Harsco Reports Jump in Earnings for Quarter

Harsco Corp. reported new records for sales, income from continuing operations, and earnings per diluted share from continuing operations for the third quarter and first nine months of the year. Cash flow from operations through the first nine months also set a new record.

For the third quarter of 2005 Harsco reported income from continuing operations increased by 30 percent to $40 million from $30.7 million last year. Overall operating margins improved to 10.0 percent, up from 8.8 percent in last year's comparable quarter, reflecting a significant improvement in operating income from three of the company's four operating groups.

Third quarter sales increased 13 percent to a record $697 million, compared with $617 million in the same period last year.

For the first nine months, sales, income from continuing operations, and diluted earnings per share from continuing operations were all records. Income from continuing operations was $104.9 million, compared with income from continuing operations of $78.5 million in the first nine months of 2004. This year's results represent increases in income and diluted EPS of 34 percent and 32 percent, respectively. Sales for the first nine months of 2005 were $2.03 billion, an increase of 14 percent from sales of $1.79 billion in the same period a year ago.

Commenting on the company's performance, Derek Hathaway, Harsco chairman, president and CEO, said, ``We continue to be pleased with the operating income balance and geographical diversity of the Company, which again has provided the foundation for record results and the growing consistency and predictability of revenue and income streams. Our Access Services, Engineered Products & Services and Gas Technologies operating groups each achieved a gain of at least 50 percent in operating income in this third quarter compared with the comparable period last year.

In reviewing its various segments, the company reported that sales for its mill services division increased 4 percent to $255 million from $245 million in last year's third quarter. However, higher energy costs, announced production cut backs by global steel customers, and higher severance costs resulted in a modest 7 percent decline in third quarter operating income to $23.1 million from $25.0 million last year. Operating margins decreased to 9.1 percent from 10.2 percent in the third quarter of 2004. However, for the nine months of 2005, margins are stand at 10.5 percent.

The outlook for Mill Services remains positive. The company continues to actively pursue new contract signings for additional services with existing customers as well as potential new customers, in addition to seeking other areas of future growth potential. Worldwide steel demand continues to be substantial, with industry sources predicting a 3 percent increase in demand to 998 million metric tons this year, and further growth of another 4 to 5 percent next year.