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Harsco Corporation Reports Fourth Quarter and Full Year 2022 Results

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Harsco Corporation (NYSE: HSC) reported a fourth quarter 2022 revenue of $468 million, a 6% increase year-over-year excluding foreign exchange impacts. GAAP operating income was $2 million, while adjusted EBITDA surged to $61 million, exceeding guidance. For the full year, revenue grew to $1.89 billion but resulted in a GAAP operating loss of $57 million. The company anticipates improved financial performance in 2023, with adjusted EBITDA expected between $240 million and $260 million. The ongoing focus will be on capital discipline and operational efficiencies.

Positive
  • Fourth quarter revenues increased to $468 million, 6% up year-over-year excluding FX impacts.
  • Adjusted EBITDA for Q4 reached $61 million, surpassing expectations.
  • Full year revenue rose to $1.89 billion, a 6% increase year-over-year.
  • Expectations for 2023 include adjusted EBITDA between $240 million and $260 million.
Negative
  • GAAP operating loss for 2022 was $57 million, compared to a $88 million profit in 2021.
  • Fourth quarter GAAP diluted loss per share was $0.30, down from earnings of $0.13 in the prior year.
  • Harsco Environmental's revenues decreased 4% due to foreign currency translation impacts.
  • Fourth Quarter Revenues from Continuing Operations Totaled $468 Million, An Increase of 6 Percent Over the Prior-Year Quarter After Excluding FX Translation Impacts

  • Q4 GAAP Operating Income from Continuing Operations of $2 Million

  • Adjusted EBITDA in Q4 Totaled $61 Million; Above Company's Guidance Range Due to Strong Performance in Each Business Segment

  • Full Year 2022 Revenue from Continuing Operations Increased 6 Percent Before FX Translation Impacts; GAAP Operating Loss of $57 million Including Impairments, While Adjusted EBITDA Totaled $229 million

  • 2023 Adjusted EBITDA Expected to Increase to Between $240 Million and $260 Million

PHILADELPHIA, Feb. 27, 2023 (GLOBE NEWSWIRE) -- Harsco Corporation (NYSE: HSC) today reported fourth quarter 2022 results. On a U.S. GAAP ("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)

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. Those who wish to listen to the conference call webcast should visit the Investor Relations section of the Company’s website at www.harsco.com. The live call also can be accessed by dialing (833) 634-5019, or (412) 902-4237 for international callers. Please ask to join the Harsco Corporation call. Listeners are advised to dial in approximately ten minutes prior to the call. If you are unable to listen to the live call, the webcast will be archived on the Company’s website.

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 health conditions; (2) changes in currency exchange rates, interest rates, commodity and fuel costs and capital costs; (3) changes in the performance of equity and bond markets that could affect, among other things, the valuation of the assets in the Company's pension plans and the accounting for pension assets, liabilities and expenses; (4) changes in governmental laws and regulations, including environmental, occupational health and safety, tax and import tariff standards 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 Company's ability to negotiate, complete, and integrate strategic transactions; (13) failure to complete a divestiture of the Rail division, as announced on November 2, 2021 on satisfactory terms, or at all; (14) potential severe volatility in the capital or commodity markets; (15) failure to retain key management and employees; (16) the outcome of any disputes with customers, contractors and subcontractors; (17) 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 has been significantly impacted by COVID-19) to maintain their credit availability; (18) implementation of environmental remediation matters; (19) risk and uncertainty associated with intangible assets; (20) the risk that the Company may be unable to implement fully and successfully the expected incremental actions at Clean Earth due to market conditions or otherwise and may fail to deliver the expected resulting benefits; and (21) 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 II, Item 1A “Risk Factors,” of the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2022, and Part I, Item 1A, "Risk Factors," of the Company's Annual Report on Form 10-K for the year ended December 31, 2021. 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.

NON-GAAP MEASURES
Measurements of financial performance not calculated in accordance with GAAP should be considered as supplements to, and not substitutes for, performance measurements calculated or derived in accordance with GAAP. Any such measures are not necessarily comparable to other similarly-titled measurements employed by other companies.

Adjusted diluted earnings per share: Adjusted diluted earnings per share is a non-GAAP financial measure and consists of diluted earnings (loss) per share from continuing operations adjusted for unusual items and acquisition-related intangible asset amortization expense. 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. The Company’s management believes Adjusted diluted earnings per share 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.

Adjusted EBITDA: 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); facility fees and debt-related income (expense); 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.

Free cash flow: Free cash flow is a non-GAAP financial measure and consists of net cash provided (used) by operating activities less capital expenditures and expenditures for intangible assets; and plus capital expenditures for strategic ventures, total proceeds from sales of assets and certain transaction-related / debt-refinancing expenditures. The Company's management believes that Free cash flow is meaningful to investors because management reviews Free cash flow 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. Free cash flow excludes the former Harsco Rail Segment since the segment is reported as discontinued operations. This presentation provides a basis for comparison of ongoing operations and prospects.

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

      
      
HARSCO CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
     
  Three Months Ended Twelve Months Ended 
  December 31 December 31 
(In thousands, except per share amounts)  2022   2021   2022   2021  
Revenues from continuing operations:         
Revenues $468,302  $462,073  $1,889,065  $1,848,399  
Costs and expenses from continuing operations:         
Cost of sales  380,314   382,402   1,553,335   1,490,556  
Selling, general and administrative expenses  66,832   59,184   268,066   272,233  
Research and development expenses  145   145   690   956  
Goodwill and other intangible asset impairment charges  15,000      119,580     
Other (income) expenses, net  4,222   4,270   4,737   (3,722) 
Total costs and expenses  466,513   446,001   1,946,408   1,760,023  
Operating income (loss) from continuing operations  1,789   16,072   (57,343)  88,376  
Interest income  1,270   563   3,559   2,231  
Interest expense  (23,621)  (15,595)  (75,156)  (63,235) 
Facility fees and debt-related income (expense)  (2,062)     (2,956)  (5,506) 
Defined benefit pension income  2,163   3,862   8,938   15,640  
Income (loss) from continuing operations before income taxes and equity income  (20,461)  4,902   (122,958)  37,506  
Income tax benefit (expense) from continuing operations  (2,899)  5,625   (10,381)  (9,089) 
Equity income (loss) of unconsolidated entities, net  195   186   (178)  (302) 
Income (loss) from continuing operations  (23,165)  10,713   (133,517)  28,115  
Discontinued operations:         
Income (loss) from discontinued businesses  (15,076)  (38,766)  (50,301)  (25,863) 
Income tax benefit (expense) from discontinued businesses  2,105   4,309   7,387   477  
Income (loss) from discontinued operations, net of tax  (12,971)  (34,457)  (42,914)  (25,386) 
Net income (loss)  (36,136)  (23,744)  (176,431)  2,729  
Less: Net (income) loss attributable to noncontrolling interests  (582)  (591)  (3,638)  (5,978) 
Net income (loss) attributable to Harsco Corporation $(36,718) $(24,335) $(180,069) $(3,249) 
Amounts attributable to Harsco Corporation common stockholders: 
Income (loss) from continuing operations, net of tax $(23,747) $10,122  $(137,155) $22,137  
Income (loss) from discontinued operations, net of tax  (12,971)  (34,457)  (42,914)  (25,386) 
Net income (loss) attributable to Harsco Corporation common stockholders $(36,718) $(24,335) $(180,069) $(3,249) 
Weighted-average shares of common stock outstanding  79,564   79,294   79,493   79,234  
Basic earnings (loss) per common share attributable to Harsco Corporation common stockholders: 
Continuing operations $(0.30) $0.13  $(1.73) $0.28  
Discontinued operations  (0.16)  (0.43)  (0.54)  (0.32) 
Basic earnings (loss) per share attributable to Harsco Corporation common stockholders $(0.46)(a)$(0.31)(a)$(2.27) $(0.04) 
Diluted weighted-average shares of common stock outstanding  79,564   80,093   79,493   80,289  
Diluted earnings (loss) per common share attributable to Harsco Corporation common stockholders: 
Continuing operations $(0.30) $0.13  $(1.73) $0.28  
Discontinued operations  (0.16)  (0.43)  (0.54)  (0.32) 
Diluted earnings (loss) per share attributable to Harsco Corporation common stockholders $(0.46) $(0.30) $(2.27) $(0.04) 

(a) Does not total due to rounding.

  

     
HARSCO CORPORATION
CONSOLIDATED BALANCE SHEETS
    

(In thousands)
 December 31
2022
 December 31
2021
ASSETS    
Current assets:    
Cash and cash equivalents $81,332  $82,908 
Restricted cash  3,762   4,220 
Trade accounts receivable, net  264,428   377,881 
Other receivables  25,379   33,059 
Inventories  81,375   70,493 
Prepaid expenses  30,583   31,065 
Current portion of assets held-for-sale  266,335   265,413 
Other current assets  14,541   9,934 
Total current assets  767,735   874,973 
Property, plant and equipment, net  656,875   653,913 
Right-of-use assets, net  101,253   101,576 
Goodwill  759,253   883,109 
Intangible assets, net  352,160   402,801 
Deferred income tax assets  17,489   17,883 
Assets held-for-sale  70,105   71,234 
Other assets  65,984   48,419 
Total assets $2,790,854  $3,053,908 
LIABILITIES    
Current liabilities:    
Short-term borrowings $7,751  $7,748 
Current maturities of long-term debt  11,994   10,226 
Accounts payable  205,577   186,126 
Accrued compensation  43,595   48,165 
Income taxes payable  3,640   6,378 
Current portion of operating lease liabilities  25,521   25,590 
Current portion of liabilities of assets held-for-sale  159,004   161,999 
Other current liabilities  140,199   155,159 
Total current liabilities  597,281   601,391 
Long-term debt  1,336,995   1,359,446 
Retirement plan liabilities  46,601   93,693 
Operating lease liabilities  75,246   74,571 
Liabilities of assets held-for-sale  9,463   8,492 
Environmental liabilities  26,880   28,435 
Deferred tax liabilities  30,069   33,826 
Other liabilities  45,277   48,284 
Total liabilities  2,167,812   2,248,138 
HARSCO CORPORATION STOCKHOLDERS’ EQUITY    
Common stock  145,448   144,883 
Additional paid-in capital  225,759   215,528 
Accumulated other comprehensive loss  (567,636)  (560,139)
Retained earnings  1,614,441   1,794,510 
Treasury stock  (848,570)  (846,622)
Total Harsco Corporation stockholders’ equity  569,442   748,160 
Noncontrolling interests  53,600   57,610 
Total equity  623,042   805,770 
Total liabilities and equity $2,790,854  $3,053,908 


 
HARSCO CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
  Three Months Ended 
December 31
 Twelve Months Ended 
December 31
(In thousands)  2022   2021   2022   2021 
Cash flows from operating activities:        
Net income (loss) $(36,136) $(23,744) $(176,431) $2,729 
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation  31,753   33,066   129,712   131,449 
Amortization  8,532   8,670   34,137   35,224 
Deferred income tax (benefit) expense  27   (8,019)  (12,029)  (16,930)
Equity (income) loss of unconsolidated entities, net  (195)  (186)  178   302 
Dividends from unconsolidated entities     269   526   269 
(Gain) loss on early extinguishment of debt        (2,254)  2,668 
Goodwill and other intangible asset impairment charges  15,000      119,580    
Other, net  (808)  3,209   (427)  2,062 
Changes in assets and liabilities, net of acquisitions and dispositions of businesses:
     Accounts receivable  19,323   12,782   94,317   (19,781)
     Income tax refunds receivable, reimbursable to seller     2,135   7,687   2,870 
     Inventories  (5,459)  (11,340)  (16,798)  (7,783)
     Contract assets  1,954   8,695   11,543   (43,510)
     Right-of-use assets  7,342   7,250   29,171   28,300 
     Accounts payable  6,234   2,007   19,264   14,118 
     Accrued interest payable  6,916   7,429   (643)  (411)
     Accrued compensation  1,614   (5,629)  (3,945)  6,469 
     Advances on contracts  (5,360)  (314)  (11,347)  (14,311)
     Operating lease liabilities  (6,876)  (6,753)  (28,374)  (27,307)
     Retirement plan liabilities, net  (6,307)  (9,086)  (34,136)  (45,786)
     Other assets and liabilities  (18,188)  5,006   (9,204)  21,556 
Net cash provided by operating activities  19,366   25,447   150,527   72,197 
Cash flows from investing activities:        
Purchases of property, plant and equipment  (35,515)  (48,819)  (137,160)  (158,326)
Proceeds from sales of assets  2,470   1,212   10,759   16,724 
Expenditures for intangible assets  (37)  (71)  (184)  (358)
Proceeds from note receivable        8,605   6,400 
Net proceeds from settlement of foreign currency forward exchange contracts  7,379   12,004   20,950   10,940 
Proceeds (payments) for settlements of interest rate swaps  282      (2,304)   
Other investing activities, net  53   (10)  273   171 
Net cash used by investing activities  (25,368)  (35,684)  (99,061)  (124,449)
Cash flows from financing activities:        
Short-term borrowings, net  607   (3,715)  884   935 
Current maturities and long-term debt:        
Additions  65,016   33,195   224,445   540,663 
Reductions  (57,479)  (12,497)  (256,310)  (464,848)
Dividends paid to noncontrolling interests        (4,841)  (3,103)
Sale (purchase) of noncontrolling interests        1,901    
Stock-based compensation - Employee taxes paid  (132)  (119)  (1,949)  (3,392)
Payment of contingent consideration     (854)  (6,915)  (1,588)
Deferred financing costs           (7,828)
Other financing activities, net           (601)
Net cash provided (used) by financing activities  8,012   16,010   (42,785)  60,238 
Effect of exchange rate changes on cash and cash equivalents, including restricted cash  (1,953)  1,252   (10,715)  (527)
Net increase (decrease) in cash and cash equivalents, including restricted cash  57   7,025   (2,034)  7,459 
Cash and cash equivalents, including restricted cash, at beginning of period  85,037   80,103   87,128   79,669 
Cash and cash equivalents, including restricted cash, at end of period $85,094  $87,128  $85,094  $87,128 


 
HARSCO CORPORATION
REVIEW OF OPERATIONS BY SEGMENT (Unaudited)
  Three Months Ended Three Months Ended
  December 31, 2022 December 31, 2021
(In thousands) Revenues Operating
Income (Loss)
 Revenues Operating
Income (Loss)
Harsco Environmental $256,872 $(4,372) $267,649 $19,614 
Harsco Clean Earth  211,430  13,865   194,424  5,183 
Corporate    (7,704)    (8,725)
Consolidated Totals $468,302 $1,789  $462,073 $16,072 
         
  Twelve Months Ended Twelve Months Ended
  December 31, 2022 December 31, 2021
(In thousands) Revenues Operating
Income (Loss)
 Revenues Operating
Income (Loss)
Harsco Environmental $1,061,239 $59,559  $1,068,083 $103,402 
Harsco Clean Earth  827,826  (81,785)  780,316  25,639 
Corporate    (35,117)    (40,665)
Consolidated Totals $1,889,065 $(57,343) $1,848,399 $88,376 


  
HARSCO CORPORATION
RECONCILIATION OF ADJUSTED DILUTED EARNINGS PER SHARE TO DILUTED EARNINGS (LOSS) PER SHARE FROM CONTINUING OPERATIONS AS REPORTED (Unaudited)

 
  Three Months Ended Twelve Months Ended 
  December 31 December 31 
   2022   2021  2022   2021  
Diluted earnings (loss) per share from continuing operations as reported $(0.30) $0.13 $(1.73) $0.28  
Facility fees and debt-related expense (income) (a)       (0.01)  0.07  
Corporate strategic costs (b)     0.02     0.06  
Harsco Clean Earth segment goodwill impairment charge (c)       1.32     
Harsco Environmental segment other intangible asset impairment charge (d)  0.19     0.19     
Harsco Environmental segment severance (e)  0.05     0.05   (0.01) 
Harsco Clean Earth segment severance costs (f)       0.03     
Harsco Clean Earth segment contingent consideration adjustments (g)       (0.01)    
Taxes on above unusual items (h)  (0.01)    (0.05)  (0.02) 
Adjusted diluted earnings (loss) per share, including acquisition amortization expense  (0.07)(i) 0.14(j) (0.20)(j) 0.37 (j)
Acquisition amortization expense, net of tax (i)  0.08   0.08  0.31   0.32  
Adjusted diluted earnings per share  $0.01  $0.22 $0.10 (j)$0.69  

(a) Costs incurred at Corporate to amend the Company's Senior Secured Credit Facilities, partially offset by income recognized related to a gain on the repurchase of $25.0 million of Senior Notes, (Q4 2022 of $0.1 million pre-tax expense; twelve months 2022 $0.5 million pre-tax income) and costs at Corporate associated with amending the Company's existing Senior Secured Credit Facilities to establish a New Term Loan (of which 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 (twelve months 2021 $5.5 million pre-tax expense).
(b) Certain strategic costs incurred at Corporate associated with supporting and executing the Company's long-term strategies. The twelve months ended 2022 included the relocation of the Company's headquarters (Q4 2022 $0.2 million pre-tax expense; twelve months 2022 $0.4 million pre-tax expense) and the twelve months ended 2021 included the divestiture of the former Harsco Rail segment (Q4 2021 $1.3 million pre-tax expense; twelve months 2021 $4.5 million pre-tax expense).
(c) Non-cash goodwill impairment charge in the Harsco Clean Earth segment (twelve months 2022 $104.6 million pre-tax expense).
(d) Non-cash other intangible asset impairment charge in the Harsco Environmental segment (Q4 2022 and twelve months 2022 $15.0 million pre-tax expense).
(e) Severance and related costs incurred in the Harsco Environmental segment (Q4 2022 and twelve months 2022 $4.2 million pre-tax expense), and adjustment to prior year severance and related costs incurred in the Harsco Environmental segment (twelve months 2021 $0.9 million pre-tax income).
(f) Severance and related costs incurred in the Harsco Clean Earth segment (twelve months 2022 $2.6 million pre-tax expense), (Q4 2021 and twelve months 2021 $0.4 million pre-tax expense).
(g) Adjustment to contingent consideration related to the acquisition of the Harsco Clean Earth segment (twelve months 2022 $0.8 million pre-tax income).
(h) Unusual items are tax-effected at the global effective tax rate, before discrete items, in effect at the time the unusual item is recorded, except for unusual items from countries where no tax benefit can be realized, in which case a zero percent tax rate is used.
(i) Acquisition amortization expense was $7.7 million pre-tax and $31.1 million pre-tax for Q4 2022 and the twelve months 2022, respectively, and after-tax was $6.2 million and $24.6 million for Q4 2022 and the twelve months 2022, respectively. Acquisition amortization expense was $8.0 million pre-tax and $32.3 million pre-tax for Q4 2021 and the twelve months 2021, respectively, and after-tax was $6.4 million and $19.4 million for Q4 2021 and the twelve months 2021, respectively.
(j) Does not total due to rounding.


  
HARSCO CORPORATION
RECONCILIATION OF PROJECTED ADJUSTED DILUTED EARNINGS (LOSS) PER SHARE TO DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS (a)
(Unaudited)
 
          
  Projected Projected 
  Three Months Ending Twelve Months Ending 
  March 31 December 31 
   2023   2023  
  Low High Low High 
Diluted earnings (loss) per share from continuing operations $(0.37) $(0.30) $(0.80) $(0.50) 
Estimated acquisition amortization expense, net of tax  0.07   0.07   0.28   0.28  
Adjusted diluted earnings (loss) per share  $(0.30)(b)$(0.23)(b)$(0.52) $(0.23)(b)

(a) Excludes Harsco Rail Segment.
(b) Does not total due to rounding.

 
HARSCO CORPORATION
RECONCILIATION OF ADJUSTED EBITDA BY SEGMENT TO OPERATING INCOME (LOSS) AS REPORTED BY SEGMENT (Unaudited)

(In thousands) Harsco
Environmental
 Harsco
Clean Earth
 Corporate Consolidated
Totals
         
Three Months Ended December 31, 2022:      
Operating income (loss) as reported $(4,372) $13,865  $(7,704) $1,789 
Corporate strategic costs        229   229 
Harsco Clean Earth segment severance costs     37      37 
Harsco Environmental segment severance costs  4,156         4,156 
Harsco Environmental segment intangible asset impairment  15,000         15,000 
Operating income (loss) excluding unusual items  14,784   13,902   (7,475)  21,211 
Depreciation  26,569   4,623   561   31,753 
Amortization  1,648   6,022      7,670 
Adjusted EBITDA $43,001  $24,547  $(6,914) $60,634 
Revenues as reported $256,872  $211,430    $468,302 
Adjusted EBITDA margin (%)  16.7%  11.6%    12.9%
         
Three Months Ended December 31, 2021:      
Operating income (loss) as reported $19,614  $5,183  $(8,725) $16,072 
Corporate strategic costs        1,280   1,280 
Harsco Environmental segment severance costs     390      390 
Operating income (loss) excluding unusual items  19,614   5,573   (7,445)  17,742 
Depreciation  27,384   4,854   434   32,672 
Amortization  1,972   6,001      7,973 
Adjusted EBITDA $48,970  $16,428  $(7,011) $58,387 
Revenues as reported $267,649  $194,424    $462,073 
Adjusted EBITDA margin (%)  18.3%  8.4%    12.6%


 
HARSCO CORPORATION
RECONCILIATION OF ADJUSTED EBITDA BY SEGMENT TO OPERATING INCOME (LOSS) AS REPORTED BY SEGMENT (Unaudited)

(In thousands) Harsco
Environmental
 Harsco
Clean Earth
 
Corporate
 Consolidated
Totals
Twelve Months Ended December 31, 2022:        
Operating income (loss) as reported $59,559  $(81,785) $(35,117) $(57,343)
Corporate strategic costs        357   357 
Harsco Clean Earth segment goodwill impairment charge     104,580      104,580 
Harsco Clean Earth segment severance costs     2,577      2,577 
Harsco Clean Earth segment contingent consideration adjustment     (827)     (827)
Harsco Environmental segment severance costs  4,156         4,156 
Harsco Environmental segment intangible asset impairment  15,000         15,000 
Operating income (loss) excluding unusual items  78,715   24,545   (34,760)  68,500 
Depreciation  108,880   18,836   1,996   129,712 
Amortization  6,809   24,299      31,108 
Adjusted EBITDA  194,404   67,680   (32,764)  229,320 
Revenues as reported $1,061,239  $827,826    $1,889,065 
Adjusted EBITDA margin (%)  18.3%  8.2%    12.1%
         
Twelve Months Ended December 31, 2021:      
Operating income (loss) as reported $103,402  $25,639  $(40,665) $88,376 
Corporate strategic costs        4,450   4,450 
Harsco Clean Earth segment severance costs     390      390 
Harsco Environmental segment severance costs  (900)        (900)
Operating income (loss) excluding unusual items  102,502   26,029   (36,215)  92,316 
Depreciation  105,830   19,672   1,900   127,402 
Amortization  8,052   24,180      32,232 
Adjusted EBITDA  216,384   69,881   (34,315)  251,950 
Revenues as reported $1,068,083  $780,316    $1,848,399 
Adjusted EBITDA margin (%)  20.3%  9.0%    13.6%


HARSCO CORPORATION
RECONCILIATION OF CONSOLIDATED ADJUSTED EBITDA TO CONSOLIDATED INCOME (LOSS) FROM CONTINUING OPERATIONS AS REPORTED (Unaudited)

  
  Three Months Ended December 31
(In thousands)  2022   2021 
Consolidated income (loss) from continuing operations $(23,165) $10,713 
     
Add back (deduct):    
Equity in (income) loss of unconsolidated entities, net  (195)  (186)
Income tax (benefit) expense  2,899   (5,625)
Defined benefit pension income  (2,163)  (3,862)
Facility fees and debt-related expense (income)  2,062    
Interest expense  23,621   15,595 
Interest income  (1,270)  (563)
Depreciation  31,753   32,672 
Amortization  7,670   7,973 
     
Unusual items:    
Corporate strategic costs  229   1,280 
Harsco Environmental segment intangible asset impairment charge  15,000    
Harsco Environmental segment severance costs  4,156    
Harsco Clean Earth segment severance costs  37   390 
Consolidated Adjusted EBITDA $60,634  $58,387 


   
HARSCO CORPORATION
RECONCILIATION OF ADJUSTED EBITDA TO CONSOLIDATED INCOME (LOSS) FROM CONTINUING OPERATIONS AS REPORTED (Unaudited)

  
  Twelve Months Ended
December 31
(In thousands)  2022   2021 
Consolidated income (loss) from continuing operations $(133,517) $28,115 
     
Add back (deduct):    
Equity in (income) loss of unconsolidated entities, net  178   302 
Income tax (benefit) expense  10,381   9,089 
Defined benefit pension income  (8,938)  (15,640)
Facility fees and debt-related expense (income)  2,956   5,506 
Interest expense  75,156   63,235 
Interest income  (3,559)  (2,231)
Depreciation  129,712   127,402 
Amortization  31,108   32,232 
     
Unusual items:    
Corporate strategic costs  357   4,450 
Harsco Environmental segment severance costs  4,156   (900)
Harsco Environmental segment other intangible asset impairment charge  15,000    
Harsco Clean Earth segment goodwill impairment charge  104,580    
Harsco Clean Earth segment severance costs  2,577   390 
Harsco Clean Earth segment contingent consideration adjustments  (827)   
Adjusted EBITDA $229,320  $251,950 


  
HARSCO CORPORATION
RECONCILIATION OF PROJECTED CONSOLIDATED ADJUSTED EBITDA TO PROJECTED CONSOLIDATED INCOME FROM CONTINUING OPERATIONS (a)
(Unaudited)
 
  Projected Projected 
  Three Months Ending Twelve Months Ending 
  March 31 December 31 
   2023   2023  
(In millions) Low High Low High 
Consolidated loss from continuing operations $(29) $(23) $(61) $(36) 
          
Add back (deduct):         
Income tax (income) expense  3   4   8   11  
Facility fees and debt-related (income) expense  2   2   10   9  
Net interest  23   22   95   91  
Defined benefit pension (income) expense  6   5   22   20  
Depreciation and amortization  40   40   166   166  
Consolidated Adjusted EBITDA $45  $50  $240  $260 (b)

(a) Excludes former Harsco Rail Segment
(b) Does not total due to rounding.

 
HARSCO CORPORATION
RECONCILIATION OF FREE CASH FLOW TO NET CASH PROVIDED BY OPERATING ACTIVITIES (Unaudited)

  Three Months Ended Twelve Months Ended
  December 31 December 31
(In thousands)  2022   2021   2022   2021 
Net cash provided by operating activities $19,366  $25,447   150,527  $72,197 
Less capital expenditures  (35,515)  (48,819)  (137,160)  (158,326)
Less expenditures for intangible assets  (37)  (71)  (184)  (358)
Plus capital expenditures for strategic ventures (a)  361   677   1,789   3,660 
Plus total proceeds from sales of assets (b)  2,470   1,212   10,759   16,724 
Plus transaction-related expenditures (c)     150   1,854   18,938 
Harsco Rail free cash flow deficit/(benefit)  16,783   13,774   47,610   45,611 
Free cash flow $3,428  $(7,630) $75,195  $(1,554)

(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 certain debt refinancing transactions.

 
HARSCO CORPORATION
RECONCILIATION OF PROJECTED FREE CASH FLOW TO PROJECTED NET CASH PROVIDED BY OPERATING ACTIVITIES (Unaudited) (a)

  Projected
Twelve Months Ending
December 31
   2023 
(In millions) Low High
Net cash provided by operating activities $140  $170 
Less net capital / intangible asset expenditures  (125)  (135)
Plus capital expenditures for strategic ventures  5   5 
Free cash flow $20  $40 

(a) Excludes former Harsco Rail Segment


  
Investor Contact
David Martin
267.946.1407
damartin@harsco.com
Media Contact
Jay Cooney
267.857.8017
jcooney@harsco.com

FAQ

What were Harsco Corporation's Q4 2022 financial results?

Harsco reported Q4 2022 revenues of $468 million and an adjusted EBITDA of $61 million, exceeding guidance.

What is Harsco Corporation's outlook for 2023?

Harsco expects adjusted EBITDA in the range of $240 million to $260 million for 2023.

How did Harsco Corporation perform in 2022?

Harsco's 2022 revenue reached $1.89 billion, but it reported a GAAP operating loss of $57 million.

What factors affected Harsco Corporation's financial performance in 2022?

The company faced foreign currency translation impacts and inflationary pressures that impacted profits.

What were the diluted earnings per share for Harsco Corporation in Q4 2022?

The diluted loss per share from continuing operations was $0.30 for Q4 2022.

HARSCO CORP

NYSE:HSC

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United States of America