CAMP HILL, Pa., May 02, 2018 (GLOBE NEWSWIRE) -- Harsco Corporation (NYSE:HSC) today reported first quarter 2018 results. On a U.S. GAAP basis, first quarter 2018 diluted earnings per share from continuing operations were $0.22. This figure compares with first quarter of 2017 GAAP diluted earnings per share from continuing operations of $0.11.

GAAP operating income from continuing operations for the first quarter of 2018 was $37 million, which exceeded the guidance range of $30 million to $35 million previously provided by the Company.

“We are pleased to report strong first quarter results, which exceeded our expectations,” said President and CEO Nick Grasberger. “Harsco executed well in the quarter and a strengthening global economy has become more apparent in recent months. This momentum supports a boost to our 2018 outlook and a more meaningful increase in our key performance measures relative to last year.”

“The initiation of a share repurchase program is another indication of our progress. We have consistently met or exceeded expectations over the past few years and the underlying stability within our businesses has strengthened considerably. The buyback decision reflects our business confidence as well as our financial flexibility. Looking ahead, we are focused on executing against our growth priorities. We are confident these investments will support further earnings growth for Harsco and create additional value for shareholders.”

Consolidated First Quarter Operating Results

Total revenues were $408 million, an increase of 10 percent compared with the prior-year quarter as a result of higher revenues in the Company's Metals & Minerals and Industrial segments. The first quarter of 2018 included revenues of approximately $8 million related to the Company's multi-year contracts with SBB, or the federal railway system in Switzerland.

GAAP operating income from continuing operations was $37 million during the first quarter of 2018 compared with GAAP operating income of $29 million in the same quarter of last year. Operating income in the Metals & Minerals and Industrial segments improved in comparison with the prior-year quarter, while operating income declined as expected in the Rail segment. Also, Corporate spending decreased relative to the prior-year period, contributing to the year-on-year increase in operating income.

Revenues increased 7 percent to $265 million, as a result of higher steel output and service levels as well as foreign exchange translation. Meanwhile, operating income in the first quarter of 2018 totaled $28 million compared with operating income of $26 million in the prior-year period. The improvement in operating earnings is attributable to the above items, which were partially offset by higher general and administrative costs to support the Company's growth strategy. Lastly, the segment's operating margin in the first quarter of 2018 was 10.5 percent, or slightly better than the same quarter of 2017.

Revenues increased 27 percent to $84 million, due to increased demand within each of the Industrial product businesses. Meanwhile, operating income increased to $12 million from $3 million and the segment's operating margin increased to 14.9 percent from 4.4 percent in the comparable quarter last year. These changes are attributable to improved demand, manufacturing improvements and a more favorable sales mix.

evenues totaled $60 million, essentially unchanged from the prior-year quarter. The first quarter of 2018 included revenues of approximately $8 million from SBB. Meanwhile, operating income totaled $2 million compared with $6 million in the prior-year quarter. Lower equipment and contract services contributions, which were anticipated, partially offset by an improved after-market parts mix led to the change in operating income. As a result, the segment's operating margin was 3.3 percent in the first quarter of 2018.

Cash Flow

Net cash used by operating activities totaled $8 million in the first quarter of 2018, compared with $6 million in the prior-year period. Further, free cash flow was $(35) million in the first quarter of 2018, compared with $(22) million in the prior-year period. The year-over-year change in free cash flow reflects an increase in capital expenditures, including for growth, and a modest decrease in net cash from operating activities.

2018 Outlook

The Company's 2018 guidance is increased to reflect revised forecasts for the Metals & Minerals and Industrial segments as compared with the guidance provided along with the Company's fourth quarter 2017 results. For Metals & Minerals, adjusted operating income is expected to increase more than previously anticipated due to higher mill services demand and commodity prices. As a result, higher customer steel output and commodity prices, new contract ramp-ups, operational savings and improved profitability in certain Applied Products businesses are expected to be only partially offset by exited sites and investments to support growth initiatives for the year. Meanwhile, the Industrial outlook is improved to reflect better demand for each of its product businesses. This fact, along with a more favorable product mix and manufacturing savings, are now expected to support a larger year-on-year increase in operating income compared with prior guidance.

The outlook for the Rail segment and Corporate are mostly unchanged. In Rail, adjusted operating income is anticipated to be modestly higher compared with 2017, as increased demand for after-market parts and Protran Technology products will be partially offset by a less favorable mix of equipment sales and lower contributions from contracting services. Also, Corporate spending is expected to be modestly higher than 2017 due to personnel investments and professional fees.

Lastly, note that this outlook and comparisons with the prior year are now updated to reflect the application of the new pension classification standard for both 2017 and 2018. The related impact to the Company's segment reporting for each of the 2017 quarters is included later in this press release.

Key highlights in the Outlook are included below.

Full Year 2018

• GAAP and adjusted operating income for the full year is expected to range from $165 million to $180 million; versus $150 million to $170 million previously and compared with 2017 GAAP operating income of $145 million and 2017 adjusted operating income of $150 million.
• GAAP and adjusted diluted earnings per share from continuing operations for the full year are expected in the range of $1.11 to $1.24; versus $0.97 to $1.14 previously and compared with 2017 GAAP diluted earnings per share of $0.09 and 2017 adjusted diluted earnings per share of $0.74.
• Free cash flow is expected in the range of $85 million to $100 million, versus $80 million to $100 million previously and compared with $93 million in 2017. Also, the free cash flow outlook anticipates net capital expenditures of between $125 million and $145 million and growth-oriented capital spending of $45 million to $50 million in 2018.
• Net interest expense is forecasted to range from $34 million to $36 million; compared with $45 million
  in 2017.
• The effective tax rate is expected to range from 26 percent to 28 percent.
• Adjusted return on invested capital is expected to range from 14.0 percent to 15.5 percent; compared with 11.5 percent in 2017.

Q2 2018

• GAAP and adjusted operating income of $45 million to $50 million; compared with GAAP and adjusted operating income of $43 million in the prior-year quarter.
• GAAP and adjusted earnings per share from continuing operations of $0.30 to $0.35; compared with GAAP and adjusted earnings per share of $0.22 in the prior-year quarter.

About Harsco

Harsco Corporation serves key industries that are fundamental to worldwide economic development, including steel and metals production, railways and energy. Harsco’s common stock is a component of the S&P SmallCap 600 Index and the Russell 2000 Index. Additional information can be found at www.harsco.com.