Calgon Carbon Corporation
) announced that it has entered into an accelerated share
repurchase (ASR) agreement with Morgan Stanley & Co. LLC to
buy back roughly $50 million of its stock. The company will
receive around 3.3 million shares at the beginning of the ASR
with the total number of shares to be purchased under the deal
will be decided upon the final settlement.
The share repurchase will be funded through Calgon Carbon's
revolving credit facility, which stood at $118 million as of
September 30, 2012. The share repurchases will be completed by
the third quarter of 2013. The deal signifies the company's
ability to enhance shareholders' value through the proper
utilization of its capital structure.
The announcement was made a day after the company announced a
share repurchase program worth approximately $100 million. The
ASR represents a part of this program.
Calgon initiated the stock repurchase program as part of its
short-term strategy and its confidence in the growth from the
emerging markets. The company initiated this plan after the
completion of its 2013 profit plan.
A few weeks ago, Calgon Carbon released its third-quarter 2012
results. The company incurred a loss of $4.5 million or 8 cents a
share in the quarter compared with a profit of $14.5 million or
25 cents a share a year ago. Excluding a restructuring charge of
$8 million, the Pennsylvania-based pollution control company
earned 6 cents a share in the quarter, which missed the Zacks
Consensus Estimate of 12 cents.
Revenues dipped 5.6% year over year to $135.5 million, and missed
the Zacks Consensus Estimate of $143 million. Currency
translation had a negative impact of $3.2 million on sales,
stemming from a stronger dollar.
Calgon Carbon remains confident in its ability to balance the
need for future investment with its responsibility to provide
short-term returns. Despite some challenges, the company expects
to continue to capitalize on its growth opportunities. Healthy
sales gains and strategic initiatives will be beneficial in the
We, however, remain concerned about the economic challenges
that it might face in the remainder of 2012. Moreover, escalating
costs remain a headwind.
We currently have a long-term (more than 6 months) Neutral
recommendation on Calgon Carbon. The company, which competes with
), retains a Zacks #4 Rank that translates to a short-term (1 to
3 months) Sell rating.
CALGON CARBON (CCC): Free Stock Analysis
MEADWESTVACO CP (MWV): Free Stock Analysis
To read this article on Zacks.com click here.