insiderdeltaSEC filings, surfaced and scored

CoverageForm 410-K10-Q8-K13D13G13F

Schnitzer Steel Industries, Inc.

RDUSCIK 0000912603 · Every Form 4 filed by insiders at this issuer. See financials →

Annual report (10-K)

Latest 10-K filed Oct 24, 2024. Sentiment + YoY language diff vs prior year. Read sections →

Signal:Neutral

Risk Factors:tone -0.0295Δ+0.000585% similar+40/-41 ¶

MD&A:tone -0.0135Δ-0.000291% similar+214/-224 ¶

Sentiment via Loughran-McDonald lexicon · YoY diff via Jaccard similarity + paragraph set difference.

Recent 8-K announcements

Per-item disclosure feed. Item 2.02 is the earnings release.

Jul 10, 2025no items parsed Jul 7, 2025no items parsed Jul 1, 2025no items parsed Jun 20, 2025no items parsed Jun 5, 2025no items parsed

Top insiders

Most active reporters at Schnitzer Steel Industries, Inc.

Name	Roles	Filings
Souza Brian	Officer	7
Vaughn James Matthew	Officer	7
Hicks Wayland R	Director	6
Gregorio Mauro	Director	5
Peach Richard	Officer	5

Showing 11-15 of 21

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All filings

180 Form 4 / 4-A filings, newest first

Filed	Insider	Top transaction	Shares	Price	Value
Jul 10, 2025	Kelley Erika K. VP, Chief Accounting Officer	DDisposition	4,016	$30.00	$120,480
Jul 10, 2025	Shoemaker Leslie L Director	DDisposition	20,016.91	$30.00	$600,507
Jul 10, 2025	Friedman Gregory R Director	DDisposition	18,739.54	$30.00	$562,186
Jul 10, 2025	Heiskell Steven SVP & President, Recycling P&S	DDisposition	139,160	$30.00	$4,174,800
Jul 10, 2025	Hathhorn Marc E. EVP & COO	DDisposition	145,581	$30.00	$4,367,430

Showing 6-10 of 180

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Real-time Form 4 intelligence. Smarter insider tracking.

Filed		Top transaction	Shares	Price	Value

YoY shift: Neutral

Year-over-year tone shift - average net-tone change across Risk Factors and MD&A vs the prior 10-K. This filing is 0.01pp more bullish than last year's.

Why YoY instead of absolute: the LM lexicon has ~6.6× more negative words than positive (legal/risk-disclosure language is heavy on hedging), so every 10-K reads bearish on raw tone. Year-over-year change strips that bias and surfaces the actual shift in management's framing.

Tone shift by section

The two components the gauge averages: how Risk Factors and MD&A each shifted in net tone versus last year's 10-K. The headline above is their average, so a green needle over a soft section just means the other section carried it.

Risk Factors

+0.05pp

Flat

Net-tone change vs last year's 10-K.

MD&A

-0.02pp

Flat

Net-tone change vs last year's 10-K.

Per-snippet highlights

Sentence-level sentiment highlighting with category and subcategory filters is coming once the snippet-scoring pipeline lands. For now, dig into the actual section text on the Sections tab.

Language change vs prior 10-K

Risk Factors (Item 1A) - words with the biggest YoY frequency increase

Negative rising

incident+7
threats+4
incidents+3
adversely+2
critical+2

Positive rising

integrity+2
profitability+1
enable+1
strengthen+1
accomplished+1

Risk Factors (Item 1A)

11,151 words

Risk Factors Relating to Our Business

Potential costs related to the environmental cleanup of Portland Harbor may be material to our financial position and liquidity

In December 2000, we were notified by the United States Environmental Protection Agency (“EPA”) under the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”) that we are one of the potentially responsible parties (“PRPs”) that owns or operates or formerly owned or operated sites which are part of or adjacent to Portland Harbor. In January 2017, the EPA issued a Record of Decision (“ROD”) that identified the selected remedy for Portland Harbor. The EPA has estimated the total cost of the selected remedy at $1.7 billion with a net present value cost of $1.05 billion (at a 7% discount rate) and an estimated construction period of 13 years following completion of the remedial designs. In the ROD, the EPA stated that the cost estimate is an order-of-magnitude engineering estimate that is expected to be within +50% to -30% of the actual project cost and that changes in the cost elements are likely to occur as a result of new information and data collected during the engineering design. Accordingly, the final cost may differ materially from that set forth in the ROD. The ROD provided only site-wide cost estimates and did not provide sufficient detail to estimate costs for specific sediment management areas within Portland Harbor. In addition, the ROD did not determine or allocate the responsibility for remediation costs among the PRPs. Except for certain early action projects in which we are not involved, remediation activities at Portland Harbor are not expected to commence for a number of years. Moreover, those activities are expected to be sequenced, and the order and timing of such sequencing has not been determined. We have joined with approximately 100 other PRPs in a voluntary process to establish an allocation of costs at Portland Harbor. We expect the next major stage of the allocation process to proceed in parallel with the remedial design process. In addition to the remedial action process overseen by the EPA, the Portland Harbor Natural Resource Trustee Council (“Trustee Council”) is assessing natural resource damages at Portland Harbor. We are working with the Trustee Council to finalize an early settlement of our alleged natural resource damage liability at Portland Harbor. Our environmental liabilities as of both August 31, 2024 and 2023 included $8 million and $5 million, respectively, relating to the Portland Harbor matters described above. Because the final remedial actions have not yet been designed and there has not been a determination of the allocation among the PRPs of costs of the investigations or remedial action costs, we believe it is not possible to reasonably estimate the amount or range of costs which we are likely to or which it is reasonably possible that we will incur in connection with Portland Harbor, although such costs could be material to our financial position, results of operations, cash flows, and liquidity. Among the facts being evaluated are detailed information on the history of ownership of and the nature of the uses of and activities and operations performed on each property within Portland Harbor, which are factors that will play a substantial role in determining the allocation of investigation and remedy costs among the PRPs. We have insurance policies that we believe will provide reimbursement for costs we incur for defense, remedial design, remedial action, and mitigation for or settlement of natural resource damages claims in connection with Portland Harbor. Most of these policies jointly insure us and MMGL, LLC (“MMGL”), an unaffiliated company, as the successor to a former subsidiary. We and MMGL have negotiated the settlement with certain insurers of claims against us related to Portland Harbor, continue to seek settlements with other insurers, and formed two Qualified Settlement Funds (“QSFs”) which became operative in fiscal 2020 and 2023, respectively, to hold such settlement amounts until funds are needed to pay or reimburse costs incurred

14 / Radius Recycling, Inc. Form 10-K Fiscal 2024

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RADIUS RECYCLING, INC.

by us and MMGL in connection with Portland Harbor. These insurance policies and the funds in the QSFs may not cover all of the costs which we may incur.

The Oregon Department of Environmental Quality is separately providing oversight of our investigations and source control activities at various sites adjacent to Portland Harbor that are focused on controlling any current “uplands” releases of contaminants into the Willamette River. We have accrued liabilities for source control and related work at two sites, reflecting estimated costs of primarily investigation and design, which costs have not been material in the aggregate to date. No liabilities have been established in connection with investigations for any other sites because the extent of contamination, required source control work, and our responsibility for the contamination and source control work, in each case if any, have not yet been determined. In addition, pursuant to our insurance policies, we are being reimbursed for the costs we incur for required source control evaluation and remediation work.

Significant cash outflows in the future related to Portland Harbor could reduce the amount of our borrowing capacity that could otherwise be used for investment in capital expenditures, acquisitions, dividends, and share repurchases. Any material liabilities or cash expenditures, net of recoveries, incurred in the future related to Portland Harbor could result in our failure to maintain compliance with certain covenants in our debt agreements. See “Contingencies – Environmental” in Note 10 - Commitments and Contingencies in the Notes to the Consolidated Financial Statements in Part II, Item 8 of this report for further detail on these matters.

Equipment upgrades, equipment failures, and facility damage may lead to production curtailments or shutdowns

Our business operations and recycling and manufacturing processes depend on critical pieces of equipment, including information technology equipment, shredders, nonferrous sorting technology, furnaces, and a rolling mill, which may be out of service occasionally for scheduled upgrades or maintenance or as a result of unanticipated failures or events. Our facilities are subject to equipment failures and the risk of catastrophic loss due to unanticipated events such as mechanical failures, fires, earthquakes, accidents, or violent weather conditions. For instance, although the impact on our operations as a result of natural disasters has not been significant to date, certain of our facilities in Puerto Rico have experienced damage due to hurricanes, including as a result of Hurricane Fiona in September 2022, and certain facilities in California, Oregon, and Washington were briefly closed in September 2020 due to poor air quality as a result of wildfires. Additionally, we experienced a fire at our Cascade Steel Rolling Mills in McMinnville, Oregon in May 2021 as well as at our metals recycling facility in Everett, Massachusetts in December 2021. While we carry insurance that applies to the repair and replacement of property that experienced physical loss or damage and business income losses resulting from events such as these two fires, as discussed in Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, our insurance coverage is subject to deductibles, and various conditions, exclusions, and limits. Moreover, our insurance coverage may be unavailable or insufficient to protect us against losses in the case of future events. In addition, insurance may not continue to be available in the future on acceptable terms or at acceptable costs. Interruptions in our processing and production capabilities and shutdowns resulting from unanticipated events also could disrupt customer and supplier relationships and could have a material adverse effect on our financial condition, results of operations, and cash flows.

Failure to realize or delays in realizing expected benefits from capital projects, including investments in processing and manufacturing technology improvements and information technology systems, may impact our financial condition, operating results, and cash flows

We may engage in capital projects based on the forecasted project economics, political and regulatory environments, and the expected return on the capital to be employed in the project. Large-scale projects may take many years to complete, during which time the political and regulatory environment or other market conditions may change from our forecast. For example, we make significant investments in processing and manufacturing technology improvements and other information technology systems aimed at increasing the efficiency and capabilities of our businesses and to maximize our economies of scale. Completion of and realization of the benefits from such improvements may be subject to many factors including, but not limited to, permitting, construction, equipment delivery, commissioning and ramp up, environmental compliance, and technology performance risks, some of which are outside our control and could result in further delays in such projects or require us to incur additional costs. Vendors may be unable to deliver on their commitments and permitting agencies may be delayed in issuing necessary permits which can cause construction, commissioning, and ramp-up time to take significantly longer than expected. For example, we have continued to experience delays in construction activities and equipment deliveries, commissioning and ramp-up times related to our capital projects, and to the time required to obtain permits from government agencies, resulting in the deferral of certain capital expenditures and in the timing of realization of the anticipated benefits of the technology improvements. Failure to realize or delays in realizing the anticipated benefits and to generate adequate returns on such capital projects may have a material adverse effect on our financial condition, results of operations, and cash flows.

15 / Radius Recycling, Inc. Form 10-K Fiscal 2024

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RADIUS RECYCLING, INC.

We operate in industries that are cyclical and sensitive to general economic conditions, which could have a material adverse effect on our operating results, financial condition, and cash flows

Demand for most of our products is cyclical in nature and sensitive to general economic conditions. The timing and magnitude of the cycles in the industries in which our products are used, including global steel manufacturing and nonresidential and infrastructure construction in the U.S., are difficult to predict. The cyclical nature of our operations tends to reflect and be amplified by changes in economic conditions, both domestically and internationally, the effects of inflation, changes in interest rates, and foreign currency exchange fluctuations. For example, in fiscal 2023 and 2024 higher inflation impacted our operating costs, including, but not limited to, employee compensation costs and certain costs of production. Increasing interest rates, both domestically and internationally, could lead to slowdowns in global investment and production, resulting in reduced generation of scrap and decreased demand for our products. Economic downturns or a prolonged period of slow growth in the U.S. and foreign markets or any of the industries in which we operate could have a material adverse effect on our results of operations, financial condition, and cash flows.

Changing conditions in global markets including the impact of sanctions and tariffs, quotas, and other trade actions and import restrictions may adversely affect our operating results, financial condition, and cash flows

We generate a substantial portion of our revenues from sales to customers located outside the U.S., including countries in Asia, the Mediterranean region, and North, Central, and South America. In each of the last three years, exports comprised approximately 54% to 61% of our ferrous sales volumes and 56% to 57% of our nonferrous sales volumes. Our ability to sell our products profitably, or at all, into international markets is subject to a number of risks including adverse impacts of political, economic, military, terrorist, or major pandemic events; labor and social issues; legal and regulatory requirements or limitations imposed by foreign governments including quotas, tariffs, or other protectionist trade barriers, sanctions, adverse tax law changes, nationalization, currency restrictions, or import restrictions for certain types of products we export; and disruptions or delays in shipments caused by customs compliance or other actions of government agencies. Economic and geopolitical instability, including as a result of military conflict, could give rise to turmoil in markets that could have an impact on our business. The occurrence of such events and conditions may adversely affect our operating results, financial condition, and cash flows. For example, tariffs and import license requirements and quotas have been in place for several years in multiple jurisdictions, including China. Our ability to navigate these tariffs and restrictions is critical to our business and any changes or expansion in these tariffs and restrictions could adversely impact our business or results of operations. In addition, changing conditions in global markets may contribute to concentration in one or more of our country destinations. For example, in fiscal 2024, Bangladesh, Turkey and India comprised 85% of our ferrous export sales.

In March 2018, the U.S. imposed a 25 percent tariff on certain imported steel products and a 10 percent tariff on certain imported aluminum products under Section 232 of the Trade Expansion Act of 1962. Currently, imports from certain countries, including Canada and Mexico, are exempt from these duties pursuant to various agreements, including quotas. In response to a surge of imports of steel products from Mexico and a concern that third countries were circumventing the Section 232 tariffs by sending semi-finished steel to Mexico for further processing, the U.S. reimposed Section 232 tariffs on imports of Mexican steel that is not melted and poured in North America. In addition to the country exclusions, the U.S. Department of Commerce is managing a process where importers may request exclusion of specific products from the Section 232 tariffs, and interested domestic producers can object to the exclusion requests. There have been multiple legal challenges to the Section 232 actions in U.S. courts and the World Trade Organization. To date, the duties remain in place. These tariffs, along with other U.S. trade actions, have triggered retaliatory actions by certain affected countries, and other foreign governments may impose trade measures on other U.S. goods in the future. For example, China has imposed a series of retaliatory tariffs on certain U.S. products, including a 25 percent tariff on all grades of U.S. scrap and an additional 25 percent tariff on U.S. aluminum scrap. These tariffs and other trade actions could result in a decrease in international steel demand and negatively impact demand for our products, which would adversely impact our business. Given the uncertainty regarding the scope and duration of these trade actions by the U.S. or other countries, the impact of the trade actions on our operations or results remains uncertain, but this impact could be material.

Increases in the value of the U.S. dollar relative to other currencies may reduce the demand for our products

A significant portion of our recycled metal revenues is generated from sales to foreign customers, which are denominated in U.S. dollars. At times during our 2023 and 2024 fiscal years, the U.S. dollar strengthened relative to other world currencies. A strengthening U.S. dollar makes our products more expensive for non-U.S. customers, which may negatively impact our export sales. A strengthening U.S. dollar also makes imported metal products less expensive, which may result in an increase in imports of steel products into the U.S. As a result, our finished steel products, which are made in the U.S., may become more expensive for our U.S. customers relative to imported steel products thereby reducing demand for our products.

16 / Radius Recycling, Inc. Form 10-K Fiscal 2024

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RADIUS RECYCLING, INC.

Changes in the availability or price of inputs such as raw materials and end-of-life vehicles could reduce our sales and adversely impact our margins

Our businesses require certain materials that are sourced from third-party suppliers. Although the synergies from our integrated operations allow us to be our own source for some raw materials, particularly with respect to recycled metal for our steel manufacturing operations, we rely on other suppliers for most of our raw material and other input needs, including inputs to steel production such as graphite electrodes, alloys, and other required consumables. Industry supply conditions generally involve risks, including the possibility of shortages of raw materials, increases in raw material and other input costs, and reduced control over delivery schedules. We procure our scrap inventory from numerous sources. These suppliers generally are not bound by long-term contracts and have no obligation to sell scrap metal to us. In periods of declining or lower recycled metal prices, suppliers may elect to hold scrap metal to wait for higher prices or intentionally slow their metal collection activities, tightening supply. The effects of competition for supply of scrap metal, including of specific grades, can significantly impact the flow of scrap volumes into our facilities, our metal spreads, and our operating margins. If a substantial number of suppliers cease selling scrap metal to us, we will be unable to recycle metal at desired levels, and our results of operations and financial condition could be materially adversely affected. For instance, in fiscal 2023 and continuing into fiscal 2024, a slowdown in economic growth in the U.S., coupled with rising interest rates and inflation, led consumers and businesses to hold on to vehicles longer, constraining the supply of scrap metal including end-of-life vehicles, which resulted in significantly reduced processed volumes. A slowdown of industrial production in the U.S. may also reduce the supply of industrial grades of metal to the metals recycling industry, resulting in less recyclable metal available to process and market. Increased competition for domestic scrap metal, including as a result of overcapacity or consolidation in the metal recycling industry in the U.S. and Canada, may also reduce the supply of scrap metal available to us. Failure to obtain a steady supply of recyclable material could both adversely impact our ability to meet sales commitments and reduce our operating margins. Failure to obtain an adequate supply of end-of-life vehicles, including due to increasing trends over time in the proportion of electric vehicles sold to total vehicles sold, the pace of and the auto recycling industry response to which are uncertain, could adversely impact our ability to attract customers and charge admission fees and reduce parts sales at our auto parts stores. Failure to obtain raw materials and other inputs to steel production, such as graphite electrodes, alloys, and other required consumables, could adversely impact our ability to make steel to the specifications of our customers.

Significant decreases in recycled metal prices may adversely impact our operating results

The timing and magnitude of the cycles in the industries in which we operate are difficult to predict and are influenced by different economic conditions in the domestic market, where we typically acquire our raw materials, and foreign markets, where we typically sell the majority of our products. Purchase prices for scrap metal including end-of-life vehicles and selling prices for recycled metal are subject to market forces beyond our control. While we attempt to respond to changing recycled metal selling prices through adjustments to our metal purchase prices, our ability to do so is limited by competitive and other market factors. As a result, we may not be able to reduce our metal purchase prices to fully offset a sharp reduction in recycled metal sales prices, which may adversely impact our operating income and cash flows. In addition, a rapid decrease in selling prices may compress our operating margins due to the impact of average inventory cost accounting, which causes cost of goods sold recognized in the Consolidated Statements of Operations to decrease at a slower rate than metal purchase prices.

Imbalances in supply and demand conditions in the global steel industry may reduce demand for our products

Economic expansions and contractions in global economies can result in supply and demand imbalances in the global steel industry that can significantly affect the price of commodities used and sold by our business, as well as the price of and demand for finished steel products. In a number of foreign countries, such as China, steel producers are generally government-owned and may therefore make production decisions based on political or other factors that do not reflect free market conditions. In fiscal 2023 and increasingly in 2024, as well as in the past, overcapacity and excess steel production in these foreign countries resulted in the export of aggressively priced semi-finished and finished steel products. This led to disruptions in steel-making operations within other countries, negatively impacting demand for our recycled metal products used by EAF mills globally as their primary feedstock. Further, the import of foreign steel products into the U.S. at similarly aggressive prices have in the past adversely impacted finished steel sales prices and sales volumes. Existing or new trade laws and regulations may cause or be inadequate to prevent disadvantageous trade practices, which could have a material adverse effect on our financial condition and results of operations. Although trade regulations restrict or impose duties on the importation of certain products, if foreign steel production significantly exceeds consumption in those countries, global demand for our recycled metal products could decline and imports of steel products into the U.S. could increase, resulting in lower volumes and selling prices for our recycled metal products and finished steel products.

17 / Radius Recycling, Inc. Form 10-K Fiscal 2024

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RADIUS RECYCLING, INC.

Acquisitions and integration of acquired businesses may result in operating difficulties and other unintended consequences

We have made and may continue to make acquisitions of or expand into complementary businesses to enable us to expand our customer and supplier base and grow our revenues. Execution of any past or potential future acquisition or expansion involves several risks, including:

Difficulty integrating the acquired businesses’ personnel and operations;

Challenges in obtaining permits or meeting other regulatory requirements;

Potential loss of key employees, customers, or suppliers of the acquired business;

Difficulties in realizing anticipated cost savings, efficiencies, and synergies;

Unexpected costs;

Inaccurate assessment of or undisclosed liabilities;

Inability to maintain uniform standards, controls, and procedures;

Disruption to existing businesses; and

Difficulty in managing growth.

If we do not successfully execute on acquisitions or expansions and the acquired or expanded businesses do not perform as projected, our financial condition and results of operations could be materially adversely affected.

Supply chain disruptions affecting our customers, end users of our recycled products, or our suppliers could adversely impact the demand for our products or the availability of inputs, increase our costs, or otherwise adversely impact our business

Supply chain disruptions and related labor shortages and logistics constraints have and could continue to impact our customers, end users of our recycled products, and our suppliers and adversely impact our business. Direct and indirect impacts on our business of such supply chain disruptions could include reduction in the demand for and price of certain of our products, slowdown in flows of scrap metal from certain supply channels, and reduced availability or increases in costs of other inputs, consumables, supplies, and capital equipment. Disruptions within our logistics or supply chain network could adversely affect our ability to produce or deliver our products in a timely manner, which could impair our ability to meet customer demand for products and result in reduced volumes and sales, increased supply chain costs, or damage to our reputation. Such disruptions in the future may result from a number of factors beyond our control. Supply chain disruptions due to any of those factors could negatively impact our financial performance or financial condition.

Reliance on third-party shipping companies may restrict our ability to ship our products

We significantly rely on third parties to handle and transport raw materials to our production facilities and products to customers. Despite our practice of utilizing a diversified group of suppliers of transportation, factors beyond our control, including changes in fuel prices, political events, governmental regulation of transportation, changes in market rates, carrier availability, carrier bankruptcy, labor shortages, shipping industry consolidation, and disruptions in transportation routes and infrastructure, may adversely impact our ability to ship our products and our operating margins. These impacts could include delays or other disruptions in shipments in transit, including as a result of congested seaports and travel routes, or third-party shipping companies increasing their charges for transportation services or otherwise reducing or eliminating the availability of their containers, vehicles, rail cars, barges, or ships. For example, during fiscal 2022, worldwide demand for logistical services increased sharply, which led to a global shortage of available shipping containers, congested seaports, and higher freight rates, impacting the timing of certain shipments and resulting in reductions in sales volumes of certain products. The delays in container shipping for U.S. exports were exacerbated by the backlog of containerized imports at U.S. seaports. While we aim to pass on the majority of shipping and related charges to our customers, there can be no assurance that we will be able to do so into the future. As a result, we may not be able to transport our products in a timely and cost-effective manner, which could have a material adverse effect on our financial condition and results of operations and may harm our reputation.

18 / Radius Recycling, Inc. Form 10-K Fiscal 2024

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RADIUS RECYCLING, INC.

The agreement governing our bank credit facilities imposes certain restrictions on our business and contains financial covenants

Our secured bank credit facilities contain certain restrictions on our business which limit (subject to certain exceptions) our ability to, among other things, incur or suffer to exist certain liens, make investments, incur or guaranty additional indebtedness, enter into consolidations, mergers, acquisitions, and sales of assets, make distributions and other restricted payments, change the nature of our business, engage in transactions with affiliates and enter into restrictive agreements, including agreements that restrict the ability of our subsidiaries to make distributions. These restrictions may affect our ability to operate our business or execute our strategy and may limit our ability to take advantage of potential business opportunities as they arise. Our bank credit agreement also requires that we maintain certain financial and other covenants. Our ability to comply with these covenants may also be affected by events beyond our control, including prevailing economic, financial, and industry conditions. Our failure to comply with any of these restrictions or financial covenants could result in an event of default under the bank credit agreement and permit our lenders to cease lending to us and declare all amounts borrowed from them to be due and payable, together with accrued and unpaid interest. This could require us to refinance our bank facilities, which we may not be able to do at terms acceptable to us, or at all.

Potential limitations on our ability to access capital resources may restrict our ability to operate

Our operations are capital intensive. Our business also requires substantial expenditures for routine maintenance. While we expect that our cash requirements, including the funding of capital expenditures, debt service, dividends, share repurchases, and investments, will be financed by internally generated funds or from borrowings under our secured committed bank credit facilities, there can be no assurance that this will be the case. Additional acquisitions could require financing from external sources. Although we believe we have adequate access to contractually committed borrowings, we could be adversely affected if we are not able to meet the conditions required to incur such borrowing or if our banks ceased lending or were unable to honor their contractual commitments. Failure to access our credit facilities could restrict our ability to fund operations, make capital expenditures, or execute acquisitions.

Impairment of goodwill, long-lived and other assets may adversely affect our operating results

Our long-lived asset groups are subject to an impairment assessment when certain triggering events or circumstances indicate that their carrying value may be impaired. If the carrying value of an asset group is not recoverable because it exceeds our estimate of future undiscounted cash flows from the use and eventual disposition of the operations related to the asset group, an impairment loss is recognized by the amount the carrying value exceeds its fair value. Our goodwill is subject to an impairment assessment annually, and when certain triggering events or circumstances indicate that its carrying value may be impaired. The results of these tests for potential impairment, as well as the number and frequency of identified triggering events indicating potential impairment, may be adversely affected by unfavorable market conditions, our financial performance trends, or an increase in interest rates, among other factors. If, as a result of an impairment test, we determine that the fair value of any of our long-lived asset groups or our goodwill is less than its carrying amount, we may incur an impairment charge that could have a material adverse effect on our financial condition and results of operations. In addition to goodwill and long-lived assets, we carry other assets on our balance sheet that are subject to impairment testing and potential loss recognition in accordance with applicable accounting standards. These other assets include, but are not limited to, investments in the equity of unconsolidated entities, assets held for sale, and assets abandoned either before or after they are placed in service. Impairment of long-lived and other assets, if incurred in the future, could have a material adverse effect on our results of operations.

Public health emergencies, such as pandemics or epidemics, could have an adverse effect on our business, results of operations, financial condition, and cash flows

Our operations expose us to risks associated with pandemics, epidemics, or other public health emergencies. Such events could lead to restrictions and mandates, which could be applied differently across jurisdictions, and there could be global impacts resulting directly or indirectly from such an event including labor shortages, logistical challenges, and supply chain disruptions such as increased port congestion, and increases in costs for certain goods and services. For instance, the onset of the coronavirus disease 2019 (COVID-19) outbreak, which the World Health Organization characterized as a global public health emergency from March 2020 through May 2023, negatively affected our business and ongoing global impacts have negatively affected our sales volumes, operating costs, and financial results to varying degrees and could continue to negatively affect our results of operations, cash flows, and financial position in the future.

Inability to achieve or sustain the benefits from productivity, cost savings, and restructuring initiatives may adversely impact our operating results

During the past several years, we implemented a number of productivity improvement, cost savings, and restructuring initiatives designed to reduce operating expenses and improve profitability and to achieve further integration and synergistic cost efficiencies in our operating platform. These initiatives included implementing productivity initiatives to increase production efficiency and material

19 / Radius Recycling, Inc. Form 10-K Fiscal 2024

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RADIUS RECYCLING, INC.

recovery, reducing certain operating expenses through headcount reductions, reducing organizational layers, consolidating shared service functions, savings from procurement activities, streamlining of administrative and supporting services functions, other non-headcount measures, and idling underutilized assets and closing facilities to more closely align our business to market conditions. For example, during the first and second quarters of fiscal 2024, we announced and began implementing productivity and cost reduction initiatives with a targeted annual benefit of approximately $70 million. These initiatives aim to improve profitability through a combination of increased yields, efficiencies in processing, procurement, and pricing, and reduced costs including from headcount reductions, decreased lease costs, professional and outside services, and implementation of operational efficiencies. We may undertake similar or additional productivity initiatives in the future in the normal course or in response to market conditions. Our ability to achieve or sustain the anticipated cost reductions and other benefits from these initiatives within the expected time frame is subject to many estimates and assumptions. These estimates and assumptions are subject to significant economic, competitive, and other uncertainties, some of which are beyond our control. We have incurred, and may incur in the future, restructuring charges and other exit-related activities as a result of such initiatives. Failure to achieve or sustain the expected cost reductions and other benefits related to these productivity improvements, cost savings, and restructuring initiatives could have a material adverse effect on our results of operations and cash flows.

We may be unable to renew facility leases, thus restricting our ability to operate

We lease a significant portion of our facilities, including the substantial majority of our auto parts facilities. The cost to renew such leases may increase significantly, and we may not be able to renew such leases on commercially reasonable terms or at all. Failure to renew these leases or find suitable alternative locations for our facilities may impact our ability to continue operations within certain geographic areas, which could have a material adverse effect on our financial condition, results of operations, and cash flows.

Changing economic conditions may result in customers not fulfilling their contractual obligations

We enter into export ferrous sales contracts preceded by negotiations that include fixing price, quantity, shipping terms, and other contractual terms. Upon finalization of these terms and satisfactory completion of other contractual contingencies, the customer typically opens a letter of credit to satisfy its payment obligation under the contract prior to our shipment of the cargo. In times of changing economic conditions, including during periods of sharply falling recycled metal prices and global financial instability, there is an increased risk that customers may not be willing or able to fulfill their contractual obligations or open letters of credit. As of August 31, 2024 and 2023, 28% and 38%, respectively, of our accounts receivable balance were covered by letters of credit. In addition, in higher or rising commodity price environments and during periods of challenging global macroeconomic and steel industry conditions, we have experienced proportionately lower credit insurance coverage of applicable customer credit limits, which may increase our exposure to customer credit risk.

Consolidation in the steel industry may reduce demand for our products

There has been consolidation in the steel industry that has included steel mills acquiring steel fabricators to ensure demand for their products. If any of our steel mill’s significant remaining customers were to be acquired by competing steel mills, this could reduce the demand for our products and force us to lower our prices, reducing our revenues, or to reduce production, which could increase our unit costs and have a material adverse effect on our financial condition and results of operations.

Product liability claims may adversely impact our operating results

We could inadvertently acquire radioactive scrap metal that could potentially be included in recycled mixed metal shipped to consumers worldwide. Although we have invested in radiation detection equipment in the majority of our locations, including the facilities from which we ship directly to customers, failure to detect radioactive metal remains a possibility. Even though we maintain insurance to address the risk of this failure in detection, there can be no assurance that the insurance coverage would be adequate or will continue to be available on acceptable terms. In addition, if we fail to meet contractual requirements for a product, we may be subject to product warranty costs and claims. These costs and claims could both have a material adverse effect on our financial condition and results of operations and harm our reputation.

We are subject to legal proceedings and legal compliance risks that may adversely impact our financial condition, results of operations, and liquidity

We spend substantial resources ensuring that we comply with domestic and foreign laws and regulations, contractual obligations and other legal standards. Notwithstanding this, we are subject to a variety of legal proceedings and compliance risks in respect of various matters, including regulatory, safety, environmental, employment, transportation, intellectual property, contractual, import/export, international trade, and governmental matters that arise in the course of our business and in our industry. For example, legal proceedings can include those arising from accidents involving Company-owned vehicles, including Company tractor trailers. In some instances,

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such accidents and the related litigation involve accidents that have resulted in third-party fatalities. An outcome in an unusual or significant legal proceeding or compliance investigation in excess of insurance recoveries could adversely affect our financial condition and results of operations. For information regarding our current significant legal proceedings and contingencies, see Part I, Item 3. Legal Proceedings and “Contingencies – Other” in Note 10 - Commitments and Contingencies in Part II, Item 8 of this report.

Climate change may adversely impact our facilities and our ongoing operations

The potential physical impacts of climate change on our operations are highly uncertain and depend upon the unique geographic and environmental factors present, for example rising sea levels at our deepwater port facilities, changing storm patterns and intensities, and changing temperature levels. As many of our recycling facilities are located near deepwater ports, rising sea levels may disrupt our ability to receive scrap metal, process the metal through our shredders, and ship products to our customers. Extreme weather events and conditions, such as wildfires, hurricanes, thunderstorms, tornadoes, and snow or ice storms, may increase our costs or cause damage to our facilities, and any damage resulting from extreme weather may not be fully insured. Increased frequency and duration of adverse weather events and conditions may also inhibit construction activity utilizing our products, scrap metal inflows to our recycling facilities, and retail admissions and parts sales at our auto parts stores. Potential adverse impacts from climate change, including rising temperatures and extreme weather events and conditions, may create health and safety issues for employees operating at our facilities and may lead to an inability to maintain standard operating hours.

We may not realize our deferred tax assets in the future

The assessment of recoverability of our deferred tax assets is based on an evaluation of existing positive and negative evidence as to whether it is more-likely-than-not that they will be realized. If negative evidence outweighs positive evidence, a valuation allowance is required. Factors that may result in a valuation allowance include significant negative industry or economic trends, a decrease in earnings performance and projections of future taxable income, adverse changes in laws or regulations, and a variety of other factors. Recording a valuation allowance could have a material adverse impact on our results of operations and financial condition. In the past, we have recorded significant valuation allowances against our deferred tax assets. Deferred tax assets may require further valuation allowances if it is not more-likely-than-not that the deferred tax assets will be realized. See Note 16 - Income Taxes in the Notes to the Consolidated Financial Statements in Part II, Item 8 of this report for further detail on valuation allowances.

Tax increases and changes in tax rules may adversely affect our financial results

As a company conducting business on a global basis with physical operations throughout North America, we are exposed, both directly and indirectly, to the effects of changes in U.S., state, local, and foreign tax rules. Taxes for financial reporting purposes and cash tax liabilities in the future may be adversely affected by changes in such tax rules. For example, a new gross revenue tax has been proposed in the State of Oregon, which, if enacted, could result in increased tax burden independent of reduced profitability due to market conditions. The proposed change reflects a broader trend of jurisdictions seeking to increase tax revenue from corporations. Such changes may put us at a competitive disadvantage compared to some of our major competitors, to the extent we are unable to pass the tax costs through to our customers.

One or more cybersecurity incidents may adversely impact our financial condition, results of operations, and reputation

Our operations involve the use of multiple systems, some of which are outsourced to certain third-party service and hosting providers, that process, store, and transmit sensitive information about our customers, suppliers, employees, financial position, operating results, and strategies. We face global cybersecurity risks and threats on a continual and ongoing basis, which include, but are not limited to, attempts to access systems and information, computer viruses, or denial-of-service attacks. These risks and threats range from uncoordinated individual attempts to sophisticated and targeted measures. Increased numbers of employees working remotely increases our exposure to cyber-threats. While we are not aware of any material cyber-attacks or breaches of our systems to date, such attempts occur regularly and, thus, we have and continue to implement measures to safeguard our systems and information and mitigate potential risks, including employee training around phishing, malware, and other cyber risks, but there is no assurance that such actions will be sufficient to prevent cyber-attacks or security breaches that manipulate or improperly use our systems, compromise sensitive information, destroy or corrupt data, or otherwise disrupt our operations. The occurrence of such events, including breaches of our security measures or those of our third-party service providers, could negatively impact our reputation and our competitive position and could result in litigation with third parties, regulatory action, loss of business due to disruption of operations and/or reputational damage, potential liability and increased remediation and protection costs, any of which could have a material adverse effect on our financial condition and results of operations. Additionally, as cybersecurity threats become more sophisticated, we may need to increase our investments in security measures which could have a material adverse effect on our financial condition and results of operations.

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Increasing attention to environmental, social and governance (ESG) matters may impact our business and financial results

Increasing attention has been given to corporate activities related to ESG matters in public discourse and the investment community. A number of advocacy groups, both domestically and internationally, have campaigned for governmental and private action to promote ESG-related change at public companies, including, but not limited to, through the investment and voting practices of investment advisers, pension funds, universities and other members of the investing community.

These activities have also aimed to increase the attention on and demand for action related to various ESG matters, which has contributed to increasing societal, investor, and legislative focus and pressure on ESG practices and disclosures, including those related to climate change, GHG emissions targets, business resilience under the assumptions of demand-constrained scenarios, net-zero ambitions, transition plans, actions related to diversity and inclusion, political activities, racial equity audits, and governance standards. As a result, we may face increasing pressure regarding our ESG practices and disclosures. Investors, stakeholders, and other interested parties are also increasingly focusing on issues related to environmental justice. This has resulted and is likely to continue to result in increased scrutiny with respect to our business and operations, which could in turn result in the cancellation or delay of projects, the revocation or delay of permits, termination of contracts, lawsuits, regulatory action, and policy change that may adversely affect our business strategy, increase our costs, and adversely affect our reputation and financial performance.

Responding to such ESG-focused activism has been and will likely continue to be costly and time-consuming. Such response efforts could also result in the implementation of certain ESG practices and/or disclosure requirements that may present a heightened level of legal and regulatory risk, or that threaten our credibility with other investors and stakeholders. The methodologies and standards for tracking and reporting on ESG matters are relatively new, have not been standardized, and continue to evolve. As a result, our ESG-related disclosures, metrics, and targets may not necessarily be calculated in the same manner or comparable to similarly titled measures presented by us in other contexts, or by other companies or third-party estimates. While we believe that our ESG disclosures and methodologies reflect our business strategy and are reasonable at the time made or used, as our business or applicable methodologies, standards, or regulations develop and evolve, we may revise or cease reporting or using certain disclosures and methodologies if we determine that they are no longer advisable or appropriate. If our ESG disclosures and methodologies are or are perceived by government authorities, investors, or stakeholders to be inadequate, inaccurate, or non-compliant with applicable standards or regulations, or if we discover material inaccuracies therein, our reputation could be negatively impacted, and we could be exposed to litigation and other regulatory actions.

We are exposed to translation risks associated with fluctuations in foreign currency exchange rates

Our operations in Canada expose us to translation risks associated with fluctuations in foreign currency exchange rates as compared to the U.S. dollar, our reporting currency. As a result, we are subject to foreign currency exchange risks due to exchange rate movements in connection with the translation of the operating costs and the assets and liabilities of our foreign operations into our functional currency for inclusion in our Consolidated Financial Statements.

We may incur losses and additional costs as a result of our hedging transactions

We currently use interest rate swap derivative instruments, as well as derivative contracts for commodities used in normal business operations that are settled by physical delivery, and we expect to continue their use in the future. If the instruments we use to hedge our exposure to various types of risk are not effective or increase our exposure to unexpected events or risks, we may incur losses. In addition, we may be required to incur additional costs in connection with any future regulation of derivative instruments applicable to us.

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Risk Factors Relating to the Regulatory Environment

Governmental agencies may refuse to grant or renew our licenses and permits, thus restricting our ability to operate

We conduct certain aspects of our operations subject to licenses, permits, and approvals from state and local governments. Governmental agencies often resist the establishment of certain types of facilities in their communities, including metal recycling and auto parts facilities. Increased permitting requirements could require substantial additional capital expenditures, impose financial assurance obligations, subject us to increased compliance and penalty risks, severely limit operational flexibility, and increase operating costs, or adversely impact our ability to acquire or sell materials. Increased focus on strengthening environmental compliance and enforcement in overburdened communities that may be disproportionately impacted by adverse health and environmental effects may impact our ability to obtain or renew licenses and permits for facilities in or near such communities. In addition, changes in zoning and increased residential and mixed-use development near our facilities are reducing the buffer zones and creating land use conflicts with heavy industrial uses such as ours. This could result in increased complaints, increased inspections and enforcement including fines and penalties, operating restrictions, the need for additional capital expenditures, and increased opposition to maintaining or renewing required approvals, licenses, and permits. In addition, waste products from our operations are subject to classification and regulations that, among other things, determine how such materials may be handled, stored, transported, and disposed. Failure to obtain or maintain regulatory permits, approvals, or exemptions for such waste could materially increase our costs or limit our operations. For example, in fiscal 2022, as a result of court orders and regulatory changes, we were required at times to transport shredder waste from our Oakland facility out of state for disposal at increased costs. See Part I, Item 3. Legal Proceedings. As an additional example, our Bay Area Air Quality Management District (“BAAQMD”) permit to operate currently limits the number of ships that may call at our Oakland, California facility to 26 ships per year. In July 2018, we applied for a modification of such permit to increase the number of annual ship calls to 32 per year. BAAQMD has not acted on our permit modification request but, in the interim, had routinely issued annual Compliance and Settlement Agreements (“CSA”) to permit 32 ship calls in each year. In October 2022, however, BAAQMD declined to renew the CSA for 2022, following which we applied for and obtained a short-term variance authorizing the 32 ship calls in calendar year 2022. Unless we are able to operate within the current 26 ship call limit in any given calendar year, we will need to apply for a similar variance. Failure to obtain such a variance in the future could have a material adverse effect on our financial condition and results of operations due to the reduced marine shipments, and lost profits related thereto. Additionally, by letter dated June 22, 2023, ODEQ notified the Company that it intended to reopen the Company’s Title V permit at the steel mill for purposes of incorporating the emissions of a third-party contractor that has operated on a portion of the site for decades. We have objected to such action and are engaged in discussions with ODEQ.

Furthermore, from time to time, both the U.S. and foreign governments impose regulations and restrictions on trade in the markets in which we operate. In some countries, governments require us to apply for certificates or registration before allowing shipment of recycled metal to customers in those countries. There can be no assurance that future approvals, licenses, and permits will be granted or that we will be able to maintain and renew the approvals, licenses, and permits we currently hold. Failure to obtain these approvals could cause us to limit or discontinue operations in these locations or prevent us from developing or acquiring new facilities, which could have a material adverse effect on our financial condition and results of operations.

Environmental compliance costs and potential environmental liabilities may have a material adverse effect on our financial condition and results of operations

Compliance with environmental laws and regulations is a significant factor in our business. We are subject to local, state, and federal environmental laws and regulations in the U.S. and other countries relating to, among other matters:

Waste disposal;

Air emissions;

Waste water and storm water management, treatment, and discharge;

The use and treatment of groundwater;

Soil and groundwater contamination and remediation;

Generation, discharge, storage, handling, transportation, and disposal of hazardous materials and secondary materials;

Employee health and safety; and

Climate change generally.

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We are also required to obtain environmental permits from governmental authorities for certain operations. Violation of or failure to obtain permits or comply with these laws or regulations could result in our business being fined or otherwise sanctioned by regulators or becoming subject to litigation by private parties. In recent years, capital expenditures for environmental projects have increased and have represented a significant share of our annual capital expenditures. Future environmental compliance costs, including capital expenditures for environmental projects, may increase because of new laws and regulations, changing regulatory interpretations and stricter enforcement of current laws and regulations by regulatory authorities, expanding emissions, groundwater, storm water and other testing requirements, and new information on emission or contaminant levels including with respect to emerging contaminants such as per- and polyfluoroalkyl substances (“PFAS”), uncertainty regarding adequate pollution control levels, the future costs of pollution control technology, and issues related to climate change.

We have seen an increased focus by federal, state, and local regulators on metals recycling and auto dismantling facilities and new or expanding regulatory requirements. For example, the DTSC has increased its enforcement actions and sought to impose additional permitting and regulatory requirements on the metals recycling industry in the state that has resulted in and could in the future increase operating and compliance costs and require additional capital expenditures. In addition, in July 2021, the EPA issued an enforcement alert reflecting a national enforcement initiative in conjunction with state regulators focused on Clean Air Act compliance at metal recycling facilities that operate auto and scrap metal shredders. While we believe we are an industry leader in air emission controls and have been working with state and local regulators on compliance and permitting matters, we have in the past and may in the future be subject to enforcement actions or litigation by regulators or private parties that could result in additional penalties, compliance requirements, or capital investments. See Part I, Item 3. Legal Proceedings of this report.

In addition, previous operations by us, predecessor entities, or others at facilities that we currently or formerly owned, operated, or otherwise used may have caused contamination from hazardous substances. As a result, we are exposed to possible claims, including government fines and penalties, costs for investigation and clean-up activities, claims for natural resources damages, and claims by third parties for personal injury and property damage, under environmental laws and regulations, especially for the remediation of waterways and soil or groundwater contamination. These laws can impose liability for the cleanup of hazardous substances even if the owner or operator was neither aware of nor responsible for the release of the hazardous substances. We have, in the past, incurred liabilities, expenditures, fines and penalties associated with violations of certain of these laws and regulations. In December 2000, we were notified by the EPA that we are one of the potentially responsible parties that owns or operates, or formerly owned or operated, sites which are part of or adjacent to Portland Harbor. Further, we have been notified that we are or may be a potentially responsible party at sites other than Portland Harbor currently or formerly owned or operated by us or at other sites where we may have responsibility for such costs due to past disposal or other activities. Environmental compliance costs and potential environmental liabilities could have a material adverse effect on our financial condition, results of operations, and cash flows. See also the risk factor “Potential costs related to the environmental cleanup of Portland Harbor may be material to our financial position and liquidity” in this Item 1A and “Contingencies – Environmental” in Note 10 - Commitments and Contingencies in the Notes to the Consolidated Financial Statements in Part II, Item 8 of this report.

The U.S. Federal Government and state and local regulators are also emphasizing efforts to strengthen environmental compliance and enforcement, including with respect to clean-up actions under superfund and hazardous waste laws, in overburdened communities that may be disproportionately impacted by adverse health and environmental effects. On September 10, 2021, U.S. EPA Region 9 and the California Environmental Protection Agency announced a joint effort to expand environmental enforcement in overburdened California communities. These initiatives could result in increased enforcement, compliance, and clean-up costs, including increased capital expenditures, at our facilities located at or near such communities.

Compliance with existing and future climate change, greenhouse gas, and other air emission laws and regulations may adversely impact our operating results

Recent and future legislation or increased regulation regarding climate change and GHG emissions could impose significant costs on our business and our customers and suppliers, including increased energy, capital equipment, emissions controls, environmental monitoring and reporting, and other costs in order to comply with laws and regulations concerning and limitations imposed on climate change and GHG emissions. The potential costs of allowances, taxes, fees, offsets, or credits or additional emission reduction measures that may be part of “cap and trade” programs or other legislative or regulatory requirements are still uncertain and the future of these programs or measures is unknown. For example, in March 2020, the Governor of Oregon issued an executive order directing state agencies to take certain actions to reduce and regulate GHG emissions. Pursuant to this executive order, ODEQ adopted a new Climate Protection Program to limit GHG emissions in the state including from large stationary sources such as our steel mill. Pursuant to these regulations, the mill’s GHG process emissions will be subject to a best available emission reduction technology analysis and standard and its natural gas GHG combustion emissions will be subject to the cap and annual reductions applied to its natural gas supplier. The implementation of such regulations, standards, and programs and any associated costs, including any operating or capital expenditures, are uncertain, but may be material to our results of operations, cash flows, and financial position. The potential increased costs to us of

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natural gas supplies are also uncertain. In addition, the ODEQ Cleaner Air Oregon (“CAO”) program regulates toxic air emissions from manufacturing and commercial facilities located in Oregon. The ODEQ has published a prioritization list of the facilities within the state subject to the CAO program based on emissions inventories that facilities submitted to the ODEQ. The prioritization list established four tiers of risk groups. Our steel mill has been assigned to the first-tier risk group and entered the CAO program in 2020. To comply with the existing CAO program rules, and as they may be revised in the future, we must undertake an emissions inventory and a public health risk assessment for both our steel mill and our Portland metals recycling facility. We may be required to incur additional operating or capital expenditures to mitigate any significant identified emissions risks, and such expenditures may be material. In addition, we have and continue to incur material capital expenditures to enclose and install additional emission controls for our shredders to meet air emission standards. Recent and future climate change and GHG laws or regulations could negatively impact our ability (and that of our customers and suppliers) to compete with companies situated in areas not subject to such requirements. Until the timing, scope, and extent of any future laws or regulations becomes known, we cannot predict the effect on our financial condition, operating performance, or ability to compete. Furthermore, even without such laws or regulations, increased awareness and any adverse publicity in the global marketplace about the GHGs emitted by companies in the metals recycling and steel manufacturing industries could harm our reputation and reduce customer demand for our products.

Risk Factors Relating to Our Employees

Labor shortages or increased labor costs may adversely affect our operating results, financial condition, and cash flows

Our employees contribute to developing and meeting our business goals and objectives, and labor is a significant component of operating our business. The impact of labor shortages or increased labor costs because of increased competition for employees, unemployment levels and benefits, higher employee turnover rates, increases in the federally-mandated or state-mandated minimum wage, change in exempt and non-exempt status, or other employee benefits costs (including costs associated with health insurance coverage or workers’ compensation insurance), may increase our costs or impede our ability to operate our facilities and could have a material adverse effect on our results of operations, financial condition, and cash flows. Recruiting and retaining employees in sufficient numbers to optimally staff our facilities may result in increases in our labor costs.

Reliance on employees subject to collective bargaining may restrict our ability to operate

Approximately 24% of our full-time employees are represented by unions under collective bargaining agreements, including substantially all of the manufacturing employees at our steel manufacturing facility. As these agreements expire, we may not be able to negotiate extensions or replacements of such agreements on acceptable terms. Any failure to reach an agreement with one or more of our unions may result in strikes, lockouts, or other labor actions, including work slowdowns or stoppages, which could have a material adverse effect on our results of operations.

The underfunded status of our multiemployer pension plans may cause us to increase our contributions to the plans

As discussed in Note 13 - Employee Benefits in the Notes to the Consolidated Financial Statements in Part II, Item 8 of this report, we contribute to the Steelworkers Western Independent Shops Pension Plan (“WISPP”), a multiemployer plan benefiting union employees of our steel mill. Because we have no current intention of withdrawing from the WISPP, we have not recognized a withdrawal liability in our consolidated financial statements. However, if such a liability were triggered, it could have a material adverse effect on our results of operations, financial position, liquidity, and cash flows. Our contributions to the WISPP could also increase as a result of a diminished contribution base due to the insolvency or withdrawal of other employers who currently contribute to it, the inability or failure of withdrawing employers to pay their withdrawal liabilities, or other funding deficiencies, as we would need to fund the retirement obligations of these employers.

ITEM 1B. UNRESOLV ED STAFF COMMENTS

None.

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ITEM 1C. CYBERSECURITY

Risk management and strategy

Our cybersecurity program has been designed to protect our organization's sensitive information, mitigate cyber threats, and ensure our critical assets’ confidentiality, integrity, and availability even as the threat landscape evolves. This is accomplished by a layered security approach through implementing security measures across various levels of our people, systems, and infrastructure with leading-edge cybersecurity tools combined with a 24/7 Security Operations Center and advanced vulnerability and incident management capabilities. Our safeguards also include employee training and awareness programs around phishing, malware, and other cybersecurity risks.

Cybersecurity is recognized as a top enterprise risk and the IT Risk Management (“ITRM”) program is an integral component of our enterprise risk management (“ERM”) program. Protection of the Company’s informational assets is managed by a comprehensive, multi-layer strategy, modeled on the National Institute of Standards and Technology (“NIST”) cybersecurity framework, and combines technology, services, policies, and user education to mitigate cyber risks. We have instituted Acceptable Use, Information Security, and Vendor Risk policies and procedures, which support our efforts to protect employees and contractors, while ensuring that we partner with responsible vendors who also invest in effective cybersecurity practices. Where appropriate, we engage external experts in different capacities to assist in our assessment, identification, and management of risks from cybersecurity threats. Our relationships with these external partners enable us to leverage their expertise to continually strengthen our programs and procedures.

Our ITRM program also includes processes to identify, assess and oversee risks presented by third parties, including vendors, service providers and other external users of our systems, as well as the systems of third parties that could adversely impact our business in the event of a cybersecurity incident affecting those third-party systems.

In the event of a cybersecurity incident, we have an established incident response plan that requires prompt notification of the CEO and the Information Security and Privacy Executive Committee (“ISPEC”). The CEO and the ISPEC oversee the process for assessing the impacts of incidents, monitoring our mitigation and remediation efforts, and complying with any relevant laws and regulations.

To date, we have not identified any material risks from cybersecurity threats, including as a result of any cybersecurity incident, which have materially affected, or are reasonably likely to materially affect, us, our business strategy, our results of operations, or our financial condition. As discussed more fully under “Item 1A. Risk Factors”, the sophistication of cyber threats continues to increase, and the preventative actions the Company takes to reduce the risk of cyber incidents and protect its systems and information may be insufficient. See “Item 1A. Risk Factors, One or more cybersecurity incidents may adversely impact our financial condition, results of operations, and reputation” above for more information.

Governance

Our Board of Directors has overall oversight responsibility for our ERM program, including oversight of cybersecurity risk management. The Board administers its risk oversight function through the full Board and its standing committees. The Audit Committee is responsible for ensuring that management has processes in place designed to identify and evaluate cybersecurity risks and implement processes and programs to manage such risks and mitigate cybersecurity incidents. Management, including the Chief Information Officer (“CIO”), updates the Audit Committee on at least an annual basis regarding our cybersecurity programs and material cybersecurity risks and mitigation strategies. In addition, we have a standardized incident response process that establishes procedures for timely escalation and notification to the ISPEC and other members of senior management.

Our CIO, with oversight by the ISPEC, is responsible for managing the Company’s digital infrastructure, systems, and services and ensuring the confidentiality, integrity, and availability of information stored and processed using those systems. Our CIO has more than 30 years of IT and cybersecurity experience and oversees a team of dedicated cybersecurity personnel with various experience and certifications in information security and cybersecurity.

Our internal compliance organization, through its involvement in the ISPEC, the Enterprise Compliance Counsel (“ECC”) and Internal Audit Department, works closely with our cybersecurity team in assessing and managing our cybersecurity risk.

The ISPEC provides comprehensive strategic guidance, coordination, and oversight of the Company’s information security and privacy programs and governance, including the Cybersecurity Program, Data Privacy Program, Information Technology Policies, and data breach and cyber incident testing, plans, and operational response. The ISPEC meets quarterly and is co-chaired by the CIO and Assistant General Counsel, Legal, Chief Privacy Officer and Deputy Chief Compliance Officer. The ECC oversees key risk areas, which include IT and Cyber. The CIO is a key risk owner for the IT and cybersecurity domain and works with the ECC to effectively mitigate compliance risk within our functional regulatory area. This council meets quarterly and is chaired by the SVP General Counsel & Chief Compliance Officer and Assistant General Counsel, Legal, Chief Privacy Officer and Deputy Chief Compliance Officer.

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ITEM 2. PR OPERTIES

Our facilities and administrative offices by division, type and location were as follows as of August 31, 2024:

Number of Facilities

Type

Location

Owned (1)

Leased

Administrative Offices

California

New Jersey

Oregon

Rhode Island

Auto Parts Stores

Alberta, Canada

Arkansas

British Columbia, Canada

California (2)

Florida

Georgia

Illinois

Indiana

Kansas

Missouri

Nevada

Ohio

Oregon

Rhode Island

Texas

Utah

Virginia

Washington

Metals Recycling

Alabama

British Columbia, Canada

California

Georgia

Hawaii

Kentucky

Maine

Massachusetts

Mississippi

Montana

Nevada

New Hampshire

Oregon

Puerto Rico

Rhode Island

Tennessee

Washington

Steel Mill

Oregon

Steel Distribution

California

Recycling Services

Texas

Total Operating Facilities and Administrative Offices

[A] Operation includes a deepwater port. Puerto Rico and Hawaii operations access deepwater ports through public docks.

[B] Includes large-scale shredding operations.

Includes facilities that are primarily owned where an adjacent or supplementary parcel of the site is leased.

Three sites are jointly owned with minority interest partners.

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We consider all operating properties, both owned and leased, to be well-maintained, in good operating condition, and suitable and adequate to carry on our business. For further discussion of our operating properties, see “Business,” and “Distribution” in Part I, Item 1 of this report.

Language change vs prior 10-K

MD&A (Item 7) - words with the biggest YoY frequency increase

Negative rising

impairment+4
alleging+3
against+2
impaired+2
weaker+2

Positive rising

gains+6
effective+2
advances+2
leading+2
improvement+2

MD&A (Item 7)

39,538 words

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This section includes a discussion of our operations for the fiscal years ended August 31, 2024 and 2023. The following discussion and analysis provide information which management believes is relevant to an assessment and understanding of our financial condition and results of operations. The discussion should be read in conjunction with the Consolidated Financial Statements and the related Notes thereto included in Part II, Item 8 of this report.

For discussion of our results of operations for fiscal year 2022 including comparison to fiscal 2023, refer to Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended August 31, 2023.

Business

Founded in 1906, Radius Recycling is one of North America’s largest recyclers of ferrous and nonferrous metal, including end-of-life vehicles, and a manufacturer of finished steel products. As a vertically integrated organization, we offer a range of products and services to meet global demand through our network that includes 50 retail self-service auto parts stores, 53 metals recycling facilities, and an electric arc furnace (“EAF”) steel mill. Our internal organizational and reporting structure includes a single operating and reportable segment.

We sell recycled ferrous and nonferrous metal in both foreign and domestic markets. We also sell a range of finished steel long products produced at our steel mill. Our results of operations depend in large part on the demand and prices for recycled metal in foreign and domestic markets and on the supply of raw materials, including end-of-life vehicles, available to be processed at our facilities. Our results of operations also depend substantially on our operating leverage from processing and selling higher volumes of recycled metal as well as our ability to efficiently extract ferrous and nonferrous metals from the shredding process. We respond to changes in selling prices for processed metal by seeking to adjust purchase prices for unprocessed scrap metal in order to manage the impact on our operating results. We believe we generally benefit from sustained periods of stable or rising recycled metal selling prices, which allow us to better maintain or increase both operating results and unprocessed scrap metal flow into our facilities. When recycled metal selling prices decline, either sharply or for a sustained period, our operating margins typically compress. With respect to finished steel products produced at our steel mill, our results of operations are impacted by demand and prices for these products, which are sold to customers located primarily in the Western U.S. and Western Canada.

Our quarterly operating results fluctuate based on a variety of factors including, but not limited to, changes in market conditions for recycled ferrous and nonferrous metal and finished steel products, the supply of scrap metal in our domestic markets, and varying demand for used auto parts from our self-service retail stores. Certain of these factors are influenced, to a degree, by the impact of seasonal changes including severe weather conditions, which can impact the timing of shipments and inhibit construction activity utilizing our products, scrap metal collection and production levels at our facilities, and retail admissions and parts sales at our auto parts stores. Further, sanctions, trade actions, and licensing and inspection requirements can impact the level of profitability on sales of our products and, in certain cases, impede or restrict our ability to sell to certain export markets or require us to direct our sales to alternative market destinations, which can cause our quarterly operating results to fluctuate.

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Strategic Priorities

As we continue to closely monitor economic conditions, we remain focused on the following core strategies and plans to meet our business goals and objectives:

Long-term expansion of ferrous and nonferrous scrap metal supply and processing, sales volumes, and operating margins;

Manufacturing and information technology investments and process improvements to increase the separation and recovery of metal materials from our shredding process, expand product optionality, enable volume growth, increase efficiency, and expand recycling services;

Development of new products and use of our core competencies in adjacent recycling businesses to expand recycling services and capabilities to reach a broader market, enhance customer value, and increase operating margins;

Increase market share through initiatives to maximize volumes and through selective partnerships, alliances, and acquisitions;

Productivity and continuous improvement initiatives to ensure the safety of our employees, increase operating efficiency and effectiveness, advance sustainable business practices, improve natural resource stewardship, and reduce operating expense;

Use of our seven deepwater ports and ground-based logistics network to directly access customers domestically and internationally to meet demand for our products wherever it is greatest; and

Further optimization of our integrated recycling and steel manufacturing operating platforms to maximize opportunities for synergies, cost efficiencies, and volumes.

Key economic factors and trends affecting the industries in which we operate

We sell recycled metals to the global steel industry for the production of finished steel. Our financial results largely depend on supply of raw materials in the U.S. and Western Canada and demand for recycled metal in foreign and domestic markets and for finished steel products in the Western U.S. and Western Canada. Demand for most of our products is cyclical in nature and sensitive to changes in general economic conditions. The timing and magnitude of the economic cycles in the industries in which our products are used, including global steel manufacturing and nonresidential and infrastructure construction in the U.S., are difficult to predict. Global economic conditions, including impacts of geopolitical instability, structural and cyclical changes in supply and demand conditions, inflation, changes in interest rates, the strength of the U.S. dollar, the availability and price of raw material alternatives, and trade actions such as tariffs affect market prices for and sales volumes of recycled ferrous and nonferrous metal in global markets and steel products in the Western U.S. and Western Canada and can have a significant impact on the results of our operations.

Market conditions and net selling prices for recycled ferrous metals globally were weaker in fiscal 2024 compared to the prior fiscal year driven by weaker demand primarily from slower global growth, elevated levels of Chinese steel exports, inflationary pressure including increased scrap collection and other operating costs, and high interest rates. The slowdown in economic activity, including due to higher interest rates, that began substantially in the second half of fiscal 2022 and persisted throughout fiscal 2023 and 2024 led to reduced generation of scrap metal in the U.S. domestic market and increased competition for available scrap volumes. The tight supply flows in combination with the lower price environment for recycled metals put significant pressure on metals spreads in fiscal 2023 and 2024, causing operating margin compression.

Market conditions for recycled nonferrous metals diverged from those for ferrous, with nonferrous demand and prices strengthening in the second half of fiscal 2024, except for selling prices for platinum group metals (PGMs) included in catalytic converters which declined significantly year-over-year. Our continued investment in nonferrous metal recovery technologies designed to increase metal recovery and the volume of nonferrous material from shredding operations is an important driver for the targeted improvement of our operating profit.

Average net selling prices for our finished steel products decreased compared to fiscal 2023 and the record-high levels reached in fiscal 2022 due to softer non-residential construction demand in our West Coast markets, including as a result of the higher interest rate environment, but remained at relatively high historical levels.

We continue to believe decarbonization efforts by companies, industries, and governments around the world, including investments in low carbon technologies such as renewable energies, electric vehicles, and energy efficiency solutions that are more metal intensive and minimize carbon dioxide emissions from the use of fossil fuels, among other factors, support global long-term demand for our recycled metal products.

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Steel Mill Fire

On May 22, 2021, we experienced a fire at our steel mill in McMinnville, Oregon. Direct physical loss or damage to property from the incident was limited to the mill’s melt shop, with no bodily injuries and no physical loss or damage to other buildings or equipment. We experienced loss of business income during the shutdown of the steel mill and the subsequent ramp-up phase which was substantially completed in fiscal 2022. We have insurance that was fully applicable to the losses and filed insurance claims, which were subject to deductibles and various conditions, exclusions, and limits, for the property that experienced physical loss or damage and business income losses resulting from the matter. In the fourth quarter of fiscal 2023, we reached a full and final settlement with our insurers for our claims. All insurance proceeds and recovery gains in connection with our claims had been received and recognized, respectively, as of August 31, 2023. We recognized a total of $52 million of insurance recovery gains within cost of goods sold in the Consolidated Statement of Operations in connection with this event, of which $27 million and $15 million was recognized in fiscal 2023 and 2022, respectively, reflecting recovery of applicable losses including business income losses incurred as a result of the fire.

Everett Facility Shredder Fire

On December 8, 2021, we experienced a fire at our metals recycling facility in Everett, Massachusetts. Direct physical loss or damage to property from the incident was limited to the facility’s shredder building and equipment, with no bodily injuries and no physical loss or damage to property reported at other buildings or equipment. As a result of the fire, shredding operations ceased, while all non-shredding operations at the facility continued, including torching, shearing, separating, and sorting purchased non-shreddable recycled ferrous metals. On January 28, 2022, shredding operations at the facility began ramping up following the replacement of and repairs to shredder equipment that had been damaged. In addition, shredding operations temporarily ceased at the facility on June 18, 2022 and, following discussions with the Massachusetts Department of Environmental Protection and the Massachusetts Attorney General’s office, we installed a temporary emission capture system and controls that allowed for us to resume shredding operations on November 11, 2022 and for continued operation during the repair and replacement of the shredder enclosure building. Non-shredding operations at the facility continued during this period. The repair and replacement of most property that experienced physical loss or damage, primarily buildings and improvements, was substantially completed by the end of fiscal 2023. We have insurance that was fully applicable to the losses, including but not limited to the costs of installing the temporary capture and controls system and any associated loss of business income, and filed insurance claims, which were subject to deductibles and various conditions, exclusions, and limits, for the property damage or loss and business income losses resulting from the matter. In the third quarter of fiscal 2024, we reached a full and final settlement with our insurers for our claims. All insurance proceeds and recovery gains in connection with our claims had been received and recognized, respectively, as of August 31, 2024. We recognized a total of $47 million of insurance recovery gains within cost of goods sold in the Consolidated Statement of Operations in connection with this event, of which $14 million, $16 million and $17 million was recognized in fiscal 2024, 2023, and 2022, respectively, reflecting recovery of applicable losses including business income losses incurred as a result of the fire.

Use of Non-GAAP Financial Measures

In this management’s discussion and analysis, we use supplemental measures of our performance, liquidity, and capital structure which are derived from our consolidated financial information but which are not presented in our consolidated financial statements prepared in accordance with GAAP. We believe that providing these non-GAAP financial measures adds a meaningful presentation of our operating and financial performance, liquidity, and capital structure. For example, we use adjusted EBITDA as one of the measures to compare and evaluate financial performance. Adjusted EBITDA is the sum of our net income before results from discontinued operations, interest expense, income taxes, depreciation and amortization, goodwill impairment charges, restructuring charges and other exit-related activities, other asset impairment charges, charges for legacy environmental matters (net of recoveries), amortization of capitalized cloud computing implementation costs, business development costs not related to ongoing operations including pre-acquisition expenses, charges related to non-ordinary course legal settlements, and other items which are not related to underlying business operational performance. See the reconciliations of supplemental financial measures, including adjusted EBITDA, in Non-GAAP Financial Measures at the end of this Item 7.

Our non-GAAP financial measures should be considered in addition to, but not as a substitute for, the most directly comparable GAAP measures. Although we find these non-GAAP financial measures useful in evaluating the performance of our business, our reliance on these measures is limited because they often materially differ from our consolidated financial statements presented in accordance with GAAP. Therefore, we typically use these adjusted amounts in conjunction with our GAAP results to address these limitations. Our non-GAAP financial measures may not be comparable to similarly titled measures of other companies. Other companies, including companies in our industry, may calculate non-GAAP financial measures differently than we do, limiting the usefulness of those measures for comparative purposes.

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Financial Highlights of Results of Operations for Fiscal 2024

Diluted loss per share from continuing operations attributable to Radius shareholders in fiscal 2024 was $9.37, which included a goodwill impairment charge of $216 million or $6.41 per share, net of tax. Diluted loss per share was $0.92 in the prior fiscal year.

Adjusted diluted loss per share from continuing operations attributable to Radius shareholders in fiscal 2024 was $2.68, compared to earnings per share of $0.85 in the prior fiscal year.

Net loss in fiscal 2024 was $266 million, compared to $25 million in the prior fiscal year.

Adjusted EBITDA in fiscal 2024 was $29 million, compared to $144 million in the prior fiscal year.

Market conditions for recycled metals and finished steel were weaker in fiscal 2024 compared to the prior fiscal year, leading to lower average ferrous and finished steel net selling prices and a significant compression in metal spreads. The average net selling prices for our ferrous products decreased by 4% as a result of weaker global demand, due in part to elevated levels of Chinese steel exports. Ferrous sales volumes increased 3% compared to the prior year, including increased volumes associated with recycling services. The average net selling prices for our nonferrous products increased 4% on robust global demand, and sales volumes were 1% higher compared to the prior fiscal year. Average net selling prices for our finished steel products decreased by 12% compared to the prior fiscal year due to softer non-residential construction demand in our West Coast markets which, combined with purchase costs for raw materials staying relatively consistent, led to a significant margin compression. Our results in fiscal 2024 reflected the continued unfavorable impact of tight supply flows of ferrous scrap metal due to lower prices and manufacturing activity, significantly lower year-over-year PGM prices, and inflationary pressure on operating costs. Contributions from productivity and cost reduction initiatives identified and commenced in fiscal 2024 and fiscal 2023 helped to offset the continued effects of inflationary pressure on operating costs. In addition, fiscal 2023 results benefited from $30 million higher insurance recovery gains related to the steel mill fire and the Everett facility shredder fire that occurred in prior periods.

In fiscal 2024, based on financial and operational performance factors and the sustained decrease in our market capitalization, we identified a triggering event requiring the performance of a quantitative goodwill impairment test as of May 1, 2024 which resulted in a non-cash goodwill impairment charge of $216 million.

SG&A expense in fiscal 2024 decreased 7% compared to the prior fiscal year primarily reflecting benefits from cost reduction measures implemented in the current fiscal year which more than offset the impact of inflation and higher costs related to technology investments and certain legal matters.

The following items further highlight selected liquidity and capital structure metrics:

Net cash used in operating activities of $53 million in fiscal 2024, compared to cash provided by operating activities of $139 million in the prior fiscal year.

Debt was $415 million as of August 31, 2024, compared to $249 million as of August 31, 2023.

Debt, net of cash, was $409 million as of August 31, 2024, compared to $243 million as of August 31, 2023.

See the reconciliations of adjusted diluted earnings per share from continuing operations attributable to Radius shareholders, adjusted EBITDA, and debt, net of cash in Non-GAAP Financial Measures at the end of this Item 7.

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Results of Operations

Selected Financial Measures and Operating Statistics

For the Year Ended August 31,

% Increase (Decrease)

($ in thousands, except for prices and per share amounts)

Ferrous revenues

Nonferrous revenues

Steel revenues (1)

Retail and other revenues

Total revenues

Cost of goods sold

Gross margin (total revenues less cost of goods sold)

Gross margin (%)

Selling, general and administrative expense

Diluted earnings (loss) per share from continuing operations attributable to Radius shareholders:

Reported

Adjusted (2)

Net income (loss)

Adjusted EBITDA (2)

Recycled ferrous metal average sales prices ($/LT) (3) :

Domestic

Foreign

Average

Ferrous volumes (LT, in thousands):

Domestic (4)

Foreign

Total ferrous volumes (LT, in thousands) (4)(8)

Recycled nonferrous metal average sales price ($/pound) (3)(5)

Nonferrous volumes (pounds, in thousands) (4)(5)

Finished steel average sales price ($/ST) (3)

Finished steel sales volumes (ST, in thousands)

Cars purchased (in thousands) (6)

Number of auto parts stores at period end

Rolling mill utilization (7)

NM = Not Meaningful

LT = Long Ton, which is equivalent to 2,240 pounds. ST = Short Ton, which is equivalent to 2,000 pounds.

Steel revenues include predominantly sales of finished steel products, in addition to sales of semi-finished goods (billets) and steel manufacturing scrap.

See the reconciliations of Non-GAAP Financial Measures at the end of this Item 7.

Price information is shown after netting the cost of freight incurred to deliver the product to the customer.

Ferrous and nonferrous volumes sold externally and delivered to our steel mill for finished steel production.

Average sales price and volume information excludes PGMs in catalytic converters.

Cars purchased by auto parts stores only.

Rolling mill utilization is based on effective annual production capacity under current conditions of 580 thousand tons of finished steel products.

May not foot due to rounding.

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Revenues

Revenues in fiscal 2024 decreased by 5% compared to the prior fiscal year primarily due to lower average net selling prices for our ferrous and finished steel products driven by weaker market conditions. Market conditions for recycled ferrous metals and finished steel were weaker in fiscal 2024 compared to the prior fiscal year, leading to lower average ferrous and finished steel net selling prices. The average net selling prices for our ferrous products decreased by 4% as a result of weaker demand, due in part to elevated levels of Chinese steel exports. Ferrous sales volumes increased 3% in fiscal 2024 compared to 2023, partially due to the adverse impact of operational disruptions in the first quarter of fiscal 2023. Global nonferrous demand strengthened through the second half of fiscal 2024, leading to a 4% increase in average net selling prices for our nonferrous products compared to the prior fiscal year. Our nonferrous sales volumes in fiscal 2024 increased by 1% compared to the prior year. The benefit of increased selling prices and volumes on our nonferrous revenue was more than offset by significantly lower PGM prices and volumes in fiscal 2024 compared to fiscal 2023. Market conditions for our finished steel products were softer in fiscal 2024, leading to finished steel average selling prices decreasing 12%, compared to higher prices in the prior fiscal year. Finished steel sales volumes decreased 2% in fiscal 2024 compared to the prior fiscal year.

Operating Performance

The combination of goodwill impairment charges, significantly lower year-over-year finished steel prices, ferrous metal spread compression due to weaker market conditions, higher production and other operating costs, and a lower benefit from insurance recoveries in the current fiscal year had a significant adverse impact on our operating margins, net income (loss) and adjusted EBITDA. Net loss in fiscal 2024 was $266 million, compared to net loss of $25 million in the prior fiscal year. Adjusted EBITDA in fiscal 2024 was $29 million, compared to $144 million in the prior fiscal year. Contributions from productivity and cost reduction initiatives identified and commenced in fiscal 2024 and fiscal 2023 helped to offset the continued effects of inflationary pressure on operating costs. Our results in fiscal 2024 and fiscal 2023 included $14 million and $43 million, respectively, in insurance recovery gains associated with the resolution of property damage and business interruption claims related to the steel mill fire and the Everett facility shredder fire that occurred in prior periods.

Starting in the third quarter of fiscal 2023, we achieved the full quarterly run rate of the targeted annual benefits of $60 million associated with our productivity and cost reduction initiatives introduced in fiscal 2023. In addition, during fiscal 2024, we began implementing incremental productivity and cost reduction initiatives with an aggregate targeted annual benefit of approximately $70 million. These fiscal 2024 initiatives included a combination of increased yields, efficiencies in processing, transportation and procurement, and reduced costs including from headcount reductions and a targeted reduction of SG&A expense by 10%. In the fourth quarter of fiscal 2024, we achieved substantially the full quarterly run rate of the targeted annual benefits associated with our fiscal 2024 initiatives. Contributions from these productivity and cost reduction initiatives helped to offset the effects of inflationary pressure and increases in operating costs. During fiscal 2024, we incurred $7 million of restructuring charges and other exit-related costs in connection with these plans, compared to $3 million in fiscal 2023.

SG&A expense in fiscal 2024 decreased by 7% compared to the prior fiscal year reflecting benefits from cost reduction measures implemented during fiscal 2024, lower incentive compensation due to Company performance, and lower legacy environmental charges, partially offset by higher outside and professional services expenses, due in part to higher costs for legal matters and the impact of inflation.

In the third quarter of fiscal 2024, based on financial and operational performance factors and the sustained decrease in our market capitalization, we identified a triggering event requiring the performance of a quantitative goodwill impairment test as of May 1, 2024 which resulted in a non-cash goodwill impairment charge of $216 million, representing the full carrying amount of goodwill allocated to three of our reporting units. The remaining $13 million of goodwill, which is carried by one reporting unit, a recycling services operation, was deemed not to be impaired. In fiscal 2023 we recorded $51 million in goodwill and other asset impairment charges. See further discussion in the Critical Accounting Estimates section at the end of Part II, Item 7 and Note 8 - Goodwill and Other Intangible Assets, net in the Notes to the Consolidated Financial Statements of this report.

See the reconciliation of adjusted EBITDA in Non-GAAP Financial Measures at the end of this Item 7.

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Interest Expense

Interest expense was $27 million, $19 million, and $9 million as of August 31, 2024, 2023, and 2022, respectively. The increase in interest expense was primarily due to increased average borrowings as well as higher interest rates on amounts outstanding under our bank credit facilities, compared to the prior fiscal year.

Income Taxes

Year Ended August 31,

Income (loss) from continuing operations before income taxes

Income tax (expense) benefit

Effective tax rate

Our effective tax rate from continuing operations for fiscal 2024 and 2023 was a benefit on pre-tax loss of 17.2% and 9.8%. Our effective tax rate from continuing operations for fiscal 2024 was lower than the U.S. federal statutory rate of 21% primarily due to the effect of permanent differences from non-deductible goodwill and the recognition of a valuation allowance against deferred tax assets in the Company’s U.S. federal, state and foreign tax jurisdictions. Our effective tax rate from continuing operations for fiscal 2023 was lower than the U.S. federal statutory rate of 21% primarily due to the aggregate effect of the relatively low absolute level of pre-tax earnings, permanent differences from non-deductible expenses, and unrecognized tax benefits.

The goodwill impairment charge recognized in the third quarter of fiscal 2024 led to a significant increase in our deferred tax assets, and as a result, the future reversal of existing taxable temporary differences as a source of income does not support the full realization of our deferred tax assets. In fiscal 2024 we determined that it is more likely than not that the tax benefits associated with certain of our deferred tax assets will not be realized and recorded a $14 million valuation allowance against deferred tax assets in our U.S. federal, state and foreign tax jurisdictions. The amount of the deferred tax asset considered realizable could be adjusted if estimates of future taxable income change. We continue to maintain valuation allowances against certain deferred tax assets in certain jurisdictions as a result of negative evidence, including historical losses in these jurisdictions, which indicates that it is more-likely-than-not that the associated tax benefit will not be realized.

Liquidity and Capital Resources

We rely on cash provided by operating activities as a primary source of liquidity, supplemented by current cash on hand and borrowings under our existing credit facilities.

Sources and Uses of Cash

We had cash balances of $6 million as of both August 31, 2024 and 2023. Cash balances are intended to be used primarily for working capital, capital expenditures, dividends, share repurchases, investments, and acquisitions. We use excess cash on hand to reduce amounts outstanding under our credit facilities. As of August 31, 2024, debt was $415 million, compared to $249 million as of August 31, 2023. Debt, net of cash, was $409 million as of August 31, 2024, compared to $243 million as of August 31, 2023. The increase in debt was primarily due to increased borrowings from our credit facilities mainly to fund working capital needs and capital expenditures. See the reconciliation of debt, net of cash, in Non-GAAP Financial Measures at the end of this Item 7.

Operating Activities

Net cash used in operating activities in fiscal 2024 was $53 million, compared to cash provided by operating activities of $139 million in fiscal 2023.

Sources of cash other than from earnings in fiscal 2024 included a $17 million decrease in prepaid expenses and other current assets primarily due to changes in the timing of payment of premiums under various insurance policies. Uses of cash in fiscal 2024 included a $60 million increase in accounts receivable primarily due to the timing of sales and collections and a $10 million decrease in accrued payroll and related liabilities primarily due to decreased incentive compensation liabilities.

Sources of cash other than from earnings in fiscal 2023 included a $48 million decrease in inventories primarily due to lower raw material purchase costs and the timing of purchases and sales and a $12 million decrease in accounts receivable primarily due to the timing of sales and collections. Uses of cash in fiscal 2023 included a $24 million decrease in accrued payroll and related liabilities primarily due to decreased incentive compensation liabilities and a $14 million decrease in accrued liabilities due in part to recognition

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through fiscal 2023 earnings of advance payments received from insurers in excess of recoveries as of the end of fiscal 2022 upon full and final settlement with our insurers for our claims arising from the May 2021 steel mill fire.

Investing Activities

Net cash used in investing activities in fiscal 2024 was $79 million, compared to $144 million in fiscal 2023.

Cash used in investing activities in fiscal 2024 included capital expenditures of $76 million to upgrade our equipment and infrastructure and for investments in advanced metals recovery technology and environmental and safety-related assets, compared to $130 million in the prior fiscal year.

Cash used in investing activities in fiscal 2023 included $25 million paid to acquire the assets of the ScrapSource business on November 18, 2022. We funded this acquisition using cash on hand and borrowings under our existing credit facilities. See Note 7 - Business Acquisitions in the Notes to the Consolidated Financial Statements in Part II, Item 8 of this report for further detail. Cash flows from investing activities in fiscal 2023 included proceeds of $8 million representing the portion of advance payments from insurers deemed a recovery of capital purchases incurred for repair and replacement of damaged property arising from the December 2021 Everett facility shredder fire.

Financing Activities

Net cash provided by financing activities for fiscal 2024 was $131 million, compared to net cash used in financing activities of $33 million in fiscal 2023.

Cash flows from financing activities in fiscal 2024 included $161 million in net borrowings of debt compared to $3 million in net repayment of debt in the prior fiscal year (refer to Non-GAAP Financial Measures at the end of this Item 7). Uses of cash in fiscal 2024 and 2023 included $5 million and $8 million, respectively, for payment of employee tax withholdings resulting from settlement of share-based awards and $22 million and $21 million, respectively, in each fiscal year for the payment of dividends.

Debt

Following is a summary of our outstanding balances and availability on credit facilities and long-term debt, exclusive of finance lease obligations (in thousands):

Outstanding as of

August 31, 2024

Remaining

Availability

Bank secured revolving credit facilities (1)

Other debt obligations

Remaining availability is net of $7 million of outstanding stand-by letters of credit as of August 31, 2024.

Our senior secured revolving credit facilities provide for revolving loans of $800 million and C$15 million, which mature in August 2027. On June 17, 2024, we and certain of our subsidiaries entered into the Fourth Amendment (the “Fourth Amendment”) to our Third Amended and Restated Credit Agreement, dated as of April 6, 2016, by and among the Company, as the U.S. Borrower, Schnitzer Steel Canada, Ltd., as the Canadian Borrower, the subsidiaries of the Company party thereto (the “Guarantors”), Bank of America N.A., as administrative agent and the other lenders party thereto (as amended prior to the Fourth Amendment, the “Existing Credit Agreement”, the Existing Credit Agreement, as amended pursuant to the Fourth Amendment, the “Amended Credit Agreement”). The principal changes to the Existing Credit Agreement effected by the Fourth Amendment are (i) the removal of the consolidated fixed charge coverage ratio for each of the fiscal quarters ending May 31, 2024 through February 28, 2025, (ii) the introduction of a minimum consolidated interest coverage ratio of 2.00 to 1.00 for the fiscal quarter ending May 31, 2024, and 1.25 to 1.00 for the fiscal quarter ending February 28, 2025, and (iii) the introduction of a minimum consolidated asset coverage ratio of 1.00 to 1.00 for each of the fiscal quarters ending May 31, 2024 through February 28, 2025.

The Fourth Amendment also revised the applicable interest rates under the facility which, starting June 17, 2024, are based, at our option, on either the Secured Overnight Financing Rate (“SOFR”) (or the Term Canadian Overnight Repo Rate Average “CORRA” for C$ loans), plus a spread of between 1.50% and 2.50%, with the amount of the spread based on a pricing grid tied to our ratio of consolidated net funded debt to EBITDA (as defined by the credit agreement), or the greater of (a) the prime rate, (b) the federal funds rate plus 0.50% or (c) the daily rate equal to Term SOFR plus 1.00%, in each case, plus a spread of between 0.50% and 1.50% based on a pricing grid tied to our consolidated net funded debt to EBITDA ratio. In addition, commitment fees are payable on the unused portion of the credit facilities at rates between 0.175% and 0.350% based on a pricing grid tied to our ratio of consolidated net funded debt to EBITDA.

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Our obligations under our credit agreement are guaranteed by substantially all of our subsidiaries. The credit facilities and the related guarantees are secured by senior first priority liens on certain of our and our subsidiaries’ assets, including equipment, inventory, and accounts receivable. The Fourth Amendment expanded the collateral package provided to the lenders to include most other personal property and equity interests held by the Company and the Guarantors in their respective subsidiaries.

We had borrowings outstanding under our credit facilities of $394 million and $230 million as of August 31, 2024 and 2023, respectively. The weighted average interest rate on amounts outstanding under our credit facilities was 8.0% and 7.2% as of August 31, 2024 and 2023, respectively. In the fourth quarter of fiscal 2023, we entered into three interest rate swap transactions to hedge the variability in interest cash flows associated with our variable-rate loans under our credit facilities. The interest rate swaps require us to make fixed-rate payments based on a total notional amount of $150 million and an average annual rate of approximately 4.40% in exchange for the receipt of variable-rate amounts over a three-year term ending in August 2026. See Note 15 - Derivative Financial Instruments in Part II, Item 8 of this report for disclosure related to derivative instruments and hedging activities.

We use the credit facilities to fund working capital, capital expenditures, dividends, share repurchases, investments, and acquisitions. Our credit agreement contains various representations and warranties, events of default, and financial and other customary covenants which limit (subject to certain exceptions) our ability to, among other things, incur or suffer to exist certain liens, make investments, incur or guaranty additional indebtedness, enter into consolidations, mergers, acquisitions, and sales of assets, make distributions and other restricted payments, change the nature of our business, engage in transactions with affiliates, and enter into restrictive agreements, including agreements that restrict the ability of our subsidiaries to make distributions. The financial covenants under the credit agreement include (a) a consolidated fixed charge coverage ratio, defined as the four-quarter rolling sum of consolidated EBITDA less defined maintenance capital expenditures and certain environmental expenditures divided by consolidated fixed charges which, for the fiscal quarters ending May 31, 2024 through February 28, 2025, has been replaced with maintenance covenants during that period requiring compliance with a minimum permitted interest coverage ratio and a minimum permitted asset coverage ratio as per the Fourth Amendment as described above, and (b) a consolidated leverage ratio, defined as consolidated funded indebtedness divided by the sum of consolidated net worth and consolidated funded indebtedness.

As of August 31, 2024, we were in compliance with the applicable financial covenants under our credit agreement. The consolidated asset coverage ratio was required to be no less than 1.00 to 1.00 and was 1.33 to 1.00 as of August 31, 2024. The consolidated leverage ratio was required to be no more than 0.55 to 1.00 and was 0.40 to 1.00 as of August 31, 2024.

While we expect to remain in compliance with the financial covenants under the credit agreement, we may not be able to do so in the event market conditions do not improve, or other factors have a significant adverse impact on our results of operations and financial position. If we do not maintain compliance with our financial covenants and are unable to obtain an amendment or waiver from our lenders, a breach of a financial covenant would constitute an event of default and allow the lenders to exercise remedies under the agreements, the most severe of which is the termination of the credit facility under our committed bank credit agreement and acceleration of the amounts owed under the agreement. In such case, we would be required to evaluate available alternatives and take appropriate steps to obtain alternative funds. We cannot assure that any such alternative funds, if sought, could be obtained or, if obtained, would be adequate or on acceptable terms.

Other debt obligations, which totaled $12 million as of both August 31, 2024 and 2023, primarily relate to equipment purchases, the contract consideration for which includes an obligation to make future monthly payments to the vendor in the form of licensing fees. For accounting purposes, such obligations are treated as a partial financing of the purchase price by the equipment vendor. Monthly payments commence when the equipment is placed in service and achieves specified minimum operating metrics, with payments continuing for a period of four years thereafter.

Capital Expenditures

Capital expenditures totaled $76 million for fiscal 2024, compared to $130 million for fiscal 2023. Capital expenditures included approximately $19 million and $33 million for investments in growth in fiscal 2024 and 2023, respectively. We currently plan to invest in the range of $80 million to $90 million in capital expenditures in fiscal 2025. These capital expenditures include investments in growth, including new nonferrous processing technologies, and to support growth in recycling services and other volume initiatives, and investments to upgrade our equipment, infrastructure, and information technology systems, and for environmental and safety-related assets, using cash generated from operations and available credit facilities. Supply chain disruptions have contributed to some delays in construction activities and equipment deliveries related to our capital projects, and to the time required to obtain permits from government agencies, resulting in the deferral of certain capital expenditures. Given the continually evolving nature of such disruptions and other factors impacting the timing of project completion, the extent to which forecasted capital expenditures could be deferred is uncertain.

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Environmental Compliance

Building on our commitment to recycling and operating our business in an environmentally responsible manner, we continue to invest in facilities that improve our environmental presence in the communities in which we operate. As part of our capital expenditures discussed in the prior paragraph, we invested approximately $21 million in capital expenditures for environmental projects in fiscal 2024, and we currently plan to invest in the range of $30 million to $40 million for such projects in fiscal 2025. These projects include investments in equipment to ensure ongoing compliance with air quality and other environmental regulations and storm water systems.

We have been identified by the EPA as one of the potentially responsible parties that own or operate or formerly owned or operated sites which are part of or adjacent to the Portland Harbor Superfund site (“Portland Harbor”). See Note 10 - Commitments and Contingencies in the Notes to the Consolidated Financial Statements in Part II, Item 8 of this report for a discussion of this matter, as well as other legacy environmental loss contingencies. We believe it is not possible to reasonably estimate the amount or range of costs which we are likely to or which it is reasonably possible that we will incur in connection with Portland Harbor, although such costs could be material to our financial position, results of operations, cash flows, and liquidity. We have insurance policies and QSFs that we believe will provide reimbursement for costs we incur for defense, remediation, and mitigation for natural resource damages claims in connection with Portland Harbor, although there are no assurances that those policies and the QSFs will cover all of the costs which we may incur. Significant cash outflows in the future related to Portland Harbor, as well as related to other legacy environmental loss contingencies, could reduce the amounts available for borrowing that could otherwise be used for working capital, capital expenditures, dividends, share repurchases, investments, and acquisitions and could result in our failure to maintain compliance with certain covenants in our debt agreements, and could adversely impact our liquidity.

Dividends

On July 2, 2024, our Board of Directors declared a dividend for the fourth quarter of fiscal 2024 of $0.1875 per common share, which equates to an annual cash dividend of $0.75 per common share. Dividends of $0.75 per common share, totaling $22 million, were declared and paid during fiscal 2024, and $21 million in dividends were also declared and paid during fiscal 2023.

Share Repurchase Program

We did not repurchase any shares of our common stock during fiscal 2024 and 2023. For information regarding share repurchases during fiscal 2022, see “Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities” above in Part II of this report, incorporated by reference herein.

Assessment of Liquidity and Capital Resources

Historically, our available cash resources, internally generated funds, credit facilities, and equity offerings have financed our acquisitions, capital expenditures, working capital, and other financing needs. As of August 31, 2024, we have entered into contracts to sell certain discrete real estate assets that are projected to generate net cash proceeds in excess of $35 million upon consummation of the transactions, which we expect will occur during the second half of fiscal 2025, subject to customary terms and conditions. These real estate sale transactions will not meaningfully modify our operating footprint.

We generally believe our current cash resources, internally generated funds, existing credit facilities, and access to the capital markets will provide adequate short-term and long-term liquidity needs for working capital, capital expenditures, dividends, investments and acquisitions, joint ventures, debt service requirements, environmental obligations, share repurchases, and other contingencies. However, in the event market conditions fail to improve, we are unable to realize the benefits of our operational and cost savings initiatives, or other negative factors occur, we may need additional liquidity which would require us to evaluate available alternatives and take appropriate steps to obtain sufficient additional funds. There can be no assurances that any such supplemental funding, if sought, could be obtained or, if obtained, would be adequate or on acceptable terms.

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Contractual Obligations

We have certain contractual obligations to make future payments. The following table summarizes future obligations related to debt and leases as of August 31, 2024 (in thousands):

Payment Due by Period

Thereafter

Totals

Contractual Obligations

Credit facilities (1)

Interest payments on credit facilities (2)

Other debt, including interest (3)

Finance leases, including interest

Operating leases (4)

Credit facilities include the principal amount of borrowings outstanding under bank secured revolving credit facilities, which mature in August 2027.

Interest payments on credit facilities are based on interest rates in effect as of August 31, 2024, including the effect of interest rate swaps. As contractual interest rates and the amount of debt outstanding is variable in certain cases, actual cash payments may differ from the estimates provided.

Other debt obligations primarily relate to equipment purchases, the contract consideration for which includes an obligation to make future monthly payments to the vendor in the form of licensing fees. For accounting purposes, such obligation is treated as a partial financing of the purchase price by the equipment vendor. Monthly payments commence when the equipment is placed in service and continue for a period of four years thereafter.

Operating lease payments reflect those embedded in the measurement of our operating lease liabilities and, thus, include future lease payments for the remaining non-cancellable period of the lease together with periods covered by renewal (or termination) options which we are reasonably certain to exercise (or not to exercise). These operating lease payments do not include certain tax, insurance, and maintenance costs, which are also required contractual obligations under our operating leases but are generally not fixed and can fluctuate from year to year. Also, we have excluded future minimum lease payments for leases that have been executed but have not commenced as of August 31, 2024.

In addition to future obligations related to debt and leases presented in the table above, we have certain material cash requirements, including but not limited to commitments for capital expenditures. See “Capital Expenditures” within “Liquidity and Capital Resources” above in this Item 7 for discussion of our planned investment in capital expenditures in fiscal 2025, a portion of which represents contractual commitments that existed as of the end of our fiscal 2024. We also had open purchase orders as of August 31, 2024 for purchases of primarily fuels and lubricants, machinery and equipment components and parts, and consumables used in our operations of approximately $89 million, nearly all of which require payment of cash in our fiscal 2025.

In fiscal 2023, we entered three interest rate swap transactions to hedge the variability in interest cash flows associated with our variable-rate loans under our credit facilities. The interest rate swaps require us to make fixed-rate payments based on a total notional amount of $150 million and an average annual rate of approximately 4.40% in exchange for the receipt of variable-rate amounts over a three-year term ending in August 2026. See Note 15 - Derivative Financial Instruments in Part II, Item 8 of this report for disclosure related to derivative instruments and hedging activities.

See Note 13 - Employee Benefits in Part II, Item 8 of this report for disclosure related to qualified and nonqualified retirement plans, which include a defined benefit pension plan, a supplemental executive retirement benefit plan, multiemployer pension plans, defined contribution plans, and a deferred compensation plan.

We maintain stand-by letters of credit to provide support for certain obligations, including workers’ compensation and performance bonds. As of August 31, 2024, we had $7 million outstanding under these arrangements.

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Critical Accounting Estimates

The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires us to make certain judgments, estimates, and assumptions regarding uncertainties that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. An accounting estimate is deemed to be critical if it is made based on assumptions and judgments about matters that are inherently uncertain at the time the estimate is made, if different estimates reasonably could have been used, or if changes in the estimate that are reasonably likely to occur could materially impact our consolidated financial statements. Because of the uncertainty inherent in these matters, actual results could differ from the estimates we use. We are not currently aware of any reasonably likely events or circumstances that would result in materially different amounts being reported.

Our critical accounting estimates include those related to inventories, goodwill, business acquisitions, long-lived assets, environmental costs, and income taxes.

Inventories

Our inventories consist of processed and unprocessed scrap metal (ferrous, nonferrous, and mixed nonferrous recovered joint products arising from the manufacturing process), semi-finished steel products (billets), finished steel products (primarily rebar, wire rod, and merchant bar), used and salvaged vehicles, and supplies. Inventories are stated at the lower of cost and net realizable value. We consider estimated future selling prices when determining the estimated net realizable value of our inventory. As we generally sell our recycled ferrous metal under contracts that provide for shipment within 30 to 60 days after the price is agreed, we utilize the selling prices under committed contracts and sales orders for determining the estimated net realizable value of quantities on hand that will be shipped under these contracts and sales orders.

The accounting process we use to record ferrous scrap metal quantities relies on significant estimates. With respect to estimating the quantities of unprocessed ferrous scrap metal inventory that are moved into production, we rely on weighed quantities of the processed ferrous material, adjusted for estimated metal recoveries and yields that are based on historical trends and other judgments by management. Actual recoveries and yields can vary depending on product quality, moisture content, and the source of the unprocessed metal. The Company’s estimates are intended to reasonably reflect the quantities of unprocessed ferrous scrap metal that are used in the production of processed ferrous metal. To assist in validating the reasonableness of these estimates, we periodically review shrink factors and perform monthly physical inventories. Due to the inherent nature of our scrap metal inventories, including variations in product density, holding period, and production processes utilized to manufacture the products, physical inventories will not necessarily detect all variances for scrap metal inventory such that estimates of quantities are required. To mitigate this risk, we further adjust our ferrous physical inventories when the volume of a commodity is low and a physical inventory count is deemed to more accurately estimate the remaining volume.

Goodwill

We evaluate goodwill for impairment annually on July 1 and upon the occurrence of certain triggering events or substantive changes in circumstances that indicate that the fair value of goodwill may be impaired. Impairment of goodwill is tested at the reporting unit level. A reporting unit is an operating segment or one level below an operating segment (referred to as a “component”).

When testing goodwill for impairment, we have the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more-likely-than-not that the estimated fair value of a reporting unit is less than its carrying amount. If we elect to perform a qualitative assessment and determine that an impairment is more-likely-than-not, we are then required to perform the quantitative impairment test, otherwise no further analysis is required. We also may elect not to perform the qualitative assessment and, instead, proceed directly to the quantitative impairment test. When performing the quantitative impairment test, we apply a one-step quantitative test and record the amount of goodwill impairment as the excess of a reporting unit’s carrying amount over its fair value, not to exceed the total amount of goodwill allocated to that reporting unit.

Our quantitative impairment assessment considers both the income approach and the market approach to estimate a reporting unit’s fair value. Assumptions primarily include revenue growth rates driven by future ferrous and nonferrous commodity price and sales volume expectations, gross margins, selling, general and administrative expense relative to total revenues, capital expenditures, working capital requirements, discount rates based on a reporting unit’s weighted average cost of capital (“WACC”), tax rate, terminal growth rate, benefits associated with a taxable transaction, and synergistic benefits available to market participants. We test the reasonableness of the inputs and outcomes of our discounted cash flow analysis against available market data. These estimates change from period to period based on operating results, market conditions, and other factors and could materially affect the determination of the fair value and potential goodwill impairment for each reporting unit. Our quantitative assessment is sensitive to changes in underlying estimates and assumptions including the level of margin recovery, the discount rate and terminal growth rate.

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In the third quarter of fiscal 2024, we identified a triggering event that indicated that the goodwill allocated to certain of our reporting units may be impaired. For the two metals recycling reporting units and the autos reporting unit subject to the quantitative impairment test, the estimated fair value of each reporting unit was less than its carrying amount, resulting in full impairment of the allocated goodwill and an aggregate impairment charge of $216 million.

In the fourth quarter of fiscal 2024, we performed the annual goodwill impairment test as of July 1, 2024. As of the testing date, the balance of our goodwill was $13 million, which was allocated to one reporting unit, a recycling services operation. We elected to perform the qualitative assessment for this reporting unit and concluded that it was not more-likely-than-not that the fair value of the reporting unit was less than its carrying value as of the testing date, and, therefore, no further impairment testing was required.

See Note 8 - Goodwill and Other Intangible Assets, net in the Notes to the Consolidated Financial Statements in Part II, Item 8 of this report for further detail.

Business Acquisitions

We recognize the assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree at the acquisition date, measured at their fair values as of that date. Contingent purchase consideration is recorded at fair value at the date of acquisition. Any excess purchase price over the fair value of the net assets acquired is recorded as goodwill. Within one year from the date of acquisition, we may update the value allocated to the assets acquired and liabilities assumed, and the resulting goodwill balance, based on information received regarding the valuation of such assets and liabilities that was not available at the time of purchase. Measuring assets and liabilities at fair value requires us to determine the price that would be paid by a third-party market participant based on the highest and best use of the assets or interests acquired. See Note 7 - Business Acquisitions in the Notes to the Consolidated Financial Statements in Part II, Item 8 of this report for disclosure of our acquisition of the Columbus Recycling business on October 1, 2021, our acquisition of the Encore Recycling business on April 29, 2022, and our acquisition of the ScrapSource business on November 18, 2022.

Long-Lived Assets

We test long-lived tangible and intangible assets for impairment at the asset group level, which is determined based on the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities. We test our asset groups for impairment when certain triggering events or changes in circumstances indicate that the carrying value of the asset group may be impaired. If the carrying value of the asset group is not recoverable because it exceeds the estimate of future undiscounted cash flows from the use and eventual disposition of the asset group, an impairment loss is recognized by the amount the carrying value exceeds its fair value, if any. The impairment loss is allocated to the long-lived assets of the group on a pro rata basis using the relative carrying amounts of those assets, except that the loss allocated to an individual long-lived asset of the group shall not reduce the carrying amount of that asset below its fair value. Fair value is determined using one or more of the income, market, or cost approaches, depending on the nature of the asset group. Determination of fair value is considered a critical accounting estimate. In fiscal 2024, we did not identify any triggering events or changes in circumstances indicating that the carrying value of a material asset group may be impaired.

Environmental Costs

We operate in industries that inherently possess environmental risks. To manage these risks, we employ both our own environmental staff and outside consultants. Environmental management and finance personnel meet regularly to discuss environmental risks. We estimate future costs for known environmental remediation requirements and accrue for them on an undiscounted basis when it is probable that we have incurred a liability and the related costs can be reasonably estimated but the timing of incurring the estimated costs is unknown. The regulatory and government management of these projects is complex, which is one of the primary factors that make it difficult to assess the cost of potential and future remediation. When only a wide range of estimated amounts can be reasonably established and no other amount within the range is better than any other, the low end of the range is recorded in the financial statements. If further developments or resolution of an environmental matter result in facts and circumstances that are significantly different than the assumptions used to develop these liabilities, the accrual for environmental remediation could be materially understated or overstated. Adjustments to these liabilities are made when additional information becomes available that affects the estimated costs to study or remediate any environmental issues or when expenditures for which accruals are established are made. The factors we consider in the recognition and measurement of environmental liabilities include:

Current regulations, both at the time the liability is established and during the course of the investigation or remediation process, which specify standards for acceptable remediation;

Information about the site which becomes available as the site is studied and remediated;

The professional judgment of senior level internal staff and outside consultants, who take into account similar, recent instances of environmental remediation issues, and studies of our sites, among other considerations;

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Available technologies that can be used for remediation; and

The number and financial condition of other potentially responsible parties and the extent of their responsibility for the costs of study and remediation.

Our accrued environmental liabilities as of August 31, 2024 included $8 million related to the Portland Harbor Superfund site. Because the final remedial actions have not yet been designed and there has not been a final determination of the amount of natural resource damages or of the allocation among the potentially responsible parties of costs of the investigations, or remedial action costs, we believe it is not possible to reasonably estimate the amount or range of costs which we are likely or which it is reasonably possible that we may incur in connection with Portland Harbor, although such costs could be material to our financial position, results of operations, cash flows, and liquidity. Therefore, no additional amounts have been accrued. Further, we have been notified that we are or may be a potentially responsible party at sites other than Portland Harbor which are currently or formerly owned or operated by us or at other sites where we may have responsibility for such costs due to past disposal or other activities. See “Contingencies – Environmental” in Note 10 - Commitments and Contingencies in the Notes to the Consolidated Financial Statements in Part II, Item 8 of this report.

Income Taxes

Valuation Allowances

We assess the realizability of our deferred tax assets on a quarterly basis through an analysis of potential sources of future taxable income, including prior year taxable income available to absorb a carryback of tax losses, reversals of existing taxable temporary differences, tax planning strategies, and forecasts of taxable income. We consider all negative and positive evidence, including the weight of the evidence, to determine if valuation allowances against deferred tax assets are required. Due to the significant judgment involved, realizability of our deferred tax assets is considered a critical accounting estimate. We maintain valuation allowances against certain U.S. federal, state and foreign deferred tax assets. Realization of the deferred tax assets is dependent upon generating sufficient taxable income in the associated tax jurisdictions in future years to benefit from the reversal of net deductible temporary differences. Changes in historical earnings performance and future earnings projections, among other factors, may cause us to adjust our valuation allowance on deferred tax assets, which would impact our results of operations in the period we determine that these factors have changed. See “Valuation Allowances” in Note 16 - Income Taxes in the Notes to the Consolidated Financial Statements in Part II, Item 8 of this report.

Recently Issued Accounting Standards

For a description of recent accounting pronouncements that may have an impact on our financial condition, results of operations, or cash flows, see Note 3 - Recent Accounting Pronouncements in the Notes to the Consolidated Financial Statements in Part II, Item 8 of this report.

Non-GAAP Financial Measures

Debt, net of cash

Debt, net of cash is the difference between (i) the sum of long-term debt and short-term borrowings (i.e., total debt) and (ii) cash and cash equivalents. We believe that presenting debt, net of cash is useful to investors as a measure of our leverage, as cash and cash equivalents can be used, among other things, to repay indebtedness.

The following is a reconciliation of debt, net of cash (in thousands):

August 31, 2024

August 31, 2023

Short-term borrowings

Long-term debt, net of current maturities

Total debt

Less cash and cash equivalents

Total debt, net of cash

Net borrowings (repayments) of debt

Net borrowings (repayments) of debt is the sum of borrowings from long-term debt and repayments of long-term debt. We present this amount as the net change in our borrowings (repayments) for the period because we believe it is useful for investors as a meaningful presentation of the change in debt.

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The following is a reconciliation of net (repayments) borrowings of debt (in thousands):

Fiscal 2024

Fiscal 2023

Fiscal 2022

Borrowings from long-term debt

Repayments of long-term debt

Net (repayments) borrowings of debt

Adjusted EBITDA, adjusted selling, general, and administrative expense, adjusted income from continuing operations attributable to Radius shareholders, and adjusted diluted earnings per share from continuing operations attributable to Radius shareholders

Management believes that providing these non-GAAP financial measures adds a meaningful presentation of our results from business operations excluding adjustments for goodwill impairment charges, restructuring charges and other exit-related activities, other asset impairment charges (net of recoveries), legacy environmental matters (net of recoveries), amortization of capitalized cloud computing implementation costs, business development costs not related to ongoing operations including pre-acquisition expenses, charges related to non-ordinary course legal settlements, and the income tax benefit allocated to these adjustments, items which are not related to underlying business operational performance, and improves the period-to-period comparability of our results from business operations.

Following are reconciliations of net income (loss) to adjusted EBITDA, and adjusted selling, general, and administrative expense (in thousands):

Year Ended August 31,

Reconciliation of adjusted EBITDA:

Net income (loss)

Loss from discontinued operations, net of tax

Interest expense

Income tax expense (benefit)

Depreciation and amortization

Goodwill impairment charges

Restructuring charges and other exit-related activities

Other asset impairment charges, net (1)

Charges for legacy environmental matters, net (2)

Amortization of cloud computing software costs (3)

Business development costs

Charges related to legal settlements (4)

Adjusted EBITDA

Selling, general and administrative expense:

As reported

Charges for legacy environmental matters, net (2)

Business development costs

Adjusted

For the years ended August 31, 2024 and 2023, other asset impairment charges included $1 million and $5 million, respectively, of impairment and other adjustments of an equity investment to fair value reported within “Other expense, net” on the Consolidated Statement of Operations.

Legal and environmental charges, net of recoveries, for legacy environmental matters including those related to the Portland Harbor Superfund site and to other legacy environmental loss contingencies. See Note 10 - Commitments and Contingencies, “Portland Harbor” and “Other Legacy Environmental Loss Contingencies” in the Notes to the Consolidated Financial Statements in Part II, Item 8 of this report.

Amortization of cloud computing software costs consists of expense recognized in cost of goods sold and selling, general, and administrative expense resulting from amortization of capitalized implementation costs for cloud computing IT systems. This expense is not included in depreciation and amortization. No amortization of cloud computing software costs was incurred prior to the first quarter of fiscal 2024; therefore, prior period Adjusted EBITDA amounts are not impacted.

Charges related to legal settlements in fiscal 2022 relate to a claim by a utility provider for past charges.

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Following are reconciliations of adjusted income (loss) from continuing operations attributable to Radius shareholders and adjusted diluted earnings (loss) per share from continuing operations attributable to Radius shareholders (in thousands, except per share data):

Year Ended August 31,

Income (loss) from continuing operations attributable to Radius shareholders:

As reported

Goodwill impairment charges

Restructuring charges and other exit-related activities

Other asset impairment charges, net (1)

Charges for legacy environmental matters, net (2)

Business development costs

Charges related to legal settlements (3)

Income tax benefit allocated to adjustments (4)

Adjusted

Diluted earnings (loss) per share from continuing operations attributable to Radius shareholders:

As reported

Goodwill impairment charges, per share

Restructuring charges and other exit-related activities, per share

Other asset impairment charges, net, per share (1)

Charges for legacy environmental matters, net, per share (2)

Business development costs, per share

Charges related to legal settlements, per share (3)

Income tax benefit allocated to adjustments, per share (4)

Effect of dilutive shares, per share (5)

Adjusted (6)

For the years ended August 31, 2024 and 2023, other asset impairment charges included $1 million ($0.02 per share before income tax) and $5 million ($0.19 per share before income tax) of impairment and other adjustments of an equity investment to fair value reported within “Other expense, net” on the Consolidated Statement of Operations.

Charges related to legal settlements in fiscal 2022 relate to a claim by a utility provider for past charges.

Income tax allocated to the aggregate adjustments reconciling reported and adjusted income (loss) from continuing operations attributable to Radius shareholders and diluted earnings (loss) per share from continuing operations attributable to Radius shareholders is determined based on a tax provision calculated with and without the adjustments.

For the year ended August 31, 2023, adjusted diluted earnings (loss) per share from continuing operations attributable to Radius shareholders reflects the inclusion of an incremental 652 thousand common stock equivalent shares attributable to dilutive share-based compensation awards that were antidilutive for the purpose of calculating the comparable GAAP loss per share measure.

May not foot due to rounding.

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ITEM 7A. QUANTITATIVE AND QUALITAT IVE DISCLOSURES ABOUT MARKET RISK

Commodity Price Risk

We are exposed to commodity price risk, mainly associated with variations in the market price for ferrous and nonferrous metals, including recycled metal, finished steel products, auto bodies, and other commodities. The timing and magnitude of industry cycles are difficult to predict and are impacted by general economic conditions. We respond to increases and decreases in forward selling prices by adjusting purchase prices. We actively manage our exposure to commodity price risk and monitor the actual and expected spread between forward selling prices and purchase costs and processing and shipping expense. Sales contracts are based on prices negotiated with our customers, and generally orders are placed 30 to 60 days ahead of the shipment date. However, financial results may be negatively impacted when forward selling prices fall more quickly than we can adjust purchase prices or when customers fail to meet their contractual obligations. We assess the net realizable value of inventory (“NRV”) each quarter based upon contracted sales orders and estimates of future selling prices. Based on contracted sales and estimates of future selling prices, a 10% decrease in the selling price of inventory would not have had a material NRV impact as of August 31, 2024 and 2023.

Interest Rate Risk

We are exposed to market risk associated with changes in interest rates related to our debt obligations. Our revolving credit facility is subject to variable interest rates and therefore have exposure to changes in interest rates. We may at times use derivative instruments to manage some portion of this risk. Our interest rate swap derivatives are agreements with independent counterparties that provide for payments based on a notional amount and are designed to hedge the variability in cash flows resulting from variable interest rates for a portion of our credit facilities. If market interest rates had changed 10% from actual interest rate levels in fiscal 2024 or 2023, including the effect of our interest rate swaps, the effect on our interest expense and net income would not have been material.

Credit Risk

Credit risk relates to the risk of loss that might occur as a result of non-performance by counterparties of their contractual obligations to take delivery of recycled metal and finished steel products and to make financial settlements of these obligations, or to provide sufficient quantities of scrap metal or payment to settle advances, loans and other contractual receivables in connection with demolition and scrap extraction projects. We manage our exposure to credit risk through a variety of methods, including shipping recycled ferrous metal exports under letters of credit, collection of deposits prior to shipment for certain nonferrous export customers, establishment of credit limits for certain sales on open terms, credit insurance and designation of collateral and financial guarantees securing advances, loans, and other contractual receivables. We have experienced reductions in the availability of credit insurance that we have historically used to cover a portion of our recycled metal and finished steel sales to domestic customers, which reduced availability may increase our exposure to customer credit risk. In addition, in higher or rising commodity price environments, we have experienced proportionately lower credit insurance coverage of applicable customer credit limits, which may increase our exposure to customer credit risk.

Historically, we have shipped almost all of our large shipments of recycled ferrous metal to foreign customers under contracts supported by letters of credit issued or confirmed by banks deemed creditworthy. The letters of credit ensure payment by the customer. As we generally sell export recycled ferrous metal under contracts or orders that generally provide for shipment within 30 to 60 days after the price is agreed, our customers typically do not have difficulty obtaining letters of credit from their banks in periods of rising ferrous prices, as the value of the letters of credit are collateralized by the value of the inventory on the ship. However, in periods of significantly declining prices, or due to country specific currency limitations, our customers may not be able to obtain letters of credit for the full sales value of the inventory to be shipped.

As of August 31, 2024 and 2023, 28% and 38%, respectively, of our accounts receivable balance was covered by letters of credit, and the amount of past due receivables was not material.

Foreign Currency Exchange Rate Risk

We are exposed to foreign currency exchange rate risk, mainly associated with sales transactions and related accounts receivable denominated in the U.S. Dollar by our Canadian subsidiary with a functional currency of the Canadian Dollar. In certain instances, we may use derivatives to manage some portion of this risk. As of August 31, 2024 and 2023, we did not have any derivative contracts to manage our foreign currency exchange rate risk.

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ITEM 8. FINANCIAL STATEMEN TS AND SUPPLEMENTARY DATA

Management’s Annual Report on Internal Control Over Financial Reporting

Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. The Company’s internal control over financial reporting is a process designed by, or under the supervision of, the Company’s principal executive and principal financial officers and effected by the Company’s Board of Directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

The Company’s internal control over financial reporting includes policies and procedures that relate to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of assets of the Company; provide reasonable assurance that transactions are recorded as necessary to permit the preparation of the Company’s consolidated financial statements in accordance with generally accepted accounting principles and that the receipts and expenditures of the Company are being made only in accordance with authorization of the Company’s management and directors; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the Company’s consolidated financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projection of any evaluation of effectiveness to future periods is subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies and procedures may deteriorate.

Management of the Company assessed the effectiveness of the Company’s internal control over financial reporting using the criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on its assessment, management determined that the Company’s internal control over financial reporting was effective as of August 31, 2024.

PricewaterhouseCoopers LLP, the independent registered public accounting firm that audited the Company’s consolidated financial statements included in this Annual Report, also audited the effectiveness of the Company’s internal control over financial reporting as of August 31, 2024, as stated in their report included herein.

Tamara L. Lundgren

Stefano R. Gaggini

Chairman, President and Chief Executive Officer

Senior Vice President and Chief Financial Officer

October 24, 2024

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Report of Independent Regist ered Public Accounting Firm

To the Board of Directors and Shareholders of Radius Recycling, Inc.

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of Radius Recycling, Inc. and its subsidiaries (the “Company”) as of August 31, 2024 and 2023, and the related consolidated statements of operations, of comprehensive income (loss), of equity and of cash flows for each of the three years in the period ended August 31, 2024, including the related notes and financial statement schedule listed in the index appearing under Item 15(a)(2) (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of August 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of August 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended August 31, 2024 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of August 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Basis for Opinions

The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

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RADIUS RECYCLING, INC.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Volume of Ferrous Metal Inventory

As described in Notes 2 and 4 to the consolidated financial statements, the Company’s processed and unprocessed scrap metal inventory was $137 million as of August 31, 2024, of which processed and unprocessed ferrous metal inventory represents a significant portion. The accounting process the Company uses to record ferrous scrap metal quantities relies on significant estimates. With respect to estimating the quantities of unprocessed ferrous scrap metal inventory that are moved into production, management relies on weighed quantities of the processed ferrous material, adjusted for estimated metal recoveries and yields that are based on historical trends and other judgments by management. Actual recoveries and yields can vary depending on product quality, moisture content, and the source of the unprocessed metal. The Company’s estimates are intended to reasonably reflect the quantities of unprocessed ferrous scrap metal that are used in the production of processed ferrous metal. To assist in validating the reasonableness of these estimates, management periodically reviews shrink factors and performs monthly physical inventories. Due to the inherent nature of the Company’s scrap metal inventories, including variations in product density, holding period, and production processes utilized to manufacture the products, physical inventories will not necessarily detect all variances for scrap metal inventory such that estimates of quantities are required. To mitigate this risk, the Company further adjusts its ferrous physical inventories when the volume of a commodity is low and a physical inventory count is deemed to more accurately estimate the remaining volume.

The principal considerations for our determination that performing procedures relating to the volume of ferrous metal inventory is a critical audit matter are a high degree of auditor effort in performing procedures and evaluating audit evidence related to the ferrous metal inventory volumes.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the ferrous metal inventory volumes, including the ferrous metal recoveries and yields. These procedures also included, among others, (i) testing inventory quantities received; (ii) assessing the reasonableness of management’s estimated yields by comparing them to actual yields of ultimate ferrous metal recoveries; (iii) testing ferrous metal inventory shipments; (iv) observing certain of management’s physical inventory counts; (v) assessing rollforward activity between the time of the inventory counts observed and year-end; and (vi) considering whether evidence obtained in other areas of the audit is consistent with management’s estimates related to ferrous metal inventory volumes.

Goodwill Impairment Assessment – One of the Metals Recycling Reporting Units and the Autos Reporting Unit

As described in Notes 2 and 8 to the consolidated financial statements, the Company’s goodwill balance was $13 million as of August 31, 2024. Management evaluates goodwill for impairment annually on July 1 and upon the occurrence of certain triggering events or substantive changes in circumstances that indicate that the fair value of goodwill may be impaired. When performing a quantitative impairment test, management records the amount of goodwill impairment as the excess of a reporting unit’s carrying amount over its fair value, not to exceed the total amount of goodwill allocated to that reporting unit. In the third quarter of fiscal 2024, based primarily on the respective financial and operational performance of the reporting units, as well as the sustained decrease in the Company’s market capitalization, management identified a triggering event for three of its reporting units (two related to metals recycling, and one related to autos). The evaluation resulted in full impairment of the allocated goodwill and an aggregate impairment charge of $216 million, a substantial portion of which related to one of the metals recycling reporting units and the autos reporting unit. When management performs a quantitative goodwill impairment test, they consider both the income approach and market approach to estimate the fair value of the reporting unit. The determination of fair value using the income approach involves the use of estimates and assumptions, including revenue growth rates driven by future ferrous and nonferrous commodity price and sales volume expectations, gross margins, selling, general, and administrative expense relative to total revenues, capital expenditures, working capital requirements, discount rate, tax rate, terminal growth rate, benefits associated with a taxable transaction, and synergistic benefits available to market participants.

The principal considerations for our determination that performing procedures relating to the interim goodwill impairment assessment of one of the metals recycling reporting units and the autos reporting unit is a critical audit matter are (i) the significant judgment by management when developing the fair value estimate of the reporting units; (ii) a high degree of auditor judgment, subjectivity, and

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RADIUS RECYCLING, INC.

effort in performing procedures and evaluating management’s significant assumptions related to gross margins of both reporting units; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s interim goodwill impairment assessment, including controls over the valuation of one of the metals recycling reporting units and the autos reporting unit. These procedures also included, among others, (i) testing management’s process for developing the fair value estimate of the reporting units; (ii) evaluating the appropriateness of the income approach used by management; (iii) testing the completeness and accuracy of underlying data used in the income approach; and (iv) evaluating the significant assumptions used by management related to gross margins. Evaluating management’s assumptions related to gross margins involved evaluating whether the assumption used by management was reasonable considering (i) the current and past performance of the reporting units; (ii) the consistency with external market and industry data; and (iii) whether the assumptions were consistent with evidence obtained in other areas of the audit. Professionals with specialized skill and knowledge were used to assist in evaluating the appropriateness of the income approach.

/s/ PricewaterhouseCoopers LLP

Portland, Oregon

October 24, 2024

We have served as the Company’s auditor since 1976, which includes periods before the Company became subject to SEC reporting requirements.

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RADIUS RECYCLING, INC.

CONSOLIDATED B ALANCE SHEETS

(In thousands, except per share amounts)

August 31,

Assets

Current assets:

Cash and cash equivalents

Accounts receivable, net

Inventories

Refundable income taxes

Prepaid expenses and other current assets

Total current assets

Property, plant and equipment, net

Operating lease right-of-use assets

Investments in joint ventures

Goodwill

Intangibles, net

Deferred income taxes

Other assets

Total assets

Liabilities and Equity

Current liabilities:

Short-term borrowings

Accounts payable

Accrued payroll and related liabilities

Environmental liabilities

Operating lease liabilities

Accrued income taxes

Other accrued liabilities

Total current liabilities

Deferred income taxes

Long-term debt, net of current maturities

Environmental liabilities, net of current portion

Operating lease liabilities, net of current maturities

Other long-term liabilities

Total liabilities

Commitments and contingencies (Note 10)

Radius Recycling (“Radius”) shareholders’ equity:

Preferred stock – 20,000 shares $ 1.00 par value authorized, none issued

Class A common stock – 75,000 shares $ 1.00 par value authorized,

27,839 and 27,312 shares issued and outstanding

Class B common stock – 25,000 shares $ 1.00 par value authorized,

200 and 200 shares issued and outstanding

Additional paid-in capital

Retained earnings

Accumulated other comprehensive loss

Total Radius shareholders’ equity

Noncontrolling interests

Total equity

Total liabilities and equity

See Notes to the Consolidated Financial Statements.

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RADIUS RECYCLING, INC.

CONSOLIDATED STATEM ENTS OF OPERATIONS

(In thousands, except per share amounts)

Year Ended August 31,

Revenues

Operating expense:

Cost of goods sold

Selling, general and administrative

(Income) from joint ventures

Goodwill impairment charges

Other asset impairment charges, net

Restructuring charges and other exit-related activities

Operating income (loss)

Interest expense

Other expense, net

Income (loss) from continuing operations before income taxes

Income tax (expense) benefit

Income (loss) from continuing operations

Loss from discontinued operations, net of tax

Net income (loss)

Net income attributable to noncontrolling interests

Net income (loss) attributable to Radius shareholders

Net income (loss) per share attributable to Radius shareholders:

Basic:

Income (loss) per share from continuing operations

Net income (loss) per share

Diluted:

Income (loss) per share from continuing operations

Net income (loss) per share

Weighted average number of common shares:

Basic

Diluted

See Notes to the Consolidated Financial Statements.

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RADIUS RECYCLING, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands)

Year Ended August 31,

Net income (loss)

Other comprehensive loss, net of tax:

Foreign currency translation adjustments

Cash flow hedges, net

Pension obligations, net

Total other comprehensive loss, net of tax

Comprehensive income (loss)

Less comprehensive income attributable to noncontrolling interests

Comprehensive income (loss) attributable to Radius shareholders

See Notes to the Consolidated Financial Statements.

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RADIUS RECYCLING, INC.

CONSOLIDATED STAT EMENTS OF EQUITY

(In thousands, except per share amounts)

Common Stock

Additional

Accumulated Other

Total Radius

Class A

Class B

Paid-in

Retained

Comprehensive

Shareholders’

Noncontrolling

Total

Amount

Capital

Earnings

Loss

Equity

Interests

Equity

Balance as of August 31, 2021

Net income

Other comprehensive loss, net of tax

Distributions to noncontrolling interests

Share repurchases

Issuance of restricted stock

Restricted stock withheld for taxes

Share-based compensation cost

Dividends ($ 0.75 per common share)

Balance as of August 31, 2022

Net income (loss)

Other comprehensive loss, net of tax

Distributions to noncontrolling interests

Issuance of restricted stock

Restricted stock withheld for taxes

Share-based compensation cost

Dividends ($ 0.75 per common share)

Balance as of August 31, 2023

Net income (loss)

Other comprehensive loss, net of tax

Distributions to noncontrolling interests

Issuance of restricted stock

Restricted stock withheld for taxes

Share-based compensation cost

Dividends ($ 0.75 per common share)

Balance as of August 31, 2024

See Notes to the Consolidated Financial Statements.

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RADIUS RECYCLING, INC.

CONSOLIDATED STATEM ENTS OF CASH FLOWS

(In thousands)

Year Ended August 31,

Cash flows from operating activities:

Net income (loss)

Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities:

Goodwill impairment charges

Other asset impairment charges, net

Depreciation and amortization

Inventory write-downs

Deferred income taxes

Undistributed equity in earnings of joint ventures

Share-based compensation expense

(Gain) loss on disposal of assets, net

Other loss, net

Changes in assets and liabilities, net of acquisitions:

Accounts receivable

Inventories

Income taxes

Prepaid expenses and other current assets

Other long-term assets

Operating lease assets and liabilities

Accounts payable

Accrued payroll and related liabilities

Other accrued liabilities

Environmental liabilities

Other long-term liabilities

Distributed equity in earnings of joint ventures

Net cash provided by (used in) operating activities

Cash flows from investing activities:

Capital expenditures

Acquisitions, net of acquired cash

Proceeds from insurance and sale of assets

Purchase of investment

Maturity of investment

Deposit on land option

Net cash used in investing activities

Cash flows from financing activities:

Borrowings from long-term debt

Repayments of long-term debt

Payment of debt issuance costs

Repurchase of Class A common stock

Taxes paid related to net share settlement of share-based payment awards

Distributions to noncontrolling interests

Dividends paid

Net cash provided by (used in) financing activities

Effect of exchange rate changes on cash

Net change in cash and cash equivalents

Cash and cash equivalents as of beginning of year

Cash and cash equivalents as of end of year

See Notes to the Consolidated Financial Statements.

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RADIUS RECYCLING, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

(In thousands)

Year Ended August 31,

SUPPLEMENTAL DISCLOSURES:

Cash paid (received) during the year for:

Interest

Income taxes, net

Schedule of noncash investing and financing transactions:

Purchases of property, plant and equipment included in liabilities

See Notes to the Consolidated Financial Statements.

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RADIUS RECYCLING, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Note 1 - Nature of Operations

Founded in 1906, Radius Recycling, Inc. (formerly Schnitzer Steel Industries, Inc.), an Oregon corporation, is one of North America’s largest recyclers of ferrous and nonferrous metal, including end-of-life vehicles, and a manufacturer of finished steel products. Radius Recycling, Inc. and its consolidated subsidiaries, together, are referred to as the Company.

The Company acquires and recycles ferrous and nonferrous scrap metal for sale to foreign and domestic metal producers, processors, and brokers, and it procures salvaged vehicles and sells serviceable used auto parts from these vehicles through a network of self-service auto parts stores. Most of these auto parts stores supply the Company’s shredding facilities with auto bodies that are processed into saleable recycled metal products. In addition to the sale of recycled metal products processed at its facilities, the Company provides a variety of recycling and related services. The Company also produces a range of finished steel long products at its electric arc furnace (“EAF”) steel mill using recycled ferrous metal sourced internally from its recycling and joint venture operations and other raw materials.

As of August 31, 2024 , all of the Company’s facilities were located in the United States (“U.S.”) and its territories and Canada.

Note 2 - Summary of Significant Accounting Policies

Basis of Presentation

The Consolidated Financial Statements include the accounts of Radius Recycling and its majority-owned and wholly-owned subsidiaries. The equity method of accounting is used for investments in joint ventures over which the Company has significant influence but does not have effective control. All significant intercompany account balances, transactions, profits, and losses have been eliminated. All transactions and relationships with variable interest entities are evaluated to determine whether the Company is the primary beneficiary of the entities, therefore requiring consolidation. The Company does not have any variable interest entities requiring consolidation. The Consolidated Financial Statements are presented in U.S. Dollars. Certain prior year amounts have been reclassified to conform with current year presentation.

Segment Reporting

The accounting standards for reporting information about operating segments define an operating segment as a component of an enterprise that engages in business activities from which it may earn revenues and incur expenses for which discrete financial information is available that is evaluated regularly by the chief operating decision-maker in deciding how to allocate resources and in assessing performance. The Company’s internal organizational and reporting structure reflects a functionally based, integrated model and includes a single operating and reportable segment.

Cash and Cash Equivalents

Cash and cash equivalents include short-term securities that are not restricted by third parties and have an original maturity date of 90 days or less. Included in accounts payable are book overdrafts representing outstanding payments in excess of funds on deposit of $ 59 million and $ 62 million as of August 31, 2024 and 2023 , respectively.

Accounts Receivable, net

Accounts receivable represent amounts primarily due from customers on product and other sales. These accounts receivable, which are reduced by an allowance for credit losses, are recorded at the invoiced amount and do not bear interest. The Company extends credit to customers under contracts containing customary and explicit payment terms, and payment is generally required within 30 to 60 days of shipment. Nonferrous export sales typically require a deposit prior to shipment. Historically, almost all of the Company’s ferrous export sales have been made with letters of credit. Ferrous and nonferrous metal sales to domestic customers and finished steel sales are generally made on open account, and a portion of these sales are covered by credit insurance.

The Company evaluates the collectibility of its accounts receivable based on a combination of factors, including whether sales were made pursuant to letters of credit or required deposits prior to shipment, the aging of customer receivable balances, the financial condition of the Company’s customers, historical collection rates, and economic trends. Management uses this evaluation to estimate the amount of customer receivables that may not be collected in the future and records a provision for expected credit losses. Accounts are written off when all efforts to collect have been exhausted. The allowance for credit losses was $ 2 million as of both August 31, 2024 and 2023.

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RADIUS RECYCLING, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Also included in accounts receivable are short-term advances to scrap metal suppliers used as a mechanism to acquire unprocessed scrap metal. The advances are generally repaid with scrap metal, as opposed to cash. Repayments of advances with scrap metal are treated as noncash operating activities in the Consolidated Statements of Cash Flows and totaled $ 12 million, $ 13 million, and $ 11 million for the fiscal years ended August 31, 2024, 2023, and 2022 , respectively.

Inventories

The Company’s inventories consist of processed and unprocessed scrap metal (ferrous, nonferrous, and mixed nonferrous recovered joint products arising from the manufacturing process), semi-finished steel products (billets), finished steel products (primarily rebar, wire rod, and merchant bar), used and salvaged vehicles, and supplies. Inventories are stated at the lower of cost and net realizable value. The Company determines the cost of ferrous and nonferrous scrap metal inventories using the average cost method and capitalizes substantially all direct processing costs and facility costs into inventory. The Company allocates material and production costs to joint products using the gross margin method. The Company determines the cost of used and salvaged vehicle inventory at its auto parts stores, which is reported within finished goods, based on the average price the Company pays for a vehicle and capitalizes the vehicle cost and substantially all production costs into inventory. The Company determines the cost of its semi-finished and finished steel product inventories based on average costs and capitalizes all direct and indirect costs of manufacturing into inventory. Indirect costs of manufacturing include general plant costs, maintenance, and facility costs. The Company determines the cost of the substantial majority of its supplies inventory using the average cost method and reduces the carrying value for losses due to obsolescence. Fixed manufacturing costs incurred in periods of abnormally low production are expensed. The Company considers estimated future selling prices when determining the estimated net realizable value of its inventory. As the Company generally sells its recycled ferrous metal under contracts that provide for shipment within 30 to 60 days after the price is agreed, it utilizes the selling prices under committed contracts and sales orders for determining the estimated net realizable value of quantities on hand that will be shipped under these contracts and sales orders.

The accounting process the Company uses to record ferrous scrap metal quantities relies on significant estimates. With respect to estimating the quantities of unprocessed ferrous scrap metal inventory that are moved into production, management relies on weighed quantities of the processed ferrous material, adjusted for estimated metal recoveries and yields that are based on historical trends and other judgments by management. Actual recoveries and yields can vary depending on product quality, moisture content, and the source of the unprocessed metal. The Company’s estimates are intended to reasonably reflect the quantities of unprocessed ferrous scrap metal that are used in the production of processed ferrous metal. To assist in validating the reasonableness of these estimates, management periodically reviews shrink factors and performs monthly physical inventories. Due to the inherent nature of the Company’s scrap metal inventories, including variations in product density, holding period, and production processes utilized to manufacture the products, physical inventories will not necessarily detect all variances for scrap metal inventory such that estimates of quantities are required. To mitigate this risk, the Company further adjusts its ferrous physical inventories when the volume of a commodity is low and a physical inventory count is deemed to more accurately estimate the remaining volume.

Leases

The Company enters into leases to obtain access to real property, machinery, and equipment assets. Most of the Company’s lease obligations relate to real property leases for the Company’s operating sites, including the substantial majority of its auto parts stores, and for the Company’s administrative offices. The Company determines whether an arrangement contains a lease at inception by assessing whether it receives the right to direct the use of and obtain substantially all of the economic benefit from use of the underlying asset. Lease classification, measurement, and recognition are determined at lease commencement, which is the date the underlying asset is available for use by the Company. The accounting classification of a lease is based on whether the arrangement is effectively a financed purchase of the underlying asset (finance lease) or not (operating lease). Leases that, at lease commencement, have a non-cancellable lease term of 12 months or less and do not include an option to either purchase the underlying asset or renew the lease beyond 12 months that the Company is reasonably certain to exercise are classified as short-term leases and are not recognized on the balance sheet.

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RADIUS RECYCLING, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For leases other than short-term leases, the Company recognizes right-of-use assets and lease liabilities based primarily on the present value of future minimum lease payments over the lease term at lease commencement. Right-of-use assets represent the Company’s right to use the underlying asset during the lease term, while lease liabilities represent the Company’s obligation to make future lease payments. The lease term is the non-cancellable period of the lease, together with periods covered by renewal (or termination) options which the Company is reasonably certain to exercise (or not to exercise). Lease payments are discounted to present value using the Company’s incremental borrowing rate unless the discount rate implicit in the lease is readily determinable. The Company’s incremental borrowing rate for each lease is the estimated rate of interest that the Company would have to pay to borrow the aggregate lease payments on a collateralized basis over the lease term. Estimation of the incremental borrowing rate requires judgment by management and reflects an assessment of the Company’s credit standing to derive an implied secured credit rating and corresponding yield curve. Right-of-use assets and lease liabilities are subject to remeasurement after lease commencement when certain events or changes in circumstances arise, such as a change in the lease term due to reassessment of whether the Company is reasonably certain to exercise a renewal or termination option.

For operating leases, lease expense is recognized on a straight-line basis over the lease term. For finance leases, the lease right-of-use asset is amortized on a straight-line basis and interest expense is recognized on the lease liability using the effective interest rate method. Many of the Company’s real property leases contain variable lease payments that depend on an index or a rate, which are included in the measurement of the right-of-use asset and lease liability using the index or rate at lease commencement. Subsequent changes in variable lease payments are recorded as variable lease expenses during the period in which they are incurred. The Company elected a practical expedient to not separate lease and related non-lease components for accounting purposes and, thus, costs related to such non-lease components are disclosed as lease expense. Payments for short-term leases are recognized in the income statement on a straight-line basis over the lease term. See Note 5 - Leases for further detail.

The Company leases machinery assets to customers primarily to facilitate the provision of recycling services. For the periods presented, such lessor arrangements were classified as operating leases, whereby the Company keeps the asset underlying the lease on its balance sheet and depreciates the asset based on its estimated useful life. The Company recognizes lease income for these operating leases on a straight-line basis within revenues in the Consolidated Statements of Operations. As of both August 31, 2024 and 2023 , property, plant and equipment, net, as reported in the Consolidated Balance Sheets, included machinery assets underlying these operating leases with a carrying value of $ 14 million. Lease income derived from these operating leases was not material to any of the periods presented.

Property, Plant and Equipment, net

Property, plant and equipment are recorded at cost. Expenditures for major additions and improvements are capitalized, while routine repair and maintenance costs are expensed as incurred. Interest cost related to the construction of qualifying assets is capitalized as part of the construction costs. When assets are retired or sold, the related cost and accumulated depreciation are removed from the accounts and resulting gains or losses are generally included in operating expense. Gains and losses from sales of assets related to an exit activity are reported within restructuring charges and other exit-related activities in the Consolidated Statements of Operations. Depreciation is recorded on a straight-line basis over the estimated useful lives of the assets. Upon idling an asset, depreciation continues to be recorded. Leasehold improvements are amortized over the shorter of their estimated useful lives or the remaining lease term.

The estimated useful lives assigned to the Company’s property, plant and equipment as of August 31, 2024, were generally as follows:

Useful Life

(in years)

Machinery and equipment

Land improvements

Buildings and leasehold improvements

Software licenses and Enterprise Resource Planning (“ERP”) systems

Office equipment

Prepaid Expenses

The Company’s prepaid expenses, reported within prepaid expenses and other current assets in the Consolidated Balance Sheets, totaled $ 22 million and $ 27 million as of August 31, 2024 and 2023, respectively, and consisted primarily of deposits on capital projects, prepaid insurance, prepaid services, and prepaid property taxes.

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RADIUS RECYCLING, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Other Assets

The Company’s other assets, exclusive of prepaid expenses and assets relating to certain employee benefit plans, consisted primarily of receivables from insurers, advances to a supplier of metals recycling equipment, cash held in a client trust account relating to a legal settlement, certificates of deposit, two equity investments, capitalized implementation costs for cloud computing arrangements, debt issuance costs, notes and other contractual receivables, major spare parts and equipment, and assets held for sale. Other assets are reported within either prepaid expenses and other current assets or other assets in the Consolidated Balance Sheets based on their expected use either during or beyond the current operating cycle of one year from the reporting date. See Note 13 - Employee Benefits for further detail on the Company’s assets relating to employee benefit plans.

Receivables from insurers represent the portion of insured losses expected to be recovered from the Company’s insurers under various insurance policies or from a Qualified Settlement Fund holding settlement amounts deposited by certain insurers of claims against the Company related to the Portland Harbor Superfund site. The receivables are recorded at an amount not to exceed the recorded loss and only if the terms of legally enforceable insurance contracts support that the insurance recovery will not be disputed and is deemed collectible, or if recovery of the loss by the Company from a Qualified Settlement Fund is probable. Receivables from insurers as of each reporting date relate to environmental claims, workers’ compensation claims, and third-party claims. As of August 31, 2024 , receivables from insurers totaled $ 15 million, including $ 13 million relating to environmental claims. As of August 31, 2023 , receivables from insurers totaled $ 14 million, including $ 10 million relating to environmental claims.

Other assets as of August 31, 2024 and August 31, 2023 also included $ 18 million and $ 11 million, respectively, representing advances to a supplier of metals recycling equipment.

Other assets as of August 31, 2023 also included approximately $ 7 million in connection with cash deposited into a client trust account in fiscal 2021 to fund the remediation of a site, a portion of which was previously leased to and operated by an indirect, wholly-owned subsidiary. The cash was deposited into the client trust account by other potentially liable parties in connection with settlement of a lawsuit relating to allocation of the remediation costs, including agreement by the Company’s subsidiary to perform certain remedial actions. During fiscal 2024, the $ 7 million was distributed to the Company from the client trust account for purposes of holding the funds and maximizing returns, each consistent with the terms of the settlement agreement, of which $ 6 million was held in certificates of deposit which mature in July of 2025 and is reported within prepaid expenses and other current assets as of August 31, 2024. See “Other Legacy Environmental Loss Contingencies” within “Contingencies – Environmental” in Note 10 - Commitments and Contingencies for further discussion of this matter.

The Company invested $ 6 million in the equity of a privately-held U.S. waste and recycling entity in fiscal 2017. The investment is accounted for under the guidance for investments in equity securities. In August 2022, the privately-held entity merged with a publicly-traded U.S. entity. During fiscal 2023, the Company recorded $ 5 million of impairment and other adjustments of the equity investment to its fair value, reported within other expense, net on the Consolidated Statement of Operations. As of August 31, 2024 and 2023 , the fair value of the investment reported within prepaid expenses and other current assets in the Consolidated Balance Sheets was less than $ 1 million and $ 1 million, respectively.

Other assets as of August 31, 2024 and 2023 included $ 7 million and $ 5 million, respectively, of capitalized cloud computing implementation costs. The Company’s cloud computing arrangements primarily comprise hosting arrangements which are service contracts, whereby the Company gains remote access to use enterprise software hosted by the vendor or another third party on an as-needed basis for a period of time in exchange for a subscription fee. Subscription fees are usually prepaid and recorded in operating expense over the period that the Company has access to use the software. Implementation costs for cloud computing arrangements are capitalized if certain criteria are met and consist of internal and external costs directly attributable to developing and configuring cloud computing software for its intended use. Amortization of capitalized implementation costs is recorded on a straight-line basis over the term of the cloud computing arrangement, which is the non-cancellable period of the agreement, together with periods covered by renewal options which the Company is reasonably certain to exercise. During fiscal 2023, in connection with the pursuit of an alternative solution, the Company abandoned the implementation of a cloud computing arrangement and recorded a $ 5 million impairment associated with previously capitalized cloud computing arrangement implementation costs.

Debt issuance costs consist primarily of costs incurred by the Company to enter or modify its credit facilities. The Company reports deferred debt issuance costs within other assets in the Consolidated Balance Sheets and amortizes them to interest expense on a straight-line basis over the contractual term of the arrangement.

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RADIUS RECYCLING, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Notes and other contractual receivables consist primarily of advances to entities in the business of extracting scrap metal through demolition and other activities. Repayment of these advances to suppliers is in either cash or scrap metal. The Company performs periodic reviews of its notes and other contractual receivables to identify credit risks and to assess the overall collectibility of the receivables, which typically involves consideration of the value of collateral which in the case of advances to suppliers is generally in the form of scrap metal extracted from demolition and construction projects. A note or other contractual receivable is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due in accordance with the contractual terms of the agreement. If the carrying value of the receivable exceeds its recoverable amount, an impairment is recorded for the difference.

Accounting for Impacts of Involuntar y Events

Assets destroyed or damaged as a result of involuntary events are written off or reduced in carrying value to their salvage value. When recovery of all or a portion of the amount of property damage loss or other covered expenses through insurance proceeds is demonstrated to be probable, a receivable is recorded and offsets the loss or expense up to the amount of the total loss or expense. No gain is recorded until all contingencies related to the insurance claim have been resolved.

On May 22, 2021, the Company experienced a fire at its steel mill in McMinnville, Oregon. Direct physical loss or damage to property from the incident was limited to the mill’s melt shop, with no bodily injuries and no physical loss or damage to other buildings or equipment. The Company experienced loss of business income during the shutdown of the steel mill and the subsequent ramp-up phase which was substantially completed in fiscal 2022. The Company filed insurance claims for the physical loss and damage experienced at the mill's melt shop and business income losses resulting from the matter. In fiscal 2023, the Company reached a full and final settlement with its insurers for its claims, and all insurance proceeds and recovery gains in connection with the Company’s claims had been received and recognized, respectively, as of August 31, 2023. The amount of insurance recovery gains recognized within cost of goods sold on the Consolidated Statements of Operations was $ 27 million and $ 15 million during the years ended August 31, 2023 and 2022, respectively, reflecting recovery of applicable losses including business income losses incurred as a result of the fire.

On December 8, 2021, the Company experienced a fire at its metals recycling facility in Everett, Massachusetts. Direct physical loss or damage to property from the incident was limited to the facility’s shredder building and equipment, with no bodily injuries and no physical loss or damage to property reported at other buildings or equipment. As a result of the fire, shredding operations ceased, while all non-shredding operations at the facility continued, including torching, shearing, separating, and sorting purchased non-shreddable recycled ferrous metals. On January 28, 2022, shredding operations at the facility began ramping up following the replacement and repairs to shredder equipment that had been damaged. In addition, shredding operations temporarily ceased at the facility on June 18, 2022 and, following discussions with the Massachusetts Department of Environmental Protection and the Massachusetts Attorney General’s office, the Company installed a temporary emission capture system and controls that allowed for the resumption of shredding operations on November 11, 2022 and for continued operation during the repair and replacement of the shredder enclosure building. Non-shredding operations at the facility continued during this period. The repair and replacement of most property that experienced physical loss or damage, primarily buildings and improvements, was substantially completed by the end of fiscal 2023. The Company filed insurance claims for the property that experienced physical loss or damage and business income losses resulting from the matter. In fiscal 2024, the Company reached a full and final settlement with its insurers for its claims, and all insurance proceeds and recovery gains in connection with the Company’s claims had been received and recognized, respectively, as of August 31, 2024. The amount of insurance recovery gains recognized within cost of goods sold on the Consolidated Statements of Operations was $ 14 million, $ 16 million, and $ 17 million during the years ended August 31, 2024, 2023, and 2022 , respectively, reflecting recovery of applicable losses including business income losses incurred as a result of the fire.

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RADIUS RECYCLING, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Long-Lived Assets

The Company tests long-lived tangible and intangible assets for impairment at the asset group level, which is determined based on the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities. Operating lease right-of-use assets are considered long-lived assets subject to this impairment testing. For the Company’s metals recycling operations, an asset group generally consists of the regional shredding operation along with surrounding feeder operations, except that the combined Oregon metals recycling and steel manufacturing operations is a single asset group. For the Company’s auto parts operations, generally each auto parts store is an asset group. The Company tests its asset groups for impairment when certain triggering events or changes in circumstances indicate that the carrying value of the asset group may be impaired. If the carrying value of the asset group is not recoverable because it exceeds the Company’s estimate of future undiscounted cash flows from the use and eventual disposition of the asset group, an impairment loss is recognized by the amount the carrying value exceeds its fair value, if any. The impairment loss is allocated to the long-lived assets of the group on a pro rata basis using the relative carrying amounts of those assets, except that the loss allocated to an individual long-lived asset of the group shall not reduce the carrying amount of that asset below its fair value. Fair value is determined using one or more of the income, market, or cost approaches, depending on the nature of the asset group.

With respect to individual long-lived assets, changes in circumstances may merit a change in the estimated useful lives or salvage values of the assets, which are accounted for prospectively in the period of change. For such assets, the useful life is shortened based on the Company’s plans to dispose of or abandon the asset before the end of its original useful life and depreciation is accelerated beginning when that determination is made.

Long-lived asset impairment charges (recoveries) and accelerated depreciation are reported in the Consolidated Statements of Operations within (1) asset impairment charges, net and (2) restructuring charges and other exit-related activities if related to a site closure.

Investments in Joint Ventures

As of August 31, 2024 and 2023, the Company had one 50 %-owned joint venture interest which is accounted for under the equity method of accounting. The joint venture sells recycled metal to the Company’s operations at prices that approximate local market rates, which produces intercompany profit. This intercompany profit is eliminated while the products remain in inventory and is not recognized until the finished products are sold to third parties. As of August 31, 2024, the Company’s investments in equity method joint ventures have generated $ 8 million in cumulative undistributed earnings. See Note 18 - Related Party Transactions for further detail on transactions with joint ventures.

A loss in value of an investment in a joint venture is recognized when the decline is other than temporary. Management considers all available evidence to evaluate the realizable value of its investments including the length of time and the extent to which the fair value has been less than cost, the financial condition and near-term prospects of the joint venture business, and the Company’s intent and ability to retain the investment for a period of time sufficient to allow for any anticipated recovery in fair value. Once management determines that an other-than-temporary impairment exists, the investment is written down to its fair value, which establishes a new cost basis. The Company determines fair value using Level 3 inputs under the fair value hierarchy using an income approach based on a discounted cash flow analysis.

Goodwill and Other Intangible Assets, net

Goodwill represents the excess of the purchase price over the net amount of identifiable assets acquired and liabilities assumed in a business combination measured at fair value. The Company evaluates goodwill for impairment annually on July 1 and upon the occurrence of certain triggering events or substantive changes in circumstances that indicate that the fair value of goodwill may be impaired. Impairment of goodwill is tested at the reporting unit level. A reporting unit is an operating segment or one level below an operating segment (referred to as a “component”). A component of an operating segment is required to be identified as a reporting unit if the component is a business for which discrete financial information is available and segment management regularly reviews its operating results.

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RADIUS RECYCLING, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

When testing goodwill for impairment, the Company has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more-likely-than-not that the estimated fair value of a reporting unit is less than its carrying amount. If the Company elects to perform a qualitative assessment and determines that an impairment is more-likely-than-not, the Company is then required to perform the quantitative impairment test, otherwise no further analysis is required. The Company also may elect not to perform the qualitative assessment and, instead, proceed directly to the quantitative impairment test. When performing the quantitative impairment test, the Company applies a one-step quantitative test and records the amount of goodwill impairment as the excess of a reporting unit’s carrying amount over its fair value, not to exceed the total amount of goodwill allocated to that reporting unit.

When the Company performs a quantitative goodwill impairment test, it considers both the income approach and market approach to estimate the fair value of the reporting unit. The determination of fair value involves the use of estimates and assumptions, including revenue growth rates driven by future ferrous and nonferrous commodity price and sales volume expectations, gross margins, selling, general, and administrative expense relative to total revenues, capital expenditures, working capital requirements, discount rate based on a market-based weighted average cost of capital (“WACC”), tax rate, terminal growth rate, benefits associated with a taxable transaction, and synergistic benefits available to market participants. In addition, to corroborate the reporting unit’s income approach valuation, as well as to estimate the fair value of the Company’s other reporting units, including those with no allocated goodwill, the Company uses a market approach based on earnings multiple data, and it performs a reconciliation of its estimate of the aggregate fair value of all reporting units to the Company’s market capitalization, including consideration of a control premium. See Note 8 - Goodwill and Other Intangible Assets, net for further detail including the recognition of goodwill impairment charges of $ 216 million and $ 39 million during the fiscal years ended August 31, 2024 and 2023, respectively.

The Company tests indefinite-lived intangible assets for impairment by first assessing qualitative factors to determine whether it is necessary to perform a quantitative impairment test. If the Company believes, as a result of its qualitative assessment, that it is more-likely-than-not that the fair value of the indefinite-lived intangible asset is less than its carrying amount, the quantitative impairment test is required. Otherwise, no further testing is required. The Company did no t record impairment charges on indefinite-lived intangible assets in any of the periods presented. See Note 8 - Goodwill and Other Intangible Assets, net for further detail.

Business Acquisitions

The Company recognizes the assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree at the acquisition date, measured at their fair values as of that date. Contingent purchase consideration is recorded at fair value at the date of acquisition. Any excess purchase price over the fair value of the net assets acquired is recorded as goodwill. Within one year from the date of acquisition, the Company may update the value allocated to the assets acquired and liabilities assumed and the resulting goodwill balance as a result of information received regarding the valuation of such assets and liabilities that was not available at the time of purchase. Measuring assets and liabilities at fair value requires the Company to determine the price that would be paid by a third-party market participant based on the highest and best use of the assets or interests acquired. Acquisition costs are expensed as incurred. See Note 7 - Business Acquisitions for further detail.

Restructuring Charges and Other Exit-Related Activities

Restructuring charges consist of severance, contract termination, and other restructuring-related costs. A liability for severance costs is typically recognized when the plan of termination has been communicated to the affected employees and is measured at its fair value at the communication date. A liability for contract termination or other restructuring-related costs is measured at its fair value in the period in which the liability is incurred. Exit-related activities consist primarily of asset impairments in connection with closure of certain operations and sites, net of gains on exit-related disposals.

Accrued Workers’ Compensation Costs

The Company is self-insured for the majority of workers’ compensation claims with exposure limited by various stop-loss insurance policies. The Company estimates the costs of workers’ compensation claims based on the nature of the injury incurred and on guidelines established by the applicable state. An accrual is recorded based upon the amount of unpaid claims as of the balance sheet date. Accrued amounts recorded for individual claims are reviewed periodically as treatment progresses and adjusted to reflect additional information that becomes available. The estimated cost of claims incurred but not reported is included in the accrual. The Company accrued $ 5 million for the estimated cost of unpaid workers’ compensation claims as of both August 31, 2024 and 2023, which is included in other accrued liabilities in the Consolidated Balance Sheets, with corresponding workers’ compensation insurance receivables of $ 2 million as of both August 31, 2024 and 2023 which is included in other current assets.

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RADIUS RECYCLING, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Environmental Liabilities

The Company estimates future costs for known environmental remediation requirements and accrues for them on an undiscounted basis when it is probable that the Company has incurred a liability and the related costs can be reasonably estimated but the timing of incurring the estimated costs is unknown. The Company considers various factors when estimating its environmental liabilities, and it evaluates the adequacy of these liabilities on a quarterly basis. Adjustments to the liabilities are recorded to selling, general, and administrative expense in the Consolidated Statements of Operations when additional information becomes available that affects the estimated costs to study or remediate any environmental issues or expenditures are made for which liabilities were established. Legal investigation and defense costs incurred in connection with environmental contingencies are expensed as incurred.

When only a wide range of estimated amounts can be reasonably established and no other amount within the range is a better estimate than another, the low end of the range is recorded in the financial statements. In a number of cases, it is possible that the Company may receive reimbursement through insurance or from other third parties for a site or matter. In these situations, recoveries of environmental remediation costs from other parties are recognized when realization of the claim for recovery is deemed probable. The amounts recorded for environmental liabilities are reviewed periodically as assessment and remediation progresses at individual sites or for particular matters and adjusted to reflect additional information that becomes available. Due to evolving remediation technology, changing regulations, possible third-party contributions, the subjective nature of the assumptions used, and other factors, amounts accrued could vary significantly from amounts paid. See “Contingencies – Environmental” in Note 10 - Commitments and Contingencies for further detail.

Loss Contingencies

The Company is subject to certain legal proceedings and contingencies in addition to those related to environmental liabilities discussed above in this Note, the outcomes of which are subject to significant uncertainty. The Company accrues for estimated losses if it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred. The Company uses judgment and evaluates whether a loss contingency arising from litigation or an unasserted claim should be disclosed or recorded. The outcome of legal proceedings and other contingencies is inherently uncertain and often difficult to estimate. Accrued legal contingencies are reported within other accrued liabilities in the Consolidated Balance Sheets. See “Contingencies – Other” in Note 10 - Commitments and Contingencies for further detail.

Financial Instruments

The Company’s financial instruments include primarily cash and cash equivalents, certificates of deposit, accounts receivable, accounts payable, and debt and derivative contracts. The Company uses the market approach to value its financial assets and liabilities, determined using available market information. The net carrying amounts of cash and cash equivalents, certificates of deposit, accounts receivable, and accounts payable approximate fair value due to the short-term nature of these instruments. For long-term debt, which is primarily at variable interest rates, fair value is estimated using observable inputs (Level 2) and approximates the carrying value. Derivative contracts are reported at fair value.

Fair Value Measurements

Fair value is measured using inputs from the three levels of the fair value hierarchy. Classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement. The three levels are described as follows:

Level 1 – Unadjusted quoted prices in active markets for identical assets and liabilities.

Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the determination of the fair value of the asset or liability, either directly or indirectly.

Level 3 – Unobservable inputs that are significant to the determination of the fair value of the asset or liability.

When developing fair value measurements, the Company uses quoted market prices whenever available or seeks to maximize the use of observable inputs and minimize the use of unobservable inputs when quoted market prices are not available.

Derivatives

The Company records derivative instruments at fair value in the Consolidated Balance Sheets, and changes in their fair value are recognized in either other comprehensive income (loss) in the Consolidated Statements of Comprehensive Income (Loss) or net income (loss) in the Consolidated Statements of Operations, as applicable, depending on the nature of the underlying exposure, whether the

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derivative has been designated as a hedge and, if designated as a hedge, whether the hedge is expected to be highly effective. For cash flow hedges, such as the interest rate swap transactions entered by the Company in fiscal 2023, a formal assessment is made, both at the hedge’s inception and on an ongoing basis, to determine whether the derivatives that are designated as hedging instruments have been highly effective in offsetting changes in the cash flows of hedged items and whether those derivatives may be expected to remain highly effective in future periods. Changes in the fair value of a derivative that is qualified, designated, and highly effective as a cash flow hedge are recorded in other comprehensive income (loss) and are reclassified to earnings in the period in which earnings are impacted by the hedged item. When it is determined that a derivative is not highly effective as a hedge or that it has ceased to be a highly effective hedge, the Company discontinues hedge accounting prospectively. When available, quoted market prices or prices obtained through external sources are used to measure a derivative instrument’s fair value. The fair value of these instruments is a function of underlying forward interest rates, related volatility, counterparty creditworthiness, and the duration of the contracts. The Company has elected an accounting policy to classify the cash flows from its interest rate swap derivatives designated in qualifying cash flow hedges as cash flows from operating activities in the Consolidated Statements of Cash Flows, consistent with the classification of cash flows from the hedged item. See Note 15 - Derivative Financial Instruments for further detail.

Derivative contracts for commodities used in normal business operations that are settled by physical delivery, among other criteria, are eligible for and may be designated as normal purchases and normal sales. Contracts that qualify as normal purchases or normal sales are not marked-to-market. The Company does not use derivative instruments for trading or speculative purposes.

Foreign Currency Translation and Transactions

Assets and liabilities of the Company’s operations in Canada are translated into U.S. dollars at the period-end exchange rate, revenues and expenses of these operations are translated into U.S. dollars at the average exchange rate for the period, and cash flows of these operations are translated into U.S. dollars using the exchange rates in effect at the time of the cash flows. Translation adjustments are not included in determining net income for the period, but are recorded in accumulated other comprehensive income, a separate component of shareholders’ equity. Foreign currency transaction gains and losses are generated from the effects of exchange rate changes on transactions denominated in a currency other than the functional currency. Gains and losses on foreign currency transactions are generally included in determining net income for the period. The Company reports these gains and losses within other expense, net in the Consolidated Statements of Operations. Net realized and unrealized foreign currency transaction gains and losses were not material for fiscal 2024, 2023, or 2022 .

Common Stock

Each share of Class A and Class B common stock is entitled to one vote. Additionally, each share of Class B common stock may be converted to one share of Class A common stock. As such, the Company reserves one share of Class A common stock for each share of Class B common stock outstanding. There are currently no meaningful distinctions between the rights of holders of Class A shares and Class B shares.

Share Repurchases

The Company accounts for the repurchase of stock at par value. All shares repurchased are deemed retired. Upon retirement of the shares, the Company records the difference between the weighted average cost of such shares and the par value of the stock as an adjustment to additional paid-in capital, with the excess recorded to retained earnings when additional paid-in capital is not sufficient.

Revenue Recognition

The Company recognizes revenue upon satisfying its promises to transfer goods or services to customers under the terms of its contracts. Nearly all of these promises, referred to as performance obligations, consist of the transfer of physical goods, including recycled ferrous and nonferrous metal, auto bodies, auto parts, and finished steel products, to customers. These performance obligations are satisfied at the point in time the Company transfers control of the goods to the customer, which in nearly all cases is when title to and risk of loss of the goods transfer to the customer. The timing of transfer of title and risk of loss is dictated by customary or explicitly stated contract terms. For example, the Company recognizes revenue on partially loaded bulk shipments of recycled ferrous metal when contractual terms support revenue recognition based on transfer of title and risk of loss. The majority of the Company’s sales involve transfer of control to the customer, and thus revenue recognition, before delivery to the customer’s destination; for example, upon release of the goods to the shipper. The Company’s bill-and-hold arrangements involve transfer of control to the customer when the goods have been segregated from other inventory at the Company’s facility and are ready for physical transfer to the customer. Shipping and handling activities that occur after a customer has obtained control of a good are accounted for as fulfillment costs rather than an additional promise in a contract. As such, shipping and handling consideration (freight revenue) is recognized when control of the goods transfers to the customer, and freight expense is accrued to cost of goods sold when the related revenue is recognized.

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RADIUS RECYCLING, INC.

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In certain regional markets, the Company enters into contracts whereby it arranges for, or brokers, the transfer of recyclable material between suppliers and end customers. For transactions in which the Company obtains substantive control of the material before the goods are transferred to the end customer, for example by arranging for the processing or warehousing of the material, the Company recognizes revenue equal to the gross amount of the consideration it expects to receive from the customer (as principal). Alternatively, for transactions in which the Company does not obtain substantive control of the material before the product is transferred to the end customer, the Company recognizes revenue equal to the net amount of the consideration it expects to retain after paying the supplier for the purchase of the material (as agent). The Company is the agent in the transaction for the substantial majority of brokerage arrangements.

Nearly all of the Company’s sales contracts reflect market pricing at the time the contract is executed, are one year or less, and generally provide for shipment within 30 to 60 days after the price has been agreed upon with the customer. The Company’s retail auto parts sales are at listed prices and are recognized at the point of sale.

The Company recognizes revenue based on contractually stated selling prices and quantities shipped, net of sales tax, and adjusted for estimated claims and discounts. Claims are customary in the recycled metal industry and arise from variances in the quantity or quality of delivered products. Revenue adjustments may be required if the settlement of claims exceeds original estimates. Discounts offered to certain finished steel customers qualify as variable consideration as the discounts are contingent upon future events. Variable consideration arising from discounts is recognized upon the transfer of finished steel products to customers based upon either the expected value or the most likely amount and was not material for each of the years ended August 31, 2024, 2023, and 2022. The Company experiences very few sales returns and, therefore, no material provisions for returns have been made when sales are recognized. For each of the years ended August 31, 2024, 2023, and 2022 , revenue adjustments related to performance obligations that were satisfied in previous periods were not material.

Advertising Costs

The Company expenses advertising costs when incurred. Advertising expense was $ 6 million , $ 5 million , and $ 6 million for the years ended August 31, 2024, 2023, and 2022 , respectively.

Share-Based Compensation

The Company estimates the grant-date fair value of stock-based compensation awards based on the market closing price of the underlying Class A common stock on the date of grant, except for performance share awards with a total shareholder return (“TSR”) market condition for which the Company estimates the grant-date fair value using a Monte-Carlo simulation model. The Company recognizes compensation cost for all awards, net of estimated forfeitures, over the requisite service period. Share-based compensation cost is based on the grant-date fair value as described above, except for performance share awards with a non-market performance condition. For these awards, compensation cost is based on the probable outcome of achieving the specified performance conditions. The Company reassesses whether achievement of the performance condition is probable at each reporting date and, if probable, the level of achievement. See Note 14 - Share-Based Compensation for further detail.

Income Taxes

Income taxes are accounted for using the asset and liability method. This requires the recognition of taxes currently payable or refundable and the recognition of deferred tax assets and liabilities for the future tax consequences of events that are recognized in one reporting period in the Consolidated Financial Statements but in a different reporting period on the tax returns. Tax credits are recognized as a reduction of income tax expense in the year the credit arises. Valuation allowances are recorded to reduce deferred tax assets when it is more-likely-than-not that a tax benefit will not be realized. The Company assesses the realizability of its deferred tax assets on a quarterly basis through an analysis of potential sources of future taxable income, including prior year taxable income available to absorb a carryback of tax losses, reversals of existing taxable temporary differences, tax planning strategies, and forecasts of taxable income. The Company considers all negative and positive evidence, including the weight of the evidence, to determine if valuation allowances against deferred tax assets are required. Tax benefits arising from uncertain tax positions are recognized when it is more-likely-than-not that the position will be sustained upon examination by the relevant tax authorities. The amount recognized in the financial statements is the largest amount of tax benefit that is greater than 50 percent likely of being realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. The Company recognizes interest and penalties, if any, related to uncertain tax positions in income tax expense. See Note 16 - Income Taxes for further detail.

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RADIUS RECYCLING, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Net Income (Loss) Per Share

Basic net income (loss) per share attributable to Radius shareholders is computed by dividing net income (loss) attributable to Radius shareholders by the weighted average number of outstanding common shares during the period presented including vested deferred stock units (“DSUs”) and restricted stock units (“RSUs”) meeting certain criteria. Diluted net income (loss) per share attributable to Radius shareholders is computed by dividing net income (loss) attributable to Radius shareholders by the weighted average number of common shares outstanding, assuming dilution. Potentially dilutive common shares include the assumed vesting of DSU, RSU, and performance share awards using the treasury stock method. Net income (loss) attributable to noncontrolling interests is deducted from income (loss) from continuing operations to arrive at income (loss) from continuing operations attributable to Radius shareholders for the purpose of calculating income (loss) per share from continuing operations attributable to Radius shareholders. See Note 17 - Net Income (Loss) Per Share for further detail.

Use of Estimates

The preparation of the Company’s Consolidated Financial Statements in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements and reported amounts of revenue and expenses during the reporting period. Examples include revenue recognition; the allowance for credit losses; estimates of contingencies, including environmental liabilities and other legal liabilities; goodwill, long-lived asset and indefinite-lived intangible asset valuation; valuation of equity investments; valuation of certain share-based awards; other asset valuation; inventory measurement and valuation; pension plan assumptions; and the assessment of the valuation of deferred income taxes and income tax contingencies. Actual results may differ from estimated amounts.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to significant concentration of credit risk consist primarily of cash and cash equivalents, accounts receivable and derivative financial instruments. The majority of cash and cash equivalents is maintained with major financial institutions. Balances with these and certain other institutions exceeded the Federal Deposit Insurance Corporation insured amount of $ 250 thousand as of August 31, 2024 . Concentration of credit risk with respect to accounts receivable is limited because a large number of geographically diverse customers make up the Company’s customer base. The Company controls credit risk through credit approvals, credit limits, credit insurance, letters of credit or other collateral, cash deposits, and monitoring procedures. The Company is exposed to a residual credit risk with respect to open letters of credit by virtue of the possibility of the failure of a bank providing a letter of credit. The counterparties to the Company's derivative financial instruments are major financial institutions.

Note 3 - Recent Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2023-07 (“ASU 2023-07”), Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, amending reportable segment disclosure requirements to include disclosure of incremental segment information on an annual and interim basis. Among the disclosure enhancements are new disclosures regarding significant segment expenses that are regularly provided to the chief operating decision-maker and included within each reported measure of segment profit or loss, as well as other segment items bridging segment revenue to each reported measure of segment profit or loss. The amendments in ASU 2023-07 are effective for the Company’s fiscal 2025, and interim periods within the Company’s fiscal 2026, and are applied retrospectively. Early adoption is permitted. As the amendments apply to reportable segment disclosures only, the Company does not expect adoption to have a material impact on its consolidated financial statements.

In December 2023, the FASB issued Accounting Standards Update 2023-09 (“ASU 2023-09”), Income Taxes (Topic 740): Improvement to Income Tax Disclosures, amending income tax disclosure requirements for the effective tax rate reconciliation and income taxes paid. The amendments in ASU 2023-09 are effective beginning in the Company’s fiscal 2026 and are applied prospectively. Early adoption and retrospective application of the amendments are permitted. As the amendments apply to income tax disclosures only, the Company does not expect adoption to have a material impact on its consolidated financial statements.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Note 4 - Inventories

Inventories consisted of the following as of August 31 (in thousands):

Processed and unprocessed scrap metal

Semi-finished goods

Finished goods

Supplies

Inventories

Note 5 - Leases

The Company’s operating leases for real property underlying certain auto parts stores, metals recycling facilities, and administrative offices generally have non-cancellable lease terms of 5 to 10 years , many of which contain multiple renewal options for a further 5 to 20 years . Renewal options which the Company is reasonably certain to exercise are included in the measurement of lease term. The Company’s finance leases and other operating leases involve primarily transportation equipment assets, have non-cancellable lease terms of less than 10 years and usually do not include renewal options.

The Company’s fiscal 2024 total lease cost was $ 41 million, consisting primarily of operating lease expense of $ 26 million and short-term lease expense of $ 11 million. The Company’s fiscal 2023 and fiscal 2022 total lease cost was $ 38 million and $ 36 million, respectively, consisting primarily of operating lease expense of $ 25 million and short-term lease expense of $ 10 million in both periods. The other components of the Company’s total lease cost for each of fiscal 2024, 2023 and 2022, including finance lease amortization and interest expense, variable lease expense, and sublease income, were not material both individually and in aggregate. The substantial majority of the Company’s total lease cost for each of fiscal 2024, 2023, and 2022 is presented within cost of goods sold in the Consolidated Statements of Operations.

Finance lease assets and liabilities consisted of the following as of August 31 (in thousands):

Balance Sheet Classification

Assets:

Finance lease right-of-use assets (1)

Property, plant and equipment, net

Liabilities:

Finance lease liabilities - current

Short-term borrowings

Finance lease liabilities - noncurrent

Long-term debt, net of current maturities

Total finance lease liabilities

Presented net of accumulated amortization of $ 5 million and $ 6 million as of August 31, 2024 and 2023 , respectivel y.

The weighted average remaining lease terms and weighted average discount rates for the Company’s leases as of August 31:

Weighted Average

Remaining Lease

Term (Years)

Weighted Average

Discount Rate

Weighted Average

Remaining Lease

Term (Years)

Weighted Average

Discount Rate

Operating leases

Finance leases

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RADIUS RECYCLING, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Maturities of lease liabilities by fiscal year as of August 31, 2024 were as follows (in thousands):

Year Ending August 31,

Finance Leases

Operating Leases

Thereafter

Total lease payments

Less amounts representing interest

Total lease liabilities

Less current maturities

Lease liabilities, net of current maturities

Supplemental cash flow information and non-cash activity related to leases are as follows (in thousands):

Year Ended August 31,

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows for operating leases

Operating cash flows for finance leases

Financing cash flows for finance leases

Lease liabilities arising from obtaining right-of-use assets (1) :

Operating leases

Finance leases

Amounts include new leases and adjustments to lease balances as a result of remeasurement.

Note 6 - Property, Plant and Equipment, net

Property, plant and equipment, net consisted of the following as of August 31 (in thousands):

Machinery and equipment

Land and improvements

Buildings and leasehold improvements

Software licenses and ERP systems

Office equipment

Construction in progress

Property, plant and equipment, gross

Less accumulated depreciation

Property, plant and equipment, net (1)

Property, plant and equipment, net included $ 20 million and $ 21 million as of August 31, 2024 and 2023 , respectively, related to the Company’s Canadian operations.

Depreciation expense for property, plant and equipment, which includes amortization expense for finance lease right-of-use assets, was $ 90 million , $ 84 million , and $ 72 million for the years ended August 31, 2024, 2023, and 2022, respectively. See Note 5 - Leases for additional disclosure on finance leases. Interest cost related to the construction of qualifying assets capitalized as part of the construction costs were not material in any of the periods presented.

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RADIUS RECYCLING, INC.

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Note 7 - Business Acquisitions

Fiscal 2023 Business Acquisition

On November 18, 2022 , the Company used cash on hand and borrowings under existing credit facilities to acquire the operating assets of ScrapSource, a recycling services company that provides solutions for industrial companies that generate scrap metal from their manufacturing process. The acquired business expands the Company's national recycling services operations, giving rise to expected benefits supporting the amount of acquired goodwill. The total purchase consideration of approximately $ 25 million was allocated to the assets acquired and liabilities assumed based on their respective estimated fair values on the date of the acquisition.

The following table summarizes the fair values of the assets acquired and liabilities assumed by the Company as of the November 18, 2022 acquisition date (in thousands):

Operating lease right-of-use assets

Goodwill (1)

Other intangible assets

Other assets

Total assets acquired

Operating lease liability

Total liabilities assumed

Net assets acquired

All of the acquired goodwill is tax deductible.

The following table summarizes the purchase price allocation to the identifiable intangible assets and their estimated useful lives as of the November 18, 2022 acquisition date (in thousands):

Useful Life

Supplier relationships

Non-compete intangible assets

Customer relationships

The results of operations for the acquired ScrapSource business beginning as of the November 18, 2022 acquisition date are included in the accompanying consolidated financial statements. For the fiscal year ended August 31, 2023, the revenues and net income contributed by the acquired ScrapSource business and reported in the Consolidated Statements of Operations, as well as the prior fiscal year unaudited pro forma amounts of revenue and net income, were not material to the financial statements taken as a whole.

Fiscal 2022 Business Acquisitions

On October 1, 2021 , the Company used cash on hand and borrowings under existing credit facilities to acquire eight metals recycling facilities across Mississippi, Tennessee, and Kentucky from Columbus Recycling, a provider of recycled ferrous and nonferrous metal products and recycling services. Combined with the Company’s regional metals recycling facilities in Georgia, Alabama, and Tennessee, the acquired operations offer additional recycling products, services, and logistics solutions to customers and suppliers across the Southeast, giving rise to expected benefits supporting the amount of acquired goodwill. The total purchase consideration of $ 117 million was allocated to the assets acquired and liabilities assumed based on their respective estimated fair values on the date of the acquisition. The results of operations for the acquired Columbus Recycling business beginning as of the October 1, 2021 acquisition date are included in the accompanying consolidated financial statements.

On April 29, 2022 , the Company used cash on hand and borrowings under existing credit facilities to acquire two recycling facilities in the greater Atlanta, Georgia metropolitan area, including a metal shredding operation and recycled auto-parts center from the previous owners of Encore Recycling. Combined with the Company’s existing regional metals recycling facilities and recycled auto-parts centers, the acquired operations offer additional recycling products, services, and logistics solutions to customers and suppliers across portions of the Southeast, giving rise to expected benefits supporting the amount of acquired goodwill. The total purchase consideration of $ 64 million was allocated to the assets acquired and liabilities assumed based on their respective estimated fair values on the date of the acquisition. The results of operations for the acquired Encore Recycling business beginning as of the April 29, 2022 acquisition date are included in the accompanying consolidated financial statements.

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RADIUS RECYCLING, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Unaudited Pro Forma Information

The following unaudited pro forma information presents the effect on the consolidated financial results of the Company of the Columbus Recycling and Encore Recycling businesses acquired during fiscal 2022 as though the businesses had been acquired as of the beginning of fiscal 2021 (in thousands):

Year Ended August 31,

Revenues

Net income

Net income attributable to Radius shareholders

There are no individually material, nonrecurring pro forma adjustments directly attributable to the business combinations included in these pro forma revenues and earnings.

The information included in the pro forma amounts is derived from historical information obtained from the sellers of the businesses. These pro forma results are not necessarily indicative of what actual results would have been had these acquisitions occurred as of the beginning of fiscal 2021. In addition, the pro forma results are not intended to be a projection of future results and do not reflect any synergies that may be achieved from combining operations.

Note 8 - Goodwill and Other Intangible Assets, net

Goodwill

In the fourth quarter of fiscal 2024, the Company performed the annual goodwill impairment test as of July 1, 2024 . As of the testing date, the balance of the Company’s goodwill was $ 13 million, which was allocated to one reporting unit, a recycling services operation. The Company elected to perform the qualitative assessment for this reporting unit and concluded that it was not more likely than not that the fair value of the reporting unit was less than its carrying value as of the testing date, and, therefore, no further impairment testing was required.

Fiscal 2024 Goodwill Impairment

In the third quarter of fiscal 2024, the Company identified a triggering event that indicated the goodwill allocated to certain of the Company’s reporting units may be impaired. Prior to the third quarter of fiscal 2024, the Company had most recently performed the quantitative impairment test for goodwill carried by three of its reporting units, consisting of two regional metals recycling operations and its network of auto parts stores, as of July 1, 2023, as described under the “Fiscal 2023 Impairment” subheading within this Note 8, below.

Based primarily on the respective financial and operational performance of certain of the Company’s reporting units with allocated goodwill, as well as the sustained decrease in the Company’s market capitalization beginning near the end of the second fiscal quarter of fiscal 2024, and substantially maintained throughout March and April 2024, the Company identified a triggering event and performed an interim impairment test. As of the May 1, 2024 testing date, the balance of the Company’s goodwill was $ 229 million, which was allocated among four reporting units. Three of the reporting units, which consist of two regional metals recycling operations and the Company’s network of auto parts stores, were allocated an aggregate of $ 216 million of goodwill. The Company performed a quantitative impairment test for goodwill allocated to these three reporting units to identify potential impairment and measure an impairment loss, if necessary.

For the two metals recycling reporting units and the autos reporting unit subject to the quantitative impairment test as of May 1, 2024, the estimated fair value of each reporting unit was less than its carrying amount, resulting in full impairment of the allocated goodwill and an aggregate impairment charge of $ 216 million.

The projections used in the income approach took into consideration, as applicable, the impact of recent and current market conditions for ferrous and nonferrous recycled metals and retail auto parts, the cost of obtaining adequate supply flows of scrap metal including end-of-life vehicles, and recent trends in production and other operating costs. The projections assumed a recovery of operating margins from the levels experienced at the measurement date over a multi-year period. The WACC rate used in the income approach valuation ranged from 14.5 % to 15.0 %. The terminal growth rate used was 2 %. A reporting-unit-specific risk premium is embedded in the WACC to reflect the perceived level of uncertainty inherent in expected future cash flows. As part of the goodwill impairment test, the Company performed a reconciliation of its market capitalization to the aggregated estimated fair value of all reporting units, including consideration of a control premium.

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RADIUS RECYCLING, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Fiscal 2023 Goodwill Impairment

In the fourth quarter of fiscal 2023, the Company performed the annual goodwill impairment test as of July 1, 2023. As of the testing date, the balance of the Company’s goodwill was $ 269 million, which was allocated among four reporting units. All of the approximately $ 13 million of goodwill carried by one of the reporting units related to the business acquisition that was completed in fiscal 2023. The Company elected to perform the qualitative assessment for this reporting unit and concluded that it was not more likely than not that the fair value of the reporting unit was less than its carrying value. The remaining $ 256 million of goodwill as of the testing date was allocated among three reporting units, which consist of two regional metals recycling operations and the Company's network of auto parts stores. Based primarily on the respective financial and operational performance of each of these three reporting units and the Company overall, as well as the year-over-year decrease in the Company’s market capitalization as of the testing date, the Company elected to not perform the qualitative assessment and to proceed directly to the quantitative impairment test for goodwill allocated to the three reporting units to identify potential impairment and measure an impairment loss, if necessary.

For one of the metals recycling reporting units and the autos reporting unit subject to the quantitative impairment test, the estimated fair value of the reporting unit exceeded its carrying amount by approximately 24 % and 33 %, respectively, as of July 1, 2023. For the other metals recycling reporting unit, the estimated fair value of the reporting unit was less than its carrying amount, resulting in a partial impairment of goodwill of $ 39 million.

The projections used in the income approach took into consideration, as applicable, the impact of recent and current market conditions for ferrous and nonferrous recycled metals and retail auto parts, the cost of obtaining adequate supply flows of scrap metal including end-of-life vehicles, and recent trends in production and other operating costs. The projections assumed a recovery of operating margins from the levels experienced at the measurement date over a multi-year period. The WACC rate used in the income approach valuation ranged from 13.6 % to 13.7 %. The terminal growth rate used was 2 %. A reporting-unit-specific risk premium is embedded in the WACC to reflect the perceived level of uncertainty inherent in each reporting unit's expected future cash flows. As part of the goodwill impairment test, the Company performed a reconciliation of its market capitalization to the aggregated estimated fair value of all reporting units, including consideration of a control premium.

The gross change in the carrying amount of goodwill for the years ended August 31, 2024 and 2023 was as follows (in thousands):

Goodwill

Balance as of September 1, 2022

Additions (1)

Measurement period adjustments (2)

Impairments

Foreign currency translation adjustment

Balance as of August 31, 2023

Impairments

Foreign currency translation adjustment

Balance as of August 31, 2024

Additions to goodwill in fiscal 2023 relate to the ScrapSource business acquired on November 18, 2022. All additions are presented exclusive of measurement period adjustments. See Note 7 - Business Acquisitions.

Measurement period adjustments in fiscal 2023 relate to the acquired ScrapSource and Encore Recycling businesses.

Accumulated goodwill impairment charges were $ 726 million as of August 31, 2024.

75 / Radius Recycling, Inc. Form 10-K Fiscal 2024

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RADIUS RECYCLING, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Other Intangible Assets, net

The following table presents the Company’s other intangible assets as of August 31 (in thousands):

Gross

Carrying

Amount

Accumulated

Amortization

Net

Gross

Carrying

Amount

Accumulated

Amortization

Net

Supplier relationships

Covenants not to compete

Customer relationships

Indefinite-lived intangibles (1)

Software assets

Total

Indefinite-lived intangibles include previously acquired trade names and certain permits and licenses.

See Note 7 - Business Acquisitions for information regarding intangible assets acquired in business combinations during the years ended August 31, 2023 and 2022. Total intangible asset amortization expense was $ 6 million in each of the years ended August 31, 2024 and 2023 , and was $ 3 million for the year ended August 31, 2022 . There were no impairments of amortized intangible assets recognized in the periods presented.

The estimated amortization expense, based on current intangible asset balances, during the next five fiscal years and thereafter is as follows (in thousands):

Years Ending August 31,

Estimated

Amortization

Expense

Thereafter

Total

Note 9 - Debt

Debt consisted of the following as of August 31 (in thousands):

Bank revolving credit facilities, interest primarily at SOFR plus a spread

Finance lease liabilities

Other debt obligations

Total debt

Less current maturities

Debt, net of current maturities

The Company’s senior secured revolving credit facilities provide for $ 800 million and C$ 15 million in revolving loans maturing in August 2027 . The $ 800 million credit facility includes a $ 50 million sublimit for letters of credit, a $ 25 million sublimit for swing line loans, and a $ 50 million sublimit for multicurrency borrowings. On June 17, 2024, the Company and certain of its subsidiaries entered into the Fourth Amendment (the “Fourth Amendment”) to its Third Amended and Restated Credit Agreement, dated as of April 6, 2016, by and among the Company, as the U.S. Borrower, Schnitzer Steel Canada, Ltd., as the Canadian Borrower, the subsidiaries of the Company party thereto (the “Guarantors”), Bank of America N.A., as administrative agent and the other lenders party thereto (as amended prior to the Fourth Amendment, the “Existing Credit Agreement”, the Existing Credit Agreement, as amended pursuant to the Fourth Amendment, the “Amended Credit Agreement”).

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RADIUS RECYCLING, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The principal changes to the Existing Credit Agreement effected by the Fourth Amendment are (i) the removal of the consolidated fixed charge coverage ratio for each of the fiscal quarters ending May 31, 2024 through February 28, 2025, (ii) the introduction of a minimum consolidated interest coverage ratio of 2.00 to 1.00 for the fiscal quarter ending May 31, 2024, and 1.25 to 1.00 for the fiscal quarter ending February 28, 2025, and (iii) the introduction of a minimum consolidated asset coverage ratio of 1.00 to 1.00 for each of the fiscal quarters ending May 31, 2024 through February 28, 2025. The Company incurred $ 2 million in debt issuance costs in connection with the Amended Credit Agreement, which are amortized to interest expense over the remaining term of the arrangement.

The Fourth Amendment also revised the applicable interest rates under the facility which are based, at the Company’s option, on either the Secured Overnight Financing Rate (“SOFR”) (or the Term Canadian Overnight Repo Rate Average “CORRA” for C$ loans), plus a spread of between 1.50 % and 2.50 %, with the amount of the spread based on a pricing grid tied to the Company’s ratio of consolidated net funded debt to EBITDA (as defined by the credit agreement), or the greater of (a) the prime rate, (b) the federal funds rate plus 0.50 % or (c) the daily rate equal to Term SOFR plus 1.00 %, in each case, plus a spread of between 0.50 % and 1.50 % based on a pricing grid tied to the Company’s consolidated net funded debt to EBITDA ratio. In addition, commitment fees are payable on the unused portion of the credit facilities at rates between 0.175 % and 0.350 % based on a pricing grid tied to the Company’s ratio of consolidated net funded debt to EBITDA.

As of August 31, 2024 and 2023, borrowings outstanding under the credit facilities were $ 394 million and $ 230 million respectively. The weighted average interest rate on amounts outstanding under the credit facilities was 8.0 % and 7.2 % as of August 31, 2024 and 2023, respectively.

The credit agreement contains various representations and warranties, events of default, and financial and other customary covenants which limit (subject to certain exceptions) the Company’s ability to, among other things, incur or suffer to exist certain liens, make investments, incur or guaranty additional indebtedness, enter into consolidations, mergers, acquisitions, and sales of assets, make distributions and other restricted payments, change the nature of the business, engage in transactions with affiliates, and enter into restrictive agreements, including agreements that restrict the ability of the subsidiaries to make distributions. The financial covenants under the credit agreement included (a) a consolidated fixed charge coverage ratio, defined as the four-quarter rolling sum of consolidated EBITDA less defined maintenance capital expenditures and certain environmental expenditures divided by consolidated fixed charges which, for the fiscal quarters ending May 31, 2024 through February 28, 2025, has been replaced with maintenance covenants during that period requiring compliance with a minimum permitted interest coverage ratio and a minimum permitted asset coverage ratio as per the Fourth Amendment as described above and (b) a consolidated leverage ratio, defined as consolidated funded indebtedness divided by the sum of consolidated net worth and consolidated funded indebtedness. The Company’s obligations under the credit agreement are guaranteed by substantially all of its subsidiaries. The credit facilities and the related guarantees are secured by senior first priority liens on certain of the Company’s and its subsidiaries’ assets, including equipment, inventory, and accounts receivable. The Fourth Amendment expanded the collateral package provided to the lenders to include most other personal property and equity interests held by the Company and the Guarantors in their respective subsidiaries.

As of August 31, 2024, the Company was in compliance with the applicable financial covenants under the Amended Credit Agreement. While the Company expects to remain in compliance with the financial covenants under the credit agreement, the Company may not be able to do so in the event market conditions do not improve, or other factors have a significant adverse impact on its results of operations and financial position. If the Company does not maintain compliance with its financial covenants and is unable to obtain an amendment or waiver from its lenders, a breach of a financial covenant would constitute an event of default and allow the lenders to exercise remedies under the agreements, the most severe of which is the termination of the credit facility under the Amended Credit Agreement and acceleration of the amounts owed under the Agreement.

Other debt obligations, which totaled $ 12 million as of both August 31, 2024 and 2023 primarily relate to equipment purchases, the contract consideration for which includes an obligation to make future monthly payments to the vendor in the form of licensing fees. For accounting purposes, such obligations are treated as a partial financing of the purchase price by the equipment vendor. Monthly payments commence when the equipment is placed in service and achieves specified minimum operating metrics, with payments continuing for a period of four years thereafter.

77 / Radius Recycling, Inc. Form 10-K Fiscal 2024

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RADIUS RECYCLING, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Principal payments on the Company’s bank revolving credit facilities and other debt obligations during the next five fiscal years and thereafter are as follows (in thousands):

Year Ending August 31,

Credit Facilities

Other Debt Obligations

Thereafter

Total

See Note 5 - Leases for additional disclosure on finance lease obligations, including payments during the next five fiscal years and thereafter. The Company maintains stand-by letters of credit to provide for certain obligations including workers’ compensation and performance bonds. The Company had $ 7 million and $ 8 million outstanding under these arrangements as of August 31, 2024 and 2023 , respectively.

Note 10 - Commitments and Contingencies

Contingencies - Environmental

Changes in the Company’s environmental liabilities for the years ended August 31, 2024 and 2023 were as follows (in thousands):

Balance as of

September 1, 2022

Liabilities

Established

(Released), Net

Payments and

Other

Ending Balance

August 31, 2023

Liabilities

Established

(Released), Net

Payments and

Other

Ending Balance

August 31, 2024

Current

Liability

Noncurrent Liability

The Company has environmental liabilities for the potential remediation of locations where it has conducted business or has environmental liabilities from historical or recent activities. These liabilities relate to the investigation and potential remediation of waterways and soil and groundwater contamination and may also involve natural resource damages, governmental fines and penalties, and claims by third parties for personal injury and property damage. Except for Portland Harbor and certain liabilities discussed under “Other Legacy Environmental Loss Contingencies” below, such liabilities were not individually material at any site.

Portland Harbor

In December 2000, the Company was notified by the United States Environmental Protection Agency (“EPA”) under the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”) that it is one of the potentially responsible parties (“PRPs”) that own or operate or formerly owned or operated sites which are part of or adjacent to the Portland Harbor Superfund site (“Portland Harbor”).

The precise nature and extent of cleanup of any specific areas within Portland Harbor, the parties to be involved, the timing of any specific remedial action and the allocation of the costs for any cleanup among responsible parties have not yet been determined. The process of site investigation, remedy selection, identification of additional PRPs, and allocation of costs has been underway for a number of years, but significant uncertainties remain. It is unclear to what extent the Company will be liable for environmental costs or third-party contribution or damage claims with respect to Portland Harbor.

From 2000 to 2017, the EPA oversaw a remedial investigation/feasibility study (“RI/FS”) at Portland Harbor. The Company was not among the parties that performed the RI/FS, but it contributed to the costs through an interim settlement with the performing parties. The performing parties have indicated that they incurred more than $ 155 million in that effort.

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RADIUS RECYCLING, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

In January 2017, the EPA issued a Record of Decision (“ROD”) that identified the selected remedy for Portland Harbor. The EPA has estimated the total cost of the selected remedy at $ 1.7 billion with a then net present value cost of $ 1.05 billion (at a 7 % discount rate) and an estimated construction period of 13 years following completion of the remedial designs. In the ROD, the EPA stated that the cost estimate is an order-of-magnitude engineering estimate that is expected to be within + 50 % to - 30 % of the actual project cost and that changes in the cost elements are likely to occur as a result of new information and data collected during the engineering design. Accordingly, the final cost may differ materially from that set forth in the ROD. The Company has identified a number of concerns regarding the remedy described in the ROD, which is based on data that is more than 15 years old, and the EPA’s estimates for the costs and time required to implement the selected remedy. Moreover, the ROD provided only Portland Harbor site-wide cost estimates and did not provide sufficient detail to estimate costs for specific sediment management areas within Portland Harbor. In addition, the ROD did not determine or allocate the responsibility for remediation costs among the PRPs.

In the ROD, the EPA acknowledged that much of the data was more than a decade old at that time and would need to be updated with a new round of “baseline” sampling to be conducted prior to the remedial design phase. The remedial design phase is an engineering phase during which additional technical information and data are collected, identified, and incorporated into technical drawings and specifications developed for the subsequent remedial action. Following issuance of the ROD, the EPA proposed that the PRPs, or a subgroup of PRPs, perform the additional investigative work in advance of remedial design.

In December 2017, the Company and three other PRPs entered into an Administrative Settlement Agreement and Order on Consent with the EPA to perform such pre-remedial design investigation and baseline sampling over a two-year period. The report analyzing the results concluded that Portland Harbor conditions have improved substantially since the data forming the basis of the ROD was collected. The EPA found with a few limited corrections that the new baseline data is of suitable quality and stated that such data will be used, in addition to existing and forthcoming design-level data, to inform implementation of the ROD. However, the EPA did not agree that the data or the analysis warranted a change to the remedy at this time and reaffirmed its commitment to proceed with remedial design. The Company and other PRPs disagree with the EPA’s position on use of the more recent data and will continue to pursue limited, but critical, changes to the selected remedy for Portland Harbor during the remedial design phase.

The EPA encouraged PRPs to step forward (individually or in groups) to enter into consent agreements to perform remedial design in various project areas covering Portland Harbor. While certain PRPs executed consent agreements for remedial design work, because of the EPA’s refusal to date to modify the remedy to reflect the most current data on Portland Harbor conditions and because of concerns with the terms of the consent agreement, the Company elected not to enter into a consent agreement. In April 2020, the EPA issued a unilateral administrative order (“UAO”) to the Company and MMGL, LLC (“MMGL”), an unaffiliated company, for the remedial design work in a portion of Portland Harbor designated as the River Mile 3.5 East Project Area. As required by the UAO, the Company notified the EPA of its intent to comply while reserving all of its sufficient cause defenses. Failure to comply with a UAO, without sufficient cause, could subject the Company to significant penalties or treble damages. Pursuant to the optimized remedial design timeline set forth in the UAO, the EPA’s expected schedule for completion of the remedial design work was four years . At the time it issued the UAO in April 2020, the EPA estimated the cost of the work at approximately $ 4 million. The Company has agreed with the other respondent to the UAO, MMGL, that the Company will lead the performance and be responsible for a portion of the costs of the work for remedial design under the UAO and also entered into an agreement with another PRP pursuant to which such other PRP has agreed to fund a portion of the costs of such work. These agreements are not an allocation of liability or claims associated with Portland Harbor as between the respondents or with respect to any third party. The Company has insurance policies and Qualified Settlement Funds (“QSFs”) pursuant to which the Company is being reimbursed for the costs it has incurred for remedial design. See further discussion of the QSFs below in this Note. As of both August 31, 2024 and 2023, the Company had insurance and other receivables in the same amount as the environmental reserves for such remedial design work under the UAO. See “Other Assets” in Note 2 – Summary of Significant Accounting Policies for further discussion of insurance and other related receivables. The Company also expects to pursue in the future allocation or contribution from other PRPs for a portion of such remedial design costs. In February 2021, the EPA announced that 100 percent of Portland Harbor’s areas requiring active cleanup are in the remedial design phase of the process.

Except for certain early action projects in which the Company is not involved, remediation activities at Portland Harbor are not expected to commence for a number of years. Moreover, those activities are expected to be sequenced, and the order and timing of such sequencing has not been determined. In addition, as noted above, the ROD does not determine the allocation of costs among PRPs.

The Company has joined with approximately 100 other PRPs, including the RI/FS performing parties, in a voluntary process to establish an allocation of costs at Portland Harbor, including the costs incurred in the RI/FS, ongoing remedial design costs, and future remedial action costs. The Company expects the next major stage of the allocation process to proceed in parallel with the remedial design process.

The Company’s environmental liabilities as of August 31, 2024 and 2023 included $ 5 million and $ 2 million, respectively, relating to the Portland Harbor matters described above.

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RADIUS RECYCLING, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

In addition to the remedial action process overseen by the EPA, the Portland Harbor Natural Resource Trustee Council (“Trustee Council”) is assessing natural resource damages at Portland Harbor. In 2008, the Trustee Council invited the Company and other PRPs to participate in funding and implementing the Natural Resource Injury Assessment for Portland Harbor. The Company and other participating PRPs ultimately agreed to fund the first two phases of the three-phase assessment, which included the development of the Natural Resource Damage Assessment Plan (“AP”) and implementation of the AP to develop information sufficient to facilitate early settlements between the Trustee Council and Phase 2 participants and the identification of restoration projects to be funded by the settlements. In late May 2018, the Trustee Council published notice of its intent to proceed with Phase 3, which will involve the full implementation of the AP and the final injury and damage determination. The Company is proceeding with the process established by the Trustee Council regarding early settlements under Phase 2. The Company has established an environmental reserve of approximately $ 2 million for this alleged natural resource damages liability as it continues to work with the Trustee Council to finalize an early settlement. As of August 31, 2024 and 2023, the Company had a receivable in the same amount as the environmental reserve. See “Other Assets” in Note 2 – Summary of Significant Accounting Policies for further discussion of insurance and other related receivables.

On January 30, 2017, one of the Trustees, the Confederated Tribes and Bands of the Yakama Nation, which withdrew from the council in 2009, filed a suit against approximately 30 parties, including the Company, seeking reimbursement of certain past and future response costs in connection with remedial action at Portland Harbor and recovery of assessment costs related to natural resources damages from releases at and from Portland Harbor to the Multnomah Channel and the Lower Columbia River. The parties filed various motions to dismiss or stay this suit, and in August 2019, the court issued an order denying the motions to dismiss and staying the action. The Company intends to defend against the claims in this suit and does not have sufficient information to determine the likelihood of a loss in this matter or to estimate the amount of damages being sought or the amount of such damages that could be allocated to the Company.

Because the final remedial actions have not yet been designed and there has not been a determination of the allocation among the PRPs of costs of the investigations or remedial action costs, the Company believes it is not possible to reasonably estimate the amount or range of costs which it is likely to or which it is reasonably possible that it will incur in connection with Portland Harbor, although such costs could be material to the Company’s financial position, results of operations, cash flows, and liquidity. Among the facts being evaluated are detailed information on the history of ownership of and the nature of the uses of and activities and operations performed on each property within Portland Harbor, which are factors that will play a substantial role in determining the allocation of investigation and remedy costs among the PRPs.

The Company has insurance policies that it believes will provide reimbursement for costs it incurs for defense, remediation, and mitigation for or settlement of natural resource damages claims in connection with Portland Harbor although there are no assurances that those policies will cover all the costs which the Company may incur. Most of these policies jointly insure the Company and MMGL, as the successor to a former subsidiary of the Company. The Company and MMGL have negotiated settlements with certain insurers of claims against them related to Portland Harbor, continue to seek settlements with other insurers, and formed two QSFs which became operative in fiscal 2020 and 2023, respectively, to hold such settlement amounts until funds are needed to pay or reimburse costs incurred by the Company and MMGL in connection with Portland Harbor. These insurance policies and the funds in the QSFs may not cover all of the costs which the Company may incur. Each QSF is an unconsolidated variable interest entity (“VIE”) with no primary beneficiary. Two managers unrelated to each other, one appointed by the Company and one appointed by MMGL, share equally the power to direct the activities of each VIE that most significantly impact its economic performance. The Company’s appointee to co-manage each VIE is an executive officer of the Company. Neither MMGL nor its appointee to co-manage each VIE is a related party of the Company for the purpose of the primary beneficiary assessment or otherwise.

The Oregon Department of Environmental Quality is separately providing oversight of investigations and source control activities by the Company at various sites adjacent to Portland Harbor that are focused on controlling any current “uplands” releases of contaminants into the Willamette River. The Company has accrued liabilities for source control and related work at two sites, reflecting estimated costs of primarily investigation and design, which costs have not been material in the aggregate to date. No liabilities have been established in connection with investigations for any other sites because the extent of contamination, required source control work, and the Company’s responsibility for the contamination and source control work, in each case if any, have not yet been determined. The Company believes that, pursuant to its insurance policies and agreements with other third parties, it will be reimbursed for the costs it incurs for required source control evaluation and remediation work; however, the Company's insurance policies and agreements with other third parties may not cover all the costs which the Company incurs. As of both August 31, 2024 and 2023, the Company had an insurance receivable in the same amount as the environmental reserve for such source control work.

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RADIUS RECYCLING, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Other Legacy Environmental Loss Contingencies

The Company’s environmental loss contingencies as of August 31, 2024 and 2023, other than Portland Harbor, include actual or possible investigation and remediation costs from historical contamination at sites currently or formerly owned or formerly operated by the Company or at other sites where the Company may have responsibility for such costs due to past disposal or other activities (“legacy environmental loss contingencies”). These legacy environmental loss contingencies relate to the potential remediation of waterways and soil and groundwater contamination and may also involve natural resource damages, governmental fines and penalties, and claims by third parties for personal injury and property damage. The Company has been notified that it is or may be a potentially responsible party at certain of these sites, and investigation and remediation activities are ongoing or may be required in the future. The Company recognizes a liability for such matters when the loss is probable and can be reasonably estimated. When investigation, allocation, and remediation activities are ongoing or where the Company has not yet been identified as having responsibility or the contamination has not yet been identified, it is reasonably possible that the Company may need to recognize additional liabilities in connection with such sites but the Company cannot currently reasonably estimate the possible loss or range of loss absent additional information or developments. Such additional liabilities, individually or in the aggregate, may have a material adverse effect on the Company’s results of operations, financial condition, or cash flows.

In fiscal 2018, the Company accrued $ 4 million for the estimated costs related to remediation of shredder residue disposed of in or around the 1970s at third-party sites located near each other. Investigation activities have been conducted under oversight of the applicable state regulatory agency. As of August 31, 2024 and 2023 , the Company had $ 5 million and $ 4 million, respectively, accrued for this matter. It is reasonably possible that the Company may recognize additional liabilities in connection with this matter at the time such losses are probable and can be reasonably estimated. The Company previously estimated a range of reasonably possible losses related to this matter in excess of current accruals at between zero and $ 28 million based on a range of remedial alternatives and subject to development and approval by regulators of specific remedy implementation plans. However, subsequent to the development of those remedial alternatives, the Company performed additional investigative activities under new state requirements that are likely to impact the required remedial actions and associated cost estimates , but the scope of such impacts and the amount or the range of the additional associated costs are not reasonably estimable at this time and are subject to further investigation, analysis, and discussion by the Company and regulators.

In addition, the Company’s loss contingencies as of August 31, 2024 and 2023 included $ 2 million and $ 5 million, respectively, for the estimated costs related to environmental matters in connection with a closed facility owned and previously operated by an indirect, wholly-owned subsidiary, including monitoring and remediation of soil and groundwater conditions and funding for wellhead treatment facilities. In fiscal 2023 the Company accrued an incremental $ 7 million for certain soil remediation activities based on additional information related to estimated costs to complete. Investigation and remediation activities have been conducted under the oversight of the applicable state regulatory agency and are on-going, and the Company's subsidiary has also been working with state and local officials with respect to the protection of public and private water supplies. As part of its activities relating to the protection of public water supplies, the Company’s subsidiary agreed to reimburse the municipality for certain studies and plans and to provide funding for the construction and operation by the municipality of wellhead treatment facilities. It is reasonably possible that the Company may recognize additional liabilities in connection with this matter at the time such additional losses are probable and can be reasonably estimated. However, the Company cannot reasonably estimate at this time the possible additional loss or range of possible additional losses associated with this matter pending the on-going implementation of the approved remediation plans for soil and groundwater conditions and completion and operation of the wellhead treatment facilities.

In addition, the Company’s loss contingencies as of both August 31, 2024 and 2023 included $ 10 million, for the estimated costs related to remediation of a site a portion of which was previously leased to and operated by an indirect, wholly-owned subsidiary. In connection with settlement of a lawsuit relating to allocation of the remediation costs, the Company’s subsidiary agreed to perform the remedial action related to metals contamination on the site initially estimated to cost approximately $ 7.9 million, and another potentially liable party agreed to perform the remedial action related to creosote contamination at the site. As part of the settlement, other potentially liable parties agreed to make payments totaling approximately $ 7.6 million to fund the remediation of the metals contamination at the site in exchange for a release and indemnity. This amount was fully funded in fiscal 2021. In fiscal 2023, the Company increased its estimate of the cost to perform the remedial action by approximately $ 3 million. It is reasonably possible that the Company may recognize additional liabilities in connection with this matter at the time such additional losses are probable and can be reasonably estimated. The Company estimates the reasonably possible additional losses associated with this matter to range from zero to $ 10 million as of August 31, 2024, pending completion, approval, and implementation of the remediation action plan.

81 / Radius Recycling, Inc. Form 10-K Fiscal 2024

Table of Contents

RADIUS RECYCLING, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Summary - Environmental Contingencies

With respect to environmental contingencies other than the Portland Harbor Superfund site and the Other Legacy Environmental Loss Contingencies, which are discussed separately above, management currently believes that adequate provision has been made for the potential impact of its environmental contingencies. Historically, the amounts the Company has ultimately paid for such remediation activities have not been material in any given period, but there can be no assurance that such amounts paid will not be material in the future.

Contingencies - Other

On May 6, 2022, The Athletics Investment Group LLC (“A’s”) filed an action in the Superior Court of the State of California, County of Alameda against the Bay Area Air Quality Management District (“BAAQMD”) as Respondent and the Company as Real Party in Interest (the “BAAQMD Case”) alleging that the BAAQMD has failed to properly regulate the Company’s Oakland shredder facility under the federal and California Clean Air Acts and seeking an order requiring the BAAQMD to revoke the Company’s Permit to Operate for the Oakland facility. On June 3, 2022, the BAAQMD removed this action to the United States District Court, Northern District of California where the A’s had previously filed an action against the Company on July 7, 2021 raising substantially similar issues under the federal Clean Air Act’s citizen suit provision alleging violations by the Oakland facility of the federal Clean Air Act and permit conditions and seeking declaratory and injunctive relief (the “CAA Case”). The A’s recently disclosed that they were also seeking up to approximately $ 183 million in fines in the CAA Case, which claims the Company denies. The Company has vigorously defended against the claims asserted in the CAA Case, which is currently set for trial commencing November 12, 2024. The BAAQMD Case was remanded back to Alameda Superior Court on October 7, 2022, and no schedule has yet been established for that case.

On June 28, 2024, the Alameda County Criminal Grand Jury returned an indictment against the Company and two operations employees alleging felony and misdemeanor environmental regulatory violations for mishandling hazardous waste, including destruction of evidence, arising from the August 2023 scrap metal fire at the Company’s Oakland, CA facility and the Company’s subsequent shredding of the burned material. The Company disputes the allegations and intends to vigorously defend itself in connection with these allegations. The Company does not anticipate that the ultimate outcome of this matter will have a material adverse effect on its results of operations, financial condition, or cash flows.

In addition to legal proceedings relating to the contingencies described above, the Company is a party to various legal proceedings arising in the normal course of business. The Company recognizes a liability for such matters when the loss is probable and can be reasonably estimated. The Company does not anticipate that the liabilities arising from such legal proceedings in the normal course of business, after taking into consideration expected insurance recoveries, will have a material adverse effect on its results of operations, financial condition, or cash flows.

82 / Radius Recycling, Inc. Form 10-K Fiscal 2024

Table of Contents

RADIUS RECYCLING, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Note 11 - Accumulated Other Comprehensive Loss

The components of accumulated other comprehensive loss, net of tax, are as follows as of August 31, 2024, 2023, and 2022 (in thousands):

Foreign Currency

Translation

Adjustments

Cash Flow Hedges, net

Pension Obligations,

net

Total

Balance as of September 1, 2021

Other comprehensive income (loss) before reclassifications

Income tax expense

Other comprehensive income (loss) before reclassifications, net

of tax

Amounts reclassified from accumulated other comprehensive loss

Income tax benefit

Amounts reclassified from accumulated other comprehensive loss,

net of tax

Net periodic other comprehensive income (loss)

Balance as of August 31, 2022

Other comprehensive loss before reclassifications

Income tax benefit

Other comprehensive loss before reclassifications,

net of tax

Amounts reclassified from accumulated other comprehensive loss

Income tax expense (benefit)

Amounts reclassified from accumulated other comprehensive loss,

net of tax

Net periodic other comprehensive income (loss)

Balance as of August 31, 2023

Other comprehensive income (loss) before reclassifications

Income tax expense

Other comprehensive income (loss) before reclassifications,

net of tax

Amounts reclassified from accumulated other comprehensive loss

Income tax expense (benefit)

Amounts reclassified from accumulated other comprehensive loss,

net of tax

Net periodic other comprehensive income (loss)

Balance as of August 31, 2024

Reclassifications from accumulated other comprehensive loss to earnings, both individually and in the aggregate, were not material to the impacted captions in the Consolidated Statements of Operations in all periods presented.

83 / Radius Recycling, Inc. Form 10-K Fiscal 2024

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RADIUS RECYCLING, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Note 12 - Revenue

Disaggregation of Revenues

The table below illustrates the Company’s revenues disaggregated by major product and sales destination (in thousands):

Year Ended August 31,

Major product information:

Ferrous revenues

Nonferrous revenues

Steel revenues (1)

Retail and other revenues

Total revenues

Revenues based on sales destination:

Foreign

Domestic

Total revenues

Steel revenues include predominantly sales of finished steel products, in addition to sales of semi-finished goods (billets) and steel manufacturing scrap.

In fiscal 2024, 2023, and 2022 , the Company had no external customer that accounted for more than 10 % of the Company’s consolidated revenues. Sales to customers located in foreign countries are a significant part of the Company’s business. The schedule below identifies those foreign countries to which the Company’s sales exceeded 10% of consolidated revenues in any of the last three years ended August 31 (in thousands):

Revenue

Revenues

Bangladesh

Turkey

N/A = Sales were less than the 10 % threshold.

Receivables from Contracts with Customers

The revenue accounting standard defines a receivable as an entity’s right to consideration that is unconditional, meaning that only the passage of time is required before payment is due. As of August 31, 2024 and 2023, receivables from contracts with customers, net of an allowance for credit losses, represented substantially all of total accounts receivable reported in the Consolidated Balance Sheets as of each reporting date.

Contract Liabilities

Contract consideration received from a customer prior to revenue recognition is recorded as a contract liability and is recognized as revenue when the Company satisfies the related performance obligation under the terms of the contract. The Company’s contract liabilities, which consist almost entirely of customer deposits for recycled metal and finished steel sales contracts reported within accounts payable in the Consolidated Balance Sheets, totaled $ 10 million and $ 7 million as of August 31, 2024 and 2023 , respectively. Unsatisfied performance obligations reflected in these contract liabilities relate to contracts with original expected durations of one year or less and, therefore, are not disclosed. The substantial majority of outstanding contract liabilities are reclassified to revenues within three months of the reporting date as a result of satisfying performance obligations.

Note 13 - Employee Benefits

The Company and certain of its subsidiaries have or contribute to qualified and nonqualified retirement plans. These plans include a defined benefit pension plan, a supplemental executive retirement benefit plan (“SERBP”), multiemployer pension plans, defined contribution plans, and a deferred compensation plan.

84 / Radius Recycling, Inc. Form 10-K Fiscal 2024

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RADIUS RECYCLING, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Defined Benefit Pension Plan and Supplemental Executive Retirement Benefit Plan

The Company maintains a qualified defined benefit pension plan for certain nonunion employees. Effective June 30, 2006, the Company froze this plan and ceased accruing further benefits for employee service. The Company reflects the funded status of the defined benefit pension plan as a net asset or liability in its Consolidated Balance Sheets. Changes in its funded status are recognized in comprehensive income. The Company amortizes as a component of net periodic pension benefit cost a portion of the net gain or loss reported within accumulated other comprehensive loss if the beginning-of-year net gain or loss exceeds 5 % of the greater of the benefit obligation or the market value of plan assets. The net funded status of the pension plan was as follows:

Year Ended August 31,

Fair value of plan assets

Projected benefit obligation

Net funded status

Under the fair value hierarchy, plan assets comprised Level 1 and Level 2 investments as of August 31, 2024 and 2023 . No significant contributions are expected to be made to the defined benefit pension plan in the future; however, changes in the discount rate or actual investment returns that are lower than the long-term expected return on plan assets could result in the need for the Company to make additional contributions. The assumed discount rate used to calculate the projected benefit obligation was 4.8 % and 5.1 % as of August 31, 2024 and 2023, respectively. The Company estimates future annual benefit payments to be between $ 500 thousand and $ 2 million per year.

The Company also has a nonqualified SERBP for certain executives. A restricted trust fund has been established with assets invested in life insurance policies that can be used for plan benefits, although the fund is subject to claims of the Company’s general creditors. The trust fund is included in other assets, the current portion of the pension liability is included in other accrued liabilities, and the noncurrent portion of the pension liability is included in other long-term liabilities in the Company’s Consolidated Balance Sheets. The trust fund was valued at $ 4 million as of each August 31, 2024 and 2023. The trust fund assets’ gains and losses are included in other expense, net in the Company’s Consolidated Statements of Operations. The benefit obligation was $ 4 million as of each of August 31, 2024 and 2023.

Because the defined benefit pension plan and the SERBP are not material to the Consolidated Financial Statements, other disclosures required by U.S. GAAP have been omitted.

Multiemployer Pension Plans

The Company contributes to 13 multiemployer pension plans in accordance with its collective bargaining agreements. Multiemployer pension plans are defined benefit plans sponsored by multiple employers in accordance with one or more collective bargaining agreements. The plans are jointly managed by trustees that include representatives from both management and labor unions. Contributions to the plans are made based upon a fixed rate per hour worked and are agreed to by contributing employers and the unions in collective bargaining. Benefit levels are set by a joint board of trustees based on the advice of an independent actuary regarding the level of benefits that agreed-upon contributions can be expected to support. To the extent that the pension obligation of other participating employers is unfunded, the Company may be required to make additional contributions in the future to fund these obligations.

One of the multiemployer plans that the Company contributes to is the Steelworkers Western Independent Shops Pension Plan (“WISPP,” EIN 90-0169564, Plan No. 001) benefiting the union employees of the Company’s steel manufacturing operations, which are covered by a collective bargaining agreement that will expire on March 31, 2026 . As of October 1, 2022, the WISPP was certified by the plan’s actuaries as being in the Green Zone, as defined by the Pension Protection Act of 2006. The Company contributed $ 4 million to the WISPP for each of the years ended August 31, 2024, 2023, and 2022. These contributions represented more than 5 % of total contributions to the WISPP for each year.

Company contributions to all of the multiemployer plans totaled $ 8 million for the year ended August 31, 2024 , and $ 7 million for each of the years ended August 31, 2023, and 2022.

Defined Contribution Plans

The Company has several defined contribution plans covering certain employees. Company contributions to the defined contribution plans totaled $ 6 million , for the years ended August 31, 2024 and 2023 , and totaled $ 5 million for the year ended August 31, 2022.

85 / Radius Recycling, Inc. Form 10-K Fiscal 2024

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RADIUS RECYCLING, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Deferred Compensation Plan

In fiscal 2021, the Company established a non-qualified deferred compensation plan (the “DCP”) which permits eligible employees to elect to defer receipt of compensation including salary, bonuses, and certain equity awards made under the Company’s long-term incentive plan. The DCP also allows the Company to make discretionary contributions to participant accounts that may be subject to one or more vesting schedules. Participant contributions, excluding equity awards subject to vesting conditions, are fully vested at all times. The deferred compensation liability as of August 31, 2024 and 2023 was $ 6 million and $ 4 million, respectively, consisted entirely of deferred salary and bonuses, and was substantially all noncurrent and classified within other long-term liabilities on the Consolidated Balance Sheets. The Company maintains a rabbi trust to fund obligations under the DCP. The carrying value of assets held in the rabbi trust, which comprise company-owned life insurance policies, substantially equaled the deferred compensation liability as of both August 31, 2024 and 2023 . The rabbi trust asset is classified within other assets on the Consolidated Balance Sheets.

Note 14 - Share-Based Compensation

The Company’s 1993 Stock Incentive Plan, as amended (the “1993 Plan”), was established to provide for the grant of stock-based compensation awards to its employees, consultants, and directors. The 1993 Plan authorized the grant of restricted shares, restricted stock units, performance-based awards including performance share awards, stock options, and stock appreciation rights, and other stock-based awards. The 1993 Plan was administered by the Compensation Committee of the Company’s Board of Directors (“Compensation Committee”).

On January 30, 2024, the Company’s shareholders approved the Radius Recycling, Inc. 2024 Omnibus Incentive Plan (the “2024 Omnibus Incentive Plan”). The 2024 Omnibus Incentive Plan authorizes the Compensation Committee to grant to directors, officers, employees, consultants, and advisors of the Company incentive compensation, including share-based compensation. The 2024 Omnibus Incentive Plan replaces and supersedes the remaining shares available for grant under 1993 Plan. There are 3.0 million shares of Class A common stock reserved for issuance under the 2024 Omnibus Incentive Plan. Additionally, any awards granted under the 1993 Plan and subsequently canceled or withheld in payment for taxes relating to an award vesting will become available for future grants under the 2024 Omnibus Incentive Plan. As of August 31, 2024 , there were 3.1 million shares available for future grants.

Share-based compensation expense was $ 9 million, $ 11 million, and $ 19 million for the years ended August 31, 2024, 2023, and 2022, respectively.

Restricted Stock Units (“RSUs”)

Both the 2024 Omnibus Incentive Plan and the 1993 Plan authorize RSU awards to certain employees subject to certain conditions and restrictions. RSUs generally vest 20 % per year over five years commencing October 31 of the year after grant. Each RSU entitles the recipient to receive one share of Class A common stock upon vesting. The estimated fair value of an RSU is based on the market closing price of the underlying Class A common stock on the date of grant. C ompensation cost for RSUs is recognized over the requisite service period of the awards, net of forfeitures, which for participants who were retirement eligible as of the grant date or who will become retirement eligible during the five-year term of the award is the longer of two years or the period ending on the date retirement eligibility is achieved.

A summary of the Company’s RSU activity for the year ended August 31, 2024 is as follows:

Number of

Units

(in thousands)

Weighted Average

Grant Date

Fair Value

Outstanding as of August 31, 2023

Granted

Vested

Forfeited

Outstanding as of August 31, 2024

For the years ended August 31, 2023, and 2022 , the weighted average grant date fair value of RSUs granted was $ 31.80 and $ 52.32 , respectively. The total fair value of RSUs that vested, based on the market closing price of the underlying Class A common stock on the vesting date, was $ 5 million, $ 7 million, and $ 8 million for the years ended August 31, 2024, 2023, and 2022, respectively. As of August 31, 2024 , total unrecognized compensation costs related to unvested RSUs amounted to $ 8 million, which is expected to be recognized over a weighted average period of two years .

86 / Radius Recycling, Inc. Form 10-K Fiscal 2024

Table of Contents

RADIUS RECYCLING, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Performance Share Awards

Both the 2024 Omnibus Incentive Plan and the 1993 Plan authorize the issuance of performance-based awards to certain employees subject to certain conditions and restrictions. Vesting is subject to both the continued employment of the participant with the Company and the achievement of certain performance goals established by the Compensation Committee. A participant generally must be employed by the Company on October 31 following the end of the performance period to receive an award payout. However, adjusted awards are paid if employment terminates earlier on account of a qualifying employment termination event such as death, disability, retirement, termination without cause after the first year of the performance period, or a sale of the Company.

In recent years, the performance share awards have comprised two separate and distinct awards with different vesting conditions. Awards vest if the threshold level under the specified metric is met at the end of the approximately three-year performance period. For awards granted in fiscal 2024, the performance metrics are the Company’s total shareholder return (“TSR”) based on the Company’s average TSR percentile rank relative to a designated peer group and the Company’s recycled metal volume growth. Award share payouts depend on the extent to which the performance goals have been achieved. The number of shares that a participant receives is equal to the number of performance shares granted multiplied by the payout factor, which ranges from a threshold of 50 % to a maximum of 200 %. The TSR awards granted in fiscal 2024 stipulate certain limitations to the payout in the event the payout reaches a defined ceiling level or the Company’s TSR is negative.

For awards granted in fiscal 2023 and fiscal 2022, the performance metrics are the Company’s recycled metal volume growth and its return on capital employed (“ROCE”). Award share payouts depend on the extent to which the performance goals have been achieved, which performance-based payout factors are adjusted by a TSR modifier based on the Company’s average TSR percentile rank relative to a designated peer group. The number of shares that a participant receives is equal to the number of performance shares granted multiplied by an initial payout factor based on recycled metal volume growth and ROCE, which ranges from a threshold of 50 % to a maximum of 200 %. The final payout factor is then determined by applying the TSR modifier to the initial payout factor within a certain range, with a maximum increase or decrease of 20 %.

The Company estimates the fair value of performance share awards with a TSR market condition using a Monte-Carlo simulation model utilizing several key assumptions, including the following for such awards granted during the years ended August 31:

Expected share price volatility (Radius)

Expected share price volatility (Peer group)

Expected correlation to peer group companies

Risk-free rate of return

The fair value of the recycled metal volume growth awards granted in fiscal 2024, which awards do not have a TSR market condition, is based on the market closing price of the underlying Class A common stock on the grant date.

The compensation cost for the TSR-based performance share awards granted in fiscal 2024 is based on the grant-date fair value, net of estimated forfeitures, and is recognized over the requisite service period (or to the date a qualifying employment termination event entitles the recipient to a prorated award, if before the end of the service period), regardless of whether the market condition has been or will be satisfied.

The compensation cost for performance share awards with a non-market performance condition granted in fiscal year 2024 (recycled metals volume growth) and fiscal years 2023 and 2022 (either recycled metals volume growth or ROCE, with a TSR modifier) is recognized over the requisite service period (or to the date a qualifying employment termination event entitles the recipient to a prorated award, if before the end of the service period) based on the probable outcome of achieving the specified performance conditions, net of estimated forfeitures. The Company reassesses whether achievement of the performance conditions is probable at each reporting date. If it is probable that the actual performance results will exceed the stated target performance conditions, the Company accrues additional compensation cost for the additional performance shares to be awarded. If, upon reassessment, it is no longer probable that the actual performance results will exceed the stated target performance conditions, or that it is no longer probable that the target performance conditions will be achieved, the Company reverses any recognized compensation cost for shares no longer probable of being issued. If the performance conditions are not achieved at the end of the performance period, all related compensation cost previously recognized is reversed.

87 / Radius Recycling, Inc. Form 10-K Fiscal 2024

Table of Contents

RADIUS RECYCLING, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

A summary of the Company’s performance-based awards activity for the year ended August 31, 2024 is as follows:

Number of

Awards

(in thousands)

Weighted Average

Grant Date

Fair Value

Outstanding as of August 31, 2023

Granted - Recycled metal volume growth

Granted - TSR

Performance achievement (1)

Vested

Forfeited

Outstanding as of August 31, 2024

Reflects the net number of awards achieved above target levels based on actual performance measured at the end of the performance period.

For the years ended August 31, 2023 and 2022 , the weighted average grant date fair value per share of performance share awards granted was $ 32.10 and $ 54.29 , respectively. The total fair value of performance share awards which vested, based on the market closing price of the Company’s Class A common stock on the vesting date, was $ 9 million, $ 13 million, and $ 14 million for the years ended August 31, 2024, 2023, and 2022, respectively. As of August 31, 2024 , total unrecognized compensation costs related to unvested performance share awards amounted to $ 4 million, which is expected to be recognized over a weighted average period of two years .

Deferred Stock Units (“DSUs”)

The Deferred Compensation Plan for Non-Employee Directors (“DSU Plan”) provides for the issuance of DSUs to non-employee directors to be granted under the DSU Plan. Each DSU gives the director the right to receive one share of Class A common stock at a future date. Immediately following the annual meeting of shareholders, each non-employee director receives DSUs which become fully vested on the day before the next annual meeting, subject to continued service on the Board. The compensation cost associated with the DSUs granted is recognized over the requisite service period of the awards.

The Company issues Class A common stock to a director pursuant to vested DSUs in a lump sum in January of the first year after the director ceases to be a director of the Company, subject to the right of the director to elect an installment payment program under the DSU Plan.

During the years ended August 31, 2024, 2023, and 2022 the compensation cost associated with DSUs and the total value of shares granted and vested during each of these fiscal years, as well as the unrecognized compensation cost as of August 31, 2024 , were not material.

Note 15 - Derivative Financial Instruments

Interest Rate Swaps

The Company is exposed to interest rate risk on its debt and may enter interest rate swap contracts to effectively manage the impact of interest rate changes on its outstanding debt, which has predominantly floating interest rates. The Company does not enter interest rate swap transactions for trading or speculative purposes.

During the fiscal year ended August 31, 2023, the Company entered three pay-fixed interest rate swap transactions, each with a different major financial institution counterparty and designated as a cash flow hedge, to hedge the variability in interest cash flows associated with the Company’s variable-rate loans under its bank revolving credit facilities. The interest rate swaps involve the receipt of variable-rate amounts from the counterparty in exchange for the Company making fixed-rate payments over the life of the agreement without exchange of the underlying notional amount. These contracts mature in August 2026. As of each of August 31, 2024 and 2023 , the total notional amount of these interest rate swaps was $ 150 million. The fair values of the interest rate swaps are based upon inputs corroborated by observable market data which is considered Level 2 of the fair value hierarchy.

The fair value of derivative instruments in the Consolidated Balance Sheet as of August 31, 2024 and 2023 is as follows (in thousands):

88 / Radius Recycling, Inc. Form 10-K Fiscal 2024

Table of Contents

RADIUS RECYCLING, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Asset (Liability) Derivatives

Balance Sheet Location

August 31, 2024

August 31, 2023

Interest rate swap contracts

Prepaid expenses and other current assets

Interest rate swap contracts

Other accrued liabilities

Interest rate swap contracts

Other long-term liabilities

See Note 11 - Accumulated Other Comprehensive Loss for tabular presentation of the effects of interest rate swap derivative cash flow hedges on other comprehensive income. All related cash flow hedge amounts reclassified from accumulated other comprehensive income (“AOCI”) were recorded in interest expense on the Consolidated Statement of Operations for the years ended August 31, 2024 and 2023 , which reclassified amounts totaled $ 1 million and less than $ 1 million, respectively. Total interest expense was $ 27 million and $ 19 million for the years ended August 31, 2024 and 2023, respectively. There was no hedge ineffectiveness with respect to the Company’s interest rate swap cash flow hedges for the years ended August 31, 2024 and 2023 .

Note 16 - Income Taxes

Income (loss) from continuing operations before income taxes was as follows for the years ended August 31 (in thousands):

United States

Foreign

Total

Income tax expense (benefit) from continuing operations consisted of the following for the years ended August 31 (in thousands):

Current:

Federal

State

Foreign

Total current tax expense (benefit)

Deferred:

Federal

State

Foreign

Total deferred tax expense (benefit)

Total income tax expense (benefit)

A reconciliation of the difference between the federal statutory rate and the Company’s effective tax rate for the years ended August 31 is as follows:

Federal statutory rate

State taxes, net of credits

Foreign income taxed at different rates

Valuation allowance on deferred tax assets

Non-deductible officers’ compensation

Other non-deductible expenses

Research and development credits

Tax return to provision adjustment

Unrecognized tax benefits

Interest income

Excess tax benefit from stock-based compensation

Non-deductible goodwill

Other

Effective tax rate

89 / Radius Recycling, Inc. Form 10-K Fiscal 2024

Table of Contents

RADIUS RECYCLING, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Effective Tax Rate

The Company’s effective tax rate from continuing operations for fiscal year 2024 was a benefit on pre-tax loss of 17.2 % , compared to a benefit on pre-tax loss of 9.8 % for fiscal 2023 and an expense on pre-tax income of 20.6 % for fiscal 2022 , respectively. The Company’s effective tax rate from continuing operations for fiscal 2024 was lower than the U.S. federal statutory rate of 21 % primarily due to the effect of permanent differences from non-deductible goodwill and the recognition of a valuation allowance against deferred tax assets in the Company’s U.S. federal, state and foreign tax jurisdictions. The Company's effective tax rate from continuing operations for fiscal 2023 was lower than the U.S. federal statutory rate of 21 % primarily due to the aggregate effect of the relatively low absolute level of pre-tax earnings, permanent differences from non-deductible expenses, and unrecognized tax benefits. The Company’s effective tax rate from continuing operations for fiscal 2022 approximated the U.S. federal statutory rate of 21 %, reflecting tax benefits from vesting of share-based awards, the foreign derived intangible income (“FDII”) deduction, and research and development credits, offset by the aggregate impact of state taxes and permanent differences from non-deductible expenses.

Deferred Tax Assets and Liabilities

Deferred tax assets and liabilities comprised the following as of August 31 (in thousands):

Deferred tax assets:

Operating lease liabilities

Amortizable goodwill and other intangibles

Employee benefit accruals

Net operating loss carryforwards

Environmental liabilities

Other contingencies

State credit carryforwards

Inventory valuation methods

163(j) interest expense carryforward

Other

Valuation allowances

Total deferred tax assets

Deferred tax liabilities:

Accelerated depreciation and other basis differences

Operating lease right-of-use assets

Investment in operating partnerships

Prepaid expense acceleration and other

Total deferred tax liabilities

Net deferred tax assets (liabilities)

As of August 31, 2024 , deferred tax assets related to U.S. federal operating loss carryforwards were $ 24 million which had a $ 5 million valuation allowance and no expiration period, and deferred tax assets related to state operating loss carryforwards were $ 12 million , which had a full valuation allowance. Incremental state operating loss carryforwards will begin to expire if not used on tax returns filed between fiscal years 2025 and 2045 . State credit carryforwards had a full valuation allowance and will begin to expire if not used on tax returns filed between fiscal years 2025 and 2039 .

Valuation Allowances

The goodwill impairment charge recognized in the third quarter of fiscal 2024 led to a significant increase in the Company’s deferred tax assets, and as a result, the future reversal of existing taxable temporary differences as a source of income does not support the full realization of deferred tax assets. In fiscal 2024, the Company determined that it is more likely than not that the tax benefits associated with certain of its deferred tax assets will not be realized and recorded a $ 14 million valuation allowance against deferred tax assets in the Company’s U.S. federal, state and foreign tax jurisdictions.

90 / Radius Recycling, Inc. Form 10-K Fiscal 2024

Table of Contents

RADIUS RECYCLING, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Accounting for Uncertainty in Income Taxes

The following table summarizes the activity related to the Company’s reserve for unrecognized tax benefits, excluding interest and penalties, for the years ended August 31 (in thousands):

Unrecognized tax benefits, as of the beginning of the year

Additions (reductions) for tax positions of prior years

Additions for tax positions of the current year

Reductions for lapse of statutes

Unrecognized tax benefits, as of the end of the year

The recognized amount of tax-related penalties and interest was not material for each of the fiscal years presented in this report.

The Company files federal and state income tax returns in the U.S. and foreign tax returns in Puerto Rico and Canada. For U.S. federal income tax returns, fiscal years 2021 to 2023 remain subject to examination under the statute of limitations.

Note 17 - Net Income (Loss) Per Share

The following table sets forth the information used to compute basic and diluted net income (loss) per share attributable to Radius shareholders for the years ended August 31 (in thousands):

Income (loss) from continuing operations

Net income attributable to noncontrolling interests

Income (loss) from continuing operations attributable to Radius shareholders

Loss from discontinued operations, net of tax

Net income (loss) attributable to Radius shareholders

Computation of shares:

Weighted average common shares outstanding, basic

Incremental common shares attributable to dilutive performance share, RSU and DSU awards

Weighted average common shares outstanding, diluted

Common stock equivalent shares of 322,651 , 698,847 , and 113,005 were considered antidilutive and were excluded from the calculation of diluted net income (loss) per share attributable to Radius shareholders for the years ended August 31, 2024, 2023, and 2022 respectively.

Note 18 - Related Party Transactions

The Company purchases recycled metal from its joint venture operation at prices that approximate fair market value. These purchases totaled $ 19 million , $ 18 million , and $ 26 million for the years ended August 31, 2024, 2023, and 2022 , respectively.

91 / Radius Recycling, Inc. Form 10-K Fiscal 2024

Table of Contents

RADIUS RECYCLING, INC.

Schedule II – Valuation and Qualifying Accounts

For the Years Ended August 31, 2024, 2023, and 2022

(In thousands)

Column A

Column B

Column C

Column D

Column E

Description

Balance at

Beginning

of Period

Charges

to Cost and Expenses

Deductions

Balance at

End of

Period

Fiscal 2024

Allowance for credit losses

Deferred tax valuation allowance

Fiscal 2023

Allowance for credit losses

Deferred tax valuation allowance

Fiscal 2022

Allowance for credit losses

Deferred tax valuation allowance

92 / Radius Recycling, Inc. Form 10-K Fiscal 2024

Table of Contents

RADIUS RECYCLING, INC.

Schnitzer Steel Industries, Inc.

Annual report (10-K)

Recent 8-K announcements

Top insiders

All filings

Tone shift by section

Language change vs prior 10-K

Risk Factors (Item 1A)

Language change vs prior 10-K

MD&A (Item 7)

External resources

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