) reported third quarter 2013 earnings per share of 90 cents,
which beat the Zacks Consensus Estimate of 84 cents by 7.1%.
Quarterly earnings also grew 22% year over year excluding the
impact from currency fluctuation. The company's net income
increased to $126.3 million, up 18.8% from $106.3 million in the
Earnings were primarily driven by continued growth in
bookings, improvement in both sales and margin figures, and
reduced share counts. In addition, the company's key initiatives
such as 'One Flowserve' has also helped in margin expansion,
thereby driving EPS growth.
Total revenue in the quarter increased 5.4% to $1,229 million.
Excluding the currency impact, revenues climbed 6.4% year over
year. The improvements in sales were due to 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 $1,217
Engineered Product Division
) revenues for the quarter were $651.4 million, up 14.8% year
over year (up 17.8% excluding the impact on constant currency
basis), aided by a strong increase in original equipment sales.
Bookings for the segment surged 20.2% to $665.3 million.
Excluding the currency impact, bookings increased 20.9%.
Industrial Product Division
) sales for the third quarter came in at $222.4 million,
declining 8.7% year over year. Bookings for the segment were down
19.4% year over year to $228.5 million.
Flow Control Division
) revenues were $394.4 million - a marginal decline of 0.1% year
over year. Bookings for the segment also slipped 2.1% to $373.2
Gross margin for the quarter grew 100 bps to 34.4%. The EPD
segment's gross margin was 33.7% (down 20 bps) and the IPD
segment's gross margin was 25.5% (up 120 bps). The FCD segment's
gross margin moved north 200 bps to 37.4%. The rise in segmental
gross margin was primarily due to significant growth in OE
(Original Equipments) bookings, improvement in execution of
operational plans and cost-control initiatives. Operating margin
also increased 150 bps to 15.7%.
Balance Sheet and Cash Flow
The company ended the quarter with cash and cash equivalents
of $113.7 million compared with $304.3 million as of Dec 31,
2012. The company had a long-term debt of $839.2 million compared
with $869.1 million at year-end 2012.
The company's net cash flow from operating activities was
$108.9 million at the end of the nine-month period ended on Sep
Flowserve narrowed its 2013 EPS guidance from the previous
range of $3.20 to $3.53 to $3.33 to $3.53 at present.
Flowserve's OE business is showing a positive trend with an
increasing number of pre-FEED, FEED and EPC contracts going
forward. Moreover, Flowserve aims to strategically deploy cash on
long-term projects that will likely increase shareholders'
wealth. In the long-run, the company plans to invest in accretive
acquisitions. We commend the company's key strategies such as
focus on driving organic growth, operational efficiencies,
capital deployment and improving working capital metrics.
Flowserve currently has a Zacks Rank #4 (Sell). Other players
in the same industry that are worth a look include
Electronic for Imaging Inc
). While Electronic for Imaging carries a Zacks Rank #1 (Strong
Parker have a Zacks Rank # 2 (Buy) each.
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