Financial Data and Key Metrics Changes - For the full year 2024, Enviri reported revenues of $2.3 billion and adjusted EBITDA of $319 million, marking a 4% year-on-year increase or an 11% increase on an organic basis, the highest adjusted EBITDA in ten years [25][9] - Free cash flow for the year was a negative $34 million, primarily due to cash usage for large engineer-to-order projects in the rail business and delayed collections [27][34] - The covenant net leverage ratio at the end of 2024 improved to 4.07 times [28] Business Line Data and Key Metrics Changes - Clean Earth delivered record earnings and margins, with adjusted EBITDA in 2024 more than double its earnings in 2021, and cash earnings, profit margins, and free cash flow were each two times higher than at the time of acquisition [10][26] - Harsco Environmental's revenues totaled $240 million in Q4, with an organic decline of 4% due to lower service levels from weaker steel production [37] - Rail revenues totaled $77 million in Q4, with adjusted EBITDA of $2 million, reflecting lower aftermarket sales and a less favorable business mix [43] Market Data and Key Metrics Changes - The global steel industry faced significant challenges, with low production levels and site closures impacting Harsco Environmental's performance [14][38] - Steel production was weakest in Europe, North America, and the Middle East, with mill utilization below 73% in Q4 [39] Company Strategy and Development Direction - The company aims to shift its portfolio towards a specialty waste business with higher growth rates and healthy cash flow conversion, with Clean Earth's contribution to consolidated EBITDA growing from 25% to over 50% [11][12] - Enviri plans to increase growth-oriented capital spending in Clean Earth due to meaningful opportunities, while also considering divesting the rail business to reduce financial leverage [20][54] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges in the global steel industry but expressed confidence in the company's ability to manage through cycles and improve cash flow in 2025 [15][21] - For 2025, adjusted EBITDA is expected to be within a range of $305 to $325 million, with Clean Earth's EBITDA projected to grow double digits, offset by Harsco Environmental's decline [51][57] Other Important Information - The company is refreshing its board with expertise in core markets and portfolio strategy, nominating Nick Fanadakis, former CFO of DuPont, to the board [23] - Adjusted diluted loss per share for Q4 was four cents, excluding special items totaling $90 million [32] Q&A Session Summary Question: Clean Earth's volume performance in 2024 - Management noted that volume churn among top retail accounts in 2024 should turn into a tailwind for 2025, expecting a 4-5% volume lift in industrial markets [64][66] Question: Harsco Environmental's contract downside protection - Management indicated that they are likely at the bottom in terms of volume at most plants, with site closures being the bigger impact [68] Question: Clean Earth's IT and facility improvements - Management reported being over halfway through a two-and-a-half-year IT harmonization program and expects high returns from facility investments [73][78] Question: Rail's incremental costs and delivery timelines - Management stated that risk will dissipate significantly once the first vehicle in the series is delivered, which is expected in 12-15 months [81][83] Question: Steel production assumptions for 2025 guidance - Management expects volume growth in India, the Middle East, and Africa, with flat production in other regions [90] Question: PFAS opportunities in Clean Earth - Management is currently treating PFAS-contaminated wastewater and is well-positioned for future opportunities, but no substantial revenue is built into the 2025 plan [96][97] Question: Rail's 2025 cadence - Management suggested spreading the production plan evenly throughout the year for modeling purposes [100]
enviri(NVRI) - 2024 Q4 - Earnings Call Transcript