Enviri Corp 10-Q, filed May 3, 2023

Enviri Corp (NVRI)

10-Q 2023-05-03 For: 2023-03-31

Added on June 09, 2026

About this 10-Q

Enviri Corp filed this 10-Q on May 3, 2023, covering the quarter ended March 31, 2023.

Headline figures

Quarter ended March 31, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $495.65M; up 9.5% from $452.8M a year earlier
Net loss: $9.53M; compared with a net loss of $39.84M a year earlier
Diluted EPS: -$0.12; compared with -$0.50 a year earlier

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Class						Outstanding at April 28, 2023
Common stock, par value $1.25 per share						79,738,373


		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	28

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	35

Item 4.	Controls and Procedures	35


PART II — OTHER INFORMATION

Item 1.	Legal Proceedings	35

Item 1A.	Risk Factors	36

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	36









Item 6.	Exhibits	37


SIGNATURES		38


Term						Description
AOCI						Accumulated Other Comprehensive Income (Loss)
AR Facility						Trade receivables securitization facility
ASU						Financial Accounting Standards Board Accounting Standards Update
CE						Harsco Clean Earth Segment
CERCLA						Comprehensive Environmental Response, Compensation, and Liability Act of 1980
Consolidated Adjusted EBITDA						EBITDA as calculated in accordance with the Company's Credit Agreement
COVID-19						The COVID-19 coronavirus pandemic
Credit Agreement						Credit Agreement governing the Senior Secured Credit Facilities
DEA						United States Drug Enforcement Administration
Deutsche Bahn						National railway company in Germany
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
HE						Harsco Environmental Segment
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
Network Rail						Infrastructure manager for most of the railway in the U.K.
New Term Loan						$500 million term loan raised in March 2021 under the Senior Secured Credit Facilities, maturing on March 10, 2028
OCI						Other Comprehensive Income (Loss)

PA DEP						Pennsylvania Department of Environmental Protection
Rail						The former Harsco Rail Segment
Revolving Credit Facility						$700 million multi-year revolving credit facility under the Senior Secured Credit Facilities
ROU						Right of use
SBB						Federal railway system of Switzerland
SCE						Supreme Council for Environment in Bahrain
SEC						Securities and Exchange Commission
Senior Notes						5.75% Notes due July 31, 2027
Senior Secured Credit Facilities						Primary source of borrowings comprised of the New Term Loan and the Revolving Credit Facility
SOFR						Secured Overnight Financing Rate
SPE						The Company's wholly-owned bankruptcy-remote special purpose entity, which is used in connection with the AR Facility
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 2023		December 31 2022
ASSETS
Current assets:
Cash and cash equivalents	$	91,759	$	81,332
Restricted cash	4,477		3,762
Trade accounts receivable, net	281,777		264,428

Other receivables	25,832		25,379
Inventories	84,705		81,375

Prepaid expenses	24,878		30,583
Current portion of assets held-for-sale	264,051		266,335
Other current assets	15,181		14,541
Total current assets	792,660		767,735

Property, plant and equipment, net	665,191		656,875
Right-of-use assets, net	100,199		101,253
Goodwill	763,013		759,253
Intangible assets, net	345,595		352,160


Deferred income tax assets	18,422		17,489
Assets held-for-sale	69,554		70,105
Other assets	70,360		65,984
Total assets	$	2,824,994	$	2,790,854
LIABILITIES
Current liabilities:
Short-term borrowings	$	2,142	$	7,751
Current maturities of long-term debt	13,245		11,994
Accounts payable	225,314		205,577

Accrued compensation	50,193		43,595
Income taxes payable	3,987		3,640





Current portion of operating lease liabilities	26,104		25,521
Current portion of liabilities of assets held-for-sale	159,069		159,004
Other current liabilities	138,224		140,199
Total current liabilities	618,278		597,281
Long-term debt	1,346,206		1,336,995


Retirement plan liabilities	48,013		46,601



Operating lease liabilities	74,149		75,246
Liabilities of assets held-for-sale	8,942		9,463
Environmental liabilities	26,481		26,880
Deferred tax liabilities	28,426		30,069
Other liabilities	50,547		45,277
Total liabilities	2,201,042		2,167,812
COMMITMENTS AND CONTINGENCIES
HARSCO CORPORATION STOCKHOLDERS’ EQUITY

Common stock	145,843		145,448
Additional paid-in capital	229,218		225,759
Accumulated other comprehensive loss	(560,842)		(567,636)
Retained earnings	1,604,916		1,614,441
Treasury stock	(849,678)		(848,570)
Total Harsco Corporation stockholders’ equity	569,457		569,442
Noncontrolling interests	54,495		53,600
Total equity	623,952		623,042
Total liabilities and equity	$	2,824,994	$	2,790,854


	Three Months Ended
	March 31
(In thousands, except per share amounts)		2023		2022
Revenues from continuing operations:


Revenues		495,653		452,797
Costs and expenses from continuing operations:


Cost of sales		400,688		377,019
Selling, general and administrative expenses		71,935		69,153
Research and development expenses		176		56

Other (income) expenses, net		(6,151)		(1,179)
Total costs and expenses		466,648		445,049
Operating income (loss) from continuing operations		29,005		7,748
Interest income		1,455		644
Interest expense		(24,328)		(15,092)
Facility fees and debt-related income (expense)		(2,363)		(532)

Defined benefit pension income (expense)		(5,335)		2,410
Income (loss) from continuing operations before income taxes and equity income		(1,566)		(4,822)
Income tax benefit (expense) from continuing operations		(6,923)		(1,221)
Equity income (loss) of unconsolidated entities, net		(133)		(131)
Income (loss) from continuing operations		(8,622)		(6,174)
Discontinued operations:

Income (loss) from discontinued businesses		619		(39,097)
Income tax benefit (expense) from discontinued businesses		(587)		6,591
Income (loss) from discontinued operations, net of tax		32		(32,506)
Net income (loss)		(8,590)		(38,680)
Less: Net (income) loss attributable to noncontrolling interests		(935)		(1,159)
Net income (loss) attributable to Harsco Corporation		$	(9,525)	$	(39,839)
Amounts attributable to Harsco Corporation common stockholders:
Income (loss) from continuing operations, net of tax		$	(9,557)	$	(7,333)
Income (loss) from discontinued operations, net of tax		32		(32,506)
Net income (loss) attributable to Harsco Corporation common stockholders		$	(9,525)	$	(39,839)
Weighted-average shares of common stock outstanding		79,633		79,363
Basic earnings (loss) per common share attributable to Harsco Corporation common stockholders:
Continuing operations		$	(0.12)	$	(0.09)
Discontinued operations		0.00		(0.41)
Basic earnings (loss) per share attributable to Harsco Corporation common stockholders		$	(0.12)	$	(0.50)
Diluted weighted-average shares of common stock outstanding		79,633		79,363
Diluted earnings (loss) per common share attributable to Harsco Corporation common stockholders:
Continuing operations		$	(0.12)	$	(0.09)
Discontinued operations		0.00		(0.41)
Diluted earnings (loss) per share attributable to Harsco Corporation common stockholders		$	(0.12)	$	(0.50)


☒			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)	2023		2022
Cash flows from operating activities:
Net income (loss)	$	(8,590)	$	(38,680)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation	33,039		33,604
Amortization	7,965		8,586
Deferred income tax (benefit) expense	(56)		(4,275)
Equity (income) loss of unconsolidated entities, net	133		131
Dividends from unconsolidated entities	—		178




Other, net	1,009		259
Changes in assets and liabilities, net of acquisitions and dispositions of businesses:
Accounts receivable	(14,533)		(15,364)
Income tax refunds receivable, reimbursable to seller	—		7,687
Inventories	(8,534)		(4,610)
Contract assets	11,698		4,843
Right-of-use assets	7,842		7,076
Accounts payable	17,735		1,655
Accrued interest payable	(6,998)		(7,393)
Accrued compensation	7,343		(5,692)
Advances on contracts	(5,591)		(7,808)


Operating lease liabilities	(7,202)		(7,063)
Retirement plan liabilities, net	814		(14,519)

Other assets and liabilities	838		7,070
Net cash provided (used) by operating activities	36,912		(34,315)
Cash flows from investing activities:
Purchases of property, plant and equipment	(22,146)		(32,958)


Proceeds from sales of assets	823		5,976
Expenditures for intangible assets	(36)		(54)

Net proceeds (payments) from settlement of foreign currency forward exchange contracts	(1,212)		1,061
Payments for settlements of interest rate swaps	—		(1,062)
Other investing activities, net	32		124
Net cash used by investing activities	(22,539)		(26,913)
Cash flows from financing activities:
Short-term borrowings, net	(3,029)		2,051
Current maturities and long-term debt:
Additions	59,000		72,005
Reductions	(57,200)		(2,566)






Stock-based compensation - Employee taxes paid	(930)		(1,377)
Payment of contingent consideration	—		(6,915)




Net cash (used) provided by financing activities	(2,159)		63,198
Effect of exchange rate changes on cash and cash equivalents, including restricted cash	(1,072)		455
Net increase in cash and cash equivalents, including restricted cash	11,142		2,425
Cash and cash equivalents, including restricted cash, at beginning of period	85,094		87,128
Cash and cash equivalents, including restricted cash, at end of period	$	96,236	$	89,553

Supplementary cash flow information:
Change in accrual for purchases of property, plant and equipment included in accounts payable	$	7,524	$	(745)


	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, 2022	$	145,448	$	(848,570)	$	225,759	$	1,614,441	$	(567,636)	$	53,600	$	623,042

Net income (loss)							(9,525)				935		(8,590)




Total other comprehensive income (loss), net of deferred income taxes of $1,901									6,794		358		7,152



Purchase of subsidiary shares from noncontrolling interest					398						(398)		—






Vesting of restricted stock units and other stock grants, net 177,574 shares	395		(1,108)		(395)								(1,108)


Amortization of unearned portion of stock-based compensation, net of forfeitures					3,456								3,456
Balances, March 31, 2023	$	145,843	$	(849,678)	$	229,218	$	1,604,916	$	(560,842)	$	54,495	$	623,952


(In millions)	March 31 2023		December 31 2022
Net amounts sold under factoring arrangements	$	21.7	$	17.3
Program capacities	32.0		31.4



	Three Months Ended
	March 31
Defined Benefit Pension Plans Net Periodic Pension Cost (Benefit)	U.S. Plans				International Plans
(In thousands)	2023		2022		2023		2022
Service costs	$	—	$	—	$	307	$	432
Interest costs	2,543		1,429		7,414		4,394
Expected return on plan assets	(1,750)		(2,699)		(7,657)		(10,384)
Recognized prior service costs	—		—		114		120
Recognized actuarial losses	1,151		1,183		3,519		3,544


Defined benefit pension plans net periodic pension cost (benefit)	$	1,944	$	(87)	$	3,697	$	(1,894)


	Three Months Ended
Company Contributions	March 31
(In thousands)	2023		2022
Defined benefit pension plans (U.S.)	$	420	$	446
Defined benefit pension plans (International)	4,183		11,357
Multiemployer pension plans	484		457
Defined contribution pension plans	3,229		3,794


(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, 2023
Asset derivatives (Level 2):
Foreign currency exchange forward contracts	Other current assets	$	119	$	1,967	$	2,086
Interest rate swaps	Other current assets	1,310		—		1,310

Total		$	1,429	$	1,967	$	3,396

Liability derivatives (Level 2):
Foreign currency exchange forward contracts	Other current liabilities	$	806	$	6,695	$	7,501

Interest rate swaps	Other liabilities	4,446		—		4,446
Total		$	5,252	$	6,695	$	11,947
December 31, 2022
Asset derivatives (Level 2):
Foreign currency exchange forward contracts	Other current assets	$	1,042	$	2,154	$	3,196




Total		$	1,042	$	2,154	$	3,196
Liability derivatives (Level 2):
Foreign currency exchange forward contracts	Other current liabilities	$	577	$	4,796	$	5,373


Total		$	577	$	4,796	$	5,373


	Amount Recognized in OCI on Derivatives				Amount Reclassified from AOCI into Income - Effective Portion or Equity
	Three Months Ended				Three Months Ended
	March 31				March 31
(In thousands)	2023		2022		2023		2022
Foreign currency exchange forward contracts	$	(682)	$	1,009	$	411	$	(588)


Interest rate swaps	(2,887)		—		(248)		1,050

	$	(3,569)	$	1,009	$	163	$	462


	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)		2023		2022

Foreign currency exchange forward contracts	Cost of services and products sold	$	(3,297)	$	3,838


FORM			10-Q


(In thousands)	March 31 2023		December 31 2022
Finished goods	$	12,884	$	11,809
Work-in-process	1,776		2,030

Raw materials and purchased parts	29,270		27,946
Stores and supplies	40,775		39,590
Total inventories	$	84,705	$	81,375


(In thousands)	March 31 2023		December 31 2022
Land	$	71,987	$	72,020
Land improvements	16,843		16,750
Buildings and improvements	219,332		217,926
Machinery and equipment	1,539,171		1,513,238
Uncompleted construction	85,421		84,472
Gross property, plant and equipment	1,932,754		1,904,406
Less: Accumulated depreciation	(1,267,563)		(1,247,531)
Property, plant and equipment, net	$	665,191	$	656,875


	Three Months Ended
	March 31, 2022
(In thousands)	Harsco Environmental Segment		Harsco Clean Earth Segment		Consolidated Totals
Primary Geographical Markets (a):
North America	$	71,079	$	190,746	$	261,825
Western Europe	102,079		—		102,079
Latin America (b)	35,805		—		35,805
Asia-Pacific	28,068		—		28,068
Middle East and Africa	19,886		—		19,886
Eastern Europe	5,134		—		5,134
Total Revenues	$	262,051	$	190,746	$	452,797

Key Product and Service Groups:
Environmental services related to resource recovery for metals manufacturing and related logistical services	$	227,689	$	—	$	227,689
Ecoproducts	31,965		—		31,965
Environmental systems for aluminum dross and scrap processing	2,397		—		2,397



Hazardous waste processing solutions	—		159,007		159,007

Soil and dredged materials processing and reuse solutions	—		31,739		$	31,739
Total Revenues	$	262,051	$	190,746	$	452,797


	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, 2021	$	(134,889)		$	(3,024)		$	(422,248)		$	22	$	(560,139)

OCI before reclassifications	(2,847)		(a)	802		(b)	9,184		(a)	(3)		7,136
Amounts reclassified from AOCI, net of tax	—			338			4,534			—		4,872



Total OCI	(2,847)			1,140			13,718			(3)		12,008
Less: OCI attributable to noncontrolling interests	482			—			—			—		482
OCI attributable to Harsco Corporation	(2,365)			1,140			13,718			(3)		12,490
Balance at March 31, 2022	$	(137,254)		$	(1,884)		$	(408,530)		$	19	$	(547,649)


(In thousands)		Three Months Ended				Location on the Condensed Consolidated Statements of Operations
	March 31
		2023		2022



Amortization of cash flow hedging instruments:
Foreign currency exchange forward contracts		$	411	$	(588)	Income (loss) from discontinued businesses



Interest rate swaps		(248)		1,050		Interest expense

Total before taxes		163		462
Income taxes		(39)		(124)
Total reclassification of cash flow hedging instruments, net of tax		$	124	$	338

Amortization of defined benefit pension items (c):
Actuarial losses		$	4,670	$	4,727	Defined benefit pension income (expense)
Prior service costs		114		120		Defined benefit pension income (expense)



Total before taxes		4,784		4,847
Income taxes		(292)		(313)
Total reclassification of defined benefit pension items, net of tax		$	4,492	$	4,534


	Three Months Ended
	March 31
(In millions, except percentages)		2023			2022
Revenues:
Harsco Environmental		$	273.2		$	262.1
Harsco Clean Earth		222.5			190.7


Total Revenues		$	495.7		$	452.8
Operating Income (Loss):
Harsco Environmental		$	22.3		$	18.3
Harsco Clean Earth		16.5			(1.3)

Corporate		(9.8)			(9.2)
Total Operating Income		$	29.0		$	7.7
Operating Margins:
Harsco Environmental		8.2		%	7.0		%
Harsco Clean Earth		7.4		%	(0.7)		%

Consolidated Operating Margin		5.9		%	1.7		%



Significant Effects on Revenues (In millions)	Three Months Ended
Revenues — 2022	$	262.1
Net effects of price/volume changes, primarily attributable to volume changes and service mix	23.5
Impact of foreign currency translation	(13.0)
Net impact of new and lost contracts	0.6


Revenues — 2023	$	273.2


		March 31
	Three Months Ended
(In millions, except per share amounts and percentages)		2023			2022
Total revenues		$	495.7		$	452.8
Cost of services and products sold		400.7			377.0
Selling, general and administrative expenses		71.9			69.2
Research and development expenses		0.2			0.1

Other (income) expenses, net		(6.2)			(1.2)
Operating income (loss) from continuing operations		29.0			7.7
Interest income		1.5			0.6
Interest expense		(24.3)			(15.1)
Facility fees and debt-related income (expense)		(2.4)			(0.5)

Defined benefit pension income		(5.3)			2.4
Income (loss) from continuing operations before income taxes and equity income		(1.6)			(4.8)
Income tax benefit (expense) from continuing operations		(6.9)			(1.2)
Equity income (loss) of unconsolidated entities, net		(0.1)			(0.1)
Income (loss) from continuing operations		(8.6)			(6.2)

Income (loss) from discontinued businesses		0.6			(39.1)
Income tax benefit (expense) related to discontinued operations		(0.6)			6.6
Income (loss) from discontinued operations, net of tax		—			(32.5)
Net income (loss)		(8.6)			(38.7)
Total other comprehensive income (loss)		7.2			12.0
Total comprehensive income (loss)		(1.4)			(26.7)
Diluted earnings (loss) per common share from continuing operations attributable to Harsco Corporation common stockholders		$	(0.12)		$	(0.09)
Effective income tax rate for continuing operations		(442.1)		%	(25.3)		%



(In millions)	Three Months Ended
Change in costs due to changes in revenues volume	$	26.4
Changes in costs due to change in prices, including materials, labor, fuel, transportation and maintenance	11.1
Impact of foreign currency translation	(11.1)
Other	(2.7)

Total change in cost of services and products sold — 2023 vs. 2022	$	23.7


Summary of Senior Secured Credit Facilities and Notes: (In millions)	March 31 2023		December 31 2022
By type:
New Term Loan	$	491.3	$	492.5
Revolving Credit Facility	375.0		370.0
5.75% Senior Notes	475.0		475.0
Total	$	1,341.3	$	1,337.5
By classification:
Current	$	5.0	$	5.0
Long-term	1,336.3		1,332.5
Total	$	1,341.3	$	1,337.5


	March 31, 2023
(In millions)	Facility Limit		Outstanding Balance		Outstanding Letters of Credit		Available Credit


Revolving credit facility (a U.S.-based program)	$	700.0	$	375.0	$	31.8	$	293.2


Exhibit Number						Description
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
101.Lab						Labels Linkbase Document
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.
104						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)



DATE	May 3, 2023	/s/ PETER F. MINAN
		Peter F. Minan
		Senior Vice President and Chief Financial Officer
		(On behalf of the registrant and as Principal Financial Officer)

DATE	May 3, 2023	/s/ SAMUEL C. FENICE
		Samuel C. Fenice
		Vice President and Corporate Controller
		(Principal Accounting Officer)