- Second quarter Reported and Adjusted1 Earnings Per Share
(EPS)2 of 55 cents and 73 cents, an increase of 41% and 40%,
respectively, driven by strong operational execution
- Bookings of $1.25 billion were the highest quarterly level
since 2014 and includes record aftermarket activity of more than
$610 million
- Adjusted Gross and Operating Margins3 of 32.3% and 12.5%,
respectively, increased 200 and 210 basis points compared to prior
year
- Raised full-year 2024 Adjusted EPS guidance4 to $2.60 to
$2.75
Flowserve Corporation (NYSE: FLS), a leading provider of flow
control products and services for the global infrastructure
markets, today announced its financial results for the second
quarter ended June 30, 2024.
Second Quarter 2024
Highlights (all comparisons to the 2023 second quarter,
unless otherwise noted)
- Reported EPS of $0.55 and Adjusted EPS of $0.73, compared to
$0.39 and $0.52, respectively
- Second quarter 2024 Reported EPS includes after-tax adjusted
expenses of $23.7 million, comprised of realignment charges and
write-down of investment among other items
- Total bookings were $1.25 billion, up $135.1 million or 12.2%.
On a constant currency basis5, total bookings were up $144.2
million or 13.0%
- Original equipment bookings were $632.1 million, up $112.0
million or 21.5%. On a constant currency basis, original equipment
bookings were up $115.2 million or 22.2%
- Aftermarket bookings were $614.0 million, up $23.1 million or
3.9%. On a constant currency basis, aftermarket bookings were up
$29.0 million or 4.9%
- Sales were $1.16 billion, up $76.5 million or 7.1%. On a
constant currency basis, sales were up $83.7 million or 7.7%
- Original equipment sales were $566.4 million, up $48.5 million
or 9.4%. On a constant currency basis, original equipment sales
were up $51.0 million or 9.8%
- Aftermarket sales were $590.5 million, up $28.0 million or
5.0%. On a constant currency basis, aftermarket sales were up $32.7
million or 5.8%
- Reported gross and operating margins were 31.6% and 10.5%,
respectively, up 170 basis points and 160 basis points,
respectively
- Adjusted gross and operating margins were 32.3% and 12.5%,
respectively, up 200 basis points and 210 basis points,
respectively
- Backlog of $2.7 billion was up 2.8% sequentially with a second
quarter book-to-bill of 1.08x
“Our second quarter results further solidify the momentum we
have generated over the last several quarters. We delivered
meaningful sequential and year-over-year improvements in bookings,
revenue and margins driven by our operational excellence program
and the effectiveness of organizational design changes implemented
last year. We achieved significant bookings of $1.25 billion during
the quarter, which included a healthy mix of record quarterly
aftermarket bookings and large project bookings,” said Scott Rowe,
Flowserve’s President and Chief Executive Officer. “With
accelerating operational performance, our constructive end markets,
and a renewed focus on product management, we believe we are well
positioned to deliver on our long-term targets.”
Rowe concluded, “With our strong financial and operating
performance year-to-date, combined with our outlook for the rest of
the year and confidence in our execution, we have increased our
full-year Adjusted EPS guidance for 2024. Our 3D strategy continues
to accelerate our growth, and we remain committed to further
capitalizing on opportunities that will deliver long-term value
creation for our customers, associates, and shareholders.”
Revised 2024 Guidance4
Flowserve is raising its Adjusted EPS guidance metrics for 2024
and reaffirmed most other financial targets, as shown in the table
below:
Prior
Target Range6
Revised
Target Range
Revenue Growth
Up 4.0% to 6.0%
Reaffirmed
Reported Earnings Per Share
$2.25 - $2.45
Reaffirmed
Adjusted Earnings Per Share
$2.50 - $2.70
$2.60 – $2.75
Net Interest Expense
$60 to $65 million
Reaffirmed
Adjusted Tax Rate
~20%
~21%
Capital Expenditures
$75 - $85 million
Reaffirmed
Flowserve’s 2024 Adjusted EPS target range excludes expected
adjusted items including realignment charges of approximately $45
million, as well as the potential impact of below-the-line foreign
currency effects and certain other discrete items which may arise
during the course of the year.
Second Quarter 2024 Results Conference
Call
Flowserve will host its conference call with the financial
community on Tuesday, July 30th at 10:00 AM Eastern. Scott Rowe,
President and Chief Executive Officer, as well as other members of
the management team will be presenting. The call can be accessed by
shareholders and other interested parties at www.flowserve.com
under the “Investors” section.
1
See Consolidated Reconciliation of
Non-GAAP Financial Measures to the Most Directly Comparable GAAP
Financial Measure (Unaudited) and Segment Reconciliation of
Non-GAAP Financial Measures to the Most Directly Comparable GAAP
Financial Measure (Unaudited) tables for a detailed reconciliation
of reported results to adjusted measures.
2
Adjusted EPS excludes identified
realignment expenses, the impact from other specific discrete items
and below-the-line foreign currency effects and utilizes the
then-applicable foreign exchange rates and approximately 132
million fully diluted shares.
3
Adjusted gross and operating margins are
calculated by dividing adjusted gross profit and adjusted operating
income, respectively, by revenues. Adjusted gross profit and
adjusted operating income are derived by excluding the adjusted
items. See Consolidated Reconciliation of Non-GAAP Financial
Measures to the Most Directly Comparable GAAP Financial Measure
(Unaudited) and Segment Reconciliation of Non-GAAP Financial
Measures to the Most Directly Comparable GAAP Financial Measure
(Unaudited) tables for a detailed reconciliation.
4
2024 Adjusted EPS excludes realignment
expenses as well as the impact of below-the-line foreign currency
effects and certain other discrete items which may arise during the
year and utilizes June 2024 foreign exchange rates and
approximately 132 million fully diluted shares.
5
Constant currency is a non-GAAP financial
measure. We have calculated constant currency amounts and the
associated currency effects on operations by translating current
year results on a monthly basis at prior year exchange rates for
the same periods.
6
Prior target range was provided as of
April 29, 2024.
CONDENSED CONSOLIDATED STATEMENTS OF
INCOME
(Unaudited)
Three Months Ended June
30,
(Amounts in thousands, except per share
data)
2024
2023
Sales
$
1,156,892
$
1,080,376
Cost of sales
(790,796
)
(757,616
)
Gross profit
366,096
322,760
Selling, general and administrative
expense
(238,627
)
(230,082
)
Loss on sale of business
(12,981
)
-
Net earnings from affiliates
6,816
3,970
Operating income
121,304
96,648
Interest expense
(16,917
)
(16,554
)
Interest income
1,174
1,907
Other income (expense), net
(5,263
)
(5,543
)
Earnings (loss) before income taxes
100,298
76,458
Provision for income taxes
(23,846
)
(21,304
)
Net earnings (loss), including
noncontrolling interests
76,452
55,154
Less: Net earnings attributable to
noncontrolling interests
(3,836
)
(3,951
)
Net earnings (loss) attributable to
Flowserve Corporation
$
72,616
$
51,203
Net earnings (loss) per share attributable
to Flowserve Corporation common shareholders:
Basic
$
0.55
$
0.39
Diluted
0.55
0.39
Weighted average shares – basic
131,656
131,171
Weighted average shares – diluted
132,415
131,810
Consolidated Reconciliation of Non-GAAP
Financial Measures to the Most Directly Comparable GAAP Financial
Measure (Unaudited)
(Amounts in thousands, except per share
data)
Three Months Ended June 30,
2024
Gross Profit
Selling, General &
Administrative Expense
Loss on Sale of
Business
Operating Income
Other Income (Expense),
Net
Provision For (Benefit From)
Income Taxes
Net Earnings (Loss)
Effective Tax Rate
Diluted EPS
Reported
$
366,096
$
238,627
$
12,981
$
121,304
$
(5,263
)
$
23,846
$
72,616
23.8
%
0.55
Reported as a percent of sales
31.6
%
20.6
%
1.1
%
10.5
%
-0.5
%
2.1
%
6.3
%
Realignment charges (a)
7,521
267
(12,981
)
20,235
-
1,558
18,677
7.7
%
0.14
Discrete items (b)
-
(1,100
)
-
1,100
-
259
841
23.5
%
0.01
Discrete asset write-downs (c)(d)
-
(1,795
)
-
1,795
3,567
1,342
4,020
25.0
%
0.03
Below-the-line foreign exchange impacts
(e)
-
-
-
-
207
29
178
13.9
%
0.00
Adjusted
$
373,617
$
235,999
$
-
$
144,434
$
(1,489
)
$
27,034
$
96,332
21.3
%
0.73
Adjusted as a percent of sales
32.3
%
20.4
%
0.0
%
12.5
%
-0.1
%
2.3
%
8.3
%
Note: Amounts may not calculate due to
rounding
(a) Charges represent realignment costs
incurred as a result of realignment programs of which $19,200 is
non-cash.
(b) Charge represents costs associated
with merger and acquisition activity.
(c) Charge represents a $1,795 non-cash
write-down of a software asset.
(d) Charge represents a $3,567 non-cash
write-down of a debt investment.
(e) Below-the-line foreign exchange
impacts represent the remeasurement of foreign exchange derivative
contracts as well as the remeasurement of assets and liabilities
that are denominated in a currency other than a site’s respective
functional currency.
Three Months Ended June 30,
2023
Gross Profit
Selling, General &
Administrative Expense
Operating Income
Other Income (Expense),
Net
Provision For (Benefit From)
Income Taxes
Net Earnings (Loss)
Effective Tax Rate
Diluted EPS
Reported
$
322,760
$
230,082
$
96,648
$
(5,543
)
$
21,304
$
51,203
27.9
%
0.39
Reported as a percent of sales
29.9
%
21.3
%
8.9
%
-0.5
%
2.0
%
4.7
%
Realignment charges (a)
4,106
(7,445
)
11,551
-
2,982
8,569
25.8
%
0.07
Acquisition related (b)
-
(2,856
)
2,856
-
732
2,124
25.6
%
0.02
Discrete asset write-downs (c)
796
(1,038
)
1,834
-
479
1,355
26.1
%
0.01
Below-the-line foreign exchange impacts
(d)
-
-
-
4,758
(156
)
4,914
-3.3
%
0.04
Adjusted
$
327,662
$
218,743
$
112,889
$
(785
)
$
25,341
$
68,165
26.0
%
0.52
Adjusted as a percent of sales
30.3
%
20.2
%
10.4
%
-0.1
%
2.3
%
6.3
%
Note: Amounts may not calculate due to
rounding
(a) Charges represent realignment costs
incurred as a result of realignment programs of which $4 is
non-cash.
(b) Charges represent costs associated
with a terminated acquisition.
(c) Charge represents a further expense of
$1,834 associated with a sales contract that was initially adjusted
out of Non-GAAP measures in 2017.
(d) Below-the-line foreign exchange
impacts represent the remeasurement of foreign exchange derivative
contracts as well as the remeasurement of assets and liabilities
that are denominated in a currency other than a site’s respective
functional currency.
SEGMENT INFORMATION
(Unaudited)
FLOWSERVE PUMPS DIVISION
Three Months Ended June
30,
(Amounts in millions, except
percentages)
2024
2023
Bookings
$
898.8
$
760.0
Sales
812.2
765.4
Gross profit
260.2
226.8
Gross profit margin
32.0
%
29.6
%
SG&A
136.1
132.8
Segment operating income
131.0
98.0
Segment operating income as a percentage
of sales
16.1
%
12.8
%
FLOW CONTROL DIVISION
Three Months Ended June
30,
(Amounts in millions, except
percentages)
2024
2023
Bookings
$
349.2
$
359.7
Sales
347.7
317.7
Gross profit
106.3
93.1
Gross profit margin
30.6
%
29.3
%
SG&A
61.0
56.9
Loss on sale of business
(13.0
)
-
Segment operating income
32.3
36.1
Segment operating income as a percentage
of sales
9.3
%
11.4
%
Segment Reconciliation of Non-GAAP
Financial Measures to the Most Directly Comparable GAAP Financial
Measure (Unaudited)
(Amounts in thousands)
Flowserve Pumps
Division
Three Months Ended June 30,
2024
Gross Profit
Selling, General &
Administrative Expense
Operating Income
Three Months Ended June 30,
2023
Gross Profit
Selling, General &
Administrative Expense
Operating Income
Reported
$
260,215
$
136,053
$
130,978
Reported
$
226,814
$
132,780
$
98,003
Reported as a percent of sales
32.0
%
16.8
%
16.1
%
Reported as a percent of sales
29.6
%
17.3
%
12.8
%
Realignment charges (a)
7,378
720
6,658
Realignment charges (a)
953
(17
)
970
Adjusted
$
267,593
$
136,773
$
137,636
Discrete asset write-downs (b)
796
(1,038
)
1,834
Adjusted as a percent of sales
32.9
%
16.8
%
16.9
%
Adjusted
$
228,563
$
131,725
$
100,807
Adjusted as a percent of sales
29.9
%
17.2
%
13.2
%
Flow Control
Division
Three Months Ended June 30,
2024
Gross Profit
Selling, General &
Administrative Expense
Loss on Sale of
Business
Operating Income
Three Months Ended June 30,
2023
Gross Profit
Selling, General &
Administrative Expense
Operating Income
Reported
$
106,271
$
61,034
$
12,981
$
32,251
Reported
$
93,058
$
56,943
$
36,115
Reported as a percent of sales
30.6
%
17.6
%
3.7
%
9.3
%
Reported as a percent of sales
29.3
%
17.9
%
11.4
%
Realignment charges (a)
221
53
(12,981
)
13,149
Realignment charges (a)
3,153
-
3,153
Discrete items (b)
-
(1,100
)
-
1,100
Acquisition related (c)
-
(2,856
)
2,856
Adjusted
$
106,492
$
59,987
$
-
$
46,500
Adjusted
$
96,211
$
54,087
$
42,124
Adjusted as a percent of sales
30.6
%
17.3
%
0.0
%
13.4
%
Adjusted as a percent of sales
30.3
%
17.0
%
13.3
%
Note: Amounts may not calculate due to
rounding
Note: Amounts may not calculate due to
rounding
(a) Charges represent realignment costs
incurred as a result of realignment programs of which $19,200 is
non-cash.
(a) Charges represent realignment costs
incurred as a result of realignment programs of which $4 is
non-cash.
(b) Charge represents costs associated
with merger and acquisition activity.
(b) Charge represents a further expense of
$1,834 associated with a sales contract that was initially adjusted
out of Non-GAAP measures in 2017.
(c) Charge represents costs associated
with a terminated acquisition.
CONDENSED CONSOLIDATED STATEMENTS OF
INCOME
(Unaudited)
Six Months Ended June
30,
(Amounts in thousands, except per share
data)
2024
2023
Sales
$
2,244,371
$
2,060,681
Cost of sales
(1,539,307
)
(1,441,090
)
Gross profit
705,064
619,591
Selling, general and administrative
expense
(467,045
)
(474,359
)
Loss on sale of businesses
(12,981
)
-
Net earnings from affiliates
9,344
8,603
Operating income
234,382
153,835
Interest expense
(32,233
)
(32,766
)
Interest income
2,343
3,401
Other income (expense), net
(6,137
)
(13,562
)
Earnings (loss) before income taxes
198,355
110,908
Benefit from (provision for) income
taxes
(43,988
)
(25,757
)
Net earnings (loss), including
noncontrolling interests
154,367
85,151
Less: Net earnings attributable to
noncontrolling interests
(7,531
)
(7,181
)
Net earnings (loss) attributable to
Flowserve Corporation
$
146,836
$
77,970
Net earnings (loss) per share attributable
to Flowserve Corporation common shareholders:
Basic
$
1.12
$
0.59
Diluted
1.11
0.59
Weighted average shares – basic
131,583
131,051
Weighted average shares – diluted
132,392
131,782
Consolidated Reconciliation of Non-GAAP
Financial Measures to the Most Directly Comparable GAAP Financial
Measure (Unaudited)
(Amounts in thousands, except per share
data)
Six Months Ended June 30, 2024
Gross Profit
Selling, General &
Administrative Expense
Loss on Sale of
Business
Operating Income
Other Income (Expense),
Net
Provision For (Benefit From)
Income Taxes
Net Earnings (Loss)
Effective Tax Rate
Diluted EPS
Reported
$
705,064
$
467,045
$
12,981
$
234,382
$
(6,137
)
$
43,988
$
146,836
22.2
%
1.11
Reported as a percent of sales
31.4
%
20.8
%
0.6
%
10.4
%
-0.3
%
2.0
%
6.5
%
Realignment charges (a)
13,194
(1,227
)
(12,981
)
27,402
-
2,281
25,121
8.3
%
0.19
Discrete items (b)(c)
-
900
-
(900
)
-
259
(1,159
)
-28.8
%
(0.01
)
Discrete asset write-downs (d)(e)
-
(1,795
)
-
1,795
3,567
1,342
4,020
25.0
%
0.03
Below-the-line foreign exchange impacts
(f)
-
-
-
-
(1,116
)
(22
)
(1,094
)
2.0
%
(0.01
)
Adjusted
$
718,258
$
464,923
$
-
$
262,679
$
(3,686
)
$
47,848
$
173,724
20.9
%
1.31
Adjusted as a percent of sales
32.0
%
20.7
%
0.0
%
11.7
%
-0.2
%
2.1
%
7.7
%
Note: Amounts may not calculate due to
rounding
(a) Charges represent realignment costs
incurred as a result of realignment programs of which $20,000 is
non-cash.
(b) Represents a reduction to reserves of
$2,000 associated with our ongoing financial exposure in Russia
that were adjusted for Non-GAAP measures when established in
2022.
(c) Charge represents $1,100 of costs
associated with merger and acquisition activity.
(d) Charge represents a $1,795 non-cash
write-down of a software asset.
(e) Charge represents a $3,567 non-cash
write-down of a debt investment.
(f) Below-the-line foreign exchange
impacts represent the remeasurement of foreign exchange derivative
contracts as well as the remeasurement of assets and liabilities
that are denominated in a currency other than a site’s respective
functional currency.
Six Months Ended June 30, 2023
Gross Profit
Selling, General &
Administrative Expense
Operating Income
Other Income (Expense),
Net
Provision For (Benefit From)
Income Taxes
Net Earnings (Loss)
Effective Tax Rate
Diluted EPS
Reported
$
619,591
$
474,359
$
153,835
$
(13,562
)
$
25,757
$
77,970
23.2
%
0.59
Reported as a percent of sales
30.1
%
23.0
%
7.5
%
-0.7
%
1.2
%
3.8
%
Realignment charges (a)
4,308
(24,122
)
28,430
-
6,166
22,264
21.7
%
0.17
Acquisition related (b)
-
(5,952
)
5,952
-
1,554
4,398
26.1
%
0.03
Discrete asset write-downs (c)(d)(e)
1,969
(3,955
)
5,924
-
1,517
4,407
25.6
%
0.03
Below-the-line foreign exchange impacts
(f)
-
-
-
12,164
393
11,771
3.2
%
0.09
Adjusted
$
625,868
$
440,330
$
194,141
$
(1,398
)
$
35,387
$
120,810
21.7
%
0.92
Adjusted as a percent of sales
30.4
%
21.4
%
9.4
%
-0.1
%
1.7
%
5.9
%
Note: Amounts may not calculate due to
rounding
(a) Charges represent realignment costs
incurred as a result of realignment programs of which $7,601 is
non-cash.
(b) Charges represent costs associated
with a terminated acquisition.
(c) Charge represents a further expense of
$1,834 associated with a sales contract that was initially adjusted
out of Non-GAAP measures in 2017.
(d) Charge represents a further $1,173
non-cash write-down of inventory associated with a customer sales
contract that was originally determined to be uncollectible in
2020.
(e) Charge represents a $2,917 non-cash
write-down of a licensing agreement.
(f) Below-the-line foreign exchange
impacts represent the remeasurement of foreign exchange derivative
contracts as well as the remeasurement of assets and liabilities
that are denominated in a currency other than a site’s respective
functional currency.
SEGMENT INFORMATION
(Unaudited)
FLOWSERVE PUMPS DIVISION
Six Months Ended June
30,
(Amounts in millions, except
percentages)
2024
2023
Bookings
$
1,602.2
$
1,487.8
Sales
1,581.6
1,465.5
Gross profit
508.2
448.2
Gross profit margin
32.1
%
30.6
%
SG&A
275.8
279.8
Segment operating income
241.9
177.1
Segment operating income as a percentage
of sales
15.3
%
12.1
%
FLOW CONTROL DIVISION
Six Months Ended June
30,
(Amounts in millions, except
percentages)
2024
2023
Bookings
$
689.9
$
691.6
Sales
668.2
599.3
Gross profit
199.0
173.4
Gross profit margin
29.8
%
28.9
%
SG&A
119.0
118.7
Loss on sale of business
(13.0
)
-
Segment operating income
67.0
54.6
Segment operating income as a percentage
of sales
10.0
%
9.1
%
Segment Reconciliation of Non-GAAP
Financial Measures to the Most Directly Comparable GAAP Financial
Measure (Unaudited)
(Amounts in thousands)
Flowserve Pumps
Division
Six Months Ended June 30, 2024
Gross Profit
Selling, General &
Administrative Expense
Operating Income
Six Months Ended June 30, 2023
Gross Profit
Selling, General &
Administrative Expense
Operating Income
Reported
$
508,153
$
275,763
$
241,872
Reported
$
448,241
$
279,759
$
177,076
Reported as a percent of sales
32.1
%
17.4
%
15.3
%
Reported as a percent of sales
30.6
%
19.1
%
12.1
%
Realignment charges (a)
12,422
(321
)
12,743
Realignment charges (a)
1,343
(2,067
)
3,410
Discrete item (b)
-
2,000
(2,000
)
Discrete asset write-downs (b)(c)(d)
1,969
(3,955
)
5,924
Adjusted
$
520,575
$
277,442
$
252,615
Adjusted
$
451,553
$
273,737
$
186,410
Adjusted as a percent of sales
32.9
%
17.5
%
16.0
%
Adjusted as a percent of sales
30.8
%
18.7
%
12.7
%
Flow Control
Division
Six Months Ended June 30, 2024
Gross Profit
Selling, General &
Administrative Expense
Loss on Sale of
Business
Operating Income
Six Months Ended June 30, 2023
Gross Profit
Selling, General &
Administrative Expense
Operating Income
Reported
$
198,966
$
119,026
$
12,981
$
66,959
Reported
$
173,351
$
118,702
$
54,649
Reported as a percent of sales
29.8
%
17.8
%
1.9
%
10.0
%
Reported as a percent of sales
28.9
%
19.8
%
9.1
%
Realignment charges (a)
988
(61
)
(12,981
)
14,030
Realignment charges (a)
3,164
(8,906
)
12,070
Discrete item (c)
-
(1,100
)
-
1,100
Acquisition related (e)
-
(5,952
)
5,952
Adjusted
$
199,954
$
117,865
$
-
$
82,089
Adjusted
$
176,515
$
103,844
$
72,671
Adjusted as a percent of sales
29.9
%
17.6
%
0.0
%
12.3
%
Adjusted as a percent of sales
29.5
%
17.3
%
12.1
%
Note: Amounts may not calculate due to
rounding
Note: Amounts may not calculate due to
rounding
(a) Charges represent realignment costs
incurred as a result of realignment programs of which $20,000 is
non-cash.
(a) Charges represent realignment costs
incurred as a result of realignment programs of which $4 is
non-cash.
(b) Represents a reduction to reserves
associated with our ongoing financial exposure in Russia that were
adjusted for Non-GAAP measures when established in 2022.
(b) Charge represents a further expense of
$1,834 associated with a sales contract that was initially adjusted
out of Non-GAAP measures in 2017.
(c) Charge represents costs associated
with merger and acquisition activity.
(c) Charge represents a further $1,173
non-cash write-down of inventory associated with a customer sales
contract that was originally determined to be uncollectible in
2020.
(d) Charge represents a $2,917 non-cash
write-down of a licensing agreement.
(e) Charges represent costs associated
with a terminated acquisition.
Second Quarter and
Year-to-Date 2024 - Segment Results
(dollars in millions, comparison
vs. 2023 second quarter and year-to-date, unaudited)
FPD
FCD
2nd Qtr
YTD
2nd Qtr
YTD
Bookings
$
898.8
$
1,602.2
$
349.2
$
689.9
- vs. prior year
138.8
18.3
%
114.4
7.7
%
-10.5
-2.9
%
-1.7
-0.2
%
- on constant currency
145.6
19.2
%
120.7
8.1
%
-8.3
-2.3
%
1.3
0.2
%
Sales
$
812.2
$
1,581.6
$
347.7
$
668.2
- vs. prior year
46.8
6.1
%
116.1
7.9
%
30.0
9.4
%
68.9
11.5
%
- on constant currency
52.0
6.8
%
118.2
8.1
%
32.0
10.1
%
71.2
11.9
%
Gross Profit
$
260.2
$
508.2
$
106.3
$
199.0
- vs. prior year
14.7
%
13.4
%
14.2
%
14.8
%
Gross Margin (% of sales)
32.0
%
32.1
%
30.6
%
29.8
%
- vs. prior year (in basis points)
240 bps
150 bps
130 bps
90 bps
Operating Income
$
131.0
$
241.9
$
32.3
$
67.0
- vs. prior year
33.0
33.7
%
64.8
36.6
%
-3.8
-10.5
%
12.4
22.7
%
- on constant currency
34.5
35.2
%
66.6
37.6
%
-3.3
-9.4
%
13.2
23.9
%
Operating Margin (% of sales)
16.1
%
15.3
%
9.3
%
10.0
%
- vs. prior year (in basis points)
330 bps
320 bps
(210) bps
90 bps
Adjusted Operating Income *
$
137.6
$
252.6
$
46.5
$
82.1
- vs. prior year
36.8
36.5
%
66.2
35.5
%
4.4
10.5
%
9.4
12.9
%
- on constant currency
38.3
38.0
%
68.0
36.5
%
4.9
11.5
%
10.2
14.0
%
Adj. Oper. Margin (% of sales)*
16.9
%
16.0
%
13.4
%
12.3
%
- vs. prior year (in basis points)
370 bps
330 bps
10 bps
20 bps
Backlog
$
1,857.8
$
837.5
* Adjusted Operating Income and Adjusted
Operating Margin exclude realignment charges and other specific
discrete items
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Unaudited)
June 30,
December 31,
(Amounts in thousands, except par
value)
2024
2023
ASSETS
Current assets:
Cash and cash equivalents
$
515,083
$
545,678
Accounts receivable, net of allowance for
expected credit losses of $80,591 and $80,013, respectively
1,031,656
881,869
Contract assets, net of allowance for
expected credit losses of $4,815 and $4,993, respectively
287,676
280,228
Inventories
851,305
879,937
Prepaid expenses and other
130,095
116,065
Total current assets
2,815,815
2,703,777
Property, plant and equipment, net of
accumulated depreciation of $1,156,824 and $1,158,451,
respectively
491,864
506,158
Operating lease right-of-use assets,
net
157,797
156,430
Goodwill
1,170,555
1,182,225
Deferred taxes
214,930
218,358
Other intangible assets, net
117,236
122,248
Other assets, net of allowance for
expected credit losses of $65,895 and $66,864, respectively
196,287
219,523
Total assets
$
5,164,484
$
5,108,719
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable
$
557,145
$
547,824
Accrued liabilities
457,697
504,430
Contract liabilities
293,354
287,697
Debt due within one year
66,439
66,243
Operating lease liabilities
31,705
32,382
Total current liabilities
1,406,340
1,438,576
Long-term debt due after one year
1,211,611
1,167,307
Operating lease liabilities
145,016
138,665
Retirement obligations and other
liabilities
385,193
389,120
Shareholders’ equity:
Common shares, $1.25 par value
220,991
220,991
Shares authorized – 305,000
Shares issued – 176,793 and 176,793,
respectively
Capital in excess of par value
489,786
506,525
Retained earnings
3,945,577
3,854,717
Treasury shares, at cost – 45,620 and
45,885 shares, respectively
(2,004,494
)
(2,014,474
)
Deferred compensation obligation
7,979
7,942
Accumulated other comprehensive loss
(689,775
)
(639,601
)
Total Flowserve Corporation shareholders'
equity
1,970,064
1,936,100
Noncontrolling interests
46,260
38,951
Total equity
2,016,324
1,975,051
Total liabilities and equity
$
5,164,484
$
5,108,719
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
(Unaudited)
Six Months Ended June
30,
(Amounts in thousands)
2024
2023
Cash flows – Operating
activities:
Net earnings (loss), including
noncontrolling interests
$
154,367
$
85,151
Adjustments to reconcile net earnings
(loss) to net cash provided (used) by operating activities:
Depreciation
37,883
37,452
Amortization of intangible and other
assets
4,391
5,158
Loss on sale of business
12,981
-
Stock-based compensation
17,400
15,878
Foreign currency, asset write downs and
other non-cash adjustments
10,935
(8,418
)
Change in assets and liabilities:
Accounts receivable, net
(168,540
)
(5,350
)
Inventories
3,603
(99,240
)
Contract assets, net
(13,267
)
9,917
Prepaid expenses and other assets, net
10,945
(105
)
Accounts payable
14,376
7,118
Contract liabilities
10,894
10,831
Accrued liabilities
(47,795
)
(2,091
)
Retirement obligations and other
liabilities
4,402
8,412
Net deferred taxes
(3,100
)
(14,329
)
Net cash flows provided (used) by
operating activities
49,475
50,384
Cash flows – Investing
activities:
Capital expenditures
(28,289
)
(31,893
)
Payments for disposition of business
(2,352
)
-
Other
551
(941
)
Net cash flows provided (used) by
investing activities
(30,090
)
(32,834
)
Cash flows – Financing
activities:
Payments on term loan
(30,000
)
(20,000
)
Proceeds under revolving credit
facility
100,000
150,000
Payments under revolving credit
facility
(25,000
)
(100,000
)
Proceeds under other financing
arrangements
562
197
Payments under other financing
arrangements
(1,460
)
(3,458
)
Repurchases of common shares
(16,161
)
-
Payments related to tax withholding for
stock-based compensation
(9,093
)
(6,235
)
Payments of dividends
(55,259
)
(52,471
)
Other
(272
)
(320
)
Net cash flows provided (used) by
financing activities
(36,683
)
(32,287
)
Effect of exchange rate changes on cash
and cash equivalents
(13,297
)
2,603
Net change in cash and cash
equivalents
(30,595
)
(12,134
)
Cash and cash equivalents at beginning of
period
545,678
434,971
Cash and cash equivalents at end of
period
$
515,083
$
422,837
About Flowserve
Flowserve Corp. is one of the world’s leading providers of fluid
motion and control products and services. Operating in more than 50
countries, the company produces engineered and industrial pumps,
seals and valves as well as a range of related flow management
services. More information about Flowserve can be obtained by
visiting the company’s Web site at www.flowserve.com.
Safe Harbor Statement: This news release includes
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange
Act of 1934, which are made pursuant to the safe harbor provisions
of the Private Securities Litigation Reform Act of 1995, as
amended. Words or phrases such as, "may," "should," "expects,"
"could," "intends," "plans," "anticipates," "estimates,"
"believes," "forecasts," "predicts" or other similar expressions
are intended to identify forward-looking statements, which include,
without limitation, earnings forecasts, statements relating to our
business strategy and statements of expectations, beliefs, future
plans and strategies and anticipated developments concerning our
industry, business, operations and financial performance and
condition.
The forward-looking statements included in this news release are
based on our current expectations, projections, estimates and
assumptions. These statements are only predictions, not guarantees.
Such forward-looking statements are subject to numerous risks and
uncertainties that are difficult to predict. These risks and
uncertainties may cause actual results to differ materially from
what is forecast in such forward-looking statements, and include,
without limitation, the following: economic, political and other
risks associated with our international operations, including
military actions, trade embargoes, epidemics or pandemics or
changes to tariffs or trade agreements that could affect customer
markets, particularly North African, Latin American, Asian and
Middle Eastern markets and global oil and gas producers, and
non-compliance with U.S. export/re-export control, foreign corrupt
practice laws, economic sanctions and import laws and regulations;
any continued volatile regional and global economic conditions
resulting from the COVID-19 pandemic on our business and
operations; global supply chain disruptions and the current
inflationary environment could adversely affect the efficiency of
our manufacturing and increase the cost of providing our products
to customers; a portion of our bookings may not lead to completed
sales, and our ability to convert bookings into revenues at
acceptable profit margins; changes in global economic conditions
and the potential for unexpected cancellations or delays of
customer orders in our reported backlog; our dependence on our
customers’ ability to make required capital investment and
maintenance expenditures; if we are not able to successfully
execute and realize the expected financial benefits from any
restructuring and realignment initiatives, our business could be
adversely affected; the substantial dependence of our sales on the
success of the oil and gas, chemical, power generation and water
management industries; the adverse impact of volatile raw materials
prices on our products and operating margins; increased aging and
slower collection of receivables, particularly in Latin America and
other emerging markets; our exposure to fluctuations in foreign
currency exchange rates, including in hyperinflationary countries
such as Venezuela and Argentina; potential adverse consequences
resulting from litigation to which we are a party, such as
litigation involving asbestos-containing material claims;
expectations regarding acquisitions and the integration of acquired
businesses; the potential adverse impact of an impairment in the
carrying value of goodwill or other intangible assets; our
dependence upon third-party suppliers whose failure to perform
timely could adversely affect our business operations; the highly
competitive nature of the markets in which we operate;
environmental compliance costs and liabilities; potential work
stoppages and other labor matters; access to public and private
sources of debt financing; our inability to protect our
intellectual property in the U.S., as well as in foreign countries;
obligations under our defined benefit pension plans; our internal
control over financial reporting may not prevent or detect
misstatements because of its inherent limitations, including the
possibility of human error, the circumvention or overriding of
controls, or fraud; the recording of increased deferred tax asset
valuation allowances in the future or the impact of tax law changes
on such deferred tax assets could affect our operating results; our
information technology infrastructure could be subject to service
interruptions, data corruption, cyber-based attacks or network
security breaches, which could disrupt our business operations and
result in the loss of critical and confidential information;
ineffective internal controls could impact the accuracy and timely
reporting of our business and financial results; and other factors
described from time to time in our filings with the Securities and
Exchange Commission.
All forward-looking statements included in this news release are
based on information available to us on the date hereof, and we
assume no obligation to update any forward-looking statement.
The Company reports its financial results in accordance with
U.S. generally accepted accounting principles (GAAP). However,
management believes that non-GAAP financial measures which exclude
certain non-recurring items present additional useful comparisons
between current results and results in prior operating periods,
providing investors with a clearer view of the underlying trends of
the business. Management also uses these non-GAAP financial
measures in making financial, operating, planning and compensation
decisions and in evaluating the Company's performance. Non-GAAP
financial measures, which may be inconsistent with similarly
captioned measures presented by other companies, should be viewed
in addition to, and not as a substitute for, the Company’s reported
results prepared in accordance with GAAP.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240729279537/en/
Investor Contacts: Jay Roueche, Vice President, Investor
Relations & Treasurer, (972) 443-6560 Tarek Zeni, Director,
Investor Relations, (469) 420-4045
Media Contact: Wes Warnock, Vice President, Marketing,
Communications & Public Affairs, (972) 443-6900
Flowserve (NYSE:FLS)
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Flowserve (NYSE:FLS)
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