Press Release

CIRCOR Reports Third-Quarter 2016 Financial Results

October 28, 2016 at 7:30 AM EDT

BURLINGTON, Mass.--(BUSINESS WIRE)--Oct. 28, 2016-- CIRCOR International, Inc. (NYSE: CIR), a leading provider of flow control solutions and other highly engineered products for markets including oil & gas, power generation, industrial and aerospace & defense, today announced financial results for the third quarter ended October 2, 2016.

Third-Quarter 2016 Highlights

  • Revenue of $135 million, GAAP EPS of $0.27 and Adjusted EPS of $0.46
  • Operating cash flow of $21 million and Free Cash Flow of $17.5 million
  • Energy business diversified through the acquisition of Critical Flow Solutions (CFS)
  • CIRCOR simplification continues with new organization structure

“Despite the cyclical headwinds facing our Energy business, we continue to focus on what we control. In the third quarter, we negotiated an important strategic acquisition, further reduced costs, and improved our working capital and cash flow performance,” said Scott Buckhout, President and Chief Executive Officer. “The supplier quality issues we noted in the second quarter in our Aerospace and Defense business have been resolved. We expect stronger performance from this business going forward.”

On October 13, 2016, CIRCOR closed on the acquisition of Critical Flow Solutions. This acquisition is consistent with the Company’s disciplined capital deployment strategy and diversifies CIRCOR’s revenue base as it further penetrates the stable downstream refining market. CFS brings an impressive portfolio of high technology valves and automation equipment for severe-service applications. CFS is generating strong margins due to its proprietary technology, large installed base, and high proportion of aftermarket sales.

“In addition, we are taking further actions to optimize our organizational structure to drive top-line growth and better align our businesses with end markets,” added Buckhout. “Going forward, our new ‘Energy’ segment, including our recent acquisition of CFS, will primarily serve the oil & gas market. The second segment, ‘Advanced Flow Solutions,’ will include the current Aerospace & Defense businesses plus the Control Valves product line out of our legacy Energy Group. We expect to complete this reorganization in the fourth quarter and report the year-end results consistent with the new organizational structure.”

Advanced Flow Solutions (AFS) brings together CIRCOR’s Aerospace & Defense and Control Valves product lines under one management structure. AFS will be a diversified flow control technology platform that will help CIRCOR accelerate growth in the aerospace, defense, power, process, and general industrial end markets. In addition, this new Group will serve as the platform to acquire innovative technologies in broader flow control adjacencies. Sumit Mehrotra will lead this new Group, which will be headquartered in Corona, California. Mr. Mehrotra currently serves as CIRCOR’s Senior Vice President for Global Supply Chain & Product Management.

“As we enter the final quarter of the year, we remain focused on executing our simplification and margin improvement actions. We are committed to creating long-term value for our shareholders by investing in both organic growth and acquisitions, expanding margins, generating strong free cash flow, and being disciplined with capital deployment,” concluded Buckhout.

Fourth-Quarter 2016 Guidance

For the fourth quarter of 2016, the Company will provide its guidance during the conference call later today.

Selected Consolidated Results (unaudited)

($ millions except EPS)     Q3 2016     Q3 2015     Change
Revenue     $ 134.8 $ 159.3   (15)%
GAAP Operating Income $ 3.5 $ (3.5) 200%
Adjusted Operating Income1 $ 8.2 $ 16.2 (49)%
GAAP Operating Margin 2.6% (2.2)% 480 bps
Adjusted Operating Margin1 6.1% 10.1% (400) bps
GAAP Earnings Per Share (Diluted) $ 0.27 $ (0.49) 155%
Adjusted Earnings Per Share (Diluted)1 $ 0.46 $ 0.64 (28)%
Operating Cash Flow $ 21.2 $ 5.0 324%
Free Cash Flow2 $ 17.5 $ 2.2 NM
Orders $ 111.3 $ 128.5 (13)%

Segment Results

($ millions)     Q3 2016     Q3 2015     Change
Energy      

Revenue

$ 99.8 $ 122.9 (19)%
GAAP Operating Margin 7.7% (0.6)% 830 bps
Adjusted Operating Margin1 11.4% 15.4% (400) bps
Orders $ 78.5 $ 94.2 (17)%
 
Aerospace & Defense
Revenue $ 35.0 $ 36.4 (4)%
GAAP Operating Margin 6.7% 8.9% (220) bps
Adjusted Operating Margin1 9.7% 9.1% 60 bps
Orders $

32.8

$ 34.3 (4)%

1. Consolidated and Segment Results for Q3 2016 exclude special, restructuring and impairment charges totaling $4.7 million. This includes (i) $1.9 million for non-cash acquisition-related intangible amortization expense; (ii) $0.8 million related to the exit of the Company’s California machine shop; (iii) $0.4 million related to the Company’s Brazil exit; and (iv) $1.6 million related to the Company’s suspension of manufacturing operations in China and other restructuring programs. Q3 2015 results exclude special, restructuring and impairment charges totaling $19.7 million including (i) $16.9 million related to the closure of the Brazil manufacturing operations including restructuring-related inventory charge of $6.4 million; (ii) $2.5 million for Schroedahl intangible amortization expense; and (iii) restructuring costs of $0.4 million.

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.

Conference Call Information
CIRCOR International will hold a conference call to review its financial results today, October 28, 2016, 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 net income, adjusted earnings per share (diluted), adjusted operating income, 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 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. 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 flow control solutions and other highly engineered products and sub-systems for markets including oil & gas, power generation, industrial and aerospace & defense. CIRCOR has a diversified product portfolio with recognized, market-leading brands that fulfill its customers’ unique application 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 industry talent. For more information, visit the Company’s investor relations website at http://investors.circor.com.

 
CIRCOR INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(in thousands, except per share data)

UNAUDITED

    Three Months Ended     Nine Months Ended
October 2, 2016     October 4, 2015 October 2, 2016     October 4, 2015
Net revenues $ 134,833 $ 159,258 $ 432,023 $ 492,023
Cost of revenues 92,479   113,865   298,005   343,187  
GROSS PROFIT 42,354 45,393 134,018 148,836
Selling, general and administrative expenses 36,002 38,143 110,290 119,344
Impairment charges 208 2,502 208 2,502
Special charges, net 2,631   8,277   9,165   13,098  
OPERATING INCOME (LOSS) 3,513   (3,529 ) 14,355   13,892  
Other expense (income):
Interest expense, net 605 828 1,841 2,274
Other expense (income), net 163   (587 ) (914 ) (1,197 )
TOTAL OTHER EXPENSE, NET 768   241   927   1,077  
INCOME (LOSS) BEFORE INCOME TAXES 2,745 (3,770 ) 13,428 12,816
(Benefit from) Provision for income taxes (1,673 ) 4,308   1,325   10,109  
NET INCOME (LOSS) $ 4,418   $ (8,078 ) $ 12,103   $ 2,707  
Earnings (Loss) per common share:
Basic $ 0.27 $ (0.49 ) $ 0.74 $ 0.16
Diluted $ 0.27 $ (0.49 ) $ 0.73 $ 0.16
Weighted average number of common shares outstanding:
Basic 16,427 16,485 16,411 16,989
Diluted 16,629 16,485 16,568 17,029
Dividends declared per common share $ 0.0375 $ 0.0375 $ 0.1125 $ 0.1125
 
CIRCOR INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

UNAUDITED

    Nine Months Ended
October 2, 2016     October 4, 2015
OPERATING ACTIVITIES
Net income $ 12,103 $ 2,707
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation 9,614 10,676
Amortization 7,586 6,742
Bad debt (recovery) expense (928 ) 2,832
Loss on write down of inventory 5,784 11,808
Compensation expense of share-based plans 4,200 5,811
Tax effect of share-based plan compensation 123 (259 )
Loss on sale or write down of property, plant and equipment 3,238 478
Impairment charges 208 2,502
Gain on sale of business (1,044 )
Changes in operating assets and liabilities, net of effects of acquisition and disposition:
Trade accounts receivable 15,422 8,118
Inventories 20,216 (29,260 )
Prepaid expenses and other assets 545 (2,801 )
Accounts payable, accrued expenses and other liabilities (39,161 ) (21,669 )
Net cash provided by (used in) operating activities 38,950   (3,359 )
INVESTING ACTIVITIES
Purchases of property, plant and equipment (10,776 ) (9,604 )
Proceeds from the sale of property, plant and equipment 1,186 1,200
Proceeds from the sale of affiliate 2,759
Business acquisition, net of cash acquired   (79,983 )
Net cash used in investing activities (9,590 ) (85,628 )
FINANCING ACTIVITIES
Proceeds from long-term debt 90,589 241,619
Payments of long-term debt (88,740 ) (141,830 )
Dividends paid (1,873 ) (1,937 )
Proceeds from the exercise of stock options 192 259
Tax effect of share-based plan compensation (123 ) 259
Purchases of common stock   (69,517 )
Net cash provided by financing activities 45   28,853  
Effect of exchange rate changes on cash and cash equivalents 983   (7,416 )
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 30,388 (67,550 )
Cash and cash equivalents at beginning of period 54,541   121,372  
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 84,929   $ 53,822  
 
CIRCOR INTERNATIONAL, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands)

UNAUDITED

    October 2, 2016     December 31, 2015
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 84,929 $ 54,541
Trade accounts receivable, less allowance for doubtful accounts of $7,570 and $8,290, respectively 112,122 125,628
Inventories 153,470 177,840
Prepaid expenses and other current assets 18,001   16,441  
Total Current Assets 368,522   374,450  
PROPERTY, PLANT AND EQUIPMENT, NET 81,327 87,029
OTHER ASSETS:
Goodwill 117,167 115,452
Intangibles, net 40,953 48,981
Deferred income taxes 42,713 36,799
Other assets 5,983   7,204  
TOTAL ASSETS $ 656,665   $ 669,915  
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable $ 50,500 $ 64,284
Accrued expenses and other current liabilities 39,950 52,878
Accrued compensation and benefits 17,386 18,424
Income taxes payable 5,956   6,585  
Total Current Liabilities 113,792 142,171
LONG-TERM DEBT 92,400 90,500
DEFERRED INCOME TAXES 9,837 10,424
OTHER NON-CURRENT LIABILITIES 24,038 26,043
SHAREHOLDERS’ EQUITY:
Common stock 178 177
Additional paid-in capital 287,919 283,621
Retained earnings 268,169 257,939
Common treasury stock, at cost (74,972 ) (74,972 )
Accumulated other comprehensive loss, net of tax (64,696 ) (65,988 )
Total Shareholders’ Equity 416,598   400,777  
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 656,665   $ 669,915  
 
CIRCOR INTERNATIONAL, INC.

SUMMARY OF ORDERS AND BACKLOG

(in millions)

UNAUDITED

      Three Months Ended     Nine Months Ended
October 2,
2016
    October 4,
2015
October 2,
2016
    October 4,
2015
ORDERS (1)
Energy $ 78.5 $ 94.2 $ 266.5 $ 348.7
Aerospace & Defense

32.8

  34.3   117.0   103.9
Total orders $

111.3

  $ 128.5   $ 383.5   $ 452.6
 
BACKLOG (2) October 2,
2016
October 4,
2015
Energy $ 120.9 $ 210.6
Aerospace & Defense 99.3   94.1  
Total backlog $ 220.2   $ 304.7  
 

 

 

Note 1: Orders do not include the foreign exchange impact due to the re-measurement of customer order backlog amounts denominated in foreign currencies.

Note 2: Backlog includes unshipped customer orders.

CIRCOR INTERNATIONAL, INC.

SUMMARY REPORT BY SEGMENT

(in thousands, except percentages)

UNAUDITED

                                     
2015   2016
1ST QTR   2ND QTR   3RD QTR   4TH QTR   TOTAL   1ST QTR   2ND QTR   3RD QTR   YTD
NET REVENUES              
Energy $ 127,586 $ 127,230 $ 122,905 $ 124,412 $ 502,133 $ 112,620 $ 110,678 $ 99,798 $ 323,096
Aerospace & Defense 38,274     39,676     36,353     39,832     154,134     38,178     35,714     35,035     108,927  
Total $ 165,860     $ 166,906     $ 159,258     $ 164,243     $ 656,267     $ 150,798     $ 146,392     $ 134,833     $ 432,023  
OPERATING MARGIN
Energy 13.8 % 13.4 % 15.4 % 13.4 % 14.0 % 12.6 % 13.0 % 11.4 % 12.3 %
Aerospace & Defense 8.0 %   8.8 %   9.1 %   10.4 %   9.1 %   9.3 %   8.4 %   9.7 %   9.2 %
Segment operating margin 12.4 % 12.3 % 14.0 % 12.7 % 12.8 % 11.8 % 11.9 % 10.9 % 11.5 %
Corporate expenses (3.6 )%   (3.3 )%   (3.8 )%   (2.5 )%   (3.3 )%   (4.3 )%   (3.7 )%   (4.8 )%   (4.3 )%
Adjusted operating margin 8.8 % 9.0 % 10.1 % 10.2 % 9.5 % 7.5 % 8.1 % 6.1 % 7.3 %
Restructuring related inventory charges % 1.2 % 4.0 % 0.6 % 1.4 % 1.3 % 0.1 % % 0.5 %
Impairment charges % % 1.6 % % 0.4 % % % 0.2 % 0.1 %
Special restructuring charges, net 0.9 % 1.9 % 0.2 % (0.2 )% 0.7 % 0.8 % 2.2 % 1.7 % 1.5 %
Special acquisition amortization % 1.3 % 1.6 % 1.4 % 1.0 % 1.2 % 1.3 % 1.4 % 1.3 %
Special other charges, net of recoveries % 0.1 % 5.0 % 1.0 % 1.5 % 0.5 % 0.9 % 0.3 % 0.6 %
Brazil restatement impact 0.4 %   1.5 %   %   %   0.5 %   %   %   %   %
Total GAAP operating margin 7.4 %   3.0 %   (2.2 )%   7.5 %   4.0 %   3.6 %   3.7 %   2.6 %   3.3 %
 
CIRCOR INTERNATIONAL, INC.

SUMMARY REPORT BY SEGMENT

(in thousands, except percentages and per share data)

UNAUDITED

         
2015   2016
1ST QTR   2ND QTR   3RD QTR   4TH QTR   TOTAL   1ST QTR   2ND QTR   3RD QTR   YTD
INCOME STATEMENT              
Energy $ 17,550 $ 17,008 $ 18,932 $ 16,724 $ 70,214 $ 14,186 $ 14,346 $ 11,357 $ 39,888
Aerospace & Defense 3,045     3,494     3,298     4,146     13,982     3,562     3,011     3,406     9,979  
Segment operating income 20,595 20,502 22,230 20,870 84,197 17,748 17,357 14,763 49,867
Corporate expenses (6,034 )   (5,477 )   (6,078 )   (4,122 )   (21,710 )   (6,488 )   (5,431 )   (6,522 )   (18,441 )
Adjusted operating income 14,561 15,025 16,152 16,748 62,487 11,260 11,926 8,240 31,426
Restructuring related inventory charges 2,005 6,412 974 9,391 1,958 75 2,033
Impairment charges 2,502 2,502 208 208
Special restructuring charges, net 1,512 3,127 342 (347 ) 4,634 1,163 3,259 2,252 6,674
Special acquisition amortization 2,110 2,490 2,238 6,838 1,868 1,911 1,888 5,667
Special other charges, net of recoveries (1 ) 183 7,935 1,603 9,720 776 1,334 379 2,489
Brazil restatement impact 719     2,509             3,228                  
Total GAAP operating income (loss) 12,331 5,090 (3,529 ) 12,281 26,174 5,495 5,347 3,513 14,355
INTEREST EXPENSE, NET (640 ) (805 ) (828 ) (570 ) (2,844 ) (631 ) (605 ) (605 ) (1,841 )
OTHER INCOME (EXPENSE), NET 506     104     587     (2,099 )   (902 )   528     549     (163 )   914  
PRETAX INCOME (LOSS) 12,197 4,389 (3,770 ) 9,612 22,428 5,392 5,291 2,745 13,428
(PROVISION FOR) BENEFIT FROM INCOME TAXES (3,284 )   (2,517 )   (4,308 )   (2,456 )   (12,565 )   (1,520 )   (1,478 )   1,673     (1,325 )
EFFECTIVE TAX RATE 26.9 % 57.3 % (114.3 )% 25.6 % 56.0 % 28.2 % 27.9 % (61.0 )% 9.9 %
NET INCOME (LOSS) $ 8,913     $ 1,872     $ (8,078 )   $ 7,156     $ 9,863     $ 3,872     $ 3,813     $ 4,418     $ 12,103  
Weighted Average Common Shares Outstanding (Diluted) 17,712 16,900 16,485 16,555 16,913 16,481 16,595 16,629 16,568
EARNINGS (LOSS) PER COMMON SHARE (Diluted) $ 0.50     $ 0.11     $ (0.49 )   $ 0.43     $ 0.58     $ 0.23     $ 0.23     $ 0.27     $ 0.73  
 

CIRCOR INTERNATIONAL, INC.

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

(in thousands, except percentages)

UNAUDITED

         
2015   2016
1ST QTR   2ND QTR   3RD QTR   4TH QTR   TOTAL   1ST QTR   2ND QTR   3RD QTR   YTD
FREE CASH FLOW AS % OF NET INCOME (LOSS) (207 )%   239 %   (27 )%   397 %   169 % 96 %   214 %   395 %   243 %
FREE CASH FLOW $ (18,415 ) $ 4,483 $ 2,169 $ 28,403 $ 16,640 $ 3,720 $ 8,174 $ 17,466 $ 29,360
ADD:
Capital expenditures, net of sale proceeds 1,983     3,584     2,837     2,098     10,502     3,934     1,926     3,730     9,590  
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES $ (16,432 )   $ 8,067     $ 5,006     $ 30,501     $ 27,142     $ 7,654     $ 10,100     $ 21,196     $ 38,950  
NET (CASH) DEBT $ (66,337 ) $ 59,051 $ 57,277 $ 35,959 $ 35,959 $ 31,220 $ 24,630 $ 7,471 $ 7,471
ADD:
Cash & cash equivalents 103,883     55,027     53,822     54,541     54,541     66,580     72,970     84,929     84,929  
TOTAL DEBT $ 37,546     $ 114,078     $ 111,099     $ 90,500     $ 90,500     $ 97,800     $ 97,600     $ 92,400     $ 92,400  
TOTAL SHAREHOLDERS' EQUITY $ 462,384 $ 421,070 $ 407,979 $ 400,777 $ 400,777 $ 414,107 $ 411,367 $ 416,598 $ 416,598
 
DEBT AS % OF EQUITY 8 % 27 % 27 % 23 % 23 % 24 % 24 % 22 % 22 %
NET DEBT AS % OF EQUITY (14 )% 14 % 14 % 9 % 9 % 8 % 6 % 2 % 2 %
 
CIRCOR INTERNATIONAL, INC.

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

(in thousands, except percentages and per share data)

UNAUDITED

         
2015  

2016

1ST QTR   2ND QTR   3RD QTR   4TH QTR   TOTAL   1ST QTR   2ND QTR   3RD QTR   YTD
ADJUSTED NET INCOME $ 10,564   $ 9,357   $ 10,635   $ 10,512   $ 41,068 $ 8,683   $ 8,781   $ 7,626   $ 25,090
LESS:
Restructuring related inventory charges 2,005 6,412 974 9,391 1,958 75 2,033
Impairment charges 2,502 2,502 208 208
Special restructuring charges, net 1,512 3,127 342 (347 ) 4,634 1,163 3,259 2,252 6,674
Special acquisition amortization 2,110 2,490 2,238 6,838 1,868 1,911 1,888 5,667
Special other charges, net of recoveries (1 ) 183 7,935 1,603 9,720 776 1,334 379 2,489
Brazil restatement impact 719 2,509 3,228
Income tax impact (579 )   (2,449 )   (968 )   (1,112 )   (5,108 )   (954 )   (1,611 )   (1,519 )   (4,084 )
NET INCOME (LOSS) $ 8,913     $ 1,872     $ (8,078 )   $ 7,156     $ 9,863     $ 3,872     $ 3,813     $ 4,418     $ 12,103  
 
ADJUSTED EARNINGS PER SHARE (Diluted) $ 0.60 $ 0.55 $ 0.64 $ 0.63 $ 2.43 $ 0.52 $ 0.53 $ 0.46 $ 1.51
LESS:
Restructuring related inventory charges 0.12 0.39 0.06 0.57 0.12 0.12
Impairment charges 0.15 0.15 0.01 0.01
Special restructuring charges, net 0.09 0.19 0.02 (0.02 ) 0.28 0.07 0.20 0.14 0.40
Special acquisition amortization 0.12 0.15 0.14 0.41 0.11 0.12 0.11 0.34
Special other charges, net of recoveries 0.01 0.48 0.10 0.59 0.05 0.08 0.02 0.15
Brazil restatement impact 0.04 0.15 0.19
Income tax impact (0.03 )   (0.15 )   (0.06 )   (0.07 )   (0.31 )   (0.06 )   (0.10 )   (0.09 )   (0.25 )

EARNINGS (LOSS) PER COMMON SHARE
(Diluted)

$ 0.50     $ 0.11     $ (0.49 )   $ 0.43     $ 0.58     $ 0.23     $ 0.23     $ 0.27     $ 0.73  
 
CIRCOR INTERNATIONAL, INC.

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

(in thousands, except percentages)

UNAUDITED

         
2015   2016
1ST QTR   2ND QTR   3RD QTR   4TH QTR   TOTAL   1ST QTR   2ND QTR   3RD QTR   YTD
ADJUSTED EBITDA $ 19,299   $ 19,474   $ 20,980   $ 18,927   $ 78,681 $ 15,712   $ 16,346   $ 11,815   $ 43,873
LESS:
Restructuring related inventory charges (2,005 ) (6,412 ) (974 ) (9,391 ) (1,958 ) (75 ) (2,033 )
Impairment charges (2,502 ) (2,502 ) (208 ) (208 )
Special restructuring charges, net (1,512 ) (3,127 ) (342 ) 347 (4,634 ) (1,163 ) (3,259 ) (2,252 ) (6,674 )
Special other charges, net of recoveries 1 (183 ) (7,935 ) (1,603 ) (9,720 ) (776 ) (1,334 ) (379 ) (2,489 )
Brazil restatement impact (719 )   (2,509 )           (3,228 )                
EBITDA $ 17,068     $ 11,650     $ 3,789     $ 16,698     $ 49,206     $ 11,815     $ 11,678     $ 8,976     $ 32,469  
LESS:
Interest expense, net (641 ) (805 ) (828 ) (570 ) (2,844 ) (631 ) (605 ) (605 ) (1,841 )
Depreciation (3,521 ) (3,629 ) (3,526 ) (3,578 ) (14,254 ) (3,263 ) (3,213 ) (3,138 ) (9,614 )
Amortization (710 ) (2,827 ) (3,205 ) (2,939 ) (9,681 ) (2,529 ) (2,569 ) (2,488 ) (7,586 )
(Provision for) benefit from income taxes (3,284 )   (2,517 )   (4,308 )   (2,456 ) (12,565 )   (1,520 )   (1,478 )   1,673     (1,325 )
NET INCOME (LOSS) $ 8,913     $ 1,872     $ (8,078 )   $ 7,156     $ 9,863     $ 3,872     $ 3,813     $ 4,418     $ 12,103  
 
CIRCOR INTERNATIONAL, INC.

SUPPLEMENTAL SEGMENT DATA

(in thousands, except percentages)

UNAUDITED

                                                                         
2015   2016
1ST QTR   2ND QTR   3RD QTR   4TH QTR   TOTAL   1ST QTR   2ND QTR   3RD QTR   YTD
Energy   A&D   Energy   A&D   Energy   A&D   Energy   A&D   Energy   A&D   Energy   A&D   Energy   A&D   Energy   A&D   Energy   A&D
ADJUSTED OPERATING MARGIN 13.8 %   8.0 %   13.4 %   8.8 %   15.4 %   9.1 %   13.4 %   10.4 %   14.0 %   9.1 % 12.6 %   9.3 %   13.0 %   8.4 %   11.4 %   9.7 %   12.3 %   9.2 %
Restructuring related inventory charges % % 0.1 % 4.7 % 5.2 % % 0.4 % 1.2 % 1.4 % 1.5 % 1.7 % 0.1 % 0.1 % % % % 0.6 % %
Impairment charges % % % % 2.0 % % % % 0.5 % % % % % % 0.2 % % 0.1 % %
Special restructuring charges, net 0.3 % 3.1 % 2.2 % 0.8 % 0.2 % 0.2 % (0.3 )% 0.1 % 0.6 % 1.0 % (0.2 )% 3.8 % 0.8 % 6.6 % 1.2 % 3.0 % 0.6 % 4.5 %
Special acquisition amortization % % 1.7 % % 2.0 % % 1.8 % % 1.4 % % 1.7 % % 1.7 % % 1.9 % % 1.8 % %
Special other charges, net of recoveries 0.4 % (2.6 )% 0.2 % (0.2 )% 6.5 % % 0.7 % % 1.9 % (0.7 )% 0.7 % % 1.2 % % 0.4 % % 0.8 % %
Brazil restatement impact 0.6 %   %   2.0 %   %   %   %   %   %   0.6 %   %   %   %   %   %   %   %   %   %
GAAP OPERATING MARGIN 12.5 %   7.5 %   7.2 %   3.5 %   (0.6 )%   8.9 %   10.9 %   9.1 %   7.6 %   7.2 %   8.8 %   5.5 %   9.1 %   1.8 %   7.7 %   6.7 %   8.6 %   4.7 %
 
                                                                         
2015   2016
1ST QTR   2ND QTR   3RD QTR   4TH QTR   TOTAL   1ST QTR   2ND QTR   3RD QTR   YTD
Energy   A&D   Energy   A&D   Energy   A&D   Energy   A&D   Energy   A&D   Energy   A&D   Energy   A&D   Energy   A&D   Energy   A&D
ADJUSTED OPERATING INCOME $ 17,550   $ 3,045   $ 17,008   $ 3,494   $ 18,932   $ 3,298   $ 16,724   $ 4,146   $ 70,214   $ 13,982 $ 14,186   $ 3,562   $ 14,346   $ 3,011   $ 11,357   $ 3,406   $ 39,888   $ 9,979

Restructuring related
inventory charges

153 1,852 6,412 508 466 7,073 2,318 1,919 39 74 1,993 39

Impairment charges

2,502 2,502 208 208

Special restructuring
charges, net

343 1,169 2,818 309 279 63 (394 ) 47 3,046 1,588 (278 ) 1,441 900 2,359 1,191 1,061 1,814 4,861

Special acquisition
amortization

2,110 2,490 2,238 6,838 1,868 1,911 1,888 5,667

Special other charges, net
of recoveries

556 (977 ) 248 (65 ) 7,935 828 9,567 (1,042 ) 774 1,335 379 2,488

Brazil restatement impact

719         2,509                         3,228                                    

GAAP OPERATING
INCOME (LOSS)

$ 15,932     $ 2,853     $ 9,170     $ 1,398     $ (686 )   $ 3,235     $ 13,544     $ 3,633     $ 37,960     $ 11,118     $ 9,903     $ 2,082     $ 10,126     $ 652     $ 7,690     $ 2,345     $ 27,719     $ 5,079
 

Source: CIRCOR International, Inc.

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