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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM			10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 30, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 001-03970

ENVIRI CORPORATION

(Exact name of registrant as specified in its charter)

Delaware

23-1483991

(State or other jurisdiction of incorporation or organization)

(I.R.S. employer identification number)

Two Logan Square
100-120 North 18th Street, 17th Floor,

Philadelphia,

Pennsylvania

19103

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code 267-857-8715

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common stock, par value $1.25 per share

NVRI

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ NO ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit). Yes ☒ NO ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ☐ NO ☒

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.


Class						Outstanding at October 24, 2024
Common stock, par value $1.25 per share						80,135,155

Table of Contents

ENVIRI CORPORATION

FORM 10-Q

INDEX


		Page
PART I — FINANCIAL INFORMATION

Item 1.	Financial Statements	4
	Condensed Consolidated Balance Sheets (Unaudited)	4
	Condensed Consolidated Statements of Operations (Unaudited)	5
	Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)	6
	Condensed Consolidated Statements of Cash Flows (Unaudited)	7
	Condensed Consolidated Statements of Equity (Unaudited)	8
	Notes to Condensed Consolidated Financial Statements (Unaudited)	10

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	31

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	42

Item 4.	Controls and Procedures	42


PART II — OTHER INFORMATION

Item 1.	Legal Proceedings	43

Item 1A.	Risk Factors	43

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	43





Item 5.	Other Information	43



Item 6.	Exhibits	44


SIGNATURES		45

Table of Contents

Glossary of Defined Terms

Unless the context requires otherwise, "Enviri," the "Company," "we," "our," or "us" refers to Enviri Corporation on a consolidated basis. The Company also uses several other terms in this Quarterly Report on Form 10-Q, which are further defined below:


Term						Description
AOCI						Accumulated Other Comprehensive Income (Loss)
AR Facility						Revolving trade receivables securitization facility
ASU						Financial Accounting Standards Board Accounting Standards Update
CE						Clean Earth reportable business segment
CERCLA						Comprehensive Environmental Response, Compensation, and Liability Act of 1980
Consolidated Adjusted EBITDA						EBITDA as calculated in accordance with the Company's Credit Agreement.
Credit Agreement						Credit Agreement governing the Senior Secured Credit Facilities
DEA						United States Drug Enforcement Administration
Deutsche Bahn						National railway company in Germany
DTSC						California Department of Toxic Substances Control
EBITDA						Earnings before interest, tax, depreciation and amortization
EPA						U.S. Environmental Protection Agency
ESOL						Stericycle Environmental Solutions business
FASB						Financial Accounting Standards Board
HE						Harsco Environmental reportable business segment
ICMS						Type of value-added tax in Brazil
IKG						The former Harsco Industrial IKG business
ISDA						International Swaps and Derivatives Association
Network Rail						Infrastructure manager for most of the railway in the U.K.
Term Loan						$500 million term loan raised in March 2021 under the Senior Secured Credit Facilities, maturing on March 10, 2028
OCI						Other Comprehensive Income (Loss)


Performix						Performix Metallurgical Additives, LLC, a subsidiary of HE
Rail						Harsco Rail reportable business segment
Reed						Reed Minerals, LLC, a subsidiary of HE
Revolving Credit Facility						Revolving credit facility under the Senior Secured Credit Facilities containing $50.0 million maturing on March 10, 2026 and $625.0 million maturing on September 5, 2029
SBB						Federal railway system of Switzerland
SCE						Kingdom of Bahrain's Supreme Council for Environment
SEC						U.S. Securities and Exchange Commission
Senior Notes						5.75% Notes due July 31, 2027
Senior Secured Credit Facilities						Primary source of borrowings comprised of the Term Loan and the Revolving Credit Facility
SOFR						Secured Overnight Financing Rate
SPE						The Company's wholly-owned bankruptcy-remote special purpose entity, which is used in connection with the AR Facility
SPRA						State Revenue Authorities from the State of São Paulo, Brazil



U.S. GAAP						Accounting principles generally accepted in the U.S.

Table of Contents

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ENVIRI CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)


(In thousands)	September 30 2024		December 31 2023
ASSETS
Current assets:
Cash and cash equivalents	$	110,243	$	121,239
Restricted cash	2,889		3,375
Trade accounts receivable, net	318,906		338,187

Other receivables	42,960		40,565
Inventories	196,189		189,369
Current portion of contract assets	64,190		64,875
Prepaid expenses	63,818		58,723

Other current assets	6,969		11,023
Total current assets	806,164		827,356

Property, plant and equipment, net	698,315		707,397
Right-of-use assets, net	95,710		102,891
Goodwill	767,076		780,978
Intangible assets, net	305,633		327,983


Deferred income tax assets	16,495		16,295

Other assets	112,682		91,798
Total assets	$	2,802,075	$	2,854,698
LIABILITIES
Current liabilities:
Short-term borrowings	$	14,357	$	14,871
Current maturities of long-term debt	17,952		15,558
Accounts payable	245,996		243,279

Accrued compensation	65,414		79,609
Income taxes payable	8,952		7,567


Reserve for forward losses on contracts	53,513		52,919
Current portion of advances on contracts	16,838		38,313


Current portion of operating lease liabilities	27,381		28,775

Other current liabilities	168,676		174,342
Total current liabilities	619,079		655,233
Long-term debt	1,431,868		1,401,437


Retirement plan liabilities	39,900		45,087



Operating lease liabilities	69,977		75,476

Environmental liabilities	22,959		25,682
Deferred tax liabilities	31,749		29,160
Other liabilities	60,664		47,215
Total liabilities	2,276,196		2,279,290
COMMITMENTS AND CONTINGENCIES
ENVIRI CORPORATION STOCKHOLDERS’ EQUITY

Common stock	146,706		146,105
Additional paid-in capital	250,855		238,416
Accumulated other comprehensive loss	(545,620)		(539,694)
Retained earnings	1,483,589		1,528,320
Treasury stock	(851,541)		(849,996)
Total Enviri Corporation stockholders’ equity	483,989		523,151
Noncontrolling interests	41,890		52,257
Total equity	525,879		575,408
Total liabilities and equity	$	2,802,075	$	2,854,698

See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

ENVIRI CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)


	Three Months Ended					Nine Months Ended
	September 30					September 30
(In thousands, except per share amounts)	2024		2023			2024		2023
Revenues from continuing operations:
Service revenues	$	488,132	$	490,791		$	1,492,569	$	1,434,314
Product revenues	85,495		106,177			291,368		332,375
Total revenues	573,627		596,968			1,783,937		1,766,689
Costs and expenses from continuing operations:
Cost of services sold	373,924		377,539			1,154,998		1,120,578
Cost of products sold	80,821		93,389			258,227		277,086

Selling, general and administrative expenses	89,183		93,513			266,763		262,175
Research and development expenses	888		902			2,692		2,441

Property, plant and equipment impairment charge	—		—			—		14,099
Remeasurement of long-lived assets	—		—			10,695		—
Gain on sale of businesses, net	(8,601)		—			(10,478)		—
Other expense (income), net	40		2,865			6,600		(4,052)
Total costs and expenses	536,255		568,208			1,689,497		1,672,327
Operating income (loss) from continuing operations	37,372		28,760			94,440		94,362
Interest income	981		1,722			6,113		4,796
Interest expense	(28,813)		(27,552)			(84,869)		(78,956)
Facility fees and debt-related income (expense)	(2,978)		(2,806)			(8,687)		(7,899)

Defined benefit pension income (expense)	(4,257)		(5,430)			(12,599)		(16,159)
Income (loss) from continuing operations before income taxes and equity income	2,305		(5,306)			(5,602)		(3,856)
Income tax benefit (expense) from continuing operations	(13,437)		(3,498)			(31,372)		(26,846)
Equity income (loss) of unconsolidated entities, net	38		(151)			(84)		(593)
Income (loss) from continuing operations	(11,094)		(8,955)			(37,058)		(31,295)
Discontinued operations:

Income (loss) from discontinued businesses	(1,584)		(1,538)			(4,287)		(4,358)
Income tax benefit (expense) from discontinued businesses	411		399			1,112		1,131
Income (loss) from discontinued operations, net of tax	(1,173)		(1,139)			(3,175)		(3,227)
Net income (loss)	(12,267)		(10,094)			(40,233)		(34,522)
Less: Net loss (income) attributable to noncontrolling interests	(901)		(708)			(4,498)		2,756
Net income (loss) attributable to Enviri Corporation	$	(13,168)	$	(10,802)		$	(44,731)	$	(31,766)
Amounts attributable to Enviri Corporation common stockholders:
Income (loss) from continuing operations, net of tax	$	(11,995)	$	(9,663)		$	(41,556)	$	(28,539)
Income (loss) from discontinued operations, net of tax	(1,173)		(1,139)			(3,175)		(3,227)
Net income (loss) attributable to Enviri Corporation common stockholders	$	(13,168)	$	(10,802)		$	(44,731)	$	(31,766)

Weighted-average shares of common stock outstanding	80,165		79,850			80,085		79,767
Basic earnings (loss) per common share attributable to Enviri Corporation common stockholders:
Continuing operations	$	(0.15)	$	(0.12)		$	(0.52)	$	(0.36)
Discontinued operations	(0.01)		(0.01)			(0.04)		(0.04)
Basic earnings (loss) per share attributable to Enviri Corporation common stockholders	$	(0.16)	$	(0.14)	(a)	$	(0.56)	$	(0.40)

Diluted weighted-average shares of common stock outstanding	80,165		79,850			80,085		79,767
Diluted earnings (loss) per common share attributable to Enviri Corporation common stockholders:
Continuing operations	$	(0.15)	$	(0.12)		$	(0.52)	$	(0.36)
Discontinued operations	(0.01)		(0.01)			(0.04)		(0.04)
Diluted earnings (loss) per share attributable to Enviri Corporation common stockholders	$	(0.16)	$	(0.14)	(a)	$	(0.56)	$	(0.40)

(a) Does not total due to rounding

See accompanying notes to unaudited condensed consolidated financial statements.

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ENVIRI CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited)



	Three Months Ended
	September 30
(In thousands)	2024		2023
Net income (loss)	$	(12,267)	$	(10,094)
Other comprehensive income (loss):
Foreign currency translation adjustments, net of deferred income taxes of $3,438 and $(1,926) in 2024 and 2023, respectively	22,985		(21,133)
Net gain (loss) on cash flow hedging instruments, net of deferred income taxes of $1,129 and $(418) in 2024 and 2023, respectively	(3,670)		1,250
Pension liability adjustments, net of deferred income taxes of $(262) and $(293) in 2024 and 2023, respectively	(11,125)		13,580
Unrealized gain (loss) on marketable securities, net of deferred income taxes of $(3) and $1 in 2024 and 2023, respectively	8		(4)
Total other comprehensive income (loss)	8,198		(6,307)
Total comprehensive income (loss)	(4,069)		(16,401)
Comprehensive (income) loss attributable to noncontrolling interests	(2,171)		(129)
Comprehensive income (loss) attributable to Enviri Corporation	$	(6,240)	$	(16,530)



	Nine Months Ended
	September 30
(In thousands)	2024		2023
Net income (loss)	$	(40,233)	$	(34,522)
Other comprehensive income (loss):
Foreign currency translation adjustments, net of deferred income taxes of $3,138 and $685 in 2024 and 2023, respectively	(4,355)		1,902
Net gain (loss) on cash flow hedging instruments, net of deferred income taxes of $442 and $(1,100) in 2024 and 2023, respectively	(1,679)		3,124
Pension liability adjustments, net of deferred income taxes of $(821) and $(1,003) in 2024 and 2023, respectively	328		10,218
Unrealized gain (loss) on marketable securities, net of deferred income taxes of $(2) and $(1) in 2024 and 2023	5		2
Total other comprehensive income (loss)	(5,701)		15,246
Total comprehensive income (loss)	(45,934)		(19,276)
Less: Comprehensive (income) loss attributable to noncontrolling interests	(4,723)		4,812
Comprehensive income (loss) attributable to Enviri Corporation	$	(50,657)	$	(14,464)

See accompanying notes to unaudited condensed consolidated financial statements.

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ENVIRI CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)


	Nine Months Ended September 30
(In thousands)	2024		2023
Cash flows from operating activities:
Net income (loss)	$	(40,233)	$	(34,522)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation	111,525		102,893
Amortization	24,089		24,327
Deferred income tax (benefit) expense	5,634		3,946
Equity (income) loss of unconsolidated entities, net	84		593
Dividends from unconsolidated entities	204		—
Property, plant and equipment impairment charge	—		14,099


Remeasurement of long-lived assets	10,695		—
Gain on sale of businesses, net	(10,478)		—
Other, net	1,928		4,743
Changes in assets and liabilities, net of acquisitions and dispositions of businesses:
Accounts receivable	3,231		(48,175)

Inventories	(17,084)		(10,548)
Contract assets	(14,923)		1,317
Right-of-use assets	23,687		24,467
Accounts payable	7,421		(818)
Accrued interest payable	(5,092)		(6,828)
Accrued compensation	(13,412)		20,436
Advances on contracts	(10,446)		(21,824)


Operating lease liabilities	(23,341)		(22,980)
Retirement plan liabilities, net	(6,981)		(4,862)

Other assets and liabilities	(4,737)		(92)
Net cash (used) provided by operating activities	41,771		46,172
Cash flows from investing activities:
Purchases of property, plant and equipment	(102,094)		(93,630)

Proceeds from sale of business, net	57,667		—
Proceeds from sales of assets	12,479		2,080
Expenditures for intangible assets	(1,181)		(478)
Proceeds from notes receivable	17,023		11,238
Net proceeds (payments) from settlement of foreign currency forward exchange contracts	(6,133)		2,034

Other investing activities, net	—		462
Net cash used by investing activities	(22,239)		(78,294)
Cash flows from financing activities:
Short-term borrowings, net	(2,982)		4,196
Current maturities and long-term debt:
Additions	201,562		185,992
Reductions	(200,584)		(140,522)

Dividends paid to noncontrolling interests	(15,964)		—
Contributions from noncontrolling interests	874		1,654



Stock-based compensation - Employee taxes paid	(1,546)		(1,374)



Deferred financing costs	(3,765)		—

Net cash (used) provided by financing activities	(22,405)		49,946
Effect of exchange rate changes on cash and cash equivalents, including restricted cash	(8,609)		(4,231)
Net increase (decrease) in cash and cash equivalents, including restricted cash	(11,482)		13,593
Cash and cash equivalents, including restricted cash, at beginning of period	124,614		85,094
Cash and cash equivalents, including restricted cash, at end of period	$	113,132	$	98,687

Supplementary cash flow information:
Change in accrual for purchases of property, plant and equipment included in accounts payable	$	3,501	$	(3,252)

See accompanying notes to unaudited condensed consolidated financial statements.

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ENVIRI CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (Unaudited)


	Enviri Corporation Stockholders’ Equity
	Common Stock				Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Noncontrolling Interests
(In thousands, except share amounts)	Issued		Treasury										Total
Balances, December 31, 2022	$	145,448	$	(848,570)	$	225,759	$	1,614,441	$	(567,636)	$	53,600	$	623,042

Net income (loss)	—		—		—		(9,525)		—		935		(8,590)



Total other comprehensive income (loss), net of deferred income taxes of $1,901	—		—		—		—		6,794		358		7,152



Purchase of subsidiary shares from noncontrolling interest	—		—		398		—		—		(398)		—






Vesting of restricted stock units and other stock grants, net 177,574 shares	395		(1,108)		(395)		—		—		—		(1,108)


Amortization of unearned portion of stock-based compensation, net of forfeitures	—		—		3,456		—		—		—		3,456
Balances, March 31, 2023	$	145,843	$	(849,678)	$	229,218	$	1,604,916	$	(560,842)	$	54,495	$	623,952

Net income (loss)	—		—		—		(11,439)		—		(4,399)		(15,838)



Total other comprehensive income (loss), net of deferred income taxes of $(684)	—		—		—		—		16,236		(1,835)		14,401


Contributions from noncontrolling interest	—		—		—		—		—		1,654		1,654







Vesting of restricted stock units and other stock grants, net 82,415 shares	123		(130)		(123)		—		—		—		(130)

Amortization of unearned portion of stock-based compensation, net of forfeitures	—		—		3,368		—		—		—		3,368
Balances, June 30, 2023	$	145,966	$	(849,808)	$	232,463	$	1,593,477	$	(544,606)	$	49,915	$	627,407

Net income (loss)	—		—		—		(10,802)		—		708		(10,094)



Total other comprehensive income (loss), net of deferred income taxes of $(2,636)	—		—		—		—		(5,728)		(579)		(6,307)










Vesting of restricted stock units and other stock grants, net 73,223 shares	113		(136)		(113)		—		—		—		(136)

Amortization of unearned portion of stock-based compensation, net of forfeitures	—		—		2,895		—		—		—		2,895
Balances, September 30, 2023	$	146,079	$	(849,944)	$	235,245	$	1,582,675	$	(550,334)	$	50,044	$	613,765

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	Enviri Corporation Stockholders’ Equity
(In thousands, except share amounts)	Common Stock				Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Noncontrolling Interests
	Issued		Treasury										Total
Balances, December 31, 2023	$	146,105	$	(849,996)	$	238,416	$	1,528,320	$	(539,694)	$	52,257	$	575,408

Net income (loss)	—		—		—		(17,962)		—		1,116		(16,846)
Cash dividends declared:

Noncontrolling interests	—		—		—		—		—		(8,243)		(8,243)

Total other comprehensive income (loss), net of deferred income taxes of $(1,433)	—		—		—		—		(6,838)		(821)		(7,659)


Contributions from noncontrolling interests	—		—		—		—		—		874		874







Vesting of restricted stock units, net 201,053 shares	443		(1,270)		(443)		—		—		—		(1,270)


Amortization of unearned portion of stock-based compensation, net of forfeitures	—		—		3,860		—		—		—		3,860
Balances, March 31, 2024	$	146,548	$	(851,266)	$	241,833	$	1,510,358	$	(546,532)	$	45,183	$	546,124
Net income (loss)	—		—		—		(13,601)		—		2,481		(11,120)
Cash dividends declared:

Noncontrolling interests	—		—		—		—		—		(4,308)		(4,308)

Total other comprehensive income (loss), net of deferred income taxes of $(112)	—		—		—		—		(6,016)		(224)		(6,240)









Stock appreciation rights exercised, net 603 shares	1		(2)		(1)		—		—		—		(2)
Vesting of restricted stock units and other stock grants, net 74,725 shares	102		(59)		(102)		—		—		—		(59)


Amortization of unearned portion of stock-based compensation, net of forfeitures	—		—		4,403		—		—		—		4,403
Balances, June 30, 2024	$	146,651	$	(851,327)	$	246,133	$	1,496,757	$	(552,548)	$	43,132	$	528,798
Net income (loss)	—		—		—		(13,168)		—		901		(12,267)
Cash dividends declared:

Noncontrolling interests	—		—		—		—		—		(3,413)		(3,413)

Total other comprehensive income (loss), net of deferred income taxes of $4,302	—		—		—		—		6,928		1,270		8,198










Vesting of restricted stock units and other stock grants, net 23,351 shares	55		(214)		(55)		—		—		—		(214)


Amortization of unearned portion of stock-based compensation, net of forfeitures	—		—		4,777		—		—		—		4,777
Balances, September 30, 2024	$	146,706	$	(851,541)	$	250,855	$	1,483,589	$	(545,620)	$	41,890	$	525,879

See accompanying notes to unaudited condensed consolidated financial statements.

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ENVIRI CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

1. Basis of Presentation

The Company has prepared these unaudited condensed consolidated financial statements in accordance with U.S. GAAP for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X of the SEC. Accordingly, the unaudited Condensed Consolidated Financial Statements do not include all information and disclosure required by U.S. GAAP for annual financial statements. The December 31, 2023 Condensed Consolidated Balance Sheet information contained in this Quarterly Report on Form 10-Q was derived from the 2023 audited consolidated financial statements. These unaudited Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements, including the notes thereto, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. In the opinion of management, all adjustments (all of which are of a normal recurring nature) that are necessary for a fair statement are reflected in these unaudited Condensed Consolidated Financial Statements.

Going Concern

The Company’s cash flow forecasts, existing cash and cash equivalents, borrowings available under the Senior Secured Credit Facilities and the AR Facility indicate sufficient liquidity to fund the Company’s operations for at least the next twelve months. As such, the Company’s unaudited Consolidated Financial Statements have been prepared on the basis that it will continue as a going concern for a period extending beyond twelve months from the date the unaudited Consolidated Financial Statements are issued. This assessment includes the expected ability to meet required financial covenants and the continued ability to draw down on the Senior Secured Credit Facilities (see Note 9, Debt and Credit Agreements).

Reclassifications

During the nine months ended September 30, 2024, the Company determined that the held-for-sale criteria for Rail was no longer met and, as a result, the Company made reclassifications to prior year amounts previously classified as discontinued operations and assets held-for-sale in the Company's Consolidated Statements of Operations and Consolidated Balance Sheets, along with the accompanying notes to the Company's Consolidated Financial Statements. See Note 3, Discontinued Operations and Dispositions for further details.

2. Recently Adopted and Recently Issued Accounting Standards

The Company has not adopted any accounting standards during the three and nine months ended September 30, 2024:

The following accounting standards have been issued and become effective for the Company at a future date:

In November 2023, the FASB issued changes that require expansion of annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses. The changes become effective starting with the Company's annual financial statements for the year ended December 31, 2024. The Company is currently evaluating the impact that this change will have on the Company's disclosures and will apply the change retrospectively for all periods presented.

In December 2023, the FASB issued changes which require greater disaggregation of income tax disclosures related to the income tax rate reconciliation and income taxes paid. The changes become effective starting with the Company's annual financial statements for the year ended December 31, 2025. The guidance should be applied on a prospective basis with the option to apply the standard retrospectively. Early adoption is permitted. The Company is currently evaluating the impact that this change will have on the Company's disclosures.

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3. Discontinued Operations and Dispositions

Harsco Rail Segment

The results of the Rail business were previously presented as discontinued operations. However, the held for sale criteria were no longer met beginning with March 31, 2024 as the sales process has been paused. The assets and liabilities of the Rail business, previously presented as held for sale, were reclassified to held and used in the Condensed Consolidated Balance Sheets as of December 31, 2023, and the results of the Rail business were reclassified from discontinued operations to continuing operations for all periods presented in the Condensed Consolidated Statements of Operations. The Rail business’ assets and liabilities as of March 31, 2024 were measured at the carrying amount before the assets were classified as held for sale, reduced by $10.7 million representing the depreciation and amortization expense that would have been recognized had the assets been continuously classified as held for use. The $10.7 million reduction to the carrying value of the Rail assets was reported in Remeasurement of long-lived assets in the first quarter of 2024.

The reclassification of the Rail business's balance sheet positions as of December 31, 2023 had the following impacts on the Condensed Consolidated Balance Sheets and are summarized as follows:


(in thousands)	December 31 2023
Trade accounts receivable, net	$	57,415
Other receivables	6,708
Inventories	103,077
Current portion of contract assets	56,341
Prepaid expenses	28,797
Other current assets	2,895
Property, plant and equipment, net	44,113
Right-of-use assets, net	7,050
Goodwill	13,026
Intangible assets, net	3,122
Deferred income tax assets	973

Other assets	22,792
Total assets	$	346,309

Accounts payable	$	44,703
Accrued compensation	6,056
Income taxes payable	1,434
Current portion of operating lease liabilities	3,656
Current portion of advances on contracts	32,912
Reserve for forward losses on contracts	52,725
Other current liabilities	30,550

Operating lease liabilities	3,331
Deferred tax liabilities	350
Other liabilities	494
Total liabilities	$	176,211

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The reclassification of the results of the Rail business to continuing operations had the following impacts on the Consolidated Statement of Operations for the three and nine months ended September 30, 2023:


	Three Months Ended		Nine Months Ended
	September 30		September 30
(In thousands)	2023		2023
Service revenues	$	17,806	$	36,291
Product revenues	54,574		189,989
Total revenues	72,380		226,280
Cost of services sold	11,425		24,341
Cost of products sold	50,760		157,265
Total cost of sales	62,185		181,606
Selling, general and administrative expenses	9,124		29,001
Research and development expenses	631		1,494
Other expense (income), net	1,455		2,912
Total costs and expenses	73,395		215,013
Operating income (loss) from continuing operations	(1,015)		11,267
Interest income	44		96
Interest expense	(813)		(2,165)
Defined benefit pension income (expense)	6		19
Income (loss) from continuing operations before income taxes and equity income	(1,778)		9,217
Income tax benefit (expense) from continuing operations	611		(5,495)
Income (loss) from continuing operations	$	(1,167)	$	3,722

Harsco Environmental Segment

On April 1, 2024, the Company completed the sale of Performix Metallurgical Additives, LLC, a subsidiary of HE, for $17.5 million, subject to normal post-closing adjustments, and recognized a gain on the sale of $1.8 million (or approximately $1.3 million after-tax).

On August 29, 2024, the Company completed the sale of Reed Minerals, LLC, a subsidiary of HE, for $45.0 million subject to normal post-closing adjustments, and recognized a gain on sale of $8.7 million (or approximately $2.8 million after-tax). The most material classes of assets and liabilities on the date of the sale were Trade accounts receivable, net of $9.9 million, Inventories of $7.1 million, Property, plant and equipment ("PP&E") net of $10.7 million, Goodwill of $13.7 million and Accounts payable of $6.9 million.

Other

Discontinued operations include costs directly attributable to retained contingent liabilities of other previously disposed businesses.

4. Accounts Receivable and Note Receivable

Accounts receivable consist of the following:


(In thousands)	September 30 2024		December 31 2023
Trade accounts receivable	$	331,627	$	353,709
Less: Allowance for expected credit losses	(12,721)		(15,522)

Trade accounts receivable, net	$	318,906	$	338,187

Other receivables (a)	$	42,960	$	40,565

(a) Other receivables include employee receivables, insurance receivable, tax claims and refunds and other miscellaneous items not included in Trade accounts receivable, net.

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The change in provision for expected credit losses related to trade accounts receivable was as follows:


	Three Months Ended				Nine Months Ended
	September 30				September 30
(In thousands)	2024		2023		2024		2023
Change in provision for expected credit losses	$	(1,361)	$	6,054	$	(880)	$	6,448

At September 30, 2024, $21.4 million of the Company's trade accounts receivable were past due by twelve months or more, with $11.3 million of this amount reserved.

Accounts Receivable Securitization Facility

In June 2022, the Company and its SPE entered into an AR Facility with PNC Bank, National Association ("PNC") to accelerate cash flows from trade accounts receivable. On October 1, 2024, the Company renewed the AR Facility for a three-year term expiring in October 2027. The maximum purchase commitment by PNC is $150.0 million.

The total outstanding balance of trade receivables that have been sold and derecognized by the SPE is $150.0 million as of September 30, 2024 and December 31, 2023. The SPE owned $66.9 million and $82.2 million of trade receivables as of September 30, 2024 and December 31, 2023, respectively, which is included in the caption Trade accounts receivable, net, on the Condensed Consolidated Balance Sheets. See Note 9, Debt and Credit Agreements, for AR Facility expenses incurred.

The Company received proceeds of $5.0 million from the AR Facility for the nine months ended September 30, 2023. No proceeds were received during the nine months ended September 30, 2024

Factoring Arrangements

The Company maintains factoring arrangements with a financial institution to sell certain accounts receivable that are also accounted for as a sale of financial assets and accordingly, derecognized from the Company's Consolidated Balance Sheet. The following table reflects balances for net amounts sold and program capacities for the arrangements:


(In millions)	September 30 2024		December 31 2023
Net amounts sold under factoring arrangements	$	14.7	$	16.1
Program capacities	20.1		32.6

Note Receivable

In January 2020, the Company sold IKG for $85.0 million including cash and a note receivable, subject to post-closing adjustments. The note receivable from the buyer had a face value of $40.0 million, bearing interest at 2.50%, that is paid in kind with an original maturity of January 31, 2027. Due to a change in control of the ownership of IKG during the second quarter of 2024, prepayment of the note was required, as defined in the note receivable agreement. As such, the Company received a payment of $17.0 million in April 2024, resulting in a pre-tax gain of $2.7 million reflected in the caption Interest income on the Consolidated Statement of Operations. As of December 31, 2023, the balance was classified as noncurrent and is included in the caption Other assets on the Condensed Consolidated Balance Sheet at amortized cost.


(In millions)	September 30 2024		December 31 2023
Note receivable, at amortized cost	$	—	$	14.0
Note receivable, fair value	—		15.4

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5. Inventories

Inventories consist of the following:


(In thousands)	September 30 2024		December 31 2023
Finished goods	$	22,784	$	16,171
Work-in-process	20,617		13,081

Raw materials and purchased parts	105,904		114,046
Stores and supplies	46,884		46,071
Total inventories	$	196,189	$	189,369

6. Property, Plant and Equipment

PP&E consist of the following:


(In thousands)	September 30 2024		December 31 2023
Land and improvements	$	95,101	$	93,793

Buildings and improvements	236,279		243,472
Machinery and equipment	1,671,568		1,729,637
Uncompleted construction	64,581		66,241
Gross property, plant and equipment	2,067,529		2,133,143
Less: Accumulated depreciation	(1,369,214)		(1,425,746)
Property, plant and equipment, net	$	698,315	$	707,397

During the nine months ended September 30, 2023, the Company recorded an impairment charge of $14.1 million related to abandoned equipment at a customer site of HE China, which is included in the caption Property, plant and equipment impairment charge in the Condensed Consolidated Statements of Operations.

7. Leases

The components of lease expense were as follows:


	Three Months Ended				Nine Months Ended
	September 30				September 30
(In thousands)	2024		2023		2024		2023
Finance leases:
Depreciation expense	$	3,445	$	2,051	$	9,046	$	5,614
Interest on lease liabilities	1,164		482		3,064		1,414
Operating leases	9,689		9,277		29,482		28,497
Variable and short-term lease expense	13,756		13,606		41,555		40,136
Sublease income	(1)		(2)		(5)		(5)
Total lease expense	$	28,053	$	25,414	$	83,142	$	75,656

8. Goodwill and Other Intangible Assets

The Company tests for goodwill impairment annually, or more frequently if indicators of impairment exist, or if a decision is made to dispose of a business. The Company performs its annual goodwill impairment test as of October 1 and monitors for triggering events on an ongoing basis.

During the nine months ended September 30, 2024, the Company determined that there were no events or indicators present that would indicate that it was more-likely-than-not that its reporting units' fair values were less than their carrying amounts, which would require a further interim impairment analysis. However, unfavorable economic conditions, including continued cost inflation and labor shortages, as well as rising interest rates, could impact the Company's future projected cash flows and discount rates used to estimate fair value, which could result in an impairment charge to any of the Company's reporting units in a future period.

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During the nine months ended September 30, 2024, due to the loss of a customer in Europe for HE, the Company recorded a $2.8 million charge to fully impair the value of a related customer relationship intangible asset. This amount is included in the caption Other expense (income), net on the Consolidated Statement of Operations.

9. Debt and Credit Agreements

Long-term debt consists of the following:


(In thousands)	September 30 2024		December 31 2023

Senior Secured Credit Facilities:
Term Loan	$	483,750	$	487,500


Revolving Credit Facility	437,000		422,000
5.75% Senior Notes	475,000		475,000
Other financing payable (including finance leases) in varying amounts	67,638		44,469
Total debt obligations	1,463,388		1,428,969
Less: deferred financing costs	(13,568)		(11,974)
Total debt obligations, net of deferred financing costs	1,449,820		1,416,995
Less: current maturities of long-term debt	(17,952)		(15,558)
Long-term debt	$	1,431,868	$	1,401,437

In September 2024, the Company amended its Senior Secured Credit Facilities to, among other things, extend the term of the Revolving Credit Facility to September 5, 2029 and adjust the limit to $625.0 million. In addition, the Company retained $50.0 million of its existing revolving commitments which mature on March 10, 2026. The extended Revolving Credit Facility bears interest at a rate, depending on total net leverage, ranging from 75 to 125 basis points over base rate or 175 to 225 basis points over SOFR and the existing Revolving Credit Facility bears interest at a rate, depending on total net leverage, ranging from 50 to 175 basis points over base rate or 150 to 275 basis points over SOFR, in each case, subject to zero floor. The Company expensed $0.3 million of previously recorded deferred financing costs and capitalized $4.4 million of fees incurred related to the amendment.

Also as a result of this amendment, the net debt to consolidated adjusted EBITDA ratio covenant is 4.75x for the quarter ended September 30, 2024, and decreases to 4.50x for the quarter ended June 30, 2025, 4.25x for the quarter ended December 31, 2025 and 4.00x thereafter. The Company's required coverage of consolidated interest charges is set at a minimum of 2.75x through the end of 2024 and increases to 3.00x beginning with the first quarter of 2025.

At September 30, 2024, the Company was in compliance with its debt covenants under the Senior Secured Credit Facilities, with a total net debt to Consolidated Adjusted EBITDA ratio of 3.99x and a total interest coverage ratio of 3.15x. The Company believes it will continue to maintain compliance with these covenants based on its current outlook. However, the Company's estimates of compliance with these covenants could change in the future with a deterioration in economic conditions, higher than forecasted interest rates, the timing of working capital including the collection of receivables, an inability to realize increased pricing and implement cost reduction initiatives that mitigate the impacts of inflation and other factors that may adversely impact its compliance with covenants.

Facility Fees and Debt-Related Income (Expense)

The components of the Condensed Consolidated Statements of Operations caption Facility fees and debt-related income (expense) were as follows:


	Three Months Ended				Nine Months Ended
	September 30				September 30
(In thousands)	2024		2023		2024		2023
Gain (loss) on extinguishment of debt	$	(325)	$	—	$	(325)	$	—
Unused debt commitment and amendment fees	—		—		—		(12)
Securitization and factoring fees	(2,653)		(2,806)		(8,362)		(7,887)
Facility fees and debt-related income (expense)	$	(2,978)	$	(2,806)	$	(8,687)	$	(7,899)

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10. Employee Benefit Plans



	Three Months Ended
	September 30
Defined Benefit Pension Plan Net Periodic Pension Cost (Benefit)	U.S. Plans				International Plans
(In thousands)	2024		2023		2024		2023
Service costs	$	—	$	—	$	334	$	314
Interest costs	2,419		2,543		7,551		7,664
Expected return on plan assets	(2,236)		(1,750)		(8,480)		(7,921)
Recognized prior service costs	—		—		119		116
Recognized actuarial losses	1,045		1,150		3,864		3,633

Defined benefit pension plan net periodic pension cost (benefit)	$	1,228	$	1,943	$	3,388	$	3,806



	Nine Months Ended
	September 30
Defined Benefit Pension Plans Net Periodic Pension Cost (Benefit)	U.S. Plans				International Plans
(In thousands)	2024		2023		2024		2023
Service costs	$	—	$	—	$	1,007	$	941
Interest costs	7,257		7,629		22,445		22,645
Expected return on plan assets	(6,708)		(5,250)		(25,194)		(23,404)
Recognized prior service costs	—		—		354		345
Recognized actuarial losses	3,135		3,451		11,459		10,732


Defined benefit pension plans net periodic pension cost (benefit)	$	3,684	$	5,830	$	10,071	$	11,259

Cash contributions to U.S. and international defined benefit pension plans totaled $6.8 million and $13.3 million for the nine months ended September 30, 2024, respectively. The Company's estimate of expected cash contributions to be paid during the remainder of 2024 for the U.S. and international defined benefit pension plans is $0.4 million and $4.4 million, respectively.

11. Income Taxes

Income tax expense from continuing operations for the three and nine months ended September 30, 2024 was $13.4 million and $31.4 million, respectively, compared with $3.5 million and $26.8 million for the three and nine months ended September 30, 2023, respectively. The income tax expense increase for the three months ended September 30, 2024, compared with the three months ended September 30, 2023, primarily includes $5.7 million of tax expense related to the net gain from the Reed sale, the increased disallowed interest expense in the U.S. resulting from reduced income, the withholding tax on cash repatriation in certain foreign jurisdictions, as well as a change in the geographical mix of income, partially offset by the tax benefit resulting from an $11.2 million additional forward loss provision recorded for Rail's Network Rail contract. The increase in income tax expense for the nine months ended September 30, 2024, compared with the nine months ended September 30, 2023, primarily includes $5.7 million of tax expense related to the net gain from the Reed sale, the increased disallowed interest expense in the U.S. resulting from reduced income, the withholding tax on cash repatriation in certain foreign jurisdictions, as well as a change in the geographical mix of income, partially offset by the net tax benefit resulting from the year-over-year change in the forward loss provision recorded for Rail's Network Rail contract of $36.8 million and a $3.7 million valuation allowance for a deferred tax asset in a certain foreign jurisdiction in 2023, not recurring in 2024.

For the three and nine months ended September 30, 2024, the Company calculated its quarterly tax provision based on its best estimate of the full year tax rate applicable to the quarter. For the three and nine months ended September 30, 2023, due to the insignificant amount of pre-tax book loss relative to the size of permanent book-tax differences and a varying net income (loss) pattern projected for the year, the Company’s tax provision estimate was determined using an actual year-to-date method.

The reserve for uncertain tax positions on September 30, 2024 and December 31, 2023 was $3.6 million and $3.4 million, respectively, including interest and penalties. Within the next twelve months, it is reasonably possible that $0.6 million in unrecognized income tax benefits will be recognized upon settlement of tax examinations and the expiration of various statutes of limitations.

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12. Commitments and Contingencies

Environmental

The Company is involved in a number of environmental remediation investigations and cleanups and, along with other companies, has been identified as a “potentially responsible party” for certain byproduct disposal sites. While each of these matters is subject to various uncertainties, it is probable that the Company will agree to make payments toward funding certain of these activities, and it is possible that some of these matters will be decided unfavorably to the Company. The Company has evaluated its potential liability and its financial exposure is dependent upon such factors as the continuing evolution of environmental laws and regulatory requirements, the availability and application of technology, the allocation of cost among potentially responsible parties, the years of remedial activity required and the remediation methods selected.

The Company evaluates its liability for future environmental remediation costs on a quarterly basis. Although actual costs to be incurred at identified sites in future periods may vary from the estimates, given inherent uncertainties in evaluating environmental exposures, the Company does not expect that any costs that are reasonably possible to be incurred by the Company in connection with environmental matters in excess of the amounts accrued would have a material adverse effect on the Company's financial condition, results of operations or cash flows.

The following table summarizes information related to the location and undiscounted amount of the Company's environmental liabilities:


(In thousands)	September 30 2024		December 31 2023
Current portion of environmental liabilities (a)	$	8,981	$	7,540
Long-term environmental liabilities	22,959		25,682
Total environmental liabilities	$	31,940	$	33,222

(a) The current portion of environmental liabilities is included in the caption Other current liabilities on the Condensed Consolidated Balance Sheets.

Legal Proceedings

In the ordinary course of business, the Company is a defendant or party to various claims and lawsuits, including those discussed below. Unless stated otherwise below, the Company has not determined a loss to be probable or estimable for the legal proceedings.

In November 2022, the EPA and the Kentucky Department for Environmental Protection (the “KDEP”) conducted an inspection of Clean Earth of Calvert City LLC’s facility in Calvert City, KY and alleged several violations for which the EPA proposed a civil penalty of $0.8 million. On June 30, 2024, the EPA verbally agreed to a settlement involving a combination of civil penalties in the amount of $0.2 million and a Supplemental Environmental Project estimated to cost approximately $1.0 million that requires installing a concrete and storm water management system to enhance compliance and protection of the environment.

On January 27, 2020, the EPA issued a Notice of Potential Liability to the Company, along with several other companies, concerning the Newtown Creek Superfund Site located in Kings and Queens Counties in New York, which alleges certain facilities formerly owned or operated by subsidiaries of the Company may have resulted in the discharge of hazardous substances into Newtown Creek or its Dutch Kills tributary. The site has been subject to CERCLA response activities since approximately 2011. The EPA expects to issue a Record of Decision for the sitewide cleanup plan no sooner than 2028 and announced, in July 2021, that it would defer its decision on a potential early action response for the lower two miles of the Creek until the sitewide studies are completed. On August 28, 2024, the EPA released a proposed plan for clean up of the East Branch portion of Newtown Creek. The Company is one of 23 Potentially Responsible Parties ("PRPs") that have received notices, though it is believed other PRPs may exist. The Company vigorously contests the allegations of this notice and currently does not believe that this matter will have a material effect on the Company’s financial position or results from operations.

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On June 25 and 26, 2018, the DTSC conducted a compliance enforcement inspection of ESOL’s facility in Rancho Cordova, California, which was then owned by Stericycle, Inc. On February 14, 2020, the DTSC filed an action in the Superior Court for the State of California, Sacramento Division, alleging violations of California’s Hazardous Waste Control Law and the facility’s hazardous waste permit arising from the inspection. On August 27, 2020, the DTSC issued a Notice of Denial of Hazardous Waste Facility Permit Application, denying the renewal of the facility's hazardous waste permit. The Company continues to utilize the site for non-hazardous waste and is evaluating additional potential alternate uses for the site. The DTSC investigation and compliance issues leading to the compliance tier assignment were ongoing well before the Company's acquisition of the ESOL business, and the Company was aware of the investigation and many of the issues raised in the investigation at the time of the purchase. Accordingly, the Company is indemnified for certain fines and other costs and expenses associated with this matter by Stericycle, Inc. In May 2024, Stericycle consummated a settlement, on behalf of itself and the Company, with the DTSC in the February 2020 Superior Court action for payment of $3.1 million and other injunctive relief related to the ongoing closure of the hazardous waste facility. A final consent judgment for penalties and permanent injunction was approved and entered by the Court on June 6, 2024. In July 2024, on behalf of itself and the Company, Stericycle paid all fines in this matter.

The Company has had ongoing meetings with the SCE over processing salt cakes, a processing byproduct, stored at the Al Hafeerah site. The Company’s Bahrain operations that produced the salt cakes has ceased operations. An Environmental Impact Assessment and Technical Feasibility Study for facilities to process the salt cakes was approved by the SCE during the first quarter of 2018. Commissioning of the facilities was completed during the third quarter of 2021 and the processing of the salt cakes has commenced. The Company's current reserve of $4.9 million at September 30, 2024 continues to represent the Company's best estimate of the ultimate costs to be incurred to resolve this matter. The Company continues to evaluate this reserve and any future change in estimated costs which could be material to the Company’s results of operations in any one period.

On July 27, 2018, Brazil’s Federal and Rio de Janeiro State Public Prosecution Offices (the "MPF" and "MPE", respectively) filed a Civil Public Action against CSN, one of the Company's customers, the Company’s Brazilian subsidiary, the Municipality of Volta Redonda, Brazil, and the Instituto Estadual do Ambiente, the state of Rio de Janeiro's environmental protection agency, seeking the implementation of various measures to limit and reduce the accumulation of customer-owned slag at the site in Brazil. On August 6, 2018, the 3rd Federal Court in Volta Redonda (the "Volta Redonda Court") granted the MPF and MPE an injunction against the defendants requiring, among other things, CSN and the Company’s Brazilian subsidiary to limit the volume of slag sent to the site. Because the customer owns the site and the slag located on the site, the Company believes that complying with this injunction is the steel producer’s responsibility. Nevertheless, the Volta Redonda Court issued two orders fining the Company and CSN for what it viewed as violations of the injunction. The Company appealed the fines and the underlying injunction and, beginning on March 25, 2022, the Volta Redonda Court entered a series of orders suspending the litigation proceedings and staying any additional fines and interest accruals while the parties discuss a possible resolution to the matter. The aggregate amount of fines levied against the Company, exclusive of interest, is approximately 32 million Brazilian reais (or approximately $6 million as of September 30, 2024), plus interest. On October 5, 2024, the Volta Redonda Court determined that, as of August 1, 2024, the Company was not responsible for complying with the injunction because the Company no longer operates at the site. The Company and the other parties continue to discuss a potential resolution related to the portion of the authorities' claims that allegedly occurred prior to August 1, 2024. The Company does not believe that a loss relating to this matter is probable or estimable at this point.

In October 2021, the Company received a subpoena and two indictments before the Amsterdam District Court in the Netherlands concerning the Company's operations at a customer site Ijmuiden, Netherlands. The Amsterdam Public Prosecutor’s Office ("APPO") issued two indictments against the Company, alleging violations in connection with dust releases and/or events alleged to have occurred in 2018 through May 2020 at the site. The action cited provisions which permit fines for the alleged infractions and sought €0.1 million in fines with a smaller amount held in abeyance. On February 2, 2022, the APPO announced that it would further investigate residents’ claims related to this matter. On February 25, 2022, the Amsterdam District Court ruled that the Company was liable for only one alleged violation and that this alleged violation was unintentional. The court issued a fine of €5 thousand, to be held in abeyance. Both the Company and the APPO appealed this ruling. An appellate hearing was held on July 5, 2024, with the APPO seeking €0.3 million in fines. On July 19, 2024, the Court of Appeals ruled that the Company was liable for two alleged intentional violations and issued a fine of €25 thousand. Both the Company and the APPO have appealed this ruling. The Company is vigorously contesting all allegations against it and is also working with its customer to ensure the control of emissions. The Company has contractual indemnity rights from its customer that it believes will substantially cover any fines or penalties.

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DEA Investigation

Prior to the Company’s acquisition of ESOL, Stericycle, Inc. notified the Company that the DEA had served an administrative subpoena on Stericycle, Inc. and executed a search warrant at a facility in Rancho Cordova, CA and an administrative inspection warrant at a facility in Indianapolis, IN. The Company has determined that the DEA and the DTSC have launched investigations involving, at least in part, the ESOL business of collecting, transporting, and destroying controlled substances from retail customers that transferred from Stericycle, Inc. to the Company. The Company is cooperating with these inquiries, which relate primarily to the period before the Company owned the ESOL business. Since the acquisition of the ESOL business, the Company has performed a vigorous review of ESOL’s compliance program related to controlled substances and has made material changes to the manner in which controlled substances are transported from retail customers to DEA-registered facilities for destruction. Pursuant to an agreement with Stericycle, the Company has contractual recourse for any material loss the Company has determined is reasonably possible. The Company has not accrued any amounts in respect of these investigations and does not believe a loss is probable.

Brazilian Tax Disputes

The Company is involved in a number of tax disputes with federal, state and municipal tax authorities in Brazil. These disputes are at various stages of the legal process, including the administrative review phase and the collection action phase, and include assessments of fixed amounts of principal and penalties, plus interest charges that increase at statutorily determined amounts per month and are assessed on the aggregate amount of the principal and penalties. In addition, at the collection action or court of appeals phase, the losing party could be subject to a charge to cover statutorily mandated legal fees, which are generally calculated as a percentage of the total assessed amounts due, inclusive of penalty and interest. Many of the claims relate to ICMS, services and social security tax disputes. The largest proportion of the assessed amounts relate to ICMS claims filed by the SPRA, encompassing the period from January 2002 to May 2005.

In October 2009, the Company received notification of the SPRA’s final administrative decision regarding the levying of ICMS in the State of São Paulo in relation to services provided to a customer in the State between January 2004 and May 2005. Another ICMS tax case involving the SPRA refers to the tax period from January 2002 to December 2003. On April 23, 2024, the Company’s customer directed the Company to accept a settlement offer made by the SPRA and the Company accepted the settlement offer on April 26, 2024. Under the settlement, the Company will pay a total of $3.5 million over sixty months, plus interest, in return for a full release from the SPRA as to both claims. Pursuant to our contractual rights, the Company is indemnified by its customer for this amount and the customer is making payments to the government on behalf of the Company. Therefore, the Company has recorded an indemnification receivable from the customer for this amount.

On December 30, 2020, the Company received an assessment from the municipal authority in Ipatinga, Brazil alleging $1.9 million in unpaid service taxes from the period 2015 to 2020. After calculating the interest and penalties accrued, the Company estimates that the current overall potential liability for this case is approximately $5.9 million. On July 21, 2023, the Company filed the last administrative appeal against the decision that maintained the assessment and a final administrative decision is still pending. Due to the multiple defenses that are available, the Company does not believe a loss is probable.

The Company intends to continue its practice of vigorously defending itself against these tax claims under various alternatives, including judicial appeal. The Company will continue to evaluate its potential liability with regard to these claims on a quarterly basis; however, it is not possible to predict the ultimate outcome of these tax-related disputes in Brazil. No loss provision has been recorded in the Company's Condensed Consolidated Financial Statements for the disputes described above because the loss contingency is not deemed probable, and the Company does not expect that any costs that are reasonably possible to be incurred by the Company in connection with Brazilian tax disputes would have a material adverse effect on the Company's financial condition, results of operations or cash flows.

Asbestos Actions

The Company is named as one of many defendants in legal actions in the U.S. alleging personal injury from exposure to airborne asbestos over the past several decades. In their suits, the plaintiffs have named as defendants, among others, many manufacturers, distributors and installers of numerous types of equipment or products that allegedly contained asbestos.

At September 30, 2024, there were approximately 17,000 pending asbestos personal injury actions filed against the Company. The vast majority of these actions were filed in the New York Supreme Court (New York County), of which the majority of such actions were on the Deferred/Inactive Docket created by the New York Supreme Court in December 2002 for all pending and future asbestos actions filed by persons who cannot demonstrate that they have a malignant condition or discernible physical impairment. A relatively small portion of cases are on the Active or In Extremis docket in New York County or on active dockets in other jurisdictions. The complaints in most of those actions generally follow a form that contains a standard demand of significant damages, regardless of the individual plaintiff's alleged medical condition, and without identifying any Company product.

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The Company will continue to vigorously defend against such claims and is confident that it will be successful in doing so. The Company has never been a producer, manufacturer or processor of asbestos fibers. Any asbestos-containing part of a Company product used in the past was purchased from a supplier and the asbestos encapsulated in other materials such that airborne exposure, if it occurred, was not harmful and is not associated with the types of injuries alleged in the pending actions.

The Company has liability insurance coverage under various primary and excess policies that the Company believes will be available, if necessary, to substantially cover any liability that might ultimately be incurred in the asbestos actions referred to above. The costs and expenses of the asbestos actions are being paid by the Company's insurers.

In view of the persistence of asbestos litigation in the U.S., the Company expects to continue to receive additional claims in the future. The Company intends to continue its practice of vigorously defending these claims and cases. At September 30, 2024, the Company has successfully dismissed approximately 28,500 cases by stipulation or summary judgment prior to trial.

It is not possible to predict the ultimate outcome of asbestos-related actions in the U.S. due to the unpredictable nature of this litigation, and no loss provision has been recorded in the Company's Condensed Consolidated Financial Statements because a loss contingency is not deemed probable or estimable. Despite this uncertainty, and although results of operations and cash flows for a given period could be adversely affected by asbestos-related actions, the Company does not expect that any costs that are reasonably possible to be incurred by the Company in connection with asbestos litigation would have a material adverse effect on the Company's financial condition, results of operations or cash flows.

Other

On November 5, 2020, a worker suffered a fatal injury at a site owned by the Company’s customer, Gerdau Ameristeel US, Inc. ("Gerdau"), in Midlothian, TX. Although the Company was not directly involved in the accident, the worker was employed by a sub-contractor of a sub-contractor of the Company. On May 11, 2023, the parties completed a formal settlement agreement, settling the claims brought by the worker's family. The Company paid its insurance deductible of $5.0 million and has recorded an indemnification receivable from Gerdau for the recovery of certain losses based upon the contractual indemnity rights. On August 25, 2023, the Company initiated arbitration proceedings against Gerdau before the American Arbitration Association to enforce its contractual indemnity rights. There can be no assurances that the Company's position will ultimately prevail; however, any financial statement impact is not expected to be material.

The Company is subject to various other claims and legal proceedings covering a wide range of matters that arose in the ordinary course of business. In the opinion of management, all such matters are adequately covered by insurance or by established reserves, and, if not so covered, are without merit or are of such kind, or involve such amounts, as would not have a material adverse effect on the financial position, results of operations or cash flows of the Company.

Insurance liabilities are recorded when it is probable that a liability has been incurred for a particular event and the amount of loss associated with the event can be reasonably estimated. Insurance reserves have been estimated based primarily upon actuarial calculations and reflect the undiscounted estimated liabilities for ultimate losses, including claims incurred but not reported. Inherent in these estimates are assumptions that are based on the Company's history of claims and losses, a detailed analysis of existing claims with respect to potential value, and current legal and legislative trends. If actual claims differ from those projected by management, changes (either increases or decreases) to insurance reserves may be required and would be recorded through income in the period the change was determined. When a recognized liability has been determined to be covered by third-party insurance, the Company records an insurance claim receivable to reflect the covered liability. Insurance claim receivables are included in Other receivables on the Company's Condensed Consolidated Balance Sheets. See Note 1, Summary of Significant Accounting Policies in Part II, Item 8 Financial Statements and Supplementary Data in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, under Accrued Insurance and Loss Reserves, for additional information.

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13. Reconciliation of Basic and Diluted Shares


	Three Months Ended				Nine Months Ended
	September 30				September 30
(In thousands, except per share amounts)	2024		2023		2024		2023
Income (loss) from continuing operations attributable to Enviri Corporation common stockholders	$	(11,995)	$	(9,663)	$	(41,556)	$	(28,539)
Weighted-average shares outstanding:
Weighted-average shares outstanding - basic	80,165		79,850		80,085		79,767
Dilutive effect of stock-based compensation	—		—		—		—
Weighted-average shares outstanding - diluted	80,165		79,850		80,085		79,767

Earnings (loss) from continuing operations per common share, attributable to Enviri Corporation common stockholders:
Basic	$	(0.15)	$	(0.12)	$	(0.52)	$	(0.36)

Diluted	$	(0.15)	$	(0.12)	$	(0.52)	$	(0.36)

The following average outstanding stock-based compensation units were not included in the computation of diluted earnings (loss) per share because the effect was either antidilutive or the market conditions for the performance share units were not met:


	Three Months Ended		Nine Months Ended
	September 30		September 30
(In thousands)	2024	2023	2024	2023
Restricted stock units	1,607	969	1,650	997

Stock appreciation rights	2,618	2,380	2,764	2,427
Performance share units	1,833	1,341	1,852	1,382

14. Derivative Instruments, Hedging Activities and Fair Value

Derivative Instruments and Hedging Activities

The Company uses derivative instruments, including foreign currency exchange forward contracts and interest rate swaps to manage certain foreign currency and interest rate exposures. Derivative instruments are viewed as risk management tools by the Company and are not used for trading or speculative purposes. All derivative instruments are recorded on the Company's Condensed Consolidated Balance Sheets at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the earnings effect of the hedged forecasted transactions in a cash flow hedge. The Company may enter into derivative contracts that are intended to economically hedge certain of its risks, even though hedge accounting does not apply or the Company elects not to apply hedge accounting.

The Company primarily applies the market approach for recurring fair value measurements and endeavors to utilize the best available information. Accordingly, the Company utilizes valuation techniques that maximize the use of observable inputs, such as forward rates, interest rates, the Company’s credit risk and counterparties’ credit risks, and which minimize the use of unobservable inputs. The Company is able to classify fair value balances based on the ability to observe those inputs. Foreign currency exchange forward contracts and interest rate swaps are based upon pricing models using market-based inputs (Level 2). Model inputs can be verified and valuation techniques do not involve significant management judgment.

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The fair value of outstanding derivative contracts recorded as assets and liabilities on the Company's Condensed Consolidated Balance Sheets was as follows:


(In thousands)	Balance Sheet Location	Fair Value of Derivatives Designated as Hedging Instruments		Fair Value of Derivatives Not Designated as Hedging Instruments		Total Fair Value
September 30, 2024
Asset derivatives (Level 2):
Foreign currency exchange forward contracts	Other current assets	$	27	$	275	$	302


Total		$	27	$	275	$	302

Liability derivatives (Level 2):
Foreign currency exchange forward contracts	Other current liabilities	$	1,296	$	6,954	$	8,250
Interest rate swaps	Other current liabilities	1,130		—		1,130
Interest rate swaps	Other liabilities	802		—		802
Total		$	3,228	$	6,954	$	10,182

December 31, 2023
Asset derivatives (Level 2):
Foreign currency exchange forward contracts	Other current assets	$	77	$	1,597	$	1,674


Interest rate swaps	Other current assets	1,443		—		1,443

Total		$	1,520	$	1,597	$	3,117

Liability derivatives (Level 2):
Foreign currency exchange forward contracts	Other current liabilities	$	561	$	8,064	$	8,625

Interest rate swaps	Other liabilities	2,150		—		2,150
Total		$	2,711	$	8,064	$	10,775

All of the Company's derivatives are recorded on the Condensed Consolidated Balance Sheets at gross amounts and do not offset. All of the Company's interest rate swaps and certain foreign currency exchange forward contracts are transacted under ISDA documentation. Each ISDA master agreement permits the net settlement of amounts owed in the event of default. The Company's derivative assets and liabilities subject to enforceable master netting arrangements, if offset, would have resulted in net liabilities of $1.9 million and $0.5 million at September 30, 2024 and December 31, 2023, respectively.

The effect of derivative instruments on the Company's Condensed Consolidated Statements of Comprehensive Income (Loss) was as follows:

Derivatives Designated as Hedging


	Gain (Loss) Recognized in OCI on Derivatives				Loss (Gain) Reclassified from AOCI into Income - Effective Portion or Equity
	Three Months Ended				Three Months Ended
	September 30				September 30
(In thousands)	2024		2023		2024		2023
Foreign currency exchange forward contracts	$	(1,188)	$	373	$	541	$	(270)


Interest rate swaps	(3,284)		2,390		(866)		(825)

	$	(4,472)	$	2,763	$	(325)	$	(1,095)



	Gain (Loss) Recognized in OCI on Derivatives				Loss (Gain) Reclassified from AOCI into Income - Effective Portion or Equity
	Nine Months Ended				Nine Months Ended
	September 30				September 30
(In thousands)	2024		2023		2024		2023
Foreign currency exchange forward contracts	$	(938)	$	(748)	$	44	$	1,007
Interest rate swaps	1,394		5,655		(2,619)		(1,690)

	$	456	$	4,907	$	(2,575)	$	(683)

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The location and amount of gain (loss) recognized on the Company's Condensed Consolidated Statements of Operations was as follows:


	Three Months Ended
	September 30
	2024				2023
(In thousands)	Product Revenues		Interest Expense			Product Revenues		Interest Expense
Total amounts in the Condensed Consolidated Statement of Operations in which the effects of derivatives designated as hedging instruments are recorded	$	85,495	$	(28,813)		$	106,177	$	(27,552)
Interest rate swaps:
Gain (loss) reclassified from AOCI into income	—		866			—		825

Foreign exchange contracts:
Gain (loss) reclassified from AOCI into income	(541)		—			270		—



	Nine Months Ended
	September 30
	2024				2023
(In thousands)	Product Revenues		Interest Expense			Product Revenues		Interest Expense
Total amounts in the Condensed Consolidated Statement of Operations in which the effects of derivatives designated as hedging instruments are recorded	$	291,368	$	(84,869)		$	332,375	$	(78,956)
Interest rate swaps:
Gain (loss) reclassified from AOCI into income	—		2,619			—		1,690

Foreign exchange contracts:
Gain (loss) reclassified from AOCI into income	(44)		—			(1,007)		—

Derivatives Not Designated as Hedging Instruments


	Location of Gain (Loss) Recognized in Income on Derivatives (a)	Amount of Gain (Loss) Recognized in Income on Derivatives (a)
		Three Months Ended				Nine Months Ended
		September 30				September 30
(In thousands)		2024		2023		2024		2023

Foreign currency exchange forward contracts	Cost of services and products sold	$	(18,569)	$	12,174	$	(6,344)	$	13,739

(a) These gains (losses) offset other amounts recognized in cost of services and products sold principally as a result of intercompany or third party foreign currency exposures.

Foreign Currency Exchange Forward Contracts

The Company conducts business in multiple currencies and, accordingly, is subject to the inherent risks associated with foreign exchange rate movements. Foreign currency-denominated assets and liabilities are translated into U.S. dollars at the exchange rates existing at the respective consolidated balance sheet dates, and income and expense items are translated at the average exchange rates during the respective periods.

The Company uses derivative instruments to hedge cash flows related to foreign currency fluctuations. Foreign currency exchange forward contracts outstanding are part of a worldwide program to minimize foreign currency exchange operating income and balance sheet exposure by offsetting foreign currency exposures of certain future payments between the Company and various subsidiaries, suppliers or customers. The unsecured contracts are with major financial institutions. The Company may be exposed to credit loss in the event of non-performance by the contract counterparties. The Company evaluates the creditworthiness of the counterparties and does not expect default by them. Foreign currency exchange forward contracts are used to hedge commitments, such as foreign currency debt, firm purchase commitments and foreign currency cash flows for certain export sales transactions.

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Changes in the fair value of derivatives used to hedge foreign currency denominated balance sheet items are reported directly in earnings, along with offsetting transaction gains and losses on the items being hedged. Derivatives used to hedge forecasted cash flows associated with foreign currency commitments may be accounted for as cash flow hedges, as deemed appropriate, if the criteria for hedge accounting are met. Gains and losses on derivatives designated as cash flow hedges are deferred in AOCI, a separate component of equity, and reclassified to earnings in a manner that matches the timing of the earnings impact of the hedged transactions. The ineffective portion of all hedges, if any, is recognized currently in earnings.

The recognized gains and losses offset amounts recognized in cost of services and products sold principally as a result of intercompany or third-party foreign currency exposures. At September 30, 2024 and December 31, 2023, the notional amounts of foreign currency exchange forward contracts were $657.0 million and $633.3 million, respectively. These contracts are primarily denominated in British Pound Sterling and Euros and mature through 2027.

In addition to foreign currency exchange forward contracts, the Company designates certain loans as hedges of net investments in international subsidiaries. The Company recorded a pre-tax net gain of $0.9 million for the three months ended September 30, 2024 and a pre-tax net loss of $0.3 million for the three months ended September 30, 2023, and pre-tax net gains of $2.1 million and $1.2 million for the nine months ended September 30, 2024 and September 30, 2023, respectively, in OCI.

Interest Rate Swaps

The Company uses interest rate swaps in conjunction with certain variable rate debt issuances in order to secure a fixed interest rate. Changes in the fair value attributed to the effect of the swaps’ interest spread and changes in the credit worthiness of the counter-parties are recorded in OCI and are reclassified into income as interest payments are made.

In the first quarter of 2023, the Company entered into a series of interest rate swaps with a scheduled maturity of December 2025. The swaps have the effect of converting $300.0 million of the Term Loan from a floating interest rate to a fixed interest rate and are classified as cash flow hedges. The fixed rates provided by these swaps, ranging from 4.16% to 4.21%, replace the adjusted SOFR rate in the interest calculation.

In October 2024, the Company entered into a new series of interest rate swaps that will be in effect upon the maturity of the existing interest rate swaps in December 2025 and will mature in March 2028. These forward swaps will continue to have the same effect of converting $300.0 million from the Term Loan from a floating interest rate to a fixed interest rate and will be classified as cash flow hedges. These swaps will provide fixed interest rates that range from 3.06% to 3.12% and will continue to replace the adjusted SOFR rate in the interest calculation.

Fair Value of Other Financial Instruments

The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities and short-term borrowings approximate fair value due to the short-term maturities of these assets and liabilities. At September 30, 2024 and December 31, 2023, the total fair value of long-term debt and current maturities, excluding deferred financing costs, was $1,450.2 million and $1,394.5 million, respectively, compared with a carrying value of $1,463.4 million and $1,429.0 million, respectively. Fair values for debt are based on pricing models using market-based inputs (Level 2) for similar issues or on the current rates offered to the Company for debt of the same remaining maturities.

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15. Review of Operations by Segment


	Three Months Ended				Nine Months Ended
	September 30				September 30
(In thousands)	2024		2023		2024		2023
Revenues
Harsco Environmental	$	279,148	$	285,877	$	871,196	$	848,659
Clean Earth	236,791		238,711		698,926		691,750
Harsco Rail	57,688		72,380		213,815		226,280

Total Revenues	$	573,627	$	596,968	$	1,783,937	$	1,766,689

Operating Income (Loss) from Continuing Operations
Harsco Environmental	$	33,181	$	17,867	$	73,055	$	52,885
Clean Earth	26,833		21,497		71,308		61,002
Harsco Rail	(14,101)		(999)		(26,251)		10,270
Corporate	(8,541)		(9,605)		(23,672)		(29,795)
Total Operating Income (Loss) from Continuing Operations	$	37,372	$	28,760	$	94,440	$	94,362

Depreciation
Harsco Environmental	$	27,554	$	28,793	$	83,793	$	84,707
Clean Earth	8,685		6,054		24,347		16,528
Harsco Rail	1,040		—		2,424		—
Corporate	300		550		961		1,658
Total Depreciation	$	37,579	$	35,397	$	111,525	$	102,893

Amortization
Harsco Environmental	$	532	$	1,013	$	2,525	$	3,020
Clean Earth	5,991		6,330		18,147		18,472
Harsco Rail	68		—		157		—
Corporate (a)	1,318		952		3,260		2,835
Total Amortization	$	7,909	$	8,295	$	24,089	$	24,327
Capital Expenditures
Harsco Environmental	$	24,905	$	20,735	$	69,674	$	75,826
Clean Earth	13,020		6,186		27,084		15,990
Harsco Rail	3,567		279		5,154		1,515
Corporate	82		89		182		299
Total Capital Expenditures	$	41,574	$	27,289	$	102,094	$	93,630

(a) Amortization expense on Corporate relates to the amortization of deferred financing costs.

Reconciliation of Segment Operating Income to Income (Loss) From Continuing Operations before Income Taxes and Equity Income


	Three Months Ended				Nine Months Ended
	September 30				September 30
(In thousands)	2024		2023		2024		2023
Segment operating income (loss)	$	45,913	$	38,365	$	118,112	$	124,157
General Corporate expense	(8,541)		(9,605)		(23,672)		(29,795)
Operating income (loss) from continuing operations	37,372		28,760		94,440		94,362
Interest income	981		1,722		6,113		4,796
Interest expense	(28,813)		(27,552)		(84,869)		(78,956)
Facility fees and debt-related income (expense)	(2,978)		(2,806)		(8,687)		(7,899)

Defined benefit pension income (expense)	(4,257)		(5,430)		(12,599)		(16,159)
Income (loss) from continuing operations before income taxes and equity income	$	2,305	$	(5,306)	$	(5,602)	$	(3,856)

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16. Revenues

The Company recognizes revenues to depict the transfer of promised services and products to customers in an amount that reflects the consideration the Company expects to receive in exchange for those services and products. Service revenues include CE and the service components of HE and Rail. Product revenues include portions of HE and Rail.

A summary of the Company's revenues by primary geographical markets as well as by key product and service groups is as follows:



	Three Months Ended
	September 30, 2024
(In thousands)	Harsco Environmental Segment		Clean Earth Segment		Harsco Rail Segment		Consolidated Totals
Primary Geographical Markets (a):
North America	$	70,316	$	236,791	$	31,644	$	338,751
Western Europe	108,709		—		21,294		130,003
Latin America (b)	38,195		—		247		38,442
Asia-Pacific	31,333		—		4,503		35,836
Middle East and Africa	26,327		—		—		26,327
Eastern Europe	4,268		—		—		4,268
Total Revenues	$	279,148	$	236,791	$	57,688	$	573,627
Key Product and Service Groups:
Environmental services related to resource recovery for metals manufacturing and related logistical services	$	235,490	$	—	$	—	$	235,490
Ecoproducts	36,663		—		—		36,663
Environmental systems for aluminum dross and scrap processing	6,995		—		—		6,995
Railway track maintenance equipment	—		—		19,099		19,099
After market parts and services; safety and diagnostic technology	—		—		23,495		23,495
Railway contracting services	—		—		15,094		15,094
Hazardous waste processing solutions	—		194,557		—		194,557

Soil and dredged materials processing and reuse solutions	—		42,234		—		42,234
Total Revenues	$	279,148	$	236,791	$	57,688	$	573,627



	Three Months Ended
	September 30, 2023
(In thousands)	Harsco Environmental Segment		Clean Earth Segment		Harsco Rail Segment		Consolidated Totals
Primary Geographical Markets (a):
North America	$	78,528	$	238,711	$	50,322	$	367,561
Western Europe	109,473		—		20,294		129,767
Latin America (b)	44,351		—		700		45,051
Asia-Pacific	25,787		—		1,064		26,851
Middle East and Africa	22,673		—		—		22,673
Eastern Europe	5,065		—		—		5,065
Total Revenues	$	285,877	$	238,711	$	72,380	$	596,968

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	Three Months Ended
	September 30, 2023
(In thousands)	Harsco Environmental Segment		Clean Earth Segment		Harsco Rail Segment		Consolidated Totals

Key Product and Service Groups:
Environmental services related to resource recovery for metals manufacturing and related logistical services	$	234,274	$	—	$	—	$	234,274
Ecoproducts	43,841		—		—		43,841
Environmental systems for aluminum dross and scrap processing	7,762		—		—		7,762
Railway track maintenance equipment	—		—		24,531		24,531
After market parts and services; safety and diagnostic technology	—		—		31,310		31,310
Railway contracting services	—		—		16,539		16,539
Hazardous waste processing solutions	—		194,927		—		194,927

Soil and dredged materials processing and reuse solutions	—		43,784		—		43,784
Total Revenues	$	285,877	$	238,711	$	72,380	$	596,968



	Nine Months Ended
	September 30, 2024
(In thousands)	Harsco Environmental Segment		Clean Earth Segment		Harsco Rail Segment		Consolidated Totals
Primary Geographical Markets (a):
North America	$	238,553	$	698,926	$	129,119	$	1,066,598
Western Europe	328,604		—		61,318		389,922
Latin America (b)	122,396		—		3,205		125,601
Asia-Pacific	88,593		—		20,173		108,766
Middle East and Africa	79,858		—		—		79,858
Eastern Europe	13,192		—		—		13,192
Total Revenues	$	871,196	$	698,926	$	213,815	$	1,783,937
Key Product and Service Groups:
Environmental services related to resource recovery for metals manufacturing and related logistical services	$	747,303	$	—	$	—	$	747,303
Ecoproducts	107,190		—		—		107,190
Environmental systems for aluminum dross and scrap processing	16,703		—		—		16,703
Railway track maintenance equipment	—		—		79,535		79,535
After-market parts and services; safety and diagnostic technology	—		—		89,502		89,502
Railway contracting services	—		—		44,778		44,778
Hazardous waste processing solutions	—		581,341		—		581,341
Soil and dredged materials processing and reuse solutions	—		117,585		—		117,585
Total Revenues	$	871,196	$	698,926	$	213,815	$	1,783,937

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	Nine Months Ended
	September 30, 2023
(In thousands)	Harsco Environmental Segment		Clean Earth Segment		Harsco Rail Segment		Consolidated Totals
Primary Geographical Markets (a):
North America	$	238,617	$	691,750	$	163,934	$	1,094,301
Western Europe	318,177		—		44,858		363,035
Latin America (b)	127,486		—		1,865		129,351
Asia-Pacific	87,087		—		15,623		102,710
Middle East and Africa	62,195		—		—		62,195
Eastern Europe	15,097		—		—		15,097
Total Revenues	$	848,659	$	691,750	$	226,280	$	1,766,689


Key Product and Service Groups:
Environmental services related to resource recovery for metals manufacturing and related logistical services	$	706,273	$	—	$	—	$	706,273
Ecoproducts	122,747		—		—		122,747
Environmental systems for aluminum dross and scrap processing	19,639		—		—		19,639
Railway track maintenance equipment	—		—		98,771		98,771
After-market parts and services; safety and diagnostic technology	—		—		93,633		93,633
Railway contracting services	—		—		33,876		33,876
Hazardous waste processing solutions	—		578,545		—		578,545
Soil and dredged materials processing and reuse solutions	—		113,205		—		113,205
Total Revenues	$	848,659	$	691,750	$	226,280	$	1,766,689

(a) Revenues are attributed to individual countries based on the location of the facility generating the revenue.

(b) Includes Mexico.

The Company may receive payments in advance of earning revenue (advances on contracts), which are included in Current portion of advances on contracts and Other liabilities on the Condensed Consolidated Balance Sheets. The Company may recognize revenue in advance of being able to contractually invoice the customer (contract assets), which is included in Current portion of contract assets and Other assets on the Condensed Consolidated Balance Sheets. Contract assets are transferred to Trade accounts receivable, net, when the right to payment becomes unconditional. Contract assets and advances on contracts are reported as a net position, on a contract-by-contract basis, at the end of each reporting period. These instances are primarily related to Rail.

The Company had contract assets totaling $107.9 million and $86.9 million at September 30, 2024 and December 31, 2023, respectively. The Company had advances on contracts totaling $28.3 million and $38.6 million at September 30, 2024 and December 31, 2023, respectively. During the three and nine months ended September 30, 2024, the Company recognized $4.8 million and $25.3 million, respectively, of revenue related to amounts previously included in advances on contracts. During the three and nine months ended September 30, 2023, the Company recognized revenues of $13.3 million and $35.8 million, respectively, related to amounts previously included in advances on contracts.

At September 30, 2024, HE had remaining, fixed, unsatisfied performance obligations where the expected contract duration exceeds one year totaling $73.7 million. Of this amount, $21.7 million is expected to be fulfilled by September 30, 2025, $17.7 million by September 30, 2026, $14.1 million by September 30, 2027, $11.8 million by September 30, 2028 and the remainder thereafter. These amounts exclude any variable fees, fixed fees subject to indexation and any performance obligations expected to be satisfied within one year.

At September 30, 2024, Rail had remaining, fixed, unsatisfied performance obligations where the expected contract duration exceeds one year totaling $119.0 million. Of this amount, $54.9 million is expected to be fulfilled by September 30, 2025, $27.3 million by September 30, 2026, $21.0 million by September 30, 2027, $6.9 million by September 30, 2028 and the remainder thereafter. These amounts exclude any variable fees, fixed fees subject to indexation and any performance obligations expected to be satisfied within one year.

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Rail is currently manufacturing highly-engineered equipment under large long-term fixed-price contracts with SBB, Network Rail, and Deutsche Bahn. As previously disclosed, the Company recognized estimated forward loss provisions in 2021, 2022 and 2023 related to these contracts due to several factors, such as material and labor cost inflation, supply chain delays, the bankruptcy of a key vendor and increased engineering efforts.

For the Network Rail contract, the Company recorded an additional loss provision of $11.2 million in the third quarter of 2024, primarily related to delays in the estimated delivery of the machines and increased engineering and manufacturing costs primarily as a result of design changes. For the nine months ended September 30, 2024, the forward loss provision totaled $13.3 million. It is possible there may be additional delays in the project requiring additional costs to be recorded in the future, which could have a material impact on the Company's results in that period. During the nine months ended September 30, 2023, the Company reversed a portion of its previous estimated loss provision adjustment in the amount of $23.5 million. The favorable adjustment was the result of an amendment to the contract with Network Rail which extended the delivery schedule for the machines and reduced the estimate of liquidated damages. The majority of the reduction in liquidated damages was recorded as an increase to revenue and contract assets. Partially offsetting this were higher estimated material, engineering and labor costs due to additional experience gained during the manufacturing process.

For the Deutsche Bahn contract, the Company recorded an additional loss provision of $7.2 million during the nine months ended September 30, 2024 related to supplier price increases, challenges with supplier quality on key components and increased engineering efforts that exceeded previous estimates. During the third quarter of 2023, the Company recorded an additional forward loss provision of $2.4 million. For the nine months ended September 30, 2023, the forward loss provision totaled $10.8 million. The additional loss provisions were due to increased costs related to a critical supplier that had filed for bankruptcy in 2022 and ceased operations during the second quarter of 2023, as well as an increase in estimated component costs and engineering costs.

For the SBB contract, during the third quarter of 2024, the Company recorded a favorable adjustment of $0.7 million. For the nine months ended September 30, 2024, the net reduction totaled $0.5 million. For the nine months ended September 30, 2023, the Company recorded an additional forward loss provision of $6.1 million due to increased costs related to estimates for material, engineering and commissioning costs for the remaining vehicles.

The estimated forward loss provisions represent the Company's best estimate based on currently available information. It is possible that the Company's overall estimate of liquidated damages, penalties and costs to complete these contracts may change, which could result in an additional estimated forward loss provision at such time that could be material. The Company will continue to update its estimates to complete these contracts, which will include the effect of negotiations with the customers regarding price increases, change orders and extensions to delivery schedules.

As of September 30, 2024, the contracts with Network Rail, Deutsche Bahn and SBB are 63%, 46% and 90% complete, respectively, based on costs incurred.

The Company provides assurance type warranties primarily for product sales at Rail. These warranties are typically not priced or negotiated separately (there is no option to separately purchase the warranty) or the warranty does not provide customers with a service in addition to the assurance that the product complies with agreed-upon specifications. Accordingly, such warranties do not represent separate performance obligations.

17. Other Expense (Income), Net

The major components of this Condensed Consolidated Statements of Operations caption were as follows:


	Three Months Ended				Nine Months Ended
	September 30				September 30
(In thousands)	2024		2023		2024		2023

Employee termination benefit costs	$	1,316	$	1,210	$	5,926	$	1,377

ENVIRI Corp 10-Q