Flowserve Acquires LNG Pumping Technology from NexGen Cryo to Accelerate Decarbonization Growth Strategy

Rhea-AI Summary

Flowserve (NYSE: FLS) has acquired cryogenic Liquefied Natural Gas (LNG) submerged pump technology from NexGen Cryogenic Solutions, Inc. This acquisition includes intellectual property and in-process R&D related to LNG pump and cold energy recovery turbine (CERT) technology for liquefaction, shipping, and regasification markets. The move is expected to expand Flowserve's LNG product portfolio and complement its existing offerings.

The acquisition aligns with Flowserve's 3D growth strategy to diversify, decarbonize, and digitize. It aims to strengthen the company's decarbonization offerings across the LNG value chain. Flowserve plans to leverage its new state-of-the-art LNG pump facility and network of quick response centers to commercialize this technology.

The transaction closed in Q3 2024 and is expected to reduce Flowserve's adjusted earnings per share by $0.05 in that quarter.

Positive

• Acquisition expands Flowserve's LNG product portfolio
• Aligns with company's 3D growth strategy (diversify, decarbonize, digitize)
• Strengthens decarbonization offerings across the LNG value chain
• Leverages existing network of 150+ quick response centers for commercialization

Negative

• Expected to reduce adjusted earnings per share by $0.05 in Q3 2024

Insights

Financial Analyst

The acquisition of NexGen Cryo's LNG pumping technology is a strategic move for Flowserve. This aligns with their 3D growth strategy aimed at diversifying, decarbonizing and digitizing their portfolio. Such acquisitions are generally seen as positive because they expand the company's product offerings and capabilities, which can lead to increased market share and revenue.

The immediate impact on earnings, a reduction of $0.05 per share for the third quarter of 2024, is relatively minor and likely to be offset by long-term gains. The technology has the potential to improve operational efficiency and reduce costs for customers, making Flowserve's products more attractive in the competitive LNG market.

From an investment perspective, this acquisition could be seen as a forward-thinking move that positions Flowserve well for the future. However, investors should watch for how effectively Flowserve integrates this technology and its real-world performance impact.

Market Research Analyst

The LNG market is growing as a transitional fuel in the global shift towards cleaner energy. Flowserve's acquisition of NexGen Cryo's advanced LNG pump and CERT technology positions the company advantageously within this expanding market. By enhancing the efficiency and reliability of LNG operations, Flowserve can capture greater market share and meet the rising demand for sustainable energy solutions.

This move also signals Flowserve's commitment to innovation and sustainability, which can enhance its brand value and appeal to environmentally-conscious stakeholders. The integration of this technology can create synergies within their existing product lines, potentially leading to new product developments and market opportunities.

For investors, this acquisition indicates a strategic alignment with market trends, suggesting potential for long-term growth and stability. Monitoring the market's response and subsequent performance metrics will be important to assessing the full impact of this acquisition.

Tech Expert

This acquisition is significant from a technological standpoint. NexGen Cryo's LNG pumping and CERT technology offer advanced solutions that can improve the efficiency and environmental footprint of LNG operations. These technologies can recover cold energy during the LNG process, which can be a valuable asset in reducing energy consumption and operating costs.

The integration of such advanced technology into Flowserve's existing portfolio can lead to enhanced product offerings and more comprehensive solutions for the LNG industry. This positions Flowserve not just as a supplier, but as a leader in innovative, efficient and sustainable LNG technologies.

For investors, understanding the technical merits of this acquisition is crucial. If successfully integrated, this technology can provide a competitive edge, opening new revenue streams and improving overall profitability.

DALLAS--(BUSINESS WIRE)-- Flowserve Corporation (“Flowserve”) (NYSE: FLS), a leading provider of flow control products and services for the global infrastructure markets, has acquired the intellectual property and in-process R&D related to cryogenic Liquefied Natural Gas (LNG) submerged pump technology, systems and packaging from NexGen Cryogenic Solutions, Inc. (“NexGen Cryo”), a privately held, Arizona-based company specialized in the engineering, design and testing of LNG pumps and turbines.

NexGen Cryo’s pump and cold energy recovery turbine (CERT) technology for the liquefaction, shipping and regasification markets is expected to meaningfully differentiate and expand Flowserve’s LNG product portfolio and complement its existing pumps, valves and mechanical seals offering.

“LNG provides a resilient pathway to energy transition. As we continue advancing our 3D growth strategy to diversify, decarbonize and digitize, this technology acquisition will strengthen our decarbonization offerings across the LNG value chain,” said Scott Rowe, Flowserve’s President and Chief Executive Officer. “We look forward to leveraging our new state-of-the-art LNG pump facility with our existing network of more than 150 quick response centers to commercialize this LNG product offering to our customers.”

Dennis Chalmers, President and Chief Executive Officer of NexGen Cryo commented, “With over 300 years of combined cryogenic pump team experience, we are excited in the potential for this next-generation technology to provide LNG customers across the globe improved efficiency, increased reliability and reduced operating expenditures. I am excited for the next phase of this technology.”

Transaction Details
The technology acquisition closed during the third quarter of 2024. The purchase price and associated expenses are expected to reduce adjusted earnings per share by $0.05 in Flowserve’s 2024 third quarter. NexGen Cryo’s technology is now part of Flowserve’s Pumps Division.

About Flowserve
Flowserve Corporation is one of the world’s leading providers of fluid motion and control products and services. Operating in more than 50 countries, the company produces engineered and industrial pumps, seals and valves as well as a range of related flow management services. More information about Flowserve can be obtained by visiting the company’s website at www.flowserve.com.

About NexGen Cryo
NexGen Cryogenic Solutions, Inc. specializes in the engineering, design and testing of LNG submerged pumps and turbines. More information about NexGen Cryo can be obtained by visiting the company’s website at www.nexgencryo.com.

Safe Harbor Statement: This news release 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 Reform Act of 1995, as amended. Words or phrases such as, "may," "should," "expects," "could," "intends," "plans," "anticipates," "estimates," "believes," "forecasts," "predicts" or other similar expressions are intended to identify forward-looking statements, which include, without limitation, earnings forecasts, statements relating to our business strategy and statements of expectations, beliefs, future plans and strategies and anticipated developments concerning our industry, business, operations and financial performance and condition.

The forward-looking statements included in this news release are based on our current expectations, projections, estimates and assumptions. These statements are only predictions, not guarantees. Such forward-looking statements are subject to numerous risks and uncertainties that are difficult to predict. These risks and uncertainties may cause actual results to differ materially from what is forecast in such forward-looking statements, and include, without limitation, the following: economic, political and other risks associated with our international operations, including military actions, trade embargoes, epidemics or pandemics or changes to tariffs or trade agreements that could affect customer markets, particularly North African, Latin American, Asian and Middle Eastern markets and global oil and gas producers, and non-compliance with U.S. export/re-export control, foreign corrupt practice laws, economic sanctions and import laws and regulations; any continued volatile regional and global economic conditions resulting from the COVID-19 pandemic on our business and operations; global supply chain disruptions and the current inflationary environment could adversely affect the efficiency of our manufacturing and increase the cost of providing our products to customers; a portion of our bookings may not lead to completed sales, and our ability to convert bookings into revenues at acceptable profit margins; changes in global economic conditions and the potential for unexpected cancellations or delays of customer orders in our reported backlog; our dependence on our customers’ ability to make required capital investment and maintenance expenditures; if we are not able to successfully execute and realize the expected financial benefits from any restructuring and realignment initiatives, our business could be adversely affected; the substantial dependence of our sales on the success of the oil and gas, chemical, power generation and water management industries; the adverse impact of volatile raw materials prices on our products and operating margins; increased aging and slower collection of receivables, particularly in Latin America and other emerging markets; our exposure to fluctuations in foreign currency exchange rates, including in hyperinflationary countries such as Venezuela and Argentina; potential adverse consequences resulting from litigation to which we are a party, such as litigation involving asbestos-containing material claims; expectations regarding acquisitions and the integration of acquired businesses; the potential adverse impact of an impairment in the carrying value of goodwill or other intangible assets; our dependence upon third-party suppliers whose failure to perform timely could adversely affect our business operations; the highly competitive nature of the markets in which we operate; environmental compliance costs and liabilities; potential work stoppages and other labor matters; access to public and private sources of debt financing; our inability to protect our intellectual property in the U.S., as well as in foreign countries; obligations under our defined benefit pension plans; our internal control over financial reporting may not prevent or detect misstatements because of its inherent limitations, including the possibility of human error, the circumvention or overriding of controls, or fraud; the recording of increased deferred tax asset valuation allowances in the future or the impact of tax law changes on such deferred tax assets could affect our operating results; our information technology infrastructure could be subject to service interruptions, data corruption, cyber-based attacks or network security breaches, which could disrupt our business operations and result in the loss of critical and confidential information; ineffective internal controls could impact the accuracy and timely reporting of our business and financial results; and other factors described from time to time in our filings with the Securities and Exchange Commission.

All forward-looking statements included in this news release are based on information available to us on the date hereof, and we assume no obligation to update any forward-looking statement.

The Company reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). However, management believes that non-GAAP financial measures which exclude certain non-recurring items present additional useful comparisons between current results and results in prior operating periods, providing investors with a clearer view of the underlying trends of the business. Management also uses these non-GAAP financial measures in making financial, operating, planning and compensation decisions and in evaluating the Company's performance. Non-GAAP financial measures, which may be inconsistent with similarly captioned measures presented by other companies, should be viewed in addition to, and not as a substitute for, the Company’s reported results prepared in accordance with GAAP.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240723988621/en/

Investors:

Jay Roueche, Vice President, Investor Relations & Treasurer (972) 443-6560

Tarek Zeni, Director, Investor Relations (469) 420-4045

Media:

Wes Warnock, Vice President, Marketing, Communications & Public Affairs (972) 443-6900

Source: Flowserve Corporation

FAQ

What technology did Flowserve (FLS) acquire from NexGen Cryo?

Flowserve acquired cryogenic Liquefied Natural Gas (LNG) submerged pump technology, including intellectual property and in-process R&D related to LNG pump and cold energy recovery turbine (CERT) technology for liquefaction, shipping, and regasification markets.

How does the NexGen Cryo acquisition align with Flowserve's (FLS) strategy?

The acquisition aligns with Flowserve's 3D growth strategy to diversify, decarbonize, and digitize. It strengthens the company's decarbonization offerings across the LNG value chain and expands its LNG product portfolio.

When did Flowserve (FLS) close the acquisition of NexGen Cryo's technology?

The technology acquisition closed during the third quarter of 2024.

What is the financial impact of the NexGen Cryo acquisition on Flowserve's (FLS) earnings?

The purchase price and associated expenses are expected to reduce Flowserve's adjusted earnings per share by $0.05 in the third quarter of 2024.