Harsco Corporation (NYSE: HSC) today reported second quarter 2022 results. On a U.S. GAAP ("GAAP") basis, second quarter of 2022 diluted loss per share from continuing operations was $1.34, including a Clean Earth non-cash goodwill impairment charge and other unusual items. Adjusted diluted earnings per share from continuing operations in the second quarter of 2022 was $0.01. These figures compare with second quarter of 2021 GAAP diluted earnings per share from continuing operations of $0.11 and adjusted diluted earnings per share from continuing operations of $0.20.

The GAAP operating loss from continuing operations for the second quarter of 2022 was $97 million and Adjusted EBITDA was $49 million in the quarter.

“Our team is taking aggressive action to mitigate the extraordinary inflationary which impacted our results in the quarter,” said Chairman and CEO Nick Grasberger. “In Clean Earth, the segment most impacted by external inflationary pressures, we are implementing incremental pricing and cost reduction initiatives which we believe will offset these challenges and better position Clean Earth to realize its profit and margin potential in the future. We also remain focused on reducing our leverage and creating value from our unique asset base. While the steps we are taking will take time to deliver results, we remain encouraged by the healthy underlying demand across most of our end markets and are confident in our ability to deliver profitable growth and value creation for shareholders.”

Harsco Corporation—Selected Second Quarter Results

($ in millions, except per share amounts)   Q2 2022   Q2 2021
Revenues   $ 481     $ 469  
Operating income from continuing operations - GAAP   $ (97 )   $ 26  
Diluted EPS from continuing operations - GAAP   $ (1.34 )   $ 0.11  
Adjusted EBITDA   $ 49     $ 67  
Adjusted EBITDA margin     10.2 %     14.3 %
Adjusted diluted EPS   $ 0.01     $ 0.20  

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 Second Quarter Operating Results

Consolidated revenues from continuing operations were $481 million, an increase of 3 percent compared with the prior-year quarter. Environmental and Clean Earth each realized an increase in revenues compared to the second quarter of 2021. Foreign currency translation negatively impacted second quarter 2022 revenues by approximately $20 million (4 percent), compared with the prior-year period.

The Company's GAAP operating loss from continuing operations was $97 million for the second quarter of 2022 including a non-cash goodwill impairment charge of $105 million, compared with GAAP operating income of $26 million in the same quarter of 2021. Meanwhile, adjusted EBITDA totaled $49 million in the second quarter of 2022 versus $67 million in the second quarter of the prior year. Both Environmental and Clean Earth experienced lower adjusted EBITDA relative to the prior year including the impacts of foreign exchange translation in Environmental and inflationary pressures on operating costs.

Second Quarter Business ReviewEnvironmental

($ in millions)   Q2 2022   Q2 2021
Revenues   $ 278     $ 273  
Operating income - GAAP   $ 24     $ 30  
Adjusted EBITDA   $ 53     $ 58  
Adjusted EBITDA margin     19.0 %     21.2 %

Environmental revenues totaled $278 million in the second 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 ecoproductsTM, partially offset by FX translation impacts. The segment's GAAP operating income and adjusted EBITDA totaled $24 million and $53 million, respectively, in the second quarter of 2022. These figures compare with GAAP operating income of $30 million and adjusted EBITDA of $58 million in the prior-year period. The year-on-year change in adjusted earnings reflects the above-mentioned FX impacts as well as operating cost inflation and fewer asset sales relative to the prior-year quarter.

Clean Earth

($ in millions)   Q2 2022   Q2 2021
Revenues   $ 203     $ 196  
Operating income (loss) - GAAP   $ (112 )   $ 7  
Adjusted EBITDA   $ 5     $ 18  
Adjusted EBITDA margin     2.3 %     9.4 %

Clean Earth revenues totaled $203 million in the second quarter of 2022, a 4 percent increase over the prior-year quarter as a result of higher pricing for environmental services and volume growth from industrial customers. The segment's GAAP operating loss was $112 million and adjusted EBITDA was $5 million in the second quarter of 2022. These figures compare with $7 million of operating income and $18 million of adjusted EBITDA in the prior-year period. The change in adjusted earnings is mainly attributable to significant cost inflation above price (including transportation, containers and end-disposal costs), which is being addressed in the third quarter through pricing initiatives and cost reductions.

Goodwill Impairment Charge - Clean EarthHarsco recorded a non-cash goodwill impairment for Clean Earth in the second quarter. This $105 million charge reflects the impacts of a higher discount rate and lower near-term earnings expectations for Clean Earth as a result of extraordinary inflation. In response to these pressures, the Company recently launched a Profit Improvement Plan in Clean Earth targeting benefits of more than $30 million through commercial pricing initiatives and cost reductions. These improvements are expected to strengthen margins in the coming quarters, and the Company remains committed to a Clean Earth long-term EBITDA margin target of 15 percent.

Cash FlowNet cash provided by operating activities was $152 million in the second quarter of 2022, compared with net cash provided by operating activities of $37 million in the prior-year period. Free cash flow (excluding Rail) was $132 million in the second quarter of 2022, compared with $20 million in the prior-year period. The change in free cash flow compared with the prior-year quarter is principally related to the Company's accounts receivable securitization transaction (approximately $120 million), which was completed in June 2022.

2022 OutlookThe Company has updated its 2022 guidance to reflect heightened inflation challenges as well as the effects of foreign exchange translation. Actions are underway to mitigate these impacts through commercial efforts and cost reductions, however these actions are not expected to fully offset these pressures until 2023. Summary Outlook highlights are as follows:

2022 Full Year Outlook(Continuing Operations) Current May Outlook
GAAP Operating Income/(Loss) $(53) - $(63) million $81 - $96 million
Adjusted EBITDA $210 - $220 million $250 - $265 million
GAAP Diluted Earnings/(Loss) Per Share $(1.58) - $(1.72) $0.02 - $0.10
Adjusted Diluted Earnings/(Loss) Per Share $0.00 - $(0.13) $0.35 - $0.44
Free Cash Flow $115 - $125 million $25 - $40 million
Net Interest Expense $68 - $70 million unchanged
Pension Income (Non-Operating) $9 million $10 million
Net Capital Expenditures $125 - $130 million unchanged
     
Q3 2022 Outlook(Continuing Operations)
GAAP Operating Income $12 - $17 million  
Adjusted EBITDA $54 - $59 million  
GAAP Diluted Earnings/(Loss) Per Share $(0.10) - $(0.16)  
Adjusted Diluted Earnings/(Loss) Per Share $(0.02) - $(0.08)  

Rail / Discontinued OperationsThe sales process for Rail is ongoing, and the Company remains in discussions with select interested parties. Rail is a non-core business with unique asset base and a positive long-term outlook, and the Company remains committed to selling Rail on a disciplined basis, thereby creating value for shareholders. Further transaction updates will be provided when appropriate.

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. 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 StatementsThe 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 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 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 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 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); 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 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 Harsco

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
HARSCO CORPORATIONCONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)        
    Three Months Ended   Six Months Ended
    June 30   June 30
(In thousands, except per share amounts)     2022       2021       2022       2021  
Revenues from continuing operations:                
Service revenues   $ 439,618     $ 429,651     $ 858,053     $ 843,990  
Product revenues     41,434       39,023       75,796       71,949  
Total revenues     481,052       468,674       933,849       915,939  
Costs and expenses from continuing operations:                
Cost of services sold     368,994       344,982       715,351       674,835  
Cost of products sold     34,205       30,466       64,867       57,980  
Selling, general and administrative expenses     67,935       70,805       137,088       142,419  
Research and development expenses     296       323       352       480  
Goodwill impairment charge     104,580             104,580        
Other (income) expenses, net     2,045       (4,167 )     866       (5,158 )
Total costs and expenses     578,055       442,409       1,023,104       870,556  
Operating income (loss) from continuing operations     (97,003 )     26,265       (89,255 )     45,383  
Interest income     693       577       1,337       1,124  
Interest expense     (16,692 )     (15,643 )     (31,784 )             (31,899 )
Facility fees and debt-related income (expense)     2,149       (50 )     1,617               (5,308 )
Defined benefit pension income     2,247       3,956       4,657       7,890  
Income (loss) from continuing operations before income taxes and equity income     (108,606 )     15,105       (113,428 )     17,190  
Income tax benefit (expense) from continuing operations     3,115       (4,797 )     1,894       (6,898 )
Equity income (loss) of unconsolidated entities, net     (114 )     (76 )     (245 )     (195 )
Income (loss) from continuing operations     (105,605 )     10,232       (111,779 )     10,097  
Discontinued operations:                
Income (loss) from discontinued businesses     1,879       8,239       (37,218 )     11,603  
Income tax benefit (expense) from discontinued businesses     (770 )     (3,391 )     5,821       (5,055 )
Income (loss) from discontinued operations, net of tax     1,109       4,848       (31,397 )     6,548  
Net income (loss)     (104,496 )     15,080       (143,176 )     16,645  
Less: Net (income) loss attributable to noncontrolling interests     (1,095 )     (1,692 )     (2,254 )     (3,122 )
Net income (loss) attributable to Harsco Corporation   $ (105,591 )   $ 13,388     $ (145,430 )   $ 13,523  
Amounts attributable to Harsco Corporation common stockholders:
Income (loss) from continuing operations, net of tax   $ (106,700 )   $ 8,540     $ (114,033 )   $ 6,975  
Income (loss) from discontinued operations, net of tax     1,109       4,848               (31,397 )     6,548  
Net income (loss) attributable to Harsco Corporation common stockholders   $ (105,591 )   $ 13,388     $         (145,430 )   $ 13,523  
Weighted-average shares of common stock outstanding     79,509       79,265       79,437       79,177  
Basic earnings (loss) per common share attributable to Harsco Corporation common stockholders:
Continuing operations   $ (1.34 )   $ 0.11     $ (1.44 )   $ 0.09  
Discontinued operations     0.01       0.06       (0.40 )     0.08  
Basic earnings (loss) per share attributable to Harsco Corporation common stockholders   $ (1.33 ) (a) $ 0.17     $ (1.83 )   $ 0.17  
Diluted weighted-average shares of common stock outstanding     79,509       80,774       79,437       80,397  
Diluted earnings (loss) per common share attributable to Harsco Corporation common stockholders:
Continuing operations   $ (1.34 )   $ 0.11     $ (1.44 )   $ 0.09  
Discontinued operations     0.01       0.06       (0.40 )     0.08  
Diluted earnings (loss) per share attributable to Harsco Corporation common stockholders   $ (1.33 )   $ 0.17     $         (1.83 )   $ 0.17  

  

HARSCO CORPORATIONCONSOLIDATED BALANCE SHEETS (Unaudited)        
(In thousands)   June 302022   December 312021
ASSETS        
Current assets:        
Cash and cash equivalents   $ 96,782     $ 82,908  
Restricted cash     4,025       4,220  
Trade accounts receivable, net     267,747       377,881  
Other receivables     28,174       33,059  
Inventories     80,999       70,493  
Prepaid expenses     21,906       31,065  
Current portion of assets held-for-sale     263,913       265,413  
Other current assets     26,508       9,934  
Total current assets     790,054       874,973  
Property, plant and equipment, net     637,480       653,913  
Right-of-use assets, net     104,212       101,576  
Goodwill     759,439       883,109  
Intangible assets, net     382,741       402,801  
Deferred income tax assets     16,551       17,883  
Assets held-for-sale     65,079       71,234  
Other assets     43,403       48,419  
Total assets   $ 2,798,959     $ 3,053,908  
LIABILITIES        
Current liabilities:        
Short-term borrowings   $ 2,196     $ 7,748  
Current maturities of long-term debt     17,952       10,226  
Accounts payable     213,037       186,126  
Accrued compensation     40,744       48,165  
Current portion of operating lease liabilities     26,073       25,590  
Current portion of liabilities of assets held-for-sale     151,369       161,999  
Other current liabilities     147,022       161,537  
Total current liabilities     598,393       601,391  
Long-term debt     1,302,857       1,359,446  
Retirement plan liabilities     60,424       93,693  
Operating lease liabilities     77,104       74,571  
Liabilities of assets held-for-sale     7,827       8,492  
Environmental liabilities     26,669       28,435  
Deferred tax liabilities     27,372       33,826  
Other liabilities     46,610       48,284  
Total liabilities     2,147,256       2,248,138  
HARSCO CORPORATION STOCKHOLDERS’ EQUITY        
Common stock     145,319       144,883  
Additional paid-in capital     221,117       215,528  
Accumulated other comprehensive loss     (573,872 )     (560,139 )
Retained earnings     1,649,080       1,794,510  
Treasury stock     (848,320 )     (846,622 )
Total Harsco Corporation stockholders’ equity     593,324       748,160  
Noncontrolling interests     58,379       57,610  
Total equity     651,703       805,770  
Total liabilities and equity   $ 2,798,959     $ 3,053,908  
HARSCO CORPORATIONCONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
    Three Months Ended June 30   Six Months Ended June 30
(In thousands)     2022       2021       2022       2021  
Cash flows from operating activities:                
Net income (loss)   $         (104,496 )   $ 15,080     $         (143,176 )   $ 16,645  
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation     32,463       32,156       66,067       64,904  
Amortization     8,481       8,816       17,067       17,783  
Deferred income tax (benefit) expense     (6,121 )     (2,986 )     (10,396 )     (6,407 )
Equity (income) loss of unconsolidated entities, net     114       76       245       195  
Dividends from unconsolidated entities     348             526        
(Gain) loss on early extinguishment of debt     (2,254 )           (2,254 )     2,668  
Goodwill impairment charge     104,580           104,580        
Other, net     761       (3,277 )     1,020       (2,149 )
Changes in assets and liabilities, net of acquisitions and dispositions of businesses:                
Accounts receivable     102,971       (7,038 )     87,607       (23,484 )
Income tax refunds receivable, reimbursable to seller                 7,687        
Inventories     (3,825 )     15,049       (8,435 )     15,456  
Contract assets     2,993               (18,796 )     7,836               (37,866 )
Right-of-use assets     7,307       7,129       14,383       13,897  
Accounts payable     17,192       (4,899 )     18,847       (13,491 )
Accrued interest payable     6,653       7,183       (740 )     (137 )
Accrued compensation     (192 )     6,242       (5,884 )     4,701  
Advances on contracts     (5,818 )     (3,653 )     (13,626 )     (13,351 )
Operating lease liabilities     (7,032 )     (6,756 )     (14,095 )     (13,506 )
Retirement plan liabilities, net     (7,068 )     (8,591 )     (21,587 )     (27,858 )
Other assets and liabilities     4,997       968       12,067       15,530  
Net cash provided by operating activities     152,054       36,703       117,739       13,530  
Cash flows from investing activities:                
Purchases of property, plant and equipment     (28,833 )     (41,264 )             (61,791 )     (68,646 )
Proceeds from sales of assets     615       6,180       6,591       10,042  
Expenditures for intangible assets     (46 )     (64 )     (100 )     (132 )
Proceeds from note receivable     8,605       6,400       8,605       6,400  
Net proceeds (payments) from settlement of foreign currency forward exchange contracts     3,938       449       4,999               (978 )
Payments for settlements of interest rate swaps     (1,061 )           (2,123 )      
Other investing activities, net     29       87       153       133  
Net cash used by investing activities     (16,753 )     (28,212 )     (43,666 )     (53,181 )
Cash flows from financing activities:                
Short-term borrowings, net     (2,082 )     3,869       (31 )     4,444  
Current maturities and long-term debt:                
Additions     32,956       30,645       104,961       465,518  
Reductions     (150,295 )     (38,951 )     (152,861 )     (413,481 )
Dividends paid to noncontrolling interests           (3,094 )           (3,094 )
Sale (purchase) of noncontrolling interests     1,901             1,901        
Stock-based compensation - Employee taxes paid     (321 )     (687 )             (1,698 )     (3,172 )
Payment of contingent consideration                         (6,915 )      
Deferred financing costs           (1,303 )                   (7,828 )
Other financing activities, net           (201 )                   (601 )
Net cash provided (used) by financing activities     (117,841 )     (9,722 )     (54,643 )     41,786  
Effect of exchange rate changes on cash and cash equivalents, including restricted cash     (6,206 )     1,193       (5,751 )     483  
Net increase (decrease) in cash and cash equivalents, including restricted cash     11,254       (38 )     13,679       2,618  
Cash and cash equivalents, including restricted cash, at beginning of period     89,553       82,325       87,128       79,669  
Cash and cash equivalents, including restricted cash, at end of period   $ 100,807     $ 82,287     $ 100,807     $ 82,287  
HARSCO CORPORATIONREVIEW OF OPERATIONS BY SEGMENT (Unaudited)
    Three Months Ended   Three Months Ended
    June 30, 2022   June 30, 2021
(In thousands)   Revenues   OperatingIncome (Loss)   Revenues   Operating Income (Loss)
Harsco Environmental   $ 277,599   $ 23,547     $ 272,546   $ 30,223  
Harsco Clean Earth     203,453             (111,668 )     196,128     7,386  
Corporate                 (8,882 )         (11,344 )
Consolidated Totals   $ 481,052   $         (97,003 )   $ 468,674   $ 26,265  
                 
    Six Months Ended   Six Months Ended
    June 30, 2022   June 30, 2021
(In thousands)   Revenues   OperatingIncome (Loss)   Revenues   Operating Income (Loss)
Harsco Environmental   $ 539,650   $ 41,814     $ 530,532   $ 56,158  
Harsco Clean Earth     394,199             (112,965 )     385,407     10,564  
Corporate                 (18,104 )         (21,339 )
Consolidated Totals   $ 933,849   $         (89,255 )   $ 915,939   $ 45,383  
HARSCO CORPORATIONRECONCILIATION OF ADJUSTED DILUTED EARNINGS PER SHARE TO DILUTED EARNINGS (LOSS) PER SHARE FROM CONTINUING OPERATIONS AS REPORTED (Unaudited)  
    Three Months Ended   Six Months Ended  
    June 30   June 30  
      2022       2021       2022       2021    
Diluted earnings (loss) per share from continuing operations as reported   $ (1.34 )   $ 0.11     $ (1.44 )   $ 0.09    
Facility fees and debt-related expense (income) (a)     (0.03 )           (0.02 )     0.07    
Corporate strategic costs (b)           0.02             0.02    
Harsco Clean Earth segment goodwill impairment charge (c)     1.32             1.32          
Harsco Clean Earth Segment severance costs (d)     0.01             0.02          
Taxes on above unusual items (e)     (0.04 )     (0.01 )     (0.04 )     (0.02 )  
Adjusted diluted earnings (loss) per share, including acquisition amortization expense     (0.07 ) (g)   0.12       (0.16 )     0.15   (g)
Acquisition amortization expense, net of tax (f)     0.08       0.08       0.16       0.16    
Adjusted diluted earnings per share   $ 0.01     $ 0.20     $     $ 0.31    
(a)   Income recognized related to a gain on the repurchase of $25.0 million of Senior Notes, partially offset by costs incurred at Corporate to amend the Company's Senior Secured Credit Facilities (Q2 2022 $2.1million pre-tax; six months 2022 $1.6 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 (Q2 2021 $0.1 million pre-tax; six months 2021 $5.3 million pre-tax).
(b)  Certain strategic costs incurred at Corporate associated with supporting and executing the Company's long-term strategies. The six months ended 2022 includes the relocation of the Company's headquarters (Q2 2022 $0.2 million pre-tax; six months 2022 $(0.2) million pre-tax and Q2 and six months 2021 $1.7 million pre-tax ).
(c)  Non-cash goodwill impairment charge (Q2 2022 and the six months 2022 $104.6 million pre-tax).
(d)  Severance and related costs incurred in the Harsco Clean Earth Segment (Q2 2022 $1.1 million pre-tax; six months 2022 $1.4 million pre-tax).
(e)  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.
(f)   Acquisition amortization expense was $7.8 million pre-tax and $15.7 million pre-tax for Q2 2022 and the six months 2022, respectively, and after-tax was $6.2 million and $12.4 million for Q2 2022 and the six months 2022, respectively. Acquisition amortization expense was $8.1 million pre-tax and $16.2 million pre-tax for Q2 2021 and the six months 2021, respectively, and after-tax was $6.5 million and $13.0 million for Q2 2021 and the six months 2021, respectively.
(g)  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)  
    ProjectedThree Months EndingSeptember 30   ProjectedTwelve Months EndingDecember 31  
      2022       2022    
    Low   High   Low   High  
Diluted earnings (loss) per share from continuing operations   $ (0.16 )   $ (0.10 )   $ (1.72 )   $ (1.58 )  
Corporate strategic costs     0.01       0.01                
Harsco Clean Earth segment goodwill impairment charge                 1.32       1.32    
Harsco Clean Earth Segment severance costs                 0.02       0.02    
Corporate facility fees and debt-related expense (income)                 (0.02 )     (0.02 )  
Taxes on above unusual items                 (0.04 )     (0.04 )  
Adjusted diluted earnings (loss) per share, including acquisition amortization expense     (0.15 )     (0.09 )     (0.44 )     (0.30 ) (b)
Estimated acquisition amortization expense, net of tax     0.08       0.08       0.31       0.31    
Adjusted diluted earnings (loss) per share   $ (0.08 ) (b) $ (0.02 ) (b) $ (0.13 )   $    
(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 June 30, 2022:            
Operating income (loss) as reported   $ 23,547     $ (111,668 )   $         (8,882 )   $ (97,003 )
Corporate strategic costs                 229       229  
Harsco Clean Earth Segment goodwill impairment charge           104,580             104,580  
Harsco Clean Earth Segment severance costs           1,148             1,148  
Operating income (loss) excluding unusual items     23,547       (5,940 )     (8,653 )     8,954  
Depreciation     27,467       4,536       460       32,463  
Amortization     1,714       6,131             7,845  
Adjusted EBITDA   $ 52,728     $ 4,727     $         (8,193 )   $ 49,262  
Revenues as reported   $ 277,599     $ 203,453         $ 481,052  
Adjusted EBITDA margin (%)     19.0 %     2.3 %         10.2 %
                 
Three Months Ended June 30, 2021:            
Operating income (loss) as reported   $ 30,223     $ 7,386     $ (11,344 )   $ 26,265  
Corporate acquisition and integration costs                 1,681       1,681  
Operating income (loss) excluding unusual items     30,223       7,386       (9,663 )     27,946  
Depreciation     25,550       4,905       494       30,949  
Amortization     2,035       6,063             8,098  
Adjusted EBITDA   $ 57,808     $ 18,354     $ (9,169 )   $ 66,993  
Revenues as reported   $ 272,546     $ 196,128         $ 468,674  
Adjusted EBITDA margin (%)     21.2 %     9.4 %         14.3 %
HARSCO CORPORATIONRECONCILIATION OF CONSOLIDATED ADJUSTED EBITDA TO CONSOLIDATED INCOME (LOSS) FROM CONTINUING OPERATIONS AS REPORTED (Unaudited)    
    Three Months Ended June 30
(In thousands)     2022       2021  
Consolidated income (loss) from continuing operations   $         (105,605 )   $ 10,232  
         
Add back (deduct):        
Equity in (income) loss of unconsolidated entities, net     114       76  
Income tax (benefit) expense     (3,115 )     4,797  
Defined benefit pension income     (2,247 )     (3,956 )
Facility fees and debt-related expense (income)     (2,149 )     50  
Interest expense     16,692       15,643  
Interest income     (693 )     (577 )
Depreciation     32,463       30,949  
Amortization     7,845       8,098  
         
Unusual items:        
Corporate strategic costs     229       1,681  
Harsco Clean Earth goodwill impairment charge     104,580        
Harsco Clean Earth Segment severance costs     1,148        
Consolidated Adjusted EBITDA   $ 49,262     $ 66,993  
HARSCO CORPORATIONRECONCILIATION OF PROJECTED CONSOLIDATED ADJUSTED EBITDA TO PROJECTED CONSOLIDATED INCOME FROM CONTINUING OPERATIONS (a)(Unaudited)  
    ProjectedThree Months EndingSeptember 30   ProjectedTwelve Months EndingDecember 31  
      2022       2022    
(In millions)   Low   High   Low   High  
Consolidated loss from continuing operations     (12 )     (7 )             (132 )             (121 )  
                   
Add back (deduct):                  
Income tax (income) expense     5       6       8       9    
Facility fees and debt-related (income) expense     1       1                
Net interest     20       19       70       68    
Defined benefit pension income     (2 )     (2 )     (9 )     (9 )  
Depreciation and amortization     42       42       166       166    
                   
Unusual items:                  
Corporate strategic costs     1       1                
Harsco Clean Earth goodwill impairment                 105       105    
Harsco Clean Earth Segment severance costs                 1       1    
Consolidated Adjusted EBITDA   $ 54   (b) $ 59   (b) $ 210   (b) $ 220   (b)
(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   Six Months Ended
    June 30   June 30
(In thousands)     2022       2021       2022       2021  
Net cash provided by operating activities   $ 152,054     $ 36,703       117,739     $ 13,530  
Less capital expenditures     (28,833 )     (41,264 )     (61,791 )     (68,646 )
Less expenditures for intangible assets     (46 )     (64 )     (100 )     (132 )
Plus capital expenditures for strategic ventures (a)     180       926       508       1,798  
Plus total proceeds from sales of assets (b)     615       6,180       6,591       10,042  
Plus transaction-related expenditures (c)     218       3,920       1,096       18,004  
Harsco Rail free cash flow deficit     7,667       14,064       38,988       29,748  
Free cash flow   $ 131,855     $ 20,465     $ 103,031     $ 4,344  
(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)
    ProjectedTwelve Months EndingDecember 31
      2022  
(In millions)   Low   High
Net cash provided by operating activities   $ 240     $ 255  
Less net capital expenditures     (125 )     (130 )
Free cash flow     115       125  
(a) Excludes former Harsco Rail Segment

 

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