Calgon Carbon Corporation (CCC), the water and air purifying systems manufacturer, earned profit of 23 cents in the fourth quarter of 2009 compared with 11 cents in the fourth quarter of 2008. Reported earnings surpassed the Zacks Consensus Estimate of 15 cents and the market estimate of 16 cents.

Quarterly profit more than doubled on strong demand for air treatment products. For the full year, Calgon earned $39.2 million, or 69 cents per share, on $411.9 million in sales.

Revenues in the quarter were up 8% year over year to $110.7 million. Pricing and greater demand for activated carbon, used to remove mercury from coal-fired power plant gas, helped the growth in revenues and profits. Sales in Calgon Carbon’s biggest segment, Activated Carbon and Service Incorporatedreased 14% to $96.8 million in the reported quarter versus the fourth quarter of 2008.

The increase was primarily driven by a higher demand for activated carbon products in the environmental air treatment market and higher pricing in the food and potable water markets.

However, Equipment sales fell 26.7% to $11 million on lower demand for ion exchange, odor control and traditional carbon adsorption systems. Consumer sales for the quarter increased 20.1% to $2.7 million due to higher demand for activated carbon cloth and PreZerve® products. Net sales for the year ended December 31, 2009 were $411.9 million, versus $400.3 million for the comparable period in 2008, an increase of 2.9%.

Gross margin for the quarter was 42.2%, higher than 33% for the fourth quarter of 2008. The increase was primarily due to higher pricing for certain activated carbon products and services.

Selling, administrative and research expenses rose 19% to $20.8 million in the quarter due to acquisition costs, legal expenses and higher employee-related costs. Cash and cash equivalents were $38.1 million as of December 31, 2009, compared with $16.7 million in the previous year.

We are optimistic about Calgon Carbon’s focus on the growing demand for activated carbon used in potable water treatment in Asia and to remove mercury from the emissions of coal fired power plants. We believe this would drive growth meaningfully in 2010.

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