Enviri Corp 10-Q, filed Aug 2, 2023

Enviri Corp (NVRI)

10-Q 2023-08-02 For: 2023-06-30

Added on June 09, 2026

About this 10-Q

Enviri Corp filed this 10-Q on August 2, 2023, covering the quarter ended June 30, 2023.

Headline figures

Quarter ended June 30, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $520.17M; up 8.1% from $481.05M a year earlier
Net loss: $11.44M; compared with a net loss of $105.59M a year earlier
Diluted EPS: -$0.14; compared with -$1.33 a year earlier

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Class						Outstanding at July 31, 2023
Common stock, par value $1.25 per share						79,755,066


		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	30

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	39

Item 4.	Controls and Procedures	39


PART II — OTHER INFORMATION

Item 1.	Legal Proceedings	39

Item 1A.	Risk Factors	39

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	40









Item 6.	Exhibits	41


SIGNATURES		42


Term						Description
AOCI						Accumulated Other Comprehensive Income (Loss)
AR Facility						Trade receivables securitization facility
ASU						Financial Accounting Standards Board Accounting Standards Update
CE						Clean Earth reportable business 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
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 reportable business 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 reportable business 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)	June 30 2023		December 31 2022
ASSETS
Current assets:
Cash and cash equivalents	$	85,484	$	81,332
Restricted cash	3,882		3,762
Trade accounts receivable, net	296,521		264,428

Other receivables	41,941		25,379
Inventories	84,644		81,375

Prepaid expenses	22,142		30,583
Current portion of assets held-for-sale	271,189		266,335
Other current assets	19,121		14,541
Total current assets	824,924		767,735

Property, plant and equipment, net	649,662		656,875
Right-of-use assets, net	98,662		101,253
Goodwill	764,949		759,253
Intangible assets, net	339,076		352,160


Deferred income tax assets	14,804		17,489
Assets held-for-sale	90,541		70,105
Other assets	70,019		65,984
Total assets	$	2,852,637	$	2,790,854
LIABILITIES
Current liabilities:
Short-term borrowings	$	3,853	$	7,751
Current maturities of long-term debt	14,595		11,994
Accounts payable	212,570		205,577

Accrued compensation	51,973		43,595
Income taxes payable	5,337		3,640





Current portion of operating lease liabilities	26,140		25,521
Current portion of liabilities of assets held-for-sale	153,199		159,004
Other current liabilities	139,300		140,199
Total current liabilities	606,967		597,281
Long-term debt	1,382,140		1,336,995


Retirement plan liabilities	48,505		46,601



Operating lease liabilities	73,537		75,246
Liabilities of assets held-for-sale	6,358		9,463
Environmental liabilities	26,494		26,880
Deferred tax liabilities	33,425		30,069
Other liabilities	47,804		45,277
Total liabilities	2,225,230		2,167,812
COMMITMENTS AND CONTINGENCIES
ENVIRI CORPORATION STOCKHOLDERS’ EQUITY

Common stock	145,966		145,448
Additional paid-in capital	232,463		225,759
Accumulated other comprehensive loss	(544,606)		(567,636)
Retained earnings	1,593,477		1,614,441
Treasury stock	(849,808)		(848,570)
Total Enviri Corporation stockholders’ equity	577,492		569,442
Noncontrolling interests	49,915		53,600
Total equity	627,407		623,042
Total liabilities and equity	$	2,852,637	$	2,790,854


	Three Months Ended					Six Months Ended
	June 30					June 30
(In thousands, except per share amounts)	2023			2022		2023		2022
Revenues from continuing operations:


Revenues	$	520,168		$	481,052	$	1,015,821	$	933,849
Costs and expenses from continuing operations:


Cost of sales	406,627			403,199		807,315		780,218
Selling, general and administrative expenses	76,850			67,935		148,785		137,088
Research and development expenses	500			296		676		352
Goodwill impairment charge	—			104,580		—		104,580
Property, plant and equipment impairment charge	14,099			—		14,099		—
Other (income) expenses, net	(2,223)			2,045		(8,374)		866
Total costs and expenses	495,853			578,055		962,501		1,023,104
Operating income (loss) from continuing operations	24,315			(97,003)		53,320		(89,255)
Interest income	1,567			693		3,022		1,337
Interest expense	(25,724)			(16,692)		(50,052)		(31,784)
Facility fees and debt-related income (expense)	(2,730)			2,149		(5,093)		1,617

Defined benefit pension income (expense)	(5,407)			2,247		(10,742)		4,657
Income (loss) from continuing operations before income taxes and equity income	(7,979)			(108,606)		(9,545)		(113,428)
Income tax benefit (expense) from continuing operations	(10,319)			3,115		(17,242)		1,894
Equity income (loss) of unconsolidated entities, net	(309)			(114)		(442)		(245)
Income (loss) from continuing operations	(18,607)			(105,605)		(27,229)		(111,779)
Discontinued operations:

Income (loss) from discontinued businesses	7,556			1,879		8,175		(37,218)
Income tax benefit (expense) from discontinued businesses	(4,787)			(770)		(5,374)		5,821
Income (loss) from discontinued operations, net of tax	2,769			1,109		2,801		(31,397)
Net income (loss)	(15,838)			(104,496)		(24,428)		(143,176)
Less: Net (income) loss attributable to noncontrolling interests	4,399			(1,095)		3,464		(2,254)
Net income (loss) attributable to Enviri Corporation	$	(11,439)		$	(105,591)	$	(20,964)	$	(145,430)
Amounts attributable to Enviri Corporation common stockholders:
Income (loss) from continuing operations, net of tax	$	(14,208)		$	(106,700)	$	(23,765)	$	(114,033)
Income (loss) from discontinued operations, net of tax	2,769			1,109		2,801		(31,397)
Net income (loss) attributable to Enviri Corporation common stockholders	$	(11,439)		$	(105,591)	$	(20,964)	$	(145,430)

Weighted-average shares of common stock outstanding	79,816			79,509		79,725		79,437
Basic earnings (loss) per common share attributable to Enviri Corporation common stockholders:
Continuing operations	$	(0.18)		$	(1.34)	$	(0.30)	$	(1.44)
Discontinued operations	0.03			0.01		0.04		(0.40)
Basic earnings (loss) per share attributable to Enviri Corporation common stockholders	$	(0.14)	(a)	$	(1.33)	$	(0.26)	$	(1.83)	(a)

Diluted weighted-average shares of common stock outstanding	79,816			79,509		79,725		79,437
Diluted earnings (loss) per common share attributable to Enviri Corporation common stockholders:
Continuing operations	$	(0.18)		$	(1.34)	$	(0.30)	$	(1.44)
Discontinued operations	0.03			0.01		0.04		(0.40)
Diluted earnings (loss) per share attributable to Enviri Corporation common stockholders	$	(0.14)	(a)	$	(1.33)	$	(0.26)	$	(1.83)	(a)


☒			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


	Six Months Ended June 30
(In thousands)	2023		2022
Cash flows from operating activities:
Net income (loss)	$	(24,428)	$	(143,176)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation	67,496		66,067
Amortization	16,032		17,067
Deferred income tax (benefit) expense	7,622		(10,396)
Equity (income) loss of unconsolidated entities, net	442		245
Dividends from unconsolidated entities	—		526


(Gain) loss on early extinguishment of debt	—		(2,254)
Goodwill impairment charge	—		104,580
Property, plant and equipment impairment charge	14,099		—
Other, net	4,146		1,020
Changes in assets and liabilities, net of acquisitions and dispositions of businesses:
Accounts receivable	(56,383)		87,607
Income tax refunds receivable, reimbursable to seller	—		7,687
Inventories	(7,952)		(8,435)
Contract assets	(3,535)		7,836
Right-of-use assets	16,211		14,383
Accounts payable	12,960		18,847
Accrued interest payable	(192)		(740)
Accrued compensation	9,194		(5,884)
Advances on contracts	(12,978)		(13,626)


Operating lease liabilities	(14,790)		(14,095)
Retirement plan liabilities, net	(5,468)		(21,587)

Other assets and liabilities	5,714		12,067
Net cash (used) provided by operating activities	28,190		117,739
Cash flows from investing activities:
Purchases of property, plant and equipment	(66,341)		(61,791)


Proceeds from sales of assets	1,439		6,591
Expenditures for intangible assets	(427)		(100)
Proceeds from notes receivable	11,238		8,605
Net proceeds (payments) from settlement of foreign currency forward exchange contracts	(2,408)		4,999
Payments for settlements of interest rate swaps	—		(2,123)
Other investing activities, net	84		153
Net cash used by investing activities	(56,415)		(43,666)
Cash flows from financing activities:
Short-term borrowings, net	601		(31)
Current maturities and long-term debt:
Additions	123,996		104,961
Reductions	(90,727)		(152,861)


Contributions from noncontrolling interests	1,654		—

Sale of noncontrolling interests	—		1,901

Stock-based compensation - Employee taxes paid	(1,238)		(1,698)
Payment of contingent consideration	—		(6,915)




Net cash (used) provided by financing activities	34,286		(54,643)
Effect of exchange rate changes on cash and cash equivalents, including restricted cash	(1,789)		(5,751)
Net increase in cash and cash equivalents, including restricted cash	4,272		13,679
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	$	89,366	$	100,807

Supplementary cash flow information:
Change in accrual for purchases of property, plant and equipment included in accounts payable	$	(3,170)	$	6,836


	Enviri 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
Net income (loss)	—		—		—		(11,439)		—		(4,399)		(15,838)




Total other comprehensive income (loss), net of deferred income taxes of $(684)	—		—		—		—		16,236		(1,835)		14,401


Contributions from noncontrolling interests	—		—		—		—		—		1,654		1,654







Vesting of restricted stock units and other stock grants, net 82,415 shares	123		(130)		(123)		—		—		—		(130)


Amortization of unearned portion of stock-based compensation, net of forfeitures	—		—		3,368		—		—		—		3,368
Balances, June 30, 2023	$	145,966	$	(849,808)	$	232,463	$	1,593,477	$	(544,606)	$	49,915	$	627,407


	Six Months Ended June 30
(In millions)	2023		2022
Upon execution in June 2022	$	—	$	120.0
Additional proceeds	5.0		—
Total received	$	5.0	$	120.0



	Three Months Ended
	June 30
Defined Benefit Pension Plan Net Periodic Pension Cost (Benefit)	U.S. Plans				International Plans
(In thousands)	2023		2022		2023		2022
Service costs	$	—	$	—	$	308	$	417
Interest costs	2,543		1,429		7,538		4,128
Expected return on plan assets	(1,750)		(2,698)		(7,784)		(9,720)
Recognized prior service costs	—		—		115		113
Recognized actuarial losses	1,150		1,183		3,579		3,313

Defined benefit pension plan net periodic pension cost (benefit)	$	1,943	$	(86)	$	3,756	$	(1,749)



	Six Months Ended
	June 30
Defined Benefit Pension Plans Net Periodic Pension Cost (Benefit)	U.S. Plans				International Plans
(In thousands)	2023		2022		2023		2022
Service costs	$	—	$	—	$	615	$	849
Interest costs	5,086		2,858		14,952		8,522
Expected return on plan assets	(3,500)		(5,397)		(15,441)		(20,104)
Recognized prior service costs	—		—		229		233
Recognized actuarial losses	2,301		2,366		7,098		6,857


Defined benefit pension plans net periodic pension cost (benefit)	$	3,887	$	(173)	$	7,453	$	(3,643)


(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
June 30, 2023
Asset derivatives (Level 2):
Foreign currency exchange forward contracts	Other current assets	$	34	$	4,295	$	4,329
Interest rate swaps	Other current assets	3,110		—		3,110

Total		$	3,144	$	4,295	$	7,439

Liability derivatives (Level 2):
Foreign currency exchange forward contracts	Other current liabilities	$	753	$	2,964	$	3,717

Interest rate swaps	Other liabilities	710		—		710
Total		$	1,463	$	2,964	$	4,427
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
	June 30				June 30
(In thousands)	2023		2022		2023		2022
Foreign currency exchange forward contracts	$	(438)	$	957	$	866	$	(998)


Interest rate swaps	6,152		—		(617)		1,061

	$	5,714	$	957	$	249	$	63


	Location of Gain (Loss) Recognized in Income on Derivatives	Amount of Gain (Loss) Recognized in Income on Derivatives (a)
		Three Months Ended				Six Months Ended
		June 30				June 30
(In thousands)		2023		2022		2023		2022

Foreign currency exchange forward contracts	Cost of services and products sold	$	4,862	$	18,234	$	1,565	$	22,072


FORM			10-Q


(In millions)	June 30 2023		December 31 2022
Net amounts sold under factoring arrangements	$	15.2	$	17.3
Program capacities	32.2		31.4


(In thousands)	June 30 2023		December 31 2022
Finished goods	$	14,411	$	11,809
Work-in-process	1,107		2,030

Raw materials and purchased parts	26,927		27,946
Stores and supplies	42,199		39,590
Total inventories	$	84,644	$	81,375


(In thousands)	June 30 2023		December 31 2022
Land	$	72,090	$	72,020
Land improvements	16,907		16,750
Buildings and improvements	208,666		217,926
Machinery and equipment	1,566,383		1,513,238
Uncompleted construction	78,420		84,472
Gross property, plant and equipment	1,942,466		1,904,406
Less: Accumulated depreciation	(1,292,804)		(1,247,531)
Property, plant and equipment, net	$	649,662	$	656,875


	Three Months Ended
	June 30, 2022
(In thousands)	Harsco Environmental Segment		Clean Earth Segment		Consolidated Totals
Primary Geographical Markets (a):
North America	$	80,709	$	203,453	$	284,162
Western Europe	99,591		—		99,591
Latin America (b)	39,202		—		39,202
Asia-Pacific	31,950		—		31,950
Middle East and Africa	20,762		—		20,762
Eastern Europe	5,385		—		5,385
Total Revenues	$	277,599	$	203,453	$	481,052

Key Product and Service Groups:
Environmental services related to resource recovery for metals manufacturing and related logistical services	$	236,165	$	—	$	236,165
Ecoproducts	38,083		—		38,083
Environmental systems for aluminum dross and scrap processing	3,351		—		3,351



Hazardous waste processing solutions	—		170,817		170,817

Soil and dredged materials processing and reuse solutions	—		32,636		32,636
Total Revenues	$	277,599	$	203,453	$	481,052


	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	(61,493)		(a)	1,692		(b)	33,697		(a)	(13)		(26,117)
Amounts reclassified from AOCI, net of tax	—			168			8,831			—		8,999



Total OCI	(61,493)			1,860			42,528			(13)		(17,118)
Less: OCI attributable to noncontrolling interests	3,385			—			—			—		3,385
OCI attributable to Enviri Corporation	(58,108)			1,860			42,528			(13)		(13,733)
Balance at June 30, 2022	$	(192,997)		$	(1,164)		$	(379,720)		$	9	$	(573,872)



Significant Effects on Revenues (In millions)	Three Months Ended		Six Months Ended
Revenues — June 30, 2022	$	277.6	$	539.7
Net effects of price/volume changes, primarily attributable to volume changes and service mix	14.1		37.6
Impact of foreign currency translation	(4.2)		(17.2)
Net impact of new and lost contracts	2.0		2.6

Other	0.1		0.1
Revenues — June 30, 2023	$	289.6	$	562.8



	Three Months		Six Months
(In millions)	Ended		Ended
Change in costs due to changes in revenues volume	$	12.4	$	38.8
Changes in costs due to change in prices, including materials, labor, fuel, transportation and maintenance	(2.0)		9.1
Impact of foreign currency translation	(3.2)		(14.3)
Other	(3.8)		(6.5)

Total change in cost of services and products sold — 2023 vs. 2022	$	3.4	$	27.1


Summary of Senior Secured Credit Facilities and Notes: (In millions)	June 30 2023		December 31 2022
By type:
New Term Loan	$	490.0	$	492.5
Revolving Credit Facility	410.0		370.0
5.75% Senior Notes	475.0		475.0
Total	$	1,375.0	$	1,337.5
By classification:
Current	$	5.0	$	5.0
Long-term	1,370.0		1,332.5
Total	$	1,375.0	$	1,337.5


	June 30, 2023
(In millions)	Facility Limit		Outstanding Balance		Outstanding Letters of Credit		Available Credit


Revolving credit facility (a U.S.-based program)	$	700.0	$	410.0	$	35.8	$	254.2


Exhibit Number						Description
3.1						Restated Certificate of Incorporation, as Amended.
3.2						Amended and Restated By-laws, dated June 5, 2023 (incorporated by reference to Exhibit 3.2 to the Company's Current Report on Form 8-K dated June 8, 2023. Commission File Number 001-03970).
10.1						Omnibus Amendment, dated as of June 30 2023, that is the First Amendment to Receivables Purchase Agreement among Harsco Receivables LLC, as seller, Enviri Corporation (f/k/a Harsco Corporation), as initial servicer, and PNC Bank, National Association, as administrative agent and a purchaser, and the First Amendment to Purchase and Contribution Agreement among Enviri Corporation (f/k/a Harsco Corporation), as initial servicer, various entities party thereto as originators, and Harsco Receivables LLC, as buyer.
10.2						Form of Non-Employee Director Indemnification Agreement (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K dated June 21, 2023. Commission File Number 001-03970).
10.3						Amendment No. 3 to the 2013 Equity and Incentive Compensation Plan (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K dated April 25, 2023. 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
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	August 2, 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	August 2, 2023	/s/ SAMUEL C. FENICE
		Samuel C. Fenice
		Vice President and Corporate Controller
		(Principal Accounting Officer)