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Calgon Carbon Corporation (CCC - Analyst Report)) reported fourth-quarter 2013 earnings of 20 cents per share compared with 16 cents per share in the year-ago quarter. The quarterly results beat the Zacks Consensus Estimate by a penny.

The company posted a net income of $11 million in the reported quarter compared with $9.1 million recorded in the prior-year quarter. The year-ago quarter’s results were hurt by restructuring charges of $2.3 million.
For full-year 2013, earnings were 84 cents compared with 41 cents in 2012. It beat the Zacks Consensus Estimate of 82 cents per share.

Revenues decreased roughly 6.1% year over year to $133.1 million in the reported quarter from $141.8 million recorded in the year-ago quarter. It lagged the Zacks Consensus Estimate of $138 million.

The decline in sales was due to lower sales of activated carbon in Asia, including Japan, and lower demand for mercury removal carbon in the U.S. Currency translation had a negative impact of $1.6 million on sales, stemming from a stronger U.S. dollar.

For full-year 2013, sales were $547.9 million, a 2.5% decrease year over year, primarily due to lower revenue recognition on ballast water treatment systems and lower sales of activated carbon for mercury removal. Foreign currency translation had an $11.6 million negative impact on sales due to stronger U.S. dollar.

Margins and Expenses

Gross margin was 34.3% in the quarter, an increase from 31.2% a year ago.

Selling, administrative and research (SG&A) expenses rose 8.4% year over year to $22.2 million. The company attributed the increase to higher employee-related expenses.

Segment Performance

Revenues from the Activated Carbon and Service segment decreased 8.6% year over year to $116.3 million in the fourth quarter due to lower demand for granular activated carbon (GAC) for drinking water in Asia, earlier than expected deliveries of GAC in Japan and lower pricing for powdered activated carbon for mercury removal, partly offset by increased demand for activated carbon products and services in the environmental water treatment market.

Equipment revenues increased 12.4% year over year to $13.3 million due to higher revenue from carbon adsorption equipment. Consumer sales decreased 25.1% year over year to $3.4 million in the quarter.

Financial Position

Calgon Carbon’s cash and cash equivalents as of Dec 31, 2013, was roughly $32.9 million, up from $18.2 million as of Dec 31, 2012. Long-term debt stood at $32.1 million as of Dec 31, 2013, compared with $44.4 million as of Dec 31, 2012.

Outlook

Calgon Carbon expects to benefit from the implementation of the cost reduction program and corporate initiatives going forward. The company will continue to capitalize on opportunities for revenue growth from environmental regulations for mercury removal from coal-fired power plants and for ballast water treatment.

Calgon carbon’s Board has approved $85 million for capital spending in 2014 that is expected to increase carbon production capacity while reducing costs.

Calgon Carbon has a Zacks Rank #3 (Hold).

Other companies in the pollution control industry worth considering include Sharps Compliance Corp (SMED - Snapshot Report), Heritage-Crystal Clean, Inc. (HCCI - Snapshot Report) and Pure Cycle Corporation (PCYO - Snapshot Report). While Sharps Compliance carries a Zacks Rank #1 (Strong Buy), Heritage-Crystal Clean and Pure Cycle have a Zacks Rank #2 (Buy).

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