HSC - Earnings call transcript Q2 2022

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Operator

Good morning. My name is Chad, and I will be your conference facilitator. At this time, I would like to welcome everyone to the Harsco Corporation Second Quarter Release Conference Call. [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. of without conference of the redistributions party any Harsco or permitted are expressed recordings this by telephone other Corporation. No written consent

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

Dave Martin

Martin Financial Grasberger, Anshooman Chad, Dave Chief our the President This Chief Officer; welcome your and Chairman take Harsco's will results morning. and me Senior discuss and questions. With you, We'll year. quarter for everyone joining and Harsco. Thank this morning, we the today Aga, then Vice for us and Officer. to I'm from is Nick our outlook our Executive second

Before mention few our let items. a me presentation,

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

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

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

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

Nick Grasberger

for us Thank and you, today. everyone. Dave, morning, joining good Thanks

QX consistent weeks we results a with were the you ago. results As released seen, our preliminary few adjusted have

in Clean what January anticipated continued our challenging especially a to accelerate disposal price costs our was in us, quarter Earth in second and Clean in April Inflation Earth segment. transportation for increases. energy, and beyond we The quarter

the reduction the roughly Coupled successfully compared significant second broadest was doubling the impact year. first certain far, cost the half EBITDA our margin and Our ever coordination the of Clean $XX at This actions, million through with by despite EBITDA contractual million, largest increase limitations. $XX half implemented Earth. should be implemented increase with was, July price customers to on to

X Earth, so gap X EBITDA quarters, about negative and points inflation or Clean margin. at $XX a the past the million or Over of between price cumulative was

to the gap running forward is value our cost asset corporate our customers X We are committed support moving proposition been to the pricing to opportunity reduction of months. the and over this Earth and eliminating through team I've with Clean The actions. past base clear. leverage

this achievable, Our as and targeted it business remains lead realizes to I'm its EBITDA of margin excited XX% potential.

I'll is Rail Environmental, strategic parties. Harsco and on the discuss process I Before sale provide ongoing, for sales The Rail discussions in with our remain an we update certain segment. of

have as a Rail's complexities a contracts selling as thereby with before, unique Overall, positive in committed will market, long-term in The value said However, and business on fundamental creating European outlook. very appropriate. for Further remains be business basis, disciplined the updates shareholders. provided the business the a company change process. Rail with Harsco we've divestiture conditions, M&A economic including slowed a is to

businesses annual mechanism remains price in We've India price and implemented escalation which regions, in of offset through offset In Europe, weakness in is summary, its over Turning of currency foreign performed healthy. impact quarter the inflation. to volumes by revenues and segment most of to to the Harsco expect HE higher and each and due volumes early pockets impact during steel Environmental, Overall, demand. inflation China. in increases were each XXXX. the of will increased see the the fundamental in -- quarter discuss we the We Anshooman fully well demand increased business did some in prior strong. our

was that our not were operate The certainly new our less adapting reality, businesses our supply or have were labor Times create when are the market chains long-term contracts to forward. of are also inflation I'll existent was needs. over to more markets, at shareholder supportive end we and time propositions under Our negotiated strong. and aligned but value changed now and our fundamentally, going well turn to this our Anshooman. call a competitive value positions

Anshooman Aga

July and Please X% year price good our services continuing Thanks, is quarter environment, compared attributable Nick, which including and a with $XXX mainly Clean Harsco's turn morning, mill increased to the headwind while revenues consistent increase growth price. $XX resulted This ecoproduct X. FX Slide to translation. Adjusted and quarter prior was to million, Earth X% and from operations million, from everyone. update. second totaled from higher with demand, EBITDA

our in guidance per in the million, $X we anticipated. the while at impairment These the factors tax. Environmental result GAAP May our strengthening contributed impacts May mainly this inflation was of the of higher low the goodwill was of QX due Earth. third-party exchange The foreign diesel, was disposals the guidance impact much time, U.S. total containers loss in $X.XX, dollar. share included items As was the non-cash adjusted noted to per were unusual $X.XX Meanwhile, quarter, million earnings share to CE's and was unusual In Harsco's after than of May million was quarter. $XX below due from unprecedented at $XXX Clean impact being transportation, $X.XX. our end share and items This approximately outlook. our all the approximately below of continuing operations EBITDA cost that to

We within our interest Slide completed a securitization segment. ratio. cash financing a of and covenant quarter the in which more leverage our Xx ratio X.Xx impact to liquidity decision and under accounts to million. exchange translation offset June. We Lastly, of year-on-year. turn sales flow impacts This free a increased $XX $XXX EBITDA translation million. impact million, and $XX EBITDA quarter $X Please $XXX X the million against It transaction Segment approximately our X% reflects costs, ended of by the decreased was relative includes was on lower prudent of including last for just to operating Meanwhile, as asset ecoproducts of quarter see ecoproduct. mainly also costs partially higher this and impact adjusted services fewer the leverage Revenues Environmental change revenues rate of second totaled by the was adjusted the higher FX our $XXX with of of volume million year. million. and and than receivable

the the of related on supply customer situation comment also diversity me given energy Europe. base benefits and HE the in Let and in gas our

gas reliant have limited we certain Russian First, such on Germany. countries that are most as exposure to

Europe volumes to regions, dynamic long or to have continue disruptions any remain elsewhere. X turn in by remains and intact as Slide discuss limited expect and this countries we'd date Secondly, been demand other to to overall Please to impact the our Clean to and within Earth. as offset HE

$X the For million impact EBITDA including second items revenues XXXX, mentioned quarter Compared decreased in the price, the I year-on-year. reflects quarter price. of the to inflation of This earlier, and revenues of increased while total was million. adjusted $XX change cost $XXX million X% EBITDA adjusted net

and driver. offset is reductions additional As to and Nick larger mentioned, we've aggressive actions cost the inflation. Price to taken price

second effective. large customer are these expect Our These XXXX. the to half, a increases the of margins and are and in impacts part going efforts we by recoup now inflation discussions will boost well, early price

to in million on is with our of range within expected July, XXXX Harsco's to our X. turn let's $XXX million. Consistent adjusted EBITDA now Slide update a to be outlook Now, $XXX

Additionally, will of the reflects that our free Rail, million anticipate securitization. benefit $XXX cash we excluding $XXX AR now to flow, between be million, which

within the guidance segment year full our deck. appendix find can You the slide of

EBITDA adjusted $XX me X guidance. expected from million. Let range million with on conclude third QX $XX Slide is quarter to our to

below We higher impacts volumes Earth be expect results as will to and year inflation pressures offset good improvement, the prior due net is to year by anticipated its to earnings prior environmental below adjusted new be contracts. adjusted and partially of see sequential FX inflationary EBITDA but will price. modestly Clean be

Lastly, corporate quarter. Q&A. hand I Thanks, call now be back for to should third will $XX operator approximately and the the for costs million the

Operator

the [Operator first Instructions] will from Stifel. Hoffman Michael And from be question

Michael Hoffman

too, lots candor, CEOs David. appreciate and bad with of Anshooman duck so news. weave and Nick, I around the

just You up took and stood it.

On 'XX? get the still do a transaction Rail you'll you believe side, announced in

Nick Grasberger

do. I

more I likely than not. think that's

say, discussions gaining a indicated, M&A we line the from in ongoing largest -- a of the contracts. the factor I on there the assessing the market, time our apart in of are kind weakness European would As risk though, is at and few moment the large

risk number of of Our working in now. different that issues is those those view the a of the so view business, interested through somewhat we're than

issue would it of higher half. half this EBITDA look was be bit for a Third at in expected it's than first the the bit, year second Rail, the if in you

the the year so a market North orders in We the backlog. equipment, to talked or of the should year. group latter of economic in second among in pretty much Now, be not our is half year. significant of as in But some I can in earlier EBITDA about we there's the the that in half. Those recovery for the and buyer we environment, that think in lot whether took the early concern higher realize shipped this in American

the buyers the be now. are high. navigating very, remains of interest clear, in those issues we're to level So very business kind But the with that of

Michael Hoffman

you We issue. would a issue. don't that take cost observation a There's have demand the

of of what and the the what -- you're can we Clean that in What's revenues wanting I'd the just of specifically of officially it. yes sustainability side. response. you're We And into What's about that's on view the sort quality is But so doing trend a easy view side? side. recession, now little an understand despite your of to demand like your the to on And of we're kind light the in demand get the of -- your redefine then government a that? in seeing. Earth, cost view the dig

Nick Grasberger

by in of price. to by impacted that's if course, customer, Well, now refer you of of margin Yes. quality kind heavily revenue,

Waste, margins will in by half will We've based demand overall not on segments, And second believe that and Care indications Health the to were so the the Waste. volume yet Waste and they that Industrial across return we soften seen, that large situation. X economic being our any where Retail Michael, the

the optimistic So would segments our say, fairly ability we those in to X on quarters. remain, coming I volumes each in of grow

strong. Health would some in Industrial have somewhat Retail case actually, Care. the Industrial, of In I say, been softness and fine. We seen have

what seeing we're to understand answer health our that back. not the working really better to care should of due some with to partner, do will the we're question, can and soften your signs bring economy. overall, to But So any the volumes we Stericycle, volume

Michael Hoffman

And nature of to discretionary. quality also of opposed view my the as revenues Okay. is recurring

pretty good So about feel volumes? recurring good, pretty these -- there's of consistent you aspect

Nick Grasberger

recurring. fact, side, or But I'd Hazardous business, you amount in -- it's that on projects do their Waste is, the healthy as know, Soil on a based Certainly, generally in X/X of is say not Yes. so volume our recur.

And so, yes.

Michael Hoffman

Basically, then your It Health visitations dig piece, mean, down. not bit. that electrosurgeries to slow. our care health and That a Care from looks from appears consistent system's is like with just just overloaded people. -- enough are And the demand the little perspective, I were perspective?

Nick Grasberger

is. it Yes,

Michael Hoffman

I'm assuming -- help up on the balance the shore about sheet. to move get I securitization, concerns the anybody's

we're And clear. year, it. of one-time, is operating-driven story. so This Just a you to next then benefit the I'm cash an flow back the get

year-over-year we correct be down it in should So that 'XX, modeling is

Anshooman Aga

is drew down the June. million. $XXX Michael, We total in million facility $XXX

left, another So and $XX ongoing million that's our facility. there's

and a It So we at or slightly even. current be so it, will reduction of that levels amount securitize. to a be going won't in do will there makes the the higher securitization forward the continuation economic sense there

Michael Hoffman

Okay.

do So a into with year base so argument, operationally. going of plus, XXX sake pulled I'm million $XXX let's just say, you next for whatever down

cash from way incremental in whatever the the about think generation segments. So to improvements That's it? X

Anshooman Aga

cash -- correct. drive then year. continuation operating is would $XXX next cash ongoing The forward, it's free flow million That's flow would of pulled that a and our

Michael Hoffman

And down do what did cash? -- you did the debt? Okay. pay with you Did

Anshooman Aga

We did.

Michael Hoffman

I had That Okay. now. Great. for was what

Operator

the And Solow Larry next question from CJS Securities. is from

Larry Solow

had high Earth businesses, with Environmental different company, that David a mentioned are you with said don't publicly that you last, lot from actually but the of did when a taking of compare and you're Earth that around it the sort a you that you you Maybe and experience to you Earth of of I know you And so business, sort contrast the there if -- But know kind lot. side? think some this. I issues into can look a sort did business. Clean know sticking right on I Clean turned I some of know level, came you and before the over back. after theme. I maybe think the in could you call, somewhat was at just how of -- bring Maybe your over what can commented Clean Nick, the maybe I just Environmental,

Nick Grasberger

us and predominant our legacy and And as think to inflation all the that accommodate IT pricing Earth, But now. more part, is years, we practices say, Earth now certain routing, a X Clean the In replicated July situation. change elsewhere. cost we clearly, past and Stericycle, of logistics, or Clean acquired the we points have evolve process, general, at masked saw certain Well, that of degree of X There I change over in issue outsource healthy remedy and There increase cost. the aren't the in from implement combining would a to is or of -- course, in-sourcing say by facilities that around are that received margins reduction opportunities X right? efficient that when the regions in Clean best opportunities Xx I'll business a the tools and in And inflation, price increase will, large have execution. ESOL that. are we today process of, Earth being changes number business we available that But significant the benefit we couple in I those. from associated this lanes result

but So a a things be been doing that lacking. number has honest, the to have execution been now. there are of bit just underway, we're Then

that the process did and as and we the Environmental very Harsco execution that of discipline change case driving just are we hard, years So in ago.

Larry Solow

to up -- I really it's weren't quarter last you're is back the yet. explainable, price the go during I of in for you the I months. on commentating much more saw you when of know the would lot misses me half. it But the Is of more, -- sort a -- putting fuel and lot of results. in or quarter. specifics couple if very cleaners you the of think bit was to it doubling QX increases on lately. accelerated call, putting X%. have somewhat sort back second last you it like to I mentioned guess, with QX a quite know doubling last like little seems spoke rising things lag? I I about would couple second seems I price to qualitatively was in increases if a started Just they But just a the back up XX months, rise maybe it slow and like prices been think but that Which a come Even not of even price to think the just the but of just it we know other quarter, not I acceleration kind getting revenue down, I over take

Nick Grasberger

effective transportation was of that and advance inflation, disposal in of costs costs those both things. of significant acceleration fuel X, in that and was increase price and the terms April types in diesel Well, really

We sufficient cover So increase that what mean, in. inflation yes. underestimated clearly I not had price would to was be the that.

Larry Solow

Just switching the piece. on gears quickly real environmental

because would Just so revenue the to right? The And -- cost that, contracts -- I of -- was event is kind are it's then of a $XX clarify, impact growth that's of of X% that the lot million on these been impact. actually strong plus. sort plus, revenue imagine, on pretty ex-currency -- have currency some a and

right? some are that. get costs on as rising, that so payback So you Is

Anshooman Aga

Yes.

impact. revenue the been without currency would have So growth stronger

in revenue. mill growth have services We our

increases. benefited from price revenue have in ecoproducts and We also, we our had growth

We a a built have and into is lot diesel contracts annual of in pass-through. contracts, our escalations

the So price as quarter guidance the for and for and year-on-year roughly.

Larry Solow

it. Got

I Great, the appreciate Okay. color. also

Nick Grasberger

EBITDA the is full year, to the for But impact on FX of [XX]. [X]

Anshooman Aga

[XX]. to [X]

Nick Grasberger

full [XX] Yes. year be on then gap about to the And HE Earth a in price in million would is that Clean $XX basis. inflation analogous the

Operator

will And next Street Markets Lake Capital question Brown Rob be from the from

Rob Brown

Or annually, sort sort these the had? increases to clarify risk is are you've had, are more wanted if in Or the some changes, compared you've repriced pricing Just you've margins? of now risk on for to of inflation there new much inflation? [indiscernible] those what got protections that that in and contracts -- how contracts

Nick Grasberger

Yes. overcome. to significant been now or, Well, at we've for of offset that for believe I And the the a that inflation. magnitude that's required challenge challenge certainly contracts was not many say, did most us increases that I'll price were allow

been with we've closely case where refused the price we've not to. a helping single that there's has chosen to increase very inflation take it's And actually been business the process our been to So a customer them good customers, working a in their elsewhere. subject or date understand that

the the of a because quite we So we've at future, some not many targeting perhaps again, will But high. it Which, contracts contracts be right, actually size. inflationary increases took allow is did that realization changed the to type point. -- environment bit of on of in what time course price for regarding were in this those is accommodate cases, that of

Rob Brown

of Okay. in hear. is demand you but And think seeing a then of the Good segment? activity, bit, is on environment it see right the business, I period this business the how where little now? activity? touched project the to kind you Soils but Are seasonal on that is demand how a you lot sales

Nick Grasberger

to with and have fairly a of for on there hazardous we number positive. for us would retailers, and number Demand now bids business is have of large side -- new been trends waste outstanding steady, a the I Yes. the say. And hazardous

we of stronger business, than half that second these Dredge You a of tracking be may a material expect been we've first our half refer are -- of as and many the year processing to being projects we in released, the bit because so we're this do that lot to Soils good and on the speak.

Operator

from next Markets. from will Devin Capital BMO The be Dodge question

Devin Dodge

can start targeted. improvement? us restrictions to with, help than pricing And you and much then about? that $XX off to you that is million of how is price be remain given more that the maybe much cost some Just How you've to talked contract taken, of profit understand improvement incremental actions much how

Nick Grasberger

Yes.

annualized get price. So XXXX. is $XX is million basis, And so say, the remaining that annualized so of in of $XX we'll on million cost. effect that course, million, $X of is $X an or million, The the benefit larger

more of million million $XX cost $XX of an So think kind basis. the to as on annualized

Devin Dodge

And you can just CE consolidation maybe the initiative QX. of the of just division, in driver saw was checking a that systems? on to the to trying sense us positive or negative give update you pressures in this margin get an I'm

Nick Grasberger

it's been quantify positive. rolled a certainly it's mitigation the probably There's to exactly risk software certainly value on one what products. leads the in out difficult But and the to component was fact, it largely benefit of it this a every a at to last point, Well, at and, also. truck I how so looking and efficiency week, And operates how of or it's is. compliance our it in

Devin Dodge

Okay.

identify able targets And the buckets that recognize half more you that Look, Earth could performance this the of Okay. or probably moving still like at But last be you to achieve? focused here. year. kind Clean second of on we pretty think can early one it's then XXXX, you least in one just frame financial what or are I here, think

Nick Grasberger

XXXX in the when rate we be this into year look think cost to EBITDA out this effect you price clearly, run in of be higher at XXXX, will we're with the Earth doing I point expect substantially than Clean annualized coming where to what and the year. consider the of Well, Yes. at and for in respect

Operator

from question will Jeff Hammond KeyBanc. the And next from be

Jeff Hammond

guess, then wondering the Soil, -- some was this One, incremental? in Earth. million Clean pre et kind like, visibility cetera? activity this is still like update the of of Dredge? and project just It turning that all corner? on contemplated X Or seems on just running us the negative, Just just And $XX on I for of savings, kind this pre-announcement, visibility it's just

Nick Grasberger

weeks. weeks, incremental. The over reduction, all of of Well, the effective kind terms would executed in The $XX our July million X. say, QX, increase of coordination has July, kind of cost I the developed planning be began and of it and within last middle several again, price a will it is and few

Jeff Hammond

And Dredge? Soil,

Nick Grasberger

Yes.

that Soil projects couple So have a major would on aware East and be on the Coast recently the of of Dredge, started. you

half. so they're to significant volume providing second And lift to a in the

challenges is bring the in that of of the material. that also business, One shortage in to trucks having inbound we're though,

guidance find working control is for that's of but something a in process, the material second that to to that very over. a course, challenge. and our that's, facilities of to so implicit -- don't get to here half, have our hard We're but it's And been lot we that into ways

Jeff Hammond

business? know, I your talked can around cyclicality, dynamics, the of Clean Earth pricing view kind of you're just how about set then business power if And you better, execution about can be we Nick, competitive thinking the and but just level of structurally, kind

Nick Grasberger

Yes.

think terms processing I And only one competitive that in strong we a hazardous of we're again, learned a have power, match. very of we've federally-permitted other waste set valuable recently pricing that can facilities position. in very

footprint, of companies that's So a to major them. looking some great nationwide at or that have retailers a major when industrial value you're these

volume of though, needs is I business amount we to in competitively, not flow do may not to you In leverage, before. own therefore, assets. price part cases, of business. proposition pricing incineration, us. to our to not this been limitations We There's of with also, in on business we material landfills. is or and I'll we've own to our hazardous reduce in been value cost our because forego think, We use this So prices. the say this with the leverage or able And to simply is recall incineration, high. there affecting disposal that environment, And have, incinerators. own quite gain -- do access plenty in of time, work that, that's issue course, never that some that always over to customers revenue the been of disposal. we capacity, to material It's having do being cannot model, an to extreme that much capacity and we

it's over for online couple there's very lot but sure. a unique of the the a So continuing term, coming environment. it's years, of in next And short capacity

the terms there's down that still overhead structure, in that. of awful think work I first of we're of the be overhead an lot And phases third done the bring where next second to be. to there here and of taking will it structure be in opportunity the step to can few weeks, but and

Jeff Hammond

securitization, And Okay. kind cash Or is kind if the the just else then lower there we free there? exclude profitability? function flow anything of is a the lower of in of

Anshooman Aga

profitability. lower It's correct. That's

If Earth flow. cash you works free XX% of it remember, our its EBITDA and XX% between Clean segment, into

came cash it that corresponding the we're EBITDA outlook So a effect minimize. on down, trying had as to knock-on

Operator

next [Operator from Instructions] question The is from D.A. Karimi Zane Davidson.

Zane Karimi

the business, are waste can the So to dredging and business, contract improved And you in updated that are dynamics, stronger Soil the hazardous in being differences for structures what hearing historically Dredge half speak well? as and second degree the contracts? to and particularly that margins soil contracts have those that between while

Nick Grasberger

And that process and Dredge Soil larger Yes. all on inflation. than at Well, of impact a the of material moment, process. a we mix In that's terms there having component in being updated. there's the of in the type they're business, the margins

Zane Karimi

to X $X think that compared you I the about provided Can GAAP speak operating difference difference. million And ago? weeks in was updated nitpicking to thing there one about the here. income a then today just

Anshooman Aga

was in that Yes, mainly goodwill.

impairment to testing, goodwill million. to went back $XXX through go you be as If pre-release, goodwill we'd controls impairment estimated the model, our approximately goodwill finalized internal million a $XXX our and impact final was we

Operator

our concludes this over remarks. to back would gentlemen, question-and-answer session. I to Martin conference for the any turn and Ladies like closing Dave

Dave Martin

Chad, Take feel questions. soon. interest thank for always, you we with speaking Please morning. Harsco this contact as you appreciate to your Thank that And to with any in you, joined look free everyone forward care. and me us and follow-up

Operator

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

You may now disconnect.

Enviri (NVRI) 2 Aug 222022 Q2 Earnings call transcript