CIRCOR International — Q4 2020 Earnings Presentation
16 slides from CIRCOR International's earnings presentation, Mar 4, 2021
Slide 1: 2020 Fourth Quarter and Full Year Earnings Call
INDUSTRIAL AEROSPACE & DEFENSE 2020 Fourth Quarter and Full Year Earnings Call March 4, 2021 This presentation contains certain statements that are “forward-looking statements” as that term is defined under the Private Securities Litigation Reform Act of 1995 (the “Act”). The words “may,” “hope,” “s
Slide 2: 2020 Execution on Strategic Plan
2020 Execution on Strategic Plan 2 Resilient business portfolio continues to deliver Strong operational execution Positioning CIRCOR to take advantage of market recovery • End market and product diversification helped mitigate the impact of a weaker macro environment • Strong year in Defense mostly
Slide 3: 4Q and FY 2020 Reported Results
4Q’20 FY’20y/y y/y 3 Backlog Orders Organic % Revenue Organic %* AOI* AOI % GAAP EPS Adj. EPS* FCF* % of adj. net income 379 168 208 23 11.2% $(0.70) $0.66 20 152% (8)% (29)% (25)% (14)% (10)% (28)% (210) bps n/a (20)% 11% 379 736 773 68 8.7% $(9.28) $1.43 (35) - (8)% (25)% (18)% (20)% (12)% (38)% (
Slide 4: 4Q'20 Industrial Segment Highlights
4Q’20 Industrial Segment Highlights ($ millions) 4Q 2020 Orders • Sequential improvement led by continued recovery in China and India, improvement in EMEA & Americas • Down y/y driven by tough 1Q’20 comp in Downstream 4Q 2020 Revenue • Sequential improvement in EMEA, Commercial Marine, and aftermark
Slide 5: 4Q'20 Aerospace & Defense Segment Highlights
4Q’20 Aerospace & Defense Segment Highlights ($ millions) 4Q 2020 Orders • Orders decline driven by timing of large Defense orders and continued pressure on Commercial demand due to COVID-19 4Q 2020 Revenue • Strong defense revenue mostly offset lower Commercial demand 4Q 2020 AOI • Strong margin ra
Slide 6: GAAP to Adjusted Results Reconciliation
GAAP Special Adjusted GAAP Special Adjusted Adj Ex Div* Sales 208 - 208 243 - 243 224 Gross margin 67 3 71 78 5 83 77 SG&A 56 (9) 47 58 (7) 51 48 Goodwill impairment charge - - - - - - Special & restructuring income, net 1 (1) - 3 (3) - - Operating (loss) income 10 13 23 17 15 32 29 Interest expense
Slide 7: 4Q'20 Cash Flow and Debt Position
4Q’20 Cash Flow and Debt Position 7 4Q’194Q’20 y/y $17$24 40% Cash flow from operations driven by improved operating income and lower inventory Reduced net debt by $126 million in 2020 ... continue to use FCF to pay down debt in 2021 Targeting long-term leverage ratio of 2.0x to 2.5x net debt to EBI
Slide 8: 1Q'21 Industrial Revenue Outlook
1Q’21 Industrial Revenue Outlook Primary End Market Share of 2020 revenue 1Q’21 y/y revenue Downstream Machinery Manufacturing Commercial Marine Chemical Processing Midstream O&G Power Generation Building & Construction Wastewater Other End Markets Aftermarket Memo: Price Total Industrial 10% 6% 9%
Slide 9: 1Q'21 A&D Revenue Outlook
1Q’21 A&D Revenue Outlook 9 D e fe n s e C o m m e rc ia l Primary End Market Share of 2020 revenue 1Q’21 y/y revenue Top programs Other OEM Aftermarket Memo: Price Defense subtotal Boeing / Airbus Other OEM Aftermarket Memo: Price Commercial subtotal Other end markets Total A&D 27% 23% 19% 4% 69% 7
Slide 10: 2021 Financial Framework
2019 2020 2021 Guide 2021 Financial Framework Org. revenue growth 2% (12)% 0 - 4% Adjusted EPS $2.62 $1.43 $2.00 - $2.20 Key Variables Other Expectations • A&D: Low to mid-single digit growth … slow recovery in Commercial; US defense budget flat with some growth in Naval programs • Industrial: Low-s
Slide 11: 2021+ Strategic Priorities
2021+ Strategic Priorities 11 • Attract, develop, and retain top talent • Foster diversity, equity, and inclusion People Accelerate Growth Allocate Capital Effectively Expand Margins • Invest in differentiated technology and digital – New products – Aftermarket support technology – Enhanced customer
Slide 12: Appendix
12 Appendix
Slide 13: A Leading Provider of Mission Critical Flow Control Products Globally
A Leading Provider of Mission Critical Flow Control Products Globally 13 Commerical Aerospace 12% Defense 23% Industrial 65% Revenue by End Markets • Products for mission critical and severe service applications • Leader in niche segments with benefits of scale • Global and diverse end markets with
Slide 14: CIRCOR End Market Exposure
CIRCOR End Market Exposure 14 Commercial Aerospace (5%) Defense (17%) Numbers may not add due to rounding. Machinery Manufacturing Commercial Marine Chemical Processing Midstream O&G Power Building & Construction Wastewater Other End Markets Downstream O&G (7%) Aerospace & Defense (8%) Industrial (2
Slide 15: Financial goals
Financial goals 15 • +100 to 150 bps higher than end market growth driven by strategic initiatives • Continued execution on price initiatives • Near term (18-24 months) AOI% outlook • Industrial: low teens • A&D: mid-20s • CIRCOR Operating System delivering improved operating performance • FCF conve
Slide 16: Use of Non-GAAP Financial Measures
Use of Non-GAAP Financial Measures Within this presentation the Company uses non-GAAP financial measures, including Adjusted operating income, Adjusted operating margin, Adjusted net income, Adjusted earnings per share (diluted), EBITDA, Adjusted EBITDA, net debt, free cash flow and organic growth (