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CIRCOR International Reports Fourth-Quarter 2011 Financial Results

Dépèche transmise le 23 février 2012 par Business Wire

CIRCOR International Reports Fourth-Quarter 2011 Financial Results

CIRCOR International Reports Fourth-Quarter 2011 Financial Results

BURLINGTON, Mass.--(BUSINESS WIRE)--CIRCOR International, Inc. (NYSE: CIR), a leading provider of valves and other highly engineered products for the energy, aerospace and industrial markets, today announced financial results for the fourth quarter and year ended December 31, 2011.

“We delivered another strong quarter of revenue growth and profitability”

“We delivered another strong quarter of revenue growth and profitability,” said Chairman and Chief Executive Officer Bill Higgins. “Consistent with our guidance, revenues increased 12% year-over-year with all three segments contributing, and adjusted EPS was up 11% excluding the impact of Leslie asbestos and bankruptcy.”

Higgins continued, “As we look back at 2011, we accomplished key strategic plan initiatives:

  • Permanently resolved the Leslie asbestos liability
  • Won large programs in Aerospace with potential value of more than $200 million
  • Expanded margins in the Flow Technology segment for the third consecutive year
  • Acquired a valve business in Brazil to service Petrobras and the energy markets
  • Began construction of a manufacturing plant in India to serve the power generation market

These milestones are key to our strategy, which includes growing in high-growth markets and expanding our product and service offerings into higher-margin, critical applications.”

Consolidated Results

Revenues for the fourth quarter of 2011 were $217.1 million, a 12% increase from $194.1 million in the fourth quarter of 2010. CIRCOR reported net income for the fourth quarter of 2011 of $10.3 million, or $0.59 per diluted share, compared with net income of $7.7 million, or $0.44 per diluted share, for the fourth quarter of 2010. Excluding Leslie asbestos and bankruptcy charges, net of tax, adjusted earnings per diluted share for the fourth quarter of 2011 and 2010 were $0.59 and $0.53, respectively.

Consolidated adjusted operating earnings, which exclude Leslie asbestos and bankruptcy charges, rose 15% to $15.0 million for the fourth quarter of 2011 from $13.0 million for the fourth quarter of 2010.

The Company received orders totaling $186.2 million during the fourth quarter of 2011, a decrease of 12% compared with the fourth quarter of 2010, with a decline in Energy, partially offset by growth in Aerospace and Flow. Backlog as of December 31, 2011 was $397.4 million, down 2% from backlog of $404.3 million at December 31, 2010.

During the fourth quarter of 2011, the Company generated $15.2 million of free cash flow (defined as net cash from operating activities less capital expenditures) compared with $16.2 million in the fourth quarter of 2010.

Energy

Energy segment revenues of $110.2 million for the quarter ended December 31, 2011 represent a 22% increase from $90.2 million for the quarter ended December 31, 2010. The increase in revenues year over year was primarily due to organic growth of 19% as a result of strength in the North American short-cycle business and pipeline solutions. The remainder of the revenue increase includes 4% growth from the February 2011 Brazilian energy acquisition, which was partially offset by a negative foreign currency impact of 1%.

Incoming orders for the fourth quarter of 2011 were $86.2 million, a decrease of 29% year over year, due to particularly strong international projects business recorded in the fourth quarter of 2010. Ending backlog totaled $169.3 million, a decrease of 6% year over year.

For the fourth quarter of 2011, the Energy segment adjusted operating margin of 8.4% was up from 6.7% in the fourth quarter of 2010, primarily due to improvements in the short-cycle and pipeline businesses.

Aerospace

Aerospace segment revenues increased by 2% to $36.0 million for the fourth quarter of 2011 from $35.5 million in the fourth quarter of 2010. The increase in Aerospace segment revenues is attributable to 2% organic growth.

Incoming orders for the fourth quarter of 2011 were $35.9 million, an increase of 16% year over year. Orders increased due to a ramp up in commercial aerospace production and an increase in landing gear orders. Ending backlog totaled $158.3 million, an increase of 8% year over year.

The Aerospace segment’s adjusted operating margin was 8.6% for the fourth quarter of 2011, down from 14.1% for the fourth quarter of 2010. Adjusted operating margins decreased primarily due to lower margins in landing gear operations and increased investments for large future programs, partially offset by favorable volume and associated leverage.

Flow Technologies

Flow Technologies segment revenues increased 4% to $70.9 million for the fourth quarter of 2011 from $68.4 million in the fourth quarter of 2010. Fourth-quarter 2011 Flow Technology segment revenues reflected organic growth of 4%.

Incoming orders for this segment were $64.1 million for the fourth quarter of 2011, an increase of 5% year over year. If you exclude the unfavorable impact of LED equipment, which were particularly strong in 2010, Flow orders increased 11%. Ending backlog totaled $69.8 million, a decrease of 10% year over year which was also effected by LED equipment as well as delivery of several large maritime projects.

This segment’s adjusted operating margin for the fourth quarter of 2011 improved to 12.9%, compared with 12.5% in the fourth quarter of 2010, due to volume, pricing and productivity partially offset by power growth investments. For the fourth quarter of 2010, adjusted operating margin excludes the impact of Leslie asbestos and bankruptcy charges.

Financial Outlook

CIRCOR currently expects revenues for the first quarter of 2012 in the range of $198 million to $205 million. Earnings are expected to be in the range of $0.35 to $0.45 per diluted share. As in 2011, CIRCOR expects the second half of 2012 to show an improvement over the first half of the year. CIRCOR’s guidance for earnings per share assumes a 30% 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, February 23, 2012, 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 first-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 energy, aerospace and industrial 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   Twelve Months Ended
December 31, 2011 December 31, 2010   December 31, 2011   December 31, 2010
 
 
Net revenues $ 217,110 $ 194,059 $ 822,349 $ 685,910
Cost of revenues   157,736     140,532     596,954     488,641  
GROSS PROFIT 59,374 53,527 225,395 197,269
Selling, general and administrative expenses 44,338 40,483 168,421 149,508
Leslie asbestos and bankruptcy charges   -     2,173     676     32,775  
OPERATING INCOME   15,036     10,871     56,298     14,986  
Other expense (income):
Interest income (99 ) (82 ) (265 ) (244 )
Interest expense 1,138 723 4,195 2,760
Other expense (income), net   342     608     2,172     (39 )
Total other expense   1,381     1,249     6,102     2,477  
INCOME BEFORE INCOME TAXES 13,655 9,622 50,196 12,509
Provision (Benefit) for income taxes   3,370     1,890     13,562     (115 )
NET INCOME $ 10,285   $ 7,732   $ 36,634   $ 12,624  
 
Earnings per common share:
Basic $ 0.60 $ 0.45 $ 2.12 $ 0.74
Diluted $ 0.59 $ 0.44 $ 2.10 $ 0.73
 
Weighted average common shares outstanding:
Basic 17,280 17,165 17,240 17,137
Diluted 17,435 17,378 17,417 17,297
     
 
CIRCOR INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
UNAUDITED
     
 
Twelve Months Ended
December 31, 2011   December 31, 2010
 
OPERATING ACTIVITIES
Net income $ 36,634 $ 12,624

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

Depreciation 15,085 13,075
Amortization 4,351 4,301
Compensation expense of share-based plans 3,807 3,430
Tax effect of share based compensation (673 ) (189 )
Deferred income taxes 307 (9,869 )
(Gain) loss on disposal of property, plant and equipment (69 ) 315
(Payment) provision for Leslie bankruptcy settlement (76,625 ) 24,974
 

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

Trade accounts receivable (17,862 ) (24,768 )
Inventories (38,588 ) (21,997 )
Prepaid expenses and other assets (22,918 ) 1,721
Accounts payable, accrued expenses and other liabilities   47,718     33,227  
Net cash (used in) provided by operating activities   (48,833 )   36,844  
 
INVESTING ACTIVITIES
Additions to property, plant and equipment (17,901 ) (14,913 )
Proceeds from the disposal of property, plant and equipment 117 106
Proceeds from the sale of investments 0 21,427
Business acquisitions, net of cash acquired   (20,221 )   (34,401 )
Net cash used in investing activities   (38,005 )   (27,781 )
 
FINANCING ACTIVITIES
Proceeds from borrowings 279,346 88,680
Payments of borrowings (178,905 ) (95,370 )
Debt issuance costs (2,001 ) 0
Dividends paid (2,650 ) (2,643 )
Proceeds from the exercise of stock options 589 529
Tax effect of share based compensation   673     189  
Net cash provided by (used in) financing activities   97,052     (8,615 )
Effect of exchange rate changes on cash and cash equivalents   (1,111 )   (1,046 )
 
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 9,103 (598 )
Cash and cash equivalents at beginning of year   45,752     46,350  
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 54,855   $ 45,752  
       
 
CIRCOR INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
UNAUDITED
 
         
December 31, 2011   December 31, 2010
 
ASSETS
Current Assets:
Cash & cash equivalents $ 54,855 $ 45,752
Short-term investments 99 101

Trade accounts receivable, less allowance for doubtful accounts of
 $1,127 and $822, respectively

156,075 138,860
Inventories 203,777 167,797
Income taxes refundable 0 1,625
Prepaid expenses and other current assets 12,376 5,749
Deferred income tax asset 16,320 20,111
Insurance receivables 0 38
Assets held for sale   542     542
Total Current Assets   444,044     380,575
 
Property, Plant and Equipment, net 104,434 95,768
 
Other Assets:
Goodwill 77,829 63,175
Intangibles, net 58,442 62,322
Deferred income tax asset 27,949 11,829
Other assets   9,825     2,526
Total Assets $ 722,523   $ 616,195
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:

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