Financial Performance

Summary of 2015 Financial Performance

During 2015, Calgon Carbon put the finishing touches on a transformation that provides us with the stability, strength and resources needed to execute on our long-term growth strategies.  As the year unfolded, however, the Company was faced with a number of challenges that immediately put the resiliency of our transformed business platform to the test.

These challenges included a stronger U.S. dollar, a slowing in global economic growth, an elongation of the time between activated carbon reactivation and exchange services required by certain municipal water market customers, and the continued regulatory delay of ballast water management regulation.  While the Company experienced a significant increase in sales to North American coal-fired power plants for the removal of mercury from flue gas emissions as a result of the Mercury and Air Toxics Standards that went into effect early in the year, the impact of the aforementioned challenges combined to result in total sales that declined to $535.0 million in 2015 from $555.1 million in 2014.

Despite the overall reduction in sales, our gross margin before depreciation and amortization (pre-D&A gross margin) was essentially unchanged at $191.5 million in 2015 versus $192.1 million in 2014. And as a percentage of sales, our pre-D&A gross margin increased 1.2 percentage points to 35.8% compared to 34.6% in the previous year.  This represents our third consecutive annual improvement and a cumulative 5.6 percentage point expansion of our pre-D&A gross margin from 30.2% in 2012, due in large part to our transformed business model - including our aggressive and ongoing $50 million cost improvement program.

Operating income declined to $64.8 million in 2015 compared to $74.6 million in the year prior, reflecting higher incremental depreciation and general and administrative costs, including those related to our activities to complete the launch of our upgraded global SAP system.

As a result, our net income for 2015 was $43.5 million, or $0.82 per fully diluted share, compared to net income of $49.4 million, or $0.92 per fully diluted share in 2014. (in the below table, dollars in thousands except per share data)                                        

Financial Highlights

2015

2014

2013

2012

Net Sales

 $ 535,004

 $ 555,103

 $ 547,939

 $ 562,255

Gross Margin %*

35.8%

34.6%

33.0%

30.2%

Operating Expense %

17.1%

15.7%

15.1%

16.6%

Income from Operations

 $ 64,794

 $ 74,605

 $ 68,889

 $ 39,861

Net Income

 $ 43,463

 $ 49,370

 $ 45,713

 $ 23,272

Net Income per Common Share (Diluted)

 $ 0.82

 $ 0.92

 $ 0.84

 $ 0.41

EBITDA %**

18.6%

18.6%

17.6%

11.3%

* Net sales less the cost of products sold as a percentage of sales (excluding depreciation and amortization).
** Earnings before interest, taxes, depreciation, and amortization as a percentage of sales.