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EC

ENVIRI Corp (NVRI)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 revenue was $562.3M and adjusted EBITDA was $65.0M; GAAP diluted EPS from continuing operations was -$0.58 and adjusted diluted EPS was -$0.22 . Versus Q1, revenue rose modestly while adjusted EBITDA and adjusted EPS softened .
  • Relative to S&P Global consensus, results were weaker: revenue missed ($562.3M vs $576.6M*), EPS missed (-$0.22 vs -$0.12*), and EBITDA missed ($65.0M vs $70.9M*) . Values retrieved from S&P Global.
  • Full-year guidance was cut: adjusted EBITDA to $290–$310M (from $305–$325M) and adjusted FCF to $15–$35M (from $30–$50M), driven entirely by a weaker Rail outlook; Q3 guidance introduced with adjusted EBITDA of $76–$86M .
  • Strategic alternatives review announced (including potential tax-efficient sale or separation of Clean Earth), creating a meaningful portfolio catalyst and potential rerating path for the stock .

What Went Well and What Went Wrong

What Went Well

  • Clean Earth delivered record Q2 earnings with margin at 16.3%, supported by higher volumes, pricing, and efficiency initiatives; management expects margins to climb in 2H as disposal outages normalize (“temporary impact”) .
  • Harsco Environmental remained resilient despite subdued steel volumes; initiatives and new sites are expected to drive “considerable” improvement in 2H (“new sites ramping up…cost reduction initiatives”) .
  • The Board commenced a formal strategic alternatives process to unlock sum-of-the-parts value, specifically highlighting Clean Earth’s high strategic value in a consolidating industry .

What Went Wrong

  • Rail materially underperformed: revenues fell 28% YoY to $58M, adjusted EBITDA was -$3M, and operating loss widened to -$20M on weak equipment/parts/technology volumes, higher manufacturing costs and unfavorable mix .
  • Additional forward-loss provisions were recorded (≈$15.9M) largely tied to Network Rail and SBB as cost-to-complete estimates were updated; demand weakness drove unusually low standard equipment bookings with YTD orders down >30% .
  • Consolidated adjusted free cash flow was -$14.0M in Q2 (vs +$9.5M in Q2’24) as lower cash earnings and higher capex weighed; operating cash flow fell to $22.0M (vs $39.0M) .

Financial Results

MetricQ4 2024Q1 2025Q2 2025Consensus (Q2 2025)
Revenues ($USD Millions)$559.0 $548.3 $562.3 $576.6*
GAAP Diluted EPS ($)-$1.03 -$0.15 -$0.58 N/A
Adjusted Diluted EPS ($)-$0.04 -$0.18 -$0.22 -$0.12*
Adjusted EBITDA ($USD Millions)$70.2 $66.9 $64.7 $70.9*
Adjusted EBITDA Margin (%)12.6% 12.2% 11.5% N/A
Operating Cash Flow ($USD Millions)$36.3 $6.6 $22.0 N/A
Adjusted Free Cash Flow ($USD Millions)$7.5 -$13.2 -$14.0 N/A

Values retrieved from S&P Global for the consensus column.
Notes: Company “Adjusted EBITDA” is non-GAAP and may differ from S&P’s EBITDA definition .

Segment breakdown (Q2 2025 vs Q2 2024):

SegmentMetricQ2 2024Q2 2025
Harsco EnvironmentalRevenues ($M)$292.9 $258.0
Operating income (GAAP, $M)$20.3 $4.3
Adjusted EBITDA ($M)$49.2 $39.9
Adjusted EBITDA Margin (%)16.8% 15.5%
Clean EarthRevenues ($M)$236.1 $246.3
Operating income (GAAP, $M)$23.9 $24.6
Adjusted EBITDA ($M)$38.1 $40.1
Adjusted EBITDA Margin (%)16.1% 16.3%
Harsco RailRevenues ($M)$81.0 $58.0
Operating income (GAAP, $M)-$3.1 -$20.3
Adjusted EBITDA ($M)$7.4 -$3.3
Adjusted EBITDA Margin (%)9.1% -5.7%

KPIs and operational metrics:

KPIQ1 2025Q2 2025
Rail YTD ordersHealthy orders in base business (qualitative) Down >30% (standard equipment bookings anemic)
Operating Cash Flow ($M)$6.6 $22.0
Adjusted Free Cash Flow ($M)-$13.2 -$14.0

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted EBITDA ($M)FY 2025$305–$325 $290–$310 Lowered
Adjusted Free Cash Flow ($M)FY 2025$30–$50 $15–$35 Lowered
GAAP Loss from Continuing Ops ($M)FY 2025$(36)–$(17) $(74)–$(56) Lowered
GAAP Diluted EPS (cont. ops)FY 2025$(0.50)–$(0.26) $(0.97)–$(0.75) Lowered
Adjusted Diluted EPS (cont. ops)FY 2025$(0.34)–$(0.11) $(0.52)–$(0.30) Lowered
Net Cash Provided by Operating Activities ($M)FY 2025$156–$186 $141–$171 Lowered
Net Interest Expense (ex-unusual) ($M)FY 2025$105–$109 $107–$110 Raised
Pension Expense (Non-Operating) ($M)FY 2025~$20 ~$21 Raised
Tax Expense (ex-unusual) ($M)FY 2025$28–$33 $26–$31 Lowered
Net Capital Expenditures ($M)FY 2025$130–$140 $130–$140 Maintained
Q3 2025 GAAP Loss ($M)Q3 2025N/A$(12)–$(3) Initiated
Q3 2025 Adjusted EBITDA ($M)Q3 2025N/A$76–$86 Initiated
Q3 2025 GAAP Diluted EPSQ3 2025N/A$(0.16)–$(0.05) Initiated
Q3 2025 Adjusted Diluted EPSQ3 2025N/A$(0.10)–$0.01 Initiated

Earnings Call Themes & Trends

TopicQ4 2024 (Previous-2)Q1 2025 (Previous-1)Q2 2025 (Current)Trend
Strategic alternativesBoard considering portfolio options; focus on Clean Earth value and deleveraging No formal process disclosed Formal strategic review announced; potential sale/separation of Clean Earth Emerging
Rail demand/backlogBase business strong; ETOs a headwind; cash consumption in ETOs Healthy standard equipment orders; DB amendment reduces risk Orders paused; YTD down >30%; lower demand across US/Canada/Mexico/China Worsening short-term
Tariffs/macroSteel market challenged by Chinese exports; EU actions needed Minimal direct tariff impact; weaker USD helpful Rail weakness partly due to global trade tensions; mixed outlook Mixed
Clean Earth performanceRecord Q4 margins and cash flow; margin expansion drivers Record Q1; margin 16.2%; pipeline robust Record Q2 earnings; margin 16.3%; disposal outages temporary Improving
Harsco EnvironmentalSoft steel volumes; site exits; FX headwinds Stable like-for-like; stronger 2H expected New sites ramping; cost actions; 2H improvement expected Improving 2H
Regulatory/legalEnvironmental matter charges in HE; impairments No new major issues highlighted No new major regulatory items highlighted Stabilizing
IT/R&D executionOne Clean Earth IT program ~halfway through; facility improvements planned Ongoing IT platform; productivity benefits anticipated IT project on track; further productivity benefits next year Advancing

Management Commentary

  • “Clean Earth achieved record Q2 earnings while continuing to generate strong free cash flow, and Harsco Environmental again delivered consistent performance despite steel-industry volumes remaining subdued. Rail results were below our expectations and negatively impacted by weak demand and ongoing operating challenges.” — CEO Nick Grasberger .
  • “Demand for standard equipment and parts has slowed considerably since the end of Q1… We attribute this softness to economic and global trade uncertainty… As a result, we have reduced our outlook for the year.” — CEO Nick Grasberger .
  • “Q3 adjusted EBITDA is expected to range from $76M to $86M. Each of our segments is anticipated to see sequential improvement in earnings.” — CFO Tom Vadaketh .
  • “The Board has authorized a comprehensive review of strategic alternatives… including a tax-efficient sale or separation of the Clean Earth business.” — CEO Nick Grasberger .

Q&A Highlights

  • Guidance reduction is “entirely due to the reduction in rail,” with FX now only a slight negative YoY versus initial expectations .
  • Clean Earth margin softness stemmed from temporary disposal outages requiring costlier alternatives; mix effects (soil & dredge weaker) also weighed, but margins expected to climb sequentially .
  • Rail forward-loss provisions ($15M) were mainly Network Rail ($10M) and SBB (~$4–5M) as cost-to-complete estimates were revised; negotiations with Network Rail could lead to improved terms or an exit .
  • New Rail leadership with operational focus is improving supply chain/warehouse-to-plant logistics; team upgrades in finance and operations increase confidence in resolving issues .
  • Harsco Environmental 2H uplift expected from new sites, cost reductions, and focus on underperforming locations; some US volume uptick offset elsewhere .

Estimates Context

  • Wall Street consensus (S&P Global) for Q2 2025: Revenue $576.6M*, EPS -$0.12*, EBITDA $70.9M*; 3 estimates for revenue/EPS [functions.GetEstimates].
  • Actuals vs consensus: Revenue $562.3M (miss), Adjusted Diluted EPS -$0.22 (miss), Adjusted EBITDA $64.7–$65.0M (miss) . Values retrieved from S&P Global.
  • Note: S&P’s EBITDA “actual” captured as $41.7M* may reflect a differing definition versus company Adjusted EBITDA ($65.0M); investors should anchor on consistent definitions when comparing [functions.GetEstimates]. Values retrieved from S&P Global.
  • Given Rail-driven guidance cuts, Street models likely need lower Rail volumes/margins, higher manufacturing costs, and added caution on ETO loss provisions; CE margin trajectory and HE 2H improvement remain supportive offsets .

Key Takeaways for Investors

  • Rail is the swing factor; unusually weak demand and higher costs drove a guidance cut, and bookings are down >30% YTD — expect continued near-term pressure and monitor Network Rail negotiations for risk mitigation .
  • Clean Earth’s execution remains strong with record Q2 earnings and 16.3% margin; management sees sequential margin improvement in 2H as disposal capacity normalizes — a stabilizing anchor in the portfolio .
  • Harsco Environmental should improve in 2H on new site ramps and cost actions despite subdued steel volumes; upside leverage to any steel output recovery exists .
  • Full-year guidance reductions (EBITDA and FCF) were driven entirely by Rail; Q3 guides imply sequential earnings improvement across segments — watch Q3 delivery cadence and cost control .
  • Strategic alternatives (including possible Clean Earth separation) create a near- to medium-term catalyst for value realization given CE’s strong growth/margin profile in a consolidating space .
  • Liquidity and covenants were proactively managed earlier in 2025; higher interest expense guidance and pension expense tweaks flow through FY outlook — factor into EPS/FCF modeling .
  • Trade setup: Near-term sentiment may hinge on Rail updates and strategic review headlines; medium-term thesis centers on CE/HE cash generation and portfolio optimization unlocking sum-of-the-parts value .