Harsco Reports Jump in Earnings for Quarter

Harsco Corp. reported strong numbers for the recently concluded quarter. Income during the first quarter of the year reached $16.9 million, compared with $12.5 million last year, an increase of 35 percent.

First quarter sales totaled a record $556 million, up 14 percent from $488 million in the first quarter of 2003.

Derek Hathaway, Harsco’s chairman, president and CEO, noted, “Results in the first quarter have given us a good start toward our overall 2004 growth objectives for increased sales, earnings, margins, cash flow and Economic Value Added.”

``Harsco's positive performance was led by our MultiServ mill services business, which generated 42 percent of total company sales and 68 percent of total operating income in the first quarter.

In the Mill Services division, sales increased 26 percent to $236 million from $188 million in last year's first quarter. Organic growth and the company's acquisition of the industrial services division of C. J. Langenfelder & Son last June were responsible for $25.5 million, or 14 percent of the increase, while positive foreign currency translation increased sales $22.5 million, or 12 percent. Operating income for the quarter increased 51 percent to $25.3 million from $16.7 million in the same period last year, reflecting strong operating growth as well as positive foreign currency translation of $2.6 million. Operating margins improved to 10.7 percent, compared with 8.9 percent in last year's first quarter.

The outlook for the MultiServ business continues to be favorable. Worldwide steel demand and production, the primary drivers of this segment's operations, continue to trend up. In addition, the company has targeted approximately $125 million of cash flow for growth initiatives in 2004, the majority of which will be invested in new mill services opportunities. During the quarter, significant progress was made in this regard with the signing of a number of new or expanded contracts, including steel mills in Brazil, France and Serbia.

The company expects additional new signings in future quarters. The Company continues to focus on growth investments that should further enhance this segment's top line, operating income, cash flow and EVA.

“Our positive outlook is marginally tempered by the increasing cost of goods sold in our manufacturing businesses due to higher commodity costs, and by higher administrative expenses for compliance with Sarbanes-Oxley Act requirements, particularly Section 404,'' said Hathaway.

“Towards the second half of the year, the benefits of positive currency translation may diminish somewhat. However, we are very encouraged by our strong first quarter performance and the improving macro-economic environment. We continue to expect record sales, earnings per share and operating cash flow in 2004, led by strong results from MultiServ as well as our SGB international access services business and all business units in our Other Infrastructure Products and Services group. ''