CIR CIRCOR International Inc

CIRCOR Posts Second Quarter Earnings of $0.26 per share * Most end-markets served show steady growth BURLINGTON, Mass., July 21 /PRNewswire-FirstCall/ -- CIRCOR International, Inc. (NYSE:CIR), a leading provider of valves and fluid control products for the instrumentation, fluid regulation and petrochemical markets, announced today results for the second quarter ended June 27, 2004. Net income for the second quarter of 2004 was $4.1 million, or $0.26 per diluted share, compared to $4.4 million, or $0.28 per diluted share, for the 2003 second quarter. Revenues for the 2004 second quarter were $94.6 million, an increase of 6% from $89.2 million for the second quarter 2003. For the six months ended June 27, 2004, net income was $8.4 million or $0.53 per diluted share. Net income for the six months ended June 29, 2003, totaled $8.2 million or $0.53 per diluted share. Revenues for the first six months of 2004 were $185.2 million, an increase of 5% from $176.4 million for the first six months of 2003. The Company indicated that its second quarter results were in line with its expectations and guidance given at the beginning of the quarter. The Company's Chairman and Chief Executive Officer, David A. Bloss, Sr., stated, "We are encouraged by the improvements we are seeing in market conditions as incoming orders increased 12% compared to the second quarter 2003 and 17% sequentially as June-ended backlog reached another record level." During the quarter, the Company generated $6.3 million of free cash flow (defined as net cash from operating activities, less capital expenditures and dividends paid) and, for the first half of 2004, $8.5 million of free cash flow was generated. At the end of the quarter the Company remained in a positive net cash position (cash, cash equivalents, and investments less total debt), including the use of $14 million in cash to acquire Mallard Control Company in April 2004. CIRCOR's Petrochemical Product segment revenues increased 4% to $39.7 million from $38.3 million in the second quarter of last year and were up 3% on a year-to-date basis primarily due to the acquisition of Mallard Control in April 2004. Incoming orders for the quarter were up 15% compared to the second quarter 2003, and, sequentially increased 56%. Backlog increased 12% compared to June 29, 2003, and increased 22% since March 28, 2004. Mr. Bloss indicated that the high level of incoming order rates this quarter indicates that international oil and gas project activity remains healthy. He further stated, "This segment achieved operating margins of 7.7% for the second quarter 2004 as we continued to achieve profitability improvements in our North American operations. However, these improvements were masked by higher metals costs and lower second quarter volume of shipments from our Pibiviesse business unit that serves the international project market. Shipments for these projects tend to be rather erratic depending upon the contractor's scheduling of delivery of the individual projects in our backlog." CIRCOR's Instrumentation and Thermal Fluid Controls Products segment revenues were up 8% to $54.9 million for the second quarter compared to $51.0 million for the same period last year and up 6% on a year to date basis. Incoming orders for this segment were up 9% compared to the second quarter last year, while backlog at quarter-end increased 16% versus last year and was nearly unchanged from March 28, 2004. Order levels benefited from two acquisitions made in the fourth quarter of 2003, both serving analytical sampling applications, and from improvement in industrial instrumentation and military aerospace markets. Operating margin for this segment was 11.4% during the second quarter 2004. Mr. Bloss commented, "Price increases were implemented in most businesses during the current quarter to help offset the rise in stainless steel costs. In addition, we made significant progress with the consolidation of the Tomco business, acquired in late 2002, into our Hoke operations in Spartanburg, S.C. during the second quarter and expect to see improving operational performance the rest of this year." Bloss added, "Operating efficiency improvements and inventory reduction remain high priorities for all our management teams. We have made substantial progress in restructuring our businesses and generating cash during the first five years of our existence. The next step in our goal to become operationally excellent is to transform our processes by applying lean/sigma principles throughout our organization. We are excited about the prospects for further improvement that exist for us in areas such as on-time deliveries, lead-times, inventory turnover and overall cost reduction. Executive training in lean/sigma methods will begin during the remainder of 2004 with formal goal setting and implementation starting immediately thereafter." Regarding earnings guidance for the remainder of the year, the Company is expecting its third quarter to have sequentially less revenue as the continuing recovery of industrial and aerospace markets are offset by seasonally slower demand for steam products and lower scheduled deliveries to international oil and gas projects. Mr. Bloss added, "The fourth quarter is expected to be brighter for us as we foresee continued strengthening of our markets and higher scheduled shipments for international oil and gas projects currently in our backlog. Third quarter results are anticipated to be in the range of $0.22 to $0.24 per diluted share with our fourth quarter earnings improving to within $0.32 to $0.36 per diluted share." CIRCOR International has scheduled a conference call to review its results for the second quarter 2004 on Thursday, July 22, 2004, at 9:00am ET. Interested parties may access the call by dialing (800) 361-0912. A replay of the call will be available from noon ET on July 22, 2004 through midnight on July 28, 2004. To access the replay, interested parties should dial (888) 203-1112 and enter confirmation code #203259 when prompted. The presentation slides that will be discussed in the conference call are expected to be available on Wednesday, July 21, 2004, by 6:00pm ET. The presentation slides may be downloaded from the quarterly earnings page of the investor section on the CIRCOR website: http://www.circor.com/. An audio recording of the conference call also is expected to be posted on the company's website by July 26, 2004. CIRCOR International, Inc. is a leading provider of valves and fluid control products that allow customers around the world to use fluids safely and efficiently in the instrumentation, thermal fluid regulation and petrochemical markets. CIRCOR's executive headquarters are located at 25 Corporate Drive, Burlington, MA 01803. This press release contains certain statements that are "forward-looking statements" as that term is defined under the Private Securities Litigation Reform Act of 1995 (the "Act") and releases issued by the Securities and Exchange Commission (SEC). The words "may," "hope," "will," "should," "expect," "plan," "anticipate," "intend," "believe," "estimate," "predict," "potential," "continue," and other expressions which are predictions of or indicate future events and trends and which do not relate to historical matters identify forward-looking statements. We believe that it is important to communicate our future expectations to our stockholders, and we, therefore, make forward-looking statements in reliance upon the safe harbor provisions of the Act. However, there may be events in the future that we are not able to accurately predict or control, and our actual results, performance or achievements may differ materially from the expectations we describe in our forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, the cyclicality and highly competitive nature of some of our end markets, changes in the price of and demand for oil and gas in both domestic and international markets, variability of raw material and component pricing, fluctuations in foreign currency exchange rates, and our ability to continue operating our manufacturing facilities at efficient levels and to successfully implement our acquisition strategy. We advise you to read further about these and other risk factors set forth under the caption "Certain Risk Factors That May Affect Future Results" in our SEC filings. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. CIRCOR INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) UNAUDITED Three Months Ended Six Months Ended June 27, June 29, June 27, June 29, 2004 2003 2004 2003 Net revenues $94,552 $89,224 $185,249 $176,387 Cost of revenues 66,878 62,303 129,282 124,644 GROSS PROFIT 27,674 26,921 55,967 51,743 Selling, general and administrative expenses 20,557 19,119 41,082 36,757 Special charges - - 38 - OPERATING INCOME 7,117 7,802 14,847 14,986 Other (income) expense: Interest income (184) (201) (355) (303) Interest expense 1,156 1,550 2,347 3,113 Other income, net (193) (417) (50) (692) Total other expense 779 932 1,942 2,118 INCOME BEFORE INCOME TAXES 6,338 6,870 12,905 12,868 Provision for income taxes 2,216 2,473 4,515 4,632 NET INCOME $4,122 $4,397 $8,390 $8,236 Earnings per common share: Basic $0.27 $0.29 $0.55 $0.54 Diluted $0.26 $0.28 $0.53 $0.53 Weighted average common shares outstanding: Basic 15,334 15,175 15,321 15,146 Diluted 15,908 15,634 15,946 15,576 CIRCOR INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) UNAUDITED Six Months Ended June 27, 2004 June 29, 2003 OPERATING ACTIVITIES Net income $8,390 $8,236 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation 5,033 5,033 Amortization 115 149 Compensation expense of stock-based plans 304 130 Loss (gain) on disposal of property, plant and equipment 11 (9) Loss on write-down of property, plant and equipment 100 - Gain on disposal of assets held for sale (387) - Gain on sale of marketable securities - (8) Equity in undistributed earnings of affiliates (44) - Changes in operating assets and liabilities, net of effects from business acquisitions: Trade accounts receivable 1,785 2,905 Inventories (5,624) 10,117 Prepaid expenses and other assets (1,739) (1,280) Accounts payable, accrued expenses and other liabilities 4,593 2,852 Net cash provided by operating activities 12,537 28,125 INVESTING ACTIVITIES Additions to property, plant and equipment (2,869) (1,853) Proceeds from disposal of property, plant and equipment 732 9 Proceeds from sale of assets held for sale 3,030 - Business acquisitions, net of cash acquired (12,156) - Purchase of investments (1,456) (43) Proceeds from sale of investments 1,456 2,679 Other (15) - Net cash (used in) provided by investing activities (11,278) 792 FINANCING ACTIVITIES Proceeds from long-term borrowings 125 144 Payments of long-term debt (3,462) (3,876) Dividends paid (1,149) (1,136) Proceeds from the exercise of stock options 243 777 Net cash used in financing activities (4,243) (4,091) Effect of exchange rate changes on cash and cash equivalents (691) 1,809 (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (3,675) 26,635 Cash and cash equivalents at beginning of year 58,202 38,382 CASH AND CASH EQUIVALENTS AT END OF PERIOD $54,527 $65,017 CIRCOR INTERNATIONAL, INC. CONSOLIDATED BALANCE SHEETS (in thousands, except share data) UNAUDITED June 27, December 31, 2004 2003 ASSETS Current Assets: Cash and cash equivalents $54,527 $58,202 Investments 7,517 7,840 Trade accounts receivable, less allowance for doubtful accounts of $2,282 and $2,119, respectively 64,303 64,830 Inventories 105,762 97,278 Prepaid expenses and other current assets 4,788 4,587 Deferred income taxes 6,456 6,303 Assets held for sale 1,190 3,884 Total Current Assets 244,543 242,924 Property, Plant and Equipment, net 60,672 61,737 Other Assets: Goodwill 117,842 111,448 Intangibles, net 1,600 1,587 Other assets 6,402 6,167 Total Assets $431,059 $423,863 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accounts payable $37,097 $37,635 Accrued expenses and other current liabilities 28,284 27,742 Income taxes payable 5,930 1,491 Notes payable and current portion of long-term debt 15,137 17,268 Total Current Liabilities 86,448 84,136 Long-term Debt, net of current portion 42,853 43,791 Deferred Income Taxes 6,521 6,303 Other Noncurrent Liabilities 10,322 9,820 Minority Interest 4,601 4,653 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 15,342,019 and 15,302,127 issued and outstanding, respectively 153 153 Additional paid-in capital 206,884 206,160 Retained earnings 62,034 54,793 Accumulated other comprehensive income 11,243 14,054 Total Shareholders' Equity 280,314 275,160 Total Liabilities and Shareholders' Equity $431,059 $423,863 CIRCOR INTERNATIONAL, INC. SUMMARY OF ORDERS AND BACKLOG (in thousands) UNAUDITED Three Months Ended Six Months Ended June 27, June 29, June 27, June 29, 2004 2003 2004 2003 ORDERS Instrumentation & Thermal Fluid Controls $54,153 $49,686 $111,253 $100,055 Petrochemical 49,598 43,273 81,473 86,699 Total orders $103,751 $92,959 $192,726 $186,754 June 27, June 29, 2004 2003 BACKLOG Instrumentation & Thermal Fluid Controls $41,692 $35,974 Petrochemical 54,769 49,109 Total backlog $96,461 $85,083 Note: Backlog includes all unshipped customer orders. CIRCOR INTERNATIONAL, INC. SUMMARY REPORT BY SEGMENT (in thousands, except earnings per share) UNAUDITED 2003 1ST QTR 2ND QTR 3RD QTR 4TH QTR YEAR NET REVENUES Instrumentation & Thermal Fluid Controls $49,119 $50,963 $47,132 $53,561 $200,775 Petrochemical 38,044 38,261 39,529 42,844 158,678 Total 87,163 89,224 86,661 96,405 359,453 OPERATING MARGIN Instrumentation & Thermal Fluid Controls 12.2% 12.5% 11.9% 9.5% 11.5% Petrochemical 7.6% 8.6% 10.9% 12.1% 9.9% Segment operating margin 10.2% 10.8% 11.5% 10.7% 10.8% Corporate expenses -1.9% -2.1% -2.1% -2.1% -2.1% Special charges 0.0% 0.0% -0.3% -1.1% -0.4% Total operating margin 8.2% 8.7% 9.0% 7.5% 8.3% OPERATING INCOME Instrumentation & Thermal Fluid Controls 5,982 6,359 5,622 5,110 23,073 Petrochemical 2,876 3,303 4,309 5,171 15,659 Segment operating income 8,858 9,662 9,931 10,281 38,732 Corporate expenses (1,674) (1,860) (1,859) (1,989) (7,382) Special charges - - (271) (1,092) (1,363) Total operating income w/ special charges 7,184 7,802 7,801 7,200 29,987 INTEREST EXPENSE, NET (1,461) (1,349) (1,320) (1,021) (5,151) OTHER (EXPENSE) INCOME, NET 275 417 362 (217) 837 PRETAX INCOME 5,998 6,870 6,843 5,962 25,673 PROVISION FOR INCOME TAXES (2,159) (2,473) (2,464) (704) (7,800) EFFECTIVE TAX RATE 36.0% 36.0% 36.0% 11.8% 30.4% NET INCOME $3,839 $4,397 $4,379 $5,258 $17,873 Weighted Average Common Shares Outstanding (Diluted) 15,533 15,634 15,812 15,919 15,675 EARNINGS PER COMMON SHARE (Diluted) $0.25 $0.28 $0.28 $0.33 $1.14 EARNINGS PER COMMON SHARE (Diluted) excluding special charges $0.25 $0.28 $0.29 $0.37 $1.20 EBIT $7,459 $8,219 $8,163 $6,983 $30,824 Depreciation 2,470 2,563 2,478 2,053 9,564 Amortization of intangibles 74 75 74 75 298 EBITDA $10,003 $10,857 $10,715 $9,111 $40,686 EBITDA AS A PERCENT OF SALES 11.5% 12.2% 12.4% 9.5% 11.3% CAPITAL EXPENDITURES $795 $1,058 $3,940 $1,030 $6,823 2004 1ST QTR 2ND QTR YTD NET REVENUES Instrumentation & Thermal Fluid Controls $51,639 $54,864 $106,503 Petrochemical 39,058 39,688 78,746 Total 90,697 94,552 185,249 OPERATING MARGIN Instrumentation & Thermal Fluid Controls 11.2% 11.4% 11.3% Petrochemical 10.9% 7.7% 9.3% Segment operating margin 11.1% 9.8% 10.4% Corporate expenses -2.5% -2.3% -2.4% Special charges 0.0% 0.0% 0.0% Total operating margin 8.5% 7.5% 8.0% OPERATING INCOME Instrumentation & Thermal Fluid Controls 5,776 6,239 12,015 Petrochemical 4,251 3,066 7,317 Segment operating income 10,027 9,305 19,332 Corporate expenses (2,259) (2,188) (4,447) Special charges (38) - (38) Total operating income w/ special charges 7,730 7,117 14,847 INTEREST EXPENSE, NET (1,020) (972) (1,992) OTHER (EXPENSE) INCOME, NET (143) 193 50 PRETAX INCOME 6,567 6,338 12,905 PROVISION FOR INCOME TAXES (2,299) (2,216) (4,515) EFFECTIVE TAX RATE 35.0% 35.0% 35.0% NET INCOME $4,268 $4,122 $8,390 Weighted Average Common Shares Outstanding (Diluted) 16,001 15,908 15,946 EARNINGS PER COMMON SHARE (Diluted) $0.27 $0.26 $0.53 EARNINGS PER COMMON SHARE (Diluted) excluding special charges $0.27 $0.26 $0.53 EBIT $7,586 $7,310 $14,896 Depreciation 2,680 2,353 5,033 Amortization of intangibles 77 38 115 EBITDA $10,343 $9,701 $20,044 EBITDA AS A PERCENT OF SALES 11.4% 10.3% 10.8% CAPITAL EXPENDITURES $1,294 $1,575 $2,869 CIRCOR INTERNATIONAL, INC. RECONCILIATION OF KEY PERFORMANCE MEASURES TO COMMONLY USED GENERALLY ACCEPTED ACCOUNTING PRINCIPLE TERMS (in thousands) UNAUDITED 2003 1ST QTR 2ND QTR 3RD QTR 4TH QTR YEAR FREE CASH FLOW [NET CASH FLOW FROM OPERATING ACTIVITIES LESS CAPITAL EXPENDITURES LESS DIVIDENDS PAID] $14,533 $10,508 $7,183 $16,915 $49,139 ADD: Capital expenditures 795 1,058 3,940 1,030 6,823 Dividends paid 567 569 570 574 2,280 NET CASH PROVIDED BY OPERATING ACTIVITIES $15,895 $12,135 $11,693 $18,519 $58,242 NET (CASH) DEBT [TOTAL DEBT LESS CASH AND CASH EQUIVALENTS LESS INVESTMENTS] $20,209 $8,005 $254 $(4,983) $(4,983) ADD: Cash and cash equivalents 51,419 65,017 74,847 58,202 58,202 Investments 4,072 1,464 - 7,840 7,840 TOTAL DEBT $75,700 $74,486 $75,101 $61,059 $61,059 NET DEBT AS % OF NET CAPITALIZATION 7.5% 3.0% 0.1% -1.8% -1.8% NET DEBT [As defined above] $20,209 $8,005 $254 $(4,983) $(4,983) ADD: Cash and cash equivalents 51,419 65,017 74,847 58,202 58,202 Investments 4,072 1,464 - 7,840 7,840 TOTAL DEBT $75,700 $74,486 $75,101 $61,059 $61,059 NET CAPITALIZATION [TOTAL DEBT PLUS SHAREHOLDERS' EQUITY LESS CASH, LESS CASH EQUIVALENTS, LESS INVESTMENTS] $270,090 $266,529 $263,505 $270,177 $270,177 LESS: Debt (75,700) (74,486) (75,101) (61,059) (61,059) ADD: Cash and cash equivalents 51,419 65,017 74,847 58,202 58,202 Investments 4,072 1,464 - 7,840 7,840 TOTAL SHAREHOLDERS' EQUITY 249,881 258,524 263,251 275,160 275,160 ADD: TOTAL DEBT 75,700 74,486 75,101 61,059 61,059 TOTAL CAPITAL $325,581 $333,010 $338,352 $336,219 $336,219 TOTAL DEBT / TOTAL CAPITAL 23.3% 22.4% 22.2% 18.2% 18.2% EBIT [OPERATING INCOME PLUS OTHER NET (INCOME) EXPENSE] $7,459 $8,219 $8,163 $6,983 $30,824 ADD: Other (income) expense, net (275) (417) (362) 217 (837) OPERATING INCOME $7,184 $7,802 $7,801 $7,200 29,987 EBITDA [OPERATING INCOME PLUS OTHER NET (INCOME) EXPENSE] PLUS DEPRECIATION PLUS AMORTIZATION] $10,003 $10,857 $10,715 $9,111 40,686 LESS: Other (income) expense, net (275) (417) (362) 217 (837) Depreciation (2,470) (2,563) (2,478) (2,053) (9,564) Amortization of intangibles (74) (75) (74) (75) (298) OPERATING INCOME $7,184 $7,802 $7,801 $7,200 $29,987 2004 1ST QTR 2ND QTR HALF YEAR FREE CASH FLOW [NET CASH FLOW FROM OPERATING ACTIVITIES LESS CAPITAL EXPENDITURES LESS DIVIDENDS PAID] $2,254 $6,265 $8,519 ADD: Capital expenditures 1,294 1,575 2,869 Dividends paid 573 576 1,149 NET CASH PROVIDED BY OPERATING ACTIVITIES $4,121 $8,416 $12,537 NET (CASH) DEBT [TOTAL DEBT LESS CASH AND CASH EQUIVALENTS LESS INVESTMENTS] $(8,706) $(4,054) $(4,054) ADD: Cash and cash equivalents 59,963 54,527 54,527 Investments 7,679 7,517 7,517 TOTAL DEBT $58,936 $57,990 $57,990 NET DEBT AS % OF NET CAPITALIZATION -3.3% -1.5% -1.5% NET DEBT [As defined above] $(8,706) $(4,054) $(4,054) ADD: Cash and cash equivalents 59,963 54,527 54,527 Investments 7,679 7,517 7,517 TOTAL DEBT $58,936 $57,990 $57,990 NET CAPITALIZATION [TOTAL DEBT PLUS SHAREHOLDERS' EQUITY LESS CASH, LESS CASH EQUIVALENTS, LESS INVESTMENTS] $267,728 $276,260 $276,260 LESS: Debt (58,936) (57,990) (57,990) ADD: Cash and cash equivalents 59,963 54,527 54,527 Investments 7,679 7,517 7,517 TOTAL SHAREHOLDERS' EQUITY 276,434 280,314 280,314 ADD: TOTAL DEBT 58,936 57,990 57,990 TOTAL CAPITAL $335,370 $338,304 $338,304 TOTAL DEBT / TOTAL CAPITAL 17.6% 17.1% 17.1% EBIT [OPERATING INCOME PLUS OTHER NET (INCOME) EXPENSE] $7,586 $7,310 $14,896 ADD: Other (income) expense, net 144 (193) (49) OPERATING INCOME $7,730 $7,117 $14,847 EBITDA [OPERATING INCOME PLUS OTHER NET (INCOME) EXPENSE] PLUS DEPRECIATION PLUS AMORTIZATION] $10,343 $9,701 $20,044 LESS: Other (income) expense, net 144 (193) (49) Depreciation (2,680) (2,353) (5,033) Amortization of intangibles (77) (38) (115) OPERATING INCOME $7,730 $7,117 $14,847 NOTE: These non-GAAP key performance measures are provided for the convenience of financial analysts who have used such as additional measures of liquidity and leverage. DATASOURCE: CIRCOR International, Inc. CONTACT: Kenneth W. Smith, Chief Financial Officer of CIRCOR International, Inc., +1-781-270-1200 Web site: http://www.circor.com/

Copyright