UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 30, 2022
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) | (Commission File Number) | (I.R.S. Employer Identification No.) | ||||||||||||
| | ||||||||||||||
| (Address of principal executive offices) | (Zip Code) | |||||||||||||
(781 ) 270-1200
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition.
On September 30, 2022, CIRCOR International, Inc. (the “Company”) issued a press release announcing its financial results for the quarter ended July 3, 2022. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.
The information in this Item 2.02 of Form 8-K and the Exhibits 99.1 and 99.2 attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities and Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any registration statement or other document filed under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by special reference in such filing.
Item 7.01.
Presentation slides discussing the Company's quarterly operating results are attached to this Current Report on Form 8-K, as Exhibit 99.2, and are incorporated herein by reference. The information in this Item 7.01 of Form 8-K and the attached Exhibit 99.2 shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liability that section, nor shall it be deemed incorporated by reference into any registration statement or other document filed under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by special reference in such filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit No. Description
| CIRCOR Reports Financial Results for Second Quarter Ended July 3, 2022 | |||||
| Second Quarter 2022 Investor Review Presentation | |||||
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | ||||
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | ||||
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | ||||
| 101.LAB | Inline XBRL Taxonomy Extension Labels Linkbase Document | ||||
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | ||||
| 104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) | ||||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
CIRCOR INTERNATIONAL, INC. | |||||
September 30, 2022 | /s/ Jessica W. Wenzell | ||||
Jessica W. Wenzell | |||||
General Counsel & Chief People Officer | |||||
Exhibit 99.1
CIRCOR Reports Financial Results for Second Quarter Ended July 3, 2022
•GAAP EPS of $0.19 - Up 120% YoY; Adjusted EPS of $0.32 - Up 60% YoY
•GAAP Operating Income of $11.9 Million - Up 239% YoY; Adjusted Operating Income of $16.6 Million - Up 50% YoY
•Orders down (1%) reported and up 5% organically
•Progressing with review of strategic alternatives
•Q2 10-Q filed
Burlington, Mass., September 30, 2022
CIRCOR International, Inc. (NYSE: CIR) (“CIRCOR” or “the Company”), one of the world’s leading providers of mission critical flow control products and services for the Industrial and Aerospace & Defense markets, today announced financial results for the second quarter ended July 3, 2022.
Q2 2022 Overview:
•Revenue of $191 million up 2% reported and 8% organically compared to Q2'2021
◦Aerospace & Defense revenue of $67 million, up 11% reported and 14% organically
◦Industrial revenue of $124 million, down (2%) reported and up 5% organically
•Orders of $208 million, down (1%) and up 5% organically
◦Aerospace & Defense orders of $69 million, up 27% and 32% organically
◦Industrial orders of $139 million, down (11%) and (4%) organically
•Backlog of $477 million, up 9% driven by strong demand in Industrial
•GAAP operating income of $11.9 million, up 239%
•GAAP operating margin of 6.2%, up 1080 bps
•Adjusted operating income $16.6 million, up 50%
•Adjusted operating margin of 8.7%, up 280 bps
CIRCOR President and CEO, Tony Najjar said, “Our team executed well in Q2, navigating ongoing supply chain challenges, an inflationary environment, and labor shortages. Organic orders were up 5% for the quarter and our backlog heading into the second half of the year was a robust $477 million, up 9% from prior year. Our revenues in the quarter were up 2% reported and 8% organically with solid margin expansion as a result of our simplification actions and value-based pricing initiatives.”
Mr. Najjar continued, “With today’s filing of our second-quarter 10-Q, we are very pleased to be up to date with our financial reporting. Our team has worked tirelessly to make this happen, while also making progress with our simplification and cost-out actions, and in our process to review strategic alternatives. We have been hard at work seeking to ensure that CIRCOR delivers sustained growth and margin expansion. We continue to build on our relationships with our customers, improving service levels and aftermarket product flow, while focusing on value-based pricing initiatives and leveraging 80/20 principles across the Company.”
Conference Call Information
CIRCOR International will hold a conference call to review its second-quarter 2022 financial results at 9:00 a.m. ET today, September 30, 2022. To listen to the live conference call and view the accompanying presentation slides, please visit “Webcasts & Presentations” in the “Investors” portion of CIRCOR’s website. https://investors.circor.com/. The live call also can be accessed by dialing (877) 407-5790 or (201) 689-8328. Participants are encouraged to dial in to the call at least 15 minutes prior to the start time. The webcast will be archived on the Company’s website for one year.
1
Selected Consolidated Results
(unaudited)
| ($ millions except EPS) | Q2 2022 | Q2 2021 | Change | Six Months Ended July 3, 2022 | Six Months Ended July 4, 2021 | Change | ||||||||||||||||||||||||||||||||
Revenue1 | $ | 191.4 | $ | 187.6 | 2 | % | $ | 377.0 | $ | 364.0 | 4 | % | ||||||||||||||||||||||||||
| GAAP operating (loss) income | 11.9 | (8.6) | 239 | % | 0.1 | (13.8) | 101 | % | ||||||||||||||||||||||||||||||
Adjusted operating income2 | 16.6 | 11.0 | 50 | % | 27.0 | 17.8 | 52 | % | ||||||||||||||||||||||||||||||
| GAAP operating margin | 6.2 | % | (4.6) | % | 1080 bps | 0.0 | % | (3.8) | % | 380 bps | ||||||||||||||||||||||||||||
Adjusted operating margin3 | 8.7 | % | 5.9 | % | 280 bps | 7.2 | % | 4.9 | % | 230 bps | ||||||||||||||||||||||||||||
| GAAP (loss) per share | $ | 0.19 | $ | (0.93) | 120 | % | $ | (0.86) | $ | (1.52) | 43 | % | ||||||||||||||||||||||||||
Adjusted earnings per share (diluted)4 | $ | 0.32 | $ | 0.20 | 60 | % | $ | 0.37 | $ | 0.22 | 68 | % | ||||||||||||||||||||||||||
| Operating cash flow | (3.6) | 8.9 | -141 | % | (19.5) | (10.3) | -89 | % | ||||||||||||||||||||||||||||||
Adjusted free cash flow5 | (9.1) | 6.2 | -246 | % | (28.6) | (16.4) | -74 | % | ||||||||||||||||||||||||||||||
Orders6 | $ | 208.4 | $ | 210.2 | -1 | % | $ | 430.0 | $ | 436.9 | -2 | % | ||||||||||||||||||||||||||
Segment Results
(unaudited)
| ($ in millions) | Q2 2022 | Q2 2021 | Change | Six Months Ended July 3, 2022 | Six Months Ended July 4, 2021 | Change | ||||||||||||||||||||||||||||||||
| Aerospace & Defense | ||||||||||||||||||||||||||||||||||||||
Revenue1 | $ | 67.3 | $ | 60.6 | 11 | % | $ | 130.6 | $ | 119.1 | 10 | % | ||||||||||||||||||||||||||
Segment operating income2 | 13.6 | 11.7 | 16 | % | 24.9 | 21.7 | 15 | % | ||||||||||||||||||||||||||||||
Segment operating margin3 | 20.2 | % | 19.4 | % | 80 bps | 19.0 | % | 18.2 | % | 80 bps | ||||||||||||||||||||||||||||
Orders6 | $ | 69.1 | $ | 54.2 | 27 | % | $ | 146.9 | $ | 127.2 | 15 | % | ||||||||||||||||||||||||||
| Industrial | ||||||||||||||||||||||||||||||||||||||
Revenue1 | $ | 124.1 | $ | 127.0 | -2 | % | $ | 246.4 | $ | 244.9 | 1 | % | ||||||||||||||||||||||||||
Segment operating income2 | 8.5 | 7.2 | 17 | % | 15.3 | 13.1 | 17 | % | ||||||||||||||||||||||||||||||
Segment operating margin3 | 6.8 | % | 5.7 | % | 110 bps | 6.2 | % | 5.3 | % | 90 bps | ||||||||||||||||||||||||||||
Orders6 | $ | 139.4 | $ | 156.0 | -11 | % | $ | 283.1 | $ | 309.7 | -9 | % | ||||||||||||||||||||||||||
1. Consolidated and Industrial segment revenues for Q2 2022 and Q2 2021 included $0.2 million and $3.1 million, respectively, relating to our Pipeline Engineering business.
2. Adjusted operating income is a non-GAAP financial measure. Refer to “Use of Non-GAAP Financial Measures” for an explanation of our non-GAAP financial measures and to the reconciliations included in this press release. Adjusted operating income and Industrial segment operating income for Q2 2022 and Q2 2021 included $(1.1) million and $(1.8) million, respectively, relating to our Pipeline Engineering business.
3. Adjusted operating margin is a non-GAAP financial measure. Adjusted operating margin for Q2 2022 and Q2 2021 included (492)% and (56)%, respectively, relating to our Pipeline Engineering business.
4. Adjusted earnings per share (diluted) is a non-GAAP financial measure. Adjusted earnings per share and our segment results for Q2 2022 exclude net loss from non-cash acquisition-related intangible amortization and special and restructuring charges of $4.7 million, consisting of (i) $10.4 million for non-cash acquisition-related intangible amortization and depreciation expense; (ii) $5.0 million of special charges related to the amendment of the credit agreement; (iii) $5.0 million of costs due to the investigation into the accounting irregularities of the Pipeline Engineering business and incremental professional services incurred due to the restatement; (iv) $0.9 million of special charges related to the evaluation of strategic alternatives for the company; (v) net restructuring charges of $4.7 million comprised of $5.3 million of CTA loss offset by other adjustments of $0.6 million due to the deconsolidation of the Pipeline Engineering businesses; (vi) other special and restructuring charges net of $0.7 million; and (vii) a gain of $22.0 million on the sale of real estate located at Walden, New York and Tampa, Florida. Adjusted consolidated and segment results for Q2 2021 exclude net loss from discontinued operations of $0.9 million and net loss from non-cash acquisition-related intangible amortization, special and restructuring charges totaling $19.6 million ($21.9 million after tax). These charges include: (i) $11.8 million for non-cash acquisition-related intangible amortization and depreciation expense; (ii) $3.0 million of special charges related to the Heater & Control Valve divestiture; (iii) $3.8 million of other special and restructuring charges; and (iv) $1.0 million of restructuring related inventory charges.
5. Adjusted free cash flow, a non-GAAP financial measure, is calculated by subtracting GAAP capital expenditures, net of proceeds from asset sales, from GAAP operating cash flow.
6. Orders, an operating measure, is defined as a legally binding agreement from an authorized individual at a customer requesting CIRCOR to provide goods and/or services at a fixed or determinable price and CIRCOR is capable of providing such goods and services, when the terms and conditions are firm enough to assure subsequent payment by the customer. Consolidated and Industrial segment orders for Q2 2022 and Q2 2021 included $0.0 million and $5.2 million, respectively, relating to our Pipeline Engineering business. As previously disclosed in our Form 10-K for the year ended December 31, 2021, the Company discovered accounting irregularities in its Pipeline Engineering business unit resulting in a restatement of previously issued financial statements.
2
Company Files Quarterly Report on Form 10-Q for the Period Ended July 3, 2022
The Company today filed its Quarterly Report on Form 10-Q for the second quarter of 2022.
Use of Non-GAAP Financial Measures
In this press release, the Company uses the non-GAAP financial measures adjusted net income, adjusted EBITDA, adjusted operating income, adjusted operating margin, adjusted earnings per share and adjusted free cash flow. 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 that these non-GAAP financial measures provide useful information to investors and others in understanding and evaluating CIRCOR’s current operating performance and future prospects in the same manner as management does if they so choose. These non-GAAP financial measures can also assist investors and others in comparing CIRCOR’s current financial results with CIRCOR’s past financial results in a consistent manner.
We exclude costs and tax effects associated with special and restructuring activities, such as reducing overhead and consolidating facilities. We believe that the costs related to special and 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 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 or exited businesses and to provide a comparison of changes in our revenue and orders (an operating measure), we also discuss these changes on an “organic” basis. Organic is calculated assuming the divestitures and/or exited businesses completed prior to July 3, 2022 were completed on January 1, 2021 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.
3
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.
Cautionary Note Regarding Forward-Looking Statements
This press release contains “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Actual results may differ materially from the expectations the Company describes in its forward-looking statements. Substantial reliance should not be placed on forward-looking statements because they involve unknown risks, uncertainties and other factors, which are, in some cases, beyond the control of CIRCOR. Important factors that could cause actual results to differ materially from expectations include, but are not limited to the inability to achieve expected results in pricing and cost out actions and the related impact on margins and cash flow; the effectiveness of the Company’s internal control over financial reporting and disclosure controls and procedures; the remediation of the material weaknesses in the Company’s internal controls over financial reporting or other potential weaknesses of which the Company is not currently aware or which have not been detected; the timing of the Company regaining compliance with the NYSE’s continued listing standards; the timing and outcome, if any, of the Company’s strategic alternatives review; 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 , rising inflation, increasing interest rates, natural disasters, military conflicts, including the conflict between Russia and Ukraine, terrorist attacks and other similar matters; and the risks detailed from time to time in the Company’s periodic reports filed with the SEC. Before making any investment decisions regarding CIRCOR, the Company strongly advises you to read the section entitled “Risk Factors” in its 2021 Annual Report on Form 10-K, which can be accessed under the “Investors” link of the Company’s website at www.circor.com. The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
Contact:
Scott Solomon
Senior Vice President
Sharon Merrill Associates, Inc.
(857) 383-2409
4
CIRCOR INTERNATIONAL, INC
CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except per share data) (unaudited)
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| July 3, 2022 | As Restated July 4, 2021 | July 3, 2022 | As Restated July 4, 2021 | ||||||||||||||||||||
| Net revenues | $ | 191,376 | $ | 187,590 | $ | 377,031 | $ | 364,041 | |||||||||||||||
| Cost of revenues | 133,171 | $ | 131,156 | $ | 263,543 | $ | 256,045 | ||||||||||||||||
| Gross profit | 58,205 | 56,434 | 113,488 | 107,996 | |||||||||||||||||||
| Selling, general and administrative expenses | 52,057 | 58,188 | 110,127 | 115,825 | |||||||||||||||||||
| Special and restructuring (recoveries) charges, net | (5,730) | 6,803 | 3,272 | 5,995 | |||||||||||||||||||
| Operating income (loss) | 11,878 | (8,557) | 89 | (13,824) | |||||||||||||||||||
| Other expense (income): | |||||||||||||||||||||||
| Interest expense, net | 10,203 | 7,957 | 19,659 | 16,327 | |||||||||||||||||||
| Other (income), net | (1,638) | (1,267) | (2,924) | (3,048) | |||||||||||||||||||
| Total other expense, net | 8,565 | 6,690 | 16,735 | 13,279 | |||||||||||||||||||
| Income (loss) from continuing operations before income taxes | 3,313 | (15,247) | (16,646) | (27,103) | |||||||||||||||||||
| (Benefit from) provision for income taxes | (647) | 2,659 | 875 | 2,360 | |||||||||||||||||||
| Income (loss) from continuing operations, net of tax | 3,960 | (17,906) | (17,521) | (29,463) | |||||||||||||||||||
| Loss from discontinued operations, net of tax | $ | — | $ | (878) | $ | — | $ | (1,117) | |||||||||||||||
| Net income (loss) | $ | 3,960 | $ | (18,784) | $ | (17,521) | $ | (30,580) | |||||||||||||||
| Basic income (loss) per common share: | |||||||||||||||||||||||
| Basic from continuing operations | $ | 0.19 | $ | (0.89) | $ | (0.86) | $ | (1.46) | |||||||||||||||
| Basic from discontinued operations | $ | — | $ | (0.04) | $ | — | $ | (0.06) | |||||||||||||||
| Net income (loss) | $ | 0.19 | $ | (0.93) | $ | (0.86) | $ | (1.52) | |||||||||||||||
| Diluted income (loss) per common share: | |||||||||||||||||||||||
| Diluted from continuing operations | $ | 0.19 | $ | (0.89) | $ | (0.86) | $ | (1.46) | |||||||||||||||
| Diluted from discontinued operations | $ | — | $ | (0.04) | $ | — | $ | (0.06) | |||||||||||||||
| Net income (loss) | $ | 0.19 | $ | (0.93) | $ | (0.86) | $ | (1.52) | |||||||||||||||
| Weighted average number of common shares outstanding: | |||||||||||||||||||||||
| Basic | 20,361 | 20,230 | 20,336 | 20,143 | |||||||||||||||||||
| Diluted | 20,428 | 20,230 | 20,336 | 20,143 | |||||||||||||||||||
5
CIRCOR INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands) (unaudited)
| Six Months Ended | |||||||||||
| OPERATING ACTIVITIES | July 3, 2022 | As Restated July 4, 2021 | |||||||||
| Net (loss) | $ | (17,521) | $ | (30,580) | |||||||
| (Loss) from discontinued operations, net of income taxes | — | (1,117) | |||||||||
| (Loss) from continuing operations, net of tax | $ | (17,521) | (29,463) | ||||||||
| Adjustments to reconcile net (loss) to net cash (used in) operating activities: | |||||||||||
| Depreciation | 10,056 | 11,970 | |||||||||
| Amortization | 18,580 | 21,353 | |||||||||
| Change in provision for bad debt expense | (221) | (356) | |||||||||
| Write down of inventory | 1,181 | 1,548 | |||||||||
| Compensation expense for share-based plans | 375 | 2,903 | |||||||||
| Loss on debt extinguishment | 4,977 | — | |||||||||
| Amortization of debt issuance costs | 1,649 | 2,005 | |||||||||
| Deferred tax provision | — | (1,317) | |||||||||
| Loss on sale of businesses | — | 1,031 | |||||||||
| Gain on sale of real estate | (22,008) | — | |||||||||
| Other impairment charges | 8,011 | — | |||||||||
| Loss on deconsolidation charges | 4,675 | — | |||||||||
| Changes in operating assets and liabilities, net of effects of acquisitions and divestitures: | |||||||||||
| Trade accounts receivable | 3,283 | 6,455 | |||||||||
| Inventories | (20,548) | (14,617) | |||||||||
| Prepaid expenses and other assets | (16,947) | (10,119) | |||||||||
| Accounts payable, accrued expenses and other liabilities | 4,941 | (1,158) | |||||||||
| Net cash used in continuing operating activities | (19,517) | (9,765) | |||||||||
| Net cash used in discontinued operating activities | — | (579) | |||||||||
| Net cash (used in) operating activities | (19,517) | (10,344) | |||||||||
| INVESTING ACTIVITIES | |||||||||||
| Additions to property, plant and equipment | (9,133) | (6,038) | |||||||||
| Proceeds from the sale of property, plant and equipment | 80 | 2 | |||||||||
| Proceeds from beneficial interest of factored receivables | 2,336 | 998 | |||||||||
| Proceeds from the sale of real estate | 26,433 | — | |||||||||
| Proceeds from the sale of businesses | — | 9,993 | |||||||||
| Net cash provided by investing activities | 19,716 | 4,955 | |||||||||
| FINANCING ACTIVITIES | |||||||||||
| Proceeds from long-term debt | 124,016 | 103,350 | |||||||||
| Payments of long-term debt | (105,616) | (100,250) | |||||||||
| Net change in short-term borrowings | (1,573) | (292) | |||||||||
| Proceeds from the exercise of stock options | — | 151 | |||||||||
| Withholding tax payments on net share settlements on equity awards | (1,187) | (4,119) | |||||||||
| Payments of debt issuance costs | (16,701) | — | |||||||||
| Net cash (used in) financing activities | (1,061) | (1,160) | |||||||||
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | (3,848) | (1,782) | |||||||||
| DECREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH | (4,710) | (8,331) | |||||||||
| Cash, cash equivalents, and restricted cash at beginning of period | 61,374 | 68,607 | |||||||||
| CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF PERIOD | $ | 56,664 | $ | 60,276 | |||||||
6
CIRCOR INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data) (unaudited)
| July 3, 2022 | December 31, 2021 | ||||||||||
| ASSETS | |||||||||||
| CURRENT ASSETS: | |||||||||||
| Cash and cash equivalents | $ | 55,238 | $ | 59,924 | |||||||
| Trade accounts receivable, net | 93,530 | 100,149 | |||||||||
| Inventories | 134,247 | 123,343 | |||||||||
| Prepaid expenses and other current assets | 119,522 | 110,749 | |||||||||
| Total Current Assets | 402,537 | 394,165 | |||||||||
| PROPERTY, PLANT AND EQUIPMENT, NET | 139,082 | 154,461 | |||||||||
| OTHER ASSETS: | |||||||||||
| Goodwill | 119,750 | 122,906 | |||||||||
| Intangibles, net | 273,476 | 303,476 | |||||||||
| Deferred income taxes | 685 | 756 | |||||||||
| Other assets | 53,890 | 43,534 | |||||||||
| TOTAL ASSETS | $ | 989,420 | $ | 1,019,298 | |||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||||
| CURRENT LIABILITIES: | |||||||||||
| Accounts payable | $ | 83,152 | $ | 83,382 | |||||||
| Accrued expenses and other current liabilities | 78,554 | 81,998 | |||||||||
| Accrued compensation and benefits | 28,158 | 26,551 | |||||||||
| Short-term borrowings and current portion of long-term debt | — | 1,611 | |||||||||
| Total Current Liabilities | 189,864 | 193,542 | |||||||||
| LONG-TERM DEBT | 520,999 | 511,694 | |||||||||
| DEFERRED INCOME TAXES | 19,689 | 21,721 | |||||||||
| PENSION LIABILITY, NET | 111,716 | 120,881 | |||||||||
| OTHER NON-CURRENT LIABILITIES | 43,489 | 37,744 | |||||||||
| COMMITMENTS AND CONTINGENCIES (NOTE 9 AND 10) | |||||||||||
| 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; 21,724,341 and 21,633,131 issued at July 3, 2022 and December 31, 2021 respectively | 217 | 217 | |||||||||
| Additional paid-in capital | 454,361 | 454,852 | |||||||||
| Accumulated deficit | (215,602) | (198,081) | |||||||||
Common treasury stock, at cost (1,372,488 shares at July 3, 2022 and December 31, 2021) | (74,472) | (74,472) | |||||||||
| Accumulated other comprehensive loss, net of tax | (60,841) | (48,800) | |||||||||
| Total Shareholders’ Equity | 103,663 | 133,716 | |||||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 989,420 | $ | 1,019,298 | |||||||
7
CIRCOR INTERNATIONAL, INC.
SUMMARY OF ORDERS AND BACKLOG
(in millions) (unaudited)
| Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||||
| July 3, 2022 | July 4, 2021 | July 3, 2022 | July 4, 2021 | |||||||||||||||||||||||||||||
| ORDERS (1) | ||||||||||||||||||||||||||||||||
| Aerospace & Defense | $ | 69.0 | $ | 54.2 | $ | 146.90 | $ | 127.2 | ||||||||||||||||||||||||
| Industrial | 139.4 | 156.0 | 283.1 | 309.7 | ||||||||||||||||||||||||||||
| Total orders | $ | 208.4 | $ | 210.2 | $ | 430.0 | $ | 436.9 | ||||||||||||||||||||||||
| July 3, 2022 | July 4, 2021 | |||||||||||||||||||||||||||||||
| BACKLOG (2) | ||||||||||||||||||||||||||||||||
| Aerospace & Defense | $ | 199.0 | $ | 191.7 | ||||||||||||||||||||||||||||
| Industrial | 278.4 | 248.2 | ||||||||||||||||||||||||||||||
| Total backlog | $ | 477.4 | $ | 439.9 | ||||||||||||||||||||||||||||
1. Orders do not include the foreign exchange impact due to the re-measurement of customer backlog amounts denominated in foreign currencies. Industrial includes $0.0 million and $5.2 million of orders for Pipeline Engineering for the three months ended July 3, 2022 and July 4, 2021 respectively. Industrial includes $2.3 million and $10.7 million of orders for Pipeline Engineering for the six months ended July 3, 2022 and July 4, 2021 respectively. | ||||||||||||||||||||||||||||||||
| 2. Backlog is calculated as current period orders plus unshipped customer orders from prior periods for which revenue has not been recognized. Industrial includes $0.0 million and $0.7 million for Pipeline Engineering in 2022 and 2021 respectively. | ||||||||||||||||||||||||||||||||
8
CIRCOR INTERNATIONAL, INC.
SEGMENT INFORMATION
(in thousands, except percentages) (unaudited)
| 2021 As Restated | 2022 | ||||||||||||||||||||||||||||
| As reported | 1ST QTR | 2ND QTR | 3RD QTR | 4TH QTR | TOTAL | 1ST QTR | 2ND QTR | TOTAL | |||||||||||||||||||||
| ORDERS | |||||||||||||||||||||||||||||
| Aerospace & Defense | $ | 72,999 | $ | 54,243 | $ | 54,028 | $ | 73,898 | $ | 255,168 | $ | 77,890 | $ | 69,053 | $ | 146,943 | |||||||||||||
| Industrial | 153,695 | 155,959 | 139,691 | 146,065 | 595,410 | 143,727 | 139,370 | 283,097 | |||||||||||||||||||||
| Total | $ | 226,693 | $ | 210,203 | $ | 193,719 | $ | 219,964 | $ | 850,578 | $ | 221,617 | $ | 208,423 | $ | 430,040 | |||||||||||||
| NET REVENUES | |||||||||||||||||||||||||||||
| Aerospace & Defense | $ | 58,488 | $ | 60,613 | $ | 63,461 | $ | 69,979 | $ | 252,541 | $ | 63,370 | $ | 67,271 | $ | 130,641 | |||||||||||||
| Industrial | 117,963 | 126,977 | 126,248 | 134,938 | 506,126 | 122,285 | 124,105 | 246,390 | |||||||||||||||||||||
| Total | $ | 176,451 | $ | 187,590 | $ | 189,709 | $ | 204,917 | $ | 758,667 | $ | 185,655 | $ | 191,376 | $ | 377,031 | |||||||||||||
| SEGMENT OPERATING INCOME | |||||||||||||||||||||||||||||
| Aerospace & Defense | $ | 9,988 | $ | 11,741 | $ | 15,927 | $ | 18,416 | $ | 56,073 | $ | 11,320 | $ | 13,566 | $ | 24,886 | |||||||||||||
| Industrial | 5,834 | 7,237 | 7,124 | 8,700 | 28,896 | 6,857 | 8,484 | 15,341 | |||||||||||||||||||||
| Corporate expenses | (9,035) | (7,950) | (7,015) | (6,636) | (30,638) | (7,770) | (5,485) | (13,255) | |||||||||||||||||||||
| Total | $ | 6,787 | $ | 11,028 | $ | 16,036 | $ | 20,480 | $ | 54,331 | $ | 10,407 | $ | 16,565 | $ | 26,972 | |||||||||||||
| SEGMENT OPERATING MARGIN % | |||||||||||||||||||||||||||||
| Aerospace & Defense | 17.1 | % | 19.4 | % | 25.1 | % | 26.3 | % | 22.2 | % | 17.9 | % | 20.2 | % | 19.0 | % | |||||||||||||
| Industrial | 4.9 | % | 5.7 | % | 5.6 | % | 6.4 | % | 5.7 | % | 5.6 | % | 6.8 | % | 6.2 | % | |||||||||||||
| Total | 3.8 | % | 5.9 | % | 8.5 | % | 10.0 | % | 7.2 | % | 5.6 | % | 8.7 | % | 7.2 | % | |||||||||||||
| 2021 | 2022 | ||||||||||||||||||||||||||||
Pipeline Engineering1 | 1ST QTR | 2ND QTR | 3RD QTR | 4TH QTR | TOTAL | 1ST QTR | 2ND QTR | TOTAL | |||||||||||||||||||||
| ORDERS - Industrial | $ | 5,531 | $ | 5,192 | $ | 6,575 | $ | 7,121 | $ | 24,419 | $ | 2,260 | $ | — | $ | 2,260 | |||||||||||||
| NET REVENUES - Industrial | $ | 2,994 | $ | 3,124 | $ | 3,236 | $ | 5,248 | $ | 14,602 | $ | 3,012 | $ | 218 | $ | 3,230 | |||||||||||||
| SEGMENT OP. INC. -Industrial | $ | (2,479) | $ | (1,754) | $ | (2,470) | $ | (3,191) | $ | (9,893) | $ | (3,190) | $ | (1,074) | $ | (4,264) | |||||||||||||
| Segment Operating Margin % | (82.8) | % | (56.1) | % | (76.3) | % | (60.8) | % | (67.8) | % | (105.9) | % | (492.7) | % | (132.0) | % | |||||||||||||
| 1) Quantifies the impact of the Pipeline Engineering business on the Industrial Segment. | |||||||||||||||||||||||||||||
9
CIRCOR INTERNATIONAL, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND KEY PERFORMANCE MEASURES
(in thousands, except percentages) (unaudited)
| 2021 As Restated | 2022 | ||||||||||||||||||||||||||||
| 1ST QTR | 2ND QTR | 3RD QTR | 4TH QTR | TOTAL | 1ST QTR | 2ND QTR | TOTAL | ||||||||||||||||||||||
| Net Cash (Used In) Provided By Operating Activities | $ | (19,210) | $ | 8,866 | $ | 10,197 | $ | 10,595 | $ | 10,448 | $ | (15,924) | $ | (3,593) | $ | (19,517) | |||||||||||||
| LESS | |||||||||||||||||||||||||||||
Capital expenditures, net of sale proceeds1 | 3,392 | 2,644 | 4,541 | 4,168 | 14,745 | 3,592 | 5,461 | 9,053 | |||||||||||||||||||||
| ADJUSTED FREE CASH FLOW | $ | (22,602) | $ | 6,222 | $ | 5,656 | $ | 6,427 | $ | (4,297) | $ | (19,516) | $ | (9,054) | $ | (28,570) | |||||||||||||
| Gross Debt | $ | 538,541 | $ | 524,391 | $ | 518,464 | $ | 526,311 | $ | 526,311 | $ | 547,681 | $ | 543,100 | $ | 543,100 | |||||||||||||
| Less: Cash & Cash equivalents | 64,837 | 58,862 | 58,013 | 59,924 | 59,924 | 61,122 | 55,238 | 55,238 | |||||||||||||||||||||
| GROSS DEBT, NET OF CASH | $ | 473,704 | $ | 465,529 | $ | 460,451 | $ | 466,387 | $ | 466,387 | $ | 486,559 | $ | 487,862 | $ | 487,862 | |||||||||||||
| TOTAL SHAREHOLDERS' EQUITY | $ | 138,663 | $ | 122,185 | $ | 121,256 | $ | 133,716 | $ | 133,716 | $ | 110,321 | $ | 103,663 | $ | 103,663 | |||||||||||||
| GROSS DEBT AS % OF EQUITY | 388 | % | 429 | % | 428 | % | 394 | % | 394 | % | 496 | % | 524 | % | 524 | % | |||||||||||||
| GROSS DEBT, NET OF CASH AS % OF EQUITY | 342 | % | 381 | % | 380 | % | 349 | % | 349 | % | 441 | % | 471 | % | 471 | % | |||||||||||||
1. Includes capital expenditures, net of proceeds of asset sales from GAAP operating cash flow. | |||||||||||||||||||||||||||||
10
CIRCOR INTERNATIONAL, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND KEY PERFORMANCE MEASURES
(in thousands, except percentages) (unaudited)
| 2021 As Restated | 2022 | ||||||||||||||||||||||||||||
| 1ST QTR | 2ND QTR | 3RD QTR | 4TH QTR | TOTAL | 1ST QTR | 2ND QTR | TOTAL | ||||||||||||||||||||||
| NET (LOSS) INCOME | $ | (11,796) | $ | (18,784) | $ | (2,630) | $ | (28,427) | $ | (61,638) | $ | (21,481) | $ | 3,960 | $ | (17,521) | |||||||||||||
| LESS: | |||||||||||||||||||||||||||||
| Restructuring related inventory charges (recoveries), net | — | 958 | (60) | (299) | 599 | 2,757 | — | 2,757 | |||||||||||||||||||||
| Restructuring charges (recoveries), net | 2,060 | 2,281 | (312) | 205 | 4,234 | 6,447 | 4,695 | 11,142 | |||||||||||||||||||||
| Acquisition amortization | 10,487 | 10,498 | 10,417 | 10,369 | 41,772 | 9,391 | 9,178 | 18,569 | |||||||||||||||||||||
| Acquisition depreciation | 2,375 | 1,327 | 1,412 | 1,397 | 6,511 | 1,045 | 1,239 | 2,285 | |||||||||||||||||||||
| Special (recoveries) charges, net | (2,870) | 4,523 | 1,126 | 17,259 | 20,038 | 2,556 | (10,425) | (7,870) | |||||||||||||||||||||
| Goodwill Impairment charge | — | — | — | 10,500 | 10,500 | — | — | — | |||||||||||||||||||||
| Income tax impact | (44) | 2,425 | (596) | (1,622) | 163 | 384 | (2,207) | (1,823) | |||||||||||||||||||||
| Net loss (income) from discontinued operations | 239 | 878 | (2,510) | (13) | (1,406) | — | — | — | |||||||||||||||||||||
| ADJUSTED NET INCOME | $ | 451 | $ | 4,106 | $ | 6,847 | $ | 9,369 | $ | 20,773 | $ | 1,099 | $ | 6,440 | $ | 7,539 | |||||||||||||
| (LOSS) EARNINGS PER COMMON SHARE (Diluted) | $ | (0.59) | $ | (0.93) | $ | (0.13) | $ | (1.40) | $ | (3.05) | $ | (1.06) | $ | 0.19 | $ | (0.86) | |||||||||||||
| LESS: | |||||||||||||||||||||||||||||
| Restructuring related inventory charges | — | 0.05 | — | (0.01) | 0.03 | 0.14 | — | 0.14 | |||||||||||||||||||||
| Restructuring charges (recoveries), net | 0.10 | 0.11 | (0.02) | 0.01 | 0.21 | 0.32 | 0.23 | 0.55 | |||||||||||||||||||||
| Acquisition amortization | 0.52 | 0.52 | 0.51 | 0.51 | 2.07 | 0.46 | 0.45 | 0.91 | |||||||||||||||||||||
| Acquisition depreciation | 0.12 | 0.07 | 0.07 | 0.07 | 0.32 | 0.05 | 0.06 | 0.11 | |||||||||||||||||||||
| Special (recoveries) charges, net | (0.14) | 0.22 | 0.06 | 0.85 | 0.99 | 0.13 | (0.51) | (0.39) | |||||||||||||||||||||
| Impairment charge | — | — | — | 0.52 | 0.52 | — | — | — | |||||||||||||||||||||
| Income tax impact | — | 0.12 | (0.03) | (0.08) | 0.01 | 0.02 | (0.11) | (0.09) | |||||||||||||||||||||
| (Loss) earnings) per share from discontinued operations | 0.01 | 0.04 | (0.12) | — | (0.07) | — | — | — | |||||||||||||||||||||
| ADJUSTED EARNINGS PER SHARE (Diluted) | $ | 0.02 | $ | 0.20 | $ | 0.34 | $ | 0.46 | $ | 1.03 | $ | 0.05 | $ | 0.32 | $ | 0.37 | |||||||||||||
11
CIRCOR INTERNATIONAL, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND KEY PERFORMANCE MEASURES
(in thousands, except percentages) (unaudited)
| 2021 As Restated | 2022 | ||||||||||||||||||||||||||||
| 1ST QTR | 2ND QTR | 3RD QTR | 4TH QTR | TOTAL | 1ST QTR | 2ND QTR | TOTAL | ||||||||||||||||||||||
| NET (LOSS) INCOME | $ | (11,796) | $ | (18,784) | $ | (2,629) | $ | (28,426) | $ | (61,635) | $ | (21,481) | $ | 3,960 | $ | (17,521) | |||||||||||||
| LESS: | |||||||||||||||||||||||||||||
| Interest expense, net | 8,369 | 7,958 | 7,997 | 8,040 | 32,365 | 9,456 | 10,203 | 19,659 | |||||||||||||||||||||
| Depreciation | 6,509 | 5,460 | 5,536 | 5,348 | 22,854 | 5,000 | 5,056 | 10,056 | |||||||||||||||||||||
| Amortization | 10,696 | 10,657 | 10,576 | 10,375 | 42,304 | 9,397 | 9,183 | 18,580 | |||||||||||||||||||||
| Provision for income taxes | (297) | 2,659 | 850 | 1,970 | 5,182 | 1,523 | (647) | 876 | |||||||||||||||||||||
| Loss (income) from discontinued operations | 239 | 878 | (2,510) | (13) | (1,406) | — | — | — | |||||||||||||||||||||
| EBITDA | $ | 13,720 | $ | 8,828 | $ | 19,820 | $ | (2,706) | $ | 39,664 | $ | 3,895 | $ | 27,755 | $ | 31,650 | |||||||||||||
| LESS: | |||||||||||||||||||||||||||||
| Restructuring related inventory charges (recoveries) | — | 958 | (60) | (299) | 599 | 2,757 | — | 2,757 | |||||||||||||||||||||
| Restructuring charges (recoveries), net | 2,060 | 2,281 | (312) | 205 | 4,234 | 6,447 | 4,695 | 11,142 | |||||||||||||||||||||
| Special (recoveries) charges, net | (2,870) | 4,523 | 1,126 | 17,259 | 20,038 | 2,556 | (10,425) | (7,870) | |||||||||||||||||||||
| Goodwill impairment charge | — | — | — | 10,500 | 10,500 | — | — | — | |||||||||||||||||||||
| ADJUSTED EBITDA | $ | 12,910 | $ | 16,590 | $ | 20,574 | $ | 24,959 | $ | 75,035 | $ | 15,655 | $ | 22,025 | $ | 37,679 | |||||||||||||
12
CIRCOR INTERNATIONAL, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND KEY PERFORMANCE MEASURES
(in thousands, except percentages) (unaudited)
| 2021 As Restated | 2022 | ||||||||||||||||||||||||||||
| 1ST QTR | 2ND QTR | 3RD QTR | 4TH QTR | TOTAL | 1ST QTR | 2ND QTR | TOTAL | ||||||||||||||||||||||
| OPERATING (LOSS) INCOME | $ | (5,266) | $ | (8,557) | $ | 3,451 | $ | (18,952) | $ | (29,323) | $ | (11,789) | $ | 11,878 | $ | 89 | |||||||||||||
| LESS: | |||||||||||||||||||||||||||||
| Restructuring related inventory charges (recoveries) | — | 958 | (60) | (299) | 599 | 2,757 | — | 2,757 | |||||||||||||||||||||
| Restructuring charges (recoveries), net | 2,060 | 2,281 | (312) | 205 | 4,234 | 6,447 | 4,695 | 11,142 | |||||||||||||||||||||
| Acquisition amortization | 10,487 | 10,498 | 10,417 | 10,369 | 41,772 | 9,391 | 9,178 | 18,569 | |||||||||||||||||||||
| Acquisition depreciation | 2,375 | 1,327 | 1,412 | 1,397 | 6,511 | 1,045 | 1,239 | 2,285 | |||||||||||||||||||||
| Special (recoveries) charges, net | (2,870) | 4,523 | 1,126 | 17,259 | 20,038 | 2,556 | (10,425) | (7,870) | |||||||||||||||||||||
| Goodwill impairment charge | — | — | — | 10,500 | 10,500 | — | — | — | |||||||||||||||||||||
| ADJUSTED OPERATING INCOME | $ | 6,787 | $ | 11,029 | $ | 16,035 | $ | 20,479 | $ | 54,331 | $ | 10,407 | $ | 16,565 | $ | 26,972 | |||||||||||||
| OPERATING MARGIN | (3.0) | % | (4.6) | % | 1.8 | % | (9.2) | % | (3.9) | % | (6.3) | % | 6.2 | % | 0.0 | % | |||||||||||||
| LESS: | |||||||||||||||||||||||||||||
| Restructuring related inventory charges (recoveries) | 0.0 | % | 0.5 | % | 0.0 | % | (0.1) | % | 0.1 | % | 1.5 | % | 0.0 | % | 0.7 | % | |||||||||||||
| Restructuring charges (recoveries), net | 1.2 | % | 1.2 | % | (0.2) | % | 0.1 | % | 0.6 | % | 3.5 | % | 2.5 | % | 3.0 | % | |||||||||||||
| Acquisition amortization | 5.9 | % | 5.6 | % | 5.5 | % | 5.1 | % | 5.5 | % | 5.1 | % | 4.8 | % | 4.9 | % | |||||||||||||
| Acquisition depreciation | 1.3 | % | 0.7 | % | 0.7 | % | 0.7 | % | 0.9 | % | 0.6 | % | 0.6 | % | 0.6 | % | |||||||||||||
| Special (recoveries) charges, net | (1.6) | % | 2.4 | % | 0.6 | % | 8.4 | % | 2.6 | % | 1.4 | % | (5.4) | % | (2.1) | % | |||||||||||||
| Goodwill impairment charge | 0.0 | % | 0.0 | % | 0.0 | % | 5.1 | % | 1.4 | % | 0.0 | % | 0.0 | % | 0.0 | % | |||||||||||||
| ADJUSTED OPERATING MARGIN | 3.8 | % | 5.9 | % | 8.5 | % | 10.0 | % | 7.2 | % | 5.6 | % | 8.7 | % | 7.2 | % | |||||||||||||
13
CIRCOR INTERNATIONAL, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND KEY PERFORMANCE MEASURES
(in thousands, except percentages) (unaudited)
| CIRCOR | Aerospace & Defense | Industrial | ||||||||||||||||||||||||||||||||||||
| 2Q 22 | 2Q 21 | Change | 2Q 22 | 2Q 21 | Change | 2Q 22 | 2Q 21 | Change | ||||||||||||||||||||||||||||||
| Reported Orders | 208,423 | 210,203 | (1) | % | 69,053 | 54,243 | 27 | % | 139,370 | 155,959 | (11) | % | ||||||||||||||||||||||||||
| FX | 12,735 | 2,395 | 10,340 | |||||||||||||||||||||||||||||||||||
| Organic | 221,158 | 210,203 | 5 | % | 71,448 | 54,243 | 32 | % | 149,710 | 155,959 | (4) | % | ||||||||||||||||||||||||||
| CIRCOR | Aerospace & Defense | Industrial | ||||||||||||||||||||||||||||||||||||
| 2Q 22 | 2Q 21 | Change | 2Q 22 | 2Q 21 | Change | 2Q 22 | 2Q 21 | Change | ||||||||||||||||||||||||||||||
| Reported Revenue | 191,376 | 187,590 | 2 | % | 67,271 | 60,613 | 11 | % | 124,105 | 126,977 | (2) | % | ||||||||||||||||||||||||||
| FX | 11,153 | 2,036 | 9,118 | |||||||||||||||||||||||||||||||||||
| Organic | 202,529 | 187,590 | 8 | % | 69,307 | 60,613 | 14 | % | 133,223 | 126,977 | 5 | % | ||||||||||||||||||||||||||
Note regarding financial statements: Restated amounts are computed independently each quarter; therefore, the sum of the quarterly amounts may not equal the total amount for the respective year due to rounding.
14
INDUSTRIAL AEROSPACE & DEFENSE Second-Quarter 2022 Earnings Call September 30, 2022 Exhibit 99.2
Forward-Looking Statements This presentation contains “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Actual results may differ materially from the expectations the Company describes in its forward-looking statements. Substantial reliance should not be placed on forward-looking statements because they involve unknown risks, uncertainties and other factors, which are, in some cases, beyond the control of CIRCOR. Important factors that could cause actual results to differ materially from expectations include, but are not limited to the Company’s ability to achieve expected results in pricing and cost out actions and the related impact on margins and cash flow; the effectiveness of the Company’s internal control over financial reporting and disclosure controls and procedures; the remediation of the material weaknesses in the Company’s internal control over financial reporting or other potential weaknesses of which the Company is not currently aware or which have not been detected; the timing and outcome, if any, of the Company’s strategic alternatives review; the impact on the Company of the situation in Russia and Ukraine; 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 the COVID-19 pandemic, rising inflation, increasing interest rates, natural disasters, military conflicts, including the conflict between Russia and Ukraine, terrorist attacks and other similar matters and the risks detailed from time to time in the Company’s periodic reports filed with the SEC. Before making any investment decisions regarding CIRCOR, the Company strongly advises you to read the section entitled “Risk Factors” in its 2021 Annual Report on Form 10-K, which can be accessed under the “Investors” link of the Company’s website at www.circor.com. The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. 2
Use of Non-GAAP Financial Measures Within this presentation, the Company uses the non-GAAP financial measures organic revenue, adjusted net income, adjusted EBITDA, adjusted operating income, adjusted operating margin, adjusted earnings per share, net debt and adjusted free cash flow. 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 that these non-GAAP financial measures provide useful information to investors and others in understanding and evaluating CIRCOR’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 CIRCOR’s current financial results with CIRCOR’s past financial results in a consistent manner. Specifically: • We exclude the FX impact on revenue as FX can materially change. We believe the FX impact are not indicative to our normal operating revenue. • We exclude costs and tax effects associated with special and restructuring activities, such as reducing overhead and consolidating facilities. We believe that the costs related to special and 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 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 or exited businesses and to provide a comparison of changes in our revenue and orders (an operating measure), we also discuss these changes on an “organic” basis. Organic is calculated assuming the divestitures and/or exited businesses are completed prior to July 3, 2022, were completed on January 1, 2021, and excluding the impact of changes in foreign currency exchange rates. 3
Agenda and Speakers • Executive Overview • 2Q’22 Financial Performance • FY’22 Guidance • Market Outlook • Q&A Tony Najjar President & Chief Executive Officer AJ Sharma Chief Financial Officer & SVP, Business Development 4
Flow Control for Mission-Critical Applications • Leadership in served markets • Well-positioned on key aerospace and defense platforms • Leveraging core technology to drive growth in adjacent markets • Global and diverse end markets with longstanding loyal customer base • Large aftermarket platform primed for value pricing and growth 67% 33% Industrial A&D 2021 Revenue by Region North America 43% EMEA 38% ROW 19% Leading Brands 5 Key Points 2021 Revenue by End Market
Execution of Strategic Priorities Margin Expansion Growth De-Levering our Balance Sheet • Value pricing • Simplification • Best-cost country sourcing and manufacturing • Factory modernization • Leveraging products and technologies in growing markets • Deepening customer engagement • Expanding strong aftermarket business • Exited loss-making Pipeline Engineering business • Continued focus on improving cash flow from operations • Leveraging select sale-leaseback transactions 6
2Q’22 Highlights 7 • Solid execution navigating supply chain constraints • Successful pricing execution more than offsetting inflation • Overhead cost reduction and cost controls • Demand environment remains positive YOY 2Q ’22 Compare Organic orders +5% Backlog +9% Revenue +2% Organic revenue +8% AOI (%) +280 bps AOI ($) +50% Adjusted EBITDA +33% Adjusted EPS +60% Commentary Organic revenue, Adjusted Operating Income (AOI), AOI%, Adjusted EBITDA and Adjusted EPS are non-GAAP measures.
Leveraging Core Technology to Drive Growth in Adjacent Markets 8 Medical Devices Supply critical products used in blood collection devices and cardiac assist equipment to leading medical equipment OEMs FY’ 21 Orders: $18M September 2022 YTD Orders: $24M High pressure/ Low temperature transportation solution across hydrogen value chain FY’ 21 Orders: $3M September 2022 YTD Orders: $8M Hydrogen Applications
Value Pricing 2.8% 3.8% 2021 (ACT) 2022 (FCST) Aerospace & Defense 9 1.4% 4.7% 2021 (ACT) 2022 (FCST) Industrial • A&D: pricing process well established; leverages aftermarket, price escalations in long-term contracts • Industrial: Leveraging our strong position in the aftermarket and 80/20 principles (Price as % of Sales) (Price as % of Sales) 100 bps 330 bps
2Q’22 Financial Results Summary CIRCOR 2Q’22 2Q’21 Change Backlog $477 $440 9% Orders 208 210 (1)% Organic % 5% Revenue 191 188 2% Organic % 8% GAAP operating income (Loss) 11.9 (8.6) 239% GAAP operating margin 6.2% (4.6)% 1080bps Adjusted operating income (AOI) 16.6 11.0 50% AOI% 8.7% 5.9% 280 bps GAAP EPS $0.19 $(0.93) 120% Adjusted EPS $0.32 $0.20 60% Adjusted EBITDA 22.0 16.6 33% Adjusted FCF $(9.1) $6.2 (246)% 10 Comments on 2Q’22 Results • Broad based orders growth…led by defense, commercial aerospace, industrial aftermarket and downstream • Strong execution across our businesses • AOI growth of 50% and 280bps AOI margin expansion… pricing, overhead reduction, exit of Pipeline Engineering • Adjusted EPS growth of 60%...higher AOI partly offset by higher interest cost and FX • Adjusted FCF impacted by Russia project cash draw, restatement costs, investments in working capital and capex Organic revenue, Adjusted Operating Income (AOI), AOI%, Adjusted EPS, Adjusted EBITDA and Adjusted Free Cash Flow (FCF) are non-GAAP measures. * Financial results include results from the Pipeline Engineering business, including $0.2 million of revenue and $(1.1) million of AOI in Q2’22 and $5.2 million of orders, $3.1 million of revenue, and $(1.8) million of AOI in Q2’21. ($ in millions, except EPS)
2Q’22 A&D Segment Highlights 11 Aerospace & Defense 2Q’22 2Q’21 Change Backlog $199 $192 4% Orders 69 54 27% Organic % 32% Revenue 67 61 11% Organic % 14% AOI $13.6 $11.7 16% AOI% 20.2% 19.4% 80 bps Comments on 2Q’22 Results • Organic orders growth driven by defense (+37%) and commercial aerospace (+50%) • Broad-based revenue growth…strength across our markets, partly offset by decline in Navy due to supply chain constraints • AOI margins up +80bps…pricing and volume, partially offset by less favorable mix related to a defense program Organic Revenue, Adjusted Operating Income (AOI), and AOI% are non-GAAP measures. ($ in millions)
2Q’22 Industrial Segment Highlights Industrial 2Q’22 2Q’21 Change Backlog $278 $248 12% Orders 139 156 (11)% Organic % (4)% Revenue 124 127 (2)% Organic % 5% AOI $8.5 $7.2 17% AOI% 6.8% 5.7% 110 bps 12 Comments on 2Q’22 Results • Organic orders growth in industrial aftermarket (+25%) and downstream (+17%), offset by timing of a large Navy order (-10pts) and Pipeline Engineering exit (-3pts) • Organic revenue growth across end markets • AOI margin up +110bps…pricing, Pipeline Engineering exit, partly offset by supply chain inefficiencies ($ in millions) Organic Revenue, Adjusted Operating Income (AOI), and AOI% are non-GAAP measures. * Financial results include results from the Pipeline Engineering business, including $0.2 million of revenue and $(1.1) million of AOI in Q2’22 and $5.2 million of orders, $3.1 million of revenue, and $(1.8) million of AOI in Q2’21.
Net Debt and Leverage 13 Net Debt, Adjusted EBITDA and Compliance Adjusted EBITDA are non-GAAP measures. 1 – Net Debt defined as total debt (Term Loan B and revolvers) less cash or cash equivalents 2 – TTM defined as trailing twelve months 3 – Compliance adjusted EBITDA as per the credit agreement definition. 1Q’22 2Q’22 Net Debt1 $487 $488 Adjusted Earnings Before Interest Taxes, Depreciation and Amortization (TTM2) $78 $83 Net Leverage 6.3x 5.9x Compliance Adjusted Earnings Before Interest Taxes, Depreciation and Amortization (TTM) $96 $100 Compliance Leverage3 5.1x 4.9x Comments • Executed ~$26M of sale and sale-leaseback (SLB) transaction in 2Q, partly offset by debt amendment cost of $17M • Closed on a ~$28M net cash proceeds SLB transaction in August • De-levering throughout the year…cash from sale leaseback, improving FCF and expanding EBITDA • Expect year end net leverage in the range of high 4s to low 5s ($ in millions)
FY’22 Guide 14 CIRCOR 1H’22 2H’22 Range FY’22 Range Change vs. FY’21 (midpoint) Revenue $377 $380 to $400 $757 to $777 Reported 1% Organic 7% AOI $27 $43 to $51 $70 to 78 36% Adjusted EBITDA $38 $51 to $60 $89 to $98 24% Interest Cost $(20) ~$(25) ~$(45) 39% Adjusted EPS $0.37 $0.69 to $0.96 $1.07 to $1.34 19% Commentary • Improving pricing and mix, moderating inflation • 12M annualized cost-outs…expect $5M carryover benefit in 2023 • FX headwinds • Risk exposure: unwind of a Russia project in the event of tighter sanctions ~$4M non-cash charge Adjusted Operating Income (AOI), Adjusted EBITDA and Adjusted EPS are non-GAAP measures. Please see “Reconciliation of Forward-Looking Non-GAAP Measures” in the Appendix for a discussion of the reconciliation of our full year 2022 non-GAAP guidance. *Financial results include results from the Pipeline Engineering business - 1H’22 $2.3 million of orders, $3.2M of revenue and $(4.3M) in AOI ($ in millions, except EPS)
FY’22 Market Outlook – Orders 15 Industrial Vs. PY Approximate Sales Mix (%) Growth Drivers General Industrial Power generation, midstream O&G, new business activities for lithium batteries manufacturing, aftermarket, and pricing Commercial Marine Strong aftermarket growth supported by pricing and increased utilization Downstream O&G Decline driven by non-repeat of large capital project booked in India in PY Other Decline driven by non-repeat of multi-year large defense order for US Navy Aftermarket Solid growth supported driven by pricing and increased utilization 59 15 17 9 40-45 Aerospace & Defense Vs. PY Approximate Sales Mix (%) Growth Drivers Defense Growth driven by the aftermarket, new products for missiles fusing devices and space application and pricing partial offset from timing of large defense orders Commercial Growth driven by the recovery in the single isle platforms at Airbus and Boeing and the aftermarket supported by pricing and the rebound in air travel Other Growth driven by new products in the Hydrogen market and increased activities in medical Aftermarket Expect strength across end markets 61 17 22 25-30
Summary • Anticipate 6-8% organic revenue growth in FY’22 • FY Margin expansion of 36% at mid-point of range, despite ongoing macroeconomic headwinds o Leveraging strong aftermarket position in Industrial o Positive momentum from value pricing and 80/20 principles across the organization despite challenging macroeconomic climate • Well positioned on key commercial aerospace and defense platforms o Ongoing recovery in commercial aerospace o Strong position on key defense platforms o Growth through new product development • Continued focus on de-levering 16
INDUSTRIAL AEROSPACE & DEFENSE Appendix
2Q’22 Organic Orders and Revenue vs. PY 18Organic Revenue is a non-GAAP measure. 2Q 22 2Q 21 Change 2Q 22 2Q 21 Change 2Q 22 2Q 21 Change Reported Orders 208,423$ 210,203$ -1% 69,053$ 54,243$ 27% 139,370$ 155,959$ -11% Divestitures - - - - - - FX 12,735 2,395 10,340 Organic 221,158$ 210,203$ 5% 71,448$ 54,243$ 32% 149,710$ 155,959$ -4% 2Q 22 2Q 21 Change 2Q 22 2Q 21 Change 2Q 22 2Q 21 Change Reported Revenue 191,376$ 187,590$ 2% 67,271$ 60,613$ 11% 124,105$ 126,977$ -2% Divestitures - - - - - - FX 11,153 2,036 9,118 Organic 202,529$ 187,590$ 8% 69,307$ 60,613$ 14% 133,223$ 126,977$ 5% CIRCOR Aerospace & Defense Industrial CIRCOR Aerospace & Defense Industrial
2Q’22 GAAP Operating (Loss) Income to Adjusted Operating Income 19 1ST QTR 2ND QTR 3RD QTR 4TH QTR TOTAL 1ST QTR 2ND QTR TOTAL GAAP OPERATING INCOME (LOSS) $ (5,266) $ (8,557) $ 3,451 $ (18,952) $ (29,323) $ (11,789) $ 11,878 $ 89 LESS: Restructuring related inventory charges (recoveries) - 958 (60) (299) 599 2,757 - 2,757 Restructuring charges (recoveries), net 2,060 2,281 (312) 205 4,234 6,447 4,695 11,142 Acquisition amortization 10,487 10,498 10,417 10,369 41,772 9,391 9,178 18,569 Acquisition depreciation 2,375 1,327 1,412 1,397 6,511 1,045 1,239 2,284 Special (recoveries) charges , net (2,870) 4,523 1,126 17,259 20,038 2,556 (10,425) (7,869) Goodwill impairment charge - - - 10,500 10,500 - - - ADJUSTED OPERATING INCOME 6,787$ 11,029$ 16,035$ 20,479$ 54,331$ 10,407$ 16,565$ 26,972$ GAAP OPERATING MARGIN -3.0% -4.6% 1.8% -9.2% -3.9% -6.3% 6.2% 0.0% LESS: Restructuring related inventory charges (recoveries) 0.0% 0.5% 0.0% -0.1% 0.1% 1.5% 0.0% 0.7% Restructuring charges (recoveries), net 1.2% 1.2% -0.2% 0.1% 0.6% 3.5% 2.5% 3.0% Acquisition amortization 5.9% 5.6% 5.5% 5.1% 5.5% 5.1% 4.8% 4.9% Acquisition depreciation 1.3% 0.7% 0.7% 0.7% 0.9% 0.6% 0.6% 0.6% Special (recoveries) charges , net -1.6% 2.4% 0.6% 8.4% 2.6% 1.4% -5.4% -2.1% Goodwill impairment charge 0.0% 0.0% 0.0% 5.1% 1.4% 0.0% 0.0% 0.0% ADJUSTED OPERATING MARGIN 3.8% 5.9% 8.5% 10.0% 7.2% 5.6% 8.7% 7.2% 2021 2022
2Q’22 GAAP Net (Loss) Income to Adjusted EBITDA 20 1ST QTR 2ND QTR 3RD QTR 4TH QTR TOTAL 1ST QTR 2ND QTR YTD TOTAL NET (LOSS) INCOME $ (11,796) $ (18,784) $ (2,629) $ (28,426) $ (61,635) $ (21,481) $ 3,960 (17,521)$ LESS: Interest expense, net 8,369 7,958 7,997 8,040 32,365 9,456 10,203 19,659 Depreciation 6,509 5,460 5,536 5,348 22,854 5,000 5,056 10,056 Amortization 10,696 10,657 10,576 10,375 42,304 9,397 9,183 18,580 Provision for income taxes (297) 2,659 850 1,970 5,182 1,523 (647) 876 Loss (income) from discontinued operations 239 878 (2,510) (13) (1,406) - - - EBITDA $ 13,720 $ 8,828 $ 19,820 $ (2,706) $ 39,664 $ 3,895 $ 27,755 $ 31,650 LESS: Restructuring related inventory charges (recoveries) - 958 (60) (299) 599 2,757 - 2,757 Restructuring charges (recoveries), net 2,060 2,281 (312) 205 4,234 6,447 4,695 11,142 Special (recoveries) charges, net (2,870) 4,523 1,126 17,259 20,038 2,556 (10,425) (7,869) Goodwill impairment charge - - - 10,500 10,500 - - - ADJUSTED EBITDA 12,910$ 16,590$ 20,574$ 24,959$ 75,035$ 15,655$ 22,025$ 37,680$ 2021 2022
2Q’22 GAAP Net (Loss) Income to Adjusted Net Income 21 1ST QTR 2ND QTR 3RD QTR 4TH QTR TOTAL 1ST QTR 2ND QTR TOTAL NET (LOSS) INCOME $ (11,796) $ (18,784) $ (2,630) $ (28,427) (61,638)$ $ (21,481) $ 3,960 (17,521)$ LESS: Restructuring related inventory charges - 958 (60) (299) 599 2,757 - 2,757$ Restructuring charges, net 2,060 2,281 (312) 205 4,234 6,447 4,695 11,142$ Acquisition amortization 10,487 10,498 10,417 10,369 41,772 9,391 9,178 18,569$ Acquisition depreciation 2,375 1,327 1,412 1,397 6,511 1,045 1,239 2,285$ Special (recoveries) charges , net (2,870) 4,523 1,126 17,259 20,038 2,556 (10,425) (7,870)$ Goodwill Impairment charge - - - 10,500 10,500 - - -$ Income tax impact (44) 2,425 (596) (1,622) 163 384 (2,207) (1,823)$ Net loss (income) from discontinued operations 239 878 (2,510) (13) (1,406) - - -$ ADJUSTED NET INCOME $ 451 $ 4,106 $ 6,847 $ 9,369 $ 20,773 $ 1,099 $ 6,440 $ 7,539 (LOSS) EARNINGS PER COMMON SHARE (Diluted) (0.59)$ (0.93)$ (0.13)$ (1.40)$ (3.05)$ (1.06)$ 0.19$ (0.86)$ LESS: Restructuring related inventory charges - 0.05 (0.00) (0.01) 0.03 0.14 - 0.14$ Restructuring charges, net 0.10 0.11 (0.02) 0.01 0.21 0.32 0.23 0.55 Acquisition amortization 0.52 0.52 0.51 0.51 2.07 0.46 0.45 0.91 Acquisition depreciation 0.12 0.07 0.07 0.07 0.32 0.05 0.06 0.11 Special (recoveries) charges, net (0.14) 0.22 0.06 0.85 0.99 0.13 (0.51) (0.39) Impairment charge - - - 0.52 0.52 - - - Income tax impact (0.00) 0.12 (0.03) (0.08) 0.01 0.02 (0.11) (0.09) Earnings (Loss) per share from discontinued operations 0.01 0.04 (0.12) (0.00) (0.07) - - - ADJUSTED EARNINGS PER SHARE (Diluted) $ 0.02 $ 0.20 $ 0.34 $ 0.46 $ 1.03 $ 0.05 $ 0.32 $ 0.37 2021 2022
2Q’22 Adjusted Free Cash Flow 22 (a) Includes capital expenditures, net of proceeds of asset sales from GAAP operating cash flow. 1ST QTR 2ND QTR 3RD QTR 4TH QTR TOTAL 1ST QTR 2ND QTR YTD TOTAL $ (19,210) $ 8,866 $ 10,197 $ 10,595 $ 10,448 $ (15,924) $ (3,593) $ (19,517) LESS Capital expenditures, net of sale proceeds (a) 3,392 2,644 4,541 4,168 14,745 3,592 5,461 9,053 FREE CASH FLOW $ (22,602) $ 6,222 $ 5,656 $ 6,427 $ (4,297) $ (19,516) $ (9,054) $ (28,570) Gross Debt $ 538,541 $ 524,391 $ 518,464 $ 526,311 $ 526,311 $ 547,681 $ 543,100 $543,100 Less: Cash & Cash equivalents 64,837 58,862 58,013 59,924 59,924 61,122 55,238 55,238 GROSS DEBT, NET OF CASH $ 473,704 $ 465,529 $ 460,451 $ 466,387 $ 466,387 $ 486,559 $ 487,862 $487,862 TOTAL SHAREHOLDERS' EQUITY $ 138,663 $ 122,185 $ 121,256 $ 133,716 $ 133,716 $ 110,321 $ 103,663 $103,663 GROSS DEBT AS % OF EQUITY 388% 429% 428% 394% 394% 496% 524% 524% GROSS DEBT, NET OF CASH AS % OF EQUITY 342% 381% 380% 349% 349% 441% 471% 471% Net Cash (Used In) Provided By Operating Activities 2021 2022
Reconciliation of Forward-Looking Non-GAAP Measures 23 This presentation contains forward-looking estimates of organic revenue growth, AOI, adjusted EBITDA and adjusted EPS for full year 2022. We provide these non-GAAP measures to investors on a prospective basis for the same reasons (set forth on slide 3 (“Use of Non-GAAP Financial Measures”)) that we provide to investors on a historical basis. We are unable to provide a reconciliation of our forward-looking estimate of full year 2022 organic revenue growth, AOI, adjusted EBITDA and adjusted EPS to a forward-looking estimate of full year 2022 GAAP revenue growth, GAAP operating income (loss), GAAP net income (loss) and GAAP EPS because certain information needed to make a reasonable forward-looking estimate of such non- GAAP measures for full year 2022 is difficult to predict and estimate and is often dependent on future events that may be uncertain or outside of our control. Such events may include unanticipated changes in currency exchange rates, our GAAP effective tax rate, unanticipated gains or losses, and other unanticipated non-recurring items not reflective of ongoing operations. Our forward-looking estimates of both GAAP and non-GAAP measures of our financial performance may differ materially from our actual results and should not be relied upon as statements of fact.