Thursday, industrial services and engineered products company Harsco Corp. (HSC), reported a huge decline in profit for the third quarter, impacted by strengthening of the U.S. dollar, lower steel production, loss from discontinued operations and a one-time charge. Looking ahead, the company revised its full year earnings guidance, while providing outlook for the fourth quarter.
The Camp Hill, Pennsylvania-based company's net income attributable to shareholders dropped to $20.18 million or $0.25 per share from $80.28 million or $0.95 per share a year earlier.
Income from continuing operations for the quarter attributable to shareholders was $31.97 million or $0.40 per share, down from $83.97 million or $0.99 for the same period last year. Loss from discontinued operations attributable to stockholders widened to $11.79 million or $0.15 per share from $3.69 million or $0.04 per share for the year-ago period.
On average, seven analysts polled by Thomson Reuters expected the company to report a profit of $0.47 per share for the quarter. Analysts' estimates typically exclude special items.
Harsco's total revenues were $744.22 million, down from $1.05 billion last year. Analysts expected revenue of $789.12 million for the quarter.
The company's infrastructure segment, Harsco Infrastructure third quarter sales declined 29% to $279 million from $393 million in the same period last year. The decline was attributed to strengthening of the U.S. dollar. The segment's operating income declined to $23 million from $60 million for the year earlier period.
Harsco Metals, the company's metal business unit was also impacted by the strength of U.S. dollar, with sales declining 35% to $275 million from a year earlier. Operating loss was approximately $4.4 million compared with $33.3 million for the prior year period.
The company's smallest segment, Harsco Minerals & Rail sales declined by 17% to $190 million from $228 million a year earlier and operating income declined by less than 6% to just under $40 million from $42 million for the year-ago period.
Total costs and expenses dropped to $687.80 million from $911.02 million for the year-ago period, mainly by a $472.94 million cost of services sold decline from last year.
Third quarter interest expense was $15.82 million, down from $19.65 million for the prior year quarter.
"Looking forward to 2010, we are confident that we will return to growth next year. Our confidence is underpinned by our strong free cash flows and the opportunities these present; improving steel production; the favorable outlook for foreign exchange translation; and the ongoing benefits from our cost reduction efforts and additional countermeasures," Harsco Chairman and Chief Executive Officer Salvatore Fazzolari said.
Looking ahead for the fourth quarter, the company expects earnings from continuing operations in the range of $0.42 - $0.47 per share. Analysts currently expect earnings of $0.50 per share for the quarter.
For the full year, Harsco expects earnings per share from continuing operations to be in the range of $1.70-$1.75, excluding the effect of the $0.11 net non-cash charge. Earlier, the company had expected earnings from continuing operations in the range of $1.72-$1.82. Analysts expect earnings of $1.75 per share for the full year 2009.
HSC is currently trading at $32.65, down $1.07 or 3.17%, on a volume of 1.13 million shares on the NYSE.
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