John S. Stanik, the chairman, president and chief executive
Calgon Carbon Corporation
) has decided to hang up his boots after 21 years of service. Mr.
Stanik cited personal reasons for his retirement but he will remain
in his current positions until his successor takes over. Calgon
Carbon's Board plans to appoint a new CEO by the end of the third
quarter this year.
The next person to head the company will have a challenging task
of keeping costs under control, a problem Calgon Carbon faced in
the first quarter this year. He or she will also need to sustain
the top-line growth achieved by the company in the previous
Calgon Carbon's revenues jumped roughly 10% from the prior-year
quarter to $136.6 million in the first quarter of 2012. The bump in
revenues was driven by improved demand for activated carbon product
and services, increased sales of ballast water treatment systems
and ion exchange equipment.
Revenues from equipment sales and consumer products displayed
massive growth, jumping almost 77% and 37%, respectively. The
company has identified these segments as its revenue drivers. The
person who takes over from Mr. Stanik will thus have Calgon
Carbon's growth drivers laid out.
However, the challenge comes in the form of escalating costs.
Calgon Carbon's gross margin shrunk to 31.3% in the first quarter
from 33.3% in the year-ago period. The company had to contend with
higher plant maintenance expenses, unfavorable mix and raw material
inflation in the first quarter.
Moreover, the company might see more challenges thrown its way
due to a potentially worsening economic situation. Calgon Carbon is
focusing on improving its margins and Mr. Stanik's replacement will
have to address the issue of rising costs if the company is to
achieve its target.
The company sprung a positive earnings surprise of 16.67% in the
most recent quarter, posting earnings of 14 cents a share as
against the Zacks Consensus Estimate of 12 cents. However, its
performance has not been reflected in the share price, with Calgon
Carbon's stock losing approximately 11% of its value since the turn
of the New Year.
In addition, the stock trades perilously close to its 52-week
low. Hence, the next person to lead the company will have the task
of steering it through its cost problems and deliver value to
We currently have a long-term Neutral recommendation on Calgon
Carbon. The company, which competes with
), holds a Zacks #3 Rank, which translates into a short-term Hold
CALGON CARBON (CCC): Free Stock Analysis Report
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