Flowserve Announces First Quarter 2006
Flowserve reported record bookings and backlog for the first quarter of 2006. It also said it expects to file its 2005 Form 10-K Report with the Securities and Exchange Commission during the latter part of the second quarter of 2006 and to become current with its SEC financial report filings later in the year.
Record First Quarter Core Bookings Increase 34 Percent, Excluding Currency and Divested Operations, Over Prior Year Period
First quarter 2006 bookings increased to approximately $879 million, which represents a record for any quarter. The $879 million record includes the impact of a negative currency effect of $37.5 million, or 5.5 percent. It also compares with first quarter 2005 bookings of approximately $713 million, or $686 million excluding divestitures during 2005. Therefore, excluding divestitures and currency impact, core bookings increased 34 percent compared with the prior year period. Excluding only divestitures, bookings increased 28 percent. Excluding neither divestitures nor currency, bookings increased 23 percent.
Backlog at the end of the first quarter of 2006 increased about 39 percent compared with the prior year period to $1.23 billion, a record for any quarter, including positive currency effects of about 1 percent. This compares with a backlog of approximately $884 million at the end of the first quarter of 2005 and $994 million at the end of 2005, excluding 2005 divestitures in both cases. The company said that the increase was due to a combination of a larger volume of project orders, stronger aftermarket business and longer negotiated product delivery lead times that are typical of robust markets.
"We are continuing to see strong activity in virtually all of our markets on a global basis, including our oil, chemical and power customer base," said Flowserve President and Chief Executive Officer Lewis M. Kling. "Our strongest bookings increase was in our pump operations, led by new project business. This is significant because of the typically profitable aftermarket opportunities that have traditionally arisen from an increased installed base. This pump project order strength also bodes well for our valve project business, which traditionally lags the pump project business. Our seal business bookings also remained strong during the quarter, consistent with its excellent track record."
Debt Inches Higher In First Quarter
Consolidated debt inched up approximately $9 million at the end of the first quarter of 2006, compared with year-end 2005. This increase reflects a first quarter 2006 annual payment of $50 million of broad-based, full-year 2005 employee earned incentive awards. It also reflects the impact of professional service fees related to the recent restatement of the company's financial statements and audit completed in February 2006, and related work on the 2005 Form 10-K Report and annual audit. The increase further includes debt repayment of approximately $11 million made in early January 2006 using the net proceeds from the divestiture of the General Services Group.
"We continue to examine our options for employing our expected continued cash flow," said Chief Financial Officer Mark A. Blinn. "Among them are reducing our financial leverage, beginning regular dividends, repurchasing outstanding common stock, increasing investments in our technologies and infrastructure, making further pension contributions and enhancing our capital structure. We also anticipate our professional fees to complete our financial audits and SEC filings will substantially decrease this year compared with the prior year and then normalize in 2007."
SEC Filings Update
The company said it is making good progress in closing its 2005 annual financial statements and expects to file its 2005 Form 10-K Report during the latter part of the second quarter. The company anticipates it will become current on its remaining required SEC filings later in 2006. In addition, the company expects to file all of its 2004 Form 10-Q reports with the SEC in the near future.
The company reiterated its positive outlook. "We are very pleased with our strong first quarter bookings, which bode very well for the future," Kling said. "We are excited when we look at our business prospects in 2006 and beyond."
Source: Flowserve Corporation