CIR_Q1_03.31.2013_8-K

“The repositioning actions we took in all three of our segments to generate greater profitability and better focus on key strategic markets are on track for completion by the end of the current second quarter,” said Buckhout. “We expect to begin realizing the full run-rate of approximately $7 million in annualized savings from these actions in the second half of 2013.”

“We anticipate improved performance on both the top and bottom lines in the second quarter and we remain focused on margin expansion and evaluating further repositioning opportunities. Our key markets are attractive and have significant long-term growth potential. We believe these markets will continue to provide opportunities for CIRCOR to expand organically and through acquisitions,” concluded Buckhout.

Revenues for the first quarter of 2013 were $205.4 million, a 4% decrease from $214.3 million in the first quarter of 2012, due primarily to lower energy shipments as a result of lower North American rig counts. Adjusted earnings per diluted share in the first quarter of 2013, excluding the impact of special charges of $0.07, was $0.52, a 6% increase compared to the prior year's first-quarter results of $0.49. Net income for the first quarter of 2013, including special charges, was $7.9 million, or $0.45 per diluted share, compared with net income of $8.6 million, or $0.49 per diluted share, for the first quarter of 2012.

The Company received orders totaling $226.8 million during the first quarter of 2013, a decrease of 9% compared with the first quarter of 2012 due primarily to lower Energy orders in both the North American short cycle and large international project businesses. This was partially offset by growth in both Aerospace and Flow Technologies. Backlog as of March 31, 2013 was $457.3 million, up 6% from backlog of $432.3 million at April 1, 2012.

Energy segment revenues decreased 11% to $96.7 million for the first quarter of 2013 from $109.3 million for the first quarter of 2012. First-quarter 2013 Energy segment revenues declined across most markets compared to the same period in 2012 when revenues were particularly strong with high rig counts. In addition, the year-over-year decrease was exacerbated by unfavorable foreign currency fluctuations.

Incoming orders for the first quarter of 2013 were $110.1 million, a decrease of 19% year-over-year as a result of a decline in rig counts in North America and timing of large international projects. Ending backlog totaled $217.8 million, an increase of 12% year-over-year, primarily due to higher order levels in the Middle East within the Company's large international project business.

For the first quarter of 2013, the Energy segment's adjusted operating margin increased to 11.1% from 8.2% in the first quarter of 2012, primarily driven by improved large international project pricing. This was partially offset by lower volume and increases in selling and marketing expenses to expand the Company's presence in emerging markets. Segment adjusted operating margin for the quarter excludes special and repositioning related inventory charges of $0.6 million related to the repositioning of the Company's Brazil operations.

Aerospace segment adjusted operating margin for the first quarter of 2013 decreased to 3.5% from 10.8% in the first quarter of 2012, primarily due to product development investments and start-up costs for new programs, including the A350, A330 and Blackhawk with an approximate impact of 500bps. In addition, during Q1 of 2012 CIRCOR completed a large engineering project which favorably impacted segment adjusted operating margin that quarter. Segment adjusted operating margin for Q1 2013 excludes special and repositioning charges of $0.9 million related to the repositioning of certain operations and manufacturing activities.

CIRCOR International will hold a conference call to review its financial results today, May 2, 2013, at 10:00 a.m. ET. Those who wish to listen to the conference call and view the accompanying presentation slides should visit “Webcasts & Presentations” in the “Investors” portion of the CIRCOR website. The live call also can be accessed by dialing (877) 407-5790 or (201) 689-8328. If you are unable to listen to the live call, the webcast will be archived for one year on the Company's website.

Adjusted net income, adjusted earnings per diluted share, adjusted operating margin, and free cash flow are non-GAAP financial measures and are intended to serve as a complement to results provided in accordance with accounting principles generally accepted in the United States. Free cash flow is defined as net cash from operating activities less capital expenditures. CIRCOR believes that such information provides an additional measurement and consistent historical comparison of the Company's performance. A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures is available in this news release.

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Reliance should not be placed on forward-looking statements because they involve unknown risks, uncertainties and other factors, which are, in some cases, beyond the control of CIRCOR. Any statements in this press release that are not statements of historical fact are forward-looking statements, including, but not limited to, those relating to CIRCOR's future performance, including second-quarter revenue and earnings guidance and estimated total annualized pre-tax savings from repositioning actions. Actual events, performance or results could differ materially from the anticipated events, performance or results expressed or implied by such forward-looking statements. BEFORE MAKING ANY INVESTMENT DECISIONS REGARDING OUR COMPANY, WE STRONGLY ADVISE YOU TO READ THE SECTION ENTITLED "RISK FACTORS" IN OUR MOST RECENT ANNUAL REPORT ON FORM 10-K AND SUBSEQUENT REPORTS ON FORMS 10-Q, WHICH CAN BE ACCESSED UNDER THE "INVESTORS" LINK OF OUR WEBSITE AT WWW.CIRCOR.COM. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

CIRCOR International, Inc. designs, manufactures and markets valves and other highly engineered products for markets including energy, oil & gas, power generation and aerospace. With more than 7,500 customers in over 100 countries, CIRCOR has a diversified product portfolio with recognized, market-leading brands. CIRCOR's culture, built on the CIRCOR Business System, is defined by the Company's commitment to attracting, developing and retaining the best talent and pursuing continuous improvement in all aspects of its business and operations. The Company's strategy includes growing organically by investing in new, differentiated products; adding value to component products; and increasing the development of mission-critical subsystems and solutions. CIRCOR also plans to leverage its strong balance sheet to acquire strategically complementary businesses. For more information, visit the Company's investor relations web site at http://investors.circor.com.

CIRCOR INTERNATIONAL, INC. CONSOLIDATED STATEMENT OF OPERATIONS (in thousands, except per share data) UNAUDITED

	Three Months Ended
	March 31, 2013			April 1, 2012
Net revenues	$	205,398		$	214,280
Cost of revenues	145,549			155,668
GROSS PROFIT	59,849			58,612
Selling, general and administrative expenses	45,571			44,912
Special charges	1,378			—
OPERATING INCOME	12,900			13,700
Other (income) expense:
Interest income	(43		)	(83		)
Interest expense	830			1,164
Other, net	612			138
TOTAL OTHER EXPENSE	1,399			1,219
INCOME BEFORE INCOME TAXES	11,501			12,481
Provision for income taxes	3,592			3,896
NET INCOME	$	7,908		$	8,585
Earnings per common share:
Basic	$	0.45		$	0.50
Diluted	$	0.45		$	0.49
Weighted average number of common shares outstanding:
Basic	17,511			17,315
Diluted	17,529			17,390

CIRCOR INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (UNAUDITED)

	Three Months Ended
	March 31, 2013			April 1, 2012
OPERATING ACTIVITIES
Net income	$	7,908		$	8,585
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation	4,009			4,008
Amortization	758			964
Compensation expense of share-based plans	1,028			1,195
Tax effect of share-based compensation	(285		)	479
(Gain) loss on property, plant and equipment	(66		)	2
Changes in operating assets and liabilities, net of effects from business acquisitions:
Trade accounts receivable	(2,455		)	3,539
Inventories	(6,461		)	(2,179		)
Prepaid expenses and other assets	(827		)	(5,549		)
Accounts payable, accrued expenses and other liabilities	2,198			(14,011		)
Net cash provided by (used in) operating activities	5,807			(2,967		)
INVESTING ACTIVITIES
Additions to property, plant and equipment	(4,707		)	(4,122		)
Proceeds from the sale of property, plant and equipment	75			15
Net cash used in investing activities	(4,632		)	(4,107		)
FINANCING ACTIVITIES
Proceeds from long-term debt	33,598			41,123
Payments of long-term debt	(37,655		)	(47,806		)
Dividends paid	(670		)	(666		)
Proceeds from the exercise of stock options	1,368			73
Tax effect of share-based compensation	285			(479		)
Net cash used in financing activities	(3,074		)	(7,755		)
Effect of exchange rate changes on cash and cash equivalents	(2,207		)	1,265
DECREASE IN CASH AND CASH EQUIVALENTS	(4,105		)	(13,564		)
Cash and cash equivalents at beginning of period	61,738			54,855
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	57,633		$	41,291

CIRCOR INTERNATIONAL, INC. CONSOLIDATED BALANCE SHEETS (in thousands, except share data) UNAUDITED

	March 31, 2013			December 31, 2012
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	57,633		$	61,738
Short-term investments	99			101
Trade accounts receivable, less allowance for doubtful accounts of $1,683 and $1,706, respectively	150,849			150,825
Inventories	201,618			198,005
Prepaid expenses and other current assets	17,647			16,510
Deferred income tax asset	15,365			15,505
Assets held for sale	542			542
Total Current Assets	443,753			443,226
PROPERTY, PLANT AND EQUIPMENT, NET	104,756			105,903
OTHER ASSETS:
Goodwill	76,535			77,428
Intangibles, net	42,954			45,157
Deferred income tax asset	28,563			30,064
Other assets	7,549			8,203
TOTAL ASSETS	$	704,110		$	709,981
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	90,756		$	80,361
Accrued expenses and other current liabilities	58,683			67,235
Accrued compensation and benefits	22,732			26,540
Income taxes payable	982			393
Notes payable and current portion of long-term debt	8,000			7,755
Total Current Liabilities	181,153			182,284
LONG-TERM DEBT, NET OF CURRENT PORTION	58,546			62,729
DEFERRED INCOME TAXES	9,956			10,744
OTHER NON-CURRENT LIABILITIES	35,636			35,977
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; 17,549,210 and 17,445,687 shares issued and outstanding at March 31, 2013 and December 31, 2012, respectively	175			174
Additional paid-in capital	264,719			262,744
Retained earnings	165,750			158,509
Accumulated other comprehensive loss, net of taxes	(11,825		)	(3,180		)
Total Shareholders’ Equity	418,819			418,247
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	704,110		$	709,981

CIRCOR INTERNATIONAL, INC. SUMMARY OF ORDERS AND BACKLOG (in millions) UNAUDITED

	Three Months Ended
	March 31, 2013		April 1, 2012
ORDERS (1)
Energy	$	110.1	$	135.6
Aerospace	42.2		40.2
Flow Technologies	74.5		72.9
Total orders	$	226.8	$	248.7

BACKLOG (2)	March 31, 2013		April 1, 2012
Energy	$	217.8	$	195.2
Aerospace	162.7		161.1
Flow Technologies	76.8		76.0
Total backlog	$	457.3	$	432.3

Note 1: Orders do not include the foreign exchange impact due to the re-measurement of customer order backlog amounts denominated in foreign currencies.
Note 2: Backlog includes all unshipped customer orders.

CIRCOR INTERNATIONAL, INC. SUMMARY REPORT BY SEGMENT (in thousands, except earnings per share) UNAUDITED

	2012															2013
	1ST QTR			2ND QTR			3RD QTR			4TH QTR			TOTAL			1ST QTR
NET REVENUES
Energy	$	109,264		$	113,527		$	109,968		$	96,582		$	429,341		$	96,722
Aerospace	38,085			35,896			31,795			35,316			141,092			37,326
Flow Technologies	66,931			70,439			68,041			69,707			275,119			71,350
Total	214,280			219,862			209,804			201,605			845,552			205,398
* ADJUSTED OPERATING MARGIN
Energy	8.2		%	11.1		%	14.0		%	12.5		%	11.4		%	11.1		%
Aerospace	10.8		%	8.8		%	4.2		%	3.5		%	7.0		%	3.5		%
Flow Technologies	11.3		%	12.8		%	13.1		%	13.1		%	12.6		%	12.7		%
Segment operating margin	9.6		%	11.3		%	12.2		%	11.1		%	11.1		%	10.3		%
Corporate expenses	(3.2		)%	(2.9		)%	(3.4		)%	(3.4		)%	(3.2		)%	(3.2		)%
* Adjusted operating margin	6.4		%	8.4		%	8.8		%	7.8		%	7.8		%	7.1		%
Repositioning inventory charges	0.0		%	0.0		%	2.0		%	0.0		%	0.5		%	0.1		%
Impairment charges	0.0		%	0.0		%	4.9		%	0.0		%	1.2		%	0.0		%
Special charges	0.0		%	0.0		%	0.7		%	1.9		%	0.6		%	0.7		%
Total operating margin	6.4		%	8.4		%	1.3		%	5.8		%	5.5		%	6.3		%

CIRCOR INTERNATIONAL, INC. SUMMARY REPORT BY SEGMENT (in thousands, except earnings per share) UNAUDITED

* ADJUSTED OPERATING INCOME
Energy	8,928			12,580			15,432			12,100			49,040			10,751
Aerospace	4,124			3,153			1,324			1,234			9,835			1,320
Flow Technologies	7,587			9,043			8,919			9,105			34,654			9,044
Segment operating income	20,639			24,776			25,675			22,439			93,529			21,115
Corporate expenses	(6,939		)	(6,297		)	(7,170		)	(6,802		)	(27,207		)	(6,588		)
* Adjusted operating income	13,700			18,479			18,505			15,637			66,322			14,528
Repositioning inventory charges	—			—			4,124			37			4,161			250
Impairment charges	—			—			10,348			—			10,348			—
Special charges	—			—			1,377			3,905			5,282			1,378
Total operating income	13,700			18,479			2,656			11,695			46,531			12,900
INTEREST EXPENSE, NET	(1,081		)	(1,017		)	(1,122		)	(1,038		)	(4,258		)	(787		)
OTHER EXPENSE, NET	(138		)	(184		)	(564		)	373			(514		)	(612		)
PRETAX INCOME	12,481			17,278			970			11,030			41,759			11,501
(PROVISION) BENEFIT FOR INCOME TAXES	(3,896		)	(6,142		)	899			(1,822		)	(10,960		)	(3,592		)
EFFECTIVE TAX RATE	31.2		%	35.5		%	(92.8		)%	16.5		%	26.2		%	31.2		%
NET INCOME	$	8,585		$	11,136		$	1,869		$	9,208		$	30,799		$	7,908
Weighted Average Common Shares Outstanding (Diluted)	17,390			17,451			17,467			17,499			17,452			17,529
EARNINGS PER COMMON SHARE (Diluted)	$	0.49		$	0.64		$	0.11		$	0.53		$	1.76		$	0.45
ADJUSTED EBITDA	$	18,534		$	23,043		$	22,809		$	16,808		$	81,194		$	18,682
ADJUSTED EBITDA AS A % OF SALES	8.6		%	10.5		%	10.9		%	8.3		%	9.6		%	9.1		%
CAPITAL EXPENDITURES	$	4,122		$	6,661		$	3,314		$	4,073		$	18,170		$	4,707

* Adjusted Operating Income & Margin exclude inventory repositioning, impairment and special charges.

CIRCOR INTERNATIONAL, INC. RECONCILIATION OF KEY PERFORMANCE MEASURES TO COMMONLY USED GENERALLY ACCEPTED ACCOUNTING PRINCIPLE TERMS (in thousands, except earnings per share) UNAUDITED

	2012						2013
	1ST QTR	2ND QTR		3RD QTR	4TH QTR	TOTAL	1ST QTR
FREE CASH FLOW [NET CASH FLOW FROM OPERATING ACTIVITIES LESS CAPITAL EXPENDITURES]	$(7,089)	$5,077		$18,746	$25,619	$42,353	$1,100
ADD:
Capital Expenditures	4,122	6,661		3,314	4,073	18,170	4,707
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES	$(2,967)	$11,738		$22,060	$29,692	$60,523	$5,807
NET DEBT [TOTAL DEBT LESS CASH & CASH EQUIVALENTS LESS INVESTMENTS]	$57,263	$54,376		$34,706	$8,645	$8,645	$8,814
ADD:
Cash & Cash Equivalents	41,291	41,414		48,976	61,738	61,738	57,633
Investments	101	98		102	101	101	99
TOTAL DEBT	$98,655	$95,888		$83,784	$70,484	$70,484	$66,546
DEBT AS % OF EQUITY	25%	24%		20%	17%	17%	16%
TOTAL DEBT	98,655	95,888		83,784	70,484	70,484	66,546
TOTAL SHAREHOLDERS' EQUITY	399,018	397,957		409,016	418,247	418,247	418,819
EBIT [NET INCOME LESS INCOME TAXES LESS INTEREST EXPENSE, NET]	$13,562	$	18,295	$2,092	$12,068	$46,017	$12,287
LESS:
Interest expense, net	(1,081)	(1,017)		(1,122)	(1,038)	(4,258)	(787)
(Provision) benefit for income taxes	(3,896)	(6,142)		899	(1,822)	(10,960)	(3,592)
NET INCOME	$8,585	$11,136		$1,869	$9,208	$30,799	$7,908

CIRCOR INTERNATIONAL, INC. RECONCILIATION OF KEY PERFORMANCE MEASURES TO COMMONLY USED GENERALLY ACCEPTED ACCOUNTING PRINCIPLE TERMS (in thousands, except earnings per share) UNAUDITED

ADJUSTED OPERATING INCOME [OPERATING INCOME EXCLUDING INVENTORY REPOSITIONING, IMPAIRMENT AND SPECIAL CHARGES]	$13,700	$	18,479	$18,505	$	15,600	$	66,322	$14,528
LESS:
Inventory repositioning charges	—	—		4,124	37		4,161		250
Impairment charges	—	—		10,348	—		10,348		—
Special charges	—	—		1,377	3,905		5,282		1,378
OPERATING INCOME	$13,700	$18,479		$2,656	$11,695		$46,531		$12,900
ADJUSTED EARNINGS PER SHARE [EPS EXCLUDING INVENTORY REPOSITIONING, IMPAIRMENT AND SPECIAL CHARGES, NET OF TAX]	$0.49	$0.64		$0.77	$0.69		$	2.59	$0.52
LESS:
Inventory repositioning charges, net of tax	$—	$—		$0.17	$—		$0.17		$0.01
Impairment charges, net of tax	$—	$—		$0.43	$—		$0.43		$—
Special charges, net of tax	$—	$—		$0.06	$0.16		$0.22		$0.06
EARNINGS PER COMMON SHARE (Diluted)	$0.49	$0.64		$0.11	$0.53		$1.76		$0.45

CIRCOR INTERNATIONAL, INC. RECONCILIATION OF KEY PERFORMANCE MEASURES TO COMMONLY USED GENERALLY ACCEPTED ACCOUNTING PRINCIPLE TERMS (in thousands, except earnings per share) UNAUDITED

EBITDA [NET INCOME LESS NET INTEREST EXPENSE, DEPRECIATION, AMORTIZATION AND INCOME TAXES]	$18,534	$23,043	$	2,092	$	12,068	$	65,345	$17,054
LESS:
Interest expense, net	(1,081)	(1,017)	(1,122)		(1,038)		(4,258)		(787)
Depreciation	(4,008)	(3,825)	(3,932)		(3,967)		(15,732)		(4,009)
Amortization	(964)	(923)	(936)		(773)		(3,596)		(758)
(Provision) benefit for income taxes	(3,896)	(6,142)	899		(1,822)		(10,960)		(3,592)
NET INCOME	$8,585	$11,136	$1,869		$9,208		$30,799		$7,908
ADJUSTED EBIDTA [NET INCOME EXCLUDING INVENTORY REPOSITIONING, IMPAIRMENT AND SPECIAL CHARGES, NET INTEREST EXPENSE, DEPRECIATION, AMORTIZATION AND INCOME TAXES]	$18,534	$23,043	$22,809		$20,750		$	85,136	$18,682
Inventory repositioning charges	$—	$—	$(4,124)		$(37)		$(4,161)		$(250)
Impairment charges	$—	$—	$(10,348)		$—		$(10,348)		$—
Special charges	$—	$—	$(1,377)		$(3,905)		$(5,282)		$(1,378)
Interest expense, net	$(1,081)	$(1,017)	$(1,122)		$(1,038)		$(4,258)		$(787)
Depreciation	$(4,008)	$(3,825)	$(3,932)		$(3,967)		$(15,732)		$(4,009)
Amortization	$(964)	$(923)	$(936)		$(773)		$(3,596)		$(758)
(Provision) benefit for income taxes	$(3,896)	$(6,142)	$899		$(1,822)		$(10,960)		$(3,592)
NET INCOME	$8,585	$11,136	$1,869		$9,208		$30,799		$7,908

CIRCOR INTERNATIONAL, INC. RECONCILIATION OF FUTURE PERFORMANCE MEASURES TO COMMONLY USED GENERALLY ACCEPTED ACCOUNTING PRINCIPLE TERMS UNAUDITED

		2nd Quarter 2013
		Low			High
EXPECTED ADJUSTED EARNINGS PER SHARE [EPS EXCLUDING INVENTORY REPOSITIONING, IMPAIRMENT AND SPECIAL CHARGES, NET OF TAX]		$	0.64		$	0.70
LESS: REPOSITIONING RELATED CHARGES
Inventory repositioning charges, net of tax	}	$	(0.19	)	$	(0.17	)
Impairment charges, net of tax
Special charges, net of tax
EXPECTED EARNINGS PER COMMON SHARE (Diluted)		$	0.45		$	0.53