Enviri Corporation

Enviri reported second-quarter total revenue of $187 million, but that included a negative $136 million revenue adjustment tied to exiting the two rail contracts that had been accounted for under percentage-of-completion. Adjusted EBITDA was $34 million, up 22% year over year; adjusted loss per share was $0.63. Harsco Environmental revenue was $266 million, up 3%, and adjusted EBITDA was $46 million, up 15%. Rail adjusted revenue was $58 million and adjusted EBITDA was a $5 million loss. Management said full-year guidance is unchanged: HE adjusted EBITDA of $170 million to $180 million and Rail adjusted EBITDA loss of $19 million to $26 million. For Q3, HE is expected to be modestly above last year at the midpoint, Rail EBITDA is expected to decline on lower volumes, corporate costs should be about $9 million, and adjusted free cash flow is expected to be modestly negative.

Russell Hochman framed the quarter as an early sign of momentum for the post-Clean Earth Enviri, emphasizing that the company is moving quickly to strengthen its foundation and improve earnings, margins, and cash flow. He said exiting the Deutsche Bahn and Network Rail ETO contracts significantly de-risks Rail and that the company is pursuing multiple self-help initiatives across operations, supply chain, SG&A, and customer service. His tone was upbeat and confident, repeatedly pointing to 2027 as the point when these actions should translate into meaningful growth and better cash generation.

Peter Minan highlighted that operating teams beat the high end of guidance in both HE and Rail, with free cash flow also improving. He cited $34 million of adjusted EBITDA, $247 million of unusual P&L items, and an adjusted free cash flow outflow of $9 million that was better year over year and quarter over quarter. He said the company ended the quarter with net debt of approximately $290 million and net leverage of 1.9x, and noted that approximately 300 positions are being eliminated, with the resulting margin uplift expected to exceed $15 million annually on a full run-rate basis. He also said Q3 gross corporate costs should be about $9 million and that the company expects to count only $100 million of cash in its net debt calculation for covenant purposes.

Analysts focused heavily on the ETO contract exit, asking about the $190 million liability, the remaining risks, and whether Network Rail discussions could still change the outcome. Management said DB has an agreement in place with GBM and that discussions with Network Rail are ongoing, but they believe they are on a better path and that the accounting move is meant to put the issue behind them. Questions also centered on cash flow and whether Rail can approach breakeven free cash flow later this year; management said they expect that in Q4 and suggested 2027 should be positive for Rail on a standalone basis. Analysts also asked about Middle East exposure and aftermarket mix; management said several sites are affected by regional conflict, but none are shut down, and that aftermarket is roughly 40% of revenue historically but should rise as OE volumes remain weak and ETO-related revenue falls away.