance matters; translation risks associated with fluctuation in foreign exchange rates; the impact of hedging transactions; inability to obtain or renew business licenses and permits; environmental compliance costs and potential environmental liabilities; increased environmental regulations and enforcement; compliance with climate change and greenhouse gas emission laws and regulations; the impact of labor shortages or increased labor costs; reliance on employees subject to collective bargaining agreements; and the impact of the underfunded status of multiemployer plans in which we participate.

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

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

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

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

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

Note 5 - Commitments and Contingencies

Contingencies - Environmental

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

16Changes in the Company’s environmental liabilities for the three months ended November 30, 2023 were as follows (in thousands):


Balance as of September 1, 2023		Liabilities Established (Released), Net		Payments and Other			Balance as of November 30, 2023		Short-Term		Long-Term
$	66,777	$	131	$	(2,665	)	$	64,243	$	11,891	$	52,352

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SCHNITZER STEEL INDUSTRIES, INC.dba RADIUS RECYCLING

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~Changes in the Company’s environmental liabilities for the six months ended February 28, 2023 were as follows (in thousands):~~

Balance as of
September 1, 2022

Liabilities
Established
(Released), Net

Payments and
Other

Balance as of
February 28, 2023

Short-Term

Long-Term

$
68,500

$
1,608

$
(6,633
)

$
63,475

$
8,495

$
54,980

As of ~~February 28,~~November 30, 2023 and August 31, ~~2022,~~2023, the Company had environmental liabilities of $6364 million and $6967 million, respectively, for the potential remediation of locations where it has conducted business or has environmental liabilities from historical or recent activities. These liabilities relate to the investigation and potential remediation of waterways and soil and groundwater contamination and may also involve natural resource damages, governmental fines and penalties, and claims by third parties for personal injury and property damage. Except for Portland Harbor and certain liabilities discussed under “Other Legacy Environmental Loss Contingencies” below, such liabilities were not individually material at any site.

Portland Harbor

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

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

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

In January 2017, the EPA issued a Record of Decision (“ROD”) that identified the selected remedy for Portland Harbor. The EPA has estimated the total cost of the selected remedy at $1.7 billion with a net present value cost of $1.05 billion (at a 7% discount rate) and an estimated construction period of 13 years following completion of the remedial designs. In the ROD, the EPA stated that the cost estimate is an order-of-magnitude engineering estimate that is expected to be within +50% to -30% of the actual project cost and that changes in the cost elements are likely to occur as a result of new information and data collected during the engineering design. Accordingly, the final cost may differ materially from that set forth in the ROD. The Company has identified a number of concerns regarding the remedy described in the ROD, which is based on data that is more than 15 years old, and the EPA’s estimates for the costs and time required to implement the selected remedy. Moreover, the ROD provided only Portland Harbor site-wide cost estimates and did not provide sufficient detail to estimate costs for specific sediment management areas within Portland Harbor. In addition, the ROD did not determine or allocate the responsibility for remediation costs among the PRPs.

In the ROD, the EPA acknowledged that much of the data was more than a decade old at that time and would need to be updated with a new round of “baseline” sampling to be conducted prior to the remedial design phase. The remedial design phase is an engineering phase during which additional technical information and data are collected, identified, and incorporated into technical drawings and specifications developed for the subsequent remedial action. Following issuance of the ROD, the EPA proposed that the PRPs, or a subgroup of PRPs, perform the additional investigative work in advance of remedial design.

In December 2017, the Company and three other PRPs entered into an Administrative Settlement Agreement and Order on Consent with the EPA to perform such pre-remedial design investigation and baseline sampling over a two-year period. The report analyzing the results concluded that Portland Harbor conditions have improved substantially since the data forming the basis of the ROD was collected. The EPA found with a few limited corrections that the new baseline data is of suitable quality and stated that such data will be used, in addition to existing and forthcoming design-level data, to inform implementation of the ROD. However, the EPA did not agree that the data or the analysis warranted a change to the remedy at this time and reaffirmed its commitment to proceed with remedial design. The Company and other PRPs disagree with the EPA’s position on use of the more recent data and will continue to pursue limited, but critical, changes to the selected remedy for Portland Harbor during the remedial design phase.

1715

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SCHNITZER STEEL INDUSTRIES, INC.dba RADIUS RECYCLING

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The EPA encouraged PRPs to step forward (individually or in groups) to enter into consent agreements to perform remedial design in various project areas covering Portland Harbor. While certain PRPs executed consent agreements for remedial design work, because of the EPA’s refusal to date to modify the remedy to reflect the most current data on Portland Harbor conditions and because of concerns with the terms of the consent agreement, the Company elected not to enter into a consent agreement. In April 2020, the EPA issued a unilateral administrative order (“UAO”) to the Company and MMGL, LLC (“MMGL”), an unaffiliated company, for the remedial design work in a portion of Portland Harbor designated as the River Mile 3.5 East Project Area. As required by the UAO, the Company notified the EPA of its intent to comply while reserving all of its sufficient cause defenses. Failure to comply with a UAO, without sufficient cause, could subject the Company to significant penalties or treble damages. Pursuant to the optimized remedial design timeline set forth in the UAO, the EPA’s expected schedule for completion of the remedial design work was four years. At the time it issued the UAO in April 2020, the EPA estimated the cost of the work at approximately $4 million. The Company has agreed with the other respondent to the UAO, MMGL, that the Company will lead the performance and be responsible for a portion of the costs of the work for remedial design under the UAO and also entered into an agreement with another PRP pursuant to which such other PRP has agreed to fund a portion of the costs of such work. These agreements are not an allocation of liability or claims associated with Portland Harbor as between the respondents or with respect to any third party. As of each of ~~February 28,~~November 30, 2023 and August 31, ~~2022,~~2023, the Company had $31 million in environmental reserves related to this matter. The Company has insurance policies and Qualified Settlement Funds (“QSFs”) pursuant to which the Company is being reimbursed for the costs it has incurred for remedial design. See further discussion of the QSFs below in this Note. As of both ~~February 28,~~November 30, 2023 and August 31, ~~2022,~~2023, the Company had insurance and other receivables in the same amount as the environmental reserves for such remedial design work under the UAO. See “Other Assets” in Note 1 - Summary of Significant Accounting Policies for further discussion of insurance and other related receivables. The Company also expects to pursue in the future allocation or contribution from other PRPs for a portion of such remedial design costs. In February 2021, the EPA announced that 100 percent of Portland Harbor’s areas requiring active cleanup are in the remedial design phase of the process.

Except for certain early action projects in which the Company is not involved, remediation activities at Portland Harbor are not expected to commence for a number of years. Moreover, those activities are expected to be sequenced, and the order and timing of such sequencing has not been determined. In addition, as noted above, the ROD does not determine the allocation of costs among PRPs.

The Company has joined with approximately 100 other PRPs, including the RI/FS performing parties, in a voluntary process to establish an allocation of costs at Portland Harbor, including the costs incurred in the RI/FS, ongoing remedial design costs, and future remedial action costs. The Company expects the next major stage of the allocation process to proceed in parallel with the remedial design process.

In addition to the remedial action process overseen by the EPA, the Portland Harbor Natural Resource Trustee Council (“Trustee Council”) is assessing natural resource damages at Portland Harbor. In 2008, the Trustee Council invited the Company and other PRPs to participate in funding and implementing the Natural Resource Injury Assessment for Portland Harbor. The Company and other participating PRPs ultimately agreed to fund the first two phases of the three-phase assessment, which included the development of the Natural Resource Damage Assessment Plan (“AP”) and implementation of the AP to develop information sufficient to facilitate early settlements between the Trustee Council and Phase 2 participants and the identification of restoration projects to be funded by the settlements. In late May 2018, the Trustee Council published notice of its intent to proceed with Phase 3, which will involve the full implementation of the AP and the final injury and damage determination. The Company is proceeding with the process established by the Trustee Council regarding early settlements under Phase 2. The Company has established an environmental reserve of approximately $2.3 million for this alleged natural resource damages liability as it continues to work with the Trustee Council to finalize an early settlement. As of each of ~~February 28,~~November 30, 2023 and August 31, ~~2022,~~2023, the Company had a receivable in the same amount as the environmental reserve. See “Other Assets” in Note 1 - Summary of Significant Accounting Policies for further discussion of insurance and other related receivables.

On January 30, 2017, one of the Trustees, the Confederated Tribes and Bands of the Yakama Nation, which withdrew from the council in 2009, filed a suit against approximately 30 parties, including the Company, seeking reimbursement of certain past and future response costs in connection with remedial action at Portland Harbor and recovery of assessment costs related to natural resources damages from releases at and from Portland Harbor to the Multnomah Channel and the Lower Columbia River. The parties filed various motions to dismiss or stay this suit, and in August 2019, the court issued an order denying the motions to dismiss and staying the action. The Company intends to defend against the claims in this suit and does not have sufficient information to determine the likelihood of a loss in this matter or to estimate the amount of damages being sought or the amount of such damages that could be allocated to the Company.

1816

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SCHNITZER STEEL INDUSTRIES, INC.dba RADIUS RECYCLING

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The Company’s environmental liabilities as of ~~February 28,~~each of November 30, 2023 and August 31, ~~2022~~2023 included $5 million ~~and $~~6 ~~million, respectively,~~ relating to the Portland Harbor matters described above.

Because the final remedial actions have not yet been designed and there has not been a determination of the allocation among the PRPs of costs of the investigations or remedial action costs, the Company believes it is not possible to reasonably estimate the amount or range of costs which it is likely to or which it is reasonably possible that it will incur in connection with Portland Harbor, although such costs could be material to the Company’s financial position, results of operations, cash flows, and liquidity. Among the facts being evaluated are detailed information on the history of ownership of and the nature of the uses of and activities and operations performed on each property within Portland Harbor, which are factors that will play a substantial role in determining the allocation of investigation and remedy costs among the PRPs.

The Company has insurance policies that it believes will provide reimbursement for costs it incurs for defense, remediation, and mitigation for or settlement of natural resource damages claims in connection with Portland Harbor although there are no assurances that those policies will cover all of the costs which the Company may incur. Most of these policies jointly insure the Company and MMGL, as the successor to a former subsidiary of the Company. The Company and MMGL have negotiated the settlement with certain insurers of claims against them related to Portland Harbor, continue to seek settlements with other insurers, and formed two QSFs which became operative in fiscal 2020 and the second quarter of fiscal 2023, respectively, to hold such settlement amounts until funds are needed to pay or reimburse costs incurred by the Company and MMGL in connection with Portland Harbor. These insurance policies and the funds in the QSFs may not cover all of the costs which the Company may incur. Each QSF is an unconsolidated variable interest entity (“VIE”) with no primary beneficiary. Two managers unrelated to each other, one appointed by the Company and one appointed by MMGL, share equally the power to direct the activities of each VIE that most significantly impact its economic performance. The Company’s appointee to co-manage each VIE is an executive officer of the Company. Neither MMGL nor its appointee to co-manage each VIE is a related party of the Company for the purpose of the primary beneficiary assessment or otherwise.

The Oregon Department of Environmental Quality is separately providing oversight of investigations and source control activities by the Company at various sites adjacent to Portland Harbor that are focused on controlling any current “uplands” releases of contaminants into the Willamette River. The Company has accrued liabilities for source control and related work at two sites, reflecting estimated costs of primarily investigation and design, which costs have not been material in the aggregate to date. No liabilities have been established in connection with investigations for any other sites because the extent of contamination, required source control work, and the Company’s responsibility for the contamination and source control work, in each case if any, have not yet been determined. The Company believes that, pursuant to its insurance policies and agreements with other third parties, it will be reimbursed for the costs it incurs for required source control evaluation and remediation work; however, the Company’s insurance policies and agreements with other third parties may not cover all of the costs which the Company incurs. As of ~~both February 28,~~each of November 30, 2023 and August 31, ~~2022,~~2023, the Company had an insurance receivable in the same amount as the environmental reserve for such source control work.

Other Legacy Environmental Loss Contingencies

The Company’s environmental loss contingencies as of ~~February 28,~~November 30, 2023 and August 31, ~~2022,~~2023, other than Portland Harbor, include actual or possible investigation and remediation costs from historical contamination at sites currently or formerly owned or formerly operated by the Company or at other sites where the Company may have responsibility for such costs due to past disposal or other activities (“legacy environmental loss contingencies”). These legacy environmental loss contingencies relate to the potential remediation of waterways and soil and groundwater contamination and may also involve natural resource damages, governmental fines and penalties, and claims by third parties for personal injury and property damage. The Company has been notified that it is or may be a potentially responsible party at certain of these sites, and investigation and remediation activities are ongoing or may be required in the future. The Company recognizes a liability for such matters when the loss is probable and can be reasonably estimated. When investigation, allocation, and remediation activities are ongoing or where the Company has not yet been identified as having responsibility or the contamination has not yet been identified, it is reasonably possible that the Company may need to recognize additional liabilities in connection with such sites but the Company cannot currently reasonably estimate the possible loss or range of loss absent additional information or developments. Such additional liabilities, individually or in the aggregate, may have a material adverse effect on the Company’s results of operations, financial condition, or cash flows.

1917

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SCHNITZER STEEL INDUSTRIES, INC.dba RADIUS RECYCLING

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

In fiscal 2018, the Company accrued $4 million for the estimated costs related to remediation of shredder residue disposed of in or around the 1970s at third-party sites located near each other. Investigation activities have been conducted under oversight of the applicable state regulatory agency. As of each of ~~February 28,~~November 30, 2023 and August 31, ~~2022,~~2023, the Company had $4 million accrued for this matter. It is reasonably possible that the Company may recognize additional liabilities in connection with this matter at the time such losses are probable and can be reasonably estimated. The Company previously estimated a range of reasonably possible losses related to this matter in excess of current accruals at between zero and $28 million based on a range of remedial alternatives and subject to development and approval by regulators of specific remedy implementation plans. However, subsequent to the development of those remedial alternatives, the Company performed additional investigative activities under new state requirements that are likely to impact the required remedial actions and associated cost estimates, but the scope of such impacts and the amount or the range of the additional associated costs are not reasonably estimable at this time and are subject to further investigation, analysis, and discussion by the Company and regulators. The Company is investigating whether a portion or all of the current and future losses related to this matter, if incurred, are covered by existing insurance coverage or may be offset by contributions from other responsible parties.

In addition, the Company’s loss contingencies as of ~~February 28,~~November 30, 2023 and August 31, ~~2022~~2023 included $43 million and $85 million, respectively, for the estimated costs related to environmental matters in connection with a closed facility owned and previously operated by an indirect, wholly-owned subsidiary, including monitoring and remediation of soil and groundwater conditions and funding for wellhead treatment facilities. In the first quarter of fiscal 2023, the Company accrued an incremental $1 million for certain soil remediation activities based on additional information related to estimated costs to complete. Investigation and remediation activities have been conducted under the oversight of the applicable state regulatory agency and are on-going, and the Company’s subsidiary has also been working with state and local officials with respect to the protection of public and private water supplies. As part of its activities relating to the protection of public water supplies, the Company’s subsidiary agreed to reimburse the municipality for certain studies and plans and to provide funding for the construction and operation by the municipality of wellhead treatment facilities. It is reasonably possible that the Company may recognize additional liabilities in connection with this matter at the time such additional losses are probable and can be reasonably estimated. However, the Company cannot reasonably estimate at this time the possible additional loss or range of possible additional losses associated with this matter pending the on-going implementation of the approved remediation plans for soil and groundwater conditions and completion and operation of the wellhead treatment facilities.

In addition, the Company’s loss contingencies as of each of ~~February 28,~~November 30, 2023 and August 31, ~~2022~~2023 included $710 million for the estimated costs related to remediation of a site a portion of which was previously leased to and operated by an indirect, wholly-owned subsidiary. In connection with settlement of a lawsuit relating to allocation of the remediation costs, the Company’s subsidiary agreed to perform the remedial action related to metals contamination on the site initially estimated to cost approximately $7.9 million, and another potentially liable party agreed to perform the remedial action related to creosote contamination at the site. As part of the settlement, other potentially liable parties agreed to make payments totaling approximately $7.6 million to fund the remediation of the metals contamination at the site in exchange for a release and indemnity. This amount was fully funded into a client trust account for the Company’s subsidiary in December 2020. ~~See “Other Assets” in Note 1 - Summary~~In the fourth quarter of ~~Significant Accounting Policies for further discussion~~fiscal 2023, the Company increased its estimate of ~~this client trust account.~~the cost to perform the remedial action by approximately $3 million. It is reasonably possible that the Company may recognize additional liabilities in connection with this matter at the time such additional losses are probable and can be reasonably estimated. ~~However,~~The Company estimates the ~~Company cannot~~ reasonably ~~estimate at this time the possible additional loss or range of~~ possible additional losses associated with this matter to range from zero to $10 million as of November 30, 2023, pending completion, approval, and implementation of the remediation action plan.

Summary - Environmental Contingencies

With respect to environmental contingencies other than the Portland Harbor Superfund site and the Other Legacy Environmental Loss Contingencies, which are discussed separately above, management currently believes that adequate provision has been made for the potential impact of its environmental contingencies. Historically, the amounts the Company has ultimately paid for such remediation activities have not been material in any given period, but there can be no assurance that such amounts paid will not be material in the future.

Contingencies – Other

In addition to legal proceedings relating to the contingencies described above, the Company is a party to various legal proceedings arising in the normal course of business. The Company recognizes a liability for such matters when the loss is probable and can be reasonably estimated. The Company does not anticipate that the liabilities arising from such legal proceedings in the normal course of business, after taking into consideration expected insurance recoveries, will have a material adverse effect on its results of operations, financial condition, or cash flows.

2018

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SCHNITZER STEEL INDUSTRIES, INC.dba RADIUS RECYCLING

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 6 - Accumulated Other Comprehensive Loss

Changes in accumulated other comprehensive loss, net of tax, comprise the following (in thousands):

Three Months Ended February 28, 2023

Three Months Ended February 28, 2022

Foreign Currency
Translation
Adjustments

Pension Obligations,
Net

Total

Foreign Currency
Translation
Adjustments

Pension Obligations,
Net

Total

Balances - December 1 (Beginning of period)

$
(36,925
)

$
(2,377
)

$
(39,302
)

$
(32,724
)

$
(2,555
)

$
(35,279
)
Other comprehensive (loss) income before reclassifications

(1,361
)

—

(1,361
)

722

—

722

Income tax benefit (expense)

—

—

—

—

—

—

Other comprehensive (loss) income before reclassifications, net of tax

(1,361
)

—

(1,361
)

722

—

722

Amounts reclassified from accumulated other comprehensive loss

—

75

75

—

154

154

Income tax (benefit)

—

(17
)

(17
)

—

(35
)

(35
)
Amounts reclassified from accumulated other comprehensive loss, net of tax

—

58

58

—

119

119

Net periodic other comprehensive (loss) income

(1,361
)

58

(1,303
)

722

119

841

Balances - February 28 (End of period)

$
(38,286
)

$
(2,319
)

$
(40,605
)

$
(32,002
)

$
(2,436
)

$
(34,438
)


	Six Months Ended February 28, 2023									Six Months Ended February 28, 2022									Three Months Ended November 30, 2023												Three Months Ended November 30, 2022
	Foreign Currency Translation Adjustments			Pension Obligations, Net			Total			Foreign Currency Translation Adjustments			Pension Obligations, Net			Total			Foreign Currency Translation Adjustments			Cash Flow Hedges, net			Pension Obligations, Net			Total			Foreign Currency Translation Adjustments			Pension Obligations, Net			Total
Balances - September 1 (Beginning of period)	$	(34,679	)	$	(2,410	)	$	(37,089	)	$	(31,609	)	$	(2,945	)	$	(34,554	)	$	(37,340	)	$	(304	)	$	(2,039	)	$	(39,683	)	$	(34,679	)	$	(2,410	)	$	(37,089	)
Other comprehensive (loss) income before reclassifications		(3,607	)		(34	)		(3,641	)		(393	)		451			58			(499	)		197			178			(124	)		(2,246	)		(34	)		(2,280	)
Income tax benefit (expense)		—			8			8			—			(101	)		(101	)		—			(44	)		(40	)		(84	)		—			8			8
Other comprehensive (loss) income before reclassifications, net of tax		(3,607	)		(26	)		(3,633	)		(393	)		350			(43	)		(499	)		153			138			(208	)		(2,246	)		(26	)		(2,272	)
Amounts reclassified from accumulated other comprehensive loss		—			151			151			—			205			205			—			(336	)		63			(273	)		—			76			76
Income tax (benefit)		—			(34	)		(34	)		—			(46	)		(46	)
Income tax benefit (expense)																				—			76			(14	)		62			—			(17	)		(17	)
Amounts reclassified from accumulated other comprehensive loss, net of tax		—			117			117			—			159			159			—			(260	)		49			(211	)		—			59			59
Net periodic other comprehensive (loss) income		(3,607	)		91			(3,516	)		(393	)		509			116			(499	)		(107	)		187			(419	)		(2,246	)		33			(2,213	)
Balances - February 28 (End of period)	$	(38,286	)	$	(2,319	)	$	(40,605	)	$	(32,002	)	$	(2,436	)	$	(34,438	)
Balances - November 30 (End of period)																			$	(37,839	)	$	(411	)	$	(1,852	)	$	(40,102	)	$	(36,925	)	$	(2,377	)	$	(39,302	)

Reclassifications from accumulated other comprehensive loss to earnings, both individually and in the aggregate, were not material to the impacted captions in the Unaudited Condensed Consolidated Statements of Operations in all periods presented.

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~~SCHNITZER STEEL INDUSTRIES, INC.~~

~~NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

Note 7 - Revenue

Disaggregation of Revenues

The table below illustrates the Company’s revenues disaggregated by major product and sales destination (in thousands):


	Three Months Ended February 28,				Six Months Ended February 28,				Three Months Ended November 30,
	2023		2022		2023		2022		2023		2022
Major product information:
Ferrous revenues	$	434,122	$	438,314	$	695,851	$	904,170	$	348,897	$	261,729
Nonferrous revenues		179,655		196,142		357,330		390,571		169,294		177,675
Steel revenues(1)		107,825		116,196		232,340		219,434		113,531		124,515
Retail and other revenues		34,351		32,546		69,162		67,141		41,175		34,811
Total revenues	$	755,953	$	783,198	$	1,354,683	$	1,581,316	$	672,897	$	598,730
Revenues based on sales destination:
Foreign	$	436,219	$	435,471	$	708,903	$	906,644	$	358,021	$	272,684
Domestic		319,734		347,727		645,780		674,672		314,876		326,046
Total revenues	$	755,953	$	783,198	$	1,354,683	$	1,581,316	$	672,897	$	598,730

(1)

Steel revenues include predominantly sales of finished steel products, in addition to sales of semi-finished goods (billets) and steel manufacturing scrap.

Receivables from Contracts with Customers

The revenue accounting standard defines a receivable as an entity’s right to consideration that is unconditional, meaning that only the passage of time is required before payment is due. As of ~~February 28,~~November 30, 2023 and August 31, ~~2022,~~2023, receivables from contracts with customers, net of an allowance for credit losses, totaled $~~238~~189 million and $~~230~~208 million, respectively, representing 99% ~~and~~ 97~~%, respectively,~~ of total accounts receivable reported in the Unaudited Condensed Consolidated Balance Sheets at each reporting date.

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SCHNITZER STEEL INDUSTRIES, INC. dba RADIUS RECYCLING

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Contract Liabilities

Contract consideration received from a customer prior to revenue recognition is recorded as a contract liability and is recognized as revenue when the Company satisfies the related performance obligation under the terms of the contract. The Company’s contract liabilities, which consist almost entirely of customer deposits for recycled metal and finished steel sales contracts, are reported within accounts payable in the Unaudited Condensed Consolidated Balance Sheets and totaled $9 ~~million and $~~87 million as of ~~February 28,~~each of November 30, 2023 and August 31, ~~2022, respectively.~~2023. Unsatisfied performance obligations reflected in these contract liabilities relate to contracts with original expected durations of one year or less and, therefore, are not disclosed. The substantial majority of outstanding contract liabilities are reclassified to revenues within three months of the reporting date as a result of satisfying performance obligations.

Note 8 - Share-Based Compensation

In the first quarter of fiscal ~~2023,~~2024, as part of the annual awards under the Company’s Long-Term Incentive Plan, the Compensation Committee of the Company’s Board of Directors granted ~~213,080~~290,461 restricted stock units (“RSUs”) and ~~211,046~~293,239 performance share awards to the Company’s key employees and officers under the Company’s 1993 Amended and Restated Stock Incentive Plan.

The RSUs have a five-year term and vest 20% per year commencing October 31, ~~2023.~~2024. The aggregate fair value of all the RSUs granted was based on the market closing price of the underlying Class A common stock on the grant date and totaled $7 million. The compensation expense associated with the RSUs is recognized over the requisite service period of the awards, net of forfeitures, which for participants who were retirement eligible as of the grant date or who will become retirement eligible during the five-year term of the awards is the longer of two years or the period ending on the date retirement eligibility is achieved.

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~~SCHNITZER STEEL INDUSTRIES, INC.~~

~~NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

The performance share awards granted in the first quarter of 2024 comprise two separate and distinct awards with different vesting conditions. Awards vest if the threshold level under the specified metric is met at the end of the approximately three-year performance period. ~~For awards granted in the first quarter of fiscal 2023, the~~The performance metrics are (1) the Company’s total shareholder return (“TSR”) based on the Company’s average TSR percentile rank relative to a designated peer group and (2) the Company’s recycled metal volume ~~growth and its return on capital employed (“ROCE”).~~growth. Award share payouts depend on the extent to which the performance goals have been achieved, which performance-based payout factors are adjusted by a total shareholder return (“TSR”) modifier based on the Company’s average TSR percentile rank relative to a designated peer group.achieved. The number of shares that a participant receives is equal to the number of performance shares granted multiplied by ~~an initial~~a payout factor, ~~based on recycled metal volume growth and ROCE,~~ which ranges from a threshold of 50% to a maximum of 200%. The ~~final payout factor is then determined by applying the~~ TSR ~~modifier~~award stipulates certain limitations to the ~~initial~~ payout ~~factor within~~in the event the payout reaches a ~~certain range, with a maximum increase~~defined ceiling level or ~~decrease of~~ the Company’s TSR is negative.20%.

~~Half of the performance share awards granted by the Company during~~During the first quarter of fiscal ~~2023 were based on~~2024, the ~~Company's recycled metal volume growth metric and half were~~Company granted 148,032 performance share awards based on its ~~ROCE~~relative TSR metric ~~in each case subject to a TSR modifier with performance measured~~ over aan approximately three-year performance period ~~consisting of the Company’s 2023, 2024, and 2025 fiscal years.~~ending August 31, 2026. The Company estimated the fair value of ~~performance share~~TSR awards granted in the first quarter of fiscal ~~2023~~2024 using a Monte-Carlo simulation model utilizing several key assumptions, including the following:


	Percentage
Expected share price volatility ~~(SSI)~~(Radius)		~~56.1~~47.9	%
Expected share price volatility (Peer group)		~~60.5~~46.6	%
Expected correlation to peer group companies		~~48.1~~46.6	%
Risk-free rate of return		~~4.16~~4.82	%

The estimated aggregate fair value of ~~these~~the TSR-based performance share awards at the date of grant was $73 million. The compensation expense for these awards based on the grant-date fair value, net of estimated forfeitures, is recognized over the requisite service period (or to the date a qualifying employment termination event entitles the recipient to a prorated award, if before the end of the service period), regardless of whether the market condition has been or will be satisfied.

During the first quarter of fiscal 2024, the Company granted 145,207 performance share awards based on its recycled metal volume growth for the three-year performance period consisting of the Company’s 2024, 2025 and 2026 fiscal years. The fair value of the awards granted was based on the market closing price of the underlying Class A common stock on the grant date and totaled $3 million.

The Company accrues compensation cost for ~~these~~the performance share awards related to recycled metal volume growth based on the probable outcome of achieving specified performance conditions, net of estimated forfeitures, over the requisite service period (or to the date a qualifying employment termination event entitles the recipient to a prorated award, if before the end of the service period).

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SCHNITZER STEEL INDUSTRIES, INC. dba RADIUS RECYCLING

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The Company reassesses whether achievement of the performance conditions is probable at each reporting date. If it is probable that the actual performance results will exceed the stated target performance conditions, the Company accrues additional compensation cost for the additional performance shares to be ~~awarded irrespective of the TSR modifier, the effects of which are incorporated in the grant-date fair value of the awards.~~awarded. If, upon reassessment, it is no longer probable that the actual performance results will exceed the stated target performance conditions, or ~~that~~ it is no longer probable that the target performance conditions will be achieved, the Company reverses any recognized compensation cost for shares no longer probable of being issued. If the performance conditions are not achieved at the end of the performance period, all related compensation cost previously recognized is reversed.

Performance share awards will be paid in Class A common stock as soon as practicable after the end of the requisite service period and vesting date of October 31, ~~2025.~~2026.

Note 9 - Derivative Financial Instruments

Interest Rate Swaps

The Company is exposed to interest rate risk on its debt and may enter interest rate swap contracts to effectively manage the impact of interest rate changes on its outstanding debt, which has predominantly floating interest rates. The Company does not enter interest rate swap transactions for trading or speculative purposes.

In the ~~second~~fourth quarter of fiscal 2023, the Company ~~granted deferred stock units (“DSUs”)~~entered three pay-fixed interest rate swap transactions, each with a different major financial institution counterparty and designated as a cash flow hedge, to ~~each of its non-employee directors under~~hedge the variability in interest cash flows associated with the Company’s ~~1993 Stock Incentive Plan, as amended. Each DSU gives~~variable-rate loans under its bank revolving credit facilities. The interest rate swaps involve the ~~director~~receipt of variable-rate amounts from the ~~right to receive~~ counterparty in exchange for the Company making fixed-rate payments over the life of the agreement without exchange of the underlying notional amount. These contracts mature in August 2026. As of both November 30, 2023 and August 31, 2023, the total notional amount of these interest rate swaps was $~~one~~150 ~~share~~million. The fair values of ~~Class A common stock at a future date. The grant reflected an aggregate~~the interest rate swaps are based upon inputs corroborated by observable market data which is considered Level 2 of ~~21,438~~ ~~DSUs that will vest in full on~~ the ~~day before the Company’s 2024 annual meeting of shareholders, subject to continued Board service.~~ fair value hierarchy.

The ~~total~~ fair value of ~~these awards at~~derivative instruments in the ~~grant date was~~Unaudited Condensed Consolidated Balance Sheet as of November 30, 2023 and August 31, 2023 is as follows (in thousands):


	Asset (Liability) Derivatives
	Balance Sheet Location	November 30, 2023			August 31, 2023
Interest rate swap contracts	Prepaid expenses and other current assets	$	930		$	1,163
Interest rate swap contracts	Other long-term liabilities		(1,461	)		(1,555	)

See Note 6 - Accumulated Other Comprehensive Loss for tabular presentation of the effects of interest rate swap derivative cash flow hedges on other comprehensive income. All related cash flow hedge amounts reclassified from accumulated other comprehensive income (“AOCI”) were recorded in interest expense on the Unaudited Condensed Consolidated Statement of Operations for the three months ended November 30, 2023, which reclassified amounts totaled less than $1 million. Total interest expense was $5 million for the three months ended November 30, 2023. There was no hedge ineffectiveness with respect to the Company’s interest rate swap cash flow hedges for the three months ended November 30, 2023.

Note 910 - Income Taxes

Effective Tax Rate

The Company’s effective tax rate from continuing operations for the ~~second~~first quarter ~~and first six months~~ of fiscal ~~2023~~2024 was ~~a benefiton pre-tax income of~~ ~~14.5% and~~ a benefit on pre-tax loss of ~~32.8~~36.4%~~, respectively,~~ compared to ~~an expense on pre-tax income of~~ ~~24.0~~25.6% ~~and~~ ~~21.3%, respectively,~~ for the comparable prior year ~~periods.~~period. The Company’s effective tax rate from continuing operations for the ~~second~~first quarter of fiscal ~~2023 was significantly different than the U.S. federal statutory rate of~~ 21% primarily due to the Company’s financial performance and the effect of discrete items on intra-period allocation. For the second quarter of fiscal 2022, the Company's effective tax rate from continuing operations2024 was higher than the U.S. federal statutory rate of 21% primarily due to the aggregate effect of the Company's financial performance, permanent differences from non-deductible expenses, and unrecognized tax benefits on intra-period allocation of the estimated annual tax provision. The Company’s effective tax rate from continuing operations for the first quarter of fiscal 2023 was higher than the U.S. federal statutory rate of 21% primarily due to discrete tax benefits resulting from vesting of share-based awards in the quarter, as well as the impact of ~~state taxes and~~ permanent differences from non-deductible expenses on the projected annual effective tax rate applied to the quarterly results.

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SCHNITZER STEEL INDUSTRIES, INC.dba RADIUS RECYCLING

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Valuation Allowances

The Company assesses the realizability of its deferred tax assets on a quarterly basis through an analysis of potential sources of future taxable income, including prior year taxable income available to absorb a carryback of tax losses, reversals of existing taxable temporary differences, tax planning strategies, and forecasts of taxable income. The Company considers all negative and positive evidence, including the weight of the evidence, to determine if valuation allowances against deferred tax assets are required. The Company continues to maintain valuation allowances against certain state and Canadian deferred tax assets. Canadian deferred tax assets against which the Company continues to maintain a valuation allowance relate to indefinite-lived assets.

The Company files federal and state income tax returns in the U.S. and foreign tax returns in Puerto Rico and Canada. For U.S. federal income tax returns, fiscal years 2014 to ~~2022~~2023 remain subject to examination under the statute of limitations.

Note 1011 - Net (Loss) Income ~~(Loss)~~ Per Share

The following table sets forth the information used to compute basic and diluted net (loss) income ~~(loss)~~ per share attributable to ~~SSI~~Radius shareholders (in thousands):

Three Months Ended February 28,

Six Months Ended February 28,

2023

2022

2023

2022

Income (loss) from continuing operations

$
4,048

$
38,136

$
(13,439
)

$
85,441

Net loss (income) attributable to noncontrolling interests

81

(550
)

(151
)

(1,627
)
Income (loss) from continuing operations attributable to SSI shareholders

$
4,129

$
37,586

$
(13,590
)

$
83,814

Income from discontinued operations, net of tax

224

29

155

—

Net income (loss) attributable to SSI shareholders

$
4,353

$
37,615

$
(13,435
)

$
83,814

Computation of shares:

Weighted average common shares outstanding, basic

28,081

28,231

27,912

28,195

Incremental common shares attributable to dilutive performance share awards, restricted stock units and deferred stock units

536

1,481

—

1,603

Weighted average common shares outstanding, diluted

28,617

29,712

27,912

29,798


	Three Months Ended November 30,
	2023			2022
Loss from continuing operations	$	(17,797	)	$	(17,487	)
Net income attributable to noncontrolling interests		(165	)		(232	)
Loss from continuing operations attributable to Radius shareholders	$	(17,962	)	$	(17,719	)
Loss from discontinued operations, net of tax		(2	)		(69	)
Net loss attributable to Radius shareholders	$	(17,964	)	$	(17,788	)
Computation of shares:
Weighted average common shares outstanding, basic		28,219			27,723
Incremental common shares attributable to dilutive performance share awards, restricted stock units and deferred stock units		—			—
Weighted average common shares outstanding, diluted		28,219			27,723

Common stock equivalent shares of ~~56,520~~525,287 and ~~796,877~~1,084,867 were considered antidilutive and were excluded from the calculation of diluted net (loss) income ~~(loss)~~ per share for the three ~~and six~~ months ended ~~February 28,~~November 30, 2023 ~~respectively, compared to~~ ~~311,736~~and~~199,786~~ ~~for the three and six months ended February 28,~~ 2022, respectively.

Note 1112 - Related Party Transactions

The Company purchases recycled metal from one of its joint venture operations at prices that approximate fair market value. These purchases totaled $4 million ~~and $~~5 ~~million~~ for each of the three months ended ~~February 28,~~November 30, 2023 and ~~2022, respectively, and $~~8 ~~million and $~~11 ~~million for the six months ended February 28, 2023 and 2022, respectively.~~2022.

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SCHNITZER STEEL INDUSTRIES, INC.dba RADIUS RECYCLING

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This section includes a discussion of our operations for the three ~~and six~~ months ended ~~February 28,~~November 30, 2023 and 2022. The following discussion and analysis provide information which management believes is relevant to an assessment and understanding of our financial condition and results of operations. The discussion should be read in conjunction with our Annual Report on Form 10-K for the year ended August 31, ~~2022,~~2023, and the Unaudited Condensed Consolidated Financial Statements and the related Notes thereto included in Part I, Item 1 of this report.

General

Founded in 1906, ~~Schnitzer Steel Industries, Inc.~~ Radius Recyclingis one of North America’s largest recyclers of ferrous and nonferrous metal, including end-of-life vehicles, and a manufacturer of finished steel products. As a vertically integrated organization, we offer a range of products and services to meet global demand through our network that includes 50 retail self-service auto parts stores, 54 metals recycling facilities, and an electric arc furnace (“EAF”) steel mill. Our internal organizational and reporting structure includes a single operating and reportable segment.

We sell recycled ferrous and nonferrous metal in both foreign and domestic markets. We also sell a range of finished steel long products produced at our steel mill. We acquire, process, and recycle end-of-life (salvaged) vehicles, rail cars, home appliances, industrial machinery, manufacturing scrap, and construction and demolition scrap through our facilities. Our retail self-service auto parts stores located across the United States (“U.S.”) and Western Canada, which operate under the commercial brand-name Pick-n-Pull, procure the significant majority of our salvaged vehicles and sell serviceable used auto parts from these vehicles. Upon acquiring a salvaged vehicle, we remove catalytic converters, aluminum wheels, and batteries for separate processing and sale prior to placing the vehicle in our retail lot. After retail customers have removed desired parts from a vehicle, we may remove remaining major component parts containing ferrous and nonferrous metals, which are primarily sold to wholesalers. The remaining auto bodies are crushed and shipped to our metals recycling facilities to be shredded or sold to third parties when geographically more economical. At our metals recycling facilities, we process mixed and large pieces of scrap metal into smaller pieces by crushing, torching, shearing, shredding, separating, and sorting, resulting in recycled ferrous, nonferrous, and mixed metal pieces of a size, density, and metal content required by customers to meet their production needs. Each of our shredding, nonferrous processing, and separation systems is designed to optimize the recovery of valuable recycled metal. We also purchase nonferrous metal directly from industrial vendors and other suppliers and aggregate and prepare this metal for shipment to customers by ship, rail, or truck. In addition to the sale of recycled metal processed at our facilities, we also provide a variety of recycling and related services including brokering the sale of ferrous and nonferrous scrap metal generated by industrial entities and demolition projects to customers in the domestic market, among other services. Our steel mill produces semi-finished goods (billets) and finished goods, consisting of rebar, coiled rebar, wire rod, merchant bar, and other specialty products, using recycled ferrous metal sourced internally from our recycling and joint venture operations and other raw materials.

We operate seven deepwater port locations, six of which are equipped with large-scale shredders. Our deepwater port facilities on both the East and West Coasts of the U.S. (in Everett, Massachusetts; Providence, Rhode Island; Oakland, California; Tacoma, Washington; and Portland, Oregon) and access to public deepwater port facilities (in Kapolei, Hawaii and Salinas, Puerto Rico) allow us to ship bulk cargoes of processed recycled ferrous metal to steel manufacturers located in Europe, Africa, the Middle East, Asia, North America, Central America, and South America. Our exports of nonferrous recycled metal are shipped in containers through various public docks to specialty steelmakers, foundries, aluminum sheet and ingot manufacturers, copper refineries and smelters, brass and bronze ingot manufacturers, wire and cable producers, wholesalers, and other recycled metal processors globally. We also transport both ferrous and nonferrous metals by truck, rail, and barge in order to transfer scrap metal between our facilities for further processing, to load shipments at our export facilities, and to meet regional domestic demand.

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SCHNITZER STEEL INDUSTRIES, INC. dba RADIUS RECYCLING

Our results of operations depend in large part on the demand and prices for recycled metal in foreign and domestic markets and on the supply of raw materials, including end-of-life vehicles, available to be processed at our facilities. Our results of operations also depend substantially on our operating leverage from processing and selling higher volumes of recycled metal as well as our ability to efficiently extract ferrous and nonferrous metals from the shredding process. We respond to changes in selling prices for processed metal by seeking to adjust purchase prices for unprocessed scrap metal in order to manage the impact on our operating results. The spread between selling prices for processed metal and the cost of purchased scrap metal (metal spread) is subject to a number of factors, including differences in the market conditions between the domestic regions where scrap metal is acquired and the areas in the world to which the processed metals are sold, market volatility from the time the selling price is agreed upon with the customer until the time the scrap metal is purchased, changes in the availability of scrap metal including the volume generated by source and grade, and changes in transportation costs. We believe we generally benefit from sustained periods of stable or rising recycled metal selling prices, which allow us to better maintain or increase both operating results and unprocessed scrap metal flow into our facilities. When recycled metal selling prices decline, either sharply or for a sustained period, our operating margins typically compress. With respect to finished steel products produced at our steel mill, our results of operations are impacted by demand and prices for these products, which are sold to customers located primarily in the Western U.S. and Western Canada.

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~~SCHNITZER STEEL INDUSTRIES, INC.~~

Our quarterly operating results fluctuate based on a variety of factors including, but not limited to, changes in market conditions for recycled ferrous and nonferrous metal and finished steel products, the supply of scrap metal in our domestic markets, varying demand for used auto parts from our self-service retail stores, the efficiency of our supply chain, and variations in production and other operating costs. Certain of these factors are influenced, to a degree, by the impact of seasonal changes including severe weather conditions, which can impact the timing of shipments and inhibit construction activity utilizing our products, scrap metal collection and production levels at our facilities, and retail admissions and parts sales at our auto parts stores. Further, sanctions, trade actions, and licensing, product quality, and inspection requirements can impact the level of profitability on sales of our products and, in certain cases, impede or restrict our ability to sell to certain export markets or require us to direct our sales to alternative market destinations, which can cause our quarterly operating results to fluctuate.

Steel Mill Fire

On May 22, 2021, we experienced a fire at our steel mill in McMinnville, Oregon. Direct physical loss or damage to property from the incident was limited to the mill’s melt shop, with no bodily injuries and no physical loss or damage to other buildings or equipment. The rolling mill production ceased in early June 2021. In August 2021, our steel mill began ramping up operations following the substantial completion of replacement and repairs of property and equipment in the melt shop that had been lost or damaged by the fire. We experienced ~~the~~ loss of business income during the shutdown of the steel mill and the subsequent ramp-up phase which was substantially completed ~~during the second quarter of~~in fiscal 2022. We have insurance that ~~we believe~~ is fully applicable to the losses and ~~have~~ filed insurance claims, which are subject to deductibles and various conditions, exclusions, and limits, for the property that experienced physical loss or damage and business income losses resulting from the matter. The property damage deductible under the policies insuring our assets in this matter is $1 million, while the deductible for lost business income is 10 times the Average Daily Gross Earnings which would have been earned had no interruption occurred, calculated subject to judgments and uncertainties. As of August 31, 2021, prepaid expenses and other current assets included an initial $10 million insurance receivable recognized in fiscal 2021, primarily offsetting applicable losses including capital purchases of $10 million that we had incurred as of August 31, 2021. In the first half of fiscal 2022, we increased the amount of this insurance receivable to $25 million and recognized a related $15 million insurance recovery gain, $3 million and $12 million of which was recognized in the first and second quarters of fiscal 2022, respectively, within cost of goods sold and included within the Unaudited Condensed Consolidated Statements of Operations, reflecting recovery of applicable losses incurred as a result of the fire to date. In addition, during the first half of fiscal 2022, we received advance payments from insurers totaling approximately $30 million towards our claims, and not reflecting any final or full settlement of claims with the insurers, which amount reduced the $25 million insurance receivable to zero with the remaining amount of advance payments reported within other accrued liabilities on the Unaudited Condensed Consolidated Balance Sheets. The amount of advance payments reported within other accrued liabilities was $4 million as of February 28, 2023 and $5 million as of August 31, 2022. In March 2023, during the thirdfourth quarter of fiscal 2023, we ~~received additional advance payments from~~reached a full and final settlement with our insurers ~~of approximately $13 million towards~~for our claims. All insurance proceeds and recovery gains in connection with our claims ~~increasing the total~~had been received and recognized, respectively, as of such advance payments from insurers to approximately $43 million, and not reflecting any final or full settlement of claims with the insurers. These amounts do not reflect potential additional recoveries of business income losses resulting from this matter that may be recognized in the future when settlements of the business interruption claims are resolved.

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~~SCHNITZER STEEL INDUSTRIES, INC.~~August 31, 2023.

Everett Facility Shredder Fire

On December 8, 2021, we experienced a fire at our metals recycling facility in Everett, Massachusetts. Direct physical loss or damage to property from the incident was limited to the facility’s shredder building and equipment, with no bodily injuries and no physical loss or damage to property reported at other buildings or equipment. As a result of the fire, shredding operations ceased, while all non-shredding operations at the facility continued, including torching, shearing, separating, and sorting purchased non-shreddable recycled ferrous metals. On January 28, 2022, shredding operations at the facility began ramping up following the replacement and repairs to shredder equipment that had been damaged. Completion of the remainder of repair and replacement of property that experienced physical loss or damage, primarily buildings and improvements, will occur over a longer period and impacts on business income may continue. For example,In addition, shredding operations temporarily ceased at the facility on June 18, 2022 and, following discussions with the Massachusetts Department of Environmental Protection and the Massachusetts Attorney General’s office, we installed a temporary emission capture system and controls that allowed for us to resume shredding operations on November 11, 2022 and ~~continue shredding operations while~~for continued operation during the repair and replacement of the shredder enclosure ~~building is completed.~~building. Non-shredding operations at the facility continued during this period. The repair and replacement of most property that experienced physical loss or damage, primarily buildings and improvements, was substantially completed by the end of fiscal 2023. We have insurance that we believe is fully applicable to the losses, including but not limited to the costs of installing the temporary capture and controls system and any associated loss of business income, and have filed insurance claims, which are subject to deductibles and various conditions, exclusions, and limits, for the property damage or loss and business income losses resulting from the matter. The property damage deductible under the policies insuring our assets in this matter is $0.5 million, while the deductible for lost business income is 10 times the Average Daily Gross Earnings which would have been earned had no interruption occurred, calculated subject to judgments and uncertainties. The insurance claims resolution process may extend significantly beyond completion of repair and replacement of the physical plant property that experienced physical loss or damage and the restart of production activities. In fiscal 2022, after the fire, we recognized an aggregate $17 million insurance receivable and related insurance recovery gain, $10 million of which was recorded in the second quarter of fiscal 2022, reported within prepaid expenses and other current assets and within cost of goods sold, respectively, reflecting recovery of applicable losses including impairment charges of $7 million related to the carrying value of plant and equipment assets damaged by the fire and initial capital purchases and other costs totaling $10 million that we had incurred asAs of August 31, ~~2022. Also during fiscal 2022,~~2023, we had recognized, in aggregate, $34 million in insurance recovery gains and had received, in aggregate, advance payments from insurers totaling approximately $7$33 million towards our claims, and not reflecting any final or full settlement of claims with the ~~insurers, which amount reduced~~insurers. During the first quarter of fiscal

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SCHNITZER STEEL INDUSTRIES, INC. dba RADIUS RECYCLING

2024, we recognized an additional $4 million insurance receivable ~~to $10 million as~~and related insurance recovery gain, reported within cost of ~~February 28,~~goods sold on the Unaudited Condensed Consolidated Statements of Operations. As of November 30, 2023 and August 31, ~~2022.~~2023 we had receivables from our insurers of $5 million and $1 million, respectively, reported within prepaid expenses and other current assets on the Unaudited Condensed Consolidated Balance Sheets. These amounts do not reflect potential additional recoveries of costs for the repair and replacement of property that experienced physical loss or damage or of business income losses resulting from this matter that may be recognized in the future when settlements of the claims are resolved.

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~~SCHNITZER STEEL INDUSTRIES, INC.~~

Coronavirus Disease 2019 (“COVID-19”)

~~We continue to monitor the impact of COVID-19 on all aspects of our business.~~ Following the onset of COVID-19 and its negative effects on our business, most prominently reflected in our fiscal 2020 results, global economic conditions improved beginning in fiscal 2021 and continued to improve through most of fiscal 2022. However, there are ongoing global impacts resulting directly or indirectly from the pandemic, including labor shortages, logistical challenges, and increases in costs for certain goods and services including due to the impact of inflation, which have negatively impacted our sales volumes, operating costs, and financial results to varying degrees. ~~The ongoing effects of the COVID-19 pandemic could negatively impact our results of operations, cash flows, and financial position in the future.~~

Use of Non-GAAP Financial Measures

In this management’s discussion and analysis, we use supplemental measures of our performance, liquidity, and capital structure which are derived from our consolidated financial information, but which are not presented in our consolidated financial statements prepared in accordance with GAAP. We believe that providing these non-GAAP financial measures adds a meaningful presentation of our operating and financial performance, liquidity, and capital structure. For example, we use adjusted EBITDA as one of the measures to compare and evaluate financial performance. Adjusted EBITDA is the sum of our net income ~~(loss)~~ before results from discontinued operations, interest expense, income taxes, depreciation and amortization, ~~restructuring~~ charges ~~and other exit-related activities,~~for legacy environmental matters (net of recoveries), asset impairment charges, business development costs not related to ongoing operations including pre-acquisition expenses, amortization of capitalized cloud computing implementation costs, restructuring charges ~~for legacy environmental matters (net of recoveries), asset impairment charges,~~and other exit-related activities, and other items which are not related to underlying business operational performance. See the reconciliations of supplemental financial measures, including adjusted EBITDA, in Non-GAAP Financial Measures at the end of this Item 2.

Our non-GAAP financial measures should be considered in addition to, but not as a substitute for, the most directly comparable GAAP measures. Although we find these non-GAAP financial measures useful in evaluating the performance of our business, our reliance on these measures is limited because they often materially differ from our consolidated financial statements presented in accordance with GAAP. Therefore, we typically use these adjusted amounts in conjunction with our GAAP results to address these limitations. Our non-GAAP financial measures may not be comparable to similarly titled measures of other companies. Other companies, including companies in our industry, may calculate non-GAAP financial measures differently than we do, limiting the usefulness of those measures for comparative purposes.

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SCHNITZER STEEL INDUSTRIES, INC.dba RADIUS RECYCLING

Financial Highlights of Results of Operations for the ~~Second~~First Quarter of Fiscal ~~2023~~2024

•

Diluted ~~earnings~~loss per share from continuing operations attributable to ~~SSI~~Radius shareholders in the ~~second~~first quarter of each of fiscal 2024 and 2023 was ~~$0.14, compared to $1.27 per share in the prior year quarter.~~$(0.64).

•

Adjusted diluted ~~earnings~~loss per share from continuing operations attributable to ~~SSI~~Radius shareholders in the ~~second~~first quarter of fiscal ~~2023~~2024 was ~~$0.14,~~($0.64), compared to ~~adjusted diluted earnings per share of $1.38~~$(0.44) in the prior year quarter.

•

Net ~~income~~loss in the ~~second~~first quarter of each of fiscal 2024 and 2023 was ~~$4 million, compared to net income of $38 million in the prior year quarter.~~$18 million.

•

Adjusted EBITDA in the ~~second~~first quarter of fiscal ~~2023~~2024 was ~~$32~~$1 million, compared to ~~$75~~$8 million in the prior year quarter.

~~Market conditions for recycled metals~~Our total revenues were ~~weaker~~$673 million in the ~~second~~first quarter of fiscal ~~2023 compared to~~2024, an increase of 12% from $599 million of total revenues in the prior year quarter ~~leading~~primarily due to higher sales volumes, while gross margin decreased year-over-year primarily reflecting the impact of lower ~~average net~~metal spreads for our recycled metal and finished steel products. The persistently tight supply conditions for scrap metal, including end of life vehicles, in our domestic markets during the first quarter of fiscal 2024 led to purchase prices for unprocessed scrap metal increasing at a faster rate than selling prices for ~~our ferrous~~recycled metal which, combined with significantly lower year-over-year platinum group metals (PGM) prices and ~~nonferrous products~~higher production and ~~a compression in metal spreads. The average net selling prices for our ferrous and nonferrous products decreased by 18% and 10%, respectively, compared~~other operating costs, led to margin compression. In the ~~second~~first quarter of fiscal ~~2022. Ferrous~~2024, ferrous and nonferrous sales volumes increased by ~~18%~~35% and 12%, respectively, compared to the prior year quarter, primarily reflecting additional volumes arising from our two business acquisitions completed in April and November 2022, a drawdown of ferrous inventories due to the delay of several bulk shipments at the end of the first quarter of fiscal 2023, and the adverse impact ~~of the initial Everett shredder downtime~~ on sales volumes in the prior year ~~quarter. Market conditions for our finished steel products were softer in the second~~ quarter of ~~fiscal 2023, leading~~disruptions related to ~~finished~~an extended shredder outage at the Everett metals recycling facility and a regulatory issue limiting operations at our shredder facility in California, both of which were resolved by mid-November 2022. The increases in ferrous and nonferrous sales volumes also included additional volumes arising from our acquisition of the ScrapSource business on November 18, 2022. Finished steel average selling prices ~~decreasing 10%~~were 18% lower in the first quarter of fiscal 2024 compared to the prior year ~~quarter. Our results in~~quarter, contributing to significantly lower metal spreads, the ~~second quarter~~effect of ~~fiscal 2023 also reflected tighter supply flows and reduced processed volumes in the lower price environment, lower year-over-year platinum group metals (PGM) prices, and the impact of inflation,~~which was partially offset by a ~~more favorable impact from average inventory accounting compared to the prior year quarter. We achieved a benefit of approximately $23 million~~10% increase in finished steel sales volumes. Contributions from productivity and cost reduction initiatives implemented throughout fiscal 2023, as well as new initiatives identified and commenced in the ~~second~~first quarter of fiscal ~~2023, including from measures announced in October 2022 and January 2023 and implemented during the first half of fiscal 2023, which~~2024, helped to partially offset the effects of ~~higher~~inflationary pressure on operating ~~costs including from inflationary pressure.~~costs.

Selling, general, and administrative (“SG&A”) expense in the ~~second~~first quarter of fiscal ~~2023 increased~~2024 decreased by 5%2% compared to the prior year quarter ~~reflecting~~primarily due to lower employee-related expenses, including lower incentive compensation accruals, and legacy environmental charges, partially offset by higher ~~salaries~~technology-related and ~~wages, outside~~professional services expenses. Productivity and ~~insurance expenses, in part from higher costs resulting from our acquisitions and other growth-related~~cost reduction initiatives ~~and~~substantially offset the impact of inflation ~~partially offset by benefits from productivity~~ and ~~cost reduction~~growth-related initiatives ~~and lower share-based compensation expense and legacy environmental charges.~~on our SG&A expense.

The following items further highlight selected liquidity and capital structure metrics:

•

For the first ~~six~~three months of fiscal ~~2023,~~2024, net cash ~~provided by~~used in operating activities was ~~$26~~$1 million, compared to ~~$13~~$62 million in the prior year comparable period.

•

Debt was ~~$310~~$284 million as of ~~February 28,~~November 30, 2023, compared to $249 million as of August 31, ~~2022,~~2023, as a result of increased borrowings from our credit facilities primarily to fund capital expenditures and ~~the acquisition of the ScrapSource business.~~working capital needs.

•

Debt, net of cash, was ~~$299~~$280 million as of ~~February 28,~~November 30, 2023, compared to ~~$205~~$243 million as of August 31, ~~2022.~~2023.

See the reconciliations of adjusted diluted earnings per share from continuing operations attributable to ~~SSI~~Radius shareholders, adjusted EBITDA, and debt, net of cash in Non-GAAP Financial Measures at the end of this Item 2.

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SCHNITZER STEEL INDUSTRIES, INC.dba RADIUS RECYCLING

Results of Operations

Selected Financial Measures and Operating Statistics


	Three Months Ended February 28,									Six Months Ended February 28,									Three Months Ended November 30,
($ in thousands, except for prices and per share amounts)	2023			2022			%			2023			2022			%			2023			2022			%
Ferrous revenues	$	434,122		$	438,314			(1	)%	$	695,851		$	904,170			(23	)%	$	348,897		$	261,729			33	%
Nonferrous revenues		179,655			196,142			(8	)%		357,330			390,571			(9	)%		169,294			177,675			(5	)%
Steel revenues(1)		107,825			116,196			(7	)%		232,340			219,434			6	%		113,531			124,515			(9	)%
Retail and other revenues		34,351			32,546			6	%		69,162			67,141			3	%		41,175			34,811			18	%
Total revenues		755,953			783,198			(3	)%		1,354,683			1,581,316			(14	)%		672,897			598,730			12	%
Cost of goods sold		682,937			670,539			2	%		1,232,948			1,353,783			(9	)%		633,420			550,011			15	%
Gross margin (total revenues less cost of goods sold)	$	73,016		$	112,659			(35	)%	$	121,735		$	227,533			(46	)%	$	39,477		$	48,719			(19	)%
Gross margin (%)		9.7	%		14.4	%		(33	)%		9.0	%		14.4	%		(38	)%		5.9	%		8.1	%		(27	)%
Selling, general and administrative expense	$	63,957		$	61,081			5	%	$	128,185		$	116,348			10	%	$	63,102		$	64,228			(2	)%
Diluted earnings (loss) per share from continuing operations attributable to SSI shareholders:
Diluted loss per share from continuing operations attributable to Radius shareholders:
Reported	$	0.14		$	1.27			(89	)%	$	(0.49	)	$	2.81		NM			$	(0.64	)	$	(0.64	)		(—	)%
Adjusted(2)	$	0.14		$	1.38			(90	)%	$	(0.30	)	$	2.96		NM			$	(0.64	)	$	(0.44	)		45	%
Net income (loss)	$	4,272		$	38,165			(89	)%	$	(13,284	)	$	85,441		NM
Net loss																			$	(17,799	)	$	(17,556	)		1	%
Adjusted EBITDA(2)	$	31,850		$	75,259			(58	)%	$	40,212		$	153,345			(74	)%	$	1,061		$	8,362			(87	)%
Average ferrous recycled metal sales prices ($/LT)(3):
Domestic	$	359		$	418			(14	)%	$	336		$	424			(21	)%	$	342		$	313			9	%
Foreign	$	368		$	455			(19	)%	$	364		$	452			(19	)%	$	359		$	356			1	%
Average	$	367		$	445			(18	)%	$	357		$	446			(20	)%	$	354		$	340			4	%
Ferrous volumes (LT, in thousands):
Domestic(4)		444			408			9	%		876			839			4	%		535			432			24	%
Foreign		819			663			24	%		1,238			1,381			(10	)%		617			418			47	%
Total ferrous volumes (LT, in thousands)(4)(8)		1,263			1,071			18	%		2,114			2,219			(5	)%		1,152			851			35	%
Average nonferrous sales price ($/pound)(3)(5)	$	0.99		$	1.10			(10	)%	$	0.94		$	1.08			(13	)%	$	0.91		$	0.90			1	%
Nonferrous volumes (pounds, in thousands)(4)(5)		164,796			147,145			12	%		327,516			300,373			9	%		181,728			162,720			12	%
Finished steel average sales price ($/ST)(3)	$	943		$	1,045			(10	)%	$	980		$	1,013			(3	)%	$	831		$	1,015			(18	)%
Finished steel sales volumes (ST, in thousands)		109			106			3	%		227			205			11	%		129			118			10	%
Cars purchased (in thousands)(6)		72			73			(1	)%		141			153			(8	)%		64			69			(7	)%
Number of auto parts stores at period end		50			50			(—	)%		50			50			(—	)%		50			51			(2	)%
Rolling mill utilization(7)		75	%		86	%		(13	)%		78	%		82	%		(5	)%		95	%		81	%		17	%

NM = Not Meaningful

LT = Long Ton, which is equivalent to 2,240 pounds. ST = Short Ton, which is equivalent to 2,000 pounds.

(1)

Steel revenues include predominantly sales of finished steel products, in addition to sales of semi-finished goods (billets) and steel manufacturing scrap.

(2)

See the reconciliations of Non-GAAP Financial Measures at the end of this Item 2.

(3)

Price information is shown after netting the cost of freight incurred to deliver the product to the customer.

(4)

Ferrous and nonferrous volumes sold externally and delivered to our steel mill for finished steel production.

(5)

Average sales price and volume information excludes PGMs in catalytic converters.

(6)

Cars purchased by auto parts stores only.

(7)

Rolling mill utilization is based on effective annual production capacity under current conditions of 580 thousand tons of finished steel products.

(8)

May not foot due to rounding.

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~~SCHNITZER STEEL INDUSTRIES, INC.~~

Revenues

Revenues in the ~~second~~first quarter ~~and first six months~~ of fiscal ~~2023 decreased~~2024 increased by ~~3% and 14%, respectively,~~12% compared to the prior year periods primarily due to lower average net selling prices for our ferrous and nonferrous products driven by weaker market conditions for recycled metals globally. In the second quarter and first six months of fiscal 2023, the average net selling prices for our ferrous products decreased by 18% and 20%, respectively, and for our nonferrous products decreased by 10% and 13%, respectively, compared to the prior year periods.quarter. Ferrous ~~sales volumes in the second quarter and first six months of fiscal 2023 increased by 18% and decreased by 5%, respectively,~~ and nonferrous sales volumes increased by ~~12%~~35% and 9%12%, respectively, ~~compared to the prior year periods. Our ferrous and nonferrous sales volumes in the second quarter and first six months of fiscal 2023 in part reflected~~additional volumes arising from the Columbus Recycling business acquired on October 1, 2021, the Encore Recycling business acquired on April 29, 2022, and the ScrapSource business acquired on November 18, 2022, as well asyear-over-year, primarily reflecting the adverse impact ~~on sales volumes~~ in the prior year ~~periods~~quarter of ~~the initial Everett shredder downtime. Our ferrous sales volumes in the first six months of fiscal 2023 were adversely impacted by~~ disruptions related to an extended shredder outage at the Everett metals recycling facility and a regulatory issue limiting operations at our shredder facility in California, both of which were resolved by mid-November ~~2022, as well as tight supply flows~~2022. The increases in ferrous and nonferrous sales volumes also included additional volumes arising from our acquisition of the ~~lower price environment. Market conditions~~ScrapSource business on November 18, 2022. In the first quarter of fiscal 2024, the average net selling prices for our ~~finished steel~~ferrous and nonferrous products ~~were softer in the second quarter~~increased by 4% and ~~first six months of fiscal 2023, leading to finished steel average selling prices decreasing 10% and 3%~~1%, respectively, compared to the prior year ~~periods.~~quarter, the latter of which excludes PGMs in catalytic converters for which selling prices decreased significantly year-over-year. Finished steel ~~sales volumes increased 11%~~average selling prices were 18% lower year-over-year, more than offsetting a 10% increase in ~~the first six months~~finished steel volumes.

Table of fiscal 2023, compared to the prior year period, primarily reflecting the impact on the prior period volumes of the ramp up of steel mill operations that began in August 2021 and which was substantially completed during the second quarter of fiscal 2022. The ramp-up of steel mill operations during the first half of fiscal 2022 followed completion of repair and replacement of damaged property arising from the May 2021 steel mill fire.Contents

SCHNITZER STEEL INDUSTRIES, INC. dba RADIUS RECYCLING

Operating Performance

Net ~~income (loss)~~loss in each of the ~~second quarter and~~ first ~~six months~~quarters of fiscal 2024 and 2023 was ~~$4 million and $(13) million, respectively, compared to net income of $38 million and $85 million, respectively, in the prior year periods.~~$18 million. Adjusted EBITDA in the second quarter and first six months of fiscal 2023 was $32 million and $40 million, respectively, compared to $75 million and $153 million, respectively, in the prior year periods. The lower price environment for recycled metals, as well as the impact of tight supply flows, reduced processed volumes, and the extended operational disruptions in the first quarter of fiscal ~~2023 had a significant adverse impact on our operating margins and overall operating results~~2024 was $1 million, compared to $8 million in the ~~second~~prior year quarter. While our total revenues increased year-over-year, mainly from significantly higher ferrous sales volumes and to a lesser degree higher ferrous average net selling prices, gross margin decreased primarily reflecting the impact of lower metal spreads for our recycled metal and finished steel products. The persistently tight supply conditions for scrap metal, including end of life vehicles, in our domestic markets during the first quarter ~~and first six months~~ of fiscal ~~2023.~~2024 led to purchase prices for unprocessed scrap metal increasing at a faster rate than selling prices for recycled metal which, combined with significantly lower year-over-year PGM prices and higher production and other operating costs, led to margin compression. Ferrous metal spreads in the ~~second~~first quarter ~~and first six months~~ of fiscal ~~2023~~2024 decreased by approximately ~~19% and 20%, respectively, and average net selling prices for our nonferrous joint products that are recovered from the shredding process, comprising primarily zorba, decreased by approximately3% and 5%, respectively,~~15% compared to the prior year ~~periods.~~quarter. Finished steel metal spreads were lower in the ~~second~~first quarter of fiscal ~~2023,~~2024 driven by an 18% decrease in average selling prices compared to the prior year quarter. Our results in the second quarter and first six months of fiscal 2023 also reflected lower year-over-year PGM prices, an impairment charge related to an equity investment recorded in the first quarter of fiscal 2023, and the impact of inflation on operating costs, partially offset by a more favorable impact from average inventory accounting compared to the prior year periods.

SG&A expense in the ~~second~~first quarter ~~and first six months~~ of fiscal ~~2023 increased~~2024 decreased by ~~5% and 10%, respectively,~~2% compared to the prior year ~~periods~~quarter primarily due to lower employee-related expenses, including lower incentive compensation accruals, and legacy environmental charges, partially offset by higher ~~salaries and wages, outside~~technology-related and professional services ~~insurance,~~expenses. Productivity and ~~travel expenses, partially resulting from our acquisitions and other growth-related~~cost reduction initiatives ~~and~~substantially offset the impact of inflation ~~partially offset by lower share-based compensation expense~~ and ~~legacy environmental charges. The higher expenses~~growth-related initiatives on our SG&A expense.

In addition to the $60 million in ~~the second quarter and first six months of fiscal 2023 were partially offset by benefits from~~ productivity and cost reduction initiatives ~~when compared to~~announced in fiscal 2023, for which we achieved the ~~prior year periods.~~

~~In October 2022,~~$15 million full quarterly run rate of benefits starting in the third quarter of fiscal 2023, we ~~announced~~identified and began implementing ~~productivity and cost reduction~~new initiatives in the first quarter of fiscal 2024 with a targeted annual benefit of approximately $40 million, the vast majority of which is expected to be achieved in fiscal 2023. In addition, in January 2023, we announced incremental initiatives aiming to reduce SG&A costs by approximately $20 million annually, of which approximately two-thirds is expected to be achieved in fiscal 2023.$30 million. These new initiatives aim to improve profitability through a combination of increased yields, efficiencies in processing, ~~procurement,~~transportation and ~~pricing,~~procurement, and reduced costs including from headcount ~~reductions, decreased lease costs, professional and outside services, and implementation~~reductions. We expect to achieve substantially the full quarterly run rate of ~~operational efficiencies. In~~benefits from these new initiatives in the second quarter ~~and first six months~~ of fiscal 2024. Contributions from productivity and cost reduction initiatives implemented throughout fiscal 2023, ~~we achieved a benefit from these~~as well as new initiatives identified and ~~others implemented during~~commenced in the first quarter of fiscal ~~2022, of approximately $23 million and $37 million, respectively, which~~2024, helped to partially offset the effects of inflationary pressure on operating costs.

See the reconciliation of adjusted EBITDA in Non-GAAP Financial Measures at the end of this Item 2.

Interest Expense

Interest expense was $5 million ~~and $8 million, respectively,~~ for the ~~second~~first quarter ~~and first six months~~ of fiscal ~~2023,~~2024, compared to ~~$2 million and~~ $3 million for the same ~~periods~~period in the prior year. The increase in interest expense was primarily due to higher interest rates on amounts outstanding under our bank credit facilities ~~as well as increased average borrowings,~~ compared to the prior year ~~periods.~~

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~~SCHNITZER STEEL INDUSTRIES, INC.~~period.

Income Tax

The effective tax rate from continuing operations for the ~~second~~first quarter ~~and first six months~~ of fiscal ~~2023~~2024 was ~~a benefit on pre-tax income of 14.5% and~~ a benefit on pre-tax loss of ~~32.8%, respectively,~~36.4% compared to ~~an expense on pre-tax income of 24.0% and 21.3%, respectively,~~25.6% for the comparable prior year ~~periods.~~quarter. Our effective tax rate from continuing operations for the ~~second~~first quarter of fiscal ~~2023~~2024 was ~~significantly different~~higher than the U.S. federal statutory rate of 21% primarily due to ~~our~~the aggregate effect of the Company's financial performance, permanent differences from non-deductible expenses, and ~~the effect of discrete items~~unrecognized tax benefits on intra-period ~~allocation.~~allocation of the estimated annual tax provision. For the ~~second~~first quarter of fiscal ~~2022,~~2023, the effective tax rate from continuing operations was higher than the U.S. federal statutory rate of 21% primarily due to discrete tax benefits resulting from vesting of share-based awards in the ~~aggregate~~quarter, as well as the impact of ~~state taxes and~~ permanent differences from non-deductible expenses on the projected annual effective tax rate applied to the quarterly results.

Liquidity and Capital Resources

We rely on cash provided by operating activities as a primary source of liquidity, supplemented by current cash on hand and borrowings under our existing credit facilities.

Sources and Uses of Cash

We had cash balances of ~~$11~~$4 million and ~~$44~~$6 million as of ~~February 28,~~November 30, 2023 and August 31, ~~2022,~~2023, respectively. Cash balances are intended to be used primarily for working capital, capital expenditures, dividends, share repurchases, investments, and acquisitions. We use excess cash on hand to reduce amounts outstanding under our credit facilities. As of ~~February 28,~~November 30, 2023, debt was ~~$310~~$284 million compared to $249 million as of August 31, ~~2022,~~2023, and debt, net of cash, was ~~$299~~$280 million as of ~~February 28,~~November 30, 2023, compared to ~~$205~~$243 million as of August 31, ~~2022, which~~2023. The increases in debt were primarily due to increased borrowings from our credit facilities primarily to fund ~~higher net working capital needs,~~ capital expenditures and ~~the acquisition of the ScrapSource business on November 18, 2022.~~working capital needs. See the reconciliation of debt, net of cash, in Non-GAAP Financial Measures at the end of this Item 2.

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SCHNITZER STEEL INDUSTRIES, INC. dba RADIUS RECYCLING

Operating Activities

Net cash ~~provided by~~used in operating activities in the first ~~six~~three months of fiscal ~~2023~~2024 was ~~$26~~$1 million, compared to ~~$13~~$62 million in the first ~~six~~three months of fiscal ~~2022.~~2023.

Sources of cash in the first six months of fiscal 2023 included a $34 million decrease in inventory primarily due to lower raw material purchase costs and the timing of purchases and sales and a $12 million increase in accounts payable primarily due to the timing of purchases and payments. Uses of cash in the first ~~six~~three months of fiscal ~~2023~~2024 included ~~a $33~~an $8 million decrease in accrued payroll and related liabilities primarily due to the payment of incentive compensation ~~in the first quarter of fiscal 2023~~ previously accrued under our fiscal ~~2022~~2023 plans, a $3 million increase in prepaid expenses and other current assets primarily relating to the recognition of insurance receivables, and a ~~$14~~$3 million ~~increase~~decrease in environmental liabilities primarily due to payments in connection with legacy environmental matters. Sources of cash in the first three months of fiscal 2024 included a $16 million decrease in accounts receivable primarily ~~due to~~reflecting the impact of changes in product selling prices and the timing of sales and collections.

Sources of cash other than from earnings in the first six months of fiscal 2022 included a $12 million increase in accounts payable primarily due to higher raw material purchase prices and the timing of purchases and payments and an $8 million increase in other accrued liabilities primarily reflecting the portion of advance payments from insurance carriers received in the period towards our claims arising from the May 2021 steel mill fire deemed attributable to operating activities. Uses of cash in the first ~~six~~three months of fiscal ~~2022~~2023 included a $53 million increase in inventories due to higher raw material purchase costs and the timing of purchases and sales, a $48 million increase in accounts receivable primarily due to higher selling prices and higher sales volumes for recycled metals, as well as the timing of sales and collections, a $40$29 million decrease in accrued payroll and related liabilities primarily due to the payment of incentive compensation ~~in the first quarter of fiscal 2022~~ previously accrued under our fiscal ~~2021~~2022 plans, a $28 million increase in inventory primarily due to the delay of several bulk shipments to December 2022, and a ~~$12~~$19 million decrease in ~~environmental liabilities~~accounts payable due to the timing of purchases and payments. Sources of cash in the first three months of fiscal 2023 included a $17 million decrease in accounts receivable primarily due to ~~payments~~a decrease in ~~connection with legacy environmental matters. The sources~~selling prices for recycled metals and ~~uses~~the timing of ~~cash related to operating activities described above also reflect higher net working capital needs during the ramp-up of steel mill operations that began in August 2021 following completion of repair~~sales and ~~replacement of damaged property arising from the May 2021 steel mill fire.~~collections.

Investing Activities

Net cash used in investing activities was ~~$98~~$24 million in the first ~~six~~three months of fiscal ~~2023,~~2024, compared to ~~$172~~$72 million in the first ~~six~~three months of fiscal ~~2022.~~

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~~SCHNITZER STEEL INDUSTRIES, INC.~~2023.

Cash used in investing activities in the first ~~six~~three months of fiscal 2024 included capital expenditures of $25 million to upgrade our equipment and infrastructure and for investments in advanced metals recovery technology, information technology systems, and environmental and safety-related assets, compared to $48 million in the prior year period.

Cash used in investing activities in the first three months of fiscal 2023 included $25 million paid to acquire the assets of the ScrapSource business on November 18, 2022. We funded the acquisition using cash on hand and borrowings under our existing credit facilities. ~~See Note 3 - Business Acquisitions in the Notes to the Unaudited Condensed Consolidated Financial Statements in Part I, Item 1 of this report for further detail.~~ Cash used in investing activities in the first three months of fiscal 2023 also included capital expenditures of ~~$75~~$48 million to upgrade our equipment and infrastructure and for investments in advanced metals recovery technology and environmental and safety-related ~~assets, compared to $69 million in the prior year period.~~

Cash used in investing activities in the first six months of fiscal 2022 included $114 million paid to acquire the assets of the Columbus Recycling business on October 1, 2021. We funded the acquisition using cash on hand and borrowings under our existing credit facilities. See Note 3 - Business Acquisitions in the Notes to the Unaudited Condensed Consolidated Financial Statements in Part I, Item 1 of this report for further detail. Cash flows from investing activities in the first six months of fiscal 2022 also included proceeds of $10 million representing the portion of advance payments from insurance carriers deemed a recovery of capital purchases incurred for repair and replacement of damaged property arising from the May 2021 steel mill fire.assets.

Financing Activities

Net cash provided by financing activities in the first ~~six~~three months of fiscal ~~2023~~2024 was ~~$40~~$24 million, compared to ~~$150~~$94 million in the first ~~six~~three months of fiscal ~~2022.~~2023.

Cash flows ~~from~~provided by financing activities in the first ~~six~~three months of fiscal ~~2023~~2024 included ~~$59~~$35 million in net borrowings of debt, compared to ~~$180~~$108 million in the prior year period (refer to Non-GAAP Financial Measures at the end of this Item 2). Uses of cash in the first ~~six~~three months of fiscal 2024 and 2023 ~~and 2022~~ included $7$5 million and ~~$10~~$7 million, respectively, for payment of employee tax withholdings resulting from vesting of share-based awards and ~~$11~~$6 million in each period for the payment of dividends.

Debt

Our senior secured revolving credit facilities, which provide for revolving loans of $800 million and C$15 million, mature in August 2027 pursuant to a credit agreement with Bank of America, N.A., as administrative agent, and other lenders party thereto. Interest rates on outstanding indebtedness under the credit agreement are based, at our option, on either the Secured Overnight Financing Rate (“SOFR”) (or the Canadian Dollar Offered Rate, "CDOR" for C$ loans), plus a spread of between 1.25% and 2.00%, with the amount of the spread based on a pricing grid tied to our ratio of consolidated net funded debt to EBITDA (as defined by the credit agreement), or the greater of (a) the prime rate, (b) the federal funds rate plus 0.50% or (c) the daily rate equal to Term SOFR plus 1.00%, in each case, plus a spread of between 0.25% and 1.00% based on a pricing grid tied to our consolidated net funded debt to EBITDA ratio. In addition, commitment fees are payable on the unused portion of the credit facilities at rates between 0.175% and 0.30% based on a pricing grid tied to our ratio of consolidated net funded debt to EBITDA.

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SCHNITZER STEEL INDUSTRIES, INC. dba RADIUS RECYCLING

Under the credit agreement, we may establish one or more key performance indicators (“KPIs”) to measure our performance with respect to certain of our environmental, social and governance targets. Subject to the terms and conditions of the credit agreement, we may propose to amend the credit agreement to modify (i) the pricing spread and (ii) the commitment fee rate. Such modifications would be tied to our performance against the KPIs and would allow for (i) the pricing spread to be increased or decreased by no more than (a) 0.025% per KPI and (b) 0.05% for all KPIs, and (ii) the commitment fee rate to be increased or decreased by no more than 0.005% for all KPIs. Such adjustments would be determined on an annual basis and would not be cumulative.

We had borrowings outstanding under our credit facilities of ~~$290~~$265 million as of ~~February 28,~~November 30, 2023 and $230 million as of August 31, ~~2022.~~2023. The weighted average interest rate on amounts outstanding under our credit facilities was ~~6.20%~~6.97% and ~~3.65%~~7.17% as of ~~February 28,~~November 30, 2023 and August 31, ~~2022,~~2023, respectively.

We use the credit facilities to fund working capital, capital expenditures, dividends, share repurchases, investments, and acquisitions. Our credit agreement contains various representations and warranties, events of default, and financial and other customary covenants which limit (subject to certain exceptions) our ability to, among other things, incur or suffer to exist certain liens, make investments, incur or guaranty additional indebtedness, enter into consolidations, mergers, acquisitions, and sales of assets, make distributions and other restricted payments, change the nature of our business, engage in transactions with affiliates, and enter into restrictive agreements, including agreements that restrict the ability of our subsidiaries to make distributions. The financial covenants under the credit agreement include (a) a consolidated fixed charge coverage ratio, defined as the four-quarter rolling sum of consolidated EBITDA less defined maintenance capital expenditures and certain environmental expenditures divided by consolidated fixed charges, and (b) a consolidated leverage ratio, defined as consolidated funded indebtedness divided by the sum of consolidated net worth and consolidated funded indebtedness.

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As of ~~February 28,~~November 30, 2023, we were in compliance with the financial covenants under our credit agreement. The consolidated fixed charge coverage ratio was required to be no less than 1.50 to 1.00 and was ~~4.36~~2.67 to 1.00 as of ~~February 28,~~November 30, 2023. The consolidated leverage ratio was required to be no more than 0.55 to 1.00 and was ~~0.26~~0.24 to 1.00 as of ~~February 28,~~November 30, 2023.

Our obligations under our credit agreement are guaranteed by substantially all of our subsidiaries. The credit facilities and the related guarantees are secured by senior first priority liens on certain of our and our subsidiaries’ assets, including equipment, inventory, and accounts receivable.

While we currently expect to remain in compliance with the financial covenants under the credit agreement, we may not be able to do so in the event market conditions, ~~COVID-19,~~ or other ~~negative~~ factors have a significant and sustained adverse impact on our results of operations and financial position. If we do not maintain compliance with our financial covenants and are unable to obtain an amendment or waiver from our lenders, a breach of a financial covenant would constitute an event of default and allow the lenders to exercise remedies under the agreements, the most severe of which is the termination of the credit facility under our committed bank credit agreement and acceleration of the amounts owed under the agreement. In such case, we would be required to evaluate available alternatives and take appropriate steps to obtain alternative funds. We cannot assure that any such alternative funds, if sought, could be obtained or, if obtained, would be adequate or on acceptable terms.

Other debt obligations, which totaled ~~$13~~$12 million as of each of ~~February 28,~~November 30, 2023 and August 31, ~~2022, respectively,~~2023, primarily relate to equipment purchases, the contract consideration for which includes an obligation to make future monthly payments to the vendor in the form of licensing fees. For accounting purposes, such obligations are treated as a partial financing of the purchase price by the equipment vendor. Monthly payments commence when the equipment is placed in service and achieves specified minimum operating metrics, with payments continuing for a period of four years thereafter.

Capital Expenditures

Capital expenditures totaled ~~$75~~$25 million for the first ~~six~~three months of fiscal ~~2023,~~2024, compared to ~~$69~~$48 million for the prior year period. ~~Capital expenditures in the first six months of fiscal 2023 included approximately $18 million for investments in growth.~~ We currently plan to invest ~~in the range of $110 million to $120~~approximately $100 million in capital expenditures in fiscal 2023, which range excludes capital expenditures associated with the ongoing repair and replacement of the shredder enclosure building damaged by the fire at our Everett facility, as these expenditures are expected to be substantially recovered through insurance.2024. These capital expenditures include investments in growth, including new nonferrous processing technologies, and to support volume initiatives as well as post-acquisition and other growth projects, and investments to upgrade our equipment, infrastructure, and ~~infrastructure~~information technology systems, and for environmental and safety-related assets, using cash generated from operations and available credit facilities. Supply chain disruptions have contributed to some delays in construction activities and equipment deliveries related to our capital projects, and to the time required to obtain permits from government agencies, resulting in the deferral of certain capital expenditures. Given the continually evolving nature of such disruptions and other factors impacting the timing of project completion, the extent to which forecasted capital expenditures could be deferred is uncertain.

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SCHNITZER STEEL INDUSTRIES, INC. dba RADIUS RECYCLING

Environmental Compliance

Building on our commitment to recycling and operating our business in an environmentally responsible manner, we continue to invest in facilities that improve our environmental presence in the communities in which we operate. As part of our capital expenditures discussed in the prior paragraph, we invested approximately ~~$12~~$5 million in capital expenditures for environmental projects in the first ~~six~~three months of fiscal ~~2023,~~2024, and we currently plan to invest ~~in the range of $30 million to $40~~approximately $35 million for such projects in fiscal ~~2023.~~2024. These projects include investments in equipment to ensure ongoing compliance with air quality and other environmental regulations and storm water systems.

We have been identified by the United States Environmental Protection Agency as one of the potentially responsible parties that own or operate or formerly owned or operated sites which are part of or adjacent to the Portland Harbor Superfund site (“Portland Harbor”). See Note 5 - Commitments and Contingencies in the Notes to the Unaudited Condensed Consolidated Financial Statements in Part I, Item 1 of this report for a discussion of this matter, as well as other legacy environmental loss contingencies. We believe it is not possible to reasonably estimate the amount or range of costs which we are likely to or which it is reasonably possible that we will incur in connection with Portland Harbor, although such costs could be material to our financial position, results of operations, cash flows, and liquidity. We have insurance policies and a Qualified Settlement ~~Funds~~Fund (“QSFs”) that we believe will provide reimbursement for costs we incur for defense, remediation, and mitigation for natural resource damages claims in connection with Portland Harbor, although there are no assurances that those policies and the QSFs will cover all of the costs which we may incur. Significant cash outflows in the future related to Portland Harbor, as well as related to other legacy environmental loss contingencies, could reduce the amounts available for borrowing that could otherwise be used for working capital, capital expenditures, dividends, share repurchases, investments, and acquisitions and could result in our failure to maintain compliance with certain covenants in our debt agreements, and could adversely impact our liquidity.

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Dividends

On ~~January 5,~~October 25, 2023, our Board of Directors declared a dividend for the ~~second~~first quarter of fiscal ~~2023~~2024 of $0.1875 per common share, which equates to an annual cash dividend of $0.75 per common share. The dividend was paid on ~~February 14,~~November 27, 2023.

Share Repurchase Program

As of ~~February 28,~~November 30, 2023, pursuant to our board-authorized share repurchase programs, we had remaining authorization to repurchase up to 2.8 million shares of our Class A common stock when we deem such repurchases to be appropriate. We may repurchase our common stock for a variety of reasons, such as to optimize our capital structure and to offset dilution related to share-based compensation arrangements. We consider several factors in determining whether to make share repurchases including, among other things, our cash needs, the availability of funding, our future business plans, and the market price of our stock. We did not repurchase any of our common stock during the ~~second~~first quarter of fiscal 2024 or 2023.

Assessment of Liquidity and Capital Resources

Historically, our available cash resources, internally generated funds, credit facilities, and equity offerings have financed our acquisitions, capital expenditures, working capital, and other financing needs.

We generally believe our current cash resources, internally generated funds, existing credit facilities, and access to the capital markets will provide adequate short-term and long-term liquidity needs for working capital, capital expenditures, dividends, investments and acquisitions, joint ventures, debt service requirements, environmental obligations, share repurchases, and other contingencies. However, in the event of a sustained market deterioration, we may need additional liquidity which would require us to evaluate available alternatives and take appropriate steps to obtain sufficient additional funds. There can be no assurances that any such supplemental funding, if sought, could be obtained or, if obtained, would be adequate or on acceptable terms.

Contractual Obligations

There were no material changes related to contractual obligations and commitments from the information provided in our Annual Report on Form 10-K for the fiscal year ended August 31, ~~2022.~~2023.

We maintain stand-by letters of credit to provide support for certain obligations, including workers’ compensation and performance bonds. As of ~~February 28,~~November 30, 2023, we had $8 million outstanding under these arrangements.

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SCHNITZER STEEL INDUSTRIES, INC. dba RADIUS RECYCLING

Critical Accounting Estimates

There were no material changes to our critical accounting estimates as described in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of our Annual Report on Form 10-K for the year ended August 31, ~~2022.~~2023.

Recently Issued Accounting Standards

~~We have not identified any~~For a description of recent accounting pronouncements that ~~are expected to~~may have ~~a material~~an impact on our financial condition, results of operations, or cash flows, ~~upon adoption.~~see “Recent Accounting Pronouncements” in Note 1 - Summary of Significant Accounting Policies in the Notes to the Unaudited Condensed Consolidated Financial Statements in Part I, Item 1 of this report.

Non-GAAP Financial Measures

Debt, net of cash

Debt, net of cash is the difference between (i) the sum of long-term debt and short-term borrowings (i.e., total debt) and (ii) cash and cash equivalents. We believe that presenting debt, net of cash is useful to investors as a measure of our leverage, as cash and cash equivalents can be used, among other things, to repay indebtedness.

The following is a reconciliation of debt, net of cash (in thousands):

February 28, 2023

August 31, 2022

Short-term borrowings

$
6,527

$
6,041

Long-term debt, net of current maturities

303,552

242,521

Total debt

310,079

248,562

Less cash and cash equivalents

11,459

43,803

Total debt, net of cash

$
298,620

$
204,759

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	November 30, 2023		August 31, 2023
Short-term borrowings	$	5,641	$	5,813
Long-term debt, net of current maturities		278,280		243,579
Total debt		283,921		249,392
Less cash and cash equivalents		4,408		6,032
Total debt, net of cash	$	279,513	$	243,360

Net borrowings (repayments) of debt

Net borrowings (repayments) of debt is the sum of borrowings from long-term debt and repayments of long-term debt. We present this amount as the net change in our borrowings (repayments) for the period because we believe it is useful for investors as a meaningful presentation of the change in debt.

The following is a reconciliation of net borrowings (repayments) of debt (in thousands):


	Six Months Ended February 28,						Three Months Ended November 30,
	2023			2022			2023			2022
Borrowings from long-term debt	$	333,242		$	405,094		$	135,099		$	186,356
Repayments of long-term debt		(274,036	)		(225,395	)		(100,568	)		(78,781	)
Net borrowings (repayments) of debt	$	59,206		$	179,699		$	34,531		$	107,575

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SCHNITZER STEEL INDUSTRIES, INC. dba RADIUS RECYCLING

Adjusted EBITDA, adjusted selling, general, and administrative expense, adjusted ~~income (loss)~~loss from continuing operations attributable to ~~SSI~~Radius shareholders, and adjusted diluted ~~earnings (loss)~~loss per share from continuing operations attributable to ~~SSI~~Radius shareholders

Management believes that providing these non-GAAP financial measures adds a meaningful presentation of our results from business operations excluding adjustments for ~~restructuring~~ charges ~~and other exit-related activities,~~for legacy environmental matters (net of recoveries), asset impairment charges, business development costs not related to ongoing operations including pre-acquisition expenses, amortization of capitalized cloud computing implementation costs, restructuring charges ~~for legacy environmental matters (net of recoveries), asset impairment charges,~~and other exit-related activities, and the income tax benefit allocated to these adjustments, items which are not related to underlying business operational performance, and improves the period-to-period comparability of our results from business operations.

Following are reconciliations of net (loss) income ~~(loss)~~ to adjusted EBITDA and adjusted selling, general, and administrative expense (in thousands):


	Three Months Ended February 28,						Six Months Ended February 28,						Three Months Ended November 30,
	2023			2022			2023			2022			2023			2022
Reconciliation of adjusted EBITDA:
Net income (loss)	$	4,272		$	38,165		$	(13,284	)	$	85,441
(Income) from discontinued operations, net of tax		(224	)		(29	)		(155	)		—
Net loss													$	(17,799	)	$	(17,556	)
Loss from discontinued operations, net of tax														2			69
Interest expense		4,908			1,901			8,232			3,273			4,810			3,324
Income tax (benefit) expense		(513	)		12,073			(6,545	)		23,170
Income tax benefit														(10,170	)		(6,032	)
Depreciation and amortization		22,399			18,596			43,850			35,816			23,471			21,451
Restructuring charges and other exit-related activities		828			4			2,420			26
Business development costs		103			545			338			1,159
Charges for legacy environmental matters, net(1)		77			4,004			1,356			4,460			323			1,279
Asset impairment charges(2)		—			—			4,000			—			219			4,000
Business development costs														90			235
Amortization of cloud computing software costs(3)														80			—
Restructuring charges and other exit-related activities														35			1,592
Adjusted EBITDA	$	31,850		$	75,259		$	40,212		$	153,345		$	1,061		$	8,362

Selling, general and administrative expense:
As reported	$	63,957		$	61,081		$	128,185		$	116,348		$	63,102		$	64,228
Charges for legacy environmental matters, net(1)														(323	)		(1,279	)
Business development costs		(103	)		(545	)		(338	)		(1,159	)		(90	)		(235	)
Charges for legacy environmental matters, net(1)		(77	)		(4,004	)		(1,356	)		(4,460	)
Adjusted	$	63,777		$	56,532		$	126,491		$	110,729		$	62,689		$	62,714

(1)

Legal and environmental charges, net of recoveries, for legacy environmental matters including those related to the Portland Harbor Superfund site and to other legacy environmental loss contingencies. See Note 5 - Commitments and Contingencies, “Portland Harbor” and “Other Legacy Environmental Loss Contingencies” in the Notes to the Unaudited Condensed Consolidated Financial Statements in Part I, Item 1 of this report.

(2)

For the ~~six months ended February 28,~~first quarters of fiscal 2024 and 2023, asset impairment charges included $219 thousand and $4 million, respectively, reported within "Other loss, net" on the Unaudited Condensed Consolidated Statement of Operations.

(3)

Amortization of cloud computing software costs consists of expense recognized in cost of goods sold and selling, general, and administrative expense resulting from amortization of capitalized implementation costs for cloud computing IT systems. This expense is not included in depreciation and amortization. No amortization of cloud computing software costs was incurred prior to the first quarter of fiscal 2024; therefore, prior period Adjusted EBITDA amounts are not impacted.

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Following are reconciliations of adjusted net ~~income (loss)~~loss from continuing operations attributable to ~~SSI~~Radius shareholders and adjusted diluted ~~earnings (loss)~~loss per share from continuing operations attributable to ~~SSI~~Radius shareholders (in thousands, except per share data):


	Three Months Ended February 28,						Six Months Ended February 28,						Three Months Ended November 30,
	2023			2022			2023			2022			2023			2022
Income (loss) from continuing operations attributable to SSI shareholders:
Loss from continuing operations attributable to Radius shareholders:
As reported	$	4,129		$	37,586		$	(13,590	)	$	83,814		$	(17,962	)	$	(17,719	)
Restructuring charges and other exit-related activities		828			4			2,420			26
Business development costs		103			545			338			1,159
Charges for legacy environmental matters, net(1)		77			4,004			1,356			4,460			323			1,279
Asset impairment charges(2)		—			—			4,000			—			219			4,000
Business development costs														90			235
Restructuring charges and other exit-related activities														35			1,592
Income tax benefit allocated to adjustments(3)		(1,151	)		(1,073	)		(2,865	)		(1,322	)		(737	)		(1,714	)
Adjusted	$	3,986		$	41,066		$	(8,341	)	$	88,137		$	(18,032	)	$	(12,327	)


Diluted earnings (loss) per share from continuing operations attributable to SSI shareholders:
Diluted loss per share from continuing operations attributable to Radius shareholders:
As reported	$	0.14		$	1.27		$	(0.49	)	$	2.81		$	(0.64	)	$	(0.64	)
Restructuring charges and other exit-related activities, per share		0.03			—			0.09			—
Business development costs, per share		—			0.02			0.01			0.04
Charges for legacy environmental matters, net, per share(1)		—			0.13			0.05			0.15			0.01			0.05
Asset impairment charges, per share(2)		—			—			0.14			—			0.01			0.14
Business development costs, per share														—			0.01
Restructuring charges and other exit-related activities, per share														—			0.06
Income tax benefit allocated to adjustments, per share(3)		(0.04	)		(0.04	)		(0.10	)		(0.04	)		(0.03	)		(0.06	)
Adjusted(4)	$	0.14		$	1.38		$	(0.30	)	$	2.96		$	(0.64	)	$	(0.44	)

(1)

(2)

For the ~~six months ended February 28,~~first quarters of fiscal 2024 and 2023, asset impairment charges included $219 thousand ($0.01 per share) and $4 million ($0.14 per ~~share before income tax)~~share), respectively, reported within "Other loss, net" on the Unaudited Condensed Consolidated Statement of Operations.

(3)

Income tax allocated to the aggregate adjustments reconciling reported and adjusted (loss) income ~~(loss)~~ from continuing operations attributable to ~~SSI~~Radius shareholders and diluted (loss) earnings ~~(loss)~~ per share from continuing operations attributable to ~~SSI~~Radius shareholders is determined based on a tax provision calculated with and without the adjustments.

(4)

May not foot due to rounding.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Commodity Price Risk

We are exposed to commodity price risk, mainly associated with variations in the market price for ferrous and nonferrous metals, including scrap metal, finished steel products, auto bodies and other commodities. The timing and magnitude of industry cycles are difficult to predict and are impacted by general economic conditions as well as other factors including political and military events. We respond to increases and decreases in forward selling prices by adjusting purchase prices. We actively manage our exposure to commodity price risk and monitor the actual and expected spread between forward selling prices and purchase costs and processing and shipping expense. Sales contracts are based on prices negotiated with our customers, and generally orders are placed 30 to 60 days ahead of the shipment date. However, financial results may be negatively impacted when forward selling prices fall more quickly than we can adjust purchase prices or when customers fail to meet their contractual obligations. We assess the net realizable value of inventory (“NRV”) each quarter based upon contracted sales orders and estimated future selling prices. Based on contracted sales and estimates of future selling prices, a 10% decrease in the estimated selling price of inventory would not have had a material NRV impact as of ~~February 28,~~November 30, 2023.

Interest Rate Risk

There have been no material changes to our disclosure regarding interest rate risk set forth in Item 7A. Quantitative and Qualitative Disclosures About Market Risk included in our Annual Report on Form 10-K for the year ended August 31, ~~2022.~~2023.

Credit Risk

Credit risk relates to the risk of loss that might occur as a result of non-performance by counterparties of their contractual obligations to take delivery of scrap metal and finished steel products and to make financial settlements of these obligations, or to provide sufficient quantities of scrap metal or payment to settle advances, loans and other contractual receivables in connection with demolition and scrap extraction projects. We manage our exposure to credit risk through a variety of methods, including shipping ferrous scrap metal exports under letters of credit, collection of deposits prior to shipment for certain nonferrous export customers, establishment of credit limits for certain sales on open terms, credit insurance and designation of collateral and financial guarantees securing advances, loans, and other contractual receivables. ~~Due in part to the effects of COVID-19, we~~We have experienced reductions in the availability of credit insurance that we have historically used to cover a portion of our recycled metal and finished steel sales to domestic customers, which reduced availability may increase our exposure to customer credit risk. In addition, in higher or rising commodity price environments, we have experienced proportionately lower credit insurance coverage of applicable customer credit limits, which may increase our exposure to customer credit risk.

Historically, we have shipped almost all of our large shipments of ferrous scrap metal to foreign customers under contracts supported by letters of credit issued or confirmed by banks deemed creditworthy. The letters of credit ensure payment by the customer. As we generally sell export recycled ferrous metal under contracts or orders that generally provide for shipment within 30 to 60 days after the price is agreed, our customers typically do not have difficulty obtaining letters of credit from their banks in periods of rising ferrous prices, as the value of the letters of credit are collateralized by the value of the inventory on the ship. However, in periods of significantly declining prices, our customers may not be able to obtain letters of credit for the full sales value of the inventory to be shipped.

As of ~~February 28,~~November 30, 2023 and August 31, ~~2022, 25%~~2023, 21% and ~~24%~~38%, respectively, of our accounts receivable balance was covered by letters of credit, and the amount of past due receivables was not material.

Foreign Currency Exchange Rate Risk

We are exposed to foreign currency exchange rate risk, mainly associated with sales transactions and related accounts receivable denominated in the U.S. Dollar by our Canadian subsidiary with a functional currency of the Canadian Dollar.

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ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”)) that are designed to ensure that information we are required to disclose in the reports we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified by the Securities and Exchange Commission’s rules and forms and that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. Any controls and procedures, no matter how well designed and operated, can only provide reasonable assurance of achieving the desired control objectives. Our management, with the participation of the Chief Executive Officer and Chief Financial Officer, has completed an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures. Consistent with guidance issued by the Securities and Exchange Commission that an assessment of internal controls over financial reporting of a recently acquired business may be omitted from management's evaluation of disclosure controls and procedures, management is excluding an assessment of the internal controls of the Encore Recycling business, which we acquired on April 29, 2022, and the ScrapSource business, which we acquired on November 18, 2022, from its evaluation of the effectiveness of our disclosure controls and procedures. Together, the Encore Recycling and ScrapSource businesses represented approximately 3% of our consolidated total assets and 3% of our consolidated total revenues as of and for the six months ended February 28, 2023. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of ~~February 28,~~November 30, 2023, our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control Over Financial Reporting

There was no change in our internal control over financial reporting (as that term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended ~~February 28,~~November 30, 2023, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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SCHNITZER STEEL INDUSTRIES, INC.dba RADIUS RECYCLING

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Information regarding reportable legal proceedings is contained in Part I, “Item 3. Legal Proceedings” in our Annual Report on Form 10-K for the fiscal year ended August 31, ~~2022,~~2023 and Note 5 - Commitments and Contingencies in the Notes to the Unaudited Condensed Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report on Form 10-Q, incorporated by reference herein, and as follows:

We previously disclosed that, on September 3, 2021, the Oregon Department of Environmental Quality (“ODEQ”) issued a ~~corrective action~~Pre-Enforcement Notice (“PEN”) alleging that the Company’s metal shredder facility in Portland, Oregon was in violation of Title V of the federal Clean Air Act (“CAA”). In the PEN, ODEQ also alleged violations of major source new source review, the ODEQ’s Cleaner Air Oregon Program and federal hazardous air pollutant control technology requirements and gave notice to the Company that ODEQ had referred the matter to USEPA for review and possible formal enforcement. On November 3, 2023, ODEQ and the Company entered into a Mutual Agreement and Order resolving the PEN and ODEQ’s enforcement ~~order issued~~concerns, which included an agreement by the ~~California State Department of Toxic Substance Control (“DTSC”) on March 18, 2021 relating~~Company to our metal recycling facility in Fresno, California based on inspections conducted by the DTSC in 2013. The 2013 inspection resulted in the issuance of a Summary of Violations in 2015 setting forth a number of alleged violations relating to hazardous waste management requirements. While we dispute the alleged violations, we engaged in settlement discussions that had resulted in a tentative agreement in April 2018 to settle the matter for $490 thousand, of which $368 thousand was to be paid aspay a civil penalty and $122 thousand was to be paid as reimbursement for agency investigation and enforcement costs. However, the parties were not able to reach agreement on the injunctive terms of the settlement agreement, and the California Office of the Attorney General (“COAG”), on behalf of DTSC, filed suit in the ~~Superior Court~~total amount of the State of California, County of Fresno on June 25, 2020 against Schnitzer Fresno, Inc., a wholly-owned subsidiary, which operates the facility, seeking a permanent injunction and civil penalties. In early 2022, the parties agreed to formal mediation of the dispute, which effort was unsuccessful. However, we were able to resume settlement negotiations with DTSC, and settlement was achieved in January 2023. A Stipulated Judgement resolving the case was entered by the Fresno County Superior Court on January 18, 2023. The settlement terms include payment of a penalty of $525 thousand, specified injunctive relief requirements, and completion of site investigation and remediation requirements depending on the outcome of the investigation and risk assessment.$500,000.

We previously disclosed the September 30, 2022 reversal by the California State Court of Appeal of a lower court judgment and writ of mandate requiring the DTSC to rescind the Company’s “f letters” pursuant to which DTSC classified treated shredder waste from the Company’s metal shredding facility in Oakland, California as a “nonhazardous waste” that, among other things, permits its use as alternative daily cover at municipal landfills. Following the California Supreme Court’s denial of review of the Court of Appeal’s decision, the Company immediately sought reinstatement of its “f letters.” On April 3, 2023, the Company received confirmation from DTSC that the “f letters” are in effect, subject to certain conditions.

ITEM 1A. RISK FACTORS

There have been no material changes to our risk factors reported or new risk factors identified since the filing of our Annual Report on Form 10-K for the year ended August 31, ~~2022.~~2023.

ITEM 5. OTHER INFORMATION

~~None.~~During the three months ended November 30, 2023, none of the Company's directors or officers (as defined in Rule 16a-1(f) of the Securities Exchange Act of 1934, as amended), adopted, terminated, or modified a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement (as such terms are defined in Item 408 of Regulation S-K of the Securities Act of 1933, as amended).

4037

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SCHNITZER STEEL INDUSTRIES, INC.dba RADIUS RECYCLING

ITEM 6. EXHIBITS


Exhibit Number		Exhibit Description

10.1*		Form of ~~Deferred Stock Unit~~Long-Term Incentive Award Agreement under the 1993 Stock Incentive Plan used for ~~non-employee directors for~~ awards granted in ~~2023~~fiscal 2024.

10.2*		~~Summary Sheet~~Form of ~~2023 Non-Employee Director Compensation~~Restricted Stock Unit Award Agreement under the 1993 Stock Incentive Plan used for awards granted in fiscal 2024.

10.3*		Fiscal 2024 Annual Performance Bonus Program for the Chief Executive Officer.

31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS		Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH		Inline XBRL Taxonomy Extension Schema Document

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document

104		Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

* Management contract or compensatory plan or arrangement.

4138

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SCHNITZER STEEL INDUSTRIES, INC.dba RADIUS RECYCLING

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		SCHNITZER STEEL INDUSTRIES, INC.
		(Registrant)

Date:	~~April 7, 2023~~January 4, 2024	By:	/s/ Tamara L. Lundgren
			Tamara L. Lundgren
			Chairman, President and Chief Executive Officer

Date:	~~April 7, 2023~~January 4, 2024	By:	/s/ Stefano R. Gaggini
			Stefano R. Gaggini
			Senior Vice President and Chief Financial Officer

4239



Oregon		93-0341923
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

299 SW Clay Street, Suite ~~350~~400, Portland, Oregon		97201
(Address of principal executive offices)		(Zip Code)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock, $1.00 par value	~~SCHN~~RDUS	The Nasdaq Stock Market LLC


	PAGE
FORWARD-LOOKING STATEMENTS	3

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)	4

Unaudited Condensed Consolidated Balance Sheets as of ~~February 28,~~November 30, 2023 and August 31, ~~2022~~2023	4

Unaudited Condensed Consolidated Statements of Operations for the Three ~~and Six~~ Months Ended ~~February 28,~~November 30, 2023 and 2022	5

Unaudited Condensed Consolidated Statements of Comprehensive ~~Income (Loss)~~Loss for the Three ~~and Six~~ Months Ended ~~February 28,~~November 30, 2023 and 2022	6

Unaudited Condensed Consolidated Statements of Equity for the Three ~~and Six~~ Months Ended ~~February 28,~~November 30, 2023 and 2022	7

Unaudited Condensed Consolidated Statements of Cash Flows for the ~~Six~~Three Months Ended ~~February 28,~~November 30, 2023 and 2022	98

Notes to the Unaudited Condensed Consolidated Financial Statements	1110

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	2523

Item 3. Quantitative and Qualitative Disclosures about Market Risk	3835

Item 4. Controls and Procedures	3936

PART II. OTHER INFORMATION

Item 1. Legal Proceedings	4037

Item 1A. Risk Factors	4037

Item 5. Other Information	4037

Item 6. Exhibits	4138

SIGNATURES	4239


	February 28, 2023			August 31, 2022			November 30, 2023			August 31, 2023
Assets
Current assets:
Cash and cash equivalents	$	11,459		$	43,803		$	4,408		$	6,032
Accounts receivable, net of allowance for credit losses of $1,744 and $1,566		240,632			237,654
Accounts receivable, net of allowance for credit losses of $1,476 and $1,590								191,415			210,442
Inventories		286,733			315,189			281,062			278,642
Refundable income taxes		2,219			1,696			3,135			3,245
Prepaid expenses and other current assets		52,447			73,044			55,427			51,979
Total current assets		593,490			671,386			535,447			550,340
Property, plant and equipment, net of accumulated depreciation of $882,121 and $855,032		689,374			664,120
Property, plant and equipment, net of accumulated depreciation of $919,522 and $902,231								698,715			706,805
Operating lease right-of-use assets		112,600			122,413			114,965			115,686
Investments in joint ventures		11,681			12,841			10,268			10,750
Goodwill		268,497			255,198			229,345			229,419
Intangibles, net of accumulated amortization of $9,412 and $7,256		35,570			26,155
Intangibles, net of accumulated amortization of $13,957 and $12,442								32,720			32,540
Deferred income taxes		22,254			24,598			22,438			22,713
Other assets		47,629			49,886			48,756			47,696
Total assets	$	1,781,095		$	1,826,597		$	1,692,654		$	1,715,949
Liabilities and Equity
Current liabilities:
Short-term borrowings	$	6,527		$	6,041		$	5,641		$	5,813
Accounts payable		212,598			217,689			200,569			209,423
Accrued payroll and related liabilities		26,045			59,702			26,976			35,144
Environmental liabilities		8,495			13,031			11,891			13,743
Operating lease liabilities		20,601			21,660			19,923			19,835
Accrued income taxes		763			3,856			346			358
Other accrued liabilities		46,186			59,594			39,813			39,614
Total current liabilities		321,215			381,573			305,159			323,930
Deferred income taxes		55,968			63,328			47,665			58,617
Long-term debt, net of current maturities		303,552			242,521			278,280			243,579
Environmental liabilities, net of current portion		54,980			55,469			52,352			53,034
Operating lease liabilities, net of current maturities		93,074			101,651			95,267			96,086
Other long-term liabilities		23,868			23,581			29,655			29,044
Total liabilities		852,657			868,123			808,378			804,290
Commitments and contingencies (Note 5)
Schnitzer Steel Industries, Inc. (“SSI”) shareholders’ equity:
Radius Recycling (“Radius”) shareholders’ equity:
Preferred stock – 20,000 shares $1.00 par value authorized, none issued		—			—			—			—
Class A common stock – 75,000 shares $1.00 par value authorized, 27,255 and 26,747 shares issued and outstanding		27,255			26,747
Class A common stock – 75,000 shares $1.00 par value authorized, 27,663 and 27,312 shares issued and outstanding								27,663			27,312
Class B common stock – 25,000 shares $1.00 par value authorized, 200 and 200 shares issued and outstanding		200			200			200			200
Additional paid-in capital		20,831			22,975			22,258			26,035
Retained earnings		917,266			941,146			870,975			894,316
Accumulated other comprehensive loss		(40,605	)		(37,089	)		(40,102	)		(39,683	)
Total SSI shareholders’ equity		924,947			953,979
Total Radius shareholders’ equity								880,994			908,180
Noncontrolling interests		3,491			4,495			3,282			3,479
Total equity		928,438			958,474			884,276			911,659
Total liabilities and equity	$	1,781,095		$	1,826,597		$	1,692,654		$	1,715,949


	Six Months Ended February 28,						Three Months Ended November 30,
	2023			2022			2023			2022
Cash flows from operating activities:
Net (loss) income	$	(13,284	)	$	85,441
Adjustments to reconcile net (loss) income to cash provided by operating activities:
Net loss							$	(17,799	)	$	(17,556	)
Adjustments to reconcile net loss to cash used in operating activities:
Asset impairment charges		4,000			—			219			4,000
Exit-related asset impairments		143			—			—			143
Depreciation and amortization		43,850			35,816			23,471			21,451
Inventory write-downs		575			304			—			575
Deferred income taxes		(6,337	)		13,988			(10,834	)		(5,741	)
Undistributed equity in earnings of joint ventures		(1,101	)		(827	)		(673	)		(790	)
Share-based compensation expense		5,144			9,231			1,376			2,816
Loss on disposal of assets, net		16			1,345
(Gain) loss on disposal of assets, net								(418	)		300
Unrealized foreign exchange loss, net		85			121			356			141
Credit loss, net		195			16
Credit loss (recovery), net								14			(18	)
Changes in assets and liabilities, net of acquisitions:
Accounts receivable		(13,914	)		(47,762	)		15,833			16,925
Inventories		33,834			(52,624	)		293			(27,846	)
Income taxes		(4,783	)		(697	)		405			(293	)
Prepaid expenses and other current assets		9,758			1,309			(2,771	)		1,839
Other long-term assets		(1,389	)		(651	)		(1,184	)		(1,212	)
Operating lease assets and liabilities		232			(903	)		(65	)		313
Accounts payable		12,245			11,762			353			(18,692	)
Accrued payroll and related liabilities		(33,421	)		(39,711	)		(8,163	)		(28,902	)
Other accrued liabilities		(7,177	)		7,583			(683	)		(8,709	)
Environmental liabilities		(4,914	)		(12,482	)		(2,523	)		(2,452	)
Other long-term liabilities		1,935			455			494			1,556
Distributed equity in earnings of joint ventures		—			1,000			1,000			—
Net cash provided by operating activities		25,692			12,714
Net cash used in operating activities								(1,299	)		(62,152	)
Cash flows from investing activities:
Capital expenditures		(74,511	)		(69,409	)		(24,808	)		(47,520	)
Acquisitions, net of acquired cash		(26,902	)		(113,939	)		—			(26,902	)
Proceeds from insurance and sale of assets		3,026			11,129			609			2,219
Deposit on land option		—			(80	)
Net cash used in investing activities		(98,387	)		(172,299	)		(24,199	)		(72,203	)
Cash flows from financing activities:
Borrowings from long-term debt		333,242			405,094			135,099			186,356
Repayment of long-term debt		(274,036	)		(225,395	)		(100,568	)		(78,781	)
Payment of debt issuance costs		(156	)		—			—			(135	)
Repurchase of Class A common stock		—			(7,865	)
Taxes paid related to net share settlement of share-based payment awards		(6,809	)		(9,577	)		(4,802	)		(6,807	)
Distributions to noncontrolling interests		(1,155	)		(1,785	)		(362	)		(962	)
Dividends paid		(10,671	)		(10,841	)		(5,551	)		(5,540	)
Net cash provided by financing activities		40,415			149,631			23,816			94,131
Effect of exchange rate changes on cash		(64	)		(41	)		58			(40	)
Net decrease in cash and cash equivalents		(32,344	)		(9,995	)		(1,624	)		(40,264	)
Cash and cash equivalents as of beginning of period		43,803			27,818			6,032			43,803
Cash and cash equivalents as of end of period	$	11,459		$	17,823		$	4,408		$	3,539


Large accelerated filer	☒	Accelerated filer	☐	Non-accelerated filer	☐


	Common Stock																Accumulated
	Class A						Class B				Additional						Other			Total SSI
Three Months Ended February 28, 2022	Shares			Amount			Shares		Amount		Paid-in Capital			Retained Earnings			Comprehensive Loss			Shareholders’ Equity			Noncontrolling Interests			Total Equity
Balance as of December 1, 2021		27,624		$	27,624			200	$	200	$	43,641		$	834,504		$	(35,279	)	$	870,690		$	4,066		$	874,756
Net income		—			—			—		—		—			37,615			—			37,615			550			38,165
Other comprehensive income, net of tax		—			—			—		—		—			—			841			841			—			841
Distributions to noncontrolling interests		—			—			—		—		—			—			—			—			(759	)		(759	)
Share repurchases		(200	)		(200	)		—		—		(7,665	)		—			—			(7,865	)		—			(7,865	)
Issuance of restricted stock		9			9			—		—		(9	)		—			—			—			—			—
Share-based compensation cost		—			—			—		—		4,854			—			—			4,854			—			4,854
Dividends ($0.1875 per common share)		—			—			—		—		—			(5,343	)		—			(5,343	)		—			(5,343	)
Balance as of February 28, 2022		27,433		$	27,433			200	$	200	$	40,821		$	866,776		$	(34,438	)	$	900,792		$	3,857		$	904,649


Operating lease right-of-use assets	$	466
Goodwill(1)		13,105
Other intangible assets		11,955
Other assets		9
Total assets acquired		25,535
Operating lease liability		466
Total liabilities assumed		466
Net assets acquired	$	25,069


Balance as of September 1, 2022		Liabilities Established (Released), Net		Payments and Other			Balance as of February 28, 2023		Short-Term		Long-Term
$	68,500	$	1,608	$	(6,633	)	$	63,475	$	8,495	$	54,980


	Three Months Ended February 28, 2023									Three Months Ended February 28, 2022
	Foreign Currency Translation Adjustments			Pension Obligations, Net			Total			Foreign Currency Translation Adjustments			Pension Obligations, Net			Total
Balances - December 1 (Beginning of period)	$	(36,925	)	$	(2,377	)	$	(39,302	)	$	(32,724	)	$	(2,555	)	$	(35,279	)
Other comprehensive (loss) income before reclassifications		(1,361	)		—			(1,361	)		722			—			722
Income tax benefit (expense)		—			—			—			—			—			—
Other comprehensive (loss) income before reclassifications, net of tax		(1,361	)		—			(1,361	)		722			—			722
Amounts reclassified from accumulated other comprehensive loss		—			75			75			—			154			154
Income tax (benefit)		—			(17	)		(17	)		—			(35	)		(35	)
Amounts reclassified from accumulated other comprehensive loss, net of tax		—			58			58			—			119			119
Net periodic other comprehensive (loss) income		(1,361	)		58			(1,303	)		722			119			841
Balances - February 28 (End of period)	$	(38,286	)	$	(2,319	)	$	(40,605	)	$	(32,002	)	$	(2,436	)	$	(34,438	)

Useful Life

Supplier relationships

Non-compete intangible assets

Customer relationships