Sign in

You're signed outSign in or to get full access.

RR

RADIUS RECYCLING, INC. (RDUS)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 FY2025 showed clear sequential and year-over-year improvement driven by higher volumes across ferrous, nonferrous, and finished steel, with revenues of $0.73B, adjusted EPS of $(0.39), and adjusted EBITDA of $22M .
  • Finished steel utilization jumped to 107% (vs. 88% in Q2), supporting margin expansion; nonferrous prices rose 7% q/q and volumes +23% as domestic demand strengthened .
  • The Board declared a $0.1875 quarterly dividend (125th consecutive), and the company reiterated timing of its pending merger with Toyota Tsusho America in 2H 2025; no earnings call was held due to the merger process .
  • A June credit agreement amendment reduced revolver commitments to $625M and suspended certain maintenance covenants while continuing to test the consolidated asset coverage ratio, a notable capital-structure development into close .

What Went Well and What Went Wrong

What Went Well

  • Strong sequential demand and pricing recovery: nonferrous average net selling prices +7% q/q and volumes +23% on domestic demand and improved recovery from technology investments .
  • Finished steel strength: volumes +15% q/q; utilization 107% vs. 88% in Q2; average net prices +4% q/q aided by seasonally stronger Western construction activity .
  • Clear operating leverage and adjusted EBITDA swing to $22M from approximately break-even in Q2; adjusted loss per share narrowed from $(0.99) to $(0.39) .

What Went Wrong

  • Ferrous market volatility: domestic restocking in March was followed by notable price declines amid macro uncertainty; export ferrous demand weakened due to elevated Chinese semi-finished/finished steel exports .
  • Interest expense remained elevated, and operating cash flow was modest ($3M) despite improvements; net debt ended at $438M .
  • No Q3 earnings call due to merger process, limiting real-time management dialogue and guidance granularity .

Financial Results

MetricQ3 2024Q1 2025Q2 2025Q3 2025
Revenue ($USD Millions)$674 $657 $643 $727
Diluted EPS - Continuing Ops ($USD)$(6.97) $(1.30) $(1.15) $(0.59)
Adjusted EPS ($USD)$(0.59) $(1.33) $(0.99) $(0.39)
Gross Margin ($USD Millions)$46 $33 $27 $50
Adjusted EBITDA ($USD Millions)$9 — — $22
Operating Cash Flow ($USD Millions)$(1) $(2) $20 $3

Balance sheet and cash:

  • Total debt: $445M (Q1), $430M (Q2), $454M (Q3); Net debt: $430M (Q1), $424M (Q2), $438M (Q3) .
  • Capex: $12M (Q1), $11M (Q2), $10M (Q3) .
  • Effective tax rate: 11% expense (Q1), 11% benefit (Q2), 2% benefit (Q3) .

KPIs and operating statistics:

KPIQ3 2024Q1 2025Q2 2025Q3 2025
Ferrous Sales Volumes (LT, ‘000s)1,112 1,106 1,094 1,137
Avg Net Ferrous Price ($/LT)$350 $338 $330 $341
Nonferrous Sales Volumes (M lbs)183 177 174 215
Avg Nonferrous Price ($/lb)$1.04 $1.02 $1.03 $1.10
Finished Steel Volumes (ST, ‘000s)126 125 131 151
Finished Steel Avg Price ($/ST)$817 $775 $756 $787
Rolling Mill Utilization (%)88% 81% 88% 107%

Narrative drivers:

  • Sequential improvement tied to seasonality, higher yields from metal recovery technology, stronger nonferrous/finished steel pricing, and healthier Western construction demand .
  • Export ferrous pressure persisted due to Chinese steel exports and macro uncertainty .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Dividend per shareQ3 FY2025$0.1875 (Q2 declared) $0.1875 (Q3 declared) Maintained
FY2025 CapexFY2025~$60M (Q1 call) No update in Q3 PR Maintained (no change disclosed)
Earnings call plansQ3 FY2025Normal cadenceNo call due to pending merger Suspended
Credit facility capacityAs of June 16, 2025$800M commitments $625M commitments; adjusted covenants Lowered

Earnings Call Themes & Trends

Note: No Q3 earnings call due to pending merger; prior-quarter call (Q1 FY2025) used for narrative continuity.

TopicPrevious Mentions (Q1 FY2025)Current Period (Q3 FY2025)Trend
Chinese steel export pressureManagement cited elevated Chinese exports dampening global ferrous demand and prices .Export ferrous market weaker; domestic volatile; average prices +3% q/q but fell late-quarter .Persistent headwind; domestic volatility remains.
Nonferrous demand and recovery techStronger demand; ramp of primary nonferrous recovery systems; target substantial full ramp by Q3 FY2025 .Nonferrous pricing +7% q/q; volumes +23% on domestic demand and higher yields from recovery investments .Execution visible; contribution increasing.
Finished steel utilization and spreadsQ1 mill utilization 81% with maintenance; spreads compressed vs prior year .Utilization 107% in Q3 with stronger construction demand; average prices +4% q/q .Positive recovery with operating leverage.
Tax rate volatilityNot a cash taxpayer; quarterly rate volatility expected due to valuation allowance .2% benefit on pretax loss in Q3 .Volatility continues.
Capex and asset monetizationFY2025 capex ~$60M; expect ~$35M net proceeds from asset sales in 2H FY2025 .Capex $10M in Q3; monetization proceeds referenced in prior quarter (no Q3 update) .Spending aligned to performance; monetization still expected.
Credit facility and interest$800M facility; rate cuts to benefit interest expense; net debt $430M in Q1 .Revolver reduced to $625M; maintenance covenants suspended or extended; asset coverage continues to be tested .Tighter liquidity lines; covenant flexibility.
M&A (Merger)Merger agreement with TAI announced Mar 13; closing expected 2H 2025 .Shareholders approved June 5; regulatory approvals outstanding; no Q3 call .Progressing toward close.

Management Commentary

  • Strategy alignment and secular demand: “Our strategic initiatives are strongly aligned with secular growth trends… investments in advanced metal recovery technologies… and expansion of our 3PR service and offering” .
  • Recovery systems ramp: “We… target the substantial full ramp-up of the permitted systems by Q3 of fiscal ’25… expect approximately $10 EBITDA per ferrous ton in normal market conditions” .
  • Market outlook on Chinese exports: “Chinese steel overproduction has clearly had a dampening effect… we anticipate a correction… we can’t give you the time but we do anticipate a correction” .
  • Capital allocation: “We project fiscal ’25 CapEx… around $60 million… asset monetization transactions with net proceeds of approximately $35 million” .
  • Liquidity and interest costs: “We benefit from cuts in short-term interest rates… line of credit is based on short-term rates… benefits only partially reflected in Q1 and will be reflected in full in Q2” .

Q&A Highlights

  • Export ferrous pricing and China: Analysts queried prospects for relief from elevated Chinese exports; management expects other countries to push back on cheap exports and anticipates a correction, timing uncertain .
  • Interest expense trajectory: Q1 interest expense was flattish q/q but higher y/y; management expects lower interest costs as rate cuts flow through, with liquidity supported by capex alignment and asset monetization (~$35M), and facility capacity previously at $800M (now amended) .

Estimates Context

  • Wall Street consensus (S&P Global) for Q3 FY2025 was unavailable due to data mapping limitations; no EPS or revenue consensus retrieved. Values retrieved from S&P Global were unavailable.
  • As a result, no formal beat/miss assessment versus consensus can be provided for Q3 FY2025.

Key Takeaways for Investors

  • Sequential operating inflection: Revenues rebounded to $0.73B and adjusted EBITDA to $22M on volume and price recovery, notably in nonferrous and finished steel; operating leverage evident in mill utilization at 107% .
  • Export ferrous remains pressured: Elevated Chinese exports continue to weigh on export markets; domestic demand showed restocking volatility; traders should watch near-term price swings and inventory dynamics .
  • Liquidity framework adjusted: The revolver reduction to $625M and covenant changes offer flexibility but signal tighter committed lines ahead of merger close; monitor asset coverage ratio tests and net debt trend ($438M) .
  • Capex discipline and technology ROI: Capex paced to performance ($10M in Q3); nonferrous recovery investments are contributing to yields and margins—important for medium-term EBITDA normalization .
  • Dividend continuity amid merger: $0.1875 declared again; pending $30/share cash acquisition by TAI (shareholder-approved) remains the principal stock catalyst near term pending regulatory approvals in 2H 2025 .
  • Tax rate volatility persists: With valuation allowance, quarterly ETR swings can materially affect EPS prints irrespective of operating trends—risk for near-term earnings optics .
  • No Q3 call: Limited fresh qualitative detail due to no call; use Q1 call for medium-term themes and monitor filings for merger progress and operating updates .

Segment/Operations KPIs

MetricQ3 2024Q1 2025Q2 2025Q3 2025
Ferrous Sales Volumes (LT, ‘000s)1,112 1,106 1,094 1,137
Avg Net Ferrous Price ($/LT)$350 $338 $330 $341
Nonferrous Sales Volumes (M lbs)183 177 174 215
Avg Nonferrous Price ($/lb)$1.04 $1.02 $1.03 $1.10
Finished Steel Volumes (ST, ‘000s)126 125 131 151
Finished Steel Avg Price ($/ST)$817 $775 $756 $787
Rolling Mill Utilization (%)88% 81% 88% 107%

Additional disclosures:

  • Operating cash flow: $3M in Q3; Capex $10M; net debt $438M .
  • Domestic vs export ferrous pricing and volumes available in selected stats tables .

Disclosures and Source Notes

  • Q3 FY2025 earnings press release (8-K Item 2.02): full results and operating statistics .
  • Preliminary Q3 update and Sixth Amendment to Credit Agreement (8-Ks dated June 20): guidance on adjusted EBITDA and credit facility changes .
  • Q2 FY2025 press release and 8-K: prior-quarter performance and trends .
  • Q1 FY2025 press release and earnings call transcript: themes, capex, tax commentary, interest rate impact, technology ramp expectations .
  • Merger press release (March 13, 2025): transaction and timeline .