Harsco Corporation (NYSE:HSC) today reported second quarter 2017
results. Diluted earnings per share from continuing operations in
the second quarter of 2017 were $0.22. This figure compares with a
GAAP diluted loss per share from continuing operations of $0.35 and
adjusted diluted earnings per share from continuing operations of
$0.15 in the second quarter of 2016. The prior-year GAAP figure
included a forward loss provision related to the Company's railway
maintenance equipment contracts with the federal railway system in
Switzerland.
Operating income from continuing operations for the second
quarter of 2017 was $42 million, which exceeded the guidance range
of $32 million to $38 million previously provided by the
Company.
“Q2 proved to be another strong quarter for Harsco,” said
President and CEO Nick Grasberger. “Each business executed well and
underlying market conditions were supportive in the quarter. As a
result, our three businesses exceeded expectations in the second
quarter. Looking forward, we expect our internal momentum to
continue, which along with an improved market outlook within our
Metals & Industrial businesses, lead us to raise our outlook
for operating income and free cash flow for the year. Beyond
achieving these financial targets, we remain focused on developing
our product and business capabilities and strengthening our
returns. Lastly, we remain confident in the earnings potential of
Harsco and our ability to create value for our shareholders in the
future.”
Harsco Corporation—Selected Second Quarter
Results
($ in millions, except per share amounts) |
|
Q2 2017 |
|
Q2 2016 |
Revenues |
|
$ |
395 |
|
|
$ |
370 |
|
Operating income from continuing operations - GAAP |
|
$ |
42 |
|
|
$ |
1 |
|
Operating margin from continuing operations - GAAP |
|
10.8 |
% |
|
0.4 |
% |
Diluted EPS from continuing operations |
|
$ |
0.22 |
|
|
$ |
(0.35 |
) |
Unusual items per diluted share |
|
$ |
— |
|
|
$ |
0.50 |
|
Adjusted operating income - excluding unusual items |
|
$ |
42 |
|
|
$ |
41 |
|
Adjusted operating margin - excluding unusual items |
|
10.8 |
% |
|
11.2 |
% |
Adjusted diluted EPS from continuing operations - excluding unusual
items |
|
$ |
0.22 |
|
|
$ |
0.15 |
|
Return on invested capital (TTM) - excluding unusual items |
|
9.6 |
% |
|
6.0 |
% |
|
|
|
|
|
|
|
Consolidated Second Quarter Operating
Results
Total revenues were $395 million, an increase of 7 percent
compared with the prior-year quarter. This change is
attributable to higher revenues in each of the Company’s segments.
Foreign currency translation negatively impacted second quarter
2017 revenues by approximately $5 million.
GAAP operating income from continuing operations for the second
quarter of 2017 was $42 million. This figure compares with
GAAP operating income of $1 million and adjusted operating income
of $41 million in the same quarter last year. Operating
income in the Metals & Minerals and Industrial segments
improved in comparison with the prior-year quarter, while adjusted
operating income was consistent in the Rail segment. The Company's
operating margin was 10.8 percent versus an adjusted operating
margin of 11.2 percent the in second quarter of 2016.
Second Quarter Business Review
Metals & Minerals
($ in millions) |
|
Q2 2017 |
|
Q2 2016 |
|
%Change |
Revenues |
|
$ |
259 |
|
|
$ |
254 |
|
|
2 |
% |
Operating income - GAAP |
|
$ |
32 |
|
|
$ |
31 |
|
|
4 |
% |
Operating margin - GAAP |
|
12.4 |
% |
|
12.2 |
% |
|
|
Customer liquid steel tons (millions) |
|
37.0 |
|
|
34.8 |
|
|
6 |
% |
Revenues increased 2 percent to $259 million, as higher steel
output and service levels as well as increased nickel-related sales
offset the impact from foreign exchange translation. Meanwhile,
operating income increased 4 percent due to the above positive
factors, and the segment's operating margin improved by 20 basis
points to 12.4 percent versus last year’s second quarter.
Industrial
($ in millions) |
|
Q2 2017 |
|
Q2 2016 |
|
%Change |
Revenues |
|
$ |
74 |
|
|
$ |
66 |
|
|
11 |
% |
Operating income - GAAP |
|
$ |
9 |
|
|
$ |
7 |
|
|
25 |
% |
Operating margin - GAAP |
|
12.4 |
% |
|
11.0 |
% |
|
|
Revenues increased 11 percent to $74 million, as increased
demand for air-cooled heat exchangers from U.S. energy customers
fully offset lower sales of industrial grating and fencing. The
prior-year quarter benefited from the sale of high-security fencing
for the new Mexico City International Airport, as previously
announced. The improved demand for heat exchangers led to an
increase in operating income, and as a result, the segment’s
operating margin increased to 12.4 percent from 11.0 percent in the
comparable quarter last year.
Rail
($ in millions) |
|
Q2 2017 |
|
Q2 2016 |
|
%Change |
Revenues |
|
$ |
62 |
|
|
$ |
50 |
|
|
24 |
% |
Operating income - GAAP |
|
$ |
8 |
|
|
$ |
(32 |
) |
|
nmf |
|
Operating margin - GAAP |
|
12.8 |
% |
|
|
nmf |
|
|
|
Adjusted operating income - excluding unusual items (1) |
|
$ |
8 |
|
|
$ |
8 |
|
|
— |
|
Adjusted operating margin - excluding unusual items (1) |
|
12.8 |
% |
|
16.2 |
% |
|
|
(1) no unusual items in Q2 2017; nmf=not meaningful |
|
|
|
|
|
|
Revenues increased 24 percent to $62 million as a result of
higher original equipment shipments, mainly to international
customers. These sales offset the impact of lower after-market
parts sales and contract services compared with the prior-year
period. Operating income totaled $8 million in comparison with a
GAAP operating loss of $32 million and adjusted operating income of
$8 million in the prior-year quarter. Operating income in this
year's second quarter was comparable with adjusted operating income
in the previous year as a result of the above trends as well as
higher administrative expenses, including marketing and severance
costs, in this year's second quarter. Given these factors and a
less favorable product sales mix, the segment's operating margin
decreased to 12.8 percent versus an adjusted operating margin of
16.2 percent in last year's second quarter.
Cash Flow
Net cash provided by operating activities totaled $53 million in
the second quarter of 2017, compared with $32 million in the
prior-year period. Further, free cash flow was $30 million in the
second quarter of 2017, compared with $19 million in the prior-year
period. This cash flow improvement reflects increased net cash from
operating activities, principally as a result of working capital
changes and the timing of interest payments, partially offset by an
increase in net capital expenditures.
2017 Outlook
The Company's 2017 Outlook is improved to reflect raised
forecasts for the Metals & Minerals and Industrial segments as
compared with the guidance previously provided as part of the
Company's first quarter 2017 results. For Metals & Minerals,
the updated outlook reflects higher service levels in certain
geographies and expectations for Applied Products performance, as
well as new contract additions and recent foreign exchange rates.
As a result, it is anticipated that operational savings, new sites
and services, higher customer steel output, and increased
commodities prices will support an increase in adjusted operating
income in this segment for the year compared with 2016. Meanwhile,
the Industrial outlook is again improved to reflect increased
capital spending for heat exchangers from U.S. energy customers.
This trend, along with improved demand for commercial boilers and
water heaters, is expected to lead to an increase in Industrial
operating income for the year.
These positives offset a more cautious outlook for the Rail
segment. Second-quarter timing benefits are to reverse through the
balance of the year, and the Company's guidance now reflects lower
anticipated or delayed spending for equipment and after-market
parts in North America compared with the prior 2017 forecast. As a
result, adjusted operating income in Rail is expected to modestly
decline from 2016 as higher international demand for equipment and
parts as well as Intelligent Solutions is likely to be offset by
persistent weakness in the North American market. Lastly, Corporate
spending is still projected to increase compared with 2016 largely
as a result of higher pension and other benefit program costs as
well as professional fees.
Key highlights in the Outlook are included below.
Full Year 2017
- Operating income for the full year is expected to range from
$125 million to $140 million; this compares with guidance of $115
million to $130 million previously and GAAP operating income of $63
million and adjusted operating income of $116 million in 2016.
- Free cash flow is expected in the range of $80 million to $95
million, including net capital expenditures of between $85 million
and $95 million; compared with free cash flow guidance of $70
million to $85 million previously and $100 million in
2016.
- Net interest expense is forecasted to range from $45 million to
$47 million.
- The effective tax rate is expected to range from 36 percent to
38 percent.
- GAAP and adjusted earnings per share for the full year are
currently expected in the range of $0.55 to $0.69; this compares
with guidance of $0.47 to $0.61 previously and a GAAP loss per
share of $1.07 and adjusted earnings per share of $0.48 per share
in 2016.
- Adjusted return on invested capital is expected to range from
9.0 percent to 10.0 percent; compared with 6.9 percent in
2016.
Q3 2017
- Adjusted operating income of $30 million to $37 million;
compared with GAAP operating income of $29 million in the
prior-year quarter.
- Adjusted earnings per share of $0.13 to $0.18; compared with a
GAAP loss per share of $0.41 and adjusted earnings per share of
$0.14 in the prior-year quarter.
Conference Call
The Company will hold a conference call today at 9:00 a.m.
Eastern Time to discuss its results and respond to questions from
the investment community. The conference call will be broadcast
live through the Harsco Corporation website at www.harsco.com. The
Company will refer to a slide presentation that accompanies its
formal remarks. The slide presentation will be available on the
Company’s website.
The call can also be accessed by telephone by dialing (800)
611-4920, or (973) 200-3957 for international callers. Enter
Conference ID number 53065331. Listeners are advised to dial
in at least five minutes prior to the call.
Replays will be available via the Harsco website and also by
telephone through August 17, 2017 by dialing (800) 585-8367, (855)
859-2056 or (404) 537-3406.
Forward-Looking Statements
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," "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
general economic 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; (5) market and
competitive changes, including pricing pressures, market demand and
acceptance for new products, services and technologies; (6) the
Company's inability or failure to protect its intellectual property
rights from infringement in one or more of the many countries in
which the Company operates; (7) failure to effectively
prevent, detect or recover from breaches in the Company's
cybersecurity infrastructure; (8) unforeseen business disruptions
in one or more of the many countries in which the Company operates
due to political instability, civil disobedience, armed
hostilities, public health issues or other calamities; (9)
disruptions associated with labor disputes and increased operating
costs associated with union organization; (10) the seasonal
nature of the Company's business; (11) the Company's ability
to successfully enter into new contracts and complete new
acquisitions or strategic ventures in the time-frame contemplated,
or at all; (12) the integration of the Company's strategic
acquisitions; (13) the amount and timing of repurchases of the
Company's common stock, if any; (14) the prolonged recovery in
global financial and credit markets and economic conditions
generally, which could result in the Company's customers curtailing
development projects, construction, production and capital
expenditures, which, in turn, could reduce the demand for the
Company's products and services and, accordingly, the Company's
revenues, margins and profitability; (15) the outcome of any
disputes with customers, contractors and subcontractors; (16) the
financial condition of the Company's customers, including the
ability of customers (especially those that may be highly leveraged
and those with inadequate liquidity) to maintain their credit
availability; (17) implementation of environmental remediation
matters; (18) risk and uncertainty associated with intangible
assets; and (19) 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, 2016. The
Company cautions that these factors may not be exhaustive and that
many of these factors are beyond the Company's ability to control
or predict. Accordingly, forward-looking statements should
not be relied upon as a prediction of actual results. The Company
undertakes no duty to update forward-looking statements except as
may be required by law.
About Harsco
Harsco Corporation serves key industries that are fundamental to
worldwide economic development, including steel and metals
production, railways and energy. 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 |
|
Six Months Ended |
|
|
June 30 |
|
June 30 |
(In thousands, except per share amounts) |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Revenues from
continuing operations: |
|
|
|
|
|
|
|
|
Service
revenues |
|
$ |
251,306 |
|
|
$ |
249,626 |
|
|
$ |
491,915 |
|
|
$ |
475,120 |
|
Product
revenues |
|
143,592 |
|
|
120,307 |
|
|
275,524 |
|
|
248,094 |
|
Total revenues |
|
394,898 |
|
|
369,933 |
|
|
767,439 |
|
|
723,214 |
|
Costs and
expenses from continuing operations: |
|
|
|
|
|
|
|
|
Cost of
services sold |
|
192,690 |
|
|
191,508 |
|
|
381,591 |
|
|
381,325 |
|
Cost of
products sold |
|
100,727 |
|
|
125,388 |
|
|
199,593 |
|
|
218,632 |
|
Selling,
general and administrative expenses |
|
55,606 |
|
|
49,520 |
|
|
110,747 |
|
|
100,304 |
|
Research
and development expenses |
|
1,329 |
|
|
956 |
|
|
2,160 |
|
|
1,838 |
|
Other
expenses |
|
2,072 |
|
|
1,247 |
|
|
2,966 |
|
|
10,370 |
|
Total costs and expenses |
|
352,424 |
|
|
368,619 |
|
|
697,057 |
|
|
712,469 |
|
Operating income from continuing operations |
|
42,474 |
|
|
1,314 |
|
|
70,382 |
|
|
10,745 |
|
Interest income |
|
493 |
|
|
552 |
|
|
1,005 |
|
|
1,087 |
|
Interest expense |
|
(12,405 |
) |
|
(13,805 |
) |
|
(24,058 |
) |
|
(26,168 |
) |
Change in fair value to
the unit adjustment liability and loss on dilution of equity method
investment |
|
— |
|
|
(1,489 |
) |
|
— |
|
|
(13,706 |
) |
Income (loss) from continuing operations before income
taxes and equity income (loss) |
|
30,562 |
|
|
(13,428 |
) |
|
47,329 |
|
|
(28,042 |
) |
Income tax expense |
|
(11,234 |
) |
|
(12,000 |
) |
|
(17,487 |
) |
|
(9,834 |
) |
Equity income (loss) of
unconsolidated entities, net |
|
— |
|
|
(694 |
) |
|
— |
|
|
2,481 |
|
Income (loss) from continuing operations |
|
19,328 |
|
|
(26,122 |
) |
|
29,842 |
|
|
(35,395 |
) |
Discontinued
operations: |
|
|
|
|
|
|
|
|
Income on
disposal of discontinued business |
|
628 |
|
|
2,886 |
|
|
40 |
|
|
2,380 |
|
Income
tax expense related to discontinued business |
|
(225 |
) |
|
(1,065 |
) |
|
(14 |
) |
|
(878 |
) |
Income from discontinued operations |
|
403 |
|
|
1,821 |
|
|
26 |
|
|
1,502 |
|
Net income
(loss) |
|
19,731 |
|
|
(24,301 |
) |
|
29,868 |
|
|
(33,893 |
) |
Less: Net
income attributable to noncontrolling interests |
|
(693 |
) |
|
(1,872 |
) |
|
(1,940 |
) |
|
(3,149 |
) |
Net income
(loss) attributable to Harsco Corporation |
|
$ |
19,038 |
|
|
$ |
(26,173 |
) |
|
$ |
27,928 |
|
|
$ |
(37,042 |
) |
Amounts attributable to Harsco Corporation common
stockholders: |
Income
(loss) from continuing operations, net of tax |
|
$ |
18,635 |
|
|
$ |
(27,994 |
) |
|
$ |
27,902 |
|
|
$ |
(38,544 |
) |
Income
from discontinued operations, net of tax |
|
403 |
|
|
1,821 |
|
|
26 |
|
|
1,502 |
|
Net income (loss) attributable to Harsco Corporation common
stockholders |
|
$ |
19,038 |
|
|
$ |
(26,173 |
) |
|
$ |
27,928 |
|
|
$ |
(37,042 |
) |
|
|
|
|
|
|
|
|
|
Weighted-average shares
of common stock outstanding |
|
80,535 |
|
|
80,337 |
|
|
80,460 |
|
|
80,288 |
|
Basic earnings (loss) per common share attributable to
Harsco Corporation common stockholders: |
Continuing operations |
|
$ |
0.23 |
|
|
$ |
(0.35 |
) |
|
$ |
0.35 |
|
|
$ |
(0.48 |
) |
Discontinued operations |
|
0.01 |
|
|
0.02 |
|
|
— |
|
|
0.02 |
|
Basic earnings
(loss) per share attributable to Harsco Corporation common
stockholders |
|
$ |
0.24 |
|
|
$ |
(0.33 |
) |
|
$ |
0.35 |
|
|
$ |
(0.46 |
) |
|
|
|
|
|
|
|
|
|
Diluted
weighted-average shares of common stock outstanding |
|
82,850 |
|
|
80,337 |
|
|
82,558 |
|
|
80,288 |
|
Diluted earnings (loss) per common share attributable to
Harsco Corporation common stockholders: |
Continuing operations |
|
$ |
0.22 |
|
|
$ |
(0.35 |
) |
|
$ |
0.34 |
|
|
$ |
(0.48 |
) |
Discontinued operations |
|
— |
|
|
0.02 |
|
|
— |
|
|
0.02 |
|
Diluted
earnings (loss) per share attributable to Harsco Corporation common
stockholders |
|
$ |
0.23 |
|
(a) |
$ |
(0.33 |
) |
|
$ |
0.34 |
|
|
$ |
(0.46 |
) |
(a) Does not total due to rounding.
HARSCO CORPORATIONCONSOLIDATED BALANCE
SHEETS (Unaudited) |
(In thousands) |
|
June 30 2017 |
|
December 31 2016 |
ASSETS |
|
|
|
|
Current
assets: |
|
|
|
|
Cash and
cash equivalents |
|
$ |
58,105 |
|
|
$ |
69,831 |
|
Restricted cash |
|
4,671 |
|
|
2,048 |
|
Trade
accounts receivable, net |
|
289,280 |
|
|
236,554 |
|
Other
receivables |
|
22,340 |
|
|
21,053 |
|
Inventories |
|
201,851 |
|
|
187,681 |
|
Other
current assets |
|
32,840 |
|
|
33,108 |
|
Total current assets |
|
609,087 |
|
|
550,275 |
|
Property, plant and
equipment, net |
|
484,100 |
|
|
490,255 |
|
Goodwill |
|
393,804 |
|
|
382,251 |
|
Intangible assets,
net |
|
39,972 |
|
|
41,567 |
|
Deferred income tax
assets |
|
106,044 |
|
|
106,311 |
|
Other assets |
|
13,277 |
|
|
10,679 |
|
Total assets |
|
$ |
1,646,284 |
|
|
$ |
1,581,338 |
|
LIABILITIES |
|
|
|
|
Current
liabilities: |
|
|
|
|
Short-term borrowings |
|
$ |
5,985 |
|
|
$ |
4,259 |
|
Current
maturities of long-term debt |
|
16,248 |
|
|
25,574 |
|
Accounts
payable |
|
118,633 |
|
|
107,954 |
|
Accrued
compensation |
|
44,210 |
|
|
46,658 |
|
Income
taxes payable |
|
7,742 |
|
|
4,301 |
|
Insurance
liabilities |
|
11,949 |
|
|
11,850 |
|
Advances
on contracts and other customer advances |
|
124,902 |
|
|
117,329 |
|
Other
current liabilities |
|
135,191 |
|
|
109,748 |
|
Total current liabilities |
|
464,860 |
|
|
427,673 |
|
Long-term debt |
|
617,674 |
|
|
629,239 |
|
Insurance
liabilities |
|
23,344 |
|
|
25,265 |
|
Retirement plan
liabilities |
|
310,278 |
|
|
319,597 |
|
Other liabilities |
|
43,232 |
|
|
42,001 |
|
Total liabilities |
|
1,459,388 |
|
|
1,443,775 |
|
HARSCO
CORPORATION STOCKHOLDERS’ EQUITY |
|
|
|
|
Common
stock |
|
141,039 |
|
|
140,625 |
|
Additional paid-in capital |
|
178,435 |
|
|
172,101 |
|
Accumulated other comprehensive loss |
|
(591,735 |
) |
|
(606,722 |
) |
Retained
earnings |
|
1,177,907 |
|
|
1,150,688 |
|
Treasury
stock |
|
(761,717 |
) |
|
(760,391 |
) |
Total Harsco Corporation stockholders’ equity |
|
143,929 |
|
|
96,301 |
|
Noncontrolling
interests |
|
42,967 |
|
|
41,262 |
|
Total equity |
|
186,896 |
|
|
137,563 |
|
Total liabilities and equity |
|
$ |
1,646,284 |
|
|
$ |
1,581,338 |
|
HARSCO CORPORATIONCONSOLIDATED STATEMENTS
OF CASH FLOWS (Unaudited) |
|
|
Three Months Ended |
|
Six Months Ended |
|
|
June 30 |
|
June 30 |
(In thousands) |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Cash flows from
operating activities: |
|
|
|
|
|
|
|
|
Net
income (loss) |
|
$ |
19,731 |
|
|
$ |
(24,301 |
) |
|
$ |
29,868 |
|
|
$ |
(33,893 |
) |
Adjustments to reconcile net income (loss) to net cash
provided by operating activities: |
Depreciation |
|
30,288 |
|
|
32,655 |
|
|
60,495 |
|
|
65,736 |
|
Amortization |
|
1,987 |
|
|
2,962 |
|
|
4,008 |
|
|
5,926 |
|
Change in
fair value to the unit adjustment liability and loss on dilution of
equity method investment |
|
— |
|
|
1,489 |
|
|
— |
|
|
13,706 |
|
Contract
estimated forward loss provision for Harsco Rail Segment |
|
— |
|
|
40,050 |
|
|
— |
|
|
40,050 |
|
Deferred
income tax expense (benefit) |
|
3,654 |
|
|
(2,290 |
) |
|
3,433 |
|
|
(2,857 |
) |
Equity in
(income) loss of unconsolidated entities, net |
|
— |
|
|
694 |
|
|
— |
|
|
(2,481 |
) |
Dividends
from unconsolidated entities |
|
— |
|
|
— |
|
|
19 |
|
|
16 |
|
Other,
net |
|
2,803 |
|
|
811 |
|
|
5,708 |
|
|
1,871 |
|
Changes
in assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts
receivable |
|
(14,924 |
) |
|
(12,941 |
) |
|
(42,806 |
) |
|
3,011 |
|
Inventories |
|
(5,541 |
) |
|
(11,383 |
) |
|
(6,296 |
) |
|
(23,791 |
) |
Accounts
payable |
|
4,800 |
|
|
(457 |
) |
|
4,259 |
|
|
(16,308 |
) |
Accrued
interest payable |
|
(120 |
) |
|
(6,704 |
) |
|
166 |
|
|
(36 |
) |
Accrued
compensation |
|
7,987 |
|
|
5,014 |
|
|
(4,365 |
) |
|
1,237 |
|
Advances
on contracts and other customer advances |
|
3,519 |
|
|
7,886 |
|
|
(1,479 |
) |
|
(1,109 |
) |
Retirement plan liabilities, net |
|
(2,840 |
) |
|
(3,633 |
) |
|
(11,221 |
) |
|
(13,871 |
) |
Other
assets and liabilities |
|
1,559 |
|
|
1,796 |
|
|
4,990 |
|
|
(8,534 |
) |
Net cash provided by operating activities |
|
52,903 |
|
|
31,648 |
|
|
46,779 |
|
|
28,673 |
|
Cash flows from
investing activities: |
|
|
|
|
|
|
|
|
Purchases
of property, plant and equipment |
|
(23,711 |
) |
|
(15,225 |
) |
|
(40,700 |
) |
|
(32,176 |
) |
Proceeds
from sales of assets |
|
528 |
|
|
2,296 |
|
|
1,534 |
|
|
5,115 |
|
Purchases
of businesses, net of cash acquired |
|
— |
|
|
— |
|
|
— |
|
|
(26 |
) |
Other
investing activities, net |
|
4,137 |
|
|
(6,043 |
) |
|
4,170 |
|
|
(616 |
) |
Net cash used by investing activities |
|
(19,046 |
) |
|
(18,972 |
) |
|
(34,996 |
) |
|
(27,703 |
) |
Cash flows from
financing activities: |
|
|
|
|
|
|
|
|
Short-term borrowings, net |
|
(1,353 |
) |
|
2,315 |
|
|
2,302 |
|
|
1,949 |
|
Current
maturities and long-term debt: |
|
|
|
|
|
|
|
|
Additions |
|
— |
|
|
21,009 |
|
|
24,000 |
|
|
50,019 |
|
Reductions |
|
(32,367 |
) |
|
(32,687 |
) |
|
(46,712 |
) |
|
(75,608 |
) |
Cash
dividends paid on common stock |
|
— |
|
|
— |
|
|
— |
|
|
(4,105 |
) |
Dividends
paid to noncontrolling interests |
|
(1,769 |
) |
|
(1,702 |
) |
|
(1,769 |
) |
|
(1,702 |
) |
Purchase
of noncontrolling interests |
|
— |
|
|
(4,731 |
) |
|
— |
|
|
(4,731 |
) |
Stock-based compensation - Employee taxes paid |
|
(1,273 |
) |
|
(91 |
) |
|
(1,326 |
) |
|
(91 |
) |
Proceeds
from cross-currency interest rate swap termination |
|
— |
|
|
— |
|
|
— |
|
|
16,625 |
|
Deferred
financing costs |
|
(6 |
) |
|
(1 |
) |
|
(42 |
) |
|
(895 |
) |
Other
financing activities, net |
|
(368 |
) |
|
— |
|
|
(368 |
) |
|
— |
|
Net cash used by financing activities |
|
(37,136 |
) |
|
(15,888 |
) |
|
(23,915 |
) |
|
(18,539 |
) |
Effect of exchange rate
changes on cash and cash equivalents, including restricted
cash |
|
1,626 |
|
|
2,045 |
|
|
3,029 |
|
|
7,051 |
|
Net decrease in cash
and cash equivalents, including restricted cash |
|
(1,653 |
) |
|
(1,167 |
) |
|
(9,103 |
) |
|
(10,518 |
) |
Cash and cash
equivalents, including restricted cash, at beginning of period |
|
64,429 |
|
|
70,405 |
|
|
71,879 |
|
|
79,756 |
|
Cash and cash
equivalents, including restricted cash, at end of
period |
|
$ |
62,776 |
|
|
$ |
69,238 |
|
|
$ |
62,776 |
|
|
$ |
69,238 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HARSCO CORPORATIONREVIEW OF OPERATIONS BY
SEGMENT (Unaudited) |
|
|
Three Months Ended |
|
Three Months Ended |
|
|
June 30, 2017 |
|
June 30, 2016 |
(In thousands) |
|
Revenues |
|
OperatingIncome
(Loss) |
|
Revenues |
|
Operating Income (Loss) |
Harsco
Metals & Minerals |
|
$ |
259,306 |
|
|
$ |
32,177 |
|
|
$ |
253,560 |
|
|
$ |
30,927 |
|
Harsco
Industrial |
|
73,563 |
|
|
9,151 |
|
|
66,270 |
|
|
7,300 |
|
Harsco
Rail |
|
61,994 |
|
|
7,961 |
|
|
50,103 |
|
|
(31,948 |
) |
Corporate |
|
35 |
|
|
(6,815 |
) |
|
— |
|
|
(4,965 |
) |
Consolidated Totals |
|
$ |
394,898 |
|
|
$ |
42,474 |
|
|
$ |
369,933 |
|
|
$ |
1,314 |
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended |
|
Six Months Ended |
|
|
June 30, 2017 |
|
June 30, 2016 |
(In thousands) |
|
Revenues |
|
OperatingIncome
(Loss) |
|
Revenues |
|
Operating Income (Loss) |
Harsco
Metals & Minerals |
|
$ |
506,340 |
|
|
$ |
58,606 |
|
|
$ |
483,232 |
|
|
$ |
37,868 |
|
Harsco
Industrial |
|
139,448 |
|
|
11,955 |
|
|
128,139 |
|
|
13,771 |
|
Harsco
Rail |
|
121,582 |
|
|
13,947 |
|
|
111,843 |
|
|
(27,042 |
) |
General
Corporate |
|
69 |
|
|
(14,126 |
) |
|
— |
|
|
(13,852 |
) |
Consolidated Totals |
|
$ |
767,439 |
|
|
$ |
70,382 |
|
|
$ |
723,214 |
|
|
$ |
10,745 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HARSCO CORPORATIONRECONCILIATION OF
ADJUSTED DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS
EXCLUDING UNUSUAL ITEMS TO DILUTED EARNINGS (LOSS) PER SHARE FROM
CONTINUING OPERATIONS AS REPORTED (Unaudited) |
|
|
Three Months Ended |
|
Six Months Ended |
|
|
June 30 |
|
June 30 |
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Diluted earnings (loss)
per share from continuing operations as reported (a) |
|
$ |
0.22 |
|
|
$ |
(0.35 |
) |
|
$ |
0.34 |
|
|
$ |
(0.48 |
) |
Harsco Rail Segment
forward contract loss provision (b) |
|
— |
|
|
0.50 |
|
|
— |
|
|
0.50 |
|
Net loss on dilution of
equity method investment (c) |
|
— |
|
|
— |
|
|
— |
|
|
0.13 |
|
Harsco Metals &
Minerals Segment site exit charges (d) |
|
— |
|
|
— |
|
|
— |
|
|
0.06 |
|
Harsco Metals &
Minerals Segment separation costs (e) |
|
— |
|
|
— |
|
|
— |
|
|
0.04 |
|
Taxes on above unusual
items (f) |
|
— |
|
|
— |
|
|
— |
|
|
(0.07 |
) |
Adjusted
diluted earnings per share from continuing operations excluding
unusual items |
|
$ |
0.22 |
|
|
$ |
0.15 |
|
|
$ |
0.34 |
|
|
$ |
0.18 |
|
(a) No unusual items were excluded in the three and six months
ended June 30, 2017.
(b) Harsco Rail Segment forward contract loss provision related
to the Company's contracts with the federal railway system of
Switzerland (Q2 and six months 2016 $40.1 million pre-tax)
(c) Loss on the dilution of the Company's investment in Brand
Energy & Infrastructure Services recorded at Corporate (six
months 2016 $10.3 million pre-tax).
(d) Harsco Metals & Minerals Segment charges primarily
attributable to site exit costs (six months 2016 $5.1 million
pre-tax).
(e) Costs associated with Harsco Metals & Minerals Segment
separation recorded at Corporate (six months 2016 $3.3 million
pre-tax).
(f) 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.
The Company’s management believes Adjusted diluted earnings per
share from continuing operations excluding unusual items, which is
a non-U.S. GAAP financial measure, is useful to investors because
it provides an overall understanding of the Company’s historical
and future prospects. Exclusion of unusual items permits evaluation
and comparison of results for the Company’s core business
operations, and it is on this basis that management internally
assesses the Company’s performance. This measure should be
considered in addition to, rather than as a substitute for, other
information provided in accordance with U.S. GAAP.
HARSCO CORPORATIONRECONCILIATION OF
ADJUSTED DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS
EXCLUDING UNUSUAL ITEMS TO DILUTED LOSS PER SHARE FROM CONTINUING
OPERATIONS AS REPORTED (Unaudited) |
|
|
Three Months Ended |
|
|
September 30 |
|
|
2016 |
Diluted loss per share
from continuing operations as reported |
|
$ |
(0.41 |
) |
Net loss on dilution
and sale of equity investment (a) |
|
0.54 |
|
Expense of deferred
financing costs (b) |
|
0.01 |
|
Taxes on above unusual
items (c) |
|
— |
|
Adjusted
diluted earnings per share from continuing operations excluding
unusual items |
|
$ |
0.14 |
|
(a) Loss on the dilution and sale of the Company's investment in
Brand Energy & Infrastructure Services recorded at Corporate
($43.5 million pre-tax).
(b) Expense of deferred financing costs associated with the
Company's repayment of approximately $85 million on its Term Loan
Facility recorded at Corporate ($1.1 million pre-tax)
(c) 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.
The Company’s management believes Adjusted diluted earnings per
share from continuing operations excluding unusual items, which is
a non-U.S. GAAP financial measure, is useful to investors because
it provides an overall understanding of the Company’s historical
and future prospects. Exclusion of unusual items permits evaluation
and comparison of results for the Company’s core business
operations, and it is on this basis that management internally
assesses the Company’s performance. This measure should be
considered in addition to, rather than as a substitute for, other
information provided in accordance with U.S. GAAP.
HARSCO CORPORATIONRECONCILIATION OF
ADJUSTED DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS
EXCLUDING UNUSUAL ITEMS TO DILUTED LOSS PER SHARE FROM CONTINUING
OPERATIONS AS REPORTED (Unaudited) |
|
|
Twelve Months Ended |
|
|
December 31 |
|
|
2016 |
Diluted loss per share
from continuing operations as reported |
|
$ |
(1.07 |
) |
Net loss on dilution
and sale of equity investment (a) |
|
0.66 |
|
Harsco Rail Segment
forward contract loss provision (b) |
|
0.56 |
|
Loss on early
extinguishment of debt (c) |
|
0.44 |
|
Harsco Metals &
Minerals Segment site exit and underperforming contract charges,
net (d) |
|
0.06 |
|
Harsco Metals &
Minerals Segment separation costs (e) |
|
0.04 |
|
Expense of deferred
financing costs (f) |
|
0.01 |
|
Harsco Metals &
Minerals Segment cumulative translation adjustment liquidation
(g) |
|
(0.01 |
) |
Taxes on above unusual
items (h) |
|
(0.21 |
) |
Adjusted
diluted earnings per share from continuing operations excluding
unusual items |
|
$ |
0.48 |
|
(a) Loss on the dilution and sale of the Company's investment in
Brand Energy & Infrastructure Services recorded at Corporate
($53.8 million pre-tax).
(b) Harsco Rail Segment forward contract loss provision related
to the Company's contracts with the federal railway system of
Switzerland ($45.1 million pre-tax).
(c) Loss on early extinguishment of debt recorded at Corporate
($35.3 million pre-tax).
(d) Harsco Metals & Minerals Segment charges primarily
attributable to site exit and underperforming contract costs ($5.1
million pre-tax).
(e) Costs associated with Harsco Metals & Minerals Segment
separation recorded at Corporate ($3.3 million
pre-tax).
(f) Expense of deferred financing costs associated with the
Company's repayment of approximately $85 million on its Term Loan
Facility recorded at Corporate ($1.1 million
pre-tax).
(g) Harsco Metals & Minerals Segment gain related to the
liquidation of cumulated translation adjustment related to an
exited country ($1.2 million pre-tax).
(h) 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.
The Company’s management believes Adjusted diluted earnings per
share from continuing operations excluding unusual items, which is
a non-U.S. GAAP financial measure, is useful to investors because
it provides an overall understanding of the Company’s historical
and future prospects. Exclusion of unusual items permits evaluation
and comparison of results for the Company’s core business
operations, and it is on this basis that management internally
assesses the Company’s performance. This measure should be
considered in addition to, rather than as a substitute for, other
information provided in accordance with U.S. GAAP.
HARSCO CORPORATIONREVIEW OF OPERATIONS BY
SEGMENT EXCLUDING UNUSUAL ITEMS (Unaudited) |
(In thousands) |
|
Harsco Metals & Minerals |
|
Harsco Industrial |
|
Harsco
Rail |
|
Corporate |
|
Consolidated Totals |
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended June 30, 2017: |
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
as reported (a) |
|
$ |
32,177 |
|
|
$ |
9,151 |
|
|
$ |
7,961 |
|
|
$ |
(6,815 |
) |
|
$ |
42,474 |
|
Revenues as
reported |
|
$ |
259,306 |
|
|
$ |
73,563 |
|
|
$ |
61,994 |
|
|
$ |
35 |
|
|
$ |
394,898 |
|
Operating margin
(%) |
|
12.4 |
% |
|
12.4 |
% |
|
12.8 |
% |
|
|
|
10.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended June 30, 2016: |
|
|
|
|
|
|
|
|
|
|
Adjusted operating
income (loss) excluding unusual items |
|
$ |
30,927 |
|
|
$ |
7,300 |
|
|
$ |
8,102 |
|
|
$ |
(4,965 |
) |
|
$ |
41,364 |
|
Revenues as
reported |
|
$ |
253,560 |
|
|
$ |
66,270 |
|
|
$ |
50,103 |
|
|
$ |
— |
|
|
$ |
369,933 |
|
Adjusted operating
margin (%) excluding unusual items |
|
12.2 |
% |
|
11.0 |
% |
|
16.2 |
% |
|
|
|
11.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
Six
Months Ended June 30, 2017: |
|
|
|
|
|
|
|
|
Operating income (loss)
as reported (a) |
|
$ |
58,606 |
|
|
$ |
11,955 |
|
|
$ |
13,947 |
|
|
$ |
(14,126 |
) |
|
$ |
70,382 |
|
Revenues as
reported |
|
$ |
506,340 |
|
|
$ |
139,448 |
|
|
$ |
121,582 |
|
|
$ |
69 |
|
|
$ |
767,439 |
|
Operating margin
(%) |
|
11.6 |
% |
|
8.6 |
% |
|
11.5 |
% |
|
|
|
9.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
Six
Months Ended June 30, 2016: |
|
|
|
|
|
|
|
|
Adjusted operating
income (loss) excluding unusual items |
|
$ |
42,968 |
|
|
$ |
13,771 |
|
|
$ |
13,008 |
|
|
$ |
(10,565 |
) |
|
$ |
59,182 |
|
Revenues as
reported |
|
$ |
483,232 |
|
|
$ |
128,139 |
|
|
$ |
111,843 |
|
|
$ |
— |
|
|
$ |
723,214 |
|
Adjusted operating
margin (%) excluding unusual items |
|
8.9 |
% |
|
10.7 |
% |
|
11.6 |
% |
|
|
|
8.2 |
% |
(a) No unusual items were excluded in the three and six months
ended June 30, 2017.
The Company’s management believes Adjusted operating margin (%)
excluding unusual items, which is a non-U.S. GAAP financial
measure, is useful to investors because it provides an overall
understanding of the Company’s historical and future prospects.
Exclusion of unusual items permits evaluation and comparison of
results for the Company’s core business operations, and it is on
this basis that management internally assesses the Company’s
performance. This measure should be considered in addition
to, rather than as a substitute for, other information provided in
accordance with U.S. GAAP.
HARSCO CORPORATIONRECONCILIATION OF
ADJUSTED OPERATING INCOME (LOSS) EXCLUDING UNUSUAL ITEMS BY SEGMENT
TO OPERATING INCOME (LOSS) AS REPORTED BY SEGMENT
(Unaudited) |
(In thousands) |
|
Harsco Metals & Minerals |
|
Harsco Industrial |
|
Harsco
Rail |
|
Corporate |
|
Consolidated Totals |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2017: |
|
|
|
|
|
|
|
|
Operating income (loss)
as reported (a) |
|
$ |
32,177 |
|
|
$ |
9,151 |
|
|
$ |
7,961 |
|
|
$ |
(6,815 |
) |
|
$ |
42,474 |
|
Revenues as
reported |
|
$ |
259,306 |
|
|
$ |
73,563 |
|
|
$ |
61,994 |
|
|
$ |
35 |
|
|
$ |
394,898 |
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2016: |
|
|
|
|
|
|
|
|
Operating income (loss)
as reported |
|
$ |
30,927 |
|
|
$ |
7,300 |
|
|
$ |
(31,948 |
) |
|
$ |
(4,965 |
) |
|
$ |
1,314 |
|
Harsco Rail Segment
forward contract loss provision |
|
— |
|
|
— |
|
|
40,050 |
|
|
— |
|
|
40,050 |
|
Adjusted operating
income (loss) excluding unusual items |
|
$ |
30,927 |
|
|
$ |
7,300 |
|
|
$ |
8,102 |
|
|
$ |
(4,965 |
) |
|
$ |
41,364 |
|
Revenues as
reported |
|
$ |
253,560 |
|
|
$ |
66,270 |
|
|
$ |
50,103 |
|
|
$ |
— |
|
|
$ |
369,933 |
|
(a) No unusual items were excluded in the three months ended
June 30, 2017.
The Company’s management believes Adjusted operating income
(loss) excluding unusual items, which is a non-U.S. GAAP financial
measure, is useful to investors because it provides an overall
understanding of the Company’s historical and future prospects.
Exclusion of unusual items permits evaluation and comparison of
results for the Company’s core business operations, and it is on
this basis that management internally assesses the Company’s
performance. This measure should be considered in addition
to, rather than as a substitute for, other information provided in
accordance with U.S. GAAP.
HARSCO CORPORATIONRECONCILIATION OF
ADJUSTED OPERATING INCOME (LOSS) EXCLUDING UNUSUAL ITEMS BY SEGMENT
TO OPERATING INCOME (LOSS) AS REPORTED BY SEGMENT
(Unaudited) |
(In thousands) |
|
Harsco Metals & Minerals |
|
Harsco Industrial |
|
Harsco
Rail |
|
Corporate |
|
Consolidated Totals |
|
|
|
|
|
|
|
|
|
|
|
|
|
Six
Months Ended June 30, 2017: |
|
|
|
|
|
|
|
|
|
Operating income (loss)
as reported (a) |
|
$ |
58,606 |
|
|
$ |
11,955 |
|
|
$ |
13,947 |
|
|
$ |
(14,126 |
) |
|
$ |
70,382 |
|
|
Revenues as
reported |
|
$ |
506,340 |
|
|
$ |
139,448 |
|
|
$ |
121,582 |
|
|
$ |
69 |
|
|
$ |
767,439 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six
Months Ended June 30, 2016: |
|
|
|
|
|
|
|
|
|
Operating income (loss)
as reported |
|
$ |
37,868 |
|
|
$ |
13,771 |
|
|
$ |
(27,042 |
) |
|
$ |
(13,852 |
) |
|
$ |
10,745 |
|
|
Harsco Rail Segment
forward contract loss provision |
|
— |
|
|
— |
|
|
40,050 |
|
|
— |
|
|
40,050 |
|
|
Harsco Metals &
Minerals Segment site exit charges |
|
5,100 |
|
|
— |
|
|
— |
|
|
— |
|
|
5,100 |
|
|
Harsco Metals &
Minerals Segment separation costs |
|
— |
|
|
— |
|
|
— |
|
|
3,287 |
|
|
3,287 |
|
|
Adjusted operating
income (loss) excluding unusual items |
|
$ |
42,968 |
|
|
$ |
13,771 |
|
|
$ |
13,008 |
|
|
$ |
(10,565 |
) |
|
$ |
59,182 |
|
|
Revenues as
reported |
|
$ |
483,232 |
|
|
$ |
128,139 |
|
|
$ |
111,843 |
|
|
$ |
— |
|
|
$ |
723,214 |
|
|
(a) No unusual items were excluded in the six months ended June
30, 2017.
The Company’s management believes Adjusted operating income
(loss) excluding unusual items, which is a non-U.S. GAAP financial
measure, is useful to investors because it provides an overall
understanding of the Company’s historical and future prospects.
Exclusion of unusual items permits evaluation and comparison of
results for the Company’s core business operations, and it is on
this basis that management internally assesses the Company’s
performance. This measure should be considered in addition to,
rather than as a substitute for, other information provided in
accordance with U.S. GAAP.
HARSCO CORPORATIONRECONCILIATION OF
ADJUSTED OPERATING INCOME (LOSS) EXCLUDING UNUSUAL ITEMS BY SEGMENT
TO OPERATING INCOME (LOSS) AS REPORTED BY SEGMENT
(Unaudited) |
(In thousands) |
|
Harsco Metals & Minerals |
|
Harsco Industrial |
|
Harsco
Rail |
|
Corporate |
|
Consolidated Totals |
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve Months Ended December 31, 2016: |
|
|
|
|
|
|
|
|
|
Operating income (loss)
as reported |
|
$ |
81,634 |
|
|
$ |
23,182 |
|
|
$ |
(17,527 |
) |
|
$ |
(23,820 |
) |
|
$ |
63,469 |
|
|
Harsco Rail Segment
forward contract loss provision |
|
— |
|
|
— |
|
|
45,050 |
|
|
— |
|
|
45,050 |
|
|
Harsco Metals &
Minerals Segment site exit |
|
5,100 |
|
|
— |
|
|
— |
|
|
— |
|
|
5,100 |
|
|
Harsco Metals &
Minerals Segment separation costs |
|
— |
|
|
— |
|
|
— |
|
|
3,287 |
|
|
3,287 |
|
|
Harsco Metals &
Minerals Segment cumulative translation adjustment liquidation |
|
(1,157 |
) |
|
— |
|
|
— |
|
|
— |
|
|
(1,157 |
) |
|
Adjusted operating
income (loss), excluding unusual items |
|
$ |
85,577 |
|
|
$ |
23,182 |
|
|
$ |
27,523 |
|
|
$ |
(20,533 |
) |
|
$ |
115,749 |
|
|
Revenues as
reported |
|
$ |
965,540 |
|
|
$ |
247,542 |
|
|
$ |
238,107 |
|
|
$ |
34 |
|
|
$ |
1,451,223 |
|
|
The Company’s management believes Adjusted operating income
(loss) excluding unusual items, which is a non-U.S. GAAP financial
measure, is useful to investors because it provides an overall
understanding of the Company’s historical and future prospects.
Exclusion of unusual items permits evaluation and comparison of
results for the Company’s core business operations, and it is on
this basis that management internally assesses the Company’s
performance. This measure should be considered in addition to,
rather than as a substitute for, other information provided in
accordance with U.S. GAAP.
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) |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Net cash provided by
operating activities |
|
$ |
52,903 |
|
|
$ |
31,648 |
|
|
$ |
46,779 |
|
|
$ |
28,673 |
|
Less capital
expenditures |
|
(23,711 |
) |
|
(15,225 |
) |
|
(40,700 |
) |
|
(32,176 |
) |
Plus capital
expenditures for strategic ventures (a) |
|
337 |
|
|
79 |
|
|
396 |
|
|
95 |
|
Plus total proceeds
from sales of assets (b) |
|
528 |
|
|
2,296 |
|
|
1,534 |
|
|
5,115 |
|
Free cash flow |
|
$ |
30,057 |
|
|
$ |
18,798 |
|
|
$ |
8,009 |
|
|
$ |
1,707 |
|
(a) Capital expenditures for strategic ventures represent the
partner’s share of capital expenditures in certain ventures
consolidated in the Company’s financial statements.
(b) Asset sales are a normal part of the business model,
primarily for the Harsco Metals & Minerals Segment.
The Company's management believes that Free cash flow, which is
a non-U.S. GAAP financial measure, is meaningful to investors
because management reviews cash flows generated from (used in)
operations less capital expenditures net of asset sales proceeds.
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, are not deducted from the measure. This
measure should be considered in addition to, rather than as a
substitute for, other information provided in accordance with U.S.
GAAP.
HARSCO CORPORATIONRECONCILIATION OF FREE
CASH FLOW TO NET CASH PROVIDED BY OPERATING ACTIVITIES
(Unaudited) |
|
|
Twelve Months Ended |
|
|
December 31 |
(In thousands) |
|
2016 |
Net cash provided by
operating activities |
|
$ |
159,785 |
|
Less capital
expenditures |
|
(69,340 |
) |
Plus capital
expenditures for strategic ventures (a) |
|
170 |
|
Plus total proceeds
from sales of assets (b) |
|
9,305 |
|
Free cash flow |
|
$ |
99,920 |
|
(a) Capital expenditures for strategic ventures represent the
partner’s share of capital expenditures in certain ventures
consolidated in the Company’s financial statements.
(b) Asset sales are a normal part of the business model,
primarily for the Harsco Metals & Minerals Segment.
The Company's management believes that Free cash flow, which is
a non-U.S. GAAP financial measure, is meaningful to investors
because management reviews cash flows generated from (used in)
operations less capital expenditures net of asset sales proceeds.
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, are not deducted from the measure. This
measure should be considered in addition to, rather than as a
substitute for, other information provided in accordance with U.S.
GAAP.
HARSCO CORPORATIONRECONCILIATION OF FREE
CASH FLOW TO NET CASH PROVIDED BY OPERATING ACTIVITIES
(Unaudited) |
|
|
Projected Twelve Months Ending December
31 |
|
|
2017 |
(In millions) |
|
Low |
|
High |
Net cash provided by
operating activities |
|
$ |
175 |
|
|
$ |
180 |
|
Less capital
expenditures |
|
(101 |
) |
|
(92 |
) |
Plus total proceeds
from asset sales and capital expenditures for strategic
ventures |
|
6 |
|
|
7 |
|
Free Cash Flow |
|
$ |
80 |
|
|
$ |
95 |
|
The Company's management believes that free cash flow, which is
a non-U.S. GAAP financial measure, is meaningful to investors
because management reviews cash flows generated from operations
less capital expenditures net of asset sales proceeds. 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, are not deducted from the measure. This
measure should be considered in addition to, rather than as a
substitute for, other information provided in accordance with U.S.
GAAP.
HARSCO CORPORATIONRECONCILIATION OF RETURN
ON INVESTED CAPITAL EXCLUDING UNUSUAL ITEMS TO NET LOSS FROM
CONTINUING OPERATIONS AS REPORTED (a) (Unaudited) |
|
|
Trailing Twelve Months for Period Ended June
30 |
(In thousands) |
|
2017 |
|
2016 |
Loss from continuing
operations |
|
$ |
(15,185 |
) |
|
$ |
(51,808 |
) |
Unusual items: |
|
|
|
|
Net loss on dilution
and sale of equity investment |
|
43,518 |
|
|
10,304 |
|
Loss on early
extinguishment of debt |
|
35,337 |
|
|
— |
|
Harsco Rail Segment
forward contract loss provision |
|
5,000 |
|
|
40,050 |
|
Expense of deferred
financing costs |
|
1,125 |
|
|
— |
|
Harsco Metals &
Minerals Segment cumulative translation adjustment liquidation |
|
(1,157 |
) |
|
— |
|
Harsco Metals &
Minerals Segment contract termination charges |
|
— |
|
|
13,484 |
|
Harsco Metals &
Minerals Segment separation costs |
|
— |
|
|
13,209 |
|
Harsco Metals &
Minerals Segment site exit and underperforming contract charges,
net |
|
— |
|
|
10,077 |
|
Harsco Metals &
Minerals Segment salt cake processing and disposal charges |
|
— |
|
|
7,000 |
|
Harsco Metals &
Minerals Segment Project Orion charges |
|
— |
|
|
5,070 |
|
Harsco Metals &
Minerals Segment subcontractor settlement charge |
|
— |
|
|
4,220 |
|
Harsco Metals &
Minerals Segment multi-employer pension plan charge |
|
— |
|
|
1,122 |
|
Harsco Infrastructure
Segment loss on disposal |
|
— |
|
|
1,000 |
|
Taxes on above unusual
items (b) |
|
(11,512 |
) |
|
(12,021 |
) |
Net income from
continuing operations, as adjusted |
|
57,126 |
|
|
41,707 |
|
After-tax interest
expense (c) |
|
30,461 |
|
|
31,039 |
|
|
|
|
|
|
Net operating profit
after tax as adjusted |
|
$ |
87,587 |
|
|
$ |
72,746 |
|
|
|
|
|
|
Average equity |
|
$ |
216,509 |
|
|
$ |
300,556 |
|
Plus average debt |
|
700,588 |
|
|
904,177 |
|
Average capital |
|
$ |
917,097 |
|
|
$ |
1,204,733 |
|
|
|
|
|
|
Return on
invested capital excluding unusual items |
|
9.6 |
% |
|
6.0 |
% |
(a) Return on invested capital excluding unusual items is net
income (loss) from continuing operations excluding unusual items,
and after-tax interest expense, divided by average capital for the
year. The Company uses a trailing twelve month average for
computing average capital.
(b) 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.
(c) The Company’s effective tax rate approximated 37% on an
adjusted basis for both periods for interest expense.
The Company’s management believes Return on invested capital
excluding unusual items, which is a non-U.S. GAAP financial
measure, is meaningful in evaluating the efficiency and
effectiveness of the capital invested in the Company’s business.
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. This measure should be considered in addition to,
rather than as a substitute for, net income or other information
provided in accordance with U.S. GAAP.
HARSCO CORPORATIONRECONCILIATION OF RETURN
ON INVESTED CAPITAL EXCLUDING UNUSUAL ITEMS TO NET LOSS FROM
CONTINUING OPERATIONS AS REPORTED (a) (Unaudited) |
|
|
Year Ended December 31 |
(In thousands) |
|
2016 |
Loss from continuing
operations |
|
$ |
(80,422 |
) |
Unusual items: |
|
|
Net loss on dilution
and sale of equity investment |
|
53,822 |
|
Harsco Rail Segment
forward contract loss provision |
|
45,050 |
|
Loss on early
extinguishment of debt |
|
35,337 |
|
Harsco Metals &
Minerals Segment site exit and underperforming contract charges,
net |
|
5,100 |
|
Harsco Metals &
Minerals Segment separation costs |
|
3,287 |
|
Expense of deferred
financing costs |
|
1,125 |
|
Harsco Metals &
Minerals Segment cumulative translation adjustment liquidation |
|
(1,157 |
) |
Taxes on above unusual
items (b) |
|
(17,335 |
) |
Net income from
continuing operations, as adjusted |
|
44,807 |
|
After-tax interest
expense (c) |
|
31,790 |
|
|
|
|
Net operating profit
after tax as adjusted |
|
$ |
76,597 |
|
|
|
|
Average equity |
|
$ |
290,995 |
|
Plus average debt |
|
821,559 |
|
Average capital |
|
$ |
1,112,554 |
|
|
|
|
Return on
invested capital excluding unusual items |
|
6.9 |
% |
|
|
|
|
(a) Return on invested capital excluding unusual items is net
income (loss) from continuing operations excluding unusual items,
and after-tax interest expense, divided by average capital for the
year. The Company uses a trailing twelve month average for
computing average capital.
(b) 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.
(c) The Company’s effective tax rate approximated 37% on an
adjusted basis for both periods for interest expense.
The Company’s management believes Return on invested capital
excluding unusual items, which is a non-U.S. GAAP financial
measure, is meaningful in evaluating the efficiency and
effectiveness of the capital invested in the Company’s business.
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. This measure should be considered in addition to,
rather than as a substitute for, net income or other information
provided in accordance with U.S. GAAP.
Investor Contact
David Martin
717.612.5628
damartin@harsco.com
Media Contact
Kenneth Julian
717.730.3683
kjulian@harsco.com
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