EXHIBIT 99.1
PRESS RELEASE
Contact: | Kenneth Smith | |
Chief Financial Officer | ||
CIRCOR International, Inc. | ||
781-270-1200 |
CIRCOR Announces First Quarter Earnings of $0.32
• | Excluding special charge, EPS rises to $0.33, up 22% on 13% increase in revenues |
• | Before acquisitions, orders increase 14% while backlogs climb 40% to another record |
BURLINGTON, MA, April 27, 2005
CIRCOR International, Inc. [NYSE: CIR], a leading provider of valves and other fluid control devices for the instrumentation, aerospace, thermal fluid and energy markets, today announced results for the first quarter ended April 3, 2005. Net income for the first quarter of 2005 increased 21% to $5.2 million compared to $4.3 million for the 2004 first quarter. Diluted earnings per share for the quarter were $0.32, also an increase of 19% over last year’s $0.27 per share performance. Revenues for the 2005 first quarter were $102.2 million, an increase of 13% from $90.7 million for the first quarter of 2004.
During first quarter 2005, the Company used $1.2 million of free cash flow (defined as net cash used in operating activities, less capital expenditures and dividends paid) which included higher inventory to support the record backlog and the $2.8 million capital expenditure for a new facility in Europe. After acquiring Loud Engineering and Manufacturing in January for $36 million in cash, the Company had $29.1 million in cash, cash equivalents and investments on hand at the end of the first quarter and 13% total debt to total capitalization.
The Company received orders totaling $112.0 million during first quarter 2005. Excluding acquisitions made over the past 12 months, orders totaled $101.2 million, representing an increase of 14% over the $89.0 million in orders recorded during the same period of 2004. Total order backlog at the end of first quarter 2005 was $143.0 million and, excluding acquisitions, was $121.9 million, an increase of 40% over the $87.3 million backlog at the same period end last year.
CIRCOR’s Chairman and Chief Executive Officer, David A. Bloss, Sr., commented on the Company’s performance stating, “Business conditions continued to improve this quarter in basically all of our major markets served, but especially in the aerospace, chemical processing and oil and gas sectors. Our recent acquisition of Loud Engineering gave an additional boost to our results as expected.”
Mr. Bloss further stated, “Operating results were higher than expected because of the additional revenues, improved pricing and higher factory utilization. Consolidated operating margin, excluding special charges, was 8.7% for the quarter and was negatively affected by the additional costs related to our compliance with Sarbanes-Oxley Section 404 requirements.”
CIRCOR’s Energy Products Segment revenues increased 6% to $41.2 million from $39.1 million in the first quarter last year due to the timing of project shipments this quarter and the benefits from the acquisition of Mallard Control Company in April 2004. Incoming orders for the quarter were up 43% compared to first quarter 2004 while backlog increased 79% compared to March-end 2004. This segment’s operating margin was 8.0% for first quarter 2005, down from the 10.9% achieved in first quarter 2004 and 10.6% (excluding unusual charges) in fourth quarter 2004, primarily due to lower volume of higher-margin product shipments to large international oil and gas projects.
CIRCOR’s Instrumentation and Thermal Fluid Controls Products Segment revenues were up 18% to $61.0 million for the first quarter compared to $51.6 million for the same period last year. Incoming orders for this segment were up 16% compared to the first quarter last year and backlog at quarter end 2005 increased 48% versus first quarter-end 2004 due to the addition of Loud’s backlog this quarter. Excluding the Loud acquisition, orders increased 4.2% and backlog was basically unchanged compared to last year. This segment’s adjusted operating margin, excluding special charges primarily related to accrued severance payments in Europe related to a facility consolidation, was 14.8% during the first quarter of 2005 compared to 11.2% for the first quarter of 2004 and 12.0% (excluding unusual charges) in the fourth quarter of 2004.
CIRCOR provided guidance for its second quarter 2005 results, indicating that it expects earnings to be in the range of $0.35 to $0.39 per diluted share excluding special charges.
CIRCOR International has scheduled a conference call to review its results for the first quarter 2005 on Thursday, April 28, 2005 at 10:30 a.m. ET. Interested parties may access the call by dialing (888) 695-0614 or (719) 457-2664. A replay of the call will be available from 1:30 p.m. ET on April 28, 2005 through midnight May 4, 2005. To access the replay, interested parties should dial (888) 203-1112 or (719) 457-0820 and enter confirmation code #4156006 when prompted. The presentation slides that will be discussed in the conference call are expected to be available on April 27, 2005, by 6:00 pm 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 May 2, 2005.
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, aerospace, thermal fluid, and energy 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,” “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 | ||||||||
April 3, 2005 | March 28, 2004 | |||||||
Net revenues | $ | 102,238 | $ | 90,697 | ||||
Cost of revenues | 69,297 | 62,404 | ||||||
GROSS PROFIT | 32,941 | 28,293 | ||||||
Selling, general and administrative expenses | 24,090 | 20,525 | ||||||
Special charges | 305 | 38 | ||||||
OPERATING INCOME | 8,546 | 7,730 | ||||||
Other (income) expense: | ||||||||
Interest income | (85 | ) | (171 | ) | ||||
Interest expense | 872 | 1,190 | ||||||
Other expense (income), net | (181 | ) | 144 | |||||
Total other expense | 606 | 1,163 | ||||||
INCOME BEFORE INCOME TAXES | 7,940 | 6,567 | ||||||
Provision for income taxes | 2,779 | 2,299 | ||||||
NET INCOME | $ | 5,161 | $ | 4,268 | ||||
Earnings per common share: | ||||||||
Basic | $ | 0.33 | $ | 0.28 | ||||
Diluted | $ | 0.32 | $ | 0.27 | ||||
Weighted average common shares outstanding: | ||||||||
Basic | 15,515 | 15,308 | ||||||
Diluted | 16,054 | 16,001 |
CIRCOR INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
UNAUDITED
Three Months Ended | ||||||||
April 3, 2005 | March 28, 2004 | |||||||
OPERATING ACTIVITIES | ||||||||
Net income | $ | 5,161 | $ | 4,268 | ||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||||||||
Depreciation | 2,597 | 2,680 | ||||||
Amortization | 38 | 77 | ||||||
Compensation expense of stock-based plans | 206 | 223 | ||||||
Loss (gain) on sale of property, plant and equipment | 7 | (26 | ) | |||||
Gain on sale of assets held for sale | — | (194 | ) | |||||
Equity in undistributed (earnings) loss of affiliates | (63 | ) | 4 | |||||
Changes in operating assets and liabilities, net of effects from business acquisitions: | ||||||||
Trade accounts receivable | (134 | ) | (1,084 | ) | ||||
Inventories | (11,697 | ) | (1,567 | ) | ||||
Prepaid expenses and other assets | (3,892 | ) | (2,150 | ) | ||||
Accounts payable, accrued expenses and other liabilities | 10,805 | 1,890 | ||||||
Net cash provided by operating activities | 3,028 | 4,121 | ||||||
INVESTING ACTIVITIES | ||||||||
Additions to property, plant and equipment | (3,668 | ) | (1,296 | ) | ||||
Proceeds from sale of property, plant and equipment | — | 400 | ||||||
Proceeds from sale of assets held for sale | — | 1,889 | ||||||
Business acquisition, net of cash acquired | (34,690 | ) | — | |||||
Net cash (used in) provided by investing activities | (38,358 | ) | 993 | |||||
FINANCING ACTIVITIES | ||||||||
Proceeds from borrowings | 645 | — | ||||||
Payments of debt | (374 | ) | (2,077 | ) | ||||
Dividends paid | (586 | ) | (573 | ) | ||||
Proceeds from the exercise of stock options | 3,064 | 84 | ||||||
Net cash provided by (used in) financing activities | 2,749 | (2,566 | ) | |||||
Effect of exchange rate changes on cash and cash equivalents | (1,130 | ) | (787 | ) | ||||
(DECREASE) / INCREASE IN CASH AND CASH EQUIVALENTS | (33,711 | ) | 1,761 | |||||
Cash and cash equivalents at beginning of year | 58,653 | 58,202 | ||||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 24,942 | $ | 59,963 | ||||
CIRCOR INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
UNAUDITED
April 3, 2005 | December 31, 2004 | |||||
ASSETS | ||||||
Current Assets: | ||||||
Cash and cash equivalents | $ | 24,942 | $ | 58,653 | ||
Investments | 4,117 | 4,155 | ||||
Trade accounts receivable, less allowance for doubtful accounts of $2,185 and $2,549, respectively | 65,236 | 64,521 | ||||
Inventories | 119,026 | 105,150 | ||||
Prepaid expenses and other current assets | 6,534 | 2,414 | ||||
Deferred income taxes | 6,021 | 6,953 | ||||
Total Current Assets | 225,876 | 241,846 | ||||
Property, Plant and Equipment, net | 61,580 | 59,302 | ||||
Other Assets: | ||||||
Goodwill | 144,743 | 120,307 | ||||
Intangibles, net | 1,386 | 1,424 | ||||
Other assets | 10,904 | 5,539 | ||||
Total Assets | $ | 444,489 | $ | 428,418 | ||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||
Current Liabilities: | ||||||
Accounts payable | $ | 45,333 | $ | 38,023 | ||
Accrued expenses and other current liabilities | 32,690 | 30,490 | ||||
Income taxes payable | 1,506 | 1,362 | ||||
Notes payable and current portion of long-term debt | 15,992 | 15,051 | ||||
Total Current Liabilities | 95,521 | 84,926 | ||||
Long-term Debt, Net of Current Portion | 28,434 | 27,829 | ||||
Deferred Income Taxes | 6,438 | 6,932 | ||||
Other Noncurrent Liabilities | 11,386 | 10,646 | ||||
Minority Interest | 4,699 | 4,650 | ||||
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 15,634,202 and 15,430,305 issued and outstanding, respectively | 156 | 154 | ||||
Additional paid-in capital | 211,727 | 208,392 | ||||
Retained earnings | 68,868 | 64,293 | ||||
Accumulated other comprehensive income | 17,260 | 20,596 | ||||
Total Shareholders’ Equity | 298,011 | 293,435 | ||||
Total Liabilities and Shareholders’ Equity | $ | 444,489 | $ | 428,418 | ||
CIRCOR INTERNATIONAL, INC.
SUMMARY OF ORDERS AND BACKLOG
(in thousands)
UNAUDITED
Three Months Ended | ||||||
April 3, 2005 | March 28, 2004 | |||||
ORDERS | ||||||
Instrumentation & Thermal Fluid Controls | $ | 66,434 | $ | 57,100 | ||
Energy Products | 45,525 | 31,875 | ||||
Total orders | $ | 111,959 | $ | 88,975 | ||
April 3, 2005 | December 31, 2004 | |||||
BACKLOG | ||||||
Instrumentation & Thermal Fluid Controls | $ | 62,792 | $ | 39,819 | ||
Energy Products | 80,234 | 75,923 | ||||
Total backlog | $ | 143,026 | $ | 115,742 | ||
Note: Backlog includes all unshipped customer orders.
CIRCOR INTERNATIONAL, INC.
SUMMARY REPORT BY SEGMENT
(in thousands, except earnings per share)
UNAUDITED
2004 | 2005 | |||||||||||||||||||||||
1ST QTR | 2ND QTR | 3RD QTR | 4TH QTR | YTD | 1ST QTR | |||||||||||||||||||
NET REVENUES | ||||||||||||||||||||||||
Instrumentation & Thermal Fluid Controls (TFC) | $ | 51,639 | $ | 54,864 | $ | 52,966 | $ | 59,187 | $ | 218,656 | $ | 61,025 | ||||||||||||
Energy Products | 39,058 | 39,688 | 36,794 | 47,638 | 163,178 | 41,213 | ||||||||||||||||||
Total | 90,697 | 94,552 | 89,760 | 106,825 | 381,834 | 102,238 | ||||||||||||||||||
OPERATING MARGIN | ||||||||||||||||||||||||
Instrumentation & TFC | 11.2 | % | 11.4 | % | 10.9 | % | 10.5 | % | 11.0 | % | 14.8 | % | ||||||||||||
Energy Products | 10.9 | % | 7.7 | % | 7.8 | % | -2.3 | % | 5.6 | % | 8.0 | % | ||||||||||||
Segment operating margin | 11.1 | % | 9.8 | % | 9.7 | % | 4.7 | % | 8.7 | % | 12.0 | % | ||||||||||||
Corporate expenses | -2.5 | % | -2.3 | % | -2.9 | % | -3.6 | % | -2.8 | % | -3.4 | % | ||||||||||||
Special charges | 0.0 | % | 0.0 | % | -0.3 | % | 0.0 | % | -0.1 | % | -0.3 | % | ||||||||||||
Total operating margin | 8.5 | % | 7.5 | % | 6.5 | % | 1.2 | % | 5.7 | % | 8.4 | % | ||||||||||||
OPERATING INCOME | ||||||||||||||||||||||||
Instrumentation & TFC (excl. special charges) | 5,776 | 6,239 | 5,786 | 6,188 | 23,989 | 9,004 | ||||||||||||||||||
Energy Products (excl. special charges) | 4,251 | 3,066 | 2,877 | (1,116 | ) | 9,078 | 3,290 | |||||||||||||||||
Segment operating income (excl. special charges) | 10,027 | 9,305 | 8,663 | 5,072 | 33,067 | 12,294 | ||||||||||||||||||
Corporate expenses | (2,259 | ) | (2,188 | ) | (2,585 | ) | (3,798 | ) | (10,830 | ) | (3,443 | ) | ||||||||||||
Special charges | (38 | ) | — | (265 | ) | — | (303 | ) | (305 | ) | ||||||||||||||
Total operating income | 7,730 | 7,117 | 5,813 | 1,274 | 21,934 | 8,546 | ||||||||||||||||||
INTEREST EXPENSE, NET | (1,020 | ) | (972 | ) | (1,001 | ) | (697 | ) | (3,690 | ) | (787 | ) | ||||||||||||
OTHER (EXPENSE) INCOME, NET | (143 | ) | 193 | 241 | (57 | ) | 234 | 181 | ||||||||||||||||
PRETAX INCOME | 6,567 | 6,338 | 5,053 | 520 | 18,478 | 7,940 | ||||||||||||||||||
PROVISION FOR INCOME TAXES | (2,299 | ) | (2,216 | ) | (1,770 | ) | (390 | ) | (6,675 | ) | (2,779 | ) | ||||||||||||
EFFECTIVE TAX RATE | 35.0 | % | 35.0 | % | 35.0 | % | 75.0 | % | 36.1 | % | 35.0 | % | ||||||||||||
NET INCOME | $ | 4,268 | $ | 4,122 | $ | 3,283 | $ | 130 | $ | 11,803 | $ | 5,161 | ||||||||||||
Weighted Average Common Shares Outstanding (Diluted) | 16,001 | 15,908 | 15,825 | 15,932 | 15,877 | 16,054 | ||||||||||||||||||
EARNINGS PER COMMON SHARE (Diluted) | $ | 0.27 | $ | 0.26 | $ | 0.21 | $ | 0.01 | $ | 0.74 | $ | 0.32 | ||||||||||||
EARNINGS PER COMMON SHARE (Diluted) | $ | 0.27 | $ | 0.26 | $ | 0.22 | $ | 0.01 | $ | 0.76 | $ | 0.33 | ||||||||||||
EBIT | $ | 7,587 | $ | 7,310 | $ | 6,054 | $ | 1,217 | $ | 22,168 | $ | 8,727 | ||||||||||||
Depreciation | 2,680 | 2,353 | 2,528 | 2,103 | 9,664 | 2,597 | ||||||||||||||||||
Amortization of intangibles | 77 | 38 | 38 | 39 | 192 | 38 | ||||||||||||||||||
EBITDA | $ | 10,344 | $ | 9,701 | $ | 8,620 | $ | 3,359 | $ | 32,024 | $ | 11,362 | ||||||||||||
EBITDA AS A PERCENT OF SALES | 11.4 | % | 10.3 | % | 9.6 | % | 3.1 | % | 8.4 | % | 11.1 | % | ||||||||||||
CAPITAL EXPENDITURES | $ | 1,294 | $ | 1,575 | $ | 757 | $ | 1,661 | $ | 5,287 | $ | 3,668 | ||||||||||||
CIRCOR INTERNATIONAL, INC.
RECONCILIATION OF KEY PERFORMANCE MEASURES TO COMMONLY USED
GENERALLY ACCEPTED ACCOUNTING PRINCIPLE TERMS
(in thousands)
UNAUDITED
2004 | 2005 | |||||||||||||||||||||||||
1ST QTR | 2ND QTR | 3RD QTR | 4TH QTR | YTD | 1ST QTR | |||||||||||||||||||||
FREE CASH FLOW [NET CASH FLOW FROM OPERATING ACTIVITIES LESS CAPITAL EXPENDITURES LESS DIVIDENDS PAID] | $ | 2,254 | $ | 7,275 | $ | 4,438 | $ | 7,692 | $ | 21,659 | $ | (1,226 | ) | |||||||||||||
ADD: | Capital expenditures | 1,294 | 1,575 | 757 | 1,661 | 5,287 | 3,668 | |||||||||||||||||||
Dividends paid | 573 | 576 | 576 | 578 | 2,303 | 586 | ||||||||||||||||||||
NET CASH PROVIDED BY OPERATING ACTIVITIES | $ | 4,121 | $ | 9,426 | $ | 5,771 | $ | 9,931 | $ | 29,249 | $ | 3,028 | ||||||||||||||
NET (CASH) DEBT [TOTAL DEBT LESS CASH AND CASH EQUIVALENTS LESS INVESTMENTS] | $ | (8,706 | ) | $ | (4,054 | ) | $ | (9,918 | ) | $ | (19,928 | ) | $ | (19,928 | ) | $ | 15,367 | |||||||||
ADD: | Cash and cash equivalents | 59,963 | 54,527 | 60,055 | 58,653 | 58,653 | 24,942 | |||||||||||||||||||
Investments | 7,679 | 7,517 | 7,953 | 4,155 | 4,155 | 4,117 | ||||||||||||||||||||
TOTAL DEBT | $ | 58,936 | $ | 57,990 | $ | 58,090 | $ | 42,880 | $ | 42,880 | $ | 44,426 | ||||||||||||||
NET DEBT AS % OF NET CAPITALIZATION | -3.3 | % | -1.5 | % | -3.6 | % | -7.3 | % | -7.3 | % | 4.9 | % | ||||||||||||||
NET CAPITALIZATION [TOTAL DEBT PLUS SHAREHOLDERS’ EQUITY LESS CASH AND CASH EQUIVALENTS, LESS INVESTMENTS] | $ | 267,728 | $ | 276,260 | $ | 275,870 | $ | 273,507 | $ | 273,507 | $ | 313,378 | ||||||||||||||
LESS: | Total debt | (58,936 | ) | (57,990 | ) | (58,090 | ) | (42,880 | ) | (42,880 | ) | (44,426 | ) | |||||||||||||
ADD: | Cash and cash equivalents | 59,963 | 54,527 | 60,055 | 58,653 | 58,653 | 24,942 | |||||||||||||||||||
Investments | 7,679 | 7,517 | 7,953 | 4,155 | 4,155 | 4,117 | ||||||||||||||||||||
TOTAL SHAREHOLDERS’ EQUITY | 276,434 | 280,314 | 285,788 | 293,435 | 293,435 | 298,011 | ||||||||||||||||||||
ADD: | Total debt | 58,936 | 57,990 | 58,090 | 42,880 | 42,880 | 44,426 | |||||||||||||||||||
TOTAL CAPITAL | $ | 335,370 | $ | 338,304 | $ | 343,878 | $ | 336,315 | $ | 336,315 | $ | 342,437 | ||||||||||||||
TOTAL DEBT / TOTAL CAPITAL | 17.6 | % | 17.1 | % | 16.9 | % | 12.7 | % | 12.7 | % | 13.0 | % | ||||||||||||||
EBIT [NET INCOME LESS INTEREST EXPENSE, NET] | $ | 7,587 | $ | 7,310 | $ | 6,054 | $ | 1,217 | $ | 22,168 | $ | 8,727 | ||||||||||||||
LESS: | Interest expense, net | (1,020 | ) | (972 | ) | (1,001 | ) | (697 | ) | (3,690 | ) | (787 | ) | |||||||||||||
Provision for income taxes | (2,299 | ) | (2,216 | ) | (1,770 | ) | (390 | ) | (6,675 | ) | (2,779 | ) | ||||||||||||||
NET INCOME | $ | 4,268 | $ | 4,122 | $ | 3,283 | $ | 130 | $ | 11,803 | $ | 5,161 | ||||||||||||||
EBITDA [NET INCOME LESS INTEREST EXPENSE, NET LESS DEPRECIATION LESS AMORTIZATION LESS TAXES] | $ | 10,344 | $ | 9,701 | $ | 8,620 | $ | 3,359 | $ | 32,024 | $ | 11,362 | ||||||||||||||
LESS: | ||||||||||||||||||||||||||
Interest expense, net | (1,020 | ) | (972 | ) | (1,001 | ) | (697 | ) | (3,690 | ) | (787 | ) | ||||||||||||||
Depreciation | (2,680 | ) | (2,353 | ) | (2,528 | ) | (2,103 | ) | (9,664 | ) | (2,597 | ) | ||||||||||||||
Amortization of intangibles | (77 | ) | (38 | ) | (38 | ) | (39 | ) | (192 | ) | (38 | ) | ||||||||||||||
Provision for income taxes | (2,299 | ) | (2,216 | ) | (1,770 | ) | (390 | ) | (6,675 | ) | (2,779 | ) | ||||||||||||||
NET INCOME | $ | 4,268 | $ | 4,122 | $ | 3,283 | $ | 130 | $ | 11,803 | $ | 5,161 | ||||||||||||||
INCOME EXCLUDING SPECIAL CHARGES [NET INCOME LESS SPECIAL CHARGES, NET OF TAX] | $ | 4,293 | $ | 4,122 | $ | 3,455 | $ | 130 | $ | 11,997 | $ | 5,359 | ||||||||||||||
LESS: | Special charges, net of tax | (25 | ) | — | (172 | ) | — | (194 | ) | (198 | ) | |||||||||||||||
NET INCOME | $ | 4,268 | $ | 4,122 | $ | 3,283 | $ | 130 | $ | 11,803 | $ | 5,161 | ||||||||||||||