Chemviron Carbon, the European operating group of pollution control company Calgon Carbon Corporation (CCC - Analyst Report), has won a 10-year contract from Thames Water to reactivate spent activated carbon used to treat drinking water. Thames is the largest provider of drinking water and wastewater services in the UK.
The contract value will depend on the amount of carbon reactivated on an annual basis, which is expected to be around 11 million lbs (5,000 million tons).
Chemviron is expected to complete the $9.5-million renovation and expansion of the Tipton plant (Tipton) located near Birmingham, U.K., in 2014. Thereafter, Chemviron plans to reactivate the spent carbon at the facility.
Tipton plant’s production capacity is expected to increase to 18 million lbs (8,200 million tons) from 13 million lbs (5,800 million tons) after the plant’s renovation and expansion. However, until the completion of the expansion activities, Thames’ carbon will be reactivated at Chemviron Carbon’s facilities in Grays, UK and Feluy, Belgium.
Management claims Chemviron to be the most effective reactivator in the UK. It offers water utilities and a comprehensive range of value-added technical and site services. Thames Water provides high-quality drinking water to their customers. Thus, the collaboration will strengthen Calgon Carbon and Thames’ decades-old relationship.
Calgon Carbon delivered impressive first-quarter 2013 results on May 6. The company’s earnings topped the Zacks Consensus Estimate, but sales fell short. While Calgon Carbon is expected to gain from its cost reduction and pricing actions, it remains exposed to currency headwinds and weakness in its equipment business.
Calgon Carbon remains confident in its ability to balance the need for future investment with responsibility to provide short-term returns. The company continues to focus on ballast water treatment, reactivation services and mercury removal as its basis for sustainable growth. It remains focused on improving margins across all regions. However, its strategic initiatives position it for significant growth in the longer term.
Calgon Carbon retains a Zacks Rank #1 (Strong Buy).
Other companies in the pollution control industry worth considering are CECO Environmental Corp.
(CECE - Snapshot Report
), Perma-Fix Environmental Services Inc.
(PESI - Snapshot Report
) and Pure Cycle Corporation
(PCYO - Snapshot Report
). While CECO retains a Zacks Rank #1 (Strong Buy), both Perma and Pure Cycle hold a Zacks Rank #2 (Buy).