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CIRCOR Reports Second-Quarter 2020 Financial Results

CIRCOR International, Inc. (NYSE: CIR), one of the world’s leading providers of mission critical flow control products and services for the Industrial and Aerospace & Defense markets, today announced GAAP and adjusted financial results for the second quarter ended June 28, 2020.

Second Quarter 2020 Overview

  • Orders of $193 million produced a book-to-bill ratio of 1.04 and backlog increase of $7 million
  • Revenue of $186 million, down 24% reported, down 14% organically
    • Aerospace & Defense revenue of $62 million, down 4% reported, down 3% organically
    • Industrial revenue of $124 million, down 32% reported, down 19% organically
  • GAAP loss per share of $(1.68); Adjusted earnings per share of $0.22
  • GAAP operating margin of (0.7%); Adjusted operating margin of 8.5%
  • Aerospace & Defense operating margin of 21.1%, up 500 bps versus last year
  • Completed exit from upstream Oil & Gas: Divested loss-making Distributed Valves
  • All manufacturing facilities operating at level of demand
  • Remain on track to achieve $45 million 2020 cost reduction plan
  • Gross debt reduction of $156 million and net debt reduction of $205 million over last 12 months

“As we continue to navigate the COVID-19 environment, CIRCOR’s top priority remains the health and safety of our employees, customers and suppliers,” said Scott Buckhout, CIRCOR’s President and CEO. “I would like to thank the entire CIRCOR team for doing a remarkable job serving our customers during this challenging time. I am pleased to report that as of today, all of our facilities are operational, with limited direct disruption from the COVID-19 pandemic.”

Mr. Buckhout continued, “Our team has been effectively executing and building upon the 18-month strategic plan that we laid out last summer. Consistent with this plan, we completed our exit from upstream Oil & Gas, remain on track to launch 45 new products this year, and have expanded our planned 2020 cost actions to better align our cost structure with the current market environment.”

“Looking ahead, we continue to focus on creating long-term value for shareholders by positioning the Company for growth, expanding margins, generating strong free cash flow, and de-levering the balance sheet.”

 

Selected Preliminary Consolidated Results

 

($ millions except EPS)

Q2 2020

Q2 2019

Change

Q2 YTD
2020

Q2 YTD
2019

Change

Revenue

$

186.1

$

245.8

-24

%

$

378.3

$

484.6

-22

%

Revenue - excluding divested businesses 1

186.1

219.7

-15

%

373.4

428.7

-13

%

GAAP operating (loss) income

(1.4

)

12.0

-112

%

(74.8

)

29.8

-351

%

Adjusted operating income 2

15.9

28.6

-44

%

27.0

52.0

-48

%

GAAP operating margin

(0.7

)%

4.9

%

-560 bps

(19.8

)%

6.1

%

-2590 bps

Adjusted operating margin 2

8.5

%

11.6

%

-310 bps

7.1

%

10.7

%

-360 bps

Adjusted operating margin ex divestitures 1&2

8.5

%

10.6

%

-210 bps

7.2

%

9.5

%

-230 bps

GAAP loss per share (diluted)

$

(1.68

)

$

(0.93

)

-81

%

$

(5.66

)

$

(1.16

)

-388

%

Adjusted earnings per share (diluted) 2

$

0.22

$

0.65

-66

%

$

0.42

$

1.17

-64

%

Operating cash flow

(24.9

)

12.3

-302

%

(48.8

)

(10.0

)

-388

%

Free cash flow 3

(28.4

)

9.3

-405

%

(55.8

)

(16.7

)

-234

%

Orders

192.6

258.0

-25

%

401.1

518.0

-23

%

Orders - excluding divested businesses 1

192.6

233.6

-18

%

396.7

462.9

-14

%

 

Segment Results

 

($ millions)

Q2 2020

Q2 2019

Change

Q2 YTD
2020

Q2 YTD
2019

Change

Aerospace & Defense

Revenue

$

62.2

$

64.7

-4

%

$

127.7

$

125.9

1

%

Segment operating income

13.1

10.4

26

%

25.6

19.8

29

%

Segment operating margin

21.1

%

16.1

%

500 bps

20.1

%

15.7

%

440 bps

Orders

$

76.6

$

93.4

-18

%

$

148.6

$

181.5

-18

%

Industrial

Revenue

$

123.8

$

181.1

-32

%

$

250.5

$

358.7

-30

%

Revenue - excluding divested businesses 1

123.8

155.0

-20

%

245.6

302.8

-19

%

Segment operating income 2

12.4

26.2

-53

%

17.6

48.8

-64

%

Segment operating margin 2

10.0

%

14.5

%

-450 bps

7.0

%

13.6

%

-660 bps

Orders

$

116.0

$

164.6

-30

%

$

252.5

$

336.5

-25

%

Orders - excluding divested businesses 1

116.0

140.2

-17

%

248.0

281.4

-12

%

 
  1. Orders and revenue excluding divested businesses are non-GAAP measures and are calculated by subtracting the orders and revenues generated by the divested businesses during the periods prior to their divestiture from reported orders and revenues. Divested businesses include Reliability Services, Spence/Nicholson and Instrumentation & Sampling (all Industrial) which were sold before June 28, 2020.
  2. Adjusted consolidated and segment results for Q2 2020 exclude net loss from discontinued operations of $43.8 million and net loss from non-cash acquisition-related intangible amortization, special and restructuring charges totaling $17.3 million ($5.3 million income, net of tax). These charges include: (i) $11.7 million for non-cash acquisition-related intangible amortization and depreciation expense; (ii) $4.6 million of professional fees associated with an unsolicited tender offer to acquire all outstanding shares of the Company’s common stock; and (iii) $1.0 million of other special and restructuring charges. Adjusted consolidated and segment results for Q2 2019 exclude net loss from discontinued operations of $17.2 million and net loss from non-cash acquisition-related intangible amortization, special and restructuring charges totaling $16.6 million ($14.3 million, net of tax). These charges include: (i) $12.4 million for non-cash acquisition-related intangible amortization expense and amortization of the step-up in fixed asset values; (ii) $2.1 million of professional fees associated with an unsolicited tender offer to acquire all outstanding shares of the Company’s common stock;(iii) $1.4 million related to the divestiture of our Reliability Services business; and (iv) $0.7 million of other special and restructuring charges.
  3. Free cash flow is a non-GAAP financial measure and is calculated by subtracting GAAP capital expenditures, net of proceeds from asset sales, from GAAP operating cash flow.

Conference Call Information

CIRCOR International will hold a conference call to review its financial results at 9:00 a.m. ET today, August 7, 2020. 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 and organic growth (and such measures further excluding discontinued operations) are non-GAAP financial measures. These non-GAAP financial measures are used by management in our financial and operating decision making because we believe they reflect our ongoing business and facilitate period-to-period comparisons. We believe these non-GAAP financial measures provide useful information to investors and others in understanding and evaluating the Company’s current operating performance and future prospects in the same manner as management does, if they so choose. These non-GAAP financial measures also allow investors and others to compare the Company’s current financial results with the Company’s past financial results in a consistent manner. For example:

We exclude costs and tax effects associated with restructuring activities, such as reducing overhead and consolidating facilities. We believe that the costs related to these restructuring activities are not indicative of our normal operating costs.

We exclude certain acquisition-related costs, including significant transaction costs and amortization of inventory and fixed-asset step-ups and the related tax effects. We exclude these costs because we do not believe they are indicative of our normal operating costs.

We exclude the expense and tax effects associated with the non-cash amortization of acquisition-related intangible assets because a significant portion of the purchase price for acquisitions may be allocated to intangible assets that have lives up to 25 years. Exclusion of the non-cash amortization expense allows comparisons of operating results that are consistent over time for both our newly acquired and long-held businesses and with both acquisitive and non-acquisitive peer companies.

We also exclude certain gains/losses and related tax effects, which are either isolated or cannot be expected to occur again with any predictability, and that we believe are not indicative of our normal operating gains and losses. For example, we exclude gains/losses from items such as the sale of a business, significant litigation-related matters and lump-sum pension plan settlements.

We exclude the results of discontinued operations.

We exclude goodwill impairment charges.

Due to the significance of recently sold businesses and to provide a comparison of changes in our orders and revenue, we also discuss these changes on an “organic” basis. Organic is calculated assuming the divestitures completed prior to June 28, 2020 were completed on January 1, 2019 and excluding the impact of changes in foreign currency exchange rates.

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

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

Safe Harbor Statement

This press release contains certain statements that are “forward-looking statements” as that term is defined under the Private Securities Litigation Reform Act of 1995 (the “Act”). The words “may,” “hope,” “should,” “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “predict,” “potential,” “continue,” and other expressions, which are predictions of or indicate future events and trends and which do not relate to historical matters, identify forward-looking statements, although not all forward-looking statements are accompanied by such words. We believe that it is important to communicate our future expectations to our stockholders, and we, therefore, make forward-looking statements in reliance upon the safe harbor provisions of the Act. However, there may be events in the future that we are not able to accurately predict or control and our actual results may differ materially from the expectations we describe in our forward-looking statements. Forward-looking statements, including statements about outlook for the third quarter, the expected and potential direct or indirect impacts of the COVID-19 pandemic on our business, the realization of cost reductions from restructuring activities and expected synergies, the number of new product launches and future cash flows from operating activities, involve known and unknown risks, uncertainties and other factors, which may cause our actual results, performance or achievements to differ materially from anticipated future results, performance or achievements expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to: the duration and severity of the COVID-19 pandemic and its impact on the global economy; changes in the price of and demand for oil and gas in both domestic and international markets; our ability to successfully integrate acquired businesses; any adverse changes in governmental policies; variability of raw material and component pricing; changes in our suppliers’ performance; fluctuations in foreign currency exchange rates; changes in tariffs or other taxes related to doing business internationally; our ability to hire and retain key personnel; our ability to operate our manufacturing facilities at efficient levels including our ability to prevent cost overruns and reduce costs; our ability to generate increased cash by reducing our working capital; our prevention of the accumulation of excess inventory; our ability to successfully implement our divestiture; restructuring or simplification strategies; fluctuations in interest rates; our ability to successfully defend product liability actions; as well as the uncertainty associated with the current worldwide economic conditions and the continuing impact on economic and financial conditions in the United States and around the world, including as a result of COVID-19, natural disasters, terrorist attacks, current Middle Eastern conflicts and other similar matters. BEFORE MAKING ANY INVESTMENT DECISIONS REGARDING OUR COMPANY, WE STRONGLY ADVISE YOU TO READ FURTHER ABOUT THESE AND OTHER RISK FACTORS SET FORTH IN THE “RISK FACTORS” OF OUR ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2019, WHICH IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ("SEC") AND IS AVAILABLE ON THE SEC'S WEBSITE AT WWW.SEC.GOV, 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 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 3,200 employees and is headquartered in Burlington, Massachusetts. For more information, visit the Company’s investor relations website at http://investors.circor.com.

 

CIRCOR INTERNATIONAL, INC.
Condensed Consolidated Statements of Operations
(in thousands, except per share data) (unaudited)

 

Three Months Ended

Six Months Ended

Q2 2020

Q2 2019

Q2 2020

Q2 2019

Net revenues

$

186,066

$

245,768

$

378,279

$

484,623

Cost of revenues

127,105

163,851

259,275

328,292

Gross profit

58,961

81,917

119,004

156,331

Selling, general and administrative expenses

54,738

65,682

114,296

130,188

Goodwill impairment charge

116,182

Special and restructuring (charges) recoveries, net

5,607

4,215

(36,685

)

(3,627

)

Operating (loss) income

(1,384

)

12,020

(74,789

)

29,770

Other expense (income):

Interest expense (income), net

8,486

12,947

17,497

26,041

Other income, net

2,144

153

(536

)

(1,995

)

Total other expense, net

10,630

13,100

16,961

24,046

(Loss) income from continuing operations before income taxes

(12,014

)

(1,080

)

(91,750

)

5,724

(Benefit from) provision for income taxes

(21,769

)

284

(13,395

)

5,993

Income (loss) from continuing operations, net of tax

9,755

(1,364

)

(78,355

)

(269

)

Loss from discontinued operations, net of tax

(43,847

)

(17,156

)

(34,685

)

(22,884

)

Net loss

$

(34,092

)

$

(18,520

)

$

(113,040

)

$

(23,153

)

Basic income (loss) per common share:

Basic from continuing operations

$

0.49

$

(0.07

)

$

(3.93

)

$

(0.01

)

Basic from discontinued operations

$

(2.19

)

$

(0.86

)

$

(1.74

)

$

(1.15

)

Net loss

$

(1.71

)

$

(0.93

)

$

(5.66

)

$

(1.16

)

Diluted income (loss) per common share:

Diluted from continuing operations

$

0.48

$

(0.07

)

$

(3.93

)

$

(0.01

)

Diluted from discontinued operations

$

(2.16

)

$

(0.86

)

$

(1.74

)

$

(1.15

)

Net loss

$

(1.68

)

$

(0.93

)

$

(5.66

)

$

(1.16

)

Weighted average number of common shares outstanding:

Basic

19,987

19,906

19,962

19,888

Diluted

20,286

19,906

19,962

19,888

 

CIRCOR INTERNATIONAL, INC.
Condensed Consolidated Statements of Cash Flows
(in thousands) (unaudited)

 

Six Months Ended

June 28,
2020

June 30,
2019

OPERATING ACTIVITIES

Net loss

$

(113,040

)

$

(23,153

)

Loss from discontinued operations, net of income taxes

(34,685

)

(22,884

)

Loss from continuing operations

(78,355

)

(269

)

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation

10,079

11,067

Amortization

21,492

24,317

Provision for bad debt expense

7,768

21

Loss on write-down of inventory

352

961

Compensation expense for share-based plans

2,290

2,976

Amortization of debt issuance costs

5,488

1,997

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

72

Goodwill impairment charge

116,182

Gain on sale of businesses

(54,253

)

(9,165

)

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

Trade accounts receivable

768

17,867

Inventories

(12,370

)

(12,868

)

Prepaid expenses and other assets

(25,264

)

(11,592

)

Accounts payable, accrued expenses and other liabilities

(31,475

)

(30,465

)

Net cash (used in) provided by continuing operating activities

(37,298

)

(5,081

)

Net cash used in discontinued operating activities

(11,532

)

(4,958

)

Net cash used in operating activities

(48,830

)

(10,039

)

INVESTING ACTIVITIES

Additions to property, plant and equipment

(6,815

)

(6,358

)

Proceeds from sale of property, plant and equipment

(142

)

858

Proceeds from the sale of business

169,375

82,203

Proceeds from collection of beneficial interest

1,339

Net cash provided by continuing investment activities

163,757

76,703

Net cash provided by (used in) discontinued investing activities

(10,071

)

(1,184

)

Net cash provided by investing activities

153,686

75,519

FINANCING ACTIVITIES

Proceeds from long-term debt

129,325

149,500

Payments of long-term debt

(191,141

)

(208,300

)

Proceeds from the exercise of stock options

118

106

Net cash used in continuing financing activities

(61,698

)

(58,694

)

Net cash used in financing activities

(61,698

)

(58,694

)

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

(2,421

)

793

INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH

40,737

7,579

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

85,727

69,525

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

$

126,464

$

77,104

CIRCOR INTERNATIONAL, INC.
Condensed Consolidated Balance Sheets
(in thousands) (unaudited)

 

June 28, 2020

December 31, 2019

ASSETS

CURRENT ASSETS:

Cash and cash equivalents

$

125,421

$

84,531

Trade accounts receivable, less allowance for doubtful accounts of $10,877 and $3,086 at June 28, 2020 and December 31, 2019, respectively

117,131

125,422

Inventories

148,383

137,309

Prepaid expenses and other current assets

94,969

66,664

Assets held for sale

161,193

Total Current Assets

485,904

575,119

PROPERTY, PLANT AND EQUIPMENT, NET

167,194

172,179

OTHER ASSETS:

Goodwill

156,654

271,893

Intangibles, net

363,087

385,542

Deferred income taxes

53,357

30,852

Other assets

34,171

35,360

TOTAL ASSETS

$

1,260,367

$

1,470,945

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:

Accounts payable

$

68,155

$

79,399

Accrued expenses and other current liabilities

102,717

94,169

Accrued compensation and benefits

27,318

19,518

Liabilities held for sale

43,289

Total Current Liabilities

198,190

236,375

LONG-TERM DEBT

578,613

636,297

DEFERRED INCOME TAXES

20,229

21,425

PENSION LIABILITY, NET

145,138

146,801

OTHER NON-CURRENT LIABILITIES

44,846

38,636

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY:

Preferred stock, $0.01 par value; 1,000,000 shares authorized; no shares issued and outstanding

Common stock, $0.01 par value; 29,000,000 shares authorized; 19,994,356 and 19,912,362 shares issued and outstanding at June 28, 2020 and December 31, 2019, respectively

214

213

Additional paid-in capital

449,576

446,657

(Accumulated deficit) retained earnings

(13,982

)

99,280

Common treasury stock, at cost (1,372,488 shares at June 28, 2020 and December 31, 2019)

(74,472

)

(74,472

)

Accumulated other comprehensive loss, net of tax

(87,985

)

(80,267

)

Total Shareholders' Equity

273,351

391,411

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

1,260,367

$

1,470,945

CIRCOR INTERNATIONAL, INC.
Summary of Orders and Backlog
(in millions) (unaudited)

 

Three Months Ended

Six Months Ended

Q2 2020

Q2 2019

Q2 2020

Q2 2019

ORDERS (1)

Aerospace & Defense

$

76.6

$

93.4

$

148.6

$

181.5

Industrial

116.0

164.6

252.5

336.5

Total Orders

$

192.6

$

258.0

$

401.1

$

518.0

Q2 2020

Q2 2019

BACKLOG (2)

Aerospace & Defense

$

214.2

$

235.0

Industrial

217.8

238.1

Total Backlog

$

432.0

$

473.1

Note 1: Orders do not include the foreign exchange impact due to the re-measurement of customer backlog amounts denominated in foreign currencies. Orders for the six months ended June 28, 2020 include orders from businesses divested prior to June 28, 2020 of $4.5 million. Orders for the three months ended June 30, 2019 include orders from businesses divested of $24.4 million ($55.1 million for the six months ended June 30, 2019). Divested businesses are Reliability Services, Spence/Nicholson and Instrumentation and Sampling, all in the Industrial segment.

Note 2: Backlog includes unshipped customer orders for which revenue has not been recognized. Backlog at Q2 2019 includes $11.3 million for Industrial related to divested businesses.

 

CIRCOR INTERNATIONAL, INC.
Segment Information
(in thousands, except percentages) (unaudited)

2019

2020

As Reported

1ST QTR

2ND QTR

3RD QTR

4TH QTR

TOTAL

1ST QTR

2ND QTR

TOTAL

ORDERS

Aerospace & Defense

$

88,107

$

93,405

$

63,968

$

68,459

$

313,939

$

72,031

$

76,616

$

148,647

Industrial

171,834

164,642

158,986

168,091

663,553

136,443

116,023

252,466

Total

$

259,941

$

258,047

$

222,954

$

236,550

$

977,492

$

208,474

$

192,639

$

401,113

NET REVENUES

Aerospace & Defense

$

61,240

$

64,694

$

67,621

$

79,070

$

272,625

$

65,493

$

62,241

$

127,734

Industrial

177,615

181,074

169,431

163,568

691,688

126,720

123,825

250,545

Total

$

238,855

$

245,768

$

237,052

$

242,638

$

964,313

$

192,213

$

186,066

$

378,279

SEGMENT OPERATING
INCOME

Aerospace & Defense

$

9,374

$

10,443

$

13,564

$

19,099

$

52,480

$

12,494

$

13,142

$

25,636

Industrial

22,581

26,174

21,278

20,757

90,790

5,169

12,406

17,575

Corporate expenses

(8,522

)

(8,028

)

(9,248

)

(7,671

)

(33,469

)

(6,588

)

(9,664

)

(16,252

)

Total

$

23,433

$

28,589

$

25,594

$

32,185

$

109,801

$

11,075

$

15,884

$

26,959

SEGMENT OPERATING
MARGIN %

Aerospace & Defense

15.3

%

16.1

%

20.1

%

24.2

%

19.2

%

19.1

%

21.1

%

20.1

%

Industrial

12.7

%

14.5

%

12.6

%

12.7

%

13.1

%

4.1

%

10.0

%

7.0

%

Total

9.8

%

11.6

%

10.8

%

13.3

%

11.4

%

5.8

%

8.5

%

7.1

%

2019

2020

Results of Divested Businesses (1)

1ST QTR

2ND QTR

3RD QTR

4TH QTR

TOTAL

1ST QTR

2ND QTR

TOTAL

ORDERS - Industrial

$

30,611

$

24,448

$

22,090

$

18,047

$

95,196

$

4,449

$

$

4,449

NET REVENUES - Industrial

$

29,787

$

26,101

$

20,697

$

18,602

$

95,187

$

4,900

$

$

4,900

SEGMENT OP. INC. - Industrial

$

6,217

$

5,229

$

2,677

$

3,166

$

17,289

$

$

$

 

CIRCOR INTERNATIONAL, INC.
Supplemental Information Regarding Divested Businesses
(in thousands, except percentages) (unaudited)

 

2019

2020

Results Excluding Divested
Businesses (1)

1ST QTR

2ND QTR

3RD QTR

4TH QTR

TOTAL

1ST QTR

2ND QTR

TOTAL

ORDERS

Aerospace & Defense

$

88,107

$

93,405

$

63,968

$

68,459

$

313,939

$

72,031

$

76,616

$

148,647

Industrial

141,223

140,194

136,896

150,044

568,357

131,994

116,023

248,017

Total

$

229,330

$

233,599

$

200,864

$

218,503

$

882,296

$

204,025

$

192,639

$

396,664

NET REVENUES

Aerospace & Defense

$

61,240

$

64,694

$

67,621

$

79,070

$

272,625

$

65,493

$

62,241

$

127,734

Industrial

147,828

154,973

148,734

144,966

596,501

121,820

123,825

245,645

Total

$

209,068

$

219,667

$

216,355

$

224,036

$

869,126

$

187,313

$

186,066

$

373,379

SEGMENT OPERATING
INCOME

Aerospace & Defense

$

9,374

$

10,443

$

13,564

$

19,099

$

52,480

$

12,494

$

13,142

$

25,636

Industrial

16,364

20,945

18,601

17,591

73,501

5,169

12,406

17,575

Corporate expenses

(8,522

)

(8,028

)

(9,248

)

(7,671

)

(33,469

)

(6,588

)

(9,664

)

(16,252

)

Total

$

17,216

$

23,360

$

22,917

$

29,019

$

92,512

$

11,075

$

15,884

$

26,959

SEGMENT OPERATING
MARGIN %

Aerospace & Defense

15.3

%

16.1

%

20.1

%

24.2

%

19.2

%

19.1

%

21.1

%

20.1

%

Industrial

11.1

%

13.5

%

12.5

%

12.1

%

12.3

%

4.2

%

10.0

%

7.2

%

Total

8.2

%

10.6

%

10.6

%

13.0

%

10.6

%

5.9

%

8.5

%

7.2

%

(1) Divested businesses are related to the Industrial Segment and include Reliability Services, Spence/Nicholson and Instrumentation & Sampling. Engineered Valves and Distributed Valves are discontinued operations and not reflected in the As Reported figures in accordance with US GAAP.

 

CIRCOR INTERNATIONAL, INC.
Reconciliation of Key Performance Measures to Commonly Used Generally Accepted Accounting Principle Terms
(in thousands, except percentages) (unaudited)

 

2019

2020

1ST QTR

2ND QTR

3RD QTR

4TH QTR

TOTAL

1ST QTR

2ND QTR

TOTAL

Net Cash (Used In) Provided By
Operating Activities

$

(22,378

)

$

12,339

$

9,128

$

16,822

$

15,911

$

(23,947

)

$

(24,883

)

$

(48,830

)

Less: Capital expenditures, net of sale proceeds (a)

3,689

2,995

(963

)

(1,535

)

4,186

3,412

3,527

6,939

FREE CASH FLOW

$

(26,067

)

$

9,344

$

10,091

$

18,357

$

11,725

$

(27,359

)

$

(28,410

)

$

(55,769

)

Gross Debt

$

753,950

$

748,250

$

659,100

$

653,850

$

653,850

$

602,288

$

592,038

$

592,038

Less: Cash & Cash equivalents

73,619

76,082

69,225

84,531

84,531

170,861

125,421

125,421

NET DEBT

$

680,331

$

672,168

$

589,875

$

569,319

$

569,319

$

431,427

$

466,617

$

466,617

TOTAL SHAREHOLDERS' EQUITY

$

516,177

$

494,899

$

375,388

$

391,411

$

391,411

$

290,845

$

273,351

$

273,351

GROSS DEBT AS % OF EQUITY

146

%

151

%

176

%

167

%

167

%

207

%

217

%

217

%

NET DEBT AS % OF EQUITY

132

%

136

%

157

%

145

%

145

%

148

%

171

%

171

%

(a) includes capital expenditures, net of sales proceeds of discontinued operations

CIRCOR INTERNATIONAL, INC.
Reconciliation of Key Performance Measures to Commonly Used Generally Accepted Accounting Principle Terms
(in thousands, except percentages) (unaudited)

 

2019

2020

1ST QTR

2ND QTR

3RD QTR

4TH QTR

TOTAL

1ST QTR

2ND QTR

TOTAL

NET (LOSS) INCOME

$

(4,633

)

$

(18,520

)

$

(112,338

)

$

1,555

$

(133,936

)

$

(78,948

)

$

(34,092

)

$

(113,040

)

LESS:

Restructuring related inventory charges (recoveries)

325

(1,145

)

(820

)

(602

)

(602

)

Amortization of inventory step-up

Restructuring charges, net

358

299

5,038

(509

)

5,186

2,883

588

3,471

Acquisition amortization

12,077

11,247

11,202

11,189

45,715

10,218

10,681

20,899

Acquisition depreciation

1,123

1,106

1,102

1,021

4,352

974

980

1,954

Special (recoveries) charges, net

(8,200

)

3,917

18,481

3,488

17,686

(45,175

)

5,019

(40,156

)

Goodwill impairment charge

116,182

116,182

Income tax impact

3,625

(2,266

)

5,533

(1,752

)

5,140

7,704

(22,549

)

(14,845

)

Net loss (income) from discontinued operations

5,728

17,156

84,688

1,595

109,167

(9,162

)

43,848

34,686

ADJUSTED NET INCOME

$

10,403

$

12,939

$

12,561

$

16,587

$

52,490

$

4,074

$

4,475

$

8,549

(LOSS) EARNINGS PER COMMON
SHARE (Diluted)

$

(0.23

)

$

(0.93

)

$

(5.64

)

$

0.08

$

(6.73

)

$

(3.96

)

$

(1.68

)

$

(5.66

)

LESS:

Restructuring related inventory charges (recoveries)

0.02

0.00

(0.06)

0.00

(0.04)

(0.03)

0.00

(0.03)

Amortization of inventory step-up

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

Restructuring charges, net

0.02

0.02

0.25

(0.03)

0.26

0.14

0.03

0.17

Acquisition amortization

0.61

0.57

0.56

0.56

2.30

0.51

0.53

1.05

Acquisition depreciation

0.06

0.06

0.06

0.05

0.22

0.05

0.05

0.10

Special (recoveries) charges, net

(0.41)

0.20

0.93

0.18

0.89

(2.27)

0.25

(2.01)

Goodwill impairment charge

0.00

0.00

0.00

0.00

0.00

5.83

0.00

5.82

Income tax impact

0.18

(0.12)

0.28

(0.10)

0.24

0.39

(1.11)

(0.75)

Loss per share from discontinued operations

0.29

0.86

4.25

0.08

5.48

(0.46)

2.16

1.74

ADJUSTED EARNINGS PER SHARE
(Diluted)

$

0.52

$

0.65

$

0.63

$

0.82

$

2.62

$

0.20

$

0.22

$

0.42

CIRCOR INTERNATIONAL, INC.
Reconciliation of Key Performance Measures to Commonly Used Generally Accepted Accounting Principle Terms
(in thousands, except percentages) (unaudited)

 

2019

2020

1ST QTR

2ND QTR

3RD QTR

4TH QTR

TOTAL

1ST QTR

2ND QTR

TOTAL

NET (LOSS) INCOME

$

(4,633

)

$

(18,520

)

$

(112,338

)

$

1,555

$

(133,936

)

$

(78,948

)

$

(34,092

)

$

(113,040

)

LESS:

Interest expense, net

13,094

12,947

11,804

10,763

48,609

9,011

8,486

17,497

Depreciation

5,499

5,568

5,551

5,427

22,045

5,121

4,958

10,079

Amortization

12,536

11,685

11,629

11,741

47,591

10,516

10,976

21,492

Provision for (benefit from) income taxes

5,709

284

7,490

1,193

14,676

8,374

(21,769

)

(13,395

)

Loss (income) from discontinued operations

5,728

17,156

84,688

1,595

109,167

(9,162

)

43,847

34,685

EBITDA

$

37,933

$

29,121

$

8,825

$

32,274

$

108,152

$

(55,088

)

$

12,406

$

(42,682

)

LESS:

Restructuring related inventory charges

325

(1,145

)

(820

)

(602

)

(602

)

Amortization of inventory step-up

Restructuring charges, net

358

299

5,038

(509

)

5,186

2,883

588

3,471

Special (recoveries) charges, net

(8,200

)

3,917

18,481

3,488

17,686

(45,175

)

5,019

(40,156

)

Goodwill impairment charge

116,182

116,182

ADJUSTED EBITDA

$

30,416

$

33,337

$

31,199

$

35,253

$

130,204

$

18,200

$

18,013

$

36,213

CIRCOR INTERNATIONAL, INC.
Reconciliation of Key Performance Measures to Commonly Used Generally Accepted Accounting Principle Terms
(in thousands, except percentages) (unaudited)

 

2019

2020

1ST QTR

2ND QTR

3RD QTR

4TH QTR

TOTAL

1ST QTR

2ND QTR

TOTAL

GAAP OPERATING INCOME (LOSS)

$

17,750

$

12,020

$

(9,084

)

$

16,996

$

37,682

$

(73,405

)

$

(1,384

)

$

(74,789

)

LESS:

Restructuring related inventory charges (recoveries)

325

(1,145

)

(820

)

(602

)

(602

)

Amortization of inventory step-up

Restructuring charges, net

358

299

5,038

(509

)

5,186

2,883

588

3,471

Acquisition amortization

12,077

11,247

11,202

11,189

45,715

10,218

10,681

20,899

Acquisition depreciation

1,123

1,106

1,102

1,021

4,352

974

980

1,954

Special (recoveries) charges, net

(8,200

)

3,917

18,481

3,488

17,686

(45,175

)

5,019

(40,156

)

Goodwill impairment charge

116,182

116,182

ADJUSTED OPERATING INCOME

$

23,433

$

28,589

$

25,594

$

32,185

$

109,801

$

11,075

$

15,884

$

26,959

GAAP OPERATING MARGIN

7.4

%

4.9

%

-3.8

%

7.0

%

3.9

%

-38.2

%

-0.7

%

-19.8

%

LESS:

Restructuring related inventory charges (recoveries)

0.1

%

%

-0.5

%

%

-0.1

%

-0.3

%

%

-0.2

%

Amortization of inventory step-up

%

%

%

%

%

%

%

%

Restructuring charges, net

0.1

%

0.1

%

2.1

%

-0.2

%

0.5

%

1.5

%

0.3

%

0.9

%

Acquisition amortization

5.1

%

4.6

%

4.7

%

4.6

%

4.7

%

5.3

%

5.7

%

5.5

%

Acquisition depreciation

0.5

%

0.5

%

0.5

%

0.4

%

0.5

%

0.5

%

0.5

%

0.5

%

Special (recoveries) charges, net

-3.4

%

1.6

%

7.8

%

1.4

%

1.8

%

-23.5

%

2.7

%

-10.6

%

Goodwill impairment charge

%

%

%

%

%

60.4

%

%

30.7

%

ADJUSTED OPERATING MARGIN

9.8

%

11.6

%

10.8

%

13.3

%

11.4

%

5.8

%

8.5

%

7.1

%

Contacts:

Abhi Khandelwal
Senior Vice President Finance & Chief Financial Officer
CIRCOR International
(781) 270-1200

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