Revenue Recognition

6 Months Ended

Jun. 30, 2024

Revenue from Contract with Customer [Abstract]

Revenues

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

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



	Three Months Ended
	June 30, 2024
(In thousands)	Harsco Environmental Segment		Clean Earth Segment		Harsco Rail Segment		Consolidated Totals
Primary Geographical Markets (a):
North America	$	84,027	$	236,105	$	53,044	$	373,176
Western Europe	109,620		—		18,652		128,272
Latin America (b)	41,280		—		1,918		43,198
Asia-Pacific	28,345		—		7,345		35,690
Middle East and Africa	25,182		—		—		25,182
Eastern Europe	4,475		—		—		4,475
Total Revenues	$	292,929	$	236,105	$	80,959	$	609,993
Key Product and Service Groups:
Environmental services related to resource recovery for metals manufacturing and related logistical services	$	253,685	$	—	$	—	$	253,685
Ecoproducts	34,263		—		—		34,263
Environmental systems for aluminum dross and scrap processing	4,981		—		—		4,981
Railway track maintenance equipment	—		—		30,517		30,517
After market parts and services; safety and diagnostic technology	—		—		35,131		35,131
Railway contracting services	—		—		15,311		15,311
Hazardous waste processing solutions	—		194,874		—		194,874

Soil and dredged materials processing and reuse solutions	—		41,231		—		41,231
Total Revenues	$	292,929	$	236,105	$	80,959	$	609,993



	Three Months Ended
	June 30, 2023
(In thousands)	Harsco Environmental Segment		Clean Earth Segment		Harsco Rail Segment		Consolidated Totals
Primary Geographical Markets (a):
North America	$	81,616	$	230,575	$	69,450	$	381,641
Western Europe	107,318		—		11,377		118,695
Latin America (b)	42,180		—		561		42,741
Asia-Pacific	32,339		—		7,460		39,799
Middle East and Africa	21,117		—		—		21,117
Eastern Europe	5,023		—		—		5,023
Total Revenues	$	289,593	$	230,575	$	88,848	$	609,016

Key Product and Service Groups:
Environmental services related to resource recovery for metals manufacturing and related logistical services	$	242,638	$	—	$	—	$	242,638
Ecoproducts	40,504		—		—		40,504
Environmental systems for aluminum dross and scrap processing	6,451		—		—		6,451
Railway track maintenance equipment	—		—		44,796		44,796
After market parts and services; safety and diagnostic technology	—		—		34,530		34,530
Railway contracting services	—		—		9,522		9,522
Hazardous waste processing solutions	—		197,506		—		197,506

Soil and dredged materials processing and reuse solutions	—		33,069		—		33,069
Total Revenues	$	289,593	$	230,575	$	88,848	$	609,016



	Six Months Ended
	June 30, 2024
(In thousands)	Harsco Environmental Segment		Clean Earth Segment		Harsco Rail Segment		Consolidated Totals
Primary Geographical Markets (a):
North America	$	168,237	$	462,135	$	97,475	$	727,847
Western Europe	219,895		—		40,024		259,919
Latin America (b)	84,201		—		2,958		87,159
Asia-Pacific	57,260		—		15,670		72,930
Middle East and Africa	53,531		—		—		53,531
Eastern Europe	8,924		—		—		8,924
Total Revenues	$	592,048	$	462,135	$	156,127	$	1,210,310
Key Product and Service Groups:
Environmental services related to resource recovery for metals manufacturing and related logistical services	$	511,813	$	—	$	—	$	511,813
Ecoproducts	70,527		—		—		70,527
Environmental systems for aluminum dross and scrap processing	9,708		—		—		9,708
Railway track maintenance equipment	—		—		60,436		60,436
After-market parts and services; safety and diagnostic technology	—		—		66,007		66,007
Railway contracting services	—		—		29,684		29,684
Hazardous waste processing solutions	—		386,784		—		386,784
Soil and dredged materials processing and reuse solutions	—		75,351		—		75,351
Total Revenues	$	592,048	$	462,135	$	156,127	$	1,210,310



	Six Months Ended
	June 30, 2023
(In thousands)	Harsco Environmental Segment		Clean Earth Segment		Harsco Rail Segment		Consolidated Totals
Primary Geographical Markets (a):
North America	$	160,089	$	453,039	$	113,612	$	726,740
Western Europe	208,704		—		24,564		233,268
Latin America (b)	83,135		—		1,165		84,300
Asia-Pacific	61,300		—		14,559		75,859
Middle East and Africa	39,522		—		—		39,522
Eastern Europe	10,032		—		—		10,032
Total Revenues	$	562,782	$	453,039	$	153,900	$	1,169,721


Key Product and Service Groups:
Environmental services related to resource recovery for metals manufacturing and related logistical services	$	471,999	$	—	$	—	$	471,999
Ecoproducts	78,906		—		—		78,906
Environmental systems for aluminum dross and scrap processing	11,877		—		—		11,877
Railway track maintenance equipment	—		—		74,240		74,240
After-market parts and services; safety and diagnostic technology	—		—		62,323		62,323
Railway contracting services	—		—		17,337		17,337
Hazardous waste processing solutions	—		383,618		—		383,618
Soil and dredged materials processing and reuse solutions	—		69,421		—		69,421
Total Revenues	$	562,782	$	453,039	$	153,900	$	1,169,721

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

(b) Includes Mexico.

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

The Company had contract assets totaling $99.4 million and $86.9 million at June 30, 2024 and December 31, 2023, respectively. The Company had advances on contracts totaling $30.5 million and $38.6 million at June 30, 2024 and December 31, 2023, respectively. During the three and six months ended June 30, 2024, the Company recognized $9.8 million and $20.5 million of revenue related to amounts previously included in advances on contracts. During the three and six months ended June 30, 2023, the Company recognized revenues of $10.9 million and $22.5 million, respectively, related to amounts previously included in advances on contracts.

At June 30, 2024, HE had remaining, fixed, unsatisfied performance obligations where the expected contract duration exceeds one year totaling $77.0 million. Of this amount, $21.6 million is expected to be fulfilled by June 30, 2025, $18.9 million by June 30, 2026, $14.5 million by June 30, 2027, $11.6 million by June 30, 2028 and the remainder thereafter. These amounts exclude any variable fees, fixed fees subject to indexation and any performance obligations expected to be satisfied within one year.

At June 30, 2024, Rail had remaining, fixed, unsatisfied performance obligations where the expected contract duration exceeds one year totaling $128.7 million. Of this amount, $60.7 million is expected to be fulfilled by June 30, 2025, $34.2 million by June 30, 2026, $21.8 million by June 30, 2027, $8.0 million by June 30, 2028 and the remainder thereafter. These amounts exclude any variable fees, fixed fees subject to indexation and any performance obligations expected to be satisfied within one year.

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

For the Network Rail contract, the Company recorded an additional loss provision of $2.0 million in the second quarter of 2024, primarily related to costs for redesign and increased manufacturing costs. During the second quarter of 2023, the Company reversed a portion of its previous estimated loss provision adjustment in the amount of $23.6 million. The favorable adjustment was the result of an amendment to the contract with Network Rail which extended the delivery schedule for the machines and reduced the estimate of liquidated damages. The majority of the reduction in liquidated damages was recorded as an increase to revenue and contract assets. Partially offsetting this were higher estimated material, engineering and labor costs due to additional experience gained during the manufacturing process.

For the Deutsche Bahn contract, the Company recorded an additional loss provision of $7.2 million in the second quarter of 2024, related to supplier price increases, challenges with supplier quality on key components and increased engineering efforts that exceeded previous estimates. During the second quarter of 2023, the Company recorded an additional forward loss provision of $8.4 million. This loss provision was due to increased costs related to a critical supplier that had filed for bankruptcy in 2022 and ceased operations during the second quarter of 2023, as well as an increase in estimated component costs and engineering costs.

For the SBB contract, a $0.2 million provision was recognized in the six months ended June 30, 2024. In the second quarter of 2023, the company recorded an additional forward loss provision of $6.1 million, due to increased costs related to increased estimates for material, engineering and commissioning costs for the remaining vehicles.

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

As of June 30, 2024, the contracts with Network Rail, Deutsche Bahn and SBB are 62%, 44% and 89% complete, respectively, based on costs incurred.

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

- Definition

The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 9
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-9

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 10
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-10

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 15
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-15

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 12
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-12

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 12
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-12

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 12
-Subparagraph (c)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-12

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 12
-Subparagraph (d)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-12

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 12
-Subparagraph (e)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-12

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 13
-Subparagraph (b)(2)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-13

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Name Accounting Standards Codification
-Topic 606
-Publisher FASB
-URI https://asc.fasb.org//606/tableOfContent

+ Details

ENVIRI Corp 10-Q