Harsco Corporation Reports First Quarter 2013 Results

Harsco Corporation Reports First Quarter 2013 Results

Operating Income and EPS Both Grow Despite Lower Revenues

CAMP HILL, Pa., May 9, 2013 (GLOBE NEWSWIRE) -- Diversified global industrial
company Harsco Corporation (NYSE:HSC) today reported first quarter 2013
diluted earnings per share from continuing operations of $0.09, compared with
a U.S. GAAP ("GAAP") loss of $0.36 in the first quarter of 2012. Excluding
special items in the first quarter of 2012, adjusted diluted earnings per
share from continuing operations were $0.07. There were no special items in
the first quarter of 2013. (See Table 1 for a description of the special items
and a reconciliation of GAAP and adjusted results).

CEO Comment

"We delivered better-than-expected financial results despite challenging
industry dynamics in our two largest businesses," said Harsco President and
CEO Patrick Decker. "While we face headwinds in certain markets, we also have
many opportunities to grow in key emerging markets and to serve our customers
with our innovative products and services. We will remain steadfast in our
commitment to Continuous Improvement, disciplined capital allocation and
enhanced cash returns."

Consolidated First Quarter Operating Results

Total revenues were $715 million, compared with $752 million in the prior-year
quarter. The majority of this decline was due to the Company's decision to
exit underperforming contracts in Metals & Minerals and to cease
underperforming operations in certain countries in Infrastructure in 2012.
Foreign currency translation negatively impacted revenues by $12 million.

Operating income from continuing operations was $26 million, compared with a
GAAP operating loss from continuing operations of $13 million in the
prior-year quarter. Excluding special items, adjusted operating income from
continuing operations was $25 million in last year's first quarter. Despite an
unfavorable mix of equipment deliveries in Rail and challenging market
conditions in Metals & Minerals and Infrastructure, the Company increased
operating income margin 30 basis points to 3.6 percent in this year's first
quarter, primarily due to its prior restructuring and cost-reduction actions
in its two largest businesses and operating income growth in the Industrial
segment.

                                                      
Table 1 Special Items                      First Quarter               
                                          2013         2012
GAAP diluted EPS from continuing           $0.09        ($0.36)
operations
Restructuring charges(a)                  --           0.41
Former CEO separation expense(b)          --           0.04
Gains on pension curtailment(c)           --           (0.02)
Adjusted diluted EPS from continuing       $0.09        $0.07
operations
                                                      
(a) Charges resulting from the Company's previously announced restructuring
plans in Infrastructure (1Q 2012 $35.6 million pre-tax).
(b) Separation expense for former CEO (1Q 2012 $4.1 million pre-tax).
(c) Pension curtailment gains in Metals & Minerals (1Q 2012 $1.7 million
pre-tax).

First Quarter Business Review

Harsco Metals & Minerals

Revenues were $337 million, compared with $360 million in the prior-year
quarter. This decline was due principally to exiting certain underperforming
contracts and lower steel production volumes, which were partially offset by
new contracts. Foreign currency translation negatively impacted revenues by $9
million.

Operating income was $20 million, consistent with adjusted operating income of
$20 million in the prior-year quarter. Operating margin increased 20 basis
points to 5.9 percent in this year's quarter. This performance primarily
reflects the Company's prior cost reduction actions, which were offset by
lower steel production volumes.

Harsco Infrastructure

Revenues were $216 million, compared with $238 million in the prior-year
quarter. This decline was due principally to exiting certain countries and
lower industrial maintenance activity in Europe, which were partially offset
by improved equipment rental activity in certain geographies. Foreign currency
translation negatively impacted revenues by $2 million.

Infrastructure's operating loss was $12 million, compared with an adjusted
operating loss of $18 million in the prior-year quarter. This year-over-year
improvement reflects better equipment rental activity, benefits from prior
cost reduction actions and the favorable operating income impact from exiting
certain countries.

Harsco Rail

Revenues increased 5 percent to $72 million from $68 million in the first
quarter of 2012. Operating income was $3 million, compared with $9 million in
the first quarter of 2012. Operating margin was 4.7 percent, compared with
13.7 percent in the prior-year quarter.

Rail's unusually low first quarter margin was primarily due to the mix of
equipment deliveries. As Rail nears completion of its large, multi-year
contract with the China Ministry of Railways, its production content in the
quarter shifted to lower-margin components, consistent with the contract's
structure.

Harsco Industrial

Revenues increased 5 percent to $90 million from $86 million in the prior-year
quarter. Operating income rose 15 percent to $16 million from $14 million.
Operating margin increased 160 basis points to 17.8 percent.

Industrial's performance primarily reflects a favorable overall product mix,
as well as improved demand for industrial boilers and air-cooled heat
exchangers.

Cash Flow

Free cash flow was a use of $38 million, compared with a use of $30 million in
the prior-year period. This cash flow performance reflects higher net cash
from operations; essentially unchanged capital expenditures; but lower
non-core asset disposals compared with last year's quarter. The Company's cash
flow has been strongest historically in the second half of the year.

Second Quarter Outlook

Metals & Minerals' revenues and operating income in the second quarter are
expected to be moderately lower than the prior-year quarter. This is due to
expected year-over-year steel production declines at certain customers and the
carry-over impact of exited contracts. These factors are expected to be
partially offset by growth from higher-return contracts.

Infrastructure's second quarterrevenues and operating results are expected to
be generally in line with the prior-year quarter. This reflects continued
softness in commercial construction, particularly in Western Europe, partially
offset by early-stage improvement in North America.

Rail's second quarter revenues, operating income and operating margin are
expected to grow from the prior-year quarter. This is principally due to
equipment delivery timing and a favorable contracting services mix compared
with the second quarter of 2012.

Industrial's second quarter revenues and operating income are anticipated to
be slightly below the prior-year quarter's strong results. This business
continues to see solid demand for its products, particularly air-cooled heat
exchangers.

The Company expects its effective income tax rate to approximate 32 percent in
the second quarter of 2013. This modest increase from historical levels is due
to losses from operations in certain jurisdictions where tax benefits will not
be able to be recognized, as well as the geographic mix of income. Going
forward, there may be some variability in the reported GAAP tax rate from
quarter to quarter depending on the actual geographic mix of earnings.

Based on the aforementioned factors, the Company expects diluted earnings per
share from continuing operations in the second quarter to range from $0.30 to
$0.35. The Company reported diluted earnings per share from continuing
operations of $0.43, excluding special items, in the second quarter of 2012.

Conference Call

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 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 40780375.
Listeners are advised to dial in at least five minutes prior to the call.

Replays of the webcast will be available via the Investor Relations section of
the Harsco website. Audio replays are available until May 13 by dialing (800)
611-4920, or (973) 200-3957 for international callers. Enter Conference ID
number 40780375

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 the Private Securities Litigation Reform Act of
1995, 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 the Company's outlook for the second quarter of 2013,
management's confidence in and strategies for performance; expectations for
new and existing products, technologies and opportunities; and expectations
regarding growth, revenues, cash flows, earnings and Economic Value Added
("EVA®"). 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 stock 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, tax and import
tariff standards; (5) market and competitive changes, including pricing
pressures, market demand and acceptance for new products, services and
technologies; (6) 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; (7)
the seasonal nature of the Company's business; (8) the Company's ability to
successfully enter into new contracts and complete new acquisitions or joint
ventures in the timeframe contemplated, or at all; (9) the integration of the
Company's strategic acquisitions; (10) the amount and timing of repurchases of
the Company's common stock, if any; (11) 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; (12) the outcome of any
disputes with customers; (13) 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; (14) the Company's ability to successfully implement and receive
the expected benefits of cost-reduction and restructuring initiatives,
including the achievement of expected cost savings in the expected time frame;
(15) risk and uncertainty associated with intangible assets; and (16) 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
the "Risk Factors" section of the Company's Form 10-K for the year ended
December 31, 2012. 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 play a fundamental role in
worldwide economic development, including steel and metals production,
construction, railways and energy. 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.

                                                                 
HARSCO CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
                                                        Three Months Ended
                                                        March 31
(In thousands, except per share amounts)                 2013      2012
Revenues from continuing operations:                              
Service revenues                                         $ 551,155 $ 598,700
Product revenues                                         164,240   153,635
Total revenues                                           715,395   752,335
                                                                 
Costs and expenses from continuing operations:                    
Cost of services sold                                    443,396   483,425
Cost of products sold                                    120,862   110,242
Selling, general and administrative expenses             124,698   129,203
Research and development expenses                        2,196     2,060
Other (income) expense                                   (1,542)   40,092
Total costs and expenses                                 689,610   765,022
                                                                 
Operating income (loss) from continuing operations       25,785    (12,687)
                                                                 
Interest income                                          406       674
Interest expense                                         (11,743)  (12,824)
                                                                 
Income (loss) from continuing operations before income   14,448    (24,837)
taxes and equity income
                                                                 
Income tax expense                                       (4,965)   (4,498)
Equity in income (loss) of unconsolidated entities, net  (14)      169
                                                                 
Income (loss) from continuing operations                 9,469     (29,166)
Discontinued operations:                                          
Loss on disposal of discontinued business                (642)     (650)
Income tax benefit related to discontinued business      245       244
Loss from discontinued operations                        (397)     (406)
Net income (loss)                                        9,072     (29,572)
Less: Net (income) loss attributable to noncontrolling   (1,827)   203
interests
Net income (loss) attributable to Harsco Corporation     $ 7,245   $ (29,369)
                                                                 
Amounts attributable to Harsco Corporation common                 
stockholders:
Income (loss) from continuing operations, net of tax     $ 7,642   $ (28,963)
Loss from discontinued operations, net of tax            (397)     (406)
Net income (loss) attributable to Harsco Corporation     $ 7,245   $ (29,369)
common stockholders
                                                                 
Weighted (average shares of common stock outstanding     80,706    $80,579
Basic earnings (loss) per common share attributable to            
Harsco Corporation common stockholders:
Continuing operations                                    $ 0.09    $ (0.36)
Discontinued operations                                  (0.00)    (0.01)
                                                                 
Basic earnings (loss) per share attributable to Harsco   $ 0.09    $ (0.36)(a)
Corporation common stockholders
                                                                 
Diluted weighted(average shares of common stock          80,930    80,579
outstanding
Diluted earnings (loss) per common share attributable to          
Harsco Corporation common stockholders:
Continuing operations                                    $ 0.09    $ (0.36)
Discontinued operations                                  (0.00)    (0.01)
                                                                 
Diluted earnings (loss) per share attributable to Harsco $ 0.09    $ (0.36)(a)
Corporation common stockholders
(a) Does not total due to rounding.                              
                                                                 

                                                         
HARSCO CORPORATION                                        
CONSOLIDATED BALANCE SHEETS (Unaudited)                   
                                             March 31     December 31
(In thousands)                                2013         2012
ASSETS                                                    
Current assets:                                           
Cash and cash equivalents                     $92,941    $95,250
Trade accounts receivable, net                622,156      600,264
Other receivables                             39,651       39,836
Inventories                                   244,517      236,512
Other current assets                          96,644       94,581
Total current assets                          1,095,909    1,066,443
Property, plant and equipment, net            1,239,668    1,266,225
Goodwill                                      418,565      429,198
Intangible assets, net                        71,425       77,726
Other assets                                  159,487      136,377
Total assets                                  $2,985,054 $2,975,969
LIABILITIES                                               
Current liabilities:                                      
Short-term borrowings                         $10,674    $8,560
Current maturities of long-term debt          5,886        3,278
Accounts payable                              231,608      221,479
Accrued compensation                          74,058       94,398
Income taxes payable                          8,898        10,109
Dividends payable                             16,535       16,520
Insurance liabilities                         20,859       19,434
Advances on contracts                         37,166       47,696
Other current liabilities                     212,310      216,101
Total current liabilities                     617,994      637,575
Long-term debt                                1,010,630    957,428
Deferred income taxes                         19,337       18,880
Insurance liabilities                         64,593       63,248
Retirement plan liabilities                   352,442      385,062
Other liabilities                             45,495       52,152
Total liabilities                             2,110,491    2,114,345
EQUITY                                                    
Harsco Corporation stockholders' equity:                  
Common stock                                  140,211      140,080
Additional paid-in capital                    155,500      152,645
Accumulated other comprehensive loss          (392,934)    (411,168)
Retained earnings                             1,666,184    1,675,490
Treasury stock                                (746,038)    (745,205)
Total Harsco Corporation stockholders' equity 822,923      811,842
Noncontrolling interests                      51,640       49,782
Total equity                                  874,563      861,624
Total liabilities and equity                  $2,985,054 $2,975,969

                                                                 
                                                                 
HARSCO CORPORATION                                                
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)                 
                                                        Three Months Ended
                                                         March 31
(In thousands)                                           2013      2012
                                                                 
Cash flows from operating activities:                             
Net income (loss)                                        $9,072  $(29,572)
Adjustments to reconcile net income (loss) to net cash            
provided (used) by operating activities:
Depreciation                                             61,282    65,454
Amortization                                             4,444     6,488
Deferred income tax benefit                              (1,407)   (7,367)
Equity in (income) loss of unconsolidated entities, net  14        (169)
Harsco 2011/2012 Restructuring Program non-cash          --        12,246
adjustment
Other, net                                               (180)     (9,830)
Changes in assets and liabilities:                                
Accounts receivable                                      (30,108)  212
Inventories                                              (10,757)  (17,269)
Accounts payable                                         13,252    (9,522)
Accrued interest payable                                 5,874     5,552
Accrued compensation                                     (17,725)  (11,760)
Harsco Infrastructure Segment 2010 Restructuring Program (84)      (1,317)
accrual
Harsco 2011/2012 Restructuring Program accrual           (8,054)   (599)
Other assets and liabilities                             (22,208)  (3,973)
                                                                 
Net cash provided (used) by operating activities         3,415     (1,426)
                                                                 
Cash flows from investing activities:                             
Purchases of property, plant and equipment               (53,733)  (52,789)
Proceeds from sales of assets                            10,595    22,488
Other investing activities, net                          2,903     (2,020)
                                                                 
Net cash used by investing activities                    (40,235)  (32,321)
                                                                 
Cash flows from financing activities:                             
Short-term borrowings, net                               4,093     (19,527)
Current maturities and long-term debt:                            
Additions                                                63,719    139,066
Reductions                                               (15,064)  (61,196)
Cash dividends paid on common stock                      (16,536)  (16,499)
Dividends paid to noncontrolling interests               (755)     --
Contributions from noncontrolling interests              857       7,935
Purchase of noncontrolling interests                     (166)     --
Common stock issued - options                            214       542
Other financing activities, net                          --        (2,708)
                                                                 
Net cash provided by financing activities                36,362    47,613
                                                                 
Effect of exchange rate changes on cash                  (1,851)   1,554
                                                                 
Net increase (decrease) in cash and cash equivalents     (2,309)   15,420
                                                                 
Cash and cash equivalents at beginning of period         95,250    121,184
                                                                 
Cash and cash equivalents at end of period               $92,941 $136,604

                                                    
HARSCO CORPORATION
REVIEW OF OPERATIONS BY SEGMENT
(Unaudited)
                                                    
                            Three Months Ended       Three Months Ended
                             March 31, 2013           March 31, 2012
                                                             
(In thousands)               Revenues   Operating     Revenues   Operating
                                        Income (Loss)            Income (Loss)
                                                             
Harsco Metals & Minerals     $337,324 $19,757     $359,951 $22,311
                                                             
Harsco Infrastructure        216,059   (12,016)     237,972   (53,542)
                                                             
Harsco Rail                  71,566    3,342        68,048    9,331
                                                             
Harsco Industrial            90,446    16,136       86,364    13,998
                                                             
General Corporate            --        (1,434)      --        (4,785)
                                                             
Consolidated Totals          $715,395 $25,785     $752,335 $(12,687)
                                                             


HARSCO CORPORATION
REVIEW OF OPERATIONS BY SEGMENT EXCLUDING SPECIAL ITEMS (a) (Unaudited)
(In thousands)
                                                              
          Harsco     Harsco         Harsco    Harsco                Consolidated
         Metals &   Infrastructure Rail      Industrial Corporate  Totals
          Minerals
Three
Months
Ended                                                          
March 31,
2013
Operating
income
(loss),   $19,757  $(12,016)    $3,342  $16,136  $(1,434) $25,785
as
reported
Revenues,
as        $337,324 $216,059     $71,566 $90,446  $--      $715,395
reported
Operating
margin %,
excluding 5.9%       -5.6%          4.7%      17.8%                3.6%
special
items (b)
                                                              
Three
Months
Ended                                                          
March 31,
2012
                                                              
Operating
income
(loss),   $20,390  $(17,962)    $9,331  $13,998  $(586)   $25,171
excluding
special
items
Revenues,
as        $359,951 $237,972     $68,048 $86,364  $--      $752,335
reported
Operating
margin %,
excluding 5.7%       -7.5%          13.7%     16.2%                3.3%
special
items
                                                              
(a)The Company's management believes operating margin excluding special items,
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 special 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.
(b) No special items were excluded in the first quarter of 2013.



HARSCO CORPORATION
RECONCILIATION OF OPERATING INCOME (LOSS) BY SEGMENT EXCLUDING SPECIAL ITEMS (a)
(Unaudited)
(In thousands)
                                                                  
              Harsco     Harsco         Harsco    Harsco                Consolidated
             Metals &   Infrastructure Rail      Industrial Corporate  Totals
              Minerals
Three Months
Ended March                                                        
31, 2013
                                                                  
Operating
income        $19,757  $(12,016)    $3,342  $16,136  $(1,434) $25,785
(loss), as
reported (b)
Revenues, as  $337,324 $216,059     $71,566 $90,446  $--      $715,395
reported
                                                                  

Three Months                                                       
Ended March
31, 2012
                                                                  
Operating
income        $22,311  $(53,542)    $9,331  $13,998  $(4,785) $(12,687)
(loss), as
reported
                                                                  
- 2011/2012
Restructuring (205)     35,580        --       --        74        35,449
Program
charge
- Former CEO
separation    --        --            --       --        4,125     4,125
expense
- Gains on
pension       (1,716)   --            --       --        --        (1,716)
curtailment
Operating
income
(loss),       $20,390  $(17,962)    $9,331  $13,998  $(586)   $25,171
excluding
special items
Revenues, as  $359,951 $237,972     $68,048 $86,364  $--      $752,335
reported

(a)The Company's management believes operating income excluding special items, 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 special
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.
(b)No special items were excluded in the first quarter of 2013.


HARSCO CORPORATION
FREE CASH FLOW (a) (Unaudited)
                                      
                                      Three Months Ended
                                       March 31
(In thousands)                         2013                2012
Net cash provided (used) by operating  $3,415            $(1,426)
activities
Less maintenance capital expenditures  (27,259)           (35,832)
(b)
Less growth capital expenditures (c)   (26,474)           (16,957)
Plus capital expenditures for          2,118              1,283
strategic ventures (d)
Plus total proceeds from sales of      10,595             22,488
assets (e)
Free Cash Flow                         $(37,605)         $(30,444)
(a) The Company's management believes that free cash flow, 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.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.
(b) Maintenance capital expenditures are necessary to sustain the Company's
current revenue streams and include contract renewals.
(c) Growth capital expenditures, for which management has discretion as to
amount, timing and geographic placement, expand the Company's revenue base and
create additional future cash flow.
(d) Capital expenditures for strategic ventures represent the partner's share
of capital expenditures in certain ventures consolidated in the Company's
financial statements.
(e) Asset sales are a normal part of the business model, primarily for the
Harsco Infrastructure and Harsco Metals & Minerals Segments

CONTACT: Investor Contact
         Jim Jacobson
         717.612.5628
         jjacobson@harsco.com
        
         Media Contact
         Kenneth D. Julian
         717.730.3683
         kjulian@harsco.com

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