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Harsco's Mining Contract Win

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Earlier this week, Harsco Corporation (HSC - Free Report) declared the winning of a prime contract for providing rental scaffolding and formwork system supplies to the major expansion project at the Minera Donya Ines de Collahuasi SCM mine located in Chile. The award, prestigious as it is, also ossifies Harsco’s position towards becoming a strong service provider to the mining industry.

According to the agreement, Harsco will seamlessly deploy its engineered forming systems along with its scaffolding solutions to the copper manufacturing site. This will facilitate pouring cast-in-place concrete of around 13,000 cubic yards along with other construction crew management services such as work-at-height solutions, etc.

Management appeared ebullient not only on winning this momentous contract but for other reasons too. This venture shall provide Harsco with the opportunity to solidify ties in the mining sector which till date has not been one of its niche industries to deal in. Thus, the award shall allow for market proliferation and open up new avenues for major business expansion across industries.

We observed a poor performance from Harsco’s Infrastructure segment in its first quarter results of 2012 which were reported by the company on May 2, 2012. Demand trend deteriorated heavily to post a 9% annual decline in revenues reaching $238 million at the end of the quarter. Hopefully the situation would ameliorate now with the recent turn of events in this segment.

The company should always remain cautious of peers in the industry it pertains to. Big players to take note of in this regard include Hudson Technologies, Inc. (HDSN - Free Report) , ScanSource, Inc. (SCSC - Free Report) and TMS International Corporation .

The current Zacks Consensus Estimates for the second quarter of 2012 and for fiscal 2012 are 35 cents per share and $1.35 per share, respectively. Harsco currently retains a Zacks #5 Rank, which translates into a short-term ‘Strong Sell’ rating. We also have an ‘Underperform’ recommendation on the company’s stock.

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