(RTTNews) - Wednesday, industrial pump and valve maker Flowserve Corp. (FLS: News ) reported third-quarter earnings that were almost flat with the comparable quarter last year, despite a 9% drop in sales. Earnings per share for the quarter, however, increased 1% and came in above Street estimates. Separately, the company also lowered its full year earnings guidance and announced plans to expand its realignment initiatives.

Net income attributable to the company for the third quarter was $116.94 million, almost flat compared to $117.05 million in the corresponding period last year. However, net earnings to common shareholders increased 1% to $2.07 per share from $2.04 per share in the same period last year, and include realignment charges of $0.05 per share.

On average, eight analysts polled by Thomson Reuters expected the company to report earnings of $2.00 per share for the quarter. Analysts' estimates typically exclude special items.

According to the company , its per share earnings in the third-quarter of 2009 EPS was favorably impacted by lower weighted average common shares outstanding at September 30, 2009 resulting from share repurchasing program, a 100 basis point improvement in operating margin and cost containment initiatives.

The impact on third quarter 2009 EPS growth from foreign currency hedging gains and reduced net interest expense was offset by a higher tax rate resulting from discrete tax benefits in the third quarter 2008 that did not recur. Savings generated in the third quarter 2009 from realignment activities was approximately $10 million.
Quarterly sales declined 9% to $1.05 billion from $1.15 billion in the year-ago quarter. Excluding negative currency effects of $47 million, sales for the quarter declined 5% over the year-ago period. Eight Street analysts expected the company to report sales of $1.11 billion for the quarter.

Segment wise, Flowserve Pump Division sales were $637 million, flat with the previous year, or up 5% excluding negative currency effects of $31 million. Sales in the company's Flow Control Division declined 20% to $294 million. Flow Solutions Division Sales were $136 million, down 20% from the prior year period.

Flowserve gross margin increased 150 basis points to 36.6%, including realignment charges of 20 basis points. Gross profit declined to $385.2 million from $404.9 million a year earlier. Operating margin increased 100 basis points to 15.3% from 14.3%, including increased legal costs and realignment charges of 110 basis points. Operating income declined to $161.2 million from $164.5 million in the same period last year.

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