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Calgon Signs Deal with Phoenix

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Calgon Carbon Corporation (CCC - Free Report) and the City of Phoenix, Arizona penned a ten-year deal to provide reactivation services for activated carbon used for drinking water treatment in Arizona. As per the deal, Calgon Carbon will build a reactivation facility, which will be used to reactivate Phoenix's spent carbon, in Maricopa County, Arizona. The facility will also cater to two additional cities in Arizona.

The value of the transaction will depend on the activated carbon that is annually reactivated, which is expected to be about 11 million pounds. The facility is expected to commence operations in 2013 with an annual reactivation capacity of approximately 25 million pounds.

The facility is expected to treat drinking water for those municipalities that use granular activated carbon (GAC). The GAC removes organic compounds from the water, reducing the formation of byproducts after the addition of chlorine. The facility will also provide custom reactivation services to the municipalities.

Calgon Carbon is a global leader in services and solutions for purifying air and water. In February 2012, the company reported a profit of 9 cents per share for the fourth quarter of 2011 compared with 22 cents for the year-ago quarter. It, however, missed the Zacks Consensus Estimate of 13 cents per share.

For full-year 2011, the company’s earnings came in at 69 cents per share compared with 61 cents per share in 2010, missing the Zacks Consensus Estimate of 72 cents per share.

Sales in the quarter increased 15.5% to $138.2 million from $131.5 million in the year ago quarter; slightly ahead of the Zacks Consensus Estimate of $138 million. Currency translation had a positive impact of $1.3 million on sales for the quarter.

Calgon Carbon attributed the sales growth in the quarter to higher sales from Calgon Carbon Japan (“CCJ”) and higher prices for its activated carbon and services in the U.S. and Europe. In these two regions, increase in sales in its wastewater, food, and environmental air markets were offset by a decline in sales in the respirator and potable water markets. For the full year 2011, sales amounted to $541.5 million, an increase of 12.3% year over year.

Despite some challenges, the company expects to continue to capitalize on its growth opportunities. It continues to regard ballast water treatment, reactivation services, disinfection by-products and mercury removal as the basis for sustained growth throughout the decade.

Calgon Carbon competes with MeadWestvaco Corporation . It currently retains a Zacks #4 Rank, which translates into a short-term Sell rating.

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