Enviri Corporation · NYSE:NVRI
Enviri — Harsco — Investor Presentation (May 2018)
40 slides from Enviri's investor presentation, May 2018
Slide 1: Investor Presentation May 2018
INVESTOR PRESENTATION May 2018 1
Slide 2: Forward Looking Statements
FORWARD LOOKING STATEMENTS Forward-Looking Statements The Company’s presentation contains forward-looking statements based on management’s current expectations, estimates and projections. The nature of the Company's business and the many countries in which it operates subject it to changing economic
Slide 3: Harsco Today
HARSCO TODAY Market leading provider of environmental services and manufacturer of engineered products, serving industries that are fundamental to global growth. FY 2017 Revenue 2017 EBITDA (Adjusted)1 Industrial Industrial Metals & Minerals Metals & Minerals $300M $43M $1.0B $219M (19%) (14%) (63%)
Slide 4: Investment Highlights
INVESTMENT HIGHLIGHTS STRONG ATTRACTIVE MARKET POSITIONED FOR FOUNDATION ENVIRONMENT GROWTH High-performing businesses Serving critical industries Meaningful operating leverage Diversified portfolio, customers, with underlying growth geographies and markets Accelerated innovation driven
Slide 5: Poised for Long-Term Growth with Improving Performance
POISED FOR LONG-TERM GROWTH WITH IMPROVING PERFORMANCE ADJUSTED OPERATING INCOME1 ADJUSTED OPERATING INCOME MARGIN1 ($ Millions) 12.0% 200 165 – 180 9.4% -10.2% 150 9.0% 9.3% 100 150 117 8.1% 50 6.0% 2016 2017 2018* 2016 2017 2018* FREE CASH FLOW1 ROIC1 ($ Millions) 18.0% 14.0 – 15.5% 125 85 – 100 1
Slide 6: Metals & Minerals
METALS & ~$1B MINERALS 2017 Revenue A GLOBAL MARKET LEADER 30+ Countries VALUE DRIVERS Critical services for steel production and environmental Transformation solutions Differentiated operational expertise and technology ~70 Customers Initiatives Cost savings benefits to customers Significantl
Slide 7: M&M Applied Products
M&M APPLIED PRODUCTS ADVANCED MATERIAL TECHNOLOGIES DELIVERING ZERO WASTE SOLUTIONS ABRASIVES FERTILIZER ASPHALT ~20% ATTRACTIVE MARGIN ROOFING GRANULES ROAD CONSTRUCTION METALLURGICAL ADDITIVES OF M&M REVENUES PROFILE SOIL CONDITIONER CEMENT PRODUCTION SLAG CONDITIONERS Steelphalt, UK Performix, US
Slide 8: Industrial: Premium Quality Products and Trusted Brands
INDUSTRIAL PREMIUM QUALITY PRODUCTS AND TRUSTED BRANDS CAPITAL-LIGHT REVENUE MIX BY BUSINESS BUSINESS WITH HIGH RETURNS Yearly CapEx: ~2% of revenue (2017 excluding MX property sale) ROIC: 29% (2017)1 INDUSTRIAL INDUSTRIAL INDUSTRIAL Ai r - X - C h a n g e r s Patterson-Kelley IKG Industries VAL
Slide 9: Rail: Leader in North America Rail Maintenance Equipment
RAIL LEADER IN NORTH AMERICA RAIL MAINTENANCE EQUIPMENT WITH GROWING PRESENCE IN ASIA & EUROPE CAPITAL-LIGHT REVENUE MIX BY BUSINESS BUSINESS WITH HIGH RETURNS Yearly CapEx: ~1% of revenue (2017) CONTRACTING 13% ORIGINAL ROIC: 33% (2017)1 SOLUTIONS EQUIPMENT SALES VALUE DRIVERS ~$296M 2 49% Gr
Slide 10: Innovation Driven Growth
INNOVATION DRIVEN GROWTH CULTURE OF INNOVATION GROUNDED IN CUSTOMER NEED. SUPPORTED BY BUSINESS DEVELOPMENT AND HOME-GROWN TECHNOLOGIES A Proven Development Metals Process Industrial & Minerals Nuro Control Steam Boxes Software Mobile Scrap Shear Integrated Cooler Silencer Rail (patent pending) Falc
Slide 11: Growth Opportunities: Metals & Minerals
GROWTH OPPORTUNITIES METALS & MINERALS RECENT CONTRACT WINS1 # of Contract wins 18 Additional revenue backlog ($M) 533 Considerable Targeted Pursuit New Opportunities at Existing Sites (average of New Sites (unique position in Environmental Product Growth capital commitment 41 less than 5 services p
Slide 12: Growth Opportunities: Industrial and Rail
GROWTH OPPORTUNITIES INDUSTRIAL RAIL MARKET RECOVERY, INVESTMENTS & STRONG REVENUE GROWTH IN CORE INNOVATIONS TO GROW REVENUE PRODUCTS AirX: Penetration downstream and market adjacencies; new Protran Technology: Suite of collision and advance CenterGate facility provides industry-leading manufac
Slide 13: Growth Opportunities: Shifting Focus to M&A
GROWTH OPPORTUNITIES SHIFTING FOCUS TO M&A M&A INVESTMENT CRITERIA Attractive characteristics (e.g. Growth is Balanced Profitable business model reduced cyclicality, unique Between Organic strategically aligned with Harsco’s growth objectives technology or access to and Acquisitions new/growing
Slide 14: Disciplined Financial Strategy
DISCIPLINED FINANCIAL STRATEGY PRINCIPALS PRIORITIES Maintain efficient capital structure Financially driven capital allocation process Maximize strategic flexibility Return capital to shareholders through $75M share repurchase authorization Sustain working capital improvements in each bus
Slide 15: 2018 Outlook - Consolidated
2018 OUTLOOK - CONSOLIDATED 2018 2017 ADJUSTED OPERATING INCOME1 $165 to $180M $150M ADJUSTED OPERATING INCOME 9.5% to 10.0% 9.3% MARGIN1 ADJUSTED DILUTED EARNINGS PER $1.11 to $1.24 $0.74 SHARE1 FREE CASH FLOW BEFORE GROWTH $130 to $150M $109M CAPITAL1 FREE CASH FLOW1 $85M to $100M $93M ROIC1 14.0%
Slide 16: Positioned for Long-Term Value Creation
POSITIONED FOR LONG-TERM VALUE CREATION 20171 LT PLAN1 KEY ASSUMPTIONS REVENUE $1.6B $2.0-2.2B Does not include future acquisitions 5%+ M&M revenue CAGR from market and growth investments of $200M+ ADJUSTED OI $150M $250-285M M&M renewal rates and pricing in-line with historical averages ADJUS
Slide 17: Positioned to Deliver Sustainable Growth and Value
POSITIONED TO DELIVER SUSTAINABLE GROWTH AND VALUE Significant financial flexibility and FCF High-performing businesses well- to pursue growth opportunities and positioned to deliver earnings growth enhance shareholder returns Positioned to capitalize on favorable ROIC-focused approach market and in
Slide 18: Appendix
APPENDIX 18
Slide 19: Experienced Management Team
EXPERIENCED MANAGEMENT TEAM NICHOLAS RUSSELL GRASBERGER HOCHMAN President and Chief SVP, General Counsel, Chief Executive Officer Compliance Officer & Corporate Secretary SCOTT TRACEY GERSON MCKENZIE President of Industrial SVP & Chief HR Officer JESWANT PETER GILL MINAN President of Rail SVP & Chie
Slide 20: Experienced Board of Directors
EXPERIENCED BOARD OF DIRECTORS JAMES F. KATHY G. DAVID C. F. NICHOLAS EARL EDDY EVERITT GRASBERGER Retired Executive Vice President of Founding partner of McDonough, Non-Executive Chairman President and Chief Executive GATX Corporation Eddy, Parsons & Baylous, A.C., a Former Co-Leader of D
Slide 21: Business Sensitive to Macro Drivers
BUSINESS SENSITIVE TO MACRO DRIVERS MANY BUSINESS DRIVERS BUSINESS VARIABLES IMPACT TO BOTTOM LINE Liquid Steel Production1 Within current scope of operations... Liquid steel mmt +3% production 1000 Materials ~$2.2M Fixed fees Management ~1% and Equipment / labor liquid steel rental demand seg
Slide 22: Q2 2018 Outlook
Q2 2018 YEAR-OVER-YEAR CONSIDERATIONS INCLUDE: OUTLOOK METALS & MINERALS Higher LST and commodities, new contracts and operating benefits, partially offset by exits and Adjusted operating income1 is expected to be between growth-related investments $45M–$50M versus $43M in Q2 2017 INDUSTRIAL Increas
Slide 23: 2018 Segment Outlook
2018 SEGMENT OUTLOOK Excluding unusual items 2018 VERSUS 20171 Revenues ▲ Mid-single to high-single digits ▲ Metals & Operating Income ~10% at mid-point, excluding unusual items Minerals + LST, new sites/services, cost/operational savings, commodities prices, Applied Products, FX Drivers - Exited si
Slide 24: Q1 2018 Financial Summary
Q1 2018 FINANCIAL SUMMARY KEY PERFORMANCE INDICATORS Q1 operating income above guidance range of $30-35 million Change vs. 2017 Results exceeded guidance due to M&M and Industrial $ in millions except EPS Q1 2018 $ % or bps performance, as well as lower Revenues 408 35 10% Corporate spending M
Slide 25: Q1 2018 Metals & Minerals
Q1 2018 Business Highlights METALS & MINERALS Revenues increased due to higher services demand and foreign exchange SUMMARY LST CONTINUING SITES translation RESULTS Million tons $ in millions Q1 Q1 % 36 2018 2017 Change Operating income Revenues, as reported 265 247 7% 33 increase reflects above
Slide 26: Q1 2018 Industrial
Q1 2018 Business Highlights INDUSTRIAL Revenue increase reflects improved demand within the three product SUMMARY REVENUE MIX businesses RESULTS $ in millions $ in millions Q1 Q1 % 100 2018 2017 Change 80 Significant operating Revenues, as reported 84 66 27% 60 income and margin 40 increase due
Slide 27: Q1 2018 Rail
Q1 2018 Business Highlights RAIL Revenues essentially unchanged, including SBB revenue of $8 million in Q1 2018 SUMMARY REVENUE MIX RESULTS $ in millions $ in millions Q1 Q1 % 125 Operating income 2018 2017 Change 100 change reflects lower Revenues, as reported 60 60 --% 75 equipment and 50 cont
Slide 28: General Information: Revenue Mix by Geography
GENERAL INFORMATION REVENUE MIX BY GEOGRAPHY 1 COMPANY METALS & APAC 14% APAC 10% Europe MINERALS ME & Africa 4% 40% Europe 30% Latin America ME & Africa 16% ~$1.0B2 3% North America 27% Latin America INDUSTRIAL Latin America 7% 11% APAC 1% ~$1.6B2 North ~$300M2 America 91% RAIL North America 44% As
Slide 29: Reconciliation of Non-GAAP Measures
RECONCILIATION OF NON-GAAP MEASURES HARSCO CORPORATION RECONCILIATION OF ADJUSTED DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS EXCLUDING UNUSUAL ITEMS TO DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS AS REPORTED (Unaudited) Twelve Months Ended December 31 2017 Diluted earnings per s
Slide 30: Reconciliation of Non-GAAP Measures
RECONCILIATION OF NON-GAAP MEASURES HARSCO CORPORATION RECONCILIATION OF ADJUSTED OPERATING INCOME (LOSS) EXCLUDING UNUSUAL ITEMS BY SEGMENT TO OPERATING INCOME (LOSS) AS REPORTED BY SEGMENT AFTER RECLASSIFICATION (Unaudited) (a) Harsco Metals & Harsco Harsco Consolidated (In thousands) Minerals Ind
Slide 31: Reconciliation of Non-GAAP Measures
RECONCILIATION OF NON-GAAP MEASURES HARSCO CORPORATION RECONCILIATION OF ADJUSTED OPERATING INCOME (LOSS) EXCLUDING UNUSUAL ITEMS BY SEGMENT TO OPERATING INCOME (LOSS) AS REPORTED BY SEGMENT AFTER RECLASSIFICATION (Unaudited) (a) Harsco Metals & Harsco Harsco Consolidated (In thousands) Minerals Ind
Slide 32: Reconciliation of Non-GAAP Measures
RECONCILIATION OF NON-GAAP MEASURES HARSCO CORPORATION RECONCILIATION OF FREE CASH FLOW TO NET CASH PROVIDED BY OPERATING ACTIVITIES (Unaudited) Three Months Ended March 31 (In thousands) 2018 2017 Net cash used by operating activities $ (8,243) $ (6,124) Less capital expenditures (26,897) (16,989)
Slide 33: Reconciliation of Non-GAAP Measures
RECONCILIATION OF NON-GAAP MEASURES HARSCO CORPORATION RECONCILIATION OF FREE CASH FLOW AND FREE CASH FLOW BEFORE GROWTH CAPITAL EXPENDITURES TO NET CASH PROVIDED BY OPERATING ACTIVITIES (Unaudited) Twelve Months Ended December 31 (In thousands) 2017 2016 Net cash provided by operating activities $
Slide 34: Reconciliation of Non-GAAP Measures
RECONCILIATION OF NON-GAAP MEASURES HARSCO CORPORATION RECONCILIATION OF FREE CASH FLOW AND FREE CASH FLOW BEFORE GROWTH CAPITAL EXPENDITURES TO NET CASH PROVIDED BY OPERATING ACTIVITIES (Unaudited) Projected Twelve Months Ending December 31 2018 (In millions) Low High Net cash provided by operating
Slide 35: Reconciliation of Non-GAAP Measures
RECONCILIATION OF NON-GAAP MEASURES HARSCO CORPORATION RECONCILIATION OF RETURN ON INVESTED CAPITAL EXCLUDING UNUSUAL ITEMS TO NET INCOME (LOSS) FROM CONTINUING OPERATIONS AS REPORTED (a) (Unaudited) Trailing Twelve Months for (a) Return on invested capital excluding unusual items is Period Ended Ma
Slide 36: Reconciliation of Non-GAAP Measures
RECONCILIATION OF NON-GAAP MEASURES HARSCO CORPORATION RECONCILIATION OF RETURN ON INVESTED CAPITAL EXCLUDING UNUSUAL ITEMS TO NET INCOME (LOSS) FROM CONTINUING OPERATIONS AS REPORTED (a) (Unaudited) (a) Return on invested capital excluding unusual items is Year Ended December 31 net income (loss) f
Slide 37: Reconciliation of Non-GAAP Measures
RECONCILIATION OF NON-GAAP MEASURES HARSCO CORPORATION RECONCILIATION OF EBITDA BY SEGMENT AND ADJUSTED EBITDA EXCLUDING UNUSUAL ITEMS BY SEGMENT TO OPERATING INCOME (LOSS) AS PREVIOUSLY REPORTED BY SEGMENT AFTER PENSION RECLASSIFICATION (Unaudited) (a) Harsco Harsco Harsco (In thousands) Metals & M
Slide 38: Reconciliation of Non-GAAP Measures
RECONCILIATION OF NON-GAAP MEASURES HARSCO CORPORATION RECONCILIATION OF EBITDA; AND ADJUSTED EBITDA EXCLUDING UNUSUAL ITEMS AND NET MAINTENANCE CAPITAL EXPENDITURES TO NET INCOME FROM CONTINUING OPERATIONS, AS REPORTED (Unaudited) Twelve Months Ended December 31 (In thousands) 2017 Net income from
Slide 39: Reconciliation of Non-GAAP Measures
RECONCILIATION OF NON-GAAP MEASURES HARSCO CORPORATION RECONCILIATION OF NET MAINTENANCE CAPITAL EXPENDITURES TO PURCHASES OF PROPERTY, PLANT AND EQUIPMENT (Unaudited) Twelve Months Ended December 31 (In thousands) 2017 Maintenance capital expenditures (a) $ 81,849 Growth capital expenditures (b) 16
Slide 40: Reconciliation of Non-GAAP Measures
RECONCILIATION OF NON-GAAP MEASURES HARSCO CORPORATION RECONCILIATION OF ADJUSTED OPERATING INCOME, EXCLUDING UNUSUAL ITEMS TO OPERATING INCOME AS REPORTED AFTER PENSION RECLASSIFICATION (Unaudited) (a) Twelve Months Ended Twelve Months Ended December 31 December 31 (In thousands) 2017 2016 Operatin