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Flowserve's CEO Discusses Q3 2011 Results - Earnings Call Transcript

Operating margins and overall profitability were up in the quarter as a result, in part, to our continued discipline in driving SG&A efficiency and controlling costs. One real success in this area has been the reduction of our corporate SG&A expenses. We were also pleased by the improvement we saw on our IPD operations where our recovery plan is starting to take affect. We continue to work towards achieving our goal of IPD operating margins between 14% and 15% by 2015.

Overall, I am very proud of what we accomplish this quarter and the progress we have made, but we still have areas for improvement. We are very focused on our operating metrics, including cash flow and working capital, both of which dick will discuss in detail later in the call. And we are also very focused on improving our operational performance, which is a key driver in our organization.

During the quarter, we announced an agreement to acquire Lawrence Pumps, which we expect to close shortly. Lawrence Pumps provides us with engineered severe service technologies, which are critical to many of our oil and gas and petrochemical customers. We are excited to welcome Lawrence Pumps into Flowserve, and we believe we can leverage our global QRC network and global sales force to expand the reach of the Lawrence products and capture unrealized aftermarket potential. The Lawrence transaction is a good example of our disciplined acquisition strategy as we remain focused on bolt-on acquisitions that have a close strategic fit, provide new flow control technologies to our product portfolio, contain synergy and unserved aftermarket opportunities and are positioned for rapid growth by leveraging our strong global sales and manufacturing capabilities. We currently believe that we can best enhance shareholder value through these types of tuck-in acquisitions. While we always look at newly arising opportunities, we have no major acquisitions in our current plan since they are inconsistent with this bolt-on strategy.

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