) reported third-quarter 2012 earnings per share of $2.07,
beating the Zacks Consensus Estimate by a couple of cents and
9.5% higher than the year-ago level. Profits were primarily
driven by solid top-line growth, operational progress and
improved SG&A leverage. The company also witnessed record
aftermarket backlog during the quarter.
Total revenue in the quarter increased 3.9% to $1.17 billion.
Excluding the currency impact of $75 million, revenue climbed
10.6% year over year. Sales increased due to increasing focus on
leveraging additional operating improvement opportunities. Its
strong aftermarket performance, focus on supply chain,
operational excellence and disciplined cost management drove the
Engineered Product Division (EPD) revenue for the quarter was
$567.5 million, up 5.3% year over year (down 1.2% on constant
currency basis), aided by strong aftermarket performance. This
was offset somewhat by the sales mix shift to original equipment
and product line mix. Bookings for the segment fell 2.4% on a
constant currency basis to $553.7 million. Excluding the impact
of currency, bookings grew 4.1%.
Industrial Product Division (IPD) sales for the third quarter
came in at $243.6 million, a year-over-year increase of 18.6% (up
13% on constant currency basis). Higher sales of original
equipments in the Asia Pacific and North America benefited the
company, partly offset by sales decline in Europe. Sales of
original equipments improved in the Asia Pacific and North
America benefited the company, partly offset by sales decline in
The IPD recovery plan has began to favorably impact the
business with increased focus on supply chain, operational
excellence, on-time delivery and disciplined cost management.
Bookings for the segment surged 27% on constant currency basis to
$283.5 million. Excluding the impact of currency, bookings spiked
34.6%, helped by the strength of original equipment orders in the
oil and gas industry.
Flow Control Division (FCD) revenue was $394.7 million,
reflecting an increase of 14.2% on a year-over-year basis (up
7.2% on constant currency basis). Higher sales in Asia Pacific,
North America, the Middle East and Latin America aided the
quarterly result but sales declines in Europe and Africa emerged
as dampeners. The top line was primarily driven by strong
oil and gas, chemical and general industry bookings.
Bookings for the segment fell 7% on a constant currency basis
to $381.4 million. Excluding the impact of currency, bookings
dipped 1.1%. The fall in the bookings was due to reduced original
equipment bookings in the Middle East/Africa and Latin America,
offset partly by an increase in Russia.
Gross margin for the quarter contracted 20 basis points year
over year to 33.4%. EPD segment's gross margin was 33.9% (up 30
basis points) where as IPD segment registered a gross margin of
24.3% (up 70 basis points). The rise in segment gross margin was
primarily driven by sales mix shift to aftermarket sales,
improvement in execution and progress made in shipping low margin
FCD segment's gross margin, however, declined 30 basis points
to 35.4%; primarily due to a shift in product line mix and a less
favorable sales mix between original equipment and
Balance Sheet and Cash Flow
The company exited the quarter with cash and cash equivalents
of $217.4 million compared to $337.4 million as of December 31,
2011. The company had a long-term debt of $879 million and a
total equity of $2.03 billion.
The company exited the year with net cash flow from operating
activities of $122.6 million compared with negative $150.1
million as of 30 September 2011.
Concurrent with the earnings release, Flowserve narrowed its
2012 earnings guidance to $8.20-$8.70 per share compared with
$8.00 to $8.80 per sharementioned earlier.
Flowserve Corporation, which faces stiff competition from
), retains a Zacks#2 Rank, implying a short-term Buy rating.
Longer term, we maintain our Outperform recommendation on the
FLOWSERVE CORP (FLS): Free Stock Analysis
STRATASYS INC (SSYS): Free Stock Analysis
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