CIRCOR International, Inc. (NYSE:
CIR), a provider of valves and other highly engineered products and
subsystems that control the flow of fluids safely and efficiently
in the aerospace, energy and industrial markets, today announced
financial results for the third quarter ended October 3, 2010.
Management Comments on Third-Quarter Results
“Our third-quarter financial results demonstrate continuing
improvements on the top and bottom line,” said Chairman and Chief
Executive Officer Bill Higgins. “Revenues came in at the high end
of our guidance, while earnings, exclusive of Leslie bankruptcy and
asbestos charges, surpassed our expectations. Revenue growth was
primarily driven by continued strength at the short cycle Energy
business and earlier-cycle Flow Technologies end markets. Earnings
benefited from segment performance, currency impacts and a reduced
tax rate.”
“We are particularly pleased with our bookings performance, with
orders up 51% year-over-year, which includes 17% from
acquisitions,” said Higgins. “We achieved order growth across all
three business segments, but saw particular strength in our
short-cycle Energy business. While we had expected further
sequential pick up in Energy’s longer cycle international project
businesses, orders remained essentially flat. Flow Technologies
experienced increased orders across most end markets. The increase
in orders at Aerospace was primarily driven by the acquisition of
Castle Precision Industries.”
“As previously announced, we have obtained the asbestos claimant
votes necessary for approval of Leslie Controls’ pre-negotiated
Chapter 11 reorganization and the U.S. Bankruptcy Court has entered
an order confirming the plan,” said Higgins. “We are now focused on
obtaining district court approval and then winning any appeals that
may be pursued.”
Leslie’s final emergence from bankruptcy would not occur until
any appeals are favorably resolved, although CIRCOR and Leslie
believe that any such appeals would be without merit. Leslie is
continuing to conduct business as usual during the Chapter 11
process.
Consolidated Results
Revenues for the third quarter of 2010 were $177.6 million, a
23% increase from $144.3 million generated in the third quarter of
2009. CIRCOR reported net income for the third quarter of 2010 of
$10.4 million, or $0.60 per diluted share, compared with net income
of $8.4 million, or $0.49 per diluted share, for the third quarter
of 2009.
Pre-tax Leslie bankruptcy and asbestos charges were $2.3 million
for the three months ended October 3, 2010, compared with $2.0
million of non-bankruptcy asbestos charges for the year-earlier
period. Excluding special charges and Leslie bankruptcy and
asbestos charges net of tax, adjusted earnings per diluted share
were $0.70 for the third quarter of 2010, an increase of 27%
compared with $0.54 in the third quarter of 2009.
Consolidated Orders and Free Cash Flow
The Company received orders totaling $207.1 million during the
third quarter of 2010, an increase of 51% compared with the third
quarter of 2009 and a 21% increase compared with the second quarter
of 2010. Backlog as of October 3, 2010 was $391.6 million, up 32%
from backlog of $297.9 million at September 27, 2009 and up 23%
from $317.6 million at July 4, 2010.
During the third quarter of 2010, the Company used $3.3 million
of free cash flow (defined as net cash from operating activities,
less capital expenditures and dividends paid) compared with
generating $11.2 million in the third quarter of 2009 due primarily
to changes in working capital and increased capital
expenditures.
Energy
CIRCOR’s Energy segment revenues of $80.6 million for the
quarter ended October 3, 2010 represent a 32% increase from $61.2
million for the quarter ended September 27, 2009. The increase
included 24% organic growth and 12% from acquisitions, which was
partially offset by a negative foreign currency adjustment of 4%.
The organic growth was the result of a strong year-over-year
rebound in the North American short-cycle business.
Incoming orders for the third quarter of 2010 were $98.5
million, an increase of 95% year over year and 24.0% sequentially.
The year-over-year growth was due to strength in the North American
short-cycle business and the acquisition of Pipeline Engineering in
the fourth quarter of 2009. Ending backlog totaled $153.0 million,
a 34% increase year over year and a 23% increase sequentially.
The Energy segment adjusted operating margin, which excludes the
impact of special charges, was 11.1% during the third quarter of
2010 compared with 10.9% for the third quarter of 2009 and 8.3% for
the second quarter of 2010. The increase in third-quarter 2010
operating margin was primarily driven by organic growth, associated
operating leverage, favorable penalty reserve adjustments and
productivity improvements. This was partially offset by continued
pricing pressures - especially for large international projects -
unfavorable mix and acquisition impacts.
Aerospace
CIRCOR’s Aerospace segment revenues increased by 8% to $28.3
million for the third quarter of 2010 from $26.2 million in the
third quarter of 2009. The increase in revenues was driven by 9%
growth from acquisitions and 2% organic growth, which was partially
offset by a 2% decline from foreign currency adjustments. The
organic growth was from sales of military landing gear, which
offset small declines in other end markets.
Incoming orders for the third quarter of 2010 were $31.3
million, an increase of 15% year over year and 16% sequentially.
The majority of the increase in orders was due to the acquisition
of Castle in August. Ending backlog totaled $152.8 million, an
increase of 27% year over year and 30% sequentially.
The Aerospace segment’s adjusted operating margin, which
excludes the impact of special charges, was 9.6% for the third
quarter of 2010 compared with 13.2% for the third quarter of 2009
and 14.6% for the second quarter of 2010. Third-quarter 2010
margins decreased primarily due to higher operating expenses
related to support of new programs and acquisition transaction
costs, partially offset by productivity gains and favorable
pricing.
Flow Technologies
CIRCOR’s Flow Technologies segment revenues increased 21% to
$68.6 million from $56.9 million in the third quarter of 2009.
Third-quarter 2010 revenues reflected organic growth of 22%,
primarily due to semiconductor, maritime, instrumentation and
process strength, and growth from acquisitions of 2%, which was
partially offset by foreign currency adjustments of 3%.
Incoming orders for this segment were $77.4 million for the
third quarter of 2010, an increase of 30% year over year and 20%
sequentially. The year-over-year increase was due to strength in
all markets, with the exception of petrochemical and refining.
Ending backlog totaled $85.9 million, an increase of 36% year over
year and 14% sequentially.
This segment’s adjusted operating margin, which excludes the
impact of special and Leslie asbestos and bankruptcy charges, for
the third quarter of 2010 was 13.1% compared with 10.9% in the
third quarter of 2009, and 10.1% in the second quarter of 2010. The
third-quarter year-over-year margin increase was due to higher
volumes, productivity and favorable mix.
Business and Financial Outlook
“Our sales and bookings trends are both positive, led by the
short-cycle Energy and early-cycle Flow Technologies businesses,”
said Higgins. “While the long-cycle businesses have recently
stabilized, we have not seen a meaningful pick up at this point.
Our balance sheet remains strong and will enable us to fund the
Leslie reorganization plan and continue to invest in organic growth
and strategic acquisitions.”
CIRCOR currently expects revenues for the fourth quarter of 2010
in the range of $192 million to $202 million and adjusted earnings
in the range of $0.50 to $0.63 per diluted share. CIRCOR’s guidance
for adjusted earnings per share excludes $0.06 per diluted share in
Leslie asbestos and bankruptcy charges and assumes that exchange
rates remain at present levels.
Conference Call Information
CIRCOR International will hold a conference call to review its
financial results today, November 4, 2010, at 10:00 a.m. ET. Those
who wish to listen to the conference call and view the accompanying
presentation slides should visit “Webcasts & Presentations” in
the “Investors” portion of the CIRCOR
website. The live call also can be accessed by dialing (877)
407-5790 or (201) 689-8328. If you are unable to listen to the live
call, the webcast will be archived for one year on the Company’s
website.
Use of Non-GAAP Financial Measures
Adjusted net income, adjusted earnings per diluted share,
adjusted operating margin, and free cash flow are non-GAAP
financial measures and are intended to serve as a complement to
results provided in accordance with accounting principles generally
accepted in the United States. CIRCOR believes that such
information provides an additional measurement and consistent
historical comparison of the Company’s performance. A
reconciliation of the non-GAAP financial measures to the most
directly comparable GAAP measures is available in this news
release.
Safe Harbor Statement
This press release contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. Reliance should not be placed on forward-looking
statements because they involve unknown risks, uncertainties and
other factors, which are, in some cases, beyond the control of
CIRCOR. Any statements in this press release that are not
statements of historical fact are forward-looking statements,
including, but not limited to, those relating to CIRCOR’s future
performance, including fourth-quarter revenue and earnings
guidance; and the Company's expectations related to the process for
Leslie Controls' emergence from bankruptcy. Actual events,
performance or results could differ materially from the anticipated
events, performance or results expressed or implied by such
forward-looking statements. BEFORE MAKING ANY INVESTMENT DECISIONS
REGARDING OUR COMPANY, WE STRONGLY ADVISE YOU TO READ THE SECTION
ENTITLED "RISK FACTORS" IN OUR MOST RECENT ANNUAL REPORT ON FORM
10-K AND SUBSEQUENT REPORTS ON FORMS 10-Q, WHICH CAN BE ACCESSED
UNDER THE "INVESTORS" LINK OF OUR WEBSITE AT WWW.CIRCOR.COM. We
undertake no obligation to publicly update or revise any
forward-looking statement, whether as a result of new information,
future events or otherwise.
About CIRCOR International, Inc. CIRCOR International, Inc. designs, manufactures
and markets valves and other highly engineered products and
subsystems that control the flow of fluids safely and efficiently
in the aerospace, energy and industrial markets. With more than
9,000 customers in over 100 countries, CIRCOR has a diversified
product portfolio with recognized, market-leading brands. CIRCOR’s
culture, built on the CIRCOR Business System, is defined by the
Company’s commitment to attracting, developing and retaining the
best talent and pursuing continuous improvement in all aspects of
its business and operations. The Company’s strategy includes
growing organically by investing in new, differentiated products;
adding value to component products; and increasing the development
of mission-critical subsystems and solutions. CIRCOR also plans to
leverage its strong balance sheet to acquire strategically
complementary businesses. For more information, visit the Company’s
investor relations web site at http://investors.circor.com.
CIRCOR INTERNATIONAL, INC. CONSOLIDATED STATEMENTS
OF OPERATIONS (in thousands, except per share data)
UNAUDITED
Three Months Ended Nine Months Ended
October 3, 2010 September 27, 2009 October 3,
2010 September 27, 2009 Net revenues $
177,577 $ 144,327 $ 491,851 $ 484,509 Cost of revenues
126,096 102,462 348,109
338,123 GROSS PROFIT 51,481 41,865 143,742 146,386 Selling,
general and administrative expenses 35,648 29,787 109,024 98,127
Leslie asbestos and bankruptcy charges 2,343 1,977 30,603 13,682
Special recoveries - (543 ) -
(1,678 ) OPERATING INCOME 13,490 10,644
4,115 36,255 Other (income)
expense: Interest income (69 ) (77 ) (162 ) (391 ) Interest expense
803 471 2,036 857 Other income, net (853 ) (959 )
(646 ) (1,409 ) Total other (income) expense
(119 ) (565 ) 1,228 (943 ) INCOME
BEFORE INCOME TAXES 13,609 11,209 2,887 37,198 Provision (benefit)
for income taxes 3,210 2,804
(2,005 ) 10,601 NET INCOME $ 10,399 $ 8,405
$ 4,892 $ 26,597 Earnings per common
share: Basic $ 0.61 $ 0.49 $ 0.29 $ 1.56 Diluted $ 0.60 $ 0.49 $
0.28 $ 1.56 Weighted average common shares outstanding:
Basic 17,123 17,023 17,095 17,003 Diluted 17,258 17,116 17,238
17,050
CIRCOR INTERNATIONAL,
INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in
thousands) UNAUDITED Nine Months
Ended October 3, 2010 September 27, 2009
OPERATING ACTIVITIES Net income $ 4,892 $ 26,597
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation 9,509 9,620 Amortization 3,065
1,956 Provision for Leslie bankruptcy settlement 24,974 -
Compensation expense of stock-based plans 2,445 2,351 Tax effect of
share based compensation (114 ) 412 Loss (gain) on disposal of
property, plant and equipment 248 (60 ) Changes in operating
assets and liabilities, net of effects from business acquisitions:
Trade accounts receivable (13,734 ) 30,690 Inventories (20,727 )
40,836 Prepaid expenses and other assets 5,368 8,546 Accounts
payable, accrued expenses and other liabilities (1,183 )
(91,717 ) Net cash provided by operating activities
14,743 29,231
INVESTING
ACTIVITIES Additions to property, plant and equipment (11,400 )
(6,106 ) Proceeds from the sale of property, plant and equipment 75
95 Purchase of investments - (278,916 ) Proceeds from sale of
investments 21,427 312,918 Business acquisitions, net of cash
acquired (34,401 ) (10,428 ) Net cash (used in)
provided by investing activities (24,299 ) 17,563
FINANCING ACTIVITIES Proceeds from long-term
debt 91,750 57,372 Payments of long-term debt (60,202 ) (64,703 )
Debt issuance costs (2,814 ) Dividends paid (1,982 ) (1,930 )
Proceeds from the exercise of stock options 329 37 Tax effect of
share based compensation 114 (412 ) Net cash
provided by (used in) financing activities 30,009
(12,450 ) Effect of exchange rate changes on cash and cash
equivalents 1,723 1,891 INCREASE
IN CASH AND CASH EQUIVALENTS 22,176 36,235 Cash and cash
equivalents at beginning of year 46,350 47,473
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 68,526 $
83,708
CIRCOR INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS (in thousands, except share
data) UNAUDITED
October 3,
2010 December 31, 2009 ASSETS Current
Assets: Cash & cash equivalents $ 68,526 $ 46,350 Short-term
investments 97 21,498 Trade accounts receivable, less allowance for
doubtful accounts of $1,208 and $1,992, respectively 135,199
115,260 Inventories 172,543 145,031 Income taxes refundable - 726
Prepaid expenses and other current assets 8,324 4,195 Deferred
income tax asset 43,177 15,847 Insurance receivables 194 4,614
Assets held for sale 542 1,167 Total Current Assets
428,602 354,688 Property, Plant and Equipment,
net 96,547 95,167 Other Assets: Goodwill 60,437 47,893
Intangibles, net 63,943 55,238 Deferred income tax asset - 5,676
Other assets 5,351 3,391 Total Assets $ 654,880 $
562,053
LIABILITIES AND SHAREHOLDERS' EQUITY Current
Liabilities: Accounts payable $ 80,841 $ 57,239 Accrued expenses
and other current liabilities 44,694 46,736 Accrued compensation
and benefits 21,658 18,617 Leslie asbestos and bankruptcy related
liabilities 80,064 12,476 Income taxes payable 1,471 - Notes
payable and current portion of long-term debt 10,613
5,914 Total Current Liabilities 239,341 140,982
Long-Term Debt, net of current portion 31,785 1,565 Deferred
income taxes 11,786 - Long-Term Leslie asbestos liability - 47,785
Other Non-Current Liabilities 20,249 21,313 Shareholders' Equity:
Preferred stock, $.01 par value; 1,000,000 shares authorized; no
shares issued and outstanding - - Common stock, $.01 par value;
29,000,000 shares authorized; and 17,098,925 and 16,991,365 issued
and outstanding, respectively 171 170 Additional paid-in capital
252,471 249,960 Retained earnings 89,328 86,408 Accumulated other
comprehensive income 9,749 13,870 Total Shareholders'
Equity 351,719 350,408 Total Liabilities and
Shareholders' Equity $ 654,880 $ 562,053
CIRCOR
INTERNATIONAL, INC. SUMMARY OF ORDERS AND BACKLOG (in
thousands) UNAUDITED
Three Months Ended Nine Months
Ended October 3, 2010 September 27, 2009
October 3, 2010 September 27, 2009
ORDERS 1 Energy $ 98,456 $ 50,574 $ 244,070 $ 170,100
Aerospace 31,280 27,231 93,109 89,415 Flow
Technologies 77,367 59,688 210,787
167,902 Total orders $ 207,103 $ 137,493 $ 547,966 $ 427,417
October 3, 2010 September 27, 2009
BACKLOG 2 Energy $ 152,968 $ 114,139 Aerospace
152,790 120,453 Flow Technologies 85,859
63,280 Total backlog $ 391,617 $ 297,872
Note 1: Beginning in Q2 2010, orders have
been adjusted to exclude the foreign exchange impact from backlog
remeasurement.
The three and nine months ended September
27, 2009 reflect a decrease of $6.1 million and $7.4 million,
respectively.
Note 2: Backlog includes all unshipped customer orders.
CIRCOR INTERNATIONAL, INC. SUMMARY REPORT
BY SEGMENT (in thousands, except earnings per share)
UNAUDITED
2009 2010 1ST QTR
2ND QTR 3RD QTR 4TH QTR
YTD 1ST QTR 2ND QTR
3RD QTR YTD NET
REVENUES Energy $ 89,307 $ 76,814 $ 61,185 $ 66,113 $
293,419 $ 57,722 $ 77,305 $ 80,613 $ 215,640 Aerospace 28,344
30,243 26,234 28,506 113,327 27,274 27,811 28,316 83,401 Flow
Technologies 57,996 57,478
56,908 63,494 235,876
61,273 62,889 68,648
192,810 Total 175,647 164,535
144,327 158,113 642,622
146,269 168,005 177,577
491,851
* ADJUSTED OPERATING MARGIN Energy 18.1 % 12.3 % 10.9
% 3.0 % 11.7 % 3.5 % 8.3 % 11.1 % 8.1 % Aerospace 15.4 % 16.2 %
13.2 % 14.7 % 14.9 % 13.2 % 14.6 % 9.6 % 12.5 % Flow Technologies
11.6 % 9.5 % 10.9 % 11.7 % 11.0 % 10.2 % 10.1 % 13.1 % 11.2 %
Segment operating margin 15.5 % 12.1 % 11.3 % 8.6 % 12.0 % 8.1 %
10.0 % 11.7 % 10.1 % Corporate expenses -3.1 % -3.4 % -3.0 % -3.3 %
-3.2 % -3.1 % -3.1 % -2.7 % -3.0 % * Adjusted operating margin 12.5
% 8.7 % 8.4 % 5.3 % 8.8 % 5.0 % 6.9 % 8.9 % 7.1 % Leslie asbestos
and bankruptcy charges (recoveries) 4.7 % 2.1 % 1.4 % 25.5 % 8.4 %
-0.4 % 17.2 % 1.3 % 6.2 % Impairment charges 0.0 % 0.0 % 0.0 % 0.3
% 0.1 % 0.0 % 0.0 % 0.0 % 0.0 % Special charges (recoveries) -0.6 %
0.0 % -0.4 % 0.0 % -0.3 % 0.0 % 0.0 % 0.0 % 0.0 % Total operating
margin 8.4 % 6.6 % 7.4 % -20.6 % 0.6 % 5.4 % -10.3 % 7.6 % 0.8 %
* ADJUSTED OPERATING INCOME Energy 16,169
9,461 6,696 1,966 34,292 2,025 6,424 8,968 17,417 Aerospace 4,372
4,905 3,461 4,195 16,933 3,607 4,067 2,726 10,400 Flow Technologies
6,744 5,484 6,197
7,444 25,869 6,276
6,367 8,997 21,640
Segment operating income 27,285
19,850
16,354 13,605 77,094 11,908 16,858 20,691 49,457 Corporate expenses
(5,365 ) (5,589 ) (4,276 ) (5,267 )
(20,497 ) (4,607 ) (5,274 ) (4,859 )
(14,740 ) * Adjusted operating income 21,920
14,261 12,078 8,338
56,597 7,301 11,584
15,832 34,717 Leslie asbestos and
bankruptcy charges (recoveries) 8,263 3,442 1,977 40,397 54,079
(648 ) 28,908 2,343 30,603 Impairment charges - - - 485 485 - - - -
Special charges (recoveries) (1,135 ) - (543 ) - (1,678 ) - - - -
Total operating income 14,792 10,819 10,644 (32,544 ) 3,711 7,949
(17,325 ) 13,490 4,115 INTEREST EXPENSE, NET (32 ) (41 )
(394 ) (602 ) (1,069 ) (554 ) (586 ) (734 ) (1,874 ) OTHER
(EXPENSE) INCOME, NET 183 267
959 (967 ) 442 51
(258 ) 853 646 PRETAX INCOME
(LOSS) 14,943 11,045 11,209 (34,113 ) 3,084 7,446 (18,169 ) 13,609
2,886 (PROVISION) BENEFIT FOR INCOME TAXES (4,483 )
(3,313 ) (2,804 ) 13,386 2,786
(1,713 ) 6,928 (3,210 ) 2,005
EFFECTIVE TAX RATE 30.0 % 30.0 % 25.0 % 39.2 % -90.3 % 23.0
% 38.1 % 23.6 % -69.5 %
NET (LOSS) INCOME $ 10,460 $
7,732 $ 8,405 $ (20,727 ) $ 5,870 $ 5,733
$ (11,241 ) $ 10,399 $ 4,892 Weighted
Average Common Shares Outstanding (Diluted) 17,014 17,066 17,116
17,033 17,111 17,193 17,109 17,258 17,238
EARNINGS PER
COMMON SHARE (Diluted) $ 0.61 $ 0.45 $ 0.49
$ (1.22 ) $ 0.34 $ 0.33 $ (0.66 ) $ 0.60
$ 0.28 EBIT $ 14,975 $ 11,086 $ 11,603 $
(33,511 ) $ 4,153 $ 8,000 $ (17,583 ) $ 14,343 $ 4,761 Depreciation
2,839 3,245 3,536 3,687 13,307 3,228 3,115 3,166 9,509 Amortization
of intangibles 622 627 707
1,078 3,034 979
964 1,122 3,064
EBITDA $ 18,436 $ 14,958 $ 15,846 $
(28,746 ) $ 20,494 $ 12,207 $ (13,504 ) $ 18,631
$ 17,334
EBITDA AS A PERCENT OF SALES
10.5 % 9.1 % 11.0 % -18.2 % 3.2
% 8.3 % -8.0 % 10.5 % 3.5 %
CAPITAL EXPENDITURES $ 2,576 $ 1,925 $ 1,605
$ 4,926 $ 11,032 $ 3,606 $ 4,580
$ 3,213 $ 11,400
* Adjusted Operating
Income & Margin excludes Special, Impairment, and Leslie
asbestos and bankruptcy charges CIRCOR INTERNATIONAL,
INC. RECONCILIATION OF KEY PERFORMANCE MEASURES TO COMMONLY
USED GENERALLY ACCEPTED ACCOUNTING PRINCIPLE TERMS
(in thousands) UNAUDITED
2009
2010 1ST QTR 2ND QTR 3RD
QTR 4TH QTR YTD 1ST QTR
2ND QTR 3RD QTR YTD
FREE CASH FLOW [NET CASH FLOW FROM
OPERATING ACTIVITIES LESS CAPITAL EXPENDITURES LESS
DIVIDENDS PAID] $ (7,928
) $ 17,882 $
11,241 $ 11,757
$ 32,952 $ (7,019
) $ 11,947 $
(3,566 ) $ 1,361
ADD:Capital expenditures 2,576 1,925 1,605 4,926 11,032 3,606 4,580
3,213 11,400
Dividends paid
657 637 636 638
2,568 639 640
703 1,982 NET CASH PROVIDED BY
(USED IN) OPERATING ACTIVITIES $ (4,695 ) $ 20,444 $ 13,482
$ 17,321 $ 46,552 $ (2,774 ) $ 17,167 $
350 $ 14,743
NET (CASH) DEBT [TOTAL DEBT LESS CASH &
CASH EQUIVALENTS LESS INVESTMENTS]
$ (49,519 ) $ (69,331
) $ (77,081 ) $
(60,369 ) $ (60,369 )
$ (52,713 ) $
(55,976 ) $ (26,225 )
$ (26,225 ) ADD: Cash & cash
equivalents 36,113 33,038 83,708 46,350 46,350 37,812 60,857 68,526
68,526 Investments 36,991 48,344
3,023 21,498 21,498
22,412 94 97 97
TOTAL DEBT $ 23,585 $ 12,051 $ 9,650 $
7,479 $ 7,479 $ 7,511 $ 4,975 $ 42,398
$ 42,398
DEBT AS % OF
EQUITY 7 %
3 % 3 %
2 % 2 %
2 % 2 %
12 % 12 %
TOTAL DEBT 23,585 12,051 9,650 7,479 7,479 7,511 4,975 42,398
42,398 TOTAL SHAREHOLDERS' EQUITY 341,860 357,596 371,728
350,408 350,408 349,244 324,128 351,719 351,719
EBIT [NET INCOME LESS INCOME TAXES LESS INTEREST
EXPENSE, NET] $ 14,975
$ 11,086 $ 11,603
$ (33,511 ) $
4,153 $ 8,000
$ (17,583 ) $
14,343 $ 4,760 LESS:
Interest expense, net (32 ) (41 ) (394 ) (602 ) (1,069 ) (554 )
(586 ) (734 ) (1,874 ) Provision for income taxes (4,483 )
(3,313 ) (2,804 ) 13,386 2,786
(1,713 ) 6,928 (3,210 )
2,005 NET INCOME $ 10,460 $ 7,732 $
8,405 $ (20,727 ) $ 5,870 $ 5,733 $ (11,241 )
$ 10,399 $ 4,892
EBITDA [NET
INCOME LESS INTEREST EXPENSE, NET, LESS DEPRECIATION LESS
AMORTIZATION LESS INCOME
TAXES]
$ 18,436 $
14,958 $ 15,846
$ (28,746 ) $ 20,494
$ 12,207 $
(13,504 ) $ 18,631
$ 17,334 LESS: Interest expense, net (32 ) (41
) (394 ) (602 ) (1,069 ) (554 ) (586 ) (734 ) (1,874 ) Depreciation
(2,839 ) (3,245 ) (3,536 ) (3,687 ) (13,307 ) (3,228 ) (3,115 )
(3,166 ) (9,509 ) Amortization (622 ) (627 ) (707 ) (1,078 ) (3,034
) (979 ) (964 ) (1,122 ) (3,065 ) Provision for income taxes
(4,483 ) (3,313 ) (2,804 ) 13,386
2,786 (1,713 ) 6,928
(3,210 ) 2,005 NET INCOME $ 10,460 $
7,732 $ 8,405 $ (20,727 ) $ 5,870 $ 5,733
$ (11,241 ) $ 10,399 $ 4,891
ADJUSTED INCOME [NET INCOME EXCLUDING SPECIAL,
IMPAIRMENT, AND LESLIE ASBESTOS AND BANKRUPTCY CHARGES,
NET OF TAX] $ 15,037
$ 9,969 $ 9,285
$ 5,826 $ 40,117
$ 5,312 $
7,549 $ 11,922
$ 24,784 LESS: Special charges (recoveries),
net of tax (794 ) - (405 ) - (1,199 ) - - - - Impairment charges -
- - 295 295 Leslie asbestos and bankruptcy charges (recoveries),
net of tax 5,371 2,237 1,285 26,258 35,151 (421 ) 18,790 1,523
19,892 NET INCOME $ 10,460 $ 7,732 $ 8,405
$ (20,727 ) $ 5,870 $ 5,733 $ (11,241 ) $
10,399 $ 4,892
ADJUSTED
WEIGHTED AVERAGE SHARES N/A
N/A N/A
17,140 N/A
N/A
17,109 N/A
17,095 Adjustment for anti-dilutive conversion
of shares - - - 107 - - 153 - 143
Weighted average common shares
outstanding (diluted) 17,014 17,066
17,116 17,033 17,111
17,193 17,262 17,258
17,238
ADJUSTED EARNINGS PER
SHARE [EPS EXCLUDING SPECIAL, IMPAIRMENT, AND LESLIE
ASBESTOS AND BANKRUPTCY CHARGES, NET OF TAX]
$ 0.88 $ 0.58
$ 0.54 $
0.34 $ 2.34
$ 0.31 $ 0.44
$ 0.69 $ 1.45
LESS: Special charges (recoveries),
net of tax impact on EPS
$ (0.05 ) $ - $ (0.02 ) $ - $ (0.07 ) $ - $ - $ - $ - Impairment
charges $ - $ - $ - $ 0.02 $ 0.02 Leslie asbestos and bankruptcy
charges (recoveries), net of tax impact on EPS $ 0.32 $ 0.13 $ 0.08
$ 1.54 $ 2.05 $ (0.02 ) $ 1.10 $ 0.09 $ 1.16
EARNINGS PER COMMON SHARE
(Diluted) $ 0.61 $ 0.45 $ 0.49 $ (1.22 ) $
0.34 $ 0.33 $ (0.66 ) $ 0.60 $ 0.28
CIRCOR INTERNATIONAL, INC Leslie Controls Asbestos
Items (in thousands, except case information)
2009 2010 1ST QTR 2ND QTR
3RD QTR 4TH QTR YTD 1ST
QTR 2ND QTR 3RD QTR
YTD Quarterly Case
Rollforward Beginning open cases 968 1,103 1,158
1,143 968 1,104 1,150 1,214 1,104 Cases filed 222 203 131 131 687
150 169 132 451 Cases resolved and dismissed (87 ) (148 ) (146 )
(170 ) (551 ) (104 ) (105 ) (6 ) (215 )
Ending open cases 1,103
1,158 1,143 1,104
1,104 1,150 1,214
1,340 1,340
Ending open
mesothelioma cases 578 584
612 597 597 623
672 713 713
Income Statement Amounts Indemnity costs
accrued (cases filed) $ 4,602 $ 2,109 $ 1,140 $ 39,810 $ 47,661 $
699 $ 1,797 $ - $ 2,496 Adverse verdict costs (recoveries) 90 97 95
(1,308 ) (1,026 ) 65 (2,455 ) - (2,390 ) Defense costs incurred
3,166 3,275 3,009 2,862 12,312 3,731 3,435 16 7,182 Insurance
recoveries adjustment 2,069 - - - 2,069 (3,652 ) - - (3,652 )
Insurance recoveries accrued (1,664 ) (2,039 ) (2,268 ) (966 )
(6,937 ) (1,491 ) (1,135 ) - (2,626 ) Leslie Bankruptcy related
charges, net - - - - - - 27,266 2,327 29,593 Net pre-tax
Leslie asbestos and
bankruptcy expense
(recovery) $ 8,263 $ 3,442 $ 1,976 $ 40,398
$ 54,079 $ (648 ) $ 28,908 $
2,343 $ 30,603
Balance Sheet
Amounts Bankruptcy and indemnity liability $
20,781 $ 19,849 $ 20,060 $ 57,716 $ 57,732 $ 78,976 $ 78,067
Incurred defense cost liability 4,212 5,169 3,615 2,544 2,099 3,455
1,997 Insurance recoveries receivable (9,088 ) (7,426
) (6,485 ) (4,614 ) (7,997 ) (1,180 )
(194 ) Net Leslie asbestos liability $ 15,905 $
17,592 $ 17,190 $ 55,646 $ 51,834 $
81,251 $ 79,870
CIRCOR INTERNATIONAL,
INC. RECONCILIATION OF FUTURE PERFORMANCE MEASURES TO
COMMONLY USED GENERALLY ACCEPTED ACCOUNTING PRINCIPLE
TERMS UNAUDITED 4TH QTR 2010
Low High
EXPECTED ADJUSTED EARNINGS PER SHARE [EPS
EXCLUDING SPECIAL, IMPAIRMENT, AND LESLIE ASBESTOS AND
BANKRUPTCY CHARGES, NET OF TAX] $ 0.50
$ 0.63 LESS: Expected special charges
(recoveries), net of tax impact on EPS $ - $ - Expected impairment
charges, net of tax impact on EPS $ - $ - Expected Leslie asbestos
and bankruptcy charges, net of tax impact on EPS $ 0.06 $ 0.06
EXPECTED EARNINGS PER COMMON
SHARE (Diluted) $ 0.44 $ 0.57
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