Enviri (NVRI) 31 Oct 242024 Q3 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. Are your indicates participation Corporation. Your Mr. begin Martin, call. you may your

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

mention Before let few presentation, our me a items.

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

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

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

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

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

and Dave, everyone. you, good Thank morning,

to [indiscernible] passion [indiscernible] and our lost who his energy the unexpectedly President for is into commitment Before Harsco and our Morro end late colleague segment. values. [indiscernible] we his to results, past the quarter. We I'd Curry, remembered get and of like our of and to business friend, be acknowledge Environmental this our the

year. new HE until have the a at I level, is early expect which We are we the named, will next executive be and to lead to team and strong across HE President fortunate

portfolio I'll plan of an as on a business and few our and Turning update on strategic results X quarter, to our value. creating on on provide our shareholder each QX our the comments we segments, focus make and then

quarter Our Earth X terms can EBITDA by of record Clean for be another margin. one, third in quarter EBITDA characterized developments. Number and

weakening key a of the HE, our China excess in of geographies. steel due to Second, market and the slower capacity many impact of demand in global

chain of and fourth, other short-term balance asset Rail sales sheet Third, our and the facilities. business. extensions revolver continued And challenges the operational of in our supply and renewal and strengthening our credit through

while improved Earth. over EBITDA comparisons to expectations challenging Adjusted XXX Clean to XX.X%, and the double-digit Pricing, year. QX to numerous projects The Cash Turning are deliver XX% increase business increased improving continues earnings of aimed points. and an margin mix business. growth efficiency the last EBITDA remains last year over versus at driving exceed of strong. against flow basis

China, markets. to protected on steel put has some which a of of has capacity has faced production, industry exports sustainability country, markets our addition from growth common upgraded from to initiatives technology-driven new forward, should as of and In Clean benefit One linked other also weaker the for headwinds in demand pressure Harsco among XX% factors in of led PFAS. accounts and program. and customers volume IT will Clean as It to such customers and to most Earth these flood in part weakening moving from steel global Earth Environmental initiatives less also our which benefit due Excess a markets. systems

ease increase cheap term. this the protections in steel. of seen mills or steel against the potentially cease support should X other China falling of steel countries capacity pressure, to we either we production. Eventually, months, a price Over Chinese reduce near while handful we past China The have premium reduce expect outside also

X-year challenges, to have outlook see positive, for we the on our and as of do we our at few short-term contracts meaningful our Analyst not Overall, expect that mix months we HE and shared disruption a Rail will continue operational effect to Harsco vendors, touch ago global steps customers a from late we're taking on the issues. improve bottlenecks the to shipping key Tom continues disruptions to own deliveries operational related in primarily to these processes. our face manufacturing Day. and some

In addition, of quarter primary Hurricane at the South facility from production Helene affected shipments our the and manufacturing Columbia, in end Carolina.

Overall to of exceeded equipment million of of we $XX remains all proceeds I'm make million and generating balance parts primarily to with asset our businesses. in pleased We've in demand for improving the continue noncore services our aftermarket China. goal outside progress healthy our $XX from sales, markets sheet.

don't is and the the amendment now In debt U.K. by well we sizable profile. group our contributions our about expected. milestone and fund maturity credit a our further year will strengthens We've reached than finally, and fully of further was extension this supported facilities liquidity funded, pension short-term believe And bank and our addition, in earlier needed. be

taking As and discussed of evaluating best respect interest how team all of Board with Enviri enhance shareholders. we valuation Enviri's includes during in our This narrow are focused June, are on actions and to management frequently that options to open-minded value Day these shareholder are our Analyst last gap, goals. achieve and the the all and the we

and result, of the more of these course Clean EBITDA $XXX meaningful months than our of million our that to in margin outlined free position stabilize XXXX are improvement is the in net plan and yield ago. as executing and Environmental excess to of over growth value operational Rail boost the time leverage flow and our years cash have will sale. to X on better organic few million we the a confident both to business on while Based $XXX business to and that with for well-informed evaluations Earth or Harsco view X action of is our next expect support X.Xx. already We a underway date, view, that continue best allowing initiatives actions

and strategic in This will also provide flexibility greater creation for value future. optionality the

the flow our these in to Cash contracts become This Europe. rail next decline each in year. few the cash flow improve investments in generation years cash made the reduced strong of flow flow free business long-term been steadily $XX contracts a execute year, contributions. to then pension continued expect will and and expect has We XXXX million XXXX. by investment X free and In and of million $XX performance XXXX, into expense to of due we HE in and source and Rail, between in cash cash interest half improved later lower CE past

call turn now over I will Tom. to the

was to Nick, positive particularly pleased chain by challenges responded for the and a Thanks, I'm Enviri quarter note, within on The QX a to to quarter. for due adjusted and weather-related the Environmental these quarter we supply guidance market-related delivered everyone. team pressures, morning, and Rail. that good challenging customer, and Overall, close our pushing EBITDA hard Horsco range

Adjusted quarter modestly basis, on our In third quarter. impacts X%. FX on performance and impacted a $X Slide an quarter, divestitures from year-over-year further ETO-related X% little adjustment organic $XX FX starting of comment reported the of Now basis. on totaled by EBITDA an Rail. recent $XXX our revenues in Revenues changed and as was a X. million on translation let our me excluding roughly X% increased million, third translation, in down reported growth the improvement the divestitures second and EBITDA high million, multiyear

performance we was by in the saw and pricing guidance, aftermarket end equipment and which recent weaknesses delays the Clean Relative shipment deliveries. on due Earth, and our initiatives we bottlenecks another Clean right to by results lower was revenue as Rail of supply growth standard well expectations fantastic below quarter chain costs. starting was and lower offset for Hurricane our service costs. sales certain HE expectations, and lower profits benefited efficiency as contract Helene, delays recognition contracts exit better driven Asia were volumes operational slightly higher at sites by were and or customers record driven months, production curtailing earnings cost impacted internal below and with and quarter also also from had performance quarterly Earth new overall where performance. by earnings year-over-year to where slowing Our impacted These our in in margins.

cash the the for due share the capital the quarter Our deficit year capital versus loss a million with $X.XX Adjusted timing million prior of for the change and was deficit free a to of spending. $X flow working adjusted per of in $XX quarter, diluted quarter. was

and flow shipment and the negative below in was flow be in items. where expectations Rail, generated in it and our $XX quarter, this impacts quarter saw to of rail. delays cash anticipated our and cash interest Otherwise, offset although in of the the quarter the corporate costs production contracts We cash ETO was our mainly usage approximately free Free to consume due cash. other this cash to million continue HE CE significant

total Reed of net our in negative remained on of successful cash below stable ratio sale impact Minerals The just and leverage the covenant debt. offset Our flow our debt the quarter. was the Xx,

revolver before facilities segment moving our was results, I terms. to and extended Lastly, on accounts we pleased receivable at very favorable that

management fixed a swap We approach extensions, will I since prudent Also, portion terms have view were maturities. quarter these rate against maturity and we with floating additional into our next continue to entered the upcoming X attractive, debt rate risk of interest an XXXX. deal to the swap The as to not with term And the is until The proactive for loan. major future movements. ended,

was price, was Adjusted net last again, XX% EBITDA contract levels FX with and FX million, year HE. million, and of down the HE's in Slide of which quarter, investments segment. the the for prior prior of EBITDA totaled impact for of our offset $X was FX impact and sale [indiscernible] the growth margin a totaled quarter Adjusting and growth FX, million Please in net turn quarter. organic versus impact HE with and Compared million divestitures. divestitures impact and Reed exits and the favorable for translation Minerals, $XX from service and HE modestly to lower year, a the X revenues compared Segment X% $XX the divestitures. higher year, X%. performance a

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

with revenues CE's well the volumes, to prices. quarterly quarterly debt and the The revenues XX.X%. efficiency in mostly expenses increase quarter. for were and revenues KPIs quarter, CE. the [indiscernible] reach as initiatives. and $XXX result lower $XX lower price, compensation XX% million, Meanwhile, driven increased are these soil disposal as margin by bad adjusted EBITDA totaled again and million, Materials of $XXX higher the costs was year million our lower offset to records of by X% down while industrial For versus transportation increased for that $XX lower totaled incentive prior are million EBITDA Both Hazardous

volumes Rail Now the of as quarter, XXXX well Slide Rail the in please totaled services EBITDA X million various contracts. and the other result the $X and revenues was Compared change of its lower EBITDA a revenues turn with equipment aftermarket adjusted from as million business. loss our quarter. to $XX and second lower contracted is

also Both which loss modestly being quarter. We certain the an the equipment $X the approximately at quarter Turkish resulted higher EBITDA from incurred end right to quarter, shipments the FX and revenues impacted of were Hurricane year-on-year. were by linked in the lira. Contributions Helene in pushed adjusted standard of to fourth million

note comparison. The on impact of the our million forward quarter the the the a skews to million $X EBITDA of contracts approximately which for I'll year-on-year X these excludes quarter, adjustments revenue adjustments was $XX.X Europe. related adjusted ETO revenues reduction that of in loss in

have the earlier, hamper supply the strengthen areas continue these have we a Rail company the several to and team issues operational Fixing bottlenecks business. improve is action for top mentioned taken priority of and issues initiatives to to these As and launched chain Rail.

is, priority of contracts. continue key the the ETO drive to completion of large to Another course, X

usage base As the cash to business significant a earlier, the certain I deliveries customers business in the stemming contracts. mentioned delayed in from and quarter on saw

position full business We range. to expect cash the use a the for $XX net year in be in million the

business and to our line for $XXX bookings in our pipeline Year-to-date with strong. Services, million continue see strong is We base and in expectations. our were and over demand Equipment

will of portfolio cash said earnings the we at Rail in deliver our which and we is a part expect future. valuable Day our As flow steady Investor in June,

XXXX updated a down just within with XXXX. of from be The partially full our expectations EBITDA million, HE expected on for is prior and Now to year by X. our tempered lower versus X% let Enviri's is for which Rail, up now Clean reflecting range guidance offset a this range is me million to to Slide outlook million turn adjusted raised $XXX outlook midpoint $XXX $XX over Earth. a of range

others. and customers of REIT expectation change production of Association reflects expect maintained result HE, Steel in curtailments For It these also in and divestiture. reduced of the This levels World steel reflects QX. HE year. service was our production the steel the reflects lower year the be by remainder to September the by customers as lowest production levels and provided the impact outlooks for recent some of the we among our the a

shipments For on XXXX Rail, our of the certain into change relates latest contracts. being to assessment some our and pushed performance

the detailed Our outlook appendix the in presentation. segment can of be found

The HE reduced where reflects we usage in guidance we also other is is midpoint flow, partially timing expectations Rail, approximately I our receipts free cash and includes million receipts item interest the would our slower cash outlook said is $XX also in just for and fully compelling, CE lower and which milestone related. a changed. will cash of we The almost the This of some to ago. outflows. mention we offsets China, which free expect this reflects generate -- together the flagged earnings and our cash mentioned $XXX It Otherwise, and total year cash cash have generation which pushout find flow other at for previously you from past have which Rail. I the negative year, of cash now this and million. moment has

we in clear, our be XXXX disappointed cash performance. To are

expect do cash positive we in our said, generation XXXX. Nick inflection a As in

make should burden ETO most decline rail cash as performance contributions improve our Our importantly, progress interest expect contracts. as we pension should to large our on and we

seasonally environmental I guidance. Let from services to due lower Rail a expected Clean to higher EBITDA And quarter year expected is our million. expected adjustments and fourth quarter. anticipated impacts, Environmental QX for on with Relative is is growth. to and me divestitures mix. prior Slide and adjusted drive would prices, Horsco comp volumes with improvements range EBITDA traditionally both to note higher improved CE. be and due million a quarter to above HE EBITDA, exits, conclude EBITDA in EBITDA and weak to HE to certain contract be X $XX XXXX, prior contract increase is that quarter favorable year And Earth $XX less to translation cost the FX year-on-year is to QX mix incentive the earnings expected lower modestly

in from free note and operator QX normally current the QX, I QX now is on quarter. anticipated received cash also that call performance back Lastly, Q&A. is as would cash the flow Thanks, hand delays I'll Cash from for strengthen case. will the to help the to

Instructions] [Operator

from The Street Lake Markets. comes Capital first question Rob Brown from

cost I with much How is with of lower cost just guess have ability first activity? on the to that lower question you kind is flexibility a to much deal HE. how And fixed lower volumes do is business? there in

Rob, it's Nick.

sites And there a then have few that the during mentioned there to that billings volume a been know, reached, in what Tom declines bit both we impact. simply provide a QX. fixed shut you below threshold is I which down. have threshold. against good and we fees, As minimum that's that saw of quarter But and I until protection again have is certain see And expect some think and just

And our impact is guidance QX that so in the and results well. as of

seeing Okay. are on Clean And to some Great. are there? the nicely? helpful. continue color the in be then seeing volume Earth, on would that And the growth growth volume where strength grow you you Just

been has volume a of general, seeing Care there's segment there. retail, growth healthy churn. In for been the us, In Yes. Health amount healthy

then has And been so-called so the we've to or soft. manufacturing sector X weakest flat industrial the softness. that's seen And been of where the

question next CJS Securities. Larry Solow from The from comes

environmental first [indiscernible] question in to well period on of I obviously sounds a volumes. decline as we're the It in piece. condolences global like just guess My

contract you contracts. mentioned away some some win Just contract curious walked net like or you from loss? I what's losses know your

this to a release, Steel trying out mentioned Just press weeks sort that ability new of of know grow you contract revenue figure to your in I new a a couple just environment. you ago. car had

high global rate? that level, curious from any? give new level can have a Is win And us -- contract does meaningful? just So if any -- color on this your net you

audience to which performance emphasize EBITDA here, that on way an But first think at just is second, to knows look the business. the of what respond is let that minus I HE I'll in Larry. the a CapEx me best

EBITDA, softened is a and less. This higher business the much our seen been long but minus on has flow a for more much on the CapEx we've guidance impact it So stable cash EBITDA level of is we've than than time.

that with And efficiency on in seen able so into are we declines And spending. QX third year volume and the of quarter well. will we've some and next mitigate in these as capital to

we and certainly of the in revenue before, that opportunities have terms of HE. in growth, remains we've growth healthy commented an it and pipeline case extraordinarily lengthy And

Our of competitive and since is risk in seeing really ramping of course, that impact best that we that selecting serve strong. those XXXX, to in number We'll limit we're opportunities quite markets, the are up see And of growth will conditions sites. have now. higher be the with that we some those terms the And mitigate short-term the position investment at tend best in the lower. benefit of contracts, of a the is are returns contracts the and our we're only are our of some and, existing to

a in markets, against underway here we U.S., the from our increasingly, it and given India, really in and -- away I geographic geographic general, think, a of be we'll we've year tailwind the seen is imports, more this this that see some for shift but business. of to But next right? going shift general, takes growth time, significant portfolio have now protections this You year. Europe U.K. in Turkey, But and low-cost the there's the Mexico, towards

flat quarter side. Earth, the a volumes color. Okay. positive margin the And very had side, on I revenue obviously, and that relatively Clean on on appreciate nice

bps. a sequentially XXX up like think initiatives pricing Nick, the over efficiencies. you know were you've I lot I even and X of last done years,

think to today where margin X-year more to room we Anything on kind are you a I around the XX on of unusual to of in for had sort opted Is this upside increases pretty there flat further quarter? target drive margin. revenue? impressive

I say would nothing unusual.

As kind first forth. now on and an focused and behind Clean significant effort X growth we're and enhanced so you lot a leadership, and and value efficiency new pricing new we cost focus, forth. years the structure putting so of And and with leadership of awful Earth, volume driving know, propositions

as drive margin see start in I EBITDA and growth look growth expansion to top more So business. we forward, volume that we'll think and line

then Okay. the And out flow I flow. free appreciate to the next early on and cash just last year. question the look sort cash of

the I look year, year is year. Is know the this job, $XX million. it's think midpoint losing at next for biggest like you If or million $XX nice significant this a I Rail piece positive trying kind from be flip that of little XX% year? of to get to better on hand maybe next that number going a Rail I'm that. closer goes to just to

contributions down Nick to expect make obviously, -- bit to down guidance significantly it we'll cycle you to our we do So and funded got -- planning pension to XXXX. expect work be still to go as X expect costs, be happen, we comment our yes, But mentioned status. at annual cash give to into only early We guys of that Interest then a fully the little we in going interest significantly. in part. fund contributions, but those Look, here in U.K. the somewhat. I we'll in right? distinct is maybe payments year-on-year. to say, go needless the now contributions, pension a year-on-year we through pieces, more We're down Yes. think that be detail. pension momentarily, it I

of then expect us chunks So those performance. sort the has already And we there. Rail, that give big indeed, some on Rail cash are pathway X

in As be HE I'll but I position expect expect much a to as and keep mind, million. certainly it's I little and is flips better. CE negative more don't significantly. said say the And businesses, if this my much, range, Larry, do cash deliver will of improve that details little can't a comments, so expect a where right, I in then, $XX and positive it well. course, along it now in we chugging you Rail year, the give early, too cash-use to bit million to those you into extra but $XX

just the contracts next the the Rail I with point think X exception others add long-term Germany important large when of in flow one and to to positive U.K. these the end and on cash in all flipped they year. contracts

in in investing couple So cash the reduce year million significantly in year. $XX about next years contracts. past outflow cash that per of those will in been We've the net rail

we're to when a over, year, that's again, and to CE, get range flow so our to to plus pension, $XX and forward, down $XX cash flow million and in we're you when should continue in flow year per strong that which million to in and free in And rail start is of HE why generating comes million cash interest thinking look now going plan, million-plus we're per the confident couple be of long-range pretty $XX $XXX cash years. this

The Brian from next from comes question Stifel. Butler

the can ultimately they up? -- years Because you kind they positive Rail as cash much we really have over the What's you've remind as of multiple still investing back generate to just those in getting investment that how in line? X, -- kind on been you a should go And everyone kind of are can it. the X piece, after and inflow should next of those contracts you're time to pretty years EPO finish On positive. of

doubt. no Yes,

kind in contracts 'XX, next on to into those to throw latter continued X XXXX U.K. million $XX is that ETO offset part Germany. at those if kind contracts, I in positive those, or smaller in been million in swing ago for the of should accounting of what from we've $XX the we're years past million Rail minute $XX But contracts. look next That off large to million right? the of you cash investment year. minus year, My even collectively, by of end the the contracts, and other will 'XX, think We'll into the flow. not when of be couple X So cash the number so side seeing those plus flow a of of was positive comment of XX, free or a XX XX still on the

hurricane you of on sales got some cleanup And on pushed, activity the that moved? -- can and give kind ultimately then point And some got tailwind color on side? there there the is that is more the a at EBITDA

Yes.

I it $X be I'm X by think the few up million, or to the EBITDA there was X or million the not of million. company. out say were to machines that picked shipping, $X make that transportation door going a ultimately did not could And impact the

momentum that your Okay. last and is Maybe mean, but I the And not like you XXXX, of softness. sounds kind XXXX? when you you the had thoughts I'm then could can it I looking of industrial that pretty per it's look still into looking Clean Earth on, think guidance and guess that bullish one, se, be have, for I -- mean, again, carried what like? that into

adding that this next be for largely we year. did which expectation certainly an so. And would think not have Yes, volume year, we growth to

Dodge question comes Capital BMO next from Devin The from Markets.

the just to maybe I division. to back Rail So want come

Another ETL forward loss those contracts. adjustment to to the provision

out or there the that, was things this? of on say, get trying assumption I'm color if that some an in getting So the just coming worse let's going is of if QX? provide drivers things the just provision better you can to are up, will Just understand

that The to produce. Devin, to as customized us I'll are or answer engineered, highly that customer. in projects highly they're try It's nature each term we're specs right? one's And before. here. the and very -- They're look, vehicles And complex engines that. for wanted no making long according these Tom design they made well.

the to to so estimate be very, ability able costs to honest, of nearest accurately the be very the any is million And to company, challenging.

is constant closer we to what we're to so as -- a the sometimes really so take and endpoint, fine-tuning. these make going getting there to get it's to visibility better And

and supply Now going sometimes we we cost So are price cost, in may we There does have more. reduce do be sometimes et to puts the are calls, increases, right? it's There changes able think what to also it cetera. chain.

So going to that. of we ton of what to that's are is There's occasionally, these from be as that those more, try do But managing and focus, a drove the point to do and acknowledge can imagine, adjustments. have things. you of view an all we cost accounting

So not it's overly of optimistic this to just it's more whatever. contracts given just yes, part you yes, or you along. not long as and a natural expectations these me, standing It's go -- that discovering you're -- very it's have process

enough. Fair Okay.

then question you, And Okay. maybe another just likely for Tom.

Just something cash on that stands the flow out statement.

meaningfully seems interest -- on the outpacing are the it in year. financial noncontrolling So pretty cash dividends contributions flows, earnings this like

earnings more pronounced this what can has And you Just dividends and remind us assets they to? year? relate why the between gap been

we colleagues right? years. see if point, to about, else Italy. trip So that -- into businesses. into main anything my you around those main think are know. the can we accumulated earnings China, And HE so have it's think you that -- all at those you've I would to those some -- timing, related to distribute need and do some I some what as then of I a the probably it's get over we in just got course, And so some look joint there's ventures Yes, of in the of order needed in to

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

weeks. to this follow-up look Feel joining coming with Take morning. of forward as for me interest always, free contact questions. the I the speaking you with company. to many Thank in And you any us in we care. appreciate your

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

disconnect. now may You