CIRCOR Reports First-Quarter 2018 Financial Results

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

First-Quarter 2018 Highlights

  • Orders of $326.2 million, up 77% and down 1% organically
  • Revenue of $275.6 million, up 90% and up 4% organically
  • Backlog of $561 million, up $60 million in the quarter
  • GAAP Loss Per Share of $0.88, Adjusted Earnings Per Share of $0.40
  • Integration of Fluid Handling businesses on track

The momentum we saw across many of our end markets in Q4 2017 is continuing as we move through the early stages of 2018,” said Scott Buckhout, President and Chief Executive Officer. “For CIRCOR overall, our reported results were stronger than we expected as we entered the quarter. Our book to bill ratio in Q1 was almost 1.2, increasing our backlog by $60 million. Orders continue to be healthy and we expect that trend to continue through the second quarter.”

As we announced in Q1, we have re-aligned our businesses to focus on three primary end markets – Industrial, Energy, and Aerospace & Defense,” Buckhout said. “This is part of our strategy to simplify the business, clarify customer and channel relationships, and better exploit growth opportunities across the organization.”

The Fluid Handling acquisition brings a strong platform for revenue growth and profitability. Fluid Handling orders were up 16% on a pro forma, organic basis in the quarter. The integration is on track, and we are confident in our ability to fully realize all of the committed synergies,” added Buckhout.

Overall, we remain committed to driving long-term growth, generating strong cash flow, and delevering the Company by reducing debt and expanding margins,” concluded Buckhout.

Second-Quarter 2018 Guidance
For the second quarter of 2018, CIRCOR expects revenue in the range of $275 million to $285 million, and GAAP loss per share of $0.09 to $0.27, which reflects acquisition-related amortization expense of $0.51 to $0.53 and other special and restructuring charges of $0.12 to $0.18. Excluding the impact of amortization, special and restructuring charges, adjusted EPS is expected to be in the range of $0.44 to $0.54 per share. Presentation slides that provide supporting information to this guidance and first-quarter results are posted on the “Investors” section of the Company’s website, http://investors.circor.com, and will be discussed during the conference call at 9:00 a.m. ET tomorrow, May 2, 2018.

       

Selected Consolidated Results (unaudited)

 
($ millions except EPS)     Q1 2018 Q1 2017 Change
Revenue $ 275.6 $ 145.2   90%
GAAP Operating (Loss) Income $ (13.4) $ 7.4 N/M
Adjusted Operating Income1 $ 19.8 $ 9.1 118%
GAAP Operating Margin (4.9)% 5.1% N/M
Adjusted Operating Margin1 7.2% 6.3% 90 bps
GAAP (Loss) Earnings Per Share (Diluted) $ (0.88) $ 0.29 N/M
Adjusted Earnings Per Share (Diluted)1 $ 0.40 $ 0.32 25%
Operating Cash Flow $ (0.1) $ 16.2 N/M
Free Cash Flow2 $ (8.3) $ 13.4 N/M
Orders $ 326.2 $ 184.1 77%
 

Segment Results

 
($ millions)     Q1 2018 Q1 2017 Change
Energy
Revenue $ 100.0 $ 76.2 31%
Segment Operating Income $ 5.7 $ 6.4 (11)%
Segment Operating Margin 5.7% 8.4% (270) bps
Orders $ 129.8 $ 100.0 30%
 
Aerospace & Defense
Revenue $ 58.5 $ 41.6 41%
Segment Operating Income $ 8.9 $ 3.8 136%
Segment Operating Margin 15.3% 9.1% 620 bps
Orders $ 59.8 $ 56.4 6%
 
Industrial
Revenue $ 117.1 $ 27.4 328%
Segment Operating Income $ 12.9 $ 4.4 195%
Segment Operating Margin 11.1% 16.0% (490) bps
Orders $ 136.6 $ 27.7

394%

 

1. Adjusted Consolidated and Segment Results for Q1 2018 exclude non-cash acquisition-related intangible amortization, special and restructuring charges totaling $33.2 million ($25.5 million, net of tax). These charges include: (i) $20.2 million charge for non-cash acquisition-related intangible amortization expense, including the amortization of a step-up in fair value of inventories ($6.6 million); (ii) $10.5 million charge related to restructuring activities, primarily severance, related to our Engineered Valves, Reliability Services and Germany-based Pumps business; and (iii) $2.5 million related to the separation of Fluid Handling business from Colfax Corporation. Consolidated and Segment Results for Q1 2017 exclude non-cash acquisition-related intangible amortization, special and restructuring charges totaling $1.7 million ($0.6 million, net of tax). These charges include (i) $2.6 million charge for non-cash acquisition-related intangible amortization expense, (ii) $1.5 million charge related to other restructuring activities, primarily the exit of manufacturing operations in China and France; and (iii) $2.3 million net special gain primarily related to updating fair value estimates related to the purchase of Critical Flow Solutions, partially offset by Brazil losses incurred subsequent to our Q1 2016 closure of manufacturing operations.
2. Free Cash Flow is a non-GAAP financial measure and is calculated by subtracting GAAP capital expenditures, net of proceeds from asset sales, from GAAP Operating Cash Flow.

Conference Call Information
CIRCOR International will hold a conference call to review its financial results at 9:00 a.m. ET tomorrow, May 2, 2018. To listen to the live conference call and view the accompanying presentation slides, please visit “Webcasts & Presentations” in the “Investors” portion of CIRCOR’s website. The live call also can be accessed by dialing (877) 407-5790 or (201) 689-8328. The webcast will be archived on the Company’s website for one year.

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

For example:

  • We exclude costs and tax effects associated with restructuring activities, such as reducing overhead and consolidating facilities. We believe that the costs related to these restructuring activities are not indicative of our normal operating costs.
  • We exclude certain acquisition-related costs, including significant transaction costs and amortization of inventory and fixed-asset step-ups and the related tax effects. We exclude these costs because we do not believe they are indicative of our normal operating costs.
  • We exclude the expense and tax effects associated with the non-cash amortization of acquisition-related intangible assets because a significant portion of the purchase price for acquisitions may be allocated to intangible assets that have lives up to 25 years. Exclusion of the non-cash amortization expense allows comparisons of operating results that are consistent over time for both our newly acquired and long-held businesses and with both acquisitive and non-acquisitive peer companies.
  • We also exclude certain gains/losses and related tax effects, which are either isolated or cannot be expected to occur again with any predictability, and that we believe are not indicative of our normal operating gains and losses. For example, we exclude gains/losses from items such as the sale of a business, significant litigation-related matters and lump-sum pension plan settlements.

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

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

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

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

 

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

   

 

Three Months Ended
April 1, 2018   April 2, 2017
Net revenues $ 275,580 $ 145,208
Cost of revenues 199,276   98,575  
GROSS PROFIT 76,304 46,633
Selling, general and administrative expenses 77,238 40,089
Special and restructuring charges (recoveries), net 12,446   (810 )
OPERATING (LOSS) INCOME (13,380 ) 7,354  
Other expense (income):
Interest expense, net 11,801 1,669
Other (income) expense, net (1,861 ) 225  
TOTAL OTHER EXPENSE, NET 9,940   1,894  
(LOSS) INCOME BEFORE INCOME TAXES (23,320 ) 5,460
(Benefit from) provision for income taxes (5,879 ) 687  
NET (LOSS) INCOME $ (17,441 ) $ 4,773  
(Loss) Earnings per common share:
Basic $ (0.88 ) $ 0.29
Diluted $ (0.88 ) $ 0.29
Weighted average number of common shares outstanding:
Basic 19,806 16,458
Diluted 19,806 16,691
Dividends declared per common share $ $ 0.0375
 
 

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

   
Three Months Ended
OPERATING ACTIVITIES April 1, 2018   April 2, 2017
Net (loss) income $ (17,441 ) $ 4,773
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
Depreciation 7,334 3,798
Amortization 12,329 3,092
Bad debt expense (recovery) 192 (54 )
Loss on write down of inventory 6,466 548
Compensation expense of share-based plans 1,365 738
Change in fair value of contingent consideration (2,500 )
Interest amortization 881
Loss (gain) on sale or write down of property, plant and equipment 1,284 (110 )
Changes in operating assets and liabilities, net of effects of acquisition and disposition:
Trade accounts receivable 12,141 14,018
Inventories (13,833 ) 2,030
Prepaid expenses and other assets (6,616 ) (4,297 )
Accounts payable, accrued expenses and other liabilities (4,249 ) (5,841 )
Net cash (used in) provided by operating activities (147 ) 16,195  
INVESTING ACTIVITIES
Additions to property, plant and equipment (8,234 ) (3,001 )
Proceeds from the sale of property, plant and equipment 93 190
Business acquisition, working capital adjustment   1,467  
Net cash used in investing activities (8,141 ) (1,344 )
FINANCING ACTIVITIES
Proceeds from long-term debt 71,950 34,900
Payments of long-term debt (44,106 ) (43,100 )
Dividends paid (624 )
Proceeds from the exercise of stock options 301 295
Return of cash to seller (7,905 )  
Net cash provided by (used in) financing activities 20,240   (8,529 )
Effect of exchange rate changes on cash and cash equivalents 957   1,055  
INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH 12,909 7,377
Cash, cash equivalents and restricted cash at beginning of period 112,293   58,279  
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD $ 125,202   $ 65,656  
 
 

CIRCOR INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
(Unaudited)

     
April 1, 2018 December 31, 2017
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 123,305 $ 110,356
Trade accounts receivable, less allowance for doubtful accounts of $13,512 and $15,434, respectively 204,437 223,922
Inventories 265,065 244,896
Prepaid expenses and other current assets 67,129   59,219  
Total Current Assets 659,936   638,393  
PROPERTY, PLANT AND EQUIPMENT, NET 226,439 217,539
OTHER ASSETS:
Goodwill 515,177 505,762
Intangibles, net 497,027 513,364
Deferred income taxes 28,236 22,334
Other assets 8,861   9,407  
TOTAL ASSETS $ 1,935,676   $ 1,906,799  
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable $ 118,441 $ 117,329
Accrued expenses and other current liabilities 179,106 170,454
Accrued compensation and benefits 30,865   34,734  
Total Current Liabilities 328,412   322,517  
LONG-TERM DEBT 815,795 787,343
DEFERRED INCOME TAXES 31,099 26,122
PENSION LIABILITY, NET 150,572 150,719
OTHER NON-CURRENT LIABILITIES 21,486 18,124
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS’ EQUITY:
Common stock 212 212
Additional paid-in capital 436,915 438,721
Retained earnings 254,046 274,243
Common treasury stock, at cost (74,472 ) (74,472 )
Accumulated other comprehensive loss, net of tax (28,389 ) (36,730 )
Total Shareholders’ Equity 588,312   601,974  
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 1,935,676   $ 1,906,799  
 
 

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

 

    Three Months Ended
April 1, 2018   April 2, 2017
ORDERS (1) (3)
Energy $ 129.8 $ 100.0
Aerospace & Defense 59.8 56.4
Industrial 136.6   27.7
Total orders $ 326.2   $ 184.1
 
BACKLOG (2) (3) April 1, 2018 April 2, 2017
Energy $ 224.1 $ 142.8
Aerospace & Defense 165.8 106.2
Industrial 170.6   32.9
Total backlog $ 560.5   $ 281.9
 

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 for which revenue has not been recognized.
Note 3: April 2, 2017 segment amounts restated for Q1 2018 organizational realignment.

 

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

                         
2017   2018
1ST QTR   2ND QTR   3RD QTR   4TH QTR   TOTAL   1ST QTR
ORDERS        
Energy $ 100,012 $ 73,140 $ 84,857 $ 118,073 $ 376,082 $ 129,762
Aerospace & Defense 56,416 39,902 45,939 $ 52,043 194,300 59,793
Industrial 27,654     29,889     27,296     46,407     131,246     136,607  
Total $ 184,082     $ 142,931     $ 158,092     $ 216,523     $ 701,628     $ 326,162  
 
NET REVENUES
Energy $ 76,210 $ 78,276 $ 88,570 $ 96,561 $ 339,617 $ 99,972
Aerospace & Defense 41,601 43,304 41,117 $ 56,961 182,983 58,477
Industrial 27,397     29,651     30,006     52,056     139,110     117,131  
Total $ 145,208     $ 151,231     $ 159,693     $ 205,578     $ 661,710     $ 275,580  
 
SEGMENT OPERATING INCOME
Energy $ 6,407 $ 8,170 $ 6,936 $ 8,618 $ 30,131 $ 5,696
Aerospace & Defense 3,784 4,374 4,333 10,884 23,375 8,931
Industrial 4,384 4,901 5,675 4,972 19,932 12,948
Corporate expenses (5,479 )   (5,396 )   (5,067 )   (5,802 )   (21,744 )   (7,802 )
Adjusted Operating Income $ 9,096     $ 12,049     $ 11,877     $ 18,672     $ 51,694     $ 19,773  
 
SEGMENT OPERATING MARGIN %
Energy 8.4 % 10.4 % 7.8 % 8.9 % 8.9 % 5.7 %
Aerospace & Defense 9.1 % 10.1 % 10.5 % 19.1 % 12.8 % 15.3 %
Industrial 16.0 %   16.5 %   18.9 %   9.6 %   14.3 %   11.1 %
Adjusted Operating Margin 6.3 %   8.0 %   7.4 %   9.1 %   7.8 %   7.2 %
 
             

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

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

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

     
2017   2018
1ST QTR   2ND QTR   3RD QTR   4TH QTR   TOTAL   1ST QTR
NET INCOME (LOSS) $ 4,773   $ 8,970   $ 3,617   $ (5,571 )   $ 11,789 $ (17,441 )
LESS:
Restructuring related inventory charges 473
Amortization of inventory step-up 4,300 4,300 6,600
Restructuring charges, net 1,458 3,566 341 697 6,062 9,615
Acquisition amortization 2,552 2,599 2,694 4,697 12,542 11,797
Acquisition depreciation 233 233 1,837
Special charges (recoveries), net (2,268 ) (5,520 ) 1,978 13,799 7,989 2,831
Income tax impact (1,137 )   (3,124 )   (1,497 )   (8,279 )   (14,037 )   (7,687 )
ADJUSTED NET INCOME $ 5,378     $ 6,491     $ 7,133     $ 9,876     $ 28,878     $ 8,025  
 
EARNINGS (LOSS) PER COMMON SHARE (Diluted) $ 0.29 $ 0.54 $ 0.22 $ (0.32 ) $ 0.70 $ (0.88 )
LESS:
Restructuring related inventory charges 0.02
Amortization of inventory step-up 0.25 0.26 0.33
Restructuring charges, net 0.09 0.21 0.02 0.04 0.36 0.49
Acquisition amortization 0.15 0.16 0.16 0.27 0.74 0.60
Acquisition depreciation 0.01 0.01 0.09
Special charges (recoveries), net (0.14 ) (0.33 ) 0.12 0.80 0.47 0.14
Income tax impact (0.07 )   (0.19 )   (0.09 )   (0.48 )   (0.83 )   (0.39 )
ADJUSTED EARNINGS PER SHARE (Diluted) $ 0.32     $ 0.39     $ 0.43     $ 0.57     $ 1.71     $ 0.40  
 
 

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

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

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

(in thousands, except percentages)

UNAUDITED

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

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

 

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

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

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

 

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

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

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

 

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

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

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

Contacts

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

Contacts

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