Enviri (NYSE:NVRI) Reports Sales Below Analyst Estimates In Q2 Earnings, Stock Drops 15.5%

Steel and waste handling company Enviri (NYSE:NVRI) missed Wall Street’s revenue expectations in Q2 CY2025, with sales falling 7.8% year on year to $562.3 million. Its non-GAAP loss of $0.22 per share was 78.4% below analysts’ consensus estimates.

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“Our environmental businesses performed well in the quarter and in line with our expectations,” said Enviri Chairman and CEO Nick Grasberger.

Company Overview

Cooling America’s first indoor ice rink in the 19th century, Enviri (NYSE:NVRI) offers steel and waste handling services.

Revenue Growth

A company’s long-term performance is an indicator of its overall quality. Any business can have short-term success, but a top-tier one grows for years. Over the last five years, Enviri grew its sales at a mediocre 6.1% compounded annual growth rate. This fell short of our benchmark for the industrials sector and is a poor baseline for our analysis.

Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. Enviri’s recent performance shows its demand has slowed as its annualized revenue growth of 2.7% over the last two years was below its five-year trend.

This quarter, Enviri missed Wall Street’s estimates and reported a rather uninspiring 7.8% year-on-year revenue decline, generating $562.3 million of revenue.

Looking ahead, sell-side analysts expect revenue to grow 4% over the next 12 months, similar to its two-year rate. Although this projection indicates its newer products and services will catalyze better top-line performance, it is still below average for the sector.

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Operating Margin

Operating margin is a key measure of profitability. Think of it as net income - the bottom line - excluding the impact of taxes and interest on debt, which are less connected to business fundamentals.

Enviri was profitable over the last five years but held back by its large cost base. Its average operating margin of 3.4% was weak for an industrials business. This result isn’t too surprising given its low gross margin as a starting point.

Analyzing the trend in its profitability, Enviri’s operating margin decreased by 3.3 percentage points over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability. Enviri’s performance was poor no matter how you look at it - it shows that costs were rising and it couldn’t pass them onto its customers.

In Q2, Enviri generated an operating margin profit margin of negative 1.3%, down 6.9 percentage points year on year. Since Enviri’s operating margin decreased more than its gross margin, we can assume it was less efficient because expenses such as marketing, R&D, and administrative overhead increased.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Sadly for Enviri, its EPS declined by 21% annually over the last five years while its revenue grew by 6.1%. This tells us the company became less profitable on a per-share basis as it expanded.

Diving into the nuances of Enviri’s earnings can give us a better understanding of its performance. As we mentioned earlier, Enviri’s operating margin declined by 3.3 percentage points over the last five years. Its share count also grew by 2.1%, meaning the company not only became less efficient with its operating expenses but also diluted its shareholders.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For Enviri, its two-year annual EPS declines of 563% show it’s continued to underperform. These results were bad no matter how you slice the data.

In Q2, Enviri reported adjusted EPS at negative $0.22, down from $0.02 in the same quarter last year. This print missed analysts’ estimates. Over the next 12 months, Wall Street is optimistic. Analysts forecast Enviri’s full-year EPS of negative $0.42 will reach break even.

Key Takeaways from Enviri’s Q2 Results

We struggled to find many positives in these results as it lowered its full-year EPS and EBITDA guidance and its revenue, EPS, and EBITDA fell short of Wall Street’s estimates. Overall, this was a weaker quarter. The stock traded down 15.5% to $7.33 immediately after reporting.

Enviri didn’t show it’s best hand this quarter, but does that create an opportunity to buy the stock right now? If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here, it’s free.