Flowserve Beats Zacks Consensus

Flowserve Corporation (FLS) announced third quarter 2009 fully diluted EPS of $2.07, up 3 cents or 1%, including realignment charges of 5 cents per share. This was higher than the Zacks Consensus Estimate of $2.00 per share. 

Bookings for the quarter were $975 million, down 29%, or 26% excluding negative currency effects of $37 million. Sales for the quarter were $1.05 billion, down 9%, or 5% excluding negative currency effects of $47 million. 

Gross margin increased 150 basis points to 36.6%, including realignment charges of 20 basis points. Flowserve also posted a quarterly operating margin of 15.3%, including charges totaling 110 basis points. Backlog, which represents unexecuted orders, was $2.66 billion, including positive currency effects of $90 million, when compared to $2.83 billion of backlog at Dec 31, 2008. 

In the pump division, bookings of original equipment decreased approximately 60%, which represents most of the total decrease. This original equipment decrease was driven by a decline across all industries, primarily the chemical, oil and gas and general industries markets. 

In the flow control division, bookings decrease was generally attributable to a weakness in the chemical and general industries markets in Europe, Middle East and Africa and Asia-Pacific, partially offset by nuclear orders in North America. Large project awards were delayed as customers reviewed demand, pricing and other savings opportunities. 

In flow solutions division, bookings decrease was primarily attributable to decreased original equipment. The decrease in sales was driven by sales declines in all regions. Reductions in project sales shifted the sales mix toward aftermarket business with a related beneficial impact on gross margin. 

Cash and equivalents were $291 million, long-term debt was $541 million and shareowner’s equity was $1.7 billion. 

Flowserve Corporation develops, manufactures and sells precision-engineered flow control equipment, besides providing a range of aftermarket equipment services. The company operates in three divisions: Flowserve Pump, Flow Control and Flow Solutions. The company sells its products through direct sales force as well as through distributors and sales representatives. Major competitor is ITT Corporation (ITT).

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