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CIRCOR Reports 39% Revenue Growth for First Quarter of 2011

Dépèche transmise le 5 mai 2011 par Business Wire

CIRCOR Reports 39% Revenue Growth for First Quarter of 2011

CIRCOR Reports 39% Revenue Growth for First Quarter of 2011

BURLINGTON, Mass.--(BUSINESS WIRE)--CIRCOR International, Inc. (NYSE: CIR), a leading provider of valves and other highly engineered products for the industrial, aerospace and energy markets, today announced financial results for the first quarter ended April 3, 2011.

“We are very pleased to have accomplished the final step to permanently resolve Leslie’s asbestos liability. Last week we funded the asbestos trust and Leslie Controls has emerged from bankruptcy”

Management Comments on First-Quarter Results

“CIRCOR is off to a strong start in 2011,” said Chairman and Chief Executive Officer Bill Higgins. “Revenues grew by 39% year over year, and adjusted earnings per share, excluding Leslie asbestos and bankruptcy charges, increased by 58%. Our short-cycle Energy and Flow Technologies end markets are the strongest, benefiting from early-cycle economic activity. Total orders for the quarter were up 30% year over year; with Energy bookings growing 72%.”

“We are very pleased to have accomplished the final step to permanently resolve Leslie’s asbestos liability. Last week we funded the asbestos trust and Leslie Controls has emerged from bankruptcy,” said Higgins. “In addition, to support our strategic growth, we have entered into a new $300 million, five-year unsecured credit agreement, which provides better terms than our previous arrangement and additional borrowing capacity.”

CIRCOR also announced that Paul M. Coppinger will be leaving the Company May 13, 2011. As President of CIRCOR Energy, Mr. Coppinger led the segment through a period of plant consolidations and lean implementations. Commenting on the Company’s search for a new CIRCOR Energy leader, Mr. Higgins said, “This individual will drive the transition to accelerating global growth both organically and through acquisitions.”

Consolidated Results

Revenues for the first quarter of 2011 were $203.4 million, a 39% increase from $146.3 million generated in the first quarter of 2010. CIRCOR reported net income for the first quarter of 2011 of $7.9 million, or $0.45 per diluted share, compared with net income of $5.7 million, or $0.33 per diluted share, for the first quarter of 2010.

Consolidated adjusted operating earnings, which excludes Leslie asbestos and bankruptcy charges, was $13.8 million for the first quarter of 2011 compared to $7.3 million for first quarter 2010, an increase of 89%.

First-quarter 2011 net income included pretax Leslie asbestos and bankruptcy charges of $1.0 million, compared with $0.6 million of pretax asbestos recoveries in the first quarter of 2010. Excluding Leslie asbestos and bankruptcy charges and recoveries net of tax, adjusted earnings per diluted share increased 58% to $0.49 for the first quarter of 2011, compared with $0.31 in the first quarter of 2010.

Consolidated Orders and Free Cash Flow

The Company received orders totaling $221.6 million during the first quarter of 2011, an increase of 30% compared with the first quarter of 2010 and a 4% increase compared with the fourth quarter of 2010. Backlog as of April 3, 2011 was $419.1 million, up 27% from backlog of $330.4 million at April 4, 2010 and up 4% from $404.3 million at December 31, 2010.

During the first quarter of 2011, the Company generated $0.9 million of free cash flow (defined as net cash from operating activities, less capital expenditures and dividends paid) compared with using $7.0 million in the first quarter of 2010, primarily due to higher net income and working capital improvements.

Energy

CIRCOR’s Energy segment revenues of $99.2 million for the quarter ended April 3, 2011 represent a 72% increase from $57.7 million for the quarter ended April 4, 2010. The increase included 65% organic growth, 4% growth from acquisitions, and a positive foreign currency adjustment of 3%. The growth was primarily the result of strong shipment volume for large international projects and short-cycle North American business, the acquisition of SF Valves in February, and favorable foreign currency fluctuations.

Incoming orders for the first quarter of 2011 were $113.7 million, an increase of 72% year over year, but down 6% sequentially. The year-over-year growth was primarily due to strength in large international projects, which has rebounded from the low order intake in the previous year. Ending backlog totaled $203.1 million, a 50% increase year over year and a 13% increase sequentially.

For the first quarter of 2011, the Energy segment adjusted operating margin of 6.4% compares with 3.5% for the first quarter of 2010 and 6.7% for the fourth quarter of 2010. The year-over-year increase was driven primarily by the improved margins and revenue in the North American short-cycle businesses, partially offset by pricing pressure on large international projects.

Aerospace

CIRCOR’s Aerospace segment revenues increased by 18% to $32.1 million for the first quarter of 2011 from $27.3 million in the first quarter of 2010. The increase in revenues was driven by 14% growth from acquisitions, 4% organic growth, and a 1% positive foreign currency adjustment.

Incoming orders for the first quarter of 2011 were $32.8 million, a decrease of 6% year over year, but up 7% sequentially. The year-over-year order decrease was primarily due to the timing of military landing gear orders which were high in the first quarter of 2010, partially offset by the positive impact of acquisitions. Ending backlog totaled $135.3 million, an increase of 12% year over year, but down 8% sequentially.

The Aerospace segment’s adjusted operating margin was 11.6% for the first quarter of 2011, compared with 13.2% for the first quarter of 2010, and 14.1% for the fourth quarter of 2010. First-quarter 2011 adjusted operating margins decreased year over year primarily as a result of higher costs associated with the integration of the Castle acquisition.

Flow Technologies

CIRCOR’s Flow Technologies segment revenues increased 18% to $72.1 million for the first quarter of 2011 from $61.3 million in the first quarter of 2010. First-quarter 2011 revenues reflected organic growth of 15%, due to continued semiconductor strength and steady progress in process and industrial markets, growth from acquisitions of 2%, and a favorable foreign currency adjustment of 1%.

Incoming orders for this segment were $75.0 million for the first quarter of 2011, an increase of 9% year over year and 24% sequentially. The year-over-year and sequential increase reflects an improvement in most markets except refining and maritime. Ending backlog totaled $80.7 million, an increase of 9% year over year and an increase of 5% sequentially.

This segment’s adjusted operating margin, which excludes the impact of Leslie asbestos and bankruptcy charges, for the first quarter of 2011, was 13.7%, compared with 10.2% in the first quarter of 2010 and 12.5% in the fourth quarter of 2010. The first-quarter year-over-year adjusted operating margin increase was due primarily to higher volumes and associated leverage.

Business and Financial Outlook

“2011 is shaping up to be a year of improving performance for CIRCOR,” said Higgins. “Short-cycle bookings for our Energy business remain solid and large international projects are continuing to recover. We expect Energy margins will slowly improve, as we work through the lower margin project backlog. Commercial aerospace has come off the bottom; however, military sales will remain soft for the near-term. The end markets within our Flow Technologies business are healthy.”

CIRCOR currently expects revenues for the second quarter of 2011 in the range of $200 million to $207 million and adjusted earnings are expected to be in the range of $0.42 to $0.52 per diluted share. CIRCOR’s guidance for adjusted earnings per share assumes a 31% tax rate and that exchange rates remain at present levels.

Conference Call Information

CIRCOR International will hold a conference call to review its financial results today, May 5, 2011, at 10:00 a.m. ET. Those who wish to listen to the conference call and view the accompanying presentation slides should visit “Webcasts & Presentations” in the “Investors” portion of the CIRCOR website. The live call also can be accessed by dialing (877) 407-5790 or (201) 689-8328. If you are unable to listen to the live call, the webcast will be archived for one year on the Company’s website.

Use of Non-GAAP Financial Measures

Adjusted net income, adjusted earnings per diluted share, adjusted operating margin, and free cash flow are non-GAAP financial measures and are intended to serve as a complement to results provided in accordance with accounting principles generally accepted in the United States. CIRCOR believes that such information provides an additional measurement and consistent historical comparison of the Company’s performance. A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures is available in this news release.

Safe Harbor Statement

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. 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 second-quarter revenue and earnings guidance. 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 valves and other highly engineered products for the industrial, aerospace and energy markets. With more than 7,000 customers in over 100 countries, CIRCOR has a diversified product portfolio with recognized, market-leading brands. CIRCOR’s culture, built on the CIRCOR Business System, is defined by the Company’s commitment to attracting, developing and retaining the best talent and pursuing continuous improvement in all aspects of its business and operations. The Company’s strategy includes growing organically by investing in new, differentiated products; adding value to component products; and increasing the development of mission-critical subsystems and solutions. CIRCOR also plans to leverage its strong balance sheet to acquire strategically complementary businesses. For more information, visit the Company’s investor relations web site at http://investors.circor.com.

 
 
CIRCOR INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
UNAUDITED
         
 
  Three Months Ended  
  April 3, 2011     April 4, 2010  
 
 
Net revenues $ 203,370 $ 146,269
Cost of revenues   147,160     103,550  
GROSS PROFIT 56,210 42,719
Selling, general and administrative expenses 42,437 35,418
Leslie asbestos and bankruptcy charges (recoveries)   1,001     (648 )
OPERATING INCOME   12,772     7,949  
Other expense (income):
Interest income (43 ) (43 )
Interest expense 816 597
Other expense (income), net   915     (51 )
Total other expense   1,688     503  
INCOME BEFORE INCOME TAXES 11,084 7,446
Provision for income taxes   3,178     1,713  
NET INCOME $ 7,906   $ 5,733  
 
Earnings per common share:
Basic $ 0.46 $ 0.34
Diluted $ 0.45 $ 0.33
 
Weighted average common shares outstanding:
Basic 17,163 17,051
Diluted 17,378 17,193
 
 
CIRCOR INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
UNAUDITED
         
 
  Three Months Ended  
  April 3, 2011  

 

April 4, 2010  
 
OPERATING ACTIVITIES
Net income $ 7,906 $ 5,733

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

Depreciation 3,575 3,228
Amortization 1,418 979
Compensation expense of stock-based plans 1,136 843
Tax effect of share based compensation (256 ) 112
Loss on disposal of property, plant and equipment 2 0
 

Changes in operating assets and liabilities, net of effects from business acquisitions:

Trade accounts receivable 1,421 (10,734 )
Inventories (4,622 ) (4,332 )
Prepaid expenses and other assets (6,781 ) (8,212 )
Accounts payable, accrued expenses and other liabilities   416     9,609  
Net cash provided by (used in) operating activities   4,215     (2,774 )
 
INVESTING ACTIVITIES
Additions to property, plant and equipment (2,693 ) (3,606 )
Proceeds from the sale of property, plant and equipment 12 13
Purchase of investments (1 ) 0
Business acquisitions, net of cash acquired   (20,221 )   (340 )
Net cash used in investing activities   (22,903 )   (3,933 )
 
FINANCING ACTIVITIES
Proceeds from long-term debt 60,748 16,110
Payments of long-term debt (34,778 ) (15,972 )
Dividends paid (663 ) (639 )
Proceeds from the exercise of stock options 213 256
Tax effect of share based compensation   256     (112 )
Net cash provided by (used in) financing activities   25,776     (357 )
Effect of exchange rate changes on cash and cash equivalents   651     (1,474 )
 
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 7,739 (8,538 )
Cash and cash equivalents at beginning of year   45,752     46,350  
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 53,491   $ 37,812  
 
 
CIRCOR INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
UNAUDITED
         
 
           
  April 3, 2011     December 31, 2010  
 
ASSETS
Current Assets:
Cash & cash equivalents $ 53,491 $ 45,752
Short-term investments 107 101

Trade accounts receivable, less allowance for doubtful accounts of $1,249 and $822, respectively

141,280 138,860
Inventories 177,340 167,797
Income taxes refundable 1,806 1,625
Prepaid expenses and other current assets 13,200 5,749
Deferred income tax asset 20,422 20,111
Insurance receivables 38 38
Assets held for sale   542   542
Total Current Assets   408,226   380,575
 
Property, Plant and Equipment, net 100,251 95,768
 
Other Assets:
Goodwill 72,843 63,175
Intangibles, net 61,977 62,322
Deferred income tax asset 11,829 11,829
Other assets   11,582   2,526
Total Assets $ 666,708 $ 616,195
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 86,099 $ 80,577
Accrued expenses and other current liabilities 51,572 51,248
Accrued compensation and benefits 20,354 22,305
Leslie asbestos and bankruptcy related liabilities 79,801 79,831
Income taxes payable 0 38
Notes payable and current portion of long-term debt   8,178   851
Total Current Liabilities   246,004   234,850
 
Long-Term Debt, net of current portion 22,858 684
Deferred income taxes 400 0
Other Non-Current Liabilities 22,740 23,841
Shareholders' Equity:

Preferred stock, $.01 par value; 1,000,000 shares authorized; no shares issued and outstanding

0 0

Common stock, $.01 par value; 29,000,000 shares authorized; and 17,202,100 and 17,112,688 issued and outstanding, respectively

172 171
Additional paid-in capital 255,348 254,154
Retained earnings 103,631 96,389
Accumulated other comprehensive income   15,555   6,106
Total Shareholders' Equity   374,706   356,820
Total Liabilities and Shareholders' Equity $ 666,708 $ 616,195
 
 
CIRCOR INTERNATIONAL, INC.
SUMMARY OF ORDERS AND BACKLOG
(in millions)
UNAUDITED
         
 
  Three Months Ended  
  April 3, 2011     April 4, 2010  
 
ORDERS 1
Energy $ 113.7 $ 66.2
 
Aerospace 32.8 34.8
 
Flow Technologies   75.0

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