Press Release

Calgon Carbon Announces Fourth Quarter and Full Year 2015 Results

PITTSBURGH, PA  –  02/19/2016

• Board Declares Dividend of $0.05 per share
• Q4 2015 Results:
  Net sales total $130.9 million including $3.9 million unfavorable impact from currency translation; gross margin (before depreciation and amortization) as a percentage of net sales was 33.6% – both in line with expectations
  Fully diluted EPS was $0.15
• Full Year 2015 Results:
  Net sales total $535.0 million including a $22.8 million unfavorable impact from foreign currency translation, versus $555.1 million last year
  Gross margin (before depreciation and amortization) as a percentage of net sales increased to 35.8% compared to 34.6% for 2014
  North American mercury removal market revenues doubled to $58.2 million from $28.7 million in 2014
  Fully diluted EPS was $0.82
  Value returned to shareholders in the form of dividends and share repurchases totaled $45.4 million

Calgon Carbon Corporation (NYSE: CCC) announced results for the fourth quarter and year ended December 31, 2015.

Income from operations for the fourth quarter of 2015 was $10.7 million versus $18.8 million for the fourth quarter of 2014. Net income was $7.7 million for the fourth quarter of 2015 versus $12.1 million for the comparable period in 2014. On a fully diluted share basis, net income per common share for the fourth quarter of 2015 was $0.15 compared to $0.23 reported for the fourth quarter of 2014.

Current year fourth quarter income from operations includes $2.4 million in pre-tax costs related to fixed asset accelerated depreciation charges and higher than anticipated project-related expenses and pension plan settlement costs. Income tax expense was favorably impacted by $1.1 million in tax benefits related to the U.S. federal research and development tax credit.

Net sales for the fourth quarter of 2015 were $130.9 million, as compared to $140.6 million for the fourth quarter of 2014. Currency translation had a $3.9 million unfavorable impact on fourth quarter 2015 sales due to the stronger U.S. dollar.

For the fourth quarter of 2015, sales for the Activated Carbon and Service segment were $118.9 million, a decline of $7.3 million from the same period a year ago. Excluding $3.7 million of unfavorable currency translation adjustments, sales declined $3.6 million. Environmental water and environmental air market sales in the Americas were higher. These increases were more than offset by lower potable water market sales in Asia, as a large initial fill that occurred in last year’s fourth quarter did not repeat in the current year, as well as lower industrial process market sales primarily in the Americas and Europe, and lower food market and respirator product sales in the Americas.
Equipment segment sales in the fourth quarter of 2015 declined to $9.3 million in comparison to $12.2 million for the same period a year ago, primarily due to lower ballast water treatment system equipment sales.

Sales in the Consumer segment increased to $2.7 million in the fourth quarter of 2015 compared to $2.3 million in the last year’s fourth quarter primarily due to higher sales of carbon cloth for both medical and defense applications.

Net sales less the cost of products sold (excluding depreciation and amortization), as a percentage of net sales for the fourth quarter of 2015 was 33.6%, compared to 35.9% reported for the fourth quarter of 2014. The negative impact of the lower sales and a less favorable product mix were partially offset by the favorable impact of lower coal costs and the Company’s focus on cost and operational efficiency improvements.

Depreciation and amortization expense was $9.7 million in the fourth quarter of 2015 compared to $8.3 million in last year’s fourth quarter. Depreciation expense in the fourth quarter of 2015 includes incremental depreciation expense resulting from new fixed assets placed in service as well as $1.1 million in accelerated depreciation related to assets no longer in service as of December 31, 2015.

Selling, administrative and research expense for the fourth quarter of 2015 was $23.6 million versus $23.3 million in last year’s fourth quarter.
Income from operations for the fourth quarter of 2015 was $10.7 million compared to $18.8 million for the same period last year. The decline was due to the combination of the lower sales, the less favorable mix of sales, and the higher depreciation expense in the current year fourth quarter.

The effective income tax rate for the fourth quarter of 2015 was 23.2% compared to 33.3% in last year’s fourth quarter. The lower tax rate was due to favorable income tax adjustments recorded in the current year fourth quarter primarily related to the U.S. federal research and development tax credit.

The Company continued its open market stock repurchase program and used $12.1 million to repurchase 739 thousand shares of Calgon Carbon common stock during the fourth quarter of 2015. For the full year, the company repurchased approximately 2.0 million shares of Calgon Carbon common stock for approximately $35.0 million. At December 31, 2015 the Company has approximately $72.3 million of remaining authorization for additional common stock repurchases.

On February 17, 2016, Calgon Carbon’s Board of Directors declared a quarterly cash dividend of $0.05 per share, payable on March 15, 2016, to shareholders of record on March 4, 2016.
Net sales for the year ended December 31, 2015, were $535.0 million, compared to net sales of $555.1 million last year. Excluding the $22.8 million unfavorable impact from foreign currency translation, net sales increased slightly from last year. Activated Carbon and Service segment sales decreased 2.3% year-over-year. Excluding the negative impact of currency translation, Activated Carbon and Service segment sales increased 2.0%. Equipment segment revenue for the year ended December 31, 2015 declined 13.3%, or $6.0 million versus the comparable period of 2014. Consumer segment sales declined 20.8%, or $2.4 million year-over-year.

For the year ended December 31, 2015, the Company reported income from operations of $64.8 million versus $74.6 million for the year ended December 31, 2014. Net income for the year ended December 31, 2015, was $43.5 million versus $49.4 million for the year ended December 31, 2014. Earnings per common share on a fully diluted basis were $0.82 for the year ended December 31, 2014, as compared to $0.92 per common share for the year ended December 31, 2014.
Randy Dearth, Calgon Carbon’s Chairman, President and Chief Executive Officer commented, “As expected, our fourth quarter results were reflective of the continued slowdown in the global economy, particularly in the industrial sector, as well as seasonally light demand for our mercury removal products.”

Commenting on the full year, Mr. Dearth continued, “The impact of the slowing global economy as well as other challenges across our markets resulted in full year financial performance below our initial expectations.”

“I am, however, pleased with the quality of our results, and believe they demonstrate the effectiveness of our cost improvement and operational efficiency initiatives.”

“Looking ahead, we will continue to execute on our objectives to foster future growth. While I expect market uncertainties to persist through at least the early portion of 2016, I believe we have the platform and strategies in place that position us favorably as conditions improve.”

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.

Contact:
Dan Crookshank
Director – Investor Relations
Direct Dial: 412-787-6795
dcrookshank@calgoncarbon.com