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Share Name | Share Symbol | Market | Type |
---|---|---|---|
CIRCOR International Inc | NYSE:CIR | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 56.00 | 0 | 01:00:00 |
CIRCOR International, Inc. (NYSE: CIR), a leading provider of flow control solutions and other highly engineered products for the Industrial, Aerospace & Defense, and Energy markets, today announced adjusted and preliminary GAAP financial results for the third quarter ended September 29, 2019.
The results presented in this press release are considered preliminary, as the Company has not completed its review procedures related to reporting discontinued operations and related impairments and associated tax effects. As the Company completes its review, material adjustments may arise between the date of this press release and the date the Company files with the Securities and Exchange Commission its Quarterly Report on Form 10-Q for the quarter ended September 29, 2019.
Third-Quarter 2019 Highlights
“We had a solid third-quarter 2019 with continuing operations delivering 7% organic revenue growth and 11.0% adjusted operating margin, up 160 basis points from a year ago,” said Scott Buckhout, President and Chief Executive Officer. “Consistent with our stated strategy to exit commodity businesses, simplify the Company, and accelerate the deleveraging process, we completed divestures of two non-core businesses and reduced our debt by $89 million during the quarter. In October, we announced our intention to sell our Distributed Valves business, in-line with our strategic shift away from upstream oil and gas and focus on more attractive end markets with enhanced growth and earnings potential.
“Our third quarter performance and outlook for the remainder of the year are in-line with the targets communicated in our 18-month plan. We remain committed to driving long-term growth, expanding margins, generating strong free cash flow, and deleveraging the Company as we drive value for shareholders,” concluded Mr. Buckhout.
Fourth-Quarter 2019 Guidance
For the fourth quarter of 2019, CIRCOR expects revenue in the range of $238 million to $248 million, and GAAP earnings per share from continuing operations in the range of $0.03 to $0.19, which reflects acquisition-related amortization expense of $(0.49), and other special and restructuring charges of $(0.24) to $(0.20). Excluding the impact of amortization and special and restructuring (charges) gains, adjusted EPS is expected to be in the range of $0.78 to $0.88 per share. The revenue and adjusted EPS exclude the results from the Company’s Distributed Valves business, which will continue to be reported as discontinued operations until a sale is completed. Presentation slides that provide supporting information to this guidance and third-quarter results are posted on the “Investors” section of the Company’s website, http://investors.circor.com, and will be discussed during the conference call at 9:00 a.m. ET today, November 6, 2019.
Selected Preliminary Consolidated Results (unaudited)
($ millions except EPS)
Q3 2019
Q3 2018
Change
Revenue
$
237.1
$
247.2
(4)%
Revenue excluding divested businesses1
$
234.1
$
223.5
5%
GAAP Operating (Loss) Income
$
(2.3)
$
8.5
N/M
Adjusted Operating Income2
$
25.6
$
25.0
2%
GAAP Operating Margin
(1.0)%
3.5%
(450) bps
Adjusted Operating Margin2
10.8%
10.1%
70 bps
Adjusted Operating Margin excluding divestitures2
11.0%
9.4%
160 bps
GAAP (Loss) Earnings Per Share (Diluted)
$
(5.30)
$
(0.34)
N/M
Adjusted Earnings Per Share (Diluted)2
$
0.63
$
0.53
11%
Operating Cash Flow
$
8.1
$
24.1
N/M
Free Cash Flow3
$
9.0
$
19.0
N/M
Orders
$
223.0
$
283.6
(21)%
Orders excluding divested businesses1
$
218.2
$
257.3
(15)%
Segment Results
($ millions)
Q3 2019
Q3 2018
Change
Energy
Revenue
$
55.8
$
70.7
(21)%
Revenue excluding divested business1
$
55.8
$
54.1
3%
Segment Operating Income2
$
5.3
$
9.5
(44)%
Segment Operating Margin2
9.4%
13.4%
(400) bps
Orders
$
53.3
$
87.1
(39)%
Orders excluding divested business1
$
53.3
$
68.0
(22)%
Aerospace & Defense
Revenue
$
67.6
$
57.8
17%
Segment Operating Income2
$
13.5
$
8.7
55%
Segment Operating Margin2
20.0%
15.1%
490 bps
Orders
$
64.0
$
81.5
(21)%
Industrial
Revenue
$
113.6
$
118.7
(4)%
Revenue excluding divested business1
$
110.6
$
111.6
(1)%
Segment Operating Income2
$
14.0
$
14.6
(4)%
Segment Operating Margin2
12.3%
12.3%
0 bps
Orders
$
105.7
$
114.9
(8)%
Orders excluding divested business1
$
100.9
$
107.8
(6)%
Conference Call Information
CIRCOR International will hold a conference call to review its financial results at 9:00 a.m. ET today, November 6, 2019. To listen to the live conference call and view the accompanying presentation slides, please visit “Webcasts & Presentations” in the “Investors” portion of CIRCOR’s website. The live call also can be accessed by dialing (877) 407-5790 or (201) 689-8328. The webcast will be archived on the Company’s website for one year.
Use of Non-GAAP Financial Measures
Adjusted operating income, Adjusted operating margin, Adjusted net income, Adjusted earnings per share (diluted), EBITDA, Adjusted EBITDA, net debt, free cash flow and organic growth, (and such measures further excluding divested businesses) 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 reflect our ongoing business and facilitate 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:
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 included in this news release.
Safe Harbor Statement
This press release contains forward-looking statements within the meaning of Section 27 A of the Securities Act of 1933, as amended, and Section 21 E 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 fourth-quarter 2019 guidance, our future performance, including future growth and profitability, increase in shareholder value, realization of cost reductions from restructuring activities and expected synergies, plans to reduce our outstanding debt and our corporate priorities. Actual events, performance or results could differ materially from the anticipated events, performance or results expressed or implied by such forward-looking statements. Important factors that could cause actual results to vary from expectations include, but are not limited to: our ability to respond to competitive developments and to grow our business, both domestically and internationally; changes in the cost, quality or supply of raw materials; our ability to comply with our debt obligations; our ability to successfully implement our acquisition, divestiture or restructuring strategies, including our integration of the Fluid Handling business; changes in industry standards, trade policies or government regulations, both in the United States and internationally; our ability to operate our manufacturing facilities at current or higher levels and respond to increases in manufacturing costs; and any actions of stockholders or other in response to expiration of the recent unsolicited tender offer and the cost and disruption of responding to those actions. 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 differentiated technology products and sub-systems for markets including oil & gas, industrial, aerospace & defense and commercial marine. CIRCOR has a diversified flow and motion control product portfolio with recognized, market-leading brands that fulfill its customers’ mission critical needs. For more information, visit the Company’s investor relations website at http://investors.circor.com.
CIRCOR INTERNATIONAL, INC. Preliminary Condensed Consolidated Statement of Operations (in millions, except per share data) (UNAUDITED)
Three Months Ended
September 29, 2019
September 30, 2018
Net revenues
$
237.1
$
247.2
Cost of revenues
162.6
167.1
GROSS PROFIT
74.5
80.1
Selling, general and administrative expenses
60.0
68.5
Special and restructuring charges, net
16.7
3.0
OPERATING (LOSS) INCOME
(2.3
)
8.5
Other expense (income):
Interest expense, net
11.8
14.1
Other income, net
(0.8
)
(1.6
)
LOSS FROM CONTINUING OPEARTIONS BEFORE INCOME TAXES
(13.3
)
(4.0
)
Provision for income taxes
7.5
—
Loss from continuing operations, net of tax
(20.8
)
(4.0
)
Loss from discontinued operations, net of tax
(84.7
)
(2.9
)
NET LOSS
$
(105.5
)
$
(6.8
)
Basic loss per common share:
Basic loss from continuing operations
$
(1.05
)
$
(0.20
)
Basic loss from discontinuing operations
$
(4.25
)
$
(0.14
)
Net Loss
$
(5.30
)
$
(0.34
)
Diluted loss per common share:
Diluted loss from continuing operations
$
(1.05
)
$
(0.20
)
Diluted loss from discontinuing operations
$
(4.25
)
$
(0.14
)
Net Loss
$
(5.30
)
$
(0.34
)
Weighted average number of common shares outstanding:
Basic
19.9
19.8
Diluted
19.9
19.8
Numbers may not add due to rounding.
The results presented in this press release are considered preliminary, as the Company has not completed its review procedures related to reporting discontinued operations and related impairments and associated tax effects. As the Company completes its review, material adjustments may arise between the date of this press release and the date the Company files with the SEC its Quarterly Report on Form 10-Q for the quarter ended September 29, 2019.
CIRCOR INTERNATIONAL, INC. Segment Information (in millions, except percentages) UNAUDITED
2018
2019
As Reported
1ST QTR
2ND QTR
3RD QTR
4TH QTR
TOTAL
1ST QTR
2ND QTR
3RD QTR
TOTAL
ORDERS
Energy
$
85.3
$
66.8
$
87.1
$
72.3
$
311.6
$
48.1
$
44.0
$
53.3
$
145.3
Aerospace & Defense
59.8
59.4
81.5
76.7
277.5
88.1
93.4
64.0
245.5
Industrial
136.6
136.7
114.9
121.9
510.1
123.7
120.7
105.7
350.1
Total
$
281.7
$
263.0
$
283.6
$
270.9
$
1,099.2
$
259.9
$
258.0
$
223.0
$
740.9
NET REVENUES
Energy
$
64.3
$
71.1
$
70.7
$
82.8
$
288.9
$
66.9
$
61.8
$
55.8
$
184.5
Aerospace & Defense
58.5
57.5
57.8
63.3
237.0
61.2
64.7
67.6
193.6
Industrial
117.1
131.1
118.7
120.6
487.6
110.7
119.3
113.6
343.7
Total
$
239.9
$
259.7
$
247.2
$
266.7
$
1,013.5
$
238.9
$
245.8
$
237.1
$
721.7
2018
2019
DIVESTED BUSINESSES (a)
1ST QTR
2ND QTR
3RD QTR
4TH QTR
Total
1ST QTR
2ND QTR
3RD QTR
Total
ORDERS
Energy
$
16.9
$
18.4
$
19.1
$
15.5
$
69.9
$
4.1
$
—
$
—
$
4.1
Industrial
$
9.7
$
9.8
$
7.1
$
11.4
$
38.0
$
4.1
$
5.3
$
4.8
$
14.2
NET REVENUES
Energy
$
14.7
$
17.4
$
16.6
$
16.9
$
65.6
$
3.1
$
—
$
—
$
3.1
Industrial
$
8.8
$
6.3
$
7.1
$
9.0
$
31.3
$
5.4
$
5.2
$
2.9
$
13.5
OTHER INFORMATION
Q3 2019
Q3 2018
Q3 2019
Q4 2018
BACKLOG (b)
Debt & Cash
Energy
$
59.3
$
121.6
Gross Debt
$
659.1
$
807.1
Aerospace & Defense
206.9
150.6
Cash & Equivalents
69.2
68.5
Industrial
159.1
178.0
Net Debt
$
589.9
$
738.5
Total
$
425.3
$
450.2
Numbers may not add due to rounding.
(a) Divested businesses include Reliability Services (Energy), Spence / Nicholson (Industrial) and Delden (Industrial) which were sold before September 29, 2019. Engineered Valves and Distributed Valves are discontinued operations and not reflected in the As Reported figures in accordance with US GAAP.
(b) Backlog at Q3 2018 includes $21.6 million and $15.0 million for Energy and Industrial, respectively related to divested businesses. A&D 2018 backlog has been adjusted to conform to current period reporting methodology.
CIRCOR INTERNATIONAL, INC. Segment Information (in millions) UNAUDITED
Three Months Ended
September 29, 2019
September 30, 2018
ORDERS
Energy
$
53.3
$
87.1
Aerospace & Defense
64.0
81.5
Industrial
105.7
114.9
Total orders
$
223.0
$
283.6
NET REVENUES
September 29, 2019
September 30, 2018
Energy
$
55.8
$
70.7
Aerospace & Defense
67.6
57.8
Industrial
113.6
118.7
Total
$
237.1
$
247.2
SEGMENT OPERATING INCOME
September 29, 2019
September 30, 2018
Energy
$
5.3
$
9.5
Aerospace & Defense
13.5
8.7
Industrial
14.0
14.6
Corporate expenses
(7.1
)
(7.8
)
CIRCOR Adjusted Operating Income
$
25.6
$
25.0
SEGMENT OPERATING MARGIN %
September 29, 2019
September 30, 2018
Energy
9.4
%
13.4
%
Aerospace & Defense
20.0
%
15.1
%
Industrial
12.3
%
12.3
%
CIRCOR Adjusted Operating Margin
10.8
%
10.1
%
SEGMENT OPERATING MARGIN %
EXCLUDING DIVESTITURES (a)
September 29, 2019
September 30, 2018
Energy
9.4
%
12.2
%
Aerospace & Defense
20.0
%
15.1
%
Industrial
12.6
%
12.0
%
CIRCOR
11.0
%
9.4
%
Numbers may not add due to rounding.(a) Divested businesses include Reliability Services (Energy), Spence / Nicholson (Industrial) and Delden (Industrial) which were sold before September 29, 2019. Engineered Valves and Distributed Valves are discontinued operations and not reflected in the As Reported figures in accordance with US GAAP.
CIRCOR INTERNATIONAL, INC. RECONCILIATION OF KEY PERFORMANCE MEASURES TO COMMONLY USED GENERALLY ACCEPTED ACCOUNTING PRINCIPLE TERMS (in millions, except per share data) UNAUDITED
2019
2018
3RD QTR
3RD QTR
NET (LOSS) INCOME
$
(105.5
)
$
(6.8
)
LESS:
Restructuring related inventory charges
(1.1
)
—
Amortization of inventory step-up
—
—
Restructuring charges, net
5.0
1.1
Acquisition amortization
11.2
11.7
Acquisition depreciation
1.1
1.7
Special charges, net
11.7
1.9
Income tax impact
6.8
(1.9
)
Net Income from discontinued operations
84.7
2.9
ADJUSTED NET INCOME
$
13.9
$
10.6
EARNINGS (LOSS) PER COMMON SHARE (Diluted)
$
(5.30
)
$
(0.34
)
LESS:
Restructuring related inventory charges
(0.06
)
—
Amortization of inventory step-up
—
—
Restructuring charges, net
0.25
0.05
Acquisition amortization
0.56
0.59
Acquisition depreciation
0.05
0.09
Special charges, net
0.58
0.10
Income tax impact
0.29
(0.09
)
Earnings Per Share from discontinued Operations
4.25
0.14
ADJUSTED EARNINGS PER SHARE (Diluted)
$
0.63
$
0.54
Numbers may not add due to rounding.
CIRCOR INTERNATIONAL, INC. RECONCILIATION OF KEY PERFORMANCE MEASURES TO COMMONLY USED GENERALLY ACCEPTED ACCOUNTING PRINCIPLE TERMS CONTINUED (in millions, except per share data) UNAUDITED
2019
2018
3RD QTR
3RD QTR
NET (LOSS) INCOME
$
(105.5
)
$
(6.8
)
LESS:
Interest Expense, net
(11.8
)
(14.1
)
Depreciation & Amortization
(17.2
)
(18.6
)
Benefit from (provision for) income taxes
(7.5
)
—
Loss From Discontinued Operations
(84.7
)
(2.9
)
EBITDA
15.7
28.7
LESS:
Restructuring charges, net
(5.0
)
(1.1
)
Special charges, net
(10.5
)
(1.9
)
ADJUSTED EBITDA
$
31.2
$
31.7
Numbers may not add due to rounding.
CIRCOR INTERNATIONAL, INC. RECONCILIATION OF KEY PERFORMANCE MEASURES TO COMMONLY USED GENERALLY ACCEPTED ACCOUNTING PRINCIPLE TERMS CONTINUED (in millions, except percentages) UNAUDITED
2019
2018
3RD QTR
3RD QTR
GAAP OPERATING INCOME (LOSS)
$
(2.3
)
$
8.5
LESS:
Restructuring related inventory charges
(1.1
)
—
Amortization of inventory step-up
—
—
Restructuring charges, net
5.0
1.1
Acquisition amortization
11.2
11.7
Acquisition depreciation
1.1
1.7
Special charges, net
11.7
1.9
ADJUSTED OPERATING INCOME
$
25.6
$
25.0
GAAP OPERATING MARGIN
(1.0
)%
3.5
%
LESS:
Restructuring related inventory charges
(0.5
)%
—
%
Amortization of inventory step-up
—
%
—
%
Restructuring charges, net
2.1
%
0.4
%
Acquisition amortization
4.7
%
4.7
%
Acquisition depreciation
0.5
%
0.7
%
Special charges, net
4.9
%
0.8
%
ADJUSTED OPERATING MARGIN
10.8
%
10.1
%
Impact of Divestitures (a)
0.2
%
(0.8
)%
ADJUSTED OPERATING MARGIN EXCLUDING DIVESTITURES
11.0
%
9.4
%
Numbers may not add due to rounding.(a) Divested businesses include Reliability Services (Energy), Spence / Nicholson (Industrial) and Delden (Industrial) which were sold before September 29, 2019. Engineered Valves and Distributed Valves are discontinued operations and not reflected in the As Reported figures in accordance with US GAAP.
View source version on businesswire.com: https://www.businesswire.com/news/home/20191106005516/en/
David F. Mullen Senior Vice President Finance CIRCOR International (781) 270-1200
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