Enviri Corp 10-Q, filed May 3, 2022

Enviri Corp (NVRI)

10-Q 2022-05-03 For: 2022-03-31

Added on June 09, 2026

About this 10-Q

Enviri Corp filed this 10-Q on May 3, 2022, covering the quarter ended March 31, 2022.

Headline figures

Quarter ended March 31, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $452.8M; up 1.2% from $447.27M a year earlier
Net loss: $39.84M; compared with net income of $135K a year earlier
Diluted EPS: -$0.50; compared with $0.00 a year earlier

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Delaware			23-1483991
(State or other jurisdiction of incorporation or organization)			(I.R.S. employer identification number)
350 Poplar Church Road,	Camp Hill,	Pennsylvania	17011
(Address of principal executive offices)			(Zip Code)


Class						Outstanding at April 29, 2022
Common stock, par value $1.25 per share						79,417,543


		Page
PART I — FINANCIAL INFORMATION

Item 1.	Financial Statements	4
	Condensed Consolidated Balance Sheets (Unaudited)	4
	Condensed Consolidated Statements of Operations (Unaudited)	5
	Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)	6
	Condensed Consolidated Statements of Cash Flows (Unaudited)	7
	Condensed Consolidated Statements of Equity (Unaudited)	8
	Notes to Condensed Consolidated Financial Statements (Unaudited)	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	32

Item 4.	Controls and Procedures	32


PART II — OTHER INFORMATION

Item 1.	Legal Proceedings	33

Item 1A.	Risk Factors	33

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	33









Item 6.	Exhibits	34


SIGNATURES		35


Term						Description
AOCI						Accumulated Other Comprehensive Income (Loss)
AXC						The former Harsco Industrial Air-X-Changers business
CERCLA						Comprehensive Environmental Response, Compensation, and Liability Act of 1980
COVID-19						The COVID-19 coronavirus pandemic
Credit Agreement						Credit Agreement governing the Senior Secured Credit Facilities
DEA						United States Drug Enforcement Agency
DTSC						California Department of Toxic Substances Control
EBITDA						Earnings before interest, tax, depreciation and amortization
ESOL						Stericycle Environmental Solutions business
FASB						Financial Accounting Standards Board
IBORs						Interbank offered rates
ICMS						Type of value-added tax in Brazil
IKG						The former Harsco Industrial IKG business
ISDA						International Swaps and Derivatives Association
LIBOR						London Interbank Offered Rates
New Term Loan						$500 million term loan raised in March 2021 under the Senior Secured Credit Facilities, maturing on March 10, 2028
Notes						5.75% Notes due July 31, 2027
OCI						Other Comprehensive Income (Loss)

PA DEP						Pennsylvania Department of Environmental Protection
Revolving Credit Facility						Multi-year revolving credit facility under the Senior Secured Credit Facility, with a facility limit of $700 million
ROU						Right of use
SBB						Federal railway system of Switzerland
SCE						Supreme Council for Environment in Bahrain
SEC						Securities and Exchange Commission
Senior Secured Credit Facilities						Primary source of borrowings comprised of the Revolving Credit Facility and the New Term Loan
SPRA						State Revenue Authorities from the State of São Paulo, Brazil


TSDF						Treatment, storage, and disposal facility permits issued under the Resource Conservation and Recovery Act
U.S. GAAP						Accounting principles generally accepted in the U.S.


(In thousands)	March 31 2022		December 31 2021
ASSETS
Current assets:
Cash and cash equivalents	$	85,216	$	82,908
Restricted cash	4,337		4,220
Trade accounts receivable, net	385,871		377,881

Other receivables	26,128		33,059
Inventories	76,854		70,493

Prepaid expenses	32,393		31,065
Current portion of assets held-for-sale	268,590		265,413
Other current assets	13,096		9,934
Total current assets	892,485		874,973

Property, plant and equipment, net	654,765		653,913
Right-of-use assets, net	96,007		101,576
Goodwill	878,935		883,109
Intangible assets, net	393,733		402,801


Deferred income tax assets	18,207		17,883
Assets held-for-sale	66,518		71,234
Other assets	50,809		48,419
Total assets	$	3,051,459	$	3,053,908
LIABILITIES
Current liabilities:
Short-term borrowings	$	7,292	$	7,748
Current maturities of long-term debt	17,379		10,226
Accounts payable	189,896		186,126

Accrued compensation	41,780		48,165
Income taxes payable	4,085		6,378





Current portion of operating lease liabilities	25,055		25,590
Current portion of liabilities of assets held-for-sale	168,412		161,999
Other current liabilities	139,661		155,159
Total current liabilities	593,560		601,391
Long-term debt	1,422,384		1,359,446


Retirement plan liabilities	73,710		93,693



Operating lease liabilities	69,563		74,571
Liabilities of assets held-for-sale	8,326		8,492
Environmental liabilities	27,565		28,435
Deferred tax liabilities	26,832		33,826
Other liabilities	48,424		48,284
Total liabilities	2,270,364		2,248,138
COMMITMENTS AND CONTINGENCIES
HARSCO CORPORATION STOCKHOLDERS’ EQUITY

Common stock	145,261		144,883
Additional paid-in capital	218,779		215,528
Accumulated other comprehensive loss	(547,649)		(560,139)
Retained earnings	1,754,671		1,794,510
Treasury stock	(848,254)		(846,622)
Total Harsco Corporation stockholders’ equity	722,808		748,160
Noncontrolling interests	58,287		57,610
Total equity	781,095		805,770
Total liabilities and equity	$	3,051,459	$	3,053,908


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934


	Three Months Ended
	March 31
(In thousands, except per share amounts)		2022		2021
Revenues from continuing operations:
Service revenues		$	418,435	$	414,339
Product revenues		34,362		32,926
Total revenues		452,797		447,265
Costs and expenses from continuing operations:
Cost of services sold		346,357		329,853
Cost of products sold		30,662		27,514
Selling, general and administrative expenses		69,153		71,614
Research and development expenses		56		157

Other (income) expenses, net		(1,179)		(991)
Total costs and expenses		445,049		428,147
Operating income from continuing operations		7,748		19,118
Interest income		644		547
Interest expense		(15,092)		(16,256)
Unused debt commitment fees, amendment fees and loss on extinguishment of debt		(532)		(5,258)

Defined benefit pension income		2,410		3,934
Income (loss) from continuing operations before income taxes and equity income		(4,822)		2,085
Income tax benefit (expense) from continuing operations		(1,221)		(2,101)
Equity income (loss) of unconsolidated entities, net		(131)		(119)
Income (loss) from continuing operations		(6,174)		(135)
Discontinued operations:

Income (loss) from discontinued businesses		(39,097)		3,364
Income tax benefit (expense) from discontinued businesses		6,591		(1,664)
Income (loss) from discontinued operations, net of tax		(32,506)		1,700
Net income (loss)		(38,680)		1,565
Less: Net income attributable to noncontrolling interests		(1,159)		(1,430)
Net income (loss) attributable to Harsco Corporation		$	(39,839)	$	135
Amounts attributable to Harsco Corporation common stockholders:
Income (loss) from continuing operations, net of tax		$	(7,333)	$	(1,565)
Income (loss) from discontinued operations, net of tax		(32,506)		1,700
Net income (loss) attributable to Harsco Corporation common stockholders		$	(39,839)	$	135
Weighted-average shares of common stock outstanding		79,363		79,088
Basic earnings (loss) per common share attributable to Harsco Corporation common stockholders:
Continuing operations		$	(0.09)	$	(0.02)
Discontinued operations		(0.41)		0.02
Basic earnings (loss) per share attributable to Harsco Corporation common stockholders		$	(0.50)	$	—
Diluted weighted-average shares of common stock outstanding		79,363		79,088
Diluted earnings (loss) per common share attributable to Harsco Corporation common stockholders:
Continuing operations		$	(0.09)	$	(0.02)
Discontinued operations		(0.41)		0.02
Diluted earnings (loss) per share attributable to Harsco Corporation common stockholders		$	(0.50)	$	—


	Three Months Ended March 31
(In thousands)	2022		2021
Cash flows from operating activities:
Net income (loss)	$	(38,680)	$	1,565
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation	33,604		32,748
Amortization	8,586		8,967
Deferred income tax (benefit) expense	(4,275)		(3,421)
Equity (income) loss of unconsolidated entities, net	131		119
Dividends from unconsolidated entities	178		—


Loss on early extinguishment of debt	—		2,668
Other, net	259		1,128
Changes in assets and liabilities, net of acquisitions and dispositions of businesses:
Accounts receivable	(15,364)		(16,446)
Income tax refunds receivable, reimbursable to seller	7,687		—
Inventories	(4,610)		407
Contract assets	4,843		(19,070)
Right-of-use assets	7,076		6,768
Accounts payable	1,655		(8,592)
Accrued interest payable	(7,393)		(7,320)
Accrued compensation	(5,692)		(1,541)
Advances on contracts	(7,808)		(9,698)


Operating lease liabilities	(7,063)		(6,750)
Retirement plan liabilities, net	(14,519)		(19,267)

Other assets and liabilities	7,070		14,562
Net cash used by operating activities	(34,315)		(23,173)
Cash flows from investing activities:
Purchases of property, plant and equipment	(32,958)		(27,382)


Proceeds from sales of assets	5,976		3,862
Expenditures for intangible assets	(54)		(68)

Net proceeds (payments) from settlement of foreign currency forward exchange contracts	1,061		(1,427)
Payments for settlements of interest rate swaps	(1,062)		—
Other investing activities, net	124		46
Net cash used by investing activities	(26,913)		(24,969)
Cash flows from financing activities:
Short-term borrowings, net	2,051		575
Current maturities and long-term debt:
Additions	72,005		434,873
Reductions	(2,566)		(374,530)






Stock-based compensation - Employee taxes paid	(1,377)		(2,485)
Payment of contingent consideration	(6,915)		—


Deferred financing costs	—		(6,525)
Other financing activities, net	—		(400)
Net cash provided by financing activities	63,198		51,508
Effect of exchange rate changes on cash and cash equivalents, including restricted cash	455		(710)
Net increase in cash and cash equivalents, including restricted cash	2,425		2,656
Cash and cash equivalents, including restricted cash, at beginning of period	87,128		79,669
Cash and cash equivalents, including restricted cash, at end of period	$	89,553	$	82,325

Supplementary cash flow information:
Change in accrual for purchases of property, plant and equipment included in accounts payable	$	(745)	$	1,865


	Harsco Corporation Stockholders’ Equity
(In thousands, except share amounts)	Common Stock				Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Noncontrolling Interests
	Issued		Treasury										Total
Balances, December 31, 2021	$	144,883	$	(846,622)	$	215,528	$	1,794,510	$	(560,139)	$	57,610	$	805,770

Net income							(39,839)				1,159		(38,680)




Total other comprehensive income (loss), net of deferred income taxes of $(2,520)									12,490		(482)		12,008










Vesting of restricted stock units and other stock grants, net 176,253 shares	378		(1,632)		(378)								(1,632)


Amortization of unearned portion of stock-based compensation, net of forfeitures					3,629								3,629
Balances, March 31, 2022	145,261		(848,254)		218,779		1,754,671		(547,649)		58,287		781,095



	Three Months Ended
	March 31
Defined Benefit Pension Plan Income	U.S. Plans				International Plans
(In thousands)	2022		2021		2022		2021
Service cost	$	—	$	—	$	432	$	462
Interest cost	1,429		1,203		4,394		3,177
Expected return on plan assets	(2,699)		(3,050)		(10,384)		(11,331)
Recognized prior service costs	—		—		120		127
Recognized losses	1,183		1,385		3,544		4,563

Defined benefit pension plan income	$	(87)	$	(462)	$	(1,894)	$	(3,002)


	Three Months Ended
Company Contributions	March 31
(In thousands)		2022		2021
Defined benefit pension plans (U.S.)		$	446	$	2,866
Defined benefit pension plans (International)		11,357		12,622
Multiemployer pension plans		457		440
Defined contribution pension plans		3,794		3,379


(In thousands)	Balance Sheet Location	Fair Value of Derivatives Designated as Hedging Instruments		Fair Value of Derivatives Not Designated as Hedging Instruments		Total Fair Value
March 31, 2022
Asset derivatives (Level 2):
Foreign currency exchange forward contracts	Other current assets	$	1,038	$	3,235	$	4,273


Total		$	1,038	$	3,235	$	4,273

Liability derivatives (Level 2):
Foreign currency exchange forward contracts	Other current liabilities	$	216	$	1,957	$	2,173
Interest rate swaps	Other current liabilities	2,203		—		2,203

Total		$	2,419	$	1,957	$	4,376
December 31, 2021
Asset derivatives (Level 2):
Foreign currency exchange forward contracts	Other current assets	$	719	$	1,405	$	2,124




Total		$	719	$	1,405	$	2,124
Liability derivatives (Level 2):
Foreign currency exchange forward contracts	Other current liabilities	$	560	$	2,905	$	3,465
Interest rate swaps	Other current liabilities	4,157		—		4,157

Total		$	4,717	$	2,905	$	7,622


	Amount Recognized in OCI on Derivatives				Location of Amount Reclassified from AOCI into Income	Amount Reclassified from AOCI into Income - Effective Portion or Equity
	Three Months Ended					Three Months Ended
	March 31					March 31
(In thousands)	2022		2021			2022		2021
Foreign currency exchange forward contracts	$	1,009	$	(1)	Income (loss) from discontinued businesses	$	(588)	$	(50)


Interest rate swaps	—		19		Interest expense	1,050		865

	$	1,009	$	18		$	462	$	815


	Location of Gain (Loss) Recognized in Income on Derivatives		Amount of Gain (Loss) Recognized in Income on Derivatives (a)
		Three Months Ended
		March 31
(In thousands)			2022		2021

Foreign currency exchange forward contracts	Cost of services and products sold		$	3,838	$	4,744


FORM			10-Q


(In thousands)	March 31 2022		December 31 2021
Finished goods	$	7,856	$	8,323
Work-in-process	5,963		5,393

Raw materials and purchased parts	22,276		21,188
Stores and supplies	40,759		35,589
Total inventories	$	76,854	$	70,493


(In thousands)	March 31 2022		December 31 2021
Land	$	73,071	$	73,067
Land improvements	16,934		16,970
Buildings and improvements	224,746		221,236
Machinery and equipment	1,532,183		1,507,214
Uncompleted construction	59,612		63,816
Gross property, plant and equipment	1,906,546		1,882,303
Less: Accumulated depreciation	(1,251,781)		(1,228,390)
Property, plant and equipment, net	$	654,765	$	653,913


	Three Months Ended
	March 31, 2021
(In thousands)	Harsco Environmental Segment		Harsco Clean Earth Segment		Consolidated Totals
Primary Geographical Markets (a):
North America	$	67,181	$	189,279	$	256,460
Western Europe	112,171		—		112,171
Latin America (b)	30,653		—		30,653
Asia-Pacific	23,370		—		23,370
Middle East and Africa	20,121		—		20,121


	Components of AOCI, Net of Tax
(In thousands)	Cumulative Foreign Exchange Translation Adjustments			Effective Portion of Derivatives Designated as Hedging Instruments			Cumulative Unrecognized Actuarial Losses on Pension Obligations			Unrealized Gain (Loss) on Marketable Securities		Total
Balance at December 31, 2020	$	(125,392)		$	(5,840)		$	(514,500)		$	(9)	$	(645,741)

OCI before reclassifications	(3,296)		(a)	119		(b)	(1,897)		(a)	17		(5,057)
Amounts reclassified from AOCI, net of tax	—			570			5,716			—		6,286



Total OCI	(3,296)			689			3,819			17		1,229
OCI attributable to noncontrolling interests	1,066			—			—			—		1,066
OCI attributable to Harsco Corporation	(2,230)			689			3,819			17		2,295
Balance at March 31, 2021	$	(127,622)		$	(5,151)		$	(510,681)		$	8	$	(643,446)


(In thousands)	Three Months Ended			Location on the Condensed Consolidated Statements of Operations
	March 31
		2022				2021



Amortization of cash flow hedging instruments:
Foreign currency exchange forward contracts		$	(588)	$	(50)	Discontinued Operations



Interest rate swaps		1,050		865		Interest expense

Total before taxes		462		815
Income taxes		(124)		(245)
Total reclassification of cash flow hedging instruments, net of tax		$	338	$	570

Amortization of defined benefit pension items (c):
Actuarial losses		$	4,727	$	5,948	Defined benefit pension income
Prior service costs		120		127		Defined benefit pension income



Total before taxes		4,847		6,075
Income taxes		(313)		(359)
Total reclassification of defined benefit pension items, net of tax		$	4,534	$	5,716


	Three Months Ended
	March 31
(In millions, except percentages)		2022			2021
Revenues:
Harsco Environmental		$	262.1		$	258.0
Harsco Clean Earth		190.7			189.3


Total Revenues		$	452.8		$	447.3
Operating Income (Loss):
Harsco Environmental		$	18.3		$	25.9
Harsco Clean Earth		(1.3)			3.2

Corporate		(9.2)			(10.0)
Total Operating Income		$	7.7		$	19.1
Operating Margins:
Harsco Environmental		7.0		%	10.1		%
Harsco Clean Earth		(0.7)		%	1.7		%

Consolidated Operating Margin		1.7		%	4.3		%


	March 31, 2022
Significant Effects on Revenues (In millions)	Three Months Ended
Revenues — 2021	$	258.0
Net effects of price/volume changes, primarily attributable to volume changes	18.7
Impact of foreign currency translation	(7.1)
Net impact of new and lost contracts	(6.8)

Other	(0.7)
Revenues — 2022	$	262.1


		March 31
	Three Months Ended
(In millions, except per share amounts)			2022			2021
Total revenues			$	452.8		$	447.3
Cost of services and products sold			377.0			357.4
Selling, general and administrative expenses			69.2			71.6
Research and development expenses			0.1			0.2


Other (income) expenses, net			(1.2)			(1.0)
Operating income from continuing operations			7.7			19.1
Interest income			0.6			0.5
Interest expense			(15.1)			(16.3)
Unused debt commitment fees, amendment fees and loss on extinguishment of debt			(0.5)			(5.3)

Defined benefit pension income			2.4			3.9
Income tax benefit (expense) from continuing operations			(1.2)			(2.1)
Equity income (loss) of unconsolidated entities, net			(0.1)			(0.1)
Income (loss) from continuing operations			(6.2)			(0.1)

Income (loss) from discontinued businesses			(39.1)			3.4
Income tax benefit (expense) related to discontinued operations			6.6			(1.7)
Income (loss) from discontinued operations, net of tax			(32.5)			1.7
Net income (loss)			(38.7)			1.6
Total other comprehensive income (loss)			12.0			1.2
Total comprehensive income (loss)			(26.7)			2.8
Diluted earnings (loss) per common share from continuing operations attributable to Harsco Corporation common stockholders			(0.09)			(0.02)
Effective income tax rate for continuing operations			(25.3)		%	100.8		%


	March 31, 2022
(In millions)	Three Months Ended
Change in costs due to changes in revenues volume	$	9.0
Change in revenue mix and changes in prices, including materials, labor, fuel, transportation and maintenance	14.0
Impact of foreign currency translation	(6.5)
Other	3.2

Total change in cost of services and products sold — 2022 vs. 2021	$	19.7


Summary of Senior Secured Credit Facilities and Notes: (In millions)	March 31 2022		December 31 2021
By type:
New Term Loan	$	496.3	$	497.5
Revolving Credit Facility	434.0		362.0
5.75% Notes	500.0		500.0
Total	$	1,430.3	$	1,359.5
By classification:
Current	$	5.0	$	5.0
Long-term	1,425.3		1,354.5
Total	$	1,430.3	$	1,359.5


	March 31, 2022
(In millions)	Facility Limit		Outstanding Balance		Outstanding Letters of Credit		Available Credit


Revolving credit facility (a U.S.-based program)	$	700.0	$	434.0	$	29.8	$	236.2


Exhibit Number						Description
10.1						Form of RSU Award Agreement (for awards granted on or after March 1, 2022)
10.2						Form of PSU Award Agreement (for awards granted on or after March 1, 2022)
10.3						Form of SAR Award Agreement (for awards granted on or after March 1, 2022)
10.4						Amendment No. 9 to Third Amended and Restated Credit Agreement dated February 22 , 2022, among Harsco Corporation, the subsidiaries of the Company party there to, Citibank, N.A., as administrator agent and collateral agent, and the lenders party there to (incorporated by reference to Exhibit 10(a)(xv) to the Company's Annual Report of Form 10-K for the year ended December 31, 2021. Commission file Number 001-03970).
31.1						Certification Pursuant to Rule 13a-14(a) or 15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Chairman, President and Chief Executive Officer).
31.2						Certification Pursuant to Rule 13a-14(a) or 15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Chief Financial Officer).
32						Certifications Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chairman, President and Chief Executive Officer and Chief Financial Officer).
101.Def						Definition Linkbase Document
101.Pre						Presentation Linkbase Document
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101.Cal						Calculation Linkbase Document
101.Sch						Schema Document
101.Ins						Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.



DATE	May 3, 2022	/s/ ANSHOOMAN AGA
		Anshooman Aga
		Senior Vice President and Chief Financial Officer
		(On behalf of the registrant and as Principal Financial Officer)

DATE	May 3, 2022	/s/ SAMUEL C. FENICE
		Samuel C. Fenice
		Vice President and Corporate Controller
		(Principal Accounting Officer)