DELAWARE | 001-14962 | 04-3477276 | ||
(State or other jurisdiction of incorporation) | (Commission file number) | (IRS employer identification no.) |
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Emerging Growth Company | ¨ |
¨ |
• | Adjusted operating income is defined as GAAP operating income excluding intangible amortization from acquisitions completed subsequent to December 31, 2011, depreciation and cost of goods sold charges related to step-up valuations from acquisitions completed subsequent to December 31, 2016, the impact of restructuring related inventory, impairment and special charges or gains. |
• | Adjusted operating margin is defined as adjusted operating income divided by net revenues. |
• | Free cash flow is defined as net cash flow from operating activities, less net capital expenditures. Management of this Company believes free cash flow is an important measure of its liquidity as well as its ability to service long-term debt, fund future growth and to provide a return to shareholders. We also believe this free cash flow definition does not have any material limitations. |
• | Adjusted net income is defined as net income, excluding intangible amortization from acquisitions completed subsequent to December 31, 2011, depreciation and cost of goods sold charges related to step-up valuations from acquisitions completed subsequent to December 31, 2016, the impact of restructuring related inventory, impairment and special charges or gains, net of tax. |
• | Adjusted EPS is defined as earnings per common share diluted, excluding the per share impact of intangible amortization from acquisitions completed subsequent to December 31, 2011, depreciation and cost of goods sold charges related to step-up valuations from acquisitions completed subsequent to December 31, 2016, the impact of restructuring related inventory, impairment and special charges or gains, net of tax. |
• | EBITDA is defined as net income plus net interest expense, provision for income taxes, depreciation and amortization. |
• | Adjusted EBITDA is defined as EBITDA plus the impact of special charges/gains including the impact of restructuring related inventory charges, cost of goods sold charges related to step-up valuations from acquisitions completed subsequent to December 31, 2016, and impairments, net of tax. |
• | Net Debt is defined at total debt minus cash and cash equivalents. |
• | Organic growth - the change in revenue and orders excluding the impact of acquisitions, divestitures and changes in foreign exchange rates. |
• | We exclude costs and tax effects associated with restructuring activities, such as reducing overhead and consolidating facilities. We believe that the costs related to these restructuring activities are not indicative of our normal operating costs. |
• | We exclude certain acquisition-related costs, including significant transaction costs and the related tax effects. We exclude these costs because we do not believe they are indicative of our normal operating costs. |
• | We exclude the expense and tax effects associated with the non-cash amortization of acquisition-related intangible assets because a significant portion of the purchase price for acquisitions may be allocated to intangible assets that have lives of 5 to 20 years. Exclusion of the non-cash amortization expense allows comparisons of operating results that are consistent over time for both our newly acquired and long-held businesses and with both acquisitive and non-acquisitive peer companies. |
• | We also exclude certain gains/losses and related tax effects, which are either isolated or cannot be expected to occur again with any predictability, and that we believe are not indicative of our normal operating gains and losses. For example, we exclude gains/losses from items such as the sale of a business, significant litigation-related matters and lump-sum pension plan settlements. |
(d) | Exhibits. |
Exhibit No. | Description |
Title: | Senior Vice President and Corporate Controller |
• | Orders of $276 million and Revenue of $270 million |
• | Orders in A&D grew 57% year-over-year |
• | GAAP Operating Margin of 1.5%, down 120 bps year over year; 280 bps sequentially |
• | GAAP Loss per Share of $(0.93) |
• | $0.45 Adjusted Earnings per Share; $0.56 excluding Engineered Valves |
• | Adjusted Operating Margin of 8.7%, up 50 bps year-over-year; 120 bps sequentially |
• | Completed divestiture of non-core Engineered Valves in July |
• | Adjusted Operating Margin of 10.0% excluding Engineered Valves |
• | Industrial Segment Operating Margin of 13.5%, up 200 bps year-over-year; 380 bps sequentially |
• | A&D Segment Operating Margin of 16.1%, up 390 bps year-over-year; 80 bps sequentially |
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 the reported orders and revenues. Divested businesses include Reliability Services (Energy) and Delden (Industrial), which were sold before Q2 2019. No adjustment has been made for Engineered Valves which was sold in Q3 2019. |
2. | Adjusted Consolidated and Segment Results for Q2 2019 exclude non-cash acquisition-related intangible amortization, special and restructuring charges totaling $19.5 million ($23.2 million, net of tax). These charges include: (i) $12.4 million charge for non-cash acquisition-related intangible amortization and depreciation expense; (ii ) $2.1 million of professional fees associated with an unsolicited tender offer to acquire all outstanding shares of the Company’s common stock; (iii) $1.3 million for restructuring-related inventory charges; (iv) $1.1 million loss associated with divested businesses; and (v) $2.6 million of other special and restructuring charges. Adjusted Consolidated and Segment Results for Q2 2018 exclude non-cash acquisition-related intangible amortization, special and restructuring charges totaling $16.6 million ($5.5 million, net of tax). These charges include: (i) $13.5 million charge for non-cash acquisition-related intangible amortization expense and amortization of the step-up in fixed asset values; (ii) $1.9 million charge related to restructuring activities, primarily severance, related to our Engineered Valves, Reliability Services and Germany-based Pumps business; and (iii) $1.2 million primarily related to the separation of the Fluid Handling business from Colfax Corporation and exiting a product line. |
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. |
• | 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 completed prior to June 30, 2019 were completed on January 1, 2018 and excluding the impact of changes in foreign currency exchange rates. |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, 2019 | July 1, 2018 | June 30, 2019 | July 1, 2018 | ||||||||||||
Net revenues | $ | 269,607 | $ | 301,368 | $ | 540,002 | $ | 576,948 | |||||||
Cost of revenues | 191,079 | 213,117 | 387,605 | 412,393 | |||||||||||
GROSS PROFIT | 78,528 | 88,251 | 152,397 | 164,555 | |||||||||||
Selling, general and administrative expenses | 69,408 | 77,999 | 139,380 | 155,237 | |||||||||||
Special and restructuring charges (recoveries), net | 4,992 | 2,000 | (2,823 | ) | 14,446 | ||||||||||
OPERATING INCOME (LOSS) | 4,128 | 8,252 | 15,840 | (5,128 | ) | ||||||||||
Other expense (income): | |||||||||||||||
Interest expense, net | 12,856 | 13,755 | 26,035 | 25,556 | |||||||||||
Other expense (income), net | 81 | (3,759 | ) | (1,832 | ) | (5,620 | ) | ||||||||
TOTAL OTHER EXPENSE, NET | 12,937 | 9,996 | 24,203 | 19,936 | |||||||||||
LOSS BEFORE INCOME TAXES | (8,809 | ) | (1,744 | ) | (8,363 | ) | (25,064 | ) | |||||||
Provision for (benefit from) income taxes | 9,711 | (7,646 | ) | 14,790 | (13,525 | ) | |||||||||
NET (LOSS) INCOME | $ | (18,520 | ) | $ | 5,902 | $ | (23,153 | ) | $ | (11,539 | ) | ||||
(Loss) earnings per common share: | |||||||||||||||
Basic | $ | (0.93 | ) | $ | 0.30 | $ | (1.16 | ) | $ | (0.58 | ) | ||||
Diluted | $ | (0.93 | ) | $ | 0.30 | $ | (1.16 | ) | $ | (0.58 | ) | ||||
Weighted average number of common shares outstanding: | |||||||||||||||
Basic | 19,906 | 19,836 | 19,888 | 19,821 | |||||||||||
Diluted | 19,906 | 20,005 | 19,888 | 19,821 |
Six Months Ended | |||||||
OPERATING ACTIVITIES | June 30, 2019 | July 1, 2018 | |||||
Net loss | $ | (23,153 | ) | $ | (11,539 | ) | |
Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||
Depreciation | 12,173 | 14,491 | |||||
Amortization | 24,355 | 24,611 | |||||
Bad debt expense | 75 | 903 | |||||
Loss on write down of inventory | 6,620 | 4,076 | |||||
Amortization of inventory fair value step-up | — | 6,600 | |||||
Compensation expense for share-based plans | 3,132 | 2,866 | |||||
Amortization of debt issuance costs | 1,997 | 2,008 | |||||
Loss on sale or write-down of property, plant and equipment | (826 | ) | 1,037 | ||||
Gain on sale of business | (9,165 | ) | — | ||||
Changes in operating assets and liabilities, net of effects of acquisition and disposition: | |||||||
Trade accounts receivable | 13,570 | 13,163 | |||||
Inventories | (15,048 | ) | (14,824 | ) | |||
Prepaid expenses and other assets | (5,363 | ) | (16,617 | ) | |||
Accounts payable, accrued expenses and other liabilities | (18,406 | ) | (27,385 | ) | |||
Net cash used in operating activities | (10,039 | ) | (610 | ) | |||
INVESTING ACTIVITIES | |||||||
Additions to property, plant and equipment | (7,542 | ) | (11,879 | ) | |||
Proceeds from the sale of property, plant and equipment | 858 | 175 | |||||
Proceeds from the sale of business, net | 82,203 | — | |||||
Business acquisition, working capital consideration adjustment | — | 6,300 | |||||
Net cash provided by (used in) investing activities | 75,519 | (5,404 | ) | ||||
FINANCING ACTIVITIES | |||||||
Proceeds from long-term debt | 149,500 | 136,600 | |||||
Payments of long-term debt | (208,300 | ) | (105,511 | ) | |||
Proceeds from the exercise of stock options | 106 | 440 | |||||
Return of cash to Fluid Handling Seller | — | (61,201 | ) | ||||
Net cash used in financing activities | (58,694 | ) | (29,672 | ) | |||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | 793 | (5,785 | ) | ||||
INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH | 7,579 | (41,471 | ) | ||||
Cash, cash equivalents, and restricted cash at beginning of period | 69,525 | 112,293 | |||||
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF PERIOD | $ | 77,104 | $ | 70,822 |
June 30, 2019 | December 31, 2018 | ||||||
ASSETS | |||||||
CURRENT ASSETS: | |||||||
Cash and cash equivalents | $ | 76,082 | $ | 68,517 | |||
Trade accounts receivable, less allowance for doubtful accounts of $4,695 and $6,735 at June 30, 2019 and December 31, 2018, respectively | 166,623 | 183,552 | |||||
Inventories | 226,953 | 217,378 | |||||
Prepaid expenses and other current assets | 99,012 | 90,659 | |||||
Assets held for sale | 4,520 | 87,940 | |||||
Total Current Assets | 573,190 | 648,046 | |||||
PROPERTY, PLANT AND EQUIPMENT, NET | 194,932 | 201,799 | |||||
OTHER ASSETS: | |||||||
Goodwill | 461,771 | 459,205 | |||||
Intangibles, net | 410,957 | 441,302 | |||||
Deferred income taxes | 31,548 | 28,462 | |||||
Other assets | 40,299 | 12,798 | |||||
TOTAL ASSETS | $ | 1,712,697 | $ | 1,791,612 | |||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
CURRENT LIABILITIES: | |||||||
Accounts payable | $ | 118,648 | $ | 123,881 | |||
Accrued expenses and other current liabilities | 107,445 | 107,312 | |||||
Accrued compensation and benefits | 30,314 | 33,878 | |||||
Current portion of long-term debt | — | 7,850 | |||||
Liabilities held for sale | — | 11,141 | |||||
Total Current Liabilities | 256,407 | 284,062 | |||||
LONG-TERM DEBT | 728,653 | 778,187 | |||||
DEFERRED INCOME TAXES | 38,232 | 33,932 | |||||
PENSION LIABILITY, NET | 149,204 | 150,623 | |||||
OTHER NON-CURRENT LIABILITIES | 45,302 | 15,815 | |||||
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; 19,900,885 and 19,845,205 shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively | 212 | 212 | |||||
Additional paid-in capital | 444,109 | 440,890 | |||||
Retained earnings | 210,065 | 232,102 | |||||
Common treasury stock, at cost (1,372,488 shares at June 30, 2019 and December 31, 2018) | (74,472 | ) | (74,472 | ) | |||
Accumulated other comprehensive loss, net of tax | (85,015 | ) | (69,739 | ) | |||
Total Shareholders’ Equity | 494,899 | 528,993 | |||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 1,712,697 | $ | 1,791,612 |
CIRCOR INTERNATIONAL, INC. SUMMARY OF ORDERS AND BACKLOG (in millions) UNAUDITED | |||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, 2019 | July 1, 2018 | June 30, 2019 | July 1, 2018 | ||||||||||||
ORDERS (1) | |||||||||||||||
Energy | $ | 62.2 | $ | 113.2 | $ | 130.0 | $ | 242.9 | |||||||
Aerospace & Defense | 93.4 | 59.4 | 181.5 | 119.2 | |||||||||||
Industrial | 120.7 | 136.7 | 244.4 | 273.4 | |||||||||||
Total orders | $ | 276.3 | $ | 309.3 | $ | 555.9 | $ | 635.5 | |||||||
BACKLOG (2) | June 30, 2019 | July 1, 2018 | |||||||||||||
Energy | $ | 116.2 | $ | 217.7 | |||||||||||
Aerospace & Defense | 235.0 | 152.1 | |||||||||||||
Industrial | 175.7 | 167.3 | |||||||||||||
Total backlog | $ | 526.9 | $ | 537.1 | |||||||||||
Note 1: Orders do not include the foreign exchange impact due to the re-measurement of customer order backlog amounts denominated in foreign currencies. Q2 2018 orders include $22.8 million, related to businesses divested prior to June 30, 2019 (Reliability Services and Delden). | |||||||||||||||
Note 2: Backlog includes unshipped customer orders for which revenue has not been recognized. Backlog at Q2 2018 includes $29.0 million related to businesses divested prior to June 30, 2019 (Reliability Services and Delden). |
CIRCOR INTERNATIONAL, INC. SEGMENT INFORMATION (in thousands, except percentages) UNAUDITED | ||||||||||||||||||||||||
2018 | 2019 | |||||||||||||||||||||||
1ST QTR | 2ND QTR | 3RD QTR | 4TH QTR | TOTAL | 1ST QTR | 2ND QTR | TOTAL | |||||||||||||||||
ORDERS | ||||||||||||||||||||||||
Energy | $ | 129,762 | $ | 113,171 | $ | 110,987 | $ | 97,990 | $ | 451,910 | $ | 67,770 | $ | 62,239 | $ | 130,009 | ||||||||
Aerospace & Defense | 59,793 | 59,441 | 81,533 | 76,702 | 277,469 | 88,107 | 93,405 | 181,512 | ||||||||||||||||
Industrial | 136,607 | 136,746 | 114,876 | 121,886 | 510,115 | 123,746 | 120,660 | 244,406 | ||||||||||||||||
Total | $ | 326,162 | $ | 309,358 | $ | 307,396 | $ | 296,578 | $ | 1,239,494 | $ | 279,623 | $ | 276,304 | $ | 555,927 | ||||||||
NET REVENUES | ||||||||||||||||||||||||
Energy | $ | 99,972 | $ | 112,804 | $ | 121,023 | $ | 117,433 | $ | 451,232 | $ | 98,417 | $ | 85,591 | $ | 184,008 | ||||||||
Aerospace & Defense | 58,477 | 57,500 | 57,757 | 63,283 | 237,017 | 61,240 | 64,694 | 125,934 | ||||||||||||||||
Industrial | 117,131 | 131,064 | 118,734 | 120,647 | 487,576 | 110,738 | 119,322 | 230,060 | ||||||||||||||||
Total | $ | 275,580 | $ | 301,368 | $ | 297,514 | $ | 301,363 | $ | 1,175,825 | $ | 270,395 | $ | 269,607 | $ | 540,002 | ||||||||
SEGMENT OPERATING INCOME | ||||||||||||||||||||||||
Energy | $ | 5,696 | $ | 9,242 | $ | 9,163 | $ | 9,396 | $ | 33,497 | $ | 6,783 | $ | 3,498 | $ | 10,281 | ||||||||
Aerospace & Defense | 8,931 | 6,992 | 8,709 | 11,415 | 36,047 | 9,374 | 10,443 | 19,817 | ||||||||||||||||
Industrial | 12,948 | 15,037 | 14,609 | 14,746 | 57,340 | 10,786 | 16,138 | 26,924 | ||||||||||||||||
Corporate expenses | (7,802 | ) | (6,448 | ) | (8,034 | ) | (8,015 | ) | (30,299 | ) | (6,703 | ) | (6,493 | ) | (13,196 | ) | ||||||||
CIRCOR Adjusted Operating Income | $ | 19,773 | $ | 24,823 | $ | 24,447 | $ | 27,542 | $ | 96,585 | $ | 20,240 | $ | 23,586 | $ | 43,826 | ||||||||
SEGMENT OPERATING MARGIN % | ||||||||||||||||||||||||
Energy | 5.7 | % | 8.2 | % | 7.6 | % | 8.0 | % | 7.4 | % | 6.9 | % | 4.1 | % | 5.6 | % | ||||||||
Aerospace & Defense | 15.3 | % | 12.2 | % | 15.1 | % | 18.0 | % | 15.2 | % | 15.3 | % | 16.1 | % | 15.7 | % | ||||||||
Industrial | 11.1 | % | 11.5 | % | 12.3 | % | 12.2 | % | 11.8 | % | 9.7 | % | 13.5 | % | 11.7 | % | ||||||||
CIRCOR Adjusted Operating Margin | 7.2 | % | 8.2 | % | 8.2 | % | 9.1 | % | 8.2 | % | 7.5 | % | 8.7 | % | 8.1 | % | ||||||||
SEGMENT OPERATING MARGIN % EXCLUDING DIVESTITURES | ||||||||||||||||||||||||
Energy | 6.7 | % | 7.5 | % | 6.0 | % | 7.8 | % | 7.0 | % | 7.1 | % | 4.1 | % | 5.7 | % | ||||||||
Aerospace & Defense | 15.3 | % | 12.2 | % | 15.1 | % | 18.0 | % | 15.2 | % | 15.3 | % | 16.1 | % | 15.7 | % | ||||||||
Industrial | 11.4 | % | 11.9 | % | 12.8 | % | 12.7 | % | 12.2 | % | 9.7 | % | 13.5 | % | 11.7 | % | ||||||||
CIRCOR Adjusted Operating Margin Excluding Divestitures (1) | 7.7 | % | 8.2 | % | 7.9 | % | 9.3 | % | 8.3 | % | 7.6 | % | 8.7 | % | 10.6 | % | ||||||||
(1) Divestitures are Reliability Services (Energy) sold in January 2019 and Delden (Industrial) sold in October 2018. The table above does not reflect the removal of the Engineered Valves business sold in July 2019. |
CIRCOR INTERNATIONAL INC. | ||||||||||||||||||||||||
SUPPLEMENTAL INFORMATION REGARDING DIVESTED BUSINESSES | ||||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
UNAUDITED | ||||||||||||||||||||||||
2018 | 2019 | |||||||||||||||||||||||
DIVESTED BUSINESSES (1) | 1st QTR | 2nd QTR | 3rd QTR | 4th QTR | Total | 1st QTR | 2nd QTR | Total | ||||||||||||||||
ORDERS | ||||||||||||||||||||||||
Energy | $ | 16,891 | $ | 18,389 | $ | 19,145 | $ | 15,451 | $ | 69,875 | $ | 4,104 | $ | — | $ | 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 | $ | — | $ | 4,104 | ||||||||
NET REVENUES | ||||||||||||||||||||||||
Energy | $ | 14,731 | $ | 17,419 | $ | 16,579 | $ | 16,885 | $ | 65,613 | $ | 3,106 | $ | — | $ | 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 | $ | — | $ | 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 | $ | — | $ | — | $ | — | ||||||||
(1) Divested businesses include Reliability Services (Energy) sold in January 2019 and Delden (Industrial) sold in October 2018. | ||||||||||||||||||||||||
ENGINEERED VALVES | ||||||||||||||||||||||||
The table above does not include the results of the Engineered Valves business in the Energy segment which was sold in July 2019. Its results are: | ||||||||||||||||||||||||
2018 | 2019 | |||||||||||||||||||||||
1st QTR | 2nd QTR | 3rd QTR | 4th QTR | Total | 1st QTR | 2nd QTR | Total | |||||||||||||||||
Orders | $ | 20,489 | $ | 21,889 | $ | 4,695 | $ | 11,324 | $ | 58,397 | $ | 7,257 | $ | 9,218 | $ | 16,475 | ||||||||
Net Revenues | 9,600 | 8,674 | 17,491 | 14,633 | 50,398 | 14,331 | 8,304 | 22,635 | ||||||||||||||||
Segment Operating Income | (1,512 | ) | (3,314 | ) | (1,996 | ) | (1,767 | ) | (8,589) | (1,569 | ) | (2,456 | ) | (4,025) |
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 | 2ND QTR | TOTAL | |||||||||||||||||
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES | $ | (145 | ) | $ | (465 | ) | $ | 24,073 | $ | 30,531 | $ | 53,994 | $ | (22,378 | ) | $ | 12,339 | $ | (10,039 | ) | ||||
LESS: | ||||||||||||||||||||||||
Capital expenditures, net of sale proceeds | 8,141 | 3,563 | 5,119 | 6,534 | 23,357 | 3,689 | 2,995 | 6,684 | ||||||||||||||||
FREE CASH FLOW | $ | (8,286 | ) | $ | (4,028 | ) | $ | 18,954 | $ | 23,997 | $ | 30,637 | $ | (26,067 | ) | $ | 9,344 | $ | (16,723 | ) | ||||
GROSS DEBT | $ | 823,665 | $ | 827,629 | $ | 831,613 | $ | 807,050 | $ | 807,050 | $ | 753,950 | $ | 748,250 | $ | 748,250 | ||||||||
LESS: Cash & cash equivalents | 123,305 | 69,030 | 71,334 | 68,517 | 68,517 | 73,619 | 76,082 | 76,082 | ||||||||||||||||
GROSS DEBT, NET OF CASH | $ | 700,360 | $ | 758,599 | $ | 760,279 | $ | 738,533 | $ | 738,533 | $ | 680,331 | $ | 672,168 | $ | 672,168 | ||||||||
TOTAL SHAREHOLDERS' EQUITY | $ | 592,096 | $ | 573,992 | $ | 574,171 | $ | 528,993 | $ | 528,993 | $ | 516,177 | $ | 494,899 | $ | 494,899 | ||||||||
GROSS DEBT AS % OF EQUITY | 139 | % | 144 | % | 145 | % | 153 | % | 153 | % | 146 | % | 151 | % | 151 | % | ||||||||
GROSS DEBT, NET OF CASH AS % OF EQUITY | 118 | % | 132 | % | 132 | % | 140 | % | 140 | % | 132 | % | 136 | % | 136 | % |
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 | 2ND QTR | TOTAL | |||||||||||||||||
NET (LOSS) INCOME | $ | (17,441 | ) | $ | 5,902 | $ | (6,841 | ) | $ | (21,005 | ) | $ | (39,385 | ) | $ | (4,633 | ) | $ | (18,520 | ) | $ | (23,153 | ) | |
LESS: | ||||||||||||||||||||||||
Restructuring related inventory charges | 473 | 1,067 | — | 862 | 2,402 | 3,143 | 2,112 | 5,255 | ||||||||||||||||
Amortization of inventory step-up | 6,600 | — | — | — | 6,600 | — | — | — | ||||||||||||||||
Restructuring charges, net | 9,615 | 844 | 1,348 | 945 | 12,752 | 863 | 1,527 | 2,390 | ||||||||||||||||
Acquisition amortization | 11,797 | 11,767 | 11,733 | 12,013 | 47,310 | 12,078 | 11,247 | 23,325 | ||||||||||||||||
Acquisition depreciation | 1,837 | 1,735 | 1,742 | 1,735 | 7,049 | 1,122 | 1,107 | 2,229 | ||||||||||||||||
Special charges (recoveries), net | 2,831 | 1,156 | 1,408 | 5,692 | 11,087 | (8,678 | ) | 3,465 | (5,213 | ) | ||||||||||||||
Income tax impact | (7,687 | ) | (11,056 | ) | 967 | 12,124 | (5,652 | ) | 3,751 | 8,164 | 11,915 | |||||||||||||
ADJUSTED NET INCOME | $ | 8,025 | $ | 11,415 | $ | 10,357 | $ | 12,366 | $ | 42,163 | $ | 7,645 | $ | 9,102 | $ | 16,748 | ||||||||
EARNINGS (LOSS) PER COMMON SHARE (Diluted) | $ | (0.88 | ) | $ | 0.30 | $ | (0.34 | ) | $ | (1.05 | ) | $ | (1.99 | ) | $ | (0.23 | ) | $ | (0.93 | ) | $ | (1.16 | ) | |
LESS: | ||||||||||||||||||||||||
Restructuring related inventory charges | 0.02 | 0.05 | — | 0.04 | 0.12 | 0.16 | 0.11 | 0.26 | ||||||||||||||||
Amortization of inventory step-up | 0.33 | — | — | — | 0.33 | — | — | — | ||||||||||||||||
Restructuring charges, net | 0.49 | 0.04 | 0.07 | 0.05 | 0.64 | 0.04 | 0.08 | 0.12 | ||||||||||||||||
Acquisition amortization | 0.60 | 0.59 | 0.59 | 0.60 | 2.37 | 0.60 | 0.57 | 1.17 | ||||||||||||||||
Acquisition depreciation | 0.09 | 0.09 | 0.09 | 0.09 | 0.35 | 0.06 | 0.06 | 0.11 | ||||||||||||||||
Special charges (recoveries), net | 0.14 | 0.06 | 0.07 | 0.29 | 0.55 | (0.43 | ) | 0.17 | (0.26 | ) | ||||||||||||||
Income tax impact | (0.39 | ) | (0.55 | ) | 0.05 | 0.61 | (0.28 | ) | 0.19 | 0.39 | 0.60 | |||||||||||||
ADJUSTED EARNINGS PER SHARE (Diluted) | $ | 0.40 | $ | 0.57 | $ | 0.52 | $ | 0.62 | $ | 2.11 | $ | 0.38 | $ | 0.45 | $ | 0.84 |
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 | 2ND QTR | TOTAL | |||||||||||||||||
NET (LOSS) INCOME | $ | (17,441 | ) | $ | 5,902 | $ | (6,841 | ) | $ | (21,005 | ) | $ | (39,385 | ) | $ | (4,633 | ) | $ | (18,520 | ) | $ | (23,153 | ) | |
LESS: | ||||||||||||||||||||||||
Interest expense, net | (11,801 | ) | (13,755 | ) | (14,100 | ) | (13,257 | ) | (52,913 | ) | (13,179 | ) | (12,856 | ) | (26,035 | ) | ||||||||
Depreciation | (7,334 | ) | (7,157 | ) | (7,065 | ) | (7,198 | ) | (28,754 | ) | (5,944 | ) | (6,229 | ) | (12,173 | ) | ||||||||
Amortization | (12,329 | ) | (12,282 | ) | (12,234 | ) | (12,410 | ) | (49,255 | ) | (12,836 | ) | (11,519 | ) | (24,355 | ) | ||||||||
Benefit from (provision for) income taxes | 5,879 | 7,646 | (2,537 | ) | (14,278 | ) | (3,290 | ) | (5,079 | ) | (9,711 | ) | (14,790 | ) | ||||||||||
EBITDA | $ | 8,144 | $ | 31,450 | $ | 29,095 | $ | 26,138 | $ | 94,827 | $ | 32,405 | $ | 21,795 | $ | 54,200 | ||||||||
LESS: | ||||||||||||||||||||||||
Restructuring related inventory charges | (473 | ) | (1,067 | ) | — | (862 | ) | (2,402 | ) | (3,143 | ) | (2,112 | ) | (5,255 | ) | |||||||||
Amortization of inventory step-up | (6,600 | ) | — | — | — | (6,600 | ) | — | — | — | ||||||||||||||
Restructuring charges, net | (9,615 | ) | (844 | ) | (1,348 | ) | (945 | ) | (12,752 | ) | (863 | ) | (1,527 | ) | (2,390 | ) | ||||||||
Special (charges) recoveries, net | (2,831 | ) | (1,156 | ) | (1,408 | ) | (5,692 | ) | (11,087 | ) | 8,678 | (3,465 | ) | 5,213 | ||||||||||
ADJUSTED EBITDA | $ | 27,663 | $ | 34,517 | $ | 31,851 | $ | 33,637 | $ | 127,668 | $ | 27,733 | $ | 28,899 | $ | 56,632 |
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 | 2ND QTR | TOTAL | |||||||||||||||||
GAAP OPERATING INCOME (LOSS) | $ | (13,380 | ) | $ | 8,252 | $ | 8,216 | $ | 6,296 | $ | 9,384 | $ | 11,712 | $ | 4,128 | $ | 15,840 | |||||||
LESS: | ||||||||||||||||||||||||
Restructuring related inventory charges | 473 | 1,067 | — | 862 | 2,402 | 3,143 | 2,112 | 5,255 | ||||||||||||||||
Amortization of inventory step-up | 6,600 | — | — | — | 6,600 | — | — | — | ||||||||||||||||
Restructuring charges, net | 9,615 | 844 | 1,348 | 945 | 12,752 | 863 | 1,527 | 2,390 | ||||||||||||||||
Acquisition amortization | 11,797 | 11,767 | 11,733 | 12,013 | 47,310 | 12,078 | 11,247 | 23,325 | ||||||||||||||||
Acquisition depreciation | 1,837 | 1,735 | 1,742 | 1,735 | 7,049 | 1,122 | 1,107 | 2,229 | ||||||||||||||||
Special charges (recoveries), net | 2,831 | 1,156 | 1,408 | 5,692 | 11,087 | (8,678 | ) | 3,465 | (5,213 | ) | ||||||||||||||
ADJUSTED OPERATING INCOME | $ | 19,773 | $ | 24,821 | $ | 24,447 | $ | 27,543 | $ | 96,584 | $ | 20,240 | $ | 23,586 | $ | 43,826 | ||||||||
GAAP OPERATING MARGIN | (4.9 | )% | 2.7 | % | 2.8 | % | 2.1 | % | 0.8 | % | 4.3 | % | 1.5 | % | 2.9 | % | ||||||||
LESS: | ||||||||||||||||||||||||
Restructuring related inventory charges | 0.2 | % | 0.4 | % | — | % | 0.3 | % | 0.2 | % | 1.2 | % | 0.8 | % | 1.0 | % | ||||||||
Amortization of inventory step-up | 2.4 | % | — | % | — | % | — | % | 0.6 | % | — | % | — | % | — | % | ||||||||
Restructuring charges, net | 3.5 | % | 0.3 | % | 0.5 | % | 0.3 | % | 1.1 | % | 0.3 | % | 0.6 | % | 0.4 | % | ||||||||
Acquisition amortization | 4.3 | % | 3.9 | % | 3.9 | % | 4.0 | % | 4.0 | % | 4.5 | % | 4.2 | % | 4.3 | % | ||||||||
Acquisition depreciation | 0.7 | % | 0.6 | % | 0.6 | % | 0.6 | % | 0.6 | % | 0.4 | % | 0.4 | % | 0.4 | % | ||||||||
Special charges (recoveries), net | 1.0 | % | 0.4 | % | 0.5 | % | 1.9 | % | 0.9 | % | (3.2 | )% | 1.3 | % | (1.0 | )% | ||||||||
ADJUSTED OPERATING MARGIN | 7.2 | % | 8.2 | % | 8.2 | % | 9.1 | % | 8.2 | % | 7.5 | % | 8.7 | % | 8.0 | % | ||||||||
Impact of Divestitures (1) | 0.5 | % | — | % | (0.3 | )% | 0.2 | % | 0.1 | % | 0.1 | % | — | % | 0.1 | % | ||||||||
ADJUSTED OPERATING MARGIN EXCLUDING DIVESTITURES (1) | 7.7 | % | 8.2 | % | 7.9 | % | 9.3 | % | 8.3 | % | 7.6 | % | 8.7 | % | 8.1 | % | ||||||||
(1) Divestitures are Reliability Services (Energy) sold in January 2019 and Delden (Industrial) sold in October 2018. The above table does not reflect the removal of Engineered Valves business sold in July 2019. |
CIRCOR INTERNATIONAL, INC. | |||||||||||||
Q2 2019 Organic Growth Calculations | |||||||||||||
(in millions, except percentages) | |||||||||||||
UNAUDITED |
Industrial | Energy | Aerospace & Defense | CIRCOR | |||||||||||||||||||||
ORDERS | $ | % | $ | % | $ | % | $ | % | ||||||||||||||||
Q2 2018 | $ | 136.7 | $ | 113.2 | $ | 59.4 | $ | 309.4 | ||||||||||||||||
Divestitures (1) | (4.5 | ) | (18.4 | ) | — | (22.9 | ) | |||||||||||||||||
Q1 2018 Excluding Divestitures | 132.3 | 94.8 | 59.4 | 286.5 | ||||||||||||||||||||
Organic | (6.9 | ) | -5% | (31.4 | ) | -33% | 35.0 | 59 | % | (3.3 | ) | -1% | ||||||||||||
FX | (4.7 | ) | -4% | (1.2 | ) | -1% | (1.0 | ) | -2% | (6.9 | ) | -2% | ||||||||||||
Total Change Excluding Divestitures | (11.6 | ) | -9% | (32.5 | ) | -34% | 34.0 | 57 | % | (10.2 | ) | -4% | ||||||||||||
Q2 2019 | $ | 120.7 | $ | 62.2 | $ | 93.4 | $ | 276.3 | ||||||||||||||||
Industrial | Energy | Aerospace & Defense | CIRCOR | |||||||||||||||||||||
NET REVENUE | $ | % | $ | % | $ | % | $ | % | ||||||||||||||||
Q2 2018 | $ | 131.1 | $ | 112.8 | $ | 57.5 | $ | 301.4 | ||||||||||||||||
Divestitures (1) | (1.5 | ) | (17.4 | ) | — | (18.9 | ) | |||||||||||||||||
2018 Excluding Divestitures | 129.6 | 95.4 | 57.5 | 282.5 | ||||||||||||||||||||
Organic | (5.4 | ) | -4% | (8.7 | ) | -9% | 8.2 | 14 | % | (6.0 | ) | -2% | ||||||||||||
FX | (4.8 | ) | -4% | (1.1 | ) | -1% | (1.0 | ) | -2% | (6.9 | ) | -2% | ||||||||||||
Total Change Excluding Divestitures | (10.2 | ) | -8% | (9.8 | ) | -10% | 7.2 | 12 | % | (12.8 | ) | -4% | ||||||||||||
Q2 2019 | $ | 119.3 | $ | 85.6 | $ | 64.7 | $ | 269.6 | ||||||||||||||||
(1) Divestitures include businesses sold prior to the end of Q2 2019 which are Reliability Services (Energy) and Delden (Industrial). Engineered Valves, which was sold in July 2019 is not reflected above as a divestiture. | ||||||||||||||||||||||||
Numbers may not add due to rounding. |