Flowserve Corporation manufactures and services flow control equipment such as pumps, valves, and seals. It pursues industry and geographic diversity to hedge against downturns in specific industries or regions. In Q1 2009, Flowserve reported record earnings per share and sales that were up year-over-year despite currency effects, demonstrating strong performance despite the economic downturn.

1. Flowserve Corporation (FLS)Industrials GroupAndrew Yoon

2. Business DescriptionBasic Business DescriptionFlowserve 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). The company pursues a strategy of pursues a strategy of industry diversity and geographic breadth in order to hedge against industry-specific or region-specific downturns. Sales are generally direct through employees assigned to specific regions and industries; majority of sales are through existing relationships or referrals.Market Cap = 4.09B (mid-cap)

3. 2008 P/E = 9.34 (Diversified Machinery industry average of 16.7)

4. 2008 EPS = 7.82FLS operates in three sectors: Flow Control Division

5. Flowserve Pump Division

6. Flow Solutions DivisionQ2 2009 Earnings will be announced 7/29/09.

7. Business DescriptionPrice Chart52 Week Range: 37.18 – 145.45Current Price: 73.98

8. Revenue BreakdownSales by Geographic Region(amounts in thousands)North America 1,565,715.55 (35%)Europe 1,252,572.44 (28%)Middle East and Africa 492,082.03 (11%)Asia Pacific 805,225.14 (18%)Latin America 357,877.84 (8%)

9. Revenue BreakdownBookings by IndustryOil and Gas 39%Chemical 17%Power Generation 15%Water 6% General Industries* 23%* General industries includes the following: mining and ore processing, pharmaceuticals, pulp, paper, food and beverage, and other small enterprises.

10. Recent NewsRecent DevelopmentsAdded to the S&P 500 in September 2008 (replaces WaMu).

11. 2007: Joint venture with Changsa Pump Works in China, gives access to 2.7 million square feet of space, access to cheap labor.

12. 2008: 10-year supplier agreement with Saudi Aramco (world’s largest oil company, state-owned national oil company of Saudi Arabia) to supply entire range of products and services.

13. 2008: Exclusive relationship with Petrobras (Brazilian oil exploration and refining company – world’s 7th largest oil company). Investing more than $15 million for manufacturing plant in Brazil to support the recent large oil discoveries there. FLS has already received $18.4 million in pump orders from the company.

14. April 2009: FLS acquires desalination (remove salt and other minerals from water) energy-recovery system Calder AG, which generated 2008 revenues of $23 million. Terms of the deal were not discussed. FLS has already received more than $3 million in deals for Calder products.Business Segments1) Flowserve Pump Division (55% of sales, 50% of operating income) 2008 Bookings (in millions): 3040.3

15. 2008 Sales (in millions): 2514.8

16. 2008 Operating Income (in millions): 391.0

17. Designs, manufactures, distributes, and services pumps, pump systems, replacement parts, and other related equipment.

18. Marketing through worldwide sales force, regional services and repair centers, independent sales representatives. 30 plants worldwide (8 in Americas, 12 in Europe, 10 in Latin America and Asia).

19. Manufactures more than 150 active pump models.

20. FLS is the world’s largest supplier of pumps to oil and gas, chemical, and power generation industries.