Enviri Q3 Earnings Call Highlights

Key Points

• Enviri raised its full-year outlook for Harsco Environmental adjusted EBITDA to $180 million–$184 million and narrowed Rail’s expected loss to $7 million–$10 million.
• Third-quarter adjusted earnings grew 21%: Harsco Environmental revenue rose 5% and adjusted EBITDA climbed 13% to $50 million, while Rail revenue fell amid weak equipment demand but its adjusted EBITDA improved to $1 million.
• Enviri completed its exit from the Deutsche Bahn contract, paying about $73 million against previously accrued obligations, and expects its improvement program to deliver about $40 million in annualized benefits beyond those realized in 2026.

Enviri NYSE: NVRI raised its full-year earnings outlook for both of its businesses after third-quarter adjusted earnings grew 21%, helped by stronger services activity at Harsco Environmental and higher aftermarket volumes in Rail.

The company reported revenue of $325 million and adjusted earnings before interest, taxes, depreciation and amortization, or EBITDA, of $47 million. Its adjusted loss was $0.16 per share. Both businesses posted their highest quarterly earnings in roughly two years, President and CEO Russell Hochman said on the earnings call.

Management also detailed progress in reducing exposure to Rail’s engineered-to-order contracts, including the completion of its exit from a Deutsche Bahn contract. Enviri expects an internal improvement program to deliver approximately $40 million in annualized benefits beyond those realized in 2026.

Environmental gains offset weak equipment market

Harsco Environmental revenue rose 5% from a year earlier to $273 million. Adjusted EBITDA increased 13% to $50 million, with the segment’s margin exceeding 18%.

Executive Vice President and CFO Pete Minan attributed the improvement to higher service and product volumes, better pricing and operational improvements at existing sites. Those benefits were partly offset by market conditions, higher incentive pay and foreign exchange headwinds.

Customer steel output rose modestly overall, although production was considerably weaker in the Middle East and Turkey because of the ongoing conflict in the region, Minan said. Enviri expects to benefit as some European steel mills restart operations following a tariff quota scheme that took effect in July. Minan said the benefits would largely arrive in 2027, with a possible contribution in the fourth quarter.

Rail revenue fell to $52 million as demand for new equipment remained at a multi-decade low and the company exited the Deutsche Bahn and Network Rail contracts. The segment nevertheless posted $1 million in adjusted EBITDA, compared with a $4 million loss a year earlier, helped by a more favorable sales mix, lower operating costs and inventory-accounting adjustments.

Hochman said Enviri has made aftermarket products a greater focus, including through new leadership, a separate organizational structure and separate profit-and-loss reporting. Minan characterized the third-quarter gains as early wins, with longer-term benefits from structural changes expected to phase in through 2028.

Rail contract exit reduces uncertainty

Enviri paid approximately $73 million in October to repay customer advances and satisfy obligations associated with exiting the Deutsche Bahn utility track vehicle contract. The amount had been accrued, and the company had set aside cash from the Clean Earth sale to fund it. The agreement requires no payments to Deutsche Bahn, Hochman said, and calls for approximately $13 million in performance bonds to be released.

Separately, subcontractor GBM assumed responsibility for the related vehicles and paid the first installment under an agreement to acquire project assets. Enviri recognized an $8 million gain from that payment and expects up to $34 million in additional payments in coming quarters. The company also recorded a $12 million favorable adjustment related to the release of performance bonds previously accrued as a potential liability.

Discussions continue with Network Rail, which is evaluating Enviri’s proposal to upgrade its existing stoneblower fleet. Hochman said the company is no longer executing or spending incremental cash on the equipment contract and has set aside cash to address potential outcomes from its exit.

On the SBB contract, all 36 wagons have been delivered and accepted, while four of the remaining 11 vehicles are undergoing customer commissioning. Hochman said the project remains on track for completion over roughly the next year. Minan expects it to be net cash positive, more significantly in 2027 and 2028.

Higher outlook and improvement targets

Enviri raised its full-year adjusted EBITDA outlook for Harsco Environmental to $180 million–$184 million from $170 million–$180 million. For Rail, it narrowed its expected loss to $7 million–$10 million from $19 million–$26 million, citing efficiency actions and higher anticipated aftermarket volumes.

Adjusted free cash flow was negative in the third quarter. Minan said underlying cash flow should improve in the fourth quarter, excluding the October Deutsche Bahn payment, and accelerate thereafter. He also agreed that it was fair to expect Rail cash flow could be positive or at least no longer negative in 2027.

The projected $40 million in incremental annualized improvement-program benefits will be roughly split between Harsco Environmental and Rail and between 2027 and 2028, Minan said. He added that Enviri expects to provide more detail alongside its 2027 guidance in February.

About Enviri (NYSE:NVRI)

Enviri Corporation NYSE: NVRI is an environmental solutions company that provides services and products designed to help industrial, commercial and government customers manage waste, recover materials and improve resource efficiency. The company serves customers in multiple regions, with operations spanning North America, Europe and other international markets.

Enviri's Harsco Environmental business provides environmental services to the global steel industry. Its activities include the processing and beneficial reuse of steel slag and other byproducts, metal recovery, slag handling, site services and the production of mineral-based products used in areas such as construction and infrastructure.

Through its Clean Earth business, Enviri manages hazardous and non-hazardous waste streams for industrial, healthcare, pharmaceutical, retail and government customers.

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