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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 |
|
|
x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
|
|
|
|
Delaware
|
|
04-3477276
|
(State or Other Jurisdiction of
Incorporation or Organization)
|
|
(I.R.S. Employer
Identification No.)
|
|
|
|
c/o CIRCOR INTERNATIONAL, Inc.
30 Corporate Drive, Suite 200, Burlington, MA
|
|
01803-4238
|
(Address of principal executive offices)
|
|
(Zip Code)
|
|
Large accelerated filer
|
x
|
|
Accelerated filer
|
o
|
Emerging growth company
|
o
|
Non-accelerated filer
|
o
|
|
Smaller reporting company
|
o
|
|
|
|
Page
|
|
Financial Statements
(Unaudited)
|
||
|
Condensed Consolidated Balance Sheets as of September 30, 2018 and December 31, 2017
|
|
|
Condensed Consolidated Statements of (Loss) Income for the Three and Nine Months Ended September 30, 2018 and October 1, 2017
|
|
|
Condensed Consolidated Statements of Comprehensive (Loss) Income for the Three and Nine Months Ended September 30, 2018 and October 1, 2017
|
|
|
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2018 and October 1, 2017
|
|
|
||
Item
6.
|
||
ITEM 1.
|
FINANCIAL STATEMENTS
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
ASSETS
|
|
|
|
||||
CURRENT ASSETS:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
71,334
|
|
|
$
|
110,356
|
|
Trade accounts receivable, less allowance for doubtful accounts of $6,965 and $4,791 at September 30, 2018 and December 31, 2017, respectively
|
192,110
|
|
|
223,922
|
|
||
Inventories
|
226,047
|
|
|
244,896
|
|
||
Restricted cash
|
919
|
|
|
1,937
|
|
||
Prepaid expenses and other current assets
|
84,265
|
|
|
57,282
|
|
||
Total Current Assets
|
574,675
|
|
|
638,393
|
|
||
PROPERTY, PLANT AND EQUIPMENT, NET
|
215,206
|
|
|
217,539
|
|
||
OTHER ASSETS:
|
|
|
|
||||
Goodwill
|
504,638
|
|
|
505,762
|
|
||
Intangibles, net
|
470,722
|
|
|
513,364
|
|
||
Deferred income taxes
|
33,130
|
|
|
22,334
|
|
||
Other assets
|
14,479
|
|
|
9,407
|
|
||
TOTAL ASSETS
|
$
|
1,812,850
|
|
|
$
|
1,906,799
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
||||
CURRENT LIABILITIES:
|
|
|
|
||||
Accounts payable
|
$
|
111,400
|
|
|
$
|
117,329
|
|
Accrued expenses and other current liabilities
|
108,031
|
|
|
170,454
|
|
||
Accrued compensation and benefits
|
30,827
|
|
|
34,734
|
|
||
Total Current Liabilities
|
250,258
|
|
|
322,517
|
|
||
LONG-TERM DEBT
|
802,069
|
|
|
787,343
|
|
||
DEFERRED INCOME TAXES
|
25,397
|
|
|
26,122
|
|
||
PENSION LIABILITY, NET
|
142,067
|
|
|
150,719
|
|
||
OTHER NON-CURRENT LIABILITIES
|
18,888
|
|
|
18,124
|
|
||
COMMITMENTS AND CONTINGENCIES (NOTE 10)
|
|
|
|
||||
SHAREHOLDERS’ EQUITY:
|
|
|
|
||||
Preferred stock, $0.01 par value; 1,000,000 shares authorized; no shares issued and outstanding
|
—
|
|
|
—
|
|
||
Common stock, $0.01 par value; 29,000,000 shares authorized; 19,843,533 and 19,785,298 shares issued and outstanding at September 30, 2018 and December 31, 2017, respectively
|
212
|
|
|
212
|
|
||
Additional paid-in capital
|
443,984
|
|
|
438,721
|
|
||
Retained earnings
|
253,107
|
|
|
274,243
|
|
||
Common treasury stock, at cost (1,372,488 shares at September 30, 2018 and December 31, 2017)
|
(74,472
|
)
|
|
(74,472
|
)
|
||
Accumulated other comprehensive loss, net of tax
|
(48,660
|
)
|
|
(36,730
|
)
|
||
Total Shareholders’ Equity
|
574,171
|
|
|
601,974
|
|
||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
|
$
|
1,812,850
|
|
|
$
|
1,906,799
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30, 2018
|
|
October 1, 2017
|
|
September 30, 2018
|
|
October 1, 2017
|
||||||||
Net revenues
|
$
|
297,514
|
|
|
$
|
159,693
|
|
|
$
|
874,462
|
|
|
$
|
456,131
|
|
Cost of revenues
|
212,436
|
|
|
112,390
|
|
|
624,829
|
|
|
314,527
|
|
||||
GROSS PROFIT
|
85,078
|
|
|
47,303
|
|
|
249,633
|
|
|
141,604
|
|
||||
Selling, general and administrative expenses
|
74,106
|
|
|
38,120
|
|
|
229,343
|
|
|
116,425
|
|
||||
Special and restructuring charges (recoveries), net
|
2,756
|
|
|
2,319
|
|
|
17,202
|
|
|
(443
|
)
|
||||
OPERATING INCOME
|
8,216
|
|
|
6,864
|
|
|
3,088
|
|
|
25,622
|
|
||||
Other expense (income):
|
|
|
|
|
|
|
|
||||||||
Interest expense, net
|
14,100
|
|
|
2,445
|
|
|
39,656
|
|
|
6,298
|
|
||||
Other (income) expense, net
|
(1,580
|
)
|
|
823
|
|
|
(7,200
|
)
|
|
2,022
|
|
||||
TOTAL OTHER EXPENSE, NET
|
12,520
|
|
|
3,268
|
|
|
32,456
|
|
|
8,320
|
|
||||
(LOSS) INCOME BEFORE INCOME TAXES
|
(4,304
|
)
|
|
3,596
|
|
|
(29,368
|
)
|
|
17,302
|
|
||||
Provision for (benefit from) income taxes
|
2,537
|
|
|
(21
|
)
|
|
(10,988
|
)
|
|
(57
|
)
|
||||
NET (LOSS) INCOME
|
$
|
(6,841
|
)
|
|
$
|
3,617
|
|
|
$
|
(18,380
|
)
|
|
$
|
17,359
|
|
(Loss) Earnings per common share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
(0.34
|
)
|
|
$
|
0.22
|
|
|
$
|
(0.93
|
)
|
|
$
|
1.05
|
|
Diluted
|
$
|
(0.34
|
)
|
|
$
|
0.22
|
|
|
$
|
(0.93
|
)
|
|
$
|
1.04
|
|
Weighted average number of common shares outstanding:
|
|
|
|
|
|
|
|
||||||||
Basic
|
19,843
|
|
|
16,503
|
|
|
19,829
|
|
|
16,486
|
|
||||
Diluted
|
19,843
|
|
|
16,709
|
|
|
19,829
|
|
|
16,721
|
|
||||
Dividends declared per common share
|
$
|
—
|
|
|
$
|
0.0375
|
|
|
$
|
—
|
|
|
$
|
0.1125
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30, 2018
|
|
October 1, 2017
|
|
September 30, 2018
|
|
October 1, 2017
|
||||||||
Net (loss) income
|
$
|
(6,841
|
)
|
|
$
|
3,617
|
|
|
$
|
(18,380
|
)
|
|
$
|
17,359
|
|
Other comprehensive (loss) income, net of tax:
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustments
|
3,128
|
|
|
9,510
|
|
|
(15,380
|
)
|
|
28,091
|
|
||||
Interest rate swap adjustments
|
2,224
|
|
|
—
|
|
|
3,449
|
|
|
—
|
|
||||
COMPREHENSIVE (LOSS) INCOME
|
$
|
(1,489
|
)
|
|
$
|
13,127
|
|
|
$
|
(30,311
|
)
|
|
$
|
45,450
|
|
|
Nine Months Ended
|
||||||
OPERATING ACTIVITIES
|
September 30, 2018
|
|
October 1, 2017
|
||||
Net (loss) income
|
$
|
(18,380
|
)
|
|
$
|
17,359
|
|
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation
|
21,556
|
|
|
10,889
|
|
||
Amortization
|
36,845
|
|
|
9,491
|
|
||
Bad debt expense
|
1,078
|
|
|
265
|
|
||
Loss on write down of inventory
|
4,632
|
|
|
1,463
|
|
||
Amortization of inventory fair value step-up
|
6,600
|
|
|
—
|
|
||
Compensation expense for share-based plans
|
4,303
|
|
|
2,696
|
|
||
Change in fair value of contingent consideration
|
—
|
|
|
(12,200
|
)
|
||
Amortization of debt issuance costs
|
2,852
|
|
|
—
|
|
||
Loss on sale or write-down of property, plant and equipment
|
1,305
|
|
|
87
|
|
||
Loss on sale of business
|
—
|
|
|
5,300
|
|
||
Trade accounts receivable
|
21,510
|
|
|
8,782
|
|
||
Inventories
|
4,463
|
|
|
(29,703
|
)
|
||
Prepaid expenses and other assets
|
(31,034
|
)
|
|
(11,424
|
)
|
||
Accounts payable, accrued expenses and other liabilities
|
(32,267
|
)
|
|
(997
|
)
|
||
Net cash provided by operating activities
|
23,463
|
|
|
2,008
|
|
||
INVESTING ACTIVITIES
|
|
|
|
||||
Additions to property, plant and equipment
|
(17,030
|
)
|
|
(7,773
|
)
|
||
Proceeds from the sale of property, plant and equipment
|
207
|
|
|
269
|
|
||
Business acquisition, working capital consideration adjustment
|
6,300
|
|
|
1,467
|
|
||
Net cash used in investing activities
|
(10,523
|
)
|
|
(6,037
|
)
|
||
FINANCING ACTIVITIES
|
|
|
|
||||
Proceeds from long-term debt
|
199,600
|
|
|
378,263
|
|
||
Payments of long-term debt
|
(186,874
|
)
|
|
(361,325
|
)
|
||
Debt issuance costs
|
—
|
|
|
(727
|
)
|
||
Dividends paid
|
—
|
|
|
(1,879
|
)
|
||
Proceeds from the exercise of stock options
|
690
|
|
|
707
|
|
||
Return of cash to seller
|
(61,201
|
)
|
|
—
|
|
||
Net cash (used in) provided by financing activities
|
(47,785
|
)
|
|
15,039
|
|
||
Effect of exchange rate changes on cash, cash equivalents and restricted cash
|
(5,154
|
)
|
|
6,338
|
|
||
(DECREASE) INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH
|
(39,999
|
)
|
|
17,348
|
|
||
Cash, cash equivalents, and restricted cash at beginning of period
|
112,293
|
|
|
58,279
|
|
||
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF PERIOD
|
$
|
72,294
|
|
|
$
|
75,627
|
|
Non-cash investing activities:
|
|
|
|
||||
Purchases of property and equipment included in accounts payable and accrued expenses
|
$
|
1,574
|
|
|
$
|
1,400
|
|
|
|
September 30, 2018
|
||||||
|
Three Months Ended
|
|
Nine Months Ended
|
|||||
Energy Segment
|
|
|
|
|||||
|
Oil & Gas - Upstream, Midstream & Other
|
$
|
63,810
|
|
|
$
|
166,688
|
|
|
Oil & Gas - Downstream
|
57,213
|
|
|
167,110
|
|
||
|
Total
|
121,023
|
|
|
333,798
|
|
||
Aerospace & Defense Segment
|
|
|
|
|||||
|
Commercial Aerospace & Other
|
28,571
|
|
|
81,420
|
|
||
|
Defense
|
29,186
|
|
|
92,314
|
|
||
|
Total
|
57,757
|
|
|
173,734
|
|
||
Industrial Segment
|
|
|
|
|||||
|
Pumps & Valves EMEA
|
74,193
|
|
|
240,415
|
|
||
|
Pumps & Valves North America
|
44,541
|
|
|
126,515
|
|
||
|
Total
|
118,734
|
|
|
366,930
|
|
||
Net Revenue
|
$
|
297,514
|
|
|
$
|
874,462
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
Raw materials
|
$
|
79,321
|
|
|
$
|
82,372
|
|
Work in process
|
109,591
|
|
|
121,709
|
|
||
Finished goods
|
37,135
|
|
|
40,815
|
|
||
Total inventories
|
$
|
226,047
|
|
|
$
|
244,896
|
|
|
Original Estimate
|
Measurement Period Adjustment
|
Fair Value
|
|
Weighted average amortization period (in years)
|
||||||
Customer relationships
|
$
|
215,000
|
|
$
|
(7,000
|
)
|
$
|
208,000
|
|
|
19
|
Acquired technologies
|
107,000
|
|
6,000
|
|
113,000
|
|
|
20
|
|||
Trade names
|
44,000
|
|
2,000
|
|
46,000
|
|
|
Indefinite-life
|
|||
Backlog
|
22,000
|
|
(6,000
|
)
|
16,000
|
|
|
4
|
|||
Total intangible assets
|
$
|
388,000
|
|
$
|
(5,000
|
)
|
$
|
383,000
|
|
|
|
|
Energy
|
|
Aerospace & Defense
|
|
Industrial
|
|
Total
|
||||||||
Goodwill as of December 31, 2017
|
$
|
154,058
|
|
|
$
|
62,548
|
|
|
$
|
289,156
|
|
|
$
|
505,762
|
|
Adjustments to preliminary purchase price allocation
|
(5,479
|
)
|
|
(6,050
|
)
|
|
16,317
|
|
|
4,788
|
|
||||
Currency translation adjustments
|
(1,440
|
)
|
|
(33
|
)
|
|
(4,439
|
)
|
|
(5,912
|
)
|
||||
Goodwill as of September 30, 2018
|
$
|
147,139
|
|
|
$
|
56,465
|
|
|
$
|
301,034
|
|
|
$
|
504,638
|
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
||||
Patents
|
$
|
5,399
|
|
|
$
|
(5,399
|
)
|
Customer relationships
|
311,846
|
|
|
(54,971
|
)
|
||
Backlog
|
23,494
|
|
|
(15,457
|
)
|
||
Acquired technology
|
141,305
|
|
|
(21,401
|
)
|
||
Other
|
5,258
|
|
|
(4,882
|
)
|
||
Total Amortized Assets
|
$
|
487,302
|
|
|
$
|
(102,110
|
)
|
|
|
|
|
||||
Non-amortized intangibles (primarily trademarks and trade names)
|
$
|
85,530
|
|
|
$
|
—
|
|
Total Non-Amortized Intangibles
|
$
|
85,530
|
|
|
$
|
—
|
|
|
|
|
|
||||
Net carrying value of intangible assets
|
$
|
470,722
|
|
|
|
|
Remainder of 2018
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
After 2022
|
||||||||||||
Estimated amortization expense
|
$
|
12,248
|
|
|
$
|
49,851
|
|
|
$
|
45,742
|
|
|
$
|
43,574
|
|
|
$
|
38,161
|
|
|
$
|
195,616
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30, 2018
|
|
October 1, 2017
|
|
September 30, 2018
|
|
|
October 1, 2017
|
|
||||||
Net revenues
|
|
|
|
|
|
|
|
||||||||
Energy
|
$
|
121,023
|
|
|
$
|
88,569
|
|
|
$
|
333,799
|
|
|
$
|
243,055
|
|
Aerospace & Defense
|
57,757
|
|
|
41,117
|
|
|
173,734
|
|
|
126,022
|
|
||||
Industrial
|
118,734
|
|
|
30,007
|
|
|
366,929
|
|
|
87,054
|
|
||||
Consolidated net revenues
|
$
|
297,514
|
|
|
$
|
159,693
|
|
|
$
|
874,462
|
|
|
$
|
456,131
|
|
|
|
|
|
|
|
|
|
||||||||
(Loss) Income from operations before income taxes
|
|
|
|
|
|
|
|
||||||||
Energy - Segment Operating Income
|
$
|
9,163
|
|
|
$
|
6,936
|
|
|
$
|
24,101
|
|
|
$
|
21,512
|
|
Aerospace & Defense - Segment Operating Income
|
8,709
|
|
|
4,333
|
|
|
24,631
|
|
|
12,492
|
|
||||
Industrial - Segment Operating Income
|
14,609
|
|
|
5,675
|
|
|
42,592
|
|
|
14,960
|
|
||||
Corporate expenses
|
(8,034
|
)
|
|
(5,067
|
)
|
|
(22,284
|
)
|
|
(15,942
|
)
|
||||
Subtotal
|
24,447
|
|
|
11,877
|
|
|
69,040
|
|
|
33,022
|
|
||||
Restructuring charges, net
|
1,348
|
|
|
341
|
|
|
11,807
|
|
|
5,366
|
|
||||
Special charges (recoveries), net
|
1,408
|
|
|
1,978
|
|
|
5,395
|
|
|
(5,809
|
)
|
||||
Special and restructuring charges (recoveries), net
|
2,756
|
|
|
2,319
|
|
|
17,202
|
|
|
(443
|
)
|
||||
Restructuring related inventory charges
|
—
|
|
|
—
|
|
|
1,538
|
|
|
—
|
|
||||
Amortization of inventory step-up
|
—
|
|
|
—
|
|
|
6,600
|
|
|
—
|
|
||||
Acquisition amortization
|
11,734
|
|
|
2,694
|
|
|
35,299
|
|
|
7,843
|
|
||||
Acquisition depreciation of fixed assets step-up
|
1,742
|
|
|
—
|
|
|
5,314
|
|
|
—
|
|
||||
Acquisition amortization and other costs, net
|
13,476
|
|
|
2,694
|
|
|
48,751
|
|
|
7,843
|
|
||||
Consolidated Operating Income
|
8,216
|
|
|
6,864
|
|
|
3,088
|
|
|
25,622
|
|
||||
Interest expense, net
|
14,100
|
|
|
2,445
|
|
|
39,656
|
|
|
6,298
|
|
||||
Other (income) expense, net
|
(1,580
|
)
|
|
823
|
|
|
(7,200
|
)
|
|
2,022
|
|
||||
(Loss) Income from operations before income taxes
|
$
|
(4,304
|
)
|
|
$
|
3,596
|
|
|
$
|
(29,368
|
)
|
|
$
|
17,302
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30, 2018
|
|
|
October 1, 2017
|
|
|
September 30, 2018
|
|
|
October 1, 2017
|
|
||||
Capital expenditures
|
|
|
|
|
|
|
|
||||||||
Energy
|
$
|
2,572
|
|
|
$
|
1,202
|
|
|
$
|
6,852
|
|
|
$
|
2,699
|
|
Aerospace & Defense
|
1,320
|
|
|
909
|
|
|
3,161
|
|
|
2,379
|
|
||||
Industrial
|
910
|
|
|
901
|
|
|
6,760
|
|
|
2,035
|
|
||||
Corporate
|
187
|
|
|
39
|
|
|
574
|
|
|
782
|
|
||||
Consolidated capital expenditures
|
$
|
4,989
|
|
|
$
|
3,051
|
|
|
$
|
17,347
|
|
|
$
|
7,895
|
|
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization
|
|
|
|
|
|
|
|
||||||||
Energy
|
$
|
4,061
|
|
|
$
|
3,147
|
|
|
$
|
12,408
|
|
|
$
|
9,342
|
|
Aerospace & Defense
|
2,716
|
|
|
1,073
|
|
|
8,244
|
|
|
3,253
|
|
||||
Industrial
|
12,337
|
|
|
2,266
|
|
|
37,158
|
|
|
6,765
|
|
||||
Corporate
|
171
|
|
|
328
|
|
|
592
|
|
|
1,022
|
|
||||
Consolidated depreciation and amortization
|
$
|
19,285
|
|
|
$
|
6,814
|
|
|
$
|
58,402
|
|
|
$
|
20,382
|
|
|
|
|
|
|
|
|
|
||||||||
Identifiable assets
|
September 30, 2018
|
|
December 31, 2017
|
|
|
|
|
||||||||
Energy
|
$
|
905,708
|
|
|
$
|
837,492
|
|
|
|
|
|
||||
Aerospace & Defense
|
642,431
|
|
|
375,094
|
|
|
|
|
|
||||||
Industrial
|
1,020,849
|
|
|
1,408,217
|
|
|
|
|
|
||||||
Corporate
|
(756,138
|
)
|
|
(714,004
|
)
|
|
|
|
|
||||||
Consolidated identifiable assets
|
$
|
1,812,850
|
|
|
$
|
1,906,799
|
|
|
|
|
|
•
|
Level One
: Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets.
|
•
|
Level Two
: Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in inactive markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
|
•
|
Level Three
: Inputs to the valuation methodology are unobservable and significant to the fair value measurement.
|
|
Significant Other Observable Inputs
|
||
|
Level 2
|
||
|
|
||
Current Liabilities
|
$
|
(102
|
)
|
Derivative Assets
|
3,449
|
|
|
Total Financial Instruments
|
$
|
3,347
|
|
Balance beginning December 31, 2017
|
$
|
4,623
|
|
Provisions
|
1,488
|
|
|
Claims settled
|
(1,570
|
)
|
|
Currency translation adjustment
|
(57
|
)
|
|
Balance ending September 30, 2018
|
$
|
4,484
|
|
Term Remaining
|
Maximum Potential
Future Payments
|
||
0–12 months
|
$
|
38,741
|
|
Greater than 12 months
|
31,245
|
|
|
Total
|
$
|
69,986
|
|
|
September 30, 2018
|
|
October 1, 2017
|
||
Risk-free interest rate
|
2.5
|
%
|
|
1.7
|
%
|
Expected life (years)
|
4.4
|
|
|
4.5
|
|
Expected stock volatility
|
37.2
|
%
|
|
35.1
|
%
|
Expected dividend yield
|
—
|
%
|
|
0.3
|
%
|
|
Foreign Currency Translation Adjustments
|
|
Pension, net
|
|
Derivative
|
|
Total
|
||||||||
Balance as of December 31, 2017
|
$
|
(28,584
|
)
|
|
$
|
(8,146
|
)
|
|
$
|
—
|
|
|
$
|
(36,730
|
)
|
Other comprehensive income
|
(15,380
|
)
|
|
—
|
|
|
3,449
|
|
|
(11,930
|
)
|
||||
Balance as of September 30, 2018
|
$
|
(43,964
|
)
|
|
$
|
(8,146
|
)
|
|
$
|
3,449
|
|
|
$
|
(48,660
|
)
|
(in thousands, except per share amounts)
|
Three Months Ended
|
||||||||||||||||||||
|
September 30, 2018
|
|
October 1, 2017
|
||||||||||||||||||
|
Net
Income
|
|
Shares
|
|
Per Share
Amount
|
|
Net
Income
|
|
Shares
|
|
Per Share
Amount
|
||||||||||
Basic EPS
|
$
|
(6,841
|
)
|
|
19,843
|
|
|
$
|
(0.34
|
)
|
|
$
|
3,617
|
|
|
16,503
|
|
|
$
|
0.22
|
|
Dilutive securities, common stock options
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
206
|
|
|
—
|
|
||||
Diluted EPS
|
$
|
(6,841
|
)
|
|
19,843
|
|
|
$
|
(0.34
|
)
|
|
$
|
3,617
|
|
|
16,709
|
|
|
$
|
0.22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Nine Months Ended
|
||||||||||||||||||||
|
September 30, 2018
|
|
October 1, 2017
|
||||||||||||||||||
|
Net
Loss
|
|
Shares
|
|
Per Share
Amount
|
|
Net
Income
|
|
Shares
|
|
Per Share
Amount
|
||||||||||
Basic EPS
|
$
|
(18,380
|
)
|
|
19,829
|
|
|
$
|
(0.93
|
)
|
|
$
|
17,359
|
|
|
16,486
|
|
|
$
|
1.05
|
|
Dilutive securities, common stock options
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
235
|
|
|
(0.01
|
)
|
||||
Diluted EPS
|
$
|
(18,380
|
)
|
|
19,829
|
|
|
$
|
(0.93
|
)
|
|
$
|
17,359
|
|
|
16,721
|
|
|
$
|
1.04
|
|
|
Special & Restructuring Charges (Recoveries), net
|
||||||||||||||
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30, 2018
|
|
|
October 1, 2017
|
|
September 30, 2018
|
|
|
October 1, 2017
|
|
|||||
Special charges (recoveries), net
|
$
|
1,408
|
|
|
$
|
1,978
|
|
|
$
|
5,395
|
|
|
$
|
(5,809
|
)
|
Restructuring charges, net
|
1,348
|
|
|
341
|
|
|
11,807
|
|
|
5,366
|
|
||||
Total special and restructuring charges (recoveries), net
|
$
|
2,756
|
|
|
$
|
2,319
|
|
|
$
|
17,202
|
|
|
$
|
(443
|
)
|
|
Special Charges, net
|
||||||||||||||||||
|
For the three months ended September 30, 2018
|
||||||||||||||||||
|
Energy
|
|
Aerospace & Defense
|
|
Industrial
|
|
Corporate
|
|
Total
|
||||||||||
Brazil closure
|
$
|
198
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
198
|
|
Acquisition related charges
|
—
|
|
|
—
|
|
|
—
|
|
|
1,210
|
|
|
1,210
|
|
|||||
Total special charges, net
|
$
|
198
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,210
|
|
|
$
|
1,408
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Special Charges, net
|
||||||||||||||||||
|
For the nine months ended September 30, 2018
|
||||||||||||||||||
|
Energy
|
|
Aerospace & Defense
|
|
Industrial
|
|
Corporate
|
|
Total
|
||||||||||
Brazil closure
|
$
|
730
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
730
|
|
Acquisition related charges
|
—
|
|
|
—
|
|
|
—
|
|
|
4,665
|
|
|
4,665
|
|
|||||
Total special charges, net
|
$
|
730
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,665
|
|
|
$
|
5,395
|
|
•
|
On October 12, 2016, we acquired Critical Flow Solutions ("CFS"). In connection with our acquisition, we recorded
$0.1 million
of acquisition related professional fees during the nine months ended October 1, 2017. No CFS professional fees were recorded during the three months ended October 1, 2017.
|
•
|
On September 24, 2017, we entered into the Purchase Agreement to purchase FH. In connection with the Purchase Agreement, we recorded
$1.8 million
of acquisition related professional fees, primarily for legal services, during the three and nine months ended October 1, 2017.
|
|
Restructuring Charges
|
||||||||||||||||||
|
As of and for the three months ended September 30, 2018
|
||||||||||||||||||
|
Energy
|
|
Aerospace & Defense
|
|
Industrial
|
|
Corporate
|
|
Total
|
||||||||||
Facility related expenses
|
$
|
708
|
|
|
$
|
60
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
768
|
|
Employee related expenses, net
|
300
|
|
|
—
|
|
|
280
|
|
|
—
|
|
|
580
|
|
|||||
Total restructuring charges, net
|
$
|
1,008
|
|
|
$
|
60
|
|
|
$
|
280
|
|
|
$
|
—
|
|
|
$
|
1,348
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Accrued restructuring charges as of July 1, 2018
|
|
|
|
|
|
|
|
|
$
|
1,547
|
|
||||||||
Total quarter to date charges, net (shown above)
|
|
|
|
|
|
|
|
|
1,348
|
|
|||||||||
Charges paid / settled, net
|
|
|
|
|
|
|
|
|
(342
|
)
|
|||||||||
Accrued restructuring charges as of September 30, 2018
|
|
|
|
|
|
|
|
|
$
|
1,006
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Restructuring Charges
|
||||||||||||||||||
|
As of and for the nine months ended September 30, 2018
|
||||||||||||||||||
|
Energy
|
|
Aerospace & Defense
|
|
Industrial
|
|
Corporate
|
|
Total
|
||||||||||
Facility related expenses
|
$
|
2,380
|
|
|
$
|
190
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,570
|
|
Employee related expenses, net
|
7,748
|
|
|
—
|
|
|
1,489
|
|
|
—
|
|
|
9,237
|
|
|||||
Total restructuring charges, net
|
$
|
10,128
|
|
|
$
|
190
|
|
|
$
|
1,489
|
|
|
$
|
—
|
|
|
$
|
11,807
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Accrued restructuring charges as of December 31, 2017
|
|
|
|
|
|
|
|
|
$
|
1,586
|
|
||||||||
Total year to date charges, net (shown above)
|
|
|
|
|
|
|
|
|
11,807
|
|
|||||||||
Charges paid / settled, net
|
|
|
|
|
|
|
|
|
(12,387
|
)
|
|||||||||
Accrued restructuring charges as of September 30, 2018
|
|
|
|
|
|
|
|
|
$
|
1,006
|
|
|
Restructuring Charges, net
|
||||||||||||||||||
|
As of and for the three months ended October 1, 2017
|
||||||||||||||||||
|
Energy
|
|
Aerospace & Defense
|
|
Industrial
|
|
Corporate
|
|
Total
|
||||||||||
Facility related expenses
|
$
|
227
|
|
|
$
|
165
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
392
|
|
Employee related (recoveries) expenses
|
(89
|
)
|
|
38
|
|
|
—
|
|
|
—
|
|
|
(51
|
)
|
|||||
Total restructuring charges, net
|
$
|
138
|
|
|
$
|
203
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
341
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Accrued restructuring charges as of July 2, 2017
|
|
|
|
|
|
|
|
|
$
|
2,118
|
|
||||||||
Total quarter to date charges, net (shown above)
|
|
|
|
|
|
|
|
|
341
|
|
|||||||||
Charges paid / settled, net
|
|
|
|
|
|
|
|
|
(592
|
)
|
|||||||||
Accrued restructuring charges as of October 1, 2017
|
|
|
|
|
|
|
|
|
$
|
1,867
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Restructuring Charges, net
|
||||||||||||||||||
|
As of and for the nine months ended October 1, 2017
|
||||||||||||||||||
|
Energy
|
|
Aerospace & Defense
|
|
Industrial
|
|
Corporate
|
|
Total
|
||||||||||
Facility related expenses
|
$
|
2,221
|
|
|
$
|
497
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,718
|
|
Employee related expenses
|
886
|
|
|
1,762
|
|
|
—
|
|
|
—
|
|
|
2,648
|
|
|||||
Total restructuring charges, net
|
$
|
3,107
|
|
|
$
|
2,259
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,366
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Accrued restructuring charges as of December 31, 2016
|
|
|
|
|
|
|
|
|
$
|
1,618
|
|
||||||||
Total year to date charges, net (shown above)
|
|
|
|
|
|
|
|
|
5,366
|
|
|||||||||
Charges paid / settled, net
|
|
|
|
|
|
|
|
|
(5,117
|
)
|
|||||||||
Accrued restructuring charges as of October 1, 2017
|
|
|
|
|
|
|
|
|
$
|
1,867
|
|
|
2018 Actions Restructuring Charges, net as of September 30, 2018
|
||||||||||||||||||
|
Energy
|
|
Aerospace & Defense
|
|
Industrial
|
|
Corporate
|
|
Total
|
||||||||||
Facility related expenses - incurred to date
|
$
|
2,091
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,091
|
|
Employee related expenses - incurred to date
|
7,491
|
|
|
—
|
|
|
1,464
|
|
|
—
|
|
|
8,955
|
|
|||||
Total restructuring related special charges - incurred to date
|
$
|
9,582
|
|
|
$
|
—
|
|
|
$
|
1,464
|
|
|
$
|
—
|
|
|
$
|
11,046
|
|
ITEM 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
|
Three Months Ended
|
|
|
|
|
|
|
|
|
||||||||||||||
(in thousands)
|
September 30, 2018
|
|
October 1, 2017
|
|
Total
Change
|
|
Acquisitions
|
|
Operations
|
|
Foreign
Exchange
|
||||||||||||
Net Revenues
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Energy
|
$
|
121,023
|
|
|
$
|
88,569
|
|
|
$
|
32,454
|
|
|
$
|
16,579
|
|
|
$
|
16,186
|
|
|
$
|
(311
|
)
|
Aerospace & Defense
|
57,757
|
|
|
41,117
|
|
|
16,640
|
|
|
10,862
|
|
|
5,935
|
|
|
(157
|
)
|
||||||
Industrial
|
118,734
|
|
|
30,007
|
|
|
88,727
|
|
|
89,280
|
|
|
(307
|
)
|
|
(246
|
)
|
||||||
Consolidated Net Revenues
|
$
|
297,514
|
|
|
$
|
159,693
|
|
|
$
|
137,821
|
|
|
$
|
116,721
|
|
|
$
|
21,814
|
|
|
$
|
(714
|
)
|
|
Three Months Ended
|
|
|
||||||||
(in thousands, except percentages)
|
September 30, 2018
|
|
October 1, 2017
|
|
Change
|
||||||
Net Revenues
|
$
|
121,023
|
|
|
$
|
88,569
|
|
|
$
|
32,454
|
|
Segment Operating Income
|
9,163
|
|
|
6,936
|
|
|
2,227
|
|
|||
Segment Operating Margin
|
7.6
|
%
|
|
7.8
|
%
|
|
|
|
Three Months Ended
|
|
|
||||||||
(in thousands, except percentages)
|
September 30, 2018
|
|
October 1, 2017
|
|
Change
|
||||||
Net Revenues
|
$
|
57,757
|
|
|
$
|
41,117
|
|
|
$
|
16,640
|
|
Segment Operating Income
|
8,709
|
|
|
4,333
|
|
|
4,376
|
|
|||
Segment Operating Margin
|
15.1
|
%
|
|
10.5
|
%
|
|
|
|
Three Months Ended
|
|
|
|||||||
(in thousands, except percentages)
|
September 30, 2018
|
|
October 1, 2017
|
|
Change
|
|||||
Net Revenues
|
$
|
118,734
|
|
|
30,007
|
|
|
$
|
88,727
|
|
Segment Operating Income
|
14,609
|
|
|
5,675
|
|
|
8,934
|
|
||
Segment Operating Margin
|
12.3
|
%
|
|
18.9
|
%
|
|
|
|
Three months ended
|
||||||
|
September 30, 2018
|
|
October 1, 2017
|
||||
(LOSS) INCOME BEFORE INCOME TAXES
|
$
|
(4,304
|
)
|
|
$
|
3,596
|
|
|
|
|
|
||||
U.S. tax rate
|
21.0
|
%
|
|
35.0
|
%
|
||
State taxes
|
(16.6
|
)%
|
|
1
|
%
|
||
U.S. permanent differences
|
(49.7
|
)%
|
|
(2.3
|
)%
|
||
Foreign Tax rate differential
|
50.9
|
%
|
|
(2.4
|
)%
|
||
Unbenefited foreign losses
|
(4.6
|
)%
|
|
0.3
|
%
|
||
Global Intangible Low-Taxed Income impact
|
15.8
|
%
|
|
—
|
%
|
||
Intercompany financing
|
(81.5
|
)%
|
|
(1.4
|
)%
|
||
Reversal of tax reserve
|
(0.1
|
)%
|
|
(31.4
|
)%
|
||
Other
|
5.9
|
%
|
|
0.6
|
%
|
||
Effective tax rate
|
(58.9
|
)%
|
|
(0.6
|
)%
|
||
|
|
|
|
||||
(Provision for)/ Benefit from income taxes
|
$
|
(2,537
|
)
|
|
$
|
20
|
|
|
Nine Months Ended
|
|
|
|
|
|
|
|
|
||||||||||||||
(in thousands)
|
September 30, 2018
|
|
October 1, 2017
|
|
Total
Change
|
|
Acquisitions
|
|
Operations
|
|
Foreign
Exchange
|
||||||||||||
Net Revenues
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Energy
|
$
|
333,799
|
|
|
$
|
243,055
|
|
|
$
|
90,744
|
|
|
$
|
48,728
|
|
|
$
|
38,704
|
|
|
$
|
3,312
|
|
Aerospace & Defense
|
173,734
|
|
|
126,022
|
|
|
47,712
|
|
|
36,345
|
|
|
8,311
|
|
|
3,056
|
|
||||||
Industrial
|
366,929
|
|
|
87,054
|
|
|
279,875
|
|
|
279,335
|
|
|
(2,051
|
)
|
|
2,591
|
|
||||||
Consolidated Net Revenues
|
$
|
874,462
|
|
|
$
|
456,131
|
|
|
$
|
418,331
|
|
|
$
|
364,408
|
|
|
$
|
44,964
|
|
|
$
|
8,959
|
|
(in thousands, except percentages)
|
Nine Months Ended
|
||||||
|
September 30, 2018
|
|
October 1, 2017
|
||||
Net revenues
|
|
|
|
||||
Energy
|
$
|
333,799
|
|
|
$
|
243,055
|
|
Aerospace & Defense
|
173,734
|
|
|
126,022
|
|
||
Industrial
|
366,929
|
|
|
87,054
|
|
||
Consolidated net revenues
|
$
|
874,462
|
|
|
$
|
456,131
|
|
|
|
|
|
||||
(Loss) Income from operations before income taxes
|
|
|
|
||||
Energy - Segment Operating Income
|
$
|
24,101
|
|
|
$
|
21,512
|
|
Aerospace & Defense - Segment Operating Income
|
24,631
|
|
|
12,492
|
|
||
Industrial - Segment Operating Income
|
42,592
|
|
|
14,960
|
|
||
Corporate expenses
|
(22,284
|
)
|
|
(15,942
|
)
|
||
Subtotal
|
69,040
|
|
|
33,022
|
|
||
Restructuring charges, net
|
11,807
|
|
|
5,366
|
|
||
Special charges (recoveries), net
|
5,395
|
|
|
(5,809
|
)
|
||
Special and restructuring charges (recoveries), net (1)
|
17,202
|
|
|
(443
|
)
|
||
Restructuring related inventory charges (1)
|
1,538
|
|
|
—
|
|
||
Amortization of inventory step-up
|
6,600
|
|
|
—
|
|
||
Acquisition amortization (2)
|
35,299
|
|
|
7,843
|
|
||
Acquisition depreciation (2)
|
5,314
|
|
|
—
|
|
||
Acquisition amortization and other costs, net
|
48,751
|
|
|
7,843
|
|
||
Consolidated Operating Income
|
3,088
|
|
|
25,622
|
|
||
Interest expense, net
|
39,656
|
|
|
6,298
|
|
||
Other (income) expense, net
|
(7,200
|
)
|
|
2,022
|
|
||
(Loss) income from operations before income taxes
|
$
|
(29,368
|
)
|
|
$
|
17,302
|
|
|
|
|
|
||||
Consolidated Operating Margin
|
0.4
|
%
|
|
5.6
|
%
|
||
|
|
|
|
||||
(1) See Special & Restructuring Charges (Recoveries), net in Note 16 to the condensed consolidated financial statements for additional details.
|
|||||||
(2) Acquisition amortization and depreciation is recorded in either cost of revenues or selling, general, and administrative expenses depending upon the nature of the underlying asset.
|
|
Nine Months Ended
|
|
|
||||||||
(in thousands, except percentages)
|
September 30, 2018
|
|
October 1, 2017
|
|
Change
|
||||||
Net Revenues
|
$
|
333,799
|
|
|
$
|
243,055
|
|
|
$
|
90,744
|
|
Segment Operating Income
|
24,101
|
|
|
21,512
|
|
|
2,589
|
|
|||
Segment Operating Margin
|
7.2
|
%
|
|
8.9
|
%
|
|
|
|
Nine Months Ended
|
|
|
||||||||
(in thousands, except percentages)
|
September 30, 2018
|
|
October 1, 2017
|
|
Change
|
||||||
Net Revenues
|
$
|
173,734
|
|
|
$
|
126,022
|
|
|
$
|
47,712
|
|
Segment Operating Income
|
24,631
|
|
|
12,492
|
|
|
12,139
|
|
|||
Segment Operating Margin
|
14.2
|
%
|
|
9.9
|
%
|
|
|
|
Nine Months Ended
|
|
|
||||||
(in thousands, except percentages)
|
September 30, 2018
|
|
October 1, 2017
|
|
Change
|
||||
Net Revenues
|
366,929
|
|
|
87,054
|
|
|
$
|
279,875
|
|
Segment Operating Income
|
42,592
|
|
|
14,960
|
|
|
27,632
|
|
|
Segment Operating Margin
|
11.6
|
%
|
|
17.2
|
%
|
|
|
|
Nine Months Ended
|
||||||
|
September 30, 2018
|
|
October 1, 2017
|
||||
(LOSS) INCOME BEFORE INCOME TAXES
|
$
|
(29,368
|
)
|
|
$
|
17,302
|
|
|
|
|
|
||||
U.S. tax rate
|
21.0
|
%
|
|
35.0
|
%
|
||
State taxes
|
3.7
|
%
|
|
0.5
|
%
|
||
U.S. permanent differences
|
4.6
|
%
|
|
(0.9
|
)%
|
||
Foreign Tax rate differential
|
(3.8
|
)%
|
|
(3.4
|
)%
|
||
Unbenefited foreign losses
|
(4.2
|
)%
|
|
0.4
|
%
|
||
Intercompany financing
|
13.1
|
%
|
|
(1.1
|
)%
|
||
Non-taxable Refinery Valves purchase consideration
|
—
|
%
|
|
(24.6
|
)%
|
||
Other
|
3.0
|
%
|
|
(6.2
|
)%
|
||
Effective tax rate
|
37.4
|
%
|
|
0.3
|
%
|
||
|
|
|
|
||||
Benefit from income taxes
|
$
|
10,988
|
|
|
$
|
57
|
|
|
September 30, 2018
|
|
October 1, 2017
|
||||
Cash flow provided by (used in):
|
|
|
|
||||
Operating activities
|
$
|
23,463
|
|
|
$
|
2,008
|
|
Investing activities
|
(10,523
|
)
|
|
(6,037
|
)
|
||
Financing activities
|
(47,785
|
)
|
|
15,039
|
|
||
Effect of exchange rate changes on cash, cash equivalents and restricted cash
|
(5,154
|
)
|
|
6,338
|
|
||
(Decrease) / Increase in cash, cash equivalents and restricted cash
|
$
|
(39,999
|
)
|
|
$
|
17,348
|
|
ITEM 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 4.
|
CONTROLS AND PROCEDURES
|
ITEM 1.
|
LEGAL PROCEEDINGS
|
ITEM 1A.
|
RISK FACTORS
|
ITEM 6.
|
EXHIBITS
|
|
|
|
CIRCOR INTERNATIONAL, INC.
|
|
|
November 6, 2018
|
/s/ Scott A. Buckhout
|
|
Scott A. Buckhout
|
|
President and Chief Executive Officer
|
|
Principal Executive Officer
|
|
|
November 6, 2018
|
/s/ Rajeev Bhalla
|
|
Rajeev Bhalla
|
|
Executive Vice President, Chief Financial Officer
|
|
Principal Financial Officer
|
|
|
November 6, 2018
|
/s/ David F. Mullen
|
|
David F. Mullen
|
|
Vice President and Corporate Controller
|
|
Principal Accounting Officer
|
1 Year CIRCOR Chart |
1 Month CIRCOR Chart |
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