enviri(US:NVRI)2025-11-10 15:00Financial 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]