Harsco Corporation (HSC) Q2 2012 Earnings Call July 31, 2012 10:00 am ET Executives Eugene M. Truett – Vice President of Investor Relations and Credit Henry W. Knueppel – Interim Chairman and Chief Executive Officer Stephen J. Schnoor – Senior Vice President, Chief Financial Officer and Treasurer Galdino J. Claro – Executive Vice President and Chief Executive Officer of the Harsco Metals & Minerals Group Analysts William Fisher – Raymond James Jeffrey D. Hammond – KeyBanc Capital Markets Glenn Wortman – Sidoti & Company Bill Nasgovitz – Heartland Funds Presentation Operator
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Also this morning with us today is Jim Jacobson who joined Harsco yesterday as our Director, Investor Relations. We will get the new information on Jim’s background later today to all of you. As most of you, I’ll be retiring at early September and Jim will be assuming my Investor Relation responsibilities.As we do at the beginning of all of our calls, we want to let you know that there maybe forward-looking statements in our discussions with you today. These statements relate to the future of our business, our operations, results, economic expectations and other aspects relating to and affecting our business. What we say today is based on our best information available; it is possible that the results could differ from what we tell you today. We’ve listed in our SEC statements reasons and risk factors that affect our businesses. We invite you to review the SEC filings at your convenience. I would also like to remind you that replays of this call and related information are available on our website. Please take the time to access this information at your convenience. I’d like now to turn the call over to Henry Knueppel. Henry? Henry W. Knueppel Thank you, Gene. I would also like to add my welcome to all of those participating in the call this morning. Thank you for your continuing interest in Harsco. We are going to add to our typical agenda this morning. I will make some opening remarks about the second quarter; Steve Schnoor will give you some technical details and future details on the results; Galdino Claro will then give you some comments on the Metals & Minerals business; and I will finish up with some brief comments regarding the third quarter, and we will have time for questions. While a number of substantial headwinds remain in our two largest businesses, we are pleased with the results achieved in the second quarter, as reported this morning. Despite overall business levels and revenues being down relatively significantly, adjusting for one-time items, income was comparable to last year’s second quarter.
This was accomplished with a clear dedication by the entire Harsco team to bringing our costs down. Achieving margin improvements on down revenues was a significant accomplishment and one I’m sure the investment community can truly appreciate. Fairly, we would prefer increased revenues, but those cards simply are not being dealt currently.Importantly in the quarter, measurable progress was made in our previously announced restructuring initiatives, principally within our infrastructure segment. Results in the infrastructure also benefited from previously announced $6.7 million pre-tax non-cash gain related to the closure of certain foreign operations. While our restructuring efforts are, at this point, overachieving our original targets, our markets are down and offsetting some of the expected savings. Unfortunately, there is no immediate clear insight on this front. I can tell you however, our focus is not on expanding – is now on expanding our selling efforts and taking full advantage of our capabilities in this business. Further progress is also made in our Metals & Minerals business in the quarter with the signing of a new 20 year environmental services contract with Tangshan Iron & Steel, part of China’s largest steel maker. Other notable new contracts and contract renewals were also signed in the quarter as previously announced. Both our Harsco Rail and Harsco Industrial business units had results in the quarter that exceeded our expectations. Harsco Rail continues to enjoy a strong order book and continued strong bidding activity. Rail is benefiting from growing global market acceptance of its high-technology rail, maintenance-of-way equipment, parts, and services, as well as delivery of the second phase of a multi-year large equipment order from the Ministry of Rails of China. As previously reported, Rail's results in the second quarter of last year included an $8 million pre-tax non-cash one-time gain from the reduction of estimated costs related to the first phase of large equipment order to China. We do not expect this gain to be repeated. Read the rest of this transcript for free on seekingalpha.com