- Email: [email protected]
Flowserve Corp, USA
July 2003
Pump Industry Analyst
Flowserve Corp, USA Profile With 14 000 employees and operations in 56 countries Flowserve Corp, the world’s third largest pump company, operates through three business segments: Flowserve Pump Division (FPD) for engineered pumps, industrial pumps and related services; Flow Solutions Division (FSD) for precision mechanical seals and related services; and Flow Control Division (FCD) for industrial valves, nuclear valves, valve actuators and controls and related services. On 2 May 2002 Flowserve acquired Invensys’s Flow Control division (IFC), becoming the world’s second largest supplier of valve products and services.
COMMENT Faced with soft demand and some challenging markets, Flowserve sensibly concentrated on improving the variables that it could control during 2002. As a result, the company strengthened its product portfolio, streamlined its operations, improved cash flow and paid down debt, helping to move Flowserve a little closer to its vision of being the preferred supplier in the flow control industry. ■
Key Figures (US$ million) Flowserve Corp Sales Of Which: Flowserve Pump Flow Solutions Flow Control Gross Profit Restructuring Expenses Integration Expense Operating Income Net Earnings/(Loss) Bookings Ending Backlog Capital Expenditures Working Capital Contact Details Chairman, President and CEO: Address:
Year ended 31.12 2002
2001
2000
1999
1998
2251.3
1917.5
1538.3
1061.3
1083.1
1204.6 350.7 726.4
1170.2 328.0 451.5
808.6 327.4 440.1
– – –
– – –
685.5
614.6
506.9
363.3
415.3
4.3
(1.2)
19.4
15.9
–
16.2
63.0
35.2
14.2
38.3
188.1
142.2
92.0
31.7
85.1
53.0
(1.5)
13.2
12.2
48.9
2184.1
1975.5
1521.6
1039.3
1082.5
733.7
662.8
659.3
270.6
291.1
30.9
35.2
27.8
40.5
38.2
539.0
481.4
464.0
258.1
268.2
C Scott Greer 222 W Las Colinas Blvd, Suite 1500 Irving Tel: +1 972 443 6500 Texas 75039-5421 Fax: +1 972 443 6800 USA Web: www.flowserve.com
Recent Events • During 2002 Flowserve was able to pay off a significant portion of its outstanding debt - as a result the net debt-to-capital ratio improved to 58% at the end of 2002, from 71.3% at the end of 2001. • On 2 May 2002 Flowserve acquired Invensys’s Flow Control division (IFC), becoming the world’s second largest supplier of valve products and services. • Flowserve realigned its service business for pumps and valves during 2002, establishing stronger links with its original equipment business, based on Flowserve’s seals service model, which incorporates fixed-fee alliances.
5
COMPANY PROFILE
Analysis Even though Flowserve increased 2002 sales by 17.4% to US$2251.3 million, and turned a 2001 net loss of US$1.5 million into a US$53 million net profit in 2002, both results were below the company’s expectations. Growth in the oil and gas and water sectors was not enough to offset the tough market conditions in some of Flowserve’s other major end-use markets such as refining, chemical processing, power generation and general industry. Backlog in 2002 increased 10.7%, largely due to the IFC acquisition.
Pump Industry Analyst
Flowserve Corp, USA Profile With 14 000 employees and operations in 56 countries Flowserve Corp, the world’s third largest pump company, operates through three business segments: Flowserve Pump Division (FPD) for engineered pumps, industrial pumps and related services; Flow Solutions Division (FSD) for precision mechanical seals and related services; and Flow Control Division (FCD) for industrial valves, nuclear valves, valve actuators and controls and related services. On 2 May 2002 Flowserve acquired Invensys’s Flow Control division (IFC), becoming the world’s second largest supplier of valve products and services.
COMMENT Faced with soft demand and some challenging markets, Flowserve sensibly concentrated on improving the variables that it could control during 2002. As a result, the company strengthened its product portfolio, streamlined its operations, improved cash flow and paid down debt, helping to move Flowserve a little closer to its vision of being the preferred supplier in the flow control industry. ■
Key Figures (US$ million) Flowserve Corp Sales Of Which: Flowserve Pump Flow Solutions Flow Control Gross Profit Restructuring Expenses Integration Expense Operating Income Net Earnings/(Loss) Bookings Ending Backlog Capital Expenditures Working Capital Contact Details Chairman, President and CEO: Address:
Year ended 31.12 2002
2001
2000
1999
1998
2251.3
1917.5
1538.3
1061.3
1083.1
1204.6 350.7 726.4
1170.2 328.0 451.5
808.6 327.4 440.1
– – –
– – –
685.5
614.6
506.9
363.3
415.3
4.3
(1.2)
19.4
15.9
–
16.2
63.0
35.2
14.2
38.3
188.1
142.2
92.0
31.7
85.1
53.0
(1.5)
13.2
12.2
48.9
2184.1
1975.5
1521.6
1039.3
1082.5
733.7
662.8
659.3
270.6
291.1
30.9
35.2
27.8
40.5
38.2
539.0
481.4
464.0
258.1
268.2
C Scott Greer 222 W Las Colinas Blvd, Suite 1500 Irving Tel: +1 972 443 6500 Texas 75039-5421 Fax: +1 972 443 6800 USA Web: www.flowserve.com
Recent Events • During 2002 Flowserve was able to pay off a significant portion of its outstanding debt - as a result the net debt-to-capital ratio improved to 58% at the end of 2002, from 71.3% at the end of 2001. • On 2 May 2002 Flowserve acquired Invensys’s Flow Control division (IFC), becoming the world’s second largest supplier of valve products and services. • Flowserve realigned its service business for pumps and valves during 2002, establishing stronger links with its original equipment business, based on Flowserve’s seals service model, which incorporates fixed-fee alliances.
5
COMPANY PROFILE
Analysis Even though Flowserve increased 2002 sales by 17.4% to US$2251.3 million, and turned a 2001 net loss of US$1.5 million into a US$53 million net profit in 2002, both results were below the company’s expectations. Growth in the oil and gas and water sectors was not enough to offset the tough market conditions in some of Flowserve’s other major end-use markets such as refining, chemical processing, power generation and general industry. Backlog in 2002 increased 10.7%, largely due to the IFC acquisition.