Exhibit 99.1
PRESS RELEASE
CIRCOR Reports Fourth Quarter Results
| | • | | 16% Year-Over-Year Sales Growth in Fourth Quarter and 19% Increase for Full Year 2008 |
| | • | | Company Records Non-Cash Goodwill and Intangible Impairment Charges of $141.3 Million |
| | • | | 2008 Full-Year Cash Flow From Operations was $64.8 Million |
| | • | | Reports Significant Increases in Adjusted Operating Margin and Adjusted Earnings Per Diluted Share for Fourth-Quarter and Full-Year Periods |
Burlington, MA – February 25, 2009 –CIRCOR International, Inc. (NYSE: CIR), a leading provider of valves and other highly engineered products for the instrumentation, aerospace, thermal fluid and energy markets, today announced results for the fourth quarter and full year ended December 31, 2008.
Comments on the Fourth Quarter and Full Year
Commenting on the Company’s performance, President and CEO Bill Higgins stated, “Circor delivered another quarter of strong operating performance as we completed a year of record financial results, including 19 percent revenue growth and a 370 basis point increase in adjusted operating margin, which is operating margins before special and asbestos charges. Many of our businesses experienced organic sales growth and excellent bottom-line performance for the quarter and the full year that was the direct result of robust markets and our continuous and aggressive efforts to improve Circor’s team, processes, and performance to customers. We exited 2008 with a strong balance sheet with 4 percent total debt to equity and $82.3 million in cash, cash equivalents and short-term investments.”
Consolidated Results
Revenues for the fourth quarter of 2008 were $202.0 million, an increase of $27.5 million from $174.5 million for the fourth quarter of 2007. The Company recorded a net loss of $110.1 million, or $6.52 per share, in the fourth quarter of 2008, compared with net income of $10.1 million, or $0.60 per diluted share, in the corresponding quarter of 2007. Fourth-quarter 2008 net income includes a pre-tax, non-cash goodwill and intangible impairment charge of $141.3 million recorded as a special charge. On an adjusted basis, net income, excluding the after-tax impact of special charges, for the fourth quarter of 2008 would have been $19.0 million, or $1.12 per diluted share, compared with adjusted net income of $9.5 million, or $0.56 per diluted share, for the fourth quarter of 2007.
The non-cash goodwill and intangible impairment charge recorded in the fourth quarter of 2008 was required by Statement of Financial Accounting Standards No. 142 primarily as a result of recent macroeconomic factors impacting global credit markets as well as slower industry business conditions. The goodwill impairment represented 81 percent of the
Company’s total goodwill and was within the Instrumentation and Thermal Fluid Controls segment. Goodwill and intangibles related to the Energy segment were not found to be impaired. These fourth-quarter impairment charges do not require any cash payments or impact Circor’s operations, liquidity or compliance with debt covenants.
Revenues for the full year ended December 31, 2008 increased 19 percent to $793.8 million, compared with $665.7 million for full year 2007. In full year 2008, the Company reported a net loss of $59.0 million, or $3.51 per share, compared to net income of $37.9 million, or $2.27 per diluted share, in 2007. Full year 2008 results include pre-tax special charges of $141.5 million, including the non-cash goodwill and intangible impairment charge of $141.3 million and $0.2 million related to executive retirements. Full-year 2007 net income included $2.5 million of special charges. On an adjusted basis, excluding the after tax impact of the above-mentioned special charges, diluted earnings per share would have been $4.13 for full year 2008 compared with diluted earnings per share of $2.37 for full year 2007.
The Company received orders totaling $143.1 million during the fourth quarter of 2008, down 16 percent year-over-year and 13 percent sequentially from the third quarter of 2008. The year-over-year and sequential reduction in activity reflects softening market conditions as a result of the worldwide economic slowdown, primarily in the energy, HVAC and process markets. Orders for full year 2008 totaled $742.3 million and backlog totaled $342.7 million, compared with $771.7 million and $391.6 million, respectively, in 2007.
During the fourth quarter of 2008, the Company generated $23.2 million of free cash flow, defined as net cash from operating activities, less capital expenditures and dividends paid. For full year 2008, the Company had free cash flow of $47.3 million compared to $42.5 million in 2007. The improvement from 2007 largely resulted from the increase in profitability of operations, excluding the non-cash goodwill and intangible impairment charge, partially offset by an increase in working capital needs and higher capital spending.
Instrumentation and Thermal Fluid Controls Products
Revenues for Circor’s Instrumentation and Thermal Fluid Controls Products segment increased by 3 percent to $94.5 million in the fourth quarter of 2008 from $91.5 million in the fourth quarter of 2007. Organic growth of 9 percent and growth through acquisitions of 1 percent were partially offset by adverse foreign currency adjustments of 7 percent primarily as a result of the U.S. dollar appreciating against the Euro during the quarter. Incoming orders for this segment were $94.7 million for the fourth quarter 2008, an increase of 2 percent from $93.1 million in the fourth quarter 2007.
Circor’s Instrumentation and Thermal Fluid Controls Products segment adjusted operating margin, which excludes the impact of special and asbestos charges, for the fourth quarter of 2008 was 11.2 percent compared with 12.8 percent in the fourth quarter of 2007. The year-over-year decrease in adjusted operating income for the fourth quarter of 2008 was a result of inflation on materials and wages, acquisition costs, facility consolidation costs and inventory write-offs, and was partially offset by favorable volume, price and productivity.
Energy Products
Circor’s Energy Products segment revenues increased by 29 percent to $107.5 million for the fourth quarter of 2008, from $83.1 million in the fourth quarter of 2007. Fourth-quarter revenues benefited from strong organic sales across the segment, growing 34 percent year-over year, partially offset by adverse foreign currency adjustments of 5 percent.
The Energy Products segment adjusted operating margin, which excludes the impact of special charges, was 20.1 percent during the fourth quarter of 2008 compared to 15.3 percent for the fourth quarter of 2007. Fourth quarter 2008 margins benefited from favorable project mix and strong sales volumes partially offset by material cost inflation and unfavorable currency effects as the Chinese RMB continued to appreciate versus the U.S. dollar.
Business and Financial Outlook
“We entered 2009 with the goal of emerging from the global recession stronger than our competitors,” said Higgins. “Even though we expect to face significant headwinds as a result of slowdowns in many end markets in both segments, we are well positioned for these challenging times. Our strong balance sheet, commitment to further enhancing our culture of operational excellence and continuous improvement and a diversified business portfolio should enable Circor to capture market opportunities and maintain a high quality of earnings in 2009.”
Circor is providing its outlook for the first quarter 2009. The Company currently expects revenues for the first quarter of 2009 in the range of $170 million to $176 million and earnings, excluding special charges, to be in the range of $0.56 to $0.68 per diluted share.
Conference Call Information
CIRCOR International will hold a conference call to review its financial results Thursday, February 26, 2009, at 9:00 a.m. ET. Those who wish to listen to the conference call should visithttp://www.investorcalendar.com/IC/CEPage.asp?ID=141075. The live call also can be accessed by dialing (877) 407-5790 or (201) 689-8328. If you are unable to listen to the live call, the webcast will be archived on the Company’s website.
The presentation slides that will be discussed in the conference call are expected to be available today, Wednesday, February 25, 2009, at approximately 6:00 pm ET and may be downloaded from the quarterly earnings page of the investor section on the CIRCOR website athttp://www.circor.com/quarterlyearnings.
Use of Non-GAAP Financial Measures
Adjusted net income, adjusted earnings per diluted share, adjusted operating margin, and free cash flow, are non-GAAP financial measures and are intended to serve as a complement to results provided in accordance with accounting principles generally accepted in the United States. Circor believes that such information provides an additional measurement and consistent historical comparison of the Company’s performance. A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures is available in this news release.
Safe Harbor Statement
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. 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 future performance, including first-quarter revenue and earnings guidance. 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.
About CIRCOR International, Inc.
CIRCOR International, Inc. is a leading provider of valves and other highly engineered products that allow customers around the world to use fluids safely and efficiently in the instrumentation, fluid regulation, aerospace and energy markets. CIRCOR International is a member of the Standard & Poor’s S&P SmallCap 600 Index. More information is available atwww.circor.com.
|
| Contact: |
| Frederic M. Burditt |
| Chief Financial Officer |
| CIRCOR International |
| (781) 270-1200 |
CIRCOR INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
UNAUDITED
| | | | | | | | | | | | | | | | |
| | | Three Months Ended | | | Twelve Months Ended | |
| | | December 31,
2008 | | | December 31,
2007 | | | December 31,
2008 | | | December 31,
2007 | |
Net revenues | | $ | 201,956 | | | $ | 174,523 | | | $ | 793,816 | | | $ | 665,740 | |
Cost of revenues | | | 138,766 | | | | 121,320 | | | | 541,519 | | | | 470,373 | |
| | | | | | | | | | | | | | | | |
GROSS PROFIT | | | 63,190 | | | | 53,203 | | | | 252,297 | | | | 195,367 | |
Selling, general and administrative expenses | | | 37,118 | | | | 34,312 | | | | 143,157 | | | | 128,552 | |
Asbestos charges | | | 1,417 | | | | 3,639 | | | | 8,311 | | | | 7,534 | |
Special charges | | | 141,297 | | | | (922 | ) | | | 141,457 | | | | 2,514 | |
| | | | | | | | | | | | | | | | |
OPERATING INCOME (LOSS) | | | (116,642 | ) | | | 16,174 | | | | (40,628 | ) | | | 56,767 | |
| | | | | | | | | | | | | | | | |
Other (income) expense: | | | | | | | | | | | | | | | | |
Interest income | | | (396 | ) | | | (134 | ) | | | (1,350 | ) | | | (393 | ) |
Interest expense | | | 276 | | | | 289 | | | | 1,170 | | | | 3,394 | |
Other (income) expense, net | | | (390 | ) | | | 133 | | | | 270 | | | | (1,257 | ) |
| | | | | | | | | | | | | | | | |
Total other expense | | | (510 | ) | | | 288 | | | | 90 | | | | 1,744 | |
| | | | | | | | | | | | | | | | |
INCOME (LOSS) BEFORE INCOME TAXES | | | (116,132 | ) | | | 15,886 | | | | (40,718 | ) | | | 55,023 | |
Provision (benefit) for income taxes | | | (6,024 | ) | | | 5,765 | | | | 18,297 | | | | 17,112 | |
| | | | | | | | | | | | | | | | |
NET INCOME (LOSS) | | $ | (110,108 | ) | | $ | 10,121 | | | $ | (59,015 | ) | | $ | 37,911 | |
| | | | | | | | | | | | | | | | |
| | | | |
Earnings per common share: | | | | | | | | | | | | | | | | |
Basic | | $ | (6.52 | ) | | $ | 0.61 | | | $ | (3.51 | ) | | $ | 2.31 | |
Diluted | | $ | (6.52 | ) | | $ | 0.60 | | | $ | (3.51 | ) | | $ | 2.27 | |
| | | | |
Weighted average common shares outstanding: | | | | | | | | | | | | | | | | |
Basic | | | 16,897 | | | | 16,646 | | | | 16,817 | | | | 16,442 | |
Diluted | | | 16,897 | | | | 16,925 | | | | 16,817 | | | | 16,730 | |
CIRCOR INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
UNAUDITED
| | | | | | | | |
| | | Twelve Months Ended | |
| | | December 31,
2008 | | | December 31,
2007 | |
OPERATING ACTIVITIES | | | | | | | | |
Net income | | $ | (59,015 | ) | | $ | 37,911 | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | | | |
Depreciation | | | 11,548 | | | | 10,870 | |
Amortization | | | 2,625 | | | | 2,579 | |
Goodwill and intangible impairments | | | 141,297 | | | | — | |
Compensation expense of stock-based plans | | | 3,632 | | | | 5,704 | |
Tax effect of share based compensation | | | (2,242 | ) | | | (3,623 | ) |
Deferred income taxes (benefit) | | | (15,757 | ) | | | (3,574 | ) |
(Gain) loss on sale of assets held for sale | | | — | | | | (1,229 | ) |
Loss on disposal of property, plant and equipment | | | 231 | | | | 102 | |
Gain on sale of affiliate | | | — | | | | (1,605 | ) |
Equity in undistributed income of affiliates | | | — | | | | 452 | |
| | |
Changes in operating assets and liabilities, net of effects from business acquisitions: | | | | | | | | |
Trade accounts receivable | | | (10,068 | ) | | | (12,532 | ) |
Inventories | | | (8,965 | ) | | | (15,672 | ) |
Prepaid expenses and other assets | | | 329 | | | | (13,187 | ) |
Accounts payable, accrued expenses and other liabilities | | | 1,203 | | | | 50,720 | |
| | | | | | | | |
Net cash provided by operating activities | | | 64,818 | | | | 56,916 | |
| | | | | | | | |
| | |
INVESTING ACTIVITIES | | | | | | | | |
Additions to property, plant and equipment | | | (14,972 | ) | | | (11,983 | ) |
Proceeds from disposal of property, plant and equipment | | | 186 | | | | 939 | |
Proceeds from sale of assets held for sale | | | 311 | | | | 4,072 | |
Proceeds from sale of affiliate | | | — | | | | 1,605 | |
Purchase of ST investments | | | (254,965 | ) | | | (8,760 | ) |
Proceeds from sale of ST investments | | | 227,783 | | | | — | |
Business acquisitions, net of cash acquired | | | (7,263 | ) | | | (2,704 | ) |
| | | | | | | | |
Net cash used in investing activities | | | (48,920 | ) | | | (16,831 | ) |
| | | | | | | | |
| | |
FINANCING ACTIVITIES | | | | | | | | |
Proceeds from debt borrowings | | | 124,521 | | | | 87,641 | |
Payments of debt | | | (133,701 | ) | | | (130,709 | ) |
Dividends paid | | | (2,523 | ) | | | (2,464 | ) |
Proceeds from the exercise of stock options | | | 2,392 | | | | 6,380 | |
Tax effect of share based compensation | | | 2,242 | | | | 3,623 | |
| | | | | | | | |
Net cash used in financing activities | | | (7,069 | ) | | | (35,529 | ) |
| | | | | | | | |
Effect of exchange rate changes on cash and cash equivalents | | | 3,982 | | | | 1,454 | |
| | | | | | | | |
| | |
INCREASE IN CASH AND CASH EQUIVALENTS | | | 12,811 | | | | 6,010 | |
Cash and cash equivalents at beginning of year | | | 34,662 | | | | 28,652 | |
| | | | | | | | |
CASH AND CASH EQUIVALENTS AT END OF YEAR | | $ | 47,473 | | | $ | 34,662 | |
| | | | | | | | |
CIRCOR INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
UNAUDITED
| | | | | | |
| | | December 31, 2008 | | December 31, 2007 |
ASSETS | | | | | | |
Current Assets: | | | | | | |
Cash & cash equivalents | | $ | 47,473 | | $ | 34,662 |
Short-term investments | | | 34,872 | | | 8,861 |
Trade accounts receivable, less allowance for doubtful accounts of $1,968 and $2,151, respectively | | | 134,731 | | | 125,663 |
Inventories | | | 183,291 | | | 171,661 |
Prepaid expenses and other current assets | | | 3,825 | | | 3,990 |
Deferred income taxes | | | 12,396 | | | 8,220 |
Insurance receivable | | | 6,081 | | | 6,885 |
Assets held for sale | | | 1,015 | | | 312 |
| | | | | | |
Total Current Assets | | | 423,684 | | | 360,254 |
| | | | | | |
| | |
Property, Plant and Equipment, net | | | 82,843 | | | 82,465 |
| | |
Other Assets: | | | | | | |
Goodwill | | | 32,092 | | | 169,110 |
Intangibles, net | | | 42,123 | | | 47,373 |
Non-current insurance receivable | | | 4,684 | | | 5,014 |
Other assets | | | 2,597 | | | 12,253 |
| | | | | | |
Total Assets | | $ | 588,023 | | $ | 676,469 |
| | | | | | |
| | |
LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | |
Current Liabilities: | | | | | | |
Accounts payable | | $ | 94,421 | | $ | 82,038 |
Accrued expenses and other current liabilities | | | 69,948 | | | 72,481 |
Accrued compensation and benefits | | | 22,604 | | | 21,498 |
Asbestos liability | | | 9,310 | | | 9,697 |
Income taxes payable | | | 9,873 | | | 7,900 |
Notes payable and current portion of long-term debt | | | 622 | | | 201 |
| | | | | | |
Total Current Liabilities | | | 206,778 | | | 193,815 |
| | | | | | |
| | |
Long-Term Debt, net of current portion | | | 12,528 | | | 21,901 |
Deferred Income Taxes | | | 3,496 | | | 19,106 |
Long-Term Asbestos Liability | | | 9,935 | | | 7,062 |
Other Non-Current Liabilities | | | 21,664 | | | 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 16,895,250 and 16,650,407 issued and outstanding, respectively | | | 169 | | | 167 |
Additional paid-in capital | | | 247,196 | | | 240,000 |
Retained earnings | | | 83,106 | | | 144,644 |
Accumulated other comprehensive income | | | 3,151 | | | 35,573 |
| | | | | | |
Total Shareholders’ Equity | | | 333,622 | | | 420,384 |
| | | | | | |
Total Liabilities and Shareholders’ Equity | | $ | 588,023 | | $ | 676,469 |
| | | | | | |
CIRCOR INTERNATIONAL, INC.
SUMMARY OF ORDERS AND BACKLOG
(in thousands)
UNAUDITED
| | | | | | | | | | | | |
| | | Three Months Ended | | Twelve Months Ended |
| | December 31,
2008 | | December 31,
2007 | | December 31,
2008 | | December 31,
2007 |
ORDERS | | | | | | | | | | | | |
Instrumentation & Thermal Fluid Controls | | $ | 94,732 | | $ | 93,071 | | $ | 408,493 | | $ | 366,913 |
| | | | |
Energy Products | | | 48,349 | | | 77,348 | | | 333,775 | | | 404,752 |
| | | | | | | | | | | | |
| | | | |
Total orders | | $ | 143,081 | | $ | 170,419 | | $ | 742,268 | | $ | 771,665 |
| | | | | | | | | | | | |
| | | | |
| | | December 31,
2008 | | December 31,
2007 | | | | |
BACKLOG | | | | | | | | | | | | |
Instrumentation & Thermal Fluid Controls | | $ | 169,787 | | $ | 136,749 | | | | | | |
| | | | |
Energy Products | | | 172,914 | | | 254,841 | | | | | | |
| | | | | | | | | | | | |
| | | | |
Total backlog | | $ | 342,701 | | $ | 391,590 | | | | | | |
| | | | | | | | | | | | |
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 | | | YTD | | | 1ST QTR | | | 2ND QTR | | | 3RD QTR | | | 4TH QTR | | | YTD | |
NET REVENUES | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | |
Instrumentation & Thermal Fluid Controls (TFC) | | $ | 81,296 | | | $ | 85,740 | | | $ | 85,094 | | | $ | 91,466 | | | $ | 343,596 | | | $ | 88,450 | | | $ | 98,867 | | | $ | 96,298 | | | $ | 94,499 | | | $ | 378,114 | |
Energy Products | | | 79,967 | | | | 80,197 | | | | 78,923 | | | | 83,057 | | | | 322,144 | | | | 88,125 | | | | 107,738 | | | | 112,382 | | | | 107,457 | | | | 415,702 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total | | | 161,263 | | | | 165,937 | | | | 164,017 | | | | 174,523 | | | | 665,740 | | | | 176,575 | | | | 206,605 | | | | 208,680 | | | | 201,956 | | | | 793,816 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | |
ADJUSTED OPERATING MARGIN | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | |
Instrumentation & TFC (excl. special & asbestos charges) | | | 8.9 | % | | | 9.6 | % | | | 9.3 | % | | | 12.8 | % | | | 10.2 | % | | | 12.5 | % | | | 12.6 | % | | | 12.3 | % | | | 11.2 | % | | | 12.1 | % |
Energy Products (excl. special charges) | | | 12.7 | % | | | 16.3 | % | | | 17.4 | % | | | 15.3 | % | | | 15.4 | % | | | 16.2 | % | | | 20.4 | % | | | 23.2 | % | | | 20.1 | % | | | 20.2 | % |
Segment operating income (excl. special & asbestos charges) | | | 10.8 | % | | | 12.8 | % | | | 13.2 | % | | | 14.0 | % | | | 12.7 | % | | | 14.4 | % | | | 16.6 | % | | | 18.1 | % | | | 15.9 | % | | | 16.3 | % |
Corporate expenses (excl. special & asbestos charges) | | | -2.3 | % | | | -2.3 | % | | | -3.0 | % | | | -3.1 | % | | | -2.7 | % | | | -2.6 | % | | | -2.4 | % | | | -2.4 | % | | | -3.0 | % | | | -2.6 | % |
Adjusted Operating Income | | | 8.5 | % | | | 10.5 | % | | | 10.2 | % | | | 10.8 | % | | | 10.0 | % | | | 11.7 | % | | | 14.3 | % | | | 15.7 | % | | | 12.9 | % | | | 13.7 | % |
Asbestos charges (attributable to Instrumentation & TFC) | | | -0.6 | % | | | -0.6 | % | | | -1.1 | % | | | -2.1 | % | | | -1.1 | % | | | -0.6 | % | | | -1.0 | % | | | -1.8 | % | | | -0.7 | % | | | -1.0 | % |
Special charges | | | -0.4 | % | | | -0.4 | % | | | -1.3 | % | | | 0.5 | % | | | -0.4 | % | | | -0.1 | % | | | 0.0 | % | | | 0.0 | % | | | -70.0 | % | | | -17.8 | % |
Total operating margin | | | 7.4 | % | | | 9.5 | % | | | 7.8 | % | | | 9.3 | % | | | 8.5 | % | | | 11.0 | % | | | 13.3 | % | | | 13.9 | % | | | -57.8 | % | | | -5.1 | % |
| | | | | | | | | | |
ADJUSTED OPERATING INCOME | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | |
Instrumentation & TFC (excl. special & asbestos charges) | | | 7,271 | | | | 8,204 | | | | 7,913 | | | | 11,681 | | | | 35,069 | | | | 11,069 | | | | 12,451 | | | | 11,803 | | | | 10,558 | | | | 45,881 | |
Energy Products (excl. special charges) | | | 10,125 | | | | 13,063 | | | | 13,745 | | | | 12,675 | | | | 49,608 | | | | 14,303 | | | | 21,938 | | | | 26,023 | | | | 21,556 | | | | 83,820 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Segment operating income (excl. special & asbestos charges) | | | 17,396 | | | | 21,267 | | | | 21,658 | | | | 24,356 | | | | 84,677 | | | | 25,372 | | | | 34,389 | | | | 37,826 | | | | 32,114 | | | | 129,701 | |
Corporate expenses (excl. special & asbestos charges) | | | (3,653 | ) | | | (3,804 | ) | | | (4,942 | ) | | | (5,463 | ) | | | (17,862 | ) | | | (4,628 | ) | | | (4,890 | ) | | | (5,001 | ) | | | (6,042 | ) | | | (20,561 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Adjusted Operating Income | | | 13,743 | | | | 17,463 | | | | 16,716 | | | | 18,893 | | | | 66,815 | | | | 20,744 | | | | 29,499 | | | | 32,825 | | | | 26,072 | | | | 109,140 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Asbestos charges (attributable to Instrumentation & TFC) | | | (1,038 | ) | | | (1,018 | ) | | | (1,837 | ) | | | (3,641 | ) | | | (7,534 | ) | | | (1,075 | ) | | | (2,009 | ) | | | (3,810 | ) | | | (1,417 | ) | | | (8,311 | ) |
Special charges | | | (691 | ) | | | (615 | ) | | | (2,130 | ) | | | 922 | | | | (2,514 | ) | | | (160 | ) | | | — | | | | — | | | | (141,297 | ) | | | (141,457 | ) |
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Total operating income | | | 12,014 | | | | 15,830 | | | | 12,749 | | | | 16,174 | | | | 56,767 | | | | 19,509 | | | | 27,490 | | | | 29,015 | | | | (116,642 | ) | | | (40,628 | ) |
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INTEREST (EXPENSE) INCOME, NET | | | (1,218 | ) | | | (884 | ) | | | (744 | ) | | | (155 | ) | | | (3,001 | ) | | | (145 | ) | | | 23 | | | | 182 | | | | 120 | | | | 180 | |
OTHER (EXPENSE) INCOME, NET | | | 97 | | | | (215 | ) | | | 1,508 | | | | (133 | ) | | | 1,257 | | | | (401 | ) | | | (248 | ) | | | (11 | ) | | | 390 | | | | (270 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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PRETAX INCOME | | | 10,893 | | | | 14,731 | | | | 13,513 | | | | 15,886 | | | | 55,023 | | | | 18,963 | | | | 27,265 | | | | 29,186 | | | | (116,132 | ) | | | (40,718 | ) |
PROVISION FOR INCOME TAXES | | | (3,486 | ) | | | (4,713 | ) | | | (3,148 | ) | | | (5,765 | ) | | | (17,112 | ) | | | (6,068 | ) | | | (8,840 | ) | | | (9,413 | ) | | | 6,024 | | | | (18,297 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
EFFECTIVE TAX RATE | | | 32.0 | % | | | 32.0 | % | | | 23.3 | % | | | 36.3 | % | | | 31.1 | % | | | 32.0 | % | | | 32.4 | % | | | 32.3 | % | | | 5.2 | % | | | -44.9 | % |
NET INCOME | | $ | 7,407 | | | $ | 10,018 | | | $ | 10,365 | | | $ | 10,121 | | | $ | 37,911 | | | $ | 12,895 | | | $ | 18,425 | | | $ | 19,773 | | | $ | (110,108 | ) | | $ | (59,015 | ) |
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Weighted Average Common Shares Outstanding (Diluted) | | | 16,533 | | | | 16,679 | | | | 16,768 | | | | 16,925 | | | | 16,730 | | | | 16,872 | | | | 17,053 | | | | 17,068 | | | | 16,897 | | | | 16,817 | |
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EARNINGS PER COMMON SHARE (Diluted) | | $ | 0.45 | | | $ | 0.60 | | | $ | 0.62 | | | $ | 0.60 | | | $ | 2.27 | | | $ | 0.76 | | | $ | 1.08 | | | $ | 1.16 | | | $ | (6.52 | ) | | $ | (3.51 | ) |
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EBIT | | $ | 12,111 | | | $ | 15,615 | | | $ | 14,257 | | | $ | 16,041 | | | $ | 58,024 | | | $ | 19,108 | | | $ | 27,242 | | | $ | 29,004 | | | $ | (116,252 | ) | | $ | (40,898 | ) |
Depreciation | | | 2,808 | | | | 2,812 | | | | 2,662 | | | | 2,588 | | | | 10,870 | | | | 2,874 | | | | 2,977 | | | | 3,001 | | | | 2,696 | | | | 11,548 | |
Amortization of intangibles | | | 626 | | | | 632 | | | | 659 | | | | 662 | | | | 2,579 | | | | 656 | | | | 676 | | | | 680 | | | | 613 | | | | 2,625 | |
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EBITDA | | $ | 15,545 | | | $ | 19,059 | | | $ | 17,578 | | | $ | 19,291 | | | $ | 71,473 | | | $ | 22,638 | | | $ | 30,895 | | | $ | 32,685 | | | $ | (112,943 | ) | | $ | (26,725 | ) |
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EBITDA AS A PERCENT OF SALES | | | 9.6 | % | | | 11.5 | % | | | 10.7 | % | | | 11.1 | % | | | 10.7 | % | | | 12.8 | % | | | 15.0 | % | | | 15.7 | % | | | -55.9 | % | | | -3.4 | % |
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CAPITAL EXPENDITURES | | $ | 1,776 | | | $ | 2,266 | | | $ | 2,844 | | | $ | 5,097 | | | $ | 11,983 | | | $ | 2,851 | | | $ | 3,433 | | | $ | 3,878 | | | $ | 4,810 | | | $ | 14,972 | |
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CIRCOR INTERNATIONAL, INC.
RECONCILIATION OF KEY PERFORMANCE MEASURES TO COMMONLY USED
GENERALLY ACCEPTED ACCOUNTING PRINCIPLE TERMS
(in thousands)
UNAUDITED
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| | | 2007 | | | 2008 | |
| | | 1ST QTR | | | 2ND QTR | | | 3RD QTR | | | 4TH QTR | | | YTD | | | 1ST QTR | | | 2ND QTR | | | 3RD QTR | | | 4TH QTR | | | YTD | |
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 | ) | | $ | 31,536 | | | $ | (2,062 | ) | | $ | 23,215 | | | $ | 47,323 | |
ADD: Capital expenditures | | | 1,776 | | | | 2,266 | | | | 2,844 | | | | 5,097 | | | | 11,983 | | | | 2,851 | | | | 3,433 | | | | 3,878 | | | | 4,810 | | | | 14,972 | |
Dividends paid | | | 609 | | | | 614 | | | | 617 | | | | 624 | | | | 2,464 | | | | 626 | | | | 631 | | | | 631 | | | | 635 | | | | 2,523 | |
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NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES | | $ | (3,044 | ) | | $ | 8,319 | | | $ | 14,931 | | | $ | 36,710 | | | $ | 56,916 | | | $ | (1,889 | ) | | $ | 35,600 | | | $ | 2,447 | | | $ | 28,660 | | | $ | 64,818 | |
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NET (CASH) DEBT [TOTAL DEBT LESS CASH & CASH EQUIVALENTS LESS INVESTMENTS] | | $ | 39,366 | | | $ | 29,848 | | | $ | 11,815 | | | $ | (21,421 | ) | | $ | (21,421 | ) | | $ | (21,709 | ) | | $ | (46,796 | ) | | $ | (42,029 | ) | | $ | (69,195 | ) | | $ | (69,195 | ) |
ADD: Cash & cash equivalents | | | 27,050 | | | | 25,281 | | | | 30,174 | | | | 34,662 | | | | 34,662 | | | | 42,690 | | | | 38,835 | | | | 35,177 | | | | 47,473 | | | | 47,473 | |
Investments | | | 87 | | | | 94 | | | | 100 | | | | 8,861 | | | | 8,861 | | | | 4,036 | | | | 31,590 | | | | 29,376 | | | | 34,872 | | | | 34,872 | |
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TOTAL DEBT | | $ | 66,503 | | | $ | 55,223 | | | $ | 42,089 | | | $ | 22,102 | | | $ | 22,102 | | | $ | 25,017 | | | $ | 23,629 | | | $ | 22,524 | | | $ | 13,150 | | | $ | 13,150 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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DEBT AS % OF EQUITY | | | 18 | % | | | 14 | % | | | 10 | % | | | 5 | % | | | 5 | % | | | 6 | % | | | 5 | % | | | 5 | % | | | 4 | % | | | 4 | % |
TOTAL DEBT | | | 66,503 | | | | 55,223 | | | | 42,089 | | | | 22,102 | | | | 22,102 | | | | 25,017 | | | | 23,629 | | | | 22,524 | | | | 13,150 | | | | 13,150 | |
TOTAL SHAREHOLDERS’ EQUITY | | | 369,578 | | | | 385,538 | | | | 409,136 | | | | 420,384 | | | | 420,384 | | | | 446,379 | | | | 465,958 | | | | 470,888 | | | | 333,622 | | | | 333,622 | |
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EBIT [NET INCOME LESS INTEREST EXPENSE, NET] | | $ | 12,111 | | | $ | 15,615 | | | $ | 14,257 | | | $ | 16,041 | | | $ | 58,024 | | | $ | 19,108 | | | $ | 27,242 | | | $ | 29,004 | | | $ | (116,252 | ) | | $ | (40,898 | ) |
LESS: Interest expense, net | | | (1,218 | ) | | | (884 | ) | | | (744 | ) | | | (155 | ) | | | (3,001 | ) | | | (145 | ) | | | 23 | | | | 182 | | | | 120 | | | | 180 | |
Provision for income taxes | | | (3,486 | ) | | | (4,713 | ) | | | (3,148 | ) | | | (5,765 | ) | | | (17,112 | ) | | | (6,068 | ) | | | (8,840 | ) | | | (9,413 | ) | | | 6,024 | | | | (18,297 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
NET INCOME | | $ | 7,407 | | | $ | 10,018 | | | $ | 10,365 | | | $ | 10,121 | | | $ | 37,911 | | | $ | 12,895 | | | $ | 18,425 | | | $ | 19,773 | | | $ | (110,108 | ) | | $ | (59,015 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | |
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 | | | $ | 30,895 | | | $ | 32,685 | | | $ | (112,943 | ) | | $ | (26,725 | ) |
LESS: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest expense, net | | | (1,218 | ) | | | (884 | ) | | | (744 | ) | | | (155 | ) | | | (3,001 | ) | | | (145 | ) | | | 23 | | | | 182 | | | | 120 | | | | 180 | |
Depreciation | | | (2,808 | ) | | | (2,812 | ) | | | (2,662 | ) | | | (2,588 | ) | | | (10,870 | ) | | | (2,874 | ) | | | (2,977 | ) | | | (3,001 | ) | | | (2,696 | ) | | | (11,548 | ) |
Amortization | | | (626 | ) | | | (632 | ) | | | (659 | ) | | | (662 | ) | | | (2,579 | ) | | | (656 | ) | | | (676 | ) | | | (680 | ) | | | (613 | ) | | | (2,625 | ) |
Provision for income taxes | | | (3,486 | ) | | | (4,713 | ) | | | (3,148 | ) | | | (5,765 | ) | | | (17,112 | ) | | | (6,068 | ) | | | (8,840 | ) | | | (9,413 | ) | | | 6,024 | | | | (18,297 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
NET INCOME | | $ | 7,407 | | | $ | 10,018 | | | $ | 10,365 | | | $ | 10,121 | | | $ | 37,911 | | | $ | 12,895 | | | $ | 18,425 | | | $ | 19,773 | | | $ | (110,108 | ) | | $ | (59,015 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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ADJUSTED NET INCOME, EXCLUDING SPECIAL CHARGES, NET OF TAX | | $ | 7,877 | | | $ | 10,436 | | | $ | 11,813 | | | $ | 9,494 | | | $ | 39,621 | | | $ | 13,004 | | | $ | 18,425 | | | $ | 19,773 | | | $ | 19,026 | | | $ | 70,228 | |
LESS: Special charges, net of tax | | | (470 | ) | | | (418 | ) | | | (1,448 | ) | | | 627 | | | | (1,710 | ) | | | (109 | ) | | | — | | | | — | | | | (129,134 | ) | | | (129,243 | ) |
NET INCOME | | $ | 7,407 | | | $ | 10,018 | | | $ | 10,365 | | | $ | 10,121 | | | $ | 37,911 | | | $ | 12,895 | | | $ | 18,425 | | | $ | 19,773 | | | $ | (110,108 | ) | | $ | (59,015 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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ADJUSTED WEIGHTED AVERAGE SHARES | | | 16,533 | | | | 16,679 | | | | 16,768 | | | | 16,925 | | | | 16,730 | | | | 16,872 | | | | 17,053 | | | | 17,068 | | | | 17,010 | | | | 17,005 | |
Adjustment for anti-dilutive conversion of shares | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 113 | | | | 188 | |
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Weighted average common shares outstanding (diluted) | | | 16,533 | | | | 16,679 | | | | 16,768 | | | | 16,925 | | | | 16,730 | | | | 16,872 | | | | 17,053 | | | | 17,068 | | | | 16,897 | | | | 16,817 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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ADJUSTED EARNINGS PER SHARE EXCLUDING SPECIAL CHARGES, NET OF TAX | | $ | 0.48 | | | $ | 0.63 | | | $ | 0.70 | | | $ | 0.56 | | | $ | 2.37 | | | $ | 0.77 | | | $ | 1.08 | | | $ | 1.16 | | | $ | 1.12 | | | $ | 4.13 | |
LESS: Special Charges, net of tax impact on EPS | | $ | (0.03 | ) | | $ | (0.03 | ) | | $ | (0.09 | ) | | $ | 0.04 | | | $ | (0.10 | ) | | $ | (0.01 | ) | | $ | — | | | $ | — | | | $ | (7.64 | ) | | $ | (7.69 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
EARNINGS PER COMMON SHARE (Diluted) | | $ | 0.45 | | | $ | 0.60 | | | $ | 0.62 | | | $ | 0.60 | | | $ | 2.27 | | | $ | 0.76 | | | $ | 1.08 | | | $ | 1.16 | | | $ | (6.52 | ) | | $ | (3.51 | ) |
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