Calgon Carbon Inks New Contract

Pittsburgh, Penn based Calgon Carbon Corporation ( CCC - Analyst Report ) announced that it has entered into a 2-year contract with a leading U.S. power generator to supply FLUEPAC brominated powdered activated carbon (PAC). This FLUEPAC carbon will remove mercury from the fluegas of coal-fired power plants in the Midwest. The value of the contract is estimated between $16 million and $22 million.

Per the agreement, Calgon Carbon will offer certain electric generating units with 100% of their activated carbon requirements for mercury removal in the stipulated period of the contract. The FLUEPAC carbon’s price will be adjusted annually depending on Producer Price indices published by the U.S. Bureau of Labor Statistics.

The new agreement came on the heels of the previous take-or-pay supply agreement between the two companies spanning for 5 years. This contract also holds a provision of extension through 2015 on requirement.

FLUEPAC products from Calgon Carbon are specially designed to meet or exceed the performance standards of the U.S. EPA’s Mercury and Air Toxic Standards (MATS). According to the conducted full-scale tests, the newly introduced FLUEPAC carbon outperformed the standards and proved successful in reducing activated carbon injection rates by 50%–70% compared with the prevailing standard products.

Calgon Carbon, which is among the prominent pollution control companies including MFRI Inc. ( MFRI ) , Sharps Compliance Corp. ( SMED - Snapshot Report ) and Appliance Recycling Centers of America Inc. ( ARCI ) , posted mixed fourth-quarter 2012 results few days ago.

The company’s adjusted earnings (excluding a restructuring charge of $2.3 million) of 19 cents a share for fourth-quarter 2012 exceeded the Zacks Consensus Estimate of 14 cents and the year-ago earnings of 11 cents. Profits (as reported) surged 77.8% to 16 cents per share in the quarter from 9 cents in the prior-year quarter.

Revenues increased 2.6% year over year to $141.8 million in the reported quarter, but lagged the Zacks Consensus Estimate of $143.0 million. Currency translation had a negative impact of $1 million on sales, stemming from a stronger dollar.

In 2013, Calgon Carbon expects continued growth in its traditional business and benefit from the cost improvement program implemented in 2012. The company remains committed to boosting profitability through process improvement, enhanced operating efficiencies and cost reductions.

Calgon Carbon currently retains a Zacks Rank #3 (Hold).