Harsco Corporation (NYSE: HSC) today reported first quarter
2020 results. On a U.S. GAAP ("GAAP") basis, first quarter of 2020
diluted loss per share from continuing operations was $0.11, which
included strategic and acquisition integration costs as well as
severance expenses incurred within Harsco Environmental to achieve
improvement objectives. Adjusted diluted earnings per share from
continuing operations in the first quarter of 2020 were $0.16.
These figures compare with first quarter of 2019 GAAP diluted
earnings per share from continuing operations of $0.13 and adjusted
diluted earnings per share from continuing operations of $0.18.
GAAP operating income from continuing operations
for the first quarter of 2020 was $3 million. Excluding unusual
items, adjusted EBITDA was $57 million, compared to the Company's
previously provided guidance range of $43 million to $48
million.
“While Harsco had a positive start to the year,
with better than anticipated results in Clean Earth and Rail and
the completion of our ESOL acquisition, we have had to shift our
immediate priorities to include addressing the impact of the
COVID-19 pandemic,” said Chairman and CEO Nick Grasberger. “During
these unprecedented times, our focus is on ensuring the health and
well-being of our employees and the communities in which we
operate, as well as providing the services and products demanded by
the critical industries that we support. To that end, our employees
have risen to the challenge, and I would like to personally thank
all Harsco employees for their outstanding efforts to sustain our
operations, serve our customers and ensure our business
continuity.
"Our team has managed through market challenges
in the past, and while the severity and duration of this downturn
is unknown, we are well-prepared to handle this uncertain period.
Harsco has significant financial flexibility through a strong
liquidity position and favorable debt maturity profile. We are also
implementing the lessons learned from past cycles to shape our
quick and proactive decisions in response to the pandemic, such as
recently implementing actions to align our cost structure and
reduce capital spending, to support positive free cash flow
generation.
"In total, I am confident that the steps we have
taken to build a strong and durable business model focused on
environmental services and products will allow us to continue to
navigate through the year. In addition, we believe our efforts will
position Harsco to be able to exit this period a stronger, more
resilient company, poised to capitalize on growth opportunities
when the global economy eventually recovers."
Harsco Corporation—Selected First Quarter
Results
|
($ in millions, except per share amounts) |
|
Q1 2020 |
|
Q1 2019 |
|
Revenues |
|
$ |
399 |
|
|
$ |
330 |
|
| Operating
income from continuing operations - GAAP |
|
$ |
3 |
|
|
$ |
20 |
|
| Diluted
EPS from continuing operations - GAAP |
|
$ |
(0.11 |
) |
|
$ |
0.13 |
|
| Adjusted
EBITDA - excluding unusual items |
|
$ |
57 |
|
|
$ |
54 |
|
| Adjusted
EBITDA margin - excluding unusual items |
|
14.4 |
% |
|
16.3 |
% |
|
Adjusted diluted EPS from continuing operations - excluding unusual
items |
|
$ |
0.16 |
|
|
$ |
0.18 |
|
Note: Income statement details
above and commentary below reflect that the prior Industrial
segment was reclassified as Discontinued Operations in 2019. Also,
adjusted earnings per share details presented throughout this
release are adjusted for unusual items and acquisition-related
amortization expense.
Consolidated First Quarter Operating
Results
Consolidated total revenues from continuing
operations were $399 million, an increase of 21 percent compared
with the prior-year quarter due to higher revenues in the Company's
Rail segment and the acquisition of Clean Earth in mid-2019.
Foreign currency translation negatively impacted first quarter 2020
revenues by approximately $11 million compared with the prior-year
period.
GAAP operating income from continuing operations
was $3 million for the first quarter of 2020, compared with $20
million in the same quarter of last year. Meanwhile, adjusted
EBITDA totaled $57 million in the first quarter of 2020 versus $54
million in the first quarter of 2019. This increase is attributable
to the Clean Earth acquisition and lower adjusted Corporate
spending.
First Quarter Business Review
Environmental
|
($ in millions) |
|
Q1 2020 |
|
Q1 2019 |
|
%Change |
|
Revenues |
|
$ |
242 |
|
|
$ |
261 |
|
|
(8 |
)% |
| Operating
income - GAAP |
|
$ |
11 |
|
|
$ |
24 |
|
|
(57 |
)% |
| Adjusted
EBITDA - excluding unusual items |
|
$ |
43 |
|
|
$ |
51 |
|
|
(16 |
)% |
|
Adjusted EBITDA margin - excluding unusual items |
|
17.8 |
% |
|
19.6 |
% |
|
|
Environmental revenues totaled $242 million in
the first quarter of 2020, compared with $261 million in the
prior-year quarter. This change is attributable to foreign currency
translation impacts, lower services demand from steel customers and
exited contracts. The segment's GAAP operating income and adjusted
EBITDA totaled $11 million and $43 million, respectively, in the
first quarter of 2020. These figures compare with GAAP operating
income of $24 million and adjusted EBITDA of $51 million in the
prior-year period. During the quarter, Environmental initiated
actions contemplated at the beginning of the year to strengthen its
financial performance and competitive position. The costs to
complete this program totaled approximately $5 million in the first
quarter, with annualized cost benefits anticipated to be in excess
of $7 million. Meanwhile, the change in the segment's adjusted
EBITDA relative to the prior-year quarter is attributable to the
above factors and lower commodity prices, partially offset by a
reduction in selling and administrative expenses. Environmental's
adjusted EBITDA margin was 17.8 percent in the first quarter of
2020.
Clean Earth
|
($ in millions) |
|
Q1 2020 |
|
Q1 2019 |
|
%Change |
|
Revenues |
|
$ |
79 |
|
|
$ |
64 |
|
|
24 |
% |
| Operating
income - GAAP |
|
$ |
4 |
|
|
$ |
1 |
|
|
nmf |
|
| Adjusted
EBITDA - excluding unusual items |
|
11 |
|
|
8 |
|
|
43 |
% |
|
Adjusted EBITDA margin - excluding unusual items |
|
13.7 |
% |
|
11.8 |
% |
|
|
Note: The 2019 financial
information provided above and discussed below for Clean Earth is
not incorporated within Harsco's consolidated results and is
provided only for comparison purposes.
Clean Earth revenues totaled $79 million,
representing an increase of 24 percent compared with the prior-year
quarter. Segment operating income and adjusted EBITDA in the first
quarter of 2020 totaled $4 million, and $11 million, respectively.
These figures compare favorably with $1 million and $8 million,
respectively, in the prior-year period (2019 figures do not include
corporate cost allocation). The increase in revenues and earnings
is attributable to higher hazardous and non-hazardous volumes, with
growth most pronounced for dredged material processing. Clean
Earth's adjusted EBITDA margin was 13.7 percent in the first
quarter of 2020.
Rail
|
($ in millions) |
|
Q1 2020 |
|
Q1 2019 |
|
%Change |
|
Revenues |
|
$ |
78 |
|
|
$ |
69 |
|
|
14 |
% |
| Operating
income - GAAP |
|
$ |
6 |
|
|
$ |
5 |
|
|
20 |
% |
| Adjusted
EBITDA - excluding unusual items |
|
$ |
8 |
|
|
$ |
9 |
|
|
(16 |
)% |
|
Adjusted EBITDA margin - excluding unusual items |
|
9.9 |
% |
|
13.4 |
% |
|
|
Rail revenues increased 14 percent to $78
million, primarily due to higher global demand for maintenance
equipment. The segment's operating income and adjusted EBITDA
totaled $6 million and $8 million, respectively, in the first
quarter of 2020. These figures compare with operating income of $5
million and adjusted EBITDA of $9 million in the prior-year
quarter. The EBITDA change year-on-year is attributable to a less
favorable mix of equipment, partially offset by lower
administrative expense and a more favorable mix of contract
services in the most-recent quarter. Rail's adjusted EBITDA margin
was 9.9 percent in the first quarter of 2020.
Cash Flow
Net cash used by operating activities totaled
$12 million in the first quarter of 2020, compared with net cash
provided by operating activities of $15 million in the prior-year
period. Free cash flow was $(26) million (before transaction
expenses) in the first quarter of 2020, compared with $(20) million
in the prior-year period. The change in free cash flow compared
with the prior-year quarter is attributable to changes in net cash
from operating activities, including the impact of higher cash
interest payments, partially offset by lower capital
expenditures.
Business Continuity / 2020
Outlook
Harsco is operating as an essential business in
each of its segments in the United States and almost entirely
around the world. The Company has taken significant actions, as
previously disclosed, to protect its stakeholders and minimize the
operational and financial impacts of the pandemic on the business,
while continuing to provide customers with essential products and
services. As part of these efforts, Harsco has implemented work
safety and flexibility measures to keep employees and customers
healthy, as facilities remain operational.
Harsco has also taken measures to adjust its
cost structure and reduce capital expenditures, with the goal of
improving free cash flow for the year and preserving its financial
flexibility and strong liquidity position. To that end, the Company
intends to lower 2020 capital spending by approximately $75
million. In addition, Harsco recently executed actions to reduce
operating costs by approximately $15 million over the next two
quarters ($30 million annualized), while maintaining the ability to
take further cost actions if necessary. The Company has also chosen
to defer pension and certain tax cash payments and to pursue
governmental benefit reimbursements within the scope of various
pandemic-related legislation for countries within which it
operates.
Lastly, as also previously announced, Harsco
will not be providing detailed guidance for the time being given
the uncertainty around the pandemic and its evolving impact on
relevant markets. While underlying business conditions currently
vary across markets, the Company expects that sluggish customer
demand and business disruptions will persist for some time. The
extent and duration of these impacts cannot be quantified at this
time. As a result, Harsco will provide formal guidance when
visibility improves, and it deems appropriate.
Conference Call
The Company will hold a conference call today at
9:00 a.m. Eastern Time to discuss its results and respond to
questions from the investment community. The conference call will
be broadcast live through the Harsco Corporation website at
www.harsco.com. The Company will refer to a slide presentation that
accompanies its formal remarks. The slide presentation will be
available on the Company’s website.
The call can also be accessed by telephone
by dialing (844) 467-8153 or (270) 855-8732. Enter Conference
ID number 7929498. Listeners are advised to dial in at least five
minutes prior to the call.
Forward-Looking Statements
The nature of the Company's business, together
with the number of countries in which it operates, subject it to
changing economic, competitive, regulatory and technological
conditions, risks and uncertainties. In accordance with the
"safe harbor" provisions of Section 27A of the Securities Act of
1933 and Section 21E of the Securities Exchange Act of 1934, the
Company provides the following cautionary remarks regarding
important factors that, among others, could cause future results to
differ materially from the results contemplated by forward-looking
statements, including the expectations and assumptions expressed or
implied herein. Forward-looking statements contained herein
could include, among other things, statements about management's
confidence in and strategies for performance; expectations for new
and existing products, technologies and opportunities; and
expectations regarding growth, sales, cash flows, and
earnings. Forward-looking statements can be identified by the
use of such terms as "may," "could," "expect," "anticipate,"
"intend," "believe," "likely," "estimate," "plan" or other
comparable terms.
Factors that could cause actual results to
differ, perhaps materially, from those implied by forward-looking
statements include, but are not limited to: (1) changes in the
worldwide business environment in which the Company operates,
including changes in general economic conditions or changes due to
the COVID-19 coronavirus pandemic and governmental and market
reactions to the COVID-19 coronavirus pandemic; (2) changes in
currency exchange rates, interest rates, commodity and fuel costs
and capital costs; (3) changes in the performance of equity
and bond markets that could affect, among other things, the
valuation of the assets in the Company's pension plans and the
accounting for pension assets, liabilities and expenses;
(4) changes in governmental laws and regulations, including
environmental, occupational health and safety, tax and import
tariff standards and amounts; (5) market and competitive
changes, including pricing pressures, market demand and acceptance
for new products, services and technologies; (6) the Company's
inability or failure to protect its intellectual property rights
from infringement in one or more of the many countries in which the
Company operates; (7) failure to effectively prevent, detect
or recover from breaches in the Company's cybersecurity
infrastructure; (8) unforeseen business disruptions in one or more
of the many countries in which the Company operates due to
political instability, civil disobedience, armed hostilities,
public health issues or other calamities; (9) disruptions
associated with labor disputes and increased operating costs
associated with union organization; (10) the seasonal nature
of the Company's business; (11) the Company's ability to
successfully enter into new contracts and complete new acquisitions
or strategic ventures in the time-frame contemplated, or at all;
(12) the integration of the Company's strategic acquisitions;
(13) potential severe volatility in the capital markets; (14)
failure to retain key management and employees; (15) the
amount and timing of repurchases of the Company's common stock, if
any; (16) the outcome of any disputes with customers,
contractors and subcontractors; (17) the financial condition
of the Company's customers, including the ability of customers
(especially those that may be highly leveraged, have inadequate
liquidity or whose business is significantly impacted by the
COVID-19 coronavirus pandemic) to maintain their credit
availability; (18) implementation of environmental remediation
matters; (19) risk and uncertainty associated with intangible
assets and (20) other risk factors listed from time to time
in the Company's SEC reports. A further discussion of these,
along with other potential risk factors, can be found in
Part I, Item 1A, "Risk Factors," of the Company's Annual
Report on Form 10-K for the year ended December 31,
2019. The Company cautions that these factors may not be
exhaustive and that many of these factors are beyond the Company's
ability to control or predict. Accordingly, forward-looking
statements should not be relied upon as a prediction of actual
results. The Company undertakes no duty to update
forward-looking statements except as may be required by law.
About Harsco
Harsco Corporation is a global market leader
providing environmental solutions for industrial and specialty
waste streams and innovative technologies for the rail sector.
Based in Camp Hill, PA, the 13,000-employee company operates in
more than 30 countries. Harsco’s common stock is a component
of the S&P SmallCap 600 Index and the Russell 2000 Index.
Additional information can be found at www.harsco.com.
| Investor
Contact |
Media Contact |
| David Martin |
Jay Cooney |
| 717.612.5628 |
717.730.3683 |
| damartin@harsco.com |
jcooney@harsco.com |
| HARSCO
CORPORATIONCONSOLIDATED STATEMENTS OF
OPERATIONS (Unaudited) |
|
| |
|
ThreeMonths Ended |
|
| |
|
March 31 |
|
|
(In thousands, except per share amounts) |
|
2020 |
|
2019 |
|
| Revenues from continuing
operations: |
|
|
|
|
|
|
Service revenues |
|
$ |
291,339 |
|
|
$ |
229,520 |
|
|
|
Product revenues |
|
107,502 |
|
|
100,382 |
|
|
|
Total revenues |
|
398,841 |
|
|
329,902 |
|
|
| Costs and expenses from
continuing operations: |
|
|
|
|
|
|
Cost of services sold |
|
236,319 |
|
|
181,871 |
|
|
|
Cost of products sold |
|
80,149 |
|
|
69,309 |
|
|
|
Selling, general and administrative expenses |
|
72,499 |
|
|
56,406 |
|
|
|
Research and development expenses |
|
1,260 |
|
|
749 |
|
|
|
Other expenses, net |
|
5,733 |
|
|
1,743 |
|
|
|
Total costs and expenses |
|
395,960 |
|
|
310,078 |
|
|
|
Operating income from continuing operations |
|
2,881 |
|
|
19,824 |
|
|
| Interest income |
|
193 |
|
|
533 |
|
|
| Interest expense |
|
(12,649 |
) |
|
(5,507 |
) |
|
| Unused debt commitment and
amendment fees |
|
(488 |
) |
|
— |
|
|
| Defined benefit pension income
(expense) |
|
1,589 |
|
|
(1,338 |
) |
|
|
Income (loss) from continuing operations before income
taxes and equity income |
|
(8,474 |
) |
|
13,512 |
|
|
| Income tax benefit (expense) |
|
682 |
|
|
(1,219 |
) |
|
| Equity income of unconsolidated
entities, net |
|
96 |
|
|
21 |
|
|
|
Income (loss) from continuing operations |
|
(7,696 |
) |
|
12,314 |
|
|
| Discontinued
operations: |
|
|
|
|
|
|
Gain on sale of discontinued business |
|
18,462 |
|
|
— |
|
|
|
Income (loss) from discontinued businesses |
|
(225 |
) |
|
13,750 |
|
|
|
Income tax expense related to discontinued businesses |
|
(9,314 |
) |
|
(3,527 |
) |
|
|
Income from discontinued operations |
|
8,923 |
|
|
10,223 |
|
|
| Net
income |
|
1,227 |
|
|
22,537 |
|
|
|
Less: Net income attributable to noncontrolling interests |
|
(1,086 |
) |
|
(1,840 |
) |
|
| Net income
attributable to Harsco Corporation |
|
$ |
141 |
|
|
$ |
20,697 |
|
|
| Amounts
attributable to Harsco Corporation common
stockholders: |
|
Income (loss) from continuing operations, net of tax |
|
$ |
(8,782 |
) |
|
$ |
10,474 |
|
|
|
Income from discontinued operations, net of tax |
|
8,923 |
|
|
10,223 |
|
|
|
Net income attributable to Harsco Corporation common
stockholders |
|
$ |
141 |
|
|
$ |
20,697 |
|
|
| Weighted-average shares of
common stock outstanding |
|
78,761 |
|
|
79,907 |
|
|
| Basic
earnings (loss) per common share attributable to Harsco Corporation
common stockholders: |
|
Continuing operations |
|
$ |
(0.11 |
) |
|
$ |
0.13 |
|
|
|
Discontinued operations |
|
0.11 |
|
|
0.13 |
|
|
| Basic earnings (loss)
per share attributable to Harsco Corporation common
stockholders |
|
$ |
— |
|
|
$ |
0.26 |
|
|
| Diluted weighted-average shares
of common stock outstanding |
|
78,761 |
|
|
81,653 |
|
|
| Diluted
earnings (loss) per common share attributable to Harsco Corporation
common stockholders: |
|
Continuing operations |
|
$ |
(0.11 |
) |
|
$ |
0.13 |
|
|
|
Discontinued operations |
|
0.11 |
|
|
0.13 |
|
|
| Diluted earnings
(loss) per share attributable to Harsco Corporation common
stockholders |
|
$ |
— |
|
|
$ |
0.25 |
|
(a) |
(a) Does not total due to rounding.
| HARSCO
CORPORATIONCONSOLIDATED BALANCE SHEETS
(Unaudited) |
|
|
|
|
|
(In thousands) |
|
March 31 2020 |
|
December 31 2019 |
| ASSETS |
|
|
|
|
| Current
assets: |
|
|
|
|
|
Cash and cash equivalents |
|
$ |
66,488 |
|
|
$ |
57,259 |
|
|
Restricted cash |
|
2,300 |
|
|
2,473 |
|
|
Trade accounts receivable, net |
|
320,710 |
|
|
309,990 |
|
|
Other receivables |
|
18,685 |
|
|
21,265 |
|
|
Inventories |
|
167,890 |
|
|
156,991 |
|
|
Current portion of contract assets |
|
50,499 |
|
|
31,166 |
|
|
Current portion of assets held-for-sale |
|
540 |
|
|
22,093 |
|
|
Other current assets |
|
53,668 |
|
|
51,575 |
|
|
Total current assets |
|
680,780 |
|
|
652,812 |
|
| Property, plant and equipment,
net |
|
533,349 |
|
|
561,786 |
|
| Right-of-use assets, net |
|
50,491 |
|
|
52,065 |
|
| Goodwill |
|
727,882 |
|
|
738,369 |
|
| Intangible assets, net |
|
294,720 |
|
|
299,082 |
|
| Deferred income tax assets |
|
9,476 |
|
|
14,288 |
|
| Assets held-for-sale |
|
— |
|
|
32,029 |
|
| Other assets |
|
50,472 |
|
|
17,036 |
|
|
Total assets |
|
$ |
2,347,170 |
|
|
$ |
2,367,467 |
|
|
LIABILITIES |
|
|
|
|
| Current
liabilities: |
|
|
|
|
|
Short-term borrowings |
|
$ |
4,820 |
|
|
$ |
3,647 |
|
|
Current maturities of long-term debt |
|
2,758 |
|
|
2,666 |
|
|
Accounts payable |
|
181,760 |
|
|
176,755 |
|
|
Accrued compensation |
|
33,492 |
|
|
37,992 |
|
|
Income taxes payable |
|
15,956 |
|
|
18,692 |
|
|
Insurance liabilities |
|
9,844 |
|
|
10,140 |
|
|
Current portion of advances on contracts |
|
47,822 |
|
|
53,906 |
|
|
Current portion of operating lease liabilities |
|
12,421 |
|
|
12,544 |
|
|
Current portion of liabilities of assets held-for-sale |
|
— |
|
|
11,344 |
|
|
Other current liabilities |
|
141,877 |
|
|
137,208 |
|
|
Total current liabilities |
|
450,750 |
|
|
464,894 |
|
| Long-term debt |
|
789,619 |
|
|
775,498 |
|
| Insurance liabilities |
|
17,019 |
|
|
18,515 |
|
| Retirement plan liabilities |
|
164,499 |
|
|
189,954 |
|
| Advances on contracts |
|
53,775 |
|
|
6,408 |
|
| Operating lease liabilities |
|
35,561 |
|
|
36,974 |
|
| Liabilities of assets
held-for-sale |
|
— |
|
|
12,152 |
|
| Other liabilities |
|
77,077 |
|
|
73,413 |
|
|
Total liabilities |
|
1,588,300 |
|
|
1,577,808 |
|
| HARSCO CORPORATION
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
Common stock |
|
144,219 |
|
|
143,400 |
|
|
Additional paid-in capital |
|
201,856 |
|
|
200,595 |
|
|
Accumulated other comprehensive loss |
|
(616,476 |
) |
|
(587,622 |
) |
|
Retained earnings |
|
1,824,241 |
|
|
1,824,100 |
|
|
Treasury stock |
|
(842,987 |
) |
|
(838,893 |
) |
|
Total Harsco Corporation stockholders’ equity |
|
710,853 |
|
|
741,580 |
|
| Noncontrolling interests |
|
48,017 |
|
|
48,079 |
|
|
Total equity |
|
758,870 |
|
|
789,659 |
|
|
Total liabilities and equity |
|
$ |
2,347,170 |
|
|
$ |
2,367,467 |
|
| HARSCO
CORPORATIONCONSOLIDATED STATEMENTS OF CASH
FLOWS (Unaudited) |
| |
|
Three Months Ended |
| |
|
March 31 |
|
(In thousands) |
|
2020 |
|
2019 |
| Cash flows from operating
activities: |
|
|
|
|
|
Net income |
|
$ |
1,227 |
|
|
$ |
22,537 |
|
|
Adjustments to reconcile net income to net cash provided (used) by
operating activities: |
|
Depreciation |
|
29,933 |
|
|
30,204 |
|
|
Amortization |
|
6,557 |
|
|
3,045 |
|
|
Deferred income tax expense |
|
4,412 |
|
|
595 |
|
|
Equity in income of unconsolidated entities, net |
|
(96 |
) |
|
(21 |
) |
|
Gain on sale from discontinued business |
|
(18,462 |
) |
|
— |
|
|
Other, net |
|
(2,007 |
) |
|
(279 |
) |
|
Changes in assets and liabilities: |
|
|
|
|
|
Accounts receivable |
|
(22,050 |
) |
|
(3,270 |
) |
|
Inventories |
|
(16,412 |
) |
|
(14,448 |
) |
|
Contract assets |
|
(20,311 |
) |
|
6,770 |
|
|
Right-of-use assets |
|
3,429 |
|
|
3,895 |
|
|
Accounts payable |
|
12,308 |
|
|
3,099 |
|
|
Accrued interest payable |
|
(9,891 |
) |
|
89 |
|
|
Accrued compensation |
|
(2,752 |
) |
|
(19,924 |
) |
|
Advances on contracts |
|
40,464 |
|
|
(3,406 |
) |
|
Operating lease liabilities |
|
(3,358 |
) |
|
(3,913 |
) |
|
Retirement plan liabilities, net |
|
(15,534 |
) |
|
(9,403 |
) |
|
Income taxes payable - Gain on sale of discontinued businesses |
|
3,843 |
|
|
— |
|
|
Other assets and liabilities |
|
(2,836 |
) |
|
(732 |
) |
|
Net cash provided (used) by operating
activities |
|
(11,536 |
) |
|
14,838 |
|
| Cash flows from investing
activities: |
|
|
|
|
|
Purchases of property, plant and equipment |
|
(27,894 |
) |
|
(36,407 |
) |
|
Purchase of businesses, net of cash acquired |
|
(4,157 |
) |
|
680 |
|
|
Proceeds from sale of business, net |
|
37,219 |
|
|
— |
|
|
Proceeds from sales of assets |
|
2,185 |
|
|
1,177 |
|
|
Expenditures for intangible assets |
|
(58 |
) |
|
— |
|
|
Net proceeds (payments) from settlement of foreign currency forward
exchange contracts |
|
11,327 |
|
|
(4,091 |
) |
|
Net cash provided (used) by investing
activities |
|
18,622 |
|
|
(38,641 |
) |
| Cash flows from financing
activities: |
|
|
|
|
|
Short-term borrowings, net |
|
3,697 |
|
|
(3,578 |
) |
|
Current maturities and long-term debt: |
|
|
|
|
|
Additions |
|
52,875 |
|
|
56,998 |
|
|
Reductions |
|
(38,709 |
) |
|
(1,700 |
) |
|
Sale of noncontrolling interests |
|
— |
|
|
876 |
|
|
Stock-based compensation - Employee taxes paid |
|
(3,437 |
) |
|
(8,237 |
) |
|
Deferred financing costs |
|
(1,632 |
) |
|
— |
|
|
Net cash provided by financing activities |
|
12,794 |
|
|
44,359 |
|
| Effect of exchange rate changes
on cash and cash equivalents, including restricted cash |
|
(10,824 |
) |
|
(17 |
) |
| Net increase in cash and cash
equivalents, including restricted cash |
|
9,056 |
|
|
20,539 |
|
| Cash and cash equivalents,
including restricted cash, at beginning of period |
|
59,732 |
|
|
67,146 |
|
| Cash and cash
equivalents, including restricted cash, at end of
period |
|
$ |
68,788 |
|
|
$ |
87,685 |
|
| HARSCO
CORPORATIONREVIEW OF OPERATIONS BY
SEGMENT (Unaudited) |
| |
|
Three Months Ended |
|
Three Months Ended |
| |
|
March 31, 2020 (b) |
|
March 31, 2019 (b) |
|
(In thousands) |
|
Revenues |
|
OperatingIncome (Loss) |
|
Revenues |
|
Operating Income (Loss) |
|
Harsco Environmental |
|
$ |
241,559 |
|
|
$ |
10,520 |
|
|
$ |
261,312 |
|
|
$ |
24,497 |
|
|
Harsco Clean Earth (a) |
|
78,812 |
|
|
4,245 |
|
|
— |
|
|
— |
|
|
Harsco Rail |
|
78,470 |
|
|
6,472 |
|
|
68,590 |
|
|
5,389 |
|
|
Corporate |
|
— |
|
|
(18,356 |
) |
|
— |
|
|
(10,062 |
) |
|
Consolidated Totals |
|
$ |
398,841 |
|
|
$ |
2,881 |
|
|
$ |
329,902 |
|
|
$ |
19,824 |
|
|
(a) |
The Company's acquisition of Clean Earth closed on June 28,
2019. |
| (b) |
The operating results of the
former Harsco Industrial Segment have been reflected as
discontinued operations in the Company's Consolidated Statement of
Operations for all periods presented. |
|
HARSCO CORPORATION RECONCILIATION OF ADJUSTED
DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS TO DILUTED
EARNINGS PER SHARE FROM CONTINUING OPERATIONS (LOSS) AS
REPORTED
(Unaudited) |
| |
|
Three Months Ended |
|
| |
|
March 31 |
|
|
|
|
2020 |
|
2019 |
|
|
Diluted earnings (loss) per share from continuing operations as
reported |
|
$ |
(0.11 |
) |
|
$ |
0.13 |
|
|
| Corporate strategic costs
(a) |
|
0.17 |
|
|
0.03 |
|
|
| Harsco Environmental Segment
severance costs (b) |
|
0.07 |
|
|
— |
|
|
| Harsco Environmental
Cumulative translation adjustment liquidation (c) |
|
— |
|
|
(0.03 |
) |
|
| Harsco Rail Segment
improvement initiative costs (d) |
|
— |
|
|
0.03 |
|
|
| Corporate unused debt
commitment and amendment fees (e) |
|
0.01 |
|
|
— |
|
|
| Harsco Environmental Segment
change in fair value to contingent consideration liability (f) |
|
— |
|
|
— |
|
|
| Taxes on above unusual items
(g) |
|
(0.03 |
) |
|
(0.01 |
) |
|
| Adjusted diluted
earnings per share from continuing operations, including
acquisition amortization expense |
|
$ |
0.10 |
|
(h) |
$ |
0.16 |
|
(h) |
| Acquisition amortization
expense, net of tax |
|
0.06 |
|
|
0.02 |
|
|
| Adjusted diluted
earnings per share from continuing operations |
|
$ |
0.16 |
|
|
$ |
0.18 |
|
|
|
(a) |
Costs at Corporate associated with supporting and executing the
Company's growth strategy (Q1 2020 $13.8 million pre-tax; Q1 2019
$2.7 million pre-tax). |
| (b) |
Harsco Environmental Segment severance costs (Q1 2020 $5.2 million
pre-tax). |
| (c) |
Harsco Environmental Segment gain related to the liquidation of
cumulated translation adjustment related to an exited country (Q1
2019 $2.3 million pre-tax). |
| (d) |
Costs associated with a productivity improvement initiative in the
Harsco Rail Segment (Q1 2019 $2.6 million pre-tax). |
| (e) |
Costs at Corporate related to the new term loan under its existing
senior secured credit facilities (Q1 2020 $0.5 million
pre-tax). |
| (f) |
Fair value adjustment to contingent consideration liability related
to the acquisition of Altek (Q1 2019 $0.4 million pretax).
The Company adjusts operating income and Diluted earnings per share
from continuing operations to exclude the impact of the change in
fair value to the acquisition-related contingent consideration
liability for the Altek acquisition because it believes that the
adjustment for this item more closely correlates the reported
financial measures with the ordinary and ongoing course of the
Company's operations. |
| (g) |
Unusual items are tax-effected at the global effective tax rate,
before discrete items, in effect at the time the unusual item is
recorded, except for unusual items from countries where no tax
benefit can be realized, in which case a zero percent tax rate is
used. |
| (h) |
Does not total due to rounding. |
The Company’s management believes Adjusted
diluted earnings per share from continuing operations, which is a
non-GAAP financial measure, is useful to investors because it
provides an overall understanding of the Company’s historical and
future prospects. Exclusion of unusual items permits
evaluation and comparison of results for the Company’s core
business operations, and it is on this basis that management
internally assesses the Company’s performance. Exclusion of
acquisition-related intangible asset amortization expense, the
amount of which can vary by the timing, size and nature of the
Company’s acquisitions, facilitates more consistent internal
comparisons of operating results over time between the Company’s
newly acquired and long-held businesses, and comparisons with both
acquisitive and non-acquisitive peer companies. It is
important to note that such intangible assets contribute to revenue
generation and that intangible asset amortization related to past
acquisitions will recur in future periods until such intangible
assets have been fully amortized. This measure should be
considered in addition to, rather than as a substitute for, other
information provided in accordance with GAAP.
| HARSCO
CORPORATIONRECONCILIATION OF ADJUSTED EBITDA BY
SEGMENT TO OPERATING INCOME (LOSS) AS REPORTED BY SEGMENT
(Unaudited) |
|
(In thousands) |
|
Harsco Environmental |
|
Harsco Clean Earth (a) |
|
Harsco Rail |
|
Corporate |
|
Consolidated Totals |
| |
|
|
|
|
|
|
|
|
|
|
| Three Months
Ended March 31, 2020: |
|
|
|
|
|
|
|
|
|
Operating income (loss) as reported |
|
$ |
10,520 |
|
|
$ |
4,245 |
|
|
$ |
6,472 |
|
|
$ |
(18,356 |
) |
|
$ |
2,881 |
|
| Corporate strategic costs |
|
— |
|
|
— |
|
|
— |
|
|
13,763 |
|
|
13,763 |
|
| Harsco Environmental Segment
severance costs |
|
5,160 |
|
|
— |
|
|
— |
|
|
— |
|
|
5,160 |
|
| Operating income (loss) excluding
unusual items |
|
15,680 |
|
|
4,245 |
|
|
6,472 |
|
|
(4,593 |
) |
|
21,804 |
|
| Depreciation and
amortization |
|
27,311 |
|
|
6,519 |
|
|
1,299 |
|
|
513 |
|
|
35,642 |
|
| Adjusted EBITDA |
|
$ |
42,991 |
|
|
$ |
10,764 |
|
|
$ |
7,771 |
|
|
$ |
(4,080 |
) |
|
$ |
57,446 |
|
| Revenues as reported |
|
$ |
241,559 |
|
|
$ |
78,812 |
|
|
$ |
78,470 |
|
|
|
|
$ |
398,841 |
|
| Adjusted EBITDA margin (%) |
|
17.8 |
% |
|
13.7 |
% |
|
9.9 |
% |
|
|
|
14.4 |
% |
| |
|
|
|
|
|
|
|
|
|
|
| Three Months
Ended March 31, 2019: |
|
|
|
|
|
|
|
|
| Operating income (loss) as
reported |
|
$ |
24,497 |
|
|
$ |
— |
|
|
$ |
5,389 |
|
|
$ |
(10,062 |
) |
|
$ |
19,824 |
|
| Corporate strategic costs |
|
— |
|
|
— |
|
|
— |
|
|
2,739 |
|
|
2,739 |
|
| Harsco Rail Segment
improvement initiative costs |
|
— |
|
|
— |
|
|
2,648 |
|
|
— |
|
|
2,648 |
|
| Harsco Environmental Segment
cumulative translation adjustment
liquidation |
|
(2,271 |
) |
|
— |
|
|
— |
|
|
— |
|
|
(2,271 |
) |
| Harsco Environmental Segment
change in fair value to contingent
consideration liability |
|
369 |
|
|
— |
|
|
— |
|
|
— |
|
|
369 |
|
| Operating income (loss) excluding
unusual items |
|
22,595 |
|
|
— |
|
|
8,037 |
|
|
(7,323 |
) |
|
23,309 |
|
| Depreciation and
amortization |
|
28,705 |
|
|
— |
|
|
1,167 |
|
|
659 |
|
|
30,531 |
|
| Adjusted EBITDA |
|
$ |
51,300 |
|
|
$ |
— |
|
|
$ |
9,204 |
|
|
$ |
(6,664 |
) |
|
$ |
53,840 |
|
| Revenues as reported |
|
$ |
261,312 |
|
|
$ |
— |
|
|
$ |
68,590 |
|
|
|
|
$ |
329,902 |
|
| Adjusted EBITDA margin
(%) |
|
19.6 |
% |
|
|
|
13.4 |
% |
|
|
|
16.3 |
% |
(a) The Company's acquisition of Clean
Earth closed on June 28, 2019.
Consolidated Adjusted EBITDA is a non-GAAP
financial measure and consists of income from continuing operations
adjusted to add back income tax expense; equity income of
unconsolidated entities, net; net interest; defined benefit pension
income (expense); unused debt commitment and amendment fees; and
depreciation and amortization (excluding amortization of deferred
financing costs); and excludes unusual items. Segment Adjusted
EBITDA consists of operating income from continuing operations
adjusted to exclude unusual items and add back depreciation and
amortization (excluding amortization of deferred financing
costs). The sum of the Segments’ Adjusted EBITDA equals
consolidated Adjusted EBITDA. The Company‘s management believes
Adjusted EBITDA is meaningful to investors because management
reviews Adjusted EBITDA in assessing and evaluating performance.
However, this measure should be considered in addition to, rather
than as a substitute for net income from continuing operations,
operating income from continuing operations and other information
provided in accordance with GAAP. The Company's method of
calculating Adjusted EBITDA may differ from methods used by other
companies and, as a result, Adjusted EBITDA may not be comparable
to other similarly titled measures disclosed by other
companies.
| HARSCO
CORPORATION RECONCILIATION OF ADJUSTED EBITDA BY SEGMENT TO
OPERATING INCOME (LOSS) AS REPORTED BY SEGMENT
(Unaudited) |
|
(In thousands) |
|
HarscoEnvironmental |
|
Harsco Clean Earth (a) |
|
Harsco Rail |
|
Corporate |
|
Consolidated Totals |
| |
|
|
|
|
|
|
|
|
|
|
| Three Months
Ended June 30, 2019: |
|
|
|
|
|
|
|
|
|
Operating income (loss) as reported |
|
$ |
27,577 |
|
|
$ |
— |
|
|
$ |
9,443 |
|
|
$ |
(19,221 |
) |
|
$ |
17,799 |
|
| Corporate strategic costs |
|
— |
|
|
— |
|
|
— |
|
|
12,390 |
|
|
12,390 |
|
| Harsco Environmental Segment
provision for doubtful accounts |
|
5,359 |
|
|
— |
|
|
— |
|
|
— |
|
|
5,359 |
|
| Harsco Environmental Segment
change in fair value to contingent
consideration liability |
|
(3,879 |
) |
|
— |
|
|
— |
|
|
— |
|
|
(3,879 |
) |
| Harsco Rail Segment
improvement initiative costs |
|
— |
|
|
— |
|
|
1,152 |
|
|
— |
|
|
1,152 |
|
| Operating income (loss) excluding
unusual items |
|
29,057 |
|
|
— |
|
|
10,595 |
|
|
(6,831 |
) |
|
32,821 |
|
| Depreciation and
amortization |
|
28,497 |
|
|
— |
|
|
1,209 |
|
|
718 |
|
|
30,424 |
|
| Adjusted EBITDA |
|
$ |
57,554 |
|
|
$ |
— |
|
|
$ |
11,804 |
|
|
$ |
(6,113 |
) |
|
$ |
63,245 |
|
| Revenues as reported |
|
$ |
269,338 |
|
|
$ |
— |
|
|
$ |
81,560 |
|
|
|
|
$ |
350,898 |
|
| Adjusted EBITDA margin (%) |
|
21.4 |
% |
|
|
|
14.5 |
% |
|
|
|
18.0 |
% |
(a) The Company's acquisition of Clean
Earth closed on June 28, 2019. Revenues and operating income
for the three months ended June 30, 2019 are immaterial.
Consolidated Adjusted EBITDA is a non-GAAP
financial measure and consists of income from continuing operations
adjusted to add back income tax expense; equity income of
unconsolidated entities, net; net interest; defined benefit pension
income (expense); unused debt commitment and amendment fees; and
depreciation and amortization (excluding amortization of deferred
financing costs); and excludes unusual items. Segment Adjusted
EBITDA consists of operating income from continuing operations
adjusted to exclude unusual items and add back depreciation and
amortization (excluding amortization of deferred financing
costs). The sum of the Segments’ Adjusted EBITDA equals
consolidated Adjusted EBITDA. The Company‘s management believes
Adjusted EBITDA is meaningful to investors because management
reviews Adjusted EBITDA in assessing and evaluating performance.
However, this measure should be considered in addition to, rather
than as a substitute for net income from continuing operations,
operating income from continuing operations and other information
provided in accordance with GAAP. The Company's method of
calculating Adjusted EBITDA may differ from methods used by other
companies and, as a result, Adjusted EBITDA may not be comparable
to other similarly titled measures disclosed by other
companies.
| HARSCO
CORPORATION RECONCILIATION OF ADJUSTED EBITDA BY SEGMENT TO
OPERATING INCOME (LOSS) AS REPORTED BY SEGMENT
(Unaudited) |
|
(In thousands) |
|
HarscoEnvironmental |
|
Harsco Clean Earth |
|
Harsco Rail |
|
Corporate |
|
Consolidated Totals |
| |
|
|
|
|
|
|
|
|
|
|
| Three Months
Ended September 30, 2019: |
|
|
|
|
|
|
|
|
|
Operating income (loss) as reported |
|
$ |
32,794 |
|
|
$ |
11,308 |
|
|
$ |
12,115 |
|
|
$ |
(9,472 |
) |
|
$ |
46,745 |
|
| Corporate strategic costs |
|
— |
|
|
— |
|
|
— |
|
|
2,743 |
|
|
2,743 |
|
| Harsco Clean Earth Segment
severance costs |
|
— |
|
|
1,254 |
|
|
— |
|
|
— |
|
|
1,254 |
|
| Harsco Environmental Segment
change in fair value to contingent
consideration liability |
|
(906 |
) |
|
— |
|
|
— |
|
|
— |
|
|
(906 |
) |
| Harsco Rail Segment
improvement initiative costs |
|
— |
|
|
— |
|
|
845 |
|
|
— |
|
|
845 |
|
| Harsco Environmental Segment
provision for doubtful accounts |
|
815 |
|
|
— |
|
|
— |
|
|
— |
|
|
815 |
|
| Harsco Environmental Segment
site exit related |
|
(156 |
) |
|
— |
|
|
— |
|
|
— |
|
|
(156 |
) |
| Operating income (loss) excluding
unusual items |
|
32,547 |
|
|
12,562 |
|
|
12,960 |
|
|
(6,729 |
) |
|
51,340 |
|
| Depreciation and
amortization |
|
27,308 |
|
|
6,192 |
|
|
1,276 |
|
|
716 |
|
|
35,492 |
|
| Adjusted EBITDA |
|
$ |
59,855 |
|
|
$ |
18,754 |
|
|
$ |
14,236 |
|
|
$ |
(6,013 |
) |
|
$ |
86,832 |
|
| Revenues as reported |
|
$ |
260,883 |
|
|
$ |
87,639 |
|
|
$ |
74,633 |
|
|
|
|
$ |
423,155 |
|
| Adjusted EBITDA margin
(%) |
|
22.9 |
% |
|
21.4 |
% |
|
19.1 |
% |
|
|
|
20.5 |
% |
Consolidated Adjusted EBITDA is a non-GAAP
financial measure and consists of income from continuing operations
adjusted to add back income tax expense; equity income of
unconsolidated entities, net; net interest; defined benefit pension
income (expense); unused debt commitment and amendment fees; and
depreciation and amortization (excluding amortization of deferred
financing costs); and excludes unusual items. Segment Adjusted
EBITDA consists of operating income from continuing operations
adjusted to exclude unusual items and add back depreciation and
amortization (excluding amortization of deferred financing
costs). The sum of the Segments’ Adjusted EBITDA equals
consolidated Adjusted EBITDA. The Company‘s management believes
Adjusted EBITDA is meaningful to investors because management
reviews Adjusted EBITDA in assessing and evaluating performance.
However, this measure should be considered in addition to, rather
than as a substitute for net income from continuing operations,
operating income from continuing operations and other information
provided in accordance with GAAP. The Company's method of
calculating Adjusted EBITDA may differ from methods used by other
companies and, as a result, Adjusted EBITDA may not be comparable
to other similarly titled measures disclosed by other
companies.
| HARSCO
CORPORATION RECONCILIATION OF ADJUSTED EBITDA BY SEGMENT TO
OPERATING INCOME (LOSS) AS REPORTED BY SEGMENT
(Unaudited) |
|
(In thousands) |
|
HarscoEnvironmental |
|
Harsco Clean Earth (a) |
|
Harsco Rail |
|
Corporate |
|
Consolidated Totals |
| |
|
|
|
|
|
|
|
|
|
|
| Three Months
Ended December 31, 2019: |
|
|
|
|
|
|
|
|
|
Operating income (loss) as reported |
|
$ |
27,430 |
|
|
$ |
8,701 |
|
|
$ |
(3,239 |
) |
|
$ |
(12,981 |
) |
|
$ |
19,911 |
|
| Corporate strategic costs |
|
— |
|
|
— |
|
|
— |
|
|
7,280 |
|
|
7,280 |
|
| Harsco Environmental Segment
change in fair value to contingent
consideration liability |
|
(4,089 |
) |
|
— |
|
|
— |
|
|
— |
|
|
(4,089 |
) |
| Harsco Clean Earth Segment
change in fair value to contingent
consideration liability |
|
— |
|
|
825 |
|
|
— |
|
|
— |
|
|
825 |
|
| Harsco Clean Earth Segment
severance costs |
|
— |
|
|
601 |
|
|
— |
|
|
— |
|
|
601 |
|
| Harsco Rail Segment
improvement initiative costs |
|
— |
|
|
— |
|
|
185 |
|
|
— |
|
|
185 |
|
| Operating income (loss) excluding
unusual items |
|
23,341 |
|
|
10,127 |
|
|
(3,054 |
) |
|
(5,701 |
) |
|
24,713 |
|
| Depreciation and
amortization |
|
27,616 |
|
|
6,663 |
|
|
1,223 |
|
|
644 |
|
|
36,146 |
|
| Adjusted EBITDA |
|
$ |
50,957 |
|
|
$ |
16,790 |
|
|
$ |
(1,831 |
) |
|
$ |
(5,057 |
) |
|
$ |
60,859 |
|
| Revenues as reported |
|
$ |
243,314 |
|
|
$ |
81,883 |
|
|
$ |
74,590 |
|
|
|
|
$ |
399,787 |
|
| Adjusted EBITDA margin (%) |
|
20.9 |
% |
|
20.5 |
% |
|
(2.5 |
)% |
|
|
|
15.2 |
% |
| |
|
|
|
|
|
|
|
|
|
|
| Twelve Months
Ended December 31, 2019: |
|
|
|
|
|
|
|
|
| Operating income (loss) as
reported |
|
$ |
112,298 |
|
|
$ |
20,009 |
|
|
$ |
23,708 |
|
|
$ |
(51,736 |
) |
|
$ |
104,279 |
|
| Corporate strategic costs |
|
— |
|
|
— |
|
|
— |
|
|
25,152 |
|
|
25,152 |
|
| Harsco Environmental Segment
change in fair value to contingent
consideration liability |
|
(8,505 |
) |
|
— |
|
|
— |
|
|
— |
|
|
(8,505 |
) |
| Harsco Environmental Segment
provision for doubtful accounts |
|
6,174 |
|
|
— |
|
|
— |
|
|
— |
|
|
6,174 |
|
| Harsco Rail Segment
improvement initiative costs |
|
— |
|
|
— |
|
|
4,830 |
|
|
— |
|
|
4,830 |
|
| Harsco Environmental Segment
site exit related |
|
(2,427 |
) |
|
— |
|
|
— |
|
|
— |
|
|
(2,427 |
) |
| Harsco Clean Earth Segment
severance costs |
|
— |
|
|
1,855 |
|
|
— |
|
|
— |
|
|
1,855 |
|
| Harsco Clean Earth Segment
change in fair value to contingent
consideration liability |
|
— |
|
|
825 |
|
|
— |
|
|
— |
|
|
825 |
|
| Operating income (loss) excluding
unusual items |
|
107,540 |
|
|
22,689 |
|
|
28,538 |
|
|
(26,584 |
) |
|
132,183 |
|
| Depreciation and
amortization |
|
112,126 |
|
|
12,855 |
|
|
4,875 |
|
|
2,738 |
|
|
132,594 |
|
| Adjusted EBITDA |
|
$ |
219,666 |
|
|
$ |
35,544 |
|
|
$ |
33,413 |
|
|
$ |
(23,846 |
) |
|
$ |
264,777 |
|
| Revenues as reported |
|
$ |
1,034,847 |
|
|
$ |
169,522 |
|
|
$ |
299,373 |
|
|
|
|
$ |
1,503,742 |
|
| Adjusted EBITDA margin
(%) |
|
21.2 |
% |
|
21.0 |
% |
|
11.2 |
% |
|
|
|
17.6 |
% |
(a) The Company's acquisition of Clean Earth closed on
June 28, 2019.
Consolidated Adjusted EBITDA is a non-GAAP
financial measure and consists of income from continuing operations
adjusted to add back income tax expense; equity income of
unconsolidated entities, net; net interest; defined benefit pension
income (expense); unused debt commitment and amendment fees; and
depreciation and amortization (excluding amortization of deferred
financing costs); and excludes unusual items. Segment Adjusted
EBITDA consists of operating income from continuing operations
adjusted to exclude unusual items and add back depreciation and
amortization (excluding amortization of deferred financing
costs). The sum of the Segments’ Adjusted EBITDA equals
consolidated Adjusted EBITDA. The Company‘s management believes
Adjusted EBITDA is meaningful to investors because management
reviews Adjusted EBITDA in assessing and evaluating performance.
However, this measure should be considered in addition to, rather
than as a substitute for net income from continuing operations,
operating income from continuing operations and other information
provided in accordance with GAAP. The Company's method of
calculating Adjusted EBITDA may differ from methods used by other
companies and, as a result, Adjusted EBITDA may not be comparable
to other similarly titled measures disclosed by other
companies.
| HARSCO
CORPORATION RECONCILIATION OF FREE CASH FLOW TO NET CASH PROVIDED
(USED) BY OPERATING ACTIVITIES (Unaudited) |
| |
|
Three Months Ended |
| |
|
March 31 |
|
(In thousands) |
|
2020 |
|
2019 |
|
Net cash provided (used) by operating activities |
|
$ |
(11,536 |
) |
|
$ |
14,838 |
|
| Less capital expenditures |
|
(27,894 |
) |
|
(36,407 |
) |
| Less expenditures for
intangible assets |
|
(58 |
) |
|
— |
|
| Plus capital expenditures for
strategic ventures (a) |
|
1,139 |
|
|
843 |
|
| Plus total proceeds from sales
of assets (b) |
|
2,185 |
|
|
1,177 |
|
| Plus transaction-related
expenditures (c) |
|
9,979 |
|
|
— |
|
| Free cash flow |
|
$ |
(26,185 |
) |
|
$ |
(19,549 |
) |
|
(a) |
Capital expenditures for strategic ventures represent the partner’s
share of capital expenditures in certain ventures consolidated in
the Company’s financial statements. |
| (b) |
Asset sales are a normal part of
the business model, primarily for the Harsco Environmental
Segment. |
| (c) |
Expenditures directly related to
the Company's acquisition and divestiture transactions. |
The Company's management believes that Free cash
flow, which is a non-GAAP financial measure, is meaningful to
investors because management reviews cash flows generated from
operations less capital expenditures net of asset sales proceeds
and transaction-related expenditures for planning and performance
evaluation purposes. It is important to note that free cash flow
does not represent the total residual cash flow available for
discretionary expenditures since other non-discretionary
expenditures, such as mandatory debt service requirements and
settlements of foreign currency forward exchange contracts, are not
deducted from this measure. ThIs measure should be considered in
addition to, rather than as a substitute for, other information
provided in accordance with GAAP.
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