Enviri (NVRI) 27 Feb 232022 Q4 Earnings call transcript

Good morning. My name is Rocco, and I will be your conference facilitator. Welcome everyone to the Harsco Corporation's Fourth Quarter Release Conference Call. All lines have been placed on mute to avoid any background noise. After the speakers’ remarks, there will be a question-and-answer session. this being note Please Instructions] event recorded. is [Operator

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begin of I Harsco Dave Corporation. your like call. you Martin, now would Martin may to Mr. introduce

and to welcome Martin, and and Thank joining Senior Relations will XXXX, we’ll us our and Harsco’s Vice Harsco. Dave Rocco, Pete we and you, then Officer; today Chairman take I'm morning. everyone Grasberger, This discuss your VP for Chief this Minan, for Chief Financial questions. Executive results our morning, quarter Investor of is outlook Officer. our With for President fourth me Nick the

few Before mention however, a me our let items. presentation,

website. available quarterly for our presentation earnings release on slide First, our and call this are

Second, from current we our meaning and may These results on that based certain forward-looking will subject and statements are to statements. differ securities cause considered today the are that federal of to risks make and laws. those expectations statements knowledge forward-looking uncertainties within the actual are

and update any discussion forward-looking of no Factors a our or revise XX-K. see in most section statements. For recent such uncertainties, risks to Risk the undertakes The obligation company

are considered and results SEC Lastly, on for is that release the this call, to non-GAAP in slide earnings results we will purposes. financial to included A refer reporting presentation. reconciliation GAAP adjusted

the Nick. said, being With I'll turn to that call

begin Harsco people in by colleagues us good for and and supporting efforts of earthquake morning, our thanks Dave, environmental joining Thank the today. the Turkey. to I'd like acknowledging and by Southern the impacted you, everyone

the have difficult. are homes have their XXX three killed, our none Thankfully, working living families of nearly conditions in very immediate and with many lost employees sites their or employees partner area our was Tosyali. across We but

are other we temporary doing accommodations and So by can providing necessities. what we

guidance in improvements quarter. as Now initiatives, performed and than operational Earth steel in adjusted on past as production continued to improved EBITDA markets. actions the well margins. numerous our stabilized as expected revenue reflect The quarter Harsco year-over-year to These of the results our Clean was the implemented expectations quarters also our pricing as due previous segment, as above fourth we somewhat environmental quarter. the over in better previous few most ongoing declining did

the The the below impressive a were second-half team Clean of margins to free and over the the XX% limited forces the X severely in in labor in which higher a X% namely market very about first-half second turnaround in executed flow Earth Adjusted affected Adjusted and cash year. largely grew EBITDA of our of the year. EBITDA year. year. continued through performance, half capacity that also the remainder times The tight of were the inflation, external the first-half incineration second-half

our safety performance Earth, for in executed well. and record a team our step lead that levels customers moved culture impact the extremely of plan mitigate following took importance, we delivered developed to aggressively which reached new forward our service the and the Of Harsco Clean the However, action Environmental, safety equal to year. highs big

hazardous We the in waste this continue our of heightened have the to in momentum throughout in foundation expect the leadership and we along success as strategy our building validate a process structure with certainly leading been values underlying sector. year Changes Earth. the emphasis Harsco platform this of of Clean

anticipated and higher in Harsco weak, to volumes production than was bit to Environmental, last appears particularly steel year, to we service Turning QX. in compared stabilizing while remained Europe, be a

Phoenix position in Services, and at for the same improving new bankruptcy of and the And productivity time, mail to as opportunity We our our platform. of economics costs without gain a we remove were result largest boost protection. contracts, see to relaxing third our standards services competitive business. continue the We an across light risk

Harsco me opportunities challenges. discontinued then let is address At for accounted operation, and as Rail, a which

business solid is and demand is Rail Our growing.

equipment Rail experiencing are we our positive fact, our alleviate a highest we some we backlog other facility backlog, the of some In for of to in alleviate years. net second will quarter, several in constraints will which it as business. standard expect reopen Michigan parts manufacturing Ludington, the growing be the To in

for accounts and continue for remained challenges Our in Rail two-thirds of profit, our in has Rail expect XXXX. engineered these mitigate about the customers. disruptions penalties strong growth price impacts a to for new which negotiating To and design with specialized reduction be few inflation, segment and equipment, the to our we aftermarket challenges, also past contracts many the The business, years long-term changes. in chain and of our schedules due highly are increases delivery of we supply

thoughtful we being sale be are given year. our And Rail are the division's with prospective outlook. creation on to the plan attributes Harsco positive To on and focused in reengage clear, the buyers of value priority, very second-half remains and on we unique process approach a divesting the

flow Our reflects Namely growth. improvement each even with continuing all for in operations for key segment. metrics adjusted EBITDA, outlook and free limited margins XXXX financial cash volume

in anticipate points point jump margins, of led Clean of margins. about we growth basis adjusted by terms a In Earth XXX-basis XXX EBITDA

$XXX Adjusting of more the as anticipate impact of receivable well strengthening also accounts from program the cash securitization year, divestiture. million. balance last Rail an by we sheet, Importantly, flow is to by segments driven for both as our two the the by future a than operations, expected

we discuss, its earnings conditions to the market holding growth segment As be slower given Earth, is faces. strong difficult own, Environmental Clean Harsco is Pete and in while expected growth it revenue and will expect

employees And of I'd the to before mitigating year. growth over revenue turn past So the both many and productivity. for XX,XXX future identifying call the challenges for I to Pete, thank the also our opportunities like in

Pete. to the turn I'll call now

good everybody. and Nick, morning, Thanks,

The operations million, pricing up Harsco in $XXX let's was consolidated segments. Earth from foreign our turning X% So and by slide continuing the primarily with both implemented to Clean X% driven if increase compared or Environmental the impact to year the quarter that by higher exchange. four. start revenues we prior increased exclude of fourth you quarter

and totaled represents range although the due continued operating was the from lower-than-anticipated was lastly, Earth $XX larger mix better-than-expected spending. lower largest an quarter. dredge functional improvement is the million, timing EBITDA Clean and volume work, corporate related performed spending on services of expense guidance [Indiscernible]. our Adjusted benefited while as Clean performance, And and prior year. well lower during as and segments from of our stronger-than-anticipated which environmental results costs, Each the discipline prior Earth given to above our were our showed of the contributor

was driven past our Clean result prior to exceeded and pleased results the increases a cost Relative Earth of the EBITDA as efforts year. The we're EBITDA in the is second-half year the for Clean and apparent of these the by of XX% increase initiated improvements two in margin price quarter, success that mid-year. adjusted quarters Earth's

million performance a in some related adjusted was environmental, mainly been lower result expectations restructuring non-cash delayed to which early our earnings unusual share $X million, paid XXXX. cost impairment of for Free included was for $XX forward than quarter items and million boost per will of China-based this quarter due Our $X.XX have in some in payments Altek. its going $X the since the which The the cash customers, charge to was of flow quarter. from

$X by decreased slide turn quarter. by segment. million commodity higher certain $XX Brazil our Please repeat decrease Adjusted as prior adjusted XXXX. better contracts. service the EBITDA which Environmental partially million exchange activity at the to five foreign and totaled lower sites, tax site and And prices $XXX by driven in performance from of year The prior million largely headwinds for in revenues Segment as impact these translation, offset was was EBITDA were year well did year-on-year. new credits, not

output customer in at growth favorably remained with production offset sites varied stable by our year-on-year which to steel China region steel Production weak compares India, and Europe and overall Latin in America. sequentially, performance industry. the by Overall,

encouraged the quarter, faced the of solid headwinds and during execution Now considering Environmental. performance overall we're the Harsco by

next So Earth. we'll turn please Clean slide six, discuss to

million. the increased largely reached of fourth up X% the and dredged was with totaled revenues For materials soil retail. X% the adjusted to Hazardous prior totaled revenues and $XX revenues year result year-over-year price. markets quarter, of revenues followed million, growth $XXX Meanwhile, XXXX, EBITDA an million, a as $XXX by led increase quarter. representing by over quarter $XX industrial the million XX% of Compared

million. the year-on-year in Earth's expect our of benefits and This over business, EBITDA QX, million annualized over efficiency across the to we improvement $X we reflects $X restructuring points. deliver initiatives XXX-basis increased of benefits program and margin Clean adjusted the price introduced which including improved

now slide So please to turn seven.

$XXX the adjusted million. almost full-year, $X.X continuing revenues from billion totaled increased and For operations EBITDA

As a profound and doubt steel well. declined our inflation had as some were presented unprecedented impact for The where production aware financial War XX% significant the in on more you're year. customer volumes, Europe, no XXXX than the And impacts particularly of unique Russia-Ukraine challenges.

We challenges. year. a in responded quickly and the dramatic results half the to during improvement aggressively these to Leading financial second of

we the Our in the price Harsco future. shareholders value additional manage position lasting us costs, actions impact believe while for and create and to to push in will

the delays billion, performance million, XXXX with receivable fixed Moving ended net for our benefit given securitization swap in cash of flow million the accounts and collections a under interest free million recently in reflects $X.X our us cash for variable executed including to operating rates. which in interest We which Also, Rail's anticipated will part the rate year. we $XXX $XX year, was movement on, $XXX from in and recent during just debt XXXX program.

positively Lastly, on higher rates pension, funding status. pension our impacted have

million from $XX at million. end year-end improved of to Our by funded position status XXXX underfunded $XX an year

for XX% by two year contributions decrease annual actually unchanged pensions more years. from cash million than and the of Our $XX will are prior in

our turn to XXXX outlook. Both in expected our to XXXX. guidance let's Starting eight. realize slide on with in segment are earnings adjusted growth segments Now

a to For Harsco rates. headwind low-single-digit XXXX are estimated at The exchange to points expected is rate. be using XXX-basis the foreign revenues Environmental, year-end grow roughly

at is in improvement slightly by for and expected year as above XXXX the pricing, levels Profitability well increases as cost business foreign mix. offset partially commodities guidance site the midpoint. service initiatives, Environmental will price Environmental drivers exchange, and to for The be be

reductions. be spending with are included program consistent Environmental other million. The is XXXX. anticipated which to and annualized recently headcount implemented restructuring estimated this from output Customer benefits steel be a largely $XX program to

the anticipated revenues with For Clean primary mid-to-high-single to price. Earth, driver being digits grow are

are And expected full-year. basis to margins EBITDA to the XXX for points basis points XXX increase

and for the include various anticipated benefits Beyond drivers EBITDA $XX with higher over year. price, of Clean initiatives efficiency revenues for million Earth

be can And lastly, XXXX, compensation items. costs costs million and million versus adjusted incentive as attributed between smaller $XX as change increases, normal $XX corporate well costs and IT to in million be compensation, including other $XX spending are expected in the corporate to travel, of corporate and

EBITDA to year-on-year guidance per turning adjusted consolidated slide Harsco's This $XXX adjusted $X.XX. to range nine, a from So million, contemplates outlook. interest within of to our which loss is be this expected now per of translates XXXX And year-on-year headwinds X% $XXX is midpoint. $X.XX share million and to expense. to share the at EBITDA full-year range pension

relative expected of be is the $XXX in million $XX share be create million, expense to to expense a result million range of in XXXX discount $X and million of income in to interest headwind million pension fees, versus higher items including with the largely These XXXX. to of XXXX $XX compared $X.XX approximately rates. $XXX securitization should pension $XX Net million in per XXXX,

cash of flow to $XX million. $XX free million targeting we're Lastly,

Nick ratio are leverage. along of our we when lowering targeting the priority cash us, and end By considering XXXX, free sale leverage the even flow of Rail. an for important mentioned, our near improving times X with As a is of better

and are we to year-on-year in operating expected improvement. Environmental flows XXXX, cash considerable with expecting show For significant improvement Earth both underlying Clean

the much for portion Harsco the $XX in with however, right better Environmental. the a fact this A earnings; driven step the underlying coming performance of the This despite accounts in securitization are million, targeting increase be Adjusting even than XXXX. be majority capital and roughly year, million will improvement be that will will we will improvement receivable that last in of will the from more direction be coming working by years. our $XXX improvement interest cash

our range slide million So to expected quarter guidance. let adjusted me with on EBITDA to XX conclude million. is from $XX $XX QX first

And foreign year year-on-year Meanwhile, prior volumes. Clean expect initiatives. We to significantly to Environmental pricing and to earnings specific comparison are our and a adjusted include Earth above XXXX. exchange be prices environmental results, for given to stronger anticipated in product the headwinds results rates, relatively be cost QX due lower commodity

as impacted And between challenges, expense incentive quarter. in anticipated to the professional be by lower negatively should corporate first compensation Sequentially, seasonal and weather-related timing lastly, as is as are and commodity $XX results accruals for the and of prices, be volumes, certain quarter, typical $X first million million including the costs well for fees.

Thanks. for And Rocco now Q&A. to I'll hand call the back

Thank you.

will Please the question-and-answer go Instructions] comes We Stifel. from first session. at now Today's Hoffman Michael begin [Operator ahead. question

Thank you very much.

quickly is impressed cost I'm going pretty did I'm react market is -- to muted. steel, says steel to understand by you saying that the So trying the world the side. be to production steel steel global steel

thing everything a to the what that So rebound sort think are was that some comfort that gets mix your good expecting the customers, gives was bit of you about in that and is better? you Is how that's weak Europe? stable little more within

Hi, true of that is in Yes, year. Yes. the second-half Michael. the

We difficult of European And second-half lot year. boost see the first-half restart there's have anticipate year. comp we improvement it do modest started. very the to in our the even discussion production, hasn't in amongst a to yet very But the volume of or though customers a of actually

just the but a through price. Clean and Okay. see Earth, in But nuancing market their wondering in you activity you strong across really was business fact know, well, the that? recurring lot then I as there volume and emphasized of that? you were end if was then of And Did we volume price XQ overwhelmed on disposal

fairly was You know, modest. volume

because capacity overall, driver issue. soil EBITDA really was incineration better of in dredged the and was was constrained, We it the our Volume than be little revenue to a has. continue and But pricing improvement cost. of

of probably is yet. but backlog relief? much through WTI before not that that's you back at least there's Okay. capacity the the (ph) that relief hearing with [confer] Would scenario year so really online, the it's first-half really then we're And market incremental that provides providing

enable our outlook improvement are in incineration to Yes. would the slots really in to more more capacity take us not available be ourselves. We or to anticipating here business that any clear us

second-half the year. the by Even of

you constrained? think So remains year just whole the

Largely yes.

with are, you And North some on where jobs the Princeton University. looming some phase around big that the shared that Any more model? infrastructure have with a the in there's Moynihan things or in that for of of, Metro in past Okay. at visibility IIJA either then kind lot there's next part Tunnel of activity us projects the dirt LaGuardia’s driving those

Yes. in from Michael, as I'm and you've are heard projects us frustrating. these sure delays others, quite the

pretty projects modest our into couple So of the some incremental in built a we've also some? outlook from of Will years, we've of volume I certainly hasn't But expect to. assumed materialized. year. degree this and those see past upside that it we

fairly cautious. being we're So

noted industry Okay, and side This on me. last Earth the for not one been has Clean pricing. for

I perspectives, ask you had certainly had and change becomes follow by hyperinflationary now sustaining as inflation. a structural now As of that, as from change of it the growth use way, through churn? Do impact to environment in What to price that inflation that. ultimately, see a you driver price even you And think in do growth you can the was because ebbs? form a with of the two

it's of justified certainly price us to certainly the as I the we proposition the the enables and to second-half year customers was Well, when that think our importance in our in its get of value it second-half learned year.

increasing we're prices. Now also

to realization this a price annual rate. early which high Our also we increase year, expect have

both hazardous enable we forward. should price soil. to I yes, contaminated proposition have that that going the waste one Is gain us say So value would and in that

Okay, you. great. Thank

go Please next question today at Solow And Larry ahead. from comes CJS the Securities.

Pete. and Nick morning, Good Great.

Just follow-ups a good. on good, couple -- of

Earth, are summary dredging. least are price Is sort maybe saying this On Incremental are summarize cleaner drivers mostly so kind essentially the year Clean just flat that the going that pretty the year? to volumes this be at the infrastructure and side you and from on little it. incremental a of hazardous it's of benefit of then and

reduction, cost Yes. reduction. operational And cost

some by overhead haz year-over-year that and We simply and opportunities being related soil not say yes, those I robust. inflation the We driven costs, the both impact plan, largely matters. price is removed are quite of cost. the have mitigated being also compensation some growth the in but those. in our just in by will waste growth of are and benefits pipeline built of But

essentially And the and you incinerate in hazardous room -- said, on and stuff ability capacity for it’s growth process? is, more you just to limitation like it's to basically for make

Well [Multiple economy, sorry. Speakers] the well as as overall

Fair… Right.

…that outlook in in industrial the The and economy. particular. for retail overall

your it's soil visibility -- is on And sounds more it and still really like? basically on timing the it's side, that limited,

it the previous than been also. Better has years couple Right. of

Right.

think I (ph) [several] on being a we're again, And volumes. cautious bit

just And gears switching little Sure. then a bit.

a Obviously, contracts? improve of it's a good So you you're you and to year. without new on a think ability wins cost cash obviously, I reduce on but this environmental want slower wins just about great but longer Environment term, line, free What do that new of I cutting production in some fine sort stuff. a business your victim of obtain flow, fairly the it’s how more leverage, kind this side, get done new investment? all just of kind and just Obviously job know to still levered.

very Yes, focused it's on. a great It's question. we're something

our If utilizing cetera. how know-how It's assets right? the of sheet to If service. labor these to and et fund the et perform truly force our and you engineering consider Environmental adds Harsco around right not, new solutions environmental and cetera, customers, to value balance its skill

true think I customers’ for balance is healthier think cost bit So than proposition. capital an us -- was lower are bankruptcy to this you've ours. Their over ours. time sheets Phoenix of and our fact our than opportunity, The drive I value of a that provides

put And that hard basis. win pretty so see contracts can we're on if of more capital a some to push and going you all light we new to together here

that's under just you. X Pete. times Could you enough. targeting, getting just you even clarify, year. lever And question maybe towards sort of, end -- fair Yes, for you're said by the Got the maybe a the of or

you you're think yes. a $X down So get I'd $X.XX] net now high-end is over million number. I Right that do used to EBITDA like [$X.XX, right? suggest debt billion (ph), And how or your I do little that, $XXX the the that going

right. that’s Yes,

you So leverage the I Yes. quoted [Multiple got Speakers] recognize is to that the ratio

Got you.

adjusted. still they're Yes. So

that We talk calculation. about my offline. That fair. could That's was

Sounds guys. great. Yes, I appreciate the color Thanks.

Thank you.

you. Thank

next at from Brown Please [Operator Instructions] Our Rob question comes ahead. Markets. go Street Lake Capital

Thanks for taking my question.

wanted get seeing Environmental you little market? a with How come the on environment to Just more more of, Phoenix that Are the detail change sort opportunities, bankruptcy. things? competitive in to has

basis. and morning, Good situation bankruptcy very thanks a at a look dynamic contract-by-contract Rob, with -- now to Phoenix and on it's question. that's really Yes. Yes, for need you the the

Of of all extraordinarily that know are of course, we to the customers behalf these that we steel. services our perform critical mill on production

So with and situation will what function if understandably very to they our will This Phoenix of how ownership survive need anything in structure future. what Phoenix in the contracting going approach they're customers navigate. their to cautious and be the and how be

we our on proposition. well that of we a very value we are appreciate contracts or that So sites focused handful think truly know

a bankruptcy year. And at many during ways so unusual little time. targeting very But some a six, it's take would hope we going contracts, process in to we're the more selectively point and to which eight it's secure

would can value so we'll think for good be and our for focus plays we sites, to six where we this the how is see shareholders. out. our business and eight But on add new company really our And again,

later you driving things? Thank on And has Is an of sort about process, Is bit a waiting that reenergizing color. update that How sort Just of now? year. Okay, the it this on Rail it great little right certain talked dormant then progressed? you. sale for what that?

Yes.

dormant certainly it's standpoint. our from So

to lot want that us from to and our to We banker continue parties expressed interest a both to have re-engage. of

the Rail to attest. focused we're And somebody's direction. are many as it's, kind I that moving it's other very part suppliers As there. continuing core penalties simplifying point and the delivery He's situation our situations. large of longer-term frustratingly not customers renegotiate and process right schedule on is slow I of business and can The both think on mentioned, the customers contracts. Pete in price to and But facing unique of a Pete and on also a is course, this to Rail similar many, understand for business us our the

buyers need negotiating the of that's still relief be to the outcome, we'll So speak of months negotiations year. the those but position and we're be the a of in to that degree between our the simplification wrapping to customers and other pleased a business understand second-half going think as we with very Rail few will a executing we're re-engage up parts and that that confident and we in take of strong the provide with

I'll you. turn it Thank Great. over.

ladies management and the And I'd any the gentlemen, over to you. Thank turn this back remarks. question-and-answer concludes like session. today's final team conference to for

call. Thanks, Please that joined follow-up we this care. always, for Rocco in all and have contact me to Harsco with your And any great appreciate and Take as day. interest a free you feel questions. thank

today's Thank conference We today's you attending presentation. thank all call. concludes you. for This

disconnect a your You lines wonderful have day. now may and