HSC - Earnings call transcript Q2 2018

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning. My name is Deidre and I will be your conference facilitator. At this time, I would like to welcome everyone to the Harsco Corporation Second Quarter Release conference call. All lines have been placed on mute to avoid any background noise. After the speakers’ remarks, there will be a question and answer period.

to then question your the like simply this telephone would star press number you ask during a time, keypad. If one on

by may Harsco on would the and this accompanying you like on withdraw subject presentation teleconference. of are question If and behalf to made Harsco of Corporation by of conference to this all telephone this recording redistributions conference, or rights consent reserved. pound other are telephone permitted your you No Corporation are key recordings Harsco webcast be other written keypad. Corporation party without any telephone will Also, your express Corporation. Harsco press copyright

may now participation to Corporation. Martin introduce begin your Dave you Harsco your I Your call. indicates would like of Martin, agreement. Mr.

Dave Martin

and year. this and and Financial This our today take to of and Minan, our Executive the Dave for you, outlook results Chief quarter I’m joining Investor President us questions. Officer. me Pete your Harsco. Director will then With Thank Senior our Chief the morning, for everyone Martin, discuss Grasberger, morning. of XXXX updated Relations second Officer, Nick welcome and is for our We’ll Deidre, President Vice we

however, me presentation, a few items. our Before let highlight

earnings slide as have the website. a call PDF First, of our for presentation our release this well as been to posted

A webcast. available Second, website and today. is replay will be this recorded being call on our later

from certain statements. on considered current risks to statements forward-looking may are laws. of today forward-looking make and statements federal Third, to actual that knowledge results that uncertainties are expectations These our the will based differ cause within securities these we and the and are subject meaning

or Risk release in and any are XX-K. results results as a update call uncertainties, most risks revise to forward-looking no included undertakes see in such refer will financial to earnings GAAP SEC recent For our adjusted obligation Fourth, our today. slide is statement. this A Factors to presentation purposes. of on for section reconciliation the considered The that well non-GAAP company our as we discussion reporting

are so Lastly, and bear I us and note that with Nick, different any Pete during please transition locations communication in challenges. today,

the Now Nick to his over begin remarks. I’ll turn to call

Nicholas Grasberger

Good to Dave. I’m margin. adjusted in operating that another for strong we everyone you highest exceeding margin joining Each guidance the achieved you, us. and double-digit a very Thank and thank over business segment say morning quarter, decade. our profit happy reaching profit delivered

the We have also for raised outlook profit full year. our

XX% focus a three our allocation, and most Harsco years perhaps challenged We we in the and year cost In well. we exceed times of our the - reflects smart XXXX confident expect prospects on short, the as to enter efficient our and than importantly, Finally a businesses. disciplined higher improvements that’s decade few that over on each yielded capital a highest more businesses. for operations, now in of half this our few in capital at foundational return has believe second and historically ago the of of

to brief end and positioned XXXX appropriate. call includes and that the turn we segment team, a management supportive This to capital plans. growth to as few internal XXXX. the shareholders a talented strategic just while to comments Pete. a sheet, return of As Through I’ll investing flexibility with each well combination balance make on both we execute initiatives strong when stable markets, [indiscernible] a indicates, in continuing outlook maintaining healthy a to over and are momentum our our anticipate and through end then

output component growth sales result and applied well minerals you critical which, growth is of services and high Our another new delivered product know, quarter as strategy. as strong a a metals and as segment contracts, steel as to increased our

the on for quarter. higher. that income is of an operating growth update our this in at adjust expanded not like provide the we good relationships the in new I’d a discussed added innovation have investments bit also our call last This and efforts. you made some themes M&M to we resources have past. to if M&M profit key I on commercial is investments pace a year, Importantly, and earnings that our pursuing I last year, seen mentioned in these initiatives our

As contracts a revenues will in half these the expect of regions healthy that in due towards lift new investments and XXXX, commence the across we we first to look all year. several

team, staff as serve We to talented would as while strengthen also have function. Chief adding the M&M and Officer at also we recently result experiences took a added Operating development strategic what business the skills a our a to and look M&M of executive

Finally, aluminum our help U.K.-based global manufacturer products in It streams. aspirations M&M manage steel better waste our market-leading leader of developing first we in a of strategy solutions environmental and M&M of investment Altek into with beyond solutions a platform fits recyclers to in core This perfectly we providing took the first that process basic decade, I discussed a our producers to integrating is the environmental are than into into May, Altek significant the more the the acquisition industry. for their transform of a Group, industry. beyond our the premier business. and In industries step

last reported continue run operating quarter. rate result and nearly a mix demand an efficiency. considerable upstream demonstrated compared increased and the XX% and growth products to favorable of revenue organic increased more businesses industrial excellent All XX% Revenues XX% QX QX bookings highest over year, increased to segment income in Our early since as leverage operating improved up Notably, of and operational improvement show due XXXX. strength with year. prices, product industrial prior higher to than three and second while Air-X-Changers midstream

capturing to our in competitors also further for product market from [indiscernible] key positioned We that continued share line gain momentum are downstream.

XX% versus of QX year. and Our XXXX up industrial is XX% up of versus backlog this QX

half coupled improving In continue into momentum strong expect all industrial market and with We our we other also to and rail second our segment, is conditions other and results segments, businesses. turned products XXXX. This are the end anticipate overall have an team Similar innovative together new which that in to quoting like three we this markets rail instituted focused two value expect stronger a world. to and businesses propositions and in Pete significant will will to broaden pipeline provide of around our we our an has exciting in compelling much the company, I’d The of indicate business. investing a and to across strengthened customers our led always thank you more have and I backlog ask orientation that interest our technology to provide access further QX in our activities. even your a process corner management perspective. the support growth strategy and and combination to now as market your and truly for

Peter Minan

Thanks Nick, everyone. and good morning

what for me also this full just results Let the revised year. quarter with our - said we echo Nick outlook are and pleased very our

for sales in was businesses, Asia, Let rail and of million. contributor with the parts America Slide equipment X. and of Harsco’s operating was anticipated. This better rail to our product North range outperformance to start operating our aftermarket quarter. our mix the $XX than largest and was In second million Among our me adjusted guidance $XX million. $XX exceeded the quarter income result the in quarter

I’ll starting we within related of After rail difficult emerging Some led internal great of the quarter, the to trend this market, development execution American years some This which our coupled rail are market in see our a these the with and is North later. were see. benefits industry. timing to backlog on certainly few touch to evidence healthy growth and welcome a in momentum in positive

strength across and of very than our nice were positive. remain industrial the highlight. businesses our again Air-X-Changers in to metal continues experienced margin Secondly, grading trends expansion industrial results all in the our We while segment business, in some better expected remain the

customer quite also the next backlog improved. bookings. industrial activity strong Our through quarters strong for with in has the Like few quarter in nicely our increased the rail, and the order visibility quarter was

corporate again spending than was expenditures. for Lastly, the some relative we of lower forecasted to quarter, timing due partially guidance the to our

As is years. in number million in Nick adjusted margin operating income adjusted a represents Harsco’s said, same our of $XX with operating of quarter. our The true the highest profitability

margin of X% year-on-year each segment increase segment growth XX% was operating highest This each quarter. Our reported higher industrial to and margin the in an XXXX. segment year quarter realized with the Once prior earnings XX.X% increase Revenues QX. with the of million, led income, growth digit the in second double our versus line in a adjusted realizing rate. compared total $XXX quarter our again, second adjusted top

the over $X.XX. to our Our comparable range figure per also XXXX. represented was compared of $X.XX adjusted XX% earnings to a increase guidance share This EPS period $X.XX of

million; a in the EPS lower favorable earnings items and to interest Altek which addition driven acquisition a We an by our performance, impact unusual and per operating lower adjustment $X.X and the some valuation M&M positive $X expense had facility developments million; re-price expenses allowance Altek deferred million, of costs $X in by we of and effective In rate. These tax have $X to to did of as was a credit million. reversal in our amend stronger share operating the had acquisition resulting income included tax a costs also of told reported. to net accrual few positive all quarter linked

quarter second totaled $X.XX. Harco’s of improvement capital As cash the earnings the quarter expenditures. was quarter the first million, flow share can year. decline slight to the over Free represented quarter, Compared in with $XX XXXX higher a GAAP the which attributed be in a sizeable result, per this

free as year. the in Looking very will half the year, is our forward, of be we each second case anticipate traditionally that flow strong cash this

X. the In if increased metals actually on second me segments, revenue. is [indiscernible] of X%. revenues starting Let exited the you This into segment growth exclude in the Slide impact XX% quarter, get the

services These million had customer increased approximately million on in growth steel income prior and demand increases higher sites contributions quarter. income from attributable rose operating a applied at net businesses. contract X% adjusted are higher operating in Our positive to the QX. well impact Steel output to Also, certain output year. from as $XX the products as in $XX

As for partially are impact to of turned now quarters for changes net and Group were approximately growth totaled May. it planned positive the we of offset aware, you The near in million as Also positives increase couple positive a we new investing These acquired remain winning growth-related the future. we quarter. are $X.X contract aware, which investments of are and M&M, expect in ago business. you by the end and Altek

was forward well our as impact quarter’s customers. acquisition smoothly the material, and its process will benefits the are Harsco the results excited we integration as not this on about is to While moving provide

margin Lastly, second reached adjusted quarter. the metals operating XX.X% in

period comparable the our within on X, XXXX industrial the income industry Slide XXXX compared in in businesses the quarter. positive changes These demand product and and for growth XX% improved of income to the versus with increased XX% Each reflect realized quarter. Turning over while product revenue higher prices, revenues trends, operating segment rose margins. three

well prior As second the to earlier, backlogs illustrating as our the that a were result, to XX.X% recent from strong we’ve Air-X-Changers backlog margin reached grew margins, improvements year manufacturing segment $XXX positive years. of perform income bookings approximately in operating Bookings million, period. the of and XX.X% benefits and the and in within the with trends Also segment’s across versus very in quarter and increased of the our QX. XX% maintained Air-X-Changers backlog rose customer XXXX, over business. XX% implemented most quarter-over-quarter mentioned continues realized

in rail second quarter, the the before on as the for recognition due SBB quarter increased we’ve Revenues X% to margin. Slide which noted mainly in the revenue has zero X. Now segment of

quarter. to $X year relative income margin $X Operating XXXX. by totaled trends, XX% SG&A, lower income operating SBB of revenues aftermarket offset effect higher excluding the a versus were QX America sales. million slight from in million increase to North revenues. along and impact, with mix SBB margin services contributed the and in reached sales the Rail’s operating These zero lower product sales outside prior Beyond the equipment contract lower

positive to have vehicles and SBB been first of vehicles of the capabilities this Regarding XX continue base our contract. equipment customer. this the The contract, SBB performing year. respect very to under to the the we the the of steady over lock Twelve expect to the second machines. our well with to against down progress With of commitments and handed is SBB make remains contracts, second during design pleased half we the

As represented and early was I XX% customer in quarterly Orders increased over bookings positive to earlier, QX. our year-on-year XXXX. alluded growth backlog total highest and since

sale into U.S. with in a relatively large Our order Asia. equipment the were Southeast an largest Metro wins quarter equipment and

a rail. in at roughly As result, our backlog $XXX stands million

me latest Turning let a to Slide X key and few outlook, items. highlight our XXXX

$X.XX $XXX adjusted earnings $XXX as driven expected be a year primarily full previously. forecasted compared and $XXX well $X.XX per rail million Likewise, a and outlook to share range guidance as $X.XX. million is These to per has to prior to to increased our our of now are to of between to segments industrial $X.XX operating being as by share corporate. $XXX million. our income million compares This range First, changes adjusted

industrial, For this to confidence segment has and versus and operating XX% result income as earlier, our increase XX% as mentioned roughly improved, for projected previously. is visibility now a

year better now mix higher is rail, expected product from For favorable to prior for similar year. a the Net support a more be contributions spending aftermarket to and outlook. corporate the

$XXX a of raised is guidance $XX to million. million flow cash free to Our range

our expect in of full on million and last the revenue cost for closely. as expectations versus a our item our this continue a from Overall, higher year now operating expectations impact mentioned across material will a year’s and movement negative the by is input neutral compared a months has be at call, to to impact we dollars quarterly with is for labor as had this XXXX. commodities few monitor FX ago. somewhat impacted businesses; any however, our earnings few rates. point One we result stronger FX the to don’t of U.S. we inflation costs As expected our that The dollar income

in of businesses each the is for appendix. presentation included the outlook summary Our

Also, $XX Let continue operating adjusted to $XX comments as Slide and of on expect QX, some the quarter of year third adjusted XXXX. we prior income million share million to of X. on be to million with me between with compared the In quarter. share between $X.XX quarter per earnings $XX $X.XX projected operating per per in $X.XX compared third be share increase income the and diluted is as earnings in and

products. Rail each QX, company’s in segments in the anticipate to equipment projected third to due is XXXX. that year. of of of for we of the versus case the are full to profitability to expected versus from Because contributions aftermarket, last will earnings improvement prior quarter and most quarter the was similar As the an timing rail, rail’s this third realize of higher significantly the of the shipments quarter look Protran in year increase earnings year fourth quarter

results that and M&M We growth as applied expected to benefit impacts. investments and from year increase a new to demand. not to as from service positives $X product this contributions contracts. year. due of well account improved the levels expect higher anticipated are Industrial XXXX These gain prior third our guidance million repeated to are in offset takes into the our FX will quarter be that quarter Note

take Lastly acquisition. million with approximately debt we ended Altek two we times quarter $XXX before after your of position the and questions, leverage a of ratio a the net

on lower a $X change realized pleased interest annual were we XX in by the to XXXX. This quarter, lowers over our the by costs loan our benefit is the During million, benefits incremental basis re-pricing we which term late points. interest nice rate

as also $XXX liquidity At we We quarter across making our of credit giving flexibility increased million. result, the million, added our strategy, Harsco’s execute $XXX growth capacity segments. the us as exceeded investments a our by end including

questions. shareholders ratio point back growth We our of to the leverage of and in and repurchases. at reduce concludes year using capital a we’d near free happy with anticipate stock cash prepared be to this take our our flow or at XXXX That debt, this your return end support half to objectives, expect remarks, We X.X some to our times. second

Operator

comes Lake Brown first line Your with the Street Markets. Rob from Capital of instructions] question [Operator

Rob Brown

the Good morning. quarter. Nice job on

Nicholas Grasberger

Good Thank Rob. you, morning.

Rob Brown

but might go First, that, I’d what some like your Altek just additional how acquisition just to bit fits on little Altek for. and on looking seemed into more. fit, thoughts into like the strategy a give be more nice else a color you acquisitions, maybe

Nicholas Grasberger

us serve our to industry. industry. it first of industry, new a intend that provides a aluminum build course, around the being to to Altek the and Well, aluminum That’s platform access we step,

downstream. Of and is also that regarded as issue is recyclers within that initial over is technology enables waste a course, brings all solve largest cakes, markets Altek the at have, that space we other so of what’s or convert processing number value There’s of adjacent salt we further intend products us to that industrial pursue and our At a as producers waste by-products entry. believe looking a time, viewed the we’re looking of largely widely that Altek what aluminum same we’re higher the address at. of the segments aluminum to a theme beyond lot that same companies opportunity their of There streams helping saleable to time. are number

but first We’re about it very the excited is the Altek just acquisition, step.

make or the in I in whether think you’ll us similar time, other industries. basic see adjacent moves aluminum over space, steel,

Rob Brown

Okay, or that’s thank about or I that you wanted there strength, other applied talked is contribution strength products you. developed On - good just products? market there? in products, happening strength in What’s bit are clarify a new applied a overview, there. market you’ve to

Nicholas Grasberger

each investment say Well, product it’s would primary leaders made is we big so of applied push is commercial now the on have it. of and both. strength in have I that regions. dedicated There the resources, commercial we driver our a resources the geographic in

it’s of looking within generated applied customers to We solutions also opportunities products, stream mostly address of are initiatives; our innovation say I internal internally the their so increasingly pipeline driven by waste new also would steel a course for number in our new industry. product within but

Rob Brown

is wanted at to price this point. guidance clarify what in just assumption I the Then Okay, good. nickel the

Nicholas Grasberger

Pete, do that? you have

Peter Minan

it frankly for assumed the don’t that, - price pound. Rob. to pretty that’s and We change is where exactly in year, where nickel rest per The as today, change really today. of half, I assumption about much The it going was for it the significant first Nick. is largely $X sure about expect continue the any we Yes, said, and is

Rob Brown

I’ll turn thank Great, you. over. it

Operator

the Jeff Your Hammond of Capital line next comes question from with Keybanc Markets.

Trish Gorman

Jeff slightly is view, what’s just updated that little an this looks little a rail, it maybe that. outlook bit changing than maybe that color a Hey, within excluding key so last for SBB, the revenue, more Trish is just guidance, you Can more updated clarify bit on drive Hammond. and factors for lower Gorman on about the like talk quarter,

Nicholas Grasberger

want you that Pete, as Okay. take to well?

Peter Minan

Yes, sure.

with Let significant of outlook tends me that The quite you’ll income uptick see operating rail, first the half terms relates in is second so strong, particularly. for the start the part but rail to a for be question. second for the the half it of certainly as of strong both second half, to year

in segments, the two where second expect half is we’ve in of kind the period, all three look the to to my mentioned we of I experienced trends of be by are in year. and the we you if third quarter this the the the the industrial prior quarters reverse which the of versus large, bigger half, the it particularly up and half But rail and As year. what year, last at remarks, where the first was is of continue from expect kind in second of of

Trish Gorman

going Then quarter and impact the did investments growth expect M&M, have we the forward? Okay. that should for what in within what

Nicholas Grasberger

course, to been the to acquisitions, mentioned Altek for Clearly strategy the it’s products as applied With I similar think the a course resources which say. business. and human I and, people ones business is acquisition. as that the investments the function respect of in to resource have well difficult investments, have the added to of on both focused that’s development been

a that on clear return getting XXXX. but really would expect we’re larger to the I investments, it’s those be in So return

revenues As bit in year, revenue I in around little mentioned and a we’re that next a if higher. expecting be in should growth earlier, we XXXX, lift nice M&M not believe XX%

Trish Gorman

helpful. great. you, Thank that’s Okay,

Operator

telephone ask on would to your if a is question, That you keypad. like to ask Again one star, please press a star, one question.

Again Fran, please your Fran, Okoniewski question Fran further are open, state Friess state line your a line have open, please with We There is questions. Associates. question. is your your from no question.

Dave Martin

your few with Deidre, thank morning. Harsco, We we in day, and and certainly a great again to in speaking for months. Have you, Thank us you look you this thank appreciate a interest everyone forward you. joining

Operator

call. does This conclude today’s conference

you, disconnect. Thank Thank for now may disconnect. a you day. great participation, may your You you have

Enviri (NVRI) 2 Aug 182018 Q2 Earnings call transcript