Harsco Corp. anticipates second-quarter losses; expects strong year-end improvements

Harsco Corp. said Thursday the company expects losses in the second quarter when it reports its results Aug. 2 but is implementing actions to finish the year strong. 

The company said it expects a U.S. GAAP operating loss from continuing operations of between $95 million and $97 million including a non-cash goodwill impairment charge of about $100 million and adjusted earnings between $47.5 million to $50.0 million. 

Harsco Environmental showed positive earnings growth in the quarter, however HE second quarter results are expected to be at the lower end of prior implied guidance due to unfavorable foreign exchange translation impacts. 

 Meanwhile, Clean Earth (CE) earnings are expected to be about $12 million below target at about $5 million, due to unprecedented cost inflation on third-party transportation and other logistics and disposal services, the company said.   

 To mitigate the impacts of these incremental external challenges, CE recently implemented several additional actions to restore margins and boost second-half performance. These actions include commercial pricing initiatives, in addition to those executed directly following the first quarter, Harsco said. 

 In addition, the company is implementing a cost reduction program along with efficiency initiatives focused on reducing transportation, procurement, and container expenditures.  

Overall, these incremental actions are expected to deliver second-half 2022 benefits of more than $30 million, Harsco said. Successfully capturing these improvements is expected to strengthen margins in the coming quarters, with the company committed to a longer-term CE EBITDA margin target of 15%.  

Harsco expects to record a non-cash goodwill impairment charge for Clean Earth in the second quarter. The goodwill impairment is currently anticipated to be approximately $100 million, the company said.  

 As a result of these factors, Harsco is now expecting a 2022 U.S. GAAP operating loss from continuing operations of between $51 million and $61 million including a noncash goodwill impairment charge of approximately $100 million and Adjusted EBITDA within a range of $210 to $220 million, compared with Adjusted EBITDA of $250 to $265 million previously.  

Harsco Environmental is anticipated to see year-over-year growth in the second-half 2022 Adjusted EBITDA, despite foreign exchange translation headwinds versus prior guidance and some sequential weakness in steel customer volumes, particularly in Europe.  

And for the year, HE Adjusted EBITDA is now expected to be within a range of $208 million to $214 million.  

Meanwhile, Clean Earth’s 2022 Adjusted EBITDA is now anticipated to be between $40 million and $44 million.  

The above-mentioned actions are expected to drive profit and margin improvements in the second-half, however Clean Earth is not expected to fully offset the underlying inflationary challenges until early 2023. Harsco expects to be in compliance with its financial covenants at the end of the second quarter and for the foreseeable future.  

Also, the company’s process to sell Rail is ongoing, and it will provide an update on this transaction when appropriate.  

Additional second quarter and Outlook details will be provided when the company reports quarterly results Aug 2.