News Release

BURLINGTON, Mass.--(BUSINESS WIRE)--Jul. 26, 2018-- CIRCOR International, Inc. (NYSE: CIR), a leading provider of flow control solutions and other highly engineered products for the Industrial, Energy and Aerospace & Defense markets, today announced financial results for the second quarter ended July 1, 2018. Results include the acquisition of the Colfax Fluid Handling business, which CIRCOR acquired in December 2017.

Second-Quarter 2018 Highlights

• Orders of $309.4 million, up 116% on a reported basis and up 15% on a pro forma organic basis
• Revenue of $301.4 million, up 99% on a reported basis and up 9% on a pro forma organic basis
• GAAP Earnings per Share of $0.30; Adjusted Earnings per Share of $0.57
• Acquisition integration on track

“Our top-line momentum continued in the second quarter as most of our end markets remained strong,” said Scott Buckhout, President and Chief Executive Officer. “We generated over $300 million of sales in the quarter. Our book to bill ratio was again above one, positioning us well for the second half of 2018.”

“Our organizational re-alignment around end markets is producing results and our integration activities are on track. We remain confident in our ability to realize the committed synergies,” added Buckhout.

“Our priorities remain driving long-term growth, generating strong cash flow and de-levering the Company by reducing debt and expanding margins,” concluded Buckhout.

Third-Quarter 2018 Guidance
For the third quarter of 2018, CIRCOR expects revenue in the range of $290 million to $300 million, and GAAP loss per share of $0.23 to $0.06, which reflects acquisition-related amortization expense of $0.52 to $0.54 and other special and restructuring charges of $0.09 to $0.14. Excluding the impact of amortization, special and restructuring charges, adjusted EPS is expected to be in the range of $0.45 to $0.55 per share. Presentation slides that provide supporting information to this guidance and second-quarter results are posted on the “Investors” section of the Company’s website, http://investors.circor.com, and will be discussed during the conference call at 9:00 a.m. ET tomorrow, July 27, 2018.

Selected Consolidated Results (unaudited)
	($ millions except EPS)			Q2 2018				Q2 2017				Change
	Revenue			$	301.4			$	151.2			99%
	GAAP Operating Income			$	8.3			$	11.4			(27)%
	Adjusted Operating Income1			$	24.8			$	12.0			107%
	GAAP Operating Margin				2.7%				7.5%			(490) bps
	Adjusted Operating Margin1				8.2%				8.0%			20 bps
	GAAP Earnings Per Share (Diluted)			$	0.30			$	0.54			(44)%
	Adjusted Earnings Per Share (Diluted)1			$	0.57			$	0.39			46%
	Operating Cash Flow			$	(1.9)			$	2.7			N/M
	Free Cash Flow2			$	(5.9)			$	0.3			N/M
	Orders			$	309.4			$	142.9			116%

Segment Results
	($ millions)			Q2 2018				Q2 2017				Change
	Industrial
	Revenue			$	131.1			$	29.7			341%
	Segment Operating Income			$	15.0			$	4.9			206%
	Segment Operating Margin				11.5%				16.5%			(500) bps
	Orders			$	136.7			$	29.9			357%
	Energy
	Revenue			$	112.8			$	78.3			44%
	Segment Operating Income			$	9.2			$	8.2			12%
	Segment Operating Margin				8.2%				10.4%			(230) bps
	Orders			$	113.2			$	73.1			55%
	Aerospace & Defense
	Revenue			$	57.5			$	43.3			33%
	Segment Operating Income			$	7.0			$	4.4			59%
	Segment Operating Margin				12.2%				10.1%			210 bps
	Orders			$	59.4			$	39.9			49%

1.Adjusted Consolidated and Segment Results for Q2 2018 exclude non-cash acquisition-related intangible amortization, special and restructuring charges totaling $16.6 million ($5.5 million, net of tax). These charges include: (i) $13.5 million charge for non-cash acquisition-related intangible amortization expense and amortization of the step-up in fixed asset values; (ii) $1.9 million charge related to restructuring activities, primarily severance, related to our Engineered Valves, Reliability Services and Germany-based Pumps business; and (iii) $1.2 million primarily related to the separation of the Fluid Handling business from Colfax Corporation and exiting a product line.Consolidated and Segment Results for Q2 2017 exclude special and restructuring charges and non-cash acquisition-related intangible amortization, totaling $0.6 million ($2.5 million, net of tax). These charges include (i) $2.6 million charge for non-cash acquisition-related intangible amortization expense, (ii) $5.3 million charge related to the sale of our France build-to-print business, (iii) $1.3 million charge related to the exit of manufacturing operations in China, including $0.8 million related to environmental clean-up costs, (iv) $1.1 million charge related to other restructuring activities, primarily reductions-in-force, across Europe and North America, and (v) a $9.7 million gain related to the revaluation of the contingent consideration for purchase of Critical Flow Solutions.
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.
N/M = Not meaningful

Conference Call Information
CIRCOR International will hold a conference call to review its financial results at 9:00 a.m. ET tomorrow, July 27, 2018. To listen to the live conference call and view the accompanying presentation slides, please visit “Webcasts & Presentations” in the “Investors” portion of CIRCOR’s website. The live call also can be accessed by dialing (877) 407-5790 or (201) 689-8328. The webcast will be archived on the Company’s website for one year.

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, free cash flow, organic growth, pro forma combined amounts and pro forma organic growth 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 and fixed-asset 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 up to 25 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.
• Due to the significance of the Fluid Handling acquisition and to provide a more meaningful comparison of changes in our orders and revenue, we also discuss these changes on a “pro forma organic” basis. Pro forma organic is calculated assuming the Fluid Handling acquisition was completed on January 1, 2017 and excluding the impact of changes in foreign currency exchange rates.

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 included in this news release.

Safe Harbor Statement
This press release contains forward-looking statements within the meaning of Section 27 A of the Securities Act of 1933, as amended, and Section 21 E 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 third-quarter 2018 guidance, our future performance, including realization of cost reductions from restructuring activities and expected synergies, and our corporate priorities. Actual events, performance or results could differ materially from the anticipated events, performance or results expressed or implied by such forward-looking statements. Important factors that could cause actual results to vary from expectations include, but are not limited to: our ability to respond to competitive developments and to grow our business, both domestically and internationally; changes in the cost, quality or supply of raw materials; our ability to comply with our debt obligations; our ability to successfully implement our acquisition, divesture or restructuring strategies, including our integration of the Fluid Handling business; changes in industry standards, trade policies or government regulations, both in the United States and internationally; and our ability to operate our manufacturing facilities at current or higher levels and respond to increases in manufacturing costs. 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 differentiated technology products and sub-systems for markets including oil & gas, industrial, aerospace & defense and commercial marine. CIRCOR has a diversified flow and motion control product portfolio with recognized, market-leading brands that fulfill its customers’ mission critical 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 talent. For more information, visit the Company’s investor relations website at http://investors.circor.com.

CIRCOR INTERNATIONAL, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) (in thousands, except per share data) (UNAUDITED)
			Three Months Ended								Six Months Ended
			July 1, 2018				July 2, 2017				July 1, 2018				July 2, 2017
Net revenues			$	301,368			$	151,231			$	576,948			$	296,439
Cost of revenues			213,117				103,563				412,393				202,139
GROSS PROFIT			88,251				47,668				164,555				94,300
Selling, general and administrative expenses			77,999				38,218				155,237				78,305
Special and restructuring charges (recoveries), net			2,000				(1,954		)		14,446				(2,763		)
OPERATING INCOME (LOSS)			8,252				11,404				(5,128		)		18,758
Other expense (income):
Interest expense, net			13,755				2,184				25,556				3,853
Other (income) expense, net			(3,759		)		974				(5,620		)		1,200
TOTAL OTHER EXPENSE, NET			9,996				3,158				19,936				5,053
(LOSS) INCOME BEFORE INCOME TAXES			(1,744		)		8,246				(25,064		)		13,705
(Benefit from) provision for income taxes			(7,646		)		(724		)		(13,525		)		(37		)
NET INCOME (LOSS)			$	5,902			$	8,970			$	(11,539	)		$	13,742
Earnings (Loss) per common share:
Basic			$	0.30			$	0.54			$	(0.58	)		$	0.83
Diluted			$	0.30			$	0.54			$	(0.58	)		$	0.82
Weighted average number of common shares outstanding:
Basic			19,836				16,497				19,821				16,478
Diluted			20,005				16,762				19,906				16,726
Dividends declared per common share			$	—			$	0.0375			$	—			$	0.0750

CIRCOR INTERNATIONAL, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (UNAUDITED)
			Six Months Ended
OPERATING ACTIVITIES			July 1, 2018				July 2, 2017
Net (loss) income			$	(11,539	)		$	13,742
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
Depreciation			14,491				7,345
Amortization			24,611				6,216
Bad debt expense (recovery)			532				(319		)
Loss on write down of inventory			9,084				1,068
Compensation expense of share-based plans			2,866				1,386
Change in fair value of contingent consideration			—				(12,200		)
Interest amortization			1,172				—
Loss (gain) on sale or write down of property, plant and equipment			1,124				(66		)
Loss on sale of business			—				5,300
Changes in operating assets and liabilities, net of effects of acquisition and disposition:
Trade accounts receivable			13,223				16,478
Inventories			(12,920		)		(12,382		)
Prepaid expenses and other assets			(17,534		)		(8,011		)
Accounts payable, accrued expenses and other liabilities			(27,146		)		305
Net cash (used in) provided by operating activities			(2,036		)		18,862
INVESTING ACTIVITIES
Additions to property, plant and equipment			(12,315		)		(5,504		)
Proceeds from the sale of property, plant and equipment			175				318
Business acquisition, working capital adjustment			6,300				1,467
Net cash used in investing activities			(5,840		)		(3,719		)
FINANCING ACTIVITIES
Proceeds from long-term debt			137,162				333,021
Payments of long-term debt			(104,194		)		(332,233		)
Dividends paid			—				(1,251		)
Proceeds from the exercise of stock options			440				707
Return of cash to seller			(61,201		)		—
Net cash used in financing activities			(27,793		)		(206		)
Effect of exchange rate changes on cash and cash equivalents			(5,755		)		4,056
(DECREASE) INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH			(41,424		)		18,993
Cash, cash equivalents and restricted cash at beginning of period			112,247				58,279
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD			$	70,823			$	77,272

CIRCOR INTERNATIONAL, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share data) (UNAUDITED)
			July 1, 2018				December 31, 2017
ASSETS
CURRENT ASSETS:
Cash and cash equivalents			$	69,030			$	110,356
Trade accounts receivable, less allowance for doubtful accounts of $6,704 and $4,791, respectively			199,805				223,922
Inventories			244,153				244,896
Restricted cash			1,792				1,937
Prepaid expenses and other current assets			70,133				57,282
Total Current Assets			584,913				636,456
PROPERTY, PLANT AND EQUIPMENT, NET			217,471				217,539
OTHER ASSETS:
Goodwill			501,723				505,762
Intangibles, net			481,585				513,364
Deferred income taxes			41,498				22,334
Other assets			11,995				9,407
TOTAL ASSETS			$	1,839,185			$	1,904,862
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable			$	114,152			$	117,329
Accrued expenses and other current liabilities			105,922				170,454
Accrued compensation and benefits			32,041				34,734
Total Current Liabilities			252,115				322,517
LONG-TERM DEBT			819,779				787,343
DEFERRED INCOME TAXES			27,320				26,122
PENSION LIABILITY, NET			142,417				150,719
OTHER NON-CURRENT LIABILITIES			23,561				18,124
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS’ EQUITY:
Common stock			212				212
Additional paid-in capital			442,318				438,721
Retained earnings			259,948				274,243
Common treasury stock, at cost			(74,472		)		(74,472		)
Accumulated other comprehensive loss, net of tax			(54,013		)		(36,730		)
Total Shareholders’ Equity			573,993				601,974
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY			$	1,839,185			$	1,906,799

CIRCOR INTERNATIONAL, INC. SUMMARY OF ORDERS AND BACKLOG (in millions) UNAUDITED
			Three Months Ended								Six Months Ended
			July 1, 2018				July 2, 2017				July 1, 2018				July 2, 2017
ORDERS (1) (3)
Energy			$	113.2			$	73.1			$	242.9			$	173.2
Aerospace & Defense			59.4				39.9				119.2				96.3
Industrial			136.7				29.9				273.4				57.5
Total orders			$	309.3			$	142.9			$	635.5			$	327.0
BACKLOG (2) (3)			July 1, 2018				July 2, 2017
Energy			$	217.7			$	140.1
Aerospace & Defense			152.1				105.7
Industrial			167.3				33.8
Total backlog			$	537.1			$	279.6

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 represents unshipped customer orders for which revenue has not been recognized.
Note 3: 2018 backlog reflects adjustments related to the cumulative impact of changes in revenue recognition due to the Company's adoption of ASC 606. July 2, 2017 amounts restated for Q1 2018 organizational realignment.

CIRCOR INTERNATIONAL, INC. SEGMENT INFORMATION (in thousands, except percentages) UNAUDITED
			2017																				2018
			1ST QTR				2ND QTR				3RD QTR				4TH QTR				TOTAL				1ST QTR				2ND QTR				TOTAL
ORDERS
Energy			$	100,012			$	73,140			$	84,857			$	118,073			$	376,082			$	129,762			$	113,171			$	242,933
Aerospace & Defense			56,416				39,902				45,939				$	52,043			194,300				59,793				59,441				119,234
Industrial			27,654				29,889				27,296				46,407				131,246				136,607				136,746				273,353
Total			$	184,082			$	142,931			$	158,092			$	216,523			$	701,628			$	326,162			$	309,358			$	635,520
NET REVENUES
Energy			$	76,210			$	78,276			$	88,570			$	96,561			$	339,617			$	99,972			$	112,804			$	212,776
Aerospace & Defense			41,601				43,304				41,117				$	56,961			182,983				58,477				57,500				$	115,977
Industrial			27,397				29,651				30,006				52,056				139,110				117,131				131,064				$	248,195
Total			$	145,208			$	151,231			$	159,693			$	205,578			$	661,710			$	275,580			$	301,368			$	576,948
SEGMENT OPERATING INCOME
Energy			$	6,407			$	8,170			$	6,936			$	8,618			$	30,131			$	5,696			$	9,242			$	14,938
Aerospace & Defense			3,784				4,374				4,333				10,884				23,375				8,931				6,992				$	15,923
Industrial			4,384				4,901				5,675				4,972				19,932				12,948				15,037				$	27,985
Corporate expenses			(5,479		)		(5,396		)		(5,067		)		(5,802		)		(21,744		)		(7,802		)		(6,448		)		$	(14,250	)
Adjusted Operating Income			$	9,096			$	12,049			$	11,877			$	18,672			$	51,694			$	19,773			$	24,823			$	44,596
SEGMENT OPERATING MARGIN %
Energy			8.4		%		10.4		%		7.8		%		8.9		%		8.9		%		5.7		%		8.2		%		7.0		%
Aerospace & Defense			9.1		%		10.1		%		10.5		%		19.1		%		12.8		%		15.3		%		12.2		%		13.7		%
Industrial			16.0		%		16.5		%		18.9		%		9.6		%		14.3		%		11.1		%		11.5		%		11.3		%
Adjusted Operating Margin			6.3		%		8.0		%		7.4		%		9.1		%		7.8		%		7.2		%		8.2		%		7.7		%

CIRCOR INTERNATIONAL, INC. RECONCILIATION OF KEY PERFORMANCE MEASURES TO COMMONLY USED GENERALLY ACCEPTED ACCOUNTING PRINCIPLE TERMS (in thousands, except percentages) UNAUDITED
			2017																				2018
			1ST QTR				2ND QTR				3RD QTR				4TH QTR				TOTAL				1ST QTR				2ND QTR				TOTAL
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES			$	16,195			$	2,667			$	(16,854	)		$	7,629			$	9,637			$	(147	)		$	(1,893	)		$	(2,040	)
LESS:
Capital expenditures, net of sale proceeds			2,811				2,375				2,318				6,103				13,607				8,141				3,999				12,140
FREE CASH FLOW			$	13,384			$	292			$	(19,172	)		$	1,526			$	(3,970	)		$	(8,288	)		$	(5,892	)		$	(14,180	)
TOTAL DEBT			$	243,000			$	252,856			$	269,026			$	795,208			$	795,208			$	823,665			$	827,629			$	827,629
LESS:
Cash & cash equivalents			65,656				77,272				75,627				110,356				110,356				123,305				69,030				69,030
NET DEBT			$	177,344			$	175,584			$	193,399			$	684,852			$	684,852			$	700,360			$	758,599			$	758,599
TOTAL SHAREHOLDERS' EQUITY			$	415,537			$	438,097			$	451,885			$	601,974			$	601,974			$	588,312			$	573,992			$	573,992
TOTAL DEBT AS % OF EQUITY			58		%		58		%		60		%		132		%		132		%		140		%		144		%		144		%
NET DEBT AS % OF EQUITY			43		%		40		%		43		%		114		%		114		%		119		%		132		%		132		%

CIRCOR INTERNATIONAL, INC. RECONCILIATION OF KEY PERFORMANCE MEASURES TO COMMONLY USED GENERALLY ACCEPTED ACCOUNTING PRINCIPLE TERMS (in thousands, except per share data) UNAUDITED
			2017																				2018
			1ST QTR				2ND QTR				3RD QTR				4TH QTR				TOTAL				1ST QTR				2ND QTR				TOTAL
NET INCOME (LOSS)			$	4,773			$	8,970			$	3,617			$	(5,571	)		$	11,789			$	(17,441	)		$	5,902			$	(11,539	)
LESS:
Restructuring related inventory charges			—				—				—				—				—				473				1,067				1,540
Amortization of inventory step-up			—				—				—				4,300				4,300				6,600				—				6,600
Restructuring charges, net			1,458				3,566				341				697				6,062				9,615				844				10,459
Acquisition amortization			2,552				2,599				2,694				4,697				12,542				11,797				11,767				23,564
Acquisition depreciation			—				—				—				233				233				1,837				1,735				3,572
Special (recoveries) charges, net			(2,268		)		(5,520		)		1,978				13,799				7,989				2,831				1,156				3,987
Income tax impact			(1,137		)		(3,124		)		(1,497		)		(8,279		)		(14,037		)		(7,687		)		(11,056		)		(18,743		)
ADJUSTED NET INCOME			$	5,378			$	6,491			$	7,133			$	9,876			$	28,878			$	8,025			$	11,415			$	19,440
EARNINGS (LOSS) PER COMMON SHARE (Diluted)			$	0.29			$	0.54			$	0.22			$	(0.32	)		$	0.70			$	(0.88	)		$	0.30			$	(0.58	)
LESS:
Restructuring related inventory charges			—				—				—				—				—				0.02				0.05				0.08
Amortization of inventory step-up			—				—				—				0.25				0.26				0.33				—				0.33
Restructuring charges, net			0.09				0.21				0.02				0.04				0.36				0.49				0.04				0.53
Acquisition amortization			0.15				0.16				0.16				0.27				0.74				0.60				0.59				1.18
Acquisition depreciation			—				—				—				0.01				0.01				0.09				0.09				0.18
Special (recoveries) charges, net			(0.14		)		(0.33		)		0.12				0.80				0.47				0.14				0.06				0.20
Income tax impact			(0.07		)		(0.19		)		(0.09		)		(0.48		)		(0.83		)		(0.39		)		(0.55		)		(0.94		)
ADJUSTED EARNINGS PER SHARE (Diluted)			$	0.32			$	0.39			$	0.43			$	0.57			$	1.71			$	0.40			$	0.57			$	0.98

CIRCOR INTERNATIONAL, INC. RECONCILIATION OF KEY PERFORMANCE MEASURES TO COMMONLY USED GENERALLY ACCEPTED ACCOUNTING PRINCIPLE TERMS (in thousands) UNAUDITED
			2017																				2018
			1ST QTR				2ND QTR				3RD QTR				4TH QTR				TOTAL				1ST QTR				2ND QTR				TOTAL
NET INCOME (LOSS)			$	4,773			$	8,970			$	3,617			$	(5,571	)		$	11,789			$	(17,441	)		$	5,902			$	(11,539	)
LESS:
Interest expense, net			(1,669		)		(2,184		)		(2,445		)		(4,479		)		(10,777		)		(11,801		)		(13,755		)		(25,556		)
Depreciation			(3,798		)		(3,547		)		(3,544		)		(4,401		)		(15,290		)		(7,334		)		(7,157		)		(14,491		)
Amortization			(3,092		)		(3,124		)		(3,275		)		(5,256		)		(14,747		)		(12,329		)		(12,282		)		(24,611		)
(Provision for) benefit from income taxes			(687		)		724				21				5,618				5,676				5,879				7,646				13,525
EBITDA			$	14,019			$	17,101			$	12,860			$	2,947			$	46,927			$	8,144			$	31,450			$	39,594
LESS:
Restructuring related inventory charges			—				—				—				—				—				(473		)		(1,067		)		(1,540		)
Amortization of inventory step-up			—				—				—				(4,300		)		(4,300		)		(6,600		)		—				(6,600		)
Restructuring charges, net			(1,458		)		(3,566		)		(341		)		(697		)		(6,062		)		(9,615		)		(844		)		(10,459		)
Special recoveries (charges), net			2,268				5,520				(1,978		)		(13,799		)		(7,989		)		(2,831		)		(1,156		)		(3,987		)
ADJUSTED EBITDA			$	13,209			$	15,147			$	15,179			$	21,743			$	65,278			$	27,663			$	34,517			$	62,180

CIRCOR INTERNATIONAL, INC. RECONCILIATION OF KEY PERFORMANCE MEASURES TO COMMONLY USED GENERALLY ACCEPTED ACCOUNTING PRINCIPLE TERMS (in thousands, except percentages) UNAUDITED
			2017																				2018
			1ST QTR				2ND QTR				3RD QTR				4TH QTR				TOTAL				1ST QTR				2ND QTR				TOTAL
GAAP OPERATING INCOME (LOSS)			$	7,354			$	11,404			$	6,864			$	(5,054	)		$	20,568			$	(13,380	)		$	8,252			$	(5,128	)
LESS:
Restructuring related inventory charges			—				—				—				—				—				473				1,067				1,540
Amortization of inventory step-up			—				—				—				4,300				4,300				6,600				—				6,600
Restructuring charges, net			1,458				3,566				341				697				6,062				9,615				844				10,459
Acquisition amortization			2,552				2,599				2,694				4,697				12,542				11,797				11,767				23,564
Acquisition depreciation			—				—				—				233				233				1,837				1,735				3,572
Special (recoveries) charges, net			(2,268		)		(5,520		)		1,978				13,799				7,989				2,831				1,156				3,987
ADJUSTED OPERATING INCOME			$	9,096			$	12,049			$	11,877			$	18,672			$	51,694			$	19,773			$	24,821			$	44,594
GAAP OPERATING MARGIN			5.1		%		7.5		%		4.3		%		(2.5		)%		3.1		%		(4.9		)%		2.7		%		(0.9		)%
LESS:
Restructuring related inventory charges			—		%		—		%		—		%		—		%		—		%		0.2		%		0.4		%		0.3		%
Amortization of inventory step-up			—		%		—		%		—		%		2.1		%		0.6		%		2.4		%		—		%		1.1		%
Restructuring charges, net			1.0		%		2.4		%		0.2		%		0.3		%		0.9		%		3.5		%		0.3		%		1.8		%
Acquisition amortization			1.8		%		1.7		%		1.7		%		2.3		%		1.9		%		4.3		%		3.9		%		4.1		%
Acquisition depreciation			—		%		—		%		—		%		0.1		%		—		%		0.7		%		0.6		%		0.6		%
Special (recoveries) charges, net			(1.6		)%		(3.7		)%		1.2		%		6.7		%		1.2		%		1.0		%		0.4		%		0.7		%
ADJUSTED OPERATING MARGIN			6.3		%		8.0		%		7.4		%		9.1		%		7.8		%		7.2		%		8.2		%		7.7		%

The Company is providing certain combined information related to the recently acquired Fluid Handling business.

CIRCOR INTERNATIONAL, INC. SEGMENT INFORMATION - COMBINED (in thousands, except percentages) UNAUDITED
			2017
			1ST QTR				2ND QTR				3RD QTR				4TH QTR				TOTAL
ORDERS - Recast
Energy			$	100,012			$	73,140			$	84,857			$	118,073			$	376,082
Aerospace & Defense			56,416				39,902				45,939				52,043				194,300
Industrial			27,654				29,889				27,296				46,407				131,246
Total			$	184,082			$	142,931			$	158,092			$	216,523			$	701,628
ORDERS - Fluid Handling
Energy			$	23,679			$	16,882			$	21,401			$	11,803			$	73,765
Aerospace & Defense			8,255				24,375				9,716				6,816				49,162
Industrial			77,944				76,866				87,378				60,193				302,381
Total			$	109,878			$	118,123			$	118,495			$	78,812			$	425,308
ORDERS - Combined
Energy			$	123,690			$	90,022			$	106,258			$	129,876			$	449,846
Aerospace & Defense			64,671				64,277				55,655				58,859				243,462
Industrial			105,598				106,755				114,674				106,601				433,628
Total			$	293,959			$	261,054			$	276,587			$	295,336			$	1,126,936
NET REVENUES - Recast
Energy			$	76,210			$	78,276			$	88,570			$	96,561			$	339,617
Aerospace & Defense			41,601				43,304				41,117				56,961				182,983
Industrial			27,397				29,651				30,006				52,056				139,110
Total			$	145,208			$	151,231			$	159,693			$	205,578			$	661,710
NET REVENUES - Fluid Handling
Energy			$	15,546			$	17,705			$	17,789			$	13,663			$	64,703
Aerospace & Defense			10,728				17,044				11,208				6,918				45,898
Industrial			85,264				83,310				85,604				72,489				326,667
Total			$	111,538			$	118,059			$	114,601			$	93,070			$	437,268
NET REVENUES - Combined
Energy			$	91,756			$	95,981			$	106,359			$	110,224			$	404,320
Aerospace & Defense			52,329				60,348				52,325				63,879				228,881
Industrial			112,661				112,961				115,610				124,545				465,777
Total			$	256,746			$	269,290			$	274,294			$	298,648			$	1,098,978

Notes:
- Items labeled "Recast" represent previously reported CIRCOR information, adjusted to reflect the impact of our February 28, 2018 organizational realignment
- Items labeled "Fluid Handling" represent the information from the Fluid Handling businesses prior to their acquisition by CIRCOR on December 10, 2017
- Items labeled "Combined" represent the sum of the Recast and Fluid Handling information

CIRCOR INTERNATIONAL, INC. SEGMENT INFORMATION - COMBINED (in thousands, except percentages) UNAUDITED
			2017
			1ST QTR				2ND QTR				3RD QTR				4TH QTR				TOTAL
SEGMENT OPERATING INCOME - Recast
Energy			$	6,407			$	8,170			$	6,936			$	8,618			$	30,131
Aerospace & Defense			3,784				4,374				4,333				10,884				23,375
Industrial			4,384				4,901				5,675				4,972				19,932
Corporate expenses			(5,479		)		(5,396		)		(5,067		)		(5,802		)		(21,744		)
Total			$	9,096			$	12,049			$	11,877			$	18,672			$	51,694
SEGMENT OPERATING INCOME - Fluid Handling
Energy			$	(83	)		$	1,080			$	1,761			$	812			$	3,570
Aerospace & Defense			1,488				3,661				2,201				(367		)		6,983
Industrial			8,833				7,709				4,365				(1,414		)		19,493
Corporate expenses			—				—				—				—				—
Total			$	10,238			$	12,450			$	8,327			$	(969	)		$	30,046
SEGMENT OPERATING INCOME - Combined
Energy			$	6,324			$	9,250			$	8,697			$	9,430			$	33,701
Aerospace & Defense			5,272				8,035				6,534				10,517				30,358
Industrial			13,217				12,610				10,040				3,558				39,425
Corporate expenses			(5,479		)		(5,396		)		(5,067		)		(5,802		)		(21,744		)
Total			$	19,334			$	24,499			$	20,204			$	17,703			$	81,740
SEGMENT OPERATING MARGIN - Combined
Energy			6.9		%		9.6		%		8.2		%		8.6		%		8.3		%
Aerospace & Defense			10.1		%		13.3		%		12.5		%		16.5		%		13.3		%
Industrial			11.7		%		11.2		%		8.7		%		2.9		%		8.5		%
Corporate expenses			(2.1		)%		(2.0		)%		(1.8		)%		(1.9		)%		(2.0		)%
Total			7.5		%		9.1		%		7.4		%		5.9		%		7.4		%

Notes:
- Items labeled "Recast" represent previously reported CIRCOR information, adjusted to reflect the impact of our February 28, 2018 organizational realignment
- Items labeled "Fluid Handling" represent the information from the Fluid Handling businesses prior to their acquisition by CIRCOR on December 10, 2017
- Items labeled "Combined" represent the sum of the Recast and Fluid Handling information
- Segment Operating Margin - Combined represent Segment Operating Income - Combined divided by Segment Net Revenues Combined

CIRCOR INTERNATIONAL, INC. Q2 2018 Organic Growth Calculations (in thousands, except percentages) UNAUDITED
ORDERS
			Industrial												Energy												Aerospace & Defense
			Reported						Pro Forma Combined						Reported						Pro Forma Combined						Reported						Pro Forma Combined
			$			%			$			%			$			%			$			%			$			%			$			%
2017			29,889						106,755						73,140						90,022						39,902						64,277
Product line transfer			—						14,600						—						—						—						(14,600	)
2017 as Adjusted			29,889						121,355						73,140						90,022						39,902						49,677
Organic			3,267			11	%		9,780			8	%		19,470			27	%		21,449			24	%		2,766			7	%		8,664			17	%
Acquisitions			102,460			343	%		—			—	%		18,389			25	%		—			—	%		15,661			39	%		—			—	%
Foreign Exchange			1,130			4	%		5,611			5	%		2,172			3	%		1,700			2	%		1,112			3	%		1,100			2	%
Total Change			106,857			358	%		15,391			13	%		40,031			55	%		23,149			26	%		19,539			49	%		9,764			20	%
2018			136,746						136,746						113,171						113,171						59,441						59,441
NET REVENUE
			Industrial												Energy												Aerospace & Defense
			Reported						Pro Forma Combined						Reported						Pro Forma Combined						Reported						Pro Forma Combined
			$			%			$			%			$			%			$			%			$			%			$			%
2017			29,651						112,961						78,276						95,981						43,304						60,348
Organic			(220	)		(1	)%		13,003			12	%		15,765			20	%		15,824			16	%		1,319			3	%		(3,948	)		(7	)%
Acquisitions			100,602			339	%		—			—	%		17,419			22	%		—			—	%		11,793			27	%		—			—	%
Foreign Exchange			1,031			3	%		5,100			5	%		1,346			2	%		1,000			1	%		1,084			3	%		1,100			2	%
Total Change			101,413			341	%		18,103			16	%		34,529			44	%		16,824			18	%		14,196			33	%		(2,848	)		(5	)%
2018			131,064						131,064						112,804						112,804						57,500						57,500

CIRCOR INTERNATIONAL, INC. Q2 2018 Organic Growth Calculations (in thousands, except percentages) UNAUDITED
ORDERS
			Total
			Reported							Pro Forma Combined
			$			%				$			%
2017			142,931							261,054
Product line transfer			—							—
2017 as Adjusted			142,931							261,054
Organic			25,502			18	%			39,893			15	%
Acquisitions			136,511			96	%			—			—	%
Foreign Exchange			4,414			3	%			8,411			3	%
Total Change			166,427			116	%			48,304			18	%
2018			309,358							309,358
NET REVENUE
			Total
			Reported							Pro Forma Combined
			$			%				$			%
2017			151,231							269,290
Organic			16,863			11	%			24,878			9	%
Acquisitions			129,814			86	%			—			—	%
Foreign Exchange			3,460			2	%			7,200			3	%
Total Change			150,137			99	%			32,078			12	%
2018			301,368							301,368

CIRCOR INTERNATIONAL, INC. RECONCILIATION OF FLUID HANDLING SEGMENT INFORMATION TO GAAP OPERATING INCOME (in thousands, except percentages) UNAUDITED
			2017
			1ST QTR				2ND QTR				3RD QTR				4TH QTR				TOTAL
FLUID HANDLING GAAP OPERATING INCOME (LOSS)			$	4,359			$	19,738			$	2,241			$	3,129			$	29,467
LESS:
Asbestos costs			2,690				2,517				2,379				1,274				8,860
Impairment charges			—				—				—								—
Exited businesses			65				(26		)		(47		)		—				(8		)
Acquisition amortization			796				810				818				—				2,424
Restructuring and other special charges (recoveries)			2,328				(10,589		)		636				(5,372		)		(12,997		)
Stay bonus			—				—				2,300				—				2,300
FLUID HANDLING ADJUSTED OPERATING INCOME			$	10,238			$	12,450			$	8,327			$	(969	)		$	30,046

Notes
- Amounts relate to Fluid Handling results prior to December 10, 2017, the date of CIRCOR's acquisition.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20180726006010/en/

Source: Circor International, Inc.

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