HARRISBURG, Pa., Dec. 13, 2002 (PRIMEZONE) -- Addressing the financial community in New York City today, Harsco Corporation (NYSE:HSC) Chairman, President and CEO Derek C. Hathaway reaffirmed the Company's confidence in its future growth prospects and worldwide market opportunities, saying that strong free cash flows and company-wide margin improvements, before increased pension costs, are expected to be lead indicators of the Company's accomplishments for 2003.
Mr. Hathaway said that the Company significantly lowered its operating cost structure during 2002 and should see the full benefit of these initiatives in 2003, despite the difficult macro-economic environment. Top line growth before divestitures is expected from the Company's Mill Services, Access Services and Track Technologies businesses, reflecting generally improving conditions within the steel industry, market expansion opportunities for access services, and increased export market sales in the UK, China and elsewhere for the Company's railway track services and equipment. Revenues in the Gas and Fluid Control business are expected to remain essentially even with 2002. Mr. Hathaway also said that the Company's significant debt reduction efforts in 2002 and further debt reduction initiatives for 2003 should again lower net interest expense in the coming year. He cautioned, however, that increased non-cash pension expense due to the adverse performance of the financial markets in 2002 will be reflected in the Company's 2003 reported results, as discussed in the Company's third quarter 2002 press release.
Reporting on the Company's first full year of Economic Value Added (EVA(r)) implementation, Mr. Hathaway stated that the EVA discipline for asset management and capital investment has clearly been established within Harsco. Mr. Hathaway noted that management incentive compensation plans throughout the Company are now tied directly to EVA, thus aligning management compensation with the risks and rewards of the Company's stockholders.
Joining Mr. Hathaway in detailing the Company's performance and outlook were Salvatore Fazzolari, Senior Vice President, Chief Financial Officer and Treasurer; Paul Coppock, Senior Vice President, Chief Administrative Officer, General Counsel and Secretary; Geoffrey Butler, Senior Vice President - Operations and President, Heckett MultiServ International and SGB Group; Ronald Kaplan, Senior Vice President - Operations and President, Harsco Gas and Fluid Control Group; and Robert Newman, President, Harsco Track Technologies.
Commenting on Harsco's financial performance, Mr. Fazzolari said the Company made considerable financial progress during 2002, and is expecting to meet or exceed its strategic financial goals for lowering its debt to capital ratio, increasing free cash flow, reducing the capital employed in its businesses, and lowering its effective tax rate. He noted that for 2003, Harsco's main financial objectives again center on generating considerable excess cash that will be used to further reduce debt and strategically grow the Company's industrial services businesses.
Mr. Fazzolari said that overall Company revenues in 2003 are expected to be approximately equal to those of 2002 due to divestitures and economic conditions, and that 2003 EPS growth is expected to be approximately 4 percent with the increased non-cash pension expense included. EPS growth before the increased pension expense is expected to be in the area of 19 percent, Mr. Fazzolari said.
Reviewing the Company's quarter-by-quarter outlook, Mr. Fazzolari said that first quarter 2003 EPS is expected to be down from the prior year period, due to continuing difficult economic conditions in the Access Services and Gas and Fluid Control businesses. The first quarter is traditionally a slower seasonal period for the Company. Performance in subsequent quarters of 2003 is expected to show improved year-over-year results as the benefit of the Company's cost reduction initiatives are more fully felt; lower net interest expense from debt reduction efforts is realized; seasonal strength becomes evident in its Mill Services and Track Technologies units; and anticipated improvements in the macro market conditions begin to benefit all of the Company's businesses in the second half of the year. Mr. Fazzolari noted, however, that increased non-cash pension expense will negatively affect the Company's reported performance in each quarter of 2003.
Mr. Fazzolari reaffirmed that the Company will continue to operate a balanced financial profile that is focused on the sale of non-core assets, debt reduction, and free cash flow generation; prudent balance sheet management; and growth in a measured and EVA-positive way.
An archived Webcast of the meeting, including the detailed presentation slides, can be accessed through the Harsco Corporation Web site at www.harsco.com.
Forward-Looking Statements
The nature of the Company's operations and the many countries in which it operates subject it to changing economic, competitive, regulatory, and technological conditions, risks, and uncertainties. In accordance with the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, the Company provides the following cautionary remarks regarding important factors which, among others, could cause future results to differ materially from the forward-looking statements, expectations and assumptions expressed or implied herein. These include statements about our management confidence and strategies for performance; expectations for new and existing products, technologies, and opportunities; and expectations for market segment and industry growth, sales, cash flows, earnings, and EVA.
These factors include, but are not limited to: (1) changes in the worldwide business environment in which the Company operates, including general economic conditions, particularly in the mill services, steel, infrastructure, non-residential construction and industrial gas markets; (2) changes in currency exchange rates, interest rates, and capital costs; (3) changes in the performance of stock and bond markets, particularly in the United States and United Kingdom, that could affect the valuation of the assets in the Company's pension plans and the accounting for pension assets, liabilities and expense; (4) changes in governmental laws and regulations, including taxes and import tariffs; (5) market and competitive changes, including pricing pressures, market demand and acceptance for new products, services, and technologies; (6) unforeseen business disruptions in one or more of the 40 countries which the Company operates due to political instability, civil disobedience, armed hostilities or other calamities; and (7) other risk factors listed from time to time in the Company's SEC reports. The Company does not intend to update this information and disclaims any legal liability to the contrary.
Harsco Corporation is a diversified industrial services and products company with market-leading businesses serving the worldwide infrastructure development, steel and metals, railway transportation, and gas and energy industries. The Company employs approximately 18,000 people in more than 40 countries of operation. Additional information can be found at www.harsco.com.