Q1 2010 Earnings Call
May 06, 2010 11:00 am ET
Dean Freeman - Senior Vice President of Finance and Treasurer
Thomas Ferguson - Senior Vice President and President of Flowserve Pump Division
Richard Guiltinan - Principal Financial Officer, Chief Accounting Officer, Senior Vice President of Finance and Controller
Thomas Pajonas - Senior Vice President and President of Flow Control Division
Paul Fehlman - Vice President of Investor Relations, Financial Planning & Analysis
Kyle Ahlfinger - Chief Marketing Officer and Vice President
Mark Blinn - Chief Executive Officer, President and Director
Jeffrey Beach - Stifel, Nicolaus & Co., Inc.
Charles Brady - BMO Capital Markets U.S.
Jamie Sullivan - RBC Capital Markets Corporation
Karen Finerman - Metropolitan Capital
Welcome to Flowserve's Quarter One Earnings Call. [Operator Instructions] I would now like to turn today's call over to Paul Fehlman.
Previous Statements by FLS
» Flowserve Corp. Q4 2009 Earnings Call Transcript
» Flowserve Corp. Q3 2009 Earnings Call Transcript
» Flowserve Corp. Q2 2009 Earnings Call Transcript
Thank you, operator. Hello everyone, and thank you for joining us. Welcome to Flowserve's First Quarter 2010 Earnings Conference Call. Today's call is being webcast with our earnings presentation via our website at www.flowserve.com. Simply click on the Investor Relations tab to access the webcast and the accompanying presentation.
Before we get started on the presentation, I want to point out a couple of important items. First, for those of you that have accessed today's call through our dial-in phone number and also wish to follow along with the earnings presentation slides via our website, please click on the Click Here to Listen Via Phone icon at the bottom of the event details page.
I'd also like to note that our webcast will be posted on our website for replay approximately two hours following the end of this call. The replay will stay on the site for an on-demand review for the next few months.
Joining us today are Mark Blinn, President and CEO of Flowserve; Tom Ferguson, President of the Flow Solutions Group; and Tom Pajonas, President of the Flow Control division, as well as Kyle Ahlfinger, Vice President and Chief Marketing Officer; Dean Freeman, Vice President, Finance and Treasurer; and Dick Guiltinan, VP Finance and Chief Accounting Officer. Following our commentary, we will begin the Q&A session.
Regarding any forward-looking statements, I'll refer you to yesterday's earnings release and 10-Q filing and today's earnings presentation slide deck for Flowserve's Safe Harbor Statement on this topic. All of this information can be found on Flowserve's website under the Investor Relations section. I encourage you to read these statements carefully with respect to our conference call this morning. The information in this conference call, including all statements by management plus their answers to questions related in any way to projections or other forward-looking statements, are subject to Flowserve's Safe Harbor. Now I'd like to turn it over to Mark to begin the formal presentation. Mark?
Thank you, Paul, and good morning, everyone. First, I will take a moment to review our first quarter results and highlight a few important trends. We had a solid quarter with earnings per share of $1.42, which included $0.32 of charges related to the Venezuelan currency devaluation as well as other below-the-line items related to other currency valuations versus the dollar and a penny of net realignment charges. Bookings for the quarter were $1.07 billion, representing an increase both year-over-year and sequentially, and this was our sixth consecutive quarter of bookings around $1 billion.
Year-over-year, operating margins were down slightly on an adjusted basis as the benefits of our realignment initiatives, supply-chain management, operating efficiency and a steady aftermarket business offset some of the headwinds from price and volume.
And I'm especially proud of our operations management and the people in the field who continued to execute well while also substantially completing the integration of the Pump and Seal divisions to align our business for future growth.
Moving on to the current global economic environment. In general, economic indicators are showing some signs of improved market conditions. We saw continued signs of growth in emerging and developing markets, especially China, India, Brazil, the Middle East and Russia. Also the stabilization of market commodities and the stabilization of the price of oil supported capital investment planning in the activation of large projects postponed from previous periods.
And while GDP forecasts support improving market conditions, we currently remain cautious in our assessment of the U.S. and other material markets. We're also keeping a close watch over currency volatility in Europe as weakness in the euro can negatively impact reported earnings, but from a business perspective, can make our European operations more cost competitive over time.
When you look at our business, we believe that we are well-positioned to take advantage of growth opportunities in the current market environment as the investments we have made provide a global platform for the business in emerging markets. Our capabilities in advanced technologies and applications expertise provide capabilities in the critical applications that our customers need, and our aftermarket service platform continues to expand to provide even more offerings to our customers. And we believe this will be further leveraged by the integration of our Pump and Seal businesses into the Flow Solutions Group.
As a result, we are reaffirming our EPS guidance for the full year 2010 of $6.35 to $7.15, including up to $0.26 per share in realignment charges and approximately $0.25 per share related to the Venezuelan currency devaluation.
Looking forward, we believe that our long-term success will come from effective execution of several key strategies. The first of these is disciplined profitable growth, which means that we will continue to invest to grow our business globally while ensuring that we meet our financial commitments, return value to our shareholders and maintain a sustainable business for the future.