Calgon Carbon Announces Third Quarter Results

October 30, 2009 8:30 AM EDT

PITTSBURGH--(BUSINESS WIRE)-- Calgon Carbon Corporation (NYSE: CCC) announced results for the third quarter ended September 30, 2009.

The company reported net income of $13.9 million for the third quarter of 2009, versus $2.2 million for the comparable period of 2008. On a fully diluted basis, net income per common share for the third quarter of 2009 was $0.25 as compared to fully diluted net income per common share of $0.04 for the comparable quarter of 2008.

Income from operations for the third quarter of 2009 was $14.1 million, as compared to income from operations of $12.3 million for the third quarter of 2008.

Net sales for the third quarter of 2009 were $107.5 million versus third quarter 2008 sales of $99.1 million, an increase of 8.5%. Currency translation had a $2.3-million negative impact on sales for the third quarter of 2009 due to the stronger U.S. dollar.

For the third quarter of 2009, sales of Activated Carbon and Service increased by 10.6% versus the third quarter of 2008. The increase was due to favorable pricing and higher demand in areas of strategic focus, including products in the environmental air treatment market, as well as supply of activated carbon for a new potable water treatment facility in Asia. Equipment sales declined 9.5% versus the third quarter of 2008. The decrease was attributable to lower demand for traditional carbon adsorption and odor control equipment, and was partially offset by higher revenue from systems that employ ultraviolet light technology. A 23.7% increase in Consumer sales for the third quarter of 2009 was due to higher demand for activated carbon cloth.

Net sales less the cost of products sold as a percentage of net sales was 33.9% for both the third quarter of 2009 and the third quarter of 2008.

Selling, administrative and research expenses for the third quarter of 2009 and for the third quarter of 2008 were comparable. As a result of the quarter-over-quarter sales growth, selling, administrative and research expenses as a percentage of sales were 16.4% for the third quarter of 2009, versus 17.5% for the third quarter of 2008.

For the third quarter of 2009, the company reported a tax benefit of $0.8 million, versus a tax provision of $1.6 million for the comparable period in 2008. During the third quarter of 2009, the company determined that a sufficient amount of foreign source income had been generated to release $5.0 million of its valuation allowance on foreign tax credits. Absent this and other 2009 discrete events, the company estimates that its 2009 consolidated annual tax rate will be 38.4%.

Calgon Carbon's board of directors did not declare a quarterly dividend.

Net income for the nine months ended September 30, 2009 was $25.9 million versus $25.3 million for the comparable period of 2008. The 2009 results include the above mentioned $5.0 million valuation allowance release. The 2008 results include a non-recurring after-tax gain of $5.7 million from the settlement of a lawsuit, and a non-recurring after-tax gain of $3.2 million related to the sale of the company's charcoal business. Fully diluted net income per common share for the nine months ended September 30, 2009 was $0.46. Fully diluted net income per common share for the nine months ended September 30, 2008 was $0.48 which consisted of $0.42 from continuing operations and $0.06 from discontinued operations.

In May 2008, Accounting Standards Codification (ASC) 470-20 "Debt with Conversion and Other Options" was issued. ASC 470-20 affected the accounting treatment for convertible debt instruments that allow for either mandatory or optional cash settlements. ASC 470-20 affected the accounting associated with the company's senior convertible notes. Guidance within this ASC required the company to recognize additional non-cash interest expense based on the market rate for similar debt instruments without the conversion feature, as well as losses on induced conversions. ASC 470-20 was effective for fiscal periods beginning in 2009 and required retrospective application. The company adopted this accounting guidance in the first quarter of 2009 and, accordingly, the prior periods' financial statements included herein have been adjusted. Adoption of this guidance reduced previously reported earnings per diluted share for the third quarter and full year fiscal 2008 by $0.08 and $0.10, respectively.

Commenting on the results, John Stanik, Calgon Carbon's chairman, president and chief executive officer, said, "We are pleased with the third quarter performance. Sales of activated carbon for potable water treatment in Asia and for the removal of mercury from coal-fired power plants offset the decline in demand in our traditional markets that have been affected by the global economic slowdown. We are very encouraged by the demand for our activated carbon products in these emerging markets which we have identified as major growth opportunities for Calgon Carbon."

Calgon Carbon Corporation, headquartered in Pittsburgh, Pennsylvania, is a global leader in services and solutions for making water and air safer and cleaner.

This news release contains historical information and forward-looking statements. Forward-looking statements typically contain words such as "expect," "believe," "estimate," "anticipate," or similar words indicating that future outcomes are uncertain. Statements looking forward in time, including statements regarding future growth and profitability, price increases, cost savings, broader product lines, enhanced competitive posture and acquisitions, are included in the company's most recent Annual Report pursuant to the "safe harbor" provision of the Private Securities Litigation Reform Act of 1995. They involve known and unknown risks and uncertainties that may cause the company's actual results in future periods to be materially different from any future performance suggested herein. Further, the company operates in an industry sector where securities values may be volatile and may be influenced by economic and other factors beyond the company's control. Some of the factors that could affect future performance of the company are higher energy and raw material costs, costs of imports and related tariffs, labor relations, availability of capital and environmental requirements as they relate both to our operations and to our customers, changes in foreign currency exchange rates, borrowing restrictions, validity of patents and other intellectual property, and pension costs. In the context of the forward-looking information provided in this news release, please refer to the discussions of risk factors and other information detailed in, as well as the other information contained in the company's most recent Annual Report.

Calgon Carbon Corporation

Condensed Consolidated Statement of Income

(Dollars in thousands except per share data)

(Unaudited)

                               Quarter Ended            Nine Months Ended

                               September 30,            September 30,

                               2009         2008*       2009         2008*

Net Sales                      $ 107,495    $ 99,069    $ 301,218    $ 297,876

Cost of Products Sold            71,089       65,461      202,622      198,247

Depreciation and                 4,690        4,036       12,438       12,161
Amortization

Selling, Administrative &        17,596       17,311      52,929       50,756
Research

Gain from AST Settlement         -            -           -            (9,250  )

                                 93,375       86,808      267,989      251,914

Income from Operations           14,120       12,261      33,229       45,962

Interest Expense - Net           27           (1,258 )    24           (4,559  )

Loss on Debt Extinguishment      (899    )    (6,313 )    (899    )    (6,313  )

Other Expense - Net              (646    )    (701   )    (2,574  )    (1,269  )

Income From Continuing
Operations Before Income Tax     12,602       3,989       29,780       33,821
and Equity in Income from
Equity Investments

Income Tax (Benefit)             (787    )    1,593       5,187        12,067
Provision

Income from Continuing
Operations Before Equity         13,389       2,396       24,593       21,754
in Income from Equity
Investments

Equity in Income from Equity     470          38          1,338        337
Investments

Income from Continuing           13,859       2,434       25,931       22,091
Operations

Income (Loss) from               -            (211   )    -            3,236
Discontinued Operations

Net Income                     $ 13,859     $ 2,223     $ 25,931     $ 25,327

Net Income per Common Share

Basic:

Income from Continuing         $ .25        $ .05       $ .48        $ .53
Operations

Income (Loss) from             $ -          $ -         $ -          $ .08
Discontinued Operations

Total                          $ .25        $ .05       $ .48        $ .61

Diluted:

Income from Continuing         $ .25        $ .04       $ .46        $ .42
Operations

Income (Loss) from             $ -          $ -         $ -          $ .06
Discontinued Operations

Total                          $ .25        $ .04       $ .46        $ .48

Weighted Average Shares
Outstanding (Thousands)

Basic                            54,940       44,625      54,466       41,818

Diluted                          56,448       53,798      56,274       52,536

* Results have been retrospectively adjusted to incorporate the adoption of
guidance within Accounting Standards
Codification (ASC) 470-20 "Debt with Conversion and Other Options," formerly APB
14-1, "Accounting for Convertible
Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial
Cash Settlement)."

Calgon Carbon Corporation

Segment Data:

Segment Sales                 3Q09         3Q08        YTD 2009   YTD 2008

Activated Carbon and Service    94,230       85,219      261,376    257,401

Equipment                       10,558       11,662      32,784     32,101

Consumer                        2,707        2,188       7,058      8,374

Total Sales (thousands)       $ 107,495    $ 99,069    $ 301,218  $ 297,876

Segment

Operating Income (loss)*      3Q09         3Q08        YTD 2009   YTD 2008

Activated Carbon and Service    18,647       15,941      43,729     53,083

Equipment                       (60     )    588         1,877      4,550

Consumer                        223          (232   )    61         490

Income from Operations        $ 18,810     $ 16,297    $ 45,667   $ 58,123
(thousands)

*Before depreciation and amortization. The YTD 2008 period includes the
$9.3 million gain on AST settlement
($5.3 million Activated Carbon and Service and $4.0 million Equipment).

Calgon Carbon Corporation

Condensed Consolidated Balance Sheet

(Dollars in thousands)

(Unaudited)

                                            September 30,  December 31,

                                            2009           2008*

Assets

Current assets:

Cash and cash equivalents                   $ 15,529       $ 16,750

Restricted cash                               5,266          -

Receivables                                   62,296         64,515

Inventories                                   88,186         93,725

Other current assets                          26,571         25,598

Total current assets                          197,848        200,588

Property, plant and equipment, net            151,073        122,960

Other assets                                  57,684         63,714

Total assets                                $ 406,605      $ 387,262

Liabilities and Shareholders' Equity

Current liabilities:

Short-term debt                             $ -            $ 1,605

Current portion of long-term debt             -              7,903

Other current liabilities                     55,446         56,036

Total current liabilities                     55,446         65,544

Other liabilities                             60,072         68,441

Total liabilities                             115,518        133,985

Total shareholders' equity                    291,087        253,277

Total liabilities and shareholders' equity  $ 406,605      $ 387,262

* Results have been retrospectively adjusted to incorporate the adoption
of guidance within Accounting Standards
Codification (ASC) 470-20 "Debt with Conversion and Other Options,"
formerly APB 14-1, "Accounting for Convertible
Debt Instruments That May Be Settled in Cash upon Conversion (Including
Partial Cash Settlement)."

    Source: Calgon Carbon Corporation

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