) reported strong fourth quarter and fiscal 2013 results on Feb
18, 2014, following which its shares moved up 5.7% on Feb 19, to
close at $80.60.
Quarterly earnings per share (EPS) came in at $1.10, which
surpassed the Zacks Consensus Estimate of $1.00 by 10.0%.
Quarterly earnings also grew 17% year over year excluding the
impact of currency fluctuation.
Earnings were primarily driven by continued growth in
bookings, improvement in both sales and margin figures. In
addition, the company's key initiatives such as 'One Flowserve'
has also helped in margin expansion, and in turn EPS growth.
Total revenue in the quarter increased 5.2% year over year to
$1.39 billion. Excluding the currency impact, revenues climbed
4.6% year over year. The improvement in sales came from a stable
aftermarket performance, focus on supply chain and operational
excellence along with the company's ongoing cost management
efforts. Moreover, revenues beat the Zacks Consensus Estimate of
During the quarter, the company recorded bookings worth $1.25
billion, reflecting an increase of 15.7% (excluding the impact of
currency) year over year. The original equipment bookings for the
quarter grew 21.6% (excluding the impact of currency) to $722.0
million and aftermarket bookings grew 8.5% (excluding the impact
of currency) to $530.6 million.
Engineered Product Division
) revenues for the quarter were $2,537.1 million, up 5.6% year
over year, aided by an increase in original equipment sales.
Bookings for the segment increased 4.3% to $2,474.1 million.
Industrial Product Division
) sales for the fourth quarter came in at $950.2 million, down
0.4% year over year. Bookings for the segment fell 7.8% year over
Flow Control Division
) revenues were $1,615.7 million, up 3.8% year over year.
Bookings for the segment also increased 8.8% to $1661.9
Gross margin for the quarter grew 17 basis points (bps) to
33.8%. The EPD segment's gross margin was 33.8% (down 17 bps) and
the IPD segment's gross margin was 26.4% (up 16 bps). The FCD
segment's gross margin increased to 35.8% from 34.8% in the
prior-year quarter. The rise in segmental gross margin was
primarily due to significant growth in OE (Original Equipment)
bookings, improvement in execution of operational plans and cost
control initiatives. Operating margin also increased by 6 bps to
Balance Sheet and Cash Flow
The company ended the year with cash and cash equivalents of
$363.8 million compared with $304.3 million as of Dec 31, 2012.
The company had long-term debt of $1.13 million compared with
$869.1 million as of Dec 31, 2012.
The company's net cash flow from operating activities was
$487.8 million as of Dec 31, 2013.
Following the earnings release, the board of directors
announced a 14.3% increase in quarterly cash dividend to 16 cents
per share on the company's outstanding shares of common stock.
The prior dividend of 14 cents was paid in Jan 2014. The new
dividend will be payable on Apr 11, 2014, to shareholders of
record as of the close of business on Mar 28, 2014.
Based on its strong performance in the fourth quarter of 2013,
the company provided an outlook for fiscal 2014. The company
expects a robust earnings increase year over year, driven by 3%
to 6% revenue growth, an improved backlog, continued operating
improvements, cost leverage and its capital allocation
Flowserve reiterated its 2014 EPS expectation in the range of
$3.65 to $4.00.
Flowserve currently has a Zacks Rank #3 (Hold). Better-ranked
players in the same industry include
Altra Holdings Inc
). All three carry a Zacks Rank # 2 (Buy).
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