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| 8-K - FORM 8-K - CIRCOR INTERNATIONAL INC | d8k.htm |
EXHIBIT 99.1
PRESS RELEASE
CIRCOR Reports Fourth-Quarter and 2010 Results
• Q4 Revenue and Adjusted EPS in Line with Guidance Range
• Q4 Revenues Grow 23% Year over Year to $194.1 Million
• Q4 Orders Increase 22% on 50% Energy Bookings Growth over 2010
Burlington, MA – February 24, 2011 – CIRCOR International, Inc. (NYSE: CIR), a provider of valves and other highly engineered products and subsystems that control the flow of fluids safely and efficiently in the aerospace, energy and industrial markets, today announced financial results for the fourth quarter and year ended December 31, 2010.
Management Comments on Fourth-Quarter Results
“CIRCOR concluded 2010 with solid top line growth for the fourth quarter,” said Chairman and Chief Executive Officer Bill Higgins. “Total revenues were up 23% from the fourth quarter of 2009 in line with our initial guidance, driven by strong short-cycle Energy segment growth. Adjusted earnings, excluding Leslie asbestos and bankruptcy charges, were also within our initial guidance range.”
“We are pleased with year-over-year order growth in the Energy segment of 50%, confirming that capital spending on large international projects is gradually coming off the cyclical bottom,” said Higgins.
“Finally, we are ecstatic with the affirmation by the U.S. Federal District Court of Leslie’s reorganization plan,” said Higgins. “We have now cleared the last major milestone for Leslie Controls to emerge from bankruptcy free of asbestos liabilities.”
Consolidated Results
Revenues for the fourth quarter of 2010 were $194.1 million, a 23% increase from $158.1 million generated in the fourth quarter of 2009. CIRCOR reported net income for the fourth quarter of 2010 of $7.7 million, or $0.44 per diluted share, compared with a net loss of $20.7 million, or $1.22 per share, for the fourth quarter of 2009.
Fourth-quarter 2010 net income included pretax Leslie asbestos and bankruptcy charges of $2.2 million, compared with charges during the fourth quarter of 2009 of $40.4 million of pretax Leslie asbestos charges and a $0.5 million intangible trade name impairment charge. Excluding special, impairment and Leslie asbestos and bankruptcy charges net of tax, adjusted earnings per diluted share increased 56% to $0.53 for the fourth quarter of 2010, compared with $0.34 in the fourth quarter of 2009.
Consolidated Orders and Free Cash Flow
The Company received orders totaling $212.4 million during the fourth quarter of 2010, an increase of 22% compared with the fourth quarter of 2009 and a 3% increase compared with the third quarter of 2010. Backlog as of December 31, 2010 was $404.3 million, up 28% from backlog of $316.7 million at December 31, 2009 and up 3% from $391.6 million at October 3, 2010.
During the fourth quarter of 2010, the Company generated $15.7 million of free cash flow (defined as net cash from operating activities, less capital expenditures and dividends paid) compared with generating $11.8 million in the fourth quarter of 2009, with the increase primarily due to higher net income. For full year 2010, the Company had free cash flow of $16.9 million compared with $33.0 million in 2009. The decline in free cash flow from 2009 largely resulted from working capital increases and higher capital expenditures.
Energy
CIRCOR’s Energy segment revenues of $90.2 million for the quarter ended December 31, 2010 represent a 37% increase from $66.1 million for the quarter ended December 31, 2009. The increase included 41% organic growth, which was partially offset by a negative foreign currency adjustment of 4%. The organic growth was primarily the result of strong shipment volume in the North American short-cycle business.
Incoming orders for the fourth quarter of 2010 were $120.8 million, an increase of 50% year over year and 23% sequentially. The year-over-year growth was primarily due to continued strength in the North American short-cycle business and a strong recovery in late-cycle large energy projects. Ending backlog totaled $179.9 million, a 35% increase year over year and an 18% increase sequentially.
For the fourth quarter of 2010, the Energy segment adjusted operating margin, which excludes the impact of special charges, of 6.7% compares with 3.0% for the fourth quarter of 2009 and 11.1% for the third quarter of 2010. The 2010 year-over-year increase in fourth-quarter adjusted operating margin was primarily driven by organic growth, associated operating leverage, and lack of severance and consolidation expenses which were incurred in the fourth quarter of 2009. This improvement was partially offset by severe pricing pressures and cost overruns in large international projects.
Aerospace
CIRCOR’s Aerospace segment revenues increased by 24% to $35.5 million for the fourth quarter of 2010 from $28.5 million in the fourth quarter of 2009. The increase in revenues was driven by 15% growth from acquisitions and 12% organic growth, which was partially offset by a 3% decline from foreign currency adjustments. The organic growth was from sales across most end markets.
Incoming orders for the fourth quarter of 2010 were $30.8 million, an increase of 24% year over year, but down 2% sequentially. The majority of the year-over-year increase in orders was due to the acquisition of Castle in August 2010. Ending backlog totaled $147.2 million, an increase of 28% year over year, but down 4% sequentially.
The Aerospace segment’s adjusted operating margin was 14.1% for the fourth quarter of 2010, compared with 14.7% for the fourth quarter of 2009, which excludes the impact of special charges, and 9.6% for the third quarter of 2010. Fourth-quarter 2010 adjusted operating margins decreased primarily due to higher operating expenses related to the support of new programs and acquisition integration costs.
Flow Technologies
CIRCOR’s Flow Technologies segment revenues increased 8% to $68.4 million for the fourth quarter of 2010 from $63.5 million in the fourth quarter of 2009. Fourth-quarter 2010 revenues reflected organic growth of 10%, primarily due to semiconductor, maritime, industrial and process strength, and growth from acquisitions of 1%, which was partially offset by foreign currency adjustments of 3%.
Incoming orders for this segment were $60.8 million for the fourth quarter of 2010, a decrease of 12% year over year and 21% sequentially. The year-over-year and sequential decrease was due to lower semiconductor and maritime orders offsetting moderate growth in most other markets. Ending backlog totaled $77.2 million, an increase of 14% year over year and a decrease of 10% sequentially.
This segment’s adjusted operating margin, which excludes the impact of Leslie asbestos and bankruptcy charges, for the fourth quarter of 2010 was 12.5%, compared with 11.7% in the fourth quarter of 2009 and 13.1% in the third quarter of 2010. The fourth-quarter year-over-year adjusted operating margin increase was due primarily to higher volumes and associated leverage in addition to a gain from a small asset disposition.
Business and Financial Outlook
“We executed well on our growth strategy in 2010,” said Higgins. “Our strategy is to strengthen our positions in targeted end-markets and build global capabilities in high-growth emerging markets through organic and acquisition growth while incrementally expanding margins. We believe this strategy will enable us to double the size of our company within the next three to five years.”
“We remain cautiously optimistic as we proceed in 2011. Most of the energy markets are rebounding although pricing of large projects continues to be competitive. Commercial aerospace looks stronger in general, but we expect weakness in military sales. Most of our industrial markets are continuing to show growth,” concluded Higgins.
CIRCOR currently expects revenues for the first quarter of 2011 in the range of $193 million to $203 million and adjusted earnings in the range of $0.41 to $0.51 per diluted share. CIRCOR’s guidance for adjusted earnings per share excludes $0.02 per diluted share in Leslie asbestos and bankruptcy charges and assumes a 30% tax rate and that exchange rates remain at present levels.
Conference Call Information
CIRCOR International will hold a conference call to review its financial results today, February 24, 2011, at 10:00 a.m. ET. Those who wish to listen to the conference call and view the accompanying presentation slides should visit “Webcasts & Presentations” in the “Investors” portion of the CIRCOR website. The live call also can be accessed by dialing (877) 407-5790 or (201) 689-8328. If you are unable to listen to the live call, the webcast will be archived for one year on the Company’s website.
Use of Non-GAAP Financial Measures
Adjusted net income, adjusted earnings per diluted share, adjusted operating margin, and free cash flow are non-GAAP financial measures and are intended to serve as a complement to results provided in accordance with accounting principles generally accepted in the United States. CIRCOR believes that such information provides an additional measurement and consistent historical comparison of the Company’s performance. A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures is available in this news release.
Safe Harbor Statement
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E 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 future performance, including first-quarter revenue and earnings guidance; the Company’s strategy to strengthen its positions in targeted end-markets and build global capabilities in high-growth emerging markets through organic and acquisition growth while incrementally expanding margins; belief that strategy will enable CIRCOR to double its size within the next three to five years; expectations for weak military sales; and the Company's expectations related to the
process for Leslie Controls' emergence from bankruptcy. Actual events, performance or results could differ materially from the anticipated events, performance or results expressed or implied by such forward-looking statements. 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 valves and other highly engineered products and subsystems that control the flow of fluids safely and efficiently in the aerospace, energy and industrial markets. With more than 7,000 customers in over 100 countries, CIRCOR has a diversified product portfolio with recognized, market-leading brands. CIRCOR’s culture, built on the CIRCOR Business System, is defined by the Company’s commitment to attracting, developing and retaining the best talent and pursuing continuous improvement in all aspects of its business and operations. The Company’s strategy includes growing organically by investing in new, differentiated products; adding value to component products; and increasing the development of mission-critical subsystems and solutions. CIRCOR also plans to leverage its strong balance sheet to acquire strategically complementary businesses. For more information, visit the Company’s investor relations web site at http://investors.circor.com.
Contact:
Frederic M. Burditt
Chief Financial Officer
CIRCOR International
(781) 270-1200
CIRCOR INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
UNAUDITED
| Three Months Ended | Twelve Months Ended | |||||||||||||||
| December 31, 2010 | December 31, 2009 | December 31, 2010 | December 31, 2009 | |||||||||||||
| Net revenues |
$ | 194,059 | $ | 158,113 | $ | 685,910 | $ | 642,622 | ||||||||
| Cost of revenues |
140,532 | 109,920 | 488,641 | 448,043 | ||||||||||||
| GROSS PROFIT |
53,527 | 48,193 | 197,269 | 194,579 | ||||||||||||
| Selling, general and administrative expenses |
40,483 | 39,855 | 149,508 | 137,982 | ||||||||||||
| Leslie asbestos and bankruptcy charges |
2,173 | 40,397 | 32,775 | 54,079 | ||||||||||||
| Impairment charges |
— | 485 | — | 485 | ||||||||||||
| Special recoveries |
— | — | — | (1,678 | ) | |||||||||||
| OPERATING INCOME (LOSS) |
10,871 | (32,544 | ) | 14,986 | 3,711 | |||||||||||
| Other expense (income): |
||||||||||||||||
| Interest income |
(82 | ) | (76 | ) | (244 | ) | (467 | ) | ||||||||
| Interest expense |
723 | 678 | 2,760 | 1,535 | ||||||||||||
| Other expense (income), net |
608 | 967 | (39 | ) | (441 | ) | ||||||||||
| Total other expense |
1,249 | 1,569 | 2,477 | 627 | ||||||||||||
| INCOME (LOSS) BEFORE INCOME TAXES |
9,622 | (34,113 | ) | 12,509 | 3,084 | |||||||||||
| Provision (benefit) for income taxes |
1,890 | (13,386 | ) | (115 | ) | (2,786 | ) | |||||||||
| NET INCOME (LOSS) |
$ | 7,732 | $ | (20,727 | ) | $ | 12,624 | $ | 5,870 | |||||||
| Earnings (loss) per common share: |
||||||||||||||||
| Basic |
$ | 0.45 | $ | (1.22 | ) | $ | 0.74 | $ | 0.35 | |||||||
| Diluted |
$ | 0.44 | $ | (1.22 | ) | $ | 0.73 | $ | 0.34 | |||||||
| Weighted average common shares outstanding: |
||||||||||||||||
| Basic |
17,165 | 17,033 | 17,137 | 17,008 | ||||||||||||
| Diluted |
17,378 | 17,033 | 17,297 | 17,111 | ||||||||||||
CIRCOR INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
UNAUDITED
| Twelve Months Ended | ||||||||
| December 31, 2010 | December 31, 2009 | |||||||
| OPERATING ACTIVITIES |
||||||||
| Net income |
$ | 12,624 | $ | 5,870 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
| Depreciation |
13,075 | 13,307 | ||||||
| Amortization |
4,301 | 3,034 | ||||||
| Goodwill and intangible impairment charges |
— | 485 | ||||||
| Provision for future asbestos claims |
— | 39,800 | ||||||
| Provision for Leslie bankruptcy settlement |
24,974 | — | ||||||
| Compensation expense of stock-based plans |
3,430 | 2,717 | ||||||
| Tax effect of share based compensation |
(189 | ) | 493 | |||||
| Deferred income taxes (benefit) |
(9,868 | ) | (18,237 | ) | ||||
| Loss (gain) on disposal of property, plant and equipment |
315 | (91 | ) | |||||
| Changes in operating assets and liabilities, net of effects from business acquisitions: |
||||||||
| Trade accounts receivable |
(18,246 | ) | 35,936 | |||||
| Inventories |
(16,865 | ) | 49,157 | |||||
| Prepaid expenses and other assets |
2,059 | 509 | ||||||
| Accounts payable, accrued expenses and other liabilities |
18,867 | (86,428 | ) | |||||
| Net cash provided by operating activities |
34,477 | 46,552 | ||||||
| INVESTING ACTIVITIES |
||||||||
| Additions to property, plant and equipment |
(14,913 | ) | (11,032 | ) | ||||
| Proceeds from the sale of property, plant and equipment |
106 | 485 | ||||||
| Purchase of investments |
— | (300,431 | ) | |||||
| Proceeds from sale of investments |
21,427 | 315,917 | ||||||
| Business acquisitions, net of cash acquired |
(34,401 | ) | (37,516 | ) | ||||
| Net cash used in investing activities |
(27,781 | ) | (32,577 | ) | ||||
| FINANCING ACTIVITIES |
||||||||
| Proceeds from long-term debt |
88,680 | 60,051 | ||||||
| Payments of long-term debt |
(95,370 | ) | (73,336 | ) | ||||
| Debt issuance costs |
(1,935 | ) | ||||||
| Dividends paid |
(2,643 | ) | (2,568 | ) | ||||
| Proceeds from the exercise of stock options |
529 | 240 | ||||||
| Tax effect of share based compensation |
189 | (493 | ) | |||||
| Net cash used in financing activities |
(8,615 | ) | (18,041 | ) | ||||
| Effect of exchange rate changes on cash and cash equivalents |
1,321 | 2,943 | ||||||
| DECREASE IN CASH AND CASH EQUIVALENTS |
(598 | ) | (1,123 | ) | ||||
| Cash and cash equivalents at beginning of year |
46,350 | 47,473 | ||||||
| CASH AND CASH EQUIVALENTS AT END OF PERIOD |
$ | 45,752 | $ | 46,350 | ||||
CIRCOR INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
UNAUDITED
| December 31, 2010 | December 31, 2009 | |||||||
| ASSETS |
||||||||
| Current Assets: |
||||||||
| Cash & cash equivalents |
$ | 45,752 | $ | 46,350 | ||||
| Short-term investments |
101 | 21,498 | ||||||
| Trade accounts receivable, less allowance for doubtful accounts of $822 and $1,992, respectively |
138,860 | 115,260 | ||||||
| Inventories |
167,797 | 145,031 | ||||||
| Income taxes refundable |
1,625 | 726 | ||||||
| Prepaid expenses and other current assets |
5,749 | 4,195 | ||||||
| Deferred income tax asset |
20,111 | 15,847 | ||||||
| Insurance receivables |
38 | 4,614 | ||||||
| Assets held for sale |
542 | 1,167 | ||||||
| Total Current Assets |
380,575 | 354,688 | ||||||
| Property, Plant and Equipment, net |
95,768 | 95,167 | ||||||
| Other Assets: |
||||||||
| Goodwill |
63,175 | 47,893 | ||||||
| Intangibles, net |
62,322 | 55,238 | ||||||
| Deferred income tax asset |
11,829 | 5,676 | ||||||
| Other assets |
2,526 | 3,391 | ||||||
| Total Assets |
$ | 616,195 | $ | 562,053 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||||
| Current Liabilities: |
||||||||
| Accounts payable |
$ | 80,577 | $ | 57,239 | ||||
| Accrued expenses and other current liabilities |
51,248 | 46,736 | ||||||
| Accrued compensation and benefits |
22,305 | 18,617 | ||||||
| Leslie asbestos and bankruptcy related liabilities |
79,831 | 12,476 | ||||||
| Income taxes payable |
38 | — | ||||||
| Notes payable and current portion of long-term debt |
851 | 5,914 | ||||||
| Total Current Liabilities |
234,850 | 140,982 | ||||||
| Long-Term Debt, net of current portion |
684 | 1,565 | ||||||
| Long-Term Leslie asbestos liability |
— | 47,785 | ||||||
| Other Non-Current Liabilities |
23,841 | 21,313 | ||||||
| Shareholders’ Equity: |
||||||||
| Preferred stock, $.01 par value; 1,000,000 shares authorized; no shares issued and outstanding |
— | — | ||||||
| Common stock, $.01 par value; 29,000,000 shares authorized; and 17,112,688 and 16,991,365 issued and outstanding, respectively |
171 | 170 | ||||||
| Additional paid-in capital |
254,154 | 249,960 | ||||||
| Retained earnings |
96,389 | 86,408 | ||||||
| Accumulated other comprehensive income |
6,106 | 13,870 | ||||||
| Total Shareholders’ Equity |
356,820 | 350,408 | ||||||
| Total Liabilities and Shareholders’ Equity |
$ | 616,195 | $ | 562,053 | ||||
CIRCOR INTERNATIONAL, INC.
SUMMARY OF ORDERS AND BACKLOG
(in millions)
UNAUDITED
| Three Months Ended | Twelve Months Ended | |||||||||||||||
| December 31, 2010 | December 31, 2009 | December 31, 2010 | December 31, 2009 | |||||||||||||
| ORDERS 1 |
||||||||||||||||
| Energy |
$ | 120.8 | $ | 80.4 | $ | 364.8 | $ | 250.5 | ||||||||
| Aerospace |
30.8 | 24.9 | 123.9 | 114.4 | ||||||||||||
| Flow Technologies |
60.8 | 69.1 | 271.6 | 236.9 | ||||||||||||
| Total orders |
$ | 212.4 | $ | 174.4 | $ | 760.3 | $ | 601.8 | ||||||||
| December 31, 2010 | December 31, 2009 | |||||||
| BACKLOG 2 |
||||||||
| Energy |
$ | 179.9 | $ | 133.3 | ||||
| Aerospace |
147.2 | 115.3 | ||||||
| Flow Technologies |
77.2 | 68.1 | ||||||
| Total backlog |
$ | 404.3 | $ | 316.7 | ||||
Note 1: Beginning in Q2 2010, orders have been adjusted to exclude the foreign exchange impact from backlog remeasurement
The three and twelve months ended December 31, 2009 reflect an increase of $3.5 million and a decrease of $3.9 million, respectively
Note 2: Backlog includes all unshipped customer orders.
CIRCOR INTERNATIONAL, INC.
SUMMARY REPORT BY SEGMENT
(in thousands, except earnings per share)
UNAUDITED
| 2009 | 2010 | |||||||||||||||||||||||||||||||||||||||
| 1ST QTR | 2ND QTR | 3RD QTR | 4TH QTR | YTD | 1ST QTR | 2ND QTR | 3RD QTR | 4TH QTR | YTD | |||||||||||||||||||||||||||||||
| NET REVENUES |
||||||||||||||||||||||||||||||||||||||||
| Energy |
$ | 89,307 | $ | 76,814 | $ | 61,185 | $ | 66,113 | $ | 293,419 | $ | 57,722 | $ | 77,305 | $ | 80,613 | $ | 90,229 | $ | 305,869 | ||||||||||||||||||||
| Aerospace |
28,344 | 30,243 | 26,234 | 28,506 | 113,327 | 27,274 | 27,811 | 28,316 | 35,465 | 118,866 | ||||||||||||||||||||||||||||||
| Flow Technologies |
57,996 | 57,478 | 56,908 | 63,494 | 235,876 | 61,273 | 62,889 | 68,648 | 68,365 | 261,175 | ||||||||||||||||||||||||||||||
| Total |
175,647 | 164,535 | 144,327 | 158,113 | 642,622 | 146,269 | 168,005 | 177,577 | 194,059 | 685,910 | ||||||||||||||||||||||||||||||
| * ADJUSTED OPERATING MARGIN |
||||||||||||||||||||||||||||||||||||||||
| Energy |
18.1 | % | 12.3 | % | 10.9 | % | 3.0 | % | 11.7 | % | 3.5 | % | 8.3 | % | 11.1 | % | 6.7 | % | 7.7 | % | ||||||||||||||||||||
| Aerospace |
15.4 | % | 16.2 | % | 13.2 | % | 14.7 | % | 14.9 | % | 13.2 | % | 14.6 | % | 9.6 | % | 14.1 | % | 13.0 | % | ||||||||||||||||||||
| Flow Technologies |
11.6 | % | 9.5 | % | 10.9 | % | 11.7 | % | 11.0 | % | 10.2 | % | 10.1 | % | 13.1 | % | 12.5 | % | 11.5 | % | ||||||||||||||||||||
| Segment operating margin |
15.5 | % | 12.1 | % | 11.3 | % | 8.6 | % | 12.0 | % | 8.1 | % | 10.0 | % | 11.7 | % | 10.1 | % | 10.1 | % | ||||||||||||||||||||
| Corporate expenses |
-3.1 | % | -3.4 | % | -3.0 | % | -3.3 | % | -3.2 | % | -3.1 | % | -3.1 | % | -2.7 | % | -3.3 | % | -3.1 | % | ||||||||||||||||||||
| * Adjusted operating margin |
12.5 | % | 8.7 | % | 8.4 | % | 5.3 | % | 8.8 | % | 5.0 | % | 6.9 | % | 8.9 | % | 6.7 | % | 7.0 | % | ||||||||||||||||||||
| Leslie asbestos and bankruptcy charges (recoveries) |
4.7 | % | 2.1 | % | 1.4 | % | 25.5 | % | 8.4 | % | -0.4 | % | 17.2 | % | 1.3 | % | 1.1 | % | 4.8 | % | ||||||||||||||||||||
| Impairment charges |
0.0 | % | 0.0 | % | 0.0 | % | 0.3 | % | 0.1 | % | 0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | ||||||||||||||||||||
| Special charges (recoveries) |
-0.6 | % | 0.0 | % | -0.4 | % | 0.0 | % | -0.3 | % | 0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | ||||||||||||||||||||
| Total operating margin |
8.4 | % | 6.6 | % | 7.4 | % | -20.6 | % | 0.6 | % | 5.4 | % | -10.3 | % | 7.6 | % | 5.6 | % | 2.2 | % | ||||||||||||||||||||
| * ADJUSTED OPERATING INCOME |
||||||||||||||||||||||||||||||||||||||||
| Energy |
16,169 | 9,461 | 6,696 | 1,966 | 34,292 | 2,025 | 6,424 | 8,968 | 6,024 | 23,441 | ||||||||||||||||||||||||||||||
| Aerospace |
4,372 | 4,905 | 3,461 | 4,195 | 16,933 | 3,607 | 4,067 | 2,726 | 5,002 | 15,402 | ||||||||||||||||||||||||||||||
| Flow Technologies |
6,744 | 5,484 | 6,197 | 7,444 | 25,869 | 6,276 | 6,367 | 8,997 | 8,512 | 30,152 | ||||||||||||||||||||||||||||||
| Segment operating income |
27,285 | 19,850 | 16,354 | 13,605 | 77,094 | 11,908 | 16,858 | 20,691 | 19,538 | 68,995 | ||||||||||||||||||||||||||||||
| Corporate expenses |
(5,365 | ) | (5,589 | ) | (4,276 | ) | (5,267 | ) | (20,497 | ) | (4,607 | ) | (5,274 | ) | (4,859 | ) | (6,494 | ) | (21,234 | ) | ||||||||||||||||||||
| * Adjusted operating income |
21,920 | 14,261 | 12,078 | 8,338 | 56,597 | 7,301 | 11,584 | 15,832 | 13,044 | 47,761 | ||||||||||||||||||||||||||||||
| Leslie asbestos and bankruptcy charges (recoveries) |
8,263 | 3,442 | 1,977 | 40,397 | 54,079 | (648 | ) | 28,908 | 2,343 | 2,173 | 32,776 | |||||||||||||||||||||||||||||
| Impairment charges |
— | — | — | 485 | 485 | — | — | — | — | — | ||||||||||||||||||||||||||||||
| Special charges (recoveries) |
(1,135 | ) | — | (543 | ) | — | (1,678 | ) | — | — | — | — | — | |||||||||||||||||||||||||||
| Total operating income |
14,792 | 10,819 | 10,644 | (32,544 | ) | 3,711 | 7,949 | (17,325 | ) | 13,490 | 10,871 | 14,986 | ||||||||||||||||||||||||||||
| INTEREST EXPENSE, NET |
(32 | ) | (41 | ) | (394 | ) | (602 | ) | (1,069 | ) | (554 | ) | (586 | ) | (734 | ) | (641 | ) | (2,515 | ) | ||||||||||||||||||||
| OTHER (EXPENSE) INCOME, NET |
183 | 267 | 959 | (967 | ) | 442 | 51 | (258 | ) | 853 | (608 | ) | 38 | |||||||||||||||||||||||||||
| PRETAX INCOME (LOSS) |
14,943 | 11,045 | 11,209 | (34,113 | ) | 3,084 | 7,446 | (18,169 | ) | 13,609 | 9,622 | 12,508 | ||||||||||||||||||||||||||||
| (PROVISION) BENEFIT FOR INCOME TAXES |
(4,483 | ) | (3,313 | ) | (2,804 | ) | 13,386 | 2,786 | (1,713 | ) | 6,928 | (3,210 | ) | (1,890 | ) | 115 | ||||||||||||||||||||||||
| EFFECTIVE TAX RATE |
30.0 | % | 30.0 | % | 25.0 | % | 39.2 | % | -90.3 | % | 23.0 | % | 38.1 | % | 23.6 | % | 19.6 | % | -0.9 | % | ||||||||||||||||||||
| NET (LOSS) INCOME |
$ | 10,460 | $ | 7,732 | $ | 8,405 | $ | (20,727 | ) | $ | 5,870 | $ | 5,733 | $ | (11,241 | ) | $ | 10,399 | $ | 7,732 | $ | 12,624 | ||||||||||||||||||
| Weighted Average Common Shares Outstanding (Diluted) |
17,014 | 17,066 | 17,116 | 17,033 | 17,111 | 17,193 | 17,109 | 17,258 | 17,378 | 17,297 | ||||||||||||||||||||||||||||||
| EARNINGS PER COMMON SHARE (Diluted) |
$ | 0.61 | $ | 0.45 | $ | 0.49 | $ | (1.22 | ) | $ | 0.34 | $ | 0.33 | $ | (0.66 | ) | $ | 0.60 | $ | 0.44 | $ | 0.73 | ||||||||||||||||||
| EBIT |
$ | 14,975 | $ | 11,086 | $ | 11,603 | $ | (33,511 | ) | $ | 4,153 | $ | 8,000 | $ | (17,583 | ) | $ | 14,343 | $ | 10,263 | $ | 15,024 | ||||||||||||||||||
| Depreciation |
2,839 | 3,245 | 3,536 | 3,687 | 13,307 | 3,228 | 3,115 | 3,166 | 3,566 | 13,075 | ||||||||||||||||||||||||||||||
| Amortization of intangibles |
622 | 627 | 707 | 1,078 | 3,034 | 979 | 964 | 1,122 | 1,236 | 4,301 | ||||||||||||||||||||||||||||||
| EBITDA |
$ | 18,436 | $ | 14,958 | $ | 15,846 | $ | (28,746 | ) | $ | 20,494 | $ | 12,207 | $ | (13,504 | ) | $ | 18,631 | $ | 15,065 | $ | 32,400 | ||||||||||||||||||
| EBITDA AS A PERCENT OF SALES |
10.5 | % | 9.1 | % | 11.0 | % | -18.2 | % | 3.2 | % | 8.3 | % | -8.0 | % | 10.5 | % | 7.8 | % | 4.7 | % | ||||||||||||||||||||
| CAPITAL EXPENDITURES |
$ | 2,576 | $ | 1,925 | $ | 1,605 | $ | 4,926 | $ | 11,032 | $ | 3,606 | $ | 4,580 | $ | 3,213 | $ | 3,513 | $ | 14,913 | ||||||||||||||||||||
| * | Adjusted Operating Income & Margin excludes Special, Impairment, and Leslie asbestos and bankruptcy charges |
CIRCOR INTERNATIONAL, INC.
RECONCILIATION OF KEY PERFORMANCE MEASURES TO COMMONLY USED
GENERALLY ACCEPTED ACCOUNTING PRINCIPLE TERMS
(in thousands)
UNAUDITED
| 2009 | 2010 | |||||||||||||||||||||||||||||||||||||||||
| 1ST QTR | 2ND QTR | 3RD QTR | 4TH QTR | YTD | 1ST QTR | 2ND QTR | 3RD QTR | 4TH QTR | YTD | |||||||||||||||||||||||||||||||||
| FREE CASH FLOW [NET CASH FLOW FROM OPERATING ACTIVITIES LESS CAPITAL EXPENDITURES LESS DIVIDENDS PAID] |
$ | (7,928 | ) | $ | 17,882 | $ | 11,241 | $ | 11,757 | $ | 32,952 | $ | (7,019 | ) | $ | 11,947 | $ | (3,566 | ) | $ | 15,560 | $ | 16,921 | |||||||||||||||||||
| ADD: |
Capital expenditures |
2,576 | 1,925 | 1,605 | 4,926 | 11,032 | 3,606 | 4,580 | 3,213 | 3,513 | 14,913 | |||||||||||||||||||||||||||||||
| Dividends paid |
657 | 637 | 636 | 638 | 2,568 | 639 | 640 | 703 | 661 | 2,643 | ||||||||||||||||||||||||||||||||
| NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES |
$ | (4,695 | ) | $ | 20,444 | $ | 13,482 | $ | 17,321 | $ | 46,552 | $ | (2,774 | ) | $ | 17,167 | $ | 350 | $ | 19,734 | $ | 34,477 | ||||||||||||||||||||
| NET DEBT (CASH) [TOTAL DEBT LESS CASH & CASH EQUIVALENTS LESS INVESTMENTS] |
$ | (49,519 | ) | $ | (69,331 | ) | $ | (77,081 | ) | $ | (60,369 | ) | $ | (60,369 | ) | $ | (52,713 | ) | $ | (55,976 | ) | $ | (26,225 | ) | $ | (44,318 | ) | $ | (44,318 | ) | ||||||||||||
| ADD: |
||||||||||||||||||||||||||||||||||||||||||
| Cash & cash equivalents |
36,113 | 33,038 | 83,708 | 46,350 | 46,350 | 37,812 | 60,857 | 68,526 | 45,752 | 45,752 | ||||||||||||||||||||||||||||||||
| Investments |
36,991 | 48,344 | 3,023 | 21,498 | 21,498 | 22,412 | 94 | 97 | 101 | 101 | ||||||||||||||||||||||||||||||||
| TOTAL DEBT |
$ | 23,585 | $ | 12,051 | $ | 9,650 | $ | 7,479 | $ | 7,479 | $ | 7,511 | $ | 4,975 | $ | 42,398 | $ | 1,535 | $ | 1,535 | ||||||||||||||||||||||
| DEBT AS % OF EQUITY |
7 | % | 3 | % | 3 | % | 2 | % | 2 | % | 2 | % | 2 | % | 12 | % | 0 | % | 0 | % | ||||||||||||||||||||||
| TOTAL DEBT |
23,585 | 12,051 | 9,650 | 7,479 | 7,479 | 7,511 | 4,975 | 42,398 | 1,535 | 1,535 | ||||||||||||||||||||||||||||||||
| TOTAL SHAREHOLDERS’ EQUITY |
341,860 | 357,596 | 371,728 | 350,408 | 350,408 | 349,244 | 324,128 | 351,719 | 356,820 | 356,820 | ||||||||||||||||||||||||||||||||
| EBIT [NET INCOME LESS INCOME TAXES LESS INTEREST EXPENSE, NET] |
$ | 14,975 | $ | 11,086 | $ | 11,603 | $ | (33,511 | ) | $ | 4,153 | $ | 8,000 | $ | (17,583 | ) | $ | 14,343 | $ | 10,263 | $ | 15,023 | ||||||||||||||||||||
| LESS: |
||||||||||||||||||||||||||||||||||||||||||
| Interest expense, net |
(32 | ) | (41 | ) | (394 | ) | (602 | ) | (1,069 | ) | (554 | ) | (586 | ) | (734 | ) | (641 | ) | (2,515 | ) | ||||||||||||||||||||||
| Provision for income taxes |
(4,483 | ) | (3,313 | ) | (2,804 | ) | 13,386 | 2,786 | (1,713 | ) | 6,928 | (3,210 | ) | (1,890 | ) | 115 | ||||||||||||||||||||||||||
| NET INCOME |
$ | 10,460 | $ | 7,732 | $ | 8,405 | $ | (20,727 | ) | $ | 5,870 | $ | 5,733 | $ | (11,241 | ) | $ | 10,399 | $ | 7,732 | $ | 12,624 | ||||||||||||||||||||
| EBITDA [NET INCOME LESS INTEREST EXPENSE, NET, LESS DEPRECIATION LESS AMORTIZATION LESS INCOME TAXES] |
$ | 18,436 | $ | 14,958 | $ | 15,846 | $ | (28,746 | ) | $ | 20,494 | $ | 12,207 | $ | (13,504 | ) | $ | 18,631 | $ | 15,065 | $ | 32,399 | ||||||||||||||||||||
| LESS: |
||||||||||||||||||||||||||||||||||||||||||
| Interest expense, net |
(32 | ) | (41 | ) | (394 | ) | (602 | ) | (1,069 | ) | (554 | ) | (586 | ) | (734 | ) | (641 | ) | (2,515 | ) | ||||||||||||||||||||||
| Depreciation |
(2,839 | ) | (3,245 | ) | (3,536 | ) | (3,687 | ) | (13,307 | ) | (3,228 | ) | (3,115 | ) | (3,166 | ) | (3,566 | ) | (13,075 | ) | ||||||||||||||||||||||
| Amortization |
(622 | ) | (627 | ) | (707 | ) | (1,078 | ) | (3,034 | ) | (979 | ) | (964 | ) | (1,122 | ) | (1,236 | ) | (4,301 | ) | ||||||||||||||||||||||
| Provision for income taxes |
(4,483 | ) | (3,313 | ) | (2,804 | ) | 13,386 | 2,786 | (1,713 | ) | 6,928 | (3,210 | ) | (1,890 | ) | 115 | ||||||||||||||||||||||||||
| NET INCOME |
$ | 10,460 | $ | 7,732 | $ | 8,405 | $ | (20,727 | ) | $ | 5,870 | $ | 5,733 | $ | (11,241 | ) | $ | 10,399 | $ | 7,732 | $ | 12,624 | ||||||||||||||||||||
| ADJUSTED INCOME [NET INCOME EXCLUDING SPECIAL, IMPAIRMENT, AND LESLIE ASBESTOS AND BANKRUPTCY CHARGES, NET OF TAX] |
$ | 15,037 | $ | 9,969 | $ | 9,285 | $ | 5,826 | $ | 40,117 | $ | 5,312 | $ | 7,549 | $ | 11,922 | $ | 9,144 | $ | 33,928 | ||||||||||||||||||||||
| LESS: |
||||||||||||||||||||||||||||||||||||||||||
| Special charges (recoveries), net of tax |
(794 | ) | — | (405 | ) | — | (1,199 | ) | — | — | — | — | — | |||||||||||||||||||||||||||||
| Impairment charges |
— | — | — | 295 | 295 | — | — | — | — | — | ||||||||||||||||||||||||||||||||
| Leslie asbestos and bankruptcy charges (recoveries), net of tax |
5,371 | 2,237 | 1,285 | 26,258 | 35,151 | (421 | ) | 18,790 | 1,523 | 1,412 | 21,304 | |||||||||||||||||||||||||||||||
| NET INCOME |
$ | 10,460 | $ | 7,732 | $ | 8,405 | $ | (20,727 | ) | $ | 5,870 | $ | 5,733 | $ | (11,241 | ) | $ | 10,399 | $ | 7,732 | $ | 12,624 | ||||||||||||||||||||
| ADJUSTED WEIGHTED AVERAGE SHARES |
N/A | N/A | N/A | 17,140 | N/A | N/A | 17,109 | N/A | N/A | N/A | ||||||||||||||||||||||||||||||||
| Adjustment for anti-dilutive conversion of shares |
— | — | — | 107 | — | — | 153 | — | — | — | ||||||||||||||||||||||||||||||||
| Weighted average common shares outstanding (diluted) |
17,014 | 17,066 | 17,116 | 17,033 | 17,111 | 17,193 | 17,262 | 17,258 | 17,378 | 17,297 | ||||||||||||||||||||||||||||||||
| ADJUSTED EARNINGS PER SHARE [EPS EXCLUDING SPECIAL, IMPAIRMENT, AND LESLIE ASBESTOS AND BANKRUPTCY CHARGES, NET OF TAX] |
$ | 0.88 | $ | 0.58 | $ | 0.54 | $ | 0.34 | $ | 2.34 | $ | 0.31 | $ | 0.44 | $ | 0.69 | $ | 0.53 | $ | 1.97 | ||||||||||||||||||||||
| LESS: |
Special charges (recoveries), net of tax impact on EPS |
(0.05 | ) | — | (0.02 | ) | — | (0.07 | ) | — | — | — | — | — | ||||||||||||||||||||||||||||
| Impairment charges |
— | — | — | 0.02 | 0.02 | — | — | — | — | — | ||||||||||||||||||||||||||||||||
| Leslie asbestos and bankruptcy charges (recoveries), net of tax impact on EPS |
0.32 | 0.13 | 0.08 | 1.54 | 2.05 | (0.02 | ) | 1.10 | 0.09 | 0.08 | 1.24 | |||||||||||||||||||||||||||||||
| EARNINGS PER COMMON SHARE (Diluted) |
$ | 0.61 | $ | 0.45 | $ | 0.49 | $ | (1.22 | ) | $ | 0.34 | $ | 0.33 | $ | (0.66 | ) | $ | 0.60 | $ | 0.44 | $ | 0.73 | ||||||||||||||||||||
CIRCOR INTERNATIONAL, INC
Leslie Controls Asbestos Items
(in thousands, except case information)
| 2009 | 2010 | |||||||||||||||||||||||||||||||||||||||
| 1ST QTR | 2ND QTR | 3RD QTR | 4TH QTR | YTD | 1ST QTR | 2ND QTR | 3RD QTR | 4TH QTR | YTD | |||||||||||||||||||||||||||||||
| Quarterly Case Rollforward |
||||||||||||||||||||||||||||||||||||||||
| Beginning open cases |
968 | 1,103 | 1,158 | 1,143 | 968 | 1,104 | 1,150 | 1,214 | 1,340 | 1,104 | ||||||||||||||||||||||||||||||
| Cases filed |
222 | 203 | 131 | 131 | 687 | 150 | 169 | 132 | 451 | |||||||||||||||||||||||||||||||
| Cases resolved and dismissed |
(87 | ) | (148 | ) | (146 | ) | (170 | ) | (551 | ) | (104 | ) | (105 | ) | (6 | ) | (215 | ) | ||||||||||||||||||||||
| Ending open cases |
1,103 | 1,158 | 1,143 | 1,104 | 1,104 | 1,150 | 1,214 | 1,340 | 1,340 | 1,340 | ||||||||||||||||||||||||||||||
| Ending open mesothelioma cases |
578 | 584 | 612 | 597 | 597 | 623 | 672 | 713 | 713 | 713 | ||||||||||||||||||||||||||||||
| Income Statement Amounts |
||||||||||||||||||||||||||||||||||||||||
| Indemnity costs accrued (cases filed) |
$ | 4,602 | $ | 2,109 | $ | 1,140 | $ | 39,810 | $ | 47,661 | $ | 699 | $ | 1,797 | $ | — | $ | — | $ | 2,496 | ||||||||||||||||||||
| Adverse verdict costs (recoveries) |
90 | 97 | 95 | (1,308 | ) | (1,026 | ) | 65 | (2,455 | ) | — | — | (2,390 | ) | ||||||||||||||||||||||||||
| Defense costs incurred |
3,166 | 3,275 | 3,009 | 2,862 | 12,312 | 3,731 | 3,435 | 16 | 319 | 7,501 | ||||||||||||||||||||||||||||||
| Insurance recoveries adjustment |
2,069 | — | — | — | 2,069 | (3,652 | ) | — | — | — | (3,652 | ) | ||||||||||||||||||||||||||||
| Insurance recoveries accrued |
(1,664 | ) | (2,039 | ) | (2,268 | ) | (966 | ) | (6,937 | ) | (1,491 | ) | (1,135 | ) | — | — | (2,626 | ) | ||||||||||||||||||||||
| Leslie Bankruptcy related charges, net |
— | — | — | — | — | — | 27,266 | 2,327 | 1,854 | 31,447 | ||||||||||||||||||||||||||||||
| Net pre-tax Leslie asbestos and bankruptcy expense (recovery) |
$ | 8,263 | $ | 3,442 | $ | 1,976 | $ | 40,398 | $ | 54,079 | $ | (648 | ) | $ | 28,908 | $ | 2,343 | $ | 2,173 | $ | 32,776 | |||||||||||||||||||
| Balance Sheet Amounts |
||||||||||||||||||||||||||||||||||||||||
| Bankruptcy and indemnity liability |
$ | 20,781 | $ | 19,849 | $ | 20,060 | $ | 57,716 | $ | 57,732 | $ | 78,976 | $ | 78,067 | $ | 77,689 | ||||||||||||||||||||||||
| Incurred defense cost liability |
4,212 | 5,169 | 3,615 | 2,544 | 2,099 | 3,455 | 1,997 | 2,142 | ||||||||||||||||||||||||||||||||
| Insurance recoveries receivable |
(9,088 | ) | (7,426 | ) | (6,485 | ) | (4,614 | ) | (7,997 | ) | (1,180 | ) | (194 | ) | (38 | ) | ||||||||||||||||||||||||
| Net Leslie asbestos liability |
$ | 15,905 | $ | 17,592 | $ | 17,190 | $ | 55,646 | $ | 51,834 | $ | 81,251 | $ | 79,870 | $ | 79,793 | ||||||||||||||||||||||||
CIRCOR INTERNATIONAL, INC.
RECONCILIATION OF FUTURE PERFORMANCE MEASURES TO COMMONLY
USED GENERALLY ACCEPTED ACCOUNTING PRINCIPLE TERMS
UNAUDITED
| 1st QTR 2011 | ||||||||
| Low | High | |||||||
| EXPECTED ADJUSTED EARNINGS PER SHARE [EPS EXCLUDING SPECIAL, IMPAIRMENT, AND LESLIE ASBESTOS AND BANKRUPTCY CHARGES, NET OF TAX] |
$ | 0.41 | $ | 0.51 | ||||
| LESS: |
||||||||
| Expected special charges (recoveries), net of tax impact on EPS |
$ | — | $ | — | ||||
| Expected impairment charges, net of tax impact on EPS |
$ | — | $ | — | ||||
| Expected Leslie asbestos and bankruptcy charges, net of tax impact on EPS |
$ | 0.02 | $ | 0.02 | ||||
| EXPECTED EARNINGS PER COMMON SHARE (Diluted) |
$ | 0.39 | $ | 0.49 | ||||