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Flowserve Wins Desalination Contract

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Flowserve Corporation (FLS) recently won a multi-million dollar contract from M.N. Larnaca Desalination for providing a complete pump package and energy recovery devices. The exact amount of the multi-million dollar contract remained undisclosed. However; Flowserve will book the contract in its first quarter of 2013 order book.

Located in the Republic of Cyprus, the Larnaca desalination plant conducts a 60,000 cubic meters (15.9 million gallons/day) seawater reverse osmosis daily. The desalination plant is a joint venture of Mekorot Development & Enterprise Ltd. of Israel and Netcom Limited of Cyprus. The Larnaca desalination plant will primarily design and rebuild the existing seawater reverse osmosis and operate the upgraded facility for the next 25 years.

Flowserve’s energy recovery devices and pumps are specially designed for the desalination market. Global water desalination needs are growing very rapidly owing to continued growth in population and urbanization around the globe. Therefore, in order to expand its presence and capture the potential, Flowserve acquired CALDER AG, a Swiss Company, in 2009 to expand its products and advanced technologies to the growing global desalination markets.

Through its Calder brand of products and technologies, Flowserve specializes in the design, engineering, and supply of energy recovery equipment and related proprietary technologies for the reverse osmosis process used in desalination plants around the world.

As per the terms of the contract, the desalination facility at Larnaca will make use of Flowserve’s Calder Dual Work Exchange Energy Recovery units, as well as the company’s DMX pumps in the high pressure feed service. The Dual Work Exchange Energy Recovery units are isobaric machines that recover approximately 97% of the hydraulic energy left in the brine stream, which ultimately benefits the customers to lower the costs to operate the facility.

The contract is a part of the Water Management segment of the company. In 2012, the Water Management industry represented 4% of the total company bookings. In 2012, the water management industry was impacted by weakness in spending levels as desalination projects continued to be delayed. However, worldwide demand for fresh water and water treatment continues to create requirements for new facilities or for upgrades of existing systems, many of which require products that Flowserve offers, particularly pumps.

Flowserve currently holds a Zacks Rank #3 (Hold) while some other important players in the same industry such as AECOM Technology Corporation (ACM) and Ingersoll Rand Plc (IR) have a Zacks Rank #2 (Buy). Another stock, which is worth considering at the moment, is Altra Holdings, Inc. (AIMC) having a Zacks Rank #1.

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