Radius Recycling, Inc.

Good day, and thank you for standing by. Welcome to the Radius Recycling second quarter 2024 earnings release call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Michael Bennett, Investor Relations. Please go ahead.

Thank you, Marvin, and good morning. I'm Michael Bennett, the company's Vice President of Investor Relations. I'm happy to welcome you to Radius Recycling's earnings presentation for the second quarter of fiscal 2024. In addition to today's audio comments, we've issued our press release and posted a set of slides, both of which you can access on our website, at radiusrecycling.com. Before we start, let me call your attention to the detailed Safe Harbor Statement on slide 2, which is also included in our press release and in the company's Form 10-Q, which will be filed later today. As we note on slide 2, we may make forward-looking statements on our call today, such as our statements about our targets, volume growth, and margins. Our actual results may differ materially from those projected in our forward-looking statements. Additional information concerning factors that could cause actual results to materially differ from those in the forward-looking statement is contained in slide 2, as well as our press release of today and our Form 10-Q. Please note that we will be discussing some non-GAAP measures during our presentation today. We have included a reconciliation of those metrics to GAAP in the appendix to our slide presentation. Now, let me turn the call over to Tamara Lundgren, our Chairman and Chief Executive Officer. She will host the call today with Stephanie Virginia, our Chief Financial Officer.

Thank you, Michael. Good morning, everyone, and welcome to our fiscal 24 second quarter earnings call. On our call this morning, I'll review our Q2 results and the market conditions impacting our performance. Stephanie will then provide more detail on our financial performance and our capital investments and allocation priorities. I'll wrap up. with an update on the strategic actions we have underway to address current industry dynamics and create long-term value through the cycle, and then we'll take your questions. Let's turn now to slide four to review our second quarter highlights. Without question, current conditions in the scrap markets remain challenging. The cyclical headwinds of high interest rates and low manufacturing activity are creating tighter supply flows and compressing our metal spreads. and they are being exacerbated by continued inflationary pressures. Our Q2 results reflected adjusted EBITDA of $3 million and an adjusted EPS loss of $1.04. While our second quarter volumes are always impacted by seasonality, this year they were particularly affected by unusually wet winter weather. However, on a year-over-year basis, our non-Ferris volumes increased in Q2 due in part to contributions from our strategic investments in advanced metal recovery technologies. The tough impacts of cyclicality are not new to us. What is different this time are the structural demand tailwinds, which are strongly aligned with our strategic initiatives focused on metal recovery technologies, volume growth, expansion of our 3PR services, and mitigating the impact of current market conditions through actions that are within our control, specifically cost reductions, operating efficiencies, and execution. During the second quarter, we achieved substantially the full quarterly run rate associated with the $30 million productivity plan that we announced last October. We expanded this plan by an additional $40 million through a 10% reduction of SG&A expense and further production cost efficiencies. These initiatives included workforce changes, which have a profound impact not only on our colleagues who are no longer with our company, but also on the RADIUS team. Our team has shown tremendous resilience in managing through this challenging time, and I want to thank them for their commitment and nimbleness in executing these changes while continuing to work safely and support each other. Let's turn now to slide five to review market trends. Scrap supply flows remained tight during the quarter on lower economic activity. For the last 16 months, U.S. manufacturing PMI has been clocking in at below 50, the longest stretch of contraction in manufacturing activity that we've seen in over 20 years. The most recent March report, however, shows demand might be bouncing back, with the index rising to slightly above 50, up 2.5 percentage points from February, which may mark the beginning of a manufacturing recovery. Another indicator of scrap tightness is the average age of vehicles on the road. Driven by higher prices for used cars, lower auto production, and higher financing costs, the continued increase in average age of vehicles on the road has resulted in lower scrappage rates of end of life vehicles. Other contributors to the constrained scrap supply include the relatively low demand for durable goods and increased scrap collection costs, including the impacts of inflation. All of these tight supply conditions have led to a stickiness in scrap purchase costs, which have not moved in line with the changes in selling prices. Now, as you can see on this slide, Ferris export selling prices strengthened in the early part of the quarter, driven primarily by restocking globally, before softening in the second half of the quarter. Scrap prices in the U.S. domestic Ferris market were higher than export prices throughout the quarter and followed a similar trajectory. Since the end of the quarter, March Ferris export and domestic prices atypically weakened further, but preliminary April reports indicate a stabilizing domestic market and a slightly improving export market. Turning to non-Ferris, Base metal index prices for aluminum and copper remained range-bound during the quarter, impacted by a variety of factors, including a softer U.S. dollar, supply tightness, and weaker demand out of China. Turning to finished steel, market prices in the quarter remained relatively steady, although the unusually wet weather on the West Coast during the quarter impacted construction activity beyond normal seasonality. We expect to see this correct itself over the next few months. along with increased demand related to the U.S. infrastructure bills. Our Oregon steel mill, with its range of low carbon products, including our line of net zero carbon emission steel products, is very well positioned to benefit from these market movements. So now, let me turn it over to Stefano.