UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) January 31, 2008
Harsco Corporation
(Exact name of registrant as specified in its charter)
|
DE |
1-3970 |
23-1483991 |
||
|
(State or other jurisdiction of incorporation) |
(Commission File Number) | (IRS Employer Identification No.) |
|
350 Poplar Church Road, Camp Hill PA, 17011 |
17011 |
|||
| (Address of principal executive offices) | (Zip Code) |
Registrant's telephone number, including area code: 717-763-7064
________________________________________________________________________________
(Former name or former address, if changed since last report)
| Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: | ||
| [ ] | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
| [ ] | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
| [ ] | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
| [ ] | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |
Item 2.02. Results of Operations and Financial Condition.
On January 31, 2008, Harsco Corporation issued a press release announcing its earnings for the quarter and year-ended December 31, 2007. A copy of the press release is attached hereto as Exhibit 99.1.
This information is being furnished in this report and shall not be deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 (the "Exchange Act") or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 9.01. Financial Statements and Exhibits.
Exhibit 99.1. Press release dated January 31, 2008
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
|
Harsco Corporation
(Registrant) |
||
|
January 31, 2008
(Date) |
/s/ STEPHEN J. SCHNOOR
Stephen J. Schnoor Senior Vice President and CFO |
| Exhibit Index | ||
| 99.1 | Press release dated January 31, 2008 | |
EXHIBIT 99.1
Harsco Reports Record Fourth Quarter and Full-Year 2007 Results From Continuing Operations
Company Increases 2008 Guidance On Strength of Its Global Outlook
* Fourth quarter diluted EPS from continuing operations a record
$0.74, up 35 percent
* Fourth quarter sales up 21 percent to a record $975 million
* Full-year diluted EPS from continuing operations up 36 percent
to a record $3.01
* Full-year sales reach a record $3.69 billion, up 22 percent
* 2007 cash flow from operations a record $472 million, up
15 percent
* Successful divestiture of Gas Technologies unit delivers one-time
after-tax gain of $26 million from discontinued operations in the
fourth quarter
HARRISBURG, Pa., Jan. 31, 2008 (PRIME NEWSWIRE) -- Worldwide industrial services company Harsco Corporation (NYSE:HSC) today reported record fourth quarter and full-year 2007 results from continuing operations.
Fourth quarter 2007 diluted EPS from continuing operations was a record $0.74, compared with $0.55 in the fourth quarter last year. Fourth quarter income from continuing operations was $62.4 million, also a record, compared with $46.4 million last year. Sales in the quarter totaled a record $975 million, up 21 percent from sales of $804 million in the same period last year. Foreign currency translation increased sales by $54 million and pre-tax income by $4.3 million in this year's fourth quarter.
For the full year 2007, income from continuing operations was $255.1 million, or $3.01 per diluted share, both records, compared with income from continuing operations of $186.4 million, or $2.21 per diluted share in 2006. This reflects a 37 percent increase in income and a 36 percent increase in diluted EPS. Sales for the full year 2007 reached a record $3.69 billion, an increase of 22 percent from last year's sales of $3.03 billion. Positive foreign currency translation contributed approximately $167 million to sales in 2007 and approximately $13.9 million to pre-tax income.
Commenting on the Company's results, Harsco Chairman Derek C. Hathaway said, "We are pleased that Harsco has once again produced record quarterly and annual results, reaffirming the value of the Company's far-sighted planning and execution of its global growth strategies. As I retire, it is a personal pleasure to see the Company ending 2007 on a strong operating note and knowing that it is well-positioned for further growth in 2008 and beyond."
Outlook
Commenting on the Company's outlook, Harsco CEO Salvatore D. Fazzolari said, "As we enter 2008 we remain confident of our growth opportunities. Our extensive global footprint and balanced portfolio of businesses will continue to allow us to expand across the world, particularly in the rapidly developing areas of the Middle East, China, India, and Latin America, as these and other key regions continue to invest heavily in their infrastructure. As evidenced by our recent press releases, we see continued acceptance of our value-adding industrial services and products throughout a wider geographic area. With strong internally generated cash flows and a rearmed balance sheet, we clearly have the strength and the cash flows to fund our targeted growth objectives."
"Our continued confidence in Harsco's global growth outlook leads us to raise our full year 2008 guidance for EPS from continuing operations to a range of $3.40 to $3.50, from our previous range of $3.35 to $3.45," said Mr. Fazzolari. "Using the midpoint of the updated guidance, this reflects an increase of approximately 15 percent over 2007's diluted EPS from continuing operations of $3.01."
For the first quarter of 2008, the Company is forecasting earnings from continuing operations in the range of $0.60 to $0.62 per share, compared with $0.54 in last year's first quarter, or an increase of 13.0 percent from the mid-point.
Fourth Quarter Business Review
Access Services
Fourth quarter 2007 sales increased 26 percent to $387 million from $307 million last year. Organic sales growth contributed $55 million, or approximately 18 percent; acquisitions contributed $1 million, or less than 1 percent; and positive foreign currency translation contributed $24 million, or approximately 8 percent. Operating income increased by 63 percent to $51.4 million in the fourth quarter, up from $31.5 million in the comparable period last year. Positive foreign currency translation increased operating income by approximately $2.7 million in this year's fourth quarter. Operating margins increased by 300 basis points to 13.3 percent from 10.3 percent in the fourth quarter of last year.
The outstanding performance in the quarter was the result of strong end-market demand in virtually all regions served by the Company. Of particular note were the Middle East and Eastern Europe, as well as the U.S. and Western Europe.
The outlook for 2008 remains very positive. The Company expects generally strong end-market demand to continue in most of the major geographic regions currently served. This, coupled with further market share gains in existing territories, the penetration of additional regions, and prudent investment in growth capital expenditures, underpin the Company's confidence for continued growth from its Access Services businesses.
Mill Services
Sales in the fourth quarter of 2007 increased by almost 16 percent to $405 million from $350 million in last year's comparable quarter. Organic sales were up $11 million or approximately 3 percent; acquisitions contributed $15 million, or 4 percent; and positive foreign currency translation contributed $29 million, or 8 percent. Fourth quarter operating income decreased by $7.3 million or 19 percent to $31.1 million. Foreign currency translation contributed $3.5 million to operating income in the quarter. Operating margins decreased from 11.0 percent in last year's fourth quarter to 7.7 percent this year.
The quarter included higher severance and other restructuring charges of $4.7 million pre-tax, compared with last year's comparable period. Also incurred in the quarter were $2.9 million pre-tax in higher costs for process improvements and other optimization initiatives to better position the business for future growth and improved operating performance. Adjusting for these charges and costs, income in the quarter would have been essentially flat compared with the fourth quarter of last year. Likewise, adjusting for these restructuring charges and process optimization costs, operating margins in the fourth quarter of 2007 would have been 9.5 percent, compared with 11.1 percent in the similar quarter of 2006.
The Company remains confident that the operating margins of this segment will return to more historical levels as 2008 progresses. There are clear indications that global steel production continues to increase, and the Company has announced several important new contract signings, with further such announcements expected. The estimated future value of the Company's Mill Services contracts grew by over 11 percent in 2007 to end the year at almost $5 billion. The Company believes that its recent restructuring and optimization efforts will result in margin improvements throughout 2008, as detailed during its recent Annual Analysts Conference in December.
Minerals & Rail Services and Products
Sales of $182 million in the fourth quarter of 2007 were 24 percent higher than the $147 million in the same period last year. Organic sales growth contributed $1 million, or approximately 1 percent; the previously announced February 1, 2007 acquisition of Excell Minerals contributed $33 million, or 22 percent; and positive foreign currency translation contributed approximately $1 million, or 1 percent. Operating income increased by 103 percent to $29.9 million, up from $14.8 million in the fourth quarter of last year. Foreign currency translation had a minimal effect on operating income in this year's fourth quarter. Operating margins were 16.4 percent, 640 basis points higher than last year's fourth quarter margin of 10.0 percent.
The quarter's strong performance was again broad-based and included increases in operating income and margins from all business units in the group. Revenues increased for all units except Harsco Track Technologies where sales were down in the quarter due to the timing of deliveries. Year-end backlogs for Harsco Track Technologies, however, are at record levels.
The outlook for the Minerals & Rail Services and Products group remains positive. Recent new contract awards and healthy order backlogs should allow the companies within this group to perform well in 2008.
Discontinued Operations
As previously announced, the Company completed the sale of its Gas Technologies business group on December 7, 2007. Terms of the sale included $300 million paid in cash at closing plus a working capital adjustment, and a $40 million earnout, contingent on the Gas Technologies group achieving certain performance targets in 2008 or 2009. During the fourth quarter the Company recorded income of $29.1 million, or $0.34 per diluted share from discontinued operations, which included a $26.4 million after-tax gain, or $0.31 per share, from the sale of this business.
Liquidity, Capital Resources and Other Matters
Net cash provided by operating activities for the full year 2007 was a record $472 million, a 15 percent increase over the $409 million for the comparable period of last year. Net cash used by investing activities was $386 million, a 7 percent increase over the $359 million last year. The increased use of cash was due primarily to higher capital expenditures for organic growth, capital initiatives to improve operational efficiencies, and expenditures for businesses acquired in 2007, offset by proceeds from the Gas Technologies divestiture. Net cash provided by operating activities in the fourth quarter of 2007 was $99 million, compared with $130 million in 2006. The fourth quarter of 2007 included higher tax payments and inventory purchases required for order backlogs. In addition, $300 million was received in the fourth quarter from the previously noted sale of the Company's Gas Technologies business.
During 2007, the Company's total debt increased by $18 million to $1.08 billion. The increase in debt was principally due to foreign currency translation. On a cash basis, total debt decreased by $22.7 million from December 31, 2006. The debt-to-capital ratio decreased 730 basis points to 40.8 percent, down from 48.1 percent at the end of 2006.
Consistent with the results for the year, significant improvement in Economic Value Added (EVA(r)) was achieved in 2007.
Forward-Looking Statements
This news release contains forward-looking statements based on management's current expectations, estimates and projections. All statements that address expectations or projections about the future, including statements about the company's strategy for growth, product development, market position, expected expenditures and financial results are forward-looking statements. Some of the forward-looking statements may be identified by words like "may," "could," "believes," "expects," "anticipates," "plans," "intends," "projects," "indicates," and similar expressions. These statements are not guarantees of future performance and involve a number of risks, uncertainties and assumptions. Many factors, including those discussed more fully elsewhere in this release and in documents filed with the Securities and Exchange Commission by Harsco, particularly its latest annual report on Form 10-K and quarterly report on Form 10-Q, as well as others, could cause results to differ materially from those stated. These factors include, but are not limited to, changes in the worldwide business environment in which the Company operates; changes in the performance of stock and bond markets; changes in governmental laws and regulations; market and competitive changes, including pricing pressures, market demand and acceptance for new products, services, and technologies; unforeseen business disruptions in one or more of the many countries in which the Company operates; the seasonal nature of the Company's business; and the successful integration of the Company's strategic acquisitions. The Company undertakes no duty to update forward-looking statements.
Conference Call
As previously announced, the Company will hold a conference call today at 2:00 p.m. Eastern Time (ET) 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 call can also be accessed by telephone by dialing (800) 611-4920, or (706) 634-5923 from outside the United States and Canada. Enter Conference ID number 29050419. Listeners are advised to dial in at least five minutes prior to the call. Replays will be available via the Harsco website, or by telephone beginning approximately 5:00 pm ET today. The telephone replay dial-in number is (800) 642-1687, or (706) 645-9291 from outside the United States and Canada. Enter Conference ID number 29050419.
About Harsco
Harsco Corporation is one of the world's leading diversified industrial services companies, serving major customers in the global non-residential construction and infrastructure, steel and metals, energy and railway industries. 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.
The Harsco Corporation logo is available at http://www.primenewswire.com/newsroom/prs/?pkgid=361
HARSCO CORPORATION
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
Three Months Ended Twelve Months Ended
(In thousands, except December 31 December 31
per share amounts) 2007 2006(a) 2007 2006(a)
-----------------------------------------------------------------------
Revenues from continuing
operations:
Service sales $ 847,803 $ 678,522 $3,166,561 $2,538,068
Product sales 126,818 125,714 521,599 487,545
-----------------------------------------------------------------------
Total revenues 974,621 804,236 3,688,160 3,025,613
-----------------------------------------------------------------------
Costs and expenses from
continuing operations:
Cost of services sold 622,516 498,595 2,316,904 1,851,230
Cost of products sold 86,667 91,752 368,600 351,962
Selling, general and
administrative expenses 149,851 127,506 538,233 472,790
Research and development
expenses 585 875 3,175 2,846
Other expenses 4,348 610 3,443 2,476
-----------------------------------------------------------------------
Total costs and
expenses 863,967 719,338 3,230,355 2,681,304
-----------------------------------------------------------------------
Operating income from
continuing operations 110,654 84,898 457,805 344,309
Equity in income/(loss)
of unconsolidated
entities, net 309 (63) 1,049 192
Interest income 2,013 1,003 4,968 3,582
Interest expense (21,291) (16,517) (81,383) (60,479)
-----------------------------------------------------------------------
Income from continuing
operations before
income taxes and
minority interest 91,685 69,321 382,439 287,604
Income tax expense (26,418) (21,214) (117,598) (93,354)
-----------------------------------------------------------------------
Income from continuing
operations before
minority interest 65,267 48,107 264,841 194,250
Minority interest in net
income (2,889) (1,673) (9,726) (7,848)
-----------------------------------------------------------------------
Income from continuing
operations 62,378 46,434 255,115 186,402
-----------------------------------------------------------------------
Discontinued operations:
Income from operations of
discontinued business 2,251 8,512 26,897 14,070
Gain on disposal of
discontinued business 45,522 28 41,414 28
Income tax expense (18,704) (2,503) (23,934) (4,102)
-----------------------------------------------------------------------
Income from discontinued
operations 29,069 6,037 44,377 9,996
-----------------------------------------------------------------------
Net Income $ 91,447 $ 52,471 $ 299,492 $ 196,398
=======================================================================
Average shares of common
stock outstanding 84,290 84,030 84,169 83,905
Basic earnings per common
share:
Continuing operations $ 0.74 $ 0.55 $ 3.03 $ 2.22
Discontinued operations 0.34 0.07 0.53 0.12
-----------------------------------------------------------------------
Basic earnings per common
share $ 1.08 $ 0.62 $ 3.56 $ 2.34
=======================================================================
Diluted average shares of
common stock outstanding 84,849 84,535 84,724 84,430
Diluted earnings per
common share:
Continuing operations $ 0.74 $ 0.55 $ 3.01 $ 2.21
Discontinued operations 0.34 0.07 0.52 0.12
-----------------------------------------------------------------------
Diluted earnings per
common share $ 1.08 $ 0.62 $ 3.53 $ 2.33
=======================================================================
(a) Reclassified for comparative purposes.
HARSCO CORPORATION
CONSOLIDATED BALANCE SHEETS (Unaudited)
December 31 December 31
(In thousands) 2007 2006
---------------------------------------------------------------------
ASSETS
Current assets:
Cash and cash equivalents $ 121,833 $ 101,260
Accounts receivable, net 824,094 753,168
Inventories 310,931 285,229
Other current assets 88,016 88,398
Assets held-for-sale 463 3,567
---------------------------------------------------------------------
Total current assets 1,345,337 1,231,622
---------------------------------------------------------------------
Property, plant and equipment, net 1,535,214 1,322,467
Goodwill, net 720,069 612,480
Intangible Assets, net 188,864 88,164
Other assets 115,946 71,690
---------------------------------------------------------------------
Total assets $ 3,905,430 $ 3,326,423
=====================================================================
LIABILITIES
Current liabilities:
Short-term borrowings $ 60,323 $ 185,074
Current maturities of long-term debt 8,384 13,130
Accounts payable 307,814 287,006
Accrued compensation 108,871 95,028
Income taxes payable 41,300 61,967
Dividends payable 16,444 15,983
Insurance liabilities 44,823 40,810
Other current liabilities 286,011 211,777
---------------------------------------------------------------------
Total current liabilities 873,970 910,775
---------------------------------------------------------------------
Long-term debt 1,012,087 864,817
Deferred income taxes 174,423 103,592
Insurance liabilities 67,182 62,542
Retirement plan liabilities 120,536 189,457
Other liabilities 91,113 48,876
---------------------------------------------------------------------
Total liabilities 2,339,311 2,180,059
---------------------------------------------------------------------
STOCKHOLDERS' EQUITY
Common stock 138,665 85,614
Additional paid-in capital 128,622 166,494
Accumulated other comprehensive loss (2,501) (169,334)
Retained earnings 1,904,502 1,666,761
Treasury stock (603,169) (603,171)
---------------------------------------------------------------------
Total stockholders' equity 1,566,119 1,146,364
---------------------------------------------------------------------
Total liabilities and stockholders'
equity $ 3,905,430 $ 3,326,423
=====================================================================
HARSCO CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Three Months Ended Twelve Months Ended
December 31 December 31
(In thousands) 2007 2006 2007 2006
---------------------------------------------------------------------
Cash flows from
operating activities:
Net income $ 91,447 $ 52,471 $ 299,492 $ 196,398
Adjustments to reconcile
net income to net cash
provided (used) by
operating activities:
Depreciation 73,382 64,496 277,397 245,397
Amortization 8,440 1,985 29,016 7,585
Equity in income of
unconsolidated
entities, net (310) 67 (1,049) (188)
Dividends or
distributions from
unconsolidated
entities 5 -- 181 --
Other, net (41,341) (1,124) (42,076) 8,008
Changes in assets and
liabilities, net of
acquisitions and
dispositions of
businesses:
Accounts receivable 39,056 28,191 (60,721) (27,261)
Inventories (31,830) 2,099 (106,495) (20,347)
Accounts payable (6,291) 23,569 18,268 13,017
Accrued interest
payable (20,488) (18,282) (1,291) 497
Accrued compensation 11,721 8,234 8,516 11,846
Other assets and
liabilities (24,395) (31,403) 50,502 (25,713)
---------------------------------------------------------------------
Net cash provided by
operating activities 99,396 130,303 471,740 409,239
---------------------------------------------------------------------
Cash flows from investing
activities:
Purchases of property,
plant and equipment (117,403) (83,693) (443,583) (340,173)
Purchase of businesses,
net of cash acquired (830) (22,912) (254,639) (34,333)
Proceeds from sales of
assets 298,899 6,227 317,189 17,650
Other investing
activities (2,110) (2,718) (5,092) (2,599)
---------------------------------------------------------------------
Net cash provided
(used) by investing
activities 178,556 (103,096) (386,125) (359,455)
---------------------------------------------------------------------
Cash flows from financing
activities:
Short-term borrowings,
net (376,208) 84,846 (137,645) 73,050
Current maturities and
long-term debt:
Additions 426,060 64,648 1,023,282 315,010
Reductions (298,291) (165,326) (908,295) (423,769)
Cash dividends paid on
common stock (14,945) (13,657) (59,725) (54,516)
Common stock
issued-options 7,351 319 11,765 11,574
Other financing
activities (2,697) (1,854) (7,069) (5,545)
---------------------------------------------------------------------
Net cash used by
financing activities (258,730) (31,024) (77,687) (84,196)
---------------------------------------------------------------------
Effect of exchange rate
changes on cash (57) 5,544 12,645 14,743
---------------------------------------------------------------------
Net increase (decrease)
in cash and cash
equivalents 19,165 1,727 20,573 (19,669)
Cash and cash
equivalents at beginning
of period 102,668 99,533 101,260 120,929
---------------------------------------------------------------------
Cash and cash
equivalents at end
of period $ 121,833 $ 101,260 $ 121,833 $ 101,260
=====================================================================
HARSCO CORPORATION
REVIEW OF OPERATIONS BY SEGMENT (Unaudited)
(In thousands)
Three Months Ended Three Months Ended
December 31, 2007 December 31, 2006
Operating
Income Operating
Sales (loss) Sales Income
---------------------------------------------------------------------
Access Services
Segment $ 387,481 $ 51,350 $ 306,843 $ 31,500
Mill Services Segment 404,745 31,062 350,136 38,346
Minerals & Rail
Services and Products
("all other") Category 182,379 29,944 147,257 14,787
General Corporate 16 (1,702) -- 265
---------------------------------------------------------------------
Consolidated Totals $ 974,621 $ 110,654 $ 804,236 $ 84,898
=====================================================================
Twelve Months Ended Twelve Months Ended
December 31, 2007 December 31, 2006
Operating Operating
Income Income
Sales (loss) Sales (loss)
---------------------------------------------------------------------
Access Services
Segment $ 1,415,873 $ 183,752 $ 1,080,924 $ 120,382
Mill Services Segment 1,522,274 134,504 1,366,530 147,798
Minerals & Rail
Services and Products
("all other") Category 749,997 142,191 578,159 77,466
General Corporate 16 (2,642) -- (1,337)
---------------------------------------------------------------------
Consolidated
Totals $ 3,688,160 $ 457,805 $ 3,025,613 $ 344,309
=====================================================================
CONTACT: Harsco Corporation
Media Contact
Kenneth D. Julian
717.730.3683
kjulian@harsco.com
Investor Contact
Eugene M. Truett
717.975.5677
etruett@harsco.com