Calgon Carbon Corp. (CCC) announced on Thursday that it received a federal contract from the U.S. Army Contracting Command, Illinois, for supply of air filtration machinery. The contract is valued at a minimum of $1.9 million with a potential value of $5.1 million over a period of three years.
Calgon Carbon, headquartered in Pittsburgh, Pennsylvania, is a global leader in services and solutions for making water and air safer and cleaner. The company has a long experience in supplying filter housings and activated carbon filters for indoor air purification, industrial air purification and military applications.
We believe that the contract should help Calgon Carbon further strengthen its position in the air filtration market including containment and indoor air quality products and services.
At its analyst day earlier this month, Calgon Carbon discussed its strategic plans for the period 2010–2015. Calgon Carbon is focusing on emerging markets. The company stated that focus on Asia should drive earnings growth from 2010 to 2015.
Calgon Carbon is also optimistic about its development in the ultraviolet (UV)-based disinfection market and water treatment market in China. Calgon Carbon currently has a market share of 25% to 33% in the total UV-treated drinking water. We expect the company to realize substantial top and bottom line growth as this market matures and order increases in the long term.
However, UV technology products face significant competition from Trojan Technologies Inc. (Ontario, Canada), jointly owned by Danaher Corp. (DHR) and Wedeco Ideal Horizons (Charlotte, North Carolina) owned by ITT Corp. (ITT). These competitors are more resourceful and can adapt better to situations for developing more advanced or cost-effective technologies, increasing its market share, or leverage distribution networks.
Moreover, Calgon Carbon faces weak demand for its carbon products, its major business segment. Lower demand in many of Calgon Carbon’s end markets has resulted in a considerable decline in Activated Carbon and Service sales volume. We expect volumes in the segment to remain challenging in 2010 as the end-markets are yet to recover fully.
Currently, we remain Neutral on Calgon Carbon.
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