Enviri (NVRI) 3 May 232023 Q1 Earnings call transcript

Good morning. My name is Sarah, and I will be your conference facilitator. At this time, I would like to welcome everyone to the Harsco Corporation First Quarter Release Conference Call. [Operator Instructions] Also, this telephone conference presentation and accompanying webcast made on behalf of Harsco Corporation are subject to copyright by Harsco Corporation and all rights are reserved. No recordings or redistributions of this telephone conference by any other party are permitted without the expressed written consent of Harsco Corporation.

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

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

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

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

from Second, of current subject are company certain and that differ today risks section statements actual the XX-K. The recent expectations and risks materially obligation knowledge the forward-looking update statements. to in that any may and a such in the federal uncertainties results we those Risk Factors securities are make meaning to our cause within revise laws. These undertakes statements on discussion most are and of considered or will forward-looking uncertainties to statements forward-looking no based our for

call, to results are purposes. as I'll the well adjusted non-GAAP presentation. that may on slide that With included reporting we call GAAP said, A turn for earnings financial SEC results to release today Lastly, considered reconciliation to is this the refer in as Nick. the

everyone. morning, Thank you, good and Dave,

cost improved. The commercial well than is we which in and as attributed business, was better certain across our stronger Environmental as Operation. Clean as pricing execution continuing of directly markets a end and first outlook significance, Our is are appear in have to our well Harsco Discontinued generally performance lifting we is cash and to and more markets. of as initiatives stable for quarter end expected our both improve our Earth free segments, our Rail Of both the fundamentals developments the EBITDA the at and external than moment, environment Nonetheless, flow of any it year.

quarter the at year-end before at about Xx below was end, leverage should decline to sales. figure our and of the asset impact So Xx

to our on in the Harsco later provide this In the in business Rail team Environmental, I'll of business last comments each lower a the to quarter. services and managed business ecoproducts the Our sale at better face of initiate Both segments. year few this the business production the steel plan remains our performed of steel mill time. compared the year. effectively

were from services in directly due revenues Additional tied not production initiatives. focused especially costs to continued byproduct North series America. sales, to And to higher as overhead lower were steel of a trend

year, in margins second last million. half above The higher comparison be the that now the ] of year, flow full approaching year and steel and EBITDA should production improve free cash we modestly [ of to in HG EBITDA generation expect with $XXX

limit provide to capital continue opportunities ] risk-adjusted [ in HG to growth a We strong return. only that

which so modest averaged volume reduction improved has segment Turning higher driven delivered flow cost initiatives conversion. margins, the free period change step margins X-month and third Earth. The quarter cash EBITDA mix, numerous been X% or The of XX% to and Clean growth. and in pricing consecutive during previous its by

margin this to improved has progress We remain continue level Earth conversion our flow also Free expect or of we towards as to at target. the margins in above significantly. EBITDA the Clean year cash for remainder XX%

to culture like delivering Jeff Earth create fits financial year. week Underlying this free full is over and this XX% of Clean a as welcome flow new the year of basis, from the performance to saw the joined veteran I'd President year Earth. ago. to and successful few Jeff of leadership on promise leader, back us with also months we thank on to our safety our efficiency. a Clean On capacity. you an from would improved the who conversion a over Overall, is for years an and he we past values. segment his exceptional Bell logistics, labor operational like value last performance, Beswick Harsco much well feel service this shareholder I Jim Earth the hazardous to to the is cash namely track waste in interim and of XX% acquisitions grow industry, with levels, several to expect Clean

Rail Developments year. is order a our awarded this highest for The year meet in believe the We our significant deliver and U.K. will in while businesses a grounded our South of of to and services. were contract Michigan standard a to ability also long-term healthy, a equipment contract and this in in on EBITDA we greatly will much the a the to segment the in primary Overall, long-term in diminished. in reopening later business years. equipment. of divestiture demand year, capacity contracts enhancing cash plant The our our fulfilling risks associated forecast in be with of growing level recently this U.K., remain large the handful few successful provide standard equipment support Carolina higher also manufacturing facility flow aftermarket and is be providing at Rail the activity

Laurion to of corporate Tim welcome of our to Directors. Board terms I'd In governance, like

of banker decades to been along with on several has expertise brings M&A the markets. strategy, the deal and great leading his and waste a and environmental services industry for knowledge, capital a Tim sectors

past despite Finally, our for markets. over end quarters in I'd lift thank remarkable to like executing employees lackluster the a performance our X

ability underscored cash numerous propositions and of services. success the team. value I'll of and products turn our has And our the offset across Our the programs call inflation of over the to impact and now commitment, resiliency the to of improving at demonstrate our our flow the efficiency raise clearly talent strength aimed Pete. to prices boosting

good Nick, and morning, Thanks, everyone.

quarter, to me exchange. let had please. was prior the from pricing and our continuing prior start which prior Harsco's including And services for Environmental revenues within performance. compared million, Slide our year Adjusted Nick's range of stronger-than-anticipated increased operations year. X% up of The off environmental represents primarily consolidated a the Let's year. Each $XX by first is quarter increase start segments. Clean above and X, by impact very EBITDA Harsco foreign start comment, to with improvement million, our the $XXX we strong guidance increased echoing and off Earth totaled on the a realized both driven segments from XX% demand

due industrial and we customers and were expected Clean particularly Earth from to waste additional results volumes, improved efficiencies, retail material better that processed. hazardous than higher service dredged

labor as well cost initiatives. our improvements increased see to continued execution from as the continue productivity also We of

results as and driven For Harsco ecoproducts to were performance customer Environmental, Earth lower Clean increase as North of due cost the well as better increases, higher in businesses EBITDA price services higher America. despite certain quarter, to was by a [indiscernible] strong result Relative the improvements. by than year demand anticipated and prior mix volumes

per our helped year-on-year loss quarter, improvement was cash favorably quarter and for guidance. China-based along compares receipt adjusted with also other $X.XX improvement February million, from Free to the was our sequentially. This which of efforts. by cash flow an the both our Our cash share the management was ongoing customers, $XX for

prior And leverage to Xx at to leverage to net expect mentioned our near decreased end. mentioned, Nick be Xx asset as quarter at considering year-end our sales. below I as last Lastly, any we quarter,

impact change The the year-on-year. decreased tax from Slide our revenues foreign and $XX by to adjusted segment. Revenues prior million not please of million due by while year-on-year Segment So in credits, driven and adjusted for pricing largely EBITDA did and to and quarter. turn X $X the million higher EBITDA translation which EBITDA demand, repeat year Brazil was $XXX Environmental year totaled the prior was increased XXXX. exchange services

our approximately as The Overall America, in of also prices by Europe with North Latin little X% at and was output of and performance our by China growth course, in weak certain were inflation region, customer and commodity by sites sequentially. services at offset sites cost production and as site exits, impact changed varied contractual America. higher increases. decreased price Production India, results activity affected year-on-year steel partially lower offset and well

to Next, please Clean discuss turn X Earth. Slide to

$XX to various approximately well we million. and revenue. at increased quarter. activity soil cost as Clearly, initiatives and $XX by both Earth, Earth's we and for, the increase well $X number dredge was up productivity are of and driven. price results Approximately and was digits improvement quarter margin growth increase totaled year-on-year, million price Clean volume compared Meanwhile, the the Northeast, business, year totaled demand improved for revenues million, firm. For planned about reached of and specific This which followed our over stops the EBITDA from $XX first XX%. this excited the the underlying implemented of volumes prior adjusted Overall, as benefits and the in underlying we've as dredge waste materials initiatives an totaled this to very $XXX in $XXX with revenues processed. Hazardous of revenues of the XX% higher and the gains across with million points mid-single basis Clean the XX% X/X driving retail. increased represents roughly are as XX%. quarter, and of resulting by million Volume over markets, the quarter, with delivering pleased appears increased Compared for XXXX, quarter, price, million the volume increased reflects sites cost higher industrial revenues year-over-year led adjusted the collection the EBITDA XXX year results. prior

outlook. our turn Now Slide XXXX please to for revised X

the and compares $XXX that year. to prior lastly, is a adjusted note translates range this in are $XX slides. million our within And This to adjusted of to million, of $XXX million share million appendix now million $XX the cash free Harsco's detailed be flow our our And to of new up year year-on-year. of can targeting the found guidance revised XX% and to be range to loss between an to outlook $X.XX. midpoint segment $X.XX full for with expected $XXX $XXX per million, we EBITDA

Slide me conclude let quarter our second So on X with guidance.

to expected from million $XX is EBITDA adjusted quarter Second range million. $XX to

Earth be significantly pricing We earnings to year our largely initiatives. expect cost above results and to prior Clean adjusted due

to anticipated For prior the the given a Harsco strong year. Environmental, lower QX in results be are slightly year-on-year, comparison to

hand earnings are steel in midpoint of repeated the Environmental work to in our headwinds comparable to not prices. This items incentive Sequentially, for corporate second the should and costs Specific first compensation, QX. call anticipated are sequentially. be expenditures, at improvements be Harsco offset now be Environmental some to expected Q&A. seasonal Earth, certain within the production, with commodity for the Clean higher the Sarah adjusted will And reflects $X reflecting These to approximately increase earnings QX quarter foreign by lastly, Thanks, will Also Sequentially, for back guidance. seasonal be largely will volume for markets. event-driven expected including exchange be growth. and include its quarter. rates I'll million

question Larry first with Our Solow comes Instructions] [Operator CJS from Securities.

feel X to is start quarters. guidance. good I got for raising clarify, quarter, to a in [ the the I year. beat it's seasonally rate much like on It of not -- little this Clean And -- question A the the realize the you're QX just a really Congratulations most next seems like mostly of guidance Earth. most just back usually slower, high-level you ], too. the sort but on the

table there? some just a more to So trying you the conservative? be on leaving bit little perhaps Are

guess, of sort that a the the of some But for sort level? you year? of I sort actually QX good of mention reason reasoning at start a was. after pretty how to in sort year Clean much know remainder the from Any I of I high event-driven Earth, any impact leaving benefits, know don't of did

Thanks, This Pete. Larry. is

very we think I clear. the That's strong had quarter. a to first obviously, very, pretty start

QX there's I think for I in that's about economy see, particularly. significant And repeating reflected -- current There's and $X the at seeing still headed for is think rest accounted Obviously, of we that Earth some I globally reflects rest our the in guidance or the where the in our are probably $X for event-driven million to do of Clean million that the they anticipate certainly think EBITDA won't of uncertainty can't year. we there And outlook the activity U.S. guidance. year. enough our

prior coming see We to also back really at we the -- steel for the immediately production, in was it that looking don't where year. outlook

same-store In year, we're production down on looking X% basis steel a at fact, full the for being year-on-year. roughly

So outlook all Larry. together the is reflected for that full year, of in our

sites more big Got Clean to issue ] -- obviously, and only specifically, in you. with Is And flattish, just to that a up, improved It really. where able mentioned like increased specifically, of guys late people, know you like some volumes on able [ -- getting customers. being But I and collection 'XX, some you think costing the not maybe Earth increased pretty mentioned, volume. -- hire and volume just 'XX, you're I slightly a from you was pickups some 'XX to not labor statement? these fair are had feels you collections get serve bodies but 'XX, but

that's Yes, fair.

significantly. it back very within a but operations were losing than look Clean still a because ago this But the year safety. we a even mentioned it's year Earth, you at well. was I say ago. didn't staffing. time, we Safety just improving better it's revenue have that If than opportunities challenge, performing I'd are And more is the

and all having would. we finding our delivery per many honestly, -- hire stops we Our to we're people as really these as things not are we're thought day, performance,

labor comment I the that made. efficiency that's So

Right. -- of well. taken had not increases, think initiatives, seem you pricing mistaken, 'XX? in shape know your if right, additional I And have to obviously the this beginning I year, pretty

Yes.

start price cumulative the now is price, for company. of at crossing impact you versus inflation and line total that back line you just the in middle the If of look the XXXX inflation

Right.

So not ] additional [ price feel increases, probably like future room I you there's that to actions fair? sort probably more Is of for there. but -- have similar

sure. Yes. high single of is I mid- I inflation -- digits. to kind still mean,

to to continue yes, price recover so we And will that. need to

guess, I or still includes, But right? the year-over-year. that of below where business I is guess, guys mentioned just soil dredging the XX% Great. that can business, And been sort the was you up and dry that nicely lastly, go, just then remind, Is it fair? well has remains

mix previous business, peak. we're in Yes, is. limited And it that's below attempting at something to kind the in was both the the where address. volume yes, We're the it is by and capacity soil, dredging and of

was soil bookings also I'll in million, double saw it of $XX business, add time year. the last this this Larry, up is that we almost quarter where particularly, which from

about the in So rest of we that order business, particularly. see for good outlook year indications really the the

steel whatnot. select business? steel positive get privy, next rate I contracts what there probably Or sort of little exits flat I out of Got grow to year-over-year customers little are about If if flattish, you trying are of of over going Environmental. to terms is of year-over-year But sort could could I sort FX impact -- appreciate net just just on customers one I the the it. I know or because What and just rate? And the that. What the you full you you of profitable sneak mentioned there? some production outlook of -- a know grows mentioned the just for new sort -- Are at some you of is years? but more, down-ish and production year. in sort few a less to your new win

Yes, question. good it's a

call contracts, for the in certainly versus was will be quarter the So and churn, expired right, year. new it, let's our business positive

the $X million uplift year-over-year, year, EBITDA for something magnitude. in million $X think it's that I to probably of

I did we're on business booking in So selective long-term of very that that contracts. the being mention new terms we're

margins. lift ad helping capital require are doing job business of that that are finding hoc lot to We nice not that a services does a in

somewhat well, well. capital-constrained So that, I is sheet. overall, -- in we're environment despite quite think balance doing the it's But still and we're executing our business a given

Our Markets. from Brown Street comes next Capital Lake Rob question with

on up margins. Clean wanted the Just to follow Earth

XX% can point? reached? sense be target say iterated at this in on margin is And confidence that you EBITDA any targets. you think when your I that would How level

which, and a as it's We overhead One if And lower lift the to project some PFAS much in high reasons. when course, still a pricing difficult I provides of projects time, should completed. that, our business, margins. the pretty with volumes is recently, clearly, in of to of the learned talk nice at for as But we've are Well, the the well. to XX% help going leveraging have over margin And higher reduce few structure overhead is the within business. don't said lift a kind look kind that opportunity, that to uplift you that's the we from Clean a think contributor to really will XX% of also that. and Earth. to quite about structure timing of profitability as we've contribute to beyond And still be IT opportunity significant our revenues

What Great. quarter. strength driving you you it? strong talked the are and where being then about Okay. And drive the seeing ecoproducts of I sort -- in what's think

QX. Yes, primarily certainly kind a also be lift few earnings, saw lackluster America, bit. Altek in year. stainless with that business year-over-year, steel of part North We this have million of even though after we is $X are good a down outside up to years America, should volume our million of the deals up EBITDA North commodity In slag business prices $X that business, in the a of and Pittsburgh their that

be of would the the X year. primary both those expectation for lift drivers and in ecoproducts' the the the So quarter

with comes Butler Our next question from Brian Stifel.

the production can you give when and you just color us and guess on a what at some price outlook like? that and trend first continues, be looking maybe perspective on, it's been customer look I you volume the level see industrial weakening, that might from at how

Yes.

industrial, health strongest call various X up the while M&I you we is those Earth, by if manufacturing the So -- or markets, lagging followed the X. and retail, the that's end care, of consider within what Clean been

industrial comfortable continue. the There -- some we're softness of We major assuming continue that's trends. the of be in pretty to retailers good heard serve. all may this point, that in volumes we course, to we've at production see, M&I going regardless of And

So health more a to pretty we're for retail cautious be But good. balance being we sector, to expect the care year. and the on continue little M&I the of

Okay. Investment That's least Act? that money Is helpful. or see Clean at you the the soil seen the benefit the that And from first flowing? Earth guidance? in when into then, I possibly have business, guess, do any still of Or on in you the baked any quarter

Yes. have money I off don't you of Dave, and we that we've of lift flow to wouldn't benefit. Honestly, that tie know that. I the hand, expect Pete, maybe sense seen to a some when volume

directly It's hard seeing here earlier, But increasing And order rates are not, materialize positive years to whether in will think you very I precisely as the I'm we determine a business. we it's related to a to or tie haven't books in few there But when it, at directly seems actually do, mentioned connection. is to Brian, I bookings. dollar obviously. date. it we in be seen But that's hard telling that trend

maybe Okay. Do base have the PFAS. test? feedback And some Cod, mentioned results you relate? That's that did that How or any on helpful. PFAS you were any -- color joint you could Cape there

Yes.

has from there permit challenges a state some Massachusetts. had partner the getting of our So

So kind of There's We're going opportunities. moment. on working lot a of the at hold a that lot project partnering. other is on on, of testing

a now. particular PFAS build-out of the and right the lot strategic But happening. on path slow that quite a is robust So project and is model is whole it

our that to at performance technology, test as we soil highly Now facilities, and encouraged of by own partners. as we're our our continue well the remediation

the kind that on through Earth, plateaued disposal in is then that that Clean of Is Or did the off? still And rising? quarter? how Okay. pricing trend

Pricing?

pricing. disposal Yes,

the quarters. likely as Yes. at not -- at of the and No, that up, we incineration particular, seen will for next know, this go the last to cost remain the several that constraints But time to you year. that and in continues had capacity levels continues

half on one Rail ] of maybe color you kind sale. it's can last of the XXXX. then year? Should [ for of looking announcement And a you give I of a the know kind in target be some mentioned we the that one, back little still

positively. the to think Probably trend half EBITDA so. year, latter of I Yes, the continues

a mentioned, I think later And year. that well rather some working to of served the this process And so as contracts through, number beginning we I'll contains we're large by still earlier say, risk. also successfully we're than

help those. buyers on And so And that the we're working diligence And potential the risk hard will improve very to look at that's again, profile been as its business process it. and with much successful.

questions. Dave turn for like no to Instructions] further over the concludes session. remarks. [Operator to conference would [indiscernible] This any question-and-answer back closing our Martin I

questions. interest thank all your Thank we me you for and Harsco, And to Take follow-up free Feel you, and joining morning. always, Sarah, this have care. call us day. with great a in as any appreciate

conference attending Thank presentation. for now today's concluded. has The you

You disconnect. may now