CIRCOR International, Inc. (NYSE: CIR), a leading provider of
flow control solutions and other highly engineered products for the
Industrial, Energy and Aerospace & Defense markets, today
announced financial results for the second quarter ended June 30,
2019.
Second-Quarter 2019 Highlights
- Orders of $276 million and Revenue of $270 million
- Orders in A&D grew 57% year-over-year
- GAAP Operating Margin of 1.5%, down 120 bps year-over-year; 280
bps sequentially
- GAAP Loss per Share of $(0.93)
- $0.45 Adjusted Earnings per Share; $0.56 excluding Engineered
Valves
- Adjusted Operating Margin of 8.7%, up 50 bps year-over-year;
120 bps sequentially
- Completed divestiture of non-core Engineered Valves in
July
- Adjusted Operating Margin of 10.0% excluding Engineered
Valves
- Industrial Segment Operating Margin of 13.5%, up 200 bps
year-over-year; 380 bps sequentially
- A&D Segment Operating Margin of 16.1%, up 390 bps
year-over-year; 80 bps sequentially
“We reported solid second-quarter 2019 results driven by strong
performance in our Industrial and Aerospace & Defense
businesses,” said Scott Buckhout, President and Chief Executive
Officer. “We reduced our debt by almost $60 million in the first
half of 2019, underscoring our commitment to deleveraging. In July,
we completed the divestiture of our loss-making upstream oil &
gas engineered valve business, which is consistent with our
strategy to exit non-core businesses and further simplify the
Company.”
Mr. Buckhout continued, “As detailed in our June investor update
presentation, we are executing on a detailed plan to deliver
substantial earnings growth while deleveraging over the next 18
months. Our second-quarter results are right in line with that
plan.
“Looking ahead to the second half of the year, we expect results
to continue to improve as we benefit from higher volume, price
increases and additional integration savings. We remain focused on
enhancing shareholder value and we are confident that our plan will
deliver significant value in the near- and long-term,” concluded
Mr. Buckhout.
Execution of Our Strategic Plan and Evaluation of Value
Creation Opportunities – Our Path Forward
The CIRCOR Board of Directors and management team have taken
decisive actions over the past five years to transform the Company,
and we continue to build on that transformation. CIRCOR has
outlined a comprehensive 18-month plan to deliver substantial value
to shareholders. We delivered on our plan in the second quarter,
and we are confident in our previously provided outlook for the
balance of 2019 and 2020. As we continue to build on our
transformation and execute our strategic plan, the Company will
evaluate a broad range of operational, financial, and strategic
options that could potentially deliver value in excess of the
strategic plan. These options include further portfolio
simplification, capital allocation opportunities, and the sale of
part or all of CIRCOR, among others. There can be no assurance that
the Company will pursue any particular action or transaction;
however, CIRCOR will assess all viable paths to enhancing
shareholder value, including continuing to execute our strategic
plan.
Third-Quarter 2019 Guidance For the third quarter of
2019, CIRCOR expects revenue in the range of $250 million to $260
million, and GAAP loss per share in the range of $(2.15) to
$(1.85), which reflects acquisition-related amortization expense of
$(0.49) and other special and restructuring charges of $(2.18) to
$(1.96), including an expected loss on the sale of the Engineered
Valves business in the range of $(1.85) to $(1.65). Excluding the
impact of amortization, special and restructuring (charges) gains,
adjusted EPS is expected to be in the range of $0.52 to $0.60 per
share. The revenue and adjusted EPS exclude the results from the
Company’s Engineered Valves business, which was divested in July.
Presentation slides that provide supporting information to this
guidance and second-quarter results are posted on the “Investors”
section of the Company’s website, http://investors.circor.com, and
will be discussed during the conference call at 9:00 a.m. ET today,
August 1, 2019.
Selected Consolidated Results (unaudited)
($ millions except EPS)
Q2 2019
Q2 2018
Change
Revenue
$
269.6
$
301.4
(11)%
Revenue excluding divested
businesses1
$
269.6
$
282.5
(5)%
GAAP Operating Income
$
4.1
$
8.3
(51)%
Adjusted Operating Income2
$
23.6
$
24.8
(5)%
GAAP Operating Margin
1.5%
2.7%
(120) bps
Adjusted Operating Margin2
8.7%
8.2%
50 bps
GAAP (Loss) Earnings Per Share
(Diluted)
$
(0.93)
$
0.30
N/M
Adjusted Earnings Per Share
(Diluted)2
$
0.45
$
0.57
(21)%
Operating Cash Flow
$
12.3
$
(0.5)
N/M
Free Cash Flow3
$
9.3
$
(4.0)
N/M
Orders
$
276.3
$
309.4
(11)%
Orders excluding divested
businesses1
$
276.3
$
286.5
(4)%
Segment Results
($ millions)
Q2 2019
Q2 2018
Change
Energy
Revenue
$
85.6
$
112.8
(24)%
Revenue excluding divested
business1
$
85.6
$
95.4
(10)%
Segment Operating Income
$
3.5
$
9.2
(62)%
Segment Operating Margin
4.1%
8.2%
(410) bps
Orders
$
62.2
$
113.2
(45)%
Orders excluding divested
business1
$
62.2
$
94.8
(34)%
Aerospace & Defense
Revenue
$
64.7
$
57.5
13%
Segment Operating Income
$
10.4
$
7.0
49%
Segment Operating Margin
16.1%
12.2%
390 bps
Orders
$
93.4
$
59.4
57%
Industrial
Revenue
$
119.3
$
131.1
(9)%
Revenue excluding divested
business1
$
119.3
$
129.6
(8)%
Segment Operating Income
$
16.1
$
15.0
7%
Segment Operating Margin
13.5%
11.5%
200 bps
Orders
$
120.7
$
136.7
(12)%
Orders excluding divested
business1
$
120.7
$
132.3
(9)%
- Orders and revenue excluding divested businesses are non-GAAP
measures and are calculated by subtracting the orders and revenues
generated by the divested businesses during the periods prior to
their divestiture from the reported orders and revenues. Divested
businesses include Reliability Services (Energy) and Delden
(Industrial), which were sold before Q2 2019. No adjustment has
been made for Engineered Valves which was sold in Q3 2019.
- Adjusted Consolidated and Segment Results for Q2 2019 exclude
non-cash acquisition-related intangible amortization, special and
restructuring charges totaling $19.5 million ($23.2 million, net of
tax). These charges include: (i) $12.4 million charge for non-cash
acquisition-related intangible amortization and depreciation
expense; (ii ) $2.1 million of professional fees associated with an
unsolicited tender offer to acquire all outstanding shares of the
Company’s common stock; (iii) $1.3 million for
restructuring-related inventory charges; (iv) $1.1 million loss
associated with divested businesses; and (v) $2.6 million of other
special and restructuring charges. Adjusted Consolidated and
Segment Results for Q2 2018 exclude non-cash acquisition-related
intangible amortization, special and restructuring charges totaling
$16.6 million ($5.5 million, net of tax). These charges include:
(i) $13.5 million charge for non-cash acquisition-related
intangible amortization expense and amortization of the step-up in
fixed asset values; (ii) $1.9 million charge related to
restructuring activities, primarily severance, related to our
Engineered Valves, Reliability Services and Germany-based Pumps
business; and (iii) $1.2 million primarily related to the
separation of the Fluid Handling business from Colfax Corporation
and exiting a product line.
- Free Cash Flow is a non-GAAP financial measure and is
calculated by subtracting GAAP capital expenditures, net of
proceeds from asset sales, from GAAP Operating Cash Flow.
Conference Call Information CIRCOR International will
hold a conference call to review its financial results at 9:00 a.m.
ET today, August 1, 2019. To listen to the live conference call and
view the accompanying presentation slides, please visit “Webcasts
& Presentations” in the “Investors” portion of CIRCOR’s
website. The live call also can be accessed by dialing (877)
407-5790 or (201) 689-8328. The webcast will be archived on the
Company’s website for one year.
Use of Non-GAAP Financial
Measures
Adjusted operating income, Adjusted
operating margin, Adjusted net income, Adjusted earnings per share
(diluted), EBITDA, Adjusted EBITDA, net debt, free cash flow,
organic growth, pro forma combined amounts and pro forma organic
growth (and such measures further excluding Engineered Valves) are
non-GAAP financial measures. These non-GAAP financial measures are
used by management in our financial and operating decision making
because we believe they reflect our ongoing business and facilitate
period-to-period comparisons. We believe these non-GAAP financial
measures provide useful information to investors and others in
understanding and evaluating the Company’s current operating
performance and future prospects in the same manner as management
does, if they so choose. These non-GAAP financial measures also
allow investors and others to compare the Company’s current
financial results with the Company’s past financial results in a
consistent manner.
For example:
- We exclude costs and tax effects associated with restructuring
activities, such as reducing overhead and consolidating facilities.
We believe that the costs related to these restructuring activities
are not indicative of our normal operating costs.
- We exclude certain acquisition-related costs, including
significant transaction costs and amortization of inventory and
fixed-asset step-ups and the related tax effects. We exclude these
costs because we do not believe they are indicative of our normal
operating costs.
- We exclude the expense and tax effects associated with the
non-cash amortization of acquisition-related intangible assets
because a significant portion of the purchase price for
acquisitions may be allocated to intangible assets that have lives
up to 25 years. Exclusion of the non-cash amortization expense
allows comparisons of operating results that are consistent over
time for both our newly acquired and long-held businesses and with
both acquisitive and non-acquisitive peer companies.
- We also exclude certain gains/losses and related tax effects,
which are either isolated or cannot be expected to occur again with
any predictability, and that we believe are not indicative of our
normal operating gains and losses. For example, we exclude
gains/losses from items such as the sale of a business, significant
litigation-related matters and lump-sum pension plan
settlements.
- Due to the significance of recently sold businesses and to
provide a comparison of changes in our orders and revenue, we also
discuss these changes on an “organic” basis. Organic is calculated
assuming the divestitures completed prior to June 30, 2019 were
completed on January 1, 2018 and excluding the impact of changes in
foreign currency exchange rates.
CIRCOR’s management uses these non-GAAP measures, in addition to
GAAP financial measures, as the basis for measuring the Company’s
operating performance and comparing such performance to that of
prior periods and to the performance of our competitors. We use
such measures when publicly providing our business outlook,
assessing future earnings potential, evaluating potential
acquisitions and dispositions and in our financial and operating
decision-making process, including for compensation purposes.
Investors should recognize that these non-GAAP measures might
not be comparable to similarly titled measures of other companies.
These measures should be considered in addition and not as a
substitute for or superior to, any measure of performance, cash
flow or liquidity prepared in accordance with accounting principles
generally accepted in the United States. A reconciliation of the
non-GAAP financial measures to the most directly comparable GAAP
measures is included in this news release.
Safe Harbor Statement This press release contains
forward-looking statements within the meaning of Section 27 A of
the Securities Act of 1933, as amended, and Section 21 E 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 third-quarter 2019 guidance, our future performance,
including future growth and profitability, increase in shareholder
value, realization of cost reductions from restructuring activities
and expected synergies, plans to reduce our outstanding debt and
our corporate priorities. Actual events, performance or results
could differ materially from the anticipated events, performance or
results expressed or implied by such forward-looking statements.
Important factors that could cause actual results to vary from
expectations include, but are not limited to: our ability to
respond to competitive developments and to grow our business, both
domestically and internationally; changes in the cost, quality or
supply of raw materials; our ability to comply with our debt
obligations; our ability to successfully implement our acquisition,
divestiture or restructuring strategies, including our integration
of the Fluid Handling business; changes in industry standards,
trade policies or government regulations, both in the United States
and internationally; our ability to operate our manufacturing
facilities at current or higher levels and respond to increases in
manufacturing costs; and any actions of stockholders or others in
response to expiration of the recent unsolicited tender offer and
the cost and disruption of responding to those actions. 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 differentiated technology
products and sub-systems for markets including oil & gas,
industrial, aerospace & defense and commercial marine. CIRCOR
has a diversified flow and motion control product portfolio with
recognized, market-leading brands that fulfill its customers’
mission critical needs. The Company’s strategy is to grow
organically and through complementary acquisitions; simplify
CIRCOR’s operations; achieve world class operational excellence;
and attract and retain top talent. For more information, visit the
Company’s investor relations website at
http://investors.circor.com.
CIRCOR INTERNATIONAL,
INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(in thousands, except per
share data)
(UNAUDITED)
Three Months Ended
Six Months Ended
June 30, 2019
July 1, 2018
June 30, 2019
July 1, 2018
Net revenues
$
269,607
$
301,368
$
540,002
$
576,948
Cost of revenues
191,079
213,117
387,605
412,393
GROSS PROFIT
78,528
88,251
152,397
164,555
Selling, general and administrative
expenses
69,408
77,999
139,380
155,237
Special and restructuring charges
(recoveries), net
4,992
2,000
(2,823
)
14,446
OPERATING INCOME (LOSS)
4,128
8,252
15,840
(5,128
)
Other expense (income):
Interest expense, net
12,856
13,755
26,035
25,556
Other expense (income), net
81
(3,759
)
(1,832
)
(5,620
)
TOTAL OTHER EXPENSE, NET
12,937
9,996
24,203
19,936
LOSS BEFORE INCOME TAXES
(8,809
)
(1,744
)
(8,363
)
(25,064
)
Provision for (benefit from) income
taxes
9,711
(7,646
)
14,790
(13,525
)
NET (LOSS) INCOME
$
(18,520
)
$
5,902
$
(23,153
)
$
(11,539
)
(Loss) earnings per common share:
Basic
$
(0.93
)
$
0.30
$
(1.16
)
$
(0.58
)
Diluted
$
(0.93
)
$
0.30
$
(1.16
)
$
(0.58
)
Weighted average number of common shares
outstanding:
Basic
19,906
19,836
19,888
19,821
Diluted
19,906
20,005
19,888
19,821
CIRCOR INTERNATIONAL,
INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(in thousands)
(UNAUDITED)
Six Months Ended
OPERATING ACTIVITIES
June 30, 2019
July 1, 2018
Net loss
$
(23,153
)
$
(11,539
)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation
12,173
14,491
Amortization
24,355
24,611
Bad debt expense
75
903
Loss on write down of inventory
6,620
4,076
Amortization of inventory fair value
step-up
—
6,600
Compensation expense for share-based
plans
3,132
2,866
Amortization of debt issuance costs
1,997
2,008
Loss on sale or write-down of property,
plant and equipment
(826
)
1,037
Gain on sale of business
(9,165
)
—
Changes in operating assets and
liabilities, net of effects of acquisition and disposition:
Trade accounts receivable
13,570
13,163
Inventories
(15,048
)
(14,824
)
Prepaid expenses and other assets
(5,363
)
(16,617
)
Accounts payable, accrued expenses and
other liabilities
(18,406
)
(27,385
)
Net cash used in operating activities
(10,039
)
(610
)
INVESTING ACTIVITIES
Additions to property, plant and
equipment
(7,542
)
(11,879
)
Proceeds from the sale of property, plant
and equipment
858
175
Proceeds from the sale of business,
net
82,203
—
Business acquisition, working capital
consideration adjustment
—
6,300
Net cash provided by (used in) investing
activities
75,519
(5,404
)
FINANCING ACTIVITIES
Proceeds from long-term debt
149,500
136,600
Payments of long-term debt
(208,300
)
(105,511
)
Proceeds from the exercise of stock
options
106
440
Return of cash to Fluid Handling
Seller
—
(61,201
)
Net cash used in financing activities
(58,694
)
(29,672
)
Effect of exchange rate changes on cash,
cash equivalents and restricted cash
793
(5,785
)
INCREASE (DECREASE) IN CASH, CASH
EQUIVALENTS, AND RESTRICTED CASH
7,579
(41,471
)
Cash, cash equivalents, and restricted
cash at beginning of period
69,525
112,293
CASH, CASH EQUIVALENTS, AND RESTRICTED
CASH AT END OF PERIOD
$
77,104
$
70,822
CIRCOR INTERNATIONAL,
INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(in thousands, except share
and per share data)
(UNAUDITED)
June 30, 2019
December 31, 2018
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
$
76,082
$
68,517
Trade accounts receivable, less allowance
for doubtful accounts of $4,695 and $6,735 at June 30, 2019 and
December 31, 2018, respectively
166,623
183,552
Inventories
226,953
217,378
Prepaid expenses and other current
assets
99,012
90,659
Assets held for sale
4,520
87,940
Total Current Assets
573,190
648,046
PROPERTY, PLANT AND EQUIPMENT, NET
194,932
201,799
OTHER ASSETS:
Goodwill
461,771
459,205
Intangibles, net
410,957
441,302
Deferred income taxes
31,548
28,462
Other assets
40,299
12,798
TOTAL ASSETS
$
1,712,697
$
1,791,612
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable
$
118,648
$
123,881
Accrued expenses and other current
liabilities
107,445
107,312
Accrued compensation and benefits
30,314
33,878
Current portion of long-term debt
—
7,850
Liabilities held for sale
—
11,141
Total Current Liabilities
256,407
284,062
LONG-TERM DEBT
728,653
778,187
DEFERRED INCOME TAXES
38,232
33,932
PENSION LIABILITY, NET
149,204
150,623
OTHER NON-CURRENT LIABILITIES
45,302
15,815
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS’ EQUITY:
Preferred stock, $0.01 par value;
1,000,000 shares authorized; no shares issued and outstanding
—
—
Common stock, $0.01 par value; 29,000,000
shares authorized; 19,900,885
and 19,845,205 shares issued and
outstanding at June 30, 2019 and December 31, 2018,
respectively
212
212
Additional paid-in capital
444,109
440,890
Retained earnings
210,065
232,102
Common treasury stock, at cost (1,372,488
shares at June 30, 2019 and December 31, 2018)
(74,472
)
(74,472
)
Accumulated other comprehensive loss, net
of tax
(85,015
)
(69,739
)
Total Shareholders’ Equity
494,899
528,993
TOTAL LIABILITIES AND SHAREHOLDERS’
EQUITY
$
1,712,697
$
1,791,612
CIRCOR INTERNATIONAL,
INC.
SUMMARY OF ORDERS AND
BACKLOG
(in millions)
UNAUDITED
Three Months Ended
Six Months Ended
June 30, 2019
July 1, 2018
June 30, 2019
July 1, 2018
ORDERS (1)
Energy
$
62.2
$
113.2
$
130.0
$
242.9
Aerospace & Defense
93.4
59.4
181.5
119.2
Industrial
120.7
136.7
244.4
273.4
Total orders
$
276.3
$
309.3
$
555.9
$
635.5
BACKLOG (2)
June 30, 2019
July 1, 2018
Energy
$
116.2
$
217.7
Aerospace & Defense
235.0
152.1
Industrial
175.7
167.3
Total backlog
$
526.9
$
537.1
Note 1: Orders do not include the foreign
exchange impact due to the re-measurement of customer order backlog
amounts denominated in foreign currencies. Q2 2018 orders include
$22.8 million, related to businesses divested prior to June 30,
2019 (Reliability Services and Delden).
Note 2: Backlog includes unshipped
customer orders for which revenue has not been recognized. Backlog
at Q2 2018 includes $29.0 million related to businesses divested
prior to June 30, 2019 (Reliability Services and Delden).
CIRCOR INTERNATIONAL,
INC.
SEGMENT INFORMATION
(in thousands, except
percentages)
UNAUDITED
2018
2019
1ST QTR
2ND QTR
3RD QTR
4TH QTR
TOTAL
1ST QTR
2ND QTR
TOTAL
ORDERS
Energy
$
129,762
$
113,171
$
110,987
$
97,990
$
451,910
$
67,770
$
62,239
$
130,009
Aerospace & Defense
59,793
59,441
81,533
76,702
277,469
88,107
93,405
181,512
Industrial
136,607
136,746
114,876
121,886
510,115
123,746
120,660
244,406
Total
$
326,162
$
309,358
$
307,396
$
296,578
$
1,239,494
$
279,623
$
276,304
$
555,927
NET REVENUES
Energy
$
99,972
$
112,804
$
121,023
$
117,433
$
451,232
$
98,417
$
85,591
$
184,008
Aerospace & Defense
58,477
57,500
57,757
63,283
237,017
61,240
64,694
125,934
Industrial
117,131
131,064
118,734
120,647
487,576
110,738
119,322
230,060
Total
$
275,580
$
301,368
$
297,514
$
301,363
$
1,175,825
$
270,395
$
269,607
$
540,002
SEGMENT OPERATING INCOME
Energy
$
5,696
$
9,242
$
9,163
$
9,396
$
33,497
$
6,783
$
3,498
$
10,281
Aerospace & Defense
8,931
6,992
8,709
11,415
36,047
9,374
10,443
19,817
Industrial
12,948
15,037
14,609
14,746
57,340
10,786
16,138
26,924
Corporate expenses
(7,802
)
(6,448
)
(8,034
)
(8,015
)
(30,299
)
(6,703
)
(6,493
)
(13,196
)
CIRCOR Adjusted Operating
Income
$
19,773
$
24,823
$
24,447
$
27,542
$
96,585
$
20,240
$
23,586
$
43,826
SEGMENT OPERATING MARGIN %
Energy
5.7
%
8.2
%
7.6
%
8.0
%
7.4
%
6.9
%
4.1
%
5.6
%
Aerospace & Defense
15.3
%
12.2
%
15.1
%
18.0
%
15.2
%
15.3
%
16.1
%
15.7
%
Industrial
11.1
%
11.5
%
12.3
%
12.2
%
11.8
%
9.7
%
13.5
%
11.7
%
CIRCOR Adjusted Operating
Margin
7.2
%
8.2
%
8.2
%
9.1
%
8.2
%
7.5
%
8.7
%
8.1
%
SEGMENT OPERATING MARGIN % EXCLUDING
DIVESTITURES
Energy
6.7
%
7.5
%
6.0
%
7.8
%
7.0
%
7.1
%
4.1
%
5.7
%
Aerospace & Defense
15.3
%
12.2
%
15.1
%
18.0
%
15.2
%
15.3
%
16.1
%
15.7
%
Industrial
11.4
%
11.9
%
12.8
%
12.7
%
12.2
%
9.7
%
13.5
%
11.7
%
CIRCOR Adjusted Operating Margin
Excluding Divestitures (1)
7.7
%
8.2
%
7.9
%
9.3
%
8.3
%
7.6
%
8.7
%
10.6
%
(1) Divestitures are Reliability Services
(Energy) sold in January 2019 and Delden (Industrial) sold in
October 2018. The table above does not reflect the removal of the
Engineered Valves business sold in July 2019.
CIRCOR INTERNATIONAL
INC.
SUPPLEMENTAL INFORMATION
REGARDING DIVESTED BUSINESSES
(in thousands)
UNAUDITED
2018
2019
DIVESTED
BUSINESSES (1)
1st QTR
2nd QTR
3rd QTR
4th QTR
Total
1st QTR
2nd QTR
Total
ORDERS
Energy
$
16,891
$
18,389
$
19,145
$
15,451
$
69,875
4,104
$
—
$
4,104
Industrial
4,848
4,484
2,302
4,796
16,430
—
—
—
CIRCOR
$
21,738
$
22,873
$
21,446
$
20,247
$
86,305
4,104
$
—
$
4,104
NET REVENUES
Energy
$
14,731
$
17,419
$
16,579
$
16,885
$
65,613
3,106
$
—
$
3,106
Industrial
3,897
1,499
2,070
3,846
11,312
—
—
—
CIRCOR
$
18,628
$
18,918
$
18,649
$
20,731
$
76,925
3,106
$
—
$
3,106
SEGMENT OPERATING INCOME
Energy
$
8
$
2,085
$
2,905
$
1,597
$
6,596
—
$
—
$
—
Industrial
79
(427)
(371)
(78)
(798)
—
—
—
CIRCOR
$
87
$
1,658
$
2,534
$
1,519
$
5,798
—
$
—
$
—
(1) Divested businesses include
Reliability Services (Energy) sold in January 2019 and Delden
(Industrial) sold in October 2018.
ENGINEERED
VALVES
The table above does not include the
results of the Engineered Valves business in the Energy segment
which was sold in July 2019. Its results are:
2018
2019
1st QTR
2nd QTR
3rd QTR
4th QTR
Total
1st QTR
2nd QTR
Total
Orders
$
20,489
$
21,889
$
4,695
$
11,324
$
58,397
7,257
9,218
$
16,475
Net Revenues
9,600
8,674
17,491
14,633
50,398
14,331
8,304
22,635
Segment Operating Income
(1,512)
(3,314)
(1,996)
(1,767)
(8,589)
(1,569)
(2,456)
(4,025)
CIRCOR INTERNATIONAL,
INC.
RECONCILIATION OF KEY
PERFORMANCE MEASURES TO COMMONLY USED GENERALLY ACCEPTED ACCOUNTING
PRINCIPLE TERMS
(in thousands, except
percentages)
UNAUDITED
2018
2019
1ST QTR
2ND QTR
3RD QTR
4TH QTR
TOTAL
1ST QTR
2ND QTR
TOTAL
NET CASH (USED IN) PROVIDED BY
OPERATING ACTIVITIES
$
(145
)
$
(465
)
$
24,073
$
30,531
$
53,994
$
(22,378
)
$
12,339
$
(10,039
)
LESS:
Capital expenditures, net of sale
proceeds
8,141
3,563
5,119
6,534
23,357
3,689
2,995
6,684
FREE CASH FLOW
$
(8,286
)
$
(4,028
)
$
18,954
$
23,997
$
30,637
$
(26,067
)
$
9,344
$
(16,723
)
GROSS DEBT
$
823,665
$
827,629
$
831,613
$
807,050
$
807,050
$
753,950
$
748,250
$
748,250
LESS: Cash & cash equivalents
123,305
69,030
71,334
68,517
68,517
73,619
76,082
76,082
GROSS DEBT, NET OF CASH
$
700,360
$
758,599
$
760,279
$
738,533
$
738,533
$
680,331
$
672,168
$
672,168
TOTAL SHAREHOLDERS' EQUITY
$
592,096
$
573,992
$
574,171
$
528,993
$
528,993
$
516,177
$
494,899
$
494,899
GROSS DEBT AS % OF EQUITY
139
%
144
%
145
%
153
%
153
%
146
%
151
%
151
%
GROSS DEBT, NET OF CASH AS % OF
EQUITY
118
%
132
%
132
%
140
%
140
%
132
%
136
%
136
%
CIRCOR INTERNATIONAL,
INC.
RECONCILIATION OF KEY
PERFORMANCE MEASURES TO COMMONLY USED GENERALLY ACCEPTED ACCOUNTING
PRINCIPLE TERMS
(in thousands, except per
share data)
UNAUDITED
2018
2019
1ST QTR
2ND QTR
3RD QTR
4TH QTR
TOTAL
1ST QTR
2ND QTR
TOTAL
NET (LOSS) INCOME
$
(17,441
)
$
5,902
$
(6,841
)
$
(21,005
)
$
(39,385
)
$
(4,633
)
$
(18,520
)
$
(23,153
)
LESS:
Restructuring related inventory
charges
473
1,067
—
862
2,402
3,143
2,112
5,255
Amortization of inventory step-up
6,600
—
—
—
6,600
—
—
—
Restructuring charges, net
9,615
844
1,348
945
12,752
863
1,527
2,390
Acquisition amortization
11,797
11,767
11,733
12,013
47,310
12,078
11,247
23,325
Acquisition depreciation
1,837
1,735
1,742
1,735
7,049
1,122
1,107
2,229
Special charges (recoveries), net
2,831
1,156
1,408
5,692
11,087
(8,678
)
3,465
(5,213
)
Income tax impact
(7,687
)
(11,056
)
967
12,124
(5,652
)
3,751
8,164
11,915
ADJUSTED NET INCOME
$
8,025
$
11,415
$
10,357
$
12,366
$
42,163
$
7,645
$
9,102
$
16,748
EARNINGS (LOSS) PER COMMON SHARE
(Diluted)
$
(0.88
)
$
0.30
$
(0.34
)
$
(1.05
)
$
(1.99
)
$
(0.23
)
$
(0.93
)
$
(1.16
)
LESS:
Restructuring related inventory
charges
0.02
0.05
—
0.04
0.12
0.16
0.11
0.26
Amortization of inventory step-up
0.33
—
—
—
0.33
—
—
—
Restructuring charges, net
0.49
0.04
0.07
0.05
0.64
0.04
0.08
0.12
Acquisition amortization
0.60
0.59
0.59
0.60
2.37
0.60
0.57
1.17
Acquisition depreciation
0.09
0.09
0.09
0.09
0.35
0.06
0.06
0.11
Special charges (recoveries), net
0.14
0.06
0.07
0.29
0.55
(0.43
)
0.17
(0.26
)
Income tax impact
(0.39
)
(0.55
)
0.05
0.61
(0.28
)
0.19
0.39
0.60
ADJUSTED EARNINGS PER SHARE
(Diluted)
$
0.40
$
0.57
$
0.52
$
0.62
$
2.11
$
0.38
$
0.45
$
0.84
CIRCOR INTERNATIONAL,
INC.
RECONCILIATION OF KEY
PERFORMANCE MEASURES TO COMMONLY USED GENERALLY ACCEPTED ACCOUNTING
PRINCIPLE TERMS
(in thousands)
UNAUDITED
2018
2019
1ST QTR
2ND QTR
3RD QTR
4TH QTR
TOTAL
1ST QTR
2ND QTR
TOTAL
NET (LOSS) INCOME
$
(17,441
)
$
5,902
$
(6,841
)
$
(21,005
)
$
(39,385
)
$
(4,633
)
$
(18,520
)
$
(23,153
)
LESS:
Interest expense, net
(11,801
)
(13,755
)
(14,100
)
(13,257
)
(52,913
)
(13,179
)
(12,856
)
(26,035
)
Depreciation
(7,334
)
(7,157
)
(7,065
)
(7,198
)
(28,754
)
(5,944
)
(6,229
)
(12,173
)
Amortization
(12,329
)
(12,282
)
(12,234
)
(12,410
)
(49,255
)
(12,836
)
(11,519
)
(24,355
)
Benefit from (provision for) income
taxes
5,879
7,646
(2,537
)
(14,278
)
(3,290
)
(5,079
)
(9,711
)
(14,790
)
EBITDA
$
8,144
$
31,450
$
29,095
$
26,138
$
94,827
$
32,405
$
21,795
$
54,200
LESS:
Restructuring related inventory
charges
(473
)
(1,067
)
—
(862
)
(2,402
)
(3,143
)
(2,112
)
(5,255
)
Amortization of inventory step-up
(6,600
)
—
—
—
(6,600
)
—
—
—
Restructuring charges, net
(9,615
)
(844
)
(1,348
)
(945
)
(12,752
)
(863
)
(1,527
)
(2,390
)
Special (charges) recoveries, net
(2,831
)
(1,156
)
(1,408
)
(5,692
)
(11,087
)
8,678
(3,465
)
5,213
ADJUSTED EBITDA
$
27,663
$
34,517
$
31,851
$
33,637
$
127,668
$
27,733
$
28,899
$
56,632
CIRCOR INTERNATIONAL,
INC.
RECONCILIATION OF KEY
PERFORMANCE MEASURES TO COMMONLY USED GENERALLY ACCEPTED ACCOUNTING
PRINCIPLE TERMS
(in thousands, except
percentages)
UNAUDITED
2018
2019
1ST QTR
2ND QTR
3RD QTR
4TH QTR
TOTAL
1ST QTR
2ND QTR
TOTAL
GAAP OPERATING INCOME (LOSS)
$
(13,380
)
$
8,252
$
8,216
$
6,296
$
9,384
$
11,712
$
4,128
$
15,840
LESS:
Restructuring related inventory
charges
473
1,067
—
862
2,402
3,143
2,112
5,255
Amortization of inventory step-up
6,600
—
—
—
6,600
—
—
—
Restructuring charges, net
9,615
844
1,348
945
12,752
863
1,527
2,390
Acquisition amortization
11,797
11,767
11,733
12,013
47,310
12,078
11,247
23,325
Acquisition depreciation
1,837
1,735
1,742
1,735
7,049
1,122
1,107
2,229
Special charges (recoveries), net
2,831
1,156
1,408
5,692
11,087
(8,678
)
3,465
(5,213
)
ADJUSTED OPERATING INCOME
$
19,773
$
24,821
$
24,447
$
27,543
$
96,584
$
20,240
$
23,586
$
43,826
GAAP OPERATING MARGIN
(4.9
)%
2.7
%
2.8
%
2.1
%
0.8
%
4.3
%
1.5
%
2.9
%
LESS:
Restructuring related inventory
charges
0.2
%
0.4
%
—
%
0.3
%
0.2
%
1.2
%
0.8
%
1.0
%
Amortization of inventory step-up
2.4
%
—
%
—
%
—
%
0.6
%
—
%
—
%
—
%
Restructuring charges, net
3.5
%
0.3
%
0.5
%
0.3
%
1.1
%
0.3
%
0.6
%
0.4
%
Acquisition amortization
4.3
%
3.9
%
3.9
%
4.0
%
4.0
%
4.5
%
4.2
%
4.3
%
Acquisition depreciation
0.7
%
0.6
%
0.6
%
0.6
%
0.6
%
0.4
%
0.4
%
0.4
%
Special charges (recoveries), net
1.0
%
0.4
%
0.5
%
1.9
%
0.9
%
(3.2
)%
1.3
%
(1.0
)%
ADJUSTED OPERATING MARGIN
7.2
%
8.2
%
8.2
%
9.1
%
8.2
%
7.5
%
8.7
%
8.0
%
Impact of Divestitures (1)
0.5
%
—
%
(0.3
)%
0.2
%
0.1
%
0.1
%
—
%
0.1
%
ADJUSTED OPERATING MARGIN EXCLUDING
DIVESTITURES (1)
7.7
%
8.2
%
7.9
%
9.3
%
8.3
%
7.6
%
8.7
%
8.1
%
(1) Divestitures are Reliability Services
(Energy) sold in January 2019 and Delden (Industrial) sold in
October 2018. The above table does not reflect the removal of
Engineered Valves business sold in July 2019.
CIRCOR INTERNATIONAL,
INC.
Q2 2019 Organic Growth
Calculations
(in millions, except
percentages)
UNAUDITED
Industrial
Energy
Aerospace &
Defense
CIRCOR
ORDERS
$
%
$
%
$
%
$
%
Q2 2018
$
136.7
$
113.2
$
59.4
$
309.4
Divestitures (1)
(4.5
)
(18.4
)
—
(22.9
)
Q1 2018 Excluding Divestitures
132.3
94.8
59.4
286.5
Organic
(6.9
)
-5%
(31.4
)
-33%
35.0
59
%
(3.3
)
-1%
FX
(4.7
)
-4%
(1.2
)
-1%
(1.0
)
-2%
(6.9
)
-2%
Total Change Excluding Divestitures
(11.6
)
-9%
(32.5
)
-34%
34.0
57
%
(10.2
)
-4%
Q2 2019
$
120.7
$
62.2
$
93.4
$
276.3
Industrial
Energy
Aerospace &
Defense
CIRCOR
NET REVENUE
$
%
$
%
$
%
$
%
Q2 2018
$
131.1
$
112.8
$
57.5
$
301.4
Divestitures (1)
(1.5
)
(17.4
)
—
(18.9
)
2018 Excluding Divestitures
129.6
95.4
57.5
282.5
Organic
(5.4
)
-4%
(8.7
)
-9%
8.2
14
%
(6.0
)
-2%
FX
(4.8
)
-4%
(1.1
)
-1%
(1.0
)
-2%
(6.9
)
-2%
Total Change Excluding Divestitures
(10.2
)
-8%
(9.8
)
-10%
7.2
12
%
(12.8
)
-4%
Q2 2019
$
119.3
$
85.6
$
64.7
$
269.6
(1) Divestitures include businesses sold
prior to the end of Q2 2019 which are Reliability Services (Energy)
and Delden (Industrial). Engineered Valves, which was sold in July
2019 is not reflected above as a divestiture.
Numbers may not add due to rounding.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190801005528/en/
David F. Mullen Senior Vice President Finance CIRCOR
International (781) 270-1200
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