Why Radius Recycling Shares Are Trading Lower Today

Radius Recycling, Inc. RDUS shares are trading lower after it reported second-quarter (Q2) financial results for 2024.

Revenue stood at $621.06 million, beating the consensus of $626.15 million.

Gross margin declined to $40 million from $73 million a year ago, and adjusted EBITDA decreased to $3 million, compared to $32 million a year ago.

Ferrous sales volumes (LT, in thousands) decreased to 980 from 1,263 a year ago; adjusted EBITDA per ferrous ton sold ($/LT) was $3 compared to $25 in the prior-year quarter.

Avg. net ferrous sales prices ($/LT) rose to $384 from $367 in Q2 FY23. Finished steel average net sales price ($/ST) came in at $832 (vs. 943 a year ago), and sales volumes (ST, in thousands) of 114 (vs. 109 in the comparable period).

Finished steel sales volumes increased on the continued strength of non-residential and infrastructure demand in the Western U.S.

Adjusted loss per share: $1.04, beating the consensus of $1.09.

Radius implemented a plan to deliver $40 million in annual benefits by reducing selling, general, and administrative expenses by 10%.

Radius CEO Tamara Lundgren says “near-term market conditions for recycled metals are challenging” amid cyclical headwinds. The plan is to position Radius “to benefit from an improvement in market conditions and positive structural demand tailwinds.”     

“Scrap supply flows should benefit from a decline in U.S. interest rates and a recovery in global manufacturing activity. Additionally, 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.”  

Dividend: The board declared a cash dividend per share of $0.1875. It’s payable on May 6 to shareholders of record as of April 22, 2024.

Investors can gain exposure to the stock via two ETFs. They are VanEck Environmental Services ETF EVX and SPDR S&P Metals & Mining ETF XME.

Price Action: RDUS shares are trading lower by 6.95% at $18.75 on the last check Thursday.