) recently announced the sale of its Infrastructure division to
its own joint venture (JV) with private investment firm -
Clayton, Dubilier & Rice. In lieu of the sale, Harsco will
receive $300 million in cash and a 29% equity stake in the JV,
valued at $225 million. The investment firm will also acquire
Brand Energy & Infrastructure Services, Inc. from First
Reserve. The two acquired businesses will continue to operate as
Brand Energy & Infrastructure Services, offering specialized
industrial services to the energy and infrastructure sectors.
The new entity, Brand Energy & Infrastructure Services'
proforma revenues for 2013 are estimated to be around $3 billion,
with earnings before interest, taxes, depreciation and
amortization (EBITDA) margin in the low double-digits. Though the
energy sector will be the major revenue driver for the new
entity, there will be substantial revenue contributions from the
Harsco's Infrastructure segment generated revenues of $251
million in the second quarter of 2013, increasing 7% year over
year. Despite the increased revenues, the segment incurred an
adjusted operating loss of $2 million. The sell-off of the
business is in line with the company's strategy of simplifying
its business profile. Along with this, Harsco's financial
structure will be enhanced, which can be used for the company's
organic growth or for strategic acquisitions.
The transaction, subject to regulatory approvals, is expected
to consummate before the end of 2013. Harsco reported weak
results for the second quarter of 2013, with earnings per share
of 30 cents missing the Zacks Consensus Estimate by 11.8%.
Following the results, the Zacks Consensus Estimate for 2013 has
dropped 22.5% in the last 60 days to 93 cents per share,
reflecting an estimated year-over-year decline of 21.7%. For
2014, the Zacks Consensus Estimate declined 17.6% in the past 60
days to $1.31 per share, reflecting a year-over-year growth of
Harsco currently carries a Zacks Rank #5 (Strong Sell). Other
stocks worth a look in the industrial services industry include
CaesarStone Sdot-Yam Ltd.
). While AAON Inc. and CaesarStone carry a Zacks Rank #1 (Strong
Buy), Codexis carries a Zacks Rank #2 (Buy).
AAON INC (AAON): Get Free Report
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HARSCO CORP (HSC): Free Stock Analysis Report
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