Financial Data and Key Metrics Changes - In Q3, total revenue was $575 million, and adjusted EBITDA was $74 million, both representing highs for the year but lower than initial expectations [12][21] - Adjusted diluted loss per share was $0.08 for the quarter, excluding unusual items totaling $12 million pre-tax [13] - Adjusted free cash flow for the quarter was $6 million, which was $20 million above Q2 [14] Business Line Data and Key Metrics Changes - Clean Earth revenue grew 6% year-over-year to $250 million, with adjusted EBITDA reaching $43 million and a margin of 17.3% [17] - Harsco Environmental segment revenues totaled $261 million, with adjusted EBITDA of $44 million, impacted by divestitures and site closures [16] - Harsco Rail revenues were $64 million, with an adjusted EBITDA loss of $4 million, reflecting lower equipment volumes and higher manufacturing costs [18] Market Data and Key Metrics Changes - Steel production at customer locations rose modestly, with higher output in the U.S., India, and the Middle East, offset by lower production in Canada and Brazil [16] - Customer utilization rates in Europe remained below 70%, indicating room for improvement across the service portfolio [17] Company Strategy and Development Direction - The company is undergoing a strategic review to unlock value in its business portfolio, particularly focusing on the Clean Earth business [5][6] - A potential simultaneous sale of Clean Earth along with a taxable spin of Harsco Environmental and Rail businesses is being considered to minimize tax leakage for shareholders [6] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, expecting strong performance from Clean Earth in Q4 and a better year for Harsco Environmental in 2026 [9][11] - The outlook for Harsco Rail has been lowered due to demand weakness, but management is confident in the earnings and cash flow potential of the company [11] Other Important Information - The company amended its credit agreement to allow for potential transactions involving Clean Earth, providing additional flexibility in financial covenants [15] - The midpoint of EBITDA guidance was reduced by $27 million, primarily driven by rail, with free cash flow guidance reduced by $50 million [20] Q&A Session Summary Question: Update on the strategic review process - Management indicated strong interest in the Clean Earth business and is optimistic about unlocking its value before year-end [24] Question: Clarification on the $27 million EBITDA guidance drop - The majority of the drop is attributed to rail, with adjustments made to de-risk the outlook based on current order visibility [26] Question: Performance of Clean Earth and soil business - Management noted that while hazardous waste is expected to see a 15% EBITDA increase, the soil and dredge business is facing timing issues with project starts [28][29] Question: Sustainability of industry multiples - Management expressed confidence that the multiples expected from precedent transactions would be consistent with current market conditions [34] Question: Current run rate for baseline rail business - The baseline EBITDA for the rail business is currently in the $30 million range, lower than the historical $35 million-$40 million due to demand drop [36]

Financial Data and Key Metrics Changes - Total revenue for Q2 2025 was $562 million, down approximately 6% on an organic basis compared to the previous year [19][23] - Adjusted EBITDA for the quarter was $65 million, with adjusted diluted loss per share at $0.22, excluding unusual items [19][23] - Adjusted free cash flow for the quarter was a negative $14 million, expected to improve in Q3 and Q4 [25][33] Business Line Data and Key Metrics Changes - Clean Earth reported revenues of $246 million, up 4% year-over-year, with adjusted EBITDA reaching $25 million, up 5% [27] - Harsco Environmental's revenues totaled $258 million with adjusted EBITDA of $40 million, impacted by divestitures and lower service levels [25][26] - Rail revenues were $58 million with an adjusted EBITDA loss of $3 million, attributed to lower volumes and unfavorable product mix [29] Market Data and Key Metrics Changes - The U.S. steel market showed a modest uptick in volumes due to added trade protections, but overall volumes remained flat [12][26] - Demand for standard equipment and parts in the Rail segment has slowed considerably, with year-to-date orders down more than 30% [14][30] Company Strategy and Development Direction - The company is evaluating strategic alternatives to unlock value, including a potential sale or separation of the Clean Earth business [7][8] - Focus on stabilizing the Rail segment while continuing to invest in new service capabilities and building a strong business pipeline in Clean Earth [8][11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the potential for improved results in the second half of the year, particularly in Harsco Environmental due to new sites and cost reduction initiatives [12][54] - The company has lowered its outlook for the year due to challenges in the Rail segment, but remains optimistic about the overall earnings and cash flow potential [17][33] Other Important Information - The company is undergoing a formal evaluation of its business portfolio with the assistance of advisors, focusing on options that may unlock value sooner [8][9] - Adjustments in forward loss provisions at Harsco Rail were primarily due to revisions in estimated costs to complete contracts [63] Q&A Session Summary Question: Is the reduced outlook driven entirely by Rail? - The reduction in outlook for EBITDA and free cash flow is entirely due to the reduction in Rail, stemming from demand and market issues [39][40] Question: What is the impact of tariffs on Clean Earth? - No direct impact from tariffs has been observed; volume trends in the hazardous waste business remain strong [42] Question: What is driving the expected improvement in Harsco Environmental margins? - New sites ramping up and cost reduction initiatives are expected to contribute to margin improvement in the second half of the year [54] Question: How long do down cycles in Rail typically last? - The current down cycle is expected to be shorter-lived, as it is not indicative of a recession but rather a temporary cutback in spending by customers [56] Question: What prompted the Board to consider strategic options now? - The persistent discount to the sum of parts value and increased confidence in potential outcomes prompted the strategic review [61][62] Question: Can you provide details on the forward loss provisions at Harsco Rail? - The charges relate to Network Rail and SBB, with adjustments based on revised cost estimates to complete contracts [63]