CIRCOR International Completes Restatement; Files Annual Report on Form 10-K for the Year Ended December 31, 2021 and Announces 2022 Annual Meeting Date

• Orders and backlog grow by double digits in 2021, driven by Industrial Segment
• Previously disclosed selected preliminary financial expectations for first-quarter 2022 reiterated
• Orders growth in second-quarter 2022 (excluding Pipeline Engineering)
• Exit from Pipeline Engineering Business and accounting review completed
• Board of Directors remain focused on exploration of strategic alternatives

CIRCOR International, Inc. (NYSE: CIR) (“CIRCOR” or “the Company”), one of the world’s leading providers of mission critical flow control products and services for the Industrial and Aerospace & Defense (A&D) markets, today announced the filing of the Company’s annual report on Form 10-K for the year ended December 31, 2021 (the “Annual Report”), restated financial statements for the years ended December 31, 2019, and 2020, and interim financial statements for the first, second, and third quarters of 2020 and 2021.

“We continue to make solid progress on our growth, value pricing and simplification program, and believe that the initiatives we are implementing effectively position us to better support our customers, expand margins and navigate the dynamic market environment,” said Tony Najjar, Chief Operating Officer and Interim President and CEO. “The simplification and structural cost out initiatives underway in our Industrial segment and within Corporate remain on track, and we have completed our exit from the loss-making Pipeline Engineering business. In addition, our value pricing efforts have been successful in supporting our performance, enabling us to more than offset the effects of inflation.”

The Company is reiterating its previously disclosed selected preliminary, unaudited, unreviewed financial expectations for first-quarter 2022. For second-quarter 2022, CIRCOR expects low single digit order growth (high single digits on an organic basis), excluding Pipeline Engineering, driven by strength in the Aerospace & Defense segment, offset by a decline in the Industrial segment on a difficult prior year comparison.

Helmuth Ludwig, Chair of the Board, said, “We are pleased to have the restatement behind us so that management and the Board can focus on the parallel paths of executing initiatives to enhance growth and margins across our businesses while reviewing potential strategic alternatives to maximize shareholder value. Our team has worked diligently to complete the accounting review, and I want to thank all our stakeholders for their trust and patience during this period."

2021 Overview Results As Reported:

• Backlog of $444 million, up 16% reported driven by strong demand in Industrial
• Orders of $851 million, up 16% reported and 14% organically
  • Aerospace & Defense orders of $255 million remaining flat YoY and (1%) organically
  • Industrial orders of $595 million, up 24% reported and 22% organically
• Revenue of $759 million down (1%) reported and (2%) organically
  • Aerospace & Defense revenue of $253 million, down (5%) reported and (6%) organically
  • Industrial revenue of $506 million, up 1% reported and flat organically
• GAAP operating (loss) income ($29) million, up 69% reported
• Adjusted operating income $54 million, down (1%)
• GAAP operating margin of (3.9%); Adjusted operating margin of 7.2%

2021 Overview Results Excluding Divestitures and Pipeline Engineering:

• Backlog of $443 million, up 16% adjusted, driven by strong demand in Industrial
• Orders of $826 million, up 16% adjusted and 11% organically
  • Aerospace & Defense orders of $255 million remaining flat YoY and (1%) organically
  • Industrial orders of $571 million, up 24% adjusted and 21% organically
• Revenue of $744 million flat YoY and (4%) organically
  • Aerospace & Defense revenue of $253 million, down (5%) adjusted and (6%) organically
  • Industrial revenue of $491 million, up 3% adjusted and flat organically
• Adjusted operating income $64 million, up 2% adjusted
• Adjusted operating margin of 8.6%

As previously announced, the restatement resulted from accounting irregularities in the Company’s Pipeline Engineering business. The accounting irregularities were the result of intentional acts of an individual employee. In connection with the restatement process, the Company identified material weaknesses in the Company’s internal control over financial reporting during the applicable periods. Remedial actions have been identified and further actions are planned as noted in Part II, Item 9A, “Controls and Procedures” on Form 10-K. The restated financial statements and the Annual Report are available on the CIRCOR investor relations website, https://investors.circor.com/, and on the U.S. Securities and Exchange Commission website, www.sec.gov.

1. Orders, revenue and adjusted operating income excluding Divested & Pipeline Engineering businesses are non-GAAP measures. Divested businesses include Instrumentation & Sampling which was sold during Q1 2020. Pipeline Engineering is related to accounting irregularities noted on March 14,2022 8-K Filing. Both Instrumentation & Sampling and Pipeline Engineering are in the Industrial Segment.
2. Adjusted consolidated and segment results for Q4 2021 exclude net income from discontinued operations and net loss from non-cash acquisition-related intangible amortization, special and restructuring charges, and goodwill impairment charge totaling $39.4 million. These charges include: (i) $11.8 million for non-cash acquisition-related intangible amortization and depreciation expense; (ii) $8.7 million of costs related to debt refinancing; (iii) $7.9 million related to incremental loss allowance for a receivable, contract asset and sub-contractor claims for a contract assumed as part of the Fluid Handling acquisition; (iv) $0.5 million other special and restructuring recoveries; and (v) $10.5 million goodwill impairment charge related to our Industrial segment. Adjusted consolidated and segment results for Q4 2020 exclude net loss from discontinued operations of $0.8 million and net loss from non-cash acquisition-related intangible amortization, special and restructuring charges totaling $13.4 million. These charges include: (i) $12.0 million for non-cash acquisition-related intangible amortization and depreciation expense; (ii) $1.4 million of professional fees and other costs associated with restructuring and cost reductions. It also excludes the Q4 2020 charge for valuation allowance against deferred tax assets by virtue of using an effective tax rate in the adjusted results which is a $12.4 million adjustment to taxes.
3. Free cash flow is a non-GAAP financial measure and is calculated by subtracting GAAP capital expenditures, net of proceeds from asset sales, from GAAP operating cash flow.

CIRCOR Announces Date for 2022 Annual Meeting

On July 25, 2022, the Board of Directors (the “Board”) of the Company established October 4, 2022 as the date of the Company’s 2022 Annual Meeting of Stockholders (the “2022 Annual Meeting”) and August 22, 2022 as the record date (the “Record Date”) for determining stockholders entitled to notice of and to vote at the 2022 Annual Meeting. The Company will provide additional meeting details in its proxy statement related to the 2022 Annual Meeting.

First-Quarter 2022 10-Q

As disclosed in its May 23, 2022 announcement, in light of the accounting review the Company was unable to file its Quarterly Report on Form 10-Q (the “Form 10-Q”) for the first quarter ended April 3, 2022 on a timely basis without unreasonable effort or expense. The Company is working on completing its Form 10-Q for its 2022 first quarter and will make a subsequent announcement concerning the date and time of its first-quarter 2022 earnings release.

Company Expects to File Form 12-b-25 Related to Second-Quarter 10-Q

CIRCOR expects to file a Form 12b-25 with the U.S. Securities and Exchange Commission (SEC) to disclose that CIRCOR requires additional time to complete the Company’s Quarterly Report for the second quarter ended July 3, 2022 (the “Quarterly Report”). The Company plans to file the Quarterly Report as soon as possible.

Use of Non-GAAP Financial Measures

In this press release, the Company uses the non-GAAP financial measures organic orders, organic revenue, adjusted operating income, adjusted operating income as a percentage of sales, and free cash flow. Non-GAAP financial measures are used by management in our financial and operating decision making because we believe they reflect our ongoing business and facilitate period-to-period comparisons. We believe that these non-GAAP financial measures provide useful information to investors and others in understanding and evaluating CIRCOR’s current operating performance and future prospects in the same manner as management does if they so choose. These non-GAAP financial measures also allow investors and others to compare CIRCOR’s current financial results with CIRCOR’s past financial results in a consistent manner.

We exclude costs and tax effects associated with restructuring activities, such as reducing overhead and consolidating facilities. We believe that the costs related to these restructuring activities are not indicative of our normal operating costs. We exclude certain acquisition-related costs, including significant transaction costs and amortization of inventory and fixed-asset step-ups and the related tax effects. We exclude these costs because we do not believe they are indicative of our normal operating costs.

We exclude the expense and tax effects associated with the non-cash amortization of acquisition-related intangible assets because a significant portion of the purchase price for acquisitions may be allocated to intangible assets that have lives up to 25 years. Exclusion of the non-cash amortization expense allows comparisons of operating results that are consistent over time for both our newly acquired and long-held businesses and with both acquisitive and non-acquisitive peer companies.

We also exclude certain gains/losses and related tax effects, which are either isolated or cannot be expected to occur again with any predictability, and that we believe are not indicative of our normal operating gains and losses. For example, we exclude gains/losses from items such as the sale of a business, significant litigation-related matters and lump-sum pension plan settlements. We exclude the results of discontinued operations. We exclude goodwill impairment charges. We exclude these costs because we do not believe they are indicative of our normal operating costs.

Due to the significance of recently sold businesses and to provide a comparison of changes in our orders and revenue, we also discuss these changes on an “organic” basis. Organic is calculated assuming the divestitures completed prior to December 31, 2021 were completed on January 1, 2020 and excluding the impact of changes in foreign currency exchange rates.

CIRCOR’s management uses these non-GAAP measures, in addition to GAAP financial measures, as the basis for measuring the Company’s operating performance and comparing such performance to that of prior periods and to the performance of our peers. We use such measures when publicly providing our business outlook, assessing future earnings potential, evaluating potential acquisitions and dispositions and in our financial and operating decision-making process, including for compensation purposes.

Investors should recognize that these non-GAAP measures might not be comparable to similarly titled measures of other companies. These measures should be considered in addition and not as a substitute for or superior to, any measure of performance, cash flow or liquidity prepared in accordance with accounting principles generally accepted in the United States. A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures is included in this news release.

About CIRCOR International, Inc.

CIRCOR International is one of the world’s leading providers of mission critical flow control products and services for the Industrial and Aerospace & Defense markets. The Company has a product portfolio of market-leading brands serving its customers’ most demanding applications. CIRCOR markets its solutions directly and through various sales partners to more than 14,000 customers in approximately 100 countries. The Company has a global presence with approximately 3,100 employees and is headquartered in Burlington, Massachusetts. For more information, visit the Company’s investor relations website at http://investors.circor.com.

Cautionary Note Regarding Forward-Looking Statements

This press release 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 statements. Substantial 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. Important factors that could cause actual results to differ materially from expectations include, but are not limited to findings and conclusions of the Audit Committee’s review; the effectiveness of the Company’s internal control over financial reporting and disclosure controls and procedures; the remediation of the material weaknesses in the Company’s internal controls over financial reporting or other potential weaknesses of which the Company is not currently aware or which have not been detected; the timing of the Company regaining compliance with the NYSE’s continued listing standards; the timing and outcome, if any, of the Company’s strategic alternatives review and its potential exit from the Pipeline Engineering business unit; the impact on the Company of the situation in Russia and Ukraine; and the risks detailed from time to time in the Company’s periodic reports filed with the SEC. Before making any investment decisions regarding CIRCOR, the Company strongly advises you to read the section entitled “Risk Factors” in its 2021 Annual Report on Form 10-K, which can be accessed under the “Investors” link of the Company’s website at www.circor.com. The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.