Steel and waste handling company Enviri (NYSE: NVRI) fell short of the market’s revenue expectations in Q1 CY2025, with sales falling 8.7% year on year to $548.3 million. Its non-GAAP loss of $0.18 per share was 15.6% above analysts’ consensus estimates.

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"We are pleased to have met our financial goals for the quarter, supported by consistent execution in our business units,” 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.

Sales Growth

A company’s long-term performance is an indicator of its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Luckily, Enviri’s sales grew at a decent 7.8% compounded annual growth rate over the last five years. Its growth was slightly above the average industrials company and shows its offerings resonate with customers.

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 annualized revenue growth of 7.1% over the last two years aligns with its five-year trend, suggesting its demand was consistently weak.

This quarter, Enviri missed Wall Street’s estimates and reported a rather uninspiring 8.7% year-on-year revenue decline, generating $548.3 million of revenue.

Looking ahead, sell-side analysts expect revenue to grow 1.9% over the next 12 months, a deceleration versus the last two years. This projection doesn't excite us and implies its products and services will face some demand challenges.

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Operating Margin

Operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses – everything from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies with different levels of debt and tax rates because it excludes interest and taxes.

Enviri was profitable over the last five years but held back by its large cost base. Its average operating margin of 3.7% was weak for an industrials business. This result isn’t too surprising given its low gross margin as a starting point.

Looking at the trend in its profitability, Enviri’s operating margin decreased by 1.3 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 Q1, Enviri generated an operating profit margin of 5.6%, in line with the same quarter last year. This indicates the company’s cost structure has recently been stable.

Earnings Per Share

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Sadly for Enviri, its EPS declined by 17.3% annually over the last five years while its revenue grew by 7.8%. 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 was flat this quarter but declined by 1.3 percentage points over the last five years. Its share count also grew by 2%, 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 more recent period because it can provide insight into an emerging theme or development for the business.

For Enviri, its two-year annual EPS declines of 380% show it’s continued to underperform. These results were bad no matter how you slice the data.

In Q1, Enviri reported EPS at negative $0.18, up from negative $0.21 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street is optimistic. Analysts forecast Enviri’s full-year EPS of negative $0.21 will reach break even.

Key Takeaways from Enviri’s Q1 Results

We were glad Enviri's EPS outperformed Wall Street’s estimates. On the other hand, its revenue missed significantly and its EBITDA guidance for next quarter fell short of Wall Street’s estimates. Overall, this print wasn't all bad, but it was weak nonetheless. The stock remained flat at $6.90 immediately after reporting.

Is Enviri an attractive investment opportunity right now? We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.