Q3 2024 Radius Recycling Inc Earnings Call

July 2, 2024

Michael Bennett: such as our statements about our target, volume growth, and margins.

Volume growth and margins.

Michael Bennett: Our actual results may differ materially from those projected in our four-looking statements. Additional information concerning factors that could cause actual results to materially differ from those in the four-looking statement is contained in slide two, as well as our press release of today and our Form 10-Q.

such as our statements about our targets, volume growth, and margins. Our actual results may differ materially from those projected in our forward-looking statements.

Additional information concerning factors that could cause actual results to materially differ from those in the forward-looking statement is contained in slide 2, as well as our press release of today and our Form 10-Q .

Michael Bennett: Please note that we will be discussing some non-GAAP measures during our presentation today. We have included a recommendation of those metrics to GAP in the appendix to our slide presentation.

Please note that we will be discussing some non- GAAP measures during our presentation today. We have included a reconciliation of those metrics to GAP in the appendix to our slide presentation.

Michael Bennett: Now, let me turn this all over to Tamara Lundgren, our Chairman and Chief Executive Officer. She will host the call today with Stefano Gaggini, our Chief Financial Officer.

Michael Bennett: such as our statements about our targets, volume growth, and margins. However, our actual results may differ materially from those projected in our forward-looking statements. Additional information concerning factors that could cause actual results to materially differ from those in the forward-looking statement is contained in Slide 2, as well as in our press release of today and our Form 10-Q. Please note that we will be discussing some non-GAAP measures during our presentation today. We have included a reconciliation of those metrics to GAAP in the appendix to our slide presentation. Now, let me turn the call over to Tamara Lundgren, our Chairman and Chief Executive Officer. She will host the call today with Stefano Gaggini, our Chief Financial Officer. Thank you, Michael, and good morning, everyone.

Speaker Change: Now, let me turn the call over to Tamara Lundgren, our Chairman and Chief Executive Officer. She will host the call today with Stefano Gaggini, our Chief Financial Officer.

Tamara Lundgren: Thank you, Michael, and good morning, everyone. Welcome to Radius Recycling's third quarter earnings call. I'd like to start off this morning by recognizing our employees for continuing to improve our safety performance. While we continue to work towards our goal of an injury-free workplace, our year-over-year safety results are trending positively. Earlier this morning, we reported our financial results for our third quarter, which reflected what many of you already knew: that market conditions over the past year have been the toughest we've experienced since 2015. While our reported third quarter loss was $6.97 per share, $6.21 of this was related to a non-cash goodwill impairment charge and a related deferred tax valuation allowance.

Tamara L. Lundgren: Welcome to Radius Recycling's third quarter earnings call. I'd like to start off this morning by recognizing our employees for continuing to improve our safety performance. While we continue to work towards our goal of an injury-free workplace, our year-over-year safety results are trending positively. Earlier this morning, we reported our financial results for our third quarter, which reflected, as many of you already knew, that market conditions over the past year have been the toughest we've experienced since 2015. While our reported third-quarter loss was $6.97 per share, $6.21 of this was related to a non-cash goodwill impairment charge and a related deferred tax valuation allowance.

Tamara L. Lundgren: Thank you, Michael, and good morning, everyone.

Tamara L. Lundgren: Welcome to Radius Recycling's third quarter earnings call. I'd like to start off this morning by recognizing our employees for continuing to improve our safety performance.

Tamara L. Lundgren: While we continue to work towards our goal of an injury-free workplace, our year-over-year safety results are trending positively.

Tamara L. Lundgren: Earlier this morning, we reported our financial results for our third quarter, which reflected

Tamara L. Lundgren: What many of you already knew, that market conditions over the past year have been the toughest we've experienced since 2015.

Tamara L. Lundgren: While our reported third quarter loss was $6.97 per share, $6.21 of this was related to a non-cash goodwill impairment charge and a related deferred tax valuation allowance.

Tamara Lundgren: Our adjusted loss per share of 59 cents represents significantly better results than the prior quarter. And in light of the very strong headwinds in the recycled metals market, I want to recognize our team for delivering improved sequential results. Their actions show that we're not just waiting for the markets to improve, but are continuously focused on the things that we can control. Lowering our costs, operating efficiently, meeting our customers' needs, and achieving the returns from our capital investments. Our concentrated focus on cost savings, productivity, technology investments, and recycling services is moving us forward. The benefits from all these initiatives should come through more clearly when the cyclical headwinds impacting scrap supply flows sub-side.

Tamara L. Lundgren: Our adjusted loss per share of $0.597 represents significantly better results than the prior quarter. And in light of the very strong headwinds in the recycled metals market, I want to recognize our team for delivering improved sequential results. Their actions show that we're not just waiting for the markets to improve but are continuously focused on the things that we can control, such as lower our costs, operating efficiently, meeting our customers' needs, and achieving returns on our capital investments.

Tamara L. Lundgren: Their actions show that we're not just waiting for the markets to improve, but are continuously focused on the things that we can control. Lowering our costs, operating efficiently, meeting our customers' needs, and achieving the returns from our capital investments.

Tamara L. Lundgren: Our concentrated focus on cost savings, productivity, technology investments, and recycling services is moving us forward. The benefits from all these initiatives should come through more clearly when the cyclical headwinds impacting scrap supply flows subside. On our call this morning, I'll review our Q3 results, the market conditions impacting our performance, and the strategic actions we have underway to address current industry dynamics and create long-term value through the cycle. Stefano will then provide more detail on our financial performance and our capital investments and allocation priorities. I'll wrap up, and then we'll take your questions.

Tamara Lundgren: On our call this morning, I'll review our Q3 results, the market conditions impacting our performance, and the strategic actions we have underway to address current industry dynamics and create long-term value through the cycle. Stefano will then provide more detail on our financial performance and our capital investments and allocation priorities.

Tamara L. Lundgren: On our call this morning, I'll review our Q3 results, the market conditions impacting our performance, and the strategic actions we have underway to address current industry dynamics and create long-term value through the cycle.

Tamara L. Lundgren: Stefano will then provide more detail on our financial performance and our capital investments and allocation priorities. I'll wrap up and then we'll take your questions.

Tamara Lundgren: I'll wrap up, and then we'll take your questions.

Tamara Lundgren: Let's turn now to slide four to review our third quarter highlights. Our Q3 results reflect sequential improvements in our major metrics. Adjusted EBITDA of $9 million was up significantly versus Q2, and we delivered meaningful increases in ferrous, non-ferrous, and finished steel sales volumes. These improvements reflect benefits from our expanded cost reduction and productivity improvement programs. Williams, continued focus on our commercial buying programs, and the strength of our spiel mill, which enjoyed 88% capacity utilization, significantly higher than a 77% U.S. average.

Tamara L. Lundgren: Let's turn now to slide four to review our third quarter highlights. Our Q3 results reflect sequential improvements in our major metrics. Adjusted EBITDA of $9 million was up significantly versus Q2, and we delivered meaningful increases in ferrous, non-ferrous, and finished steel sales volumes. These improvements reflect benefits from our expanded cost reduction and productivity improvement program, continued focus on our commercial buying program, and the strength of our steel mill, which enjoyed 88 percent capacity utilization, significantly higher than the 77 percent U.S. average. These positive achievements were partially offset by continued tight scrap supply flows that are the main contributor to our compressed margins.

Tamara L. Lundgren: Let's turn now to slide 4 to review our third quarter highlights.

Stefano R. Gaggini: Our Q3 results reflect sequential improvements in our major metrics. Adjusted EBITDA of $9 million was up significantly versus Q2, and we delivered meaningful increases in ferrous, non-ferrous, and finished steel sales volumes.

Stefano R. Gaggini: These improvements reflect benefits from our expanded cost reduction and productivity improvement programs.

Stefano R. Gaggini: continued focus on our commercial buying programs, and the strength of our steel mill, which enjoyed 88% capacity utilization, significantly higher than the 77% U.S. average.

Tamara Lundgren: These positive achievements were partially offset by continued tight scraps of ply flows that are the main contributor to our compressed margins. Amidst these challenging conditions, we generated approximately break-even cash flow and returned capital to our shareholders through our 121st consecutive quarterly dividend.

Stefano R. Gaggini: These positive achievements were partially offset by continued tight scrap supply flows that are the main contributor to our compressed margins.

Tamara L. Lundgren: Amidst these challenging conditions, we generated approximately break-even cash flow and returned capital to our shareholders through our 121st consecutive quarterly dividend. Now, we turn now to slide 5 to dig a bit deeper into the supply trends that have been impacting our performance. Lower economic activity has been constraining scrap supply flows for more than a year, for 18 out of the last 19 months. U.S. manufacturing PMI has been below 50, which indicates contractionary territory.

Stefano R. Gaggini: Amidst these challenging conditions, we generated approximately break-even cash flow and returned capital to our shareholders through our 121st consecutive quarterly dividend.

Tamara Lundgren: Let's turn out a slide five to dig a bit deeper into the supply trends that have been impacting our performance. Lower economic activity has been constraining scrap supply flows for more than a year. For 18 out of the last 19 months, U.S. Manufacturing PMI has been below 50, which indicates contractionary territory.

Stefano R. Gaggini: Let's turn now to slide five to dig a bit deeper into the supply trends that have been impacting our performance.

Stefano R. Gaggini: Lower economic activity has been constraining scrap supply flows for more than a year.

Stefano R. Gaggini: For 18 out of the last 19 months, U.S. manufacturing PMI has been below 50, which indicates contractionary territory.

Tamara Lundgren: Lower auto production, as well as higher prices and financing costs for new and used cars, have contributed to the average age of vehicles reaching their highest level on record, resulting in lower scrap adrapes of end-of-life vehicles. These tight supply conditions have led to stickiness and scrap purchase costs, which have not moved in line with the drops in selling prices. While we don't control the pace of improvement in market conditions, we've seen in the past how quickly the cycle can turn.

Tamara L. Lundgren: Lower auto production, as well as higher prices and financing costs for new and used cars, have contributed to the average age of vehicles reaching their highest level on record, resulting in lower scrappage rates of end-of-life vehicles. These tight supply conditions have led to stickiness and scrap purchase costs, which have not moved in line with the drops in selling prices. While we don't control the pace of improvement in market conditions, we've seen in the past how quickly the cycle can turn.

Stefano R. Gaggini: Lower auto production, as well as higher prices and financing costs for new and used cars, have contributed to the average age of vehicles reaching their highest level on record, resulting in lower scrappage rates of end-of-life vehicles.

Stefano R. Gaggini: These tight supply conditions have led to stickiness and scrap purchase costs, which have not moved in line with the drops in selling prices.

Stefano R. Gaggini: Well, we don't control the pace of improvement in market conditions. We've seen in the past how quickly the cycle can turn. We expect scrap supply flows to benefit from a recovery in global manufacturing activity, including auto production.

Tamara Lundgren: We expect scrap supply flows to benefit from a recovery in global manufacturing activity, including auto production, increased infrastructure activity, and a decline in interest rates, and to provide us with significant operating leverage benefits as volumes recover.

Tamara L. Lundgren: We expect scrap supply flows to benefit from a recovery in global manufacturing activity, including auto production, increased infrastructure activity, and a decline in interest rates and to provide us with significant operating leverage benefits as volumes recover. It's also important to note the big difference in the current market environment versus previous down cycles, namely the structural demand tailwinds associated with decarbonization and related low-carbon technologies.

Stefano R. Gaggini: increased infrastructure activity, and a decline in interest rates, and to provide us with significant operating leverage benefits as volumes recover.

Tamara Lundgren: It's also important to note the big difference in the current market environment versus previous down cycles. Specifically, the structural demand tailwinds associated with decarbonization and related low-carbon technologies. This positive structural demand has led to sales prices for recycled ferrous, holding up well compared to prior downturns, and for recycled non-ferrous, reaching multi-year highs. Equally as important, this structural demand is strongly aligned with our strategic initiatives focused on metal recovery technologies, expanding our 3PR service and solutions business, and increasing our volumes.

Stefano R. Gaggini: It's also important to note the big difference in the current market environment versus previous down cycles.

Stefano R. Gaggini: Specifically, the structural demand tailwinds associated with decarbonization and related low-carbon technologies.

Tamara L. Lundgren: This positive structural demand has led to sales prices for recycled ferrous holding up well compared to prior downturns, and for recycled non-ferrous reaching multi-year highs. Equally important, this structural demand is strongly aligned with our strategic initiatives focused on metal recovery technologies, expanding our 3PR service and solutions business, and increasing our volume. So let's turn now to slide six for some additional details on these strategic initiatives. As you can see on this slide, our strategic priorities can be bucketed into four areas. First, our Cost Reduction and Productivity Program. This year, we launched a program to deliver $70 million in benefits through cost reductions and productivity.

Stefano R. Gaggini: This positive structural demand has led to sales prices for recycled ferrous holding up well compared to prior downturns, and for recycled non-ferrous reaching multi-year highs.

Stefano R. Gaggini: Equally as important, this structural demand is strongly aligned with our strategic initiatives focused on metal recovery technologies, expanding our 3PR service and solutions business, and increasing our volumes.

Tamara Lundgren: Let's turn now to slide 6 for some additional details on these strategic initiatives.

Tamara L. Lundgren: In Q3, we achieved approximately 75% of the quarterly run rate associated with the plan, and we expect to deliver substantially all of the remainder by the end of our fourth quarter. Second, our investments in advanced metal recovery technology. This is a multi-site, multi-year investment program focused on increasing the recovery of non-ferrous metals from our shredding process and creating product optionality by enabling us to create furnace-ready products based on demand and price. The majority of the returns from these investments are still to come.

Stefano R. Gaggini: So let's turn now to slide 6 for some additional details on these strategic initiatives.

Tamara Lundgren: As you can see on this slide, our strategic priorities can be bucketed into four areas. First, our cost reduction and productivity program. This year, we launched a program to deliver $70 million in benefits through cost reductions and productivity initiatives. In Q3, we achieved approximately 75% of the quarterly run rate associated with the plan, and we expected to deliver substantially all of the remainder by the end of our fourth quarter.

Tamara L. Lundgren: And when we reach full deployment, these investments should return over $40 million in annual EBITDA. Third, our trademark 3TR service and solutions business line that enables our customers to increase their recycling rates, reduce material going to landfills, lower their carbon footprint, and provide enhanced sustainability reporting. This is asset-light, typically with multi-year contracts, that can provide a counterbalance to our more cyclical core recycling operations. Reflecting steady growth, our 3PR business line is now contributing just over 10% to our recycled metals volume, and fourth, increasing our volumes. We have an available retained annual recycling capacity of over 1 million ferrous tons compared to our current volume trend.

Stefano R. Gaggini: As you can see on this slide, our strategic priorities can be bucketed into four areas.

Stefano R. Gaggini: First, our Cost Reduction and Productivity Program.

Stefano R. Gaggini: This year, we launched a program to deliver $70 million in benefits through cost reductions and productivity initiatives.

Stefano R. Gaggini: In Q3, we achieved approximately 75% of the quarterly run rate associated with the plan, and we expect to deliver substantially all of the remainder by the end of our fourth quarter.

Tamara Lundgren: Second, our investments in advanced metal recovery technologies. This is a multi-site, multi-year investment program focused on increasing the recovery of non-ferrous metals from our shredding process and creating product optionality by enabling us to create furnace-ready products based on demand and price. The majority of the returns from these investments are still to come, and when we reach full deployment, these investments should return over $40 million in annual EBITDA.

Stefano R. Gaggini: Second, our investments in advanced metal recovery technologies.

Stefano R. Gaggini: This is a multi-site, multi-year investment program focused on increasing the recovery of non-ferrous metals from our shredding process and creating product optionality by enabling us to create furnace-ready products based on demand and price.

Stefano R. Gaggini: The majority of the returns from these investments are still to come, and when we reach full deployment, these investments should return over $40 million in annual EBITDA.

Tamara Lundgren: Third, our trademark 3PR service and solutions business line that enables our customers to increase their recycling rates, reduce material going to landfills, lower their carbon footprint, and provide enhanced sustainability reporting. This is asset light, typically with multi-year contracts, that can provide a counterbalance to our more cyclical core recycling operations. Reflecting steady growth, our 3PR business line is now contributing just over 10% to our recycled metals volumes.

Stefano R. Gaggini: Third, our trademark 3PR service and solutions business line that enables our customers to increase their recycling rates.

Stefano R. Gaggini: reduce material going to landfills, lower their carbon footprint, and provide enhanced sustainability reporting. This is asset light, typically with multi-year contracts, that can provide a counterbalance to our more cyclical core recycling operations.

Stefano R. Gaggini: Reflecting steady growth, our 3PR business line is now contributing just over 10% to our recycled metals volumes.

Tamara Lundgren: And fourth, increasing our volumes. We have available retained annual recycling capacity of over 1 million ferris tons compared to our current volume trends. As market conditions improve, this gives us the opportunity to create significant operating leverage.

Stefano R. Gaggini: And fourth, increasing our volumes. We have available retained annual recycling capacity of over 1 million ferrous tons compared to our current volume trends.

Tamara L. Lundgren: As market conditions improve, this gives us the opportunity to create significant operating levels. We're also investing in digital tools at our pick-and-pull franchise to capture previously untapped sources of car flows and related revenue streams, which are especially important as new auto production remains below pre-pandemic levels and demand for salvaged auto parts remains solid. Well, benefits from these initiatives are already contributing to our financial... Their positive effect on our operating margins is currently being masked by the impact of the headwinds we've been experiencing.

Stefano R. Gaggini: As market conditions improve, this gives us the opportunity to create significant operating leverage.

Tamara Lundgren: We're also investing in digital tools at our pick and pull franchise to capture previously untapped sources of car flows and related revenue streams, which are especially important as new auto production remains below pre-pandemic levels, and demand for salvaged auto parts remains solid. While benefits from these initiatives are already contributing to our financial performance, their positive effect on our operating margins is currently being masked by the impact of the headwinds we've been experiencing. As these cyclical conditions abate, we expect the benefits of our actions to become much more visible in our margins and EBITDA and to provide a substantial boost to future financial results.

Stefano R. Gaggini: We're also investing in digital tools at our pick-and-pull franchise to capture previously untapped sources of car flows and related revenue streams, which are especially important as new auto production remains below pre-pandemic levels.

Stefano R. Gaggini: and Demand for Salvaged Auto Parts remains solid.

Stefano R. Gaggini: Well, benefits from these initiatives are already contributing to our financial performance.

Stefano R. Gaggini: Their positive effect on our operating margins is currently being masked by the impact of the headwinds we've been experiencing.

Tamara L. Lundgren: As these cyclical conditions abate, we expect the benefits of our actions to become much more visible in our margins and EBITDA and to provide a substantial boost to future financial results. Now, I turn now to slide 7 to review ferrous and non-ferrous demand in a bit more detail. During the third quarter, market conditions for non-ferrous and ferrous recycled metals reflected diverging trends. For non-ferrous, we saw strengthening demand, with copper and aluminum achieving multi-year highs.

Stefano R. Gaggini: As these cyclical conditions abate, we expect the benefits of our actions to become much more visible in our margins and EBITDA, and to provide a substantial boost to future financial results.

Tamara Lundgren: Let's turn out as slide 7 to review Ferris and non-ferris demand in a bit more detail. During the third quarter, market conditions for non-ferrous and ferrous recycled metals reflected diverging trends. For non-ferris, we saw strengthening demand, with copper and aluminum achieving multi-year highs. Although lower demand from the auto industry continues to keep PGM prices down and Zorba and Twitch pricing near parity, we achieved a 10% sequential increase in average selling prices for our non-ferris products and 4% higher volumes.

Stefano R. Gaggini: Let's turn now to slide 7 to review ferrous and non-ferrous demand in a bit more detail.

Stefano R. Gaggini: During the third quarter, market conditions for non-ferrous and ferrous recycled metals reflected diverging trends.

Stefano R. Gaggini: For non-ferrous, we saw strengthening demand, with copper and aluminum achieving multi-year highs.

Tamara L. Lundgren: Although lower demand from the auto industry continues to keep PGM prices down and Zorba and Twitch pricing near parity, we achieved a 10% sequential increase in average selling prices for our non-ferrous products and 4% higher volume. For Ferris, demand was softer sequentially, which led to a decline in average selling prices and a compression in metal spread.

Stefano R. Gaggini: Although lower demand from the auto industry continues to keep PGM prices down and Zorba and Twitch pricing near parity, we achieved a 10% sequential increase in average net selling prices for our non-ferrous products and 4% higher volumes.

Tamara Lundgren: For Ferris, demand was softer sequentially, which led to a decline in average selling prices and a compression in metal spreads. This lower global demand for Ferris was due in part to increasing levels of Chinese semi-finished and finished steel exports. Seasonality, together with sales of certain cargoes that were delayed at the end of the prior quarter, lifted our Ferris sales volumes. And finished steel sales volumes and utilization during the quarter at our steel mill were higher sequentially, driven by seasonally stronger construction activity in the Western U.S. and Western Canada.

Stefano R. Gaggini: For Ferris, demand was softer sequentially, which led to a decline in average selling prices and a compression in metal spreads.

Stefano R. Gaggini: This lower global demand for ferrous was due in part to increasing levels of Chinese semi-finished and finished steel exports.

Stefano R. Gaggini: Seasonality, together with sales of certain cargos that were delayed at the end of the prior quarter, lifted our Ferris sales volumes.

Stefano R. Gaggini: And finished steel sales volumes and utilization during the quarter at our steel mill were higher sequentially, driven by seasonally stronger construction activity in the western U.S. and western Canada.

Tamara L. Lundgren: This lower global demand for ferrous was due in part to increasing levels of Chinese semi-finished and finished steel exports. Seasonality, together with sales of certain cargoes that were delayed at the end of the prior quarter, lifted our Ferris sales volume and Finished Steel Sales Volumes and Utilization during the Quarter at our Steel Mill or Higher Sequential, driven by seasonally stronger construction activity in the western U.S. and western Canada. So now, I will turn the presentation over to Stefano. Thank you, Tamara, and good morning.

Stefano Gaggini: So now, let me turn the presentation over to Stefano. Thank you, Tamara, and good morning. I'll start with a review of the performance drivers in the third quarter, and we'll then cover progress on our cost reduction in productivity plans. Consolidated adjusted EBDA in the third quarter improved to $9 million compared to $3 million in the prior quarter, driven by higher sales volumes, stronger non-ferrous demand, our cost reduction and productivity program, and recognition of insurance recoveries. This benefits more than offset the impact of the weaker Ferris market conditions.

Speaker Change: So now, let me turn the presentation over to Stefano.

Stefano R. Gaggini: I'll start with a review of the performance drivers in the third quarter, and we'll then cover progress on our cost reduction and productivity plan. Consolidated Adjusted EBITDA in the third quarter improved to $9 million compared to $3 million in the prior quarter, driven by higher sales volumes, stronger nonferrous demand, our cost reduction and productivity program, and recognition of insurance recoveries. These benefits more than offset the impact of the weaker ferrous market conditions. In the third quarter, as part of an impairment test required by accounting standards, we recognized a non-cash impairment charge of $216 million on goodwill allocated to three reporting units within our recycling operations.

Stefano R. Gaggini: Thank you, Tamara, and good morning. I'll start with a review of the performance drivers in the third quarter and we'll then cover progress on our cost reduction and productivity plan.

Stefano R. Gaggini: Consolidated Adjusted EBITDA in the third quarter improved to $9 million compared to $3 million in the prior quarter, driven by higher sales volumes, stronger non-ferrous demand, our cost reduction and productivity program, and recognition of insurance recoveries.

Stefano R. Gaggini: These benefits more than offset the impact of the weaker Ferris market conditions.

Stefano Gaggini: In the third quarter, as part of an impairment test required by accounting standards, we are recognized a non-cash impairment charge of $216 million on goodwill allocated to three reporting units within our recycling operations. The impairment charge was triggered by the combination of the lower current financial performance of our recycling operations due to the challenging market conditions, including tight scrub generation and compressed metal spreads, coupled with the decrease in our market capitalization. The value of goodwill associated with our growing recycling services business remains supported. The non-cash goodwill impairment charge is adjusted out of our non-GAAP financial measures.

Stefano R. Gaggini: In the third quarter, as part of an impairment test required by accounting standards, we recognized a non-cash impairment charge of $216 million on goodwill allocated to three reporting units within our recycling operations.

Stefano R. Gaggini: The impairment charge was triggered by the combination of the lower current financial performance of our recycling operations due to the challenging market conditions, including tight scrap generation and compressed metal spreads, coupled with the decrease in our market capitalization. However, the value of goodwill associated with our growing recycling services business remains supported. The non-cash goodwill impairment charge is adjusted out of our non-GAAP financial measures. In the third quarter, we also reached final settlement with insurers for our claim related to the shredder outage at our Everett facility that occurred in prior years. As a result, we recognized a final $7 million in insurance recoveries during the period, compared to $2 million in the second quarter.

Stefano R. Gaggini: The value of goodwill associated with our growing recycling services business remains supported. The non-cash goodwill impairment charge is adjusted out of our non-GAAP financial measures.

Stefano Gaggini: In the third quarter, we also reached final settlement with insurance for our claim related to the shredder outage at our Everett facility that occurred in prior years. As a result, we recognize the final $7 million in insurance recoveries in the period compared to $2 million in the second quarter. Our claim for this matter is now completed.

Stefano R. Gaggini: In the third quarter, we also reached final settlement with insurers for our claim related to the shredder outage at our Everett facility that occurred in prior years.

Stefano R. Gaggini: As a result, we recognize a final $7 million in insurance recoveries in the period, compared to $2 million in the second quarter. Our claim for this matter is now completed.

Stefano R. Gaggini: Our claim for this matter is now completed. As shown on the slide, cost savings and productivity measures are critical levers within our control to mitigate the current market conditions, inflationary headwinds, and operating margin pressure. We are focusing on structural initiatives capable of generating sustained benefits independent of changes in market conditions or volumes. During the current fiscal year, we identified initiatives with annual run rate benefits aggregating to $70 million, including a reduction of SG&A expense by 10%.

Stefano Gaggini: As shown on the slide, cost savings and productivity measures are critical levels within our control to mitigate the current market conditions, inflationary headwinds, and operating margin pressure. We are focusing upon structural initiatives capable of generating sustained benefits independent of changes in market conditions or volumes. During the current fiscal year, we identified initiatives with annual run rate benefits aggregating to $70 million, including a reduction of SGN expense by 10%. These initiatives are primarily comprised of production cost reductions, yield increases, optimization of transportation and logistics, decreases in non-trade procurement spend, adjustments in headcount and other employee-related expenses, and a reduction in discretionary activities such as travel and use of professional and other outside services.

Stefano R. Gaggini: As shown on the slide, cost savings and productivity measures are critical levers within our control to mitigate the current market conditions, inflationary headwinds and operating margin pressure.

Stefano R. Gaggini: We are focusing upon structural initiatives capable of generating sustained benefits independent of changes in market conditions or volumes.

Stefano R. Gaggini: During the current fiscal year, we identified initiatives with annual run rate benefits aggregating to $70 million, including a reduction of SG&A expense by 10%.

Stefano R. Gaggini: These initiatives are primarily comprised of production cost reductions, yield increases, optimization of transportation and logistics, decreases in non-trade procurement spend, adjustments in headcount and other employee-related expenses, and a reduction in discretionary activities such as travel and use of professional and other outside services. In the third quarter, we made significant progress with our plan and achieved approximately $13 million in benefits, an increase of $5 million sequentially. We expect to achieve substantially the full run rate by the end of our fiscal year.

Stefano R. Gaggini: These initiatives are primarily comprised of production cost reductions,

Stefano R. Gaggini: Yield Increases, Optimization of Transportation and Logistics,

Stefano R. Gaggini: Decreases in non-trade procurement spend, adjustments in headcount and other employee-related expenses, and a reduction in discretionary activities such as travel and use of professional and other outside services.

Stefano Gaggini: In the third quarter, we made significant progress with our plan and achieved approximately $13 million of benefits, an increase of $5 million sequentially. We expect to achieve substantially the full run rate by the end of our fiscal year. We incur restructuring charges and other exit-related costs of approximately $3 million in connection with these measures during the third quarter.

Stefano R. Gaggini: In the third quarter, we made significant progress with our plan and achieved approximately $13 million of benefits, an increase of $5 million sequentially.

Stefano R. Gaggini: We expect to achieve substantially the full run rate by the end of our fiscal year.

Stefano R. Gaggini: We incur refactoring charges and other exit-related costs of approximately $3 million in connection with these measures during the third quarter. Now, let's move to slide 9 to discuss Fairness, Sales, and the Market Dynamics. Export and domestic demand for ferrous recycled metals was softer sequentially. As Tamara mentioned, the surge in Chinese steel exports continued to negatively impact global demand.

Stefano R. Gaggini: We incur refactoring charges and other exit-related costs of approximately $3 million in connection with these measures during the third quarter.

Stefano Gaggini: Now let's move to slide 9 to discuss ferrous sales and the market dynamics. Export and domestic demand for ferrous recycle metals was softer sequentially. As Tamara mentioned, the surge in Chinese tillexport continued to negatively impact global demand. In the first five months of calendar year 2024, China's Finnish tillexport increased 23% year over year, impacting both steel production and ferrous crop demand, particularly in Asia and the Middle East. The domestic scrap prices started the quarter higher than the export, but then declined more significantly during the quarter. As a result of these dynamics, average net selling prices declined 9% sequentially and led to compression and metal spreads.

Stefano R. Gaggini: Now let's move to slide 9 to discuss fairer sales and the market dynamics.

Stefano R. Gaggini: Export and domestic demand for ferrous recycled metals was softer sequentially. As Tamara mentioned, the surge in Chinese steel exports continued to negatively impact global demand.

Stefano R. Gaggini: In the first five months of calendar year 2024, China's finished steel exports increased 23% year over year, impacting both steel production and ferrous scrap demand, particularly in Asia and the Middle East. Domestic scrub prices started the quarter higher than expectations but then declined more significantly during the quarter. As a result of these dynamics, average net selling prices declined 9% sequentially and led to compression in metal spreads.

Stefano R. Gaggini: In the first five months of calendar year 2024, China's finished steel exports increased 23% year-over-year, impacting both steel production and ferroscrap demand, particularly in Asia and the Middle East.

Stefano R. Gaggini: Domestic scrub prices started the quarter higher than exports, but then declined more significantly during the quarter.

Stefano R. Gaggini: As a result of these dynamics, average net selling prices declined 9% sequentially and led to compression in metal spreads.

Stefano Gaggini: The declining ferrous prices in the quarter also created a detriment from average inventory accounting of $3 per ferrous tonne in the third quarter. Ferrous sales volumes were up 13% sequentially, and the share of domestic ferrous shipments was 48%. Our top sales destinations for ferrous exports were Bangladesh, Turkey, and India.

Stefano R. Gaggini: The decline in ferrous prices in the quarter also created a detriment from average inventory accounting of $3 per ferrous ton in the third quarter. Ferrous sales volumes were up 13% sequentially, and the share of domestic ferrous shipments was 48%. Our top sales destinations for ferrous exports were Bangladesh, Turkey, and India. Now, let's move to slide 10 to discuss non-ferrous sales and the market dynamics, and provide an update on our non-ferrous investments.

Stefano R. Gaggini: The decline in ferrous prices in the quarter also created a detriment from average inventory accounting of $3 per ferrous ton in the third quarter.

Stefano R. Gaggini: Ferrous sales volumes were up 13% sequentially and the share of domestic ferrous shipments was 48%.

Stefano R. Gaggini: Our top sales destinations for ferrous exports were Bangladesh, Turkey, and India.

Stefano Gaggini: Now, let's move to slide 10 to discuss non-ferrous sales in the market dynamics and provide an update on our non-ferrous investments. Average net selling prices for recycled copper, aluminum, and other non-ferrous products were up 10% sequentially, reflecting a strengthening global demand throughout the quarter. Non-ferrous sales volumes were up 4% sequentially. We sold our non-ferrous products to 14 countries, with the major export destinations being Malaysia, India, and China. We continue the deployment of our advanced primary non-ferrous recovery systems, which drive the incremental metal recovery and the majority of the expected contribution from our investments in advanced recovery technologies.

Stefano R. Gaggini: Now let's move to slide 10 to discuss non-ferrous sales and the market dynamics and provide an update on our non-ferrous investments.

Stefano R. Gaggini: Average net selling prices for recycled copper, aluminum, and other non-ferrous products were up 10% sequentially, reflecting strengthening global demand throughout the quarter. Non-ferrous sales volumes were up 4% sequentially. We sold our non-ferrous products to 14 countries, with the major export destinations being Malaysia, India, and China.

Stefano R. Gaggini: Average net selling prices for recycled copper, aluminum, and other non-ferrous products were up 10% sequentially, reflecting a strengthening global demand throughout the quarter.

Stefano R. Gaggini: Non-ferrous sales volumes were up 4% sequentially. We sold our non-ferrous products to 14 countries, with the major export destinations being Malaysia, India and China.

Stefano R. Gaggini: We continue the deployment of our advanced primary non-ferrous recovery systems, which drive the incremental metal recovery and the majority of the expected contribution from our investments in advanced recovery technologies. We made headway in the ramp-up activities on several of these primary systems during the quarter. We continue to work closely with our technology vendors and project completion of construction of the currently permitted primary systems by the end of the summer, with ramp-up to full operations to be reached by calendar year-end 2024. We have two primary systems left to start construction on the West Coast, subject to permitting approval.

Stefano Gaggini: We made headway in the ramp-up activities on several of these primary systems during the quarter. We continue to work closely with our technology vendors and project completion of construction of the currently permitted primary systems by the end of the summer, with ramp-up to full operations to be reached by calendar year end 2024. We have two primary systems left to start construction on the West Coast subject to permitting approval. We also have operational advanced separation systems that give us the option to process Zorba into a higher grade twitch and other furnace-ready materials when market dynamics are supportive.

Stefano R. Gaggini: We made headway in the ramp-up activities on several of these primary systems during the quarter.

Stefano R. Gaggini: We continue to work closely with our technology vendors and project completion of construction of the currently permitted primary systems by the end of the summer, with ramp-up to full operations to be reached by calendar year-end 2024.

Stefano R. Gaggini: We have two primary systems left to start construction on the West Coast, subject to permitting approval. We also have operational advanced separation systems that give us the option to process Zorba into higher-grade twitch and other furnace-ready materials when market dynamics are supportive.

Stefano R. Gaggini: We also have operational advanced separation systems that give us the option to process Zorba into higher-grade twitch and other furnace-ready materials when market dynamics are supported. Overall, the contribution to performance from these systems was positive in the third quarter. We believe we are at an inflection point in the ramp-up phase of several of these systems and expect to see a trend of increasing returns from these investments through the remainder of calendar 2024.

Stefano Gaggini: Overall, the contribution to performance from these systems was positive in the third quarter. We believe we are at an inflection point in the ramp-up phase of several of these systems and expect to see a trend of increasing returns from these investments in the remainder of calendar 2024. Once fully operational, we continue to expect substantial returns from our investments of approximately $10 EBITDA per Terreston.

Stefano R. Gaggini: Overall, the contribution to performance from these systems was positive in the third quarter.

Stefano R. Gaggini: We believe we are at an inflection point in the ramp-up phase of several of these systems and expect to see a trend of increasing returns from these investments in the remainder of calendar 2024.

Stefano R. Gaggini: Once fully operational, we continue to expect substantial returns from our investments of approximately $10 EBITDA per farrow stone. Now, let's move to slide 11 to discuss our steel mill performance. Finish steel sales volumes of 126,000 tons in the third quarter were up 11% sequentially, as we benefited from a solid pickup in seasonal construction activity after a slow start in early spring due to the lingering impact of rain in the west. Average meal utilization was 88%, up from 81% in the prior quarter, a reflection of sound demand from non-residential construction in our western market. Average net selling prices for finished steel were approximately flat sequentially. We believe our mills stand to benefit from the anticipated demand associated with the U.S. infrastructure bill. Now, let's move to slide 12.

Stefano R. Gaggini: Once fully operational, we continue to expect substantial returns from our investments of approximately $10 EBITDA per ferrous ton.

Stefano Gaggini: Now, let's move to slide 11 to discuss our steel mill performance. Finish steel sales volumes of 126,000 tons in the third quarter were up 11% sequentially, as we benefited from a solid pickup in seasonal construction activity after a slow start in early spring due to the lingering impact of rain in the West. Average mill utilization was 88%, up from 81% in the prior quarter, a reflection of sound demand from non-residential construction in our western markets.

Stefano R. Gaggini: Now let's move to slide 11 to discuss our steel mill performance.

Stefano R. Gaggini: Finnish steel sales volumes of 126,000 tons in the third quarter were up 11% sequentially, as we benefited from a solid pick-up in seasonal construction activity after a slow start in early spring due to the lingering impact of rain in the west.

Stefano R. Gaggini: Average meal utilization was 88%, up from 81% in the prior quarter, a reflection of sound demand from non-residential construction in our western markets.

Stefano Gaggini: Average net selling prices for finished steel were approximately flat sequentially. We believe our mill stands to benefit from the anticipated demand associated with the U.S. Infrastructure bill.

Stefano R. Gaggini: Average net selling prices for finished steel were approximately flat sequentially.

Stefano R. Gaggini: We believe our mills stand to benefit from the anticipated demand associated with the U.S. infrastructure bills.

Stefano R. Gaggini: Operating cash flow for the third quarter was near break-even, reflecting a significant improvement sequentially. However, the impact on working capital of higher volumes in the quarter substantially offset the benefit from shipment and collection of certain bulk cargoes that had been delayed at the end of the prior quarter. Based on current levels of sales activity and demand, we expect a fourth quarter cash flow from operations to be positive. Capital expenditures were $16 million during the third quarter.

Stefano R. Gaggini: Now let's move to slide 12.

Stefano R. Gaggini: Operating cash flow for the third quarter was near break-even, reflecting a significant improvement sequentially.

Stefano R. Gaggini: The impact on working capital of higher volumes in the quarter substantially offset the benefit from shipment and collection of certain bulk cargoes that had been delayed at the end of the prior quarter.

Stefano Gaggini: Based on current levels of sales activity and demand, we expect the fourth quarter cash flow from operations to be positive. Capital expenditures were $16 million during the third quarter. We project capital expenditures for fiscal 24 as a whole to be in the range of $75 to $80 million. Approximately one-fourth will be for growth projects, including for our non-ferrous technology initiatives and investments to support recycling services expansion, with the remaining spend for maintaining the business and the environmental-related capital projects. The effective tax rate for a third quarter was a benefit of 18% on reported pre-tax results.

Stefano R. Gaggini: Based on current levels of sales activity and demand, we expect a fourth quarter cash flow from operations to be positive.

Stefano R. Gaggini: Capital expenditures were $16 million during the third quarter.

Stefano R. Gaggini: We project capital expenditures for Fiscal 24 as a whole to be in the range of $75-$80 million. Approximately one-fourth will be for growth projects, including for our non-ferrous technology initiatives and investments to support recycling services expansion, with the remaining spend on maintaining the business and environmental-related capital projects. The effective tax rate for the third quarter was a benefit of 18% on reported pre-tax results. Our tax rate in the quarter reflected a detriment directly related to the goodwill impairment charge as it led to the recognition of a valuation allowance charge of $6 million on deferred tax assets.

Stefano R. Gaggini: We project capital expenditures for Fiscal 24 as a whole to be in the range of $75 to $80 million.

Stefano R. Gaggini: Approximately one-fourth will be for growth projects, including for our non-ferrous technology initiatives and investments to support recycling services expansion, with the remaining spend for maintaining the business and environmental-related capital projects.

Stefano R. Gaggini: The effective tax rate for the third quarter was a benefit of 18% on reported pre-tax results.

Stefano Gaggini: Our tax rate in the quarter reflected a detriment directly related to the goodwill impairment charge, as it led to the recognition of a valuation allowance charge of $6 million on the third tax assets. Excluding the impairment charge and its related tax impact, the tax rate on our known gap results was a benefit of 27% in the third quarter.

Stefano R. Gaggini: Our tax rate in the quarter reflected a detriment directly related to the goodwill impairment charge, as it led to the recognition of a valuation allowance charge of $6 million on deferred tax assets.

Stefano R. Gaggini: Excluding the impairment charge and its related tax impact, the tax rate on our non-GAAP results was a benefit of 27% in the third quarter. Net debt was $386 million at the end of the third quarter, and net leverage was 37%. Subsequent to the end of the quarter, we amended our existing revolving crates facility, which has a borrowing capacity of up to $800 million and matures in August 2027. The amendment provides for a relaxation of certain financial covenants for the four fiscal quarter-end periods through the end of the second quarter of fiscal 2025. The size of the crate facility and its maturity date were not changed as a result of the amendment.

Stefano R. Gaggini: Excluding the impairment charge and its related tax impact, the tax rate on our known gap results was a benefit of 27% in the third quarter.

Stefano R. Gaggini: Net debt was $386 million at the end of the third quarter, and net leverage was 37%.

Stefano R. Gaggini: Subsequent to the end of the quarter, we amended our existing revolving credit facility, which has a borrowing capacity of up to $800 million and matures in August 2027.

Stefano R. Gaggini: The amendment provides for a relaxation of certain financial covenants for the four fiscal quarter-end periods through the end of the second quarter of fiscal 2025.

Stefano R. Gaggini: The size of the crate facility and its maturity date were not changed as a result of the amendment.

Stefano Gaggini: Our capital priorities are focused on reinvesting in the business and supporting our strategic initiatives, including completing the deployment of our technology investments and growing our recycling services business. Returning capital to shareholders through our quarterly dividend, always an important part for balanced capital allocation.

Stefano R. Gaggini: Our capital priorities are focused on reinvesting in the business and supporting our strategic initiatives, including completing the deployment of our technology investments and growing our recycling services business. Returning capital to shareholders through our quarterly dividend is also an important part of our balanced capital allocation. Given the quarter has just started, it is too early to provide a fourth quarter quantitative outlook at this time. And with that, I'll turn the call back over to Tamara. Thank you, Stefano.

Stefano R. Gaggini: Returning capital to shareholders through our quarterly dividend also is an important part of our balanced capital allocation.

Stefano Gaggini: Given the quarter has just started, it is too early to provide a fourth quarter quantitative outlook at this time.

Stefano R. Gaggini: Given the quarter has just started, it is too early to provide a fourth quarter quantitative outlook at this time.

Tamara Lundgren: And with that, I'll turn the call back over to Tamara. Thank you, Stefano. Today's market conditions won't last forever, and as we've discussed earlier, we are well positioned to benefit from demand trends associated with decarbonization, infrastructure investment, stronger global manufacturing activity, and declines in interest rates. We have more than 100 operating facilities, producing annual Ferris volumes of over four million tons, non-Ferris volumes of over 700 million pounds, and more than 500,000 tons of low carbon and net zero carbon emission green finished steel products. There is a legacy at our company of facing challenges head on and navigating through the toughest of times.

Speaker Change: And with that, I'll turn the call back over to Tamara.

Tamara L. Lundgren: Today's market conditions won't last forever, and as we've discussed earlier, we are well positioned to benefit from demand trends associated with decarbonization, infrastructure investment, stronger global manufacturing activity, and declines in interest rates. We have more than 100 operating facilities producing annual fares volumes of over 4 million tons, non-fares volumes of over 700 million pounds, and more than 500,000 tons of low carbon and net zero carbon emission green finished fuel products. There is a legacy at our company of facing challenges head on and navigating through the toughest of times.

Tamara L. Lundgren: Thank you, Stefano.

Speaker Change: Today's market conditions won't last forever, and as we've discussed earlier, we are well positioned to benefit from demand trends associated with decarbonization, infrastructure investment, stronger global manufacturing activity, and declines in interest rates.

Speaker Change: We have more than 100 operating facilities, producing annual ferrous volumes of over 4 million tons, non-ferrous volumes of over 700 million pounds, and more than 500,000 tons of low-carbon and net-zero carbon emission green-finished steel products.

Speaker Change: There is a legacy at our company of facing challenges head-on and navigating through the toughest of times. Our team is experienced in managing what we can control in the short term, while continuing to execute on our longer term initiatives.

Tamara Lundgren: Our team is experienced in managing what we can control in the short term, while continuing to execute on our longer-term initiative.

Tamara L. Lundgren: Our team is experienced in managing what we can control in the short term while continuing to execute on our longer-term initiatives. Before we open the call for questions, I'd like to thank our team for their dedication and our customers, suppliers, and the communities in which we operate for their partnership. Working together, we continue to demonstrate the critical and essential role of our business in our local economies and across the globe.

Tamara Lundgren: Before we open the call for questions, I'd like to thank our team for their dedication and our customers, suppliers, and the communities in which we operate for their partnership. Working together, we continue to demonstrate the critical and essential role of our business and our local economies and across the globe.

Speaker Change: Before we open the call for questions, I'd like to thank our team for their dedication, and our customers, suppliers, and the communities in which we operate for their partnership.

Speaker Change: Working together, we continue to demonstrate the critical and essential role of our business in our local economies and across the globe.

Operator: And now, operator, let's see if there are any questions. As a reminder to ask a question, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. Please stand by while we compile the Q&A roster.

Tamara L. Lundgren: And now, operator, let's see if there are any questions. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. After all your questions, please press star 11 again.

Speaker Change: And now, operator, let's see if there are any questions.

Speaker Change: As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced.

Speaker Change: To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster.

Operator: Please stand by while we compile the Q&A. Our first question comes from Martin Englert with Seaboard Research Partners. Your line is now open.

Martin Englert: Our first question comes from Martin Englert with Seaport Research Partners. Your line is now open. Good morning. How are you? Good. Thank you.

Speaker Change: Our first question comes from Martin Englert with Seaport Research Partners. Your line is now open.

Martin John Englert: Good morning. Oh, good morning. How are you?

Unnamed: Good. Good. Thank you.

Martin John Englert: Good morning. Hello. Good morning. Good morning. How are you? Good. Good.

Martin John Englert: A question of market fundamental trends persisting over the foreseeable future. What are their levers and options that the company has to address this? If we look forward, and we're in an environment 12 months from now where fundamentals just haven't changed for whatever reasons, I guess. How do you think about your options? Have you considered them? Some of the Ferris facilities aren't inherently profitable, potential temporary idling of them until the market turns around. So let me take that to start, and then Stefano, why don't you add in as well?

Martin Englert: A question of market fundamental trends persists over the foreseeable future. What are the levers and options that the company have to address this? If we look forward and we're in an environment 12 months from now where fundamentals just haven't changed for whatever various reasons.

Martin John Englert: Thank you. Question. Market fundamental trends persist over the foreseeable future.

Speaker Change: What are the levers and options that the company have to address this if we look forward and we're in an environment 12 months from now where fundamentals just haven't changed for whatever various reasons?

Martin Englert: I guess, how do you think about your options and be considered if some of the ferric facilities aren't inherently profitable? Potential temporary idling of them until the market turns around?

Speaker Change: I guess, how do you think about your options? Have you considered if some of the Ferris facilities aren't inherently profitable, potential temporary idling of them until the market turns around?

Tamara Lundgren: So, let me take that to start, and then Stefano, why don't you add in as well. So, when we think about what is the path to expand our margins, there are really three major areas that we consider to be near term. One is our AMRTS Advanced Mental Recycling Technology Investments, which, as I mentioned before, the majority of the benefits are still to come and should be material and fully deployed, adding a significant amount of EBITDA. And we're through the bulk of it. We still have a couple of projects to get permitted. But that is one area that we're focusing on, and that I would recommend that you look at because it is so aligned with the increasing demand for non-ferrous metals.

Speaker Change: So let me take that to start and then Stefano, why don't you add in as well. So when we think about what is the path to expand our margins,

Tamara L. Lundgren: So when we think about what the path to expanding our margins is, there are really three major areas that we consider to be near term. One is our AMRTS, Advanced Metal Recycling Technology investments, which, as I mentioned before, the majority of the benefits are still to come and should be material when fully deployed, adding a significant amount of EBITDA. And we're through the bulk of it.

Speaker Change: There are really three major areas that we consider to be near term. One is our AMRTS, Advanced Metal Recycling Technology Investments.

Speaker Change: which, as I mentioned before, the majority of the benefits are still to come and should be material when fully deployed, adding a significant amount of EBITDA. And we're through the bulk of it. We still have a couple of...

Tamara L. Lundgren: We still have a couple of areas, projects to get permitted, but that is one area that we're focusing on and that I would recommend that you look at, because it is so aligned with the increasing demand for non-ferrous metals. And so, both near-term and strategically, I think it is a very powerful investment program. The second is the completion of obtaining the benefits from the Cost Reduction and Productivity Program that we announced at the beginning of the year.

Speaker Change: Projects to get permitted, but that is one area that we're focusing on and that I would recommend that you look at because it is so aligned with the increasing demand for non-ferrous metals.

Tamara Lundgren: And so, both near term and strategically, I think it is a very powerful investment program. The second is the completion of obtaining the benefits from the cost reduction and productivity program that we announced at the beginning of the year. As we mentioned earlier, we've achieved about three quarters of the run rate through Q3, and we expect substantially the full benefit by year end. And I think that program is going to be particularly helpful to margins now that the inflationary pressure is lower. And then third, I would focus on the investments we're making in our recycling services business line.

Speaker Change: and so both near-term and strategically, I think it is a very powerful investment program.

Speaker Change: The second is the completion of obtaining the benefits from the Cost Reduction and Productivity Program.

Tamara L. Lundgren: As we mentioned earlier, we've achieved about three-quarters of the run rate through Q3, and we expect substantially the full benefit by year-end. And I think that program is going to be particularly helpful to margins now that the inflationary pressure is lower. And then third, I would focus on the investments we're making in our recycling services business line. Our 3PR, which stands for third-party recycling, is our take on third-party logistics, where we are providing services to customers to help them manage their recycling operations.

Speaker Change: that we announced at the beginning of the year. As we mentioned earlier, we've achieved about three-quarters.

Speaker Change: of the run rate through Q3, and we expect substantially the full benefit by year-end. And I think that program is going to be particularly helpful to margins now that the inflationary pressure is lower.

Speaker Change: And then third, I would focus on the investments we're making in our recycling services business line.

Speaker Change: are 3PR, which stands for third-party recycling, which is our take on third-party logistics, where we are providing services to customers to help them manage their recycling operations.

Tamara L. Lundgren: So we're investing in that. It's contributing to increased volumes. And we're continuing to invest in digital tools in our pick-and-pull franchise in order to access previously untapped sources of supply. So I'll focus the attention on that, and then Stefano, you might want to just mention our process for asset monitoring.

Speaker Change: So we're investing in that. It's contributing to increased volumes, and we're continuing to invest in digital tools.

Speaker Change: and our Pick and Pull franchise in order to access previously untapped sources of supply. So I'd focus the attention on that, and then Stefano, you might want to just mention our process for asset monetization.

Tamara Lundgren: Correct. Martin, we look at our operating platform and evaluate our portfolio on an ongoing basis that includes looking at various metrics from a performance perspective as well as looking at asset monetization opportunities that were to be the case. Any more color on the asset monetization? Are these maybe smaller businesses that you're evaluating, or something higher level that's larger, like the steel mills business. We routinely look at our portfolio to see whether our sites are still in the best places, and we see that particularly in our pick and pull franchise, where we are over the years we have monetized certain assets and moved development to other places.

Stefano R. Gaggini: Martin, we look at our operating platform and evaluate our portfolio on an ongoing basis. That includes looking at various metrics from a performance perspective, as well as looking at asset monetization opportunities if that were to be the case. Any more color on asset monetization or the, may be smaller businesses that you're evaluating or something higher level that's larger like the steel mills business? We routinely... Oh, sorry, Stefano. No, no, go ahead.

Stefano R. Gaggini: Correct. Martin, you know, we look at our operating platform and evaluate our portfolio on an ongoing basis. That includes, you know, looking at various metrics from a performance perspective, as well as, you know, looking at asset monetization opportunities if that were to be the case.

Speaker Change: Any more color on the asset monetization, or the

Speaker Change: maybe smaller businesses that you're evaluating or something higher level that's larger like the steel mills business.

Stefano R. Gaggini: We routinely look at our portfolio to see whether our sites are still in the best places. And so we see that, particularly in our pick-and-pull franchise, where over the years we have monetized certain assets and moved development to other places. So it is something that we look at routinely.

Speaker Change: We were, oh sorry, Stefano. No, go ahead, go ahead, Tamara.

Speaker Change: We routinely look at our portfolio to see whether our sites are

Speaker Change: still in the best places. And so we see that particularly in our pick-and-pull franchise.

Speaker Change: where over the years we have monetized certain assets and moved development to other places. So it is something that we look at routinely. And when you mentioned in your question, you know, underperforming sites,

Stefano Gaggini: So it is something that we look at routinely, and when you mention in your question, you know, underperforming sites or idling sites, you know that is something that we've done also in the past. That's very focused on where our supply flow is coming, what are we pushing through with those sites, and are they long-term holds or should they be monetized and repositioned elsewhere. The reported export fair price seemed a bit weak relative to the benchmark indices in the quarter. Maybe touch on in some more detail the markets you were selling into if you feel like you had to sell it maybe more competitive prices versus the benchmarks on average to secure volumes across the asset.

Martin John Englert: And when you mentioned in your question underperforming sites or idling sites, that is something that we've done also in the past that is very focused on where supply flows are coming from, what we are pushing through with those sites, and are they long-term holds, or should they be monetized and repurposed? The reported export Ferris price seemed a bit weak relative to the benchmark indices in the quarter; can maybe touch on in some more detail the markets you were selling into if you feel like you had to sell at maybe more competitive prices versus the benchmarks on average for six-year volumes across the S&P. I'll take that one, Martin.

Speaker Change: or idling sites, you know, that is something that we've done also in the past.

Speaker Change: that's very focused on where are supply flows coming, what are we pushing through those sites, and are they long-term holds or should they be monetized and repositioned elsewhere.

Speaker Change: The reported export ferrous price seemed a bit weak relative to the benchmark indices in the quarter.

Speaker Change: Can maybe touch on in some more detail the markets you were selling into if you feel like you had to sell at maybe more competitive prices versus the benchmarks on average to six-year volumes across the assets?

Stefano Gaggini: I'll take that one, Martin. As you know, benchmark index prices for recycled metals are published on our growth basis before freight costs. So when you compare, you know, to our average net selling prices, those are on a net basis, net of freight. So the net selling price is a reflection of where we sell to in which geography and meaning that the mix of sales destinations can create some deviations compared to growth benchmark prices. As I mentioned in my remarks, our top sales destination in the quarter were Bangladesh and India on the west coast and Turkey from the east coast, and overall your markets on the south side are highly competitive.

Stefano R. Gaggini: As you know, benchmark index prices for recycled metals are published on a gross basis before freight costs. So when you compare to our average net selling prices, those are on a net basis, net of freight. Thus, the net selling price is a reflection of where we sell to in which geography, meaning that the mix of sales destinations can create some deviations compared to gross benchmark prices.

Speaker Change: I'll take that one, Martin.

Martin John Englert: As you know, benchmark index prices for recycled metals are published on a gross basis before freight costs. So when you compare to our average net selling prices, those are on a net basis, net of freight.

Speaker Change: So the net selling price is a reflection of where we sell to in which geography and meaning that the mix of sales destinations can create some deviations compared to gross benchmark prices. As I mentioned in my remarks

Martin John Englert: As I mentioned in my remarks, our top sales destinations in the quarter were Bangladesh and India on the West Coast and Turkey from the East Coast. And overall, markets on the sales side are highly competitive. We sell to where demand is greatest. And we view those freight rates as a pass-through. Can you touch on what was happening with freight rates, in particular in East Asia?

Speaker Change: Our top sales destination in the quarter were Bangladesh and India on the West Coast and Turkey from the East Coast. And overall, markets on the sales side are highly competitive. We sell to where demand is greatest.

Stefano Gaggini: We sell to where demand is greatest, and we viewed as those freight rates as a pass-through.

Stefano Gaggini: Any touch on what was happening with freight rates in particular East Asia? I know that there's been in the container market there's been some serious in place in there in recent history in the bulk market. It could be a little bit different, but maybe... How the freight rates are today over the last quarter, looking at the West Coast to get it to the consumers in East Asia and how that compares to history, whether they're inflated or not. So I'll start with saying that our freight rates for bulk were pretty much flat sequentially Q3 to Q2 this year. They're up year over year, do primarily to the situation in the Panama and Suez canals, but as you are aware, they're pass-throughs for us, so we didn't really see any impact sequentially. And the canal situations are, the rates have been adjusted for that over the course of the last 12 months.

Speaker Change: Can you touch on what was happening with freight rates in particular East Asia? I know that there's been

Speaker Change: In the container market, there's been some serious inflation there in recent history. In the bulk market, it could be a little bit different, but maybe.

Stefano R. Gaggini: I know that there's been, in the container market, there's been some serious inflation there in recent history. In the bulk market, it could be a little bit different, but maybe... How the freight rates are today over the last quarter, looking at the West Coast to get it to the consumers in East Asia and how that compares to history, whether they're inflated or not. And so I'll start with saying that our freight rates for bulk were pretty much flat sequentially from Q3 to Q2 this year.

Speaker Change: How the freight rates are today over the last quarter, looking at the West Coast to get it to the consumers in East Asia, and how that compares to history, whether they're inflated or not.

Speaker Change: So, I'll start with saying that our freight rates for bulk...

Speaker Change: were pretty much flat sequentially, Q3 to Q2 this year. They're up year over year due primarily to the situation in the Panama and Suez Canals.

Stefano R. Gaggini: They're up year-over-year due primarily to the situation in the Panama and Suez Canals, but as you're aware, they're pass-throughs for us, so we didn't really see any impact sequentially, and the canal situations, the rates have been adjusted for that over the course of the last couple of years. When you look at your footprint, is there anything unique about the regional markets for ferrous recycling where the assets are operated and located that makes scrap collections more challenging with lower margins versus the broader U.S. market as a whole? The one thing that I would say is that there are certainly different regulatory environments across countries.

Speaker Change: but as

Speaker Change: As you're aware, there are pass-throughs for us, so we didn't really see any impact sequentially. And the canal situations, the rates have been adjusted for that over the course of the last 12 months.

Stefano Gaggini: Okay.

Stefano Gaggini: When you look at your footprint, is there anything unique about the regional markets on fair street cycling, where the assets are operated and located within, that makes scrap collections more challenging with the lower margins versus the broader US market as a whole? The one thing that I would say is that there are certainly different regulatory environments across regions, so if you look at, for example, the West Coast regulatory environment versus other regions in the US, that could impact operating costs, not so much necessarily actual scrap collection costs, but when you look at what it costs to get to a product ready for sale, you do see regional differences from a regulatory perspective.

Speaker Change: Okay.

Speaker Change: When you look at your footprint, is there anything unique about the regional markets on ferrous recycling, where the assets are operated and located within, that makes scrap collections more challenging with the lower margins versus the broader U.S. market as a whole?

Speaker Change: The one thing that I would say is that there are certainly...

Speaker Change: different regulatory environments across regions.

Tamara L. Lundgren: So if you look at, for example, the West Coast regulatory environment versus other regions in the US, that could impact operating costs. Not so much, necessarily, actual scrap collection costs, but when you look at what it costs to get a product ready for sale, you do see regional differences from a regulatory perspective. But, you know, as you know, Martin's scrap collection is very local, not national, so really, it's the sub-regional market levels that are typically the best bunch.

Speaker Change: So if you look at, for example, the West Coast regulatory environment versus other regions in the U.S.

Speaker Change: that could impact operating costs. Not so much necessarily actual scrap collection costs, but when you look at...

Speaker Change: at what it costs to get to a product ready for sale, you do see regional differences from a regulatory perspective. But as you know, Martin's Scrap Collection is very local, not national. So,

Stefano Gaggini: But, as you know, Martin's scrap collection is very local, not national, so really it's the sub-regional market levels that are typically the best benchmarks. Understood.

Speaker Change: Really, it's the sub-regional market levels that are typically the best benchmarks.

Tamara L. Lundgren: Thank you, and I think that was understood. Could you share some color on the underlying profitability, EBITDA per ton, of the steel mills business? Maybe some goal posts or how that looks for the quarter and the trailing 12 months? I'll take that one, Martin.

Martin Englert: Could you share some color on the underline profitability, EBITDA, for John of the steel mill business, maybe some goal posts, or how that works for the quarter in the trailing 12 months?

Speaker Change: Understood. Could you share some color on the underlying profitability, EBITDA per ton, of the steel mills business? Maybe some goal posts or how that looks for the quarter and the trailing 12 months?

Martin Englert: I'll take that one, Martin. As you know, we report our results on one segment, and that's on a consolidated basis, so we do not provide the steel mill contribution separately. Obviously, we have said before, in the current market, the contribution of our steel mill, and from the sale of finished steel, of this integrated mill that we have remains, you know, the mill remains a significant contributor to our consolidated performance, and spreads remain healthy in historical context, although obviously they are lower; they have declined from the all-time highs that we had seen in fiscal 22 in early 23, and I'll leave it at that.

Stefano R. Gaggini: As you know, we report our results in one segment and that's on a consolidated basis, so we do not provide the steel mill contribution separately. Obviously, as we have said before, in the current market, the contribution of our steel mill from the sale of finished steel, of this integrated mill that we have, remains, you know, the mill remains a significant contributor to our consolidated performance, and spreads remain healthy in historical context, although obviously they are lower, they have declined from the all-time highs that we had seen in fiscal 22 and early 23. And I'll leave it at that.

Speaker Change: I'll take that one, Martin. As you know, we report our results on one segment, and that's on a consolidated basis.

Speaker Change: So, we do not provide the steel mill contribution separately. Obviously, we have said before, in the current market, the contribution, right, of our steel mill and from the sale of finished steel of this integrated mill that we have remains, you know, the mill remains a significant contributor to our consolidated performance.

Speaker Change: And spreads remain healthy in historical context, although obviously they are lower. They have declined from the all time highs that we had seen in fiscal 22 and early 23. And I'll leave it at that.

Martin Englert: While it natively are you able to discuss going through the business, you provide various metrics across the business lines. I understand that it's just a consolidated group resolved, but, you know, with a ferrous business, a steel mill business, auto parts business, non-ferrous business. Of all the major and services business too, but of all the major businesses, how many of them were EBITDA profitable over, you know, current quarter, trailing 12 months, I'm trying to get a sense. I mean, I suspect that the steel mills business embedded in there is probably a large portion of the positive EBITDA contribution, non-fair; probably improved. I would guess Ferris is probably negative, I'd be a little bit unsure on the auto body business and assume the services is probably positive.

Martin John Englert: Qualitatively, are you able to discuss going through the various metrics across the business lines? I understand that it's just a consolidated group result, but you know we have a ferrous business, a steel mills business, an auto parts business, a non-ferrous business, of all the major, and services businesses too, but of all the major businesses, how many of them were EBITDA profitable? over, you know, the current quarter trailing 12 months. I'm trying to get a sense.

Speaker Change: Qualitatively, are you able to discuss going to the visit you provide?

Stefano R. Gaggini: I mean, I suspect that the steel mill business embedded in there probably a large portion of the positive EBITDA contribution, non-ferrous probably improved. I would guess ferrous is probably negative. I'd be a little bit unsure about the auto body business, but assume that services is probably more popular. Again, I think that the answer I gave you before, as far as not breaking apart the results in the way they are describing, we have one integrated platform, so all these businesses are integrated, including the mill.

Speaker Change: various metrics across the business lines. I understand that it's just a consolidated group result, but you know, with a ferrous business, a steel mills business, auto parts business, non-ferrous business.

Speaker Change: of all the major and services business too. But of all the major businesses, how many of them were EBITDA profitable?

Speaker Change: over, you know, current quarter trailing 12 months. I'm trying to get a sense. I mean, I suspect that the steel mills business embedded in there is probably a large portion of the

Speaker Change: positive EBITDA contribution, non-ferrous probably improved. I would guess ferrous is probably negative. I'd be a little bit unsure on the auto body business and assume that services is probably positive.

Stefano Gaggini: Again, I think that, you know, the answer I gave you before, as far as not breaking apart the results in the way they are describing, we have one integrated platform, so all these businesses are integrated, including the mill. You know, as we said before, we look at, you know, our portfolio very focused on making sure that actually from a valuable contribution perspective, every business that we have is contributing positively to results, and all of them where.

Speaker Change: Again, I think that, you know, the answer I gave you before, as far as not breaking apart the results in the way they are describing, we have one integrated platform, so all these businesses are integrated, including the mill.

Stefano R. Gaggini: As we said before, we look at our portfolio very focused on making sure that, from a variable contribution perspective, every business that we have is contributing positively to results, and all of them have. So I think that that's the level of detail we can provide at this time. Okay, I appreciate the color.

Speaker Change: As we said before, we look at our portfolio very focused on making sure that actually, from a valuable contribution perspective, every business that we have is contributing positively.

Stefano Gaggini: So, I think that that's the level of detail we can provide at this time.

Speaker Change: to results, and all of them where. So I think that that's the level of detail we can provide at this time.

Martin Englert: Okay, I appreciate the color.

Martin John Englert: Thank you. And good luck. It was nice to see the cost reduction efforts seem to be running a little ahead of the initial plan as far as timing is concerned. So, nice job.

Martin Englert: Thank you and good luck.

Martin Englert: It was nice to see the cost reduction efforts seem to be running a little ahead of the initial plan as far as timing, so nice you're out there.

Speaker Change: Okay, I appreciate the color. Thank you and good luck. It was nice to see the cost reduction efforts seem to be running a little ahead of the initial plan as far as timing. So nice job there.

Martin Englert: Thank you.

Speaker Change: Thank you. Thank you.

Speaker Change: Thank you.

Samuel Mckinney: Our next question comes from Samuel McKinney with KeyBank Capital Markets; your line is now open. Hi, good morning, Stephanie. How are you? Good.

Operator: Thank you. One moment for our next question. Our next question comes from Samuel McKinney with KeyBank Capital Markets. Your line is now open. Hi Tamara and Stefano, how are you?

Speaker Change: One moment for our next question.

Speaker Change: Our next question comes from Samuel McKinney with KeyBank Capital Markets. Your line is now open.

Samuel J. McKinney: Good morning. Good morning. I'll start on the Ferris export market again. Despite headwinds from domestic consumption rates in Turkey and the impact of Chinese exports, you decided your export volumes were solid quarter over quarter. Any way to frame up the impact that those delayed cargo ships had on your fiscal third quarter and how the dynamics of that market have developed over the course of this summer? Yeah, I'll start, Sam, here.

Samuel J. McKinney: Hi Tamara, Stefano, how are you? Good morning.

Samuel Mckinney: I'll start on, again, on the fairest export market, despite headwinds from domestic consumption rates in Turkey and the impact of Chinese exports you cited. Export volumes were solid, quarter over quarter. Anyway to frame up the impact that those delayed cargo ships had in your fiscal third quarter and how dynamics of that market have developed over the course of the summer. Yeah, I'll start saying here and just from a, from the perspective of the volumes, right, which were up 13% on the fairest side, sequentially. It's really too, too driver there. One is the, the seasonality that we see on flows that, that came through despite the fact that flows, you know, remain when we look at, you know, prior years, they remain tight from a sequential perspective compared to the winter they went up.

Samuel J. McKinney: Good. I'll start again on the fairest export market. Despite headwinds from domestic consumption rates in Turkey and the impact of Chinese exports, your export volumes were solid.

Samuel J. McKinney: quarter over quarter, any way to frame up the impact that those delayed cargo ships had in your fiscal third quarter and how dynamics of that market have developed over the course of this summer?

Tamara L. Lundgren: And just from the perspective of the volumes, which were up 13% on the ferrous side sequentially, there were really two drivers there. One was the seasonality that we see on flows that came through, despite the fact that flows remain tight from a sequential perspective compared to the winter when they went up. And I would say that that's probably the majority of what makes up the increase, and the rest is from delayed cargoes that we had at the end of Q3, which we shipped in Q3.

Sam: Yeah, I'll start, Sam, here. And just from the perspective of the volumes, right, which were up 13% on the ferrous side.

Sam: sequentially.

Sam: It's really two drivers there. One is the seasonality that we see on flows.

Sam: that came through, despite the fact that flows remain, when we look at prior years, they remain tight.

Samuel Mckinney: And I would say that that's probably the majority of the, of the, what makes up the increase, and the rest is from the delayed cargo that we had at the end of Q3, which we in, in Q3. You know, with the higher volumes, we have also higher inventories, and we look for those sales to continue into Q4.

Sam: from a sequential perspective compared to the winter, they went up. And I would say that that's probably the majority of what makes up the increase, and the rest...

Tamara L. Lundgren: You know, with the higher volumes, we also have higher inventories, and so we look for those sales to continue into Q4. Okay, any way to frame up the volume on those delayed cargo ships, how much they benefited the quarter? I would say it's more around one-third of that increase sequentially. Okay, thanks, that's helpful.

Sam: is from the delayed cargoes that we had at the end of Q3, which we shipped in Q3. With the higher volumes, we have also higher inventories, and so we look for those sales to continue into Q4.

Samuel Mckinney: Okay, anyway to frame up the volume on those delayed cargo ships, how much they benefited the quarter? I would say it's more around one-third of that increase, sequentially. Okay, thanks. That's helpful.

Speaker Change: Okay, any way to frame up the volume on those delayed cargo ships how much they benefited the quarter?

Speaker Change: I would say it's more around one-third of that of that increase sequentially.

Samuel J. McKinney: And then moving into non-fares, and global Zorba pricing remains pretty frothy. You've mentioned before that the tight premium of Twitch over Zorba can make conversion less attractive. How do you view that market as Zorba prices remain high? Yeah, I'll start on this one.

Samuel Mckinney: And then moving into non-ferrous and global Zorba price, it remains pretty frothy. And you've mentioned before that the tight premium of Twitch over Zorba can make conversion less attractive. How do you view that market as Zorba prices remain high? Yeah, I'll start on that one. So obviously, with higher Zorba prices, irrespective of whether we process the Zorba into higher valued Twitch and other foreign Australian materials, the higher value of Zorba flows through our margins, and that's a positive contributor to the higher Zorba price; the better the margin. From the perspective of the processing itself, obviously we look at what we are able to generate in additional contributions from the processing, compared that to the processing cost, and if the market conditions, which is mainly driven by that Twitch to Zorba premium, if that is high enough and beneficial, we will process the Zorba.

Speaker Change: Okay, thanks, that's helpful.

Speaker Change: And then moving into non-ferrous, and global Zorba pricing remains pretty frothy, and you've mentioned before that the tight premium of Twitch over Zorba can make conversion less attractive. How do you view that market as Zorba prices remain high?

Stefano R. Gaggini: So obviously, with higher ZORBA prices, right, irrespective of whether we process the ZORBA into higher value, you know, tWitch, and other furnace ready materials, the higher value of ZORBA flows through our margins, and that's a positive contributor. So the higher the ZORBA price, the better the margin. From the perspective of the processing itself, obviously, we look at what we are able to generate in additional contribution from the processing, compare that to the processing cost, and if the market conditions, which are mainly driven by that tWitch to ZORBA premium, if that is high enough and beneficial, we will process the ZORBA. And if not, we are going to forego that option.

Speaker Change: Yeah, I'll start on this one. So obviously with higher ZORBA prices, right, irrespective of whether we process the ZORBA into higher value, you know, tWitch and other furnace ready materials.

Speaker Change: The higher value of Zorba flows through our margins, and that's a positive contributor to the higher Zorba price.

Speaker Change: the better the margin. From the perspective of the processing itself, obviously, we look at what we are able to generate in additional contribution from the processing, compare that to the processing costs, and if the market conditions, which is mainly driven by that

Speaker Change: Twitch to Zorba premium, if there is.

Speaker Change: High enough.

Samuel Mckinney: And if not, we are going to forego that option. So it's through about a product option, I think that's what our advanced aluminum separation systems, our current operational allow us to have is that product option, which comes in handy, and we can toggle between processing and not. So in the current environment, those market conditions and compression in that premium lead us to not processing the Zorba into Twitch.

Samuel J. McKinney: So it's truly about the product optionality; that's what our advanced aluminum separation systems that are currently operational allow us to have, is that product optionality, which comes in handy, and we can toggle between processing and not processing. So in the current environment, those market conditions and compression in that premium lead us to not processing ZORBA into tWitch. Yes, lastly for me, this year's CapEx of $75 to $80 million. Should we expect a similar sort of low range next year as well? Yes, we have that range for the current year.

Samuel Mckinney: Yes, lastly for me, this year's CAPEX of $75 to $80 million should we expect a similar sort of low range next year as well? Yes, we have that range for the current year; what we have not provided at target for next year, in the current environment with compressed, compressed spreads and lower performance. Clearly, our CAPEX, as part of our advanced capital allocation, our CAPEX is something that we look at and we have the ability to adjust our CAPEX spend to align with those market conditions and company performance and cash flow trends and reprioritize certain projects.

Stefano R. Gaggini: While we have not provided a target for next year, in the current environment with compressed spreads and lower performance, clearly, our CAPEX, as part of our balanced capital allocation, is something that we look at, and we have the ability to adjust our CAPEX spend to align with those market conditions and company performance and cash flow trends and reprioritize certain projects. Clearly, the adjustments or tweaks in that spend do not impact our investments to complete the advanced non-ferrous recovery systems.

Speaker Change: Current environment with <unk>.

Speaker Change: Compressed compressed spreads.

Speaker Change: And lower performance clearly.

Speaker Change: Our capex as part of our balanced capital allocation. Our Capex is something that we'll look at and we have the ability to adjust our capex spend to align with those market conditions and company performance and cash flow trends in the repricing or do you prioritize.

Speaker Change: Certain projects.

Samuel Mckinney: Clearly, the adjustments are tweaked in that spend does not impact our investments to complete the advanced non-ferrous recovery systems. We continue full steam on that, and we also continue to grow our recycling services. So when I step back and I look at those levels of CAPEX, one way is to look at what we're spending today and continue to think about that as the ability to flex. The other way to look at it. I do that from a depreciation perspective; we have depreciation around $95 to $100 million from an annual run rate currently. That's another way to look at the longer-term CAPEX spend potential.

Speaker Change: Clearly the adjustments or tweaks in that spend does not impact.

Speaker Change: Our investments to complete the advanced Nonferrous recovery systems, we continue full steam on that and we also continue to grow our recycling services. So when I step back and I look at and.

Speaker Change: Those levels of Capex, one way to look at what we're seeing to date and continue to think about that is that.

Speaker Change: Ability to flex.

Speaker Change: The other way to look at it you know.

Speaker Change: Hey, do that from a depreciation perspective.

Speaker Change: Depreciation of around $95 million to $100 million in an annual run rate currently that's another way to kind of look at the longer term.

Speaker Change: Capex spend are potential.

Samuel Mckinney: Okay, great. That's it for me. Thank you.

Speaker Change: Okay, great that's it for me.

Speaker Change: Thank you. Thank you.

Speaker Change: Yes.

Speaker Change: Thank you. This concludes our question and answer session.

Operator: This concludes our question-and-answer session.

Tamara Lundgren: I would now like to turn it back to Tamara Lundgren for closing remarks. Thank you. And thank you, everyone, for your time today. We look forward to speaking with you again when we report our fourth quarter results in October. In the interim, stay safe and stay well.

Speaker Change: Now I'd like to turn it back to Tamara Lundgren for closing remarks.

Tamara L. Lundgren: Thank you and thank you everyone for your time today, we look forward to speaking with you again, when we report our fourth quarter results in October and the interim stay safe and stay well.

Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.

Speaker Change: This concludes today's conference call.

Thank you for participating you may now disconnect.

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don Martin Englert, Tamara Lundgren, Michael Bennett, Radius Recycling Martin Englert, Tamara Lundgren, Michael Martin Englert, Tamara Lundgren, Dr. Martin Englert, Tamara Lundgren, Michael Bennett, Radius Recycling Martin Englert, Tamara Lundgren, Michael Bennett, Radius Recycling I would now like to hand the conference over to your speaker today, Michael Bennett, investor relations, please go ahead.

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Stefano R. Gaggini: We continue full steam ahead with that, and we also continue to grow our recycling services. So when I step back and I look at those levels of capex, one way is to look at what we're spending today and continue to think about that as the ability to flex. The other way to look at it is to look at it from a depreciation perspective.

Speaker Change: Looking to the radius.

Speaker Change: <unk> third quarter 2024 earnings release call and webcast.

Speaker Change: At this time all participants are in a listen only mode.

Speaker Change: After the speaker's presentation, there will be a question and answer session.

Speaker Change: To ask a question during the session you will need to press star one on your telephone you will then hear an automated message advising your hand is raised to withdraw your question. Please press star one again.

Speaker Change: Please be advised that today's conference is being recorded.

Stefano R. Gaggini: We have depreciation around $95 to $100 million on an annual run rate currently. That's another way to kind of look at a longer-term capex spend potential. Okay, great. That's it for me.

Speaker Change: I would now like to hand, the conference over to your Speaker today, Michael Bennett Investor Relations. Please go ahead.

Michael Bennett: Thank you, Danielle, and good morning. I am Michael Bennett, the company's Vice-President of Investor Relations. I am happy to welcome you to Radius Recycling's earnings presentation for the third quarter of physical 2024. In addition to today's audio comments, we have issued our press release and posted a set of slides, both of which you can access on our website at radiusrecycling.com. Before we start, let me call your attention to the detailed safe harbor statement on slide two, which is also included in our press release and in the company's Form 10-Q, which we filed later today. As we know it on slide two, we may make four looking statements on our call today, such as our statements about our targets, flying growth. Our actual results may differ materially from those projected in our four-looking statements.

Samuel J. McKinney: Thank you. Thank you. This concludes our question and answer session. I would now like to turn it back to Tamara Lundgren for closing remarks. Thank you. And thank you, everyone, for your time today. We look forward to speaking with you again when we report our fourth quarter results in October. In the interim, stay safe and stay well.

Michael Bennett: Thank you Danielle and good morning.

Michael Bennett: I'm, Michael Bennett, the company's Vice President of Investor Relations.

Operator: This concludes today's conference call. Thank you for participating. You may now disconnect. Thank you for watching! ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? Good day and thank you for standing by. Welcome to the Radius Recycling 3rd Quarter 2024 Earnings Release Call and Webcast. At this time, all participants are in a listen-only mode.

Michael Bennett: Happy to welcome you to radius recycling earnings presentation for the third quarter of fiscal 2024.

Michael Bennett: In addition to today's audio comments, we have issued our press release and posted a set of slides both of which you can access on our website at radius recycling dot com.

Michael Bennett: Before we start let me call your attention to the detailed safe Harbor statement on slide two which is also included in our press release and in the company's Form 10-Q, which will be filed later today.

Michael Bennett: As we note on slide two we may make forward looking statements on our call today.

Michael Bennett: Statements about our targets volume growth and margins.

Michael Bennett: Our actual results may differ materially from those projected in our forward looking statements.

Michael Bennett: Additional information concerning factors that could cause actual results to materially differ from those in the four-looking statement is contained in slide two, as well as our press release of today and our Form 10-Q. Please note that we will be discussing some non-GAAP measures during our presentation today. We have included a reconciliation of those metrics to GAAP and the appendix to our slide presentation.

Additional information concerning factors that could cause actual results to materially differ from those in the forward looking statements is contained in slide two as well as our press release of today and our Form 10-Q.

Michael Bennett: Please note that we will be discussing some non-GAAP measures during our presentation today.

Michael Bennett: We have included a reconciliation of those metrics to GAAP in the appendix to our slide presentation.

Tamara Lundgren: Now, let me turn this all over to Tamara Lundgren, our chairman and chief executive officer. She will host the call today with Stefano Gaggini, our Chief Financial Officer. Thank you, Michael, and good morning, everyone. Welcome to Radius Recycling's third quarter earnings call. I'd like to start off this morning by recognizing our employees for continuing to improve our safety performance. While we continue to work towards our goal of an injury-free workplace, our year-over-year safety results are trending positively. Earlier this morning, we reported our financial results for our third quarter, which reflected what many of you already knew: that market conditions over the past year have been the toughest we've experienced since 2015.

Operator: After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising that your hand is raised.

Speaker Change: Now, let me turn the call over to Tamara Lundgren, our chairman and Chief Executive Officer.

Speaker Change: She will host the call today with Stefano good Ginnie.

Speaker Change: Chief Financial Officer.

Speaker Change: Thank you Michael and good morning, everyone welcome to radius recycling third quarter earnings call I'd like to start off this morning by recognizing our employees for continuing to improve our safety performance. While we continue to work towards our goal of an injury free workplace or <unk>.

Operator: To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Michael Bennett, Investor Relations. Thank you, Danielle, and good morning.

Michael Bennett: I'm Michael Bennett, the company's Vice President of Investor Relations. I'm happy to welcome you to Radius Recycling's earnings presentation for the third quarter of fiscal 2024. In addition to today's audio comments, we've issued our press release and posted a set of slides, both of which you can access on our website at radiusrecycling.com. Before we start, let me call your attention to the detailed safe harbor statement on slide two, which is also included in our press release and in the company's form 10-Q, which will be filed later today.

Over year safety results are trending positively.

Michael Bennett: As we note on slide 2, we may make forward-looking statements on our call today, such as our statements about our targets, volume growth, and margins. However, our actual results may differ materially from those projected in our forward-looking statements. Additional information concerning factors that could cause actual results to materially differ from those in the forward-looking statement is contained in Slide 2, as well as in our press release of today and our Form 10-Q. Please note that we will be discussing some non-GAAP measures during our presentation today.

Speaker Change: Earlier. This morning, we reported our financial results for our third quarter, which reflected.

Speaker Change: Many of you already know that market conditions over the past year has been the toughest we've experienced since 2015, while our reported third quarter loss was $6 97 per share $6 in 'twenty. One sense of this was related to a noncash goodwill impairment charge and a <unk>.

Tamara Lundgren: While our reported third quarter loss was $6.97 per share, $6.21 of this was related to a non-cash goodwill impairment charge and a related deferred tax valuation allowance. Our adjusted loss per share of 59 cents represents significantly better results than the prior quarter, and in light of the very strong headwinds in the recycled metals market, I want to recognize our team for delivering improved sequential results. There are actions show that we're not just waiting for the markets to improve, but are continuously focused on the things that we can control. Lowering our costs, operating efficiently, meeting our customers' needs, and achieving the returns from our capital investments.

Speaker Change: Related deferred tax valuation allowance.

Speaker Change: Our adjusted loss per share of 59 times.

Speaker Change: Presents significantly better results than the prior quarter.

Speaker Change: And in light of the very strong headwinds in the recycled metals market I want to recognize our team for delivering improved sequential results.

Speaker Change: Our actions show that we're not just waiting for the markets to improve but are continuously focused on the things that we can control lowering our cost operating efficiently.

Meeting, our customers' needs and achieving the returns from our capital investments.

Tamara Lundgren: Our concentrated focus on cost savings, productivity, technology investments, and recycling services is moving us forward. The benefits from all these initiatives should come through more clearly when the cyclical headwinds impacting scraps' supply flows subside. On our call this morning, I'll review our Q3 results, the market conditions impacting our performance, and the strategic actions we have underway to address current industry dynamics and create long-term value through the cycle. Stefano will then provide more detail on our financial performance and our capital investments and allocation priorities.

Speaker Change: Our concentrated focus on cost savings productivity technology investments and recycling services is moving us forward the benefits from all of these initiatives should come through more clearly when the cyclical headwinds impacting scrap supply flows subside.

Michael Bennett: We have included a reconciliation of those metrics to GAAP in the appendix to our slide presentation. Now, let me turn the call over to Tamara Lundgren, our Chairman and Chief Executive Officer. She will host the call today with Stefano Gaggini, our Chief Financial Officer. Thank you, Michael, and good morning, everyone.

Stephan: On our call. This morning, I'll review, our Q3 results the market conditions impacting our performance and the strategic actions, we have underway to address current industry dynamics and create long term value through the cycle Stephan.

Speaker Change: Stefano will then provide more detail on our financial performance and our capital investments and allocation priorities I'll wrap up and then we'll take your questions.

Tamara Lundgren: I'll wrap up, and then we'll take your questions. Let's turn now to slide four to review our third quarter highlights. Our Q3 results reflect sequential improvements in our major metrics; adjusted EBITDA of $9 million was up significantly versus Q2, and we delivered meaningful increases in ferrous, non-ferrous, and finished steel sales volumes. These improvements reflect benefits from our expanded cost reduction and productivity improvement programs, and continued focus on our commercial buying programs and the strength of our steel mill, which enjoyed 88% capacity utilization, significantly higher than a 77% U.S. average. These positive achievements were partially offset by continued tight scrap supply flows that are the main contributor to our compressed margins.

Tamara L. Lundgren: Our adjusted loss per share of $0.59 represents significantly better results than the prior quarter. And in light of the very strong headwinds in the recycled metals market, I want to recognize our team for delivering improved sequential results. Their actions show that we're not just waiting for the markets to improve but are continuously focused on the things that we can control, such as lower our costs, operating efficiently, meeting our customers' needs, and achieving returns on our capital investments.

Speaker Change: Let's turn now to slide four to review our third quarter highlights.

Stefano: Our Q3 results reflect sequential improvements in our major metrics adjusted EBITDA of $9 million was up significantly versus Q2 and.

And we delivered meaningful increases in ferrous nonferrous and finished steel sales volumes.

These improvements reflect benefits from our expanded cost reduction and productivity improvement programs.

<unk> focus on our commercial buying programs.

Stefano: The strength of our steel mill.

Stefano: Enjoyed 88% capacity utilization significantly higher than the 77% U S average.

Stefano: These positive achievements were partially offset by continued tight scrap supply flows that are the main contributor to our compressed margins.

Tamara Lundgren: Amidst these challenging conditions, we generated approximately break-even cash flow and returned capital to our shareholders through our 121st consecutive quarterly dividend.

Stefano: Amidst these challenging conditions, we generated approximately breakeven cash flow and returned capital to our shareholders through our 121 consecutive quarterly dividend.

Tamara Lundgren: Let's turn out a slight five to dig a bit deeper into the supply trends that have been impacting our performance. Lower economic activity has been constraining scrap supply flows for more than a year. For 18 out of the last 19 months, U.S. Manufacturing PMI has been below 50, which indicates contractionary territory. Lower auto production, as well as higher prices and financing costs for new and used cars, have contributed to the average age of vehicles reaching their highest level on record, resulting in lower scrap adripes of end-of-life vehicles. These tight supply conditions have led to stickiness and scrap purchase costs, which have not moved in line with the drops in selling prices.

Stefano: Let's turn now to slide five to dig a bit deeper into the supply trends that have been impacting our performance.

Lower economic activity has been constraining scrap supply flows for more than a year.

Stefano: For 2018 out of the last 19 months U S manufacturing PMI has been below 50, which indicates contractionary territory.

Stefano: Lower auto production as well as higher prices and financing costs for new and used cars have contributed to the average age of vehicles, reaching their highest level on record, resulting in lower scrappage rates of end of life vehicles.

Stefano: These tight supply conditions have led to stickiness and scrap purchase costs, which have not moved in line with the drops in selling prices.

Tamara Lundgren: While we don't control the pace of improvement in market conditions, we've seen in the past how quickly the cycle can turn. We expect scrap supply flows to benefit from a recovery in global manufacturing activity, including auto production, increased infrastructure activity, and a decline in interest rates, and to provide us with significant operating leverage benefits as volumes recover. It's also important to note the big difference in the current market environment versus previous down cycles. Specifically, the structural demand tailwinds associated with decarbonization and related low carbon technologies. This positive structural demand has led to sales prices for recycled ferrous holding up well compared to prior downturns, and for recycled non-ferrous reaching multi-year highs.

Stefano: While we don't control the pace of improvement and market conditions, we've seen in the past how quickly the cycle can turn we expect scrap supply flows to benefit from a recovery in global manufacturing activity, including auto production.

Stefano: Increased infrastructure activity and a decline in interest rates and to provide us with significant operating leverage benefits as volumes recover.

Stefano: It's also important to note the big difference in the current market environment versus previous down cycles.

Stefano: Specifically, the structural demand tailwind associated with de carbonization and related low carbon technologies.

Tamara L. Lundgren: This positive structural demand has led to sales prices for recycled ferrous holding up well compared to prior downturns, and for recycled non-ferrous reaching multi-year highs. Equally important, this structural demand is strongly aligned with our strategic initiatives focused on metal recovery technologies, expanding our 3PR service and solutions business, and increasing our volume. So let's turn now to slide 6 for some additional details on these strategic initiatives. As you can see on this slide, our strategic priorities can be bucketed into four areas. First, our Cost Reduction and Productivity Program. This year, we launched a program to deliver $70 million in benefits through cost reductions and productivity.

Stefano: This positive structural demand has led to sales prices for recycled ferrous holding up well compared to prior downturns.

Stefano: Recycled nonferrous, reaching multi year highs.

Tamara Lundgren: Equally as important, this structural demand is strongly aligned with our strategic initiatives, focused on metal recovery technologies, expanding our 3PR service and solutions business, and increasing our volumes.

Stefano: Equally as important this structural demand is strongly aligned with our strategic initiatives focused on metal recovery technologies, expanding our three PR service and solutions business and increasing our volumes.

Tamara Lundgren: So let's turn now to slide six for some additional details on these strategic initiatives. As you can see on this slide, our strategic priorities can be bucketed into four areas. First, our cost reduction and productivity program. This year, we launched a program to deliver $70 million in benefits through cost reductions and productivity initiatives. In Q3, we achieved approximately 75% of the quarterly run rate associated with the plan, and we expect to deliver substantially all of the remainder by the end of our fourth quarter. Second, our investments in advanced metal recovery technologies. This is a multi-site, multi-year investment program focused on increasing the recovery of non-ferrous metals from our shredding process, and creating product optionality by enabling us to create furnace-ready products based on demand and price.

Stefano: So, let's turn now to slide six for some additional details on these strategic initiatives.

Stefano: As you can see on this slide our strategic priorities can be bucket it into four areas first our cost reduction and productivity program.

Stefano: This year, we launched a program to deliver $70 million in benefits through cost reductions and productivity initiatives.

Stefano: In Q3, we achieved approximately 75% of the quarterly run rate associated with the plan.

Stefano: And we expect to deliver substantially all of the remainder by the end of our fourth quarter.

Stefano: Second our investments in advanced metal recovery technologies.

Stefano: This is a multi site multi year investment program focused on increasing the recovery of nonferrous metals from our shredding process and creating product optionality by enabling us to create furnace ready products based on demand and price.

Tamara L. Lundgren: The majority of the returns from these investments are still to come, and when we reach full deployment, these investments should return over $40 million in annual EBITDA. Third, our trademark 3PR service and solutions business line that enables our customers to increase their recycling rates, reduce material going to landfills, lower their carbon footprint, and provide enhanced sustainability reporting.

Stefano: The majority of the returns from these investments are still to come.

Stefano: And when we reach full deployment these investments should return over $40 million in annual EBITDA.

Stefano: Third our trademark <unk> service and solutions business line that enables our customers to increase their recycling rates.

Tamara Lundgren: Recycling recycling recycling recycling recycling recycling recycling recycling recycling and footprint and provide enhanced sustainability reporting. This is asset light, typically with multi-year contracts that can provide a counterbalance to our more cyclical core recycling operations. Reflecting steady growth, our 3PR business line is now contributing just over 10% to our recycled metals volumes. And fourth, increasing our volumes. We have available retained annual recycling capacity of over 1 million ferrous tons compared to our current volume trends. As market conditions improve, this gives us the opportunity to create significant operating leverage. We're also investing in digital tools at our pick and pull franchise to capture previously untapped sources of car flows and related revenue streams, which are especially important as new auto production remains below pre-pandemic levels, and demand for salvaged auto parts remains solid.

This material going to landfills lower their carbon footprint and provide enhanced sustainability reporting.

Tamara L. Lundgren: This is asset-light, typically with multi-year contracts, that can provide a counterbalance to our more cyclical core recycling operations. Reflecting steady growth, our 3PR business line is now contributing just over 10% to our recycled metals volume, and fourth, increasing our volumes. We have available retained annual recycling capacity of over 1 million ferrous tons compared to our current volume trend.

Stefano: This is asset light typically with multiyear contracts that can provide a counterbalance to our more cyclical core recycling operations, reflecting steady growth. Our <unk> business line is now contributing just over 10% to a recycled metals volumes.

Stefano: And fourth increasing our volumes, we have available retained annual recycling capacity of over 1 million ferrous tons compared to our current volume trends.

Tamara L. Lundgren: As market conditions improve, this gives us the opportunity to create significant operating leverage. We're also investing in digital tools at our pick-and-pull franchise to capture previously untapped sources of car flows and related revenue streams, which are especially important as new auto production remains below pre-pandemic levels and demand for salvaged auto parts remains solid. Well, benefits from these initiatives are already contributing to our financial... Their positive effect on our operating margins is currently being masked by the impact of the headwinds we've been experiencing.

Stefano: As market conditions improve this gives us the opportunity to create significant operating leverage.

Stefano: We're also investing in digital tools at our pick and pull franchise to capture previously untapped sources of car flows and related revenue streams, which are especially important as new auto production remains below pre pandemic levels.

Stefano: And demand for salvage auto parts remains solid.

Tamara Lundgren: While benefits from these initiatives are already contributing to our financial performance, their positive effect on our operating margins is currently being masked by the impact of the headwinds we've been experiencing. As these cyclical conditions abate, we expect the benefits of our actions to become much more visible in our margins and EBITDA and to provide a substantial boost to future financial results.

Stefano: While benefits from these initiatives are already contributing to our financial performance.

Stefano: There are positive effect on our operating margins. It is currently being masked by the impact of the headwinds we've been experiencing.

Tamara L. Lundgren: As these cyclical conditions abate, we expect the benefits of our actions to become much more visible in our margins and EBITDA and to provide a substantial boost to future financial results. Let's turn now to slide 7 to review ferrous and non-ferrous demand in a bit more detail. During the third quarter, market conditions for non-ferrous and ferrous recycled metals reflected diverging trends.

Stefano: As these cyclical conditions abate, we expect the benefits of our actions to become much more visible and our margins and EBITDA and to provide a substantial boost to future financial results.

Tamara Lundgren: Let's turn now to slide seven to review ferrous and non-ferrous demand in a bit more detail. During the third quarter, market conditions for non-ferrous and ferrous recycled metals reflected diverging trends. For non-ferrous, we saw strengthening demand, with copper and aluminum achieving multi-year highs. Although lower demand from the auto industry continues to keep PGM prices down and Zorba and Twitch pricing near parity. We achieved a 10% sequential increase in average selling prices for our non-ferrous products and 4% higher volumes. For ferrous, demand was softer sequentially, which led to a decline in average selling prices and a compression in metal spread.

Tamara L. Lundgren: For non-ferrous, we saw strengthening demand, with copper and aluminum achieving multi-year highs, although lower demand from the auto industry continues to keep PGM prices down and Zorba and Twitch pricing near parity. We achieved a 10% sequential increase in average net selling prices for our non-ferrous products and 4% higher volume. For Ferris, demand was softer sequentially, which led to a decline in average selling prices and a compression in metal spread.

Stefano: Let's turn now to slide seven to review ferrous and nonferrous demand and a bit more detail.

Stefano: During the third quarter market conditions for nonferrous, and ferrous recycled metals reflected diverging trends.

Stefano: For non ferrous, we saw strengthening demand with copper and aluminum achieving multiyear highs.

Stefano: Although lower demand from the auto industry continues to keep PGM prices down and Zorba and Twitch pricing near parity, we achieved a 10% sequential increase in average net selling prices for our nonferrous products and 4% higher volumes.

For ferrous demand was softer sequentially, which led to a decline in average selling prices and a compression in metal spreads.

Tamara Lundgren: This lower global demand for ferrous was due in part to increasing levels of Chinese semi-finished and finished steel exports. Seasonality, together with sales of certain cargoes that were delayed at the end of the prior quarter, lifted our ferrous sales volumes. And finished steel sales volumes and utilization during the quarter at our spill mill were higher sequentially, driven by seasonally stronger construction activity in the western US and western Canada.

Tamara L. Lundgren: This lower global demand for ferrous was due in part to increasing levels of Chinese semi-finished and finished steel exports. Seasonality, together with sales of certain cargoes that were delayed at the end of the prior quarter, lifted our Ferris sales volume, and finished steel sales volumes and utilization during the quarter at our steel mill were higher sequentially, driven by seasonally stronger construction activity in the western U.S. and western Canada. So now, I will turn the presentation over to Stefano. Thank you, Tamara, and good morning.

Stefano: This lower global demand for ferrous was due in part to increasing levels of Chinese semi finished and finished steel exports.

Stefano: Seasonality together with sales of certain cargos that were delayed at the end of the prior quarter lifted our ferrous sales volumes.

Stefano: And finished steel sales.

Stefano: <unk> and utilization during the quarter at our steel mill were higher sequentially driven by seasonally stronger construction activity in the Western U S and Western Canada.

Stefano Gaggini: So now, let me turn the presentation over to Stefano. Thank you, Tamara, and good morning. I'll start with a review of the performance drivers in the third quarter, and we'll then cover progress on our cost reduction and productivity plans. Consolidated adjusted EBDA in the third quarter improved to $9 million, compared to $3 million in the prior quarter, driven by higher sales volumes, stronger non-ferrous demand, our cost reduction and productivity program, and recognition of insurance recoveries. This benefits more than offset the impact of the weaker Ferris market conditions. In the third quarter, as part of an impairment test required by accounting standards, we are recognizing a non-cash impairment charge of $216 million on goodwill allocated to three reporting units within our recycling operations.

Speaker Change: So now let me turn the presentation over to Stefano.

Stefano: Thank you Tamara and good morning.

Stefano R. Gaggini: I'll start with a review of the performance drivers in the third quarter, and we'll then cover progress on our cost reduction and productivity plans. Consolidated Adjusted EBITDA in the third quarter improved to $9 million compared to $3 million in the prior quarter, driven by higher sales volumes, stronger nonferrous demand, our cost reduction and productivity program, and recognition of insurance recoveries. These benefits more than offset the impact of the weaker Ferris market conditions. In the third quarter, as part of an impairment test required by accounting standards, we recognized a non-cash impairment charge of $216 million on goodwill allocated to three reporting units within our recycling operations.

Stefano: I'll start with a review of the performance drivers in the third quarter and will then cover progress on our cost reduction and productivity plan.

Stefano: Consolidated adjusted EBITDA in the third quarter improved to $9 million compared to $3 million in the prior quarter driven by higher sales volumes stronger non ferrous demand, our cost reduction and productivity program and recognition of insurance recoveries.

Stefano: These benefits more than offset the impact of the weaker ferrous market conditions.

Stefano: In the third quarter as part of an impairment test as required by accounting standards, we recognized a noncash impairment charge of $216 million on goodwill allocated to three reporting units within our recycling operations.

Stefano Gaggini: The impairment charge was triggered by the combination of the lower current financial performance of our recycling operations due to the challenging market conditions, including tight scrap generation and compressed metal spreads, coupled with the decrease in our market capitalization. The value of goodwill associated with our growing recycling services business remains supported. The non-cash goodwill impairment charge is adjusted out of our non-GAAP financial measures. In the third quarter, we also reached final settlement with insurers for our claim related to the shredder outage at our Everett facility that occurred in prior years. As a result, we recognize the final $7 million in insurance recoveries in the period compared to $2 million in the second quarter.

Stefano: Chairman charge was triggered by the combination of the lower current financial performance of our recycling operations due to the challenging market conditions, including guidance Cup generation and compressed metal spreads coupled with the decrease in our market capitalization.

Stefano: The value of goodwill associated with our growing recycling services business remains supported the noncash goodwill impairment charge is adjusted out of our non-GAAP financial measures.

Stefano: In the third quarter. We also reached final settlement with insurers for our claim related to the shredder outage at our <unk> facility that occurred in prior years as a result, we recognized the final $7 million in insurance recoveries in the period compared to $2 million in the second quarter.

Stefano Gaggini: Our claim for this matter is now completed. As shown on the slide, cost savings and productivity measures are critical levels within our control to mitigate the current market conditions, inflationary headwinds, and operating margin pressure. We are focusing upon structural initiatives capable of generating sustained benefits independent of changes in market conditions or volumes. During the current fiscal year, we identified initiatives with annual run rate benefits aggregating to $70 million, including a reduction of SGN expense by 10%. These initiatives are primarily comprised of production cost reductions, yield increases, optimization of transportation and logistics, decreases in non-trade procurement spend, adjustments in headcount and other employee-related expenses, and a reduction in discretionary activities such as travel and use of professional and other outside services.

Stefano: Our claim for this matter is now completed.

Stefano: As shown on the slide cost savings and productivity measures are critical levers within our control to mitigate the current market conditions inflationary headwinds and operating margin pressure we.

Stefano: We are focusing up on structural initiatives capable of generating sustained benefits independent of changes in market conditions or volumes during.

Stefano: During the current fiscal year, we identified initiatives with annual run rate benefits aggregating to $17 million, including a reduction of SG&A expense by 10%.

Stefano: These initiatives.

Stefano: Primarily comprised of production cost reductions yield increases optimization of transportation and logistics decreases in non trade procurement spend adjustments in headcount and other employee related expenses and a reduction in discretionary activities, such as travel and use of professional and other <unk>.

Stefano: <unk> services in.

Stefano: In the third quarter, we made significant progress with our plan and achieved approximately $13 million of benefits an increase of $5 million sequentially.

Stefano: We expect to achieve substantially the full run rate by the end of our fiscal year.

Stefano R. Gaggini: We incur refactoring charges and other exit-related costs of approximately $3 million in connection with these measures during the third quarter. Now, let's move to slide 9 to discuss Federal Sales and the Market Dynamics. Export and domestic demand for ferrous recycled metals was softer sequentially. As Tamara mentioned, the surge in Chinese steel exports continued to negatively impact global demand.

Stefano: We incurred restructuring charges and other exit related costs of approximately $3 million.

Stefano: In connection with these measures during the third quarter.

Stefano Gaggini: Now let's move to slide 9 to discuss Ferris sales and the market dynamics. Export and domestic demand for ferris recycle metals was softer sequentially. As Tamara mentioned, the surge in Chinese tillexport continued to negatively impact global demand. In the first five months of calendar year 2024, China's finished tile export increased 23% year-over-year, impacting both steel production and ferrous crop demand, particularly in Asia and the Middle East. The domestic scrap prices started the quarter higher than the export, but then declined more significantly during the quarter. As a result of these dynamics, average net selling prices declined 9% sequentially and led to compression and metal spreads.

Stefano: Now, let's move to slide nine to discuss ferrous sales and the market dynamics.

Thomas: Export and domestic demand for ferrous recycled metals was softer sequentially as Thomas mentioned the surge in Chinese steel exports continued to negatively impact global demand in the first five months of calendar year 2020 for Chinas finished steel exports increased 23% year over.

Thomas: The year impacting both steel production and ferrous scrap demand, particularly in Asia and the middle East.

Thomas: Domestic scrap prices started the quarter higher than expert, but then declined more significantly during the quarter.

Thomas: As a result of these dynamics average net selling prices declined 9% sequentially and led to compression of metal spread.

Stefano Gaggini: The declining ferrous prices in the quarter also created a detriment from average inventory accounting of $3 per ferrous ton in the third quarter. Ferrous sales volumes were up 13% sequentially, and the share of domestic ferrous shipment was 48%. Our top sales destinations for ferrous exports were Bangladesh, Turkey, and India.

Stefano R. Gaggini: The decline in ferrous prices in the quarter also created a detriment from average inventory accounting of $3 per ferrous ton in the third quarter. Ferrous sales volumes were up 13% sequentially, and the share of domestic ferrous shipments was 48%. Our top sales destinations for ferrous exports were Bangladesh, Turkey, and India. Now, let's move to slide 10 to discuss non-fairness sales and the market dynamics, and provide an update on our non-fairness investment.

The decline in ferrous prices in the quarter also created a detriment from average inventory accounting of $3 per ferrous ton in the third quarter.

Thomas: Better sales volumes were up 13% sequentially and to share of domestic better shipments was 48%.

Thomas: Our top sales destinations for ferrous experts, where Bangladesh, Turkey and India.

Stefano Gaggini: Now let's move to slide 10 to discuss non-ferrous sales in the market dynamics and provide an update on our non-ferrous investments. Average net selling prices for recycled copper, aluminum, and other non-ferrous products were up 10% sequentially, reflecting a strengthening global demand throughout the quarter. Non-ferrous sales volumes were up 4% sequentially. We sold our non-ferrous products to 14 countries, with the major export destinations being Malaysia, India, and China. We continue the deployment of our advanced primary non-ferrous recovery systems, which drive the incremental metal recovery and the majority of the expected contribution from our investments in advanced recovery technologies.

Thomas: Now, let's move to slide 10 to discuss nonferrous sales and the market dynamics and provide an update on our non ferrous investments.

Thomas: Average net selling prices for recycled copper aluminum and other nonferrous products were up 10% sequentially, reflecting a strengthening global demand throughout the quarter.

Nonferrous sales volumes were up 4% sequentially, we sold our nonferrous products to 14 countries with the major export destinations in Malaysia, India and China.

Stefano R. Gaggini: We continue the deployment of our advanced primary non-ferrous recovery systems, which drive the incremental metal recovery and the majority of the expected contribution from our investments in advanced recovery technology. We made headway in the ramp-up activities on several of these primary systems during the quarter. We continue to work closely with our technology vendors and project completion of construction of the currently permitted primary systems by the end of the summer. We'd ramp up to full operations to be reached by calendar year end 2024. We have two primary systems left to start construction on the West Coast, subject to permitting approval.

Thomas: We continue the deployment of our advanced primary nonferrous recovery systems, which drive the incremental metal recovery and the majority of the expected contribution from our investments in advanced recovery technologies.

Stefano Gaggini: We made headway in the ramp-up activities on several of these primary systems during the quarter. We continue to work closely with our technology vendors and project completion of construction of the currently permitted primary systems by the end of the summer, with ramp-up to full operations to be reached by calendar year end 2024. We have two primary systems left to start construction on the West Coast subject to permitting approval. We also have operational advanced separation systems that give us the option to process Zorba into a higher-grade Twitch and other furnace-ready materials when market dynamics are supportive.

Thomas: We made headway in the ramp up activities on several of these primary systems during the quarter.

Thomas: We continue to work closely with our technology vendors and project completion of construction of the currently permitted primary systems by the end of the summer we would ramp up to full operations to be reached by calendar year end 2024.

Thomas: We have two primary systems led to start construction on the west coast subject to permitting approval.

Thomas: We also have operational advanced separation systems that give us the option to process zorba into a higher grade twitch and other furnace ready materials when market dynamics are supportive.

Thomas: Overall the contribution to performance from these systems was positive in the third quarter. We believe we are at an inflection point in the ramp up phase of etc. Several of these systems and expect to see a trend of increasing returns from these investments in the remainder of calendar 2024.

Stefano R. Gaggini: Once fully operational, we continue to expect substantial returns from our investments of approximately $10 EBITDA per ferrous ton. Now, let's move to slide 11 to discuss our steel mill performance. Finish steel sales volumes of 126,000 tons in the third quarter were up 11% sequentially, as we benefited from a solid pickup in seasonal construction activity after a slow start in early spring due to the lingering impact of rain in the west. Average meal utilization was 88%, up from 81% in the prior quarter, a reflection of sound demand from non-residential construction in our western market. Average net selling prices for finished steel were approximately flat sequentially. We believe our mills stand to benefit from the anticipated demand associated with the U.S. infrastructure bill. Now, let's move to slide 12.

Thomas: Once fully operational we continue to expect substantial return from our investments of approximately $10 EBITDA per ferrous ton.

Stefano Gaggini: Now, let's move to slide 11 to discuss our steel mill performance. Finished steel sales volumes of 126,000 tons in the third quarter were up 11% sequentially. As we benefited from a solid pickup in seasonal construction activity, after a slow start in early spring due to the lingering impact of rain in the west, average mill utilization was 88%, up from 81% in the prior quarter, a reflection of sound demand from non-residential construction in our western markets. Average net selling prices for finished steel were approximately flat sequentially. We believe our mill stands to benefit from the anticipated demand associated with the US Infrastructure Bill.

Thomas: Now, let's move to slide 11 to discuss our steel mill performance.

Thomas: Finished steel sales volumes of 126000 tons in the third quarter were up 11% sequentially.

Thomas: As we benefited from a solid pickup in seasonal construction activity. After a slow start in early spring due to the lingering impact of rain in the west.

Thomas: Average mill utilization was 88% up from 81% in the prior quarter, a reflection of some demand from non residential construction in our western markets.

Thomas: Average net selling prices for finished steel were approximately flat sequentially.

Thomas: We believe our mill stands to benefit from the anticipated demand associated with the U S infrastructure Bill.

Stefano Gaggini: Now let's move to slide 12. Operating cash flow for the third quarter was near break-even, reflecting a significant improvement sequentially. The impact on working capital of higher volumes in the quarter substantially offset the benefit from shipment and collection of certain bulk cargos that had been delayed at the end of the prior quarter. Based on current levels of sales activity and demand, we expect the fourth quarter cash flow from operations to be positive. Capital expenditures were $16 million during the third quarter. We project capital expenditures for fiscal 24 as a whole to be in the range of $75 to $80 million.

Thomas: Now, let's move to slide 12.

Thomas: Operating cash flow for the third quarter was near breakeven, reflecting a significant improvement sequentially.

Thomas: But on working capital of higher volumes in the quarter substantially offset the benefit from shipment and collection of certain bulk cargoes that had been delayed at the end of the prior quarter.

Thomas: Based on current levels of sales activity and demand, we expect the fourth quarter cash flow from operations to be positive.

Thomas: Capital expenditures were $16 million during the third quarter.

Thomas: Capital expenditures for fiscal 'twenty, four as a whole to be in the range of $75 million to $80 million.

Stefano Gaggini: Approximately one-fourth will be for growth projects, including for our non-ferrous technology initiatives and investments to support recycling services expansion, with a remaining spend for maintaining the business and the environmental-related capital projects. The effective tax rate for a third quarter was a benefit of 18% on reported pre-tax results. Our tax rate in the quarter reflected a detriment directly related to the goodwill impairment charge, as it led to the recognition of a valuation allowance charge of $6 million on the third tax assets. Excluding the impairment charge and its creative tax impact, the tax rate on our known gap results was a benefit of 27% in the third quarter.

Thomas: Approximately one fourth will be for growth projects, including for our nonferrous technology initiatives and investments to support recycling services expansion with the remaining spend for maintaining the business and the environmental related capital projects.

The effective tax rate for the third quarter was a benefit of 18% on a reported pre tax results are.

Our tax rate in the quarter reflected a detriment directly related to the goodwill impairment charge has it led to the recognition of a valuation allowance charge of $6 million on deferred tax assets.

Thomas: Excluding the impairment charge and its related tax impact.

Thomas: Tax rate on our non-GAAP results was a benefit of 27% in the third quarter.

Stefano Gaggini: Net debt was $386 million at the end of the third quarter, and net leverage was 37%. Subsequent to the end of the quarter, we amended our existing revolving credit facility, which has a borrowing capacity of up to $800 million and matures in August 2027. The amendment provides for a relaxation of certain financial covenants for the four fiscal quarter-end periods to the end of the second quarter of fiscal 2025. The size of the credit facility and its maturity date were not changed as a result of the amendment. Our capital priorities are focused on reinvesting in the business and supporting our strategic initiatives, including completing the deployment of our technology investments and growing our recycling services business. Returning capital to shareholders through our quarterly dividend also is an important part of our balanced capital allocation.

Thomas: Net debt was $386 million at the end of the third quarter and net leverage was 37%.

Thomas: Subsequent to the end of the quarter, we amended our existing revolving credit facility, which has a borrowing capacity of up to $800 million and matures in August 2027.

Thomas: The amendment provides for a relaxation of certain financial covenants for the fourth fiscal quarter end periods through the end of the second quarter of fiscal 2025.

Thomas: The size of the credit facility in its maturity date will not change as a result of the amendment.

Thomas: Our capital priorities are focused on reinvesting in the business and supporting our strategic initiatives, including completing the deployment of our technology investments and growing our recycling services business.

Thomas: Returning capital to shareholders through our quarterly dividend.

Thomas: An important part of our balanced capital allocation.

Tamara Lundgren: Given the quarter has just started, it is too early to provide a fourth quarter quantitative outlook at this time. And with that, I'll turn the call back over to Tamara. Thank you, Stefano. Today's market conditions won't last forever, and as we've discussed earlier, we are well-positioned to benefit from demand trends associated with decarbonization, infrastructure investment, stronger global manufacturing activity, and declines in interest rates. We have more than 100 operating facilities, producing annual Ferris volumes of over 4 million tons, non-Ferris volumes of over 700 million pounds, and more than 500,000 tons of low carbon and net-zero carbon emission green finished steel products.

Thomas: Given the quarter has just started it is too early to provide a fourth quarter quantitative outlook at this time.

Speaker Change: And with that I'll turn the call back over to Tamara.

Tamara L. Lundgren: Thank you Stefano.

Tamara L. Lundgren: Today's market conditions won't last forever, and as we've discussed earlier, we are well positioned to benefit from demand trends associated with decarbonization, infrastructure investment, stronger global manufacturing activity, and declines in interest rates. We have more than 100 operating facilities producing annual ferrous volumes of over 4 million tons, non-ferrous volumes of over 700 million pounds, and more than 500,000 tons of low-carbon and net-zero carbon emission green finished fuel products There is a legacy at our company of facing challenges head on and navigating through the toughest of times.

Tamara L. Lundgren: Today's market conditions won't last forever and as we've discussed earlier, we are well positioned to benefit from demand trends associated with de carbonization infrastructure investment stronger global manufacturing activity and declines in interest rates, we have more than 100 operating facilities producing annual fair.

Tamara L. Lundgren: Those volumes of over 4 million tonnes nonferrous volumes of over 700 million pounds and more than 500000 tonnes of low carbon and net zero carbon emission green finished steel products.

Tamara Lundgren: There is a legacy at our company of facing challenges head on and navigating through the toughest of times. Our team is experienced in managing what we can control in the short term while continuing to execute on our longer-term initiative. Before we open the call for questions, I'd like to thank our team for their dedication and our customers, suppliers, and the communities in which we operate for their partnership. Working together, we continue to demonstrate the critical and essential role of our business and our local economies and across the globe.

Tamara L. Lundgren: There is a legacy at our company are facing challenges head on and navigating through the toughest of times. Our team is experienced in managing what we can control in the short term, while continuing to execute on our longer term initiatives.

Tamara L. Lundgren: Before we open the call for questions I'd like to thank our team for their dedication and our customers suppliers and the communities in which we operate for their partnership.

Tamara L. Lundgren: Working together, we continue to demonstrate the critical and essential role of our business and our local economies and across the globe.

Operator: And now operator, let's see if there are any questions. As a reminder to ask a question, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. Please stand by while we compile the Q&A roster.

Tamara L. Lundgren: And now operator, let's see if there are any questions.

Speaker Change: As a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw your question. Please press star one again.

Operator: Please stand by while we compile the Q&A. Our first question comes from Martin Englert with Seaboard Research Partners. Your line is now open.

Speaker Change: Please standby, while we compile the Q&A roster.

Speaker Change: Yeah.

Martin Englert: Our first question comes from Martin Englert with Seaport Research Partners. Your line is now open. Good morning. How are you? Good. Thank you. A question of market fundamental trends versus over the foreseeable future. What other levers and options does the company have to address this if we look forward and were in an environment 12 months from now where fundamentals just haven't changed for whatever various reasons. I guess how do you think about your options and be considered if some of the ferrous facilities aren't inherently profitable potential temporary idling of them until the market turns around.

Speaker Change: Our first question comes from Martin Engler with Seaport Research Partners. Your line is now open.

Martin John Englert: Good morning. Good morning. How are you?

Good morning, Good morning, good morning, how are you.

Unnamed: Good. Good. Thank you.

Speaker Change: Got it.

Speaker Change: Great.

Martin John Englert: A question of market fundamental trends persisting over the foreseeable future. What other levers and options does the company have to address this? If we look forward and we're in an environment 12 months from now, where fundamentals just haven't changed for whatever reasons, I guess. How do you think about your options? Have you considered?

Speaker Change: Thanks for your question market fundamental trends persist over the foreseeable future.

Speaker Change: What are their levers and options as a company have to address it.

Speaker Change: Look forward and we're in an environment 12 months from now where fundamentals.

Speaker Change: Haven't changed for whatever various reasons.

Speaker Change: How do you think about your auction have you considered.

Speaker Change: Some of the surface facilities are.

Speaker Change: Currently profitable potential temporary idling of them until the market turns around.

Tamara Lundgren: So let me take that to start, and then Stephanie, why don't you add in as well. So when we think about what is the path to expand our margins, there are really three major areas that we consider to be near term. One is our AMRTS, the Advanced Mental Recycling Technology Investments, which, as I mentioned before, the majority of the benefits are still to come and should be material when fully deployed, adding a significant amount of EBITDA. And we're through the bulk of it. We still have a couple of projects to get permitted. But that is one area that we're focusing on, and that I would recommend that you look at because it is so aligned with the increasing demand for non-ferrous metals.

Tamara L. Lundgren: Some of the Ferris facilities aren't inherently profitable, potential temporary idling of them until the market turns around. So let me take that to start, and then Stefano, why don't you add in as well? So when we think about what the path to expanding our margins is, there are really three major areas that we consider to be near term. One is our AMRTS, Advanced Metal Recycling Technology investments, which, as I mentioned before, the majority of the benefits are still to come and should be material when fully deployed, adding a significant amount of EBITDA. And we're through the bulk of it; we still have a couple of...

Speaker Change: So let me take that.

To start and then Stephane, how why don't you add in.

Speaker Change: Well so when we think about what is the path to expand our margins. There are really three major areas that we consider to be near term.

Speaker Change: One is our <unk> advanced metal recycling technology investments, which as I mentioned before the majority of the benefits are still to come and should be material when fully deployed adding a significant amount of EBITDA and and we're through the bulk of it we still have a couple of.

Tamara L. Lundgren: Projects to get permitted, but that is one area that we're focusing on and that I would recommend that you look at, because it is so aligned with the increasing demand for non-ferrous metals. And so, both near-term and strategically, I think it is a very powerful investment program. The second is the completion of obtaining the benefits from the Cost Reduction and Productivity Program that we announced at the beginning of the year.

Speaker Change: Projects to get permitted but that that is one area that I would.

Speaker Change: That we are focusing on in that.

Speaker Change: Would recommend that you look at because it is so aligned with the increase in demand for non ferrous metals and answers. So both near term and strategically I think it is a very powerful.

Speaker Change: Investment program.

The second is the completion of the of obtaining the benefits from the cost reduction and productivity program that we announced at the beginning of the year.

Speaker Change: As we mentioned earlier, we have achieved about three quarters of the run rate through Q3, and we expect substantially the full benefit by by year end and I think that.

Speaker Change: I was going to be particularly helpful to margins now that the inflationary pressure is lower.

Speaker Change: And then third I would focus on the investments, we're making in our recycling services business line, our three PR, which stands for third party recycling, which is our take on third party logistics, where we are providing services to customers to help them manage their recycling operations. So we're investing in that.

Tamara Lundgren: Our 3PR, which stands for third party recycling, which is our take on third party logistics, where we are providing services to customers to help them manage their recycling operations. So we're investing in that; it's contributing to increased volumes, and we're continuing to invest in digital tools in our pick and pull franchise in order to access previously untapped sources of supply. So I would focus the attention on that, and then definitely you might want to just mention our process for asset monies. Correct. Martin, we look at our operating platform and evaluate our portfolio on an ongoing basis that includes looking at various metrics from a performance perspective as well as looking at asset monetization opportunities that were to be the case.

Tamara L. Lundgren: So we're investing in that. It's contributing to increased volumes. And we're continuing to invest in digital tools in our pick-and-pull franchise in order to access previously untapped sources of supply. So I'll focus the attention on that. And then, Stefano, you might want to just mention our process for asset monitoring.

Speaker Change: <unk>, it's contributing to.

Speaker Change: Two increased volumes and we're continuing to invest in digital tools and our pick and pull.

Speaker Change: Franchise in order to access previously untapped sources of of supply So I would I'd.

Speaker Change: I'd focus.

Speaker Change: The attention on that and then Stefano you might want to just mention our process for asset monetization.

Stefano R. Gaggini: Martin, you know, we look at our operating platform and evaluate our portfolio on an ongoing basis. That includes, you know, looking at various metrics from a performance perspective, as well as, you know, looking at asset monetization opportunities if that were to be the case. Any more color on asset monetization or the, may be smaller businesses that you're evaluating, or something higher level that's larger, like the steel mills? We routinely... I did both. Oh, sorry. Stefano.

Stefano: Correct, Martin and we look at our operating platform and evaluate our portfolio on an ongoing basis.

Stefano: And that includes looking at values of metrics from a performance perspective, as well as looking at asset monetization opportunities that where we are to be the case.

Tamara Lundgren: Any more color on the asset monetization? Are these maybe smaller businesses that you're evaluating, or something higher level that's larger, like the steel-milk business. We routinely look at our portfolio to see whether our sites are still in the best places, and we see that particularly in our pick and pull franchise, where over the years we have monetized certain assets and moved development to other places. So it is something that we look at routinely, and when you mention in your question, you know, underperforming sites or idling sites, you know that is something that we've done also in the past. That's very focused on where our supply flow is coming, what are we pushing through with those sites, and are they long-term holds or should they be monetized and repositioned elsewhere?

Speaker Change: Any more color on the asset monetization.

Speaker Change: Maybe smaller businesses that you are evaluating.

Or something higher level.

Speaker Change: But the larger steel mills business.

Speaker Change: We do.

Speaker Change: Oh, sorry go ahead go ahead okay.

Tamara L. Lundgren: Oh, go ahead. We routinely look at our portfolio to see whether our sites are still in the best places. And so we see that particularly in our pick-and-pull franchise, where over the years we have monetized certain assets and moved development to other places. So it is something that we look at routinely.

Speaker Change: We routinely look at our portfolio.

Speaker Change: Two to see whether our sites are still in the best places and so we see that particularly in our pick and pull franchise, where where we where over the years, we have monetize certain assets and move development to other places. So it is something that we look at routinely and when you.

Stefano R. Gaggini: And when you mentioned in your question underperforming sites or idling sites, that is something that we've done also in the past that is very focused on where supply flows are coming from, what we are pushing through those sites, and are they long-term holds, or should they be monetized and repurposed? The reported export Ferris price seemed a bit weak relative to the benchmark indices in the quarter. Can you maybe touch on in some more detail the markets you were selling into if you feel like you had to sell it, maybe at more competitive prices versus the benchmarks on average to secure volumes across the board? I'll take that one, Martin.

Speaker Change: Mentioned in your question underperforming sites.

Speaker Change: Or idling sites that is something that we've done also in the past.

Speaker Change: That's very.

Speaker Change: Focused on where our supply flows coming.

What what are what are we pushing through with those sites and are they long term holds or should they be monetized and repositioned elsewhere.

Stefano Gaggini: The reported export Ferris price seemed a bit weak relative to the benchmark indices in the quarter. Maybe touch on in some more detail the markets you were selling into if you feel like you had to sell it maybe more competitive prices versus the benchmarks on average to the clear volumes across the asset. I'll take that one, Martin. As you know, benchmark index prices for recycled metals are published on our growth basis before freight costs. So when you compare, you know, to our average net selling prices, those are on a net basis, net of freight. So the net selling price is a reflection of where we sell to in which geography and meaning that the mix of sales destinations can create some deviations compared to growth benchmark prices.

Speaker Change: The reported export ferrous price.

Speaker Change: A bit weak relative to the benchmark indices.

Speaker Change: In the quarter.

Speaker Change: Can you maybe touch on some more detail of the markets you are selling into.

Speaker Change: You have to sell it.

Speaker Change: Maybe more competitive prices versus the benchmarks on average to six year volumes across the asset.

Stefano R. Gaggini: As you know, benchmark index prices for recycled metals are published on a gross basis before freight costs. So when you compare to our average net selling prices, those are on a net basis, net of freight. So the net selling price is a reflection of where we sell to in which geography, meaning that the mix of sales destinations can create some deviations compared to gross benchmark prices.

Speaker Change: I'll take that one Martin.

Martin: As you know benchmark index prices for recycled metals are published on a gross basis before freight costs. So when you compare to our average net selling prices goes out on a net basis net of freight.

Martin: So the net selling price is a reflection of where we sell to and which geography and.

Martin: Meaning that the mix of sales destinations can create some deviations compared to gross benchmark prices.

Stefano R. Gaggini: As I mentioned in my remarks, our top sales destinations in the quarter were Bangladesh and India on the West Coast and Turkey from the East Coast. And overall, the markets on the sales side are highly competitive. We sell to where demand is greatest, and we view those freight rates as a pass-through. Can you touch on what is happening with freight rates, in particular in East Asia? I know that there's been some serious inflation in the container market in recent history.

Stefano Gaggini: As I mentioned in my remarks, our top sales destination in the quarter were Bangladesh and India on the west coast, and Turkey, Turkey from the east coast. And overall, your markets on the south side are highly competitive. We sell to where demand is greatest, and we viewed those freight rates as a past room. And you touched on what was happening with freight rates in particular East Asia. I know that there's been in the container market. There's been some serious in place in there in recent history in the bulk market. It could be a little bit different but maybe how the freight rates are today over the last quarter looking at the west coast to get it to the consumers in East Asia and how that compares to history, whether they're inflated or not.

Martin: As I mentioned in my remarks.

Martin: Top tier destination in the quarter, where Bangladesh and India on the on the West Coast in Turkey, Turkey from the from the East Coast and overall markets on the sales side of highly competitive we sell to.

Martin: Where demand is greatest.

Martin: And we viewed as those freight rates.

Martin: Through.

Speaker Change: Could you touch on what was happening with freight rates in particular.

Speaker Change: I know that there is.

Speaker Change: And the container market.

Speaker Change: Serious inflation there.

Stefano R. Gaggini: In the bulk market, it could be a little bit different, but maybe how the freight rates are today over the last quarter, looking at the West Coast to get it to the consumers in East Asia and how that compares to history, whether they're inflated or not. And so I'll start by saying that our freight rates for bulk were flat, pretty much flat sequentially, from Q3 to Q2 this year. They're up year over year due primarily to the situation in the Panama and Suez Canals, but as you're aware, they're pass-throughs for us, so we didn't really see any impact sequentially, and the canal situations, the rates have been adjusted for that over the course of the last year.

Speaker Change: A history.

Speaker Change: Welcome Mark.

Speaker Change: It could be a little bit different but maybe.

Speaker Change: How the freight rates are today over the last quarter.

Speaker Change: The west coast to get it to the consumers.

Speaker Change: And how that compared to history to whether they're inflated or not.

Stefano Gaggini: So I'll start with saying that our freight rates for bulk were pretty much flat sequentially, Q3 to Q2 this year. They're up year over year, due primarily to the situation in the Panama and Suez Canal, but as you are aware, they're pass-throughs for us. So we didn't really see any impact sequentially, and the canal situations are the rates have been adjusted for that over the course of the last 12 months.

Speaker Change: So I'll start with saying that our freight rates for bulk.

Speaker Change: We're flat pretty much flat sequentially Q3 to Q2. This year they are up year over year due primarily to the situation in the Panama and Suez Canal.

Speaker Change: But as you know as you are aware of their pass throughs for us. So so we didn't really see any impact sequentially.

Speaker Change: Sequentially and the.

Speaker Change: The canal situations are.

Speaker Change: Yeah.

Speaker Change: The rates have been adjusted for that over the over the course of the last 12 months.

Stefano Gaggini: Okay, when you look at your footprint, is there anything unique about the regional markets on ferris or cyclone where the assets are operated and located within that makes scrap collections more challenging with the lower margins versus the broader US market as a whole. The one thing that I would say is that there are certainly different regulatory environments across regions. So if you look at, for example, the West Coast regulatory environment versus other regions in the US, that could impact operating costs. Not so much necessarily actual scrap collection costs, but when you look at what it costs to get to a product ready for sale, you do see regional differences from a regulatory perspective.

Speaker Change: Okay.

Stefano R. Gaggini: When you look at your footprint, is there anything unique about the regional markets for ferrous recycling, where the assets are operated and located, that makes scrap collections more challenging with a lower margin versus the broader US market as a whole? The one thing that I would say is that there are certainly different regulatory environments across regions. So if you look at, for example, the West Coast regulatory environment versus other regions in the U.S., that could impact operating costs, not so much necessarily actual scrap collection costs, but when you look at what it costs to get a product ready for sale, you do see regional differences from a regulatory perspective. But, you know, as you know, Martin's scrap collection is very local, not national, so, really, it's the sub- [inaudible] I'll take that one, Martin.

Speaker Change: When you look at your footprint is there anything unique about the regional markets on ferrous recycling.

Speaker Change: Where the assets are operated and located within.

Speaker Change: That makes scrap collection more challenging with the lower margin versus the broader U S market as a whole.

Speaker Change: The one thing that I would say is that there are certainly different regulatory environments across regions. So if you look at for example, the west coast regulatory environment.

Speaker Change: Versus other regions in the U S that could impact operating cost not so much necessarily actual scrap collection costs, but when you look at.

At what it costs.

Speaker Change: To get to a a product ready for sale you do see regional differences from a regulatory perspective.

Stefano Gaggini: But, you know, as you know, Martin Scrap collection is very local, not national. So really it's the sub-regional market levels that are typically the best benchmarks.

Speaker Change: But.

Martin: No Martin scrap collection is very local not national so.

Martin: Really it's the sub regional market levels that are typically the best benchmarks.

Stefano Gaggini: Understood. Could you share some color on the underlying profitability, EBITDA, per tonne of the steel mill business, maybe some goal posts or how that works for the quarter in the 12 months? I'll take that one, Martin. As you know, we report our results on one segment, and that's on a consolidated basis. So we do not provide the steel mill contribution separately. Obviously, we have said before that in the current market, the contribution of our steel mill and from the sale of finished steel of this integrated mill that we have remains, you know, the mill remains a significant contributor to our consolidated performance.

Martin: Understood.

Speaker Change: Could you share some color on the underlying profit availability EBITDA per ton.

Speaker Change: All mills business, maybe some goalposts on how that looks for the quarter and the trailing 12 months.

Stefano R. Gaggini: As you know, we report our results in one segment, and that's on a consolidated basis. So we do not provide the steel mill contribution separately. Obviously, as we have said before, in the current market, the contribution, right, of our steel mill and the revenue from the sale of finished steel from this integrated mill that we have remains, you know, the mill remains a significant contributor to our consolidated performance.

I'll take that one mark.

Speaker Change: No.

Speaker Change: We report our results on one segment and Thats on a consolidated basis. So.

Speaker Change: So we do not provide the steel mill.

Speaker Change: Contribution.

Speaker Change: Berkeley, obviously, we have said before.

Speaker Change: In the current market.

Speaker Change: The contribution right of our steel mill.

Speaker Change: From the sale of finished steel of this integrated model that we have remained EMEA remains a significant contributor to our consolidated performance.

Stefano R. Gaggini: And spreads remain healthy in historical context, although obviously they are lower, they have declined from the all-time highs that we had seen in fiscal 22 and early 23. And, and I'll leave it at that. Qualitatively, are you able to discuss going to the best you've provided? various metrics across the business lines. I understand that it's just a consolidated group result, but you know, with a Ferris business, seals, mills, bills, auto parts business, nonferrous business, and services business too, but of all the major businesses, how many of them were EBITDA profitable? Over, you know, the current quarter and the trailing 12 months. I'm trying to get a sense of it.

Stefano Gaggini: And spreads remain healthy in historical context, although obviously they are lower; they have declined from the old time highs that we had seen in fiscal 22 in early 23. And I'll leave it at that. I'll leave it at that. Of all the major and services business, too, but of all the major businesses, how many of them were EBITDA profitable over, you know, current quarter, trailing 12 months, I'm trying to get a sense. I mean, I suspect that the steel mill business embedded in there is probably a large portion of the positive EBITDA contribution, non-fair, probably improved.

And spreads remain healthy in historical context, although obviously they are lower they have declined from the all time highs that we had seen in fiscal 'twenty two early 'twenty three.

Speaker Change: Leave it at that.

Speaker Change #100: Qualitatively are you able to discuss growing.

Speaker Change #101: You have provided.

Speaker Change #102: Various metrics across the business lines I understand.

Speaker Change #103: Consolidated group results.

Speaker Change #104: Ferris business.

Bill: No Bill.

Speaker Change #104: Yes.

Speaker Change #106: <unk> parts business nonferrous business.

Speaker Change #106: All of the major and services business to all the major businesses.

Speaker Change #107: How many of them were EBITDA profitable.

Martin John Englert: I mean, I suspect that the steel mills business embedded in there probably a large portion of the positive EBITDA contribution. Non-ferrous probably improved. I would guess ferrous is probably negative.

Speaker Change #107: Current quarter trailing 12 months.

Speaker Change #108: I'm trying to get a sense I mean, I suspect that the steel mills business embedded in there.

Speaker Change #108: Probably a large portion of the.

Speaker Change #108: Positive EBITDA contribution nonferrous, probably improve.

Stefano Gaggini: I would guess Ferris is probably negative. I'd be a little bit unsure on the out-of-body business and assume that services is probably positive. Again, I think that, you know, the answer I gave you before, as far as not breaking apart the results in the way they are describing, we have one integrated platform, so all these businesses are integrated, including the mill. You know, as we said before, we look at, you know, our portfolio very focused on making sure that actually from a valuable contribution perspective, every business that we have is contributing positively to results, and all of them where.

Speaker Change #109: Yes, sure probably negative.

Stefano R. Gaggini: I'd be a little bit unsure about the auto body business, but assume that services is probably more popular. Again, I think that, you know, the answer I gave you before, as far as not breaking apart the results in the way they are describing, we have one integrated platform, so all these businesses are integrated, including the mill. As we said before, we look at our portfolio very focused on making sure that, from a valuable contribution perspective, every business that we have is contributing positively to results, and all of them are. So I think that that's the level of detail we can provide, you know, at this time. Okay, I appreciate the color.

Speaker Change #109: A little bit on sure on the auto body business.

Speaker Change #109: But services is probably positive.

Speaker Change #109: Again, I think that the.

Speaker Change #109: The answer I gave you before as far as not breaking apart the results in the.

Speaker Change #109: The way they are describing.

Speaker Change #109: One integrated platform for all these businesses are integrated including including the mill.

Speaker Change #109: As we said before we look at.

Speaker Change #109: Our portfolio very focused on making sure that actually.

Speaker Change #109: From a provider contribution perspective every business that we have.

Speaker Change #109: Is.

Speaker Change #109: Is contributing positively.

Speaker Change #109: Results.

Speaker Change #109: And all of them were so I think that the.

Stefano Gaggini: So, I think that that's the level of detail we can provide at this time.

Speaker Change #109: That's the <unk>.

Speaker Change #109: Level of detail, we can provide them.

Speaker Change #109: At this time.

Martin Englert: Okay, I appreciate the color. Thank you, and good luck.

Martin John Englert: Thank you. And good luck. It was nice to see the cost reduction efforts seem to be running a little ahead of the initial plan as far as timing is concerned. So, nice job.

Speaker Change #110: Okay I appreciate the color. Thank you and good luck. It was nice to see the cost reduction efforts seem to be running a little higher.

Martin Englert: It was nice to see the cost reduction efforts seem to be running a little ahead of the initial plan as far as timing. So, nice question.

Speaker Change #110: The initial plan as far as timing.

Speaker Change #111: Yes, Sir.

Speaker Change #112: Thank you. Thank you.

Speaker Change #112: Thank you.

Speaker Change #113: One moment for our next question.

Samuel Mckinney: Our next question comes from Samuel McKinney with KeyBank Capital Markets. Your line is now open. Hi, Tim. Good morning. Good. I'll start on, again, on the Ferris Export Market; despite headwinds from domestic consumption rates in Turkey and the impact of Chinese exports you've cited, the export volumes were solid, quarter over quarter. Any way to frame up the impact that those delayed cargo ships have in your fiscal third quarter and how dynamics of that market have developed over the course of the summer. Yeah, I'll start saying here, and just from the perspective of the volume, which were up 13% on the Ferris side, sequentially. It's really two drivers there.

Operator: Thank you. One moment for our next question. Our next question comes from Samuel McKinney with KeyBank Capital Markets. Your line is now open. Hi Tamara and Stefano, how are you?

Speaker Change #114: Our next question comes from Samuel Mckinney with Keybanc capital markets. Your line is now open.

Speaker Change #115: Hi, Good morning, Stefano how are you.

Speaker Change #114: Hey.

Samuel J. McKinney: Good morning. Good. I'll start again on the fairest export market. Despite headwinds from domestic consumption rates in Turkey and the impact of Chinese exports, your export volumes were solid quarter over quarter. Any way to frame up the impact that those delayed cargo ships had on your fiscal third quarter and how the dynamics of that market have developed over the course of this summer? Yeah, I'll start, Sam, here.

Samuel J. McKinney: Good I'll start again on the ferrous export market and despite headwinds from domestic consumption rates in Turkey, and the impact of Chinese exports, you decided the export volumes were solid quarter over quarter any way to frame up the impact that those delayed cargo ships had.

Samuel J. McKinney: In your fiscal third quarter, and how dynamics of that market has developed over the course of this summer.

Stefano R. Gaggini: And just from the perspective of volumes, which were up 13% on the ferrous side sequentially, there are really two drivers there. One is the seasonality that we see on flows that came through, despite the fact that flows remain tight from a sequential perspective compared to the winter when they went up. And I would say that that's probably the majority of what makes up the increase.

Samuel J. McKinney: Yes.

Sam: I'll start Sam here and just from a from the perspective of the volumes, which were up 13% on the federal side.

Sam: Sequentially.

Sam: Really two drivers there one is the seasonality that we see on flows.

Samuel Mckinney: One is the seasonality that we see on flows that came through despite the fact that flows remain when we look at prior years; they remain tight from a sequential perspective compared to the winter they went up. And I would say that that's probably the majority of what makes up the increase, and the rest is from the delayed cargo that we had at the end of Q3, which we shipped in Q3. With the higher volumes, we have all the higher inventories, and so we look for those sales to continue into Q4. Okay, any way to frame up the volume on those delayed cargo ships, how much they benefited the quarter?

Sam: That came through despite the fact that flows.

Sam: When we look at prior years, they remain tight from a sequential perspective compared to the winter. They went up and I would say that probably.

Stefano R. Gaggini: And the rest is from the delayed cargoes that we had at the end of Q3, which we shipped in Q3. You know, with the higher volumes, we have all the higher inventories, and so we look for those sales to continue into Q4. Okay, any way to frame up the volume on those delayed cargo ships, how much they benefited the quarter? I would say it's more around one-third of that increase sequentially.

The majority of the of the more than makes up the increase and the rest.

Sam: Is from the delayed cargoes that we had at the end of Q3, which we shift.

Sam: In Q3.

With the higher volumes, we have although higher inventories and so we'll look for for those those sales to continue into Q4.

Speaker Change #116: Okay any way to frame up the volume on those delayed cargo ships, how much they benefited the quarter.

Samuel Mckinney: I would say it's more around one third of that increase sequentially. Okay, thanks. That's helpful.

Speaker Change #117: I would say, it's more around one third of that of that increase sequentially.

Speaker Change #118: Okay. Thanks, that's helpful.

Samuel J. McKinney: Okay, thanks, that's helpful. And then moving into non-ferrous and global Zorba pricing, which remains pretty frothy, and you've mentioned before that the tight premium of Twitch over Zorba can make conversion less attractive. How do you view that market as Zorba prices remain high? Yeah, I'll start on this one. So obviously, with higher Zorba prices, right, irrespective of whether we process the Zorba into higher value, you know, twitch, and other furnace ready materials, the higher value of Zorba flows through our margins, and that's a positive contributor.

Samuel Mckinney: Moving into non-ferrous and global Zorba price, it remains pretty frothy. You've mentioned before that the tight premium of Twitch over Zorba can make conversion less attractive. How do you view that market as Zorba price is remain high? Yeah, I'll start on this one. So, obviously, with higher Zorba prices, irrespective of whether we process the Zorba into higher value in a Twitch and other furnace-free materials, the higher value of Zorba flows through our margins and that's a positive contributor to the higher the Zorba price, the better the margin. From the perspective of the processing itself, obviously, we look at what we are able to generate in additional contributions from the processing, compare that to the processing cost, and if the market conditions, which is mainly driven by that Twitch to Zorba premium, if there is high enough and beneficial, we will process the Zorba.

Speaker Change #119: And then moving into nonferrous, I mean global Zorba pricing remains pretty frothy, you've mentioned before that the tight premium switchover zorba can make conversion less attractive how do you view that market as zorba prices remain high.

Samuel J. McKinney: So the higher the Zorba price, the better the margin. From the perspective of the processing itself, obviously, we look at what we are able to generate in additional contribution from the processing, compare that to the processing cost, and if the market conditions, which are mainly driven by that switch to the Zorba premium, if that is high enough and beneficial, we will process the Zorba, and if not, we will forego that option.

Speaker Change #120: Yes, I'll start on that one.

Speaker Change #121: So obviously with higher zorba prices irrespective of whether we process the zorba into into higher valued twitch and other materials.

Speaker Change #121: Higher value of Zorba.

Speaker Change #121: Flow through flow through our margins and Thats and Thats, a positive contributor to the higher dose arm of price.

Speaker Change #121: The better margin.

Speaker Change #121: From the perspective of the the processing itself, obviously, we look at.

Speaker Change #121: What we are able to generate an additional contribution from the processing compare that to the processing cost and if the market conditions, which is mainly driven by that.

Speaker Change #121: Twitched Zorba premium if that is high enough.

Speaker Change #121: And beneficial we will process.

Samuel Mckinney: And if not, we are going to forego that option. So, it's true about a product option, I think, that's what our advanced aluminum separation systems are currently operational, allow us to have is a product option, I think, which comes in handy, and we can toggle between processing and not. So, in the current environment, those market conditions and compression in that premium lead us to not processing the Zorba into Twitch.

And if not we are going to forego that options is through your about the protocol on IP, that's what our advance aluminum separation systems that are currently operational allow us to have is that product opportunity, which comes in handy and we can we can toggle between processing or not.

Samuel J. McKinney: So it's truly about the product optionality, that's what our advanced aluminum separation systems that are currently operational allow us to have, is the product optionality, which comes in handy, and we can toggle between processing and not processing. So in the current environment, those market conditions and compression in that premium lead us to not processing the Zorba into twitch. Yes, lastly for me, this year's CapEx of $75 to $80 million. Should we expect a similar sort of low range next year as well?

Speaker Change #121: So in the current environment those market conditions and compression in <unk>.

Speaker Change #121: In that premium lead us to not processing the doorbell to Twitch.

Samuel Mckinney: Yes, lastly, for me, this year's CAPEX of $75 to $80 million; should we expect a similar sort of low range next year as well? Yes, we have that range for the current year, what we have spread and lower performance. Clearly, our CAPEX is part of our advanced capital allocation. Our CAPEX is something that we look at, and we have the ability to adjust our CAPEX spend to align with those market conditions and company performance and cash flow trends, and reprioritize certain projects. Clearly, the adjustments or tweaks in that spend do not impact our investments to complete the advanced non-ferrous recovery systems. We continue full steam on that, and we also continue to grow our recycling services.

Speaker Change #122: Yes, Lastly for me the this year's Capex of $75 million to $80 million should we expect a similar sort of low range next year as well.

Samuel J. McKinney: Yes, we have that range for the current year. While we have not provided a target for next year, in the current environment with compressed spreads and lower performance, clearly, our capex, as part of our balanced capital allocation, is something that we look at, and we have the ability to adjust our capex spend to align with those market conditions and company performance and cash flow trends and reprioritize certain projects. Clearly, the adjustments or tweaks in that spend do not impact our investments to complete the advanced non-ferrous recovery systems.

Speaker Change #122: Yes.

Speaker Change #122: We have we have.

Speaker Change #123: The range for the current year, while we have not provided right.

Speaker Change #123: Target for next year in the current.

Speaker Change #123: Current environment with <unk>.

Speaker Change #123: Compressed compressed spreads spreads.

Speaker Change #123: And lower performance clearly, our capex as part of our balanced capital allocation.

Speaker Change #123: It's something that we'll look at and we have the ability to adjust our capex spend to align with those market conditions and company performance and cash flow trends in the real priority or would you prioritize.

Speaker Change #123: Certain projects.

Speaker Change #123: Clearly the adjustments or tweaks in that spend does not impact.

Speaker Change #123: Our investments to complete the advanced Nonferrous recovery systems, we continue full steam on that and we also continue to grow our recycling services. So when I step back and I look at.

Stefano R. Gaggini: We continue full steam ahead with that, and we also continue to grow our recycling services. So when I step back, and I look at it, [inaudible] Okay, great. That's it for me.

Samuel Mckinney: So, when I step back and I look at those levels of CAPEX, one way is to look at what we're spending today and continue to think about that as the ability to flex. The other way to look at it. I do that from a depreciation perspective; we have depreciation around $95 to $100 million from an annual run rate currently. That's another way to look at a longer-term CAPEX spend potential.

Speaker Change #123: At those levels of Capex, one way to look at what we're paying today and.

Speaker Change #123: And continue to to think about that is the ability to flex.

Speaker Change #123: The other way to look at it.

Speaker Change #123: Hey, do that from a depreciation perspective, we have depreciation of around $95 million to $100 million from a manual run rate currently that's another way to kind of look at the longer term.

Speaker Change #123: Capex spend are potential.

Samuel Mckinney: Okay, great. That's it for me. Thank you.

Okay, great that's it for me.

Thank you.

Speaker Change #123: <unk>.

Speaker Change #123: Yes.

Operator: This concludes our question and answer session. I would now like to turn it back to Tamara Lundgren for closing remarks. Thank you, and thank you everyone for your time today. We look forward to speaking with you again when we report our fourth quarter results in October. In the interim, stay safe and stay well. This concludes today's conference call. Thank you for participating.

Speaker Change #124: Thank you.

Speaker Change #125: This concludes our question and answer session I would now like to turn it back to Tamara Lundgren for closing remarks.

Thank you and thank you everyone for your time today, we look forward to speaking with you again, when we report our fourth quarter results in October and the interim stay safe and stay well.

Speaker Change #125: Yeah.

This concludes today's conference call.

Speaker Change #126: Thank you for participating you may now disconnect.

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