Flowserve (FLS) shares ended the last trading session 7.3% higher at $52.14. The jump came on an impressive volume with a higher-than-average number of shares changing hands in the session. This compares to the stock's 1.2% loss over the past four weeks. Flowserve's rally is largely driven by optimism over its strong momentum in the Flowserve Pump Division and Flow Control Division segments. Also, the acquisition of the intellectual property and in-process R&D related to cryogenic liquefied natural gas (LNG ...

Investors in Flowserve Corporation (FLS) need to pay close attention to the stock based on moves in the options market lately. That is because the Oct 18, 2024 $25.00 Call had some of the highest implied volatility of all equity options today. What is Implied Volatility? Implied volatility shows how much movement the market is expecting in the future. Options with high levels of implied volatility suggest that investors in the underlying stocks are expecting a big move in one direction or the other. It coul ...

Flowserve Corporation (FLS) stands to benefit from strength across its businesses, focus on operational excellence and solid liquidity position. The company remains focused on investing in growth opportunities and strengthening its long-term market position. FLS, which has a market capitalization of $6.5 billion, currently carries a Zacks Rank #2 (Buy). Let's delve into the factors that have been aiding the firm for a while now. End-Market Strength: The company is witnessing several positive trends in its k ...

Acquisition Overview - Flowserve Corporation has signed a definitive agreement to acquire MOGAS Industries for $290 million in cash, with a potential earnout of $15 million [1] - The acquisition will be funded through cash and available debt financing [1] Company Profile - MOGAS Industries, based in Houston, TX, specializes in mission-critical severe service valves and related aftermarket services [2] - The company serves various end markets, including power, mining, and process industries, with a global presence in regions such as Europe, Canada, South America, Australia, China, India, and the Middle East [2] Strategic Rationale - The acquisition aligns with Flowserve's strategy to strengthen its business and product portfolio [3] - MOGAS will be integrated into Flowserve's Flow Control Division, enhancing its offerings in valves and valve automation products [3][4] - The addition of MOGAS' differentiated valve products and technical expertise will bolster Flowserve's position in mining, mineral extraction, and process industries [4] Growth Potential - The acquisition is expected to augment Flowserve's existing valve and automation product portfolio and accelerate its 3D growth strategy [5] - It will enhance Flowserve's direct exposure to mining and mineral extraction, improve aftermarket potential, and generate revenue growth synergies [5] Transaction Timeline - The transaction is anticipated to be completed in the fourth quarter of 2024, pending customary closing conditions [6] - It is projected to be accretive to Flowserve's adjusted earnings per share in the first full year post-closing [6] Current Business Performance - Flowserve is experiencing strong momentum in its Pump Division and Flow Control Division segments, with revenues in the Pump Division up 6.1% year over year in the second quarter [7] - The Flow Control Division's revenues increased by 9.4% year over year, driven by original equipment sales growth in multiple regions [8] - However, the company faces challenges with rising costs, as its cost of sales increased by 4.4% year over year to $790.8 million in the second quarter, with a 16.1% increase in 2023 [8] Competitive Landscape - Flowserve operates in a highly competitive market for pumps and valves, facing competition from established companies like Crane Co., Emerson Electric Co., and ITT Inc. [9]

Group 1: Company Performance - Flowserve Corporation (FLS) is experiencing strong momentum in its Pump Division and Flow Control Division, with revenues in the Pump Division up 6.1% year over year in the second quarter [1] - The Flow Control Division's performance is supported by a 9.4% year-over-year increase in revenues, driven by original equipment sales in various regions including the Middle East, North America, Asia Pacific, and Europe [2] - The company's booking levels are being driven by strength in several end markets and the implementation of the Diversify, Decarbonize, and Digitize (3D) strategy, which aims to expand its presence in diverse end markets [3] Group 2: Market Trends and Opportunities - Flowserve is witnessing improved customer orders due to large project wins in the oil and gas market, with notable strength in the chemical sector, particularly from the Emerald greenfield petrochemical project in Saudi Arabia [4] - The company anticipates significant chemical capacity additions in the Middle East and a modest improvement in global chemical demand in the upcoming quarters [4] - The power generation market is also seeing solid booking levels, driven by growth in data center capacity and increasing activity in Artificial Intelligence [4] Group 3: Strategic Acquisitions - Flowserve aims to expand its market share and product offerings through strategic acquisitions, including the acquisition of intellectual property and in-process R&D related to cryogenic liquefied natural gas (LNG) submerged pump technology from NexGen Cryogenic Solutions Inc. in July 2024 [5] - The addition of NexGen's pump and cold energy recovery turbine technology will enhance Flowserve's LNG product portfolio and complement its existing offerings [6] Group 4: Financial Challenges - The company faces challenges with escalating costs, as the cost of sales increased 4.4% year over year to 68.4% of sales in the second quarter of 2024, primarily due to higher raw material costs [6] - Research and development costs are also rising, contributing to a 3.7% year-over-year increase in selling, general, and administrative expenses, which reached 20.6% of sales [7] - Flowserve's financial performance is subject to risks associated with foreign currency exchange rates, interest rate fluctuations, and hyperinflation in some foreign countries, which may impact revenue in the future [7]

Flowserve Corporation's (FLS) second-quarter 2024 adjusted earnings (excluding 18 cents from non-recurring items) of 73 cents per share beat the Zacks Consensus Estimate of 63 cents. The bottom line increased 40.4% year over year. Results primarily benefited from higher revenues, partially offset by an increase in operating costs and expenses. Flowserve's total revenues of $1.16 billion beat the consensus estimate of $1.12 billion. The top line increased 7.1% year over year. Sales increased 7.7% on a consta ...

Financial Data and Key Metrics - Revenue for Q2 2024 was $1.15 billion, a 7% increase year-over-year [5][10] - Adjusted gross margin increased by 200 basis points to 32.3%, and adjusted operating margin increased by 210 basis points to 12.5% [5][10] - Adjusted earnings per share (EPS) increased by over 40% to $0.73 [10] - Bookings reached $1.25 billion, a 12% increase year-over-year and 20% sequential growth, with a book-to-bill ratio of 1.08x [10] - Backlog grew by $70 million sequentially to $2.7 billion [10] Business Line Performance - The aftermarket business achieved record bookings of $614 million, marking the seventh consecutive quarter above $550 million [17][78] - The chemicals market saw $272 million in bookings, a 14% year-over-year increase, driven by a major petrochemical project in Saudi Arabia [46] - Power generation bookings were $153 million, a 34% increase year-over-year, with nuclear activity contributing over $70 million [27] - The mining sector is expected to grow, with current efforts contributing roughly $100 million annually, and plans to expand through organic and inorganic strategies [28] Market Performance - Oil and gas generated the highest dollar growth, with a 22% year-over-year increase, driven by large projects in the Middle East [23] - Middle East bookings grew significantly due to three large projects, while Europe and Asia-Pacific saw slight declines [24] - The project funnel increased by 8% year-over-year, with strong visibility into opportunities in the Middle East and other regions [24] Strategic Direction and Industry Competition - The company is focused on operational and product excellence, aiming for 100-200 basis points of margin improvement by 2027 [12][65] - The 3D strategy (Decarbonization, Diversification, Digitization) represents over 25% of total bookings, with a focus on energy transition and digital solutions [45][48] - The acquisition of in-process R&D for submerged cryogenic pumps in LNG aims to strengthen the company's position in the energy transition market [18][96] Management Commentary on Operating Environment and Future Outlook - Management expressed confidence in achieving 2027 financial targets, with a focus on margin expansion and operational improvements [21][60] - The company expects a stronger second half of 2024, with adjusted EPS guidance raised to $2.60-$2.75, representing a 27% increase year-over-year [29][31] - The macro environment remains favorable, driven by global megatrends such as energy transition, decarbonization, and digitization [48] Other Important Information - The company launched a product excellence program, with early progress expected to show results in late 2024 and 2025 [12][65] - Red Raven, the company's IoT offering, is gaining traction, with 2,250 assets instrumented and positive customer feedback [110][130] - The company is actively managing pricing, with a 4-5% price increase announced at the beginning of the year, and improved project pricing environments [126][127] Q&A Session Summary Question: Gross margin trends and FCD performance [131][143] - The company is focused on operational and product excellence to expand margins, with a target of 150 basis points or more in 2024 [143] - FCD's gross margins are impacted by product mix, but improvements are expected in the second half of the year [162] Question: Aftermarket business sustainability [17][78] - The aftermarket business is expected to remain strong, driven by high utilization rates and pent-up demand, with a focus on improving capture rates [78][118] Question: LNG and cryogenic pump acquisition [96][158] - The acquisition of cryogenic pump technology is expected to generate $50 million in annual revenue by 2026-2027, with potential for additional market share in LNG [96][158] Question: Nuclear and power generation outlook [102][120] - Nuclear power generation is expected to grow, with strong visibility into life extensions and new projects in Europe and North America [102][120] - Power demand is increasing, driven by electrification and data center growth, with a 20% increase in power bookings year-over-year [120][124] Question: Pricing environment [126][127] - The company has improved pricing discipline, with a 4-5% price increase and better project pricing environments [126][127] Question: Red Raven adoption and digital capabilities [110][130] - Red Raven adoption is progressing, with 2,250 assets instrumented and positive customer feedback, leading to repeat orders and increased aftermarket opportunities [110][130]

For the quarter ended June 2024, Flowserve (FLS) reported revenue of $1.16 billion, up 7.1% over the same period last year. EPS came in at $0.73, compared to $0.52 in the year-ago quarter. Here is how Flowserve performed in the just reported quarter in terms of the metrics most widely monitored and projected by Wall Street analysts: Sales- FPD: $810.61 million compared to the $797.94 million average estimate based on four analysts. The reported number represents a change of +5.9% year over year. Sales- FCD: ...

This quarterly report represents an earnings surprise of 15.87%. A quarter ago, it was expected that this company that makes pumps, valves and other parts for the oil and gas industries would post earnings of $0.47 per share when it actually produced earnings of $0.58, delivering a surprise of 23.40%. Flowserve, which belongs to the Zacks Manufacturing - General Industrial industry, posted revenues of $1.16 billion for the quarter ended June 2024, surpassing the Zacks Consensus Estimate by 3.09%. This compa ...

Financial Performance - Total bookings for Q2 2024 reached $1.25 billion, an increase of $135.1 million or 12.2% year-over-year, with a constant currency increase of 13.0%[3] - Reported EPS for Q2 2024 was $0.55, a 41% increase compared to $0.39 in Q2 2023, while adjusted EPS rose to $0.73, up 40% from $0.52[6] - Sales for Q2 2024 were $1.16 billion, reflecting a $76.5 million or 7.1% increase year-over-year, with a constant currency increase of 7.7%[3] - The company reported a net earnings increase to $72.6 million in Q2 2024, compared to $51.2 million in Q2 2023[11] - Flowserve Corporation reported sales of $2,244.4 million for the six months ended June 30, 2024, compared to $2,060.7 million for the same period in 2023, representing an increase of 8.9%[38] - Net earnings for the six months ended June 30, 2024, were $154,367, an increase from $85,151 in the same period of 2023[25] - The diluted earnings per share (EPS) for the six months ended June 30, 2024, was $1.11, compared to $0.59 for the same period in 2023, indicating a significant improvement[39] Bookings and Backlog - Original equipment bookings increased to $632.1 million, up $112.0 million or 21.5%, while aftermarket bookings rose to $614.0 million, an increase of $23.1 million or 3.9%[3] - The backlog at the end of Q2 2024 was $2.7 billion, representing a 2.8% sequential increase, with a book-to-bill ratio of 1.08x[7] - Flowserve Pumps Division reported bookings of $1,602.2 million for the six months ended June 30, 2024, an increase of 7.7% compared to $1,487.8 million for the same period in 2023[41] - Flow Control Division bookings were $689.9 million, a slight decrease of 0.2% from $691.6 million in the same period last year[41] Margins and Profitability - Adjusted gross margin improved to 32.3%, up 200 basis points from the prior year, and adjusted operating margin increased to 12.5%, up 210 basis points[6] - Reported gross profit for the six months ended June 30, 2024, was $508,153, representing 32.1% of sales, compared to $448,241 and 30.6% for the same period in 2023[21] - Gross profit for the six months ended June 30, 2024, was $705.1 million, up from $619.6 million in the prior year, reflecting a gross profit margin of 31.4%[39] - Gross profit for the Flowserve Pumps Division increased to $508.2 million, resulting in a gross profit margin of 32.1%, compared to 30.6% in the prior year[41] - Gross profit for the Flow Control Division was $199.0 million, with a gross profit margin of 29.8%, compared to 28.9% in the prior year[41] Operational Efficiency - Flowserve's operational excellence program and organizational design changes contributed to significant improvements in bookings, revenue, and margins[4] - Overall, the company is focused on expanding its market presence and enhancing operational efficiency through strategic initiatives and product development[41] Guidance and Future Outlook - Flowserve raised its full-year 2024 adjusted EPS guidance to a range of $2.60 to $2.75[6] - Adjusted earnings per share (EPS) guidance for 2024 has been raised to a range of $2.60 to $2.75, up from the previous range of $2.50 to $2.70[29] - The company reaffirmed its revenue growth target range of 4.0% to 6.0% for the full year[29] - Capital expenditures for 2024 are reaffirmed at $75 million to $85 million[29] Segment Performance - The Flowserve Pumps Division achieved bookings of $898.8 million for the three months ended June 30, 2024, compared to $760.0 million in the prior year, an increase of 18.3%[34] - The Flow Control Division reported sales of $347.7 million for the three months ended June 30, 2024, up from $317.7 million in the same period of 2023, representing a growth of 9.5%[34] - Segment operating income for the Flowserve Pumps Division was $131.0 million, or 16.1% of sales, for the three months ended June 30, 2024, compared to $98.0 million, or 12.8% of sales, in the prior year[34] - Segment operating income for the Flowserve Pumps Division was $241.9 million, representing 15.3% of sales, up from 12.1% in the previous year[41] - Segment operating income for the Flow Control Division was $67.0 million, which is 10.0% of sales, up from 9.1% in the previous year[41] Cash and Assets - Total current assets increased to $2,815,815 as of June 30, 2024, compared to $2,703,777 at the end of 2023[24] - Cash and cash equivalents at the end of the period were $515,083, down from $545,678 at the beginning of the period[25] - Total liabilities and equity as of June 30, 2024, were $5,164,484, compared to $5,108,719 at the end of 2023[24] Losses and Charges - The company reported a loss on business sale of $12,981 for the six months ended June 30, 2024[25] - The company incurred a loss on the sale of businesses amounting to $12.98 million for the six months ended June 30, 2024[38] - The company experienced a loss on the sale of business amounting to $13.0 million in the Flow Control Division[41] - The company reported realignment charges of $13.2 million for the six months ended June 30, 2024, which included non-cash charges of $20.0 million[40]