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Harsco Corporation Reports Second Quarter 2021 Results
来源: Nasdaq GlobeNewswire / 03 8月 2021 07:00:01 America/New_York
- Second Quarter Revenues Totaled $570 Million, an Increase of 27 Percent and 8 Percent, Respectively, From the Prior Year and Sequential Quarters
- Q2 GAAP Operating Income of $36 Million and GAAP Diluted Earnings Per Share of $0.18
- Adjusted Q2 EBITDA Totaled $78 Million; At Upper-End of Previous Guidance Range
- Q2 Adjusted Earnings Per Share of $0.28
- Full Year 2021 Adjusted EBITDA Guidance Range Unchanged At $295 Million To $310 Million
CAMP HILL, Pa., Aug. 03, 2021 (GLOBE NEWSWIRE) -- Harsco Corporation (NYSE: HSC) today reported second quarter 2021 results. On a U.S. GAAP ("GAAP") basis, second quarter of 2021 diluted earnings per share from continuing operations were $0.18 including certain strategic costs. Adjusted diluted earnings per share from continuing operations in the second quarter of 2021 were $0.28. These figures compare with a second quarter of 2020 GAAP diluted loss per share from continuing operations of $0.14 and adjusted diluted earnings per share from continuing operations of $0.13.
GAAP operating income from continuing operations for the second quarter of 2021 was $36 million. Adjusted EBITDA totaled $78 million in the quarter, compared to the Company's previously provided guidance range of $73 million to $79 million.
“Harsco continued to experience strong growth and operational momentum during the second quarter in each of our businesses," said Chairman and CEO Nick Grasberger. “The underlying business strength has broadened to include certain businesses that had lagged earlier in the economic recovery, and was supported by our ongoing operational improvements and key initiatives. We have also continued to make good progress on our integration with Clean Earth, which remains one of our near term priorities along with the ongoing efforts to strengthening our financial position. I am confident that Harsco is well-positioned to benefit as the global economy strengthens further, and we expect to create additional shareholder value in the future through our ongoing business transformation.”
Harsco Corporation—Selected Second Quarter Results
($ in millions, except per share amounts) Q2 2021 Q2 2020 Q1 2021 Revenues $ 570 $ 447 $ 529 Operating income from continuing operations - GAAP $ 36 $ 2 $ 25 Diluted EPS from continuing operations - GAAP $ 0.18 $ (0.14 ) $ 0.02 Adjusted EBITDA - excluding unusual items $ 78 $ 59 $ 66 Adjusted EBITDA margin - excluding unusual items 13.7 % 13.2 % 12.4 % Adjusted diluted EPS from continuing operations - excluding unusual items $ 0.28 $ 0.13 $ 0.15 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 total revenues from continuing operations were $570 million, an increase of 27 percent compared with the prior-year quarter. Each business segment realized meaningful revenue growth versus the comparable 2020 quarter. Foreign currency translation positively impacted second quarter 2021 revenues by approximately $16 million compared with the prior-year period, translating to an organic growth rate of 24 percent.GAAP operating income from continuing operations was $36 million for the second quarter of 2021, compared with $2 million in the same quarter of last year. Meanwhile, adjusted EBITDA totaled $78 million in the second quarter of 2021 versus $59 million in the second quarter of 2020. This adjusted EBITDA increase is attributable to improved performance in each of the Company's business segments as a result of strengthening economic conditions, internal improvement actions and growth initiatives.
Second Quarter Business Review
Environmental
($ in millions) Q2 2021 Q2 2020 Q1 2021 Revenues $ 273 $ 204 $ 258 Operating income - GAAP $ 30 $ 14 $ 26 Adjusted EBITDA - excluding unusual items $ 58 $ 40 $ 54 Adjusted EBITDA margin - excluding unusual items 21.2 % 19.7 % 20.8 % Environmental revenues totaled $273 million in the second quarter of 2021, an increase of 34 percent compared with the prior-year quarter. This increase is principally attributable to improved demand for environmental services and applied products as well as favorable foreign exchange movements. The segment's GAAP operating income and adjusted EBITDA totaled $30 million and $58 million, respectively, in the second quarter of 2021. These figures compare with GAAP operating income of $14 million and adjusted EBITDA of $40 million in the prior-year period. The year-on-year improvement in adjusted earnings is attributable to increased services and products demand, as noted above.
Clean Earth
($ in millions) Q2 2021 Q2 2020 Q1 2021 Revenues $ 196 $ 162 $ 189 Operating income - GAAP $ 7 $ — $ 3 Adjusted EBITDA - excluding unusual items $ 18 $ 11 $ 15 Adjusted EBITDA margin - excluding unusual items 9.4 % 7.0 % 7.7 % Note: The 2020 financial information provided above and discussed below for Clean Earth does not include a corporate cost allocation for ESOL.
Clean Earth revenues totaled $196 million in the second quarter of 2021, an increase of 21 percent compared with the prior-year quarter. The revenue increase is attributable to increased environmental services demand within both the hazardous waste and contaminated-dredge materials lines of business. Segment operating income was $7 million and adjusted EBITDA totaled $18 million in the second quarter of 2021. These figures compare with zero operating income and adjusted EBITDA of $11 million, respectively, in the prior-year period. The improvement in adjusted earnings is attributable to the above factors as well as integration improvement benefits. These factors were partially offset by personnel investments to support the Clean Earth platform and certain other expenditures, including IT and rebranding related expenses, which will not occur beyond 2021. Lastly, Clean Earth's adjusted EBITDA margin increased to 9.4 percent in the second quarter of 2021 versus 7.0 percent in the comparable-quarter of 2020.
Rail
($ in millions) Q2 2021 Q2 2020 Q1 2021 Revenues $ 101 $ 82 $ 82 Operating income (loss) - GAAP $ 9 $ 9 $ 5 Adjusted EBITDA - excluding unusual items $ 10 $ 10 $ 6 Adjusted EBITDA margin - excluding unusual items 10.1 % 12.2 % 7.3 % Rail revenues increased 24 percent compared with the prior-year quarter to $101 million. This increase principally reflects higher global equipment revenues, including those under various long-term supply contracts. The segment's operating income and adjusted EBITDA totaled $9 million and $10 million, respectively, in the second quarter of 2021, and these figures are similar to results realized in the prior-year quarter. EBITDA performance year-on-year reflects higher equipment contributions, offset by a less favorable sales mix across other business-lines and higher SG&A costs.
Cash Flow
Net cash provided by operating activities totaled $37 million in the second quarter of 2021, compared with net cash provided by operating activities of $33 million in the prior-year period. Free cash flow was $6 million in the second quarter of 2021, compared with $18 million in the prior-year period. The change in free cash flow compared with the prior-year quarter is principally related to higher capital expenditures, some of which were deferred from 2020, as well as the timing of working capital items.2021 Outlook
The Company's 2021 guidance is unchanged relative to the outlook provided with the Company's first quarter 2021 results. Comments by business segments are as follows:Environmental. For the year, the primary drivers for an increase in adjusted EBITDA compared with 2020 are expected to be favorable demand for underlying services and products as well as higher commodity prices.
Clean Earth. For the year, adjusted EBITDA is projected to increase due to the full-year impact of ESOL ownership, underlying organic growth for hazardous material services and integration benefits, partially offset by an additional allocation of Corporate costs and investments which include various non-recurring expenditures.
Rail. For the year, the primary drivers for an increase in adjusted EBITDA versus 2020 remain higher anticipated demand for equipment and technology products, as well as higher contract services contributions.
Lastly, adjusted Corporate spending is still expected to range from $36 million to $37 million for the year.
Summary Outlook highlights are as follows:
2021 Full Year Outlook GAAP Operating Income $118 - $133 million Adjusted EBITDA $295 - $310 million GAAP Diluted Earnings Per Share $0.42 - 0.57 Adjusted Diluted Earnings Per Share $0.82 - 0.96 Free Cash Flow Before Growth Capital $95 - $115 million Free Cash Flow $35 - $55 million Net Interest Expense $62 - $63 million Net Capital Expenditures $150 - $170 million Effective Tax Rate, Excluding Any Unusual Items 34 - 36% Q3 2021 Outlook GAAP Operating Income $31 - $37 million Adjusted EBITDA $75 - $81 million GAAP Diluted Earnings Per Share $0.15 - 0.21 Adjusted Diluted Earnings Per Share $0.23 - 0.29 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 (833) 651-7826 or (414) 238-0989.
Enter Conference ID number 2147976.Forward-Looking Statements
The nature of the Company's business, together with the number of countries in which it operates, subject it to changing economic, competitive, regulatory and technological conditions, risks and uncertainties. In accordance with the "safe harbor" provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, the Company provides the following cautionary remarks regarding important factors that, among others, could cause future results to differ materially from the results contemplated by forward-looking statements, including the expectations and assumptions expressed or implied herein. Forward-looking statements contained herein could include, among other things, statements about management's confidence in and strategies for performance; expectations for new and existing products, technologies and opportunities; and expectations regarding growth, sales, cash flows, and earnings. Forward-looking statements can be identified by the use of such terms as "may," "could," "expect," "anticipate," "intend," "believe," "likely," "estimate," "outlook," "plan" or other comparable terms.Factors that could cause actual results to differ, perhaps materially, from those implied by forward-looking statements include, but are not limited to: (1) changes in the worldwide business environment in which the Company operates, including changes in general economic conditions or 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 integration of the Company's strategic acquisitions; (13) potential severe volatility in the capital markets; (14) failure to retain key management and employees; (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, have inadequate liquidity or whose business is significantly impacted by COVID-19) 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, 2020. 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 is a global market leader providing environmental solutions for industrial and specialty waste streams and innovative technologies for the rail sector. Based in Camp Hill, PA, the 12,000-employee company operates in more than 30 countries. Harsco’s common stock is a component of the S&P SmallCap 600 Index and the Russell 2000 Index. Additional information can be found at www.harsco.com.HARSCO CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)Three Months Ended Six Months Ended June 30 June 30 (In thousands, except per share amounts) 2021 2020 2021 2020 Revenues from continuing operations: Service revenues $ 436,732 $ 345,643 $ 861,181 $ 637,232 Product revenues 133,088 101,638 237,494 208,890 Total revenues 569,820 447,281 1,098,675 846,122 Costs and expenses from continuing operations: Cost of services sold 348,509 285,941 683,015 522,549 Cost of products sold 105,862 78,201 192,438 158,061 Selling, general and administrative expenses 82,665 80,771 165,708 153,270 Research and development expenses 628 792 1,446 2,052 Other (income) expenses, net (4,063 ) (292 ) (4,975 ) 5,441 Total costs and expenses 533,601 445,413 1,037,632 841,373 Operating income from continuing operations 36,219 1,868 61,043 4,749 Interest income 638 816 1,223 1,009 Interest expense (15,986 ) (14,953 ) (32,850 ) (27,602 ) Unused debt commitment fees, amendment fees and loss on extinguishment of debt (50 ) (1,432 ) (5,308 ) (1,920 ) Defined benefit pension income 3,974 1,723 7,927 3,312 Income (loss) from continuing operations before income taxes and equity income 24,795 (11,978 ) 32,035 (20,452 ) Income tax benefit (expense) from continuing operations (8,564 ) 2,304 (12,793 ) 2,986 Equity income (loss) of unconsolidated entities, net (76 ) 71 (195 ) 167 Income (loss) from continuing operations 16,155 (9,603 ) 19,047 (17,299 ) Discontinued operations: Gain (loss) on sale of discontinued business — (91 ) — 18,371 Income (loss) from discontinued businesses (1,451 ) 524 (3,242 ) 299 Income tax benefit (expense) from discontinued businesses 376 (285 ) 840 (9,599 ) Income (loss) from discontinued operations, net of tax (1,075 ) 148 (2,402 ) 9,071 Net income (loss) 15,080 (9,455 ) 16,645 (8,228 ) Less: Net income attributable to noncontrolling interests (1,692 ) (1,147 ) (3,122 ) (2,233 ) Net income (loss) attributable to Harsco Corporation $ 13,388 $ (10,602 ) $ 13,523 $ (10,461 ) Amounts attributable to Harsco Corporation common stockholders: Income (loss) from continuing operations, net of tax $ 14,463 $ (10,750 ) $ 15,925 $ (19,532 ) Income (loss) from discontinued operations, net of tax (1,075 ) 148 (2,402 ) 9,071 Net income (loss) attributable to Harsco Corporation common stockholders $ 13,388 $ (10,602 ) $ 13,523 $ (10,461 ) Weighted-average shares of common stock outstanding 79,265 78,987 79,177 78,874 Basic earnings (loss) per common share attributable to Harsco Corporation common stockholders: Continuing operations $ 0.18 $ (0.14 ) $ 0.20 $ (0.25 ) Discontinued operations (0.01 ) — (0.03 ) 0.12 Basic earnings (loss) per share attributable to Harsco Corporation common stockholders $ 0.17 $ (0.13 ) (a) $ 0.17 $ (0.13 ) Diluted weighted-average shares of common stock outstanding 80,774 78,987 80,397 78,874 Diluted earnings (loss) per common share attributable to Harsco Corporation common stockholders: Continuing operations $ 0.18 $ (0.14 ) $ 0.20 $ (0.25 ) Discontinued operations (0.01 ) — (0.03 ) 0.12 Diluted earnings (loss) per share attributable to Harsco Corporation common stockholders $ 0.17 $ (0.13 ) (a) $ 0.17 $ (0.13 ) HARSCO CORPORATION
CONSOLIDATED BALANCE SHEETS (Unaudited)(In thousands) June 30
2021December 31
2020ASSETS Current assets: Cash and cash equivalents $ 77,870 $ 76,454 Restricted cash 4,417 3,215 Trade accounts receivable, net 424,185 407,390 Other receivables 38,316 34,253 Inventories 157,616 173,013 Current portion of contract assets 85,236 54,754 Prepaid expenses 58,416 56,099 Other current assets 15,300 10,645 Total current assets 861,356 815,823 Property, plant and equipment, net 672,138 668,209 Right-of-use assets, net 94,276 96,849 Goodwill 903,345 902,074 Intangible assets, net 422,906 438,565 Deferred income tax assets 10,626 15,274 Other assets 57,452 56,493 Total assets $ 3,022,099 $ 2,993,287 LIABILITIES Current liabilities: Short-term borrowings $ 7,202 $ 7,450 Current maturities of long-term debt 8,514 13,576 Accounts payable 206,180 218,039 Accrued compensation 49,960 45,885 Income taxes payable 7,856 3,499 Current portion of advances on contracts 54,017 39,917 Current portion of operating lease liabilities 24,056 24,862 Other current liabilities 193,128 184,727 Total current liabilities 550,913 537,955 Long-term debt 1,327,588 1,271,189 Retirement plan liabilities 193,421 231,335 Advances on contracts 15,934 45,017 Operating lease liabilities 68,484 69,860 Environmental liabilities 29,046 29,424 Deferred tax liabilities 31,312 40,653 Other liabilities 56,018 54,455 Total liabilities 2,272,716 2,279,888 HARSCO CORPORATION STOCKHOLDERS’ EQUITY Common stock 144,836 144,288 Additional paid-in capital 209,992 204,078 Accumulated other comprehensive loss (626,206 ) (645,741 ) Retained earnings 1,811,282 1,797,759 Treasury stock (846,401 ) (843,230 ) Total Harsco Corporation stockholders’ equity 693,503 657,154 Noncontrolling interests 55,880 56,245 Total equity 749,383 713,399 Total liabilities and equity $ 3,022,099 $ 2,993,287 HARSCO CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)Three Months Ended
June 30Six Months Ended
June 30(In thousands) 2021 2020 2021 2020 Cash flows from operating activities: Net income (loss) $ 15,080 $ (9,455 ) $ 16,645 $ (8,228 ) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation 32,156 31,579 64,904 61,512 Amortization 8,816 9,115 17,783 15,672 Deferred income tax benefit (2,986 ) (5,067 ) (6,407 ) (655 ) Equity in (income) loss of unconsolidated entities, net 76 (71 ) 195 (167 ) Loss (gain) on sale from discontinued business — 91 — (18,371 ) Loss on early extinguishment of debt — — 2,668 — Other, net (3,277 ) (237 ) (2,149 ) (2,244 ) Changes in assets and liabilities, net of acquisitions and dispositions of businesses: Accounts receivable (7,038 ) 38,584 (23,484 ) 16,534 Inventories 15,049 (254 ) 15,456 (16,666 ) Contract assets (18,796 ) (8,623 ) (37,866 ) (28,934 ) Right-of-use assets 7,129 8,405 13,897 11,834 Accounts payable (4,899 ) (20,427 ) (13,491 ) (8,119 ) Accrued interest payable 7,183 6,951 (137 ) (2,940 ) Accrued compensation 6,242 (2,015 ) 4,701 (4,767 ) Advances on contracts (3,653 ) (4,628 ) (13,351 ) 35,836 Operating lease liabilities (6,756 ) (8,238 ) (13,506 ) (11,596 ) Retirement plan liabilities, net (8,591 ) (3,492 ) (27,858 ) (19,026 ) Income taxes payable - Gain on sale of discontinued businesses — (376 ) — 3,467 Other assets and liabilities 968 1,215 15,530 (1,621 ) Net cash provided by operating activities 36,703 33,057 13,530 21,521 Cash flows from investing activities: Purchases of property, plant and equipment (41,264 ) (23,319 ) (68,646 ) (51,213 ) Purchase of businesses, net of cash acquired — (438,447 ) — (442,604 ) Proceeds from sale of discontinued business, net — — — 37,219 Proceeds from sales of assets 6,180 1,767 10,042 3,952 Expenditures for intangible assets (64 ) 16 (132 ) (42 ) Proceeds from note receivable 6,400 — 6,400 — Net proceeds (payments) from settlement of foreign currency forward exchange contracts 449 (10,562 ) (978 ) 765 Other investing activities, net 87 59 133 59 Net cash used by investing activities (28,212 ) (470,486 ) (53,181 ) (451,864 ) Cash flows from financing activities: Short-term borrowings, net 3,869 (1,020 ) 4,444 2,677 Current maturities and long-term debt: Additions 30,645 475,726 465,518 528,601 Reductions (38,951 ) (23,697 ) (413,481 ) (62,406 ) Dividends paid to noncontrolling interests (3,094 ) — (3,094 ) — Stock-based compensation - Employee taxes paid (687 ) (656 ) (3,172 ) (4,093 ) Deferred financing costs (1,303 ) (296 ) (7,828 ) (1,928 ) Other financing activities, net (201 ) (1,371 ) (601 ) (1,371 ) Net cash provided (used) by financing activities (9,722 ) 448,686 41,786 461,480 Effect of exchange rate changes on cash and cash equivalents, including restricted cash 1,193 4,006 483 (6,818 ) Net increase (decrease) in cash and cash equivalents, including restricted cash (38 ) 15,263 2,618 24,319 Cash and cash equivalents, including restricted cash, at beginning of period 82,325 68,788 79,669 59,732 Cash and cash equivalents, including restricted cash, at end of period $ 82,287 $ 84,051 $ 82,287 $ 84,051 HARSCO CORPORATION
REVIEW OF OPERATIONS BY SEGMENT (Unaudited)Three Months Ended Three Months Ended June 30, 2021 June 30, 2020 (In thousands) Revenues Operating
Income (Loss)Revenues Operating
Income (Loss)Harsco Environmental $ 272,546 $ 30,223 $ 203,991 $ 13,563 Harsco Clean Earth 196,128 7,386 161,579 (202 ) Harsco Rail 101,146 8,912 81,711 8,631 Corporate — (10,302 ) — (20,124 ) Consolidated Totals $ 569,820 $ 36,219 $ 447,281 $ 1,868 Six Months Ended Six Months Ended June 30, 2021 June 30, 2020 (In thousands) Revenues Operating
Income (Loss)Revenues Operating
Income (Loss)Harsco Environmental $ 530,532 $ 56,158 $ 445,550 $ 24,083 Harsco Clean Earth (a) 385,407 10,564 240,391 4,043 Harsco Rail 182,736 13,576 160,181 15,103 Corporate — (19,255 ) — (38,480 ) Consolidated Totals $ 1,098,675 $ 61,043 $ 846,122 $ 4,749
(a) The Company's acquisition of ESOL closed on April 6, 2020.HARSCO CORPORATION
RECONCILIATION OF ADJUSTED DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS TO DILUTED EARNINGS (LOSS) PER SHARE FROM CONTINUING OPERATIONS AS REPORTED (Unaudited)Three Months Ended Six Months Ended June 30 June 30 2021 2020 2021 2020 Diluted earnings (loss) per share from continuing operations as reported $ 0.18 $ (0.14 ) $ 0.20 $ (0.25 ) Corporate unused debt commitment fees, amendment fees and loss on extinguishment of debt (a) — 0.02 0.07 0.02 Corporate strategic costs (b) 0.02 — 0.02 — Corporate acquisition and integration costs (c) — 0.22 — 0.39 Harsco Environmental Segment severance costs (d) — — — 0.07 Taxes on above unusual items (e) (0.01 ) (0.05 ) (0.02 ) (0.08 ) Adjusted diluted earnings per share from continuing operations, including acquisition amortization expense 0.20 (g) 0.05 0.27 0.15 Acquisition amortization expense, net of tax (f) 0.08 0.08 0.16 0.14 Adjusted diluted earnings per share from continuing operations $ 0.28 $ 0.13 $ 0.43 $ 0.29 (a) Costs at Corporate 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) and costs associated with amending the Company's existing Senior secured Credit Facilities, to increase the net debt to consolidated adjusted EBITDA covenant ratio (Q2 2020 $1.4 million pre-tax; six months 2020 $1.9 million pre-tax). (b) Certain strategic costs incurred at Corporate associated with supporting and executing the Company's growth strategy (Q2 and six months 2021 $1.7 million pre-tax). (c) Acquisition and integration costs at Corporate (Q2 2020 $17.2 million pre-tax; six months 2020 $30.9 million pre-tax). (d) Harsco Environmental Segment severance costs (six months 2020 $5.2 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 $8.2 million pre-tax and $16.4 million pre-tax for Q2 and six months 2021, respectively; and $8.4 million pre-tax and $14.3 million pre-tax for Q2 and six months 2020, respectively. (g) Does not total due to rounding. The Company’s management believes Adjusted diluted earnings per share from continuing operations, which is a non-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. 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. 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. This measure should be considered in addition to, rather than as a substitute for, other information provided in accordance with GAAP.
HARSCO CORPORATION
RECONCILIATION OF ADJUSTED DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS TO DILUTED LOSS PER SHARE FROM CONTINUING OPERATIONS AS REPORTED (Unaudited)Three Months
Ended
March 312021 Diluted income per share from continuing operations as reported $ 0.02 Corporate unused debt commitment fees, amendment fees and loss on extinguishment of debt (a) 0.07 Taxes on above unusual items (b) (0.01 ) Adjusted diluted loss per share from continuing operations, including acquisition amortization expense 0.07 (d) Acquisition amortization expense, net of tax (c) 0.08 Adjusted diluted earnings per share from continuing operations $ 0.15 (a) Costs at Corporate 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 ($5.3 million pre-tax). (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) Acquisition amortization expense was $8.2 million pre-tax. (d) Does not total due to rounding. The Company’s management believes Adjusted diluted earnings per share from continuing operations, which is a non-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. 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. 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. This measure should be considered in addition to, rather than as a substitute for, other information provided in accordance with GAAP.
HARSCO CORPORATION
RECONCILIATION OF PROJECTED ADJUSTED DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS TO DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS (Unaudited)Projected
Three Months Ending
September 30Projected
Twelve Months Ending
December 312021 2021 Low High Low High Diluted earnings per share from continuing operations $ 0.15 $ 0.21 $ 0.42 $ 0.57 Corporate unused debt commitment fees, amendment fees and loss on extinguishment of debt — — 0.07 0.07 Corporate strategic costs — — 0.02 0.02 Taxes on above unusual items — — (0.02 ) (0.02 ) Adjusted diluted earnings per share from continuing operations, including acquisition amortization expense 0.15 0.21 0.49 0.64 Estimated acquisition amortization expense, net of tax 0.08 0.08 0.33 0.33 Adjusted diluted earnings per share from continuing operations $ 0.23 $ 0.29 $ 0.82 $ 0.96 (a)
(a) Does not total due to rounding.The Company’s management believes Adjusted diluted earnings per share from continuing operations, which is a non-GAAP financial measure, is useful to investors because it provides an overall understanding of the Company’s historical and future prospects. 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. 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. This measure should be considered in addition to, rather than as a substitute for, other information provided in accordance with GAAP.
HARSCO CORPORATION
RECONCILIATION OF ADJUSTED EBITDA BY SEGMENT TO OPERATING INCOME (LOSS) AS REPORTED BY SEGMENT (Unaudited)(In thousands) Harsco
EnvironmentalHarsco Clean
EarthHarsco
RailCorporate Consolidated
TotalsThree Months Ended June 30, 2021: Operating income (loss) as reported $ 30,223 $ 7,386 $ 8,912 $ (10,302 ) $ 36,219 Corporate strategic costs — — — 1,681 1,681 Operating income (loss) excluding unusual items 30,223 7,386 8,912 (8,621 ) 37,900 Depreciation 25,550 4,905 1,207 494 32,156 Amortization 2,035 6,063 85 — 8,183 Adjusted EBITDA $ 57,808 $ 18,354 $ 10,204 $ (8,127 ) $ 78,239 Revenues as reported $ 272,546 $ 196,128 $ 101,146 $ 569,820 Adjusted EBITDA margin (%) 21.2 % 9.4 % 10.1 % 13.7 % Three Months Ended June 30, 2020: Operating income (loss) as reported $ 13,563 $ (202 ) $ 8,631 $ (20,124 ) $ 1,868 Corporate acquisition and integration costs — — — 17,176 17,176 Operating income (loss) excluding unusual items 13,563 (202 ) 8,631 (2,948 ) 19,044 Depreciation 24,663 5,138 1,257 521 31,579 Amortization 1,921 6,347 83 — 8,351 Adjusted EBITDA $ 40,147 $ 11,283 $ 9,971 $ (2,427 ) $ 58,974 Revenues as reported $ 203,991 $ 161,579 $ 81,711 $ 447,281 Adjusted EBITDA margin (%) 19.7 % 7.0 % 12.2 % 13.2 % Consolidated Adjusted EBITDA is a non-GAAP financial measure and consists of income from continuing operations adjusted to add back income tax expense; equity income of unconsolidated entities, net; net interest expense; defined benefit pension income (expense); unused debt commitment fees, amendment fees and loss on extinguishment of debt; and depreciation and amortization (excluding amortization of deferred financing costs); and excludes unusual items. Segment Adjusted EBITDA consists of operating income from continuing operations adjusted to exclude unusual items and add back depreciation and amortization (excluding amortization of deferred financing costs). The sum of the Segments’ Adjusted EBITDA and Corporate Adjusted EBITDA equals Consolidated Adjusted EBITDA. The Company‘s management believes Adjusted EBITDA is meaningful to investors because management reviews Adjusted EBITDA in assessing and evaluating performance. However, this measure should be considered in addition to, rather than as a substitute for, net income from continuing operations, operating income from continuing operations and other information provided in accordance with GAAP. The Company's method of calculating Adjusted EBITDA may differ from methods used by other companies and, as a result, Adjusted EBITDA may not be comparable to other similarly titled measures disclosed by other companies.
HARSCO CORPORATION
RECONCILIATION OF ADJUSTED EBITDA BY SEGMENT TO OPERATING INCOME (LOSS) AS REPORTED BY SEGMENT (Unaudited)(In thousands) Harsco
EnvironmentalHarsco Clean
Earth (a)Harsco
RailCorporate Consolidated
TotalsSix Months Ended June 30, 2021: Operating income (loss) as reported $ 56,158 $ 10,564 $ 13,576 $ (19,255 ) $ 61,043 Corporate strategic costs — — — 1,681 1,681 Operating income (loss) excluding unusual items 56,158 10,564 13,576 (17,574 ) 62,724 Depreciation 51,267 10,242 2,418 977 64,904 Amortization 4,083 12,146 170 — 16,399 Adjusted EBITDA $ 111,508 $ 32,952 $ 16,164 $ (16,597 ) $ 144,027 Revenues as reported $ 530,532 $ 385,407 $ 182,736 $ 1,098,675 Adjusted EBITDA margin (%) 21.0 % 8.5 % 8.8 % 13.1 % Six Months Ended June 30, 2020: Operating income (loss) as reported $ 24,083 $ 4,043 $ 15,103 $ (38,480 ) $ 4,749 Corporate acquisition and integration costs — — — 30,939 30,939 Harsco Environmental Segment severance costs 5,160 — — — 5,160 Operating income (loss) excluding unusual items 29,243 4,043 15,103 (7,541 ) 40,848 Depreciation 50,038 7,759 2,472 1,034 61,303 Amortization 3,857 10,245 167 — 14,269 Adjusted EBITDA $ 83,138 $ 22,047 $ 17,742 $ (6,507 ) $ 116,420 Revenues as reported $ 445,550 $ 240,391 $ 160,181 $ 846,122 Adjusted EBITDA margin (%) 18.7 % 9.2 % 11.1 % 13.8 %
(a) The Company's acquisition of ESOL closed on April 6, 2020.Consolidated Adjusted EBITDA is a non-GAAP financial measure and consists of income from continuing operations adjusted to add back income tax expense; equity income of unconsolidated entities, net; net interest expense; defined benefit pension income (expense); unused debt commitment fees, amendment fees and loss on extinguishment of debt; and depreciation and amortization (excluding amortization of deferred financing costs); and excludes unusual items. Segment Adjusted EBITDA consists of operating income from continuing operations adjusted to exclude unusual items and add back depreciation and amortization (excluding amortization of deferred financing costs). The sum of the Segments’ Adjusted EBITDA and Corporate Adjusted EBITDA equals Consolidated Adjusted EBITDA. The Company‘s management believes Adjusted EBITDA is meaningful to investors because management reviews Adjusted EBITDA in assessing and evaluating performance. However, this measure should be considered in addition to, rather than as a substitute for, net income from continuing operations, operating income from continuing operations and other information provided in accordance with GAAP. The Company's method of calculating Adjusted EBITDA may differ from methods used by other companies and, as a result, Adjusted EBITDA may not be comparable to other similarly titled measures disclosed by other companies.
HARSCO CORPORATION
RECONCILIATION OF ADJUSTED EBITDA BY SEGMENT TO OPERATING INCOME (LOSS) AS REPORTED BY SEGMENT (Unaudited)(In thousands) Harsco
EnvironmentalHarsco Clean
EarthHarsco
RailCorporate Consolidated
TotalsThree Months Ended March 31, 2021: Operating income (loss) as reported $ 25,935 $ 3,178 $ 4,664 $ (8,953 ) $ 24,824 Depreciation 25,717 5,337 1,211 483 32,748 Amortization 2,048 6,083 85 — 8,216 Adjusted EBITDA $ 53,700 $ 14,598 $ 5,960 $ (8,470 ) $ 65,788 Revenues as reported $ 257,986 $ 189,279 $ 81,590 $ 528,855 Adjusted EBITDA margin (%) 20.8 % 7.7 % 7.3 % 12.4 % Consolidated Adjusted EBITDA is a non-GAAP financial measure and consists of income from continuing operations adjusted to add back income tax expense; equity income of unconsolidated entities, net; net interest expense; defined benefit pension income (expense); unused debt commitment fees, amendment fees and loss on extinguishment of debt; and depreciation and amortization (excluding amortization of deferred financing costs); and excludes unusual items. Segment Adjusted EBITDA consists of operating income from continuing operations adjusted to exclude unusual items and add back depreciation and amortization (excluding amortization of deferred financing costs). The sum of the Segments’ Adjusted EBITDA and Corporate Adjusted EBITDA equals Consolidated Adjusted EBITDA. The Company‘s management believes Adjusted EBITDA is meaningful to investors because management reviews Adjusted EBITDA in assessing and evaluating performance. However, this measure should be considered in addition to, rather than as a substitute for, net income from continuing operations, operating income from continuing operations and other information provided in accordance with GAAP. The Company's method of calculating Adjusted EBITDA may differ from methods used by other companies and, as a result, Adjusted EBITDA may not be comparable to other similarly titled measures disclosed by other companies.
HARSCO CORPORATION
RECONCILIATION OF CONSOLIDATED ADJUSTED EBITDA TO CONSOLIDATED INCOME (LOSS) FROM CONTINUING OPERATIONS AS REPORTED (Unaudited)Three Months Ended
June 30(In thousands) 2021 2020 Consolidated income (loss) from continuing operations $ 16,155 $ (9,603 ) Add back (deduct): Equity in (income) loss of unconsolidated entities, net 76 (71 ) Income tax (benefit) expense 8,564 (2,304 ) Defined benefit pension income (3,974 ) (1,723 ) Unused debt commitment fees, amendment fees and loss on extinguishment of debt 50 1,432 Interest expense 15,986 14,953 Interest income (638 ) (816 ) Depreciation 32,156 31,579 Amortization 8,183 8,351 Unusual items: Corporate strategic costs 1,681 — Corporate acquisition and integration costs — 17,176 Consolidated Adjusted EBITDA $ 78,239 $ 58,974 Consolidated Adjusted EBITDA is a non-GAAP financial measure and consists of income from continuing operations adjusted to add back income tax expense; equity income of unconsolidated entities, net; net interest expense; defined benefit pension income (expense); unused debt commitment fees, amendment fees and loss on extinguishment of debt; and depreciation and amortization (excluding amortization of deferred financing costs); and excludes unusual items. Segment Adjusted EBITDA consists of operating income from continuing operations adjusted to exclude unusual items and add back depreciation and amortization (excluding amortization of deferred financing costs). The sum of the Segments’ Adjusted EBITDA and Corporate Adjusted EBITDA equals Consolidated Adjusted EBITDA. The Company‘s management believes Adjusted EBITDA is meaningful to investors because management reviews Adjusted EBITDA in assessing and evaluating performance. However, this measure should be considered in addition to, rather than as a substitute for, net income from continuing operations, operating income from continuing operations and other information provided in accordance with GAAP. The Company's method of calculating Adjusted EBITDA may differ from methods used by other companies and, as a result, Adjusted EBITDA may not be comparable to other similarly titled measures disclosed by other companies.
HARSCO CORPORATION
RECONCILIATION OF CONSOLIDATED ADJUSTED EBITDA TO CONSOLIDATED INCOME (LOSS) FROM CONTINUING OPERATIONS AS REPORTED (Unaudited)Six Months Ended
June 30(In thousands) 2021 2020 Consolidated income (loss) from continuing operations 19,047 $ (17,299 ) Add back (deduct): Equity in (income) loss of unconsolidated entities, net 195 (167 ) Income tax expense (benefit) 12,793 (2,986 ) Defined benefit pension income (7,927 ) (3,312 ) Unused debt commitment and amendment fees 5,308 1,920 Interest expense 32,850 27,602 Interest income (1,223 ) (1,009 ) Depreciation 64,904 61,303 Amortization 16,399 14,269 Unusual items: Corporate strategic costs 1,681 — Corporate acquisition and integration costs — 30,939 Harsco Environmental Segment severance costs — 5,160 Consolidated Adjusted EBITDA $ 144,027 $ 116,420 Consolidated Adjusted EBITDA is a non-GAAP financial measure and consists of income from continuing operations adjusted to add back income tax expense; equity income of unconsolidated entities, net; net interest expense; defined benefit pension income (expense); unused debt commitment fees, amendment fees and loss on extinguishment of debt; and depreciation and amortization (excluding amortization of deferred financing costs); and excludes unusual items. Segment Adjusted EBITDA consists of operating income from continuing operations adjusted to exclude unusual items and add back depreciation and amortization (excluding amortization of deferred financing costs). The sum of the Segments’ Adjusted EBITDA and Corporate Adjusted EBITDA equals Consolidated Adjusted EBITDA. The Company‘s management believes Adjusted EBITDA is meaningful to investors because management reviews Adjusted EBITDA in assessing and evaluating performance. However, this measure should be considered in addition to, rather than as a substitute for, net income from continuing operations, operating income from continuing operations and other information provided in accordance with GAAP. The Company's method of calculating Adjusted EBITDA may differ from methods used by other companies and, as a result, Adjusted EBITDA may not be comparable to other similarly titled measures disclosed by other companies.
HARSCO CORPORATION
RECONCILIATION OF CONSOLIDATED ADJUSTED EBITDA TO CONSOLIDATED INCOME FROM CONTINUING OPERATIONS AS REPORTED (Unaudited)Three Months
Ended
March 31(In thousands) 2021 Consolidated income from continuing operations $ 2,892 Add back (deduct): Equity in income of unconsolidated entities, net 119 Income tax expense 4,229 Defined benefit pension income (3,953 ) Unused debt commitment fees, amendment fees and loss on extinguishment of debt 5,258 Interest expense 16,864 Interest income (585 ) Depreciation 32,748 Amortization 8,216 Consolidated Adjusted EBITDA $ 65,788 Consolidated Adjusted EBITDA is a non-GAAP financial measure and consists of income from continuing operations adjusted to add back income tax expense; equity income of unconsolidated entities, net; net interest expense; defined benefit pension income (expense); unused debt commitment fees, amendment fees and loss on extinguishment of debt; and depreciation and amortization (excluding amortization of deferred financing costs); and excludes unusual items. Segment Adjusted EBITDA consists of operating income from continuing operations adjusted to exclude unusual items and add back depreciation and amortization (excluding amortization of deferred financing costs). The sum of the Segments’ Adjusted EBITDA and Corporate Adjusted EBITDA equals Consolidated Adjusted EBITDA. The Company‘s management believes Adjusted EBITDA is meaningful to investors because management reviews Adjusted EBITDA in assessing and evaluating performance. However, this measure should be considered in addition to, rather than as a substitute for, net income from continuing operations, operating income from continuing operations and other information provided in accordance with GAAP. The Company's method of calculating Adjusted EBITDA may differ from methods used by other companies and, as a result, Adjusted EBITDA may not be comparable to other similarly titled measures disclosed by other companies.
HARSCO CORPORATION
RECONCILIATION OF PROJECTED CONSOLIDATED ADJUSTED EBITDA TO PROJECTED CONSOLIDATED INCOME FROM CONTINUING OPERATIONS (Unaudited)Projected
Three Months Ending
September 30Projected
Twelve Months Ending
December 312021 2021 (In millions) Low High Low High Consolidated income from continuing operations $ 13 $ 19 $ 46 $ 58 Add back: Income tax expense 5 7 26 30 Net interest 16 15 63 62 Defined benefit pension income (4 ) (4 ) (14 ) (14 ) Depreciation and amortization 44 44 175 175 Consolidated Adjusted EBITDA $ 75 (a) $ 81 $ 295 (a) $ 310 (a)
(a) Does not total due to rounding.Consolidated Adjusted EBITDA is a non-GAAP financial measure and consists of income from continuing operations adjusted to add back income tax expense; equity income of unconsolidated entities, net; net interest expense; defined benefit pension income (expense); unused debt commitment fees, amendment fees and loss on extinguishment of debt; and depreciation and amortization (excluding amortization of deferred financing costs); and excludes unusual items. Segment Adjusted EBITDA consists of operating income from continuing operations adjusted to exclude unusual items and add back depreciation and amortization (excluding amortization of deferred financing costs). The sum of the Segments’ Adjusted EBITDA and Corporate Adjusted EBITDA equals Consolidated Adjusted EBITDA. The Company‘s management believes Adjusted EBITDA is meaningful to investors because management reviews Adjusted EBITDA in assessing and evaluating performance. However, this measure should be considered in addition to, rather than as a substitute for, net income from continuing operations, operating income from continuing operations and other information provided in accordance with GAAP. The Company's method of calculating Adjusted EBITDA may differ from methods used by other companies and, as a result, Adjusted EBITDA may not be comparable to other similarly titled measures disclosed by other companies.
HARSCO CORPORATION
RECONCILIATION OF FREE CASH FLOW TO NET CASH PROVIDED BY OPERATING ACTIVITIES (Unaudited)Three Months Ended Six Months Ended June 30 June 30 (In thousands) 2021 2020 2021 2020 Net cash provided by operating activities $ 36,703 $ 33,057 $ 13,530 $ 21,521 Less capital expenditures (41,264 ) (23,319 ) (68,646 ) (51,213 ) Less expenditures for intangible assets (64 ) 16 (132 ) (42 ) Plus capital expenditures for strategic ventures (a) 926 225 1,798 1,364 Plus total proceeds from sales of assets (b) 6,180 1,767 10,042 3,952 Plus transaction-related expenditures (c) 3,920 5,961 18,004 15,940 Plus taxes paid on sale of business — 376 — 376 Free cash flow $ 6,401 $ 18,083 $ (25,404 ) $ (8,102 ) (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. The Company's management believes that Free cash flow, which is a non-GAAP financial measure, is meaningful to investors because management reviews cash flows generated from operations less capital expenditures net of asset sales proceeds and transaction-related expenditures and income taxes 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. This measure should be considered in addition to, rather than as a substitute for, other information provided in accordance with GAAP.
HARSCO CORPORATION
RECONCILIATION OF PROJECTED FREE CASH FLOW TO PROJECTED NET CASH PROVIDED BY OPERATING ACTIVITIES (Unaudited)Projected
Twelve Months Ending
December 312021 (In millions) Low High Net cash provided by operating activities $ 167 $ 207 Less capital expenditures (162 ) (183 ) Plus total proceeds from asset sales and capital expenditures for strategic ventures 12 13 Plus transaction related expenditures 18 18 Free cash flow 35 55 Add growth capital expenditures 60 60 Free cash flow before growth capital expenditures $ 95 $ 115 The Company's management believes that Free cash flow, which is a non-GAAP financial measure, is meaningful to investors because management reviews cash flows generated from operations less capital expenditures net of asset sales proceeds and transaction-related expenditures and income taxes 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. This measure should be considered in addition to, rather than as a substitute for, other information provided in accordance with GAAP.
Investor Contact
David Martin
717.612.5628
damartin@harsco.comMedia Contact
Jay Cooney
717.730.3683
jcooney@harsco.com
- Second Quarter Revenues Totaled $570 Million, an Increase of 27 Percent and 8 Percent, Respectively, From the Prior Year and Sequential Quarters