CIRCOR INTERNATIONAL INC - FORM 8-K - EX-99.1 - PRESS RELEASE REGARDING EARNINGS - April 29, 2016

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EX-99.2 - FIRST QUARTER 2016 INVESTOR REVIEW PRESENTATION - CIRCOR INTERNATIONAL INCcir_q1x04032016xex992.htm
8-K - 8-K - CIRCOR INTERNATIONAL INCcir_04032016x8-k.htm
EXHIBIT 99.1

CIRCOR Reports First-Quarter 2016 Financial Results

Burlington, MA - April 29, 2016 - CIRCOR International, Inc. (NYSE: CIR), a leading provider of valves and other highly engineered products for markets including oil & gas, power generation and aerospace & defense, today announced financial results for the first quarter ended April 3, 2016.

First-Quarter 2016 Highlights

•
Delivered Revenue of $151 million and Adjusted EPS of $0.52
•
Accelerated cost control and restructuring actions to improve bottom-line performance
•
Achieved Energy adjusted operating margin of 12.6%
•
Expanded Aerospace & Defense adjusted operating margin to 9.3%

“CIRCOR delivered solid first-quarter financial results, demonstrating ongoing progress on our margin expansion and simplification strategy,” said Scott Buckhout, President and Chief Executive Officer. “Despite significant headwinds in our Energy markets, we maintained strong margin performance and delivered year-over-year sales growth in our engineered valve and control valve businesses. Aerospace & Defense continued to improve its bottom line results, expanding margins 130 basis points over last year.”

“Going forward, we are focused on laying the foundation for long-term above market growth. We continue to improve our operations while we carefully invest in areas with the best long-term growth potential,” added Buckhout. “In addition, we are using the ongoing weakness in our Energy markets as an opportunity to further accelerate our cost reduction strategy. Our simplification and restructuring actions launched to date remain on track.”

“Finally we remain committed to creating shareholder value through growth, margin expansion, strong cash flow, and disciplined capital deployment,” concluded Buckhout.

Second-Quarter 2016 Guidance
For the second quarter of 2016, the Company will provide its guidance during the conference call later today.



1


Conference Call Information
CIRCOR International will hold a conference call to review its financial results today, April 29, 2016, at 9:00 a.m. ET. To listen to the conference call and view the accompanying presentation slides, visit “Webcasts & Presentations” in the “Investors” portion of the CIRCOR website. The call also can be accessed by dialing (877) 407-5790 or (201) 689-8328. 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 share (diluted), 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.

2

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 the realization of cost reductions from restructuring activities. 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 highly engineered products and sub-systems for markets including oil & gas, power generation and aerospace & defense. CIRCOR has a diversified product portfolio with recognized, market-leading brands that fulfill its customers’ unique application needs. The Company’s strategy is to grow organically and through complementary acquisitions; simplify CIRCOR’s operations; achieve world class operational excellence; and attract and retain top industry talent. For more information, visit the Company’s investor relations web site at http://investors.circor.com.

Contact:
Rajeev Bhalla
Executive Vice President & Chief Financial Officer
CIRCOR International
(781) 270-1200





3



CIRCOR INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
UNAUDITED
 
Three Months Ended
 
April 3, 2016
 
April 5, 2015
Net revenues
$
150,798

 
$
165,860

Cost of revenues
105,565

 
113,211

     GROSS PROFIT
45,233

 
52,649

Selling, general and administrative expenses
37,799

 
38,808

Special charges, net
1,939

 
1,511

     OPERATING INCOME
5,495

 
12,331

Other expense (income):
 
 
 
Interest expense, net
631

 
641

Other income, net
(528
)
 
(506
)
     TOTAL OTHER EXPENSE, NET
103

 
135

INCOME BEFORE INCOME TAXES
5,392

 
12,196

Provision for income taxes
1,520

 
3,284

NET INCOME
$
3,872

 
$
8,913

Earnings per common share:
 
 
 
Basic
$
0.24

 
$
0.50

Diluted
$
0.23

 
$
0.50

Weighted average number of common shares outstanding:
 
 
 
Basic
16,381

 
17,662

Diluted
16,481

 
17,712

Dividends paid per common share
$
0.0375

 
$
0.0375



4



CIRCOR INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
UNAUDITED
 
Three Months Ended
 
April 3, 2016
 
April 5, 2015
OPERATING ACTIVITIES
 
 
 
Net income
$
3,872


$
8,913

Adjustments to reconcile net income to net cash provided by (used in) operating activities:
 
 
 
Depreciation
3,263

 
3,521

Amortization
2,529

 
710

Bad debt (recovery) expense
(848
)
 
312

Loss on write down of inventory
2,525

 
510

Compensation expense of share-based plans
1,538

 
2,222

Tax effect of share-based plan compensation
92

 
(289
)
Loss on sale of property, plant and equipment
14

 
46

Loss on write down of property, plant and equipment
1,489

 
—

Gain on sale of business
—

 
(972
)
Changes in operating assets and liabilities, net of effects of acquisition and disposition:
 
 
 
Trade accounts receivable
11,089

 
6,694

Inventories
8,486

 
(19,207
)
Prepaid expenses and other assets
(4,287
)
 
(3,431
)
Accounts payable, accrued expenses and other liabilities
(22,108
)
 
(18,224
)
Net cash provided by (used in) operating activities
7,654

 
(19,195
)
INVESTING ACTIVITIES
 
 
 
Purchases of property, plant and equipment
(4,021
)
 
(2,610
)
Proceeds from the sale of property, plant and equipment
87

 
—

Proceeds from the sale of affiliate
—

 
2,759

Net cash (used in) provided by investing activities
(3,934
)
 
149

FINANCING ACTIVITIES
 
 
 
Proceeds from long-term debt
35,139

 
46,903

Payments of long-term debt
(27,871
)
 
(21,540
)
Dividends paid
(625
)
 
(672
)
Proceeds from the exercise of stock options
111

 
38

Tax effect of share-based plan compensation
(92
)
 
289

Purchases of common stock
—

 
(13,291
)
Net cash provided by financing activities
6,662

 
11,727

Effect of exchange rate changes on cash and cash equivalents
1,657

 
(10,081
)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
12,039

 
(17,400
)
Cash and cash equivalents at beginning of year
54,541

 
121,286

CASH AND CASH EQUIVALENTS AT END OF PERIOD
$
66,580

 
$
103,886


5



CIRCOR INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands)
UNAUDITED
 
April 3, 2016
 
December 31, 2015
ASSETS
 
 
 
CURRENT ASSETS:
 
 
 
Cash and cash equivalents
$
66,580

 
$
54,541

Trade accounts receivable, less allowance for doubtful accounts of $7,628 and $8,290, respectively
117,569

 
125,628

Inventories
170,100

 
177,840

Prepaid expenses and other current assets
21,303

 
16,441

Total Current Assets
375,552

 
374,450

PROPERTY, PLANT AND EQUIPMENT, NET
86,089

 
87,029

OTHER ASSETS:
 
 
 
Goodwill
118,170

 
115,452

Intangibles, net
47,520

 
48,981

Deferred income taxes
36,483

 
36,799

Other assets
7,283

 
7,204

TOTAL ASSETS
$
671,097

 
$
669,915

LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 
 
CURRENT LIABILITIES:
 
 
 
Accounts payable
$
55,726

 
$
64,284

Accrued expenses and other current liabilities
43,081

 
52,878

Accrued compensation and benefits
17,173

 
18,424

Income taxes payable
8,406

 
6,585

Total Current Liabilities
124,386

 
142,171

LONG-TERM DEBT, NET OF CURRENT PORTION
97,800

 
90,500

DEFERRED INCOME TAXES
10,168

 
10,424

OTHER NON-CURRENT LIABILITIES
24,636

 
26,043

SHAREHOLDERS’ EQUITY:
 
 
 
Common stock
177

 
177

Additional paid-in capital
285,410

 
283,621

Retained earnings
261,186

 
257,939

Common treasury stock, at cost
(74,972
)
 
(74,972
)
Accumulated other comprehensive loss, net of tax
(57,694
)
 
(65,988
)
Total Shareholders’ Equity
414,107

 
400,777

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
$
671,097

 
$
669,915





6

CIRCOR INTERNATIONAL, INC.
SUMMARY OF ORDERS AND BACKLOG
(in millions)
UNAUDITED
 
Three Months Ended
 
April 3,
2016
 
April 5,
2015
ORDERS (1)
 
 
 
Energy
$
99.8

 
$
143.1

Aerospace & Defense
36.9

 
39.2

Total orders
$
136.8

 
$
182.3

 
 
 
 
BACKLOG (2)
April 3,
2016
 
April 5,
2015
Energy
$
167.7

 
$
247.6

Aerospace & Defense
92.3

 
104.2

Total backlog
$
260.0

 
$
351.8

 
 
 
 
Note 1: Orders do not include the foreign exchange impact due to the re-measurement of customer order backlog amounts denominated in foreign currencies.
Note 2: Backlog includes unshipped customer orders.


7

CIRCOR INTERNATIONAL, INC.
SUMMARY REPORT BY SEGMENT
(in thousands, except percentages)
UNAUDITED
 
 
 
 
 
 
 
 
2015
2016
 
1ST QTR
2ND QTR
3RD QTR
4TH QTR
TOTAL
1ST QTR
NET REVENUES
 
 
 
 
 
 
Energy
$
127,586

$
127,230

$
122,905

$
124,412

$
502,133

$
112,620

Aerospace & Defense
38,274

39,676

36,353

39,832

154,134

38,178

Total
$
165,860

$
166,906

$
159,258

$
164,243

$
656,267

$
150,798

ADJUSTED OPERATING MARGIN
 
 
 
 
 
 
Energy
13.8
 %
13.4
 %
15.4
 %
13.4
 %
14.0
 %
12.6
 %
Aerospace & Defense
8.0
 %
8.8
 %
9.1
 %
10.4
 %
9.1
 %
9.3
 %
Segment operating margin
12.4
 %
12.3
 %
14.0
 %
12.7
 %
12.8
 %
11.8
 %
Corporate expenses
(3.6
)%
(3.3
)%
(3.8
)%
(2.5
)%
(3.3
)%
(4.3
)%
Adjusted operating margin
8.8
 %
9.0
 %
10.1
 %
10.2
 %
9.5
 %
7.5
 %
Restructuring related inventory charges
—
 %
1.2
 %
4.0
 %
0.6
 %
1.4
 %
1.3
 %
Impairment charges
—
 %
—
 %
1.6
 %
—
 %
0.4
 %
—
 %
Special restructuring charges, net
0.9
 %
1.9
 %
0.2
 %
(0.2
)%
0.7
 %
1.4
 %
Special acquisition amortization
—
 %
1.3
 %
1.6
 %
1.4
 %
1.0
 %
1.2
 %
Special other charges, net of recoveries
—
 %
0.1
 %
5.0
 %
1.0
 %
1.5
 %
(0.1
)%
Brazil restatement impact
0.4
 %
1.5
 %
—
 %
—
 %
0.5
 %
—
 %
Total GAAP operating margin
7.4
 %
3.0
 %
(2.2
)%
7.5
 %
4.0
 %
3.6
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 

8

CIRCOR INTERNATIONAL, INC.
SUMMARY REPORT BY SEGMENT
(in thousands, except earnings per share and percentages)
UNAUDITED
 
 
 
 
 
 
 
 
2015
2016
 
1ST QTR
2ND QTR
3RD QTR
4TH QTR
TOTAL
1ST QTR
ADJUSTED OPERATING INCOME
 
 
 
 
 
 
Energy
$
17,550

$
17,008

$
18,932

$
16,724

$
70,214

$
14,186

Aerospace & Defense
3,045

3,494

3,298

4,146

13,982

3,562

Segment operating income
20,595

20,502

22,230

20,870

84,197

17,748

Corporate expenses
(6,034
)
(5,477
)
(6,078
)
(4,122
)
(21,710
)
(6,488
)
Adjusted operating income
14,561

15,025

16,152

16,748

62,487

11,260

Restructuring related inventory charges
—

2,005

6,412

974

9,391

1,958

Impairment charges
—

—

2,502

—

2,502

—

Special restructuring charges, net
1,512

3,127

342

(347
)
4,634

2,040

Special acquisition amortization
—

2,110

2,490

2,238

6,838

1,868

Special other charges, net of recoveries
(1
)
183

7,935

1,603

9,720

(101
)
Brazil restatement impact
719

2,509

—

—

3,228

—

Total GAAP operating income (loss)
12,331

5,090

(3,529
)
12,281

26,174

5,495

INTEREST EXPENSE, NET
(640
)
(805
)
(828
)
(570
)
(2,844
)
(631
)
OTHER INCOME (EXPENSE), NET
506

104

587

(2,099
)
(902
)
528

PRETAX INCOME (LOSS)
12,197

4,389

(3,770
)
9,612

22,428

5,392

PROVISION FOR INCOME TAXES
(3,284
)
(2,517
)
(4,308
)
(2,456
)
(12,565
)
(1,520
)
EFFECTIVE TAX RATE
26.9
 %
57.3
 %
(114.3
)%
25.6
 %
56.0
 %
28.2
 %
NET INCOME (LOSS)
$
8,913

$
1,872

$
(8,078
)
$
7,156

$
9,863

$
3,872

Weighted Average Common Shares Outstanding (Diluted)
17,712

16,900

16,485

16,555

16,913

16,481

EARNINGS (LOSS) PER COMMON SHARE (Diluted)
$
0.50

$
0.11

$
(0.49
)
$
0.43

$
0.58

$
0.23

 
 
 
 
 
 
 


9

CIRCOR INTERNATIONAL, INC.
RECONCILIATION OF KEY PERFORMANCE MEASURES TO COMMONLY USED GENERALLY ACCEPTED ACCOUNTING PRINCIPLE TERMS
(in thousands, except percentages)
UNAUDITED
 
2015
2016
 
1ST QTR
2ND QTR
3RD QTR
4TH QTR
TOTAL
1ST QTR
FREE CASH FLOW AS % OF NET INCOME (LOSS)
(207
)%
239
%
(27
)%
397
%
169
%
96
%
FREE CASH FLOW
$
(18,415
)
$
4,483

$
2,169

$
28,403

$
16,640

$
3,720

ADD:
 
 
 
 
 
 
Capital expenditures, net of sale proceeds
1,983

3,584

2,837

2,098

10,502

3,934

NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES
$
(16,432
)
$
8,067

$
5,006

$
30,501

$
27,142

$
7,654

NET (CASH) DEBT
$
(66,337
)
$
59,051

$
57,277

$
35,959

$
35,959

$
31,220

ADD:
 
 
 
 
 
 
Cash & cash equivalents
103,883

55,027

53,822

54,541

54,541

66,580

TOTAL DEBT
$
37,546

$
114,078

$
111,099

$
90,500

$
90,500

$
97,800

TOTAL SHAREHOLDERS' EQUITY
$
462,384

$
421,070

$
407,979

$
400,777

$
400,777

$
414,107

DEBT AS % OF EQUITY
8
 %
27
%
27
 %
23
%
23
%
24
%

10

CIRCOR INTERNATIONAL, INC.
RECONCILIATION OF KEY PERFORMANCE MEASURES TO COMMONLY USED GENERALLY ACCEPTED ACCOUNTING PRINCIPLE TERMS
(in thousands, except earnings per share)
UNAUDITED
 
 
 
 
 
 
 
 
2015
2016
 
1ST QTR
2ND QTR
3RD QTR
4TH QTR
TOTAL
1ST QTR
ADJUSTED NET INCOME
$
10,564

$
9,357

$
10,635

$
10,512

$
41,068

$
8,683

LESS:
 




 


 
Restructuring related inventory charges, net of tax
—

1,339

6,412

799

8,550

1,945

Impairment charges, net of tax
—

—

2,502

—

2,502

—

Special restructuring charges, net of tax
1,079

2,175

304

(561
)
2,997

1,665

Special acquisition amortization, net of tax
—

1,409

1,587

1,695

4,691

1,266

Special other net charges, net of tax
(147
)
53

7,908

1,423

9,237

(65
)
Brazil restatement impact
719

2,509

—

—

3,228

—

NET INCOME (LOSS)
$
8,913

$
1,872

$
(8,078
)
$
7,156

$
9,863

$
3,872

ADJUSTED EARNINGS PER SHARE (Diluted)
$
0.60

$
0.55

$
0.64

$
0.63

$
2.43

$
0.52

LESS:
 
 
 
 
 
 
Restructuring related inventory charges, net of tax
—

0.08

0.39

0.05

0.51

0.12

Impairment charges, net of tax
—

—

0.15

—

0.15

—

Special restructuring charges, net of tax
0.06

0.13

0.02

(0.03
)
0.18

0.10

Special acquisition amortization, net of tax
—

0.08

0.10

0.10

0.28

0.08

Special other net charges, net of tax
—

—

0.47

0.08

0.54

(0.01
)
Brazil restatement impact
0.04

0.15

—

—

0.19

—

EARNINGS (LOSS) PER COMMON SHARE (Diluted)
$
0.50

$
0.11

$
(0.49
)
$
0.43

$
0.58

$
0.23

 
 
 
 
 
 
 

11

CIRCOR INTERNATIONAL, INC.
RECONCILIATION OF KEY PERFORMANCE MEASURES TO COMMONLY USED GENERALLY ACCEPTED ACCOUNTING PRINCIPLE TERMS
(in thousands, except earnings per share)
UNAUDITED
 
 
 
 
 
 
 
 
2015
2016
 
1ST QTR
2ND QTR
3RD QTR
4TH QTR
TOTAL
1ST QTR
ADJUSTED EBITDA
$
19,299

$
19,474

$
20,980

$
18,927

$
78,681

$
15,712

LESS:
 
 
 
 
 
 
Restructuring related inventory charges
—

(2,005
)
(6,412
)
(974
)
(9,391
)
(1,958
)
Impairment charges
—

—

(2,502
)
—

(2,502
)
—

Special restructuring charges, net
(1,512
)
(3,127
)
(342
)
347

(4,634
)
(2,040
)
Special other charges, net of recoveries
1

(183
)
(7,935
)
(1,603
)
(9,720
)
101

Brazil restatement impact
(719
)
(2,509
)
—

—

(3,228
)
—

EBITDA
$
17,068

$
11,650

$
3,789

$
16,698

$
49,206

$
11,815

LESS:
 
 
 
 
 
 
Interest expense, net
(641
)
(805
)
(828
)
(570
)
(2,844
)
(631
)
Depreciation
(3,521
)
(3,629
)
(3,526
)
(3,578
)
(14,254
)
(3,263
)
Amortization, including special acquisition
(710
)
(2,827
)
(3,205
)
(2,939
)
(9,681
)
(2,529
)
Provision for income taxes
(3,284
)
(2,517
)
(4,308
)
(2,456
)
(12,565
)
(1,520
)
NET INCOME (LOSS)
$
8,913

$
1,872

$
(8,078
)
$
7,156

$
9,863

$
3,872



12

CIRCOR INTERNATIONAL INC Reports