CIRCOR (CIR) Misses Q1 EPS by 25c, Revenues Beat

CIRCOR (NYSE: CIR) reported Q1 EPS of $0.20, $0.25 worse than the analyst estimate of $0.45. Revenue for the quarter came in at $192.2 million versus the consensus estimate of $191.61 million.

First-Quarter 2020 Overview

• Prioritizing health and safety while continuing our strategic transformation and managing business continuity during the COVID-19 pandemic
• Orders of $208 million produced a book-to-bill ratio of 1.09 and backlog increase of $16 million
• Revenue of $192 million, down 20% reported, down 9% organically
  • Aerospace & Defense revenue of $65 million, up 7% reported, up 8% organically
  • Industrial revenue of $127 million, down 29% reported, down 16% organically
• GAAP loss per share of $(3.96) reflecting a non-cash goodwill impairment charge of $116 million in the Industrial segment due to COVID-19 impact on outlook
• Adjusted earnings per share of $0.20, including estimated $(0.45) impact from COVID-19, driven by:
  • Delayed revenue of $12 million and adjusted operating income of $5 million
  • Receivable write-off of $6 million
• GAAP operating margin of (38%); adjusted operating margin of 5.8%
• Aerospace & Defense operating margin of 19.1%, up 380 bps versus last year
• Initiated $45 million of 2020 cost actions due to current market environment
• Exited Q1 with $171 million of cash on hand
• Repriced debt in February 2020, reducing interest expense by 25 bps
• Completed sale of non-core Instrumentation & Sampling business in January 2020 for $172 million, subject to working capital adjustment
• Distributed Valves business exit to be completed in Q2 2020

“At CIRCOR, our top priority remains the health and safety of our employees, customers and suppliers. The CIRCOR team has been doing a remarkable job and I want to thank them for their service and unwavering dedication to our customers in this rapidly changing environment,” said Scott Buckhout, CIRCOR’s President and CEO. “CIRCOR’s products and services have been deemed essential in the vast majority of regions in which we operate, and as a result, all of our facilities are currently open. During this time of unprecedented uncertainty, our team has taken extraordinary measures to maintain business continuity, implementing numerous safety measures in an effort to ensure our employees around the world remain safe and our business continues to supply essential products to our customers with as little disruption as possible.”

Mr. Buckhout continued, “We are taking prudent action in the face of the COVID-19 pandemic while continuing to execute against our previously announced 18-month strategic plan. De-levering the Company remains a top priority. We reduced our net debt by $138 million in the first quarter. In addition, we are aggressively taking cost out of our business to better align our cost structure with the current market environment. We expect the actions taken to date will reduce costs in 2020 by approximately $45 million. As a result, we expect to improve our cash flow in the back half of the year as cost reductions kick in and we complete the disbursements associated with finalizing CIRCOR’s strategic transformation out of non-core upstream Oil & Gas.

“Looking ahead, we continue to focus on creating long-term value for shareholders by positioning the Company for growth, expanding margins, generating strong free cash flow, and de-levering the Company.”

For earnings history and earnings-related data on CIRCOR (CIR) click here.

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