Enviri (NVRI) 1 Aug 242024 Q2 Earnings call transcript

Good morning. My name is Asha, and I'll be your conference facilitator. At this time, I would like to welcome everyone to the Enviri Corporation's second quarter release conference call. [Operator Instructions] Also, this teleconference 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 redistribution of this telephone conference by any other party are permitted without the express written consent of Enviri Corporation.

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

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

our few Before presentation, let a me items. mention

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

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

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

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

the was higher. Stericycle and in Enviri Thank a figure. point last EBITDA last you, a expectations free strengthening of Dave, was higher cash adjusted ago, each U.S. than of despite of and as another EBITDA cash for X% X about and QX the benefit our performed year increased quarter everyone. QX XX% EBITDA. good year's our dollar terms of morning, in million flow strong flow adverse versus of segments X above the was $XX Consolidated settlement year and margin of impacts

U.S. full expect outlook the dollar In impact of for terms not from better strong we performance businesses. as the a the our impact our earnings of year, guidance are our to we of changing offset

for now is on is a Our Analyst XXXX financial decline. discussed Xx leverage first as continues X.Xx since in time in years of Day Debt-to-EBITDA our recent below Philadelphia. our at the path target to a few we to and

At flow over steadily period quarter contracts Rail, ETO Analyst are stages delivered. had due an this year are the ecoproducts Day, X expect of site $XX contributed versus as common for restructuring a X% rise and vehicles to to organization we business quarter of We costs margin million services and same EBITDA small of interest Earth the of and to per first pricing our actions These this with production steel Harsco of anemic the excellent Year-to-date were steady, reduced still months to improving for value also $XXX the business of of Earth To repeat the million our main margin Demand related These we're quarter both million sale $XX to Both theme of growth quarter levels, year margin from the IT positive asset We that the gains of with catalysts, and working flow the Rail capital operational combined in remediation, EBITDA EBITDA free HE of and both and Clean last onetime the incremental pension the severance growth. record sales. double impact with more $XX spending will in second achieved through a and business. execution million our growth, $XX X future a and The proceeds Environmental the expansion. of than very to highest a ago this year. Harsco XX%. commercial quarter on the we the positive healthy to figure business was Earth initiatives. of deployment driving our results noted EBITDA PFAS the XX% when any million generated mill end also also ESOL and initiatives is of and particularly expenses is in which the M&A. Harsco the QX, job solid impressive core in was of of million cash systems, EBITDA had capital number Clean is XXXX. we segment, cash as doing turn creating adjusting including the cash targeting of despite that cash begin growth a were currency, since exits. Europe. annum performance EBITDA the to in early delivered HE for of goal. QX improving. cash across Clean efficiency believe in and against an we in runoff flow is are through in $XX nearly recently growth and generated

that half options divest as the At $X in successful negotiations business, couple with X conclude the of we delivery be the ETO offset QX growing few delivery a a of cost uncontrollable business are catalyst the ETO remaining the to overruns and to and delays. in vehicles the for we ETO initial we to the We After of customers of business. large the contracts. of in the year charges the years of expect will relief we believe key million point, contracts be booked on focused this sale exploring core related now the second executing on the

impact safe report released innovative annual We include This across our areas, our focus environment, fifth people. which and ambitions, the outlines metrics ESG a our report. our solutions, thriving recently inspired goals, also workplaces

that the making our X.X, the of companies recordable total one For XXXX, I'm in rate industry. to incident proud us highlight safest was

waste. processed facts illustrate steel We slag the and challenges Tom. We of customers. I our tons process call XX% XX HE over to are million also solving reusing recycled or these turn to we recycling environmental complex reusing waste recycling Clean believe with will reuse the by how now most Earth XX% of faced of or

The Thank you, an results Rail. X%, results on morning, and in record basis, Clean strong X% and Enviri a EBITDA Nick, driven QX. team quarterly by Earth and again year-on-year grew for for good Revenues organic adjusted delivered increased improvement nice everyone.

cash since anticipated, Our further for and decreased the than below better mid-XXXX. first covenant was flow Xx leverage ratio our time to

a was Now settlement for translation the on FX let sale me business, higher $XX acquisition second in X. relatively after quarter, Stericycle second X% in X an totaled favorable to In quarter and on versus large ESOL since on comment Performix contracts. Adjusted an XX% COVID basis starting our the but adjusted adjustments the rail flat XXXX. adjusting XXXX $XXX and year-on-year performance EBITDA of in our further, and X% year sequentially, European impacts, of revenues quarterly basis Slide this the the improvement impact reported organic prior the order million, the million, of with being of for highest forward-loss engineered our EBITDA on

Our year-over-year Earth Clean earnings growth was anticipated. driven as and by Rail

adjusted segments all outcome. the prior range better-than-anticipated for earnings to operating contributing guidance modestly were Our above the X quarter with our also

a cash as flow some capital Our share in as working both prior million for the working better quarter, versus benefits well capital the deficit with spending improvement movements. a reflecting the performance for of $X.X per million timing adjusted year earnings $X.XX $XX quarter. Free in year-on-year and was quarter was capital

Lastly, to as X.Xx mentioned. higher QX, I EBITDA. change from as trailing by here, both in ratio debt covenant leverage was our improved well as X.Xx driven This lower

debt flow cash in free focus generated on lower the to reflects addition also In quarter, the net reduction. debt our continued the

As Metallurgical previously net the with Additives $XX our million. Please disclosed, the an of business sale million, QX remainder monetized segment. our to the revenues a and in Slide we $XX quarter, of business, proceeds in generating X quarter, Performix Harsco and the note receivable for we related turn X% sale sold IKG our $X net of prior up versus year $XXX also Segment FX totaled administrative to severance of million was million, Environmental mix compared Adjusting quarter translation from favorable X%. expected, of the and growth the FX, which, favorable including for The less lower sale and Performix, Adjusted prior the impact for compensation. EBITDA HE certain $XX business organic a demand offset higher impact totaled by pricing impact. and modestly costs, and was year. the Performix, as the of FX for million was

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

with earnings the up was revenues the $XXX quarter, X% the increased and million. delivering strong For growth for lower of despite highest favorable performance and its $XX reached business $XX and difficult QX EBITDA making profitability adjusted volumes ever of revenue operating CE the in of XX%. driven costs quarter margins well initiatives. million, totaled versus of reach This ever for and settlement as prior impact Stericycle record XX% CE a very both a year, the EBITDA This to highest by XXXX and efficiency as million EBITDA price in was QX with comparison.

As volumes were comparison project care, the and the $XX to revenues for volumes. versus due and soil retail soil elsewhere very $XXX higher included faced XXXX this in quarter totaled million volumes as dredge XXXX Hazardous work. a dredge Health revenues mixed anticipated, this year mainly Materials lower difficult CE strong offset quarter. project-related while that quarter, growth million, were reached was

forward-loss $X Europe. the and Slide adjusted second This $XX and in contracts in to X total million, our million ETO excludes Rail quarter. Rail our to of adjustments $X related X turn please business. EBITDA Now revenues totaled totaled EBITDA million large

are nature with XXXX. deliveries before, lasting we've term long contracts these As through in equipment said some

occasionally charges estimates our as also as with the continuing these are stabilize we to projects. projects. We're We work making could our contract additional QX, with And progress our negotiations we see saw to in complete fine-tune customers. we to good cost

will impact we adjusted both as forward-loss EBITDA. have contract done the any well we from the in additional As as provisions favorable excluding from past, negotiations be charges from

base prior of versus driven X earnings contracts, impact The in from adjusted few ETO QX earnings coming Rail's the equipment year-on-year year in XXXX. was adjustment QX these the growth the the quarter a years in revenues the by higher Excluding demand. services of U.K. contracts in decline from with the favorable our highest in and were forward-loss

While they million These $XX the impact by versus excluding comparison be excluded we approximately cannot the are EBITDA, quarter. adjustments these revenues. from the revenue negatively XXXX adjustments of impact from

now of turn expected adjusted a Now be is year X. let million to within updated to million. range full XXXX Slide to $XXX EBITDA me $XXX on outlook Enviri's our

to approximately is X%. offset largely for translation our and May intact. are our from impacts the balance continues of Our midpoint by QX results better-than-expected our of growth HE is to May guidance, outlook relative the to guidance unchanged in point Also, year-over-year year. Otherwise, FX

QX free adjusted the can between share of per flow a segment $XX adjusted be detailed $XX And to The translates we're now flow still the appendix outlook targeting loss upside million. guidance range cash found in and EBITDA in year cash the of Our was guidance of largely reflected presentation. This cash reflects $X.XX of to timing million overdue the This customer $X.XX. these from There relatively receivables related, collection China. which of in flow collections, remains and unchanged. risk for the a is with some in of outlook timing wide range. our some is the outlook

on QX X Let adjusted to the business $XX to impacts Clean and sale is be by million. our expected EBITDA EBITDA our is EBITDA Earth me Environmental prior from million being translation expected volumes above benefit guidance. Slide quarter XXXX, with higher third and anticipated similar from to Performix of Harsco move to the now FX be with quarter. prices QX to range April. is $XX offset year in the to

drive and earnings equipment to prices improvements technology standard higher increase is due growth. And demand. to Rail projected are and EBITDA higher the to expected Here, cost year-on-year

QX QX from Lastly, is note anticipated on timing of to some we I'd flow the due weaken that in QX. benefits in free QX, saw to cash

to This sheet, balance an we've getting covenant in the is this review I'll get sales and the years. Thanks, for And recent the is we hand our for communicated as and below to will a to goal and progress us, our considerable reduce milestone. operator key Day, below to priority opportunities Xx to for remains on call additional Finally, leverage to Q&A. asset continue Xx now coming Analyst year. our back at made important our

The [Operator with Aadit question comes first Instructions] Stifel. from Shrestha

in below your Just to on HE expectations, came of adjusted mean usually it's EBITDA margin, it XX%. sort XX% I

the how I -- outlook through to do was And in 'XX to of implied average half you 'XX? within XX.X%. walk in second half sort it that maybe the that How us XX%, the think first around you could level? can do get get XX% FY you see what you margin for margins

yes, mentioned, FX were et in half, cetera. pressure, the -- did we we as Aadit, the addition severance There Well, so unusual to items. in have the more first some costs, some

don't -- in but be expect still some the it and we to see half. continue expect to expect will more would revenue the FX That because -- so one be margins over second won't those we piece. is second affects be normal. both time There still affect EBITDA. again we pressure, that to And half And

So range. we comfortable be to it XX% in business, to continue that that XX% the feel will

have well. also half sites in second has sizable impact relatively as margin HE increase are have the we underperforming We fairly second expect XX in on improvement been a the that that ramp a of few They large months. that the to improving, for half, and and in

Okay. Great.

million So net date for received just from said proceeds you've looking the to at sale, sales. $XX asset you

What XX%. point? up You're trying sale this else XX% is to to at for get to

wouldn't we comment I opportunities monetize continue some at to imagine, looking to would want specifics, you as are any Obviously, assets. but on to Yes.

have quite far our on the half. XX% that and progress the pleased eyes range still first to we through made with set XX% So so

comes The CJS Larry question next from Solow Securities. with

-- Nick, guess, nice quarter, just X relative questions. can clarifications Rail you year. just really I a clarify. to especially had you last Could or Obviously,

year, difference last trying the the a on contract, and then to EBITDA? and I'm there year up of lower said, some is, that growth, obviously, figure Does domestic question the you between all make better that And adjustment no? assume less the demand next -- service. the on that's that. difference ETO this in I guess also or equipment losses are the So demand. you is I just

sure. Yes,

Rail good standard So let's a core in X the business, pieces. ETOs. our and In bit it and into core business contracted services The aftermarket the all break equipment, year-over-year. up are

our And helping. on contracts. certainly numbers charges exclude that's X the the So reported ETO largest

core ETOs, year-over-year really included product and performance in core services year-over-year. core, the of in the point business yes, better I'd those segments, which The the the really better. each segments are doing is the and But the is the improvement other to within of

we If on contracts, I just consistently last and the have charges year so EBITDA, year. this been ETO and adjusted the excluding -- large both the from

to coming So they contributing year underlying but that's are last not those much this this year, business. is The the than yes, core -- from growth. lower base growth

Got improving, ETO it. you cash is negative, I guess, decline, Tom, improving. as that the but And it's said, the is then flow, losses It's still right?

beyond we to right deliver right mean, is contracts have and just vehicles, these the Yes, happening yes. are long-term I numbers, the we the what's now building vehicles now.

and we vehicles, And generating when so that is cash contracts a of cash use in these delivering these start so. or said, as we'll couple years start period, Nick on a

off they're driving haven't become throws we a talked but forward. So underlying as specific before less EBITDA negative it about will cash outlook pretty then, we negative cash but what's go line The until that's much of negative period, with rail. progressively the This year, earnings. we've numbers, on shared business in in

it. Got

you a industrial, -- those in revenues, it health QX retail, a are really volume last you Clean estimates price? if gears, getting of a switching grow more of you benefits just grew of just price us what volumes? volumes continue In view? strong like back a little it terms Earth, us last color quarter. and some Can you you like the there EBITDA little to had XX%, underlying looks give my of right. it's over then are where And -- year. Can Is And out cross-sectional revenue, just give Okay. year, Obviously, seeing versus just feels if care? bit

Sure, sure.

health M&I growth and part projects segment of in they are backlog, know. business, you care was soils relatively QX, this the haven't in also started. We've they the some business, while but lumpy so-called of volume seen in So the good That's in in yet larger flat. Larry, underlying as the

So very are hazardous projects we high -- soil margin.

good same, The have the the retail a up was for volume those is QX. the known out I for in year is is the Also, to in the in soft. the a difficult half the soil U.S. course, And comp in gets in -- underlying bit that, guess, comparison retail, segment. trend a second the QX of the dredge, well, But a We of -- coming and about tougher of of them. but projects. count some stop then retail the bit

Yes. So

flat you relatively again, comparison the the would if So account project for work volume a rest of is year-over-year, bit. up the little

Street next Capital Markets. The Instructions] [Operator with Lake Rob comes from Brown question

Earth Just revenue Clean following growth. up the on

Analyst Day just sense the or talked see growth? get of you playing about on that over revenue growth and that that next opportunity. should And kind being a volume the together terms X? how your a think growth I you out a in at into bit you you of give of Can year see double higher digits pricing

our the business Rob, what lumpy of Day, we we're mid-single relatively volume Clean the continue Earth low during growth to changed. of kind hasn't seeing. parts Again, to view Analyst in time. this Clean can highlighted in digits be expect And over our we and as Earth that's

the think the comparison. but sizable is projects these year-over-year tend to backlog Certainly, have quarter-to-quarter effect demand I there. on the is growing, a

to can And sense. timing Makes to you on margins, integration? what's further. on the the you're and But the help those improvements alluded working like sort Okay. and of kind sales that even expand of operational IT referring then platform specifically

Yes.

Earth? You're referring to Clean

Yes.

Yes.

are So a them. number there of

our dramatic and and made last of process logistics I in think where couple in we've we years of waste. network transport the improvements the efficiency

as well. also, efficiency. of the of that facilities improve number served that I the efficiency flow is a think that, a and containers So material around of driver initiatives in key to We've have

a dozen Clean platform to major second quarter that facilities believe the And in reaching to yet largest are that. one system don't there we're referenced to probably any of initiative So that without to converted glitches. have are really -- any where had diminishing we contributed Earth. move returns. I I IT major projects a common different milestone a over our a in there that

So that will to the shorten lead it lot that system, further gives times, for times serve the of in in confidence business. overhead to us and rollout system will lower result of It response a customers.

in is initiatives delivering focused cost reduction SG&A are the mostly reduction Clean date on kind So of while the to us. of of the the ahead services, cost still Earth

Markets. with comes question Capital from BMO next The Davis Baynton

you at on looking Rail could additional just results, So adjustments. segment ETO the provide contract the please color some

mentioned these move which of weighing of rail were delivery years these So part does the commentary, main all I in had process in there? adjustments But that couple the be will morning, you a thought that help QX sale. postponing this on at the And that needle the know the you mentioned operations, was recognizing the catalyst. behind

I'll Vadaketh. mean, I -- way. I you think of It's think take that it Tom that. yes, The in could

more getting We as for quarter by have each like. progressively accurate goes

what We more have to visibility vehicles. it's out build into take these to going

imagine, you these go we then supply each highly cetera. are had equipment SKUs chain when into engineered, of and pieces And occurring If these have one. COVID that a period with over highly thousands been complex of issues, et

And out be of we estimates to had so have some all to turned that, insufficient. of out these of that the original because build

a last these $X getting In year, adjustments, end to have particularly we I the in much million QX, we had worth. know. QX. think of about didn't as We are you lot We in QX, frankly. back took

few to they we the before years think deliveries. do I have still go trailing off, complete we are a So but

I So be more, could but we're think that's a remark trailing off. my that few there do

light his go in think this you -- what remarks. is I I'd future said we of to saying, Once green prepared think terms a In back to were divestiture? I Nick could of then vehicles, better stability we contracts we'll whether process. probably bit that a little these the and the about potentially at the divestiture delivering feel restart consider start we point,

Do just to And Okay. SG&A the Earth. how cost then be visibility some any IT of you could long see that the quickly rollout Great. on of in system have that reductions? into Clean

half I think XXXX. of the latter to be that's likely in going

any This question-and-answer Dave ahead. to remarks. would turn Please concludes go closing like the back the Martin I to for session. conference over

Please you. call. look your Yes. feel in in follow-up any to free And Thank future. Thank forward you contact me the appreciate for questions. lastly, with we Enviri and to joining interest the speaking

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

You disconnect. may now