Enviri Corporation ((NVRI)) has held its Q4 earnings call. Read on for the main highlights of the call.
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Enviri Corporation’s latest earnings call painted a picture of mixed results, with notable highs and significant challenges. The company celebrated strong performance in its Clean Earth segment, which achieved record revenues and significantly contributed to the overall results. However, Enviri also faced considerable hurdles in its Harsco Environmental and Harsco Rail segments due to unfavorable market conditions and operational issues, resulting in negative cash flows and substantial special charges.
Record Performance by Clean Earth
Clean Earth stood out during the earnings call as a major success story, achieving record revenue, EBITDA, and cash flow in the fourth quarter of 2024. Since 2021, the segment’s EBITDA has more than doubled, with a substantial improvement in profit margins, making it a key driver of Enviri’s financial success.
Highest Adjusted EBITDA in Over a Decade
Enviri reported its highest adjusted EBITDA in over ten years, showcasing a 10% organic increase and a 100 basis point lift in margins. This achievement highlights the company’s efforts in optimizing its operational efficiency and financial performance.
Improved Cash Flow and Safety Measures
The earnings call highlighted that cash flow from operations, particularly from Clean Earth and Harsco Environmental, improved to nearly $200 million. Additionally, the company has enhanced its safety performance, underscoring its commitment to maintaining a safe work environment.
Clean Earth’s Strategic Growth
Clean Earth’s contribution to Enviri’s consolidated EBITDA has grown significantly, from 25% in 2021 to over 50%. The segment is on track for further double-digit EBITDA growth in 2025, reinforcing its strategic importance to Enviri’s future.
Positive Free Cash Flow from Clean Earth and HE
In 2024, Clean Earth and Harsco Environmental generated over $190 million in free cash flow, marking an improvement from the previous year and providing a strong financial foundation for Enviri.
Challenges in Harsco Environmental
Harsco Environmental faced significant challenges due to weaker global steel production, low-priced Chinese steel flooding export markets, and a strong US dollar, impacting its financial performance adversely.
Ongoing Difficulties in Harsco Rail
Harsco Rail continued to struggle with engineered contracts, supply chain disruptions, and inflation, resulting in a negative cash flow impact and adding to Enviri’s financial challenges.
Substantial Special Charges
The company reported special charges totaling $90 million in the fourth quarter, attributed to asset impairments, write-downs, and environmental issues, which weighed heavily on the financial results.
Negative Free Cash Flow
Enviri’s free cash flow for 2024 was negative $34 million, primarily due to large engineer-to-order projects in the Rail business, highlighting the need for strategic adjustments in this segment.
Forward-Looking Guidance
Looking ahead, Enviri Corporation provided key guidance metrics for 2025. The company anticipates adjusted EBITDA to range from $305 to $325 million, reflecting a 5% organic growth. Clean Earth’s EBITDA is projected to grow in double digits, while Harsco Environmental is expected to see a decline. Free cash flow is expected to improve significantly, ranging from $30 million to $50 million, driven by improvements in Rail’s cash flow and decreased pension contributions. Rail’s adjusted EBITDA is anticipated to rise by 50%, supported by price, volume, and efficiency initiatives. Capital spending is planned at $130 to $140 million, focusing on growth in Clean Earth.
In summary, Enviri Corporation’s earnings call presented a mixed bag of outcomes, with Clean Earth delivering exceptional results, while other segments like Harsco Environmental and Rail faced notable challenges. The company is optimistic about future growth in Clean Earth and expects improvements in cash flow, albeit with some anticipated difficulties in other areas. Investors will be keenly watching how Enviri navigates these challenges and leverages its strengths in the coming year.
