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Harsco Awarded Multiple Contracts

SPW HSC

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Harsco Corporation (HSC - Snapshot Report), a world-renowned supplier of industrial services and engineered products, recently declared winning of three prime international task orders with a total value of over $85 million under its Harsco Rail group. The awards, prestigious as these are, also ossify Harsco’s position towards becoming a strong service provider to the rail industry.

Per the first order, the company through its rail grinder deal with Italy will be engaged in providing construction and track maintenance support services for laying of new metro track in Milan. The company is designing the railway parts in its Harsco Rail U.S. production facilities and these are scheduled to deliver by 2014 and 2015. In addition, the company will also offer contract grinding services and in-country maintenance support services.

Harsco has received its second order from India to improve its railway track by installing the latest equipment. The company will be providing additional Harsco P-811 Track Renewal Trains (TRTs) to Indian Railways to augment the efficiency of its railway track and ensure more safety.

Finally, the company has also been awarded a multi-year contract extension in UK. The contract pertains to continuing the fleet operation of its Stoneblowers on behalf of Network Rail by mid-2015.

Management was quite excited regarding these wins by stating that these are the outcomes of Harsco’s long-lasting reputation, which helped it in expanding its businesses globally. The Rail segment generated revenues of $80 million in the second quarter of 2012, up 2.6% from the year-ago quarter and 17.6% sequentially. The annual hike was attributable to ameliorated order booking, improved bidding activity and equipment revenue growth occurring during the quarter.

Harsco’s perennial contract wins have become highly laudable with time. Earlier this week, the company’s Metals & Minerals group declared extending its association with Tata Steel UK through a multi-year agreement. The company will continue offering various types of its services such as metal recovery, scrap management, briquetting, slab handling, coke crushing and machine scarfing in the facilities of Scunthorpe and Port Talbot. Under the contract, Tata Steel Strip will collaborate with Long’s businesses.

The company should always remain cautious of its peers in the industry it belongs to. Big players to take note of in this regard include ThermoGenesis Corp. and SPX Corporation (SPW - Snapshot Report).

The current Zacks Consensus Estimates for the third quarter of 2012 and for 2012 are 37 cents per share and $1.24 per share, respectively. The company currently retains a Zacks #3 Rank, which translates into a short-term ‘Hold’ rating. We also have a long-term ‘Neutral’ recommendation on the company’s stock.

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