Enviri Corp (NVRI) 2023 Q4 法說會逐字稿

Good morning. My name is MJ and I will be the conference facilitator. At this time, I would like to welcome everyone to the Enviri Corporation Fourth Quarter Release Conference Call.

早安.我叫 MJ，我將擔任會議主持人。此時此刻，我歡迎大家參加 Enviri 公司第四季發布電話會議。

(Operator Instructions)

（操作員說明）

Also, this telephone conference presentation and accompanying webcast made on behalf of Enviri Corporation, are subject to copyright by Enviri Corporation and all rights are reserved. No recordings or redistributions of this telephone conference by any other party are permitted without the express written consent of Enviri Corporation. Your participation indicates your agreement. I would now like to introduce Dave Martin of Enviri Corporation. Mr. Martin, you may begin your call.

此外，代表 Enviri Corporation 製作的本電話會議簡報和隨附的網路廣播受 Enviri Corporation 版權所有保護，並保留所有權利。未經 Enviri Corporation 明確書面同意，任何其他方不得錄製或重新分發本次電話會議。您的參與即表示您的同意。現在我想介紹 Enviri 公司的 Dave Martin。馬丁先生，您可以開始通話了。

Thank you, MJ, and welcome to everyone joining us this morning. I'm Dave Martin of Enviri. With me today is Nick Grasberger, our Chairman and Chief Executive Officer; and Tom Vadaketh, our Senior Vice President and Chief Financial Officer. This morning, we will discuss our results for the fourth quarter of 2023 and our outlook for 2024. We'll then take your questions.

謝謝你，MJ，歡迎大家今天早上加入我們。我是 Enviri 的戴夫馬丁。今天和我在一起的是我們的董事長兼執行長尼克·格拉斯伯格 (Nick Grasberger)；以及我們的資深副總裁兼財務長 Tom Vadaketh。今天早上，我們將討論 2023 年第四季的業績以及 2024 年的展望。

Before our presentation, let me mention a few items. First, our quarterly earnings release and slide presentation for this call are available on our website. Second, we will make statements today that are considered forward-looking within the meaning of federal securities laws. These statements are based on our current knowledge and expectations and are subject to certain risks and uncertainties, that may cause actual results to differ materially from these statements.

在我們的演講之前，讓我先提幾點。首先，我們的季度收益發布和本次電話會議的幻燈片演示可在我們的網站上取得。其次，我們今天將發表聯邦證券法意義上的前瞻性聲明。這些陳述是基於我們目前的知識和預期，並受到某些風險和不確定性的影響，可能導致實際結果與這些陳述有重大差異。

For a discussion of such risks and uncertainties, see the Risk Factors section in our most recent 10-K and 10-Q. The company undertakes no obligation to revise or update any forward-looking statements. Lastly, on the call, we will refer to adjusted financial results that are considered non-GAAP for SEC reporting purposes. A reconciliation to GAAP results is included in the earnings release, as well as a slide presentation.

有關此類風險和不確定性的討論，請參閱我們最新的 10-K 和 10-Q 中的風險因素部分。本公司不承擔修改或更新任何前瞻性陳述的義務。最後，在電話會議上，我們將參考出於 SEC 報告目的而被視為非 GAAP 的調整後財務業績。收益報告和幻燈片簡報中包含了與公認會計原則（GAAP）結果的對帳。

With that being said, I'll turn the call to Nick.

話雖如此，我會把電話轉給尼克。

Thank you, Dave, and good morning, everyone. The fourth quarter was another strong quarter for Enviri with both Harsco Environmental and Clean Earth, delivering double-digit revenue and EBITDA growth versus Q4 of 2022, capping a very strong 2023.

謝謝戴夫，大家早安。第四季是 Enviri 與 Harsco Environmental 和 Clean Earth 的又一個強勁季度，與 2022 年第四季相比，營收和 EBITDA 實現了兩位數成長，為 2023 年的強勁表現畫上句號。

The Rail business, excluding the impact of a few large European contracts, delivered its best quarter in many years. Tom will step through the details of the quarter in a few minutes. So we're pleased with the continued solid performance of our core businesses. That being said, we believe our share price has not kept pace with the improving fundamentals of our businesses, over the past 18 months.

排除一些大型歐洲合約的影響，鐵路業務實現了多年來最好的季度業績。湯姆將在幾分鐘內逐步介紹該季度的詳細資訊。因此，我們對核心業務持續穩健的表現感到滿意。話雖如此，我們認為在過去 18 個月中，我們的股價並未跟上我們業務基本面改善的步伐。

To support the point, I'd like to share a few of the highlights of last year. Number one, revenue and EBITDA both increased at double-digit rates for the full year of 2023. EBITDA margins were up 200 basis points. Cash flow from our 2 core segments increased $125 million. Financial leverage declined more than 1 turn to around 4 turns. Operationally, Clean Earth, the Clean Earth team did a very nice job executing price increases, achieving record service levels, reducing the risk and cost of accessing disposal capacity and increasing our capabilities and engagement in PFAS-related matters, amongst many other accomplishments.

為了支持這一點，我想分享去年的一些亮點。第一，2023 年全年營收和 EBITDA 均以兩位數的速度成長。我們兩個核心部門的現金流量增加了 1.25 億美元。財務槓桿下降逾1週至4週左右。在營運方面，清潔地球團隊在執行價格上漲、達到創紀錄的服務水準、降低使用處置能力的風險和成本、提高我們在PFAS 相關事務上的能力和參與度等方面做得非常好，此外還取得了許多其他成就。

At Harsco Environmental, we continue to expand our footprint with new contracts in faster-growing markets with better financial profiles and also to invest in innovation projects focused on extracting environmental benefits from steel slag. HE also achieved its financial plan for the year despite much lower-than-expected steel production, demonstrating strong execution.

在哈斯科環境，我們繼續透過在成長更快、財務狀況更好的市場中簽訂新合約來擴大我們的足跡，並投資於專注於從鋼渣中提取環境效益的創新項目。儘管鋼鐵產量遠低於預期，哈電集團仍實現了今年的財務計劃，展現了強勁的執行力。

In terms of leadership, we upgraded our senior management team, with Tom Vadaketh and Jeff Beswick the President of Clean Earth, while also continuing to refresh our Board of Directors with 2 new appointments. The year was not without some challenges. While there is outside interest in the purchase of our Rail division, delays in reaching an agreement on new commercial terms on a single large loss-making European contract has pushed out the divestiture and negatively impacted our cash flow. Additionally, we were affected by the increase in short-term interest rates.

在領導階層方面，我們升級了高階管理團隊，湯姆·瓦達克斯(Tom Vadaketh) 和傑夫·貝西克(Jeff Beswick) 擔任清潔地球公司總裁，同時還繼續更新董事會，任命了2 名新成員。這一年並非沒有一些挑戰。儘管外界對收購我們的鐵路部門感興趣，但由於未能就一份大型虧損歐洲合約就新商業條款達成一致，導致剝離計劃被推遲，並對我們的現金流產生了負面影響。此外，我們也受到短期利率上升的影響。

Turning to the outlook for the year. We expect our end markets to be supportive of further growth and improvements in our financial profile. We anticipate steel production at the mills we support will increase low single digits, while still remaining below mid-cycle levels. We also expect the domestic retail and industrial and healthcare markets served by Clean Earth to increase at low single-digit rates.

轉向今年的展望。我們預計我們的終端市場將支持我們財務狀況的進一步成長和改善。我們預計我們支持的鋼廠的鋼鐵產量將成長低個位數，但仍低於週期中期水準。我們也預期清潔地球服務的國內零售、工業和醫療保健市場將以較低的個位數成長率成長。

Clean Earth will be somewhat challenged by difficult comparisons to high-margin project work that we saw last year. Nonetheless, the ongoing efficiency programs in both HE and CE should yield an overall increase in EBITDA of near 10%, at the high end of our guidance. Cash flow and margin should also improve.

與我們去年看到的高利潤項目工作相比，清潔地球將受到一定的挑戰。儘管如此，高等教育和消費電子領域正在進行的效率計劃應該會使 EBITDA 整體成長近 10%，達到我們指導的上限。現金流和利潤率也應該會改善。

So overall, we're very happy with the developments in the Clean Earth platform, over the past 18 months, and we've largely achieved our margin and cash flow expectations when we acquired these businesses. We are even more excited today about the value creation potential of the business, and we will be sharing updated margin and growth targets for Clean Earth, later this year.

因此，總的來說，我們對過去 18 個月中 Clean Earth 平台的發展感到非常滿意，並且在收購這些業務時，我們基本上已經實現了利潤和現金流預期。今天，我們對該業務的價值創造潛力感到更加興奮，我們將在今年稍後分享清潔地球的最新利潤和成長目標。

Clean Earth's value proposition and its pricing leverage within the market are clear. And with specialty waste assets trading at all-time high valuations, we believe the market value of Clean Earth is considerably more than our initial investment. We're also pleased with the stability of the Harsco Environmental platform. The volatility of our earnings and cash flow have lessened significantly in the business's good cyclical upside, as well as a strong competitive position.

清潔地球的價值主張及其在市場中的定價槓桿是明確的。由於特種廢棄物資產的交易估值處於歷史最高水平，我們相信清潔地球的市場價值遠遠超過我們的初始投資。我們也對哈斯科環境平台的穩定性感到滿意。由於業務良好的周期性上升以及強大的競爭地位，我們的獲利和現金流的波動性已顯著減少。

Our lengthy pipeline of growth opportunities allows us to focus on those with the best risk-adjusted returns. And finally, the emerging technologies and ecoproducts can change the game in terms of both economics and environmental benefits.

我們漫長的成長機會管道使我們能夠專注於那些具有最佳風險調整回報的機會。最後，新興技術和生態產品可以在經濟和環境效益方面改變遊戲規則。

Concerning Rail, I'm encouraged by the performance of the business. The team has made significant operational improvements with a strong finish to the year in Q4. Excluding the impact of the EU contracts, profit and cash flow generation were up nicely year-over-year and will begin in 2024. The team has worked hard to stabilize the large European contracts, and we expect to complete our agreement with a major customer on new commercial terms, later this year.

關於鐵路，我對該業務的表現感到鼓舞。該團隊在營運方面取得了重大改進，並在第四季度取得了強勁的業績。排除歐盟合約的影響，利潤和現金流量同比增長良好，並將於2024年開始。 。

So efforts to divest the business are continuing, and we're focused on remaining financially disciplined, while executing an acceptable transaction for shareholders. So to be sure, the Board and the management team are squarely focused on creating value, both across and within our portfolio of businesses, while pursuing our strategic ambition of investing in environmental solutions. We look forward to sharing such developments with investors throughout the year.

因此，剝離業務的努力仍在繼續，我們的重點是保持財務紀律，同時執行股東可接受的交易。因此，可以肯定的是，董事會和管理團隊專注於在我們的業務組合內部和內部創造價值，同時追求我們投資環境解決方案的策略目標。我們期待全年與投資者分享這些進展。

Now I'll turn the call over to Tom.

現在我將把電話轉給湯姆。

Thanks, Nick, and good morning, everyone. Let me start by saying that my first full quarter with Enviri was rewarding and refreshing. I've learned a great deal more about our businesses and our people as well as the tremendous opportunity in front of us. I've been impressed with the quality and engagement of Enviri's employees, and I'm excited about where the company is headed.

謝謝尼克，大家早安。首先我要說的是，我在 Enviri 工作的第一個完整季度是有益且令人耳目一新的。我對我們的企業和員工以及我們面前的巨大機會有了更多的了解。 Enviri 員工的素質和敬業度給我留下了深刻的印象，我對公司的發展方向感到興奮。

The Enviri team delivered a strong finish in the fourth quarter to a strong year, with revenue for the full year 2023 growing 10%, adjusted EBITDA growing 28%, a significant improvement in cash generation and an improvement in our covenant net leverage from 5.3x on January 1 last year to 4.1x at the end of the year.

Enviri 團隊在第四季度取得了強勁的業績，2023 年全年營收成長 10%，調整後 EBITDA 成長 28%，現金產生能力顯著改善，我們的契約淨槓桿率從 5.3 倍提高從去年1月1日到年底的4.1倍。

Now let me comment on our fourth quarter performance, starting on Slide 4. Enviri's fourth quarter revenues from continuing operations increased to $529 million, up 13%, compared with the prior year quarter. The increase was driven by both pricing and higher demand for our environmental services in both Clean Earth and Harsco Environmental. Adjusted EBITDA totaled $73 million, this result represents a 21% improvement from the prior year and is above our prior guidance range.

現在讓我從投影片 4 開始評論我們第四季的業績。這一增長是由清潔地球和哈斯科環境公司的定價和環境服務更高的需求所推動的。調整後 EBITDA 總計 7,300 萬美元，這一結果比前一年提高了 21%，高於我們先前的指導範圍。

The stronger-than-anticipated results were driven mostly by volumes and the more favorable business mix with, again, both Harsco Environmental and Clean Earth contributing. Relative to the prior year quarter, each operating segment contributed to the growth in adjusted EBITDA, which I'll discuss shortly. This was partially offset by higher corporate spending, which was mainly driven by higher incentive compensation spending in 2023 and other smaller items that occurred in 2022, that did not repeat, such as some FX-related hedging gains.

強於預期的業績主要是由銷售和更有利的業務組合推動的，哈斯科環境和清潔地球也做出了貢獻。與去年同期相比，每個營運部門都對調整後 EBITDA 的成長做出了貢獻，我將很快討論這一點。這部分被企業支出增加所抵消，企業支出增加主要是由於 2023 年激勵薪酬支出增加以及 2022 年發生的其他較小項目（例如一些與外匯相關的對沖收益）沒有重複的推動。

Our adjusted loss per share was $0.07 for the quarter. Free cash flow for the quarter was $25 million versus $3 million in the prior year quarter. This improvement was driven by a reduction in working capital and higher cash earnings. Our days sales outstanding improved by 8% or 6 days, from the end of 2022 to the end of 2023, with both HE and CE showing strong improvement, and the finance and operating teams within our business is doing a great job to drive this improvement. Lastly, our net leverage decreased to 4.1x from 4.5x at the end of Q3.

本季調整後每股虧損為 0.07 美元。本季自由現金流為 2,500 萬美元，去年同期為 300 萬美元。這項改善是由營運資本減少和現金收入增加所推動的。從 2022 年底到 2023 年底，我們的應收帳款天數提高了 8% 或 6 天，HE 和 CE 都顯示出強勁的改善，我們業務中的財務和營運團隊在推動這一改善方面做得非常出色。最後，我們的淨槓桿率從第三季末的 4.5 倍降至 4.1 倍。

Please turn to Slide 5 and our Environmental segment. Segment revenues totaled $292 million, up 14% compared with the prior year quarter. Adjusted EBITDA for the quarter reached $56 million, representing an increase of over 30%. Relative to the prior year quarter, HE benefited from higher services and ecoproducts volumes, including from new sites as well as higher pricing. As a result, HE's EBITDA margin exceeded 19%, which was its highest quarterly margin for the year.

請參閱投影片 5 和我們的環境部分。該部門營收總計 2.92 億美元，比去年同期成長 14%。該季度調整後 EBITDA 達到 5,600 萬美元，成長超過 30%。與去年同期相比，HE 受益於更高的服務和生態產品數量，包括新站點以及更高的定價。因此，哈電的 EBITDA 利潤率超過 19%，為年內最高季度利潤率。

Turning to Clean Earth on Slide 6. For the quarter, revenues totaled $237 million, and adjusted EBITDA reached $29 million. Compared to the fourth quarter of 2022, revenues increased 12%, and revenues decreased only modestly from the record levels we saw in the third quarter of 2023. Year-on-year, price contributed about 1/3 of the increase, with underlying volume growth led by industrial markets, which included the impact of project-related work, followed by retail.

轉向幻燈片 6 上的「清潔地球」。與2022 年第四季相比，營收成長了12%，與2023 年第三季的創紀錄水平相比，營收僅略有下降。銷售成長由工業市場帶動，其中包括專案相關工作的影響，其次是零售市場。

Hazardous materials revenues reached $189 million, while Soil-Dredge revenues totaled $48 million for the quarter. These figures represent increases of 11% and 14%, respectively. Clean Earth adjusted EBITDA increased 17% year-on-year. In addition to price and volumes, the businesses -- the business benefited from efficiency initiatives, and these positive items were partially offset by higher incentive compensation, restructuring costs and some internal investments or spending.

該季度危險物質收入達到 1.89 億美元，而土壤疏浚收入總計 4,800 萬美元。這些數字分別增加了 11% 和 14%。 Clean Earth調整後的EBITDA年增17%。除了價格和銷售之外，企業還受益於效率舉措，而這些積極的項目被更高的激勵薪酬、重組成本和一些內部投資或支出部分抵消。

Now please turn to Slide 7. For the full year, revenues from continuing operations increased to almost $2.1 billion, an increase of 10% year-over-year. And adjusted EBITDA totaled $293 million, an increase of 28% over 2022. Additionally, Enviri's underlying free cash flow performance was positive. HE and Clean Earth together generated free cash flow of approximately $185 million in 2023, an improvement of over $125 million compared with the prior year due to higher earnings and working capital performance. This increase was partially offset by higher interest costs at corporate.

現在請看投影片 7。調整後 EBITDA 總計 2.93 億美元，比 2022 年成長 28%。 HE 和 Clean Earth 於 2023 年總共產生了約 1.85 億美元的自由現金流，由於收益和營運資本績效的提高，與前一年相比增加了超過 1.25 億美元。這一成長被企業利息成本上升部分抵銷。

We reduced our covenant net leverage ratio by over 1 turn during the year from 5.3x to 4.1x. Without a doubt, 2023 was a very strong year for Enviri, our strong market positions and value proposition enabled us to drive increases in volume as well as price. Our operating teams executed well and realized meaningful benefits from various growth and improvement initiatives.

年內，我們將契約淨槓桿率降低了超過 1 倍，從 5.3 倍降至 4.1 倍。毫無疑問，2023 年對 Enviri 來說是非常強勁的一年，我們強大的市場地位和價值主張使我們能夠推動銷售和價格的成長。我們的營運團隊執行良好，並從各種成長和改進措施中實現了有意義的收益。

Clean Earth, for example, reached an all-time high for on-time customer service, while recycling and reusing 10 billion pounds of waste. Harsco Environmental won more than 20 service contract renewals and secured 5 new growth contracts during the year, illustrating its continuing premier position in the market. We expect these positive trends to continue in 2024.

例如，Clean Earth 在準時客戶服務方面達到了歷史最高水平，同時回收和再利用了 100 億磅的廢棄物。哈斯科環保在這一年中贏得了 20 多項續簽服務合同，並獲得了 5 份新的增長合同，彰顯了其在市場上持續的領先地位。我們預計這些積極趨勢將在 2024 年持續下去。

We're also very pleased with the performance of our Rail business and the team. Rail performed strongly in Q4 with revenues up more than 30% year-on-year. It generated fourth quarter free cash flow and its quarterly adjusted earnings was the highest in 2-plus years. As Nick mentioned, the Rail team has done a great job this last year to drive operational improvements on the base business, while working towards stabilizing our large ETO contracts and agreeing to a go-forward plan with our customers.

我們對鐵路業務和團隊的表現也非常滿意。鐵路在第四季度表現強勁，營收年增超過 30%。該公司第四季度產生了自由現金流，季度調整後收益創兩年多來最高水準。正如 Nick 所提到的，鐵路團隊去年在推動基礎業務營運改善方面做得非常出色，同時努力穩定我們的大型 ETO 合約並與客戶商定前進計畫。

We recorded charges of $40 million in Q4, reflecting forward losses on these contracts, where we now have significantly improved visibility. Importantly, we think we're at or near an inflection point for Rail. It's earnings and cash flow are projected to strengthen further in 2024, and its cash flow is set to improve further beyond 2024, as these large contracts mature.

我們在第四季度記錄了 4000 萬美元的費用，反映了這些合約的遠期損失，但我們現在的可見度顯著提高。重要的是，我們認為鐵路正處於或接近轉折點。預計 2024 年，其盈利和現金流將進一步增強，隨著這些大型合約的成熟，其現金流將在 2024 年後進一步改善。

Now let me turn to our 2024 outlook on Slide 8. Harsco's full year adjusted EBITDA is expected to be within a range of $300 million to $320 million, up 6% year-on-year at the midpoint. These -- this represents continued momentum in the business after a very strong 2023, with EBITDA growing strong double digits over a 2-year period. This EBITDA range translates to adjusted earnings per share guidance of between breakeven and a loss of $0.25.

現在讓我轉向幻燈片 8 上的 2024 年展望。這些——這代表了該業務在經歷了非常強勁的 2023 年之後的持續增長勢頭，稅息折舊及攤銷前利潤 (EBITDA) 在兩年內實現了兩位數的強勁增長。該 EBITDA 範圍轉化為調整後每股收益指引，介於損益平衡和虧損 0.25 美元之間。

Lastly, we're planning for capital spending of between $130 million and $140 million, which is comparable to 2023, and we're targeting free cash flow of $20 million to $40 million. For 2024, we are expecting an underlying improvement in operating cash flows within HE and CE -- with HE and CE expected to see an increase of up to $30 million year-on-year. The impact will be partially offset by a slight increase in cash interest and higher incentive payouts linked to 2023 performance.

最後，我們計劃資本支出在 1.3 億美元到 1.4 億美元之間，與 2023 年相當，我們的目標自由現金流為 2,000 萬美元到 4,000 萬美元。到 2024 年，我們預計 HE 和 CE 內部的營運現金流量將出現根本性改善，預計 HE 和 CE 的年增幅將高達 3,000 萬美元。這一影響將被現金利息的小幅增加和與 2023 年業績相關的更高的激勵支出所部分抵消。

Also note that this free cash flow outlook again excludes Rail. It also excludes finance leases. We have entered into finance lease obligations of approximately $50 million, mostly for Clean Earth, that will commence in 2024 and are expected to carry into 2025. These leases for Clean Earth relates to the refreshment of its vehicle fleet, which occurs once per decade roughly. As a result of EBITDA growth and free cash flow, our leverage ratio is anticipated to decline further during 2024.

另請注意，這自由現金流前景再次不包括鐵路。它還不包括融資租賃。我們已承擔約 5,000 萬美元的融資租賃義務，主要用於 Clean Earth，將於 2024 年開始，預計將延續到 2025 年。由於 EBITDA 成長和自由現金流，我們的槓桿率預計在​​ 2024 年進一步下降。

Now let's turn to our segment guidance on Slide 9. Both segments are expected to realize growth in adjusted earnings in 2024. For Harsco Environmental, revenues are expected to grow at a low single-digit rate and HE's profitability is expected to be slightly above 2023 levels at the guidance midpoint. Growth in HE revenue and EBITDA will be driven by higher customer steel production, new contracts, site improvement initiatives and pricing. The outlook for better steel production is principally driven by Europe, India and the Middle East.

現在讓我們轉向幻燈片9 中的細分市場指引。數成長率成長，而HE 的獲利能力預計將略高於2023 年水準處於指導中點。 HE 收入和 EBITDA 的成長將受到更高的客戶鋼鐵產量、新合約、場地改進計劃和定價的推動。鋼鐵產量改善的前景主要是由歐洲、印度和中東推動的。

For Clean Earth, revenues are also anticipated to grow low single digits, while CE's EBITDA will grow at a higher rate with its margins expected to improve 50 to 100 basis points for the full year. Beyond higher revenues, EBITDA drivers for Clean Earth again include various efficiency initiatives with anticipated gross benefits of over $10 million for the year. Lastly, corporate costs are expected to be comparable with 2023 levels.

對於 Clean Earth，營收預計也將成長較低的個位數，而 CE 的 EBITDA 將以更高的速度成長，全年利潤率預計將提高 50 至 100 個基點。除了更高的收入之外，清潔地球的 EBITDA 驅動因素還包括各種效率舉措，預計今年的總效益將超過 1,000 萬美元。最後，企業成本預計將與 2023 年的水準相當。

Let me conclude on Slide 10 with our first quarter guidance. Q1, adjusted EBITDA is expected to range from $63 million to $70 million. Harsco Environmental EBITDA is anticipated to increase slightly versus Q1 2023. Higher volumes, price and improvements will contribute to the growth. Clean Earth EBITDA is also expected to be modestly above the prior year quarter.

讓我用我們的第一季指導來總結投影片 10。第一季度，調整後 EBITDA 預計在 6,300 萬美元至 7,000 萬美元之間。哈斯科環境 EBITDA 預計將比 2023 年第一季略有成長。清潔地球 EBITDA 預計也將略高於去年同期。

Here, higher price and improvements are expected to offset a less favorable business mix. Compared with Q4, this outlook contemplates seasonal weakness in each of our business segments. And lastly, I'd note that Q1 is traditionally a weak free cash flow period given seasonal business performance and cash flows. This will be the case again in 2024. We expect to consume cash in Q1, given the seasonality, as well as the timing of interest and incentive compensation payments.

在這裡，更高的價格和改進預計將抵消不利的業務組合。與第四季度相比，這一前景考慮到我們每個業務部門的季節性疲軟。最後，我要指出的是，鑑於季節性業務表現和現金流，第一季傳統上是自由現金流疲軟的時期。 2024 年將再次出現這種情況。

Thanks, and I'll now hand the call back to the operator for Q&A.

謝謝，我現在將把電話轉交給接線員進行問答。

(Operator Instructions)

（操作員說明）

Today's first question comes from Rob Brown with Lake Street Capital Markets.

今天的第一個問題來自 Lake Street Capital Markets 的 Rob Brown。

First question is on the Clean Earth growth expectations. Just wanted to get a sense of how much price is left to realize and how the volume mix is shaking up for '24?

第一個問題是關於清潔地球成長的預期。只是想了解還有多少價格需要實現，以及 24 年的銷售組合如何改變？

Well, we -- in the last couple of years, we've been quite pleased with the pricing leverage within Clean Earth. I think this year, typically raise prices in January. We've been very pleased again with the acceptance of that, I'll say, relative to our inflation. So I think we continue to expect to see some margin lift over time from pricing.

嗯，在過去的幾年裡，我們對清潔地球的定價槓桿感到非常滿意。我認為今年，通常會在一月提價。我想說，相對於我們的通貨膨脹，我們再次對接受這一點感到非常高興。因此，我認為隨著時間的推移，我們仍然預期定價會帶來一些利潤率的提升。

In terms of volume in Clean Earth, the Industrial segment is probably the strongest in terms of its outlook, 3% or 4%. I think something less than that in retail and in healthcare. We did have a number of large one-off high-margin projects in Clean Earth last year that never quite know if they're going to repeat. So perhaps we're a bit conservative here in how we think about the volume in 2024. But the -- I will say that the pipeline of those projects remains very strong. We're just never quite sure when they're going to start.

就清潔地球的數量而言，工業領域的前景可能是最強勁的，達到 3% 或 4%。我認為零售業和醫療保健業的情況要少一些。去年，我們在清潔地球方面確實有一些大型一次性高利潤項目，但這些項目永遠不知道它們是否會重複。因此，也許我們對 2024 年的數量的看法有點保守。我們只是不太確定他們什麼時候開始。

Okay. Got it. And what's sort of the long-term growth rate in Clean Earth that you see at this point? Is it even with those projects, is it in that kind of low to mid-single-digit growth rate in Clean Earth, how do you see that kind of coming up?

好的。知道了。您目前看到的「清潔地球」的長期成長率是多少？即使有了這些項目，清潔地球的成長率是否處於中低個位數，您如何看待這種情況的出現？

Yes. I think about it as kind of a GDP-plus growth business. So think of GDP plus a few points of growth over a cycle. And of course, we would expect the volume in the business to be somewhat less volatile than GDP overall throughout the cycle.

是的。我認為這是一項GDP+成長業務。因此，請考慮 GDP 加上一個週期內的幾個成長點。當然，我們預期整個週期內業務量的波動性將低於 GDP 整體波動性。

The next question comes from Michael Hoffman with Stifel.

下一個問題來自 Michael Hoffman 和 Stifel。

To the -- you've all been very good about calling out the project activity. Could you just remind us so we get the -- because we're all start doing quarterly numbers, the cadence of when we should think about that. And, so we get that quarterly cadence, right? And I realize it's a little bit of a housekeeping question, but I think we all want to pay attention to that.

致——你們都非常善於宣傳項目活動。可以提醒我們一下嗎？而且，我們得到了季度節奏，對吧？我意識到這有點像家政問題，但我認為我們都想關注這一點。

Yes. Michael, it's Tom Vadaketh. I can take that. So we guided you to the growth rates over the quarter, and I'd expect basically about the same pattern and phasing by quarter. So each -- broadly speaking, each quarter for each of the businesses should be -- should have the same kind of growth rate. So in a nutshell, a similar phase into last year.

是的。邁克爾，我是湯姆·瓦達克斯。我可以接受。因此，我們向您介紹了本季的成長率，我預計基本上會出現相同的模式並按季度分階段進行。因此，從廣義上講，每個業務的每個季度都應該具有相同的成長率。簡而言之，與去年類似。

Okay. And that -- but just to remember, the project work was heavy in the first half, that's where we've got to overcome that in the first half. Is that correct in Clean Earth?

好的。但請記住，上半年的專案工作很繁重，這就是我們必須在上半年克服的問題。 《清潔地球》中的說法正確嗎？

Actually, I would say in the soils business, the project work was better in the second half of the year. In the first half of the year, we have a somewhat challenged comparison in the -- because of the settlement with the large customer, as you may remember.

實際上，我想說，在土壤業務方面，下半年的專案工作比較好。今年上半年，我們在比較方面遇到了一些挑戰——因為您可能還記得，因為與大客戶的結算。

Yes. Okay. That's what I wanted to draw out. And then free cash flow, at the segment level, that's an impressive number going up $30 million year-over-year on $185 million. How do we get -- what has to happen in the business model to convert at the whole company level, where the conversion of your EBITDA starts to look more like the peers, which is in the 30% to 40% of EBITDA instead of we're landing somewhere in the low double digits?

是的。好的。這就是我想畫出來的。然後，在細分市場層面，自由現金流是一個令人印象深刻的數字，年增 3,000 萬美元，較去年同期的 1.85 億美元增加了 3,000 萬美元。我們如何得到——商業模式必鬚髮生什麼才能在整個公司層面進行轉換，您的 EBITDA 轉換開始看起來更像同行，佔 EBITDA 的 30% 到 40%，而不是我們是否落在低兩位數的某個位置？

Yes. Great question. First of all, Clean Earth is in that conversion range of 75% to 80%. So I think that compares very favorably to its peers who are more capital intensive, in HE that conversion figure is closer to 50%. Now over time -- and there's a big push this year to transition some of our contracts to more of an asset-light model, where we're only really investing in the so-called critical assets on the sites, that truly add value and less so in the assets used for logistics.

是的。很好的問題。首先，清潔地球的轉換率在 75% 到 80% 之間。因此，我認為與資本密集的同行相比，這非常有利，在高等教育中，轉換率接近 50%。現在，隨著時間的推移，今年我們大力推動將我們的一些合約轉變為輕資產模式，在這種模式下，我們只真正投資於網站上所謂的關鍵資產，這些資產真正增加了價值，並且使用於物流的資產則較少。

So over time, that value proposition is better adopted. I think we'll see the HE cash conversion certainly improve. And then, of course, the last piece of that is interest expense, right? We're highly levered. We have a lot of interest expense. And so as rates come down and as we delever, that will certainly help the cash conversion on a consolidated basis.

因此，隨著時間的推移，這種價值主張會得到更好的採用。我認為我們會看到高等教育現金轉換肯定會有所改善。當然，最後一部分是利息支出，對吧？我們的槓桿率很高。我們有很多利息支出。因此，隨著利率下降和去槓桿化，這肯定有助於全面現金轉換。

Okay. To that end, you're trying to sell a business to help do that. At one point, you alluded to that nefarious European customer that if you couldn't get a resolution in a timely manner, you'd pull it out and then just sell the business away. What's changed in the strategy to...

好的。為此，您正在嘗試出售一家企業來幫助實現這一目標。有一次，你提到那個邪惡的歐洲客戶，如果你不能及時得到解決方案，你就會把它撤掉，然後把生意賣掉。策略發生了什麼變化...

Yes. I think we feel that we really need to negotiate new commercial terms with this one customer. If we were to divest the business and retain the risk on that contract without the ability to execute it. I'm just not sure that would be wise for us to do. So again, the base business is very strong, standard equipment, aftermarket.

是的。我認為我們確實需要與這位客戶談判新的商業條款。如果我們要剝離業務並保留該合約的風險而無法執行該合約。我只是不確定我們這樣做是否明智。再說一遍，基礎業務非常強大，標準設備，售後市場。

Our Services business is very strong, but we just don't believe we can get the right value risk profile for the business until we complete this negotiation. It's still, of course, a strategic imperative to divest it, but it needs to make sense for shareholders. And I guess, I'd also remind everyone that the Rail business is less than 10% of our EBITDA on a consolidated basis.

我們的服務業務非常強大，但我們認為在完成此談判之前，我們無法獲得正確的業務價值風險狀況。當然，剝離它仍然是策略上的當務之急，但它需要對股東有意義。我想，我還要提醒大家，鐵路業務在合併後的 EBITDA 中所佔比例還不到 10%。

So again, it's something we want to do. But even if we were to decide to retain it, given that the outlook for the business is good and we might become more comfortable executing the next year or 2 of these contracts, as opposed to effectively outsourcing it, but retaining the risk. That may well be the right thing to do for shareholders. We're just not at that point yet to make that call.

再說一遍，這是我們想做的事情。但即使我們決定保留它，考慮到業務前景良好，我們可能會更願意執行明年或兩年的這些合同，而不是有效地將其外包，但保留風險。對股東來說，這很可能是正確的做法。我們只是還沒到那個時候做出決定。

Yes. I mean it's the deleveraging aspect, not the EBITDA. I think the market is focused on at this point. Two things on PFAS and then Superfunds. So, in your outlook, have you assumed that a more conservative view about PFAS, given the current administration being very slow about issuing final rules. And then on the flip side, they've just issued an announcement of 25 sites to get Superfund cleanup funding, and I'm curious about how you see Clean Earth role in some of that activity because a lot of it is predominantly in your sweet spot geographically.

是的。我的意思是去槓桿化方面，而不是 EBITDA。我認為市場現在的焦點是這一點。關於 PFAS 和超級基金的兩件事。那麼，在您看來，鑑於現任政府發布最終規則的速度非常緩慢，您是否對 PFAS 持更保守的看法？另一方面，他們剛剛發布了 25 個地點的公告，以獲得超級基金清理資金，我很好奇你如何看待清潔地球在其中一些活動中的作用，因為其中許多主要是在你的甜蜜中地理上的地點。

Right, right. Well first of all, on PFAS, we do not have any kind of financial impact of PFAS remediation in our 2024 guidance. We're feeling very good about how we're positioned, both in terms of technology and the partnerships that we've developed, and you may recall recently an announcement with the DoD on a on a project to prove out some remediation concepts with the Navy and the Air Force.

是的是的。首先，就 PFAS 而言，我們的 2024 年指引中沒有 PFAS 補救措施的任何財務影響。我們對自己的定位感覺非常好，無論是在技術方面還是在我們建立的合作夥伴關係方面，您可能還記得最近與國防部宣布的一個項目，旨在證明一些補救概念海軍和空軍。

So we feel very good about how we're positioned when the -- when those volumes begin to flow. In terms of the Superfund sites, I think that news came out a few days ago. As you know, Michael, we have facilities all over the country, a really strong footprint, both in soil and in hazardous waste. So we certainly would expect to participate in the Superfund volumes as they begin to flow.

因此，當這些交易量開始流動時，我們對自己的定位感到非常滿意。就超級基金網站而言，我認為該消息是幾天前發布的。如你所知，邁克爾，我們在全國各地都有設施，無論是在土壤還是危險廢物方面，我們的足跡都非常強大。因此，我們當然希望在超級基金開始流動時參與其中。

The next question comes from Larry Solow with CJS Securities.

下一個問題來自 CJS 證券公司的 Larry Solow。

Great. Just a quick follow-up on -- a follow-up just quickly on the Rail. You said I just want to clarify just in terms of run rate EBITDA or just kind of some number you look at it, is it around $20 million to $25 million, I know you said less in terms of EBITDA, maybe excluding the charges, is there any way to kind of look at what that sort of run rate EBITDA is today or the '24 outlook...

偉大的。只是對鐵路的快速跟進。你說我只是想澄清一下 EBITDA 的運行率，或者只是你看的一些數字，大約是 2000 萬到 2500 萬美元，我知道你說的 EBITDA 較少，也許不包括費用，是有什麼方法可以了解今天的EBITDA 運行率或24 年的前景...

Yes. No, it's closer to $30 million this year on -- in our outlook, the EBITDA. But on a quality of earnings basis, it's higher because of a few add-backs. So we're looking at $35 million to $40 million, in terms of the QofE EBITDA figure for Rail this year.

是的。不，在我們的展望中，今年的 EBITDA 接近 3000 萬美元。但從獲利品質的角度來看，由於一些附加因素的影響，獲利水準較高。因此，就鐵路今年的 QofE EBITDA 數據而言，我們預計為 3,500 萬至 4,000 萬美元。

Got you. Okay. And then I guess, Environmental Services had really nice quarter normally seasonally a little bit slower, your margins actually picked up too. So really good to see that. I'm just curious, it sounds like there's a lot of positives going into '24. You mentioned you're expecting volumes in steel to pick up. You called out a few new contracts. I don't know if your net contracts business at new is a positive, but it sounds like it is and some favorable pricing. So I'm just -- it sounds like that's also a good guide. So I'm just trying to figure out what are some of the offsets kind of to mute your expectations for the growth in '24 environmental?

明白你了。好的。然後我想，環境服務部門的季度表現非常好，通常季節性稍微慢一點，你的利潤率實際上也有所上升。很高興看到這一點。我只是很好奇，聽起來 24 年有很多正面的事情。您提到預計鋼鐵產量將會增加。你簽了幾份新合約。我不知道你們的新淨合約業務是否積極，但聽起來確實如此，而且定價也很優惠。所以我只是——聽起來這也是一個很好的指南。所以我只是想弄清楚有哪些抵銷措施可以減弱您對 24 年環境成長的預期？

Right. So the core of the Global Mill Services business is really improving nicely year-over-year, both in terms of volume and EBITDA and cash flow. The ecoproducts business, which is, as you know, in part, exposed to certain commodity prices. So we expect to be weaker because of those commodity prices and we also have a business within HE, called Reed Minerals, that is transitioning from coal slag to steel slag as its base product for roofing materials and abrasive materials. And that transition, the EBITDA will decline year-over-year. So ecoproducts overall is probably down about $10 million of EBITDA. Again, mostly because of price, but also in this one business.

正確的。因此，全球工廠服務業務的核心確實在銷售、息稅折舊攤提前利潤 (EBITDA) 和現金流方面逐年大幅改善。如您所知，生態產品業務在一定程度上受到某些商品價格的影響。因此，由於這些大宗商品價格，我們預計會走弱，而且我們在 HE 內部還有一項名為 Reed Minerals 的業務，該業務正在從煤渣過渡到鋼渣，作為屋頂材料和磨料材料的基礎產品。在這種轉變中，EBITDA 將比去年同期下降。因此，ecoproducts 的 EBITDA 總體可能減少約 1000 萬美元。再說一遍，主要是因為價格，而且也是因為這項業務。

Okay. Got it. And then just switching gear to Clean Earth couple there. Just on the mix, it sounds like a little bit of a down turn in mix. Is that more on the hazardous side? I guess it sounds like those projects related, you're not referring to the -- or is that also on the soil side? In terms of timing of projects, I guess, that would be on the soil side or not necessarily? Just trying to clarify that.

好的。知道了。然後將齒輪切換到清潔地球夫婦。就混音而言，聽起來混音有點低迷。這是否更加危險？我想這聽起來像是那些相關的項目，你指的不是——或者也是在土壤方面？就專案的時間安排而言，我想，這可能是在土壤方面，還是不一定？只是想澄清這一點。

Yes. So again, the margins on the soil business are about a point or 2 higher than that on the hazardous side. We saw very strong growth in the soils volume, particularly in the second half of the year. And so there is a bit of a mix down overall in Clean Earth because of that dynamic this year. We also had some very high-margin hazardous projects that, again, they may well repeat. The pipeline is good. We just don't have clear visibility to when. There may be a bit of conservatism there.

是的。同樣，土壤業務的利潤率大約比危險業務高一兩個百分點。我們看到土壤容量成長非常強勁，特別是在今年下半年。因此，由於今年的動態，清潔地球總體上有一些混合。我們還有一些利潤非常高的危險項目，這些項目很可能會重複。管道狀況良好。我們只是不清楚何時會發生。那裡可能有一點保守主義。

Got you. Because I know your bookings were up pretty strongly. I think you had 5 of those last quarter on the soil for the whole year...

明白你了。因為我知道你們的預訂量成長得相當強勁。我想你上個季度全年都有 5 個這樣的東西...

They were, right. They were. And the outlook is good. Yes.

他們是，對的。他們是。且前景良好。是的。

Got you. And then just last question. Any commentary the positive effects, perhaps just on the intent to contract for Veolia generation. I guess that won't really kick into '25. But so I guess is there still kind of a backlog for you guys this year a little bit of supply chain issue until you get some of this stuff moved out faster some other ways.

明白你了。然後是最後一個問題。任何評論的正面影響，也許只是對威立雅發電合約的意圖。我想這不會真正進入 25 年。但我想今年你們仍然有一些積壓的供應鏈問題，直到你們以其他方式更快地轉移這些東西。

Yes. I think we and Veolia feel really very positive about the agreement that we've reached. And the benefits are helping us now, even though their large incinerator is not opening until 2025. As part of the agreement with Veolia, we have access to their other incinerators as well. And so the benefits of that contract in terms of capacity access as well as price are benefiting as we speak.

是的。我認為我們和威立雅對我們達成的協議感到非常積極。儘管他們的大型焚化爐要到 2025 年才會開放，但這些好處現在正在幫助我們。因此，正如我們所說，該合約在容量存取和價格方面的好處正在受益。

(Operator Instructions)

（操作員說明）

The next question comes from Davis Baynton with BMO Capital Markets.

下一個問題來自 BMO 資本市場的 Davis Baynton。

This is Davis on for Devin Dodge. So just wondering, regarding that European Rail contract. So did I hear correctly when you said that the agreement is likely not going to be reached until the back half of the year? Is there any incremental commentary you can give on the timing of that?

這是戴維斯替補德文道奇。所以只是想知道，關於歐洲鐵路合約。那你說的協議可能要到下半年才能達成，我沒聽錯吧？您可以對這個時間安排發表任何增量評論嗎？

Yes. No, we're certainly in discussions with them now. We've passed a few milestones recently that should enable us to accelerate those discussions. But I'll just be very honest, dealing with a large bureaucratic, European state-owned rail company can be a bit frustrating in terms of the pace at which things move. So it's difficult to predict.

是的。不，我們現在肯定正在與他們進行討論。我們最近已經實現了一些里程碑，這應該使我們能夠加速這些討論。但我要說實話，與一家大型官僚歐洲國有鐵路公司打交道，就事情進展的速度而言，可能會有點令人沮喪。所以很難預測。

Yes. I appreciate the color there. And then just maybe one more quickly for me. Just on the accounts receivable securitization, significant decrease in that compared to the previous quarter and the last year. I'm just wondering if there's any color that you could give there, please?

是的。我很欣賞那裡的顏色。然後對我來說也許再快一點。僅就應收帳款證券化而言，較上季和去年同期大幅下降。我只是想知道你是否可以給那裡任何顏色？

Well, the -- so we -- it's Tom Vadaketh. We have the facility. Obviously, the facility went into force in 2022, and that's when there was that effectively a onetime benefit, I think, of about $140 million, $145 million. We had an additional $5 million or so this year. And so the size of the facility today is about $150 million, and we expect it to stay at that kind of level going forward. So there won't -- there shouldn't be an additional cash flow benefit from that going forward.

好吧，我們是湯姆·瓦達克斯。我們有這個設施。顯然，該機制於 2022 年生效，我認為當時有效的一次性收益約為 1.4 億美元、1.45 億美元。今年我們額外獲得了約 500 萬美元。因此，目前該設施的規模約為 1.5 億美元，我們預計未來將保持在這一水平。因此，未來不會有額外的現金流收益。

Thank you, this concludes our question-and-answer session. I would like to turn the conference back over to Dave Martin for any closing remarks.

謝謝大家，我們的問答環節到此結束。我想將會議轉回戴夫馬丁（Dave Martin）發表閉幕詞。

Thank you, MJ, and thank you for all that joined the call today. Please feel free to reach out to me with any questions. And as always, we appreciate your interest in the company and look forward to speaking soon. Take care.

謝謝你，MJ，也謝謝今天加入電話會議的所有人。如有任何問題，請隨時與我聯絡。一如既往，我們感謝您對公司的興趣，並期待盡快與您交談。小心。

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

會議現已結束。感謝您參加今天的演講。您現在可以斷開連線。