), a diversified industrial company, posted GAAP earnings per
share (EPS) of 9 cents in the first quarter of 2013 versus a loss
of 36 cents in the year-ago quarter. Adjusted EPS was 9 cents in
the quarter compared with 7 cents in the year-ago quarter. The
quarterly adjusted EPS beat the Zacks Consensus Estimate of 6
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Revenues in the reported quarter were $715.4 million versus
$752.3 million in the year-ago quarter. The quarterly revenues
missed the Zacks Consensus Estimate of $721 million. The
year-over-year decline in revenue was due to the termination of
underperforming agreements in the Metals & Minerals segment
and the discontinuation of the Infrastructure segment's
underperforming operations in some countries. Foreign currency
translation also reduced sales in the reported quarter.
On a segmental basis, Metals & Minerals generated revenues of
$337 million, down 6.4% from the year-earlier quarter. The
year-over-year decline was driven by the closure of certain
underperforming contracts, negative foreign currency translation
and lower steel production volumes, which were partially offset
by new contracts.
Revenues from the Infrastructure segment came in at $216 million,
down 9.2% from the year-earlier quarter, primarily driven by
negative foreign currency translation and lower industrial
maintenance activity in Europe, which were partially offset by
improved equipment rental activity.
The Rail segment generated revenues of $72 million, up 5% from
the year-ago quarter.
Revenues from the Industrial segment were $90 million, up 5% year
over year, driven by overall product mix, as well as improved
demand for industrial boilers and air-cooled heat exchangers.
In terms of business mix, Service revenues were $551.1 million
versus $598.7 million in the year-earlier quarter. Product
revenues improved to $164.2 million from $153.6 million in the
GAAP operating income was $26 million in the reported quarter
versus an operating loss of $13 million in the year-ago
quarter. Operating income margin increased 30 basis points
Balance Sheet and Cash Flow
Harsco exited the reported quarter with cash and cash equivalents
of $ 92.9 million, and long-term debt of over $1 billion.
Net cash provided by operating activities was $3.4 million.
During the reported quarter, free cash flow aggregated ($38)
million compared with ($30) million in the year-ago period.
Management expects EPS from continuing operations to range from
30 cents to 35 cents per share in the second quarter of 2013.
Metals & Minerals' revenues in the second quarter are
expected to be moderately lower than the prior-year quarter.
Management believes that the uncertain economic conditions will
lead to lower steel production going forward. Harsco expects the
Rail business to witness better operating performance
sequentially on the back of favorable equipment delivery.
However, the company's Industrial segment revenue will likely be
moderate and Infrastructure revenues are likely to be in line
with the year-ago quarter.
Harsco currently has a Zacks Rank #5 (Strong Sell). Other stocks
that look promising and are worth considering in the industry are
W.W. Grainger, Inc
Ternium S. A
), each carrying a Zacks Rank #2 (Buy).