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Article by DailyStocks_admin    (11-15-12 01:41 AM)

Description

Filed with the SEC from Nov 01 to Nov 07:

Robins & Myers (RBN)
Gamco disclosed it now owns 2,579,062 shares (6.1%) after it bought 529,675 from Sept. 5 through Nov. 2 for $59.18 to $59.85 each. Gamco also disclosed selling 96,963 from Sept. 14 through Oct. 31 for $59.35 to $60.05 each. On Aug. 9, Robbins said it would be acquired by National Oilwell Varco (NOV) for $60 per share in cash, representing a 28% premium over the stock's prior closing price.
BUSINESS OVERVIEW

OVERVIEW

Robbins & Myers, Inc. is an Ohio corporation. As used in this report, the terms “Company,” “Robbins & Myers,” “R&M,” “we,” “our,” or “us” mean Robbins & Myers, Inc. and its subsidiaries unless the context indicates another meaning. We are a leading supplier of engineered equipment and systems for critical applications in global energy, industrial, chemical and pharmaceutical markets. We attribute our success to our close and continuing interaction with customers, our manufacturing, sourcing and application engineering expertise and our ability to serve customers globally. Our fiscal 2012 sales were approximately $1,035 million.

On August 8, 2012, we entered into a definitive merger agreement with National Oilwell Varco, Inc. (“NOV,” “National Oilwell Varco”) in an all-cash transaction. Under the terms of the proposed transaction, which has been approved by the Boards of Directors of both Robbins & Myers, Inc. and NOV, upon the closing of the merger, our shareholders will receive $60.00 in cash for each common share of Robbins & Myers they own. Consummation of the transaction is subject to customary closing conditions, including obtaining certain regulatory approvals, as well as approval from the shareholders of Robbins & Myers, Inc. On October 9, 2012, we received a request for additional information and documents from the U.S. Justice Department (often referred to as a second request) in connection with the proposed merger.

Beginning with the first quarter of fiscal year 2012 (“fiscal 2012”), we changed the composition of our reportable segments to reflect organizational, management and operational changes implemented in the first quarter of fiscal 2012. The Company now reports results in two business segments consisting of Energy Services and Process & Flow Control. The Company previously reported its operations under the Fluid Management segment and the Process Solutions segment.

On January 10, 2011 (“the acquisition date”), we completed our acquisition of T-3 Energy Services, Inc. (“T-3”), by means of a merger, such that T-3 became a wholly-owned subsidiary of Robbins & Myers, Inc. The purchase price for acquiring all of the outstanding common stock of T-3 was approximately $618.4 million, which consisted of approximately $106.3 million in cash, $492.1 million as the fair value of our common shares and $20.0 million as the fair value of options and warrants issued to replace T-3 grants for pre-merger services and warrants. The operating results of T-3 are included in our consolidated financial statements since the acquisition date within our Energy Services segment.

On April 29, 2011, we divested our Romaco businesses. The results of our Romaco segment are reported as discontinued operations for all periods presented.

Information concerning our sales, income before interest and income taxes (“EBIT”), identifiable assets by segment and sales and tangible assets by geographic area for the years ended August 31, 2012, 2011 and 2010 is set forth in Note 16 to the Consolidated Financial Statements included at Item 8 and is incorporated herein by reference.

Energy Services Segment

Our Energy Services business segment, which includes T-3, designs, manufactures, markets, repairs and services equipment and systems used in upstream oil and gas exploration and recovery, production and completion, pipeline transmission infrastructure and a variety of other industrial applications. Our Energy Services segment includes products and services sold under the Robbins & Myers Energy Systems ® and T-3 ® brands. Our products and systems include power sections for drilling motors, blow-out preventers (“BOPs”), down-hole progressing cavity pumps, drive systems and automation, wellhead equipment, frac manifolds and trees, high pressure engineered gate valves, and a broad line of ancillary equipment for the energy sector, such as rod guides, rod and tubing rotators, pipeline closure products and valves.

Sales, Marketing and Distribution. We sell our hydraulic drilling power sections, BOPs, pressure control systems, wellhead equipment, manifolds and gate valves through a direct sales force. We sell our tubing wear prevention products, down-hole pump systems, closure products and industrial pumps through major oilfield and industrial distributors as well as our direct sales force and service centers in key oilfield locations. Backlog at August 31, 2012 was $169.7 million, compared with $121.3 million at August 31, 2011.

Aftermarket Sales . Aftermarket sales consist principally of selling replacement components for our pumps, as well as the relining of power section stators, repair and field services for BOPs, manifolds and valves for the energy market. Aftermarket sales represented approximately 30% of the sales in this segment in fiscal 2012, compared with 34% in fiscal 2011. However, replacement items, such as power section rotors and stators and down-hole pumps are components of larger systems that wear out after regular usage. These are often sold as components in larger systems and are not identifiable by us as aftermarket sales.

Markets and Competition. We believe we are one of the leading independent manufacturers of power sections, BOPs, pressure control systems, wellhead equipment and frac manifolds and trees, in the markets we serve. We are also a leading manufacturer of rod guides, pipeline closure products and down-hole progressing cavity pumps worldwide. While the markets we serve are generally highly fragmented and also involve various competing technologies, we believe that with our leading brands and products, we are effectively positioned to serve customers with an attractive range of products and services.

Process & Flow Control Segment

Our Process & Flow Control business segment designs, manufactures and services glass-lined reactors and storage vessels, industrial progressing cavity pumps, mixing equipment, and related products such as grinders for applications involving the flow of viscous, abrasive and solid-laden slurries and sludge, standard and customized fluid-agitation equipment and systems. We also provide alloy steel vessels, heat exchangers, other fluid systems, wiped film evaporators and packaged process systems. In addition, we provide customized fluoropolymer-lined fittings, vessels and accessories. The primary markets served by this segment are the industrial, chemical, pharmaceutical, wastewater treatment, food and beverage, specialty chemical and other end markets. Primary brands are Pfaudler ® , Moyno ® , Chemineer ® and Edlon ® .

Sales, Marketing and Distribution. We primarily manufacture, market, sell and service glass-lined reactors, storage vessels, industrial pumps, thermal and other fluid processing systems through our direct sales and service force, as well as manufacturers’ representatives in certain geographic markets. Industrial mixers and agitation equipment products are primarily sold through manufacturers’ representatives. Backlog at August 31, 2012 was $138.1 million compared with $129.8 million at August 31, 2011.

Aftermarket Sales. Aftermarket products and services, which include field service, replacement parts, accessories and reconditioning of glass-lined vessels, are an important part of our glass-lined reactor product line. Our aftermarket capabilities and presence allow us to service our large installed base of Pfaudler ® glass-lined vessels and to meet the needs of our customers who outsource various maintenance and service functions. In addition, we refurbish and sell used, glass-lined vessels. Our aftermarket business for the Chemineer ® and Moyno ® lines primarily consists of selling replacement parts. Aftermarket sales represented approximately 37% of this segment’s sales in fiscal 2012, compared with 38% in fiscal 2011.

Markets and Competition. We believe we have the number one worldwide market position in sales value for quality glass-lined reactors and storage vessels, competing principally with smaller European companies. Competition in Europe has increased resulting in increasing pricing pressure. There are also Asian suppliers who compete in local markets based on a lower quality specification. We are also one of the leading suppliers of progressing cavity pumps for industrial applications, and also for mixing equipment for certain markets. There are several worldwide competitors in these markets and there are also various alternative technologies related to the markets we serve. Our Edlon ® brand primarily competes by offering highly engineered products and products made for special needs, and tends to compete with other niche suppliers.

Other Consolidated Information

BACKLOG

Our total order backlog was $307.8 million at August 31, 2012 compared with $251.1 million at August 31, 2011. We expect to ship substantially all of our backlog during the next 12 months.

CUSTOMERS

No customer represented more than 10% of consolidated sales in fiscal 2012, 2011 or 2010. See Note 16 – Business Segments and Geographic Information, included in Item 8 of this Report for financial information by geographic region.

RAW MATERIALS

Raw materials are purchased from a broad supplier base that is often located in the same regions as our facilities. Over the last three years the prices of raw materials, especially steel, have been volatile. Our supply of steel and other raw materials and components has been adequate and available without significant delivery delays. No events are known or anticipated that would change the availability of raw materials. No one vendor provides more than 10% of our supplied materials.

GENERAL

We own a number of patents relating to the design and manufacture of our products. While we consider these patents important, we believe that the successful manufacture and sale of our products depends more upon application expertise and manufacturing skills. We are committed to maintaining high quality manufacturing standards and have completed ISO certification at many of our facilities.

During fiscal 2012, we spent approximately $7.0 million on research and development activities compared with $5.9 million in fiscal 2011 and $4.8 million in fiscal 2010. These amounts do not include engineering development costs incurred in conjunction with fulfilling custom customer orders and executing customer projects.

Compliance with federal, state and local laws regulating the discharge of materials into the environment is not anticipated to have any material effect upon the Company’s capital expenditures, earnings or competitive position.

At August 31, 2012, we had 3,473 employees, which included approximately 380 employees at majority-owned joint ventures. Approximately 270 of our U.S. employees were covered by collective bargaining agreements at various locations. In addition, approximately 510 of our non-U.S. employees were covered by government-mandated agreements in their respective countries. The agreement covering our Dayton, Ohio, manufacturing facility expires in fiscal 2013. The Company considers labor relations at each of its locations to be generally good.

CERTIFICATIONS

Peter C. Wallace, our President and Chief Executive Officer, certified to the New York Stock Exchange (“NYSE”) on February 6, 2012 that, as of that date, he was not aware of any violation by the Company of the NYSE’s Corporate Governance Listing Standards. We have filed with the Securities and Exchange Commission (“SEC”) the certifications of Mr. Wallace and Kevin J. Brown, our Interim Chief Financial Officer, that are required by Section 302 of the Sarbanes-Oxley Act of 2002 relating to the financial statements and disclosures contained in our Annual Report on Form 10-K for the year ended August 31, 2012.

AVAILABLE INFORMATION

We make available free of charge on or through our web site, at www.robn.com, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports as soon as reasonably practicable after such materials are electronically filed with or furnished to the SEC.

CEO BACKGROUND

Richard J. Giromini Director Since October 2008

Mr. Giromini, age 58, has been President and Chief Executive Officer of Wabash National Corporation (manufacturer and distributor of semi-trailers to the trucking industry) from January 2007 and a director since December 2005. He was President and Chief Operating Officer of Wabash National Corporation from December 2005 through December 2006. From February 2005 until December 2005, Mr. Giromini served as Executive Vice President and Chief Operating Officer, and from July 2002 to February 2005, he was Senior Vice President and Chief Operating Officer, of Wabash National Corporation. Mr. Giromini brings to the Board his extensive executive, operational and sales experience with a public company, with particular insight and experience in lean manufacturing, turnarounds, logistics and distribution.



Stephen F. Kirk Director Since June 2006

Mr. Kirk, age 62, has been Senior Vice President and Chief Operating Officer of The Lubrizol Corporation (manufacturer of specialty chemicals) since September 2008. From June 2004 to September 2008, he was President of Lubrizol Additives. He served as Vice President of Sales and Marketing of The Lubrizol Corporation from June 1999 to June 2004. In October, 2011, Mr. Kirk informed our Board of Directors that he will retire from Lubrizol effective December 31, 2011. In accordance with our Corporate Governance Guidelines, Mr. Kirk submitted his resignation to the Chairman of our Board of Directors, and the members of our Nominating and Governance Committee (other than Mr. Kirk) reviewed the continued appropriateness of Mr. Kirk’s membership on the Board. The Board, upon recommendation of the Nominating and Governance Committee, rejected the resignation. Mr. Kirk brings to the Board global operational and executive experience with a public company. His knowledge of the chemical markets is particularly suited to our Process Solutions Group business.



Peter C. Wallace Director Since July 2004

Mr. Wallace, age 57, has been President and Chief Executive Officer of the Company since July 2004. From October 2001 to July 2004, Mr. Wallace was President and Chief Executive Officer of IMI Norgren Group (sophisticated motion and fluid control systems for original equipment manufacturers). He was employed by Rexnord Corporation (power transmission and conveying components) for 25 years serving as President and Group Chief Executive from 1998 until October 2001 and holding a variety of senior sales, marketing, and international positions prior thereto. Mr. Wallace is also a director of Applied Industrial Technologies, Inc. and Rogers Corporation, publicly-held companies. Mr. Wallace provides an important executive and leadership perspective to the Board given his extensive knowledge of the Company and the industries and markets in which it operates, as well as his executive experience and experience in sales and marketing, and as a director of other public companies.

Andrew G. Lampereur Director Since March 2007

Mr. Lampereur, age 48, has been Executive Vice President and Chief Financial Officer of Actuant Corporation (manufacturer of industrial products and systems) since August 2000. Mr. Lampereur joined Actuant in 1993 as Corporate Controller, a position he held until 1996 when he was appointed Vice President of Finance of its Gardner Bender unit. He served as Vice President, General Manager for Gardner Bender, from 1998 until assuming his present position. Mr. Lampereur brings to the Board extensive executive and financial experience with a public company.



Thomas P. Loftis Director Since 1987

Mr. Loftis, age 67, has been Chairman of the Board of the Company since June 2004 and served as Vice Chairman from March 2004 to June 2004. Mr. Loftis has been engaged in commercial real estate development, asset management and consulting with Midland Properties, Inc. since 1981. Loftis Investments LLC, a company wholly owned by Mr. Loftis, is a general partner of M.H.M. & Co., Ltd. (investments). Mr. Loftis is also a director of Security National Bank, a subsidiary of Park National Corporation. Mr. Loftis brings to the Board his long-term experience with the Company and knowledge of the Company’s operations, his experience as an entrepreneur, and relationship with M.H.M., our largest shareholder.



Dale L. Medford Director Since 2003

Mr. Medford, age 61, retired in June 2005 from The Reynolds and Reynolds Company (software and services to automotive retailers) where he had served as Chief Administrative Officer from July 2004 to June 2005, as Executive Vice President and Chief Financial Officer from January 2001 to June 2005, and as Vice President of Corporate Finance and Chief Financial Officer from February 1986 to January 2001. Mr. Medford brings to the Board his extensive past financial and administrative experience with a public company.



Albert J. Neupaver Director Since January 2009

Mr. Neupaver, age 61, has been President, Chief Executive Officer and a director of Wabtec Corporation (manufacturer of braking equipment and other parts for locomotives, freight cars and passenger rail cars) since February 2006. From 1998 to February 2006, Mr. Neupaver was President of the Electromechanical Group of AMETEK, Inc. (manufacturer of electronic instruments and electromechanical devices). Mr. Neupaver also serves as a director of Koppers Holdings Inc., a publicly-held company. Mr. Neupaver brings to the Board his experience as a chief executive officer of a global publicly-held manufacturing company, his operations experience, and his experience as a director of other public companies.

MANAGEMENT DISCUSSION FROM LATEST 10K

Overview

We are a leading designer, manufacturer and marketer of highly engineered, application-critical equipment and systems for the energy, industrial, chemical and pharmaceutical markets worldwide. With our acquisition of T-3 Energy Services, Inc. (“T-3”) on January 10, 2011 (“the acquisition date”), we are expanding and complementing our energy business in our Energy Services segment, and creating a stronger strategic platform with better scale to support future growth. We attribute our success to our close and continuing interaction with customers, our manufacturing, sourcing and application engineering expertise and our ability to serve customers globally. We have initiated programs to reduce our manufacturing footprint for specific product lines to improve asset utilization, and we have standardized more of the reactor system product offerings to leverage our supply chain, global manufacturing assets and functional resources. We are continuing to find ways to leverage strengths across the Company and identify new synergy opportunities. In fiscal 2013, we expect to continue our streamlining and profit margin expansion efforts in certain businesses and pursue our organic and strategic growth initiatives to improve our competitiveness, financial results, long-term profitability and shareholder value.

As more fully described in Note 3 of Notes to Consolidated Financial Statements, on August 8, 2012, we entered into a definitive merger agreement with National Oilwell Varco, Inc. (“NOV,” “National Oilwell Varco”), in an all-cash transaction. Under the terms of the transaction, which has been approved by the Boards of Directors of both Robbins & Myers and NOV, upon the closing of the merger, our shareholders will receive $60.00 in cash for each common share of Robbins & Myers they own. Consummation of the transaction is subject to customary closing conditions, including obtaining certain regulatory approvals, as well as approval of our shareholders. On October 9, 2012, we received a request for additional information and documents from the U.S. Justice Department (often referred to as a second request) in connection with the proposed merger. Unless expressly noted to the contrary, all forward-looking statements in the discussion and analysis of financial condition and results of operations that follows relate to the Company on a stand-alone basis and are not reflective of the impact of the proposed merger with NOV.

We continued to experience positive results during fiscal 2012 in major geographic areas and end markets, with most products achieving revenue growth and improved margins driven by strong backlog at the beginning of fiscal 2012 and higher orders in fiscal 2012, along with benefits from our past restructuring and continuing cost containment initiatives. We are seeing our energy markets moderating, but remain at relatively high levels and continued growth in certain chemical and industrial markets. We are cautiously optimistic that with our order trends and record backlog in both our segments at the end of fiscal 2012, we will continue to see improved operating results in fiscal 2013.

With approximately 43% of our sales outside the United States, we can be affected by changes in currency exchange rates between the U.S. dollar and the foreign currencies in non-U.S. countries in which we operate. The impact on net income, sales and orders due to foreign exchange changes was not material for fiscal 2012 compared with fiscal 2011. Additionally, the assets and liabilities of our foreign operations are translated at the exchange rates in effect at the balance sheet date, with related gains or losses reported as a separate component of our shareholders’ equity, except for Venezuela, which is reported following highly inflationary accounting rules under U.S. GAAP. The marginal weakening of most foreign currencies against the U.S. dollar in fiscal 2012 did not materially impact our financial condition at the end of fiscal 2012 as compared with the end of fiscal 2011.

Beginning with the first quarter of fiscal 2012, we changed the composition of our reportable segments to reflect organizational, management and operational changes implemented in the first quarter of fiscal 2012. The Company now reports results in two business segments consisting of Energy Services and Process & Flow Control. The Company previously reported its operations under the Fluid Management segment and the Process Solutions segment. The businesses in our Energy Services segment provide mission-critical products to customers in the upstream oil and gas markets for use in drilling and exploration, production and completion, and pipeline transmission infrastructure. Major products include power sections for drilling motors, blowout preventers, down-hole progressing cavity pumps, drive systems and automation, wellhead equipment, frac manifolds and trees, high pressure engineered gate valves and a broad line of ancillary equipment for the energy sector, such as rod guides, rod and tubing rotators, pipeline closure products and valves. Our Energy Services segment includes products and services sold under the Robbins & Myers Energy Systems ® and T-3 ® brands. Our Process & Flow Control segment targets industrial customers in the industrial chemical, pharmaceutical, wastewater treatment, food and beverage, and other end markets. Products include glass-lined reactors and thermal heat exchangers, progressing cavity pumps for industrial applications and surface transfer of viscous fluids, mixing equipment and engineered systems used to filter and process various liquids and materials. Primary brands in our Process & Flow Control segment include Pfaudler ® , Moyno ® , Chemineer ® and Edlon ® . We believe that this strategic realignment, which is reflected in our financial reporting for all periods presented, will enable us to have greater focus on our primary end markets while creating additional opportunities to more efficiently serve common customers and to leverage strengths across product groups.

As mentioned above, on January 10, 2011, we acquired 100% of the outstanding common stock and voting interest of T-3. The operating results of T-3 are included in our consolidated financial statements since the acquisition date in our Energy Services segment.

During the third quarter of fiscal 2011, we divested our Romaco businesses (Romaco segment). This divestiture was part of the Company’s portfolio management process and operating strategy to simplify the business and improve its profit profile, and to focus on growing the Company around core competencies. The results of operations for our Romaco segment are reported as discontinued operations for all periods presented.

With the sale of the Romaco segment and our realignment as discussed above, our business consists of two market-focused segments: Energy Services and Process & Flow Control.

Energy Services . Order levels from customers served by our Energy Services segment moderated in the second half of fiscal 2012, but continued to show year-over-year improvements in fiscal 2012 compared with fiscal 2011. Our primary objectives for this segment are to grow sales by increasing our capacity to meet current demand, expanding our geographic reach, improving our selling and product management capabilities, commercializing new products in our niche market sectors, developing new customer relationships, and expanding our aftermarket business. Our Energy Services business segment designs, manufactures, markets, repairs and services equipment and systems including power sections for drilling motors, blow-out preventers, down-hole progressing cavity pumps, drive systems and controllers, wellhead equipment, frac manifolds and trees, high pressure engineered gate valves, and a broad line of ancillary equipment for the energy sector, such as rod guides, rod and tubing rotators, pipeline closure products and valves. These products are primarily used in upstream oil and gas exploration and recovery applications.

Process & Flow Control . Our Process & Flow Control segment orders improved in fiscal 2012 over fiscal 2011, achieving the highest levels since fiscal 2008. Pricing began to show improvement in fiscal 2012, but has not fully recovered, especially in the European chemical markets. Our primary objectives for this segment are to reduce operating costs in developed regions, increase manufacturing capabilities in low cost areas, standardize our products to increase operating flexibility, integrate our global operations and increase our focus on aftermarket opportunities. Our Process & Flow Control business segment designs, manufactures and services glass-lined reactors and storage vessels, customized equipment and systems and customized fluoropolymer-lined fittings, industrial progressing cavity pumps and complementary products such as grinders and customized fluid-agitation equipment and systems primarily for the pharmaceutical, industrial and specialty chemical markets.

Fiscal Year Ended August 31, 2012 Compared with Fiscal Year Ended August 31, 2011

Net Sales

Consolidated net sales from continuing operations for fiscal 2012 were $1,034.8 million, or $214.1 million higher than fiscal 2011 net sales, an increase of 26%. Excluding the impact of currency translation and the T-3 acquisition, net sales increased by $100.8 million, or 16%, due to higher sales in both of our segments in fiscal 2012.

The Energy Services segment, which includes T-3 results since January 10, 2011, had sales of $665.5 million in fiscal 2012 compared with $477.2 million in fiscal 2011. The T-3 acquisition contributed $127.0 million in additional sales over the prior year, with $78.4 million due to T-3 being owned for only a partial period of the prior year and the remaining due to strong demand in fiscal 2012, as discussed below. Excluding the impacts of foreign currency translation and T-3 acquisition, sales in fiscal 2012 increased $64.1 million, or 21%. This volume increase was primarily due to higher customer demand resulting from higher oil prices worldwide in fiscal 2012 and increased expenditure for drilling activity as exploration and production companies invested to capture oil and gas from shale formations in North America. Orders for this segment were impacted by the same factors and were $714.4 million in fiscal 2012 compared with $517.8 million in fiscal 2011. Excluding currency and acquisition impacts, orders in fiscal 2012 grew $61.9 million, or 21%, due to strong market conditions. Ending backlog at August 31, 2012 was $169.7 million compared with $121.3 million at August 31, 2011.

The Process & Flow Control segment had sales of $369.3 million in fiscal 2012 compared with $343.4 million in fiscal 2011, an increase of $25.9 million, or 8%. Excluding currency impact, sales in fiscal 2012 increased $36.7 million, or 11%, from the prior year, reflecting improved market conditions in certain served end markets. Segment orders in fiscal 2012 continued to improve from fiscal 2011 and were $386.6 million, compared with $358.5 million in fiscal 2011. Excluding currency impact, orders increased $38.4 million, or 11%, in fiscal 2012 compared with fiscal 2011, reflecting improved demand in certain end markets outside Europe. Ending backlog at August 31, 2012 was $138.1 million compared with $129.8 million at August 31, 2011.

Income Before Interest and Income Taxes (EBIT)

Consolidated EBIT from continuing operations for fiscal 2012 was $218.6 million compared with $131.3 million in fiscal 2011, an increase of $87.3 million. The T-3 business acquired in the second quarter of fiscal 2011 contributed $42.3 million of the consolidated EBIT increase, including $5.9 million of T-3 merger-related costs incurred at Corporate and $19.7 million of higher amortization related to customer backlog, severance costs and inventory write-up values expense in the Energy Services segment which did not recur in fiscal 2012. The current year EBIT includes $3.0 million of expense related to the NOV merger. The remaining $48.0 million increase in consolidated EBIT was mainly attributable to the higher sales volume described above in all our business platforms and a favorable sales mix in our Energy Services segment. The exchange rate impact on EBIT was minimal.

The Energy Services segment had EBIT of $198.0 million in fiscal 2012, compared with $131.0 million in the prior year, an increase of $67.0 million. The T-3 business acquired in the second quarter of fiscal 2011 contributed $36.4 million of the increase. The prior year EBIT included merger-related expenses of $19.7 million for higher amortization related to customer backlog, severance and expense due to inventory write-up values. The remaining increase in EBIT of $30.6 million was mainly due to the higher sales volume described above and an improved product sales mix. The exchange rate impact on EBIT was minimal.

The Process & Flow Control segment had EBIT of $41.4 million in fiscal 2012 compared with $26.8 million in fiscal 2011, an increase of $14.6 million. The increase in EBIT was due principally to the higher sales volume in fiscal 2012 described above. Fiscal 2011 had $1.2 million of pension curtailment costs related to one of our U.S. operations and restructuring costs of $1.0 million related to our German operations, that did not recur in fiscal 2012. The exchange rate impact on EBIT was minimal.

Corporate costs were $5.6 million lower in fiscal 2012 compared with fiscal 2011. Merger-related costs, NOV in fiscal 2012 and T-3 in fiscal 2011, were $2.9 million lower. The remaining decrease is from lower compensation costs related to the departure of an executive officer in the second quarter of fiscal 2012, lower pension costs and foreign currency gains.

Income Taxes

Our effective tax rate for continuing operations was 30.9% for fiscal 2012 compared with 38.2% in fiscal 2011. The current year effective tax rate is lower than the U.S. statutory tax rate and the effective tax rate in fiscal 2011, primarily due to audit settlements in fiscal 2012 and the related release of unrecognized tax benefit balances, as well as increased income in our foreign locations which have lower effective tax rates. Additionally, fiscal 2011 included the recording of an additional valuation allowance of $7.0 million for certain deferred tax assets in our Process & Flow Control segment.

Net Income

Our net income in fiscal 2012 was $150.0 million compared with $134.0 million in fiscal 2011, which includes income from discontinued operations, net of tax, of $53.6 million (see Note 5—Discontinued Operations in Item 8 of this Report). Net income from continuing operations in fiscal 2012 was $150.0 million, compared with $80.4 million in fiscal 2011. The increase in fiscal 2012 net income from continuing operations was primarily driven by the contribution of the prior year T-3 acquisition for the full year, higher sales volume, favorable product mix, lower merger-related charges and a lower effective tax rate.

Fiscal Year Ended August 31, 2011 Compared with Fiscal Year Ended August 31, 2010

Net Sales

Consolidated net sales from continuing operations for fiscal 2011 were $820.6 million, or $342.4 million higher than fiscal 2010 net sales, an increase of 72%. Excluding the impact of currency translation and the T-3 acquisition, net sales increased by $152.4 million, or 32%, due to higher sales in both of our segments in fiscal 2011.

The Energy Services segment, which included T-3 results since January 10, 2011, had sales of $477.2 million in fiscal 2011 compared with $201.6 million in fiscal 2010. Excluding the impacts of foreign currency translation and T-3 acquisition, sales in fiscal 2011 increased $91.7 million, or 45%. The increase was primarily due to strong growth in horizontal rigs, as exploration and production companies invested to capture oil and gas from shale formations in North America. Orders for this segment were $517.8 million in fiscal 2011 compared with $218.4 million in fiscal 2010. Excluding currency and acquisition impacts, orders in fiscal 2011 grew $78.4 million, or 36%, due to strong market conditions. Ending backlog at August 31, 2011, including T-3 backlog of $91.3 million, was $121.3 million compared with $27.1 million at August 31, 2010.

The Process & Flow Control segment had sales of $343.4 million in fiscal 2011 compared with $276.6 million in fiscal 2010, an increase of $66.8 million, or 24%. Excluding currency impact, sales in fiscal 2011 increased $60.7 million, or 22%, from the prior year, due to improving demand for capital goods in global chemical markets. Segment orders in fiscal 2011 continued to improve from fiscal 2010 and were $358.5 million, compared with $303.5 million in fiscal 2010. Excluding currency impact, orders increased $49.9 million, or 16%, in fiscal 2011 compared with fiscal 2010, reflecting improved demand in certain end markets outside Europe. Ending backlog at August 31, 2011 was $129.8 million compared with $109.7 million at August 31, 2010.

Income Before Interest and Income Taxes (EBIT)

Consolidated EBIT from continuing operations for fiscal 2011 was $131.3 million compared with $46.9 million in fiscal 2010, an increase of $84.4 million. Excluding the impacts of currency translation and operating results of T-3, consolidated EBIT in fiscal 2011 increased by $67.2 million. This increase in consolidated EBIT was mainly attributable to the higher sales volume described above in all our business platforms and a favorable sales mix in our Energy Services segment. We also experienced $1.8 million of lower restructuring charges in our Process & Flow Control segment in fiscal 2011 compared with fiscal 2010.

The Energy Services segment had EBIT of $131.0 million in fiscal 2011 compared with $61.7 million in fiscal 2010. Excluding currency and acquisition impacts, EBIT for fiscal 2011 increased by $51.8 million, or 84%, due principally to the sales increase and a favorable product mix.

The Process & Flow Control segment had EBIT of $26.8 million in fiscal 2011 compared with $4.9 million in fiscal 2010. This increase in EBIT resulted from higher sales volume in fiscal 2011, as well as lower restructuring charges of $1.8 million.

Corporate costs were $6.8 million higher in fiscal 2011 compared with fiscal 2010, primarily due to $5.9 million of costs associated with professional fees and accelerated stock compensation expense related to the T-3 merger transaction.

Income Taxes

Our effective tax rate for continuing operations was 38.2% for fiscal 2011 compared with 35.2% in fiscal 2010. The fiscal 2011 effective tax rate was higher than the U.S. statutory tax rate and the effective tax rate in fiscal 2010, primarily due to the recording of an additional valuation allowance of $7.0 million for certain deferred tax assets in our Process & Flow Control segment. Excluding this impact, the effective tax rate for fiscal 2011 was lower than the U.S. federal statutory tax rate primarily due to certain U.S. permanent deductions and tax credits.

The effective tax rate for fiscal 2010 from continuing operations approximated the U.S. federal statutory tax rate.

Net Income

Our net income in fiscal 2011, which included income from discontinued operations, net of tax, of $53.6 million (see Note 5—Discontinued Operations in Item 8 of this Report), was $134.0 million compared with $33.2 million in fiscal 2010, which included net income from discontinued operations of $3.9 million. Net income from continuing operations in fiscal 2011 was $80.4 million, compared with $29.3 million in fiscal 2010. The increase in fiscal 2011 net income was primarily driven by higher sales volume and a favorable product mix, somewhat reduced by charges relating to the acquisition of T-3 and a higher effective tax rate.

Liquidity and Capital Resources

Operating Activities

In fiscal 2012, our cash inflow from operating activities was $160.4 million, compared with $101.0 million in fiscal 2011, an increase of $59.4 million. This increase in fiscal 2012 was primarily caused by higher net income from continuing operations of $69.6 million, reduced by increased funding for our pension plans of $6.8 million. The increase in working capital was a reduction in operating cash flow, although lower than the prior year impact.

In fiscal 2011, our cash inflow from operating activities was $101.0 million, compared with $88.5 million in fiscal 2010, an increase of $12.5 million. This increase was caused by higher net income, somewhat reduced by higher working capital needs in fiscal 2011 to support our sales and profit growth, payments for restructuring costs accrued at the end of fiscal 2010, increased funding for U.S. pension plans, and payments related to accruals in the opening balance sheet of T-3.

Cash flows from operating activities can fluctuate significantly from period-to-period due to working capital needs and the timing of payments for items such as income taxes, restructuring activities, pension funding and other items.

We expect our available cash, fiscal 2013 operating cash flow and availability under our credit agreement to be adequate to fund fiscal year 2013 operating needs, shareholder dividends, capital expenditures, and additional share repurchases, if any.

Investing Activities

In fiscal 2012, the Company continued to generate substantial cash from operating activities, which resulted in a strong year end financial position, with resources available for reinvestment in existing businesses. Capital expenditures in fiscal 2012 were $29.5 million in fiscal 2012 and were primarily related to our cost reduction and sales growth initiatives.

In fiscal 2011, our net cash outflows relating to investing activities of $29.5 million included $90.4 million of cash used for the T-3 acquisition, net of cash acquired; cash proceeds from the sale of our Romaco businesses of $89.2 million and $28.3 million of capital expenditures.

In fiscal 2010, our net cash outflows from investing activities of $8.1 million consisted of capital expenditures of approximately $10.6 million and asset sale proceeds of $2.5 million related to the sale of certain of our assets at two of our business units.

The Company expects fiscal 2013 capital spending to be about 30% higher than fiscal 2012.

Financing Activities

Our cash outflows from financing activities for fiscal 2012 were $188.6 million which included $187.2 million in share repurchases, as more fully described in Note 14 of the financial statements at Item 8 of this Report. The decrease in net proceeds from stock activities in fiscal 2012 of $12.9 million primarily resulted from fewer stock option exercises in the current year. The large amount of option exercises in fiscal 2011 was attributable to the T-3 acquisition. Dividends paid during fiscal 2012 were $8.6 million, or $1.0 million higher than fiscal 2011, primarily due to additional shares issued in January 2011 related to our T-3 merger. The quarterly dividend rate per common share was increased in January 2012 from $0.045 to $0.050.

From available cash balances, we repaid the remaining $30.0 million of Senior Notes on the May 3, 2010 maturity date.

On October 6, 2011, the Company announced that its Board of Directors had authorized to repurchase up to 3.0 million of the Company’s outstanding common shares, in addition to the approximately 1.0 million remaining available for repurchase under the October 2008 authorization by the Board of Directors. In fiscal 2012, the Company repurchased all the remaining 4.0 million shares for $187.2 million. Repurchases were funded from the Company’s available cash balances. There were no such share repurchases in fiscal 2011 and 2010.

On June 25, 2012, the Company’s Board of Directors authorized the repurchase of up to 2.0 million of the Company’s currently outstanding common shares (the “June 2012 Program”). Repurchases under the June 2012 Program will generally be made in the open market or in privately negotiated transactions not exceeding prevailing market prices, subject to regulatory considerations and market conditions, and will be funded from the Company’s cash and credit facilities. There were no repurchases under the June 2012 Program in fiscal 2012. Under the terms of the definitive merger agreement with NOV, we have agreed not to repurchase our common shares under the June 2012 Program pending consummation of the merger. The June 2012 Program will expire when we have repurchased all the authorized shares, unless terminated earlier by a Board resolution or consummation of the merger.

Credit Agreement

Our Bank Credit Agreement (the “Agreement”) provides that we may borrow, for the five-year term of the Agreement, on a revolving credit basis up to a maximum of $150.0 million at any one time. In addition, under the terms of the Agreement, we are entitled, on up to six occasions prior to the maturity of the loan, subject to the satisfaction of certain conditions, to increase the aggregate commitments under the Agreement in the aggregate principal amount of up to $150.0 million. All outstanding amounts under the Agreement are due and payable on March 16, 2016. Interest is variable based upon formulas tied to a Eurocurrency rate or an alternative base rate defined in the Agreement, at our option. Borrowings, which may also be used for general corporate purposes, are unsecured, but are guaranteed by certain of our subsidiaries. While no amounts are outstanding under the Agreement at August 31, 2012, we have $23.7 million of standby letters of credit outstanding at August 31, 2012. These standby letters of credit are used as security for advance payments received from customers and for future payments to our vendors. Accordingly, under the Agreement, we have $126.3 million of unused borrowing capacity.

The Agreement contains customary representations and warranties, default provisions and affirmative and negative covenants, including limitations on indebtedness, liens, asset sales, mergers and other fundamental changes involving the Company, permitted investments, sales and lease backs, cash dividends and share repurchases, and financial covenants relating to interest coverage and leverage. As of August 31, 2012, we are in compliance with these covenants.

We obtained a waiver from the lenders under the Agreement in connection with our pending merger with National Oilwell Varco, because the execution of the Merger Agreement and the merger would cause us to be in default under the Agreement.

Critical Accounting Policies and Estimates

This “Management’s Discussion and Analysis” is based on our Consolidated Financial Statements and the related notes. The more critical accounting policies used in the preparation of our Consolidated Financial Statements are discussed below.

Revenue Recognition

We recognize revenue at the time of title passage to our customer which is generally upon shipment of the product. We recognize revenue for certain longer-term contracts based on the percentage of completion method. The percentage of completion method requires estimates of total expected contract revenue and costs. We follow this method because we can make reasonably dependable estimates of the revenue and cost applicable to various stages of a contract. Revisions in profit estimates are reflected in the period in which the facts that gave rise to the revision become known.

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires us to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and the related notes. Significant estimates made by us include the allowance for doubtful accounts, inventory valuation, deferred tax asset valuation allowance, warranty, litigation, product liability, tax contingencies, stock option valuation, goodwill and intangible valuation and retirement benefit obligations.

Our estimate for uncollectible accounts receivable is based upon an analysis of our prior collection experience, specific customer creditworthiness, current economic trends within the industries we serve, specific customers’ ability to pay us and the length of time that the receivables are past due.

Inventory valuation reserves are determined based on our assessment of the demand for our products and the on-hand quantities of inventory in relation to historical usage. The inventory to which this reserve relates is still on-hand and will be sold or disposed of in the future. The expected selling price of this inventory approximates its net book value; therefore, there is no significant impact on gross margin when it is sold.

MANAGEMENT DISCUSSION FOR LATEST QUARTER

Overview

We are a leading designer, manufacturer and marketer of highly engineered, application-critical equipment and systems for the energy, industrial, chemical and pharmaceutical markets worldwide. With our acquisition of T-3 Energy Services, Inc. (“T-3”) on January 10, 2011 (“the acquisition date”), we are expanding and complementing our energy business in our Energy Services segment, and creating a stronger strategic platform with better scale to support future growth. We attribute our success to our close and continuing interaction with customers, our manufacturing, sourcing and application engineering expertise and our ability to serve customers globally. We have initiated programs to reduce our manufacturing footprint for specific product lines to improve asset utilization, and we have standardized more of the reactor system product offerings to leverage our supply chain, global manufacturing assets and functional resources. We are continuing to find ways to leverage strengths across the Company and identify new synergy opportunities. We expect to continue our streamlining and profit margin expansion efforts in certain businesses in the remainder of fiscal 2012 and pursue organic and strategic growth initiatives to improve our competitiveness, financial results, long-term profitability and shareholder value.

We continued to experience positive results during the third quarter of fiscal 2012 in major geographic areas and end markets, with most products achieving revenue growth and improved margins driven by strong backlog at the beginning of fiscal 2012 and higher orders in fiscal 2012, along with benefits from our past restructuring and continuing cost containment initiatives. We are seeing our energy markets moderating, but remain at relatively high levels and continued growth in certain chemical and industrial markets. We are cautiously optimistic that with our order trends and record backlog in both our segments at the end of the third quarter of fiscal 2012, we will continue to see improved operating results through our fiscal 2012.

With approximately 47% of our sales outside the United States, we can be affected by changes in currency exchange rates between the U.S. dollar and the foreign currencies in non-U.S. countries in which we operate. Although the U.S. dollar strengthened against most of the other major currencies in fiscal 2012, the impact on net income, sales and orders due to exchange rate changes was not material in the first nine months of fiscal 2012 compared with the same period in the prior year. Additionally, the assets and liabilities of our foreign operations are translated at the exchange rates in effect at the balance sheet date, with related gains or losses reported as a separate component of our shareholders’ equity, except for Venezuela which is reported following highly inflationary accounting rules under U.S. generally accepted accounting principles (“GAAP”). The strengthening of the U.S. dollar against most other foreign currencies in the first nine months of fiscal 2012 did not materially impact our consolidated financial condition at the end of the third quarter as compared with the end of fiscal 2011.

Beginning with the first quarter of fiscal 2012, we changed the composition of our reportable segments to reflect organizational, management and operational changes implemented in the first quarter of fiscal 2012. The Company now reports results in two business segments consisting of Energy Services and Process & Flow Control. The Company previously reported its operations under the Fluid Management segment and the Process Solutions segment. The businesses in our Energy Services segment provide mission-critical products to customers in the upstream oil and gas markets for use in drilling and exploration, production and completion, and pipeline transmission infrastructure. Major products include power sections for drilling motors, blowout preventers and pressure control products, artificial lift equipment and automation, wellhead products and wellbore wear prevention components, pipeline closures and valves. Our Energy Services segment includes products and services sold under the Robbins & Myers Energy Systems ® and T-3 ® brands. Our Process & Flow Control segment targets industrial customers in the industrial chemical, pharmaceutical, wastewater treatment, food and beverage, and other end markets. Products include glass-lined reactors and thermal heat exchangers, progressing cavity pumps for industrial applications and surface transfer of viscous fluids, mixing equipment and engineered systems used to filter and process various liquids and materials. Primary brands in our Process & Flow Control segment include Pfaudler ® , Moyno ® , Chemineer ® and Edlon ® . We believe that this strategic realignment, which is reflected in our financial reporting for all periods presented, will enable us to have greater focus on our primary end markets while creating additional opportunities to more efficiently serve common customers and to leverage strengths across product groups.

On March 8, 2012, unionized employees at the Company’s Moyno manufacturing facility in Springfield, Ohio, (Process & Flow Control segment) rejected the Company’s labor contract offer and initiated a work stoppage. Operations at the facility have continued during this work stoppage, and the Company did not experience a material effect in its third quarter fiscal 2012 operating results.

As mentioned above, on January 10, 2011, we acquired 100% of the outstanding common stock and voting interest of T-3. The operating results of T-3 are included in our consolidated financial statements since the acquisition date in our Energy Services segment.

During the third quarter of fiscal 2011, we divested our Romaco businesses (Romaco segment). This divestiture was part of the Company’s portfolio management process and operating strategy to simplify the business and improve its profit profile, and to focus on growing the Company around core competencies. The results of operations for our Romaco segment are reported as discontinued operations for all periods presented.

With the sale of the Romaco segment and our realignment as discussed above, our business consists of two market-focused segments: Energy Services and Process & Flow Control.

Energy Services. Order levels from customers served by our Energy Services segment moderated in the third quarter of fiscal 2012, but continued to be stronger in the third quarter and the year-to-date nine months of fiscal 2012 compared with the comparable periods of the prior year. Our primary objectives for this segment are to grow sales by increasing our capacity to meet current demand, expanding our geographic reach, improving our selling and product management capabilities, commercializing new products in our niche market sectors, developing new customer relationships, and expanding our aftermarket business. Our Energy Services business segment designs, manufactures, markets, repairs and services equipment and systems including power sections for drilling motors, blow-out preventers, downhole progressing cavity pumps, drive systems and controllers, wellhead equipment, frac manifolds and trees, high pressure engineered gate valves, and a broad line of ancillary equipment for the energy sector, such as rod guides, rod and tubing rotators, pipeline closure products and valves. These products are primarily used in upstream oil and gas exploration and recovery applications.

Process & Flow Control. Order levels in our Process & Flow Control segment trended upward in the third quarter and year-to-date nine months of fiscal 2012, relative to the comparable periods of the prior year. Pricing is beginning to show improvement in fiscal 2012, but has not fully recovered, especially in the European chemical markets. Our primary objectives for this segment are to reduce operating costs in developed regions, increase manufacturing capabilities in low cost areas, standardize our products to increase operating flexibility, integrate our global operations and increase our focus on aftermarket opportunities. Our Process & Flow Control business segment designs, manufactures and services glass-lined reactors and storage vessels, customized equipment and systems and customized fluoropolymer-lined fittings, industrial progressing cavity pumps and complementary products such as grinders and customized fluid-agitation equipment and systems primarily for the pharmaceutical, industrial and specialty chemical markets.

Three months ended May 31, 2012 and May 31, 2011

Net Sales

Consolidated net sales from continuing operations for the third quarter of fiscal 2012 were $266.3 million, $29.3 million higher than net sales from continuing operations for the third quarter of fiscal 2011. Excluding the impact of currency translation, net sales increased by $33.5 million, or 14%.

The Energy Services segment had sales of $175.0 million in the third quarter of fiscal 2012 compared with $144.2 million in the third quarter of fiscal 2011. Excluding currency translation, sales increased $31.8 million, or 22%. This increase was primarily due to strong growth in horizontal rigs, as exploration and production companies invested in drilling activities in North America. Orders for this segment were impacted by the same factors and at $175.9 million were $8.7 million, or 5% higher than the comparable period in the prior year, excluding currency impact. Ending backlog at May 31, 2012 was $172.3 million compared with $121.3 million at August 31, 2011 and $122.2 million at May 31, 2011.

The Process & Flow Control segment had sales of $91.3 million in the third quarter of fiscal 2012 compared with $92.8 million in the third quarter of fiscal 2011. Excluding the impact of currency translation, sales increased $1.8 million, or 2%, over the prior year period due to general market conditions. Segment orders were strong at $109.9 million, and were 16% higher than the third quarter fiscal 2011. Excluding currency impact, orders in the third quarter of fiscal 2012 increased $18.8 million, or 20%, over the comparable period of fiscal 2011, reflecting improved market conditions in certain served end markets. Ending backlog at May 31, 2012 was $142.7 million compared with $129.8 million at August 31, 2011 and $125.7 million at May 31, 2011.

Income Before Interest and Income Taxes (EBIT)

Consolidated EBIT for the third quarter of fiscal 2012 was $61.9 million, an increase of $23.2 million from the third quarter of fiscal 2011. Excluding the impact of currency translation, EBIT increased by $23.6 million, or 61%. There were lower non-acquisition related corporate costs in fiscal 2012 of $2.1 million, as described below. The remaining increase of $21.5 million was primarily attributable to the higher sales volume described above in our Energy Services segment, a $1.8 million favorable litigation settlement and $8.2 million of merger related expenses in fiscal 2011, as described below. The exchange rate impact on EBIT was minimal.

The Energy Services segment had EBIT of $55.5 million in the third quarter of fiscal 2012, compared with $35.3 million in the third quarter of fiscal 2011, an increase of $20.2 million. The prior year EBIT included non-recurring merger related expenses of $8.2 million for higher amortization related to customer backlog and the expense due to inventory write-up values. The remaining increase in EBIT of $12.0 million was mainly due to the higher sales volume described above and a $1.8 million favorable litigation settlement in the third quarter of fiscal 2012. The exchange rate impact on EBIT was minimal.

The Process & Flow Control segment had EBIT of $10.0 million in the third quarter of fiscal 2012 compared with $9.2 million in the third quarter of fiscal 2011, an increase of $0.8 million. This increase in EBIT was mainly due to the sales volume increase described above and improved project pricing in fiscal 2012. Foreign currency had no impact on EBIT in the quarter.

Corporate costs in the third quarter of fiscal 2012 were $2.1 million lower than the same period in the prior year primarily due to foreign currency gains in the current year and higher consultant costs related to strategic and legal matters in fiscal 2011.

Income Taxes

The effective tax rate for continuing operations was 28.2% for the third quarter of fiscal 2012 compared with 50.3% in the prior year period. The effective tax rate for the three month period ended May 31, 2012 was lower than the U.S. federal statutory tax rate and the comparable period fiscal 2011 rate, primarily due to audit settlements in the third quarter of fiscal 2012 and the related release of unrecognized tax benefits balances, as well as increased income in our foreign locations which have lower effective tax rates.

The effective tax rate for the third quarter fiscal 2011 of 50.3% was higher than the U.S. federal statutory tax rate primarily due to the recording of an additional valuation allowance of $7.0 million for certain deferred tax assets in our Process & Flow Control segment.

Nine months ended May 31, 2012 and May 31, 2011

Net Sales

Consolidated net sales from continuing operations for the first nine months of fiscal 2012 were $759.6 million; $197.9 million higher than net sales for the same period of fiscal 2011. Excluding the impacts of currency translation and the T-3 acquisition, sales increased by $81.9 million, or 18%, due to higher sales in both of our segments in fiscal 2012.

The Energy Services segment had sales of $489.8 million in the first nine months of fiscal 2012 compared with $310.5 million in the same period of fiscal 2011. The T-3 acquisition contributed $122.5 million in additional sales over the prior year period, with $79.5 million due to T-3 being owned for only a partial period of the prior year and the remaining due to strong demand in fiscal 2012, as discussed below. Excluding the impacts of currency and the T-3 acquisition, sales for the first nine months of fiscal 2012 increased by $58.1 million, or 28%, compared with the same period in the prior year. This volume increase was primarily due to higher customer demand resulting from higher oil prices worldwide in the first nine months of the year and increased expenditure for drilling activity in North America. Orders for this segment were strong at $541.6 million in the first nine months of fiscal 2012 compared with $352.0 million in the same prior year period. Excluding currency and acquisition impacts, orders in the first nine months of fiscal 2012 grew $69.5 million, or 33%. Ending backlog at May 31, 2012 was $172.3 million compared with $121.3 million at August 31, 2011 and $122.2 million at May 31, 2011.

The Process & Flow Control segment had sales of $269.8 million in the first nine months of fiscal 2012, higher than the $251.1 million recorded in the same period of fiscal 2011, an increase of $18.7 million. Excluding the impact of currency translation, sales in the first nine months of fiscal 2012 increased $23.8 million, or 9%, over the comparable prior year period. Segment orders in the first nine months of fiscal 2012 increased by $30.2 million, or 12%, from the same period in the prior year period due to improved demand in certain served end markets. Excluding currency impact, orders in the first nine months of fiscal 2012 increased by $34.6 million, or 13%, over the same period of fiscal 2011. Ending backlog at May 31, 2012 was $142.7 million compared with $129.8 million at August 31, 2011 and $125.7 million at May 31, 2011.

Income Before Interest and Income Taxes (EBIT)

Consolidated EBIT for the first nine months of fiscal 2012 was $171.6 million, an increase of $92.7 million from the same period of the prior year. Excluding the impacts of currency translation and the T-3 acquisition, EBIT increased by $53.0 million. There were lower non-acquisition related corporate costs of $5.0 million, described below, a favorable legal settlement of $1.8 million in fiscal 2012 and fiscal 2011 included pension curtailment costs of $1.2 million which did not recur in fiscal 2012. The remaining increase of $45.0 million was primarily attributable to the higher sales volume described above in both of our segments and favorable product sales mix in our Energy Services segment. The exchange rate impact on EBIT was minimal.

The Energy Services segment had EBIT of $153.2 million in the first nine months of fiscal 2012, compared with $79.8 million in the same prior year period, an increase of $73.4 million. The T-3 business acquired in the second quarter of fiscal 2011 contributed $40.0 million of the increase as it had EBIT of $40.5 million in the first nine months of fiscal 2012 compared with an EBIT of $0.5 million in the comparable period of the prior year. The prior year EBIT included expenses of $19.7 million for higher amortization related to customer backlog, severance, other merger-related costs and expense due to inventory write-up values. The remaining increase in EBIT of $33.4 million was mainly due to the higher sales volume described above, an improved product sales mix and a favorable legal settlement of $1.8 million in fiscal 2012. The exchange rate impact on EBIT was minimal.

The Process & Flow Control segment had EBIT of $29.6 million in the first nine months of fiscal 2012 compared with $21.3 million in the comparable period of fiscal 2011, an increase of $8.3 million, or 39%. The increase in EBIT was due principally to the higher sales volume in fiscal 2012 described above and $1.2 million of pension curtailment costs in the first quarter of fiscal 2011 related to one of our U.S. operations that did not recur in fiscal 2012. The exchange rate impact on EBIT was minimal.

Corporate costs were $10.9 million lower in the first nine months of fiscal 2012 compared with the same period in fiscal 2011, $5.0 million primarily due to lower compensation costs related to the departure of an executive officer in the second quarter of fiscal 2012, lower pension costs, lower legal costs and foreign currency gains. There were also $5.9 million of costs relating to the T-3 merger in fiscal 2011 that did not recur in fiscal 2012.

Income Taxes

The effective tax rate for continuing operations was 31.0% for the first nine months of fiscal 2012 compared with 42.0% in the comparable prior year period. The current year effective tax rate was lower than the U.S. statutory tax rate and the prior year rate, primarily due to audit settlements in the third quarter of fiscal 2012 and the related release of unrecognized tax benefits balances, as well as increased income in our foreign locations which have lower effective tax rates. Additionally, the nine month period of fiscal 2011 included the recording of an additional valuation allowance of $7.0 million for certain deferred tax assets in our Process & Flow Control segment.

Liquidity and Capital Resources

Operating Activities

In the first nine months of fiscal 2012, our cash inflow from operating activities was $107.5 million, compared with $25.7 million in the same period of the prior year. This increase, despite our higher pension payments of approximately $7.7 million for U.S. plans in fiscal 2012, occurred primarily because of higher net income from continuing operations and lower investment in accounts receivable and accounts payable. The first nine months of fiscal 2011 included payments related to accruals in the opening balance sheet of T-3. Our cash flows from operating activities can fluctuate significantly from period to period due to working capital needs, the timing of payments for items such as income taxes, restructuring activities, pension funding and other items.

We expect our available cash, fiscal 2012 operating cash flow and amounts available under our credit agreement to be adequate to fund fiscal 2012 operating needs, shareholder dividends, capital expenditures, and additional share repurchases.

Investing Activities

Our financial condition continues to remain strong at the end of the third quarter of fiscal 2012, with resources available for reinvestment in existing businesses and strategic acquisitions. Our capital expenditures were $20.8 million in the first nine months of fiscal 2012 and related primarily to our sales growth and cost reduction initiatives.

Our cash outflows relating to investing activities for the first nine months of fiscal 2011 of $15.4 million included $90.4 million of cash used for the T-3 acquisition, net of cash acquired; cash proceeds from sale of our Romaco businesses of $89.2 million; and $14.2 million of capital expenditures.

Financing Activities

Our cash outflows from financing activities for the first nine months of fiscal 2012 were $163.5 million, which included $163.3 million in share repurchases, as more fully described in Note 13 of the financial statements.

The decrease in net proceeds from stock activities in fiscal 2012 primarily resulted from fewer stock option exercises in the current year. Fiscal 2011 included the exercise of approximately 0.7 million stock options resulting in cash proceeds of approximately $17.1 million.

Credit Agreement

Our Bank Credit Agreement (the “Agreement”) provides that we may borrow, for the term of the Agreement, on a revolving credit basis up to a maximum of $150.0 million at any one time. In addition, under the terms of the Agreement, we are entitled, on up to six occasions prior to the maturity of the loan, subject to the satisfaction of certain conditions, to increase the aggregate commitments under the Agreement in the aggregate principal amount of up to $150.0 million. All outstanding amounts under the Agreement are due and payable on March 16, 2016. Interest is variable based upon formulas tied to a Eurocurrency rate or an alternative base rate defined in the Agreement, at our option. Borrowings, which may also be used for general corporate purposes, are unsecured, but are guaranteed by certain of our subsidiaries. While no amounts are outstanding under the Agreement at May 31, 2012, we have $23.9 million of standby letters of credit outstanding at May 31, 2012. These standby letters of credit are used as security for advance payments received from customers and for future payments to our vendors. Accordingly, under the Agreement, we have $126.1 million of unused borrowing capacity.

The Agreement contains customary representations and warranties, default provisions and affirmative and negative covenants, including limitations on indebtedness, liens, asset sales, mergers and other fundamental changes involving the Company, permitted investments, sales and lease backs, cash dividends and share repurchases, and financial covenants relating to interest coverage and leverage. As of May 31, 2012, we are in compliance with these covenants.

CONF CALL

Peter Wallace

Thank you and good morning. Again, I'm Peter Wallace, President and CEO of Robbins & Myers. Chris Hix, our Chief Financial Officer for the company, is joining me on the call this morning. We are pleased to provide an update on our fiscal 2009 first quarter performance.

During this webcast we will report on the financial results for the September through November time period, discuss the business environment and future prospects, provide segment-level information and comments relative to primary markets, and communicate our primary objectives for the coming year.

Following my initial comments, Chris will take you through a detailed review of our financial performance, working capital changes, and changes in our balance sheet. We will open the phone lines to address your specific questions following our prepared comments.

Slides are also available online at the R&M website if you're not following on this online presentation.

Take your attention to Slide 1, which is our cautionary statement, which should be noted in these more challenging economic times. You should understand this presentation will contain forward-looking statements. Actual events and results may differ from those described in this presentation due to significant changes in capital expenditures in our primary markets, including chemical processing and pharmaceutical, major changes in the price of oil and gas, changes in foreign currency exchange rates and more.

We also refer to various non-GAAP measures, such as earnings per share excluding special items, as we feel they are helpful to investors in assessing our ongoing performance.

Please refer to our slide entitled Cautionary Statement Concerning Forward-Looking Information for additional comments.

Now advance to Slide 2, where we'll have a few comments on the first quarter. We had a very healthy Q1, with sales and orders up on an organic basis. Profitability was very strong, with an EBIT margin of 14.8% or 140 basis points ahead of the same period a year ago, and cash flow showed a marked improvement over the prior year period.

During the quarter, we purchased slightly more than 2 million shares for $39 million and we feel these were made at attractive prices. On Tuesday of this week we announced that we have increased our dividend to $0.04 per share for the quarter, up about 7% from earlier period. In spite of the share repurchase program and dividend payments, we continue to be underleveraged with a net cash position.

The only negative in the quarter was that we began to experience some slowdown in order rates at the end of the quarter, and we have seen a slowdown in quotation and inquiry activity at some of our units as well. However, we have continued to see strength in demand for our energy related products. Like the other companies you most likely follow, we are watching the markets closely to determine the best way to respond to changing market demand. We will discuss this a bit more in a few minutes.

At the end, you should have confidence that we are a much-improved business that can weather some headwinds and make the most of the challenging market environment.

Turning to Slide 3, you will note reported orders were down in the quarter due to the strengthening U.S. dollar, but were up 4% on a constant currency basis. Sales were up 3% in the quarter or 6% organically, and in spite of fairly strong headwinds from currency, our backlog grew $10 million on a year-over-year basis. A healthy backlog should support shipments in the near term.

Please turn to Slide 4. Profit margins in the quarter were strong. We improved 140 basis points to 14.8%, driven by strength in our Fluid Management Group. Process Solutions saw a slight drop in profitability, but was close to double-digit for the quarter. And Romaco went to a loss position in the period driven by lower sales volume. We will discuss the segment details in a few minutes.

Diluted earnings per share for the quarter improved to $0.50, up from $0.40 in the prior year period. Cash flow in the first quarter has historically been negative in the first quarter as the units release payments to vendors and make the year end bonus payments. This year was a much better situation as we were able to hold cash flow neutral from year end levels, which is about a $6 million improvement from the prior year. It is clear that improved functional disciplines and tighter controls are paying dividends.

As you can see now on Slide 5, we have continued to make progress. The trailing four quarters of adjusted EBITDA, which we define as EBIT less restructuring costs and the gains and losses on asset sales, has continued to move upwards. We are proud to report $141 million in adjusted EBITDA delivered in the trailing four quarters. The first quarter of 2009 fiscal year had EBITDA of $30 million, which represents a 14% year-on-year improvement.

Moving on the Slide 6, we should note that the worldwide financial crisis is beginning to impact our industrial businesses. Order rates, inquiry levels, and quotation activity have slowed in the last two months. During the quarter, the Fluid Management Group was up due to strength in energy markets, but experienced weakness in the municipal and industrial markets. Orders for Process Solutions were positive in the quarter, but were driven by some larger projects in Europe. Beyond these larger projects, the underlying activity has declined in both chemical and pharma markets. And Romaco has had lower demand, seen in both the incoming order rates and the shipments.

Many of the large chemical companies have announced plans to reduce their work force, close or idle facilities, and these changes will ultimately have an impact on projects that may have been planned, but can still be cancelled. We do feel there is no exposure with our current backlog of business, but the project activity will be lower in the back half of the year.

Our business managers in the pharma and packaging side of the business remain somewhat optimistic that many projects will still be funded; however, the weakness in booked orders in the first quarter is of concern. We are tracking these projects and will be prepared to adjust plans if the weakness continues.

Municipal spending has also been off, although we have seen a stronger level of customer quotations during the last month. All in all, we are now facing what other companies have faced. With so many industries struggling or having credit issues for such a long period of time, it has finally caught up to us.

A very bright spot is the continuing performance of our Fluid Management Group and, in particular, the energy part of the business. We will have more on this in just a minute.

As a leader in many of our primary markets, we are well positioned to go after new business. We are in great financial position and will be able to pursue incremental business as opportunities arise. The markets seem to change week to week, and we will be even more diligent in adapting to the challenging environment.

Turing to Slide 7, you will see that we are implementing some contingency plans to shore up profit levels in lieu of the softer demand. Our managers are experienced and have been through market cycles before. We will do the obvious, such as curtail hiring, review capital spend plans, and work to minimize overtime costs. There are normally some expenditures that can be deemed discretionary, and we will take a very hard view on these investments. We will also work with our supplier partners to find ways to reduce costs, and we will take advantage of the lower commodity prices in steel and energy to control our overall cost situation.

Beyond the first level cost reductions, we are also evaluating our structure to make sure we have the optimum footprint to serve our customers. There may be opportunities for future facility consolidations.

However, I also want to mention that we have an extremely strong balance sheet that will allow us to continue funding smart projects that will drive future growth. We will work to protect profitability, but we'll also continue to fund strategic investments that will allow us to come out of the cycle stronger than others.

Now on Slide 8 you will see that the Fluid Management Group had another great quarter. Orders were up 2%, but were up 8% excluding the currency impact. This strong year-over-year performance was driven by demand for energy products, while the industrial and municipal markets were somewhat lower.

Sales were up 14% or 18% organically. It should be noted that while drill rig activity has come down a bit due to the lower oil and gas prices, one of our key product lines is used primarily in horizontal and directional drilling, and this particularly rig activity has fared much better than vertical drilling. We've also had further success with some of our key accounts and have been able to take some market share with key players in the industry.

Profit levels were fantastic with an EBIT margin of 30% in the quarter, a full 450 basis points ahead of the prior year period. This performance was driven by a favorable mix, higher volume, and price management programs.

We are a leader in the industry, and we'll try to use our position to capture new market share.

Moving on the Slide 9, you will see that orders for Process Solutions were down 4.7%, driven by the effect of the stronger dollar, principally against the euro. Excluding the currency impact, orders were actually up 6% in the period. The order strength was driven by major European orders in the chemical sector.

As mentioned earlier, we are watching the order and project activity closely. We have seen a reduction in inquiries, but there remain some large projects that appear to be still active.

Sales in the quarter were up 2% or 4% organically. We continue to have good backlog levels that have supported the sales increase.

EBIT margins declined in the quarter due in large part to a change in mix. Our Asian businesses have seen an increase in alloy vessels versus glass-lined vessels, and this contributes to the profit change. In addition, some of the units had excess inventory, resulting in higher steel cost relative to current pricing.

We have taken action on several fronts to address the more difficult period expected in the second half of the year. The business remains focused on delivering profit levels in spite of slower demand.

Moving on to Slide 10, Romaco was the disappointment for the quarter. During the fiscal 2008, we demonstrated that this group can deliver reasonable profit levels, but we were caught with lower than anticipated shipments in the first quarter. Orders were off 21%, driven by the strengthening U.S. dollar. The business is mostly conducted in euros and on this basis the order rate was off 8% - better, but nothing to be feeling great about.

On a similar note, sales were off 23% or 17% organically. The lower sales were the primary driver for the business showing a loss in the most recent period.

During the quarter we incurred a $500,000 expense to restructure our sales organization in the U.K., and this should be recovered with savings throughout the balance of the fiscal year.

We are actively pursuing major project work that has been identified as the variable contribution margin for this business is now very attractive. While we do this, we are also moving forward with actions to reduce our costs should the weaker demand experienced in the first quarter continue throughout the year.

On Slide 11 I have identified the primary areas of management focus for fiscal 2009. You will note they have not changed much from the prior year and we feel the consistency of our message is a real strength.

We continue to make strides with the implement of lean, but those that follow the lean journey understand that this process never ends. There are many opportunities for us to remove waste, improve cycle time, and react faster to changing customer requirements.

Key account management will become a cornerstone of our business. We will differentiate ourselves with more than products. We will strategically align ourselves with the major players in the market that can make a difference.

Each of our businesses have introduced new products. We are becoming much better at identifying those projects that should receive funding. Our customers expect us to continue delivering a solution that will allow them to improve productivity with their operations and acquisitions will hopefully be a part of our growth. We have a balance sheet that supports acquisitions and even though this may be a difficult time to close deals, we are pursuing some possibilities at this time.

With the changing market, we are looking at all aspects of our cost structure, organization structure and more. Overall, we are running with our strategy in place by responding to the market challenges in a prudent manner.

Slide 12 summarizes some of the comments that I have already made throughout the presentation. We have a healthy backlog that will serve us well in the short term, but feel the second half will come under more pressure until liquidity and confidence is restored across the world markets.

We have planned on currency to be at the rates as of the end of our first quarter - at the end of November to be specific. Our earlier guidance for the year indicated that our capital spend would be approximately $25 to $30 million, and with a lower expected demand, we will most likely scale this back to something closer to $20 million.

As you will see on Slide 13, we are providing new guidance for the fiscal year, now guiding to $1.80 to $2.00 per share for the year. This contrasts to $2.52 in the prior year or $2.17 after adjusting for one-off and special items.

For the second quarter we are forecasting diluted earnings per share of $0.40 to $0.50. It should be noted that the forecast accounts for the approximate 2 million shares purchased to date, but does not factor additional purchases during the remainder of the year.

Moving to Slide 14, I would like to make some summary comments. We are continuing with our successful programs around lean implementation and key account management programs. We have made progress, but there remains much more to be accomplished. Our balance sheet is in terrific shape and will support both organic and strategic growth initiatives. We have remained attractively positioned, with leadership positions serving primary markets in energy, chemical and pharma, and we have assembled a capable and experienced management team that will work to create long-term shareholder value.

With these opening comments, I will now turn the presentation over to Chris so that he can walk you through some of the financial highlights. Chris?
Christopher Hix

Well, thanks, Pete. If everyone will turn to Slide 16, I can begin my prepared remarks.

Orders decreased and sales increased on a nominal year-over-year basis in the first quarter, and once you strip away the significant impact from currency translation changes - something we will discuss in more detail in a moment - you can see that orders and sales both increased modestly in the first quarter.

Enterprise organic growth was led by improvements in our FMG and PSG businesses, offset a bit by a decrease in our Romaco business.

Backlog grew during the first quarter as orders exceeded sales in each segment. Compared with the prior year, backlog is $9 million higher. Excluding the impact of currency, backlog would be $34 million higher than the prior year and would also have been sequentially higher than last year's fourth quarter.

During the first quarter we also made strides in gross margins with positive momentum from 2008 extending into the new fiscal year. You will recall our discussions over the past few quarters regarding pricing, improved operational execution, and sharpened analysis and control. The company again demonstrated the benefits from these actions in its first quarter, along with favorable mix, expanding gross margins year-over-year by 200 basis points to 38.2%.

We were able to leverage these improvements in sales and gross margins into greater profitability, increasing EBIT margins 140 basis points to 14.8%. If you strip away the currency effects, the flow through on our organic growth was about 30%, consistent with general expectations of 30% to 40% across our businesses.

EPS grew $0.10 year-over-year to $0.50 in the first quarter, benefiting from higher operating performance and about $0.01 from a lower tax rate and another $0.01 from reduced interest expense as a result of the repayment of $70 million of senior notes in May of 2008. We did not receive any share repurchase benefits to EPS in Q1 due to the late timing of the purchases in the quarter.

Let's turn to Slide 17 to further discuss recent currency changes. The three charts across the top of the slide represent the amount of U.S. dollars that could be purchased with a euro, a British pound and a Canadian dollar from September 2007 through the end of our first quarter, November 30, 2008. These three currencies are our principal non-U.S. operating currencies. For our 2009 plan and guidance, we used the exchange rates as of the end of fiscal 2008, that is, at the end of August. These rates are reflected on the charts as a red dotted line.

After setting these rates, the currencies experienced significant devaluations with respect to the U.S. dollar, 14% to 16%. The result was lower translated sales and profits in Q1 from our nonU.S. entities. It's important to note that every 10% change in exchange rates relative to the U.S. dollar with our current mix and level of business is expected to create an annual $0.12 EPS impact. For the remainder of the year we have assumed the end of November exchange rates. With the euro recently strengthening against the U.S. dollar, perhaps the currency impacts will moderate.

If you turn to Slide 18, you will see that current assets decreased year-over-year from $285 million to $264 million and current liabilities decreased from $174 million to $154 million, both significantly impacted by currency exchange rates. We can remove the bias from currency and look more closely at core performance by examining the ratio of net working capital to annualized quarterly sales. Under this measure, we improved from 16% in the prior year to 15.4% this year, driven largely by improved customer collections activity, offset a bit by increased inventories and lower payables.

Given the changing economic picture, the improvements we've made in cash flow management over the past two years should serve us well in a more uncertain environment.

Please turn to Slide 19. Earlier Pete mentioned that we managed to keep cash flow from operations neutral in the first quarter of this year versus consuming $6 million of cash in the first quarter of last year. That enabled us to end the quarter with $74 million of cash, which also reflects the $39 million that we invested during the quarter in share repurchases. We also ended the quarter with very little debt, principally $30 million of senior notes due in May of 2010. Our senior credit facility remains undrawn and is available until December 2011.

In short, our balance sheet is strong and Robbins & Myers is positioned to weather choppy economic conditions.

That concludes my remarks. Pete, back to you.
Peter Wallace

Operator, I think we're now ready to open the phone lines for questions.

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