Industrial pump and valve maker Flowserve Corporation (FLS) Friday said it currently expects earnings for the full year 2009 at or above the high end of its previously announced target range. The company also provided an earnings guidance for fiscal 2010.
The Irving, Texas-based company currently expects earnings for fiscal 2009 at or above the high end of its prior guidance range of $7.20 to $7.50 per share. Results for the year would include nearly $68 million or $0.90 per share of the originally estimated $71 million in 2009 realignment charges.
On average, 10 analysts polled by Thomson Reuters expect Flowserve to earn $7.45 per share for the full year. Analysts' estimates typically exclude special items.
Further, Flowserve said it anticipates to achieve nearly $110 million in annual run rate benefits from realignment initiatives and also noted that the realignment charges expected to be taken in 2010.
For the fourth quarter of fiscal 2009, bookings were approximately $940 million, a decrease of 8% from the comparable period prior year. The company noted that during the fourth quarter, it experienced delays in release of major pending projects. For the full year 2009, the company's bookings were around $3.9 billion, down 24% from fiscal 2008.
President and chief executive officer Mark Blinn said, "We continued to see good levels of other original equipment business and aftermarket business opportunities worldwide, and our continued focus on these parts of our business have provided stable and profitable business in recent challenging markets. Additionally, the growth in our original equipment sales over the past few years will provide continued aftermarket opportunities."
In the preceding third quarter, Flowserve's attributable income 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. Quarterly sales declined 9% to $1.05 billion from $1.15 billion in 2008 third quarter. Excluding negative currency effects of $47 million, net sales were down 5% over the prior year.
Looking ahead to fiscal 2010, the company currently estimates earnings to be between $6.35 and $7.15 per share, including the full impact of up to $20 million that consists of $3 million carried over from 2009, or around $0.26 per share, in planned 2010 realignment charges and an anticipated first quarter after-tax charge of approximately $14 million or $0.25 per share to reflect the adverse impact of devaluation of Venezuelan bolivar. Analysts currently expect Flowserve to earn $7.28 per share for the full year 2010.
In January 2010, Venezuelan bolivar was devalued from 2.15 bolivars to 4.3 bolivars to the US dollar, and the company noted that the currency was designated as hyperinflationary. As a result, Flowserve expects to recognize an anticipated currency re-measurement loss in the first quarter of 2010 of nearly $14 million, which is estimated to be recognized in other income or expense.
The company stated that it is assessing the ongoing impact of currency devaluation on its operations in Venezuela and imports into Venezuelan market. Venezuelan subsidiary's sales in 2009 and total assets after the effect of devaluation represented less than 1% of the company's respective consolidated totals.
Flowserve Pump Division and Flow Solutions Division have been integrated into new Flow Solutions Group, effective January 1, 2010. The company added that the new group will be led by its senior vice president and president Tom Ferguson.
"This integration is designed to drive business growth and provide increased value to our customers, while we continue to focus on operational excellence and cost efficiency," Blinn added.
At December 31, 2009, Flowserve's backlog was approximately $2.4 billion as compared to $2.8 billion in the corresponding period last year. The company said it had strong cash flow performance in the 2009 fourth quarter, ending the year with a cash balance of nearly $650 million, exceeding total debt by about $90 million. Flowserve intends to announce its fourth quarter and full year 2009 financial results on February 24, 2010.
FLS is currently trading on the New York Stock Exchange at $93.53 per share, down $1.66 or 1.74%, on a volume of 572,998 shares. In the past 52-week period, the stock has been trading in a range of $43.23 to $108.85.
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