Harsco Corporation (NYSE: HSC) today reported first quarter
2023 results. On a U.S. GAAP (“GAAP”) basis, the first quarter of
2023 diluted loss per share from continuing operations was $0.12,
after unusual items including a net gain on a lease to relocate a
site. Adjusted diluted loss per share from continuing operations in
the first quarter of 2023 was $0.11. These figures compare with
first quarter of 2022 GAAP diluted loss per share from continuing
operations of $0.09 and adjusted diluted loss per share from
continuing operations of $0.01.
GAAP operating income from continuing operations
for the first quarter of 2023 was $29 million. Adjusted EBITDA was
$63 million in the quarter, compared to the Company’s previously
provided guidance range of $45 million to $50 million.
“Harsco delivered another quarter of strong
operating and financial performance, as we continued to benefit
from steady demand for our environmental solutions and focused
execution by our teams across the company,” said Harsco Chairman
and CEO Nick Grasberger. “Our results were supported by healthy
underlying volumes and favorable cost performance relative to our
earlier expectations, with operating costs aided by proactive
internal initiatives. These positive financial results, coupled
with our cash management, have led to a sequential decrease in our
leverage, a trend we expect to continue in the coming quarters.
“Looking forward, demand within our key markets
remains solid, and we anticipate continued positive momentum in
both Clean Earth and Harsco Environmental. As a result, we are
raising our outlook for the year. Business performance at Rail is
also trending positively and our efforts to simplify and de-risk
the business are ongoing, as we continue to position the business
for a sale. Overall, we are encouraged by our progress and expect
that continued execution of our key priorities will position Harsco
well to create significant shareholder value in the coming
years.”
Harsco Corporation—Selected First Quarter
Results
|
($ in millions, except per share amounts) |
|
Q1 2023 |
|
Q1 2022 |
|
Revenues |
|
$ |
496 |
|
|
$ |
453 |
|
| Operating
income from continuing operations - GAAP |
|
$ |
29 |
|
|
$ |
8 |
|
| Diluted
EPS from continuing operations - GAAP |
|
$ |
(0.12 |
) |
|
$ |
(0.09 |
) |
| Adjusted
EBITDA - Non GAAP |
|
$ |
63 |
|
|
$ |
49 |
|
| Adjusted
EBITDA margin - Non GAAP |
|
|
12.7 |
% |
|
|
10.8 |
% |
|
Adjusted diluted EPS from continuing operations - Non GAAP |
|
$ |
(0.11 |
) |
|
$ |
(0.01 |
) |
| |
|
|
|
|
|
|
|
|
Note: Adjusted diluted earnings (loss) per
share from continuing operations and adjusted EBITDA details
presented throughout this release are adjusted for unusual items;
in addition, adjusted diluted earnings per share from continuing
operations is adjusted for acquisition-related amortization
expense. See below for definition of these non-GAAP measures.
Consolidated First Quarter Operating
Results
Consolidated revenues from continuing operations
were $496 million, an increase of 9 percent compared with the
prior-year quarter. Both Harsco Environmental and Clean Earth
realized an increase in revenues compared to the first quarter of
2022 due to higher demand for environmental services and higher
services pricing. Foreign currency translation negatively impacted
first quarter 2023 revenues by approximately $13 million (3
percent), compared with the prior-year period.
The Company’s GAAP operating income from
continuing operations was $29 million for the first quarter of
2023, compared with GAAP operating income of $8 million in the same
quarter of 2022. Meanwhile, adjusted EBITDA totaled $63 million in
the first quarter of 2023 versus $49 million in the first quarter
of the prior year. Clean Earth achieved significantly higher
adjusted EBITDA relative to the prior-year quarter, while Harsco
Environmental’s adjusted EBITDA was below the comparable quarter of
2022 as anticipated.
First Quarter Business ReviewHarsco
Environmental
|
($ in millions) |
|
Q1 2023 |
|
Q1 2022 |
|
Revenues |
|
$ |
273 |
|
|
$ |
262 |
|
| Operating
income - GAAP |
|
$ |
22 |
|
|
$ |
18 |
|
| Adjusted
EBITDA - Non GAAP |
|
$ |
44 |
|
|
$ |
48 |
|
|
Adjusted EBITDA margin - Non GAAP |
|
|
16.1 |
% |
|
|
18.4 |
% |
| |
|
|
|
|
|
|
|
|
Harsco Environmental revenues totaled $273
million in the first quarter of 2023, an increase of 4 percent
compared with the prior-year quarter. This change is attributable
to increases in both volume and price, partially offset by the
impact of FX translation. The segment’s GAAP operating earnings and
adjusted EBITDA totaled $22 million and $44 million, respectively,
in the first quarter of 2023. These figures compare with GAAP
operating income of $18 million and adjusted EBITDA of $48 million
in the prior-year period. The year-on-year change in adjusted
earnings reflects the above-mentioned items as well as the impact
of select site exits, higher operating costs due to inflation, and
certain items (i.e. recovery of Brazil sales taxes) in the
prior-year quarter which were not repeated in 2023.
Clean Earth
|
($ in millions) |
|
Q1 2023 |
|
Q1 2022 |
|
Revenues |
|
$ |
222 |
|
|
$ |
191 |
|
|
Operating income (loss) - GAAP |
|
$ |
16 |
|
|
$ |
(1 |
) |
|
Adjusted EBITDA - Non GAAP |
|
$ |
27 |
|
|
$ |
10 |
|
|
Adjusted EBITDA margin - Non GAAP |
|
|
12.3 |
% |
|
|
5.3 |
% |
|
|
|
|
|
|
|
|
|
|
Clean Earth revenues totaled $222 million in the
first quarter of 2023, a 17 percent increase over the prior-year
quarter as a result of higher volumes and services pricing. The
segment’s GAAP operating income was $16 million and adjusted EBITDA
was $27 million in the first quarter of 2023. These figures compare
with a GAAP operating loss of $1 million and adjusted EBITDA of $10
million in the prior-year period. The year-on-year improvement in
adjusted earnings reflects higher volumes and price as well as cost
reduction and efficiency initiatives, partially offset by
inflationary pressures on certain expenditures such as labor and
disposal. As a result, Clean Earth’s adjusted EBITDA margin
increased to 12.3 percent in the first quarter of 2023 versus 5.3
percent in the comparable quarter of 2022.
Cash Flow
Net cash provided by operating activities was
$37 million in the first quarter of 2023, compared with net cash
used by operating activities of $34 million in the prior-year
period. Free cash flow (excluding Rail) was $12 million in the
first quarter of 2023, compared with $(29) million in the
prior-year period. The increase in free cash flow compared with the
prior-year quarter is mainly attributable to higher cash earnings,
the timing of certain payments and lower net capital spending.
2023 Outlook
The Company has increased its 2023 guidance to
reflect its positive business momentum and improved visibility in
each of its businesses, relative to the outlook provided with the
Company’s fourth quarter 2022 results. Comments by business
segments are as follows:
Harsco Environmental adjusted
EBITDA is projected to be modestly above 2022 results. For the
year, higher services pricing, restructuring benefits, site
improvement initiatives and new contracts are expected to be
partially offset by FX translation impacts and lower commodity
prices.
Clean Earth adjusted EBITDA is
expected to significantly increase versus 2022, as a result of
higher services pricing as well as cost reduction and operational
improvement actions, offsetting the impacts of continued
labor-market and supply-chain (disposal) tightness.
Corporate spending is
anticipated to be higher relative to the prior year due to the
normalization of certain expenditures, including travel and higher
planned incentive compensation.
Lastly, Harsco Free Cash Flow
is now projected to be within a range of $25 million to $45 million
for the year, which represents a significant improvement in
underlying cash flows due to higher cash earnings and working
capital (adjusted for the Accounts Receivable Securitization
benefit in 2022).
|
2023 Full Year Outlook(Continuing
Operations) |
Current |
Prior |
|
GAAP Operating Income/(Loss) |
$101 - $116 million |
$74 - $94 million |
|
Adjusted EBITDA |
$260 - $275 million |
$240 - $260 million |
|
GAAP Diluted Earnings/(Loss) Per Share from Continuing
Operations |
$(0.33) - $(0.54) |
$(0.50) - $(0.80) |
|
Adjusted Diluted Earnings/(Loss) Per Share from Continuing
Operations |
$(0.12) - $(0.33) |
$(0.23) - $(0.52) |
|
Free Cash Flow |
$25 - $45 million |
$20 - $40 million |
|
Net Interest Expense |
$92 - $95 million |
$91 - $95 million |
|
Account Receivable Securitization Fees |
$10 million |
$9 - $10 million |
|
Pension Expense (Non-Operating) |
$20 - $22 million |
$20 - $22 million |
|
Tax Expense, Excluding Any Unusual Items |
$12 - $15 million |
$8 - $11 million |
|
Net Capital Expenditures |
$125 - $135 million |
$125 - $135 million |
|
|
|
|
|
|
|
|
|
Q2 2023 Outlook (Continuing
Operations) |
|
|
|
GAAP Operating Income |
$24 - $31 million |
|
|
Adjusted EBITDA |
$65 - $72 million |
|
|
GAAP Diluted Earnings/(Loss) Per Share from Continuing
Operations |
$(0.07) - $(0.16) |
|
|
Adjusted Diluted Earnings/(Loss) Per Share from Continuing
Operations |
$(0.01) - $(0.09) |
|
|
|
|
|
Conference Call
The Company will hold a conference call today at
10:00 a.m. Eastern Time to discuss its results and respond to
questions from the investment community. Those who wish to listen
to the conference call webcast should visit the Investor Relations
section of the Company’s website at www.harsco.com. The live call
also can be accessed by dialing (833) 634-5019, or (412) 902-4237
for international callers. Please ask to join the Harsco
Corporation call. Listeners are advised to dial in approximately
ten minutes prior to the call. If you are unable to listen to the
live call, the webcast will be archived on the Company’s
website.
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,” “outlook,” “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 health
conditions; (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
Company’s ability to negotiate, complete, and integrate strategic
transactions; (13) failure to complete a divestiture of the Rail
segment, as announced on November 2, 2021 on satisfactory terms, or
at all; (14) potential severe volatility in the capital or
commodity markets; (15) failure to retain key management and
employees; (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 has been significantly impacted by COVID-19) to
maintain their credit availability; (18) implementation of
environmental remediation matters; (19) risk and uncertainty
associated with intangible assets; (20) the risk that the Company
may be unable to implement fully and successfully the expected
incremental actions at Clean Earth due to market conditions or
otherwise and may fail to deliver the expected resulting benefits;
and (21) 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, 2022. 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.
NON-GAAP MEASURESMeasurements
of financial performance not calculated in accordance with GAAP
should be considered as supplements to, and not substitutes for,
performance measurements calculated or derived in accordance with
GAAP. Any such measures are not necessarily comparable to other
similarly-titled measurements employed by other companies. The most
comparable GAAP measures are included within the definitions
below.
Adjusted diluted earnings per share from
continuing operations: Adjusted diluted earnings (loss)
per share from continuing operations is a non-GAAP financial
measure and consists of diluted earnings (loss) per share from
continuing operations adjusted for unusual items and
acquisition-related intangible asset amortization expense. 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. The Company’s management believes
Adjusted diluted earnings per share from continuing operations 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.
Adjusted EBITDA: Adjusted
EBITDA is a non-GAAP financial measure and consists of income
(loss) from continuing operations adjusted to add back income tax
expense; equity income of unconsolidated entities, net; net
interest expense; defined benefit pension income (expense);
facility fees and debt-related income (expense); 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 and Corporate 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.
Free cash flow: Free cash flow
is a non-GAAP financial measure and consists of net cash provided
(used) by operating activities less capital expenditures and
expenditures for intangible assets; and plus capital expenditures
for strategic ventures, total proceeds from sales of assets and
certain transaction-related / debt-refinancing expenditures. The
Company’s management believes that Free cash flow is meaningful to
investors because management reviews Free cash flow 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. Free cash flow
excludes the former Harsco Rail Segment since the segment is
reported as discontinued operations. This presentation provides a
basis for comparison of ongoing operations and prospects.
About Harsco
Harsco Corporation is a global market leader
providing environmental solutions for industrial and specialty
waste streams. Based in Philadelphia, PA, the 12,000-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.
| |
|
|
|
| HARSCO
CORPORATIONCONSOLIDATED STATEMENTS OF
OPERATIONS (Unaudited) |
|
|
|
| |
|
Three Months
Ended |
| |
|
March 31 |
|
(In thousands, except per share amounts) |
|
|
2023 |
|
|
|
2022 |
|
| Revenues from continuing operations: |
|
|
|
|
|
Revenues |
|
$ |
495,653 |
|
|
$ |
452,797 |
|
| Costs and expenses from continuing
operations: |
|
|
|
|
|
Cost of sales |
|
|
400,688 |
|
|
|
377,019 |
|
|
Selling, general and administrative expenses |
|
|
71,935 |
|
|
|
69,153 |
|
|
Research and development expenses |
|
|
176 |
|
|
|
56 |
|
|
Other (income) expenses, net |
|
|
(6,151 |
) |
|
|
(1,179 |
) |
|
Total costs and expenses |
|
|
466,648 |
|
|
|
445,049 |
|
|
Operating income (loss) from continuing
operations |
|
|
29,005 |
|
|
|
7,748 |
|
| Interest income |
|
|
1,455 |
|
|
|
644 |
|
| Interest expense |
|
|
(24,328 |
) |
|
|
(15,092 |
) |
| Facility fees and debt-related income (expense) |
|
|
(2,363 |
) |
|
|
(532 |
) |
| Defined benefit pension income (expense) |
|
|
(5,335 |
) |
|
|
2,410 |
|
|
Income (loss) from continuing operations before income
taxes and equity income |
|
|
(1,566 |
) |
|
|
(4,822 |
) |
| Income tax benefit (expense) from continuing operations |
|
|
(6,923 |
) |
|
|
(1,221 |
) |
| Equity income (loss) of unconsolidated entities, net |
|
|
(133 |
) |
|
|
(131 |
) |
|
Income (loss) from continuing operations |
|
|
(8,622 |
) |
|
|
(6,174 |
) |
| Discontinued operations: |
|
|
|
|
|
Income (loss) from discontinued businesses |
|
|
619 |
|
|
|
(39,097 |
) |
|
Income tax benefit (expense) from discontinued businesses |
|
|
(587 |
) |
|
|
6,591 |
|
|
Income (loss) from discontinued operations, net of
tax |
|
|
32 |
|
|
|
(32,506 |
) |
| Net income (loss) |
|
|
(8,590 |
) |
|
|
(38,680 |
) |
|
Less: Net (income) loss attributable to noncontrolling
interests |
|
|
(935 |
) |
|
|
(1,159 |
) |
| Net income (loss) attributable to Harsco
Corporation |
|
$ |
(9,525 |
) |
|
$ |
(39,839 |
) |
| Amounts attributable to Harsco Corporation
common stockholders: |
|
Income (loss) from continuing operations, net of tax |
|
$ |
(9,557 |
) |
|
$ |
(7,333 |
) |
|
Income (loss) from discontinued operations, net of tax |
|
|
32 |
|
|
|
(32,506 |
) |
|
Net income (loss) attributable to Harsco Corporation common
stockholders |
|
$ |
(9,525 |
) |
|
$ |
(39,839 |
) |
| Weighted-average shares of common stock outstanding |
|
|
79,633 |
|
|
|
79,363 |
|
| Basic earnings (loss) per common share attributable
to Harsco Corporation common stockholders: |
|
Continuing operations |
|
$ |
(0.12 |
) |
|
$ |
(0.09 |
) |
|
Discontinued operations |
|
|
0.00 |
|
|
|
(0.41 |
) |
| Basic earnings (loss) per share attributable to Harsco
Corporation common stockholders |
|
$ |
(0.12 |
) |
|
$ |
(0.50 |
) |
| Diluted weighted-average shares of common stock
outstanding |
|
|
79,633 |
|
|
|
79,363 |
|
| Diluted earnings (loss) per common share
attributable to Harsco Corporation common stockholders: |
|
Continuing operations |
|
$ |
(0.12 |
) |
|
$ |
(0.09 |
) |
|
Discontinued operations |
|
|
0.00 |
|
|
|
(0.41 |
) |
| Diluted earnings (loss) per share attributable to
Harsco Corporation common stockholders |
|
$ |
(0.12 |
) |
|
$ |
(0.50 |
) |
| |
|
|
|
|
|
|
|
|
| HARSCO CORPORATIONCONSOLIDATED BALANCE
SHEETS |
|
|
|
|
|
(In thousands) |
|
March 31 2023 |
|
December 31 2022 |
| ASSETS |
|
|
|
|
| Current assets: |
|
|
|
|
|
Cash and cash equivalents |
|
$ |
91,759 |
|
|
$ |
81,332 |
|
|
Restricted cash |
|
|
4,477 |
|
|
|
3,762 |
|
|
Trade accounts receivable, net |
|
|
281,777 |
|
|
|
264,428 |
|
|
Other receivables |
|
|
25,832 |
|
|
|
25,379 |
|
|
Inventories |
|
|
84,705 |
|
|
|
81,375 |
|
|
Prepaid expenses |
|
|
24,878 |
|
|
|
30,583 |
|
|
Current portion of assets held-for-sale |
|
|
264,051 |
|
|
|
266,335 |
|
|
Other current assets |
|
|
15,181 |
|
|
|
14,541 |
|
|
Total current assets |
|
|
792,660 |
|
|
|
767,735 |
|
| Property, plant and equipment, net |
|
|
665,191 |
|
|
|
656,875 |
|
| Right-of-use assets, net |
|
|
100,199 |
|
|
|
101,253 |
|
| Goodwill |
|
|
763,013 |
|
|
|
759,253 |
|
| Intangible assets, net |
|
|
345,595 |
|
|
|
352,160 |
|
| Deferred income tax assets |
|
|
18,422 |
|
|
|
17,489 |
|
| Assets held-for-sale |
|
|
69,554 |
|
|
|
70,105 |
|
| Other assets |
|
|
70,360 |
|
|
|
65,984 |
|
|
Total assets |
|
$ |
2,824,994 |
|
|
$ |
2,790,854 |
|
| LIABILITIES |
|
|
|
|
| Current liabilities: |
|
|
|
|
|
Short-term borrowings |
|
$ |
2,142 |
|
|
$ |
7,751 |
|
|
Current maturities of long-term debt |
|
|
13,245 |
|
|
|
11,994 |
|
|
Accounts payable |
|
|
225,314 |
|
|
|
205,577 |
|
|
Accrued compensation |
|
|
50,193 |
|
|
|
43,595 |
|
|
Income taxes payable |
|
|
3,987 |
|
|
|
3,640 |
|
|
Current portion of operating lease liabilities |
|
|
26,104 |
|
|
|
25,521 |
|
|
Current portion of liabilities of assets held-for-sale |
|
|
159,069 |
|
|
|
159,004 |
|
|
Other current liabilities |
|
|
138,224 |
|
|
|
140,199 |
|
|
Total current liabilities |
|
|
618,278 |
|
|
|
597,281 |
|
| Long-term debt |
|
|
1,346,206 |
|
|
|
1,336,995 |
|
| Retirement plan liabilities |
|
|
48,013 |
|
|
|
46,601 |
|
| Operating lease liabilities |
|
|
74,149 |
|
|
|
75,246 |
|
| Liabilities of assets held-for-sale |
|
|
8,942 |
|
|
|
9,463 |
|
| Environmental liabilities |
|
|
26,481 |
|
|
|
26,880 |
|
| Deferred tax liabilities |
|
|
28,426 |
|
|
|
30,069 |
|
| Other liabilities |
|
|
50,547 |
|
|
|
45,277 |
|
|
Total liabilities |
|
|
2,201,042 |
|
|
|
2,167,812 |
|
| HARSCO CORPORATION STOCKHOLDERS’ EQUITY |
|
|
|
|
|
Common stock |
|
|
145,843 |
|
|
|
145,448 |
|
|
Additional paid-in capital |
|
|
229,218 |
|
|
|
225,759 |
|
|
Accumulated other comprehensive loss |
|
|
(560,842 |
) |
|
|
(567,636 |
) |
|
Retained earnings |
|
|
1,604,916 |
|
|
|
1,614,441 |
|
|
Treasury stock |
|
|
(849,678 |
) |
|
|
(848,570 |
) |
|
Total Harsco Corporation stockholders’ equity |
|
|
569,457 |
|
|
|
569,442 |
|
| Noncontrolling interests |
|
|
54,495 |
|
|
|
53,600 |
|
|
Total equity |
|
|
623,952 |
|
|
|
623,042 |
|
|
Total liabilities and equity |
|
$ |
2,824,994 |
|
|
$ |
2,790,854 |
|
|
|
|
|
|
|
|
|
|
|
| HARSCO
CORPORATIONCONSOLIDATED STATEMENTS OF CASH
FLOWS (Unaudited) |
| |
|
Three Months Ended March 31 |
|
(In thousands) |
|
|
2023 |
|
|
|
2022 |
|
| Cash flows from operating activities: |
|
|
|
|
|
Net income (loss) |
|
$ |
(8,590 |
) |
|
$ |
(38,680 |
) |
|
Adjustments to reconcile net income (loss) to net cash provided by
operating activities: |
|
Depreciation |
|
|
33,039 |
|
|
|
33,604 |
|
|
Amortization |
|
|
7,965 |
|
|
|
8,586 |
|
|
Deferred income tax (benefit) expense |
|
|
(56 |
) |
|
|
(4,275 |
) |
|
Equity (income) loss of unconsolidated entities, net |
|
|
133 |
|
|
|
131 |
|
|
Dividends from unconsolidated entities |
|
|
— |
|
|
|
178 |
|
|
Other, net |
|
|
1,009 |
|
|
|
259 |
|
|
Changes in assets and liabilities, net of acquisitions and
dispositions of businesses: |
|
Accounts receivable |
|
|
(14,533 |
) |
|
|
(15,364 |
) |
|
Income tax refunds receivable, reimbursable to seller |
|
|
— |
|
|
|
7,687 |
|
|
Inventories |
|
|
(8,534 |
) |
|
|
(4,610 |
) |
|
Contract assets |
|
|
11,698 |
|
|
|
4,843 |
|
|
Right-of-use assets |
|
|
7,842 |
|
|
|
7,076 |
|
|
Accounts payable |
|
|
17,735 |
|
|
|
1,655 |
|
|
Accrued interest payable |
|
|
(6,998 |
) |
|
|
(7,393 |
) |
|
Accrued compensation |
|
|
7,343 |
|
|
|
(5,692 |
) |
|
Advances on contracts |
|
|
(5,591 |
) |
|
|
(7,808 |
) |
|
Operating lease liabilities |
|
|
(7,202 |
) |
|
|
(7,063 |
) |
|
Retirement plan liabilities, net |
|
|
814 |
|
|
|
(14,519 |
) |
|
Other assets and liabilities |
|
|
838 |
|
|
|
7,070 |
|
|
Net cash provided (used) by operating
activities |
|
|
36,912 |
|
|
|
(34,315 |
) |
| Cash flows from investing activities: |
|
|
|
|
|
Purchases of property, plant and equipment |
|
|
(22,146 |
) |
|
|
(32,958 |
) |
|
Proceeds from sales of assets |
|
|
823 |
|
|
|
5,976 |
|
|
Expenditures for intangible assets |
|
|
(36 |
) |
|
|
(54 |
) |
|
Net proceeds from settlement of foreign currency forward exchange
contracts |
|
|
(1,212 |
) |
|
|
1,061 |
|
|
Payments for settlements of interest rate swaps |
|
|
— |
|
|
|
(1,062 |
) |
|
Other investing activities, net |
|
|
32 |
|
|
|
124 |
|
|
Net cash used by investing activities |
|
|
(22,539 |
) |
|
|
(26,913 |
) |
| Cash flows from financing activities: |
|
|
|
|
|
Short-term borrowings, net |
|
|
(3,029 |
) |
|
|
2,051 |
|
|
Current maturities and long-term debt: |
|
|
|
|
|
Additions |
|
|
59,000 |
|
|
|
72,005 |
|
|
Reductions |
|
|
(57,200 |
) |
|
|
(2,566 |
) |
|
Stock-based compensation - Employee taxes paid |
|
|
(930 |
) |
|
|
(1,377 |
) |
|
Payment of contingent consideration |
|
|
— |
|
|
|
(6,915 |
) |
|
Net cash (used) provided by financing
activities |
|
|
(2,159 |
) |
|
|
63,198 |
|
| Effect of exchange rate changes on cash and cash equivalents,
including restricted cash |
|
|
(1,072 |
) |
|
|
455 |
|
| Net increase (decrease) in cash and cash equivalents, including
restricted cash |
|
|
11,142 |
|
|
|
2,425 |
|
| Cash and cash equivalents, including restricted cash, at
beginning of period |
|
|
85,094 |
|
|
|
87,128 |
|
| Cash and cash equivalents, including restricted cash,
at end of period |
|
$ |
96,236 |
|
|
$ |
89,553 |
|
| |
|
|
|
|
|
|
|
|
| HARSCO
CORPORATIONREVIEW OF OPERATIONS BY
SEGMENT (Unaudited) |
| |
|
Three Months Ended |
|
Three Months Ended |
| |
|
March 31, 2023 |
|
March 31, 2022 |
|
(In thousands) |
|
Revenues |
|
OperatingIncome (Loss) |
|
Revenues |
|
Operating Income (Loss) |
|
Harsco Environmental |
|
$ |
273,189 |
|
$ |
22,285 |
|
|
$ |
262,051 |
|
$ |
18,267 |
|
|
Harsco Clean Earth |
|
|
222,464 |
|
|
16,471 |
|
|
|
190,746 |
|
|
(1,297 |
) |
|
Corporate |
|
|
— |
|
|
(9,751 |
) |
|
|
— |
|
|
(9,222 |
) |
|
Consolidated Totals |
|
$ |
495,653 |
|
$ |
29,005 |
|
|
$ |
452,797 |
|
$ |
7,748 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| HARSCO
CORPORATIONRECONCILIATION OF ADJUSTED DILUTED
EARNINGS PER SHARE FROM CONTINUING OPERATIONS TO DILUTED EARNINGS
(LOSS) PER SHARE FROM CONTINUING OPERATIONS AS REPORTED
(Unaudited) |
| |
|
Three Months Ended |
| |
|
March 31 |
|
|
|
|
2023 |
|
|
|
2022 |
|
| Diluted earnings (loss) per
share from continuing operations, as reported |
|
$ |
(0.12 |
) |
|
$ |
(0.09 |
) |
| Facility fees and debt-related
expense (income) (a) |
|
|
— |
|
|
|
0.01 |
|
| Corporate strategic costs
(b) |
|
|
0.01 |
|
|
|
(0.01 |
) |
| Harsco Environmental net gain
on lease incentive (c) |
|
|
(0.09 |
) |
|
|
— |
|
| Taxes on above unusual items
(d) |
|
|
0.02 |
|
|
|
— |
|
| Adjusted diluted
earnings (loss) per share from continuing operations, including
acquisition amortization expense |
|
|
(0.18 |
) |
|
|
(0.09 |
) |
|
Acquisition amortization expense, net of tax (e) |
|
|
0.07 |
|
|
|
0.08 |
|
| Adjusted diluted
earnings (loss) per share from continuing operations |
|
$ |
(0.11 |
) |
|
$ |
(0.01 |
) |
(a) Costs incurred at Corporate to amend the Company’s
Senior Secured Credit Facilities (three months 2022 $0.5 million
pre-tax expense).(b) Certain strategic costs incurred at
Corporate associated with supporting and executing the Company’s
long-term strategies (three months 2023 $0.6 million pre-tax
expense). 2022 included the relocation of the Company’s
headquarters (three months 2022 $0.4 million pre-tax
income).(c) Net gain recognized for a lease modification that
resulted in a lease incentive for the Company for a site relocation
prior the end of the expected lease term (three months ended 2023
$6.8 million pre-tax).(d) Unusual items are tax-effected at
the global effective tax rate, before discrete items, in effect at
the time the unusual item is recorded.(e) Acquisition
amortization expense was $7.0 million pre-tax and $7.9 million
pre-tax for the three months ended 2023 and 2022, respectively, and
after-tax was $5.4 million and $6.2 million for the three months
ended 2023 and 2022, respectively.
| |
| HARSCO
CORPORATION RECONCILIATION OF PROJECTED ADJUSTED DILUTED EARNINGS
(LOSS) PER SHARE FROM CONTINUING OPERATIONS TO DILUTED EARNINGS PER
SHARE FROM CONTINUING OPERATIONS (a)(Unaudited) |
| |
|
|
|
|
|
|
|
|
| |
|
Projected |
|
Projected |
| |
|
Three Months
Ending |
|
Twelve
Months Ending |
| |
|
June 30 |
|
December 31 |
| |
|
|
2023 |
|
|
|
2023 |
|
|
|
|
Low |
|
High |
|
Low |
|
High |
|
Diluted earnings (loss) per share from continuing operations |
|
$ |
(0.16 |
) |
|
$ |
(0.07 |
) |
|
$ |
(0.54 |
) |
|
$ |
(0.33 |
) |
| Corporate strategic costs |
|
|
— |
|
|
|
— |
|
|
|
0.01 |
|
|
|
0.01 |
|
| Harsco Environmental segment
net gain on lease incentive |
|
|
— |
|
|
|
— |
|
|
|
(0.09 |
) |
|
|
(0.09 |
) |
| Taxes on above unusual
items |
|
|
— |
|
|
|
— |
|
|
|
0.02 |
|
|
|
0.02 |
|
| Adjusted diluted
earnings (loss) per share from continuing operations, including
acquisition amortization expense |
|
|
(0.16 |
) |
|
|
(0.07 |
) |
|
|
(0.60 |
) |
|
|
(0.39 |
) |
| Estimated acquisition
amortization expense, net of tax |
|
|
0.07 |
|
|
|
0.07 |
|
|
|
0.27 |
|
|
|
0.27 |
|
| Adjusted diluted
earnings (loss) per share from continuing operations |
|
$ |
(0.09 |
) |
|
$ |
(0.01 |
) |
(b) |
$ |
(0.33 |
) |
|
$ |
(0.12 |
) |
(a) Excludes Harsco Rail Segment.(b) Does not total
due to rounding.
| |
| HARSCO
CORPORATIONRECONCILIATION OF ADJUSTED EBITDA BY
SEGMENT TO OPERATING INCOME (LOSS) AS REPORTED BY SEGMENT
(Unaudited) |
| (In
thousands) |
|
Harsco Environmental |
|
HarscoClean Earth |
|
Corporate |
|
ConsolidatedTotals |
| Three Months
Ended March 31, 2023: |
|
|
|
|
|
|
|
|
| Operating
income (loss), as reported |
|
$ |
22,285 |
|
|
$ |
16,471 |
|
|
$ |
(9,751 |
) |
|
$ |
29,005 |
|
| Corporate strategic costs |
|
|
— |
|
|
|
— |
|
|
|
569 |
|
|
|
569 |
|
| Harsco Environmental segment net gain on lease incentive |
|
|
(6,782 |
) |
|
|
— |
|
|
|
— |
|
|
|
(6,782 |
) |
| Operating income (loss) excluding unusual items |
|
|
15,503 |
|
|
|
16,471 |
|
|
|
(9,182 |
) |
|
|
22,792 |
|
| Depreciation |
|
|
27,560 |
|
|
|
4,927 |
|
|
|
552 |
|
|
|
33,039 |
|
| Amortization |
|
|
999 |
|
|
|
6,029 |
|
|
|
— |
|
|
|
7,028 |
|
| Adjusted EBITDA |
|
|
44,062 |
|
|
|
27,427 |
|
|
|
(8,630 |
) |
|
|
62,859 |
|
| Revenues as reported |
|
$ |
273,189 |
|
|
$ |
222,464 |
|
|
|
|
$ |
495,653 |
|
| Adjusted EBITDA margin (%) |
|
|
16.1 |
% |
|
|
12.3 |
% |
|
|
|
|
12.7 |
% |
| |
|
|
|
|
|
|
|
|
| Three Months Ended March 31,
2022: |
|
|
|
|
|
|
| Operating income (loss), as reported |
|
$ |
18,267 |
|
|
$ |
(1,297 |
) |
|
$ |
(9,222 |
) |
|
$ |
7,748 |
|
| Corporate strategic costs |
|
|
— |
|
|
|
— |
|
|
|
(448 |
) |
|
|
(448 |
) |
| Harsco Clean Earth segment severance costs |
|
|
— |
|
|
|
300 |
|
|
|
— |
|
|
|
300 |
|
| Operating income (loss) excluding unusual items |
|
|
18,267 |
|
|
|
(997 |
) |
|
|
(9,670 |
) |
|
|
7,600 |
|
| Depreciation |
|
|
28,072 |
|
|
|
5,101 |
|
|
|
431 |
|
|
|
33,604 |
|
| Amortization |
|
|
1,828 |
|
|
|
6,075 |
|
|
|
— |
|
|
|
7,903 |
|
| Adjusted EBITDA |
|
|
48,167 |
|
|
|
10,179 |
|
|
|
(9,239 |
) |
|
|
49,107 |
|
| Revenues as reported |
|
$ |
262,051 |
|
|
$ |
190,746 |
|
|
|
|
$ |
452,797 |
|
| Adjusted EBITDA margin (%) |
|
|
18.4 |
% |
|
|
5.3 |
% |
|
|
|
|
10.8 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| HARSCO
CORPORATIONRECONCILIATION OF ADJUSTED EBITDA TO
CONSOLIDATED INCOME (LOSS) FROM CONTINUING OPERATIONS AS
REPORTED (Unaudited) |
| |
|
Three Months EndedMarch 31 |
|
(In thousands) |
|
|
2023 |
|
|
|
2022 |
|
| Consolidated income (loss)
from continuing operations |
|
$ |
(8,622 |
) |
|
$ |
(6,174 |
) |
| |
|
|
|
|
| Add back
(deduct): |
|
|
|
|
| Equity in (income) loss of
unconsolidated entities, net |
|
|
133 |
|
|
|
131 |
|
| Income tax (benefit)
expense |
|
|
6,923 |
|
|
|
1,221 |
|
| Defined benefit pension
income |
|
|
5,335 |
|
|
|
(2,410 |
) |
| Facility fees and debt-related
expense (income) |
|
|
2,363 |
|
|
|
532 |
|
| Interest expense |
|
|
24,328 |
|
|
|
15,092 |
|
| Interest income |
|
|
(1,455 |
) |
|
|
(644 |
) |
| Depreciation |
|
|
33,039 |
|
|
|
33,604 |
|
| Amortization |
|
|
7,028 |
|
|
|
7,903 |
|
| |
|
|
|
|
| Unusual items: |
|
|
|
|
| Corporate strategic costs |
|
|
569 |
|
|
|
(448 |
) |
| Harsco Environmental segment
net gain on lease incentive |
|
|
(6,782 |
) |
|
|
— |
|
| Harsco Clean Earth segment
severance costs |
|
|
— |
|
|
|
300 |
|
| Adjusted
EBITDA |
|
$ |
62,859 |
|
|
$ |
49,107 |
|
| |
|
|
|
|
|
|
|
|
| HARSCO
CORPORATION RECONCILIATION OF PROJECTED CONSOLIDATED ADJUSTED
EBITDA TO PROJECTED CONSOLIDATED INCOME FROM CONTINUING OPERATIONS
(a)(Unaudited) |
| |
|
Projected |
|
Projected |
| |
|
Three Months Ending |
|
Twelve Months Ending |
| |
|
June 30 |
|
December 31 |
| |
|
|
2023 |
|
|
|
2023 |
|
|
(In millions) |
|
Low |
|
High |
|
Low |
|
High |
|
Consolidated loss from continuing operations |
|
$ |
(12 |
) |
|
$ |
(5 |
) |
|
$ |
(40 |
) |
|
$ |
(22 |
) |
| |
|
|
|
|
|
|
|
|
| Add back
(deduct): |
|
|
|
|
|
|
|
|
| Income tax (income)
expense |
|
|
4 |
|
|
|
5 |
|
|
|
14 |
|
|
|
16 |
|
| Facility fees and debt-related
(income) expense |
|
|
3 |
|
|
|
2 |
|
|
|
10 |
|
|
|
10 |
|
| Net interest |
|
|
24 |
|
|
|
23 |
|
|
|
95 |
|
|
|
92 |
|
| Defined benefit pension
(income) expense |
|
|
5 |
|
|
|
5 |
|
|
|
22 |
|
|
|
20 |
|
| Depreciation and
amortization |
|
|
41 |
|
|
|
41 |
|
|
|
165 |
|
|
|
165 |
|
| |
|
|
|
|
|
|
|
|
| Unusual
items: |
|
|
|
|
|
|
|
|
| Corporate strategic costs |
|
|
— |
|
|
|
— |
|
|
|
1 |
|
|
|
1 |
|
| Harsco Environmental net gain
on lease incentive |
|
|
— |
|
|
|
— |
|
|
|
(7 |
) |
|
|
(7 |
) |
| Consolidated Adjusted EBITDA |
|
$ |
65 |
|
|
$ |
72 |
|
(b) |
$ |
260 |
|
|
$ |
275 |
|
(a) Excludes former Harsco Rail Segment(b) Does not total due to
rounding.
| |
| HARSCO
CORPORATIONRECONCILIATION OF FREE CASH FLOW TO NET
CASH PROVIDED BY OPERATING ACTIVITIES (Unaudited) |
| |
|
Three Months Ended |
| |
|
March 31 |
|
(In thousands) |
|
|
2023 |
|
|
|
2022 |
|
| Net cash provided by operating
activities |
|
|
36,912 |
|
|
$ |
(34,315 |
) |
| Less capital expenditures |
|
|
(22,146 |
) |
|
|
(32,958 |
) |
| Less expenditures for
intangible assets |
|
|
(36 |
) |
|
|
(54 |
) |
| Plus capital expenditures for
strategic ventures (a) |
|
|
486 |
|
|
|
328 |
|
| Plus total proceeds from sales
of assets (b) |
|
|
823 |
|
|
|
5,976 |
|
| Plus transaction-related
expenditures (c) |
|
|
— |
|
|
|
878 |
|
| Harsco Rail free cash flow
deficit/(benefit) |
|
|
(3,945 |
) |
|
|
31,321 |
|
| Free cash flow |
|
$ |
12,094 |
|
|
$ |
(28,824 |
) |
(a) Capital expenditures for strategic ventures represent
the partner’s share of capital expenditures in certain ventures
consolidated in the Company’s condensed consolidated 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 and costs at Corporate associated with
certain debt refinancing transactions.
| |
| HARSCO
CORPORATION RECONCILIATION OF PROJECTED FREE CASH FLOW TO PROJECTED
NET CASH PROVIDED BY OPERATING ACTIVITIES (Unaudited)
(a) |
| |
|
Projected Twelve Months
Ending December 31 |
| |
|
|
2023 |
|
|
(In millions) |
|
Low |
|
High |
|
Net cash provided by operating activities |
|
$ |
145 |
|
|
$ |
175 |
|
| Less net capital / intangible
asset expenditures |
|
|
(125 |
) |
|
|
(135 |
) |
| Plus capital expenditures for
strategic ventures |
|
|
5 |
|
|
|
5 |
|
| Free cash flow |
|
$ |
25 |
|
|
$ |
45 |
|
(a) Excludes former Harsco Rail Segment
| Investor
Contact David
Martin267.946.1407damartin@harsco.com |
Media ContactJay
Cooney267.857.8017jcooney@harsco.com |
Harsco (NYSE:HSC)
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Harsco (NYSE:HSC)
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