Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil EL&P Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries CIRCOR Reports Financial Results for Second Quarter Ended July 3, 2022 By: CIRCOR International, Inc. via Business Wire September 30, 2022 at 06:15 AM EDT GAAP EPS of $0.19 - Up 120% YoY; Adjusted EPS of $0.32 - Up 60% YoY GAAP Operating Income of $11.9 Million - Up 239% YoY; Adjusted Operating Income of $16.6 Million - Up 50% YoY Orders down (1%) reported and up 5% organically Progressing with review of strategic alternatives Q2 10-Q filed 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 markets, today announced financial results for the second quarter ended July 3, 2022. Q2 2022 Overview: Revenue of $191 million up 2% reported and 8% organically compared to Q2'2021 Aerospace & Defense revenue of $67 million, up 11% reported and 14% organically Industrial revenue of $124 million, down (2%) reported and up 5% organically Orders of $208 million, down (1%) and up 5% organically Aerospace & Defense orders of $69 million, up 27% and 32% organically Industrial orders of $139 million, down (11%) and (4%) organically Backlog of $477 million, up 9% driven by strong demand in Industrial GAAP operating income of $11.9 million, up 239% GAAP operating margin of 6.2%, up 1080 bps Adjusted operating income $16.6 million, up 50% Adjusted operating margin of 8.7%, up 280 bps CIRCOR President and CEO, Tony Najjar said, “Our team executed well in Q2, navigating ongoing supply chain challenges, an inflationary environment, and labor shortages. Organic orders were up 5% for the quarter and our backlog heading into the second half of the year was a robust $477 million, up 9% from prior year. Our revenues in the quarter were up 2% reported and 8% organically with solid margin expansion as a result of our simplification actions and value-based pricing initiatives.” Mr. Najjar continued, “With today’s filing of our second-quarter 10-Q, we are very pleased to be up to date with our financial reporting. Our team has worked tirelessly to make this happen, while also making progress with our simplification and cost-out actions, and in our process to review strategic alternatives. We have been hard at work seeking to ensure that CIRCOR delivers sustained growth and margin expansion. We continue to build on our relationships with our customers, improving service levels and aftermarket product flow, while focusing on value-based pricing initiatives and leveraging 80/20 principles across the Company.” Conference Call Information CIRCOR International will hold a conference call to review its second-quarter 2022 financial results at 9:00 a.m. ET today, September 30, 2022. To listen to the live conference call and view the accompanying presentation slides, please visit “Webcasts & Presentations” in the “Investors” portion of CIRCOR’s website. https://investors.circor.com/. The live call also can be accessed by dialing (877) 407-5790 or (201) 689-8328. Participants are encouraged to dial in to the call at least 15 minutes prior to the start time. The webcast will be archived on the Company’s website for one year. Selected Consolidated Results (unaudited) ($ millions except EPS) Q2 2022 Q2 2021 Change Six Months Ended July 3, 2022 Six Months Ended July 4, 2021 Change Revenue1 $ 191.4 $ 187.6 2 % $ 377.0 $ 364.0 4 % GAAP operating (loss) income 11.9 (8.6 ) 239 % 0.1 (13.8 ) 101 % Adjusted operating income2 16.6 11.0 50 % 27.0 17.8 52 % GAAP operating margin 6.2 % (4.6 )% 1080 bps 0.0 % (3.8 )% 380 bps Adjusted operating margin3 8.7 % 5.9 % 280 bps 7.2 % 4.9 % 230 bps GAAP (loss) per share $ 0.19 $ (0.93 ) 120 % $ (0.86 ) $ (1.52 ) 43 % Adjusted earnings per share (diluted)4 $ 0.32 $ 0.20 60 % $ 0.37 $ 0.22 68 % Operating cash flow (3.6 ) 8.9 -141 % (19.5 ) (10.3 ) -89 % Adjusted free cash flow5 (9.1 ) 6.2 -246 % (28.6 ) (16.4 ) -74 % Orders6 $ 208.4 $ 210.2 -1 % $ 430.0 $ 436.9 -2 % Segment Results (unaudited) ($ in millions) Q2 2022 Q2 2021 Change Six Months Ended July 3, 2022 Six Months Ended July 4, 2021 Change Aerospace & Defense Revenue1 $ 67.3 $ 60.6 11 % $ 130.6 $ 119.1 10 % Segment operating income2 13.6 11.7 16 % 24.9 21.7 15 % Segment operating margin3 20.2 % 19.4 % 80 bps 19.0 % 18.2 % 80 bps Orders6 $ 69.1 $ 54.2 27 % $ 146.9 $ 127.2 15 % Industrial Revenue1 $ 124.1 $ 127.0 -2 % $ 246.4 $ 244.9 1 % Segment operating income2 8.5 7.2 17 % 15.3 13.1 17 % Segment operating margin3 6.8 % 5.7 % 110 bps 6.2 % 5.3 % 90 bps Orders6 $ 139.4 $ 156.0 -11 % $ 283.1 $ 309.7 -9 % Consolidated and Industrial segment revenues for Q2 2022 and Q2 2021 included $0.2 million and $3.1 million, respectively, relating to our Pipeline Engineering business. Adjusted operating income is a non-GAAP financial measure. Refer to “Use of Non-GAAP Financial Measures” for an explanation of our non-GAAP financial measures and to the reconciliations included in this press release. Adjusted operating income and Industrial segment operating income for Q2 2022 and Q2 2021 included $(1.1) million and $(1.8) million, respectively, relating to our Pipeline Engineering business. Adjusted operating margin is a non-GAAP financial measure. Adjusted operating margin for Q2 2022 and Q2 2021 included (492)% and (56)%, respectively, relating to our Pipeline Engineering business. Adjusted earnings per share (diluted) is a non-GAAP financial measure. Adjusted earnings per share and our segment results for Q2 2022 exclude net loss from non-cash acquisition-related intangible amortization and special and restructuring charges of $4.7 million, consisting of (i) $10.4 million for non-cash acquisition-related intangible amortization and depreciation expense; (ii) $5.0 million of special charges related to the amendment of the credit agreement; (iii) $5.0 million of costs due to the investigation into the accounting irregularities of the Pipeline Engineering business and incremental professional services incurred due to the restatement; (iv) $0.9 million of special charges related to the evaluation of strategic alternatives for the company; (v) net restructuring charges of $4.7 million comprised of $5.3 million of CTA loss offset by other adjustments of $0.6 million due to the deconsolidation of the Pipeline Engineering businesses; (vi) other special and restructuring charges net of $0.7 million; and (vii) a gain of $22.0 million on the sale of real estate located at Walden, New York and Tampa, Florida. Adjusted consolidated and segment results for Q2 2021 exclude net loss from discontinued operations of $0.9 million and net loss from non-cash acquisition-related intangible amortization, special and restructuring charges totaling $19.6 million ($21.9 million after tax). These charges include: (i) $11.8 million for non-cash acquisition-related intangible amortization and depreciation expense; (ii) $3.0 million of special charges related to the Heater & Control Valve divestiture; (iii) $3.8 million of other special and restructuring charges; and (iv) $1.0 million of restructuring related inventory charges. Adjusted free cash flow, a non-GAAP financial measure, is calculated by subtracting GAAP capital expenditures, net of proceeds from asset sales, from GAAP operating cash flow. Orders, an operating measure, is defined as a legally binding agreement from an authorized individual at a customer requesting CIRCOR to provide goods and/or services at a fixed or determinable price and CIRCOR is capable of providing such goods and services, when the terms and conditions are firm enough to assure subsequent payment by the customer. Consolidated and Industrial segment orders for Q2 2022 and Q2 2021 included $0.0 million and $5.2 million, respectively, relating to our Pipeline Engineering business. As previously disclosed in our Form 10-K for the year ended December 31, 2021, the Company discovered accounting irregularities in its Pipeline Engineering business unit resulting in a restatement of previously issued financial statements. Company Files Quarterly Report on Form 10-Q for the Period Ended July 3, 2022 The Company today filed its Quarterly Report on Form 10-Q for the second quarter of 2022. Use of Non-GAAP Financial Measures In this press release, the Company uses the non-GAAP financial measures adjusted net income, adjusted EBITDA, adjusted operating income, adjusted operating margin, adjusted earnings per share and adjusted 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 can also assist investors and others in comparing CIRCOR’s current financial results with CIRCOR’s past financial results in a consistent manner. We exclude costs and tax effects associated with special and restructuring activities, such as reducing overhead and consolidating facilities. We believe that the costs related to special and 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 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 or exited businesses and to provide a comparison of changes in our revenue and orders (an operating measure), we also discuss these changes on an “organic” basis. Organic is calculated assuming the divestitures and/or exited businesses completed prior to July 3, 2022 were completed on January 1, 2021 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 the inability to achieve expected results in pricing and cost out actions and the related impact on margins and cash flow; 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; the uncertainty associated with the current worldwide economic conditions and the continuing impact on economic and financial conditions in the United States and around the world, including as a result of COVID-19 , rising inflation, increasing interest rates, natural disasters, military conflicts, including the conflict between Russia and Ukraine, terrorist attacks and other similar matters; 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 Six Months Ended July 3, 2022 As Restated July 4, 2021 July 3, 2022 As Restated July 4, 2021 Net revenues $ 191,376 $ 187,590 $ 377,031 $ 364,041 Cost of revenues 133,171 $ 131,156 $ 263,543 $ 256,045 Gross profit 58,205 56,434 113,488 107,996 Selling, general and administrative expenses 52,057 58,188 110,127 115,825 Special and restructuring (recoveries) charges, net (5,730 ) 6,803 3,272 5,995 Operating income (loss) 11,878 (8,557 ) 89 (13,824 ) Other expense (income): Interest expense, net 10,203 7,957 19,659 16,327 Other (income), net (1,638 ) (1,267 ) (2,924 ) (3,048 ) Total other expense, net 8,565 6,690 16,735 13,279 Income (loss) from continuing operations before income taxes 3,313 (15,247 ) (16,646 ) (27,103 ) (Benefit from) provision for income taxes (647 ) 2,659 875 2,360 Income (loss) from continuing operations, net of tax 3,960 (17,906 ) (17,521 ) (29,463 ) Loss from discontinued operations, net of tax $ — $ (878 ) $ — $ (1,117 ) Net income (loss) $ 3,960 $ (18,784 ) $ (17,521 ) $ (30,580 ) Basic income (loss) per common share: Basic from continuing operations $ 0.19 $ (0.89 ) $ (0.86 ) $ (1.46 ) Basic from discontinued operations $ — $ (0.04 ) $ — $ (0.06 ) Net income (loss) $ 0.19 $ (0.93 ) $ (0.86 ) $ (1.52 ) Diluted income (loss) per common share: Diluted from continuing operations $ 0.19 $ (0.89 ) $ (0.86 ) $ (1.46 ) Diluted from discontinued operations $ — $ (0.04 ) $ — $ (0.06 ) Net income (loss) $ 0.19 $ (0.93 ) $ (0.86 ) $ (1.52 ) Weighted average number of common shares outstanding: Basic 20,361 20,230 20,336 20,143 Diluted 20,428 20,230 20,336 20,143 CIRCOR INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) Six Months Ended OPERATING ACTIVITIES July 3, 2022 As Restated July 4, 2021 Net (loss) $ (17,521 ) $ (30,580 ) (Loss) from discontinued operations, net of income taxes — (1,117 ) (Loss) from continuing operations, net of tax $ (17,521 ) (29,463 ) Adjustments to reconcile net (loss) to net cash (used in) operating activities: Depreciation 10,056 11,970 Amortization 18,580 21,353 Change in provision for bad debt expense (221 ) (356 ) Write down of inventory 1,181 1,548 Compensation expense for share-based plans 375 2,903 Loss on debt extinguishment 4,977 — Amortization of debt issuance costs 1,649 2,005 Deferred tax provision — (1,317 ) Loss on sale of businesses — 1,031 Gain on sale of real estate (22,008 ) — Other impairment charges 8,011 — Loss on deconsolidation charges 4,675 — Changes in operating assets and liabilities, net of effects of acquisitions and divestitures: Trade accounts receivable 3,283 6,455 Inventories (20,548 ) (14,617 ) Prepaid expenses and other assets (16,947 ) (10,119 ) Accounts payable, accrued expenses and other liabilities 4,941 (1,158 ) Net cash used in continuing operating activities (19,517 ) (9,765 ) Net cash used in discontinued operating activities — (579 ) Net cash (used in) operating activities (19,517 ) (10,344 ) INVESTING ACTIVITIES Additions to property, plant and equipment (9,133 ) (6,038 ) Proceeds from the sale of property, plant and equipment 80 2 Proceeds from beneficial interest of factored receivables 2,336 998 Proceeds from the sale of real estate 26,433 — Proceeds from the sale of businesses — 9,993 Net cash provided by investing activities 19,716 4,955 FINANCING ACTIVITIES Proceeds from long-term debt 124,016 103,350 Payments of long-term debt (105,616 ) (100,250 ) Net change in short-term borrowings (1,573 ) (292 ) Proceeds from the exercise of stock options — 151 Withholding tax payments on net share settlements on equity awards (1,187 ) (4,119 ) Payments of debt issuance costs (16,701 ) — Net cash (used in) financing activities (1,061 ) (1,160 ) Effect of exchange rate changes on cash, cash equivalents and restricted cash (3,848 ) (1,782 ) DECREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH (4,710 ) (8,331 ) Cash, cash equivalents, and restricted cash at beginning of period 61,374 68,607 CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF PERIOD $ 56,664 $ 60,276 CIRCOR INTERNATIONAL, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share data) (unaudited) July 3, 2022 December 31, 2021 ASSETS CURRENT ASSETS: Cash and cash equivalents $ 55,238 $ 59,924 Trade accounts receivable, net 93,530 100,149 Inventories 134,247 123,343 Prepaid expenses and other current assets 119,522 110,749 Total Current Assets 402,537 394,165 PROPERTY, PLANT AND EQUIPMENT, NET 139,082 154,461 OTHER ASSETS: Goodwill 119,750 122,906 Intangibles, net 273,476 303,476 Deferred income taxes 685 756 Other assets 53,890 43,534 TOTAL ASSETS $ 989,420 $ 1,019,298 LIABILITIES AND SHAREHOLDERS’ EQUITY CURRENT LIABILITIES: Accounts payable $ 83,152 $ 83,382 Accrued expenses and other current liabilities 78,554 81,998 Accrued compensation and benefits 28,158 26,551 Short-term borrowings and current portion of long-term debt — 1,611 Total Current Liabilities 189,864 193,542 LONG-TERM DEBT 520,999 511,694 DEFERRED INCOME TAXES 19,689 21,721 PENSION LIABILITY, NET 111,716 120,881 OTHER NON-CURRENT LIABILITIES 43,489 37,744 COMMITMENTS AND CONTINGENCIES (NOTE 9 AND 10) SHAREHOLDERS’ EQUITY: Preferred stock, $0.01 par value; 1,000,000 shares authorized; no shares issued and outstanding — — Common stock, $0.01 par value; 29,000,000 shares authorized; 21,724,341 and 21,633,131 issued at July 3, 2022 and December 31, 2021 respectively 217 217 Additional paid-in capital 454,361 454,852 Accumulated deficit (215,602 ) (198,081 ) Common treasury stock, at cost (1,372,488 shares at July 3, 2022 and December 31, 2021) (74,472 ) (74,472 ) Accumulated other comprehensive loss, net of tax (60,841 ) (48,800 ) Total Shareholders’ Equity 103,663 133,716 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 989,420 $ 1,019,298 CIRCOR INTERNATIONAL, INC. SUMMARY OF ORDERS AND BACKLOG (in millions) (unaudited) Three Months Ended Six Months Ended July 3, 2022 July 4, 2021 July 3, 2022 July 4, 2021 ORDERS (1) Aerospace & Defense $ 69.0 $ 54.2 $ 146.90 $ 127.2 Industrial 139.4 156.0 283.1 309.7 Total orders $ 208.4 $ 210.2 $ 430.0 $ 436.9 July 3, 2022 July 4, 2021 BACKLOG (2) Aerospace & Defense $ 199.0 $ 191.7 Industrial 278.4 248.2 Total backlog $ 477.4 $ 439.9 1. Orders do not include the foreign exchange impact due to the re-measurement of customer backlog amounts denominated in foreign currencies. Industrial includes $0.0 million and $5.2 million of orders for Pipeline Engineering for the three months ended July 3, 2022 and July 4, 2021 respectively. Industrial includes $2.3 million and $10.7 million of orders for Pipeline Engineering for the six months ended July 3, 2022 and July 4, 2021 respectively. 2. Backlog is calculated as current period orders plus unshipped customer orders from prior periods for which revenue has not been recognized. Industrial includes $0.0 million and $0.7 million for Pipeline Engineering in 2022 and 2021 respectively. CIRCOR INTERNATIONAL, INC. SEGMENT INFORMATION (in thousands, except percentages) (unaudited) 2021 As Restated 2022 As reported 1ST QTR 2ND QTR 3RD QTR 4TH QTR TOTAL 1ST QTR 2ND QTR TOTAL ORDERS Aerospace & Defense $ 72,999 $ 54,243 $ 54,028 $ 73,898 $ 255,168 $ 77,890 $ 69,053 $ 146,943 Industrial 153,695 155,959 139,691 146,065 595,410 143,727 139,370 283,097 Total $ 226,693 $ 210,203 $ 193,719 $ 219,964 $ 850,578 $ 221,617 $ 208,423 $ 430,040 NET REVENUES Aerospace & Defense $ 58,488 $ 60,613 $ 63,461 $ 69,979 $ 252,541 $ 63,370 $ 67,271 $ 130,641 Industrial 117,963 126,977 126,248 134,938 506,126 122,285 124,105 246,390 Total $ 176,451 $ 187,590 $ 189,709 $ 204,917 $ 758,667 $ 185,655 $ 191,376 $ 377,031 SEGMENT OPERATING INCOME Aerospace & Defense $ 9,988 $ 11,741 $ 15,927 $ 18,416 $ 56,073 $ 11,320 $ 13,566 $ 24,886 Industrial 5,834 7,237 7,124 8,700 28,896 6,857 8,484 15,341 Corporate expenses (9,035 ) (7,950 ) (7,015 ) (6,636 ) (30,638 ) (7,770 ) (5,485 ) (13,255 ) Total $ 6,787 $ 11,028 $ 16,036 $ 20,480 $ 54,331 $ 10,407 $ 16,565 $ 26,972 SEGMENT OPERATING MARGIN % Aerospace & Defense 17.1 % 19.4 % 25.1 % 26.3 % 22.2 % 17.9 % 20.2 % 19.0 % Industrial 4.9 % 5.7 % 5.6 % 6.4 % 5.7 % 5.6 % 6.8 % 6.2 % Total 3.8 % 5.9 % 8.5 % 10.0 % 7.2 % 5.6 % 8.7 % 7.2 % 2021 2022 Pipeline Engineering1 1ST QTR 2ND QTR 3RD QTR 4TH QTR TOTAL 1ST QTR 2ND QTR TOTAL ORDERS - Industrial $ 5,531 $ 5,192 $ 6,575 $ 7,121 $ 24,419 $ 2,260 $ — $ 2,260 NET REVENUES - Industrial $ 2,994 $ 3,124 $ 3,236 $ 5,248 $ 14,602 $ 3,012 $ 218 $ 3,230 SEGMENT OP. INC. -Industrial $ (2,479 ) $ (1,754 ) $ (2,470 ) $ (3,191 ) $ (9,893 ) $ (3,190 ) $ (1,074 ) $ (4,264 ) Segment Operating Margin % (82.8 ) % (56.1 ) % (76.3 ) % (60.8 ) % (67.8 ) % (105.9 ) % (492.7 ) % (132.0 ) % 1) Quantifies the impact of the Pipeline Engineering business on the Industrial Segment. CIRCOR INTERNATIONAL, INC. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND KEY PERFORMANCE MEASURES (in thousands, except percentages) (unaudited) 2021 As Restated 2022 1ST QTR 2ND QTR 3RD QTR 4TH QTR TOTAL 1ST QTR 2ND QTR TOTAL Net Cash (Used In) Provided By Operating Activities $ (19,210 ) $ 8,866 $ 10,197 $ 10,595 $ 10,448 $ (15,924 ) $ (3,593 ) $ (19,517 ) LESS Capital expenditures, net of sale proceeds1 3,392 2,644 4,541 4,168 14,745 3,592 5,461 9,053 ADJUSTED FREE CASH FLOW $ (22,602 ) $ 6,222 $ 5,656 $ 6,427 $ (4,297 ) $ (19,516 ) $ (9,054 ) $ (28,570 ) Gross Debt $ 538,541 $ 524,391 $ 518,464 $ 526,311 $ 526,311 $ 547,681 $ 543,100 $ 543,100 Less: Cash & Cash equivalents 64,837 58,862 58,013 59,924 59,924 61,122 55,238 55,238 GROSS DEBT, NET OF CASH $ 473,704 $ 465,529 $ 460,451 $ 466,387 $ 466,387 $ 486,559 $ 487,862 $ 487,862 TOTAL SHAREHOLDERS' EQUITY $ 138,663 $ 122,185 $ 121,256 $ 133,716 $ 133,716 $ 110,321 $ 103,663 $ 103,663 GROSS DEBT AS % OF EQUITY 388 % 429 % 428 % 394 % 394 % 496 % 524 % 524 % GROSS DEBT, NET OF CASH AS % OF EQUITY 342 % 381 % 380 % 349 % 349 % 441 % 471 % 471 % Includes capital expenditures, net of proceeds of asset sales from GAAP operating cash flow. CIRCOR INTERNATIONAL, INC. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND KEY PERFORMANCE MEASURES (in thousands, except percentages) (unaudited) 2021 As Restated 2022 1ST QTR 2ND QTR 3RD QTR 4TH QTR TOTAL 1ST QTR 2ND QTR TOTAL NET (LOSS) INCOME $ (11,796 ) $ (18,784 ) $ (2,630 ) $ (28,427 ) $ (61,638 ) $ (21,481 ) $ 3,960 $ (17,521 ) LESS: Restructuring related inventory charges (recoveries), net — 958 (60 ) (299 ) 599 2,757 — 2,757 Restructuring charges (recoveries), net 2,060 2,281 (312 ) 205 4,234 6,447 4,695 11,142 Acquisition amortization 10,487 10,498 10,417 10,369 41,772 9,391 9,178 18,569 Acquisition depreciation 2,375 1,327 1,412 1,397 6,511 1,045 1,239 2,285 Special (recoveries) charges, net (2,870 ) 4,523 1,126 17,259 20,038 2,556 (10,425 ) (7,870 ) Goodwill Impairment charge — — — 10,500 10,500 — — — Income tax impact (44 ) 2,425 (596 ) (1,622 ) 163 384 (2,207 ) (1,823 ) Net loss (income) from discontinued operations 239 878 (2,510 ) (13 ) (1,406 ) — — — ADJUSTED NET INCOME $ 451 $ 4,106 $ 6,847 $ 9,369 $ 20,773 $ 1,099 $ 6,440 $ 7,539 (LOSS) EARNINGS PER COMMON SHARE (Diluted) $ (0.59 ) $ (0.93 ) $ (0.13 ) $ (1.40 ) $ (3.05 ) $ (1.06 ) $ 0.19 $ (0.86 ) LESS: Restructuring related inventory charges — 0.05 — (0.01 ) 0.03 0.14 — 0.14 Restructuring charges (recoveries), net 0.10 0.11 (0.02 ) 0.01 0.21 0.32 0.23 0.55 Acquisition amortization 0.52 0.52 0.51 0.51 2.07 0.46 0.45 0.91 Acquisition depreciation 0.12 0.07 0.07 0.07 0.32 0.05 0.06 0.11 Special (recoveries) charges, net (0.14 ) 0.22 0.06 0.85 0.99 0.13 (0.51 ) (0.39 ) Impairment charge — — — 0.52 0.52 — — — Income tax impact — 0.12 (0.03 ) (0.08 ) 0.01 0.02 (0.11 ) (0.09 ) (Loss) earnings) per share from discontinued operations 0.01 0.04 (0.12 ) — (0.07 ) — — — ADJUSTED EARNINGS PER SHARE (Diluted) $ 0.02 $ 0.20 $ 0.34 $ 0.46 $ 1.03 $ 0.05 $ 0.32 $ 0.37 CIRCOR INTERNATIONAL, INC. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND KEY PERFORMANCE MEASURES (in thousands, except percentages) (unaudited) 2021 As Restated 2022 1ST QTR 2ND QTR 3RD QTR 4TH QTR TOTAL 1ST QTR 2ND QTR TOTAL NET (LOSS) INCOME $ (11,796 ) $ (18,784 ) $ (2,629 ) $ (28,426 ) $ (61,635 ) $ (21,481 ) $ 3,960 $ (17,521 ) LESS: Interest expense, net 8,369 7,958 7,997 8,040 32,365 9,456 10,203 19,659 Depreciation 6,509 5,460 5,536 5,348 22,854 5,000 5,056 10,056 Amortization 10,696 10,657 10,576 10,375 42,304 9,397 9,183 18,580 Provision for income taxes (297 ) 2,659 850 1,970 5,182 1,523 (647 ) 876 Loss (income) from discontinued operations 239 878 (2,510 ) (13 ) (1,406 ) — — — EBITDA $ 13,720 $ 8,828 $ 19,820 $ (2,706 ) $ 39,664 $ 3,895 $ 27,755 $ 31,650 LESS: Restructuring related inventory charges (recoveries) — 958 (60 ) (299 ) 599 2,757 — 2,757 Restructuring charges (recoveries), net 2,060 2,281 (312 ) 205 4,234 6,447 4,695 11,142 Special (recoveries) charges, net (2,870 ) 4,523 1,126 17,259 20,038 2,556 (10,425 ) (7,870 ) Goodwill impairment charge — — — 10,500 10,500 — — — ADJUSTED EBITDA $ 12,910 $ 16,590 $ 20,574 $ 24,959 $ 75,035 $ 15,655 $ 22,025 $ 37,679 CIRCOR INTERNATIONAL, INC. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND KEY PERFORMANCE MEASURES (in thousands, except percentages) (unaudited) 2021 As Restated 2022 1ST QTR 2ND QTR 3RD QTR 4TH QTR TOTAL 1ST QTR 2ND QTR TOTAL OPERATING (LOSS) INCOME $ (5,266 ) $ (8,557 ) $ 3,451 $ (18,952 ) $ (29,323 ) $ (11,789 ) $ 11,878 $ 89 LESS: Restructuring related inventory charges (recoveries) — 958 (60 ) (299 ) 599 2,757 — 2,757 Restructuring charges (recoveries), net 2,060 2,281 (312 ) 205 4,234 6,447 4,695 11,142 Acquisition amortization 10,487 10,498 10,417 10,369 41,772 9,391 9,178 18,569 Acquisition depreciation 2,375 1,327 1,412 1,397 6,511 1,045 1,239 2,285 Special (recoveries) charges, net (2,870 ) 4,523 1,126 17,259 20,038 2,556 (10,425 ) (7,870 ) Goodwill impairment charge — — — 10,500 10,500 — — — ADJUSTED OPERATING INCOME $ 6,787 $ 11,029 $ 16,035 $ 20,479 $ 54,331 $ 10,407 $ 16,565 $ 26,972 OPERATING MARGIN (3.0 ) % (4.6 ) % 1.8 % (9.2 ) % (3.9 ) % (6.3 ) % 6.2 % 0.0 % LESS: Restructuring related inventory charges (recoveries) 0.0 % 0.5 % 0.0 % (0.1 ) % 0.1 % 1.5 % 0.0 % 0.7 % Restructuring charges (recoveries), net 1.2 % 1.2 % (0.2 ) % 0.1 % 0.6 % 3.5 % 2.5 % 3.0 % Acquisition amortization 5.9 % 5.6 % 5.5 % 5.1 % 5.5 % 5.1 % 4.8 % 4.9 % Acquisition depreciation 1.3 % 0.7 % 0.7 % 0.7 % 0.9 % 0.6 % 0.6 % 0.6 % Special (recoveries) charges, net (1.6 ) % 2.4 % 0.6 % 8.4 % 2.6 % 1.4 % (5.4 ) % (2.1 ) % Goodwill impairment charge 0.0 % 0.0 % 0.0 % 5.1 % 1.4 % 0.0 % 0.0 % 0.0 % ADJUSTED OPERATING MARGIN 3.8 % 5.9 % 8.5 % 10.0 % 7.2 % 5.6 % 8.7 % 7.2 % CIRCOR INTERNATIONAL, INC. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND KEY PERFORMANCE MEASURES (in thousands, except percentages) (unaudited) CIRCOR Aerospace & Defense Industrial 2Q 22 2Q 21 Change 2Q 22 2Q 21 Change 2Q 22 2Q 21 Change Reported Orders 208,423 210,203 (1 )% 69,053 54,243 27 % 139,370 155,959 (11 )% FX 12,735 2,395 10,340 Organic 221,158 210,203 5 % 71,448 54,243 32 % 149,710 155,959 (4 )% CIRCOR Aerospace & Defense Industrial 2Q 22 2Q 21 Change 2Q 22 2Q 21 Change 2Q 22 2Q 21 Change Reported Revenue 191,376 187,590 2 % 67,271 60,613 11 % 124,105 126,977 (2 )% FX 11,153 2,036 9,118 Organic 202,529 187,590 8 % 69,307 60,613 14 % 133,223 126,977 5 % 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. 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CIRCOR Reports Financial Results for Second Quarter Ended July 3, 2022 By: CIRCOR International, Inc. via Business Wire September 30, 2022 at 06:15 AM EDT GAAP EPS of $0.19 - Up 120% YoY; Adjusted EPS of $0.32 - Up 60% YoY GAAP Operating Income of $11.9 Million - Up 239% YoY; Adjusted Operating Income of $16.6 Million - Up 50% YoY Orders down (1%) reported and up 5% organically Progressing with review of strategic alternatives Q2 10-Q filed 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 markets, today announced financial results for the second quarter ended July 3, 2022. Q2 2022 Overview: Revenue of $191 million up 2% reported and 8% organically compared to Q2'2021 Aerospace & Defense revenue of $67 million, up 11% reported and 14% organically Industrial revenue of $124 million, down (2%) reported and up 5% organically Orders of $208 million, down (1%) and up 5% organically Aerospace & Defense orders of $69 million, up 27% and 32% organically Industrial orders of $139 million, down (11%) and (4%) organically Backlog of $477 million, up 9% driven by strong demand in Industrial GAAP operating income of $11.9 million, up 239% GAAP operating margin of 6.2%, up 1080 bps Adjusted operating income $16.6 million, up 50% Adjusted operating margin of 8.7%, up 280 bps CIRCOR President and CEO, Tony Najjar said, “Our team executed well in Q2, navigating ongoing supply chain challenges, an inflationary environment, and labor shortages. Organic orders were up 5% for the quarter and our backlog heading into the second half of the year was a robust $477 million, up 9% from prior year. Our revenues in the quarter were up 2% reported and 8% organically with solid margin expansion as a result of our simplification actions and value-based pricing initiatives.” Mr. Najjar continued, “With today’s filing of our second-quarter 10-Q, we are very pleased to be up to date with our financial reporting. Our team has worked tirelessly to make this happen, while also making progress with our simplification and cost-out actions, and in our process to review strategic alternatives. We have been hard at work seeking to ensure that CIRCOR delivers sustained growth and margin expansion. We continue to build on our relationships with our customers, improving service levels and aftermarket product flow, while focusing on value-based pricing initiatives and leveraging 80/20 principles across the Company.” Conference Call Information CIRCOR International will hold a conference call to review its second-quarter 2022 financial results at 9:00 a.m. ET today, September 30, 2022. To listen to the live conference call and view the accompanying presentation slides, please visit “Webcasts & Presentations” in the “Investors” portion of CIRCOR’s website. https://investors.circor.com/. The live call also can be accessed by dialing (877) 407-5790 or (201) 689-8328. Participants are encouraged to dial in to the call at least 15 minutes prior to the start time. The webcast will be archived on the Company’s website for one year. Selected Consolidated Results (unaudited) ($ millions except EPS) Q2 2022 Q2 2021 Change Six Months Ended July 3, 2022 Six Months Ended July 4, 2021 Change Revenue1 $ 191.4 $ 187.6 2 % $ 377.0 $ 364.0 4 % GAAP operating (loss) income 11.9 (8.6 ) 239 % 0.1 (13.8 ) 101 % Adjusted operating income2 16.6 11.0 50 % 27.0 17.8 52 % GAAP operating margin 6.2 % (4.6 )% 1080 bps 0.0 % (3.8 )% 380 bps Adjusted operating margin3 8.7 % 5.9 % 280 bps 7.2 % 4.9 % 230 bps GAAP (loss) per share $ 0.19 $ (0.93 ) 120 % $ (0.86 ) $ (1.52 ) 43 % Adjusted earnings per share (diluted)4 $ 0.32 $ 0.20 60 % $ 0.37 $ 0.22 68 % Operating cash flow (3.6 ) 8.9 -141 % (19.5 ) (10.3 ) -89 % Adjusted free cash flow5 (9.1 ) 6.2 -246 % (28.6 ) (16.4 ) -74 % Orders6 $ 208.4 $ 210.2 -1 % $ 430.0 $ 436.9 -2 % Segment Results (unaudited) ($ in millions) Q2 2022 Q2 2021 Change Six Months Ended July 3, 2022 Six Months Ended July 4, 2021 Change Aerospace & Defense Revenue1 $ 67.3 $ 60.6 11 % $ 130.6 $ 119.1 10 % Segment operating income2 13.6 11.7 16 % 24.9 21.7 15 % Segment operating margin3 20.2 % 19.4 % 80 bps 19.0 % 18.2 % 80 bps Orders6 $ 69.1 $ 54.2 27 % $ 146.9 $ 127.2 15 % Industrial Revenue1 $ 124.1 $ 127.0 -2 % $ 246.4 $ 244.9 1 % Segment operating income2 8.5 7.2 17 % 15.3 13.1 17 % Segment operating margin3 6.8 % 5.7 % 110 bps 6.2 % 5.3 % 90 bps Orders6 $ 139.4 $ 156.0 -11 % $ 283.1 $ 309.7 -9 % Consolidated and Industrial segment revenues for Q2 2022 and Q2 2021 included $0.2 million and $3.1 million, respectively, relating to our Pipeline Engineering business. Adjusted operating income is a non-GAAP financial measure. Refer to “Use of Non-GAAP Financial Measures” for an explanation of our non-GAAP financial measures and to the reconciliations included in this press release. Adjusted operating income and Industrial segment operating income for Q2 2022 and Q2 2021 included $(1.1) million and $(1.8) million, respectively, relating to our Pipeline Engineering business. Adjusted operating margin is a non-GAAP financial measure. Adjusted operating margin for Q2 2022 and Q2 2021 included (492)% and (56)%, respectively, relating to our Pipeline Engineering business. Adjusted earnings per share (diluted) is a non-GAAP financial measure. Adjusted earnings per share and our segment results for Q2 2022 exclude net loss from non-cash acquisition-related intangible amortization and special and restructuring charges of $4.7 million, consisting of (i) $10.4 million for non-cash acquisition-related intangible amortization and depreciation expense; (ii) $5.0 million of special charges related to the amendment of the credit agreement; (iii) $5.0 million of costs due to the investigation into the accounting irregularities of the Pipeline Engineering business and incremental professional services incurred due to the restatement; (iv) $0.9 million of special charges related to the evaluation of strategic alternatives for the company; (v) net restructuring charges of $4.7 million comprised of $5.3 million of CTA loss offset by other adjustments of $0.6 million due to the deconsolidation of the Pipeline Engineering businesses; (vi) other special and restructuring charges net of $0.7 million; and (vii) a gain of $22.0 million on the sale of real estate located at Walden, New York and Tampa, Florida. Adjusted consolidated and segment results for Q2 2021 exclude net loss from discontinued operations of $0.9 million and net loss from non-cash acquisition-related intangible amortization, special and restructuring charges totaling $19.6 million ($21.9 million after tax). These charges include: (i) $11.8 million for non-cash acquisition-related intangible amortization and depreciation expense; (ii) $3.0 million of special charges related to the Heater & Control Valve divestiture; (iii) $3.8 million of other special and restructuring charges; and (iv) $1.0 million of restructuring related inventory charges. Adjusted free cash flow, a non-GAAP financial measure, is calculated by subtracting GAAP capital expenditures, net of proceeds from asset sales, from GAAP operating cash flow. Orders, an operating measure, is defined as a legally binding agreement from an authorized individual at a customer requesting CIRCOR to provide goods and/or services at a fixed or determinable price and CIRCOR is capable of providing such goods and services, when the terms and conditions are firm enough to assure subsequent payment by the customer. Consolidated and Industrial segment orders for Q2 2022 and Q2 2021 included $0.0 million and $5.2 million, respectively, relating to our Pipeline Engineering business. As previously disclosed in our Form 10-K for the year ended December 31, 2021, the Company discovered accounting irregularities in its Pipeline Engineering business unit resulting in a restatement of previously issued financial statements. Company Files Quarterly Report on Form 10-Q for the Period Ended July 3, 2022 The Company today filed its Quarterly Report on Form 10-Q for the second quarter of 2022. Use of Non-GAAP Financial Measures In this press release, the Company uses the non-GAAP financial measures adjusted net income, adjusted EBITDA, adjusted operating income, adjusted operating margin, adjusted earnings per share and adjusted 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 can also assist investors and others in comparing CIRCOR’s current financial results with CIRCOR’s past financial results in a consistent manner. We exclude costs and tax effects associated with special and restructuring activities, such as reducing overhead and consolidating facilities. We believe that the costs related to special and 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 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 or exited businesses and to provide a comparison of changes in our revenue and orders (an operating measure), we also discuss these changes on an “organic” basis. Organic is calculated assuming the divestitures and/or exited businesses completed prior to July 3, 2022 were completed on January 1, 2021 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 the inability to achieve expected results in pricing and cost out actions and the related impact on margins and cash flow; 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; the uncertainty associated with the current worldwide economic conditions and the continuing impact on economic and financial conditions in the United States and around the world, including as a result of COVID-19 , rising inflation, increasing interest rates, natural disasters, military conflicts, including the conflict between Russia and Ukraine, terrorist attacks and other similar matters; 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 Six Months Ended July 3, 2022 As Restated July 4, 2021 July 3, 2022 As Restated July 4, 2021 Net revenues $ 191,376 $ 187,590 $ 377,031 $ 364,041 Cost of revenues 133,171 $ 131,156 $ 263,543 $ 256,045 Gross profit 58,205 56,434 113,488 107,996 Selling, general and administrative expenses 52,057 58,188 110,127 115,825 Special and restructuring (recoveries) charges, net (5,730 ) 6,803 3,272 5,995 Operating income (loss) 11,878 (8,557 ) 89 (13,824 ) Other expense (income): Interest expense, net 10,203 7,957 19,659 16,327 Other (income), net (1,638 ) (1,267 ) (2,924 ) (3,048 ) Total other expense, net 8,565 6,690 16,735 13,279 Income (loss) from continuing operations before income taxes 3,313 (15,247 ) (16,646 ) (27,103 ) (Benefit from) provision for income taxes (647 ) 2,659 875 2,360 Income (loss) from continuing operations, net of tax 3,960 (17,906 ) (17,521 ) (29,463 ) Loss from discontinued operations, net of tax $ — $ (878 ) $ — $ (1,117 ) Net income (loss) $ 3,960 $ (18,784 ) $ (17,521 ) $ (30,580 ) Basic income (loss) per common share: Basic from continuing operations $ 0.19 $ (0.89 ) $ (0.86 ) $ (1.46 ) Basic from discontinued operations $ — $ (0.04 ) $ — $ (0.06 ) Net income (loss) $ 0.19 $ (0.93 ) $ (0.86 ) $ (1.52 ) Diluted income (loss) per common share: Diluted from continuing operations $ 0.19 $ (0.89 ) $ (0.86 ) $ (1.46 ) Diluted from discontinued operations $ — $ (0.04 ) $ — $ (0.06 ) Net income (loss) $ 0.19 $ (0.93 ) $ (0.86 ) $ (1.52 ) Weighted average number of common shares outstanding: Basic 20,361 20,230 20,336 20,143 Diluted 20,428 20,230 20,336 20,143 CIRCOR INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) Six Months Ended OPERATING ACTIVITIES July 3, 2022 As Restated July 4, 2021 Net (loss) $ (17,521 ) $ (30,580 ) (Loss) from discontinued operations, net of income taxes — (1,117 ) (Loss) from continuing operations, net of tax $ (17,521 ) (29,463 ) Adjustments to reconcile net (loss) to net cash (used in) operating activities: Depreciation 10,056 11,970 Amortization 18,580 21,353 Change in provision for bad debt expense (221 ) (356 ) Write down of inventory 1,181 1,548 Compensation expense for share-based plans 375 2,903 Loss on debt extinguishment 4,977 — Amortization of debt issuance costs 1,649 2,005 Deferred tax provision — (1,317 ) Loss on sale of businesses — 1,031 Gain on sale of real estate (22,008 ) — Other impairment charges 8,011 — Loss on deconsolidation charges 4,675 — Changes in operating assets and liabilities, net of effects of acquisitions and divestitures: Trade accounts receivable 3,283 6,455 Inventories (20,548 ) (14,617 ) Prepaid expenses and other assets (16,947 ) (10,119 ) Accounts payable, accrued expenses and other liabilities 4,941 (1,158 ) Net cash used in continuing operating activities (19,517 ) (9,765 ) Net cash used in discontinued operating activities — (579 ) Net cash (used in) operating activities (19,517 ) (10,344 ) INVESTING ACTIVITIES Additions to property, plant and equipment (9,133 ) (6,038 ) Proceeds from the sale of property, plant and equipment 80 2 Proceeds from beneficial interest of factored receivables 2,336 998 Proceeds from the sale of real estate 26,433 — Proceeds from the sale of businesses — 9,993 Net cash provided by investing activities 19,716 4,955 FINANCING ACTIVITIES Proceeds from long-term debt 124,016 103,350 Payments of long-term debt (105,616 ) (100,250 ) Net change in short-term borrowings (1,573 ) (292 ) Proceeds from the exercise of stock options — 151 Withholding tax payments on net share settlements on equity awards (1,187 ) (4,119 ) Payments of debt issuance costs (16,701 ) — Net cash (used in) financing activities (1,061 ) (1,160 ) Effect of exchange rate changes on cash, cash equivalents and restricted cash (3,848 ) (1,782 ) DECREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH (4,710 ) (8,331 ) Cash, cash equivalents, and restricted cash at beginning of period 61,374 68,607 CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF PERIOD $ 56,664 $ 60,276 CIRCOR INTERNATIONAL, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share data) (unaudited) July 3, 2022 December 31, 2021 ASSETS CURRENT ASSETS: Cash and cash equivalents $ 55,238 $ 59,924 Trade accounts receivable, net 93,530 100,149 Inventories 134,247 123,343 Prepaid expenses and other current assets 119,522 110,749 Total Current Assets 402,537 394,165 PROPERTY, PLANT AND EQUIPMENT, NET 139,082 154,461 OTHER ASSETS: Goodwill 119,750 122,906 Intangibles, net 273,476 303,476 Deferred income taxes 685 756 Other assets 53,890 43,534 TOTAL ASSETS $ 989,420 $ 1,019,298 LIABILITIES AND SHAREHOLDERS’ EQUITY CURRENT LIABILITIES: Accounts payable $ 83,152 $ 83,382 Accrued expenses and other current liabilities 78,554 81,998 Accrued compensation and benefits 28,158 26,551 Short-term borrowings and current portion of long-term debt — 1,611 Total Current Liabilities 189,864 193,542 LONG-TERM DEBT 520,999 511,694 DEFERRED INCOME TAXES 19,689 21,721 PENSION LIABILITY, NET 111,716 120,881 OTHER NON-CURRENT LIABILITIES 43,489 37,744 COMMITMENTS AND CONTINGENCIES (NOTE 9 AND 10) SHAREHOLDERS’ EQUITY: Preferred stock, $0.01 par value; 1,000,000 shares authorized; no shares issued and outstanding — — Common stock, $0.01 par value; 29,000,000 shares authorized; 21,724,341 and 21,633,131 issued at July 3, 2022 and December 31, 2021 respectively 217 217 Additional paid-in capital 454,361 454,852 Accumulated deficit (215,602 ) (198,081 ) Common treasury stock, at cost (1,372,488 shares at July 3, 2022 and December 31, 2021) (74,472 ) (74,472 ) Accumulated other comprehensive loss, net of tax (60,841 ) (48,800 ) Total Shareholders’ Equity 103,663 133,716 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 989,420 $ 1,019,298 CIRCOR INTERNATIONAL, INC. SUMMARY OF ORDERS AND BACKLOG (in millions) (unaudited) Three Months Ended Six Months Ended July 3, 2022 July 4, 2021 July 3, 2022 July 4, 2021 ORDERS (1) Aerospace & Defense $ 69.0 $ 54.2 $ 146.90 $ 127.2 Industrial 139.4 156.0 283.1 309.7 Total orders $ 208.4 $ 210.2 $ 430.0 $ 436.9 July 3, 2022 July 4, 2021 BACKLOG (2) Aerospace & Defense $ 199.0 $ 191.7 Industrial 278.4 248.2 Total backlog $ 477.4 $ 439.9 1. Orders do not include the foreign exchange impact due to the re-measurement of customer backlog amounts denominated in foreign currencies. Industrial includes $0.0 million and $5.2 million of orders for Pipeline Engineering for the three months ended July 3, 2022 and July 4, 2021 respectively. Industrial includes $2.3 million and $10.7 million of orders for Pipeline Engineering for the six months ended July 3, 2022 and July 4, 2021 respectively. 2. Backlog is calculated as current period orders plus unshipped customer orders from prior periods for which revenue has not been recognized. Industrial includes $0.0 million and $0.7 million for Pipeline Engineering in 2022 and 2021 respectively. CIRCOR INTERNATIONAL, INC. SEGMENT INFORMATION (in thousands, except percentages) (unaudited) 2021 As Restated 2022 As reported 1ST QTR 2ND QTR 3RD QTR 4TH QTR TOTAL 1ST QTR 2ND QTR TOTAL ORDERS Aerospace & Defense $ 72,999 $ 54,243 $ 54,028 $ 73,898 $ 255,168 $ 77,890 $ 69,053 $ 146,943 Industrial 153,695 155,959 139,691 146,065 595,410 143,727 139,370 283,097 Total $ 226,693 $ 210,203 $ 193,719 $ 219,964 $ 850,578 $ 221,617 $ 208,423 $ 430,040 NET REVENUES Aerospace & Defense $ 58,488 $ 60,613 $ 63,461 $ 69,979 $ 252,541 $ 63,370 $ 67,271 $ 130,641 Industrial 117,963 126,977 126,248 134,938 506,126 122,285 124,105 246,390 Total $ 176,451 $ 187,590 $ 189,709 $ 204,917 $ 758,667 $ 185,655 $ 191,376 $ 377,031 SEGMENT OPERATING INCOME Aerospace & Defense $ 9,988 $ 11,741 $ 15,927 $ 18,416 $ 56,073 $ 11,320 $ 13,566 $ 24,886 Industrial 5,834 7,237 7,124 8,700 28,896 6,857 8,484 15,341 Corporate expenses (9,035 ) (7,950 ) (7,015 ) (6,636 ) (30,638 ) (7,770 ) (5,485 ) (13,255 ) Total $ 6,787 $ 11,028 $ 16,036 $ 20,480 $ 54,331 $ 10,407 $ 16,565 $ 26,972 SEGMENT OPERATING MARGIN % Aerospace & Defense 17.1 % 19.4 % 25.1 % 26.3 % 22.2 % 17.9 % 20.2 % 19.0 % Industrial 4.9 % 5.7 % 5.6 % 6.4 % 5.7 % 5.6 % 6.8 % 6.2 % Total 3.8 % 5.9 % 8.5 % 10.0 % 7.2 % 5.6 % 8.7 % 7.2 % 2021 2022 Pipeline Engineering1 1ST QTR 2ND QTR 3RD QTR 4TH QTR TOTAL 1ST QTR 2ND QTR TOTAL ORDERS - Industrial $ 5,531 $ 5,192 $ 6,575 $ 7,121 $ 24,419 $ 2,260 $ — $ 2,260 NET REVENUES - Industrial $ 2,994 $ 3,124 $ 3,236 $ 5,248 $ 14,602 $ 3,012 $ 218 $ 3,230 SEGMENT OP. INC. -Industrial $ (2,479 ) $ (1,754 ) $ (2,470 ) $ (3,191 ) $ (9,893 ) $ (3,190 ) $ (1,074 ) $ (4,264 ) Segment Operating Margin % (82.8 ) % (56.1 ) % (76.3 ) % (60.8 ) % (67.8 ) % (105.9 ) % (492.7 ) % (132.0 ) % 1) Quantifies the impact of the Pipeline Engineering business on the Industrial Segment. CIRCOR INTERNATIONAL, INC. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND KEY PERFORMANCE MEASURES (in thousands, except percentages) (unaudited) 2021 As Restated 2022 1ST QTR 2ND QTR 3RD QTR 4TH QTR TOTAL 1ST QTR 2ND QTR TOTAL Net Cash (Used In) Provided By Operating Activities $ (19,210 ) $ 8,866 $ 10,197 $ 10,595 $ 10,448 $ (15,924 ) $ (3,593 ) $ (19,517 ) LESS Capital expenditures, net of sale proceeds1 3,392 2,644 4,541 4,168 14,745 3,592 5,461 9,053 ADJUSTED FREE CASH FLOW $ (22,602 ) $ 6,222 $ 5,656 $ 6,427 $ (4,297 ) $ (19,516 ) $ (9,054 ) $ (28,570 ) Gross Debt $ 538,541 $ 524,391 $ 518,464 $ 526,311 $ 526,311 $ 547,681 $ 543,100 $ 543,100 Less: Cash & Cash equivalents 64,837 58,862 58,013 59,924 59,924 61,122 55,238 55,238 GROSS DEBT, NET OF CASH $ 473,704 $ 465,529 $ 460,451 $ 466,387 $ 466,387 $ 486,559 $ 487,862 $ 487,862 TOTAL SHAREHOLDERS' EQUITY $ 138,663 $ 122,185 $ 121,256 $ 133,716 $ 133,716 $ 110,321 $ 103,663 $ 103,663 GROSS DEBT AS % OF EQUITY 388 % 429 % 428 % 394 % 394 % 496 % 524 % 524 % GROSS DEBT, NET OF CASH AS % OF EQUITY 342 % 381 % 380 % 349 % 349 % 441 % 471 % 471 % Includes capital expenditures, net of proceeds of asset sales from GAAP operating cash flow. CIRCOR INTERNATIONAL, INC. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND KEY PERFORMANCE MEASURES (in thousands, except percentages) (unaudited) 2021 As Restated 2022 1ST QTR 2ND QTR 3RD QTR 4TH QTR TOTAL 1ST QTR 2ND QTR TOTAL NET (LOSS) INCOME $ (11,796 ) $ (18,784 ) $ (2,630 ) $ (28,427 ) $ (61,638 ) $ (21,481 ) $ 3,960 $ (17,521 ) LESS: Restructuring related inventory charges (recoveries), net — 958 (60 ) (299 ) 599 2,757 — 2,757 Restructuring charges (recoveries), net 2,060 2,281 (312 ) 205 4,234 6,447 4,695 11,142 Acquisition amortization 10,487 10,498 10,417 10,369 41,772 9,391 9,178 18,569 Acquisition depreciation 2,375 1,327 1,412 1,397 6,511 1,045 1,239 2,285 Special (recoveries) charges, net (2,870 ) 4,523 1,126 17,259 20,038 2,556 (10,425 ) (7,870 ) Goodwill Impairment charge — — — 10,500 10,500 — — — Income tax impact (44 ) 2,425 (596 ) (1,622 ) 163 384 (2,207 ) (1,823 ) Net loss (income) from discontinued operations 239 878 (2,510 ) (13 ) (1,406 ) — — — ADJUSTED NET INCOME $ 451 $ 4,106 $ 6,847 $ 9,369 $ 20,773 $ 1,099 $ 6,440 $ 7,539 (LOSS) EARNINGS PER COMMON SHARE (Diluted) $ (0.59 ) $ (0.93 ) $ (0.13 ) $ (1.40 ) $ (3.05 ) $ (1.06 ) $ 0.19 $ (0.86 ) LESS: Restructuring related inventory charges — 0.05 — (0.01 ) 0.03 0.14 — 0.14 Restructuring charges (recoveries), net 0.10 0.11 (0.02 ) 0.01 0.21 0.32 0.23 0.55 Acquisition amortization 0.52 0.52 0.51 0.51 2.07 0.46 0.45 0.91 Acquisition depreciation 0.12 0.07 0.07 0.07 0.32 0.05 0.06 0.11 Special (recoveries) charges, net (0.14 ) 0.22 0.06 0.85 0.99 0.13 (0.51 ) (0.39 ) Impairment charge — — — 0.52 0.52 — — — Income tax impact — 0.12 (0.03 ) (0.08 ) 0.01 0.02 (0.11 ) (0.09 ) (Loss) earnings) per share from discontinued operations 0.01 0.04 (0.12 ) — (0.07 ) — — — ADJUSTED EARNINGS PER SHARE (Diluted) $ 0.02 $ 0.20 $ 0.34 $ 0.46 $ 1.03 $ 0.05 $ 0.32 $ 0.37 CIRCOR INTERNATIONAL, INC. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND KEY PERFORMANCE MEASURES (in thousands, except percentages) (unaudited) 2021 As Restated 2022 1ST QTR 2ND QTR 3RD QTR 4TH QTR TOTAL 1ST QTR 2ND QTR TOTAL NET (LOSS) INCOME $ (11,796 ) $ (18,784 ) $ (2,629 ) $ (28,426 ) $ (61,635 ) $ (21,481 ) $ 3,960 $ (17,521 ) LESS: Interest expense, net 8,369 7,958 7,997 8,040 32,365 9,456 10,203 19,659 Depreciation 6,509 5,460 5,536 5,348 22,854 5,000 5,056 10,056 Amortization 10,696 10,657 10,576 10,375 42,304 9,397 9,183 18,580 Provision for income taxes (297 ) 2,659 850 1,970 5,182 1,523 (647 ) 876 Loss (income) from discontinued operations 239 878 (2,510 ) (13 ) (1,406 ) — — — EBITDA $ 13,720 $ 8,828 $ 19,820 $ (2,706 ) $ 39,664 $ 3,895 $ 27,755 $ 31,650 LESS: Restructuring related inventory charges (recoveries) — 958 (60 ) (299 ) 599 2,757 — 2,757 Restructuring charges (recoveries), net 2,060 2,281 (312 ) 205 4,234 6,447 4,695 11,142 Special (recoveries) charges, net (2,870 ) 4,523 1,126 17,259 20,038 2,556 (10,425 ) (7,870 ) Goodwill impairment charge — — — 10,500 10,500 — — — ADJUSTED EBITDA $ 12,910 $ 16,590 $ 20,574 $ 24,959 $ 75,035 $ 15,655 $ 22,025 $ 37,679 CIRCOR INTERNATIONAL, INC. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND KEY PERFORMANCE MEASURES (in thousands, except percentages) (unaudited) 2021 As Restated 2022 1ST QTR 2ND QTR 3RD QTR 4TH QTR TOTAL 1ST QTR 2ND QTR TOTAL OPERATING (LOSS) INCOME $ (5,266 ) $ (8,557 ) $ 3,451 $ (18,952 ) $ (29,323 ) $ (11,789 ) $ 11,878 $ 89 LESS: Restructuring related inventory charges (recoveries) — 958 (60 ) (299 ) 599 2,757 — 2,757 Restructuring charges (recoveries), net 2,060 2,281 (312 ) 205 4,234 6,447 4,695 11,142 Acquisition amortization 10,487 10,498 10,417 10,369 41,772 9,391 9,178 18,569 Acquisition depreciation 2,375 1,327 1,412 1,397 6,511 1,045 1,239 2,285 Special (recoveries) charges, net (2,870 ) 4,523 1,126 17,259 20,038 2,556 (10,425 ) (7,870 ) Goodwill impairment charge — — — 10,500 10,500 — — — ADJUSTED OPERATING INCOME $ 6,787 $ 11,029 $ 16,035 $ 20,479 $ 54,331 $ 10,407 $ 16,565 $ 26,972 OPERATING MARGIN (3.0 ) % (4.6 ) % 1.8 % (9.2 ) % (3.9 ) % (6.3 ) % 6.2 % 0.0 % LESS: Restructuring related inventory charges (recoveries) 0.0 % 0.5 % 0.0 % (0.1 ) % 0.1 % 1.5 % 0.0 % 0.7 % Restructuring charges (recoveries), net 1.2 % 1.2 % (0.2 ) % 0.1 % 0.6 % 3.5 % 2.5 % 3.0 % Acquisition amortization 5.9 % 5.6 % 5.5 % 5.1 % 5.5 % 5.1 % 4.8 % 4.9 % Acquisition depreciation 1.3 % 0.7 % 0.7 % 0.7 % 0.9 % 0.6 % 0.6 % 0.6 % Special (recoveries) charges, net (1.6 ) % 2.4 % 0.6 % 8.4 % 2.6 % 1.4 % (5.4 ) % (2.1 ) % Goodwill impairment charge 0.0 % 0.0 % 0.0 % 5.1 % 1.4 % 0.0 % 0.0 % 0.0 % ADJUSTED OPERATING MARGIN 3.8 % 5.9 % 8.5 % 10.0 % 7.2 % 5.6 % 8.7 % 7.2 % CIRCOR INTERNATIONAL, INC. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND KEY PERFORMANCE MEASURES (in thousands, except percentages) (unaudited) CIRCOR Aerospace & Defense Industrial 2Q 22 2Q 21 Change 2Q 22 2Q 21 Change 2Q 22 2Q 21 Change Reported Orders 208,423 210,203 (1 )% 69,053 54,243 27 % 139,370 155,959 (11 )% FX 12,735 2,395 10,340 Organic 221,158 210,203 5 % 71,448 54,243 32 % 149,710 155,959 (4 )% CIRCOR Aerospace & Defense Industrial 2Q 22 2Q 21 Change 2Q 22 2Q 21 Change 2Q 22 2Q 21 Change Reported Revenue 191,376 187,590 2 % 67,271 60,613 11 % 124,105 126,977 (2 )% FX 11,153 2,036 9,118 Organic 202,529 187,590 8 % 69,307 60,613 14 % 133,223 126,977 5 % 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. View source version on businesswire.com: https://www.businesswire.com/news/home/20220929005986/en/Contacts Scott Solomon Senior Vice President Sharon Merrill Associates, Inc. (857) 383-2409
GAAP EPS of $0.19 - Up 120% YoY; Adjusted EPS of $0.32 - Up 60% YoY GAAP Operating Income of $11.9 Million - Up 239% YoY; Adjusted Operating Income of $16.6 Million - Up 50% YoY Orders down (1%) reported and up 5% organically Progressing with review of strategic alternatives Q2 10-Q filed
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 markets, today announced financial results for the second quarter ended July 3, 2022. Q2 2022 Overview: Revenue of $191 million up 2% reported and 8% organically compared to Q2'2021 Aerospace & Defense revenue of $67 million, up 11% reported and 14% organically Industrial revenue of $124 million, down (2%) reported and up 5% organically Orders of $208 million, down (1%) and up 5% organically Aerospace & Defense orders of $69 million, up 27% and 32% organically Industrial orders of $139 million, down (11%) and (4%) organically Backlog of $477 million, up 9% driven by strong demand in Industrial GAAP operating income of $11.9 million, up 239% GAAP operating margin of 6.2%, up 1080 bps Adjusted operating income $16.6 million, up 50% Adjusted operating margin of 8.7%, up 280 bps CIRCOR President and CEO, Tony Najjar said, “Our team executed well in Q2, navigating ongoing supply chain challenges, an inflationary environment, and labor shortages. Organic orders were up 5% for the quarter and our backlog heading into the second half of the year was a robust $477 million, up 9% from prior year. Our revenues in the quarter were up 2% reported and 8% organically with solid margin expansion as a result of our simplification actions and value-based pricing initiatives.” Mr. Najjar continued, “With today’s filing of our second-quarter 10-Q, we are very pleased to be up to date with our financial reporting. Our team has worked tirelessly to make this happen, while also making progress with our simplification and cost-out actions, and in our process to review strategic alternatives. We have been hard at work seeking to ensure that CIRCOR delivers sustained growth and margin expansion. We continue to build on our relationships with our customers, improving service levels and aftermarket product flow, while focusing on value-based pricing initiatives and leveraging 80/20 principles across the Company.” Conference Call Information CIRCOR International will hold a conference call to review its second-quarter 2022 financial results at 9:00 a.m. ET today, September 30, 2022. To listen to the live conference call and view the accompanying presentation slides, please visit “Webcasts & Presentations” in the “Investors” portion of CIRCOR’s website. https://investors.circor.com/. The live call also can be accessed by dialing (877) 407-5790 or (201) 689-8328. Participants are encouraged to dial in to the call at least 15 minutes prior to the start time. The webcast will be archived on the Company’s website for one year. Selected Consolidated Results (unaudited) ($ millions except EPS) Q2 2022 Q2 2021 Change Six Months Ended July 3, 2022 Six Months Ended July 4, 2021 Change Revenue1 $ 191.4 $ 187.6 2 % $ 377.0 $ 364.0 4 % GAAP operating (loss) income 11.9 (8.6 ) 239 % 0.1 (13.8 ) 101 % Adjusted operating income2 16.6 11.0 50 % 27.0 17.8 52 % GAAP operating margin 6.2 % (4.6 )% 1080 bps 0.0 % (3.8 )% 380 bps Adjusted operating margin3 8.7 % 5.9 % 280 bps 7.2 % 4.9 % 230 bps GAAP (loss) per share $ 0.19 $ (0.93 ) 120 % $ (0.86 ) $ (1.52 ) 43 % Adjusted earnings per share (diluted)4 $ 0.32 $ 0.20 60 % $ 0.37 $ 0.22 68 % Operating cash flow (3.6 ) 8.9 -141 % (19.5 ) (10.3 ) -89 % Adjusted free cash flow5 (9.1 ) 6.2 -246 % (28.6 ) (16.4 ) -74 % Orders6 $ 208.4 $ 210.2 -1 % $ 430.0 $ 436.9 -2 % Segment Results (unaudited) ($ in millions) Q2 2022 Q2 2021 Change Six Months Ended July 3, 2022 Six Months Ended July 4, 2021 Change Aerospace & Defense Revenue1 $ 67.3 $ 60.6 11 % $ 130.6 $ 119.1 10 % Segment operating income2 13.6 11.7 16 % 24.9 21.7 15 % Segment operating margin3 20.2 % 19.4 % 80 bps 19.0 % 18.2 % 80 bps Orders6 $ 69.1 $ 54.2 27 % $ 146.9 $ 127.2 15 % Industrial Revenue1 $ 124.1 $ 127.0 -2 % $ 246.4 $ 244.9 1 % Segment operating income2 8.5 7.2 17 % 15.3 13.1 17 % Segment operating margin3 6.8 % 5.7 % 110 bps 6.2 % 5.3 % 90 bps Orders6 $ 139.4 $ 156.0 -11 % $ 283.1 $ 309.7 -9 % Consolidated and Industrial segment revenues for Q2 2022 and Q2 2021 included $0.2 million and $3.1 million, respectively, relating to our Pipeline Engineering business. Adjusted operating income is a non-GAAP financial measure. Refer to “Use of Non-GAAP Financial Measures” for an explanation of our non-GAAP financial measures and to the reconciliations included in this press release. Adjusted operating income and Industrial segment operating income for Q2 2022 and Q2 2021 included $(1.1) million and $(1.8) million, respectively, relating to our Pipeline Engineering business. Adjusted operating margin is a non-GAAP financial measure. Adjusted operating margin for Q2 2022 and Q2 2021 included (492)% and (56)%, respectively, relating to our Pipeline Engineering business. Adjusted earnings per share (diluted) is a non-GAAP financial measure. Adjusted earnings per share and our segment results for Q2 2022 exclude net loss from non-cash acquisition-related intangible amortization and special and restructuring charges of $4.7 million, consisting of (i) $10.4 million for non-cash acquisition-related intangible amortization and depreciation expense; (ii) $5.0 million of special charges related to the amendment of the credit agreement; (iii) $5.0 million of costs due to the investigation into the accounting irregularities of the Pipeline Engineering business and incremental professional services incurred due to the restatement; (iv) $0.9 million of special charges related to the evaluation of strategic alternatives for the company; (v) net restructuring charges of $4.7 million comprised of $5.3 million of CTA loss offset by other adjustments of $0.6 million due to the deconsolidation of the Pipeline Engineering businesses; (vi) other special and restructuring charges net of $0.7 million; and (vii) a gain of $22.0 million on the sale of real estate located at Walden, New York and Tampa, Florida. Adjusted consolidated and segment results for Q2 2021 exclude net loss from discontinued operations of $0.9 million and net loss from non-cash acquisition-related intangible amortization, special and restructuring charges totaling $19.6 million ($21.9 million after tax). These charges include: (i) $11.8 million for non-cash acquisition-related intangible amortization and depreciation expense; (ii) $3.0 million of special charges related to the Heater & Control Valve divestiture; (iii) $3.8 million of other special and restructuring charges; and (iv) $1.0 million of restructuring related inventory charges. Adjusted free cash flow, a non-GAAP financial measure, is calculated by subtracting GAAP capital expenditures, net of proceeds from asset sales, from GAAP operating cash flow. Orders, an operating measure, is defined as a legally binding agreement from an authorized individual at a customer requesting CIRCOR to provide goods and/or services at a fixed or determinable price and CIRCOR is capable of providing such goods and services, when the terms and conditions are firm enough to assure subsequent payment by the customer. Consolidated and Industrial segment orders for Q2 2022 and Q2 2021 included $0.0 million and $5.2 million, respectively, relating to our Pipeline Engineering business. As previously disclosed in our Form 10-K for the year ended December 31, 2021, the Company discovered accounting irregularities in its Pipeline Engineering business unit resulting in a restatement of previously issued financial statements. Company Files Quarterly Report on Form 10-Q for the Period Ended July 3, 2022 The Company today filed its Quarterly Report on Form 10-Q for the second quarter of 2022. Use of Non-GAAP Financial Measures In this press release, the Company uses the non-GAAP financial measures adjusted net income, adjusted EBITDA, adjusted operating income, adjusted operating margin, adjusted earnings per share and adjusted 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 can also assist investors and others in comparing CIRCOR’s current financial results with CIRCOR’s past financial results in a consistent manner. We exclude costs and tax effects associated with special and restructuring activities, such as reducing overhead and consolidating facilities. We believe that the costs related to special and 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 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 or exited businesses and to provide a comparison of changes in our revenue and orders (an operating measure), we also discuss these changes on an “organic” basis. Organic is calculated assuming the divestitures and/or exited businesses completed prior to July 3, 2022 were completed on January 1, 2021 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 the inability to achieve expected results in pricing and cost out actions and the related impact on margins and cash flow; 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; the uncertainty associated with the current worldwide economic conditions and the continuing impact on economic and financial conditions in the United States and around the world, including as a result of COVID-19 , rising inflation, increasing interest rates, natural disasters, military conflicts, including the conflict between Russia and Ukraine, terrorist attacks and other similar matters; 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 Six Months Ended July 3, 2022 As Restated July 4, 2021 July 3, 2022 As Restated July 4, 2021 Net revenues $ 191,376 $ 187,590 $ 377,031 $ 364,041 Cost of revenues 133,171 $ 131,156 $ 263,543 $ 256,045 Gross profit 58,205 56,434 113,488 107,996 Selling, general and administrative expenses 52,057 58,188 110,127 115,825 Special and restructuring (recoveries) charges, net (5,730 ) 6,803 3,272 5,995 Operating income (loss) 11,878 (8,557 ) 89 (13,824 ) Other expense (income): Interest expense, net 10,203 7,957 19,659 16,327 Other (income), net (1,638 ) (1,267 ) (2,924 ) (3,048 ) Total other expense, net 8,565 6,690 16,735 13,279 Income (loss) from continuing operations before income taxes 3,313 (15,247 ) (16,646 ) (27,103 ) (Benefit from) provision for income taxes (647 ) 2,659 875 2,360 Income (loss) from continuing operations, net of tax 3,960 (17,906 ) (17,521 ) (29,463 ) Loss from discontinued operations, net of tax $ — $ (878 ) $ — $ (1,117 ) Net income (loss) $ 3,960 $ (18,784 ) $ (17,521 ) $ (30,580 ) Basic income (loss) per common share: Basic from continuing operations $ 0.19 $ (0.89 ) $ (0.86 ) $ (1.46 ) Basic from discontinued operations $ — $ (0.04 ) $ — $ (0.06 ) Net income (loss) $ 0.19 $ (0.93 ) $ (0.86 ) $ (1.52 ) Diluted income (loss) per common share: Diluted from continuing operations $ 0.19 $ (0.89 ) $ (0.86 ) $ (1.46 ) Diluted from discontinued operations $ — $ (0.04 ) $ — $ (0.06 ) Net income (loss) $ 0.19 $ (0.93 ) $ (0.86 ) $ (1.52 ) Weighted average number of common shares outstanding: Basic 20,361 20,230 20,336 20,143 Diluted 20,428 20,230 20,336 20,143 CIRCOR INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) Six Months Ended OPERATING ACTIVITIES July 3, 2022 As Restated July 4, 2021 Net (loss) $ (17,521 ) $ (30,580 ) (Loss) from discontinued operations, net of income taxes — (1,117 ) (Loss) from continuing operations, net of tax $ (17,521 ) (29,463 ) Adjustments to reconcile net (loss) to net cash (used in) operating activities: Depreciation 10,056 11,970 Amortization 18,580 21,353 Change in provision for bad debt expense (221 ) (356 ) Write down of inventory 1,181 1,548 Compensation expense for share-based plans 375 2,903 Loss on debt extinguishment 4,977 — Amortization of debt issuance costs 1,649 2,005 Deferred tax provision — (1,317 ) Loss on sale of businesses — 1,031 Gain on sale of real estate (22,008 ) — Other impairment charges 8,011 — Loss on deconsolidation charges 4,675 — Changes in operating assets and liabilities, net of effects of acquisitions and divestitures: Trade accounts receivable 3,283 6,455 Inventories (20,548 ) (14,617 ) Prepaid expenses and other assets (16,947 ) (10,119 ) Accounts payable, accrued expenses and other liabilities 4,941 (1,158 ) Net cash used in continuing operating activities (19,517 ) (9,765 ) Net cash used in discontinued operating activities — (579 ) Net cash (used in) operating activities (19,517 ) (10,344 ) INVESTING ACTIVITIES Additions to property, plant and equipment (9,133 ) (6,038 ) Proceeds from the sale of property, plant and equipment 80 2 Proceeds from beneficial interest of factored receivables 2,336 998 Proceeds from the sale of real estate 26,433 — Proceeds from the sale of businesses — 9,993 Net cash provided by investing activities 19,716 4,955 FINANCING ACTIVITIES Proceeds from long-term debt 124,016 103,350 Payments of long-term debt (105,616 ) (100,250 ) Net change in short-term borrowings (1,573 ) (292 ) Proceeds from the exercise of stock options — 151 Withholding tax payments on net share settlements on equity awards (1,187 ) (4,119 ) Payments of debt issuance costs (16,701 ) — Net cash (used in) financing activities (1,061 ) (1,160 ) Effect of exchange rate changes on cash, cash equivalents and restricted cash (3,848 ) (1,782 ) DECREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH (4,710 ) (8,331 ) Cash, cash equivalents, and restricted cash at beginning of period 61,374 68,607 CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF PERIOD $ 56,664 $ 60,276 CIRCOR INTERNATIONAL, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share data) (unaudited) July 3, 2022 December 31, 2021 ASSETS CURRENT ASSETS: Cash and cash equivalents $ 55,238 $ 59,924 Trade accounts receivable, net 93,530 100,149 Inventories 134,247 123,343 Prepaid expenses and other current assets 119,522 110,749 Total Current Assets 402,537 394,165 PROPERTY, PLANT AND EQUIPMENT, NET 139,082 154,461 OTHER ASSETS: Goodwill 119,750 122,906 Intangibles, net 273,476 303,476 Deferred income taxes 685 756 Other assets 53,890 43,534 TOTAL ASSETS $ 989,420 $ 1,019,298 LIABILITIES AND SHAREHOLDERS’ EQUITY CURRENT LIABILITIES: Accounts payable $ 83,152 $ 83,382 Accrued expenses and other current liabilities 78,554 81,998 Accrued compensation and benefits 28,158 26,551 Short-term borrowings and current portion of long-term debt — 1,611 Total Current Liabilities 189,864 193,542 LONG-TERM DEBT 520,999 511,694 DEFERRED INCOME TAXES 19,689 21,721 PENSION LIABILITY, NET 111,716 120,881 OTHER NON-CURRENT LIABILITIES 43,489 37,744 COMMITMENTS AND CONTINGENCIES (NOTE 9 AND 10) SHAREHOLDERS’ EQUITY: Preferred stock, $0.01 par value; 1,000,000 shares authorized; no shares issued and outstanding — — Common stock, $0.01 par value; 29,000,000 shares authorized; 21,724,341 and 21,633,131 issued at July 3, 2022 and December 31, 2021 respectively 217 217 Additional paid-in capital 454,361 454,852 Accumulated deficit (215,602 ) (198,081 ) Common treasury stock, at cost (1,372,488 shares at July 3, 2022 and December 31, 2021) (74,472 ) (74,472 ) Accumulated other comprehensive loss, net of tax (60,841 ) (48,800 ) Total Shareholders’ Equity 103,663 133,716 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 989,420 $ 1,019,298 CIRCOR INTERNATIONAL, INC. SUMMARY OF ORDERS AND BACKLOG (in millions) (unaudited) Three Months Ended Six Months Ended July 3, 2022 July 4, 2021 July 3, 2022 July 4, 2021 ORDERS (1) Aerospace & Defense $ 69.0 $ 54.2 $ 146.90 $ 127.2 Industrial 139.4 156.0 283.1 309.7 Total orders $ 208.4 $ 210.2 $ 430.0 $ 436.9 July 3, 2022 July 4, 2021 BACKLOG (2) Aerospace & Defense $ 199.0 $ 191.7 Industrial 278.4 248.2 Total backlog $ 477.4 $ 439.9 1. Orders do not include the foreign exchange impact due to the re-measurement of customer backlog amounts denominated in foreign currencies. Industrial includes $0.0 million and $5.2 million of orders for Pipeline Engineering for the three months ended July 3, 2022 and July 4, 2021 respectively. Industrial includes $2.3 million and $10.7 million of orders for Pipeline Engineering for the six months ended July 3, 2022 and July 4, 2021 respectively. 2. Backlog is calculated as current period orders plus unshipped customer orders from prior periods for which revenue has not been recognized. Industrial includes $0.0 million and $0.7 million for Pipeline Engineering in 2022 and 2021 respectively. CIRCOR INTERNATIONAL, INC. SEGMENT INFORMATION (in thousands, except percentages) (unaudited) 2021 As Restated 2022 As reported 1ST QTR 2ND QTR 3RD QTR 4TH QTR TOTAL 1ST QTR 2ND QTR TOTAL ORDERS Aerospace & Defense $ 72,999 $ 54,243 $ 54,028 $ 73,898 $ 255,168 $ 77,890 $ 69,053 $ 146,943 Industrial 153,695 155,959 139,691 146,065 595,410 143,727 139,370 283,097 Total $ 226,693 $ 210,203 $ 193,719 $ 219,964 $ 850,578 $ 221,617 $ 208,423 $ 430,040 NET REVENUES Aerospace & Defense $ 58,488 $ 60,613 $ 63,461 $ 69,979 $ 252,541 $ 63,370 $ 67,271 $ 130,641 Industrial 117,963 126,977 126,248 134,938 506,126 122,285 124,105 246,390 Total $ 176,451 $ 187,590 $ 189,709 $ 204,917 $ 758,667 $ 185,655 $ 191,376 $ 377,031 SEGMENT OPERATING INCOME Aerospace & Defense $ 9,988 $ 11,741 $ 15,927 $ 18,416 $ 56,073 $ 11,320 $ 13,566 $ 24,886 Industrial 5,834 7,237 7,124 8,700 28,896 6,857 8,484 15,341 Corporate expenses (9,035 ) (7,950 ) (7,015 ) (6,636 ) (30,638 ) (7,770 ) (5,485 ) (13,255 ) Total $ 6,787 $ 11,028 $ 16,036 $ 20,480 $ 54,331 $ 10,407 $ 16,565 $ 26,972 SEGMENT OPERATING MARGIN % Aerospace & Defense 17.1 % 19.4 % 25.1 % 26.3 % 22.2 % 17.9 % 20.2 % 19.0 % Industrial 4.9 % 5.7 % 5.6 % 6.4 % 5.7 % 5.6 % 6.8 % 6.2 % Total 3.8 % 5.9 % 8.5 % 10.0 % 7.2 % 5.6 % 8.7 % 7.2 % 2021 2022 Pipeline Engineering1 1ST QTR 2ND QTR 3RD QTR 4TH QTR TOTAL 1ST QTR 2ND QTR TOTAL ORDERS - Industrial $ 5,531 $ 5,192 $ 6,575 $ 7,121 $ 24,419 $ 2,260 $ — $ 2,260 NET REVENUES - Industrial $ 2,994 $ 3,124 $ 3,236 $ 5,248 $ 14,602 $ 3,012 $ 218 $ 3,230 SEGMENT OP. INC. -Industrial $ (2,479 ) $ (1,754 ) $ (2,470 ) $ (3,191 ) $ (9,893 ) $ (3,190 ) $ (1,074 ) $ (4,264 ) Segment Operating Margin % (82.8 ) % (56.1 ) % (76.3 ) % (60.8 ) % (67.8 ) % (105.9 ) % (492.7 ) % (132.0 ) % 1) Quantifies the impact of the Pipeline Engineering business on the Industrial Segment. CIRCOR INTERNATIONAL, INC. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND KEY PERFORMANCE MEASURES (in thousands, except percentages) (unaudited) 2021 As Restated 2022 1ST QTR 2ND QTR 3RD QTR 4TH QTR TOTAL 1ST QTR 2ND QTR TOTAL Net Cash (Used In) Provided By Operating Activities $ (19,210 ) $ 8,866 $ 10,197 $ 10,595 $ 10,448 $ (15,924 ) $ (3,593 ) $ (19,517 ) LESS Capital expenditures, net of sale proceeds1 3,392 2,644 4,541 4,168 14,745 3,592 5,461 9,053 ADJUSTED FREE CASH FLOW $ (22,602 ) $ 6,222 $ 5,656 $ 6,427 $ (4,297 ) $ (19,516 ) $ (9,054 ) $ (28,570 ) Gross Debt $ 538,541 $ 524,391 $ 518,464 $ 526,311 $ 526,311 $ 547,681 $ 543,100 $ 543,100 Less: Cash & Cash equivalents 64,837 58,862 58,013 59,924 59,924 61,122 55,238 55,238 GROSS DEBT, NET OF CASH $ 473,704 $ 465,529 $ 460,451 $ 466,387 $ 466,387 $ 486,559 $ 487,862 $ 487,862 TOTAL SHAREHOLDERS' EQUITY $ 138,663 $ 122,185 $ 121,256 $ 133,716 $ 133,716 $ 110,321 $ 103,663 $ 103,663 GROSS DEBT AS % OF EQUITY 388 % 429 % 428 % 394 % 394 % 496 % 524 % 524 % GROSS DEBT, NET OF CASH AS % OF EQUITY 342 % 381 % 380 % 349 % 349 % 441 % 471 % 471 % Includes capital expenditures, net of proceeds of asset sales from GAAP operating cash flow. CIRCOR INTERNATIONAL, INC. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND KEY PERFORMANCE MEASURES (in thousands, except percentages) (unaudited) 2021 As Restated 2022 1ST QTR 2ND QTR 3RD QTR 4TH QTR TOTAL 1ST QTR 2ND QTR TOTAL NET (LOSS) INCOME $ (11,796 ) $ (18,784 ) $ (2,630 ) $ (28,427 ) $ (61,638 ) $ (21,481 ) $ 3,960 $ (17,521 ) LESS: Restructuring related inventory charges (recoveries), net — 958 (60 ) (299 ) 599 2,757 — 2,757 Restructuring charges (recoveries), net 2,060 2,281 (312 ) 205 4,234 6,447 4,695 11,142 Acquisition amortization 10,487 10,498 10,417 10,369 41,772 9,391 9,178 18,569 Acquisition depreciation 2,375 1,327 1,412 1,397 6,511 1,045 1,239 2,285 Special (recoveries) charges, net (2,870 ) 4,523 1,126 17,259 20,038 2,556 (10,425 ) (7,870 ) Goodwill Impairment charge — — — 10,500 10,500 — — — Income tax impact (44 ) 2,425 (596 ) (1,622 ) 163 384 (2,207 ) (1,823 ) Net loss (income) from discontinued operations 239 878 (2,510 ) (13 ) (1,406 ) — — — ADJUSTED NET INCOME $ 451 $ 4,106 $ 6,847 $ 9,369 $ 20,773 $ 1,099 $ 6,440 $ 7,539 (LOSS) EARNINGS PER COMMON SHARE (Diluted) $ (0.59 ) $ (0.93 ) $ (0.13 ) $ (1.40 ) $ (3.05 ) $ (1.06 ) $ 0.19 $ (0.86 ) LESS: Restructuring related inventory charges — 0.05 — (0.01 ) 0.03 0.14 — 0.14 Restructuring charges (recoveries), net 0.10 0.11 (0.02 ) 0.01 0.21 0.32 0.23 0.55 Acquisition amortization 0.52 0.52 0.51 0.51 2.07 0.46 0.45 0.91 Acquisition depreciation 0.12 0.07 0.07 0.07 0.32 0.05 0.06 0.11 Special (recoveries) charges, net (0.14 ) 0.22 0.06 0.85 0.99 0.13 (0.51 ) (0.39 ) Impairment charge — — — 0.52 0.52 — — — Income tax impact — 0.12 (0.03 ) (0.08 ) 0.01 0.02 (0.11 ) (0.09 ) (Loss) earnings) per share from discontinued operations 0.01 0.04 (0.12 ) — (0.07 ) — — — ADJUSTED EARNINGS PER SHARE (Diluted) $ 0.02 $ 0.20 $ 0.34 $ 0.46 $ 1.03 $ 0.05 $ 0.32 $ 0.37 CIRCOR INTERNATIONAL, INC. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND KEY PERFORMANCE MEASURES (in thousands, except percentages) (unaudited) 2021 As Restated 2022 1ST QTR 2ND QTR 3RD QTR 4TH QTR TOTAL 1ST QTR 2ND QTR TOTAL NET (LOSS) INCOME $ (11,796 ) $ (18,784 ) $ (2,629 ) $ (28,426 ) $ (61,635 ) $ (21,481 ) $ 3,960 $ (17,521 ) LESS: Interest expense, net 8,369 7,958 7,997 8,040 32,365 9,456 10,203 19,659 Depreciation 6,509 5,460 5,536 5,348 22,854 5,000 5,056 10,056 Amortization 10,696 10,657 10,576 10,375 42,304 9,397 9,183 18,580 Provision for income taxes (297 ) 2,659 850 1,970 5,182 1,523 (647 ) 876 Loss (income) from discontinued operations 239 878 (2,510 ) (13 ) (1,406 ) — — — EBITDA $ 13,720 $ 8,828 $ 19,820 $ (2,706 ) $ 39,664 $ 3,895 $ 27,755 $ 31,650 LESS: Restructuring related inventory charges (recoveries) — 958 (60 ) (299 ) 599 2,757 — 2,757 Restructuring charges (recoveries), net 2,060 2,281 (312 ) 205 4,234 6,447 4,695 11,142 Special (recoveries) charges, net (2,870 ) 4,523 1,126 17,259 20,038 2,556 (10,425 ) (7,870 ) Goodwill impairment charge — — — 10,500 10,500 — — — ADJUSTED EBITDA $ 12,910 $ 16,590 $ 20,574 $ 24,959 $ 75,035 $ 15,655 $ 22,025 $ 37,679 CIRCOR INTERNATIONAL, INC. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND KEY PERFORMANCE MEASURES (in thousands, except percentages) (unaudited) 2021 As Restated 2022 1ST QTR 2ND QTR 3RD QTR 4TH QTR TOTAL 1ST QTR 2ND QTR TOTAL OPERATING (LOSS) INCOME $ (5,266 ) $ (8,557 ) $ 3,451 $ (18,952 ) $ (29,323 ) $ (11,789 ) $ 11,878 $ 89 LESS: Restructuring related inventory charges (recoveries) — 958 (60 ) (299 ) 599 2,757 — 2,757 Restructuring charges (recoveries), net 2,060 2,281 (312 ) 205 4,234 6,447 4,695 11,142 Acquisition amortization 10,487 10,498 10,417 10,369 41,772 9,391 9,178 18,569 Acquisition depreciation 2,375 1,327 1,412 1,397 6,511 1,045 1,239 2,285 Special (recoveries) charges, net (2,870 ) 4,523 1,126 17,259 20,038 2,556 (10,425 ) (7,870 ) Goodwill impairment charge — — — 10,500 10,500 — — — ADJUSTED OPERATING INCOME $ 6,787 $ 11,029 $ 16,035 $ 20,479 $ 54,331 $ 10,407 $ 16,565 $ 26,972 OPERATING MARGIN (3.0 ) % (4.6 ) % 1.8 % (9.2 ) % (3.9 ) % (6.3 ) % 6.2 % 0.0 % LESS: Restructuring related inventory charges (recoveries) 0.0 % 0.5 % 0.0 % (0.1 ) % 0.1 % 1.5 % 0.0 % 0.7 % Restructuring charges (recoveries), net 1.2 % 1.2 % (0.2 ) % 0.1 % 0.6 % 3.5 % 2.5 % 3.0 % Acquisition amortization 5.9 % 5.6 % 5.5 % 5.1 % 5.5 % 5.1 % 4.8 % 4.9 % Acquisition depreciation 1.3 % 0.7 % 0.7 % 0.7 % 0.9 % 0.6 % 0.6 % 0.6 % Special (recoveries) charges, net (1.6 ) % 2.4 % 0.6 % 8.4 % 2.6 % 1.4 % (5.4 ) % (2.1 ) % Goodwill impairment charge 0.0 % 0.0 % 0.0 % 5.1 % 1.4 % 0.0 % 0.0 % 0.0 % ADJUSTED OPERATING MARGIN 3.8 % 5.9 % 8.5 % 10.0 % 7.2 % 5.6 % 8.7 % 7.2 % CIRCOR INTERNATIONAL, INC. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND KEY PERFORMANCE MEASURES (in thousands, except percentages) (unaudited) CIRCOR Aerospace & Defense Industrial 2Q 22 2Q 21 Change 2Q 22 2Q 21 Change 2Q 22 2Q 21 Change Reported Orders 208,423 210,203 (1 )% 69,053 54,243 27 % 139,370 155,959 (11 )% FX 12,735 2,395 10,340 Organic 221,158 210,203 5 % 71,448 54,243 32 % 149,710 155,959 (4 )% CIRCOR Aerospace & Defense Industrial 2Q 22 2Q 21 Change 2Q 22 2Q 21 Change 2Q 22 2Q 21 Change Reported Revenue 191,376 187,590 2 % 67,271 60,613 11 % 124,105 126,977 (2 )% FX 11,153 2,036 9,118 Organic 202,529 187,590 8 % 69,307 60,613 14 % 133,223 126,977 5 % 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. View source version on businesswire.com: https://www.businesswire.com/news/home/20220929005986/en/