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Flowserve (FLS) Beats on Q2 Earnings, Raises 2023 Guidance
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Flowserve Corporation’s (FLS - Free Report) second-quarter 2023 adjusted earnings (excluding 13 cents from non-recurring items) of 52 cents per share beat the Zacks Consensus Estimate of earnings of 40 cents per share. The bottom line increased 73.3% year over year.
Flowserve’s total sales of $1,080.4 million beat the consensus estimate of $981 million. The top line increased 22.5% year over year. Sales increased 22.9% on a constant-currency basis.
Aftermarket sales in the reported quarter increased 20% year over year (or up 19.5% on a constant-currency basis) to $562.6 million. Original equipment sales totaled $517.8 million, reflecting an increase of 29.5% (up 26.2% on a constant-currency basis).
Bookings totaled $1.11 billion in the quarter, reflecting an increase of 6.4% (or 6.6% on a constant-currency basis) from the year-ago quarter. The backlog at the end of the reported quarter was $2.8 billion, up 22.8% year over year.
Segmental Details
The company currently has two reportable segments, which are Flowserve Pump Division and Flow Control Division. A brief discussion of the segments is provided below:
Revenues from the Flowserve Pump Division segment were $765.4 million, up 24.5% year over year. Bookings increased 5.9% to $760.0 million. The segment operating income was $98.0 million for the quarter, up 71% year over year. Our estimate for the same was $80.5 million.
Revenues from the Flow Control Division segment were $317.7 million, up 18.4% year over year. Our estimate for segmental revenues was $293.3 million. Bookings of $359.7 million increased 9%. The segment operating income was $36.1 million for the quarter, up 18.8% year over year. Our estimate for the same was $29.6 million.
Flowserve Corporation Price, Consensus and EPS Surprise
In the second quarter, Flowserve’s cost of sales increased 19.8% year over year to $757.6 million. It represented 70.1% of sales, compared with 71.7% of sales in the year-ago quarter. Gross profit increased 29.2% to $322.8 million, and the margin increased 160 basis points (bps) to 29.9%. Selling, general and administrative expenses were $230.1 million, up 18.2% year over year. It represented 21.3% of sales.
Operating income in the quarter increased 60.2% year over year to $96.6 million. The adjusted operating margin increased to 10.4%, up 320 bps year over year. The effective tax rate was 27.9% in the quarter.
Balance Sheet and Cash Flow
Exiting the second quarter, Flowserve had cash and cash equivalents of $422.8 million, compared with $435 million at the end of December 2022. Long-term debt (due after one year) was $1,245.3 million, compared with $1,224.2 million at the end of December 2022.
In the first six months of 2023, the company generated net cash of $50.4 million from operating activities against $71.4 million used in the year-ago period. Capital expenditure in the period totaled $31.9 million, up 2.8% from the year-ago period.
During the same time period, the company used $52.5 million for distributing dividends.
2023 Guidance Improved
Flowserve expects a 16.0-18.0% year-over-year increase in revenues in 2023, compared with 10.0-12.0% predicted before. The company anticipates reported earnings per share to be $1.40-$1.65. Adjusted earnings per share are estimated to be $1.85-$2.00 for the year, compared with $1.65-$1.85 expected earlier. The Zacks Consensus Estimate for the same stands at $1.84. The adjusted tax rate is anticipated to be approximately 20%. The company expects net interest expense of approximately $60 million and capital expenditure of $75-$85 million for the year.
Zacks Rank & Other Stocks to Consider
FLS currently carries a Zacks Rank #2 (Buy). Some other top-ranked companies from the Industrial Products sector are discussed below:
GEF delivered a trailing four-quarter earnings surprise of 7.7%, on average. GEF’s earnings estimates have increased 13.4% for fiscal 2023 in the past 60 days. Its shares have risen 8.6% in the past year.
Caterpillar Inc. (CAT - Free Report) presently carries a Zacks Rank of 2. CAT’s earnings surprise in the last four quarters was 18.5%, on average.
In the past 60 days, estimates for Caterpillar’s earnings have increased 1.4% for 2023. The stock has gained 56.6% in the past year.
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Flowserve (FLS) Beats on Q2 Earnings, Raises 2023 Guidance
Flowserve Corporation’s (FLS - Free Report) second-quarter 2023 adjusted earnings (excluding 13 cents from non-recurring items) of 52 cents per share beat the Zacks Consensus Estimate of earnings of 40 cents per share. The bottom line increased 73.3% year over year.
Flowserve’s total sales of $1,080.4 million beat the consensus estimate of $981 million. The top line increased 22.5% year over year. Sales increased 22.9% on a constant-currency basis.
Aftermarket sales in the reported quarter increased 20% year over year (or up 19.5% on a constant-currency basis) to $562.6 million. Original equipment sales totaled $517.8 million, reflecting an increase of 29.5% (up 26.2% on a constant-currency basis).
Bookings totaled $1.11 billion in the quarter, reflecting an increase of 6.4% (or 6.6% on a constant-currency basis) from the year-ago quarter. The backlog at the end of the reported quarter was $2.8 billion, up 22.8% year over year.
Segmental Details
The company currently has two reportable segments, which are Flowserve Pump Division and Flow Control Division. A brief discussion of the segments is provided below:
Revenues from the Flowserve Pump Division segment were $765.4 million, up 24.5% year over year. Bookings increased 5.9% to $760.0 million. The segment operating income was $98.0 million for the quarter, up 71% year over year. Our estimate for the same was $80.5 million.
Revenues from the Flow Control Division segment were $317.7 million, up 18.4% year over year. Our estimate for segmental revenues was $293.3 million. Bookings of $359.7 million increased 9%. The segment operating income was $36.1 million for the quarter, up 18.8% year over year. Our estimate for the same was $29.6 million.
Flowserve Corporation Price, Consensus and EPS Surprise
Flowserve Corporation price-consensus-eps-surprise-chart | Flowserve Corporation Quote
Margin Profile
In the second quarter, Flowserve’s cost of sales increased 19.8% year over year to $757.6 million. It represented 70.1% of sales, compared with 71.7% of sales in the year-ago quarter. Gross profit increased 29.2% to $322.8 million, and the margin increased 160 basis points (bps) to 29.9%. Selling, general and administrative expenses were $230.1 million, up 18.2% year over year. It represented 21.3% of sales.
Operating income in the quarter increased 60.2% year over year to $96.6 million. The adjusted operating margin increased to 10.4%, up 320 bps year over year. The effective tax rate was 27.9% in the quarter.
Balance Sheet and Cash Flow
Exiting the second quarter, Flowserve had cash and cash equivalents of $422.8 million, compared with $435 million at the end of December 2022. Long-term debt (due after one year) was $1,245.3 million, compared with $1,224.2 million at the end of December 2022.
In the first six months of 2023, the company generated net cash of $50.4 million from operating activities against $71.4 million used in the year-ago period. Capital expenditure in the period totaled $31.9 million, up 2.8% from the year-ago period.
During the same time period, the company used $52.5 million for distributing dividends.
2023 Guidance Improved
Flowserve expects a 16.0-18.0% year-over-year increase in revenues in 2023, compared with 10.0-12.0% predicted before. The company anticipates reported earnings per share to be $1.40-$1.65. Adjusted earnings per share are estimated to be $1.85-$2.00 for the year, compared with $1.65-$1.85 expected earlier. The Zacks Consensus Estimate for the same stands at $1.84. The adjusted tax rate is anticipated to be approximately 20%. The company expects net interest expense of approximately $60 million and capital expenditure of $75-$85 million for the year.
Zacks Rank & Other Stocks to Consider
FLS currently carries a Zacks Rank #2 (Buy). Some other top-ranked companies from the Industrial Products sector are discussed below:
Greif, Inc. (GEF - Free Report) presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks.
GEF delivered a trailing four-quarter earnings surprise of 7.7%, on average. GEF’s earnings estimates have increased 13.4% for fiscal 2023 in the past 60 days. Its shares have risen 8.6% in the past year.
Caterpillar Inc. (CAT - Free Report) presently carries a Zacks Rank of 2. CAT’s earnings surprise in the last four quarters was 18.5%, on average.
In the past 60 days, estimates for Caterpillar’s earnings have increased 1.4% for 2023. The stock has gained 56.6% in the past year.