enviri(US:NVRI)2021-02-24 16:00Financial Performance - Revenues for the year ended December 31, 2020 increased approximately 24% compared to 2019, driven by the acquisitions of Clean Earth and ESOL, and increased sales in the Harsco Rail Segment [192]. - Operating income from continuing operations for the year ended December 31, 2020 decreased approximately 80% compared to 2019, primarily due to decreased customer production levels in the Harsco Environmental Segment and incremental acquisition costs related to ESOL [192]. - Diluted losses per common share from continuing operations for the year ended December 31, 2020 were $0.41, compared to diluted earnings of $0.35 for 2019 [192]. - Total revenues for 2020 increased by $360.1 million or 24% from 2019, driven primarily by the impact of ESOL and Clean Earth acquisitions, which contributed $500.9 million [209]. - Consolidated operating income for 2020 was $21.1 million, a decrease of $83.2 million or 79.8% from $104.3 million in 2019, with a consolidated operating margin dropping to 1.1% from 6.9% [207]. Segment Performance - Harsco Environmental Segment revenues decreased by 11.6% to $914.4 million in 2020, while Harsco Clean Earth Segment revenues increased by 265.5% to $619.6 million [195]. - The Harsco Clean Earth Segment has shown resilience, with business levels returning to near pre-COVID levels, supported by the ESOL acquisition [194]. - Harsco Environmental segment revenues decreased to $914.4 million in 2020 from $1,034.8 million in 2019, reflecting a net effect of price/volume changes of $(73.7) million and foreign currency translation losses of $(24.4) million [198]. - Harsco Clean Earth segment revenues for 2020 were $619.6 million, significantly impacted by the acquisition of ESOL, which added $500.9 million in revenue [201]. - The Harsco Rail segment reported revenues of $329.8 million in 2020, up from $299.4 million in 2019, with a positive impact from increased railway contracting services [205]. Cash Flow and Capital Expenditures - Cash flows provided by operating activities for the year ended December 31, 2020 were $53.8 million, an increase of $54.0 million compared to 2019 [192]. - Capital expenditures for property, plant, and equipment for the year ended December 31, 2020 were $120.2 million, a decrease of 35.0% compared to 2019 [192]. - Net cash provided by operating activities in 2020 was $53.8 million, an increase of $54.0 million from 2019, driven by favorable changes in net working capital and the absence of a $103 million tax payment from the sale of AXC in 2019 [233]. - Net cash used by investing activities in 2020 was $520.6 million, a decrease of $388.5 million from 2019, reflecting reduced proceeds from business sales and decreased cash paid for acquisitions [236]. - Net cash provided by financing activities in 2020 was $487.0 million, an increase of $361.2 million from 2019, primarily due to higher net cash borrowings of $500.4 million [237]. Expenses and Costs - Selling, general and administrative expenses increased by $75.0 million or 30% in 2020, largely due to acquisition-related costs and the inclusion of expenses from ESOL and Clean Earth acquisitions [211]. - The total cost of services and products sold for 2020 rose by $356.5 million or 31% from 2019, primarily due to the impact of ESOL and Clean Earth acquisitions [210]. - Interest expense in 2020 was $59.7 million, an increase of $23.1 million or 63% compared to 2019, primarily due to higher outstanding borrowings and interest rates [216]. - The Company undertook significant cost reduction measures in 2020, including a tiered approach to potential supplemental cost mitigation efforts in response to COVID-19 [29]. Tax and Liabilities - The effective income tax rate for continuing operations in 2020 was 8.9%, a significant decrease from 35.8% in 2019, mainly due to increased acquisition costs and a favorable tax adjustment related to net operating losses [222]. - Total other comprehensive loss was $55.3 million in 2020, compared to a loss of $0.1 million in 2019, primarily driven by lower discount rates for pension plans [229]. - The Company has $4.3 million of potential long-term tax liabilities related to uncertain tax positions as of December 31, 2020 [245]. - Unrecognized tax benefits at December 31, 2020, were $2.9 million, down from $3.1 million in 2019 [307]. Acquisitions and Goodwill - The Company acquired 100% of ESOL in 2020 and Clean Earth in 2019, enhancing its waste processing capabilities [277]. - Goodwill balances increased from $738.4 million in 2019 to $902.1 million in 2020, primarily allocated to the Harsco Environmental Segment [278]. Pension and Insurance - The Company recorded a net periodic pension income increase of approximately $8 million in 2021, primarily due to higher plan asset values [29]. - Defined benefit pension income in 2020 was $7.2 million, an increase from $5.5 million in 2019, attributed to higher plan asset values [221]. - The global weighted-average discount rate for defined benefit pension plans was 1.6% as of December 31, 2020, with U.K. and U.S. rates at 1.4% and 2.4%, respectively [265]. - The expected long-term rate of return on plan assets decreased from 5.6% in 2020 to 5.1% in 2021, impacting the net periodic pension cost (NPPC) positively [266]. Future Outlook - The Company expects long-term growth in the Harsco Environmental Segment to be driven by investments, innovation, and economic growth supporting higher global steel consumption [193]. - The Company expects to have sufficient financial liquidity and borrowing capacity to support its business strategies despite the impacts of COVID-19 [232]. - The Company expects to utilize cash from operations and borrowings to meet future cash requirements for operations and growth initiatives [244].