HARRISBURG, Pa., April 28, 2011 (GLOBE NEWSWIRE) -- Worldwide industrial services and engineered products company Harsco Corporation (NYSC:HSC) today reported first quarter 2011 results from continuing operations.
First Quarter 2011 Highlights
First quarter 2011 diluted earnings per share from continuing operations were $0.15, compared with $0.10 per share in the first quarter of last year. Income from continuing operations was $13.6 million, compared with $9.7 million in the first quarter last year. Sales increased by 5 percent in the quarter to $779 million from $742 million in last year's first quarter. Foreign currency translation increased sales by approximately $19 million when compared with the first quarter last year, but did not have a meaningful impact on operating income.
Commenting on the Company's results, Harsco Chairman, President and Chief Executive Officer Salvatore D. Fazzolari said, "We are encouraged by the balanced performance of our operations in the first quarter of 2011. This is a good start to the year. Despite the still-fragile domestic economy and continued uncertainties throughout the major global economies in which we operate, all four of our business segments performed well. The first quarter results benefited by approximately $3 million, or $0.03 per share, from the timing of deliveries within our Harsco Rail and Harsco Industrial businesses. These deliveries were planned for the second quarter, but for various reasons were realized in the first quarter.
"While we are encouraged by these results, it remains prudent for us to view the near-term outlook with a degree of caution, particularly as we have yet to see measurable improvement in our Infrastructure Segment's principal end-markets of the U.S., U.K. and Western Europe. As such, we are slightly increasing our previous full-year 2011 earnings guidance from $1.25 to $1.35 diluted earnings per share from continuing operations to $1.30 to $1.40.
"As we have previously communicated, our second quarter results will be negatively impacted by the timing of shipments within our Harsco Rail group being weighted more towards the second half of the year. Furthermore, due to the economic uncertainties we continue to face in key end-markets, and given that the previously mentioned first quarter benefit from the acceleration of deliveries will have the opposite effect in the second quarter, our present outlook is for second quarter 2011 earnings from continuing operations in the range of $0.34 to $0.39 per share, compared with $0.40 per share in the second quarter of 2010. I should note also that last year's second quarter benefited from an approximately $0.03 per share gain largely on the sale of assets that is not expected to be repeated in this year's second quarter.
"We expect our prospects for the full year will be clearer at the end of the second quarter, particularly for our Harsco Infrastructure Segment, at which point we should have further visibility for the remainder of 2011."
First Quarter Business Review
Harsco Metals & Minerals
Sales in the first quarter increased approximately $47 million to $392 million, up 14 percent from $344 million in last year's comparable quarter. Foreign currency translation increased sales in the quarter by $12 million, but had only a minimal effect on operating income. Operating income in the quarter increased by 48 percent to $28.6 million, compared with $19.3 million in the first quarter of last year. Operating margins in the first quarter of 2011 were 7.3 percent, compared with 5.6 percent in the first quarter last year.
Results in the quarter benefited from increased global steel production, new contract start-ups, the Company's continued cost control initiatives, and increased market prices for recovered metallics.
Looking ahead, the full-year outlook for this Segment remains favorable. Global steel production is expected to remain at or near current levels and new contract bidding activity throughout the world remains strong.
Sales in the first quarter increased approximately 4 percent to $262 million from $251 million in the first quarter last year. Foreign currency translation increased sales by approximately $5 million in the quarter, when compared with the first quarter of 2010. An operating loss of $17.5 million was incurred in the quarter, compared with an operating loss of $19.3 million in the first quarter of last year.
As this Segment continues to successfully implement the major restructuring plan announced in the fourth quarter of last year, the Company expects to achieve its anticipated savings of approximately $40 million in 2011, and full annualized savings of $60 million starting in 2012, as previously announced. Average rental rates and utilization rates appear to have bottomed out sequentially. Nevertheless, uncertainties and challenges remain in major end-markets, particularly in the U.S., U.K. and Western Europe. The prospects for the full year should be clearer at the end of the second quarter of this year.
As expected, sales in the first quarter of 2011 decreased to $63 million, down approximately 34 percent from sales of $95 million in last year's first quarter. Consequently, operating income of $8.1 million was lower than the $20.4 million in last year's comparable quarter, which was also as expected. Likewise, operating margins of 13.0 percent were lower, compared with 21.4 percent in last year's first quarter. It should be noted that a key shipment was pulled forward for delivery in the first quarter of 2011 that had been planned for the second quarter.
To reiterate previous comments made at the Company's Annual Analysts Conference in December and again when the Company's fourth quarter 2010 results were reported on January 27, 2011, the quarterly results of Harsco Rail in 2011 will again be affected by the timing of unit deliveries as they are completed. Order deliveries in 2011 will be significantly weighted in the second half of the year compared with the first half in 2010. Overall, the Company expects another year of strong results from the Rail Segment.
Sales in the quarter increased by approximately 21 percent to $63 million, from last year's first quarter sales of $52 million. Likewise, operating income of $10.7 million was 27 percent greater than last year's $8.4 million. Operating margins of 16.9 percent in the quarter were 80 basis points higher than the operating margins of 16.1 percent in the first quarter of 2010.
The outlook for this Segment remains favorable. Demand for this Segment's engineered products remains strong and recently announced joint venture agreements in Australia and Brazil should contribute to longer-term growth.
Liquidity, Capital Resources and Other Matters
Net cash provided by operating activities for the first quarter of 2011 was $13 million, compared with $30 million for the prior year. Capital expenditures in the first quarter of 2011 were $67 million, compared with $30 million for the same period last year. The increase in capital expenditures is due to recent contract wins, principally in the Metals & Minerals Segment where bidding activity continues to be very strong.
At the end of the quarter, the Company's balance sheet debt was $919 million, up slightly from the December 31, 2010 amount of $885 million. The debt-to-capital ratio at March 31, 2011 was 38.0 percent, up slightly from 37.6 percent at December 31, 2010, which was the Company's lowest level since 1998.
Economic Value added (EVA®) improved in the first quarter of 2011 over the comparable 2010 period, due principally to better earnings performance.
For the first quarter of 2011, income from discontinued operations was a loss after tax of $0.8 million, or $0.01 per diluted share, compared with income of $0.3 million in the first quarter of 2010 due to an income tax benefit.
Forward Looking Statements
This news release contains forward-looking statements based on management's current expectations, estimates and projections. All statements that address expectations or projections about the future, including statements about the company's strategy for growth, product development, market position, expected expenditures and financial results are forward-looking statements. Some of the forward-looking statements may be identified by words like "may," "could," "believes," "expects," "anticipates," "plans," "intends," "projects," "indicates," and similar expressions. These statements are not guarantees of future performance and involve a number of risks, uncertainties and assumptions. Many factors, including those discussed more fully elsewhere in this release and in documents filed with the Securities and Exchange Commission by Harsco, particularly its latest annual report on Form 10-K and quarterly report on Form 10-Q, as well as others, could cause results to differ materially from those stated. These factors include, but are not limited to, changes in the worldwide business environment in which the Company operates, including general economic conditions; changes in currency exchange rates, interest rates, commodity and fuel costs and capital costs; changes in the performance of the equity and debt 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; changes in governmental laws and regulations, including environmental, tax and import tariff standards; market and competitive changes, including pricing pressures, market demand and acceptance for new products, services, and technologies; 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; the seasonal nature of the Company's business; our ability to successfully enter into new contracts and complete new acquisitions or joint ventures in the timeframe contemplated or at all; the recent global financial and credit crisis, which could result in our customers curtailing development projects, construction, production and capital expenditures, which, in turn, could reduce the demand for our products and services and, accordingly, our sales, margins and profitability; 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; the successful integration of the Company's strategic acquisitions; the amount and timing of repurchases of the Company's common stock, if any; our ability to successfully implement cost-reduction initiatives; and other risk factors listed from time to time in the Company's SEC reports. The Company undertakes no duty to update forward-looking statements.
As previously announced, the Company will hold a conference call today at 10:00 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 . The call can also be accessed by telephone by dialing (800) 611-4920, or (973) 200-3957 for international callers. Enter Conference ID number 57859895. Listeners are advised to dial in at least five minutes prior to the call. Replays will be available via the Harsco website.
Harsco Corporation is a diversified, global industrial services and engineered products company serving major industries that are fundamental to worldwide infrastructure development and economic growth. Harsco's common stock is a component of the S&P MidCap 400 Index and the Russell 1000 Index. Additional information can be found at www.harsco.com.
The Harsco Corporation logo is available at
CONTACT: Investor Contact Eugene M. Truett 717.975.5677 email@example.com Media Contact Kenneth D. Julian 717.730.3683 firstname.lastname@example.org