Philadelphia-based Enviri Corporation announced that both Harsco Rail Europe and Harsco Rail Limited have finished all of their activities related to their respective engineered-to-order contracts with Deutsche Bahn (DB) to design and supply utility track vehicles.
The decision to cease the activities was taken to eliminate future performance risk, financial statement volatility, and future cash outflows related to the contracted activities. As a result, Enviri will be recording a noncash impairment asset charge of approximately $75 million and recording an incremental liability of approximately $133 million to address future obligations related to these contracts. Enviri said it expects these contract exits to conclude the company’s exposure to its legacy ETO contract risks.
Harsco Rail Europe GmbH has entered into an agreement with General Atomics subsidiary Gleisbaumechanik Brandenburg GmbH (GBM) to sell relevant assets and intellectual property to GBM to complete the utility track vehicles for DB. As a result, Harsco Rail Europe has ceased all activities relating to its DB ETO contract. Harsco Rail Limited has informed Network Rail (NR) that it has ceased all activities related to its ETO contract for stoneblower rail maintenance vehicles, and has proposed a plan to extend the life of NR’s existing stoneblower fleet which is currently operated and maintained by Harsco Rail Limited.
Cash payments, if any, to be received from GBM related to the asset transfer agreement would be recorded as income as received later this year and early 2027. Enviri said its opening capital structure included cash sufficient to address these liabilities with no change in leverage.
Harsco Rail said it is committed to delivering on its remaining ETO contract with Swiss Federal Railways (SBB), which is progressing on schedule with final deliveries and positive cash flows expected in 2027.
“This is an important milestone in fulfilling our commitment to de-risk Enviri of these challenged ETO contracts,” Enviri President and CEO Russell Hochman said. “Eliminating the cash outflows, volatility, and uncertainty related to continued activities under these contracts is an important step forward for Enviri and our shareholders. Going forward, Harsco Rail will enhance its focus on its core maintenance-of-way businesses, where we have demonstrated competitive advantages and which we believe will deliver more consistent returns for our shareholders.”