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CIRCOR International Inc. Reports Operating Results (10-Q)

November 04, 2010 | About:
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10qk

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CIRCOR International Inc. (CIR) filed Quarterly Report for the period ended 2010-10-03.

Circor International Inc. has a market cap of $595.1 million; its shares were traded at around $35.17 with a P/E ratio of 22.4 and P/S ratio of 0.9. The dividend yield of Circor International Inc. stocks is 0.4%.CIR is in the portfolios of John Keeley of Keeley Fund Management, Mario Gabelli of GAMCO Investors, NWQ Managers of NWQ Investment Management Co, Richard Pzena of Pzena Investment Management LLC, Chuck Royce of Royce& Associates, Jim Simons of Renaissance Technologies LLC.

Highlight of Business Operations:

Our net inventory balance was $172.5 million as of October 3, 2010, compared to $145.0 million as of December 31, 2009. Our inventory allowance as of October 3, 2010 was $16.5 million, compared with $13.7 million as of December 31, 2009. Our provision for inventory obsolescence was $4.1 million and $4.4 million for the first nine months of 2010 and 2009, respectively. Although we have experienced declines in our organic revenue for the nine months ended October 3, 2010, we have experienced increases in orders and order backlog and we believe our inventory allowances remain adequate with a net realizable value of our inventory higher than our current inventory cost.

If our estimates or related projections change in the future due to changes in industry and market conditions, we may be required to record additional impairment charges. The goodwill recorded on the consolidated balance sheet as of October 3, 2010 increased $12.5 million to $60.4 million compared to $47.9 million as of December 31, 2009. This increase is primarily due to the 2010 acquisitions of Castle Precision Industries (Castle), Mazda Ltd. (Mazda), and Ateliers de Navarre (ADN), partially offset by currency translation adjustments.

Significant management judgment is required in determining our provision for income taxes, deferred tax assets and liabilities and any valuation allowance. Our effective tax rates differ from the statutory rate due to the impact of research and product development tax credits, domestic manufacturing deductions, state taxes, and the tax impact of non-U.S. operations. Our effective tax rate was (90.3%), 44.9%, and 31.1% for 2009, 2008 and 2007, respectively. Our 2009 tax rate included the tax impact of a $39.8 million non-cash asbestos charge for future claims anticipated over the next five years for which the tax benefit was $13.9 million. Excluding the non-cash asbestos charge, the 2009 effective tax rate would have been 26.0%. Our 2008 tax rate included the tax impact of an adjustment for goodwill and intangible impairment of $141.3 million, for which the tax basis was $32.8 million. Excluding the goodwill and impairment charge, the 2008 effective tax rate would have been 30.3%.

Energy segment revenues increased by $19.4 million, or 32%, for the quarter ended October 3, 2010 compared to the quarter ended September 27, 2009. The increase was the result of organic growth of $14.4 million plus $7.5 million in additional revenues due to the fourth quarter 2009 acquisition of Pipeline Engineering & Supply Co. Ltd. (Pipeline Engineering) partially offset by a decline of $2.4 million from foreign currency fluctuations. The organic growth was the result of a strong year over year rebound in North American short cycle business. Orders for this segment increased $47.9 million to $98.5 million for the three months ended October 3, 2010 compared to the same period in 2009. This increase was primarily due to continued strength in North American short cycle business and the fourth quarter 2009 acquisition of Pipeline Engineering. Backlog has increased by $38.8 million to $153.0 million as of October 3, 2010 compared to the same period in 2009. We continue to see a rebound in North American short cycle activities which is helping to offset lower large international projects compared to the prior year.

Aerospace segment revenues increased by $2.1 million, or 8%, for the quarter ended October 3, 2010 compared to the quarter ended September 27, 2009. The increase was due to $2.2 million in additional revenue primarily from the third quarter 2010 acquisition of Castle and $0.5 million in organic growth partially offset by a $0.6 million decline from foreign currency fluctuations. The organic growth was the result of growth in the military landing gear market offsetting small declines in other markets. Orders for this segment increased $4.0 million to $31.3 million for the three months ended October 3, 2010 compared to the same period in 2009. The Castle acquisition added $2.3 million to the increase in orders for the three months ended October 3, 2010. Backlog has increased by $32.3 million to $152.8 million as of October 3, 2010 compared to the same period in 2009. The Castle acquisition added approximately $30.0 million to our backlog during the three months ended October 3, 2010. There have been signs that the commercial aerospace markets are seeing modest year over year improvement. However, we remain cautious for 2010 and anticipate, excluding the impact of acquisitions, that shipments will be relatively flat compared to 2009.

Flow Technologies segment revenues increased by $11.7 million, or 21%, for the quarter ended October 3, 2010 compared to the quarter ended September 27, 2009. The increase in revenues was the result of an incremental $12.7 million from organic growth primarily due to semiconductor, maritime, instrumentation and process industry strength. In addition, $0.9 million of revenues came from the second quarter 2010 acquisition of Mazda. This growth was partially offset by $1.8 million in lower revenues resulting from foreign currency fluctuations. Orders for this segment increased $17.7 million to $77.4 million for the three months ended October 3, 2010 compared to the same period in 2009 with strength in all markets excluding petrochemical and refining. Backlog has increased by $22.6 million to $85.9 million as of October 3, 2010 compared to the same period in 2009. Our outlook for the remainder of 2010 continues to be cautious for most of our Flow Tec

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