Calgon Carbon Corporation (CCC) has bagged a $2.4 million contract from the City of Cincinnati, Ohio, to provide an ultraviolet (UV) disinfection system for its Richard Miller water treatment plant.
By the end of 2010, Pennsylvania-based Calgon Carbon will deliver eight Sentinel® 48″ Chevron reactors. The company will treat up to 240 million gallons of drinking water per day. Calgon claims that the Chevron 48 reactors can disinfect up to 50 million gallons of drinking water per day.
Calgon Carbon is optimistic about its development in the UV-based disinfection market and the water treatment market in China. The company currently has a market share of 25% to 33% in the total UV-treated drinking water in the country. We expect Calgon Carbon to realize substantial top- and bottom-line growth as this market matures and orders increase in the long term.
However, the 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). Products from Trojan are more resourceful and can adapt better to situations for developing more advanced or cost-effective technologies, increasing its market share, or leveraging distribution networks.
Calgon Carbon, headquartered in Pittsburgh, Pennsylvania, is a global leader in services and solutions for cleaning water and air. The company has a long experience in supplying filter housings and activated carbon filters for indoor air purification, industrial air purification and military applications.
Earlier this month, Calgon Carbon received a federal contract from the U.S. Army Contracting Command, Illinois, for the 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.
We believe that the contracts should help Calgon Carbon further strengthen its position in the air and water filtration markets.
We reiterate our Neutral recommendation on Calgon Carbon, which is supported by the short-term (1 to 3 months) Zacks #3 Rank (Hold).
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