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Flowserve's CEO Discusses Q4 2011 Results - Earnings Call Transcript

Joining us today are Mark Blinn, President and CEO of Flowserve; Tom Pajonas, Our Chief Operating Officer; Mike Taff, our Chief Financial Officer; and Dick Guiltinan, our Chief Accounting Officer.

Following our commentary today, we will begin the Q&A session. Regarding any forward-looking statements, I refer you to yesterday's earnings release and 10-K filing and today's earnings presentation slide deck for Flowserve's Safe Harbor statement on this topic. All of this information can be found at Flowserve's website under the Investor Relations section. We encourage you to read these statements carefully with respect to our conference call this morning.

Now I would like to turn it over to Mark to begin the formal presentation. Mark?

Mark A. Blinn

Thank you, Mike, and good morning, everyone. I am pleased with our solid 2011 results, and I am proud of the work our employees have done to position us to take advantage of what we believe are improving end markets.

Looking at our 2011 financial results, bookings were $4.7 billion, up 10.2% versus the prior year. We ended 2011 with our highest fourth quarter backlog since 2008, in spite of geopolitical challenges and considerable currency headwinds.

Our after market bookings grew 9% in 2011, demonstrating the success of our end-user strategies, which include ongoing investments in our global QRC's, as well as our strategic localization efforts. Earnings per share were $7.64, up 11% versus prior year. Our margins were negatively impacted by lower margin, large projects booked in 2010 and early 2011, as well as incremental cost associated with the few delayed shipments. Despite these margin headwinds, we had positive operating income improvement on both a year-over-year and sequential basis, as we continue to tightly manage cost.

Our 2011 results demonstrate the execution of our core strategies around global localization near key customers and resource allocations towards higher growth markets. Towards those strategies, we continued our efforts to reposition our people and capabilities in growing regions of the world, and we are seeing the benefits of these efforts in the bookings growth in emerging markets. We expect this trend to continue in 2012 in light of our additional investment in Brazil, China, India and Russia.

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