Enviri (NVRI) Q2 Revenue Falls 8%

Enviri (NVRI -0.44%), a company specializing in environmental solutions through waste management, recycling, and industrial services, released its second quarter 2025 earnings on August 5, 2025. The headline result was a miss on both revenue and non-GAAP earnings per share (EPS) for the quarter: revenue was $562 million versus the analyst estimate of $576.6 million, and non-GAAP EPS came in at $(0.22), below the expected $(0.12). These shortfalls were driven by continued weakness in the Harsco Rail segment and lingering effects from past business divestitures. Clean Earth achieved record earnings in the second quarter of 2025. The company lowered its full-year guidance, reflecting ongoing Rail segment pressures and increasing caution about the rest of 2025.

Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.

Overview of Enviri’s Business and Key Focus Areas

Enviri delivers environmental solutions focused on waste and materials management for industrial and commercial clients, with primary operations under its Clean Earth and Harsco Environmental segments. Clean Earth specializes in hazardous waste management and soil remediation, while Harsco Environmental provides onsite slag handling and resource recovery for steelmakers. The smaller Harsco Rail segment manufactures rail maintenance equipment and technology.

The company’s recent strategy centers on transforming into a pure-play environmental solutions provider. Key success factors include building a stable base of long-term contracts, driving operational efficiency, and growing its environmental footprint through acquisitions while divesting legacy non-core businesses. Strong long-term customer relationships and regulatory compliance, especially in the waste business, underpin much of Enviri’s predictable revenue stream. Regulatory permits—over 700 in Clean Earth—play a vital role in establishing and sustaining market presence, making compliance and licensing core to future growth.

Quarterly Performance: Segment Results and Developments

During the quarter, Clean Earth posted record earnings in the second quarter of 2025. Revenue in this segment rose 4% year over year, driven by higher volumes, improved pricing, and gains from operational efficiencies. Adjusted EBITDA (non-GAAP) for Clean Earth was $40 million for the quarter, and Adjusted EBITDA margin expanded to 16.3% for Clean Earth. Management noted that this margin growth resulted from better route optimization and lower disposal costs, although temporary outages at primary disposal sites did lead to higher costs in some cases.

Harsco Environmental revenue declined 11.9% year over year (GAAP), partly due to divestitures such as Reed Minerals. On an adjusted basis excluding sales of exited businesses, Harsco Environmental revenue decreased 5%. The business maintained steady performance in the face of subdued demand in the steel industry, delivering $40 million of adjusted EBITDA (non-GAAP) and a 15.5% adjusted EBITDA margin (non-GAAP). Lower service levels from site closures, lost contracts, and weaker eco-products sales weighed on results. Still, long-term contracts remain stable, with a service backlog estimated at $2.7 billion.

Harsco Rail continued to be the largest challenge, with revenue (GAAP) dropping 28% to $58 million. Adjusted EBITDA loss was $3 million and the segment Adjusted EBITDA margin (non-GAAP) reversed from a 9.1% profit in Q2 2024 to a (5.7%) loss. Management attributed much of the segment’s poor showing to lower volumes, higher manufacturing costs, and a less favorable business mix, as well as weak demand and global trade tensions. Rail’s underperformance was significant enough to pull down the company’s consolidated results and led to a downward revision in full-year guidance.

Enviri’s statutory net loss from continuing operations widened to $46 million for the quarter. Adjusted free cash flow (non-GAAP) was negative, falling to $(14) million from a positive $9 million in Q2 2024. Management explained that lower cash earnings and higher investment spending drove this result. Notably, Adjusted EBITDA (non-GAAP) for the group missed both the comparable period and was at the low end of guidance. In addition to operational trends, one-time items like asset impairments and site exit costs in Harsco Environmental amplified GAAP losses.

Strategic Moves, Guidance, and Investor Focus Areas

Enviri reduced its full-year guidance, now projecting adjusted EBITDA (non-GAAP) in the range of $290 million to $310 million, down from $305 million to $325 million earlier. The forecast for adjusted free cash flow (non-GAAP) for the full year was also cut, to a $15 million to $35 million range. Both changes are due to the heightened softness and losses in the Rail business, while Outlooks for the environmental segments remain intact. Adjusted EBITDA for the third quarter is expected to be between $76 million and $86 million, with Adjusted diluted EPS from continuing operations (non-GAAP) was guided in a range of $(0.10) to $0.01 for the third quarter.

For the first time, management formally announced a review of strategic alternatives to “unlock shareholder value.” This process could include a tax-efficient sale or separation of the Clean Earth business. No assurances were given about the outcome or timing of this review. The announcement introduces strategic uncertainty, with any possible business sale or spin-off carrying significant operational and portfolio implications.

The two environmental segments are expected to remain the company’s main earnings drivers. Clean Earth Adjusted EBITDA is expected to increase as a result of volume growth, efficiency initiatives, and higher pricing. Harsco Environmental Adjusted EBITDA is projected to be below prior-year results, with currency impacts, business divestitures, exited contracts, and a less favorable services mix partially offset by improvement initiatives, new contracts, and product volumes.

Investors should monitor several developments in coming quarters: Clean Earth’s continued margin expansion (non-GAAP Adjusted EBITDA margin). The company’s balance sheet remains leveraged, with $1.48 billion of long-term debt (GAAP), and lower free cash flow could limit financial flexibility if Rail recovery lags. NVRI does not currently pay a dividend.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.