CIRCOR International, Inc. (NYSE: CIR), a leading provider of
valves and other highly engineered products for the energy,
aerospace and industrial markets, today announced financial results
for the first quarter ended April 1, 2012.
“CIRCOR performed well in the first quarter of 2012 as we
exceeded our expectations for both top- and bottom-line
performance,” said Chairman and Chief Executive Officer Bill
Higgins. “Continued strength in the North American short-cycle
Energy business and strong Aerospace segment sales helped drive
year-over-year revenue growth of 5%. Bookings were up 12%
year-over-year with solid gains in almost all areas excluding the
market for LED equipment.”
“Earnings per diluted share were $0.49, and Energy segment
operating margins were slightly better than anticipated at 8.2% in
the first quarter,” said Higgins. “All in all, a good start to the
year.”
Consolidated Results
Revenues for the first quarter of 2012 were $214.3 million, a 5%
increase from $203.4 million in the first quarter of 2011. Net
income for the first quarter of 2012 was $8.6 million, or $0.49 per
diluted share, compared with net income of $7.9 million, or $0.45
per diluted share, for the first quarter of 2011. Excluding Leslie
asbestos and bankruptcy charges, net of tax, adjusted earnings per
diluted share was $0.49 in the first quarter of 2011.
Consolidated adjusted operating earnings, which excludes Leslie
asbestos and bankruptcy charges was $13.7 million for the first
quarter of 2012 down slightly from $13.8 million in the first
quarter of 2011 as favorable volume was offset primarily by
expenses related to future growth initiatives.
The Company received orders totaling $248.7 million during the
first quarter of 2012, an increase of 12% compared with the first
quarter of 2011. The increase was driven primarily by increases in
the Energy and Aerospace segments and was partially offset by
weakness in Flow Technology’s LED equipment business. Backlog as of
April 1, 2012 was $432.3 million, up 3% from backlog of $419.1
million at April 3, 2011.
During the first quarter of 2012, the Company used $7.1 million
of free cash flow (defined as net cash from operating activities
less capital expenditures) compared with $0.5 million generated in
the first quarter of 2011.
Energy
Energy segment revenues of $109.3 million for the quarter ended
April 1, 2012 represent a 10% increase from $99.2 million for the
quarter ended April 3, 2011. The increase in revenues
year-over-year was due to organic growth of 10% and 2% growth from
the February 2011 Brazilian energy acquisition, partially offset by
a negative foreign currency impact of 2%.
Incoming orders for the first quarter of 2012 were $135.6
million, an increase of 19% year-over-year due to strength in the
North American short-cycle business. International project orders,
despite being down from the strong first quarter of last year,
experienced its strongest quarter since the fourth quarter of 2010.
Ending backlog totaled $195.2 million, a decrease of 4%
year-over-year.
For the first quarter of 2012, the Energy segment adjusted
operating margin of 8.2% was up from 6.4% in the first quarter of
2011, primarily due to the significant volume increase and the
associated leverage in the North American short-cycle business as
well as improved pricing in large international projects, partially
offset by growth investments in Brazil.
Aerospace
Aerospace segment revenues increased by 19% to $38.1 million for
the first quarter of 2012 from $32.1 million in the first quarter
of 2011. The increase in Aerospace segment revenues is attributable
to 20% organic growth, which was slightly offset by a negative
foreign currency impact of 1%.
Incoming orders for the first quarter of 2012 were $40.2
million, an increase of 22% year-over-year. Orders increased due to
strength in military projects and other programs. Ending backlog
totaled $161.1 million, an increase of 19% year-over-year.
The Aerospace segment’s adjusted operating margin was 10.8% for
the first quarter of 2012, down from 11.6% for the first quarter of
2011. Adjusted operating margin decreased primarily due to
increased large future programs expenses, partially offset by
favorable volume and associated leverage.
Flow Technologies
Flow Technologies segment revenues decreased 7% to $66.9 million
for the first quarter of 2012 from $72.1 million in the first
quarter of 2011. First-quarter 2012 Flow Technologies segment
revenues reflected an organic decline of 6% due to lower LED
equipment shipments and a negative foreign currency impact of
1%.
Incoming orders for this segment were $72.9 million for the
first quarter of 2012, a decrease of 3% year-over-year, driven
primarily by the soft LED market. Ending backlog totaled $76
million, a decrease of 6% year-over-year, which was also affected
by lower LED equipment and navy orders.
This segment’s adjusted operating margin for the first quarter
of 2012 decreased to 11.3%, compared with 13.7% in the first
quarter of 2011, due to the decline in the LED equipment market and
increased spending on this segment’s growth initiatives in the
power generation market.
Financial Outlook
CIRCOR currently expects revenues for the second quarter of 2012
in the range of $219 million to $224 million. Earnings are expected
to be in the range of $0.44 to $0.54 per diluted share. CIRCOR’s
guidance for earnings per share assumes a 30% tax rate and that
exchange rates remain at present levels.
Conference Call Information
CIRCOR International will hold a conference call to review its
financial results today, May 3, 2012, at 10:00 a.m. ET. Those who
wish to listen to the conference call and view the accompanying
presentation slides should visit "Webcasts & Presentations" in
the "Investors" portion of the CIRCOR website. The live call also
can be accessed by dialing (877) 407-5790 or (201) 689-8328. If you
are unable to listen to the live call, the webcast will be archived
for one year on the Company’s website.
Use of Non-GAAP Financial Measures
Adjusted net income, adjusted earnings per diluted share,
adjusted operating margin, and free cash flow are non-GAAP
financial measures and are intended to serve as a complement to
results provided in accordance with accounting principles generally
accepted in the United States. CIRCOR believes that such
information provides an additional measurement and consistent
historical comparison of the Company’s performance. A
reconciliation of the non-GAAP financial measures to the most
directly comparable GAAP measures is available in this news
release.
Safe Harbor Statement
This press release contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. 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 second-quarter revenue and earnings
guidance. Actual events, performance or results could differ
materially from the anticipated events, performance or results
expressed or implied by such forward-looking statements. BEFORE
MAKING ANY INVESTMENT DECISIONS REGARDING OUR COMPANY, WE STRONGLY
ADVISE YOU TO READ THE SECTION ENTITLED "RISK FACTORS" IN OUR MOST
RECENT ANNUAL REPORT ON FORM 10-K AND SUBSEQUENT REPORTS ON FORMS
10-Q, WHICH CAN BE ACCESSED UNDER THE "INVESTORS" LINK OF OUR
WEBSITE AT WWW.CIRCOR.COM. We undertake no obligation to publicly
update or revise any forward-looking statement, whether as a result
of new information, future events or otherwise.
About CIRCOR International, Inc.
CIRCOR International, Inc. designs, manufactures and markets
valves and other highly engineered products for the energy,
aerospace and industrial markets. With more than 7,500 customers in
over 100 countries, CIRCOR has a diversified product portfolio with
recognized, market-leading brands. CIRCOR’s culture, built on the
CIRCOR Business System, is defined by the Company’s commitment to
attracting, developing and retaining the best talent and pursuing
continuous improvement in all aspects of its business and
operations. The Company’s strategy includes growing organically by
investing in new, differentiated products; adding value to
component products; and increasing the development of
mission-critical subsystems and solutions. CIRCOR also plans to
leverage its strong balance sheet to acquire strategically
complementary businesses. For more information, visit the Company’s
investor relations web site at http://investors.circor.com.
CIRCOR INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF
INCOME (in thousands, except per share data)
UNAUDITED
Three Months Ended April 1, 2012
April 3, 2011 Net revenues $ 214,280 $ 203,370
Cost of revenues 155,668 147,142 GROSS
PROFIT 58,612 56,228 Selling, general and administrative expenses
44,912 42,455 Leslie asbestos and bankruptcy charges -
1,001 OPERATING INCOME 13,700
12,772 Other expense (income): Interest income (83 )
(43 ) Interest expense 1,164 816 Other expense, net 138
915 Total other expense 1,219
1,688 INCOME BEFORE INCOME TAXES 12,481 11,084
Provision for income taxes 3,896 3,178
NET INCOME $ 8,585 $ 7,906 Earnings per common
share: Basic $ 0.50 $ 0.46 Diluted $ 0.49 $ 0.45 Weighted
average common shares outstanding: Basic 17,315 17,163 Diluted
17,390 17,378
CIRCOR INTERNATIONAL, INC. CONSOLIDATED
STATEMENTS OF CASH FLOWS (in thousands) UNAUDITED
Three Months Ended April 1,
2012 April 3, 2011 OPERATING
ACTIVITIES Net income $ 8,585 $ 7,906
Adjustments to reconcile net income to net
cash provided by (used in) operating
activities:
Depreciation 4,008 3,575 Amortization 964 1,418 Compensation
expense of share-based plans 1,195 1,136 Tax effect of share based
compensation 479 (256 ) Loss on disposal of property, plant and
equipment 2 2
Changes in operating assets and
liabilities, net of effects from business
acquisitions:
Trade accounts receivable 3,539 3,734 Inventories (2,179 )
(2,818 ) Prepaid expenses and other assets (5,549 ) (6,657 )
Accounts payable, accrued expenses and other liabilities
(14,011 ) (4,822 ) Net cash (used in) provided by operating
activities (2,967 ) 3,218
INVESTING
ACTIVITIES Additions to property, plant and equipment (4,122 )
(2,693 ) Proceeds from the disposal of property, plant and
equipment 15 12 Proceeds from the sale of investments 0 (1 )
Business acquisitions, net of cash acquired 0
(20,221 ) Net cash used in investing activities (4,107 )
(22,903 )
FINANCING ACTIVITIES Proceeds from
borrowings 41,123 60,748 Payments of borrowings (47,806 ) (34,778 )
Dividends paid (666 ) (663 ) Proceeds from the exercise of stock
options 73 213 Tax effect of share based compensation (479 )
256 Net cash (used in) provided by financing
activities (7,755 ) 25,776 Effect of exchange
rate changes on cash and cash equivalents 1,265
1,648 (DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS (13,564 ) 7,739 Cash and cash equivalents at beginning
of year 54,855 45,752 CASH AND CASH
EQUIVALENTS AT END OF PERIOD $ 41,291 $ 53,491
CIRCOR INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS (in thousands, except share
data) UNAUDITED
April 1, 2012
December 31, 2011 ASSETS Current Assets: Cash
& cash equivalents $ 41,291 $ 54,855 Short-term investments 101
99
Trade accounts receivable, less
allowance for doubtful accounts of $1,152 and
$1,127, respectively
154,930 156,075 Inventories 208,125 203,777 Prepaid expenses and
other current assets 17,067 12,376 Deferred income tax asset 16,578
16,320 Assets held for sale 542 542 Total
Current Assets 438,634 444,044
Property, Plant and Equipment, net 105,973 104,434 Other
Assets: Goodwill 78,676 77,829 Intangibles, net 58,188 58,442
Deferred income tax asset 28,054 27,949 Other assets 11,008
9,825 Total Assets $ 720,533 $ 722,523
LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities:
Accounts payable $ 87,420 $ 92,493 Accrued expenses and other
current liabilities 61,332 63,386 Accrued compensation and benefits
23,457 24,328 Leslie asbestos and bankruptcy related liabilities
1,000 1,000 Income taxes payable 4,310 5,553 Notes payable and
current portion of long-term debt 3,159 8,796
Total Current Liabilities 180,678 195,556
Long-Term Debt, net of current portion 95,496 96,327
Deferred income taxes 11,480 11,284 Other Non-Current Liabilities
33,861 35,271 Shareholders' Equity:
Preferred stock, $.01 par value; 1,000,000
shares authorized; no shares issued and outstanding
0 0
Common stock, $.01 par value; 29,000,000
shares authorized; and 17,392,225 and 17,268,212 issued
and outstanding, respectively
174 173 Additional paid-in capital 259,538 258,209 Retained
earnings 138,296 130,373 Accumulated other comprehensive income
(loss) 1,010 (4,670 ) Total Shareholders' Equity
399,018 384,085 Total Liabilities and
Shareholders' Equity $ 720,533 $ 722,523
CIRCOR INTERNATIONAL, INC. SUMMARY OF ORDERS AND
BACKLOG (in millions) UNAUDITED
Three
Months Ended April 1, 2012 April 3, 2011
ORDERS 1 Energy $ 135.6 $ 113.7 Aerospace 40.2
32.8 Flow Technologies 72.9 75.0 Total
orders $ 248.7 $ 221.5
April 1, 2012 April 3, 2011
BACKLOG 2 Energy $ 195.2 $ 203.1 Aerospace
161.1 135.3 Flow Technologies 76.0 80.7
Total backlog $ 432.3 $ 419.1 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 all unshipped customer orders.
CIRCOR INTERNATIONAL, INC.
SUMMARY REPORT BY SEGMENT
(in thousands, except earnings per
share)
UNAUDITED
2011 2012 1ST QTR
2ND QTR 3RD QTR
4TH QTR YTD 1ST QTR
NET REVENUES Energy $ 99,170 $ 81,994 $ 103,300 $
110,228 $ 394,692 $ 109,264 Aerospace 32,110 36,029 32,681 36,017
136,837 38,085 Flow Technologies 72,090 73,885
73,980 70,865 290,820
66,931 Total 203,370
191,908 209,961 217,110
822,349 214,280
* ADJUSTED OPERATING
MARGIN Energy 6.4 % 5.3 % 7.2 % 8.4 % 7.0 % 8.2 %
Aerospace 11.6 % 11.2 % 5.6 % 8.6 % 9.3 % 10.8 % Flow Technologies
13.7 % 12.4 % 13.6 % 12.9 % 13.1 % 11.3 % Segment operating margin
9.8 % 9.1 % 9.2 % 9.9 % 9.5 % 9.6 % Corporate expenses -3.0 % -2.7
% -1.7 % -3.0 % -2.6 % -3.2 % * Adjusted operating margin 6.8 % 6.5
% 7.5 % 6.9 % 6.9 % 6.4 % Leslie asbestos and bankruptcy charges
(recoveries) 0.5 % -0.1 % -0.1 % 0.0 % 0.1 % 0.0 % Total operating
margin 6.3 % 6.5 % 7.6 % 6.9 % 6.8 % 6.4 %
* ADJUSTED
OPERATING INCOME Energy 6,393 4,373 7,441 9,225 27,432
8,928 Aerospace 3,727 4,021 1,846 3,081 12,675 4,124 Flow
Technologies 9,854 9,133
10,037 9,171 38,195
7,587 Segment operating income 19,974 17,527 19,324
21,477 78,302 20,639 Corporate expenses (6,201 )
(5,100 ) (3,585 ) (6,441 ) (21,327 )
(6,939 ) * Adjusted operating income 13,773
12,427 15,739 15,036
56,975 13,700 Leslie asbestos and bankruptcy
charges (recoveries) 1,001 (124 ) (201 ) - 676 -
Total operating income 12,772 12,550
15,940 15,036 56,298 13,700 INTEREST EXPENSE, NET (773 )
(1,232 ) (887 ) (1,039 ) (3,930 ) (1,081 ) OTHER EXPENSE, NET
(915 ) (560 ) (354 ) (342 )
(2,171 ) (138 ) PRETAX INCOME 11,084 10,758 14,699
13,655 50,196 12,481 PROVISION FOR INCOME TAXES (3,178 )
(3,261 ) (3,752 ) (3,370 ) (13,562 )
(3,896 ) EFFECTIVE TAX RATE 28.7 % 30.3 % 25.5 % 24.7 % 27.0
% 31.2 %
NET INCOME $ 7,906 $ 7,497 $ 10,947
$ 10,285 $ 36,634 $ 8,585
Weighted Average Common Shares Outstanding (Diluted) 17,378 17,434
17,423 17,435 17,417 17,390
EARNINGS PER COMMON SHARE
(Diluted) $ 0.45 $ 0.43 $ 0.63 $ 0.59
$ 2.10 $ 0.49 EBIT $ 11,857 $ 11,990 $
15,586 $ 14,694 $ 54,127 $ 13,562 Depreciation 3,575 3,921 3,770
3,820 15,085 4,008 Amortization of intangibles 1,418
778 1,097 1,058
4,351 964
EBITDA $ 16,850 $
16,689 $ 20,453 $ 19,572 $ 73,563 $
18,534
EBITDA AS A PERCENT OF SALES 8.3
% 8.7 % 9.7 % 9.0 % 8.9 % 8.6 %
CAPITAL EXPENDITURES $ 2,693 $ 4,770 $
3,792 $ 6,647 $ 17,901 $ 4,122
* Adjusted Operating Income & Margin excludes Leslie
asbestos and bankruptcy charges.
CIRCOR INTERNATIONAL, INC. RECONCILIATION
OF KEY PERFORMANCE MEASURES TO COMMONLY USED GENERALLY
ACCEPTED ACCOUNTING PRINCIPLE TERMS (in thousands)
UNAUDITED
2011
2012
1ST QTR 2ND QTR 3RD
QTR 4TH QTR YTD
1ST QTR
FREE CASH FLOW [NET CASH FLOW FROM OPERATING
ACTIVITIES LESS CAPITAL EXPENDITURES] $
525 $ (77,244 )
$ (5,214 )
$ 15,199 $ (66,734
) $ (7,089
) ADD: Capital Expenditures 2,693 4,770
3,792 6,647 17,902
4,122 NET CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIES $ 3,218 $ (72,474 ) $ (1,422 ) $ 21,846 $
(48,832 ) $ (2,967 )
NET DEBT (CASH) [TOTAL DEBT LESS CASH & CASH
EQUIVALENTS LESS INVESTMENTS] $
(22,554 ) $ 56,828
$ 64,145 $
50,169 $ 50,169
$ 57,263 ADD: Cash
& cash equivalents 53,491 48,302 39,254 54,855 54,855 41,291
Investments 99 107 98
99 99 101 TOTAL
DEBT $ 31,036 $ 105,237 $ 103,497 $ 105,123
$ 105,123 $ 98,655
DEBT AS % OF EQUITY
8 % 27 %
27 %
27 % 27 %
25 % TOTAL DEBT
31,036 105,237 103,497 105,123 105,123 98,655 TOTAL
SHAREHOLDERS' EQUITY 374,706 385,833 384,296 384,085 384,085
399,018
EBIT [NET
INCOME LESS INCOME TAXES LESS INTEREST EXPENSE,
NET] $ 11,857
$ 11,990 $
15,586 $ 14,694
$ 54,127
$ 13,562 LESS: Interest expense, net
(773 ) (1,232 ) (887 ) (1,039 ) (3,930 ) (1,081 ) Provision for
income taxes (3,178 ) (3,261 ) (3,752 )
(3,370 ) (13,561 ) (3,896 ) NET INCOME $ 7,906
$ 7,497 $ 10,947 $ 10,285 $ 36,635
$ 8,585
EBITDA [NET INCOME LESS INTEREST EXPENSE, NET, LESS
DEPRECIATION LESS AMORTIZATION LESS INCOME
TAXES] $ 16,850
$ 16,689 $
20,453 $ 19,572
$ 73,563
$ 18,534 LESS: Interest expense, net
(773 ) (1,232 ) (887 ) (1,039 ) (3,931 ) (1,081 ) Depreciation
(3,575 ) (3,921 ) (3,770 ) (3,820 ) (15,085 ) (4,008 ) Amortization
(1,418 ) (778 ) (1,097 ) (1,058 ) (4,351 ) (964 ) Provision for
income taxes (3,178 ) (3,261 ) (3,752 )
(3,370 ) (13,561 ) (3,896 ) NET INCOME $ 7,906
$ 7,497 $ 10,947 $ 10,285 $ 36,635
$ 8,585
ADJUSTED INCOME [NET INCOME EXCLUDING LESLIE ASBESTOS AND
BANKRUPTCY CHARGES, NET OF TAX]
$ 8,557 $
7,416 $ 10,816
$ 10,285 $
37,074 $
8,585 LESS: Leslie asbestos and bankruptcy charges
(recoveries), net of tax 651 (81 ) (131 ) - 439 - NET INCOME
$ 7,906 $ 7,497 $ 10,947 $ 10,285 $
36,635 $ 8,585
ADJUSTED EARNINGS PER SHARE [EPS EXCLUDING LESLIE
ASBESTOS AND BANKRUPTCY CHARGES, NET OF TAX]
$ 0.49
$ 0.43 $ 0.62
$ 0.59
$ 2.13 $
0.49 LESS: Leslie asbestos and bankruptcy charges
(recoveries), net of tax impact on EPS 0.04 (0.00 ) (0.01 ) - 0.03
- EARNINGS PER COMMON
SHARE (Diluted) $ 0.45 $ 0.43 $ 0.63 $ 0.59
$ 2.10 $ 0.49
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