CIRCOR Reports Fourth-Quarter and Year-End 2016 Financial Results

February 16, 2017 at 8:00 AM EST

BURLINGTON, Mass.--(BUSINESS WIRE)--Feb. 16, 2017-- CIRCOR International, Inc. (NYSE: CIR), a leading provider of flow control solutions and other highly engineered products for markets including oil & gas, aerospace, power, process and industrial solutions, today announced financial results for the fourth quarter and year ended December 31, 2016.

Fourth-Quarter 2016 Highlights

  • Revenue of $158 million, GAAP EPS of ($0.12) and Adjusted EPS of $0.48
  • Operating Cash Flow of $20 million and Free Cash Flow of $17 million
  • Critical Flow Solutions integration progressing well
  • Orders in short-cycle North America market strengthening
  • Cost control and restructuring actions continuing to drive bottom-line performance

“CIRCOR concluded 2016 with solid fourth-quarter performance delivering revenue of $158 million and adjusted earnings per share of $0.48,” said Scott Buckhout, President and Chief Executive Officer. “We were pleased with the quarter, especially the impact of our simplification program and the improvement in our North America short-cycle order trend. In addition, the integration of Critical Flow Solutions is progressing as planned.”

“During the fourth quarter, we formed the Advanced Flow Solutions group to drive better top-line growth by aligning our organization with end markets,” added Buckhout. “AFS serves as a diversified flow technology platform that will expand our penetration into the aerospace, power, process and industrial markets.”

“As we enter 2017, we are optimistic about the market outlook across the majority of our businesses and we anticipate that our simplification and operational excellence actions will continue to benefit the bottom line. We remain focused on building shareholder value through top-line growth, margin expansion, strong cash flow and disciplined capital deployment,” concluded Buckhout.

First-Quarter 2017 Guidance
The Company will provide its guidance for the first quarter of 2017 during the conference call later today.

 

Selected Consolidated Results (unaudited)

 
($ millions except EPS)       Q4 2016       Q4 2015       Change       FY 2016       FY 2015       Change
Revenue       $ 158.2 $ 164.2     (4)% $ 590.3 $ 656.3   (10)%
GAAP Operating (Loss) Income $ (3.4) $ 12.3 NM $ 10.9 $ 26.2 (58)%
Adjusted Operating Income1 $ 11.0 $ 16.7 (34)% $ 42.4 $ 62.5 (32)%
GAAP Operating Margin (2.2)% 7.5% NM 1.8% 4.0% (220) bps
Adjusted Operating Margin1 6.9% 10.2% (330) bps 7.2% 9.5% (230) bps
GAAP (Loss) Earnings Per Share (Diluted) $ (0.12) $ 0.43 NM $ 0.61 $ 0.58 5%
Adjusted Earnings Per Share (Diluted)1 $ 0.48 $ 0.63 (24)% $ 1.99 $ 2.43 (18)%
Operating Cash Flow $ 20.4 $ 30.5 (33)% $ 59.4 $ 27.1 119%
Free Cash Flow2 $ 17.0 $ 28.4 (40)% $ 46.4 $ 16.6 179%
Orders $ 142.3 $ 137.9 3% $ 525.7 $ 590.4 (11)%

Segment Results

 
($ millions)       Q4 2016       Q4 2015     Change       FY 2016       FY 2015     Change
Energy            
Revenue $ 89.0 $ 91.6 (3)% $ 322.0 $ 383.7 (16)%
Segment Operating Income $ 9.3 $ 10.3 (10)% $ 34.6 $ 50.4 (31)%
Segment Operating Margin 10.4% 11.2% (80) bps 10.7% 13.1% (240) bps
Orders $ 85.2 $ 70.5 21% $ 270.5 $ 339.4 (20)%
 
Advanced Flow Solutions
Revenue $ 69.2 $ 72.6 (5)% $ 268.2 $ 272.6 (2)%
Segment Operating Income $ 8.9 $ 10.6 (16)% $ 33.5 $ 33.8 (1)%
Segment Operating Margin 12.9% 14.6% (170) bps 12.5% 12.4% 10 bps
Orders $ 57.1 $ 67.4 (15)% $ 255.2 $ 251.0 2%
 

1. Consolidated and Segment Results for Q4 2016 exclude special and restructuring charges totaling $14.4 million. These charges include (i) $5.6 million for non-cash acquisition-related intangible amortization expense, including the amortization of a step-up in fair value of inventories; (ii) $4.5 million related to a non-cash charge associated with a lump sum distribution paid to terminated and vested participants in CIRCOR’s pension plan; (iii) $2.3 million related to the exit of the California machine shop and the Brazil facility, as well as the suspension of manufacturing operations in China; (iv) $1.0 million related to other restructuring programs across the Energy segment; and (v) $1.0 million related to professional fees incurred for completed acquisitions. Consolidated and Segment Results for Q4 2015 exclude special and restructuring charges totaling $4.5 million. These charges include (i) $2.1 million related to the closure of the Brazil manufacturing operations; (ii) $2.2 million for non-cash acquisition-related intangible amortization expense; (iii) restructuring charges of $0.5 million; and (iv) a net gain of $0.3 million.

2. Free Cash Flow is a non-GAAP financial measure and is calculated by subtracting GAAP capital expenditures, net of proceeds from asset sales, from GAAP Operating Cash Flow.

Conference Call Information
CIRCOR International will hold a conference call to review its financial results today, February 16, 2017, at 10:00 a.m. ET. To listen to the conference call and view the accompanying presentation slides, visit “Webcasts & Presentations” in the “Investors” portion of the CIRCOR website. The call also can be accessed by dialing (877) 407-5790 or (201) 689-8328. The webcast will be archived for one year on the Company’s website.

Use of Non-GAAP Financial Measures
Adjusted operating income, Adjusted operating margin, Adjusted net income, Adjusted earnings per share (diluted), EBITDA, Adjusted EBITDA, net debt and free cash flow are non-GAAP financial measures. These non-GAAP financial measures are used by management in our financial and operating decision making because we believe they better reflect our ongoing business and allow for meaningful period-to-period comparisons. We believe these non-GAAP financial measures provide useful information to investors and others in understanding and evaluating the Company’s current operating performance and future prospects in the same manner as management does, if they so choose. These non-GAAP financial measures also allow investors and others to compare the Company’s current financial results with the Company’s past financial results in a consistent manner. For example:

  • We exclude costs and tax effects associated with restructuring activities, such as reducing overhead and consolidating facilities. We believe that the costs related to these restructuring activities are not indicative of our normal operating costs.
  • We exclude certain acquisition-related costs, including significant transaction costs and amortization of inventory step-ups and the related tax effects. We exclude these costs because we do not believe they are indicative of our normal operating costs.
  • We exclude the expense and tax effects associated with the non-cash amortization of acquisition-related intangible assets because a significant portion of the purchase price for acquisitions may be allocated to intangible assets that have lives of 5 to 20 years. Exclusion of the non-cash amortization expense allows comparisons of operating results that are consistent over time for both our newly acquired and long-held businesses and with both acquisitive and non-acquisitive peer companies.
  • We also exclude certain gains/losses and related tax effects, which are either isolated or cannot be expected to occur again with any predictability, and that we believe are not indicative of our normal operating gains and losses. For example, we exclude gains/losses from items such as the sale of a business, significant litigation-related matters and lump-sum pension plan settlements.

CIRCOR’s management uses these non-GAAP measures, in addition to GAAP financial measures, as the basis for measuring the Company’s operating performance and comparing such performance to that of prior periods and to the performance of our competitors. We use such measures when publicly providing our business outlook, assessing future earnings potential, evaluating potential acquisitions and dispositions and in our financial and operating decision-making process, including for compensation purposes.

Investors should recognize that these non-GAAP measures might not be comparable to similarly titled measures of other companies. These measures should be considered in addition and not as a substitute for or superior to, any measure of performance, cash flow or liquidity prepared in accordance with accounting principles generally accepted in the United States. 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 the realization of cost reductions from restructuring activities. 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 flow control solutions and other highly engineered products and sub-systems for markets including oil & gas, aerospace, power, process and industrial solutions. CIRCOR has a diversified product portfolio with recognized, market-leading brands that fulfill its customers’ unique application needs. The Company’s strategy is to grow organically and through complementary acquisitions; simplify CIRCOR’s operations; achieve world class operational excellence; and attract and retain top industry talent. For more information, visit the Company’s investor relations website at http://investors.circor.com.

 
CIRCOR INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF (LOSS) INCOME

(in thousands, except per share data)

UNAUDITED

 
      Three Months Ended       Twelve Months Ended

December 31,
2016

     

December 31,
2015

December 31,
2016

     

December 31,
2015

Net revenues $ 158,236 $ 164,243 $ 590,259 $ 656,267
Cost of revenues 109,139   113,747   407,144   456,935
GROSS PROFIT 49,097 50,496 183,115 199,332
Selling, general and administrative expenses 44,528 36,959 154,818 156,302
Impairment charges 208 2,502
Special and restructuring charges, net 8,006   1,256   17,171   14,354
OPERATING (LOSS) INCOME (3,437 ) 12,281   10,918   26,174
Other expense (income):
Interest expense, net 1,468 570 3,310 2,844
Other (income) expense, net (1,157 ) 2,099   (2,072 ) 902
TOTAL OTHER EXPENSE, NET 311   2,669   1,238   3,746
(LOSS) INCOME BEFORE INCOME TAXES (3,748 ) 9,612 9,680 22,428
(Benefit from) Provision for income taxes (1,746 ) 2,456   (421 ) 12,565
NET (LOSS) INCOME $ (2,002 ) $ 7,156   $ 10,101   $ 9,863
(Loss) Earnings per common share:
Basic $ (0.12 ) $ 0.44 $ 0.62 $ 0.59
Diluted $ (0.12 ) $ 0.43 $ 0.61 $ 0.58
Weighted average number of common shares outstanding:
Basic 16,439 16,425 16,418 16,850
Diluted 16,439 16,555 16,536 16,913
Dividends declared per common share $ 0.0375 $ 0.0375 $ 0.1500 $ 0.1500
 
 
CIRCOR INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

UNAUDITED

 
      Twelve Months Ended

December 31,
2016

     

December 31,
2015

OPERATING ACTIVITIES
Net income $ 10,101 $ 9,863
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation 13,304 14,254
Amortization 12,316 9,681
Bad debt expense 2,330 2,561
Loss on write down of inventory 9,297 15,404
Compensation expense of share-based plans 5,545 6,579
Tax effect of share-based plan compensation 145 (134 )
Pension settlement charge 4,457
Deferred income tax (benefit) expense (10,737 ) 781
Loss on sale or write down of property, plant and equipment 3,708 305
Impairment charges 208 2,502
Gain on sale of business (1,044 )
Changes in operating assets and liabilities, net of effects of acquisition and disposition:
Trade accounts receivable 29,322 20,393
Inventories 36,092 (14,446 )
Prepaid expenses and other assets (8,332 ) (4,786 )
Accounts payable, accrued expenses and other liabilities (48,357 ) (34,771 )
Net cash provided by operating activities 59,399   27,142  
INVESTING ACTIVITIES
Purchases of property, plant and equipment (14,692 ) (12,711 )
Proceeds from the sale of property, plant and equipment 1,700 2,209
Proceeds from divestitures 2,759
Business acquisition, net of cash acquired (197,489 ) (79,983 )
Net cash used in investing activities (210,481 ) (87,726 )
FINANCING ACTIVITIES
Proceeds from long-term debt 323,200 261,394
Payments of long-term debt (162,540 ) (182,004 )
Dividends paid (2,497 ) (2,559 )
Proceeds from the exercise of stock options 246 258
Tax effect of share-based plan compensation (145 ) 134
Sales (purchases) of common stock 500   (74,972 )
Net cash provided by financing activities 158,764   2,251  
Effect of exchange rate changes on cash and cash equivalents (3,944 ) (8,498 )
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 3,738 (66,831 )
Cash and cash equivalents at beginning of period 54,541   121,372  
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 58,279   $ 54,541  
 
 
CIRCOR INTERNATIONAL, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands)

UNAUDITED

 
      December 31, 2016       December 31, 2015
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 58,279 $ 54,541
Trade accounts receivable, less allowance for doubtful accounts of $5,056 and $8,290, respectively 133,046 125,628
Inventories 149,584 177,840
Prepaid expenses and other current assets

29,557

  16,441  
Total Current Assets

370,466

  374,450  
PROPERTY, PLANT AND EQUIPMENT, NET 99,713 87,029
OTHER ASSETS:
Goodwill

206,659

115,452
Intangibles, net 135,778 48,981
Deferred income taxes 4,824 36,799
Other assets 3,316   7,204  
TOTAL ASSETS $ 820,756   $ 669,915  
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable $ 46,767 $ 64,284
Accrued expenses and other current liabilities 50,707 59,463
Accrued compensation and benefits 20,249   18,424  
Total Current Liabilities 117,723   142,171  
LONG-TERM DEBT 251,200 90,500
DEFERRED INCOME TAXES 13,657 10,424
OTHER NON-CURRENT LIABILITIES 33,766 26,043
SHAREHOLDERS’ EQUITY:
Common stock 178 177
Additional paid-in capital 289,423 283,621
Retained earnings 265,543 257,939
Common treasury stock, at cost (74,472 ) (74,972 )
Accumulated other comprehensive loss, net of tax (76,262 ) (65,988 )
Total Shareholders’ Equity 404,410   400,777  
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 820,756   $ 669,915  
 
 
CIRCOR INTERNATIONAL, INC.

SUMMARY OF ORDERS AND BACKLOG

(in millions)

UNAUDITED

 
      Three Months Ended       Twelve Months Ended
December 31,
2016
      December 31,
2015
December 31,
2016
      December 31,
2015
ORDERS (1) (3)
Energy $ 85.2 $ 70.5 $ 270.5 $ 339.4
Advanced Flow Solutions 57.1   67.4   255.2   251.0
Total orders $ 142.3   $ 137.9   $ 525.7   $ 590.4
 
BACKLOG (2) (3) December 31,
2016
December 31,
2015
Energy $ 123.1 $ 131.6
Advanced Flow Solutions 119.3   137.4  
Total backlog $ 242.4   $ 269.0  

 

Note 1: Orders do not include the foreign exchange impact due to the re-measurement of customer order backlog amounts denominated in foreign currencies.
Note 2: Backlog includes unshipped customer orders, including backlog associated with acquisitions.
Note 3: December 31, 2015 segment amounts restated for Q4 2016 organizational realignment.

 

 

CIRCOR INTERNATIONAL, INC.

SEGMENT INFORMATION

(in thousands, except percentages)

UNAUDITED

    2015       2016
1ST QTR       2ND QTR       3RD QTR       4TH QTR       TOTAL       1ST QTR       2ND QTR       3RD QTR       4TH QTR       TOTAL
NET REVENUES                                                
Energy $ 105,619 $ 97,753 $ 88,679 $ 91,604 $ 383,655 $ 83,409 $ 80,736 $ 68,901 $ 89,000 $ 322,046
Advanced Flow Solutions 60,241         69,153         70,579         72,639         272,612         67,389         65,656         65,932         69,236         268,213  
Total $ 165,860         $ 166,906         $ 159,258         $ 164,243         $ 656,267         $ 150,798         $ 146,392         $ 134,833         $ 158,236         $ 590,259  
 
SEGMENT OPERATING INCOME
Energy $ 15,011 $ 12,926 $ 12,153 $ 10,296 $ 50,386 $ 9,296 $ 9,293 $ 6,755 $ 9,276 $ 34,619
Advanced Flow Solutions 5,584 7,576 10,077 10,574 33,811 8,452 8,064 8,008 8,939 33,463
Corporate expenses (6,034 )       (5,477 )       (6,078 )       (4,122 )       (21,710 )       (6,488 )       (5,431 )       (6,522 )       (7,231 )       (25,672 )
Adjusted Operating Income $ 14,561         $ 15,025         $ 16,152         $ 16,748         $ 62,487         $ 11,260         $ 11,926         $ 8,240         $ 10,984         $ 42,410  
 
SEGMENT OPERATING MARGIN %
Energy 14.2 % 13.2 % 13.7 % 11.2 % 13.1 % 11.1 % 11.5 % 9.8 % 10.4 % 10.7 %
Advanced Flow Solutions 9.3 %       11.0 %       14.3 %       14.6 %       12.4 %       12.5 %       12.3 %       12.1 %       12.9 %       12.5 %
Adjusted Operating Margin 8.8 %       9.0 %       10.1 %       10.2 %       9.5 %       7.5 %       8.1 %       6.1 %       6.9 %       7.2 %
 
 

 

CIRCOR INTERNATIONAL, INC.

RECONCILIATION OF KEY PERFORMANCE MEASURES TO COMMONLY USED GENERALLY ACCEPTED ACCOUNTING PRINCIPLE TERMS

(in thousands, except percentages)

UNAUDITED

    2015       2016
1ST QTR       2ND QTR       3RD QTR       4TH QTR       TOTAL       1ST QTR       2ND QTR       3RD QTR       4TH QTR       TOTAL
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES $ (16,432 )       $ 8,067       $ 5,006       $ 30,501       $ 27,142 $ 7,654       $ 10,100       $ 21,196       $ 20,449       $ 59,399
LESS:
Capital expenditures, net of sale proceeds 1,983         3,584         2,837         2,098         10,502         3,934         1,926         3,730         3,402         12,992  
FREE CASH FLOW $ (18,415 )       $ 4,483         $ 2,169         $ 28,403         $ 16,640         $ 3,720         $ 8,174         $ 17,466         $ 17,047         $ 46,407  
TOTAL DEBT $ 37,546 $ 114,078 $ 111,099 $ 90,500 $ 90,500 $ 97,800 $ 97,600 $ 92,400 $ 251,200 $ 251,200
LESS:
Cash & cash equivalents 103,883         55,027         53,822         54,541         54,541         66,580         72,970         84,929         58,279         58,279  
NET (CASH) DEBT $ (66,337 )       $ 59,051         $ 57,277         $ 35,959         $ 35,959         $ 31,220         $ 24,630         $ 7,471         $ 192,921         $ 192,921  
TOTAL SHAREHOLDERS' EQUITY $ 462,384 $ 421,070 $ 407,979 $ 400,777 $ 400,777 $ 414,107 $ 411,367 $ 416,598 $ 404,410 $ 404,410
 
TOTAL DEBT AS % OF EQUITY 8 % 27 % 27 % 23 % 23 % 24 % 24 % 22 % 62 % 62 %
NET DEBT AS % OF EQUITY (14 )% 14 % 14 % 9 % 9 % 8 % 6 % 2 % 48 % 48 %
 
 

 

 

CIRCOR INTERNATIONAL, INC.

RECONCILIATION OF KEY PERFORMANCE MEASURES TO COMMONLY USED GENERALLY ACCEPTED ACCOUNTING PRINCIPLE TERMS

(in thousands, except per share data)

UNAUDITED

    2015       2016
1ST QTR       2ND QTR       3RD QTR       4TH QTR       TOTAL       1ST QTR       2ND QTR       3RD QTR       4TH QTR       TOTAL
NET INCOME (LOSS) $ 8,913       $ 1,872       $ (8,078 )       $ 7,156       $ 9,863 $ 3,872       $ 3,813       $ 4,418       $ (2,002 )       $ 10,101
LESS:
Restructuring related inventory charges 2,005 6,412 974 9,391 1,958 75 813 2,846
Amortization of inventory step-up 1,366 1,366
Impairment charges 2,502 2,502 208 208
Restructuring charges, net 1,512 3,127 342 (347 ) 4,634 1,163 3,259 2,252 2,301 8,975
Acquisition intangible amortization 2,110 2,490 2,238 6,838 1,868 1,911 1,888 4,234 9,901
Special charges, net (1 ) 183 7,935 1,603 9,720 776 1,334 379 5,707 8,196
Brazil restatement impact 719 2,509 3,228
Income tax impact (579 )       (2,449 )       (968 )       (1,112 )       (5,108 )       (954 )       (1,611 )       (1,519 )       (4,487 )       (8,571 )
ADJUSTED NET INCOME $ 10,564         $ 9,357         $ 10,635         $ 10,512         $ 41,068         $ 8,683         $ 8,781         $ 7,626         $ 7,932         $ 33,022  
 
EARNINGS (LOSS) PER COMMON SHARE (Diluted) $ 0.50 $ 0.11 $ (0.49 ) $ 0.43 $ 0.58 $ 0.23 $ 0.23 $ 0.27 $ (0.12 ) $ 0.61
LESS:
Restructuring related inventory charges 0.12 0.39 0.06 0.57 0.12 0.05 0.17
Amortization of inventory step-up 0.08 0.08
Impairment charges 0.15 0.15 0.01 0.01
Restructuring charges, net 0.09 0.19 0.02 (0.02 ) 0.28 0.07 0.20 0.14 0.14 0.54
Acquisition intangible amortization 0.12 0.15 0.14 0.41 0.11 0.12 0.11 0.26 0.60
Special charges, net 0.01 0.48 0.10 0.59 0.05 0.08 0.02 0.35 0.50
Brazil restatement impact 0.04 0.15 0.19
Income tax impact (0.03 )       (0.15 )       (0.06 )       (0.07 )       (0.31 )       (0.06 )       (0.10 )       (0.09 )       (0.27 )       (0.52 )
ADJUSTED EARNINGS PER SHARE (Diluted) $ 0.60         $ 0.55         $ 0.64         $ 0.63         $ 2.43         $ 0.52         $ 0.53         $ 0.46         $ 0.48         $ 1.99  
 
 

 

CIRCOR INTERNATIONAL, INC.

RECONCILIATION OF KEY PERFORMANCE MEASURES TO COMMONLY USED GENERALLY ACCEPTED ACCOUNTING PRINCIPLE TERMS

(in thousands)

UNAUDITED

    2015       2016
1ST QTR       2ND QTR       3RD QTR       4TH QTR       TOTAL       1ST QTR       2ND QTR       3RD QTR       4TH QTR       TOTAL
NET INCOME (LOSS) $ 8,913       $ 1,872       $ (8,078 )       $ 7,156       $ 9,863 $ 3,872       $ 3,813       $ 4,418       $ (2,002 )       $ 10,101
LESS:
Interest expense, net (641 ) (805 ) (828 ) (570 ) (2,844 ) (631 ) (605 ) (605 ) (1,468 ) (3,310 )
Depreciation (3,521 ) (3,629 ) (3,526 ) (3,578 ) (14,254 ) (3,263 ) (3,213 ) (3,138 ) (3,690 ) (13,304 )
Amortization (710 ) (2,827 ) (3,205 ) (2,939 ) (9,681 ) (2,529 ) (2,569 ) (2,488 ) (4,730 ) (12,316 )
(Provision for) benefit from income taxes (3,284 )       (2,517 )       (4,308 )       (2,456 )       (12,565 )       (1,520 )       (1,478 )       1,673         1,746         421  
EBITDA $ 17,068         $ 11,650         $ 3,789         $ 16,698         $ 49,206         $ 11,815         $ 11,678         $ 8,976         $ 6,140         $ 38,610  
LESS:
Restructuring related inventory charges (2,005 ) (6,412 ) (974 ) (9,391 ) (1,958 ) (75 ) (813 ) (2,846 )
Amortization of inventory step-up (1,366 ) (1,366 )
Impairment charges (2,502 ) (2,502 ) (208 ) (208 )
Restructuring charges, net (1,512 ) (3,127 ) (342 ) 347 (4,634 ) (1,163 ) (3,259 ) (2,252 ) (2,301 ) (8,975 )
Special charges, net 1 (183 ) (7,935 ) (1,603 ) (9,720 ) (776 ) (1,334 ) (379 ) (5,707 ) (8,196 )
Brazil restatement impact (719 )       (2,509 )                       (3,228 )                                        
ADJUSTED EBITDA $ 19,298         $ 19,474         $ 20,980         $ 18,928         $ 78,681         $ 15,712         $ 16,346         $ 11,815         $ 16,327         $ 60,201  
 
 

 

CIRCOR INTERNATIONAL, INC.

RECONCILIATION OF KEY PERFORMANCE MEASURES TO COMMONLY USED GENERALLY ACCEPTED ACCOUNTING PRINCIPLE TERMS

(in thousands, except percentages)

UNAUDITED

    2015       2016
1ST QTR       2ND QTR       3RD QTR       4TH QTR       TOTAL       1ST QTR       2ND QTR       3RD QTR       4TH QTR       TOTAL
GAAP OPERATING INCOME (LOSS) $ 12,331       $ 5,090       $ (3,529 )       $ 12,281       $ 26,174 $ 5,495       $ 5,347       $ 3,513       $ (3,437 )       $ 10,918
LESS:
Restructuring related inventory charges 2,005 6,412 974 9,391 1,958 75 813 2,846
Amortization of inventory step-up 1,366 1,366
Impairment charges 2,502 2,502 208 208
Restructuring charges, net 1,512 3,127 342 (347 ) 4,634 1,163 3,259 2,252 2,301 8,975
Acquisition intangible amortization 2,110 2,490 2,238 6,838 1,868 1,911 1,888 4,234 9,901
Special charges, net (1 ) 183 7,935 1,603 9,720 776 1,334 379 5,707 8,196
Brazil restatement impact 719         2,509                         3,228                                          
ADJUSTED OPERATING INCOME $ 14,561         $ 15,025         $ 16,152         $ 16,748         $ 62,487         $ 11,260         $ 11,926         $ 8,240         $ 10,984         $ 42,410  
 
GAAP OPERATING MARGIN 7.4 % 3.0 % (2.2 )% 7.5 % 4.0 % 3.6 % 3.7 % 2.6 % (2.2 )% 1.8 %
LESS:
Restructuring related inventory charges % 1.2 % 4.0 % 0.6 % 1.4 % 1.3 % 0.1 % % 0.5 % 0.5 %
Amortization of inventory step-up % % % % % % % % 0.9 % 0.2 %
Impairment charges % % 1.6 % % 0.4 % % % 0.2 % % %
Restructuring charges, net 0.9 % 1.9 % 0.2 % (0.2 )% 0.7 % 0.8 % 2.2 % 1.7 % 1.5 % 1.5 %
Acquisition intangible amortization % 1.3 % 1.6 % 1.4 % 1.0 % 1.2 % 1.3 % 1.4 % 2.7 % 1.7 %
Special charges, net % 0.1 % 5.0 % 1.0 % 1.5 % 0.5 % 0.9 % 0.3 % 3.6 % 1.4 %
Brazil restatement impact 0.4 %         1.5 %         %       %       0.5 %         %       %       %       %       %
ADJUSTED OPERATING MARGIN 8.8 %         9.0 %         10.1 %         10.2 %         9.5 %         7.5 %         8.1 %         6.1 %         6.9 %       7.2 %
 

Source: CIRCOR International, Inc.

CIRCOR International
Rajeev Bhalla, 781-270-1200
Executive Vice President & Chief Financial Officer