Exhibit 99.1
PRESS RELEASE
CIRCOR Reports Second-Quarter 2010 Results
• | Revenue and EPS Within Guidance Range, Exclusive of FX and Leslie Controls Bankruptcy and Asbestos Charges |
• | Orders Up 4% Year Over Year with Demand Stabilizing in Many Markets; Short Cycle Energy Up Strongly |
• | Operational Efficiency Gains Continue with 190 Basis Point Improvement in Sequential Adjusted Operating Profit Margin |
• | Leslie Controls Pre-negotiated Chapter 11 Plan of Reorganization On Track To Date |
Burlington, MA – August 2, 2010 –CIRCOR International, Inc. (NYSE: CIR), a provider of valves and other highly engineered products and subsystems that control the flow of fluids safely and efficiently in the aerospace, energy and industrial markets, today announced financial results for the second quarter ended July 4, 2010.
Management Comments on Second-Quarter Results
“CIRCOR performed well from an operational perspective during the second quarter of 2010,” said Chairman and Chief Executive OfficerBill Higgins. “Our segments reported sequential improvements in adjusted operating income as we continue to focus on our lean manufacturing, global sourcing and productivity initiatives. Revenues and EPS were within our guidance range if you exclude the negative effect of foreign currency and Leslie Controls’ bankruptcy and asbestos charges from our actual results and our guidance.”
“Strong bookings in early-cycle industries, such as short-cycle oil and gas, semiconductor and instrumentation, are encouraging,” said Higgins. “The markets served by our Aerospace business seem to be forming a bottom with an improving outlook in the commercial sector. Optimism is growing in later-cycle end markets as quotation activity continues to grow, and orders appear to be building off a base.”
“On July 12th we announced that our Leslie Controls subsidiary filed a pre-negotiated Chapter 11 plan of reorganization intended to permanently resolve Leslie’s asbestos liability through the creation of a trust pursuant to Section 524(g) of the U.S. Bankruptcy Code,” said Higgins. “We believe that such a plan is the best solution for our shareholders, as it will equitably resolve all pending and future Leslie asbestos claims and provide CIRCOR with permanent protection from derivative claims. Additionally, once the legal process is completed, Leslie Controls will be positioned to grow and contribute to CIRCOR’s profitability.”
Consolidated Results
Revenues for the second quarter of 2010 were $168.0 million, a 2% increase from $164.5 million generated in the second quarter of 2009. As a result of charges associated with the Leslie bankruptcy filing, CIRCOR reported a net loss for the second quarter of 2010 of $11.2 million, or $0.66 per share, compared with net income of $7.7 million, or $0.45 per diluted share, for the second quarter of 2009.
Pre-tax Leslie bankruptcy and asbestos charges were $28.9 million for the three months ended July 4, 2010, compared with $3.4 million of non-bankruptcy asbestos charges for the year-earlier period. Excluding special charges and Leslie bankruptcy and asbestos charges net of tax, adjusted earnings per diluted share were $0.44 for the second quarter of 2010 compared with $0.58 in the second quarter of 2009. Excluding $0.16, or $4.0 million pre-tax, for ongoing Leslie asbestos charges, CIRCOR’s guidance for the second quarter of 2010 was $0.44 to $0.55 earnings per diluted share.
Consolidated Orders and Free Cash Flow
The Company received orders totaling $170.7 million during the second quarter of 2010, an increase of 4% compared with the second quarter of 2009 and flat compared with the first quarter of 2010. The year-over-year increase in orders primarily results from acquisitions and strength in many of our short-cycle businesses offset by declines in late-cycle businesses, such as large international and pipeline projects. Backlog as of July 4, 2010 was $317.6 million, up 6% from backlog of $300.4 million at June 28, 2009 and down sequentially by 4% from April 4, 2010.
During the second quarter of 2010, the Company generated $11.9 million of free cash flow (defined as net cash from operating activities, less capital expenditures and dividends paid) compared with generating $17.9 million in the second quarter of 2009.
Energy
CIRCOR’s Energy segment revenues of $77.3 million for the quarter ended July 4, 2010 were slightly higher than revenues of $76.8 million for the quarter ended June 28, 2009. The increase included 10% growth from acquisitions, which was offset by an organic decline of 6% and a negative foreign currency adjustment of 4%.
Incoming orders for the second quarter of 2010 were $79.4 million, an increase of 13% year over year and 20% sequentially. The year-over-year growth was due to strength in North American short-cycle partially offset by fewer bookings of large international oil and gas and pipeline solutions projects than the second quarter of 2009. On a sequential basis, orders for large international oil and gas and pipeline projects improved. Ending backlog totaled $124.7 million, a 3% increase compared with $121.5 million at the end of the second quarter of 2009, and an 8% decrease sequentially due entirely to foreign currency impact.
The Energy segment adjusted operating margin, which excludes the impact of special charges, was 8.3% during the second quarter of 2010 compared with 12.3% for the second quarter of 2009 and 3.5% for the first quarter of 2010. Second-quarter 2010 margins were negatively affected year over year by organic revenue declines across the segment, the associated lost
operating leverage, unfavorable pricing in large international projects, and the dilutive impact of the Pipeline Engineering acquisition. These factors were partially offset by higher North American short-cycle business volume, as well as increased productivity and lower severance costs.
Aerospace
CIRCOR’s Aerospace segment revenues decreased by 8% to $27.8 million for the second quarter of 2010 from $30.2 million in the second quarter of 2009. The decrease in revenues was driven by an organic decline of 6% as a result of the soft commercial aerospace market and the timing of military and defense shipments, and a 2% decline from foreign currency adjustments. Incoming orders for the second quarter of 2010 were $27.0 million, a decrease of 31% from $39.2 million in the second quarter of 2009, and a 22% decrease from $34.8 million in the first quarter of 2010. The year-over-year and sequential decreases were primarily due to the timing of booking large military landing gear orders in the earlier periods. Ending backlog totaled $117.2 million, which was relatively flat with the second quarter of 2009, and down 3% sequentially.
The Aerospace segment’s adjusted operating margin, which excludes the impact of special charges, was 14.6% for the second quarter of 2010 compared with 16.2% for the second quarter of 2009 and 13.2% for the first quarter of 2010. Second-quarter 2010 margins were negatively affected by a decline in organic revenue and associated lost operating leverage as well as increased expenses for engineering and product development supporting future programs, which was partially offset by favorable product mix and productivity gains.
Flow Technologies
CIRCOR’s Flow Technologies segment revenues increased 9% to $62.9 million from $57.5 million in the second quarter of 2009. Second-quarter 2010 revenues reflected organic growth of 12%, primarily due to semiconductor strength, which was partially offset by foreign currency adjustments of 3%. Incoming orders for this segment were $64.3 million for the second quarter of 2010, an increase of 19% from $54.3 million in the second quarter of 2009 and a decrease of 7% sequentially. The year-over-year increase was due to strengthening demand in semiconductors and instrumentation, but was partially offset by weakness in commercial construction and petrochemical and refining. Ending backlog totaled $75.7 million, a 24% increase compared with $61.0 million at the end of the second quarter of 2009, and a 2% increase sequentially.
This segment’s adjusted operating margin, which excludes the impact of special and Leslie asbestos and bankruptcy charges, for the second quarter of 2010 was 10.1% compared with 9.5% in the second quarter of 2009, and 10.2% in the first quarter of 2010. The second-quarter 2010 margin year-over-year increase was due to higher volumes and productivity partially offset by unfavorable product mix.
Business and Financial Outlook
“We are cautiously optimistic as we enter the second half of 2010 and look toward 2011,” said Higgins. “Our sales are rebounding in certain markets, beginning with early-cycle businesses, and we are seeing the benefit of our lean cost structure in improving adjusted operating margins.
Approval of the Leslie Controls’ pre-negotiated plan of reorganization would enhance CIRCOR’s overall profitability going forward. We continue to maintain a strong balance sheet that will enable us to fund the Leslie plan and continue to invest in organic growth and strategic acquisitions.”
Beginning this third quarter 2010, CIRCOR’s guidance for adjusted earnings per share will exclude any special or Leslie asbestos and bankruptcy charges, as management believes this measure will be more useful for investors and financial institutions to analyze and compare companies on the basis of operating performance.
CIRCOR currently expects revenues for the third quarter of 2010 in the range of $170 million to $180 million and earnings, excluding special charges and Leslie asbestos and bankruptcy charges, to be in the range of $0.50 to $0.60 per diluted share. CIRCOR’s guidance assumes that exchange rates remain at present levels.
Conference Call Information
CIRCOR International will hold a conference call to review its financial results today, August 2, 2010, at 5:00 p.m. ET. Those who wish to listen to the conference call and view the accompanying presentation slides should visit“Webcasts & Presentations” in the“Investors” portion of the CIRCOR website. 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 for one year on the Company’s website.
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 third-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 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 valves and other highly engineered products and subsystems that control the flow of fluids safely and efficiently in the aerospace, energy and industrial markets. With more than 9,000 customers in over 100 countries, CIRCOR has a diversified product portfolio with recognized, market-leading brands. CIRCOR’s culture, built on the CIRCOR Business System, is defined by the Company’s commitment to attracting, developing and retaining the best talent and pursuing continuous improvement in all aspects of its business and operations. The Company’s strategy includes growing organically by investing in new, differentiated products; adding value to component products; and increasing the development of mission-critical subsystems and solutions. CIRCOR also plans to leverage its strong balance sheet to acquire strategically complementary businesses. For more information, visit the Company’s investor relations web site athttp://investors.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 | Six Months Ended | |||||||||||||||
July 4, 2010 | June 28, 2009 | July 4, 2010 | June 28, 2009 | |||||||||||||
Net revenues | $ | 168,005 | $ | 164,535 | $ | 314,274 | $ | 340,182 | ||||||||
Cost of revenues | 118,463 | 116,032 | 222,013 | 235,660 | ||||||||||||
GROSS PROFIT | 49,542 | 48,503 | 92,261 | 104,522 | ||||||||||||
Selling, general and administrative expenses | 37,959 | 34,242 | 73,376 | 68,340 | ||||||||||||
Leslie asbestos and bankruptcy charges | 28,908 | 3,442 | 28,260 | 11,705 | ||||||||||||
Special (recoveries) charges | — | — | — | (1,135 | ) | |||||||||||
OPERATING (LOSS) INCOME | (17,325 | ) | 10,819 | (9,375 | ) | 25,612 | ||||||||||
Other (income) expense: | ||||||||||||||||
Interest income | (50 | ) | (167 | ) | (92 | ) | (314 | ) | ||||||||
Interest expense | 636 | 208 | 1,233 | 386 | ||||||||||||
Other expense (income), net | 258 | (267 | ) | 207 | (449 | ) | ||||||||||
Total other expense (income) | 844 | (226 | ) | 1,348 | (377 | ) | ||||||||||
(LOSS) INCOME BEFORE INCOME TAXES | (18,169 | ) | 11,045 | (10,723 | ) | 25,989 | ||||||||||
Benefit (Provision) for income taxes | 6,928 | (3,313 | ) | 5,216 | (7,797 | ) | ||||||||||
NET (LOSS) INCOME | $ | (11,241 | ) | $ | 7,732 | $ | (5,507 | ) | $ | 18,192 | ||||||
Earnings per common share: | ||||||||||||||||
Basic | $ | (0.66 | ) | $ | 0.46 | $ | (0.32 | ) | $ | 1.07 | ||||||
Diluted | $ | (0.66 | ) | $ | 0.45 | $ | (0.32 | ) | $ | 1.07 | ||||||
Weighted average common shares outstanding: | ||||||||||||||||
Basic | 17,108 | 16,970 | 17,080 | 16,944 | ||||||||||||
Diluted | 17,108 | 17,066 | 17,080 | 17,040 |
CIRCOR INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
UNAUDITED
Six Months Ended | ||||||||
July 4, 2010 | June 28, 2009 | |||||||
OPERATING ACTIVITIES | ||||||||
Net (loss) income | $ | (5,507 | ) | $ | 18,192 | |||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||
Depreciation | 6,343 | 6,084 | ||||||
Amortization | 1,942 | 1,249 | ||||||
Provision for Leslie bankruptcy settlement | 24,974 | — | ||||||
Compensation expense of stock-based plans | 1,814 | 1,585 | ||||||
Tax effect of share based compensation | (90 | ) | 403 | |||||
Gain on disposal of property, plant and equipment | 275 | (33 | ) | |||||
Changes in operating assets and liabilities, net of effects from business acquisitions: | ||||||||
Trade accounts receivable | (19,247 | ) | 16,791 | |||||
Inventories | (14,850 | ) | 27,371 | |||||
Prepaid expenses and other assets | 3,228 | 701 | ||||||
Accounts payable, accrued expenses and other liabilities | 15,511 | (56,594 | ) | |||||
Net cash provided by operating activities | 14,393 | 15,749 | ||||||
INVESTING ACTIVITIES | ||||||||
Additions to property, plant and equipment | (8,187 | ) | (4,501 | ) | ||||
Proceeds (purchases) from disposal of property, plant and equipment | (233 | ) | 43 | |||||
Purchase of investments | — | (214,925 | ) | |||||
Proceeds from sale of investments | 21,427 | 201,826 | ||||||
Business acquisitions, net of cash acquired | (5,210 | ) | (7,510 | ) | ||||
Net cash provided by (used in) investing activities | 7,797 | (25,067 | ) | |||||
FINANCING ACTIVITIES | ||||||||
Proceeds from long-term debt | 32,458 | 64,187 | ||||||
Payments of long-term debt | (34,645 | ) | (68,545 | ) | ||||
Dividends paid | (1,279 | ) | (1,294 | ) | ||||
Proceeds from the exercise of stock options | 293 | 36 | ||||||
Tax effect of share based compensation | 90 | (403 | ) | |||||
Net cash used in financing activities | (3,083 | ) | (6,019 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents | (4,600 | ) | 902 | |||||
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 14,507 | (14,435 | ) | |||||
Cash and cash equivalents at beginning of year | 46,350 | 47,473 | ||||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 60,857 | $ | 33,038 | ||||
CIRCOR INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
UNAUDITED
July 4, 2010 | December 31, 2009 | ||||||
ASSETS | |||||||
Current Assets: | |||||||
Cash & cash equivalents | $ | 60,857 | $ | 46,350 | |||
Short-term investments | 94 | 21,498 | |||||
Trade accounts receivable, less allowance for doubtful accounts of $1,432 and $1,992, respectively | 125,468 | 115,260 | |||||
Inventories | 152,996 | 145,031 | |||||
Income taxes refundable | — | 726 | |||||
Prepaid expenses and other current assets | 7,697 | 4,195 | |||||
Deferred income tax asset | 42,187 | 15,847 | |||||
Insurance receivables | 1,180 | 4,614 | |||||
Assets held for sale | 542 | 1,167 | |||||
Total Current Assets | 391,021 | 354,688 | |||||
Property, Plant and Equipment, net | 91,426 | 95,167 | |||||
Other Assets: | |||||||
Goodwill | 50,580 | 47,893 | |||||
Intangibles, net | 50,310 | 55,238 | |||||
Deferred income tax asset | — | 5,676 | |||||
Other assets | 3,058 | 3,391 | |||||
Total Assets | $ | 586,395 | $ | 562,053 | |||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
Current Liabilities: | |||||||
Accounts payable | $ | 77,900 | $ | 57,239 | |||
Accrued expenses and other current liabilities | 46,379 | 46,736 | |||||
Accrued compensation and benefits | 18,444 | 18,617 | |||||
Leslie asbestos and bankruptcy related liabilities | 82,431 | 12,476 | |||||
Income taxes payable | 417 | — | |||||
Notes payable and current portion of long-term debt | 696 | 5,914 | |||||
Total Current Liabilities | 226,267 | 140,982 | |||||
Long-Term Debt, net of current portion | 4,279 | 1,565 | |||||
Deferred income taxes | 11,512 | — | |||||
Long-Term Leslie asbestos liability | — | 47,785 | |||||
Other Non-Current Liabilities | 20,209 | 21,313 | |||||
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 17,050,121 and 16,991,365 issued and outstanding, respectively | 171 | 170 | |||||
Additional paid-in capital | 252,098 | 249,960 | |||||
Retained earnings | 79,620 | 86,408 | |||||
Accumulated other comprehensive (loss) income | (7,761 | ) | 13,870 | ||||
Total Shareholders’ Equity | 324,128 | 350,408 | |||||
Total Liabilities and Shareholders’ Equity | $ | 586,395 | $ | 562,053 | |||
CIRCOR INTERNATIONAL, INC.
SUMMARY OF ORDERS AND BACKLOG
(in thousands)
UNAUDITED
Three Months Ended | Six Months Ended | |||||||||||
July 4, 2010 | June 28, 2009 | July 4, 2010 | June 28, 2009 | |||||||||
ORDERS 1 | ||||||||||||
Energy | $ | 79,411 | $ | 70,555 | $ | 145,614 | $ | 119,527 | ||||
Aerospace | 27,023 | 39,233 | 61,829 | 62,184 | ||||||||
Flow Technologies | 64,295 | 54,254 | 133,421 | 108,214 | ||||||||
Total orders | $ | 170,729 | $ | 164,042 | $ | 340,864 | $ | 289,925 | ||||
July 4, 2010 | June 28, 2009 | |||||||||||
BACKLOG2 | ||||||||||||
Energy | $ | 124,733 | $ | 121,531 | ||||||||
Aerospace | 117,194 | 117,795 | ||||||||||
Flow Technologies | 75,672 | 61,046 | ||||||||||
Total backlog | $ | 317,599 | $ | 300,372 | ||||||||
Note 1: Beginning in Q2 2010, orders have been adjusted to exclude the foreign exchange impact from backlog remeasurement of $5.3 million for the three months ended June 28, 2009, and ($23.6) million, and $1.3 million for the six month periods ended July 4, 2010 and June 28, 2009 respectively
Note 2: Backlog includes all unshipped customer orders.
CIRCOR INTERNATIONAL, INC.
SUMMARY REPORT BY SEGMENT
(in thousands, except earnings per share)
UNAUDITED
2009 | 2010 | |||||||||||||||||||||||||||||||
1ST QTR | 2ND QTR | 3RD QTR | 4TH QTR | YTD | 1ST QTR | 2ND QTR | YTD | |||||||||||||||||||||||||
NET REVENUES | ||||||||||||||||||||||||||||||||
Energy | $ | 89,307 | $ | 76,814 | $ | 61,185 | $ | 66,113 | $ | 293,419 | $ | 57,722 | $ | 77,305 | $ | 135,027 | ||||||||||||||||
Aerospace | 28,344 | 30,243 | 26,234 | 28,506 | 113,327 | 27,274 | 27,811 | 55,085 | ||||||||||||||||||||||||
Flow Technologies | 57,996 | 57,478 | 56,908 | 63,494 | 235,876 | 61,273 | 62,889 | 124,162 | ||||||||||||||||||||||||
Total | 175,647 | 164,535 | 144,327 | 158,113 | 642,622 | 146,269 | 168,005 | 314,274 | ||||||||||||||||||||||||
* ADJUSTED OPERATING MARGIN | ||||||||||||||||||||||||||||||||
Energy | 18.1 | % | 12.3 | % | 10.9 | % | 3.0 | % | 11.7 | % | 3.5 | % | 8.3 | % | 6.3 | % | ||||||||||||||||
Aerospace | 15.4 | % | 16.2 | % | 13.2 | % | 14.7 | % | 14.9 | % | 13.2 | % | 14.6 | % | 13.9 | % | ||||||||||||||||
Flow Technologies | 11.6 | % | 9.5 | % | 10.9 | % | 11.7 | % | 11.0 | % | 10.2 | % | 10.1 | % | 10.2 | % | ||||||||||||||||
Segment operating margin | 15.5 | % | 12.1 | % | 11.3 | % | 8.6 | % | 12.0 | % | 8.1 | % | 10.0 | % | 9.2 | % | ||||||||||||||||
Corporate expenses | -3.1 | % | -3.4 | % | -3.0 | % | -3.3 | % | -3.2 | % | -3.1 | % | -3.1 | % | -3.1 | % | ||||||||||||||||
* Adjusted operating margin | 12.5 | % | 8.7 | % | 8.4 | % | 5.3 | % | 8.8 | % | 5.0 | % | 6.9 | % | 6.0 | % | ||||||||||||||||
Leslie asbestos and bankruptcy charges (recoveries) | 4.7 | % | 2.1 | % | 1.4 | % | 25.5 | % | 8.4 | % | -0.4 | % | 17.2 | % | 9.0 | % | ||||||||||||||||
Special charges (recoveries) | -0.6 | % | 0.0 | % | -0.4 | % | 0.3 | % | -0.2 | % | 0.0 | % | 0.0 | % | 0.0 | % | ||||||||||||||||
Total operating margin | 8.4 | % | 6.6 | % | 7.4 | % | -20.6 | % | 0.6 | % | 5.4 | % | -10.3 | % | -3.0 | % | ||||||||||||||||
* ADJUSTED OPERATING INCOME | ||||||||||||||||||||||||||||||||
Energy | 16,169 | 9,461 | 6,696 | 1,966 | 34,292 | 2,025 | 6,424 | 8,449 | ||||||||||||||||||||||||
Aerospace | 4,372 | 4,905 | 3,461 | 4,195 | 16,933 | 3,607 | 4,067 | 7,674 | ||||||||||||||||||||||||
Flow Technologies | 6,744 | 5,484 | 6,197 | 7,444 | 25,869 | 6,276 | 6,367 | 12,643 | ||||||||||||||||||||||||
Segment operating income | 27,285 | 19,850 | 16,354 | 13,605 | 77,094 | 11,908 | 16,858 | 28,766 | ||||||||||||||||||||||||
Corporate expenses | (5,365 | ) | (5,589 | ) | (4,276 | ) | (5,267 | ) | (20,497 | ) | (4,607 | ) | (5,274 | ) | (9,881 | ) | ||||||||||||||||
* Adjusted operating income | 21,920 | 14,261 | 12,078 | 8,338 | 56,597 | 7,301 | 11,584 | 18,885 | ||||||||||||||||||||||||
Leslie asbestos and bankruptcy charges (recoveries) | 8,263 | 3,442 | 1,977 | 40,397 | 54,079 | (648 | ) | 28,908 | 28,260 | |||||||||||||||||||||||
Special charges (recoveries) | (1,135 | ) | — | (543 | ) | 485 | (1,193 | ) | — | — | — | |||||||||||||||||||||
Total operating income | 14,792 | 10,819 | 10,644 | (32,544 | ) | 3,711 | 7,949 | (17,325 | ) | (9,375 | ) | |||||||||||||||||||||
INTEREST (EXPENSE) INCOME, NET | (32 | ) | (41 | ) | (394 | ) | (602 | ) | (1,069 | ) | (554 | ) | (586 | ) | (1,140 | ) | ||||||||||||||||
OTHER (EXPENSE) INCOME, NET | 183 | 267 | 959 | (967 | ) | 442 | 51 | (258 | ) | (207 | ) | |||||||||||||||||||||
PRETAX INCOME (LOSS) | 14,943 | 11,045 | 11,209 | (34,113 | ) | 3,084 | 7,446 | (18,169 | ) | (10,723 | ) | |||||||||||||||||||||
(PROVISION) BENEFIT FOR INCOME TAXES | (4,483 | ) | (3,313 | ) | (2,804 | ) | 13,386 | 2,786 | (1,713 | ) | 6,928 | 5,216 | ||||||||||||||||||||
EFFECTIVE TAX RATE | 30.0 | % | 30.0 | % | 25.0 | % | 39.2 | % | -90.3 | % | 23.0 | % | 38.1 | % | 48.6 | % | ||||||||||||||||
NET (LOSS) INCOME | $ | 10,460 | $ | 7,732 | $ | 8,405 | $ | (20,727 | ) | $ | 5,870 | $ | 5,733 | $ | (11,241 | ) | $ | (5,507 | ) | |||||||||||||
Weighted Average Common Shares Outstanding (Diluted) | 17,014 | 17,066 | 17,116 | 17,033 | 17,111 | 17,193 | 17,109 | 17,080 | ||||||||||||||||||||||||
EARNINGS PER COMMON SHARE (Diluted) | $ | 0.61 | $ | 0.45 | $ | 0.49 | $ | (1.22 | ) | $ | 0.34 | $ | 0.33 | $ | (0.66 | ) | $ | (0.32 | ) | |||||||||||||
EBIT | $ | 14,975 | $ | 11,086 | $ | 11,603 | $ | (33,511 | ) | $ | 4,153 | $ | 8,000 | $ | (17,583 | ) | $ | (9,582 | ) | |||||||||||||
Depreciation | 2,839 | 3,245 | 3,536 | 3,687 | 13,307 | 3,228 | 3,115 | 6,343 | ||||||||||||||||||||||||
Amortization of intangibles | 622 | 627 | 707 | 1,078 | 3,034 | 979 | 964 | 1,942 | ||||||||||||||||||||||||
EBITDA | $ | 18,436 | $ | 14,958 | $ | 15,846 | $ | (28,746 | ) | $ | 20,494 | $ | 12,207 | $ | (13,504 | ) | $ | (1,297 | ) | |||||||||||||
EBITDA AS A PERCENT OF SALES | 10.5 | % | 9.1 | % | 11.0 | % | -18.2 | % | 3.2 | % | 8.3 | % | -8.0 | % | -0.4 | % | ||||||||||||||||
CAPITAL EXPENDITURES | $ | 2,576 | $ | 1,925 | $ | 1,605 | $ | 4,926 | $ | 11,032 | $ | 3,606 | $ | 4,580 | $ | 8,187 | ||||||||||||||||
* | Adjusted Operating Income & Margin excludes special and Leslie asbestos and bankruptcy charges |
CIRCOR INTERNATIONAL, INC.
RECONCILIATION OF KEY PERFORMANCE MEASURES TO COMMONLY USED
GENERALLY ACCEPTED ACCOUNTING PRINCIPLE TERMS
(in thousands)
UNAUDITED
2009 | 2010 | |||||||||||||||||||||||||||||||
1ST QTR | 2ND QTR | 3RD QTR | 4TH QTR | YTD | 1ST QTR | 2ND QTR | YTD | |||||||||||||||||||||||||
FREE CASH FLOW [NET CASH FLOW FROM OPERATING ACTIVITIES LESS CAPITAL EXPENDITURES LESS DIVIDENDS PAID] | $ | (7,928) | $ | 17,882 | $ | 11,241 | $ | 11,757 | $ | 32,952 | $ | (7,019) | $ | 11,947 | $ | 4,928 | ||||||||||||||||
ADD: Capital expenditures | 2,576 | 1,925 | 1,605 | 4,926 | 11,032 | 3,606 | 4,580 | 8,186 | ||||||||||||||||||||||||
Dividends paid | 657 | 637 | 636 | 638 | 2,568 | 639 | 640 | 1,279 | ||||||||||||||||||||||||
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES | $ | (4,695 | ) | $ | 20,444 | $ | 13,482 | $ | 17,321 | $ | 46,552 | $ | (2,774 | ) | $ | 17,167 | $ | 14,393 | ||||||||||||||
NET (CASH) DEBT [TOTAL DEBT LESS CASH & CASH EQUIVALENTS LESS INVESTMENTS] | $ | (49,519 | ) | $ | (69,331 | ) | $ | (77,081 | ) | $ | (60,369 | ) | $ | (60,369 | ) | $ | (52,713 | ) | $ | (55,976 | ) | $ | (55,976 | ) | ||||||||
ADD: | ||||||||||||||||||||||||||||||||
Cash & cash equivalents | 36,113 | 33,038 | 83,708 | 46,350 | 46,350 | 37,812 | 60,857 | 60,857 | ||||||||||||||||||||||||
Investments | 36,991 | 48,344 | 3,023 | 21,498 | 21,498 | 22,412 | 94 | 94 | ||||||||||||||||||||||||
TOTAL DEBT | $ | 23,585 | $ | 12,051 | $ | 9,650 | $ | 7,479 | $ | 7,479 | $ | 7,511 | $ | 4,975 | $ | 4,975 | ||||||||||||||||
DEBT AS % OF EQUITY | 7 | % | 3 | % | 3 | % | 2 | % | 2 | % | 2 | % | 2 | % | 2 | % | ||||||||||||||||
TOTAL DEBT | 23,585 | 12,051 | 9,650 | 7,479 | 7,479 | 7,511 | 4,975 | 4,975 | ||||||||||||||||||||||||
TOTAL SHAREHOLDERS’ EQUITY | 341,860 | 357,596 | 371,728 | 350,408 | 350,408 | 349,244 | 324,128 | 324,128 | ||||||||||||||||||||||||
EBIT [NET INCOME LESS INCOME TAXES LESS INTEREST EXPENSE, NET] | $ | 14,975 | $ | 11,086 | $ | 11,603 | $ | (33,511 | ) | $ | 4,153 | $ | 8,000 | $ | (17,583 | ) | $ | (9,583 | ) | |||||||||||||
LESS: | ||||||||||||||||||||||||||||||||
Interest expense, net | (32 | ) | (41 | ) | (394 | ) | (602 | ) | (1,069 | ) | (554 | ) | (586 | ) | (1,140 | ) | ||||||||||||||||
Provision for income taxes | (4,483 | ) | (3,313 | ) | (2,804 | ) | 13,386 | 2,786 | (1,713 | ) | 6,928 | 5,215 | ||||||||||||||||||||
NET INCOME | $ | 10,460 | $ | 7,732 | $ | 8,405 | $ | (20,727 | ) | $ | 5,870 | $ | 5,733 | $ | (11,241 | ) | $ | (5,508 | ) | |||||||||||||
EBITDA [NET INCOME LESS INTEREST EXPENSE, NET, LESS DEPRECIATION LESS AMORTIZATION LESS INCOME TAXES] | $ | 18,436 | $ | 14,958 | $ | 15,846 | $ | (28,746 | ) | $ | 20,494 | $ | 12,207 | $ | (13,504 | ) | $ | (1,297 | ) | |||||||||||||
LESS: | ||||||||||||||||||||||||||||||||
Interest expense, net | (32 | ) | (41 | ) | (394 | ) | (602 | ) | (1,069 | ) | (554 | ) | (586 | ) | (1,140 | ) | ||||||||||||||||
Depreciation | (2,839 | ) | (3,245 | ) | (3,536 | ) | (3,687 | ) | (13,307 | ) | (3,228 | ) | (3,115 | ) | (6,343 | ) | ||||||||||||||||
Amortization | (622 | ) | (627 | ) | (707 | ) | (1,078 | ) | (3,034 | ) | (979 | ) | (964 | ) | (1,943 | ) | ||||||||||||||||
Provision for income taxes | (4,483 | ) | (3,313 | ) | (2,804 | ) | 13,386 | 2,786 | (1,713 | ) | 6,928 | 5,215 | ||||||||||||||||||||
NET INCOME | $ | 10,460 | $ | 7,732 | $ | 8,405 | $ | (20,727 | ) | $ | 5,870 | $ | 5,733 | $ | (11,241 | ) | $ | (5,508 | ) | |||||||||||||
ADJUSTED INCOME [NET INCOME EXCLUDING SPECIALCHARGES AND LESLIE ASBESTOS AND BANKRUPTCY CHARGES, NET OF TAX] | $ | 15,037 | $ | 9,969 | $ | 9,285 | $ | 5,826 | $ | 40,117 | $ | 5,312 | $ | 7,549 | $ | 12,861 | ||||||||||||||||
LESS: | ||||||||||||||||||||||||||||||||
Special charges (recoveries), net of tax | (794 | ) | — | (405 | ) | 295 | (905 | ) | — | — | — | |||||||||||||||||||||
Leslie asbestos and bankruptcy charges (recoveries), net of tax | 5,371 | 2,237 | 1,285 | 26,258 | 35,151 | (421 | ) | 18,790 | 18,369 | |||||||||||||||||||||||
NET INCOME | $ | 10,460 | $ | 7,732 | $ | 8,405 | $ | (20,727 | ) | $ | 5,870 | $ | 5,733 | $ | (11,241 | ) | $ | (5,508 | ) | |||||||||||||
ADJUSTED WEIGHTED AVERAGE SHARES | N/A | N/A | N/A | 17,140 | N/A | N/A | 17,109 | 17,080 | ||||||||||||||||||||||||
Adjustment for anti-dilutive conversion of shares | — | — | — | 107 | — | — | 153 | 147 | ||||||||||||||||||||||||
Weighted average common shares outstanding | 17.014 | 17.066 | 17.116 | 17,033 | 17.111 | 17.193 | 17,262 | 17,227 | ||||||||||||||||||||||||
ADJUSTED EARNINGS PER SHARE [EPS EXCLUDING SPECIALCHARGES AND LESLIE ASBESTOS AND BANKRUPTCY CHARGES, NET OF TAX] | $ | 0.88 | $ | 0.58 | $ | 0.54 | $ | 0.34 | $ | 2.34 | $ | 0.31 | $ | 0.44 | $ | 0.75 | ||||||||||||||||
LESS: Special charges (recoveries), net of tax impact on EPS | $ | (0.05 | ) | $ | — | $ | (0.02 | ) | $ | 0.02 | $ | (0.01 | ) | $ | — | $ | — | $ | — | |||||||||||||
Leslie asbestos and bankruptcy charges (recoveries), net of tax impact on EPS | $ | 0.32 | $ | 0.13 | $ | 0.08 | $ | 1.54 | $ | 2.05 | $ | (0.02 | ) | $ | 1.10 | $ | 1.08 | |||||||||||||||
EARNINGS PER COMMON SHARE (Diluted) | $ | 0.61 | $ | 0.45 | $ | 0.49 | $ | (1.22 | ) | $ | 0.34 | $ | 0.33 | $ | (0.66 | ) | $ | (0.32 | ) | |||||||||||||
CIRCOR INTERNATIONAL, INC
Leslie Controls Asbestos Items
(in thousands, except case information)
2009 | 2010 | |||||||||||||||||||||||||||||||
1ST QTR | 2ND QTR | 3RD QTR | 4TH QTR | YTD | 1ST QTR | 2ND QTR | YTD | |||||||||||||||||||||||||
Quarterly Case Rollforward | ||||||||||||||||||||||||||||||||
Beginning open cases | 968 | 1,103 | 1,158 | 1,143 | 968 | 1,104 | 1,150 | 1,104 | ||||||||||||||||||||||||
Cases filed | 222 | 203 | 131 | 131 | 687 | 150 | 169 | 319 | ||||||||||||||||||||||||
Cases resolved and dismissed | (87 | ) | (148 | ) | (146 | ) | (170 | ) | (551 | ) | (104 | ) | (105 | ) | (209 | ) | ||||||||||||||||
Ending open cases | 1,103 | 1,158 | 1,143 | 1,104 | 1,104 | 1,150 | 1,214 | 1,214 | ||||||||||||||||||||||||
Ending open mesothelioma cases | 578 | 584 | 612 | 597 | 597 | 623 | 672 | 672 | ||||||||||||||||||||||||
Income Statement Amounts | ||||||||||||||||||||||||||||||||
Indemnity costs accrued (cases filed) | $ | 4,602 | $ | 2,109 | $ | 1,140 | $ | 39,810 | $ | 47,661 | $ | 699 | $ | 1,797 | $ | 2,496 | ||||||||||||||||
Adverse verdict costs (recoveries) | 90 | 97 | 95 | (1,308 | ) | (1,026 | ) | 65 | (2,455 | ) | (2,390 | ) | ||||||||||||||||||||
Defense costs incurred | 3,166 | 3,275 | 3,009 | 2,862 | 12,312 | 3,731 | 3,435 | 7,166 | ||||||||||||||||||||||||
Insurance recoveries adjustment | 2,069 | — | — | — | 2,069 | (3,652 | ) | — | (3,652 | ) | ||||||||||||||||||||||
Insurance recoveries accrued | (1,664 | ) | (2,039 | ) | (2,268 | ) | (966 | ) | (6,937 | ) | (1,491 | ) | (1,135 | ) | (2,626 | ) | ||||||||||||||||
Bankruptcy related charges, net | — | — | — | — | — | — | 27,266 | 27,266 | ||||||||||||||||||||||||
Net pre-tax Leslie asbestos and bankruptcy expense (recovery) | $ | 8,263 | $ | 3,442 | $ | 1,976 | $ | 40,398 | $ | 54,079 | $ | (648 | ) | $ | 28,908 | $ | 28,260 | |||||||||||||||
Balance Sheet Amounts | ||||||||||||||||||||||||||||||||
Bankruptcy and indemnity liability | $ | 20,781 | $ | 19,849 | $ | 20,060 | $ | 57,716 | $ | 57,732 | $ | 78,976 | ||||||||||||||||||||
Incurred defense cost liability | 4,212 | 5,169 | 3,615 | 2,544 | 2,099 | 3,455 | ||||||||||||||||||||||||||
Insurance recoveries asset | (9,088 | ) | (7,426 | ) | (6,485 | ) | (4,614 | ) | (7,997 | ) | (1,180 | ) | ||||||||||||||||||||
Net Leslie asbestos and bankruptcy liabilities | $ | 15,905 | $ | 17,592 | $ | 17,190 | $ | 55,646 | $ | 51,834 | $ | 81,251 | ||||||||||||||||||||