Shares of Harsco (HSC 3.70%) slumped more than 17% by 10:30 a.m. EST on Friday. Driving down the environmental solutions company's stock was its preliminary fourth-quarter results.
Harsco reported that it generated about $400 million in sales during the fourth quarter, along with $31 million of adjusted operating income. That bottom-line number fell well short of the company's prior guidance range of $53 million to $58 million.
Mainly weighing on earnings were the results of its environmental and rail segments. Many of the company's environmental customers slowed their production during the fourth quarter due to seasonal weakness and challenging market conditions. Meanwhile, a customer shipment delay and some operational challenges hurt the results of its rail segment.
But Harsco believes these headwinds will be temporary. It noted that the moves its environmental customers made should ultimately fuel a recovery in their markets. Meanwhile, one of the main issues weighing on its rail segment was the consolidation of its North American manufacturing operations into a single facility. While that didn't go as smoothly as it anticipated, causing it to defer some shipments, it expects to recoup them this year.
Harsco battled headwinds during the fourth quarter, which caused it to fall well short of its expectations. While the company believes these issues will go away over the coming year, investors want to see it do a better job of executing its strategy of focusing on higher-growth, less-cyclical environmental solutions.