2. Business Overview Business Overview (Week 1 Slides) Flowserve Corporation (FLS) is a manufacturer and service provider of flow control systems. The company develops and builds flow control equipment such as pumps, valves, and seals, and provides installation, repair, and retrofitting services for its products through its quick response centers (QRCs) of which there are more than 150 total worldwide.
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4. 2002: Acquired Invensys plc’s Flow Control Division (IFC) for $535 million, suffered large integration costs due to the acquisition.
5. Underwent major restructuring program: reduce costs and eliminate excess capacity – closed 28 facilities, removed about 700 positions (2002-2003).
6. Installed new CEO Lewis Kling in 2005, who focused on increasing operating efficiency by divesting unprofitable divisions, reducing debt (net income suffered before due to large interest expenses, approximately half of operating income), improving company’s image and establishing a vision for the future.
7. Replaced other major positions around same time: CFO, CCO, CMO, COO, etc.
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10. Goals of 2009 restructuring initiative: cut unproductive manufacturing facilities and personnel and reduce SG&A expenses.
11. Expect to incur $40 million ($0.50/share) in fees.
12. Currently spent $0.38/share in first two quarters of 2009, restructuring almost complete.
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14. However, competitor DRC derives 45% of revenue from aftermarket servicing, with 33 service centers in 17 countries.
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17. Power generation industry expected to grow dramatically over time, especially in developing countries such as China and India. Alternative energy will become more popular in coming years; company sees alternative energy as important part of its growth.
