CIRCOR Reports Fourth-Quarter 2020 and Full Year 2020 Financial Results

March 4, 2021 at 6:30 AM EST

BURLINGTON, Mass.--(BUSINESS WIRE)--Mar. 4, 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 fourth quarter and full year ended December 31, 2020.

Fourth Quarter 2020:

  • Revenue of $208 million, down (14)% reported and (10)% organically
    • Aerospace & Defense revenue of $78 million, down (2)% reported and (3)% organically
    • Industrial revenue of $131 million, down (20)% reported, and (13)% organically
  • GAAP operating margin of 4.8%; Adjusted operating margin of 11.2%
  • GAAP earnings per share of $(0.70); Adjusted earnings per share of $0.66
  • Strong operating cash flow of $24 million; Free cash flow of $20 million

Full Year 2020:

  • Revenue of $773 million, down (20)% reported and (12)% organically
    • Aerospace & Defense revenue of $268 million, down (2)% reported and (2)% organically
    • Industrial revenue of $505 million, down (27)% reported and (17)% organically
  • GAAP operating margin of (7.8)%; Adjusted operating margin of 8.7%
  • GAAP earnings per share of $(9.28); Adjusted earnings per share of $1.43
  • Completed $45 million cost reduction & avoidance plan; revenue drop through to earnings of 25%
  • Operating cash flow of $(23) million impacted by exit of upstream oil & gas and one-time cash charges; Free cash flow of $(35) million
  • Reduced net debt by $126 million / (22)% and interest expense by $14 million
  • Launched 49 new products in 2020 vs. 33 in 2019

CIRCOR President and CEO Scott Buckhout said, “Our teams were faced with an unprecedented challenge presented by the global COVID-19 pandemic in 2020 – a challenge we met head on by prioritizing the health and safety of our employees, delivering mission critical equipment and service to our customers, and executing difficult but necessary cost out actions to preserve our financial strength. I am proud of the resilience and remarkable effort of the entire CIRCOR team in navigating a challenging and dynamic year.”

Mr. Buckhout continued, “Despite the difficult macro environment, we made significant progress on executing our strategic plan. We successfully completed our exit from upstream oil & gas with the sale of Instrumentation & Sampling and Distributed Valves and significantly reduced our debt position with the proceeds from these sales. We also executed our value-based pricing strategy across both businesses while launching a record number of new products in collaboration with our customers and suppliers. I am confident that these efforts along with our continued focus on improving our operations and execution using the CIRCOR Operating System will position us to take full advantage of an eventual market recovery.”

Mr. Buckhout concluded, “Looking ahead to 2021, our team remains focused on delivering for our customers, shareholders, and employees by executing strategic initiatives that drive organic growth, expand margins, and drive improved free cash flow to further reduce debt.”

2021 Guidance

For the full year of 2021, CIRCOR expects organic revenue growth in the range of 0 to 4%, with low to mid-single digit growth in Aerospace and Defense and low-single digit growth in Industrial. Adjusted EPS is expected to be in the range of $2.00 to $2.20 driven by increased sales volume and improved operating margins. CIRCOR also expects its adjusted net income to free cash flow conversion to be 85% - 95%. Free cash flow generated in 2021 will be used to deleverage CIRCOR, and the company continues to target a net debt to adjusted EBITDA ratio of 2.0x to 2.5x. Presentation slides that provide supporting information to this guidance and fourth-quarter and year-end 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.

Selected Preliminary Consolidated Results

($ in millions except EPS)

 

Q4 2020

 

Q4 2019

 

Change

 

Q4 YTD
2020

 

Q4 YTD
2019

 

Change

Revenue

 

$

208.4

 

 

$

242.6

 

 

-14

%

 

$

773.3

 

 

$

964.3

 

 

-20

%

Revenue - excluding divested businesses1

 

208.4

 

 

224.0

 

 

-7

%

 

768.4

 

 

869.1

 

 

-12

%

GAAP operating (loss) income

 

9.9

 

 

17.0

 

 

-42

%

 

(60.4)

 

 

37.7

 

 

-260

%

Adjusted operating income2

 

23.3

 

 

32.2

 

 

-28

%

 

67.6

 

 

109.8

 

 

-38

%

GAAP operating margin

 

4.8

%

 

7.0

%

 

-220 bps

 

(7.8)

%

 

3.9

%

 

-1170 bps

Adjusted operating margin2

 

11.2

%

 

13.3

%

 

-210 bps

 

8.7

%

 

11.4

%

 

-270 bps

Adjusted operating margin ex divestitures2

 

11.2

%

 

13.0

%

 

-180 bps

 

8.8

%

 

10.6

%

 

-180 bps

GAAP (loss) earnings per share (diluted)

 

$

(0.70)

 

 

$

0.08

 

 

-975

%

 

$

(9.28)

 

 

$

(6.73)

 

 

-38

%

Adjusted earnings per share (diluted)2

 

$

0.66

 

 

$

0.82

 

 

-20

%

 

$

1.43

 

 

$

2.62

 

 

-45

%

Operating cash flow

 

23.6

 

 

16.8

 

 

40

%

 

(22.7)

 

 

15.9

 

 

-243

%

Free cash flow3

 

20.4

 

 

18.4

 

 

11

%

 

(35.3)

 

 

11.7

 

 

-402

%

Orders

 

168.5

 

 

236.6

 

 

-29

%

 

736.2

 

 

977.5

 

 

-25

%

Orders - excluding divested businesses1

 

168.5

 

 

218.5

 

 

-23

%

 

731.7

 

 

882.3

 

 

-17

%

Segment Results

($ in millions)

 

Q4 2020

 

Q4 2019

 

Change

 

Q4 2020

 

Q4 2019

 

Change

Aerospace & Defense

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

77.8

 

 

$

79.1

 

 

-2

%

 

$

267.8

 

 

$

272.6

 

 

-2

%

Segment operating income

 

18.7

 

 

19.1

 

 

-2

%

 

59.1

 

 

52.5

 

 

13

%

Segment operating margin

 

24.0

%

 

24.2

%

 

-20 bps

 

22.1

%

 

19.2

%

 

290 bps

Orders

 

46.8

 

 

68.5

 

 

-32

%

 

254.5

 

 

313.9

 

 

-19

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Industrial

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

130.5

 

 

$

163.6

 

 

-20

%

 

$

505.4

 

 

$

691.7

 

 

-27

%

Revenue - excluding divested businesses1

 

130.5

 

 

145.0

 

 

-10

%

 

500.5

 

 

596.5

 

 

-16

%

Segment operating income

 

12.4

 

 

20.8

 

 

-40

%

 

39.8

 

 

90.8

 

 

-56

%

Segment operating margin

 

9.5

%

 

12.7

%

 

-320 bps

 

7.9

%

 

13.1

%

 

-520 bps

Orders

 

121.7

 

 

168.1

 

 

-28

%

 

481.6

 

 

663.6

 

 

-27

%

Orders - excluding divested businesses1

 

121.7

 

 

150.0

 

 

-19

%

 

477.2

 

 

568.4

 

 

-16

%

  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 Reliability Services, Spence/Nicholson and Instrumentation & Sampling (all Industrial) which were sold before December 31, 2020.
  2. Adjusted consolidated and segment results for Q4 2020 exclude net loss from discontinued operations of $0.8 million and net loss from non-cash acquisition-related intangible amortization, special and restructuring charges totaling $13.4 million. These charges include: (i) $12.0 million for non-cash acquisition-related intangible amortization and depreciation expense; (ii) $1.4 million of professional fees and other costs associated with restructuring and cost reductions. It also excludes the Q4 2020 charge for valuation allowance against deferred tax assets by virtue of using an effective tax rate in the adjusted results which is a $14.8 million adjustment to taxes. Adjusted consolidated and segment results for Q4 2019 exclude net loss from discontinued operations of $1.6 million and net loss from non-cash acquisition-related intangible amortization, special and restructuring charges totaling $15.2 million ($13.4 million, net of tax). These charges include: (i) $12.2 million for non-cash acquisition-related intangible amortization expense and amortization of the step-up in fixed asset values; (ii) $2.3 million related to restructuring and cost saving initiatives; (iii) $1.3 million of professional fees associated with an unsolicited tender offer to acquire all outstanding shares of the Company’s common stock; (iv) $1.2 million related to divestitures, partially offset by (v) a $1.8 million gain on the sale of a building.
  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 today, March 4, 2021. To listen to the live conference call and view the accompanying presentation slides, please visit “Webcasts & Presentations” in the “Investors” section 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 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.

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 December 31, 2020 were completed on January 1, 2019 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 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, 2019, 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 3,100 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

 

Twelve Months Ended

 

 

 

 

Q4 2020

 

Q4 2019

 

Q4 2020

 

Q4 2019

 

 

 

 

 

 

 

 

 

 

 

Net revenues

 

$

208,351

 

 

$

242,638

 

 

$

773,271

 

 

$

964,313

 

Cost of revenues

 

140,939

 

 

164,634

 

 

530,844

 

 

655,504

 

Gross profit

 

67,412

 

 

78,004

 

 

242,427

 

 

308,809

 

Selling, general and administrative expenses

 

56,046

 

 

58,029

 

 

220,994

 

 

248,256

 

Goodwill impairment charge

 

 

 

 

 

116,182

 

 

 

Special and restructuring charges (recoveries), net

 

1,444

 

 

2,979

 

 

(34,303)

 

 

22,872

 

Operating income, (loss)

 

9,922

 

 

16,996

 

 

(60,446)

 

 

37,681

 

Other expense (income)

 

 

 

 

 

 

 

 

Interest expense, net

 

8,520

 

 

10,763

 

 

34,219

 

 

48,609

 

Other (income) expense, net

 

(758)

 

 

1,919

 

 

(529)

 

 

(836)

 

Total other expense, net

 

7,762

 

 

12,682

 

 

33,690

 

 

47,773

 

Income (loss) from continuing operations before income taxes

 

2,160

 

 

4,314

 

 

(94,136)

 

 

(10,092)

 

Provision for (benefit from) income taxes

 

15,299

 

 

1,163

 

 

56,222

 

 

14,676

 

(Loss) Income from continuing operations, net of tax

 

(13,139)

 

 

3,151

 

 

(150,358)

 

 

(24,768)

 

(Loss) Income from discontinued operations, net of tax

 

(795)

 

 

(1,595)

 

 

(35,140)

 

 

(109,167)

 

Net (Loss) income

 

$

(13,934)

 

 

$

1,556

 

 

$

(185,498)

 

 

$

(133,935)

 

 

 

 

 

 

 

 

 

 

 

 

Basic (loss) income per common share:

 

 

 

 

 

 

 

 

Basic from continuing operations

 

$

(0.66)

 

 

$

0.16

 

 

$

(7.52)

 

 

$

(1.24)

 

Basic from discontinued operations

 

$

(0.04)

 

 

$

(0.08)

 

 

$

(1.76)

 

 

$

(5.48)

 

Net (loss) income

 

$

(0.70)

 

 

$

0.08

 

 

$

(9.28)

 

 

$

(6.73)

 

Diluted income (loss) per common share:

 

 

 

 

 

 

 

 

Diluted from continuing operations

 

$

(0.66)

 

 

$

0.16

 

 

$

(7.52)

 

 

$

(1.24)

 

Diluted from discontinued operations

 

$

(0.04)

 

 

$

(0.08)

 

 

$

(1.76)

 

 

$

(5.48)

 

Net (loss) income

 

$

(0.70)

 

 

$

0.08

 

 

$

(9.28)

 

 

$

(6.73)

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding:

 

 

 

 

 

 

 

 

Basic

 

 

20,002

 

 

19,920

 

 

19,982

 

 

19,903

 

Diluted

 

 

20,002

 

 

20,148

 

 

19,982

 

 

19,903

 

CIRCOR INTERNATIONAL, INC. 

Condensed Consolidated Statements of Cash Flows

(in thousands) (unaudited)

 

 

 

 

 

Twelve Months Ended

 

 

 

 

December 31,
2020

 

December 31,
2019

OPERATING ACTIVITIES

 

 

 

 

Net loss

 

$

(185,498)

 

 

$

(133,935)

 

Loss from discontinued operations, net of income taxes

 

(35,140)

 

 

(109,167)

 

Loss from continuing operations

 

(150,358)

 

 

(24,768)

 

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

 

 

 

 

Depreciation

 

20,385

 

 

22,045

 

Amortization

 

43,662

 

 

47,591

 

Provision for bad debt expense

 

6,099

 

 

617

 

Write down of inventory

 

3,618

 

 

366

 

Compensation expense for share-based plans

 

5,488

 

 

5,418

 

Amortization of debt issuance costs

 

7,460

 

 

4,622

 

Deferred tax provision

 

51,319

 

 

(3,440)

 

Loss on sale or write-down of property, plant and equipment

 

 

 

(1,793)

 

Goodwill impairment charge

 

116,182

 

 

 

(Gain) loss on sale of businesses

 

(54,429)

 

 

3,615

 

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

 

 

 

 

Trade accounts receivable

 

23,506

 

 

24,339

 

Inventories

 

5,780

 

 

(9,557)

 

Prepaid expenses and other assets

 

(34,824)

 

 

7,360

 

Accounts payable, accrued expenses and other liabilities

 

(52,051)

 

 

(34,168)

 

Net cash (used in) provided by continuing operating activities

 

(8,163)

 

 

42,247

 

Net cash used in discontinued operating activities

 

(14,561)

 

 

(26,334)

 

Net cash used in operating activities

 

(22,724)

 

 

15,913

 

INVESTING ACTIVITIES

 

 

 

 

Additions to property, plant and equipment

 

(12,222)

 

 

(13,855)

 

Proceeds from sale of property, plant and equipment

 

(322)

 

 

6,172

 

Proceeds from the sale of business

 

165,540

 

 

162,591

 

Proceeds from beneficial interest of factored receivables

 

2,957

 

 

861

 

Net cash provided by continuing investment activities

 

155,953

 

 

155,769

 

Net cash used in discontinued investing activities

 

(11,658)

 

 

(2,733)

 

Net cash provided by investing activities

 

144,295

 

 

153,036

 

FINANCING ACTIVITIES

 

 

 

 

Proceeds from long-term debt

 

219,000

 

 

281,600

 

Payments of long-term debt

 

(352,916)

 

 

(434,797)

 

Proceeds from the exercise of stock options

 

118

 

 

253

 

Net cash used in continuing financing activities

 

(133,798)

 

 

(152,944)

 

Net cash used in financing activities

 

(133,798)

 

 

(152,944)

 

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

 

4,195

 

 

197

 

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

 

(8,032)

 

 

16,202

 

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

 

85,727

 

 

69,525

 

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

 

$

77,695

 

 

$

85,727

 

CIRCOR INTERNATIONAL, INC. 

Condensed Consolidated Balance Sheets

(in thousands) (unaudited)

 

 

 

December 31, 2020

 

December 31, 2019

ASSETS

 

 

 

 

CURRENT ASSETS:

 

 

 

 

Cash and cash equivalents

 

$

76,452

 

 

$

84,531

 

Trade accounts receivable, less allowance for doubtful accounts of
$9,035 and $3,086 at December 31, 2020 and December 31, 2019, respectively

 

102,730

 

 

125,422

 

Inventories

 

129,084

 

 

137,309

 

Prepaid expenses and other current assets

 

93,770

 

 

66,664

 

Assets held for sale

 

5,073

 

 

161,193

 

Total Current Assets

 

407,109

 

 

575,119

 

PROPERTY, PLANT AND EQUIPMENT, NET

 

168,763

 

 

172,179

 

OTHER ASSETS:

 

 

 

 

Goodwill

 

158,944

 

 

271,893

 

Intangibles, net

 

353,595

 

 

385,542

 

Deferred income taxes

 

3,990

 

 

30,852

 

Other assets

 

41,881

 

 

35,360

 

TOTAL ASSETS

 

$

1,134,282

 

 

$

1,470,945

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

Accounts payable

 

$

61,236

 

 

$

79,399

 

Accrued expenses and other current liabilities

 

76,168

 

 

94,169

 

Accrued compensation and benefits

 

28,332

 

 

19,518

 

Liabilities held for sale

 

 

 

43,289

 

Total Current Liabilities

 

165,736

 

 

236,375

 

LONG-TERM DEBT

 

507,888

 

 

636,297

 

DEFERRED INCOME TAXES

 

32,190

 

 

21,425

 

PENSION LIABILITY, NET

 

163,642

 

 

146,801

 

OTHER NON-CURRENT LIABILITIES

 

58,785

 

 

38,636

 

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;
21,373,813 and 21,284,850 outstanding at December 31, 2020 and
December 31, 2019 respectively

 

214

 

 

213

 

Additional paid-in capital

 

452,728

 

 

446,657

 

(Accumulated deficit) retained earnings

 

(86,461)

 

 

99,280

 

Common treasury stock, at cost (1,372,488 shares at December 31,
2020 and December 31, 2019)

 

(74,472)

 

 

(74,472)

 

Accumulated other comprehensive loss, net of tax

 

(85,968)

 

 

(80,267)

 

Total Shareholders' Equity

 

206,041

 

 

391,411

 

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

 

$

1,134,282

 

 

$

1,470,945

 

CIRCOR INTERNATIONAL, INC. 

Summary of Orders and Backlog

(in millions) (unaudited)

 

 

 

 

 

Three Months Ended

 

Twelve Months Ended

 

 

 

 

Q4 2020

 

Q4 2019

 

Q4 2020

 

Q4 2019

 

 

 

 

 

 

 

 

 

 

 

ORDERS (1)

 

 

 

 

 

 

 

 

 

 

 

Aerospace & Defense

 

$

46.8

 

 

$

68.5

 

 

$

254.5

 

 

$

313.9

 

 

 

Industrial

 

121.7

 

 

168.1

 

 

481.6

 

 

663.6

 

 

 

Total Orders

 

$

168.5

 

 

$

236.6

 

 

$

736.2

 

 

$

977.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q4 2020

 

Q4 2019

 

 

 

 

BACKLOG (2)

 

 

 

 

 

 

 

 

 

 

 

Aerospace & Defense

 

$

182.1

 

 

$

194.5

 

 

 

 

 

 

 

Industrial

 

197.2

 

 

226.2

 

 

 

 

 

 

 

Total Backlog

 

$

379.3

 

 

$

420.7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 twelve months ended December 31, 2020 include orders from businesses divested prior to December 31, 2020 of $4.5 million. Orders for the three months ended December 31, 2019 include orders from businesses divested of $18.0 million ($95.2 million for the twelve months ended December 31, 2019). Divested businesses are Reliability Services, Spence/Nicholson and Instrumentation & Sampling, all in the Industrial segment.

 

 

 

 

 

 

 

 

 

 

 

Note 2: Backlog includes unshipped customer orders for which revenue has not been recognized. Backlog at Q4 2019 includes $8.6 million for Industrial related to divested businesses.

CIRCOR INTERNATIONAL, INC. 

Segment Information

(in thousands, except percentages)

UNAUDITED

 
       

 

 

 

2019

2020

 

As reported

 

 

1ST QTR

 

2ND QTR

 

3RD QTR

 

4TH QTR

 

TOTAL

1ST QTR

 

2ND QTR

 

3RD QTR

 

4TH QTR

 

TOTAL

 

ORDERS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aerospace & Defense

 

 

$

88,107

 

$

93,405

 

$

63,968

 

$

68,459

 

$

313,939

 

$

72,031

 

$

76,616

 

$

59,105

 

$

46,796

 

$

254,548

 

Industrial

 

 

171,834

 

164,642

 

158,986

 

168,091

 

663,553

 

136,443

 

116,023

 

107,453

 

121,690

 

481,609

 

Total

 

 

$

259,941

 

$

258,047

 

$

222,954

 

$

236,550

 

$

977,492

 

$

208,474

 

$

192,639

 

$

166,558

 

$

168,486

 

$

736,157

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET REVENUES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aerospace & Defense

 

 

$

61,240

 

$

64,694

 

$

67,621

 

$

79,070

 

$

272,625

 

$

65,493

 

$

62,241

 

$

62,249

 

$

77,839

 

$

267,822

 

Industrial

 

 

177,615

 

181,074

 

169,431

 

163,568

 

691,688

 

126,720

 

123,825

 

124,391

 

130,513

 

505,449

 

Total

 

 

$

238,855

 

$

245,768

 

$

237,052

 

$

242,638

 

$

964,313

 

$

192,213

 

$

186,066

 

$

186,640

 

$

208,352

 

$

773,271

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SEGMENT
OPERATING INCOME

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aerospace & Defense

 

 

$

9,374

 

$

10,443

 

$

13,564

 

$

19,099

 

$

52,480

 

$

12,494

 

$

13,142

 

$

14,782

 

$

18,675

 

$

59,093

 

Industrial

 

 

22,581

 

26,174

 

21,278

 

20,757

 

90,790

 

5,169

 

12,406

 

9,807

 

12,441

 

39,823

 

Corporate expenses

 

 

(8,522)

 

(8,028)

 

(9,248)

 

(7,671)

 

(33,469)

 

(6,588)

 

(9,664)

 

(7,244)

 

(7,789)

 

(31,285)

 

Total

 

 

$

23,433

 

$

28,589

 

$

25,594

 

$

32,185

 

$

109,801

 

$

11,075

 

$

15,884

 

$

17,345

 

$

23,327

 

$

67,631

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SEGMENT
OPERATING MARGIN %

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aerospace & Defense

 

 

15.3%

 

16.1%

 

20.1%

 

24.2%

 

19.2%

 

19.1%

 

21.1%

 

23.7%

 

24.0%

 

22.1%

 

Industrial

 

 

12.7%

 

14.5%

 

12.6%

 

12.7%

 

13.1%

 

4.1%

 

10.0%

 

7.9%

 

9.5%

 

7.9%

 

Total

 

 

9.8%

 

11.6%

 

10.8%

 

13.3%

 

11.4%

 

5.8%

 

8.5%

 

9.3%

 

11.2%

 

8.7%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2019

2020

 

Results of divested businesses (1)

 

 

1ST QTR

 

2ND QTR

 

3RD QTR

 

4TH QTR

 

TOTAL

1ST QTR

 

2ND QTR

 

3RD QTR

 

4TH QTR

 

TOTAL

 

ORDERS - Industrial

 

 

$

30,611

 

$

24,448

 

$

22,090

 

$

18,047

 

$

95,196

 

$

4,449

 

$

 

$

 

$

 

$

4,449

 

NET REVENUES - Industrial

 

 

$

29,787

 

$

26,101

 

$

20,697

 

$

18,602

 

$

95,187

 

$

4,900

 

$

 

$

 

$

 

$

4,900

 

SEGMENT OP. INC. -Industrial

 

 

$

6,217

 

$

5,229

 

$

2,677

 

$

3,166

 

$

17,289

 

$

 

$

 

$

 

$

 

$

 

CIRCOR INTERNATIONAL, INC. 

Supplemental Information Regarding Divested Businesses

(in thousands, except percentages) (unaudited)

 

 

 

2019

2020

Results excluding
divested businesses

1ST QTR

2ND QTR

3RD QTR

4TH QTR

TOTAL

1ST QTR

2ND QTR

3RD QTR

4TH QTR

TOTAL

ORDERS

 

 

 

 

 

 

 

 

 

 

Aerospace & Defense

$88,107

$93,405

$63,968

$68,459

$313,939

$72,031

$76,616

$59,105

$46,796

$254,548

Industrial

141,223

140,194

136,896

150,044

568,357

131,994

116,023

107,453

121,690

477,160

Total

$229,330

$233,599

$200,864

$218,503

$882,296

$204,025

$192,639

$166,558

$168,486

$731,708

 

 

 

 

 

 

 

 

 

 

 

 

NET REVENUES

 

 

 

 

 

 

 

 

 

 

Aerospace & Defense

$61,240

$64,694

$67,621

$79,070

$272,625

$65,493

$62,241

$62,249

$77,839

$267,822

Industrial

147,828

154,973

148,734

144,966

596,501

121,820

123,825

124,391

130,513

500,549

Total

$209,068

$219,667

$216,355

$224,036

$869,126

$187,313

$186,066

$186,640

$208,352

$768,371

 

 

 

 

 

 

 

 

 

 

 

 

SEGMENT OPERATING INCOME

 

 

 

 

 

 

 

 

 

 

Aerospace & Defense

$9,374

$10,443

$13,564

$19,099

$52,480

$12,494

$13,142

$14,782

$18,675

$59,093

Industrial

16,364

20,945

18,601

17,591

73,501

5,169

12,406

9,807

12,441

39,823

Corporate expenses

(8,522)

(8,028)

(9,248)

(7,671)

(33,469)

(6,588)

(9,664)

(7,244)

(7,789)

(31,285)

Total

$17,216

$23,360

$22,917

$29,019

$92,512

$11,075

$15,884

$17,345

$23,327

$67,631

 

 

 

 

 

 

 

 

 

 

 

 

SEGMENT OPERATING MARGIN %

 

 

 

 

 

 

 

 

 

 

Aerospace & Defense

15.3%

16.1%

20.1%

24.2%

19.2%

19.1%

21.1%

23.7%

24.0%

22.1%

Industrial

11.1%

13.5%

12.5%

12.1%

12.3%

4.2%

10.0%

7.9%

9.5%

8.0%

Total

8.2%

10.6%

10.6%

13.0%

10.6%

5.9%

8.5%

9.3%

11.2%

8.8%

 

 

 

 

 

 

 

 

 

 

 

 

(1) Divested businesses are related to the Industrial Segment and include Reliability Services, Spence/Nicholson and Instrumentation & Sampling. Engineered Valves and 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)

     

 

 

 

2019

2020

 

 

 

1ST QTR

 

2ND QTR

 

3RD QTR

 

4TH QTR

 

TOTAL

1ST QTR

 

2ND QTR

 

3RD QTR

 

4TH QTR

 

TOTAL

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Cash (Used In)
Provided By Operating Activities

 

 

$(22,378)

 

$12,339

 

$9,128

 

$16,822

 

$15,913

 

$(23,947)

 

$(24,883)

 

$2,465

 

$23,641

 

$(22,724)

LESS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital expenditures,
net of sale proceeds (a)

 

 

3,689

 

2,995

 

(963)

 

(1,535)

 

4,186

 

3,412

 

3,527

 

2,330

 

3,275

 

12,544

FREE CASH FLOW

 

 

$(26,067)

 

$9,344

 

$10,091

 

$18,357

 

$11,727

 

$(27,359)

 

$(28,410)

 

$135

 

$20,366

 

$(35,268)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Debt

 

 

$753,950

 

$748,250

 

$659,100

 

$653,850

 

$653,850

 

$602,288

 

$592,038

 

$540,463

 

$519,938

 

$519,938

Less: Cash & Cash equivalents

 

 

73,619

 

76,082

 

69,225

 

84,531

 

84,531

 

170,861

 

125,421

 

72,772

 

76,452

 

76,452

GROSS DEBT, NET
OF CASH

 

 

$680,331

 

$672,168

 

$589,875

 

$569,319

 

$569,319

 

$431,427

 

$466,617

 

$467,691

 

$443,486

 

$443,486

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL
SHAREHOLDERS' EQUITY

 

 

$516,177

 

$494,899

 

$375,388

 

$391,411

 

$391,411

 

$290,845

 

$273,351

 

$220,814

 

$206,041

 

$206,041

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GROSS DEBT AS %
OF EQUITY

 

 

146%

 

151%

 

176%

 

167%

 

167%

 

207%

 

217%

 

245%

 

252%

 

252%

GROSS DEBT, NET
OF CASH AS % OF EQUITY

 

 

132%

 

136%

 

157%

 

145%

 

145%

 

148%

 

171%

 

212%

 

215%

 

215%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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)

 

 

 

2019

2020

 

 

1ST QTR

2ND QTR

3RD QTR

4TH QTR

TOTAL

1ST QTR

2ND QTR

3RD QTR

4TH QTR

TOTAL

NET (LOSS) INCOME

 

$

(4,633)

 

$

(18,520)

 

$

(112,338)

 

$

1,555

 

$

(133,935)

 

$

(78,948)

 

$

(34,092)

 

$

(58,524)

 

$

(13,934)

 

$

(185,498)

 

LESS:

 

 

 

 

 

 

 

 

 

 

 

Restructuring related
inventory charges

 

325

 

 

(1,145)

 

 

(820)

 

(602)

 

 

351

 

 

(251)

 

Restructuring
charges, net

 

358

 

299

 

5,038

 

(509)

 

5,186

 

2,883

 

588

 

502

 

972

 

4,945

 

Acquisition amortization

 

12,077

 

11,247

 

11,202

 

11,189

 

45,715

 

10,218

 

10,681

 

10,625

 

10,939

 

42,463

 

Acquisition depreciation

 

1,123

 

1,106

 

1,102

 

1,021

 

4,352

 

974

 

980

 

1,011

 

1,021

 

3,986

 

Special (recoveries)
charges, net

 

(8,200)

 

3,917

 

18,481

 

3,488

 

17,686

 

(45,175)

 

5,019

 

436

 

473

 

(39,247)

 

Goodwill Impairment charge

 

 

 

 

 

 

116,182

 

 

 

 

116,182

 

Income tax impact

 

3,625

 

(2,266)

 

5,533

 

(1,752)

 

5,140

 

7,704

 

(22,549)

 

53,240

 

13,125

 

51,521

 

Net loss (income)
from discontinued operations

 

5,728

 

17,156

 

84,688

 

1,595

 

109,167

 

(9,162)

 

43,848

 

(341)

 

795

 

35,140

 

ADJUSTED NET INCOME

 

$

10,403

 

$

12,939

 

$

12,561

 

$

16,587

 

$

52,491

 

$

4,074

 

$

4,475

 

$

7,300

 

$

13,390

 

$

29,240

 

 

 

 

 

 

 

 

 

 

 

 

 

(LOSS) EARNINGS
PER COMMON
SHARE (Diluted)

 

$

(0.23)

 

$

(0.93)

 

$

(5.64)

 

$

0.08

 

$

(6.73)

 

$

(3.96)

 

$

(1.68)

 

$

(2.93)

 

$

(0.70)

 

$

(9.28)

 

LESS:

 

 

 

 

 

 

 

 

 

 

 

Restructuring related
inventory charges

 

0.02

 

 

(0.06)

 

 

(0.04)

 

(0.03)

 

 

0.02

 

 

(0.01)

 

Restructuring
charges, net

 

0.02

 

0.02

 

0.25

 

(0.03)

 

0.26

 

0.14

 

0.03

 

0.02

 

0.05

 

0.25

 

Acquisition amortization

 

0.61

 

0.57

 

0.56

 

0.56

 

2.30

 

0.51

 

0.53

 

0.53

 

0.55

 

2.13

 

Acquisition depreciation

 

0.06

 

0.06

 

0.06

 

0.05

 

0.22

 

0.05

 

0.05

 

0.05

 

0.05

 

0.20

 

Special (recoveries)
charges, net

 

(0.41)

 

0.20

 

0.93

 

0.18

 

0.89

 

(2.27)

 

0.25

 

0.02

 

0.02

 

(1.96)

 

Impairment charge

 

 

 

 

 

 

5.83

 

 

 

 

5.81

 

Income tax impact

 

0.18

 

(0.12)

 

0.28

 

(0.10)

 

0.24

 

0.39

 

(1.11)

 

2.66

 

0.66

 

2.58

 

Earnings (Loss) per
share from
discontinued operations

 

0.29

 

0.86

 

4.25

 

0.08

 

5.48

 

(0.46)

 

2.16

 

(0.02)

 

0.04

 

1.76

 

ADJUSTED
EARNINGS PER
SHARE (Diluted)

 

$

0.52

 

$

0.65

 

$

0.63

 

$

0.82

 

$

2.62

 

$

0.20

 

$

0.22

 

$

0.36

 

$

0.66

 

$

1.43

 

CIRCOR INTERNATIONAL, INC.

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

(in thousands, except percentages) (unaudited)

 

 

 

2019

2020

 

 

1ST QTR

2ND QTR

3RD QTR

4TH QTR

TOTAL

1ST QTR

2ND QTR

3RD QTR

4TH QTR

TOTAL

 

 

 

 

 

 

 

 

 

 

 

 

NET (LOSS) INCOME

 

$

(4,633)

 

$

(18,520)

 

$

(112,338)

 

$

1,555

 

$

(133,935)

 

$

(78,948)

 

$

(34,092)

 

$

(58,524)

 

$

(13,934)

 

$

(185,498)

 

LESS:

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

13,094

 

12,947

 

11,804

 

10,763

 

48,609

 

9,011

 

8,486

 

8,202

 

8,520

 

34,219

 

Depreciation

 

5,499

 

5,568

 

5,551

 

5,427

 

22,045

 

5,121

 

4,958

 

4,802

 

5,504

 

20,385

 

Amortization

 

12,536

 

11,685

 

11,629

 

11,741

 

47,591

 

10,516

 

10,976

 

10,925

 

11,245

 

43,662

 

Provision for income taxes

 

5,709

 

284

 

7,490

 

1,193

 

14,676

 

8,374

 

(21,769)

 

54,318

 

15,299

 

56,222

 

Loss (income) from
discontinued operations

 

5,728

 

17,156

 

84,688

 

1,595

 

109,167

 

(9,162)

 

43,847

 

(341)

 

795

 

35,140

 

EBITDA

 

$

37,933

 

$

29,121

 

$

8,825

 

$

32,274

 

$

108,152

 

$

(55,088)

 

$

12,406

 

$

19,383

 

$

27,429

 

$

4,130

 

LESS:

 

 

 

 

 

 

 

 

 

 

 

Restructuring related
inventory charges (recoveries)

 

325

 

 

(1,145)

 

 

(820)

 

(602)

 

 

351

 

 

(251)

 

Restructuring
charges (recoveries), net

 

358

 

299

 

5,038

 

(509)

 

5,186

 

2,883

 

588

 

502

 

972

 

4,945

 

Special (recoveries)
charges, net

 

(8,200)

 

3,917

 

18,481

 

3,488

 

17,686

 

(45,175)

 

5,019

 

436

 

473

 

(39,247)

 

Goodwill
impairment charge

 

 

 

 

 

 

116,182

 

 

 

 

116,182

 

ADJUSTED EBITDA

 

$

30,416

 

$

33,337

 

$

31,199

 

$

35,253

 

$

130,204

 

$

18,200

 

$

18,013

 

$

20,671

 

$

28,873

 

$

85,758

 

CIRCOR INTERNATIONAL, INC.

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

(in thousands, except percentages) (unaudited)

 

 

 

2019

2020

 

 

1ST QTR

2ND QTR

3RD QTR

4TH QTR

TOTAL

1ST QTR

2ND QTR

3RD QTR

4TH QTR

TOTAL

 

 

 

 

 

 

 

 

 

 

 

 

GAAP OPERATING
INCOME (LOSS)

 

$

17,750

 

$

12,020

 

$

(9,084)

 

$

16,996

 

$

37,682

 

$

(73,405)

 

$

(1,384)

 

$

4,420

 

$

9,923

 

$

(60,446)

 

LESS:

 

 

 

 

 

 

 

 

 

 

 

Restructuring related
inventory charges (recoveries)

 

325

 

 

(1,145)

 

 

(820)

 

(602)

 

 

351

 

 

(251)

 

Amortization of
inventory step-up

 

 

 

 

 

 

 

 

 

 

 

Restructuring charges
(recoveries), net

 

358

 

299

 

5,038

 

(509)

 

5,186

 

2,883

 

588

 

502

 

972

 

4,945

 

Acquisition amortization

 

12,077

 

11,247

 

11,202

 

11,189

 

45,715

 

10,218

 

10,681

 

10,625

 

10,939

 

42,463

 

Acquisition depreciation

 

1,123

 

1,106

 

1,102

 

1,021

 

4,352

 

974

 

980

 

1,011

 

1,021

 

3,986

 

Special (recoveries)
charges, net

 

(8,200)

 

3,917

 

18,481

 

3,488

 

17,686

 

(45,175)

 

5,019

 

436

 

473

 

(39,247)

 

Goodwill impairment charge

 

 

 

 

 

 

116,182

 

 

 

 

116,182

 

ADJUSTED
OPERATING INCOME

 

$

23,433

 

$

28,589

 

$

25,594

 

$

32,185

 

$

109,801

 

$

11,075

 

$

15,884

 

$

17,345

 

$

23,327

 

$

67,631

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP OPERATING MARGIN

 

7.4

%

4.9

%

(3.8)

%

7.0

%

3.9

%

(38.2)

%

(0.7)

%

2.4

%

4.8

%

(7.8)

%

LESS:

 

 

 

 

 

 

 

 

 

 

 

Restructuring related
inventory charges (recoveries)

 

0.1

%

0.0

%

(0.5)

%

0.0

%

(0.1)

%

(0.3)

%

0.0

%

0.2

%

0.0

%

0.0

%

Amortization of
inventory step-up

 

0.0

%

0.0

%

0.0

%

0.0

%

0.0

%

0.0

%

0.0

%

0.0

%

0.0

%

0.0

%

Restructuring charges
(recoveries), net

 

0.1

%

0.1

%

2.1

%

(0.2)

%

0.5

%

1.5

%

0.3

%

0.3

%

0.5

%

0.6

%

Acquisition amortization

 

5.1

%

4.6

%

4.7

%

4.6

%

4.7

%

5.3

%

5.7

%

5.7

%

5.3

%

5.5

%

Acquisition depreciation

 

0.5

%

0.5

%

0.5

%

0.4

%

0.5

%

0.5

%

0.5

%

0.5

%

0.5

%

0.5

%

Special (recoveries)
charges, net

 

(3.4)

%

1.6

%

7.8

%

1.4

%

1.8

%

(23.5)

%

2.7

%

0.2

%

0.2

%

(5.1)

%

Goodwill impairment charge

 

0.0

%

0.0

%

0.0

%

0.0

%

0.0

%

60.4

%

0.0

%

0.0

%

0.0

%

15.0

%

ADJUSTED
OPERATING MARGIN

 

9.8

%

11.6

%

10.8

%

13.3

%

11.4

%

5.8

%

8.5

%

9.3

%

11.2

%

8.7

%

 

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

Source: CIRCOR International, Inc.