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Enviri (NVRI) Q3 Earnings call transcript Oct 31, 2024

AInvestFriday, Nov 1, 2024 2:10 am ET
2min read

The Enviri Corporation held its second quarter release conference call, shedding light on its financial performance and outlook for the remainder of the year. The call, led by VP of Investor Relations, Dave Martin, CEO Nick Grasberger, and CFO Tom Vadaketh, provided insights into the company's key themes and trends, addressing investor concerns and highlighting strategic moves.

Strategic Highlights

The call began with acknowledging the loss of a key colleague and friend, [indiscernible] Curry, who led the Harsco Environmental segment. Grasberger emphasized the company's resilience and commitment to its values, leading the HE division until a new President is appointed.

Grasberger detailed the company's record-breaking quarter for Clean Earth, with double-digit earnings growth and improved EBITDA margin. Despite challenges in the steel industry and operational issues in the Rail business, the company remains optimistic, focusing on strategic initiatives to create shareholder value.

Financial Performance and Challenges

Enviri's Q3 revenue totaled $574 million, down 4% on a reported basis, but up slightly on an organic basis. The company's adjusted EBITDA was $85 million, an improvement of 3% year-over-year. The performance was impacted by lower aftermarket sales in Asia, lower revenue recognition on certain contracts, and supply chain disruptions.

Grasberger highlighted the strategic moves to strengthen the balance sheet, including asset sales and the renewal and extension of short-term credit facilities. The company expects to generate cash flow of $50 million to $75 million from asset sales, fully fund its U.K. pension fund, and extend its revolver and accounts receivable facilities.

Looking Ahead

The company is focusing on operational improvements, efficiency initiatives, and strategic growth opportunities, particularly in Clean Earth. Grasberger mentioned the potential for volume growth linked to sustainability initiatives and the expansion into new markets such as PFAS. The company is also investing in technology-driven initiatives, including upgraded IT systems and technology-driven programs, under its One Clean Earth program.

Despite challenges in the steel industry and operational hurdles in the Rail business, Enviri remains confident in its strategic direction. The company is focused on executing its operational plan, aiming for meaningful growth and margin improvement over the next 2-3 years, while stabilizing the Rail business for potential sale.

Investor Insights

During the question-and-answer session, analysts probed into the company's ability to handle lower volumes in the Harsco Environmental division and the volume growth in Clean Earth. Grasberger acknowledged the challenges, emphasizing the company's focus on efficiency and cost management, as well as the potential for volume growth in Clean Earth.

Analysts also inquired about the company's cash flow, particularly in the Rail division. Vadaketh provided details on the company's investment in long-term contracts, the expected improvement in Rail's cash performance, and the impact of these investments on future free cash flow.

Conclusion

The Enviri Corporation's Q3 earnings call provided a comprehensive overview of its financial performance and strategic direction. Despite challenges, the company remains optimistic, focusing on operational improvements, strategic growth opportunities, and shareholder value creation. The company's outlook for the remainder of the year and beyond underscores its commitment to navigating through market challenges and capitalizing on growth opportunities.

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