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CIRCOR Reports Third-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 third quarter ended September 27, 2020.

Third Quarter 2020 Overview

  • Revenue of $187 million, down 21% reported, down 15% organically
    • Aerospace & Defense revenue of $62 million, down 8% reported, down 9% organically
    • Industrial revenue of $124 million, down 27% reported, down 18% organically
  • Revenue drop through to earnings of 19%
  • GAAP loss per share of $(2.93); Adjusted earnings per share of $0.36
  • GAAP operating margin of 2.4%; Adjusted operating margin of 9.3%
  • Aerospace & Defense operating margin of 23.7%, up 360 bps versus last year
  • Gross debt reduction of $119 million and net debt reduction of $122 million over last 12 months
  • Remain on track to achieve $45 million 2020 cost reduction plan
  • Free cash flow flat and in line with prior guidance

“While the COVID-19 pandemic continues to have an impact around the globe, the strength, resilience, and diversification of our portfolio – together with the outstanding work and commitment of our employees – is mitigating the effect of the weaker economic environment,” said Scott Buckhout, CIRCOR’s President and CEO. “Fortunately, the mission critical nature of our products has ensured that our pricing strategy remains on track. In addition, the CIRCOR Operating System continues to play a pivotal role in driving execution, with most operating metrics improving through the downturn. We are working with urgency to ensure CIRCOR is positioned to take full advantage of an eventual market recovery by launching a record number of new products and establishing ongoing collaboration with customers and suppliers.”

“Looking ahead, we are focused on driving value for shareholders by investing in growth, expanding margins, generating strong free cash flow, and de-levering the balance sheet,” concluded Buckhout.

Selected Preliminary Consolidated Results

($ in millions except EPS)

Q3 2020

Q3 2019

Change

Q3 YTD
2020

Q3 YTD
2019

Change

Revenue

$

186.6

$

237.1

-21

%

$

564.9

$

721.7

-22

%

Revenue - excluding divested businesses1

186.6

216.4

-14

%

560.0

645.1

-13

%

GAAP operating (loss) income

4.4

(9.1)

148

%

(70.4)

20.7

-440

%

Adjusted operating income2

17.3

25.6

-32

%

44.3

77.6

-43

%

GAAP operating margin

2.4

%

(3.8)

%

620 bps

(12.5)

%

2.9

%

-1540 bps

Adjusted operating margin2

9.3

%

10.8

%

-150 bps

7.8

%

10.8

%

-300 bps

Adjusted operating margin ex divestitures2

9.3

%

10.6

%

-130 bps

7.9

%

9.8

%

-190 bps

GAAP loss per share (diluted)

$

(2.93)

$

(5.64)

48

%

$

(8.59)

$

(6.81)

-26

%

Adjusted earnings per share (diluted)2

$

0.36

$

0.63

-43

%

$

0.78

$

1.80

-57

%

Operating cash flow

2.5

9.1

-73

%

(46.4)

(0.9)

-5056

%

Free cash flow3

0.1

10.1

-99

%

(55.6)

(6.6)

-742

%

Orders

166.6

223.0

-25

%

567.7

740.9

-23

%

Orders - excluding divested businesses1

166.6

200.9

-17

%

563.2

663.8

-15

%

Segment Results

($ in millions)

Q3 2020

Q3 2019

Change

Q3 YTD
2020

Q3 YTD
2019

Change

Aerospace & Defense

Revenue

$

62.2

$

67.6

-8

%

$

190.0

$

193.6

-2

%

Segment operating income

14.8

13.6

9

%

40.4

33.4

21

%

Segment operating margin

23.7

%

20.1

%

360 bps

21.3

%

17.2

%

410 bps

Orders

59.1

64.0

-8

%

207.8

245.5

-15

%

Industrial

Revenue

$

124.4

$

169.4

-27

%

$

374.9

$

528.1

-29

%

Revenue - excluding divested businesses1

124.4

148.7

-16

%

370.0

451.5

-18

%

Segment operating income

9.8

21.3

-54

%

27.4

70.0

-61

%

Segment operating margin

7.9

%

12.6

%

-470 bps

7.3

%

13.3

%

-600 bps

Orders

107.5

159.0

-32

%

359.9

495.5

-27

%

Orders - excluding divested businesses1

107.5

136.9

-21

%

355.5

418.3

-15

%

  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 September 27, 2020.
  2. Adjusted consolidated and segment results for Q3 2020 exclude net income from discontinued operations of $0.3 million and net loss from non-cash acquisition-related intangible amortization, special and restructuring charges totaling $12.9 million. These charges include: (i) $11.6 million for non-cash acquisition-related intangible amortization and depreciation expense; (ii) $0.8 million of professional fees and other costs associated with restructuring and cost reductions; and (iii) $0.5 million of other special and restructuring charges. It also excludes the Q3 2020 charge for valuation allowance against deferred tax assets by virtue of using an effective tax rate in the adjusted results which is a $53.3 million adjustment to taxes. Adjusted consolidated and segment results for Q3 2019 exclude net loss from discontinued operations of $84.7 million and net loss from non-cash acquisition-related intangible amortization, special and restructuring charges totaling $34.7 million ($40.2 million, net of tax). These charges include: (i) $12.3 million for non-cash acquisition-related intangible amortization expense and amortization of the step-up in fixed asset values; (ii) $11.6 million related to business sales; (iii) $8.0 million of professional fees and other costs associated with restructuring and cost reductions; (iv) $4.0 million of professional fees associated with an unsolicited tender offer to acquire all outstanding shares of the Company’s common stock; and (iv) $1.1 million of other special and restructuring recoveries.
  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, November 5, 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 (833) 665-0658 or (914) 987-7312. The conference ID number is 9088809. 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.

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 September 27, 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 fourth quarter, the expected and potential direct or indirect impacts of the COVID-19 pandemic on our business, the realization of cost reductions from restructuring activities and expected synergies, the number of new product launches and future cash flows from operating activities, involve known and unknown risks, uncertainties and other factors, which may cause our actual results, performance or achievements to differ materially from anticipated future results, performance or achievements expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to: the duration and severity of the COVID-19 pandemic and its impact on the global economy; changes in the price of and demand for oil and gas in both domestic and international markets; any adverse changes in governmental policies; variability of raw material and component pricing; changes in our suppliers’ performance; fluctuations in foreign currency exchange rates; changes in tariffs or other taxes related to doing business internationally; our ability to hire and retain key personnel; our ability to operate our manufacturing facilities at efficient levels including our ability to prevent cost overruns and reduce costs; our ability to generate increased cash by reducing our working capital; our prevention of the accumulation of excess inventory; our ability to successfully implement our divestiture; restructuring or simplification strategies; fluctuations in interest rates; our ability to successfully defend product liability actions; as well as the uncertainty associated with the current worldwide economic conditions and the continuing impact on economic and financial conditions in the United States and around the world, including as a result of COVID-19, natural disasters, terrorist attacks and other similar matters. We advise you to read further about these and other risk factors set forth in Part II, Item 1A of this Quarterly Report on Form 10-Q and Part I, Item 1A, “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2019, which is filed with the Securities and Exchange Commission ("SEC") and is available on the SEC's website at www.sec.gov. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

About CIRCOR International, Inc.

CIRCOR International is one of the world’s leading providers of mission critical flow control products and services for the Industrial and Aerospace & Defense markets. The Company has a product portfolio of market-leading brands serving its customers’ most demanding applications. CIRCOR markets its solutions directly and through various sales partners to more than 14,000 customers in approximately 100 countries. The Company has a global presence with approximately 3,200 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

Nine Months Ended

Q3 2020

Q3 2019

Q3 2020

Q3 2019

Net revenues

$

186,640

$

237,052

$

564,920

$

721,675

Cost of revenues

130,630

162,578

389,905

490,870

Gross profit

56,010

74,474

175,015

230,805

Selling, general and administrative expenses

50,652

60,039

164,948

190,227

Goodwill impairment charge

116,182

Special and restructuring charges (recoveries), net

938

23,519

(35,747)

19,893

Operating income (loss)

4,420

(9,084)

(70,368)

20,685

Other expense (income), net:

Interest expense, net

8,202

11,804

25,699

37,846

Other expense (income), net

765

(759)

229

(2,755)

Total other expense, net

8,967

11,045

25,928

35,091

(Loss) income from continuing operations before income taxes

(4,547)

(20,129)

(96,296)

(14,406)

Provision for (benefit from) income taxes

54,318

7,520

40,923

13,513

(Loss) income from continuing operations, net of tax

(58,865)

(27,649)

(137,219)

(27,919)

Income (loss) from discontinued operations, net of tax

341

(84,688)

(34,345)

(107,572)

Net loss

$

(58,524)

$

(112,337)

$

(171,564)

$

(135,491)

Basic income (loss) per common share:

Basic from continuing operations

$

(2.94)

$

(1.39)

$

(6.87)

$

(1.40)

Basic from discontinued operations

$

0.02

$

(4.25)

$

(1.72)

$

(5.41)

Net loss

$

(2.93)

$

(5.64)

$

(8.59)

$

(6.81)

Diluted income (loss) per common share:

Diluted from continuing operations

$

(2.94)

$

(1.39)

$

(6.87)

$

(1.40)

Diluted from discontinued operations

$

0.02

$

(4.25)

$

(1.72)

$

(5.41)

Net loss

$

(2.93)

$

(5.64)

$

(8.59)

$

(6.81)

Weighted average number of common shares outstanding:

Basic

20,001

19,916

19,975

19,898

Diluted

20,001

19,916

19,975

19,898

 

CIRCOR INTERNATIONAL, INC.

Condensed Consolidated Statements of Cash Flows

(in thousands) (unaudited)

 

Nine Months Ended

September 27,
2020

September 29,
2019

OPERATING ACTIVITIES

Net loss

$

(171,564)

$

(135,491)

Loss from discontinued operations, net of income taxes

(34,345)

(107,572)

Loss from continuing operations

(137,219)

(27,919)

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

Depreciation

14,881

16,618

Amortization

32,418

36,023

Provision for bad debt expense

7,219

(469)

Write down of inventory

2,386

301

Compensation expense for share-based plans

4,076

4,200

Amortization of debt issuance costs

6,463

3,669

Deferred tax provision

35,582

11,812

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

2,889

Goodwill impairment charge

116,182

(Gain) loss on sale of businesses

(54,253)

2,707

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

Trade accounts receivable

18,051

17,413

Inventories

(8,477)

(11,724)

Prepaid expenses and other assets

(39,184)

(20,546)

Accounts payable, accrued expenses and other liabilities

(30,468)

(18,300)

Net cash (used in) provided by continuing operating activities

(32,343)

16,674

Net cash used in discontinued operating activities

(14,022)

(17,585)

Net cash used in operating activities

(46,365)

(911)

INVESTING ACTIVITIES

Additions to property, plant and equipment

(9,147)

(9,519)

Proceeds from sale of property, plant and equipment

(122)

99

Proceeds from the sale of business

166,210

163,056

Proceeds from beneficial interest of factored receivables

2,212

Net cash provided by continuing investment activities

159,153

153,636

Net cash used in discontinued investing activities

(11,338)

(2,435)

Net cash provided by investing activities

147,815

151,201

FINANCING ACTIVITIES

Proceeds from long-term debt

165,800

231,950

Payments of long-term debt

(279,191)

(379,897)

Proceeds from the exercise of stock options

117

106

Net cash used in continuing financing activities

(113,274)

(147,841)

Net cash used in financing activities

(113,274)

(147,841)

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

29

(1,753)

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

(11,795)

696

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

85,727

69,525

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

$

73,932

$

70,221

 

CIRCOR INTERNATIONAL, INC.

Condensed Consolidated Balance Sheets

(in thousands) (unaudited)

 

September 27,
2020

December 31,
2019

ASSETS

CURRENT ASSETS:

Cash and cash equivalents

$

72,772

$

84,531

Trade accounts receivable, less allowance for doubtful accounts of $10,424 and $3,086 at September 27, 2020 and December 31, 2019, respectively

102,840

125,422

Inventories

144,476

137,309

Prepaid expenses and other current assets

98,401

66,664

Assets held for sale

161,193

Total Current Assets

418,489

575,119

PROPERTY, PLANT AND EQUIPMENT, NET

167,037

172,179

OTHER ASSETS:

Goodwill

158,117

271,893

Intangibles, net

357,038

385,542

Deferred income taxes

905

30,852

Other assets

43,621

35,360

TOTAL ASSETS

$

1,145,207

$

1,470,945

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:

Accounts payable

$

63,966

$

79,399

Accrued expenses and other current liabilities

86,176

94,169

Accrued compensation and benefits

27,570

19,518

Liabilities held for sale

43,289

Total Current Liabilities

177,712

236,375

LONG-TERM DEBT

527,721

636,297

DEFERRED INCOME TAXES

16,823

21,425

PENSION LIABILITY, NET

143,599

146,801

OTHER NON-CURRENT LIABILITIES

58,538

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; 19,997,931 and 19,912,362 outstanding at September 27, 2020 and December 31, 2019 respectively

214

213

Additional paid-in capital

451,351

446,657

(Accumulated deficit) retained earnings

(72,528)

99,280

Common treasury stock, at cost (1,372,488 shares at September 27, 2020 and December 31, 2019)

(74,472)

(74,472)

Accumulated other comprehensive loss, net of tax

(83,751)

(80,267)

Total Shareholders' Equity

220,814

391,411

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

1,145,207

$

1,470,945

 

CIRCOR INTERNATIONAL, INC.

Summary of Orders and Backlog

(in millions) (unaudited)

 

Three Months Ended

Nine Months Ended

Q3 2020

Q3 2019

Q3 2020

Q3 2019

ORDERS (1)

Aerospace & Defense

$

59.1

$

64.0

$

207.8

$

245.5

Industrial

107.5

159.0

359.9

495.4

Total Orders

$

166.6

$

223.0

$

567.7

$

740.9

Q3 2020

Q3 2019

BACKLOG (2)

Aerospace & Defense

$

211.4

$

206.9

Industrial

204.0

218.4

Total Backlog

$

415.4

$

425.3

Note 1: Orders do not include the foreign exchange impact due to the re-measurement of customer backlog amounts denominated in foreign currencies. Orders for the nine months ended September 27, 2020 include orders from businesses divested prior to September 27, 2020 of $4.5 million. Orders for the three months ended September 27, 2019 include orders from businesses divested of $22.1 million ($77.1 million for the nine months ended September 27, 2019). Divested businesses are Reliability Services, Spence/Nicholson and Instrumentation & Sampling, all in the Industrial segment.

Note 2: Backlog includes unshipped customer orders for which revenue has not been recognized. Backlog at Q3 2019 includes $9.1 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

3RD QTR

TOTAL

ORDERS

Aerospace & Defense

$

88,107

$

93,405

$

63,968

$

68,459

$

313,939

$

72,031

$

76,616

$

59,105

$

207,752

Industrial

171,834

164,642

158,986

168,091

663,553

136,443

116,023

107,453

359,919

Total

$

259,941

$

258,047

$

222,954

$

236,550

$

977,492

$

208,474

$

192,639

$

166,558

$

567,671

NET REVENUES

Aerospace & Defense

$

61,240

$

64,694

$

67,621

$

79,070

$

272,625

$

65,493

$

62,241

$

62,249

$

189,983

Industrial

177,615

181,074

169,431

163,568

691,688

126,720

123,825

124,391

374,937

Total

$

238,855

$

245,768

$

237,052

$

242,638

$

964,313

$

192,213

$

186,066

$

186,640

$

564,920

SEGMENT OPERATING INCOME

Aerospace & Defense

$

9,374

$

10,443

$

13,564

$

19,099

$

52,480

$

12,494

$

13,142

$

14,782

$

40,418

Industrial

22,581

26,174

21,278

20,757

90,790

5,169

12,406

9,807

27,383

Corporate expenses

(8,522)

(8,028)

(9,248)

(7,671)

(33,469)

(6,588)

(9,664)

(7,244)

(23,496)

Total

$

23,433

$

28,589

$

25,594

$

32,185

$

109,801

$

11,075

$

15,884

$

17,345

$

44,305

SEGMENT OPERATING MARGIN %

Aerospace & Defense

15.3

%

16.1

%

20.1

%

24.2

%

19.2

%

19.1

%

21.1

%

23.7

%

21.3

%

Industrial

12.7

%

14.5

%

12.6

%

12.7

%

13.1

%

4.1

%

10.0

%

7.9

%

7.3

%

Total

9.8

%

11.6

%

10.8

%

13.3

%

11.4

%

5.8

%

8.5

%

9.3

%

7.8

%

2019

2020

Results of divested businesses (1)

1ST QTR

2ND QTR

3RD QTR

4TH QTR

TOTAL

1ST QTR

2ND QTR

3RD 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

1ST QTR

2ND QTR

3RD QTR

4TH QTR

TOTAL

1ST QTR

2ND QTR

3RD QTR

TOTAL

ORDERS

Aerospace & Defense

$

88,107

$

93,405

$

63,968

$

68,459

$

313,939

$

72,031

$

76,616

$

59,105

$

207,752

Industrial

141,223

140,194

136,896

150,044

568,357

131,994

116,023

107,453

355,470

Total

$

229,330

$

233,599

$

200,864

$

218,503

$

882,296

$

204,025

$

192,639

$

166,558

$

563,222

NET REVENUES

Aerospace & Defense

$

61,240

$

64,694

$

67,621

$

79,070

$

272,625

$

65,493

$

62,241

$

62,249

$

189,983

Industrial

147,828

154,973

148,734

144,966

596,501

121,820

123,825

124,391

370,037

Total

$

209,068

$

219,667

$

216,355

$

224,036

$

869,126

$

187,313

$

186,066

$

186,640

$

560,020

SEGMENT OPERATING INCOME

Aerospace & Defense

$

9,374

$

10,443

$

13,564

$

19,099

$

52,480

$

12,494

$

13,142

$

14,782

$

40,418

Industrial

16,364

20,945

18,601

17,591

73,501

5,169

12,406

9,807

27,383

Corporate expenses

(8,522)

(8,028)

(9,248)

(7,671)

(33,469)

(6,588)

(9,664)

(7,244)

(23,496)

Total

$

17,216

$

23,360

$

22,917

$

29,019

$

92,512

$

11,075

$

15,884

$

17,345

$

44,305

SEGMENT OPERATING MARGIN %

Aerospace & Defense

15.3

%

16.1

%

20.1

%

24.2

%

19.2

%

19.1

%

21.1

%

23.7

%

21.3

%

Industrial

11.1

%

13.5

%

12.5

%

12.1

%

12.3

%

4.2

%

10.0

%

7.9

%

7.4

%

Total

8.2

%

10.6

%

10.6

%

13.0

%

10.6

%

5.9

%

8.5

%

9.3

%

7.9

%

(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

3RD QTR

TOTAL

Net Cash (Used In) Provided By Operating Activities

$

(22,378)

$

12,339

$

9,128

$

16,822

$

15,911

$

(23,947)

$

(24,883)

$

2,465

$

(46,365)

LESS

Capital expenditures, net of sale proceeds (a)

3,689

2,995

(963)

(1,535)

4,186

3,412

3,527

2,330

9,269

FREE CASH FLOW

$

(26,067)

$

9,344

$

10,091

$

18,357

$

11,725

$

(27,359)

$

(28,410)

$

135

$

(55,634)

Gross Debt

$

753,950

$

748,250

$

659,100

$

653,850

$

653,850

$

602,288

$

592,038

$

540,463

$

540,463

Less: Cash & Cash equivalents

73,619

76,082

69,225

84,531

84,531

170,861

125,421

72,772

72,772

GROSS DEBT, NET OF CASH

$

680,331

$

672,168

$

589,875

$

569,319

$

569,319

$

431,427

$

466,617

$

467,691

$

467,691

TOTAL SHAREHOLDERS' EQUITY

$

516,177

$

494,899

$

375,388

$

391,411

$

391,411

$

290,845

$

273,351

$

220,814

$

220,814

GROSS DEBT AS % OF EQUITY

146

%

151

%

176

%

167

%

167

%

207

%

217

%

245

%

245

%

GROSS DEBT, NET OF CASH AS % OF EQUITY

132

%

136

%

157

%

145

%

145

%

148

%

171

%

212

%

212

%

(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

3RD QTR

TOTAL

NET (LOSS) INCOME

$

(4,633)

$

(18,520)

$

(112,338)

$

1,555

$

(133,936)

$

(78,948)

$

(34,092)

$

(58,524)

$

(171,564)

LESS:

Restructuring related inventory charges

325

(1,145)

(820)

(602)

351

(250)

Restructuring charges, net

358

299

5,038

(509)

5,186

2,883

588

502

3,973

Acquisition amortization

12,077

11,247

11,202

11,189

45,715

10,218

10,681

10,625

31,523

Acquisition depreciation

1,123

1,106

1,102

1,021

4,352

974

980

1,011

2,965

Special (recoveries) charges, net

(8,200)

3,917

18,481

3,488

17,686

(45,175)

5,019

436

(39,720)

Goodwill Impairment charge

116,182

116,182

Income tax impact

3,625

(2,266)

5,533

(1,752)

5,140

7,704

(22,549)

53,240

38,395

Net loss (income) from discontinued operations

5,728

17,156

84,688

1,595

109,167

(9,162)

43,848

(341)

34,345

ADJUSTED NET INCOME

$

10,403

$

12,939

$

12,561

$

16,587

$

52,490

$

4,074

$

4,475

$

7,300

$

15,849

(LOSS) EARNINGS PER COMMON SHARE (Diluted)

$

(0.23)

$

(0.93)

$

(5.64)

$

0.08

$

(6.73)

$

(3.96)

$

(1.68)

$

(2.93)

$

(8.59)

LESS:

Restructuring related inventory charges

0.02

(0.06)

(0.04)

(0.03)

0.02

(0.01)

Restructuring charges, net

0.02

0.02

0.25

(0.03)

0.26

0.14

0.03

0.02

0.20

Acquisition amortization

0.61

0.57

0.56

0.56

2.30

0.51

0.53

0.53

1.58

Acquisition depreciation

0.06

0.06

0.06

0.05

0.22

0.05

0.05

0.05

0.15

Special (recoveries) charges, net

(0.41)

0.20

0.93

0.18

0.89

(2.27)

0.25

0.02

(1.99)

Impairment charge

5.83

5.82

Income tax impact

0.18

(0.12)

0.28

(0.10)

0.24

0.39

(1.11)

2.66

1.91

Earnings (Loss) per share from discontinued operations

0.29

0.86

4.25

0.08

5.48

(0.46)

2.16

(0.02)

1.72

ADJUSTED EARNINGS PER SHARE (Diluted)

$

0.52

$

0.65

$

0.63

$

0.82

$

2.62

$

0.20

$

0.22

$

0.36

$

0.78

 

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

3RD QTR

TOTAL

NET (LOSS) INCOME

$

(4,633)

$

(18,520)

$

(112,338)

$

1,555

$

(133,936)

$

(78,948)

$

(34,092)

$

(58,524)

$

(171,564)

LESS:

Interest expense, net

13,094

12,947

11,804

10,763

48,609

9,011

8,486

8,202

25,699

Depreciation

5,499

5,568

5,551

5,427

22,045

5,121

4,958

4,802

14,881

Amortization

12,536

11,685

11,629

11,741

47,591

10,516

10,976

10,925

32,418

Provision for income taxes

5,709

284

7,490

1,193

14,676

8,374

(21,769)

54,318

40,923

Loss (income) from discontinued operations

5,728

17,156

84,688

1,595

109,167

(9,162)

43,847

(341)

34,345

EBITDA

$

37,933

$

29,121

$

8,825

$

32,274

$

108,152

$

(55,088)

$

12,406

$

19,383

$

(23,299)

LESS:

Restructuring related inventory charges (recoveries)

325

(1,145)

(820)

(602)

351

(250)

Restructuring charges (recoveries), net

358

299

5,038

(509)

5,186

2,883

588

502

3,973

Special (recoveries) charges, net

(8,200)

3,917

18,481

3,488

17,686

(45,175)

5,019

436

(39,720)

Goodwill impairment charge

116,182

116,182

ADJUSTED EBITDA

$

30,416

$

33,337

$

31,199

$

35,253

$

130,204

$

18,200

$

18,013

$

20,671

$

56,885

 

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

3RD QTR

TOTAL

GAAP OPERATING INCOME (LOSS)

$

17,750

$

12,020

$

(9,084)

$

16,996

$

37,682

$

(73,405)

$

(1,384)

$

4,420

$

(70,368)

LESS:

Restructuring related inventory charges (recoveries)

325

(1,145)

(820)

(602)

351

(250)

Amortization of inventory step-up

Restructuring charges (recoveries), net

358

299

5,038

(509)

5,186

2,883

588

502

3,973

Acquisition amortization

12,077

11,247

11,202

11,189

45,715

10,218

10,681

10,625

31,523

Acquisition depreciation

1,123

1,106

1,102

1,021

4,352

974

980

1,011

2,965

Special (recoveries) charges, net

(8,200)

3,917

18,481

3,488

17,686

(45,175)

5,019

436

(39,720)

Goodwill impairment charge

116,182

116,182

ADJUSTED OPERATING INCOME

$

23,433

$

28,589

$

25,594

$

32,185

$

109,801

$

11,075

$

15,884

$

17,345

$

44,305

GAAP OPERATING MARGIN

7.4

%

4.9

%

(3.8)

%

7.0

%

3.9

%

(38.2)

%

(0.7)

%

2.4

%

(12.5)

%

LESS:

Restructuring related inventory charges (recoveries)

0.1

%

%

(0.5)

%

%

(0.1)

%

(0.3)

%

%

0.2

%

%

Amortization of inventory step-up

%

%

%

%

%

%

%

%

%

Restructuring charges (recoveries), net

0.1

%

0.1

%

2.1

%

(0.2)

%

0.5

%

1.5

%

0.3

%

0.3

%

0.7

%

Acquisition amortization

5.1

%

4.6

%

4.7

%

4.6

%

4.7

%

5.3

%

5.7

%

5.7

%

5.6

%

Acquisition depreciation

0.5

%

0.5

%

0.5

%

0.4

%

0.5

%

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

%

0.2

%

(7.0)

%

Goodwill impairment charge

%

%

%

%

%

60.4

%

%

%

20.6

%

ADJUSTED OPERATING MARGIN

9.8

%

11.6

%

10.8

%

13.3

%

11.4

%

5.8

%

8.5

%

9.3

%

7.8

%

Contacts:

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

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