Press Release

CIRCOR Reports Fourth-Quarter and Year-End 2017 Financial Results

February 28, 2018 at 8:00 AM EST

BURLINGTON, Mass.--(BUSINESS WIRE)--Feb. 28, 2018-- CIRCOR International, Inc. (NYSE: CIR), a leading provider of flow control solutions and other highly engineered products for the Energy, Aerospace & Defense and Industrial markets, today announced financial results for the fourth quarter and full year ended December 31, 2017.

  • Q4 Orders of $217 million; up 32% organically
  • Q4 Revenue of $206 million, up 4% organically
  • Q4 GAAP loss per share of $(0.32)
  • Q4 Adjusted EPS of $0.57
  • Acquisition of Colfax Fluid Handling complete; integration underway
  • Company suspends quarterly dividend to prioritize debt reduction

“We capped a solid year in 2017 with strong orders growth, and improving revenue and earnings,” said Scott Buckhout, President and Chief Executive Officer. “Energy segment orders increased 37% organically in the fourth quarter, led by our Distributed Valves and Refinery Valves business units. In Advanced Flow Solutions, robust Aerospace demand contributed to a 25% increase in organic orders in the segment.”

The Fluid Handling business, which was acquired from Colfax Corporation on December 11, 2017, also contributed favorably to the results, generating $36.5 million in sales and $5.5 million in segment operating income.

“Since completing the Fluid Handling acquisition in December, we’ve put a full-time, global integration team in place and started executing our plan to reduce combined costs, consolidate systems and processes, and drive growth synergies,” Buckhout said. “We begin 2018 well positioned to capitalize on the growth opportunities in a diversified range of favorable end markets.

“Going forward, we will continue to focus on creating long-term value for our shareholders by investing in growth, executing a seamless integration of Fluid Handling, and reducing our leverage,” concluded Buckhout.

U.S. Tax Reform
The Tax Cuts & Jobs Act did not have a significant impact on the fourth-quarter 2017 results given the Company’s net deferred tax position. Additional analysis regarding the realization of foreign tax credit carryover is in process and will be completed mid-2018.

Dividends
As part of its capital deployment strategy, the Company has suspended its quarterly cash dividend of $0.0375 per share, beginning in the first quarter of 2018. Suspension of this nominal dividend on common stock will allow the Company to redirect the funds to repay debt.

First-Quarter 2018 Guidance
The Company will provide guidance for the first quarter of 2018 during the conference call later today.

Selected Consolidated Results (unaudited)

($ millions except EPS)       Q4 2017     Q4 2016     Change     FY 2017     FY 2016     Change
Revenue       $ 205.6 $ 158.2   47.3 $ 661.7 $ 590.3   71.4
GAAP Operating Income (Loss) $ (5.1)

 

$ (3.4) (1.6) $ 20.6 $ 10.9 9.7
Adjusted Operating Income1 $ 18.7 $ 11.0 7.7 $ 51.7 $ 42.4 9.3
GAAP Operating Margin

(2.5)%

(2.2)% (30) bps 3.1% 1.8% 130 bps
Adjusted Operating Margin1 9.1% 6.9% 220 bps 7.8% 7.2% 60 bps
GAAP Earnings (Loss) Per Share (Diluted) $ (0.32) $ (0.12) (0.20) $ 0.70 $ 0.61 0.09
Adjusted Earnings Per Share (Diluted)1 $ 0.57 $ 0.48 0.09 $ 1.71 $ 1.99 (0.28)
Operating Cash Flow $ 7.6 $ 20.4 (12.8) $ 9.6 $ 59.4 (49.8)
Free Cash Flow2 $ 1.5 $ 17.0 (15.5) $ (4.0) $ 46.4 (50.4)
Orders $ 216.5 $ 142.3 74.2 $ 701.6 $ 525.7 175.9

Segment Results (unaudited)

($ millions)                               Q4 2017     Q4 2016     Change     FY 2017     FY 2016     Change
Energy                                  
Revenue $ 92.2 $ 89.0 3.2 $ 347.6 $ 322.0 25.5
Segment Operating Income $ 7.6 $ 9.3 (1.7) $ 30.7 $ 34.6 (3.9)
Segment Operating Margin 8.3% 10.4% (210) bps 8.8% 10.7% (190) bps
Orders $ 118.7 $ 85.2 33.5 $ 389.4 $ 270.5 118.9
 
Advanced Flow Solutions
Revenue $ 76.8 $ 69.2 7.6 $ 277.6 $ 268.2 9.4
Segment Operating Income $ 11.4 $ 8.9 2.5 $ 37.2 $ 33.5 3.7
Segment Operating Margin 14.8% 12.9% 190 bps 13.4% 12.5% 90 bps
Orders $ 73.5 $ 57.1 16.4 $ 287.9 $ 255.2 32.7
 
Fluid Handling3
Revenue $ 36.5 $ -- -- $ 36.5 $ -- --
Segment Operating Income $ 5.5 $ -- -- $ 5.5 $ -- --
Segment Operating Margin 15.0% -- -- 15.0% -- --
Orders $ 24.3 $ -- -- $ 24.3 $ -- --

1.

     

Consolidated and Segment Results for Q4 2017 exclude special and restructuring charges and non-cash acquisition-related intangible and inventory step-up amortization, totaling $23.7 million (pre-tax). This net charge includes (i) $9.2 million charge for non-cash acquisition-related intangible amortization expense, including the amortization of a step-up in fair value of inventories; (ii) $8.9 million in transaction fees associated with the acquisition of the Colfax Fluid Handling business; (iii) $2.4 million for settlement of a legal matter; (iv) $1.8 million write-off for deferred financing fees associated with the prior debt agreement; and (v) $1.4 million related to previously announced restructuring actions. Consolidated and Segment Results for Q4 2016 exclude special and restructuring charges, totaling $14.4 million. These charges include (i)$5.6 million for non-cash acquisition-related intangible amortization expense, including the amortization of a step-up in fair value of inventories; (ii) $4.5 million related to a non-cash charge associated with a lump sum distribution paid to terminated and vested participants in CIRCOR’s pension plan; (iii) $2.3 million related to the exit of the California machine shop and the Brazil facility, as well as the suspension of manufacturing operations in China; (iv) $1.0 million related to other restructuring programs across the Energy Segment; and (v) $1.0 million related to professional fees incurred for completed acquisitions.

2.

Free Cash Flow is a non-GAAP financial measure and is calculated by subtracting GAAP capital expenditures, net of proceeds from asset sales, from GAAP Operating Cash Flow.

3.

Fluid Handling results reflect the period from December 11, 2017 to December 31, 2017. Prior period comparisons are not meaningful.

Conference Call Information
CIRCOR International will hold a conference call to review its financial results today, February 28, 2018, at 9:00 a.m. ET. To listen to the conference call and view the accompanying presentation slides, visit “Webcasts & Presentations” in the “Investors” portion of the CIRCOR website. The call also can be accessed by dialing (877) 407-5790 or (201) 689-8328. The webcast will be archived for one year on the Company’s website.

Use of Non-GAAP Financial Measures
Adjusted operating income, Adjusted operating margin, Adjusted net income, Adjusted earnings per share (diluted), EBITDA, Adjusted EBITDA, net debt and free cash flow are non-GAAP financial measures. These non-GAAP financial measures are used by management in our financial and operating decision making because we believe they better reflect our ongoing business and allow for meaningful period-to-period comparisons. We believe these non-GAAP financial measures provide useful information to investors and others in understanding and evaluating the Company’s current operating performance and future prospects in the same manner as management does, if they so choose. These non-GAAP financial measures also allow investors and others to compare the Company’s current financial results with the Company’s past financial results in a consistent manner. For example:

  • We exclude costs and tax effects associated with restructuring activities, such as reducing overhead and consolidating facilities. We believe that the costs related to these restructuring activities are not indicative of our normal operating costs.
  • We exclude certain acquisition-related costs, including significant transaction costs and amortization of inventory and fixed-asset step-ups and the related tax effects. We exclude these costs because we do not believe they are indicative of our normal operating costs.
  • We exclude the expense and tax effects associated with the non-cash amortization of acquisition-related intangible assets because a significant portion of the purchase price for acquisitions may be allocated to intangible assets that have lives up to 25 years. Exclusion of the non-cash amortization expense allows comparisons of operating results that are consistent over time for both our newly acquired and long-held businesses and with both acquisitive and non-acquisitive peer companies.
  • We also exclude certain gains/losses and related tax effects, which are either isolated or cannot be expected to occur again with any predictability, and that we believe are not indicative of our normal operating gains and losses. For example, we exclude gains/losses from items such as the sale of a business, significant litigation-related matters and lump-sum pension plan settlements.

CIRCOR’s management uses these non-GAAP measures, in addition to GAAP financial measures, as the basis for measuring the Company’s operating performance and comparing such performance to that of prior periods and to the performance of our competitors. We use such measures when publicly providing our business outlook, assessing future earnings potential, evaluating potential acquisitions and dispositions and in our financial and operating decision-making process, including for compensation purposes.

Investors should recognize that these non-GAAP measures might not be comparable to similarly titled measures of other companies. These measures should be considered in addition and not as a substitute for or superior to, any measure of performance, cash flow or liquidity prepared in accordance with accounting principles generally accepted in the United States. A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures is included in this news release.

Safe Harbor Statement
This press release contains forward-looking statements within the meaning of Section 27 A of the Securities Act of 1933, as amended, and Section 21 E of the Securities Exchange Act of 1934, as amended. Reliance should not be placed on forward-looking statements because they involve unknown risks, uncertainties and other factors, which are, in some cases, beyond the control of CIRCOR. Any statements in this press release that are not statements of historical fact are forward-looking statements, including, but not limited to, those relating to CIRCOR's future performance, including the realization of cost reductions from restructuring activities. Actual events, performance or results could differ materially from the anticipated events, performance or results expressed or implied by such forward-looking statements. Important factors that could cause actual results to vary from expectations include, but are not limited to: our ability to respond to competitive developments and to grow our business, both domestically and internationally; changes in the cost, quality or supply of raw materials; our ability to comply with our debt obligations; our ability to successfully implement our acquisition, divesture or restructuring strategies, including our integration of the recently acquired Fluid Handling business; changes in industry standards or government regulations, both in the United States and internationally; and our ability to operate our manufacturing facilities at current or higher levels and respond to increases in manufacturing costs. BEFORE MAKING ANY INVESTMENT DECISIONS REGARDING OUR COMPANY, WE STRONGLY ADVISE YOU TO READ THE SECTION ENTITLED "RISK FACTORS" IN OUR MOST RECENT ANNUAL REPORT ON FORM 10-K AND SUBSEQUENT REPORTS ON FORMS 10-Q, WHICH CAN BE ACCESSED UNDER THE "INVESTORS" LINK OF OUR WEBSITE AT WWW.CIRCOR.COM. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

About CIRCOR International, Inc.
CIRCOR International, Inc. designs, manufactures and markets differentiated flow control products and sub-systems for Energy, Aerospace & Defense and Industrial customers. The Company has a diversified product portfolio of recognized, market-leading brands that fulfill its customers’ mission critical needs. The Company’s strategy is to grow organically and through complementary acquisitions; simplify CIRCOR’s operations; achieve world class operational excellence; and attract and retain top talent. For more information, visit the Company’s investor relations website at http://investors.circor.com.

 
CIRCOR INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF (LOSS) INCOME

(in thousands, except per share data)

UNAUDITED

 
          Three Months Ended   Twelve Months Ended
December 31, 2017   December 31, 2016 December 31, 2017   December 31, 2016
Net revenues $ 205,578 $ 158,236 $ 661,710 $ 590,259
Cost of revenues 146,362   109,139   460,890   407,144  
GROSS PROFIT 59,216 49,097 200,820 183,115
Selling, general and administrative expenses 49,776 44,528 166,201 154,818
Impairment charges 208
Special and restructuring charges, net 14,495   8,006   14,051   17,171  
OPERATING (LOSS) / INCOME (5,055 ) (3,437 ) 20,568   10,918  
Other expense (income):
Interest expense, net 4,479 1,468 10,777 3,310
Other expense (income), net 1,655   (1,157 ) 3,678   (2,072 )
TOTAL OTHER EXPENSE, NET 6,134   311   14,455   1,238  
(LOSS) / INCOME BEFORE INCOME TAXES (11,189 ) (3,748 ) 6,113 9,680
(Benefit from) Provision for income taxes (5,619 ) (1,746 ) (5,676 ) (421 )
NET (LOSS) / INCOME $ (5,570 ) $ (2,002 ) $ 11,789   $ 10,101  
(Loss) Earnings per common share:
Basic $ (0.32 ) $ (0.12 ) $ 0.71 $ 0.62
Diluted $ (0.32 ) $ (0.12 ) $ 0.70 $ 0.61
Weighted average number of common shares outstanding:
Basic 17,233 16,439 16,674 16,418
Diluted 17,233 16,439 16,849 16,536
Dividends declared per common share $ 0.0375 $ 0.0375 $ 0.1500 $ 0.1500
 
 
CIRCOR INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

UNAUDITED

 
      Twelve Months Ended
OPERATING ACTIVITIES December 31, 2017   December 31, 2016
Net income $ 11,789 $ 10,101
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation 15,290 13,304
Amortization 14,747 12,316
Provision for bad debt expense 810 2,330
Loss on write down of inventory 7,337 9,297
Compensation expense of share-based plans 3,807 5,545
Debt extinguishment 1,810
Change in fair value of contingent consideration (12,200 )
Interest amortization 759
Tax effect of share-based plan compensation 145
Pension settlement charge 4,457
Deferred income tax expense (benefit)

(7,908

)

(10,737 )
Loss on sale of property, plant and equipment 360 3,708
Impairment charges 208
Loss on sale of business 5,300
Changes in operating assets and liabilities, net of effects of acquisition and disposition:
Trade accounts receivable (5,734 ) 18,536
Inventories (19,494 ) 36,092
Prepaid expenses and other assets (8,578 ) 2,454
Accounts payable, accrued expenses and other liabilities

1,542

 

(48,357 )
Net cash provided by operating activities 9,637   59,399  

INVESTING ACTIVITIES

Purchases of property, plant and equipment (14,541 ) (14,692 )
Proceeds from the sale of property, plant and equipment 934 1,700
Business acquisition and working capital adjustment (488,517 ) (197,489 )
Net cash used in investing activities (502,124 ) (210,481 )
FINANCING ACTIVITIES
Proceeds from long-term debt 1,090,883 323,200
Payments of long-term debt (523,183 ) (162,540 )
Debt issuance costs (30,366 )
Dividends paid (2,506 ) (2,497 )
Proceeds from the exercise of stock options 740 246
Tax effect of share-based plan compensation (145 )
Purchase of common stock   500  
Net cash provided by financing activities 535,568   158,764  
Effect of exchange rate changes on cash and cash equivalents 8,996   (3,944 )
INCREASE IN CASH AND CASH EQUIVALENTS 52,077 3,738
Cash and cash equivalents at beginning of period 58,279   54,541  
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 110,356   $ 58,279  
 
 

CIRCOR INTERNATIONAL, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands)

UNAUDITED

 
      December 31, 2017   December 31, 2016
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 110,356 $ 58,279
Trade accounts receivable, less allowance for doubtful accounts of $4,791 and $5,056, respectively 223,922 133,046
Inventories 244,896 149,584
Prepaid expenses and other current assets 59,219   29,557  
Total Current Assets 638,393   370,466  
PROPERTY, PLANT AND EQUIPMENT, NET 217,539 99,713
OTHER ASSETS:
Goodwill 505,762 206,659
Intangibles, net 513,364 135,778
Deferred income taxes 22,334 4,824
Other assets 9,407   3,317  
TOTAL ASSETS $ 1,906,799   $ 820,757  
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable $ 117,329 $ 46,767
Accrued expenses and other current liabilities 170,454 50,707
Accrued compensation and benefits 34,734   20,249  
Total Current Liabilities 322,517   117,723  
LONG-TERM DEBT 787,343 251,200

DEFERRED INCOME TAXES

26,122 13,657

PENSION LIABILITY, NET

150,719

13,131

OTHER NON-CURRENT LIABILITIES

18,124

20,635

SHAREHOLDERS’ EQUITY:
Preferred stock, $0.01 par value; 1,000,000 shares authorized; no shares issued and outstanding
Common stock 212 178
Additional paid-in capital 438,721 289,423
Retained earnings 274,243 265,543
Common treasury stock, at cost (74,472 ) (74,472 )
Accumulated other comprehensive loss, net of tax (36,730 ) (76,262 )
Total Shareholders’ Equity 601,974   404,410  
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 1,906,799   $ 820,756  
 
 
CIRCOR INTERNATIONAL, INC.

SUMMARY OF ORDERS AND BACKLOG

(in millions)

UNAUDITED

 
          Three Months Ended     Twelve Months Ended

December 31,
2017

 

December 31,
2016

December 31,
2017

 

December 31,
2016

ORDERS (1)
Energy $ 118.7 $ 85.2 $ 389.4 $ 270.5
Advanced Flow Solutions 73.5 57.1 287.9 255.2
Fluid Handling 24.3     24.3  
Total orders $ 216.5   $ 142.3   $ 701.6   $ 525.7
 
BACKLOG (2)

December 31,
2017

December 31,
2016

Energy $ 170.8 $ 123.1
Advanced Flow Solutions 133.3 119.3
Fluid Handling 196.3    
Total backlog $ 500.4   $ 242.4  
 
Note 1:   Orders do not include the foreign exchange impact due to the re-measurement of customer order backlog amounts denominated in foreign currencies. Fluid Handling orders are for the period December 11, 2017 to December 31, 2017.
Note 2: Backlog includes unshipped customer orders for which revenue has not been recognized, including backlog associated with acquisitions.
 
CIRCOR INTERNATIONAL, INC.

SEGMENT INFORMATION

(in thousands, except percentages)

UNAUDITED

                                                 
2016     2017
1ST QTR   2ND QTR   3RD QTR   4TH QTR   TOTAL     1ST QTR   2ND QTR   3RD QTR   4TH QTR   TOTAL
NET REVENUES                
Energy $ 83,409 $ 80,736 $ 68,901 $ 89,000 $ 322,046 $ 80,135 $ 82,586 $ 92,613 $ 92,244 $ 347,578
Advanced Flow Solutions 67,389 65,656 65,932 69,236 268,213 65,073 68,645 67,080

 

76,839 277,637
Fluid Handling                                   36,495     36,495  

Total

$ 150,798     $ 146,392     $ 134,833     $ 158,236     $ 590,259       $ 145,208     $ 151,231     $ 159,693     $ 205,578     $ 661,710  
 
SEGMENT OPERATING INCOME
Energy $ 9,296 $ 9,293 $ 6,755 $ 9,276 $ 34,619 $ 6,864 $ 8,858 $ 7,397

 

7,629 $ 30,748
Advanced Flow Solutions 8,452 8,064 8,008 8,939 33,463 7,711 8,587 9,548 11,384 37,230
Fluid Handling 5,460 5,460
Corporate expenses (6,488 )   (5,431 )   (6,522 )   (7,231 )   (25,672 )     (5,479 )   (5,396 )   (5,067 )   (5,802 )   (21,744 )
Adjusted Operating Income $ 11,260     $ 11,926     $ 8,240     $ 10,984     $ 42,410       $ 9,096     $ 12,049     $ 11,878     $ 18,671     $ 51,694  
 
SEGMENT OPERATING MARGIN %
Energy 11.1 % 11.5 % 9.8 % 10.4 % 10.7 % 8.6 % 10.7 % 8.0 % 8.3 % 8.8 %
Advanced Flow Solutions 12.5 % 12.3 % 12.1 % 12.9 % 12.5 % 11.8 % 12.5 % 14.2 % 14.8 % 13.4 %
Fluid Handling %   %   %   %   %     %   %   %   15.0 %   15.0 %
Adjusted Operating Margin 7.5 %   8.1 %   6.1 %   6.9 %   7.2 %     6.3 %   8.0 %   7.4 %   9.1 %   7.8 %
 
 
CIRCOR INTERNATIONAL, INC.

RECONCILIATION OF KEY PERFORMANCE MEASURES TO COMMONLY USED GENERALLY ACCEPTED ACCOUNTING PRINCIPLE TERMS

(in thousands, except percentages)

UNAUDITED

           
2016     2017
1ST QTR   2ND QTR   3RD QTR   4TH QTR   TOTAL     1ST QTR   2ND QTR   3RD QTR   4TH QTR   TOTAL
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES $ 7,654   $ 10,100   $ 21,196   $ 20,449   $ 59,399 $ 16,195   $ 2,667   $ (16,854 )   $ 7,629   $ 9,637
LESS:
Capital expenditures, net of sale proceeds 3,934     1,926     3,730     3,402     12,992       2,811     2,375     2,318     6,103     13,607  
FREE CASH FLOW $ 3,720     $ 8,174     $ 17,466     $ 17,047     $ 46,407       $ 13,384     $ 292     $ (19,172 )   $ 1,526     $ (3,970 )
TOTAL DEBT $ 97,800 $ 97,600 $ 92,400 $ 251,200 $ 251,200 $ 243,000 $ 252,856 $ 269,026 $ 795,208 $ 795,208
LESS:
Cash & cash equivalents 66,580     72,970     84,929     58,279     58,279       65,656     77,272     75,627     110,356     110,356  

NET DEBT

$ 31,220     $ 24,630     $ 7,471     $ 192,921     $ 192,921       $ 177,344     $ 175,584     $ 193,399     $ 684,852     $ 684,852  
TOTAL SHAREHOLDERS' EQUITY $ 414,107 $ 411,367 $ 416,598 $ 404,410 $ 404,410 $ 415,537 $ 438,097 $ 451,885 $ 601,974 $ 601,974
 
TOTAL DEBT AS % OF EQUITY 24 % 24 % 22 % 62 % 62 % 58 % 58 % 60 % 132 % 132 %
NET DEBT AS % OF EQUITY 8 % 6 % 2 % 48 % 48 % 43 % 40 % 43 % 114 % 114 %
 
 
CIRCOR INTERNATIONAL, INC.

RECONCILIATION OF KEY PERFORMANCE MEASURES TO COMMONLY USED GENERALLY ACCEPTED ACCOUNTING PRINCIPLE TERMS

(in thousands, except per share data)

UNAUDITED

           
2016     2017
1ST QTR   2ND QTR   3RD QTR   4TH QTR   TOTAL     1ST QTR   2ND QTR   3RD QTR   4TH QTR   TOTAL
NET INCOME (LOSS) $ 3,872   $ 3,813   $ 4,418   $ (2,002 )   $ 10,101 $ 4,773   $ 8,970   $ 3,617   $ (5,571 )   $ 11,789
LESS:
Restructuring related inventory charges 1,958 75 813 2,846
Amortization of inventory step-up 1,366 1,366 4,300 4,300
Impairment charges 208 208
Restructuring charges, net 1,163 3,259 2,252 2,301 8,975 1,458 3,566 341 697 6,062
Acquisition amortization 1,868 1,911 1,888 4,234 9,901 2,552 2,599 2,694 4,697 12,542
Acquisition depreciation 233 233
Special charges (recoveries), net 776 1,334 379 5,707 8,196 (2,268 ) (5,520 ) 1,978 13,799 7,989
Income tax impact (954 )   (1,611 )   (1,519 )   (4,487 )   (8,571 )     (1,137 )   (3,124 )   (1,497 )   (8,279 )   (14,037 )
ADJUSTED NET INCOME $ 8,683     $ 8,781     $ 7,626     $ 7,932     $ 33,022       $ 5,378     $ 6,491     $ 7,133     $ 9,876     $ 28,878  
 
EARNINGS (LOSS) PER COMMON SHARE (Diluted) $ 0.23 $ 0.23 $ 0.27 $ (0.12 ) $ 0.61 $ 0.29 $ 0.54 $ 0.22 $ (0.32 ) $ 0.70
LESS:
Restructuring related inventory charges 0.12 0.05 0.17
Amortization of inventory step-up 0.08 0.08 0.25 0.26
Impairment charges 0.01 0.01
Restructuring charges, net 0.07 0.20 0.14 0.14 0.54 0.09 0.21 0.02 0.04 0.36
Acquisition amortization 0.11 0.12 0.11 0.26 0.60 0.15 0.16 0.16 0.27 0.74
Acquisition depreciation 0.01 0.01
Special charges (recoveries), net 0.05 0.08 0.02 0.35 0.50 (0.14 ) (0.33 ) 0.12 0.80 0.47
Income tax impact (0.06 )   (0.10 )   (0.09 )   (0.27 )   (0.52 )     (0.07 )   (0.19 )   (0.09 )   (0.48 )   (0.83 )
ADJUSTED EARNINGS PER SHARE (Diluted) $ 0.52     $ 0.53     $ 0.46     $ 0.48     $ 1.99       $ 0.32     $ 0.39     $ 0.43     $ 0.57     $ 1.71  
 
 
CIRCOR INTERNATIONAL, INC.

RECONCILIATION OF KEY PERFORMANCE MEASURES TO COMMONLY USED GENERALLY ACCEPTED ACCOUNTING PRINCIPLE TERMS

(in thousands)

UNAUDITED

           
2016     2017
1ST QTR   2ND QTR   3RD QTR   4TH QTR   TOTAL     1ST QTR   2ND QTR   3RD QTR   4TH QTR   TOTAL
NET INCOME (LOSS) $ 3,872   $ 3,813   $ 4,418   $ (2,002 )   $ 10,101 $ 4,773   $ 8,970   $ 3,617   $ (5,571 )   $ 11,789
LESS:
Interest expense, net (631 ) (605 ) (605 ) (1,468 ) (3,310 ) (1,669 ) (2,184 ) (2,445 ) (4,479 ) (10,777 )
Depreciation (3,263 ) (3,213 ) (3,138 ) (3,690 ) (13,304 ) (3,798 ) (3,547 ) (3,544 ) (4,401 ) (15,290 )
Amortization (2,529 ) (2,569 ) (2,488 ) (4,730 ) (12,316 ) (3,092 ) (3,124 ) (3,275 ) (5,256 ) (14,747 )
(Provision for) benefit from income taxes (1,520 )   (1,478 )   1,673     1,746     421       (687 )   724     21     5,618     5,676  
EBITDA $ 11,815 $ 11,678 $ 8,976 $ 6,140 $ 38,610 $ 14,019 $ 17,101 $ 12,860 $ 2,947 $ 46,927
LESS:
Restructuring related inventory charges (1,958 ) (75 ) (813 ) (2,846 )
Amortization of inventory step-up (1,366 ) (1,366 ) (4,300 ) (4,300 )
Impairment charges (208 ) (208 )
Restructuring charges, net (1,163 ) (3,259 ) (2,252 ) (2,301 ) (8,975 ) (1,458 ) (3,566 ) (341 ) (697 ) (6,062 )
Special (charges) recoveries, net (776 )   (1,334 )   (379 )   (5,707 )   (8,196 )     2,268     5,520     (1,978 )   (13,799 )   (7,989 )
ADJUSTED EBITDA $ 15,712     $ 16,346     $ 11,815     $ 16,327     $ 60,201       $ 13,209     $ 15,147     $ 15,179     $ 21,743     $ 65,278  
 
         
CIRCOR INTERNATIONAL, INC.

RECONCILIATION OF KEY PERFORMANCE MEASURES TO COMMONLY USED GENERALLY ACCEPTED ACCOUNTING PRINCIPLE TERMS

(in thousands, except percentages)

UNAUDITED

 
2016     2017
1ST QTR   2ND QTR  

3RD QTR

  4TH QTR   TOTAL     1ST QTR   2ND QTR   3RD QTR   4TH QTR   TOTAL
GAAP OPERATING INCOME (LOSS) $ 5,495   $ 5,347   $ 3,513   $ (3,437 )   $ 10,918 $ 7,354   $ 11,404   $ 6,864   $ (5,054 )   $ 20,568
LESS:
Restructuring related inventory charges 1,958 75 813 2,846
Amortization of inventory step-up 1,366 1,366 4,300 4,300
Impairment charges 208 208
Restructuring charges, net 1,163 3,259 2,252 2,301 8,975 1,458 3,566 341 697 6,062
Acquisition amortization 1,868 1,911 1,888 4,234 9,901 2,552 2,599 2,694 4,697 12,542
Acquisition depreciation 233 233
Special charges (recoveries), net 776     1,334     379     5,707     8,196       (2,268 )   (5,520 )   1,978     13,799     7,989  
ADJUSTED OPERATING INCOME $ 11,260     $ 11,926     $ 8,240     $ 10,984     $ 42,410       $ 9,096     $ 12,049     $ 11,877     $ 18,672     $ 51,694  
 
GAAP OPERATING MARGIN 3.6 % 3.7 % 2.6 % (2.2 )% 1.8 % 5.1 % 7.5 % 4.3 % (2.5 )% 3.1 %
LESS:
Restructuring related inventory charges 1.3 % 0.1 % —% 0.5 % 0.5 % % % % % %
Amortization of inventory step-up —% —% —% 0.9 % 0.2 % % % % 2.1 % 0.6 %
Impairment charges —% —% 0.2 % % % % % % % %
Restructuring charges, net 0.8 % 2.2 % 1.7 % 1.5 % 1.5 % 1.0 % 2.4 % 0.2 % 0.3 % 0.9 %
Acquisition amortization 1.2 % 1.3 % 1.4 % 2.7 % 1.7 % 1.8 % 1.7 % 1.7 % 2.3 % 1.9 %
Acquisition depreciation % % % % % % % % 0.1 % %
Special charges (recoveries), net 0.5 %   0.9 %   0.3 %   3.6 %   1.4 %     (1.6 )%   (3.7 )%   1.2 %   6.7 %   1.2 %
ADJUSTED OPERATING MARGIN 7.5 %   8.1 %   6.1 %   6.9 %   7.2 %     6.3 %   8.0 %   7.4 %   9.1 %   7.8 %
 

Source: CIRCOR International, Inc.

CIRCOR International
Rajeev Bhalla, 781-270-1200
Executive Vice President & Chief Financial Officer