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Flowserve Corporation’s (FLS - Free Report) first-quarter 2023 adjusted earnings (excluding 20 cents from non-recurring items) of 40 cents per share beat the Zacks Consensus Estimate of earnings of 26 cents per share. Our estimate for first-quarter adjusted earnings was 25 cents per share. The bottom line increased 471.4% year over year.
Flowserve’s total sales of $980.3 million beat the Zacks Consensus Estimate of $900 million. Our estimate for net sales in the reported quarter was $898.6 million. The top line increased 19.4% year over year. Sales increased 22.3% on a constant-currency basis.
Aftermarket sales in the reported quarter increased 18% year over year (or up 20.7% on a constant-currency basis) to $516.8 million. Original equipment sales totaled $463.5 million, reflecting an increase of 21% (up 24.1% on a constant-currency basis).
Bookings totaled $1.06 billion in the quarter, reflecting a decrease of 2.7% (or 0.5% on a constant-currency basis) from the year-ago quarter. The backlog at the end of the reported quarter was $2.8 billion, up 2.6% on a sequential basis.
Segmental Details
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 segment were $700.1 million, up 21.6% year over year. Our estimate for segmental revenues was $625.3 million. Bookings declined 8.4% to $728.5 million.
Revenues from the Flow Control Division segment were $281.6 million, up 13.6% year over year. Our estimate for segmental revenues was $273.3 million. Bookings of $332.0 million increased 12.8%.
Flowserve Corporation Price, Consensus and EPS Surprise
In the first quarter, Flowserve’s cost of sales increased 11.8% year over year to $683.5 million. It represented 69.7% of sales, compared with 74.5% of sales in the year-ago quarter. Gross profit increased 41.6% to $296.8 million, and margin increased 480 basis points to 30.3%. Selling, general and administrative expenses were $244.3 million, up 18.5% year over year. It represented 24.9% of sales.
Operating income in the quarter increased 676.3% year over year to $57.2 million. The adjusted operating margin increased to 8.3% from 3.3% in the year-ago quarter. The effective tax rate was 15.2% in the quarter.
Balance Sheet and Cash Flow
Exiting the first quarter, Flowserve had cash and cash equivalents of $404.7 million, compared with $435 million at the end of December 2022. Long-term debt (due after one year) was $1,209.2 million, compared with $1,224.2 million at the end of December 2022.
In the first three months of 2023, the company generated net cash of $26.6 million from operating activities against $26.8 million used in the year-ago period. Capital expenditure in the period totaled $15.3 million, up 9% from the year ago.
During the same time period, the company used $26.2 million for distributing dividends. Flowserve did not buy back shares during the period.
2023 Guidance
Flowserve expects a 10.0-12.0% year-over-year increase in revenues in 2023, compared with 9-11% predicted before. The company anticipates reported earnings per share of $1.40-$1.65. FLS expects adjusted earnings per share of $1.65-$1.85 for the year, compared with $1.50-$1.75 per share expected earlier. The midpoint of the guided range of $1.75 per share implies a 59.1% jump from the fiscal 2022 figure of $1.10 per share. The adjusted tax rate is anticipated to be 18-20%. The company expects net interest expense of $55-$60 million and capital expenditure of $75-$85 million for the year.
Zacks Rank & Other Stocks to Consider
FLS currently sports a Zacks Rank #1 (Strong Buy). Some other top-ranked companies from the Industrial Products sector are discussed below:
IR’s earnings surprise in the last four quarters was 8.5%, on average. In the past 60 days, estimates for Ingersoll Rand’s 2023 earnings have increased 3.3%. The stock has rallied 7.2% in the past six months.
Parker-Hannifin Corporation (PH - Free Report) presently carries a Zacks Rank #2 (Buy). The company delivered a trailing four-quarter earnings surprise of 9.1%, on average.
In the past 60 days, estimates for Parker-Hannifin’s fiscal 2023 (ending June 2023) earnings have increased 0.5%. The stock has gained 7.2% in the past six months.
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Flowserve (FLS) Q1 Earnings & Revenues Beat, 2023 View Raised
Flowserve Corporation’s (FLS - Free Report) first-quarter 2023 adjusted earnings (excluding 20 cents from non-recurring items) of 40 cents per share beat the Zacks Consensus Estimate of earnings of 26 cents per share. Our estimate for first-quarter adjusted earnings was 25 cents per share. The bottom line increased 471.4% year over year.
Flowserve’s total sales of $980.3 million beat the Zacks Consensus Estimate of $900 million. Our estimate for net sales in the reported quarter was $898.6 million. The top line increased 19.4% year over year. Sales increased 22.3% on a constant-currency basis.
Aftermarket sales in the reported quarter increased 18% year over year (or up 20.7% on a constant-currency basis) to $516.8 million. Original equipment sales totaled $463.5 million, reflecting an increase of 21% (up 24.1% on a constant-currency basis).
Bookings totaled $1.06 billion in the quarter, reflecting a decrease of 2.7% (or 0.5% on a constant-currency basis) from the year-ago quarter. The backlog at the end of the reported quarter was $2.8 billion, up 2.6% on a sequential basis.
Segmental Details
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 segment were $700.1 million, up 21.6% year over year. Our estimate for segmental revenues was $625.3 million. Bookings declined 8.4% to $728.5 million.
Revenues from the Flow Control Division segment were $281.6 million, up 13.6% year over year. Our estimate for segmental revenues was $273.3 million. Bookings of $332.0 million increased 12.8%.
Flowserve Corporation Price, Consensus and EPS Surprise
Flowserve Corporation price-consensus-eps-surprise-chart | Flowserve Corporation Quote
Margin Profile
In the first quarter, Flowserve’s cost of sales increased 11.8% year over year to $683.5 million. It represented 69.7% of sales, compared with 74.5% of sales in the year-ago quarter. Gross profit increased 41.6% to $296.8 million, and margin increased 480 basis points to 30.3%. Selling, general and administrative expenses were $244.3 million, up 18.5% year over year. It represented 24.9% of sales.
Operating income in the quarter increased 676.3% year over year to $57.2 million. The adjusted operating margin increased to 8.3% from 3.3% in the year-ago quarter. The effective tax rate was 15.2% in the quarter.
Balance Sheet and Cash Flow
Exiting the first quarter, Flowserve had cash and cash equivalents of $404.7 million, compared with $435 million at the end of December 2022. Long-term debt (due after one year) was $1,209.2 million, compared with $1,224.2 million at the end of December 2022.
In the first three months of 2023, the company generated net cash of $26.6 million from operating activities against $26.8 million used in the year-ago period. Capital expenditure in the period totaled $15.3 million, up 9% from the year ago.
During the same time period, the company used $26.2 million for distributing dividends. Flowserve did not buy back shares during the period.
2023 Guidance
Flowserve expects a 10.0-12.0% year-over-year increase in revenues in 2023, compared with 9-11% predicted before. The company anticipates reported earnings per share of $1.40-$1.65. FLS expects adjusted earnings per share of $1.65-$1.85 for the year, compared with $1.50-$1.75 per share expected earlier. The midpoint of the guided range of $1.75 per share implies a 59.1% jump from the fiscal 2022 figure of $1.10 per share. The adjusted tax rate is anticipated to be 18-20%. The company expects net interest expense of $55-$60 million and capital expenditure of $75-$85 million for the year.
Zacks Rank & Other Stocks to Consider
FLS currently sports a Zacks Rank #1 (Strong Buy). Some other top-ranked companies from the Industrial Products sector are discussed below:
Ingersoll Rand Inc. (IR - Free Report) presently sports a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks.
IR’s earnings surprise in the last four quarters was 8.5%, on average. In the past 60 days, estimates for Ingersoll Rand’s 2023 earnings have increased 3.3%. The stock has rallied 7.2% in the past six months.
Parker-Hannifin Corporation (PH - Free Report) presently carries a Zacks Rank #2 (Buy). The company delivered a trailing four-quarter earnings surprise of 9.1%, on average.
In the past 60 days, estimates for Parker-Hannifin’s fiscal 2023 (ending June 2023) earnings have increased 0.5%. The stock has gained 7.2% in the past six months.