Thanks very much. Good afternoon and thank you for joining us. Our speakers today are Randy Dearth, Calgon Carbon’s CEO, who, as we announced yesterday, will add Chairman of the Board to his title on May 1st; Bob O’Brien, our Chief Operating Officer; and Steve Schott, our CFO. The presentations will follow our standard format, opening remarks from Randy review of the third quarter financials by Steve. And operations report from Bob, then Q&A. Before we begin, please be advised of the Private Securities Litigation Reform Act of 1995 provides a Safe Harbor for forward-looking statements. Today’s presentations or perhaps some of the comments that Calgon Carbon’s executives make during the Q&A may contain statements that are forward-looking. Forward-looking statements typically contain words such as expect, believe, estimate, anticipate, or similar words indicating that future outcomes are uncertain. Statements looking forward in time including statements regarding future growth and profitability, price increases, cost savings, product lines, enhanced competitive posture and acquisitions are included in the company’s most recent Annual Report pursuant to the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995. They involve known and unknown risks and uncertainties that may cause the company’s actual results in future periods to be materially different from any future performance suggested during this webcast. Further, the company operates in an industry sector where securities values may be volatile and may be influenced by economic and other factors beyond the company’s control. Some of the factors that could affect future performance of the company or changes in or delays in the implementation of regulations that cause the market for our products, acquisitions, higher energy and raw materials costs, costs of imports and related tariffs, labor relations, capital and environmental requirements, changes in foreign currency exchange rates, borrowing restrictions, validity of patents and other intellectual property, and pension costs. In the context of the forward-looking information provided in this call and webcast, please refer to the discussions of risk factors and other information detailed in, as well as the other information contained in the company’s most recent Annual Report. Randy?

Thanks, Gail and good afternoon, everyone. Calgon Carbon’s solid financial results for both the fourth quarter of 2013 and the full year, were driven primarily by the successful implementation of our 2013 initiatives, including our global cost and efficiency improvement program. Although we were successful in improving various metrics, I am particularly pleased with the increasing gross margin percentage over the past year. In the first quarterly conference call after joining Calgon Carbon, I told you that I was unhappy with the decline in the company’s gross margin, and I subsequently made margin improvement a top priority at Calgon Carbon. The sequential increase in the fourth quarter gross margin from 33.3%, to 34.3% represents the fifth consecutive quarter of improvement in that metric. During my first quarter as CEO, our margins were 27.3%. And comparing that with most – our most recent results, shows an increase of 700 basis points. We have made excellent progress in this area, and margin expansion will continue to be a priority in our long term strategy for profitable improvement. In addition to the benefits derived from the cost improvement and efficiency program, process improvements made last year at our Pearl River plant, also had a positive impact on the results for the year, including lower operating expenses, and realization of the approximate 8 million pounds of additional virgin carbon capacity. Our product rationalization program which eliminated 45% of our SKUs, also contributed to lower operating cost at our carbon manufacturing facilities. Let’s talk about revenue for the year. When comparing 2013 to 2012, we note that we had lower sales at Hyde Marine, lower pricing in the mercury market, and unfavorable foreign exchange which totaled approximately $39 million. These losses were partially offset by our approximate $10 dollar price increase in our Carbon and Service segment as well as growth primarily in our CNS segment. We will continue to review the sales-margin relationship, but in the short term, we remain focused on sales that improve margins, especially those based on the carbon that we manufacture. The improvement in other metrics clearly demonstrates that our success in 2013 was not limited to margin improvement. For example, operating expense year-over-year decreased by $10.4 million. As a result, operating expense as a percent of sales, improved from 16.6% in 2012, to 15.1% in 2013. EBITDA as a percentage of sales, increased from 11.3% to 17.6%. And of course, 2013’s net income of $45.7 million compared very favorably with the $23.3 million for 2012. I will be back later in the call to discuss certain strategic opportunities. In the meantime, Steve will present a summary of the financial results for the fourth quarter, and Bob will provide a review of operations. Steve?

Thanks, Randy. Good afternoon, everyone. Total sales for the fourth quarter of 2013 were $133.1 million, versus $141.8 million in the fourth quarter of 2012, a decrease of $8.7 million or 6.1%. Currency translation had a negative impact of $1.6 million for the fourth quarter of 2013 due to the weaker Yen. Regarding our segments, sales in the activated Carbon and Service segment decreased $10.9 million, or 8.6% for the fourth quarter of 2013 compared to 2012’s fourth quarter. The decrease was primarily due to several factors including lower demand for granular activated carbon for municipal drinking water in Asia, of approximately $9 million, that resulted from a large 2012 carbon fill and earlier than expected 2013 deliveries to our customers in Japan. In addition, pricing for powdered activated carbon for U.S. mercury removal, stemming from the 2012 renegotiation of a prior five-year contract, reduced our fourth quarter 2013 revenue by $3.2 million. Finally, currency translation had a negative impact of $1.6 million on sales for the fourth quarter due to the weaker Yen. Partially offsetting these declines, was an increase in demand for activated carbon products and services in the environmental water treatment market. Equipment sales increased $1.5 million, or 12.4$ for the fourth quarter of 2013, as compared to 2012’s fourth quarter, primarily due to higher revenue for traditional carbon equipment of $1.9 million partially offset by lower revenue for ballast water treatment systems. Sales for the consumer segment increased approximately $700,000 or 25.1% for the fourth quarter of 2013 compared to 2012’s fourth quarter. Net sales less cost of products sold before depreciation and amortization, as a percentage of net sales, was 34.3% in the fourth quarter of 2013, compared to 31.2% in the fourth quarter of 2012, an increase of 3.1 percentage points. The increase was…

Thanks very much, Steve. Next, Bob will present the operations review for the quarter. Bob? Bob O’Brien: Thanks, Gail. Let me start with our manufacturing area where we have a number of activities underway. First, our virgin carbon production facilities, Big Sandy, Kentucky, and Pearl River, Mississippi continue to operate well in Q4, producing a full capacity. The investments that we made at our Pearl River facility in 2012 are performing at or above our expectations. In 2013, as part of our cost improvement and efficiency programs, we initiated a number of capital projects at our Big Sandy plant. Many of these projects which included investments to improve the consistency of our steam supply and increase our coal handling capabilities, will also increase our capacity by approximately 5 million pound per year. Further, building on the success of our Pearl River expansion, the board has also recently approved a $17 million capital upgrade to one of our three existing Big Sandy production lines which is again targeted to reduce costs while increasing our production by an additional 9 million pounds per year. This important project is expected to be completed in early 2016. In addition to our capital investments, our operational excellence program where we have engaged an outside consultant to critique, challenge, and modify our operating methods and procedures, is proceeding as planned. The work of the consultant will wrap up in Q2 of 2014. Further it should be also noted that during the fourth quarter, we successfully negotiated two 3-year coal contracts that should provide significant savings per ton going forward. We now have 70% of our coal needs under long term contracts. With our expectations for future growth in the activated carbon market, in the Americas and in the rest of the world, we are continuing to…

Thanks, Bob. Next, Steve will comment on the outlook for the first quarter. Steve?

Thanks, Gail. Sales, our first quarter sales are expected to decline slightly sequentially. Net sales less cost of products sold as a percentage of net sales, while expected to continue to improve for the full year of 2014, is expected to be flat or show only a modest increase sequentially. Operating expenses are expected to increase slightly sequentially. In January, we launched our SAP re-engineering project. This is a significant project aimed at substantially improving our ERP system functionality. We estimate this project may increase our operating expenses by as much as $1 million in each quarter of 2014. Finally, we expect our 2014 full year tax rate to approximately 34%.

Thanks, Steve. Next, Randy will discuss certain strategic opportunities.

In our investor day, Steve spoke about our strong financial profile. And I identified four different strategic opportunities to increase value through deployment of our balance sheet. These include M&A, investing in existing plants, investing in new production facilities, and returning value to shareholders. Let’s discuss M&A first. I have nothing to announce today, but identifying acquisition candidates is an ongoing effort with a focus on strengthening our activated carbon and related service business. We do have a team in place that is evaluating various candidates. Next, investing in existing plants. At investor day, I reported that demand for activated carbon is expected to grow at a 10.8% compounded annual growth rate from 2012 through 2017. In order to capitalize on this significant increase in demand, we must consider expanding our virgin carbon production capacity. In his remarks, Bob mentioned capital improvement projects under way that will also incrementally increase virgin production capacity. In fact, we expect to realize more than 18 million pounds of virgin capacity in 2016 as a result of these projects. Let me note that these incremental pounds are in our cost improvement program which I will address shortly. We will continue to look for, and invest in projects that both improve the cost and efficiencies of our existing plants, and at the same time, add incremental production capacity. However, in order to take full advantage of the projected increase in demand for virgin carbon in the coming years, we must look to another source for additional capacity. As I discussed at investor day, selling more outsourced product is a possible solution that this approach would dilute our margins. So that brings us to our third option for utilizing our balance sheet to create value. Building a new carbon manufacturing facility. Over the past 18 months,…

(Operator instructions). Your first question comes from the line of Kevin Maczka of BB&T Capital Markets.

Thank you. Randy, first question. You’ve obviously been making great progress on the cost side, but I want to start with the top line. You’re mentioning again the 10% CAGR forecast that we see and I’m just trying to square that with our activated carbon revenues being flat or slightly down the last two years and I guess we’re forecasting down again as we go into Q1. Can you just talk a little bit about the core business x mercury and how did we do in 2013 from a volume and price standpoint? And if we freed up, I think Bob said 13 million of additional pounds, how are we not getting more volume left?

Yes, good afternoon, Kevin. Let me start first by talking a little bit about revenue and the 10.8% CAGR. The 10.8% CAGR is represented to you in Phoenix, really focused on the fact that the mercury market will be developing in 2015 after the MATS rolling takes effect, and also the fact that we see tremendous opportunity growing in China in the coming years. Okay, so that addresses the 10.8. When you look again at our revenue, year-over-year, let’s break that down again, Hyde Marine for instance, you know, we’re looking a number there, year-over-year, of $15.5 million difference from 2013 to 2012. As Steve pointed out, the exchange rate, again, year-over-year, $11.6 million, not insignificant. And then we mentioned the mercury market, indeed that is one customer within the mercury market that year-over-year not because of volume, but strictly because of pricing, was down $11.7 million. So those three in and of themselves, you know, is a $39 million year-over-year decrease. Bob, you want to comment on the capacity? Bob O’Brien: Well, I think, to your point, we are growing the Carbon and Service business, but it’s being masked by those three negatives, or headwinds that we faced in 2013. So we are seeing growth now as we explained, I think when we were in Phoenix, capacity is tight on our virgin carbon plants, so we are making sure, number one, that we are selling those products to the people who are willing to pay us frankly, the most money and see the value of the products that we deliver. And we’re continuing to look at ways to incrementally increase that capacity. And certainly, we talked about that today. In the short term, besides those actions, we need to continue to look to fill up the capacity that we have in our reactivation facilities, and we are making progress there across the world, our capacity percent utilization is increasing in Europe, it’s increasing in the U.S., and it’s increasing in China. So we’re making headway there. We need – in the short term, to be a better distributor of products that we purchase from Asia, and that’s one of our focuses in 2014 and we’re doing that. So we think we are growing in the Carbon and Service market in 2014 and certainly then in anticipation of bigger growth rates in 2015 with the mercury market taking hold.

We’ve always described the core business as kind of a GDP type grower. Did we – again, when you back out in mercury and Hyde, and just think about the core carbon business, did we have that kind of experience in ‘13 and is that again the way to think about it? Is that what you’re describing, Bob for ‘14? Bob O’Brien: Yes, I think you know, the core business does grow relatively around the GDPs and then the – I’ll use the word kicker, it’s based on regulations because a lot of our business is environmentally oriented. So if there are new regulations that are adopted in a given country that affect drinking water standards, or waste water standards, or air standards, that can be a significant boost to our opportunities. And of course, that’s what we’re looking for in the U.S., in the mercury market and which we’ve been seeing in the water treatment market and those – by-products for the last few years. So I think our core business is strong, is growing relative to the GDPs of the various markets that we’re in and then the – any changes in regulations or additional regulations give us the opportunity to grow in the environmental markets.

And Kevin, if I can jump in again and just to add on what Bob said, and I’ve said this many times to our shareholders, is that, you know, 2013, 2014, we have been looking at our traditional business and looking at the margin improvement knowing that mercury is in 2015 is out there. We’re at the footholds of that right now, and I’m really pleased despite these three major revenue headwinds if you will, I’m really proud of the fact that our team focused on the margin, taking out the products we took out, really focus on higher-end customers and end markets and I think that – I’m really proud and successful that we’ve been able to do that. And now with our advanced FLUEPAC products, we’re really positioning ourselves for the mercury space and that excites us quite a bit.

Right, and just the final follow up for me on that point, I guess, so if we’re running effectively sold out in Pearl River and Sandy, I mean, the way that you can sell more in a core business is you add in capacity, raise price or maybe even do more outsourcing, which I guess, you would probably not be the first choice. But new capacity, it sounds like you’re evaluating but that’s a slow process to bring on board. Price increase, as you’ve already done some of that and you’re not very keen on further outsourcing, so again, revenues down sequentially in Q1, is that kind of the way to think about the core business for, at least, for the next few quarters? Bob O’Brien: Well, I think you may have miscast our desire to sell outsource products. I mean, I think, that is part of our strategy and if demand increases in the US as we expect, what we’ll be doing is keep more of our production capacity or keeping more of the product that we make in the US, in the Americas, and we will shift more of our business in Europe and Asia to outsource. So, selling more outsource product is one of our growth strategies. As Randy mentioned, we would sell that at a lower margin, but its still would be an attractive sale for the company. It would increase our top line and also increase our bottom line. So I think you should think in the short term, again, that keeping the products that we make in the US at home and looking to sell more outsource product in Asia and in Europe is the way we’re going to grow in the carbon and service business. Along with filling up our reactivation capacity, because that is an area where we do have adequate capacity to increase sales in all regions of the world.

Okay, got it. I will get back in line.

Your next question comes from the line of Michael Gaugler of Brean Capital.

Afternoon, everyone. Bob O’Brien: Hey, Mike.

Hi, Mike.

Just some housekeeping items, on the gross margin, did you get a bump basically due to the decline in sales in Japan?

Yes; modest but yes.

Okay, and then the other item. I knew you had guided to a slightly higher tax rate, I think, as recently as last quarter and it came in a little better than anticipated. Was there anything behind that?

Mike, just some – I’ll call them housekeeping items when we filed our 2012 tax return, we noticed an incremental benefit to some of our assumptions we had made around the domestic manufacturing deduction and so with that recognized in the third quarter we did adjust in Q4 slightly to reflect the appropriate 2013 benefit. The lower sales in Japan also helped, that’s our highest tax jurisdiction at over 40%. So, there were a combination of factors. In the full year, at 32%, benefited approximately two full percentage points from the Datong sale that we had in the first quarters; so taking them out, you normalize the 34 and that’s what we think the rate will be in 2014 as well.

Okay. Thanks, guys. Appreciate it.

Sure.

Your next question comes from the line of Ben Kallo of Robert Baird.

All right. Thanks for taking my question. As far as capacity expansion goes, you talked about Greenfield and then moving on past that to Brownfield Pearl River, and I remember talking about expanding Pearl River six or seven years ago. Why even look at a Greenfield there? Are there obstacles at Brownfield at Pear River? And when you decide you [ph] green light, how long does it take to get that up and running? Is there still permitting there to do. Bob O’Brien: We’re trying to find the long-term, having the production in place in the right area that would allow us to make product competitively for the next 20 or 30 years. So having the plant situated where we think we can have good coal supplies that allow us to make products which are very competitive in the marketplace is a consideration. So, as we’re looking at how we expand or where we expand, that is a big part of our decision, where do we think we can have good coals in competitive cost. So we’ve looked at a number of couple – a number of different sites. And at least, at this stage, Pearl River seems like it could be an attractive market. We still have – an attractive area. You call it a Brownfield site, I mean, it’s an existing plant location, right? When we built the Pearl River facility, in 1991, we laid it out actually to be able to have three production sites. So the infrastructure is in place to allow it to be expanded, relatively, economically – and much more economically compared to a Greenfield site, so that’s one of the things that we are taking in to consideration.

And as far as timing, when is – you have a green light there if you decided to move forward? Bob O’Brien: It would be close to three years from now, two and a half to three years from now.

Okay, and then – thank you. On the react side, it looks like you’re building out – continue to build out capacity on react. Can you talk about why that is, what’s driving that decision and then, we talked about for a long time moving the virgin to react – free up virgin capacity. Is there any way you can quantify how much of that has actually been done so far? Bob O’Brien: Okay, your first question on industrial capacity. Our big reactivation capacity – our big reactivation facilities industrial in the US or at Neville Island, just outside of Pittsburgh here and at our Catlettsburg Kentucky facility, both of those furnaces are fairly old and go back into the 1970s. So, both of them are in need of some major upgrade from a maintenance standpoint. So we decided that the Neville Island site was the best one to make first investment from a modernization and we also looked at what we can do from a capacity standpoint and for relatively small amount of money, we were able to have a fairly significant increasing capacity. So we’re actually planning for the future, and if the market doesn’t really grow, we’ll be able to handle the majority of our needs at the Neville Island facility and drive our cost down. So we basically made a strategic decision. We had to spend money there and adding a little bit more capacity just seemed like a pretty good decision to make.

Great. And my last question, Bob; when you look at just the overall market and capacity out there, could you just update us where we are on – and I know each market is different but maybe just focus on the mercury market where we are on supply and demand and where you expect that to shake out in a year if new capacity is coming online anywhere that you see. Any thoughts you have there. Thanks. Bob O’Brien: Yeah. I don’t think we’re aware of any new capacity coming online in the US for any virgin carbon product targeted for the mercury market or not. I think we’ve continued to say the range for carbon supply in the mercury market could be – correct me like [ph] –

400 million to 700 million. Bob O’Brien: 400 million to 700 million at the upside, and I think that that’s probably still a good estimate. So based on available capacity in the US, it should be tight in the future 2015, 2016, and 2017. I will just comment though, again, that our development efforts have been aimed at trying to make products that work better in the power plant, so actually, from a pound standpoint, if more utilities would adopt our products, the actual pound sold into the market would go down. It doesn’t mean the value of the market would go down because our products would be more expensive but they would provide a benefit we believe to the utility. So that number, 400 million to 700 million not only is affected by the various operations at the plants but it’s also somewhat affected by who they choose to be their carbon supplier and if they choose us, which we would certainly hope they will, the actual pounds usage would be lower.

Your next question comes from the line of David Rose of Wedbush Securities.

Good afternoon. I was wondering if we can follow up on some of the potential headwinds on the revenue so I just get a little bit more clarity on the delta in revenues. If we look at DB2 or revenues from DB2 and revenues from Long Term 2 Enhanced Rule, how much would you say came in on both of those respectively for 2013 and what’s sense of the outlook for that comparison for 2014?

David, I don’t think we have that in front of us for 2013. I think our – I can tell you our outlook for ‘14 is growth. But to be honest and I apologize, we don’t have the 2013 for your information with us.

But that number should – but the revenue opportunity from DB2 should step down, shouldn’t it, from 2014?

Well, we still have the smaller utilities remaining to adopt the Disinfection Byproduct Rule, so no, we still expect some growth. I can tell you that we still expect growth for next year.

Okay. And then on the UV side, from Long Term 2, same sort of forecast growth from that business as well?

On the UV side, oh.

Yeah.

Yeah, we do expect – we’re continuing to have opportunities for UV treatment in the US driven by the rule that you quote and we still have opportunities that are global in nature, in Asia, in Australia and the Middle East, so we’re pursuing opportunities in drinking water standpoint on a global basis. And we do – although I can’ quantify it at this point, we do continue to expect to see a reuse market developing in the US for those areas of the country that are short on water and reusing the waste water, turning it into a higher quality product either for use in irrigation or in some places actually all the way to completely turning it into a drinking water system. So that remains another opportunity for the standard UV treatment.

Have you seen increase in floatation [ph] as a result of your Title 22 approval in California?

I don’t have that information with me, so we’d have to check on that for you. We can make it into [indiscernible].

Okay. Then, lastly, on CapEx, do you need additional CapEx and outer years [ph] to achieve that 10% CAGR? Or that basically cover you for the next three, four years, how should we think about CapEx?

We’ll decide whether we quote, unquote, “need it”. Under an assumption, we could outsource, then we would evaluate the outsourcing assumption particularly in Europe and Asia as Bob mentioned against building and expanding where we would get a significantly enhanced margin. And so we’re always evaluating against our growth assumptions, how we can expand and you hear us today talk about several small projects to incrementally debottleneck and expand, and then we’ll evaluate and/or evaluating whether or not, a new site, whether it’d Greenfield, Brownfield or otherwise should be constructed so that we have a balance between what we’ll outsource and what we’ll manufacture.

Let me just add to that, David, I mean, this is a huge priority for us right now in Bob’s engineering teams, in our marketing teams and the finance group, really trying to understand as Steve just said, the best way to go. I mean, we’re really looking at this seriously with a lot of detail and we have some various options. We presented a need [ph] to you here today. So, in terms of – is this is enough capital? I can’t answer that and we’ll have to keep looking at our strategy.

Okay, and then – I’m sorry, one last one, Randy, if I may. Given where Hyde is today, the delay you had, I guess, alluded to some changes that will be made at Hyde in terms of managing cost, should we expect some restructuring cost in Q1 and Q2?

No.

Okay.

[Indiscernible].

Okay, great. Thank you very much.

Your next question comes from the line of Steve Schwartz of First Analysis.

Well, good afternoon, everybody.

Hey, Steve.

Hi, Steve.

With respect to reactivation capacity, how much right now would you say is unutilized?

Well, we don’t typically disclose that number. Bob O’Brien: Comparatively, we probably have the most unutilized in the United States. China’s facility is very small. Europe is becoming more fully utilized each and every year, so we’re pleased with the progress we made there but we don’t disclose that number for competitive reasons.

Okay. Understandable. I guess, to add to that, how much of your virgin production could be moved into your unutilized reactivation capacity? Could you fill that unutilized capacity with virgin if your conversion – customer conversion program were to be 100% effective? Bob O’Brien: I don’t think it would fill it all. We would come close but if we project growth in the marketplace, then coupled with our conversion, we get a lot closer to filling our capacity.

Okay. The context of that question is, Randy, when you talked about the four opportunities for capital deployment, you talk about the expansions at 18 million additional pounds in ‘16, and then there’s Greenfield greater than 50 million pounds. So I’m just trying to figure out just how much capacity you could have coming online in all facets.

Yeah, and again, just to add on to Bob, I mean, obviously, there will be some of that and we’re just going to continue to understand and continue to push reactivation where we can.

Okay. And then if I could ask about, in the press release you talked about pricing for mercury removal pack and in your comments, I think, your prepared remarks talked a little bit about the renewal of older contracts. I just want to confirm that the weaker pricing there is on the renewal of existing business or is this on new business you’re getting.

Well, the weaker pricing, the specific one that we mentioned where pricing went down by $11 million for us, that was within existing customer that the contract with them ended, right?

Okay.

There really hasn’t been much actual bidding as I mentioned in Q4 for new opportunities. So there’s really no way to specifically measure any changes in the pricing in the marketplace. I think it’s still – until we start to see more of the utilities actually starting to place orders for their 2015 needs, we’ll have a better handle. Again, we are targeting as much as we can, let’s say, focusing on our advanced products. We have product line that’s competitive in all areas but we’re really targeting the advanced products and they sell at a higher price based in standard products because they perform better.

And so it doesn’t concern you that you’re expecting this big rush in just a matter of one or two quarters but at this point you’re seeing so very little activity? It seems like that’s an awful steep ramp –

Yeah.

– given that the horizon out there is pretty well understood. I mean, with the exception of these 170 units that got the one year extension but –

Well, if you’d ask – if I had my druthers, I wish people would be placing orders right now. But we know that there is a vibrant market for the carbon injection equipment and utilities are purchasing that. So we know that they are preparing to get it to – to get their systems ready, to get their plants ready to feed activated carbon. And I think they’re just trying to make the best decisions too. We strongly encourage utilities to test not just by on specs or products but to test and so that they can know that they’re making the best decisions for their facility. So, we like people to be buying quicker. It would make my life easier in dealing with Randy, I can tell you that, but it’s coming and we’re confident that it’s coming.

Okay. And then if I could ask just one more, and I think you touched on this in responding to David’s questions, but as far as the virgin GAC capacity, I mean, we know the powder for mercury removal is a growth opportunity out there. What do you expect is going to drive virgin GAC demand? Bob O’Brien: Well I think, yes, I answered that earlier. This is Bob again. I mean we do get growth in carbon sales, granular carbon sales basically in line with economy growth.

Right. Bob O’Brien: And we expect to see that worldwide. And we also grow or the market activated carbon grows in relation to new regulations or either on water or air pollution. And so there haven’t been that many new regulations in Europe. There haven’t been many regulations in the U.S. which are driving demand. And every one [ph] forecast I think that there will be regulations taking place in China, they’re going to be spending more money for controlling environmental pollution. India is also another market where we expect there’ll be activated carbon growth. So those developing countries, those areas that are heavily polluted, there are regulations being placed on the books or contemplated that should drive the use of activated carbon. Brazil is a market where we think there’re opportunities. And we’re looking to do more from reactivation standpoint.

Hey, Steve, this is Randy. Can I add just a little bit to that?

Sure.

We presented you today with the issue with West Virginia. We know of three pretty strong emerging markets and you know them quite well too. I am looking out into the future and there’s going to be, when you look at air and water, there has to be more regulations and Bob just pointed to the global. But even to the United States that is still out there that potentially could come down to path. And I think a Company like ours needs to be well positioned, having the right discussions and being able to provide a solution for what was a very bad problem. And so I believe that beyond, where we’re already aware of today, there could be more in the future.

And do you think those opportunities that you’re referring to right now are as well developed as you expect the expansion of disinfection byproducts to be? Because you’ve talked about that these facilities that are not yet using carbon for disinfection byproducts but you expect that regulation to expand. So do you think these other opportunities in from emerging markets and what have you are as far along, have as high a probability as what you think that probability is for DBPs? I guess I’m trying to gauge the strength of the pipeline of opportunities. Bob O’Brien: I’m not sure it’s as strong as the disinfection byproduct market because that is a regulation that’s in place, has been in place with part of the compliance state. So that would have to be the strongest. The other growth areas outside the U.S. we’ve mentioned such as China, such as India, such as Brazil, those governments particularly China have made commitments to spending more money for pollution control. And talking to our sales people who are on the ground in China and in India, and they definitely see that there are things changing, that there are opportunities developing. I can’t say that I would classify them in the same – at the same level that we would – that the DBP market, but we do think the opportunities are there.

Steve, I was in the meeting with the EPA. I think it was three weeks ago now in D.C. and [indiscernible] disinfection byproducts which would be the disinfection byproducts formed when you use chloramines instead of chlorine that’s definitely on their radar. So they were asking us a lot of questions about activated carbon and its role in here, so.

Okay, that’s great. Hey, thank you for your time.

Your next question comes from the line of Dan Mannes of Avondale Partners.

Hey, good afternoon, everyone.

Hi. Bob O’Brien: Hi, Dan.

Hi, Dan.

I just want to follow up on a couple of these lines of questioning. First, as it relates to, number one, the I guess I’ll call them throughput expansions and the number two, the broader capacity expansions, I just want to make sure this jives with the way you’re talking about in market growth particularly in the context of a lot of underutilized capacity in react. Randy, when you talked about end market growth you really focused, number one, on mercury in the U.S. which is primarily a powder product and then two of emerging markets. And then I contrast that with your discussion of not just the potential expansion of Big Sandy but I meant a whole new line at Pearl River. And I’m trying to understand if you’re talking about building new capacity in the right market or should I be thinking that you’re building capacity somewhere else? Because I guess I’m not putting together the supply and the demand. Bob O’Brien: So you’re talking about building capacity outside of the U.S., is that your question versus the U.S.?

Yes. I mean basically, I’m trying to understand why you’d be focused on building a new line at either Big Sandy or Pearl River when most of the domestic demand is going to come from mercury which is number one, a powder product, which historically you have wanted [ph] that capacity to meet. And two, you can also free up capacity from your existing plants by shifting from virgin to react and a lot of the excess demand is coming from the rest of the world. So why would you want to build a lot of new granular capacity in the U.S. is basically what I’m asking? Bob O’Brien: Well, I think there is a demand in the mercury market that we have to evaluate how best that we can fill that need. And again as our products hopefully are accepted by the marketplace, there will be demand there. But I think your point is well taken that why we haven’t made a firm decision yet as to exactly where we would add larger amounts of capacity. We certainly think it makes good economic sense to debottleneck and increase the capacity of our existing production lines. There, we know we get a better return from the standpoint. We usually get more capacity for lower capital dollars. And then also we’re able to drive down operating cost when we do that. So that is almost a no brainer for us as far as that’s the direction to go. When it comes to a major expansion, it’s going to be a lot of dollars and that’s something that Randy just mentioned we are taking seriously. So we are evaluating, do we want to be in the U.S.? We certainly are considering what are our options in places like China? We talked to people there all the time. And so that’s one of the reasons. We’re just trying to get all of our ducks in a row so whenever we make a decision, it will be the right decision for the long term.

So putting aside sort of a whole brand new line and just looking at sort of what I’ll call I guess debottlenecking and improved efficiencies, can you get an attractive return on capital just through the lower cost structure of the plant vis-à-vis buying back stock or do you really need to see the increase demand side to make those economics work? And this is just for the throughput, just the operational improvements you’re talking about, like what you did at Pearl River.

We did a positive return from that, just from the cost savings and if we did no more than just used our production in lieu of outsourced product.

Okay.

More handsome returns are provided if we’re providing these products in the new markets, but no, they’re fine. There’s a lot of cost savings with these, better overheard absorption, better efficiencies et cetera. Bob O’Brien: And we learned a tremendous amount at Pearl River that we’re excited to take to Big Sandy. And that’s happening even as we speak.

Okay. The second question I have is as it relates to the buyback, the $20 million was purchased between I guess mid-December and mid-February. Number one, can you indicate where your share count was actually at the end of the year? And two, with still $130 million of authorization but at the same time, a pretty sizable capital plant for ‘14, how should we think through your capital spend or your – any buybacks as we look to ‘14?

Let me start with that part of the question first as Steve is looking up our end of year – end of year share count.

Sure.

So in terms – and I think we’ve laid it out pretty clearly and you’ve heard me say many times, it’s going to be a balance. We’re constantly balancing this balance sheet with where the best returns are going to be for shareholders. And quite honestly, you’re seeing that somewhat of a combination. And we’re constantly recording and be looking at this and in looking at what we want to do. And we will continue with the share repurchase program. Bob O’Brien: Dan, relative to share count, our fourth quarter in the press release had just over $55 million shares for the weighted average for Q4. We didn’t – the buyback started near the end of that quarter. So the most of the $900,000 plus shares we bought would have been in Q1.

Got it. And then just one last question as it relates to the mercury market, you talked about, I guess almost a $12 million, I think you said $11.7 million reduction in revenue and I assume that’s primarily from the one renegotiated contract in Illinois. Do you have any other material contracts left from that legacy pricing or have you already experienced all the potential step down given the change in market from I guess 2008 and 2009 to now? Bob O’Brien: Yes. We have no further legacy contracts where pricing is not consistent, let’s say, with the existing marketplace. So there’s no big – there’s no big surprise out there like we saw with that one customer.

Yes. And Dan just to take the opportunity, this is Steve Schott. That was one customer, price changed, we kept the business under a new contract. So our margin improvement had to overcome that entire price decline. So just to further how well we did this year, we overcame that entire deficit and improved as much as we already talked about.

Got it. And if you’ll indulge me with one last one. It looked like on the international front, obviously currency was a pretty big headwind in Japan. I was wondering, is there any other major changes in either Japan or the Asian market in terms of the demand side and that’s not withstanding the, I guess, the early fill I guess in Q3 in Japan. Any other material going on there or is that market been steady?

It’s pretty steady. I’ll give my thoughts and let Bob chime in. As it relates to Japan, they actually grew in local currency. So they did increase their volume. There were just a tremendous amount of headwinds from an FX perspective. And probably when we get to the end of the first quarter comparing it to the year ago, there will be a little bit more because I think the end weakened even further from where it was a year ago. I guess I’ll provide my commentary that I’d like to see us grow more in all of Asia and particularly China. We made some progress in filling our Soguo [ph] Plant, but we’re operating it. It’s still a fraction of its capacity and we have ways to go.

Okay. Bob O’Brien: And I think in the Asian market, we’ll probably see some ups and downs because a fair amount of our business there has been tied to relatively large municipal fills. So the quarter, we get a big municipal fill, sales go up and then in the next quarter if we’re not able to duplicate that, sales are down in year-to-year comparison. So we’ve had some big fills and frankly and hopefully that those will continue.

And let me talk administratively because as you know over the past couple of years, we talked about Japan and how unhappy things were there. I’m very pleased to report that with new management and new focus on the business and how we do things, I’m quite pleased with how that’s developed. I’m very pleased with the head person we have there. As you know we announced a new head of China and he now is getting very active in the Chinese market and looking at opportunities and running our plant. So I think we’re making the right decisions to secure our Asian business and grow into the future.

Sounds good. Thanks.

Your next question comes from the line of Christopher Butler of Sidoti & Company.

Hi, good afternoon, everyone. Bob O’Brien: Hey, Chris.

Hi, Chris.

A lot of good questions so far. The one thing that you said that still lives me a little bit confused was this ballast water. You had mentioned that regardless of whether or not demand improves this year, you’re going to have improvements to that business. What is the back-up plan should demand not work out at least somewhat the way you think it is? Bob O’Brien: Well, then we will take as many initiatives as we can to reduce our cost whether it’s fewer consultants, lower other operating cost, we’ll be as aggressive as we can in managing our operating expenses. We have stood fully ready now for a series of years for our market that is not quite here. And we appreciate fully that that has burdened our equipment segment performance to where we’ve had quarterly losses. And we acknowledged that that cannot be the long-term rate. We are optimistic that the IMO will get approved this year and that this is a relatively temporary situation. But we want our investors to know that we’re cognizant at this and we’re going to do the best we can to manage to do breakeven or profitable any and every way we can.

And just a quick sec on you, you had mentioned that the maintenance in this quarter the fourth quarter was less year-over-year. Could you quantify that and give us a sense on what’s typical for our fourth quarter maintenance?

No, I would only – what I’ll add to that is only that it was more a function of how unusually high the 2012 period was because we had tremendous difficulties at our Pearl River facility. We had undergone a significant expansion which we worked our way through only to be hit by a hurricane as I recall near at the end of the third quarter. And we had a tremendous amount of difficulty there in particular. It wasn’t so much a function of this year’s being unusual but rather what it happened in 2012.

Got you. I appreciate it.

You’re welcome.

Your next question comes from the line of Jinming Liu of Ardour Capital.

Thanks for taking my question. Bob O’Brien: Yes, sure.

Yes. First with regarding the carbon sale [ph] decrease, [indiscernible] decrease in sales, with a price increase and the stronger U.S. dollar, have you see any loss of customers especially in Europe?

No. Actually our business in my view has been, in Europe, has been a pleasant surprise, we’ve done pretty well. We’ve grown our business and we expect to continue to grow our business in Europe, so that has not been an issue.

Okay, good to hear. I’m still – throughout the question, I’m still confused by your strategy in emerging market. If you believe the potential future growth will come from emerging markets, but along there, what other high new diversity [ph] in Datong facility not that long ago, so are you [indiscernible] or source a contract production somewhere in Asia just to service that market? I’m a bit confused there. Bob O’Brien: Well this is Bob. Again, we shut down the Datong facility for a number of reasons. Frankly it’s not economic for us to operate it. If and when the mercury market develops in China, we do expect to develop. Timing is really the issue. I don’t think we would expect that we would ship product from the U.S. and be competitive in China. We would identify manufacturers to work with in China and use our technology in some fashion, right, whether we would have a stronger relationship with them or they would manufacture products for us. Those are the types of things we’ll be evaluating. But supply to the Chinese market for most products, will be made by – will be produced in China.

Okay, got that. Thanks.

There are no further questions at this time. I will now return the call to Randy Dearth for any additional or closing remarks.

Thank you very much. And thank you all for some very great questions. So let me conclude by saying today that Calgon Carbon’s results for 2013 demonstrates significant progress in achieving our strategic objectives and that includes improving profitability which we talked a lot about today and enhancing shareholder value. In 2014, we’re going to intend to build on that success that we had last year and we’re going to continue to implement our global cost improvement program and by further strengthening our position to capitalize on our two major growth opportunities and again, we talked a lot about mercury and ballast water. We’re going to intend to make significant investments in our activated carbon production facilities, in our SAP system that Steve talked about and in other areas of the company. So I look forward to sharing our progress to you in future calls. Thank you for joining us today.

Thank you for participating in the Calgon Carbon Corporation fourth quarter 2013 results conference call. You may now disconnect.