CIRCOR Delivers Strong Second Quarter Results and Reaffirms 2021 Guidance

August 10, 2021 at 6:05 AM EDT

Well positioned for second half revenue growth and margin expansion

BURLINGTON, Mass.--(BUSINESS WIRE)--Aug. 10, 2021-- CIRCOR International, Inc. (NYSE: CIR), one of the world’s leading providers of mission critical flow control products and services for the Industrial and Aerospace & Defense markets, today announced GAAP and adjusted financial results for the second quarter ended July 4, 2021.

Second Quarter 2021 Overview:

  • Orders of $210 million, up 9% reported and 4% organically
    • Industrial orders of $156 million, up 34% reported and 27% organically due to strength across almost all end markets and regions
    • Aerospace & Defense orders of $54 million, down (29)% reported and (31)% organically due to timing of large Defense orders
  • Revenue of $190 million, up 2% reported and down (2)% organically
    • Industrial revenue of $130 million, up 5% reported and down (1)% organically
    • Aerospace & Defense revenue of $61 million, down (2)% reported and (5)% organically
  • GAAP operating margin of (2.6)%; Adjusted operating margin of 7.7%, down 80 bps
  • GAAP loss per share of $(0.77); Adjusted earnings per share of $0.35, up 59%
  • GAAP operating cash flow of $11 million; Free cash flow of $8 million, 115% of adj. net income
  • Total debt reduced by $14 million versus prior quarter driven by 2Q'21 free cash flow performance

CIRCOR President and CEO Scott Buckhout said, "Our team delivered another solid quarter highlighted by 27% organic orders growth in our Industrial business and strong free cash flow conversion of 115%. Revenue and earnings per share were both in line with our expectations and we are encouraged by the pace of recovery across our Industrial and Aerospace & Defense end markets. Our performance in the first half positions CIRCOR for a strong second half and achievement of our 2021 commitments."

Mr. Buckhout continued, "In addition to our financial performance, we continue to make progress on our strategic priorities. We launched 21 products in the first half of 2021 and remain on track to deliver 45 new products in 2021. In an effort to build on our simplification program and accelerate sustainable margin expansion, we kicked off 80/20 in three of our largest Industrial businesses. And finally, we used our free cash flow generated in the quarter to pay down debt. We expect greater than one turn of leverage improvement in 2021."

Mr. Buckhout concluded, "Based on our strong orders performance in the 1st half, and our $436 million backlog, we’re confident that we will deliver on our 2021 organic revenue and adjusted EPS guidance provided in May. Going forward, we continue to focus on creating long-term value for shareholders by positioning the Company for growth, expanding margins, generating strong free cash flow, and de-levering the balance sheet."

3Q'21 Guidance Update

In the third quarter of 2021, CIRCOR expects reported revenue to increase 10 to 12% and organic revenue to increase 8 to 10%. On a reported basis, Industrial revenue is expected to grow 7 to 11% driven by increased deliveries across end markets and regions. Aerospace & Defense revenue is expected to increase 12 to 15% driven by the timing of large Defense shipments and favorable year-over-year comparisons in our Commercial end markets. In addition, CIRCOR expects adjusted EPS of $0.55 to $0.60 (+53% to 67% versus prior year) and free cash flow conversion of 120 to 140% ($13 to $17 million).

2021 Guidance

For the full year of 2021, CIRCOR reiterated its guidance of organic revenue growth of 2 to 4%, Adjusted EPS of $2.10 to $2.30, and adjusted net income to free cash flow conversion of 85% to 95%.

Presentation slides that provide supporting information to this guidance and second-quarter results are posted on the “Investors” section of the Company’s website and will be discussed during the conference call at 9:00 a.m. ET today.

Conference Call Information

CIRCOR International will hold a conference call to review its financial results at 9:00 a.m. ET today, August 10, 2021. To listen to the live conference call and view the accompanying presentation slides, please visit “Webcasts & Presentations” in the “Investors” portion of CIRCOR’s website. The live call also can be accessed by dialing (877) 407-5790 or (201) 689-8328. Participants are encouraged to dial in to the call at least 15 minutes prior to the start time. The webcast will be archived on the Company’s website for one year.

Selected Preliminary Consolidated Results

($ millions except EPS)

 

Q2 2021

 

Q2 2020

 

Change

 

Q2 YTD 2021

 

Q2 YTD 2020

 

Change

Orders

 

$

210.2

 

 

 

$

192.6

 

 

 

9

%

 

$

436.9

 

 

 

$

401.1

 

 

 

9

%

Orders - excluding divested businesses1

 

210.2

 

 

 

192.6

 

 

 

9

%

 

436.9

 

 

 

396.7

 

 

 

10

%

Revenue

 

$

190.3

 

 

 

$

186.1

 

 

 

2

%

 

$

371.0

 

 

 

$

378.3

 

 

 

-2

%

Revenue - excluding divested businesses1

 

190.3

 

 

 

186.1

 

 

 

2

%

 

371.0

 

 

 

373.4

 

 

 

-1

%

GAAP operating (loss) income

 

(4.9

)

 

 

(1.4

)

 

 

-250

%

 

(4.6

)

 

 

(74.8

)

 

 

94

%

Adjusted operating income2

 

14.6

 

 

 

15.9

 

 

 

-8

%

 

27.1

 

 

 

27.0

 

 

 

%

GAAP operating margin

 

(2.6

)

%

 

(0.7

)

%

 

-190 bps

 

(1.2

)

%

 

(19.8

)

%

 

1860 bps

Adjusted operating margin2

 

7.7

 

%

 

8.5

 

%

 

-80 bps

 

7.3

 

%

 

7.1

 

%

 

20 bps

Adjusted operating margin ex divestitures2

 

7.7

 

%

 

8.5

 

%

 

-80 bps

 

7.3

 

%

 

7.2

 

%

 

10 bps

GAAP loss per share (diluted)

 

$

(0.77

)

 

 

$

(1.68

)

 

 

54

%

 

$

(1.13

)

 

 

$

(5.66

)

 

 

80

%

Adjusted earnings per share (diluted)2

 

$

0.35

 

 

 

$

0.22

 

 

 

59

%

 

$

0.60

 

 

 

$

0.42

 

 

 

43

%

Operating cash flow

 

10.9

 

 

 

(24.9

)

 

 

144

%

 

(6.7

)

 

 

(48.8

)

 

 

86

%

Free cash flow3

 

8.3

 

 

 

(28.4

)

 

 

129

%

 

(12.8

)

 

 

(55.8

)

 

 

77

%

Segment Results

($ in millions)

 

Q2 2021

 

Q2 2020

 

Change

Aerospace & Defense

 

 

 

 

 

 

Orders

 

$

54.2

 

 

$

76.6

 

 

-29

%

Revenue

 

$

60.8

 

 

$

62.2

 

 

-2

%

Segment operating income

 

12.1

 

 

13.1

 

 

-8

%

Segment operating margin

 

19.9

%

 

21.1

%

 

-120 bps

 

 

 

 

 

 

 

Industrial

 

 

 

 

 

 

Orders

 

$

156.0

 

 

$

116.0

 

 

34

%

Revenue

 

$

129.6

 

 

$

123.8

 

 

5

%

Segment operating income

 

10.4

 

 

12.4

 

 

-16

%

Segment operating margin (adjusted)

 

8.0

%

 

10.0

%

 

-200 bps

  1. Orders and revenue excluding divested businesses are non-GAAP measures and are calculated by subtracting the orders and revenues generated by the divested businesses during the periods prior to their divestiture from reported orders and revenues. Divested businesses include Instrumentation & Sampling (all Industrial) which was sold during Q1 2020.
  2. Adjusted consolidated and segment results for Q2 2021 exclude net loss from discontinued operations of $0.9 million and net loss from non-cash acquisition-related intangible amortization, special and restructuring charges totaling $19.6 million ($21.9 million after tax). These charges include: (i) $11.8 million for non-cash acquisition-related intangible amortization and depreciation expense; (ii) $3.0 million of special charges related to the Heater & Control Valve divestiture; (iii) $3.8 million of other special and restructuring charges; and (iv) $1.0 million of restructuring related inventory charges. Adjusted consolidated and segment results for Q2 2020 exclude net loss from discontinued operations of $43.8 million and net loss from non-cash acquisition-related intangible amortization, special and restructuring charges totaling $17.3 million ($5.3 million income, net of tax). These charges include: (i) $11.7 million for non-cash acquisition-related intangible amortization and depreciation expense; (ii) $4.6 million of professional fees associated with an unsolicited tender offer to acquire all outstanding shares of the Company’s common stock; and (iii) $1.0 million of other special and restructuring charges.
  3. 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.

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, free cash flow and organic growth (and such measures further excluding discontinued operations) 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 reflect our ongoing business and facilitate 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. We exclude the results of discontinued operations.

We exclude goodwill impairment charges. We exclude these costs because we do not believe they are indicative of our normal operating costs.

Due to the significance of recently sold businesses and to provide a comparison of changes in our orders and revenue, we also discuss these changes on an “organic” basis. Organic is calculated assuming the divestitures completed prior to July 4, 2021 were completed on January 1, 2020 and excluding the impact of changes in foreign currency exchange rates.

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. 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 press release.

Safe Harbor Statement

This press release contains certain statements that are “forward-looking statements” as that term is defined under the Private Securities Litigation Reform Act of 1995 (the “Act”). The words “may,” “hope,” “should,” “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “predict,” “potential,” “continue,” and other expressions, which are predictions of or indicate future events and trends and which do not relate to historical matters, identify forward-looking statements, although not all forward-looking statements are accompanied by such words. We believe that it is important to communicate our future expectations to our stockholders, and we, therefore, make forward-looking statements in reliance upon the safe harbor provisions of the Act. However, there may be events in the future that we are not able to accurately predict or control and our actual results may differ materially from the expectations we describe in our forward-looking statements. Forward-looking statements, including statements about outlook for the fourth quarter, the expected and potential direct or indirect impacts of the COVID-19 pandemic on our business, the realization of cost reductions from restructuring activities and expected synergies, the number of new product launches and future cash flows from operating activities, involve known and unknown risks, uncertainties and other factors, which may cause our actual results, performance or achievements to differ materially from anticipated future results, performance or achievements expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to: the duration and severity of the COVID-19 pandemic and its impact on the global economy; changes in the price of and demand for oil and gas in both domestic and international markets; any adverse changes in governmental policies; variability of raw material and component pricing; changes in our suppliers’ performance; fluctuations in foreign currency exchange rates; changes in tariffs or other taxes related to doing business internationally; our ability to hire and retain key personnel; our ability to operate our manufacturing facilities at efficient levels including our ability to prevent cost overruns and reduce costs; our ability to generate increased cash by reducing our working capital; our prevention of the accumulation of excess inventory; our ability to successfully implement our divestiture; restructuring or simplification strategies; fluctuations in interest rates; our ability to successfully defend product liability actions; as well as the uncertainty associated with the current worldwide economic conditions and the continuing impact on economic and financial conditions in the United States and around the world, including as a result of COVID-19, natural disasters, terrorist attacks and other similar matters. We advise you to read further about these and other risk factors set forth in Part II, Item 1A of this Quarterly Report on Form 10-Q and Part I, Item 1A, “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2020, which is filed with the Securities and Exchange Commission ("SEC") and is available on the SEC's website at www.sec.gov. 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 is one of the world’s leading providers of mission critical flow control products and services for the Industrial and Aerospace & Defense markets. The Company has a product portfolio of market-leading brands serving its customers’ most demanding applications. CIRCOR markets its solutions directly and through various sales partners to more than 14,000 customers in approximately 100 countries. The Company has a global presence with approximately 3,200 employees and is headquartered in Burlington, Massachusetts. For more information, visit the Company’s investor relations website at http://investors.circor.com.

CIRCOR INTERNATIONAL, INC.

Condensed Consolidated Statements of Operations

(in thousands, except per share data) (unaudited)

         

 

 

Three Months Ended

 

Six Months Ended

 

 

July 4, 2021

 

June 28, 2020

 

July 4, 2021

 

June 28, 2020

 

 

 

 

 

 

 

 

 

Net revenues

 

$

190,346

 

 

$

186,066

 

 

$

371,001

 

 

$

378,279

 

Cost of revenues

 

130,460

 

 

127,105

 

 

255,034

 

 

259,275

 

Gross profit

 

59,886

 

 

58,961

 

 

115,967

 

 

119,004

 

Selling, general and administrative expenses

 

58,023

 

 

54,738

 

 

114,526

 

 

114,296

 

Goodwill impairment charge

 

 

 

 

 

 

 

116,182

 

Special and restructuring charges (recoveries), net

 

6,803

 

 

5,607

 

 

5,995

 

 

(36,685

)

Operating income (loss)

 

(4,940

)

 

(1,384

)

 

(4,554

)

 

(74,789

)

Other expense (income), net:

 

 

 

 

 

 

 

 

Interest expense, net

 

7,957

 

 

8,486

 

 

16,327

 

 

17,497

 

Other expense (income), net

 

(1,173

)

 

2,144

 

 

(2,676

)

 

(536

)

Total other expense, net

 

6,784

 

 

10,630

 

 

13,651

 

 

16,961

 

(Loss) income from continuing operations before income taxes

 

(11,724

)

 

(12,014

)

 

(18,205

)

 

(91,750

)

Provision for (benefit from) income taxes

 

2,961

 

 

(21,769

)

 

3,360

 

 

(13,395

)

(Loss) income from continuing operations, net of tax

 

(14,685

)

 

9,755

 

 

(21,565

)

 

(78,355

)

Income (loss) from discontinued operations, net of tax

 

(878

)

 

(43,847

)

 

(1,117

)

 

(34,685

)

Net loss

 

$

(15,563

)

 

$

(34,092

)

 

$

(22,682

)

 

$

(113,040

)

 

 

 

 

 

 

 

 

 

Basic income (loss) per common share:

 

 

 

 

 

 

 

 

Basic from continuing operations

 

$

(0.73

)

 

$

0.49

 

 

$

(1.07

)

 

$

(3.93

)

Basic from discontinued operations

 

$

(0.04

)

 

$

(2.19

)

 

$

(0.06

)

 

$

(1.74

)

Net loss

 

$

(0.77

)

 

$

(1.71

)

 

$

(1.13

)

 

$

(5.66

)

Diluted income (loss) per common share:

 

 

 

 

 

 

 

 

Diluted from continuing operations

 

$

(0.73

)

 

$

0.48

 

 

$

(1.07

)

 

$

(3.93

)

Diluted from discontinued operations

 

$

(0.04

)

 

$

(2.16

)

 

$

(0.06

)

 

$

(1.74

)

Net loss

 

$

(0.77

)

 

$

(1.68

)

 

$

(1.13

)

 

$

(5.66

)

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding:

 

 

 

 

 

 

 

 

Basic

 

20,230

 

 

19,987

 

 

20,143

 

 

19,962

 

Diluted

 

20,230

 

 

20,286

 

 

20,143

 

 

19,962

 

CIRCOR INTERNATIONAL, INC.

Condensed Consolidated Statements of Cash Flows

(in thousands) (unaudited)

 

 

Six Months Ended

 

 

July 4, 2021

 

June 28, 2020

OPERATING ACTIVITIES

 

 

 

 

Net loss

 

$

(22,682

)

 

$

(113,040

)

Loss from discontinued operations, net of income taxes

 

(1,117

)

 

(34,685

)

Loss from continuing operations

 

(21,565

)

 

(78,355

)

Adjustments to reconcile net loss to net cash (used in) provided by operating activities:

 

 

 

 

Depreciation

 

11,970

 

 

10,079

 

Amortization

 

21,353

 

 

21,492

 

Provision for bad debt expense

 

(350

)

 

7,768

 

Write down of inventory

 

961

 

 

352

 

Compensation expense for share-based plans

 

2,903

 

 

2,290

 

Amortization of debt issuance costs

 

2,005

 

 

5,488

 

Deferred tax provision

 

823

 

 

 

Goodwill impairment charge

 

 

 

116,182

 

(Gain) loss on sale of businesses

 

1,031

 

 

(54,253

)

Changes in operating assets and liabilities, net of effects of acquisition and disposition:

 

 

 

 

Trade accounts receivable

 

6,345

 

 

768

 

Inventories

 

(14,038

)

 

(12,370

)

Prepaid expenses and other assets

 

(17,792

)

 

(25,264

)

Accounts payable, accrued expenses and other liabilities

 

214

 

 

(31,475

)

Net cash (used in) provided by continuing operating activities

 

(6,140

)

 

(37,298

)

Net cash used in discontinued operating activities

 

(579

)

 

(11,532

)

Net cash used in operating activities

 

(6,719

)

 

(48,830

)

INVESTING ACTIVITIES

 

 

 

 

Additions to property, plant and equipment

 

(6,038

)

 

(6,815

)

Proceeds from sale of property, plant and equipment

 

2

 

 

(142

)

Proceeds from the sale of business

 

9,993

 

 

169,375

 

Proceeds from beneficial interest of factored receivables

 

998

 

 

1,339

 

Net cash provided by continuing investment activities

 

4,955

 

 

163,757

 

Net cash used in discontinued investing activities

 

 

 

(10,071

)

Net cash provided by investing activities

 

4,955

 

 

153,686

 

FINANCING ACTIVITIES

 

 

 

 

Proceeds from long-term debt

 

103,350

 

 

129,325

 

Payments of long-term debt

 

(100,250

)

 

(191,141

)

Withholding tax payments on restricted and performance stock units converted

 

(4,119

)

 

 

Proceeds from the exercise of stock options

 

151

 

 

118

 

Net cash provided by (used) in financing activities

 

(868

)

 

(61,698

)

Effect of exchange rate changes on cash, cash equivalents and restricted cash

 

(1,627

)

 

(2,421

)

(DECREASE) INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH

 

(4,259

)

 

40,737

 

Cash, cash equivalents, and restricted cash at beginning of period

 

77,696

 

 

85,727

 

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF PERIOD

 

$

73,437

 

 

$

126,464

 

CIRCOR INTERNATIONAL, INC.

Condensed Consolidated Balance Sheets

(in thousands) (unaudited)

         

 

 

July 4, 2021

 

December 31, 2020

ASSETS

 

 

 

 

CURRENT ASSETS:

 

 

 

 

Cash and cash equivalents

 

$

72,181

 

 

$

76,452

 

Trade accounts receivable, less allowance for doubtful accounts of $8,596 and $9,035 at July 4, 2021 and December 31, 2020, respectively

 

96,591

 

 

102,730

 

Inventories

 

136,012

 

 

129,084

 

Prepaid expenses and other current assets

 

109,683

 

 

93,226

 

Assets held for sale

 

 

 

5,073

 

Total Current Assets

 

414,467

 

 

406,565

 

PROPERTY, PLANT AND EQUIPMENT, NET

 

160,817

 

 

168,763

 

OTHER ASSETS:

 

 

 

 

Goodwill

 

156,785

 

 

158,944

 

Intangibles, net

 

328,957

 

 

353,595

 

Deferred income taxes

 

776

 

 

779

 

Other assets

 

40,199

 

 

41,882

 

TOTAL ASSETS

 

$

1,102,001

 

 

$

1,130,528

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

Accounts payable

 

$

68,224

 

 

$

61,236

 

Accrued expenses and other current liabilities

 

72,294

 

 

75,624

 

Accrued compensation and benefits

 

29,721

 

 

28,332

 

Total Current Liabilities

 

170,239

 

 

165,192

 

LONG-TERM DEBT

 

512,375

 

 

507,888

 

DEFERRED INCOME TAXES

 

27,562

 

 

28,980

 

PENSION LIABILITY, NET

 

156,501

 

 

163,642

 

OTHER NON-CURRENT LIABILITIES

 

52,284

 

 

58,785

 

COMMITMENTS AND CONTINGENCIES

 

 

 

 

SHAREHOLDERS' EQUITY:

 

 

 

 

Preferred stock, $0.01 par value; 1,000,000 shares authorized; no shares issued and outstanding

 

 

 

 

Common stock, $0.01 par value; 29,000,000 shares authorized; 21,620,528 and 21,373,813 issued at July 4, 2021 and December 31, 2020 respectively

 

216

 

 

214

 

Additional paid-in capital

 

452,512

 

 

452,728

 

(Accumulated deficit) retained earnings

 

(109,143

)

 

(86,461

)

Common treasury stock, at cost (1,372,488 shares at July 4, 2021 and December 31, 2020)

 

(74,472

)

 

(74,472

)

Accumulated other comprehensive loss, net of tax

 

(86,073

)

 

(85,968

)

Total Shareholders' Equity

 

183,040

 

 

206,041

 

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

 

$

1,102,001

 

 

$

1,130,528

 

CIRCOR INTERNATIONAL, INC.

Summary of Orders and Backlog

(in millions) (unaudited)

         

 

 

Three Months Ended

 

Six Months Ended

 

 

July 4, 2021

 

June 28, 2020

 

July 4, 2021

 

June 28, 2020

 

 

 

 

 

 

 

 

 

ORDERS (1)

 

 

 

 

 

 

 

 

Aerospace & Defense

 

$

54.2

 

 

$

76.6

 

 

$

127.2

 

 

$

148.6

 

Industrial

 

156.0

 

 

116.0

 

 

309.7

 

 

252.5

 

Total Orders

 

$

210.2

 

 

$

192.6

 

 

$

436.9

 

 

$

401.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

July 4, 2021

 

June 28, 2020

 

 

 

 

BACKLOG (2)

 

 

 

 

 

 

 

 

Aerospace & Defense

 

$

188.3

 

 

$

214.2

 

 

 

 

 

Industrial

 

248.2

 

 

217.8

 

 

 

 

 

Total Backlog

 

$

436.5

 

 

$

432.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Note 1: Orders do not include the foreign exchange impact due to the re-measurement of customer backlog amounts denominated in foreign currencies. Orders for the six months ended June 28, 2020 include orders from businesses divested prior to June 28,2020 of $4.4 million.

Note 2: Backlog includes unshipped customer orders for which revenue has not been recognized.

CIRCOR INTERNATIONAL, INC.

Segment Information

(in thousands, except percentages)

UNAUDITED

       

 

 

2020

2021

As reported

 

1ST QTR

2ND QTR

3RD QTR

4TH QTR

TOTAL

1ST QTR

2ND QTR

ORDERS

 

 

 

 

 

 

 

 

Aerospace & Defense

 

$

72,031

 

 

$

76,616

 

 

$

59,105

 

 

$

46,796

 

 

$

254,548

 

 

$

72,999

 

 

$

54,243

 

 

Industrial

 

136,443

 

 

116,023

 

 

107,453

 

 

121,690

 

 

481,609

 

 

153,695

 

 

155,959

 

 

Total

 

$

208,474

 

 

$

192,639

 

 

$

166,558

 

 

$

168,486

 

 

$

736,157

 

 

$

226,693

 

 

$

210,203

 

 

 

 

 

 

 

 

 

 

 

NET REVENUES

 

 

 

 

 

 

 

 

Aerospace & Defense

 

$

65,493

 

 

$

62,241

 

 

$

62,249

 

 

$

77,839

 

 

$

267,822

 

 

$

60,001

 

 

$

60,761

 

 

Industrial

 

126,720

 

 

123,825

 

 

124,391

 

 

130,513

 

 

505,449

 

 

120,654

 

 

129,585

 

 

Total

 

$

192,213

 

 

$

186,066

 

 

$

186,640

 

 

$

208,352

 

 

$

773,271

 

 

$

180,655

 

 

$

190,346

 

 

 

 

 

 

 

 

 

 

 

SEGMENT OPERATING INCOME

 

 

 

 

 

 

 

 

Aerospace & Defense

 

$

12,494

 

 

$

13,142

 

 

$

14,782

 

 

$

18,675

 

 

$

59,093

 

 

$

10,706

 

 

$

12,095

 

 

Industrial

 

5,169

 

 

12,406

 

 

9,807

 

 

12,441

 

 

39,823

 

 

9,735

 

 

10,400

 

 

Corporate expenses

 

(6,588

)

 

(9,664

)

 

(7,244

)

 

(7,789

)

 

(31,285

)

 

(8,002

)

 

(7,850

)

 

Total

 

$

11,075

 

 

$

15,884

 

 

$

17,345

 

 

$

23,327

 

 

$

67,631

 

 

$

12,439

 

 

$

14,645

 

 

 

 

 

 

 

 

 

 

 

SEGMENT OPERATING MARGIN %

 

 

 

 

 

 

 

 

Aerospace & Defense

 

19.1

 

%

21.1

 

%

23.7

 

%

24.0

 

%

22.1

 

%

17.8

 

%

19.9

 

%

Industrial

 

4.1

 

%

10.0

 

%

7.9

 

%

9.5

 

%

7.9

 

%

8.1

 

%

8.0

 

%

Total

 

5.8

 

%

8.5

 

%

9.3

 

%

11.2

 

%

8.7

 

%

6.9

 

%

7.7

 

%

 

 

 

 

 

 

 

 

 

 

 

2020

2021

Results of divested businesses (1)

 

1ST QTR

2ND QTR

3RD QTR

4TH QTR

TOTAL

1ST QTR

2ND QTR

ORDERS - Industrial

 

$

4,449

 

 

$

 

 

$

 

 

$

 

 

$

4,449

 

 

$

 

 

$

 

 

NET REVENUES - Industrial

 

$

4,900

 

 

$

 

 

$

 

 

$

 

 

$

4,900

 

 

$

 

 

$

 

 

SEGMENT OP. INC. -Industrial

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

CIRCOR INTERNATIONAL, INC. 

Supplemental Information Regarding Divested Businesses

(in thousands, except percentages) (unaudited)

       

 

 

2020

2021

Results excluding divested businesses

 

1ST QTR

2ND QTR

3RD QTR

4TH QTR

TOTAL

1ST QTR

2ND QTR

ORDERS

 

 

 

 

 

 

 

 

Aerospace & Defense

 

$72,031

$76,616

$59,105

$46,796

$254,548

$72,999

$54,243

Industrial

 

131,994

116,023

107,453

121,690

477,160

153,695

155,959

Total

 

$204,025

$192,639

$166,558

$168,486

$731,708

$226,693

$210,203

 

 

 

 

 

 

 

 

 

NET REVENUES

 

 

 

 

 

 

 

 

Aerospace & Defense

 

$65,493

$62,241

$62,249

$77,839

$267,822

$60,001

$60,761

Industrial

 

121,820

123,825

124,391

130,513

500,549

120,654

129,585

Total

 

$187,313

$186,066

$186,640

$208,352

$768,371

$180,655

$190,346

 

 

 

 

 

 

 

 

 

SEGMENT OPERATING INCOME

 

 

 

 

 

 

 

 

Aerospace & Defense

 

$12,494

$13,142

$14,782

$18,675

$59,093

$10,706

$12,095

Industrial

 

5,169

12,406

9,807

12,441

39,823

9,735

10,400

Corporate expenses

 

(6,588)

(9,664)

(7,244)

(7,789)

(31,285)

(8,002)

(7,850)

Total

 

$11,075

$15,884

$17,345

$23,327

$67,631

$12,439

$14,645

 

 

 

 

 

 

 

 

 

SEGMENT OPERATING MARGIN %

 

 

 

 

 

 

 

 

Aerospace & Defense

 

19.1%

21.1%

23.7%

24.0%

22.1%

17.8%

19.9%

Industrial

 

4.2%

10.0%

7.9%

9.5%

8.0%

8.1%

8.0%

Total

 

5.9%

8.5%

9.3%

11.2%

8.8%

6.9%

7.7%

 

 

 

 

 

 

 

 

 

(1) Divested businesses are related to the Industrial Segment and include Instrumentation & Sampling. Distributed Valves are discontinued operations and not reflected in the As Reported figures in accordance with US GAAP.

CIRCOR INTERNATIONAL, INC.

Reconciliation of Key Performance Measures to Commonly Used Generally Accepted Accounting Principle Terms

(in thousands, except percentages) (unaudited)

       

 

 

2020

2021

 

 

1ST QTR

2ND QTR

3RD QTR

4TH QTR

TOTAL

1ST QTR

2ND QTR

 

 

 

 

 

 

 

 

 

Net Cash (Used In) Provided By Operating Activities

 

$(23,947)

$(24,883)

$2,465

$23,641

$(22,724)

$(17,703)

$10,984

LESS

 

 

 

 

 

 

 

 

Capital expenditures, net of sale proceeds (a)

 

3,412

3,527

2,330

3,275

12,544

3,392

2,644

FREE CASH FLOW

 

$(27,359)

$(28,410)

$135

$20,366

$(35,268)

$(21,095)

$8,340

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Debt

 

$602,288

$592,038

$540,463

$519,938

$519,938

$536,938

$523,038

Less: Cash & Cash equivalents

 

170,861

125,421

72,772

76,452

76,452

75,680

72,181

GROSS DEBT, NET OF CASH

 

$431,427

$466,617

$467,691

$443,486

$443,486

$461,258

$450,857

 

 

 

 

 

 

 

 

 

TOTAL SHAREHOLDERS' EQUITY

 

$290,845

$273,351

$220,814

$206,041

$206,041

$196,106

$183,039

 

 

 

 

 

 

 

 

 

GROSS DEBT AS % OF EQUITY

 

207%

217%

245%

252%

252%

274%

286%

GROSS DEBT, NET OF CASH AS % OF EQUITY

 

148%

171%

212%

215%

215%

235%

246%

 

 

 

 

 

 

 

 

 

(a) includes capital expenditures, net of sales proceeds of discontinued operations

 

CIRCOR INTERNATIONAL, INC.

Reconciliation of Key Performance Measures to Commonly Used Generally Accepted Accounting Principle Terms

(in thousands, except percentages) (unaudited)

                             

 

 

2020

 

2021

 

 

1ST QTR

 

2ND QTR

 

3RD QTR

 

4TH QTR

 

TOTAL

 

1ST QTR

 

2ND QTR

NET (LOSS) INCOME

 

$

(78,948

)

  $ (34,092 )   $ (58,524 )   $ (13,934 )   $ (185,498 )   $ (7,119 )   $ (15,563 )

LESS:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restructuring related inventory charges

 

 

(602

)

 

 

 

 

 

351

 

 

 

 

 

 

(251

)

 

 

 

 

 

958

 

Restructuring charges, net

 

 

2,883

 

 

 

588

 

 

 

502

 

 

 

972

 

 

 

4,945

 

 

 

2,060

 

 

 

2,281

 

Acquisition amortization

 

 

10,218

 

 

 

10,681

 

 

 

10,625

 

 

 

10,939

 

 

 

42,463

 

 

 

10,487

 

 

 

10,498

 

Acquisition depreciation

 

 

974

 

 

 

980

 

 

 

1,011

 

 

 

1,021

 

 

 

3,986

 

 

 

2,375

 

 

 

1,326

 

Special (recoveries) charges, net

 

 

(45,175

)

 

 

5,019

 

 

 

436

 

 

 

473

 

 

 

(39,247

)

 

 

(2,869

)

 

 

4,522

 

Goodwill Impairment charge

 

 

116,182

 

 

 

 

 

 

 

 

 

 

 

 

116,182

 

 

 

 

 

 

 

Income tax impact

 

 

7,704

 

 

 

(22,549

)

 

 

53,240

 

 

 

13,125

 

 

 

51,521

 

 

 

(335

)

 

 

2,266

 

Net loss (income) from discontinued operations

 

 

(9,162

)

 

 

43,847

 

 

 

(341

)

 

 

795

 

 

 

35,140

 

 

 

239

 

 

 

878

 

ADJUSTED NET INCOME

 

$

4,074

 

  $

4,475

    $

7,300

    $

13,390

    $

29,240

    $

4,838

    $

7,165

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(LOSS) EARNINGS PER COMMON SHARE (Diluted)

 

$

(3.96

)

  $

(1.68

)   $

(2.93

)   $

(0.70

)   $

(9.28

)   $

(0.35

)   $

(0.77

)

LESS:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restructuring related inventory charges

 

 

(0.03

)

 

 

 

 

 

0.02

 

 

 

 

 

 

(0.01

)

 

 

 

 

 

0.05

 

Restructuring charges, net

 

 

0.14

 

 

 

0.03

 

 

 

0.02

 

 

 

0.05

 

 

 

0.25

 

 

 

0.10

 

 

 

0.11

 

Acquisition amortization

 

 

0.51

 

 

 

0.53

 

 

 

0.53

 

 

 

0.55

 

 

 

2.13

 

 

 

0.52

 

 

 

0.52

 

Acquisition depreciation

 

 

0.05

 

 

 

0.05

 

 

 

0.05

 

 

 

0.05

 

 

 

0.20

 

 

 

0.12

 

 

 

0.07

 

Special (recoveries) charges, net

 

 

(2.27

)

 

 

0.25

 

 

 

0.02

 

 

 

0.02

 

 

 

(1.96

)

 

 

(0.14

)

 

 

0.22

 

Impairment charge

 

 

5.83

 

 

 

 

 

 

 

 

 

 

 

 

5.81

 

 

 

 

 

 

 

Income tax impact

 

 

0.39

 

 

 

(1.11

)

 

 

2.66

 

 

 

0.66

 

 

 

2.58

 

 

 

(0.02

)

 

 

0.11

 

Earnings (Loss) per share from discontinued operations

 

 

(0.46

)

 

 

2.16

 

 

 

(0.02

)

 

 

0.04

 

 

 

1.76

 

 

 

0.01

 

 

 

0.04

 

ADJUSTED EARNINGS PER SHARE (Diluted)

 

$

0.20

 

  $

0.22

    $

0.36

    $

0.66

    $

1.43

    $

0.24

    $

0.35

 
                             

CIRCOR INTERNATIONAL, INC.

Reconciliation of Key Performance Measures to Commonly Used Generally Accepted Accounting Principle Terms

(in thousands, except percentages) (unaudited)

       

 

 

2020

2021

 

 

1ST QTR

2ND QTR

3RD QTR

4TH QTR

TOTAL

1ST QTR

2ND QTR

NET (LOSS) INCOME

 

$

(78,948

)

$

(34,092

)

$

(58,524

)

$

(13,934

)

$

(185,498

)

$

(7,119

)

$

(15,563

)

LESS:

 

 

 

 

 

 

 

 

Interest expense, net

 

9,011

 

8,486

 

8,202

 

8,520

 

34,219

 

8,369

 

7,957

 

Depreciation

 

5,121

 

4,958

 

4,802

 

5,504

 

20,385

 

6,509

 

5,461

 

Amortization

 

10,516

 

10,976

 

10,925

 

11,245

 

43,662

 

10,696

 

10,657

 

Provision for income taxes

 

8,374

 

(21,769

)

54,318

 

15,299

 

56,222

 

400

 

2,961

 

Loss (income) from discontinued operations

 

(9,162

)

43,847

 

(341

)

795

 

35,140

 

239

 

878

 

EBITDA

 

$

(55,088

)

$

12,406

 

$

19,383

 

$

27,429

 

$

4,130

 

$

19,094

 

$

12,351

 

LESS:

 

 

 

 

 

 

 

 

Restructuring related inventory charges (recoveries)

 

(602

)

 

351

 

 

(251

)

 

958

 

Restructuring charges, net

 

2,883

 

588

 

502

 

972

 

4,945

 

2,060

 

2,281

 

Special (recoveries) charges, net

 

(45,175

)

5,019

 

436

 

473

 

(39,247

)

(2,869

)

4,522

 

Goodwill impairment charge

 

116,182

 

 

 

 

116,182

 

 

 

ADJUSTED EBITDA

 

$

18,200

 

$

18,013

 

$

20,671

 

$

28,873

 

$

85,758

 

$

18,285

 

$

20,112

 

CIRCOR INTERNATIONAL, INC.

Reconciliation of Key Performance Measures to Commonly Used Generally Accepted Accounting Principle Terms

(in thousands, except percentages) (unaudited)

                 

 

 

2020

2021

 

 

1ST QTR

2ND QTR

3RD QTR

4TH QTR

TOTAL

1ST QTR

2ND QTR

GAAP OPERATING INCOME (LOSS)

 

$

(73,405

)

$

(1,384

)

$

4,420

 

$

9,923

 

$

(60,446

)

$

386

 

$

(4,940

)

LESS:

 

 

 

 

 

 

 

 

Restructuring related inventory charges (recoveries)

 

 

(602

)

 

 

 

351

 

 

 

 

(251

)

 

 

 

958

 

Amortization of inventory step-up

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restructuring charges, net

 

 

2,883

 

 

588

 

 

502

 

 

972

 

 

4,945

 

 

2,060

 

 

2,281

 

Acquisition amortization

 

 

10,218

 

 

10,681

 

 

10,625

 

 

10,939

 

 

42,463

 

 

10,487

 

 

10,498

 

Acquisition depreciation

 

 

974

 

 

980

 

 

1,011

 

 

1,021

 

 

3,986

 

 

2,375

 

 

1,326

 

Special (recoveries) charges, net

 

 

(45,175

)

 

5,019

 

 

436

 

 

473

 

 

(39,247

)

 

(2,869

)

 

4,522

 

Goodwill impairment charge

 

 

116,182

 

 

 

 

 

 

 

 

116,182

 

 

 

 

 

ADJUSTED OPERATING INCOME

 

$

11,075

 

$

15,884

 

$

17,345

 

$

23,327

 

$

67,631

 

$

12,439

 

$

14,645

 

 

 

 

 

 

 

 

 

 

GAAP OPERATING MARGIN

 

 

(38.2

)%

 

(0.7

)%

 

2.4

%

 

4.8

%

 

(7.8

)%

 

0.2

%

 

(2.7

)%

LESS:

 

 

 

 

 

 

 

 

Restructuring related inventory charges (recoveries)

 

 

(0.3

)%

 

%

 

0.2

%

 

%

 

%

 

%

 

0.5

%

Amortization of inventory step-up

 

 

%

 

%

 

%

 

%

 

%

 

%

 

%

Restructuring charges, net

 

 

1.5

%

 

0.3

%

 

0.3

%

 

0.5

%

 

0.6

%

 

1.1

%

 

1.3

%

Acquisition amortization

 

 

5.3

%

 

5.7

%

 

5.7

%

 

5.3

%

 

5.5

%

 

5.8

%

 

5.8

%

Acquisition depreciation

 

 

0.5

%

 

0.5

%

 

0.5

%

 

0.5

%

 

0.5

%

 

1.3

%

 

0.7

%

Special (recoveries) charges, net

 

 

(23.5

)%

 

2.7

%

 

0.2

%

 

0.2

%

 

(5.1

)%

 

(1.6

)%

 

2.5

%

Goodwill impairment charge

 

 

60.4

%

 

%

 

%

 

%

 

15.0

%

 

%

 

%

ADJUSTED OPERATING MARGIN

 

 

5.8

%

 

8.5

%

 

9.3

%

 

11.2

%

 

8.7

%

 

6.9

%

 

8.1

%

                 

 

Alex Maki
Vice President - FP&A and Investor Relations
CIRCOR International
(781) 270-1200

Source: CIRCOR International, Inc.