Flowserve Corporation · NYSE:FLS
Flowserve — Non-Deal Roadshow (October 2008)
40 slides from Flowserve's roadshow presentation, Oct 6, 2008
Slide 1: Flowserve Corporation Ladenburg Thalmann Non-Deal Roadshow
Flowserve Corporation Ladenburg Thalman Non-Deal Roadshow October 6-9, 2008 Lew Kling, President and Chief Executive Officer Mark Blinn, SVP, CFO and Latin America Operations Tom Pajonas, President, Flow Control Division Zac Nagle, VP Investor Relations
Slide 2: Special Note: Safe Harbor Statement
Special Note SAFE HARBOR STATEMENT: This presentation includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, which are made pursuant to the safe harbor provisions of the Private Securities Litigation
Slide 3: Pumps - Valves - Seals: A Broad Set of Product Capabilities
Pumps - Valves - Seals A Broad Set of Product Capabilities Core Industries Oil / Gas Chemical Water General Industry Power Quick Response Centers (QRCs) Aftermarket Support Services Localized Support Lower Total Cost of Ownership A Leading Portfolio of Products, Solutions & Services Industry Leading
Slide 4: Global Presence
GLOBAL PRESENCE we on Ameren atm ameres te nt “ne enna na FLOWSERVE 4g ee Ge Oe OS Experience in Motion Flower Proprietary & Conte
Slide 5: History Tells Us: Positive Infrastructure Cycles
History Tells Us .... During Positive Infrastructure Cycles, Many Companies Do Well ... History also tells us, during Flat or Negative Cycles, there still has been Significant Infrastructure and Aftermarket Business ... But ... Only Strong Companies Continue to Do Well! 1997 1998 1999 2000 2001 2002
Slide 6: Continued Good Opportunities in the Infrastructure Market Place
Continued Good Opportunities in the Infrastructure Market Place "The Indian government has revised its target of additional power generation during the Eleventh Five- Year Plan period (2007-12) to 90,000 megawatts (MW) from the previous figure of 78,577 MW..." [Industrial Info Resources (IIR) Sept 2
Slide 7: What Drives Infrastructure Spending?
What Drives Infrastructure Spending? Population Growth Industrialization Rural to Urban Move Middle Class Rise Aging Infrastructure Independence Refurbishment Efficiency Upgrade Optimization Diversification Sustainability Environmental Nationalism Infrastructure Investments Are Driven by Many Factor
Slide 8: Mature & Developing Markets are Different
Mature & Developing Markets are Different Governments Often Stand Behind Financing in Developing Markets INVESTMENT DRIVERS: Profit & Return on Investment Regulatory / Environmental Sustainability Security & Independence Efficiency / Optimization INVESTMENT DRIVERS: Government Mandates Localization
Slide 9: Worldwide Urban Population Growth
As an Example....Lets Look at Worldwide Urban Population Growth Developing Markets' Urban Population Growth Creates Infrastructure Needs... Forecasted Yearly Average Growth ['07-'10] Mature Markets - 3.2M per year Developing Markets - 48.7M per year Developing Markets Growth Driven by: Urban Expansi
Slide 10: Demographics & Other Drivers Yield Growth in Oil & Electricity Usage
1990 2000 2007 1990 2000 2007 2010 (Fcst) Demographics & Other Drivers Yield Growth in Oil & Electricity Usage Petroleum Usage (Million Barrels/Day) Petroleum & Electricity Usage in Developing Markets is forecasted to exceed the Mature Markets by 2010 The use of Alternative Energy Sources will conti
Slide 11: The Oil & Gas Industry Continues to Forecast Opportunity on a Global Scale
'97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 >'07 Mature Markets 6.2 5.3 5.5 5.5 6.3 6.6 7.1 7.8 8.9 10.5 12.1 0 Developing Markets 2.5 2.6 2.3 2.4 2.9 3 3.4 4 4.8 6 7.2 Total 8.7 7.9 7.8 7.9 9.1 9.6 10.5 11.8 13.7 16.5 19.3 The Oil & Gas Industry Continues to Forecast Opportunity on a Global Scale F
Slide 12: Impact from the Price for Oil
Impact from the Price for Oil Optimally Priced Oil, Not High Priced Oil, Drives Diversified Investments Optimally Priced Oil
Slide 13: The Power Industry is Projected to Remain in a Growth Stage
Oil & Gas Power Chem/Pharm Water GI Other 2007 36 16 20 7 8 13 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 >'07 Mature Markets 3.2 2.7 2.9 3.4 4.1 3.4 3.3 3.5 3.8 4.1 4.5 0 Developing Markets 1.2 1.3 1.4 1.6 1.5 1.6 1.8 2.3 2.7 3.1 3.4 Total 4.4 4 4.3 5 5.6 5 5.1 5.8 6.5 7.2 7.9 The Power Industry i
Slide 14: The Chemical Industry Continues to Show Strength in Developing Markets
Oil & Gas Power Chem/Pharm Water GI Other 2007 36 16 20 7 8 13 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 >'07 Mature Markets 6.5 5.8 5.3 6 6 6.3 6.3 6.6 7.2 7.9 8.7 0 Developing Markets 1.6 1.5 1.6 1.5 1.7 1.8 2.3 2.9 3.5 4.1 4.6 Total 8.1 7.3 6.9 7.5 7.7 8.1 8.6 9.5 10.7 12 13.3 The Chemical Indu
Slide 15: Infrastructure Investment in Water Continues
Oil & Gas Power Chem/Pharm Water GI Other 2007 36 16 20 7 8 13 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 >'07 Mature Markets 8.7 8.9 9.5 10 11.1 10.9 10.8 10.9 11.3 12 13.2 0 Developing Markets 1.2 1.2 1.2 1.3 1.4 1.5 1.9 2.3 2.6 3 3.4 Total 9.9 10.1 10.7 11.3 12.5 12.4 12.7 13.2 13.9 15 16.6 Infr
Slide 16: Mining and Ore Processing is Forecasting Continued Strength
Oil & Gas Power Chem/Pharm Water GI Other 2007 36 16 20 7 8 13 Mining and Ore Processing is Forecasting Continued Strength Globally Flowserve 1H08 Bookings Split 8% Market Perspective - General Industries Industry Market in $Billions for Pumps, Valves & Seals Mature Markets Developing Markets Recent
Slide 17: Markets May Seem Uncertain But They Don't Go Away
Markets May Seem Uncertain or May Even Slow Down ...... 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Mature Markets 30.8 28.4 28.8 30.9 33.8 33.6 34.1 35.6 38.5 42.3 47.3 Developing Markets 7.9 8.3 8 8.4 9.3 9.7 11.6 14.2 17.3 20.3 23 Chart Source: European Industrial Forecast adjusted to
Slide 18: Flowserve
FLOWSERVE =e “we 3S in
Slide 19: Everything Starts With Our Customers
Everything Starts With Our Customers Product is Delivered On-Time CUSTOMER REQUIREMENTS Product Performs as Expected Product is Supported Efficiency and Optimization Positive Performance Builds Sustained Customer Loyalty
Slide 20: A Historical Overview
A Historical Overview An Eleven Year Old Company With Over 200 Years of History In the Flow Control Business Through Multiple Cycles
Slide 21: WCC Multistage Pump and System
WCC Multistage Pump and System Typical Applications Pipeline Service Onshore Oil Production Offshore Oil Production Refining
Slide 22: HDO Multistage Pump and System
Typical Applications Pipeline Service Onshore Oil Production Offshore Oil Production Refining HDO Multistage Pump and System
Slide 23: Market Leader in Large Oil and Gas Valve Applications
Market leader in Large Oil and Gas Valve Applications Typical Applications High Pressure Oil High Pressure Gas
Slide 24: Market Leader in Cryogenic Valve Applications
Market Leader in Cryogenic Valve Applications Typical Applications Liquefied Natural Gas (LNG)
Slide 25: Dry Gas Compressor Seal is One of Largest in the World
Dry Gas Compressor Seal is One of Largest in the World Typical Applications Gas to Liquids LNG Decoking Crude Oil Handling and Treatment 22.3" Diameter
Slide 26: Continued Strong Bookings Growth
Q1 Q2 Q3 Q4 2004 621 638 634 628 2005 685.6 696 773.8 771.4 2006 878.6 912 892 934.4 2007 1088.8 1053.3 1061 1115.6 2008 1420.3 1310.6 +28% Q2 2008 bookings included currency benefit of approximately $97 million and Niigata Worthington acquisition bookings of $16 million compared to Q2 2007. Continu
Slide 27: Strong Bookings Growth Drives Future Sales
Q1 Q2 Q3 Q4 2004 577.1 618.3 623.4 703.7 2005 616.1 691.2 649.5 738.5 2006 653.9 752.9 770.8 883.6 2007 803.4 930.7 919.2 1109.4 2008 993.3 1127.6 +6% Q2 2008 sales included currency benefit of approximately $85 million and Niigata Worthington acquisition sales of $29 million compared to Q2 2007. St
Slide 28: Flowserve Global Presence - Q2 Year-to-Date 2008
Domestic International 2008 Q2 356 805 Oil and Gas Power Chemical Water GI Other 2008 Q2 36 16 20 7 8 13 Domestic 32% International 73% Bookings Flowserve Global Presence - Q2 Year-to-Date 2008 Global Diversified Flow Control Infrastructure Company Revenue International 68% Domestic International 20
Slide 29: Flowserve's Global Presence
Flowserve's Global Presence Flowserve Has Operations in More Than 55 Countries with Over 15,000 Employees
Slide 30: Strength in Large Projects Around the World Continues
Strength in Large Projects Around the World Continues
Slide 31: Aftermarket Strategy and Growth Opportunity
Strategically Pursue Original Equipment (OE) orders to Build Global Installed Base which Drives Aftermarket Locate Quick Response Centers (QRC) near our Customers' Operations Currently, Flowserve has 151 QRC sites in 34 countries around the globe Leverage our Lifecycle Advantage Alliance Structure t
Slide 32: Leveraging Technology to Expand Capabilities
Leveraging Technology to Expand Capabilities Nuclear Power Generation - Generation III Products Subsea Oil & Gas Recovery - Deep Water Recovery Products Desalination Expansion - Salt Water Reverse Osmosis (SWRO) Products Advanced Diagnostic Solutions - Providing Intelligence for Predictive Maintenan
Slide 33: Energy Security & Our Environment
Energy Security & Our Environment Flowserve is Already Supporting Many Advancements in These Critical Areas Currently Served Markets Clean Coal - Coal to Liquids & Coal Gasification Wind Power Bio-Technology Solar Power Gas Fuel Compression Liquefied Natural Gas (LNG) Geo-Thermal Power Compressed Hy
Slide 34: Summation
SUMMATION Remember, History Reminds Us that during all parts of the Business Cycle... There has been continued Infrastructure Investment Aftermarket spend must continue in order to keep: Oil & Gas Flowing, Water Available, Chemicals Available & Electricity "On" Customers will select Suppliers who: D
Slide 35: Cost and Revenue Initiatives Across Business Cycles
..... For Which We Continue Preparing For By ... .... To Take Advantage of All Phases of Business Cycles COST INITIATIVES: Moving Strategic Sourcing, Subassembly Production and Final Assembly to Low Cost Countries Hiring Temporary Employees where Practical Using Multiple Shifts vs. "Brick & Mortar"
Slide 36: Experience in Motion
Experience n Motion siarearve Prue Conia Page 36
Slide 37: 2008 Q2 Consolidated Financial Results
On 7/30/2008, Raised Full Year 2008 EPS Guidance to $7.20-$7.50 2008 Q2 - Consolidated Financial Results * As of 6/30/08, 0.3 million shares had been repurchased in conjunction with the company's previously announced $300 million share buyback program. * As of 6/30/08, 0.3 million shares had been re
Slide 38: Cash Flows Used to Strengthen the Balance Sheet
Net Debt / Capital 2000 2001 2002 2003 2004 2005 2006 2007 2008 Plan 0.76 0.706 0.576 0.502 0.402 0.374 0.312 0.1 0.25 Cash Flows Have Been Used to Strengthen the Balance Sheet over the Past Several Years
Slide 39: Deployment of Cash Flow
Deployment of Cash Flow Highly Selective Acquisitions Divestitures New QRCs Cost Reduction Initiatives Product Line Expansion Share Repurchases Dividend Growth Flowserve's Strong Cash Flow and Solid Balance Sheet Can be Used to Fund Many Opportunities in the Near Future Return of Shareholder Capital
Slide 40: Experience in Motion
Experience in Motion FlorvorvePrpratry & Conte Page 40