Enviri Corporation Reports Third Quarter 2024 Results

• Third quarter revenues totaled $574 million; organic growth in the quarter was 1%
• Q3 GAAP operating income of $37 million
• Adjusted EBITDA in Q3 totaled $85 million, an increase of 3% over the prior-year quarter
• Completed sale of Reed Minerals, enabling Company to surpass 2024 asset sales goal of $50 to $75 million
• Refinanced revolving credit and accounts receivable securitization facilities, enhancing financial flexibility
• 2024 Adjusted EBITDA now expected to be within range of $317 million and $327 million; mid-point lowered 3% to reflect sale of Reed Minerals and other factors

PHILADELPHIA, Oct. 31, 2024 (GLOBE NEWSWIRE) — Enviri Corporation (NYSE: NVRI) today reported third quarter 2024 results. Revenues in the third quarter of 2024 totaled $574 million. GAAP operating income from continuing operations for the third quarter of 2024 was $37 million and Adjusted EBITDA was $85 million, an increase of 3% over the prior-year quarter.

On a U.S. GAAP (“GAAP”) basis, the third quarter of 2024 diluted loss per share from continuing operations was $0.15, including the impact of the Reed Minerals sale, certain Harsco Rail contract adjustments and other unusual items. The adjusted diluted loss per share from continuing operations in the third quarter of 2024 was $0.01. These figures compare with third quarter of 2023 GAAP diluted loss per share from continuing operations of $0.12, after strategic expenses, an accounts receivable provision, and other unusual items, and adjusted diluted earnings per share from continuing operations of $0.08.

“Enviri reported results within our quarterly earnings guidance range, despite market weakness in Harsco Environmental as well as shipment delays and operational challenges within Harsco Rail,” said Enviri Chairman and CEO Nick Grasberger. “Notwithstanding those headwinds, Clean Earth had another standout quarter, achieving record quarterly profits and margins, driven by increased pricing and efficiency improvements. We also successfully executed on a number of key initiatives, including surpassing our 2024 asset sales target with the sale of Reed Minerals and extending our credit facility, providing us with enhanced financial flexibility.”

“As we look to the end of 2024, we expect the headwinds in Harsco Environmental and Harsco Rail to persist in the short-term, as reflected in our fourth quarter outlook. Our focus remains on controlling what we can control with the help of our talented team by continuing to execute on our growth plan and strategic priorities. These actions are expected to drive meaningful earnings and cash flow increases and enhance value for shareholders over time.”

Enviri Corporation—Selected Third Quarter Results

Note: Adjusted diluted earnings (loss) per share from continuing operations and Adjusted EBITDA details presented throughout this release are adjusted for unusual items; in addition, adjusted diluted earnings per share from continuing operations is adjusted for acquisition-related amortization expense. See below for definition of these non-GAAP measures and reconciliations to the most directly comparable GAAP financial measures.

Consolidated Third Quarter Operating Results
Consolidated revenues from continuing operations were $574 million, or 4% below the prior-year quarter due to business divestitures and foreign currency translation. FX translation negatively impacted third quarter 2024 revenues by approximately $6 million and Adjusted EBITDA by approximately $2 million compared with the prior-year period.

The Company’s GAAP operating income from continuing operations was $37 million for the third quarter of 2024, compared with GAAP operating income of $29 million in the same quarter of 2023. Meanwhile, Adjusted EBITDA totaled $85 million in the third quarter of 2024 versus $82 million in the third quarter of the prior year, an increase of 3%, with this increase driven by Clean Earth performance.

Third Quarter Business Review

Harsco Environmental

Harsco Environmental revenues totaled $279 million in the third quarter of 2024, a decrease of 2% compared with the prior-year quarter. This change is attributable to FX translation, business divestitures and contract exits, partially offset by price increases, growth contracts and higher service levels. Excluding the FX and divestiture impacts, revenue growth was 5%. The segment’s GAAP operating income and Adjusted EBITDA totaled $33 million and $53 million, respectively, in the third quarter of 2024. These figures compare with GAAP operating income of $18 million and Adjusted EBITDA of $54 million in the prior-year period. The year-on-year change in adjusted earnings reflects the above-mentioned impacts. As a result, Harsco Environmental’s Adjusted EBITDA margin was 19.0% in the third quarter of 2024 versus 18.9% in the comparable quarter of 2023.

Clean Earth

Clean Earth revenues totaled $237 million in the third quarter of 2024, a 1% decrease over the prior-year quarter as lower volumes (mainly from Industrial markets) offset higher services pricing. The segment’s GAAP operating income was $27 million and Adjusted EBITDA was $42 million in the third quarter of 2024. These figures compare with GAAP operating income of $21 million and Adjusted EBITDA of $34 million in the prior-year period. The year-on-year improvement in adjusted earnings reflects higher pricing, efficiency improvements and lower administrative costs, partially offset by lower volume impacts. As a result, Clean Earth’s Adjusted EBITDA margin increased to 17.5% in the third quarter of 2024 versus 14.2% in the comparable quarter of 2023.

Harsco Rail

Harsco Rail revenues totaled $58 million in the third quarter of 2024, a 20% decrease over the prior-year quarter. This change reflects lower volumes of equipment, aftermarket parts and contracted services as well as certain contract loss adjustments relative to the comparable 2023 quarter. Note that certain equipment shipments were delayed to the fourth quarter because of Hurricane Helene’s effect on operations. The segment’s GAAP operating loss was $14 million and Adjusted EBITDA loss was $2 million in the third quarter of 2024. These figures compare with a GAAP operating loss of $1 million and Adjusted EBITDA of $2 million in the prior-year period. The year-on-year change in adjusted earnings resulted mainly from lower volumes as mentioned above as well as a less favorable product mix.

Cash Flow
Net cash provided by operating activities was $1 million in the third quarter of 2024, compared with net cash provided by operating activities of $18 million in the prior-year period. Adjusted free cash flow was $(34) million in the third quarter of 2024, compared with $(7) million in the prior-year period. The change in adjusted free cash flow compared with the prior-year quarter is attributable to the timing of working capital and higher capital spending.

2024 Outlook
The Company’s 2024 Adjusted EBITDA outlook is updated to reflect the sale of Reed Minerals and lower volumes in Harsco Environmental as well as shipment delays and supply chain and other production challenges that are slowing performance against certain contracts in Harsco Rail, partially offset by an improved outlook for Clean Earth. Guidance for free cash flow has been revised as a result.

The mid-point of the 2024 Adjusted EBITDA guidance represents a 5% increase, compared with 2023. Key business drivers for each segment as well as other 2024 guidance details are below:

Harsco Environmental Adjusted EBITDA is projected to be below prior-year results. Currency impacts, business divestitures, exited contracts, lower commodity prices and personnel investments are expected to be partially offset by higher services pricing, site improvement initiatives and higher services volumes at certain sites, including those tied to growth investments and new contracts.

Clean Earth Adjusted EBITDA is expected to increase versus 2023 as a result of higher services pricing (net of inflation) and efficiency initiatives, offsetting the impacts of a less favorable project-related business mix as well as the 2023 Stericycle settlement not repeating.

Harsco Rail Adjusted EBITDA is expected to increase versus 2023 as a result of higher demand and pricing for standard equipment offerings, technology products and contracted services, partially offset by lower contributions from aftermarket parts (volume and product mix driven).

Corporate spending is anticipated to decrease (single-digit percentage) when compared with 2023.

Conference Call

The Company will hold a conference call today at 9:00 a.m. Eastern Time to discuss its results and respond to questions from the investment community. Those who wish to listen to the conference call webcast should visit investors.enviri.com, or by dialing (833) 630-1956 or (412) 317-1837 for international callers. Please ask to join the Enviri Corporation call. Listeners are advised to dial in approximately ten minutes prior to the call. If you are unable to listen to the live call, the webcast will be archived on the Company’s website.

Forward-Looking Statements
The nature of the Company’s business, together with the number of countries in which it operates, subject it to changing economic, competitive, regulatory and technological conditions, risks and uncertainties. In accordance with the “safe harbor” provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, the Company provides the following cautionary remarks regarding important factors that, among others, could cause future results to differ materially from the results contemplated by forward-looking statements, including the expectations and assumptions expressed or implied herein. Forward-looking statements contained herein could include, among other things, statements about management’s confidence in and strategies for performance; expectations for new and existing products, technologies and opportunities; and expectations regarding growth, sales, cash flows, and earnings. Forward-looking statements can be identified by the use of such terms as “may,” “could,” “expect,” “anticipate,” “intend,” “believe,” “likely,” “estimate,” “outlook,” “plan,” “contemplate,” “project,” “target” or other comparable terms.

Factors that could cause actual results to differ, perhaps materially, from those implied by forward-looking statements include, but are not limited to: (1) the Company’s ability to successfully enter into new contracts and complete new acquisitions, divestitures, or strategic ventures in the time-frame contemplated or at all, including the Company’s ability to divest the Harsco Rail business in the future; (2) the Company’s inability to comply with applicable environmental laws and regulations; (3) the Company’s inability to obtain, renew, or maintain compliance with its operating permits or license agreements; (4) various economic, business, and regulatory risks associated with the waste management industry; (5) the seasonal nature of the Company’s business; (6) risks caused by customer concentration, the long-term nature of customer contracts, and the competitive nature of the industries in which the Company operates; (7) the outcome of any disputes with customers, contractors and subcontractors; (8) the financial condition of the Company’s customers, including the ability of customers (especially those that may be highly leveraged or have inadequate liquidity) to maintain their credit availability; (9) higher than expected claims under the Company’s insurance policies, or losses that are uninsurable or that exceed existing insurance coverage; (10) market and competitive changes, including pricing pressures, market demand and acceptance for new products, services and technologies; changes in currency exchange rates, interest rates, commodity and fuel costs and capital costs; (11) the Company’s ability to negotiate, complete, and integrate strategic transactions and joint ventures with strategic partners; (12) the Company’s ability to effectively retain key management and employees, including due to unanticipated changes to demand for the Company’s services, disruptions associated with labor disputes, and increased operating costs associated with union organizations; (13) the Company’s inability or failure to protect its intellectual property rights from infringement in one or more of the many countries in which the Company operates; (14) failure to effectively prevent, detect or recover from breaches in the Company’s cybersecurity infrastructure; (15) changes in the worldwide business environment in which the Company operates, including changes in general economic and industry conditions and cyclical slowdowns; (16) fluctuations in exchange rates between the U.S. dollar and other currencies in which the Company conducts business; (17) unforeseen business disruptions in one or more of the many countries in which the Company operates due to changes in economic conditions, changes in governmental laws and regulations, including environmental, occupational health and safety, tax and import tariff standards and amounts; political instability, civil disobedience, armed hostilities, public health issues or other calamities; (18) liability for and implementation of environmental remediation matters; (19) product liability and warranty claims associated with the Company’s operations; (20) the Company’s ability to comply with financial covenants and obligations to financial counterparties; (21) the Company’s outstanding indebtedness and exposure to derivative financial instruments that may be impacted by, among other factors, changes in interest rates; (22) tax liabilities and changes in tax laws; (23) changes in the performance of equity and bond markets that could affect, among other things, the valuation of the assets in the Company’s pension plans and the accounting for pension assets, liabilities and expenses; (24) risk and uncertainty associated with intangible assets; and the other risk factors listed from time to time in the Company’s SEC reports. A further discussion of these, along with other potential risk factors, can be found in Part I, Item 1A, “Risk Factors” of the Company’s most recently filed Annual Report on Form 10-K, as updated by subsequent Quarterly Reports on Form 10-Q, which are filed with the Securities and Exchange Commission. The Company cautions that these factors may not be exhaustive and that many of these factors are beyond the Company’s ability to control or predict. Accordingly, forward-looking statements should not be relied upon as a prediction of actual results. The Company undertakes no duty to update forward-looking statements except as may be required by law.

Non-GAAP Measures
Measurements of financial performance not calculated in accordance with GAAP should be considered as supplements to, and not substitutes for, performance measurements calculated or derived in accordance with GAAP. Any such measures are not necessarily comparable to other similarly-titled measurements employed by other companies. The most comparable GAAP measures are included within the definitions below and reconciliations of these non-GAAP measures to the most directly comparable GAAP financial measures are included at the end of this press release.

Adjusted diluted earnings per share from continuing operations: Adjusted diluted earnings (loss) per share from continuing operations is a non-GAAP financial measure and consists of diluted earnings (loss) per share from continuing operations adjusted for unusual items and acquisition-related intangible asset amortization expense. It is important to note that such intangible assets contribute to revenue generation and that intangible asset amortization related to past acquisitions will recur in future periods until such intangible assets have been fully amortized. The Company’s management believes Adjusted diluted earnings per share from continuing operations is useful to investors because it provides an overall understanding of the Company’s historical and future prospects. Exclusion of unusual items permits evaluation and comparison of results for the Company’s core business operations, and it is on this basis that management internally assesses the Company’s performance. Exclusion of acquisition-related intangible asset amortization expense, the amount of which can vary by the timing, size and nature of the Company’s acquisitions, facilitates more consistent internal comparisons of operating results over time between the Company’s newly acquired and long-held businesses, and comparisons with both acquisitive and non-acquisitive peer companies.

Adjusted EBITDA: Adjusted EBITDA is a non-GAAP financial measure and consists of income (loss) from continuing operations adjusted to add back income tax expense; equity income of unconsolidated entities, net; net interest expense; defined benefit pension income (expense); facility fees and debt-related income (expense); and depreciation and amortization (excluding amortization of deferred financing costs); and excludes unusual items. Segment Adjusted EBITDA consists of operating income from continuing operations adjusted to exclude unusual items and add back depreciation and amortization (excluding amortization of deferred financing costs). The sum of the Segments’ Adjusted EBITDA and Corporate Adjusted EBITDA equals consolidated Adjusted EBITDA. The Company‘s management believes Adjusted EBITDA is meaningful to investors because management reviews Adjusted EBITDA in assessing and evaluating performance.

Adjusted free cash flow: Adjusted free cash flow is a non-GAAP financial measure and consists of net cash provided (used) by operating activities less capital expenditures and expenditures for intangible assets; and plus capital expenditures for strategic ventures, total proceeds from sales of assets and certain transaction-related / debt-refinancing expenditures. The Company’s management believes that Adjusted free cash flow is important to management and useful to investors as a supplemental measure as it indicates the cash flow available for working capital needs, repay debt obligations, invest in future growth through new business development activities, conduct strategic acquisitions or other uses of cash. It is important to note that Adjusted free cash flow does not represent the total residual cash flow available for discretionary expenditures since other non-discretionary expenditures, such as mandatory debt service requirements and settlements of foreign currency forward exchange contracts, are not deducted from this measure. This presentation provides a basis for comparison of ongoing operations and prospects.

Organic growth: Organic growth is a non-GAAP financial measure that calculates the change in Total revenue, excluding the impacts resulting from foreign currency translation, acquisitions, divestitures and certain unusual items. The Company believes this measure provides investors with a supplemental understanding of underlying revenue trends by providing revenue growth on a consistent basis.

About Enviri
Enviri is transforming the world to green, as a trusted global leader in providing a broad range of environmental services and related innovative solutions. The company serves a diverse customer base by offering critical recycle and reuse solutions for their waste streams, enabling customers to address their most complex environmental challenges and to achieve their sustainability goals. Enviri is based in Philadelphia, Pennsylvania and operates in more than 150 locations in over 30 countries. Additional information can be found at www.enviri.com.

(a) Does not total due to rounding

1. Certain strategic costs incurred at Corporate associated with supporting and executing the Company’s long-term strategies (Q3 2024 $1.2 million pre-tax expense and nine months ended September 30, 2024 $2.7 million pre-tax expense; Q3 2023 $2.0 million pre-tax expense and nine months ended September 30, 2023 $4.4 million pre-tax expense).
2. Net gain recognized for the sale of certain assets by Corporate (nine months ended September 30, 2024 $3.3 million pre-tax income).
3. Adjustment related to a previously recorded liability related to a contingent consideration from the Company’s acquisition of Clean Earth (Q3 2023 and nine months ended September 2023 $0.8 million pre-tax income).
4. Gain recognized by Corporate due to the prepayment of a note receivable in April 2024 (nine months ended September 30, 2024 $2.7 million pre-tax income).
5. Non-cash intangible asset impairment charge in the Harsco Environmental segment (nine months ended September 30, 2024 $2.8 million pre-tax expense).
6. Severance and related costs incurred in the Harsco Environmental segment (Q3 2023 and nine months ended September 30, 2023 $1.1 million pre-tax expense).
7. Gain, net of exit costs, recognized for a lease modification that resulted in a lease incentive received by the Harsco Environmental segment for a site relocation prior the end of the expected lease term (nine months ended September 30, 2023 $9.8 million pre-tax income). An adjustment to the reserve for exit costs related to this site was recorded upon vacating the site in 2024 (nine months ended September 30, 2024 $0.5 million pre-tax income).
8. Non-cash property, plant and equipment impairment charge related to abandoned equipment at a Harsco Environmental site, net of noncontrolling interest impact (nine months ended September 30, 2023 net $7.9 million, which included $14.1 million pre-tax expense, net of $6.2 million that represents the noncontrolling partner’s share of the impairment charge).
9. Accounts receivable provision related to a customer in the Middle East (Q3 2023 and nine months ended September 30, 2023 $5.3 million pre-tax expense).
10. Net gain recorded by the Harsco Environmental segment and Corporate on the sales of Performix Metallurgical Additives, LLC in April 2024 and Reed Minerals, LLC in August 2024, former subsidiaries of the Company within the Harsco Environmental segment (Q3 2024 $8.6 million pre-tax income and nine months ended September 30, 2024 $10.5 million pre-tax income).
11. Beginning in March 31, 2024, the Company determined that the held-for-sale criteria was no longer met for the Harsco Rail segment and a charge was recorded for the depreciation and amortization expense that would have been recognized during the periods that Harsco Rail’s long-lived assets were classified as held-for-sale, had the assets been continuously classified as held-for-use (nine months ended September 30, 2024 $10.7 million pre-tax expense).
12. Adjustment to severance and related costs incurred in the Harsco Rail segment (nine months ended September 30, 2023 $0.5 million pre-tax income).
13. Adjustments to the Company’s provision for forward losses on contracts with certain customers in the Harsco Rail segment, principally for Deutsche Bahn, Network Rail and SBB (Q3 2024 $10.5 million pre-tax expense and nine months ended 2024 $19.9 million pre-tax expense; Q3 2023 $2.9 million pre-tax expense and nine months ended 2023 $4.2 million pre-tax income).
14. Unusual items are tax-effected at the global effective tax rate, before discrete items, in effect during the year the unusual item is recorded.
15. Pre-tax acquisition amortization expense was $6.6 million and $7.3 million in Q3 2024 and 2023, respectively, and after-tax expense was $5.0 million and $5.7 million in Q3 2024 and 2023, respectively. Pre-tax acquisition amortization expense was $20.8 million and $21.5 million for the nine months 2024 and 2023, respectively, and after-tax expense was $16.0 million and $16.6 million for the nine months ended 2024 and 2023, respectively.
16. Does not total due to rounding.

(a) Does not total due to rounding.

(a) Does not total due to rounding.

1. Capital expenditures for strategic ventures represent the partner’s share of capital expenditures in certain ventures consolidated in the Company’s condensed consolidated financial statements.
2. Asset sales are a normal part of the business model, primarily for the Harsco Environmental segment. The nine months ended September 30, 2024 also included asset sales by Corporate.
3. Expenditures directly related to the Company’s divestiture transactions and other strategic costs incurred at Corporate.

(a) Includes the sales of Performix Metallurgical Additives, LLC in April 2024 and Reed Minerals in August 2024.
(b) Change in revenue adjustments as a result of estimated forward loss provisions recorded by Harsco Rail during the three months ended September 30, 2024 and 2023, principally for the Deutsche Bahn, Network Rail and SBB contracts.

(a) Includes the sales of Performix Metallurgical Additives, LLC in April 2024 and Reed Minerals in August 2024.