Harsco Corporation (HSC) saw its loss widen to $32.99 million, or $0.41 a share for the quarter ended Sep. 30, 2016. In the previous year period, the company reported a loss of $8.66 million, or $0.11 a share. On an adjusted basis, earnings per share were at $0.14 for the quarter compared with $0.18 in the same period last year.
Revenue during the quarter dropped 14.14 percent to $367.79 million from $428.33 million in the previous year period. Gross margin for the quarter expanded 74 basis points over the previous year period to 22.15 percent. Total expenses were 92.23 percent of quarterly revenues, down from 98.20 percent for the same period last year. This has led to an improvement of 597 basis points in operating margin to 7.77 percent.
Operating income for the quarter was $28.58 million, compared with $7.73 million in the previous year period.
"The third quarter for Harsco was another solid result, led by our Metals & Minerals business," said president and chief executive officer Nick Grasberger. "Further, we were particularly pleased with our free cash flow performance in this quarter, which supports raising our free cash flow outlook for the year. We also substantially reduced our financial leverage in the quarter and further strengthened our financial flexibility more recently through a very successful refinancing. Looking ahead, our strategic priorities remain unchanged as we pursue initiatives to improve our market position and capital returns in each of our businesses, and we remain optimistic about our earnings potential as markets recover."
For fiscal year 2016, the company expects operating income to be in the range of $60 million to $69 million. The company expects adjusted operating income to be in the range of $20 million to $29 million for the fourth-quarter. For fiscal year 2016, the company expects adjusted operating income to be in the range of $108 million to $117 million. For financial year 2016, the company projects diluted earnings per share to be in the range of $0.76 to $0.85. On an adjusted basis, the company projects diluted earnings per share to be in the range of $0.06 to $0.11 for the fourth-quarter. For financial year 2016, the company projects diluted earnings per share to be in the range of $0.36 to $0.45 on adjusted basis.
Operating cash flow improves
Harsco Corporation has generated cash of $104.76 million from operating activities during the nine month period, up 17.57 percent or $15.65 million, when compared with the last year period.
Cash flow from investing activities was $129.90 million for the nine month period as against cash outgo of $103.23 million in the last year period.
The company has spent $241.96 million cash to carry out financing activities during the nine month period as against cash inflow of $1.57 million in the last year period.
Cash and cash equivalents stood at $79.91 million as on Sep. 30, 2016, up 37.79 percent or $21.92 million from $57.99 million on Sep. 30, 2015.
Working capital increases sharply
Harsco Corporation has recorded an increase in the working capital over the last year. It stood at $169.69 million as at Sep. 30, 2016, up 26.32 percent or $35.36 million from $134.34 million on Sep. 30, 2015. Current ratio was at 1.37 as on Sep. 30, 2016, up from 1.25 on Sep. 30, 2015.
Cash conversion cycle (CCC) has decreased to 69 days for the quarter from 90 days for the last year period. Days sales outstanding went up to 79 days for the quarter compared with 72 days for the same period last year.
Days inventory outstanding has decreased to 34 days for the quarter compared with 57 days for the previous year period. At the same time, days payable outstanding went up to 44 days for the quarter from 39 for the same period last year.
Debt comes down
Harsco Corporation has recorded a decline in total debt over the last one year. It stood at $675.55 million as on Sep. 30, 2016, down 21.37 percent or $183.65 million from $859.20 million on Sep. 30, 2015. Total debt was 40.04 percent of total assets as on Sep. 30, 2016, compared with 40.63 percent on Sep. 30, 2015. Debt to equity ratio was at 2.31 as on Sep. 30, 2016, down from 3.14 as on Sep. 30, 2015. Interest coverage ratio improved to 2.08 for the quarter from 0.70 for the same period last year.
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