July 26, 2018 - 5:12 PM EDT
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CIRCOR Reports Second-Quarter 2018 Financial Results

BURLINGTON, Mass.

CIRCOR International, Inc. (NYSE: CIR), a leading provider of flow control solutions and other highly engineered products for the Industrial, Energy and Aerospace & Defense markets, today announced financial results for the second quarter ended July 1, 2018. Results include the acquisition of the Colfax Fluid Handling business, which CIRCOR acquired in December 2017.

Second-Quarter 2018 Highlights

  • Orders of $309.4 million, up 116% on a reported basis and up 15% on a pro forma organic basis
  • Revenue of $301.4 million, up 99% on a reported basis and up 9% on a pro forma organic basis
  • GAAP Earnings per Share of $0.30; Adjusted Earnings per Share of $0.57
  • Acquisition integration on track

“Our top-line momentum continued in the second quarter as most of our end markets remained strong,” said Scott Buckhout, President and Chief Executive Officer. “We generated over $300 million of sales in the quarter. Our book to bill ratio was again above one, positioning us well for the second half of 2018.”

“Our organizational re-alignment around end markets is producing results and our integration activities are on track. We remain confident in our ability to realize the committed synergies,” added Buckhout.

“Our priorities remain driving long-term growth, generating strong cash flow and de-levering the Company by reducing debt and expanding margins,” concluded Buckhout.

Third-Quarter 2018 Guidance
For the third quarter of 2018, CIRCOR expects revenue in the range of $290 million to $300 million, and GAAP loss per share of $0.23 to $0.06, which reflects acquisition-related amortization expense of $0.52 to $0.54 and other special and restructuring charges of $0.09 to $0.14. Excluding the impact of amortization, special and restructuring charges, adjusted EPS is expected to be in the range of $0.45 to $0.55 per share. Presentation slides that provide supporting information to this guidance and second-quarter results are posted on the “Investors” section of the Company’s website, http://investors.circor.com, and will be discussed during the conference call at 9:00 a.m. ET tomorrow, July 27, 2018.

         

Selected Consolidated Results (unaudited)

  ($ millions except EPS)     Q2 2018 Q2 2017 Change
Revenue $ 301.4 $ 151.2 99%
GAAP Operating Income $ 8.3 $ 11.4 (27)%
Adjusted Operating Income1 $ 24.8 $ 12.0 107%
GAAP Operating Margin 2.7% 7.5% (490) bps
Adjusted Operating Margin1 8.2% 8.0% 20 bps
GAAP Earnings Per Share (Diluted) $ 0.30 $ 0.54 (44)%
Adjusted Earnings Per Share (Diluted)1 $ 0.57 $ 0.39 46%
Operating Cash Flow $ (1.9) $ 2.7 N/M
Free Cash Flow2 $ (5.9) $ 0.3 N/M
Orders $ 309.4 $ 142.9

116%

 
         

Segment Results

($ millions)     Q2 2018 Q2 2017 Change
Industrial
Revenue $ 131.1 $ 29.7 341%
Segment Operating Income $ 15.0 $ 4.9 206%
Segment Operating Margin 11.5% 16.5% (500) bps
Orders $ 136.7 $ 29.9 357%
 
Energy
Revenue $ 112.8 $ 78.3 44%
Segment Operating Income $ 9.2 $ 8.2 12%
Segment Operating Margin 8.2% 10.4% (230) bps
Orders $ 113.2 $ 73.1 55%
 
Aerospace & Defense
Revenue $ 57.5 $ 43.3 33%
Segment Operating Income $ 7.0 $ 4.4 59%
Segment Operating Margin 12.2% 10.1% 210 bps
Orders $ 59.4 $ 39.9 49%
 

1. 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. Consolidated and Segment Results for Q2 2017 exclude special and restructuring charges and non-cash acquisition-related intangible amortization, totaling $0.6 million ($2.5 million, net of tax). These charges include (i) $2.6 million charge for non-cash acquisition-related intangible amortization expense, (ii) $5.3 million charge related to the sale of our France build-to-print business, (iii) $1.3 million charge related to the exit of manufacturing operations in China, including $0.8 million related to environmental clean-up costs, (iv) $1.1 million charge related to other restructuring activities, primarily reductions-in-force, across Europe and North America, and (v) a $9.7 million gain related to the revaluation of the contingent consideration for purchase of Critical Flow Solutions.
2. 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.
N/M = Not meaningful

Conference Call Information
CIRCOR International will hold a conference call to review its financial results at 9:00 a.m. ET tomorrow, July 27, 2018. To listen to the live conference call and view the accompanying presentation slides, please visit “Webcasts & Presentations” in the “Investors” portion of CIRCOR’s website. The live call also can be accessed by dialing (877) 407-5790 or (201) 689-8328. The webcast will be archived on the Company’s website for one year.

Use of Non-GAAP Financial Measures
Adjusted operating income, Adjusted operating margin, Adjusted net income, Adjusted earnings per share (diluted), EBITDA, Adjusted EBITDA, net debt, free cash flow, organic growth, pro forma combined amounts and pro forma organic growth are non-GAAP financial measures. These non-GAAP financial measures are used by management in our financial and operating decision making because we believe they better reflect our ongoing business and allow for meaningful period-to-period comparisons. We believe these non-GAAP financial measures provide useful information to investors and others in understanding and evaluating the Company’s current operating performance and future prospects in the same manner as management does, if they so choose. These non-GAAP financial measures also allow investors and others to compare the Company’s current financial results with the Company’s past financial results in a consistent manner.

For example:

  • We exclude costs and tax effects associated with restructuring activities, such as reducing overhead and consolidating facilities. We believe that the costs related to these restructuring activities are not indicative of our normal operating costs.
  • We exclude certain acquisition-related costs, including significant transaction costs and amortization of inventory and fixed-asset step-ups and the related tax effects. We exclude these costs because we do not believe they are indicative of our normal operating costs.
  • We exclude the expense and tax effects associated with the non-cash amortization of acquisition-related intangible assets because a significant portion of the purchase price for acquisitions may be allocated to intangible assets that have lives up to 25 years. Exclusion of the non-cash amortization expense allows comparisons of operating results that are consistent over time for both our newly acquired and long-held businesses and with both acquisitive and non-acquisitive peer companies.
  • We also exclude certain gains/losses and related tax effects, which are either isolated or cannot be expected to occur again with any predictability, and that we believe are not indicative of our normal operating gains and losses. For example, we exclude gains/losses from items such as the sale of a business, significant litigation-related matters and lump-sum pension plan settlements.
  • Due to the significance of the Fluid Handling acquisition and to provide a more meaningful comparison of changes in our orders and revenue, we also discuss these changes on a “pro forma organic” basis. Pro forma organic is calculated assuming the Fluid Handling acquisition was completed on January 1, 2017 and excluding the impact of changes in foreign currency exchange rates.

CIRCOR’s management uses these non-GAAP measures, in addition to GAAP financial measures, as the basis for measuring the Company’s operating performance and comparing such performance to that of prior periods and to the performance of our competitors. We use such measures when publicly providing our business outlook, assessing future earnings potential, evaluating potential acquisitions and dispositions and in our financial and operating decision-making process, including for compensation purposes.

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

Safe Harbor Statement
This press release contains forward-looking statements within the meaning of Section 27 A of the Securities Act of 1933, as amended, and Section 21 E of the Securities Exchange Act of 1934, as amended. Reliance should not be placed on forward-looking statements because they involve unknown risks, uncertainties and other factors, which are, in some cases, beyond the control of CIRCOR. Any statements in this press release that are not statements of historical fact are forward-looking statements, including, but not limited to, those relating to CIRCOR's third-quarter 2018 guidance, our future performance, including realization of cost reductions from restructuring activities and expected synergies, and our corporate priorities. Actual events, performance or results could differ materially from the anticipated events, performance or results expressed or implied by such forward-looking statements. Important factors that could cause actual results to vary from expectations include, but are not limited to: our ability to respond to competitive developments and to grow our business, both domestically and internationally; changes in the cost, quality or supply of raw materials; our ability to comply with our debt obligations; our ability to successfully implement our acquisition, divesture or restructuring strategies, including our integration of the Fluid Handling business; changes in industry standards, trade policies or government regulations, both in the United States and internationally; and our ability to operate our manufacturing facilities at current or higher levels and respond to increases in manufacturing costs. BEFORE MAKING ANY INVESTMENT DECISIONS REGARDING OUR COMPANY, WE STRONGLY ADVISE YOU TO READ THE SECTION ENTITLED "RISK FACTORS" IN OUR MOST RECENT ANNUAL REPORT ON FORM 10-K AND SUBSEQUENT REPORTS ON FORMS 10-Q, WHICH CAN BE ACCESSED UNDER THE "INVESTORS" LINK OF OUR WEBSITE AT WWW.CIRCOR.COM. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

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

     

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

 
Three Months Ended Six Months Ended
July 1, 2018   July 2, 2017 July 1, 2018   July 2, 2017
Net revenues $ 301,368 $ 151,231 $ 576,948 $ 296,439
Cost of revenues 213,117   103,563   412,393   202,139  
GROSS PROFIT 88,251 47,668 164,555 94,300
Selling, general and administrative expenses 77,999 38,218 155,237 78,305
Special and restructuring charges (recoveries), net 2,000   (1,954 ) 14,446   (2,763 )
OPERATING INCOME (LOSS) 8,252   11,404   (5,128 ) 18,758  
Other expense (income):
Interest expense, net 13,755 2,184 25,556 3,853
Other (income) expense, net (3,759 ) 974   (5,620 ) 1,200  
TOTAL OTHER EXPENSE, NET 9,996   3,158   19,936   5,053  
(LOSS) INCOME BEFORE INCOME TAXES (1,744 ) 8,246 (25,064 ) 13,705
(Benefit from) provision for income taxes (7,646 ) (724 ) (13,525 ) (37 )
NET INCOME (LOSS) $ 5,902   $ 8,970   $ (11,539 ) $ 13,742  
Earnings (Loss) per common share:
Basic $ 0.30 $ 0.54 $ (0.58 ) $ 0.83
Diluted $ 0.30 $ 0.54 $ (0.58 ) $ 0.82
Weighted average number of common shares outstanding:
Basic 19,836 16,497 19,821 16,478
Diluted 20,005 16,762 19,906 16,726
Dividends declared per common share $ $ 0.0375 $ $ 0.0750
 
   

 

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

 
Six Months Ended
OPERATING ACTIVITIES July 1, 2018   July 2, 2017
Net (loss) income $ (11,539 ) $ 13,742
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
Depreciation 14,491 7,345
Amortization 24,611 6,216
Bad debt expense (recovery) 532 (319 )
Loss on write down of inventory 9,084 1,068
Compensation expense of share-based plans 2,866 1,386
Change in fair value of contingent consideration (12,200 )
Interest amortization 1,172
Loss (gain) on sale or write down of property, plant and equipment 1,124 (66 )
Loss on sale of business 5,300
Changes in operating assets and liabilities, net of effects of acquisition and disposition:
Trade accounts receivable 13,223 16,478
Inventories (12,920 ) (12,382 )
Prepaid expenses and other assets (17,534 ) (8,011 )
Accounts payable, accrued expenses and other liabilities (27,146 ) 305  
Net cash (used in) provided by operating activities (2,036 ) 18,862  
INVESTING ACTIVITIES
Additions to property, plant and equipment (12,315 ) (5,504 )
Proceeds from the sale of property, plant and equipment 175 318
Business acquisition, working capital adjustment 6,300   1,467  
Net cash used in investing activities (5,840 ) (3,719 )
FINANCING ACTIVITIES
Proceeds from long-term debt 137,162 333,021
Payments of long-term debt (104,194 ) (332,233 )
Dividends paid (1,251 )
Proceeds from the exercise of stock options 440 707
Return of cash to seller (61,201 )  
Net cash used in financing activities (27,793 ) (206 )
Effect of exchange rate changes on cash and cash equivalents (5,755 ) 4,056  
(DECREASE) INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH (41,424 ) 18,993
Cash, cash equivalents and restricted cash at beginning of period 112,247   58,279  
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD $ 70,823   $ 77,272  
 
     

CIRCOR INTERNATIONAL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

(UNAUDITED)

 
July 1, 2018 December 31, 2017
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 69,030 $ 110,356
Trade accounts receivable, less allowance for doubtful accounts of $6,704 and $4,791, respectively 199,805 223,922
Inventories 244,153 244,896

Restricted cash

1,792

1,937

Prepaid expenses and other current assets

70,133

 

57,282

 
Total Current Assets 584,913   636,456  
PROPERTY, PLANT AND EQUIPMENT, NET 217,471 217,539
OTHER ASSETS:
Goodwill 501,723 505,762
Intangibles, net 481,585 513,364
Deferred income taxes

41,498

22,334
Other assets 11,995   9,407  

TOTAL ASSETS

$

1,839,185

  $ 1,904,862  
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable $ 114,152 $ 117,329
Accrued expenses and other current liabilities 105,922 170,454
Accrued compensation and benefits 32,041   34,734  
Total Current Liabilities 252,115   322,517  
LONG-TERM DEBT 819,779 787,343
DEFERRED INCOME TAXES

27,320

26,122
PENSION LIABILITY, NET 142,417 150,719
OTHER NON-CURRENT LIABILITIES 23,561 18,124
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS’ EQUITY:
Common stock 212 212
Additional paid-in capital 442,318 438,721
Retained earnings 259,948 274,243
Common treasury stock, at cost (74,472 ) (74,472 )
Accumulated other comprehensive loss, net of tax (54,013 ) (36,730 )
Total Shareholders’ Equity 573,993   601,974  
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $

1,839,185

  $ 1,906,799  
 
 

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

 

    Three Months Ended   Six Months Ended
July 1, 2018   July 2, 2017 July 1, 2018   July 2, 2017
ORDERS (1) (3)  
Energy $ 113.2 $ 73.1 $ 242.9 $ 173.2
Aerospace & Defense 59.4 39.9 119.2 96.3
Industrial 136.7   29.9   273.4   57.5
Total orders $ 309.3   $ 142.9   $ 635.5   $ 327.0
 
BACKLOG (2) (3) July 1, 2018 July 2, 2017
Energy $ 217.7 $ 140.1
Aerospace & Defense 152.1 105.7
Industrial 167.3   33.8  
Total backlog $ 537.1   $ 279.6  
 

Note 1: Orders do not include the foreign exchange impact due to the re-measurement of customer order backlog amounts denominated in foreign currencies.
Note 2: Backlog represents unshipped customer orders for which revenue has not been recognized.
Note 3: 2018 backlog reflects adjustments related to the cumulative impact of changes in revenue recognition due to the Company's adoption of ASC 606. July 2, 2017 amounts restated for Q1 2018 organizational realignment.

 

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

 

                                 
2017   2018
1ST QTR   2ND QTR   3RD QTR   4TH QTR   TOTAL   1ST QTR   2ND QTR   TOTAL
ORDERS            
Energy $ 100,012 $ 73,140 $ 84,857 $ 118,073 $ 376,082 $ 129,762 $ 113,171 $ 242,933
Aerospace & Defense 56,416 39,902 45,939 $ 52,043 194,300 59,793 59,441 119,234
Industrial 27,654     29,889     27,296     46,407     131,246     136,607     136,746     273,353  
Total $ 184,082     $ 142,931     $ 158,092     $ 216,523     $ 701,628     $ 326,162     $ 309,358     $ 635,520  
 
NET REVENUES
Energy $ 76,210 $ 78,276 $ 88,570 $ 96,561 $ 339,617 $ 99,972 $ 112,804 $ 212,776
Aerospace & Defense 41,601 43,304 41,117 $ 56,961 182,983 58,477 57,500 $ 115,977
Industrial 27,397     29,651     30,006     52,056     139,110     117,131     131,064     $ 248,195  
Total $ 145,208     $ 151,231     $ 159,693     $ 205,578     $ 661,710     $ 275,580     $ 301,368     $ 576,948  
 
SEGMENT OPERATING INCOME
Energy $ 6,407 $ 8,170 $ 6,936 $ 8,618 $ 30,131 $ 5,696 $ 9,242 $ 14,938
Aerospace & Defense 3,784 4,374 4,333 10,884 23,375 8,931 6,992 $ 15,923
Industrial 4,384 4,901 5,675 4,972 19,932 12,948 15,037 $ 27,985
Corporate expenses (5,479 )   (5,396 )   (5,067 )   (5,802 )   (21,744 )   (7,802 )   (6,448 )   $ (14,250 )
Adjusted Operating Income $ 9,096     $ 12,049     $ 11,877     $ 18,672     $ 51,694     $ 19,773     $ 24,823     $ 44,596  
 
SEGMENT OPERATING MARGIN %
Energy 8.4 % 10.4 % 7.8 % 8.9 % 8.9 % 5.7 % 8.2 % 7.0 %
Aerospace & Defense 9.1 % 10.1 % 10.5 % 19.1 % 12.8 % 15.3 % 12.2 % 13.7 %
Industrial 16.0 %   16.5 %   18.9 %   9.6 %   14.3 %   11.1 %   11.5 %   11.3 %
Adjusted Operating Margin 6.3 %   8.0 %   7.4 %   9.1 %   7.8 %   7.2 %   8.2 %   7.7 %
 
 

CIRCOR INTERNATIONAL, INC.
RECONCILIATION OF KEY PERFORMANCE MEASURES TO COMMONLY USED GENERALLY ACCEPTED ACCOUNTING PRINCIPLE TERMS
(in thousands, except percentages)
UNAUDITED

         
2017   2018
1ST QTR   2ND QTR   3RD QTR   4TH QTR   TOTAL   1ST QTR   2ND QTR   TOTAL
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES $ 16,195   $ 2,667   $ (16,854 )   $ 7,629   $ 9,637 $ (147 )   $ (1,893 )   $ (2,040 )
LESS:
Capital expenditures, net of sale proceeds 2,811     2,375     2,318     6,103     13,607     8,141     3,999     12,140  
FREE CASH FLOW $ 13,384     $ 292     $ (19,172 )   $ 1,526     $ (3,970 )   $ (8,288 )   $ (5,892 )   $ (14,180 )
TOTAL DEBT $ 243,000 $ 252,856 $ 269,026 $ 795,208 $ 795,208 $ 823,665 $ 827,629 $ 827,629
LESS:
Cash & cash equivalents 65,656     77,272     75,627     110,356     110,356     123,305     69,030     69,030  
NET DEBT $ 177,344     $ 175,584     $ 193,399     $ 684,852     $ 684,852     $ 700,360     $ 758,599     $ 758,599  
TOTAL SHAREHOLDERS' EQUITY $ 415,537 $ 438,097 $ 451,885 $ 601,974 $ 601,974 $ 588,312 $ 573,992 $ 573,992
 
TOTAL DEBT AS % OF EQUITY 58 % 58 % 60 % 132 % 132 % 140 % 144 % 144 %
NET DEBT AS % OF EQUITY 43 % 40 % 43 % 114 % 114 % 119 % 132 % 132 %
 
 
CIRCOR INTERNATIONAL, INC.

RECONCILIATION OF KEY PERFORMANCE MEASURES TO COMMONLY USED GENERALLY ACCEPTED ACCOUNTING PRINCIPLE TERMS

(in thousands, except per share data)

UNAUDITED

         
2017   2018
1ST QTR   2ND QTR   3RD QTR   4TH QTR   TOTAL   1ST QTR   2ND QTR   TOTAL
NET INCOME (LOSS) $ 4,773   $ 8,970   $ 3,617   $ (5,571 )   $ 11,789 $ (17,441 )   $ 5,902   $ (11,539 )
LESS:
Restructuring related inventory charges 473 1,067 1,540
Amortization of inventory step-up 4,300 4,300 6,600 6,600
Restructuring charges, net 1,458 3,566 341 697 6,062 9,615 844 10,459
Acquisition amortization 2,552 2,599 2,694 4,697 12,542 11,797 11,767 23,564
Acquisition depreciation 233 233 1,837 1,735 3,572
Special (recoveries) charges, net (2,268 ) (5,520 ) 1,978 13,799 7,989 2,831 1,156 3,987
Income tax impact (1,137 )   (3,124 )   (1,497 )   (8,279 )   (14,037 )   (7,687 )   (11,056 )   (18,743 )
ADJUSTED NET INCOME $ 5,378     $ 6,491     $ 7,133     $ 9,876     $ 28,878     $ 8,025     $ 11,415     $ 19,440  
 
EARNINGS (LOSS) PER COMMON SHARE (Diluted) $ 0.29 $ 0.54 $ 0.22 $ (0.32 ) $ 0.70 $ (0.88 ) $ 0.30 $ (0.58 )
LESS:
Restructuring related inventory charges 0.02 0.05 0.08
Amortization of inventory step-up 0.25 0.26 0.33 0.33
Restructuring charges, net 0.09 0.21 0.02 0.04 0.36 0.49 0.04 0.53
Acquisition amortization 0.15 0.16 0.16 0.27 0.74 0.60 0.59 1.18
Acquisition depreciation 0.01 0.01 0.09 0.09 0.18
Special (recoveries) charges, net (0.14 ) (0.33 ) 0.12 0.80 0.47 0.14 0.06 0.20
Income tax impact (0.07 )   (0.19 )   (0.09 )   (0.48 )   (0.83 )   (0.39 )   (0.55 )   (0.94 )
ADJUSTED EARNINGS PER SHARE (Diluted) $ 0.32     $ 0.39     $ 0.43     $ 0.57     $ 1.71     $ 0.40     $ 0.57     $ 0.98  
 
 
CIRCOR INTERNATIONAL, INC.

RECONCILIATION OF KEY PERFORMANCE MEASURES TO COMMONLY USED GENERALLY ACCEPTED ACCOUNTING PRINCIPLE TERMS

(in thousands)

UNAUDITED

         
2017   2018
1ST QTR   2ND QTR   3RD QTR   4TH QTR   TOTAL   1ST QTR   2ND QTR   TOTAL
NET INCOME (LOSS) $ 4,773   $ 8,970   $ 3,617   $ (5,571 )   $ 11,789 $ (17,441 )   $ 5,902   $ (11,539 )
LESS:
Interest expense, net (1,669 ) (2,184 ) (2,445 ) (4,479 ) (10,777 ) (11,801 ) (13,755 ) (25,556 )
Depreciation (3,798 ) (3,547 ) (3,544 ) (4,401 ) (15,290 ) (7,334 ) (7,157 ) (14,491 )
Amortization (3,092 ) (3,124 ) (3,275 ) (5,256 ) (14,747 ) (12,329 ) (12,282 ) (24,611 )
(Provision for) benefit from income taxes (687 )   724     21     5,618     5,676     5,879     7,646     13,525  
EBITDA $ 14,019 $ 17,101 $ 12,860 $ 2,947 $ 46,927 $ 8,144 $ 31,450 $ 39,594
LESS:
Restructuring related inventory charges (473 ) (1,067 ) (1,540 )
Amortization of inventory step-up (4,300 ) (4,300 ) (6,600 ) (6,600 )
Restructuring charges, net (1,458 ) (3,566 ) (341 ) (697 ) (6,062 ) (9,615 ) (844 ) (10,459 )
Special recoveries (charges), net 2,268     5,520     (1,978 )   (13,799 )   (7,989 )   (2,831 )   (1,156 )   (3,987 )
ADJUSTED EBITDA $ 13,209     $ 15,147     $ 15,179     $ 21,743     $ 65,278     $ 27,663     $ 34,517     $ 62,180  
 
 
CIRCOR INTERNATIONAL, INC.

RECONCILIATION OF KEY PERFORMANCE MEASURES TO COMMONLY USED GENERALLY ACCEPTED ACCOUNTING PRINCIPLE TERMS

(in thousands, except percentages)

UNAUDITED

         
2017   2018
1ST QTR   2ND QTR   3RD QTR   4TH QTR   TOTAL   1ST QTR   2ND QTR   TOTAL
GAAP OPERATING INCOME (LOSS) $ 7,354   $ 11,404   $ 6,864   $ (5,054 )   $ 20,568 $ (13,380 )   $ 8,252   $ (5,128 )
LESS:
Restructuring related inventory charges 473 1,067 1,540
Amortization of inventory step-up 4,300 4,300 6,600 6,600
Restructuring charges, net 1,458 3,566 341 697 6,062 9,615 844 10,459
Acquisition amortization 2,552 2,599 2,694 4,697 12,542 11,797 11,767 23,564
Acquisition depreciation 233 233 1,837 1,735 3,572
Special (recoveries) charges, net (2,268 )   (5,520 )   1,978     13,799     7,989     2,831     1,156     3,987  
ADJUSTED OPERATING INCOME $ 9,096     $ 12,049     $ 11,877     $ 18,672     $ 51,694     $ 19,773     $ 24,821     $ 44,594  
 
GAAP OPERATING MARGIN 5.1 % 7.5 % 4.3 % (2.5 )% 3.1 % (4.9 )% 2.7 % (0.9 )%
LESS:
Restructuring related inventory charges % % % % % 0.2 % 0.4 % 0.3 %
Amortization of inventory step-up % % % 2.1 % 0.6 % 2.4 % % 1.1 %
Restructuring charges, net 1.0 % 2.4 % 0.2 % 0.3 % 0.9 % 3.5 % 0.3 % 1.8 %
Acquisition amortization 1.8 % 1.7 % 1.7 % 2.3 % 1.9 % 4.3 % 3.9 % 4.1 %
Acquisition depreciation % % % 0.1 % % 0.7 % 0.6 % 0.6 %
Special (recoveries) charges, net (1.6 )% (3.7 )% 1.2 % 6.7 % 1.2 % 1.0 % 0.4 % 0.7 %
ADJUSTED OPERATING MARGIN 6.3 % 8.0 % 7.4 % 9.1 % 7.8 % 7.2 % 8.2 % 7.7 %
 

The Company is providing certain combined information related to the recently acquired Fluid Handling business.

   

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

 
2017
1ST QTR   2ND QTR   3RD QTR   4TH QTR   TOTAL
ORDERS - Recast        
Energy $ 100,012 $ 73,140 $ 84,857 $ 118,073 $ 376,082
Aerospace & Defense 56,416 39,902 45,939 52,043 194,300
Industrial 27,654     29,889     27,296     46,407     131,246
Total $ 184,082     $ 142,931     $ 158,092     $ 216,523     $ 701,628
 
ORDERS - Fluid Handling
Energy $ 23,679 $ 16,882 $ 21,401 $ 11,803 $ 73,765
Aerospace & Defense 8,255 24,375 9,716 6,816 49,162
Industrial 77,944     76,866     87,378     60,193     302,381
Total $ 109,878     $ 118,123     $ 118,495     $ 78,812     $ 425,308
 
ORDERS - Combined
Energy $ 123,690 $ 90,022 $ 106,258 $ 129,876 $ 449,846
Aerospace & Defense 64,671 64,277 55,655 58,859 243,462
Industrial 105,598     106,755     114,674     106,601     433,628
Total $ 293,959     $ 261,054     $ 276,587     $ 295,336     $ 1,126,936
 
NET REVENUES - Recast
Energy $ 76,210 $ 78,276 $ 88,570 $ 96,561 $ 339,617
Aerospace & Defense 41,601 43,304 41,117 56,961 182,983
Industrial 27,397     29,651     30,006     52,056     139,110
Total $ 145,208     $ 151,231     $ 159,693     $ 205,578     $ 661,710
 
NET REVENUES - Fluid Handling
Energy $ 15,546 $ 17,705 $ 17,789 $ 13,663 $ 64,703
Aerospace & Defense 10,728 17,044 11,208 6,918 45,898
Industrial 85,264     83,310     85,604     72,489     326,667
Total $ 111,538     $ 118,059     $ 114,601     $ 93,070     $ 437,268
 
NET REVENUES - Combined
Energy $ 91,756 $ 95,981 $ 106,359 $ 110,224 $ 404,320
Aerospace & Defense 52,329 60,348 52,325 63,879 228,881
Industrial 112,661     112,961     115,610     124,545     465,777
Total $ 256,746     $ 269,290     $ 274,294     $ 298,648     $ 1,098,978
 

Notes:
- Items labeled "Recast" represent previously reported CIRCOR information, adjusted to reflect the impact of our February 28, 2018 organizational realignment
- Items labeled "Fluid Handling" represent the information from the Fluid Handling businesses prior to their acquisition by CIRCOR on December 10, 2017
- Items labeled "Combined" represent the sum of the Recast and Fluid Handling information

   

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

 
2017
1ST QTR   2ND QTR   3RD QTR   4TH QTR   TOTAL
SEGMENT OPERATING INCOME - Recast        
Energy $ 6,407 $ 8,170 $ 6,936 $ 8,618 $ 30,131
Aerospace & Defense 3,784 4,374 4,333 10,884 23,375
Industrial 4,384 4,901 5,675 4,972 19,932
Corporate expenses (5,479 )   (5,396 )   (5,067 )   (5,802 )   (21,744 )
Total $ 9,096     $ 12,049     $ 11,877     $ 18,672     $ 51,694  
 
SEGMENT OPERATING INCOME - Fluid Handling
Energy $ (83 ) $ 1,080 $ 1,761 $ 812 $ 3,570
Aerospace & Defense 1,488 3,661 2,201 (367 ) 6,983
Industrial 8,833 7,709 4,365 (1,414 ) 19,493
Corporate expenses                  
Total $ 10,238     $ 12,450     $ 8,327     $ (969 )   $ 30,046  
 
SEGMENT OPERATING INCOME - Combined
Energy $ 6,324 $ 9,250 $ 8,697 $ 9,430 $ 33,701
Aerospace & Defense 5,272 8,035 6,534 10,517 30,358
Industrial 13,217 12,610 10,040 3,558 39,425
Corporate expenses (5,479 )   (5,396 )   (5,067 )   (5,802 )   (21,744 )
Total $ 19,334     $ 24,499     $ 20,204     $ 17,703     $ 81,740  
 
SEGMENT OPERATING MARGIN - Combined
Energy 6.9 % 9.6 % 8.2 % 8.6 % 8.3 %
Aerospace & Defense 10.1 % 13.3 % 12.5 % 16.5 % 13.3 %
Industrial 11.7 % 11.2 % 8.7 % 2.9 % 8.5 %
Corporate expenses (2.1 )% (2.0 )% (1.8 )% (1.9 )% (2.0 )%
Total 7.5 % 9.1 % 7.4 % 5.9 % 7.4 %
 

Notes:
- Items labeled "Recast" represent previously reported CIRCOR information, adjusted to reflect the impact of our February 28, 2018 organizational realignment
- Items labeled "Fluid Handling" represent the information from the Fluid Handling businesses prior to their acquisition by CIRCOR on December 10, 2017
- Items labeled "Combined" represent the sum of the Recast and Fluid Handling information
- Segment Operating Margin - Combined represent Segment Operating Income - Combined divided by Segment Net Revenues Combined

                         

CIRCOR INTERNATIONAL, INC.
Q2 2018 Organic Growth Calculations
(in thousands, except percentages)
UNAUDITED

 
ORDERS      
Industrial Energy Aerospace & Defense
Reported

Pro Forma
Combined

Reported

Pro Forma
Combined

Reported

Pro Forma
Combined

$ % $ % $ % $ % $ % $ %
2017 29,889 106,755 73,140 90,022 39,902 64,277
Product line transfer   14,600         (14,600 )
2017 as Adjusted 29,889 121,355 73,140 90,022 39,902 49,677
Organic 3,267 11 % 9,780 8 % 19,470 27 % 21,449 24 % 2,766 7 % 8,664 17 %
Acquisitions 102,460 343 % % 18,389 25 % % 15,661 39 % %
Foreign Exchange 1,130   4 % 5,611   5 % 2,172   3 % 1,700   2 % 1,112   3 % 1,100   2 %
Total Change 106,857   358 % 15,391   13 % 40,031   55 % 23,149   26 % 19,539   49 % 9,764  

20

%
 
2018 136,746   136,746   113,171   113,171   59,441   59,441  
 
NET REVENUE      
Industrial Energy Aerospace & Defense
Reported

Pro Forma
Combined

Reported

Pro Forma
Combined

Reported

Pro Forma
Combined

$ % $ % $ % $ % $ % $ %
2017 29,651 112,961 78,276 95,981 43,304 60,348
 
Organic (220 ) (1 )% 13,003 12 % 15,765 20 % 15,824 16 % 1,319 3 % (3,948 ) (7 )%
Acquisitions 100,602 339 % % 17,419 22 % % 11,793 27 % %
Foreign Exchange 1,031   3 % 5,100   5 % 1,346   2 % 1,000   1 % 1,084   3 % 1,100   2 %
Total Change 101,413   341 % 18,103  

16

% 34,529   44 % 16,824   18 % 14,196   33 % (2,848 ) (5 )%
 
2018 131,064   131,064   112,804   112,804   57,500   57,500  
 
 
CIRCOR INTERNATIONAL, INC.
Q2 2018 Organic Growth Calculations
(in thousands, except percentages)
UNAUDITED
 
ORDERS      
Total
Reported     Pro Forma Combined
$   % $   %
2017 142,931 261,054
Product line transfer    
2017 as Adjusted 142,931 261,054
Organic 25,502 18 % 39,893 15 %
Acquisitions 136,511 96 % %
Foreign Exchange 4,414   3 % 8,411   3 %
Total Change 166,427  

116

% 48,304   18 %
 
2018 309,358   309,358  
 
NET REVENUE  
Total
Reported Pro Forma Combined
$ % $ %
2017 151,231 269,290
 
Organic 16,863 11 % 24,878 9 %
Acquisitions 129,814 86 % %
Foreign Exchange 3,460   2 % 7,200   3 %
Total Change 150,137   99 % 32,078   12 %
 

2018

301,368   301,368  
 
           

CIRCOR INTERNATIONAL, INC.
RECONCILIATION OF FLUID HANDLING SEGMENT INFORMATION TO GAAP OPERATING INCOME
(in thousands, except percentages)
UNAUDITED

 
2017
1ST QTR   2ND QTR   3RD QTR   4TH QTR   TOTAL
FLUID HANDLING GAAP OPERATING INCOME (LOSS) $ 4,359 $ 19,738 $ 2,241 $ 3,129 $ 29,467
LESS:
Asbestos costs 2,690 2,517 2,379 1,274 8,860
Impairment charges
Exited businesses 65 (26 ) (47 ) (8 )
Acquisition amortization 796 810 818 2,424
Restructuring and other special charges (recoveries) 2,328 (10,589 ) 636 (5,372 ) (12,997 )
Stay bonus         2,300         2,300  
FLUID HANDLING ADJUSTED OPERATING INCOME $ 10,238     $ 12,450     $ 8,327     $ (969 )   $ 30,046  
 

Notes
- Amounts relate to Fluid Handling results prior to December 10, 2017, the date of CIRCOR's acquisition.

CIRCOR International
Rajeev Bhalla, 781-270-1200
Executive Vice President & Chief Financial Officer


Source: Business Wire (July 26, 2018 - 5:12 PM EDT)

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