• GAAP EPS of $0.19 - Up 120% YoY; Adjusted EPS of $0.32 - Up 60% YoY
  • GAAP Operating Income of $11.9 Million - Up 239% YoY; Adjusted Operating Income of $16.6 Million - Up 50% YoY
  • Orders down (1%) reported and up 5% organically
  • Progressing with review of strategic alternatives
  • Q2 10-Q filed

CIRCOR International, Inc. (NYSE: CIR) (“CIRCOR” or “the Company”), one of the world’s leading providers of mission critical flow control products and services for the Industrial and Aerospace & Defense markets, today announced financial results for the second quarter ended July 3, 2022.

Q2 2022 Overview:

  • Revenue of $191 million up 2% reported and 8% organically compared to Q2'2021
    • Aerospace & Defense revenue of $67 million, up 11% reported and 14% organically
    • Industrial revenue of $124 million, down (2%) reported and up 5% organically
  • Orders of $208 million, down (1%) and up 5% organically
    • Aerospace & Defense orders of $69 million, up 27% and 32% organically
    • Industrial orders of $139 million, down (11%) and (4%) organically
  • Backlog of $477 million, up 9% driven by strong demand in Industrial
  • GAAP operating income of $11.9 million, up 239%
  • GAAP operating margin of 6.2%, up 1080 bps
  • Adjusted operating income $16.6 million, up 50%
  • Adjusted operating margin of 8.7%, up 280 bps

CIRCOR President and CEO, Tony Najjar said, “Our team executed well in Q2, navigating ongoing supply chain challenges, an inflationary environment, and labor shortages. Organic orders were up 5% for the quarter and our backlog heading into the second half of the year was a robust $477 million, up 9% from prior year. Our revenues in the quarter were up 2% reported and 8% organically with solid margin expansion as a result of our simplification actions and value-based pricing initiatives.”

Mr. Najjar continued, “With today’s filing of our second-quarter 10-Q, we are very pleased to be up to date with our financial reporting. Our team has worked tirelessly to make this happen, while also making progress with our simplification and cost-out actions, and in our process to review strategic alternatives. We have been hard at work seeking to ensure that CIRCOR delivers sustained growth and margin expansion. We continue to build on our relationships with our customers, improving service levels and aftermarket product flow, while focusing on value-based pricing initiatives and leveraging 80/20 principles across the Company.”

Conference Call Information

CIRCOR International will hold a conference call to review its second-quarter 2022 financial results at 9:00 a.m. ET today, September 30, 2022. 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. https://investors.circor.com/. The live call also can be accessed by dialing (877) 407-5790 or (201) 689-8328. 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.

Selected Consolidated Results

(unaudited)

 

($ millions except EPS)

 

Q2 2022

 

Q2 2021

 

Change

 

Six Months Ended July 3, 2022

 

Six Months Ended July 4, 2021

 

Change

Revenue1

 

$

191.4

 

 

$

187.6

 

 

2

%

 

$

377.0

 

 

$

364.0

 

 

4

%

GAAP operating (loss) income

 

 

11.9

 

 

 

(8.6

)

 

239

%

 

 

0.1

 

 

 

(13.8

)

 

101

%

Adjusted operating income2

 

 

16.6

 

 

 

11.0

 

 

50

%

 

 

27.0

 

 

 

17.8

 

 

52

%

GAAP operating margin

 

 

6.2

%

 

 

(4.6

)%

 

1080 bps

 

 

0.0

%

 

 

(3.8

)%

 

380 bps

Adjusted operating margin3

 

 

8.7

%

 

 

5.9

%

 

280 bps

 

 

7.2

%

 

 

4.9

%

 

230 bps

GAAP (loss) per share

 

$

0.19

 

 

$

(0.93

)

 

120

%

 

$

(0.86

)

 

$

(1.52

)

 

43

%

Adjusted earnings per share (diluted)4

 

$

0.32

 

 

$

0.20

 

 

60

%

 

$

0.37

 

 

$

0.22

 

 

68

%

Operating cash flow

 

 

(3.6

)

 

 

8.9

 

 

-141

%

 

 

(19.5

)

 

 

(10.3

)

 

-89

%

Adjusted free cash flow5

 

 

(9.1

)

 

 

6.2

 

 

-246

%

 

 

(28.6

)

 

 

(16.4

)

 

-74

%

Orders6

 

$

208.4

 

 

$

210.2

 

 

-1

%

 

$

430.0

 

 

$

436.9

 

 

-2

%

Segment Results

(unaudited)

 

($ in millions)

 

Q2 2022

 

Q2 2021

 

Change

 

Six Months Ended July 3, 2022

 

Six Months Ended July 4, 2021

 

Change

Aerospace & Defense

 

 

 

 

 

 

 

 

 

 

 

 

Revenue1

 

$

67.3

 

 

$

60.6

 

 

11

%

 

$

130.6

 

 

$

119.1

 

 

10

%

Segment operating income2

 

 

13.6

 

 

 

11.7

 

 

16

%

 

 

24.9

 

 

 

21.7

 

 

15

%

Segment operating margin3

 

 

20.2

%

 

 

19.4

%

 

80 bps

 

 

19.0

%

 

 

18.2

%

 

80 bps

Orders6

 

$

69.1

 

 

$

54.2

 

 

27

%

 

$

146.9

 

 

$

127.2

 

 

15

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Industrial

 

 

 

 

 

 

 

 

 

 

 

 

Revenue1

 

$

124.1

 

 

$

127.0

 

 

-2

%

 

$

246.4

 

 

$

244.9

 

 

1

%

Segment operating income2

 

 

8.5

 

 

 

7.2

 

 

17

%

 

 

15.3

 

 

 

13.1

 

 

17

%

Segment operating margin3

 

 

6.8

%

 

 

5.7

%

 

110 bps

 

 

6.2

%

 

 

5.3

%

 

90 bps

Orders6

 

$

139.4

 

 

$

156.0

 

 

-11

%

 

$

283.1

 

 

$

309.7

 

 

-9

%

  1. Consolidated and Industrial segment revenues for Q2 2022 and Q2 2021 included $0.2 million and $3.1 million, respectively, relating to our Pipeline Engineering business.
  2. Adjusted operating income is a non-GAAP financial measure. Refer to “Use of Non-GAAP Financial Measures” for an explanation of our non-GAAP financial measures and to the reconciliations included in this press release. Adjusted operating income and Industrial segment operating income for Q2 2022 and Q2 2021 included $(1.1) million and $(1.8) million, respectively, relating to our Pipeline Engineering business.
  3. Adjusted operating margin is a non-GAAP financial measure. Adjusted operating margin for Q2 2022 and Q2 2021 included (492)% and (56)%, respectively, relating to our Pipeline Engineering business.
  4. Adjusted earnings per share (diluted) is a non-GAAP financial measure. Adjusted earnings per share and our segment results for Q2 2022 exclude net loss from non-cash acquisition-related intangible amortization and special and restructuring charges of $4.7 million, consisting of (i) $10.4 million for non-cash acquisition-related intangible amortization and depreciation expense; (ii) $5.0 million of special charges related to the amendment of the credit agreement; (iii) $5.0 million of costs due to the investigation into the accounting irregularities of the Pipeline Engineering business and incremental professional services incurred due to the restatement; (iv) $0.9 million of special charges related to the evaluation of strategic alternatives for the company; (v) net restructuring charges of $4.7 million comprised of $5.3 million of CTA loss offset by other adjustments of $0.6 million due to the deconsolidation of the Pipeline Engineering businesses; (vi) other special and restructuring charges net of $0.7 million; and (vii) a gain of $22.0 million on the sale of real estate located at Walden, New York and Tampa, Florida. Adjusted consolidated and segment results for Q2 2021 exclude net loss from discontinued operations of $0.9 million and net loss from non-cash acquisition-related intangible amortization, special and restructuring charges totaling $19.6 million ($21.9 million after tax). These charges include: (i) $11.8 million for non-cash acquisition-related intangible amortization and depreciation expense; (ii) $3.0 million of special charges related to the Heater & Control Valve divestiture; (iii) $3.8 million of other special and restructuring charges; and (iv) $1.0 million of restructuring related inventory charges.
  5. Adjusted free cash flow, a non-GAAP financial measure, is calculated by subtracting GAAP capital expenditures, net of proceeds from asset sales, from GAAP operating cash flow.
  6. Orders, an operating measure, is defined as a legally binding agreement from an authorized individual at a customer requesting CIRCOR to provide goods and/or services at a fixed or determinable price and CIRCOR is capable of providing such goods and services, when the terms and conditions are firm enough to assure subsequent payment by the customer. Consolidated and Industrial segment orders for Q2 2022 and Q2 2021 included $0.0 million and $5.2 million, respectively, relating to our Pipeline Engineering business. As previously disclosed in our Form 10-K for the year ended December 31, 2021, the Company discovered accounting irregularities in its Pipeline Engineering business unit resulting in a restatement of previously issued financial statements.

Company Files Quarterly Report on Form 10-Q for the Period Ended July 3, 2022

The Company today filed its Quarterly Report on Form 10-Q for the second quarter of 2022.

Use of Non-GAAP Financial Measures

In this press release, the Company uses the non-GAAP financial measures adjusted net income, adjusted EBITDA, adjusted operating income, adjusted operating margin, adjusted earnings per share and adjusted free cash flow. 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 that these non-GAAP financial measures provide useful information to investors and others in understanding and evaluating CIRCOR’s current operating performance and future prospects in the same manner as management does if they so choose. These non-GAAP financial measures can also assist investors and others in comparing CIRCOR’s current financial results with CIRCOR’s past financial results in a consistent manner.

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

Due to the significance of recently sold or exited businesses and to provide a comparison of changes in our revenue and orders (an operating measure), we also discuss these changes on an “organic” basis. Organic is calculated assuming the divestitures and/or exited businesses completed prior to July 3, 2022 were completed on January 1, 2021 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 peers. 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.

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 3,100 employees and is headquartered in Burlington, Massachusetts. For more information, visit the Company’s investor relations website at http://investors.circor.com.

Cautionary Note Regarding Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Actual results may differ materially from the expectations the Company describes in its forward-looking statements. Substantial 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. Important factors that could cause actual results to differ materially from expectations include, but are not limited to the inability to achieve expected results in pricing and cost out actions and the related impact on margins and cash flow; the effectiveness of the Company’s internal control over financial reporting and disclosure controls and procedures; the remediation of the material weaknesses in the Company’s internal controls over financial reporting or other potential weaknesses of which the Company is not currently aware or which have not been detected; the timing of the Company regaining compliance with the NYSE’s continued listing standards; the timing and outcome, if any, of the Company’s strategic alternatives review; 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 , rising inflation, increasing interest rates, natural disasters, military conflicts, including the conflict between Russia and Ukraine, terrorist attacks and other similar matters; and the risks detailed from time to time in the Company’s periodic reports filed with the SEC. Before making any investment decisions regarding CIRCOR, the Company strongly advises you to read the section entitled “Risk Factors” in its 2021 Annual Report on Form 10-K, which can be accessed under the “Investors” link of the Company’s website at www.circor.com. The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

CIRCOR INTERNATIONAL, INC

CONSOLIDATED STATEMENT OF OPERATIONS

(in thousands, except per share data) (unaudited)

 

 

Three Months Ended

 

Six Months Ended

 

July 3, 2022

 

As Restated July 4, 2021

 

July 3, 2022

 

As Restated July 4, 2021

Net revenues

$

191,376

 

 

$

187,590

 

 

$

377,031

 

 

$

364,041

 

Cost of revenues

 

133,171

 

 

$

131,156

 

 

$

263,543

 

 

$

256,045

 

Gross profit

 

58,205

 

 

 

56,434

 

 

 

113,488

 

 

 

107,996

 

Selling, general and administrative expenses

 

52,057

 

 

 

58,188

 

 

 

110,127

 

 

 

115,825

 

Special and restructuring (recoveries) charges, net

 

(5,730

)

 

 

6,803

 

 

 

3,272

 

 

 

5,995

 

Operating income (loss)

 

11,878

 

 

 

(8,557

)

 

 

89

 

 

 

(13,824

)

Other expense (income):

 

 

 

 

 

 

 

Interest expense, net

 

10,203

 

 

 

7,957

 

 

 

19,659

 

 

 

16,327

 

Other (income), net

 

(1,638

)

 

 

(1,267

)

 

 

(2,924

)

 

 

(3,048

)

Total other expense, net

 

8,565

 

 

 

6,690

 

 

 

16,735

 

 

 

13,279

 

Income (loss) from continuing operations before income taxes

 

3,313

 

 

 

(15,247

)

 

 

(16,646

)

 

 

(27,103

)

(Benefit from) provision for income taxes

 

(647

)

 

 

2,659

 

 

 

875

 

 

 

2,360

 

Income (loss) from continuing operations, net of tax

 

3,960

 

 

 

(17,906

)

 

 

(17,521

)

 

 

(29,463

)

Loss from discontinued operations, net of tax

$

 

 

$

(878

)

 

$

 

 

$

(1,117

)

Net income (loss)

$

3,960

 

 

$

(18,784

)

 

$

(17,521

)

 

$

(30,580

)

 

 

 

 

 

 

 

 

Basic income (loss) per common share:

 

 

 

 

 

 

 

Basic from continuing operations

$

0.19

 

 

$

(0.89

)

 

$

(0.86

)

 

$

(1.46

)

Basic from discontinued operations

$

 

 

$

(0.04

)

 

$

 

 

$

(0.06

)

Net income (loss)

$

0.19

 

 

$

(0.93

)

 

$

(0.86

)

 

$

(1.52

)

 

 

 

 

 

 

 

 

Diluted income (loss) per common share:

 

 

 

 

 

 

 

Diluted from continuing operations

$

0.19

 

 

$

(0.89

)

 

$

(0.86

)

 

$

(1.46

)

Diluted from discontinued operations

$

 

 

$

(0.04

)

 

$

 

 

$

(0.06

)

Net income (loss)

$

0.19

 

 

$

(0.93

)

 

$

(0.86

)

 

$

(1.52

)

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding:

 

 

 

 

 

 

Basic

 

20,361

 

 

 

20,230

 

 

 

20,336

 

 

 

20,143

 

Diluted

 

20,428

 

 

 

20,230

 

 

 

20,336

 

 

 

20,143

 

CIRCOR INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands) (unaudited)

 

 

Six Months Ended

OPERATING ACTIVITIES

July 3, 2022

 

As Restated July 4, 2021

Net (loss)

$

(17,521

)

 

$

(30,580

)

(Loss) from discontinued operations, net of income taxes

 

 

 

 

(1,117

)

(Loss) from continuing operations, net of tax

$

(17,521

)

 

 

(29,463

)

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

 

 

 

Depreciation

 

10,056

 

 

 

11,970

 

Amortization

 

18,580

 

 

 

21,353

 

Change in provision for bad debt expense

 

(221

)

 

 

(356

)

Write down of inventory

 

1,181

 

 

 

1,548

 

Compensation expense for share-based plans

 

375

 

 

 

2,903

 

Loss on debt extinguishment

 

4,977

 

 

 

 

Amortization of debt issuance costs

 

1,649

 

 

 

2,005

 

Deferred tax provision

 

 

 

 

(1,317

)

Loss on sale of businesses

 

 

 

 

1,031

 

Gain on sale of real estate

 

(22,008

)

 

 

 

Other impairment charges

 

8,011

 

 

 

 

Loss on deconsolidation charges

 

4,675

 

 

 

 

Changes in operating assets and liabilities, net of effects of acquisitions and divestitures:

 

 

 

Trade accounts receivable

 

3,283

 

 

 

6,455

 

Inventories

 

(20,548

)

 

 

(14,617

)

Prepaid expenses and other assets

 

(16,947

)

 

 

(10,119

)

Accounts payable, accrued expenses and other liabilities

 

4,941

 

 

 

(1,158

)

Net cash used in continuing operating activities

 

(19,517

)

 

 

(9,765

)

Net cash used in discontinued operating activities

 

 

 

 

(579

)

Net cash (used in) operating activities

 

(19,517

)

 

 

(10,344

)

INVESTING ACTIVITIES

 

 

 

Additions to property, plant and equipment

 

(9,133

)

 

 

(6,038

)

Proceeds from the sale of property, plant and equipment

 

80

 

 

 

2

 

Proceeds from beneficial interest of factored receivables

 

2,336

 

 

 

998

 

Proceeds from the sale of real estate

 

26,433

 

 

 

 

Proceeds from the sale of businesses

 

 

 

 

9,993

 

Net cash provided by investing activities

 

19,716

 

 

 

4,955

 

FINANCING ACTIVITIES

 

 

 

Proceeds from long-term debt

 

124,016

 

 

 

103,350

 

Payments of long-term debt

 

(105,616

)

 

 

(100,250

)

Net change in short-term borrowings

 

(1,573

)

 

 

(292

)

Proceeds from the exercise of stock options

 

 

 

 

151

 

Withholding tax payments on net share settlements on equity awards

 

(1,187

)

 

 

(4,119

)

Payments of debt issuance costs

 

(16,701

)

 

 

 

Net cash (used in) financing activities

 

(1,061

)

 

 

(1,160

)

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

 

(3,848

)

 

 

(1,782

)

DECREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH

 

(4,710

)

 

 

(8,331

)

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

 

61,374

 

 

 

68,607

 

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

$

56,664

 

 

$

60,276

 

CIRCOR INTERNATIONAL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data) (unaudited)

 

 

July 3, 2022

 

December 31, 2021

ASSETS

 

 

 

CURRENT ASSETS:

 

 

 

Cash and cash equivalents

$

55,238

 

 

$

59,924

 

Trade accounts receivable, net

 

93,530

 

 

 

100,149

 

Inventories

 

134,247

 

 

 

123,343

 

Prepaid expenses and other current assets

 

119,522

 

 

 

110,749

 

Total Current Assets

 

402,537

 

 

 

394,165

 

PROPERTY, PLANT AND EQUIPMENT, NET

 

139,082

 

 

 

154,461

 

OTHER ASSETS:

 

 

 

Goodwill

 

119,750

 

 

 

122,906

 

Intangibles, net

 

273,476

 

 

 

303,476

 

Deferred income taxes

 

685

 

 

 

756

 

Other assets

 

53,890

 

 

 

43,534

 

TOTAL ASSETS

$

989,420

 

 

$

1,019,298

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

CURRENT LIABILITIES:

 

 

 

Accounts payable

$

83,152

 

 

$

83,382

 

Accrued expenses and other current liabilities

 

78,554

 

 

 

81,998

 

Accrued compensation and benefits

 

28,158

 

 

 

26,551

 

Short-term borrowings and current portion of long-term debt

 

 

 

 

1,611

 

Total Current Liabilities

 

189,864

 

 

 

193,542

 

LONG-TERM DEBT

 

520,999

 

 

 

511,694

 

DEFERRED INCOME TAXES

 

19,689

 

 

 

21,721

 

PENSION LIABILITY, NET

 

111,716

 

 

 

120,881

 

OTHER NON-CURRENT LIABILITIES

 

43,489

 

 

 

37,744

 

COMMITMENTS AND CONTINGENCIES (NOTE 9 AND 10)

 

 

 

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; 21,724,341 and 21,633,131 issued at July 3, 2022 and December 31, 2021 respectively

 

217

 

 

 

217

 

Additional paid-in capital

 

454,361

 

 

 

454,852

 

Accumulated deficit

 

(215,602

)

 

 

(198,081

)

Common treasury stock, at cost (1,372,488 shares at July 3, 2022 and December 31, 2021)

 

(74,472

)

 

 

(74,472

)

Accumulated other comprehensive loss, net of tax

 

(60,841

)

 

 

(48,800

)

Total Shareholders’ Equity

 

103,663

 

 

 

133,716

 

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

$

989,420

 

 

$

1,019,298

 

CIRCOR INTERNATIONAL, INC.

SUMMARY OF ORDERS AND BACKLOG

(in millions) (unaudited)

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

 

July 3, 2022

 

July 4, 2021

 

July 3, 2022

 

July 4, 2021

 

 

 

 

 

 

 

 

 

 

 

ORDERS (1)

 

 

 

 

 

 

 

 

 

 

Aerospace & Defense

 

$

69.0

 

$

54.2

 

$

146.90

 

$

127.2

 

 

Industrial

 

 

139.4

 

 

156.0

 

 

283.1

 

 

309.7

 

 

Total orders

 

$

208.4

 

$

210.2

 

$

430.0

 

$

436.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

July 3, 2022

 

July 4, 2021

 

 

 

 

BACKLOG (2)

 

 

 

 

 

 

 

 

 

 

Aerospace & Defense

 

$

199.0

 

$

191.7

 

 

 

 

 

 

Industrial

 

 

278.4

 

 

248.2

 

 

 

 

 

 

Total backlog

 

$

477.4

 

$

439.9

 

 

 

 

1. Orders do not include the foreign exchange impact due to the re-measurement of customer backlog amounts denominated in foreign currencies. Industrial includes $0.0 million and $5.2 million of orders for Pipeline Engineering for the three months ended July 3, 2022 and July 4, 2021 respectively. Industrial includes $2.3 million and $10.7 million of orders for Pipeline Engineering for the six months ended July 3, 2022 and July 4, 2021 respectively.

2. Backlog is calculated as current period orders plus unshipped customer orders from prior periods for which revenue has not been recognized. Industrial includes $0.0 million and $0.7 million for Pipeline Engineering in 2022 and 2021 respectively.

CIRCOR INTERNATIONAL, INC.

SEGMENT INFORMATION

(in thousands, except percentages) (unaudited)

 

 

 

2021 As Restated

2022

As reported

 

1ST QTR

2ND QTR

3RD QTR

4TH QTR

TOTAL

1ST QTR

2ND QTR

TOTAL

ORDERS

 

 

 

 

 

 

 

 

 

Aerospace & Defense

 

$

72,999

 

$

54,243

 

$

54,028

 

$

73,898

 

$

255,168

 

$

77,890

 

$

69,053

 

$

146,943

 

Industrial

 

 

153,695

 

 

155,959

 

 

139,691

 

 

146,065

 

 

595,410

 

 

143,727

 

 

139,370

 

 

283,097

 

Total

 

$

226,693

 

$

210,203

 

$

193,719

 

$

219,964

 

$

850,578

 

$

221,617

 

$

208,423

 

$

430,040

 

 

 

 

 

 

 

 

 

 

 

NET REVENUES

 

 

 

 

 

 

 

 

 

Aerospace & Defense

 

$

58,488

 

$

60,613

 

$

63,461

 

$

69,979

 

$

252,541

 

$

63,370

 

$

67,271

 

$

130,641

 

Industrial

 

 

117,963

 

 

126,977

 

 

126,248

 

 

134,938

 

 

506,126

 

 

122,285

 

 

124,105

 

 

246,390

 

Total

 

$

176,451

 

$

187,590

 

$

189,709

 

$

204,917

 

$

758,667

 

$

185,655

 

$

191,376

 

$

377,031

 

 

 

 

 

 

 

 

 

 

 

SEGMENT OPERATING INCOME

 

 

 

 

 

 

Aerospace & Defense

 

$

9,988

 

$

11,741

 

$

15,927

 

$

18,416

 

$

56,073

 

$

11,320

 

$

13,566

 

$

24,886

 

Industrial

 

 

5,834

 

 

7,237

 

 

7,124

 

 

8,700

 

 

28,896

 

 

6,857

 

 

8,484

 

 

15,341

 

Corporate expenses

 

 

(9,035

)

 

(7,950

)

 

(7,015

)

 

(6,636

)

 

(30,638

)

 

(7,770

)

 

(5,485

)

 

(13,255

)

Total

 

$

6,787

 

$

11,028

 

$

16,036

 

$

20,480

 

$

54,331

 

$

10,407

 

$

16,565

 

$

26,972

 

 

 

 

 

 

 

 

 

 

 

SEGMENT OPERATING MARGIN %

 

 

 

 

 

 

Aerospace & Defense

 

 

17.1

%

 

19.4

%

 

25.1

%

 

26.3

%

 

22.2

%

 

17.9

%

 

20.2

%

 

19.0

%

Industrial

 

 

4.9

%

 

5.7

%

 

5.6

%

 

6.4

%

 

5.7

%

 

5.6

%

 

6.8

%

 

6.2

%

Total

 

 

3.8

%

 

5.9

%

 

8.5

%

 

10.0

%

 

7.2

%

 

5.6

%

 

8.7

%

 

7.2

%

 

 

 

 

 

 

 

 

 

 

 

 

2021

2022

Pipeline Engineering1

 

1ST QTR

2ND QTR

3RD QTR

4TH QTR

TOTAL

1ST QTR

2ND QTR

TOTAL

ORDERS - Industrial

 

$

5,531

 

$

5,192

 

$

6,575

 

$

7,121

 

$

24,419

 

$

2,260

 

$

 

$

2,260

 

NET REVENUES - Industrial

 

$

2,994

 

$

3,124

 

$

3,236

 

$

5,248

 

$

14,602

 

$

3,012

 

$

218

 

$

3,230

 

SEGMENT OP. INC. -Industrial

 

$

(2,479

)

$

(1,754

)

$

(2,470

)

$

(3,191

)

$

(9,893

)

$

(3,190

)

$

(1,074

)

$

(4,264

)

Segment Operating Margin %

 

 

(82.8

) %

 

(56.1

) %

 

(76.3

) %

 

(60.8

) %

 

(67.8

) %

 

(105.9

) %

 

(492.7

) %

 

(132.0

) %

1) Quantifies the impact of the Pipeline Engineering business on the Industrial Segment.

 

 

CIRCOR INTERNATIONAL, INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND KEY PERFORMANCE MEASURES

(in thousands, except percentages) (unaudited)

 

 

 

2021 As Restated

2022

 

 

1ST QTR

2ND QTR

3RD QTR

4TH QTR

TOTAL

1ST QTR

2ND QTR

TOTAL

 

 

 

 

 

 

 

 

 

 

Net Cash (Used In) Provided By Operating Activities

$

(19,210

)

$

8,866

 

$

10,197

 

$

10,595

 

$

10,448

 

$

(15,924

)

$

(3,593

)

$

(19,517

)

LESS

 

 

 

 

 

 

 

 

 

Capital expenditures, net of sale proceeds1

 

3,392

 

 

2,644

 

 

4,541

 

 

4,168

 

 

14,745

 

 

3,592

 

 

5,461

 

 

9,053

 

ADJUSTED FREE CASH FLOW

$

(22,602

)

$

6,222

 

$

5,656

 

$

6,427

 

$

(4,297

)

$

(19,516

)

$

(9,054

)

$

(28,570

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Debt

 

$

538,541

 

$

524,391

 

$

518,464

 

$

526,311

 

$

526,311

 

$

547,681

 

$

543,100

 

$

543,100

 

Less: Cash & Cash equivalents

 

64,837

 

 

58,862

 

 

58,013

 

 

59,924

 

 

59,924

 

 

61,122

 

 

55,238

 

 

55,238

 

GROSS DEBT, NET OF CASH

$

473,704

 

$

465,529

 

$

460,451

 

$

466,387

 

$

466,387

 

$

486,559

 

$

487,862

 

$

487,862

 

 

 

 

 

 

 

 

 

 

 

TOTAL SHAREHOLDERS' EQUITY

$

138,663

 

$

122,185

 

$

121,256

 

$

133,716

 

$

133,716

 

$

110,321

 

$

103,663

 

$

103,663

 

 

 

 

 

 

 

 

 

 

 

GROSS DEBT AS % OF EQUITY

 

388

%

 

429

%

 

428

%

 

394

%

 

394

%

 

496

%

 

524

%

 

524

%

GROSS DEBT, NET OF CASH AS % OF EQUITY

 

342

%

 

381

%

 

380

%

 

349

%

 

349

%

 

441

%

 

471

%

 

471

%

 

 

 

 

 

 

 

 

 

 

  1. Includes capital expenditures, net of proceeds of asset sales from GAAP operating cash flow.

CIRCOR INTERNATIONAL, INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND KEY PERFORMANCE MEASURES

(in thousands, except percentages) (unaudited)

 

 

 

2021 As Restated

2022

 

 

1ST QTR

2ND QTR

3RD QTR

4TH QTR

TOTAL

1ST QTR

2ND QTR

TOTAL

NET (LOSS) INCOME

 

$

(11,796

)

$

(18,784

)

$

(2,630

)

$

(28,427

)

$

(61,638

)

$

(21,481

)

$

3,960

 

$

(17,521

)

LESS:

 

 

 

 

 

 

 

 

 

Restructuring related inventory charges (recoveries), net

 

 

 

 

958

 

 

(60

)

 

(299

)

 

599

 

 

2,757

 

 

 

 

2,757

 

Restructuring charges (recoveries), net

 

 

2,060

 

 

2,281

 

 

(312

)

 

205

 

 

4,234

 

 

6,447

 

 

4,695

 

 

11,142

 

Acquisition amortization

 

 

10,487

 

 

10,498

 

 

10,417

 

 

10,369

 

 

41,772

 

 

9,391

 

 

9,178

 

 

18,569

 

Acquisition depreciation

 

 

2,375

 

 

1,327

 

 

1,412

 

 

1,397

 

 

6,511

 

 

1,045

 

 

1,239

 

 

2,285

 

Special (recoveries) charges, net

 

 

(2,870

)

 

4,523

 

 

1,126

 

 

17,259

 

 

20,038

 

 

2,556

 

 

(10,425

)

 

(7,870

)

Goodwill Impairment charge

 

 

 

 

 

 

 

 

10,500

 

 

10,500

 

 

 

 

 

 

 

Income tax impact

 

 

(44

)

 

2,425

 

 

(596

)

 

(1,622

)

 

163

 

 

384

 

 

(2,207

)

 

(1,823

)

Net loss (income) from discontinued operations

 

 

239

 

 

878

 

 

(2,510

)

 

(13

)

 

(1,406

)

 

 

 

 

 

 

ADJUSTED NET INCOME

 

$

451

 

$

4,106

 

$

6,847

 

$

9,369

 

$

20,773

 

$

1,099

 

$

6,440

 

$

7,539

 

 

 

 

 

 

 

 

 

 

 

(LOSS) EARNINGS PER COMMON SHARE (Diluted)

 

$

(0.59

)

$

(0.93

)

$

(0.13

)

$

(1.40

)

$

(3.05

)

$

(1.06

)

$

0.19

 

$

(0.86

)

LESS:

 

 

 

 

 

 

 

 

 

Restructuring related inventory charges

 

 

 

 

0.05

 

 

 

 

(0.01

)

 

0.03

 

 

0.14

 

 

 

 

0.14

 

Restructuring charges (recoveries), net

 

 

0.10

 

 

0.11

 

 

(0.02

)

 

0.01

 

 

0.21

 

 

0.32

 

 

0.23

 

 

0.55

 

Acquisition amortization

 

 

0.52

 

 

0.52

 

 

0.51

 

 

0.51

 

 

2.07

 

 

0.46

 

 

0.45

 

 

0.91

 

Acquisition depreciation

 

 

0.12

 

 

0.07

 

 

0.07

 

 

0.07

 

 

0.32

 

 

0.05

 

 

0.06

 

 

0.11

 

Special (recoveries) charges, net

 

 

(0.14

)

 

0.22

 

 

0.06

 

 

0.85

 

 

0.99

 

 

0.13

 

 

(0.51

)

 

(0.39

)

Impairment charge

 

 

 

 

 

 

 

 

0.52

 

 

0.52

 

 

 

 

 

 

 

Income tax impact

 

 

 

 

0.12

 

 

(0.03

)

 

(0.08

)

 

0.01

 

 

0.02

 

 

(0.11

)

 

(0.09

)

(Loss) earnings) per share from discontinued operations

 

 

0.01

 

 

0.04

 

 

(0.12

)

 

 

 

(0.07

)

 

 

 

 

 

 

ADJUSTED EARNINGS PER SHARE (Diluted)

 

$

0.02

 

$

0.20

 

$

0.34

 

$

0.46

 

$

1.03

 

$

0.05

 

$

0.32

 

$

0.37

 

CIRCOR INTERNATIONAL, INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND KEY PERFORMANCE MEASURES

(in thousands, except percentages) (unaudited)

 

 

 

2021 As Restated

2022

 

 

1ST QTR

2ND QTR

3RD QTR

4TH QTR

TOTAL

1ST QTR

2ND QTR

TOTAL

 

 

 

 

 

 

 

 

 

 

NET (LOSS) INCOME

 

$

(11,796

)

$

(18,784

)

$

(2,629

)

$

(28,426

)

$

(61,635

)

$

(21,481

)

$

3,960

 

$

(17,521

)

LESS:

 

 

 

 

 

 

 

 

 

Interest expense, net

 

8,369

 

 

7,958

 

 

7,997

 

 

8,040

 

 

32,365

 

 

9,456

 

 

10,203

 

 

19,659

 

Depreciation

 

 

6,509

 

 

5,460

 

 

5,536

 

 

5,348

 

 

22,854

 

 

5,000

 

 

5,056

 

 

10,056

 

Amortization

 

 

10,696

 

 

10,657

 

 

10,576

 

 

10,375

 

 

42,304

 

 

9,397

 

 

9,183

 

 

18,580

 

Provision for income taxes

 

(297

)

 

2,659

 

 

850

 

 

1,970

 

 

5,182

 

 

1,523

 

 

(647

)

 

876

 

Loss (income) from discontinued operations

 

239

 

 

878

 

 

(2,510

)

 

(13

)

 

(1,406

)

 

 

 

 

 

 

EBITDA

 

$

13,720

 

$

8,828

 

$

19,820

 

$

(2,706

)

$

39,664

 

$

3,895

 

$

27,755

 

$

31,650

 

LESS:

 

 

 

 

 

 

 

 

 

Restructuring related inventory charges (recoveries)

 

 

 

958

 

 

(60

)

 

(299

)

 

599

 

 

2,757

 

 

 

 

2,757

 

Restructuring charges (recoveries), net

 

2,060

 

 

2,281

 

 

(312

)

 

205

 

 

4,234

 

 

6,447

 

 

4,695

 

 

11,142

 

Special (recoveries) charges, net

 

(2,870

)

 

4,523

 

 

1,126

 

 

17,259

 

 

20,038

 

 

2,556

 

 

(10,425

)

 

(7,870

)

Goodwill impairment charge

 

 

 

 

 

 

 

 

10,500

 

 

10,500

 

 

 

 

 

 

 

ADJUSTED EBITDA

 

$

12,910

 

$

16,590

 

$

20,574

 

$

24,959

 

$

75,035

 

$

15,655

 

$

22,025

 

$

37,679

 

CIRCOR INTERNATIONAL, INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND KEY PERFORMANCE MEASURES

(in thousands, except percentages) (unaudited)

 

 

 

2021 As Restated

2022

 

 

1ST QTR

2ND QTR

3RD QTR

4TH QTR

TOTAL

1ST QTR

2ND QTR

TOTAL

 

 

 

 

 

 

 

 

 

 

OPERATING (LOSS) INCOME

 

$

(5,266

)

$

(8,557

)

$

3,451

 

$

(18,952

)

$

(29,323

)

$

(11,789

)

$

11,878

 

$

89

 

LESS:

 

 

 

 

 

 

 

 

 

Restructuring related inventory charges (recoveries)

 

 

 

 

958

 

 

(60

)

 

(299

)

 

599

 

 

2,757

 

 

 

 

2,757

 

Restructuring charges (recoveries), net

 

 

2,060

 

 

2,281

 

 

(312

)

 

205

 

 

4,234

 

 

6,447

 

 

4,695

 

 

11,142

 

Acquisition amortization

 

 

10,487

 

 

10,498

 

 

10,417

 

 

10,369

 

 

41,772

 

 

9,391

 

 

9,178

 

 

18,569

 

Acquisition depreciation

 

 

2,375

 

 

1,327

 

 

1,412

 

 

1,397

 

 

6,511

 

 

1,045

 

 

1,239

 

 

2,285

 

Special (recoveries) charges, net

 

 

(2,870

)

 

4,523

 

 

1,126

 

 

17,259

 

 

20,038

 

 

2,556

 

 

(10,425

)

 

(7,870

)

Goodwill impairment charge

 

 

 

 

 

 

 

 

10,500

 

 

10,500

 

 

 

 

 

 

 

ADJUSTED OPERATING INCOME

 

$

6,787

 

$

11,029

 

$

16,035

 

$

20,479

 

$

54,331

 

$

10,407

 

$

16,565

 

$

26,972

 

 

 

 

 

 

 

 

 

 

 

OPERATING MARGIN

 

 

(3.0

) %

 

(4.6

) %

 

1.8

%

 

(9.2

) %

 

(3.9

) %

 

(6.3

) %

 

6.2

%

 

0.0

%

LESS:

 

 

 

 

 

 

 

 

 

Restructuring related inventory charges (recoveries)

 

 

0.0

%

 

0.5

%

 

0.0

%

 

(0.1

) %

 

0.1

%

 

1.5

%

 

0.0

%

 

0.7

%

Restructuring charges (recoveries), net

 

 

1.2

%

 

1.2

%

 

(0.2

) %

 

0.1

%

 

0.6

%

 

3.5

%

 

2.5

%

 

3.0

%

Acquisition amortization

 

 

5.9

%

 

5.6

%

 

5.5

%

 

5.1

%

 

5.5

%

 

5.1

%

 

4.8

%

 

4.9

%

Acquisition depreciation

 

 

1.3

%

 

0.7

%

 

0.7

%

 

0.7

%

 

0.9

%

 

0.6

%

 

0.6

%

 

0.6

%

Special (recoveries) charges, net

 

 

(1.6

) %

 

2.4

%

 

0.6

%

 

8.4

%

 

2.6

%

 

1.4

%

 

(5.4

) %

 

(2.1

) %

Goodwill impairment charge

 

 

0.0

%

 

0.0

%

 

0.0

%

 

5.1

%

 

1.4

%

 

0.0

%

 

0.0

%

 

0.0

%

ADJUSTED OPERATING MARGIN

 

 

3.8

%

 

5.9

%

 

8.5

%

 

10.0

%

 

7.2

%

 

5.6

%

 

8.7

%

 

7.2

%

CIRCOR INTERNATIONAL, INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND KEY PERFORMANCE MEASURES

(in thousands, except percentages) (unaudited)

 

 

 

CIRCOR

 

Aerospace & Defense

 

Industrial

 

 

2Q 22

2Q 21

Change

 

2Q 22

2Q 21

Change

 

2Q 22

2Q 21

Change

Reported Orders

 

208,423

210,203

(1

)%

 

69,053

54,243

27

%

 

139,370

155,959

(11

)%

FX

 

12,735

 

 

 

2,395

 

 

 

10,340

 

 

Organic

 

221,158

210,203

5

%

 

71,448

54,243

32

%

 

149,710

155,959

(4

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CIRCOR

 

Aerospace & Defense

 

Industrial

 

 

2Q 22

2Q 21

Change

 

2Q 22

2Q 21

Change

 

2Q 22

2Q 21

Change

Reported Revenue

 

191,376

187,590

2

%

 

67,271

60,613

11

%

 

124,105

126,977

(2

)%

FX

 

11,153

 

 

 

2,036

 

 

 

9,118

 

 

Organic

 

202,529

187,590

8

%

 

69,307

60,613

14

%

 

133,223

126,977

5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Note regarding financial statements: Restated amounts are computed independently each quarter; therefore, the sum of the quarterly amounts may not equal the total amount for the respective year due to rounding.

Scott Solomon Senior Vice President Sharon Merrill Associates, Inc. (857) 383-2409

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