CIRCOR International — Q2 2022 Earnings Presentation
23 slides from CIRCOR International's earnings presentation, Sep 30, 2022
Slide 1: Second-Quarter 2022 Earnings Call
INDUSTRIAL AEROSPACE & DEFENSE Second-Quarter 2022 Earnings Call September 30, 2022 Exhibit 99.2
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation 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 st
Slide 3: Use of Non-GAAP Financial Measures
Use of Non-GAAP Financial Measures Within this presentation, the Company uses the non-GAAP financial measures organic revenue, adjusted net income, adjusted EBITDA, adjusted operating income, adjusted operating margin, adjusted earnings per share, net debt and adjusted free cash flow. Non-GAAP finan
Slide 4: Agenda and Speakers
Agenda and Speakers • Executive Overview • 2Q’22 Financial Performance • FY’22 Guidance • Market Outlook • Q&A Tony Najjar President & Chief Executive Officer AJ Sharma Chief Financial Officer & SVP, Business Development 4
Slide 5: Flow Control for Mission-Critical Applications
Flow Control for Mission-Critical Applications • Leadership in served markets • Well-positioned on key aerospace and defense platforms • Leveraging core technology to drive growth in adjacent markets • Global and diverse end markets with longstanding loyal customer base • Large aftermarket platform
Slide 6: Execution of Strategic Priorities
Execution of Strategic Priorities Margin Expansion Growth De-Levering our Balance Sheet • Value pricing • Simplification • Best-cost country sourcing and manufacturing • Factory modernization • Leveraging products and technologies in growing markets • Deepening customer engagement • Expanding strong
Slide 7: Highlights
2Q’22 Highlights 7 • Solid execution navigating supply chain constraints • Successful pricing execution more than offsetting inflation • Overhead cost reduction and cost controls • Demand environment remains positive YOY 2Q ’22 Compare Organic orders +5% Backlog +9% Revenue +2% Organic revenue +8% A
Slide 8: Leveraging Core Technology to Drive Growth in Adjacent Markets
Leveraging Core Technology to Drive Growth in Adjacent Markets 8 Medical Devices Supply critical products used in blood collection devices and cardiac assist equipment to leading medical equipment OEMs FY’ 21 Orders: $18M September 2022 YTD Orders: $24M High pressure/ Low temperature transportation
Slide 9: Value Pricing
Value Pricing 2.8% 3.8% 2021 (ACT) 2022 (FCST) Aerospace & Defense 9 1.4% 4.7% 2021 (ACT) 2022 (FCST) Industrial • A&D: pricing process well established; leverages aftermarket, price escalations in long-term contracts • Industrial: Leveraging our strong position in the aftermarket and 80/20 principl
Slide 10: Financial Results Summary
2Q’22 Financial Results Summary CIRCOR 2Q’22 2Q’21 Change Backlog $477 $440 9% Orders 208 210 (1)% Organic % 5% Revenue 191 188 2% Organic % 8% GAAP operating income (Loss) 11.9 (8.6) 239% GAAP operating margin 6.2% (4.6)% 1080bps Adjusted operating income (AOI) 16.6 11.0 50% AOI% 8.7% 5.9% 280 bps
Slide 11: A&D Segment Highlights
2Q’22 A&D Segment Highlights 11 Aerospace & Defense 2Q’22 2Q’21 Change Backlog $199 $192 4% Orders 69 54 27% Organic % 32% Revenue 67 61 11% Organic % 14% AOI $13.6 $11.7 16% AOI% 20.2% 19.4% 80 bps Comments on 2Q’22 Results • Organic orders growth driven by defense (+37%) and commercial aerospace (
Slide 12: Industrial Segment Highlights
2Q’22 Industrial Segment Highlights Industrial 2Q’22 2Q’21 Change Backlog $278 $248 12% Orders 139 156 (11)% Organic % (4)% Revenue 124 127 (2)% Organic % 5% AOI $8.5 $7.2 17% AOI% 6.8% 5.7% 110 bps 12 Comments on 2Q’22 Results • Organic orders growth in industrial aftermarket (+25%) and downstream
Slide 13: Net Debt and Leverage
Net Debt and Leverage 13 Net Debt, Adjusted EBITDA and Compliance Adjusted EBITDA are non-GAAP measures. 1 – Net Debt defined as total debt (Term Loan B and revolvers) less cash or cash equivalents 2 – TTM defined as trailing twelve months 3 – Compliance adjusted EBITDA as per the credit agreement d
Slide 14: FY'22 Guide
FY’22 Guide 14 CIRCOR 1H’22 2H’22 Range FY’22 Range Change vs. FY’21 (midpoint) Revenue $377 $380 to $400 $757 to $777 Reported 1% Organic 7% AOI $27 $43 to $51 $70 to 78 36% Adjusted EBITDA $38 $51 to $60 $89 to $98 24% Interest Cost $(20) ~$(25) ~$(45) 39% Adjusted EPS $0.37 $0.69 to $0.96 $1.07 t
Slide 15: FY'22 Market Outlook – Orders
FY’22 Market Outlook – Orders 15 Industrial Vs. PY Approximate Sales Mix (%) Growth Drivers General Industrial Power generation, midstream O&G, new business activities for lithium batteries manufacturing, aftermarket, and pricing Commercial Marine Strong aftermarket growth supported by pricing and i
Slide 16: Summary
Summary • Anticipate 6-8% organic revenue growth in FY’22 • FY Margin expansion of 36% at mid-point of range, despite ongoing macroeconomic headwinds o Leveraging strong aftermarket position in Industrial o Positive momentum from value pricing and 80/20 principles across the organization despite cha
Slide 17: Appendix
INDUSTRIAL AEROSPACE & DEFENSE Appendix
Slide 18: Organic Orders and Revenue vs. PY
2Q’22 Organic Orders and Revenue vs. PY 18Organic Revenue is a non-GAAP measure. 2Q 22 2Q 21 Change 2Q 22 2Q 21 Change 2Q 22 2Q 21 Change Reported Orders 208,423$ 210,203$ -1% 69,053$ 54,243$ 27% 139,370$ 155,959$ -11% Divestitures - - - - - - FX 12,735 2,395 10,340 Organic 221,158$ 210,203$ 5% 71,4
Slide 19: GAAP Operating (Loss) Income to Adjusted Operating Income
2Q’22 GAAP Operating (Loss) Income to Adjusted Operating Income 19 1ST QTR 2ND QTR 3RD QTR 4TH QTR TOTAL 1ST QTR 2ND QTR TOTAL GAAP OPERATING INCOME (LOSS) $ (5,266) $ (8,557) $ 3,451 $ (18,952) $ (29,323) $ (11,789) $ 11,878 $ 89 LESS: Restructuring related inventory charges (recoveries) - 958 (60)
Slide 20: GAAP Net (Loss) Income to Adjusted EBITDA
2Q’22 GAAP Net (Loss) Income to Adjusted EBITDA 20 1ST QTR 2ND QTR 3RD QTR 4TH QTR TOTAL 1ST QTR 2ND QTR YTD 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 Depre
Slide 21: GAAP Net (Loss) Income to Adjusted Net Income
2Q’22 GAAP Net (Loss) Income to Adjusted Net Income 21 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 - 958 (60) (299) 599 2,757 - 2,757$ Res
Slide 22: Adjusted Free Cash Flow
2Q’22 Adjusted Free Cash Flow 22 (a) Includes capital expenditures, net of proceeds of asset sales from GAAP operating cash flow. 1ST QTR 2ND QTR 3RD QTR 4TH QTR TOTAL 1ST QTR 2ND QTR YTD TOTAL $ (19,210) $ 8,866 $ 10,197 $ 10,595 $ 10,448 $ (15,924) $ (3,593) $ (19,517) LESS Capital expenditures, n
Slide 23: Reconciliation of Forward-Looking Non-GAAP Measures
Reconciliation of Forward-Looking Non-GAAP Measures 23 This presentation contains forward-looking estimates of organic revenue growth, AOI, adjusted EBITDA and adjusted EPS for full year 2022. We provide these non-GAAP measures to investors on a prospective basis for the same reasons (set forth on s