Flowserve Wins Pumps Contract

Flowserve Corporation (FLS - Analyst Report) received an order for its process pumps to be used in the carbon dioxide (CO2) capture unit of Mississippi Power's Kemper County integrated gasification combined cycle (IGCC) power station project. The Kemper County IGCC power plant has been planned to reduce the emission of CO2 in the atmosphere by detaining about 65% of the released gas. The collected CO2 will be sold to be utilized in the enhanced oil recovery (EOR) operations.

This is the first project in the United States, where a power plant has been designed to minimize the CO2 released in the power generation process through the use of capture unit. The project is focused on achieving the goal of low-carbon electricity production and will aid in achieving a sustainable means of power generation. The order was booked in the first quarter of 2011.

Flowserve has expanded its business across the globe, and revenues outside North America at present account for more than 70% of its total revenue. This diversification strategy should help mitigate the impact of an economic downturn in any one of the industries or countries that its serves.

The company sells its products in highly-competitive markets, which puts pressure on profit margins and limits its ability to maintain or increase the market share of its products. The company may be unable to deliver significant backlog on time, which could affect its revenues, future sales and profitability, and relationships with customers. A major competitor of Flowserve is ITT Corporation (ITT - Analyst Report).

Flowserve Corporation is a world leading manufacturer and aftermarket service provider of comprehensive flow control systems. The company was incorporated in the State of New York on May 1, 1912. Flowserve develops and manufactures precision-engineered flow control equipment, such as pumps, valves, and seals, for critical service applications that require high reliability.

The company uses its manufacturing platform to offer a broad array of aftermarket equipment services, such as installation, advanced diagnostics, repair, and retrofitting. The company uses a footprint of Quick Response Centers (QRCs) around the globe to deliver these aftermarket services.

We currently maintain our Neutral rating on Flowserve for the long term, with a Zacks #3 Rank (short-term Hold recommendation) over the next one-to-three months.

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