Revenue Falls Short Despite Optimistic Expectations
Radius Recycling, Inc. RDUS shares are trading lower after it reported second-quarter (Q2) financial results for 2024.
Struggles in Gross Margin and Adjusted EBITDA
Gross margin declined to $40 million from $73 million a year ago, and adjusted EBITDA decreased to $3 million, compared to $32 million a year ago.
Decline in Ferrous Sales Volumes
Ferrous sales volumes (LT, in thousands) decreased to 980 from 1,263 a year ago; adjusted EBITDA per ferrous ton sold ($/LT) was $3 compared to $25 in the prior-year quarter.
Positive Shift in Net Ferrous Sales Prices
Avg. net ferrous sales prices ($/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).
Future Outlook Amid Challenges
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.
Roadmap for Improvement
Radius implemented a plan to deliver $40 million in annual benefits by reducing selling, general, and administrative expenses by 10%.
Radius CEO Tamara Lundgren expressed challenges in the recycled metals market and plans to position Radius to benefit from future market conditions.
Long-Term Prospects and Strategic Trends
The company anticipates benefits from a decline in U.S. interest rates and increased demand for recycled metals driven by global manufacturing activity, decarbonization trends, and upcoming legislative acts.
Upcoming Dividend and Investment Opportunities
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 through ETFs like VanEck Environmental Services ETF EVX and SPDR S&P Metals & Mining ETF XME.
Market Reaction and Current Performance
Price Action: RDUS shares are trading lower by 6.95% at $18.75 on the last check Thursday.
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