CIRCOR Reports Third Quarter 2021 Results

November 12, 2021 at 6:30 AM EST

BURLINGTON, Mass.--(BUSINESS WIRE)--Nov. 12, 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 third quarter ended October 3, 2021.

Third Quarter 2021 Overview:

  • Backlog of $435 million, up 15% YTD, driven by strong demand across Industrial end markets
  • Orders of $194M, up 16% reported and 15% organically
    • Industrial orders of $140 million, up 30% reported and 28% organically
    • Aerospace & Defense orders of $54 million, down (9)% reported and (10)% organically
  • Revenue of $191 million, up 2% reported and 1% organically, was adversely impacted by $(10) million due to global supply chain, logistics, and labor constraints late in the third quarter
    • Industrial revenue of $129 million, up 4% reported and 3% organically
    • Aerospace & Defense revenue of $61 million, down (1)% reported and (2)% organically
  • GAAP operating margin of 3.5%; Adjusted operating margin of 10.1%, up 80 bps
  • GAAP earnings per share of $0.06; Adjusted earnings per share of $0.50, up 39%
  • GAAP operating cash flow of $11 million; Free cash flow of $7 million, up $7 million

CIRCOR President and CEO Scott Buckhout said, “Our team delivered solid third quarter 2021 results with 15% organic orders growth, 80 basis points of margin expansion, and a 39% increase in adjusted earnings. While global supply chain constraints adversely impacted our 3Q results and 4Q outlook, we remain encouraged by robust demand for our Industrial products and strong positions on growing Aerospace & Defense programs.”

Mr. Buckhout continued, “Despite the near term macro challenges, our focus remains on our long term strategic priorities. We plan to deliver 45 new products for our customers in 2021 that will drive future organic growth and margin expansion. In addition, our teams have accelerated price increases across product lines in order to mitigate the impact of higher inflation. And finally, we continue to use our free cash flow to pay down debt in order to achieve a net debt to adjusted EBITDA ratio of 2.0 to 2.5.”

Mr. Buckhout concluded, “Our $435 million backlog positions us well for organic revenue, earnings, and free cash flow growth, and we continue to drive long-term value creation for employees, customers, and shareholders.”

4Q'21 Guidance Update

In the fourth quarter of 2021, CIRCOR expects organic revenue to increase by 1 to 3% which reflects $(15) million of delayed revenue due to global supply chain, logistics, and labor challenges. Industrial revenue is expected to increase by 3 to 6% driven by aftermarket volume, and Aerospace & Defense revenue is expected to be down (5) to 0% with growth in both Commercial Aerospace and Defense aftermarket sales offset by lower large Defense program shipments. In addition, CIRCOR expects adjusted EPS of $0.60 to $0.65 and free cash flow conversion of 85 to 105% ($10 to $15 million).

2021 Guidance Update

For the full year of 2021, CIRCOR expects organic revenue to decrease by (2) to (0)% (previously 2 to 4%) which reflects $(25) million of delayed revenue due to global supply chain, logistics, and labor challenges. Reported revenue growth for 2021 is expected to be between (1) to 1%. Adjusted EPS is now expected to be of $1.69 to $1.74 (previously $2.10 to $2.30) driven by our lower revenue outlook and the impact of continued inflationary pressure. Finally, we expect adjusted net income to free cash flow conversion to be 15% to 25% as supply chain issues delay the completion of in-process projects and adversely impact the timing of customer collections.

Presentation slides that provide supporting information to this guidance and first-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, November 12, 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)

 

Q3 2021

 

Q3 2020

 

Change

 

Q3 YTD
2021

 

Q3 YTD
2020

 

Change

Orders

 

193.7

 

 

166.6

 

 

16

%

 

630.6

 

 

567.7

 

 

11

%

Orders - excluding divested businesses1

 

193.7

 

 

166.6

 

 

16

%

 

630.6

 

 

563.2

 

 

12

%

Revenue

 

$

190.8

 

 

$

186.6

 

 

2

%

 

$

561.8

 

 

$

564.9

 

 

-1

%

Revenue - excluding divested businesses1

 

190.8

 

 

186.6

 

 

2

%

 

561.8

 

 

560.0

 

 

%

GAAP operating (loss) income

 

6.7

 

 

4.4

 

 

51

%

 

2.1

 

 

(70.4)

 

 

103

%

Adjusted operating income2

 

19.3

 

 

17.3

 

 

11

%

 

46.3

 

 

44.3

 

 

5

%

GAAP operating margin

 

3.5

%

 

2.4

%

 

110 bps

 

0.4

%

 

(12.5)

%

 

1290 bps

Adjusted operating margin2

 

10.1

%

 

9.3

%

 

80 bps

 

8.2

%

 

7.8

%

 

40 bps

Adjusted operating margin ex divestitures2

 

10.1

%

 

9.3

%

 

80 bps

 

8.2

%

 

7.9

%

 

30 bps

GAAP earnings (loss) per share (diluted)

 

$

0.06

 

 

$

(2.93)

 

 

102

%

 

$

(1.07)

 

 

$

(8.59)

 

 

88

%

Adjusted earnings per share (diluted)2

 

$

0.50

 

 

$

0.36

 

 

39

%

 

$

1.10

 

 

$

0.78

 

 

41

%

Operating cash flow

 

11.4

 

 

2.5

 

 

362

%

 

4.7

 

 

(46.4)

 

 

110

%

Free cash flow3

 

6.8

 

 

0.1

 

 

n/a

 

(5.9)

 

 

(55.6)

 

 

89

%

Segment Results

($ in millions)

 

Q3 2021

 

Q3 2020

 

Change

 

Q3 YTD
2021

 

Q3 YTD
2020

 

Change

Aerospace & Defense

 

 

 

 

 

 

 

 

 

 

 

 

Orders

 

$

54.0

 

 

$

59.1

 

 

-9

%

 

$

181.3

 

 

$

207.8

 

 

-13

%

Revenue

 

61.5

 

 

62.2

 

 

-1

%

 

182.2

 

 

190.0

 

 

-4

%

Segment operating income

 

14.9

 

 

14.8

 

 

1%

 

37.7

 

 

40.4

 

 

-7

%

Segment operating margin

 

24.2

%

 

23.7

%

 

50 bps

 

20.7

%

 

21.3

%

 

-60 bps

 

 

 

 

 

 

 

 

 

 

 

 

 

Industrial

 

 

 

 

 

 

 

 

 

 

 

 

Orders

 

$

139.7

 

 

$

107.5

 

 

30

%

 

$

449.3

 

 

$

359.9

 

 

25

%

Orders - excluding divested businesses1

 

139.7

 

 

107.5

 

 

30

%

 

449.3

 

 

355.5

 

 

26

%

Revenue

 

129.3

 

 

124.4

 

 

4

%

 

379.5

 

 

374.9

 

 

1

%

Revenue - excluding divested businesses1

 

129.3

 

 

124.4

 

 

4

%

 

379.5

 

 

370.0

 

 

3

%

Segment operating income

 

11.3

 

 

9.8

 

 

15

%

 

31.4

 

 

27.4

 

 

15

%

Segment operating margin (adjusted)

 

8.7

%

 

7.9

%

 

80 bps

 

8.3

%

 

7.4

%

 

90 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 Q3 2021 exclude net income from discontinued operations of $2.5 million and net loss from non-cash acquisition-related intangible amortization, special and restructuring charges totaling $12.6 million. These charges include: (i) $11.8 million for non-cash acquisition-related intangible amortization and depreciation expense; and (ii) $0.8 million of other special and restructuring recoveries. Adjusted consolidated and segment results for Q3 2020 exclude net income from discontinued operations of $0.3 million and net loss from non-cash acquisition-related intangible amortization, special and restructuring charges totaling $12.9 million. These charges include: (i) $11.6 million for non-cash acquisition-related intangible amortization and depreciation expense; (ii) $0.8 million of professional fees and other costs associated with restructuring and cost reductions; and (iii) $0.5 million of other special and restructuring charges. It also excludes the Q3 2020 charge for valuation allowance against deferred tax assets by virtue of using an effective tax rate in the adjusted results which is a $53.3 million adjustment to taxes.
  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 October 3, 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 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, 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 3,100 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 STATEMENT OF OPERATIONS

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

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

 

October 3, 2021

 

September 27,
2020

 

October 3, 2021

 

September 27,
2020

 

 

 

 

 

 

 

 

 

 

 

Net revenues

 

$

190,782

 

 

$

186,640

 

 

$

561,783

 

 

$

564,920

 

Cost of revenues

 

130,027

 

 

130,630

 

 

385,061

 

 

389,905

 

Gross profit

 

60,755

 

 

56,010

 

 

176,722

 

 

175,015

 

Selling, general and administrative expenses

 

53,265

 

 

50,652

 

 

167,792

 

 

164,948

 

Goodwill impairment charge

 

 

 

 

 

 

 

116,182

 

Special and restructuring charges (recoveries), net

 

814

 

 

938

 

 

6,808

 

 

(35,747)

 

Operating income (loss)

 

6,676

 

 

4,420

 

 

2,122

 

 

(70,368)

 

Other expense (income), net:

 

 

 

 

 

 

 

 

Interest expense, net

 

7,997

 

 

8,202

 

 

24,325

 

 

25,699

 

Other expense (income), net

 

134

 

 

765

 

 

(2,543)

 

 

229

 

Total other expense, net

 

8,131

 

 

8,967

 

 

21,782

 

 

25,928

 

Income (loss) from continuing operations before income taxes

 

(1,455)

 

 

(4,547)

 

 

(19,660)

 

 

(96,296)

 

(Benefit from) provision for income taxes

 

(92)

 

 

54,318

 

 

3,268

 

 

40,923

 

Income (loss) from continuing operations, net of tax

 

$

(1,363)

 

 

$

(58,865)

 

 

$

(22,928)

 

 

$

(137,219)

 

Income (loss) from discontinued operations, net of tax

 

$

2,510

 

 

$

341

 

 

$

1,393

 

 

$

(34,345)

 

Net income (loss)

 

$

1,147

 

 

$

(58,524)

 

 

$

(21,535)

 

 

$

(171,564)

 

 

 

 

 

 

 

 

 

 

 

 

Basic income (loss) per common share:

 

 

 

 

 

 

 

 

Basic from continuing operations

 

$

(0.07)

 

 

$

(2.94)

 

 

$

(1.14)

 

 

$

(6.87)

 

Basic from discontinued operations

 

$

0.12

 

 

$

0.02

 

 

$

0.07

 

 

$

(1.72)

 

Net income (loss)

 

$

0.06

 

 

$

(2.93)

 

 

$

(1.07)

 

 

$

(8.59)

 

Diluted income (loss) per common share:

 

 

 

 

 

 

 

 

Diluted from continuing operations

 

$

(0.07)

 

 

$

(2.94)

 

 

$

(1.14)

 

 

$

(6.87)

 

Diluted from discontinued operations

 

$

0.12

 

 

$

0.02

 

 

$

0.07

 

 

$

(1.72)

 

Net income (loss)

 

$

0.06

 

 

$

(2.93)

 

 

$

(1.07)

 

 

$

(8.59)

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding:

 

 

 

 

 

 

 

 

Basic

 

 

20,257

 

 

20,001

 

 

20,181

 

 

19,975

 

Diluted

 

 

20,257

 

 

20,001

 

 

20,181

 

 

19,975

 

CIRCOR INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands) (unaudited)

 

 

 

 

 

Nine Months Ended

 

 

 

 

October 3, 2021

 

September 27,
2020

OPERATING ACTIVITIES

 

 

 

 

Net loss

 

$

(21,535)

 

 

$

(171,564)

 

Income (loss) from discontinued operations, net of income taxes

 

1,393

 

 

(34,345)

 

Loss from continuing operations

 

(22,928)

 

 

(137,219)

 

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

 

 

 

Depreciation

 

17,505

 

 

14,881

 

Amortization

 

31,929

 

 

32,418

 

Change in provision for bad debt expense

 

(353)

 

 

7,219

 

Write down of inventory

 

1,201

 

 

2,386

 

Compensation expense for share-based plans

 

4,165

 

 

4,076

 

Amortization of debt issuance costs

 

3,032

 

 

6,463

 

Deferred tax provision

 

823

 

 

35,582

 

Goodwill impairment charge

 

 

 

116,182

 

Loss (gain) on sale of businesses

 

1,308

 

 

(54,253)

 

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

 

 

 

Trade accounts receivable

 

8,937

 

 

18,051

 

Inventories

 

(12,095)

 

 

(8,477)

 

Prepaid expenses and other assets

 

(32,680)

 

 

(39,184)

 

Accounts payable, accrued expenses and other liabilities

 

6,310

 

 

(30,468)

 

Net cash provided by (used in) continuing operating activities

7,154

 

 

(32,343)

 

Net cash provided by (used in) discontinued operating activities

(2,484)

 

 

(14,022)

 

Net cash provided (used in) operating activities

 

4,670

 

 

(46,365)

 

INVESTING ACTIVITIES

 

 

 

 

Additions to property, plant and equipment

 

(10,579)

 

 

(9,147)

 

Proceeds from sale of property, plant and equipment

 

2

 

 

(122)

 

Proceeds from the sale of business

 

9,993

 

 

166,210

 

Proceeds from beneficial interest of factored receivables

 

1,531

 

 

2,212

 

Net cash provided by continuing investment activities

 

947

 

 

159,153

 

Net cash used in discontinued investing activities

 

 

 

(11,338)

 

Net cash provided by investing activities

 

947

 

 

147,815

 

FINANCING ACTIVITIES

 

 

 

 

Proceeds from long-term debt

 

145,550

 

 

165,800

 

Payments of long-term debt

 

(148,450)

 

 

(279,191)

 

Proceeds from the exercise of stock options

 

151

 

 

117

 

Withholding tax payments on restricted and performance stock units converted

 

(4,154)

 

 

 

Net cash used in financing activities

 

(6,903)

 

 

(113,274)

 

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

 

(3,163)

 

 

29

 

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

(4,449)

 

 

(11,795)

 

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

77,696

 

 

85,727

 

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

$

73,247

 

 

$

73,932

 

CIRCOR INTERNATIONAL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands) (unaudited)

 

 

 

October 3, 2021

 

December 31, 2020

ASSETS

 

 

 

CURRENT ASSETS:

 

 

 

Cash and cash equivalents

$

71,969

 

 

$

76,452

 

Trade accounts receivable, less allowance for doubtful accounts of $8,374
and $9,035 at October 3, 2021 and December 31, 2020, respectively

93,222

 

 

102,730

 

Inventories

132,242

 

 

129,084

 

Prepaid expenses and other current assets

118,783

 

 

93,226

 

Assets held for sale

 

 

5,073

 

Total Current Assets

 

416,216

 

 

406,565

 

PROPERTY, PLANT AND EQUIPMENT, NET

158,327

 

 

168,763

 

OTHER ASSETS:

 

 

 

Goodwill

155,739

 

 

158,944

 

Intangibles, net

315,452

 

 

353,595

 

Deferred income taxes

761

 

 

779

 

Other assets

43,780

 

 

41,882

 

TOTAL ASSETS

$

1,090,275

 

 

$

1,130,528

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

CURRENT LIABILITIES:

 

 

 

Accounts payable

$

72,883

 

 

$

61,236

 

Accrued expenses and other current liabilities

74,357

 

 

75,624

 

Accrued compensation and benefits

32,454

 

 

28,332

 

Total Current Liabilities

 

179,694

 

 

165,192

 

LONG-TERM DEBT

507,093

 

 

507,888

 

DEFERRED INCOME TAXES

26,767

 

 

28,980

 

PENSION LIABILITY, NET

152,322

 

 

163,642

 

OTHER NON-CURRENT LIABILITIES

39,855

 

 

58,785

 

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; 21,627,259
and 21,373,813 issued at October 3, 2021 and December 31, 2020 respectively

217

 

 

214

 

Additional paid-in capital

453,761

 

 

452,728

 

(Accumulated deficit) retained earnings

(107,996)

 

 

(86,461)

 

Common treasury stock, at cost (1,372,488 shares at October 3,
2021 and December 31, 2020)

(74,472)

 

 

(74,472)

 

Accumulated other comprehensive loss, net of tax

(86,966)

 

 

(85,968)

 

Total Shareholders' Equity

 

184,544

 

 

206,041

 

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

1,090,275

 

 

$

1,130,528

 

CIRCOR INTERNATIONAL, INC.

SUMMARY OF ORDERS AND BACKLOG

(in millions) (unaudited)

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

 

October 3,
2021

 

September 27,
2020

 

October 3,
2021

 

September 27,
2020

 

 

 

 

 

 

 

 

 

 

 

ORDERS (1)

 

 

 

 

 

 

 

 

 

 

Aerospace & Defense

 

$

54.0

 

 

$

59.1

 

 

$

181.3

 

 

$

207.8

 

 

 

Industrial

 

139.7

 

 

107.5

 

 

449.3

 

 

359.9

 

 

 

Total Orders

 

$

193.7

 

 

$

166.6

 

 

$

630.6

 

 

$

567.7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

October 3,
2021

 

September 27,
2020

 

 

 

 

BACKLOG (2)

 

 

 

 

 

 

 

 

 

 

Aerospace & Defense

 

$

179.7

 

 

$

211.4

 

 

 

 

 

 

 

Industrial

 

254.9

 

 

204.0

 

 

 

 

 

 

 

Total Backlog

 

$

434.6

 

 

$

415.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 nine months ended September 27, 2020 include orders from businesses divested prior to September 27, 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

3RD QTR

TOTAL

ORDERS

 

 

 

 

 

 

 

 

 

 

Aerospace & Defense

 

$

72,031

 

$

76,616

 

$

59,105

 

$

46,796

 

$

254,548

 

$

72,999

 

$

54,243

 

$

54,028

 

$

181,270

 

Industrial

 

136,443

 

116,023

 

107,453

 

121,690

 

481,609

 

153,695

 

155,959

 

139,691

 

449,345

 

Total

 

$

208,474

 

$

192,639

 

$

166,558

 

$

168,486

 

$

736,157

 

$

226,693

 

$

210,203

 

$

193,719

 

$

630,615

 

 

 

 

 

 

 

 

 

 

 

 

NET REVENUES

 

 

 

 

 

 

 

 

 

 

Aerospace & Defense

 

$

65,493

 

$

62,241

 

$

62,249

 

$

77,839

 

$

267,822

 

$

60,001

 

$

60,761

 

$

61,484

 

$

182,246

 

Industrial

 

126,720

 

123,825

 

124,391

 

130,513

 

505,449

 

120,654

 

129,585

 

129,298

 

379,537

 

Total

 

$

192,213

 

$

186,066

 

$

186,640

 

$

208,352

 

$

773,271

 

$

180,655

 

$

190,346

 

$

190,782

 

$

561,783

 

 

 

 

 

 

 

 

 

 

 

 

SEGMENT OPERATING INCOME

 

 

 

 

 

 

 

 

 

 

Aerospace & Defense

 

$

12,494

 

$

13,142

 

$

14,782

 

$

18,675

 

$

59,093

 

$

10,706

 

$

12,095

 

$

14,868

 

$

37,668

 

Industrial

 

5,169

 

12,406

 

9,807

 

12,441

 

39,823

 

9,735

 

10,400

 

11,268

 

31,403

 

Corporate expenses

 

(6,588)

 

(9,664)

 

(7,244)

 

(7,789)

 

(31,285)

 

(8,002)

 

(7,850)

 

(6,878)

 

(22,726)

 

Total

 

$

11,075

 

$

15,884

 

$

17,345

 

$

23,327

 

$

67,631

 

$

12,439

 

$

14,645

 

$

19,258

 

$

46,345

 

 

 

 

 

 

 

 

 

 

 

 

SEGMENT OPERATING MARGIN %

 

 

 

 

 

 

 

 

 

 

Aerospace & Defense

 

19.1

%

21.1

%

23.7

%

24.0

%

22.1

%

17.8

%

19.9

%

24.2

%

20.7

%

Industrial

 

4.1

%

10.0

%

7.9

%

9.5

%

7.9

%

8.1

%

8.0

%

8.7

%

8.3

%

Total

 

5.8

%

8.5

%

9.3

%

11.2

%

8.7

%

6.9

%

7.7

%

10.1

%

8.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

2020

2021

Results of divested businesses (1)

 

1ST QTR

2ND QTR

3RD QTR

4TH QTR

TOTAL

1ST QTR

2ND QTR

3RD QTR

TOTAL

ORDERS - Industrial

 

$

4,449

 

$

 

$

 

$

 

$

4,449

 

$

 

$

 

$

 

$

 

NET REVENUES - Industrial

 

$

4,900

 

$

 

$

 

$

 

$

4,900

 

$

 

$

 

$

 

$

 

SEGMENT OP. INC. -Industrial

 

$

 

$

 

$

 

$

 

$

 

$

 

$

 

$

 

$

 

(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.

SUPPLEMENTAL INFORMATION REGARDING DIVESTED BUSINESS

(in thousands, except percentages) (unaudited)

 

 

 

 

2020

2021

 

Results excluding divested businesses

1ST QTR

2ND QTR

3RD QTR

4TH QTR

TOTAL

1ST QTR

2ND QTR

3RD QTR

TOTAL

 

ORDERS

 

 

 

 

 

 

 

 

 

 

Aerospace & Defense

$72,031

$76,616

$59,105

$46,796

$254,548

$72,999

$54,243

$54,028

$181,270

 

Industrial

131,994

116,023

107,453

121,690

477,160

153,695

155,959

139,691

449,345

 

Total

$204,025

$192,639

$166,558

$168,486

$731,708

$226,693

$210,203

$193,719

$630,615

 

 

 

 

 

 

 

 

 

 

 

 

 

NET REVENUES

 

 

 

 

 

 

 

 

 

 

Aerospace & Defense

$65,493

$62,241

$62,249

$77,839

$267,822

$60,001

$60,761

$61,484

$182,246

 

Industrial

121,820

123,825

124,391

130,513

500,549

120,654

129,585

129,298

379,537

 

Total

$187,313

$186,066

$186,640

$208,352

$768,371

$180,655

$190,346

$190,782

$561,783

 

 

 

 

 

 

 

 

 

 

 

 

 

SEGMENT OPERATING INCOME

 

 

 

 

 

 

 

 

 

 

Aerospace & Defense

$12,494

$13,142

$14,782

$18,675

$59,093

$10,706

$12,095

$14,868

$37,668

 

Industrial

5,169

12,406

9,807

12,441

39,823

9,735

10,400

11,268

31,403

 

Corporate expenses

(6,588)

(9,664)

(7,244)

(7,789)

(31,285)

(8,002)

(7,850)

(6,878)

(22,726)

 

Total

$11,075

$15,884

$17,345

$23,327

$67,631

$12,439

$14,645

$19,258

$46,345

 

 

 

 

 

 

 

 

 

 

 

 

 

SEGMENT OPERATING MARGIN %

 

 

 

 

 

 

 

 

 

 

Aerospace & Defense

19.1%

21.1%

23.7%

24.0%

22.1%

17.8%

19.9%

24.2%

20.7%

 

Industrial

4.2%

10.0%

7.9%

9.5%

8.0%

8.1%

8.0%

8.7%

8.3%

 

Total

5.9%

8.5%

9.3%

11.2%

8.8%

6.9%

7.7%

10.1%

8.2%

 

 

 

 

 

 

 

 

 

 

 

 

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

3RD QTR

TOTAL

 

 

 

 

 

 

 

 

 

 

 

Net Cash (Used In) Provided By Operating Activities

 

$(23,947)

$(24,883)

$2,465

$23,641

$(22,724)

$(17,703)

$

10,984

 

$

11,389

 

$

4,670

 

LESS

 

 

 

 

 

 

 

 

 

 

Capital expenditures, net of sale proceeds (a)

 

3,412

3,527

2,330

3,275

12,544

3,392

2,644

 

4,541

 

10,577

 

FREE CASH FLOW

 

$(27,359)

$(28,410)

$135

$20,366

$(35,268)

$(21,095)

$

8,340

 

$

6,848

 

$

(5,907)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Debt

 

$602,288

$592,038

$540,463

$519,938

$519,938

$536,938

$

523,038

 

$

517,038

 

$

517,038

 

Less: Cash & Cash equivalents

 

170,861

125,421

72,772

76,452

76,452

75,680

72,181

 

71,969

 

71,969

 

GROSS DEBT, NET OF CASH

 

$431,427

$466,617

$467,691

$443,486

$443,486

$461,258

$

450,857

 

$

445,069

 

$

445,069

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL SHAREHOLDERS' EQUITY

 

$290,845

$273,351

$220,814

$206,041

$206,041

$196,106

$

183,039

 

$

184,544

 

$

184,544

 

 

 

 

 

 

 

 

 

 

 

 

GROSS DEBT AS % OF EQUITY

 

207%

217%

245%

252%

252%

274%

286

%

280

%

280

%

GROSS DEBT, NET OF CASH AS % OF EQUITY

 

148%

171%

212%

215%

215%

235%

246

%

241

%

241

%

 

 

 

 

 

 

 

 

 

 

 

(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

3RD QTR

TOTAL

NET (LOSS) INCOME

 

$

(78,948)

 

$

(34,092)

 

$

(58,524)

 

$

(13,934)

 

$

(185,498)

 

$

(7,119)

 

$

(15,563)

 

$

1,147

 

$

(21,535)

 

LESS:

 

 

 

 

 

 

 

 

 

 

Restructuring related inventory charges

 

(602)

 

 

351

 

 

(251)

 

 

958

 

(60)

 

899

 

Restructuring charges, net

 

2,883

 

588

 

502

 

972

 

4,945

 

2,060

 

2,281

 

(312)

 

4,029

 

Acquisition amortization

 

10,218

 

10,681

 

10,625

 

10,939

 

42,463

 

10,487

 

10,498

 

10,416

 

31,401

 

Acquisition depreciation

 

974

 

980

 

1,011

 

1,021

 

3,986

 

2,375

 

1,326

 

1,412

 

5,113

 

Special (recoveries) charges, net

 

(45,175)

 

5,019

 

436

 

473

 

(39,247)

 

(2,869)

 

4,522

 

1,126

 

2,779

 

Goodwill Impairment charge

 

116,182

 

 

 

 

116,182

 

 

 

 

 

Income tax impact

 

7,704

 

(22,549)

 

53,240

 

13,125

 

51,521

 

(335)

 

2,266

 

(860)

 

1,071

 

Net loss (income) from discontinued operations

 

(9,162)

 

43,847

 

(341)

 

795

 

35,140

 

239

 

878

 

(2,510)

 

(1,393)

 

ADJUSTED NET INCOME

 

$

4,074

 

$

4,475

 

$

7,300

 

$

13,390

 

$

29,240

 

$

4,838

 

$

7,165

 

$

10,359

 

$

22,363

 

 

 

 

 

 

 

 

 

 

 

 

(LOSS) EARNINGS PER COMMON SHARE (Diluted)

 

$

(3.96)

 

$

(1.68)

 

$

(2.93)

 

$

(0.70)

 

$

(9.28)

 

$

(0.35)

 

$

(0.77)

 

$

0.06

 

$

(1.05)

 

LESS:

 

 

 

 

 

 

 

 

 

 

Restructuring related inventory charges

 

(0.03)

 

 

0.02

 

 

(0.01)

 

 

0.05

 

 

0.04

 

Restructuring charges, net

 

0.14

 

0.03

 

0.02

 

0.05

 

0.25

 

0.10

 

0.11

 

(0.02)

 

0.20

 

Acquisition amortization

 

0.51

 

0.53

 

0.53

 

0.55

 

2.13

 

0.52

 

0.52

 

0.51

 

1.53

 

Acquisition depreciation

 

0.05

 

0.05

 

0.05

 

0.05

 

0.20

 

0.12

 

0.07

 

0.07

 

0.25

 

Special (recoveries) charges, net

 

(2.27)

 

0.25

 

0.02

 

0.02

 

(1.96)

 

(0.14)

 

0.22

 

0.05

 

0.14

 

Impairment charge

 

5.83

 

 

 

 

5.81

 

 

 

 

 

Income tax impact

 

0.39

 

(1.11)

 

2.66

 

0.66

 

2.58

 

(0.02)

 

0.11

 

(0.04)

 

0.05

 

(Loss) earnings) per share from discontinued operations

 

(0.46)

 

2.16

 

(0.02)

 

0.04

 

1.76

 

0.01

 

0.04

 

(0.12)

 

(0.07)

 

ADJUSTED EARNINGS PER SHARE (Diluted)

 

$

0.20

 

$

0.22

 

$

0.36

 

$

0.66

 

$

1.43

 

$

0.24

 

$

0.35

 

$

0.50

 

$

1.09

 

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

3RD QTR

TOTAL

 

 

 

 

 

 

 

 

 

 

 

NET (LOSS) INCOME

 

$

(78,948)

 

$

(34,092)

 

$

(58,524)

 

$

(13,934)

 

$

(185,498)

 

$

(7,119)

 

$

(15,563)

 

$

1,147

 

$

(21,535)

 

LESS:

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

9,011

 

8,486

 

8,202

 

8,520

 

34,219

 

8,369

 

7,957

 

7,997

 

24,323

 

Depreciation

 

5,121

 

4,958

 

4,802

 

5,504

 

20,385

 

6,509

 

5,461

 

5,535

 

17,505

 

Amortization

 

10,516

 

10,976

 

10,925

 

11,245

 

43,662

 

10,696

 

10,657

 

10,576

 

31,929

 

Provision for income taxes

 

8,374

 

(21,769)

 

54,318

 

15,299

 

56,222

 

400

 

2,961

 

(92)

 

3,268

 

Loss (income) from discontinued operations

 

(9,162)

 

43,847

 

(341)

 

795

 

35,140

 

239

 

878

 

(2,510)

 

(1,393)

 

EBITDA

 

$

(55,088)

 

$

12,406

 

$

19,383

 

$

27,429

 

$

4,130

 

$

19,094

 

$

12,351

 

$

22,653

 

$

54,097

 

LESS:

 

 

 

 

 

 

 

 

 

 

Restructuring related inventory charges (recoveries)

 

(602)

 

 

351

 

 

(251)

 

 

958

 

(60)

 

899

 

Restructuring charges, net

 

2,883

 

588

 

502

 

972

 

4,945

 

2,060

 

2,281

 

(312)

 

4,029

 

Special (recoveries) charges, net

 

(45,175)

 

5,019

 

436

 

473

 

(39,247)

 

(2,869)

 

4,522

 

1,126

 

2,779

 

Goodwill impairment charge

 

116,182

 

 

 

 

116,182

 

 

 

 

 

ADJUSTED EBITDA

 

$

18,200

 

$

18,013

 

$

20,671

 

$

28,873

 

$

85,758

 

$

18,285

 

$

20,112

 

$

23,407

 

$

61,804

 

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

3RD QTR

TOTAL

 

 

 

 

 

 

 

 

 

 

 

GAAP OPERATING INCOME (LOSS)

 

$

(73,405)

 

$

(1,384)

 

$

4,420

 

$

9,923

 

$

(60,446)

 

$

386

 

$

(4,940)

 

$

6,676

 

$

2,122

 

LESS:

 

 

 

 

 

 

 

 

 

 

Restructuring related inventory charges (recoveries)

 

(602)

 

 

351

 

 

(251)

 

 

958

 

(60)

 

899

 

Amortization of inventory step-up

 

 

 

 

 

 

 

 

 

 

Restructuring charges, net

 

2,883

 

588

 

502

 

972

 

4,945

 

2,060

 

2,281

 

(312)

 

4,029

 

Acquisition amortization

 

10,218

 

10,681

 

10,625

 

10,939

 

42,463

 

10,487

 

10,498

 

10,416

 

31,402

 

Acquisition depreciation

 

974

 

980

 

1,011

 

1,021

 

3,986

 

2,375

 

1,326

 

1,412

 

5,114

 

Special (recoveries) charges, net

 

(45,175)

 

5,019

 

436

 

473

 

(39,247)

 

(2,869)

 

4,522

 

1,126

 

2,779

 

Goodwill impairment charge

 

116,182

 

 

 

 

116,182

 

 

 

 

 

ADJUSTED OPERATING INCOME

 

$

11,075

 

$

15,884

 

$

17,345

 

$

23,327

 

$

67,631

 

$

12,439

 

$

14,645

 

$

19,258

 

$

46,345

 

 

 

 

 

 

 

 

 

 

 

 

GAAP OPERATING MARGIN

 

(38.2)

%

(0.7)

%

2.4

%

4.8

%

(7.8)

%

0.2

%

(2.7)

%

3.5

%

0.4

%

LESS:

 

 

 

 

 

 

 

 

 

 

Restructuring related inventory charges (recoveries)

 

(0.3)

%

%

0.2

%

%

%

%

0.5

%

%

0.2

%

Amortization of inventory step-up

 

%

%

%

%

%

%

%

%

%

Restructuring charges, net

 

1.5

%

0.3

%

0.3

%

0.5

%

0.6

%

1.1

%

1.3

%

(0.2)

%

0.7

%

Acquisition amortization

 

5.3

%

5.7

%

5.7

%

5.3

%

5.5

%

5.8

%

5.8

%

5.5

%

5.6

%

Acquisition depreciation

 

0.5

%

0.5

%

0.5

%

0.5

%

0.5

%

1.3

%

0.7

%

0.7

%

0.9

%

Special (recoveries) charges, net

 

(23.5)

%

2.7

%

0.2

%

0.2

%

(5.1)

%

(1.6)

%

2.5

%

0.6

%

0.5

%

Goodwill impairment charge

 

60.4

%

%

%

%

15.0

%

%

%

%

%

ADJUSTED OPERATING MARGIN

 

5.8

%

8.5

%

9.3

%

11.2

%

8.7

%

6.9

%

8.1

%

10.1

%

8.2

%

 

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

Source: CIRCOR International, Inc.