CIR CIRCOR International Inc

CIRCOR International, Inc. (NYSE: CIR), a leading provider of flow control solutions and other highly engineered products for markets including oil & gas, aerospace, power, process and industrial solutions, today announced financial results for the third quarter ended October 1, 2017.

Third-Quarter 2017 Highlights

• Revenue of $160 million; GAAP EPS of $0.22 and Adjusted EPS of $0.43
• Orders of $158 million; up 42% year-over-year, 23% organically
• Acquisition of Colfax Fluid Handling expected to close by year end

“The CIRCOR team generated strong results for the third quarter, posting double-digit growth in revenue and orders led primarily by our Energy segment,” said Scott Buckhout, President and Chief Executive Officer. “Robust demand for Distributed Valves drove Energy segment orders up 26% organically. We expect to see continued growth in Energy in the fourth quarter. We also reported broad-based strength in our Advanced Flow Solutions segment with a 21% increase in organic orders driven by our Aerospace businesses. We expect continued order growth and margin expansion across AFS in the fourth quarter.”

“During the quarter we announced an agreement to acquire the Fluid Handling business of Colfax,” added Buckhout. “This transaction significantly enhances our overall scale and ability to deliver severe service flow-control solutions across a complementary set of attractive end markets. The strategic fit is compelling and our customers are equally enthusiastic about the transaction. In recent weeks, I have met with the Fluid Handling teams in Europe and the U.S., and we’re excited about the strong cultural fit between our companies. We share a common focus on customers, innovation and accountability. We are on track to close the acquisition by year-end.”

“As we enter the final quarter of the year, we continue to execute our growth strategy and we remain optimistic about the outlook across most of our end markets,” concluded Buckhout.

Fourth-Quarter 2017 GuidanceThe Company will provide its guidance for the fourth quarter of 2017 during the conference call later today.

Selected Consolidated Results (unaudited)

    ($ millions except EPS)     Q3 2017     Q3 2016 Change Revenue     $ 159.7 $ 134.8 18% GAAP Operating Income $ 6.9 $ 3.5 95% Adjusted Operating Income1 $ 11.9 $ 8.2 44% GAAP Operating Margin 4.3% 2.6% 170 bps Adjusted Operating Margin1 7.4% 6.1% 130 bps GAAP Earnings Per Share (Diluted) $ 0.22 $ 0.27 (18)% Adjusted Earnings Per Share (Diluted)1 $ 0.43 $ 0.46 (7)% Operating Cash Flow $ (16.9) $ 21.2 -- Free Cash Flow2 $ (19.2) $ 17.5 -- Orders $ 158.1 $ 111.3 42%  

Segment Results

($ millions)     Q3 2017     Q3 2016   Change Energy       Revenue $ 92.6 $ 68.9 34% Segment Operating Income $ 7.4 $ 6.8 10% Segment Operating Margin 8.0% 9.8% (180) bps Orders $ 89.0 $ 55.1 62%   Advanced Flow Solutions Revenue $ 67.1 $ 65.9 2% Segment Operating Income $ 9.5 $ 8.0 19% Segment Operating Margin 14.2% 12.1% 210 bps Orders $ 69.1 $ 56.3 23%  

1. Consolidated and Segment Results for Q3 2017 exclude special and restructuring charges and non-cash acquisition-related intangible amortization, totaling $5.0 million (pre-tax). This net charge includes (i) $1.8 million in transaction fees associated with the acquisition of Colfax Fluid Handling; (ii) $2.7 million charge for non-cash acquisition-related intangible amortization expense; (iii) $0.2 million charge related to the sale of our France build-to-print business; and, (iv) $0.3 million related to previously announced restructuring actions. Consolidated and Segment Results for Q3 2016 exclude special and restructuring charges and non-cash acquisition-related intangible amortization, totaling $4.7 million (pre-tax). This includes (i) $1.9 million for non-cash acquisition-related intangible amortization expense; (ii) $0.8 million related to the exit of the Company’s California machine shop; (iii) $0.4 million related to the Company’s Brazil exit; and (iv) $1.6 million related to the Company’s suspension of manufacturing operations in China and other restructuring programs.

2. Free Cash Flow is a non-GAAP financial measure and is calculated by subtracting GAAP capital expenditures, net of proceeds from asset sales, from GAAP Operating Cash Flow.

Conference Call InformationCIRCOR International will hold a conference call to review its financial results today, October 27, 2017, at 9:00 a.m. ET. To listen to the conference call and view the accompanying presentation slides, visit “Webcasts & Presentations” in the “Investors” portion of the CIRCOR website. The call also can be accessed by dialing (877) 407-5790 or (201) 689-8328. The webcast will be archived for one year on the Company’s website.

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

• We exclude costs and tax effects associated with restructuring activities, such as reducing overhead and consolidating facilities. We believe that the costs related to these restructuring activities are not indicative of our normal operating costs.
• We exclude certain acquisition-related costs, including significant transaction costs and amortization of inventory 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 of 5 to 20 years. Exclusion of the non-cash amortization expense allows comparisons of operating results that are consistent over time for both our newly acquired and long-held businesses and with both acquisitive and non-acquisitive peer companies.
• We also exclude certain gains/losses and related tax effects, which are either isolated or cannot be expected to occur again with any predictability, and that we believe are not indicative of our normal operating gains and losses. For example, we exclude gains/losses from items such as the sale of a business, significant litigation-related matters and lump-sum pension plan settlements.

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

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

Safe Harbor StatementThis 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 the realization of cost reductions from restructuring activities. Actual events, performance or results could differ materially from the anticipated events, performance or results expressed or implied by such forward-looking statements. 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 highly engineered products and sub-systems for markets including oil & gas, power generation and aerospace & defense. CIRCOR has a diversified product portfolio with recognized, market-leading brands that fulfill its customers’ unique application needs. The Company’s strategy is to grow organically and through complementary acquisitions; simplify CIRCOR’s operations; achieve world class operational excellence; and attract and retain top industry talent. For more information, visit the Company’s investor relations website at http://investors.circor.com.

CIRCOR INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share data)

UNAUDITED

    Three Months Ended     Nine Months Ended October 1, 2017     October 2, 2016 October 1, 2017     October 2, 2016 Net revenues $ 159,693 $ 134,833 $ 456,131 $ 432,023 Cost of revenues 112,390   92,479   314,527   298,005   GROSS PROFIT 47,303 42,354 141,604 134,018 Selling, general and administrative expenses 38,120 36,002 116,425 110,290 Impairment charges — 208 — 208 Special and restructuring charges (recoveries), net 2,319   2,631   (443 ) 9,165   OPERATING INCOME 6,864   3,513   25,622   14,355   Other expense (income): Interest expense, net 2,445 605 6,298 1,841 Other expense (income), net 823   163   2,022   (914 ) TOTAL OTHER EXPENSE, NET 3,268   768   8,320   927   INCOME BEFORE INCOME TAXES 3,596 2,745 17,302 13,428 (Benefit from) Provision for income taxes (21 ) (1,673 ) (57 ) 1,325   NET INCOME $ 3,617   $ 4,418   $ 17,359   $ 12,103   Earnings per common share: Basic $ 0.22 $ 0.27 $ 1.05 $ 0.74 Diluted $ 0.22 $ 0.27 $ 1.04 $ 0.73 Weighted average number of common shares outstanding: Basic 16,503 16,427 16,486 16,411 Diluted 16,709 16,629 16,721 16,568 Dividends declared per common share $ 0.0375 $ 0.0375 $ 0.1125 $ 0.1125   CIRCOR INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

UNAUDITED

    Nine Months Ended OPERATING ACTIVITIES October 1, 2017     October 2, 2016 Net income $ 17,359 $ 12,103 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 10,889 9,614 Amortization 9,491 7,586 Bad debt expense (recovery) 265 (928 ) Loss on write down of inventory 1,463 5,784 Compensation expense of share-based plans 2,696 4,200 Tax effect of share-based plan compensation — 123 Change in fair value of contingent consideration (12,200 ) — Loss on sale of property, plant and equipment 87 3,238 Impairment charges — 208 Loss on sale of business 5,300 — Changes in operating assets and liabilities, net of effects of acquisition and disposition: Trade accounts receivable 8,782 15,422 Inventories (29,703 ) 20,216 Prepaid expenses and other assets (11,424 ) 545 Accounts payable, accrued expenses and other liabilities (997 ) (39,161 ) Net cash provided by operating activities 2,008   38,950   INVESTING ACTIVITIES Purchases of property, plant and equipment (7,773 ) (10,776 ) Proceeds from the sale of property, plant and equipment 269 1,186 Business acquisition, working capital adjustment 1,467   —   Net cash used in investing activities (6,037 ) (9,590 ) FINANCING ACTIVITIES Proceeds from long-term debt 378,263 90,589 Payments of long-term debt (361,325 ) (88,740 ) Debt issuance costs (727 ) — Dividends paid (1,879 ) (1,873 ) Proceeds from the exercise of stock options 707 192 Tax effect of share-based plan compensation —   (123 ) Net cash provided by financing activities 15,039   45   Effect of exchange rate changes on cash and cash equivalents 6,338   983   INCREASE IN CASH AND CASH EQUIVALENTS 17,348 30,388 Cash and cash equivalents at beginning of period 58,279   54,541   CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 75,627   $ 84,929     CIRCOR INTERNATIONAL, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands)

UNAUDITED

    October 1, 2017     December 31, 2016 ASSETS CURRENT ASSETS: Cash and cash equivalents $ 75,627 $ 58,279 Trade accounts receivable, less allowance for doubtful accounts of $4,760 and $5,056, respectively 130,177 133,046 Inventories 180,285 149,584 Prepaid expenses and other current assets 43,054   29,557   Total Current Assets 429,143   370,466   PROPERTY, PLANT AND EQUIPMENT, NET 99,013 99,713 OTHER ASSETS: Goodwill 210,685 206,659 Intangibles, net 130,052 135,778 Other assets 10,138   8,140   TOTAL ASSETS $ 879,031   $ 820,756   LIABILITIES AND SHAREHOLDERS’ EQUITY CURRENT LIABILITIES: Accounts payable $ 63,690 $ 46,767 Accrued expenses and other current liabilities 50,155 50,707 Accrued compensation and benefits 15,384 20,249 Current portion of long-term debt 5,000   —   Total Current Liabilities 134,229   117,723   LONG-TERM DEBT 264,026 251,200 DEFERRED INCOME TAXES 7,929 13,657 OTHER NON-CURRENT LIABILITIES 20,962 33,766 SHAREHOLDERS’ EQUITY: Preferred stock, $0.01 par value; 1,000,000 shares authorized; no shares issued and outstanding — — Common stock 179 178 Additional paid-in capital 293,907 289,423 Retained earnings 280,441 265,543 Common treasury stock, at cost (74,472 ) (74,472 ) Accumulated other comprehensive loss, net of tax (48,170 ) (76,262 ) Total Shareholders’ Equity 451,885   404,410   TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 879,031   $ 820,756     CIRCOR INTERNATIONAL, INC.

SUMMARY OF ORDERS AND BACKLOG

(in millions)

UNAUDITED

    Three Months Ended     Nine Months Ended

October 1,2017

   

October 2,2016

October 1,2017

   

October 2,2016

ORDERS (1) Energy $ 89.0 $ 55.1 $ 270.7 $ 185.3 Advanced Flow Solutions 69.1   56.3   214.4   198.1 Total orders $ 158.1   $ 111.3   $ 485.1   $ 383.4   BACKLOG (2)

October 1,2017

October 2,2016

Energy $ 142.7 $ 84.5 Advanced Flow Solutions 135.6   135.7   Total backlog $ 278.3   $ 220.2     Note 1: Orders do not include the foreign exchange impact due to the re-measurement of customer order backlog amounts denominated in foreign currencies. Note 2: Backlog includes unshipped customer orders, including backlog associated with acquisitions.   CIRCOR INTERNATIONAL, INC.

SEGMENT INFORMATION

(in thousands, except percentages)

UNAUDITED

                                                      2016     2017 1ST QTR     2ND QTR     3RD QTR     4TH QTR     TOTAL     1ST QTR     2ND QTR     3RD QTR     TOTAL NET REVENUES                             Energy $ 83,409 $ 80,736 $ 68,901 $ 89,000 $ 322,046 $ 80,135 $ 82,586 $ 92,613 $ 255,334 Advanced Flow Solutions 67,389       65,656       65,932       69,236       268,213       65,073       68,645       67,080       $ 200,798   Total $ 150,798       $ 146,392       $ 134,833       $ 158,236       $ 590,259       $ 145,208       $ 151,231       $ 159,693       $ 456,132     SEGMENT OPERATING INCOME Energy $ 9,296 $ 9,293 $ 6,755 $ 9,276 $ 34,619 $ 6,864 $ 8,858 $ 7,397 $ 23,119 Advanced Flow Solutions 8,452 8,064 8,008 8,939 33,463 7,711 8,587 9,548 25,846 Corporate expenses (6,488 )     (5,431 )     (6,522 )     (7,231 )     (25,672 )     (5,479 )     (5,396 )     (5,067 )     (15,942 ) Adjusted Operating Income $ 11,260       $ 11,926       $ 8,240       $ 10,984       $ 42,410       $ 9,096       $ 12,049       $ 11,878       $ 33,023     SEGMENT OPERATING MARGIN % Energy 11.1 % 11.5 % 9.8 % 10.4 % 10.7 % 8.6 % 10.7 % 8.0 % 9.1 % Advanced Flow Solutions 12.5 %     12.3 %     12.1 %     12.9 %     12.5 %     11.8 %     12.5 %     14.2 %     12.9 % Adjusted Operating Margin 7.5 %     8.1 %     6.1 %     6.9 %     7.2 %     6.3 %     8.0 %     7.4 %     7.2 %   CIRCOR INTERNATIONAL, INC.

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

(in thousands, except percentages)

UNAUDITED

            2016     2017 1ST QTR     2ND QTR     3RD QTR     4TH QTR     TOTAL     1ST QTR     2ND QTR     3RD QTR     TOTAL NET CASH PROVIDED BY OPERATING ACTIVITIES $ 7,654     $ 10,100     $ 21,196     $ 20,449     $ 59,399 $ 16,195     $ 2,667     $ (16,854 )     $ 2,008 LESS: Capital expenditures, net of sale proceeds 3,934       1,926       3,730       3,402       12,992       2,811       2,375       2,318       7,504   FREE CASH FLOW $ 3,720       $ 8,174       $ 17,466       $ 17,047       $ 46,407       $ 13,384       $ 292       $ (19,172 )     $ (5,496 ) TOTAL DEBT $ 97,800 $ 97,600 $ 92,400 $ 251,200 $ 251,200 $ 243,000 $ 252,856 $ 269,026 $ 269,026 LESS: Cash & cash equivalents 66,580       72,970       84,929       58,279       58,279       65,656       77,272       75,627       75,627   NET DEBT $ 31,220       $ 24,630       $ 7,471       $ 192,921       $ 192,921       $ 177,344       $ 175,584       $ 193,399       $ 193,399   TOTAL SHAREHOLDERS' EQUITY $ 414,107 $ 411,367 $ 416,598 $ 404,410 $ 404,410 $ 415,537 $ 438,097 $ 451,885 $ 451,885   TOTAL DEBT AS % OF EQUITY 24 % 24 % 22 % 62 % 62 % 58 % 58 % 60 % 60 % NET DEBT AS % OF EQUITY 8 % 6 % 2 % 48 % 48 % 43 % 40 % 43 % 43 %   CIRCOR INTERNATIONAL, INC.

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

(in thousands, except per share data)

UNAUDITED

            2016     2017 1ST QTR     2ND QTR     3RD QTR     4TH QTR     TOTAL     1ST QTR     2ND QTR     3RD QTR     TOTAL NET INCOME (LOSS) $ 3,872     $ 3,813     $ 4,418     $ (2,002 )     $ 10,101 $ 4,773     $ 8,970     $ 3,617     $ 17,359 LESS: Restructuring related inventory charges 1,958 75 — 813 2,846 — — — — Amortization of inventory step-up — — — 1,366 1,366 — — — — Impairment charges — — 208 — 208 — — — — Restructuring charges, net 1,163 3,259 2,252 2,301 8,975 1,458 3,566 341 5,366 Acquisition amortization 1,868 1,911 1,888 4,234 9,901 2,552 2,599 2,694 7,844 Special charges (recoveries), net 776 1,334 379 5,707 8,196 (2,268 ) (5,520 ) 1,978 (5,809 ) Income tax impact (954 )     (1,611 )     (1,519 )     (4,487 )     (8,571 )     (1,137 )     (3,124 )     (1,497 )     (5,758 ) ADJUSTED NET INCOME $ 8,683       $ 8,781       $ 7,626       $ 7,932       $ 33,022       $ 5,378       $ 6,491       $ 7,133       $ 19,002     EARNINGS (LOSS) PER COMMON SHARE (Diluted) $ 0.23 $ 0.23 $ 0.27 $ (0.12 ) $ 0.61 $ 0.29 $ 0.54 $ 0.22 $ 1.04 LESS: Restructuring related inventory charges 0.12 — — 0.05 0.17 — — — — Amortization of inventory step-up — — — 0.08 0.08 — — — — Impairment charges — — 0.01 — 0.01 — — — — Restructuring charges, net 0.07 0.20 0.14 0.14 0.54 0.09 0.21 0.02 0.32 Acquisition amortization 0.11 0.12 0.11 0.26 0.60 0.15 0.16 0.16 0.47 Special charges (recoveries), net 0.05 0.08 0.02 0.35 0.50 (0.14 ) (0.33 ) 0.12 (0.35 ) Income tax impact (0.06 )     (0.10 )     (0.09 )     (0.27 )     (0.52 )     (0.07 )     (0.19 )     (0.09 )     (0.34 ) ADJUSTED EARNINGS PER SHARE (Diluted) $ 0.52       $ 0.53       $ 0.46       $ 0.48       $ 1.99       $ 0.32       $ 0.39       $ 0.43       $ 1.14     CIRCOR INTERNATIONAL, INC.

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

(in thousands)

UNAUDITED

            2016     2017 1ST QTR     2ND QTR     3RD QTR     4TH QTR     TOTAL     1ST QTR     2ND QTR     3RD QTR     TOTAL NET INCOME (LOSS) $ 3,872     $ 3,813     $ 4,418     $ (2,002 )     $ 10,101 $ 4,773     $ 8,970     $ 3,617     $ 17,359 LESS: Interest expense, net (631 ) (605 ) (605 ) (1,468 ) (3,310 ) (1,669 ) (2,184 ) (2,445 ) (6,298 ) Depreciation (3,263 ) (3,213 ) (3,138 ) (3,690 ) (13,304 ) (3,798 ) (3,547 ) (3,544 ) (10,889 ) Amortization (2,529 ) (2,569 ) (2,488 ) (4,730 ) (12,316 ) (3,092 ) (3,124 ) (3,275 ) (9,491 ) (Provision for) benefit from income taxes (1,520 )     (1,478 )     1,673       1,746       421       (687 )     724       21       57   EBITDA $ 11,815 $ 11,678 $ 8,976 $ 6,140 $ 38,610 $ 14,019 $ 17,101 $ 12,860 $ 43,980 LESS: Restructuring related inventory charges (1,958 ) (75 ) — (813 ) (2,846 ) — — — — Amortization of inventory step-up — — — (1,366 ) (1,366 ) — — — — Impairment charges — — (208 ) — (208 ) — — — — Restructuring charges, net (1,163 ) (3,259 ) (2,252 ) (2,301 ) (8,975 ) (1,458 ) (3,566 ) (341 ) (5,366 ) Special (charges) recoveries, net (776 )     (1,334 )     (379 )     (5,707 )     (8,196 )     2,268       5,520       (1,978 )     5,809   ADJUSTED EBITDA $ 15,712       $ 16,346       $ 11,815       $ 16,327       $ 60,201       $ 13,209       $ 15,147       $ 15,179       $ 43,537     CIRCOR INTERNATIONAL, INC.

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

(in thousands, except percentages)

UNAUDITED

            2016     2017 1ST QTR     2ND QTR     3RD QTR     4TH QTR     TOTAL     1ST QTR     2ND QTR     3RD QTR     TOTAL GAAP OPERATING INCOME (LOSS) $ 5,495     $ 5,347     $ 3,513     $ (3,437 )     $ 10,918 $ 7,354     $ 11,404     $ 6,864     $ 25,622 LESS: Restructuring related inventory charges 1,958 75 — 813 2,846 — — — — Amortization of inventory step-up — — — 1,366 1,366 — — — — Impairment charges — — 208 — 208 — — — — Restructuring charges, net 1,163 3,259 2,252 2,301 8,975 1,458 3,566 341 5,366 Acquisition amortization 1,868 1,911 1,888 4,234 9,901 2,552 2,599 2,694 7,844 Special charges (recoveries), net 776       1,334       379       5,707       8,196       (2,268 )     (5,520 )     1,978       (5,809 ) ADJUSTED OPERATING INCOME $ 11,260       $ 11,926       $ 8,240       $ 10,984       $ 42,410       $ 9,096       $ 12,049       $ 11,877       $ 33,022     GAAP OPERATING MARGIN 3.6 % 3.7 % 2.6 % (2.2 )% 1.8 % 5.1 % 7.5 % 4.3 % 5.6 % LESS: Restructuring related inventory charges 1.3 % 0.1 % —% 0.5 % 0.5 % — % — % — % — % Amortization of inventory step-up —% —% —% 0.9 % 0.2 % — % — % — % — % Impairment charges —% —% 0.2 % — % — % — % — % — % — % Restructuring charges, net 0.8 % 2.2 % 1.7 % 1.5 % 1.5 % 1.0 % 2.4 % 0.2 % 1.2 % Acquisition amortization 1.2 % 1.3 % 1.4 % 2.7 % 1.7 % 1.8 % 1.7 % 1.7 % 1.7 % Special charges (recoveries), net 0.5 %     0.9 %     0.3 %     3.6 %     1.4 %     (1.6 )%     (3.7 )%     1.2 %     (1.3 )% ADJUSTED OPERATING MARGIN 7.5 %     8.1 %     6.1 %     6.9 %     7.2 %     6.3 %     8.0 %     7.4 %     7.2 %

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