Calgon Carbon (CCC) Misses on Q2 Earnings and Revenues - Analyst Blog
Calgon Carbon Corporation CCC reported profits of $12.6 million or 24 cents per share in the second quarter of 2015, down around 17.3% year over year. Earnings per share missed with the Zacks Consensus Estimate of 26 cents.
The Pennsylvania-based pollution control company posted revenues of $135.5 million in the reported quarter, down around 6.7% year over year. Currency translation had a $6.6 million negative impact on top-line growth due to a weaker euro, British pound sterling, and yen. Sales also missed the Zacks Consensus Estimate of $144 million.
The company’s shares are down roughly 11% since the earnings announcement, based on last Friday’s close.
Calgon Carbon Corporation - Earnings Surprise | FindTheBest
Margins and Expenses
Gross margin was 37.5% in the second quarter, an increase from 34.4% a year ago. Higher gross margin resulted from favorable mix of higher margin activated carbon product sales, reduced coal costs, and cost and operational efficiency improvements. The second quarter of 2015 also included a $1.2 million benefit related to an import duty refund.
Selling, administrative and research expenses rose 6.2% year over year to $22.6 million. The company attributed the increase to its SAP re-engineering project for improved functionality of its enterprise resource planning system that went on stream in Jul 2015, along with higher consulting-related services.
Segment Performance
Revenues from the company’s core Activated Carbon and Service segment decreased 4.9% year over year to $123.6 million in the quarter. The segment was negatively impacted by currency translation of $6.3 million. Sales of FLUEPAC products to the environmental air market, mainly in North America for mercury removal, were considerably higher. This increase was offset by lower demand for virgin and reactivated carbon mainly in the potable water markets across North America and Asia.
The Equipment division’s revenues declined 18.6% year over year to $9.6 million. Increased sales of traditional ultraviolet light systems were more than offset by lower demand for carbon adsorption equipment and ballast water treatment systems.
Sales from the Consumer segment slumped 33.3% year over year to $2.2 million in the quarter.
Financial Position
Calgon Carbon ended the quarter with cash and cash equivalents of $50.1 million, a roughly 16.4% year-over-year increase. Total debt was $87.3 million, up roughly 56.2% year over year.
Dividends & Share Repurchases
On Aug 4, 2015, Calgon Carbon’s board announced a quarterly cash dividend of 5 cents per share, payable on Sep 15, 2015, to shareholders on record as of Sep 4.
Calgon Carbon repurchased 310,881 shares through open market operations in the second quarter.
Outlook
Based on its market positioning, market share, and general level of demand for the products and services that remained high across most of its served markets, the company expects revenues and profitability for the second half of 2015 to improve from the first six months as well as the prior-year comparable period. The company also anticipates an upward revision to its expected FLUEPAC mercury control market revenues for the full year from the forecast provided in late June.
Zacks Rank
Calgon Carbon carries a Zacks Rank #4 (Sell).
Some better-ranked companies in the basic materials space are Perma-Fix Environmental Services Inc. PESI, Sharps Compliance Corp. SMED and Eastman Chemical Company EMN. While Perma-Fix sports a Zacks Rank #1 (Strong Buy), Sharps Compliance and Eastman Chemical carry a Zacks Rank #2 (Buy).
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CALGON CARBON (CCC): Free Stock Analysis Report
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