Enviri Corporation’s Earnings Call: Mixed Sentiments and Strategic Moves

Enviri Corporation ((NVRI)) has held its Q3 earnings call. Read on for the main highlights of the call.

The recent earnings call for Enviri Corporation presented a mixed sentiment, with notable achievements overshadowed by significant challenges. While Clean Earth demonstrated strong performance and strategic interest, the Harsco Rail segment faced considerable difficulties, leading to lowered guidance for both EBITDA and free cash flow.

Record Performance in Clean Earth

Clean Earth achieved a record quarterly performance, with revenue and earnings growing in single digits and margins exceeding 17%. The team has committed to a new growth strategy, resulting in a strong business backlog and healthy volume growth, showcasing the segment’s robust potential.

Harsco Environmental Financial Improvement

Harsco Environmental reported a margin of 17%, generating $33 million in free cash flow for the quarter. The segment secured new contracts to replace those exited over the past year, indicating a positive trajectory in financial performance.

Clean Earth Strategic Review

There is strong strategic interest in the Clean Earth business, with potential for a tax-efficient sale that could result in sizable cash payments to shareholders. This underscores the segment’s value and attractiveness to potential buyers.

Clean Earth Hazardous Waste Growth

The hazardous waste segment of Clean Earth is expected to see a 15% increase in EBITDA for the full year, reflecting strong performance and effective execution of its growth plan.

Harsco Rail Challenges

Harsco Rail is experiencing significant challenges, with demand for standard equipment and aftermarket parts at unprecedented low levels. The segment reported an EBITDA loss of $4 million in the quarter, highlighting the difficulties faced.

Lowered Fourth Quarter Outlook

The company lowered its fourth-quarter outlook, reducing the midpoint of EBITDA guidance by $27 million. This adjustment is largely driven by challenges in the rail segment and, to a lesser extent, Harsco Environmental.

Rail Segment Operational Pressures

The rail segment continues to face manufacturing and supply chain pressures, with a weaker business mix and higher manufacturing costs impacting performance. These operational challenges are contributing to the segment’s struggles.

Negative Free Cash Flow Guidance Adjustment

Free cash flow guidance has been reduced by $50 million, reflecting deferred milestone payments on certain rail contracts into 2026 and the revised earnings outlook. This adjustment underscores the financial pressures faced by the company.

Forward-Looking Guidance

Enviri Corporation provided guidance on its strategic review process and financial outlook during the earnings call. The company reported third-quarter total revenue of $575 million and adjusted EBITDA of $74 million but lowered its full-year guidance due to rail segment challenges and higher operating costs in Harsco Environmental. The strategic review aims to unlock value, particularly from the Clean Earth business, which has seen strong interest from potential buyers. The potential sale or separation of Clean Earth could lead to a sizable cash payment to shareholders. Despite current challenges, the company remains optimistic about 2026, expecting improved earnings and cash flow.

In conclusion, the earnings call for Enviri Corporation highlighted a mixed sentiment, with Clean Earth’s strong performance and strategic interest overshadowed by significant challenges in the Harsco Rail segment. The lowered guidance for EBITDA and free cash flow reflects these ongoing difficulties, yet the company remains hopeful for future improvements, particularly with the potential strategic moves involving Clean Earth.