UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 30, 2022

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from            to          

Commission File Number 001-03970

HARSCO CORPORATION

(Exact name of registrant as specified in its charter) 

Delaware			23-1483991
(State or other jurisdiction of incorporation or organization)			(I.R.S. employer identification number)
350 Poplar Church Road,	Camp Hill,	Pennsylvania	17011
(Address of principal executive offices)			(Zip Code)

Registrant’s telephone number, including area code  717-763-7064 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, par value $1.25 per share	HSC	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes ☒ NO ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   Yes ☒  NO ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  YES ☐  NO ☒

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

Class	Outstanding at October 31, 2022
Common stock, par value $1.25 per share	79,474,631

HARSCO CORPORATION

FORM 10-Q

INDEX

		Page
PART I — FINANCIAL INFORMATION
Item 1.	Financial Statements	4
	Condensed Consolidated Balance Sheets (Unaudited)	4
	Condensed Consolidated Statements of Operations (Unaudited)	5
	Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)	6
	Condensed Consolidated Statements of Cash Flows (Unaudited)	7
	Condensed Consolidated Statements of Equity (Unaudited)	8
	Notes to Condensed Consolidated Financial Statements (Unaudited)	10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	33
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	40
Item 4.	Controls and Procedures	40
PART II — OTHER INFORMATION
Item 1.	Legal Proceedings	41
Item 1A.	Risk Factors	41
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	41
Item 6.	Exhibits	42
SIGNATURES		43

2

Glossary of Defined Terms

Unless the context requires otherwise, "Harsco," the "Company," "we," "our," or "us" refers to Harsco Corporation on a consolidated basis. The Company also uses several other terms in this Quarterly Report on Form 10-Q, which are further defined below:

Term	Description
AOCI	Accumulated Other Comprehensive Income (Loss)
CERCLA	Comprehensive Environmental Response, Compensation, and Liability Act of 1980
Consolidated Adjusted EBITDA	EBITDA as calculated in accordance with the Company's Credit Agreement
COVID-19	The COVID-19 coronavirus pandemic
Credit Agreement	Credit Agreement governing the Senior Secured Credit Facilities
DEA	United States Drug Enforcement Agency
Deutsche Bahn	National railway company in Germany
DTSC	California Department of Toxic Substances Control
EBITDA	Earnings before interest, tax, depreciation and amortization
ESOL	Stericycle Environmental Solutions business
FASB	Financial Accounting Standards Board
ICMS	Type of value-added tax in Brazil
IKG	The former Harsco Industrial IKG business
ISDA	International Swaps and Derivatives Association
LIBOR	London Interbank Offered Rates
Network Rail	Infrastructure manager for most of the railway in the U.K.
New Term Loan	$500 million term loan raised in March 2021 under the Senior Secured Credit Facilities, maturing on March 10, 2028
OCI	Other Comprehensive Income (Loss)
PA DEP	Pennsylvania Department of Environmental Protection
Revolving Credit Facility	Multi-year revolving credit facility under the Senior Secured Credit Facility, with a facility limit of $700 million
ROU	Right of use
SBB	Federal railway system of Switzerland
SCE	Supreme Council for Environment in Bahrain
SEC	Securities and Exchange Commission
Senior Notes	5.75% Notes due July 31, 2027
Senior Secured Credit Facilities	Primary source of borrowings comprised of the Revolving Credit Facility and the New Term Loan
SPRA	State Revenue Authorities from the State of São Paulo, Brazil
TSDF	Treatment, storage, and disposal facility permits issued under the Resource Conservation and Recovery Act
U.S. GAAP	Accounting principles generally accepted in the U.S.

3

PART I — FINANCIAL INFORMATION

ITEM 1.      FINANCIAL STATEMENTS

HARSCO CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

(In thousands)	September 30 2022		December 31 2021
ASSETS
Current assets:
Cash and cash equivalents	$	81,740	$	82,908
Restricted cash	3,297		4,220
Trade accounts receivable, net	269,890		377,881
Other receivables	26,307		33,059
Inventories	80,714		70,493
Prepaid expenses	33,592		31,065
Current portion of assets held-for-sale	261,888		265,413
Other current assets	39,617		9,934
Total current assets	797,045		874,973
Property, plant and equipment, net	629,895		653,913
Right-of-use assets, net	104,227		101,576
Goodwill	744,780		883,109
Intangible assets, net	372,002		402,801
Deferred income tax assets	16,681		17,883
Assets held-for-sale	63,864		71,234
Other assets	42,901		48,419
Total assets	$	2,771,395	$	3,053,908
LIABILITIES
Current liabilities:
Short-term borrowings	$	9,463	$	7,748
Current maturities of long-term debt	16,784		10,226
Accounts payable	203,900		186,126
Accrued compensation	38,041		48,165
Income taxes payable	4,271		6,378
Current portion of operating lease liabilities	25,989		25,590
Current portion of liabilities of assets held-for-sale	157,231		161,999
Other current liabilities	136,019		155,159
Total current liabilities	591,698		601,391
Long-term debt	1,314,918		1,359,446
Retirement plan liabilities	49,286		93,693
Operating lease liabilities	77,304		74,571
Liabilities of assets held-for-sale	7,437		8,492
Environmental liabilities	26,678		28,435
Deferred tax liabilities	32,497		33,826
Other liabilities	45,442		48,284
Total liabilities	2,145,260		2,248,138
COMMITMENTS AND CONTINGENCIES
HARSCO CORPORATION STOCKHOLDERS’ EQUITY
Common stock	145,390		144,883
Additional paid-in capital	223,172		215,528
Accumulated other comprehensive loss	(596,764)		(560,139)
Retained earnings	1,651,159		1,794,510
Treasury stock	(848,439)		(846,622)
Total Harsco Corporation stockholders’ equity	574,518		748,160
Noncontrolling interests	51,617		57,610
Total equity	626,135		805,770
Total liabilities and equity	$	2,771,395	$	3,053,908

See accompanying notes to unaudited condensed consolidated financial statements.

4

HARSCO CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

	Three Months Ended					Nine Months Ended
	September 30					September 30
(In thousands, except per share amounts)	2022		2021			2022			2021
Revenues from continuing operations:
Service revenues	$	442,775	$	430,824		$	1,300,828		$	1,274,814
Product revenues	44,139		39,561			119,935			111,510
Total revenues	486,914		470,385			1,420,763			1,386,324
Costs and expenses from continuing operations:
Cost of services sold	357,194		344,050			1,072,545			1,018,885
Cost of products sold	35,609		31,289			100,476			89,269
Selling, general and administrative expenses	64,146		70,629			201,234			213,048
Research and development expenses	193		331			545			811
Goodwill impairment charge	—		—			104,580			—
Other (income) expenses, net	(351)		(2,835)			515			(7,993)
Total costs and expenses	456,791		443,464			1,479,895			1,314,020
Operating income (loss) from continuing operations	30,123		26,921			(59,132)			72,304
Interest income	952		544			2,289			1,668
Interest expense	(19,751)		(15,741)			(51,535)			(47,640)
Facility fees and debt-related income (expense)	(2,511)		(198)			(894)			(5,506)
Defined benefit pension income	2,118		3,887			6,775			11,777
Income (loss) from continuing operations before income taxes and equity income	10,931		15,413			(102,497)			32,603
Income tax benefit (expense) from continuing operations	(9,376)		(7,816)			(7,482)			(14,714)
Equity income (loss) of unconsolidated entities, net	(128)		(293)			(373)			(488)
Income (loss) from continuing operations	1,427		7,304			(110,352)			17,401
Discontinued operations:
Income (loss) from discontinued businesses	1,993		1,301			(35,225)			12,904
Income tax benefit (expense) from discontinued businesses	(539)		1,223			5,282			(3,832)
Income (loss) from discontinued operations, net of tax	1,454		2,524			(29,943)			9,072
Net income (loss)	2,881		9,828			(140,295)			26,473
Less: Net (income) loss attributable to noncontrolling interests	(802)		(2,264)			(3,056)			(5,386)
Net income (loss) attributable to Harsco Corporation	$	2,079	$	7,564		$	(143,351)		$	21,087
Amounts attributable to Harsco Corporation common stockholders:
Income (loss) from continuing operations, net of tax	$	625	$	5,040		$	(113,408)		$	12,015
Income (loss) from discontinued operations, net of tax	1,454		2,524			(29,943)			9,072
Net income (loss) attributable to Harsco Corporation common stockholders	$	2,079	$	7,564		$	(143,351)		$	21,087
Weighted-average shares of common stock outstanding	79,531		79,287			79,469			79,214
Basic earnings (loss) per common share attributable to Harsco Corporation common stockholders:
Continuing operations	$	0.01	$	0.06		$	(1.43)		$	0.15
Discontinued operations	0.02		0.03			(0.38)			0.11
Basic earnings (loss) per share attributable to Harsco Corporation common stockholders	$	0.03	$	0.10	(a)	$	(1.80)	(a)	$	0.27	(a)
Diluted weighted-average shares of common stock outstanding	79,567		80,275			79,469			80,356
Diluted earnings (loss) per common share attributable to Harsco Corporation common stockholders:
Continuing operations	$	0.01	$	0.06		$	(1.43)		$	0.15
Discontinued operations	0.02		0.03			(0.38)			0.11
Diluted earnings (loss) per share attributable to Harsco Corporation common stockholders	$	0.03	$	0.09		$	(1.80)	(a)	$	0.26

(a) Does not total due to rounding

See accompanying notes to unaudited condensed consolidated financial statements.

5

HARSCO CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited)

	Three Months Ended
	September 30
(In thousands)	2022		2021
Net income (loss)	$	2,881	$	9,828
Other comprehensive income (loss):
Foreign currency translation adjustments, net of deferred income taxes of $(4,641) and $(1,850) in 2022 and 2021, respectively	(54,914)		(27,587)
Net gain (loss) on cash flow hedging instruments, net of deferred income taxes of $(346) and $(217)in 2022 and 2021, respectively	1,143		822
Pension liability adjustments, net of deferred income taxes of $(313) and $(358)in 2022 and 2021, respectively	28,163		17,768
Unrealized gain on marketable securities, net of deferred income taxes of $3 and $— in 2022 and 2021, respectively	(7)		—
Total other comprehensive income (loss)	(25,615)		(8,997)
Total comprehensive income (loss)	(22,734)		831
Comprehensive (income) loss attributable to noncontrolling interests	1,921		(1,820)
Comprehensive income (loss) attributable to Harsco Corporation	$	(20,813)	$	(989)

	Nine Months Ended
	September 30
(In thousands)	2022		2021
Net income (loss)	$	(140,295)	$	26,473
Other comprehensive income (loss):
Foreign currency translation adjustments, net of deferred income taxes of $(11,095) and $(675)in 2022 and 2021, respectively	(116,407)		(15,437)
Net gain (loss) on cash flow hedging instruments, net of deferred income taxes of $(977) and $(519)in 2022 and 2021, respectively	3,003		1,745
Pension liability adjustments, net of deferred income taxes of $(977) and $(1,054)in 2022 and 2021, respectively	70,691		23,812
Unrealized gain (loss) on marketable securities, net of deferred income taxes of $7 and $(9)in 2022 and 2021, respectively	(20)		25
Total other comprehensive income (loss)	(42,733)		10,145
Total comprehensive income (loss)	(183,028)		36,618
Less: Comprehensive (income) loss attributable to noncontrolling interests	3,052		(4,549)
Comprehensive income (loss) attributable to Harsco Corporation	$	(179,976)	$	32,069

See accompanying notes to unaudited condensed consolidated financial statements.

6

HARSCO CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

	Nine Months Ended September 30
(In thousands)	2022		2021
Cash flows from operating activities:
Net income (loss)	$	(140,295)	$	26,473
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation	97,959		98,383
Amortization	25,605		26,554
Deferred income tax (benefit) expense	(12,056)		(8,911)
Equity (income) loss of unconsolidated entities, net	373		488
Dividends from unconsolidated entities	526		—
(Gain) loss on early extinguishment of debt	(2,254)		2,668
Goodwill impairment charge	104,580		—
Other, net	381		(1,147)
Changes in assets and liabilities, net of acquisitions and dispositions of businesses:
Accounts receivable	74,994		(32,563)
Income tax refunds receivable, reimbursable to seller	7,687		735
Inventories	(11,339)		3,557
Contract assets	9,589		(52,205)
Right-of-use assets	21,829		21,050
Accounts payable	13,030		12,111
Accrued interest payable	(7,559)		(7,840)
Accrued compensation	(5,559)		12,098
Advances on contracts	(5,987)		(13,997)
Operating lease liabilities	(21,498)		(20,554)
Retirement plan liabilities, net	(27,829)		(36,700)
Other assets and liabilities	8,984		16,550
Net cash provided by operating activities	131,161		46,750
Cash flows from investing activities:
Purchases of property, plant and equipment	(101,645)		(109,507)
Proceeds from sales of assets	8,289		15,512
Expenditures for intangible assets	(147)		(287)
Proceeds from notes receivable	8,605		6,400
Net proceeds (payments) from settlement of foreign currency forward exchange contracts	13,571		(1,064)
Payments for settlements of interest rate swaps	(2,586)		—
Other investing activities, net	220		181
Net cash used by investing activities	(73,693)		(88,765)
Cash flows from financing activities:
Short-term borrowings, net	277		4,650
Current maturities and long-term debt:
Additions	159,429		507,468
Reductions	(198,831)		(452,351)
Dividends paid to noncontrolling interests	(4,841)		(3,103)
Sale of noncontrolling interests	1,901		—
Stock-based compensation - Employee taxes paid	(1,817)		(3,273)
Payment of contingent consideration	(6,915)		(734)
Deferred financing costs	—		(7,828)
Other financing activities, net	—		(601)
Net cash (used) provided by financing activities	(50,797)		44,228
Effect of exchange rate changes on cash and cash equivalents, including restricted cash	(8,762)		(1,779)
Net increase in cash and cash equivalents, including restricted cash	(2,091)		434
Cash and cash equivalents, including restricted cash, at beginning of period	87,128		79,669
Cash and cash equivalents, including restricted cash, at end of period	$	85,037	$	80,103
Supplementary cash flow information:
Change in accrual for purchases of property, plant and equipment included in accounts payable	$	7,419	$	2,357

See accompanying notes to unaudited condensed consolidated financial statements.

7

HARSCO CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (Unaudited)

	Harsco Corporation Stockholders’ Equity
	Common Stock				Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Noncontrolling Interests
(In thousands, except share  amounts)	Issued		Treasury										Total
Balances, December 31, 2020	$	144,288	$	(843,230)	$	204,078	$	1,797,759	$	(645,741)	$	56,245	$	713,399
Net income							135				1,430		1,565
Total other comprehensive income (loss), net of deferred income taxes of $134									2,295		(1,066)		1,229
Stock appreciation rights exercised, net 3,842 shares	9		(70)		(9)								(70)
Vesting of restricted stock units and other stock grants, net 144,967 shares	312		(1,850)		(312)								(1,850)
Vesting of performance share units, net 69,127 shares	155		(1,032)		(155)								(1,032)
Amortization of unearned portion of stock-based compensation, net of forfeitures					3,342								3,342
Balances, March 31, 2021	144,764		(846,182)		206,944		1,797,894		(643,446)		56,609		716,583
Net income							13,388				1,692		15,080
Cash dividends declared:
Noncontrolling interests											(3,094)		(3,094)
Total other comprehensive income, net of deferred income taxes of $34									17,240		673		17,913
Stock appreciation rights exercised, net 13,061 shares	28		(219)		(28)								(219)
Vesting of restricted stock units and other stock grants, net 34,986 shares	44				(44)								—
Amortization of unearned portion of stock-based compensation, net of forfeitures					3,120								3,120
Balances, June 30, 2021	$	144,836	$	(846,401)	$	209,992	$	1,811,282	$	(626,206)	$	55,880	$	749,383
Net income (loss)							7,564				2,264		9,828
Cash dividends declared:
Noncontrolling interests											(9)		(9)
Total other comprehensive income (loss), net of deferred income taxes of $(2,425)									(8,553)		(444)		(8,997)
Vesting of restricted stock units and other stock grants, net 10,824 shares	20		(101)		(20)								(101)
Amortization of unearned portion of stock-based compensation, net of forfeitures					3,123								3,123
Balances, September 30, 2021	$	144,856	$	(846,502)	$	213,095	$	1,818,846	$	(634,759)	$	57,691	$	753,227

8

	Harsco Corporation Stockholders’ Equity
(In thousands, except share amounts)	Common Stock				Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Noncontrolling Interests
	Issued		Treasury										Total
Balances, December 31, 2021	$	144,883	$	(846,622)	$	215,528	$	1,794,510	$	(560,139)	$	57,610	$	805,770
Net income (loss)							(39,839)				1,159		(38,680)
Total other comprehensive income (loss), net of deferred income taxes of $(2,520)									12,490		(482)		12,008
Vesting of restricted stock units and other stock grants, net 176,253 shares	378		(1,632)		(378)								(1,632)
Amortization of unearned portion of stock-based compensation, net of forfeitures					3,629								3,629
Balances, March 31, 2022	145,261		(848,254)		218,779		1,754,671		(547,649)		58,287		781,095
Net income (loss)							(105,591)				1,095		(