Radius Recycling's Q1 Revenue Falls Short, Declines in Ferrous Sales Weigh on Results

Radius Recycling, Inc. (NASDAQ: RDUS) reported a disappointing first quarter of fiscal 2025, with a net loss of $(37) million and a loss per share of $(1.30). The company's revenue fell short of expectations, driven primarily by a decline in ferrous sales. This article explores the market dynamics that led to the decline in ferrous sales and the strategic initiatives Radius Recycling is implementing to expand margins and volumes in the future.



Radius Recycling's ferrous sales volumes decreased by 4% year-over-year (YoY) in Q1, primarily due to two market dynamics:

1. Softer global ferrous markets: The global markets for ferrous metals were softer during the quarter, leading to a 5% decrease in average net ferrous prices. This was partly due to elevated levels of Chinese steel exports, which increased by over 20% YoY in the first 11 months of CY2024. (Source: Radius Recycling's 8-K filing, January 7, 2025)
2. Tight scrap flows: There was continued tightness in scrap flows during Q1, which also contributed to the decline in ferrous sales. This tightness in scrap availability can lead to increased competition among recyclers and lower sales volumes. (Source: Radius Recycling's 8-K filing, January 7, 2025)

These market dynamics, combined with the timing of shipments, resulted in a 4% YoY decrease in ferrous sales volumes for Radius Recycling in Q1. (Source: Radius Recycling's 8-K filing, January 7, 2025)



Radius Recycling's cost reduction and productivity measures had a positive impact on its recycled metals business. The contribution from the recycled metals business improved year-over-year, driven by the benefits realized from cost reduction and productivity measures (Radius Recycling, Inc., 2025). The company implemented productivity efficiencies over the last year, which contributed to the improved performance of the recycled metals business (Radius Recycling, Inc., 2025). The stronger nonferrous demand also played a role in the improved contribution from the recycled metals business. This demand resulted in 12% higher nonferrous average net selling prices and higher metal margins (Radius Recycling, Inc., 2025). However, the benefits from cost reduction and productivity measures, along with stronger nonferrous demand, more than offset the impact of softer global ferrous markets. This led to a 5% lower average net ferrous prices due in part to elevated levels of Chinese steel exports (Radius Recycling, Inc., 2025).

Radius Recycling is implementing strategic initiatives focused on increased metal extraction and 3PRTM to expand margins and volumes in the future. These initiatives are expected to support the company's growth and competitiveness in the steel industry. The company's CEO, Tamara Lundgren, has stated that these strategic initiatives are aligned with structural demand tailwinds, such as increased investments in infrastructure, energy projects, industrial reshoring, and the transition to low-carbon technologies. By implementing these initiatives, Radius Recycling aims to take advantage of these positive trends and expand its margins and volumes in the long term.

In conclusion, Radius Recycling's Q1 revenue fell short of expectations, driven primarily by a decline in ferrous sales. The company's cost reduction and productivity measures had a positive impact on its recycled metals business, but market dynamics led to a decline in ferrous sales. Radius Recycling is implementing strategic initiatives to expand margins and volumes in the future, taking advantage of positive trends in the steel industry. Investors should monitor the company's progress in implementing these initiatives and the impact on its financial performance.