Calgon Carbon Corporation (NYSE: CCC) announced that it expects to report a loss for the third quarter of 2012. This result is primarily due to charges associated with the company’s previously announced cost reduction program, including severance and an impairment charge for the permanent closure of its activated carbon manufacturing facility in Datong, China. Also contributing to the loss were lower gross margin before depreciation and amortization as discussed below; pension charges; and an agreement reached in July with the company’s former CEO.
Sales in the third quarter which are expected to be approximately $135 million were adversely affected by reduced utilization of activated carbon for the mercury removal market and delays in deliveries of activated carbon for the municipal and wastewater markets.
The company’s gross margin before depreciation and amortization for the third quarter of 2012 is expected to be approximately 27% versus 31% for the second quarter of 2012. The decline in gross margin was due to operational issues at the company’s Pearl River plant, unfavorable sales mix, and the write-off of inventory that was determined to be obsolete. The issues at Pearl River included maintenance, a capital improvement project, and damage caused by Hurricane Isaac. As a result of these issues, the plant did not operate as planned for most of the third quarter of 2012.
Commenting on the announcement, Randy Dearth, Calgon Carbon’s president and chief executive officer, said, “We aggressively pursued our cost reduction program in the third quarter, and all components of Phase I are now in place. The Pearl River plant is operating, and the process improvements that were implemented should be a key factor in lowering manufacturing costs in 2013.”Calgon Carbon will announce third quarter results and will webcast its quarterly conference call on Friday, November 2, 2012. Calgon Carbon Corporation, headquartered in Pittsburgh, Pennsylvania, is a global leader in services and solutions for making water and air safer and cleaner.