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CIRCOR International Reports Second Quarter 2011 Financial Results

Dépèche transmise le 4 août 2011 par Business Wire

CIRCOR International Reports Second Quarter 2011 Financial Results

CIRCOR International Reports Second 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 industrial, aerospace and energy markets, today announced financial results for the second quarter ended July 3, 2011.

“Most of our markets have seen strong growth during the first half of 2011 and we have a sizable and growing backlog across all businesses to work with going forward”

Management Comments on Second-Quarter Results

“Revenues grew 14% year over year as a result of strong operating performance in our aerospace, flow technology and short-cycle energy businesses,” said Chairman and Chief Executive Officer Bill Higgins. “Orders for the quarter increased 25% year over year as a result of strengthening demand across nearly all end markets and contributions from acquisitions. Despite shipping delays in a few large projects in the quarter, which resulted in revenues and earnings below expectations, we continue to expect revenues and earnings to grow through the second half of 2011 and into next year.”

Consolidated Results

Revenues for the second quarter of 2011 were $191.9 million, a 14% increase from $168.0 million in the second quarter of 2010. CIRCOR reported net income for the second quarter of 2011 of $7.5 million, or $0.43 per diluted share, compared with a net loss of $11.2 million, or $0.66 per share, for the second quarter of 2010. Excluding Leslie asbestos and bankruptcy charges, net of tax, earnings per share for the second quarter of 2010 were $0.44.

Consolidated adjusted operating earnings (which exclude Leslie asbestos and bankruptcy charges) were $12.4 million for the second quarter of 2011 compared with $11.6 million for the second quarter of 2010, an increase of 7%.

Consolidated Orders and Free Cash Flow

The Company received orders totaling $213.4 million during the second quarter of 2011, an increase of 25% compared with the second quarter of 2010. Backlog as of July 3, 2011 was $442.0 million, up 39% from backlog of $317.6 million at July 4, 2010.

During the second quarter of 2011, the Company used $76.4 million of free cash flow (defined as net cash from operating activities less capital expenditures), which included the payment of $76.6 million in April 2011 to fund the Leslie Controls Bankruptcy Trust. This compares to $12.6 million of free cash flow generated in the second quarter of 2010.

Energy

CIRCOR’s Energy segment revenues of $82.0 million for the quarter ended July 3, 2011 represent a 6% increase from $77.3 million for the quarter ended July 4, 2010. The increase includes 4% growth from the February 2011 Brazilian energy acquisition and a positive foreign currency impact of 5%. In addition, organic growth declined by 4% primarily due to lower revenue from large international projects, partially offset by strength across the balance of the Energy segment.

Incoming orders for the second quarter of 2011 were $103.2 million, an increase of 30% year over year due to growth across the majority of the segment’s energy businesses. Ending backlog totaled $225.7 million, an increase of 81% year over year.

For the second quarter of 2011, the Energy segment adjusted operating margin of 5.3% was down from 8.3% for the second quarter of 2010 primarily due to lower organic volume and associated leverage as well as the impact of the Brazil energy acquisition, including integration activities.

Aerospace

CIRCOR’s Aerospace segment revenues increased by 30% to $36.0 million for the second quarter of 2011 from $27.8 million in the second quarter of 2010. The increase in revenues was driven by 18% growth from acquisitions, 7% organic growth, and a 5% positive foreign currency impact. The acquisition growth was primarily related to the August 2010 aerospace landing gear acquisition.

Incoming orders for the second quarter of 2011 were $33.4 million, an increase of 24% year over year, primarily due to the positive impact of acquisitions. Ending backlog totaled $133.1 million, an increase of 14% year over year.

The Aerospace segment’s adjusted operating margin was 11.2% for the second quarter of 2011, compared with 14.6% for the second quarter of 2010. Second-quarter adjusted operating margins decreased primarily due to unfavorable product mix and development costs associated with new program wins.

Flow Technologies

CIRCOR’s Flow Technologies segment revenues increased 17% to $73.9 million for the second quarter of 2011 from $62.9 million in the second quarter of 2010. Second-quarter 2011 revenues reflected organic growth of 12% with strength across nearly all end markets, growth from acquisitions of 1%, and a favorable foreign currency impact of 4%.

Incoming orders for this segment were $76.8 million for the second quarter of 2011, an increase of 19% year over year due to an improvement in most markets. Ending backlog totaled $83.2 million, an increase of 10% year over year.

This segment’s adjusted operating margin, which excludes the impact of Leslie asbestos and bankruptcy charges, for the second quarter of 2011, was 12.4%, compared with 10.1% in the second quarter of 2010. The second-quarter year-over-year increase was primarily due to revenue leverage.

Business and Financial Outlook

“Most of our markets have seen strong growth during the first half of 2011 and we have a sizable and growing backlog across all businesses to work with going forward,” said Higgins. “With this as our base, we are focused on converting the growing backlog, leveraging our newer acquisitions for growth, and expanding margins in our energy projects.”

CIRCOR currently expects revenues for the third quarter of 2011 in the range of $202 million to $212 million. Earnings are expected to be in the range of $0.47 to $0.57 per diluted share. 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, August 4, 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 third-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

 

 

Six Months Ended

 

July 3, 2011

 

 

July 4, 2010

 

 

July 3, 2011

 

 

July 4, 2010

 
 
Net revenues $ 191,908 $ 168,005 $ 395,278 $ 314,274
Cost of revenues   137,302     118,463     284,444     222,013  
GROSS PROFIT 54,606 49,542 110,834 92,261
Selling, general and administrative expenses 42,180 37,959 84,635 73,376
Leslie asbestos and bankruptcy charges (recoveries)   (124 )   28,908     877     28,260  
OPERATING INCOME (LOSS)   12,550     (17,325 )   25,322     (9,375 )
Other expense (income):
Interest income (54 ) (50 ) (97 ) (92 )
Interest expense 1,286 636 2,102 1,233
Other expense, net   560     258     1,476     207  
Total other expense   1,792     844     3,481     1,348  
INCOME (LOSS) BEFORE INCOME TAXES 10,758 (18,169 ) 21,841 (10,723 )
Provision (Benefit) for income taxes   3,261     (6,928 )   6,439     (5,216 )
NET INCOME (LOSS) $ 7,497   $ (11,241 ) $ 15,402   $ (5,507 )
 
Earnings per common share:
Basic $ 0.43 $ (0.66 ) $ 0.90 $ (0.32 )
Diluted $ 0.43 $ (0.66 ) $ 0.88 $ (0.32 )
 
Weighted average common shares outstanding:
Basic 17,251 17,108 17,206 17,080
Diluted 17,434 17,108 17,406 17,080
 
CIRCOR INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
UNAUDITED
         
 

 

Six Months Ended

 

July 3, 2011

 

 

July 4, 2010

 
OPERATING ACTIVITIES
Net income (loss) $ 15,402 $ (5,507 )
Adjustments to reconcile net income to net cash provided
by (used in) operating activities:
Depreciation 7,496 6,343
Amortization 2,196 1,942
Compensation expense of share-based plans 1,960 1,814
Tax effect of share based compensation (637 ) (90 )
(Gain) loss on disposal of property, plant and equipment (39 ) 275
(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 (9,486 ) (19,247 )
Inventories (37,714 ) (14,850 )
Prepaid expenses and other assets (6,163 ) 3,228
Accounts payable, accrued expenses and other liabilities   36,208     15,511  
Net cash (used in) provided by operating activities   (67,402 )   14,393  
 
INVESTING ACTIVITIES
Additions to property, plant and equipment (7,463 ) (8,187 )
Proceeds from the disposal of (purchases of) property, plant and equipment 50 (233 )
Purchases of investments (2 ) 0
Proceeds from the sale of investments 0 21,427
Business acquisitions, net of cash acquired   (20,221 )   (5,210 )
Net cash (used in) provided by investing activities   (27,636 )   7,797  
 
FINANCING ACTIVITIES
Proceeds from long-term borrowings 201,087 32,458
Payments of long-term borrowings (101,994 ) (34,645 )
Debt issuance costs (2,001 ) 0
Dividends paid (1,325 ) (1,279 )
Proceeds from the exercise of stock options 476 293
Tax effect of share based compensation   637     90  
Net cash provided by (used in) financing activities   96,880     (3,083 )
Effect of exchange rate changes on cash and cash equivalents   708     (4,600 )
 
INCREASE IN CASH AND CASH EQUIVALENTS 2,550 14,507
Cash and cash equivalents at beginning of year   45,752     46,350  
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 48,302   $ 60,857  
 
CIRCOR INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
UNAUDITED
         
 
         

 

July 3, 2011

 

 

December 31, 2010

 

ASSETS
Current Assets:
Cash & cash equivalents $ 48,302 $ 45,752
Short-term investments 107 101

Trade accounts receivable, less allowance

for doubtful accounts of $845 and $822, respectively 151,567 138,860
Inventories 210,103 167,797
Income taxes refundable 0 1,625
Prepaid expenses and other current assets 11,504 5,749
Deferred income tax asset 20,585 20,111
Insurance receivables 0 38
Assets held for sale   542   542
Total Current Assets   442,710   380,575
 
Property, Plant and Equipment, net 106,586 95,768
 
Other Assets:
Goodwill 79,930 63,175
Intangibles, net 62,738 62,322
Deferred income tax asset 12,589 11,829
Other assets   4,644   2,526
Total Assets $ 709,197 $ 616,195
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 99,778 $ 80,577
Accrued expenses and other current liabilities 70,372 51,248
Accrued compensation and benefits 21,144 22,305
Leslie asbestos and bankruptcy related liabilities 1,642 79,831
Income taxes payable 0 38
Notes payable and current portion of long-term debt   2,154   851
Total Current Liabilities   195,090   234,850
 
Long-Term Debt, net of current portion 103,083 684
Deferred income taxes 3,250 0
Other Non-Current Liabilities 21,941 23,841
Shareholders' Equity:
Preferred stock, $.01 par value; 1,000,000 shares
authorized; no shares issued and outstanding 0

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