Flowserve Corporation (FLS) reported earnings per share of $1.72, exceeding the Zacks Consensus Estimate of $1.59, for the first quarter of 2011. Revenues for the quarter were $997 million, a tad below the Zacks Consensus Estimate of $1,012 million.
Gross margin declined by 140 basis points to 34.9%, or 35.6% excluding realignment charges and effect of Valbart, a 2010 acquisition. Operating income was $130 million, down 8.4%, including realignment charges of $0.8 million, a $1.4 million impact of Valbart and a $2.5 million impact of events in MENA. Operating margin declined by 170 basis points to 13.1%, or 13.7% excluding realignment charges and the effect of Valbart operations.
Segment Details
FSG Engineered Product Division (EPD)
EPD order bookings for 1Q11 were $602.7 million, an increase of $10.3 million, up 1.7% year over year. EPD revenues for the first quarter of 2011 were $523.8 million, a decline of $8.0 million, down 1.5% year over year.
FSG Industrial Product Division (IPD)
IPD bookings for 1Q11 were $225.0 million, an increase of 15.7% year over year. IPD revenues for the first quarter of 2011 were $176.3 million, a decline of 10.1% year over year.
Flow Control Division (FCD)
FCD order bookings for 1Q11 were $377.3 million, up 18.3% year over year. FCD sales for the quarter were $337.6 million, up 31.8%, year over year.
Balance Sheet
Cash and cash equivalents were $289 million at the end of the quarter with long term debt at $471 million and shareowners’ equity at $2.2 billion.
Total order backlog increased to $2.81 billion compared to $2.59 billion at Dec 31, 2010.
Flowserve has expanded its business across the globe. 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 where it serves.
Flowserve’s business depends on capital investment and maintenance expenditures by customers, which in turn, are impacted by numerous factors, including the state of domestic and global economies, global energy demand, the cyclical nature of their markets, their liquidity and the condition of global credit and capital markets.
Continuing volatility in commodity prices, prolonged credit and capital market disruptions and a general slowing of economic growth might prompt customers to delay or cancel existing orders, which could adversely affect the viability of its backlog and impede its ability to realize revenues on backlog.
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. Its direct competitor is ITT Corporation (ITT).
We currently have a Neutral recommendation on Flowserve Corporation.
FLOWSERVE CORP (FLS): Free Stock Analysis Report
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