ENVIRI Corp SEC 10-K Report

ENVIRI Corp, a global provider of environmental solutions, has released its 2024 Form 10-K report, detailing the company's financial performance, business operations, strategic initiatives, and the challenges it faces. The report underscores ENVIRI's commitment to transforming into a leading environmental solutions company, focusing on waste management, recycling, and beneficial reuse across various industries.

Financial Highlights

ENVIRI Corp reported total revenues of $2,342.6 million for 2024, a slight decrease of 1% from the previous year, primarily due to divestitures and foreign currency translation. Operating income from continuing operations was $31.7 million, down by 60.3% from 2023, impacted by increased impairment charges and forward loss provisions. The company recorded a net loss of $122.7 million, compared to a net loss of $88.1 million in 2023, reflecting higher impairment charges and increased interest expenses. Diluted earnings per share from continuing operations were $(1.55), compared to $(1.03) in 2023. The cost of services and products sold was $1,902.6 million, a 1% decrease from the previous year, reflecting changes in revenue volume and mix.

Business Highlights

ENVIRI Corp operates through three main segments: Harsco Environmental, Clean Earth, and Harsco Rail. Harsco Environmental provides onsite environmental services and material processing to the global metals industry. Clean Earth specializes in specialty waste processing, treatment, recycling, and beneficial reuse solutions. Harsco Rail offers equipment and services for railway track maintenance.

In 2024, ENVIRI's revenue distribution was as follows: North America accounted for $1,405.5 million, Western Europe for $510.2 million, Latin America for $160.3 million, Asia-Pacific for $145.4 million, Middle East and Africa for $104.0 million, and Eastern Europe for $17.3 million. Notably, the Middle East and Africa region saw a significant increase of 19.7% in revenue.

Harsco Environmental serves 70 mill services customers at approximately 130 sites in 30 countries, providing a broad range of services that reduce landfill waste and carbon footprint. Clean Earth processes approximately 3.1 million tons of contaminated soil and 0.3 million cubic yards of dredged material annually.

Harsco Environmental's SteelPhalt™ launched a carbon-negative asphalt product, using a renewable bio-based substance to bind the asphalt, offering an alternative to bitumen and reducing the product's carbon footprint. Additionally, Harsco Environmental invested in new SteelPhalt (road materials) plants in Europe, expanding its downstream products business.

Looking ahead, ENVIRI Corp aims to continue its transformation into a leading global environmental solutions company, with plans to expand service portfolios, invest in innovation, and pursue acquisition opportunities, particularly in the Clean Earth segment. The company also anticipates the sale of the Rail segment when appropriate value can be realized.

Strategic Initiatives

ENVIRI Corp has been actively transforming into an environmental solutions company, focusing on managing, recycling, and reusing waste and byproduct materials across various industries. The company completed the sales of two subsidiaries, Performix and Reed, in 2024, generating $57.6 million in proceeds. Additionally, the company paused the sales process of its Rail segment, reclassifying it from discontinued operations to continuing operations.

In terms of capital management, ENVIRI amended its Senior Secured Credit Facilities in September 2024 to extend the term of the Revolving Credit Facility to September 2029 and adjust the limit to $625 million. It also retained $50 million of existing revolving commitments maturing in March 2026. In February 2025, the company further amended the Credit Agreement to reset covenant levels, focusing on maintaining compliance with financial covenants. The company also renewed its AR Facility for a three-year term expiring in October 2027 and increased the maximum purchase commitment to $160 million.

ENVIRI Corp expects to maintain compliance with its amended covenants and continue its strategic focus on environmental solutions. The company plans to leverage its extended credit facilities to support operational and business needs, including potential strategic transactions and joint ventures. The company anticipates continued compliance with debt covenants and aims to manage its capital structure to support long-term growth initiatives.

Challenges and Risks

ENVIRI Corp faces several challenges and risks, including:

• Environmental Compliance and Regulatory Risks: The Clean Earth segment faces extensive environmental regulations. Non-compliance could lead to significant liabilities and costs. Changes in laws or enforcement could require substantial capital expenditures or limit operations.
• Operational Risks: The waste management industry is subject to economic, business, and regulatory risks. The company must manage intense price competition, market share during economic contractions, and cost reduction programs.
• Customer Concentration and Contract Risks: A significant portion of revenues comes from a few large customers. Disputes or financial difficulties with these customers could adversely impact operations.
• Rail Segment Challenges: The Rail segment faces risks from long-term fixed-price contracts, which have led to losses due to cost overruns and supply chain issues. Future challenges may arise from inflation, technical problems, and project delays.
• Competition: The company faces competition across its segments, which may require price reductions or impact market share.
• Insurance and Liability Risks: Higher than expected claims or uninsured losses could impact financial performance. The company retains significant risk under its insurance policies.
• Material Costs and Supply Chain Risks: Increases in raw material costs, particularly steel, or supply chain disruptions could affect profitability.
• Intellectual Property Risks: The company may face challenges in protecting its intellectual property, which could impact competitive advantage.
• Cybersecurity Risks: Increased IT security threats pose risks to operations and data integrity. Breaches could lead to significant operational and reputational damage.
• Macroeconomic and Industry Risks: Economic downturns and cyclical industry conditions could reduce demand for products and services, impacting financial performance.
• Exchange Rate Fluctuations: The company is exposed to foreign currency risks, which could affect financial results due to exchange rate volatility.
• International Business Risks: Operating in multiple countries exposes the company to various risks, including political instability, regulatory changes, and compliance with international laws.
• Legal and Regulatory Risks: The company is subject to extensive laws and regulations, including anti-bribery laws and export controls, which could lead to significant penalties if violated.

Management highlights the importance of strategic transactions and joint ventures to drive growth. The company is focused on managing risks associated with environmental compliance, customer contracts, and market competition. Strategies include enhancing contract terms, investing in innovation, and expanding service offerings to mitigate risks.

SEC Filing: ENVIRI Corp [ NVRI ] - 10-K - Feb. 20, 2025