Yesterday, we announced our 2016 first quarter financial results. As part of my overview on the earnings conference call earlier today, I mentioned that the recent developments in crude oil prices are generally a positive development for our markets. However, near-term macro market uncertainties continue to impact our customers’ spending patterns, particularly as it relates to decisions concerning capital investments. The good news is that we continue to expect the longer term fundamentals in our served industries to remain strong. Population growth, urbanization trends and the resulting demand for energy of all types support a solid growth forecast and give us confidence that Flowserve is serving and targeting the right markets now and into the future.
I am also encouraged by the improved aftermarket activity we saw toward the end of the first quarter and the positive impact from the efforts of our sales and distribution teams to increase our run-rate business with our customers.
The following are highlights from our 2016 first quarter results:
First Quarter 2016 Highlights
• Adjusted Earnings Per Share (EPS) was $0.39
o Includes approximately $13.1 million, or $0.07 per share of distinct Selling, General & Administrative (SG&A) expenses, primarily related to accelerated non-cash accruals related to modifications in new long-term incentive plan grants, and approximately $0.03 per share of negative currency translation
o Excludes $0.10 per share of adjusted items
• Sales were $947 million, down 6.6%, or 2.1% on a constant currency basis
o Original equipment sales were $525 million, down 3.2% on a constant currency basis
o Aftermarket sales were $424 million, down 0.7% on a constant currency basis
• Total Bookings were $922 million, down 7.8% on a constant currency basis
o Aftermarket bookings were $447 million, up 0.6% on a constant currency basis
• Backlog at March 31, 2016 was $2.19 billion, up 0.8% versus year-end 2015
As we continue to navigate the current market conditions, I also want to update you on some key points regarding our transformational realignment program that were discussed in the earnings announcement.
• To simplify discussions on our realignment and manufacturing optimization efforts and our SIHI realignment effort, we are now referring to this as a single initiative. We continue to expect to generate $230 million in annualized cost reductions once complete at the end of 2017.
• During the first quarter, we achieved approximately $16 million of realignment savings compared to our previous year-to-date cost structure.
• We remain on track for the planned full year 2016 savings of $125 million.
We know many of you have either been impacted by realignment or have colleagues who have been impacted. These decisions are very difficult. While realignment activities may be hard to understand and accept, we believe these actions are necessary to sustain our industry leadership in the years to come. We will continue to keep you informed as we move forward with our actions.
Thanks to each and every associate for the role you play in serving our customers and helping us position Flowserve for the future.