엔비리(NVRI) 2026년 3분기 실적 콘퍼런스콜: 철도 부문 개선으로 가이던스 상향

핵심 요약

• 3분기 매출은 3억 2,500만 달러를 기록했으며, 조정 EBITDA는 전년 동기 대비 21% 증가한 4,700만 달러였다. 조정 주당순손실은 0.16달러를 기록했다.
• 하스코 인바이런멘털 매출은 5% 증가한 2억 7,300만 달러를 기록했다. 조정 EBITDA는 13% 증가한 5,000만 달러로 집계돼 해당 사업 부문의 EBITDA 마진율은 18%를 상회했다.
• 철도 부문 매출은 신규 장비 수요 부진과 도이체반(DB) 및 네트워크 레일 계약 해지 여파로 5,200만 달러로 감소했다. 반면 조정 EBITDA는 전년 동기 400만 달러 손실에서 100만 달러로 개선됐다.
• 엔비리는 두 사업 부문 모두에 대해 연간 조정 EBITDA 가이던스를 상향 조정했다. 하스코 인바이런멘털의 연간 조정 EBITDA는 1억 8,000만~1억 8,400만 달러에 이를 것으로 예상되며, 철도 부문의 예상 손실폭은 700만~1,000만 달러로 축소됐다.
• 10월에 약 7,300만 달러를 지급하면서 도이체반 계약 종료 절차가 완료됐다. 또한 엔비리는 향후 분기 동안 GBM으로부터 최대 3,400만 달러의 추가 대금을 수령할 것으로 예상하고 있다.
• 경영진은 자체 개선 프로그램을 통해 2026년에 실현된 효과 외에도 약 4,000만 달러의 추가적인 연간 이익을 거둘 것으로 기대하고 있으며, 이러한 효과는 하스코 인바이런멘털과 철도 부문, 그리고 2027년과 2028년 사이에 대략 균등하게 배분될 전망이다.

주요 재무 데이터

3분기 특이 항목에는 구조조정 비용 600만 달러, 1차 GBM 자산 양도 대금 수령에 따른 철도 부문 이익 800만 달러, 도이체반 계약 종료 합의 관련 유리한 조정 금액 1,200만 달러가 포함됐다.

사업 및 영업 실적

하스코 인바이런멘털

서비스 및 제품 물량 증가, 가격 인상, 기존 사업장의 운영 개선이 성장을 견인했다. 다만 중동 및 튀르키예 시장의 여건 악화, 인센티브 보상비 증가, 외환 환산상의 불리한 영향으로 인해 이러한 이익이 일부 상쇄됐다.

고객사의 조강 생산량은 전년 동기 대비 소폭 증가했다. 경영진은 2026년 7월부터 발효된 신규 관세할당 제도에 따라 유럽의 여러 제철소가 가동 재개를 계획 중이라고 밝혔다. 엔비리는 이들 사업장 중 일부에 서비스를 제공하고 있으며, 4분기에 제한적인 기여가 발생할 가능성과 함께 수혜의 대부분은 2027년에 실현될 것으로 예상하고 있다.

또한 회사는 장비 가동률과 생산성을 높이기 위해 장비 유지보수 및 관리 방식을 개편하고 있다. 아울러 해당 사업 부문의 조직과 간접비 구조를 간소화했다.

철도 부문

장비 판매량 감소는 경영진이 수십 년 만의 최저 수준으로 표현한 북미 수요 부진과 도이체반 및 네트워크 레일 계약 해지를 반영한 결과다. 반면 유리한 매출 구성, 애프터마켓 사업 호조, 운영비 절감, 제조 및 인력 구조 개편, 후입선출법(LIFO) 매출원가 조정 덕분에 수익성은 개선됐다.

엔비리는 새로운 애프터마켓 리더십을 구축하고 독립된 조직 체계와 손익(P&L) 구조를 수립했으며, 수명주기 기반의 상업적 접근 방식을 도입했다. 경영진은 이 이니셔티브가 아직 초기 단계에 있으며, 구조적 수혜는 2028년까지 단계적으로 실현될 것으로 전망했다.

도이체반 맞춤형 주문생산 계약은 완전히 종결됐다. 엔비리는 고객 선수금을 반환하고 채무를 정산하기 위해 10월에 약 7,300만 달러를 지급했다. 도이체반은 약 1,300만 달러 규모의 계약이행보증을 해제할 예정이며, 도이체반에 추가로 지급해야 할 금액은 없다.

GBM은 관련 차량에 대한 책임을 인수하고 3회의 자산 대금 중 1차 대금을 지급했다. 향후 분기에 수령할 것으로 예상되는 최대 3,400만 달러를 포함하면 총 회수액은 4,200만 달러에 달할 수 있다.

스위스 연방철도(SBB)의 경우 1차분 36량의 화차가 인도 및 검수 완료됐다. 잔여 11량 중 4량은 제조가 완료되어 고객 시운전 중이며, 7량은 생산 중이거나 착수를 앞두고 있다. 경영진은 향후 약 1년에 걸쳐 작업이 완료될 것으로 보이며, 주로 2027년과 2028년에 유의미한 순현금 유입이 발생할 것으로 예상하고 있다.

경영진 가이던스

경영진은 전망 상향 요인으로 효율성 개선 이니셔티브, 하스코 인바이런멘털의 완만한 서비스 활동 호조, 철도 부문 애프터마켓 물량 증가를 들었다.

4분기 가이던스 중간값 기준 하스코 인바이런멘털의 실적은 2025년 4분기와 유사할 것으로 예상된다. 실질적 성장은 전년도 사업 세액공제 효과의 소멸과 중동 지역의 압박 요인으로 상쇄될 전망이다. 한편 철도 부문은 애프터마켓 물량 증가와 비용 절감의 수혜를 입을 것으로 예상된다.

10월에 지급된 약 7,300만 달러의 도이체반 대금을 제외하면 기저 잉여현금흐름은 3분기 대비 개선될 것으로 예상된다. 또한 엔비리는 클린 어스 매각과 관련해 베올리아(Veolia)로부터 500만 달러의 최종 운전자본 정산금을 수령했다.

리스크 및 주요 점검 사항

• 북미 시장의 신규 장비 수요가 여전히 부진하여 철도 부문 매출을 제약하고 있다.
• 중동 분쟁이 지속되면서 해당 지역 및 튀르키예에서 하스코 인바이런멘털의 처리 물량에 하방 압력을 가하고 있다.
• 네트워크 레일은 기존 스톤블로워(자갈다짐기) 차량 업그레이드를 위해 엔비리가 제안한 대체 솔루션을 여전히 검토하고 있다. 경영진은 논의가 건설적으로 진행되고 있으나 절차에 시간이 걸릴 수 있다고 밝혔다.
• 엔비리는 네트워크 레일 장비 계약과 관련해 더 이상 작업을 수행하거나 추가 현금을 투입하지 않고 있다. 회사는 발생 가능한 결과에 대비해 충분한 현금을 유보해 두었다고 밝혔다.
• 100개 이상의 하스코 인바이런멘털 사업장에서 유지보수 및 운영상의 변화를 실행하는 데는 시일이 소요될 예정이어서 개선 프로그램의 효과가 가시화되는 시점에는 불확실성이 따른다.

애널리스트 질의응답(Q&A) 주요 내용

경영진은 철도 애프터마켓 사업 확장을 초기 단계의 기회로 규정했다. 초기 성과는 주로 단기적인 가시 성과(quick wins)에서 비롯되었으며, 조직 및 상업적 개편에 따른 기여는 향후 수 개 분기와 2028년에 걸쳐 본격화될 것으로 예상된다.

네트워크 레일과 관련해 경영진은 엔비리가 계약된 다른 서비스를 계속 제공하고 있으며 긍정적인 고객 관계를 유지하고 있다고 강조했다. 양측이 해결책 마련을 위해 협력하는 동안 장비 계약 관련 추가 지출은 발생하지 않고 있다.

회사는 사후 지급된 7,300만 달러의 도이체반 지급금을 포함해 계약 관련 채무로 분기 말 기준 약 1억 8,500만 달러를 미지급 계상했다. 또한 엔비리는 공시된 현금성 자산 외에도 계약이행보증과 관련된 현금 담보 2,500만 달러를 보유하고 있었다.

경영진은 2027년 철도 부문 현금흐름이 플러스이거나 적어도 마이너스는 아닐 것이라는 평가가 타당하다는 데 동의하면서도 공식적인 2027년 가이던스를 제시하지는 않았다. 보다 구체적인 내용은 회사가 2월에 2027년 전망을 발표할 때 공개될 예정이다.

실적 발표 콘퍼런스콜 전문

전체 실적 발표 컨퍼런스 콜 녹취록

경영진 발표

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.

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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.