Enviri (NVRI) 29 Feb 242023 Q4 Earnings call transcript

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

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

XXXX. Thank our and me our will I'm Officer; and Dave quarter Grasberger, you, Chief this fourth Chairman results and Martin outlook us MJ, our your XXX questions. We'll This Senior of of for welcome Tom to Financial Vadaketh, then the Enviri. Vice Chief Officer. take discuss With and today for our Nick joining is and Executive everyone President morning. we morning,

Before our few presentation, let me mention a items.

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

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

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

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

and with and strong versus you, growth very Enviri and another Harsco both was capping double-digit EBITDA for Dave, XXXX, good quarter Environmental revenue Thank Earth, morning, everyone. quarter The QX strong fourth XXXX. a Clean of delivering

details a Tom its will impact of few the delivered European many a large years. of quarter The excluding through in best few quarter the the Rail business, minutes. contracts, step in

share being believe businesses, over solid kept the our performance with the core the improving our businesses. pleased our said, That has of XX past of with pace we're months. not fundamentals continued we price So

turn for the increased to million. few X from rates up full our price the basis increased reducing Operationally, Clean were flow team To executing many I'd XXXX. EBITDA core accessing record last X declined EBITDA revenue and both Earth, increases, point, Financial highlights service more support job of did PFAS-related around increasing the Number risk at segments one, margins of in of a Earth achieving disposal very amongst the a and nice XXX cost accomplishments. matters, our share levels, Cash than X and leverage Clean double-digit like and the capacity capabilities year. points. other of engagement turns. year to $XXX

new in At despite achieved better also Harsco much strong plan focused Environmental, with contracts we from steel with to in lower-than-expected the for demonstrating faster-growing financial its invest financial environmental footprint profiles markets and on execution. continue HE our also production, slags. projects to expand extracting benefits steel year innovation

Jeff team, senior we Clean the terms upgraded President leadership, management our In Tom of Earth. of Beswick Vadaketh and with

While to The new without X Directors not also continuing refresh some appointments. with year our challenges. of Board was

the out our a pushed on While outside and in loss-making purchase terms cash there on the agreement impacted delays interest flow. an reaching negatively our large contract, divestiture European of Rail new single is division, in commercial has

by Additionally, the increase we short-term interest affected were rates. in

Turning to the the for outlook year.

levels. be while the still in We digits, We below single our production financial improvements further steel low anticipate and increase our of markets supportive end will at expect we growth to profile. remaining support, mid-cycle mills

expect markets served increase also retail to Clean health and Earth rates. low single-digit and care industrial domestic by We the at

XX%, our EBITDA and should last the in end work the by Clean Earth year. improve. increase margin flow of comparisons at we overall guidance. will be yield an high and programs saw efficiency somewhat that both difficult HE of ongoing high-margin Nonetheless, also CE to in challenged near project Cash should

XX past in developments we're over these and the overall, largely our cash happy flow achieved with the acquired when we've So businesses. expectations very Clean we months, the and platform, margin Earth

of Earth, we creation more about value the this business, the targets today and Clean later for are will excited year. margin be We even potential and sharing growth updated

a value within high clear. more are leverage market the We're good proposition volatility lessened market position. Earth have business strong also earnings cyclical platform. assets well trading the pleased The the is of believe comp specialty Harsco with waste cash we and our with its valuations, Earth side, investment. the Environmental is in initial flow stability Clean of Clean value significantly pricing of all-time as our than and the considerably as And competitive

with can opportunities change to of the with made those us performance the best benefits. the in Concerning economics business. encouraged by the environmental significant and allows focus the has QX. emerging And finish lengthy technologies on of year both returns. the Rail, The terms improvements game Our team risk-adjusted a growth finally, strong to I'm pipeline echoproducts and operational in of

up were later with begin impact and European complete customer on has hard the the will this stabilize major contracts, to Excluding team and commercial a The XXXX. and nicely cash to the profit large new of agreement in our contracts, flow worked expect year-over-year year. generation we EU terms,

divest are continuing, and an the business we're executing while to focused transaction shareholders. acceptable financially for disciplined, efforts on So remaining

creating year. of the strategic and and businesses, solutions. while We are ambition environmental So look in investors developments to across team our investing sure, management squarely of the both within on throughout forward sharing with to value, be the portfolio such our pursuing Board focused

turn over to Tom. Now call I'll the

good and Thanks, everyone. morning, Nick,

people as of full Enviri's us. and headed. me in and employees, been front quality rewarding first with impressed about opportunity as Let of our is the quarter that where engagement excited and deal learned tremendous was I'm my refreshing. by I've with Enviri and the I've start the businesses company great a well about saying our more

in strong improvement our at an the The year significant strong Enviri leverage adjusted year. covenant growing the team end EBITDA XXXX the to the year net in X.Xx full growing X X.Xx improvement delivered of a January generation revenue XX%, year. fourth to a last With quarter from cash for finish XX%, in a and on

higher operations let quarter to increase increased our starting both result our driven million, performance, comment for demand EBITDA XX%, totaled Now a million, environmental our $XX XX% with from was The improvement is by me up Enviri's prior Clean represents prior this revenues $XXX Slide Adjusted and quarter. in on the services X. the year Environmental. continuing Earth both above guidance fourth and Harsco range. pricing and fourth year on compared from quarter prior

the driven were year volumes the and quarter, which mostly both in EBITDA, adjusted the more prior mix favorable Relative with, to The segment operating Environmental and stronger-than-anticipated to results Earth was each XXXX, contributing. Harsco again, spending, business corporate compensation mainly by Clean some items growth was as by did This repeat, shortly. such partially offset gains. and occurred discuss in spending driven XXXX higher by FX-related smaller hedging not that that I'll in other contributed which incentive higher

the share $X.XX in million the flow Free by quarter. earnings. improvement a was higher was quarter. for quarter per was $X loss the versus working million capital in and reduction driven cash cash for adjusted Our $XX prior year This

to improvement. showing end Our business this sales finance end within days with operating XXXX, the outstanding X XXXX and the or our HE X% both of days, and teams a job improvement, drive CE and strong of improved is doing great the to by from

to Lastly, totaled XX% the segment. as and quarter. $XXX as quarter Segment Please including X.Xx the EBITDA XX%. Slide with well over increase million, leverage for our X Adjusted from ecoproducts decreased prior compared revenues to net from at representing million, higher benefited up X.Xx end sites year reached our prior the the higher $XX HE Environmental new turn year Relative an of volumes, QX. from of quarter, and to pricing. services

XX%, a HE's As highest was EBITDA result, for which year. quarterly margin the its exceeded margin

Clean to Turning on X. Earth Slide

compared increase, the Year-on-year, quarter increased growth project-related totaled reached XX%, only price in fourth the quarter underlying volume $XX For about contributed markets, industrial record adjusted levels revenues with the which retail. modestly million, we the $XXX by third followed from X/X the impact and to revenues included of of and quarter, revenues The saw by of the led decreased EBITDA of million, XXXX, work, XXXX.

Soil-Dredge EBITDA $XX XX% revenues for totaled XX%, revenues million, increases Earth and the increased XX% million quarter. reached [indiscernible] of respectively. Clean figures These adjusted Materials while represent year-on-year. $XXX

from -- these some partially internal incentive items benefited investments volumes, positive were and costs businesses spending. or to restructuring initiatives, price higher compensation, business addition and and In the by offset the efficiency

Now please turn to Slide X.

almost increase the to year, from increased And $X.X increase For an of XX% of adjusted continuing an XX% year-over-year. billion, XXXX. million, operations full revenues totaled $XXX over EBITDA

free flow This Enviri's compared offset HE underlying cash flow and Earth Additionally, higher was of increase prior an in $XXX at higher costs $XXX capital by million earnings partially generated improvement and together approximately XXXX, to interest of due working year with million cash free the corporate. over Clean performance. was performance positive.

the value during enabled turn X over our year a a X.Xx. for by ratio leverage from net strong volume price. covenant as proposition XXXX to our doubt, to in reduced market was strong We X.Xx positions as increases and well drive very year Enviri, us Without

realized teams operating well initiatives. Our from benefits meaningful executed and various growth and improvement

waste. during while than Clean Earth, growth service, service new won reusing illustrating for continuing pounds customer the XX all-time the XX high its recycling secured for year, Environmental and market. And position an on-time X Harsco billion example, contract reached contracts of more premier in renewals.

fourth more strongly quarter also our revenues the these continue in and than the We're the quarterly Rail years. positive of to adjusted with trends business expect free cash pleased year-on-year. with performed flow It its performance X-plus earnings Rail XX% in XXXX. highest We up was generated in very team. and QX

base has large mentioned, a to our drive the with on our done Nick customers. towards plan a business, last contracts operational and this the job improvements working agreeing while Rail to year stabilizing As go-forward ETO team great

forward improved contracts, million charges recorded have in $XX visibility. these of reflecting where on we now losses QX, significantly We

to or further at beyond cash and contracts flow flow for XXXX, we large Importantly, to are mature. as we're in It's inflection earnings further cash is projected improve strengthen think an set these point and XXXX, near Rail. its

EBITDA strong of after XXXX EBITDA X% million, a -- turn with continued at momentum Harsco's digits period. earnings me These a Slide X. to X-year range a our $X.XX. in share Now XXXX, per of $XXX adjusted EBITDA adjusted breakeven is to million a business double This outlook year the $XXX over the and translates strong on to let loss expected within represents between of midpoint. growing up year-on-year be range guidance this full to very

between million. of million, spending Lastly, capital comparable million of $XX we're and is million to $XXX free targeting cash for we're flow and XXXX, which to planning $XXX $XX

and we $XX payouts operating HE cash linked CE be expecting improvement an see to cash an to increase incentive by offset and increase in flows are year-on-year. will up million interest XXXX, For XXXX The impact within slight performance. in CE with partially of HE a higher underlying to and expected

Also note that It Rail. again this free cash excludes outlook excludes leases. flow finance also

$XX decade approximately fleet, expected These mostly for of occurs We refreshment Clean of to have into to that million, carry obligations entered Earth into XXXX relates roughly. which in commence Clean once vehicle per for its are Earth, and finance lease will the XXXX. leases

As growth during a free result of flow, is EBITDA leverage our anticipated ratio XXXX. to decline further cash and

segments to Both in realize earnings Now X. guidance segment are Slide our expected let's to XXXX. turn on in growth adjusted

Environmental, HE's revenues grow profitability Harsco XXXX guidance low to is expected at levels and to expected rate are For midpoint. above single-digit a at slightly the be

in be production, Europe, higher steel EBITDA The improvement and driven better East. Middle driven principally steel Growth revenue site HE contracts, pricing. and by new will production outlook is initiatives the India for customer and by

its at are to single a year. For grow to basis grow full for expected Clean also to margins digits anticipated Earth, improve with XX points XXX will the low CE's while higher rate revenues EBITDA

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

corporate levels. are Lastly, comparable expected XXXX with costs to be

with year conclude is EBITDA XXXX. volumes, QX, price first XX Environmental is QX, and quarter. will on to $XX slightly $XX the to to be Earth prior Clean increase EBITDA EBITDA million also range Harsco growth. our to is quarter the contribute me expected expected Let to Slide improvements above adjusted million. anticipated versus from Higher guidance. modestly

segments. will each QX traditionally in to offset This outlook that seasonal performance free a a favorable is Compared again Here, our cash this expected with lastly, business mix. higher QX, note the given flows. I'd And contemplates improvements business seasonal and weak in business flow of be case period are XXXX. weakness and less price cash

Q&A. and We of Thanks, hand the the to the to given and for well compensation cash back interest in as payments. as the expect QX, seasonality, incentive now call timing I'll consume operator

first Today's Lake Brown Instructions] with Markets. [Operator question Rob from Capital comes Street

the on Clean is question expectations. growth Earth First

Just for is 'XX? wanted to volume sense much get and a up shaking how realize left how mix is price of the to

the pricing couple quite last pleased we've the within Clean in with leverage of -- we been Well, years, Earth.

in pleased relative I of year, I'll with our typically that, We've acceptance very the this January. raise inflation. to say, think prices been again

some over to time to think we from margin see continue pricing. So expect I lift

probably outlook, volume Clean the strongest terms In the X% terms in of X%. segment or is in Earth, Industrial of its

I projects in in in and think that that less We Clean high-margin last large than did Health know one-off repeat. year a never going quite number if Retail they're have something Care. of to Earth

So we the I the in pipeline never -- think in projects when perhaps how say we're XXXX. quite bit to here the But start. that sure a conservative We're of remains very strong. just volume will they're going those about

in of Earth, Got kind up? this in And see point? with is Clean kind it what's low Is Clean coming sort see rate growth Earth it the the of you mid-single-digit at in long-term that projects, Okay. you rate of it. growth even to those that

Yes.

a kind business. GDP-plus I think it about growth as of

of And of volatile to a be the growth we overall expect than plus the think GDP volume points So few would in cycle. a over somewhat throughout course, the GDP of business less cycle.

The question from with Stifel. Michael next comes Hoffman

very remind quarterly so question, us numbers, so To attention out we all we should you've the get we the cadence, to all a a it's the good all little -- calling that of start because that? -- when you cadence I And, but that. realize project about we of have Could think about housekeeping right? pay And doing activity. just the we to bit think I quarterly been get

take it's Tom that. can I Michael, Vadaketh. Yes.

rates and expect quarter, I'd growth over quarter. and same the So the you the pattern about by basically to we phasing guided

each businesses should the speaking, have for broadly -- -- be kind of each of quarter So rate. each the should same growth

into year. phase So in similar a a last nutshell,

but that the Okay. Earth? Is And heavy in that Clean to half, correct? to half. remember, we've was got the that's just first project in -- where then work overcome first In the

first in the settlement project year, the year. the a the of somewhat say may Soils we in have was In customer, -- remember. business, half the would of I better as the in the the Actually, half second because work the comparison challenged with you of large

impressive year-over-year cash That's out. then we that's -- has I okay. And what to $XXX draw to wanted million. an number segment at How in level, million up what get the flow, Yes. do on going of in free $XX whole the the the company peers, to level, low instead starts at your look of we're the XX% convert EBITDA to double where conversion like to somewhere of in EBITDA model landing XX% business is the more the which digits? happen

question. Great Yes.

range First in of conversion XX% to all, Clean is XX%. that Earth of

very that capital closer figure who think I XX%. So to to its compares peers is favorably that intensive conversion are more

of the value Now asset-light assets a sites, an model, really logistics. over the to in we're time, our this where on contracts assets push there's critical transition in used less some of investing so more year big so-called and add truly for only to that the and

over So adopted. as value is better that proposition time,

last levered. improved. And conversion HE cash I it's is, highly then, think piece right? certainly interest of that expense, see We're the of we'll course, the

a interest have of lot We expense.

rates the come on consolidated cash down that will we basis. a conversion help as and so delever, And as certainly

What's business you're the sell manner, it changed Okay. to To that. alluded customer then in nefarious end, get strategy resolution that out sell that point, help to the if business. that trying At pull timely you just a one you a and couldn't to... do you'd European to a in

Yes.

wise the need with contract I this customer. to feel us to the that retain that it. we were be negotiate risk to terms not execute on think I'm If for that one would do. and the really business we ability we sure new to just divest without commercial

standard equipment, aftermarket. the So is business base very strong, again,

strong, get a our very but we for is don't it shareholders. for can business the the value everyone we it, XX% business complete guess, also make Services than business is the divest EBITDA to strategic right And remind but course, of until I'd less on we just a sense of to that needs profile basis. Rail still, consolidated believe this risk It's I imperative Our negotiation.

given to we we retain the to effectively the for comfortable these the executing well the if again, next to good more So But point business that is do were outlook might we it, even something thing want as or it, decide become that it's opposed and do. but to year contracts, yet just X may be right at that risk retaining that shareholders. outsourcing not to make of to the We're for call.

not mean EBITDA. I the the it's aspect, deleveraging Yes.

things at point. I PFAS think on the Two and Super focused then this market funds. is on

sites final about issuing on side, an So, in they've you XX sweet administration then slow issued curious predominantly some to a the that And Clean it about and current spot lot how your being given a announcement outlook, the in more your have just about cleanup get Earth is in of geographically? funding, rules? I'm view that conservative assumed because very of role see Superfund activity you of flip PFAS,

Well our developed, PFAS, of right. of both Navy technology partnerships prove first the announcement some remediation you very a with all, the about have We're recall on we've concepts XXXX of the out kind financial Right, good and PFAS and we and Air any DoD in guidance. may we're recently terms impact do on remediation not of project that in Force. on positioned, an feeling how a the with to

think -- begin a very good about how I phone the we're feel the of ago. terms days So to -- that when few begin when came super we just it out positioned to flow those in volumes sites,

know, a both Michael, soil the strong all you As in really way. and hazardous in footprint, over we have country, facilities

flow. we as participate begin Super in to would expect their volumes to certainly they So Fund

CJS with Solow Securities. Larry from comes question next The

-- Rail. just one on quick the Just follow-up follow-up quickly a on

to number $XX around it or terms rate know EBITDA just I less is EBITDA, look at to you that it, in EBITDA or any kind of of just there today million run at of run just 'XX charges, said taste maybe $XX some is outlook? excluding rate the want said what sort to of kind is million, way I look you You clarify the

to closer it's a -- because No, on higher our outlook, Yes. basis, earnings it's in add-backs. on few EBITDA. of million year of this $XX the quality But a

$XX at the for of million, So figure million to year. $XX terms looking this QEV Rail we're in EBITDA

Got you.

Okay. up And seasonally quarter normally margins then actually little guess, really Services, bit too. slower, nice I your Environmental a picked

like I'm that. sounds see to 'XX. there's lot into good really of going just curious, it So positives a

to volumes up. You and steel mentioned you're pick expecting

out net positive, I contracts. if new You a is is few know at favorable a business don't like called it some you have it and new contracts sounds pricing. but

So I'm just a also -- sounds it guide. good that's like

out environment? I'm are So of 'XX to the what some expectation kind renew growth offsets the your just in figure of trying for to

Right.

you core the So business echoproducts to in which is, terms Services Global know, volume as is both cash improving of and really flow. in nicely prices. year-over-year, Mill part, and The of the EBITDA certain commodity exposed business,

because be for expect is EBITDA also decline as those called is have Minerals, that will roofing So Reed prices that slag we And transitioning slag it to weaker commodity from year-over-year. base a we materials steel product to abrasive HE, business of Coal the within materials. and transition, and

one So echoproducts about but of because probably EBITDA. million price, mostly in of this down $XX Again, overall is business. also

switching Earth there. Okay. to Got then it. And Clean just

side? the the timing necessarily? also sounds on to Just that trying in on -- of not projects that related, on a In would clarify it sounds guess the the of be mix. side?I on not side mix, terms a that little referring the or I like Just those to is guess, that. it Soil projects, more of Is Soil or you're down bit like hazardous turn

Yes.

We X margins the a the the in strong about of on than year. growth Hazardous or second in the very particularly business on are side. saw the the again, that volume, higher Soils So half Soil point

down And Clean so mix there because is dynamic a year. bit overall this of Earth of a in that

a had is that, clear they well visibility good. pipeline just there. be have We also We conservatism bit don't high-margin repeat. Hazardous projects There some may again, very to may of when. The

Got bookings Because your pretty know up strongly. I you. were

on Soil quarter had you year. the the those last whole for slid think I

outlook the They is Yes. good. were, right. They were. And

of Got on year is guess for But some Any of commentary [ into really a intent chain you. other you for moved question. the the that backlog until then last just this won't And effects, just kick a guess some I still perhaps to ways. 'XX. contract I generation. the little Veolia positive ] there supply stuff faster guys this you out kind issue about get so

Yes.

about the reached. and are is we until XXXX. incinerator Veolia we've us even large though And agreement the not think positive opening I helping feel benefits now, really that their very

the with Veolia, agreement part we their well. to As have incinerators of other access as

well benefits of And the speak. as terms access capacity so in are benefiting as price we as of contract that

And Baynton next Davis again, if comes you Markets. BMO question have the from with Capital

Devin on Davis Dodge. for is This

So regarding European wondering, just that contract. Rail

hear I the the said until can any there did timing going of that? not the correctly be give likely that Is to year? reached of when is So the back you agreement you on half commentary incremental

us certainly recently things be in the honest, passed now. in should No, move. just that at discussions. credit, accelerate pace to state-owned rail few bit a with Yes. a European frustrating large with dealing a can enable terms very of I'll we're be beer discussions company But which them We've those milestones

predict. to difficult it's So

maybe more the one then me. there. just I color quickly for Yes. And appreciate

significant just if year. previous there's any and there, quarter receivable securitization, color you in I'm decrease accounts the to could on Just the that the please? that compared give wondering last

Well, so we the -- -- . [indiscernible] it's

XXXX, Obviously, was facility went and a in I We that's $X so onetime about when had million, have million this facility. million. the an We of or into $XXX effectively think, additional year. force benefit, that $XXX the there

at that And so forward. the facility to expect of today $XXX about kind and size million, going the of level stay it is we

-- additional going an that benefit be there forward. cash shouldn't So from flow there won't

turn any would the Thank I you, remarks. Dave this Martin conference like to for concludes over our back question-and-answer session. closing to

to for soon. interest look to to and as Take appreciate feel reach and care. Thank speaking in all you, any the the always, Please your you company And with thank forward free that out we MJ, joined questions. today. me call

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

may You disconnect. now