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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
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 | ||||||
