Enviri (NVRI) Q1 2026 Earnings Call Transcript

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DATE

Monday, May 11, 2026 at 4:30 p.m. ET

CALL PARTICIPANTS

• Chairman and Chief Executive Officer — F. Nicholas Grasberger
• President and Chief Operating Officer, Incoming CEO — Russell Hochman
• Senior Vice President and Chief Financial Officer — Thomas G. Vadaketh
• Incoming Chief Financial Officer — Pete Meinen
• Vice President, Investor Relations — David Martin

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RISKS

• Ongoing economic uncertainty was cited for both Harsco Environmental and Rail, including geopolitical risks in the Middle East and unclear effects of higher energy prices in Europe and globally.
• The Rail business order book is behind historical levels, and equipment demand remains weak, leading to concerns about revenue coverage for the year.
• The Rail segment continues to post negative cash flow, with negative $18 million attributed primarily to ETO contracts.

TAKEAWAYS

• Clean Earth sale and spin-off milestones -- Shareholder approval for the Clean Earth sale was secured, and the SEC declared the spin-off Form 10 effective; both transactions are expected to close around June 1.
• Cash conversion range -- Management reaffirmed guidance at $14.5 per share to $16.5 per share for the Clean Earth divestiture payout.
• Total revenue -- $550 million, unchanged year over year, with segment variations.
• Adjusted EBITDA -- $65 million, with Harsco Environmental and Rail segments consistent year over year, offset by lower Clean Earth volumes.
• Adjusted diluted EPS -- $0.10, reflecting stable underlying segment performance and one-time costs for the Clean Earth sale and Rail restructuring.
• Adjusted free cash flow -- Negative $6 million, noted as a seasonally weak cash quarter; Rail generated negative $18 million cash flow, mainly from ETO contracts.
• Harsco Environmental revenue -- $257 million, a 6% increase year over year, driven by new site volume, increased service demand, improved site operations, and FX benefit.
• Harsco Environmental adjusted EBITDA -- $38 million, surpassing internal expectations for the period.
• Rail revenue -- $67 million, with an adjusted EBITDA loss of $1 million; base Rail operations produced positive EBITDA.
• Order book commentary -- Pete Meinen stated, "We are a little bit behind what we have historically seen in terms of a filled order book relative to our estimated revenue for the new equipment."
• Aftermarket revenue share -- Aftermarket represented roughly 40% of Rail revenues, with EBITDA margins approximately double those of OEM equipment.
• Rail ETO contract update -- Most of the first group of SBB vehicles have been delivered and accepted; two remain pending, and homologation for the second type has begun, targeted for completion in early 2027.
• Outlook guidance -- Harsco Environmental full-year adjusted EBITDA remains at $170 million to $180 million; Rail's EBITDA loss range remains $19 million to $26 million; combined, this implies pro forma EBITDA of about $140 million for new Enviri Corporation at midpoint.
• Free cash flow outlook -- Guidance for modest positive free cash flow is unchanged.
• Rail equipment demand -- Demand for equipment continues to lag, and the full-year order book has "not yet filled."
• EU steel trade measures -- Alignment on quota and tariff changes was reached in April, with formal endorsement expected in May and implementation in July.
• Reporting transition -- Once Clean Earth is sold, it will be treated as discontinued operations, and transitional services will be provided to Veolia as part of the handoff.
• Key management changes -- Grasberger and Vadaketh will depart following transaction close; Hochman will become CEO, and Meinen will become CFO.

SUMMARY

Enviri Corporation (NYSE:NVRI) finalized key milestones for the Clean Earth sale and the spin-off of the new company, with closing anticipated by June 1. Segment dynamics showed Harsco Environmental growing year over year, offsetting flat total revenue and continued challenges in Clean Earth. Management confirmed that full-year EBITDA and free cash flow guidance remain unchanged, despite order book shortfalls and segment-specific uncertainties. The call detailed operational focus areas and highlighted key leadership transitions supporting the new company's next phase.

• Russell Hochman emphasized driving self-help improvement initiatives and a strategic review underway in both main segments to refine business priorities.
• Rail’s progress on major European ETO contracts, particularly the SBB project, is a management priority, with cash flow expected to turn positive by 2027.
• The company reported ongoing restructuring in Rail targeting supply chain and inventory reductions, with a heavier focus on capital-light businesses and aftermarket growth.
• Upcoming changes in EU steel quotas and tariffs are expected to affect Harsco Environmental's market environment from July onward.

INDUSTRY GLOSSARY

• ETO (Engineer-to-Order): Customized manufacturing contracts in Rail requiring unique vehicle engineering, with revenue and cost outcomes dependent on specific design and client requirements.
• Homologation: Regulatory process by which new rail vehicles receive required certification for operation in a specific market, often with material financial timeline implications.
• Aftermarket: Sales and services related to parts and maintenance following the original equipment sale; generally providing higher margins than initial equipment contracts.

Full Conference Call Transcript

David Martin: Thank you, Chuck, and welcome to everyone joining us this afternoon. With me today is F. Nicholas Grasberger, our Chairman and Chief Executive Officer; Russell Hochman, our President and Chief Operating Officer and incoming CEO of new Enviri Corporation; Thomas G. Vadaketh, our Senior Vice President and Chief Financial Officer; and Pete Meinen, the incoming CFO of new Enviri Corporation. Today, we will discuss our results for the first quarter as well as our outlook for our Environmental and Rail. After our prepared remarks, we will take your questions. Our quarterly earnings release and slide presentation for the call are available on our website.

During today’s call, we will make statements that are considered forward-looking within the meaning of the federal securities laws. These statements are based on our current knowledge and expectations and are subject to certain risks and uncertainties that may cause actual results to differ materially from those forward-looking statements. For a discussion of such risks and uncertainties, see the Risk Factors section in our most recent 10-K and as updated in subsequent 10-Qs. The company undertakes no obligation to revise or update any forward-looking statement. Lastly, on this call, we will refer to adjusted financial results that are considered non-GAAP for SEC reporting purposes.

A reconciliation to GAAP results is included in the earnings release today as well as the slide presentation. I will now turn the call to F. Nicholas Grasberger to begin his prepared remarks.

F. Nicholas Grasberger: Thank you, David, and good afternoon, everyone. Let me start with a brief status update on the Clean Earth sale and spin-off of new Enviri Corporation. Last week, our shareholders voted to approve the Clean Earth sale, and the Form 10 filing related to the new Enviri Corporation spin-off was approved by the SEC and declared effective. As a result, we have now cleared the key regulatory milestones for both the sale and spin-off transactions, and expect to close in approximately three weeks, or June 1, which is in line with our anticipated timing. We will announce the cash payout to shareholders from the Clean Earth sale shortly prior to closing.

Our cash conversion range remains $14.5 to $16.5 per share. We are working diligently through the details related to the payout and will not comment further today on potential outcomes. With the Clean Earth sale closing soon, this will be my last earnings call with Enviri Corporation. It has been a privilege and a pleasure to lead this company over the past 12 years. The professionalism displayed across the company over the years has been unmatched, and I am grateful for the hard work and consistent support of our employees and our board.

I would like to recognize the employees of Clean Earth and our entire Enviri Corporation team for their efforts and dedication in creating a better business and completing this successful yet complex transaction. It certainly provides a great outcome for our shareholders. I wish the Clean Earth team well, and I am confident they will thrive as part of Veolia. I would also like to recognize Thomas G. Vadaketh, who will be leaving Enviri Corporation when the transaction closes. Thomas G. Vadaketh has been a driving force behind the tremendous value creation for our shareholders during his 2.5-year tenure. Thomas G.

Vadaketh is liked and respected by all, and I simply cannot imagine a better partner for me and our colleagues during his time with our company. With that said, there is more value to be created here through new Enviri Corporation and under the leadership of Russell. New Enviri Corporation’s implied valuation today is compelling, and we believe Harsco Environmental and Harsco Rail have attractive earnings growth potential. These are strong businesses poised to improve as demand rebounds in their respective markets. Margin growth for each will be further supported by the initiatives contemplated by Russell and team. New Enviri Corporation is in very good hands, and I look forward to watching its continued progress as a sizable shareholder.

Russell, Thomas G. Vadaketh, and Pete Meinen will comment further on Q1, our outlook, and our priorities. Now over to Russell.

Russell Hochman: Thank you, Nick, and good afternoon, everyone. Harsco Environmental and Rail started the year with positive momentum, each exceeding our expectations as a result of better volumes, positive operational execution, and prudent cost management. I am optimistic about what is ahead for new Enviri Corporation. Harsco Environmental and Rail are market-leading, attractive businesses that we believe are at an inflection point. New Enviri Corporation will benefit from a strong capital structure and with less burden from related interest costs, and we are confident our internal actions will drive margin improvement. As market conditions improve, we will be even better positioned to drive earnings and cash flow growth, further reduce debt, and continue to enhance shareholder value.

Next, I will provide an update on my key priorities. These include our deep-dive business review of both Harsco Environmental and Rail, aimed at driving self-help improvement initiatives to boost business performance over the coming quarters and years, and the de-risking of Rail ETOs. The review is ongoing at an accelerated pace. We are working to refine our business strategy and priorities as well as to identify levers to reduce our complexity and drive operational excellence. Through this process, we are challenging ourselves to think critically about our business approach and best practices and, importantly, to make often difficult decisions that will position us to achieve our goals.

In Harsco Environmental, we are focused on actions that will improve our site-level productivity and maintenance efficiency as well as opportunities to optimize our SG&A and support costs. In Rail, initial restructuring is underway. We are taking actions to improve our supply chain and reduce inventory. We are prioritizing Rail’s aftermarket business where margins are attractive and significant opportunities exist, as well as evaluating other capital-light business opportunities. And we continue to evaluate further actions to optimize our manufacturing operations and reduce our global footprint and SG&A cost. Overall, I am pleased with our progress through this review and encouraged by the engagement and commitment of our people.

We will have more to communicate on this initiative in the months ahead. Our goal is to show demonstrable progress in 2026 and head into 2027 with key implementation programs in place. With regard to Rail’s European ETO contracts, I will reiterate that reducing or minimizing our ETO risk is critical and a top priority for me in 2026, and we are on track to meeting this commitment. For SBB, most of the first group of vehicles has been delivered and accepted by the customer. The remaining two of 48 vehicles are expected to be accepted by the customer in the coming months.

Homologation for the second vehicle type has started, and we expect to complete that process in early 2027. Overall, we believe that we are in a good position on the SBB contract and that its risk profile has improved drastically in the past year. As a reminder, we anticipate turning cash positive in 2027 for this project. For our contract with Deutsche Bahn, the first three vehicles are progressing as we look for ways to maximize net cash flows and otherwise de-risk the contract. For Network Rail, we are actively engaging with our customer to improve the financial outlook for the contract and otherwise minimize the volatility and risk. This de-risking is among the highest priorities for new Enviri Corporation.

The opening capital structure for new Enviri Corporation will provide us with the financial flexibility to pursue any and all de-risking options. I am optimistic about what we can accomplish over the next year, and I am extremely confident in our team. With the fresh start provided by the Clean Earth transaction to optimize our capital structure, there is considerable value creation potential at new Enviri Corporation, and we are laser-focused on priorities that will maximize this opportunity. Lastly, let me officially welcome my former colleague, Pete, back to the team. Pete knows Harsco Environmental and Rail very well, and he has already been a valued leader in the formation of our strategy for new Enviri Corporation.

I cannot imagine a better partner for me and our colleagues during this exciting time. I would also like to acknowledge Nick and Thomas G. Vadaketh as they prepare to depart the company. Thomas G. Vadaketh joined the company during a time of considerable uncertainty, successfully leading numerous financial and strategic initiatives and contributing to the transaction soon to be completed. He has been a great partner to me during his time with Enviri Corporation. Nick, of course, has been the visionary leader of this company for more than a decade. He brought stability to Enviri Corporation and instituted strategic direction, business process, and core values, all of which made a better company.

I am grateful to have served with Nick, and I will benefit from my experience with him as we enter the next phase of growth under new Enviri Corporation. Now let me turn it over to Thomas G. Vadaketh to discuss the quarter in detail.

Thomas G. Vadaketh: Thank you, Russell, and good afternoon, everyone. I will briefly review the first quarter results and then hand it over to Pete to comment on the outlook. Please turn to our first-quarter performance details starting on Slide 4. In the first quarter, total revenue was $550 million and adjusted EBITDA was $65 million. Revenues were unchanged from the prior year. Adjusted earnings for Harsco Environmental and Rail were little changed year over year, while Clean Earth results were impacted by lower volumes. Our adjusted diluted earnings per share was 10¢ for the quarter.

The unusual items in the quarter included strategic costs connected to the sale of Clean Earth and the spin-off of new Enviri Corporation, as well as costs related to Rail restructuring, which we have mentioned previously. Lastly, our adjusted free cash flow for the quarter was -$6 million during a traditionally weak cash quarter for the company. Cash performance for Harsco Environmental and Rail did improve from the prior year, although Rail remained a consumer of cash. Rail’s negative cash flow was $18 million, which is largely attributable to its ETO contracts. Please turn to Slide 5 and our Harsco Environmental segment.

Segment revenues totaled $257 million, an increase of 6% compared with the prior-year quarter, and adjusted EBITDA totaled $38 million, exceeding our expectations for the quarter. The year-over-year earnings change reflects volume from new sites, higher services demand, and operational improvements at existing sites as well as FX benefits. Customer steel output was up modestly, with higher output in India and the Middle East, mostly offset by lower production in Europe. These favorable impacts were offset by contract exits, lower ECO product volumes, and a change in business mix. Lastly, the trade measures to further support the EU steel industry continue to progress.

Alignment on the quota and tariff changes was achieved in mid-April, and formal endorsement is expected later in May, with implementation anticipated in July. Now please turn to Slide 6 to discuss Clean Earth. Clean Earth also executed well in the quarter, although its financial results were impacted by sluggish project-related work and industrial volumes, much of which related to winter storms in the first quarter. These extreme weather conditions impacted our peers as well and were most pronounced in late January and then again in mid-March. Now please turn to Slide 7 and our Rail business. Rail revenues totaled $67 million and its adjusted EBITDA loss was $1 million in the first quarter.

Rail’s base business generated positive EBITDA in the quarter, exceeding our expectations. Its modest loss is attributed to overhead costs supporting its ETO contracts. The change in earnings year over year reflects higher contributions from contracted services work, which was offset by lower equipment volumes, for which demand remains weak, as we have discussed in the past, and higher operating costs. As with Nick, this will be my final earnings call with Enviri Corporation. It has been a pleasure working with Nick, our corporate team, and the business leaders within each of our divisions. Nick has led this company through its transformation, embedding strong values with a steady focus on improving the businesses and creating value.

I am proud of what this collective team has accomplished under his leadership. I have also greatly appreciated the support from our analysts, our shareholders, our banks, and our debt holders over the years. Russell has been a key leader and a partner to me, and the company is in great hands as he takes over as CEO. I wish him, Pete, and the entire team the very best. Now over to Pete.

Pete Meinen: Thanks, Thomas G. Vadaketh, and hello, everyone. First, let me say how excited I am to be back here at Enviri Corporation. The tremendous success of Clean Earth and the hard work by Nick, Thomas G. Vadaketh, and the team to unlock the value in Enviri Corporation is truly remarkable. And I am looking forward to continuing that success with new Enviri Corporation, working with Russell and the senior leadership team to improve margin growth, reduce volatility and risks at Rail, and help to drive cash flow and earnings growth. So let me provide my perspective on the full-year and next-quarter outlook of new Enviri Corporation.

In summary, and as Russell mentioned, our guidance for both Harsco Environmental and Rail, and therefore new Enviri Corporation, is unchanged for 2026. Harsco Environmental’s adjusted EBITDA range remains $170 million to $180 million, and Rail’s EBITDA loss range remains $19 million to $26 million. As stated previously, these ranges translate to pro forma EBITDA of approximately $140 million for new Enviri Corporation, using the midpoint of each range. Our expectation for modest free cash flow during the year is also unchanged at the present time. While Q1 results were stronger than expected, there is still a significant amount of economic uncertainty. For Harsco Environmental, this uncertainty includes the geopolitical situation in the Middle East, where we maintain some operations.

It is also unclear how higher energy prices will impact business conditions in Europe and globally in the coming quarters. In Rail, the demand for equipment continues to remain challenged, and we have not yet filled our order book for the year. With that said, our EBITDA guidance for the second quarter can be found on Slide 8. Harsco Environmental performance is expected to be comparable to 2025, while Rail’s EBITDA is anticipated to decrease as a result of lower volumes. And I will remind you that our financial reporting for the year will include a mix of Enviri Corporation and new Enviri Corporation.

Once the sale of Clean Earth happens, it will be reported as a discontinued operation for financial reporting purposes. Also, corporate results will reflect that new Enviri Corporation will continue to support Clean Earth through a transition services agreement with Veolia for a period of time after closing. Before I hand it back to the operator for Q&A, let me once again say how great it is to be with you all again. I came back to Enviri Corporation simply because I am a firm believer in the value creation potential of Harsco Environmental and Rail, and I am 100% aligned with Russell’s priorities.

I look forward to catching up with many of you and reporting on our progress in the upcoming quarters. Thanks. I will now hand the call back to the operator for Q&A.

Operator: Thank you. We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. And to withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. Please press star then 1. The first question will come from Robert Brown with Lake Street Capital Markets. Please go ahead.

Robert Brown: Good afternoon. I guess the first question is on the Rail business. I think you talked a little bit about the order book still needing to get filled. Could you give us some color on how the order book typically fills, and maybe the visibility that brings as it fills up?

Pete Meinen: Yes. This is Pete. Hey, Robert, how are you doing? Normally, we would expect to see pretty much a proportionate and maybe even slightly more than proportionate order book by this time, so we are running a good bit behind. It is really just due primarily to OEM equipment in North America. We expect it to come back a little bit in the second half of the year, but as of this point in time, we are a little bit behind what we have historically seen in terms of a filled order book relative to our estimated revenue for the new equipment.

Robert Brown: Okay. Thanks for the color there. And then also aftermarket—I think Russell mentioned that as an area of focus, and I know it is a tremendous area—how much of your business is aftermarket, and what are some of the things you could do there?

Pete Meinen: Yes. Roughly about 40% of our revenues is aftermarket, and we had a pretty good aftermarket in Q1. We expect that to continue at a similar pace in the rest of the year. That is clearly an area of focus for us because it not only is a good offset to the decline in OEM, but it also provides pretty good margins. It has pretty much 2x the margins that the original equipment has, so that is the primary reason we are focusing on it.

Operator: Again, if you have a question, please press star then 1. This will conclude our question and answer session. I would like to turn the conference back over to David Martin for any closing remarks. Please go ahead.

David Martin: Thank you, Chuck, and thank you to everyone joining us this afternoon. Feel free to contact me with any follow-up, and as always, we appreciate your interest in Enviri Corporation. Have a great day. Take care.

Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.

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