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Calgon Carbon Announces Second Quarter 2016 Results

calgoncarbon.com    8/9/2016 11:45:00 AM    ReadCount:671

Board Declares Dividend of $0.05 per Share
Q2 2016 Results:
Net sales totaled $132.6 million; an increase of 10.3% from first quarter 2016 net sales of $120.2 million
Gross margin (before depreciation and amortization) was 33.9%
Selling, administrative and research expense includes $1.3 million of transaction-related costs attributable to the Company’s planned acquisition of CECA’s activated carbon and filter aid business
Selling, administrative and research expense includes $0.7 million of pension plan settlement charges
Fully diluted EPS was $0.15
Calgon Carbon Corporation (NYSE: CCC) announced results for the second quarter ended June 30, 2016.
 
Net sales for the second quarter of 2016 were $132.6 million, as compared to $135.5 million for the comparable period in 2015. Currency translation had an immaterial impact on sales for the second quarter 2016. Compared to reported 2016 first quarter net sales of $120.2 million, second quarter 2016 sales increased sequentially by $12.4 million, or 10.3%.
 
Income from operations for the second quarter of 2016 was $12.2 million versus $19.8 million for the second quarter of 2015. Net income was $7.9 million for the second quarter of 2016 versus $12.6 million for the comparable period in 2015. On a fully diluted share basis, net income per common share for the second quarter of 2016 was $0.15 compared to $0.24 reported for the second quarter of 2015.
 
Second quarter 2016 income from operations includes $1.3 million of transaction-related costs attributable to the Company’s planned acquisition of the European activated carbon and filter aid business of CECA (a subsidiary of the Arkema Group) and $0.7 million of pension plan settlement charges.
 
For the second quarter of 2016, sales for the Activated Carbon and Service segment declined to $121.1 million as compared to $123.6 million for the same period a year ago. Potable water and specialty market sales were higher across all geographic regions. These increases were slightly more than offset by lower sales of powdered activated carbon for treating coal-fired power plant mercury emissions in North America, and lower sales to industrial and food market customers across all geographic regions. Compared to reported 2016 first quarter sales of $106.2 million, second quarter 2016 Activated Carbon and Service segment sales increased $14.9 million, or 14%, as quarterly sales improved sequentially across most end markets, with a particularly strong improvement in the North American potable water market.
 
Equipment segment sales in the second quarter of 2016 were $8.8 million compared to $9.6 million for the same period a year ago. Higher sales of carbon adsorption equipment were more than offset by lower ballast water treatment system sales.
 
Sales in the Consumer segment increased to $2.6 million in the second quarter of 2016 compared to $2.2 million in last year’s second quarter due to higher sales of carbon cloth for defense applications.
 
Net sales less the cost of products sold (excluding depreciation and amortization), as a percentage of net sales for the second quarter of 2016 was 33.9%, compared to 37.5% reported for the second quarter of 2015. The decrease in the margin percentage was primarily due to a decline in the volume of higher margin products. In addition, the 2015 second quarter included a $1.2 million, or an approximate one percentage point benefit, related to an import duty refund in conjunction with the Trade Preferences Extension Act of 2015.
 
Selling, administrative and research expense for the second quarter of 2016 was $23.3 million versus $22.6 million in last year’s second quarter. The increase is primarily due to the previously mentioned $1.3 million of costs related to the planned business acquisition and $0.7 million of pension plan settlement charges. These increases were partially offset by a decrease in expenses incurred in last year’s second quarter related to the Company’s SAP re-implementation project that was completed last year.
 
On August 3, 2016, Calgon Carbon’s Board of Directors declared a quarterly cash dividend of $0.05 per share, payable on September 15, 2016, to shareholders of record on September 2, 2016.
 
Commenting on the Company’s second quarter results, Randy Dearth, Calgon Carbon’s Chairman, President and Chief Executive Officer said, “Considering the softness we anticipated in certain of our end markets in the second quarter, we delivered solid overall financial results highlighted by revenues at the high end of our expectations. The diversity of our product solutions and end markets, combined with our ongoing commitment to reducing costs and increasing efficiency across our expanding global platform, were key contributors to this performance.
 
“While generating year-over-year revenue growth in the current economic environment is proving to be challenging, we continue focusing our efforts and investments on activities that will strengthen our core global franchise, improve our profitability and cash flow, and enhance shareholder value.
 
“Notably, I’m pleased to report that CECA has completed the works council consultation process and that we signed the definitive purchase agreement related to our planned acquisition of the European wood-based activated carbon and filter aid business of Arkema Group. We remain on track to close the transaction in the fourth quarter and continue to expect it to be accretive to earnings in 2017 by $0.08 to $0.11 per diluted share, excluding any purchase accounting impacts – and to add incremental value thereafter.
 
“In addition, we are today announcing the establishment of an additional cost improvement program expected to generate savings of more than $10 million, a majority of which are expected to be realized in 2017. This brings the total targeted annual cost and efficiency improvements from the inception of our multi-phased cost improvement program that we commenced in 2012 to more than $60 million,” concluded Mr. Dearth.
 
Conference Call and Webcast Details
 
The Company will be hosting a live conference call and webcast this morning at 9:00 a.m. Eastern Time to discuss its second quarter 2016 financial results.
 
To listen to, or participate in, the conference call, please phone 866-393-4792 shortly before the scheduled start time. International callers should phone +1 706-758-4301. The conference ID is 50723047.
 
The conference call will be re-broadcast beginning approximately two hours after the call concludes through August 19, 2016, at midnight Eastern Time. To listen to the re-broadcast, please phone 800-585-8367 or +1 404-537-3406. The ID for the replay is also 50723047.
 
The webcast is being hosted by NASDAQ OMX and can be accessed on Calgon Carbon’s website at www.calgoncarbon.com on the investor home page.
 
Pure Water. Clean Air. Better World.
 
Calgon Carbon Corporation (NYSE:CCC) is a global leader in innovative solutions, high quality products and reliable services designed to protect human health and the environment from harmful contaminants in water, and air. As a leading manufacturer of activated carbon, with broad capabilities in ultraviolet light disinfection, the Company provides purification solutions for drinking water, wastewater, pollution abatement, and a variety of industrial and commercial manufacturing processes.