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What changed in ENVIRI Corp's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of ENVIRI Corp's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+304 added−294 removedSource: 10-K (2024-02-29) vs 10-K (2023-03-01)

Top changes in ENVIRI Corp's 2023 10-K

304 paragraphs added · 294 removed · 254 edited across 5 sections

Item 1. Business

Business — how the company describes what it does

61 edited+7 added−12 removed36 unchanged
Biggest changeThe Company’s global headquarters and executive offices are located at Two Logan Square, 100-120 North 18th Street, 17th Floor in Philadelphia, PA, and its main telephone number is 267-857-8715. 8 The Company’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to such reports filed with or furnished to the SEC under Sections 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, are available on the Company’s website under "Financial Information" at investors.harsco.com as soon as reasonably practicable after such reports are electronically filed with the SEC.
Biggest changeThe Company’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to such reports filed with or furnished to the SEC under Sections 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, are available as soon as reasonably practicable after such reports are electronically filed with the SEC on the Company’s website, under the "Financial Information" subheading under the "Investors" section.
The Company is responding to this need by helping our customers build better businesses and, in a larger sense, a better environment. Our go-forward strategy is clear: to continue building a leading, global environmental solutions company. SEGMENT INFORMATION The Company’s current operations consist of two reportable business segments: Harsco Environmental and Harsco Clean Earth.
The Company is responding to this need by helping our customers build better businesses and, in a larger sense, a better environment. Our go-forward strategy is clear: to continue building a leading, global environmental solutions company. SEGMENT INFORMATION The Company’s current operations consist of two reportable business segments: Harsco Environmental and Clean Earth.
Until the fourth quarter of 2021, the Company reported the Harsco Rail Segment. The Company previously announced its plan to sell the Harsco Rail business and the sale process is ongoing. Historical results for Harsco Rail are accounted for as discontinued operations.
Until the fourth quarter of 2021, the Company reported the Harsco Rail segment. The Company previously announced its plan to sell the Rail business and the sale process is ongoing. Historical results for Rail are accounted for as discontinued operations.
In recent years, HE has greatly extended its reach, signing new services contracts in bellwether emerging markets like India, and further strengthening our footprint in the Americas and Europe. As a result, our global portfolio is balanced and diversified, with foreign currency risk partially mitigated by the fact that our operating costs and revenues are regularly denominated in local currencies.
In recent years, HE has extended its reach, signing new services contracts in bellwether emerging markets like India, and further strengthening our footprint in the Americas and Europe. As a result, our global portfolio is balanced and diversified, with foreign currency risk partially mitigated by the fact that our operating costs and revenues are regularly denominated in local currencies.
GROWTH Favorable underlying market dynamics, driven by increased regulation and a growing list of contaminants and hazardous materials, and investment are anticipated to fuel CE’s growth in the coming years. We also anticipate introducing newer technologies into the market with new treatment solutions and expansion of existing technologies, including permit modifications and applications in new geographic markets.
GROWTH STRATEGY Favorable underlying market dynamics, driven by increased regulation and a growing list of contaminants and hazardous materials, and investment are anticipated to fuel CE’s growth in the coming years. We also anticipate introducing newer technologies into the market with new treatment solutions and expansion of existing technologies, including permit modifications and applications in new geographic markets.
We strive to reduce or eliminate our global environmental impacts by providing the highest-quality environmental management in our operations and improving our environmental footprint through continuous improvement efforts. Our Corporate Environmental Policy outlines our environmental stewardship commitments. We also expect all third parties that do business with the Company to share our environmental standards. • Safe Workplaces .
We strive to reduce or eliminate our global environmental impacts by providing the highest-quality environmental management in our operations and improving our environmental footprint through continuous improvement efforts. Our Corporate Environmental Policy outlines our environmental stewardship commitments. We also expect all third parties that do business with the Company to share our environmental standards. 5 • Safe Workplaces .
Item 1. Business. OUR COMPANY - OUR VISION Harsco Corporation is a market-leading, global provider of environmental solutions for industrial and specialty waste streams. Our two reportable business segments are Harsco Environmental and Harsco Clean Earth and we are a single-thesis environmental solutions company that is a leader in the markets we serve.
Item 1. Business. OUR COMPANY - OUR VISION Enviri Corporation is a market-leading, global provider of environmental solutions for industrial and specialty waste streams. Our two reportable business segments are Harsco Environmental and Clean Earth and we are a single-thesis environmental solutions company that is a leader in the markets we serve.
These products are formulated to address nutrient deficiencies and toxicity issues in soil as well as to help plants withstand outside pressures and disease. 3 Cement Additives Steel slag is naturally cementitious and commonly blended with other materials to produce environmentally-friendly, high-performing cement products.
These products are formulated to address nutrient deficiencies and toxicity issues in soil as well as to help plants withstand outside pressures and disease. • Cement Additives - Steel slag is naturally cementitious and commonly blended with other materials to produce environmentally-friendly, high-performing cement products.
As a result, demand for CE services tends to be weakest in the first and fourth quarters of each year. Due to these factors, the Company’s revenues and earnings are usually higher during the second and third quarters of each year relative to the first and fourth quarter of the year.
As a result, demand for CE services tends to be weakest in the first and fourth quarters of each year. Due to these factors, the Company’s revenues and earnings are usually higher during the second and third quarters of each year relative to the first and fourth quarters of the year.
As a result, we see CE as a platform for growth as we continue to expand our focus as an environmental solutions company. 4 CUSTOMERS CE provides regulatory-compliant solutions with a high quality of customer service to a diverse set of customers.
As a result, we see CE as a platform for growth as we continue to expand our focus as an environmental solutions company. CUSTOMERS CE provides regulatory-compliant solutions with a high quality of customer service to a diverse set of customers.
A summary of our key growth initiatives is as follows: • Further Penetrate Existing Sites . Given our broad services capabilities, we see potential for add-on services contracts at existing sites. • New Sites.
A summary of our key growth initiatives is as follows: • Further Penetrate Existing Sites . Given our broad services capabilities, we see potential for add-on services contracts at existing sites. 3 • New Sites.
Our ecoproducts TM portfolio includes road and roofing materials, abrasives, agriculture products and aggregates. This expertise is increasingly important to our customers as environmental regulations increase and the marketplace grows more averse to landfilling waste. CUSTOMERS AND SERVICE CONTRACTS We offer our customers a suite of more than 30 services, and our on-site work is performed under long-term contracts.
Our ecoproducts TM portfolio includes road and roofing materials, abrasives, agriculture products and aggregates. This expertise is important to our customers as environmental regulations increase and the marketplace grows more averse to landfilling waste. CUSTOMERS AND SERVICE CONTRACTS We offer our customers a suite of more than 30 services, and our on-site work is largely performed under long-term contracts.
The Company’s slag-based asphalt product, developed and sold as SteelPhalt™, maintains positive surface characteristics throughout the life of the road, allowing longer replacement intervals and lower maintenance costs. In 2022, SteelPhalt™ launched a carbon-negative asphalt product, using a renewable bio-based substance to bind the asphalt. This is an alternative to bitumen and reduces the product's carbon footprint.
The Company’s slag-based asphalt product, developed and sold as SteelPhalt™, maintains positive surface characteristics throughout the life of the road, allowing longer replacement intervals and lower maintenance costs. In 2023, SteelPhalt™ launched a carbon-negative asphalt product, using a renewable bio-based substance to bind the asphalt. This is an alternative to bitumen and reduces the product's carbon footprint.
This initiative includes developing new customer or industry solutions, either in-house or externally, and expanding the usage of technologies that already exist within our business. COMPETITORS HE competes principally with a small number of privately-held businesses for services outsourced by customers on a global basis.
This initiative includes developing new customer or industry solutions, either in-house or externally, and expanding the usage of technologies that already exist within our business. COMPETITION HE competes principally with a small number of privately-held businesses for services outsourced by customers on a global basis.
Ecoproducts in 2022 represented approximately 14% of HE’s revenues, and our major ecoproducts include the following: Road Surfacing and Materials Because of its natural shape and interlocking properties, steel slag holds many advantages when used in asphalt roadway surfaces, ranging from high skid resistance to better durability.
Ecoproducts in 2023 represented approximately 14% of HE’s revenues, and our major ecoproducts include the following: • Road Surfacing and Materials - Because of its natural shape and interlocking properties, steel slag holds many advantages when used in asphalt roadway surfaces, ranging from high skid resistance to better durability.
The purchases of Clean Earth and ESOL, along with the sale of our energy-linked business in 2019 and our plan to sell our Rail business, have been significant strategic steps for our Company. As a result, 100% of our revenues from continuing operations in 2022 and 2021 were generated from our two environmentally-focused segments.
The purchases of Clean Earth and ESOL, along with the sale of our energy-linked business in 2019 and our plan to sell our Rail business, have been significant strategic steps for our Company. As a result, 100% of our revenues from continuing operations in 2021 through 2023 were generated from our two environmentally-focused segments.
It also is important to note that these transactions have reduced the Company’s portfolio complexity and business cyclicality. More broadly, we are committed to viewing every customer need through a sustainability lens. Our customers are increasingly expecting more customizable solutions that address environmental challenges within their industries.
It also is important to note that these transactions have reduced the Company’s portfolio complexity and business cyclicality. More broadly, we are committed to viewing every customer need through a sustainability lens. Our customers expect customizable solutions that address environmental challenges within their industries.
Additionally, the SEC maintains a website that contains reports, proxy and other information regarding issuers that electronically file with the SEC at www.sec.gov. AVAILABLE INFORMATION Our website address is www.harsco.com.
Additionally, the SEC maintains a website that contains reports, proxy and other information regarding issuers that electronically file with the SEC at www.sec.gov. AVAILABLE INFORMATION Our website address is www.enviri.com.
To attract and retain talent, we strive to create a diverse, inclusive and supportive workplace while providing opportunities for our employees to grow and develop in their careers. 7 Corporate Values Across cultures, time zones and organizational lines, our values are the link that connects us all.
To attract and retain talent, we strive to create a diverse, inclusive and supportive workplace while providing opportunities for our employees to grow and develop in their careers. Core Values Across cultures, time zones and organizational lines, our values are the link that connects us all.
HARSCO BUSINESS SYSTEM ("HBS") Our HBS is a shared set of processes that reflect and support our corporate strategy. These repeatable and replicable standards and practices are the hallmark of a high-performing company. There is intrinsic value in a common language, and a defined business system does away, in large part, with ambiguity about what constitutes success.
ENVIRI BUSINESS SYSTEM ("EBS") Our EBS is a shared set of processes that reflect and support our corporate strategy. These repeatable and replicable standards and practices are the hallmark of a high-performing company. There is intrinsic value in a common language, and a defined business system does away, in large part, with ambiguity about what constitutes success.
This report, published in October 2022, is our most comprehensive sustainability report to date and can be found on the Company’s website (www.harsco.com/sustainability) along with other related policies. Unless specifically stated herein, documents and information on the Company's website are not incorporated by reference into this document.
This report, published in October 2023, is our most comprehensive sustainability report to date and can be found on the Company’s website (www.enviri.com/sustainability) along with other related policies. Unless specifically stated herein, documents and information on the Company's website are not incorporated by reference into this document.
In total, these services reduce both landfill waste and the carbon footprint of our customers’ sites. In 2022, on-site services represented approximately 85% of HE’s revenues. A summary of our most significant services is as follows: Resource Recovery, Metal Recycling and Slag Optimization Resource recovery, metal recycling and slag optimization is the core component of our service offerings.
In total, these services reduce both landfill waste and the carbon footprint of our customers’ sites. In 2023, on-site services represented approximately 83% of HE’s revenues. A summary of our most significant services is as follows: Resource Recovery, Metal Recycling and Slag Optimization Resource recovery, metal recycling and slag optimization is the core component of our service offerings.
Under RCRA, each hazardous waste processing facility must maintain a RCRA permit and comply with defined operating practices. This legislation is administered by the U.S. Environmental Protection Agency ("EPA"), although its authority may be delegated to a State EPA with similar or more stringent environmental standards.
Under RCRA, each hazardous waste processing facility must maintain a RCRA permit and comply with defined operating practices. This legislation is administered by the EPA, although its authority may be delegated to a State EPA with similar or more stringent environmental standards.
Estimated future revenues are exclusive of anticipated contract renewals, projected volume increases and ad-hoc services, as well as future revenues from roofing granules, abrasives products, roadmaking materials, additives and specialty recovery technology services. 2 ON-SITE SERVICES HE provides a broad range of services, most of which address our customers’ environmental challenges.
Estimated future revenues are exclusive of anticipated contract renewals, projected volume increases and ad-hoc services, as well as future revenues from roofing granules, abrasives products, roadmaking materials, additives and specialty recovery technology services. LINES OF BUSINESS HE provides a broad range of services, most of which address our customers’ environmental challenges.
CE currently operates 18 RCRA Part B permitted TSDFs, wastewater treatment facilities and supporting 10-day transfer facilities across the U.S., serving more than 90,000 customer locations, while utilizing a fleet of over 700 vehicles. It also holds a portfolio of more than 500 critically-important permits, and the waste handled by CE is recycled or beneficially reused.
CE currently operates 18 RCRA Part B permitted TSDFs, wastewater treatment facilities and supporting 10-day transfer facilities across the U.S., serving approximately 90,000 customer locations, while utilizing a fleet of over 700 vehicles. It also holds a portfolio of approximately 600 critically-important permits, and the majority of waste handled by CE is recycled or beneficially reused.
Our contract renewal rates are high, with many customer relationships that span decades. Our largest customers today include ArcelorMittal, Gerdau, Tata Steel Group, Tisco, and Hebei Iron and Steel Company. We serve most of our major customers at multiple sites, often under multiple contracts. The length of our customer relationships reflects our value proposition.
Our contract renewal rates are high, with many customer relationships that span decades. Our largest customers today include ArcelorMittal, Gerdau, Tata Steel Group, Taiyuan Iron & Steel and Ternium. We serve most of our major customers at multiple sites, often under multiple contracts. The length of our customer relationships reflects our value proposition.
The solutions include soil remediation and recycling including thermal desorption, dredged material stabilization and beneficial reuse, hazardous and non-hazardous waste stabilization and solidification, fuel blending, management and recycling, battery and electronic waste recycling, and secure electronic data destruction. Additionally, CE holds a portfolio of more than 500 process, treatment and operating permits, including the ones mentioned above.
The solutions include soil remediation and recycling including thermal desorption, dredged material stabilization and beneficial reuse, hazardous and non-hazardous waste stabilization and solidification, fuel blending, management and recycling, battery and electronic waste recycling, and secure electronic data destruction. Additionally, CE holds a portfolio of approximately 600 process, treatment and operating permits, including the ones mentioned above.
The elements of our HBS are: Environmental, Health & Safety; Continuous Improvement; Talent Development; Strategic Planning; and Acquisitions & Divestitures . ACQUISITIONS AND DIVESTITURES Given the Company’s evolution to a single-thesis environmental solutions company, acquisitions and divestitures have been an important element of our business strategy. These actions support the Company’s growth ambitions, while reducing business cyclicality and portfolio complexity.
The elements of our EBS are: Safety, Continuous Improvement and Talent Development. ACQUISITIONS AND DIVESTITURES Given the Company’s evolution to a single-thesis environmental solutions company, acquisitions and divestitures have been an important element of our business strategy. These actions support the Company’s growth ambitions, while reducing business cyclicality and portfolio complexity.
The information posted on the Company’s website is not incorporated into the Company’s SEC filings. 9
The information posted on the Company’s website is not incorporated into the Company’s SEC filings. 8
HUMAN CAPITAL RESOURCES As of December 31, 2022, we had more than 12,000 employees, excluding contingent workers, in 35 countries. The majority of these employees are represented by labor unions, through almost 100 collective bargaining agreements. Our business relies on our ability to attract and retain talented employees.
HUMAN CAPITAL RESOURCES As of December 31, 2023, we had almost 13,000 employees, excluding contingent workers, in over 30 countries. The majority of these employees are represented by labor unions, through almost 100 collective bargaining agreements. Our business relies on our ability to attract and retain talented employees.
Copies of our key Corporate governance documents, such as our Code of Business Conduct, as well as our Board's composition and structure can be viewed on our website under the “Corporate Governance” subheading of the “Our Company” page. Additionally, further information on our Corporate Sustainability initiatives also can be accessed through the “Our Company” page.
Copies of our key Corporate governance documents, such as our Code of Conduct, as well as our Board's composition and structure, can be viewed on our website under the “Corporate Governance” subheading of the “About” section. Additionally, further information on our Corporate Sustainability initiatives also can be accessed through the “Sustainability” subheading of the "About" section on our website.
The remaining facilities handle a limited number of other wastes, including electronics, batteries and light bulbs. These operations possess unique and differentiated processing technologies, such as applications for aerosol can, medical waste recycling, fuel blending, household hazardous waste and lead contaminated soils. In 2022, this line of business represented approximately 82% of CE’s revenues.
The remaining facilities handle a limited number of other wastes, including electronics, batteries and light bulbs. These operations possess unique and differentiated processing technologies, such as applications for aerosol can, medical waste recycling, fuel blending, household hazardous waste and lead contaminated soils.
These customers include waste generators in numerous industries, including chemicals, power, aerospace, medical, retail and metals, as well as integrated waste companies and brokers. CE also services federal, state and local governments as well as developers linked to large infrastructure and redevelopment projects. CE had one customer in 2022 and 2021 that provided more than 10% of this segment's revenues.
These customers include waste generators in numerous industries, including chemicals, power, aerospace, medical, retail and metals, as well as integrated waste companies and brokers. CE also services federal, state and local governments, as well as developers linked to large infrastructure and redevelopment projects.
HARSCO CLEAN EARTH BUSINESS OVERVIEW Our Harsco Clean Earth segment provides specialty waste processing, treatment, recycling, and beneficial reuse solutions for customers in the industrial, retail, healthcare, and construction industries across a variety of waste needs, including hazardous, non-hazardous, and contaminated soils and dredged materials.
Our safety practices and performance also support our business, as do our long-standing relationships and our downstream product solutions. CLEAN EARTH BUSINESS OVERVIEW CE provides specialty waste processing, treatment, recycling, and beneficial reuse solutions for customers in the industrial, retail, healthcare, and construction industries across a variety of waste needs, including hazardous, non-hazardous, and contaminated soils and dredged materials.
Where others only saw waste and expense, we saw opportunity and value nearly 100 years ago. HE was founded upon market insights, grounded in respect for the environment, efficient use of resources, and optimism for the future. Today, HE is a premier, global provider of environmental services and material processing to the global steel and metals industries.
HE was founded upon market insights, grounded in respect for the environment, efficient use of resources, and optimism for the future. 1 Today, HE is a premier, global provider of environmental services and material processing to the global steel and metals industries.
We capture liquid steel waste or byproduct (slag) and transport it for cooling, treatment and conditioning. We then recover valuable metal from the waste-stream, which is returned to our customer in a form suitable for recycling through the customers’ manufacturing process. Finally, the residual non-metallic processed material is transformed into environmental products that create new and additional revenue streams.
We capture liquid steel waste or byproduct (slag) and transport it for cooling, treatment and conditioning. We then recover valuable metal from the waste-stream, which is returned to our customer in a form suitable for recycling through the customers’ manufacturing process.
Soil and Dredged Materials CE processes approximately 3.2 million tons per year of contaminated soil and 0.4 million cubic yards of dredged material at sixteen locations, which includes fixed-based locations and mobile plants.
In 2023, this line of business represented approximately 83% of CE’s revenues. 4 Soil and Dredged Materials CE processes approximately 3.4 million tons per year of contaminated soil and 0.3 million cubic yards of dredged material at seventeen locations, which includes fixed-based locations and mobile plants.
Diversity, Equity, Engagement and Inclusion Diversity, equity, engagement, and inclusion (“DEE&I”) is an integral part of the Company’s values and processes that support recruitment, hiring, training, retention and advancement.
This program is an integral part of the Company’s values and processes that support recruitment, hiring, training, retention and advancement.
The Company’s cash flow from operations has historically been higher in the second half of the year, compared with the first half, due to working capital management, receivable collections during the fourth quarter as a result of higher revenues in preceding quarters and the timing of certain cash payments in the first half of the year, including for incentive compensation and pension contributions.
The Company’s cash flow from operations has historically been higher in the second half of the year, compared with the first half, due to working capital management, receivable collections during the fourth quarter as a result of higher revenues in preceding quarters and the timing of certain cash payments in the first half of the year, including for incentive compensation and pension contributions. 6 ENVIRONMENTAL COMPLIANCE The Company is subject to various environmental regulations within its global operations, and the scope of relevant environmental regulation expanded following the Company’s acquisitions of Clean Earth and ESOL in 2019 and 2020, respectively.
In April 2020, the Company acquired ESOL, an established waste transportation, processing and services provider with a comprehensive portfolio of disposal solutions for customers across industrial, retail and healthcare markets. The acquisition of ESOL furthered our transformation into a market-leading, single-thesis environmental solutions platform.
In June 2019, the Company acquired Clean Earth which provided the Company entry into the specialty waste market. In April 2020, the Company acquired ESOL, an established waste transportation, processing and services provider with a comprehensive portfolio of disposal solutions for customers across industrial, retail and healthcare markets.
Clean Earth and ESOL combined to form Harsco Clean Earth. 6 SEASONALITY The Company's businesses can be subject to seasonal fluctuations. Demand for services and solutions provided by HE are subject to seasonal changes related to weather conditions, inventory management through the steel-industry supply chain, and customer operating outages.
The acquisition of ESOL furthered our transformation into a market-leading, single-thesis environmental solutions platform with its combination with Clean Earth. SEASONALITY The Company's businesses can be subject to seasonal fluctuations. Demand for services and solutions provided by HE are subject to seasonal changes related to weather conditions, inventory management through the steel-industry supply chain, and customer operating outages.
Approximately 20% of these revenues are expected to be recognized by December 31, 2023; approximately 41% of these revenues are expected to be recognized between January 1, 2024 and December 31, 2026; approximately 21% of these revenues are expected to be recognized between January 1, 2027 and December 31, 2029; and the remaining revenues are expected to be recognized thereafter.
Approximately 23% of these revenues are expected to be recognized by December 31, 2024; approximately 43% of these revenues are expected to be recognized between January 1, 2025 and December 31, 2027; approximately 19% of these revenues are expected to be recognized between January 1, 2028 and December 31, 2030; and the remaining revenues are expected to be recognized thereafter.
The Company is in the process of selling the Rail business with a sale expected to occur in 2023. The intention to sell the business was first announced in the fourth quarter of 2021. The sales process was delayed in 2022 due to certain macroeconomic conditions, including rising interest rates.
The Company is in the process of selling the Rail business. The intention to sell the business was first announced in the fourth quarter of 2021. The sales process was delayed due to certain macroeconomic conditions, including rising interest rates. Rail is classified as held for sale and reported as discontinued operations for all years presented.
Metallurgical Additives The Company’s custom-designed steelmaking additives facilitate fluid slag formation in the steelmaking process, thus improving customer productivity and helping achieve the steel product specifications required for today’s premium applications. Agriculture and Turf Products We produce soil conditioners and fertilizers, principally from stainless steel slag that optimize crop yields and turf performance.
Our BLACK BEAUTY ® and SURE/CUT™ abrasives are well-recognized within the industry and are used as blast material to remove paint, rust, and other coatings from surfaces, prior to applying a new finish. • Metallurgical Additives - The Company’s custom-designed steelmaking additives facilitate fluid slag formation in the steelmaking process, thus improving customer productivity and helping achieve the steel product specifications required for today’s premium applications. • Agriculture and Turf Products - We produce soil conditioners and fertilizers, principally from stainless steel slag that optimize crop yields and turf performance.
In an effort to advance the Company’s commitment to DEE&I, the Company has taken the following initiatives: • A DEE&I Council was previously established, which is co-chaired by our CEO and Senior Vice President & Chief Human Resources Officer and is comprised of 10 cross-functional leaders from each of our business units.
In an effort to advance the Company's commitment to these values, the following initiatives were taken: • Our global Belonging and Inclusion Council, co-chaired by our CEO and Senior Vice President & Chief Human Resources Officer, expanded to include 16 cross-functional leaders from each of our business units.
These soils are contaminated with heavy metals, PCBs, pesticides, PFAS or other chemicals, and the related clean-up work is often the result of infrastructure improvements, private redevelopment, industrial site remediation and/or underground storage tank removal. CE treats and recycles this soil through various processes, after which the material is suitable for beneficial reuse as construction fill material or landfill capping.
These soils are contaminated with heavy metals, polychlorinated biphenyls (" PCBs"), pesticides, PFAS or other chemicals, and the related clean-up work is often the result of infrastructure improvements, private redevelopment, industrial site remediation and/or underground storage tank removal.
The Company also sells a slag aggregate that is a sustainable and cost-effective alternative to natural stone. This aggregate is often used as unbound road base material for secondary roads and sub-base material elsewhere. Abrasives and Roofing Materials Our Reed Minerals business is among the largest roofing granule suppliers in the U.S., partnering with the country's leading shingle manufacturers.
This aggregate is often used as unbound road base material for secondary roads and sub-base material elsewhere. • Abrasives and Roofing Materials - Our Reed Minerals business is among the largest roofing granule suppliers in the U.S., partnering with the country's leading shingle manufacturers. Nearly 100 years ago, we pioneered a process of recycling coal combustion waste from power plants.
Our experience in manufacturing these products and successfully penetrating relevant end-markets is an important differentiator for the Company. These zero-waste solutions preserve our natural resources and reduce or eliminate landfill disposal.
These services include under-vessel cleaning and the removal of ladle slag (waste) and general melt shop debris. Ecoproducts ™ HE creates value-added downstream products from industrial waste-streams. Our experience in manufacturing these products and successfully penetrating relevant end-markets is an important differentiator for the Company. These zero-waste solutions preserve our natural resources and reduce or eliminate landfill disposal.
Financial information concerning segments and international and domestic operations is included in Note 16, Information by Segment and Geographic Area , in Part II, Item 8, Financial Statements and Supplementary Data.
Financial information concerning segments and international and domestic operations is included in Note 16, Information by Segment and Geographic Area , in Part II, Item 8, Financial Statements and Supplementary Data. Our revenues by business segment are as follows, and a further description of the products and services offered through these business segments is presented below.
In addition to salaries, these programs, which vary by employee level and by the country where the employees are located, may include, among other items, bonuses, stock awards, retirement programs, health savings and flexible spending accounts, paid-time off, paid parental leave, disability programs, flexible work schedules and employee assistance programs.
In addition to salaries, these programs, which vary by employee level and by the country where the employees are located, may include, among other items, bonuses, stock awards, retirement programs, health savings and flexible spending accounts, paid-time off, paid parental leave, disability programs, flexible work schedules and employee assistance programs. 7 Belonging Program In 2023, as part of the Company's rebranding initiatives with the Company's corporate name change to Enviri Corporation, we also implemented our Belonging Program globally, which demonstrates our organization-wide commitment to fostering a diverse, collaborative and inclusive workplace.
Reed is also one of the largest U.S. manufacturers of abrasives, using coal, as well as copper and nickel slag, and crushed glass, for the surface preparation market.
Through the Company's proprietary process, we create premium quality roofing granules that are a critical raw material in asphalt roofing shingles. Reed is also one of the largest U.S. manufacturers of abrasives, using coal, as well as copper and nickel slag, and crushed glass, for the surface preparation market.
Talent Development and Succession We believe our development processes ensure continuity of leadership over the long term. Thus, annually we undertake a talent review process to access the organizational capabilities required to execute our strategy, create tailored development plans and understand the depth of our succession preparedness.
Thus, annually we undertake a talent review process to access the organizational capabilities required to execute our strategy, create tailored development plans and understand the depth of our succession preparedness. Our objective is to build the readiness of various talent pools within the organization in order to select and promote key talent.
OPERATIONS AND PERMITS CE provides a suite of regulation-compliant treatment solutions for hazardous and non-hazardous wastes that can be tailored to meet customer-specific requirements.
After treatment, these materials are also beneficially reused as fill material. In 2023, this line of business represented approximately 17% of CE’s revenues. OPERATIONS AND PERMITS CE provides a suite of regulation-compliant treatment solutions for hazardous and non-hazardous wastes that can be tailored to meet customer-specific requirements.
Scrap Management We manage customer scrap inventories and upgrade scrap by making it cleaner and denser. Improved scrap characteristics reduce electricity usage which, combined with the usage of recycled material, provides sustainability benefits to our customers. Materials Handling and Logistics We transport materials, including semi-finished and finished products, safely and efficiently for our customers.
Finally, the residual non-metallic processed material is transformed into environmental products that create new and additional revenue streams. 2 Scrap Management We manage customer scrap inventories and upgrade scrap by making it cleaner and denser. Improved scrap characteristics reduce electricity usage which, combined with the usage of recycled material, provides sustainability benefits to our customers.
HE had one customer in each of the past three years that provided more than 10% of this segment's revenues, again under many long-term contracts at multiple sites.
HE had one customer in each of the past three years that provided more than 10% of this segment's revenues, again under many long-term contracts at multiple sites. On December 31, 2023, the Company's service contracts had estimated future revenues of $3.1 billion at current production levels, which is consistent with 2022 after excluding the impacts of foreign currency translation.
CE also operates one facility to treat dredged material, the sediment accumulated at the bottom of waterways that is removed for environmental (clean-up) or maintenance (maintain depth) purposes. After treatment, these materials are also beneficially reused as fill material. In 2022, this line of business represented approximately 18% of CE’s revenues.
CE treats and recycles this soil through various processes, after which the material is suitable for beneficial reuse as construction fill material or landfill capping. CE also operates one facility to treat dredged material, the sediment accumulated at the bottom of waterways that is removed for environmental (clean-up) or maintenance (maintain depth) purposes.
CE differentiates itself from competitors through service reliability and responsiveness, its diverse operating capabilities and regulatory compliant solutions, and the value it provides through providing environmentally superior solutions relative to other disposal alternatives in the regions where it operates. 5 ENVIRONMENTAL, SOCIAL AND GOVERNANCE ("ESG") We are committed to building a global, market-leading environmental solutions company that preserves our environment, adheres to ethical and responsible business practices, and supports our customers as they do the same.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE ("ESG") We are committed to building a global, market-leading environmental solutions company that preserves our environment, adheres to ethical and responsible business practices, and supports our customers as they do the same.
Our larger peers include Clean Harbors, Republic Services, which acquired U.S. Ecology in 2022, Veolia and Heritage Environmental Services within the hazardous materials line of business and GFL Environmental and Impact Environmental within the soil and dredged materials market.
Our larger peers within the hazardous materials line of business include Clean Harbors, Republic Services, which acquired U.S. Ecology in 2022, Veolia and Covanta, which acquired Circon Holdings, Inc. in 2023 and also recently announced, through its parent company, EQT Infrastructure, its intent to acquire a major stake in Heritage Environmental Services in 2024.
Our tracking technology also provides real-time analysis of material location, quantities and product quality. Meltshop and Furnace Services Meltshop and furnace services allow the molten metal production process to run smoothly and efficiently. These services include under-vessel cleaning and the removal of ladle slag (waste) and general melt shop debris. ECOPRODUCTS™ HE creates value-added downstream products from industrial waste-streams.
Materials Handling and Logistics We transport materials, including semi-finished and finished products, safely and efficiently for our customers. Our tracking technology also provides real-time analysis of material location, quantities and product quality. Meltshop and Furnace Services Meltshop and furnace services allow the molten metal production process to run smoothly and efficiently.
Our revenues by business segment are as follows, and a further description of the products and services offered through these business segments is presented below. 1 HARSCO ENVIRONMENTAL BUSINESS OVERVIEW Our Harsco Environmental Segment can trace its heritage back to the earliest efforts in industrial recycling and environmental resource management.
HARSCO ENVIRONMENTAL BUSINESS OVERVIEW Our Harsco Environmental segment can trace its heritage back to the earliest efforts in industrial recycling and environmental resource management. Where others only saw waste and expense, we saw opportunity and value nearly 100 years ago.
Our objective is to build the readiness of various talent pools within the organization in order to select and promote key talent. In addition, we continue to invest in our employees through technical training, professional development and skills upgrade throughout the year. CORPORATE INFORMATION The Company was incorporated in 1956.
In addition, we continue to invest in our employees through technical training, professional development and skills upgrade throughout the year. CORPORATE INFORMATION The Company was incorporated in 1956. The Company’s global headquarters and executive offices are located at Two Logan Square, 100-120 North 18th Street, 17th Floor in Philadelphia, PA, and its main telephone number is 267-857-8715.
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On December 31, 2022, the Company's service contracts had estimated future revenues of $3.3 billion at current production levels, an increase of $0.2 billion from 2021, excluding foreign currency translation impacts, which is driven by new and renewed contracts. These contract values provide the Company with a substantial base of anticipated long-term revenues.
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These contract values provide the Company with a substantial base of anticipated long-term revenues.
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Nearly 100 years ago, we pioneered a process of recycling coal combustion waste from power plants. Through the Company's proprietary process, we create premium quality roofing granules that are a critical raw material in asphalt roofing shingles.
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The Company also sells a slag aggregate that is a sustainable and cost-effective alternative to natural stone.
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Our BLACK BEAUTY ® and SURE/CUT™ abrasives are well-recognized within the industry and are used as blast material to remove paint, rust, and other coatings from surfaces, prior to applying a new finish.
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CE had one customer in 2023, 2022 and 2021 that provided more than 10% of this segment's revenues.
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Our safety practices and performance also support our business, as do our long-standing relationships and our downstream product solutions.
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Our larger peers within the soil and dredged materials market include GFL Environmental, Impact Environmental and Bayshore Recycling. CE differentiates itself from competitors through service reliability and responsiveness, its diverse operating capabilities and regulatory compliant solutions, and the value it provides through providing environmentally superior solutions relative to other disposal alternatives in the regions where it operates.
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Rail is reclassified as held for sale and reported as discontinued operations for all years presented. In June 2019, the Company acquired Clean Earth which provided the Company entry into the specialty waste market.
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As the cornerstone to our shared Company culture, these values reflect our overarching direction and purpose as a business: • Be Environmental - Have an unwavering determination to make the world cleaner and greener. • Be Performance Driven - Act with passion to deliver winning results. • Be Customer Focused - Actively listen to our customers’ needs to exceed their expectations. • Be Caring - Embed safety into everything we do and treat each other as we’d like to be treated ourselves. • Be Inclusive - Create a diverse, collaborative and inclusive workplace by embracing differences. • Be Respectful - Act truthfully and honorably to create a culture where people, opinions, and feelings are respected.
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ENVIRONMENTAL COMPLIANCE The Company is subject to various environmental regulations within its global operations, and the scope of relevant environmental regulation expanded following the Company’s acquisition of Clean Earth and ESOL in 2019 and 2020, respectively.
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Our Belonging and Inclusion Council's goals include continuing to foster a workplace culture that is aligned with our Corporate Values, as defined above. • In 2023, the Company's Employee Resource Group, Enviri Women, whose mission is to promote the advancement of women across the Company through personal and professional development, mentorship, and empowerment, continued its efforts by undertaking a number of key initiatives to increase its connections with various communities, expanding its mentorship program and increasing visibility of female leaders by spotlighting their success stories, along with other various activities, in order to attract, retain and promote top talent.
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As the cornerstone to our shared Company culture, these values reflect our overarching direction and purpose as a business: • Employee Care - We are committed to safe, appealing work environments, market-competitive benefits programs and investment in personal development.
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Enviri Women expanded to eleven chapters in 2023, inclusive of Latin America, China, South Africa, the U.S. and India. • The Company continued to include diversity, equity, engagement and inclusion focused goals in key management's incentive compensation program. Talent Development and Succession We believe our development processes ensure continuity of leadership over the long term.
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We must treat our people as we would like to be treated ourselves, and we must attract and retain the very best talent throughout our organization. • Passion for Winning - We are passionate about winning through creating exceptional value for our employees, customers and shareholders.
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Excellence is not an act, but a habit. • Satisfy the Customer - We are engaged in the relentless pursuit of customer satisfaction by listening to the customers' needs, and consistently delivering value that exceeds their expectations. • Inclusion - We strive to create an environment where all people are actively included.
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Our diverse global workforce is our most valuable asset. We must foster a climate in which every employee is encouraged to engage and dedicate his or her talents and experiences. • Integrity - We demonstrate an uncompromising commitment to ethical principles. We act ethically and in the interest of the customers we serve.
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We treat others with dignity and respect, and value honesty above all else. • Respect - We respect all individuals and their contributions. Harsco will not tolerate discrimination or harassment of any kind. Our employees have a right to a safe, respectful workplace. Our management has a mandate to provide it.
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The DEE&I Council is accountable for directly shaping and promoting the Company’s DEE&I strategy and key initiatives, focusing on improving employee retention. • In 2022, the Company's Employee Resource Group, Women of Harsco, whose mission is to promote the advancement of women across the Company through personal and professional development, mentorship, and empowerment, expanded its reach to India, piloted a mentorship program that ensures effective mentor/mentee pairing, initiated a speaker series to spark discussions around leadership and tips for success and began community outreach efforts to promote career exploration for girls and young women. • Continued to include DEE&I focused goals in key management's incentive compensation program.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe Company may lose customers or be required to maintain or reduce prices as a result of competition. The industries in which the Company operates are highly competitive. Some examples are as follows: • The Harsco Environmental Segment is sustained mainly through contract renewals and new contract signings.
Biggest changeThe industries in which the Company operates are highly competitive. Some examples are as follows: • HE is sustained mainly through contract renewals and new contract signings. The Company may be unable to renew contracts at historical price levels or to obtain additional contracts at historical rates as a result of competition.
Increased information technology security threats and more sophisticated computer crime pose a risk to the Company's and its vendors, systems, networks, products and services . The Company relies upon information technology systems and networks in connection with a variety of business activities, some of which are managed by third parties (which we refer to collectively as our “associated third parties”).
Increased information technology security threats and more sophisticated computer crime pose a risk to the Company and its vendors, systems, networks, products and services . The Company relies upon information technology systems and networks in connection with a variety of business activities, some of which are managed by third parties (which we refer to collectively as our “associated third parties”).
If we are unable to complete a divestiture of our Rail division or we complete a transaction on unfavorable terms, we may suffer negative publicity, our Rail and other businesses may suffer, our results of operations, financial condition or cash flows may be adversely affected and the market value of our shares may fall.
If we are unable to complete a divestiture of Rail or we complete a transaction on unfavorable terms, we may suffer negative publicity, Rail and other businesses may suffer, our results of operations, financial condition or cash flows may be adversely affected and the market value of our shares may fall.
The success of these and other strategic ventures also depends, in large part, on the satisfactory performance by the Company's strategic venture partners of their strategic venture obligations, including their obligation to commit working capital, equity or credit support as required by the strategic venture and to support their indemnification and other contractual obligations. 12 If the Company's strategic venture partners fail to satisfactorily perform their strategic venture obligations as a result of financial or other difficulties, the strategic venture may be unable to adequately perform or deliver its contracted services.
The success of these and other strategic ventures also depends, in large part, on the satisfactory performance by the Company's strategic venture partners of their strategic venture obligations, including their obligation to commit working capital, equity or credit support as required by the strategic venture and to support their indemnification and other contractual obligations. 11 If the Company's strategic venture partners fail to satisfactorily perform their strategic venture obligations as a result of financial or other difficulties, the strategic venture may be unable to adequately perform or deliver its contracted services.
The potential compliance costs with or imposed by new or existing regulations and policies that are applicable to us could have a material impact on our results of operations. 14 MACROECONOMIC AND INDUSTRY RISKS Negative economic conditions may adversely impact demand for the Company's products and services, as well as the ability of the Company's customers to meet their obligations to the Company on a timely basis.
The potential compliance costs with or imposed by new or existing regulations and policies that are applicable to us could have a material impact on our results of operations. 13 MACROECONOMIC AND INDUSTRY RISKS Negative economic conditions may adversely impact demand for the Company's products and services, as well as the ability of the Company's customers to meet their obligations to the Company on a timely basis.
If the Company is unable to successfully manage the risks associated with its global business, the Company's results of operations, financial condition, liquidity and cash flows may be negatively impacted. 16 Due to the international nature of the Company's business, the Company could be adversely affected by violations of certain laws. The U.S.
If the Company is unable to successfully manage the risks associated with its global business, the Company's results of operations, financial condition, liquidity and cash flows may be negatively impacted. 15 Due to the international nature of the Company's business, the Company could be adversely affected by violations of certain laws. The U.S.
In addition, this could also trigger an event of default under the cross-default provisions of the Company's other obligations. As a result, a default under one or more of the existing or future financing arrangements could have significant consequences for the Company. 18 The Company is exposed to counterparty risk in its derivative financial arrangements.
In addition, this could also trigger an event of default under the cross-default provisions of the Company's other obligations. As a result, a default under one or more of the existing or future financing arrangements could have significant consequences for the Company. 17 The Company is exposed to counterparty risk in its derivative financial arrangements.
If applicable laws and governmental standards become more stringent, the Company’s results of operations, liquidity and financial condition could be materially adversely affected. 17 The Company is subject to various environmental laws, and the success of existing or future environmental claims against it could adversely impact the Company's results of operations and cash flows.
If applicable laws and governmental standards become more stringent, the Company’s results of operations, liquidity and financial condition could be materially adversely affected. 16 The Company is subject to various environmental laws, and the success of existing or future environmental claims against it could adversely impact the Company's results of operations and cash flows.
Financial market deterioration would most likely have a negative impact on the Company's NPPC and the pension assets and liabilities. This could result in a decrease to stockholders' equity and an increase in the Company's statutory funding requirements. Item 1B. Unresolved Staff Comments. None. 19
Financial market deterioration would most likely have a negative impact on the Company's NPPC and the pension assets and liabilities. This could result in a decrease to stockholders' equity and an increase in the Company's statutory funding requirements. Item 1B. Unresolved Staff Comments. None. 18
The unsecured contracts for foreign currency exchange forward contracts outstanding at December 31, 2022 mature at various times through 2023 and are with major financial institutions. The Company may also enter into derivative contracts to hedge commodity exposures.
The unsecured contracts for foreign currency exchange forward contracts outstanding at December 31, 2023 mature at various times through 2025 and are with major financial institutions. The Company may also enter into derivative contracts to hedge commodity exposures.
Moreover, the announcement and conduct of the divestiture process could cause disruptions in, and create uncertainty surrounding, our Rail division, including affecting the Rail division’s relationships with its existing and future customers, suppliers and employees, which could have an adverse effect on the Rail division’s operations and financial condition, potentially making it more difficult to successfully complete a transaction on favorable terms.
Moreover, the announcement and conduct of the divestiture process could cause disruptions in, and create uncertainty surrounding, Rail, including affecting Rail’s relationships with its existing and future customers, suppliers and employees, which could have an adverse effect on the Rail division’s operations and financial condition, potentially making it more difficult to successfully complete a transaction on favorable terms.
Examples are: • The Harsco Environmental Segment may be adversely impacted by prolonged slowdowns in steel mill production, excess production capacity, bankruptcy or receivership of steel producers and changes in outsourcing practices; • The resource recovery and slag optimization technologies business of the Harsco Environmental Segment can also be adversely impacted by prolonged slowdowns in customer production or a reduction in the selling prices of its materials, which are in some cases market-based and vary based upon the current fair value of the components being sold.
Examples are: • HE may be adversely impacted by prolonged slowdowns in steel mill production, excess production capacity, bankruptcy or receivership of steel producers and changes in outsourcing practices; • The resource recovery and slag optimization technologies business of HE can also be adversely impacted by prolonged slowdowns in customer production or a reduction in the selling prices of its materials, which are in some cases market-based and vary based upon the current fair value of the components being sold.
If the Harsco Clean Earth Segment fails to comply with applicable environmental laws and regulations, its business could be adversely affected. The regulatory framework governing the Harsco Clean Earth Segment's business is extensive. The Company could be held liable if its operations cause contamination of air, groundwater or soil or expose its employees or the public to contamination.
If the Clean Earth Segment fails to comply with applicable environmental laws and regulations, its business could be adversely affected. The regulatory framework governing CE's business is extensive. The Company could be held liable if its operations cause contamination of air, groundwater or soil or expose its employees or the public to contamination.
The future operating results of the Harsco Clean Earth Segment may be affected by such factors as its ability to utilize its facilities and workforce profitably in the face of intense price competition, maintain or increase market share during periods of economic contraction or industry consolidation, realize benefits from cost reduction programs, invest in new technologies for treatment of various waste streams, generate incremental volumes of waste to be handled through the Harsco Clean Earth Segment’s facilities from existing and acquired sales offices and service centers, appropriately contract with end disposal sites for the necessary volumes of waste, obtain sufficient volumes of waste at prices which produce revenue sufficient to offset the operating costs of its facilities and minimize downtime and disruptions of operations.
The future operating results of CE may be affected by such factors as its ability to utilize its facilities and workforce profitably in the face of intense price competition, maintain or increase market share during periods of economic contraction or industry consolidation, realize benefits from cost reduction programs, invest in new technologies for treatment of various waste streams, generate incremental volumes of waste to be handled through CE’s facilities from existing and acquired sales offices and service centers, appropriately contract with end disposal sites for the necessary volumes of waste, obtain sufficient volumes of waste at prices which produce revenue sufficient to offset the operating costs of its facilities and minimize downtime and disruptions of operations.
If actual claims are higher than those projected by management, an increase to the Company's insurance reserves may be required and would be recorded as a charge to income in the period the need for the change was determined. The Harsco Clean Earth Segment's insurance policies do not cover all losses, costs, or liabilities that it may experience.
If actual claims are higher than those projected by management, an increase to the Company's insurance reserves may be required and would be recorded as a charge to income in the period the need for the change was determined. The Company's insurance policies do not cover all losses, costs, or liabilities that it may experience.
Separately, a one percentage point change in interest rates also impacts our facility fees from our AR Facility by $1.4 million per year.
Separately, a one percentage point change in interest rates also impacts our facility fees from our AR Facility by $1.5 million per year.
LEGAL AND REGULATORY RISKS The Company's global presence subjects it to a variety of risks arising from doing business internationally. The Company operates in approximately 30 countries, generating 43% of its revenues outside of the U.S. (based on location of the facility generating the revenue) for the year ended December 31, 2022.
LEGAL AND REGULATORY RISKS The Company's global presence subjects it to a variety of risks arising from doing business internationally. The Company operates in approximately 30 countries, generating 42% of its revenues outside of the U.S. (based on location of the facility generating the revenue) for the year ended December 31, 2023.
Additionally, the Company and its associated third parties collect and store data that is of a sensitive nature, which may include names and addresses, bank account information, and other types of personal information or sensitive business information.
Additionally, the Company and its associated third parties collect and store data that is of a sensitive nature, which may include names and addresses, bank account information, and other types of personally identifiable information or sensitive business information.
In addition, as of December 31, 2022, approximately 57% of the Company’s property, plant and equipment is located outside of the U.S. The Company's global footprint exposes it to a variety of risks that may adversely affect the Company's results of operations, financial condition, liquidity and cash flows.
In addition, as of December 31, 2023, approximately 54% of the Company’s property, plant and equipment is located outside of the U.S. The Company's global footprint exposes it to a variety of risks that may adversely affect the Company's results of operations, financial condition, liquidity and cash flows.
New environmental laws or regulations that raise compliance standards or require changes in operating practices or technology may impose significant costs and/or limit the Company’s operations. The Harsco Clean Earth Segment’s revenue is primarily generated as a result of requirements imposed on its customers under federal, state and local laws and regulations to protect public health and the environment.
New environmental laws or regulations that raise compliance standards or require changes in operating practices or technology may impose significant costs and/or limit the Company’s operations. CE’s revenue is primarily generated as a result of requirements imposed on its customers under federal, state and local laws and regulations to protect public health and the environment.
Our announcement, and our conducting, of a divestiture process for our Rail division involves various risks and uncertainties, including changes in economic conditions, the risk that we may be unsuccessful in identifying an acquirer for the division, unable to enter into an agreement for a transaction and any agreement that we may enter into may not be on favorable terms and/or may not be completed due to regulatory or other factors.
Our announcement and our conducting of a divestiture process for Rail exposes us to various risks and uncertainties, including changes in economic conditions, the risk that we may be unsuccessful in identifying an acquirer for Rail, the risk may be that we may be, unable to enter into an agreement for a transaction and the risk that agreement that we may enter into may not be on favorable terms and/or may not be completed due to regulatory or other factors.
The Harsco Environmental Segment may incur capital expenditures or other costs at the beginning of a long-term contract that it expects to recoup through the life of the contract. Some of these contracts provide for advance payments to assist the Company in covering these costs and expenses.
HE may incur capital expenditures or other costs at the beginning of a long-term contract that it expects to recoup through the life of the contract. Some of these contracts provide for advance payments to assist the Company in covering these costs and expenses.
The Harsco Clean Earth Segment maintains insurance coverage, but these policies do not cover all of its potential losses, costs, or liabilities. The Company could suffer losses for uninsurable or uninsured risks or in amounts in excess of its existing insurance coverage, which would significantly affect its financial performance.
The Company maintains insurance coverage, but these policies do not cover all of its potential losses, costs, or liabilities. The Company could suffer losses for uninsurable or uninsured risks or in amounts in excess of its existing insurance coverage, which would significantly affect its financial performance.
If such insurance is not available or not available on economically acceptable terms, the Clean Earth Segment’s and our businesses could be materially and adversely affected. Increases in purchase prices (or decreases in selling prices) or availability of steel or other materials and commodities may affect the Company's profitability.
If such insurance is not available or not available on economically acceptable terms, the Company’s businesses could be materially and adversely affected. Increases in purchase prices (or decreases in selling prices) or availability of steel or other materials and commodities may affect the Company's profitability.
There can be no assurance that the Company will continue to be successful in obtaining timely permit or license applications approval, maintaining compliance with its permits, licenses and lease agreements and obtaining timely license renewals. The waste management industry, in which the Harsco Clean Earth Segment is a participant, is subject to various economic, business, and regulatory risks.
There can be no assurance that the Company will continue to be successful in obtaining timely permit or license applications approval, maintaining compliance with its permits, licenses and lease agreements and obtaining timely license renewals. The waste management industry, in which CE is a participant, is subject to various economic, business, and regulatory risks.
Certain services performed by the Harsco Environmental Segment result in the recovery, processing and sale of recovered metals and minerals and other high-value metal byproducts to its customers. The selling price of the byproducts material is market-based and varies based upon the current fair value of its components.
Certain services performed by HE result in the recovery, processing and sale of recovered metals and minerals and other high-value metal byproducts to its customers. The selling price of the byproducts material is market-based and varies based upon the current fair value of its components.
The occurrence of an event that is not fully covered by insurance could have a material adverse effect on the Company’s business, financial condition, and results of operations. In addition, the Harsco Clean Earth Segment’s business requires that it maintain various types of insurance.
The occurrence of an event that is not fully covered by insurance could have a material adverse effect on the Company’s business, financial condition, and results of operations. In addition, the Company’s business requires that it maintain various types of insurance.
In addition to the environmental and safety considerations discussed above with respect to the Harsco Clean Earth Segment, the Company's operations generally are subject to various federal, state, local and international laws, regulations and ordinances relating to the protection of health, safety and the environment, including those governing discharges to air and water, handling and disposal practices for solid and hazardous byproducts, the remediation of contaminated sites and the maintenance of a safe workplace.
In addition to the environmental and safety considerations discussed above, the Company's operations generally are subject to various federal, state, local and international laws, regulations and ordinances relating to the protection of health, safety and the environment, including those governing discharges to air and water, handling and disposal practices for solid and hazardous byproducts, the remediation of contaminated sites and the maintenance of a safe workplace.
Outdoor construction, which may be limited due to unfavorable weather, and dredging, which may be limited due to environmental restrictions in certain waterways in the Northeastern United States, can be cyclical in nature. If those cyclical industries slow significantly, the business that the Harsco Clean Earth Segment receives from them would likely decrease.
Outdoor construction, which may be limited due to unfavorable weather, and dredging, which may be limited due to environmental restrictions in certain waterways in the Northeastern United States, can be cyclical in nature. If those cyclical industries slow significantly, the business that CE receives from them would likely decrease.
Government contracts. A negative outcome on personal injury claims against the Company may adversely impact results of operations and financial condition. The Company has been named as one of many defendants (approximately 90 or more in most cases) in legal actions alleging personal injury from exposure to airborne asbestos over the past several decades.
Government contracts. A negative outcome on personal injury claims against the Company may adversely impact results of operations and financial condition. The Company has been named as one of many defendants in legal actions alleging personal injury from exposure to airborne asbestos over the past several decades.
The Clean Earth Segment may enter into a long-term contract with a customer covering multiple regions in the United States. A dispute with a customer in one region in the United States could impact the Company’s revenues related to that customer in another region.
CE may enter into a long-term contract with a customer covering multiple regions in the United States. A dispute with a customer in one region in the United States could impact the Company’s revenues related to that customer in another region.
Stringent regulations of federal, state and local governments have a substantial impact on the Harsco Clean Earth Segment’s transportation, treatment, storage, disposal and beneficial use activities. Many complex laws, rules, orders and regulatory interpretations govern environmental protection, health, safety, noise, visual impact, odor, land use, zoning, transportation and related matters.
Stringent regulations of federal, state and local governments have a substantial impact on CE’s transportation, treatment, storage, disposal and beneficial use activities. Many complex laws, rules, orders and regulatory interpretations govern environmental protection, health, safety, noise, visual impact, odor, land use, zoning, transportation and related matters.
If requirements to comply with laws and regulations governing management of contaminated soils, dredge material, and hazardous wastes were relaxed or less vigorously enforced at the federal, state and local levels, demand for the Harsco Clean Earth Segment’s services could materially decrease and the Company's revenues and earnings could be reduced. 10 If the Harsco Clean Earth Segment is unable to obtain, renew, or maintain compliance with its operating permits or license agreements with regulatory bodies, its business would be adversely affected.
If requirements to comply with laws and regulations governing management of contaminated soils, dredge material, and hazardous wastes were relaxed or less vigorously enforced at the federal, state and local levels, demand for CE’s services could materially decrease and the Company's revenues and earnings could be reduced. 9 If the Company is unable to obtain, renew, or maintain compliance with its operating permits or license agreements with regulatory bodies, its business would be adversely affected.
The Harsco Clean Earth Segment faces competition from companies with greater resources than the Company, with closer geographic proximity to waste sites, with captive end disposal assets, and who may provide service offerings that we do not provide.
CE faces competition from companies with greater resources than the Company, with closer geographic proximity to waste sites, with captive end disposal assets, and who may provide service offerings that we do not provide.
If the Company does not receive future contract awards or if these awards are delayed, significant cost may result that could have a material adverse effect on results of operations, financial condition, liquidity and cash flows.
The Company maintains a workforce based upon current and anticipated workload. If the Company does not receive future contract awards or if these awards are delayed, significant cost may result that could have a material adverse effect on results of operations, financial condition, liquidity and cash flows.
Compared with the corresponding full-year period in 2021, the average value of major currencies changed as follows in relation to the U.S. dollar during the full-year 2022, impacting the Company's revenues and income: • British pound sterling weakened by 11%; • Euro weakened by 11%; • Chinese yuan weakened by 5%; and • Brazilian real strengthened by 5% Compared with exchange rates at December 31, 2021, the value of major currencies at December 31, 2022 changed as follows: • British pound sterling weakened by 11%; • Euro weakened by 6%; • Chinese yuan weakened by 8%; and • Brazilian real strengthened by 5% 15 To illustrate the effect of foreign exchange rate changes in certain key markets of the Company, in 2022 revenues would have been approximately 4% or $70 million higher and operating income would have been 9% or $5 million higher if the average exchange rates for 2021 were utilized.
Compared with the corresponding full-year period in 2022, the average value of major currencies changed as follows in relation to the U.S. dollar during the full-year 2023, impacting the Company's revenues and income: • British pound sterling strengthened by 1%; • Euro strengthened by 3%; • Chinese yuan weakened by 5%; and • Brazilian real strengthened by 3% Compared with exchange rates at December 31, 2022, the value of major currencies at December 31, 2023 changed as follows: • British pound sterling strengthened by 5%; • Euro strengthened by 3%; • Chinese yuan weakened by 3%; and • Brazilian real strengthened by 9% 14 To illustrate the effect of foreign exchange rate changes in certain key markets of the Company, in 2023 revenues would have been less than 1% or $8 million higher and operating income would have been 2% or $3 million higher if the average exchange rates for 2022 were utilized.
Strikes or work stoppages, as well as labor shortages, experienced by the Company's customers or suppliers could have an adverse effect on the Company's business and supply chain, results of operations and financial condition. 13 The Company's intellectual property portfolio may not prevent competitors from independently developing similar or duplicative products and services.
Strikes or work stoppages, as well as labor shortages, experienced by the Company's customers or suppliers could have an adverse effect on the Company's business and supply chain, results of operations and financial condition. 12 The Company may be unable to adequately protect its intellectual property portfolio or prevent competitors from independently developing similar or duplicative products and services.
For the year ended December 31, 2022, the Company’s top five customers in the Harsco Environmental Segment accounted for approximately 31% of revenues in that Segment and 17% of the Company’s consolidated revenues.
For the year ended December 31, 2023, the Company’s top five customers in HE accounted for approximately 31% of revenues in that Segment and 17% of the Company’s consolidated revenues.
At debt levels as of December 31, 2022, a one percentage point increase in variable interest rates would increase interest expense by $8.7 million per year and a one percentage point decrease in variable interest rates would decrease interest expense by $8.7 million.
At debt levels as of December 31, 2023, a one percentage point increase in variable interest rates would increase interest expense by $9.2 million per year and a one percentage point decrease in variable interest rates would decrease interest expense by $9.2 million.
If the Company is unable to renew its contracts at the historical rates or renewals are made at reduced prices, or if its customers terminate their contracts, revenue and results of operations may decline. 11 • Like the Harsco Environmental Segment, the Harsco Clean Earth Segment is sustained primarily through contract renewals and new contract signings.
If the Company is unable to renew its contracts at the historical rates or renewals are made at reduced prices, or if its customers terminate their contracts, revenue and results of operations may decline. 10 • Like HE, CE is sustained primarily through contract renewals and new contract signings.
Therefore, the revenue generated from the sale of such recycled materials varies based upon the fair value of the commodity components being sold; • The abrasives and roofing materials business of the Harsco Environmental Segment may be adversely impacted by economic conditions that slow the rate of residential roof replacement, or by slowdowns in the industrial and infrastructure refurbishment industries; • Prolonged slowdowns may result in a decrease in the amount of waste generated, resulting in less hazardous waste collected by the Clean Earth Segment; and • Capital constraints and increased borrowing costs may also adversely impact the financial position and operations of the Company's customers across all business segments.
Therefore, the revenue generated from the sale of such recycled materials varies based upon the fair value of the commodity components being sold; • The abrasives and roofing materials business of HE may be adversely impacted by economic conditions that slow the rate of residential roof replacement, or by slowdowns in the industrial and infrastructure refurbishment industries; • Rail may be adversely impacted by developments in the railroad industry that lead to lower capital spending or reduced track maintenance spending; • Prolonged slowdowns may result in a decrease in the amount of waste generated, resulting in less hazardous waste collected by CE; and • Capital constraints and increased borrowing costs may also adversely impact the financial position and operations of the Company's customers across all business segments.
The Harsco Clean Earth Segment's facilities operate using permits and licenses issued by various regulatory bodies at various local, state and federal government levels.
The Company's facilities operate using permits and licenses issued by various regulatory bodies at various local, state and federal government levels.
For the year ended December 31, 2022, the Company’s top five customers in the Clean Earth Segment accounted for approximately 29% of the revenues in that Segment and 13% of the Company’s consolidated revenues. The Company routinely enters into contracts with its top customers of varying length and scope.
For the year ended December 31, 2023, the Company’s top five customers in CE accounted for approximately 28% of the revenues in that Segment and 12% of the Company’s consolidated revenues. The Company routinely enters into contracts with its top customers of varying length and scope.
Adverse experience with hazards and claims could result in liabilities caused by, among other things, injury or death to persons, which could have a negative effect on the Company’s reputation with its existing or potential new customers and its prospects for future business. The Company maintains a workforce based upon current and anticipated workload.
Adverse experience with hazards and claims could result in liabilities caused by, among other things, injury or death to persons, which could have a negative effect on the Company’s ability to attract and retain employees or its reputation with its existing or potential new customers and its prospects for future business.
Fluctuations in foreign exchange rates between the U.S. dollar and the approximately 25 other currencies in which the Company currently conducts business may adversely impact the Company's results of operations in any given fiscal period. The Company’s principal foreign currency exposures are in the EU, the U.K., China and Brazil.
Fluctuations in foreign exchange rates between the U.S. dollar and the approximately 25 other currencies in which the Company currently conducts business may adversely impact the Company's results of operations in any given fiscal period. The Company’s principal foreign currency exposures are in the Euro, the British pound sterling, the Chinese yuan and the Brazilian real.
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. The majority of the asbestos complaints pending against the Company have been filed in New York.
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.
For example, the Company's pollution legal liability insurance excludes costs related to fines, penalties, or assessments. The Company's insurance policies also have deductibles and self-retention limits that could expose it to significant financial expense. The Company’s ability to obtain and maintain adequate insurance may be affected by conditions in the insurance market over which it has no control.
The Company's insurance policies have deductibles and self-retention limits that could expose it to significant financial expense. The Company’s ability to obtain and maintain adequate insurance may be affected by conditions in the insurance market over which it has no control.
STRATEGIC AND OPERATIONAL RISKS We may be unable to complete a transaction to divest our Rail division on favorable terms or at all and our pursuit of a divestiture could adversely affect our businesses, results of operations and financial condition. We previously announced that we intend to divest our Rail division.
STRATEGIC AND OPERATIONAL RISKS We may be unable to complete a transaction to divest Rail on favorable terms or at all and our pursuit of a divestiture could adversely affect our businesses, results of operations and financial condition. Our intention to divest the Rail business was first announced in the fourth quarter of 2021.
The Company's total debt at December 31, 2022 was $1.4 billion. Of this amount, approximately 63% had variable rates of interest and approximately 37% had fixed interest rates. The weighted average interest rate of total debt was approximately 6.5%.
The Company's total debt at December 31, 2023 was $1.4 billion. Of this amount, approximately 64% had variable rates of interest and approximately 36% had fixed interest rates. The weighted average interest rate of total debt was approximately 7.2%.
The Company may be unable to secure or retain ownership or rights to use data in certain software analytics or services offerings. In addition, the Company may be the target of aggressive and opportunistic enforcement of patents by third parties, including non-practicing entities. Regardless of the merit of such claims, responding to infringement claims can be expensive and time-consuming.
In addition, the Company may be the target of aggressive and opportunistic enforcement of patents by third parties, including non-practicing entities. Regardless of the merit of such claims, responding to infringement claims can be expensive and time-consuming.
In a similar comparison for 2021, revenues would have been 1% or approximately $21 million lower and operating income would have been less than 1% or less than $1 million higher if the average exchange rates for 2020 were utilized.
In a similar comparison for 2022, revenues would have been approximately 4% or $70 million higher and operating income would have been 9% or $5 million higher if the average exchange rates for 2021 were utilized.
Finally, both the Harsco Environmental Segment and the Harsco Clean Earth Segment have several large customers and, if a large customer were to experience financial difficulty or file for bankruptcy or receivership protection, it could adversely impact the Company's results of operations, cash flows and asset valuations.
Finally, both HE and CE have several large customers and, if a large customer were to experience financial difficulty or file for bankruptcy or receivership protection, it could adversely impact the Company's results of operations, cash flows and asset valuations. The Company may lose customers or be required to maintain or reduce prices as a result of competition.
One or more of these events could adversely impact the Company's operating results and ability to collect its receivables. Cyclical industry and economic conditions may adversely affect the Company's businesses. The Company's businesses are subject to general economic slowdowns and cyclical conditions in each of the industries served.
Cyclical industry and economic conditions may adversely affect the Company's businesses. The Company's businesses are subject to general economic slowdowns and cyclical conditions in each of the industries served.
In addition, economic conditions may impact the Company's customers by either causing them to close locations serviced by the Harsco Environmental Segment or causing their financial condition to deteriorate to a point where they are unable to meet their obligations to the Company on a timely basis.
In addition, negative economic conditions may adversely impact the Company's customers by causing them to close locations or deteriorate their financial condition to a point where they are unable to meet their obligations to the Company on a timely basis. One or more of these events could adversely impact the Company's operating results and ability to collect its receivables.
The Company could also face competition in some countries where the Company has not protected its intellectual property portfolio. The Company may also face attempts to gain unauthorized access to the Company's information technology systems or products for the purpose of improperly acquiring trade secrets or confidential business information.
The Company may face attempts to gain unauthorized access to the Company's information technology systems or products or those of its associated third parties for the purpose of improperly acquiring trade secrets or confidential business information.
The occurrence of any of these events could adversely affect the Company's reputation, competitive position, business, results of operations and cash flows. While we have cybersecurity insurance related to a breach event covering certain expenses, damages and claims arising from such incidents may not be covered, or may exceed the amount of any insurance available.
While we have a robust cybersecurity program and maintain cybersecurity insurance related to a breach event covering certain expenses, damages and claims arising from such incidents may not be covered, or may exceed the amount of any insurance available. See Part I. Item 1C. Cybersecurity for additional details on the Company's cybersecurity program.
Globally these types of threats have increased in number and severity and it is expected that these trends will continue. These threats pose a risk to the security of the Company's systems and networks and the confidentiality, availability and integrity of the Company's data.
These threats pose a risk to the security of the Company's systems and networks and the confidentiality, availability and integrity of the Company's data.
The secure operation of these information technology systems and networks, and the processing and maintenance of this data is critical to the Company's business operations and strategy. Threats to our systems and our associated third parties' systems can derive from human error, fraud, or malice on the part of employees or third parties, or may result from accidental technological failure.
Threats to our systems and our associated third parties' systems can derive from human error, fraud, or malice on the part of employees or third parties, or may result from accidental technological failure. Globally, these types of threats have increased in number and severity and it is expected that these trends will continue.
If serious accidents or fatalities occur or its safety record was to deteriorate, it may be ineligible to bid on certain work, and existing service arrangements could be terminated. Further, regulatory changes implemented by the Occupational Safety and Health Administration, or similar foreign agencies, could impose additional costs on the Company.
Further, regulatory changes implemented by the Occupational Safety and Health Administration, or similar foreign agencies, could impose additional costs on the Company.
The Harsco Clean Earth Segment operates facilities that accept, process and/or treat materials provided by its customers. The Harsco Environmental Segment has operations at customers' steel producing sites, which often times involve extreme conditions.
CE operates facilities that accept, process and/or treat materials provided by its customers. HE has operations at customers' steel producing sites, which often times involve extreme conditions. If serious accidents or fatalities occur or its safety record was to deteriorate, it may be ineligible to bid on certain work, and existing service arrangements could be terminated.
Almost all of the New York complaints contain a standard claim for damages of $20 million or $25 million against the approximately 90 defendants, regardless of the individual plaintiff's alleged medical condition and without specifically identifying any of the Company’s products as the source of plaintiff's asbestos exposure.
The vast majority of the asbestos complaints pending against the Company have been filed in New York and the vast majority of such complaints 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.
Removed
The Company may be unable to renew contracts at historical price levels or to obtain additional contracts at historical rates as a result of competition.
Added
Although we currently intend to divest the Rail business, we cannot provide any assurance on the timing or terms of any potential divestiture, or if a divestiture will occur.
Removed
In 2021, an associated third party was the target of a cybersecurity attack. The attack did not result in the theft of personally identifiable information of any employees, but it resulted in logistical challenges with respect to internal reporting systems.
Added
The Company could also face competition in some countries where the Company has not protected its intellectual property portfolio. The Company may be unable to secure or retain ownership or rights to use data in certain software analytics or services offerings.
Added
The secure operation of these information technology systems and networks, and the processing and maintenance of this data is critical to the Company's business operations and strategy.
Added
The occurrence of any of these events could adversely affect the Company's reputation, competitive position, business, results of operations and cash flows.

Item 2. Properties

Properties — owned and leased real estate

5 edited+0 added−1 removed1 unchanged
Biggest changeHazardous Waste Processing Leased Detroit, Michigan, U.S. Hazardous Waste Processing Owned Kansas City, Missouri, U.S. Hazardous Waste Processing Owned Fernley, Nevada, U.S. Hazardous Waste Processing Owned Hatfield, Pennsylvania, U.S. Hazardous Waste Processing Owned Providence, Rhode Island, U.S. Hazardous Waste Processing Owned Avalon, Texas, U.S. Hazardous Waste Processing Owned Houston, Texas, U.S. Hazardous Waste Processing Owned Kent, Washington, U.S.
Biggest changeHazardous Waste Processing Leased Kansas City, Missouri, U.S. Hazardous Waste Processing Owned Fernley, Nevada, U.S. Hazardous Waste Processing Owned Hatfield, Pennsylvania, U.S. Hazardous Waste Processing Owned Providence, Rhode Island, U.S. Hazardous Waste Processing Owned Avalon, Texas, U.S. Hazardous Waste Processing Owned Houston, Texas, U.S. Hazardous Waste Processing Owned Kent, Washington, U.S. Hazardous Waste Processing Owned Tacoma, Washington, U.S.
Hazardous Waste Processing Owned Tacoma, Washington, U.S. Hazardous Waste Processing Owned HE principally operates on customer-owned sites and has administrative offices throughout the world, including Pittsburgh, Pennsylvania, U.S. and Leatherhead, U.K. CE has an administrative office in King of Prussia, Pennsylvania. The above table includes the principal properties owned or leased by the Company.
Hazardous Waste Processing Owned HE principally operates on customer-owned sites and has administrative offices throughout the world, including Pittsburgh, Pennsylvania, U.S. and Leatherhead, U.K. CE has an administrative office in King of Prussia, Pennsylvania. The above table includes the principal properties owned or leased by the Company.
Location Principal Products/Services Interest Harsco Environmental Segment Taiyuan City, China Environmental Services Leased Rotherham, U.K. Environmental Services Owned Drakesboro, Kentucky, U.S. Ecoproducts - Roofing Granules/Abrasives Owned Sarver, Pennsylvania, U.S. Environmental Services Owned Chesterfield, U.K. Aluminum Dross and Scrap Processing Systems Owned Harsco Clean Earth Segment Middlesex, New Jersey, U.S. Soil and Dredged Materials Processing Leased Hudson, New Jersey, U.S.
Location Principal Products/Services Interest Harsco Environmental Segment Taiyuan City, China Environmental Services Leased Rotherham, U.K. Environmental Services Owned Drakesboro, Kentucky, U.S. Ecoproducts - Roofing Granules/Abrasives Owned Sarver, Pennsylvania, U.S. Environmental Services Owned Chesterfield, U.K. Aluminum Dross and Scrap Processing Systems Owned Clean Earth Segment Carteret, New Jersey, U.S. Soil and Dredged Materials Processing Leased Kearny, New Jersey, U.S.
The Company also operates from a number of other smaller plants, warehouses and offices in addition to the above. The Company considers all of its properties at which operations are currently performed to be in satisfactory condition and suitable for their intended use. Item 3. Legal Proceedings.
The Company also operates from a number of other smaller plants, warehouses and offices in addition to the above. The Company considers all of its properties at which operations are currently performed to be in satisfactory condition and suitable for their intended use.
Hazardous Waste Processing Owned/Leased New Castle, Delaware, U.S. Soil and Dredged Materials Processing Leased Prince Georges, Maryland, U.S. Soil and Dredged Materials Processing Owned Marshall, Kentucky, U.S. Hazardous Waste Processing Owned Wayne, Michigan, U.S. Hazardous Waste Processing Owned Birmingham, Alabama, U. S. Hazardous Waste Processing Owned Inglewood, California, U.S. Hazardous Waste Processing Owned Indianapolis, Indiana, U.S.
Hazardous Waste Processing Owned/Leased New Castle, Delaware, U.S. Soil and Dredged Materials Processing Leased Upper Marlboro, Maryland, U.S. Soil and Dredged Materials Processing Owned Calvert City, Kentucky, U.S. Hazardous Waste Processing Owned Detroit, Michigan, U.S. Hazardous Waste Processing Owned Birmingham, Alabama, U. S. Hazardous Waste Processing Owned Inglewood, California, U.S. Hazardous Waste Processing Owned Indianapolis, Indiana, U.S.
Removed
Information regarding legal proceedings is included in Note 12, Commitments and Contingencies, in Part II, Item 8, "Financial Statements and Supplementary Data." Item 4. Mine Safety Disclosures. Not applicable. 20 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

6 edited+0 added−1 removed0 unchanged
Biggest changeDecember 2017 December 2018 December 2019 December 2020 December 2021 December 2022 Harsco Corporation 100.00 106.49 123.38 96.41 89.60 33.73 S&P Smallcap 600 100.00 91.52 112.37 125.05 158.59 133.06 Russell 2000 100.00 88.99 111.70 134.00 153.85 122.41 Dow Jones US Diversified Industrials 100.00 74.92 95.07 106.89 117.57 108.01 21 The above graph compares the cumulative total return on Harsco’s common stock over the five-year period ended December 31, 2022 with the cumulative total return for the same period on the Russell 2000 Index, Dow Jones U.S.
Biggest changeAll rights reserved. 21 December 2018 December 2019 December 2020 December 2021 December 2022 December 2023 Enviri Corporation 100.00 115.86 90.53 84.14 31.67 45.32 Russell 2000 100.00 125.52 150.58 172.90 137.56 160.85 Dow Jones US Diversified Industrials 100.00 126.90 142.68 156.94 144.17 187.16 The above graph compares the cumulative total return on Enviri’s common stock over the five-year period ended December 31, 2023 with the cumulative total return for the same period on the Russell 2000 Index and Dow Jones U.S.
For additional information regarding the Company's equity compensation plans see Note 14, Stock-Based Compensation, in Part II, Item 8, "Financial Statements and Supplementary Data," Part III, Item 11, "Executive Compensation," and Part III, Item 12 "Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters." Stock Performance Graph *$100 invested on 12/31/17 in stock or index, including reinvestment of dividends.
For additional information regarding the Company's equity compensation plans see Note 14, Stock-Based Compensation, in Part II, Item 8, "Financial Statements and Supplementary Data," Part III, Item 11, "Executive Compensation," and Part III, Item 12 "Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters." Stock Performance Graph *$100 invested on 12/31/2018 in stock or index, including reinvestment of dividends.
Fiscal year ending December 31. Copyright© 2023 Standard & Poor's, a division of S&P Global. All rights reserved. Copyright© 2023 S&P Dow Jones Indices LLC, a division of S&P Global. All rights reserved. Copyright© 2023 Russell Investment Group. All rights reserved.
Fiscal year ending December 31. Copyright© 2024 S&P Dow Jones Indices LLC, a division of S&P Global. All rights reserved. Copyright© 2024 Russell Investment Group.
The graph assumes that $100 was invested on December 31, 2017 in our common stock and in the shares represented by each of the indices. Item 6. [Reserved].
Diversified Industrials Index. The graph assumes that $100 was invested on December 31, 2018 in our common stock and in the shares represented by each of the indices. Item 6. [Reserved].
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Harsco Corporation common stock is listed on the New York Stock Exchange under the trading symbol HSC. At December 31, 2022, there were 79,489,640 shares outstanding.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Enviri Corporation common stock is listed on the New York Stock Exchange under the trading symbol NVRI. At December 31, 2023, there were 79,834,835 shares outstanding.
In 2022, the Company's common stock traded in a range of $3.73 to $17.42 and closed at $6.29 at year-end. At December 31, 2022, there were approximately 16,807 stockholders.
In 2023, the Company's common stock traded in a range of $5.64 to $10.01 per share and closed at $9.00 per share at year-end. At December 31, 2023, there were approximately 1,270 stockholders of record.
Removed
Diversified Industrials Index and S&P Smallcap 600 Index. Going forward, the Company is replacing the S&P Smallcap 600 with the Russell 2000. The change to the Russell 2000 reflects the Company’s view that the Russell 2000 is appropriate given its broader representation of the overall market and companies of similar size and scope to the Company.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

121 edited+39 added−24 removed75 unchanged
Biggest changeFactors that could cause actual results to differ, perhaps materially, from those implied by forward-looking statements include, but are not limited to: (1) changes in the worldwide business environment in which the Company operates, including changes in general economic conditions or health conditions; (2) changes in currency exchange rates, interest rates, commodity and fuel costs and capital costs; (3) changes in the performance of equity and bond markets that could affect, among other things, the valuation of the assets in the Company's pension plans and the accounting for pension assets, liabilities and expenses; (4) changes in governmental laws and regulations, including environmental, occupational health and safety, tax and import tariff standards and amounts; (5) market and competitive changes, including pricing pressures, market demand and acceptance for new products, services and technologies; (6) the Company's inability or failure to protect its intellectual property rights from infringement in one or more of the many countries in which the Company operates; (7) failure to effectively prevent, detect or recover from breaches in the Company's cybersecurity infrastructure; (8) unforeseen business disruptions in one or more of the many countries in which the Company operates due to political instability, civil disobedience, armed hostilities, public health issues or other calamities; (9) disruptions associated with labor disputes and increased operating costs associated with union organization; (10) the seasonal nature of the Company's business; (11) the Company's ability to successfully enter into new contracts and complete new acquisitions or strategic ventures in the time-frame contemplated, or at all; (12) the Company's ability to negotiate, complete, and integrate strategic transactions; (13) failure to conduct and complete a satisfactory process for the divestiture of the Rail division, as announced on November 2, 2021; (14) potential severe volatility in the capital or commodity markets; (15) failure to retain key management and employees; (16) the outcome of any disputes with customers, contractors and subcontractors; (17) the financial condition of the Company's customers, including the ability of customers (especially those that may be highly leveraged, have inadequate liquidity or whose business has been significantly impacted by COVID-19) to maintain their credit availability; (18) implementation of environmental remediation matters; (19) risk and uncertainty associated with intangible assets and (20) other risk factors listed from time to time in the Company's SEC reports.
Biggest changeFactors that could cause actual results to differ, perhaps materially, from those implied by forward-looking statements include, but are not limited to: (1) the Company's ability to successfully enter into new contracts and complete new acquisitions, divestitures, or strategic ventures in the time-frame contemplated or at all, including the Company's ability to timely divest the Rail business; (2) the Company’s inability to comply with applicable environmental laws and regulations; (3) the Company’s inability to obtain, renew, or maintain compliance with its operating permits or license agreements; (4) various economic, business, and regulatory risks associated with the waste management industry; (5) the seasonal nature of the Company's business; (6) risks caused by customer concentration, the long-term nature of customer contracts, and the competitive nature of the industries in which the Company operates; (7) the outcome of any disputes with customers, contractors and subcontractors; (8) the financial condition of the Company's customers, including the ability of customers (especially those that may be highly leveraged or have inadequate liquidity) to maintain their credit availability; (9) higher than expected claims under the Company’s insurance policies, or losses that are uninsurable or that exceed existing insurance coverage; (10) market and competitive changes, including pricing pressures, market demand and acceptance for new products, services and technologies; changes in currency exchange rates, interest rates, commodity and fuel costs and capital costs; (11) the Company's ability to negotiate, complete, and integrate strategic transactions and joint ventures with strategic partners; (12) the Company’s ability to effectively retain key management and employees, including due to unanticipated changes to demand for the Company’s services, disruptions associated with labor disputes, and increased operating costs associated with union organizations; (13) the Company's inability or failure to protect its intellectual property rights from infringement in one or more of the many countries in which the Company operates; (14) failure to effectively prevent, detect or recover from breaches in the Company's cybersecurity infrastructure; (15) changes in the worldwide business environment in which the Company operates, including changes in general economic and industry conditions and cyclical slowdowns; (16) fluctuations in exchange rates between the U.S. dollar and other currencies in which the Company conducts business; (17) unforeseen business disruptions in one or more of the many countries in which the Company operates due to changes in economic conditions, changes in governmental laws and regulations, including environmental, occupational health and safety, tax and import tariff standards and amounts; political instability, civil disobedience, armed hostilities, public health issues or other calamities; (18) liability for and implementation of environmental remediation matters; (19) product liability and warranty claims associated with the Company’s operations; (20) the Company’s ability to comply with financial covenants and obligations to financial counterparties; (21) the Company’s outstanding indebtedness and exposure to derivative financial instruments that may be impacted by, among other factors, 22 changes in interest rates; (22) tax liabilities and changes in tax laws; (23) changes in the performance of equity and bond markets that could affect, among other things, the valuation of the assets in the Company's pension plans and the accounting for pension assets, liabilities and expenses; (24) risk and uncertainty associated with intangible assets; and the other risk factors listed from time to time in the Company's SEC reports A further discussion of these, along with other potential risk factors, can be found in Part I, Item 1A, "Risk Factors," of this Annual Report on Form 10-K.
Total Other Comprehensive Income (Loss) Total other comprehensive loss was $11.6 million in 2022, compared with total other comprehensive income of $84.1 million in 2021.
Total other comprehensive loss was $11.6 million in 2022, compared with total other comprehensive income of $84.1 million in 2021.
The Company is subject to various international, federal, state and local income taxes in jurisdictions where the Company operates.
The Company is subject to various international, federal, state, and local income taxes in the jurisdictions where the Company operates.
If, after assessing these qualitative factors, the Company determines it is “more-likely-than-not” that the fair value of the reporting unit is less than the carrying value, the Company would perform a quantitative test. 35 The quantitative approach of testing for goodwill impairment involves comparing the current fair value of each reporting unit to the net book value, including goodwill.
If, after assessing these qualitative factors, the Company determines it is “more-likely-than-not” that the fair value of the reporting unit is less than the carrying value, the Company would perform a quantitative test. The quantitative approach of testing for goodwill impairment involves comparing the current fair value of each reporting unit to the net book value, including goodwill.
A $2.3 million gain on the repurchase of $25.0 million of Senior Notes recognized during the year ended December 31, 2022 partially offset these fees. During 2021 , the Company recognized $5.5 million of fees and other costs primarily related to the amended Senior Secured Credit Facilities.
A $2.3 million gain on the repurchase of $25.0 million of Senior Notes recognized during the year ended December 31, 2022 partially offset these fees. 27 During 2021, the Company recognized $5.5 million of fees and other costs primarily related to the amended Senior Secured Credit Facilities.
Plan Discount rate One-quarter percent increase $ — $ (0.2) One-quarter percent decrease — 0.2 Expected long-term rate of return on plan assets One-quarter percent increase $ (0.4) $ (1.4) One-quarter percent decrease 0.4 1.4 Increases or decreases to net pension obligations may be required, should circumstances that affect these estimates change.
Plan Discount rate One-quarter percent increase $ — $ (0.2) One-quarter percent decrease — 0.2 Expected long-term rate of return on plan assets One-quarter percent increase $ (0.4) $ (1.6) One-quarter percent decrease 0.4 1.6 Increases or decreases to net pension obligations may be required, should circumstances that affect these estimates change.
In applying the goodwill impairment test, the Company has the option to perform a qualitative test or a quantitative test. Under the qualitative test, the Company assesses qualitative factors to determine whether it is more likely than not that the fair value of the reporting units is less than its carrying value.
In applying the goodwill impairment test, the Company has the option to perform a qualitative test, a quantitative test or both. Under the qualitative test, the Company assesses qualitative factors to determine whether it is more likely than not that the fair value of the reporting units is less than its carrying value.
The Company currently expects operational and business needs, in addition to repayment of its current debt maturities, to be met by cash provided by operations, supplemented with borrowings from time to time principally under the Senior Secured Credit Facilities.
The Company also currently expects operational and business needs, in addition to repayment of its current debt maturities, to be met by cash provided by operations, supplemented with borrowings from time to time principally under the Senior Secured Credit Facilities.
Significant assumptions utilized in the DCF model include a WACC of 12.0%, an average annual revenue growth rate of 3% and average annual free cash flow growth rate of 3%.
Significant assumptions utilized in the DCF model include a WACC of 12.0%, an average annual revenue growth rate of approximately 3% and average annual free cash flow growth rate of approximately 3.0%.
Because of the high degree of uncertainty regarding the future cash flows associated with these potential long-term tax liabilities, the Company is unable to estimate the years in which settlement will occur with the respective taxing authorities. Off-Balance Sheet Arrangements The following table summarizes the Company's contingent commercial commitments at December 31, 2022.
Because of the high degree of uncertainty regarding the future cash flows associated with these potential long-term tax liabilities, the Company is unable to estimate the years in which settlement will occur with the respective taxing authorities. Off-Balance Sheet Arrangements The following table summarizes the Company's contingent commercial commitments at December 31, 2023.
Holding all other assumptions constant, using December 31, 2022 plan data, a one-quarter percent increase or decrease in the discount rate and the expected long-term rate of return on plan assets would increase or decrease annual 2023 pre-tax defined benefit NPPC (expense) as follows: Increase (Decrease) to 2023 NPPC (In millions) U.S. Plans U.K.
Holding all other assumptions constant, using December 31, 2023 plan data, a one-quarter percent increase or decrease in the discount rate and the expected long-term rate of return on plan assets would increase or decrease annual 2024 pre-tax defined benefit NPPC (expense) as follows: Increase (Decrease) to 2024 NPPC (In millions) U.S. Plans U.K.
On an ongoing basis, the Company evaluates its critical accounting estimates, including those related to defined benefit pension benefits, notes and accounts receivable, fair value estimates for business combinations and goodwill, long-lived asset impairment, revenue recognition - cost-to-cost method, and income taxes.
On an ongoing basis, the Company evaluates its critical accounting estimates, including those related to defined benefit pension benefits, notes and accounts receivable, fair value estimates for business combinations and goodwill, long-lived asset impairment, over time revenue recognition - cost-to-cost method and income taxes.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. The following discussion should be read in conjunction with the Consolidated Financial Statements of Harsco Corporation provided under Part II, Item 8, Financial Statements and Supplementary Data of this Annual Report on Form 10-K.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. The following discussion should be read in conjunction with the Consolidated Financial Statements of Enviri Corporation provided under Part II, Item 8, Financial Statements and Supplementary Data of this Annual Report on Form 10-K.
Cash Requirements The Company's expected future payments related to contractual obligations and commercial commitments at December 31, 2022 consist of: • Principal payments related to our short-term borrowings and long-term debt obligations that are included in our Consolidated Balance Sheets.
Cash Requirements The Company's expected future payments related to contractual obligations and commercial commitments at December 31, 2023 consist of: • Principal payments related to our short-term borrowings and long-term debt obligations that are included in our Consolidated Balance Sheets.
A summary of the major components of this caption for the periods presented is as follows: (In millions) 2022 2021 2020 Net cash provided (used) by: Change in income taxes $ (3.5) $ 4.8 $ (1.1) Change in prepaid expenses (5.8) (1.8) (7.4) Change in reserve for contract losses 15.1 13.6 (2.1) Other (a) (15.0) 5.0 9.5 Total change in Other assets and liabilities $ (9.2) $ 21.6 $ (1.1) (a) Other relates primarily to other accruals that are individually not significant.
A summary of the major components of this caption for the periods presented is as follows: (In millions) 2023 2022 2021 Net cash provided (used) by: Change in income taxes $ 7.0 $ (3.5) $ 4.8 Change in prepaid expenses (4.0) (5.8) (1.8) Change in reserve for contract losses 20.2 15.1 13.6 Other (a) 8.1 (15.0) 5.0 Total change in Other assets and liabilities $ 31.3 $ (9.2) $ 21.6 (a) Other relates primarily to other accruals that are individually not significant.
The amounts charged against pre-tax income from continuing operations related to impaired long-lived assets (or asset groups), other than definite-lived intangibles, included in Other (income) expenses, net on the Consolidated Statements of Operations were $0.6 million, $1.0 million and $0.8 million in 2022, 2021 and 2020, respectively.
The amounts charged against pre-tax income from continuing operations related to impaired long-lived assets (or asset groups), other than definite-lived intangibles, included in Other (income) expenses, net on the Consolidated Statements of Operations were $0.1 million, $0.6 million and $1.0 million in 2023, 2022 and 2021, respectively.
Forward-looking statements can be identified by the use of such terms as "may," "could," "expect," "anticipate," "intend," "believe," "likely," "estimate," "outlook," "plan" or other comparable terms.
Forward-looking statements can be identified by the use of such terms as "may," "could," "expect," "anticipate," "intend," "believe," "likely," "estimate," "outlook," "plan", "contemplate", "project" or other comparable terms.
Any principal amount outstanding under the Revolving Credit Facility is due and payable on its maturity on March 10, 2026. The following table shows the amount outstanding under the Revolving Credit Facility and available credit at December 31, 2022.
Any principal amount outstanding under the Revolving Credit Facility is due and payable on its maturity on March 10, 2026. The following table shows the amount outstanding under the Revolving Credit Facility and available credit at December 31, 2023.
The Company’s required coverage of consolidated interest charges is set at a minimum of 2.75x of Consolidated Adjusted EBITDA through the end of 2024 (subject to an increase to 3.0x upon closing of the divestiture of the former Harsco Rail Segment), and leveling at 3.0x for the first quarter in 2025 and thereafter.
The Company’s required coverage of consolidated interest charges is set at a minimum of 2.75x of Consolidated Adjusted EBITDA through the end of 2024 (subject to an increase to 3.0x upon closing of the divestiture of Rail), and leveling at 3.0x for the first quarter in 2025 and thereafter.
See Note 8, Debt and Credit Agreements in Part II, Item 8 Financial Statements and Supplementary Data for additional details on the Company's Senior Secured Credit Facilities and other long-term debt, in addition to Note 4, Ac counts Receivable and Notes Receivable in Part II, Item 8 Financial Statements and Supplementary Data for additional details on the Company's AR Facility.
See Note 8, Debt and Credit Agreements in Part II, Item 8 Financial Statements and Supplementary Data for additional details on the Company's Senior Secured Credit Facilities and other long-term debt, in addition to Note 4, Accounts Receivable and Notes Receivable in Part II, Item 8 Financial Statements and Supplementary Data for additional details on the Company's AR Facility.
Over the longer-term, the Company expects HE to grow as a result of economic growth that supports higher global steel consumption, as well as investments and innovation that support the environmental solutions needs of customers. • CE: 2023 results are anticipated to improve meaningfully compared to 2022, as a result of higher services pricing, net of inflation, cost and operational improvements and a modest increase in environmental services demand across certain end-markets.
Over the longer-term, the Company expects HE to grow as a result of economic growth that supports higher global steel consumption, as well as investments and innovation that support the environmental solutions needs of customers. • CE: 2024 results are anticipated to improve compared to 2023, as a result of higher services pricing, net of inflation, cost and operational improvements and an increase in environmental services demand across certain end-markets.
The carrying value of the assets and liabilities of the former Harsco Rail Segment are classified as Assets held-for-sale and Liabilities of assets held-for-sale on the Consolidated Balance Sheets and the operating results of the former Harsco Rail Segment are reflected in the Consolidated Statements of Operations as discontinued operations for all periods presented.
The carrying value of the assets and liabilities of Rail are classified as Assets held-for-sale and Liabilities of assets held-for-sale on the Consolidated Balance Sheets and the operating results of Rail are reflected in the Consolidated Statements of Operations as discontinued operations for all periods presented.
See Note 10, Employee Benefit Plans in Part II, Item 8 Financial Statements and Supplementary Data for additional information. • Expected net cash payable of $2.2 million representing the fair value of the foreign currency exchange contracts outstanding at December 31, 2022. The foreign currency exchange contracts are recorded on the Consolidated Balance Sheets at fair value.
See Note 10, Employee Benefit Plans in Part II, Item 8 Financial Statements and Supplementary Data for additional information. • Expected net cash payable of $7.0 million representing the fair value of the foreign currency exchange contracts outstanding at December 31, 2023. The foreign currency exchange contracts are recorded on the Consolidated Balance Sheets at fair value.
See Note 15, Financial Instruments in Part II, Item 8 Financial Statements and Supplementary Data, for additional information. • At December 31, 2022, in addition to the above contractual obligations, the Company had $4.1 million of potential long-term tax liabilities, including interest and penalties, related to uncertain tax positions.
See Note 15, Financial Instruments in Part II, Item 8 Financial Statements and Supplementary Data, for additional information. 30 • At December 31, 2023, in addition to the above contractual obligations, the Company had $3.4 million of potential long-term tax liabilities, including interest and penalties, related to uncertain tax positions.
The increase in income tax expense was primarily due to increased disallowed interest expense in 2022 as a result of lower taxable income in U.S. and a $6.8 million Brazil tax benefit recorded in 2021 resulting from the recognition of deferred tax assets not recurring in 2022, partially offset by a $3.0 million tax benefit recorded on a $104.6 million goodwill impairment recorded for the Harsco Clean Earth Segment and the change in mix of income in various countries.
The increase in income tax expense was primarily due to increased disallowed interest expense in 2022 as a result of lower taxable income in U.S. and a $6.8 million Brazil tax benefit recorded in 2021 resulting from the recognition of deferred tax assets not recurring in 2022, partially offset by a $3.0 million tax benefit recorded on the $104.6 million CE goodwill impairment and the change in mix of income in various countries.
Debt Covenants The Senior Secured Credit Facility contains a consolidated net debt to Consolidated Adjusted EBITDA ratio covenant, which is not to exceed 5.50x at December 31, 2022, and a minimum consolidated adjusted EBITDA to consolidated interest charges ratio covenant, which is not to be less than 2.75x.
Debt Covenants The Senior Secured Credit Facilities contains a consolidated Net Debt to Consolidated Adjusted EBITDA ratio covenant, which is not to exceed 5.50x at December 31, 2023, and a minimum consolidated adjusted EBITDA to consolidated interest charges ratio covenant, which is not to be less than 2.75x.
The total net leverage ratio covenant applicable to the third quarter of 2024 and earlier is subject to a 0.50x decrease upon closing of the divestiture of the former Harsco Rail Segment.
The total net leverage ratio covenant applicable to the third quarter of 2024 and earlier is subject to a 0.50x decrease upon closing of the divestiture of Rail.
Assuming all other factors remain the same, a 100-basis point increase in the discount rate would reduce the estimated fair value to 1% below the net book value; and a 1% decrease in average annual free cash flow growth would reduce the estimated fair value to 1% below the net book value.
Assuming all other factors remain the same, a 100-basis point increase in the discount rate would reduce the estimated fair value to approximately 2% above the net book value and a 1% decrease in average annual free cash flow growth would reduce the estimated fair value to approximately 2% above the net book value.
Alternatively, Consolidated Adjusted EBITDA could decrease by $6.7 million or interest expense could increase by $10.9 million and the Company would remain in compliance with these covenants. The Company believes it will continue to maintain compliance with all covenants over the next twelve months based on its current outlook.
Alternatively, Consolidated Adjusted EBITDA could decrease by $29.8 million or interest expense could increase by $10.8 million and the Company would remain in compliance with these covenants. The Company believes it will continue to maintain compliance with all covenants over the next twelve months based on its current outlook.
However, the Company’s estimates of compliance with these covenants could change in the future with a continued deterioration in economic conditions, higher than forecasted interest rate increases, or an inability to successfully execute its plans by quarter to realize increased pricing and to implement cost reduction initiatives that substantially mitigate the impacts of inflation and other factors adversely impacting its realized operating margins. 32 Cash Management The Company has various cash management systems throughout the world that centralize cash in various bank accounts where it is economically justifiable and legally permissible to do so.
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 rate increases, or an inability to successfully execute its plans by quarter to sustain increased pricing and continue to execute cost reduction initiatives that substantially mitigate the impacts of inflation and other factors may adversely impact its realized operating margins Cash Management The Company has various cash management systems throughout the world that centralize cash in various bank accounts where it is economically justifiable and legally permissible to do so.
Certainty of Cash Flows The majority of the Company's cash flows provided by operations has historically been generated in the second half of the year. The certainty of the Company's future cash flows is underpinned by the long-term nature of the Company's HE services contracts and the recurring nature of revenues within the Clean Earth Segment.
Certainty of Cash Flows The majority of the Company's cash flows provided by operations has historically been generated in the second half of the year. The certainty of the Company's future cash flows is underpinned by the long-term nature of the Company's HE services contracts and the recurring nature of revenues within CE.
Goodwill and Other Intangible Asset Impairment Charges The Company recorded impairment charges of $119.6 million during the year ended December 31, 2022, which includes a $104.6 million charge related to goodwill in CE and a $15.0 million charge related to the intangible assets in HE. There were no such charges incurred during the years ended December 31, 2021 and 2020.
Goodwill and Other Intangible Asset Impairment Charges The Company recorded impairment charges of $119.6 million during the year ended December 31, 2022, which included a $104.6 million charge related to goodwill in CE and a $15.0 million intangible asset impairment in HE. There were no such charges incurred during the years ended December 31, 2023 and 2021.
During the years ended December 31, 2022, 2021 and 2020, the Company recognized $1.7 million, $5.5 million and $1.9 million, respectively, of fees and expenses related to amendments to the Senior Secured Credit Facilities in the caption Facility fees and debt-related income (expense) on the Consolidated Statements of Operations.
During the years ended December 31, 2023, 2022 and 2021, the Company recognized $12 thousand, $1.7 million and $5.5 million, respectively, of fees and expenses related to amendments to the Senior Secured Credit Facilities in the caption Facility fees and debt-related income (expense) on the Consolidated Statements of Operations.
A number of significant assumptions and estimates are involved in the preparation of DCF models including future revenues and operating margin growth, the WACC, capital spending, and the impact of business initiatives and working capital projections. The DCF model is based on approved forecasts for the early years and historical relationships and projections for later years.
For the DCF method, a number of significant assumptions and estimates are involved in the preparation of DCF models including future revenues and operating margin growth, the WACC and working capital projections. The future revenues and operating margin growth in the DCF model is based on approved forecasts for the early years and historical relationships and projections for later years.
The Company's policy is to use the largest banks in the various countries in which the Company operates. The Company monitors the creditworthiness of banks and, when appropriate, will adjust banking operations to reduce or eliminate exposure to less creditworthy banks. At December 31, 2022, the Company's consolidated cash and cash equivalents included $79.0 million held by non-U.S. subsidiaries.
The Company's policy is to use the largest banks in the various countries in which the Company operates. The Company monitors the creditworthiness of banks and, when appropriate, will adjust banking operations to reduce or eliminate exposure to less creditworthy banks. 33 At December 31, 2023, the Company's consolidated cash and cash equivalents included $113.4 million held by non-U.S. subsidiaries.
See Note 8, Deb t and Credit Agreements in Part II, Item 8 Financial Statements and Supplementary Data for additional information on short-term borrowings and long-term debt. • Projected interest payments on long-term debt are anticipated to be approximately $89.7 million annually based upon borrowings, interest rates and foreign currency exchange rates at December 31, 2022.
See Note 8, Debt and Credit Agreements in Part II, Item 8 Financial Statements and Supplementary Data for additional information on short-term borrowings and long-term debt. • Projected interest payments on long-term debt are anticipated to be approximately $98 million annually based upon borrowings, interest rates and foreign currency exchange rates at December 31, 2023.
Amounts included in this Item 7 of this Annual Report on Form 10-K are rounded in millions and all percentages are calculated based on actual amounts. As a result, minor differences may exist due to rounding.
Results of Operations of this Annual Report on Form 10-K are rounded in millions and all percentages are calculated based on actual amounts. As a result, minor differences may exist due to rounding.
The discount rates for 2022 NPPC were 1.9% for the U.K. plan, 2.7% for the U.S. plans and 2.1% for the global weighted-average of plans. The expected long-term rate of return on plan assets is determined by evaluating the asset return expectations with the Company's advisors as well as actual, long-term, historical results of asset returns for the pension plans.
The discount rates for 2023 NPPC were 5.1% for the U.K. plan, 5.3% for the U.S. plans and 5.1% for the global weighted-average of plans. The expected long-term rate of return on plan assets is determined by evaluating the asset return expectations with the Company's advisors as well as actual, long-term, historical results of asset returns for the pension plans.
The unrecognized tax benefits at December 31, 2022 and 2021 were $2.8 million and $3.1 million, respectively, excluding accrued interest and penalties. The unrecognized income tax benefit may decrease as a result of the lapse of statute of limitations or as a result of final settlement and resolution of outstanding tax matters in various state and international jurisdictions.
The unrecognized tax benefits at December 31, 2023 and 2022 were $2.1 million and $2.8 million, respectively, excluding accrued interest and penalties. The unrecognized income tax benefit may decrease because of the lapse of statute of limitations or because of final settlement and resolution of outstanding tax matters in various state and international jurisdictions.
It is possible that the Company's overall estimate of liquidated damages, penalties and costs to complete these contracts may increase, which would result in an additional estimated forward loss provision at such time.
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 performance of the Company's 2022 annual impairment tests did not result in any impairment of the Company's goodwill. The Harsco Environmental reporting unit's estimated fair value at October 1, 2022 was approximately 13% more than the net book value.
The performance of the Company's 2023 annual quantitative impairment tests did not result in any impairment of the Company's goodwill. The Harsco Environmental reporting unit's estimated fair value at October 1, 2023 was approximately 23.0% more than the net book value.
Summary of Senior Secured Credit Facilities and Notes: (In millions) December 31 2022 December 31 2021 By type: Revolving Credit Facility $ 370.0 $ 362.0 New Term Loan 492.5 497.5 5.75% Senior Notes 475.0 500.0 Total $ 1,337.5 $ 1,359.5 By classification: Current $ 5.0 $ 5.0 Long-term 1,332.5 1,354.5 Total $ 1,337.5 $ 1,359.5 30 Senior Secured Credit Facilities In February 2022, the Company amended its Senior Credit Facilities to reset the levels of the net debt to consolidated adjusted EBITDA ratio covenant.
Summary of Senior Secured Credit Facilities and Notes: (In millions) December 31 2023 December 31 2022 By type: Revolving Credit Facility $ 422.0 $ 370.0 New Term Loan 487.5 492.5 5.75% Senior Notes 475.0 475.0 Total $ 1,384.5 $ 1,337.5 By classification: Current $ 5.0 $ 5.0 Long-term 1,379.5 1,332.5 Total $ 1,384.5 $ 1,337.5 Senior Secured Credit Facilities In February 2022, the Company amended its Senior Credit Facilities to reset the levels of the Net Debt to consolidated adjusted EBITDA ratio covenant.
At December 31, 2022, 2021 and 2020, the Company's annual effective income tax rate on income from continuing operations was (8.4)%, 24.2% and 16.0%, respectively.
At December 31, 2023, 2022 and 2021, the Company's annual effective income tax rate on income from continuing operations was (151.9)%, (8.4)% and 24.2%, respectively.
Underlying business conditions are expected to stabilize in early 2023 and these external factors are not anticipated to have a material impact on performance in 2023.
Underlying business conditions have stabilized in 2023 and these external factors are not anticipated to have a material impact on performance in 2024.
At December 31, 2022, approximately 17.5% of the Company's consolidated cash and cash equivalents had regulatory restrictions that would preclude the transfer of funds with and among subsidiaries. Non-U.S. subsidiaries also held $15.7 million of cash and cash equivalents in consolidated strategic ventures. The strategic venture agreements may require strategic venture partner approval to transfer funds with and among subsidiaries.
At December 31, 2023, approximately 16.1% of the Company's consolidated cash and cash equivalents had regulatory restrictions that would preclude the transfer of funds with and among subsidiaries. Non-U.S. subsidiaries also held $30.6 million of cash and cash equivalents in consolidated strategic ventures. The strategic venture agreements may require strategic venture partner approval to transfer funds with and among subsidiaries.
These increases were attributable to the following significant items: Changes in Revenues (In millions) 2022 vs. 2021 2021 vs. 2020 Impact of ESOL acquisition $ — $ 134.2 Net effect of price/volume changes in HE, primarily attributable to volume changes 74.7 138.3 Net effect of price/volume changes in CE, primarily attributable to pricing changes 47.5 — Net effect of price/volume changes in CE, primarily attributable to volume changes — 25.6 Net impact of new contracts and lost contracts (including exited underperforming contracts) in HE (10.4) (5.6) Foreign currency translation (70.2) 20.8 Other (1.0) 1.1 Total change in revenues $ 40.7 $ 314.4 Cost of Sales Cost of sales for 2022 increased $62.7 million or 4% from 2021.
These increases were attributable to the following significant items: Changes in Revenues (In millions) 2023 vs. 2022 2022 vs. 2021 Net effect of price/volume changes in HE, primarily attributable to volume and service mix $ 74.6 $ 74.7 Net effect of price/volume changes in CE, primarily attributable to pricing changes 94.5 47.5 Net impact of new contracts and lost contracts (including exited underperforming contracts) in HE 13.0 (10.4) Impact of foreign currency translation (8.1) (70.2) Impact of pricing settlement in CE 6.0 — Other 0.2 (1.0) Total change in revenues $ 180.2 $ 40.7 Cost of Sales Cost of sales for 2023 increased $80.3 million or 5% from 2022.
December 31, 2022 (In thousands) Facility Limit Outstanding Balance Outstanding Letters of Credit Available Credit Revolving Credit Facility (a U.S.-based program) $ 700,000 370,000 27,318 $ 302,682 Other In June 2022, the Company repurchased $25.0 million of its 5.75% Senior Notes on the open market at a discount for $22.4 million.
December 31, 2023 (In thousands) Facility Limit Outstanding Balance Outstanding Letters of Credit Available Credit Revolving Credit Facility (a U.S.-based program) $ 700,000 422,000 30,817 $ 247,183 32 Other In June 2022, the Company repurchased $25.0 million of its 5.75% Senior Notes on the open market at a discount for $22.4 million.
Recently Adopted and Recently Issued Accounting Standards Information on recently adopted and recently issued accounting standards is included in Note 2, Recently Adopted and Recently Issued Accounting Standards, in Part II, Item 8, Financial Statements and Supplementary Data.
See Note 11, Income Taxes in Part II, Item 8, Financial Statements and Supplementary Data, for additional information. Recently Adopted and Recently Issued Accounting Standards Information on recently adopted and recently issued accounting standards is included in Note 2, Recently Adopted and Recently Issued Accounting Standards, in Part II, Item 8, Financial Statements and Supplementary Data.
At December 31, 2022, the Company was in compliance with these covenants, with a net leverage ratio of 5.35x and an interest coverage ratio of 3.14x. Based on balances and covenants in effect at December 31, 2022, the Company could increase net debt by $36.6 million and still be in compliance with these debt covenants.
At December 31, 2023, the Company was in compliance with these covenants, with a net leverage ratio of 4.14x and an interest coverage ratio of 3.03x. Based on balances and covenants in effect at December 31, 2023, the Company could increase Net Debt by $439.8 million and still be in compliance with these debt covenants.
Revenue Recognition - Cost-to-Cost Method For certain contracts with customers, which meet specific criteria established in U.S. GAAP, the Company recognizes revenue on an over time basis utilizing an input method based on costs incurred (“cost-to-cost method”) to measure progress, which requires the Company to make estimates regarding the revenues and costs associated with design, manufacturing and delivery of products.
GAAP, the Company recognizes revenue on an over time basis utilizing an input method based on costs incurred (“cost-to-cost method”) to measure progress, which requires the Company to make estimates regarding the revenues and costs associated with design, manufacturing and delivery of products.
Income Tax Benefit (Expense) from Continuing Operations Income tax expense from continuing operations in 2022 was $10.4 million, compared with $9.1 million income tax expense from continuing operations in 2021. The effective income tax rate relating to continuing operations for 2022 was (8.4)%, versus 24.2% for 2021.
Income Tax Expense from Continuing Operations Income tax expense from continuing operations in 2023 was $28.2 million, compared with $10.4 million income tax expense from continuing operations in 2022. The effective income tax rate relating to continuing operations for 2023 was (151.9)%, compared to (8.4)% for 2022.
The amounts charged against pre-tax income from continuing operations related to impaired definite-lived intangibles included in Goodwill and other intangible asset impairment charges on the Consolidated Statements of Operations were $15.0 million in 2022.
The amount charged against pre-tax income from continuing operations related to impaired definite-lived intangibles included in Goodwill and other intangible asset impairment charges on the Consolidated Statements of Operations was $15.0 million for the year ended December 31, 2022. There were no definite-lived intangible impairment charges in 2023 and 2021.
The Company's view beyond 2022 is supported by the below factors, which should be considered in the context of other risks, trends and strategies, as referenced in Part I, Item 1A, Risk Factors : • HE: 2023 results are expected to be modestly above 2022 results as positive impacts from higher service pricing, net of inflation, cost and operational improvement initiatives and higher environmental services and products demand at certain sites, including those linked to growth investments, are expected to be offset by the impacts of foreign exchange translation and a less favorable service mix.
The Company's view beyond 2023 is supported by the below factors, which should be considered in the context of other risks, trends and strategies, as referenced in Part I, Item 1A, Risk Factors : • HE: 2024 results are expected to be modestly above 2023 results as positive impacts from higher service pricing, net of inflation, as well as operational improvement initiatives and higher environmental services demand, including those linked to growth investments and new contracts, are expected to be offset by the impacts of lower commodity prices and lower demand for downstream products.
The decrease in effective tax rate was primarily due to the goodwill impairment recorded for the Harsco Clean Earth Segment, the intangible assets impairment recorded for the Altek business, and the change in mix of income, partially offset by a $6.8 million Brazil tax benefit recorded in 2021 resulting from the recognition of deferred tax assets not recurring in 2022. 27 Income tax expense from continuing operations in 2021 was $9.1 million, compared with income tax benefit from continuing operations of $8.7 million in 2020 .
The decrease in effective tax rate was primarily due to the CE goodwill impairment, the intangible assets impairment recorded for the Altek business, and the change in mix of income, partially offset by a $6.8 million Brazil tax benefit recorded in 2021 resulting from the recognition of deferred tax assets not recurring in 2022.
The Harsco Environmental Segment operates primarily under long-term contracts, providing critical environmental services and material processing to the global steel and metals industries, including zero-waste solutions for manufacturing byproducts within the metals industry.
The Company's operations consist of two reportable segments: Harsco Environmental and Clean Earth. HE operates primarily under long-term contracts, providing critical environmental services and material processing to the global steel and metals industries, including zero-waste solutions for manufacturing byproducts within the metals industry.
At December 31, 2022, the Company has $180.1 million of outstanding purchase commitments, of which $138.5 million will be fulfilled in the next twelve months, which includes commitments of $105.7 million related to the Rail business. 29 • Operating lease liabilities which are included in our Consolidated Balance Sheets.
At December 31, 2023, the Company has $162.3 million of outstanding purchase commitments, of which $73.7 million will be fulfilled in the next twelve months, and includes commitments of $17.7 million related to the Rail business. • Operating lease liabilities which are included in our Consolidated Balance Sheets.
This increase primarily relates to higher weighted average interest rates, in addition to higher outstanding borrowings during 2022, related to the Senior Secured Credit Facilities. Interest expense in 2021 was $63.2 million, an increase of $5.0 million, or 9%, compared with 2020. This increase primarily relates to higher outstanding borrowings.
Interest expense in 2022 was $75.2 million, an increase of $11.9 million, or 19%, compared with 2021. This increase primarily relates to higher weighted average interest rates, in addition to increased borrowings, on the Company's Senior Secured Credit Facilities during 2022.
Longer-term, the Company expects this segment to benefit from positive underlying market trends, supported by increased environmental regulation, further growth opportunities and its attractive asset position, as well as from the less cyclical and recurring nature of this business.
Longer-term, the Company expects this segment to benefit from positive underlying market trends, supported by increased environmental regulation, further growth opportunities, lower capital requirements and its attractive asset position, as well as from the less cyclical and more recurring nature of this business. 23 Results of Operations Amounts included in this Part II. Item 7.
The effective income tax rate relating to continued operations for 2021 was 24.2%, versus 16.0% for 2020 .
The effective income tax rate relating to continued operations for 2022 was (8.4)%, versus 24.2% for 2021 .
See Note 4, Accounts Receivable and Note Receivable in Part II, Item 8, Financial Statements and Supplementary Data for additional information.
See Note 8, Debt and Credit Agreements in Part II, Item 8, Financial Statements and Supplementary Data, for additional information.
Conversely, an improvement in a customer's ability to make payments could result in a decrease of the allowance for expected credit losses. Changes in the allowance for expected credit losses related to both of these situations would be recorded through Operating income from continuing operations in the period the change was determined.
Changes in the allowance for expected credit losses related to both of these situations would be recorded through Operating income from continuing operations in the period the change was determined.
Operating Income (Loss) and Operating Margins by Segment (Dollars in millions) 2022 2021 Change % Harsco Environmental $ 59.6 $ 103.4 $ (43.8) (42.4) % Harsco Clean Earth (81.8) 25.6 (107.4) (419.0) Corporate (35.1) (40.7) 5.5 13.6 Total Operating Income (Loss) $ (57.3) $ 88.4 $ (145.7) 164.9 % 2022 2021 Harsco Environmental 5.6 % 9.7 % Harsco Clean Earth (9.9) % 3.3 % Consolidated Operating Margin (3.0) % 4.8 % Harsco Environmental Segment: Significant Effects on Revenues (In millions) Revenues—2021 $ 1,068.1 Net effects of price/volume changes, primarily attributable to volume changes 74.7 Foreign currency translation (70.2) Net impact of new contracts and lost contracts (10.4) Other (1.0) Revenues—2022 $ 1,061.2 The following factors contributed to the changes in operating income for the year ended December 31, 2022.
Operating Income (Loss) by Segment (Dollars in millions) 2023 2022 Change % Harsco Environmental $ 77.6 $ 59.6 $ 18.1 30.3 % Clean Earth 77.0 (81.8) 158.8 194.1 % Corporate (43.6) (35.1) (8.5) (24.1) % Total Operating Income (Loss) $ 111.0 $ (57.3) $ 168.4 293.6 % Operating Margins by Segment 2023 2022 Harsco Environmental 6.8 % 5.6 % Clean Earth 8.3 % (9.9) % Consolidated Operating Margin 5.4 % (3.0) % Harsco Environmental Segment: Significant Effects on Revenues (In millions) Revenues—2022 $ 1,061.2 Net effects of price/volume changes, primarily attributable to volume changes and service mix 74.6 Foreign currency translation (8.1) Net impact of new contracts and lost contracts 13.0 Other 0.2 Revenues—2023 $ 1,140.9 24 The following factors contributed to the changes in operating income (loss) for the year ended December 31, 2023.
At December 31, 2022, the Company recorded a valuation allowance reduction of $7.1 million related to current year pension adjustments recorded through AOCI, a valuation allowance reduction of $6.4 million from the effects of foreign currency translation adjustments and a valuation allowance reduction of $4.3 million related to the tax rate reduction in certain jurisdiction in U.S., partially offset by a $5.2 million valuation allowance increase related to current year losses in certain foreign jurisdictions where the Company determined that it is more likely than not that these assets will not be realized, and a $8.9 million valuation allowance increase related to disallowed interest expense.
At December 31, 2023, the Company recorded a $12.7 million valuation allowance increase related to disallowed interest expense, a $9.3 million valuation allowance increase related to current year losses in certain foreign jurisdictions where the Company determined that it is more likely than not that these assets will not be realized and a valuation allowance increase of $2.3 million from the effects of foreign currency translation adjustments.
The assumptions are selected to represent the average expected experience over time and may differ, in any one year, from actual experience due to changes in capital markets and the overall economy.
The assumptions are selected to represent the average expected experience over time and may differ, in any one year, from actual experience due to changes in capital markets and the overall economy. These differences will impact the amount of unfunded benefit obligation and the NPPC recognized.
There were no definite-lived intangible impairment charges in 2021 and 2020. 36 Critical Estimate—Asset Impairment The determination of a long-lived asset (or asset group) impairment involves significant judgments based upon short-term and long-term projections of future asset (or asset group) performance.
Critical Estimate—Asset Impairment The determination of a long-lived asset (or asset group) impairment involves significant judgments based upon short-term and long-term projections of future asset (or asset group) performance.
See the Fair Value Estimates for Business Combinations and Goodwill and the Long-lived Asset Impairment (Other than Goodwill) paragraphs under Part II, Item 7 Management's Discussion and Analysis, Application of Critical Accounting Policies and Critical Accounting Estimates for further details. 26 Other (Income) Expenses, Net The major components of this Consolidated Statements of Operations caption are detailed below.
See the Fair Value Estimates for Business Combinations and Goodwill and the Long-lived Asset Impairment (Other than Goodwill) paragraphs under Part II, Item 7 Management's Discussion and Analysis, Application of Critical Accounting Policies and Critical Accounting Estimates for further details.
During the year ended December 31, 2022, the Company received proceeds of $145.0 million from the AR Facility. The Company capitalized fees of $1.8 million related to the AR Facility, of which $0.3 million was expensed in the caption Facility fees and debt-related income (expense) on the Company's Consolidated Statements of Operations during the year ended December 31, 2022.
At the inception of the AR Facility in June 2022, the Company capitalized fees of $1.8 million related to the AR Facility, of which $0.6 million and $0.3 million were expensed in the caption Facility fees and debt-related income (expense) on the Company's Consolidated Statements of Operations during the years ended December 31, 2023 and 2022, respectively.
The Company supplements the cash provided by operations with borrowings from time to time due to historical patterns of seasonal cash flow and the funding of various projects.
The Company supplements the cash provided by operations with borrowings from time to time due to historical patterns of seasonal cash flow and the funding of various projects and regularly assesses capital needs in the context of operational trends and strategic initiatives.
The Company is in the process of selling the Rail business with a sale expected to occur in 2023. The intention to sell the business was first announced in the fourth quarter of 2021. The sales process was delayed in 2022 due to certain macroeconomic conditions, including rising interest rates.
The intention to sell the business was first announced in the fourth quarter of 2021. The sales process was delayed due to certain macroeconomic conditions, including rising interest rates.
The goodwill allocated to the Harsco Environmental reporting unit, which is defined as the Harsco Environmental Segment, is $380.0 million at December 31, 2022. The related DCF model for this reporting unit included several key assumptions related to certain price increases and expected realizable cost savings.
The goodwill allocated to the Harsco Environmental reporting unit, which is defined as HE, is $388.7 million at December 31, 2023. The related DCF model for this reporting unit included several key assumptions related to certain price increases and expected operational improvement initiatives.
Assuming all other factors remain the same, a 100-basis point increase in the discount rate would decrease the excess of estimated fair value over net book value to 3%; and, a 1% decrease in the average annual free cash flow growth rate would decrease the excess of estimated fair value over net book value to 4%.
Assuming all other factors remain the same, a 100-basis point increase in the discount rate would decrease the excess of estimated fair value over net book value to approximately 12.0% and a 1% decrease in the average annual free cash flow growth rate would decrease the excess of estimated fair value over the net book value to approximately 12.0%. 36 The Clean Earth reporting unit's estimated fair value at October 1, 2023 was approximately 12.0% more than the net book value.
The contracts with Network Rail and Deutsche Bahn are 50% and 32% complete, respectively, as of December 31, 2022. Income Taxes The Company's income tax expense, deferred tax assets and liabilities and reserves for uncertain tax positions reflect management's best estimate of taxes to be paid.
As of December 31, 2023, based on costs incurred, the second contract with SBB is 85% complete and the contracts with Network Rail and Deutsche Bahn are 53% and 40% complete, respectively. 38 Income Taxes The Company's income tax expense, deferred tax assets and liabilities and reserves for uncertain tax positions reflect management's best estimate of taxes to be paid.
Generally, the NPPC increases as the expected long-term rate of return on assets decreases. For 2022 and 2021, the global weighted-average expected long-term rate of return on asset assumption was 4.7% and 5.1%, respectively. This rate was determined based on a model of expected asset returns for an actively managed portfolio.
Generally, the NPPC increases as the expected long-term rate of return on assets decreases. For 2023 and 2022, the global weighted-average expected long-term rate of return on asset assumption was 5.5% and 4.7%, respectively.
At December 31, 2022 and 2021, trade accounts receivable of $264.4 million and $377.9 million, respectively, were net of reserves of $8.3 million and $11.7 million, respectively.
At December 31, 2023 and 2022, trade accounts receivable of $280.8 million and $264.4 million, respectively, were net of reserves of $15.5 million and $8.3 million, respectively.
These differences will impact the amount of unfunded benefit obligation and the NPPC recognized. 33 The discount rates used in calculating the Company's projected benefit obligations at the December 31, 2022 measurement date for the U.K. and U.S. defined benefit pension plans were 5.0% and 5.3%, respectively, and the global weighted-average discount rate was 5.1%.
The discount rates used in calculating the Company's projected benefit obligations at the December 31, 2023 measurement date for the U.K. and U.S. defined benefit pension plans were 4.8% and 5.0%, respectively, and the global weighted-average discount rate was 4.8%.
Critical Estimate—Notes and Accounts Receivable A considerable amount of judgment is required to assess the realizability of receivables, including the current creditworthiness of each customer, related aging of past due balances and the facts and circumstances surrounding any non-payment.
Critical Estimate—Accounts Receivable A considerable amount of judgment is required to assess the realizability of receivables, including the current creditworthiness of each customer, related aging of past due balances and the facts and circumstances surrounding any non-payment. The Company's provisions for expected credit losses during 2023, 2022 and 2021 were $7.0 million, $0.4 million and $0.6 million, respectively.
The Company maintains a trade receivables securitization facility to accelerate cash flows from trade receivables under its AR Facility. The Company and its designated subsidiaries continuously sell their trade receivables as they are originated to its SPE. The SPE transfers ownership and control of qualifying receivables to PNC Bank, up to a maximum purchase commitment of $150.0 million.
The Company maintains a revolving trade receivables securitization facility to accelerate cash flows from trade receivables under its AR Facility with PNC Bank, National Association ("PNC"). The Company and its designated subsidiaries continuously sell their trade receivables as they are originated to its SPE.
Income (Loss) from Discontinued Businesses The operating results of the former Harsco Rail Segment and costs directly attributable to the sale of the business, have been reflected as discontinued operations in the Company's Consolidated Statements of Operations for all periods presented.
See Note 11, Income Taxes in Part II, Item 8, Financial Statements and Supplementary Data, for additional information. 28 Income (Loss) from Discontinued Businesses The operating results of Rail and costs directly attributable to the sale of the business, have been reflected as discontinued operations in the Company's Consolidated Statements of Operations for all periods presented.
The interest rates on variable-rate debt and foreign currency exchange rates are subject to changes beyond the Company's control and may result in actual interest expense and payments differing from the projected amounts. • Projected facility fee payments on the AR Facility are expected to be $7.6 million annually based on the drawn amount and rates at December 31, 2022.
The interest rates on variable-rate debt and foreign currency exchange rates are subject to changes beyond the Company's control and may result in actual interest expense and payments differing from the projected amounts.
Fair Value Estimates for Business Combinations and Goodwill The Company accounts for business combinations using the acquisition method of accounting, which requires that once control is obtained, all assets acquired and liabilities assumed, including amounts attributable to noncontrolling interests, be recorded at their respective fair values at the date of acquisition.
See Note 4, Accounts Receivable and Note Receivable in Part II, Item 8, Financial Statements and Supplementary Data and Schedule II, Valuation and Qualifying Accounts in Part IV, Item 15, Exhibit and Financial Statement Schedules for additional information. 35 Fair Value Estimates for Goodwill The Company accounts for business combinations using the acquisition method of accounting, which requires that once control is obtained, all assets acquired and liabilities assumed, including amounts attributable to noncontrolling interests, be recorded at their respective fair values at the date of acquisition.

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