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 $0.08.
"Enviri reported results within our quarterly earnings guidance range, despite market weakness in Harsco Environmental as well as shipment delays and operational challenges within Harsco Rail," said Enviri Chairman and CEO Nick Grasberger. "Notwithstanding those headwinds, Clean Earth had another standout quarter, achieving record quarterly profits and margins, driven by increased pricing and efficiency improvements. We also successfully executed on a number of key initiatives, including surpassing our 2024 asset sales target with the sale of Reed Minerals and extending our credit facility, providing us with enhanced financial flexibility."
"As we look to the end of 2024, we expect the headwinds in Harsco Environmental and Harsco Rail to persist in the short-term, as reflected in our fourth quarter outlook. Our focus remains on controlling what we can control with the help of our talented team by continuing to execute on our growth plan and strategic priorities. These actions are expected to drive meaningful earnings and cash flow increases and enhance value for shareholders over time."
Enviri Corporation—Selected Third Quarter Results
($ in millions, except per share amounts)
Q3 2024
Q3 2023
Revenues
$
574
$
597
Operating income/(loss) from continuing operations - GAAP
$
37
$
29
Diluted EPS from continuing operations - GAAP
$
(0.15
)
$
(0.12
)
Adjusted EBITDA - non-GAAP
$
85
$
82
Adjusted EBITDA margin - non-GAAP
14.8
%
13.7
%
Adjusted diluted EPS from continuing operations - non-GAAP
$
(0.01
)
$
0.08
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 $82 million in the third quarter of the prior year, an increase of 3%, with this increase driven by Clean Earth performance.
Third Quarter Business Review
Harsco Environmental
($ in millions)
Q3 2024
Q3 2023
Revenues
$
279
$
286
Operating income (loss) - GAAP
$
33
$
18
Adjusted EBITDA - non-GAAP
$
53
$
54
Adjusted EBITDA margin - non-GAAP
19.0
%
18.9
%
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 $54 million in the prior-year period. The year-on-year change in adjusted earnings reflects the above-mentioned impacts. As a result, Harsco Environmental's Adjusted EBITDA margin was 19.0% in the third quarter of 2024 versus 18.9% in the comparable quarter of 2023.
Clean Earth
($ in millions)
Q3 2024
Q3 2023
Revenues
$
237
$
239
Operating income (loss) - GAAP
$
27
$
21
Adjusted EBITDA - non-GAAP
$
42
$
34
Adjusted EBITDA margin - non-GAAP
17.5
%
14.2
%
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 $34 million in the prior-year period. The year-on-year improvement in adjusted earnings reflects higher pricing, efficiency improvements and lower administrative costs, partially offset by lower volume impacts. As a result, Clean Earth's Adjusted EBITDA margin increased to 17.5% in the third quarter of 2024 versus 14.2% in the comparable quarter of 2023.
Harsco Rail
($ in millions)
Q3 2024
Q3 2023
Revenues
$
58
$
72
Operating income (loss) - GAAP
$
(14
)
$
(1
)
Adjusted EBITDA - non-GAAP
$
(2
)
$
2
Adjusted EBITDA margin - non-GAAP
(4.3
)%
2.6
%
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.
2024 Full Year Outlook
Current
Prior
GAAP Operating Income
$117 - $127 million
$128 - $141 million
Adjusted EBITDA
$317 - $327 million
$327 - $340 million
GAAP Diluted Earnings/(Loss) Per Share from Continuing Operations
$(0.61) - $(0.72)
$(0.42) - $(0.58)
Adjusted Diluted Earnings/(Loss) Per Share from Continuing Operations
$(0.06) - $(0.16)
$0.07 - $(0.09)
Adjusted Free Cash Flow
$0 - $(20) million
$10 - $30 million
Net Interest Expense, Excluding Any Unusual Items
$108 million
$108 - $111 million
Account Receivable Securitization Fees
$11 million
$11 million
Pension Expense (Non-Operating)
$17 million
$17 million
Tax Expense, Excluding Any Unusual Items
$32 - $34 million
$31 - $34 million
Net Capital Expenditures
$120 - $125 million
$130 - $140 million
Q4 2024 Outlook
GAAP Operating Income
$23 - $33 million
Adjusted EBITDA
$68 - $78 million
GAAP Diluted Earnings/(Loss) Per Share from Continuing Operations
$(0.09) - $(0.20)
Adjusted Diluted Earnings/(Loss) Per Share from Continuing Operations
$(0.03) - $(0.14)
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.
ENVIRI CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended
Nine Months Ended
September 30
September 30
(In thousands, except per share amounts)
2024
2023
2024
2023
Revenues from continuing operations:
Service revenues
$
488,132
$
490,791
$
1,492,569
$
1,434,314
Product revenues
85,495
106,177
291,368
332,375
Total revenues
573,627
596,968
1,783,937
1,766,689
Costs and expenses from continuing operations:
Cost of services sold
373,924
377,539
1,154,998
1,120,578
Cost of products sold
80,821
93,389
258,227
277,086
Selling, general and administrative expenses
89,183
93,513
266,763
262,175
Research and development expenses
888
902
2,692
2,441
Property, plant and equipment impairment charge
—
—
—
14,099
Remeasurement of long-lived assets
—
—
10,695
—
Gain on sale of businesses, net
(8,601
)
—
(10,478
)
—
Other expense (income), net
40
2,865
6,600
(4,052
)
Total costs and expenses
536,255
568,208
1,689,497
1,672,327
Operating income (loss) from continuing operations
37,372
28,760
94,440
94,362
Interest income
981
1,722
6,113
4,796
Interest expense
(28,813
)
(27,552
)
(84,869
)
(78,956
)
Facility fees and debt-related income (expense)
(2,978
)
(2,806
)
(8,687
)
(7,899
)
Defined benefit pension income (expense)
(4,257
)
(5,430
)
(12,599
)
(16,159
)
Income (loss) from continuing operations before income taxes and equity income
2,305
(5,306
)
(5,602
)
(3,856
)
Income tax benefit (expense) from continuing operations
(13,437
)
(3,498
)
(31,372
)
(26,846
)
Equity income (loss) of unconsolidated entities, net
38
(151
)
(84
)
(593
)
Income (loss) from continuing operations
(11,094
)
(8,955
)
(37,058
)
(31,295
)
Discontinued operations:
Income (loss) from discontinued businesses
(1,584
)
(1,538
)
(4,287
)
(4,358
)
Income tax benefit (expense) from discontinued businesses
411
399
1,112
1,131
Income (loss) from discontinued operations, net of tax
(1,173
)
(1,139
)
(3,175
)
(3,227
)
Net income (loss)
(12,267
)
(10,094
)
(40,233
)
(34,522
)
Less: Net loss (income) attributable to noncontrolling interests
(901
)
(708
)
(4,498
)
2,756
Net income (loss) attributable to Enviri Corporation
$
(13,168
)
$
(10,802
)
$
(44,731
)
$
(31,766
)
Amounts attributable to Enviri Corporation common stockholders:
Income (loss) from continuing operations, net of tax
$
(11,995
)
$
(9,663
)
$
(41,556
)
$
(28,539
)
Income (loss) from discontinued operations, net of tax
(1,173
)
(1,139
)
(3,175
)
(3,227
)
Net income (loss) attributable to Enviri Corporation common stockholders
$
(13,168
)
$
(10,802
)
$
(44,731
)
$
(31,766
)
Weighted-average shares of common stock outstanding
80,165
79,850
80,085
79,767
Basic earnings (loss) per common share attributable to Enviri Corporation common stockholders:
Continuing operations
$
(0.15
)
$
(0.12
)
$
(0.52
)
$
(0.36
)
Discontinued operations
$
(0.01
)
$
(0.01
)
(0.04
)
(0.04
)
Basic earnings (loss) per share attributable to Enviri Corporation common stockholders
$
(0.16
)
$
(0.14
)
(a)
$
(0.56
)
$
(0.40
)
Diluted weighted-average shares of common stock outstanding
80,165
79,850
80,085
79,767
Diluted earnings (loss) per common share attributable to Enviri Corporation common stockholders:
Continuing operations
$
(0.15
)
$
(0.12
)
$
(0.52
)
$
(0.36
)
Discontinued operations
$
(0.01
)
$
(0.01
)
(0.04
)
(0.04
)
Diluted earnings (loss) per share attributable to Enviri Corporation common stockholders
$
(0.16
)
$
(0.14
)
(a)
$
(0.56
)
$
(0.40
)
(a) Does not total due to rounding
ENVIRI CORPORATION CONSOLIDATED BALANCE SHEETS
(In thousands)
September 30 2024
December 31 2023
ASSETS
Current assets:
Cash and cash equivalents
$
110,243
$
121,239
Restricted cash
2,889
3,375
Trade accounts receivable, net
318,906
338,187
Other receivables
42,960
40,565
Inventories
196,189
189,369
Current portion of contract assets
64,190
64,875
Prepaid expenses
63,818
58,723
Other current assets
6,969
11,023
Total current assets
806,164
827,356
Property, plant and equipment, net
698,315
707,397
Right-of-use assets, net
95,710
102,891
Goodwill
767,076
780,978
Intangible assets, net
305,633
327,983
Deferred income tax assets
16,495
16,295
Other assets
112,682
91,798
Total assets
$
2,802,075
$
2,854,698
LIABILITIES
Current liabilities:
Short-term borrowings
$
14,357
$
14,871
Current maturities of long-term debt
17,952
15,558
Accounts payable
245,996
243,279
Accrued compensation
65,414
79,609
Income taxes payable
8,952
7,567
Reserve for forward losses on contracts
53,513
52,919
Current portion of advances on contracts
16,838
38,313
Current portion of operating lease liabilities
27,381
28,775
Other current liabilities
168,676
174,342
Total current liabilities
619,079
655,233
Long-term debt
1,431,868
1,401,437
Retirement plan liabilities
39,900
45,087
Operating lease liabilities
69,977
75,476
Environmental liabilities
22,959
25,682
Deferred tax liabilities
31,749
29,160
Other liabilities
60,664
47,215
Total liabilities
2,276,196
2,279,290
ENVIRI CORPORATION STOCKHOLDERS' EQUITY
Common stock
146,706
146,105
Additional paid-in capital
250,855
238,416
Accumulated other comprehensive loss
(545,620
)
(539,694
)
Retained earnings
1,483,589
1,528,320
Treasury stock
(851,541
)
(849,996
)
Total Enviri Corporation stockholders' equity
483,989
523,151
Noncontrolling interests
41,890
52,257
Total equity
525,879
575,408
Total liabilities and equity
$
2,802,075
$
2,854,698
ENVIRI CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Three Months Ended September 30
Nine Months Ended September 30
(In thousands)
2024
