Press Release

Calgon Carbon Announces Third Quarter Results

PITTSBURGH, PA  –  11/01/2010

Calgon Carbon Corporation (NYSE: CCC) announced results for the third quarter ended September 30, 2010.

For the third quarter of 2010, the company reported income from operations of $14.6 million, as compared to $14.1 million for the third quarter of 2009.

Net income for the third quarter of 2010 was $10.0 million versus $13.9 million for the comparable period of 2009. On a fully diluted basis, net income per common share for the third quarter of 2010 was $0.18 as compared to $0.25 for the comparable quarter of 2009. Results for the third quarter of 2010 include $0.8 million of income, primarily from the release of a valuation allowance on foreign tax credits, as a result of the amendment and filing of prior year tax returns. Results for the third quarter of 2009 included release of a $5.0 million valuation allowance on foreign tax credits.

Net sales for the third quarter of 2010 were $124.4 million versus third quarter 2009 sales of $107.5 million, an increase of 15.7%. For the third quarter of 2010, the net effect on sales from acquisitions completed in 2010 was $16.2 million. Currency translation had a $2.1 million negative impact on sales for the third quarter of 2010 due to the stronger U.S. dollar.

For the third quarter of 2010, sales of Activated Carbon and Service increased by 16.7%, which includes 15.4% related to the above mentioned acquisitions, versus the third quarter of 2009. Also contributing to the increase was higher demand for activated carbon products in the environmental air treatment market and increased demand for activated carbon products and services in the industrial process and food markets. These increases were partially offset by lower demand for activated carbon products in the potable water market. Sales to the potable water market in the third quarter of 2009 included supply of a large quantity of activated carbon for a new potable water treatment facility in Asia.

Equipment sales increased 14.7% versus the third quarter of 2009, principally due to higher revenue from traditional carbon adsorption equipment. A 16.4% decline in Consumer sales for the third quarter of 2010 was due to lower demand for PreZerve® products and carbon cloth.

Net sales less the cost of products sold as a percentage of net sales was 33.7% for the third quarter of 2010 versus 33.9% for the third quarter of 2009.

Selling, administrative and research expenses for the third quarter of 2010 were $21.8 million as compared to $17.6 million for the third quarter of 2009. The increase of $4.2 million included $3.1 million of on-going expenses related to acquisitions completed in the first quarter, higher employee related costs, and increased research and development activities.

Calgon Carbon’s board of directors did not declare a quarterly dividend.

Net sales for the nine months ended September 30, 2010 were $350.9 million, a $49.7 million, or 16.5%, increase over the comparable period of 2009. The $3.1 million gain on acquisitions for the nine months ended September 30, 2010 relates to acquisitions that occurred during the first quarter. Net income for the nine months ended September 30, 2010 was $22.8 million versus $25.9 million for the comparable period of 2009. The 2010 results included an $11.5 million charge resulting from a verdict against the company in a breach of contract lawsuit. The 2009 results included the above mentioned $5.0 million foreign tax credit valuation allowance release. Fully diluted net income per common share for the nine months ended September 30, 2010 was $0.40. Fully diluted net income per common share for the nine months ended September 30, 2009 was $0.46.

Commenting on the results, John Stanik, Calgon Carbon’s chairman, president and chief executive officer, said, “We are encouraged by the third quarter results, as they represent progress in achieving our long-term growth objectives. We will continue to follow our growth plan, although from time-to-time this may have an adverse impact on short-term results, but should have a more significant positive impact in the long term. For example, the increase in research and development expenses in the third quarter of 2010 should result in differentiated products that will strengthen our competitive position in that market.”

“All three acquisitions made earlier this year contributed to the quarter-over-quarter sales growth. And during the third quarter, Hyde Marine was awarded a $19.8 million contract for ballast water treatment systems that should begin to have a positive impact on revenue and income next year.”

“The integration costs for Calgon Carbon Japan and its lower product margins should continue to have a negative effect on the company’s margins for several quarters until the strategic value of the acquisition is realized. However, the strength of our traditional businesses should mitigate the negative impact, which was the case for the third quarter of 2010. Although results for the third quarter of 2010 included Calgon Carbon Japan’s product sales, gross margin rates for the third quarters of 2010 and 2009 were virtually the same.”

“I am confident that Calgon Carbon is moving in the right direction to take full advantage of its many growth opportunities which should result in significant improvement in the company’s financial performance.”

For more information about Calgon Carbon’s leading activated carbon and ultraviolet technology solutions for municipalities and industries, visit dev.calgoncarbon.com.

Calgon Carbon Corporation, headquartered in Pittsburgh, Pennsylvania, is a global leader in services and solutions for making water and air safer and cleaner.

This news release contains historical information and forward-looking statements. Forward-looking statements typically contain words such as “expect,” “believe,” “estimate,” “anticipate,” or similar words indicating that future outcomes are uncertain. Statements looking forward in time, including statements regarding future growth and profitability, price increases, cost savings, broader product lines, enhanced competitive posture and acquisitions, are included in the company’s most recent Annual Report pursuant to the “safe harbor” provision of the Private Securities Litigation Reform Act of 1995. They involve known and unknown risks and uncertainties that may cause the company’s actual results in future periods to be materially different from any future performance suggested herein. Further, the company operates in an industry sector where securities values may be volatile and may be influenced by economic and other factors beyond the company’s control. Some of the factors that could affect future performance of the company are higher energy and raw material costs, costs of imports and related tariffs, labor relations, availability of capital and environmental requirements as they relate both to our operations and to our customers, changes in foreign currency exchange rates, borrowing restrictions, validity of patents and other intellectual property, and pension costs. In the context of the forward-looking information provided in this news release, please refer to the discussions of risk factors and other information detailed in, as well as the other information contained in the company’s most recent Annual Report.

Calgon Carbon Corporation Condensed Consolidated Statement of Income
(Dollars in thousands except per share data) (Unaudited)

 

  Quarter Ended September 30,   Nine Months Ended September 30,
  2010   2009   2010   2009
Net Sales $124,371   $107,495   $350,872   $301,218
Cost of Products Sold 82,442   71,089   228,745   202,622
Depreciation and Amortization 5,491   4,690   15,829   12,438
Selling, Administrative & Research 21,802   17,346   63,497   52,679
Litigation Contingency   250   11,500   250
  109,735   93,375   319,571   267,989
Income from Operations 14,636   14,120   31,301   33,229
Interest – Net (20)   27   90   24
Gain on Acquisitions     3,119  
Loss on debt extinguishment   (899)     (899)
Other Expense – Net (710)   (646)   (1,185)   (2,574)
Income From Operations Before Income Tax and Equity in Income from Equity Investments 13,906   12,602   33,325   29,780
Income Tax Provision (Benefit) 3,954   (787)   10,640   5,187
Income from Operations Before Equity in Income from Equity Investments 9,952   13,389   22,685   24,593
Equity in Income from Equity Investments   470   112   1,338
Net Income $9,952   $13,859   $22,797   $25,931
Net Income per Common Share              
Basic $.18   $.25   $.41   $.48
Diluted $.18   $.25   $.40   $.46
Weighted Average Shares Outstanding (Thousands)              
Basic 55,904   54,940   55,815   54,466
Diluted 56,686   56,448   56,720   56,274

 

Calgon Carbon Corporation Segment Data

 

Segment Data:              
Segment Sales 3Q10   3Q09   YTD 2010   YTD 2009
Activated Carbon and Service 110,001   94,230   310,834   261,376
Equipment 12,106   10,558   33,395   32,784
Consumer 2,264   2,707   6,643   7,058
Total Sales (thousands) $124,371   $107,495   $350,872   $301,218
Segment Operating Income (loss)* 3Q10   3Q09   YTD 2010   YTD 2009
Activated Carbon and Service 19,176   18,647   46,138   43,729
Equipment 950   (60)   878   1,877
Consumer 1   223   114   61
Income from Operations (thousands) $20,127   $18,810   $47,130   $45,667

*Before depreciation and amortization. The Activated Carbon and Service segment includes a charge of $11.5 million related to a litigation contingency for the year-to-date period 2010.

Calgon Carbon Corporation Condensed Consolidated Balance Sheet
(Dollars in thousands) (Unaudited)

 

    September 30, 2010   December 31, 2009
Assets        
Current assets:        
Cash and cash equivalents   $43,108   $38,029
Restricted cash   1,451   5,556
         
Receivables   86,357   64,304
Inventories   101,750   84,587
Other current assets   40,807   29,369
Total current assets   273,473   221,845
Property, plant and equipment, net   172,370   155,100
Other assets   44,564   48,773
Total assets   $490,407   $425,718
Liabilities and Shareholders’ Equity        
Current liabilities:        
Short-term debt   $17,253   $-
Current portion of long-term debt   2,875  
Other current liabilities   82,934   62,021
Total current liabilities   103,062   62,021
Long-term debt   4,336  
Other liabilities   49,448   56,611
Total liabilities   156,846   118,632
Redeemable Non-Controlling Interest   1,618  
Total shareholders’ equity   331,943   307,086
Total liabilities and shareholders’ equity   $490,407   $425,718