Calgon Carbon (CCC) reported profits of $15.2 million or 28 cents per share in the second quarter of 2014, up 17.2% year over year. Earnings per share, however, missed the Zacks Consensus Estimate by a penny. Income from operations was $21.3 million, an increase of 5.4% year over year.
This Pennsylvania-based pollution control company posted revenues of $145.1 million in the reported quarter, up 3.3% year over year. Higher sales from Activated Carbon and Service and consumer segments were partly offset by a decline in the equipment division. Currency translation affected sales positively by $1.7 million led by stronger British pound sterling and euro. However, sales also missed the Zacks Consensus Estimate of $146 million. Gross margin (before depreciation and amortization) increased to 34.4% from 33% in the prior-year quarter.
Segment Performance
Revenues from the company’s core Activated Carbon and Service segment increased 4.8% year over year to $129.9 million in the quarter due to higher demand for activated carbon products across municipal drinking water markets in the U.S., environmental water and industrial process market, offset by lower demand for activated carbon in the respirator and environmental air markets.
The Equipment division’s revenues fell 17.2% year over year to $11.8 million on lower sales of ion exchange and traditional UV systems, partly offset by higher sales on traditional carbon equipment and ballast water treatment system.
Sales from the Consumer segment jumped 57.9% year over year to $3.3 million in the quarter on increased demand for activated carbon cloth from a major customer.
Financial Position
Calgon Carbon ended the quarter with cash and cash equivalents of $43 million, a roughly two fold year-over-year rise. Long-term debt was $55.9 million, down roughly 0.3% year over year but up around 7.4% sequentially.
Outlook
Calgon Carbon expects strong earnings due to aggressive current and future cost reduction programs and corporate initiatives. Moreover, it expects top-line growth from increased volumes in virgin carbon production, new contracts for supplies of activated carbon in agreement with the EPA’s mercury removal regulation in 2015 and higher sales of improved ballast water treatment technologies.
Calgon Carbon, which is among the prominent pollution control companies along with CECO Environmental Corp. (CECE) and Donaldson Company, Inc. (DCI), 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.
A better ranked stock in the pollution control industry worth considering is Metalico Inc. (MEA) with a Zacks Rank #2 (Buy).
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