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Flowserve (FLS) Q2 Earnings Miss Estimates, Revenues Beat
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Flowserve Corporation (FLS - Free Report) reported mixed second-quarter 2021 results, wherein earnings missed estimates by 14% but sales surpassed the same by 0.8%.
The machinery company’s adjusted earnings in the reported quarter were 37 cents per share, lagging the Zacks Consensus Estimate of 43 cents. The bottom line decreased 30.2% from the year-ago figure of 53 cents, due to lower sales.
Revenue Details
In the quarter under review, Flowserve’s sales were $898.2 million, reflecting a year-over-year decline of 2.9%. The metric was down 7.1% on a constant currency basis.
The company’s top line surpassed the Zacks Consensus Estimate of $891 million.
Aftermarket sales in the reported quarter were up 0.3% year over year (or down 3.5% on a constant-currency basis) to $463.7 million. Original equipment sales totaled $434.5 million, reflecting a decrease of 6.1% (or 10.7% on a constant-currency basis).
Bookings totaled $952.8 million in the quarter, reflecting an increase of 17.9% (or 13% on a constant-currency basis) from the year-ago quarter. Backlog at the end of the reported quarter was $1.95 billion.
The company currently has two reportable segments — Flowserve Pump Division and Flow Control Division. A brief discussion of the segments is provided below:
Revenues from the Flowserve Pump Division were $617.5 million, decreasing 8.4% year over year or 12.4% on a constant-currency basis. Bookings rose 24.7% to $668.8 million.
Revenues from the Flow Control Division were $281.2 million, increasing 11.5% year over year or 6.6% on a constant-currency basis. Bookings of $289.1 million increased 5.3%.
Margin Profile
In the quarter under review, Flowserve’s adjusted cost of sales decreased 5.4% year over year to $619.9 million. It represented 69% of sales compared with 70.8% in the year-ago quarter. Gross profit increased 3.2% to $ 278.2 million, and margin jumped 80 basis points (bps) to 31%. Selling, general and administrative expenses fell 8.1% year over year to $210.8 million. It represented 23.5% of sales.
Operating income in the quarter under review increased 65.9% year over year to $72.2 million. Adjusted operating margin decreased 280 bps to 8.5%. Net interest and other expenses (adjusted) jumped 37.8% to $17.5 million. Effective tax rate was 14% versus 24.8% in the year-ago quarter.
Balance Sheet and Cash Flow
Exiting the second quarter of 2021, Flowserve had cash and cash equivalents of $630.4 million, down 4.4% from $659.3 million at previous quarter-end. Long-term debt was relatively stable at $1,307.1 million on a sequential basis.
In the first six months of 2021, it generated net cash of $61.3 million from operating activities, up 203.5% from the previous-year period. Capital expenditure in the period totaled $22.5 million, decreasing 22.7% from $29.1 million spent a year ago.
During the first half of the year, the company used $52.2 million for distributing dividends and $17.5 million for repurchasing shares.
Outlook
For 2021, the company anticipates revenues to decline 2-4% year over year compared with a fall of 3-5% guided earlier. It predicts adjusted earnings per share in the range of $1.45-$1.65 compared with $1.40-$1.60 predicted earlier. Adjusted tax rate is expected in the 21-23% range.
Flowserve Corporation Price, Consensus and EPS Surprise
Image: Bigstock
Flowserve (FLS) Q2 Earnings Miss Estimates, Revenues Beat
Flowserve Corporation (FLS - Free Report) reported mixed second-quarter 2021 results, wherein earnings missed estimates by 14% but sales surpassed the same by 0.8%.
The machinery company’s adjusted earnings in the reported quarter were 37 cents per share, lagging the Zacks Consensus Estimate of 43 cents. The bottom line decreased 30.2% from the year-ago figure of 53 cents, due to lower sales.
Revenue Details
In the quarter under review, Flowserve’s sales were $898.2 million, reflecting a year-over-year decline of 2.9%. The metric was down 7.1% on a constant currency basis.
The company’s top line surpassed the Zacks Consensus Estimate of $891 million.
Aftermarket sales in the reported quarter were up 0.3% year over year (or down 3.5% on a constant-currency basis) to $463.7 million. Original equipment sales totaled $434.5 million, reflecting a decrease of 6.1% (or 10.7% on a constant-currency basis).
Bookings totaled $952.8 million in the quarter, reflecting an increase of 17.9% (or 13% on a constant-currency basis) from the year-ago quarter. Backlog at the end of the reported quarter was $1.95 billion.
The company currently has two reportable segments — Flowserve Pump Division and Flow Control Division. A brief discussion of the segments is provided below:
Revenues from the Flowserve Pump Division were $617.5 million, decreasing 8.4% year over year or 12.4% on a constant-currency basis. Bookings rose 24.7% to $668.8 million.
Revenues from the Flow Control Division were $281.2 million, increasing 11.5% year over year or 6.6% on a constant-currency basis. Bookings of $289.1 million increased 5.3%.
Margin Profile
In the quarter under review, Flowserve’s adjusted cost of sales decreased 5.4% year over year to $619.9 million. It represented 69% of sales compared with 70.8% in the year-ago quarter. Gross profit increased 3.2% to $ 278.2 million, and margin jumped 80 basis points (bps) to 31%. Selling, general and administrative expenses fell 8.1% year over year to $210.8 million. It represented 23.5% of sales.
Operating income in the quarter under review increased 65.9% year over year to $72.2 million. Adjusted operating margin decreased 280 bps to 8.5%. Net interest and other expenses (adjusted) jumped 37.8% to $17.5 million. Effective tax rate was 14% versus 24.8% in the year-ago quarter.
Balance Sheet and Cash Flow
Exiting the second quarter of 2021, Flowserve had cash and cash equivalents of $630.4 million, down 4.4% from $659.3 million at previous quarter-end. Long-term debt was relatively stable at $1,307.1 million on a sequential basis.
In the first six months of 2021, it generated net cash of $61.3 million from operating activities, up 203.5% from the previous-year period. Capital expenditure in the period totaled $22.5 million, decreasing 22.7% from $29.1 million spent a year ago.
During the first half of the year, the company used $52.2 million for distributing dividends and $17.5 million for repurchasing shares.
Outlook
For 2021, the company anticipates revenues to decline 2-4% year over year compared with a fall of 3-5% guided earlier. It predicts adjusted earnings per share in the range of $1.45-$1.65 compared with $1.40-$1.60 predicted earlier. Adjusted tax rate is expected in the 21-23% range.
Flowserve Corporation Price, Consensus and EPS Surprise
Flowserve Corporation price-consensus-eps-surprise-chart | Flowserve Corporation Quote
Zacks Rank & Other Stocks to Consider
The company currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks are AZZ Inc. (AZZ - Free Report) , Brady Corporation (BRC - Free Report) and Eaton Corporation plc (ETN - Free Report) . While AZZ sports a Zacks Rank #1 (Strong Buy), Brady and Eaton carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
AZZ delivered an earnings surprise of 21.24%, on average, in the trailing four quarters.
Brady delivered an earnings surprise of 1.58%, on average, in the trailing four quarters.
Eaton delivered an earnings surprise of 10.87%, on average, in the trailing four quarters.