December 02, 2008

Harsco Q1 sales up by 18% YoY

Worldwide industrial services company Harsco Corporation reported record first quarter 2008 results from continuing operations. First quarter 2008 diluted EPS from continuing operations was a record USD 0.67, up by 24% YoY from USD 0.54 in the first quarter of 2007. Income from continuing operations was a record USD 56.9 million, compared with USD 45.4 million last year, an increase of 25% YoY.

Overall operating margins were 10.1%YoY compared with 10.3% in the first quarter of last year. First quarter sales totaled a record USD 988 million up by 18% YoY from sales of USD 840 million in the same period last year. The weaker US dollar in relation to foreign currencies added approximately USD 62 million to first quarter sales and approximately USD 6.6 million in pre tax income, but the weakening dollar is also a key factor in the Company’s increase in fuel costs. The Company was particularly impacted during the quarter in its Mill Services Segment, which incurred higher fuel costs in excess of USD 5 million over this time last year.

Mr Salvatore D Fazzolari CEO of Harsco said that “We are pleased with such a strong start to 2008. Notwithstanding the uncertainties that many companies face today, we remain confident in our positive outlook for the full year. Having created a well-balanced company serving fundamental industries on a global scale, we believe the Company’s stockholders will continue to benefit throughout 2008 and beyond. We are particularly gratified by the operational progress shown by our Minerals & Rail Services and Products group. Led by significantly improved year-over-year results from our Harsco Track Technologies and Excell Minerals Divisions, this group is becoming an equal partner with our other two segments in providing earnings balance across all three platforms of our business. Our Access Services Segment turned in another solid quarter of growth. We continue to have a very positive outlook for this Segment and expect further improvements in operating performance as the year progresses.”

Mr Fazzolari said that “Our Mill Services Segment did not perform up to our expectations in the quarter. The single biggest contributing factor to the Segment’s underperformance in the quarter was sharply higher fuel prices compared with last year. While many of our contracts allow us to recoup the majority of these higher prices, it takes between six and twelve months to do so. In addition, we continue to aggressively pursue a number of margin improvement initiatives, as previously discussed in prior quarters. While the fundamentals of this business remain sound and our contract backlogs continue at record levels, it will take several quarters before operating margins in our Mill Services Segment return to more historical levels. The overall balanced company that has been created leaves us with a high degree of confidence that we will continue to meet our growth objectives for 2008 and beyond.”