Harsco Corporation

All lines have been placed on mute to avoid any background noise. After the speaker's remarks, there will be a question and answer period. If you would like to ask a question during this time, simply press star and the number one on your telephone keypad. If you would like to withdraw your question, press the pound key on your telephone keypad. Also, this telephone conference presentation and accompanying webcast made on behalf of Harsco Corporation are subject to copyright by Harsco Corporation and all rights are reserved. No recordings or redistributions of this telephone conference by any other party are permitted without the express written consent of Harsco Corporation. Your participation indicates your agreement. I would now like to introduce Dave Martin of Harsco Corporation. Mr. Martin, you may begin.

Thank you, Lori, and welcome to everyone joining us today. I'm Dave Martin, VP of Investor Relations for Harsco. With me today is Nick Rasperger, our Chairman and Chief Executive Officer, and Pete Mine in Harsco's Senior Vice President and CFO. This morning, we will discuss our results for the first quarter of 2021 and our updated outlook for the year. We'll then take your questions. Before our presentation, however, let me mention a few items. First, our quarterly earnings release as well as the slide presentation for this call are available on our website. Second, we will make statements today that are considered forward-looking within the meaning of the federal securities laws. These statements are based on our current knowledge and expectations and are subject to certain risks and uncertainties that may cause actual results to differ materially from those forward-looking statements. For a discussion of such risks and uncertainties, the risk factors section in our most recent 10-K. The company undertakes no obligation to revise or update any forward-looking statement. Lastly, on this call, we may refer to adjusted financial results that are considered non-GAAP for SEC reporting purposes. A reconciliation to GAAP results is included in the earnings released today as well as the slide presentation. With that said, I'll turn it over to Nick.

Good morning, everyone, and thanks for joining us today. As Dave just noted, Pete Minin is with us today. You may recall Pete had discussed his retirement plans on the last earnings call. So let me start with a brief update on the search process for our new CFO. I've been very happy with the degree of interest in the role of highly qualified candidates. But due to timing factors related to certain candidates' current roles, we are not yet in the position to announce Pete's successor. Therefore, I have asked Pete to extend his tenure to ensure a smooth transition to the new CFO, and he has agreed to do so. So, Pete, on behalf of the Board, I truly appreciate your ongoing commitment to our company. I would also like to welcome John Quinn to the Harsco Board of Directors. We announced John's appointment a few weeks ago. This addition demonstrates our ongoing focus on ensuring that we have the right balance of expertise and experience on our Board. John has the requisite financial and strategic acumen, as well as a deep understanding of the environmental services industry. He's a terrific fit with our board and the management team, and we are thrilled to have him join the Harsco family. I am encouraged by Harsco's strong start to 2021, with performance exceeding our expectations across all three of our segments. Our results for the first quarter reflect the outstanding execution of our team, as well as an improvement in the overall macroeconomic environment. When we reported our fourth quarter results, visibility into the year for our rail segment and the clean earth contaminated materials business was limited due to the impact of the COVID pandemic. However, we saw a clear shift during the course of the first quarter, and today each of the end markets that we serve is gaining momentum. As a result, we have raised our outlook for the full year, and while the updated outlook reflects improvement in each segment, the most significant change is in our rail business. I'll comment on each of our segments, beginning with Harsco Environmental. We now expect HE's EBITDA in 2021 to exceed that of 2019, and perhaps even approach that of 2018, which was the highest in many years. Margins are also quite strong. Despite the higher capital spending this year owing to deferrals from 2020, EBITDA minus CapEx margins should be about 10%, with EBITDA margins of 21% to 22%. I also believe the outlook for the business beyond this year to be very encouraging when we consider a return to more normal capital spending levels, the quality of our contracts, and our ongoing shift to less capital-intensive environmental services. In addition to this, steel mill utilization rates remain well below historical highs, with upside driven by a bullish outlook for infrastructure projects and consumer spending. I will also note promising developments related to our all-use oil technology and other innovations aimed at valorizing steel slag. Such projects are critical to achieving HE's ambition of becoming a leader in environmental safety and governance in the global metals industry, with a strong cash flow profile. Our Clean Earth segment continues to perform well, and we are delivering on our commitment to maximize the value from last year's ESOL acquisition, while also taking advantage of the benefits of a market recovery. After realizing more than 10 million of synergies last year, we anticipate at least another 20 million this year. The primary drivers relate to lower disposal and procurement costs combined with increased operational efficiencies and sizable SG&A savings. Hazardous waste volumes across our industrial, retail, and healthcare customers were better than we anticipated in the quarter, with nearly all categories now above pre-COVID levels. We are also winning more business in these markets, and the pipeline of business opportunities continues to grow. Overall, the ESOL business is showing its resilience, stability, and growth, which along with its attractive cash flow and the synergies support our investment thesis to combine the business with clean earth. As I said earlier, our rail segment has improved its outlook for this year with EBITDA now about one-third higher than our previous guidance. The primary driver is our aftermarket program in Asia, followed by stronger demand in our core North American market. and opportunities in the European utility vehicle market, which we lead, continue to advance. I'm also pleased with the trends in our operations and supply chain that are serving to reduce cost and improve customer service. Overall, the improved outlook and the high degree of strategic interest in the business provides us with increased strategic flexibility and opportunity to unlock value for our shareholders in the future. I'll now turn the call over to Pete.