Flowserve Corporation
(
FLS
) reported results for the second-quarter of 2012. For the second
quarter earnings per share were $1.93, which were 1.6% above the
Zacks Consensus Estimate of $1.90. Earnings were also up 24% year
over year. Profits were primarily driven by improvement in short
cycle businesses driven by increased volumes.
Total Revenue
Total revenue in the quarter increased 5.0% to $1.18 billion and
excluding the currency impact of $86 million revenue increased
12.6% year over year. Sales for the quarter were up $1.18 billion,
up 5.0%.
Excluding negative currency effects of $86 million, revenue was
up 12.6%. Growth in bookings was primarily driven by strong
chemical, oil & gas, and general industries orders as well as
continued strong aftermarket activity.
Segment Results
Engineered Product Division (EPD) revenue for the quarter was
$586.7 million, an increase of 13.2% (increase of 5.3% on constant
currency basis). Strong aftermarket performance offset the impact
of lower original equipment volumes. Bookings for the division grew
2.5% on constant currency basis reflecting an increase to $602.8
million. Excluding the impact of currency, bookings grew 10.2%.
Industrial Product Division (IPD) sales for the second quarter
grew to $231.7 million, an increase of 9.4% (3.2% on constant
currency basis). The IPD recovery plan began to favorably impact
the business. Bookings for the division were $242.9 million,
reflecting an increase of 6.2% year over year, on constant currency
basis.
Flow Control Division (FCD) revenue was $401.5 million, an
increase of 11.0% (3.7% on constant currency basis). The top line
was primarily driven by strong oil and gas, Chemical and General
Industry bookings.
Margins
Gross margin for the quarter was 32.5%, down 28 basis points
year over year. Margin was impacted by less favorable pricing in
existing long cycle backlog and incremental charges from certain
projects that are delayed.
Segment wise, EPD gross margin was 33.4% (down 110 basis
points), IPD was 24.1% (up 440 basis points) and FCD was 34.1% (up
110 basis points).
Balance Sheet and Cash Flow
The company exited the quarter with cash and cash equivalents of
$175.2 million compared to $337.4 million as of December 31, 2011.
The company had a long term debt of $426 million and had a total
equity of $2.3 billion.
The company exited the year with net cash flow from operating
activities of $60.3 million compared with a negative of $237.8
million.
Outlook
Concurrent with the earnings release, Flowserve reaffirms its
2012 earnings per share in the range of $8.00 to $8.80.
Flowserve currently has a Zacks Rank of #3, implying a short
term Hold recommendation on the stock.
FLOWSERVE CORP (FLS): Free Stock Analysis
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