Enviri Corporation · NYSE:NVRI
Enviri — Harsco — Jefferies 2013 Global Industrials Conference
31 slides from Enviri's conference presentation, Aug 14, 2013
Slide 1: Jefferies 2013 Global Industrials Conference
Jefferies 2013 Global Industrials Conference August 14, 2013 Patrick Decker, President and CEO Exhibit 99.1
Slide 2: Administrative Items: Safe Harbor
Administrative Items Safe Harbor This presentation contains forward-looking statements based on management’s current expectations, estimates and projections. All statements that address expectations or projections about the future, including statements about the Company’s strategy for growth, produc
Slide 3: Harsco at a Glance
Harsco at a Glance Multi-industry exposure through four market-leading segments Revenue: $1,404M Global Market Leader 2012 Total Revenues of $3,046M 18,500 Employees Across 50 Countries Revenue: $937M Global Market Leader Revenue: $352M Global Leader in Track Maintenance Revenue: $353M Leader in air
Slide 4: Historical Harsco Performance
Historical Harsco Performance Performance reflects weakness in end markets and need for better execution *Adjusted diluted earnings per share from continuing operations, free cash flow and adjusted return on invested capital are non-GAAP measures. See the Appendix for a reconciliation to GAAP result
Slide 5: New CFO Nick Grasberger
Title Joined Experience Most Recent Previous O d finance ontro Prod bb fe) e/Op Role Nick Grasberger SVP and CFO April 2013 25 years finance and operations Fenner, ple MD Precision Polymers Division Armstrong World Industries CEO Building Products CFO Armstrong Holdings CFO Kennametal H.J. Heinz Var
Slide 6: CEO Perspective
CEO Perspective 2Q 2013 EPS of $0.30 in guidance range Dissatisfaction with Cash flow performance in 1H 2013 Near-term outlook Metals & Minerals (M&M) performance in 2Q 2013 Pace of progress to improve results End markets are very challenging Need for better execution
Slide 7: Improvement Actions
Improvement Actions Operational Process Challenged portfolio Go-forward portfolio profile Sustainable competitive advantage Position for long-term growth Deliver strong free cash flow through business cycles Have attractive ROIC profiles Reduce Company’s exposure over time to highly cyclical and cor
Slide 8: Metals & Minerals at a Glance
Metals & Minerals at a Glance Harsco Profile Revenues and Adjusted OI Margin* Market Drivers *Adjusted operating margin is a non-GAAP measure. See the Appendix for a reconciliation to GAAP results. . World’s largest provider of on-site, outsourced services to the metals industries Provide environmen
Slide 9: Climbing the Value Chain Drives Improved Growth Profile and Returns
Climbing the Value Chain Drives Improved Growth Profile and Returns ENVIRON SVCS/ BY-PRODUCTS RESOURCE RECOVERY LOGISTICS Summary of Major Contract Wins Customer Market Primary Field of Play* Term (Years) Estimated Value LOW HIGH LOW HIGH Essar India RR $160M Jindal Group India RR 10+ $325 M TISCO C
Slide 10: Metals & Minerals Strengths
Metals & Minerals Strengths Global steel industry remains challenged, particularly in developed markets Capital intensive business largely dependent on customer production volumes for attractive returns Need to continue wins in emerging markets accelerate our CI journey lower capital intensity bring
Slide 11: Infrastructure at a Glance
Infrastructure at a Glance Harsco Profile 2012 Revenues by Geography Revenues and Adjusted OI Margin* Market Driver: Global Construction Spending Source: IHS Global Insight, 1Q 2013 ($ in trillions) *Adjusted operating margin is a non-GAAP measure. See the Appendix for a reconciliation to GAAP resul
Slide 12: Infrastructure Focus Areas
Infrastructure Focus Areas Global project management to drive top line growth More efficient yard management for improved operational efficiency and better customer service Common engineering standards to leverage innovation and lower capital intensity
Slide 13: Competitive Landscape Construction Services
Competitive Landscape Construction Services Services Provided Formwork Shoring Non-Mechanical Access Masts & Suspended Access Platforms Roofing & Shelters Site & Safety Training Services Leveraging service and geographic portfolio to capture larger share of customer projects _____________________ No
Slide 14: Infrastructure Strengths
Infrastructure Strengths Commercial construction recovery slower than expected Concentration in Europe Need to drive top-line growth through larger project wins improve execution capability in attractive markets build CI discipline, particularly in yard management Reputation for quality and safety B
Slide 15: Rail at a Glance
Rail at a Glance Harsco Profile Products and Services 2012 Revenues by Market Destination Western Europe 11% North America 40% Rest of the World 49% Growth -4% 17% -14% Growth ex MOR 12% 7% 2% *Adjusted operating margin is a non-GAAP measure. See the Appendix for a reconciliation to GAAP results. .
Slide 16: Expanding the Global Base
Expanding the Global Base China • 8 metro grinders in 2 years • Aftermarket growth • Private operator market growing • Technical service contracting Japan • Rail grinder win • Surfacing product expansion • Grinder replacement Brazil & Peru • Surfacing product win • Grinding product growth UK / Europ
Slide 17: Rail Strengths
Rail Strengths Completion of large multi- year China order – difficult near-term financial comparisons Relatively niche business; assessing growth opportunities in both core and adjacent markets Well positioned in an attractive end market Expanding global presence in high growth markets Growing afte
Slide 18: Industrial at a Glance
Industrial at a Glance Harsco Profile 2012 Revenues by Market North America 90% Rest of the World 10% Revenues and OI Margin Market Driver A market leader in energy-efficient air-cooled heat exchangers, heat transfer systems, and industrial grating products Significant growth potential through globa
Slide 19: Industrial Products
Industrial Products Air-cooled heat exchangers for natural gas compression and pipeline distribution Energy efficient heat transfer systems for heating and hot water service in large commercial and institutional buildings Steel grating for industrial and commercial flooring and safety walkways
Slide 20: Industrial Strengths
Industrial Strengths Three niche businesses; current scale is limited Need to expand into overseas energy markets accelerate bringing new product offerings to market assess opportunities to grow core and adjacent markets Well positioned in attractive industries Growing aftermarket business Strong tr
Slide 21: Overall Focus Areas to Improve Returns
Overall Focus Areas to Improve Returns Focus. Align. Execute. Build a robust CI culture Lower the capital intensity of the business Grow the businesses via market expansion & innovation Upgrade leadership talent and depth Simplify and streamline operational processes Improve the portfolio mix
Slide 22: Build Robust CI Culture
Build Robust CI Culture Lean/Kaizen Activities Employees Engaged in CI Events Reaffirmed CI as core principle Re-launched CI in Infrastructure and M&M Expanded CI into all corporate functions Launched Lean Six Sigma Staff CI leadership roles Advance CI maturity across all businesses Expand Green and
Slide 23: Lower the Capital Intensity
Lower the Capital Intensity Total Capex as % Total Harsco Revenues Continue disciplined approval and capital allocation process Deploy global asset management in Metals Invest to grow Rail and Industrial Capital Expenditures ($ in millions) 12.0% 11.5% 5.5% 6.3% 9.5% 8.7%
Slide 24: Grow Top Line via Market Expansion and Innovation
Grow Top Line via Market Expansion and Innovation Compass telematics in Rail New resource recovery and environmental services in Metals Platinum forming product in Infrastructure Healthy backlog of new product development in Industrial Shift of steel production to emerging markets Strong track recor
Slide 25: Portfolio Assessment Attributes
Portfolio Assessment Attributes Long-term attractiveness of the end markets served Quality of value proposition for each business Degree of competitive strength and differentiation Long-term growth and financial return profile Execution capability
Slide 26: Key Takeaways
Key Takeaways Opportunity for significant value creation New executive team focused on improving financial returns of the company Early stage deployment of CI Shifting service and product mix to higher value offerings Expanding presence in key growth markets Taking actions to Simplify operational pr
Slide 27: Appendix
Jefferies 2013 Global Industrials Conference August 14, 2013 Appendix
Slide 28: Non-GAAP Reconciliation
Non-GAAP Reconciliation Adjusted Diluted Earnings per Share from Continuing Operations (a) GAAP diluted EPS from continuing operations 3.01 $ 2.92 $ 1.66 $ 0.14 $ (0.12) $ (3.15) $ Special items: - Goodwill impairment charge - Harsco Infrastructure (b) - - - - - 3.29 - Restructuring charges (c) - -
Slide 29: Non-GAAP Reconciliation
Non-GAAP Reconciliation Free Cash Flow (a) ($ in millions) Net cash provided by operating activities $ $ $ $ $ $ Plus cash payments for restructuring charges - - - Less maintenance capital expenditures (b) (197) (210) (78) (108) (178) (138) Less growth capital expenditures (c) (247) (248) (87) (84)
Slide 30: Non-GAAP Reconciliation
Non-GAAP Reconciliation Adjusted Return on Invested Capital (a) (in thousands) Net income (loss), as reported 299,492 $ 240,945 $ 118,777 $ 6,754 $ (11,510) $ (254,612) $ Special items: - Goodwill impairment charge - Harsco Infrastructure - - - - - 265,038 - Restructuring charges (b) - - - 84,440 10
Slide 31: Adjusted Operating Income Margin
Adjusted Operating Income Margin (a) ‘Year Ended December 31 2070 2011 2012 ‘Harsco Metals & Minerals Operating income, as reported Special items: = Restructuring charges (b) "Charges to exit Harsco Metals & Minerals contract (c) © Gains on pension curtailment Operating income excluding special tems
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