NVRI - Earnings call transcript Q1 2024

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Operator

Good morning. My name is Jason, and I will be your conference facilitator. At this time, I would like to welcome everyone to the Enviri Corporation First Quarter 2024 Release Conference Call. [Operator Instructions] Also, this telephone conference presentation and accompanying webcast made on behalf of Enviri Corporation are subject to copyright by Enviri Corporation and all rights are reserved. No recordings or redistributions of this telephone conference by any other party are permitted without the expressed written consent of Enviri Corporation.

agreement. your indicates participation Your

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

David Martin

year. Jason, remainder Officer; our the our Chief and Financial everyone questions. results to Vadaketh, our me for Grasberger, and morning, of your President this for We'll Tom Chairman outlook you, and Vice our Executive With then Nick today and we joining Chief first and Officer. This the quarter Senior morning. take the is Thank us welcome will discuss

our a Before few presentation, items. let me mention

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

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

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

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

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

F. Grasberger

than our more our our would interest potential a like in this highest and rate both nearly earnings versus cash about morning, more EBITDA the than those higher environment. financial XXX stable shareholder flow in Thank our increased XXXX Of of last as expectations and ago. Nonetheless, we improved strong X our EBITDA the with note, you, each are adjusted upside of to Consolidated XX% segments Dave, value. Enviri's a cash basis good are XX%. [Audio was last year, decade everyone. terms of margin is in of and and EBITDA. QX start decade, businesses the leverage economic level to environmental QX performed degree points portfolio in at while Gap] above

So other from to targeting grow businesses and businesses. year million sales our disposals are cash million to considering to such improve our are means goal leverage time, and continues and $XX leverage besides cash be to generate through our $XX we to we this assets Xx. of continuing this reduce At flow below yield, of

The and Turning our dollar up. to better a a over X partially headwinds on businesses, pricing Harsco a of better. EBITDA which XX% operational consistent U.S. remainder challenge Environmental months be expectations, while will more the ago. also the discussion bit volume from was of our In about X% of few were environmental segments. was X impact growth stronger than mill a product we of volumes profits expected of the services with a Echo year offset performance in comprise and these the currency likely

and growth. Overall, of I'm lower as pleased expect cash products higher and demand and flow with earnings year services solid underlying Earth, improved HE well cash EBITDA the variance dredge as business and care expectation. relatively soil retail health the haz costs The flow than and favorable while in performed met market, our business waste our deliver the a for to In better the industrial versus and and volumes the expectations. our Clean drove previous execution markets

the key highlight and the outlook provide strategy years. few for his look team what expect our We now hosting XXXX. financial high-teens a our Jeff business. and outlook EBITDA was strong for initiatives Day Investor focused as and full CE's and percentage And year cash continues earnings be to by cash a reduce flow Clean a very on we've in leadership forward June XX. to also Earth here an Philadelphia next will and a over result, the mid- team cost up to to in improved updated Beswick

As our for into process the statements. Harsco noted release, and business Rail in decided press reconsolidate divestiture have financial our we pause to our

from there shareholders divestiture to attractive in While We to on result the potential adjustments. the a been interest at negotiations a completing few strong European be for large with these was has customers buyers, barrier this terms the largely with recognized many the risk time. contracts ongoing believe contracts favorable risk proved should associated and with

our Rail Overall, will well, of attractive the business value a the both an we associated reduced, quite objective risk the changed. and divestiture is be company. and core contracts performing strategic the of Once a the not remains this believe is the has clearly In and the view for Harsco European stabilize financial of business.

over the Tom. call I'll now turn to

Thomas Vadaketh

Thanks, good everyone. morning, Nick, and

include in grew X%, my adjusted stated EBITDA now our just now, presentation. XXXX. results remarks and The continuing team within strong of Harsco delivered our Nick operations press a nearly first As Revenues release prepared Enviri that mirror Rail quarter rate. by Xx that and grew

our leverage decreased covenant Our modestly. better cash and anticipated, slightly ratio was flow than

performance, initiatives. prior compared XX% the million, our first an year. continuing quarter combination In business of our on year volume comment Each driven segments improvement growth the of starting X quarter. again me EBIT and EBITDA higher with Adjusted EBITDA from revenues delivered to prior and X% let adjusted of first versus price, by -- higher the up cost higher year from increased X. revenues the million, Now on $XXX prior quarter, operations Slide $XX totaled a

a Also, in operating Clean Clean higher driven our of corporate year comparable by to service exceeded costs quarter. and inclusion due our due figure prior more expectations the were and prior Earth. lower Harsco both the isn't favorable initiatives costs to but guidance This Environmental with in rail, Earth to mix comparable EBITDA volumes the quarter

quarter million $X.XX the quarter. for a cash a for quarter. Free flow year-on-year positive loss share was adjusted $XX The Our versus XXXX movements. in well the in negative flow timing in of which the in year million prior as per QX and working was compensation but cash the mainly QX incentive capital change free attributed in be year, to can amount payments as this occurred $XX

XXXX. Slide Adjusted quarter the segment. to over Harsco QX our Environmental partially from items reached products compared Relative representing higher revenue our prior million prior $XXX $XX quarter, by totaled X million, million, for higher higher positive eco of turn X% as offset and were up benefited services EBITDA $X pricing. to Segment and The as volumes revenues the support currency to HE an year versus increase year with costs the well impacts Please labor and base. quarter.

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

versus volumes, million, quarter, year-on-year year. was in the was The prior and year. X% For totaled by record were offset very those for as increase marked the not at quarter in XXXX verticals. Higher to repeat of other revenues reached difficult Volumes is care XXXX expected QX anticipated mixed the revenues XX% price. were by adjusted were a was business EBITDA higher health volumes QX against X% project prior that by levels. up driven which And $XX a the in million, versus which $XXX up comparison

for example, quarterly soil adjusted to to demand pricing and were increased and XX% in of the believe effort The testament for adjusted relative EBITDA Industrial and volumes, work QX, takes, the of a for employees to strengthen year initiatives. of quarter. is efficiency record XX.X% by team year-on-year was Earth's the margin net a our the driven Clean continues CE EBITDA an improvements bit the million, reached to a while project and dredge to these drive quarter. result reasons. slightly materials business. prior retail underlying revenues less we because million improving. remains Hazardous was Despite stable puts the down totaled for down $XX Our revenues $XXX similar also

created and the margin and This continue next with we few over Clean a we margin business years our see further that is years. in goal acquired few line confident we the will when Earth are growth strategic ago to

seasonally to the and $XX our were year-on-year, Revenues a million the first adjusted revenues Rail quarter, adjusted turn prior to the was EBITDA X which please totaled Now weak Slide for quarter EBITDA higher similar business. in year. rail business. and while $X million totaled is

includes quarters, equipment to where, discussed engineered order customized price are deliver have our we few speaking, large, basis. projects we contracted the in rail a long-term to fixed on business to highly generally or a customer ETO As prior

related ETO related impact. of $XX little which make taken The we delivered results The Some profit of revenue. revenue rail gross forward, ETO Accordingly, included quarter ETO going projects we include past. charges XXXX revenue the the rail of each Rail for contracts these million with approximately will revenue in business are these million. of the on as for Rail remainder loss-making loss progress have QX business $XX Base forward or

with the demand aftermarket and were equipment XXXX less mix. Compared and offset volumes business by services a lower favorable quarter, higher

million This as to range which includes adjusted guidance be it outlook at Hosco Now let on Slide the of range X. million to up is $XXX versus to turn $XXX is updated not XXXX. for our X% [indiscernible] EBITDA February approximately our Rail. forecasts XXXX a comparable midpoint within expected year-on-year to is now full year me

said, in for performance greater operating More is consistent is that reflect on both for lower our AG businesses. and driven in basis costs, underlying impact prior and expectation offset by to CE this With is a with together HE. comparable an CE by our visibility improvement specifically, outlook guidance, increased and

expectations for and underlying up. HE, also are For results operating growth year-on-year

the year outlook now outlook of small U.S. to strengthening dollar that performance headwind million $X of for HE. nearly This versus translation sale of business handful compared of metallurgical million. X on the sat within approximately reflects by prior leading remainder our currencies FX Also, EBITDA However, an our to guidance. downstream the additives our April a a impacts $XX is the

$XX can revenues $X and for This to corporate base the ETO in book now EBITDA successfully adjusted business We includes rail see order contracts. to $XXX expecting range are fill execute potential allocation million this a the $XX later if we the Rail, in of for year costs. on we range the a excess for million EBITDA on upside our range million of For of within year. million

can detailed in the presentation. outlook Our appendix be found of the segment

to translates range and adjusted a EBITDA between share $X.XX. of $X.XX guidance Our per loss of

free are to million. we targeting $XX adjusted of cash flow $XX million Lastly, now

The is $XX our flows included to to attributable to see rail, previously. flow continue increasing million and HE which change cash We free guidance cash from wasn't CE roughly year-on-year.

these non-ETO Rail, positive as expect its we we the cash to under contracts. be negative flows delivered be For will XXXX in related cash to be XXXX. in flows equipment long-term build ETO

rail the than XXXX be overall business free XXXX. for We flow less cash in in negative to expect

Importantly, flows these positive inflection and contracts conclude. or flows total its to we XXXX. an cash will on set its flows we're will turn cash Rail improve anticipate at XXXX, that mature point and ETO We are related contracts optimistic believe in Rail is as cash in

Lower guidance. million to product $XX volumes, anticipated move from performance and this Harsco to XXXX. to contribute our X of to EBITDA versus Let range with QX will change. me impacts $XX second on adjusted sale is currency quarter Slide QX is million. to the expected decline EBITDA of Environmental

Clean Earth modestly from EBITDA is comp quarter year tough the expected above a to prior be despite XXXX.

positive is volumes of are due year-on-year from cycle Rail the and projected to to higher settlement impact expected cost prices, Here, offset technology equipment increase the prior improvements $X tariff volumes. higher year and quarter the in to million EBITDA and standard

cash majority And from note that lastly, company's year. in modestly free QX flow flow improve cash case, the anticipated I'd is the and expected second is half annual to of in as the of the is the QX traditionally

the Finally, credit these let to recently. changes. outlook agencies me rating fact on with credit starting our sheet pleased our our of see that touch were both We upgraded briefly balance

focus this improved our quarter I improving As as the on we balance our earlier, slightly continued mentioned sheet. leverage covenant

The we the on disposal will sale special sold X QX, a is expenses. QX within as cash also overhead flow. our generating gain aircraft reduce In some earnings incremental treated the our corporate and ongoing item

remainder a received sale recently the years have notes which a QX. was the IKG our This of ago. in related cash We of sold monetized to business, few receivable was

within a business sold lower on which additives business, Performix Metallurgical our HEL finally, also we X, debt. will And April help small downstream

improve the We sheet. take will operator to for call I'll to and balance Q&A. to the Thanks, actions back continue the hand now

Operator

comes Rob from from Capital Lake Markets. Street first [Operator Instructions] question Brown Our

Robert Brown

Nice the quarter. progress in

volume the to follow wanted [indiscernible] up of with there. trends some Just

sort out the XX are improvements over mixed. to continue volume you be of of XX there. situation? playing sort of to Or think the it some sort can trends there they happen macro How a I that were see do months? next mixed Is

F. Grasberger

Yes.

some industrial see Earth market. of by in a this outlook soil other business. We're year, volume expect Clean But be and and standpoint given general, segment better than the we really But segments varies cost mix. seeing Clean think as this to in to is a retail hazardous as overall, volume dredge growth a expect What's certainly driving better the year. from mix price don't I end Earth bit waste we manufacturing, much volume well lot in efficiency also and care headwinds. the churn for both the and health

Robert Brown

ETO on concluded then much clear and those playing the are fully be where and And contracts Great. is rail to how can where out, go contracts kind comfort you those business, stand? when have more more of those the on that in will

F. Grasberger

be later X the will still large receive years in Germany delivered Europe, run. of them U.K., this in the There and the actually in of we'll are cash many to contracts Yes, couple that year. in one one have a year,

the we've those next largely mentioned and did Tom, so, risk in charges behind my the I As that, forward charges. and taken or is looking additional the we we've clearly as necessary QX taken us, we're some demonstrating against that year is remarks, that reduced, over in contracts, to believe

I with whereby that to the to charges anticipate afforded increase should commercial we to customer, serve of also German mentioned some a that to terms we've the taken. negotiate those price we previous that be offset continue contract

Operator

comes question from Solow Larry next CJS The Securities. from

Lawrence Solow

that question, on guess, of just kind line of picking business. Rail I Nick, up on the

could can back the this even X be us be contract great. in beyond with you from get remember sort whatnot. think if EBITDA. you would these business said if I higher some years speed what I business kind least think terms type it think about -- some we go is at thought of $XX kind of back, of kind this of help and than you was multiyear year. I think, sort of to million I that horizon or could now What outlook, in do when up of maybe few $XX EBITDA this years us So that bring million, of What's -- we the can that of you And about a just issues

F. Grasberger

impact believe business, Rail exclude Harsco the $XX Well, these else of say, we engineered-to-order contracts, to EBITDA. if million and $XX you everything of the base generates million

to here contracts ETO years. in those expect roll next We off few the

think So X which X the it's in would the XX%, to is with I business base is last where years, been of or consistent say. XX%

performance services and level in and pre-COVID demand America, the our business. part back We're in well. North good profitability for seen in good to as and seen the very We've of kind of We've both demand technology good base aftermarket on equipment. contracted then

tailwind in the stimulus money We North competitive allocated in us also infrastructure. of America and is that's We look position strong. been at rail America some and towards for think North quite elsewhere that's our a

So at for long-term an XX, of each our provide Investor businesses. view Day updated on we'll our June

our So to until view I'd for longer-term then you to understand ask wait Rail.

Lawrence Solow

great. the And Analyst too. to to answered Day Absolutely. look that's you No, forward it, I

switching Okay. guidance. gears, I guess your question, just just just Earth just Clean a to and on

know on on side? the bookings -- year I your You in of strong however guidance mentioned on your kind about this what's you kind growth in can the for sales? dredging you little in What and industrial terms of or year frame side. of just bit are flat better really that? a What side. last health soil the volumes, all care were

F. Grasberger

Yes.

terms think helping and the mix. more than of I soil what's in volume business now dredge is

higher-margin We have pipeline fairly flat. of projects. a strong is Volume fairly overall

hold. on the by cost being some the being continue least the moment. rate to environment I really higher the not but volume, interest are is certainly these some of But put in to at earnings business, not to projects of and price grow mix, the helping think contributing driven it's the the overall, initiatives at

have, we'd said like. is not some when as that projects we've as we these of As good start visibility the before,

conceivable and that projects was certainly of it's last expected to began had these where helped as year, some we So not business. it start, that the

Operator

question Butler from The Brian comes next Stifel. from

Brian Butler

Rail the real Just to first one, back just quick.

. on of XX% the does that to the it? flow piece from EBITDA business, cash like of So that what look XX% base in

F. Grasberger

Brian, nicely. converts Obviously, good, on speaking, conversion to But cetera. customers have and the the it base is puts of pay pretty with calls the part normal generally contend you, mean, I et pretty you the business. when

expenditure of and modest that into So capital on that turns mid-single fairly the cash. business, digits average most so maybe is in

Brian Butler

when to risk and And until guys operations, kind Or in before to has reduced? now need back you you reconsider just continuing contracts need risk. Great. you're Okay. of it's completion Do reducing putting market? us -- show the you wait think these the that the been about come is it to possibly on you

F. Grasberger

it's I the latter. think that

some took we the for. in now the vast fourth accounted has risk And quarter ago, majority we not mentioned, course. I though been that As that of charges long believe even the of

stability think Bank. as of completing we commercial as on quarters the I well negotiations Deutsche need with those contracts several

that think marketing the this business. those when I could rethink of, year, happen X timing then things we later the again, happen, will

Brian Butler

Earth, much was on And the nice impact one just then quarter quarter? on How there. Clean of an January weather

F. Grasberger

bit, It a was material business still affected we quarter a we dredge as I deliver was than to again, guess, than it course, our as well say of of soil challenge we wouldn't able But has, thought. better more expected. and it were I a

Brian Butler

there And look last I'll versus your then or steel steel guidance, a been When Environmental. global increase has expectations February around of production in you maybe change switch kind on outlook? in one any Harsco at [indiscernible]

F. Grasberger

No, not. Brian, there has

be volume X so points growth I we year, in the the of of impact contracts. So to and this think the market expect would services or the that business is new X% X% mill probably balance

not has outlook really the changed. no, So

Operator

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

David Martin

for Davis Devin is Dodge. This on

rail [indiscernible] Clean results efforts but Environmental wondering speak on internal of could some pause? you and the solid Harsco to some just in if So with Earth, deleveraging the

F. Grasberger

Sure.

the not with these at some new assets the on that focus bit of looking would I at smaller them stepped mentioned, other say reconsolidation So rail. dispose we initiatives. of businesses as portfolio. the we a of are has looking But can and within some We're I degree up are

So the of remarks, $XX of then cash. second see you'll quarter. And we the see half total some we've seen in of million estimated that in other back as incremental million the think some my transactions I that, -- $XX year, to I you'll in think will

Thomas Vadaketh

about in made we've things. that. Nick I remarks, already, and covered progress a few listed my I just prepared add it said, as I'll think to but

have we receivable And planes So QX, we'll we as cash proceeds the we performance notes QX. well the then monetized generated our sold some for an amount. from in sale -- that as in

end we just QX, of that the Nick So made of good by kind already the pretty towards progress target mentioned.

Operator

There queue. are in back no I for session. our over any This more concludes the conference question-and-answer Martin like to questions to David turn closing remarks. would the

David Martin

Thank additional me us and as questions. for any to always, free joining you. to Feel great Thank you, in your we everyone, with out morning. interest fire day. appreciate this a have reach And

Operator

concluded. Conference you has presentation. attending Thank now today's for

You may disconnect. now

Enviri (NVRI) 2 May 242024 Q1 Earnings call transcript