EXHIBIT 99.1
CIRCOR Reports Second-Quarter 2019 Financial Results
Burlington, MA - August 1, 2019
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.
| |
| 1. | 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. |
| |
| 2. | 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. |
| |
| 3. | 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:
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| • | 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.
Contact:
David F. Mullen
Senior Vice President Finance
CIRCOR International
(781) 270-1200
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. |
|
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| 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. |
