Date of Report (Date of earliest event reported) | ||||||||
(Exact name of registrant as specified in its charter) | ||||||||
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||||||
(Address of principal executive offices) | (Zip Code) | |||||||
Registrant’s telephone number, including area code | ||||||||
(Former name or former address, if changed since last report.) |
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)) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Earnings press release dated October 29, 2019. |
Harsco Corporation | ||
Date: October 29, 2019 | /s/ PETER F. MINAN | |
Peter F. Minan | ||
Senior Vice President and Chief Financial Officer |
Investor Contact David Martin 717.612.5628 damartin@harsco.com | Media Contact Jay Cooney 717.730.3683 jcooney@harsco.com |
• | Q3 GAAP Operating Income of $47 Million |
• | Adjusted Operating Income Excluding Unusual Items and Acquisition-Related Amortization Expense Totaled $57 Million and Adjusted Operating Margin Reached 13.5 Percent; Results Were Consistent with Guidance |
• | Repurchased 1.4 Million Harsco Shares for $26 Million in Q3; $19 Million Remaining Under Share Repurchase Program at Quarter End |
• | Company's Net Leverage Ratio Declined to 2.2x |
• | Successfully Integrated Clean Earth During Quarter and On Pace to Achieve Targeted Synergies |
• | Issued 2018-2019 Environmental, Social and Governance (ESG) Report Highlighting Company's Corporate Sustainability Initiatives and Accomplishments |
• | 2019 Adjusted Operating Income Now Expected to Increase Nearly 10% Year-over-Year at Guidance Midpoint; Full Year Range is Now $209 Million to $214 Million |
($ in millions, except per share amounts) | Q3 2019 | Q3 2018 | ||||||
Revenues | $ | 423 | $ | 352 | ||||
Operating income from continuing operations - GAAP | $ | 47 | $ | 42 | ||||
Operating margin from continuing operations - GAAP | 11.0 | % | 11.9 | % | ||||
Diluted EPS from continuing operations - GAAP | $ | 0.22 | $ | 0.29 | ||||
Return on invested capital (TTM) - excluding unusual items and including discontinued operations | 12.5 | % |
($ in millions) | Q3 2019 | Q3 2018 | %Change | ||||||||
Revenues | $ | 261 | $ | 269 | (3 | )% | |||||
Operating income - GAAP | $ | 33 | $ | 29 | 12 | % | |||||
Operating margin - GAAP | 12.6 | % | 10.9 | % |
($ in millions) | Q3 2019 | Q3 2018 | %Change | ||||||||
Revenues | $ | 88 | $ | 71 | 23 | % | |||||
Operating income - GAAP | $ | 11 | $ | 4 | 173 | % | |||||
Operating margin - GAAP | 12.9 | % | 5.8 | % |
($ in millions) | Q3 2019 | Q3 2018 | %Change | ||||||||
Revenues | $ | 75 | $ | 83 | (10 | )% | |||||
Operating income - GAAP | $ | 12 | $ | 19 | (36 | )% | |||||
Operating margin - GAAP | 16.2 | % | 23.0 | % |
2019 Full Year Outlook | |||
2019 Outlook | 2019 Prior | 2018 Actual (as previously reported) | |
Projected Operating Income | $171 - $176m | $181 - 191m | $191m |
Adjusted Operating Income before Acquisition Amortization | $209 - 214m | $215 - 225m | $194m |
Projected Diluted Earnings Per Share | $0.86 - 0.92 | $0.89 - 1.02 | $1.64 |
Adjusted Diluted Earnings Per Share (before Acquisition Amortization) | $1.36 - 1.42 | $1.38 - 1.51 | $1.40 |
Free Cash Flow Before Growth Capital | $120 - 130m | $125 - 135m | $104m |
Free Cash Flow | $40 - 50m | $55 - 65m | $73m |
Adjusted Return on Invested Capital | 12 - 13% | ||
Net Interest Expense | $43 - 44m | ||
Non-Operating Defined Benefit Pension Expense | $6m | ||
Effective Tax Rate, Excluding Any Unusual Items | 25 - 27% |
Q4 2019 Outlook | ||
Q4 2019 | Q4 2018 (as previously reported) | |
Operating Income | $47 - 52m | $44m |
Adjusted Operating Income before Acquisition Amortization | $53 - 58m | $43m |
Diluted Earnings Per Share | $0.25 - 0.31 | $0.55 |
Adjusted Diluted Earnings Per Share (before Acquisition Amortization) | $0.30 - 0.36 | $0.36 |
HARSCO CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30 | September 30 | |||||||||||||||
(In thousands, except per share amounts) | 2019 | 2018 | 2019 | 2018 | ||||||||||||
Revenues from continuing operations: | ||||||||||||||||
Service revenues | $ | 316,667 | $ | 224,196 | $ | 784,190 | $ | 714,114 | ||||||||
Product revenues | 106,488 | 127,367 | 319,765 | 301,796 | ||||||||||||
Total revenues | 423,155 | 351,563 | 1,103,955 | 1,015,910 | ||||||||||||
Costs and expenses from continuing operations: | ||||||||||||||||
Cost of services sold | 239,519 | 174,937 | 608,230 | 554,005 | ||||||||||||
Cost of products sold | 71,970 | 82,139 | 220,634 | 205,941 | ||||||||||||
Selling, general and administrative expenses | 63,197 | 51,049 | 187,104 | 149,257 | ||||||||||||
Research and development expenses | 1,341 | 1,344 | 3,210 | 3,171 | ||||||||||||
Other expenses, net | 383 | 335 | 409 | 985 | ||||||||||||
Total costs and expenses | 376,410 | 309,804 | 1,019,587 | 913,359 | ||||||||||||
Operating income from continuing operations | 46,745 | 41,759 | 84,368 | 102,551 | ||||||||||||
Interest income | 445 | 575 | 1,569 | 1,645 | ||||||||||||
Interest expense | (12,819 | ) | (5,620 | ) | (24,429 | ) | (16,891 | ) | ||||||||
Unused debt commitment and amendment fees; and loss on early extinguishment of debt | (158 | ) | (125 | ) | (7,593 | ) | (1,159 | ) | ||||||||
Defined benefit pension income (expense) | (1,356 | ) | 934 | (4,166 | ) | 2,677 | ||||||||||
Income from continuing operations before income taxes and equity income | 32,857 | 37,523 | 49,749 | 88,823 | ||||||||||||
Income tax expense | (12,601 | ) | (11,054 | ) | (17,814 | ) | (16,750 | ) | ||||||||
Equity income of unconsolidated entities, net | 81 | — | 151 | — | ||||||||||||
Income from continuing operations | 20,337 | 26,469 | 32,086 | 72,073 | ||||||||||||
Discontinued operations: | ||||||||||||||||
Gain on sale of discontinued business | 527,980 | — | 527,980 | — | ||||||||||||
Income from discontinued businesses | 272 | 10,866 | 23,958 | 32,099 | ||||||||||||
Income tax expense related to discontinued businesses | (110,732 | ) | (2,684 | ) | (112,701 | ) | (7,233 | ) | ||||||||
Income from discontinued operations | 417,520 | 8,182 | 439,237 | 24,866 | ||||||||||||
Net income | 437,857 | 34,651 | 471,323 | 96,939 | ||||||||||||
Less: Net income attributable to noncontrolling interests | (2,506 | ) | (1,804 | ) | (6,633 | ) | (5,795 | ) | ||||||||
Net income attributable to Harsco Corporation | $ | 435,351 | $ | 32,847 | $ | 464,690 | $ | 91,144 | ||||||||
Amounts attributable to Harsco Corporation common stockholders: | ||||||||||||||||
Income from continuing operations, net of tax | $ | 17,831 | $ | 24,665 | $ | 25,453 | $ | 66,278 | ||||||||
Income from discontinued operations, net of tax | 417,520 | 8,182 | 439,237 | 24,866 | ||||||||||||
Net income attributable to Harsco Corporation common stockholders | $ | 435,351 | $ | 32,847 | $ | 464,690 | $ | 91,144 | ||||||||
Weighted-average shares of common stock outstanding | 79,666 | 80,950 | 79,966 | 80,821 | ||||||||||||
Basic earnings per common share attributable to Harsco Corporation common stockholders: | ||||||||||||||||
Continuing operations | $ | 0.22 | $ | 0.30 | $ | 0.32 | $ | 0.82 | ||||||||
Discontinued operations | 5.24 | 0.10 | 5.49 | 0.31 | ||||||||||||
Basic earnings per share attributable to Harsco Corporation common stockholders | $ | 5.46 | $ | 0.41 | (a) | $ | 5.81 | $ | 1.13 | |||||||
Diluted weighted-average shares of common stock outstanding | 81,110 | 83,879 | 81,749 | 83,690 | ||||||||||||
Diluted earnings per common share attributable to Harsco Corporation common stockholders: | ||||||||||||||||
Continuing operations | $ | 0.22 | $ | 0.29 | $ | 0.31 | $ | 0.79 | ||||||||
Discontinued operations | 5.15 | 0.10 | 5.37 | 0.30 | ||||||||||||
Diluted earnings per share attributable to Harsco Corporation common stockholders | $ | 5.37 | $ | 0.39 | $ | 5.68 | $ | 1.09 |
HARSCO CORPORATION CONSOLIDATED BALANCE SHEETS (Unaudited) | ||||||||
(In thousands) | September 30 2019 | December 31 2018 | ||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 75,458 | $ | 64,260 | ||||
Restricted cash | 2,461 | 2,886 | ||||||
Trade accounts receivable, net | 310,662 | 246,427 | ||||||
Insurance claim receivable | 195,000 | 30,000 | ||||||
Other receivables | 24,343 | 23,770 | ||||||
Inventories | 149,984 | 116,185 | ||||||
Current portion of contract assets | 13,670 | 12,130 | ||||||
Current portion of assets held-for-sale | 42,368 | 75,232 | ||||||
Other current assets | 62,442 | 34,144 | ||||||
Total current assets | 876,388 | 605,034 | ||||||
Property, plant and equipment, net | 550,073 | 432,793 | ||||||
Right-of-use assets, net | 47,662 | — | ||||||
Goodwill | 725,106 | 404,713 | ||||||
Intangible assets, net | 301,100 | 69,207 | ||||||
Deferred income tax assets | 11,661 | 48,551 | ||||||
Assets held-for-sale | 28,659 | 55,331 | ||||||
Other assets | 17,842 | 17,238 | ||||||
Total assets | $ | 2,558,491 | $ | 1,632,867 | ||||
LIABILITIES | ||||||||
Current liabilities: | ||||||||
Short-term borrowings | $ | 7,417 | $ | 10,078 | ||||
Current maturities of long-term debt | 2,540 | 6,489 | ||||||
Accounts payable | 165,570 | 124,984 | ||||||
Accrued compensation | 40,394 | 50,201 | ||||||
Income taxes payable | 102,041 | 2,634 | ||||||
Insurance liabilities | 205,721 | 40,774 | ||||||
Current portion of advances on contracts | 46,813 | 29,407 | ||||||
Current portion of operating lease liabilities | 12,145 | — | ||||||
Current portion of liabilities of assets held-for-sale | 15,203 | 39,410 | ||||||
Other current liabilities | 128,790 | 113,019 | ||||||
Total current liabilities | 726,634 | 416,996 | ||||||
Long-term debt | 764,254 | 585,662 | ||||||
Insurance liabilities | 19,730 | 19,575 | ||||||
Retirement plan liabilities | 176,791 | 213,578 | ||||||
Advances on contracts | 344 | 37,675 | ||||||
Operating lease liabilities | 32,772 | — | ||||||
Liabilities of assets held-for-sale | 5,274 | 555 | ||||||
Other liabilities | 81,432 | 45,450 | ||||||
Total liabilities | 1,807,231 | 1,319,491 | ||||||
HARSCO CORPORATION STOCKHOLDERS’ EQUITY | ||||||||
Common stock | 143,396 | 141,842 | ||||||
Additional paid-in capital | 198,007 | 190,597 | ||||||
Accumulated other comprehensive loss | (587,759 | ) | (567,107 | ) | ||||
Retained earnings | 1,784,871 | 1,298,752 | ||||||
Treasury stock | (832,775 | ) | (795,821 | ) | ||||
Total Harsco Corporation stockholders’ equity | 705,740 | 268,263 | ||||||
Noncontrolling interests | 45,520 | 45,113 | ||||||
Total equity | 751,260 | 313,376 | ||||||
Total liabilities and equity | $ | 2,558,491 | $ | 1,632,867 |
HARSCO CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30 | September 30 | |||||||||||||||
(In thousands) | 2019 | 2018 | 2019 | 2018 | ||||||||||||
Cash flows from operating activities: | ||||||||||||||||
Net income | $ | 437,857 | $ | 34,651 | $ | 471,323 | $ | 96,939 | ||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||||
Depreciation | 29,824 | 30,319 | 89,681 | 92,324 | ||||||||||||
Amortization | 6,149 | 3,054 | 11,941 | 7,620 | ||||||||||||
Deferred income tax expense | 15,323 | 1,656 | 11,500 | 1,996 | ||||||||||||
Equity in income of unconsolidated entities, net | (81 | ) | — | (151 | ) | — | ||||||||||
Dividends from unconsolidated entities | 125 | 88 | 125 | 88 | ||||||||||||
Gain on sale from discontinued business | (527,980 | ) | — | (527,980 | ) | — | ||||||||||
Loss on early extinguishment of debt | 5,314 | — | 5,314 | — | ||||||||||||
Other, net | (374 | ) | (552 | ) | 2,187 | 2,485 | ||||||||||
Changes in assets and liabilities: | ||||||||||||||||
Accounts receivable | 14,639 | (7,577 | ) | (12,395 | ) | (29,022 | ) | |||||||||
Inventories | (22,980 | ) | (7,677 | ) | (43,477 | ) | (18,852 | ) | ||||||||
Contract assets | (5,200 | ) | (9,034 | ) | (5,269 | ) | (10,427 | ) | ||||||||
Right-of-use assets | 3,976 | — | 11,204 | — | ||||||||||||
Accounts payable | (5,302 | ) | 10,188 | 5,615 | 17,547 | |||||||||||
Accrued interest payable | 7,113 | 43 | 7,398 | (15 | ) | |||||||||||
Accrued compensation | 1,723 | 5,607 | (12,802 | ) | (10,438 | ) | ||||||||||
Advances on contracts | (6,686 | ) | 777 | (17,067 | ) | (12,339 | ) | |||||||||
Operating lease liabilities | (4,025 | ) | — | (10,919 | ) | — | ||||||||||
Retirement plan liabilities, net | (5,654 | ) | (10,413 | ) | (18,800 | ) | (28,743 | ) | ||||||||
Income taxes payable - Gain on sale of discontinued business | 102,940 | — | 102,940 | — | ||||||||||||
Other assets and liabilities | (2,044 | ) | (2,815 | ) | (20,339 | ) | (14,149 | ) | ||||||||
Net cash provided by operating activities | 44,657 | 48,315 | 50,029 | 95,014 | ||||||||||||
Cash flows from investing activities: | ||||||||||||||||
Purchases of property, plant and equipment | (55,870 | ) | (34,806 | ) | (147,071 | ) | (91,302 | ) | ||||||||
Purchases of businesses, net of cash acquired | (39,010 | ) | — | (623,495 | ) | (56,389 | ) | |||||||||
Proceeds from sale of business | 599,685 | — | 599,685 | — | ||||||||||||
Proceeds from sales of assets | 5,355 | 5,943 | 7,560 | 9,096 | ||||||||||||
Purchase of intangible assets | (721 | ) | — | (1,246 | ) | — | ||||||||||
Net payments from settlement of foreign currency forward exchange contracts | 2,144 | 6,186 | 1,453 | 3,244 | ||||||||||||
Payments for interest rate swap terminations | — | — | (2,758 | ) | — | |||||||||||
Net cash provided (used) by investing activities | 511,583 | (22,677 | ) | (165,872 | ) | (135,351 | ) | |||||||||
Cash flows from financing activities: | ||||||||||||||||
Short-term borrowings, net | (1,501 | ) | 2,434 | (1,417 | ) | (543 | ) | |||||||||
Current maturities and long-term debt: | ||||||||||||||||
Additions | 41,627 | 3,300 | 781,987 | 128,158 | ||||||||||||
Reductions | (601,283 | ) | (31,911 | ) | (604,616 | ) | (75,104 | ) | ||||||||
Dividends paid to noncontrolling interests | (5 | ) | (837 | ) | (3,103 | ) | (5,446 | ) | ||||||||
Sale of noncontrolling interests | 3,150 | — | 4,026 | 477 | ||||||||||||
Common stock acquired for treasury | (25,752 | ) | — | (25,752 | ) | — | ||||||||||
Stock-based compensation - Employee taxes paid | (35 | ) | (71 | ) | (11,202 | ) | (3,685 | ) | ||||||||
Deferred financing costs | (1,609 | ) | (183 | ) | (11,073 | ) | (537 | ) | ||||||||
Net cash provided (used) by financing activities | (585,408 | ) | (27,268 | ) | 128,850 | 43,320 | ||||||||||
Effect of exchange rate changes on cash and cash equivalents, including restricted cash | (1,992 | ) | (906 | ) | (2,234 | ) | (4,641 | ) | ||||||||
Net increase (decrease) in cash and cash equivalents, including restricted cash | (31,160 | ) | (2,536 | ) | 10,773 | (1,658 | ) | |||||||||
Cash and cash equivalents, including restricted cash, at beginning of period | 109,079 | 67,087 | 67,146 | 66,209 | ||||||||||||
Cash and cash equivalents, including restricted cash, at end of period | $ | 77,919 | $ | 64,551 | $ | 77,919 | $ | 64,551 |
HARSCO CORPORATION REVIEW OF OPERATIONS BY SEGMENT (Unaudited) | ||||||||||||||||
Three Months Ended | Three Months Ended | |||||||||||||||
September 30, 2019 (b) | September 30, 2018 (b) | |||||||||||||||
(In thousands) | Revenues | Operating Income (Loss) | Revenues | Operating Income (Loss) | ||||||||||||
Harsco Environmental | $ | 260,883 | $ | 32,794 | $ | 268,881 | $ | 29,338 | ||||||||
Harsco Clean Earth (a) | 87,639 | 11,308 | — | — | ||||||||||||
Harsco Rail | 74,633 | 12,115 | 82,682 | 19,000 | ||||||||||||
Corporate | — | (9,472 | ) | — | (6,579 | ) | ||||||||||
Consolidated Totals | $ | 423,155 | $ | 46,745 | $ | 351,563 | $ | 41,759 | ||||||||
Nine Months Ended | Nine Months Ended | |||||||||||||||
September 30, 2019 (b) | September 30, 2018 (b) | |||||||||||||||
(In thousands) | Revenues | Operating Income (Loss) | Revenues | Operating Income (Loss) | ||||||||||||
Harsco Environmental | $ | 791,533 | $ | 84,868 | $ | 805,924 | $ | 92,734 | ||||||||
Harsco Clean Earth (a) | 87,639 | 11,308 | — | — | ||||||||||||
Harsco Rail | 224,783 | 26,947 | 209,912 | 29,570 | ||||||||||||
Corporate | — | (38,755 | ) | 74 | (19,753 | ) | ||||||||||
Consolidated Totals | $ | 1,103,955 | $ | 84,368 | $ | 1,015,910 | $ | 102,551 |
(a) | The Company's acquisition of Clean Earth closed on June 28, 2019. |
(b) | The operating results of the former Harsco Industrial Segment have been reflected as discontinued operations in the Company's Condensed Consolidated Statement of Operations for all periods presented. |
HARSCO CORPORATION RECONCILIATION OF ADJUSTED DILUTED EARNINGS PER SHARE BEFORE ACQUISITION AMORTIZATION EXPENSE TO DILUTED EARNINGS (LOSS) PER SHARE FROM CONTINUING OPERATIONS AS REPORTED (Unaudited) | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 30 | September 30 | ||||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||||
Diluted earnings per share from continuing operations as reported | $ | 0.22 | $ | 0.29 | $ | 0.31 | $ | 0.79 | |||||||||
Corporate strategic costs (a) | 0.03 | — | 0.22 | — | |||||||||||||
Corporate unused debt commitment and amendment fees (b) | — | — | 0.09 | 0.01 | |||||||||||||
Harsco Environmental Segment provision for doubtful accounts (c) | 0.01 | — | 0.08 | — | |||||||||||||
Harsco Rail Segment improvement initiative costs (d) | 0.01 | — | 0.06 | — | |||||||||||||
Harsco Environmental Segment change in fair value to contingent consideration liability (e) | (0.01 | ) | — | (0.05 | ) | — | |||||||||||
Harsco Environmental Segment site exit related (f) | — | — | (0.03 | ) | — | ||||||||||||
Harsco Clean Earth Segment severance costs (g) | 0.02 | — | 0.02 | — | |||||||||||||
Harsco Environmental Segment adjustment to slag disposal accrual (h) | — | — | — | (0.04 | ) | ||||||||||||
Altek acquisition costs (i) | — | — | — | 0.01 | |||||||||||||
Deferred tax asset valuation allowance adjustment (j) | 0.03 | — | 0.03 | (0.10 | ) | ||||||||||||
Taxes on above unusual items (k) | — | — | (0.04 | ) | — | ||||||||||||
Adjusted diluted earnings per share from continuing operations | $ | 0.31 | $ | 0.30 | (l) | $ | 0.67 | (l) | $ | 0.68 | (l) | ||||||
Acquisition amortization expense, net of tax | 0.06 | 0.02 | 0.10 | 0.05 | |||||||||||||
Adjusted diluted earnings per share before acquisition amortization expense | $ | 0.36 | (l) | $ | 0.32 | $ | 0.78 | (l) | $ | 0.73 |
(a) | Consultant costs at Corporate associated with supporting and executing the Company's growth strategy (Q3 2019 $2.7 million pre-tax; nine months 2019 $17.9 million pre-tax). |
(b) | Costs at Corporate related to the unused bridge financing commitment and Term Loan B amendment (nine months 2019 $7.4 million pre-tax) and the amendment of the Company's existing Senior Secured Credit Facility in order to reduce the interest rate applicable to the Term Loan Facility (nine months 2018 $1.0 million pre-tax). |
(c) | Harsco Environmental Segment provision for doubtful accounts related to a customer in the U.K. entering administration (Q3 $0.8 million pre-tax; nine months 2019 $6.2 million pre-tax). |
(d) | Costs associated with a productivity improvement initiative in the Harsco Rail Segment (Q3 2019 $0.8 million pre-tax; nine months 2019 $4.6 million pre-tax). |
(e) | Fair value adjustment to contingent consideration liability related to the acquisition of Altek (Q3 2019 $0.9 million pre-tax; nine months 2019 $4.4 million pre-tax; Q3 2018 and nine months 2018 $0.4 million pre-tax). The Company adjusts Operating income and Diluted earnings per share from continuing operations to exclude the impact of the change in fair value to the acquisition-related contingent consideration liability for the Altek acquisition because it believes that the adjustment for this item more closely correlates the reported financial measures with the ordinary and ongoing course of the Company's operations. |
(f) | Harsco Environmental Segment site exit related (Q3 2019 $0.2 million pre-tax; nine months 2019 $2.4 million pre-tax). |
(g) | Harsco Clean Earth Segment severance recognized (Q3 and nine month 2019 $1.3 million pre-tax). |
(h) | Harsco Environmental Segment adjustment to previously accrued amounts related to the disposal of certain slag material in Latin America (nine months 2018 $3.2 million pre-tax). |
(i) | Costs associated with the acquisition of Altek recorded in the Harsco Environmental Segment (nine months 2018 $0.8 million pre-tax) and at Corporate (nine months 2018 $0.4 million pre-tax). |
(j) | Adjustment of certain existing deferred tax asset valuation allowances as a result of a site exit in a certain jurisdiction in 2019 and the Altek acquisition in 2018 (Q3 and nine months 2019 $2.8 million; nine months 2018 $8.3 million). |
(k) | 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. |
(l) | Does not total due to rounding. |
HARSCO CORPORATION RECONCILIATION OF ADJUSTED DILUTED EARNINGS PER SHARE BEFORE ACQUISITION AMORTIZATION EXPENSE AND INCLUDING DISCONTINUED OPERATIONS TO DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS AS REPORTED (Unaudited) | ||||||
Three Months Ended | ||||||
December 31 | ||||||
2018 | ||||||
Diluted earnings per share from continuing operations as reported (a) | $ | 0.41 | ||||
Harsco Environmental Segment change in fair value to contingent consideration liability (b) | (0.04 | ) | ||||
Harsco Rail Segment improvement initiative costs (c) | 0.01 | |||||
Impact of U.S. Tax reform on income tax expense (d) | (0.18 | ) | ||||
Adjusted diluted earnings per share from continuing operations before acquisition amortization expense | 0.20 | |||||
Acquisition amortization expense, net of tax | 0.02 | |||||
Adjusted diluted earnings per share from continuing operations before acquisition amortization expense | 0.22 | |||||
Diluted earnings per share principally from the former Harsco Industrial Segment, excluding acquisition amortization expense | 0.14 | |||||
Adjusted diluted earnings per share before acquisition amortization expense and including discontinued operations | $ | 0.36 |
(a) | Prior period amounts have been updated to reflect the former Harsco Industrial Segment as discontinued operations. |
(b) | Fair value adjustment to contingent consideration liability related to the acquisition of Altek (Q4 2018 $3.4 million pre-tax). The Company adjusts Operating income and Diluted earnings per share from continuing operations to exclude the impact of the change in fair value to the acquisition-related contingent consideration liability for the Altek acquisition because it believes that the adjustment for this item more closely correlates the reported financial measures with the ordinary and ongoing course of the Company's operations. |
(c) | Costs associated with a productivity improvement initiative in the Harsco Rail Segment (Q4 2018 $0.6 million pre-tax). |
(d) | The Company recorded a benefit (expense) as a result of revaluing net deferred tax assets and liabilities as a result of U.S. tax reform (Q4 2018 $15.4 million benefit). |
HARSCO CORPORATION RECONCILIATION OF ADJUSTED DILUTED EARNINGS PER SHARE BEFORE ACQUISITION AMORTIZATION EXPENSE AND INCLUDING DISCONTINUED OPERATIONS TO DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS AS REPORTED (Unaudited) | |||||
Twelve Months Ended | |||||
December 31 | |||||
2018 | |||||
Diluted earnings per share from continuing operations as reported (a) | $ | 1.20 | |||
Harsco Environmental adjustment to slag disposal accrual (b) | (0.04 | ) | |||
Harsco Environmental Segment change in fair value to contingent consideration liability (c) | (0.04 | ) | |||
Altek acquisition costs (d) | 0.01 | ||||
Loss on early extinguishment of debt (e) | 0.01 | ||||
Harsco Rail Segment improvement initiative costs (f) | 0.01 | ||||
Taxes on above unusual items (g) | (0.01 | ) | |||
Impact of U.S. tax reform on income tax benefit (expense) (h) | (0.18 | ) | |||
Deferred tax asset valuation allowance adjustment (i) | (0.10 | ) | |||
Adjusted diluted earnings per share from continuing operations | 0.88 | (j) | |||
Acquisition amortization expense, net of tax | 0.07 | ||||
Adjusted diluted earnings per share from continuing operations excluding acquisition amortization expense | 0.94 | (j) | |||
Diluted earnings per share from the former Harsco Industrial Segment, excluding acquisition amortization expense | 0.45 | ||||
Adjusted diluted earnings per share before acquisition amortization expense and including discontinued operations | $ | 1.40 | (j) |
(a) | Prior period amounts have been updated to reflect the former Harsco Industrial Segment as discontinued operations. |
(b) | Harsco Environmental adjustment to previously accrued amounts related to the disposal of certain slag material in Latin America ($3.2 million pre-tax). |
(c) | Fair value adjustment to contingent consideration liability related to the acquisition of Altek ($2.9 million pre-tax). The Company adjusts Operating income and Diluted earnings per share from continuing operations to exclude the impact of the change in fair value to the acquisition-related contingent consideration liability for the Altek acquisition because it believes that the adjustment for this item more closely correlates the reported financial measures with the ordinary and ongoing course of the Company's operations. |
(d) | Costs associated with the acquisition of Altek recorded in the Harsco Environmental Segment ($0.8 million pre-tax) and at Corporate ($0.4 million pre-tax). |
(e) | Loss on early extinguishment of debt associated with amending the Company's existing Senior Secured Credit Facility in order to reduce the interest rate applicable to the Term Loan Facility ($1.0 million pre-tax). |
(f) | Costs associated with a productivity improvement initiative in the Harsco Rail Segment ($0.6 million pre-tax). |
(g) | 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. |
(h) | The Company recorded a benefit (expense) as a result of revaluing net deferred tax assets and liabilities as a result of U.S. tax reform ($15.4 million benefit). |
(i) | Adjustment of certain existing deferred tax asset valuation allowances as a result of the Altek acquisition ($8.3 million). |
(j) | Does not total due to rounding. |
HARSCO CORPORATION RECONCILIATION OF PROJECTED DILUTED EARNINGS PER SHARE AND ADJUSTED DILUTED EARNINGS PER SHARE BEFORE ESTIMATED ACQUISITION AMORTIZATION EXPENSE TO DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS (Unaudited) | ||||||||||||||||
Projected Three Months Ending December 31 | Projected Twelve Months Ending December 31 | |||||||||||||||
2019 | 2019 | |||||||||||||||
Low | High | Low | High | |||||||||||||
Diluted earnings per share from continuing operations (a)(b) | $ | 0.25 | $ | 0.31 | $ | 0.59 | $ | 0.65 | ||||||||
Diluted earnings per share from discontinued operations before acquisition amortization expense (c) | — | — | 0.26 | 0.26 | ||||||||||||
Project diluted earnings per share | 0.25 | 0.31 | 0.85 | 0.91 | ||||||||||||
Corporate strategic and transaction related costs | — | — | 0.22 | 0.22 | ||||||||||||
Corporate unused debt commitment and amendment fees | — | — | 0.09 | 0.09 | ||||||||||||
Harsco Environmental Segment provision for doubtful accounts | — | — | 0.08 | 0.08 | ||||||||||||
Harsco Environmental Segment site exit cost related | — | — | (0.03 | ) | (0.03 | ) | ||||||||||
Harsco Clean Earth Segment severance costs | — | — | 0.02 | 0.02 | ||||||||||||
Deferred tax asset valuation allowance adjustment | — | — | 0.03 | 0.03 | ||||||||||||
Harsco Rail Segment improvement initiative costs | — | — | 0.06 | 0.06 | ||||||||||||
Harsco Environmental Segment change in fair value to contingent consideration liability | — | — | (0.05 | ) | (0.05 | ) | ||||||||||
Taxes on above unusual items | — | — | (0.04 | ) | (0.04 | ) | ||||||||||
Adjusted diluted earnings per share | 0.25 | 0.31 | 1.23 | 1.29 | ||||||||||||
Estimated acquisition amortization expense, net of tax | 0.05 | 0.05 | 0.13 | 0.13 | ||||||||||||
Adjusted diluted earnings per share before estimated acquisition amortization expense | $ | 0.30 | $ | 0.36 | $ | 1.36 | $ | 1.42 |
(a) | Includes results for the Harsco Clean Earth Segment for the period from July 1, 2019 to December 31, 2019. |
(b) | Excludes results for the former Harsco Industrial Segment. |
(c) | Includes results for the former Harsco Industrial Segment for the period from January 1, 2019 to June 30, 2019. |
HARSCO CORPORATION RECONCILIATION OF ADJUSTED OPERATING INCOME (LOSS) BEFORE ACQUISITION AMORTIZATION EXPENSE BY SEGMENT TO OPERATING INCOME (LOSS) AS REPORTED BY SEGMENT (Unaudited) | ||||||||||||||||||||
(In thousands) | Harsco Environmental | Harsco Clean Earth | Harsco Rail | Corporate | Consolidated Totals | |||||||||||||||
Three Months Ended September 30, 2019: | ||||||||||||||||||||
Operating income (loss) as reported | $ | 32,794 | $ | 11,308 | $ | 12,115 | $ | (9,472 | ) | $ | 46,745 | |||||||||
Corporate strategic costs | — | — | — | 2,743 | 2,743 | |||||||||||||||
Harsco Clean Earth Segment severance costs | — | 1,254 | — | — | 1,254 | |||||||||||||||
Harsco Environmental Segment change in fair value to contingent consideration liability | (906 | ) | — | — | — | (906 | ) | |||||||||||||
Harsco Rail Segment improvement initiative costs | — | — | 845 | — | 845 | |||||||||||||||
Harsco Environmental Segment provision for doubtful accounts | 815 | — | — | — | 815 | |||||||||||||||
Harsco Environmental Segment site exit related | (156 | ) | — | — | — | (156 | ) | |||||||||||||
Adjusted operating income (loss) | 32,547 | 12,562 | 12,960 | (6,729 | ) | 51,340 | ||||||||||||||
Acquisition amortization expense | 1,751 | 3,834 | 84 | — | 5,669 | |||||||||||||||
Adjusted operating income (loss) before acquisition amortization expense | $ | 34,298 | $ | 16,396 | $ | 13,044 | $ | (6,729 | ) | $ | 57,009 | |||||||||
Revenues as reported | $ | 260,883 | $ | 87,639 | $ | 74,633 | $ | — | $ | 423,155 | ||||||||||
Adjusted operating margin (%) | 13.1 | % | 18.7 | % | 17.5 | % | 13.5 | % | ||||||||||||
Three Months Ended September 30, 2018: | ||||||||||||||||||||
Operating income (loss) as reported | $ | 29,338 | $ | — | $ | 19,000 | $ | (6,579 | ) | $ | 41,759 | |||||||||
Harsco Environmental Segment change in fair value to contingent consideration liability | 412 | — | — | — | 412 | |||||||||||||||
Adjusted operating income (loss) | 29,750 | — | 19,000 | (6,579 | ) | 42,171 | ||||||||||||||
Acquisition amortization expense | 1,872 | — | 71 | — | 1,943 | |||||||||||||||
Adjusted operating income (loss) before acquisition amortization expense | $ | 31,622 | $ | — | $ | 19,071 | $ | (6,579 | ) | $ | 44,114 | |||||||||
Revenues as reported | $ | 268,881 | $ | — | $ | 82,682 | $ | — | $ | 351,563 | ||||||||||
Adjusted operating margin (%) | 11.8 | % | 23.1 | % | 12.5 | % |
HARSCO CORPORATION RECONCILIATION OF ADJUSTED OPERATING INCOME (LOSS) BEFORE ACQUISITION AMORTIZATION EXPENSE BY SEGMENT TO OPERATING INCOME (LOSS) AS REPORTED BY SEGMENT (Unaudited) | ||||||||||||||||||||
(In thousands) | Harsco Environmental | Harsco Clean Earth | Harsco Rail | Corporate | Consolidated Totals | |||||||||||||||
Nine Months Ended September 30, 2019: | ||||||||||||||||||||
Operating income (loss) as reported | $ | 84,868 | $ | 11,308 | $ | 26,947 | $ | (38,755 | ) | $ | 84,368 | |||||||||
Corporate strategic costs | — | — | — | 17,872 | 17,872 | |||||||||||||||
Harsco Environmental provision for doubtful accounts | 6,174 | — | — | — | 6,174 | |||||||||||||||
Harsco Rail Segment improvement initiative costs | — | — | 4,645 | — | 4,645 | |||||||||||||||
Harsco Environmental Segment change in fair value to contingent consideration liability | (4,416 | ) | — | — | — | (4,416 | ) | |||||||||||||
Harsco Environmental Segment site exit related | (2,427 | ) | — | — | — | (2,427 | ) | |||||||||||||
Harsco Clean Earth Segment severance costs | — | 1,254 | — | — | 1,254 | |||||||||||||||
Adjusted operating income (loss) | 84,199 | 12,562 | 31,592 | (20,883 | ) | 107,470 | ||||||||||||||
Acquisition amortization expense | 5,436 | 3,834 | 238 | — | 9,508 | |||||||||||||||
Adjusted operating income (loss) before acquisition amortization expense | $ | 89,635 | $ | 16,396 | $ | 31,830 | $ | (20,883 | ) | $ | 116,978 | |||||||||
Revenues as reported | $ | 791,533 | $ | 87,639 | $ | 224,783 | $ | — | $ | 1,103,955 | ||||||||||
Adjusted operating margin (%) | 11.3 | % | 18.7 | % | 14.2 | % | 10.6 | % | ||||||||||||
Nine Months Ended September 30, 2018: | ||||||||||||||||||||
Operating income (loss) as reported | $ | 92,734 | $ | — | $ | 29,570 | $ | (19,753 | ) | $ | 102,551 | |||||||||
Harsco Environmental adjustment to slag disposal accrual | (3,223 | ) | — | — | — | (3,223 | ) | |||||||||||||
Altek acquisition costs | 753 | — | — | 431 | 1,184 | |||||||||||||||
Harsco Environmental Segment change in fair value to contingent consideration liability | 412 | — | — | — | 412 | |||||||||||||||
Adjusted operating income (loss) | 90,676 | — | 29,570 | (19,322 | ) | 100,924 | ||||||||||||||
Acquisition amortization expense | 3,734 | — | 235 | — | 3,969 | |||||||||||||||
Adjusted operating income (loss) before acquisition amortization expense | $ | 94,410 | $ | — | $ | 29,805 | $ | (19,322 | ) | $ | 104,893 | |||||||||
Revenues as reported | $ | 805,924 | $ | — | $ | 209,912 | $ | 74 | $ | 1,015,910 | ||||||||||
Adjusted operating margin (%) | 11.7 | % | 14.2 | % | 10.3 | % |
HARSCO CORPORATION RECONCILIATION OF ADJUSTED HARSCO CLEAN EARTH SEGMENT OPERATING INCOME BEFORE ACQUISITION AMORTIZATION EXPENSE TO HARSCO CLEAN EARTH SEGMENT OPERATING INCOME (Unaudited) | ||||
Three Months Ended September 30 | ||||
(In millions) | 2018 | |||
Operating income | $ | 4,278 | ||
Acquisition amortization expense | 3,649 | |||
Adjusted operating income before acquisition amortization expense | $ | 7,927 | ||
Revenues as reported | $ | 71,117 | ||
Adjusted operating margin (%) | 11.1 | % |
HARSCO CORPORATION RECONCILIATION OF ADJUSTED OPERATING INCOME (LOSS) BEFORE ACQUISITION AMORTIZATION EXPENSE AND INCLUDING DISCONTINUED OPERATIONS BY SEGMENT TO OPERATING INCOME (LOSS) AS REPORTED BY SEGMENT (Unaudited) | ||||||||||||||||||||
(In thousands) | Harsco Environmental | Harsco Industrial (a) | Harsco Rail | Corporate | Consolidated Totals | |||||||||||||||
Three Months Ended December 31, 2018: | ||||||||||||||||||||
Operating income (loss) as reported (b) | $ | 28,461 | $ | — | $ | 7,771 | $ | (8,086 | ) | $ | 28,146 | |||||||||
Harsco Environmental Segment change in fair value to contingent consideration liability | (3,351 | ) | — | — | — | (3,351 | ) | |||||||||||||
Harsco Rail Segment improvement initiative costs | — | — | 640 | — | 640 | |||||||||||||||
Adjusted operating income (loss) | 25,110 | — | 8,411 | (8,086 | ) | 25,435 | ||||||||||||||
Acquisition amortization expense | 1,819 | — | 71 | — | 1,890 | |||||||||||||||
Adjusted operating income (loss) before acquisition amortization expense | 26,929 | — | 8,482 | (8,086 | ) | 27,325 | ||||||||||||||
Discontinued operations - Harsco Industrial including acquisition amortization expense | — | 15,956 | — | — | 15,956 | |||||||||||||||
Adjusted operating income (loss) before acquisition amortization expense and including discontinued operations | $ | 26,929 | $ | 15,956 | $ | 8,482 | $ | (8,086 | ) | $ | 43,281 |
(a) | The operating results of the former Harsco Industrial Segment have been reflected as discontinued operations in the Company's Condensed Consolidated Statement of Operations for all periods presented. |
HARSCO CORPORATION RECONCILIATION OF ADJUSTED OPERATING INCOME (LOSS) BEFORE ACQUISITION AMORTIZATION EXPENSE AND INCLUDING DISCONTINUED OPERATIONS BY SEGMENT TO OPERATING INCOME (LOSS) AS REPORTED BY SEGMENT (Unaudited) | ||||||||||||||||||||
(In thousands) | Harsco Environmental | Harsco Industrial (a) | Harsco Rail | Corporate | Consolidated Totals | |||||||||||||||
Twelve Months Ended December 31, 2018: | ||||||||||||||||||||
Operating income (loss) as reported | $ | 121,195 | $ | — | $ | 37,341 | $ | (27,839 | ) | $ | 130,697 | |||||||||
Harsco Environmental adjustment to slag disposal accrual | (3,223 | ) | — | — | — | (3,223 | ) | |||||||||||||
Harsco Environmental Segment change in fair value to contingent consideration liability | (2,939 | ) | — | — | — | (2,939 | ) | |||||||||||||
Altek acquisition costs | 753 | — | — | 431 | 1,184 | |||||||||||||||
Harsco Rail Segment improvement initiative costs | — | — | 640 | — | 640 | |||||||||||||||
Adjusted operating income (loss) | 115,786 | — | 37,981 | (27,408 | ) | 126,359 | ||||||||||||||
Acquisition amortization expense | 5,553 | — | 306 | — | 5,859 | |||||||||||||||
Adjusted operating income (loss) before acquisition amortization expense | 121,339 | — | 38,287 | (27,408 | ) | 132,218 | ||||||||||||||
Discontinued operations - Harsco Industrial before acquisition amortization expense | — | 62,036 | — | — | 62,036 | |||||||||||||||
Adjusted operating income (loss) before acquisition amortization expense and including discontinued operations | $ | 121,339 | $ | 62,036 | $ | 38,287 | $ | (27,408 | ) | $ | 194,254 |
(a) | The operating results of the former Harsco Industrial Segment have been reflected as discontinued operations in the Company's Condensed Consolidated Statement of Operations for all periods presented. |
HARSCO CORPORATION RECONCILIATION OF ADJUSTED OPERATING INCOME (LOSS) BEFORE ACQUISITION AMORTIZATION EXPENSE AND INCLUDING DISCONTINUED OPERATIONS BY SEGMENT TO OPERATING INCOME (LOSS) AS REPORTED BY SEGMENT (Unaudited) | ||||||||||||||||||||
For the Three Months Ended | For the Year Ended | |||||||||||||||||||
(In thousands) | March 31, 2018 | June 30, 2018 | September 30, 2018 | December 31, 2018 | December 31, 2018 | |||||||||||||||
Operating income (a) | $ | 22,728 | $ | 38,064 | $ | 41,759 | $ | 28,146 | $ | 130,697 | ||||||||||
Harsco Environmental adjustment to slag disposal accrual | — | (3,223 | ) | — | — | (3,223 | ) | |||||||||||||
Harsco Environmental Segment change in fair value to contingent consideration liability | — | — | 412 | (3,351 | ) | (2,939 | ) | |||||||||||||
Altek acquisition costs | — | 1,184 | — | — | 1,184 | |||||||||||||||
Harsco Rail Segment improvement initiative costs | — | — | — | 640 | 640 | |||||||||||||||
Adjusted operating income | 22,728 | 36,025 | 42,171 | 25,435 | 126,359 | |||||||||||||||
Acquisition amortization expense | 829 | 1,197 | 1,943 | 1,890 | 5,859 | |||||||||||||||
Adjusted operating income before acquisition amortization expense | 23,557 | 37,222 | 44,114 | 27,325 | 132,218 | |||||||||||||||
Discontinued operations - Harsco Industrial before acquisition amortization expense | 14,265 | 16,013 | 15,802 | 15,956 | 62,036 | |||||||||||||||
Adjusted operating income before acquisition amortization expense and including discontinued operations | $ | 37,822 | $ | 53,235 | $ | 59,916 | $ | 43,281 | $ | 194,254 |
(a) | The operating results of the former Harsco Industrial Segment have been reflected as discontinued operations in the Company's Condensed Consolidated Statement of Operations for all periods presented. |
HARSCO CORPORATION RECONCILIATION OF ADJUSTED OPERATING INCOME (LOSS) BEFORE ACQUISITION AMORTIZATION EXPENSE AND INCLUDING DISCONTINUED OPERATIONS BY SEGMENT TO OPERATING INCOME (LOSS) AS REPORTED BY SEGMENT (Unaudited) | ||||||||||||
For the Three Months Ended | For the Six Months Ended | |||||||||||
(In thousands) | March 31, 2019 | June 30, 2019 | June 30, 2019 | |||||||||
Operating income (a) | $ | 19,824 | $ | 17,799 | $ | 37,623 | ||||||
Corporate strategic costs | 2,739 | 12,390 | 15,129 | |||||||||
Harsco Environmental Segment provision for doubtful accounts | — | 5,359 | 5,359 | |||||||||
Harsco Rail Segment improvement initiative costs | 2,648 | 1,152 | 3,800 | |||||||||
Harsco Environmental Segment change in fair value to contingent consideration liability | 369 | (3,879 | ) | (3,510 | ) | |||||||
Harsco Environmental site exit related | (2,271 | ) | — | (2,271 | ) | |||||||
Adjusted operating income | 23,309 | 32,821 | 56,130 | |||||||||
Acquisition amortization expense | 1,939 | 1,900 | 3,839 | |||||||||
Adjusted operating income before acquisition amortization expense | 25,248 | 34,721 | 59,969 | |||||||||
Discontinued operations - Harsco Industrial before acquisition amortization expense | 18,834 | 20,560 | 39,394 | |||||||||
Adjusted operating income before acquisition amortization expense and including discontinued operations | $ | 44,082 | $ | 55,281 | $ | 99,363 |
(a) | The operating results of the former Harsco Industrial Segment have been reflected as discontinued operations in the Company's Condensed Consolidated Statement of Operations for all periods presented. |
HARSCO CORPORATION RECONCILIATION OF PROJECTED OPEARTING INCOME AND ADJUSTED OPERATING INCOME BEFORE ACQUISITION AMORTIZATION EXPENSE TO OPERATING INCOME (Unaudited) | ||||||||||||||||
Projected Three Months Ended | Projected Twelve Months Ended | |||||||||||||||
December 31, 2019 | December 31, 2019 | |||||||||||||||
(In millions) | Low | High | Low | High | ||||||||||||
Operating income from continuing operations (a) (b) | $ | 47 | $ | 52 | $ | 132 | $ | 137 | ||||||||
Operating income from the former Harsco Industrial Segment before acquisition amortization (c) | — | — | 39 | 39 | ||||||||||||
Project operating income | 47 | 52 | 171 | 176 | ||||||||||||
Corporate strategic and transaction related costs | — | — | 18 | 18 | ||||||||||||
Harsco Environmental Segment provision for doubtful accounts | — | — | 6 | 6 | ||||||||||||
Harsco Rail Segment improvement initiative costs | — | — | 5 | 5 | ||||||||||||
Harsco Environmental Segment change in fair value to contingent consideration liability | — | — | (4 | ) | (4 | ) | ||||||||||
Harsco Environmental Segment site exit related | — | — | (2 | ) | (2 | ) | ||||||||||
Adjusted operating income | 47 | 52 | 194 | 199 | ||||||||||||
Estimated acquisition amortization expense | 6 | 6 | 15 | 15 | ||||||||||||
Adjusted operating income before acquisition amortization expense | $ | 53 | $ | 58 | $ | 209 | $ | 214 |
HARSCO CORPORATION RECONCILIATION OF FREE CASH FLOW BEFORE GROWTH CAPITAL EXPENDITURES TO NET CASH PROVIDED BY OPERATING ACTIVITIES (Unaudited) | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30 | September 30 | |||||||||||||||
(In thousands) | 2019 | 2018 | 2019 | 2018 | ||||||||||||
Net cash provided by operating activities | $ | 44,657 | $ | 48,315 | $ | 50,029 | $ | 95,014 | ||||||||
Less capital expenditures | (55,870 | ) | (34,806 | ) | (147,071 | ) | (91,302 | ) | ||||||||
Less purchase of intangible assets | (721 | ) | — | (1,246 | ) | — | ||||||||||
Plus capital expenditures for strategic ventures (a) | 1,461 | 437 | 4,831 | 972 | ||||||||||||
Plus total proceeds from sales of assets (b) | 5,355 | 5,943 | 7,560 | 9,096 | ||||||||||||
Plus transaction-related expenditures (c) | 10,390 | — | 26,380 | — | ||||||||||||
Free cash flow | 5,272 | 19,889 | (59,517 | ) | 13,780 | |||||||||||
Add growth capital expenditures | 25,587 | 6,875 | 56,190 | 19,017 | ||||||||||||
Free cash flow before growth capital expenditures | $ | 30,859 | $ | 26,764 | $ | (3,327 | ) | $ | 32,797 |
(a) | Capital expenditures for strategic ventures represent the partner’s share of capital expenditures in certain ventures consolidated in the Company’s 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. |
HARSCO CORPORATION RECONCILIATION OF FREE CASH FLOW BEFORE GROWTH CAPITAL EXPENDITURES TO NET CASH PROVIDED BY OPERATING ACTIVITIES (Unaudited) | ||||
Twelve Months Ended | ||||
December 31 | ||||
(In thousands) | 2018 | |||
Net cash provided by operating activities | $ | 192,022 | ||
Less capital expenditures | (132,168 | ) | ||
Plus capital expenditures for strategic ventures (a) | 1,595 | |||
Plus total proceeds from sales of assets (b) | 11,887 | |||
Free cash flow | 73,336 | |||
Add growth capital expenditures | 30,655 | |||
Free cash flow before growth capital expenditures | $ | 103,991 |
(a) | Capital expenditures for strategic ventures represent the partner’s share of capital expenditures in certain ventures consolidated in the Company’s financial statements. |
(b) | Asset sales are a normal part of the business model, primarily for the Harsco Environmental Segment. |
HARSCO CORPORATION RECONCILIATION OF CASH FLOW BEFORE GROWTH CAPITAL EXPENDITURES TO NET CASH PROVIDED BY OPERATING ACTIVITIES (Unaudited) | ||||||||
Projected Twelve Months Ending December 31 | ||||||||
2019 | ||||||||
(In millions) | Low | High | ||||||
Net cash provided by operating activities | $ | 184 | $ | 204 | ||||
Less capital expenditures | (186 | ) | (194 | ) | ||||
Plus total proceeds from asset sales and capital expenditures for strategic ventures | 16 | 14 | ||||||
Transaction related expenses | 26 | 26 | ||||||
Free cash flow | 40 | 50 | ||||||
Add growth capital expenditures | 80 | 80 | ||||||
Free cash flow before growth capital expenditures | $ | 120 | $ | 130 |
HARSCO CORPORATION RECONCILIATION OF RETURN ON INVESTED CAPITAL TO NET INCOME AS REPORTED (a) (Unaudited) | ||||
Trailing Twelve Months for Period Ended | ||||
(In thousands) | September 30, 2019 | |||
Net income as reported | $ | 519,397 | ||
Gain on sale of discontinued business | (527,980 | ) | ||
Corporate strategic costs | 17,872 | |||
Transaction-related costs for discontinued operations | 8,263 | |||
Harsco Environmental Segment change in fair value to contingent consideration liability | (7,767 | ) | ||
Unused debt commitment and amendment fees; and loss on early extinguishment of debt | 7,435 | |||
Harsco Environmental Segment provision for doubtful accounts | 6,174 | |||
Loss on extinguishment of debt in discontinued operations | 5,314 | |||
Harsco Rail Segment improvement initiative costs | 5,285 | |||
Harsco Environmental Segment site exit related | (2,427 | ) | ||
Harsco Clean Earth Segment severance costs | 1,254 | |||
Taxes on above unusual items (b) | 102,899 | |||
Impact of U.S. tax reform on income tax benefit | (15,409 | ) | ||
Deferred tax asset valuation allowance adjustment | (465 | ) | ||
Net income from continuing operations, as adjusted | 119,845 | |||
After-tax interest expense (c) | 25,669 | |||
Net operating profit after tax as adjusted | $ | 145,514 | ||
Average equity | $ | 431,499 | ||
Plus average debt | 733,341 | |||
Average capital | $ | 1,164,840 | ||
Return on invested capital | 12.5 | % |
(a) | Return on invested capital excluding unusual items is net income (loss) excluding unusual items, and after-tax interest expense, divided by average capital for the year. The Company uses a trailing twelve month average for computing average capital. |
(b) | 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. |
(c) | The Company’s effective tax rate approximated 23% for the trailing twelve months for the period ended September 30, 2019. |