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Calgon Carbon Announces Fourth Quarter 2003 Results

Board Declares Dividend

PITTSBURGH, Feb. 6 /PRNewswire-FirstCall/ -- Calgon Carbon Corporation (NYSE: CCC) announced results for the fourth quarter ended December 31, 2003.

Sales for the fourth quarter were $69.6 million versus fourth quarter 2002 sales of $62.6 million, an increase of 11.1%. Net income for the fourth quarter of 2003 was $2.0 million, as compared to $0.3 million for the fourth quarter of 2002, a 505.1% increase. Fully diluted earnings per share for the fourth quarter of 2003 were $0.05, as compared to $0.01 for the fourth quarter of 2002. Foreign currency translation had a $3.7-million positive effect on sales for the quarter due to the stronger Euro, and net income reflected a tax benefit due to a lower effective tax rate for the year.

Sales of activated carbon in the fourth quarter of 2003 versus the comparable period in 2002 declined slightly. Increased demand from the drinking water market in Europe and for specialty carbons in the U.S. was offset by weakness in the industrial process market in the U.S. Service sales were $25.2 million, an increase of 12.3%, driven by strong demand for potable water service in Europe. Engineered Systems sales increased 31.7%, due to increased contract revenue on contracts secured in the second and third quarters for perchlorate removal and UV disinfection of drinking water. Consumer sales increased 37.2% due to increased demand for charcoal.

Consolidated gross profit before depreciation and amortization as a percentage of net sales was 28.8%, versus 31.9% for the fourth quarter of 2002. Carbon and Service margins were adversely affected by product mix, increases in employee benefit costs, and competition in Europe, partially offset by the positive impact of sales in Europe of U.S-sourced, lower-cost carbon due to the stronger Euro. Engineered Systems margins improved versus the fourth quarter of 2002 due to a product mix change and a lower cost structure within the service business. Consumer margins improved due to increased charcoal manufacturing efficiencies.

Operating expense for the fourth quarter of 2003 was $1.5 million lower than for the comparable period of 2002. This 10.6% improvement was due to a reduction in employee-related costs and professional service expense, partially offset by negative foreign exchange translation.

A tax benefit of $0.6 million was recorded in the fourth quarter of 2003 to bring the company's overall annual effective tax rate to 1.6%. The tax benefit primarily related to a research and development tax credit project completed in the fourth quarter of 2003.

Sales for the twelve months ended December 31, 2003, were $278.3 million versus $258.1 million for the twelve months ended December 31, 2002, an increase of 7.8%. For the year, foreign currency translation had a positive impact of $14.6 million on sales. The change to the equity method of accounting for Calgon Mitsubishi Chemical Corporation, as the result of the joint venture formed by Calgon Carbon and Mitsubishi Chemical in 2002, had a negative impact of $4.4 million on the year-over-year sales comparison.

For the twelve months ended December 31, 2003, the company reported income before cumulative effect of accounting change of $4.5 million, versus $4.2 million for the comparable period of 2002, an increase of 6.2%. Net income for the year 2003 was $4.5 million, versus a net loss of $26.7 million in 2002. Earnings per share before the cumulative effect of accounting change on a diluted basis were $0.11 for both 2002 and 2003.

Calgon Carbon's board of directors declared a dividend of $0.03 per share. Dividends will be payable to shareholders of record as of February 23, 2004, and will be payable on March 9, 2004.

Commenting on the results, John Stanik, president and chief executive officer of Calgon Carbon, said, "We are pleased with the sales growth for both the quarter and the year, especially increases in our Service and Engineered Systems segments. However, intense competition in our Carbon and Service businesses continued to compress margins. We were also encouraged by fourth quarter sales growth in the Consumer and Engineered Systems segments, and by margin improvement in those segments which was partially due to cost efficiencies."

Looking ahead, Mr. Stanik continued, "In the short term, economic recovery in the U.S. and Europe will continue to be a major factor in the demand for Calgon Carbon's products and services. A solid backlog for UV and perchlorate removal systems should have a positive impact on sales in our Engineered Systems segment. Consumer sales will be driven by increasing demand for activated carbon cloth and the introduction of new tarnish prevention products."

"In the longer-term, sustained growth will depend on the successful implementation of our three-year strategic plan. We are off to an excellent start with the pending acquisition of Waterlink Specialty Products. We are making progress on all of our strategic initiatives -- strengthening our core businesses, applying technical knowledge to solve new purification problems, and expanding our geographical presence -- and expect them to have a significant positive impact on future results."

Calgon Carbon Corporation, headquartered in Pittsburgh, Pennsylvania, is a global leader in services and solutions for making air and water cleaner and safer. The company employs approximately 1,000 people at 14 operating facilities and 11 sales and service centers worldwide.

The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward-looking statements. This document contains certain statements that are forward-looking relative to the company's future strategy and performance. 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.

                          Calgon Carbon Corporation
                  Condensed Consolidated Statement of Income
                 (Dollars in thousands except per share data)
                                 (Unaudited)

                                           Quarter Ended   Twelve Months Ended
                                             December 31,       December 31,
                                            2003     2002      2003      2002

    Net Sales                            $69,624  $62,642  $278,322  $258,094

    Cost of Products Sold                 49,578   42,673   195,113   177,966

    Depreciation and Amortization          5,255    5,012    19,789    19,039

    Selling, Administrative & Research    12,876   14,409    55,826    51,828

    Restructuring Charge                     452      116       452       116

                                          68,161   62,210   271,180   248,949

    Income from Operations                 1,463      432     7,142     9,145

    Interest Income (Expense) - Net         (283)    (449)   (1,555)   (1,988)

    Equity Income (Loss) - Net               391     (186)      429      (186)

    Other Income (Expense) - Net            (155)    (401)   (1,646)   (1,548)

    Income Before Income Taxes,
      Minority Interest and Cumulative
      Effect of Accounting Change          1,416     (604)    4,370     5,423

    Provision (Benefit) for Income Taxes    (586)    (855)       64     1,315

    Income Before Minority Interest
      and Cumulative Effect of
      Accounting Change                    2,002      251     4,306     4,108

    Minority Interest                         31       85       179       114

    Income Before Cumulative Effect
      of Accounting Change                 2,033      336     4,485     4,222

    Cumulative Effect of Accounting
      Change                                 -        -         -     (30,926)

    Net Income (Loss)                     $2,033     $336    $4,485  $(26,704)

    Net Income per Common Share
      Before Cumulative Effect of
      Accounting Change
        Basic                               $.05     $.01      $.12      $.11
        Diluted                             $.05     $.01      $.11      $.11


                                           Quarter Ended   Twelve Months Ended
                                            December 31,        December 31,
                                            2003     2002      2003      2002

    Cumulative Effect of Accounting
      Change per Common Share
        Basic                               $-       $-        $-       $(.79)
        Diluted                             $-       $-        $-       $(.79)

    Adjusted Net Income (Loss) per
        Basic                               $.05     $.01      $.12     $(.69)
        Diluted                             $.05     $.01      $.11     $(.68)

    Weighted Average Shares
      Outstanding (Thousands)
        Basic                             39,006   38,963    39,000    38,939

        Diluted                           39,258   38,963    39,157    39,131


                          Calgon Carbon Corporation
                     Condensed Consolidated Balance Sheet
                            (Dollars in thousands)
                                 (Unaudited)

                                                December 31,      December 31,
                                                    2003              2002
                  ASSETS

    Current assets:

        Cash and cash equivalents                   $8,954            $4,093

        Receivables                                 46,133            45,490

        Inventories                                 51,811            48,665

        Other current assets                        24,210            18,169

            Total current assets                   131,108           116,417

    Property, plant and equipment, net             128,956           134,852

    Other assets                                    42,131            39,360

            Total assets                          $302,195          $290,629

    LIABILITIES AND SHAREHOLDERS' EQUITY

    Current liabilities:

        Short-term debt                               $604              $-

        Other current liabilities                   45,489            38,950

            Total current liabilities               46,093            38,950

    Long-term debt                                  53,600            57,600

    Other liabilities                               40,350            40,705

            Total liabilities                      140,043           137,255

    Minority interest                                  279                56

    Total shareholders' equity                     161,873           153,318

        Total liabilities and
         shareholders' equity                     $302,195          $290,629


                          Calgon Carbon Corporation

    Segment Data

    Segment Sales                          4Q03     4Q02   YTD 2003  YTD 2002

    Activated Carbon                      25,311   25,902   108,380   100,625
    Service                               25,182   22,421    96,198    93,494
    Engineered Solutions                  12,342    9,371    40,770    40,081
    Consumer                               6,789    4,948    32,974    23,894

    Total Sales (thousands)              $69,624  $62,642  $278,322  $258,094

    Segment
    Operating Income (Loss)*               4Q03     4Q02   YTD 2003  YTD 2002

    Activated Carbon                       3,570    4,115    14,012    16,307
    Service                                3,284    4,016    12,089    18,512
    Engineered Solutions                     531   (1,699)      141    (5,245)
    Consumer                                (215)    (872)    1,141    (1,274)

    Total Income from
      operations (thousands)              $7,170   $5,560   $27,383   $28,300

    *Before depreciation, amortization and restructuring

SOURCE Calgon Carbon Corporation