EXHIBIT 99.1
PRESS RELEASE
Contact: | Frederic M. Burditt |
Chief Financial Officer |
CIRCOR International |
(781) 270-1200 |
CIRCOR Announces First Quarter Earnings of $0.76 per share
• | Earnings for quarter increase 74% on revenue growth of 9.5% |
• | Orders and ending backlog each climb 27% and 45% respectively, with strength in both segments compared to the first quarter 2007 |
Burlington, MA, April 30, 2008
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 March 30, 2008.
Revenues for the 2008 first quarter were $176.6 million, an increase of 9.5% from $161.3 million for the first quarter 2007. Net income for the first quarter 2008 increased 74% to $12.9 million, or $0.76 per diluted share, compared to $7.4 million, or $0.45 per diluted share, for the 2007 first quarter.
The Company received orders totaling $237.0 million during the first quarter 2008, an increase of 27% over $186.8 million in orders in the first quarter of 2007 due to strength in naval, aerospace and energy markets, including both projects and distribution products, and a sequential increase of 39% over the fourth quarter of 2007. Backlog at March-end 2008 reached another record of $452.0 million, up 45% over March-end 2007 backlog of $311.2 million, and sequentially increasing 15% over the fourth quarter of 2007.
During the first quarter of 2008, the Company used $5.4 million of free cash flow (defined as net cash from operating activities, less capital expenditures and dividends paid) due to investment in working capital to support its record backlog as of March 30, 2008.
Circor’s Instrumentation and Thermal Fluid Controls Products segment revenues increased 9%, to $88.5 million from $81.3 million in the first quarter 2007, with 4% of the increase due to favorable currency adjustments. Incoming orders for this segment were $111.2 million for the first quarter 2008, an increase of 31% from $84.8 million in the first quarter 2007, which included large maritime orders as well as strong aerospace orders. Sequentially, this segment’s orders grew 19% and ending backlog grew 17% to $159.5 million. This segment’s operating margin for the first quarter 2008 was 11.3% compared to 7.9% in the first quarter of 2007, and
8.3% in the fourth quarter of 2007. Compared to the first quarter of 2007 improvement primarily came from price, mix of shipments and productivity.
Circor’s Energy Products segment revenues increased by $8.2 million, or 10%, to $88.1 million for the quarter ended March 30, 2008 compared to $80.0 million in the quarter ended April 1, 2007. Higher foreign exchange rates, primarily the higher Euro, compared to the US dollar, accounted for $7.2 million of the incremental revenue increase. Incoming orders for the quarter were $125.9 million, an increase of 23% over $102.1 million in the first quarter of 2007 and 63% sequentially with ending backlog totaling $292.6 million, a 51% increase compared to $194.3 million at the end of the first quarter 2007, and 15% sequentially. This segment’s operating margin was 16.2% during the first quarter of 2008 compared to 12.7% for the first quarter of 2007 and 15.3% for the fourth quarter of 2007. The first quarter of 2008 benefited from high margins on some large international oil and gas projects as well as favorable currency impacts.
Bill Higgins, Circor’s President and Chief Executive Officer, said, “Our first quarter results exceeded our expectations as a result of strong global markets, a great mix of shipments and margin expansion in both segments. Globally, our oil and gas markets have remained solid. Large project quotations continue at a high level and the North American short-cycle business orders rebounded with our backlog growing over the fourth quarter 2007. Meanwhile, orders for our Instrumentation and Thermal Fluid Controls Products were also strong especially in aerospace where the markets continue to look solid as well as maritime orders where we won some large naval related orders to be shipped in 2009 and 2010.”
Mr. Higgins added, “The most notable area of improvement in the quarter was our healthy segment operating margins (which exclude corporate and special charge expenses) at 13.8% which was the highest since Circor became public at the end of 1999. Although we will still have quarters that are up and down, the focus on operational excellence and lean manufacturing over the past few years, leadership development, strong customer markets, favorable currency, as well as positive product and project mix all have contributed to the great results. ”
Circor provided guidance for its second quarter 2008 results, indicating it expects earnings to be in the range of $0.74 to $0.83 per diluted share, excluding special charges. The guidance compares favorably to earnings in the second quarter 2007 of $0.60 per diluted share.
CIRCOR International will hold a conference call to review its first quarter results tomorrow, May 1, 2008 at 1:00 p.m. ET. Interested parties may access the call by dialing (888)-244-2511 from the US and Canada and (913) 312-1418 from international locations. A replay of the call will be available from 4:00 pm ET on Thursday, May 1, 2008, through 4:00 pm ET on Thursday, May 8, 2008. To access the replay, interested parties should dial (888) 203-1112 or (719) 457-0820 and enter confirmation code #4902483 when prompted. The presentation slides that will be discussed in the conference call are expected to be available today, April 30, 2008, by 6:00 pm ET and may be downloaded from the quarterly earnings page of the investor section on the CIRCOR website at http://www.circor.com/quarterlyearnings. An audio recording of the conference call also is expected to be posted on the company’s website by May 6, 2008.
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E 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. Actual events, performance or results could differ materially from the anticipated events, performance or results expressed or implied by such forward-looking statements. 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, 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.
CIRCOR INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
UNAUDITED
Three Months Ended | ||||||||
March 30, 2008 | April 1, 2007 | |||||||
Net revenues | $ | 176,575 | $ | 161,263 | ||||
Cost of revenues | 121,686 | 116,471 | ||||||
GROSS PROFIT | 54,889 | 44,792 | ||||||
Selling, general and administrative expenses | 35,220 | 32,087 | ||||||
Special charges (income), net | 160 | 691 | ||||||
OPERATING INCOME | 19,509 | 12,014 | ||||||
Other (income) expense: | ||||||||
Interest income | (202 | ) | (53 | ) | ||||
Interest expense | 347 | 1,271 | ||||||
Other (income) expense, net | 401 | (97 | ) | |||||
Total other expense | 546 | 1,121 | ||||||
INCOME BEFORE INCOME TAXES | 18,963 | 10,893 | ||||||
Provision for income taxes | 6,068 | 3,486 | ||||||
NET INCOME | $ | 12,895 | $ | 7,407 | ||||
Earnings per common share: | ||||||||
Basic | $ | 0.77 | $ | 0.46 | ||||
Diluted | $ | 0.76 | $ | 0.45 | ||||
Weighted average common shares outstanding: | ||||||||
Basic | 16,679 | 16,209 | ||||||
Diluted | 16,872 | 16,533 |
CIRCOR INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
UNAUDITED
Three Months Ended | ||||||||
March 30, 2008 | April 1, 2007 | |||||||
OPERATING ACTIVITIES | ||||||||
Net income | $ | 12,895 | $ | 7,407 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation | 2,874 | 2,808 | ||||||
Amortization | 656 | 626 | ||||||
Compensation expense of stock-based plans | 1,503 | 966 | ||||||
Tax effect of share based compensation | (1,171 | ) | (711 | ) | ||||
(Gain) Loss on sale of property, plant and equipment | (83 | ) | 31 | |||||
Equity earnings and paid dividends of affiliate, net | — | (56 | ) | |||||
Changes in operating assets and liabilities, net of effects from business acquisitions: | ||||||||
Trade accounts receivable | (6,858 | ) | 5,857 | |||||
Inventories | (5,090 | ) | (3,688 | ) | ||||
Prepaid expenses and other assets | (3,477 | ) | (6,123 | ) | ||||
Accounts payable, accrued expenses and other liabilities | (3,138 | ) | (10,161 | ) | ||||
Net cash used in operating activities | (1,889 | ) | (3,044 | ) | ||||
INVESTING ACTIVITIES | ||||||||
Additions to property, plant and equipment | (2,851 | ) | (1,776 | ) | ||||
Proceeds from disposal or sale of property, plant and equipment | 94 | 341 | ||||||
Proceeds from sale of investments | 5,451 | — | ||||||
Net cash provided by (used in) investing activities | 2,694 | (1,435 | ) | |||||
FINANCING ACTIVITIES | ||||||||
Proceeds from debt borrowings | 16,500 | 25,244 | ||||||
Payments of debt | (13,606 | ) | (23,576 | ) | ||||
Dividends paid | (626 | ) | (609 | ) | ||||
Proceeds from the exercise of stock options | 2,115 | 965 | ||||||
Tax effect of share based compensation | 1,171 | 711 | ||||||
Net cash provided by financing activities | 5,554 | 2,735 | ||||||
Effect of exchange rate changes on cash and cash equivalents | 1,669 | 142 | ||||||
INCREASE IN CASH AND CASH EQUIVALENTS | 8,028 | (1,602 | ) | |||||
Cash and cash equivalents at beginning of year | 34,662 | 28,652 | ||||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 42,690 | $ | 27,050 | ||||
CIRCOR INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
UNAUDITED
March 30, 2008 | Dec 31, 2007 | |||||
ASSETS | ||||||
Current Assets: | ||||||
Cash & cash equivalents | $ | 42,690 | $ | 34,662 | ||
Investments | 4,036 | 8,861 | ||||
Trade accounts receivable, less allowance for doubtful accounts of $ 2,238 and $2,151, respectively | 137,295 | 125,663 | ||||
Inventories | 182,601 | 171,661 | ||||
Prepaid expenses and other current assets | 7,406 | 3,990 | ||||
Insurance receivable | 7,131 | 6,885 | ||||
Deferred income taxes | 8,979 | 8,220 | ||||
Assets held for sale | 312 | 312 | ||||
Total Current Assets | 390,450 | 360,254 | ||||
Property, Plant and Equipment, net | 84,713 | 82,465 | ||||
Other Assets: | ||||||
Goodwill | 181,732 | 169,110 | ||||
Intangibles, net | 47,097 | 47,373 | ||||
Non current insurance receivable | 5,014 | 5,014 | ||||
Other assets | 907 | 12,253 | ||||
Total Assets | $ | 709,913 | $ | 676,469 | ||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||
Current Liabilities: | ||||||
Accounts payable | $ | 83,961 | $ | 82,038 | ||
Accrued expenses and other current liabilities | 77,079 | 72,481 | ||||
Accrued compensation and benefits | 18,068 | 21,498 | ||||
Asbestos liability | 10,038 | 9,697 | ||||
Income taxes payable | 8,930 | 7,900 | ||||
Notes payable and current portion of long-term debt | 232 | 201 | ||||
Total Current Liabilities | 198,308 | 193,815 | ||||
Long-Term Debt, net of current portion | 24,785 | 21,901 | ||||
Deferred Income Taxes | 20,065 | 19,106 | ||||
Long term asbestos liability | 7,062 | 7,062 | ||||
Other Non-Current Liabilities | 13,314 | 14,201 | ||||
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 16,816,007 and 16,650,407 issued and outstanding, respectively | 168 | 167 | ||||
Additional paid-in capital | 245,967 | 240,000 | ||||
Retained earnings | 156,913 | 144,644 | ||||
Accumulated other comprehensive income | 43,331 | 35,573 | ||||
Total Shareholders’ Equity | 446,379 | 420,384 | ||||
Total Liabilities and Shareholders’ Equity | $ | 709,913 | $ | 676,469 | ||
CIRCOR INTERNATIONAL, INC.
SUMMARY OF ORDERS AND BACKLOG
(in thousands)
UNAUDITED
Three Months Ended | ||||||
March 30, 2008 | April 1, 2007 | |||||
ORDERS | ||||||
Instrumentation & Thermal Fluid Controls | $ | 111,166 | $ | 84,771 | ||
Energy Products | 125,860 | 102,071 | ||||
Total orders | $ | 237,026 | $ | 186,842 | ||
March 30, 2008 | April 1, 2007 | |||||
BACKLOG | ||||||
Instrumentation & Thermal Fluid Controls | $ | 159,468 | $ | 116,910 | ||
Energy Products | 292,575 | 194,339 | ||||
Total backlog | $ | 452,043 | $ | 311,249 | ||
Note: Backlog includes all unshipped customer orders.
CIRCOR INTERNATIONAL, INC.
SUMMARY REPORT BY SEGMENT
(in thousands, except earnings per share)
UNAUDITED
2007 | 2008 | |||||||||||||||||||||||
1ST QTR | 2ND QTR | 3RD QTR | 4TH QTR | Full Year | 1ST QTR | |||||||||||||||||||
NET REVENUES | ||||||||||||||||||||||||
Instrumentation & Thermal Fluid Controls (TFC) | $ | 81,296 | $ | 85,740 | $ | 85,094 | $ | 91,466 | $ | 343,596 | $ | 88,450 | ||||||||||||
Energy Products | 79,967 | 80,197 | 78,923 | 83,057 | 322,144 | 88,125 | ||||||||||||||||||
Total | 161,263 | 165,937 | 164,017 | 174,523 | 665,740 | 176,575 | ||||||||||||||||||
OPERATING MARGIN | ||||||||||||||||||||||||
Instrumentation & TFC | 7.9 | % | 8.7 | % | 7.1 | % | 8.3 | % | 8.0 | % | 11.3 | % | ||||||||||||
Energy Products | 12.7 | % | 16.3 | % | 17.4 | % | 15.3 | % | 15.4 | % | 16.2 | % | ||||||||||||
Segment operating margin | 10.3 | % | 12.4 | % | 12.1 | % | 11.6 | % | 11.6 | % | 13.8 | % | ||||||||||||
Corporate expenses | -2.4 | % | -2.4 | % | -3.0 | % | -2.9 | % | -2.7 | % | -2.6 | % | ||||||||||||
Special charges | -0.4 | % | -0.4 | % | -1.3 | % | 0.5 | % | -0.4 | % | -0.1 | % | ||||||||||||
Total operating margin | 7.4 | % | 9.5 | % | 7.8 | % | 9.3 | % | 8.5 | % | 11.0 | % | ||||||||||||
OPERATING INCOME | ||||||||||||||||||||||||
Instrumentation & TFC (excl. special & unusual charges) | 6,433 | 7,438 | 6,076 | 7,589 | 27,536 | 9,994 | ||||||||||||||||||
Energy Products (excl. special & unusual charges) | 10,125 | 13,063 | 13,745 | 12,675 | 49,608 | 14,303 | ||||||||||||||||||
Segment operating income (excl. special & unusual charges) | 16,558 | 20,501 | 19,821 | 20,264 | 77,144 | 24,297 | ||||||||||||||||||
Corporate expenses (excl. special & unusual charges) | (3,853 | ) | (4,056 | ) | (4,942 | ) | (5,012 | ) | (17,863 | ) | (4,628 | ) | ||||||||||||
Special (charges) income, net | (691 | ) | (615 | ) | (2,130 | ) | 922 | (2,514 | ) | (160 | ) | |||||||||||||
Total operating income | 12,014 | 15,830 | 12,749 | 16,174 | 56,767 | 19,509 | ||||||||||||||||||
INTEREST EXPENSE, NET | (1,218 | ) | (884 | ) | (744 | ) | (155 | ) | (3,001 | ) | (145 | ) | ||||||||||||
OTHER (EXPENSE) INCOME, NET | 97 | (215 | ) | 1,508 | (133 | ) | 1,257 | (401 | ) | |||||||||||||||
PRETAX INCOME | 10,893 | 14,731 | 13,513 | 15,886 | 55,023 | 18,963 | ||||||||||||||||||
PROVISION FOR INCOME TAXES | (3,486 | ) | (4,713 | ) | (3,148 | ) | (5,765 | ) | (17,112 | ) | (6,068 | ) | ||||||||||||
EFFECTIVE TAX RATE | 32.0 | % | 32.0 | % | 23.3 | % | 36.3 | % | 31.1 | % | 32.0 | % | ||||||||||||
NET INCOME | $ | 7,407 | $ | 10,018 | $ | 10,365 | $ | 10,121 | $ | 37,911 | $ | 12,895 | ||||||||||||
Weighted Average Common Shares Outstanding (Diluted) | 16,533 | 16,679 | 16,768 | 16,925 | 16,730 | 16,872 | ||||||||||||||||||
EARNINGS PER COMMON SHARE (Diluted) | $ | 0.45 | $ | 0.60 | $ | 0.62 | $ | 0.60 | $ | 2.27 | $ | 0.76 | ||||||||||||
EBIT | $ | 12,111 | $ | 15,615 | $ | 14,257 | $ | 16,041 | $ | 58,024 | $ | 19,108 | ||||||||||||
Depreciation | 2,808 | 2,812 | 2,662 | 2,588 | 10,870 | 2,874 | ||||||||||||||||||
Amortization of intangibles | 626 | 632 | 659 | 662 | 2,579 | 656 | ||||||||||||||||||
EBITDA | $ | 15,545 | $ | 19,059 | $ | 17,578 | $ | 19,291 | $ | 71,473 | $ | 22,638 | ||||||||||||
EBITDA AS A PERCENT OF SALES | 9.6 | % | 11.5 | % | 10.7 | % | 11.1 | % | 10.7 | % | 12.8 | % | ||||||||||||
CAPITAL EXPENDITURES | $ | 1,776 | $ | 2,266 | $ | 2,844 | $ | 5,097 | $ | 11,983 | $ | 2,851 | ||||||||||||
CIRCOR INTERNATIONAL, INC.
RECONCILIATION OF KEY PERFORMANCE MEASURES TO COMMONLY USED
GENERALLY ACCEPTED ACCOUNTING PRINCIPLE TERMS
(in thousands)
UNAUDITED
2007 | 2008 | |||||||||||||||||||||||
1ST QTR | 2ND QTR | 3RD QTR | 4TH QTR | Full Year | 1ST QTR | |||||||||||||||||||
FREE CASH FLOW [NET CASH FLOW FROM OPERATING ACTIVITIES LESS CAPITAL EXPENDITURES LESS DIVIDENDS PAID] | $ | (5,429 | ) | $ | 5,439 | $ | 11,470 | $ | 30,989 | $ | 42,469 | $ | (5,366 | ) | ||||||||||
ADD: Capital expenditures | 1,776 | 2,266 | 2,844 | 5,097 | 11,983 | 2,851 | ||||||||||||||||||
Dividends paid | 609 | 614 | 617 | 624 | 2,464 | 626 | ||||||||||||||||||
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES | $ | (3,044 | ) | $ | 8,319 | $ | 14,931 | $ | 36,710 | $ | 56,916 | $ | (1,889 | ) | ||||||||||
NET (CASH) DEBT [TOTAL DEBT LESS CASH & CASH EQUIVALENTS LESS INVESTMENTS] | $ | 39,366 | $ | 29,848 | $ | 11,815 | $ | (21,421 | ) | $ | (21,421 | ) | $ | (21,709 | ) | |||||||||
ADD: Cash & cash equivalents | 27,050 | 25,281 | 30,174 | 34,662 | 34,662 | 42,690 | ||||||||||||||||||
Investments | 87 | 94 | 100 | 8,861 | 8,861 | 4,036 | ||||||||||||||||||
TOTAL DEBT | $ | 66,503 | $ | 55,223 | $ | 42,089 | $ | 22,102 | $ | 22,102 | $ | 25,017 | ||||||||||||
NET DEBT AS % OF NET CAPITALIZATION | 10 | % | 7 | % | 3 | % | -5 | % | -5 | % | -5 | % | ||||||||||||
NET CAPITALIZATION [TOTAL DEBT PLUS SHAREHOLDERS’ EQUITY LESS CASH & CASH EQUIVALENTS, LESS INVESTMENTS] | $ | 408,944 | $ | 415,386 | $ | 420,951 | $ | 398,963 | $ | 398,963 | $ | 424,670 | ||||||||||||
LESS: Total debt | (66,503 | ) | (55,223 | ) | (42,089 | ) | (22,102 | ) | (22,102 | ) | (25,017 | ) | ||||||||||||
ADD: Cash & cash equivalents | 27,050 | 25,281 | 30,174 | 34,662 | 34,662 | 42,690 | ||||||||||||||||||
Investments | 87 | 94 | 100 | 8,861 | 8,861 | 4,036 | ||||||||||||||||||
TOTAL SHAREHOLDERS’ EQUITY | 369,578 | 385,538 | 409,136 | 420,384 | 420,384 | 446,379 | ||||||||||||||||||
ADD: Total debt | 66,503 | 55,223 | 42,089 | 22,102 | 22,102 | 25,017 | ||||||||||||||||||
TOTAL CAPITAL | $ | 436,081 | $ | 440,761 | $ | 451,225 | $ | 442,486 | $ | 442,486 | $ | 471,396 | ||||||||||||
TOTAL DEBT / TOTAL CAPITAL | 15 | % | 13 | % | 9 | % | 5 | % | 5 | % | 5 | % | ||||||||||||
EBIT [NET INCOME LESS INTEREST EXPENSE, NET LESS TAXES] | $ | 12,111 | $ | 15,615 | $ | 14,257 | $ | 16,041 | $ | 58,024 | $ | 19,108 | ||||||||||||
LESS: Interest expense, net | (1,218 | ) | (884 | ) | (744 | ) | (155 | ) | (3,001 | ) | (145 | ) | ||||||||||||
Provision for income taxes | (3,486 | ) | (4,713 | ) | (3,148 | ) | (5,765 | ) | (17,112 | ) | (6,068 | ) | ||||||||||||
NET INCOME | $ | 7,407 | $ | 10,018 | $ | 10,365 | $ | 10,121 | $ | 37,911 | $ | 12,895 | ||||||||||||
EBITDA [NET INCOME LESS INTEREST EXPENSE, NET LESS DEPRECIATION LESS AMORTIZATION LESS TAXES] | $ | 15,545 | $ | 19,059 | $ | 17,578 | $ | 19,291 | $ | 71,473 | $ | 22,638 | ||||||||||||
LESS: | ||||||||||||||||||||||||
Interest expense, net | (1,218 | ) | (884 | ) | (744 | ) | (155 | ) | (3,001 | ) | (145 | ) | ||||||||||||
Depreciation | (2,808 | ) | (2,812 | ) | (2,662 | ) | (2,588 | ) | (10,870 | ) | (2,874 | ) | ||||||||||||
Amortization of intangibles | (626 | ) | (632 | ) | (659 | ) | (662 | ) | (2,579 | ) | (656 | ) | ||||||||||||
Provision for income taxes | (3,486 | ) | (4,713 | ) | (3,148 | ) | (5,765 | ) | (17,112 | ) | (6,068 | ) | ||||||||||||
NET INCOME | $ | 7,407 | $ | 10,018 | $ | 10,365 | $ | 10,121 | $ | 37,911 | $ | 12,895 | ||||||||||||