Enviri (NVRI) 2026年第3四半期決算説明会：鉄道部門の改善でガイダンスを引き上げ

要点

• 第3四半期の売上高は3億2,500万ドルとなり、調整後EBITDAは前年同期比21%増の4,700万ドルに拡大しました。調整後1株当たり損失は0.16ドルでした。
• ハースコ・エンバイロメンタルの売上高は5%増の2億7,300万ドルとなりました。調整後EBITDAは13%増の5,000万ドルに達し、同部門のEBITDAマージンは18%を上回りました。
• レール部門の売上高は、新造機器需要の低迷やドイツ鉄道（DB）およびネットワーク・レールとの契約終了を受け、5,200万ドルに減少しました。調整後EBITDAは前年同期の400万ドルの赤字から100万ドルの黒字へと改善しました。
• エンビリは両事業の通期調整後EBITDA見通しを引き上げました。ハースコ・エンバイロメンタルは1億8,000万〜1億8,400万ドルが見込まれ、レール部門の予想損失は700万〜1,000万ドルへと縮小しました。
• 10月に約7,300万ドルを支払ったことでDBとの契約終了手続きが完了しました。エンビリはまた、今後の四半期でGBMから最大3,400万ドルの追加支払いを受け取ると見込んでいます。
• 経営陣は、改善プログラムによって2026年に達成される分に加え、年間約4,000万ドルの増分効果がもたらされると予想しています。その影響はハースコ・エンバイロメンタルとレール部門、および2027年と2028年の間で概ね均等に配分される見通しです。

主要財務データ

第3四半期の特殊項目には、事業再編費用600万ドル、GBMへの第1回資産譲渡支払いに伴うレール部門の利益800万ドル、およびDB契約終了合意に関連する1,200万ドルの好ましい調整が含まれていました。

事業および営業業績

ハースコ・エンバイロメンタル

既存拠点におけるサービスおよび製品の取扱量増加、価格改定、業務改善が増収を後押ししました。これらの増益要因は、中東およびトルコにおける事業環境の悪化、インセンティブ報酬の増加、為替換算の逆風によって一部相殺されました。

顧客の粗鋼生産量は前年同期比で小幅に増加しました。経営陣によると、2026年7月に発効した新たな関税割当制度を受け、欧州の複数の製鉄所が操業再開を計画しています。エンビリはこれらの一部拠点にサービスを提供しており、大半の恩恵は2027年に現れると見込んでいますが、第4四半期にも限定的な寄与がある可能性があります。

同社はまた、機器の稼働率と生産性を向上させるため、保有機械の保守・管理方法の変更を進めています。あわせて、同部門の組織構造および間接費構造を簡素化しました。

レール部門

機器販売数量の減少は、経営陣が数十年ぶりの低水準と表現した北米需要の軟調さや、DBおよびネットワーク・レールとの契約終了を反映したものです。収益性は、より有利な売上構成、アフターマーケット事業の活発化、営業費用の削減、製造および人員体制の見直し、後入先出法（LIFO）による売上原価調整によって改善しました。

エンビリは、アフターマーケット部門に新たなリーダーシップを配置し、独立した組織体制と損益管理、製品ライフサイクルに基づく営業手法を確立しました。経営陣によると、この取り組みは初期段階にあり、構造的な効果は2028年にかけて段階的に現れる見通しです。

DB向けの個別受注生産契約は完全に終了しました。エンビリは前受金の返還および義務の決済のため、10月に約7,300万ドルを支払いました。DBは約1,300万ドルの履行保証を解除する予定であり、DBに対するこれ以上の支払いは発生しません。

GBMは対象車両の責任を引き継ぎ、全3回の資産支払いのうち第1回を実施しました。受取総額は最大4,200万ドルに達する可能性があり、今後の四半期に見込まれる最大3,400万ドルが含まれています。

スイス連邦鉄道（SBB）向けでは、最初の36両が納入され検収されました。残る11両のうち4両は製造を完了して顧客による試運転中であり、7両は製造中または生産開始間近です。経営陣は今後約1年での完了を見込んでおり、主に2027年と2028年に実質的な純キャッシュ流入があると予想しています。

業績予想（ガイダンス）

経営陣は、見通し引き上げの要因として、効率化施策、ハースコ・エンバイロメンタルのサービス事業の小幅な拡大、およびレール部門のアフターマーケット取扱量の増加を挙げました。

第4四半期ガイダンスの中央値では、ハースコ・エンバイロメンタルの業績は2025年第4四半期と同水準になる見込みです。基調的な成長は、前年の営業税額控除の一巡や中東での重圧によって相殺されると予想されます。レール部門はアフターマーケットの取扱量増加とコスト削減の恩恵を受ける見通しです。

10月に支払われた約7,300万ドルのDB向け支払いを除くと、実質的なフリーキャッシュフローは第3四半期から改善する見込みです。また、エンビリはクリーン・アース売却に関連し、ヴェオリアから運転資本の最終精算金500万ドルを受領しました。

リスクと注視事項

• 北米における新造機器需要は引き続き低迷しており、レール部門の売上高の抑制要因となっています。
• 中東での紛争が、同地域およびトルコにおけるハースコ・エンバイロメンタルの取扱量に引き続き下押し圧力をかけています。
• ネットワーク・レールは、既存のストーンブロワー群を改修するためにエンビリが提案した代替ソリューションを現在も検討中です。経営陣は協議が建設的であると述べつつも、手続きには時間を要する可能性があるとしています。
• エンビリは、ネットワーク・レールとの機器契約に基づく作業や追加の資金投入をもはや行っていません。同社は、起こり得る結果に対して十分な現金を確保していると述べています。
• ハースコ・エンバイロメンタルの100を超える拠点全体で保守および業務の変更を実施するには時間がかかり、改善プログラムの効果が発現する時期には不確実性があります。

アナリスト質疑応答の要点

経営陣は、レール部門のアフターマーケット拡大を初期段階の機会と位置づけました。初期の増益は主に早期に実現可能な成果によるものであり、組織および営業面の改革による貢献は今後数四半期から2028年にかけて見込まれます。

ネットワーク・レールに関して、経営陣はエンビリが引き続き契約に基づくその他のサービスを提供しており、良好な顧客関係を維持していると強調しました。双方が解決に向けて取り組んでいる間、機器契約に関する追加支出は発生していません。

同社は四半期末時点で、その後に支払われた7,300万ドルのDB向け金額を含め、契約関連の義務として約1億8,500万ドルを計上していました。また、エンビリは報告された現金とは別に、履行保証に関連する現金担保2,500万ドルを保有していました。

経営陣は、2027年の公式ガイダンスの発表は見送ったものの、同年のレール部門のキャッシュフローがプラス、あるいは少なくともマイナスにはならないとの見解は妥当であると認めました。詳細は、同社が2月に2027年の見通しを示す際に公表される見込みです。

決算説明会トランスクリプト全文

決算説明会の完全なトランスクリプト

経営陣による説明

Operator

Good morning. My name is Roy, and I will be your conference facilitator. At this time, I would like to welcome everyone to the Enviri Corporation Third Quarter 2026 Earnings Release Conference Call. Also, this telephone conference presentation and accompanying webcast made on behalf of Enviri Corporation are subject to copyright by Enviri Corporation and all rights are reserved. No recordings or redistributions of this telephone conference by any other party are permitted without express written consent of Enviri Corporation. Your participation indicates agreement.

I would now like to introduce Dave Martin of Enviri Corporation. Mr. Martin, you may now begin your call.

David Martin

Welcome to everyone joining us this morning. With me today is Russell Hochman, our President and CEO; and Peter Minan, our Executive Vice President and CFO. This morning, we will discuss our results for the third quarter as well as our outlook. After our prepared remarks, we will take your questions. Our quarterly earnings release and slide presentation for this call are available on our website.

During today's call, we will make statements that are considered forward-looking within the meaning of the federal securities laws. These statements are based on our current knowledge and expectations and are subject to certain risks and uncertainties that may cause actual results to differ materially from these forward-looking statements. For a discussion of such risks and uncertainties, see the Risk Factors section in our Form 10 information statement. The company undertakes no obligation to revise or update any forward-looking statement.

Lastly, on this call, we will refer to adjusted financial results that are considered non-GAAP for SEC reporting purposes. A reconciliation to GAAP results is included in our earnings release as well as the slide presentation. Now I'll turn the call over to Russell to begin his remarks.

Russell Hochman

Thank you, Dave. It's great to be with you all today to discuss our quarterly results and to update you on the progress we've made on our key priorities. Let's begin with the quarter. Harsco Environmental and Rail each delivered very strong results, which exceeded our expectations in the third quarter, and our business leadership and teams continue to respond well with a sense of determination and focus. Our adjusted earnings grew by more than 20% for the second consecutive quarter with both businesses reporting their highest quarterly earnings in roughly 2 years.

We achieved these results despite some persistent headwinds in the markets we serve, which I believe validates the merits of our near-term strategy for Enviri and the strong leadership and disciplined execution across our businesses. HE's growth in the quarter was driven by improvements and efficiency initiatives as well as a modest lift in volumes. Rail meanwhile, benefited from a lower overall cost structure resulting from our restructuring actions in recent quarters as well as an improved business mix, including within aftermarket parts.

Notwithstanding the continuing softness in the market for new equipment in North America, aftermarket overperformed our expectations, remaining a greater area of strategic focus and an important short-term growth opportunity for Rail. We expect the momentum within our businesses to continue, and we've raised our outlook for the year as a result. Pete will go through the quarter and our outlook in more detail. Next, let me turn to our priorities. We continue delivering on our commitments to drive actions to strengthen Enviri by derisking our ETO exposure in rail and executing on improvement program to enhance business efficiency and operational performance across the company.

We expect these efforts to drive meaningful earnings, margin and cash flow growth while improving our financial and strategic flexibility over the next year. Turning to rail ETO contracts. As we announced yesterday, we have executed an agreement with DB that releases the Harsco Rail from its obligations under the engineered-to-order contract for utility track vehicles. In connection with the release, as planned, we paid approximately $73 million in October to repay customer advances and satisfy our obligations associated with exiting the contract. This amount had been fully accrued for with the related cash set aside from the sale of Clean Earth.

As part of this agreement, DB will release performance bonds totaling approximately $13 million. No payments to DB are required under the agreement. We are pleased that DB will receive the next generation of machines from GBM to support their mission and that Harsco Rail has been able to maintain a positive relationship with this customer throughout this process. This formally completes our exit from the DB contract and removes a significant source of operational and financial uncertainty. This is truly a great outcome for Enviri and its shareholders.

Separately, under our agreement to transfer the assets related to the exited DB contract, GBM, the subcontractor on the project, has now assumed all responsibility for the related vehicles and has paid us the first of 3 installments for the project assets, which are expected to total up to $42 million. For Network Rail, our constructive discussions are ongoing, and both sides are committed to finding a mutually beneficial resolution to this situation. Network Rail continues to evaluate our proposed alternative solution to upgrade their existing fleet of stone blowers, and we expect that this process will take some time.

Importantly, we are no longer executing on this equipment contract, and therefore, we are not deploying any incremental cash related to this contract. Also, let me reaffirm that we have set aside cash from the sale of Clean Earth to fully address all potential outcomes related to exiting this contract with Network Rail. We are also making good progress on our remaining large ETO contract with SBB. The first 36 vehicles, the wagons have been fully delivered and now accepted. Of the remaining 11 vehicles, 4 have been fully manufactured and are undergoing commissioning by the customer. The other 7 vehicles are now being produced or will be shortly.

We remain on track to complete this project over the next year or so and importantly, collect the cash related to these final vehicles. While there is still work to do on these 2 contracts, we successfully eliminated a good deal of risk and distraction and the team is keenly focused on its core maintenance of way of business, which is more predictable and cash generative and lower risk. Lastly, let me comment on our self-help improvement program. These broad-based efforts have been underway for a couple of quarters, and we recently completed our final assessment of the various work streams.

We conducted a very disciplined bottoms-up process, and I'm encouraged by the ownership and leadership across the company. Based on this assessment, we are committing to deliver approximately $40 million of annualized value for our shareholders from these actions. Pete will provide some additional detail in his remarks. In Harsco Environmental, we are changing certain long-standing practices on how we maintain and manage our equipment fleet, which improve asset availability and productivity while performing at the high service levels our customers expect. We have also simplified HE's organization and overhead structure.

These actions are expected to strengthen our competitiveness while supporting our profitability and continued leadership in the industry. In Rail, we optimized our manufacturing footprint and working capital to improve operational efficiency to support product quality and on-time product delivery. We also rightsized administrative and engineering support spending, and we're beginning to see the benefits of these actions. We are also doubling down on aftermarket with a more aggressive commercial strategy that we expect to sustainably boost the size of this business within rail.

It's an exciting time for Enviri. Both HE and Rail are moving in the right direction, and our Q3 performance again highlights the importance of disciplined execution and our focus on delivering on our commitments. Our strategic priorities are very clear, and I'm encouraged by the progress we've made over the past 2 quarters. Enviri is well positioned with a strong balance sheet and significant financial and strategic flexibility, which should strengthen further as a result of our improvement initiatives. Any uplift in our end markets will further boost our growth over time. In short, we are very optimistic about what Enviri can accomplish over the next year or 2. Now let me turn it over to Pete to discuss the quarter in more detail.

Peter Minan

Thanks, Russell, and good morning, everyone. Both of our businesses executed and performed very well in the third quarter despite, as [ Russell ] mentioned, some market headwinds. Each business delivered year-over-year earnings growth that exceeded our expectations. Relative to our prior guidance, we benefited from better services activity at HE and higher aftermarket volumes in Rail. Both businesses also benefited from our focus on cost controls and our recently implemented efficiency actions. As I've mentioned before, we are laser-focused on delivering against our near-term commitments.

And given our momentum, we're pleased to raise our earnings guidance for the year. Looking a little further out, HE and Rail continue to push forward our key initiatives aimed at further boosting our earnings, margins and cash flow profile, which [ Russell ] discussed. I'll come back to our guidance and improvement program shortly, but let me first walk through our third quarter details starting on Slide 4. As with the last quarter, note that our financial data now excludes Clean Earth for all historical periods. The central costs previously allocated to Clean Earth are now embedded within our Corporate segment as we continue to support Clean Earth under a transition services agreement.

In the third quarter, total revenue was $325 million, and adjusted EBITDA was $47 million, which is 21% higher than Q3 of last year. And again, we exceeded our expectations for the quarter. HE and Rail contributed equally to our earnings growth this quarter. Our Q3 adjusted loss per share was $0.16, and our unusual items in the quarter included $6 million of restructuring costs, consisting of $3 million of severance-related costs at HE and $3 million of third-party consulting fees linked to our internal improvement program. I should note that there will be some further restructuring costs recorded in Q4.

Our unusual items also included the $8 million rail gain related to the first payment we received from GBM under our asset transfer agreement, which we disclosed last quarter. And as noted in our earnings release, we expect to receive up to $34 million in additional payments from GBM in the coming quarters. Also, as we mentioned in yesterday's press release, we recorded a $12 million favorable adjustment in connection with the execution of the DB exit agreement. The gain relates to the release of performance bonds supporting the project, which we have previously accrued as a potential liability.

Adjusted free cash flow for the quarter was negative as anticipated and included the $8 million GBM payment I just mentioned. We expect our underlying cash flow performance to improve starting in Q4 and to accelerate as we move forward. So please turn to Slide 5 and our Harsco Environmental segment. Segment revenues totaled $273 million, an increase of 5% compared with the prior year quarter. Adjusted EBITDA totaled $50 million, which is 13% higher than the comparable quarter in 2025, and HE's EBITDA margin increased to over 18%.

The year-over-year earnings improvement reflects higher services and product volumes, better pricing as well as operational improvements at certain existing sites. Now these benefits were partially offset by some market conditions, higher incentive pay and foreign exchange translation headwinds. Customer steel output increased modestly year-over-year, and production levels were considerably weaker in the Middle East and in Turkey due to the ongoing conflict in that region, but these impacts were offset elsewhere. In Europe, a number of steel mills have announced plans to restart certain operations following the implementation of the new tariff quota scheme that was effective at the beginning of July of this year.

We provide services at some of these sites and expect to benefit from these plans in the coming quarters. Next, please turn to Slide 6 and our Rail business. Rail revenues totaled $52 million, which is lower than the prior year quarter. The change reflects lower equipment volumes amid soft market demand, which remains at a multi-decade low as well as the impact of exiting the DB and Network Rail contracts. Rail's adjusted EBITDA was $1 million in the quarter compared to an EBITDA loss of $4 million in the prior year.

This improvement reflects a more favorable mix of equipment and aftermarket sales, lower operating costs following recent manufacturing footprint and workforce changes, some of which related to the DB and Network Rail contract exits as well as LIFO cost of sales adjustments. Let me next turn to our outlook on Slide 7. We have raised our full year EBITDA guidance for both HE and Rail. For HE, our EBITDA range is now $180 million to $184 million compared with $170 million to $180 million previously. And for Rail, we now expect a loss range of $7 million to $10 million compared with the previous range of $19 million to $26 million -- these changes reflect benefits from our recent business improvement and efficiency actions as well as a modest increase in service levels at HE.

And for Rail, we are now also anticipating an increase in our aftermarket volumes, which is the direct result of our focused pursuit of this market opportunity in recent quarters. Our EBITDA guidance for the fourth quarter can be found on Slide 8. At the midpoint of its guidance range, Harsco Environmental performance is expected to be similar to the fourth quarter of 2025 as underlying business growth is offset by an operating tax credit in 2025 not repeating this year as well as certain market pressures in the Middle East. For Rail, volume growth in aftermarket and cost improvements are projected to benefit results compared to the prior year quarter.

Corporate costs are expected to be $5 million to $6 million in the fourth quarter, net of stock compensation expense. We expect our underlying free cash flow in Q4 to improve relative to the third quarter. Now this expectation excludes the approximately $73 million payment we made in October as a result of exiting the DB contract that [ Russell ] mentioned. That payment was in line with our accrual and in line with our expectations and as mentioned earlier, concludes our obligations related to the DB contract. We are also pleased to report that in October, we received a $5 million working capital final true-up payment from Veolia related to the Clean Earth sale.

Our net leverage remained at 1.9x at the end of Q3 as defined by our credit agreement. And you will recall that our bank covenant definitions limit the amount of cash that can be used in calculating net debt to $100 million. Now lastly, regarding our improvement program, which [ Russell ] discussed, we expect approximately $40 million of incremental benefits in addition to those realized in 2026. The benefit will roughly be split between HE and Rail as well as between 2027 and 2028. We are certainly pushing to realize these impacts sooner, but we see this as an appropriate view at the present time.

Some of these benefits come from simplifying our organizational structure and should have more immediate impacts, while others will take time, reflecting the complexity of implementing maintenance and operational changes across more than 100 sites globally in HE. To a lesser extent, the program also includes benefits in rail related to increased aftermarket penetration in 2027 and 2028. Now we'll provide more clarity on these details with our 2027 guidance that we will issue in February. Thanks, and I'll now hand the call back to the operator for Q&A.

Operator

Your first question comes from Rob Brown with Lake Street Capital Markets.

質疑応答

Robert Brown

Just wanted to follow up on the aftermarket focus. You had good progress starting -- starting this quarter, but in the quarter. What's sort of the view on the aftermarket kind of ramp? How much progress have you made there? And how much do you have to go to really get to where you want to be?

Russell Hochman

Rob, it's Russell. I think we've made some very good progress. I think there's more to go. I think the shift is really a reorientation of the team from its sort of legacy focus on new equipment as the primary focus and a realization that there's sort of a new opportunity to focus more on the aftermarket as its own sort of product category. And so I think we've separated these with new leadership, new organizational structure, separate P&L, bringing in new expertise, new life cycle aftermarket approach. And so obviously, the results speak for themselves. We may have taken our eye off that in the past. And so we think there's more runway there in terms of going after aftermarket. So we're very enthusiastic about the opportunity.

Peter Minan

Rob, it's Pete. We're early days, a simple answer. And I think the benefits we saw in Q3 were kind of largely related to quick wins and some real good opportunities that we saw. The real structural benefits, the longer-term benefits, which you'll see in 2027 and 2028 are going to be really related to some of the structural changes that we're putting in place today. So it's going to phase in. It's not going to be an overnight change, but we expect it to continue to be accretive over the next several quarters, actually through the end of 2028.

Robert Brown

And then good progress on getting the rail contracts sort of cleaned up on the DB side. What's sort of the next steps on that broader effort? I know you really reserved complete for what the ultimate charges are, but what's sort of the next steps in that effort?

Russell Hochman

Are you referring to Network Rail, Rob?

Robert Brown

Yes.

Russell Hochman

Network Rail. So yes, as I mentioned, we're having constructive discussions with them. We have a very long-standing relationship with them going back decades. We are still providing contracted services to them and that relationship is as good as ever. And they've reaffirmed that relationship continues to be very positive and the services continue to be very good. And all I can tell you at the moment is that the 2 sides are trying to work it out, right?

And so they're evaluating our offer as you can imagine as the national rail service provider, it's a big decision for them. They have a lot of stakeholders they need to speak with. So we are there when they need us. We are available to answer their questions. We are not spending anything. And so that's really what I can report at the moment. And so we put aside what we need to put aside for any kind of eventuality. But I would just say it's heading in a direction that we had hoped for.

And obviously, the recent news on Deutsche Bahn is evidence that we can work things out with our partners. I think the news yesterday that we successfully exited in a way that our customer will ultimately receive their equipment that the reputation of Harsco Rail remains very positive with this customer. And obviously, that we are getting paid for the assets kind of is evidence that we can work these things out, right? And so we're hopeful we can repeat that with Network Rail. But that's really what I can provide as an update at the moment.

Peter Minan

And Rob, it's Pete. Lest any uncertainty at all. The Deutsche Bahn contract is concluded. So we're -- it's entirely in our rearview mirror. We have nothing -- well, nothing further to do with respect to the contract. Frankly, the only accounting adjustments you're going to see are when we collect our payments from GBM next quarter and in early 2027, and those are positive cash flows and gains. So it's, as Russell said, extremely successful conclusion to a contract that has been creating a lot of uncertainty and questions for us over the years. So really happy about that.

Operator

Your next question comes from Larry Solow with CJS Securities.

Lawrence Solow

Good to see some progress on your initiatives. Congrats there. Just on the -- so on the -- curious on the DB settlement exit, is just the amount of cash outlay or the contractual settlement, is that -- it sounds like it's basically in line with your expectations, right? SBB, I'm just trying to run through them all. SBB, I believe that will be positive cash flow this year, right? So the only real dangling or potential -- I'm not saying it's negative, but where there's still some risk, I guess, is Network Rail. Is that correct? And can you just like run us through kind of -- I know you had, I think, like $200 million of cash reserve for all these contracts. Where does that kind of stand now? Can you kind of update us on just the numbers behind it?

Peter Minan

Yes, yes, sure. Larry, Pete. Good to hear from you. Yes, let me just break it into pieces. First of all, in the question of Deutsche Bahn, that actually -- the only thing we did in October was pay off the amount that we accrued in the exact amount to our -- basically refund the advance we got, which was $73 million. We paid that early October. So that's -- you'll see that in the Q4 cash activity. I mentioned that in my remarks, but that was completely consistent with what we accrued. There is no change. And as Russell mentioned, we had the cash set aside from that, and I'll come back to that in a second.

In the case of Network Rail, we are not spending any money. We've exited the contract. So we're not -- there's no activity at all until we reach an ultimate agreement with the company. So that's -- that we've got accrued, and I'll come back to the amount accrued in a second. SBB is cash positive -- net cash positive really more significantly in 2027 and 2028. But it's just -- it's something we're keeping because it's progressing quite well from here on out, and it's going to generate a meaningful amount of cash inflow over the next couple of years.

We had accrued roughly $185 million or so at the end of the quarter for all of these things. We won't get into specifics, but part of that will be settled by the $73 million payment I just mentioned related to DB that we've already spent. And then the rest of it is related to Network Rail and some other contracts, which we'll spend when we reach a negotiated settlement with Network Rail.

As far as cash, we had $280 million of cash on the balance sheet at the end of the quarter, $50 million of it was previously indicated as restricted. It's no longer restricted as of now. So that cash is what we had set aside plus another $25 million of cash collateral, if you recall, related to performance bonds, which is not shown as cash on the balance sheet. It's actually buried in other assets. So we have just under $300 million of cash kind of on the balance sheet that we had set aside to cover not only our normal working capital needs, but to deal with any and all possible scenarios that these exits could take.

Lawrence Solow

I appreciate all that color. And I know it's early days, but it sounds like if I just put the pieces all together between the exits of these UTV contracts and hopefully, some improvement in the domestic side. If we look out to '27, I know you don't want to give guidance yet, but is it fair to say that just on the rail side, cash flow could actually be positive or at least no longer negative?

Peter Minan

Yes. I think that's a fair comment, Rob.

Robert Brown

I mean...

Lawrence Solow

Okay. Great. Lastly, just on HE. It sounds like things are progressing mostly cost cutting and stuff. But you did mention, I guess, a little bit of a revenue increase. Is that more just volumes are roughly flat. I guess you got a little bit of benefit on the Eco product side. But are you just -- what's driving the revenue improvement volume decline? Is it just more ancillary services? Or what kind of drove that modest improvement? And it sounds like on the Europe side, no benefit yet, but perhaps some benefit next year.

Peter Minan

Yes. It's volumes, but also prices. We have some good price increases. So that helps. You recall that I mentioned that we're still seeing some pressure -- volume pressures in the Middle East because of the conflict there. That's -- those were largely offset by volume and price increases elsewhere in the business. In the case of Europe, you're absolutely right. We -- there are a number of sites that are in process now for restarting furnaces, for example, and to deal with the additional volumes that they expect to come in. We operate a number of those sites, and we expect to see the benefits largely in 2027, but we might see it a little bit in Q4.

Operator

This concludes our question-and-answer session. I would now like to turn the conference back over to Mr. Martin for any closing remarks. Please go ahead.

David Martin

Thank you, Roy, and thanks for everyone joining us this morning. Any follow-up questions, feel free to reach out to me. And as always, we appreciate your interest in Enviri and look forward to speaking with you in the future. Take care.

Operator

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.