enviri(US:NVRI)2026-02-24 22:01Revenue Performance - Total revenues for 2025 were $2,240.4 million, a decrease of $102.7 million or 4.4% compared to 2024[184]. - Harsco Environmental segment reported revenues of $1,019.4 million in 2025, down 8.3% from $1,111.5 million in 2024[184]. - Clean Earth segment revenues increased by 3.6% to $973.9 million in 2025 from $940.3 million in 2024[184]. - Harsco Rail segment revenues decreased by 15.2% to $247.1 million in 2025 from $291.3 million in 2024[184]. - The North America region generated $1,344.1 million in revenues in 2025, a decrease of 4.4% from $1,406.0 million in 2024[185]. - Harsco Environmental segment revenues decreased to $1,019.4 million in 2025 from $1,111.5 million in 2024, impacted by a net loss of contracts totaling $41.9 million and divestitures of $59.9 million[190]. - Clean Earth segment revenues increased to $973.9 million in 2025 from $940.3 million in 2024, driven by favorable changes in hazardous waste business revenues which increased operating income by $19.4 million[194]. - Harsco Rail segment revenues declined to $247.1 million in 2025 from $291.3 million in 2024, primarily due to a net effect of price/volume changes resulting in a decrease of $67.2 million[195]. Operating Income and Profitability - Operating income from continuing operations for 2025 was $4.2 million, a decline of 86.3% from $30.7 million in 2024[186]. - Consolidated operating margin for 2025 was 0.2%, a decrease from 1.3% in 2024 and 3.7% in 2023, indicating a downward trend in profitability[188]. - The Company reported a significant increase in operating income for the Harsco Environmental segment, rising 31.9% to $42.2 million in 2025[186]. - Harsco Environmental's operating income was negatively impacted by a $15.0 million decrease due to unfavorable net effects from new and lost contracts in 2025[193]. - The divestitures of Performix and Reed negatively impacted Harsco Rail's operating income by $7.9 million in 2025[197]. - Harsco Environmental's operating margin improved to 4.1% in 2025 from 2.9% in 2024, despite a decline in revenues[188]. Expenses and Costs - Cost of services and products sold for 2025 decreased by $90.9 million, or 4.8%, to $1,813.3 million compared to 2024[216]. - Selling, general and administrative expenses increased by $22.6 million, or 6.3%, to $382.0 million in 2025, primarily due to higher compensation costs[217]. - Corporate costs increased SG&A by $19.2 million in 2025, mainly due to higher compensation costs of $12.8 million and professional fees of $5.0 million compared to 2024[200]. - SG&A expenses for Harsco Rail increased by $13.3 million in 2025, primarily due to higher compensation costs and unfavorable changes in expected credit losses[198]. Net Income and Losses - Net income for 2025 was a loss of $163.7 million, compared to a loss of $124.3 million in 2024[215]. - The Company recognized $30.0 million in other expenses in 2025, compared to $5.4 million in 2024[228]. - Interest income for 2025 was $2.2 million, a decrease from $6.8 million in 2024[229]. - The Company recorded an impairment charge of $7.8 million in 2025 related to exiting a downstream products business line in France[222]. Debt and Financing - The total Net Debt to Consolidated Adjusted EBITDA ratio covenant was amended to 5.25x for Q4 2025, with a target of 3.00x post-distribution of the Clean Earth business[180]. - The total outstanding under Senior Secured Credit Facilities increased from $1,364.5 million in 2024 to $1,478.5 million in 2025, reflecting a growth of approximately 8.3%[254]. - The Company amended its Senior Secured Credit Facilities to set the total Net Debt to Consolidated Adjusted EBITDA ratio covenant at 5.25x for Q4 2025, with expectations to maintain compliance based on current forecasts[256]. - As of December 31, 2025, the Company had a net leverage ratio of 4.93x and an interest coverage ratio of 2.79x, indicating compliance with debt covenants[270]. - The Company expects annual interest payments on long-term debt to be approximately $91 million based on current borrowings and interest rates[250]. Cash Flow and Investments - Net cash provided by operating activities for the year ended December 31, 2025 was $101.4 million, an increase of $23.3 million compared to 2024[245]. - Net cash used by investing activities during the year ended December 31, 2025 was $149.9 million, an increase of $115.8 million compared to 2024, primarily due to non-recurring proceeds from asset sales in 2024[247]. - Net cash provided by financing activities during the year ended December 31, 2025 was $80.3 million, compared to net cash used of $63.4 million in 2024, including net borrowings of $98.3 million[248]. Taxation - Income tax expense from continuing operations for the year ended December 31, 2025 was $23.0 million, an increase from $16.8 million in 2024, primarily due to a $8.5 million valuation allowance related to deferred tax assets in Brazil[238]. - The Company's annual effective income tax rate on income from continuing operations was (16.8)% for 2025, (16.3)% for 2024, and (75.3)% for 2023[315]. - Valuation allowances related to deferred tax assets were $210.3 million and $196.8 million at December 31, 2025 and 2024, respectively, primarily for pension liabilities and net operating losses[317]. - Unrecognized tax benefits at December 31, 2025 and 2024 were $5.8 million for both periods, excluding accrued interest and penalties[318]. Contractual Obligations and Provisions - The Company recorded an additional net $30.3 million forward loss provision for large, long-term fixed-price contracts in 2025 due to material and labor cost inflation and supply chain delays[309]. - The Company established a forward loss provision of $11.3 million for the Network Rail contract in the first half of 2025, primarily related to increased estimated manufacturing and materials costs[310]. - The Company recorded additional forward loss provisions of $5.5 million for the Deutsche Bahn contract in 2025, with $18.8 million recorded in Q4 2024 due to homologation challenges and project delays[311]. - For the SBB contract, the Company recorded additional net estimated forward loss provisions of $13.5 million in 2025, including $6.4 million in Q4 2025 related to unanticipated costs during prototype commissioning[312]. - The Company is in discussions with Network Rail regarding contract negotiations, which may include substantial revisions or a potential exit from the contract[313]. - The Company will continue to update its estimates for contract completion, which may change based on negotiations with customers regarding price increases and delivery schedules[313].