RDUS - Earnings call transcript Q4 2024

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Operator

Good day, and thank you for standing by. Welcome to the Radius Recycling's Fourth Quarter 2024 Earnings Release Call and webcast [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, Victor, and good morning. company's of the Relations. Bennett, Michael Vice Investor President I'm Recycling's you for XXXX. I'm welcome Radius earnings fiscal happy to of to presentation quarter the fourth

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

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

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 be the in that that our GAAP well our of XX-K.Â Please in X note presentation contained our could our as information We've as those we those Slide included today. materially during release Form concerning some in reconciliation appendix and statements presentation. slide of a forward-looking will non-GAAP measures today to to metrics discussing press results is actual to cause differ from

Now, Officer. let call me Lundgren, to Chief and turn our Chairman Tamara the Executive over

Tamara Lundgren

Good welcome detail. underway and we fourth earnings and by your value conditions financial discussion then quarter, address and in the review through with to I will an up, our Stefano then 'XX questions. have industry results everyone, to cycle. you, of quarter fiscal cover dynamics operating wrap take Financial update today morning, of actions strategic create more the President fourth our the a current am we'll start our and long-term on I'll quarterly joined and Vice this morning's Thank call. Senior market Chief Michael. Gaggini. I'll and Officer,Â Stefano an overview

'XX, rate almost recognize Before employees incidents. fiscal our delivering turning XX% case safety incident facilities year-over-year had our for year our to take time I'd moment and no performance. the of In achieved reduction to in we a total lost improved to another like a XX% slide, next of

employees Our to communications year-over-year improvement to our like actions through and all training reduce increased and operating improvement enhanced continuous practices processes reengineering reflects the commitment risk. of and

While team's results to do their a to commitment our safety injuries, our dedication we and reflect work culture. to safe goal of unwavering these to a and X environment still have sustainable safety work creating achieve

now, fourth quarter let's to our So to Slide turn review X highlights.

long-term demand global tight metals the with softer are remained market during and scrap headwinds. recycled trends for strong, creating conditions steel challenging fourth the availability significant While quarter

ongoing results. leading in Our in to QX our costs, compression the stickiness results scrap by purchase were margin impacted financial significantly

to However, nonferrous our was XX% executing and improvement delivered steel investments, by growth our deliver strong to focusing cost to part on EBITDA actions substantially returned our quarterly and consecutive operating quarterly improvements recycling shareholders our the commercial flow in by new priorities, due and costs, sales to platform. We operating through both $XX from XX% this quarterly sequential year. initiatives and XXXnd within generated our financial nearly able our contributions savings technology sales strategic dividend. program operating and our services metal volumes productivity team results. these of rate We headwinds cash in we our XX%, benefits from some our our control, run finished full mitigate by sales million. We And and capital announced ferrous our positive lowering earlier adjusted in and on recovery successfully volumes increased doubled our volumes by efficiently

electric for increased is of interest recycled material. arc as manufacturers furnace scrap to growth steel. The benefit by capacity, in uses improved raw maximize U.S. rates in steelmaking recycled and such demand increased long-term and the finished demand supply supported reductions structural metals use activity, metals in continued copper, to expect consumer which we primary which demand deficits construction scrap for manufacturing to and their as turn from should the forward, ferrous Looking nonferrous its lead flows materials for

of technologies, strategic focused growth services our XPR these Our growth expansion metal with secular are and initiatives strongly aligned on trends. recovery volume

supply costs imports. now on resulting used Slide X for a of in to auto in to where market which the and still lower prices are reflected XX% metal comparatively cars reaching is to and aluminum continuing exports, levels, ferrous nonferrous most underpinned new low reflected of approximately auto reaching highs copper, with largely copper, global and of high, both subdued into PMI ending higher were the declines and for average decline age scrappage of demand, steel of due rates both in started. global fiscal highs record, dive price flow Chinese down lower vehicles pre-pandemic strong conditions.Â During elevated contraction year, both the by XX their contributed manufacturing manufacturing our turn vehicles. other highest year to remains perspective, levels last for contraction a steel XX% year-over-year in spring. Prices the period than recycled year which prices the end-of-life Let's copper were and the PGM for effect production. in reached which brief during of From was a almost The multiyear to were primarily XX of production compared prices manufacturing, level particularly exception, U.S. for late prices multiyear they Average out with deeper and year-over-year, by ferrous products have steel due softened. metals remaining up financing The prices finished both the domestic months of in dampening levels. Nonferrous for

will consumer interest associated spending flows. reductions major with manufacturing, continued U.S. in bills along construction U.S. that infrastructure be the leading with higher expect activity the scrap to higher catalysts rates and We and

Let's X on the recycled now priorities to an update outlook turn for metals. strategic Slide longer-term and our for

follows. be Our as with long-term the summarized reviewed strategic priorities are directly just and we aligned trends can

program. and productivity reduction cost our First,

$XX and productivity we with year. reduction cost fiscal which million plan, earlier substantially rate quarterly this improvement This quarter, full run we achieved announced benefits annual the of associated our

of in achieving we 'XX through reposition or of consolidate fiscal both optimizing the activity production our real can part substantially where benefits our associated we As the assets estate real focus and monetization certain value. locations continued estate business efficiencies, discrete in on unlock new anticipate

advanced we in technologies. metal should on return in and over investments investment product by to a shredding of in annual 'XX. EBITDA our This 'XX, million products us nonferrous achieved The our price. In investments furnace-ready fiscal majority anticipated process from enabling is increasing annual Second, based from recovery demand returns the create estimate recovery on these optionality the full multisite, focused and creating through $XX after should nearly our of of multiyear metals program come results investments fiscal benefits. these deployment. X/X the We

service and XPR trademark our solutions line. business Third,

an 'XX. volumes. is in tight increased metals is increasing service recycling sustainability Reflecting and multiyear XX% our volumes. And to steady increase our is offering our highly reporting. growth our This rates, the operations a provide XPR lower contracts environment, business, fiscal can enables their to trends. secular recycled line with aligned recycled typically sales our we reduce carbon fourth, recycling fiscal footprint growth, now to metals our over and with enhanced Our XPR of that compared more Despite material cyclical to to customers going core their asset-light supply 'XX landfills, counterbalance provide contributing business

increase us volumes to opportunity Our operating organic currently million commercial nonferrous X to the have our the capacity leverage on initiatives ferrous gives tons that focus available. and of create we using

related flows pre-pandemic previously We and sources remains demand to franchise are for revenue investing remains as streams, especially production and important below at levels capture digital also of salvage untapped new tools parts in solid. car auto are our which Pick-n-Pull auto

positive operating currently being of already margins benefits masked the these our to we've experiencing. financial effect our While on by from the is initiatives contributing headwinds been their performance, are full impact

our provide substantial As visible margins become expect of benefits EBITDA to these results. more financial abate, boost we our much actions to and future a to and the in

So the over let Stefano. me now, turn presentation to

Stefano Gaggini

million benefits insurance the and drivers recoveries. The quarter improved was the had million our higher Tamara, to were products, the and market productivity of EBITDA conditions in are biggest all which included cost expansion our program. Cost quarter, and in $X measures control of demand metal $X the headwinds. productivity stronger nonferrous our volumes savings ramp-up reduction fourth current you, Thank Consolidated morning. to for compared in and and within million and sales recycled levers spreads good from in prices, critical an with associated pressure $XX adjusted mitigate the prior results in inflationary margin operating

sustained market independent benefits structural reflects in volumes. conditions changes a of number program that initiatives Our generate of or

are in and million of fiscal and a that approximately targeted outside and program resulting decreases in SG&A benefits logistics, expense. production other aggregate initiatives on optimization reductions, are XX% These as of adjustments reduction activities an basis, Our discretionary transportation has comprised headcount to travel from such expenses savings which other 'XX cost primarily procurement yield and of reduction X/X $XX and professional of employee-related in increases, of non-trade spend a services. use annualized

at the we reflecting measures specifically year. to prior from implemented X% SG&A benefits year, quarter, more adjusted the were expense. the down compared SG&A In costs Looking the fourth the during

fourth were certain we be benefits for in 'XX. fiscal expect quarter, those temporary receded However, to offset partially ongoing and which in costs legal later matters by the elevated

As which the our platform we continuous in routinely review and our business. part of locations do improvement, we operating

from contracts these to of proceeds of in million subject facility. These certain while the discrete existing flows $XX to terms. this As properties estate modifying customary assets process a to Tamara target 'XX, sell have not these nearby operating repositioning owned during material opportunities excess the we cash opportunities net real monetization date, executed of We To second do sales. two mentioned, half footprint. monetize to meaningfully generate includes closing involve to fiscal transactions expect our identifying real substantially and estate

material ferrous Let's focus sequentially, move market well XX%. shipments. domestic timing The sales of in were Ferrous as to XX% part as share commercial reflecting to benefits seasonality Slide on the X flows and of and shipments was dynamics. up of initiatives from discuss volumes on ferrous the equal sales

in India. Benefiting were detriment operating flows in volumes a prior seasonally sequentially. spreads flat and net sequentially, leverage Bangladesh, parity $X ferrous ton per Our destinations resulted metal the ton average inventory ferrous of in average the a process selling $X from quarter. Ferrous created increased higher impact by small compared the able per to was expand contribution accounting we to to prices top export and in together detriment quarter the fourth performance ferrous substantially were above exports ferrous quarter. sales the were the with which for The of Turkey higher of prices,

we mentioned, continue of on global steel exports. Tamara As to levels scrap elevated Chinese the market from pressure see

markets. year finished an reached and ferrous steel X-year right As the Asian scrap calendar graph and shows, particularly 'XX, on X impacting XX% the high, exports first in production year-over-year months nearly the in bottom China's of demand, increased the steel

our to and to production sales move XX% on our our sales investments net and demand. flows, nonferrous the export on products Nonferrous nonferrous Malaysia, were nonferrous X let's products discuss of were Slide an XX for Now, destinations investments. seasonality the sold with timing nonferrous X% reflecting countries benefits India shipments. We to selling our recovery nonferrous up of recycled major volumes higher update prices up and China. provide Average sequentially, associated being on strong with sequentially

'XX.Â We recovery during technologies. by to and in which systems the We contribution year Overall, quarter. construction We of ramp-up on to in systems systems and the incremental majority was of these the systems project remains expected the these nonferrous to from of end the Coast, further primary from of subject last which on primary continue construction to our X West primary left several performance positive the advanced completion fourth the calendar of quarter. progress approval. permitting start the metal ramp-up permitted recovery our activities contribution of We start have these investment the drive currently the primary of systems,

the 'XX EBITDA trend increasing the by ferrous Once calendar operational, approximately per these to target of ramp-up ton. returns and of early from in we expect our from We $XX full see returns investments fully substantial 'XX. calendar of permitted continue investments to systems a of remainder expect

was sales steel sequentially move as to from XX% our from discuss from U.S. selling in up in Finished for the the stands XX% XX% X% construction a mill let's up period. Average to we and rolling Average XX tons compared in Now, utilization of activity. the demand steel seasonal were steel quarter the XXX,XXX volumes benefited believe associated infrastructure benefit fourth solid quarter down pickup mill to of the finished the XX%, quarter. well Slide We our prior prior builds. average the U.S. net above prices anticipated were mill to also for performance. with

$X the at benefit of offset flow timing of expenditures timing detriment to working capital cash collection Operating XX. quarter. a was reflecting results million, fourth sequentially. working quarter Slide saw all the from cargoes. Capital capital were in volumes fourth quarter the impact to was volumes for of for bulk net move shipments our products in ferrous let's the higher to The million. the The Now, sales positive created EBITDA higher on quarter in the the we of by $XX on

fiscal This the a compared reduction than fiscal For was 'XX, more level we was 'XX the X/X $XX align of CapEx full to performance our investments current to trends. million. CapEx as of

we to ahead, at and levels million this environmental-related of including projects, the our million. Around the of investments growth technology projects. Net initiatives and CapEx $XX 'XX approximately services remaining the remain project for similar with was quarter. currently for business fourth Looking maintaining end debt XX% spend the our nonferrous fiscal be of will $XXX investments the capital of expansion completion continued recycling at and to support be

credit Our Under maturity of are interest million has of $XXX linked rates. August a date costs Credit market our facility capacity Agreement, a to and short-term XXXX.

As impairment the the allowance points deferred XX-basis in tax fourth of a interest reduction on results, cuts assets quarter that related true-up the exclude the impairment on to non-GAAP a a tax on from fourth which $X rate we charge by the rate results, short-term rate September. The our its impact in benefit and benefit XX% such prior the tax quarter. was U.S. result, of effective XX% a million driven Reserve, pretax by quarter. for was Federal reported of as occurred which charge the reflected valuation in taken tax goodwill The charge the benefit

business, 'XX. net the computation valuation we because allowance flexible Looking tax cash balance ahead, 'XX, a initiatives, on reinvesting fiscal to our to tax strategic to focused shareholders subject availability rate the of in fiscal in returning quarterly expect capital the in not potentially and carryforwards. We supporting position, estimates a of do pursue a given the in volatility quarter-to-quarter dividend, taxpayer be significant involved to loss the of allocation deferred We capital maintaining be operating balanced our through sheet. our expect

it a first our to At outlook. And prices call first-quarter various can in to too recycling early remain ahead, volumes. and experience flows, we back to expect quarter, finished typical in that, time respect Looking market to the uncertainties I'll with Tamara. seasonality impact and this steel with the that sales quantitative so is turn over factors provide quarter

Tamara Lundgren

for Thank focusing that team successfully commend you, Stefano. to the I for want control. to we markets our but the things for not just can on waiting improve,

global sales quarter significant market forever. stronger decarbonization, last nonferrous, and discussed improvement benefit investment, savings this finished success and our steel earlier, are manufacturing results from cost we Our increasing demand programs and to ferrous, as productivity benefited from volumes. Today's won't And and with in associated well-positioned we've conditions trends our activity. infrastructure

how turn. in quickly conditions, past the While don't of cycle the seen the improvement we market in control pace we've can

construction the scrap including significant decline and supply improvement strategic metal conditions structural and interest control as recovery in on benefits the recover. Independent help provide flows. our rates should services an platform, supply recycled our of our operating in scrap cost expansion from the timing U.S. initiatives, for and benefit benefit expect recycling of improve manufacturing us to to and productivity technologies, Improved leverage activity both company that and market of with in continued metals. will flows investments We position recovery, focus volumes tailwinds

for across fourth together, now, certification for a of questions. This demonstrate their to Place testament and culture in Great role have we thank the partnership and working built communities for customers, economies we we essential together. open experiences the the some we our were as is positive year like our take continue in our to we certified for support. In their questions, employees strong dedication workplace to and suppliers, critical globe. And and a the operate consecutive let's fiscal our which business local the to call of Before 'XX, Victor, our Work. and I'd the and team the And

Operator

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

Martin Englert

you contribution, EBITDA, there it. Question the and way I anything on other reduced the sequential be profitability that unit the Is parse help to price basis, would to helpful component volume improvement can in holding unit that of cost there know can on inventory else? quarter-on-quarter. out was speak any a change losses, the but a components you extent

Stefano Gaggini

Martin, Hi, this Stefano. is

the recognized we prior drivers $XX for improvement about the we in So think reimbursements the insurance underlying sequential the a quarter. of in EBITDA million so performance, moment, when disregarding

individually drivers, those increase largest sequential improvement products, from of our I slightly those say making is of than would of less sizing result all of component in half the operating the for volumes. that terms higher from leverage including creation In up the volumes

And prices and component, $XX from quarterly of the then I the I compared strong is of metal spreads, say, the higher the sequential in the would demand improvement. ramp-up X/X inventory up rest including The of accounting would expansion full second nonferrous the of million productivity from detriment recycled average overall the lesser that the around say and to combination is a QX. you savings to program. And what due cost mentioned, makes run to rate our benefits

Martin Englert

or change since flows? to it on same the Did exiting? you fundamental this still flows of the scrap any measurable comes see when in Or tightness during quarter backdrop the kind is

Tamara Lundgren

We seasonality. obviously impacted haven't flows And, by any are loosening. seen yes, supply

or really flows, right from change benefits the like. in than any seasonality manufacturing rate or any reductions a So, changes they levels are durable changes interest in any yet supply goods see we are now, of the inventory or function

Martin Englert

you're ferrous guess, and activity Can history? seeing in export far more I demand and here update October as you what provide as recent a brief

Tamara Lundgren

an increased end East scrap October, that of trade the bringing the sentiment our increase at Coast in vertical time aboutÂ $XX the the domestic the from sentiment remained scrap in in continue calendar semi that Asian the year led And off follow West or the weak the export pressure are steel QX region. And Coast And the Chinese impact I first details look the levels market, in since generally Chinese high the production of absorption they sea prices volumes steel has because parity. to think the can availability Europe. Coast, decreases you on export and overall Turkey into the West steel 'XX. If ferrous and demand higher the which stimulus West demand finished seen on market. fundamentals the that cautiously amid increase as both production, and mixed either we've both see Coast October Chinese of domestic in occurred U.S. steel awaiting export by and activity, and we domestic deep as of tight off decrease Chinese Well, in the domestic Sure. stable that export to remains was domestic exports to that or whether within of Chinese exports

Operator

will question next come Markets. Samuel line McKinney of from Capital from Our KeyBanc the

Samuel McKinney

the a the from the really volumes, I to supply they quarter, the and export months, the you you Sticking ferrous of into during surprise understand in buoyed the by better were that numbers. seasonally can benefits upside but the But in release? shipments around in summer timing dig noted was dynamics fourth those

Stefano Gaggini

Sam. that, Yes, take I'll

seasonality in due ferrous the factor in said the summer of prepared increase was or part shipments to remarks cargoes. the bulk from that during the more ferrous timing other the and half that on we in less on So, was equal approximately the

that the XX% drove be would that those components X increase sequentially. So, of

Samuel McKinney

you mean, from from asking were cargoes guess quarters, benefits I later volumes I shipments? timing shipments, into is past, what the to say delayed seep of in I'm maybe have of the but the caused what benefits I when know timing

Stefano Gaggini

mean I the a Sam, and from What inventory of sequentially was shipments. there the benefit reduction in that's timing

our inventory sequentially. in current timing sales difference quarter, the know, this of a As volumes. And ferrous the can a make in size there you reduction of cargoes was in shipments, given

Samuel McKinney

around sometimes And attractive. has prices then the how talk to less that in market the how premium you've a made pound, zorba has and conversions premium nonferrous, you evolved over in $XX tight With you're about zorba cited fiscal viewing 'XX? can us I year twitch recent into mean, that sitting still months of

Tamara Lundgren

still and think spread levels. Stef recovery in is which on start below me the zorba. And you that weighing compresses then twitch levels, rebound I pre-pandemic that auto don't really add? a between auto twitch why Let production, and production, is

investments product profits. of strategic so have in of the different One is the, capture had that the points us that let's at access say, refinement process reasons we the to why made metal that recovery metal highest lets the optionality provide markets we can the we've

Stefano, as deeper want auto the that we the main you driver. recovers production widening in to So as spread, anticipate might specifics. dig to

Stefano Gaggini

product right, And the value optionality higher get material prices the that allows sales. Tamara. us agree, that depending on to the process into on I basically we

of sell, premium to of So, product those if our can have grades a between there straight don't them or enough zorba to, we is process material, export. we for else will we example,

important. is utilizing product the And spreads. optionality not compressed currently, it because of we that are So

Samuel McKinney

Coast lastly for from then rain and solid volumes had off solidly seasonal think that detail the demand? to that led it fourth on West the quarter. uptick? pickup But benefited you West nonres some quarter construction improved the demand, some volume more me, Coast the in Was more And provide the again drivers coil in that specific quarter can issues third second quarter rebar nonres fourth

Tamara Lundgren

West much and We much Coast the to real still so. mid-XXXX. experience will the market to funds so. very are expected flow Very from that yet anticipate benefits probably that any has infrastructure Yes, benefit

see to We bidding activity. continue

the Dodge look Index. And can You year-over-year, Momentum significantly higher. it's at

anticipate we in West be you strong bit I from long-term utilization our rate Coast. the think XX%Â it's strong. demand to see can at September. And decreased to continues August a But continued perspective, a from

Operator

any to Tamara it not like to I this back would questions further over time. now showing I'm at Lundgren for turn remarks. closing

Tamara Lundgren

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

Operator

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

You Everyone, may great day. a now disconnect. have

Radius Recycling (RDUS) 24 Oct 242024 Q4 Earnings call transcript