Harsco Corporation (NYSE: HSC) today reported first quarter
2022 results. On a U.S. GAAP ("GAAP") basis, first quarter of 2022
diluted loss per share from continuing operations was $0.09.
Adjusted diluted loss per share from continuing operations in the
first quarter of 2022 was $0.01. These figures compare with a first
quarter of 2021 GAAP diluted loss per share from continuing
operations of $0.02 and adjusted diluted earnings per share from
continuing operations of $0.11.
GAAP operating income from continuing operations
for the first quarter of 2022 was $8 million. Adjusted EBITDA
totaled $49 million in the quarter, compared to the Company's
previously provided guidance range of $47 million to $52
million.
"Despite Harsco facing a challenging operating
environment marked by increased inflationary pressures, we met our
first quarter guidance," said Chairman and CEO Nick Grasberger.
"These results reflect the ongoing commitment of all Harsco
employees to deliver value to our customers, by solving their most
pressing environmental challenges. As the global economy continues
to grow and sustainability goals remain a focus, Harsco is poised
to benefit as a leading provider of recycling and material re-use
solutions within industrial markets.
"Looking forward, underlying demand within most key
markets remains firm, including the steel industry. The global
steel market is in the process of rebalancing as a result of the
Russia-Ukraine conflict, and we anticipate limited impacts over
time given the diversity of our portfolio. Meanwhile, continued
high inflation as well as supply-chain and labor-market tightness
remain concerns, particularly in the U.S. Internal actions are
underway to mitigate these impacts and we remain confident that
each of our businesses is positioned to deliver operating results
growth in 2022."
Harsco Corporation—Selected First Quarter
Results
($ in millions, except per share amounts) |
|
Q1 2022 |
|
Q1 2021 |
Revenues |
|
$ |
453 |
|
|
$ |
447 |
|
Operating
income from continuing operations - GAAP |
|
$ |
8 |
|
|
$ |
19 |
|
Diluted
EPS from continuing operations - GAAP |
|
$ |
(0.09 |
) |
|
$ |
(0.02 |
) |
Adjusted
EBITDA |
|
$ |
49 |
|
|
$ |
59 |
|
Adjusted
EBITDA margin |
|
|
10.8 |
% |
|
|
13.1 |
% |
Adjusted diluted EPS |
|
$ |
(0.01 |
) |
|
$ |
0.11 |
|
Note: Adjusted earnings per share and adjusted
EBITDA details presented throughout this release are adjusted for
unusual items; in addition, adjusted earnings per share details are
adjusted for acquisition-related amortization expense.
Consolidated First Quarter Operating
Results
Consolidated revenues from continuing operations
were $453 million, an increase of 1 percent compared with the
prior-year quarter. Environmental and Clean Earth each realized a
slight increase in revenues compared to the first quarter of 2021,
reflecting continued demand growth for environmental solutions
across the Company. Foreign currency translation negatively
impacted first quarter 2022 revenues by approximately $7 million
compared with the prior-year period.
GAAP operating income from continuing operations
was $8 million for the first quarter of 2022, compared with $19
million in the same quarter of 2021. Meanwhile, adjusted EBITDA
totaled $49 million in the first quarter of 2022 versus $59 million
in the first quarter of the prior year. Both Environmental and
Clean Earth experienced lower adjusted EBITDA relative to the prior
year as was anticipated.
First Quarter Business
ReviewEnvironmental
($ in millions) |
|
Q1 2022 |
|
Q1 2021 |
Revenues |
|
$ |
262 |
|
|
$ |
258 |
|
Operating
income - GAAP |
|
$ |
18 |
|
|
$ |
26 |
|
Adjusted
EBITDA |
|
$ |
48 |
|
|
$ |
54 |
|
Adjusted EBITDA margin |
|
|
18.4 |
% |
|
|
20.8 |
% |
Environmental revenues totaled $262 million in the
first quarter of 2022, an increase of 2 percent compared with the
prior-year quarter. This increase is attributable to higher demand
for mill services and favorable commodities pricing, partially
offset by FX translation impacts (FX-adjusted growth was 4
percent). The segment's GAAP operating income and adjusted EBITDA
totaled $18 million and $48 million, respectively, in the first
quarter of 2022. These figures compare with GAAP operating income
of $26 million and adjusted EBITDA of $54 million in the prior-year
period. The year-on-year change in adjusted earnings, as
anticipated, reflects a less favorable mix of services, cost
inflation pressures and FX translation. Also, this year-on-year
comparison is impacted by the recovery of Brazil sales taxes which
were greater in the prior-year quarter.
Clean Earth
($ in millions) |
|
Q1 2022 |
|
Q1 2021 |
Revenues |
|
$ |
191 |
|
|
$ |
189 |
|
Operating income (loss) - GAAP |
|
$ |
(1 |
) |
|
$ |
3 |
|
Adjusted EBITDA |
|
$ |
10 |
|
|
$ |
15 |
|
Adjusted EBITDA margin |
|
|
5.3 |
% |
|
|
7.7 |
% |
Clean Earth revenues totaled $191 million in the
first quarter of 2022, a modest increase over the prior-year
quarter. The segment GAAP operating loss was $1 million and
adjusted EBITDA totaled $10 million in the first quarter of 2022.
These figures compare with $3 million of operating income and
adjusted EBITDA of $15 million, respectively, in the prior-year
period. The change in adjusted earnings is mainly attributable to
significant cost inflation (principally transportation and
containers costs), most of which is related to a price-cost
mismatch and is anticipated to be addressed through price increases
and surcharges, as well as labor and material processing
constraints.
Cash FlowNet cash used by
operating activities totaled $34 million in the first quarter of
2022, compared with net cash used by operating activities of $23
million in the prior-year period. Free cash flow (without Rail) was
$(29) million in the first quarter of 2022, compared with $(16)
million in the prior-year period. The change in free cash flow
compared with the prior-year quarter is principally related to
higher capital expenditures (due to timing) and the change in cash
earnings.
2022 OutlookThe Company has
updated its 2022 guidance to reflect heightened inflation
challenges, related to transportation and container costs, as well
as ongoing labor-market tightness. These impacts are most
pronounced in the U.S. and within the Company's Clean Earth
segment. Internal actions are underway to mitigate these
challenges, including through commercial efforts and cost
reductions. Otherwise, the 2022 segment outlook is largely
unchanged and the Company continues to anticipate that both
business segments will realize earnings improvement during the
year.
Summary Outlook highlights are as follows:
2022 Full Year
Outlook (Continuing Operations) |
Current |
Prior |
GAAP Operating Income |
$81 - $96 million |
$85 - $105 million |
Adjusted EBITDA |
$250 - $265 million |
$255 - $275 million |
GAAP Diluted Earnings Per Share |
$0.02 - 0.10 |
$0.15 - 0.32 |
Adjusted Diluted Earnings Per Share |
$0.35 - 0.44 |
$0.50 - 0.66 |
Free Cash Flow |
$25 - $40 million |
$30 - $50 million |
Net Interest Expense |
$68 - $70 million |
$61 - $63 million |
Pension Income (Non-Operating) |
$10 million |
unchanged |
Net Capital Expenditures |
$125 - $130 million |
unchanged |
Effective Tax Rate, Excluding Any Unusual Items |
59 - 60% |
37 - 38% |
|
|
|
Q2 2022
Outlook (Continuing Operations) |
|
|
GAAP Operating Income |
$17 - $22 million |
Adjusted EBITDA |
$59 - $64 million |
GAAP Diluted Earnings Per Share |
$(0.01) - 0.03 |
Adjusted Diluted Earnings Per Share |
$0.07 - 0.11 |
Discontinued OperationsHarsco
continues to anticipate the divestiture of Rail will occur in 2022.
In the first quarter, Harsco recorded unusual items for Rail which
totaled $35 million for estimated future costs to complete three
European fixed-price contracts. These contract charges are in
addition to those recorded in the fourth quarter of 2021 and relate
to additional supply-chain challenges that have increased
anticipated costs and delayed operational progress, resulting in
penalties, under these contracts. As a result, Rail incurred an
operating loss ($36 million) for the quarter.
Conference CallThe 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 (833) 651-7826 or (414) 238-0989. Enter Conference ID
number 8496681.
Forward-Looking StatementThe 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 changes due to COVID-19
and governmental and market reactions to COVID-19; (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 conduct and
complete a satisfactory process for the divestiture of the Rail
division, as announced on November 2, 2021; (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 is
significantly impacted by COVID-19) 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, 2021. 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.
Adjusted diluted earnings per
share: Adjusted diluted earnings per share 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 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 from continuing operations
adjusted to add back income tax expense; equity income of
unconsolidated entities, net; net interest expense; defined benefit
pension income (expense); unused debt commitment fees, amendment
fees and loss on extinguishment of debt; 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
transaction-related 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 HarscoHarsco Corporation is
a global market leader providing environmental solutions for
industrial and specialty waste streams. Based in Camp Hill, 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) |
|
|
2022 |
|
|
|
2021 |
|
Revenues from continuing operations: |
|
|
|
|
Service revenues |
|
$ |
418,435 |
|
|
$ |
414,339 |
|
Product revenues |
|
|
34,362 |
|
|
|
32,926 |
|
Total revenues |
|
|
452,797 |
|
|
|
447,265 |
|
Costs and expenses
from continuing operations: |
|
|
|
|
Cost of services sold |
|
|
346,357 |
|
|
|
329,853 |
|
Cost of products sold |
|
|
30,662 |
|
|
|
27,514 |
|
Selling, general and administrative expenses |
|
|
69,153 |
|
|
|
71,614 |
|
Research and development expenses |
|
|
56 |
|
|
|
157 |
|
Other (income) expenses, net |
|
|
(1,179 |
) |
|
|
(991 |
) |
Total costs and expenses |
|
|
445,049 |
|
|
|
428,147 |
|
Operating income from continuing operations |
|
|
7,748 |
|
|
|
19,118 |
|
Interest income |
|
|
644 |
|
|
|
547 |
|
Interest expense |
|
|
(15,092 |
) |
|
|
(16,256 |
) |
Unused debt commitment fees,
amendment fees and loss on extinguishment of debt |
|
|
(532 |
) |
|
|
(5,258 |
) |
Defined benefit pension
income |
|
|
2,410 |
|
|
|
3,934 |
|
Income (loss) from continuing operations before income
taxes and equity income |
|
|
(4,822 |
) |
|
|
2,085 |
|
Income tax benefit (expense)
from continuing operations |
|
|
(1,221 |
) |
|
|
(2,101 |
) |
Equity income (loss) of
unconsolidated entities, net |
|
|
(131 |
) |
|
|
(119 |
) |
Income (loss) from continuing operations |
|
|
(6,174 |
) |
|
|
(135 |
) |
Discontinued
operations: |
|
|
|
|
Income (loss) from discontinued businesses |
|
|
(39,097 |
) |
|
|
3,364 |
|
Income tax benefit (expense) from discontinued businesses |
|
|
6,591 |
|
|
|
(1,664 |
) |
Income (loss) from discontinued operations, net of
tax |
|
|
(32,506 |
) |
|
|
1,700 |
|
Net income
(loss) |
|
|
(38,680 |
) |
|
|
1,565 |
|
Less: Net income attributable to noncontrolling interests |
|
|
(1,159 |
) |
|
|
(1,430 |
) |
Net income (loss)
attributable to Harsco Corporation |
|
$ |
(39,839 |
) |
|
$ |
135 |
|
Amounts attributable to Harsco Corporation common
stockholders: |
Income (loss) from continuing operations, net of tax |
|
$ |
(7,333 |
) |
|
$ |
(1,565 |
) |
Income (loss) from discontinued operations, net of tax |
|
|
(32,506 |
) |
|
|
1,700 |
|
Net income (loss) attributable to Harsco Corporation common
stockholders |
|
$ |
(39,839 |
) |
|
$ |
135 |
|
Weighted-average shares of
common stock outstanding |
|
|
79,363 |
|
|
|
79,088 |
|
Basic
earnings (loss) per common share attributable to Harsco Corporation
common stockholders: |
Continuing operations |
|
$ |
(0.09 |
) |
|
$ |
(0.02 |
) |
Discontinued operations |
|
|
(0.41 |
) |
|
|
0.02 |
|
Basic earnings (loss) per share attributable to Harsco
Corporation common stockholders |
|
$ |
(0.50 |
) |
|
$ |
0.00 |
|
Diluted weighted-average
shares of common stock outstanding |
|
|
79,363 |
|
|
|
79,088 |
|
Diluted
earnings (loss) per common share attributable to Harsco Corporation
common stockholders: |
Continuing operations |
|
$ |
(0.09 |
) |
|
$ |
(0.02 |
) |
Discontinued operations |
|
|
(0.41 |
) |
|
|
0.02 |
|
Diluted earnings (loss) per share attributable to Harsco
Corporation common stockholders |
|
$ |
(0.50 |
) |
|
$ |
0.00 |
|
|
|
|
|
|
|
|
|
|
HARSCO
CORPORATIONCONSOLIDATED BALANCE SHEETS
(Unaudited) |
|
|
|
|
(In thousands) |
|
March 312022 |
|
December 312021 |
ASSETS |
|
|
|
|
Current
assets: |
|
|
|
|
Cash and cash equivalents |
|
$ |
85,216 |
|
|
$ |
82,908 |
|
Restricted cash |
|
|
4,337 |
|
|
|
4,220 |
|
Trade accounts receivable, net |
|
|
385,871 |
|
|
|
377,881 |
|
Other receivables |
|
|
26,128 |
|
|
|
33,059 |
|
Inventories |
|
|
76,854 |
|
|
|
70,493 |
|
Prepaid expenses |
|
|
32,393 |
|
|
|
31,065 |
|
Current portion of assets held-for-sale |
|
|
268,590 |
|
|
|
265,413 |
|
Other current assets |
|
|
13,096 |
|
|
|
9,934 |
|
Total current assets |
|
|
892,485 |
|
|
|
874,973 |
|
Property, plant and equipment,
net |
|
|
654,765 |
|
|
|
653,913 |
|
Right-of-use assets, net |
|
|
96,007 |
|
|
|
101,576 |
|
Goodwill |
|
|
878,935 |
|
|
|
883,109 |
|
Intangible assets, net |
|
|
393,733 |
|
|
|
402,801 |
|
Deferred income tax
assets |
|
|
18,207 |
|
|
|
17,883 |
|
Assets held-for-sale |
|
|
66,518 |
|
|
|
71,234 |
|
Other assets |
|
|
50,809 |
|
|
|
48,419 |
|
Total assets |
|
$ |
3,051,459 |
|
|
$ |
3,053,908 |
|
LIABILITIES |
|
|
|
|
Current
liabilities: |
|
|
|
|
Short-term borrowings |
|
$ |
7,292 |
|
|
$ |
7,748 |
|
Current maturities of long-term debt |
|
|
17,379 |
|
|
|
10,226 |
|
Accounts payable |
|
|
189,896 |
|
|
|
186,126 |
|
Accrued compensation |
|
|
41,780 |
|
|
|
48,165 |
|
Income taxes payable |
|
|
4,085 |
|
|
|
6,378 |
|
Current portion of operating lease liabilities |
|
|
25,055 |
|
|
|
25,590 |
|
Current portion of liabilities of assets held-for-sale |
|
|
168,412 |
|
|
|
161,999 |
|
Other current liabilities |
|
|
139,661 |
|
|
|
155,159 |
|
Total current liabilities |
|
|
593,560 |
|
|
|
601,391 |
|
Long-term debt |
|
|
1,422,384 |
|
|
|
1,359,446 |
|
Retirement plan
liabilities |
|
|
73,710 |
|
|
|
93,693 |
|
Operating lease
liabilities |
|
|
69,563 |
|
|
|
74,571 |
|
Liabilities of assets
held-for-sale |
|
|
8,326 |
|
|
|
8,492 |
|
Environmental liabilities |
|
|
27,565 |
|
|
|
28,435 |
|
Deferred tax liabilities |
|
|
26,832 |
|
|
|
33,826 |
|
Other liabilities |
|
|
48,424 |
|
|
|
48,284 |
|
Total liabilities |
|
|
2,270,364 |
|
|
|
2,248,138 |
|
HARSCO CORPORATION
STOCKHOLDERS’ EQUITY |
|
|
|
|
Common stock |
|
|
145,261 |
|
|
|
144,883 |
|
Additional paid-in capital |
|
|
218,779 |
|
|
|
215,528 |
|
Accumulated other comprehensive loss |
|
|
(547,649 |
) |
|
|
(560,139 |
) |
Retained earnings |
|
|
1,754,671 |
|
|
|
1,794,510 |
|
Treasury stock |
|
|
(848,254 |
) |
|
|
(846,622 |
) |
Total Harsco Corporation stockholders’ equity |
|
|
722,808 |
|
|
|
748,160 |
|
Noncontrolling interests |
|
|
58,287 |
|
|
|
57,610 |
|
Total equity |
|
|
781,095 |
|
|
|
805,770 |
|
Total liabilities and equity |
|
$ |
3,051,459 |
|
|
$ |
3,053,908 |
|
|
|
|
|
|
|
|
|
|
HARSCO
CORPORATIONCONSOLIDATED STATEMENTS OF CASH
FLOWS (Unaudited) |
|
|
Three Months Ended March 31 |
(In thousands) |
|
|
2022 |
|
|
|
2021 |
|
Cash flows from operating activities: |
|
|
|
|
Net income (loss) |
|
$ |
(38,680 |
) |
|
$ |
1,565 |
|
Adjustments to reconcile net income (loss) to net cash provided by
operating activities: |
Depreciation |
|
|
33,604 |
|
|
|
32,748 |
|
Amortization |
|
|
8,586 |
|
|
|
8,967 |
|
Deferred income tax (benefit) expense |
|
|
(4,275 |
) |
|
|
(3,421 |
) |
Equity in (income) loss of unconsolidated entities, net |
|
|
131 |
|
|
|
119 |
|
Dividends from unconsolidated entities |
|
|
178 |
|
|
|
— |
|
Loss on early extinguishment of debt |
|
|
— |
|
|
|
2,668 |
|
Other, net |
|
|
259 |
|
|
|
1,128 |
|
Changes in assets and liabilities, net of acquisitions and
dispositions of businesses: |
|
|
|
|
Accounts receivable |
|
|
(15,364 |
) |
|
|
(16,446 |
) |
Income tax refunds receivable, reimbursable to seller |
|
|
7,687 |
|
|
|
— |
|
Inventories |
|
|
(4,610 |
) |
|
|
407 |
|
Contract assets |
|
|
4,843 |
|
|
|
(19,070 |
) |
Right-of-use assets |
|
|
7,076 |
|
|
|
6,768 |
|
Accounts payable |
|
|
1,655 |
|
|
|
(8,592 |
) |
Accrued interest payable |
|
|
(7,393 |
) |
|
|
(7,320 |
) |
Accrued compensation |
|
|
(5,692 |
) |
|
|
(1,541 |
) |
Advances on contracts |
|
|
(7,808 |
) |
|
|
(9,698 |
) |
Operating lease liabilities |
|
|
(7,063 |
) |
|
|
(6,750 |
) |
Retirement plan liabilities, net |
|
|
(14,519 |
) |
|
|
(19,267 |
) |
Other assets and liabilities |
|
|
7,070 |
|
|
|
14,562 |
|
Net cash provided by operating activities |
|
|
(34,315 |
) |
|
|
(23,173 |
) |
Cash flows from
investing activities: |
|
|
|
|
Purchases of property, plant and equipment |
|
|
(32,958 |
) |
|
|
(27,382 |
) |
Proceeds from sales of assets |
|
|
5,976 |
|
|
|
3,862 |
|
Expenditures for intangible assets |
|
|
(54 |
) |
|
|
(68 |
) |
Net proceeds (payments) from settlement of foreign currency forward
exchange contracts |
|
|
1,061 |
|
|
|
(1,427 |
) |
Payments for settlements of interest rate swaps |
|
|
(1,062 |
) |
|
|
— |
|
Other investing activities, net |
|
|
124 |
|
|
|
46 |
|
Net cash used by investing activities |
|
|
(26,913 |
) |
|
|
(24,969 |
) |
Cash flows from
financing activities: |
|
|
|
|
Short-term borrowings, net |
|
|
2,051 |
|
|
|
575 |
|
Current maturities and long-term debt: |
|
|
|
|
Additions |
|
|
72,005 |
|
|
|
434,873 |
|
Reductions |
|
|
(2,566 |
) |
|
|
(374,530 |
) |
Stock-based compensation - Employee taxes paid |
|
|
(1,377 |
) |
|
|
(2,485 |
) |
Payment of contingent consideration |
|
|
(6,915 |
) |
|
|
— |
|
Deferred financing costs |
|
|
— |
|
|
|
(6,525 |
) |
Other financing activities, net |
|
|
— |
|
|
|
(400 |
) |
Net cash provided (used) by financing
activities |
|
|
63,198 |
|
|
|
51,508 |
|
Effect of exchange rate
changes on cash and cash equivalents, including restricted
cash |
|
|
455 |
|
|
|
(710 |
) |
Net increase (decrease) in
cash and cash equivalents, including restricted cash |
|
|
2,425 |
|
|
|
2,656 |
|
Cash and cash equivalents,
including restricted cash, at beginning of period |
|
|
87,128 |
|
|
|
79,669 |
|
Cash and cash
equivalents, including restricted cash, at end of
period |
|
$ |
89,553 |
|
|
$ |
82,325 |
|
|
|
|
|
|
|
|
|
|
HARSCO
CORPORATIONREVIEW OF OPERATIONS BY
SEGMENT (Unaudited) |
|
|
Three Months Ended |
|
Three Months Ended |
|
|
March 31, 2022 |
|
March 31, 2021 |
(In thousands) |
|
Revenues |
|
OperatingIncome (Loss) |
|
Revenues |
|
Operating Income (Loss) |
Harsco Environmental |
|
$ |
262,051 |
|
$ |
18,267 |
|
|
$ |
257,986 |
|
$ |
25,935 |
|
Harsco Clean Earth |
|
|
190,746 |
|
|
(1,297 |
) |
|
|
189,279 |
|
|
3,178 |
|
Corporate |
|
|
|
|
(9,222 |
) |
|
|
— |
|
|
(9,995 |
) |
Consolidated Totals |
|
$ |
452,797 |
|
$ |
7,748 |
|
|
$ |
447,265 |
|
$ |
19,118 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HARSCO
CORPORATIONRECONCILIATION OF ADJUSTED DILUTED
EARNINGS PER SHARE TO DILUTED EARNINGS (LOSS) PER SHARE FROM
CONTINUING OPERATIONS AS REPORTED (Unaudited) |
|
|
|
Three Months Ended |
|
|
|
March 31 |
|
|
|
|
2022 |
|
|
|
2021 |
|
|
Diluted earnings (loss) per share from continuing operations as
reported |
|
$ |
(0.09 |
) |
|
$ |
(0.02 |
) |
|
Corporate unused debt
commitment fees, amendment fees and loss on extinguishment of debt
(a) |
|
|
0.01 |
|
|
|
0.07 |
|
|
Corporate strategic costs
(b) |
|
|
(0.01 |
) |
|
|
— |
|
|
Harsco Clean Earth Segment
severance costs (c) |
|
|
— |
|
|
|
— |
|
|
Taxes on above unusual items
(d) |
|
|
— |
|
|
|
(0.01 |
) |
|
Adjusted diluted
earnings per share, including acquisition amortization
expense |
|
|
(0.09 |
) |
|
|
0.03 |
|
(f) |
Acquisition amortization
expense, net of tax (e) |
|
|
0.08 |
|
|
|
0.08 |
|
|
Adjusted diluted
earnings per share |
|
$ |
(0.01 |
) |
|
$ |
0.11 |
|
|
|
|
|
|
|
|
|
|
|
|
(a) Costs at Corporate related amending the Company's existing
Senior Secured Credit Facilities to increase certain levels set
forth in the total net leverage ration covenant (Q1 2022 $0.5
million pre-tax) and costs associated with amending the Company's
existing Senior Secured Credit Facilities to establish a New Term
Loan the proceeds of which were used to repay in full the
outstanding Term Loan A and Term Loan B, to extend the maturity
date of the Revolving Credit Facility and to increase certain
levels set forth in the total net leverage ratio covenant (Q1 2021
$5.3 million pre-tax).(b) Certain strategic costs incurred at
Corporate associated with supporting and executing the Company's
long-term strategies including relocation of the Company's
headquarters (Q1 2022 $(0.4) million pre-tax).(c) Severance and
related costs incurred in the Harsco Clean Earth Segment (Q1 2022
$0.3 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, except for unusual items from
countries where no tax benefit can be realized, in which case a
zero percent tax rate is used. (e) Acquisition amortization expense
was $7.9 million pre-tax and $8.1 million pre-tax for Q1 2022 and
Q1 2021, respectively, and after-tax was $6.2 million and $6.5
million for Q1 2022 and Q1 2021, respectively.(f) Does not total
due to rounding.
HARSCO
CORPORATIONRECONCILIATION OF PROJECTED ADJUSTED
DILUTED EARNINGS (LOSS) PER SHARE TO DILUTED EARNINGS PER SHARE
FROM CONTINUING OPERATIONS (a) (Unaudited) |
|
|
|
Projected Three Months Ending
June 30 |
|
Projected Twelve Months Ending December 31 |
|
|
|
|
2022 |
|
|
2022 |
|
|
|
|
Low |
|
High |
|
Low |
|
High |
|
Diluted earnings per share from continuing operations |
|
$ |
(0.01 |
) |
|
$ |
0.03 |
|
$ |
0.02 |
|
|
$ |
0.10 |
|
|
Corporate strategic costs |
|
|
— |
|
|
|
— |
|
|
0.01 |
|
|
|
0.01 |
|
|
Harsco Clean Earth Segment
severance costs |
|
|
— |
|
|
|
— |
|
|
0.01 |
|
|
|
0.01 |
|
|
Taxes on above unusual
items |
|
|
— |
|
|
|
— |
|
|
(0.01 |
) |
|
|
(0.01 |
) |
|
Adjusted diluted
earnings per share, including acquisition amortization
expense |
|
|
(0.01 |
) |
|
|
0.03 |
|
|
0.03 |
|
|
|
0.11 |
|
|
Estimated acquisition
amortization expense, net of tax |
|
|
0.08 |
|
|
|
0.08 |
|
|
0.32 |
|
|
|
0.32 |
|
|
Adjusted diluted
earnings per share |
|
$ |
0.07 |
|
|
$ |
0.11 |
|
$ |
0.35 |
|
|
$ |
0.44 |
|
(b) |
(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 |
|
Harsco Clean Earth |
|
Corporate |
|
Consolidated Totals |
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 |
% |
|
|
|
|
|
|
|
|
|
Three
Months Ended March 31, 2021: |
|
|
|
|
|
|
Operating income (loss) as
reported |
|
$ |
25,935 |
|
|
$ |
3,178 |
|
|
$ |
(9,995 |
) |
|
$ |
19,118 |
|
Depreciation |
|
|
25,717 |
|
|
|
5,337 |
|
|
|
483 |
|
|
|
31,537 |
|
Amortization |
|
|
2,048 |
|
|
|
6,083 |
|
|
|
— |
|
|
|
8,131 |
|
Adjusted EBITDA |
|
|
53,700 |
|
|
|
14,598 |
|
|
|
(9,512 |
) |
|
|
58,786 |
|
Revenues as reported |
|
$ |
257,986 |
|
|
$ |
189,279 |
|
|
|
|
$ |
447,265 |
|
Adjusted EBITDA margin
(%) |
|
|
20.8 |
% |
|
|
7.7 |
% |
|
|
|
|
13.1 |
% |
|
|
|
|
|
|
|
|
|
HARSCO
CORPORATIONRECONCILIATION OF ADJUSTED EBITDA TO
CONSOLIDATED INCOME (LOSS) FROM CONTINUING OPERATIONS AS
REPORTED (Unaudited) |
|
|
|
|
Three Months EndedMarch 31 |
(In thousands) |
|
|
2022 |
|
|
|
2021 |
|
Consolidated income (loss) from continuing operations |
|
$ |
(6,174 |
) |
|
$ |
(135 |
) |
|
|
|
|
|
Add back
(deduct): |
|
|
|
|
Equity in (income) loss of
unconsolidated entities, net |
|
|
131 |
|
|
|
119 |
|
Income tax (benefit)
expense |
|
|
1,221 |
|
|
|
2,101 |
|
Defined benefit pension
income |
|
|
(2,410 |
) |
|
|
(3,934 |
) |
Unused debt commitment,
amendment fees and loss on extinguishment of debt |
|
|
532 |
|
|
|
5,258 |
|
Interest expense |
|
|
15,092 |
|
|
|
16,256 |
|
Interest income |
|
|
(644 |
) |
|
|
(547 |
) |
Depreciation |
|
|
33,604 |
|
|
|
31,537 |
|
Amortization |
|
|
7,903 |
|
|
|
8,131 |
|
|
|
|
|
|
Unusual
items: |
|
|
|
|
Corporate strategic costs |
|
|
(448 |
) |
|
|
— |
|
Harsco Clean Earth Segment
severance costs |
|
|
300 |
|
|
|
— |
|
Adjusted
EBITDA |
|
$ |
49,107 |
|
|
$ |
58,786 |
|
|
|
|
|
|
|
|
|
|
HARSCO
CORPORATIONRECONCILIATION OF PROJECTED
CONSOLIDATED ADJUSTED EBITDA TO PROJECTED CONSOLIDATED INCOME FROM
CONTINUING OPERATIONS (a)(Unaudited) |
|
|
|
Projected Three Months Ending
June 30 |
|
Projected Twelve Months Ending December
31 |
|
|
|
|
2022 |
|
|
|
2022 |
|
|
(In millions) |
|
Low |
|
High |
|
Low |
|
High |
|
Consolidated income from continuing
operations |
|
$ |
1 |
|
|
$ |
5 |
|
|
$ |
9 |
|
|
$ |
17 |
|
|
|
|
|
|
|
|
|
|
|
|
Add back
(deduct): |
|
|
|
|
|
|
|
|
|
Income tax (income)
expense |
|
|
1 |
|
|
|
3 |
|
|
|
13 |
|
|
|
22 |
|
|
Net interest |
|
|
17 |
|
|
|
16 |
|
|
|
70 |
|
|
|
68 |
|
|
Defined benefit pension
income |
|
|
(3 |
) |
|
|
(3 |
) |
|
|
(10 |
) |
|
|
(10 |
) |
|
Depreciation and
amortization |
|
|
42 |
|
|
|
42 |
|
|
|
167 |
|
|
|
167 |
|
|
|
|
|
|
|
|
|
|
|
|
Unusual
items: |
|
|
|
|
|
|
|
|
|
Corporate strategic costs |
|
|
— |
|
|
|
— |
|
|
|
1 |
|
|
|
1 |
|
|
Harsco Clean Earth Segment
severance costs |
|
|
— |
|
|
|
— |
|
|
|
1 |
|
|
|
1 |
|
|
Consolidated Adjusted
EBITDA |
|
$ |
59 |
|
(b) |
$ |
64 |
|
(b) |
$ |
250 |
|
(b) |
$ |
265 |
|
|
(a) Excludes 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) |
|
|
2022 |
|
|
|
2021 |
|
Net cash used by operating activities |
|
$ |
(34,315 |
) |
|
$ |
(23,173 |
) |
Less capital expenditures |
|
|
(32,958 |
) |
|
|
(27,382 |
) |
Less expenditures for
intangible assets |
|
|
(54 |
) |
|
|
(68 |
) |
Plus capital expenditures for
strategic ventures (a) |
|
|
328 |
|
|
|
872 |
|
Plus total proceeds from sales
of assets (b) |
|
|
5,976 |
|
|
|
3,862 |
|
Plus transaction-related
expenditures (c) |
|
|
878 |
|
|
|
14,084 |
|
Harsco Rail free cash flow
deficit |
|
|
31,321 |
|
|
|
15,684 |
|
Free cash flow |
|
$ |
(28,824 |
) |
|
$ |
(16,121 |
) |
(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
amending the Company's existing Senior Secured Credit
Facilities.
HARSCO
CORPORATIONRECONCILIATION OF PROJECTED FREE CASH
FLOW TO PROJECTED NET CASH PROVIDED BY OPERATING
ACTIVITIES (Unaudited) (a) |
|
|
Projected Twelve Months Ending
December 31 |
|
|
|
2022 |
|
(In millions) |
|
Low |
|
High |
Net cash provided by operating activities |
|
$ |
150 |
|
|
$ |
170 |
|
Less net capital
expenditures |
|
|
(125 |
) |
|
|
(130 |
) |
Free cash flow |
|
|
25 |
|
|
|
40 |
|
(a) Excludes former Harsco Rail Segment
Investor Contact David
Martin717.612.5628damartin@harsco.com |
Media
ContactJay
Cooney717.730.3683jcooney@harsco.com |
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