Calgon Carbon pressed to buy back $200M in stock
A New York investment firm that pushed two nominees onto Calgon Carbon Corp.'s board in March is now pressing management to buy back up to $200 million of its stock, accelerate cost-cutting and restructure its main business in order to boost shareholder value.
Starboard Value LP is “encouraged” by management's progress to improve profit margins but believes there's “additional opportunities” to widen them further, Starboard CEO Jeffrey Smith said in a letter to Calgon Carbon CEO Randy Dearth.
The firm has raised its stake in Calgon Carbon to 9.7 percent, up from 9.2 percent in March and 7.7 percent in January.
Calgon Carbon disclosed the letter in securities filing.
Starboard's letter was issued as Calgon Carbon, based in Robinson, is scheduled to release its third-quarter earnings on Tuesday. The company provides air- and water-purification products and services internationally.
Wall Street expects the company to report quarterly earnings of 22 cents a share, according to a poll of analysts by Bloomberg.
Annual earnings fell 41 percent last year to $23 million, or 41 cents a share, from $39 million, or 69 cents a share, mainly due to restructuring charges. Revenue increased 3.9 percent to $562 million from $541 million.
The company said in May it would reduce annual expenses by $30 million this year, including possible layoffs. The company employs about 1,200, including about 400 in Western Pennsylvania.
Calgon Carbon officials could not be reached on Monday.
In addition to stock buybacks and deeper expense reduction, Starboard requests Calgon Carbon spin off its activated carbon business to a publicly traded master limited partnership that the company would still control, in order to slash income taxes. Activated carbon, used for water purification, accounts for the bulk of Calgon Carbon's revenue.
“This is pretty common for (Starboard). They buy stock with the idea of looking to influence management's strategy,” said Daniel Mannes, a director and analyst at Avondale Partners LLC, Berwyn. He called the Calgon Carbon letter “more supportive toward management” than most Starboard letters he's seen.
Mannes also noted Starboard's letter surfaces just days before Calgon Carbon hosts an analyst and investor day in Scottsdale, Ariz., on Thursday.
Following pressure from Starboard in late 2012, Calgon Carbon agreed to add two Starboard-backed candidates to the company's slate of director nominees in March.
Calgon Carbon stock closed up 8 cents at $20.03.
Thomas Olson is a Trib Total Media staff writer. He can be reached at 412-320-7854 or at email@example.com.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Energy sector adjusts to global oil plummet
- New York farmers lament lost opportunity for gas riches
- U.S. coal mines nearing record low in worker deaths
- ‘Staff Pick’ is golden ticket on Kickstarter
- Drought opens Texas ranchers’ eyes to income options
- Natural gas groups says increase in Pennsylvania taxes would bring dire results for economy
- Kim Komando: Can you get a virus on your smartphone?
- Real estate union: Howard Hanna buys Langholz Wilson Ellis
- Agriculture prospects envisioned in Cuba
- Mind the time: Optimize last-minute shopping
- EDMC accused in GI Bill scheme