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," "should," "expect," "plan," "anticipate," "intend," "believe," "estimate," "predict," "potential," "continue," and other expressions, which are predictions of or indicate future events and trends and which do not relate to historical matters, identify forward-looking statements, although not all forward-looking statements are accompanied by such words. We believe that it is important to communicate our future expectations to our stockholders, and we, therefore, make forward-looking statements in reliance upon the safe harbor provisions of the Act. However, there may be events in the future that we are not able to accurately predict or control and our actual results may differ materially from the expectations we describe in our forward-looking statements. Forward-looking statements, including statements about outlook for the fourth quarter, the expected and potential direct or indirect impacts of the COVID-19 pandemic on our business, the realization of cost reductions from restructuring activities and expected synergies, the number of new product launches and future cash flows from operating activities, involve known and unknown risks, uncertainties and other factors, which may cause our actual results, performance or achievements to differ materially from anticipated future results, performance or achievements expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to: the duration and severity of the COVID-19 pandemic and its impact on the global economy; changes in the price of and demand for oil and gas in both domestic and international markets; any adverse changes in governmental policies; variability of raw material and component pricing; changes in our suppliers' perfor mance; fluctuations in foreign currency exchange rates; changes in tariffs or other taxes related to doing business internationally; our ability to hire and retain key personnel; our ability to operate our manufacturing facilities at efficient levels including our ability to prevent cost overruns and reduce costs; our ability to generate increased cash by reducing our working capital; our prevention of the accumulation of excess inventory; our ability to successfully implement our divestiture; restructuring or simplification strategies; fluctuations in interest rates; our ability to successfully defend product liability actions; as well as the uncertainty associated with the current worldwide economic conditions and the continuing impact on economic and financial conditions in the United States and around the world, including as a result of COVID- 19, natural disasters, terrorist attacks and other similar matters. We advise you to read further about these and other risk factors set forth in Part II, Item 1A of this Quarterly Report on Form 10-Q and Part I, Item 1A, "Risk Factors" of our Annual Report on Form 10-K for the year ended December 31, 2019, which is filed with the Securities and Exchange Commission ("SEC") and is available on the SEC's website atwww.sec.gov. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
See page 16 for information on the use of non-GAAP financial measures.
2020 Execution on Strategic Plan
Resilient business portfolio continues to deliver
• End market and product diversification helped mitigate the impact of a weaker macro environment
• Strong year in Defense mostly offset pressure from Commercial Aerospace
• Mission critical product portfolio enabled price increases despite market downturn
Strong operational execution
• Steadfast in prioritizing health and safety while serving our customers
• Achieved 25% decremental margins through price increases and $45 million of cost actions
• Aerospace and Defense Margins expanded 290bps driven by productivity and price
• CIRCOR Operating System delivered improved operating performance across most metrics
Positioning CIRCOR to take advantage of market recovery
• Completed exit from upstream O&G with sale of Instrumentation & Sampling and Distributed Valves
• Continued to invest in innovation with 49 new products vs. 33 in 2019
• Exited the year with strong FCF … $20M in Q4
• Reduced net debt by $126M, (22)% vs 2019 … remains top priority
2
4Q and FY 2020 Reported Results
($ millions except EPS)
Organic % (18)%
4Q'20 | FY'20 |
379 168 208 23 11.2% $(0.70) $0.66 20 152% | 379 736 773 68 8.7% $(9.28) $1.43 (35) - |
y/y
Backlog (8)%
Orders (25)%Revenue (20)%
Organic %* (12)%
AOI* (38)%
AOI %
(270) bps
GAAP EPS (38)%Adj. EPS* (45)%FCF*
% of adj. net income
Comments on 4Q results
Organic orders and revenue pressured by COVID-19 … demand reduction across Industrial and Commercial AerospaceAdjusted operating income of $23 / 11.2% … sequential improvement through the yearAdjusted EPS of $0.66 … volume impact partially offset by price and cost actions
n/a
FCF of $20 … exited the year with strong operational cash flow
Strong underlying execution despite COVID-19 challenges
Organic revenue, Adjusted Operating Income (AOI), Adjusted EPS, and Free Cash Flow (FCF) are non-GAAP measures
4Q'20 Industrial Segment Highlights
($ millions)
4Q'19 Reported
4Q'19
3Q'20 Continuing Ops
4Q'20
4Q'19 Reported
4Q'19
3Q'20 Continuing Ops
4Q'20
12.7%
12.1%
9.5%
$21
7.9%
$18
$10
$12
4Q'19 Reported
4Q'19
3Q'20 Continuing Ops
vs. 3Q
+12%
vs. 3Q
+4%
AOI expansion
vs. 3Q | y/y | AOI impacted by lower volume and inefficiencies due to |
COVID-19 offset by price (+1%) and cost actions | ||
+160bps | (260)bps |
•
4Q'20
Organic revenue and Adjusted Operating Income (AOI) are non-GAAP measures
OrganicOrganic
Continuing Ops figures exclude the impact of businesses divested prior to the end of 4Q 2020.
4Q 2020 Orders
y/y | • | Sequential improvement led by continued recovery in |
China and India, improvement in EMEA & Americas | ||
(22)% | • | Down y/y driven by tough 1Q'20 comp in Downstream |
4Q 2020 Revenuey/y
• Sequential improvement in EMEA, Commercial Marine, and aftermarket
(13)%
• Revenue impacted by lower order intake in 2Q - 4Q
4Q 2020 AOI
Numbers may not add due to rounding
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Circor International Inc. published this content on 04 March 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 04 March 2021 11:52:00 UTC.