UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): October 27, 2017
CIRCOR INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
DELAWARE | 001-14962 | 04-3477276 |
(State or Other Jurisdiction of Incorporation or Organization) | (Commission file number) | (I.R.S. Employer Identification No.) |
30 CORPORATE DRIVE, SUITE 200
BURLINGTON, MASSACHUSETTS 01803-4238
(Address of principal executive offices) (Zip Code)
(781) 270-1200
(Registrant's telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02. Results of Operations and Financial Condition.
By press release dated October 27, 2017 CIRCOR International, Inc. (the “Company”) announced its financial results for the three and nine months ended October 1, 2017. The full text of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K.
The information in this Item 2.02 of Form 8-K and the Exhibits 99.1 & 99.2 attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities and Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any registration statement or other document filed under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by special reference in such filing.
The Company’s management evaluates segment operating performance using operating income before certain charges/credits to cost of revenues and selling, general and administrative expenses, principally associated with acquisition-related activities; restructuring and other costs/income including costs arising from facility consolidations and gains and losses from the sale of product lines; and amortization of acquisition-related intangible assets. The Company also refers to this measure as segment operating income or adjusted operating income. The Company uses this measure because it helps management understand and evaluate the segments’ core operating results and facilitate comparison of performance for determining incentive compensation achievement.
In the press release and accompanying supplemental information, the Company uses the following non-GAAP financial measures: Adjusted operating income, adjusted operating margin, free cash flow, adjusted net income, adjusted earnings per share (EPS), EBITDA, adjusted EBITDA, and net debt, described as follows:
• | Adjusted operating income is defined as GAAP operating income excluding intangible amortization from acquisitions completed subsequent to December 31, 2011, the impact of restructuring related inventory, impairment and special charges or gains. |
• | Adjusted operating margin is defined as adjusted operating income divided by net revenues. |
• | Free cash flow is defined as net cash flow from operating activities, less net capital expenditures. Management of this Company believes free cash flow is an important measure of its liquidity as well as its ability to service long-term debt, fund future growth and to provide a return to shareholders. We also believe this free cash flow definition does not have any material limitations. |
• | Adjusted net income is defined as net income, excluding intangible amortization from acquisitions completed subsequent to December 31, 2011, special charges/gains including the impact of restructuring related inventory charges, and impairments, net of tax. |
• | Adjusted EPS is defined as earnings per common share diluted, excluding the per share impact of intangible amortization from acquisitions completed subsequent to December 31, 2011, special charges/gains including the impact of restructuring related inventory charges, and impairments, net of tax. |
• | EBITDA is defined as net income plus net interest expense, provision for income taxes, depreciation and amortization. |
• | Adjusted EBITDA is defined as EBITDA plus the impact of special charges/gains including the |
impact of restructuring related inventory charges, and impairments, net of tax.
• | Net Debt - is defined at total debt minus cash & cash equivalents. |
Our management uses these non-GAAP measures to gain an understanding of our comparative operating performance (when comparing such results with previous periods or forecasts). 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 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 of 5 to 20 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 peers and 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 incentive 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 our non-GAAP financial measures to the most directly comparable GAAP financial measure is provided in the supplemental information table titled “Reconciliation of Key Performance Measures to Commonly Used Generally Accepted Accounting Principle Terms” which is included as an attachment to the press release in Exhibit 99.1.
Item 9.01 Financial Statements and Exhibits.
(d) | Exhibits. |
Exhibit No. | Description |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: October 27, 2017 CIRCOR INTERNATIONAL, INC.
/s/ Rajeev Bhalla
By: Rajeev Bhalla
Title: | Executive Vice President and Chief Financial Officer |
EXHIBIT 99.1
CIRCOR Reports Third-Quarter 2017 Financial Results
Burlington, MA - October 27, 2017 - CIRCOR International, Inc. (NYSE: CIR), a leading provider of flow control solutions and other highly engineered products for markets including oil & gas, aerospace, power, process and industrial solutions, today announced financial results for the third quarter ended October 1, 2017.
Third-Quarter 2017 Highlights
• | Revenue of $160 million; GAAP EPS of $0.22 and Adjusted EPS of $0.43 |
• | Orders of $158 million; up 42% year-over-year, 23% organically |
• | Acquisition of Colfax Fluid Handling expected to close by year end |
“The CIRCOR team generated strong results for the third quarter, posting double-digit growth in revenue and orders led primarily by our Energy segment,” said Scott Buckhout, President and Chief Executive Officer. “Robust demand for Distributed Valves drove Energy segment orders up 26% organically. We expect to see continued growth in Energy in the fourth quarter. We also reported broad-based strength in our Advanced Flow Solutions segment with a 21% increase in organic orders driven by our Aerospace businesses. We expect continued order growth and margin expansion across AFS in the fourth quarter.”
“During the quarter we announced an agreement to acquire the Fluid Handling business of Colfax,” added Buckhout. “This transaction significantly enhances our overall scale and ability to deliver severe service flow-control solutions across a complementary set of attractive end markets. The strategic fit is compelling and our customers are equally enthusiastic about the transaction. In recent weeks, I have met with the Fluid Handling teams in Europe and the U.S., and we’re excited about the strong cultural fit between our companies. We share a common focus on customers, innovation and accountability. We are on track to close the acquisition by year-end.”
“As we enter the final quarter of the year, we continue to execute our growth strategy and we remain optimistic about the outlook across most of our end markets,” concluded Buckhout.
Fourth-Quarter 2017 Guidance
The Company will provide its guidance for the fourth quarter of 2017 during the conference call later today.
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Conference Call Information
CIRCOR International will hold a conference call to review its financial results today, October 27, 2017, 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.
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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 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 of 5 to 20 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 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.
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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 highly engineered products and sub-systems for markets including oil & gas, power generation 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.
Contact:
Rajeev Bhalla
Executive Vice President & Chief Financial Officer
CIRCOR International
(781) 270-1200
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CIRCOR INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share data) UNAUDITED | |||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
October 1, 2017 | October 2, 2016 | October 1, 2017 | October 2, 2016 | ||||||||||||
Net revenues | $ | 159,693 | $ | 134,833 | $ | 456,131 | $ | 432,023 | |||||||
Cost of revenues | 112,390 | 92,479 | 314,527 | 298,005 | |||||||||||
GROSS PROFIT | 47,303 | 42,354 | 141,604 | 134,018 | |||||||||||
Selling, general and administrative expenses | 38,120 | 36,002 | 116,425 | 110,290 | |||||||||||
Impairment charges | — | 208 | — | 208 | |||||||||||
Special and restructuring charges (recoveries), net | 2,319 | 2,631 | (443 | ) | 9,165 | ||||||||||
OPERATING INCOME | 6,864 | 3,513 | 25,622 | 14,355 | |||||||||||
Other expense (income): | |||||||||||||||
Interest expense, net | 2,445 | 605 | 6,298 | 1,841 | |||||||||||
Other expense (income), net | 823 | 163 | 2,022 | (914 | ) | ||||||||||
TOTAL OTHER EXPENSE, NET | 3,268 | 768 | 8,320 | 927 | |||||||||||
INCOME BEFORE INCOME TAXES | 3,596 | 2,745 | 17,302 | 13,428 | |||||||||||
(Benefit from) Provision for income taxes | (21 | ) | (1,673 | ) | (57 | ) | 1,325 | ||||||||
NET INCOME | $ | 3,617 | $ | 4,418 | $ | 17,359 | $ | 12,103 | |||||||
Earnings per common share: | |||||||||||||||
Basic | $ | 0.22 | $ | 0.27 | $ | 1.05 | $ | 0.74 | |||||||
Diluted | $ | 0.22 | $ | 0.27 | $ | 1.04 | $ | 0.73 | |||||||
Weighted average number of common shares outstanding: | |||||||||||||||
Basic | 16,503 | 16,427 | 16,486 | 16,411 | |||||||||||
Diluted | 16,709 | 16,629 | 16,721 | 16,568 | |||||||||||
Dividends declared per common share | $ | 0.0375 | $ | 0.0375 | $ | 0.1125 | $ | 0.1125 | |||||||
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CIRCOR INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) UNAUDITED | |||||||
Nine Months Ended | |||||||
OPERATING ACTIVITIES | October 1, 2017 | October 2, 2016 | |||||
Net income | $ | 17,359 | $ | 12,103 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation | 10,889 | 9,614 | |||||
Amortization | 9,491 | 7,586 | |||||
Bad debt expense (recovery) | 265 | (928 | ) | ||||
Loss on write down of inventory | 1,463 | 5,784 | |||||
Compensation expense of share-based plans | 2,696 | 4,200 | |||||
Tax effect of share-based plan compensation | — | 123 | |||||
Change in fair value of contingent consideration | (12,200 | ) | — | ||||
Loss on sale of property, plant and equipment | 87 | 3,238 | |||||
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 | 8,782 | 15,422 | |||||
Inventories | (29,703 | ) | 20,216 | ||||
Prepaid expenses and other assets | (11,424 | ) | 545 | ||||
Accounts payable, accrued expenses and other liabilities | (997 | ) | (39,161 | ) | |||
Net cash provided by operating activities | 2,008 | 38,950 | |||||
INVESTING ACTIVITIES | |||||||
Purchases of property, plant and equipment | (7,773 | ) | (10,776 | ) | |||
Proceeds from the sale of property, plant and equipment | 269 | 1,186 | |||||
Business acquisition, working capital adjustment | 1,467 | — | |||||
Net cash used in investing activities | (6,037 | ) | (9,590 | ) | |||
FINANCING ACTIVITIES | |||||||
Proceeds from long-term debt | 378,263 | 90,589 | |||||
Payments of long-term debt | (361,325 | ) | (88,740 | ) | |||
Debt issuance costs | (727 | ) | — | ||||
Dividends paid | (1,879 | ) | (1,873 | ) | |||
Proceeds from the exercise of stock options | 707 | 192 | |||||
Tax effect of share-based plan compensation | — | (123 | ) | ||||
Net cash provided by financing activities | 15,039 | 45 | |||||
Effect of exchange rate changes on cash and cash equivalents | 6,338 | 983 | |||||
INCREASE IN CASH AND CASH EQUIVALENTS | 17,348 | 30,388 | |||||
Cash and cash equivalents at beginning of period | 58,279 | 54,541 | |||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 75,627 | $ | 84,929 | |||
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CIRCOR INTERNATIONAL, INC. CONSOLIDATED BALANCE SHEETS (in thousands) UNAUDITED | |||||||
October 1, 2017 | December 31, 2016 | ||||||
ASSETS | |||||||
CURRENT ASSETS: | |||||||
Cash and cash equivalents | $ | 75,627 | $ | 58,279 | |||
Trade accounts receivable, less allowance for doubtful accounts of $4,760 and $5,056, respectively | 130,177 | 133,046 | |||||
Inventories | 180,285 | 149,584 | |||||
Prepaid expenses and other current assets | 43,054 | 29,557 | |||||
Total Current Assets | 429,143 | 370,466 | |||||
PROPERTY, PLANT AND EQUIPMENT, NET | 99,013 | 99,713 | |||||
OTHER ASSETS: | |||||||
Goodwill | 210,685 | 206,659 | |||||
Intangibles, net | 130,052 | 135,778 | |||||
Other assets | 10,138 | 8,140 | |||||
TOTAL ASSETS | $ | 879,031 | $ | 820,756 | |||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
CURRENT LIABILITIES: | |||||||
Accounts payable | $ | 63,690 | $ | 46,767 | |||
Accrued expenses and other current liabilities | 50,155 | 50,707 | |||||
Accrued compensation and benefits | 15,384 | 20,249 | |||||
Current portion of long-term debt | 5,000 | — | |||||
Total Current Liabilities | 134,229 | 117,723 | |||||
LONG-TERM DEBT | 264,026 | 251,200 | |||||
DEFERRED INCOME TAXES | 7,929 | 13,657 | |||||
OTHER NON-CURRENT LIABILITIES | 20,962 | 33,766 | |||||
SHAREHOLDERS’ EQUITY: | |||||||
Preferred stock, $0.01 par value; 1,000,000 shares authorized; no shares issued and outstanding | — | — | |||||
Common stock | 179 | 178 | |||||
Additional paid-in capital | 293,907 | 289,423 | |||||
Retained earnings | 280,441 | 265,543 | |||||
Common treasury stock, at cost | (74,472 | ) | (74,472 | ) | |||
Accumulated other comprehensive loss, net of tax | (48,170 | ) | (76,262 | ) | |||
Total Shareholders’ Equity | 451,885 | 404,410 | |||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 879,031 | $ | 820,756 | |||
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CIRCOR INTERNATIONAL, INC. SUMMARY OF ORDERS AND BACKLOG (in millions) UNAUDITED | |||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
October 1, 2017 | October 2, 2016 | October 1, 2017 | October 2, 2016 | ||||||||||||
ORDERS (1) | |||||||||||||||
Energy | $ | 89.0 | $ | 55.1 | $ | 270.7 | $ | 185.3 | |||||||
Advanced Flow Solutions | 69.1 | 56.3 | 214.4 | 198.1 | |||||||||||
Total orders | $ | 158.1 | $ | 111.3 | $ | 485.1 | $ | 383.4 | |||||||
BACKLOG (2) | October 1, 2017 | October 2, 2016 | |||||||||||||
Energy | $ | 142.7 | $ | 84.5 | |||||||||||
Advanced Flow Solutions | 135.6 | 135.7 | |||||||||||||
Total backlog | $ | 278.3 | $ | 220.2 | |||||||||||
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, including backlog associated with acquisitions. | |||||||||||||||
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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 | TOTAL | |||||||||||||||||||
NET REVENUES | |||||||||||||||||||||||||||
Energy | $ | 83,409 | $ | 80,736 | $ | 68,901 | $ | 89,000 | $ | 322,046 | $ | 80,135 | $ | 82,586 | $ | 92,613 | $ | 255,334 | |||||||||
Advanced Flow Solutions | 67,389 | 65,656 | 65,932 | 69,236 | 268,213 | 65,073 | 68,645 | 67,080 | $ | 200,798 | |||||||||||||||||
Total | $ | 150,798 | $ | 146,392 | $ | 134,833 | $ | 158,236 | $ | 590,259 | $ | 145,208 | $ | 151,231 | $ | 159,693 | $ | 456,132 | |||||||||
SEGMENT OPERATING INCOME | |||||||||||||||||||||||||||
Energy | $ | 9,296 | $ | 9,293 | $ | 6,755 | $ | 9,276 | $ | 34,619 | $ | 6,864 | $ | 8,858 | $ | 7,397 | $ | 23,119 | |||||||||
Advanced Flow Solutions | 8,452 | 8,064 | 8,008 | 8,939 | 33,463 | 7,711 | 8,587 | 9,548 | 25,846 | ||||||||||||||||||
Corporate expenses | (6,488 | ) | (5,431 | ) | (6,522 | ) | (7,231 | ) | (25,672 | ) | (5,479 | ) | (5,396 | ) | (5,067 | ) | (15,942 | ) | |||||||||
Adjusted Operating Income | $ | 11,260 | $ | 11,926 | $ | 8,240 | $ | 10,984 | $ | 42,410 | $ | 9,096 | $ | 12,049 | $ | 11,878 | $ | 33,023 | |||||||||
SEGMENT OPERATING MARGIN % | |||||||||||||||||||||||||||
Energy | 11.1 | % | 11.5 | % | 9.8 | % | 10.4 | % | 10.7 | % | 8.6 | % | 10.7 | % | 8.0 | % | 9.1 | % | |||||||||
Advanced Flow Solutions | 12.5 | % | 12.3 | % | 12.1 | % | 12.9 | % | 12.5 | % | 11.8 | % | 12.5 | % | 14.2 | % | 12.9 | % | |||||||||
Adjusted Operating Margin | 7.5 | % | 8.1 | % | 6.1 | % | 6.9 | % | 7.2 | % | 6.3 | % | 8.0 | % | 7.4 | % | 7.2 | % | |||||||||
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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 | TOTAL | |||||||||||||||||||
NET CASH PROVIDED BY OPERATING ACTIVITIES | $ | 7,654 | $ | 10,100 | $ | 21,196 | $ | 20,449 | $ | 59,399 | $ | 16,195 | $ | 2,667 | $ | (16,854 | ) | $ | 2,008 | ||||||||
LESS: | |||||||||||||||||||||||||||
Capital expenditures, net of sale proceeds | 3,934 | 1,926 | 3,730 | 3,402 | 12,992 | 2,811 | 2,375 | 2,318 | 7,504 | ||||||||||||||||||
FREE CASH FLOW | $ | 3,720 | $ | 8,174 | $ | 17,466 | $ | 17,047 | $ | 46,407 | $ | 13,384 | $ | 292 | $ | (19,172 | ) | $ | (5,496 | ) | |||||||
TOTAL DEBT | $ | 97,800 | $ | 97,600 | $ | 92,400 | $ | 251,200 | $ | 251,200 | $ | 243,000 | $ | 252,856 | $ | 269,026 | $ | 269,026 | |||||||||
LESS: | |||||||||||||||||||||||||||
Cash & cash equivalents | 66,580 | 72,970 | 84,929 | 58,279 | 58,279 | 65,656 | 77,272 | 75,627 | 75,627 | ||||||||||||||||||
NET DEBT | $ | 31,220 | $ | 24,630 | $ | 7,471 | $ | 192,921 | $ | 192,921 | $ | 177,344 | $ | 175,584 | $ | 193,399 | $ | 193,399 | |||||||||
TOTAL SHAREHOLDERS' EQUITY | $ | 414,107 | $ | 411,367 | $ | 416,598 | $ | 404,410 | $ | 404,410 | $ | 415,537 | $ | 438,097 | $ | 451,885 | $ | 451,885 | |||||||||
TOTAL DEBT AS % OF EQUITY | 24 | % | 24 | % | 22 | % | 62 | % | 62 | % | 58 | % | 58 | % | 60 | % | 60 | % | |||||||||
NET DEBT AS % OF EQUITY | 8 | % | 6 | % | 2 | % | 48 | % | 48 | % | 43 | % | 40 | % | 43 | % | 43 | % | |||||||||
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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 | TOTAL | |||||||||||||||||||
NET INCOME (LOSS) | $ | 3,872 | $ | 3,813 | $ | 4,418 | $ | (2,002 | ) | $ | 10,101 | $ | 4,773 | $ | 8,970 | $ | 3,617 | $ | 17,359 | ||||||||
LESS: | |||||||||||||||||||||||||||
Restructuring related inventory charges | 1,958 | 75 | — | 813 | 2,846 | — | — | — | — | ||||||||||||||||||
Amortization of inventory step-up | — | — | — | 1,366 | 1,366 | — | — | — | — | ||||||||||||||||||
Impairment charges | — | — | 208 | — | 208 | — | — | — | — | ||||||||||||||||||
Restructuring charges, net | 1,163 | 3,259 | 2,252 | 2,301 | 8,975 | 1,458 | 3,566 | 341 | 5,366 | ||||||||||||||||||
Acquisition amortization | 1,868 | 1,911 | 1,888 | 4,234 | 9,901 | 2,552 | 2,599 | 2,694 | 7,844 | ||||||||||||||||||
Special charges (recoveries), net | 776 | 1,334 | 379 | 5,707 | 8,196 | (2,268 | ) | (5,520 | ) | 1,978 | (5,809 | ) | |||||||||||||||
Income tax impact | (954 | ) | (1,611 | ) | (1,519 | ) | (4,487 | ) | (8,571 | ) | (1,137 | ) | (3,124 | ) | (1,497 | ) | (5,758 | ) | |||||||||
ADJUSTED NET INCOME | $ | 8,683 | $ | 8,781 | $ | 7,626 | $ | 7,932 | $ | 33,022 | $ | 5,378 | $ | 6,491 | $ | 7,133 | $ | 19,002 | |||||||||
EARNINGS (LOSS) PER COMMON SHARE (Diluted) | $ | 0.23 | $ | 0.23 | $ | 0.27 | $ | (0.12 | ) | $ | 0.61 | $ | 0.29 | $ | 0.54 | $ | 0.22 | $ | 1.04 | ||||||||
LESS: | |||||||||||||||||||||||||||
Restructuring related inventory charges | 0.12 | — | — | 0.05 | 0.17 | — | — | — | — | ||||||||||||||||||
Amortization of inventory step-up | — | — | — | 0.08 | 0.08 | — | — | — | — | ||||||||||||||||||
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 | 0.32 | ||||||||||||||||||
Acquisition amortization | 0.11 | 0.12 | 0.11 | 0.26 | 0.60 | 0.15 | 0.16 | 0.16 | 0.47 | ||||||||||||||||||
Special charges (recoveries), net | 0.05 | 0.08 | 0.02 | 0.35 | 0.50 | (0.14 | ) | (0.33 | ) | 0.12 | (0.35 | ) | |||||||||||||||
Income tax impact | (0.06 | ) | (0.10 | ) | (0.09 | ) | (0.27 | ) | (0.52 | ) | (0.07 | ) | (0.19 | ) | (0.09 | ) | (0.34 | ) | |||||||||
ADJUSTED EARNINGS PER SHARE (Diluted) | $ | 0.52 | $ | 0.53 | $ | 0.46 | $ | 0.48 | $ | 1.99 | $ | 0.32 | $ | 0.39 | $ | 0.43 | $ | 1.14 | |||||||||
11
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 | TOTAL | |||||||||||||||||||
NET INCOME (LOSS) | $ | 3,872 | $ | 3,813 | $ | 4,418 | $ | (2,002 | ) | $ | 10,101 | $ | 4,773 | $ | 8,970 | $ | 3,617 | $ | 17,359 | ||||||||
LESS: | |||||||||||||||||||||||||||
Interest expense, net | (631 | ) | (605 | ) | (605 | ) | (1,468 | ) | (3,310 | ) | (1,669 | ) | (2,184 | ) | (2,445 | ) | (6,298 | ) | |||||||||
Depreciation | (3,263 | ) | (3,213 | ) | (3,138 | ) | (3,690 | ) | (13,304 | ) | (3,798 | ) | (3,547 | ) | (3,544 | ) | (10,889 | ) | |||||||||
Amortization | (2,529 | ) | (2,569 | ) | (2,488 | ) | (4,730 | ) | (12,316 | ) | (3,092 | ) | (3,124 | ) | (3,275 | ) | (9,491 | ) | |||||||||
(Provision for) benefit from income taxes | (1,520 | ) | (1,478 | ) | 1,673 | 1,746 | 421 | (687 | ) | 724 | 21 | 57 | |||||||||||||||
EBITDA | $ | 11,815 | $ | 11,678 | $ | 8,976 | $ | 6,140 | $ | 38,610 | $ | 14,019 | $ | 17,101 | $ | 12,860 | $ | 43,980 | |||||||||
LESS: | |||||||||||||||||||||||||||
Restructuring related inventory charges | (1,958 | ) | (75 | ) | — | (813 | ) | (2,846 | ) | — | — | — | — | ||||||||||||||
Amortization of inventory step-up | — | — | — | (1,366 | ) | (1,366 | ) | — | — | — | — | ||||||||||||||||
Impairment charges | — | — | (208 | ) | — | (208 | ) | — | — | — | — | ||||||||||||||||
Restructuring charges, net | (1,163 | ) | (3,259 | ) | (2,252 | ) | (2,301 | ) | (8,975 | ) | (1,458 | ) | (3,566 | ) | (341 | ) | (5,366 | ) | |||||||||
Special (charges) recoveries, net | (776 | ) | (1,334 | ) | (379 | ) | (5,707 | ) | (8,196 | ) | 2,268 | 5,520 | (1,978 | ) | 5,809 | ||||||||||||
ADJUSTED EBITDA | $ | 15,712 | $ | 16,346 | $ | 11,815 | $ | 16,327 | $ | 60,201 | $ | 13,209 | $ | 15,147 | $ | 15,179 | $ | 43,537 | |||||||||
12
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 | TOTAL | |||||||||||||||||||
GAAP OPERATING INCOME (LOSS) | $ | 5,495 | $ | 5,347 | $ | 3,513 | $ | (3,437 | ) | $ | 10,918 | $ | 7,354 | $ | 11,404 | $ | 6,864 | $ | 25,622 | ||||||||
LESS: | |||||||||||||||||||||||||||
Restructuring related inventory charges | 1,958 | 75 | — | 813 | 2,846 | — | — | — | — | ||||||||||||||||||
Amortization of inventory step-up | — | — | — | 1,366 | 1,366 | — | — | — | — | ||||||||||||||||||
Impairment charges | — | — | 208 | — | 208 | — | — | — | — | ||||||||||||||||||
Restructuring charges, net | 1,163 | 3,259 | 2,252 | 2,301 | 8,975 | 1,458 | 3,566 | 341 | 5,366 | ||||||||||||||||||
Acquisition amortization | 1,868 | 1,911 | 1,888 | 4,234 | 9,901 | 2,552 | 2,599 | 2,694 | 7,844 | ||||||||||||||||||
Special charges (recoveries), net | 776 | 1,334 | 379 | 5,707 | 8,196 | (2,268 | ) | (5,520 | ) | 1,978 | (5,809 | ) | |||||||||||||||
ADJUSTED OPERATING INCOME | $ | 11,260 | $ | 11,926 | $ | 8,240 | $ | 10,984 | $ | 42,410 | $ | 9,096 | $ | 12,049 | $ | 11,877 | $ | 33,022 | |||||||||
GAAP OPERATING MARGIN | 3.6 | % | 3.7 | % | 2.6 | % | (2.2 | )% | 1.8 | % | 5.1 | % | 7.5 | % | 4.3 | % | 5.6 | % | |||||||||
LESS: | |||||||||||||||||||||||||||
Restructuring related inventory charges | 1.3 | % | 0.1 | % | —% | 0.5 | % | 0.5 | % | — | % | — | % | — | % | — | % | ||||||||||
Amortization of inventory step-up | —% | —% | —% | 0.9 | % | 0.2 | % | — | % | — | % | — | % | — | % | ||||||||||||
Impairment charges | —% | —% | 0.2 | % | — | % | — | % | — | % | — | % | — | % | — | % | |||||||||||
Restructuring charges, net | 0.8 | % | 2.2 | % | 1.7 | % | 1.5 | % | 1.5 | % | 1.0 | % | 2.4 | % | 0.2 | % | 1.2 | % | |||||||||
Acquisition amortization | 1.2 | % | 1.3 | % | 1.4 | % | 2.7 | % | 1.7 | % | 1.8 | % | 1.7 | % | 1.7 | % | 1.7 | % | |||||||||
Special charges (recoveries), net | 0.5 | % | 0.9 | % | 0.3 | % | 3.6 | % | 1.4 | % | (1.6 | )% | (3.7 | )% | 1.2 | % | (1.3 | )% | |||||||||
ADJUSTED OPERATING MARGIN | 7.5 | % | 8.1 | % | 6.1 | % | 6.9 | % | 7.2 | % | 6.3 | % | 8.0 | % | 7.4 | % | 7.2 | % | |||||||||
13
EXHIBIT 99.2
