Enviri Corp (NVRI) 2012 Q2 法說會逐字稿

Good morning. My name is Martina, and I will be your conference facilitator. At this time, I would like to welcome everyone to the Harsco Corporation second quarter earnings release conference call. All lines have been place on mute to prevent background noise. After the speakers' remarks, there will be a question and answer period. (Operator Instructions)

Also, this telephone conference presentation and accompanying webcast made on behalf of Harsco are subject to copyright by Harsco and all rights are reserved. Harsco will be recording this teleconference. No other recordings or distribution of this telephone conference by any other party are permitted without expressed written consent of Harsco. Your participation indicates your agreement. I would now like to introduce Mr. Eugene Truett, Vice President Investor Relations and Credit of Harsco Corporation. Mr. Truett, you may begin your call.

Thank you, Martina. Good morning. I'd like to welcome everyone to Harsco's second quarter 2012 earnings release conference call. I am here this morning with Henry Knueppel, Harsco's Interim Chairman and CEO. Obviously, we'll have more to say about that on the call. Steve Schnoor, Harsco's CFO and Treasurer; Galdino Claro, Executive Vice President and Group CEO Harsco Metals & Minerals is on the line with us. Also this morning with us today is Jim Jacobson who joined Harsco yesterday as our Director Investor Relations. We will be giving more information on Jim's background later today to all of you. As most of you know, I will be retiring in early September and Jim will be assuming my investor relations responsibilities.

As we do at the beginning of all of our calls, we want to let you know that there may be forward-looking statements in our discussions with you today. These statements relate to the future of our business, our operations, results, economic expectations, and other aspects relating to and affecting our business. What we say today is based on our best information available, it is possible that the results could differ from what we tell you today.

We have listed in our SEC statements reasons and risk factors that affect our businesses. We invite you to review the SEC filings at your convenience. I would also like to remind you that replays of this call and related information are available on our website. Please take the time to access this information at your convenience. I would like now to turn the call over to Henry Knueppel. Henry.

Thank you, Gene. I would also like to add my welcome to all of those participating in the call this morning. Thank you for your continuing interest in Harsco. We are going to add to our typical agenda this morning. I will make some opening remarks about the second quarter. Steve Schnoor will give you some technical details and further details on the results. Galdino Claro will then give you some comments on the Metals & Minerals business, and I will finish up with some brief comments regarding the third quarter and we will have time for questions.

While a number of substantial head winds remain in our two largest businesses, we are pleased with results achieved in the second quarter as reported this morning. Despite overall business levels and revenues being down relatively significantly, adjusting for one-time items, income was comparable to last year's second quarter. This was accomplished with a clear dedication by the entire Harsco team to bringing our costs down. Achieving margin improvements on down revenues was a significant accomplishment and one I'm sure the investment community can truly appreciate. Clearly, we would prefer increased revenues, but those cards simply are not being dealt currently.

Importantly in the quarter, measurable progress was made in our previously announced restructuring initiatives, principally within our Infrastructure segment. Results in the Infrastructure also benefited from previously announced $6.7 million pre-tax, non-cash gain related to the closure of certain foreign operations. While our restructuring efforts are at this point over achieving our original targets, our markets are down and offsetting some of the expected savings. Unfortunately, there is no immediate cure in sight on this front. I can tell you, however, our focus is not on expanding -- is now on expanding our selling efforts and taking full advantage of our capabilities in this business.

Further progress was also made in our Metals & Minerals business in the quarter with the signing of a new 20-year environmental services contract with Tangshan Iron & Steel, part of China's largest steel maker. Other notable new contracts and contract renewals were also signed in the quarter as previously announced. Both our Harsco Rail and Harsco Industrial business units had results in the quarter that exceeded our expectations.

Harsco Rail continues to enjoy a strong order book and continued strong bidding activity. Rail is benefiting from growing global market acceptance of its high technology rail, maintenance-of-way equipment, parts and services; as well as delivery of a second phase of a multi-year large equipment order from the Ministry of Rails of China. As previously reported, Rail's results in the second quarter of last year included an $8 million pre-tax, non-cash, one-time gain from the reduction of estimated costs related to the first phase of large equipment order to China. We do not expect this gain to be repeated.

While Harsco Industrial had a strong quarter, we are beginning to see a slow down in bookings in our air exchanger unit. The slowdown relates directly to the reduction in oil and gas prices earlier in the year and the resulting impact on drilling activity. This will have some negative effect in results later in the third quarter, but will be more impactful in the fourth quarter and beyond. All things considered, we made considerable progress during the second quarter despite market headwinds. Those improvements are testament to the qualities of the people of Harsco and I want to thank them for their energy and their accomplishments in the quarter. I will now turn the call over to Steve Schnoor.

Thank you, Henry. Good morning, everyone. As reported in this morning's press release, excluding previously announced pre-tax restructuring charges of $30 million, we report earnings per share from continuing operations of $0.49 for the second quarter. The results include approximately $0.06 per share resulting from a $6.7 million gain associated with the Infrastructure of businesses exit from certain European markets. That's part of the restructuring that we announced in 2011. Excluding that item, earnings per share were $0.43, exceeding our previous guidance of $0.32 to $0.38.

Second quarter 2011 earnings were $0.40 per share excluding $0.07 from the previously reported $8 million one-time gain associated with the Rail businesses China Ministry of Railways contract. Second quarter consolidated sales of $771 million were 12% lower than the same period last year. This reduction resulted primarily from foreign currency translation due to the weaker euro, as well as exited European countries by the Infrastructure group and exited contracts by the Metals & Minerals group.

On a comparative basis, the second quarter 2012 results benefited by improved performance of our Infrastructure business and a strong performance by the Industrial businesses. Including the previously mentioned one-time gain, the Infrastructure business was profitable for the first time since 2009. Excluding the gain, Infrastructure improved on last year's results due to savings from restructuring actions.

This was partially offset by lower customer steel volume in the Metals & Minerals business. The Rail business, as a result, were also below last year excluding the one-time gain due to the timing of shipments and product mix. As you may recall from our first quarter conference call, certain shipments that were originally expected to occur in the second quarter actually were shipped in the first quarter. Second quarter effective income tax rate, excluding restructuring charges, was 24.7% compared with 25.4% in last year's second quarter. For the third quarter the effective tax rate, excluding restructuring charges, is estimated in the area of 28% compared with 18% last year.

As previously announced at our annual analyst conference last year in December, to ensure the continued successful transformation of our Infrastructure and Metals & Minerals businesses, especially in light of the headwinds from the European economy, we continue to execute our restructuring program which began in the fourth quarter of last year and will continue throughout 2012. Total pre-tax restructuring charges are estimated approximately $198 million which are recorded in both 2011 and 2012. We recorded a pre-tax restructuring charge of $101 million in the fourth quarter of 2011, $35 million in the first quarter of 2012, and $30 million in the second quarter. A remaining $33 million is expected to be recorded during the balance of 2012.

As a reminder, the restructuring charge includes further streamlining of our European presence, exiting underperforming locations, and rationalizing our worldwide asset base. Total 2012 savings are expected to be approximately $36 million with full annualized savings estimated in the area of $65 million beginning in 2013. We are on schedule to deliver those savings. I will now review our cash flows and liquidity, and then discuss the performance of each business segment in more detail.

Year-to-date cash from operations was $91 million, excluding $56 million in cash that we paid for the restructuring activities. Cash from operations in 2012 exceeded the $81 million, again before restructuring payments, recorded in the first half of 2011. Excluding net restructuring of payments, discretionary cash flow for the first half of 2012 was $45 million compared with $2 million in the first half of 2011. We define discretionary cash flow as cash from operations plus cash from asset sales less maintenance capital expenditures, those that are required to maintain current revenues.

First half 2012 capital expenditures decreased by $59 million compared with 2011 due to the timing of project capital requirements. Asset sales are a routine part of our business and the cash is used to offset capital expenditures. First half 2012 cash from asset sales increased slightly in 2012 to $37 million compared with $33 million in 2011. Asset sales in 2012 included $14 million related to the sale of assets disposed in restructuring activities and in 2011 included $23 million from the sale of a UK product line in the Infrastructure business. Plus, after considering asset sales, our net CapEx in the first half of 2012 were $86 million, excluding the restructuring asset receipts.

Our debt to -- total capital ratio as of June 30 is 45.7%. This compares to 42.7% as of December 31. The higher ratio as of June 30 results partially from the timing of net cash receipts which were heavily weighted to the end of the second quarter and first part of the fourth quarter; therefore, limiting our ability to pay down debt at quarter end. Net debt to capital, which considers our balance sheet cash, was 42.5% as of June 30 compared with 39.2% at December 31, 2011.

Let's review the second quarter performance of each of the business groups. Second quarter sales and operating income of the Harsco Metals & Minerals segment were lower than the same period last year due to foreign currency translation, contracts that were exited, and lower steel production by certain customers. These are partially offset by higher income in the Minerals business. Operating margin of the business of 8.7%, the full restructuring cost exceeded the 8.3% for the second quarter of 2011. Restructuring, savings, service mix and increased income for the Minerals business contributed to the higher margins.

Looking ahead, continued weakening end markets are expected to negatively impact third quarter results in Metals & Minerals. However, operating margins are expected to improve due to restructuring savings and improved results from the Minerals business compared to the third quarter of last year.

The $4.1 million second quarter operating income of the Infrastructure group is the first operating profit for this business since 2009. These results do include a $6.7 million gain from exiting certain European countries and exclude $28 million of restructuring and charges. From an operational perspective, the Harsco Infrastructure results in the quarter improved from the same period last year reflecting savings from the restructuring program.

End markets remain weak, especially in North America and most of Europe. On a comparative basis, second quarter sales were below the second quarter of 2011 due to foreign currency translation, the effect of exiting certain European markets and weaker end markets, particularly in Industrial maintenance in North America. Despite the lower sales in the second quarter of 2012, results improved due to the restructuring savings.

The rental equipment utilization rate in the second quarter was 59.3%, higher than the 56.3% in the seasonally weak first quarter, slightly lower than the adjusted utilization rate in the second quarter of 2011 -- due to continued weak end market conditions in Europe. To provide a valid year-on-year comparison, utilization rates for 2011 have been adjusted for the equipment rationalization that occurred as part of the restructuring activities. Rental rates in the second quarter of 2012 approximated those in the second quarter of 2011 and was slightly higher than the first quarter of 2012.

Looking ahead, we expect continued restructuring savings in the Harsco Infrastructure business in the third quarter with continued weak end market conditions offsetting some of those benefits. Therefore, third quarter operating income, excluding restructuring costs, is expected to approximate the third quarter of 2011 which is an operating loss of $3.3 million. Harsco Rail sales in the second quarter were slightly higher than the comparable period in 2011. Operating income for Harsco Rail was lower mainly due to the one-time $8 million gain recognized in 2011. Also contributing to lower income in 2012 were product mix and the timing of shipments.

As I mentioned in our first quarter call, certain first quarter 2012 machine shipments were originally expected to ship in the second quarter thus impacting second quarter results. However, bidding and contract signings are strong with the expected shipments for the remainder of the year, full-year results should meet our original expectations. Harsco Industrial continued to perform well in the second quarter. Sales and operating income were higher in the second quarter of 2011 as well as the first quarter of 2012. Operating margins were also higher than the second quarter of last year.

Looking ahead, third quarter results for the Harsco Industrial are expected to be flat compared with last year's third quarter but below the second quarter of 2012. We are closely moderating the end markets which have recently softened and we are ready and capable to immediately reduce costs as necessary. Looking to the third quarter overall, we face softening end markets of both our Metals & Minerals and Infrastructure businesses. This softening is most pronounced in Europe and North America.

Additionally, the effective income tax rate is expected to increase sequentially for the third quarter and insurance expense will be higher. Those factors combined with the normal European vacation period will result in lower sequential earnings in the third quarter in the range of $0.32 to $0.38 per share excluding restructuring costs. Despite this, we continue to aggressively execute a restructuring plan and achieve the expected benefits for third quarter and beyond. That now completes my comments. I will now turn the call over to Galdino.

Thank you, Steve. Good morning, everyone. As Steve mentioned, Metals & Minerals generated a healthy operating income in quarter two with margins above both last year and previous quarter. The positive trend of our performance gives us the confidence that our strategy of innovating our services portfolio for its environmental solution is starting to pay back. A good contributor to our positive performance trend has been the replacement of low return basic mill services contracts by new ones, mostly in developing countries with strong focus on resource recovery. Like the Metkore contract announced a few days ago extending our ferrochrome mining experience from Brazil and South Africa now into India.

Some of those new contracts signed last year and the year before are now in full production and delivering returns above cost of capital.

Among others, we have the Dolvi operation in India now at full speed, as well as the zinc operation in Peru, the first light metal services contract in Latin America.

We have also renewed contracts in Mexico, Europe and the US with expanded activities in resource recovery. Those are also generating returns above cost of capital and have lower capital intensity.

By the end of this year, we will be starting up TISCO which is expected to be in full production in 2013. We have recently announced the Tangshan contract, as Henry pointed out, which similarly to TISCO but now in the carbon and steel front is a long-term services contract oriented towards environmentally beneficial handling and processing of steel making byproducts. Tangshan is the flagship site of China's largest steelmaker, the Hebei Group, the second largest producer of steel in the world.

You have also seen our previous announcements regarding innovative researchers recovery technology development and partnerships. Equinox was one of them. Equinox is a separation technology designed to treat wastewaters and oil containing heavy metal including copper, chrome, steel and arsenic providing solutions for the treatment of sludge or oily solids for the steel making industry and other adjacent industries such as oil and mining.

Our full scale Equinox portable plant went through a demonstration road show during this first semester with selected customers. I'm glad to inform that results were remarkable and exceed expectations. We believe to be able to sign the first service contract utilizing Equinox technology this year.

We are pleased to be able to contribute to the development of a more environmental friendly global steel industry.

We believe customer satisfaction is the only sustainable value proposition we can offer to our shareholders.

Tangshan Steel Chairman's words, during our contract signing ceremony a month ago, is a good testimony of our success. He stated, "Harsco is the premier service provider for the steel industry. It has state-of-the-art technology and a team made up of dedicated professionals. Harsco has shown the world the best services in its slag processing. They have made great contributions to protecting the environment of the city of Tangshan."

Well, we at Harsco need to contain our excitement here and keep things in perspective. The steel industry is under a very challenging situation. In Harsco, as a service provider is part of it. Our service portfolio decommoditization will not happen from one quarter to the other but, again, the consistent increase of Metals & Minerals margins and returns during the last years gives us the confidence that we are on the right track.

I will finalize my comments with a few topics. First, the steel industry challenges certainly slows down the transformation pace of Harsco Metals & Minerals. However, our increasing margins and returns reflect revolving levels of satisfaction of our customers. We booked excellent progress with our new contracts and contract renewals through innovative research recovery technologies and environmental solutions.

We have a good pipeline of promising opportunities going forward, including the TISCO start-up in quarter four, which is going to happen on schedule and on budget. The Harsco Metals & Minerals business opportunities go beyond the core. They are not limited to the steel industry performance alone any more. Thank you very much for the opportunity. I will give it back now to Henry.

Thank you, Galdino Hopefully everyone can see a lot of things that are going on that are going very well in the Metals & Minerals business. We are driving hard to improve the value equation for our customers and bringing innovation to the market. In future calls we will ask our other business leaders to talk about some of the highlights in their businesses as well.

Before taking your questions, I would like to say a few words on what we presently see for the third quarter. As experienced in the first two quarters of 2012, we expect customer steel production to be below last year. In fact, as opposed to our expectations as we came into this year, we expect to see a sequential decline in production in the third quarter. The decline will come from extended summer shutdowns due to pressures of a globally weaker than expected economy.

In the Infrastructure segment, we expect end market conditions to remain challenging with uncertain end market environments, particularly in Europe and the U.S. These conditions continue to lag our expectations and offset a portion of the terrific restructuring execution by our team. The key for this segment is now driven by sales execution. Fortunately, we expect both our Rail and our Industrial businesses to have a third quarter at or slightly above the prior year comparable period. Lastly, negatively impacting this year's third quarter will be an effective tax rate of approximately 27% compared with last year's third quarter rate of 18% which was lowered by certain discrete items not available this year.

I want to take a few additional minutes to address what I consider to be the bigger opportunities for long-term value creation for Harsco. While we are working diligently on all fronts, all the fronts already discussed in the short term, market changes and global short-term events will impact our earnings as they will for all companies. When I look at the bigger issue of long-term value creation, I am extremely optimistic about our future. In my first full quarter in this position I have been exposed to the energy, the talent, and the passion of the people who make up Harsco. I can tell you that our best days lay ahead. As a team, we re-looked at ourselves, what we do well and what we do not do well.

We have renewed our commitment to creating value for customers and for all stakeholders by improving the value proposition we offer our customers. We will do that with five significant and consistent initiatives. Those include customer centricity, putting the customer at the very center of everything we do and looking at how we can increase the value we provide to our customers. People engagement, creating meritocracy within the Company that rewards those people who drive results. Continuous improvement with lean and six sigma and other world class processes putting great tools in the hands of talented people. Innovation. You heard some of the innovation that's going on in Metals & Minerals. There's more to come. And, finally, value creation at its core which is creating returns greater than our cost to capital.

We are realigning all of the immense talent and resources of Harsco around these initiatives and our principles of improving the value proposition for our customers. We will talk about these more in the future, but I can tell you with full alignment on these initiatives, I'm excited about what the future holds. Yes, we have some immediate headwinds to deal with, but we have the people and developing processes to create real value in the years ahead.

Further, it is with a great deal of pleasure and excitement that we this morning announce the appointment of Patrick Decker, as our new President and CEO. Patrick has led the Flow Control business at Tyco for the last five years and led a very successful transformation of that business. Patrick brings immense energy and passion and is a person of incredible integrity. I could not be more excited to announce his appointment as CEO and President and a member of our Board. For all these reasons, and despite the current economy, I believe the future is extremely bright for Harsco. With that, Operator, we would be happy to entertain questions.

Certainly. (Operator Instructions) Your first question comes from the line of Bill Fisher from Raymond James. Your line is open.

Good morning. A couple of things. First maybe for Steve on the capital expenditure guidance. Any change in that? I know you have won some new projects, but some of the maintenance CapEx appears lower.

Obviously, we are doing whatever we can, Bill, everything we can to make the capital process as efficient as possible. That includes the CI activities that Henry mentioned, global procurement, higher returns on the capital that we employ. But with the projects that are coming on board later in the year, our guidance for the year still remains the same. That's around $300 million of CapEx for the year total.

Okay. And then on the infrastructure side, are the losses more concentrated still say in UK or certain markets, or are you seeing some strength in other markets that's different?

We're seeing strength in the Middle East and we're seeing strength in Latin America, but certainly Europe and North America are still very, very challenged. We have had some strength in Germany, but not enough to offset what we are seeing in the UK and elsewhere in Europe.

Okay. Great, thank you.

Your next question comes from the line of Jeff Hammond from KeyBanc Capital Markets. Your line is open.

Hi. Good morning, guys.

Good morning, Jeff.

Can you just dig in on what exactly you're seeing and how that builds in the Air Exchanger business into the back part of the year in 2013, and then just maybe a little more granularity on what's driving the weakness in North America in infrastructure?

Sure. From air exchanger standpoint, I would probably be hesitant to start to write off 2013 yet because there's a lot of time for that play out, but you saw the prices of gas and oil drop back in roughly April, I guess, and bookings followed pretty quickly. Actually, they dropped before that, and bookings started dropping in April. So, the end of this quarter we'll see a little fall off from that.

The fourth quarter is going to be, I think, challenged, but we've seen some improving bidding activity here just recently as prices have recovered a little bit. The gas supply is declining. A lot of use because of the summer heat. Hopefully we'll have a nice cold winter, and we'll continue to see the use help the pricing. But we are not immune to the marketplace itself. If drilling activity drops, then we will feel that eventually. But I think it's a little too soon to talk about '13. You asked also, I'm sorry, Jeff, about what was your other question?

Just North America. Kind of drivers of the weakness in North America.

Certainly in the last quarter we -- are you talking about infrastructure now?

Yes. Yes.

Yes. In infrastructure in the last quarter we saw a lot of power plants defer maintenance. We're expecting the fall season to be normal in that regard. There is -- I think a little bit of the issue is, frankly, that we have concentrated hard enough on the restructuring activities and all that we are doing there, and probably have not been pushing on the sale side as much as we should. Our goal now is to move the ball over to being much more aggressive in the marketplace and trying to get our fair share there.

Okay. And then, Henry, you mentioned a number of the drivers of kind of value creation. Can you just dovetail that with the CEO process in general, and some of the characteristics you found most attractive about Patrick, and kind of how he thinks about some of these same continuous improvement areas of focus?

Yes, I certainly can. First of all, let me just say that the process itself was a great process. We had some outstanding candidates and terrific job by Heidrick & Struggles and the work that they did. But, in the end, Patrick stood out, and he stood out for a lot of reasons. One is his energy and his passion around improving businesses.

He, in his role at Tyco, walked into a business that was pretty -- had a lot of disparate businesses that had been acquired over the years and he lead the integration of those businesses into a coherent operating group that has outperformed the market. He did that by using the same kind of initiatives that we are talking about.

I can tell you that he is dedicated to continuous improvement and he is dedicated to people engagement and building business talent, and it's just a great fit. I don't know how else to say it. He came across on every point that we were looking for as being very, very strong, very capable, and very ready. So, we're excited to have him aboard.

Okay. Great. And then can you talk about any of the progress you are making on working capital metrics? I know that was a focus for you, Henry, and just how you think of discretionary cash flow for the year in those terms?

I will start and let Steve finish. I think we made good progress in some of the working capital. I frankly think we are capable of doing even better than what we are doing so far. So, we are continuing to work on that energetically.

In terms of CapEx, I think the team has done a good job of reducing some of the need that we saw, we thought we were going to have as we came into the year, but we do have some heavier spending coming up in the second half as we ramp up for TISCO and now Tangshan. So, that is good news, not bad news. It's just you have to ramp it up before you start to reap the rewards. So, the second half will be a little bit heavier.

Overall, I would say that we are improving the disciplines that we have around capital. We are finding some new opportunities to reduce the capital intensity in Metals and Minerals business for sure, and I think the headset of using all of our assets globally as an integrated infrastructure group will make a big difference over the longer pull in that business. Rail and industrial are very capital efficient today, as you know. So, I think if we can continue to make progress in metals and minerals and if we've learned our lessons, if you will, in infrastructure, we will see a significant improvement as we go through the cycle.

Okay, great. Thanks, guys.

Your next question comes from the line of Glenn Wortman from Sidoti & Company. Your line is open.

Good morning, everyone.

Good morning, Glenn.

Steve, I think you mentioned that rental rates were up a bit sequentially. Can you just comment on where you are seeing some increases and decreases, if any, and then your outlook on rates for the rest of the year?

Yes. We look at the global rates, Glenn. We don't really look at it by region. I think Henry mentioned some of the stronger regions that we have right now and that being in the Middle East, places like Germany and Central America, that's where the strongest rental rates are at this point in time. We generally look at it on a global basis, though.

And then your outlook for the rest of the year, pretty stable?

Well, for the rental rates, we see stability there in the rental rates overall for the rest of the year. Certainly, we are not seeing increases in those rates at this point in time. We are going to try to maintain those, obviously. The impact of pricing is very, very critical to us. With some of the efforts we have had with making things more efficient, CI, et cetera, one of the main goals is to maintain those rates and raise them as much as we possibly can. But can we do that or not remains to be seen.

Okay. And then just in the Real business, how far along are you on the large orders with Qichon and the Chinese Ministry of Railways? And then how much in revenue are you expecting from these orders this year and next? And then maybe if you could just comment on your prospects for replacing that lost revenue when those orders are finished?

I think overall what we'd would say is, as we came into the year we were kind of thinking it was somewhat of a 50/50. But I'd say we are going to be a little bit more oriented toward this year, it looks like we're going to be able to get more out this year. So, it's probably going to be more of a 70/30 this year over next.

That would be on $100 million base or so.

Okay. Okay. How does the pipeline look? Obviously, you have maybe a negative comp next year?

Bidding activity is extremely heavy, and I will say that on a global basis. We are making a lot of new in-roads, which is great to see and a lot of opportunities. Whether or not -- I would think it's a little premature to talk about whether or not we can fill the gap left over by China, but I can tell you that our rail team is working on it every day and has made a lot of progress over the course of the year.

Okay. Thanks for taking my questions.

Thank you.

(Operator Instructions) Your next question is from the line of Bill Nasgovitz from Heartland Funds. Your line is open.

Good morning and thank you. What's the competitive advantage for Harsco here versus a key competitor, Safeway Steel? Could you just speak to that a bit?

I don't think I'm qualified to speak about Safeway, and I think it would be inappropriate even if I was. So, I won't talk about that. I will talk a little bit about Harsco's advantages. I think Harsco -- in total we bring a tremendous amount of experience in shoring, in forming and access and scaffolding, a lot of different areas and a lot of different services. What we have not necessarily been the best at in the past is taking those services that we're capable of doing in one region and transferring those over to other regions. But when you take a look at our total capability, it's nearly unmatched.

So, one of the things that Mark Kimmel and his team are focusing on is being able to share those best practices, share those capabilities on a more global scale and, frankly, we have a very global scale in our Business. So, I think that's one of the advantages of Harsco Infrastructure over nearly every other competitor, not every competitor, but certainly nearly every other competitor. So, I think the keys for us to be able to use the services that we are -- that we do an outstanding job with in certain areas across many more areas and be able to become a bigger value provider to our customers.

All right. Thank you.

Thank you.

We have no further questions in queue.

All right. Thank you, Operator. Looks like that's all the questions. Before closing, I do want to take a minute to recognize Gene Truett. The last 18 years Gene he has been an integral part of the Harsco story. In good times and bad he has been forthright in explaining Harsco to investors. Gene will be retiring in September and I can tell you for sure he will be missed.

Gene has been a tremendous help to me in the short period of time I have been here and I know for the long term he has been a tremendous help to the investing public. So, hopefully we will continue to see Gene frequently in the years ahead. Gene, thank you.

Thank you.

Again, I want to thank everyone for joining the call and for your interest in Harsco. The take-aways from this call are that the second quarter was on the high end of our expectations despite continued headwinds. The third quarter will continue to have its share of end market challenges, but the people of Harsco are up to the challenges. We are not waiting for markets to improve to continue to improve the processes and disciplines that will create value for all stakeholders. Thank you. Have a great day.

This concludes today's conference call. You may now disconnect.