BURLINGTON, Mass., Aug. 1 /PRNewswire-FirstCall/ -- CIRCOR International, Inc. , a leading provider of valves and other fluid control devices for the instrumentation, aerospace, thermal fluid and energy markets, today announced results for the second quarter and six months ended July 1, 2007.
Revenues for the 2007 second quarter were $165.9 million, an increase of 15% from $144.4 million for the second quarter 2006 period. Net income for the second quarter of 2007 increased 55% to $10.0 million, or $0.60 per diluted share, which included $0.03 per diluted share of special charges primarily related to the consolidation of manufacturing facilities. Net income for the second quarter of 2006 was $6.5 million, or $0.40 per diluted share.
For the six months ended July 1, 2007, revenues were $327.2 million, an increase of 20% from $271.7 million for the comparable period in 2006. Net income for the first half of 2007 was $17.4 million, or $1.05 per diluted share, an increase of 50% from $11.6 million, or $0.71 per diluted share, in the same period last year. Results for the first half of 2007 include $0.05 per diluted share of special charges.
The Company received a record level of orders totaling $228.4 million during the second quarter of 2007, increasing 18% over the second quarter of 2006, and a 22% increase from the first quarter of 2007. For the first six months of 2007, orders totaled $415.2 million with July 1, 2007, backlog reaching another record level of $373.7 million, representing increases of 5% and 28%, respectively, over the same periods in 2006.
During the second quarter of 2007, the Company generated $5.4 million of free cash flow (defined as net cash from operating activities, less capital expenditures and dividends paid) and, for the first six months of 2007, the Company had positive free cash flow of less than $0.1 million despite higher working capital needed to support the Company's record orders and backlog. This compares favorably to the first six months of 2006 during which the Company used $4.8 million of free cash flow. The improvement from 2006 largely resulted from the sharp increase in profitability.
Circor's Instrumentation and Thermal Fluid Controls Products segment revenues increased 8% to $85.7 million from $79.5 million in the second quarter of 2006. Incoming orders for this segment were a quarterly record $99.1 million, while this segment's backlog at July 1, 2007, reached a record $130.2 million, a 15% increase from one year ago, and an 11% increase from the end of the first quarter of 2007. This segment's operating margin for the second quarter was 8.7% excluding special charges for a U.S. facility closure, compared to the 8.6% operating margin achieved in the second quarter of 2006. However, the second quarter margin represented an 80 basis point increase from the first quarter of 2007, excluding special charges, reflecting higher unit shipments and improved pricing.
Circor's Energy Products segment revenues increased 24% to $80.2 million from $64.9 million in the second quarter of last year. Incoming orders for the quarter were $129.3 million and ending backlog totaled another record at $243.5 million compared to incoming orders of $113.4 million and ending backlog of $179.1 million in the same periods last year. This segment's operating margin reached a record 16.3% during the second quarter of 2007 compared to 11.4% for the second quarter of 2006, reflecting shipments of high-margin projects.
David A. Bloss, Sr., Circor's Chairman and Chief Executive Officer, said, "Oil and gas exploration and processing activity has once again exceeded our expectations this past quarter, despite some softness experienced in Western Canada. Our profitability also benefited from a favorable mix of international project shipments as well as increased sourcing from our facility in China and productivity improvements worldwide. We expect to see this strong market activity continue into 2008 with some dampening effect for near-term seasonal wet weather conditions in North America and for distributor inventory replenishment cycles, since they are now approaching target on-hand quantity levels."
Mr. Bloss continued, "Results for our Instrumentation and Thermal Fluid Control Products segment were in line with our expectations. The primary markets for this segment are showing mixed trends, but are positive overall due to the strength of the general aviation and European industrial process controls sectors. Operating margins for this segment improved from the first quarter trough and we expect to post quarterly improvements going forward as our cost reduction and customer delivery performance initiatives continue to be realized with stronger leadership in place at all major facilities."
Circor provided guidance for its third quarter 2007 results, indicating it expects earnings to be in the range of $0.53 to $0.56 per diluted share, with no expected special charges. The guidance compares favorably to earnings in the third quarter of 2006 of $0.45 per diluted share, but is lower than second quarter 2007 results due to an anticipated less-favorable mix of product revenues within the Energy Products segment that will be partially offset by higher operational performance of the Instrumentation and Thermal Fluid Controls Products segment.
CIRCOR International has scheduled a conference call to review its results for the second quarter of 2007 tomorrow, August 2, 2007, at 10:30 am ET. Interested parties may access the call by dialing (800) 289-0544 from the US and Canada and (913) 981-5533 from international locations. A replay of the call will be available from 1:30 pm ET on August 2, 2007, through midnight on August 8, 2007. To access the replay, interested parties should dial (888) 203-1112 or (719) 457-0820 and enter confirmation code # 4597912 when prompted. The presentation slides that will be discussed in the conference call are expected to be available on Wednesday, August 1, 2007, by 6:00 pm ET. The presentation slides may be downloaded from the quarterly earnings page of the investor section on the CIRCOR website: http://www.circor.com/quarterlyearnings/. An audio recording of the conference call also is expected to be posted on the company's website by August 6, 2007.
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. 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, 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.
CIRCOR INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
UNAUDITED
Three Months Ended Six Months Ended
July 1, July 2, July 1, July 2,
2007 2006 2007 2006
Net revenues $165,937 $144,389 $327,200 $271,684
Cost of revenues 116,116 102,268 232,587 191,225
GROSS PROFIT 49,821 42,121 94,613 80,459
Selling, general and
administrative expenses 33,376 31,409 65,464 61,259
Special charges 615 - 1,305 -
OPERATING INCOME 15,830 10,712 27,844 19,200
Other (income) expense:
Interest income (77) (89) (130) (197)
Interest expense 961 1,553 2,232 2,686
Other (income) expense, net 214 (248) 118 (380)
Total other expense 1,098 1,216 2,220 2,109
INCOME BEFORE INCOME TAXES 14,732 9,496 25,624 17,091
Provision for income taxes 4,714 3,038 8,200 5,469
NET INCOME $10,018 $6,458 $17,424 $11,622
Earnings per common share:
Basic $0.61 $0.40 $1.07 $0.73
Diluted $0.60 $0.40 $1.05 $0.71
Weighted average common
shares outstanding:
Basic 16,390 15,968 16,301 15,911
Diluted 16,679 16,332 16,582 16,266
CIRCOR INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
UNAUDITED
Six Months Ended
July 1, 2007 July 2, 2006
OPERATING ACTIVITIES
Net income $17,424 $11,622
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 5,620 5,788
Amortization 1,258 1,082
Compensation expense of stock-
based plans 1,711 1,580
Tax effect of share based
compensation (2,065) (957)
Loss on sale of assets held for sale 210 -
Gain on disposal of property,
plant and equipment (28) (80)
Equity in undistributed income
of affiliates 43 (8)
Changes in operating assets and
liabilities, net of effects from
business acquisitions:
Trade accounts receivable 938 (8,472)
Inventories (15,276) (24,471)
Prepaid expenses and other assets (6,927) (1,213)
Accounts payable, accrued
expenses and other liabilities 2,367 14,833
Net cash provided by (used in)
operating activities 5,275 (296)
INVESTING ACTIVITIES
Additions to property, plant and equipment (4,042) (3,320)
Proceeds from disposal of property,
plant and equipment 412 304
Proceeds from sale of assets held for sale 508 100
Business acquisitions, net of cash acquired - (60,989)
Purchase of investments - (5,734)
Proceeds from sale of investments - 3,195
Net cash used in investing activities (3,122) (66,444)
FINANCING ACTIVITIES
Proceeds from debt borrowings 45,994 65,547
Payments of debt (55,616) (7,038)
Dividends paid (1,223) (1,195)
Proceeds from the exercise of stock
options 2,611 1,708
Tax effect of share based compensation 2,065 957
Net cash (used in) provided by
financing activities (6,169) 59,979
Effect of exchange rate changes on
cash and cash equivalents 645 1,615
DECREASE IN CASH AND CASH EQUIVALENTS 3,371) (5,146)
Cash and cash equivalents at beginning
of year 28,652 31,112
CASH AND CASH EQUIVALENTS AT END OF PERIOD $25,281 $25,966
CIRCOR INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
UNAUDITED
July 1, December 31,
2007 2006
ASSETS
Current Assets:
Cash & cash equivalents $25,281 $28,652
Investments 94 86
Trade accounts receivable, less allowance
for doubtful accounts of $2,842 and
$2,523, respectively 109,054 108,689
Inventories 167,420 150,160
Prepaid expenses and other current assets 10,258 2,926
Deferred income taxes 6,649 7,305
Assets held for sale 2,647 3,132
Total Current Assets 321,403 300,950
Property, Plant and Equipment, net 77,927 79,039
Other Assets:
Goodwill 165,099 163,720
Intangibles, net 48,599 49,226
Other assets 12,792 12,740
Total Assets $625,820 $605,675
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $78,913 $71,788
Accrued expenses and other
current liabilities 48,165 54,359
Accrued compensation and benefits 17,176 15,325
Income taxes payable 3,259 6,027
Notes payable and current
portion of long-term debt 238 415
Total Current Liabilities 147,751 147,914
Long-Term Debt, net of current portion 54,985 64,411
Deferred Income Taxes 22,880 21,674
Other Non-Current Liabilities 14,666 14,375
Shareholders' Equity:
Preferred stock, $.01 par value; 1,000,000
shares authorized; no shares issued
and outstanding - -
Common stock, $.01 par value; 29,000,000
shares authorized; and 16,442,319 and
16,181,070 issued and outstanding,
respectively 164 162
Additional paid-in capital 230,599 224,508
Retained earnings 125,398 109,251
Accumulated other comprehensive income 29,377 23,380
Total Shareholders' Equity 385,538 357,301
Total Liabilities and Shareholders' Equity $625,820 $605,675
CIRCOR INTERNATIONAL, INC.
SUMMARY OF ORDERS AND BACKLOG
(in thousands)
UNAUDITED
Three Months Ended Six Months Ended
July 1, 2007 July 2, 2006 July 1, 2007 July 2, 2006
ORDERS
Instrumentation
& Thermal Fluid
Controls $99,057 $80,218 * $183,828 $165,706 *
Energy Products 129,345 113,440 231,416 229,419
Total orders $228,402 $193,658 $415,244 $395,125
July 1, 2007 December 31, 2006
BACKLOG
Instrumentation &
Thermal Fluid Controls $130,224 $113,434
Energy Products 243,490 172,235
Total backlog $373,714 $285,669
Note: Backlog includes all unshipped customer orders.
* Orders for the Instrumentation & Thermal Fluid Controls Products segment
have been reduced by $2,489 and $4,265 for the 3-months ended July 2,
2006 and the 6-months ended July 2, 2006, respectively, for the sale in
December 2006 of the small, French business, Societe Alsacienne
Regulaves Thermiques von Rohr ("Sart").
CIRCOR INTERNATIONAL, INC.
SUMMARY REPORT BY SEGMENT
(in thousands, except earnings per share)
UNAUDITED
2006
1ST QTR 2ND QTR 3RD QTR 4TH QTR YTD
NET REVENUES
Instrumentation & Thermal
Fluid Controls (TFC) $72,434 $79,470 $79,205 $81,591 $312,700
Energy Products 54,861 64,919 71,207 88,024 279,011
Total 127,295 144,389 150,412 169,615 591,711
OPERATING MARGIN
Instrumentation & TFC 9.1% 8.6% 9.5% 8.2% 8.8%
Energy Products 10.4% 11.4% 13.2% 15.7% 13.0%
Segment operating
margin 9.7% 9.9% 11.3% 12.1% 10.8%
Corporate expenses -3.0% -2.5% -2.8% -2.4% -2.7%
Special charges 0.0% 0.0% -0.3% -0.1% -0.1%
Total operating margin 6.7% 7.4% 8.1% 9.5% 8.0%
OPERATING INCOME
Instrumentation & TFC
(excl. special &
unusual charges) 6,595 6,861 7,522 6,680 27,658
Energy Products
(excl. special &
unusual charges) 5,702 7,429 9,420 13,797 36,348
Segment operating
income (excl. special
& unusual charges) 12,297 14,290 16,942 20,477 64,006
Corporate expenses (3,809) (3,578) (4,284) (4,146) (15,817)
Special charges - (479) (200) (679)
Total operating income 8,488 10,712 12,179 16,131 47,510
INTEREST EXPENSE, NET (1,024) (1,464) (1,383) (1,246) (5,117)
OTHER (EXPENSE) INCOME, NET 131 248 (27) (486) (134)
PRETAX INCOME 7,595 9,496 10,769 14,399 42,259
PROVISION FOR INCOME TAXES (2,431) (3,038) (3,446) (4,016) (12,931)
EFFECTIVE TAX RATE 32.0% 32.0% 32.0% 27.9% 30.6%
NET INCOME $5,164 $6,458 $7,323 $10,383 $29,328
Weighted Average Common
Shares Outstanding
(Diluted) 16,197 16,332 16,368 16,438 16,291
EARNINGS PER COMMON
SHARE (Diluted) $0.32 $0.40 $0.45 $0.63 $1.80
EARNINGS PER COMMON
SHARE (Diluted)
excluding special charges $0.32 $0.40 $0.47 $0.64 $1.83
EBIT $8,619 $10,960 $12,152 $15,645 $47,376
Depreciation 2,619 3,169 2,901 2,517 11,206
Amortization of
intangibles 515 567 709 603 2,394
EBITDA $11,753 $14,696 $15,762 $18,765 $60,976
EBITDA AS A PERCENT OF
SALES 9.2% 10.2% 10.5% 11.1% 10.3%
CAPITAL EXPENDITURES $1,578 $1,742 $3,823 $2,790 $9,933
2007
1ST QTR 2ND QTR YTD
NET REVENUES
Instrumentation & Thermal
Fluid Controls (TFC) $81,296 $85,740 $167,036
Energy Products 79,967 80,197 160,164
Total 161,263 165,937 327,200
OPERATING MARGIN
Instrumentation & TFC 7.9% 8.7% 8.3%
Energy Products 12.7% 16.3% 14.5%
Segment operating margin 10.3% 12.4% 11.3%
Corporate expenses -2.4% -2.4% -2.4%
Special charges -0.4% -0.4% -0.4%
Total operating margin 7.4% 9.5% 8.5%
OPERATING INCOME
Instrumentation & TFC (excl.
special & unusual charges) 6,433 7,438 13,871
Energy Products (excl. special
& unusual charges) 10,125 13,063 23,188
Segment operating income
(excl. special & unusual
charges) 16,558 20,501 37,059
Corporate expenses (3,853) (4,056) (7,909)
Special charges (691) (615) (1,306)
Total operating income 12,014 15,830 27,844
INTEREST EXPENSE, NET (1,218) (884) (2,102)
OTHER (EXPENSE) INCOME, NET 97 (214) (117)
PRETAX INCOME 10,893 14,732 25,625
PROVISION FOR INCOME TAXES (3,486) (4,714) (8,200)
EFFECTIVE TAX RATE 32.0% 32.0% 32.0%
NET INCOME $7,407 $10,018 $17,425
Weighted Average Common Shares
Outstanding (Diluted) 16,533 16,679 16,582
EARNINGS PER COMMON SHARE (Diluted) $0.45 $0.60 $1.05
EARNINGS PER COMMON SHARE (Diluted)
excluding special charges $0.48 $0.63 $1.10
EBIT $12,111 $15,616 $27,727
Depreciation 2,808 2,812 5,620
Amortization of intangibles 626 632 1,258
EBITDA $15,545 $19,060 $34,605
EBITDA AS A PERCENT OF SALES 9.6% 11.5% 10.6%
CAPITAL EXPENDITURES $1,776 $2,266 $4,042
CIRCOR INTERNATIONAL, INC.
RECONCILIATION OF KEY PERFORMANCE MEASURES TO COMMONLY USED
GENERALLY ACCEPTED ACCOUNTING PRINCIPLE TERMS
(in thousands)
UNAUDITED
2006
1ST QTR 2ND QTR 3RD QTR 4TH QTR YTD
FREE CASH FLOW [NET CASH
FLOW FROM OPERATING
ACTIVITIES LESS CAPITAL
EXPENDITURES LESS
DIVIDENDS PAID] $(5,213) $402 $8,865 $13,476 $17,530
ADD: Capital
expenditures 1,578 1,742 3,823 2,790 9,933
Dividends paid 595 600 600 600 2,395
NET CASH PROVIDED
BY (USED IN)
OPERATING ACTIVITIES $(3,040) $2,744 $13,288 $16,866 $29,858
NET (CASH) DEBT [TOTAL
DEBT LESS CASH & CASH
EQUIVALENTS LESS
INVESTMENTS] $68,271 $64,336 $55,157 $36,088 $36,088
ADD: Cash & cash
equivalents 27,069 25,966 33,265 28,652 28,652
Investments - 2,639 90 86 86
TOTAL DEBT $95,340 $92,941 $88,512 $64,826 $64,826
NET DEBT AS % OF NET
CAPITALIZATION 17.7% 16.2% 13.9% 9.2% 9.2%
NET CAPITALIZATION
[TOTAL DEBT PLUS
SHAREHOLDERS' EQUITY
LESS CASH & CASH
EQUIVALENTS, LESS
INVESTMENTS] $385,659 $397,814 $397,012 $393,389 $393,389
LESS: Total debt (95,340) (92,941) (88,512) (64,826) (64,826)
ADD: Cash & cash
equivalents 27,069 25,966 33,265 28,652 28,652
Investments - 2,639 90 86 86
TOTAL SHAREHOLDERS'
EQUITY 317,388 333,478 341,855 357,301 357,301
ADD: Total debt 95,340 92,941 88,512 64,826 64,826
TOTAL CAPITAL $412,728 $426,419 $430,367 $422,127 $422,127
TOTAL DEBT/TOTAL CAPITAL 23.1% 21.8% 20.6% 15.4% 15.4%
EBIT [NET INCOME LESS
INTEREST EXPENSE, NET] $8,619 $10,960 $12,152 $15,645 $47,376
LESS: Interest expense,
net (1,024) (1,464) (1,383) (1,246) (5,117)
Provision for
income taxes (2,431) (3,038) (3,446) (4,016) (12,931)
NET INCOME $5,164 $6,458 $7,323 $10,383 $29,328
EBITDA [NET INCOME LESS
INTEREST EXPENSE, NET
LESS DEPRECIATION LESS
AMORTIZATION LESS TAXES] $11,753 $14,696 $15,762 $18,765 $60,976
LESS: Interest expense,
net (1,024) (1,464) (1,383) (1,246) (5,117)
Depreciation (2,619) (3,169) (2,901) (2,517) (11,206)
Amortization of
intangibles (515) (567) (709) (603) (2,394)
Provision for
income taxes (2,431) (3,038) (3,446) (4,016) (12,931)
NET INCOME $5,164 $6,458 $7,323 $10,383 $29,328
INCOME EXCLUDING SPECIAL
CHARGES [NET INCOME LESS
SPECIAL CHARGES, NET
OF TAX] $5,164 $6,458 $7,649 $10,527 $29,799
LESS: Special charges,
net of tax - - (326) (144) (471)
NET INCOME $5,164 $6,458 $7,323 $10,383 $29,328
Weighted average common
shares outstanding
(diluted) 16,197 16,332 16,368 16,438 16,291
EARNINGS PER SHARE EXCLUDING
SPECIAL CHARGES $0.32 $0.40 $0.47 $0.64 $1.83
2007
1ST QTR 2ND QTR YTD
FREE CASH FLOW [NET CASH FLOW
FROM OPERATING ACTIVITIES LESS
CAPITAL EXPENDITURES LESS
DIVIDENDS PAID] $(5,429) $5,439 $10
ADD: Capital expenditures 1,776 2,266 4,042
Dividends paid 609 614 1,223
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES $(3,044) $8,319 $5,275
NET (CASH) DEBT [TOTAL DEBT LESS
CASH & CASH ITEMS LESS INVESTMENTS] $39,366 $29,848 $29,848
ADD: Cash & cash items 27,050 25,281 25,281
Investments 87 94 94
TOTAL DEBT $66,503 $55,223 $55,223
NET DEBT AS % OF NET CAPITALIZATION 9.6% 7.2% 7.2%
NET CAPITALIZATION [TOTAL DEBT PLUS
SHAREHOLDERS' EQUITY LESS CASH &
CASH ITEMS, LESS INVESTMENTS] $408,944 $415,386 $415,386
LESS: Total debt (66,503) (55,223) (55,223)
ADD: Cash & cash items 27,050 25,281 25,281
Investments 87 94 94
TOTAL SHAREHOLDERS' EQUITY 369,578 385,538 385,538
ADD: Total debt 66,503 55,223 55,223
TOTAL CAPITAL $436,081 $440,761 $440,761
TOTAL DEBT/TOTAL CAPITAL 15.3% 12.5% 12.5%
EBIT [NET INCOME LESS INTEREST
EXPENSE, NET] $12,111 $15,616 $27,727
LESS: Interest expense, net (1,218) (884) (2,102)
Provision for income taxes (3,486) (4,714) (8,200)
NET INCOME $7,407 $10,018 $17,425
EBITDA [NET INCOME LESS INTEREST
EXPENSE, NET LESS DEPRECIATION
LESS AMORTIZATION LESS TAXES] $15,545 $19,060 $34,605
LESS: Interest expense, net (1,218) (884) (2,102)
Depreciation (2,808) (2,812) (5,620)
Amortization of intangibles (626) (632) (1,258)
Provision for income taxes (3,486) (4,714) (8,200)
NET INCOME $7,407 $10,018 $17,425
INCOME EXCLUDING SPECIAL CHARGES
[NET INCOME LESS SPECIAL CHARGES,
NET OF TAX] $7,877 $10,436 $18,313
LESS: Special charges, net of tax (470) (418) (888)
NET INCOME $7,407 $10,018 $17,425
Weighted average common shares
outstanding (diluted) 16,533 16,679 16,582
EARNINGS PER SHARE EXCLUDING SPECIAL
CHARGES $0.48 $0.63 $1.10
