By the numbers
Q1 revenue: $600M
Up 7% year over year, driven by higher services demand and pricing in the Clean Earth and Harsco Environmental segments
Adjusted Q1 EBITDA: $78M
Up 19% year over year
Q1 net loss: $16.8M
Compared with a net loss of $8.6M the previous year
- Financial picture: During Enviri’s Q1 earnings call Thursday, CEO Nick Grasberger said each of Enviri’s three segments performed above expectations in terms of both cash flow and adjusted earnings before interest, taxes, depreciation and amoritization. He credited “healthy underlying volumes” as well as some “internal efficiency initiatives” for further improvements.
- Rail challenges: Enviri has decided to pause its previously planned divestiture process for Harsco’s rail assets. Though there was “strong interest from many potential buyers,” the barrier to completing the sale mainly came from risks associated with some of its large European contracts. Grasberger said such contracts are impacting operations as well as earnings in the rail sector. However, the rail segment’s performance “has improved in recent quarters following significant internal improvements,” and Enviri will consider a divestiture plan again in the future, he said. Q1 revenue for rail was $75 million in the quarter, up 16% from Q1 last year.
- Clean Earth highlights: Clean Earth, the company’s environmental and regulated waste management services division, saw revenues increase nearly 2% over the previous year, earning $226 million in the first quarter of 2024 mainly as a result of higher services pricing and efficiency initiatives. Adjusted EBITDA was $34 million, a year-on-year improvement of 25%. “This margin is in line with our strategic goal when we acquired [Clean Earth] a few years ago, and we're confident that we will continue to see further margin growth over the next few years,” said CFO Tom Vadaketh.
- Harsco Environmental highlights: The division, which offers material processing and environmental services to the global steel and metals industries, increased revenues by 9% year over year to a total of $299 million in the first quarter of 2024. This increase is attributable to higher services and products demand, and price increases. Enviri also sold its Performix business, which produces additives for steelmaking, to Opta Group LP. Enviri plans to use Q2 proceeds from the sale to reduce debt.
- Cash flow: Enviri aims to improve cash flow this year, Vadaketh said. Enviri expects cash flow from its three segments to improve by $40 million to $50 million in 2024, including the rail business. The Clean Earth and Harsco Environmental segments are both estimated to make over $100 million for the first time this year.
- Debt leverage: Cash flow improvements should help debt leverage reach 3.85 by the end of the year, “but we are pushing to reduce it further to 3.75,” Grasberger added. The company is also considering some other divestitures. “These are not new initiatives, but I would say the degree of focus on them is stepped up with the reconsolidation of rail,” he said.
