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CIRCOR International Completes Restatement; Files Annual Report on Form 10-K for the Year Ended December 31, 2021 and Announces 2022 Annual Meeting Date

  • Orders and backlog grow by double digits in 2021, driven by Industrial Segment
  • Previously disclosed selected preliminary financial expectations for first-quarter 2022 reiterated
  • Orders growth in second-quarter 2022 (excluding Pipeline Engineering)
  • Exit from Pipeline Engineering Business and accounting review completed
  • Board of Directors remain focused on exploration of strategic alternatives

CIRCOR International, Inc. (NYSE: CIR) (“CIRCOR” or “the Company”), one of the world’s leading providers of mission critical flow control products and services for the Industrial and Aerospace & Defense (A&D) markets, today announced the filing of the Company’s annual report on Form 10-K for the year ended December 31, 2021 (the “Annual Report”), restated financial statements for the years ended December 31, 2019, and 2020, and interim financial statements for the first, second, and third quarters of 2020 and 2021.

“We continue to make solid progress on our growth, value pricing and simplification program, and believe that the initiatives we are implementing effectively position us to better support our customers, expand margins and navigate the dynamic market environment,” said Tony Najjar, Chief Operating Officer and Interim President and CEO. “The simplification and structural cost out initiatives underway in our Industrial segment and within Corporate remain on track, and we have completed our exit from the loss-making Pipeline Engineering business. In addition, our value pricing efforts have been successful in supporting our performance, enabling us to more than offset the effects of inflation.”

The Company is reiterating its previously disclosed selected preliminary, unaudited, unreviewed financial expectations for first-quarter 2022. For second-quarter 2022, CIRCOR expects low single digit order growth (high single digits on an organic basis), excluding Pipeline Engineering, driven by strength in the Aerospace & Defense segment, offset by a decline in the Industrial segment on a difficult prior year comparison.

Helmuth Ludwig, Chair of the Board, said, “We are pleased to have the restatement behind us so that management and the Board can focus on the parallel paths of executing initiatives to enhance growth and margins across our businesses while reviewing potential strategic alternatives to maximize shareholder value. Our team has worked diligently to complete the accounting review, and I want to thank all our stakeholders for their trust and patience during this period."

2021 Overview Results As Reported:

  • Backlog of $444 million, up 16% reported driven by strong demand in Industrial
  • Orders of $851 million, up 16% reported and 14% organically
    • Aerospace & Defense orders of $255 million remaining flat YoY and (1%) organically
    • Industrial orders of $595 million, up 24% reported and 22% organically
  • Revenue of $759 million down (1%) reported and (2%) organically
    • Aerospace & Defense revenue of $253 million, down (5%) reported and (6%) organically
    • Industrial revenue of $506 million, up 1% reported and flat organically
  • GAAP operating (loss) income ($29) million, up 69% reported
  • Adjusted operating income $54 million, down (1%)
  • GAAP operating margin of (3.9%); Adjusted operating margin of 7.2%

2021 Overview Results Excluding Divestitures and Pipeline Engineering:

  • Backlog of $443 million, up 16% adjusted, driven by strong demand in Industrial
  • Orders of $826 million, up 16% adjusted and 11% organically
    • Aerospace & Defense orders of $255 million remaining flat YoY and (1%) organically
    • Industrial orders of $571 million, up 24% adjusted and 21% organically
  • Revenue of $744 million flat YoY and (4%) organically
    • Aerospace & Defense revenue of $253 million, down (5%) adjusted and (6%) organically
    • Industrial revenue of $491 million, up 3% adjusted and flat organically
  • Adjusted operating income $64 million, up 2% adjusted
  • Adjusted operating margin of 8.6%

As previously announced, the restatement resulted from accounting irregularities in the Company’s Pipeline Engineering business. The accounting irregularities were the result of intentional acts of an individual employee. In connection with the restatement process, the Company identified material weaknesses in the Company’s internal control over financial reporting during the applicable periods. Remedial actions have been identified and further actions are planned as noted in Part II, Item 9A, “Controls and Procedures” on Form 10-K. The restated financial statements and the Annual Report are available on the CIRCOR investor relations website, https://investors.circor.com/, and on the U.S. Securities and Exchange Commission website, www.sec.gov.

Selected Consolidated Results

(unaudited)

 

($ millions except EPS)

 

Q4 2021

 

Q4 2020

 

Change

 

Q4 YTD 2021

 

Q4 YTD 2020

 

Change

Orders

 

 

220.0

 

 

168.5

 

31 %

 

 

850.6

 

 

736.2

 

16 %

Orders - excluding Divested & Pipeline Engineering1

 

 

212.8

 

 

164.6

 

29 %

 

 

826.2

 

 

714.0

 

16 %

Revenue

 

$

204.9

 

$

205.3

 

— %

 

$

758.7

 

$

765.2

 

-1 %

Revenue - excluding Divested & Pipeline Engineering1

 

 

199.7

 

 

202.3

 

-1 %

 

 

744.1

 

 

745.1

 

— %

GAAP operating (loss) income

 

 

(19.0)

 

 

5.1

 

-473 %

 

 

(29.3)

 

 

(94.9)

 

69 %

Adjusted operating income2

 

 

20.5

 

 

18.5

 

11 %

 

 

54.3

 

 

55.0

 

-1 %

Adjusted operating income excluding Divested & Pipeline Engineering1,2

 

 

23.7

 

 

21.7

 

9 %

 

 

64.2

 

 

63.2

 

2 %

GAAP operating margin

 

 

(9.3) %

 

 

2.5 %

 

-1180 bps

 

 

(3.9) %

 

 

(12.4) %

 

850 bps

Adjusted operating margin2

 

 

10.0 %

 

 

9.0 %

 

100 bps

 

 

7.2 %

 

 

7.2 %

 

0 bps

Adjusted operating margin excluding Divested & Pipeline Engineering1,2

 

 

11.9 %

 

 

10.7 %

 

120 bps

 

 

8.6 %

 

 

8.5 %

 

10 bps

GAAP earnings (loss) per share (diluted)

 

$

(1.40)

 

$

(0.89)

 

-57 %

 

$

(3.05)

 

$

(10.94)

 

72 %

Adjusted earnings per share (diluted)2

 

$

0.46

 

$

0.43

 

7 %

 

$

1.01

 

$

0.90

 

12 %

Operating cash flow

 

 

10.6

 

 

25.5

 

-58 %

 

$

10.4

 

 

(22.5)

 

146 %

Free cash flow3

 

 

6.4

 

 

22.2

 

-71 %

 

 

(4.3)

 

 

(35.0)

 

88 %

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment Results

(unaudited)

 

($ in millions)

 

Q4 2021

 

Q4 2020

 

Change

 

Q4 YTD 2021

 

Q4 YTD 2020

 

Change

Aerospace & Defense

 

 

 

 

 

 

 

 

 

 

 

 

Orders

 

$

73.9

 

$

46.8

 

58 %

 

$

255.2

 

$

254.5

 

— %

Revenue

 

 

70.0

 

 

77.4

 

-10 %

 

 

252.5

 

 

266.0

 

-5 %

Segment operating income

 

 

18.4

 

 

18.5

 

-1 %

 

 

56.1

 

 

58.4

 

-4 %

Segment operating margin

 

 

26.3 %

 

 

23.9 %

 

240 bps

 

 

22.2 %

 

 

21.9 %

 

30 bps

 

 

 

 

 

 

 

 

 

 

 

 

 

Industrial

 

 

 

 

 

 

 

 

 

 

 

 

Orders

 

$

146.1

 

$

121.7

 

20 %

 

$

595.4

 

$

481.6

 

24 %

Orders - excluding Divested & Pipeline Engineering1

 

 

138.9

 

 

117.8

 

18 %

 

 

571.0

 

 

459.5

 

24 %

Revenue

 

 

134.9

 

 

127.9

 

5 %

 

 

506.1

 

 

499.2

 

1 %

Revenue - excluding Divested & Pipeline Engineering1

 

$

129.7

 

$

124.9

 

4 %

 

$

491.5

 

$

479.0

 

3 %

Segment operating income

 

 

8.7

 

 

7.0

 

24 %

 

 

28.9

 

 

27.0

 

15.0 %

Segment operating income -excluding Divested & Pipeline Engineering

 

 

11.9

 

 

10.1

 

18 %

 

 

38.8

 

 

35.2

 

10 %

Segment operating margin

 

 

6.4 %

 

 

5.5 %

 

90 bps

 

 

5.7 %

 

 

5.4 %

 

30 bps

Segment operating margin (adjusted)

 

 

9.2 %

 

 

8.1 %

 

110 bps

 

 

7.9 %

 

 

7.3 %

 

60 bps

  1. Orders, revenue and adjusted operating income excluding Divested & Pipeline Engineering businesses are non-GAAP measures. Divested businesses include Instrumentation & Sampling which was sold during Q1 2020. Pipeline Engineering is related to accounting irregularities noted on March 14,2022 8-K Filing. Both Instrumentation & Sampling and Pipeline Engineering are in the Industrial Segment.
  2. Adjusted consolidated and segment results for Q4 2021 exclude net income from discontinued operations and net loss from non-cash acquisition-related intangible amortization, special and restructuring charges, and goodwill impairment charge totaling $39.4 million. These charges include: (i) $11.8 million for non-cash acquisition-related intangible amortization and depreciation expense; (ii) $8.7 million of costs related to debt refinancing; (iii) $7.9 million related to incremental loss allowance for a receivable, contract asset and sub-contractor claims for a contract assumed as part of the Fluid Handling acquisition; (iv) $0.5 million other special and restructuring recoveries; and (v) $10.5 million goodwill impairment charge related to our Industrial segment. Adjusted consolidated and segment results for Q4 2020 exclude net loss from discontinued operations of $0.8 million and net loss from non-cash acquisition-related intangible amortization, special and restructuring charges totaling $13.4 million. These charges include: (i) $12.0 million for non-cash acquisition-related intangible amortization and depreciation expense; (ii) $1.4 million of professional fees and other costs associated with restructuring and cost reductions. It also excludes the Q4 2020 charge for valuation allowance against deferred tax assets by virtue of using an effective tax rate in the adjusted results which is a $12.4 million adjustment to taxes.
  3. 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.

CIRCOR Announces Date for 2022 Annual Meeting

On July 25, 2022, the Board of Directors (the “Board”) of the Company established October 4, 2022 as the date of the Company’s 2022 Annual Meeting of Stockholders (the “2022 Annual Meeting”) and August 22, 2022 as the record date (the “Record Date”) for determining stockholders entitled to notice of and to vote at the 2022 Annual Meeting. The Company will provide additional meeting details in its proxy statement related to the 2022 Annual Meeting.

First-Quarter 2022 10-Q

As disclosed in its May 23, 2022 announcement, in light of the accounting review the Company was unable to file its Quarterly Report on Form 10-Q (the “Form 10-Q”) for the first quarter ended April 3, 2022 on a timely basis without unreasonable effort or expense. The Company is working on completing its Form 10-Q for its 2022 first quarter and will make a subsequent announcement concerning the date and time of its first-quarter 2022 earnings release.

Company Expects to File Form 12-b-25 Related to Second-Quarter 10-Q

CIRCOR expects to file a Form 12b-25 with the U.S. Securities and Exchange Commission (SEC) to disclose that CIRCOR requires additional time to complete the Company’s Quarterly Report for the second quarter ended July 3, 2022 (the “Quarterly Report”). The Company plans to file the Quarterly Report as soon as possible.

Use of Non-GAAP Financial Measures

In this press release, the Company uses the non-GAAP financial measures organic orders, organic revenue, adjusted operating income, adjusted operating income as a percentage of sales, and free cash flow. Non-GAAP financial measures are used by management in our financial and operating decision making because we believe they reflect our ongoing business and facilitate period-to-period comparisons. We believe that these non-GAAP financial measures provide useful information to investors and others in understanding and evaluating CIRCOR’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 CIRCOR’s current financial results with CIRCOR’s past financial results in a consistent manner.

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. We exclude the results of discontinued operations. We exclude goodwill impairment charges. We exclude these costs because we do not believe they are indicative of our normal operating costs.

Due to the significance of recently sold businesses and to provide a comparison of changes in our orders and revenue, we also discuss these changes on an “organic” basis. Organic is calculated assuming the divestitures completed prior to December 31, 2021 were completed on January 1, 2020 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 peers. 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.

About CIRCOR International, Inc.

CIRCOR International is one of the world’s leading providers of mission critical flow control products and services for the Industrial and Aerospace & Defense markets. The Company has a product portfolio of market-leading brands serving its customers’ most demanding applications. CIRCOR markets its solutions directly and through various sales partners to more than 14,000 customers in approximately 100 countries. The Company has a global presence with approximately 3,100 employees and is headquartered in Burlington, Massachusetts. For more information, visit the Company’s investor relations website at http://investors.circor.com.

Cautionary Note Regarding Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Actual results may differ materially from the expectations the Company describes in its forward-looking statements. Substantial 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. Important factors that could cause actual results to differ materially from expectations include, but are not limited to findings and conclusions of the Audit Committee’s review; the effectiveness of the Company’s internal control over financial reporting and disclosure controls and procedures; the remediation of the material weaknesses in the Company’s internal controls over financial reporting or other potential weaknesses of which the Company is not currently aware or which have not been detected; the timing of the Company regaining compliance with the NYSE’s continued listing standards; the timing and outcome, if any, of the Company’s strategic alternatives review and its potential exit from the Pipeline Engineering business unit; the impact on the Company of the situation in Russia and Ukraine; and the risks detailed from time to time in the Company’s periodic reports filed with the SEC. Before making any investment decisions regarding CIRCOR, the Company strongly advises you to read the section entitled “Risk Factors” in its 2021 Annual Report on Form 10-K, which can be accessed under the “Investors” link of the Company’s website at www.circor.com. The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

CIRCOR INTERNATIONAL, INC

CONSOLIDATED STATEMENT OF OPERATIONS

(in thousands, except per share data) (unaudited)

 

 

 

Three Months Ended

 

Twelve Months Ended

 

 

December 31,

2021

 

December 31,

2020

 

December 31,

2021

 

December 31,

2020

 

 

 

 

 

 

 

 

 

Net revenues

 

$

204,917

 

$

205,295

 

$

758,667

 

$

765,219

Cost of revenues

 

 

140,348

 

 

141,242

 

 

528,291

 

 

533,005

Gross profit

 

 

64,569

 

 

64,053

 

 

230,376

 

 

232,214

Selling, general and administrative expenses

 

 

55,557

 

 

57,477

 

 

224,927

 

 

223,386

Goodwill impairment charge

 

 

10,500

 

 

 

 

10,500

 

 

138,078

Special and restructuring charges (recoveries), net

 

 

17,464

 

 

1,444

 

 

24,272

 

 

(34,303)

Operating (loss) income

 

 

(18,952)

 

 

5,132

 

 

(29,323)

 

 

(94,947)

Other expense (income):

 

 

 

 

 

 

 

 

Interest expense, net

 

 

8,040

 

 

8,520

 

 

32,365

 

 

34,219

Other expense (income)

 

 

(523)

 

 

(1,200)

 

 

(3,826)

 

 

(1,594)

Total other expense, net

 

 

7,517

 

 

7,320

 

 

28,539

 

 

32,625

(Loss) from continuing operations before income taxes

 

 

(26,469)

 

 

(2,188)

 

 

(57,862)

 

 

(127,572)

Provision for income taxes

 

 

1,970

 

 

14,992

 

 

5,182

 

 

55,902

Loss from continuing operations, net of tax

 

$

(28,439)

 

$

(17,180)

 

$

(63,044)

 

$

(183,474)

Income (loss) from discontinued operations, net of tax

 

$

13

 

$

(796)

 

$

1,406

 

$

(35,140)

Net (loss)

 

$

(28,426)

 

$

(17,976)

 

$

(61,638)

 

$

(218,614)

 

 

 

 

 

 

 

 

 

Basic income (loss) per common share:

 

 

 

 

 

 

 

 

Basic from continuing operations

 

$

(1.40)

 

$

(0.86)

 

$

(3.12)

 

$

(9.18)

Basic from discontinued operations

 

$

 

$

(0.04)

 

$

0.07

 

$

(1.76)

Net income (loss)

 

$

(1.40)

 

$

(0.90)

 

$

(3.05)

 

$

(10.94)

Diluted income (loss) per common share:

 

 

 

 

 

 

 

 

Diluted from continuing operations

 

$

(1.40)

 

$

(0.86)

 

$

(3.12)

 

$

(9.18)

Diluted from discontinued operations

 

$

 

$

(0.04)

 

$

0.07

 

$

(1.76)

Net income (loss)

 

$

(1.40)

 

$

(0.90)

 

$

(3.05)

 

$

(10.94)

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

Basic

 

 

20,261

 

 

20,002

 

 

20,201

 

 

19,982

Diluted

 

 

20,261

 

 

20,002

 

 

20,201

 

 

19,982

CIRCOR INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

 

 

Year Ended December 31,

 

2021

 

2020

OPERATING ACTIVITIES

 

 

 

Net (loss)

$

(61,638)

 

$

(218,614)

Income (loss) from discontinued operations, net of income taxes

 

1,406

 

 

(35,140)

(Loss) from continuing operations, net of tax

 

(63,044)

 

 

(183,474)

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

 

 

 

Depreciation

 

22,854

 

 

20,401

Amortization

 

42,304

 

 

43,662

Change in provision for bad debt expense

 

1,213

 

 

6,274

Write down of inventory

 

3,364

 

 

4,272

Compensation expense of share-based plans

 

5,252

 

 

5,488

Loss on debt extinguishment

 

8,693

 

 

Amortization of debt issuance costs

 

3,996

 

 

7,460

Deferred income tax provision (benefit)

 

(2,992)

 

 

46,774

Goodwill Impairment

 

10,500

 

 

138,078

Loss (gain) on sale of businesses

 

1,919

 

 

(54,429)

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

 

 

 

Trade accounts receivable

 

(6,308)

 

 

26,211

Inventories

 

(6,974)

 

 

4,366

Prepaid expenses and other assets

 

(23,665)

 

 

(29,255)

Accounts payable, accrued expenses and other liabilities

 

15,820

 

 

(43,748)

Net cash provided by (used in) continuing operations

 

12,932

 

 

(7,920)

Net cash (used in) discontinued operations

 

(2,484)

 

 

(14,561)

Net cash provided by (used in) operating activities

 

10,448

 

 

(22,481)

INVESTING ACTIVITIES

 

 

 

Additions of property, plant and equipment

 

(14,747)

 

 

(12,222)

Proceeds from the sale of property, plant and equipment

 

2

 

 

(322)

Proceeds from beneficial interest of factored receivables

 

2,047

 

 

2,957

Proceeds from sale of business

 

9,993

 

 

165,540

Net cash (used in) provided by continuing investing activities

 

(2,705)

 

 

155,953

Net cash (used in) discontinued investing activities

 

 

 

(11,658)

Net cash (used in) provided by investing activities

 

(2,705)

 

 

144,295

FINANCING ACTIVITIES

 

 

 

Proceeds from long-term debt

 

734,612

 

 

219,000

Payments of long-term debt

 

(729,551)

 

 

(352,916)

Net Change in short-term borrowings

 

(374)

 

 

372

Proceeds from the exercise of stock options

 

151

 

 

118

Withholding tax payments on net share settlements on equity rewards

 

(4,209)

 

 

(713)

Payment of debt issuance costs

 

(12,157)

 

 

Net cash used in financing activities

 

(11,528)

 

 

(134,139)

Effect of exchange rate changes on cash, cash equivalents and restricted cash

 

(3,448)

 

 

3,878

INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH

 

(7,233)

 

 

(8,447)

Cash, cash equivalents and restricted cash at beginning of year

 

68,607

 

 

77,054

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF YEAR

$

61,374

 

$

68,607

CIRCOR INTERNATIONAL, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

 

 

December 31,

 

2021

 

2020

ASSETS

 

 

 

CURRENT ASSETS:

 

 

 

Cash and cash equivalents

$

59,924

 

$

66,918

Trade accounts receivable, net

 

100,149

 

 

95,635

Inventories

 

123,343

 

 

128,092

Prepaid expenses and other current assets

 

110,749

 

 

88,985

Assets held for sale

 

 

 

5,073

Total Current Assets

 

394,165

 

 

384,703

PROPERTY, PLANT AND EQUIPMENT, NET

 

154,461

 

 

166,022

OTHER ASSETS:

 

 

 

Goodwill

 

122,906

 

 

136,923

Intangibles, net

 

303,476

 

 

353,595

Deferred income taxes

 

756

 

 

830

Other assets

 

43,534

 

 

40,784

TOTAL ASSETS

$

1,019,298

 

$

1,082,857

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

CURRENT LIABILITIES:

 

 

 

Accounts payable

$

83,382

 

$

63,614

Accrued expenses and other current liabilities

 

81,998

 

 

79,040

Accrued compensation and benefits

 

26,551

 

 

28,016

Short-term borrowings and current portion of long-term debt

 

1,611

 

 

1,624

Total Current Liabilities

 

193,542

 

 

172,294

LONG-TERM DEBT

 

511,694

 

 

507,888

DEFERRED INCOME TAXES

 

21,721

 

 

25,865

PENSION LIABILITY, NET

 

120,881

 

 

163,642

OTHER NON-CURRENT LIABILITIES

 

37,744

 

 

60,270

SHAREHOLDERS’ EQUITY:

 

 

 

Preferred stock, $0.01 par value; 1,000,000 shares authorized; — shares issued and outstanding

 

 

 

Common stock, $0.01 par value; 29,000,000 shares authorized; 21,633,131 and 21,373,813 shares issued at December 31, 2021 and 2020, respectively

 

217

 

 

214

Additional paid-in capital

 

454,852

 

 

452,728

Accumulated deficit

 

(198,081)

 

 

(136,443)

Common treasury stock, at cost (1,372,488 shares at December 31, 2021 and 2020)

 

(74,472)

 

 

(74,472)

Accumulated other comprehensive loss

 

(48,800)

 

 

(89,129)

Total Shareholders’ Equity

 

133,716

 

 

152,898

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

$

1,019,298

 

$

1,082,857

CIRCOR INTERNATIONAL, INC.

SUMMARY OF ORDERS AND BACKLOG

(in millions) (unaudited)

 

 

 

 

 

Three Months Ended

 

Twelve Months Ended

 

 

 

 

December 31,

2021

 

December 31,

2020

 

December 31,

2021

 

December 31,

2020

 

 

 

 

 

 

 

 

 

 

 

ORDERS (1)

   

 

 

 

 

 

 

 

 

 

 

Aerospace & Defense

 

$

73.9

 

$

46.8

 

$

255.2

 

$

254.6

 

 

Industrial

 

 

146.1

 

 

121.7

 

 

595.4

 

 

481.6

 

 

Total Orders

 

$

220.0

 

$

168.5

 

$

850.6

 

$

736.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31,

2021

 

December 31,

2020

 

 

 

 

BACKLOG (2)

   

 

 

 

 

 

 

 

 

 

 

Aerospace & Defense

 

$

185.3

 

$

184.1

 

 

 

 

 

 

Industrial

 

 

258.4

 

 

197.2

 

 

 

 

 

 

Total Backlog

 

$

443.7

 

$

381.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Note 1: Orders do not include the foreign exchange impact due to the re-measurement of customer backlog amounts denominated in foreign currencies. Orders for the twelve months ended December 31, 2020 include orders from businesses divested prior to December 31, 2020 of $4.4 million.

 

 

 

 

 

 

 

 

 

 

 

Note 2: Backlog includes unshipped customer orders for which revenue has not been recognized.

CIRCOR INTERNATIONAL, INC.

SEGMENT INFORMATION

(in thousands, except percentages) (unaudited)

 

 

 

2020

2021

As reported

 

1ST QTR

2ND QTR

3RD QTR

4TH QTR

TOTAL

1ST QTR

2ND QTR

3RD QTR

4TH QTR

TOTAL

ORDERS

 

 

 

 

 

 

 

 

 

 

 

Aerospace & Defense

 

$

72,031

$

76,616

$

59,105

$

46,795

$

254,547

$

72,999

$

54,243

$

54,028

$

73,898

$

255,168

Industrial

 

 

136,443

 

116,023

 

107,453

 

121,690

 

481,609

 

153,695

 

155,959

 

139,691

 

146,065

 

595,410

Total

 

$

208,474

$

192,639

$

166,558

$

168,485

$

736,156

$

226,693

$

210,203

$

193,719

$

219,964

$

850,578

 

 

 

 

 

 

 

 

 

 

 

 

NET REVENUES

 

 

 

 

 

 

 

 

 

 

 

Aerospace & Defense

 

$

65,401

$

62,123

$

61,129

$

77,357

$

266,010

$

58,488

$

60,613

$

63,461

$

69,979

$

252,541

Industrial

 

 

125,724

 

121,386

 

124,161

 

127,938

 

499,209

 

117,963

 

126,977

 

126,248

 

134,938

 

506,126

Total

 

$

191,125

$

183,509

$

185,290

$

205,295

$

765,219

$

176,451

$

187,590

$

189,709

$

204,917

$

758,667

 

 

 

 

 

 

 

 

 

 

 

 

SEGMENT OPERATING INCOME

 

 

 

 

 

 

 

 

Aerospace & Defense

 

$

12,445

$

13,075

$

14,409

$

18,450

$

58,379

$

9,988

$

11,741

$

15,927

$

18,416

$

56,073

Industrial

 

 

3,517

 

9,887

 

6,651

 

6,970

 

27,025

 

5,834

 

7,237

 

7,124

 

8,700

 

28,896

Corporate expenses

 

 

(7,246)

 

(9,006)

 

(7,243)

 

(6,882)

 

(30,378)

 

(9,035)

 

(7,950)

 

(7,015)

 

(6,636)

 

(30,638)

Total

 

$

8,716

$

13,956

$

13,817

$

18,538

$

55,026

$

6,787

$

11,028

$

16,036

$

20,480

$

54,331

 

 

 

 

 

 

 

 

 

 

 

 

SEGMENT OPERATING MARGIN %

 

 

 

 

 

 

 

 

Aerospace & Defense

 

 

19.0 %

 

21.0 %

 

23.6 %

 

23.9 %

 

21.9 %

 

17.1 %

 

19.4 %

 

25.1 %

 

26.3 %

 

22.2 %

Industrial

 

 

2.8 %

 

8.1 %

 

5.4 %

 

5.4 %

 

5.4 %

 

4.9 %

 

5.7 %

 

5.6 %

 

6.4 %

 

5.7 %

Total

 

 

4.6 %

 

7.6 %

 

7.5 %

 

9.0 %

 

7.2 %

 

3.8 %

 

5.9 %

 

8.5 %

 

10.0 %

 

7.2 %

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2020

2021

Results of divested businesses (1)

 

1ST QTR

2ND QTR

3RD QTR

4TH QTR

TOTAL

1ST QTR

2ND QTR

3RD QTR

4TH QTR

TOTAL

ORDERS - Industrial

 

$

4,449

$

$

$

$

4,449

$

$

$

$

$

NET REVENUES - Industrial

 

$

4,900

$

$

$

$

4,900

$

$

$

$

$

SEGMENT OP. INC. -Industrial

 

$

$

$

$

$

$

$

$

$

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2020

2021

Pipeline Engineering (2)

 

1ST QTR

2ND QTR

3RD QTR

4TH QTR

TOTAL

1ST QTR

2ND QTR

3RD QTR

4TH QTR

TOTAL

ORDERS - Industrial

 

$

5,667

$

4,710

$

3,399

$

3,905

$

17,681

$

5,531

$

5,192

$

6,575

$

7,121

$

24,419

NET REVENUES - Industrial

 

$

4,455

$

2,966

$

4,843

$

2,997

$

15,262

$

2,994

$

3,124

$

3,236

$

5,248

$

14,602

SEGMENT OP. INC. -Industrial

 

$

(1,438)

$

(1,455)

$

(2,146)

$

(3,129)

$

(8,167)

$

(2,479)

$

(1,754)

$

(2,470)

$

(3,191)

$

(9,893)

(1) Divested businesses are related to the Industrial Segment and include Instrumentation & Sampling. Distributed Valves are discontinued operations and not reflected in the As Reported figures in accordance with US GAAP.

2) Excluding Pipeline Engineering business as related to the Industrial Segment with respect to accounting irregularities noted on March 14, 2022 8-K filing.

CIRCOR INTERNATIONAL, INC.

SUPPLEMENTAL INFORMATION REGARDING DIVESTED & PIPELINE ENGINEERING

(in thousands, except percentages) (unaudited)

 

 

2020

2021

Results excluding Divested & Pipeline Engineering

1ST QTR

2ND QTR

3RD QTR

4TH QTR

TOTAL

1ST QTR

2ND QTR

3RD QTR

4TH QTR

TOTAL

ORDERS

 

 

 

 

 

 

 

 

 

 

Aerospace & Defense

$

72,031

$

76,616

$

59,105

$

46,795

$

254,547

$

72,999

$

54,243

$

54,028

$

73,898

$

255,168

Industrial

 

126,327

 

111,313

 

104,054

 

117,785

$

459,479

 

148,164

 

150,767

 

133,116

 

138,944

 

570,991

Total

$

198,358

$

187,929

$

163,159

$

164,580

$

714,026

$

221,163

$

205,010

$

187,144

$

212,842

$

826,159

 

 

 

 

 

 

 

 

 

 

 

NET REVENUES

 

 

 

 

 

 

 

 

 

 

Aerospace & Defense

$

65,401

$

62,123

$

61,129

$

77,357

$

266,010

$

58,488

$

60,613

$

63,461

$

69,979

$

252,541

Industrial

 

116,369

 

118,420

 

119,318

 

124,941

$

479,047

 

114,969

 

123,853

 

123,012

 

129,690

 

491,524

Total

$

181,770

$

180,543

$

180,447

$

202,298

$

745,057

$

173,457

$

184,466

$

186,473

$

199,669

$

744,065

 

 

 

 

 

 

 

 

 

 

 

SEGMENT OPERATING INCOME

 

 

 

 

 

 

 

 

Aerospace & Defense

$

12,445

$

13,075

$

14,409

$

18,450

$

58,379

$

9,988

$

11,741

$

15,927

$

18,416

$

56,073

Industrial

 

4,955

 

11,342

 

8,797

 

10,099

 

35,192

 

8,313

 

8,991

 

9,594

 

11,891

 

38,789

Corporate expenses

 

(7,246)

 

(9,006)

 

(7,243)

 

(6,882)

 

(30,378)

 

(9,035)

 

(7,950)

 

(7,015)

 

(6,636)

 

(30,638)

Total

$

10,154

$

15,411

$

15,963

$

21,667

$

63,193

$

9,266

$

12,782

$

18,506

$

23,671

$

64,224

 

 

 

 

 

 

 

 

 

 

 

SEGMENT OPERATING MARGIN %

 

 

 

 

 

 

 

 

Aerospace & Defense

 

19.0 %

 

21.0 %

 

23.6 %

 

23.9 %

 

21.9 %

 

17.1 %

 

19.4 %

 

25.1 %

 

26.3 %

 

22.2 %

Industrial

 

4.3 %

 

9.6 %

 

7.4 %

 

8.1 %

 

7.3 %

 

7.2 %

 

7.3 %

 

7.8 %

 

9.2 %

 

7.9 %

Total

 

5.6 %

 

8.5 %

 

8.8 %

 

10.7 %

 

8.5 %

 

5.3 %

 

6.9 %

 

9.9 %

 

11.9 %

 

8.6 %

CIRCOR INTERNATIONAL, INC.

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

(in thousands, except percentages) (unaudited)

 

 

 

2020

2021

 

 

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

 

$

(23,425)

$

(25,475)

$

904

$

25,515

$

(22,481)

$

(19,210)

$

8,866

$

10,197

$

10,595

$

10,448

LESS

 

 

 

 

 

 

 

 

 

 

 

Capital expenditures, net of sale proceeds (a)

 

 

3,412

 

3,545

 

2,312

 

3,275

 

12,544

 

3,392

 

2,644

 

4,541

 

4,168

 

14,745

FREE CASH FLOW

 

$

(26,837)

$

(29,020)

$

(1,408)

$

22,240

$

(35,025)

$

(22,602)

$

6,222

$

5,656

$

6,427

$

(4,297)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Debt

 

$

603,564

$

593,379

$

541,617

$

521,562

$

521,562

$

538,541

$

524,391

$

518,464

$

526,311

$

526,311

Less: Cash & Cash equivalents

 

 

163,609

 

117,719

 

63,429

 

66,918

 

66,918

 

64,837

 

58,862

 

58,013

 

59,924

 

59,924

GROSS DEBT, NET OF CASH

 

$

439,955

$

475,660

$

478,188

$

454,644

$

454,644

$

473,704

$

465,529

$

460,451

$

466,387

$

466,387

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL SHAREHOLDERS' EQUITY

 

$

254,961

$

233,789

$

174,354

$

152,898

$

152,898

$

138,663

$

122,185

$

121,256

$

133,716

$

133,716

 

 

 

 

 

 

 

 

 

 

 

 

GROSS DEBT AS % OF EQUITY

 

 

237 %

 

254 %

 

311 %

 

341 %

 

341 %

 

388 %

 

429 %

 

428 %

 

394 %

 

394 %

GROSS DEBT, NET OF CASH AS % OF EQUITY

 

 

173 %

 

203 %

 

274 %

 

297 %

 

297 %

 

342 %

 

381 %

 

380 %

 

349 %

 

349 %

 

 

 

 

 

 

 

 

 

 

 

 

(a) Includes capital expenditures, net of sales proceeds of discontinued operations

CIRCOR INTERNATIONAL, INC.

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

(in thousands, except percentages) (unaudited)

 

 

 

2020

2021

 

 

1ST QTR

2ND QTR

3RD QTR

4TH QTR

TOTAL

1ST QTR

2ND QTR

3RD QTR

4TH QTR

TOTAL

NET (LOSS) INCOME

 

$

(99,387)

$

(36,542)

$

(64,709)

$

(17,976)

$

(218,614)

$

(11,796)

$

(18,784)

$

(2,630)

$

(28,427)

$

(61,638)

LESS:

 

 

 

 

 

 

 

 

 

 

 

Restructuring related inventory charges (recoveries), net

 

 

(602)

 

 

351

 

 

(251)

 

 

958

 

(60)

 

(299)

 

599

Restructuring charges, net

 

 

2,883

 

588

 

352

 

1,122

 

4,945

 

2,060

 

2,281

 

(312)

 

205

 

4,234

Acquisition amortization

 

 

10,217

 

10,681

 

10,625

 

10,940

 

42,463

 

10,487

 

10,498

 

10,417

 

10,369

 

41,772

Acquisition depreciation

 

 

974

 

980

 

1,011

 

1,021

 

3,986

 

2,375

 

1,327

 

1,412

 

1,397

 

6,511

Special (recoveries) charges, net

 

 

(45,175)

 

5,019

 

586

 

322

 

(39,248)

 

(2,870)

 

4,523

 

1,126

 

17,259

 

20,038

Goodwill Impairment charge

 

 

138,078

 

 

 

 

138,078

 

 

 

 

10,500

 

10,500

Income tax impact

 

 

4,779

 

(21,786)

 

56,359

 

12,439

 

51,791

 

(44)

 

2,425

 

(596)

 

(1,622)

 

163

Net loss (income) from discontinued operations

 

 

(9,162)

 

43,847

 

(341)

 

796

 

35,140

 

239

 

878

 

(2,510)

 

(13)

 

(1,406)

ADJUSTED NET INCOME

 

$

2,605

$

2,787

$

4,234

$

8,664

$

18,290

$

451

$

4,106

$

6,847

$

9,369

$

20,773

 

 

 

 

 

 

 

 

 

 

 

 

(LOSS) EARNINGS PER COMMON SHARE (Diluted)

 

$

(4.99)

$

(1.83)

$

(3.24)

$

(0.89)

$

(10.79)

$

(0.58)

$

(0.91)

$

(0.13)

$

(1.38)

$

(3.00)

LESS:

 

 

 

 

 

 

 

 

 

 

 

Restructuring related inventory charges

 

 

(0.03)

 

 

0.02

 

 

(0.01)

 

 

0.05

 

 

(0.01)

 

0.03

Restructuring charges, net

 

 

0.14

 

0.03

 

0.02

 

0.06

 

0.24

 

0.10

 

0.11

 

(0.02)

 

0.01

 

0.21

Acquisition amortization

 

 

0.51

 

0.53

 

0.53

 

0.54

 

2.10

 

0.51

 

0.51

 

0.51

 

0.51

 

2.04

Acquisition depreciation

 

 

0.05

 

0.05

 

0.05

 

0.05

 

0.20

 

0.12

 

0.06

 

0.07

 

0.07

 

0.32

Special (recoveries) charges, net

 

 

(2.27)

 

0.25

 

0.03

 

0.02

 

(1.94)

 

(0.14)

 

0.22

 

0.05

 

0.84

 

0.98

Impairment charge

 

 

6.93

 

 

 

 

6.81

 

 

 

 

0.51

 

0.51

Income tax impact

 

 

0.24

 

(1.09)

 

2.82

 

0.61

 

2.56

 

 

0.12

 

(0.03)

 

(0.08)

 

0.01

(Loss) earnings) per share from discontinued operations

 

 

(0.46)

 

2.19

 

(0.02)

 

0.04

 

1.73

 

0.01

 

0.04

 

(0.12)

 

 

(0.07)

ADJUSTED EARNINGS PER SHARE (Diluted)

 

$

0.13

$

0.14

$

0.21

$

0.43

$

0.90

$

0.02

$

0.20

$

0.33

$

0.46

$

1.01

CIRCOR INTERNATIONAL, INC.

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

(in thousands, except percentages) (unaudited)

 

 

 

2020

2021

 

 

1ST QTR

2ND QTR

3RD QTR

4TH QTR

TOTAL

1ST QTR

2ND QTR

3RD QTR

4TH QTR

TOTAL

 

 

 

 

 

 

 

 

 

 

 

 

NET (LOSS) INCOME

 

$

(99,387)

$

(36,542)

$

(64,709)

$

(17,976)

$

(218,614)

$

(11,796)

$

(18,784)

$

(2,629)

$

(28,426)

$

(61,635)

LESS:

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

 

9,011

 

8,486

 

8,202

 

8,520

 

34,219

 

8,369

 

7,958

 

7,997

 

8,040

 

32,365

Depreciation

 

 

5,121

 

4,958

 

4,802

 

5,520

 

20,401

 

6,509

 

5,460

 

5,536

 

5,348

 

22,854

Amortization

 

 

10,611

 

10,881

 

10,925

 

11,244

 

43,662

 

10,696

 

10,657

 

10,576

 

10,375

 

42,304

Provision for income taxes

 

 

5,046

 

(21,126)

 

56,990

 

14,992

 

55,902

 

(297)

 

2,659

 

850

 

1,970

 

5,182

Loss (income) from discontinued operations

 

 

(9,162)

 

43,847

 

(341)

 

796

 

35,140

 

239

 

878

 

(2,510)

 

(13)

 

(1,406)

EBITDA

 

$

(78,760)

$

10,504

$

15,869

$

23,096

$

(29,290)

$

13,720

$

8,828

$

19,820

$

(2,706)

$

39,664

LESS:

 

 

 

 

 

 

 

 

 

 

 

Restructuring related inventory charges (recoveries)

 

 

(602)

 

 

351

 

 

(251)

 

 

958

 

(60)

 

(299)

 

599

Restructuring charges, net

 

 

2,883

 

588

 

352

 

1,122

 

4,945

 

2,060

 

2,281

 

(312)

 

205

 

4,234

Special (recoveries) charges, net

 

 

(45,175)

 

5,019

 

586

 

322

 

(39,248)

 

(2,870)

 

4,523

 

1,126

 

17,259

 

20,038

Goodwill impairment charge

 

 

138,078

 

 

 

 

138,078

 

 

 

 

10,500

 

10,500

ADJUSTED EBITDA

 

$

16,424

$

16,111

$

17,158

$

24,540

$

74,234

$

12,910

$

16,590

$

20,574

$

24,959

$

75,035

CIRCOR INTERNATIONAL, INC.

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

(in thousands, except percentages) (unaudited)

 

 

 

2020

2021

 

 

1ST QTR

2ND QTR

3RD QTR

4TH QTR

TOTAL

1ST QTR

2ND QTR

3RD QTR

4TH QTR

TOTAL

 

 

 

 

 

 

 

 

 

 

 

 

GAAP OPERATING INCOME (LOSS)

 

$

(97,659)

$

(3,312)

$

892

$

5,132

$

(94,947)

$

(5,266)

$

(8,557)

$

3,451

$

(18,952)

$

(29,323)

LESS:

 

 

 

 

 

 

 

 

 

 

 

Restructuring related inventory charges (recoveries)

 

 

(602)

 

 

351

 

 

(251)

 

 

958

 

(60)

 

(299)

 

599

Restructuring charges, net

 

 

2,883

 

588

 

352

 

1,122

 

4,945

 

2,060

 

2,281

 

(312)

 

205

 

4,234

Acquisition amortization

 

 

10,217

 

10,681

 

10,625

 

10,940

 

42,463

 

10,487

 

10,498

 

10,417

 

10,369

 

41,772

Acquisition depreciation

 

 

974

 

980

 

1,011

 

1,021

 

3,986

 

2,375

 

1,327

 

1,412

 

1,397

 

6,511

Special (recoveries) charges, net

 

 

(45,175)

 

5,019

 

586

 

322

 

(39,248)

 

(2,870)

 

4,523

 

1,126

 

17,259

 

20,038

Goodwill impairment charge

 

 

138,078

 

 

 

 

138,078

 

 

 

 

10,500

 

10,500

ADJUSTED OPERATING INCOME

 

$

8,716

$

13,956

$

13,817

$

18,537

$

55,026

$

6,787

$

11,029

$

16,035

$

20,479

$

54,331

 

 

 

 

 

 

 

 

 

 

 

 

GAAP OPERATING MARGIN

 

 

(51.1) %

 

(1.8) %

 

0.5 %

 

2.5 %

 

(12.4) %

 

(3.0) %

 

(4.6) %

 

1.8 %

 

(9.2) %

 

(3.9) %

LESS:

 

 

 

 

 

 

 

 

 

 

 

Restructuring related inventory charges (recoveries)

 

 

(0.3) %

 

— %

 

0.2 %

 

— %

 

— %

 

— %

 

0.5 %

 

— %

 

(0.1) %

 

0.1 %

Restructuring charges, net

 

 

1.5 %

 

0.3 %

 

0.2 %

 

0.5 %

 

0.6 %

 

1.2 %

 

1.2 %

 

(0.2) %

 

0.1 %

 

0.6 %

Acquisition amortization

 

 

5.3 %

 

5.8 %

 

5.7 %

 

5.3 %

 

5.5 %

 

5.9 %

 

5.6 %

 

5.5 %

 

5.1 %

 

5.5 %

Acquisition depreciation

 

 

0.5 %

 

0.5 %

 

0.5 %

 

0.5 %

 

0.5 %

 

1.3 %

 

0.7 %

 

0.7 %

 

0.7 %

 

0.9 %

Special (recoveries) charges, net

 

 

(23.6) %

 

2.7 %

 

0.3 %

 

0.2 %

 

(5.1) %

 

(1.6) %

 

2.4 %

 

0.6 %

 

8.4 %

 

2.6 %

Goodwill impairment charge

 

 

72.2 %

 

— %

 

— %

 

— %

 

18.0 %

 

— %

 

— %

 

— %

 

5.1 %

 

1.4 %

ADJUSTED OPERATING MARGIN

 

 

4.6 %

 

7.6 %

 

7.5 %

 

9.0 %

 

7.2 %

 

3.8 %

 

5.9 %

 

8.5 %

 

10.0 %

 

7.2 %

Note regarding financial statements: Restated amounts are computed independently each quarter; therefore, the sum of the quarterly amounts may not equal the total amount for the respective year due to rounding.

Contacts

Scott Solomon

Senior Vice President

Sharon Merrill Associates, Inc.

(857) 383-2409

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