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Flowserve Corporation Reports Third Quarter Results

Flowserve Corp. (NYSE:FLS), a leading provider of flow control products and services for the global infrastructure markets, announced today financial results for the third quarter of 2010 in its Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission. The information below highlights the third quarter and year-to-date 2010 results.

Highlights

Third Quarter of 2010 (all comparisons versus third quarter of 2009 unless otherwise noted):

  • Fully diluted EPS of $1.84, down 11.1%, including realignment charges of $0.03, Valbart related charges of $0.05 and $0.17 of net after-tax currency benefits
  • Bookings of $1.00 billion, up 2.6%, or 4.8% excluding negative currency effects of $22 million
  • Sales of $972 million, down 7.6%, or 4.5% excluding negative currency effects of $32 million
  • Gross margin decrease of 230 basis points to 34.3%, or 34.9% excluding realignment charges and effect of Valbart acquisition
  • Operating income of $129 million, down 19.9%, including realignment charges of $2.1 million and Valbart related charges of $4.3 million
  • Operating margin decrease of 200 basis points to 13.3%, or 14.1% excluding realignment charges and effect of Valbart acquisition
  • Cash balance of $311 million at September 30, 2010, resulting in net debt of $225 million
  • Backlog increased to $2.71 billion, including negative currency effects of $40 million, compared to $2.37 billion in backlog at December 31, 2009

Year-to-Date 2010 (all comparisons versus year-to-date 2009 unless otherwise noted):

  • Fully diluted EPS of $4.89, down 13.1%, including realignment charges of $0.13, Valbart related charges of $0.06 and net after-tax currency charges of $0.33, which includes $0.15 related to the Venezuelan Bolivar devaluation
  • Bookings of $3.20 billion, up 8.7%, or 8.2% excluding currency benefits of $15 million
  • Sales of $2.89 billion, down 8.7%, or 8.7% excluding currency benefits of $1 million
  • Gross margin decrease of 50 basis points to 35.5%, or 35.9% excluding realignment charges and effect of Valbart acquisition
  • Operating income of $417 million, down 10.6%, including realignment charges of $10.2 million and Valbart related charges of $5.1 million
  • Operating margin decrease of 40 basis points to 14.4%, or 15.0% excluding realignment charges and effect of Valbart acquisition

“Overall, I am proud of how well our employees and operating platform have performed in maintaining profit margins throughout the current cycle,” said Mark Blinn, Flowserve president and chief executive officer. “Looking forward, while we still believe that our long cycle large project business will remain choppy into 2011, we are seeing more evidence that our short cycle OEM businesses have started recovering, particularly in the developing markets. Our aftermarket bookings also continue to show strength, with our Integrated Solutions Group providing incremental growth, giving us additional confidence in the aftermarket opportunities being generated by our end user focus.

“We have made significant progress in our efforts to strategically position our company to drive disciplined profitable growth over the long term through investing in high growth markets, combining our pump and seal operations, investing in product and employee development and our recent acquisition of Valbart. We believe that these efforts, when combined with the benefits from our realignment programs, our cost control initiatives and the continued strength of our balance sheet, will help provide the platform leverage and operating flexibility needed to accomplish this important work. Additionally, we are pleased with the resilience and continued commitment of our people and the benefits of our diversified global operations.”

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