Steel and waste handling company Enviri (NYSE:NVRI) met Wall Streets revenue expectations in Q3 CY2025, but sales were flat year on year at $574.8 million. Its non-GAAP loss of $0.08 per share was significantly below analysts’ consensus estimates.
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Enviri (NVRI) Q3 CY2025 Highlights:
- Revenue: $574.8 million vs analyst estimates of $573.2 million (flat year on year, in line)
- Adjusted EPS: -$0.08 vs analyst estimates of -$0.03 (significant miss)
- Adjusted EBITDA: $74.41 million vs analyst estimates of $82.17 million (12.9% margin, 9.4% miss)
- Management lowered its full-year Adjusted EPS guidance to -$0.68 at the midpoint, a 65.9% decrease
- EBITDA guidance for the full year is $273 million at the midpoint, below analyst estimates of $297 million
- Operating Margin: 1.9%, down from 4.3% in the same quarter last year
- Market Capitalization: $1.02 billion
StockStory’s Take
Enviri’s third quarter results saw a positive market reaction, despite a flat topline and a notable miss on adjusted profitability metrics. Management attributed the quarter’s mixed performance to continued strength in the Clean Earth business, which delivered margin expansion and healthy volume growth in hazardous waste, while Harsco Environmental and Rail segments faced operating headwinds. CEO F. Nicholas Grasberger highlighted that Clean Earth’s execution remains high, even amid distractions stemming from the ongoing strategic review and potential divestiture, and cited “healthy volume growth as a result” of new commercial strategies. The company also pointed to ongoing challenges in Rail due to subdued demand and project timing, which weighed on overall results.
Looking ahead, Enviri’s guidance reflects management’s cautious stance, shaped by persistent softness in Rail demand and ongoing cost challenges in Harsco Environmental. The company expects Clean Earth to continue outperforming, supported by a strong backlog and ongoing investments in IT and operational capabilities. CFO Thomas G. Vadaketh noted that revised guidance is primarily driven by a more conservative outlook in Rail, stating, “we are trying to kind of derisk our outlook for the remainder of the year.” Management is optimistic about the longer-term recovery in Rail and sees potential upside from industry consolidation and new contracts in Harsco Environmental.
Key Insights from Management’s Remarks
Management credited Clean Earth’s commercial momentum and operational discipline as key positives, while segment-specific challenges in Rail and Harsco Environmental shaped Q3 results and revised guidance.
- Clean Earth margin expansion: Clean Earth posted its highest ever quarterly margin, with management attributing the result to ongoing investments in IT, a new commercial growth strategy, and strong execution despite distractions from the strategic review process. Volume growth in hazardous waste was a particular highlight.
- Rail demand remains subdued: Management described demand for standard rail equipment and aftermarket parts as “weak and at unprecedented levels,” impacting both revenue and adjusted EBITDA. Delays in contract services and sluggish order activity further weighed on results.
- Strategic review progress: The company advanced its strategic review, focused on unlocking value through a potential sale of the Clean Earth business and a tax-efficient separation of Harsco Environmental and Rail. Grasberger emphasized “strong and definitive interest” in Clean Earth from industry and financial buyers.
- Cost actions in Harsco Environmental: Harsco Environmental faced higher operating costs and lower-than-expected contributions from new sites, prompting management to implement cost reduction initiatives. These actions are expected to offset recent inflationary pressures by 2026.
- Rail project milestones: On the European ETO (engineer-to-order) contracts, management noted progress toward key milestones, including homologation for Deutsche Bahn vehicles. The company aims to de-risk these projects, anticipating a shift to repeatable manufacturing and improved cash flow once deliveries are completed.
Drivers of Future Performance
Enviri’s outlook is shaped by continued momentum in Clean Earth, recovery efforts in Rail, and efficiency initiatives in Harsco Environmental.
- Clean Earth growth resilience: Management expects Clean Earth to sustain strong performance, supported by a robust backlog and ongoing IT upgrades. The business is positioned to benefit from industry consolidation and increased hazardous waste volumes, with leadership highlighting a “very attractive backlog of projects.”
- Rail and HE recovery potential: The company anticipates Rail demand to gradually recover by 2026, as deferred maintenance spending returns and ETO contract risks abate. Harsco Environmental is expected to benefit from recent European Commission proposals supporting steel volumes and from cost-out actions addressing inflation.
- Execution risks persist: Management identified persistent headwinds in Rail, including continued weak demand and project delays, along with timing uncertainties in project starts for Clean Earth’s soil and dredge business. The company’s ability to execute on strategic separation and cost reduction plans will be critical to achieving its long-term earnings targets.
Catalysts in Upcoming Quarters
In coming quarters, the StockStory team will monitor (1) progress on the Clean Earth strategic review and the company’s ability to execute a tax-efficient separation, (2) evidence of stabilization or recovery in Rail equipment and aftermarket demand, and (3) the impact of cost reduction initiatives in Harsco Environmental on segment margins. Additionally, any developments in European steel safeguard measures and project mix in Clean Earth’s backlog will be key indicators of future performance.
Enviri currently trades at $12.67, up from $12.19 just before the earnings. Is the company at an inflection point that warrants a buy or sell? The answer lies in our full research report (it’s free for active Edge members).
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