CIRCOR (NYSE:CIR)
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- 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