Flowserve Corporation today reported its financial results for the fourth quarter and full year ended December 31, 2016.
Fourth Quarter 2016 Highlights
- Reported Earnings Per Share (EPS) of $0.50 includes $0.22 per share of adjusted items, as detailed below, and approximately $0.03 per share of negative currency translation
- Adjusted EPS[1] was $0.72 excluding the adjusted items but including the negative currency translation
- Adjusted items include $0.20 per share of realignment expenses and $0.02 of purchase price accounting expenses and Brazil inventory write-down
- Sales were $1.07 billion, down 14.7% on a constant currency basis
- Aftermarket sales were $502 million in the fourth quarter, down 8.7% on a constant currency basis
- Total bookings were $908 million, down 4.2% on a constant currency basis
- Aftermarket bookings were $446 million, or 49% of total bookings, flat with prior year on a constant currency basis
- Reported gross and operating margins of 31.0% and 10.0% increased 10 basis points and decreased 60 basis points, respectively
- Adjusted gross and operating margins[2] were 33.2% and 13.2% declined 20 basis points and 130 basis points, respectively
Full Year 2016 and Other Highlights
- Reported EPS of $1.11 includes $1.08 per share of adjusted items, as detailed below, and approximately $0.09 per share of negative currency translation
- Adjusted EPS[1] was $2.19 excluding the adjusted items but including the negative currency translation
- Adjusted items include $0.58 per share of realignment expenses, $0.47 per share to reserve for certain Latin American non-cash exposures, $0.05 of integration and purchase price accounting expenses and $0.02 of below-the-line foreign exchange benefit
- Full year sales were $3.99 billion, down 10.0% on a constant currency basis
- Aftermarket sales were $1.80 billion, down 5.9% on a constant currency basis
- Full year bookings were $3.76 billion, representing a full year book-to-bill ratio of 94%
- Full year aftermarket bookings were $1.82 billion, or 49% of total bookings, flat with prior year on a constant currency basis
- Achieved approximately $93 million of full year incremental cost savings from the realignment program, including $12 million during the 2016 fourth quarter
- Backlog at December 31, 2016 was $1.90 billion, down 12.7% versus prior year
“Flowserve delivered fourth quarter and full year 2016 results in-line with our expectations, supported by continued progress on our realignment program,” said Mark Blinn, Flowserve’s President and Chief Executive Officer. “Our focus on disciplined cost management and efficiency enhancing initiatives helped mitigate what continues to be a challenging industry environment. We were pleased to have experienced another quarter of generally stable crude prices and are encouraged by the general increased sense of optimism about the macroeconomic environment. These factors, however, have yet to translate into increased bookings levels, as customers remained cautious in new project awards and maintenance activities during the fourth quarter, and in their acceptance of completed project work. Importantly, for both the fourth quarter and for the full year, our aftermarket bookings stabilized relative to prior year levels, which is a positive development for Flowserve. We continue to achieve meaningful cost savings from our transformational realignment program and look forward to completing the vast majority of the $400 million program in 2017.
“While we are cautiously optimistic that certain energy and industrial customers’ budgets may improve off current low levels, we are not anticipating a recovery in our 2017 planning due to continued geopolitical, end market and macro uncertainties. Accordingly, our near term focus remains on controlling what we can by improving our speed to market, enhancing our project execution, and completing our strategic realignment program. We believe that these initiatives will position the company successfully through cycles regardless of market conditions. We will remain disciplined in our approach to the work we pursue, and are confident that our actions will drive a leaner and more efficient operating platform. Flowserve remains well positioned to drive value for our shareholders over the long term.”
