CIRCOR (NYSE:CIR)
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CIRCOR Posts Second Quarter Earnings of $0.26 per share
* Most end-markets served show steady growth
BURLINGTON, Mass., July 21 /PRNewswire-FirstCall/ -- CIRCOR International,
Inc. (NYSE:CIR), a leading provider of valves and fluid control products for
the instrumentation, fluid regulation and petrochemical markets, announced
today results for the second quarter ended June 27, 2004. Net income for the
second quarter of 2004 was $4.1 million, or $0.26 per diluted share, compared
to $4.4 million, or $0.28 per diluted share, for the 2003 second quarter.
Revenues for the 2004 second quarter were $94.6 million, an increase of 6% from
$89.2 million for the second quarter 2003.
For the six months ended June 27, 2004, net income was $8.4 million or $0.53
per diluted share. Net income for the six months ended June 29, 2003, totaled
$8.2 million or $0.53 per diluted share. Revenues for the first six months of
2004 were $185.2 million, an increase of 5% from $176.4 million for the first
six months of 2003.
The Company indicated that its second quarter results were in line with its
expectations and guidance given at the beginning of the quarter. The Company's
Chairman and Chief Executive Officer, David A. Bloss, Sr., stated, "We are
encouraged by the improvements we are seeing in market conditions as incoming
orders increased 12% compared to the second quarter 2003 and 17% sequentially
as June-ended backlog reached another record level."
During the quarter, the Company generated $6.3 million of free cash flow
(defined as net cash from operating activities, less capital expenditures and
dividends paid) and, for the first half of 2004, $8.5 million of free cash flow
was generated. At the end of the quarter the Company remained in a positive
net cash position (cash, cash equivalents, and investments less total debt),
including the use of $14 million in cash to acquire Mallard Control Company in
April 2004.
CIRCOR's Petrochemical Product segment revenues increased 4% to $39.7 million
from $38.3 million in the second quarter of last year and were up 3% on a
year-to-date basis primarily due to the acquisition of Mallard Control in April
2004. Incoming orders for the quarter were up 15% compared to the second
quarter 2003, and, sequentially increased 56%. Backlog increased 12% compared
to June 29, 2003, and increased 22% since March 28, 2004. Mr. Bloss indicated
that the high level of incoming order rates this quarter indicates that
international oil and gas project activity remains healthy. He further
stated, "This segment achieved operating margins of 7.7% for the second quarter
2004 as we continued to achieve profitability improvements in our North
American operations. However, these improvements were masked by higher metals
costs and lower second quarter volume of shipments from our Pibiviesse business
unit that serves the international project market. Shipments for these
projects tend to be rather erratic depending upon the contractor's scheduling
of delivery of the individual projects in our backlog."
CIRCOR's Instrumentation and Thermal Fluid Controls Products segment revenues
were up 8% to $54.9 million for the second quarter compared to $51.0 million
for the same period last year and up 6% on a year to date basis. Incoming
orders for this segment were up 9% compared to the second quarter last year,
while backlog at quarter-end increased 16% versus last year and was nearly
unchanged from March 28, 2004. Order levels benefited from two acquisitions
made in the fourth quarter of 2003, both serving analytical sampling
applications, and from improvement in industrial instrumentation and military
aerospace markets. Operating margin for this segment was 11.4% during the
second quarter 2004. Mr. Bloss commented, "Price increases were implemented in
most businesses during the current quarter to help offset the rise in stainless
steel costs. In addition, we made significant progress with the consolidation
of the Tomco business, acquired in late 2002, into our Hoke operations in
Spartanburg, S.C. during the second quarter and expect to see improving
operational performance the rest of this year."
Bloss added, "Operating efficiency improvements and inventory reduction remain
high priorities for all our management teams. We have made substantial
progress in restructuring our businesses and generating cash during the first
five years of our existence. The next step in our goal to become operationally
excellent is to transform our processes by applying lean/sigma principles
throughout our organization. We are excited about the prospects for further
improvement that exist for us in areas such as on-time deliveries, lead-times,
inventory turnover and overall cost reduction. Executive training in
lean/sigma methods will begin during the remainder of 2004 with formal goal
setting and implementation starting immediately thereafter."
Regarding earnings guidance for the remainder of the year, the Company is
expecting its third quarter to have sequentially less revenue as the continuing
recovery of industrial and aerospace markets are offset by seasonally slower
demand for steam products and lower scheduled deliveries to international oil
and gas projects. Mr. Bloss added, "The fourth quarter is expected to be
brighter for us as we foresee continued strengthening of our markets and higher
scheduled shipments for international oil and gas projects currently in our
backlog. Third quarter results are anticipated to be in the range of $0.22 to
$0.24 per diluted share with our fourth quarter earnings improving to within
$0.32 to $0.36 per diluted share."
CIRCOR International has scheduled a conference call to review its results for
the second quarter 2004 on Thursday, July 22, 2004, at 9:00am ET. Interested
parties may access the call by dialing (800) 361-0912. A replay of the call
will be available from noon ET on July 22, 2004 through midnight on July 28,
2004. To access the replay, interested parties should dial (888) 203-1112 and
enter confirmation code #203259 when prompted. The presentation slides that
will be discussed in the conference call are expected to be available on
Wednesday, July 21, 2004, by 6:00pm 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 July 26, 2004.
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," "will," "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 acquisition
strategy. 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 Six Months Ended
June 27, June 29, June 27, June 29,
2004 2003 2004 2003
Net revenues $94,552 $89,224 $185,249 $176,387
Cost of revenues 66,878 62,303 129,282 124,644
GROSS PROFIT 27,674 26,921 55,967 51,743
Selling, general and
administrative expenses 20,557 19,119 41,082 36,757
Special charges - - 38 -
OPERATING INCOME 7,117 7,802 14,847 14,986
Other (income) expense:
Interest income (184) (201) (355) (303)
Interest expense 1,156 1,550 2,347 3,113
Other income, net (193) (417) (50) (692)
Total other expense 779 932 1,942 2,118
INCOME BEFORE INCOME TAXES 6,338 6,870 12,905 12,868
Provision for income taxes 2,216 2,473 4,515 4,632
NET INCOME $4,122 $4,397 $8,390 $8,236
Earnings per common share:
Basic $0.27 $0.29 $0.55 $0.54
Diluted $0.26 $0.28 $0.53 $0.53
Weighted average common shares
outstanding:
Basic 15,334 15,175 15,321 15,146
Diluted 15,908 15,634 15,946 15,576
CIRCOR INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
UNAUDITED
Six Months Ended
June 27, 2004 June 29, 2003
OPERATING ACTIVITIES
Net income $8,390 $8,236
Adjustments to reconcile net income to net
cash provided by (used in) operating
activities:
Depreciation 5,033 5,033
Amortization 115 149
Compensation expense of stock-based plans 304 130
Loss (gain) on disposal of property, plant
and equipment 11 (9)
Loss on write-down of
property, plant and equipment 100 -
Gain on disposal of assets held for sale (387) -
Gain on sale of marketable securities - (8)
Equity in undistributed
earnings of affiliates (44) -
Changes in operating assets and liabilities,
net of effects from business acquisitions:
Trade accounts receivable 1,785 2,905
Inventories (5,624) 10,117
Prepaid expenses and other assets (1,739) (1,280)
Accounts payable, accrued expenses and
other liabilities 4,593 2,852
Net cash provided by operating activities 12,537 28,125
INVESTING ACTIVITIES
Additions to property, plant and equipment (2,869) (1,853)
Proceeds from disposal of property, plant
and equipment 732 9
Proceeds from sale of assets held for sale 3,030 -
Business acquisitions, net of cash acquired (12,156) -
Purchase of investments (1,456) (43)
Proceeds from sale of investments 1,456 2,679
Other (15) -
Net cash (used in) provided by
investing activities (11,278) 792
FINANCING ACTIVITIES
Proceeds from long-term borrowings 125 144
Payments of long-term debt (3,462) (3,876)
Dividends paid (1,149) (1,136)
Proceeds from the exercise of stock options 243 777
Net cash used in financing activities (4,243) (4,091)
Effect of exchange rate changes on
cash and cash equivalents (691) 1,809
(DECREASE) INCREASE IN CASH AND
CASH EQUIVALENTS (3,675) 26,635
Cash and cash equivalents at
beginning of year 58,202 38,382
CASH AND CASH EQUIVALENTS AT END
OF PERIOD $54,527 $65,017
CIRCOR INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
UNAUDITED
June 27, December 31,
2004 2003
ASSETS
Current Assets:
Cash and cash equivalents $54,527 $58,202
Investments 7,517 7,840
Trade accounts receivable, less allowance
for doubtful accounts of $2,282 and
$2,119, respectively 64,303 64,830
Inventories 105,762 97,278
Prepaid expenses and other current assets 4,788 4,587
Deferred income taxes 6,456 6,303
Assets held for sale 1,190 3,884
Total Current Assets 244,543 242,924
Property, Plant and Equipment, net 60,672 61,737
Other Assets:
Goodwill 117,842 111,448
Intangibles, net 1,600 1,587
Other assets 6,402 6,167
Total Assets $431,059 $423,863
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $37,097 $37,635
Accrued expenses and other
current liabilities 28,284 27,742
Income taxes payable 5,930 1,491
Notes payable and current
portion of long-term debt 15,137 17,268
Total Current Liabilities 86,448 84,136
Long-term Debt, net of current portion 42,853 43,791
Deferred Income Taxes 6,521 6,303
Other Noncurrent Liabilities 10,322 9,820
Minority Interest 4,601 4,653
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
15,342,019 and 15,302,127 issued and
outstanding, respectively 153 153
Additional paid-in capital 206,884 206,160
Retained earnings 62,034 54,793
Accumulated other comprehensive income 11,243 14,054
Total Shareholders' Equity 280,314 275,160
Total Liabilities and Shareholders' Equity $431,059 $423,863
CIRCOR INTERNATIONAL, INC.
SUMMARY OF ORDERS AND BACKLOG
(in thousands)
UNAUDITED
Three Months Ended Six Months Ended
June 27, June 29, June 27, June 29,
2004 2003 2004 2003
ORDERS
Instrumentation &
Thermal Fluid Controls $54,153 $49,686 $111,253 $100,055
Petrochemical 49,598 43,273 81,473 86,699
Total orders $103,751 $92,959 $192,726 $186,754
June 27, June 29,
2004 2003
BACKLOG
Instrumentation &
Thermal Fluid Controls $41,692 $35,974
Petrochemical 54,769 49,109
Total backlog $96,461 $85,083
Note: Backlog includes all unshipped customer orders.
CIRCOR INTERNATIONAL, INC.
SUMMARY REPORT BY SEGMENT
(in thousands, except earnings per share)
UNAUDITED
2003
1ST QTR 2ND QTR 3RD QTR 4TH QTR YEAR
NET REVENUES
Instrumentation &
Thermal Fluid
Controls $49,119 $50,963 $47,132 $53,561 $200,775
Petrochemical 38,044 38,261 39,529 42,844 158,678
Total 87,163 89,224 86,661 96,405 359,453
OPERATING MARGIN
Instrumentation &
Thermal Fluid
Controls 12.2% 12.5% 11.9% 9.5% 11.5%
Petrochemical 7.6% 8.6% 10.9% 12.1% 9.9%
Segment operating
margin 10.2% 10.8% 11.5% 10.7% 10.8%
Corporate expenses -1.9% -2.1% -2.1% -2.1% -2.1%
Special charges 0.0% 0.0% -0.3% -1.1% -0.4%
Total operating margin 8.2% 8.7% 9.0% 7.5% 8.3%
OPERATING INCOME
Instrumentation &
Thermal Fluid Controls 5,982 6,359 5,622 5,110 23,073
Petrochemical 2,876 3,303 4,309 5,171 15,659
Segment operating
income 8,858 9,662 9,931 10,281 38,732
Corporate expenses (1,674) (1,860) (1,859) (1,989) (7,382)
Special charges - - (271) (1,092) (1,363)
Total operating
income w/ special
charges 7,184 7,802 7,801 7,200 29,987
INTEREST EXPENSE, NET (1,461) (1,349) (1,320) (1,021) (5,151)
OTHER (EXPENSE) INCOME,
NET 275 417 362 (217) 837
PRETAX INCOME 5,998 6,870 6,843 5,962 25,673
PROVISION FOR INCOME
TAXES (2,159) (2,473) (2,464) (704) (7,800)
EFFECTIVE TAX RATE 36.0% 36.0% 36.0% 11.8% 30.4%
NET INCOME $3,839 $4,397 $4,379 $5,258 $17,873
Weighted Average Common
Shares Outstanding
(Diluted) 15,533 15,634 15,812 15,919 15,675
EARNINGS PER COMMON
SHARE (Diluted) $0.25 $0.28 $0.28 $0.33 $1.14
EARNINGS PER COMMON
SHARE (Diluted)
excluding special
charges $0.25 $0.28 $0.29 $0.37 $1.20
EBIT $7,459 $8,219 $8,163 $6,983 $30,824
Depreciation 2,470 2,563 2,478 2,053 9,564
Amortization of
intangibles 74 75 74 75 298
EBITDA $10,003 $10,857 $10,715 $9,111 $40,686
EBITDA AS A PERCENT OF
SALES 11.5% 12.2% 12.4% 9.5% 11.3%
CAPITAL EXPENDITURES $795 $1,058 $3,940 $1,030 $6,823
2004
1ST QTR 2ND QTR YTD
NET REVENUES
Instrumentation & Thermal
Fluid Controls $51,639 $54,864 $106,503
Petrochemical 39,058 39,688 78,746
Total 90,697 94,552 185,249
OPERATING MARGIN
Instrumentation & Thermal
Fluid Controls 11.2% 11.4% 11.3%
Petrochemical 10.9% 7.7% 9.3%
Segment operating margin 11.1% 9.8% 10.4%
Corporate expenses -2.5% -2.3% -2.4%
Special charges 0.0% 0.0% 0.0%
Total operating margin 8.5% 7.5% 8.0%
OPERATING INCOME
Instrumentation & Thermal
Fluid Controls 5,776 6,239 12,015
Petrochemical 4,251 3,066 7,317
Segment operating income 10,027 9,305 19,332
Corporate expenses (2,259) (2,188) (4,447)
Special charges (38) - (38)
Total operating income w/
special charges 7,730 7,117 14,847
INTEREST EXPENSE, NET (1,020) (972) (1,992)
OTHER (EXPENSE) INCOME, NET (143) 193 50
PRETAX INCOME 6,567 6,338 12,905
PROVISION FOR INCOME TAXES (2,299) (2,216) (4,515)
EFFECTIVE TAX RATE 35.0% 35.0% 35.0%
NET INCOME $4,268 $4,122 $8,390
Weighted Average Common Shares
Outstanding (Diluted) 16,001 15,908 15,946
EARNINGS PER COMMON SHARE
(Diluted) $0.27 $0.26 $0.53
EARNINGS PER COMMON SHARE
(Diluted)
excluding special charges $0.27 $0.26 $0.53
EBIT $7,586 $7,310 $14,896
Depreciation 2,680 2,353 5,033
Amortization of intangibles 77 38 115
EBITDA $10,343 $9,701 $20,044
EBITDA AS A PERCENT OF SALES 11.4% 10.3% 10.8%
CAPITAL EXPENDITURES $1,294 $1,575 $2,869
CIRCOR INTERNATIONAL, INC.
RECONCILIATION OF KEY PERFORMANCE MEASURES TO COMMONLY USED
GENERALLY ACCEPTED ACCOUNTING PRINCIPLE TERMS
(in thousands)
UNAUDITED
2003
1ST QTR 2ND QTR 3RD QTR 4TH QTR YEAR
FREE CASH FLOW [NET CASH
FLOW FROM OPERATING
ACTIVITIES LESS CAPITAL
EXPENDITURES LESS
DIVIDENDS PAID] $14,533 $10,508 $7,183 $16,915 $49,139
ADD: Capital
expenditures 795 1,058 3,940 1,030 6,823
Dividends paid 567 569 570 574 2,280
NET CASH PROVIDED BY
OPERATING ACTIVITIES $15,895 $12,135 $11,693 $18,519 $58,242
NET (CASH) DEBT [TOTAL
DEBT LESS CASH AND CASH
EQUIVALENTS LESS
INVESTMENTS] $20,209 $8,005 $254 $(4,983) $(4,983)
ADD: Cash and cash
equivalents 51,419 65,017 74,847 58,202 58,202
Investments 4,072 1,464 - 7,840 7,840
TOTAL DEBT $75,700 $74,486 $75,101 $61,059 $61,059
NET DEBT AS % OF NET
CAPITALIZATION 7.5% 3.0% 0.1% -1.8% -1.8%
NET DEBT [As defined
above] $20,209 $8,005 $254 $(4,983) $(4,983)
ADD: Cash and cash
equivalents 51,419 65,017 74,847 58,202 58,202
Investments 4,072 1,464 - 7,840 7,840
TOTAL DEBT $75,700 $74,486 $75,101 $61,059 $61,059
NET CAPITALIZATION
[TOTAL DEBT PLUS
SHAREHOLDERS' EQUITY
LESS CASH, LESS CASH
EQUIVALENTS, LESS
INVESTMENTS] $270,090 $266,529 $263,505 $270,177 $270,177
LESS: Debt (75,700) (74,486) (75,101) (61,059) (61,059)
ADD: Cash and cash
equivalents 51,419 65,017 74,847 58,202 58,202
Investments 4,072 1,464 - 7,840 7,840
TOTAL SHAREHOLDERS'
EQUITY 249,881 258,524 263,251 275,160 275,160
ADD: TOTAL DEBT 75,700 74,486 75,101 61,059 61,059
TOTAL CAPITAL $325,581 $333,010 $338,352 $336,219 $336,219
TOTAL DEBT / TOTAL
CAPITAL 23.3% 22.4% 22.2% 18.2% 18.2%
EBIT [OPERATING INCOME
PLUS OTHER NET
(INCOME) EXPENSE] $7,459 $8,219 $8,163 $6,983 $30,824
ADD: Other (income)
expense, net (275) (417) (362) 217 (837)
OPERATING INCOME $7,184 $7,802 $7,801 $7,200 29,987
EBITDA [OPERATING INCOME
PLUS OTHER NET
(INCOME) EXPENSE]
PLUS DEPRECIATION
PLUS
AMORTIZATION] $10,003 $10,857 $10,715 $9,111 40,686
LESS:
Other (income)
expense, net (275) (417) (362) 217 (837)
Depreciation (2,470) (2,563) (2,478) (2,053) (9,564)
Amortization of
intangibles (74) (75) (74) (75) (298)
OPERATING INCOME $7,184 $7,802 $7,801 $7,200 $29,987
2004
1ST QTR 2ND QTR HALF YEAR
FREE CASH FLOW [NET CASH FLOW
FROM OPERATING ACTIVITIES LESS
CAPITAL EXPENDITURES LESS DIVIDENDS
PAID] $2,254 $6,265 $8,519
ADD: Capital expenditures 1,294 1,575 2,869
Dividends paid 573 576 1,149
NET CASH PROVIDED BY OPERATING
ACTIVITIES $4,121 $8,416 $12,537
NET (CASH) DEBT [TOTAL DEBT LESS
CASH AND CASH EQUIVALENTS
LESS INVESTMENTS] $(8,706) $(4,054) $(4,054)
ADD: Cash and cash equivalents 59,963 54,527 54,527
Investments 7,679 7,517 7,517
TOTAL DEBT $58,936 $57,990 $57,990
NET DEBT AS % OF NET CAPITALIZATION -3.3% -1.5% -1.5%
NET DEBT [As defined above] $(8,706) $(4,054) $(4,054)
ADD: Cash and cash equivalents 59,963 54,527 54,527
Investments 7,679 7,517 7,517
TOTAL DEBT $58,936 $57,990 $57,990
NET CAPITALIZATION [TOTAL DEBT PLUS
SHAREHOLDERS' EQUITY LESS CASH,
LESS CASH EQUIVALENTS, LESS
INVESTMENTS] $267,728 $276,260 $276,260
LESS: Debt (58,936) (57,990) (57,990)
ADD: Cash and cash equivalents 59,963 54,527 54,527
Investments 7,679 7,517 7,517
TOTAL SHAREHOLDERS' EQUITY 276,434 280,314 280,314
ADD: TOTAL DEBT 58,936 57,990 57,990
TOTAL CAPITAL $335,370 $338,304 $338,304
TOTAL DEBT / TOTAL CAPITAL 17.6% 17.1% 17.1%
EBIT [OPERATING INCOME PLUS
OTHER NET (INCOME) EXPENSE] $7,586 $7,310 $14,896
ADD: Other (income) expense, net 144 (193) (49)
OPERATING INCOME $7,730 $7,117 $14,847
EBITDA [OPERATING INCOME PLUS OTHER
NET (INCOME) EXPENSE]
PLUS DEPRECIATION PLUS
AMORTIZATION] $10,343 $9,701 $20,044
LESS:
Other (income) expense, net 144 (193) (49)
Depreciation (2,680) (2,353) (5,033)
Amortization of intangibles (77) (38) (115)
OPERATING INCOME $7,730 $7,117 $14,847
NOTE: These non-GAAP key performance measures are provided for the
convenience of financial analysts who have used such as
additional measures of liquidity and leverage.
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/