Calgon Carbon???s 1Q Earnings Beat, Sales Miss

Zacks

Calgon Carbon’s 1Q Earnings Beat, Sales Miss

Calgon Carbon Corporation (CCC) reported first-quarter 2013 earnings of 18 cents per share, up roughly 29% from 14 cents per share in the year-ago quarter. The results exceeded the Zacks Consensus Estimate of 15 cents.

The company posted a profit of $9.8 million in the reported quarter, surging roughly 27% from $7.7 million recorded in the prior-year quarter.

Revenues decreased roughly 1% year over year to $135 million in the reported quarter, missing the Zacks Consensus Estimate of $137 million. Currency translation had a negative impact of $3.1 million on sales, stemming from a weaker yen.

Margins and Expenses

Gross margin was 31.6% in the quarter versus 31.3% a year ago. Gross margin was favored by a settlement of an insurance claim related to Hurricane Isaac.

Selling, administrative and research (SG&A) expenses declined 12.6% to $20.9 million. The company attributed the decrease to lower employee related costs, owing to its cost reduction initiatives.

Segment Performance

Revenues from the Activated Carbon and Service segment increased 1.4% year over year to $118.9 million in the first quarter, due to improved demand for activated carbon products and services in the municipal and industrial process markets, partially offset by lesser demand for granular activated carbon in the food market and reduced demand and pricing for powdered activated carbon for mercury removal from electric generating units.

Equipment revenues decreased 13.7% to $13.9 million on lower sales from ballast water treatment systems and ion exchange equipment, partly offset by higher sales of ultraviolet systems for drinking water treatment and carbon adsorption equipment.

Consumer sales decreased 31.3% to $2.2 million in the quarter due to lower demand for activated carbon cloth.

Financial Position

Calgon Carbon ended the quarter with cash and cash equivalents of $14.5 million, up 23.5% year over year. Long-term debt stood at $48.1 million as of Mar 31, 2013, compared with $0.3 million as of Mar 31, 2012.

Outlook

Calgon Carbon, which is among the prominent pollution control companies along with CECO Environmental Corp. (CECE), Fuel-Tech, Inc. (FTEK) and Industrial Services of America, Inc. (IDSA), expects to benefit from the implementation of the second phase of the cost reduction program, aimed at margin improvement.

Additionally, the company expects to see positive impact on sales and margins owing to price hikes on the activated carbon products and services initiated earlier this year.

Calgon Carbon currently retains a Zacks Rank #2 (Buy).

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