Flowserve Corporation Reports Second Quarter 2024 Results; Raises Full-Year Adjusted EPS

By: Flowserve Corporation via Business Wire

July 29, 2024 at 17:07 PM EDT

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 30^th 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/

Contacts

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

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Flowserve Corporation Reports Second Quarter 2024 Results; Raises Full-Year Adjusted EPS

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