Flowserve Corporation Reports Third Quarter 2018 Results

23.11.2018

Flowserve Corporation announced its financial results for the third quarter ended September 30, 2018.

Third Quarter 2018 Highlights

(all comparisons to the 2017 third quarter, unless otherwise noted)

  • Reported Earnings Per Share (EPS) of $0.21 and Adjusted EPS[1] of $0.49
    • Reported EPS includes pre-tax adjusted items of approximately $47 million, primarily related to realignment and transformation expenses, a loss on previously announced divestitures and below-the-line foreign exchange impacts
    • Adjusted EPS increased 32.4%, and 19.5% on a sequential basis
  • Sales were $953 million, up 7.8%, or 8.8% on a constant currency basis and included approximately 1% negative impact related to divested businesses
    • Aftermarket sales were $457 million, up 3.9%, or 5.0% on a constant currency basis
    • Original equipment sales were $496 million, up 11.8%, or 12.5% constant currency
  • Reported gross and operating margins of 32.4% and 6.5%
    • Adjusted gross and operating margins[2] increased 130 and 160 basis points to 33.2% and 11.0%, respectively - the highest levels since the 2016 fourth quarter
  • Total bookings exceeded $1.0 billion, up 13.2%, or 14.1% on a constant currency basis, and included approximately 1% negative impact related to divested businesses
    • Aftermarket bookings were $507 million, or 50% of total bookings, up 11.6%, or 13.0% on a constant currency basis
    • Original equipment bookings were $504 million, up 14.8%, or 15.3% on a constant currency basis

"We delivered solid results in the third quarter, including our second consecutive quarter with bookings over $1 billion. With a book-to-bill of 1.06, we increased sequential backlog and grew year-over-year revenues by 7.8%, while also delivering annual and sequential improvement in our adjusted profit margins," said Scott Rowe, Flowserve s president and chief executive officer.

"Our Flowserve 2.0 transformation strategy is fundamentally changing the way we think, act and operate across our organization," Rowe continued. "While we re still early in the company s transformational journey, we expect that our continued progress on these growth and operational initiatives will further position Flowserve to more fully capitalize on the expected improvement in our core energy markets."

"Based on our solid performance in the first three quarters of 2018 and our confidence in delivering on our fourth quarter commitments, Flowserve today revised its full year guidance, including raising our Adjusted EPS[3] target range to $1.65 to $1.75 from $1.50 to $1.70," added Lee Eckert, Flowserve s senior vice president and chief financial officer.

Rowe concluded, "As we look ahead to 2019, we are building operating momentum to better capture the growth and value-creation potential inherent in our business. We expect to continue to simplify our business model, improve our productivity, lower our cost position and deliver enhanced long-term value for our customers, employees and shareholders."

Revised 2018 Guidance

Flowserve revised its guidance metrics as described hereafter. The company now expects full year 2018 revenues to increase year-over-year in a range between 5% to 7%, which includes an approximate 1% benefit from currency offset by an approximate 1% negative impact from divestitures. GAAP EPS is now forecast between $0.75 to $0.85, while the Adjusted EPS target range was increased to $1.65 to $1.75. The company expects a full year adjusted tax rate between 27%-28%.

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