Enviri Corp (NVRI) 2024 Q3 法說會逐字稿

Good morning. My name is Danielle, and I'll be your conference facilitator. At this time, I would like to welcome everyone to the Enviri Corporation's third quarter release conference call. (Operator Instructions)

早安.我的名字是丹妮爾，我將擔任您的會議主持人。現在，我歡迎大家參加 Enviri Corporation 第三季發布電話會議。（操作員指令）

Also, this teleconference presentation and accompanying webcast made on behalf of Enviri Corporation are subject to copyright by Enviri Corporation, and all rights are reserved. Please note this call is being recorded. No recordings or redistribution of this telephone conference by any other party are permitted without the express written consent of Enviri Corporation. Your participation indicates your agreement.

此外，代表 Enviri Corporation 進行的本次電話會議演示和隨附的網路廣播均受 Enviri Corporation 的版權保護，並保留所有權利。請注意，本次通話正在錄音。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。您的參與即表明您同意。

I would now like to introduce Dave Martin of Enviri Corporation. Mr. Martin, you may begin your call.

現在我想介紹 Enviri 公司的戴夫馬丁。馬丁先生，您可以開始通話了。

Thank you, Danielle, and welcome to everyone joining us this morning. I'm Dave Martin, VP of Investor Relations for 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 third quarter and our outlook for the remainder of the year. We'll then take your questions. Before our presentation, let me mention a few items.

謝謝你，丹妮爾，歡迎大家今天早上加入我們。我是 Enviri 投資者關係副總裁 Dave Martin。今天與我一起的是我們的董事長兼執行長 Nick Grasberger；以及我們的資深副總裁兼財務長 Tom Vadaketh。今天上午，我們將討論第三季的業績以及今年剩餘時間的展望。然後我們會回答您的問題。在我們進行演講之前，請允許我提幾點。

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 the federal securities laws. These statements are based on our current expectations and are subject to certain risks and uncertainties that may cause actual results to differ materially from those forward-looking statements. For a discussion of such risks and uncertainties, see Risk Factors section in our most recent 10-K and more recent 10-Qs. The company undertakes no obligation to revise or update any forward-looking statements.

首先，我們的季度收益報告和本次電話會議的幻燈片簡報可在我們的網站上查閱。第二，我們今天發表的聲明將根據聯邦證券法的規定被視為前瞻性的。這些聲明是基於我們目前的預期，並受某些風險和不確定性的影響，可能導致實際結果與這些前瞻性聲明有重大差異。有關此類風險和不確定性的討論，請參閱我們最新的 10-K 和最新的 10-Q 中的風險因素部分。該公司不承擔修改或更新任何前瞻性陳述的義務。

Lastly, on this 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 our earnings release and the slide presentation.

最後，在本次電話會議中，我們將參考出於美國證券交易委員會報告目的而被視為非 GAAP 的調整後財務結果。我們的收益報告和幻燈片簡報中包含了與 GAAP 結果的對帳。

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

話雖如此，我會把電話轉給尼克。謝謝。

Thank you, Dave, and good morning, everyone. Before we get into the results, I'd like to acknowledge our late colleague and friend, Mauro Curi, who is the President of our Harsco Environmental segment. We unexpectedly lost Mauro near the end of this past quarter. Mauro will be remembered for his energy and passion and his commitment to our business and to our values. We are fortunate to have a strong team across HE and at the executive level, and I will lead HE until the new President is named, which we expect to be early next year.

謝謝你，戴夫，大家早安。在我們了解結果之前，我想感謝我們的已故同事和朋友 Mauro Curi，他是我們的 Harsco 環境部門的總裁。上個季度末，我們意外地失去了毛羅。人們將永遠銘記 Mauro 的活力和熱情以及他對我們的業務和價值觀的承諾。我們很幸運在高等教育和執行層面擁有一支強大的團隊，我將領導高等教育直到新校長被任命，我們預計新校長將在明年年初擔任選舉。

Turning to the quarter, I'll make a few comments on our Q3 results and on each of our three segments, and then provide an update on our strategic plan and our business portfolio as we focus on creating shareholder value. Our third quarter can be characterized by four developments. Number one, another record quarter for Clean Earth in terms of EBITDA and EBITDA margin. Second, with HE, a weakening of the global steel market due to the impact of excess capacity in China and slower demand in many of our key geographies. Third, continued supply chain and operational challenges in our rail business. And fourth, the strengthening of our balance sheet through asset sales and the renewal and extensions of our revolver and other short-term credit facilities.

談到本季度，我將對我們的第三季度業績和三個部門分別發表一些評論，然後在我們專注於創造股東價值的同時，對我們的戰略計劃和業務組合進行更新。我們的第三季有四個特點。第一，就 EBITDA 和 EBITDA 利潤率而言，Clean Earth 本季再創紀錄。其次，由於中國產能過剩以及我們許多主要地區需求放緩的影響，全球鋼鐵市場出現疲軟。第三，我們的鐵路業務在供應鏈和營運方面繼續面臨挑戰。第四，透過資產出售以及循環信貸和其他短期信貸安排的更新和延長，加強我們的資產負債表。

Turning to Clean Earth. The business continues to exceed expectations and deliver double-digit earnings growth against challenging comparisons to last year. Adjusted EBITDA increased over 20% versus Q3 of last year while the EBITDA margin improved 17.5%, an increase of over 300 basis points. Cash flow remains strong. Pricing, mix and numerous projects aimed at improving efficiency are driving the business.

轉向清潔地球。該業務持續超出預期，與去年同期相比，實現了兩位數的獲利成長。調整後 EBITDA 較去年第三季成長超過 20%，EBITDA 利潤率提高 17.5%，增幅超過 300 個基點。現金流依然強勁。定價、產品組合和眾多旨在提高效率的項目正在推動業務的發展。

In addition to these factors, moving forward, Clean Earth should also benefit from volume growth linked to sustainability initiatives among customers and new markets such as PFAS. It will also benefit from upgraded and common IT systems and other technology-driven initiatives as part of our One Clean Earth program.

除了這些因素之外，展望未來，Clean Earth 還將受益於與客戶永續發展措施以及 PFAS 等新市場相關的銷售成長。作為我們「一個清潔地球」計畫的一部分，它也將受益於升級和通用的 IT 系統以及其他技術驅動的舉措。

Harsco Environmental has faced headwinds due to a weakening steel industry in most markets. Excess capacity and weaker demand in China, which accounts for 50% of global steel production, has led to a flood of exports from the country, which has put pressure on some of our customers in less protected markets. Over the past six months, we have seen a handful of steel mills we support either cease or reduce production.

由於大多數市場鋼鐵業疲軟，哈斯科環境公司面臨阻力。中國佔全球鋼鐵產量的50%，但由於產能過剩和需求疲軟，導致該國鋼鐵出口大量增加，給我們一些在保護較少的市場的客戶帶來了壓力。在過去六個月中，我們看到我們支持的少數鋼廠停產或減產。

Eventually, we expect China to reduce capacity while other countries increase protections against cheap Chinese steel. The falling steel price premium outside of China should also ease this pressure, potentially in the near term. Overall, we continue to see our mix of customers and contracts as positive, and we do not expect the short-term disruption to have a meaningful effect on our three-year outlook for HE that we shared a few months ago at our Analyst Day.

最終，我們預期中國將減少產能，而其他國家將加強對廉價中國鋼鐵的保護。中國以外地區鋼鐵價格溢價的下降也有望在短期內緩解這種壓力。總體而言，我們繼續認為我們的客戶和合約組合是積極的，並且我們預計短期中斷不會對我們幾個月前在分析師日分享的 HE 三年展望產生重大影響。

Harsco Rail continues to face operational challenges, related primarily to the late deliveries from key vendors, global shipping disruptions and some bottlenecks in our own manufacturing processes. Tom will touch on the steps we're taking to improve these operational issues.

哈斯科鐵路繼續面臨營運挑戰，主要與主要供應商的延遲交貨、全球航運中斷以及我們自身製造流程中的一些瓶頸有關。湯姆將談到我們為改善這些營運問題所採取的措施。

In addition, Hurricane Helene affected production and shipments at the end of the quarter from our primary manufacturing facility in Columbia, South Carolina. Overall demand for our equipment aftermarket parts and services remains healthy in all markets outside of China.

此外，颶風海倫影響了我們位於南卡羅來納州哥倫比亞的主要製造工廠在本季末的生產和出貨量。中國以外所有市場對我們的設備售後零件和服務的整體需求依然強勁。

I'm pleased with the progress we continue to make in improving our balance sheet. We've exceeded our goal of generating $50 million to $75 million of proceeds from asset sales, primarily noncore businesses.

我很高興看到我們在改善資產負債表方面不斷取得進展。我們已經超額完成了透過資產出售（主要是非核心業務）獲得 5,000 萬至 7,500 萬美元收益的目標。

In addition, our sizable pension fund in the UK is now fully funded, and we don't believe further contributions will be needed. We've reached this milestone about a year earlier than expected. And finally, the amendment and extension of our short-term credit facilities was well supported by our bank group and further strengthens our liquidity and debt maturity profile.

此外，我們在英國的龐大退休基金現已充足，我們認為不需要進一步繳納。我們比預期提前大約一年達到了這一里程碑。最後，我們的短期信貸安排的修改和延長得到了我們銀行集團的大力支持，進一步增強了我們的流動性和債務期限狀況。

As discussed during our Analyst Day last June, the Board and the management team are focused on taking actions that are in the best interest of Enviri and all of our shareholders. This includes frequently evaluating all options to enhance shareholder value and narrow Enviri's valuation gap, and we are open-minded with respect to how we achieve these goals. Based on our evaluations to date, our view, our well-informed view is that the best course of action is to continue executing on our operational plan outlined a few months ago.

正如去年 6 月分析師日所討論的那樣，董事會和管理團隊專注於採取符合 Enviri 和所有股東最佳利益的行動。這包括經常評估所有提高股東價值和縮小 Enviri 估值差距的選項，並且我們對如何實現這些目標持開放態度。根據我們迄今為止的評估，我們的觀點，我們充分了解的情況是，最好的行動方案是繼續執行我們幾個月前製定的營運計劃。

We are confident that meaningful organic growth and margin improvement over the next two or three years will boost the value of both Harsco Environmental and Clean Earth while allowing time to stabilize the rail business and better position that business for sale. We already have actions underway to support these initiatives and as a result, expect to yield EBITDA in excess of $400 million in 2027 with free cash flow of more than $150 million and net leverage of 2.5 times. This will also provide greater strategic flexibility and optionality for value creation in the future. We expect to steadily improve free cash flow each year.

我們相信，未來兩三年內有意義的有機成長和利潤率提高將提升哈斯科環境公司和清潔地球公司的價值，同時也為穩定鐵路業務和為出售該業務提供更好的條件。我們已採取行動支持這些舉措，預計 2027 年 EBITDA 將超過 4 億美元，自由現金流將超過 1.5 億美元，淨槓桿率將達到 2.5 倍。這也將為未來的價值創造提供更大的策略靈活性和可選性。我們預計每年自由現金流都會穩定提高。

Cash flow generation has been reduced the past few years by the investments made in our rail business to execute three long-term contracts in Europe. This investment will decline next year, and then these contracts become a source of cash in the later half of 2026 and into 2027. In 2025, we expect free cash flow of between $40 million and $60 million due to improved performance in rail, continued strong cash flow in HE and CE and lower interest expense and pension contributions.

過去幾年，由於我們對鐵路業務的投資以及在歐洲執行的三份長期合同，導致現金流產生減少。這項投資明年將會下降，然後這些合約將成為2026年下半年和2027年的現金來源。到2025 年，我們預計自由現金流將在4,000 萬至6,000 萬美元之間，這得益於鐵路性能的提高、高等教育和高等教育附加價值的持續強勁現金流以及利息支出和養老金繳款的減少。

I will now turn the call over to Tom.

現在我將電話轉給湯姆。

Thanks, Nick, and good morning, everyone. Overall, Q3 was a challenging quarter due to market-related customer, supply chain and weather-related pressures, particularly for Harsco Environmental and Rail. The Enviri team responded to these challenges by pushing hard to close the quarter on a positive note, and I'm pleased that we delivered adjusted EBITDA within our guidance range for the quarter.

謝謝，尼克，大家早安。總體而言，第三季度是一個充滿挑戰的季度，原因在於市場相關的客戶、供應鏈和天氣相關的壓力，尤其是對於哈斯科環境和鐵路公司而言。Enviri 團隊努力應對這些挑戰，以積極的態度結束本季度，我很高興我們在本季度實現了調整後的 EBITDA 在我們的指導範圍內。

Now let me comment on our third quarter performance further starting on slide 4. In the third quarter, revenues totaled $574 million, down 4% on a reported basis. Revenues increased modestly on an organic basis, excluding the impacts of FX translation, recent divestitures and a $5 million ETO-related adjustment in rail. Adjusted EBITDA was $85 million, an improvement of 3% year-over-year as reported and little changed from our multiyear high in the second quarter. FX translation and divestitures impacted our EBITDA growth by roughly 5%.

現在，讓我從第 4 張投影片開始進一步評論我們第三季的表現。第三季度，總收入為 5.74 億美元，報告顯示下降 4%。除去外匯翻譯、近期資產剝離以及鐵路 500 萬美元 ETO 相關調整的影響，收入有機小幅增長。調整後 EBITDA 為 8,500 萬美元，年成長 3%，與第二季的多年最高水準相比變化不大。外匯翻譯和資產剝離對我們的 EBITDA 成長產生了約 5% 的影響。

Our year-over-year earnings growth was driven by Clean Earth, which had another fantastic quarter with record quarterly earnings and margins. Relative to guidance, rail performance was below our expectations and was impacted by shipment and supply chain delays for standard equipment lower aftermarket sales in Asia and lower revenue recognition and profits on certain contracts due to operational bottlenecks and higher costs. Hurricane Helene, right at the end of the quarter also impacted deliveries.

我們的年比獲利成長主要得益於 Clean Earth，該公司本季表現優異，創下了季度獲利和利潤率的新高。相對於指導意見，鐵路表現低於我們的預期，並受到標準設備的裝運和供應鏈延遲、亞洲售後市場銷售下降以及由於運營瓶頸和成本上升導致某些合約的收入確認和利潤下降的影響。本季末的颶風海倫 (Hurricane Helene) 也影響了交貨。

HE results were also slightly below our internal expectations, where we saw lower service volumes driven by our customers curtailing or slowing production in recent months, as well as delays starting new sites and contract exit costs. These weaknesses in performance were offset by Clean Earth, where we benefited from pricing efficiency initiatives and better overall cost performance.

HE 的業績也略低於我們的內部預期，我們發現服務量下降是由於我們的客戶近幾個月來削減或放緩產量，以及新工廠啟動延遲和合約退出成本。這些績效上的弱點被 Clean Earth 所抵消，我們受益於定價效率措施和更好的整體成本績效。

Our adjusted diluted loss per share was $0.01 for the quarter. Adjusted free cash flow for the quarter was a deficit of $34 million versus a deficit of $7 million in the prior year quarter, with the change due to the timing of working capital and capital spending.

本季我們的調整後每股攤薄虧損為 0.01 美元。本季調整後的自由現金流虧損 3,400 萬美元，而去年同期虧損 700 萬美元，這項變動是由於營運資本和資本支出的時間安排造成的。

Free cash flow was anticipated to be negative in the quarter, although it was below our expectations mainly due to the cash impacts of the shipment and production delays in rail. We saw significant cash usage this quarter in rail, where our ETO contracts continue to consume cash. Otherwise, HE and CE generated approximately $50 million of free cash flow in the quarter and this offset our interest costs and other corporate items.

預計本季自由現金流為負，儘管低於我們的預期，主要原因是鐵路運輸和生產延誤對現金產生了影響。本季度，我們發現鐵路行業的現金使用量很大，我們的 ETO 合約繼續消耗現金。另外，HE 和 CE 在本季產生了約 5,000 萬美元的自由現金流，這抵消了我們的利息成本和其他公司項目。

Our covenant leverage ratio remained just below 4 times, and our net debt was stable in the quarter. The successful sale of Reed Minerals offset the impact of the negative cash flow on our total debt.

我們的契約槓桿率維持在4倍以下，本季我們的淨債務維持穩定。Reed Minerals 的成功出售抵消了負現金流對我們總債務的影響。

Lastly, before moving on to segment results, I was very pleased that we extended our revolver and accounts receivable facilities at favorable terms. We will continue to have proactive approach to deal with upcoming debt maturities. And with these two extensions, the next major maturity is not until 2027.

最後，在談到分部績效之前，我很高興我們以優惠的條件延長了循環信貸和應收帳款信貸服務。我們將繼續採取積極主動的方式來處理即將到期的債務。隨著這兩次延期，下一個主要到期日要到 2027 年。

Also, since the quarter ended, we entered into an additional floating to fixed interest rate swap for a portion of our term loan. The terms were attractive, and I view the swap as prudent risk management against future rate movements.

此外，自本季結束以來，我們針對部分定期貸款簽訂了額外的浮動利率至固定利率互換協議。這些條款很有吸引力，我認為掉期是針對未來利率變動的審慎風險管理。

Please turn to slide 5 and our HE segment. Segment revenues totaled $279 million, down 2% compared with the prior year quarter, net of a $6 million FX translation impact and a $15 million impact from divestitures. Adjusting for the FX impact and the sale of performance and Reed Minerals, organic growth for HE was 5%.

請翻到投影片 5 和我們的 HE 部分。分部收入總計 2.79 億美元，比去年同期下降 2%，扣除 600 萬美元的外匯翻譯影響和 1500 萬美元的資產剝離影響。經過外匯影響以及業績和 Reed Minerals 銷售收入的調整後，HE 的有機成長率為 5%。

Adjusted EBITDA for the quarter totaled $53 million, which was modestly lower versus the prior year, and again, a net of FX and divestitures. Compared with last year, FX, divestitures and contract exits offset the favorable impact of price, growth investments and higher service levels in HE. HE's EBITDA margin was 19% in the quarter.

本季調整後的 EBITDA 總計 5,300 萬美元，較上年略有下降，且再次扣除外匯和資產剝離因素。與去年相比，外匯、資產剝離和合約退出抵消了價格、成長投資和高等教育服務水準提高的有利影響。HE 本季的 EBITDA 利潤率為 19%。

Next, please turn to slide 6 to discuss Clean Earth. For the quarter, revenues totaled $237 million, down 1% versus the prior year with lower industrial and soil volumes, mostly offset by higher prices. Hazardous materials revenues totaled $195 million, while soil dredge revenues were $42 million for the quarter.

接下來，請翻到投影片 6，討論「清潔地球」。本季總收入為 2.37 億美元，較前一年下降 1%，原因是工業和土壤產量下降，但大部分被價格上漲所抵消。本季危險物質收入總計 1.95 億美元，土壤疏浚收入為 4,200 萬美元。

Meanwhile, adjusted EBITDA increased 23% to reach $42 million and CE's quarterly margin increased to 17.5%. Both of these KPIs are again quarterly records for CE. The increase in EBITDA was driven by price, lower incentive compensation and lower bad debt expenses as well as lower transportation and disposal costs that are the result of our efficiency initiatives.

同時，調整後的 EBITDA 成長 23%，達到 4,200 萬美元，CE 的季度利潤率成長至 17.5%。這兩個 KPI 再次創下了 CE 的季度記錄。EBITDA 的成長得益於價格、激勵性薪酬和壞帳費用的降低以及運輸和處置成本的降低，這些都是我們提高效率措施的結果。

Now please turn to slide 7 and our rail business. Rail revenues totaled $58 million and its adjusted EBITDA was a loss of $2 million in the second quarter. Compared with the 2023 quarter, the EBITDA change is the result of lower aftermarket and contracted services volumes as well as lower revenues from various other equipment contracts. We also incurred an FX loss of approximately $1 million linked to the Turkish lira. Contributions from standard equipment were modestly higher year-on-year. Both revenues and adjusted EBITDA in the quarter were impacted by Hurricane Helene right at the end of the quarter, which resulted in certain shipments being pushed to the fourth quarter.

現在請翻到第 7 張投影片，介紹我們的鐵路業務。第二季度，鐵路收入總計 5,800 萬美元，調整後 EBITDA 虧損 200 萬美元。與 2023 年季度相比，EBITDA 的變化是由於售後市場和合約服務量下降以及其他各種設備合約收入下降。我們也因土耳其里拉而遭受了約 100 萬美元的外匯損失。標準設備的貢獻較去年同期略有成長。本季的營收和調整後的 EBITDA 均受到季末颶風海倫的影響，導致部分出貨量延後至第四季。

I'll note that the adjusted EBITDA for the quarter excludes forward loss adjustments of $10.5 million related to our three ETO contracts in Europe. The impact of these adjustments on revenues was approximately a reduction of $5 million in the quarter, which skews the year-on-year revenue comparison.

我要指出的是，本季調整後的 EBITDA 不包括與我們在歐洲的三份 ETO 合約相關的 1050 萬美元的遠期損失調整。這些調整對收入的影響是本季收入減少約 500 萬美元，這使得同比收入比較出現偏差。

As mentioned earlier, supply chain issues and operational bottlenecks continue to hamper rail. Fixing these issues is a top priority for the company and we have taken action to strengthen the rail team and have launched several initiatives to improve these areas of the business. Another key priority is, of course, to continue to drive the completion of the three large ETO contracts.

如前所述，供應鏈問題和營運瓶頸繼續阻礙鐵路運輸。解決這些問題是公司的首要任務，我們已採取行動加強鐵路團隊，並推出了多項措施來改善這些業務領域。另一個關鍵優先事項當然是繼續推動三項大型ETO合約的完成。

As I mentioned earlier, the business saw a significant cash usage in the quarter stemming from delayed deliveries to customers in the base business and on certain contracts. We expect the business to be in a net cash use position for the full year in the $40 million range.

正如我之前提到的，由於基礎業務和某些合約的客戶交貨延遲，該業務在本季的現金使用量大幅增加。我們預計該業務全年淨現金使用額將在 4,000 萬美元左右。

We continue to see strong demand in our base business for equipment and services, and our pipeline is strong. Year-to-date bookings were over $140 million and in line with our expectations. As we said at our Investor Day in June, rail is a valuable part of our portfolio, which we expect will deliver steady earnings and cash flow in the future.

我們的基礎業務對設備和服務的需求持續強勁，我們的產品線也很強大。年初至今的訂單金額已超過 1.4 億美元，符合我們的預期。正如我們在六月的投資者日所說的那樣，鐵路是我們投資組合中的重要組成部分，我們預計它將在未來帶來穩定的利潤和現金流。

Now let me turn to our updated 2024 outlook on slide 8. Enviri's full year adjusted EBITDA is now expected to be within a range of $317 million to $327 million, which is up 5% versus 2023. The midpoint of this range is down just over $10 million from our prior guidance with a lower range reflecting tempered expectations for HE and rail, partially offset by a raised outlook for Clean Earth.

現在，讓我轉到第 8 張投影片，談談我們更新後的 2024 年展望。Enviri 全年調整後 EBITDA 預計在 3.17 億美元至 3.27 億美元之間，較 2023 年增長 5%。這一範圍的中點比我們之前的預期低了 1000 多萬美元，較低的範圍反映了對 HE 和鐵路的預期降低，但被對 Clean Earth 的上調預期部分抵消了。

For HE, the change reflects the impact of the REIT divestiture. It also reflects lower service levels in HE as a result of reduced production and some curtailments by our steel customers in Q4. This expectation reflects recent outlooks provided by the World Steel Association and others. September steel production among our customers was the lowest of the year and we expect these production levels to be maintained for the remainder of the year.

對於 HE 而言，這項變更反映了 REIT 剝離的影響。這也反映出由於第四季度鋼鐵客戶產量下降和部分減產，導致 HE 的服務水準下降。這項預期反映了世界鋼鐵協會等機構近期的展望。9月份我們客戶的鋼鐵產量是今年以來的最低水平，我們預計今年剩餘時間的產量將保持在這一水平。

For rail, the change relates to some shipments being pushed into 2025 and our latest assessment of our performance on certain contracts. Our detailed segment outlook can be found in the appendix of the presentation.

對於鐵路而言，這項變更涉及部分貨物運輸推遲至 2025 年，以及我們對某些合約履行情況的最新評估。我們的詳細分部展望可在簡報的附錄中找到。

The other item I would mention is free cash flow, where our outlook has also changed. -- lower cash generation for the year reflects the reduced expectations for earnings and is also partially timing related. It reflects slower cash receipts from China, which we have flagged to you in the past and the pushout of some milestone receipts in rail.

我要提到的另一件事是自由現金流，我們對此的看法也改變了。 ——年度現金產生量的減少反映了獲利預期的下降，也與時間因素有關。這反映了我們過去曾向您指出的來自中國的現金收入放緩以及鐵路一些里程碑收入的延遲。

The midpoint of our free cash flow guidance is now negative $10 million. This total includes cash usage at rail, which I just mentioned a moment ago. Otherwise, we expect HE and CE will together generate approximately $200 million of cash this year, which we have said previously and which we find compelling, and this almost fully offsets our interest and other cash outflows.

我們的自由現金流預期中間值現在是負 1000 萬美元。這個總數包括我剛才提到的鐵路現金使用量。否則，我們預計 HE 和 CE 今年將共同產生約 2 億美元現金，這是我們之前所說的並且我們認為令人信服，這幾乎完全抵消了我們的利息和其他現金流出。

To be clear, we are disappointed in our 2024 cash performance. As Nick said, we do expect a positive inflection in our cash generation in 2025. Our interest burden should decline as should our pension contributions and most importantly, we expect rail cash performance to improve as we make progress on our large ETO contracts.

需要明確的是，我們對 2024 年的現金表現感到失望。正如尼克所說，我們確實預計 2025 年我們的現金創造能力將出現積極的變化。我們的利息負擔應該會下降，退休金繳款也應該會下降，最重要的是，我們預計，隨著大型 ETO 合約的進展，鐵路現金表現將會改善。

Let me conclude on slide 9 with our fourth quarter guidance. Q4 adjusted EBITDA is expected to range from $68 million to $78 million. And I would note that Q4 is traditionally a seasonally weak quarter for both HE and CE. Relative to 2023, HE environmental EBITDA, Harsco Environmental EBITDA is anticipated to be lower due to FX translation impacts, contract exits, divestitures and a less favorable services mix.

讓我在第 9 張投影片上總結我們的第四季指引。第四季調整後的 EBITDA 預計在 6,800 萬美元至 7,800 萬美元之間。我要指出的是，第四季對於 HE 和 CE 來說傳統上是季節性疲軟的季度。相對於 2023 年的 HE 環境 EBITDA，Harsco 環境 EBITDA 預計會有所下降，原因是外匯翻譯的影響、合約退出、資產剝離和不太有利的服務組合。

Clean Earth EBITDA is expected to be above the prior year quarter with higher prices, cost improvements and lower incentive comp expected to drive earnings growth. And rail EBITDA is expected to increase modestly year-on-year due to higher volumes and improved mix and certain contract adjustments in the prior year quarter.

Clean Earth EBITDA 預計將高於去年同期，因為價格上漲、成本改善和激勵補償降低預計將推動獲利成長。由於運輸量增加、產品組合改善以及去年同期的某些合約調整，預計鐵路 EBITDA 將比去年同期小幅增長。

Lastly, on Q4, I would note that free cash flow is anticipated to strengthen from Q3 as is normally the case. Cash receipt delays from Q3 will also help cash performance in the current quarter.

最後，關於第四季度，我想指出的是，預計自由現金流將從第三季開始增強，這通常是這種情況。第三季的現金收據延遲也將有助於本季的現金表現。

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

謝謝，現在我將把電話交回接線生進行問答。

(Operator Instructions) Rob Brown, Lake Street Capital Markets.

（操作員指示） Rob Brown，Lake Street Capital Markets。

I guess first question is on the ability to kind of deal with lower volumes in HE. How much is that is a fixed cost business? And how much flexibility do you have there to just lower cost with lower activity?

我想第一個問題是關於 HE 處理較低音量的能力。固定成本業務是多少？您在透過降低活動量來降低成本方面有多大的彈性？

Rob, it's Nick. As you know, we have minimum billings and fixed fees, which provide a good bit of protection against volume declines below a certain threshold. But until that threshold is reached, there is some impact. And that's what we saw during the quarter and expect to see again in Q4.

羅布，我是尼克。如您所知，我們有最低帳單和固定費用，這可以很好地防止交易量下降到某個門檻以下。但在達到該閾值之前，還是會產生一些影響。這就是我們在本季看到的情況，預計在第四季還會再次看到。

And then I think Tom and I both mentioned that there have been a few sites that have just simply shut down. And so the impact of that is in our Q3 results and guidance as well.

然後我想湯姆和我都提到有幾個網站已經直接關閉了。所以這對我們的第三季業績和指引也有影響。

Okay. Great. And then on the volume growth in Clean Earth, are you seeing that continue to grow nicely? And where are you seeing the strength there? Just some color on the volume growth would be helpful.

好的。偉大的。那麼，就 Clean Earth 的銷售成長而言，您是否看到它繼續保持良好的成長勢頭？您在哪裡看到那裡的力量？關於成交量成長的一些資訊將會很有幫助。

Yes. In general, the Health Care segment has been healthy for us, seeing volume growth there. In retail, there's been a healthy amount of churn. And so that's been flat to soft. And then the weakest of the three has been the so-called industrial or manufacturing sector where we've seen softness.

是的。整體而言，我們的醫療保健業務發展狀況良好，銷售量成長。在零售業中，客戶流失率相當高。因此，其走勢從平穩到疲軟。而這三個產業中最弱的就是所謂的工業或製造業，我們已經看到這個產業表現疲軟。

Larry Solow, CJS Securities.

索洛（Larry Solow），CJS 證券公司。

My condolences as well to Mauro. I guess first question just on the environmental piece. It sounds like we're obviously in a period of decline in global volumes. Just curious what's like your contract win net loss? I know you mentioned some contract losses or you walked away from some contracts. Just trying to figure out your ability to sort of grow revenue in this environment.

我也向毛羅表示哀悼。我想第一個問題只是關於環境部分。這聽起來我們顯然正處於全球貿易量下降的時期。只是好奇你的合約贏得淨虧損是多少？我知道您提到了一些合約損失或您放棄了一些合約。只是想弄清楚你在這種環境下增加收入的能力。

I know you mentioned a new contract that you had a press release, new car steel just a couple of weeks ago. So just curious if you can give us any color on -- from a global level -- high level, your net win rate? And does this new contract have any? Is that meaningful?

我知道您提到過一份新合同，幾週前您剛剛發布了新聞稿，關於新車鋼材。所以我很好奇，您能否從全球層面給我們一些關於您的淨勝率的詳細資訊？這份新合約有什麼內容嗎？這有意義嗎？

I'll respond to that in a second, Larry. But let me first just emphasize what I think the audience knows here, which is that the best way to look at the performance of HE is on an EBITDA minus CapEx business. So we've softened our guidance on EBITDA, but the impact on the EBITDA minus CapEx is much less. This business is much more stable than it has been and a higher level of cash flow than we've seen for a long time. And so we are able to mitigate some of these volume declines with efficiency on capital spending. And we've seen that in the third quarter and will in Q4 and into next year as well.

我馬上就回答這個問題，拉里。但首先，讓我強調一下我認為聽眾已經了解的內容，即觀察 HE 績效的最佳方式是 EBITDA 減去 CapEx 業務。因此，我們放寬了對 EBITDA 的指導，但對 EBITDA 減去資本支出的影響要小得多。這項業務比以前穩定得多，而且現金流水平也比我們長期以來所見的要高。因此，我們能夠透過提高資本支出效率來緩解部分銷售下降的影響。我們已經在第三季度看到了這一點，並將在第四季度和明年看到這一點。

And in terms of revenue growth, we've commented before, and it certainly remains the case that we have an extraordinarily healthy and lengthy pipeline of growth opportunities in HE. Our competitive position is quite strong. And since we limit our investment in growth contracts, we're really only selecting the best opportunities that tend to be in with markets, the terms of conditions are the best and, of course, the returns are higher and the risk is lower. And we have a number of those contracts that are ramping up now. We'll see the benefit of those in 2025, and that will serve to mitigate some of the short-term impact that we're seeing at some of our existing sites.

關於收入成長，我們之前已經評論過，事實仍然是，我們在高等教育領域擁有極其健康且漫長的成長機會。我們的競爭地位相當強。由於我們限制對成長合約的投資，我們實際上只選擇與市場最相符的最佳機會，條件條款是最好的，當然，回報更高，風險更低。我們有許多合約正在加緊履行。我們將在 2025 年看到這些措施的好處，這將有助於減輕我們在某些​​現有站點看到的一些短期影響。

But in general, there's a significant geographic shift underway in our portfolio now away from the UK and Europe and towards growth markets, India, Turkey, Mexico, I think, increasingly, the US, given the protections we have here against low-cost imports, but this takes time, right? You -- we've seen some of that this year and we'll see more of it next year. But in general, this geographic shift is really going to be a tailwind for the business.

但總體而言，我們的投資組合正在發生重大的地理轉移，從英國和歐洲轉向成長型市場，如印度、土耳其、墨西哥，我認為，考慮到我們在這裡對低成本進口產品的保護，美國也越來越受到青睞。您—我們今年已經看到了一些這樣的情況，明年還會看到更多。但整體而言，這種地理上的轉變確實會為企業帶來順風。

Okay. I appreciate that color. And on the positive side, Clean Earth, obviously, on relatively flat revenue and volumes had a very nice quarter on the margin side. I think you were up even sequentially like 150 bps. I know you've done a lot of initiatives over the last two years, Nick, pricing and efficiencies. I think you had opted a sort of three-year target to 17 around where we are today on the margin. Is there more room for upside pretty impressive to this quarter? Anything unusual to kind of drive further increases in margin on flat revenue?

好的。我很欣賞那個顏色。從積極的一面來看，Clean Earth 的營收和銷量顯然相對平穩，利潤率在本季表現非常好。我認為您甚至會連續上漲 150 個基點。尼克，我知道過去兩年你做了很多舉措，包括定價和效率。我認為你已經選擇了一個三年目標，即 17 個左右，與我們現在的邊際水平差不多。本季是否還有更多上漲空間？有什麼不尋常的事情可以在收入持平的情況下推動利潤率進一步上升嗎？

I would say nothing unusual. As you know, the first four years of Clean Earth, we focused an awful lot on efficiency and cost and pricing and leadership and structure and so forth. And we're now putting a significant effort behind driving volume growth with new leadership, new focus, kind of enhanced value propositions and so forth. So I think as we look forward, we'll start to see more volume growth drive margin expansion and EBITDA and top line growth in that business.

我覺得沒什麼不尋常的。如你所知，在清潔地球成立的最初四年裡，我們非常注重效率、成本、定價、領導力和結構等方面。現在，我們正透過新的領導階層、新的重點、增強的價值主張等，加強推動銷售成長。因此，我認為，展望未來，我們將開始看到更多的銷售成長推動該業務的利潤率擴大、EBITDA 和營收成長。

Okay. And then just last question on the cash flow and the free cash flow. I appreciate sort of the early look out to next year. If you look at the midpoint for this year or next year, it's a nice significant job, I think like $60 million. I know rail is losing $40 million this year. Is the biggest piece of kind of that flip going to be that rail number goes from 40% to maybe closer to positive next year? I'm just trying to get a little better hand on that.

好的。最後一個問題是關於現金流和自由現金流。我很欣賞對明年的提前展望。如果你看看今年或明年的中點，這是一項非常重要的工作，我想大約 6,000 萬美元。我知道鐵路今年損失了 4000 萬美元。這種轉變最大的部分是不是在於鐵路運輸量明年將從 40% 上升到更接近正值？我只是想更好地掌握這一點。

Yes. Look, we -- obviously, we'll comment in more detail. We're going to go through our annual planning cycle here momentarily, and then we'll only give you guys guidance in the early part. But I think it's in maybe four distinct pieces, right? So the pension contributions, cash pension contributions, we expect that to be down significantly year-on-year as we go into 2021. Nick mentioned that our pension fund in the UK is now at a fully funded status. We still got to do a little bit of work to make it happen, but I expect those contributions to be down significantly. Interest costs, yes, needless to say, we expect interest payments to be down somewhat. -- year-on-year. So those are two big chunks that already has sort of give us some pathway there. And then indeed, on rail, we expect the rail cash performance.

是的。看，我們 - 顯然，我們會更詳細地評論。我們將立即完成我們的年度規劃週期，然後我們只會在早期為你們提供指導。但我認為它可能分為四個不同的部分，對嗎？因此，我們預計，進入 2021 年，退休金繳款、現金退休金繳款將比去年同期大幅下降。Nick提到，我們在英國的退休基金現在已經處於充足的資金狀態。為了實現這一目標我們還需要做一些工作，但我預計這些捐款將大幅下降。利息成本，是的，不用說，我們預計利息支付會有所下降。 ——同比。所以這兩大塊已經為我們提供了一些途徑。事實上，在鐵路方面，我們預期鐵路的現金表現。

As I said in my comments, this year, rail is in a cash-use position in the $40 million range, right, so negative $40 million. I do expect that to improve significantly. I can't say now it's a little too early, if you don't mind, Larry, and I'll give you more details but where it flips into positive but certainly expect it to be much, much better. And then, of course, the HE and CE businesses, we expect to keep chugging along and those will deliver a little bit extra cash as well.

正如我在評論中所說，今年鐵路的現金使用狀況在 4000 萬美元左右，對，所以是負 4000 萬美元。我確實希望情況會顯著改善。我現在不能說有點太早，如果你不介意的話，拉里，我會給你更多細節，但它會轉變為積極的情況，但肯定會好得多。當然，我們預計 HE 和 CE 業務將繼續蓬勃發展，這也將帶來一些額外的現金。

I think one important point just to add on these long-term contracts in rail with the exception of the two large contracts in the UK and Germany and the others all flipped to positive cash flow when they end next year. So that will significantly reduce the net cash outflow in rail next year. We've been investing in the past couple of years about $50 million per year in cash in those contracts.

我認為一個重要的點是補充鐵路方面的這些長期合同，除了英國和德國的兩份大合同外，其他合同明年結束時都將轉為正現金流。這將大幅減少明年鐵路的淨現金流出。過去幾年，我們每年在這些合約中投資約 5,000 萬美元現金。

And so again, when you start to look forward, thinking our long-range plan, when that $50 million is over, and we're generating $30 million to $40 million of cash flow in rail per year, plus the cash flow in HE and CE, which should continue to be strong and interest comes down and pension, now that's why we're pretty confident we're going to get to this $150 million-plus range per year in free cash flow in a couple of years.

所以，當你開始展望未來，思考我們的長期計劃時，當 5000 萬美元用完後，我們每年將在鐵路上產生 3000 萬到 4000 萬美元的現金流，加上 HE 和CE 應該會繼續保持強勁，利息和退休金會下降，這就是為什麼我們非常有信心在幾年內實現每年1.5 億美元以上的自由現金流。

Brian Butler, Stifel.

布萊恩‧巴特勒 (Brian Butler)，Stifel。

On the rail piece, can we just go back to those ETO contracts that are kind of you've been investing in and kind of you're getting to positive. What's still -- can you remind everyone on the time line? And how much cash should those ultimately generate over the next three, four years as they kind of -- as they finish up? Because you really should have a pretty positive inflow after multiple years of investment in it.

關於鐵路部分，我們能否回顧一下您一直在投資的 ETO 合同，並且您已經取得了積極的成果。還有什麼——你能在時間線上提醒大家嗎？那麼當這些項目最終完工後，在未來三到四年內，它們最終能產生多少現金？因為經過多年的投資，你確實應該獲得相當可觀的收入。

Yes, no doubt. So next year, on the smaller ETO contracts, I think that number is $20 million to $25 million of positive next year. That will be offset by continued investment into the contracts in the UK and in Germany. But those two contracts, if you look to the latter part of 2026 into '27, '28, collectively, those should throw off $75 million or so of free cash flow.

是的，毫無疑問。因此，明年，對於較小的 ETO 合同，我認為這個數字明年將為 2000 萬至 2500 萬美元。這將透過對英國和德國合約的持續投資來抵消。但是，如果您展望 2026 年下半年到 2027 年、2028 年，這兩份合約總共將帶來 7,500 萬美元左右的自由現金流。

My comment a minute ago was when we're on the other side of those, right? We'll still swing from kind of minus 50, what we've been seeing in rail in the past couple of years to kind of a plus 20 or 30 million even not accounting for the positive cash flow at the end of those two large contracts.

我剛才的評論是當我們處於另一邊時，對嗎？我們仍將在負50% 左右的區間波動，就像過去幾年鐵路行業的情況一樣，甚至在不考慮這兩份大合約結束時的正現金流的情況下，仍將實現正2000 萬或3000萬的收益。

And then on the hurricane activity that got kind of pushed, can you give some color on the sales and EBITDA that ultimately got moved? And is there more -- is there a tailwind at some point on the cleanup side?

那麼，關於颶風活動的影響，您能否提供一些最終受到影響的銷售額和 EBITDA 的詳細資訊？還有更多嗎－在清理方面是否有順風？

Yes. I think there were three or four machines that ultimately did not make it out the door or could not be picked up by the shipping, the transportation company. And I'm going to say the EBITDA impact of that was a few million, $1 million to $2 million.

是的。我認為有三、四台機器最終沒有出廠或無法被運輸公司取走。我要說的是，這對 EBITDA 的影響是幾百萬美元，100 萬到 200 萬美元。

Okay. And then I guess last one, when you think of Clean Earth kind of looking into 2025, I mean, it still sounds like it's pretty bullish and and you had the industrial softness. Maybe your thoughts on, again, what that could look like? I mean, I'm not looking for guidance per se, but the momentum that you have, is that -- can that be carried into 2025?

好的。然後我想最後一個問題，當你想到 Clean Earth 展望 2025 年時，我的意思是，它聽起來仍然非常樂觀，並且具有工業疲軟性。也許您再次思考了一下那會是什麼樣子？我的意思是，我並不是在尋求指導本身，而是你們所擁有的勢頭——可以延續到 2025 年嗎？

Yes, we certainly think so. And adding to that would be an expectation for volume growth next year, which we largely did not have this year.

是的，我們確實這麼認為。除此之外，我們預計明年的銷量將會成長，但今年我們基本上沒有實現這一成長。

Devin Dodge, BMO Capital Markets.

蒙特利爾銀行資本市場 (BMO Capital Markets) 的 Devin Dodge。

So maybe I just want to come back to the rail division. Another adjustment to the forward loss provision to those ETO contracts. Just can you provide some color on the drivers of this? So just if the provision is going up, I'm just trying to understand if things are getting worse or was there an assumption that things will get better in that, let's say, the coming out of Q2?

所以也許我只是想回到鐵路部門。對這些 ETO 合約的遠期損失準備進行另一項調整。您能否提供一些關於此現象的驅動因素的詳細資訊？所以，如果撥備增加，我只是想知道情況是否會變得更糟，或者是否有假設情況會變得更好，比如說，在第二季之後？

Devin, I'll try and answer that. It's Tom here. The -- look, these are very complex projects right? And we're making engines or vehicles that no one's made before. They're highly engineered, highly customized for each customer. according to the design specs that they wanted us to produce. And they're long term in nature as well.

德文，我會盡力回答這個問題。我是湯姆。看，這些都是非常複雜的項目對吧？我們正在製造以前從未有人製造過的引擎或車輛。它們經過精心設計，針對每個客戶進行高度客製化。根據他們希望我們生產的設計規格。而且從本質上來說，它們也是長期的。

And so the ability of any company, to be honest, to be able to very, very accurately to the nearest million estimate the costs is challenging. And so as we get closer to the endpoint, we're getting better visibility sometimes to what it's really going to take to make these -- and so there is a constant fine-tuning.

因此，說實話，任何公司要想非常準確地估算出最接近百萬的成本都是很有挑戰性的。因此，當我們越來越接近終點時，我們有時會更清楚地了解真正需要做些什麼才能實現這些目標——因此我們需要不斷微調。

Now we do have puts and calls, right? So sometimes we are able to reduce what we think it's going to cost, sometimes it does cost more. There are also changes in the supply chain. There may be price increases, et cetera. So we are managing all of these things. There's a ton of focus, as you can imagine, to try and do that. But occasionally, we do have to acknowledge from an accounting point of view that the cost is going to be more, and that's what drove those adjustments.

現在我們確實有看跌期權和看漲期權，對嗎？因此，有時我們能夠降低我們認為的成本，有時成本會更高。供應鏈也發生了變化。價格可能會上漲等等。所以我們正在管理所有這些事情。你可以想像，為了做到這一點，我們需要投入大量的精力。但有時，我們確實必須從會計的角度承認成本會增加，而這正是推動這些調整的原因。

So it's not -- yes, yes, it's not overly optimistic expectations or whatever. It's just -- to me, it's just a natural part of this process given that you have these very long standing contracts and you're discovering more as you go along.

所以這不是—是的，是的，這不是過於樂觀的預期或其他什麼。對我來說，這只是這個過程的自然組成部分，因為你擁有這些非常長期的合同，並且你在過程中會發現更多。

Okay. Fair enough. Okay. And then maybe just another question likely for you, Tom. Just something that stands out on the cash flow statement. So noncontrolling interest on the -- in the financial cash flows, it seems like dividends are outpacing earnings contributions pretty meaningfully this year. Just can you remind us what assets they relate to? And why the gap between dividends and earnings has been more pronounced this year?

好的。很公平。好的。那麼也許這只是您可能要問的另一個問題，湯姆。只是現金流量表上突出的東西。因此，就財務現金流中的非控制權益而言，今年的股息似乎大大超過了收益貢獻。您能提醒我們它們與哪些資產有關嗎？為什麼今年股息與獲利之間的差距更加明顯？

Yes, it's probably just timing, right? So you've got accumulated earnings over the years. And at some point, we trip into a need to distribute some of those -- the main joint ventures that I can think about, of course, we have some in China, as you know. And then in Italy. I look around my colleagues to see if there's anything else that you would -- so I think those are the main -- so it's all HE related and what we needed to do in order to get into some of those businesses.

是的，可能只是時間問題，對吧？所以你已經累積了多年的收入。在某個時候，我們會需要分銷其中一些——我能想到的主要合資企業，當然，如你所知，我們在中國有一些。然後在義大利。我環顧我的同事，看看是否還有其他您想做的事情——所以我認為這些是主要的——所以這都是與高等教育相關的，以及我們為了進入其中一些業務所需要做的事情。

This concludes our question-and-answer session. I would like to turn the conference back over to Dave Martin for closing remarks.

我們的問答環節到此結束。我想將會議交還給戴夫馬丁 (Dave Martin) 來致結束語。

Thank you for joining us this morning. Feel free to contact me with any follow-up questions. And as always, we appreciate your interest in the company. I look forward to speaking with many of you in the coming weeks. Take care.

感謝您今天上午加入我們。如果還有任何後續問題，請隨時與我聯繫。和往常一樣，我們感謝您對公司的關注。我期待在接下來的幾週內與你們中的許多人進行交談。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。