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Calgon Carbon Provides Update To Shareholders

Any repurchases will not impede our ability to fund other strategic investments as we build for the future.

Expanded Cost Improvement Program and Execution of Long Term Coal Contracts

At Investor Day, we also announced a $10 million expansion of the Company’s cost reduction program, bringing to $40 million the total annual cost improvements. We expect to realize annual improvements of $30 million in 2015 and the full $40 million in 2016.

We also discussed the importance of securing high performing coal with the lowest total cost of ownership to produce activated carbon at our two virgin plants and to increase the amount of coal under long-term contract.

In order to determine the right price point, we studied purchase costs, inbound transportation, handling, plant productivity, and first time quality of activated carbon. Our results identified several bituminous coals/blends that perform better than our traditional coals/blends.

I’m very pleased that we have recently contracted with two highly regarded coal companies for the supply of bituminous coal that meets our cost/performance criteria. The terms are competitive with the current metallurgical coal market and are structured to protect Calgon Carbon from the frequent large swings of this coal market. Both contracts will begin immediately and expire at the end of 2018. And as a result, our coal under contract for that term is now approximately 70%.

Additional Transformation Milestones

Calgon Carbon has made significant progress on a number of fronts in 2013, a few of which were highlighted at Investor Day.

  • Improvements in key operating metrics – We have meaningfully improved our cost of goods sold, operating expense, EBITDA margin, and cash flow as a result of the implementation of our highly successful cost improvement program.
  • Milestone achieved in growing reactivation capabilities – We have increased our reactivation production capacity to approximately 250 million pounds a year and solidified our leadership position, a linchpin of our growth strategy in a highly attractive market.
  • Momentum shift in sales of ballast water treatment systems – Implementation of the new global regulatory framework draws closer, positioning Calgon Carbon to benefit from a unique growth opportunity, and to that end we received more orders in the second and third quarter of this fiscal year combined than we received over the previous two-year period. In addition, earlier this month Hyde Marine launched the Hyde GUARDIAN Gold™ Ballast Water Treatment System, an important new product with IMO type approval and AMS designation from the U.S. Coast Guard that offers the smallest footprint of any BWTS in the maritime industry.

We are firmly committed to enhancing our competitive position and creating shareholder value as we pursue our transformation initiatives.

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