Earnings call transcript Q2 2023

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Operator

Good morning. My name is Desiree, and I will be your conference facilitator. At this time, I would like to welcome everyone to the Enviri Corporation Second Quarter Release Conference Call. All lines have been placed on mute to avoid any background noise. After the speakers remarks, there will be a question-and-answer period. Instructions]. [Operator

No conference are webcast Enviri any subject all are telephone of on Corporation other and of of rights Corporation redistributions Enviri without Enviri to reserved. written party presentation are this conference the made accompanying behalf and this permitted Also, telephone or expressed by consent recordings copyright by Corporation.

Your participation indicates your agreement.

begin. to introduce Corporation. you may Enviri Dave Mr. of like Martin now would I Martin,

David Martin

is Nick your Thank our and today morning. to we With Executive joining Chief everyone today, between Senior and Chief Minan, this our and you, Financial note us Grasberger, Officer; as this doing transition speakers Officer. so different Desiree, welcome questions. call are President Pete locations and bear Chairman please Please us address me and we from that Vice with

morning, the take This outlook questions. our for will We'll results then year. our we quarter your the and second discuss remainder the of for

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

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

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

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

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

to said, you. being Thank I'll Nick. With turn the call that

Nicholas Grasberger

improvements Clean quarter and Revenues and in better were a increased adjusted X% and strong Dave, EBITDA forecasts continuing both up some in Environmental several and segments, attributable well operating divisions and as as with We delivered XX%. exceeding markets. increased over you, to good everyone. is and cost our across Thank efficiencies EBITDA Earth. performance revenues This Harsco pricing adjusted morning, initiatives second end

lifting after full last result, outlook are year a outlook our this raising once quarter. our the year for we As quarter, again

our at believe to to figure the first at Xx and continues X.Xx, the the year-end. quarter decline Additionally, I Xx sits should was which end and at leverage, below of decline

Before further few discuss. there our commentary of that on adding I performance, items to are note want a

buyers. the for initiated the priority have we of out segment our reaching Rail started Directors First, strategic and selling Board This management. a both process to selected, and have of is potential,

the the year. sell mentioned, end associated And to the long-term one the our risk business selling is I've business the We by of reducing expect with as of to necessary contracts. steps the

amending was significant and modification We've of taken schedule also I regard well Network favorable and of note should that the Rail plan reduction a effect stone contract, a by the manufacturing step delivery underlying last blower of to ahead in ahead perform that our which business our year. continues our of in a successfully exposure. the financial

was are the satisfied the our the and Stericycle increases. parties that with pleased regarding successfully dispute resolved we during price amicable. Second, result, Both settlement with I'm quarter

We with have Stericycle provide continue relationship an service. exceptional even this customer stronger and to

that name single-thesis aware, name June past changed one environmental A manage, the X, you Enviri. many few to transformation to identity on the Next, doubt reduce beneficially and provides as byproduct years we solutions over materials new industries. recycle reflect a and services company, no are our across brand waste company's and into

that evolved commitment brand has and business environment, image. that is to our our how to considered important the identity it and have with a we As name align

XXX operate and of look than has years. commitment the company's for continuing been to We with forward same to legacy are part that more energized the to change by this excellence

O'Mara was director Martinez months. Finally, We're that in the is in late third to Enviri's Rebecca our past elected June, Board and the of committed new Board, Directors. to Rebecca XX refreshing announced we

worked her and AT&T. Black particular, During transformations Fiat diversity executive for Decker, great she leadership industrial Industrial and career, companies, & experience manufacturing In will XX-year of positions Caterpillar, in her promoting value of to in and a business be and including cultural Stanley series us.

offset quarter. provide in Europe better now effect. steel of the particularly performed Environmental, At each America Strength and the the despite partially And in last lower a I'll the service effectively ecoproducts India production, Latin and comments year mill on business at face segments. few of volumes, to businesses in the steel manage this this in certain time. compared Turkey and we lower Harsco our business

figure We cash year modestly free be with million. expect higher generation and above in full continue year's last margins EBITDA flow to near EBITDA to $XXX HE

continue capital only of competitive the position limit return. in We to quite opportunities strong to provide strong. a HE growth broadly, More that risk-adjusted remains HE

inflationary We initiate more forward price our will impact as operating that on pressures. levels. to production We contracts to and to cash look returns have earnings offset volume and continue normalized renew the increases to leverage flow successfully steel

segment its margins. quarter At this consecutive Earth, fourth delivered Clean EBITDA of XX%-or-so

with It's expected in We remain that year of Clean XX% the conversion also is roughly strong important the be expect a Earth for to of remainder progress flow continue our this EBITDA we year to cash capital-light XX% margins margin EBITDA. Earth to towards to business as Clean target. highlight

improvement the on create Clean Earth health few a the Overall, safety there's made service from to value is and performance namely doubt Pricing back as much as initiatives operational well, acquisitions the efficiency. ago our is create no care the higher labor our improved to volumes financial years strong to performance levels, as platform. Underlying well results. and support segment that retail shareholder track on promise deliver

PFAS continues, regulations opportunity our increase, are Clean we work litigation supporting Finally, expands I'd related PFAS as data a and federal state and body see of budgets discuss like significant remediation finalized. to Within Earth, continue as management to the initiatives. technical

will risk and using on to of anticipates approach economics customer requirements technologies that a provide based solution than to resource-friendly or deep specific sustainable and the Our toolbox more vary incineration well. each landfills, address

capabilities our two state internal both thermal thermal and to market fixed evaluation follow. identified DoD, treatment working and that and pilot our opportunities actively expand national the with our testing partners the existing soil public to desorption water and mobile technologies and with treatment with includes with couple wastewater We're agencies technologies new to undergoing align These major see anticipated and private and EPA oxidation and to by facilities. the base assets. various which environmental hazardous water We footprint, are our existing as trials

in that a state DoD interim considered be technology by highlights PFAS, permitted which the guidance encouraged destruction rather were waste than We the hazardous published recently DoD incinerator. on could a

For memo desorption example, state-permitted could be unit thermal the as considered. states, a

strong and on for Enviri first of Earth, and efficiencies continuing savings another very the was capitalize a it summary, in on half financial in cost the and and In to Harsco the year. Rail focus pricing good strategy. escalation including will quarter a the we divestiture Clean second So at half, and operational Environmental

the to turn now I'll call over Pete.

Peter Minan

Thanks, Nick, everyone. and good morning,

to well segment. turn was Clean up $XXX our consolidated both X. million, please to primarily year with Environmental from as The operations prior and compared Earth continuing pricing driven increased increase revenues So quarter as X% by Harsco second demand quarter. the increased Slide within Enviri's

this Adjusted a and the is prior XX% EBITDA which and XX% million, totaled year sequentially. represents guidance a from above improvement $XX improvement our prior range

and containers, Earth performance. volumes better the segments from Earth soil realized realized in our primarily its Both stronger stronger-than-anticipated of business. dredge agreement. its across energy recent also Clean than disposal, our the to as were for as Clean impacts lower inclusion due costs the from and retail businesses well results expected operating Stericycle labor benefited of

For results well production services better due favorable pricing. were despite Harsco higher lower to Environmental, customer as anticipated than as demand

higher the also lower by year volumes. prior against modestly Clean quarter, prior was as consolidated the efficiency Earth increase result costs driven internal of Harsco to Environmental results operating the initiatives, price EBITDA improved year. Relative a increases, largely and

per and XXXX, from to adjusted also the a the guidance. to compares securitization cash May was flow Relative the benefit for certain payments $XX XXXX the of timing transaction reflects Our which our $X.XX our million. quarter accounts in QX. the earnings favorably second of the change negative Free receivable was quarter of share for quarter,

interest flow. free cash cash higher impacted Also capital spending and

cash Clean cash positive. for was Earth our performance consolidated within our And with performance flow flow free and expectations. operating consistent Harsco Environmental the Importantly, quarter was

to for balance performance improve year. of the cash our expect this We

year-end Lastly, before of leverage performance, considering end, that due at operating benefit quarter X.Xx to our to strong net decreased at leverage the confident and are Xx near decrease sales. asset will to we our

by to revenues year Please Adjusted our the EBITDA in exchange for results turn the demand quarter, exchange, initiatives. as services Environmental positives cost Relative and million totaled and commodities of reached quarter. lower million $XX These pricing $XXX foreign up Slide to prices $X by prior partially approximately segment. translation. benefited foreign were excluding quarter. as Environmental X from ecoproducts impacted Harsco negatively the and X%, higher the offset impact Segment in well million, improvement higher which

improvements, decreased Overall, a performed production customer well mix. our performed customer year-on-year steel was despite at approximately favorable locations that we're and lower output to X% services largely steel changed pleased see at other to HE Of due sites operational and little sequentially. note,

positive focus small supported of our anticipated were our $XX number on progresses. at with performance benefits to million driving program benefits sites initiatives, cost the realize pace is which of on increase actions a to the year our Regarding results And by QX as is improvement reduction annually. expected strengthening

Earth. discuss Slide turn X to please Clean Next, to

$XXX to result was quarter retail, Stericycle as For by a million were project revenues and only higher in $XX the modestly was Volumes EBITDA strength XXXX, and Compared care price in increases and revenues infrastructure softness timing of industrial. the and health primarily million. quarter, and second the increased manufacturing as offset XX% settlement. of totaled adjusted

reached revenues Earth's XX% EBITDA million Clean Clean increased soil quarter. and revenues XX% Earth's reached up million margin adjusted and the million, quarter. materials Hazardous for dredge year-over-year, totaled year-on-year, in while the $XX $XXX $XX

the In is quarter impact roughly is addition benefit per logistics business price volumes, of internal and benefiting lower these operating initiatives from to labor $X savings. and initiatives The positive much attributable the to million and from running with costs. internal

also incremental seeing Earth benefits and Clean lower costs. from container transportation is

before Rail our let comment outlook, the me turning to Now briefly business. on

As we with equipment Network our Nick contract renegotiated Rail. mentioned, supply recently

the delivery damages extended the machines redefined for under our contract. now the therefore, of reduced estimate liquidated due XXXX schedule have the and and We into

of associated benefit the our it very we long-term for financial contracts. additional risk to as important manufacture is amendment capacity equipment. specific the the to dedicated also helps our This reduce Rail have to a milestone For customer,

new detailed Now to please the within EBITDA can midpoint $XXX revised that of our a $XXX XX% note XXXX our turn be $XXX $X.XX. of to million. million is adjusted Slide to to year per outlook segment an year-on-year. range full million the be of revised of our X This outlook. up to to range our translates found expected adjusted Enviri's loss slides. prior and This appendix for with in guidance million $X.XX $XXX EBITDA And now share between compares

we that million $XX the Lastly, free now flow year. expect cash will $XX for million be our between and

me conclude Slide guidance. X on third quarter our with Now let

expected quarter higher adjusted to to Harsco and the Third additions Environmental's the is compared increase is At new improvements. internal million. due to $XX ecoproducts, from to prior midpoint, EBITDA $XX to contributions range from expected contract million EBITDA quarter year

lastly, the million comparison disposal just third improvements Clean Clean be the and settlement the labor compensation. prior be anticipated and for for incentive higher price, in operating costs the are and by inflation million the to to corporate adjusted be earnings be are offset projected and will $XX Earth, higher And $XX impacted will completed year to similar Earth quarter. results Sequentially, quarter. volumes as by between cost Stericycle

to Thanks, the operator back for and the questions-and-answers. I'll now hand call

Operator

you. Thank

begin the now question-and-answer Instructions]. will We [Operator session.

CJS The comes Solow Larry first from question with Securities.

Your line is open.

Larry Solow

Good morning guys. Thanks. Great.

Nicholas Grasberger

Hey, Larry. morning. Good

Larry Solow

-- guess just on I the couple Just Rail. a

of others guess a I that issues of Was now resolve? the terms of in feel Or to there are like Rail. still you reached you just sort with -- need that major it you agreement had? Network contracts obstacle that So you major kind

Nicholas Grasberger

last as way and of business as above about affected working to the question, one the particular, Yes, we're year. of Germany by good core well longer-term these very kind that a supply are ago. contracts, chain speak. of the we strong, of marketing remains know, Larry. demand challenges a is A effect, were In we good the resolve the it's inflation a you are few margins, year in others, few business there is -- Yes, kind increasing in

of time. And contracts in so Rail and over range well. with risk hard of working but a both terms the others that I kind of are as been work, Network there those from customers our our mentioned, agreements done we've operationally of outcomes lot And that we've reduce to of and notably the the most Pete contract

Larry Solow

That's Supply I I guys. other or the improved I guess getting performance. supplies And international Okay. guess, chain for those? all you domestic side, is mostly better of and contracts, imagine

So the actually some at most those things until these the...? work were of and of contracts stopped settled

Nicholas Grasberger

we're those fulfill of No, the quite is aftermarket are -- continuing contracts. no elements plan the to we're But business contracted last the standard the services, those core doing stronger the year. piece, business, to what's and also versus yes, continuing well versus equipment, technology

Larry Solow

potentially sort be just Got piece, opportunities more Can perform just growth well CapEx. somewhat some pretty And environment, you of new maybe less environmental as customers whether projects, a lackluster out or it you you it. to production to volumes. with of difficult look Great. new on the in continue steel of kind importantly obviously, sort speak

services existing at customers. expanding Just

of driving towards. I update on sort think are that's guys us of you sort been Maybe that? something

Nicholas Grasberger

Yes. Well, years. utilization say of XXXX the half steel I'd lowest is its mills, you all, in first capacity about exempt XX in of that level first at if

we efficiency, fall-through that's flow. good couple of next cost volume bit our to yield and high here there's operating years. structure in the our cash a going So and a And uplift think given potential pretty to EBITDA of

that Beyond well production-based first year, of of our the production. services we and non-steel are saw quite the doing that, mitigating steel lower and and the impact offsetting half

will there over attractive much lead of continue with next that returns very I less the handful over as on noted, to good also or us that services, then a year executing would we see of course, ramp opportunities better those that so are So And that time. expect to associated you'll capital two. to there's capital. have And growth returns

going outlook and lead So for components to HE. I a EBITDA to three flow pretty think growth in those are cash healthy

Larry Solow

sneak more just it. in. could Got And if one I

it's the -- quarter the the year...? driver like you the and on it Just -- for predominant of that on like congrats for that rates the beat Stericycle. in behind feels It's the the good it looks the kind with settlement to get Was beneficial. for that's and

Nicholas Grasberger

a certainly of component it. Yes, was

midpoint that quarter. bit about if our settlement guidance our were end I exclude the what on increased range was think we -- at benefit in of the a we has above little twice value EBITDA, the kind you by And high or of of in the Stericycle QX.

Larry Solow

forward, of that forward would was right, Right. couple in 'XX, higher That's kind But then settlement right? that wouldn't going why higher? of of I some be quarters carry next EBITDA the settlement adding in getting plus the

Nicholas Grasberger

Yes.

the So year next year well. then price part of and was as an incremental settlement increase this

$X So tailwind of there's bit price little million top midyear increase. a from well a as yes, of the on a

Larry Solow

Got Fair enough. Appreciate you. color. Nick. the Thanks

Nicholas Grasberger

Yes. Thank you.

Operator

Brown Markets. Rob Our Capital next Lake from Street question comes with

Your line is open.

Robert Brown

Good morning.

Earth. realization Just in on follow-up Clean price about wanted to of you kind the the comments talked that

of go? there? getting And that? how clarify in are You said is a to you that guess increase. Could price there's you. your Thank left you where terms much price at -- have pending you I increases

Nicholas Grasberger

related question to broadly? Stericycle the more Is or

Robert Brown

More broadly.

Nicholas Grasberger

Yes.

you know, the the in we time I think more aggressively Earth the annual business. across then prices our of year, unprecedented price as last increase instituted to this and year we And that So saw quickly increases at we book. standard to this beginning the offset inflation moved Clean

But components early I the inflation the be that forward, in this more move the price price increases a increase and anticipate would this year price annual we likely increase result the But were the will as part, event. price ahead And year year. are an as you're of again midyear certain last selectively, for expectations, raising price seeing throughout benefits well. QX in of most going

Robert Brown

in bit housing, Earth? And the you. kind of for you over you is you what Okay. I looking And then Good. the months? in Thank of strength of how mentioned of of XX But are I market some mixed some -- sort and kind environment. weakness think Clean weakness -- a are little end mentioned next sort the demand you markets think environment Earth but seeing Clean where demand seeing

Nicholas Grasberger

Yes.

health by in end kind then of care of best-performing and retail the probably industrial. So order our of followed market, is segment performance,

a by was a driven that sanitizer but little was hand work, industrial the Now quarter, think so-called the of project. weaker project in

Industrial still the underlying the a of impact think the when out I somewhat strip demand project is healthy in work on basis. you lumpy quarter-to-quarter

dredge of In the acquisition is to and but the in bookings in few is revenue highest year terms the yet business, since but volume, Most we seen years level the to business in the only because outlook to that the ago. improving. this the we've through flow good soil made of Soils business soils for quite projects are is not yet have the mix that a begin,

Robert Brown

Okay. you. Thank over. turn I'll it

Operator

Instructions]. [Operator

Markets. comes Our Capital BMO with next Baynton from question Davis

Your line is open.

Davis Baynton

Dodge. Davis is on This for Devin

you've on I of on the a you've XX% goal. wondering that to know profitability the progress margin that then on drivers maybe a little expand what's bit push if touched bit, Clean of made that? what just a this you So EBITDA I'm lot could but And that for are restoring a the Earth, timeframe underlying reasonable can and

Nicholas Grasberger

Yes.

in apply of say all, be first volume the business, expect leverage growth kind the single-digits. of operating that we which to low-to-mid will I'd So just to

it. would that of component be So a

based Secondly, in intensive. very series in the processes on highly business, a overhead are my just systems labor the and was inefficient and elevated of view still that

times it, reduction anticipate reduction is in will believe the would next overhead the execute significant two over a there we reduced overhead months. significant XX in another We've next, another since we acquired to few but that the the So structure. years, XX say we

cost to have now higher, are over this At price basis. recovering margins seen because with we've price point, and and through mix inflation the that gone past improve net as that our say of encouraging. margin on a we would ability I is beyond Third, year

Third, is on the potential soil, PFAS growth than at the in hazardous standpoint business should volume, that think, fourth, -- from I this on a mix the higher think I at volume mix the of business significant. the margin -- say, least is or because soils point. the And waste I fairly

quite that the should I to say course, to would And there margins to be are, XX% a other as realistic. to higher that items. XX months target, in lead certainly and few I XX But well. think So next of get our would

Davis Baynton

over. turn Great. Thank it you. I'll

Operator

Martin This any concludes back our question-and-answer session. to David conference remarks. closing I to for the like turn would

David Martin

Desiree, you us. questions. And you with everyone thank me in your and as to speak you, we'll joining Thank we free any for Thank soon. Enviri, follow-up appreciate Feel always, call interest again, you. and to

Operator

Thank for now The today's you concluded. presentation. conference attending is

You disconnect. now may

Enviri (NVRI) 2 Aug 232023 Q2 Earnings call transcript