Harsco Corporation
Q2 2011 Earnings Call Transcript

Published: 28 Jul 2011

[Operator:]

Good morning, my name is Michelle 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 placed on mute to prevent any background noise. After the speaker’s remarks there will be a question-and-answer period (Operator Instructions). 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. Harsco Corporation will be recording this teleconference. No other recordings or redistributions of this telephone conference by any other party are permitted without the expressed written consent of Harsco Corporation. Your participation indicates your agreement. I would now like to introduce Mr. Salvatore Fazzolari, Chairman and CEO of Harsco Corporation. Mr. Fazzolari, you may begin your call

[Salvatore Fazzolari:]

Yes, thank you. Good morning, I would like to welcome everyone to Harsco’s second quarter 2011 conference call. I have here with me today Gene Truett and Stephen Schnoor so before we begin I will ask Gene to read the Safe Harbor statement. Gene please.

[Gene Truett:]

Thank you, Sal. Good morning, everyone. As we do at the beginning of all of our calls, we just want to let you know that we will be having forward-looking statements in our discussions with you today. These statements relate to the future of our business, our operations, our 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've listed in our SEC statements reasons and risk factors that affect our businesses and these could be the reasons for any difference that could occur. We invite you to review the SEC filings at your convenience. I would 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. Sal?

[Salvatore Fazzolari:]

Thanks Gene. I will commence this morning with some brief comments and return the call over to Steve so he can give you some further color on the second quarter performance and then of course I will comment on the outlook and take your questions. So let’s start with a few opening comments. We continue to be pleased with the overall performance of our operations. In addition to achieving results above the upper hand of our previous guidance for the quarter our results as noted in the press release also benefited by an additional $8 million or $0.07 per share from the reduction of estimated cost related to the first phase of our large rail to the Ministry of Rail in China. I may add that the performance of our rail group on this first phase of the order has been truly exemplary. Also we were pleased with our overall revenue growth of 11%, which benefited from international footprint and the positive effects of foreign currency translation. We completed the first half of 2011 on a positive note and for the second time this year I’m pleased to say we have incrementally raised our earnings guidance. I’m very pleased with the landmark agreement that we announced this morning after almost three years of a tremendous effort by the Harsco team we signed a 25-year environmental solutions contract with China’s TISCO, which marks the largest single contract in Harsco’s history. TISCO who is also our joint venture partner is one of the world’s premier and largest and best managed steel companies. A combination of this important relationship establishes a major new platform for our continuing global advancement as a knowledge based environmental solutions company. We are truly honored to join with TISCO as long-term partners on such a far reaching and environmentally beneficial enterprise. There are two phases to this agreement the first phase and the most immediate is the metal recovery portion of the contract that is estimated in excess of $500 million over 25-year period. This first phase paves the way for the second phase where the joint venture company will commercialize slag co-products in China for a range of projected agricultural and industrial uses. I will now turn the call over to Steve our CFO who will give you more details on our performance for the second quarter. Steve?

[Stephen Schnoor:]

Thank you, Sal and good morning everyone. As reported in this morning’s press release we recorded earnings per share from continuing operations of $0.47 for the second quarter. The results exceeded second quarter 2010 earnings per share of $0.40 by 18%. Harsco Infrastructure and Harsco Rail improved upon prior year earnings while Harsco Industrials earnings approximated last year’s results. As expected Harsco Metals and Minerals operating income was below prior year results principally due to asset gains recorded in the second quarter of last year. Overall, results for the quarter included a change of estimated costs for completion of the first phase of the Ministry of Railways China rail order as Sal just mentioned. We do not anticipate any further significant changes in estimated cost as the first phase of the China Rail order is not completed. Second quarter consolidated sales of $875 million were 11% higher than last year with all business segments exceeding the last years (Inaudible) except Harsco Rail, which was expected due to the timing of shipments. Harsco Rail shipments in 2011 will be late into the second half of the year particularly the fourth quarter. Additionally, at China shipments originally planned for late in the fourth quarter is now expected to be (Inaudible) early in the first quarter of 2012. Conversely in 2010 shipments were much greater in the first half of the year still first year 2011 sales of Harsco Rail are expected to exceed that of 2010 and operating income should approach that of 2010. For the exception of some commodity pricing and volume weakness in the U.S. market of the minerals business second quarter results reflect overall stable market conditions for the metals and minerals segment, the rail segment and the Harsco Industrial segment. The results also reflect continued weak global market conditions in non-residential construction affecting our infrastructure business. Second quarter effective income tax rate was slightly lower than expected. The full year 2011 effective income tax rate is now expected to be in the range of 24% to 25%. As we expect tax rates in the second half of 2011 to be lower than what we had originally planned. I will now review the, our cash flows and our liquidity position and then discuss performance of each business segment in more detail. First half of the year is the most seasonally slow for our cash flows. Historically, most of our cash from operations is generated in the second half of the year particularly in the fourth quarter, this year they expect to be no exception. First half cash from operations was $67 million, which is impacted by $60 million of cash dispersed for the infrastructure group’s 2010 restructuring actions. Additionally, over $40 million of cash was collected during the first couple of days of July it was expected to be received by June 30. Capital expenditure increased due to required funding for renewal contracts and previously announced incremental growth projects in metals and minerals business. Our debt-to-capital ratio as of June 30 was 38% same as the March 31 of this year and only slightly higher than the 37.6% at year end, which is the lowest debt-to-capital ratio in at least 12 years. The second quarter 2011 debt-to-capital ratio was significantly lower than the 40% for the second quarter of last year. So our balance sheet remains in great shape providing us with substantial financial flexibility. Let’s now review the second quarter performance of each of the business groups. Second quarter sales of the Harsco Metals and Minerals segment exceeded last year by 13% while operating income and operating margins were lower than last year principally due to $3 million of asset gains recorded in last year’s second quarter. Foreign currency translation increased sales in the quarter by approximately $34 million or 9% and operating income by approximately $2 million. In the second quarter of this year, steel production of our mill side customers is higher than both the second quarter of last year as well as sequentially higher than the first quarter of 2011. It’s had a positive effect on sales and income during the quarter. The effective positive volume by our mill side customers was somewhat offset due to lower stainless steel scrap pricing as well as lower volume in the U.S. minerals business. Higher fuel costs also impacted the business. We expect stable customer steel production for the remainder of 2011 although the stainless steel scrap pricing is not expected to improve in the near term. The outlook for the full year 2011 for metals and minerals is positive resulting from new contract startups and contract renewals with increased volumes. Increased fuel cost are expected to somewhat mitigate the benefits of higher volume. Although the continued difficult environment for global and non-residential construction activity continued to impact the performance of our infrastructure group in the second quarter the overall performance of the business was consistent with our expectations. The $5.1 million operating loss in the quarter was substantially lower than the $13.6 million operating loss in last year’s second quarter and the $17.5 million operating loss in the first quarter of 2011. The cost savings for the fourth quarter 2010 restructuring actions that we took are being realized as expected. Foreign currency translation increased sales by approximately $26 million in the quarter when compared with the second quarter of last year we had a negative effect on operating income of approximately $1 million. The rental equipment utilization rate in the second quarter was 57.5%, compared with 54.1% in the second quarter of last year. As expected, due to seasonal effects the second quarter utilization rate increased from the 54% experienced at the first quarter of this year. Rental rates in the second quarter were 7% lower than last year’s second quarter where the end market conditions are still declining. However, second quarter rental rates are equal to the first quarter of 2011 and the third and fourth quarters of last year 2010 again remaining stable in consecutive quarters. Rental rates have now remained stable for three consecutive quarters. Harsco Rail reported strong results, which benefited by reduced cost of the China order that I mentioned earlier. We expect the rail business to continue to perform well for the full year 2011 as backlog and reporting [ph] activity remained strong. However, the fourth quarter results are expected to exceed the third quarter results. Harsco Industrial sales are higher than the second quarter of 2010 and operating income approximated last year. Operating margins were lower than last year due to higher commodity prices, which also affected LIFO costs. That completes my comments and I will now turn the call back to Sal.

[Salvatore Fazzolari:]

Thanks Steve. Let me summarize for you the outlook for the third quarter and for the full year. While we are encouraged obviously by the first half results it remains prudent for us to personally view the outlook for the remainder of the year with a degree of caution particularly due to the continuing global uncertainty in key markets and because we are yet to see any measurable improvement in our infrastructure segments principal end markets. And more specifically though with respect to the third quarter outlook we do expect the Harsco Infrastructure business as previously noted to continue to show notable year-over-year improvement compared with last year’s third quarter. Moreover, as we also expect that the infrastructure business will show sequential improvement as well from the second quarter to the third quarter. So, overall as Steve indicated we continued to execute on our strategy underpinned by the restructuring actions of late last year. As you look forward to the other initiatives we are taking in this business we continued to implement cost reduction actions. And so you will see that for the year-over-year improvement that we are on target to achieve approximately $40 million as we again I think articulated in the last conference call as well as last year that we are expecting approximately that kind of improvement in 2011. And then when we get to full annualized cost savings of about $60 million that will take effect in 2012, which means that we expect the business in 2012 to at least break even or better. Our Harsco Metals and Minerals business is expected to continue to perform well in the second half of the year. However, just like the second quarter the minerals business, which is isolated the one item that we will continue to (Inaudible) margins and operating income due to again as Steve indicated and we’ve articulated in the press release the pricing of stainless steel scrap is the key driver there. And but overall the metals portion the onsite services that continues to do very well. We look for the Harsco Rail business to again perform relatively well. But as we’ve noted timing of shipments to China and the second phase of the contract is resolving and a shift in sales. More specifically, the remainder of the year for rail will be negatively impacted by delivery that was planned for late in the fourth quarter but has shifted to early in the first quarter of 2012. So in summary, the third quarter is expected to be a well balanced and solid quarter given our current expectations. Our present outlook is for the third quarter EPS, diluted EPS from continuing ops to be in the range of $0.37 to $0.42 and that compares with $0.26 last year. And with respect to the full year we are again increasing slightly our previously communicated 2011 diluted EPS guidance from continuing ops from $1.30 to $1.40 per share to a new annual number of $1.35 to $1.45. The increased guidance for 2011 is based on the following factors on the positive side, the expected 2011 results factor in the lower cost of sales benefit that we mentioned relating to the rail that was realized in the second quarter. And also as Steve indicated and expected lower effective tax rate for the second half of the year as well. However, there are other factors that went into developing our advantage for the year and that includes the lower results of minerals as I just mentioned for both the third quarter as well as the fourth quarter and that’s principally due to stainless steel scrap pricing and volume. Acquisition due diligence cost in the second half of the year, a further deterioration of the UK economy and construction market for infrastructure and the timing of a rail machine as we just indicated that China, which has been expected to ship late in the fourth quarter then now it’s highly probable it will ship in early 2012. That completes my comments because I’m sure you have a lot of questions given all the announcements this morning, so we’ll be pleased to take your questions at this time.

[Operator:]

(Operator Instructions) your first question comes from Jim Lucas from Janney Capital Market. Your line is open.

[Jim Lucas:]

Thanks. Good morning guys.

[Salvatore Fazzolari:]

Good morning.

[Stephen Schnoor:]

Good morning Jim.

[Jim Lucas:]

First question, just want to follow-up on one of your last comments there Sal, when talking about second half expectations, you mentioned in the cost, acquisition due diligence costs. Could you expand upon that comment, please?

[Salvatore Fazzolari:]

Yeah, sure, I will be careful what I say because of the confidentiality agreement, but we right now, we’re doing due diligence on, principally in the rail area, as we indicate and have articulated, since I think last year that our, one of our clear focus is other than growing obviously in the emerging markets, is to grow our rail business. And so we’ve been working that for quite a bit of time, actually it started about 18 months ago. We are now in due diligence for one transaction moderate size and we expect to incur approximately $3 million in due diligence cost in the second half of the year. And that’s probably all I could say, Jim.

[Jim Lucas:]

Okay. Well, I just wanted to flash out, because clearly there is some activity there and just wanted to get as much color as we could as to what those costs were relating to. And could you give us a update on CapEx for the second half of the year, as you’ve got number of projects, you talking about it last quarter, but anyhow that you can give us there on capital spending in the back half?

[Salvatore Fazzolari:]

Yeah, I will let Steve give you some numbers, but just, I’ll start off just by saying, I’m sure you are seeing a significant number of announcement I will take you back with a major contract in Mexico for metals and minerals we had a major contract in India and other one in Brazil and obviously now at TISCO, the largest of all contract in our history. And these, what’s special about all these contracts, there is a common theme here, they’re all what we call hybrid services, which includes a lot of environmental solutions. And as we continue, as you recall one of my key strategies, when I was appointed CEO four years ago, was to transform this company to a knowledge based solutions company I suppose to just to providing basic services and products because what that leads to communization [ph]. So as we embarked on this transformation one of the key things our metals and minerals business what to develop what we called as hybrid solutions business, which really focuses a lot on environmental solutions. Everyone of these contracts addresses that issue, so maybe we have not talked enough about them in the past, so that requires, we are spending lot of money. The other thing that, I’ll get to Steve on the CapEx here in a second, but just to emphasize, one of the things that we have not talked about that’s been impacting the margins of metals and minerals as well, is the ongoing investment that we’re making in technology and business development. I mean you’re talking about millions of millions of millions of dollars. And we have not talked about that, because that’s just part of the business model now, but as compared with the past, it is relevant. So again it wasn’t just simply the issue we had with the stainless steel scrap pricing in the quarter. There is also quite a bit incremental spend on our part on technology development as well as business development. Because as you can appreciate like TISCO, for example it’s taken us three years to lay that contract, that’s we probably invested a couple of million dollars in cost to get that done. So that’s just one example, so I just want to give you a little more color. Now I will have Steve talk to you more specifically about CapEx for the year.

[Stephen Schnoor:]

Actually, right now we presently estimate our net CapEx for the year would be around $300 million, for the project that Sal mentioned, many of those projects where spending money (Inaudible), I would also point out that approximately 10% of this spend, will be for the year at TISCO, the contract which is announced this morning, so 10% from TISCO and towards the timing that have changed somewhat in some could slip into 2012 as well. But the net amount of CapEx would be approximately $300 million.

[Jim Lucas:]

Okay. And the final question, just going back to your very helpful commentary, Sal. With regards to the ongoing investments and technology and business development that incremental spend that you talked about that have had, somewhat of an impact on the metals and minerals margins, to the extent you can, can you quantify what kind of headwind that has been is that, are we talking 10s of basis points or is that more like a 100 basis points headwind?

[Salvatore Fazzolari:]

Yeah, I mean, Jim, as you can picture I mean, that will (Inaudible) it is an excuse if you will but it’s fair to say it’s in millions of dollars, okay? I mean, we’re taking this, obviously this technology thing very seriously. And you all know, I will say that you stay tuned, you will see more announcements this year that will continue to underpin what I’m saying. I think the TISCO thing clearly shows that we are changing this company, there would be more coming down the pipe that will even continue to underpin that should show you that this investment that we are making in technology is going to pay off and we are becoming a very different company.

[Jim Lucas:]

Perfect. Thank you very much.

[Operator:]

Your next question comes from Jeffrey Hammond from KeyBanc Capital Markets. Your line is open.

[Jeffrey Hammond:]

Hi guys, good morning.

[Salvatore Fazzolari:]

Good morning Jeff.

[Jeffrey Hammond:]

Just on, Sal, on the moving pieces of guidance, is there a way to – you quantify that acquisition, due diligence cost? But is there a way to quantify other, individually each of these headwinds or kind of order of magnitude, biggest impact the smallest, just in terms of the timing and the real contract that the steel scrap pricing issue?

[Salvatore Fazzolari:]

Yeah, I mean, for the second quarter for example the pricing issue and the volume issue on the stainless steel scrap specifically. It was, cost us about $4 million to $5 million, so we anticipate a similar impact to the second half of the year and that was more pronounced in the second and the third quarter, we expect a little less in the fourth quarter. But in total it was about $4 million to $5 million, similar number there just a second and just give me some broad numbers Jeff. On the rail thing, it’s kind of sensitive, giving the customer thing, so I can’t it’s hard to say its millions of dollars and just leave it at that, I think I covered all up. Now, on the infrastructure thing that we’ve talked about, we’re just saying, we’re not quantifying that, all we’re saying there is that, there is just no improvement in the market, Jeff. So it’s more of an exclamation point from the standpoint that. The benefits you’re seeing already improvement I should say, you’re seeing an infrastructure is due solely to the restructuring actions, the ongoing restructuring actions because there is no market improvement whatsoever.

[Jeffrey Hammond:]

Okay, great. And then overall for the year, do you expect margins to be up in metals and minerals?

[Salvatore Fazzolari:]

I think for the year, Jeff, certainly the income is going to up for the year. And I think the overall margins that compare to 2010, yes, I think, we were still expecting that on a year-over-year basis that the margins will improve. That’s correct.

[Jeffrey Hammond:]

Okay, great. And then, just on, can you update us on restructuring, I think you eventually get to kind of a $15 million a quarter run rate on infrastructure. Are we there yet or do we get there in 3Q?

[Salvatore Fazzolari:]

We are getting close, Jeff, we’re getting close. And I think last year, I did say that we expect, I think we are around about $12 million right now for the second quarter, I think it was. The reorder expected, as I mentioned in my comments that a loss in both the third quarter and fourth quarter, albeit they are going to be small loses. So you will see something close to the $12 million, $13 million per quarter improvement. And as we get towards the latter part of the year, obviously we’ll start getting closer to that $15 million.

[Jeffrey Hammond:]

So the difference 2Q to 3Q is really a little more cost savings in the business kind of, otherwise flat?

[Salvatore Fazzolari [ph]:]

Yeah, Jeff, just one thing keep in mind, that Q3 to Q4 you do have a possibility for a bit of seasonality as you expect the typical billing season, so keep that in mind.

[Jeffrey Hammond:]

Okay, okay. And then just on this TISCO JV, can you give us a sense of how the project kind of winds up with your historical view return on capital and particularly, risk adjusted return on capital given in emerging markets?

[Stephen Schnoor:]

I mean, Jeff I mean just a bunch of stuff, if you look at the cost of capital for China, it’s certainly higher than it is for Europe and United States and other developed economies. And so I will say is that it is above the cost of capital for China and also if you look at the, there’s two components for this and I’m just talking about the metals piece on the second piece, which is the commercialization of the co-products, which is principally agricultural and to a lesser extent industrial products, that certainly should have different characteristics as well. But that doesn’t kick in until much later; we expect that to start kicking in slowly in 2014. But the metal recovery part will commence operation sometime next year and full run rate in 2013, but all of it though above the cost of capital for China.

[Jeffrey Hammond:]

Okay, great. And then just last question on the pieces of free cash flow, can you give us what the expectation is for the year for cash flow from the operations and then that $300 million CapEx was split between maintenance and growth CapEx?

[Salvatore Fazzolari:]

Yeah, it’s about a 50/50 split between maintenance and growth Jeff and towards cash from operations, historically we have been 400 or above and I would expect that this year we would approach that as well.

[Jeffrey Hammond:]

Okay, thanks guys.

[Salvatore Fazzolari:]

You’re welcome.

[Operator:]

(Operator Instructions). Your next question comes from Scott Graham from Jefferies. Your line is open.

[Scott Graham:]

Hi, good morning, a couple of questions for you all. The metals and minerals margin deterioration didn’t really talk much about that in the first quarter was that an accelerating situation in the second quarter that you kind of saw, you know hit a little bit harder and are kind of expecting the same or do we start to see that in the first quarter? It’s just looks like that the margin is kind of running at a level that I would not have expected given what I saw in the first quarter, understanding of course that scrap prices are down I think we know that. But the impact on the margin I thought was a lot more than what I expected and I think more than perhaps what you guys talked about in the first quarter.

[Stephen Schnoor:]

Yeah, again Scott you remember the asset sale last year so you got to keep that in mind as well. But clearly, the issue did not occur until the second quarter and that is there was a significant slowdown in production of stainless steel and there was a quite a significant change in the pricing of the scrap metal, to the level that we had not seen for a quite a long time. And so it was that sudden and that significant and as I mentioned earlier in my comments that was resulting about $4 million to $5 million impact to the operating income in the second quarter, which we did not have in the first quarter.

[Scott Graham:]

Got it. So we would essentially since it happened and accelerated in the second quarter. Is that $4 million to $5 million that type of number we should see in the second half or will it in fact maybe be a little bit higher than that?

[Salvatore Fazzolari:]

That should be about the same number for the second half roughly Scott, that’s what we expecting (Inaudible).

[Scott Graham:]

Right, got it. So now turning to cash flow, I understand that the $200 million goal is sort of an average for the five year period that you guys talked about last December. But obviously with capital expenditures looking pretty large, which was kind of the same situation that we had last cycle and the working capital investments is very large as well. It doesn’t look like we are going to come anywhere near that number for 2011. And I was just wondering, why we are, I understand we are managing the business for growth with both of those components in mind CapEx and working capital. But I guess, maybe what has changed versus the December Analysts Meeting where the cash flow is so significantly different trend line wise.

[Salvatore Fazzolari:]

Well, first of all Scott you got to remember different dynamics here, all this investment is under pinned by long-term contracts. As I suppose the last cycle a lot of it was our majority of the spend was in our infrastructure business, which was not underpinned by long-term contracts and it was underpinned by short-term orders. And so that’s a huge difference and the profile, the returns and the long-term horizon of that investment, number one. Number two, as I indicated before we still obviously are very focused on free cash flow, you are going to have the years where you are just not going to hit that number, clearly this is going to be one of those years. We have ongoing programs right now that we think long-term will benefit us from a lower CapEx spend that is our global supply chain initiative, our lean initiative as well as what we call Clean Sheet assessment where we reengineer our sites to invest what you call as less investment of capital, those things take time though they have effect. But we believe those mechanisms that we put in place we are over a longer period of time release of CapEx. We still have a lot of work to do on improving our cash from operations, obviously the best way to do that is higher earnings and improved working capital we are tackling those issues very hard as well. And so you just got to be a little bit more flexible and the final point I will make is that, we are not your typical company, I still think we used to do this many years ago and I think it’s probably a better way that if you are at Harsco you really need to be Harsco from what we call discretionary cash flow. And that is cash from ops less maintenance CapEx because that’s the CapEx you need to sustain the current revenue strength. I mean you got to invest for growth and when you invest for growth requires either acquisitions, most companies spend on acquisitions, we have the luxury of doing using free cash flow for both acquisitions as well as growth CapEx. So we still think the better definition for Harsco for free cash is really cash from ops mines is maintenance CapEx I suppose the full CapEx.

[Stephen Schnoor:]

Yeah, Scott if I can add two things here, the biggest change from December is probably the simple fact that we are clearly seeing more success in winning within the metals and mineral business contract signings and bidding activity, which then requires the funding because again we only fund those contract once we have a contract we don’t spec by equipment. And I think Sal said it’s funded under a seven year contract. The other thing keep in mind when you use the term working capital is that at principle working capital is really receivables and our growth in receivables right now is to a large degree because of higher revenues, probably concurrency but be that it may. We are not the typical company that manufactures that we have raw materials, work plus finished goods that’s only 15% of the company. So, if I can just qualify these two but the primary delta from December, which again we put the data together more in November, was that we are seeing good success in metals and minerals business. The solutions based marketing of our services is really resonated.

[Scott Graham:]

Okay, last question is along the lines of the apologies I’m sorry in infrastructure. So I guess we are looking at a weaker UK environment and I know that the European total is a largest part of infrastructure. Can you just give us an idea of what the UK is to that business percentage of sales?

[Salvatore Fazzolari:]

I think it’s about 15% of the total business.

[Scott Graham:]

Okay.

[Stephen Schnoor:]

Our largest country actually in Europe, Scott you might recall as I mentioned last time it’s actually…

[Scott Graham:]

Holland.

[Stephen Schnoor:]

Holland and that’s because we are successful there with our under contract mostly industrial maintenance services.

[Salvatore Fazzolari:]

Holland and France and Germany are other three large countries in Europe and Poland. Those four countries are actually doing okay; it’s just the UK that’s really very depressed

[Scott Graham:]

Okay, actually there is one another question; unfortunately I got on to the call a couple of minutes late. Did you indicate what this second half tax rate would be?

[Stephen Schnoor:]

Yes, we did Scott it’s 24% to 25%.

[Scott Graham:]

That’s helpful. Thanks very much.

[Salvatore Fazzolari:]

Thank you.

[Operator:]

I have no further questions at this time. I turn the call back over to the presenters.

[Salvatore Fazzolari:]

Thank you. In closing obviously we are pleased with the progress for this year and as we stated our objectives are clear, we are committed to executing our strategic plan. And as we stated last December and again during the first quarter conference call and I’ll repeat again this conference 2011 is clearly a transition year for Harsco, as we regain our earnings momentum. We are committed to delivering consistent, double digit earnings growth in the next five years and beyond. And we are excited about the future of Harsco, as we embark on this new growth era. Again, I would like to thank you for your ongoing support and thanks for joining our call today.