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Calgon Carbon's Q3 Earnings & Revenues Trail, Shares Down

Calgon CarbonCCC posted profit of $12.1 million or 23 cents per share in the third quarter of 2015 compared with $12.2 million or 23 cents per share logged a year ago. Earnings per share trailed the Zacks Consensus Estimate of 25 cents.

The Pennsylvania-based pollution control company raked in revenues of roughly $133 million in the reported quarter, down around 3% year over year. Currency swings had a $5.9 million negative impact on sales, stemming from a weaker euro, British pound sterling and yen. Sales also missed the Zacks Consensus Estimate of $140 million.

Revenues were also impacted by customer postponements of expected carbon installation. In addition, sluggish global economic conditions affected sales in certain areas of the company's industrial end markets in the quarter.

The company's shares slipped roughly 10% to close at $16.35 last Thursday. The stock is down around 12% since the earnings announcement, based on last Friday's close.

Gross margin was 36.2% in the third quarter, up from 34.6% a year ago. Higher gross margin resulted from favorable mix of higher margin activated carbon product sales, reduced coal costs, and cost and operational efficiency improvements.

Selling, administrative and research expenses went up around 7% year over year to $22.6 million. The company attributed the increase to higher costs associated with its SAP re-engineering project, increased consulting-related expenses and a pension plan settlement charge.

Calgon Carbon Corporation (CCC) - Earnings Surprise | FindTheCompany

Segment Performance

Revenues from the company's core Activated Carbon and Service segment decreased roughly 2% year over year to $121.3 million in the quarter. The segment was unfavorably impacted by currency translation of $5.8 million. Sales of FLUEPAC products to the environmental air market in North America for mercury removal were considerably higher in the reported quarter. This was partly offset by reduced sales across food, potable water, environmental water and specialty carbon markets, mainly in the Americas.

The Equipment division's revenues declined around 10% year over year to $9.7 million. Increased sales of ion exchange systems were more than offset by lower ballast water treatment systems.

Sales from the Consumer segment fell 20% year over year to $2 million in the quarter.

Financial Position

Calgon Carbon ended the quarter with cash and cash equivalents of $55.3 million, a roughly 32% year-over-year increase. Total debt was $97.2 million, up roughly 80% year over year.

Calgon Carbon repurchased 872,000 shares through open market operations in the third quarter. The company has spent $28 million to repurchase 1.6 million shares so far this year.

Outlook

Moving ahead, Calgon Carbon remains optimistic about opportunities for future growth in markets in which it has a strong position, especially mercury removal. It also remains focused on executing its expansion and new product outsourcing initiatives.

Calgon Carbon is a Zacks Rank #4 (Sell).

Better-ranked companies in the pollution control space include Advanced Emissions Solutions, Inc. ADES , Energy Recovery, Inc. ERII and Tetra Tech Inc. TTEK , all holding a Zacks Rank #2 (Buy).

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TETRA TECH NEW (TTEK): Free Stock Analysis Report

CALGON CARBON (CCC): Free Stock Analysis Report

ENERGY RECOVERY (ERII): Free Stock Analysis Report

ADV EMISSIONS (ADES): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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