Industrial's fourth quarter performance was impacted by soft demand in the industrial boiler business, which had an unfavorable effect on margins.
First Quarter Outlook
The first calendar quarter has been historically the Company's lowest EPS quarter of the year. Harsco anticipates the first quarter of 2013 will reflect this normal seasonality, which is driven primarily by lower levels of commercial construction in the winter months.
Metals & Minerals' revenues in the first quarter are expected to be approximately 6 to 8 percent lower than the prior-year quarter. This is due to lower expected steel production at certain customers and the carry-over impact of exited contracts, which are not yet fully offset by the start-up of new contracts that the Company has recently won. Despite this expected revenue decline, operating margin is anticipated to be in line with the prior-year quarter due to the Company's cost reduction actions and the growth of higher-return contracts as part of the overall mix.Infrastructure's revenues in the first quarter are expected to be generally in line with the prior-year quarter. The business is expected to deliver a modest year-over-year reduction of adjusted operating loss due to the benefits from prior restructuring actions. Rail's first quarter operating income is expected to decline approximately $9 million in the first quarter from the prior-year quarter. This is principally due to an unfavorable mix of equipment deliveries and the expected shift of certain high-margin equipment deliveries from the first quarter to the second quarter of 2013 driven by customers' delivery schedules. These delayed deliveries represent approximately $4 million of operating income. Industrial's revenues and operating margin in the first quarter are expected to be in line with the first quarter of 2012. This outlook reflects similar volume for air-cooled heat exchangers and slightly increased order activity for grating and industrial boilers compared with the first quarter of 2012.