NVRI 10-Q

Enviri Corp (NVRI)

10-Q 2022-11-01 For: 2022-09-30

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Added on June 09, 2026

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Class						Outstanding at October 31, 2022
Common stock, par value $1.25 per share						79,474,631


		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)	10

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	33

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	40

Item 4.	Controls and Procedures	40


PART II — OTHER INFORMATION

Item 1.	Legal Proceedings	41

Item 1A.	Risk Factors	41

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	41









Item 6.	Exhibits	42


SIGNATURES		43


Term						Description
AOCI						Accumulated Other Comprehensive Income (Loss)

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 Agency
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
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
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 Notes						5.75% Notes due July 31, 2027
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)	September 30 2022		December 31 2021
ASSETS
Current assets:
Cash and cash equivalents	$	81,740	$	82,908
Restricted cash	3,297		4,220
Trade accounts receivable, net	269,890		377,881

Other receivables	26,307		33,059
Inventories	80,714		70,493

Prepaid expenses	33,592		31,065
Current portion of assets held-for-sale	261,888		265,413
Other current assets	39,617		9,934
Total current assets	797,045		874,973

Property, plant and equipment, net	629,895		653,913
Right-of-use assets, net	104,227		101,576
Goodwill	744,780		883,109
Intangible assets, net	372,002		402,801


Deferred income tax assets	16,681		17,883
Assets held-for-sale	63,864		71,234
Other assets	42,901		48,419
Total assets	$	2,771,395	$	3,053,908
LIABILITIES
Current liabilities:
Short-term borrowings	$	9,463	$	7,748
Current maturities of long-term debt	16,784		10,226
Accounts payable	203,900		186,126

Accrued compensation	38,041		48,165
Income taxes payable	4,271		6,378





Current portion of operating lease liabilities	25,989		25,590
Current portion of liabilities of assets held-for-sale	157,231		161,999
Other current liabilities	136,019		155,159
Total current liabilities	591,698		601,391
Long-term debt	1,314,918		1,359,446


Retirement plan liabilities	49,286		93,693



Operating lease liabilities	77,304		74,571
Liabilities of assets held-for-sale	7,437		8,492
Environmental liabilities	26,678		28,435
Deferred tax liabilities	32,497		33,826
Other liabilities	45,442		48,284
Total liabilities	2,145,260		2,248,138
COMMITMENTS AND CONTINGENCIES
HARSCO CORPORATION STOCKHOLDERS’ EQUITY

Common stock	145,390		144,883
Additional paid-in capital	223,172		215,528
Accumulated other comprehensive loss	(596,764)		(560,139)
Retained earnings	1,651,159		1,794,510
Treasury stock	(848,439)		(846,622)
Total Harsco Corporation stockholders’ equity	574,518		748,160
Noncontrolling interests	51,617		57,610
Total equity	626,135		805,770
Total liabilities and equity	$	2,771,395	$	3,053,908


	Three Months Ended					Nine Months Ended
	September 30					September 30
(In thousands, except per share amounts)	2022		2021			2022			2021
Revenues from continuing operations:
Service revenues	$	442,775	$	430,824		$	1,300,828		$	1,274,814
Product revenues	44,139		39,561			119,935			111,510
Total revenues	486,914		470,385			1,420,763			1,386,324
Costs and expenses from continuing operations:
Cost of services sold	357,194		344,050			1,072,545			1,018,885
Cost of products sold	35,609		31,289			100,476			89,269
Selling, general and administrative expenses	64,146		70,629			201,234			213,048
Research and development expenses	193		331			545			811
Goodwill impairment charge	—		—			104,580			—
Other (income) expenses, net	(351)		(2,835)			515			(7,993)
Total costs and expenses	456,791		443,464			1,479,895			1,314,020
Operating income (loss) from continuing operations	30,123		26,921			(59,132)			72,304
Interest income	952		544			2,289			1,668
Interest expense	(19,751)		(15,741)			(51,535)			(47,640)
Facility fees and debt-related income (expense)	(2,511)		(198)			(894)			(5,506)

Defined benefit pension income	2,118		3,887			6,775			11,777
Income (loss) from continuing operations before income taxes and equity income	10,931		15,413			(102,497)			32,603
Income tax benefit (expense) from continuing operations	(9,376)		(7,816)			(7,482)			(14,714)
Equity income (loss) of unconsolidated entities, net	(128)		(293)			(373)			(488)
Income (loss) from continuing operations	1,427		7,304			(110,352)			17,401
Discontinued operations:

Income (loss) from discontinued businesses	1,993		1,301			(35,225)			12,904
Income tax benefit (expense) from discontinued businesses	(539)		1,223			5,282			(3,832)
Income (loss) from discontinued operations, net of tax	1,454		2,524			(29,943)			9,072
Net income (loss)	2,881		9,828			(140,295)			26,473
Less: Net (income) loss attributable to noncontrolling interests	(802)		(2,264)			(3,056)			(5,386)
Net income (loss) attributable to Harsco Corporation	$	2,079	$	7,564		$	(143,351)		$	21,087
Amounts attributable to Harsco Corporation common stockholders:
Income (loss) from continuing operations, net of tax	$	625	$	5,040		$	(113,408)		$	12,015
Income (loss) from discontinued operations, net of tax	1,454		2,524			(29,943)			9,072
Net income (loss) attributable to Harsco Corporation common stockholders	$	2,079	$	7,564		$	(143,351)		$	21,087
Weighted-average shares of common stock outstanding	79,531		79,287			79,469			79,214
Basic earnings (loss) per common share attributable to Harsco Corporation common stockholders:
Continuing operations	$	0.01	$	0.06		$	(1.43)		$	0.15
Discontinued operations	0.02		0.03			(0.38)			0.11
Basic earnings (loss) per share attributable to Harsco Corporation common stockholders	$	0.03	$	0.10	(a)	$	(1.80)	(a)	$	0.27	(a)
Diluted weighted-average shares of common stock outstanding	79,567		80,275			79,469			80,356
Diluted earnings (loss) per common share attributable to Harsco Corporation common stockholders:
Continuing operations	$	0.01	$	0.06		$	(1.43)		$	0.15
Discontinued operations	0.02		0.03			(0.38)			0.11
Diluted earnings (loss) per share attributable to Harsco Corporation common stockholders	$	0.03	$	0.09		$	(1.80)	(a)	$	0.26


☒			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


	Nine Months Ended September 30
(In thousands)	2022		2021
Cash flows from operating activities:
Net income (loss)	$	(140,295)	$	26,473
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation	97,959		98,383
Amortization	25,605		26,554
Deferred income tax (benefit) expense	(12,056)		(8,911)
Equity (income) loss of unconsolidated entities, net	373		488
Dividends from unconsolidated entities	526		—


(Gain) loss on early extinguishment of debt	(2,254)		2,668
Goodwill impairment charge	104,580		—
Other, net	381		(1,147)
Changes in assets and liabilities, net of acquisitions and dispositions of businesses:
Accounts receivable	74,994		(32,563)
Income tax refunds receivable, reimbursable to seller	7,687		735
Inventories	(11,339)		3,557
Contract assets	9,589		(52,205)
Right-of-use assets	21,829		21,050
Accounts payable	13,030		12,111
Accrued interest payable	(7,559)		(7,840)
Accrued compensation	(5,559)		12,098
Advances on contracts	(5,987)		(13,997)


Operating lease liabilities	(21,498)		(20,554)
Retirement plan liabilities, net	(27,829)		(36,700)

Other assets and liabilities	8,984		16,550
Net cash provided by operating activities	131,161		46,750
Cash flows from investing activities:
Purchases of property, plant and equipment	(101,645)		(109,507)


Proceeds from sales of assets	8,289		15,512
Expenditures for intangible assets	(147)		(287)
Proceeds from notes receivable	8,605		6,400
Net proceeds (payments) from settlement of foreign currency forward exchange contracts	13,571		(1,064)
Payments for settlements of interest rate swaps	(2,586)		—
Other investing activities, net	220		181
Net cash used by investing activities	(73,693)		(88,765)
Cash flows from financing activities:
Short-term borrowings, net	277		4,650
Current maturities and long-term debt:
Additions	159,429		507,468
Reductions	(198,831)		(452,351)

Dividends paid to noncontrolling interests	(4,841)		(3,103)


Sale of noncontrolling interests	1,901		—

Stock-based compensation - Employee taxes paid	(1,817)		(3,273)
Payment of contingent consideration	(6,915)		(734)


Deferred financing costs	—		(7,828)
Other financing activities, net	—		(601)
Net cash (used) provided by financing activities	(50,797)		44,228
Effect of exchange rate changes on cash and cash equivalents, including restricted cash	(8,762)		(1,779)
Net increase in cash and cash equivalents, including restricted cash	(2,091)		434
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	$	85,037	$	80,103

Supplementary cash flow information:
Change in accrual for purchases of property, plant and equipment included in accounts payable	$	7,419	$	2,357


	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 (loss)							(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
Net income (loss)							(105,591)				1,095		(104,496)




Total other comprehensive income (loss), net of deferred income taxes of $(5,225)									(26,223)		(2,903)		(29,126)


Contributions from noncontrolling interests											1,900		1,900






Stock appreciation rights exercised, net 16,671 shares	29		(66)		(29)								(66)
Vesting of restricted stock units and other stock grants, net 23,224 shares	29				(29)								—


Amortization of unearned portion of stock-based compensation, net of forfeitures					2,396								2,396
Balances, June 30, 2022	$	145,319	$	(848,320)	$	221,117	$	1,649,080	$	(573,872)	$	58,379	$	651,703
Net income (loss)							2,079		$	—	802		2,881
Cash dividends declared:

Noncontrolling interests											(4,841)		(4,841)

Total other comprehensive income (loss), net of deferred income taxes of $(5,297)									(22,892)		(2,723)		(25,615)










Vesting of restricted stock units and other stock grants, net 32,836 shares	71		(119)		(71)								(119)


Amortization of unearned portion of stock-based compensation, net of forfeitures					2,126								2,126
Balances, September 30, 2022	$	145,390	$	(848,439)	$	223,172	$	1,651,159	$	(596,764)	$	51,617	$	626,135


	September 30, 2022		December 31 2021 (a)
Trade accounts receivable	$	278,876	$	389,535
Less: Allowance for expected credit losses	(8,986)		(11,654)

Trade accounts receivable, net	$	269,890	$	377,881

Other receivables (b)	$	26,307	$	33,059


(In thousands)	Harsco Environmental Segment		Harsco Clean Earth Segment		Consolidated Totals
Balance at December 31, 2021	$	399,230	$	483,879	$	883,109

Goodwill impairment	—		(104,580)		(104,580)
Foreign currency translation	(33,749)		—		(33,749)
Balance at September 30, 2022	$	365,481	$	379,299	$	744,780



	Three Months Ended
	September 30
Defined Benefit Pension Plan Net Periodic Pension Cost (Benefit)	U.S. Plans				International Plans
(In thousands)	2022		2021		2022		2021
Service costs	$	—	$	—	$	400	$	463
Interest costs	1,429		1,203		3,887		3,194
Expected return on plan assets	(2,699)		(3,050)		(9,145)		(11,358)
Recognized prior service costs	—		—		107		127
Recognized actuarial losses	1,183		1,384		3,115		4,573

Defined benefit pension plan net periodic pension cost (benefit)	$	(87)	$	(463)	$	(1,636)	$	(3,001)



	Nine Months Ended
	September 30
Defined Benefit Pension Plans Net Periodic Pension Cost (Benefit)	U.S. Plans				International Plans
(In thousands)	2022		2021		2022		2021
Service costs	$	—	$	—	$	1,250	$	1,391
Interest costs	4,287		3,609		12,409		9,576
Expected return on plan assets	(8,096)		(9,150)		(29,250)		(34,080)
Recognized prior service costs	—		—		340		381
Recognized actuarial losses	3,549		4,154		9,972		13,722


Defined benefit pension plans net periodic pension cost (benefit)	$	(260)	$	(1,387)	$	(5,279)	$	(9,010)


	Three Months Ended				Nine Months Ended
Company Contributions	September 30				September 30
(In thousands)	2022		2021		2022		2021
Defined benefit pension plans (U.S.)	$	426	$	451	$	1,313	$	3,768
Defined benefit pension plans (International)	3,824		4,549		19,411		21,472
Multiemployer pension plans	446		429		1,381		1,311
Defined contribution pension plans	3,019		2,936		9,948		9,366


(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
September 30, 2022
Asset derivatives (Level 2):
Foreign currency exchange forward contracts	Other current assets	$	3,653	$	27,131	$	30,784
Interest rate swaps	Other current assets	269		—		269

Total		$	3,922	$	27,131	$	31,053

Liability derivatives (Level 2):
Foreign currency exchange forward contracts	Other current liabilities	$	931	$	1,366	$	2,297


Total		$	931	$	1,366	$	2,297
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


FORM			10-Q


(In thousands)	September 30 2022		December 31 2021
Finished goods	$	9,714	$	8,323
Work-in-process	4,109		5,393

Raw materials and purchased parts	27,065		21,188
Stores and supplies	39,826		35,589
Total inventories	$	80,714	$	70,493


(In thousands)	September 30 2022		December 31 2021
Land	$	72,593	$	73,067
Land improvements	16,404		16,970
Buildings and improvements	212,157		221,236
Machinery and equipment	1,441,669		1,507,214
Uncompleted construction	73,645		63,816
Gross property, plant and equipment	1,816,468		1,882,303
Less: Accumulated depreciation	(1,186,573)		(1,228,390)
Property, plant and equipment, net	$	629,895	$	653,913


	Amount Recognized in OCI on Derivatives				Amount Reclassified from AOCI into Income - Effective Portion or Equity
	Three Months Ended				Three Months Ended
	September 30				September 30
(In thousands)	2022		2021		2022		2021
Foreign currency exchange forward contracts	$	1,517	$	611	$	(1,101)	$	(418)


Interest rate swaps	—		(27)		1,073		872

	$	1,517	$	584	$	(28)	$	454


	Location of Gain (Loss) Recognized in Income on Derivatives	Amount of Gain (Loss) Recognized in Income on Derivatives (a)
		Three Months Ended				Nine Months Ended
		September 30				September 30
(In thousands)		2022		2021		2022		2021

Foreign currency exchange forward contracts	Cost of services and products sold	$	18,764	$	4,105	$	40,836	$	8,109


	Three Months Ended
	September 30, 2021
(In thousands)	Harsco Environmental Segment		Harsco Clean Earth Segment		Consolidated Totals
Primary Geographical Markets (a):
North America	$	71,479	$	200,484	$	271,963
Western Europe	106,859		—		106,859
Latin America (b)	35,072		—		35,072
Asia-Pacific	30,228		—		30,228
Middle East and Africa	20,804		—		20,804
Eastern Europe	5,459		—		5,459
Total Revenues	$	269,901	$	200,484	$	470,385

Key Product and Service Groups:
Environmental services related to resource recovery for metals manufacturing and related logistical services	$	230,340	$	—	$	230,340
Ecoproducts	36,091		—		36,091
Environmental systems for aluminum dross and scrap processing	3,470		—		3,470



Waste processing, recycling, reuse and transportation solutions	—		200,484		200,484

Total Revenues	$	269,901	$	200,484	$	470,385


	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	(15,437)		(a)	257		(b)	6,628		(a)	25		(8,527)
Amounts reclassified from AOCI, net of tax	—			1,488			17,184			—		18,672



Total OCI	(15,437)			1,745			23,812			25		10,145
Less: OCI attributable to noncontrolling interests	(837)			—			—			—		(837)
OCI attributable to Harsco Corporation	(14,600)			1,745			23,812			25		10,982
Balance at September 30, 2021	$	(139,992)		$	(4,095)		$	(490,688)		$	16	$	(634,759)


	September 30, 2022
Significant Effects on Revenues (In millions)	Three Months Ended		Nine Months Ended
Revenues — 2021	$	269.9	$	800.4
Net effects of price/volume changes, primarily attributable to volume changes	19.3		65.1
Impact of foreign currency translation	(24.1)		(50.9)
Net impact of new and lost contracts	0.1		(8.7)

Other	(0.5)		(1.5)
Revenues — 2022	$	264.7	$	804.4


	September 30, 2022
(In millions)	Three Months Ended		Nine Months Ended
Change in costs due to changes in revenues volume	$	13.3	$	45.7
Changes in costs due to change in prices, including materials, labor, fuel, transportation and maintenance	23.1		54.7
Impact of foreign currency translation	(20.2)		(43.2)
Other	1.3		7.6

Total change in cost of services and products sold — 2022 vs. 2021	$	17.5	$	64.8


Summary of Senior Secured Credit Facilities and Notes: (In millions)	September 30 2022		December 31 2021
By type:
New Term Loan	$	493.8	$	497.5
Revolving Credit Facility	353.0		362.0
5.75% Senior Notes	475.0		500.0
Total	$	1,321.8	$	1,359.5
By classification:
Current	$	5.0	$	5.0
Long-term	1,316.8		1,354.5
Total	$	1,321.8	$	1,359.5


	September 30, 2022
(In millions)	Facility Limit		Outstanding Balance		Outstanding Letters of Credit		Available Credit


Revolving credit facility (a U.S.-based program)	$	700.0	$	353.0	$	32.2	$	314.8


Exhibit Number						Description
3.1						Amended and Restated By-laws, dated October 19 , 2022 (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K dated October 25 , 2022. Commission File Number 001-03970)
10.1						Offer Letter, dated August 11, 2022 (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K dated August 12, 2022. Commission File Number 001-03970)
10.2						Amen dment No. 12 to Third Amended and Restated Credit Agreement, dated as of August 29, 2022, among Harsco Corporation, the Subsidiary Guarantors party thereto, Bank of America, N.A., as administrative agent, and the lenders party thereto. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated August 29, 2022 Commiss ion File 001-3970 )
10.3						Amendment No. 11 to Third Amended and Restated Credit Agreement, dated as of August 19, 2022, among Harsco Corporation, the Subsidiary Guarantors party thereto, and Bank of America, N.A. as administrative agent. (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K dated August 29, 2022 . Commission File 001-3970 )
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	November 1, 2022	/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	November 1, 2022	/s/ SAMUEL C. FENICE
		Samuel C. Fenice
		Vice President and Corporate Controller
		(Principal Accounting Officer)