Enviri shares dip as Q2 EBITDA beats expectations despite rail contract exits

Enviri Corporation shares fell 0.78 per cent in pre-market trading on Tuesday following the release of its second-quarter financial results. The decline occurred despite the company reporting adjusted EBITDA of $34 million, which exceeded market expectations, and underlying revenue growing 2 per cent year-on-year to $324 million. The stock posted an adjusted diluted loss of $0.63 per share, reflecting a complex quarter marked by strategic divestments and mixed segment performance.

On a GAAP basis, Enviri recorded a diluted loss from continuing operations of $10.70 per share. This figure included significant charges associated with the exit of two European engineered-to-order contracts within its Harsco Rail division, as well as transaction-related expenses linked to the Clean Earth sale and spin-off. Reported revenue of $187 million was heavily impacted by $136.5 million in adjustments connected to the rail contract exits. Excluding these specific adjustments, underlying revenue demonstrated a 2 per cent increase compared to the comparable period last year.

Harsco Environmental emerged as the primary earnings contributor, generating $266 million in revenue, a 3 per cent increase year-on-year. The segment benefited from higher volumes and improved services pricing, pushing adjusted EBITDA to $46 million from $40 million in the prior year. Consequently, the segment’s adjusted EBITDA margin expanded to 17.2 per cent, up from 15.5 per cent, underscoring improved operational efficiency within the environmental division.

In contrast, Harsco Rail remained a drag on overall profitability. The division recorded adjusted revenue of $58 million, broadly unchanged from the prior-year period, but posted an adjusted EBITDA loss of $5 million. To mitigate future execution risk and reduce associated cash outflows, Enviri announced it is exiting two European engineered-to-order contracts. This strategic move is designed to address the persistent challenges within the rail business and stabilise long-term cash flow.

Cash flow metrics showed notable improvement during the quarter. Adjusted free cash flow was a negative $9 million outflow, a significant reduction from the $39 million outflow recorded a year earlier. This improvement was driven by higher cash earnings and enhancements in working capital management. Enviri reaffirmed its full-year 2026 adjusted EBITDA forecasts, projecting Harsco Environmental to generate between $170 million and $180 million, while anticipating an adjusted EBITDA loss for Harsco Rail between $19 million and $26 million.

President and CEO Russell Hochman highlighted the operational execution during the quarter, noting that both Harsco Environmental and Rail delivered results above the high end of their respective guidance ranges. He emphasised that the team performed well despite subdued conditions across end-markets. The company’s focus now shifts to maintaining these operational improvements and realising the benefits of the strategic rail contract exits as it moves through the remainder of the year.