Calgon Carbon Misses Estimates

| About: Calgon Carbon (CCC)

Calgon Carbon Corporation (NYSE:CCC) reported a profit of 20 cents per share in the first quarter of 2011 compared with 5 cents in the year-ago quarter. Reported earnings missed the Zacks Consensus Estimate by a penny.


Sales in the quarter increased 9.5% to $135.3 million missing the Zacks Consensus Estimate of $138 million. Currency translation had a positive impact of $6.6 million on sales for the second quarter due to the weak dollar. Calgon Carbon’s performance for the quarter was solid, as sales strengthened and mix improved as the quarter progressed.

Sales in Calgon Carbon's biggest segment, Activated Carbon and Service, surged 10.1% to $121.5 million in the reported quarter. The increase was primarily attributable to higher sales of activated carbon products and increased services in three of its market segments -- environmental water, environmental air and food markets.

Equipment segment sales jumped 5.0% to $11.7 million due to higher revenue from ballast water treatment systems. However, Consumer segment sales for the quarter were almost flat at $2.1 million versus the prior year quarter.


Cost of products sold increased 12.9% to $90.9 million in the reported quarter. Cost of products sold as a percentage of sales was 67.2% versus 65.2% in the year-ago quarter. Gross profit increased to $44.4 million in the quarter from $43.1 million in the prior-year quarter.

Gross margin was 32.8% in the quarter versus 34.8% for the second quarter of 2010. The decline was attributable to a $1.3 million charge related to the PreZerve product line, which was previously disclosed as being discontinued.

Selling, administrative and research expenses for the second quarter of 2011 were $22.5 million, versus $22.0 million in the comparable year-ago quarter. As a percentage of sales, SG&A improved to 16.6% in the second quarter of 2011 versus 17.8% in the second quarter of 2010.

Environmental and litigation contingencies in the second quarter of 2011 included a $1.3 million reduction in the estimate to complete a remediation project at the company’s production facility in Columbus, Ohio versus a $11.5 million litigation contingency charge in the second quarter of 2010.

Financial Performance

Cash and cash equivalents were $13.9 million as of June 30, 2011 compared with $34.0 million at the end of December 31, 2010.

Zacks Recommendation

We currently maintain a Zacks #3 Rank (short-term Hold recommendation) on Calgon and a long-term Neutral recommendation.


Calgon competes with MeadWestvaco Corporation (MWV) and ITT Water & Wastewater Herford GmbH.

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