Harsco predicting strong Q2 as steel improves

News sends stock up, despite expected Swiss rail loss

Stock in Cumberland County-based Harsco Corp. surged on Thursday following an announcement that the industrial services company expects a strong second quarter and raised its guidance for fiscal 2016.

Harsco cited improved results in its metals and minerals segment for the performance.

“The fundamental improvement in the steel and energy markets in recent months has reduced business risk, and we are optimistic on Harsco’s ability to demonstrate significant operating leverage when key markets recover further,” President and CEO Nick Grasberger said.

The company’s quarterly financial results are set to be released on Aug. 4. Grasberger’s statement came as the company issued preliminary results on Thursday.

According to that statement:

• Harsco expects adjusted operating income of $41 million for the second quarter, up from previous guidance of $22 million to $27 million.

• Tempering that somewhat, Harsco announced that it expects U.S. operating income of $1 million for the quarter, factoring in a loss provision of about $40 million on railroad maintenance equipment contacts with the Swiss federal rail system.

“Despite this challenge, we have made considerable progress in recent months developing our highly advanced equipment for this important customer,” Grasberger said. “We look forward to executing against these contracts over the next year and remain confident that we are building a profitable business within the European rail market.”

• For the full year 2016, Harsco expects adjusted operating income, excluding the loss provision for the contracts in Q2, will exceed the previously provided guidance range of $80 million to $100 million by about $20 million.

• Additionally, “corporate is expected to benefit from ongoing reduction of various overhead costs,” the company said.

Harsco stock (NYSE: HSC), which stood at $9.25 at 9:45 a.m. Friday, increased by more than 10 percent on Thursday following the company’s announcement. It opened the week at $7.28, and has had a 52-week range of $3.55 to $15.82.

Roger DuPuis
Roger DuPuis covers Cumberland County, health care, transportation, distribution, energy and environment. Have a tip or question for him? Email him at rdupuis@cpbj.com.

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