CIR CIRCOR International Inc

- Earnings before charges total $0.29 per share as revenues increase 22% BURLINGTON, Mass., Nov. 3 /PRNewswire-FirstCall/ -- CIRCOR International, Inc. (NYSE:CIR), a leading provider of valves and other fluid control products for the instrumentation, aerospace, thermal fluid and energy markets, today announced results for the third quarter ended October 2, 2005. Net income for the third quarter of 2005 was $4.3 million, or $0.27 per diluted share, compared to $3.3 million, or $0.21 per diluted share, for the 2004 third quarter. Revenues for the 2005 third quarter were $109.2 million, an increase of 22% from $89.8 million for the third quarter of 2004. For the nine months ended October 2, 2005, net income rose 34% to $15.6 million, or $0.97 per diluted share. Net income for the nine months ended September 26, 2004, totaled $11.7 million, or $0.73 per diluted share. Revenues for the first nine months of 2005 were $330.1 million, an increase of 20% from $275.0 million for the first nine months of 2004. David A. Bloss, Sr., Chairman and Chief Executive Officer, said, "We continue to benefit from higher industrial, aerospace and oilfield activity while our commercial HVAC, U.S. Navy and process steam markets remain relatively flat. While we are pleased with our results, they were at the lower end of our expectations due in large part to constraints on the supply of certain key components as well as continuing raw material cost pressures." Mr. Bloss also commented on the Company's progress in implementing internal operational improvements saying, "We currently have a number of facility consolidation projects in various stages of completion and, in addition, we are in our first year of transformation to lean operating practices. These actions are designed to substantially improve our profitability, asset utilization and cash flow as fewer facilities will be needed and our inventory cycles improve. In addition to special charges for facility consolidations, we incurred incremental costs during the quarter associated with the lean initiatives of approximately $0.4 million and $1.4 million year-to-date. Financial benefits from our efforts in these areas are expected to be realized in 2006 and beyond." During the first nine months of 2005, the Company generated $17.5 million of free cash flow (defined as net cash from operating activities, less capital expenditures and dividends paid), an increase of 25% from $14.0 million of free cash flow generated in the same period last year. Included in free cash flow for 2005 are incremental capital expenditures totaling $6.1 million related to two new facilities, one in the Netherlands and a new and expanded facility being constructed in China. Revenues for the Company's CIRCOR Energy Products segment increased 36% to $50.2 million from $36.8 million in the third quarter of last year and were up 27% on a year-to-date basis primarily due to increased shipments to international oil and gas projects. Incoming orders for the quarter increased 20% compared to third quarter 2004 and, sequentially, increased 19%. Excluding special charges, this segment achieved operating margins of 11.3% for third quarter 2005 compared to 7.8% the same period last year, on the strength of higher shipments from the Company's Pibiviesse business unit in Italy that serves the international project markets as well as profitability improvements in North American operations. CIRCOR's Instrumentation and Thermal Fluid Controls Products segment revenues were up 11% to $59.0 million for the third quarter compared to $53.0 million for the same period last year and up 15% on a year-to-date basis. Incoming orders for this segment were up 16% in the third quarter and the first nine months of 2005 compared to the same periods last year, while backlog at quarter-end increased 59% versus last year (up 9% excluding acquisitions), and increased 2% sequentially. Operating margin for this segment, excluding special charges, was 9.4% for the third quarter of 2005 compared to 10.9% during the same period last year. The results for this segment benefited from stronger industrial market conditions that were offset by continuing high metal costs and unabsorbed manufacturing expenses due to manufacturing process improvement activities. Our lean manufacturing implementation has been accelerating at our Instrumentation products group's highest volume plant and, as a result, this product group has realized a year- to-date inventory decrease of 13% or nearly $3.0 million. Results for the quarter were also negatively affected by supplier delivery delays of key components for certain aerospace products, thereby reducing shipments of these high-margin products. CIRCOR provided guidance for its fourth quarter 2005 results, indicating that it expects earnings to be in the range of $0.34 to $0.37 per diluted share excluding special charges and other costs associated with ongoing facility consolidations compared to earnings of $0.01 per diluted share in the fourth quarter last year, which included an inventory obsolescence charge and fixed asset write-off totaling $0.29 per share. The Company indicated that its forecast for the fourth quarter assumes that their primary markets continue at this year's healthy pace. However, raw material costs and availability as well as on-going changes in production processes and inventory reduction will continue to negatively affect the performance of the Instrumentation and Thermal Fluid Controls segment. In addition, specific tax planning and other project costs at the corporate level will be incurred during the fourth quarter, adding an additional $0.6 million to $0.8 million of pre-tax expenses during the period. CIRCOR International has scheduled a conference call to review its results for the third quarter of 2005 on Friday, November 4, 2005, at 10:30 am ET. Interested parties may access the call by dialing (800) 406-5356 for US & Canada and (913) 981-5572 for International locations. A replay of the call will be available from 1:30 pm ET on November 4, 2005 through midnight on November 10, 2005. To access the replay, interested parties should dial (888) 203-1112 or (719) 457-0820 and enter confirmation code # 5408053 when prompted. The presentation slides that will be discussed in the conference call are expected to be available on Thursday, November 3, 2005, by 6:00 pm ET. The presentation slides may be downloaded from the quarterly earnings page of the investor section on the CIRCOR website: http://www.circor.com/. An audio recording of the conference call also is expected to be posted on the company's website by November 8, 2005. CIRCOR International, Inc. is a leading provider of valves and fluid control products that allow customers around the world to use fluids safely and efficiently in the instrumentation, thermal fluid regulation and petrochemical markets. CIRCOR's executive headquarters are located at 25 Corporate Drive, Burlington, MA 01803. This press release contains certain statements that are "forward-looking statements" as that term is defined under the Private Securities Litigation Reform Act of 1995 (the "Act") and releases issued by the Securities and Exchange Commission (SEC). The words "may," "hope," "should," "expect," "plan," "anticipate," "intend," "believe," "estimate," "predict," "potential," "continue," and other expressions which are predictions of or indicate future events and trends and which do not relate to historical matters identify forward-looking statements. We believe that it is important to communicate our future expectations to our stockholders, and we, therefore, make forward- looking statements in reliance upon the safe harbor provisions of the Act. However, there may be events in the future that we are not able to accurately predict or control, and our actual results, performance or achievements may differ materially from the expectations we describe in our forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, the cyclicality and highly competitive nature of some of our end markets, changes in the price of and demand for oil and gas in both domestic and international markets, variability of raw material and component pricing, fluctuations in foreign currency exchange rates, and our ability to continue operating our manufacturing facilities at efficient levels and to successfully implement our lean and acquisition strategies. We advise you to read further about these and other risk factors set forth under the caption "Certain Risk Factors That May Affect Future Results" in our SEC filings. We undertake 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 STATEMENTS OF OPERATIONS (in thousands, except per share data) UNAUDITED Three Months Ended Nine Months Ended October 2, September 26, October 2, September 26, 2005 2004 2005 2004 Net revenues $109,222 $89,760 $330,117 $275,009 Cost of revenues 77,894 63,091 231,312 192,373 GROSS PROFIT 31,328 26,669 98,805 82,636 Selling, general and administrative expenses 23,669 20,591 71,802 61,673 Special charges 496 265 934 303 OPERATING INCOME 7,163 5,813 26,069 20,660 Other (income) expense: Interest income (172) (181) (486) (536) Interest expense 900 1,182 2,668 3,529 Other (income) expense, net 174 (241) 197 (291) Total other expense 902 760 2,379 2,702 INCOME BEFORE INCOME TAXES 6,261 5,053 23,690 17,958 Provision for income taxes 1,955 1,770 8,055 6,285 NET INCOME $4,306 $3,283 $15,635 $11,673 Earnings per common share: Basic $0.27 $0.21 $1.00 $0.76 Diluted $0.27 $0.21 $0.97 $0.73 Weighted average common shares outstanding: Basic 15,744 15,371 15,646 15,338 Diluted 16,228 15,825 16,079 15,885 CIRCOR INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) UNAUDITED Nine Months Ended October 2, September 26, 2005 2004 OPERATING ACTIVITIES Net income $15,635 $11,673 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 7,633 7,561 Amortization 330 153 Compensation expense of stock-based plans 764 461 Loss on disposal of property, plant and equipment 20 191 Loss on write-down of assets held for sale -- 238 Gain on disposal of assets held for sale (113) (387) Equity in undistributed earnings of affiliates (141) (86) Changes in operating assets and liabilities, net of effects from business acquisitions: Trade accounts receivable 56 6,172 Inventories (6,402) (12,092) Prepaid expenses and other assets 2,325 736 Accounts payable, accrued expenses and other liabilities 10,571 4,698 Net cash provided by operating activities 30,678 19,318 INVESTING ACTIVITIES Additions to property, plant and equipment (11,453) (3,626) Proceeds from disposal of property, plant and equipment 7 820 Proceeds from sale of assets held for sale 1,472 3,030 Business acquisitions, net of cash acquired (41,277) (12,198) Purchase price escrow release payments (829) (1,260) Purchase of investments (2,535) (5,408) Proceeds from sale of investments 2,535 5,408 Other - Net cash used in investing activities (52,080) (13,234) FINANCING ACTIVITIES Proceeds from debt borrowings 4,580 322 Payments of debt (3,221) (3,559) Dividends paid (1,765) (1,725) Proceeds from the exercise of stock options 3,757 1,098 Net cash provided by (used in) financing activities 3,351 (3,864) Effect of exchange rate changes on cash and cash equivalents (1,448) (367) (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (19,499) 1,853 Cash and cash equivalents at beginning of year 58,653 58,202 CASH AND CASH EQUIVALENTS AT END OF PERIOD $39,154 $60,055 CIRCOR INTERNATIONAL, INC. CONSOLIDATED BALANCE SHEETS (in thousands, except share data) UNAUDITED October 2, December 31, 2005 2004 ASSETS Current Assets: Cash and cash equivalents $39,154 $58,653 Investments 4,308 4,155 Trade accounts receivable, less allowance for doubtful accounts of $2,171 and $2,549, respectively 63,967 64,521 Inventories 111,963 105,150 Prepaid expenses and other current assets 3,604 2,414 Deferred income taxes 4,810 6,953 Assets held for sale 473 - Total Current Assets 228,279 241,846 Property, Plant and Equipment, net 61,807 59,302 Other Assets: Goodwill 144,475 120,307 Intangibles, net 4,808 1,424 Other assets 9,892 5,539 Total Assets $449,261 $428,418 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accounts payable $40,557 $38,023 Accrued expenses and other current liabilities 35,762 30,490 Income taxes payable 2,351 1,362 Notes payable and current portion of long-term debt 17,459 15,051 Total Current Liabilities 96,129 84,926 Long-Term Debt, net of current portion 28,057 27,829 Deferred Income Taxes 7,553 6,932 Other Non-Current Liabilities 9,813 10,646 Minority Interest -- 4,650 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 15,822,383 and 15,430,305 issued and outstanding, respectively 158 154 Additional paid-in capital 214,990 208,392 Retained earnings 78,164 64,293 Accumulated other comprehensive income 14,397 20,596 Total Shareholders' Equity 307,709 293,435 Total Liabilities and Shareholders' Equity $449,261 $428,418 CIRCOR INTERNATIONAL, INC. SUMMARY OF ORDERS AND BACKLOG (in thousands) UNAUDITED Three Months Ended Nine Months Ended October 2, September 26, October 2, September 26, 2005 2004 2005 2004 ORDERS Instrumentation & Thermal Fluid Controls $60,213 $51,688 $188,734 $162,941 Energy Products 50,029 41,755 137,742 123,228 Total orders $110,242 $93,443 $326,476 $286,169 October 2, December 31, 2005 2004 BACKLOG Instrumentation & Thermal Fluid Controls $63,153 $39,819 Energy Products 66,513 75,923 Total backlog $129,666 $115,742 Note: Backlog includes all unshipped customer orders. CIRCOR INTERNATIONAL, INC. SUMMARY REPORT BY SEGMENT (in thousands, except earnings per share) UNAUDITED 2004 1ST QTR 2ND QTR 3RD QTR 4TH QTR YTD NET REVENUES Instrumentation & Thermal Fluid Controls (TFC) $51,639 $54,864 $52,966 $59,187 $218,656 Energy Products 39,058 39,688 36,794 47,638 163,178 Total 90,697 94,552 89,760 106,825 381,834 OPERATING MARGIN Instrumentation & TFC 11.2% 11.4% 10.9% 10.5% 11.0% Energy Products 10.9% 7.7% 7.8% -2.3% 5.6% Segment operating margin 11.1% 9.8% 9.7% 4.7% 8.7% Corporate expenses -2.5% -2.3% -2.9% -3.6% -2.8% Special charges 0.0% 0.0% -0.3% 0.0% -0.1% Total operating margin 8.5% 7.5% 6.5% 1.2% 5.7% OPERATING INCOME Instrumentation & TFC (excl. special charges) 5,776 6,239 5,786 6,188 23,989 Energy Products (excl. special charges) 4,251 3,066 2,877 (1,116) 9,078 Segment operating income (excl. special charges) 10,027 9,305 8,663 5,072 33,067 Corporate expenses (2,259) (2,188) (2,585) (3,798) (10,830) Special charges (38) - (265) - (303) Total operating income 7,730 7,117 5,813 1,274 21,934 INTEREST EXPENSE, NET (1,020) (972) (1,001) (697) (3,690) OTHER (EXPENSE) INCOME, NET (143) 193 241 (57) 234 PRETAX INCOME 6,567 6,338 5,053 520 18,478 PROVISION FOR INCOME TAXES (2,299) (2,216) (1,770) (390) (6,675) EFFECTIVE TAX RATE 35.0% 35.0% 35.0% 75.0% 36.1% NET INCOME $4,268 $4,122 $3,283 $130 $11,803 Weighted Average Common Shares Outstanding (Diluted) 16,001 15,908 15,825 15,932 15,877 EARNINGS PER COMMON SHARE (Diluted) $0.27 $0.26 $0.21 $0.01 $0.74 EARNINGS PER COMMON SHARE (Diluted) excluding special charges $0.27 $0.26 $0.22 $0.01 $0.76 EBIT $7,587 $7,310 $6,054 $1,217 $22,168 Depreciation 2,680 2,353 2,528 2,103 9,664 Amortization of intangibles 77 38 38 39 192 EBITDA $10,344 $9,701 $8,620 $3,359 $32,024 EBITDA AS A PERCENT OF SALES 11.4% 10.3% 9.6% 3.1% 8.4% CAPITAL EXPENDITURES $1,294 $1,575 $757 $1,661 $5,287 CIRCOR INTERNATIONAL, INC. SUMMARY REPORT BY SEGMENT (in thousands, except earnings per share) UNAUDITED 2005 1ST QTR 2ND QTR 3RD QTR YTD NET REVENUES Instrumentation & Thermal Fluid Controls (TFC) $61,025 $62,908 $59,031 $182,964 Energy Products 41,213 55,749 50,191 147,153 Total 102,238 118,657 109,222 330,117 OPERATING MARGIN Instrumentation & TFC 14.8% 12.1% 9.4% 12.1% Energy Products 8.0% 10.7% 11.3% 10.1% Segment operating margin 12.0% 11.5% 10.3% 11.2% Corporate expenses -3.4% -2.6% -3.3% -3.1% Special charges -0.3% -0.1% -0.5% -0.3% Total operating margin 8.4% 8.7% 6.6% 7.9% OPERATING INCOME Instrumentation & TFC (excl. special charges) 9,004 7,641 5,532 22,177 Energy Products (excl. special charges) 3,290 5,957 5,680 14,927 Segment operating income (excl. special charges) 12,294 13,598 11,212 37,104 Corporate expenses (3,443) (3,105) (3,553) (10,101) Special charges (305) (133) (496) (934) Total operating income 8,546 10,360 7,163 26,069 INTEREST EXPENSE, NET (787) (667) (728) (2,182) OTHER (EXPENSE) INCOME, NET 181 (204) (174) (197) PRETAX INCOME 7,940 9,489 6,261 23,690 PROVISION FOR INCOME TAXES (2,779) (3,321) (1,955) (8,055) EFFECTIVE TAX RATE 35.0% 35.0% 31.2% 34.0% NET INCOME $5,161 $6,168 $4,306 $15,635 Weighted Average Common Shares Outstanding (Diluted) 16,054 16,171 16,228 16,079 EARNINGS PER COMMON SHARE (Diluted) $0.32 $0.38 $0.27 $0.97 EARNINGS PER COMMON SHARE (Diluted) excluding special charges $0.33 $0.39 $0.29 $1.01 EBIT $8,727 $10,156 $6,989 $25,872 Depreciation 2,597 2,586 2,450 7,633 Amortization of intangibles 38 227 65 330 EBITDA $11,362 $12,969 $9,504 $33,835 EBITDA AS A PERCENT OF SALES 11.1% 10.9% 8.7% 10.2% CAPITAL EXPENDITURES $3,668 $3,136 $4,649 $11,453 CIRCOR INTERNATIONAL, INC. RECONCILIATION OF KEY PERFORMANCE MEASURES TO COMMONLY USED GENERALLY ACCEPTED ACCOUNTING PRINCIPLE TERMS (in thousands) UNAUDITED 2004 1ST QTR 2ND QTR 3RD QTR 4TH QTR YTD FREE CASH FLOW [NET CASH FLOW FROM OPERATING ACTIVITIES LESS CAPITAL EXPENDITURES LESS DIVIDENDS PAID] $2,254 $7,275 $4,438 $7,692 $21,659 ADD: Capital expenditures 1,294 1,575 757 1,661 5,287 Dividends paid 573 576 576 578 2,303 NET CASH PROVIDED BY OPERATING ACTIVITIES $4,121 $9,426 $5,771 $9,931 $29,249 NET (CASH) DEBT [TOTAL DEBT LESS CASH AND CASH EQUIVALENTS LESS INVESTMENTS] $(8,706) $(4,054) $(9,918) $(19,928) $(19,928) ADD: Cash and cash equivalents 59,963 54,527 60,055 58,653 58,653 Investments 7,679 7,517 7,953 4,155 4,155 TOTAL DEBT $58,936 $57,990 $58,090 $42,880 $42,880 NET DEBT AS % OF NET CAPITALIZATION -3.3% -1.5% -3.6% -7.3% -7.3% NET CAPITALIZATION [TOTAL DEBT PLUS SHAREHOLDERS' EQUITY LESS CASH AND CASH EQUIVALENTS, LESS INVESTMENTS] $267,728 $276,260 $275,870 $273,507 $273,507 LESS: Total debt (58,936) (57,990) (58,090) (42,880) (42,880) ADD: Cash and cash equivalents 59,963 54,527 60,055 58,653 58,653 Investments 7,679 7,517 7,953 4,155 4,155 TOTAL SHAREHOLDERS' EQUITY 276,434 280,314 285,788 293,435 293,435 ADD: Total debt 58,936 57,990 58,090 42,880 42,880 TOTAL CAPITAL $335,370 $338,304 $343,878 $336,315 $336,315 TOTAL DEBT/TOTAL CAPITAL 17.6% 17.1% 16.9% 12.7% 12.7% EBIT [NET INCOME LESS INTEREST EXPENSE, NET] $7,587 $7,310 $6,054 $1,217 $22,168 LESS: Interest expense, net (1,020) (972) (1,001) (697) (3,690) Provision for income taxes (2,299) (2,216) (1,770) (390) (6,675) NET INCOME $4,268 $4,122 $3,283 $130 $11,803 EBITDA [NET INCOME LESS INTEREST EXPENSE, NET LESS DEPRECIATION LESS AMORTIZATION LESS TAXES] $10,344 $9,701 $8,620 $3,359 $32,024 LESS: Interest expense, net (1,020) (972) (1,001) (697) (3,690) Depreciation (2,680) (2,353) (2,528) (2,103) (9,664) Amortization of intangibles (77) (38) (38) (39) (192) Provision for income taxes (2,299) (2,216) (1,770) (390) (6,675) NET INCOME $4,268 $4,122 $3,283 $130 $11,803 INCOME EXCLUDING SPECIAL CHARGES [NET INCOME LESS SPECIAL CHARGES, NET OF TAX] $4,293 $4,122 $3,455 $130 $11,997 LESS: Special charges, net of tax (25) -- (172) -- (194) NET INCOME $4,268 $4,122 $3,283 $130 $11,803 CIRCOR INTERNATIONAL, INC. RECONCILIATION OF KEY PERFORMANCE MEASURES TO COMMONLY USED GENERALLY ACCEPTED ACCOUNTING PRINCIPLE TERMS (in thousands) UNAUDITED 2005 1ST QTR 2ND QTR 3RD QTR YTD FREE CASH FLOW [NET CASH FLOW FROM OPERATING ACTIVITIES LESS CAPITAL EXPENDITURES LESS DIVIDENDS PAID] $(412) $12,565 $5,307 $17,460 ADD: Capital expenditures 3,668 3,136 4,649 11,453 Dividends paid 586 589 590 1,765 NET CASH PROVIDED BY OPERATING ACTIVITIES $3,842 $16,290 $10,546 $30,678 NET (CASH) DEBT [TOTAL DEBT LESS CASH AND CASH EQUIVALENTS LESS INVESTMENTS] $15,367 $10,371 $2,054 $2,054 ADD: Cash and cash equivalents 24,942 29,269 39,154 39,154 Investments 4,117 4,026 4,308 4,308 TOTAL DEBT $44,426 $43,666 $45,516 $45,516 NET DEBT AS % OF NET CAPITALIZATION 4.9% 3.3% 0.7% 0.7% NET CAPITALIZATION [TOTAL DEBT PLUS SHAREHOLDERS' EQUITY LESS CASH AND CASH EQUIVALENTS, LESS INVESTMENTS] $313,378 $310,514 $309,763 $309,763 LESS: Total debt (44,426) (43,666) (45,516) (45,516) ADD: Cash and cash equivalents 24,942 29,269 39,154 39,154 Investments 4,117 4,026 4,308 4,308 TOTAL SHAREHOLDERS' EQUITY 298,011 300,143 307,709 307,709 ADD: Total debt 44,426 43,666 45,516 45,516 TOTAL CAPITAL $342,437 $343,809 $353,225 $353,225 TOTAL DEBT/TOTAL CAPITAL 13.0% 12.7% 12.9% 12.9% EBIT [NET INCOME LESS INTEREST EXPENSE, NET] $8,727 $10,156 $6,989 $25,872 LESS: Interest expense, net (787) (667) (728) (2,182) Provision for income taxes (2,779) (3,321) (1,955) (8,055) NET INCOME $5,161 $6,168 $4,306 $15,635 EBITDA [NET INCOME LESS INTEREST EXPENSE, NET LESS DEPRECIATION LESS AMORTIZATION LESS TAXES] $11,362 $12,969 $9,504 $33,835 LESS: Interest expense, net (787) (667) (728) (2,182) Depreciation (2,597) (2,586) (2,450) (7,633) Amortization of intangibles (38) (227) (65) (330) Provision for income taxes (2,779) (3,321) (1,955) (8,055) NET INCOME $5,161 $6,168 $4,306 $15,635 INCOME EXCLUDING SPECIAL CHARGES [NET INCOME LESS SPECIAL CHARGES, NET OF TAX] $5,359 $6,254 $4,647 $16,251 LESS: Special charges, net of tax (198) (86) (341) (616) NET INCOME $5,161 $6,168 $4,306 $15,635 DATASOURCE: CIRCOR International, Inc. CONTACT: Kenneth W. Smith, Chief Financial Officer of CIRCOR International, Inc., +1-781-270-1200 Web site: http://www.circor.com/

Copyright