Zacks_Analysts' Blog : Calgon Carbon Surpasses EPS Estimate - Analyst Blog

Calgon Carbon Corporation (CCC) reported a profit of 25 cents per share in the third quarter of 2011 compared with 18 cents in the year-ago quarter. Reported earnings exceeded the Zacks Consensus Estimate of 22 cents.

Revenues

Sales in the quarter increased 15.5% to $143.6 million. Currency translation had a positive impact of $5.1 million on sales for the third quarter due to the weak dollar.

Sales in Calgon Carbon's biggest segment, Activated Carbon and Service, surged 18.2% to $130.0 million in the reported quarter. The increase was primarily attributable to higher demand of activated carbon products  and increased services in five of its market segments -- potable water (including supply of a large quantity of activated carbon for a new treatment facility) wastewater and environmental treatment.

Equipment segment sales declined 4.5% to $11.6 million. The substantial increase in revenue for UV systems in the third quarter of 2011 did not offset this decline.

Consumer segment sales for the quarter also declined 11.0% year over year to $2.0 million due to lower sales of PreZerve products. The company had previously disclosed that it was discontinuing the product line.

Expenses

Cost of products sold increased 15.3% to $95.0 million in the reported quarter. Cost of products sold as a percentage of sales was 66.2% versus 33.7% in the year-ago quarter. Gross profit increased to $48.6 million in the quarter from $41.9 million in the prior-year quarter.

Gross margin was 33.8% in the quarter versus 33.7% for the third quarter of 2010.

Selling, administrative and research expenses for the third quarter of 2011 were $24.0 million, versus $21.8 million in the comparable year-ago quarter. As a percentage of sales, SG&A declined to 16.7% in the third quarter of 2011 versus 17.5% in the third quarter of 2010.

Financial Performance

Cash and cash equivalents were $12.0 million as of September 30, 2011 compared with $34.0 million at the end of December 31, 2010.

Zacks Recommendation

We currently maintain a Zacks #4 Rank (short-term Sell recommendation) on Calgon and a long-term Neutral recommendation.

Competitors

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