Flowserve Corporation, a leading provider of flow control products and services for the global infrastructure markets, has announced its financial results for the 2013 third quarter.

Highlights of 2013 Third Quarter(all comparisons versus prior year quarter, unless otherwise noted):

Fully diluted EPS of $0.90, up 30.4% compared to $0.69 per share

                        Fully diluted EPS up approximately 22% excluding below the line FX currency effects year over year

Bookings of $1.23 billion, up 3.7%, or 3.4% on a constant currency basis

                        Original equipment bookings of $750.3m, up 5.6%, or 4.4% on a constant currency basis, and up sequentially 3.6%

                        Aftermarket bookings of $479.5m, up 0.9%, or 1.9% on a constant currency basis

Sales of $1.23bn, up 5.4%, or 6.4% on a constant currency basis

                        Aftermarket sales of $464.7m, up 1.4%, or 2.5% on a constant currency basis

Gross profit increased $33.1m to $422.7m, up 8.5%

Gross margin improved 100 basis points to 34.4%

SG&A spend essentially flat, and as a percentage of sales decreased 70 basis points to 18.8%

Operating income increased $27.7m to $193.4m, up 16.7%

Operating margin of 15.7% increased 150 basis points

“We are pleased with the progress and momentum demonstrated thus far in 2013, evidenced by these strong third quarter results,” said Mark Blinn, Flowserve’s president and chief executive officer. 

“For the third quarter of 2013, our single-digit revenue increase produced solid operating leverage and incremental margins.  These improvements, when combined with the share count reduction, delivered EPS growth over 30%,” commented Mike Taff, Flowserve’s senior vice president and chief financial officer.  “Focused cost control yielded impressive SG&A leverage during the 2013 third quarter, as compared to 2012, driving SG&A as a percent of sales to 18.8%, as each segment delivered a reduction in absolute dollar SG&A spend.”

“Even with our strong third quarter financial results, we continue to address opportunities to improve our performance. Initiatives to improve our working capital are an example and are gaining traction. In the 2013 third quarter, we realised solid operating cash flow improvement both year-over-year and sequentially.  We also showed progress in a five-day reduction in DSO compared to prior year, which builds on the three day improvement in the second quarter.  With meaningful “legacy” shipments, we also saw significant improvement in our past due backlog, although our inventory turns were essentially flat.  Overall, this progress validates that our focus is well-placed and that opportunities remain available.”

“As we pursue our long-term working capital and cash flow goals, we remain strategically focused on deploying cash to the most accretive long-term alternatives, including organic and acquisitive investments or by returning excess capital to our shareholders, all while maintaining a solid balance sheet.  Through the first nine months of 2013, Flowserve returned approximately $427m in share repurchases and dividends. Going forward, we will remain faithful to this disciplined approach to capital deployment.”

“We are encouraged by the year-to-date results we have delivered with a more level-loaded business, but we still anticipate the fourth quarter to be the pinnacle of the full year.  As such, we have increased the lower-end of our prior guidance range, and now expect 2013 EPS between $3.33 and $3.53.”