ENVIRI Corp Q3 FY2025 earnings call

• Strategic review process ongoing to unlock business portfolio value, with strong interest in Clean Earth; considering structures like simultaneous sale of Clean Earth and taxable spin of Harsco Environmental and Rail businesses. • Clean Earth had record quarterly performance with single-digit revenue/earnings growth and margins >17%; IT implementation on track. • Harsco Environmental saw margin reach 17% and $33 million free cash flow in Q3, but faced cost inflation and slower improvement in underperforming sites. • Rail faced weak demand, with progress on ETO projects like Deutsche Bahn and SBB, and ongoing negotiations on Network Rail contract. • Amended credit agreement to support strategic initiatives, including potential Clean Earth sale.

Clean Earth: Revenue and earnings grew single digits, margins exceeded 17%, quarterly revenue $250 million, adjusted EBITDA $43 million (17.3% margin). Harsco Environmental: Segment revenues $261 million, adjusted EBITDA $44 million; results improved in Q3 but were slightly lower than expectations due to higher operating costs and lower contributions from new sites. Rail: Revenues $64 million, adjusted EBITDA loss $4 million; faced challenges from weak demand for standard products and aftermarket parts, contract deferrals, and adjustments on large ETO contracts.

• Midpoint of EBITDA guidance reduced by $27 million, free cash flow midpoint reduced by $50 million, largely driven by Rail and to a lesser extent Harsco Environmental. • Q4 adjusted EBITDA expected to range $62 million to $72 million; Clean Earth expected to grow year-over-year, Harsco Environmental to be modestly below prior year quarter, Rail results to be lower due mainly to volumes.

• Uncertainties in strategic review process outcomes, potential tax leakage. • Market conditions affecting Rail (weak demand for standard products) and Harsco Environmental (higher operating costs, slower improvement in underperforming sites). • Challenges in ETO project execution and contract negotiations (e.g., Network Rail contract).

Q: Wondering about progress on strategic review and more color on Clean Earth.

A: Strong interest in Clean Earth, process nearing end of year; Clean Earth had record quarter with single-digit growth.

Q: Inquires about guidance drop and granularity.

A: Rail is the main driver of guidance reduction, with removal of volume without firm orders/pipeline; HE reflects Q3 miss continuing into Q4.

Q: Asks about Clean Earth's soils segment.

A: Hazardous waste EBITDA expected up ~15%, SDM down ~15%, timing issues with projects.

Q: Asks about peer multiples and rail baseline.

A: Peer transaction multiples consistent, rail baseline in $35-$40 million range, with visibility on ETO contracts and overhead costs to adjust