Newsworthy

Metals, Financial

Schnitzer Q3 financial report reflects ‘stronger’ market

Schnitzer Steel Industries Inc. (newly renamed Radius Recycling), headquartered in Portland, Oregon, has released its fiscal results for the third quarter of 2023, which ended May 31, reporting $14 million in net income, up from $4 million the previous quarter, and net income per ferrous ton of $12 against $3 in the second quarter. 

The company says demand for recycled metals was stronger, which led to an increase in average net ferrous sales prices: $413 per long ton in the third quarter compared with $367 per long ton in the second quarter.

While the finished steel average sales price was down, sales volume was up to 142,000 tons in the third quarter against 109,000 tons in the second quarter, which the company says is because of seasonally stronger construction demand.

“Our financial and operating performance this quarter reflects stronger market conditions than we experienced earlier in the fiscal year, improved operating efficiencies from our productivity initiatives and benefits from the advanced metal recovery technology systems which have been commissioned to date,” Schnitzer CEO Tamara Lundgren says.  

Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) were $56 million, or $48 per ferrous ton. Adjusted diluted earnings per share from continuing operations totaled 67 cents, excluding charges of $5 million, or 18 cents per share, which the company says is related primarily to legacy environmental matters.

Schnitzer says its ferrous scrap sales in the third quarter were down to 1.296 million tons from 1.415 million tons in the second quarter. However, nonferrous sales volumes increased to 208 million pounds (104,000 tons) in the third quarter from 165 million pounds (82,500 tons) in the previous quarter. Schnitzer attributes this increase to more purchases and higher recovery yields associated with the company’s advanced nonferrous technology investments.  

Schnitzer says metal margins also benefited from shipments that were contracted before market prices began to soften in the second half of the quarter. Additionally, supply flows improved seasonally but remained tighter than they were a year ago.  

“While the near-term economic environment is showing some signs of slowdown, the long-term structural demand for recycled metals remains positive, supported by the increased focus on decarbonization, the transition to low-carbon technologies and the anticipated demand associated with the Infrastructure Investment and Jobs Act and the Inflation Reduction Act, including Buy Clean provisions,” Lundgren says.

Paper

Pratt opens fifth box factory in Texas

Recycled paper and packaging producer Pratt Industries, Conyers, Georgia, officially opened its new $253 million advanced manufacturing box factory in Cedar Hill, Texas, June 27.

The 1.1 million-square-foot site will produce specialty products, corrugated boxes and in-store displays using recycled containerboard. It is one of the largest and most modern of the company’s 71 factories, Pratt says, and is the company’s fifth box plant in Texas.

“Recycling is an important weapon against climate change because as things decay in landfill, they emit methane, which is 84 times more potent as greenhouse gas than carbon dioxide,” says Anthony Pratt, executive chairman of Pratt Industries. “This factory will allow the company to grow for years to come, supporting our customers, employees and the community.”

The Cedar Hill Corrugating and Innovation Center will provide 375 full-time manufacturing jobs, bringing the company’s statewide workforce to more than 1,000 and its total workforce to more than 11,500. It has invested $550 million in operations in Texas and $10.25 billion in total U.S. investments. In addition to bringing new jobs to the area, Pratt is partnering with the city and school district to sponsor a training and development program.

“We are excited to partner with the city of Cedar Hill and its officials to open this state-of-the-art facility and bring new, green-collar jobs to the area,” Mike Tansey, president of Pratt’s Southwest Converting Division, said last year when the the project was announced.

“We have a strong history of providing continuous education, apprenticeships and on-the-job training opportunities for our employees. This joint collaboration with Cedar Hill and the school district is a great opportunity for us to encourage and invest in the community’s young talent and to help them find meaningful employment and long-term financial stability.”

Metals, Mergers & Acquisitions

Metal Source acquires Bedford Recycling Inc.

Metal Source LLC, headquartered in Wabash, Indiana, has acquired the assets of Bedford Recycling Inc., which has locations in Bedford and Mitchell, Indiana.

The purchase follows Metal Source’s 2021 acquisitions of Decatur Salvage, a 12-acre metals recycling facility at 7870 US 27 in Decatur, Indiana, and Secondary Metals, which operated a 2-acre yard in Peru, Indiana. In 2022, the company purchased Huntington Aluminum based in Huntington, Indiana.

“The Parsons family has built a successful business and a legacy with Bedford Recycling,” says Colin P. Denihan, chief commercial officer at Metal Source. “We look forward to instilling our Metal Source core values and growing the operations.”

Bedford Recycling’s facilities, Metal Source’s eighth and ninth locations, include an auto shredder in Bedford, which is Metal Source’s first, a wire chopping line and other ferrous and nonferrous processing capabilities.

In addition to scrap yards in Wabash, Peru, Decatur and now Bedford and Mitchell, Metal Source operates two plants in Wabash and one plant each in Huntington and Marion, Indiana, that produce 356 sow and ingot, aluminum de-ox products and 380 sow and ingot.  

“I’m thrilled to announce this purchase,” says Ben Gebhart, CEO of Metal Source and Gebhart Holdings, its parent company. “This will allow our company to expand our capabilities and footprint as well as allow for integration and diversification within our current business. Geographically, this will allow for additional support in the area for other businesses we service.”

Metal Source, the flagship company of Gebhart Holdings, formed in 2000 as a zinc dross milling operation, shifting to aluminum scrap processing in 2003.

Metals

Report calls for revitalizing US primary aluminum manufacturing

The BlueGreen Alliance, a Washington-based nonprofit, has released a report that offers suggestions for reversing the decline of the U.S. primary aluminum industry to meet rising aluminum demand from the clean energy sector while also creating well-paying jobs, strengthening national security and reducing industrial emissions. Despite the advantages secondary aluminum production provides, the organization says insufficient scrap supplies mean more primary aluminum production will be needed.

In “Aluminum, Revitalized: Strengthening the Backbone of Our Clean Economy,” the BlueGreen Alliance, which unites labor unions and environmental organizations with the goal of solving environmental challenges in ways that create and maintain quality jobs and build a clean and equitable economy, notes that aluminum is used in solar panels, electric vehicles and other rapidly expanding clean technologies. By 2035, aluminum demand from U.S. solar power alone will exceed the country’s current aluminum production for all end uses, the nonprofit says, citing recent research.

With only five smelters operating today in the U.S., primary production has fallen even as demand soars. This production has been replaced by more polluting production overseas, the organization says, adding that primary aluminum production in China, now the source of a majority of the world’s aluminum, generates about 65 percent more emissions than U.S.-based production.

“As solar panels and electric vehicles spur rising demand for aluminum, we cannot depend on high-polluting aluminum production overseas that undercuts the very climate goals we seek,” BlueGreen Alliance Vice President of Manufacturing and Industrial Policy Ben Beachy says. “Revitalizing clean U.S. manufacturing of aluminum—a material forming the backbone of the clean economy—is imperative for meeting our climate goals while offering the opportunity to create good-paying jobs in hard-hit communities.” 

As primary aluminum production in the U.S. has declined, secondary production using scrap has grown, which has given rise to energy consumption and emissions reductions.

The report notes that maximizing collection, sorting and recycling processes for aluminum scrap would displace about 15 percent of primary aluminum demand, effectively reducing absolute CO2 emissions by 250 million tons per year. “But under this scenario, postconsumer scrap would only supply about 43 percent of the global aluminum demand in 2050. “This means that regardless of recycling improvements, we will still need to increase primary production and mine additional bauxite,” BlueGreen says.

Federal investments in the Inflation Reduction Act, the Bipartisan Infrastructure Law, the Defense Production Act and more can be leveraged to reopen smelters and retrofit them for cleaner production.

Municipal, Mergers & Acquisitions

Casella acquires $525M worth of GFL assets in the Mid-Atlantic

Casella Waste Systems Inc., a Rutland, Vermont-based regional solid waste, recycling and resource management services company, has completed the purchase of collection, transfer and recycling operations located in Pennsylvania, Delaware and Maryland from Vaughan, Ontario-based GFL Environmental Inc.

The purchase price of approximately $525 million was funded through a combination of Casella Waste’s new $430 million Term Loan A under its existing senior secured credit facility and proceeds from its recent equity offering, which Casella says raised $517.5 million.

The acquisition includes nine hauling operations, one transfer station and one material recovery facility and is expected to generate aggregate annualized revenue of approximately $185 million, Casella Waste says in a news release.

The acquisition provides strong strategic and financial benefits that are expected to augment Casella Waste’s growth opportunities through an expansion into adjacent markets with solid waste operations that have similar attributes to its existing operations, the company says.

“This is an exciting step forward in our company’s growth strategy as we extend our footprint into the Mid-Atlantic with a new platform for future growth,” says Casella Waste Systems CEO and Chairman John W. Casella says. “We are focused on ensuring a successful integration of these operations, providing excellent service to our new customers and communities and welcoming our new employees to our team.”

Both companies announced plans for Casella to purchase these assets earlier this year.

This sale was the last of three transactions for GFL Environmental, which also sold assets in Nashville, Tennessee, to an undisclosed buyer and assets in Colorado and New Mexico to Phoenix-based Republic Services.