CIR CIRCOR International Inc

- Earnings for quarter increase 74% on revenue growth of 9.5% BURLINGTON, Mass., April 30 /PRNewswire-FirstCall/ -- CIRCOR International, Inc. (NYSE:CIR), a leading provider of valves and other fluid control devices for the instrumentation, aerospace, thermal fluid and energy markets, today announced results for the first quarter ended March 30, 2008. Revenues for the 2008 first quarter were $176.6 million, an increase of 9.5% from $161.3 million for the first quarter 2007. Net income for the first quarter 2008 increased 74% to $12.9 million, or $0.76 per diluted share, compared to $7.4 million, or $0.45 per diluted share, for the 2007 first quarter. The Company received orders totaling $237.0 million during the first quarter 2008, an increase of 27% over $186.8 million in orders in the first quarter of 2007 due to strength in naval, aerospace and energy markets, including both projects and distribution products, and a sequential increase of 39% over the fourth quarter of 2007. Backlog at March-end 2008 reached another record of $452.0 million, up 45% over March-end 2007 backlog of $311.2 million, and sequentially increasing 15% over the fourth quarter of 2007. During the first quarter of 2008, the Company used $5.4 million of free cash flow (defined as net cash from operating activities, less capital expenditures and dividends paid) due to investment in working capital to support its record backlog as of March 30, 2008. Circor's Instrumentation and Thermal Fluid Controls Products segment revenues increased 9%, to $88.5 million from $81.3 million in the first quarter 2007, with 4% of the increase due to favorable currency adjustments. Incoming orders for this segment were $111.2 million for the first quarter 2008, an increase of 31% from $84.8 million in the first quarter 2007, which included large maritime orders as well as strong aerospace orders. Sequentially, this segment's orders grew 19% and ending backlog grew 17% to $159.5 million. This segment's operating margin for the first quarter 2008 was 11.3% compared to 7.9% in the first quarter of 2007, and 8.3% in the fourth quarter of 2007. Compared to the first quarter of 2007 improvement primarily came from price, mix of shipments and productivity. Circor's Energy Products segment revenues increased by $8.2 million, or 10%, to $88.1 million for the quarter ended March 30, 2008 compared to $80.0 million in the quarter ended April 1, 2007. Higher foreign exchange rates, primarily the higher Euro, compared to the US dollar, accounted for $7.2 million of the incremental revenue increase. Incoming orders for the quarter were $125.9 million, an increase of 23% over $102.1 million in the first quarter of 2007 and 63% sequentially with ending backlog totaling $292.6 million, a 51% increase compared to $194.3 million at the end of the first quarter 2007, and 15% sequentially. This segment's operating margin was 16.2% during the first quarter of 2008 compared to 12.7% for the first quarter of 2007 and 15.3% for the fourth quarter of 2007. The first quarter of 2008 benefited from high margins on some large international oil and gas projects as well as favorable currency impacts. Bill Higgins, Circor's President and Chief Executive Officer, said, "Our first quarter results exceeded our expectations as a result of strong global markets, a great mix of shipments and margin expansion in both segments. Globally, our oil and gas markets have remained solid. Large project quotations continue at a high level and the North American short-cycle business orders rebounded with our backlog growing over the fourth quarter 2007. Meanwhile, orders for our Instrumentation and Thermal Fluid Controls Products were also strong especially in aerospace where the markets continue to look solid as well as maritime orders where we won some large naval related orders to be shipped in 2009 and 2010." Mr. Higgins added, "The most notable area of improvement in the quarter was our healthy segment operating margins (which exclude corporate and special charge expenses) at 13.8% which was the highest since Circor became public at the end of 1999. Although we will still have quarters that are up and down, the focus on operational excellence and lean manufacturing over the past few years, leadership development, strong customer markets, favorable currency, as well as positive product and project mix all have contributed to the great results." Circor provided guidance for its second quarter 2008 results, indicating it expects earnings to be in the range of $0.74 to $0.83 per diluted share, excluding special charges. The guidance compares favorably to earnings in the second quarter 2007 of $0.60 per diluted share. CIRCOR International will hold a conference call to review its first quarter results tomorrow, May 1, 2008 at 1:00 p.m. ET. Interested parties may access the call by dialing (888)-244-2511 from the US and Canada and (913) 312-1418 from international locations. A replay of the call will be available from 4:00 pm ET on Thursday, May 1, 2008, through 4:00 pm ET on Thursday, May 8, 2008. To access the replay, interested parties should dial (888) 203-1112 or (719) 457-0820 and enter confirmation code #4902483 when prompted. The presentation slides that will be discussed in the conference call are expected to be available today, April 30, 2008, by 6:00 pm ET and may be downloaded from the quarterly earnings page of the investor section on the CIRCOR website at http://www.circor.com/quarterlyearnings. An audio recording of the conference call also is expected to be posted on the company's website by May 6, 2008. This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Reliance should not be placed on forward-looking statements because they involve unknown risks, uncertainties and other factors, which are, in some cases, beyond the control of CIRCOR. 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, 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. CIRCOR INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) UNAUDITED Three Months Ended March 30, 2008 April 1, 2007 Net revenues $176,575 $161,263 Cost of revenues 121,686 116,471 GROSS PROFIT 54,889 44,792 Selling, general and administrative expenses 35,220 32,087 Special charges (income), net 160 691 OPERATING INCOME 19,509 12,014 Other (income) expense: Interest income (202) (53) Interest expense 347 1,271 Other (income) expense, net 401 (97) Total other expense 546 1,121 INCOME BEFORE INCOME TAXES 18,963 10,893 Provision for income taxes 6,068 3,486 NET INCOME $12,895 $7,407 Earnings per common share: Basic $0.77 $0.46 Diluted $0.76 $0.45 Weighted average common shares outstanding: Basic 16,679 16,209 Diluted 16,872 16,533 CIRCOR INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) UNAUDITED Three Months Ended March 30, 2008 April 1, 2007 OPERATING ACTIVITIES Net income $12,895 $7,407 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 2,874 2,808 Amortization 656 626 Compensation expense of stock-based plans 1,503 966 Tax effect of share based compensation (1,171) (711) (Gain) Loss on sale of property, plant and equipment (83) 31 Equity earnings and paid dividends of affiliate, net - (56) Changes in operating assets and liabilities, net of effects from business acquisitions: Trade accounts receivable (6,858) 5,857 Inventories (5,090) (3,688) Prepaid expenses and other assets (3,477) (6,123) Accounts payable, accrued expenses and other liabilities (3,138) (10,161) Net cash used in operating activities (1,889) (3,044) INVESTING ACTIVITIES Additions to property, plant and equipment (2,851) (1,776) Proceeds from disposal or sale of property, plant and equipment 94 341 Proceeds from sale of investments 5,451 - Net cash provided by (used in) investing activities 2,694 (1,435) FINANCING ACTIVITIES Proceeds from debt borrowings 16,500 25,244 Payments of debt (13,606) (23,576) Dividends paid (626) (609) Proceeds from the exercise of stock options 2,115 965 Tax effect of share based compensation 1,171 711 Net cash provided by financing activities 5,554 2,735 Effect of exchange rate changes on cash and cash equivalents 1,669 142 INCREASE IN CASH AND CASH EQUIVALENTS 8,028 (1,602) Cash and cash equivalents at beginning of year 34,662 28,652 CASH AND CASH EQUIVALENTS AT END OF PERIOD $42,690 $27,050 CIRCOR INTERNATIONAL, INC. CONSOLIDATED BALANCE SHEETS (in thousands, except share data) UNAUDITED March 30, 2008 Dec 31, 2007 ASSETS Current Assets: Cash & cash equivalents $42,690 $34,662 Investments 4,036 8,861 Trade accounts receivable, less allowance for doubtful accounts of $2,238 and $2,151, respectively 137,295 125,663 Inventories 182,601 171,661 Prepaid expenses and other current assets 7,406 3,990 Insurance receivable 7,131 6,885 Deferred income taxes 8,979 8,220 Assets held for sale 312 312 Total Current Assets 390,450 360,254 Property, Plant and Equipment, net 84,713 82,465 Other Assets: Goodwill 181,732 169,110 Intangibles, net 47,097 47,373 Non current insurance receivable 5,014 5,014 Other assets 907 12,253 Total Assets $709,913 $676,469 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accounts payable $83,961 $82,038 Accrued expenses and other current liabilities 77,079 72,481 Accrued compensation and benefits 18,068 21,498 Asbestos liability 10,038 9,697 Income taxes payable 8,930 7,900 Notes payable and current portion of long-term debt 232 201 Total Current Liabilities 198,308 193,815 Long-Term Debt, net of current portion 24,785 21,901 Deferred Income Taxes 20,065 19,106 Long term asbestos liability 7,062 7,062 Other Non-Current Liabilities 13,314 14,201 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 16,816,007 and 16,650,407 issued and outstanding, respectively 168 167 Additional paid-in capital 245,967 240,000 Retained earnings 156,913 144,644 Accumulated other comprehensive income 43,331 35,573 Total Shareholders' Equity 446,379 420,384 Total Liabilities and Shareholders' Equity $709,913 $676,469 CIRCOR INTERNATIONAL, INC. SUMMARY OF ORDERS AND BACKLOG (in thousands) UNAUDITED Three Months Ended March 30, 2008 April 1, 2007 ORDERS Instrumentation & Thermal Fluid Controls $111,166 $84,771 Energy Products 125,860 102,071 Total orders $237,026 $186,842 March 30, 2008 April 1, 2007 BACKLOG Instrumentation & Thermal Fluid Controls $159,468 $116,910 Energy Products 292,575 194,339 Total backlog $452,043 $311,249 Note: Backlog includes all unshipped customer orders. CIRCOR INTERNATIONAL, INC. SUMMARY REPORT BY SEGMENT (in thousands, except earnings per share) UNAUDITED 2007 1ST QTR 2ND QTR 3RD QTR NET REVENUES Instrumentation & Thermal Fluid Controls (TFC) $81,296 $85,740 $85,094 Energy Products 79,967 80,197 78,923 Total 161,263 165,937 164,017 OPERATING MARGIN Instrumentation & TFC 7.9% 8.7% 7.1% Energy Products 12.7% 16.3% 17.4% Segment operating margin 10.3% 12.4% 12.1% Corporate expenses -2.4% -2.4% -3.0% Special charges -0.4% -0.4% -1.3% Total operating margin 7.4% 9.5% 7.8% OPERATING INCOME Instrumentation & TFC (excl. special & unusual charges) 6,433 7,438 6,076 Energy Products (excl. special & unusual charges) 10,125 13,063 13,745 Segment operating income (excl. special & unusual charges) 16,558 20,501 19,821 Corporate expenses (excl. special & unusual charges) (3,853) (4,056) (4,942) Special (charges) income, net (691) (615) (2,130) Total operating income 12,014 15,830 12,749 INTEREST EXPENSE, NET (1,218) (884) (744) OTHER (EXPENSE) INCOME, NET 97 (215) 1,508 PRETAX INCOME 10,893 14,731 13,513 PROVISION FOR INCOME TAXES (3,486) (4,713) (3,148) EFFECTIVE TAX RATE 32.0% 32.0% 23.3% NET INCOME $7,407 $10,018 $10,365 Weighted Average Common Shares Outstanding (Diluted) 16,533 16,679 16,768 EARNINGS PER COMMON SHARE (Diluted) $0.45 $0.60 $0.62 EBIT $12,111 $15,615 $14,257 Depreciation 2,808 2,812 2,662 Amortization of intangibles 626 632 659 EBITDA $15,545 $19,059 $17,578 EBITDA AS A PERCENT OF SALES 9.6% 11.5% 10.7% CAPITAL EXPENDITURES $1,776 $2,266 $2,844 2007 2008 4TH QTR Full Year 1ST QTR NET REVENUES Instrumentation & Thermal Fluid Controls (TFC) $91,466 $343,596 $88,450 Energy Products 83,057 322,144 88,125 Total 174,523 665,740 176,575 OPERATING MARGIN Instrumentation & TFC 8.3% 8.0% 11.3% Energy Products 15.3% 15.4% 16.2% Segment operating margin 11.6% 11.6% 13.8% Corporate expenses -2.9% -2.7% -2.6% Special charges 0.5% -0.4% -0.1% Total operating margin 9.3% 8.5% 11.0% OPERATING INCOME Instrumentation & TFC (excl. special & unusual charges) 7,589 27,536 9,994 Energy Products (excl. special & unusual charges) 12,675 49,608 14,303 Segment operating income (excl. special & unusual charges) 20,264 77,144 24,297 Corporate expenses (excl. special & unusual charges) (5,012) (17,863) (4,628) Special (charges) income, net 922 (2,514) (160) Total operating income 16,174 56,767 19,509 INTEREST EXPENSE, NET (155) (3,001) (145) OTHER (EXPENSE) INCOME, NET (133) 1,257 (401) PRETAX INCOME 15,886 55,023 18,963 PROVISION FOR INCOME TAXES (5,765) (17,112) (6,068) EFFECTIVE TAX RATE 36.3% 31.1% 32.0% NET INCOME $10,121 $37,911 $12,895 Weighted Average Common Shares Outstanding (Diluted) 16,925 16,730 16,872 EARNINGS PER COMMON SHARE (Diluted) $0.60 $2.27 $0.76 EBIT $16,041 $58,024 $19,108 Depreciation 2,588 10,870 2,874 Amortization of intangibles 662 2,579 656 EBITDA $19,291 $71,473 $22,638 EBITDA AS A PERCENT OF SALES 11.1% 10.7% 12.8% CAPITAL EXPENDITURES $5,097 $11,983 $2,851 CIRCOR INTERNATIONAL, INC. RECONCILIATION OF KEY PERFORMANCE MEASURES TO COMMONLY USED GENERALLY ACCEPTED ACCOUNTING PRINCIPLE TERMS (in thousands) UNAUDITED 2007 1ST QTR 2ND QTR 3RD QTR FREE CASH FLOW [NET CASH FLOW FROM OPERATING ACTIVITIES LESS CAPITAL EXPENDITURES LESS DIVIDENDS PAID] $(5,429) $5,439 $11,470 ADD: Capital expenditures 1,776 2,266 2,844 Dividends paid 609 614 617 NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES $(3,044) $8,319 $14,931 NET (CASH) DEBT [TOTAL DEBT LESS CASH & CASH EQUIVALENTS LESS INVESTMENTS] $39,366 $29,848 $11,815 ADD: Cash & cash equivalents 27,050 25,281 30,174 Investments 87 94 100 TOTAL DEBT $66,503 $55,223 $42,089 NET DEBT AS % OF NET CAPITALIZATION 10% 7% 3% NET CAPITALIZATION [TOTAL DEBT PLUS SHAREHOLDERS' EQUITY LESS CASH & CASH EQUIVALENTS, LESS INVESTMENTS] $408,944 $415,386 $420,951 LESS: Total debt (66,503) (55,223) (42,089) ADD: Cash & cash equivalents 27,050 25,281 30,174 Investments 87 94 100 TOTAL SHAREHOLDERS' EQUITY 369,578 385,538 409,136 ADD: Total debt 66,503 55,223 42,089 TOTAL CAPITAL $436,081 $440,761 $451,225 TOTAL DEBT / TOTAL CAPITAL 15% 13% 9% EBIT [NET INCOME LESS INTEREST EXPENSE, NET LESS TAXES] $12,111 $15,615 $14,257 LESS: Interest expense, net (1,218) (884) (744) Provision for income taxes (3,486) (4,713) (3,148) NET INCOME $7,407 $10,018 $10,365 EBITDA [NET INCOME LESS INTEREST EXPENSE, NET LESS DEPRECIATION LESS AMORTIZATION LESS TAXES] $15,545 $19,059 $17,578 LESS: Interest expense, net (1,218) (884) (744) Depreciation (2,808) (2,812) (2,662) Amortization of intangibles (626) (632) (659) Provision for income taxes (3,486) (4,713) (3,148) NET INCOME $7,407 $10,018 $10,365 2007 2008 4TH QTR Full Year 1ST QTR FREE CASH FLOW [NET CASH FLOW FROM OPERATING ACTIVITIES LESS CAPITAL EXPENDITURES LESS DIVIDENDS PAID] $30,989 $42,469 $(5,366) ADD: Capital expenditures 5,097 11,983 2,851 Dividends paid 624 2,464 626 NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES $36,710 $56,916 $(1,889) NET (CASH) DEBT [TOTAL DEBT LESS CASH & CASH EQUIVALENTS LESS INVESTMENTS] $(21,421) $(21,421) $(21,709) ADD: Cash & cash equivalents 34,662 34,662 42,690 Investments 8,861 8,861 4,036 TOTAL DEBT $22,102 $22,102 $25,017 NET DEBT AS % OF NET CAPITALIZATION -5% -5% -5% NET CAPITALIZATION [TOTAL DEBT PLUS SHAREHOLDERS' EQUITY LESS CASH & CASH EQUIVALENTS, LESS INVESTMENTS] $398,963 $398,963 $424,670 LESS: Total debt (22,102) (22,102) (25,017) ADD: Cash & cash equivalents 34,662 34,662 42,690 Investments 8,861 8,861 4,036 TOTAL SHAREHOLDERS' EQUITY 420,384 420,384 446,379 ADD: Total debt 22,102 22,102 25,017 TOTAL CAPITAL $442,486 $442,486 $471,396 TOTAL DEBT / TOTAL CAPITAL 5% 5% 5% EBIT [NET INCOME LESS INTEREST EXPENSE, NET LESS TAXES] $16,041 $58,024 $19,108 LESS: Interest expense, net (155) (3,001) (145) Provision for income taxes (5,765) (17,112) (6,068) NET INCOME $10,121 $37,911 $12,895 EBITDA [NET INCOME LESS INTEREST EXPENSE, NET LESS DEPRECIATION LESS AMORTIZATION LESS TAXES] $19,291 $71,473 $22,638 LESS: Interest expense, net (155) (3,001) (145) Depreciation (2,588) (10,870) (2,874) Amortization of intangibles (662) (2,579) (656) Provision for income taxes (5,765) (17,112) (6,068) NET INCOME $10,121 $37,911 $12,895 DATASOURCE: CIRCOR International, Inc. CONTACT: Frederic M. Burditt, Chief Financial Officer of CIRCOR International, Inc., +1-781-270-1200 Web site: http://www.circor.com/ http://www.circor.com/quarterlyearnings

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