Enviri Corporation

06/08/2026 | Press release | Distributed by Public on 06/08/2026 15:19

Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Notwithstanding the legal form of the Spin-Off described elsewhere in this Quarterly Report on Form 10-Q, New Enviri is treated as the "accounting spinnor" of CE Holdings and is the "accounting successor" to Enviri for accounting and financial reporting purposes. Therefore, the Management's Discussion and Analysis of Financial Condition and Results of Operations presented in this section is the historical Management's Discussion and Analysis of Financial Condition and Results of Operations of Enviri for the quarter ended March 31, 2026, which was issued by Enviri prior to the completion of the Transactions, on May 11, 2026.
The information presented in this Management's Discussion and Analysis of Financial Condition and Results of Operations is provided as of May 11, 2026, unless otherwise indicated or the context otherwise requires. As a result, it presents historical information about Enviri prior to the completion of the Transactions and includes the Clean Earth Business that is not part of New Enviri. See "Explanatory Note" for additional information.
The following discussion should be read in conjunction with the accompanying unaudited condensed consolidated financial statements, including the notes hereto, in this Quarterly Report on Form 10-Q, as well as the audited consolidated financial statements of the Company, including the notes thereto, included in the Company's Information Statement, dated May 8, 2026, attached as Exhibit 99.1 to the Company's Current Report on Form 8-K furnished to the SEC on May 11, 2026, which includes additional information about the Company's critical accounting policies, contractual obligations, practices and the transactions that support the financial results. The following discussion may contain forward-looking statements that reflect Enviri's plans, estimates and beliefs as of May 11, 2026. The words "may," "could," "expect," "anticipate," "intend," "believe," "likely," "estimate," "outlook," "plan," "contemplate," "project," "target" or other comparable terms, among others, generally identify "forward-looking statements," which speak only as of May 11, 2026. These statements could include, among other things, statements about Enviri's management's confidence in and strategies for performance; expectations for new and existing products, technologies and opportunities; and expectations regarding growth, sales, cash flows and earnings. The matters discussed in these forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from those made, projected or implied in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Quarterly Report on Form 10-Q, particularly under the heading "Forward-Looking Statements."
As used in this section, the term "New Enviri" means Enviri II Corporation, renamed Enviri Corporation on June 2, 2026, a Delaware corporation, and its direct and indirect subsidiaries after giving effect to the Spin-Off. As used in this section, the terms "Enviri," the "Company," "we," "us" and "our," unless otherwise specified, mean Enviri Corporation, a Delaware corporation, and its direct and indirect subsidiaries prior to the completion of the Holding Company Merger.
Executive Overview
Enviri is a market-leading, global provider of environmental solutions for industrial, retail and medical waste streams and innovative equipment and technology for the rail sector. Today, Enviri is principally an environmental solutions company that provides services to manage, recycle and beneficially reuse waste and byproduct materials across many industries. Enviri was incorporated in 1956 and has locations in approximately 30 countries, including the U.S.
Enviri's operations consisted of three reportable segments: Harsco Environmental, Clean Earth and Harsco Rail. HE operates primarily under long-term contracts, providing critical environmental services and material processing to the global steel and metals industries, including zero waste solutions for manufacturing byproducts within the metals industry. CE provides specialty waste processing, treatment, recycling and beneficial reuse solutions for customers in the industrial, retail, healthcare and construction industries across a variety of waste needs, including hazardous, non-hazardous and contaminated soils and dredged materials. Rail is a provider of highly engineered maintenance equipment, after-market parts and safety and diagnostic systems and contracting solutions, which support railroad and transit customers worldwide.
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Enviri's business is subject to risks related to doing business internationally, including tariff policy or tariff regulation, as well as international political and trade tensions. In 2025, the U.S. government announced tariffs on goods imported into the U.S. from most countries and multiple nations countered with tariffs and other actions in response. Subsequently, the U.S. government has negotiated trade agreements with certain countries while negotiations with others are ongoing. Additionally, in early 2025, the European Union (the "EU") announced plans to lower import quotas and implement anti-dumping duties against various countries that have imported certain steel products into the region. In October 2025, the European Commission formally proposed significant actions to protect its steel industry, including a sizable reduction in steel import quotas and a meaningful tariff increase on above-quota imports. These proposals require EU parliament and council approvals, which are anticipated in 2026. These efforts by the EU are intended to support a healthy industrial manufacturing base in the region. Also, the military conflict in the Middle East has led to volatile energy prices globally and higher costs for consumers.
On February 23, 2026, the Company amended its Senior Secured Credit Facilities to extend the maturity of its $50.0 million non-extended revolving credit facility from March 10, 2026 to the earlier of (i) July 1, 2026, and (ii) the closing date on which the Clean Earth segment is sold to Veolia in connection with the Merger Agreement. As described below, the sale of the Clean Earth segment was executed on June 1, 2026 and, as a result, the $50.0 million portion of the non-extended revolving credit facility was included in New Enviri's repayment of indebtedness on June 1, 2026.
On June 1, 2026, the Company executed the Transactions, whereby Veolia acquired 100% of the Clean Earth segment for an aggregate cash consideration of over $3.0 billion pursuant to the terms of the Merger Agreement. Immediately prior to the closing of the Merger, the Company executed a series of reorganizational transactions and the Separation, following which the Harsco Environmental and Harsco Rail segments are now indirectly owned by New Enviri. These transactions did not result in any material cash tax expense to Enviri or New Enviri.
Results of Operations
Amounts included in this Part I. Item 2. Results of Operations are rounded in millions and all percentages are calculated on actual amounts. As a result, minor differences may exist due to rounding.
Segment Results
Three Months Ended
March 31
(in millions, except percentages)
2026 2025
Revenues:
Harsco Environmental $ 256.7 $ 243.1
Clean Earth 225.8 234.9
Harsco Rail 67.3 69.9
Total Revenues $ 549.8 $ 547.9
Operating income (loss):
Harsco Environmental $ 10.0 $ 10.1
Clean Earth 15.8 22.3
Harsco Rail (3.2) 7.1
Corporate (21.8) (10.2)
Total operating income (loss) $ 0.8 $ 29.3
Operating margin:
Harsco Environmental 3.9 % 4.1 %
Clean Earth 7.0 % 9.5 %
Harsco Rail (4.7) % 10.2 %
Consolidated operating margin 0.1 % 5.3 %
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Harsco Environmental Segment:
Significant Effects on Revenues (in millions)
Three Months Ended
Revenues - March 31, 2025
$ 243.1
Net impact of new and lost contracts
(13.7)
Net effects of price/volume changes, primarily attributable to volume changes and services mix 13.2
Impact of foreign currency translation 14.1
Revenues - March 31, 2026
$ 256.7
The following factors contributed to the changes in operating income (loss) during the three months ended March 31, 2026:
•The three months ended March 31, 2025 included $3.3 million in employee termination benefit costs and other related costs pertaining to restructuring activities, which did not reoccur during the three months ended March 31, 2026.
•Operating income from environmental service contracts during the three months ended March 31, 2026, when compared with the three months ended March 31, 2025, decreased primarily due to an unfavorable service mix, partially offset by an increase in revenues from overall service levels.
•Lower revenues from a decrease in volumes from the Altek Group unfavorably impacted operating income by $1.0 million for the three months ended March 31, 2026, when compared to the three months ended March 31, 2025.
•The unfavorable net effects from new and lost contracts resulted in a decrease in operating income of $0.9 million during the three months ended March 31, 2026, compared to the three months ended March 31, 2025.
Clean Earth Segment:
Significant Effects on Revenues (in millions)
Three Months Ended
Revenues - March 31, 2025
$ 234.9
Net effects of price/volume changes, primarily lower volume
(9.1)
Revenues - March 31, 2026
$ 225.8
The following factors contributed to the changes in operating income (loss) during the three months ended March 31, 2026:
•A decline in revenues from the hazardous waste business decreased operating income by $3.2 million for the three months ended March 31, 2026, when compared to three months ended March 31, 2025, primarily related to a decrease in volumes due, in part, to unfavorable weather conditions and higher fuel costs, which were partially offset by higher revenues from price increases and a reduction in disposal costs.
•Selling, general and administrative expenses ("SG&A") increased $2.1 million during the three months ended March 31, 2026 from the same period in 2025, mainly from higher depreciation expense, an unfavorable change in the provision for expected credit losses and information technology-related costs related to system enhancements.
•The three months ended March 31, 2026 included a net decrease of $1.2 million in operating income primarily from lower volumes processed in the soil and dredged materials business at certain sites due, in part, to unfavorable weather conditions, net of pricing changes and volume mix at certain sites, when compared to the three months ended March 31, 2025.
Harsco Rail Segment:
Significant Effects on Revenue (in millions) Three Months Ended
Revenues - March 31, 2025
$ 69.9
Net effect of price/volume changes, primarily attributable to volume changes 7.0
Change in revenue adjustments as a result of certain estimated forward loss provisions (a)
(12.2)
Impact of foreign currency translation 2.5
Revenues - March 31, 2026
$ 67.3
(a) Principally as a result of an amendment to the Deutsche Bahn contract in 2025, as referenced in Note 15, Revenues to Enviri's unaudited condensed consolidated financial statements in Part I. Financial Statements.
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The following factors contributed to the changes in operating income (loss) during the three months ended March 31, 2026:
•An increase of $3.5 million in operating income due to higher revenues from railway contracting services during the three months ended March 31, 2026, when compared to the three months March 31, 2025, due principally to higher volume in the U.K., inclusive of an annual contractual true-up.
•The three months ended March 31, 2025 included a favorable net change in forward estimated loss provisions and related adjustments of $10.4 million related to Enviri's long-term contracts with Network Rail, Deutsche Bahn and SBB, which did not reoccur during the three months ended March 31, 2026. See Note 15, Revenues to Enviri's unaudited condensed consolidated financial statements in Part I. Financial Statements for further discussion.
•A decrease of $2.6 million in operating income from lower standard equipment revenue and higher manufacturing costs for the three months ended March 31, 2026 from the three months ended March 31, 2025.
•A decrease of $1.9 million in operating income from after-market parts due to higher manufacturing costs during the three months ended March 31, 2026, compared to the three months ended March 31, 2025, partially offset by an increase in sales from higher demand.
General Corporate:
Operating income (loss) from continuing operations was negatively impacted by costs of $12.5 million related to the planned sale of Clean Earth during the three months ended March 31, 2026, which did not occur during the three months ended March 31, 2025.
Consolidated Results
March 31
Three Months Ended
(in millions, except per share amounts and percentages) 2026 2025
Total revenues $ 549.8 $ 547.9
Cost of services and products sold 444.2 424.8
Selling, general and administrative expenses 91.5 89.1
Research and development expenses 0.5 0.5
Other expense (income), net 12.9 4.3
Operating income (loss) from continuing operations 0.8 29.3
Interest income 0.5 0.5
Interest expense (27.8) (26.6)
Facility fees and debt-related income (expense) (2.3) (2.6)
Defined benefit pension income (expense) (3.9) (5.2)
Income (loss) from continuing operations before income taxes and equity in income (32.8) (4.7)
Income tax benefit (expense) from continuing operations 24.4 (2.0)
Income (loss) from continuing operations (8.4) (6.6)
Income (loss) from discontinued businesses (1.6) (1.6)
Income tax benefit (expense) related to discontinued operations 0.4 0.4
Income (loss) from discontinued operations, net of tax (1.2) (1.2)
Net income (loss) $ (9.5) $ (7.8)
Total other comprehensive income (loss) 4.8 8.1
Total comprehensive income (loss) $ (4.8) $ 0.3
Diluted earnings (loss) per common share from continuing operations attributable to Enviri Corporation common stockholders $ (0.12) $ (0.10)
Effective income tax rate for continuing operations 74.4% (42.8)%
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Comparative Analysis of Consolidated Results
Total Revenues
Revenues for the three months ended March 31, 2026 increased by $1.9 million, or 0.3%, from the three months ended March 31, 2025. Foreign currency translation affected revenues by $16.6 million during the three months ended March 31, 2026, compared with the same period in the prior year. Refer to the discussion of segment results above for information pertaining to factors impacting revenues.
Cost of Services and Products Sold
Cost of services and products sold for the three months ended March 31, 2026 increased by $19.4 million, or 4.6%, from the three months ended March 31, 2025. The changes in cost of services and products sold were attributable to the following significant items:
(in millions)
Three Months
Ended
Cost of services and products sold - March 31, 2025
$ 424.8
Change in costs due to changes in revenue volume
(5.5)
Changes due to costs and revenue mix
10.9
Impact of foreign currency translation 13.8
Other 0.2
Cost of services and products sold - March 31, 2026
$ 444.2
Selling, General and Administrative Expenses
SG&A for the three months ended March 31, 2026 increased by $2.3 million, or 2.6%, from the three months ended March 31, 2025, which was primarily driven by higher costs of $1.0 million related to compensation expense, mainly in Corporate and CE, and $0.7 million related to depreciation expense, mostly in CE, for the three months ended March 31, 2026. Foreign currency also negatively impacted SG&A by $1.8 million during the three months ended March 31, 2026 from the same period in 2025, primarily due to HE and Rail. A decrease in professional fees of $1.9 million partially offset these SG&A increases during the three months ended March 31, 2026, when compared to the three months ended March 31, 2025, primarily as a result of Corporate costs incurred during 2025 to support and execute certain of Enviri's long-term strategies.
Other (Income) Expenses, Net
The major components of this Condensed Consolidated Statements of Operations caption are as follows:
Three Months Ended
March 31
(in millions)
2026 2025
Employee termination benefit costs $ 0.7 $ 2.5
Other costs for exit activities (a)
12.3 2.0
Asset impairments
- 0.6
Net gains on sale of assets
(0.2) (0.8)
Other (income) expenses, net $ 12.9 $ 4.3
(a) Includes costs related to the planned sale of Clean Earth.
Interest Expense
Interest expense during the three months ended March 31, 2026 increased by $1.3 million, compared with the three months ended March 31, 2025. This increase is mainly driven by higher average borrowings under the Senior Secured Credit Facilities during the three months ended March 31, 2026, when compared to the three months ended March 31, 2025.
Facility Fees and Debt-Related Income (Expense)
Enviri recognized facility fee expense mostly related to the AR Facility of $2.3 million during the three months ended March 31, 2026, compared to $2.6 million recognized during the three months ended March 31, 2025. See Note 3, Trade Accounts Receivables and Other Receivables and Note 8, Debt and Credit Agreements, to, in each case, Enviri's unaudited condensed consolidated financial statements in Part I, Item 1. Financial Statements.
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Defined Benefit Pension Income (Expense)
Defined benefit pension expense was $3.9 million and $5.2 million for the three months ended March 31, 2026 and 2025, respectively. This expense decrease is primarily related to a higher expected rate of return on plan assets in the current year, compared to 2025.
Income Tax Expense
Income tax benefit from continuing operations for the three months ended March 31, 2026 was $24.4 million, compared to $2.0 million income tax expense for the three months ended March 31, 2025. The change is primarily due to costs of $12.5 million related to the planned sale of Clean Earth during the three months ended March 31, 2026, which did not occur during the three months ended March 31, 2025, lower operating income in Clean Earth and a $5.1 million tax benefit from the vesting of stock-based compensation awards in 2026.
Income (Loss) from Continuing Operations
Loss from continuing operations was $8.4 million for the three months ended March 31, 2026, compared to $6.6 million for the three months ended March 31, 2025. The primary drivers for these changes are noted above.
Total Other Comprehensive Income (Loss)
Total other comprehensive income was $4.8 million for the three months ended March 31, 2026, compared to total other comprehensive income of $8.1 million for the three months ended March 31, 2025. The primary driver of this decrease was the fluctuation of the U.S. dollar against certain currencies during the three months ended March 31, 2026, inclusive of the impact of foreign currency translation of cumulative unrecognized actuarial losses on Enviri's pension obligations, when compared to the fluctuation of the U.S. dollar against certain currencies during the three months ended March 31, 2025. This was partially offset by the favorable change in valuation of Enviri's interest rate swaps during the three months ended March 31, 2026, when compared to the valuation during the three months ended March 31, 2025, due to the fluctuation of interest rates.
Liquidity and Capital Resources
Amounts included in this Part I. Item 2. Liquidity and Capital Resources are rounded in millions and all percentages are calculated on actual amounts. As a result, minor differences may exist due to rounding.
Cash Flow Summary
Enviri's cash flows from operating, investing and financing activities, as reflected on the Condensed Consolidated Statements of Cash Flows, are summarized in the following table:
Three Months Ended
March 31
(In millions) 2026 2025
Net cash provided (used) by:
Operating activities $ 21.5 $ 6.6
Investing activities (30.7) (18.4)
Financing activities 8.1 26.1
Effect of exchange rate changes on cash and cash equivalents, including restricted cash (2.8) -
Net change in cash and cash equivalents, including restricted cash $ (3.9) $ 14.3
Net cash (used) provided by operating activities - Net cash provided by operating activities for the three months ended March 31, 2026 was $21.5 million, an increase in cash flows of $14.9 million from the three months ended March 31, 2025, due to a net favorable change in working capital, partially offset by a decrease in cash net income, principally from the deferred income tax benefit of $30.2 million. The favorable working capital changes were primarily from the timing of annual incentive payments for accrued compensation, the timing of receipts and recognition of advances on contracts, mainly related to Rail's contracts, and the timing of inventories, partially offset by unfavorable changes in contract assets principally related to the timing of recognition for Rail's contracts, during the three months ended March 31, 2026.
Net cash (used) provided by investing activities - Net cash used by investing activities during the three months ended March 31, 2026 was $30.7 million, an increase in net cash used of $12.2 million from net cash used during the three months ended March 31, 2025, primarily due to a $12.1 million increase in purchases for capital expenditures during the three months ended March 31, 2026, when compared to the three months ended March 31, 2025, primarily by CE and HE.
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Net cash (used) provided by financing activities - Net cash provided by financing activities during the three months ended March 31, 2026 decreased by $18.1 million from the three months ended March 31, 2025 attributable to an increase in employee tax payments for stock based compensation of $15.0 million and higher net repayments of Enviri's total debt of $3.1 million during the three months ended March 31, 2026.
Sources and Uses of Cash
Enviri's principal sources of liquidity are cash provided by operations on an annual basis and borrowings under the Senior Secured Credit Facilities, augmented by cash proceeds from asset sales.
Summary of Senior Secured Credit Facilities and Notes:
(in millions)
March 31
2026 		December 31
2025
By type:
Term Loan
$ 476.3 $ 477.5
Revolving Credit Facility
557.0 526.0
5.75% Senior Notes 475.0 475.0
Total
$ 1,508.3 $ 1,478.5
By classification:
Current $ 5.0 $ 5.0
Long-term 1,503.3 1,473.5
Total $ 1,508.3 $ 1,478.5
March 31, 2026
(In millions) Facility Limit Outstanding
Balance 		Outstanding Letters of Credit Available
Credit
Revolving credit facility (a)
675.0 $ 557.0 $ 7.7 $ 110.3
(a) Includes $50.0 million and $625.0 million of revolving credit commitments scheduled to mature on the earlier of (i) July 1, 2026 and (ii) the closing date on which the Clean Earth segment is sold in connection with the Merger agreement, as amended in February 2026, and September 5, 2029, respectively. On June 1, 2026, the full balance that was outstanding on the Revolving Credit Facility was repaid in connection with the Transaction. Refer to Note 8, Debt and Credit Agreements to Enviri's unaudited condensed consolidated financial statements in Part I. Financial Statements for more information related to the Senior Secured Credit Facilities.
Debt Covenants
In November 2025, Enviri entered into an amendment to the Credit Agreement to, among other things, modify certain levels of its total Net Debt to Consolidated Adjusted EBITDA ratio covenant and permit a distribution of Enviri's Clean Earth business, together with certain related transactions, including repayments of certain of Enviri's existing indebtedness. Enviri obtained the amendment because its forward-looking projections indicated that it may not meet the minimum level required by the net leverage coverage ratio and to allow for the strategic alternatives it is currently evaluating. As a result of this amendment, the total Net Debt to Consolidated Adjusted EBITDA ratio covenant was set to 5.50x for the quarters ended March 31, 2026, June 30, 2026 and September 30, 2026, 5.00x for the quarter ended December 31, 2026 and 4.50x for the quarter ended March 31, 2027. After giving effect to the distribution of Enviri's Clean Earth business, the total Net Debt to Consolidated Adjusted EBITDA ratio covenant will be set at 3.00x.
Under the terms of the February 2025 amendment to the Senior Secured Credit Facilities, Enviri's required coverage of consolidated interest charges is set to a minimum of 2.50x for each quarter ended after December 31, 2024.
At March 31, 2026, Enviri was in compliance with these covenants, as the total net debt to Consolidated Adjusted EBITDA ratio was 4.98x, compared to the permitted maximum ratio of 5.50x, and total interest coverage ratio was 2.78x, compared to the permitted minimum ratio of 2.50x. Based on balances and covenants in effect at March 31, 2026, Enviri could increase net debt by $156.9 million and remain in compliance with these debt covenants. Alternatively, Consolidated Adjusted EBITDA could decrease by $28.5 million or interest expense could increase by $11.9 million and Enviri would remain in compliance with these covenants at March 31, 2026.
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AR Facility
Enviri maintains a revolving trade receivables securitization facility to accelerate cash flows from trade accounts receivable, which is scheduled to mature in October 2027. Under the AR Facility, Enviri and its designated subsidiaries continuously sell their trade receivables as they are originated to the wholly-owned bankruptcy-remote SPE. The SPE transfers ownership and control of qualifying receivables to PNC up to a maximum purchase commitment of $160.0 million. On June 1, 2026, the AR Facility was terminated in connection with the Transactions.
During the three months ended March 31, 2025, Enviri received $10.0 million in proceeds from the AR Facility. No proceeds were received from the AR Facility during the three months ended March 31, 2026.
Cash Management
Enviri has various cash management systems throughout the world that centralize cash in various bank accounts where it is economically justifiable and legally permissible to do so. These centralized cash balances are then redeployed to other operations to reduce short-term borrowings and to finance working capital needs or capital expenditures. Due to the transitory nature of cash balances, they are normally invested in bank deposits that can be withdrawn at will or in very liquid short-term bank time deposits and government obligations. Enviri's policy is to use the largest banks in the various countries in which it operates and monitors the creditworthiness of banks and, when appropriate, will adjust banking operations to reduce or eliminate exposure to less creditworthy banks.
At March 31, 2026, Enviri's consolidated cash and cash equivalents included $104.2 million held by non-U.S. subsidiaries and approximately 11.0% of the Enviri's consolidated cash and cash equivalents had regulatory restrictions that would preclude the transfer of funds with and among subsidiaries. Non-U.S. subsidiaries also held $41.5 million of cash and cash equivalents in consolidated strategic ventures. The strategic venture agreements may require strategic venture partner approval to transfer funds with and among subsidiaries. While the Enviri's remaining non-U.S. cash and cash equivalents can be transferred with and among subsidiaries, the majority of these non-U.S. cash balances will be used to support the ongoing working capital needs and continued growth of its non-U.S. operations.
During the year ended December 31, 2025, in connection with Enviri's contracts with certain customers, Enviri's contingent commercial commitments were updated, in which the terms of the updated agreement with the issuing bank required cash collateral totaling $20.7 million to be held until the contingent commercial commitments are released. Enviri funded this balance in 2025 and it was classified as Restricted Cash on Enviri's Condensed Consolidated Balance Sheets at December 31, 2025. During the three months ended March 31, 2026, $6.2 million of this cash collateral was released back to Enviri.
Recently Adopted and Recently Issued Accounting Standards
Information on recently adopted and recently issued accounting standards is included in Note 2, Recently Adopted and Recently Issued Accounting Standards to Enviri's unaudited condensed consolidated financial statements in Part I, Item 1, Financial Statements.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF NEW ENVIRI (SUPPLEMENTAL)
The following discussion and analysis of New Enviri's financial condition and results of operations should be read in conjunction with the accompanying unaudited condensed combined financial statements of New Enviri included in Part I. Financial Statements as well as the audited combined financial statements of New Enviri, included in the Information Statement . Throughout the periods covered by the unaudited condensed combined financial statements and audited combined financial statements, New Enviri operated as part of Enviri. Consequently, stand-alone financial statements have not historically been prepared for New Enviri. The unaudited condensed combined financial statements have been prepared on a "carve-out" basis in accordance with GAAP from Enviri's consolidated financial statements and accounting records and reflect the New Enviri Business as if New Enviri's operations had been conducted independently from Enviri. See Note 2, "Basis of Presentation" to New Enviri's unaudited condensed combined financial statements for additional information.
The following discussion may contain forward-looking statements that reflect our plans, estimates and beliefs. The words "may," "could," "expect," "anticipate," "intend," "believe," "likely," "estimate," "outlook," "plan," "contemplate," "project," "target" or other comparable terms, among others, generally identify "forward-looking statements," which speak only as of the date the statements were made. These statements could include, among other things, statements about management's confidence in and strategies for performance; expectations for new and existing products, technologies and opportunities; and expectations regarding growth, sales, cash flows and earnings. The matters discussed in these forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from those made, projected or implied in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Quarterly Report on Form 10-Q, particularly under the heading "Forward-Looking Statements," as well as those discussed under the heading "Risk Factors" in the Information Statement.
As used in this section, the terms "New Enviri," the "Company," "we," "us" and "our," unless otherwise specified, mean Enviri II Corporation (renamed Enviri Corporation on June 2, 2026), a Delaware corporation, and its direct and indirect subsidiaries after giving effect to the Spin-Off.
Spin-Off
On June 1, 2026, the Transactions were completed, resulting in, among other things, New Enviri owning all of the equity interests in Enviri LLC, Enviri LLC holding the Harsco Environmental and Rail segments and Veolia acquiring 100% of Clean Earth. The aggregate consideration paid by Veolia to acquire Clean Earth was approximately $3.0 billion, subject to customary adjustments. Of such aggregate consideration, approximately $1.3 billion was paid directly to the stockholders of CE Holdings (the former stockholders of Enviri), with the remaining approximately $1.7 billion paid to Enviri LLC (as successor by merger to Enviri) pursuant to an intercompany note issued by CE Holdings to Enviri LLC in connection with the Reorganization, which amount was used primarily for the repayment of Enviri's indebtedness, the termination of the AR Facility, the payment of transaction expenses and to retain cash to support Harsco Rail's large European engineered-to-order rail contracts The Transactions are not expected to result in any material cash tax expense to Enviri LLC (as successor by merger to Enviri) or New Enviri. Prior to the completion of the Spin-Off, New Enviri did not engage in any business activities other than in connection with the transactions contemplated by the Separation Agreement and the Merger Agreement and had no material assets or liabilities of any kind.
CE Holdings, which holds Clean Earth, and New Enviri entered into a Transition Services Agreement on June 1, 2026, pursuant to which New Enviri will provide certain services to CE Holdings on an interim, transitional basis. The services to be provided will include finance, legal, human resources, information technology, facilities and other general and administrative functions. The Transition Services Agreement specifies the fees payable for these services. The Transition Services Agreement will terminate on the expiration of the term of the last service provided under it, which will be up to twelve months following the closing of the Merger.
Following the Spin-Off, we are subject to the reporting requirements of the Exchange Act. We are required to maintain policies, procedures and practices as a separate, public company necessary to comply with our obligations under the Exchange Act and related rules and regulations. As a result, we are incurring additional costs, including internal audit, investor relations, stock administration and regulatory compliance costs. These additional costs may differ from the costs that were historically allocated to us from Enviri. To operate as a separate public company, we will incur costs to replace certain services previously provided by Enviri, which costs may be higher than those reflected in our unaudited condensed combined financial statements.
Overview
New Enviri is a market-leading, global provider of critical environmental services and material processing to the metals industry, and innovative equipment, after-market parts and services for the rail sector. The Company was incorporated in 1956 and has locations in approximately 30 countries, including the U.S.
New Enviri's operations consist of two reportable segments: Harsco Environmental and Harsco Rail. Harsco Environmental operates primarily under long-term contracts, providing critical environmental services and material processing to the global steel and metals industries, including zero waste solutions for manufacturing byproducts within the metals industry. Rail is a provider of highly engineered maintenance equipment, after-market parts and safety and diagnostics systems and contracting solutions, which support railroad and transit customers worldwide.
New Enviri's business is subject to risks related to doing business internationally, including tariff policy or tariff regulation, as well as international political and trade tensions. In 2025, the U.S. government announced tariffs on goods imported into the U.S. from numerous countries and multiple nations countered with tariffs and other actions in response. Subsequently, the U.S. government has negotiated trade agreements with certain countries while negotiations with others are ongoing. Additionally, in early 2025, the EU announced plans to lower import quotas and implement anti-dumping duties against various countries that have imported certain steel products into the region. In October 2025, the European Commission formally proposed significant actions to protect its steel industry, including a sizable reduction in steel import quotas and a meaningful tariff increase on above-quota imports. These proposals require EU parliament and council approvals, which are anticipated in 2026. These efforts by the EU are intended to support a healthy industrial manufacturing base in the region. Also, the military conflict in the Middle East has led to volatile energy prices globally and higher costs for consumers. New Enviri continues to assess its ability to pass on higher energy prices to its customers and any impacts energy price volatility will have on demand, as well as the impact of these tariffs on its businesses.
On February 23, 2026, Enviri amended the Senior Secured Credit Facilities to extend the maturity of its $50.0 million non-extended revolving credit facility from March 10, 2026 to the earlier of (i) July 1, 2026, and (ii) the closing date on which the Clean Earth segment is sold to Veolia in connection with the Merger Agreement. As described above, the sale of the Clean Earth segment was completed on June 1, 2026 and, as a result, the $50.0 million portion of the non-extended revolving credit facility was repaid on June 1, 2026.
Results of Operations
Amounts included in this Part I. Item 2. Results of Operations are rounded in millions and all percentages are calculated on actual amounts. As a result, minor differences may exist due to rounding.
Segment Results
Three Months Ended
March 31
(in millions, except percentages) 2026 2025
Revenues:
Harsco Environmental $ 256.7 $ 243.1
Harsco Rail 67.3 69.9
Total Revenues $ 324.0 $ 313.1
Operating income (loss):
Harsco Environmental $ 6.0 $ 6.1
Harsco Rail (4.5) 6.0
Corporate (10.7) 1.8
Total operating income (loss) $ (9.1) $ 13.9
Operating margin:
Harsco Environmental 2.3% 2.5%
Harsco Rail (6.6)% 8.6%
Consolidated operating margin (2.8)% 4.5%
Harsco Environmental Segment:
Significant Effects on Revenues (in millions) Three Months Ended
Revenues - March 31, 2025 $ 243.1
Net impact of new and lost contracts (13.7)
Net effects of price/volume changes, primarily attributable to volume changes and services mix 13.2
Impact of foreign currency translation 14.1
Revenues - March 31, 2026 $ 256.7
The following factors contributed to the changes in operating income (loss) during the three months ended March 31, 2026:
•The three months ended March 31, 2025 included $3.3 million in employee termination benefit costs and other related costs pertaining to restructuring activities, which did not reoccur during the three months ended March 31, 2026.
•Operating income from environmental service contracts during the three months ended March 31, 2026, when compared with the three months ended March 31, 2025, decreased primarily due to an unfavorable service mix, partially offset by an increase in revenues from overall service levels.
•Lower revenues from a decrease in volumes from the Altek Group unfavorably impacted operating income by $1.0 million for the three months ended March 31, 2026, when compared to the three months ended March 31, 2025.
•The unfavorable net effects from new and lost contracts resulted in a decrease in operating income of $0.9 million during the three months ended March 31, 2026, compared to the three months ended March 31, 2025.
Harsco Rail Segment:
Significant Effects on Revenue (in millions) Three Months Ended
Revenues - March 31, 2025
$ 69.9
Net effect of price/volume changes, primarily attributable to volume changes
7.0
Change in revenue adjustments as a result of certain estimated forward loss provisions (a)
(12.2)
Impact of foreign currency translation
2.5
Revenues - March 31, 2026
$ 67.3
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(a)Principally as a result of an amendment to the Deutsche Bahn contract in 2025, as referenced in Note 15, Revenues to New Enviri's unaudited condensed combined financial statements in Part I. Financial Statements.
The following factors contributed to the changes in operating income (loss) during the three months ended March 31, 2026:
•An increase of $3.5 million in operating income due to higher revenues from railway contracting services during the three months ended March 31, 2026, when compared to the three months March 31, 2025, due principally to higher volume in the U.K., inclusive of an annual contractual true-up.
•The three months ended March 31, 2025 included a favorable net change in forward estimated loss provisions and related adjustments of $10.4 million related to New Enviri's long-term contracts with Network Rail, Deutsche Bahn and SBB, which did not reoccur during the three months ended March 31, 2026. See Note 15, Revenues to New Enviri's unaudited condensed combined financial statements in Part I. Financial Statements for further discussion.
•A decrease of $2.6 million in operating income from lower standard equipment revenue and higher manufacturing costs for the three months ended March 31, 2026 from the three months ended March 31, 2025.
•A decrease of $1.9 million in operating income from after-market parts due to higher manufacturing costs during the three months ended March 31, 2026 compared to the three months ended March 31, 2025, partially offset by an increase in sales from higher demand.
General Corporate:
Operating income (loss) from continuing operations was negatively impacted by costs of $12.5 million related to the planned sale of Clean Earth during the three months ended March 31, 2026, which did not occur during the three months ended March 31, 2025.
Consolidated Results
March 31
Three Months Ended
(in millions, except per share amounts and percentages) 2026 2025
Total revenues $ 324.0 $ 313.1
Cost of services and products sold 275.5 251.2
Selling, general and administrative expenses 44.6 43.2
Research and development expenses 0.4 0.5
Other expense (income), net 12.7 4.2
Operating income (loss) from continuing operations (9.1) 13.9
Interest income 0.5 0.5
Interest expense (26.7) (25.5)
Facility fees and debt-related income (expense) (2.3) (2.6)
Defined benefit pension income (expense) (3.9) (5.2)
Income (loss) from continuing operations before income taxes and equity in income (41.6) (18.9)
Income tax benefit (expense) from continuing operations (5.4) (3.3)
Equity in income (loss) of unconsolidated entities, net - -
Income (loss) from continuing operations (47.0) (22.2)
Income (loss) from discontinued businesses (1.6) (1.6)
Income tax benefit (expense) related to discontinued operations - -
Income (loss) from discontinued operations, net of tax (1.6) (1.6)
Net income (loss) $ (48.6) $ (23.8)
Total other comprehensive income (loss) 6.8 5.6
Total comprehensive income (loss) $ (41.8) $ (18.2)
Effective income tax rate for continuing operations (13.1)% (17.7)%
Comparative Analysis of Combined Results
Total Revenues
Revenues for the three months ended March 31, 2026 increased by $11.0 million, or 4%, from the three months ended March 31, 2025. Foreign currency translation increased revenues by $16.6 million during the three months ended March 31, 2026, compared with the same period in the prior year. Refer to the discussion of segment results above for information pertaining to factors positively affecting and negatively impacting revenues.
Cost of Services and Products Sold
Cost of services and products sold for the three months ended March 31, 2026 increased by $24.3 million, or 10%, from the three months ended March 31, 2025. The changes in cost of services and products sold were attributable to the following significant items:
(in millions) Three Months Ended
Cost of services and products sold - March 31, 2025 $ 251.2
Change in costs due to changes in revenue volume 4.6
Changes due to costs and revenue mix 6.4
Impact of foreign currency translation 13.8
Other (0.5)
Cost of services and products sold - March 31, 2026 $ 275.5
Selling, General and Administrative Expenses
SG&A for the three months ended March 31, 2026 increased by $1.4 million, or 3%, from the three months ended March 31, 2025, which was primarily driven by higher costs of $1.1 million related to compensation expense, mainly in HE and Rail for the three months ended March 31, 2026. Foreign currency also negatively impacted SG&A by $1.8 million during the three months ended March 31, 2026 from the same period in 2025. A decrease in professional fees of $0.7 million partially offset these SG&A increases during the three months ended March 31, 2026, when compared to the three months ended March 31, 2025, primarily as a result of costs incurred during 2025 to support and execute certain of New Enviri's long-term strategies.
Other (Income) Expenses, Net
The major components of this Condensed Combined Statements of Operations caption are as follows:
Three Months Ended
March 31
(in millions) 2026 2025
Employee termination benefit costs $ 0.7 $ 2.4
Other costs for exit activities (a) 12.3 2.0
Impaired asset write-downs - 0.6
Net gains on sale of assets (0.2) (0.8)
Other (income) expenses, net $ 12.7 $ 4.2
(a) Includes costs related to the planned sale of Clean Earth
Interest Expense
Interest expense during the three months ended March 31, 2026 increased by $1.2 million, compared with the three months ended March 31, 2025. This increase is mainly driven by higher average borrowings under the Senior Secured Credit Facilities during the three months ended March 31, 2026, when compared to the three months ended March 31, 2025.
Facility Fees and Debt-Related Income (Expense)
New Enviri recognized facility fee expense mostly related to the AR Facility of $2.3 million during the three months ended March 31, 2026, compared to $2.6 million recognized during the three months ended March 31, 2025. See Note 4, Trade Accounts Receivables and Other Receivables and Note 9, Debt and Credit Agreements to, in each case, New Enviri's unaudited condensed combined financial statements in Part I. Financial Statements.
Defined Benefit Pension Income (Expense)
Defined benefit pension expense was $3.9 million and $5.2 million for the three months ended March 31, 2026 and 2025, respectively. This expense decrease is primarily related to a higher expected rate of return on plan assets in the current year, compared to 2025.
Income Tax Expense
Income tax expense from continuing operations for the three months ended March 31, 2026 and 2025 was $5.4 million and $3.3 million, respectively. Income tax expense during the three months ended March 31, 2026 increased compared to income tax expense for the three months ended March 31, 2025 primarily due to change in mix of income.
Income (Loss) from Continuing Operations
Loss from continuing operations was $47.0 million for the three months ended March 31, 2026 and $22.2 million for the three months ended March 31, 2025. The primary drivers for these changes are noted above.
Total Other Comprehensive Income (Loss)
Total other comprehensive income was $6.8 million for the three months ended March 31, 2026, compared to total other comprehensive income of $5.6 million for the three months ended March 31, 2025. The primary driver of this change was the change in valuation of Enviri's interest rate swaps during the three months ended March 31, 2026, when compared to the valuation during the three months ended March 31, 2025, due to the fluctuation of interest rates. This was partially offset by the fluctuation of the U.S. dollar against certain currencies during the three months ended March 31, 2026, inclusive of the impact of foreign currency translation of cumulative unrecognized actuarial losses on New Enviri's pension obligations.
Liquidity and Capital Resources
Amounts included in this "Liquidity and Capital Resources" section are rounded in millions and all percentages are calculated based on actual amounts. As a result, minor differences may exist due to rounding.
Cash Flow Summary
New Enviri currently expects to have sufficient financial liquidity and borrowing capacity to support the strategies within each of its businesses and its current operating and debt service needs. New Enviri currently expects operational and business needs, in addition to the repayment of its current debt maturities, to be met by cash provided by operations, supplemented with borrowings from time to time, principally under the Senior Secured Credit Facilities. New Enviri expects the Senior Secured Credit Facilities to be fully available based on continued compliance with the related covenants based on its current outlook. New Enviri supplements the cash provided by operations with borrowings due to the operational performance of its businesses, historical patterns of seasonal cash flow and the funding of various projects. New Enviri regularly assesses capital needs in the context of operational trends and strategic initiatives.
The Company's cash flows from operating, investing and financing activities, as reflected on the Condensed Combined Statements of Cash Flows, are summarized in the following table:
Three Months Ended
March 31
(In millions) 2026 2025
Net cash provided (used) by:
Operating activities $ (13.4) $ (20.7)
Investing activities (16.2) (11.8)
Financing activities 28.6 46.7
Effect of exchange rate changes on cash and cash equivalents, including restricted cash (2.8) -
Net change in cash and cash equivalents, including restricted cash $ (3.8) $ 14.2
Net cash (used) provided by operating activities - Net cash used by operating activities for the three months ended March 31, 2026 was $13.4 million, a decrease in cash outflows of $7.3 million from the three months ended March 31, 2025, primarily as a result of a decrease in cash net income, partially offset by a net favorable change in working capital. The net favorable changes in working capital during the three months ended March 31, 2026 were related to the timing of receipts and recognition of advances on contracts, mainly related to Rail's contracts, the timing of inventories and a decrease in payments of accrued compensation, partially offset by unfavorable changes related to the changes in contract assets, principally related to the timing of recognition for Rail's contracts, during the three months ended March 31, 2026.
Net cash (used ) provided by investing activities - Net cash used by investing activities during the three months ended March 31, 2026 was $16.2 million, an increase in net cash used of $4.4 million from net cash used during the three months ended March 31, 2025, primarily due to a $4.3 million increase in purchases for capital expenditures during the three months ended March 31, 2026, when compared to the three months ended March 31, 2025, primarily by HE.
Net cash (used) provided by financing activities - Net cash provided by financing activities during the three months ended March 31, 2026 was $28.6 million, a decrease of $18.1 million from the three months ended March 31, 2025 mostly attributable to net transfers from Parent of $12.4 million primarily related to an increase in net loss, and a decrease in related party notes of $3.1 million during the three months ended March 31, 2026, when compared to the three months ended March 31, 2025, due to changes in the CE receivables transferred to the SPE as part of the AR Facility.
Sources and Uses of Cash
New Enviri's principal sources of liquidity are cash provided by operations and borrowings under the Senior Secured Credit Facilities, augmented by cash proceeds from asset sales. New Enviri expects to continue to utilize the Revolving Credit Facility to meet future cash requirements for operations and growth initiatives. As of June 1, 2026, $152.0 million was available for borrowing under the Revolving Credit Facility.
Summary of Senior Secured Credit Facilities and Notes: March 31 December 31
(in millions) 2026 2025
By type:
Term Loan $ 476.3 $ 477.5
Revolving Credit Facility 557.0 526.0
5.75% Senior Notes 475.0 475.0
Total $ 1,508.3 $ 1,478.5
By classification:
Current $ 5.0 $ 5.0
Long-term 1,503.3 1,473.5
Total $ 1,508.3 $ 1,478.5
March 31, 2026
(In millions) Facility Limit Outstanding Balance Outstanding Letters of Credit Available Credit
Revolving credit facility (a) $ 675.0 $ 557.0 $ 7.7 $ 110.3
(a) Includes $50.0 million and $625.0 million of revolving credit commitments scheduled to mature on the earlier of (i) July 1, 2026 and (ii) the closing date on which the Clean Earth segment is sold in connection with the Merger Agreement, as amended in February 2026, and September 5, 2029, respectively. On June 1, 2026, the full balance that was outstanding on the Revolving Credit Facility was repaid in connection with the Transactions, and is included within the $1.1 billion of existing debt that was repaid as noted below. Refer to Note 9, Debt and Credit Agreements to New Enviri's unaudited condensed combined financial statements in Part I. Financial Statements for more information related to the Senior Secured Credit Facilities.
Debt Covenants
The Senior Secured Credit Facilities contains a total net leverage ratio covenant, which is not to exceed 5.50x at March 31, 2026, and a minimum consolidated adjusted EBITDA to consolidated interest charges ratio covenant, which is not to be less than 2.50x.
Approximately $1.1 billion of Enviri's debt balance as of March 31, 2026 was repaid as part of the Transactions resulting in a capitalized New Enviri that we expect will maintain compliance with all covenants over the next twelve months following the Transactions based on its current outlook. However, New Enviri's estimates of compliance with these amended covenants could change in the future with a deterioration in economic conditions, including softness in certain markets, changes in tariffs, higher than forecasted interest rate increases, the timing of working capital, including the collection of accounts receivables, an inability to successfully realize increased pricing and implement cost reduction initiatives that mitigate the impacts of inflation and other factors may adversely impact its realized operating margins and cash flows.
AR Facility
Prior to the completion of the Transactions, Enviri maintained a revolving trade receivables securitization facility to accelerate cash flows from trade accounts receivable, which was scheduled to mature in October 2027. Under the AR Facility, Enviri and its designated subsidiaries continuously sold their trade receivables as they were originated to the wholly-owned bankruptcy-remote SPE. The SPE transferred ownership and control of qualifying receivables to PNC up to a maximum purchase commitment of $160.0 million. The AR Facility was terminated in connection with the completion of the Transactions.
No proceeds were received from the AR Facility during the three months ended March 31, 2026. During the three months ended March 31, 2025, Enviri received $10.0 million in proceeds from the AR Facility.
Cash Management
New Enviri has various cash management systems throughout the world that centralize cash in various bank accounts where it is economically justifiable and legally permissible to do so. These centralized cash balances are then redeployed to other operations to reduce short-term borrowings and to finance working capital needs or capital expenditures. Due to the transitory nature of cash balances, they are normally invested in bank deposits that can be withdrawn at will or in very liquid short-term bank time deposits and government obligations. New Enviri's policy is to use the largest banks in the various countries in which New Enviri operates. New Enviri monitors the creditworthiness of banks and, when appropriate, will adjust banking operations to reduce or eliminate exposure to less creditworthy banks.
At March 31, 2026, New Enviri's combined cash and cash equivalents included $104.2 million held by non-U.S. subsidiaries and approximately 11.1% of the New Enviri's combined cash and cash equivalents had regulatory restrictions that would preclude the transfer of funds with and among subsidiaries. Non-U.S. subsidiaries also held $41.5 million of cash and cash equivalents in combined strategic ventures. The strategic venture agreements may require strategic venture partner approval to transfer funds with and among subsidiaries. While the New Enviri's remaining non-U.S. cash and cash equivalents can be transferred with and among subsidiaries, the majority of these non-U.S. cash balances will be used to support the ongoing working capital needs and continued growth of New Enviri's non-U.S. operations.
During the year ended December 31, 2025, in connection with New Enviri's contracts with certain customers, New Enviri's contingent commercial commitments were updated, in which the terms of the updated agreements with the issuing bank required cash collateral totaling $20.7 million to be held until the contingent commercial commitments are released. New Enviri funded this balance in 2025 and was classified as Restricted Cash on New Enviri's Combined Balance Sheets at December 31, 2025. During the three months ended March 31, 2026, $6.2 million of this cash collateral was released back to New Enviri.
Recently Adopted and Recently Issued Accounting Standards
Information on recently adopted and recently issued accounting standards is included in Note 3, Recently Adopted and Recently Issued Accounting Standards, to New Enviri's unaudited condensed combined financial statements in Part I. Financial Statements for additional information.
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