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 third quarter ended September
30, 2018. Results include the acquisition of the Colfax Fluid
Handling business, which CIRCOR acquired in December 2017.
Third-Quarter 2018 Highlights
- Orders of $307 million, up 94% on a
reported basis and up 13% on a pro forma organic basis
- Revenue of $298 million, up 86% on a
reported basis and up 10% on a pro forma organic basis
- GAAP Loss per Share of $0.34; Adjusted
Earnings per Share of $0.52
- Operating Cash Flow of $24 million;
Free Cash Flow of $19 million
- Debt pay down of $18 million
- Fluid Handling integration remains on
track
“Organic growth in our Energy and Aerospace & Defense
segments, combined with the contribution of the Fluid Handling
acquisition, drove another quarter of top-line momentum for
CIRCOR,” said Scott Buckhout, President and Chief Executive
Officer. “Order intake exceeded $300 million, led by the Industrial
segment, reflecting favorable demand trends across most of our end
markets.”
“Our working capital and cash management actions are gaining
traction, and during the quarter we generated $24 million of
operating cash flow and reduced our debt by $18 million,” added
Buckhout.
“The integration of Fluid Handling is on track, and our synergy
plan is ahead of schedule. We expect to deliver the committed
run-rate cost synergies by the end of year three, a year earlier
than our original timeline. We remain focused on driving long-term
growth and de-levering the Company through debt reduction and
margin enhancement,” concluded Buckhout.
Fourth-Quarter 2018 GuidanceFor the fourth quarter of
2018, CIRCOR expects revenue in the range of $295 million to $315
million, and GAAP loss per share in the range of $(0.19) to
$(0.04), which reflects acquisition-related amortization expense of
$0.54 to $0.56 and other special and restructuring charges of $0.13
to $0.16. Excluding the impact of amortization, special and
restructuring charges, adjusted EPS is expected to be in the range
of $0.53 to $0.63 per share. Presentation slides that provide
supporting information to this guidance and third-quarter results
are posted on the “Investors” section of the Company’s website,
http://investors.circor.com, and will be discussed during the
conference call at 9:00 a.m. ET tomorrow, November 6, 2018.
Selected Consolidated Results
(unaudited)
($ millions except EPS) Q3 2018 Q3
2017 Change Revenue $ 297.5 $ 159.7
86%
GAAP Operating Income $ 8.2 $ 6.9 19%
Adjusted Operating Income1 $ 24.4 $
11.9 105%
GAAP Operating Margin 2.8% 4.3% (150) bps
Adjusted Operating Margin1 8.2% 7.4% 80 bps
GAAP (Loss) Earnings Per Share (Diluted) $
(0.34) $ 0.22 (255)%
Adjusted Earnings Per Share
(Diluted)1 $ 0.52 $ 0.43 21%
Operating
Cash Flow $ 24.1 $ (16.9) 243%
Free Cash
Flow2 $ 19.0 $ (19.2) 199%
Orders
$ 307.4 $ 158.1 94%
Segment Results
($ millions) Q3 2018 Q3 2017
Change
Industrial Revenue $ 118.7 $ 30.0 296%
Segment Operating Income $ 14.6 $ 5.7 156%
Segment Operating Margin 12.3% 18.9% (660) bps
Orders $ 114.9 $ 27.3 321%
Energy Revenue $ 121.0 $ 88.6 37%
Segment Operating Income $ 9.2 $ 6.9 33%
Segment Operating Margin 7.6% 7.8% (20) bps
Orders $ 111.0 $ 84.9 31%
Aerospace
& Defense Revenue $ 57.8 $ 41.1 41%
Segment Operating Income $ 8.7 $ 4.3 102%
Segment Operating Margin 15.1% 10.5% 460 bps
Orders $ 81.5 $ 45.9 78%
1. Adjusted Consolidated and Segment Results for Q3 2018 exclude
non-cash acquisition-related intangible amortization, special and
restructuring charges totaling $16.2 million ($17.2 million, net of
tax). These charges include: (i) $13.5 million for non-cash
acquisition-related intangible amortization expense and
amortization of the step-up in fixed asset values; (ii) $1.3
million related to restructuring activities, primarily severance,
related to our Reliability Services and Germany-based Pumps
business; and (iii) $1.4 million primarily related to the
separation of Fluid Handling business from Colfax Corporation and
exiting a product line. Consolidated and Segment Results for Q3
2017 exclude special and restructuring charges and non-cash
acquisition-related intangible amortization, totaling $5.0 million
($3.5 million, net of tax). These charges include: (i) $2.7 million
for non-cash acquisition-related intangible amortization expense;
(ii) $1.8 million in transaction fees associated with the
acquisition of Colfax Fluid Handling; (iii) $0.3 million related to
previously announced restructuring actions; and (iv) $0.2 million
related to the sale of our France build-to-print business.
2. 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 InformationCIRCOR International will hold
a conference call to review its financial results at 9:00 a.m. ET
tomorrow, November 6, 2018. 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 MeasuresAdjusted 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 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 the Fluid
Handling acquisition and to provide a more meaningful comparison of
changes in our orders and revenue, we also discuss these changes on
a “pro forma organic” basis. Pro forma organic is calculated
assuming the Fluid Handling acquisition was completed on January 1,
2017 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 StatementThis 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 fourth-quarter 2018 guidance, our future performance,
including realization of cost reductions from restructuring
activities and expected synergies, 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; and our ability to operate our manufacturing
facilities at current or higher levels and respond to increases in
manufacturing costs. 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 (LOSS)
INCOME(in thousands, except per share
data)(UNAUDITED)
Three Months Ended Nine
Months Ended
September 30,2018
October 1,2017
September 30,2018
October 1,2017
Net revenues $ 297,514 $ 159,693 $ 874,462 $ 456,131 Cost of
revenues 212,436 112,390 624,829 314,527
GROSS PROFIT 85,078 47,303 249,633 141,604 Selling, general
and administrative expenses 74,106 38,120 229,343 116,425 Special
and restructuring charges (recoveries), net 2,756 2,319
17,202 (443 ) OPERATING INCOME 8,216 6,864
3,088 25,622 Other expense (income): Interest
expense, net 14,100 2,445 39,656 6,298 Other (income) expense, net
(1,580 ) 823 (7,200 ) 2,022 TOTAL OTHER EXPENSE, NET
12,520 3,268 32,456 8,320 (LOSS) INCOME
BEFORE INCOME TAXES (4,304 ) 3,596 (29,368 ) 17,302 Provision for
(benefit from) income taxes 2,537 (21 ) (10,988 ) (57 ) NET
(LOSS) INCOME $ (6,841 ) $ 3,617 $ (18,380 ) $ 17,359
(Loss) Earnings per common share: Basic $ (0.34 ) $ 0.22 $ (0.93 )
$ 1.05 Diluted $ (0.34 ) $ 0.22 $ (0.93 ) $ 1.04 Weighted average
number of common shares outstanding: Basic 19,843 16,503 19,829
16,486 Diluted 19,843 16,709 19,829 16,721 Dividends declared per
common share $ — $ 0.0375 $ — $ 0.1125
CIRCOR INTERNATIONAL,
INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS(in thousands)(UNAUDITED)
Nine Months Ended OPERATING ACTIVITIES
September 30,2018
October 1,2017
Net (loss) income $ (18,380 ) $ 17,359 Adjustments to reconcile net
(loss) income to net cash provided by operating activities:
Depreciation 21,556 10,889 Amortization 36,845 9,491 Bad debt
expense 1,078 265 Loss on write down of inventory 4,632 1,463
Amortization of inventory fair value step-up 6,600 — Compensation
expense of share-based plans 4,303 2,696 Change in fair value of
contingent consideration — (12,200 ) Amortization of debt issuance
costs 2,852 — Loss on sale or write down of property, plant and
equipment 1,305 87 Loss on sale of business — 5,300 Changes in
operating assets and liabilities, net of effects of acquisition and
disposition: Trade accounts receivable 21,510 8,782 Inventories
4,463 (29,703 ) Prepaid expenses and other assets (31,034 ) (11,424
) Accounts payable, accrued expenses and other liabilities (32,267
) (997 ) Net cash provided by operating activities 23,463
2,008
INVESTING ACTIVITIES Additions to property,
plant and equipment (17,030 ) (7,773 ) Proceeds from the sale of
property, plant and equipment 207 269 Business acquisition, working
capital adjustment 6,300 1,467 Net cash used in
investing activities (10,523 ) (6,037 )
FINANCING ACTIVITIES
Proceeds from long-term debt 199,600 378,263 Payments of long-term
debt (186,874 ) (361,325 ) Debt issuance costs — (727 ) Dividends
paid — (1,879 ) Proceeds from the exercise of stock options 690 707
Return of cash to seller (61,201 ) — Net cash (used in)
provided by financing activities (47,785 ) 15,039 Effect of
exchange rate changes on cash, cash equivalents and restricted cash
(5,154 ) 6,338 (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS
AND RESTRICTED CASH (39,999 ) 17,348 Cash, cash equivalents and
restricted cash at beginning of period 112,293 58,279
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD $
72,294 $ 75,627
CIRCOR INTERNATIONAL,
INC.CONDENSED CONSOLIDATED BALANCE SHEETS(in
thousands, except share and per share
data)(UNAUDITED)
September 30, 2018 December
31, 2017 ASSETS CURRENT ASSETS: Cash and cash equivalents $
71,334 $ 110,356 Trade accounts receivable, less allowance for
doubtful accounts of $6,965 and $4,791, respectively 192,110
223,922 Inventories 226,047 244,896 Restricted cash 919 1,937
Prepaid expenses and other current assets 84,265 57,282
Total Current Assets 574,675 638,393 PROPERTY,
PLANT AND EQUIPMENT, NET 215,206 217,539 OTHER ASSETS: Goodwill
504,638 505,762 Intangibles, net 470,722 513,364 Deferred income
taxes 33,130 22,334 Other assets 14,479 9,407 TOTAL
ASSETS $ 1,812,850 $ 1,906,799 LIABILITIES AND
SHAREHOLDERS’ EQUITY CURRENT LIABILITIES: Accounts payable $
111,400 $ 117,329 Accrued expenses and other current liabilities
108,031 170,454 Accrued compensation and benefits 30,827
34,734 Total Current Liabilities 250,258 322,517
LONG-TERM DEBT, NET 802,069 787,343 DEFERRED INCOME TAXES
25,397 26,122 PENSION LIABILITY, NET 142,067 150,719 OTHER
NON-CURRENT LIABILITIES 18,888 18,124 COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS’ EQUITY: Common stock 212 212 Additional paid-in
capital 443,984 438,721 Retained earnings 253,107 274,243 Common
treasury stock, at cost (74,472 ) (74,472 ) Accumulated other
comprehensive loss, net of tax (48,660 ) (36,730 ) Total
Shareholders’ Equity 574,171 601,974 TOTAL
LIABILITIES AND SHAREHOLDERS’ EQUITY $ 1,812,850 $ 1,906,799
CIRCOR INTERNATIONAL,
INC.SUMMARY OF ORDERS AND BACKLOG(in
millions)UNAUDITED
Three Months Ended Nine
Months Ended
September 30,2018
October 1,2017
September 30,2018
October 1,2017
ORDERS (1) (3) Energy $ 111.0 $ 84.9 $ 353.9 $ 258.0
Aerospace & Defense 81.5 45.9 200.8 142.3 Industrial 114.9
27.3 388.2 84.8 Total orders $ 307.4 $
158.1 $ 942.9 $ 485.1
BACKLOG (2) (3)
September 30,2018
October 1,2017
Energy $ 205.9 $ 138.8 Aerospace & Defense 173.0 108.2
Industrial 178.0 31.3 Total backlog $ 556.9 $
278.3
Note 1: Orders do not include the foreign exchange impact due to
the re-measurement of customer order backlog amounts denominated in
foreign currencies.
Note 2: Backlog represents unshipped customer orders for which
revenue has not been recognized.
Note 3: 2018 backlog reflects adjustments related to the
cumulative impact of changes in revenue recognition due to the
Company's adoption of ASC 606. October 1, 2017 amounts restated for
Q1 2018 organizational realignment.
CIRCOR INTERNATIONAL,
INC.SEGMENT INFORMATION(in thousands, except
percentages)UNAUDITED
2017 2018 1ST QTR
2ND QTR 3RD QTR 4TH
QTR TOTAL 1ST QTR
2ND QTR 3RD QTR
TOTAL ORDERS
Energy $ 100,012 $ 73,140 $ 84,857 $ 118,073 $ 376,082 $
129,762 $ 113,171 $ 110,987 $ 353,920 Aerospace & Defense
56,416 39,902 45,939 $ 52,043 194,300 59,793 59,441 81,533 200,767
Industrial 27,654 29,889
27,296 46,407 131,246
136,607 136,746
114,876 388,229
Total $ 184,082 $ 142,931
$ 158,092 $ 216,523
$ 701,628 $ 326,162
$ 309,358 $ 307,396
$ 942,916
NET REVENUES Energy $ 76,210
$ 78,276 $ 88,570 $ 96,561 $ 339,617 $ 99,972 $ 112,804 $ 121,023 $
333,799 Aerospace & Defense 41,601 43,304 41,117 $ 56,961
182,983 58,477 57,500 57,757 173,734 Industrial 27,397
29,651 30,006
52,056 139,110
117,131 131,064 118,734
366,929
Total $ 145,208
$ 151,231 $ 159,693
$ 205,578 $ 661,710
$ 275,580 $ 301,368
$ 297,514 $ 874,462
SEGMENT OPERATING INCOME Energy $ 6,407 $ 8,170 $
6,936 $ 8,618 $ 30,131 $ 5,696 $ 9,242 $ 9,163 $ 24,101 Aerospace
& Defense 3,784 4,374 4,333 10,884 23,375 8,931 6,992 8,709
24,632 Industrial 4,384 4,901 5,675 4,972 19,932 12,948 15,037
14,609 42,594 Corporate expenses (5,479 ) (5,396 )
(5,067 ) (5,802 ) (21,744
) (7,802 ) (6,448 )
(8,034 ) (22,284 )
Adjusted Operating Income $
9,096 $ 12,049 $ 11,877
$ 18,672 $ 51,694
$ 19,773 $ 24,823
$ 24,447 $ 69,043
SEGMENT OPERATING MARGIN % Energy 8.4 % 10.4 % 7.8 % 8.9 %
8.9 % 5.7 % 8.2 % 7.6 % 7.2 % Aerospace & Defense 9.1 % 10.1 %
10.5 % 19.1 % 12.8 % 15.3 % 12.2 % 15.1 % 14.2 % Industrial 16.0 %
16.5 % 18.9 % 9.6 %
14.3 % 11.1 % 11.5 %
12.3 % 11.6 %
Adjusted Operating
Margin 6.3 % 8.0 % 7.4 %
9.1 % 7.8 % 7.2 %
8.2 % 8.2 % 7.9 %
CIRCOR INTERNATIONAL,
INC.RECONCILIATION OF KEY PERFORMANCE MEASURES TO COMMONLY USED
GENERALLY ACCEPTED ACCOUNTING PRINCIPLE TERMS(in thousands, except
percentages)UNAUDITED
2017 2018 1ST QTR
2ND QTR 3RD QTR
4TH QTR TOTAL 1ST
QTR 2ND QTR 3RD QTR
TOTAL NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES $ 16,195
$ 2,667 $ (16,854
) $ 7,629 $
9,637 $ (145 ) $
(465 ) $ 24,073
$ 23,463 LESS: Capital expenditures, net of
sale proceeds 2,811 2,375
2,318 6,103 13,607
8,141 3,563
5,119 16,823 FREE CASH FLOW $ 13,384
$ 292 $ (19,172 )
$ 1,526 $ (3,970 ) $
(8,286 ) $ (4,028 ) $ 18,954
$ 6,640
GROSS DEBT $
243,000 $ 252,856 $ 269,026
$ 795,208 $ 795,208 $
823,665 $ 827,629 $ 831,613
$ 831,613 LESS: Cash & cash equivalents 65,656
77,272 75,627
110,356 110,356
123,305 69,030
71,334 71,334 GROSS DEBT, NET OF CASH $
177,344 $ 175,584 $
193,399 $ 684,852 $
684,852 $ 700,360 $
758,599 $ 760,279 $
760,279 TOTAL SHAREHOLDERS' EQUITY $ 415,537 $ 438,097 $
451,885 $ 601,974 $ 601,974 $ 592,096 $ 573,992 $ 574,171 $ 574,171
GROSS DEBT AS % OF EQUITY 58 %
58 % 60 % 132 %
132 % 139 % 144 %
145 % 145 % GROSS DEBT, NET OF CASH
AS % OF EQUITY 43 % 40 % 43
% 114 % 114 % 118
% 132 % 132 % 132
% CIRCOR INTERNATIONAL, INC.
RECONCILIATION OF KEY PERFORMANCE
MEASURES TO COMMONLY USED GENERALLY ACCEPTED ACCOUNTING PRINCIPLE
TERMS
(in thousands, except per share
data)
UNAUDITED
2017 2018 1ST QTR
2ND QTR 3RD QTR
4TH QTR TOTAL 1ST
QTR 2ND QTR 3RD QTR
TOTAL NET INCOME (LOSS) $ 4,773
$ 8,970 $ 3,617 $ (5,571 )
$ 11,789 $ (17,441 ) $ 5,902
$ (6,841 ) $ (18,380 ) LESS: Restructuring
related inventory charges — — — — — 473 1,067 — 1,540 Amortization
of inventory step-up — — — 4,300 4,300 6,600 — — 6,600
Restructuring charges, net 1,458 3,566 341 697 6,062 9,615 844
1,348 11,807 Acquisition amortization 2,552 2,599 2,694 4,697
12,542 11,797 11,767 11,733 35,297 Acquisition depreciation — — —
233 233 1,837 1,735 1,742 5,314 Special (recoveries) charges, net
(2,268 ) (5,520 ) 1,978 13,799 7,989 2,831 1,156 1,408 5,395 Income
tax impact (1,137 ) (3,124 ) (1,497 )
(8,279 ) (14,037 ) (7,687
) (11,056 ) 967
(17,776 )
ADJUSTED NET INCOME $ 5,378 $
6,491 $ 7,133 $ 9,876
$ 28,878 $ 8,025
$ 11,415 $ 10,357
$ 29,797
EARNINGS (LOSS) PER COMMON SHARE
(Diluted) $ 0.29 $ 0.54 $ 0.22 $ (0.32 ) $ 0.70 $ (0.88 ) $
0.30 $ (0.34 ) $ (0.93 ) LESS: Restructuring related inventory
charges — — — — — 0.02 0.05 — 0.08 Amortization of inventory
step-up — — — 0.25 0.26 0.33 — — 0.33 Restructuring charges, net
0.09 0.21 0.02 0.04 0.36 0.49 0.04 0.07 0.59 Acquisition
amortization 0.15 0.16 0.16 0.27 0.74 0.60 0.59 0.59 1.77
Acquisition depreciation — — — 0.01 0.01 0.09 0.09 0.09 0.27
Special (recoveries) charges, net (0.14 ) (0.33 ) 0.12 0.80 0.47
0.14 0.06 0.07 0.27 Income tax impact (0.07 ) (0.19 )
(0.09 ) (0.48 ) (0.83 )
(0.39 ) (0.55 ) 0.05
(0.89 )
ADJUSTED EARNINGS PER SHARE
(Diluted) $ 0.32 $ 0.39
$ 0.43 $ 0.57 $
1.71 $ 0.40 $ 0.57
$ 0.52 $ 1.49
CIRCOR INTERNATIONAL,
INC.RECONCILIATION OF KEY PERFORMANCE MEASURES TO COMMONLY
USED GENERALLY ACCEPTED ACCOUNTING PRINCIPLE TERMS(in
thousands)UNAUDITED
2017 2018 1ST
QTR 2ND QTR 3RD QTR
4TH QTR TOTAL
1ST QTR 2ND QTR
3RD QTR TOTAL NET INCOME (LOSS)
$ 4,773 $ 8,970 $ 3,617 $
(5,571 ) $ 11,789 $ (17,441 ) $ 5,902
$ (6,841 ) $ (18,380 ) LESS: Interest
expense, net (1,669 ) (2,184 ) (2,445 ) (4,479 ) (10,777 ) (11,801
) (13,755 ) (14,100 ) (39,656 ) Depreciation (3,798 ) (3,547 )
(3,544 ) (4,401 ) (15,290 ) (7,334 ) (7,157 ) (7,065 ) (21,556 )
Amortization (3,092 ) (3,124 ) (3,275 ) (5,256 ) (14,747 ) (12,329
) (12,282 ) (12,234 ) (36,845 ) (Provision for) benefit from income
taxes (687 ) 724 21
5,618 5,676
5,879 7,646 (2,537 )
10,988
EBITDA $ 14,019 $ 17,101 $
12,860 $ 2,947 $ 46,927 $ 8,144 $ 31,450 $ 29,095 $ 68,689 LESS:
Restructuring related inventory charges — — — — — (473 ) (1,067 ) —
(1,540 ) Amortization of inventory step-up — — — (4,300 ) (4,300 )
(6,600 ) — — (6,600 ) Restructuring charges, net (1,458 ) (3,566 )
(341 ) (697 ) (6,062 ) (9,615 ) (844 ) (1,348 ) (11,807 ) Special
recoveries (charges), net 2,268 5,520
(1,978 ) (13,799 ) (7,989
) (2,831 ) (1,156 )
(1,408 ) (5,395 )
ADJUSTED EBITDA $ 13,209
$ 15,147 $ 15,179
$ 21,743 $ 65,278
$ 27,663 $ 34,517
$ 31,851 $ 94,031
CIRCOR INTERNATIONAL,
INC.RECONCILIATION OF KEY PERFORMANCE MEASURES TO COMMONLY
USED GENERALLY ACCEPTED ACCOUNTING PRINCIPLE TERMS(in
thousands, except percentages)UNAUDITED
2017 2018 1ST
QTR 2ND QTR 3RD
QTR 4TH QTR TOTAL
1ST QTR 2ND QTR
3RD QTR TOTAL GAAP OPERATING
INCOME (LOSS) $ 7,354 $ 11,404
$ 6,864 $ (5,054 ) $ 20,568 $
(13,380 ) $ 8,252 $ 8,216
$ 3,088 LESS: Restructuring related inventory charges — — — — — 473
1,067 — 1,540 Amortization of inventory step-up — — — 4,300 4,300
6,600 — — 6,600 Restructuring charges, net 1,458 3,566 341 697
6,062 9,615 844 1,348 11,807 Acquisition amortization 2,552 2,599
2,694 4,697 12,542 11,797 11,767 11,733 35,297 Acquisition
depreciation — — — 233 233 1,837 1,735 1,742 5,314 Special
(recoveries) charges, net (2,268 ) (5,520 )
1,978 13,799
7,989 2,831 1,156
1,408 5,395
ADJUSTED OPERATING INCOME $ 9,096
$ 12,049 $ 11,877
$ 18,672 $ 51,694 $
19,773 $ 24,821 $ 24,447
$ 69,041
GAAP OPERATING
MARGIN 5.1 % 7.5 % 4.3 % (2.5 )% 3.1 % (4.9 )% 2.7 % 2.8 % 0.4
% LESS: Restructuring related inventory charges — % — % — % — % — %
0.2 % 0.4 % — % 0.2 % Amortization of inventory step-up — % — % — %
2.1 % 0.6 % 2.4 % — % — % 0.8 % Restructuring charges, net 1.0 %
2.4 % 0.2 % 0.3 % 0.9 % 3.5 % 0.3 % 0.5 % 1.4 % Acquisition
amortization 1.8 % 1.7 % 1.7 % 2.3 % 1.9 % 4.3 % 3.9 % 3.9 % 4.0 %
Acquisition depreciation — % — % — % 0.1 % — % 0.7 % 0.6 % 0.6 %
0.6 % Special (recoveries) charges, net (1.6 )%
(3.7 )% 1.2 % 6.7 %
1.2 % 1.0 % 0.4 %
0.5 % 0.6 %
ADJUSTED OPERATING MARGIN 6.3 %
8.0 % 7.4 % 9.1 %
7.8 % 7.2 % 8.2 %
8.2 % 7.9 %
The Company is providing certain combined information related
to the recently acquired Fluid Handling business.
CIRCOR INTERNATIONAL,
INC.SEGMENT INFORMATION - COMBINED(in thousands,
except percentages)UNAUDITED
2017 1ST QTR
2ND QTR 3RD QTR 4TH
QTR TOTAL ORDERS - Recast
Energy $ 100,012 $
73,140 $ 84,857 $ 118,073 $ 376,082 Aerospace & Defense 56,416
39,902 45,939 52,043 194,300 Industrial 27,654
29,889 27,296 46,407
131,246 Total $ 184,082 $
142,931 $ 158,092 $
216,523 $ 701,628
ORDERS - Fluid
Handling Energy $ 23,679 $ 16,882 $ 21,401 $ 11,803 $ 73,765
Aerospace & Defense 8,255 24,375 9,716 6,816 49,162 Industrial
77,944 76,866 87,378 60,193 302,381
Total $ 109,878 $ 118,123
$ 118,495 $ 78,812 $
425,308
ORDERS - Combined Energy $ 123,690 $ 90,022 $
106,258 $ 129,876 $ 449,846 Aerospace & Defense 64,671 64,277
55,655 58,859 243,462 Industrial 105,598
106,755 114,674 106,601
433,628 Total $ 293,959 $
261,054 $ 276,587 $
295,336 $ 1,126,936
NET REVENUES -
Recast Energy $ 76,210 $ 78,276 $ 88,570 $ 96,561 $ 339,617
Aerospace & Defense 41,601 43,304 41,117 56,961 182,983
Industrial 27,397 29,651
30,006 52,056 139,110
Total $ 145,208 $ 151,231
$ 159,693 $ 205,578 $
661,710
NET REVENUES - Fluid Handling Energy $ 15,546
$ 17,705 $ 17,789 $ 13,663 $ 64,703 Aerospace & Defense 10,728
17,044 11,208 6,918 45,898 Industrial 85,264
83,310 85,604 72,489
326,667 Total $ 111,538 $
118,059 $ 114,601 $
93,070 $ 437,268
NET REVENUES -
Combined Energy $ 91,756 $ 95,981 $ 106,359 $ 110,224 $ 404,320
Aerospace & Defense 52,329 60,348 52,325 63,879 228,881
Industrial 112,661 112,961
115,610 124,545
465,777 Total $ 256,746 $ 269,290
$ 274,294 $ 298,648
$ 1,098,978
Notes:
- Items labeled "Recast" represent previously reported CIRCOR
information, adjusted to reflect the impact of our February 28,
2018 organizational realignment
- Items labeled "Fluid Handling" represent the information from
the Fluid Handling businesses prior to their acquisition by CIRCOR
on December 10, 2017
- Items labeled "Combined" represent the sum of the Recast and
Fluid Handling information
CIRCOR INTERNATIONAL,
INC.SEGMENT INFORMATION - COMBINED(in thousands,
except percentages)UNAUDITED
2017 1ST QTR
2ND QTR 3RD QTR 4TH
QTR TOTAL SEGMENT OPERATING INCOME -
Recast
Energy $ 6,407 $ 8,170 $ 6,936 $ 8,618 $ 30,131 Aerospace &
Defense 3,784 4,374 4,333 10,884 23,375 Industrial 4,384 4,901
5,675 4,972 19,932 Corporate expenses (5,479 ) (5,396
) (5,067 ) (5,802 )
(21,744 ) Total $ 9,096 $ 12,049
$ 11,877 $ 18,672
$ 51,694
SEGMENT OPERATING INCOME - Fluid
Handling Energy $ (83 ) $ 1,080 $ 1,761 $ 812 $ 3,570 Aerospace
& Defense 1,488 3,661 2,201 (367 ) 6,983 Industrial 8,833 7,709
4,365 (1,414 ) 19,493 Corporate expenses — —
— —
— Total $ 10,238 $ 12,450
$ 8,327 $ (969 ) $ 30,046
SEGMENT OPERATING INCOME - Combined Energy $
6,324 $ 9,250 $ 8,697 $ 9,430 $ 33,701 Aerospace & Defense
5,272 8,035 6,534 10,517 30,358 Industrial 13,217 12,610 10,040
3,558 39,425 Corporate expenses (5,479 ) (5,396 )
(5,067 ) (5,802 ) (21,744
) Total $ 19,334 $ 24,499
$ 20,204 $ 17,703 $
81,740
SEGMENT OPERATING MARGIN - Combined
Energy 6.9 % 9.6 % 8.2 % 8.6 % 8.3 % Aerospace & Defense 10.1 %
13.3 % 12.5 % 16.5 % 13.3 % Industrial 11.7 % 11.2 % 8.7 % 2.9 %
8.5 % Corporate expenses (2.1 )% (2.0 )% (1.8 )% (1.9 )% (2.0 )%
Total 7.5 % 9.1 % 7.4 % 5.9 % 7.4 %
Notes:
- Items labeled "Recast" represent previously reported CIRCOR
information, adjusted to reflect the impact of our February 28,
2018 organizational realignment
- Items labeled "Fluid Handling" represent the information from
the Fluid Handling businesses prior to their acquisition by CIRCOR
on December 10, 2017
- Items labeled "Combined" represent the sum of the Recast and
Fluid Handling information
- Segment Operating Margin - Combined represent Segment
Operating Income - Combined divided by Segment Net Revenues
Combined
CIRCOR INTERNATIONAL, INC.Q3
2018 Organic Growth Calculations(in thousands, except
percentages)UNAUDITED
Industrial
Energy Aerospace & Defense ORDERS
Reported
Pro FormaCombined
Reported
Pro FormaCombined
Reported
Pro FormaCombined
$ % $ % $ % $
% $ % $ % 2017 27,296
114,674 84,857 106,258 45,939 55,655 Organic 7,853 29 %
2,027 2 % 7,068 8 % 7,142 7 % 24,473 53 % 26,092 47 % Acquisitions
79,915 293 % — — % 19,145 23 % — — % 11,335 25 % — — % Foreign
Exchange (188 ) (1 )% (1,825 ) (2 )% (83 ) — % (2,413 ) (2 )% (214
) — % (214 ) — % Total Change 87,580 321 % 202 — %
26,130 31 % 4,729 4 % 35,594 77 % 25,878
46 %
2018 114,876 114,876
110,987 110,987 81,533 81,533
Industrial Energy Aerospace &
Defense NET REVENUE Reported
Pro FormaCombined
Reported
Pro FormaCombined
Reported
Pro FormaCombined
$ % $ % $ % $
% $ % $ % 2017 30,006
115,611 88,569 106,358 41,117 52,325 Organic (308 ) (1 )%
4,928 4 % 16,187 18 % 15,559 15 % 5,935 14 % 5,589 11 %
Acquisitions 89,280 298 % — — % 16,579 19 % — — % 10,862 26 % — — %
Foreign Exchange (244 ) (1 )% (1,805 ) (2 )% (311 ) — % (893 ) (1
)% (157 ) — % (157 ) — % Total Change 88,728 296 % 3,123
3 % 32,455 37 % 14,666 14 % 16,640 40 %
5,432 10 %
2018 118,734 118,734
121,023 121,023 57,757 57,757
CIRCOR INTERNATIONAL, INC.Q3
2018 Organic Growth Calculations(in thousands, except
percentages)UNAUDITED
CIRCOR ORDERS Reported
Pro FormaCombined
$ % $ % 2017 158,092 276,587
Organic 39,394 25 % 35,261 13 % Acquisitions 110,395 70 % —
— % Foreign Exchange (485 ) — % (4,452 ) (2 )% Total Change 149,304
94 % 30,809 10 %
2018 307,396
307,396
CIRCOR NET REVENUE
Reported
Pro FormaCombined
$ % $ % 2017 159,693 274,294
Organic 21,815 14 % 26,076 10 % Acquisitions 116,721 73 % —
— % Foreign Exchange (715 ) — % (2,856 ) (1 )% Total Change 137,821
86 % 23,220 8 %
2018 297,514
297,514
CIRCOR INTERNATIONAL,
INC.RECONCILIATION OF FLUID HANDLING SEGMENT INFORMATION TO
GAAP OPERATING INCOME(in thousands, except
percentages)UNAUDITED
2017 1ST QTR 2ND
QTR 3RD QTR 4TH QTR
TOTAL FLUID HANDLING GAAP OPERATING INCOME
(LOSS) $ 4,359 $ 19,738 $ 2,241
$ 3,129 $ 29,467 LESS: Asbestos costs
2,690 2,517 2,379 1,274 8,860 Impairment charges — — — — — Exited
businesses 65 (26 ) (47 ) — (8 ) Acquisition amortization 796 810
818 — 2,424 Restructuring and other special charges (recoveries)
2,328 (10,589 ) 636 (5,372 ) (12,997 ) Stay bonus —
— 2,300 —
2,300
FLUID HANDLING ADJUSTED OPERATING
INCOME $ 10,238 $ 12,450
$ 8,327 $ (969 ) $ 30,046
Notes
- Amounts relate to Fluid Handling results prior to December 10,
2017, the date of CIRCOR's acquisition.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20181105005984/en/
CIRCOR InternationalRajeev Bhalla, 781-270-1200Executive Vice
President & Chief Financial Officer
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