Enviri Q2 Earnings Call Highlights

Key Points

• Enviri exceeded its second-quarter expectations: Adjusted EBITDA rose 22% year over year to $34 million, while Harsco Environmental delivered a 15% increase in adjusted EBITDA to $46 million. Rail benefited from double-digit aftermarket growth and lower overhead costs despite weak original-equipment demand.
• The company is exiting its Deutsche Bahn and Network Rail equipment-to-order contracts to reduce technical, financial and cash-flow risks. The projects consumed about $40 million annually, and Enviri expects the restructuring—including roughly 300 job cuts—to generate more than $15 million in annualized margin improvement.
• Enviri maintained its full-year outlook, forecasting Harsco Environmental adjusted EBITDA of $170 million to $180 million and a Rail adjusted EBITDA loss of $19 million to $26 million. Management cited continued uncertainty around Rail demand, fuel prices and geopolitical pressures on customer production.

Enviri NYSE: NVRI reported second-quarter results that exceeded its expectations, with both Harsco Environmental and Rail performing above the high end of the company’s guidance despite continued weakness in several end markets. Management also outlined steps to exit two legacy rail equipment-to-order contracts, a move it said will reduce risk and improve the company’s future cash-flow profile.

President and CEO Russell Hochman said the company’s revenue increased on a like-for-like basis during the quarter and adjusted EBITDA rose more than 20% from the prior-year period. Harsco Environmental benefited from a modest improvement in steel-market conditions, while Rail was helped by double-digit aftermarket revenue growth and operational efficiencies.

“Our Q2 results illustrate how disciplined execution and a simultaneous focus on growth opportunities and efficiencies can drive results,” Hochman said. He added that Enviri expects actions taken following its separation from Clean Earth to position the company for improved earnings and cash flow beginning in 2027.

Rail Contract Exits and Restructuring

A central development in the quarter was Enviri’s decision to exit its Deutsche Bahn and Network Rail equipment-to-order, or ETO, contracts. The company has ceased manufacturing and development work tied to those projects.

For Deutsche Bahn, Enviri signed an agreement with its primary subcontractor, GBM, to sell relevant assets and transfer supplier obligations, with Deutsche Bahn’s support. GBM plans to complete the vehicles and has agreed to compensate Enviri for inventory and intellectual property as certain milestones are achieved, management said.

Discussions with Network Rail remain ongoing. Enviri said it proposed upgrading Network Rail’s existing Stoneblower fleet, which Enviri maintains and operates under a separate contracted-services agreement. Hochman said the company believes the proposal could provide Network Rail with a transition plan while it moves to an alternative maintenance strategy.

The two projects consumed about $40 million of cash in 2025 and had been expected to consume a similar amount this year. Hochman said exiting them removes significant technical and financial risks and allows Rail to focus on its core maintenance-of-way and aftermarket operations.

Chief Financial Officer Pete Minan said the company recorded $247 million of unusual profit-and-loss items during the quarter. Of that amount, $207 million was tied to the Deutsche Bahn and Network Rail exits, including $75 million in non-cash impairment charges related to contract assets and inventory. The remaining $133 million related to incremental liabilities that Enviri may incur in settling obligations associated with the exits.

Enviri’s total accrued liability for those contracts and other contracts stood at $190 million at quarter-end. Minan said proceeds from the Clean Earth sale had been set aside to address the contract exits without increasing leverage or imposing an added burden on shareholders.

The company also recorded $29 million in Clean Earth sale and spin-off transaction costs and $10 million in restructuring costs across Harsco Environmental and Rail. Approximately 300 positions are being eliminated, with most restructuring costs related to severance. Enviri expects the completed actions to generate more than $15 million in annualized margin improvement on a full run-rate basis.

• Enviri closed its Ludington, Michigan, manufacturing operation in connection with the ETO exits.
• The company implemented restructuring programs in European operations and at its South Carolina location.
• Harsco Environmental consolidated certain site-level and central responsibilities across its global footprint.

Quarterly Financial Results

Total reported revenue was $187 million, including a negative $136 million revenue adjustment related to the rail contract exits. That adjustment reflected revenue previously recorded under percentage-of-completion accounting. Excluding the adjustment, revenue was higher than in the second quarter of 2025, according to Minan.

Adjusted EBITDA was $34 million, up 22% year over year, while the company posted an adjusted loss per share of $0.63. Adjusted free cash flow was negative $9 million, an improvement from both the prior-year and prior-quarter periods. Minan said underlying cash flow from both businesses was positive, and Rail generated its strongest cash-flow quarter in several years, helped by collections in its core business and lower ETO-related spending.

Enviri ended the quarter with about $290 million of net debt and a net leverage ratio of 1.9 times under its credit agreement. The company held roughly $300 million of cash, including $50 million identified as restricted cash.

Segment Performance and Outlook

Harsco Environmental generated $266 million in revenue, up 3% from the year-earlier quarter. Adjusted EBITDA rose 15% to $46 million, supported by higher services and product volumes, improved pricing and operational gains at certain sites.

Customer steel output increased modestly year over year, although Enviri cited volume pressure in Northern Europe and China. The company also said customer production in the Middle East has faced pressure related to the ongoing regional conflict. Minan said Enviri has sites in Oman, Abu Dhabi, Bahrain, Egypt and elsewhere in the region, and while none had shut down, some customers were experiencing difficulties obtaining materials and maintaining production levels.

Rail reported adjusted revenue of $58 million, unchanged from the prior quarter, and an adjusted EBITDA loss of $5 million. Lower original-equipment and contracted-services contributions weighed on results, partially offset by stronger aftermarket volume and lower overhead costs. Management said aftermarket historically accounted for about 40% of Rail revenue, but that share is rising as original-equipment demand remains weak and ETO revenue is removed.

Enviri maintained its full-year guidance, citing uncertainty around Rail demand, fuel prices and geopolitical effects on customer production. Harsco Environmental’s adjusted EBITDA outlook remains $170 million to $180 million, while Rail’s adjusted EBITDA loss is still projected at $19 million to $26 million.

For the third quarter, management expects Harsco Environmental’s performance at the midpoint of guidance to be modestly above the third quarter of 2025, while Rail EBITDA is expected to decline on lower volumes. Gross corporate costs are expected to be about $9 million, and adjusted free cash flow is projected to be modestly negative.

About Enviri (NYSE:NVRI)

Enviri Inc NYSE: NVRI is a provider of environmental monitoring, data intelligence and sustainability solutions for critical infrastructure and industrial operations. The company integrates Internet of Things (IoT) sensor hardware, cloud-based analytics and field services to collect, process and visualize environmental data. Enviri’s platform supports real-time monitoring and historical trend analysis across water, air and wastewater streams to help clients meet regulatory requirements and manage environmental risk.

Enviri’s product suite includes ruggedized sensor networks, remote data loggers, automated sampling systems and a web-based analytics portal.

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