Executive Summary

Q2 FY25 was operationally mixed: revenues rose sequentially to $642.5M while adjusted EBITDA was approximately break-even, with losses narrowing vs Q1 but still pressured by lower ferrous and finished steel prices and tight scrap flows .
Year-over-year, ferrous and finished steel volumes increased (ferrous +12%, steel +15%), but average net selling prices fell (ferrous -14%, steel -9%), compressing spreads; stronger nonferrous demand lifted average nonferrous prices +10% YoY .
Liquidity improved: operating cash flow was $20.0M and free cash flow $12.9M; total debt ended at $429.9M and net debt at $424.5M, with capex of ~$11M in the quarter .
Merger announced post-quarter with Toyota Tsusho America at $30.00 per share cash (≈115% premium to prior close); Q2 call canceled due to pending deal; closing targeted for 2H CY2025, pending approvals .

What Went Well and What Went Wrong

What Went Well
- Positive free cash flow ($12.9M) and $20.0M operating cash flow, aided by inventory reductions/timing of shipments and disciplined capex (~$11M) .
- Volume strength despite price headwinds: ferrous volumes +12% YoY and finished steel volumes +15% YoY; rolling mill utilization 88% vs 81% in prior-year quarter .
- Productivity actions reduced SG&A 12% YoY; quarter also included a $3M asset monetization gain, reflecting ongoing self-help levers .
What Went Wrong
- Pricing pressure: ferrous average net selling prices -14% YoY and finished steel -9% YoY, compressing spreads; export spreads compressed late in quarter when domestic prices rose and exports were already contracted .
- Tight scrap flows exacerbated by winter weather constrained supply and margins; inventory accounting was ~neutral this quarter vs ~$2/ton benefit in Q2 FY24 .
- Continued losses: reported EPS $(1.15) and adjusted EPS $(0.99); adjusted EBITDA approx. break-even vs $3M in Q2 FY24; interest expense also elevated YoY ($8.8M vs $5.8M) .

Financial Results

Income statement summary (USD Millions, except per-share)

Metric	Q2 2024	Q1 2025	Q2 2025
Revenues ($)	$621.1	$656.5	$642.5
Gross margin ($)	$40	$33	$27
Operating income (loss) ($)	$(26.7)	$(24.9)	$(28.7)
Net income (loss) ($)	$(34.0)	$(37.2)	$(33.0)
Diluted EPS (USD)	$(1.19)	$(1.30)	$(1.15)
Adjusted EPS (USD)	$(1.04)	$(1.33)	$(0.99)
Adjusted EBITDA ($)	$3	— (≈breakeven)	— (≈breakeven)

Operating KPIs

KPI	Q2 2024	Q1 2025	Q2 2025
Ferrous volumes (LT ‘000)	980	1,106	1,094
Avg. ferrous price ($/LT)	$384	$338	$330
Nonferrous volumes (MM lbs)	176	177	174
Avg. nonferrous price ($/lb)	$0.94	$1.02	$1.03
Finished steel avg price ($/ST)	$832	$775	$756
Finished steel volumes (ST ‘000)	114	125	131
Rolling mill utilization	81%	81%	88%

Cash flow and leverage

Metric	Q2 2024	Q1 2025	Q2 2025
Cash from operations ($M)	$(55)	$(2)	$20.0
Free cash flow ($M)	—	—	$12.9
Total debt ($M)	$373.6	$445.4	$429.9
Net debt ($M)	$360.0	$430.2	$424.5
Cash & equivalents ($M)	$13.6	$15.2	$5.4

Non-GAAP notes: Adjusted EPS excludes restructuring/exit, legacy environmental items (net), asset impairments, business development (incl. pre-acquisition/merger expenses), cloud implementation amortization, and tax effects; Adjusted EBITDA reconciled from net income with similar adjustments .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Capex	FY2025	≈$80M (Q4 FY24 call)	Around $60M (Q1 FY25 call)	Lowered
Cash taxes	FY2025	—	Not expected to be a cash taxpayer	New/maintained outlook
Asset monetization	2H FY2025	—	~+$35M net proceeds expected (2 properties under contract)	New
Dividend	Quarterly	$0.1875 declared historically	$0.1875 declared; payable May 5, 2025	Maintained
Merger timing	Close window	—	Expected close 2H CY2025, subject to approvals	New transaction update

No quantitative revenue/EPS/margin guidance provided in Q2; the company did not host a Q2 call due to the pending merger .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 FY24, Q1 FY25)	Current Period (Q2 FY25)	Trend
Advanced metal recovery technologies	Majority of returns expected to show in FY25; target >$40M annual EBITDA at full deployment; substantial returns ≈$10 EBITDA per ferrous ton once fully operational	Productivity initiatives fully contributing; asset monetization delivered $3M gain in Q2	Execution progressing; benefits starting to show
Scrap flows/supply tightness	Tight scrap availability a major headwind; seasonality and weak manufacturing constrain flows	Tight flows worsened by winter weather; inventory accounting neutral vs prior year benefit	Still constrained near term
Chinese steel exports/macro	Elevated Chinese exports dampened global ferrous demand/prices; reached multi‑year highs	Elevated Chinese exports continued to dampen prices	Persistent headwind
Nonferrous demand	Strong demand; prices up 4% seq in Q4; up ~12% YoY in Q1	Avg nonferrous prices +10% YoY; volumes -1% YoY on timing	Healthy demand; volatile pricing
Finished steel (West Coast)	Utilization 97% in Q4; demand softened by rates; expecting infra benefits later	Avg price -9% YoY; volumes +15% YoY; utilization 88%	Stable demand in Western markets; pricing softer YoY
SG&A/cost actions	$70M annualized program; adj. SG&A down; temporary elevated legal costs	SG&A -12% YoY; continued productivity benefits	Continued discipline
Capital allocation/liquidity	Capex guided ≈$80M (Q4); later to ≈$60M; asset sales expected	Capex ~$11M; FCF $12.9M; net debt $424.5M	Improving cash generation

Management Commentary

“The contribution from our recycled metals business improved versus a year ago, driven by benefits realized from our cost reduction and productivity measures and stronger nonferrous demand… The contribution from finished steel declined year-over-year due to weaker domestic steel conditions and a scheduled maintenance outage.” — Tamara Lundgren, Q1 FY25 call .
“We continue to expect… substantial returns from our [nonferrous recovery] investments of approximately $10 EBITDA per ferrous ton in normal market conditions.” — Stefano Gaggini, Q1 FY25 call .
“We are excited to have reached this agreement with TTC… while delivering significant immediate value to our shareholders.” — Tamara L. Lundgren, merger announcement .
“We expect inventory rebuilding and seasonality will drive improved demand in the second half of our fiscal year.” — Tamara Lundgren, Q1 FY25 call .

Q&A Highlights

Note: No Q2 FY25 earnings call was held due to the pending merger with Toyota Tsusho America . Key themes from Q1 FY25 Q&A (still relevant to Q2 dynamics):

Export ferrous market and China: Management expects eventual correction in Chinese exports as countries push back on cheap imports, but timing uncertain .
Interest expense and debt: Credit facility costs largely set; falling short-term rates should benefit interest expense; focus on cash flow, capex discipline (~$60M FY25), and ~$35M asset monetization to support FCF .
Shipment timing dynamics: Ferrous volume variability driven by inventory reduction and bulk cargo timing .
Product mix optionality: Use of product optionality (e.g., zorba vs twitch) to optimize margins depending on spreads; currently compressed spreads limiting further processing .

Estimates Context

S&P Global consensus (revenue, EPS, EBITDA) for Q2 FY25 was unavailable for RDUS at the time of this analysis (data mapping not found). As a result, we cannot benchmark reported results versus Wall Street consensus for this quarter. If you’d like, we can refresh when S&P Global mapping is updated.

Key Takeaways for Investors

Price headwinds but improving cash: Despite lower ferrous and steel prices, RDUS generated $20M operating cash flow and $12.9M FCF in Q2; continued capex discipline (~$11M) and asset monetization are supportive of liquidity .
Volumes and productivity offset some spread compression: Ferrous and steel volumes rose YoY and SG&A fell 12% YoY, reflecting productivity initiatives; adjusted EBITDA was approximately breakeven .
Macro watchpoints: Elevated Chinese steel exports and tight scrap flows remain key variables; domestic ferrous prices rose late in the quarter creating divergence with exports and near-term spread compression on pre-contracted export cargoes .
Strategic optionality: Nonferrous recovery investments (target >$40M annual EBITDA; ≈$10/ferrous ton in normal conditions) plus 3PR services should enhance resiliency as cycle turns .
Transaction overlay: The $30/share cash merger with Toyota Tsusho (expected close 2H CY2025) is the dominant catalyst near term; Q2 call was canceled due to the deal process .
Tax and interest: Management does not expect cash taxes in FY25; declining short rates should modestly ease interest costs tied to the revolver .
Near-term focus: Monitor scrap flow normalization (post-winter), domestic vs export pricing alignment, and execution on asset sales and capex plans to sustain FCF and deleveraging .

Supporting documents and disclosures: Q2 FY25 8‑K and press release (no Q2 call held) ; Q1 FY25 8‑K and call ; Q4 FY24 8‑K and call ; merger announcement with Toyota Tsusho .

RADIUS RECYCLING, INC. (RDUS)·Q2 2025 Earnings Summary