Calgon Carbon's Q3 Earnings and Revenues Miss Estimates - Analyst Blog

Calgon Carbon Corporation (CCC) reported profits of $12.2 million or 23 cents per share in the third quarter of 2014, up 2.5% year over year. Earnings per share, however, missed the Zacks Consensus Estimate of 25 cents. Income from operations was $18.9 million in the third quarter, an increase of 5.6% year over year.

This Pennsylvania-based pollution control company posted revenues of $137.7 million in the third quarter, down 1.2% year over year. Lower sales in the Equipment division were partly offset by a slight increase in the Activated Carbon and Service division. Currency translation affected sales positively by $0.6 million, led by the stronger British pound sterling. Sales also missed the Zacks Consensus Estimate of $141 million.

Gross margin (before depreciation and amortization) increased to 34.6% in the reported quarter from 33.3% in the prior-year quarter. The company's global cost-saving measures and increased pricing for some activated carbon products and services led to the rise in gross margins.

The company's share price fell as much as around 4.6% in the trading session following the earnings release, reflecting the lower-than-expected results.
 

 

Segment Performance

Revenues from the company's core Activated Carbon and Service segment increased 1.1% year over year to $124.4 million in the quarter due to higher demand for activated carbon products across the environmental water and industrial process markets.

The Equipment division's revenues fell 19.5% year over year to $10.8 million on lower sales of carbon adsorption equipment and conventional UV systems, partly offset by higher sales of ballast water treatment systems.

Sales from the Consumer segment slumped 13.8% year over year to $2.5 million in the quarter.

Financial Position

Calgon Carbon ended the quarter with cash and cash equivalents of roughly $42 million, a 40% year-over-year rise. Long-term debt was $53.1 million, up roughly 9.9% year over year.

Outlook

Calgon Carbon expects earnings to be driven by its aggressive current and future cost-reduction programs. Moreover, it expects top-line growth from increased volumes based on new contracts and agreements for supplies of activated carbon. Moreover, the company hopes to secure contracts for its advanced mercury removal products from electric utilities in the fourth quarter.

Calgon Carbon ventured into the global market for ballast water treatment with its acquisition of Hyde Marine in 2010. The company's ballast water treatment business is rapidly evolving into one of the most exciting longer-term market opportunities.

Calgon Carbon is a Zacks Rank #3 (Hold) stock.

Better-ranked stocks in the pollution control industry worth considering are Progressive Waste Solutions Ltd. (BIN), Advanced Emissions Solutions, Inc. (ADES) and Heritage-Crystal Clean, Inc (HCCI). While Progressive Waste Solutions holds a Zacks Rank #1 (Strong Buy), both Advanced Emissions Solutions and Heritage-Crystal Clean carry a Zacks Ranks #2 (Buy).

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
CALGON CARBON (CCC): Free Stock Analysis Report
 
PROGRESSV WASTE (BIN): Free Stock Analysis Report
 
ADV EMISSIONS (ADES): Free Stock Analysis Report
 
HERITAGE-CRYSTL (HCCI): Free Stock Analysis Report
 
To read this article on Zacks.com click here.