Calgon Carbon Reports 2014 Second Quarter Results

  • Second highest sales quarter in Company’s history

    Q2 2014 results versus Q2 2013 results:
    • Gross margin (before depreciation and amortization) increased to 34.4% versus 33.0%
    • Income from operations increased 5.4%
    • Fully diluted EPS increased 16.7% to $0.28

PITTSBURGH--()--Calgon Carbon Corporation (NYSE: CCC) reported results for the second quarter ended June 30, 2014.

Income from operations was $21.3 million for the second quarter of 2014, as compared to $20.2 million for the second quarter of 2013, an increase of 5.4%. Net income for the second quarter of 2014 was $15.2 million versus $13.0 million for the comparable period of 2013, a 17.2% increase. On a fully diluted basis, net income per common share for the second quarter of 2014 was $0.28 as compared to $0.24 for the second quarter of 2013.

The company reported net sales of $145.1 million for the second quarter of 2014 versus $140.4 million for the second quarter of 2013. Currency translation had a $1.7 million positive effect on sales for the second quarter of 2014 due to the strength of the British pound sterling and the euro.

For the second quarter of 2014, sales for the Activated Carbon and Service segment increased 4.8% versus the second quarter of 2013. The increase was primarily due to higher demand for activated carbon products and services in the environmental water and industrial process markets. Sales to the food and drinking water markets also showed improvement over the second quarter of 2013. These increases were partially offset by lower demand for activated carbon in the respirator and environmental air markets.

Equipment sales for the second quarter of 2014 declined $2.5 million, or 17.2%, versus the comparable period in 2013, due to lower sales of ion exchange and traditional UV systems. Higher sales of traditional carbon equipment and ballast water treatment systems partially offset the decline.

Consumer sales for the second quarter of 2014 increased $1.2 million, or 57.9%, as compared to the second quarter of 2013. The increase was attributable to a single large order.

For the second quarter of 2014, net sales less the cost of products sold (excluding depreciation and amortization) as a percentage of net sales was 34.4% versus 33.0% for the second quarter of 2013. The improvement resulted from several factors including price increases on activated carbon products and services in the Americas region that were initiated in March 2013; a more favorable product mix; favorable impacts from the Company’s global cost improvement program; and the absence of unfavorable adjustments to estimated costs, recorded in 2013, to complete certain Equipment projects.

Selling, administrative and research (SA&R) expenses for the second quarter of 2014 were $21.2 million versus $18.9 million for the comparable period of 2013. The increase included $1.1 million in expenses related to the Company’s SAP re-implementation project that is scheduled to be completed in 2015. The second quarter of 2013 included a $0.9 million benefit from the reduction of a multi-employer pension plan liability.

The income tax provision for the second quarter of 2014 included a net $1.4 million income tax benefit resulting from the conclusion of an Internal Revenue Service examination related to the Company’s 2008 amended tax return.

Net sales for the six months ended June 30, 2014, were $276.8 million, versus $275.5 million for the comparable period in 2013. Currency translation had a $1.2 million positive impact on sales for the first half of 2014 due to strength of the British pound sterling and the euro, which was partially offset by the weak yen.

Net income for the six months ended June 30, 2014, was $25.0 million versus $22.8 million for the first half of 2013. Fully diluted net income per common share for the first half of 2014 was $0.46 versus $0.42 for the comparable period of 2013.

Randy Dearth, Calgon Carbon’s Chairman, President and Chief Executive Officer, commented, “I am pleased with Calgon Carbon’s second quarter 2014 results which generated positive comparisons for several key financial metrics. For example, sales performance was one of the highest in our Company’s history, with four of our six markets growing year-over-year.”

“Results for the second quarter of 2014 reflect our on-going efforts to realize sustainable growth. Going forward, earnings should continue to be favorably impacted by the aggressive implementation of current and future cost improvement initiatives. We also expect to achieve top-line growth from projects to increase our virgin carbon production capacity; new contracts with utilities to supply activated carbon for compliance with the EPA’s mercury removal regulation in 2015; and increased sales of ballast water treatment systems resulting from regulations adopted by the U.S. Coast Guard and the International Maritime Organization.”

Pure Water. Clean Air. Better World.

Calgon Carbon Corporation (NYSE:CCC) is a global leader in innovative solutions, high quality products and reliable services designed to protect human health and the environment from harmful contaminants in water, and air. As a leading manufacturer of activated carbon, with broad capabilities in ultraviolet light disinfection, the Company provides purification solutions for drinking water, wastewater, pollution abatement, and a variety of industrial and commercial manufacturing processes.

Calgon Carbon is the world’s largest producer of granular activated carbon and supplies more than 100 types of activated carbon products - in granular, powdered, pelletized and cloth form – for more than 700 distinct applications. Headquartered in Pittsburgh, Pennsylvania, Calgon Carbon Corporation employs approximately 1,100 people at more than 15 manufacturing, reactivation, and equipment fabrication facilities in the U.S., Asia, and in Europe, where Calgon Carbon is known as Chemviron Carbon. The company also has more than 27 sales and service centers throughout the world.

For more information about Calgon Carbon’s leading activated carbon and ultraviolet technology solutions for municipalities and industries, visit www.calgoncarbon.com.

This news release contains historical information and forward-looking statements. Forward-looking statements typically contain words such as “expect,” “believe,” “estimate,” “anticipate,” or similar words indicating that future outcomes are uncertain. Statements looking forward in time, including statements regarding future growth and profitability, price increases, cost savings, broader product lines, enhanced competitive posture and acquisitions, are included in the company’s most recent Annual Report pursuant to the “safe harbor” provision of the Private Securities Litigation Reform Act of 1995. They involve known and unknown risks and uncertainties that may cause the company’s actual results in future periods to be materially different from any future performance suggested herein. Further, the company operates in an industry sector where securities values may be volatile and may be influenced by economic and other factors beyond the company’s control. Some of the factors that could affect future performance of the company are higher energy and raw material costs, costs of imports and related tariffs, labor relations, availability of capital and environmental requirements as they relate both to our operations and to our customers, changes in foreign currency exchange rates, borrowing restrictions, validity of patents and other intellectual property, and pension costs. In the context of the forward-looking information provided in this news release, please refer to the discussions of risk factors and other information detailed in, as well as the other information contained in the company’s most recent Annual Report.

Calgon Carbon Corporation
Condensed Consolidated Statements of Comprehensive Income
(Dollars in thousands except per share data)
(Unaudited)
   
Quarter Ended Six Months Ended
June 30, June 30,
2014   2013 2014   2013
 
Net Sales $ 145,132   $ 140,432   $ 276,764   $ 275,472  
 

Cost of Products Sold (Excluding Depreciation and Amortization)

95,253 94,057 182,716 186,472
 
Depreciation and Amortization 7,525 7,305 14,554 14,052
 
Selling, Administrative & Research 21,151 18,851 42,793 39,779
 
Restructuring   (122 )   (18 )   (225 )   (42 )
 
  123,807     120,195     239,838     240,261  
 
Income from Operations 21,325 20,237 36,926 35,211
 
Interest Expense - Net (24 ) (117 ) (123 ) (170 )
 
Other Expense - Net   (382 )   (341 )   (928 )   (1,169 )
 
Income Before Income Tax Provision 20,919 19,779 35,875 33,872
 
Income Tax Provision   5,716     6,809     10,863     11,088  
 
Net Income $ 15,203   $ 12,970   $ 25,012   $ 22,784  
 
Other Comprehensive Income (Loss), Net of Tax
Foreign Currency Translation 971 770 1,095 (5,518 )
Pension Benefits 120 1,713 322 1,335
Derivatives   (213 )   (15 )   (419 )   559  
 
Comprehensive Income $ 16,081   $ 15,438   $ 26,010   $ 19,160  
 
Net Income per Common Share
Basic $ .29 $ .24 $ .47 $ .42
Diluted $ .28 $ .24 $ .46 $ .42
 

Weighted Average Shares Outstanding (Thousands)

Basic 52,942 53,799 53,273 53,710
Diluted 53,845 54,547 54,181 54,376
 

Calgon Carbon Corporation        
 
 

Segment Data (unaudited):

(in thousands)
 

Segment Sales

2Q14 2Q13 YTD 2014 YTD 2013
 
Activated Carbon and Service 129,947 124,009 247,671 242,906
Equipment 11,837 14,302 22,304 28,210
Consumer   3,348     2,121     6,789     4,356  
 
Net Sales $ 145,132 $ 140,432 $ 276,764 $ 275,472
 
Segment

Operating Income (loss)*

2Q14 2Q13 YTD 2014 YTD 2013
 
Activated Carbon and Service 28,600 27,706 51,269 48,605
Equipment (629 ) (624 ) (1,616 ) (231 )
Consumer   757     442     1,602     847  
 
Income from Operations * $ 28,728 $ 27,524 $ 51,255 $ 49,221
 

*Before depreciation and amortization and restructuring.

Calgon Carbon Corporation
Condensed Consolidated Balance Sheet
(Dollars in thousands)
(Unaudited)
   
June 30, December 31,
2014 2013
 
Assets
 
Current assets:
 
Cash and cash equivalents $ 43,050 $ 32,942
 
Receivables 102,210 96,996
 
Inventories 109,222 109,517
 
Other current assets   36,699   41,995
 
Total current assets 291,181 281,450
 
Property, plant and equipment, net 274,078 266,849
 
Other assets   41,500   41,779
 
Total assets $ 606,759 $ 590,078
 
Liabilities and Shareholders' Equity
 
Current liabilities:
 
Short-term debt $ 1,971 $ 2,172
 
Other current liabilities   77,945   80,024
 
Total current liabilities 79,916 82,196
 
Long-term debt 55,899 32,114
 
Other liabilities   55,816   59,263
 
Total liabilities 191,631 173,573
 
Total shareholders' equity   415,128   416,505
 
Total liabilities and shareholders' equity $ 606,759 $ 590,078
 

Contacts

Calgon Carbon Corporation
Gail A. Gerono, Vice President – Investor Relations, 412-787-6795
ggerono@calgoncarbon-us.com

Contacts

Calgon Carbon Corporation
Gail A. Gerono, Vice President – Investor Relations, 412-787-6795
ggerono@calgoncarbon-us.com