Harsco Corporation (NYSE: HSC) today provided an update on its
expected financial results for the second quarter and outlook for
the full-year 2022.
Second Quarter Results and Improvement Plan
For the second quarter, the
Company currently expects a U.S. GAAP operating loss from
continuing operations of between $95 million and $97 million
including a non-cash goodwill impairment charge estimated at
approximately $100 million and Adjusted EBITDA within a range of
$47.5 million to $50.0 million.
Operational execution in Harsco Environmental
(HE) was positive in the quarter and the business experienced
sequential earnings growth; however, HE second quarter results are
expected to be at the lower-end of prior implied guidance due to
unfavorable foreign exchange translation impacts.
Meanwhile, Clean Earth (CE) Adjusted EBITDA for
the second quarter is expected to be approximately $5 million, or
approximately $12 million below the mid-point of prior implied
guidance. In the quarter, Clean Earth experienced unprecedented,
additional cost inflation on third-party transportation, other
logistics and disposal services.
To mitigate the impacts of these incremental
external challenges, CE recently implemented a number of additional
actions to restore margins and boost second-half
performance. These actions include commercial pricing initiatives,
in addition to those executed directly following the first quarter.
In addition, the Company is implementing a cost reduction program
along with efficiency initiatives focused on reducing
transportation, procurement, and container expenditures. Overall,
these incremental actions are expected to deliver second-half 2022
benefits of more than $30 million. Successfully capturing these
improvements is expected to strengthen margins in the coming
quarters, with the Company committed to a longer-term CE EBITDA
margin target of 15 percent.
Clean Earth Non-Cash Goodwill Impairment
Due to lower earnings expectations and higher discount rates,
Harsco expects to record a non-cash goodwill impairment charge for
Clean Earth in the second quarter. The goodwill impairment is
currently anticipated to be approximately $100 million. This amount
will be finalized before the filing of the Company’s second quarter
10-Q and note that the Adjusted EBITDA details above do not reflect
this charge.
Full Year 2022
As a result of these factors, Harsco is now expecting a 2022
U.S. GAAP operating loss from continuing operations of between $51
million and $61 million including a non-cash goodwill impairment
charge of approximately $100 million and Adjusted EBITDA within a
range of $210 to $220 million, compared with Adjusted EBITDA of
$250 to $265 million previously.
Harsco Environmental is anticipated to see year-over-year growth
in the second-half 2022 Adjusted EBITDA, despite foreign exchange
translation headwinds versus prior guidance and some sequential
weakness in steel customer volumes, particularly in Europe. And for
the full-year, HE Adjusted EBITDA is now expected to be within a
range of $208 million to $214 million.
Meanwhile, Clean Earth’s 2022 Adjusted EBITDA is now anticipated
to be between $40 million and $44 million. The above-mentioned
actions are expected to drive profit and margin improvements in the
second-half, however Clean Earth is not expected to fully offset
the underlying inflationary challenges until early 2023.
Harsco expects to be in compliance with its financial covenants
at the end of Q2 and for the foreseeable future. Also, the
Company’s process to sell Rail is ongoing, and it will provide an
update on this transaction when appropriate.
Additional second quarter and Outlook details will be provided
when the Company reports quarterly results in early August.
Earnings Schedule and Conference Call
Details
Harsco will issue its second quarter 2022
earnings results on Tuesday, August 2, 2022, prior to NYSE market
open. The Company will also host its quarterly conference call that
morning beginning at 9:00 a.m. ET.
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
This press release contains forward-looking
statements based on management’s current expectations, estimates
and projections. The nature of the Company's business and the many
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 complete a
divestiture of the Rail division, 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 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; (20) the risk that the Company may be unable to implement
fully and successfully the expected incremental actions at CE 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 II, Item 1A “Risk
Factors,” of the Company’s Quarterly Report on Form 10-Q for the
period ended March 31, 2022, and 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 Estimates
This press release includes estimates of
Adjusted EBITDA, 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. The
Company‘s management believes Adjusted EBITDA is meaningful to
investors because management reviews Adjusted EBITDA in assessing
and evaluating performance. Adjusted EBITDA estimates should
be considered as supplements to, and not substitutes for, estimates
and performance measurements calculated or derived in accordance
with GAAP. The Company’s Adjusted EBITDA estimates are not
necessarily comparable to other similarly-titled estimates or
measurements employed by other companies. The information required
to reconcile the Company’s second quarter and full year Adjusted
EBITDA estimates to estimates for the most comparable GAAP
financial measures calculated is not reasonably ascertainable due
to the difficulty in making estimates of the necessary components
of the comparable GAAP financial measures.
About Harsco Corporation
Harsco 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.
Investor Contact |
Media Contact |
David
Martin |
Jay Cooney |
717.612.5628 |
717.730.3683 |
damartin@harsco.com |
jcooney@harsco.com |
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