CIRCOR Reports First-Quarter 2019 Financial Results

April 25, 2019 at 5:45 PM EDT

BURLINGTON, Mass.--(BUSINESS WIRE)--Apr. 25, 2019-- (revised May 14, 2019 to correct Q1 2019 financial information.  Please refer to Form 8-K/A furnished on May 14, 2019 for additional information).

CIRCOR International, Inc. (NYSE: CIR), a leading provider of flow control solutions and other highly engineered products for the Industrial, Energy and Aerospace & Defense markets, today announced financial results for the first quarter ended March 31, 2019.

First-Quarter 2019 Highlights

  • Orders of $280 million, down 14% on a reported basis and down 6% on an organic basis
  • Orders in A&D segment grew nearly 50% year over year
  • Revenue of $270 million, down 2% on a reported basis and up 8% on an organic basis
  • GAAP Operating Margin of 4.3%; GAAP Loss per Share of $(0.23)
  • Adjusted Operating Margin of 7.6%; Adjusted Earnings per Share of $0.38
  • Fluid Handling integration remains on track
  • Completed sale of Reliability Services business for cash proceeds of $85 million
  • Debt pay down of $53 million

“We reported solid first-quarter 2019 results with 8% organic revenue growth,” said Scott Buckhout, President and Chief Executive Officer. “All three of our business segments grew in the quarter and the outlook for the majority of our end-markets remains positive. We anticipate improving results through the year as we benefit from higher volume, price increases and additional integration savings.

“During the quarter we made significant progress transitioning production to our low-cost manufacturing facilities around the world,” continued Mr. Buckhout. “Our Refinery Valve product line is ramping up in India; several Aerospace platforms were moved to Morocco; and our low-cost facility in Monterrey is now the primary source of production for Distributed Valves in North America.

“De-levering the Company remains a top priority. We reduced our debt by $53 million in the first quarter,” said Mr. Buckhout. “We expect strong free cash flow for the year and we continue to evaluate the sale of non-core businesses to further simplify the Company and accelerate the reduction of outstanding debt.

“Looking ahead, we continue to focus on creating long-term value for shareholders by investing in growth, expanding margins, generating strong free cash flow, and de-levering the Company,” concluded Mr. Buckhout.

Second-Quarter 2019 Guidance*
For the second quarter of 2019, CIRCOR expects revenue in the range of $270 million to $280 million, and GAAP loss per share in the range of $(0.13) to $(0.03), which reflects acquisition-related amortization expense of $(0.49) and other special and restructuring charges of $(0.04) to $(0.02). Excluding the impact of amortization, special and restructuring (charges) gains, adjusted EPS is expected to be in the range of $0.40 to $0.48 per share. Presentation slides that provide supporting information to this guidance and first-quarter results are posted on the “Investors” section of the Company’s website, http://investors.circor.com, and will be discussed during the conference call at 9:00 a.m. ET tomorrow, April 26, 2019.

*Guidance speaks only as of April 25, 2019 (when first given).

                 

Selected Consolidated Results (unaudited)

               
                 
($ millions except EPS)     Q1 2019     Q1 2018   Change
Revenue     $ 270.4       $ 275.6         (2)%
Revenue excluding divested business1     $ 267.3      

$

257.0         4%
GAAP Operating (Loss) Income     $ 11.7       $ (13.4)         N/M
Adjusted Operating Income2     $ 20.2       $ 19.8         1%
GAAP Operating Margin       4.3%         (4.9)%         N/M
Adjusted Operating Margin2       7.6%         7.2%         40 bps
GAAP (Loss) Earnings Per Share (Diluted)     $ (0.23)       $ (0.88)         N/M
Adjusted Earnings Per Share (Diluted)2     $ 0.38       $ 0.40         (8)%
Operating Cash Flow     $ (22.4)       $ (0.1)         N/M
Free Cash Flow3     $ (26.1)       $ (8.3)         N/M
Orders     $ 279.6       $ 326.2         (14)%
Orders excluding divested business1     $ 275.5      

$

304.4         (9)%
                 

Segment Results

               
                 
($ millions)     Q1 2019     Q1 2018   Change
Energy                            
Revenue     $ 98.4       $ 100.0         (2)%
Revenue excluding divested business1     $ 95.3      

$

85.2         12%
Segment Operating Income     $ 6.8       $ 5.7         19%
Segment Operating Margin       7.1%         5.7%         140 bps
Orders     $ 67.8       $ 129.8         (48)%
Orders excluding divested business1     $ 63.7       $ 112.9         (44)%
                             
Aerospace & Defense                            
Revenue     $ 61.2       $ 58.5         5%
Segment Operating Income     $ 9.4       $ 8.9         6%
Segment Operating Margin       15.3%         15.3%         0 bps
Orders     $ 88.1       $ 59.8         47%
                             
Industrial                            
Revenue     $ 110.7       $ 117.1         (5)%
Revenue excluding divested business1     $ 110.7       $ 113.2        

(2)%

Segment Operating Income     $ 10.8       $ 12.9         (16)%
Segment Operating Margin       9.7%         11.1%         (140) bps
Orders     $ 123.7       $ 136.6         (9)%
Orders excluding divested business1    

$

123.7       $ 131.8         (6)%

1.Orders and revenue excluding divested businesses is a non-GAAP measure and is calculated by subtracting the orders and revenues generated by the divested businesses during the periods prior to their divestiture from the reported orders and revenues.
2.Adjusted Consolidated and Segment Results for Q1 2019 exclude non-cash acquisition-related intangible amortization, special and restructuring charges totaling $12.3 million ($16.0 million, net of tax). These charges include: (i) $13.2 million charge for non-cash acquisition-related intangible amortization and depreciation expense (ii) $2.8 million for restructuring-related inventory charges (iii) $1.8 million loss from the business divested in January (iv) $1.1 million of other special and restructuring charges, and (v) a gain of $10.4 million in the quarter related to the sale of businesses. Adjusted Consolidated and Segment Results for Q1 2018 exclude non-cash acquisition-related intangible amortization, special and restructuring charges totaling $33.2 million ($25.5 million, net of tax). These charges include: (i) $20.2 million charge for non-cash acquisition-related intangible amortization expense, including the amortization of a step-up in fair value of inventories ($6.6 million); (ii) $10.5 million charge related to restructuring activities, primarily severance, related to our Engineered Valves, Reliability Services and Germany-based Pumps business; and (iii) $2.5 million related to the separation of Fluid Handling business from Colfax Corporation.
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.

Conference Call Information
CIRCOR International will hold a conference call to review its financial results at 9:00 a.m. ET tomorrow, April 26, 2019. 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. The webcast will be archived on the Company’s website for one year.

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, organic growth, pro forma combined amounts and pro forma organic growth 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.
  • 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 were completed on January 1, 2018 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 competitors. We use such measures when publicly providing our business outlook, assessing future earnings potential, evaluating potential acquisitions and dispositions and in our financial and operating decision-making process, including for compensation purposes.

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

Safe Harbor Statement
This press release contains forward-looking statements within the meaning of Section 27 A of the Securities Act of 1933, as amended, and Section 21 E of the Securities Exchange Act of 1934, as amended. Reliance should not be placed on forward-looking statements because they involve unknown risks, uncertainties and other factors, which are, in some cases, beyond the control of CIRCOR. Any statements in this press release that are not statements of historical fact are forward-looking statements, including, but not limited to, those relating to CIRCOR's second-quarter 2019 guidance, our future performance, including realization of cost reductions from restructuring activities and expected synergies, plans to reduce our outstanding debt and our corporate priorities. Actual events, performance or results could differ materially from the anticipated events, performance or results expressed or implied by such forward-looking statements. Important factors that could cause actual results to vary from expectations include, but are not limited to: our ability to respond to competitive developments and to grow our business, both domestically and internationally; changes in the cost, quality or supply of raw materials; our ability to comply with our debt obligations; our ability to successfully implement our acquisition, divestiture or restructuring strategies, including our integration of the Fluid Handling business; changes in industry standards, trade policies or government regulations, both in the United States and internationally; and our ability to operate our manufacturing facilities at current or higher levels and respond to increases in manufacturing costs. BEFORE MAKING ANY INVESTMENT DECISIONS REGARDING OUR COMPANY, WE STRONGLY ADVISE YOU TO READ THE SECTION ENTITLED "RISK FACTORS" IN OUR MOST RECENT ANNUAL REPORT ON FORM 10-K AND SUBSEQUENT REPORTS ON FORMS 10-Q, WHICH CAN BE ACCESSED UNDER THE "INVESTORS" LINK OF OUR WEBSITE AT WWW.CIRCOR.COM. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. Forward-looking statements in this press release speak only as of April 25, 2019 (when first released).

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

 

CIRCOR INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF LOSS
(in thousands, except per share data)
(UNAUDITED)

       
      Three Months Ended
      March 31, 2019     April 1, 2018
Net revenues     $ 270,395       $ 275,580  
Cost of revenues     196,526       199,276  
GROSS PROFIT     73,869       76,304  
Selling, general and administrative expenses     69,973       77,238  
Special and restructuring (recoveries) charges, net     (7,816 )     12,446  
OPERATING INCOME     11,712       (13,380 )
Other expense (income):            
Interest expense, net     13,179       11,801  
Other (income) expense, net     (1,913 )     (1,861 )
TOTAL OTHER EXPENSE, NET     11,266       9,940  
INCOME (LOSS) BEFORE INCOME TAXES     446       (23,320 )
Provision for (benefit from) income taxes     5,079       (5,879 )
NET LOSS     $ (4,633 )     $ (17,441 )
Loss per common share:            
Basic     $ (0.23 )     $ (0.88 )
Diluted     $ (0.23 )     $ (0.88 )
Weighted average number of common shares outstanding:            
Basic     19,870       19,806  
Diluted     19,870       19,806  
 

CIRCOR INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(UNAUDITED)

       
      Three Months Ended
OPERATING ACTIVITIES     March 31, 2019     April 1, 2018
Net Loss     $ (4,633 )     $ (17,441 )
Adjustments to reconcile net loss to net cash provided by operating activities:            
Depreciation     5,944       7,334  
Amortization     12,836       12,329  
Bad debt expense     109       261  
Loss on write down of inventory     3,368       963  
Amortization of inventory fair value step-up           6,600  
Compensation expense for share-based plans     1,432       1,365  
Amortization of debt issuance costs     1,010       881  
Loss on sale or write-down of property, plant and equipment     96       1,284  
Gain on sale of business     (10,282 )      
Changes in operating assets and liabilities, net of effects of acquisition and divestitures:            
Trade accounts receivable     8,635       22,038  
Inventories     3,452       (14,850 )
Prepaid expenses and other assets     (2,881 )     (11,648 )
Accounts payabale, accrued expenses and other liabilities     (23,052 )     (9,261 )
Net cash used in operating activities     (22,378 )     (145 )
INVESTING ACTIVITIES            
Additions to property, plant and equipment     (3,717 )     (8,234 )
Proceeds from the sale of property, plant and equipment     28       93  
Proceeds from the sale of business, net     83,321        
Net cash provided by (used in) investing activities     79,632       (8,141 )
FINANCING ACTIVITIES            
Proceeds from long-term debt     87,400       71,950  
Payments of short-term and long-term debt     (140,500 )     (44,106 )
Proceeds from the exercise of stock options           301  
Return of cash to Fluid Handling Seller           (7,905 )
Net cash (used in) provided by financing activities     (53,100 )     20,240  
Effect of exchange rate changes on cash, cash equivalents and restricted cash     957       956  
INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH     5,111       12,910  
Cash, cash equivalents, and restricted cash at beginning of period     69,525       112,293  
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF PERIOD     $ 74,636       $ 125,203  
 

CIRCOR INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
(UNAUDITED)

             
      March 31, 2019     December 31, 2018
ASSETS            
CURRENT ASSETS:            
Cash and cash equivalents     $ 73,619       $ 68,517
Trade accounts receivable, less allowance for doubtful accounts     188,500       183,552
Inventories     217,991       217,378
Prepaid expenses and other current assets     89,904       90,659
Assets held for sale     4,623       87,940
Total Current Assets     574,637       648,046
PROPERTY, PLANT AND EQUIPMENT, NET     198,148       201,799
OTHER ASSETS:            
Goodwill     460,995       459,205
Intangibles, net     422,302       441,302
Deferred income taxes     25,632       28,462
Other assets     37,620       12,798
TOTAL ASSETS     $ 1,719,334       $ 1,791,612
LIABILITIES AND SHAREHOLDERS’ EQUITY            
CURRENT LIABILITIES:            
Accounts payable     $ 122,277       $ 123,881
Accrued expenses and other current liabilities     99,591       107,312
Accrued compensation and benefits     27,251       33,878
Liabilities held for sale           11,141
Current portion of long-term debt           7,850
Total Current Liabilities     249,119       284,062
LONG-TERM DEBT     733,666       778,187
DEFERRED INCOME TAXES     33,780       33,932
PENSION LIABILITY, NET     148,297       150,623
OTHER NON-CURRENT LIABILITIES     38,295       15,815
SHAREHOLDERS’ EQUITY     516,177       528,993
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY     $ 1,719,334       $ 1,791,612
 

CIRCOR INTERNATIONAL, INC.
SUMMARY OF ORDERS AND BACKLOG
(in millions)
UNAUDITED

 

 

      Three Months Ended
      March 31, 2019     April 1, 2018
ORDERS (1)            
Energy     $ 67.8       $ 129.8
Aerospace & Defense     88.1       59.8
Industrial     123.7       136.6
Total orders     $ 279.6       $ 326.2
             
BACKLOG (2)     March 31, 2019     April 1, 2018
Energy     $ 140.3       $ 224.1
Aerospace & Defense     206.5       165.8
Industrial     174.2       170.6
Total backlog     $ 521.0       $ 560.5
             

Note 1: Orders do not include the foreign exchange impact due to the re-measurement of customer order backlog amounts denominated in foreign currencies. Q1 2019 and 2018 orders include $4.1 million and $21.7 million, respectively, related to divested businesses.
Note 2: Backlog includes unshipped customer orders for which revenue has not been recognized. Backlog at Q1 2018 includes $25.6 million related to divested businesses.

 

CIRCOR INTERNATIONAL, INC.
SEGMENT INFORMATION
(in thousands, except percentages)
UNAUDITED

                                     
      2018     2019
      1ST QTR     2ND QTR     3RD QTR     4TH QTR     TOTAL     1ST QTR
ORDERS                                    
Energy     $ 129,762       $ 113,171       $ 110,987       $ 97,990       $ 451,910       $ 67,770  
Aerospace & Defense     59,793       59,441       81,533       76,702       277,469       88,107  
Industrial     136,607       136,746       114,876       121,886       510,115       123,746  
Total     $ 326,162       $ 309,358       $ 307,396       $ 296,578       $ 1,239,494       $ 279,623  
                                     
NET REVENUES                                    
Energy     $ 99,972       $ 112,804       $ 121,023       $ 117,433       $ 451,232       $ 98,417  
Aerospace & Defense     58,477       57,500       57,757       63,283       237,017       61,240  
Industrial     117,131       131,064       118,734       120,647       487,576       110,738  
Total     $ 275,580       $ 301,368       $ 297,514       $ 301,363       $ 1,175,825       $ 270,395  
                                     
SEGMENT OPERATING INCOME                                    
Energy     $ 5,696       $ 9,242       $ 9,163       $ 9,396       $ 33,497       $ 6,783  
Aerospace & Defense     8,931       6,992       8,709       11,415       36,047       9,374  
Industrial     12,948       15,037       14,609       14,746       57,340       10,787  
Corporate expenses     (7,802 )     (6,448 )     (8,034 )     (8,015 )     (30,299 )     (6,705 )
Adjusted Operating Income     $ 19,773       $ 24,823       $ 24,447       $ 27,542       $ 96,585       $ 20,239  
                                     
SEGMENT OPERATING MARGIN %                                    
Energy     5.7 %     8.2 %     7.6 %     8.0 %     7.4 %     6.9 %
Aerospace & Defense     15.3 %     12.2 %     15.1 %     18.0 %     15.2 %     15.3 %
Industrial     11.1 %     11.5 %     12.3 %     12.2 %     11.8 %     9.7 %
CIRCOR Adjusted Operating Margin     7.2 %     8.2 %     8.2 %     9.1 %     8.2 %     7.5 %
                                     
SEGMENT OPERATING MARGIN % EXCLUDING DIVESTITURES                                    
Energy     6.7 %     7.5 %     6.0 %     7.8 %     7.0 %     7.1 %
Aerospace & Defense     15.3 %     12.2 %     15.1 %     18.0 %     15.2 %     15.3 %
Industrial     11.4 %     11.9 %     12.8 %     12.7 %     12.2 %     9.7 %
CIRCOR Adjusted Operating Margin Excluding Divestitures     7.7 %     8.2 %     7.9 %     9.3 %     8.3 %     7.6 %
           

CIRCOR INTERNATIONAL, INC.

SUPPLEMENTAL INFORMATION REGARDING DIVESTED BUSINESSES
(in thousands)
UNAUDITED
                                               
      2018     2019

DIVESTED BUSINESSES

    1st QTR     2nd QTR     3rd QTR     4th QTR     Total     1st QTR
                                               
ORDERS                                              
Energy     $ 16,891       $ 18,389       $ 19,145       $ 15,451       $ 69,875       $ 4,104
Industrial     4,848       4,484       2,302       4,796       16,430      
CIRCOR     $ 21,738       $ 22,873       $ 21,446       $ 20,247       $ 86,305       $ 4,104
                                               
NET REVENUES                                              
Energy     $ 14,731       $ 17,419       $ 16,579       $ 16,885       $ 65,613       $ 3,106
Industrial     3,897       1,499       2,070       3,846       11,312      
CIRCOR     $ 18,628       $ 18,918       $ 18,649       $ 20,731       $ 76,925       $ 3,106
                                               
SEGMENT OPERATING INCOME                                              
Energy     $ 8       $ 2,085       $ 2,905       $ 1,597       $ 6,596       $
Industrial     79      

(427

)

   

(371

)

   

(78

)

   

(798

)

   
CIRCOR     $ 87       $ 1,658       $ 2,534       $ 1,519       $ 5,798       $
       
CIRCOR INTERNATIONAL, INC.
RECONCILIATION OF KEY PERFORMANCE MEASURES TO COMMONLY USED GENERALLY ACCEPTED ACCOUNTING PRINCIPLE TERMS
(in thousands, except percentages)
UNAUDITED
       
      2018     2019
      1ST QTR     2ND QTR     3RD QTR     4TH QTR     TOTAL     1ST QTR
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES     $ (145 )     $ (465 )     $ 24,073       $ 30,531       $ 53,994       $ (22,378 )
LESS:                                    
Capital expenditures, net of sale proceeds     8,141       3,563       5,119       6,534       23,357       3,689  
FREE CASH FLOW     $ (8,286 )     $ (4,028 )     $ 18,954       $ 23,997       $ 30,637       $ (26,067 )
                                     
GROSS DEBT     $ 823,665       $ 827,629       $ 831,613       $ 807,050       $ 807,050       $ 753,950  
LESS: Cash & cash equivalents     123,305       69,030       71,334       68,517       68,517       73,619  
GROSS DEBT, NET OF CASH     $ 700,360       $ 758,599       $ 760,279       $ 738,533       $ 738,533       $ 680,331  
                                     
TOTAL SHAREHOLDERS' EQUITY     $ 592,096       $ 573,992       $ 574,171       $ 528,993       $ 528,993       $ 516,177  
                                     
GROSS DEBT AS % OF EQUITY     139 %     144 %     145 %     153 %     153 %     146 %
GROSS DEBT, NET OF CASH AS % OF EQUITY     118 %     132 %     132 %     140 %     140 %     132 %
 
CIRCOR INTERNATIONAL, INC.
RECONCILIATION OF KEY PERFORMANCE MEASURES TO COMMONLY USED GENERALLY ACCEPTED ACCOUNTING PRINCIPLE TERMS
(in thousands, except per share data)
UNAUDITED
       
      2018     2019
      1ST QTR     2ND QTR     3RD QTR     4TH QTR     TOTAL     1ST QTR
NET INCOME (LOSS)     $ (17,441 )     $ 5,902       $ (6,841 )     $ (21,005 )     $ (39,385 )     $ (4,633 )
LESS:                                    
Restructuring related inventory charges     473       1,067             864       2,404       3,142  
Amortization of inventory step-up     6,600                         6,600        
Restructuring charges, net     9,615       844       1,348       944       12,751       863  
Acquisition amortization     11,797       11,767       11,733       12,012       47,309       12,077  
Acquisition depreciation     1,837       1,735       1,742       1,735       7,049       1,123  
Special (recoveries) charges, net     2,831       1,156       1,408       5,692       11,087       (8,678 )
Income tax impact     (7,687 )     (11,056 )     967       12,124       (5,652 )     3,751  
ADJUSTED NET INCOME     $ 8,025       $ 11,415       $ 10,357       $ 12,366       $ 42,163       $ 7,645  
                                     
EARNINGS (LOSS) PER COMMON SHARE (Diluted)     $ (0.88 )     $ 0.30       $ (0.34 )     $ (1.05 )     $ (1.97 )     $ (0.23 )
LESS:                                    
Restructuring related inventory charges     0.02       0.05             0.04       0.12       0.16  
Amortization of inventory step-up     0.33                         0.33        
Restructuring charges, net     0.49       0.04       0.07       0.05       0.64       0.04  
Acquisition amortization     0.60       0.59       0.59       0.60       2.37       0.60  
Acquisition depreciation     0.09       0.09       0.09       0.09       0.35       0.06  
Special (recoveries) charges, net     0.14       0.06       0.07       0.29       0.55       (0.43 )
Income tax impact     (0.39 )     (0.55 )     0.05       0.61       (0.28 )     0.19  
ADJUSTED EARNINGS PER SHARE (Diluted)     $ 0.40       $ 0.57       $ 0.52       $ 0.62       $ 2.11       $ 0.38  
 
CIRCOR INTERNATIONAL, INC.
RECONCILIATION OF KEY PERFORMANCE MEASURES TO COMMONLY USED GENERALLY ACCEPTED ACCOUNTING PRINCIPLE TERMS
(in thousands)
UNAUDITED
       
      2018     2019
      1ST QTR     2ND QTR     3RD QTR     4TH QTR     TOTAL     1ST QTR
NET INCOME (LOSS)     $ (17,441 )     $ 5,902       $ (6,841 )     $ (21,005 )     $ (39,384 )     $ (4,633 )
LESS:                                    
Interest expense, net     (11,801 )     (13,755 )     (14,100 )     (13,257 )     (52,913 )     (13,179 )
Depreciation     (7,334 )     (7,157 )     (7,065 )     (7,198 )     (28,754 )     (5,944 )
Amortization     (12,329 )     (12,282 )     (12,234 )     (12,410 )     (49,255 )     (12,836 )
Benefit from (provision for) income taxes     5,879       7,646       (2,537 )     (14,278 )     (3,290 )     (5,079 )
EBITDA     $ 8,144       $ 31,450       $ 29,095       $ 26,138       $ 94,828       $ 32,405  
LESS:                                    
Restructuring related inventory charges     (473 )     (1,067 )           (864 )     (2,404 )     (3,142 )
Amortization of inventory step-up     (6,600 )                       (6,600 )      
Restructuring charges, net     (9,615 )     (844 )     (1,348 )     (944 )     (12,751 )     (863 )
Special recoveries (charges), net     (2,831 )     (1,156 )     (1,408 )     (5,692 )     (11,087 )     8,678  
ADJUSTED EBITDA     $ 27,663       $ 34,517       $ 31,851       $ 33,638       $ 127,669       $ 27,732  
       
CIRCOR INTERNATIONAL, INC.
RECONCILIATION OF KEY PERFORMANCE MEASURES TO COMMONLY USED GENERALLY ACCEPTED ACCOUNTING PRINCIPLE TERMS
(in thousands, except percentages)
UNAUDITED
       
      2018     2019
      1ST QTR     2ND QTR     3RD QTR     4TH QTR     TOTAL     1ST QTR
GAAP OPERATING INCOME (LOSS)     $ (13,380 )     $ 8,252       $ 8,216       $ 6,296       $ 9,384       $ 11,712  
LESS:                                    
Restructuring related inventory charges     473       1,067             864       2,404       3,142  
Amortization of inventory step-up     6,600                         6,600        
Restructuring charges, net     9,615       844       1,348       944       12,751       863  
Acquisition amortization     11,797       11,767       11,733       12,012       47,309       12,077  
Acquisition depreciation     1,837       1,735       1,742       1,735       7,049       1,123  
Special (recoveries) charges, net     2,831       1,156       1,408       5,692       11,087       (8,678 )
ADJUSTED OPERATING INCOME     $ 19,773       $ 24,821       $ 24,447       $ 27,543       $ 96,584       $ 20,240  
                                     
GAAP OPERATING MARGIN     (4.9 )%     2.7 %     2.8 %     2.1 %     0.8 %     4.3 %
LESS:                                    
Restructuring related inventory charges     0.2 %     0.4 %     %     0.3 %     0.2 %     1.2 %
Amortization of inventory step-up     2.4 %     %     %     %     0.6 %     %
Restructuring charges, net     3.5 %     0.3 %     0.5 %     0.3 %     1.1 %     0.3 %
Acquisition amortization     4.3 %     3.9 %     3.9 %     4.0 %     4.0 %     4.5 %
Acquisition depreciation     0.7 %     0.6 %     0.6 %     0.6 %     0.6 %     0.4 %
Special (recoveries) charges, net     1.0 %     0.4 %     0.5 %     1.9 %     0.9 %     (3.2 )%
ADJUSTED OPERATING MARGIN     7.2 %     8.2 %     8.2 %     9.1 %     8.2 %     7.5 %
Impact of Divestitures     0.5 %     %     (0.3 )%     0.2 %     0.1 %     0.1 %
ADJUSTED OPERATING MARGIN EXCLUDING DIVESTITURES     7.7 %     8.2 %     7.9 %     9.3 %     8.3 %     7.6 %
 

CIRCOR INTERNATIONAL, INC.
Q1 2019 Organic Growth Calculations
(in thousands, except percentages)
UNAUDITED

                                 
                           
        Industrial     Energy     Aerospace & Defense     CIRCOR
ORDERS       $     %     $     %     $     %     $     %
                                                         
Q1 2018     $ 136.6             $ 129.8             $ 59.8             $ 326.2        
Divestitures     (4.8 )             (16.9 )             0             (21.7 )      
Q1 2018 Excluding Divestitures       131.8               112.9               59.8               304.4        
                                                         
Organic       (1.3 )     -1 %       (48.0 )    

-42

%       29.7       50 %       (19.5 )     -6 %
Acquisition / Divestiture       0       0 %       4.1       4 %       0       0 %       4.1       1 %
FX     (6.8 )     -5 %       (1.3 )     -1 %       (1.4 )     -2 %     (9.4 )     -3 %
Total Change Excluding Divestitures       (8.0 )     -6 %       (45.1 )    

-40

%       28.3       47 %       (24.8 )     -8 %
                                                         
Q1 2019     $ 123.7             $ 67.8             $ 88.1             $ 279.6        
                                                       
      Industrial       Energy     Aerospace & Defense     CIRCOR
NET REVENUE     $     %       $     %     $     %     $     %
                                                         
Q1 2018    

$

117.1

           

$

100

           

$

58.5

           

$

275.6

       
Divestitures       (3.9 )           (14.7 )             0               (18.6 )      
Q1 2018 Excluding Divestitures       113.2               85.2               58.5               257.0        
                                                         
Organic       3.8       3 %       12.1       14 %       4.0       7 %       20.0       8 %
Acquisition / Divestiture       0       0 %       3.1       4 %       0       0 %       3.1       1 %
FX       (6.3 )     -6 %     (2.1 )     -2 %       (1.3 )     -2 %       (9.6 )     -4 %
Total Change Excluding Divestitures       (2.5 )     -2 %       13.2      

15

%       2.7       5 %       13.5       5 %
                                                         
Q1 2019     $ 110.7             $ 98.4             $ 61.2             $ 270.4        

 

Source: CIRCOR International, Inc.

David F. Mullen
Senior Vice President Finance
CIRCOR International
(781) 270-1200