Schnitzer Steel Industries Inc (RDUS) Reports Q4 and Fiscal 2023 Financial Results
Schnitzer Steel Industries Inc (NASDAQ:RDUS) reported a net loss of $(26) million in Q4, with a loss per share from continuing operations of $(0.92).
Adjusted earnings per share from continuing operations were $0.47 in the fourth quarter and adjusted EBITDA was $49 million.
The company generated a strong operating cash flow of $135 million in the fourth quarter.
The Board of Directors declared a cash dividend of $0.1875 per common share, payable November 27, 2023.
On October 25, 2023, Schnitzer Steel Industries Inc (NASDAQ:RDUS), also known as Radius Recycling, released its earnings report for the fourth quarter of fiscal 2023, which ended on August 31, 2023. Despite challenging market conditions and a net loss of $(26) million, the company demonstrated strong operating cash flow and continued its commitment to shareholder returns with a declared quarterly dividend.
Financial Performance and Market Conditions
The company reported a net loss of $(26) million, or $(23) per ferrous ton, and a loss per share from continuing operations in the fourth quarter of $(0.92). These figures include non-cash goodwill and other asset impairment charges of $45 million, or $1.61 per share. Adjusted earnings per share from continuing operations were $0.47 in the fourth quarter and adjusted EBITDA was $49 million, or $44 per ferrous ton. Despite these challenges, the company generated a strong operating cash flow of $135 million in the fourth quarter.
Market conditions for recycled metals in the fourth quarter weakened due to lower global steel demand. This, combined with a tightening of supply flows over the summer, led to significant metal spread compression, lower sales volumes, and an adverse impact from average inventory accounting. However, these effects were substantially offset by the recognition of certain insurance recoveries during the quarter.
Company Commentary
"While market conditions for recycled metals in the fourth quarter reflected the impact of weaker demand fundamentals, driven by higher interest rates, a slower recovery in China, and destocking in the domestic markets, accompanied by tighter supply flows, our performance benefited from strong operating cash flow and a continued focus on productivity initiatives. The long-term structural demand for recycled metals remains positive, supported by the increased focus on decarbonization, the transition to low-carbon technologies, and the anticipated demand associated with the Infrastructure Investment and Jobs Act and the Inflation Reduction Act, including Buy Clean provisions." - Tamara Lundgren, Chairman and Chief Executive Officer
Financial Tables Summary
The company's revenues for Q4 2023 stood at $718 million, with a gross margin of $90 million. The net loss for the quarter was $(26) million, translating to a net loss income per ferrous ton of $(23). The diluted earnings per share from continuing operations attributable to Radius shareholders were reported at $(0.92), with adjusted earnings per share at $0.47. The company's adjusted EBITDA for the quarter was $49 million, or $44 per ferrous ton.
The company's operating performance in the fourth quarter reflected sequentially tighter supply flows for recycled metals, which, together with lower average net selling prices for their products, resulted in a compression of metal spreads. Despite these challenges, the company recognized insurance recoveries of $41 million, of which $27 million was received in cash, in connection with previously submitted claims related to certain property damage and business interruption matters that had occurred in prior periods.
Looking Ahead
Despite the challenges faced in Q4, Schnitzer Steel Industries Inc (NASDAQ:RDUS) remains optimistic about the future. The company's commitment to productivity initiatives, strong operating cash flow, and the long-term structural demand for recycled metals, supported by the increased focus on decarbonization and the transition to low-carbon technologies, position it well for future growth.
This article first appeared on GuruFocus.
