RDUS - Earnings call transcript Q2 2024

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Operator

Good day and thank you for standing by. Welcome to the Radius Recycling Second Quarter 2024 Earnings Release Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Michael Bennett, Investor Relations. Please go ahead.

Michael Bennett

Thank you, Marvin, and good morning. company's of the Relations. Bennett, Michael Vice Investor President I'm Radius welcome presentation fiscal I to to XXXX. Recycling's of am happy quarter you earnings second for the

In of which issued can access we posted addition website set you audio at our release radiusrecycling.com. a both press and have slides, of on to today's our comments,

company's on will press me is also which filed let start, to release we X, in your attention which the in Slide our Form detailed later today. Before call safe be and the harbor XX-Q, statement included

we statements note targets, such statements on make As Slide X, our on as may we about volume forward-looking margins. today, growth and our call our

may forward-looking materially actual those projected differ statements. results in our Our from

the factors Additional in that today. well our be X note contained could as during information as those non-GAAP Slide will we presentation materially XX-Q. Please release discussing our concerning Form in some and statements measures of forward-looking that today press results is actual to cause differ from our

reconciliation to included have our GAAP those presentation. of appendix a slide We the in of metrics

turn me Gaggini, Chairman Officer. let Executive Chief the the will our Officer. to Tamara host and Financial today Chief She with call our call Stefano Lundgren, over Now

Tamara Lundgren

morning, take up to more quarter long-term your on we'll with financial performance detail address Thank results update on our this wrap provide everyone, to create Michael. cycle, dynamics and have our industry 'XX market and welcome conditions the second the and value and an I'll and capital Good you, strategic I'll priorities. current actions investments review questions. fiscal the through allocation then Stefano we performance. earnings then underway will our call our QX call. On and morning, our impacting our

headwinds exacerbated continued conditions X our supply second are high are and to being Without and of creating activity metal spreads, challenging. inflationary now cyclical tighter interest by in The turn quarter highlights. to question, and our manufacturing rates markets they scrap remain low the current Slide flows Let's pressures. review compressing

Our EPS adjusted million of an $X.XX. EBITDA reflected results $X and adjusted QX loss of

are particularly wet impacted seasonality, volumes While were our by by year, unusually quarter they this second always winter weather. affected

increased cost advanced of impact and which However, basis, are to technologies, in us. technologies. The on within metal focused through volume a QX tough metal investments contributions non-ferrous this due are are initiatives, execution. XPR part demand recovery with our What from in not efficiencies new strategic expansion market that time impacts our the specifically in conditions different our cyclicality aligned strategic is of are the to structural operating our year-over-year recovery tailwinds, of strongly actions growth, reductions, services and on current control, our volumes mitigating

by of workforce which and a also efficiencies. only longer team. production have with no SG&A who the substantially, colleagues productivity million we rate During XX% additional plan through the October. plan associated a the Radius We quarter, an expense on further profound last expanded company, second but with quarterly changes, this cost our These that million achieved, $XX are run on initiatives reduction the not included our announced we full $XX impact

and to continuing to shown managing work in want for these Our time, in each thank team other. has this changes safely tremendous and challenging commitment support resilience and through while their them executing nimbleness I

review to Scrap lower economic X remained quarter during Slide to tight on flows the now turn Let's market activity. trends. supply

beginning recovery. be the February, bouncing back, might to manufacturing the of manufacturing PMI XX may in recent years. above of manufacturing up been has March with shows index report, longest below XX, rising contraction which activity in in last the slightly from For X.X the percentage demand XX XX, The that over we've seen stretch however, points clocking most mark at months, U.S. a

contributors cars, end-of-life used road. of the scrap constrained the the collection scrap the of scrappage impacts average of the tightness prices costs, scrap and in lower vehicles financing lower including low supply auto higher to average Driven age increased the production rates age of on indicator vehicles by include is durable in continued for Another costs, of has higher road demand resulted for inflation. and on goods vehicles. Other the relatively increase

of in conditions in have tight selling led with have the All changes not line these purchase to supply which in costs, stickiness a scrap moved prices.

globally of early you slide, second of in the can this strengthened were of the primarily Scrap see prices by ferrous on U.S. in quarter, a domestic and in prices part market similar export Now followed end quarter. the March improving further. indicate half ferrous weakened and market than market. the restocking selling But prices preliminary ferrous export domestic before driven prices reports stabilizing the the trajectory. the slightly domestic as softening quarter, a atypically Since higher export the a throughout quarter April and export

a and Turning aluminum remained quarter, of including out for non-ferrous, to metal prices base demand softer impacted weaker and supply dollar, during of variety U.S. copper index tightness factors, range by a China. bound the

steel. finished remained in although Market the impacted wet the Coast beyond on the during relatively to Turning construction steady, the West quarter prices activity weather quarter unusually normal seasonality.

to itself with few months, next see the correct increased this demand infrastructure related U.S along We over bills. to expect

of market net-zero steel Our steel benefit to is movements. positioned emission products, these very from its Oregon our range with carbon of mill well including low-carbon products line

over now turn So to Stefano. let it me

Stefano Gaggini

quarter. morning. Starting sequentially saw of we good part in dynamics from selling the in and driven Average restocking. the with ferrous X%, the by Tamara, the strengthening quarter the ferrous early for market prices by you, improved Thank

conditions Asia, elevated constrain by due which However, the early levels increased Ferrous they were meaningfully. Compared at in decline expectations, reflected to scrap was the second XX% prices constrained the quarter selling more Middle the to end our to calendar exports. January impacting In volumes finished supply seasonality ability China's the including also in during sequentially impacted export of first steel from to in bulk also by was year-over-year, ferrous spreads and mostly and expand benefit January and steel of February, year supply as increased higher in delays demand part prices Turkey. performance months steel purchase the X prices of our production scrap shipments the flow down tighter XX% and XXXX, quarter. exports offset flows, of as certain Chinese continue winter was East both ferrous sales

included results positive a quarter of detriment the average compared higher second impact quarter. ferrous which to environment, first from ton Our the modest ferrous in in inventory per $X million accounting price $X

first recognized than due delays. shredder usual also export We domestic that at compares slightly occurred insurance prior Everett recoveries ferrous $X the million shipments The the the share to higher years, related shipment in to of in to in XX%, outage million quarter. was recognized facility which $X

top for Bangladesh, Our Turkey ferrous sales were destinations exports and Peru.

update our being were dollar. to sales and on sequentially We were discuss Thailand sales copper, India, U.S. on products softer seasonality. selling up prices net and aluminum X move Slide recovery our and let's X% countries China. of steady our reflecting Malaysia, benefits sequentially year-over-year, XX and to major non-ferrous dynamics and non-ferrous sold investments demand expansion volumes and platform the market of Non-ferrous for non-ferrous X% export investments. up global Now other down products Average non-ferrous were on provide to our an X% destinations and with the non-ferrous

ago. X% impacted to were from subdued PGM sequentially of a demand around year and metals auto XX% producers U.S. from by and global be continues However, prices down the and

closely X systems, by drive with majority of full the complete to to incremental our and construction of of with to which fabrication recovery summer, start non-ferrous end left continue We of of investment contribution work primary one progress of to completion to our systems continue with from primary program. ramp We project the the our permitted technology which up the in approval. and metal ramp-up installation the Several XXXX. West recovery systems year-end Coast, commissioning to stages primary awaits by in on be the are calendar and expected the construction and these reached currently operations permitting vendors of various

systems approximately the EBITDA ferrous fully we also investments separation ton. the in performance and higher-grade our contribution metal to option when quarter. advanced aluminum positive process zorba mixed second to materials market continue the returns the $XX from We dynamics from give already in have per us the was systems to supportive. Overall, into of are technologies that furnace-ready other expect substantial twitch operational operational, Once these

X discuss Now our let's mill to steel Slide move performance. to

quarter California. Our second above healthy sequentially believe from finished steel demand sales in prolonged construction on Average were reflection the steel products levels up demand, construction rolling remained year expected both periods prior created a Finished down nonresidential seasonality. steel bills. our remain performance demand Western XX% due although were the our a continued to well Coast, particularly selling mill significant West sequentially. the benefit U.S. down in from contributor X% and volumes our XX% stands We of infrastructure mill to XXX,XXX sales for seasonally and including the of consolidated prices tons from of U.S. were utilization of rain to flat XX%, of year-over-year unusually on finished markets. Sequentially, volumes net by lower construction in

collections, Now of for timing Operating shipment quarter let's move to working delayed including at to the a quarter. $XX bulk reflecting the million, the second due and outflow shipments end net impact detriment X. Slide of primarily cash capital was the the of from

the quarter. Capital to flow We reverse operating third the expect item million and $XX capital second this during benefit cash quarter. in working generation were expenditures

fiscal support technology 'XX be whole, expansion net at our was a be the due We impact non-ferrous million as XXXX. Approximately and debt capacity lowered to a leverage Availability and timing business projected investments August expect will working credit our of detriment $XX second recycling completion maturity with remaining at of quarter X/X end. have services spend was end borrowing at growth of projects. Net for from the $XXX facility which previously. quarter maintaining the the with a compared the XX% Net remains around to capital expenditures now end. million projects, for quarter, sizable shipments million to including including $XXX and the $XXX capital of the under of initiatives we environmental-related the capital the to for million

through returned shareholders of $X non-GAAP by effective driven was tax on for approximately and company's recognition projected jurisdictions. our quarterly of an was of valuation changes reported million to performance tax one pretax on allowance results assets quarter X% The a lower company primarily rate expense charge rate by adjusted the impact dividend. The reflecting of compounded results. capital X% deferred We the tax the in of in the second unusual, tax also on

let's review Now to move productivity our XX Slide to improvement program.

We inflationary and focus ways operating things are market headwinds margin mitigate to in our the on pressure that to control. through conditions, current continue

the employee-related in headcount SG&A $XX focused adjustments component from of activities. new some other specifics Looking million on at and is especially the regarding primary A program. expenses, type

of spend, procurement such professional logistics, productivity non-trade are of third end reducing rate as certain year. be these to remainder expected use in travel, transportation the in is with further by increasing outside discretionary the and services. Approximately We other substantially a and activities run decreasing also new all sizable half quarter from amount targeted and benefits of achieved services the of initiatives the the fiscal quarterly of

We during the second of restructuring measures, $X expect in incur these other charges million of exit-related which quarter. with approximately costs incurred and connection $X to million were

early Given back later still both and we visible. And time activity quantitative seasonality call flows spreads provide of quarter with that, plan when and in the Tamara. to of outlook more turn on and construction trends quarter, to the a a impact we the scrap over I'll become are volumes at third

Tamara Lundgren

use are scrap material, impact you, such in and Thank coming and raw to in they're to technologies been process which and our metals. further. as than metals to nickel replacing, structural Decarbonization products scrap The as recycled also is the is the the use expanding require services. primary uses increase increased expected recycled environmental and driving by And continue also and projected to the are the seeking demand manufacturers EAF their of its ferrous technologies than metals steelmaking reduce low-carbon years metals, metals. driving is metal anticipated carbon Stefano. more for ferrous additionally, produce to significantly mined copper demand has intensive deficits grow for capacity, increased for less of steelmaking and Many recycled

conditions, While we we the market do not improvement turn. cycle in can have quickly the past control how pace seen in the of

benefits. activity, in rates significant manufacturing flows and to U.S. a a We leverage in provide from and decline to production us global supply expect scrap recovery interest including auto with operating benefit

and the characterized both Over a by highs last XX period lows. margin months, historical

with our a and the won't additive adjusted result to And averaged productivity our to our $XX independent non-ferrous ferrous Our cost finished infrastructure and to ton. over our global recent the the plans, approximately programs investments believe we recovers, of platform market transition green be market low-carbon should meaningful have our recovery. Today's margins, in EBITDA underway, XXX per off continues. carbon XPR timing carbon we rates chain recovery reduction U.S. of We technologies investments should activity investment to emission, supply completion With our and average. that net-zero positioned together operating our and facilities, productivity forever. low last technologies historical steel cost advanced takes in manufacturing the contributions service of and and products, interest and reduction conditions are as benefit decline, well strategic

in essential customers for industry communities, of our take some open and to supporting global we like call the now, demonstrating critical let's business servicing and and for our our dedication employees again thank the and suppliers operator, Before continuously questions, our questions. economy. And I'd role their to the

Operator

from Englert of first Research Martin Our Instructions] of Partners. [Operator line question the Seaport comes

Martin Englert

the of there of the this question, of recent if total $XX room and for the on or First market is reductions do most has reductions XX the so? million over additional persist, $XX introduced a leg, company you next fundamental feel months top million trends specifically

Tamara Lundgren

cost end all as them and And start, million -- expected combination that efficiencies of half you year. QX be please are the $XX reduction that by in Martin in measures, as So and just of operating indicated, program seen with see efficiencies. implemented calendar are to in About benefits The yet a let substantially have add productivity Stefano the of me Stefano these of results. our has fit. we've

of a have the platform. and successful conditions our of market history our both appropriately our of as We adjusting resiliency team a that's and And platform reflection require. the nimbleness

Martin Englert

Okay. flows in can scrap that seen ferrous changes inbound Since exiting recycling have February may the you you observed? spreads quarter, and you've discuss that any

Tamara Lundgren

Sure.

in remarks, So to Typically, has with preliminary the export since April, slightly the And of see been see X to We weaken. only -- domestic beginning mean, as with that end and indicating the contraction in March. of prepared we quarter, the activity days also in March saw market. as a rebound export I spring, the mentioned start like. and in in markets a the that in prices our the flows both beginning didn't the of Part due some domestic market atypically we're is But March I April the manufacturing in into a to are mentioned, just improving I improvement. weather. a show XX-month reports, stabilizing we and

Martin Englert

bit the I little have saw export What in activity weeks. you the since that far up price exiting on as quarter? demand front activity recent export bumped seen the or volume has a as

Tamara Lundgren

both Coast. the what the are by we're this markets a steady elevated context Well, steady exports. in it's -- Turkey into recent weak the of seeing I what on is, a of Chinese that impacted think little And Coast activity, off or the buying region, still would selling I more current Coast, level West East off East little and say being

do of export as And some the that so see impacting demand. I

Martin Englert

Okay.

here, the uncertain at if in quarter that $X recent ton. per would any if about change approach they're way losses? holding to today anticipated just inventory or maybe XQ you Anything steady another anticipate were gains On or it it, gains for be you're things held quarter-on-quarter, where holding

Stefano Gaggini

holding when not in as are call effect. is providing market and decline. and accounting Stefano. rising the effect QX what mechanically, or quantitative Yes, third Obviously, the we a Martin, gains is for quarter. prices we But in average this detrimental saw we positive inventory environment This inventory guidance losses

domestic slightly starting improving. declining prices mentioned, quarter, before third the with and in as and stabilizing export So March Tamara

those here sequentially a would -- on to based expect being equal as the changes of detriment other to show price remainder to third subject obviously, the trends, for quarter. the quarter or So things is said, you from on, this you

Martin Englert

Okay.

of of happened into we you in move if even would what still a March, So abnormal months last in think kind it X just stability because quarter, the potentially? loss had holding of with seasonally translate the the

Stefano Gaggini

they for That's based in would right but new what -- that's it mechanically quarter, from lower that how coming directionally is It's a amount, work, prices quarter, to yes, on if probably the correct, now, would the higher we February be a correct. it wouldn't Martin. are were mechanically material be mechanically, it detriment

Martin Englert

And there and out logistics East for implications were are there two you scrap I collapse, is ferrous events understand Baltimore, wanted there. touch recent to Baltimore if the company, that's you exports, the I Taiwan. touch on on earthquake exported Bridge footprint it's in the please going in if but impact of there don't Coast could have a any And

kind items. your thoughts what I'm X curious of those are So on

Tamara Lundgren

obviously, of with events those Both our are all thoughts are of tragic those are impacted. and who

connection we connection impact think For situation likely own necessary the any company, on an expect impact in with be domestic don't rebuilding with either to I going Baltimore met their capacity. in the Taiwan neither, is is the that the in or by rebuilding or Taiwan,

Martin Englert

about demand or there, Okay. And as implications that anything as scrap going into No far thinking Taiwan area. really? or

Tamara Lundgren

us. Not I really I don't purchaser. -- They're a see for that. container primarily

so their the And can think capacity. required meet I internally rebuilding with said, I own they as

Martin Englert

have. appreciate difficult a you West the really market, job I especially Okay. I a good on That's it. Coast. navigating did thought all I

more Looking results. at broader challenging company had than up the trends, what lot was it a put for the

Tamara Lundgren

EAF flexibility by microscope And decarb they of one really to to talk the really positioned all the that. The is we're of be that. infrastructure efficiencies. and growth on very, that the the take very of a manufacturing intensity rates our from the terms eye we the sees production metal low-carbon that what low platform, in a telescope, driven doing is that I well which and tailwinds -- positive legislation. and going our interest And and funds to we the ultimately with these will are say, investment, going activity we're which comfort of trends team in And structural technologies. the one take the managing benefit we lot just advantage believe very to all come eye from cyclical feel and But is about of regularly well our positioned as of turn. higher-for-longer at of the job -- really to company with headwinds through Well, on the work keep that costs

So thank you.

Operator

the Lundgren it for to would question-and-answer remarks. Tamara closing I turn back concludes now session. to like This

Tamara Lundgren

for and We forward to you, Thank thank our results. when speaking you, everyone, we report today. quarter and time your the stay stay well. you look with interim, third safe again In

Operator

today's Thank This in conference. the you program. your participation concludes for

You disconnect. now may

Radius Recycling (RDUS) 4 Apr 242024 Q2 Earnings call transcript