PHILADELPHIA, Feb. 27, 2023 (GLOBE NEWSWIRE) — Harsco Corporation (NYSE: HSC) today reported fourth quarter 2022 results. On a U.S. GAAP basis, fourth quarter of 2022 diluted loss per share from continuing operations was $0.30, after unusual items including restructuring costs and an intangible asset impairment within Harsco Environmental. Adjusted diluted earnings per share from continuing operations in the fourth quarter of 2022 were $0.01. These figures compare with fourth quarter of 2021 GAAP diluted earnings per share from continuing operations of $0.13 and adjusted diluted earnings per share from continuing operations of $0.22.
GAAP operating income from continuing operations for the fourth quarter of 2022 was $2 million. Adjusted EBITDA was $61 million in the quarter, compared to the Company’s previously provided guidance range of $47 million to $54 million.
“Harsco delivered strong quarterly operating performance to finish 2022. We exited the year with positive momentum, driven in large part by the realization of cost efficiencies and commercial pricing initiatives, while benefiting from stabilizing market conditions,” said Harsco Chairman and CEO Nick Grasberger. “In particular, Clean Earth benefited from the continued implementation of initiatives that drove lower operating costs as well as incremental demand from infrastructure-related markets. Harsco Environmental results were aided by lower costs relative to expectations. I would like to thank our employees for their efforts through 2022, which began with unprecedented pressures related to inflation and the Russia-Ukraine conflict. Our resilience, adaptability through change and unwavering commitment to our customers enabled us to deliver against our objectives in the second half of the year.
“Looking forward, our business momentum is expected to continue. We anticipate a meaningful increase in operating results in 2023, with Clean Earth leading the way via pricing and operational efficiencies. In Harsco Environmental, improvement initiatives and price will also support its results during the year. Key to our strategy is maintaining capital discipline, enabling Harsco to strengthen its free cash flow and leverage position in the future. The sale of our Rail business this year will further help reduce our leverage. We are excited about the opportunities ahead and believe that building on our successes and delivering against our priorities will position Harsco to create shareholder value in 2023 and beyond.”
Harsco Corporation—Selected Fourth Quarter Results
| ($ in millions, except per share amounts) | Q4 2022 | Q4 2021 | ||||||
| Revenues | $ | 468 | $ | 462 | ||||
| Operating income from continuing operations – GAAP | $ | 2 | $ | 16 | ||||
| Diluted EPS from continuing operations – GAAP | $ | (0.30 | ) | $ | 0.13 | |||
| Adjusted EBITDA – Non GAAP | $ | 61 | $ | 58 | ||||
| Adjusted EBITDA margin – Non GAAP | 12.9 | % | 12.6 | % | ||||
| Adjusted diluted EPS – Non GAAP | $ | 0.01 | $ | 0.22 | ||||
Note: Adjusted diluted earnings per share and adjusted EBITDA details presented throughout this release are adjusted for unusual items; in addition, adjusted diluted earnings per share is adjusted for acquisition-related amortization expense.
Consolidated Fourth Quarter Operating Results
Consolidated revenues from continuing operations were $468 million, an increase of 1 percent compared with the prior-year quarter. Clean Earth realized an increase in revenues compared to the fourth quarter of 2021, while Harsco Environmental revenues decreased due to currency translation impacts. Foreign currency translation negatively impacted fourth quarter 2022 revenues by approximately $19 million (4 percent), compared with the prior-year period.
The Company’s GAAP operating income from continuing operations was $2 million for the fourth quarter of 2022, compared with GAAP operating income of $16 million in the same quarter of 2021. Meanwhile, adjusted EBITDA totaled $61 million in the fourth quarter of 2022 versus $58 million in the fourth quarter of the prior year. Clean Earth experienced higher adjusted EBITDA relative to the prior-year quarter, while Harsco Environmental’s adjusted EBITDA as anticipated was below the comparable quarter of 2021.
Harsco Corporation—Selected 2022 Results
| ($ in millions, except per share amounts) | 2022 | 2021 | ||||||
| Revenues | $ | 1,889 | $ | 1,848 | ||||
| Operating income (loss) from continuing operations – GAAP | $ | (57 | ) | $ | 88 | |||
| Diluted EPS from continuing operations – GAAP | $ | (1.73 | ) | $ | 0.28 | |||
| Adjusted EBITDA – excluding unusual items | $ | 229 | $ | 252 | ||||
| Adjusted EBITDA margin – excluding unusual items | 12.1 | % | 13.6 | % | ||||
| Adjusted diluted EPS from continuing operations – excluding unusual items | $ | 0.10 | $ | 0.69 |
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 Full Year 2022 Operating Results
Consolidated revenues from continuing operations were $1.89 billion in 2022, compared to $1.85 billion in 2021. Revenues for Clean Earth increased mainly due to higher pricing for its services, while Harsco Environmental revenues decreased as currency translation impacts were only partially offset by higher pricing. Foreign currency translation negatively impacted 2022 revenues by approximately $70 million compared with the prior year.
The GAAP operating loss from continuing operations was $57 million in 2022, while GAAP operating income from continuing operations in 2021 was $88 million. Adjusted EBITDA was $229 million and $252 million for these years, respectively, with the change in adjusted results reflecting the above-mentioned impact of FX translation as well as the Russia-Ukraine conflict impact on steel volumes particularly in Europe and inflation, among other factors. Inflationary pressures were most significant in Clean Earth during the first-half of 2022, subsequent to which broad-based price increases as well as cost and operational initiatives were implemented. The success of these actions led to a significant improvement in Harsco’s financial performance in the second-half of the 2022.
On a GAAP basis, diluted loss per share from continuing operations in 2022 was $1.73, and this figure compares with diluted earnings per share in 2021 of $0.28. These figures include various unusual items in each year. Adjusted diluted earnings per share from continuing operations were $0.10 in 2022, compared with $0.69 in 2021.
Fourth Quarter Business Review
Harsco Environmental
| ($ in millions) | Q4 2022 | Q4 2021 | ||||||
| Revenues | $ | 257 | $ | 268 | ||||
| Operating income – GAAP | $ | (4 | ) | $ | 20 | |||
| Adjusted EBITDA – Non GAAP | $ | 43 | $ | 49 | ||||
| Adjusted EBITDA margin – Non GAAP | 16.7 | % | 18.3 | % | ||||
Harsco Environmental revenues totaled $257 million in the fourth quarter of 2022, a decrease of 4 percent compared with the prior-year quarter. This change is attributable to FX translation impacts, partially offset by higher services activity at certain sites. The segment’s GAAP operating loss and adjusted EBITDA totaled $4 million and $43 million, respectively, in the fourth quarter of 2022. These figures compare with GAAP operating income of $20 million and adjusted EBITDA of $49 million in the prior-year period. The year-on-year change in adjusted earnings reflects the above-mentioned items as well as lower commodity prices and the recovery of Brazil sales taxes in the prior-year quarter which were not repeated in 2022.
Clean Earth
| ($ in millions) | Q4 2022 | Q4 2021 | ||||||
| Revenues | $ | 211 | $ | 194 | ||||
| Operating income (loss) – GAAP | $ | 14 | $ | 5 | ||||
| Adjusted EBITDA – Non GAAP | $ | 25 | $ | 16 | ||||
| Adjusted EBITDA margin – Non GAAP | 11.6 | % | 8.4 | % | ||||
Clean Earth revenues totaled $211 million in the fourth quarter of 2022, a 9 percent increase over the prior-year quarter as a result of higher services pricing. The segment’s GAAP operating income was $14 million and adjusted EBITDA was $25 million in the fourth quarter of 2022. These figures compare with $5 million of operating income and $16 million of adjusted EBITDA in the prior-year period. The year-on-year improvement in adjusted earnings reflects higher prices as well as cost reduction and efficiency initiatives, partially offset by inflationary pressures on certain expenditures such as transportation, labor and disposal. As a result, Clean Earth’s adjusted EBITDA margin increased to 11.6 percent in the fourth quarter of 2022 versus 8.4 percent in the comparable quarter of 2021.
Cash Flow
Net cash provided by operating activities was $19 million in the fourth quarter of 2022, compared with net cash provided by operating activities of $25 million in the prior-year period. Free cash flow (excluding Rail) was $3 million in the fourth quarter of 2022, compared with $(8) million in the prior-year period. The change in free cash flow compared with the prior-year quarter is mainly attributable to a decrease in net capital spending.
For the full-year 2022, net cash provided by operating activities totaled $151 million, compared with net cash provided by operating activities of $72 million in 2021. Free cash flow (excluding Rail) was $75 million in 2022, compared with $(2) million in the prior-year. The change in full-year free cash flow can be mainly attributed to the Company’s accounts receivable securitization program (net of other working capital changes) and lower net capital spending, partially offset by lower cash operating earnings and higher cash interest payments.
2023 Outlook
The Company’s 2023 guidance anticipates that it will realize a meaningful improvement in financial performance relative to 2022, with the better financial results driven by various price and cost reduction initiatives across the Company. Clean Earth is expected to drive the year-on-year performance growth, and the Company’s outlook contemplates that economic conditions will remain stable and that certain business challenges such as labor and disposal inflation will persist. Summary business segment and consolidated highlights are as follows:
Harsco Environmental adjusted EBITDA is projected to be modestly above 2022 results at the mid-point of guidance. For the year, higher services pricing, restructuring benefits, site improvement initiatives and new contracts are expected to be partially offset by FX translation impacts, lower commodity prices and a less favorable services mix.
Clean Earth adjusted EBITDA is expected to significantly increase versus 2022, as a result of higher services pricing as well as cost reduction and operational improvement actions, offsetting the impacts of continued labor-market and supply-chain (disposal) tightness.
Lastly, adjusted Corporate spending is anticipated to be higher relative to the prior year due to the normalization of certain expenditures, including travel and higher planned incentive compensation.
| 2023 Full Year Outlook(Continuing Operations) | |
| GAAP Operating Income/(Loss) | $74 – $94 million |
| Adjusted EBITDA | $240 – $260 million |
| GAAP Diluted Earnings/(Loss) Per Share | $(0.50) – $(0.80) |
| Adjusted Diluted Earnings/(Loss) Per Share | $(0.23) – $(0.52) |
| Free Cash Flow | $20 – $40 million |
| Net Interest Expense | $91 – $95 million |
| Account Receivable Securitization Fees | $9 – $10 million |
| Pension Expense (Non-Operating) | $20 – $22 million |
| Tax Expense, Excluding Any Unusual Items | $8 – $11 million |
| Net Capital Expenditures | $125 – $135 million |
| Q1 2023 Outlook(Continuing Operations) | |
| GAAP Operating Income | $5 – $10 million |
| Adjusted EBITDA | $45 – $50 million |
| GAAP Diluted Earnings/(Loss) Per Share | $(0.30) – $(0.37) |
| Adjusted Diluted Earnings/(Loss) Per Share | $(0.23) – $(0.30) |
About Harsco
Harsco Corporation is a global market leader providing environmental solutions for industrial and specialty waste streams. Based in Philadelphia, 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.
