HSC - Earnings call transcript Q2 2020

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Operator

Good morning. My name is Carmen and I will be your conference facilitator. At this time, I would like to welcome everyone to the Harsco Corporation Second Quarter Earnings Release Conference Call. All lines have been placed on mute to prevent any background noise. [Operator Instructions] Also, this telephone conference presentation and accompanying webcast made on behalf of Harsco Corporation are subject to copyright by Harsco Corporation, and all rights are reserved. recording be will Corporation this teleconference. Harsco recordings any other other consent Harsco or the redistributions by conference of telephone this Corporation. party written of express No are without permitted

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

Dave Martin

Officer; and Thank results and Grasberger, With Dave Executive Vice morning, XXXX of Martin, Chief and second I you, Investor everyone our me you’re hope Pete Relations the this Welcome Minan, our President ESOL. we of of us at Chief to Harsco. Senior morning, This today VP company, Nick will Financial integration is doing including and Chairman quarter for Officer. Carmen. for various initiatives discuss joining and the well. our the I’m

then take questions. your We will

presentation, our Before few a let mention however, items. me

well First, website. a as slide our presentation our release earnings the on are quarterly available as call, for

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

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

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

Nick turn his the remarks. begin I’ll over to to Now call prepared

Nick Grasberger

today. thanks and everybody for good So, us joining morning,

declined some position both volume XX% was the most by markets, and our for seeing extreme the material processed held evidence volatility in about was following in Rail. the in more the to financial the acquisition; financial primary decline to of American Shipments and well the Harsco ESOL The improvement SCOR during environmental the QX and for four quarter, North and for on track Within COVID-related our of resilience safe quarter, and of solutions While value of later the our pure-play moved our I markets strength quarter, to fourth, and a acquisition executing our end a flexibility focus as enhance our quarter ensure ability less and ESOL uncertainty, in culture cuts which of payments, out made Rail in program and characterized quarter. also waste to our Harsco, to a strong a our we team thank dedication customers, our transformation first, in would that these environments customers. confidence the focused the spending, up brought earth in most Harsco the Harsco. have other perspective, for best that delivery business to into and From then to of navigate second early stakeholders. our somewhat And liquidity on team in employees facility. flexible, The clean good and all the cost liquidity; in with importantly, we but only capturing the Throughout bit customers. future. our due from during adapt to preserving and that of a portfolio to banks we’ve I began to certain priorities: we steel at and our our quarter the deferrals markets. our year-over-year built reduction, and is capital the dates We’ve in fact challenges pandemic; the in appreciate credit in keeping an pushed testament in the investors, current and the and have their we truly the quickly our amendment encompassed workforce. key remain the efforts progress with support company, relationship our my of adds our that received business pressures. were of We customers operating to people pandemic like quarter, Harsco ongoing remains leadership of out strong are

most value though, impacted Overall, and segments. minutes creation if over few additional expect pleased steel further margins be the in we we ability cash year and recovery by to comment it of perspective, will second that to QX. is improve to transform now to a operating for are our strengthen portfolio, point, the our the we actions our focus a the opportunities Although any of our be support year, quarter. we mills on positive know. during contrast segments. have the warranted. this prepared will three to markets to least the that allow free early to slow, generate vast steps to conditions the The been COVID next in internal end business in past somewhat strategic year, financial flex take are I to meaningful the businesses. the our has likely maintained our our each this we each situation flow at the operating several half in given condition taken I such steps just From taking At take we Harsco Environmental environment unlikely of strong was on our of as the majority you of and will

remain levels low production ago sites below And some improved, while at historical So have well even fact, in year they levels. points. are

year. remainder the throughout improvement modest only of the expect We

products focus with XX% towards is generation our aluminum and equipment shifting and products, from further shift. continued collaboration on HE theme steel mobile and and flow and with of Clean to customers. Earth, recent support environmental mix increased successes applied our services Our business HE and And the Roughly to this cash today solutions ambition. derived in our this be continues aligned

more EBITDA minus than expect we degree metric in as expenditure certainly years, few on next we intensity the a capital on growing of the growing lower capital revenue. Over focus HE

Turning significant on ESOL. quarter to progress made we Clean in the Earth, of the integration

is our Clean processes and Earth to working customer effort, team ESOL core part of service. improve combined that and boost As hard

expected, focus pricing also capital functions. As yielding better is business-critical opportunities, and and but the discipline of this cost all execution working

to even to identify we beyond when levers continue improve expected what the margins We acquired we business.

success clearly energy integration to engagement impact has therefore, year’s parent recipe surprise the supportive and COVID results, So passion on the this the the three EBITDA new of year despite in most is leadership, which active enthusiasm this They values. our negative the company attitude, of remains in colleagues Strong ESOL winning Perhaps target at pleasant unchanged. point. ESOL. been possess and a been for the for core of Harsco’s one has our

some contaminated industrial, remains to recovery and dredge retail In business and soil feeds the business volumes. fairly uneven whereas robust, that The of have waste difficult performance, forecast medical business terms work seen our the is term. short in we in project

Finally, backlog. in supply reduced team execution given on our significantly core the has program track, the The of against chain Rail, Harsco the of SCOR diversification and has our remain the components the faced. order been elements of key remarkable strong delivering has risk and challenges outsourcing

X expected due the commercial American side, Class railroads. declining to capital are North the cuts spending rates On as order at

want field moving much most product a projects COVID. next-generation in had than the business forward, I improvement in ago, and unaffected new also highlight at Rail been it versus at mix version. introduction promising by to the productivity initially tamper our broader Fortunately, has XX% benchmark. look is largely years Harsco was and prototype testing decades, few operating lessons least our industry serial The past targeted the few are a at we’ve and international the market. delivered North forward We learned a completing months implementing American the has for to the in the

base Our range our machine, this core in of has expressed customer is heart the which portfolio. interest in product keen the

like which Pete, to a ESG social call our deal tightly sustainability the a minute Since just linked placing past focus corporate our governance turn are over our focus the best-in-class on July, to released strategy, report, and of I on In environmental, we we XX over is XXXX-XXXX highlights great our a months. developing Before ESG accomplishments would program. initiatives. to I

with ESG standards. points align this data reporting of year’s was report and provide our sustainability metrics objectives and leading with better more One to on progress our to

vision XX months, past addition and a positive across creating look transformation in providing to the focus been are value business ESG X highlight we detailed our the journey and how that at So we for areas. we outcomes stakeholders on our our for for have

I our investors will response have rating ESG a from XX% improvement improvement call positive our since from of quality And ESG environmental a the number Pete. XXXX, a social we from January ratings risk have over a to score ISS. our in in of XX% groups. and and We now and seen turn Sustainalytics had very

Pete Minan

good and Nick Thanks, morning everyone.

results context we Slide this of to through through the summary and am X for to QX the also consolidated teams But the turn difficult we’ve I let and experienced finance our impressed and second before our coordination financial go pressures please operational of economic our the effort be comments. the continue by managing me Nick’s with So in and echo pleased period. detail, quarter.

quarter million the and adjusted positive EBITDA to flow focus proactive our and is Our $XX in EBITDA and conditions. react the excellence, basis. generate actions, higher quarter. with $XX enabled QX with and of continued $XX us second the million. coupled compares $XXX quarter, operational And figure prior allowed million results changing to year million adjusted totaled Harsco’s these and us continuing quickly safety totaled than EBITDA of figure approach revenues business collaborative In to This cash on market our our during strong the a on free adjusted

expected While costs and and earlier quarter, efforts than underlying to the guidance May, We result that the have key April our to businesses certainly we market drivers various believe conditions was contributed better the quarter. our this troughed control the provide to we for didn’t appear in strong helped. in Each of fact quarter. and had

employee some from We accounting costs. for benefited including timing or also of the expenditures,

these half a not to half In in impact discuss the we for which portion second be our a aftermarket accrual, this of compensation Rail further second orders when reduction recur. in also incurred addition, are benefited I which will I third the the anticipated comment to some XXXX. included expected by will into on likely quarter. the good occur initially year of A QX outlook to and the business, of expenses we had moving In QX,

result, with very our in in margins of was the XX%, quarter the just conditions. our each up As over margin market legacy holding given businesses a EBITDA well

I’ll of our quarter. lower results impact, please Clean in discuss Harsco in Earth quarter the and a ESOL from Environmental quarter of further The spending. corporate a to second inclusion margins change year. expected, last adjusted the And for for is this operations minutes. costs. in quarter note, With prior of EBITDA earnings was per share by $X.XX to the diluted second due compared in bit Harsco’s lower offset consolidated continuing and year integration amendment inclusion debt few $X.XX with these the impacts driven adjusted As second by principally is for figure this partially compared the the pandemic.

of by improvement million Lastly certain quarter tax expenditures contributions beginning cash as of payroll XXXX in meaningful flow At cash totaled and company. flow the is the reflects hasn’t QX, year. $XX this is to legislation, pension positive importantly, also year-on-year $X to and Harsco’s This commitment capital. quarter. allowed strong nearly of a comparison, which million totaled as traditionally our cash affected negative in expect compared see cash $XX we By well second free free in the and XXXX. capital quarter we improvement progress free committed for flow our deferral as The lower year, flow improvement the our was the payments significant flow free to to not various a goal, working million for pandemic in the the more by in year. The cash later which and full driven

impact foreign products services XX%. roughly of period result million we Revenues a X, recent quarter. These revenues or output Compared a declined Environmental $XXX and demand XX%, expected, impacted Steel profitability the by as approximately costs year-on-year mainly flex last it to economic and was view Revenues margin positively translate reflects our as lower in pandemic our year segment. Now decreased in please and the of basis $XX and customer and same totaled to headwinds, to year, turn to our site translation. million. the months. We XX% a the compared EBITDA exchange. result sites at severe figures exchange with were given XX% on our prior variable continuing and foreign excluding the ability believe this of Slide semi-fixed

this at below customers rate our XX%, operating the XXXX. dropped the since the for quarter Importantly, rate making our lowest sites for customer utilization

free factors lower the were $XX million and flow offset the for As expenses. I cash negative $XX mentioned year-to-date free administrative by and partially Environmental’s earlier, structural these made with believe negative and year. quarter, in illustrate operating million million of Harsco year. the positive Overall, compares now cash totaled figure and business prior in we’ve totals $XX This I years. are changes recent these in results process in this the flow

our turn now in please includes business Earth Clean early Next, which April. discuss the that Slide we to X segment, to ESOL acquired

$XXX EBITDA For quarter, million revenues were the million. $XX and totaled

in included volumes and on than materials, and up the lines, similar better quarter New prior slide, for the the business and impacts states with the like an impacted revenues down projects Pennsylvania details While waste the approximately the ESOL. materials slide. where Earth basis of both were contaminated The the of York dredge construction in ESOL our Clean legacy year apparent results. the business quarter not XX% are comparisons apples-to-apples for Among second with compared on financial hazardous held hazardous on stoppage

Lastly, and free the cash Clean million quarter totaled flow $X year-to-date. million stands $XX at Earth’s in now

well ESOL is Let COVID despite me which, Nick headwinds. going the integration, mentioned, on also comment as the

overall on to flow to experience. EBITDA double improve the X cash well our increase are We and actions meaningfully years, efficiencies way and in the the generation necessary executing customer

and improvement, as order intense well. the focus and EBITDA and key inquiry at flow are which generation In operational inbound to optimization, order processes, outbound and cash to on procurement cash provide an also commercial will initiatives, we to improvement looking significant improvements addition logistics

$XX realize We of year of rate of to to million the end run year million $XX with more million annual by expect than benefits benefits $X two. this calendar

to to The segment’s changes QX XXXX previous levels, in the our metro can lines equipment declined lower turn within Slide less revenues the The in America. million $XX Rail $XX Rail X Now impacts be lower be from please while within quarter. and favorable to technology businesses North sales attributed were our business. to attributed across million EBITDA to a million product $XX our short-cycle Class similar to can and all or customers volumes. year and adjusted mix X

orders. the of Despite This these costs. in while of million strong backlog show and This benefited by to broad-based, in the driven which some These also economic the end $XXX quarter. of customers, figure face discretionary continued given are bookings by of as the lower by from shipments, is continuing offset anticipated efficiencies our quarter, U.S. well additional was pandemic, trends as XX% change quarter-on-quarter. we this and activity up of SG&A some Some X% pressures the and was timing from Rail’s to positive at timing but negative partially is pandemic UK contracting likely cuts spending as the our manufacturing work the totaling quarter. likely the year-on-year the well. in factors were were order

key from U.S. aftermarket and sales Our orders into India included in standard China additional equipment equipment and Hungary, the sales wins

continue backlog, program XX% achieving Lastly, competency we objectives. on the given roughly initiatives, very We’ve and tracking And will in Rail, on and to to our Nick target record progress continue as growing SCOR us make business. of achieved capacity, milestones are with good including allow key year-end quality. mentioned, these this

debt financial was quarter quarter of flexibility and with important billion and is quarter approximately I Also, outlook, our the before million a $XXX at financial we took with So that We actions to leverage our $X.X comment very us, ratio on starting me end. X.Xx. liquidity and balance this regard. our let conclude, position. in sheet Maintaining of net ended the

a the banks favorable As adjusted result. view market performance our conditions and proactive previously and our our covenants, change this move insurance excellent position QX I action revised prudent or liquidity. and as business steps a visibility key was strengthen announced, a to in to of provide we relationships given to more market covenants of an X.XXx, liquidity even by us debt and amend conditions not in decision, took limited. that up is advantage more remain driven Under with as outlook. starting our policy, covenant our our EBITDA fragile economic Rather, This will a

forward, below our current and very couple a further X.Xx Looking as we manage And top to with stated while currently, the conditions. reducing we past, is ratio priority years. through is our of in And our leverage our for the a this current Harsco. debt see financial target goal I’m position economic ability are comfortable to well above within our

that me be again given to said, remain can in the certain stand outlook. Future refrain however, the some uncertain let we factors, QX provide providing Accordingly, QX. QX of for With from will we effects guidance. quarter volatile timing and and I the expenditures of to to turn pandemic. guidance continue other directional economic Lastly, in the including detailed trends the likely and given where

First, appears QX. in bottom activity it business to seems touched have that

Specifically, Harsco Environmental this likely April in and in for Clean occurred Earth May.

We seen then in some and these improvement have businesses. stability since

previously and this uneven However, and, than cases, some improvement slower is hoped. we in slow

For spots of pandemic, retail to throughout the have had particularly come large Clean back, demand which Earth, market, the retailers. strength appears some from the

economy more being activity levels, including had which dropped and off the material now in activity, backlog a industrial by the daily and only reopened. is within robust this and modestly Clean of markets, Our within is less Elsewhere mixed. Earth, QX, volume is below helped pre-COVID as non-hazardous

at Clean thankfully, that dynamic this customer likely down Additionally, of back some point while number Harsco XX our Environmental, impacts place. are one are most others April. Today, only slowing know, In few. a in segments. states re-openings, now as is were the sites within And Earth roughly in you restrictions shut putting

rates In impact relevant operating the locations less you outside. markets. production pandemic as imagine, from customer the would or the Rail, given levels is However, in subdued, at remain end trends visible

However, start begin freight capital America to see June, spend. as North metro we to in and curtail in and operating customers our

anticipated, we that now are orders backlog, had which in Some deferred. have not been

further this and visibility. that domestic this offshore but with hopeful we sales will are our actions, trend incremental We cost offset pressure reduces

modest that second So the all quarter for a in relative is just means in third anticipate completed the to we revenues this Harsco increase quarter.

and more be compensation Earth with will variable EBITDA of benefit be the earlier, of expenditures, increase is the these declined for million in The anticipate fees to costs, despite million mentioned $XX $XX items is quarter. with we insurance to impact slightly to timing for relative Clean consistent accrual expenses, certain our Although this trend, will higher by to expected adjusted versus that anticipated the this pronounced some professional much revenue or together which likely as Rail, includes revenues. the offset QX. quarter, second the as And adjustment expense third comparison and

considered, by close that Let spending maximize saying in am the thanks QX confident economic and me our that results. costs, our control pleased and in current I’m flow. withstand balance free And to with to ability our – all our pressure, sheet efforts capital I cash to things limit ongoing

cash full now target we for Our $XX objective year. continue cost the the year, positive reduction and is million flow for to

up our concludes turn the remarks. for that open back I operator So the line the to call And prepared will questions. to

Operator

That with ahead with We’ll with go question. your Michael first from come your ahead go will you. Stifel. Please Instructions] question. [Operator Thank Hoffman

Michael Hoffman

Thank much. you very

kind little nothing have free since Can a a So on not range? backstop positive? it as alluded You just about do what around leverage than get feel this Xx. how have a cash about to guidance guidance but moving giving appreciate light be you bit number to be you backstop managed of in help pieces, flow cash will the less I opposed us below free flow, might you of

Pete Minan

it’s Pete. you doing? How Michael, are

Michael Hoffman

Good, good.

Pete Minan

very positive Right going cash it’s we now, I to feel flow. think it’s – free comfortable saying be

best that that sort volatility uncertainty as you and well leave rather in the I in some as the it’s I just our time, come markets any any think period the think we payments than customers of that of the the timing given put as at of it backstop, said. from of

Michael Hoffman

Can positive way? the It Will since cash Okay. second different flow will the first it were I free ask – a in you half? be you you in think do half

Pete Minan

so. think the I That’s Yes, plan.

Michael Hoffman

Okay.

least be could I So than will better the half, minimum? a that assume I at first is

Pete Minan

that’s way look Michael. good Yes, it, at a to

Michael Hoffman

some clean helps the an big there but just of That And context then your seeing alluding what they in within I you curious revised are industrial small market alright. and am lot. and – Okay, Is chemical, it business, that that generator? So for just have the when there’s the instance, is seeing industrial has are softness Clean thinking they you that you say is are end reported, a reinstated Earth lumpy, to in business? harvest guidance? on generator,

Nick Grasberger

predominantly Well, it’s soil lumpiness of The all, business. the in first Michael, Clean Earth in Yes. Nick. really is

think I north the is moving industrial business stabilized and bit. a has

as our bit So more I lumpy. are predictable. feed these that it – projects large and construction stable that to It’s business would a soil characterize be going

Michael Hoffman

what Yes. with right where at down of some those point, from worldwide hearing back job consistent view flex last stays one proving you about activity now, comments If Where The business. is future production. steel your me, of XX%, be And and terrific of context steel June? you around in it you are in sort costs right can, is steel for the non-res of did construction. then about around fact, overall question would indexing that’s a thought in that that ABI you

Pete Minan

full It’s it it’s year. our production, virtually that to expectation relates for down customers, XX% Pete. to be from will as our XX% about Right is now, Michael, anywhere least the at the overall steel same.

Michael Hoffman

on you much job for Thank questions. Nice cutting taking the cost very terrific. the gentlemen. That’s Okay.

Nick Grasberger

Thanks. Michael. Thanks,

Operator

Markets. with Please will line Hammond from the Your go KeyBanc next question ahead. be Jeff of Capital

Nick Grasberger

Hi. Jeff.

Jeff Hammond

guys. good morning, Hey,

Pete Minan

Jeff. Hey,

Jeff Hammond

quarter? strong you just does that inform And half of talk the XX% deferrals how EBITDA about cadence you the that last XX% backlog Rail, to these kind versus on some margin second you of just into can of are very talked So that balance given the seeing? about of kind

Nick Grasberger

to Yes. half all, first Well, good better expect that Rail certainly first the half. of bit we a in be second the than

at We well. good EBITDA should margin still in margin standpoint, a Rail are looking business. year-over-year the lift double-digit as From also growth the

margins to similar QX, likely be QX in will be So QX but that should better.

Jeff Hammond

Okay.

impacting half the So better? orders getting coming second new and materially in the more are deferrals

Nick Grasberger

Yes.

think North be American months I we the half the business second will in X ago. thought had softer what than

Some push-outs them within some into ‘XX. the of the are of year are

Jeff Hammond

in. the big the Okay. talk your of And noise about business then some in top business the like hazardous how headwind certainly soil ESOL terms performed expectation It looks acquisition just line? with the coming can is bottom the and you kind in of But versus quarter, the bridge. both in

Nick Grasberger

generally the would were retail. speaking, Yes. Yes. weaker we in saw of bit say, be. with good A that would nonetheless hazardous, market we bit a than the I that while volume they consistent thought trends that was

I back. As mentioned, that’s coming

are performance peer they volumes industrial was coming consistent That’s production general, of softer picking would as hazardous as anticipated. Some look our again, And up the in course, But improving. kind But trends the with have the well. sector, we at believe of of back with of were that also theirs. we say, been in medical. companies we I than

Jeff Hammond

of improve. get my work these to where abate into then work And seeing some business materials, and see of non-res some would – that starting things better? are and construction stoppages you companies of lot that if that loosen abate Okay. stoppages a are up And sell

Nick Grasberger

we the have that hand, restarted. still been have. surprised projects the think, Northeast, not particularly to that on I we But expected we yet other restart have in other Yes,

us, this So it’s has business bit day-by-day of that week-to-week, surprise in changes it – a environment. been but for a

to difficult as I it’s project, mentioned. So

Jeff Hammond

cost higher corporate? across said, the And million $XX $XX mostly segments? you is million the kind the in Okay. that then that sequentially, blend of to does the number was Or

Pete Minan

across element corporate That’s business units. the There’s it’s but the in an across Jeff, proportionate Yes. pretty much cost, the segments. almost

Jeff Hammond

feedback you And Okay. can just people improve on about, just improvements, curve? your get the kind like self for report of question, these and the see sustainability guys it, talk opportunities to funds to you look ESG, the continue that where as of good from you your ESG the some then to on biggest at and are assessment, final in

Nick Grasberger

had Yes. that Well, honestly, historically we lot things that by done. lot not A of others it, is had disclosure I have disclosed. a not think doing, look driven provided and better the at, are metrics and of of we the we

to are We do that. beginning

on and I So the we that’s have governance helpful. been Clearly, to stronger. continue side, the social think we get and

our I focus E, have really and more tracking now. on is course, of to lot the the on a And results. good it there. certain metrics. And have on down think focus better again, in made the of of comes progress it with better There’s lot we awful we focus Environmental. portfolio, shift the will an And even metrics and

focus. the that’s really So

Jeff Hammond

guys. Thanks Okay.

Operator

Capital. Street the ahead. Your of Please go Brown Rob Lake next question line from with is

Rob Brown

Good morning.

Nick Grasberger

morning. Good

Pete Minan

Yes.

Rob Brown

the of activity of kind in the But order the back? of maybe new orders, know sort – resuming? have how again quickly you can dependency following And I up push-outs visibility seen What’s that on terms how great. Rail potential that Just in terms there? what of historically, come isn’t

Nick Grasberger

boost have we what reduce Xs at to same their generally think spending they that over seen to up. to capital are Class tend it little certainly quarter. reluctant bit the I is the slow But we last then the a back saw budgets, time, be and that

So they lag – to it bit. a tends

it’s year. I the Class capital reinstated this Xs by think be the that reductions And recently will spending so announced unlikely

Pete Minan

Pete. Rob, this is

push-outs, point. talking are just When our one these other Let half. all second about relative add just we these to previous are me expectations the for

that consideration business compared this even to still there meaningful is do we main prior in in the anticipate to think year. those is I point growth push-outs be of

Rob Brown

Yes.

But it? are anything in in COVID That’s then seeing starting terms you ESOL were getting – this And get does of any doing you color. of mentioned progressing Earth terms slowdown things really opportunities And as to you great of change doing work into of Okay, new a and on. Clean you really that kind you number plan? on what the develop activity, great. Clean do are is Earth integrated or and you

Nick Grasberger

don’t question. as and Yes, our the we integrate see identified, on that yes. of good Yes, business highlighted any benefits COVID to capture the I to impact I No, ability earlier.

We we at their reached have new the been opportunities very out we have solicited and and to happy have that our additional very thoughts, ESOL colleagues and into as pleased identified. with business the dug

situation, pandemic the despite than we think upside I in even is business the So greater thought. the

Rob Brown

Okay.

I great. Okay, will Thank over. it turn you.

Nick Grasberger

you. Thank

Operator

CJS from line [Operator Instructions] Securities. with the go Larry Solow of Your come next question will Please ahead.

Larry Solow

Good Great. morning.

the again, missed I the just Just segment, on beginning. Rail

pushout, the that related internationally. your been growth of is across board? on coming is America And has more that or most So North obviously, the

was just that. I trying to assess So

Nick Grasberger

Yes. North America. Yes. No, all it’s really in

Of customer largely in base private. North course, is America our

U.S. right, Our customer projects funded base governments, is outside so and the forth. infrastructure by largely

And that has and so the projects unaffected continuing by time those COVID, line the ago. been on expected we are largely international business had months

Larry Solow

and in Is your moving growth mostly more correct international or... the And that expectations your have out side. backlog on been

Nick Grasberger

Yes, absolutely.

So we Hungary. quarter, Bahn, this Yes. the that mentioned and past big Deutsche with wins in have Pete had India the

Larry Solow

in go I sequential know giving expect not as both improvement in Rail, you margin expect sales you are the guidance, back And but into half still you correct? we – still and

Nick Grasberger

We do. Yes.

Larry Solow

can X, long-term mentioned international But expectations inevitably that sort – in great to number. years Okay. number $XXX obviously, Is X for terms a of of you some just and fear basis or have know you sales a EBITDA million maybe probably of And million any push-outs. seen you mid- any and backlog $XXX I still out that that live a your But really on longer-term targets? then reaching – you longer-term haven’t segment time. off basis, anecdotally within a have

Nick Grasberger

so. much very Yes,

before. as I opportunities mentioned expand, I continue international to the think

I in boosted our opened. SBB been doors success brand. the think have has contract really Many technologically our

at the will in similar many look good have and Southeast We a also in opportunities Asia. EU

I I have So optimistic think the never more the portion international about been Rail of business.

Larry Solow

cash start then gears on – a reducing with And of about expectation, unprecedented completely sense. the you on do capital it. recover, just you period, makes that sure will which return switching real growth focus some but sort CapEx, flow? do you I Got markets growth somewhat obviously, tempered guys as are you – am – How to longer-term fast, Environmental, is to the greater

Nick Grasberger

it is Yes. Good And tempered. absolutely, question.

the mix more We growing are unnecessarily than the focused line. on within the business shifting top

to you mix minus see think less intensive, And all on continuing will revenue grow, capital focused will it’s whereas bit environmentally-oriented that more more services and shifting muted. products. be capital I spending EBITDA a to So

Larry Solow

Got it. Great. Thank you very much.

Nick Grasberger

Thank you.

Operator

Next line from the with comes Please question Chris go of Barrington ahead. Research. Howe

Chris Howe

morning, everyone. Hi. Good

Nick Grasberger

morning. Good

Pete Minan

Okay.

Chris Howe

wanted just that the Rail on on follow-up to had have those segment. of we I some questions

know as backlog, look of flow can comment – your And business and flow adjusted the generation I free forward? of you perhaps cash the we piece on how this that segment in the what business But of piece having dig the You for you are I is the here? to cash International terms in can for backlog the quarter. in as there said your bit this mix to aftermarket pull commented was a expectations further a you about are backlog little higher know short-cycle kind conversion forward EBITDA the expectations doing. What perhaps the in business. some in

Nick Grasberger

– dampening most margins. delivered backlog consider first and as is primarily have equipment, strong overall course, we in internationally should the I take which that, is China One the is this of say, in business will Yes, the year. bit outside of that, of will okay, think remain second to need half the Chris. effect of U.S., that, the you of I aftermarket let’s part on thing a

base As we that’s margin see the we installed real time – components, that requires as over aftermarket will lift. where

in is, margin, terms today time. in North to So predominantly China. America over shift going aftermarket of that’s outside But

good more new aftermarket installed But We see base following will still will China. Europe. our in start to in you margin have

Pete Minan

Yes.

add me other points. of Let just couple a

units, the new a aftermarket, mentioned, prior whole of be of the deliveries. to of aftermarket total increase for just it orders and than in just Nick for so will reasons percentage as the equipment the respect business the with revenues been because So had smaller year in example,

modest delivered. flow, In contracts as deliver inventory are investments these the cash And terms build business that’s is and grow. for cash of long-term making for we cash flow flow we as actually because the units that we start free the the don’t get as we you until we this growing, appreciate

the base. on and this are in units very take installed the advantage flow they delivering So for expectations that increase very, this start as will start year. unit business the we aftermarket years modest And cash subsequent to generation of of

Chris Howe

last over slightly $XX innings What’s to along But of about question undiscovered? forward. moves then talk that mentioned from of the And my your the that are as can been how an what’s and to And cost regard as moving the kind of goal million, in discovered a moving still is was be maybe realized to previously you ESOL, Okay. reaffirmation of are synergies get integration, and from ahead savings and expectations? things perspective? – look you time there kind we will

Nick Grasberger

industry we better as to participants. existing realized Yes, Clean there value market, somewhat the would better, an segment say, can understand of, say, that there’s terms have Yes. believe, we we the differentiate the to Yes. from business Earth provide the market in opportunity the and let’s proposition I the

an something it’s So just of there. It’s although, done we of about not integration, course, now. on are being the awful work focused lot is very

We value very the lot somewhat customer we think of that in also a position there’s focused on that around proposition. as unique market business time over the carve service. in we And a are upside out

think, aspects Earth have we So that’s one the that term, been, of I the the appealing in of more made longer Clean acquisitions segment.

Chris Howe

taking That’s my you very helpful. Thank for questions.

Nick Grasberger

Sure.

Operator

over Dave I no will at call the have closing turn back other to questions time. remarks. for now We Martin any this

Dave Martin

to and contact with care. speaking future. for everyone, Carmen, follow-up you, questions. in any the Take again, and morning. you, me look Thank forward joining appreciate this us with you in thank And interest Harsco your Please we

Operator

you. Thank concludes conference. today’s for call. Thank again you This the joining

disconnect. You may now

Enviri (NVRI) 9 Aug 202020 Q2 Earnings call transcript