DOW JONES NEWSWIRES
Flowserve Corp.'s (FLS) third-quarter profit was flat as
cost-cutting offset a decline in sales, and the company said it is
expanding its realignment efforts.
Shares of the company fell 4.5% to $95 in after-hours trading as
the valve and pump producer's revenue fell short of Wall Street's
expectations although earnings topped analysts' estimates. The
stock has more than doubled from a three-year low last November,
but has fallen nearly 10% from its 52-week high a week ago.
Flowserve also narrowed its 2009 earnings guidance to a range of
$7.20 to $7.50, from its raised its July forecast of $7.15 to
$7.75.
"I am pleased by our notable progress in reducing our global
cost structure," said Chief Executive Mark Blinn, who was promoted
from chief financial officer Oct. 1. The company said it has saved
$17 million this year from its realignment program. It expects to
save a total of $60 million in 2009 on $41 million in realignment
costs.
Flowserve plans to expand the realignment program, which
includes posting $30 million in charges this year and up to $15
million in 2010. The additional changes are expected to save
another $50 million annually, beginning in the second half of next
year.
Total savings from the realignment programs are estimated at a
run rate of $110 million a year.
Many of Flowserve's markets have stabilized, although how much
oil-and-gas and industrial companies have recovered is not clear.
The company has been trying to reduce its debt.
For the latest quarter, Flowserve reported a profit of $116.9
million, down from $117 million a year earlier. However, per-share
earnings rose to $2.07 from $2.04, because of share buybacks. The
latest results included 5 cents a share in restructuring
charges.
Revenue slid 8.9% to $1.05 billion.
Analysts estimated earnings of $2 on revenue of $1.11 billion,
according to a poll by Thomson Reuters.
Gross margin rose to 36.6% from 35.1% on lower production costs
and cost-cutting.
Bookings decreased 29% to $975 million on lower orders from the
chemical, oil-and-gas and general industries markets. Flowserve's
backlog stood at $2.66 billion, down 6% from Dec. 31, 2008.
Profits rose in the pump segment but fell in the flow-control
and flow-solutions segments.
-By Kathy Shwiff, Dow Jones Newswires; 212-416-2357;
kathy.shwiff@dowjones.com