Flowserve Completes Acquisition of MOGAS Industries

Rhea-AI Summary

Flowserve (NYSE: FLS) has completed the acquisition of MOGAS Industries, strengthening its position in severe service valves and aftermarket services. The transaction, valued at approximately $305 million including potential earnout, was funded with cash. This acquisition aligns with Flowserve's 3D strategy, enhancing its valve aftermarket business and expanding its presence in mission-critical severe service valves.

The integration of MOGAS into Flowserve's Flow Control Division segment is expected to bolster the company's portfolio in key growth sectors such as mining, mineral extraction, and process industries. Flowserve aims to leverage its industry-leading scale to expand MOGAS' severe service portfolio and aftermarket services globally, capitalizing on MOGAS' large installed base.

Positive

• Strengthens Flowserve's position in severe service valves and aftermarket services
• Expands presence in key growth sectors: mining, mineral extraction, and process industries
• Enhances valve aftermarket business with MOGAS' large installed base
• Aligns with Flowserve's 3D strategy for growth

Negative

• Cash outlay of approximately $305 million for the acquisition

Insights

Financial Analyst

Flowserve's acquisition of MOGAS Industries for $305 million is a strategic move that significantly enhances its severe service valve portfolio. This transaction aligns with Flowserve's 3D growth strategy and expands its presence in critical sectors like mining and mineral extraction. The deal's structure, including a potential earnout, suggests confidence in MOGAS' future performance. Importantly, Flowserve used cash for the purchase, indicating strong liquidity. With a market cap of $7.25 billion, this acquisition represents about 4.2% of Flowserve's value, a substantial but manageable investment. The integration into the Flow Control Division should drive synergies and expand Flowserve's aftermarket services, potentially boosting recurring revenue streams. Investors should monitor integration progress and the impact on Flowserve's financials in upcoming quarters.

Industrial Engineering Expert

The acquisition of MOGAS Industries significantly bolsters Flowserve's capabilities in severe service valves, a critical component in harsh industrial environments. MOGAS' expertise in this niche complements Flowserve's existing portfolio, potentially leading to enhanced product offerings and innovation. The focus on mining and mineral extraction sectors is particularly noteworthy, as these industries often require highly specialized, durable equipment. This move could position Flowserve as a more comprehensive solution provider in these high-growth sectors. The emphasis on aftermarket services is also crucial, as it typically offers higher margins and more stable revenue streams compared to new equipment sales. By leveraging Flowserve's global scale, there's potential for significant expansion of MOGAS' products and services, which could drive long-term growth and market share gains in the flow control industry.

• Enhances Flowserve’s severe service portfolio targeting key growth sectors in mining, mineral extraction and process industries
• Demonstrates company’s commitment to value-creating, inorganic growth through a disciplined capital allocation approach

DALLAS--(BUSINESS WIRE)-- Flowserve Corporation (“Flowserve”) (NYSE: FLS), a leading provider of flow control products and services for the global infrastructure markets, today announced that it has completed the acquisition of MOGAS Industries (“MOGAS”). This transaction helps strengthen Flowserve’s presence in mission-critical severe service valves and associated aftermarket services.

“We welcome the MOGAS team to Flowserve and look forward to leveraging our industry-leading scale to expand the MOGAS severe service portfolio and aftermarket services to customers around the world,” said Scott Rowe, President and CEO of Flowserve. “This acquisition accelerates growth under our 3D strategy and enhances our valve aftermarket business with MOGAS’ large installed base.”

Flowserve intends to fully integrate MOGAS into its Flow Control Division segment.

As previously disclosed, Flowserve used cash to fund the transaction’s purchase price of approximately $305 million including the potential earnout.

About Flowserve

Flowserve Corp. is one of the world’s leading providers of fluid motion and control products and services. Operating in more than 50 countries, Flowserve 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 Flowserve’s Web site at www.flowserve.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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20241015206344/en/

Investors:

Brian Ezzell, Vice President, Investor Relations, Treasurer & Corporate Finance (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 company did Flowserve (FLS) acquire?

Flowserve (NYSE: FLS) acquired MOGAS Industries, a company specializing in severe service valves and associated aftermarket services.

How much did Flowserve (FLS) pay for the MOGAS Industries acquisition?

Flowserve paid approximately $305 million for the acquisition of MOGAS Industries, including a potential earnout. The transaction was funded with cash.

What are the key benefits of Flowserve's (FLS) acquisition of MOGAS Industries?

The acquisition strengthens Flowserve's presence in mission-critical severe service valves, enhances its valve aftermarket business, and expands its portfolio in key growth sectors such as mining, mineral extraction, and process industries.

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

The acquisition accelerates growth under Flowserve's 3D strategy and demonstrates the company's commitment to value-creating, inorganic growth through a disciplined capital allocation approach.