# EDGAR Filing Document

**Accession Number:** 0000912603
**File Stem:** 0000950170-25-092082
**Filing Date:** 2025-7
**Character Count:** 186953
**Document Hash:** aafb91f6e1e73d187642e91ed8c9b3cc
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0000950170-25-092082.hdr.sgml**: 20250701

**ACCESSION NUMBER**: 0000950170-25-092082

**CONFORMED SUBMISSION TYPE**: 10-Q

**PUBLIC DOCUMENT COUNT**: 67

**CONFORMED PERIOD OF REPORT**: 20250531

**FILED AS OF DATE**: 20250701

**DATE AS OF CHANGE**: 20250701

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** RADIUS RECYCLING, INC.
- **CENTRAL INDEX KEY:** 0000912603
- **STANDARD INDUSTRIAL CLASSIFICATION:** WHOLESALE-MISC DURABLE GOODS [5090]
- **ORGANIZATION NAME:** 07 Trade & Services
- **EIN:** 930341923
- **STATE OF INCORPORATION:** OR
- **FISCAL YEAR END:** 0831

**FILING VALUES:**
- **FORM TYPE:** 10-Q
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 000-22496
- **FILM NUMBER:** 251095703

**BUSINESS ADDRESS:**
- **STREET 1:** 222 SW COLUMBIA ST
- **STREET 2:** SUITE 1150
- **CITY:** PORTLAND
- **STATE:** OR
- **ZIP:** 97201
- **BUSINESS PHONE:** 5032249900

**MAIL ADDRESS:**
- **STREET 1:** P O BOX 10047
- **CITY:** PORTLAND
- **STATE:** OR
- **ZIP:** 97296

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** SCHNITZER STEEL INDUSTRIES, INC.
- **DATE OF NAME CHANGE:** 20230808

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** RADIUS RECYCLING
- **DATE OF NAME CHANGE:** 20230727

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** SCHNITZER STEEL INDUSTRIES, INC.
- **DATE OF NAME CHANGE:** 20190214

?xml version='1.0' encoding='ASCII'? 10-Q

[<u>**Table of Contents**</u>](#toc_page)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

**FORM** 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended May 31, 2025

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from __________ to __________

Commission File Number 000-22496

![img247607425_0.jpg](img247607425_0.jpg)

RADIUS RECYCLING, INC.

*(Exact name of registrant as specified in its charter)*

---

| | |
|:---|:---|
| Oregon | 93-0341923 |
| *(State or other jurisdiction of incorporation or organization)* | *(I.R.S. Employer Identification No.)* |
| 222 SW Columbia Street**,** Suite 1150**,** Portland**,** Oregon | 97201 |
| *(Address of principal executive offices)* | *(Zip Code)* |

---

**(**503**)** 224-9900

*(Registrant's telephone number, including area code)*

Securities registered pursuant to Section 12(b) of the Act:

---

| | | |
|:---|:---|:---|
| **Title of each class** | **Trading Symbol(s)** | **Name of each exchange on which registered** |
| Class A Common Stock, $1.00 par value | RDUS | The Nasdaq Stock Market LLC |

---

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐ Accelerated filer ☒ Non-accelerated filer ☐

Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The registrant had 28,057,661 shares of Class A common stock, par value of $1.00 per share, and 200,000 shares of Class B common stock, par value of $1.00 per share, outstanding as of June 27, 2025.

------

**RADIUS RECYCLING, INC.**

**FORM 10-Q**

**TABLE OF** **CONTENTS**

---

| | |
|:---|:---|
|  | **PAGE** |
| [<u>FORWARD-LOOKING STATEMENTS</u>](#forwardlooking_statements) | 3 |
| [<u>PART I. FINANCIAL INFORMATION</u>](#part_i_financial_information) |  |
| [<u>Item 1. Financial Statements (Unaudited)</u>](#item_1_financial_statements_unaudited) | 5 |
| &nbsp;&nbsp;&nbsp;&nbsp;[<u>Unaudited Condensed Consolidated Balance Sheets as of May 31, 2025 and August 31, 2024</u>](#condensed_consolidated_balance_sheets) | 5 |
| &nbsp;&nbsp;&nbsp;&nbsp;[<u>Unaudited Condensed Consolidated Statements of Operations for the Three and Nine Months ended</u>](#condensed_consolidated_statements_operat) <u>May 31, 2025 and May 31, 2024</u> | 6 |
| &nbsp;&nbsp;&nbsp;&nbsp;[<u>Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months ended May 31, 2025 and May 31, 2024</u>](#condensed_consolidated_statements_compre) | 7 |
| &nbsp;&nbsp;&nbsp;&nbsp;[<u>Unaudited Condensed Consolidated Statements of Equity for the Three and Nine Months ended May 31, 2025 and</u>](#condensed_consolidated_statements_equity)<u>May 31, 2024</u> | 8 |
| &nbsp;&nbsp;&nbsp;&nbsp;[<u>Unaudited Condensed Consolidated Statements of Cash Flows for the Nine Months Ended May 31, 2025 and</u>](#condensed_consolidated_statements_of_cf)<u>May 31, 2024</u> | 10 |
| &nbsp;&nbsp;&nbsp;&nbsp;[<u>Notes to the Unaudited Condensed Consolidated Financial Statements</u>](#toc_footnotes) | 12 |
| [<u>Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations</u>](#item_2_managements_discussion_analysis_f) | 29 |
| [<u>Item 3. Quantitative and Qualitative Disclosures about Market Risk</u>](#item_3_quantitative_qualitative_disclosu) | 41 |
| [<u>Item 4. Controls and Procedures</u>](#item_4_controls_procedures) | 42 |
| [<u>PART II. OTHER INFORMATION</u>](#part_ii_or_information) |  |
| [<u>Item 1. Legal Proceedings</u>](#item_1_legal_proceedings) | 43 |
| [<u>Item 1A. Risk Factors</u>](#item_1a_risk_factors) | 43 |
| [<u>Item 5. Other Information</u>](#item_5_other_information) | 43 |
| [<u>Item 6. Exhibits</u>](#item_6_exhibits) | 44 |
| [<u>SIGNATURES</u>](#signatures) | 45 |

---

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[<u>**Table of Contents**</u>](#toc_page)

**FORWARD-LOOKING STATEMENTS**

**Statements and information included in this Quarterly Report on Form 10-Q by Radius Recycling, Inc. that are not purely historical are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 and are made pursuant to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. Except as noted herein or as the context may otherwise require, all references to "we," "our," "us," "the Company," "Radius Recycling," and "Radius" refer to Radius Recycling, Inc. and its consolidated subsidiaries.**

**Forward-looking statements in this Quarterly Report on Form 10-Q include statements regarding future events or our expectations, intentions, beliefs, and strategies regarding the future, which may include statements regarding our proposed Merger (as defined below) with Toyota Tsusho America, Inc. ("TAI"), a U.S. subsidiary of Toyota Tsusho Corporation ("TTC"); the impact of equipment upgrades, equipment failures, and facility damage on production, including timing of repairs and resumption of operations; the realization of insurance recoveries; the Company's outlook, growth initiatives, or expected results or objectives, including pricing, margins, volumes, and profitability; completion of acquisitions and integration of acquired businesses; the progression and impact of investments in processing and manufacturing technology improvements and information technology systems; the impact of sanctions and tariffs, quotas, and other trade actions and import restrictions; the impacts of supply chain disruptions, inflation, and rising interest rates; liquidity positions; our ability to generate cash from continuing operations; trends, cyclicality, and changes in the markets we sell into; strategic direction or goals; targets; changes to manufacturing and production processes; the realization of deferred tax assets; planned capital expenditures; the cost of and the status of any agreements or actions related to our compliance with environmental and other laws; expected tax rates, deductions, and credits; the impact of pandemics, epidemics, or other public health emergencies; the impact of labor shortages or increased labor costs; obligations under our retirement plans; benefits, savings, or additional costs from business realignment, cost containment, and productivity improvement programs; the potential impact of adopting new accounting pronouncements; and the adequacy of accruals.**

**Forward-looking statements by their nature address matters that are, to different degrees, uncertain, and often contain words such as "outlook," "target," "aim," "believes," "expects," "anticipates," "intends," "assumes," "estimates," "evaluates," "may," "will," "should," "could," "opinions," "forecasts," "projects," "plans," "future," "forward," "potential," "probable," and similar expressions. However, the absence of these words or similar expressions does not mean that a statement is not forward-looking.**

**We may make other forward-looking statements from time to time, including in reports filed with the Securities and Exchange Commission, press releases, presentations, and on public conference calls. All forward-looking statements we make are based on information available to us at the time the statements are made, and we assume no obligation to update any forward-looking statements, except as may be required by law. Our business is subject to the effects of changes in domestic and global economic conditions and a number of other risks and uncertainties that could cause actual results to differ materially from those included in, or implied by, such forward-looking statements. Some of these risks and uncertainties are discussed in "Item 1A. Risk Factors" of Part I of our most recent Annual Report on Form 10-K and Part II of our most recent Quarterly Report on Form 10-Q. Examples of these risks include: the completion of the Merger is subject to various risks and uncertainties related to, among other things, its terms, timing, structure, benefits, costs and completion; the occurrence of any event, change or other circumstances that could give rise to the termination of the Merger Agreement (as defined below); the disruption of management's attention from the Company's ongoing business operations due to the Merger; the effect of the announcement of the Merger on the Company's relationships with its customers, third-party suppliers, industrial vendors and other third parties, as well as its operating results and business generally; the potential difficulties in employee retention as a result of the Merger; the Merger Agreement may be terminated in circumstances that may require the Company to pay TAI a termination fee; the fact that, if the Merger is completed, shareholders will forgo the opportunity to realize the potential long-term value of the successful execution of the Company's current strategy as an independent company; required approvals to complete the Merger by our shareholders and the receipt of certain regulatory approvals, to the extent required, and the timing and conditions for such approvals; the stock price of the Company may decline significantly if the merger is not completed; the possibility that TAI could, at a later date, engage in unspecified transactions, including restructuring efforts, special dividends or the sale of some or all of the Company's assets to one or more purchasers, that could conceivably produce a higher aggregate value than that available to shareholders in the Merger; the inability to consummate the Merger within the anticipated time period, or at all, due to any reason, including the failure to satisfy the closing conditions to the Merger; potential environmental cleanup costs related to the Portland Harbor Superfund site or other locations; the impact of equipment upgrades, equipment failures, and facility damage on production; failure to realize or delays in realizing expected benefits from capital and other projects, including investments in processing and manufacturing technology improvements and information technology systems; the cyclicality and impact of general economic conditions; the impact of inflation and interest rate and foreign currency fluctuations; changing conditions in global markets including the impact of sanctions and tariffs, quotas, and other trade actions and import restrictions; increases in the relative value of the U.S. dollar; economic and geopolitical instability including as a result of military conflict; volatile supply and demand conditions affecting prices and volumes in the markets for raw materials and other inputs we purchase; significant decreases in recycled metal prices; imbalances in supply and demand conditions in the global** 

------

[<u>**Table of Contents**</u>](#toc_page)

**steel industry; difficulties associated with acquisitions and integration of acquired businesses; supply chain disruptions; reliance on third-party shipping companies, including with respect to freight rates and the availability of transportation; restrictions on our business and financial covenants under the agreement governing our bank credit facilities; potential limitations on our ability to access capital resources and existing credit facilities; the impact of impairment of goodwill and assets other than goodwill; the impact of pandemics, epidemics, or other public health emergencies; inability to achieve or sustain the benefits from productivity, cost savings, and restructuring initiatives; inability to renew facility leases; customer fulfillment of their contractual obligations; the impact of consolidation in the steel industry; product liability claims; the impact of legal proceedings and legal compliance; the impact of climate change; the impact of not realizing deferred tax assets; the impact of tax increases and changes in tax rules; the impact of one or more cybersecurity incidents; the impact of increasing attention to environmental, social, and governance matters; translation risks associated with fluctuation in foreign exchange rates; the impact of hedging transactions; inability to obtain or renew business licenses and permits; environmental compliance costs and potential environmental liabilities; increased environmental regulations and enforcement; compliance with climate change and greenhouse gas emission laws and regulations; the impact of labor shortages or increased labor costs; reliance on employees subject to collective bargaining agreements; and the impact of the underfunded status of multiemployer plans in which we participate.**

------

[<u>**Table of Contents**</u>](#toc_page)

**PART I. FINANCIAL INFORMATION**

**ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)**

**RADIUS RECYCLING, INC.**

**CONDENSED CONSOLIDATED BALANCE SHEETS**

(Unaudited, in thousands, except per share amounts)

---

| | | |
|:---|:---|:---|
|  | **May 31, 2025** | **August 31, 2024** |
| **Assets** |  |  |
| Current assets: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Cash and cash equivalents | $16214 | $5552 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable, net of allowance for credit losses of $1,510<br> and $1,918 | 239095 | 258157 |
| &nbsp;&nbsp;&nbsp;&nbsp;Inventories | 272957 | 293932 |
| &nbsp;&nbsp;&nbsp;&nbsp;Refundable income taxes | 1019 | 923 |
| &nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses and other current assets | 44702 | 50563 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current assets | 573987 | 609127 |
| Property, plant and equipment, net of accumulated depreciation of $1,020,074<br> and $970,237 | 640578 | 672192 |
| Operating lease right-of-use assets | 129657 | 123546 |
| Investments in joint ventures | 8687 | 9841 |
| Goodwill | 13105 | 13105 |
| Intangibles, net of accumulated amortization of $22,288 and $17,552 | 23740 | 28656 |
| Deferred income taxes | 17699 | 18577 |
| Other assets | 64745 | 58725 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total assets | $1472198 | $1533769 |
| **Liabilities and Equity** |  |  |
| Current liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Short-term borrowings | $5403 | $5688 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accounts payable | 193936 | 202498 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accrued payroll and related liabilities | 19618 | 24654 |
| &nbsp;&nbsp;&nbsp;&nbsp;Environmental liabilities | 12993 | 13232 |
| &nbsp;&nbsp;&nbsp;&nbsp;Operating lease liabilities | 20680 | 19262 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accrued income taxes | 28 | 3 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other accrued liabilities | 57151 | 51233 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current liabilities | 309809 | 316570 |
| Deferred income taxes | 2877 | 4472 |
| Long-term debt, net of current maturities | 449010 | 409082 |
| Environmental liabilities, net of current portion | 51600 | 52417 |
| Operating lease liabilities, net of current maturities | 109827 | 104246 |
| Other long-term liabilities | 20962 | 21242 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total liabilities | 944085 | 908029 |
| Commitments and contingencies (Note 4) |  |  |
| Radius Recycling, Inc. ("Radius") shareholders' equity: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Preferred stock – 20,000 shares $1.00 par value authorized, none issued |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Class A common stock – 75,000 shares $1.00 par value authorized,<br> 28,058 and 27,839 shares issued and outstanding | 28058 | 27839 |
| &nbsp;&nbsp;&nbsp;&nbsp;Class B common stock – 25,000 shares $1.00 par value authorized,<br> 200 and 200 shares issued and outstanding | 200 | 200 |
| &nbsp;&nbsp;&nbsp;&nbsp;Additional paid-in capital | 34869 | 28828 |
| &nbsp;&nbsp;&nbsp;&nbsp;Retained earnings | 502913 | 606417 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accumulated other comprehensive income (loss) | (40431) | (40172) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Radius shareholders' equity | 525609 | 623112 |
| Noncontrolling interests | 2504 | 2628 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total equity | 528113 | 625740 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total liabilities and equity | $1472198 | $1533769 |

---

The accompanying Notes to the Unaudited Condensed Consolidated Financial Statements are an integral part of these statements.

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[<u>**Table of Contents**</u>](#toc_page)

**RADIUS RECYCLING, INC.**

**CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS**

(Unaudited, in thousands, except per share amounts)

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended May 31,** | **Three Months Ended May 31,** | **Nine Months Ended May 31,** | **Nine Months Ended May 31,** |
|  | **2025** | **2024** | **2025** | **2024** |
| Revenues | $726991 | $673920 | $2026036 | $1967876 |
| Operating expense: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Cost of goods sold | 677444 | 628390 | 1915587 | 1842806 |
| &nbsp;&nbsp;&nbsp;&nbsp;Selling, general and administrative | 56350 | 62100 | 167977 | 187362 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Income) from joint ventures | (231) | (300) | (867) | (1003) |
| &nbsp;&nbsp;&nbsp;&nbsp;Goodwill impairment charges |  | 215941 |  | 215941 |
| &nbsp;&nbsp;&nbsp;&nbsp;Asset impairment charges | 256 |  | 440 | 1476 |
| &nbsp;&nbsp;&nbsp;&nbsp;Restructuring charges and other exit-related activities | 375 | 3275 | 3694 | 6485 |
| Operating income (loss) | (7203) | (235486) | (60795) | (285191) |
| Interest expense | (9131) | (7368) | (26764) | (17981) |
| Other income (expense), net | (400) | (187) | 445 | (620) |
| Income (loss) from continuing operations before income taxes | (16734) | (243041) | (87114) | (303792) |
| Income tax (expense) benefit | 328 | 44551 | 814 | 53526 |
| Income (loss) from continuing operations | (16406) | (198490) | (86300) | (250266) |
| Income (loss) from discontinued operations, net of tax |  | (21) |  | (54) |
| Net income (loss) | (16406) | (198511) | (86300) | (250320) |
| Net (income) loss attributable to noncontrolling interests | (558) | 121 | (814) | (13) |
| Net income (loss) attributable to Radius shareholders | $(16964) | $(198390) | $(87114) | $(250333) |
| Net income (loss) per share attributable to Radius shareholders: |  |  |  |  |
| Basic: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Income (loss) per share from continuing operations | $(0.59) | $(6.97) | $(3.04) | $(8.82) |
| &nbsp;&nbsp;&nbsp;&nbsp;Income (loss) loss per share | $(0.59) | $(6.97) | $(3.04) | $(8.82) |
| Diluted: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Income (loss) per share from continuing operations | $(0.59) | $(6.97) | $(3.04) | $(8.82) |
| &nbsp;&nbsp;&nbsp;&nbsp;Income (loss) per share | $(0.59) | $(6.97) | $(3.04) | $(8.82) |
| Weighted average number of common shares: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Basic | 28700 | 28479 | 28652 | 28385 |
| &nbsp;&nbsp;&nbsp;&nbsp;Diluted | 28700 | 28479 | 28652 | 28385 |

---

The accompanying Notes to the Unaudited Condensed Consolidated Financial Statements are an integral part of these statements.

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[<u>**Table of Contents**</u>](#toc_page)

**RADIUS RECYCLING, INC.**

**CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)** 

(Unaudited, in thousands)

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended May 31,** | **Three Months Ended May 31,** | **Nine Months Ended May 31,** | **Nine Months Ended May 31,** |
|  | **2025** | **2024** | **2025** | **2024** |
| Net income (loss) | $(16406) | $(198511) | $(86300) | $(250320) |
| Other comprehensive income (loss), net of tax: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Foreign currency translation adjustments | 3013 | (308) | (942) | (890) |
| &nbsp;&nbsp;&nbsp;&nbsp;Cash flow hedges, net | 59 | 776 | 762 | 954 |
| &nbsp;&nbsp;&nbsp;&nbsp;Pension obligations, net | 28 | 148 | (79) | 551 |
| Total other comprehensive income (loss), net of tax | 3100 | 616 | (259) | 615 |
| Comprehensive income (loss) | (13306) | (197895) | (86559) | (249705) |
| &nbsp;&nbsp;&nbsp;&nbsp;Less comprehensive (income) loss attributable to noncontrolling interests | (558) | 121 | (814) | (13) |
| Comprehensive income (loss) attributable to Radius shareholders | $(13864) | $(197774) | $(87373) | $(249718) |

---

The accompanying Notes to the Unaudited Condensed Consolidated Financial Statements are an integral part of these statements.

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[<u>**Table of Contents**</u>](#toc_page)

**RADIUS RECYCLING, INC.**

**CONDENSED CONSOLIDATED STATEMENTS OF EQUITY**

(Unaudited, in thousands, except per share amounts)

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Common Stock** | **Common Stock** | **Common Stock** | **Common Stock** |  |  | **Accumulated** |  |  |  |
|  | **Class A** | **Class A** | **Class B** | **Class B** | **Additional** |  | **Other** | **Total Radius** |  |  |
| **Three Months Ended May 31, 2024** | **Shares** | **Amount** | **Shares** | **Amount** | **Paid-in <br>Capital** | **Retained <br>Earnings** | **Comprehensive<br>Income (Loss)** | **Shareholders'<br>Equity** | **Noncontrolling<br>Interests** | **Total <br>Equity** |
| Balance as of March 1, 2024 | 27782 | $27782 | 200 | $200 | $24503 | $831636 | $(39684) | $844437 | $3029 | $847466 |
| Net income (loss) |  |  |  |  |  | (198390) |  | (198390) | (121) | (198511) |
| Other comprehensive income (loss), net of tax |  |  |  |  |  |  | 616 | 616 |  | 616 |
| Distributions to noncontrolling interests |  |  |  |  |  |  |  |  | (154) | (154) |
| Issuance of restricted stock | 85 | 85 |  |  | (85) |  |  |  |  |  |
| Restricted stock withheld for taxes | (28) | (28) |  |  | (451) |  |  | (479) |  | (479) |
| Share-based compensation cost |  |  |  |  | 2456 |  |  | 2456 |  | 2456 |
| Dividends ($0.1875 per common share) |  |  |  |  |  | (5369) |  | (5369) |  | (5369) |
| Balance as of May 31, 2024 | 27839 | $27839 | 200 | $200 | $26423 | $627877 | $(39068) | $643271 | $2754 | $646025 |

---

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Common Stock** | **Common Stock** | **Common Stock** | **Common Stock** |  |  | **Accumulated** |  |  |  |
|  | **Class A** | **Class A** | **Class B** | **Class B** | **Additional** |  | **Other** | **Total Radius** |  |  |
| **Three Months Ended May 31, 2025** | **Shares** | **Amount** | **Shares** | **Amount** | **Paid-in<br>Capital** | **Retained<br>Earnings** | **Comprehensive<br>Income (Loss)** | **Shareholders'<br>Equity** | **Noncontrolling<br>Interests** | **Total<br>Equity** |
| Balance as of March 1, 2025 | 28000 | $28000 | 200 | $200 | $32682 | $525365 | $(43531) | $542716 | $2288 | $545004 |
| Net income (loss) |  |  |  |  |  | (16964) |  | (16964) | 558 | (16406) |
| Other comprehensive income (loss), net of tax |  |  |  |  |  |  | 3100 | 3100 |  | 3100 |
| Distributions to noncontrolling interests |  |  |  |  |  |  |  |  | (342) | (342) |
| Issuance of restricted stock | 84 | 84 |  |  | (84) |  |  |  |  |  |
| Restricted stock withheld for taxes | (26) | (26) |  |  | (739) |  |  | (765) |  | (765) |
| Share-based compensation cost |  |  |  |  | 3010 |  |  | 3010 |  | 3010 |
| Dividends ($0.1875 per common share) |  |  |  |  |  | (5488) |  | (5488) |  | (5488) |
| Balance as of May 31, 2025 | 28058 | $28058 | 200 | $200 | $34869 | $502913 | $(40431) | $525609 | $2504 | $528113 |

---

The accompanying Notes to the Unaudited Condensed Consolidated Financial Statements are an integral part of these statements.

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[<u>**Table of Contents**</u>](#table_contents)

**RADIUS RECYCLING, INC.**

**CONDENSED CONSOLIDATED STATEMENTS OF EQUITY**

(Unaudited, in thousands, except per share amounts)

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Common Stock** | **Common Stock** | **Common Stock** | **Common Stock** |  |  | **Accumulated** |  |  |  |
|  | **Class A** | **Class A** | **Class B** | **Class B** | **Additional** |  | **Other** | **Total Radius** |  |  |
| **Nine Months Ended May 31, 2024** | **Shares** | **Amount** | **Shares** | **Amount** | **Paid-in<br>Capital** | **Retained<br>Earnings** | **Comprehensive<br>Income (Loss)** | **Shareholders'<br>Equity** | **Noncontrolling<br>Interests** | **Total<br>Equity** |
| Balance as of September 1, 2023 | 27312 | $27312 | 200 | $200 | $26035 | $894316 | $(39683) | $908180 | $3479 | $911659 |
| Net income (loss) |  |  |  |  |  | (250333) |  | (250333) | 13 | (250320) |
| Other comprehensive income (loss), net of tax |  |  |  |  |  |  | 615 | 615 |  | 615 |
| Distributions to noncontrolling interests |  |  |  |  |  |  |  |  | (738) | (738) |
| Issuance of restricted stock | 766 | 766 |  |  | (766) |  |  |  |  |  |
| Restricted stock withheld for taxes | (239) | (239) |  |  | (5043) |  |  | (5282) |  | (5282) |
| Share-based compensation cost |  |  |  |  | 6197 |  |  | 6197 |  | 6197 |
| Dividends ($0.5625 per common share) |  |  |  |  |  | (16106) |  | (16106) |  | (16106) |
| Balance as of May 31, 2024 | 27839 | $27839 | 200 | $200 | $26423 | $627877 | $(39068) | $643271 | $2754 | $646025 |

---

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Common Stock** | **Common Stock** | **Common Stock** | **Common Stock** |  |  | **Accumulated** |  |  |  |
|  | **Class A** | **Class A** | **Class B** | **Class B** | **Additional** |  | **Other** | **Total Radius** |  |  |
| **Nine Months Ended May 31, 2025** | **Shares** | **Amount** | **Shares** | **Amount** | **Paid-in<br>Capital** | **Retained<br>Earnings** | **Comprehensive<br>Income (Loss)** | **Shareholders'<br>Equity** | **Noncontrolling<br>Interests** | **Total<br>Equity** |
| Balance as of September 1, 2024 | 27839 | $27839 | 200 | $200 | $28828 | $606417 | $(40172) | $623112 | $2628 | $625740 |
| Net income (loss) |  |  |  |  |  | (87114) |  | (87114) | 814 | (86300) |
| Other comprehensive income (loss), net of tax |  |  |  |  |  |  | (259) | (259) |  | (259) |
| Distributions to noncontrolling interests |  |  |  |  |  |  |  |  | (938) | (938) |
| Issuance of restricted stock | 303 | 303 |  |  | (303) |  |  |  |  |  |
| Restricted stock withheld for taxes | (84) | (84) |  |  | (1630) |  |  | (1714) |  | (1714) |
| Share-based compensation cost |  |  |  |  | 7974 |  |  | 7974 |  | 7974 |
| Dividends ($0.5625 per common share) |  |  |  |  |  | (16390) |  | (16390) |  | (16390) |
| Balance as of May 31, 2025 | 28058 | $28058 | 200 | $200 | $34869 | $502913 | $(40431) | $525609 | $2504 | $528113 |

---

The accompanying Notes to the Unaudited Condensed Consolidated Financial Statements are an integral part of these statements.

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[<u>**Table of Contents**</u>](#toc_page)

**RADIUS RECYCLING, INC.**

**CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS**

(Unaudited, in thousands)

---

| | | |
|:---|:---|:---|
|  | **Nine Months Ended May 31,** | **Nine Months Ended May 31,** |
|  | **2025** | **2024** |
| Cash flows from operating activities: |  |  |
| Net income (loss) | $(86300) | $(250320) |
| Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Goodwill impairment charges |  | 215941 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other asset impairment charges | 440 | 2040 |
| &nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization | 71749 | 72188 |
| &nbsp;&nbsp;&nbsp;&nbsp;Inventory write-downs | 92 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Deferred income taxes | (1257) | (54065) |
| &nbsp;&nbsp;&nbsp;&nbsp;Undistributed equity in earnings of joint ventures | (867) | (1003) |
| &nbsp;&nbsp;&nbsp;&nbsp;Share-based compensation expense | 7974 | 6197 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Gain) loss on disposal of assets, net | (3050) | (511) |
| &nbsp;&nbsp;&nbsp;&nbsp;Other (gain) loss, net | 1387 | 639 |
| Changes in assets and liabilities, net of acquisitions: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable | 6742 | (4317) |
| &nbsp;&nbsp;&nbsp;&nbsp;Inventories | 32487 | (46750) |
| &nbsp;&nbsp;&nbsp;&nbsp;Income taxes | 484 | 171 |
| &nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses and other current assets | (1191) | 9896 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other long-term assets | (5505) | (5797) |
| &nbsp;&nbsp;&nbsp;&nbsp;Operating lease assets and liabilities | 175 | (440) |
| &nbsp;&nbsp;&nbsp;&nbsp;Accounts payable | (3645) | 6819 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accrued payroll and related liabilities | (5017) | (12330) |
| &nbsp;&nbsp;&nbsp;&nbsp;Other accrued liabilities | 4344 | 2836 |
| &nbsp;&nbsp;&nbsp;&nbsp;Environmental liabilities | (1005) | (2180) |
| &nbsp;&nbsp;&nbsp;&nbsp;Other long-term liabilities | 1192 | 1418 |
| &nbsp;&nbsp;&nbsp;&nbsp;Distributed equity in earnings of joint ventures | 2000 | 2350 |
| Net cash provided by (used in) operating activities | 21229 | (57218) |
| Cash flows from investing activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Capital expenditures | (33653) | (56258) |
| &nbsp;&nbsp;&nbsp;&nbsp;Proceeds from insurance and sale of assets | 4581 | 2829 |
| &nbsp;&nbsp;&nbsp;&nbsp;Purchase of investments |  | (6000) |
| Net cash used in investing activities | (29072) | (59429) |
| Cash flows from financing activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Borrowings from long-term debt | 611836 | 579500 |
| &nbsp;&nbsp;&nbsp;&nbsp;Repayment of long-term debt | (572026) | (421414) |
| &nbsp;&nbsp;&nbsp;&nbsp;Payment of debt issuance costs | (2188) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Taxes paid related to net share settlement of share-based payment awards | (1714) | (5282) |
| &nbsp;&nbsp;&nbsp;&nbsp;Distributions to noncontrolling interests | (938) | (738) |
| &nbsp;&nbsp;&nbsp;&nbsp;Dividends paid | (16488) | (16306) |
| Net cash provided by (used in) financing activities | 18482 | 135760 |
| Effect of exchange rate changes on cash | 23 | 44 |
| Net change in cash and cash equivalents | 10662 | 19157 |
| Cash and cash equivalents as of beginning of period | 5552 | 6032 |
| Cash and cash equivalents as of end of period | $16214 | $25189 |

---

The accompanying Notes to the Unaudited Condensed Consolidated Financial Statements are an integral part of these statements.

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[<u>**Table of Contents**</u>](#table_contents)

**RADIUS RECYCLING, INC.**

**CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS**

(Unaudited, in thousands)

---

| | | |
|:---|:---|:---|
|  | **Nine Months Ended May 31,** | **Nine Months Ended May 31,** |
|  | **2025** | **2024** |
| SUPPLEMENTAL DISCLOSURES: |  |  |
| Cash paid (received) during the period for: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest | $24605 | $16793 |
| &nbsp;&nbsp;&nbsp;&nbsp;Income taxes, net | $(27) | $355 |
| Schedule of noncash investing and financing transactions: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Purchases of property, plant and equipment included in liabilities | $3449 | $5961 |

---

The accompanying Notes to the Unaudited Condensed Consolidated Financial Statements are an integral part of these statements.

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[<u>**Table of Contents**</u>](#toc_page)

**RADIUS RECYCLING, INC.**

**NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

---

| | |
|:---|:---|
|  | **PAGE** |
| [<u>Note 1 - Summary of Significant Accounting Policies</u>](#summary_of_sig_acct_policies) | 13 |
| [<u>Note 2 - Inventories</u>](#inventories) | 16 |
| [<u>Note 3 - Goodwill</u>](#goodwill) | 16 |
| [<u>Note 4 - Commitments and Contingencies</u>](#commitments_and_contingencies) | 17 |
| [<u>Note 5 - Accumulated Other Comprehensive Income (Loss)</u>](#accumulated_other_comp_income) | 22 |
| [<u>Note 6 - Revenue</u>](#revenue) | 23 |
| [<u>Note 7 - Share-Based Compensation</u>](#share_based_comp) | 23 |
| [<u>Note 8 - Derivative Financial Instruments</u>](#derivative_financial_instruments) | 24 |
| [<u>Note 9 - Income Taxes</u>](#income_taxes) | 25 |
| [<u>Note 10 - Net Income (Loss) Per Share</u>](#net_income_per_share) | 26 |
| [<u>Note 11 - Related Party Transactions</u>](#related_parties) | 26 |
| [<u>Note 12 - Debt</u>](#debt) | 26 |
| [<u>Note 13 - Merger with TAI</u>](#subsequent_events) | 27 |

---

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[<u>**Table of Contents**</u>](#table_contents)

RADIUS RECYCLING, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

**Note 1 - Summary of Significant Accounting Policies** 

***Basis of Presentation*** 

The accompanying Unaudited Condensed Consolidated Financial Statements of Radius Recycling, Inc. and its majority-owned and wholly-owned subsidiaries (the "Company") have been prepared pursuant to generally accepted accounting principles in the United States of America ("U.S. GAAP") for interim financial information and the rules and regulations of the United States Securities and Exchange Commission (the "SEC") for Form 10-Q, including Article 10 of Regulation S-X. The accompanying Unaudited Condensed Consolidated Financial Statements are presented in U.S. Dollars. The year-end condensed consolidated balance sheet data was derived from audited financial statements but does not include all disclosures required by U.S. GAAP. Certain information and note disclosures normally included in annual financial statements have been condensed or omitted pursuant to the rules and regulations of the SEC. Certain prior year amounts have been reclassified to conform with current year presentation. In the opinion of management, all normal, recurring adjustments considered necessary for a fair statement have been included. Management suggests that these Unaudited Condensed Consolidated Financial Statements be read in conjunction with the financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended August 31, 2024. The results for the three and nine months ended May 31, 2025 and May 31, 2024 are not necessarily indicative of the results of operations for the entire fiscal year.

***Segment Reporting***

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

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

***Merger with Toyota Tsusho America, Inc.*** 

On March 13, 2025, the Company, Toyota Tsusho America, Inc., a New York corporation ("TAI"), and TAI Merger Corporation, a Delaware corporation and a wholly owned subsidiary of TAI ("Merger Sub"), entered into an Agreement and Plan of Merger (the "Merger Agreement") pursuant to which, on the terms and subject to the conditions set forth in the Merger Agreement, Merger Sub will merge with and into the Company (the "Merger"), with the Company continuing as the surviving corporation in the Merger as a wholly owned subsidiary of TAI. The Board of Directors and the shareholders of the Company have approved the Merger Agreement and the transactions contemplated thereby, including the Merger. Refer to Note 13 - Merger with TAI, for more detailed information regarding the Merger.

***Cash and Cash Equivalents***

Cash and cash equivalents include short-term securities that are not restricted by third parties and have an original maturity date of 90 days or less. Included in accounts payable are book overdrafts representing outstanding payments in excess of funds on deposit of $52 million and $59 million as of May 31, 2025 and August 31, 2024, respectively.

***Accounts Receivable, net***

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

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[<u>**Table of Contents**</u>](#table_contents)

RADIUS RECYCLING, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Also included in accounts receivable are short-term advances to scrap metal suppliers used as a mechanism to acquire unprocessed scrap metal. The advances are generally repaid with scrap metal, as opposed to cash. Repayments of advances with scrap metal are treated as noncash operating activities in the Unaudited Condensed Consolidated Statements of Cash Flows and totaled $12 million and $9 million for the nine months ended May 31, 2025 and 2024, respectively.

***Prepaid Expenses***

The Company's prepaid expenses, reported within prepaid expenses and other current assets in the Unaudited Condensed Consolidated Balance Sheets, totaled $15 million and $22 million as of May 31, 2025 and August 31, 2024, respectively, and consisted primarily of prepaid services, deposits on capital projects, insurance, and property taxes.

***Other Assets***

The Company's other assets, exclusive of prepaid expenses and assets relating to certain employee benefit plans, consisted primarily of receivables from insurers, advances to a supplier of metals recycling equipment, short-term certificates of deposit, capitalized implementation costs for cloud computing arrangements, major spare parts and equipment, assets held for sale, equity investments, debt issuance costs, and notes and other contractual receivables. Other assets are reported within either prepaid expenses and other current assets or other assets in the Unaudited Condensed Consolidated Balance Sheets based on their expected use either during or beyond the current operating cycle of one year from the reporting date.

Receivables from insurers represent the portion of insured losses expected to be recovered from the Company's insurers under various insurance policies, or from a Qualified Settlement Fund holding settlement amounts deposited by certain insurers of claims against the Company related to the Portland Harbor Superfund site. The receivables are recorded at an amount not to exceed the recorded loss and only if the terms of legally enforceable insurance contracts support that the insurance recovery will not be disputed and is deemed collectible, or if recovery of the loss by the Company from a Qualified Settlement Fund is probable. Receivables from insurers as of each reporting date relate to environmental claims, workers' compensation claims, and third-party claims. As of May 31, 2025, receivables from insurers totaled $17 million, including $14 million relating to environmental claims. As of August 31, 2024, receivables from insurers totaled $15 million, including $13 million relating to environmental claims.

Other assets as of May 31, 2025 and August 31, 2024 included $24 million and $18 million, respectively, representing advances to a supplier of metals recycling equipment.

Other assets as of both May 31, 2025 and August 31, 2024 included $6 million related to funding for remediation costs of a legacy environmental matter held in short-term certificates of deposit and is reported within prepaid expenses and other current assets.

Other assets as of May 31, 2025 and August 31, 2024 also included $6 million and $7 million, respectively, of capitalized cloud computing arrangement implementation costs. Amortization of capitalized implementation costs is recorded on a straight-line basis over the term of the cloud computing arrangement, which is the non-cancellable period of the agreement, together with periods covered by renewal options which the Company is reasonably certain to exercise. This amortization expense is reported within operating expense, separately from depreciation and amortization expense for property, plant, and equipment and intangible assets as reported on the Unaudited Condensed Consolidated Statements of Cash Flows.

***Accounting for Impacts of Involuntary Events***

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

On December 8, 2021, the Company experienced a fire at its metals recycling facility in Everett, Massachusetts. Direct physical loss or damage to property from the incident was limited to the facility's shredder building and equipment, with no bodily injuries and no

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[<u>**Table of Contents**</u>](#table_contents)

RADIUS RECYCLING, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

physical loss or damage to property reported at other buildings or equipment. The repair and replacement of most property that experienced physical loss or damage, primarily buildings and improvements, was substantially completed by the end of fiscal 2023. The Company filed insurance claims for the property that experienced physical loss or damage and business income losses resulting from the matter. During the first half of fiscal 2024, the Company recognized a $6 million insurance receivable and related insurance recovery gain, reported within cost of goods sold on the Unaudited Condensed Consolidated Statements of Operations. During the third quarter of fiscal 2024, the Company reached a full and final settlement with its insurers for its claims and recognized an additional $7 million insurance recovery gain, reflecting the recovery of applicable losses including business income losses incurred as a result of the fire. All insurance proceeds and recovery gains in connection with the Company's claims had been received and recognized, respectively, as of August 31, 2024.

***Goodwill***

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

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

When the Company performs a quantitative goodwill impairment test, it considers both the income approach and market approach to estimate the fair value of the reporting unit. The determination of fair value involves the use of estimates and assumptions, including regarding revenue growth rates driven by future ferrous and nonferrous commodity price and sales volume expectations, gross margins, selling, general, and administrative expense relative to total revenues, capital expenditures, working capital requirements, discount rate based on a market-based weighted average cost of capital ("WACC"), tax rate, terminal growth rate, benefits associated with a taxable transaction, and synergistic benefits available to market participants. In addition, to corroborate the reporting unit's income approach valuation, as well as to estimate the fair value of the Company's other reporting units, including those with no allocated goodwill, the Company uses a market approach based on earnings multiple data, and it performs a reconciliation of its estimate of the aggregate fair value of all reporting units to the Company's market capitalization, including consideration of a control premium. See Note 3 - Goodwill for further detail including the recognition of a goodwill impairment charge of $216 million during the fiscal quarter ended May 31, 2024.

***Concentration of Credit Risk***

Financial instruments that potentially subject the Company to significant concentration of credit risk consist primarily of cash and cash equivalents, accounts receivable, and derivative financial instruments. The majority of cash and cash equivalents is maintained with major financial institutions. Balances with these and certain other institutions exceeded the Federal Deposit Insurance Corporation insured amount of $250 thousand as of May 31, 2025. Concentration of credit risk with respect to accounts receivable is limited because a large number of geographically diverse customers make up the Company's customer base. The Company controls credit risk through credit approvals, credit limits, credit insurance, letters of credit or other collateral, cash deposits, and monitoring procedures. The Company is exposed to a residual credit risk with respect to open letters of credit by virtue of the possibility of the failure of a bank providing a letter of credit. The counterparties to the Company's derivative financial instruments are major financial institutions.

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[<u>**Table of Contents**</u>](#table_contents)

RADIUS RECYCLING, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

***Recent Accounting Pronouncements*** 

In November 2024, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update 2024-03 ("ASU 2024-03"), Disaggregation of Income Statement Expenses, requiring additional disclosure of the nature of expenses included in the income statement. The new standard requires disclosures about specific types of expenses included in the expense captions presented on the face of the income statement as well as disclosures about selling expenses. The provisions in ASU 2024-03 are effective for the Company's fiscal 2028, and interim periods within the Company's fiscal 2029 and are applied prospectively. Early adoption and retrospective application of the new standard are permitted. As the provisions only apply to disclosures, the Company does not expect adoption to have a material impact on its consolidated financial statements.

**Note 2 - Inventories** 

Inventories consisted of the following (in thousands):

---

| | | |
|:---|:---|:---|
|  | **May 31, 2025** | **August 31, 2024** |
| Processed and unprocessed scrap metal | $123073 | $137013 |
| Semi-finished goods | 12111 | 14846 |
| Finished goods | 63713 | 72225 |
| Supplies | 74060 | 69848 |
| Inventories | $272957 | $293932 |

---

**Note 3 - Goodwill**

As of both May 31, 2025 and August 31, 2024, the balance of the Company's goodwill was $13 million, all of which was allocated to one reporting unit, a recycling services operation. The Company evaluates goodwill for impairment annually on July 1 and upon the occurrence of certain triggering events or substantive changes in circumstances that indicate that the fair value of goodwill may be impaired. There were no triggering events identified during the first nine months of fiscal 2025 requiring an interim goodwill impairment test.

***Fiscal 2024 Goodwill Impairment***

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

For the two metals recycling reporting units and the autos reporting unit subject to the quantitative impairment test as of May 1, 2024, the estimated fair value of each reporting unit was less than its carrying amount, resulting in full impairment of the allocated goodwill and an aggregate impairment charge of $216 million. The projections used in the income approach took into consideration, as applicable at the time of the impairment test, the impact of then existing market conditions for ferrous and nonferrous recycled metals and retail auto parts, the cost of obtaining adequate supply flows of scrap metal including end-of-life vehicles, and trends in production and other operating costs. The projections assumed a recovery of operating margins from the levels experienced at the measurement date over a multi-year period. The WACC rate used in the income approach valuation ranged from 14.5% to 15.0%. The terminal growth rate used was 2%. A reporting-unit-specific risk premium was embedded in the WACC to reflect the perceived level of uncertainty inherent in expected future cash flows. As part of the goodwill impairment test, the Company performed a reconciliation of its market capitalization to the aggregated estimated fair value of all reporting units, including consideration of a control premium.

The remaining $13 million of goodwill is carried by one reporting unit, a recycling services operation. The Company determined that there was no triggering event for this reporting unit for the third quarter of fiscal 2024.

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[<u>**Table of Contents**</u>](#table_contents)

RADIUS RECYCLING, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

**Note 4 - Commitments and Contingencies**

***Contingencies - Environmental***

The Company evaluates the adequacy of its environmental liabilities on a quarterly basis. Adjustments to the liabilities are made when additional information becomes available that affects the estimated costs to study or remediate any environmental issues or expenditures are made for which liabilities were established.

Changes in the Company's environmental liabilities for the nine months ended May 31, 2025 were as follows (in thousands):

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Balance as of<br>September 1, 2024** | Liabilities**<br>Established<br>(Released), Net** | **Payments and<br>Other** | **Balance as of<br>May 31, 2025** | **Short-Term** | **Long-Term** |
| $65649 | $412 | $(1468) | $64593 | $12993 | $51600 |

---

As of May 31, 2025 and August 31, 2024, the Company had environmental liabilities of $65 million and $66 million, respectively, for the potential remediation of locations where it has conducted business or has environmental liabilities from historical or recent activities. These liabilities relate to the investigation and potential remediation of waterways and soil and groundwater contamination and may also involve natural resource damages, governmental fines and penalties, and claims by third parties for personal injury and property damage. Except for Portland Harbor and certain liabilities discussed under "Other Legacy Environmental Loss Contingencies" below, such liabilities were not individually material at any site.

<u>Portland Harbor</u>

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

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

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

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

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

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[<u>**Table of Contents**</u>](#table_contents)

RADIUS RECYCLING, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

The EPA encouraged PRPs to step forward (individually or in groups) to enter into consent agreements to perform remedial design in various project areas covering Portland Harbor. While certain PRPs executed consent agreements for remedial design work, because of the EPA's refusal to date to modify the remedy to reflect the most current data on Portland Harbor conditions and because of concerns with the terms of the consent agreement, the Company elected not to enter into a consent agreement. In April 2020, the EPA issued a unilateral administrative order ("UAO") to the Company and MMGL, LLC ("MMGL"), an unaffiliated company, for the remedial design work in a portion of Portland Harbor designated as the River Mile 3.5 East Project Area. As required by the UAO, the Company notified the EPA of its intent to comply while reserving all of its sufficient cause defenses. Failure to comply with a UAO, without sufficient cause, could subject the Company to significant penalties or treble damages. Pursuant to the optimized remedial design timeline set forth in the UAO, the EPA's expected schedule for completion of the remedial design work was four years. At the time it issued the UAO in April 2020, the EPA estimated the cost of the work at approximately $4 million. The Company has agreed with the other respondent to the UAO, MMGL, that the Company will lead the performance and be responsible for a portion of the costs of the work for remedial design under the UAO and also entered into an agreement with another PRP pursuant to which such other PRP has agreed to fund a portion of the costs of such work. These agreements are not an allocation of liability or claims associated with Portland Harbor as between the respondents or with respect to any third party. The Company has insurance policies and Qualified Settlement Funds ("QSFs") pursuant to which the Company is being reimbursed for the costs it has incurred for remedial design. See further discussion of the QSFs below in this Note. As of both May 31, 2025 and August 31, 2024, the Company had insurance and other receivables in the same amount as the environmental reserves for such remedial design work under the UAO. See "Other Assets" in Note 1 - Summary of Significant Accounting Policies for further discussion of insurance and other related receivables. The Company also expects to pursue in the future allocation or contribution from other PRPs for a portion of such remedial design costs. In February 2021, the EPA announced that 100 percent of Portland Harbor's areas requiring active cleanup are in the remedial design phase of the process.

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

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

In November 2024, the EPA issued a Special Notice Letter under Section 122(e) of CERCLA to the Company and certain other parties requesting a proposal to undertake remedial action at Portland Harbor. Negotiations with the EPA are expected to continue as remedial design work progresses.

The Company's environmental liabilities as of each of May 31, 2025 and August 31, 2024 included $5 million relating to the Portland Harbor matters described above.

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[<u>**Table of Contents**</u>](#table_contents)

RADIUS RECYCLING, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

In addition to the remedial action process overseen by the EPA, the Portland Harbor Natural Resource Trustee Council ("Trustee Council") is assessing natural resource damages at Portland Harbor. In 2008, the Trustee Council invited the Company and other PRPs to participate in funding and implementing the Natural Resource Injury Assessment for Portland Harbor. The Company and other participating PRPs ultimately agreed to fund the first two phases of the three-phase assessment, which included the development of the Natural Resource Damage Assessment Plan ("AP") and implementation of the AP to develop information sufficient to facilitate early settlements between the Trustee Council and Phase 2 participants and the identification of restoration projects to be funded by the settlements. In late May 2018, the Trustee Council published notice of its intent to proceed with Phase 3, which will involve the full implementation of the AP and the final injury and damage determination. The Company is proceeding with the process established by the Trustee Council regarding early settlements under Phase 2. The Company has established an environmental reserve of approximately $2 million for this alleged natural resource damages liability as it continues to work with the Trustee Council to finalize an early settlement. As of each of May 31, 2025 and August 31, 2024, the Company had a receivable in the same amount as the environmental reserve. See "Other Assets" in Note 1 - Summary of Significant Accounting Policies for further discussion of insurance and other related receivables.

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

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

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

The Oregon Department of Environmental Quality is separately providing oversight of investigations and source control activities by the Company at various sites adjacent to Portland Harbor that are focused on controlling any current "uplands" releases of contaminants into the Willamette River. The Company has accrued liabilities for source control and related work at two sites, reflecting estimated costs of primarily investigation and design, which costs have not been material in the aggregate to date. No liabilities have been established in connection with investigations for any other sites because the extent of contamination, required source control work, and the Company's responsibility for the contamination and source control work, in each case if any, have not yet been determined. The Company believes that, pursuant to its insurance policies and agreements with other third parties, it will be reimbursed for the costs it incurs for required source control evaluation and remediation work; however, the Company's insurance policies and agreements with other third parties may not cover all the costs which the Company incurs. As of both May 31, 2025 and August 31, 2024, the Company had an insurance receivable in the same amount as the environmental reserve for such source control work.

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[<u>**Table of Contents**</u>](#table_contents)

RADIUS RECYCLING, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

<u>Other Legacy Environmental Loss Contingencies</u>

The Company's environmental loss contingencies as of May 31, 2025 and August 31, 2024, other than Portland Harbor, include actual or possible investigation and remediation costs from historical contamination at sites currently or formerly owned or formerly operated by the Company or at other sites where the Company may have responsibility for such costs due to past disposal or other activities ("legacy environmental loss contingencies"). These legacy environmental loss contingencies relate to the potential remediation of waterways and soil and groundwater contamination and may also involve natural resource damages, governmental fines and penalties, and claims by third parties for personal injury and property damage. The Company has been notified that it is or may be a potentially responsible party at certain of these sites, and investigation and remediation activities are ongoing or may be required in the future. The Company recognizes a liability for such matters when the loss is probable and can be reasonably estimated. When investigation, allocation, and remediation activities are ongoing or where the Company has not yet been identified as having responsibility or the contamination has not yet been identified, it is reasonably possible that the Company may need to recognize additional liabilities in connection with such sites but the Company cannot currently reasonably estimate the possible loss or range of loss absent additional information or developments. Such additional liabilities, individually or in the aggregate, may have a material adverse effect on the Company's results of operations, financial condition, or cash flows.

In fiscal 2018, the Company accrued $4 million for the estimated costs related to remediation of shredder residue disposed of in or around the 1970s at third-party sites located near each other. Investigation activities have been conducted under oversight of the applicable state regulatory agency. As of both May 31, 2025 and August 31, 2024, the Company had $5 million accrued for this matter. It is reasonably possible that the Company may recognize additional liabilities in connection with this matter at the time such losses are probable and can be reasonably estimated. The Company previously estimated a range of reasonably possible losses related to this matter in excess of current accruals at between zero and $28 million based on a range of remedial alternatives and subject to development and approval by regulators of specific remedy implementation plans. However, subsequent to the development of those remedial alternatives, the Company performed additional investigative activities under new state requirements that are likely to impact the required remedial actions and associated cost estimates, but the scope of such impacts and the amount or the range of the additional associated costs are not reasonably estimable at this time and are subject to further investigation, analysis, and discussion by the Company and regulators. The Company is investigating whether a portion or all of the current and future losses related to this matter, if incurred, are covered by existing insurance coverage or may be offset by contributions from other responsible parties.

In addition, the Company's loss contingencies as of May 31, 2025 and August 31, 2024 included $1 million and $2 million, respectively, for the estimated costs related to environmental matters in connection with a closed facility owned and previously operated by an indirect, wholly-owned subsidiary, including monitoring and remediation of soil and groundwater conditions and funding for wellhead treatment facilities. Investigation and remediation activities have been conducted under the oversight of the applicable state regulatory agency and are on-going, and the Company's subsidiary has also been working with state and local officials with respect to the protection of public and private water supplies. As part of its activities relating to the protection of public water supplies, the Company's subsidiary agreed to reimburse the municipality for certain studies and plans and to provide funding for the construction and operation by the municipality of wellhead treatment facilities. It is reasonably possible that the Company may recognize additional liabilities in connection with this matter at the time such additional losses are probable and can be reasonably estimated. However, the Company cannot reasonably estimate at this time the possible additional loss or range of possible additional losses associated with this matter pending the on-going implementation of the approved remediation plans for soil and groundwater conditions and completion and operation of the wellhead treatment facilities.

In addition, the Company's loss contingencies as of each of May 31, 2025 and August 31, 2024 included $10 million for the estimated costs related to remediation of a site, a portion of which was previously leased to and operated by an indirect, wholly-owned subsidiary. In connection with settlement of a lawsuit relating to allocation of the remediation costs, the Company's subsidiary agreed to perform the remedial action related to metals contamination on the site initially estimated to cost approximately $7.9 million, and another potentially liable party agreed to perform the remedial action related to creosote contamination at the site. As part of the settlement, other potentially liable parties agreed to make payments totaling approximately $7.6 million to fund the remediation of the metals contamination at the site in exchange for a release and indemnity. This amount was fully funded in fiscal 2021. In fiscal 2023, the Company increased its estimate of the cost to perform the remedial action by approximately $3 million. It is reasonably possible that the Company may recognize additional liabilities in connection with this matter at the time such additional losses are probable and can be reasonably estimated. The Company estimates the reasonably possible additional losses associated with this matter to range from zero to $10 million as of May 31, 2025, pending completion, approval, and implementation of the remediation action plan.

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[<u>**Table of Contents**</u>](#table_contents)

RADIUS RECYCLING, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

In addition, the Company is a PRP related to environmental matters in connection with a facility previously used for disposal of automobile shredder residue by a wholly-owned subsidiary. Investigation and remediation activities have been conducted under the oversight of the applicable state regulatory agency and are on-going. On December 4, 2020, the Company and two other PRPs entered into a final Administrative Order with the state agency, and another PRP was served with a unilateral order. Remediation discussions among the state agency, the Company and other PRPs pursuant to such order are ongoing as of May 2025. It is reasonably possible that the Company may recognize a liability in connection with this matter at the time such losses are probable and can be reasonably estimated. However, the Company cannot reasonably estimate at this time the possible additional loss or range of possible additional losses associated with this matter pending the on-going implementation of remediation plans for soil, groundwater and vapor conditions.

**<u>Summary - Environmental Contingencies</u>**

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

***Contingencies – Other***

On May 6, 2022, The Athletics Investment Group LLC ("A's") filed an action in the Superior Court of the State of California, County of Alameda against the Bay Area Air Quality Management District ("BAAQMD") as Respondent and the Company as Real Party in Interest (the "BAAQMD Case") alleging that the BAAQMD has failed to properly regulate the Company's Oakland shredder facility under the federal and California Clean Air Acts and seeking an order requiring the BAAQMD to revoke the Company's Permit to Operate for the Oakland facility. On June 3, 2022, the BAAQMD removed this action to the United States District Court, Northern District of California where the A's had previously filed an action against the Company on July 7, 2021 raising substantially similar issues under the federal Clean Air Act's citizen suit provision alleging violations by the Oakland facility of the federal Clean Air Act and permit conditions and seeking declaratory and injunctive relief (the "CAA Case"). The A's recently disclosed that they were also seeking up to approximately $183 million in fines in the CAA Case, which claims the Company denies. The Company has vigorously defended and will continue to defend against the claims asserted in the CAA Case, which went to trial on November 12, 2024, with post-trial briefing completed in March 2025. The BAAQMD Case was remanded back to Alameda Superior Court on October 7, 2022, and discovery is proceeding under an Amended Petition.

On June 28, 2024, the Alameda County Criminal Grand Jury returned an indictment against the Company and two operations employees alleging felony and misdemeanor environmental regulatory violations for mishandling hazardous waste, including destruction of evidence, arising from the August 2023 scrap metal fire at the Company's Oakland, CA facility and the Company's subsequent shredding of the burned material. The Company disputed the allegations and vigorously defended itself in connection with these allegations. On December 5, 2024, the Company and the individual defendants filed their joint demurrer to the indictment. On May 23, 2025, the Alameda County District Attorney dismissed the case in open court, terminating all charges against all defendants.

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

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[<u>**Table of Contents**</u>](#table_contents)

RADIUS RECYCLING, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

**Note 5 - Accumulated Other Comprehensive Income (Loss)**

Changes in accumulated other comprehensive income (loss), net of tax, comprise the following (in thousands):

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| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Three Months Ended May 31, 2025** | **Three Months Ended May 31, 2025** | **Three Months Ended May 31, 2025** | **Three Months Ended May 31, 2025** | **Three Months Ended May 31, 2024** | **Three Months Ended May 31, 2024** | **Three Months Ended May 31, 2024** | **Three Months Ended May 31, 2024** |
|  | **Foreign Currency<br>Translation<br>Adjustments** | **Cash Flow Hedges, Net** | **Pension Obligations,<br>Net** | **Total** | **Foreign Currency<br>Translation<br>Adjustments** | **Cash Flow Hedges, Net** | **Pension Obligations,<br>Net** | **Total** |
| Balances - March 1 (Beginning of period) | $(41633) | $(725) | $(1173) | $(43531) | $(37922) | $(126) | $(1636) | $(39684) |
| &nbsp;&nbsp;&nbsp;&nbsp;Other comprehensive income (loss) before reclassifications | 3013 | 50 |  | 3063 | (308) | 1346 |  | 1038 |
| &nbsp;&nbsp;&nbsp;&nbsp;Income tax (expense) benefit |  | (11) |  | (11) |  | (303) |  | (303) |
| &nbsp;&nbsp;&nbsp;&nbsp;Other comprehensive income (loss) before reclassifications, net of tax | 3013 | 39 |  | 3052 | (308) | 1043 |  | 735 |
| &nbsp;&nbsp;&nbsp;&nbsp;Amounts reclassified from accumulated other comprehensive income (loss) |  | 26 | 36 | 62 |  | (344) | 191 | (153) |
| &nbsp;&nbsp;&nbsp;&nbsp;Income tax expense (benefit) |  | (6) | (8) | (14) |  | 77 | (43) | 34 |
| &nbsp;&nbsp;&nbsp;&nbsp;Amounts reclassified from accumulated other comprehensive income (loss), net of tax | **—** | 20 | 28 | 48 |  | (267) | 148 | (119) |
| Net periodic other comprehensive income (loss) | 3013 | 59 | 28 | 3100 | (308) | 776 | 148 | 616 |
| Balances - May 31, respectively (End of period) | $(38620) | $(666) | $(1145) | $(40431) | $(38230) | $650 | $(1488) | $(39068) |

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| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Nine Months Ended May 31, 2025** | **Nine Months Ended May 31, 2025** | **Nine Months Ended May 31, 2025** | **Nine Months Ended May 31, 2025** | **Nine Months Ended May 31, 2024** | **Nine Months Ended May 31, 2024** | **Nine Months Ended May 31, 2024** | **Nine Months Ended May 31, 2024** |
|  | **Foreign Currency<br>Translation<br>Adjustments** | **Cash Flow Hedges, Net** | **Pension Obligations,<br>Net** | **Total** | **Foreign Currency<br>Translation<br>Adjustments** | **Cash Flow Hedges, Net** | **Pension Obligations,<br>Net** | **Total** |
| Balances - September 1 (Beginning of period) | $(37678) | $(1428) | $(1066) | $(40172) | $(37340) | $(304) | $(2039) | $(39683) |
| &nbsp;&nbsp;&nbsp;&nbsp;Other comprehensive income (loss) before reclassifications | (942) | 1140 | (210) | (12) | (890) | 2254 | 178 | 1542 |
| &nbsp;&nbsp;&nbsp;&nbsp;Income tax (expense) benefit |  | (257) | 47 | (210) |  | (507) | (40) | (547) |
| &nbsp;&nbsp;&nbsp;&nbsp;Other comprehensive income (loss) before reclassifications, net of tax | (942) | 883 | (163) | (222) | (890) | 1747 | 138 | 995 |
| &nbsp;&nbsp;&nbsp;&nbsp;Amounts reclassified from accumulated other comprehensive income (loss) |  | (157) | 108 | (49) |  | (1023) | 533 | (490) |
| &nbsp;&nbsp;&nbsp;&nbsp;Income tax expense (benefit) |  | 36 | (24) | 12 |  | 230 | (120) | 110 |
| &nbsp;&nbsp;&nbsp;&nbsp;Amounts reclassified from accumulated other comprehensive income (loss), net of tax |  | (121) | 84 | (37) |  | (793) | 413 | (380) |
| Net periodic other comprehensive income (loss) | (942) | 762 | (79) | (259) | (890) | 954 | 551 | 615 |
| Balances - May 31, respectively (End of period) | $(38620) | $(666) | $(1145) | $(40431) | $(38230) | $650 | $(1488) | $(39068) |

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

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[<u>**Table of Contents**</u>](#table_contents)

RADIUS RECYCLING, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

**Note 6 - Revenue**

***Disaggregation of Revenues*** 

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

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended May 31,** | **Three Months Ended May 31,** | **Nine Months Ended May 31,** | **Nine Months Ended May 31,** |
|  | **2025** | **2024** | **2025** | **2024** |
| Major product information: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Ferrous revenues | $320746 | $334425 | $966805 | $999419 |
| &nbsp;&nbsp;&nbsp;&nbsp;Nonferrous revenues | 229428 | 184127 | 590489 | 517902 |
| &nbsp;&nbsp;&nbsp;&nbsp;Steel revenues<sup>(1)</sup> | 125935 | 108259 | 331900 | 322511 |
| &nbsp;&nbsp;&nbsp;&nbsp;Retail and other revenues | 50882 | 47109 | 136842 | 128044 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total revenues | $726991 | $673920 | $2026036 | $1967876 |
| Revenues based on sales destination: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Foreign | $340718 | $348503 | $1032275 | $1023799 |
| &nbsp;&nbsp;&nbsp;&nbsp;Domestic | 386273 | 325417 | 993761 | 944077 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total revenues | $726991 | $673920 | $2026036 | $1967876 |

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

***Receivables from Contracts with Customers***

The revenue accounting standard defines a receivable as an entity's right to consideration that is unconditional, meaning that only the passage of time is required before payment is due. As of May 31, 2025 and August 31, 2024, receivables from contracts with customers, net of an allowance for credit losses, represented substantially all of total accounts receivable reported in the Unaudited Condensed Consolidated Balance Sheets as of each reporting date.

***Contract Liabilities***

Contract consideration received from a customer prior to revenue recognition is recorded as a contract liability and is recognized as revenue when the Company satisfies the related performance obligation under the terms of the contract. The Company's contract liabilities, which consist almost entirely of customer deposits for recycled metal and finished steel sales contracts, are reported within accounts payable in the Unaudited Condensed Consolidated Balance Sheets and totaled $12 million and $10 million as of May 31, 2025 and August 31, 2024, respectively. Unsatisfied performance obligations reflected in these contract liabilities relate to contracts with original expected durations of one year or less and, therefore, are not disclosed. The substantial majority of outstanding contract liabilities are reclassified to revenues within three months of the reporting date as a result of satisfying performance obligations.

**Note 7 - Share-Based Compensation** 

In the first quarter of fiscal 2025, the Compensation Committee of the Company's Board of Directors granted 446,993 restricted stock units ("RSUs") and 340,454 performance share awards ("PSUs") to the Company's key employees and officers under the Company's 2024 Omnibus Incentive Plan (the "2024 Plan").

Of the RSUs granted in the first quarter of fiscal 2025, 334,042 RSUs have a five-year term and vest one-fifth per year commencing November 30, 2025 and each October 31 thereafter. The remaining 112,951 RSUs have a three-year term and vest one-third per year commencing November 30, 2025 and each October 31 thereafter. The aggregate fair value of all the RSUs granted was based on the market closing price of the underlying Class A common stock on the grant date and totaled $9 million. The compensation expense associated with the RSUs is recognized over the requisite service period of the awards, net of forfeitures, which for participants who were retirement eligible as of the grant date or who will become retirement eligible during the term of the awards is the longer of two years or the period ending on the date retirement eligibility is achieved.

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[<u>**Table of Contents**</u>](#table_contents)

RADIUS RECYCLING, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The PSUs granted in the first quarter of fiscal 2025 comprise two separate and distinct awards with different vesting conditions. Awards vest if the threshold level under the specified metric is met at the end of the approximately three-year performance period. The performance metrics are (1) the Company's total shareholder return ("TSR") based on the Company's average TSR percentile rank relative to a designated peer group and (2) the Company's volume growth. Award share payouts depend on the extent to which the performance goals have been achieved. The number of shares that a participant receives is equal to the number of performance shares granted multiplied by a payout factor, which ranges from a threshold of 50% to a maximum of 200%. The TSR award stipulates certain limitations to the payout in the event the payout reaches a defined ceiling level or the Company's TSR is negative.

Approximately half of the PSUs granted during the first quarter of fiscal 2025 vest based on the Company's relative TSR metric over an approximately three-year performance period ending August 31, 2027. The Company estimated the fair value of TSR awards granted in the first quarter of fiscal 2025 using a Monte-Carlo simulation model utilizing several key assumptions, including the following:

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| | |
|:---|:---|
|  | **Percentage** |
| Expected share price volatility (Radius) | 50.2% |
| Expected share price volatility (Peer group) | 47.0% |
| Expected correlation to peer group companies | 42.4% |
| Risk-free rate of return | 4.2% |

---

The estimated aggregate fair value of the TSR-based PSUs at the date of grant was $3 million. The compensation expense for these awards based on the grant-date fair value, net of estimated forfeitures, is recognized over the requisite service period (or to the date a qualifying employment termination event entitles the recipient to a prorated award, if before the end of the service period), regardless of whether the market condition has been or will be satisfied.

Approximately half of the PSUs granted during the first quarter of fiscal 2025 vest based on the Company's volume growth for the three-year performance period consisting of the Company's 2025, 2026 and 2027 fiscal years. The fair value of the awards granted was based on the market closing price of the underlying Class A common stock on the grant date and totaled $3 million.

The Company accrues compensation cost for the PSUs related to volume growth based on the probable outcome of achieving specified performance conditions, net of estimated forfeitures, over the requisite service period (or to the date a qualifying employment termination event entitles the recipient to a prorated award, if before the end of the service period). The Company reassesses whether achievement of the performance conditions is probable at each reporting date. If it is probable that the actual performance results will exceed the stated target performance conditions, the Company accrues additional compensation cost for the additional performance shares to be awarded. If, upon reassessment, it is no longer probable that the actual performance results will exceed the stated target performance conditions, or it is no longer probable that the target performance conditions will be achieved, the Company reverses any recognized compensation cost for shares no longer probable of being issued. If the performance conditions are not achieved at the end of the performance period, all related compensation cost previously recognized is reversed.

PSUs will be paid in Class A common stock as soon as practicable after the end of the requisite service period and vesting date of October 31, 2027.

In the second quarter of fiscal 2025, the Company granted deferred stock units ("DSUs") to each of its non-employee directors under the Company's 2024 Plan. Each DSU gives the director the right to receive one share of Class A common stock at a future date. The grant included an aggregate of 57,642 shares that will vest in full on the day before the Company's 2025 annual meeting of shareholders, subject to continued Board service. The total fair value of these awards at the grant date was $1 million.

**Note 8 - Derivative Financial Instruments**

***Interest Rate Swaps***

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

In fiscal 2023, the Company entered three pay-fixed interest rate swap transactions, each with a different major financial institution counterparty and designated as a cash flow hedge, to hedge the variability in interest cash flows associated with the Company's variable-rate loans under its bank revolving credit facilities. The interest rate swaps involve the receipt of variable-rate amounts from the counterparty in exchange for the Company making fixed-rate payments over the life of the agreement without exchange of the underlying

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RADIUS RECYCLING, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

notional amount. These contracts mature in August 2026. As of both May 31, 2025 and August 31, 2024, the total notional amount of these interest rate swaps was $150 million. The fair values of the interest rate swaps are based upon inputs corroborated by observable market data which is considered Level 2 of the fair value hierarchy.

The fair value of derivative instruments in the Unaudited Condensed Consolidated Balance Sheet as of May 31, 2025 and August 31, 2024 is as follows (in thousands):

---

| | | | |
|:---|:---|:---|:---|
|  | **Balance Sheet Location** | **May 31, 2025** | **August 31, 2024** |
| Interest rate swap contracts | Other accrued liabilities | $497 | $174 |
| Interest rate swap contracts | Other long-term liabilities | $363 | $1667 |

---

See Note 5 - Accumulated Other Comprehensive Income (Loss) for tabular presentation of the effects of interest rate swap derivative cash flow hedges on other comprehensive income. All related cash flow hedge amounts reclassified from accumulated other comprehensive income ("AOCI") were recorded in interest expense on the Unaudited Condensed Consolidated Statement of Operations for the three and nine months ended May 31, 2025, which reclassified amounts totaled less than $1 million for each period. For the three and nine months ended May 31, 2024, such reclassified amounts totaled less than $1 million and $1 million, respectively. Total interest expense was $9 million and $27 million, respectively, for the third quarter and first nine months of fiscal 2025, compared to $7 million and $18 million, respectively, for the same periods in the prior year. There was no hedge ineffectiveness with respect to the Company's interest rate swap cash flow hedges for the three and nine months ended May 31, 2025 and 2024.

**Note 9 - Income Taxes**

***Effective Tax Rate*** 

The Company's effective tax rate from continuing operations for the third quarter and the first nine months of fiscal 2025 was a benefit on pre-tax loss of 2.0% and 0.9%, respectively, compared to 18.3% and 17.6%, respectively, for the comparable prior year periods. The Company's effective tax rate from continuing operations for the third quarter and first nine months of fiscal 2025 was lower than the U.S. federal statutory rate of 21% primarily due to the aggregate effect of the Company's financial performance including an increase in the Company's valuation allowance against deferred tax assets in the U.S. tax jurisdiction. For the third quarter and first nine months of fiscal 2024, the Company's effective tax rate from continuing operations was lower than the U.S. federal statutory rate of 21% primarily due to the effect of permanent differences from non-deductible expenses and the recognition of a valuation allowance against deferred tax assets in the Company's U.S. federal, state and Canadian tax jurisdictions.

***Valuation Allowances***

The Company assesses the realizability of its deferred tax assets on a quarterly basis through an analysis of potential sources of future taxable income, including prior year taxable income available to absorb a carryback of tax losses, reversals of existing taxable temporary differences, tax planning strategies, and forecasts of taxable income. The Company considers and weighs all positive and negative evidence to determine if valuation allowances against deferred tax assets are required. The Company continues to maintain a valuation allowance against its deferred tax assets in the Company's U.S. federal, state and foreign tax jurisdictions.

The Company files federal and state income tax returns in the U.S. and foreign tax returns in Puerto Rico and Canada. For U.S. federal income tax returns, fiscal years 2022 to 2024 remain subject to examination under the statute of limitations.

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RADIUS RECYCLING, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

**Note 10 - Net Income (Loss) Per Share** 

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

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended May 31,** | **Three Months Ended May 31,** | **Nine Months Ended May 31,** | **Nine Months Ended May 31,** |
|  | **2025** | **2024** | **2025** | **2024** |
| Income (loss) from continuing operations | $(16406) | $(198490) | $(86300) | $(250266) |
| Net (income) loss attributable to noncontrolling interests | (558) | 121 | (814) | (13) |
| Income (loss) from continuing operations attributable to Radius shareholders | $(16964) | $(198369) | $(87114) | $(250279) |
| Income (loss) from discontinued operations, net of tax |  | (21) |  | (54) |
| Net income (loss) attributable to Radius shareholders | $(16964) | $(198390) | $(87114) | $(250333) |
| Computation of shares: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Weighted average common shares outstanding, basic | 28700 | 28479 | 28652 | 28385 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Incremental common shares attributable to dilutive performance share awards, RSUs and DSUs |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Weighted average common shares outstanding, diluted | 28700 | 28479 | 28652 | 28385 |

---

Common stock equivalent shares of 513,938 and 272,997 were considered antidilutive and were excluded from the calculation of diluted net income (loss) per share for the three and nine months ended May 31, 2025, respectively, compared to 632,821 and 368,521 for the three and nine months ended May 31, 2024, respectively.

**Note 11 - Related Party Transactions**

The Company purchases recycled metal from one of its joint venture operations at prices that approximate fair market value. These purchases totaled $5 million for both the three months ended May 31, 2025 and 2024, and $13 million for both the nine months ended May 31, 2025 and 2024, respectively.

**Note 12 - Debt**

Debt consisted of the following as of May 31, 2025 and August 31, 2024 (in thousands):

---

| | | |
|:---|:---|:---|
|  | **May 31, 2025** | **August 31, 2024** |
| Bank revolving credit facilities, interest primarily at SOFR or LIBOR plus a spread | $435000 | $393612 |
| Finance lease liabilities | 7319 | 9042 |
| Other debt obligations | 12094 | 12116 |
| Total debt | 454413 | 414770 |
| Less current maturities | (5403) | (5688) |
| Debt, net of current maturities | $449010 | $409082 |

---

As of May 31, 2025, the Company's senior secured revolving credit facilities provided for $800 million and C$15 million in revolving loans maturing in August 2027. The credit facility included a $50 million sublimit for letters of credit, a $25 million sublimit for swing line loans, and a $50 million sublimit for multicurrency borrowings. On June 16, 2025, the Company and certain of its subsidiaries entered into the Sixth Amendment (the "Sixth Amendment") to its Third Amended and Restated Credit Agreement, dated as of April 6, 2016, by and among the Company, as the U.S. Borrower, Schnitzer Steel Canada, Ltd., as the Canadian Borrower, the subsidiaries of the Company party thereto (the "Guarantors"), Bank of America N.A., as administrative agent and the other lenders party thereto (as amended prior to the Sixth Amendment, the "Existing Credit Agreement", the Existing Credit Agreement, as amended pursuant to the Sixth Amendment, the "Amended Credit Agreement"). The Sixth Amendment makes certain modifications to the Existing Credit Agreement, including amendments that, among other things, reduce the aggregate amount of revolving commitments available under the Amended Credit Agreement from $800 million to $625 million, reduce the sublimit for multicurrency borrowings from $50 million to $39 million, and extend for two additional fiscal quarters the suspension of the maintenance covenant previously requiring compliance with a minimum permitted fixed charge coverage ratio, as described below.

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RADIUS RECYCLING, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

As of May 31, 2025 and August 31, 2024, borrowings outstanding under the credit facilities were $435 million and $394 million, respectively. The weighted average interest rate on amounts outstanding under the credit facilities was 7.0% and 8.0% as of May 31, 2025 and August 31, 2024, respectively.

The credit agreement contains various representations and warranties, events of default, and financial and other customary covenants which limit (subject to certain exceptions) the Company's ability to, among other things, incur or suffer to exist certain liens, make investments, incur or guaranty additional indebtedness, enter into consolidations, mergers, acquisitions, and sales of assets, make distributions and other restricted payments, change the nature of the business, engage in transactions with affiliates, and enter into restrictive agreements, including agreements that restrict the ability of the subsidiaries to make distributions. The financial covenants under the Amended Credit Agreement include (a) a consolidated fixed charge coverage ratio of no less than 1.50 to 1.00, defined as the four-quarter rolling sum of consolidated EBITDA less defined maintenance capital expenditures and certain environmental expenditures divided by consolidated fixed charges, and (b) a consolidated leverage ratio of no more than 0.55 to 1.00, defined as consolidated funded indebtedness divided by the sum of consolidated net worth and consolidated funded indebtedness. For the fiscal quarters ending May 31, 2024 through May 31, 2026, the consolidated fixed charge coverage ratio has been temporarily replaced with (i) a minimum consolidated interest coverage ratio of 2.00 to 1.00 for the fiscal quarter ending May 31, 2024, and 1.25 to 1.00 for each of the fiscal quarters ending February 28, 2025 and February 28, 2026, and (ii) a minimum consolidated asset coverage ratio of no less than 1.00 to 1.00 for each fiscal quarter through the remaining term of the Amended Credit Agreement. The Company's obligations under the credit agreement are guaranteed by substantially all of its subsidiaries. The credit facilities and the related guarantees are secured by senior first priority liens on certain of the Company's and its subsidiaries' assets, including equipment, inventory, accounts receivable and most other personal property and equity interests held by the Company and the Guarantors in their respective subsidiaries.

As of May 31, 2025, the Company was in compliance with the applicable financial covenants under the Amended Credit Agreement. While the Company expects to remain in compliance with the financial covenants under the credit agreement, the Company may not be able to do so in the event market conditions do not improve, or other factors have a significant adverse impact on its results of operations and financial position. If the Company does not maintain compliance with its financial covenants and is unable to obtain an amendment or waiver from its lenders, a breach of a financial covenant would constitute an event of default and allow the lenders to exercise remedies under the agreements, the most severe of which is the termination of the credit facility under the Amended Credit Agreement and acceleration of the amounts owed under the agreement.

**Note 13 - Merger with TAI**

On March 13, 2025, the Company, TAI and Merger Sub, entered into the Merger Agreement, pursuant to which, on the terms and subject to the conditions set forth in the Merger Agreement, Merger Sub will merge with and into the Company, with the Company continuing as the surviving corporation in the Merger as a wholly owned subsidiary of TAI. The Board of Directors of the Company has approved the Merger Agreement and the transactions contemplated thereby, including the Merger.

On the terms and subject to the conditions set forth in the Merger Agreement, at the effective time of the Merger (the "Effective Time"), and as a result of the Merger, each share of common stock of the Company ("Radius Common Stock") that is issued and outstanding immediately prior to the Effective Time (other than any shares of Class B common stock of the Company for which dissenters' rights have been properly exercised and perfected and not withdrawn) will be converted into the right to receive $30.00 in cash (the "Merger Consideration"), without interest, and less any applicable withholding taxes.

In addition, pursuant to the Merger Agreement, as of the Effective Time, (i) each Company RSU Award (as defined in the Merger Agreement) (or a portion thereof) that is outstanding immediately prior to the Effective Time will, to the extent not vested, automatically become fully vested and be cancelled and converted into the right to receive an amount in cash equal to the sum of (x) the product of (A) Merger Consideration and (B) the total number of shares of Radius Common Stock subject to such Company RSU Award (or portion thereof) immediately prior to the Effective Time, and (y) any accrued and unpaid dividends or dividend equivalent rights corresponding to such Company RSU Award, (ii) each Company PSU Award (as defined in the Merger Agreement) (or portion thereof) that is outstanding immediately prior to the Effective Time will, to the extent not vested, automatically become fully vested and be cancelled

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RADIUS RECYCLING, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

and converted into the right to receive an amount in cash equal to the product of (x) the Merger Consideration and (y) the total number of shares of Radius Common Stock subject to such Company PSU Award (or portion thereof) immediately prior to the Effective Time, calculated based on the greater of (A) actual performance, calculated with the applicable performance period running through the last day of the Company's most recently completed quarter prior to the Effective Time and (B) deemed target level performance, and (iii) each Company DSU Award (as defined in the Merger Agreement) (or portion thereof) that is outstanding immediately prior to the Effective Time will, to the extent not vested, automatically become fully vested and be cancelled, and converted into the right to receive an amount in cash equal to the sum of (x) the product of (A) the Merger Consideration and (B) the total number of shares of Radius Common Stock subject to such Company DSU Award (or portion thereof), and (y) any accrued and unpaid dividends or dividend equivalent rights corresponding to such Company DSU Award.

The Company, TAI and Merger Sub have made customary representations, warranties and covenants in the Merger Agreement, including, among others, covenants that (i) the Company will conduct its and its subsidiaries' business in the ordinary course of business consistent with past practice in all material respects during the interim period between the execution of the Merger Agreement and the Effective Time, (ii) the Company will not engage in certain types of transactions or take certain actions outside the ordinary course during such period without the prior consent of TAI, (iii) the Company will cause a meeting of the holders of Radius Common Stock to be held to consider approval of the Merger, and (iv) subject to certain customary exceptions, the Board of Directors of the Company will recommend that holders of Radius Common Stock vote in favor of the Merger. The Company has also made certain additional customary covenants, including, among others, covenants not to: (A) solicit or knowingly encourage any inquiries with respect to certain alternative business combination transactions or (B) subject to certain exceptions designed to allow the Board of Directors of the Company to fulfill its fiduciary duties to the Company's shareholders, engage in any discussions concerning, or provide confidential information to, any person relating to certain alternative business combination transactions.

Consummation of the Merger is subject to certain customary conditions, including (i) the adoption of the Merger by the holders of a majority of the outstanding shares of Radius Common Stock, (ii) the absence of any law prohibiting or order preventing the consummation of the Merger, (iii) the receipt of certain regulatory approvals, to the extent required, (iv) the receipt of Committee on Foreign Investment in the United States ("CFIUS") approval without the imposition of certain conditions set forth in the Merger Agreement and (v) compliance in all material respects on the part of each of the Company, TAI and Merger Sub with such party's covenants under the Merger Agreement. The obligation of each party to consummate the Merger is also conditioned upon the other party's representations and warranties being true and correct (subject to certain materiality exceptions).

On May 12, 2025, the U.S. Federal Trade Commission notified the Company that early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act") was granted, effective immediately.

On June 5, 2025, the Company held a special meeting of shareholders at which holders of the Company's Class A common stock and Class B common stock, voting together as a single class, approved the Merger Agreement.

The termination of the waiting period under the HSR Act with respect to the Merger and the approval by Radius shareholders of the Merger Agreement satisfy two of the conditions to the closing of the Merger, which remains subject to the satisfaction or waiver of other customary closing conditions set forth in the Merger Agreement, including certain other regulatory approvals.

Subject to the satisfaction of such closing conditions, the Company anticipates the Merger and the other transactions contemplated by the Merger Agreement to close in the second half of calendar year 2025. Following completion of the Merger, the Company's common stock will no longer be publicly listed.

The Merger Agreement contains certain customary termination rights for the Company and TAI, including the Company's right to terminate the Merger Agreement to accept a "Superior Proposal" (as defined in the Merger Agreement) subject to compliance with certain procedures specified in the Merger Agreement. Upon termination of the Merger Agreement under certain specified circumstances, the Company will be required to pay TAI a termination fee of $27.2 million.

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RADIUS RECYCLING, INC.

**ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS**

This section includes a discussion of our operations for the three and nine months ended May 31, 2025 and May 31, 2024. The following discussion and analysis provide information which management believes is relevant to an assessment and understanding of our financial condition and results of operations. The discussion should be read in conjunction with our Annual Report on Form 10-K for the year ended August 31, 2024, and the Unaudited Condensed Consolidated Financial Statements and the related Notes thereto included in Part I, Item 1 of this report.

**General**

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

We sell recycled ferrous and nonferrous metal in both foreign and domestic markets. We also sell a range of finished steel long products produced at our steel mill. We acquire, process, and recycle end-of-life (salvaged) vehicles, rail cars, home appliances, industrial machinery, manufacturing scrap, and construction and demolition scrap through our facilities. Our retail self-service auto parts stores located across the United States ("U.S.") and Western Canada, which operate under the commercial brand-name Pick-n-Pull, procure the significant majority of our salvaged vehicles and sell serviceable used auto parts from these vehicles. Upon acquiring a salvaged vehicle, we remove catalytic converters, aluminum wheels, and batteries for separate processing and sale prior to placing the vehicle in our retail lot. After retail customers have removed desired parts from a vehicle, we may remove remaining major component parts containing ferrous and nonferrous metals, which are primarily sold to wholesalers. The remaining auto bodies are crushed and shipped to our metals recycling facilities to be shredded or sold to third parties when geographically more economical. At our metals recycling facilities, we process mixed and large pieces of scrap metal into smaller pieces by crushing, torching, shearing, shredding, separating, and sorting, resulting in recycled ferrous, nonferrous, and mixed metal pieces of a size, density, and metal content required by customers to meet their production needs. Each of our shredding, nonferrous processing, and separation systems is designed to optimize the recovery of valuable recycled metal. We also purchase nonferrous metal directly from industrial vendors and other suppliers and aggregate and prepare this metal for shipment to customers by ship, rail, or truck. In addition to the sale of recycled metal processed at our facilities, we also provide a variety of recycling and related services including brokering the sale of ferrous and nonferrous scrap metal generated by industrial entities and demolition projects to customers in the domestic market, among other services. Our steel mill produces semi-finished goods (billets) and finished goods, consisting of rebar, coiled rebar, wire rod, merchant bar, and other specialty products, using recycled ferrous metal sourced internally from our recycling and joint venture operations and other raw materials.

We operate seven deepwater port locations, six of which are equipped with large-scale shredders. Our deepwater port facilities on both the East and West Coasts of the U.S. (in Everett, Massachusetts; Providence, Rhode Island; Oakland, California; Tacoma, Washington; and Portland, Oregon) and access to public deepwater port facilities (in Kapolei, Hawaii and Salinas, Puerto Rico) allow us to ship bulk cargoes of processed recycled ferrous metal to steel manufacturers located in Europe, Africa, the Middle East, Asia, North America, Central America, and South America. Our exports of nonferrous recycled metal are shipped in containers through various public docks to specialty steelmakers, foundries, aluminum sheet and ingot manufacturers, copper refineries and smelters, brass and bronze ingot manufacturers, wire and cable producers, wholesalers, and other recycled metal processors globally. We also transport both ferrous and nonferrous metals by truck, rail, and barge in order to transfer scrap metal between our facilities for further processing, to load shipments at our export facilities, and to meet regional domestic demand.

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RADIUS RECYCLING, INC.

Our results of operations depend in large part on the demand and prices for recycled metal in foreign and domestic markets and on the supply of raw materials, including end-of-life vehicles, available to be processed at our facilities. Our results of operations also depend substantially on our operating leverage from processing and selling higher volumes of recycled metal as well as our ability to efficiently extract ferrous and nonferrous metals from the shredding process. We respond to changes in selling prices for processed metal by seeking to adjust purchase prices for unprocessed scrap metal in order to manage the impact on our operating results. The spread between selling prices for processed metal and the cost of purchased scrap metal (metal spread) is subject to a number of factors, including differences in the market conditions between the domestic regions where scrap metal is acquired and the areas in the world to which the processed metals are sold, market volatility from the time the selling price is agreed upon with the customer until the time the scrap metal is purchased, changes in the availability of scrap metal including the volume generated by source and grade, and changes in transportation costs. We believe we generally benefit from sustained periods of stable or rising recycled metal selling prices, which allow us to better maintain or increase both operating results and unprocessed scrap metal flow into our facilities. When recycled metal selling prices decline, either sharply or for a sustained period, our operating margins typically compress. With respect to finished steel products produced at our steel mill, our results of operations are impacted by demand and prices for these products, which are sold to customers located primarily in the Western U.S. and Western Canada.

Our quarterly operating results fluctuate based on a variety of factors including, but not limited to, changes in market conditions for recycled ferrous and nonferrous metal and finished steel products, the supply of scrap metal in our domestic markets, varying demand for used auto parts from our self-service retail stores, the efficiency of our supply chain, and variations in production and other operating costs. Certain of these factors are influenced, to a degree, by the impact of seasonal changes including severe weather conditions, which can impact the timing of shipments and inhibit construction activity utilizing our products, scrap metal collection and production levels at our facilities, and retail admissions and parts sales at our auto parts stores. Further, trade actions, including tariffs, sanctions, and any retaliation by affected countries, as well as licensing, product quality, and inspection requirements, can impact the level of profitability on sales of our products and, in certain cases, impede or restrict our ability to sell to certain export markets or require us to direct our sales to alternative market destinations, which can cause our quarterly operating results to fluctuate. For further information regarding the potential impact of uncertainty in global markets including the impact of tariffs and other trade actions on our business and results of operations, see Part II, Item 1A. Risk Factors of this report.

**Merger with TAI** 

On March 13, 2025, we entered into a Merger Agreement with Toyota Tsusho America, Inc. ("TAI"), a U.S. subsidiary of Toyota Tsusho Corporation ("TTC") and TAI Merger Corporation, a wholly owned subsidiary of TAI ("Merger Sub"), pursuant to which, on the terms and subject to the conditions set forth in the Merger Agreement, Merger Sub will merge with and into the Company, with the Company continuing as the surviving corporation in the Merger as a wholly owned subsidiary of TAI. Upon the Effective Time, and as a result of the Merger, each share of Radius Common Stock that is issued and outstanding immediately prior to the Effective Time (other than any shares of Class B common stock of the Company for which dissenters' rights have been properly exercised and perfected and not withdrawn) will be converted into the right to receive $30.00 in cash without interest, and less any applicable withholding taxes. The transaction has been approved by the Company's Board of Directors and by its shareholders and is expected to close in the second half of calendar year 2025, with the closing and timing thereof subject to certain customary closing conditions. See Note 13 - Merger with TAI in the Notes to the Unaudited Condensed Consolidated Financial Statements in Part I, Item 1 of this report for more information.

**Everett Facility Shredder Fire**

On December 8, 2021, we experienced a fire at our metals recycling facility in Everett, Massachusetts. Direct physical loss or damage to property from the incident was limited to the facility's shredder building and equipment, with no bodily injuries and no physical loss or damage to property reported at other buildings or equipment. The repair and replacement of most property that experienced physical loss or damage, primarily buildings and improvements, was substantially completed by the end of fiscal 2023. We have insurance that was fully applicable to the losses, including but not limited to the costs of installing the temporary capture and controls system and any associated loss of business income, and filed insurance claims, which were subject to deductibles and various conditions, exclusions, and limits, for the property damage or loss and business income losses resulting from the matter. During the first half of fiscal 2024, we recognized an additional $6 million insurance receivable and related insurance recovery gain, reported within cost of goods sold on the Unaudited Condensed Consolidated Statements of Operations. During the third quarter of fiscal 2024, we reached a full and final settlement with our insurers for our claims and recognized an additional $7 million insurance recovery gain, reflecting the recovery of applicable losses including business income losses incurred as a result of the fire. All insurance proceeds and recovery gains in connection with our claims had been received and recognized, respectively, as of August 31, 2024.

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RADIUS RECYCLING, INC.

**Use of Non-GAAP Financial Measures**

In this management's discussion and analysis, we use supplemental measures of our performance, liquidity, and capital structure which are derived from our consolidated financial information, but which are not presented in our consolidated financial statements prepared in accordance with GAAP. We believe that providing these non-GAAP financial measures adds a meaningful presentation of our operating and financial performance, liquidity, and capital structure. For example, we use adjusted EBITDA as one of the measures to compare and evaluate financial performance. Adjusted EBITDA is the sum of our net income before results from discontinued operations, interest expense, income taxes, depreciation and amortization, restructuring charges and other exit-related activities, charges for legacy environmental matters (net of recoveries), amortization of capitalized cloud computing implementation costs, goodwill and other asset impairment charges, business development costs not related to ongoing operations including pre-acquisition and merger expenses, and other items which are not related to underlying business operational performance. See the reconciliations of supplemental financial measures, including adjusted EBITDA, in Non-GAAP Financial Measures at the end of this Item 2.

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

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RADIUS RECYCLING, INC.

**Financial Highlights of Results of Operations for the Third Quarter of Fiscal 2025**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Diluted loss per share from continuing operations attributable to Radius shareholders in the third quarter of fiscal 2025 was $(0.59), compared to $(6.97) in the prior year quarter. The prior year quarter included a goodwill impairment charge of $216 million or $(6.21) per share, net of tax.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Adjusted diluted loss per share from continuing operations attributable to Radius shareholders in the third quarter of fiscal 2025 was ($0.39), compared to $(0.59) in the prior year quarter.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Net loss in the third quarter of fiscal 2025 was $16 million, compared to $199 million in the prior year quarter.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Adjusted EBITDA in the third quarter of fiscal 2025 was $22 million, compared to $9 million in the prior year quarter.

Compared to the prior year quarter, the significant improvement in financial performance in the third quarter of fiscal 2025 was primarily driven by stronger market conditions for nonferrous products, higher sales volumes of finished steel products, and the benefits of our productivity improvement initiatives. Sales volumes for our nonferrous products hit the highest quarterly level on record and were 17% higher year-over-year, while average net selling prices were 6% higher compared to the prior year period. Finished steel sales volumes were 20% higher year-over-year, which combined with lower finished steel conversion costs driven by higher mill utilization resulted in higher contribution from finished steel compared to the prior year period. Ferrous market conditions in the third quarter of fiscal 2025 reflected significant volatility and a divergence in foreign and domestic demand, with strength in domestic market conditions offset by weaker export demand which was impacted by a further increase in China's steel exports year-over-year. Contributions from productivity and cost reduction initiatives implemented throughout fiscal 2024 helped to drive a 9% reduction in selling, general and administrative ("SG&A") expense year-over-year, or a 17% reduction of adjusted SG&A after excluding primarily merger-related costs.

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

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•For the first nine months of fiscal 2025, net cash provided by operating activities was $21 million, compared to net cash used in operating activities of $57 million in the prior year period.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Debt was $454 million as of May 31, 2025, compared to $415 million as of August 31, 2024, as a result of increased borrowings from our credit facilities primarily to fund working capital needs and capital expenditures.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Debt, net of cash, was $438 million as of May 31, 2025, compared to $409 million as of August 31, 2024.

See the reconciliations of adjusted diluted earnings per share from continuing operations attributable to Radius shareholders, adjusted EBITDA, adjusted SG&A, and debt, net of cash in Non-GAAP Financial Measures at the end of this Item 2.

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[<u>**Table of Contents**</u>](#table_contents)

RADIUS RECYCLING, INC.

**Results of Operations**

***Selected Financial Measures and Operating Statistics***

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Three Months Ended May 31,** | **Three Months Ended May 31,** | **Three Months Ended May 31,** | **Nine Months Ended May 31,** | **Nine Months Ended May 31,** | **Nine Months Ended May 31,** |
| **($ in thousands, except for prices and per share amounts)** | **2025** | **2024** | **%** | **2025** | **2024** | **%** |
| Ferrous revenues | $320746 | $334425 | (4)% | $966805 | $999419 | (3)% |
| Nonferrous revenues | 229428 | 184127 | 25% | 590489 | 517902 | 14% |
| Steel revenues<sup>(1)</sup> | 125935 | 108259 | 16% | 331900 | 322511 | 3% |
| Retail and other revenues | 50882 | 47109 | 8% | 136842 | 128044 | 7% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total revenues | 726991 | 673920 | 8% | 2026036 | 1967876 | 3% |
| Cost of goods sold | 677444 | 628390 | 8% | 1915587 | 1842806 | 4% |
| Gross margin (total revenues less cost of goods sold) | $49547 | $45530 | 9% | $110449 | $125070 | (12)% |
| Gross margin (%) | 6.8% | 6.8% | (—)% | 5.5% | 6.4% | (14)% |
| Selling, general and administrative expense | $56350 | $62100 | (9)% | $167977 | $187362 | (10)% |
| Diluted income (loss) per share from continuing operations attributable to Radius shareholders: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Reported | $(0.59) | $(6.97) | (92)% | $(3.04) | $(8.82) | (66)% |
| &nbsp;&nbsp;&nbsp;&nbsp;Adjusted<sup>(2)</sup> | $(0.39) | $(0.59) | (34)% | $(2.71) | $(2.28) | 19% |
| Net income (loss) | $(16406) | $(198511) | (92)% | $(86300) | $(250320) | (66)% |
| Adjusted EBITDA<sup>(2)</sup> | $22014 | $8618 | 155% | $21562 | $12475 | 73% |
| Average ferrous recycled metal sales prices ($/LT)<sup>(3)</sup>: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Domestic | $377 | $341 | 11% | $355 | $357 | (1)% |
| &nbsp;&nbsp;&nbsp;&nbsp;Foreign | $323 | $354 | (9)% | $328 | $364 | (10)% |
| &nbsp;&nbsp;&nbsp;&nbsp;Average | $341 | $350 | (3)% | $336 | $361 | (7)% |
| Ferrous volumes (LT, in thousands): |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Domestic<sup>(4)</sup> | 563 | 528 | 7% | 1508 | 1546 | (2)% |
| &nbsp;&nbsp;&nbsp;&nbsp;Foreign | 574 | 584 | (2)% | 1829 | 1698 | 8% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total ferrous volumes (LT, in thousands)<sup>(4)(8)</sup> | 1137 | 1112 | 2% | 3337 | 3244 | 3% |
| Average nonferrous sales price ($/pound)<sup>(3)(5)</sup> | $1.10 | $1.04 | 6% | $1.05 | $0.97 | 8% |
| Nonferrous volumes (pounds, in thousands)<sup>(4)(5)</sup> | 215253 | 183230 | 17% | 566831 | 541435 | 5% |
| Finished steel average sales price ($/ST)<sup>(3)</sup> | $787 | $817 | (4)% | $773 | $827 | (7)% |
| Finished steel sales volumes (ST, in thousands) | 151 | 126 | 20% | 407 | 369 | 10% |
| Cars purchased (in thousands)<sup>(6)</sup> | 66 | 64 | 3% | 182 | 195 | (7)% |
| Number of auto parts stores at period end | 50 | 50 | (—)% | 50 | 50 | (—)% |
| Rolling mill utilization<sup>(7)</sup> | 107% | 88% | 22% | 92% | 88% | 5% |

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NM = Not Meaningful

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

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

(2)See the reconciliations of Non-GAAP Financial Measures at the end of this Item 2.

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

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

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

(6)Cars purchased by auto parts stores only.

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

(8)May not foot due to rounding.

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[<u>**Table of Contents**</u>](#table_contents)

RADIUS RECYCLING, INC.

***Revenues*** 

Revenues in the third quarter and first nine months of fiscal 2025 increased 8% and 3%, respectively, compared to the prior year periods. Global nonferrous demand was stronger in the third quarter and first nine months of fiscal 2025, leading to increases in average net selling prices for our nonferrous products of 6% and 8%, respectively, compared to the prior year periods. Our nonferrous sales volumes in the third quarter and first nine months of fiscal 2025 were 17% and 5% higher, respectively, compared to the prior year periods. In the third quarter and first nine months of fiscal 2025, the average net selling prices for our ferrous products decreased 3% and 7%, respectively, compared to the prior year periods, including as a result of continued elevated levels of Chinese steel exports and increased macroeconomic uncertainty. Amid continuing tight supply conditions for scrap metal due to low levels of U.S. manufacturing activity and low end-of-life vehicle turnover, our total ferrous sales volumes in the third quarter and first nine months of fiscal 2025 were 2% and 3% higher, respectively, compared to the prior year periods. Finished steel sales volumes increased 20% and 10% in the third quarter and first nine months of fiscal 2025, respectively, while finished steel average net selling prices were 4% and 7% lower, respectively, compared to the prior year periods.

***Operating Performance*** 

Net loss in the third quarter and first nine months of fiscal 2025 was $16 million and $86 million, respectively, compared to $199 million and $250 million, respectively, in the comparable prior year periods. Adjusted EBITDA in both the third quarter and the first nine months of fiscal 2025 was $22 million, compared to $9 million and $12 million, respectively in the corresponding prior year periods. The combination of higher sales volumes and lower finished steel conversion costs driven by higher mill utilization resulted in expanded contribution from finished steel compared to the prior year periods. Ferrous metal spreads decreased compared to the prior year periods, driven primarily by the decrease in average net foreign selling prices for our ferrous products, which slightly more than offset the benefit of higher average net domestic selling prices. Our results in the first nine months of fiscal 2025 also reflected increased contribution from our recycling services operations, higher auto parts retail sales and a $3 million gain on the sale of certain real property assets. The prior year quarter and first nine months included a goodwill impairment charge of $216 million and nonrecurring insurance recovery gains of $7 million and $13 million, respectively, related to the Everett Facility shredder fire, which was fully resolved in fiscal 2024.

In the third quarter and first nine months of fiscal 2025, we benefited from the full quarterly run rate of the savings associated with our productivity and cost reduction measures implemented since the beginning of fiscal 2024. SG&A expense in the third quarter and first nine months of fiscal 2025 decreased 9% and 10%, respectively, compared to the prior year periods reflecting benefits from the cost reduction measures which more than offset the impact of inflation. On an adjusted basis, for the same periods SG&A expense decreased 17% and 13%, respectively, excluding primarily $5 million and $8 million of respective costs associated with the announced merger with TAI.

See the reconciliation of adjusted EBITDA and adjusted SG&A in Non-GAAP Financial Measures at the end of this Item 2.

***Interest Expense***

Interest expense was $9 million and $27 million, respectively, for the third quarter and first nine months of fiscal 2025, compared to $7 million and $18 million, respectively, for the same periods in the prior year. The increase in interest expense was primarily due to increased average borrowings compared to the prior year periods.

***Income Tax*** 

The effective tax rate from continuing operations for the third quarter and first nine months of fiscal 2025 was a benefit on pre-tax loss of 2.0% and 0.9%, respectively, compared to 18.3% and 17.6%, respectively, for the comparable prior year periods. Our effective tax rate from continuing operations for the third quarter and first nine months of fiscal 2025 was lower than the U.S. federal statutory rate of 21% primarily due to the aggregate effect of the Company's financial performance including an increase in our valuation allowance against deferred tax assets in the U.S. tax jurisdiction. For the third quarter and first nine months of fiscal 2024, our effective tax rate from continuing operations was lower than the U.S. federal statutory rate of 21% primarily due to the effect of permanent differences from non-deductible expenses and the recognition of a valuation allowance against deferred tax assets in our U.S. federal, state and Canadian tax jurisdictions.

**Liquidity and Capital Resources**

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

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[<u>**Table of Contents**</u>](#table_contents)

RADIUS RECYCLING, INC.

***Sources and Uses of Cash***

We had cash balances of $16 million and $6 million as of May 31, 2025 and August 31, 2024, respectively. Cash balances are intended to be used primarily for working capital, capital expenditures, dividends, share repurchases, investments, and acquisitions. We use excess cash on hand to reduce amounts outstanding under our credit facilities. As of May 31, 2025, debt was $454 million compared to $415 million as of August 31, 2024, and debt, net of cash, was $438 million as of May 31, 2025, compared to $409 million as of August 31, 2024. The increase in debt was primarily due to increased borrowings from our credit facilities mainly to fund working capital needs and capital expenditures. See the reconciliation of debt, net of cash, in Non-GAAP Financial Measures at the end of this Item 2.

*<u>Operating Activities</u>*

Net cash provided by operating activities in the first nine months of fiscal 2025 was $21 million, compared to net cash used in operating activities of $57 million in the first nine months of fiscal 2024.

Sources of cash in the first nine months of fiscal 2025 included a $32 million decrease in inventories primarily due to timing of purchases and sales and a $7 million decrease in accounts receivable primarily due to the timing of sales and collections and the impact of changes in product selling prices. Uses of cash in the first nine months of fiscal 2025 included a $6 million increase in other assets primarily relating to the payment of advances to a supplier of metals recycling equipment.

Sources of cash in the first nine months of fiscal 2024 included a $10 million decrease in prepaid expenses and other current assets primarily due to a decrease in prepaid insurance premiums. Uses of cash in the first nine months of fiscal 2024 included a $47 million increase in inventories primarily due to timing of purchases and sales including the delay of certain bulk shipments at period-end, and a $12 million decrease in accrued payroll and related liabilities primarily due to the payment of incentive compensation in the first quarter of fiscal 2024 previously accrued under our fiscal 2023 plans.

*<u>Investing Activities</u>*

Net cash used in investing activities was $29 million in the first nine months of fiscal 2025, compared to $59 million in the first nine months of fiscal 2024.

Cash used in investing activities in the first nine months of fiscal 2025 included capital expenditures of $34 million to upgrade our equipment and infrastructure and for investments in advanced metals recovery technology, information technology systems, and environmental and safety-related assets, compared to $56 million in the prior year period.

*<u>Financing Activities</u>*

Net cash provided by financing activities in the first nine months of fiscal 2025 was $18 million, compared to $136 million in the first nine months of fiscal 2024.

Cash flows from financing activities in the first nine months of fiscal 2025 included $40 million in net borrowings of debt, compared to $158 million in the prior year period (refer to Non-GAAP Financial Measures at the end of this Item 2). Uses of cash in the first nine months of fiscal 2025 and 2024 included $16 million in each period for the payment of dividends.

***Debt***

As of May 31, 2025, our senior secured revolving credit facilities provided for revolving loans of $800 million and C$15 million, which mature in August 2027. On June 16, 2025, we and certain of our subsidiaries entered into the Sixth Amendment (the "Sixth Amendment") to our Third Amended and Restated Credit Agreement, dated as of April 6, 2016, by and among the Company, as the U.S. Borrower, Schnitzer Steel Canada, Ltd., as the Canadian Borrower, the subsidiaries of the Company party thereto (the "Guarantors"), Bank of America N.A., as administrative agent and the other lenders party thereto (as amended prior to the Sixth Amendment, the "Existing Credit Agreement", the Existing Credit Agreement, as amended pursuant to the Sixth Amendment, the "Amended Credit Agreement"). The Sixth Amendment makes certain modifications to the Existing Credit Agreement, including amendments that, among other things, reduce the aggregate amount of revolving commitments available under the Amended Credit Agreement from $800 million to $625 million, and extend for two additional fiscal quarters the suspension of the maintenance covenant previously requiring compliance with a minimum permitted fixed charge coverage ratio, as described below.

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RADIUS RECYCLING, INC.

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

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

We had borrowings outstanding under our credit facilities of $435 million as of May 31, 2025 and $394 million as of August 31, 2024. The weighted average interest rate on amounts outstanding under our credit facilities was 7.0% and 8.0% as of May 31, 2025 and August 31, 2024, respectively.

We use the credit facilities to fund working capital, capital expenditures, dividends, share repurchases, investments, and acquisitions. Our credit agreement contains various representations and warranties, events of default, and financial and other customary covenants which limit (subject to certain exceptions) our ability to, among other things, incur or suffer to exist certain liens, make investments, incur or guaranty additional indebtedness, enter into consolidations, mergers, acquisitions, and sales of assets, make distributions and other restricted payments, change the nature of our business, engage in transactions with affiliates, and enter into restrictive agreements, including agreements that restrict the ability of our subsidiaries to make distributions. The financial covenants under the Amended Credit Agreement include (a) a consolidated fixed charge coverage ratio of no less than 1.50 to 1.00, defined as the four-quarter rolling sum of consolidated EBITDA less defined maintenance capital expenditures and certain environmental expenditures divided by consolidated fixed charges, and (b) a consolidated leverage ratio of no more than 0.55 to 1.00, defined as consolidated funded indebtedness divided by the sum of consolidated net worth and consolidated funded indebtedness. For the fiscal quarters ending May 31, 2024 through May 31, 2026, the consolidated fixed charge coverage ratio has been temporarily replaced with (i) a minimum consolidated interest coverage ratio of 2.00 to 1.00 for the fiscal quarter ending May 31, 2024, and 1.25 to 1.00 for each of the fiscal quarters ending February 28, 2025 and February 28, 2026, and (ii) a minimum consolidated asset coverage ratio of no less than 1.00 to 1.00 for each fiscal quarter end through the remaining term of the Amended Credit Agreement.

As of May 31, 2025, we were in compliance with the applicable financial covenants under our Amended Credit Agreement. The consolidated asset coverage ratio was required to be no less than 1.00 to 1.00 and was 1.13 to 1.00 as of May 31, 2025. The consolidated leverage ratio was required to be no more than 0.55 to 1.00 and was 0.46 to 1.00 as of May 31, 2025.

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

Other debt obligations, which totaled $12 million as of each of May 31, 2025 and August 31, 2024, respectively, primarily relate to equipment purchases, the contract consideration for which includes an obligation to make future monthly payments to the vendor in the form of licensing fees. For accounting purposes, such obligations are treated as a partial financing of the purchase price by the equipment vendor. Monthly payments commence when the equipment is placed in service and achieves specified minimum operating metrics, with payments continuing for a period of four years thereafter.

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[<u>**Table of Contents**</u>](#table_contents)

RADIUS RECYCLING, INC.

***Capital Expenditures***

Capital expenditures totaled $34 million for the first nine months of fiscal 2025, compared to $56 million for the prior year period. We currently plan to invest approximately $60 million in capital expenditures in fiscal 2025. These capital expenditures include investments in growth, including new nonferrous processing technologies, and to support volume initiatives as well as post-acquisition and other growth projects, and investments to upgrade our equipment, infrastructure, and information technology systems, and for environmental and safety-related assets, using cash generated from operations and available credit facilities. Supply chain disruptions have contributed to some delays in construction activities and equipment deliveries related to our capital projects, and to the time required to obtain permits from government agencies, resulting in the deferral of certain capital expenditures. Given the continually evolving nature of such disruptions and other factors impacting the timing of project completion, the extent to which forecasted capital expenditures could be deferred is uncertain.

***Environmental Compliance***

Building on our commitment to recycling and operating our business in an environmentally responsible manner, we continue to invest in facilities that improve our environmental presence in the communities in which we operate. As part of our capital expenditures discussed in the prior paragraph, we invested approximately $14 million in capital expenditures for environmental projects in the first nine months of fiscal 2025, and we currently plan to invest up to $20 million for such projects in fiscal 2025. These projects include investments in equipment to ensure ongoing compliance with air quality and other environmental regulations and storm water systems.

We have been identified by the United States Environmental Protection Agency as one of the potentially responsible parties that own or operate or formerly owned or operated sites which are part of or adjacent to the Portland Harbor Superfund site ("Portland Harbor"). See Note 4 - Commitments and Contingencies in the Notes to the Unaudited Condensed Consolidated Financial Statements in Part I, Item 1 of this report for a discussion of this matter, as well as other legacy environmental loss contingencies. We believe it is not possible to reasonably estimate the amount or range of costs which we are likely to or which it is reasonably possible that we will incur in connection with Portland Harbor, although such costs could be material to our financial position, results of operations, cash flows, and liquidity. We have insurance policies and Qualified Settlement Funds ("QSFs") that we believe will provide reimbursement for costs we incur for defense, remediation, and mitigation for natural resource damages claims in connection with Portland Harbor, although there are no assurances that those policies and the QSFs will cover all of the costs which we may incur. Significant cash outflows in the future related to Portland Harbor, as well as related to other legacy environmental loss contingencies, could reduce the amounts available for borrowing that could otherwise be used for working capital, capital expenditures, dividends, share repurchases, investments, and acquisitions and could result in our failure to maintain compliance with certain covenants in our debt agreements, and could adversely impact our liquidity.

***Dividends***

On April 4, 2025, our Board of Directors declared a dividend for the third quarter of fiscal 2025 of $0.1875 per common share, which equates to an annual cash dividend of $0.75 per common share. The dividend was paid on May 5, 2025.

***Share Repurchase Program***

As of May 31, 2025, pursuant to our board-authorized share repurchase programs, we had remaining authorization to repurchase up to 2.8 million shares of our Class A common stock when we deem such repurchases to be appropriate. We may repurchase our common stock for a variety of reasons, such as to optimize our capital structure and to offset dilution related to share-based compensation arrangements. We consider several factors in determining whether to make share repurchases including, among other things, our cash needs, the availability of funding, our future business plans, and the market price of our stock. We did not repurchase any of our common stock during the third quarter of fiscal 2025. The repurchase of shares of our Class A common stock is restricted under the terms of the Merger Agreement. As a result, we do not anticipate repurchases of shares of our Class A common stock during the pendency of the Merger.

***Assessment of Liquidity and Capital Resources***

Historically, our available cash resources, internally generated funds, credit facilities, and equity offerings have financed our acquisitions, capital expenditures, working capital, and other financing needs.

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RADIUS RECYCLING, INC.

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

**Contractual Obligations**

There were no material changes related to contractual obligations and commitments from the information provided in our Annual Report on Form 10-K for the fiscal year ended August 31, 2024.

We maintain stand-by letters of credit to provide support for certain obligations, including workers' compensation and performance bonds. As of May 31, 2025, we had $9 million outstanding under these arrangements.

**Critical Accounting Estimates**

There were no material changes to our critical accounting estimates as described in the "Management's Discussion and Analysis of Financial Condition and Results of Operations" section of our Annual Report on Form 10-K for the year ended August 31, 2024.

**Recently Issued Accounting Standards**

For a description of recent accounting pronouncements that may have an impact on our financial condition, results of operations, or cash flows, see "Recent Accounting Pronouncements" in Note 1 - Summary of Significant Accounting Policies in the Notes to the Unaudited Condensed Consolidated Financial Statements in Part I, Item 1 of this report.

**Non-GAAP Financial Measures**

***Debt, net of cash***

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

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

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| | | |
|:---|:---|:---|
|  | **May 31, 2025** | **August 31, 2024** |
| Short-term borrowings | $5403 | $5688 |
| Long-term debt, net of current maturities | 449010 | 409082 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total debt | 454413 | 414770 |
| Less cash and cash equivalents | 16214 | 5552 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total debt, net of cash | $438199 | $409218 |

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***Net borrowings (repayments) of debt***

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

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

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| | | |
|:---|:---|:---|
|  | **Nine Months Ended May 31,** | **Nine Months Ended May 31,** |
|  | **2025** | **2024** |
| Borrowings from long-term debt | $611836 | $579500 |
| Repayments of long-term debt | (572026) | (421414) |
| &nbsp;&nbsp;&nbsp;&nbsp;Net borrowings (repayments) of debt | $39810 | $158086 |

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[<u>**Table of Contents**</u>](#table_contents)

RADIUS RECYCLING, INC.

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

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

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

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended May 31,** | **Three Months Ended May 31,** | **Nine Months Ended May 31,** | **Nine Months Ended May 31,** |
|  | **2025** | **2024** | **2025** | **2024** |
| <u>Reconciliation of adjusted EBITDA:</u> |  |  |  |  |
| Net income (loss) | $(16406) | $(198511) | $(86300) | $(250320) |
| Loss from discontinued operations, net of tax |  | 21 |  | 54 |
| Interest expense | 9131 | 7368 | 26764 | 17981 |
| Income tax expense (benefit) | (328) | (44551) | (814) | (53526) |
| Depreciation and amortization | 23683 | 24406 | 71749 | 72188 |
| Business development costs | 5034 | 55 | 7585 | 285 |
| Restructuring charges and other exit-related activities | 375 | 3275 | 3694 | 6485 |
| Other asset impairment charges | 256 | 73 | 440 | 2040 |
| Amortization of cloud computing software costs<sup>(1)</sup> | 236 | 237 | 739 | 564 |
| Charges (recoveries) for legacy environmental matters, net<sup>(2)</sup> | 33 | 304 | (2295) | 783 |
| Goodwill impairment charges |  | 215941 |  | 215941 |
| Adjusted EBITDA | $22014 | $8618 | $21562 | $12475 |
| <u>Selling, general and administrative expense:</u> |  |  |  |  |
| As reported | $56350 | $62100 | $167977 | $187362 |
| Business development costs | (5034) | (55) | (7585) | (285) |
| (Charges) recoveries for legacy environmental matters, net<sup>(2)</sup> | (33) | (304) | 2295 | (783) |
| Adjusted | $51283 | $61741 | $162687 | $186294 |

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(1)Amortization of cloud computing software costs consists of expense recognized in cost of goods sold and selling, general, and administrative expense resulting from amortization of capitalized implementation costs for cloud computing IT systems. This expense is not included in depreciation and amortization.

(2)Legal and environmental charges, net of recoveries, for legacy environmental matters including those related to the Portland Harbor Superfund site and to other legacy environmental loss contingencies. See Note 4 - Commitments and Contingencies, "Portland Harbor" and "Other Legacy Environmental Loss Contingencies" in the Notes to the Unaudited Condensed Consolidated Financial Statements in Part I, Item 1 of this report.

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RADIUS RECYCLING, INC.

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

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended May 31,** | **Three Months Ended May 31,** | **Nine Months Ended May 31,** | **Nine Months Ended May 31,** |
|  | **2025** | **2024** | **2025** | **2024** |
| <u>Income (loss) from continuing operations attributable to Radius shareholders:</u> |  |  |  |  |
| As reported | $(16964) | $(198369) | $(87114) | $(250279) |
| Business development costs | 5034 | 55 | 7585 | 285 |
| Restructuring charges and other exit-related activities | 375 | 3275 | 3694 | 6485 |
| Other asset impairment charges | 256 | 73 | 440 | 2040 |
| Charges (recoveries) for legacy environmental matters, net<sup>(1)</sup> | 33 | 304 | (2295) | 783 |
| Goodwill impairment charges |  | 215941 |  | 215941 |
| Income tax expense (benefit) allocated to adjustments<sup>(2)</sup> | 121 | (38204) | 18 | (39880) |
| Adjusted | $(11145) | $(16925) | $(77672) | $(64625) |
| <u>Diluted income (loss) per share from continuing operations attributable to Radius shareholders:</u> |  |  |  |  |
| As reported | $(0.59) | $(6.97) | $(3.04) | $(8.82) |
| Business development costs, per share | 0.18 |  | 0.26 | 0.01 |
| Restructuring charges and other exit-related activities, per share | 0.01 | 0.11 | 0.13 | 0.23 |
| Other asset impairment charges, per share | 0.01 |  | 0.02 | 0.07 |
| Charges (recoveries) for legacy environmental matters, net, per share<sup>(1)</sup> |  | 0.01 | (0.08) | 0.03 |
| Goodwill impairment charges, per share |  | 7.58 |  | 7.61 |
| Income tax expense (benefit) allocated to adjustments, per share<sup>(2)</sup> |  | (1.34) |  | (1.40) |
| Adjusted<sup>(3)</sup> | $(0.39) | $(0.59) | $(2.71) | $(2.28) |

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(1)Legal and environmental charges, net of recoveries, for legacy environmental matters including those related to the Portland Harbor Superfund site and to other legacy environmental loss contingencies. See Note 4 - Commitments and Contingencies, "Portland Harbor" and "Other Legacy Environmental Loss Contingencies" in the Notes to the Unaudited Condensed Consolidated Financial Statements in Part I, Item 1 of this report.

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

(3)May not foot due to rounding.

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RADIUS RECYCLING, INC.

**ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK**

**Commodity Price Risk**

We are exposed to commodity price risk, mainly associated with variations in the market price for ferrous and nonferrous metals, including scrap metal, finished steel products, auto bodies and other commodities. The timing and magnitude of industry cycles are difficult to predict and are impacted by general economic conditions as well as other factors including political and military events. We respond to increases and decreases in forward selling prices by adjusting purchase prices. We actively manage our exposure to commodity price risk and monitor the actual and expected spread between forward selling prices and purchase costs and processing and shipping expense. Sales contracts are based on prices negotiated with our customers, and generally orders are placed 30 to 60 days ahead of the shipment date. However, financial results may be negatively impacted when forward selling prices fall more quickly than we can adjust purchase prices or when customers fail to meet their contractual obligations. We assess the net realizable value of inventory ("NRV") each quarter based upon contracted sales orders and estimated future selling prices. Based on contracted sales and estimates of future selling prices, a 10% decrease in the estimated selling price of inventory would not have had a material NRV impact as of May 31, 2025.

**Interest Rate Risk**

There have been no material changes to our disclosure regarding interest rate risk set forth in Item 7A. Quantitative and Qualitative Disclosures About Market Risk included in our Annual Report on Form 10-K for the year ended August 31, 2024.

**Credit Risk**

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

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

As of May 31, 2025 and August 31, 2024, 24% and 28%, respectively, of our accounts receivable balance was covered by letters of credit, and the amount of past due receivables was not material.

**Foreign Currency Exchange Rate Risk**

We are exposed to foreign currency exchange rate risk, mainly associated with sales transactions and related accounts receivable denominated in the U.S. Dollar by our Canadian subsidiary with a functional currency of the Canadian Dollar.

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RADIUS RECYCLING, INC.

**ITEM 4. CONTROLS AND PROCEDURES**

**Disclosure Controls and Procedures**

We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities and Exchange Act of 1934, as amended (the "Exchange Act")) that are designed to ensure that information we are required to disclose in the reports we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified by the Securities and Exchange Commission's rules and forms and that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. Any controls and procedures, no matter how well designed and operated, can only provide reasonable assurance of achieving the desired control objectives. Our management, with the participation of the Chief Executive Officer and Chief Financial Officer, has completed an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of May 31, 2025, our disclosure controls and procedures were effective at the reasonable assurance level.

**Changes in Internal Control Over Financial Reporting**

There was no change in our internal control over financial reporting (as that term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended May 31, 2025, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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RADIUS RECYCLING, INC.

**PART II. OTHER INFORMATION**

**ITEM 1. LEGAL PROCEEDINGS**

Information regarding reportable legal proceedings is contained in Part I, "Item 3. Legal Proceedings" in our Annual Report on Form 10-K for the fiscal year ended August 31, 2024 and Note 4 - Commitments and Contingencies in the Notes to the Unaudited Condensed Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report on Form 10-Q, incorporated by reference herein.

**ITEM 1A. RISK FACTORS**

There have been no material changes to our risk factors reported or new risk factors identified since the filing of our Annual Report on Form 10-K for the year ended August 31, 2024, except for the changes disclosed in our Quarterly Report on Form 10-Q for the quarterly period ended February 28, 2025.

**ITEM 5. OTHER INFORMATION**

During the three months ended May 31, 2025, none of the Company's directors or officers (as defined in Rule 16a-1(f) of the Securities Exchange Act of 1934, as amended), adopted, terminated, or modified a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement (as such terms are defined in Item 408 of Regulation S-K of the Securities Act of 1933, as amended).

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RADIUS RECYCLING, INC.

**ITEM 6. EXHIBITS** 

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| | |
|:---|:---|
| Exhibit Number | Exhibit Description |
| &nbsp;&nbsp;&nbsp;&nbsp;2.1 | [<u>Agreement and Plan of Merger, dated as of March 13, 2025, by and among Radius Recycling, Inc., Toyota Tsusho America, Inc. and TAI Merger Corporation. Filed as Exhibit 2.1 to the Registrant's Current Report on Form 8-K filed on March 14, 2025, and incorporated herein by reference.</u>](https://www.sec.gov/Archives/edgar/data/912603/000110465925024004/tm257857d3_ex2-1.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;31.1 | [<u>Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.</u>](rdus-ex31_1.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;31.2 | [<u>Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.</u>](rdus-ex31_2.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;32.1 | [<u>Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.</u>](rdus-ex32_1.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;32.2 | [<u>Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.</u>](rdus-ex32_2.htm) |
| 101.INS | Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.  |
| 101.SCH | Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents |
| 104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) |

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RADIUS RECYCLING, INC.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

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| | | | |
|:---|:---|:---|:---|
|  |  | RADIUS RECYCLING, INC. | RADIUS RECYCLING, INC. |
|  |  | (Registrant) | (Registrant) |
| Date: | July 1, 2025 | By: | /s/ Tamara L. Lundgren |
|  |  |  | Tamara L. Lundgren |
|  |  |  | Chairman, President and Chief Executive Officer |
| Date: | July 1, 2025 | By: | /s/ Stefano R. Gaggini |
|  |  |  | Stefano R. Gaggini |
|  |  |  | Senior Vice President and Chief Financial Officer |

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## Exhibit 31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

I, Tamara L. Lundgren, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Radius Recycling, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

July 1, 2025

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| |
|:---|
| /s/ Tamara L. Lundgren |
| Tamara L. Lundgren<br>Chairman, President and Chief Executive Officer |

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## Exhibit 31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

I, Stefano R. Gaggini, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Radius Recycling, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

July 1, 2025

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| |
|:---|
| /s/ Stefano R. Gaggini |
| Stefano R. Gaggini<br>Senior Vice President and Chief Financial Officer<br>|

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## Exhibit 32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Radius Recycling, Inc. (the "Company") on Form 10-Q for the quarter ended May 31, 2025 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Chairman, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

July 1, 2025

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| |
|:---|
| /s/ Tamara L. Lundgren |
| Tamara L. Lundgren<br>Chairman, President and Chief Executive Officer |

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## Exhibit 32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Radius Recycling, Inc. (the "Company") on Form 10-Q for the quarter ended May 31, 2025 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Senior Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

July 1, 2025

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| |
|:---|
| /s/ Stefano R. Gaggini |
| Stefano R. Gaggini<br>Senior Vice President and Chief Financial Officer<br>|

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