Flowserve Stock

Flowserve Corporation (Flowserve) operates as a manufacturer and aftermarket service provider of comprehensive flow control systems worldwide.

The company develops and manufactures precision-engineered flow control equipment integral to the movement, control and protection of the flow of materials in its customers’ critical processes. The company’s product portfolio of pumps, valves, seals, automation and aftermarket services supports global infrastructure industries, including oil and gas, chemical, power generation (including nuclear, fossil and renewable) and water management, as well as certain general industrial markets where its products and services add value. Through its manufacturing platform and global network of Quick Response Centers (QRCs), the company offers a broad array of aftermarket equipment services, such as installation, advanced diagnostics, repair and retrofitting for global infrastructure markets.

Strategies

Flowserve has a clear growth strategy as the company transforms its operations to better meet its customers' needs. The company seeks to be recognized by its customers as the most trusted brand of flow control technology in terms of reliability and quality. The company maintains a strategic plan that takes a balanced approach to integrating both short-term and long-term initiatives and accelerates growth through three key areas: diversification, decarbonization, and digitization (the 3D Strategy). With its 3D Strategy the company hopes to utilize its leadership in the flow control industry, and through its commitment to research and development, create innovative products and solutions, which address the emerging climate and environmental issues that its customers face.

Primary Industries

The company sells its products and services to approximately 10,000 companies, including some of the world’s leading engineering, procurement and construction firms (EPC), original equipment manufacturers, distributors and end users. The company’s products and services are used in several distinct industries having a broad geographic reach.

Demand

Demand for most of the company’s products depends on the level of new capital investment, as well as planned and unplanned maintenance expenditures by its customers.

Sales Channels

Sales to EPC firms and original equipment manufacturers are typically for large project orders and critical applications, as are certain sales to distributors. Project orders are typically procured for customers either directly from the company or indirectly through contractors for new construction projects or facility enhancement projects that are longer-cycle projects and can take up to two years.

In contrast to large project orders, the quick turnaround business, which the company also refers to as short-cycle, is defined as orders that are received from the customer (booked) and shipped generally within six months of receipt. Each of the company’s two business segments generates certain levels of this type of short-cycle business.

The company uses its manufacturing platform and global network of QRCs to offer a broad array of aftermarket equipment services, such as installation, advanced diagnostics, repair and retrofitting.

Segments

The company operates through two segments, Flowserve Pumps Division and Flow Control Division.

Flowserve Pumps Division

The company’s largest business segment is the Flowserve Pumps Division (FPD), through which it designs, manufactures, pretests, distributes and services specialty and highly-engineered custom and pre-configured pumps and pump systems, mechanical seals, auxiliary systems, replacement parts and upgrades and related aftermarket services. FPD products and services are primarily used by companies that operate in the oil and gas, chemical, power generation, water management and general industries. The company markets its pump and mechanical seal products through its global sales force and its regional QRCs and service and repair centers or through independent distributors and sales representatives. A portion of its mechanical seal products are sold directly to other original equipment manufacturers for incorporation into their rotating equipment requiring mechanical seals.

The company’s pump products are manufactured in a wide range of metal alloys and with a variety of configurations to reliably meet the operating requirements of its customers. Mechanical seals are critical to the reliable operation of rotating equipment in that they prevent leakage and emissions of hazardous substances from the rotating equipment and reduce shaft wear on the equipment caused by the use of non-mechanical seals. The company also manufactures a gas-lubricated mechanical seal that is used in high-speed compressors for gas pipelines and in the oil and gas production and process markets.

The company also conducts business through strategic foreign joint ventures. The company has five unconsolidated joint ventures that are located in Chile, India, Saudi Arabia, South Korea and the United Arab Emirates, where a portion of its products are manufactured, assembled or serviced in these territories.

FPD Products

The company manufactures more than 227 different active types of pumps, including American Petroleum Institute (API) process pumps used in many downstream refining and petrochemical processing systems, and single case multistage axially split heavy duty pumps often used for high pressure hydrocarbon pipeline transmission. In addition, the company manufactures double case diffuser style barrel pumps for medium duty applications in refining and petrochemical applications and submersible pump for deep well pumping in irrigation and municipal water supply service. The company also manufactures approximately 193 different models of mechanical seals and sealing systems. The company’s pump products are sold under globally recognized brands in some cases dating back as far as 230 years ago, including Worthington, SIHI, Durco and Innomag.

FPD Services

The company also provides engineered aftermarket services through its global network of 131 QRCs, some of which are co-located in manufacturing facilities, in 45 countries. The company’s FPD service personnel provide a comprehensive set of equipment services for flow management control systems, including installation, commissioning services, seal systems spare parts, repairs, advanced diagnostics, re-rate and upgrade solutions and retrofit programs, machining and comprehensive asset management solutions. The company provides asset management services and condition monitoring for rotating equipment through special contracts with many of its customers that reduce maintenance costs.

FPD Customers

The company’s customer mix is diversified and includes leading EPC firms, major national and international companies, equipment end users in its served markets, other original equipment manufacturers, distributors and end users. The company’s sales mix of original equipment products and aftermarket products and services diversifies its business and helps mitigate the impact of normal economic cycles on its business. The company’s sales are diversified among several industries, including oil and gas, chemical, power generation, water management and general industries.

FPD Competition

Some of the company’s largest industry competitors include: Sulzer Pumps; Ebara Corp.; Eagle Burgmann, which is a joint venture of two traditional global seal manufacturers, John Crane Inc., a unit of Smiths Group Plc; Weir Group Plc.; ITT Industries; and KSB SE & Co. KGaA.

Flow Control Division

FCD designs, manufactures, distributes and services a broad portfolio of flow control solutions, including engineered and industrial valve and automation systems, isolation and control valves, actuation, controls and related equipment. FCD leverages its experience and application know-how by offering a complete menu of engineering and project management services to complement its expansive product portfolio. FCD products are used to control, direct and manage the flow of liquids, gases and multi-phase fluids, and are a critical part of any flow control system. The company’s valve and automation products are based on flexible architecture that can be customized or engineered to perform specific functions within each customer’s unique flow control environment or objective.

The company’s flow control products are primarily used by companies operating in the chemical, power generation, oil and gas, water management and general industries. The company’s products are manufactured in 19 principal manufacturing facilities, five of which are located in the U.S., eight located in Europe, five located in Asia Pacific and one located in Latin America. The company delivers its services through its global network of 25 QRCs worldwide, including five sites in Europe and Africa, nine in North America, three in the Middle East, six in Asia Pacific and two in Latin America, including those co-located in manufacturing facilities.

FCD Products

The company’s valve, automation and controls product and solutions portfolio represent one of the most comprehensive in the flow control industry. The company’s products are used in a wide variety of applications, from general service to the most severe and demanding services, including those involving high levels of corrosion, extreme temperatures and/or pressures, zero fugitive emissions and emergency shutdown.

The company’s smart valve and diagnostic technologies integrate sensors, microprocessor controls and software into high performance integrated control valves, digital positioners and switch boxes for automated on/off valve assemblies and electric actuators. These technologies permit real-time system analysis, system warnings and remote indication of asset health. These technologies have been developed in response to the growing demand for reduced maintenance, improved process control efficiency and digital communications at the plant level. The company is committed to further enhancing the quality of its product portfolio by continuing to upgrade its existing offerings with cutting-edge technologies.

The company’s valve actuation products encompass a broad range of pneumatic, electric, hydraulic and stored energy actuation designs to take advantage of whatever power source the customer has available, including utilizing the process fluid flowing through the pipeline as a source of power to actuate the valve. The company’s actuation products also cover one of the widest ranges of output torques in the industry, providing the ability to automate anything from the smallest linear globe valve to the largest multi-turn gate valve. Most importantly, FCD combines best-in-class mechanical designs with the latest in controls and communication technologies in order to provide complete integrated automation solutions that optimize flow control performance and enhance digital end-user experience.

The company manufactures approximately 30 different active types of products, including valves, actuators, positioners, and switches. The company’s products are sold under globally recognized brands, including Valtek, Argus, Worcester, Limitorque and Durco.

FCD Services

The company’s service personnel provide comprehensive equipment maintenance services for flow control systems, including advanced diagnostics, repair, installation, commissioning, retrofit programs and field machining capabilities. A large portion of the company’s service work is performed on a quick response basis, which includes 24-hour service in all of its major markets. The company also provides in-house repair and return manufacturing services worldwide through its manufacturing facilities.

During 2022, the company added the service of condition monitoring for its control valves, which is enabled by RedRaven, its proprietary IIoT solution, and digital positioners.

FCD Customers

The company’s customer mix spans several end markets, including the chemical, power generation, oil and gas, water management, pulp and paper, mining and other general industries. The company is especially active in providing solutions for emerging applications that supports sustainability (such as concentrated solar power, hydrogen economy, carbon capture, desalination, etc.) or increases energy productivity (such as LNG), Ethylene cracking and Hydro cracking, etc.).

The company’s product offerings include original equipment, aftermarket parts, and a portfolio of services and solutions. Contracts and transactions are conducted through a variety of channels depending on customer requirements, including direct end-users, EPC firms, distributors and other original equipment manufacturers.

Seasonality

The company’s financial results are seasonal, as it typically experiences lower earnings in the first quarter of the year, with lower sales, coupled with fixed operating expenses, impacting its earnings and cash flows. The company typically has higher sales, earnings and cash flows in the second half of the year (year ended December 31, 2023).

Selling and Distribution

The company primarily distributes its products through direct sales by employees assigned to specific regions, industries or products. In addition, the company uses distributors and sales representatives to supplement its direct sales force where it is more economically efficient. The company generates a majority of its sales leads through existing relationships with vendors, customers and prospects or through referrals.

Research and Development

The company’s research and development costs were $48.7 million in 2023.

History

Flowserve Corporation was founded in 1790. The company was incorporated in the state of New York in 1912.