Harsco Enters Into Definitive Agreement to Acquire Clean Earth, Accelerating its Transformation to a Global Market Leader of Environmental Solutions
- Upon Completion of Strategic Transactions,
Environmental Solutionsand Services to Represent Nearly 80% of Harsco’s Total Revenue
- Clean Earth Business Adds Recurring Revenue Streams, Strong Growth Potential and Access to Markets with High Regulatory Barriers to Entry
Harscoto Host Conference Call at 8:30 a.m. ETto Discuss Transaction and Earnings
In a separate press release also issued today,
With the addition of Clean Earth,
“Harsco has been strategically transforming its portfolio with a goal towards value creation. The highly strategic and complementary acquisition of Clean Earth, the addition of
Strategic and Financial Benefits of Transaction
- Advances Harsco’s Environmental Strategy: As a result of the acquisition,
Harscowill gain immediate scale and a breadth of capabilities in the contaminated materials, hazardous waste, and dredge material markets that are complementary to its Metals & Minerals (“M&M”) segment’s environmental solutions and services offerings. Clean Earth and Harsco’s M&M segment share a fundamental business philosophy rooted in the beneficial reuse of waste volumes generated by industrial customers. Clean Earth’s markets have significant regulatory barriers to entry with high demand for service capabilities driven by ongoing waste generation and regulatory requirements. Clean Earth’s extensive operating permits and permitted facility footprint will accelerate Harsco’s expansion into environmental services. Upon completion of the strategic transactions, including the divestiture of Air-X-Changers, environmental solutions and services will comprise nearly 80% of Harsco’s total revenue.
- Establishes a New Growth Platform: The addition of Clean Earth significantly increases the overall addressable market opportunity for the combined company. Clean Earth operates in an expanding market driven by tightening environmental regulation at federal, state and local levels; increased public infrastructure spending; growing remediation activity, both government and private; and the increasing pricing of competing disposal alternatives. Industry consolidation also presents a unique growth opportunity with Clean Earth’s current markets. Together with Clean Earth,
Harscowill have enhanced resources and expertise to capture an increasing share of the specialty waste processing and treatment market. Furthermore, Clean Earth maintains relationships with a widely diversified base of industrial customers across a variety of sector and industry segments. The combined company’s expanded customer base will create potential long-term cross-selling opportunities with its M&M segment.
- Compelling Long-term Financial Benefits: The acquisition of Clean Earth will be margin enhancing and free cash flow accretive immediately. The transaction is expected to be accretive to earnings in 2020, the first full-year of ownership. Clean Earth has a capital light and high-margin business model with strong underlying growth driven by fundamental factors. Additionally, given the complementary nature of the companies, the combined company is targeting synergies of
$10 millionby 2020. Considering the impact of both strategic transactions, Harscoalso expects to maintain a strong balance sheet and financial flexibility to support innovation and growth initiatives. The Company’s leverage ratio is expected to be below 2-times at year-end following the completion of these two transactions. Lastly, Harscoexpects the impact of both transactions to be accretive to the Company’s long-term financial targets.
- Seamless Integration:
Harscoand Clean Earth are a strong cultural fit, with shared values and a focus on creating exceptional value for employees, customers and shareholders. Additionally, the Harscomanagement team has a proven track record of successfully integrating acquisitions and anticipate a seamless integration process for Clean Earth.
Organization and Leadership
Following the close of the transaction, Clean Earth will operate as a standalone business segment of
Financing, Approvals and Timing to Close
The acquisition will be an all cash transaction.
The transaction is expected to close in the next few months, subject to customary closing conditions, including regulatory approval.
Harsco’s Rail segment will not be impacted by the strategic transactions announced today. The Company believes it remains an attractive business to scale over the next several years, with new product introductions and geographic expansion. Given these prospects,
First Quarter 2019 Earnings
The Company today also announced first quarter 2019 results and its full year 2019 outlook.
The press releases announcing its first quarter 2019 results and the Company’s announcement that it has entered into a definitive agreement to sell its Air-X-Changers business are available in the “Investor Relations” section of harsco.com.
Conference Call and Webcast
In light of today’s news,
Dial-in (US): (800) 611-4920
Dial-in (International): (973) 200-3957
Conference ID: 60531312
Listen-Only Mode and Archived Webcast: www.harsco.com
Replay of the earnings call will be available at www.harsco.com and by telephone through
FORWARD LOOKING STATEMENTS
The nature of the Company's business 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 Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, the Company provides the following cautionary remarks regarding important factors that, among others, could cause future results to differ materially from the results contemplated by forward-looking statements, including the expectations and assumptions expressed or implied herein. Forward-looking statements contained herein could include, among other things, statements about management's confidence in and strategies for performance; expectations for new and existing products, technologies and opportunities; and expectations regarding growth, sales, cash flows, and earnings. Forward-looking statements can be identified by the use of such terms as "may," "could," "expect," "anticipate," "intend," "believe," "likely," "estimate," "outlook," "plan" or other comparable terms.
Factors that could cause actual results to differ, perhaps materially, from those implied by forward-looking statements include, but are not limited to: (1) changes in the worldwide business environment in which the Company operates, including general economic conditions; (2) changes in currency exchange rates, interest rates, commodity and fuel costs and capital costs; (3) changes in the performance of equity and bond markets that could affect, among other things, the valuation of the assets in the Company's pension plans and the accounting for pension assets, liabilities and expenses; (4) changes in governmental laws and regulations, including environmental, occupational health and safety, tax and import tariff standards; (5) market and competitive changes, including pricing pressures, market demand and acceptance for new products, services and technologies; (6) the Company's inability or failure to protect its intellectual property rights from infringement in one or more of the many countries in which the Company operates; (7) failure to effectively prevent, detect or recover from breaches in the Company's cybersecurity infrastructure; (8) unforeseen business disruptions in one or more of the many countries in which the Company operates due to political instability, civil disobedience, armed hostilities, public health issues or other calamities; (9) disruptions associated with labor disputes and increased operating costs associated with union organization; (10) the seasonal nature of the Company's business; (11) the Company's ability to successfully enter into new contracts and complete new acquisitions or strategic ventures in the time-frame contemplated, or at all; (12) the integration of the Company's strategic acquisitions, including the acquisition of
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