Flowserve Corporation Reports Third Quarter 2024 Results; Reaffirms 2024 Adjusted EPS Guidance

By: Flowserve Corporation via Business Wire

October 28, 2024 at 16:05 PM EDT

Bookings of $1.20 billion, an increase of 12.7% compared to prior year, including $615 million of aftermarket activity and record levels of 3D strategy bookings
Power bookings increased nearly 30% year-over-year, including over $100 million in nuclear awards during the third quarter
Adjusted Gross and Operating Margins¹ of 32.4% and 11.1%, respectively, an increase of 270 and 240 basis points compared to prior year period
Third quarter Reported and Adjusted² Earnings Per Share (EPS)³ of 44 cents and 62 cents, an increase of 26% and 24%, respectively, and both include a 7 cent unfavorable impact from a discrete charge for certain long-term liabilities
Generated strong operating cash flow of $178 million, an increase of 121% year-over-year, driven by earnings growth and working capital improvements

Flowserve Corporation (NYSE: FLS) (“Flowserve” or the “Company”), a leading provider of flow control products and services for the global infrastructure markets, today announced its financial results for the third quarter ended September 30, 2024.

Third Quarter 2024 Highlights (all comparisons to the 2023 third quarter, unless otherwise noted)

Total bookings were $1.20 billion, up $136.1 million or 12.7%. On a constant currency basis⁴, total bookings were up $142.8 million or 13.4%
- Original equipment bookings were $589.0 million, up $103.8 million or 21.4%. On a constant currency basis, original equipment bookings were up $106.1 million or 21.9%
- Aftermarket bookings were $614.6 million, up $32.3 million or 5.6%. On a constant currency basis, aftermarket bookings were up $36.7 million or 6.3%
Sales were $1.13 billion, up $38.4 million or 3.5%. On a constant currency basis, sales were up $43.4 million or 4.0%
- Original equipment sales were $555.8 million, up $26.6 million or 5.0%. On a constant currency basis, original equipment sales were up $27.6 million or 5.2%
- Aftermarket sales were $577.3 million, up $11.7 million or 2.1%. On a constant currency basis, aftermarket sales were up $15.7 million or 2.8%
Reported gross and operating margins were 31.5% and 9.1%, respectively, up 250 basis points and 270 basis points, respectively
- Adjusted gross and operating margins were 32.4% and 11.1%, respectively, up 270 basis points and 240 basis points, respectively
- Both Reported and Adjusted third quarter 2024 operating margins were impacted by a $12.0 million expense charge from an actuarial-determined assessment of certain long-term liabilities, which reduced operating margins by approximately 106 basis points
Reported EPS of $0.44 and Adjusted EPS of $0.62, compared to $0.35 and $0.50, respectively
- Third quarter 2024 Reported EPS includes after-tax adjusted expenses of $23.5 million, comprised of realignment charges, an in-process R&D technology purchase, pension plan transition expense, below-the-line foreign currency impact and MOGAS Industries acquisition expense
- Both Reported and Adjusted EPS were impacted by a $9.2 million (7 cents per share) expense charge resulting from an actuarial-determined assessment of certain long-term liabilities
Backlog of $2.8 billion was up 3.7% sequentially with a third quarter book-to-bill of 1.06x

“Our third quarter results reflect strong operational performance, including meaningful year-over-year improvements in margins, EPS and cash flow. The Flowserve Business System is beginning to deliver results as we advance our operational excellence and portfolio excellence initiatives. We generated $1.2 billion in bookings during the quarter, which included a healthy mix of project awards, strong aftermarket activity and record bookings from our 3D strategic initiatives,” said Scott Rowe, Flowserve’s President and Chief Executive Officer. “We believe our 3D strategy, combined with the Flowserve Business System, are the key drivers to accelerating growth and continuing to expand our margins.”

Rowe concluded, “With backlog at near-record levels of $2.8 billion and our successful closing of the MOGAS Industries acquisition earlier this month, we expect to exit 2024 with positive momentum. We are well-positioned to continue our meaningful progress in 2025 toward our 2027 financial targets. I am confident that our sustained progress will enable us to create long-term value for our customers, associates, and shareholders.”

2024 Guidance⁵

Flowserve today reaffirmed its previously announced Adjusted EPS target range, as well as certain other financial metrics, provided in its full-year 2024 guidance issued on July 29, 2024. Flowserve’s 2024 Adjusted EPS target range excludes expected adjusted items including realignment charges of approximately $45 million and the potential impact of below-the-line foreign currency effects and certain other discrete items which may arise during the course of the year. In addition, Flowserve lowered its full-year 2024 Reported EPS target range. 2024 Guidance excludes the recently completed MOGAS Industries acquisition.

		Target Range
	Revenue Growth	Up 4.0% to 6.0%
	Reported Earnings Per Share	$2.15 - $2.35
	Adjusted Earnings Per Share	$2.60 - $2.75
	Net Interest Expense	$60 to $65 million
	Adjusted Tax Rate	~21%
	Capital Expenditures	$75 - $85 million

Third Quarter 2024 Results Conference Call

Flowserve will host its conference call with the financial community on Tuesday, October 29^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.

¹Adjusted 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.

²See 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.

³Adjusted 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.

⁴Constant 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.

⁵2024 Adjusted EPS excludes realignment expenses, the recently completed MOGAS Industries acquisition, the impact of below-the-line foreign currency effects and certain other discrete items which may arise during the year and utilizes September 2024 foreign exchange rates and approximately 132 million fully diluted shares.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
	Three Months Ended September 30,
(Amounts in thousands, except per share data)		2024			2023

Sales	$	1,133,087		$	1,094,718
Cost of sales		(776,020	)		(777,024	)
Gross profit		357,067			317,694
Selling, general and administrative expense		(259,025	)		(252,065	)
Net earnings from affiliates		5,150			4,627
Operating income		103,192			70,256
Interest expense		(16,587	)		(17,273	)
Interest income		1,403			2,134
Other income (expense), net		(5,920	)		(13,710	)
Earnings (loss) before income taxes		82,088			41,407
(Provision for) benefit from income taxes		(18,739	)		11,186
Net earnings (loss), including noncontrolling interests		63,349			52,593
Less: Net earnings attributable to noncontrolling interests		(4,967	)		(6,437	)
Net earnings (loss) attributable to Flowserve Corporation	$	58,382		$	46,156

Net earnings (loss) per share attributable to Flowserve Corporation common shareholders:
Basic	$	0.44		$	0.35
Diluted		0.44			0.35

Weighted average shares – basic		131,395			131,183
Weighted average shares – diluted		132,247			132,026

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 September 30, 2024	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	$	357,067		$	259,025		$	103,192		$	(5,920	)	$	18,739		$	58,382			22.8	%	0.44
Reported as a percent of sales		31.5	%		22.9	%		9.1	%		-0.5	%		1.7	%		5.2	%
Realignment charges (a)		6,813			(2,142	)		8,955			-			(246	)		9,201			-2.7	%	0.07
Discrete items (b)(c)		2,700			(9,500	)		12,200			-			2,869			9,331			23.5	%	0.07
Acquisition related (d)		-			(1,694	)		1,694			-			399			1,295			23.6	%	0.01
Below-the-line foreign exchange impacts (e)		-			-			-			3,184			(467	)		3,651			-14.8	%	0.03
Adjusted	$	366,580		$	245,689		$	126,041		$	(2,736	)	$	21,294		$	81,860			19.7	%	0.62
Adjusted as a percent of sales		32.4	%		21.7	%		11.1	%		-0.2	%		1.9	%		7.2	%

Note: Amounts may not calculate due to rounding
(a) Charges represent realignment costs incurred as a result of realignment programs of which $5,100 is non-cash.
(b) Charge represents a one-time $5,000 discretionary cash transition benefit provided to certain employees in conjunction with the freeze of our US Qualified pension plan.
(c) Charge represents the $7,200 strategic acquisition of intellectual property related to certain liquefied natural gas technology.
(d) Charge represents acquisition-related costs associated with the MOGAS acquisition.
(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 September 30, 2023	Gross Profit			Selling, General & Administrative Expense			Operating Income			Other Income (Expense), Net			Provision For (Benefit From) Income Taxes			Earnings Attributable to Noncontrolling Interests			Net Earnings (Loss)			Effective Tax Rate		Diluted EPS
Reported	$	317,694		$	252,065		$	70,256		$	(13,710	)	$	(11,186	)	$	6,437		$	46,156		-27.0	%	0.35
Reported as a percent of sales		29.0	%		23.0	%		6.4	%		-1.3	%		-1.0	%		0.6	%		4.2	%
Realignment charges (a)		7,240			(14,954	)		22,194			-			4,250			-			17,944		19.1	%	0.14
Acquisition related (b)		-			(2,539	)		2,539			-			443			-			2,096		17.4	%	0.02
Correction of prior period errors (c)		-			-			-			-			-			(3,559	)		3,559		0.0	%	0.03
Discrete tax benefit (d)		-			-			-			-			13,000			-			(13,000	)	0.0	%	(0.10	)
Below-the-line foreign exchange impacts (e)		-			-			-			12,164			2,276			-			9,888		18.7	%	0.07
Adjusted	$	324,934		$	234,572		$	94,989		$	(1,546	)	$	8,783		$	2,878		$	66,643		11.2	%	0.50
Adjusted as a percent of sales		29.7	%		21.4	%		8.7	%		-0.1	%		0.8	%		0.3	%		6.1	%

Note: Amounts may not calculate due to rounding
(a) Charges represent realignment costs incurred as a result of realignment programs of which $0 is non-cash.
(b) Charges represent costs associated with a terminated acquisition.
(c) Represents the amount to correct the cumulative impact of prior period errors
(d) Represents a discrete tax benefit due to release of tax valuation allowance on the net deferred tax assets in a foreign jurisdiction. The associated tax expense was adjusted out in 2015.
(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.

SEGMENT INFORMATION
(Unaudited)

FLOWSERVE PUMPS DIVISION	Three Months Ended September 30,
(Amounts in millions, except percentages)		2024			2023
Bookings	$	886.6		$	734.7
Sales		782.1			766.2
Gross profit		253.2			220.3
Gross profit margin		32.4	%		28.8	%
SG&A		149.1			146.7
Segment operating income		109.3			78.3
Segment operating income as a percentage of sales		14.0	%		10.2	%

FLOW CONTROL DIVISION	Three Months Ended September 30,
(Amounts in millions, except percentages)		2024			2023
Bookings	$	318.4		$	330.5
Sales		353.1			330.7
Gross profit		106.5			97.6
Gross profit margin		30.2	%		29.5	%
SG&A		59.8			54.0
Segment operating income		46.7			43.5
Segment operating income as a percentage of sales		13.2	%		13.2	%

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 September 30, 2024	Gross Profit			Selling, General & Administrative Expense			Operating Income			Three Months Ended September 30, 2023	Gross Profit			Selling, General & Administrative Expense			Operating Income
Reported	$	253,185		$	149,060		$	109,274		Reported	$	220,321		$	146,679		$	78,269
Reported as a percent of sales		32.4	%		19.1	%		14.0	%	Reported as a percent of sales		28.8	%		19.1	%		10.2	%
Realignment charges (a)		8,415			(716	)		9,131		Realignment charges (a)		6,141			(9,929	)		16,070
Discrete items (b)(c)		1,700			(8,000	)		9,700		Adjusted	$	226,462		$	136,750		$	94,339
Adjusted	$	263,300		$	140,344		$	128,105		Adjusted as a percent of sales		29.6	%		17.8	%		12.3	%
Adjusted as a percent of sales		33.7	%		17.9	%		16.4	%

Flow Control Division
Three Months Ended September 30, 2024	Gross Profit			Selling, General & Administrative Expense			Operating Income			Three Months Ended September 30, 2023	Gross Profit			Selling, General & Administrative Expense			Operating Income
Reported	$	106,503		$	59,790		$	46,713		Reported	$	97,563		$	54,016		$	43,547
Reported as a percent of sales		30.2	%		16.9	%		13.2	%	Reported as a percent of sales		29.5	%		16.3	%		13.2	%
Realignment charges (a)		(1,590	)		(1,379	)		(211	)	Realignment charges (a)		1,099			(1,572	)		2,671
Discrete items (b)		800			(400	)		1,200		Acquisition related (b)		-			(2,539	)		2,539
Acquisition related (d)		-			(1,694	)		1,694		Adjusted	$	98,662		$	49,905		$	48,757
Adjusted	$	105,713		$	56,317		$	49,396		Adjusted as a percent of sales		29.8	%		15.1	%		14.7	%
Adjusted as a percent of sales		29.9	%		15.9	%		14.0	%

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 $5,100 is non-cash.										(a) Charges represent realignment costs incurred as a result of realignment programs of which $0 is non-cash.
(b) Charge represents a one-time $3,700 discretionary cash transition benefit provided to certain employees in conjunction with the freeze of our US Qualified pension plan.										(b) Charges represent costs associated with a terminated acquisition
(c) Charge represents the $7,200 strategic acquisition of intellectual property related to certain liquefied natural gas technology.
(d) Charge represents acquisition-related costs associated with the MOGAS acquisition.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
	Nine Months Ended September 30,
(Amounts in thousands, except per share data)		2024			2023

Sales	$	3,377,458		$	3,155,399
Cost of sales		(2,315,326	)		(2,218,114	)
Gross profit		1,062,132			937,285
Selling, general and administrative expense		(726,070	)		(726,424	)
Loss on sale of business		(12,981	)		-
Net earnings from affiliates		14,494			13,229
Operating income		337,575			224,090
Interest expense		(48,820	)		(50,039	)
Interest income		3,746			5,535
Other income (expense), net		(12,057	)		(27,271	)
Earnings (loss) before income taxes		280,444			152,315
(Provision for) benefit from income taxes		(62,728	)		(14,571	)
Net earnings (loss), including noncontrolling interests		217,716			137,744
Less: Net earnings attributable to noncontrolling interests		(12,498	)		(13,618	)
Net earnings (loss) attributable to Flowserve Corporation	$	205,218		$	124,126

Net earnings (loss) per share attributable to Flowserve Corporation common shareholders:
Basic	$	1.56		$	0.95
Diluted		1.55			0.94

Weighted average shares – basic		131,520			131,095
Weighted average shares – diluted		132,343			131,864

Consolidated Reconciliation of Non-GAAP Financial Measures to the Most Directly Comparable GAAP Financial Measure (Unaudited)
(Amounts in thousands, except per share data)

Nine Months Ended September 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	$	1,062,132		$	726,070		$	12,981		$	337,575		$	(12,057	)	$	62,728		$	205,218		22.4	%	1.55
Reported as a percent of sales		31.4	%		21.5	%		0.4	%		10.0	%		-0.4	%		1.9	%		6.1	%
Realignment charges (a)		20,007			(3,369	)		(12,981	)		36,357			-			2,035			34,322		5.6	%	0.26
Discrete items (b)(c)(d)		2,700			(7,500	)		-			10,200			-			2,869			7,331		28.1	%	0.06
Acquisition related (e)		-			(2,794	)		-			2,794			-			658			2,136		23.6	%	0.02
Discrete asset write-downs (f)(g)		-			(1,795	)		-			1,795			3,567			1,342			4,020		25.0	%	0.03
Below-the-line foreign exchange impacts (h)		-			-			-			-			2,068			(489	)		2,557		-23.6	%	0.02
Adjusted	$	1,084,839		$	710,612		$	-		$	388,721		$	(6,422	)	$	69,143		$	255,584		20.5	%	1.93
Adjusted as a percent of sales		32.1	%		21.0	%		0.0	%		11.5	%		-0.2	%		2.0	%		7.6	%

Note: Amounts may not calculate due to rounding
(a) Charges represent realignment costs incurred as a result of realignment programs of which $25,100 is non-cash.
(b) Charge 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 a one-time $5,000 discretionary cash transition benefit provided to certain employees in conjunction with the freeze of our US Qualified pension plan.
(d) Charge represents the $7,200 strategic acquisition of intellectual property related to certain liquefied natural gas technology.
(e) Charge represents acquisition-related costs associated with the MOGAS acquisition.
(f) Charge represents a $1,795 non-cash write-down of a software asset.
(g) Charge represents a $3,567 non-cash write-down of a debt investment.
(h) 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.

Nine Months Ended September 30, 2023	Gross Profit			Selling, General & Administrative Expense			Operating Income			Other Income (Expense), Net			Provision For (Benefit From) Income Taxes			Earnings Attributable to Noncontrolling Interests			Net Earnings (Loss)			Effective Tax Rate		Diluted EPS
Reported	$	937,285		$	726,424		$	224,090		$	(27,271	)	$	14,571		$	13,618		$	124,126		9.6	%	0.94
Reported as a percent of sales		29.7	%		23.0	%		7.1	%		-0.9	%		0.5	%		0.4	%		3.9	%
Realignment charges (a)		11,548			(39,076	)		50,624			-			10,415			-			40,209		20.6	%	0.30
Acquisition related (b)		-			(8,491	)		8,491			-			1,997			-			6,494		23.5	%	0.05
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)		-			-			-			24,328			2,669			-			21,659		0.0	%	0.16
Correction of prior period errors (g)		-			-			-			-			-			(3,559	)		3,559		0.0	%	0.03
Discrete tax benefit (h)		-			-			-			-			13,000			-			(13,000	)	0.0	%	(0.10	)
Adjusted	$	950,802		$	674,902		$	289,129		$	(2,943	)	$	44,169		$	10,059		$	187,454		18.3	%	1.42
Adjusted as a percent of sales		30.1	%		21.4	%		9.2	%		-0.1	%		1.4	%		0.3	%		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.
(g) Represents the amount to correct the cumulative impact of prior period errors.
(h) Represents a discrete tax benefit due to release of tax valuation allowance on the net deferred tax assets in a foreign jurisdiction. The associated tax expense was adjusted out in 2015.

SEGMENT INFORMATION
(Unaudited)

FLOWSERVE PUMPS DIVISION	Nine Months Ended September 30,
(Amounts in millions, except percentages)		2024			2023
Bookings	$	2,488.6		$	2,222.3

Sales		2,363.7			2,231.7
Gross profit		761.3			668.6
Gross profit margin		32.2	%		30.0	%
SG&A		424.8			426.4
Segment operating income		351.1			255.3
Segment operating income as a percentage of sales		14.9	%		11.4	%

FLOW CONTROL DIVISION	Nine Months Ended September 30,
(Amounts in millions, except percentages)		2024			2023
Bookings	$	1,008.3		$	1,022.1

Sales		1,021.4			930.0
Gross profit		305.5			270.9
Gross profit margin		29.9	%		29.1	%
SG&A		178.8			172.7

Loss on sale of business		(13.0	)		-
Segment operating income		113.7			98.2
Segment operating income as a percentage of sales		11.1	%		10.6	%

Segment Reconciliation of Non-GAAP Financial Measures to the Most Directly Comparable GAAP Financial Measure (Unaudited)
(Amounts in thousands)

Flowserve Pumps Division
Nine Months Ended September 30, 2024	Gross Profit			Selling, General & Administrative Expense			Operating Income						Nine Months Ended September 30, 2023	Gross Profit			Selling, General & Administrative Expense			Operating Income
Reported	$	761,338		$	424,824		$	351,146					Reported	$	668,562		$	426,438		$	255,345
Reported as a percent of sales		32.2	%		18.0	%		14.9	%				Reported as a percent of sales		30.0	%		19.1	%		11.4	%
Realignment charges (a)		20,837			(1,037	)		21,874					Realignment charges (a)		7,484			(11,996	)		19,480
Discrete items (b)(c)(d)		1,700			(6,000	)		7,700					Discrete asset write-downs (b)(c)(d)		1,969			(3,955	)		5,924
Adjusted	$	783,875		$	417,787		$	380,720					Adjusted	$	678,015		$	410,487		$	280,749
Adjusted as a percent of sales		33.2	%		17.7	%		16.1	%				Adjusted as a percent of sales		30.4	%		18.4	%		12.6	%

Flow Control Division
Nine Months Ended September 30, 2024	Gross Profit			Selling, General & Administrative Expense			Loss on Sale of Business			Operating Income			Nine Months Ended September 30, 2023	Gross Profit			Selling, General & Administrative Expense			Operating Income
Reported	$	305,469		$	178,816		$	12,981		$	113,672		Reported	$	270,914		$	172,718		$	98,196
Reported as a percent of sales		29.9	%		17.5	%		1.3	%		11.1	%	Reported as a percent of sales		29.1	%		18.6	%		10.6	%
Realignment charges (a)		(602	)		(1,440	)		(12,981	)		13,819		Realignment charges (a)		4,263			(10,478	)		14,741
Discrete item (b)		800			(400	)		-			1,200		Acquisition related (e)		-			(8,491	)		8,491
Acquisition related (e)		-			(2,794	)		-			2,794		Adjusted	$	275,177		$	153,749		$	121,428
Adjusted	$	305,667		$	174,182		$	-		$	131,485		Adjusted as a percent of sales		29.6	%		16.5	%		13.1	%
Adjusted as a percent of sales		29.9	%		17.1	%		0.0	%		12.9	%

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 $25,100 is non-cash.													(a) Charges represent realignment costs incurred as a result of realignment programs of which $7,601 is non-cash.
(b) Charge represents a one-time $3,700 discretionary cash transition benefit provided to certain employees in conjunction with the freeze of our US Qualified pension plan.													(b) Charge represents a further expense of $1,834 associated with a sales contract that was initially reserved for in 2017.
(c) Charge 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 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 the $7,200 strategic acquisition of intellectual property related to certain liquefied natural gas technology.													(d) Charge represents a $2,917 non-cash write-down of a licensing agreement.
(e) Charge represents acquisition-related costs associated with the MOGAS acquisition.													(e) Charges represent costs associated with a terminated acquisition.

Third Quarter and Year-to-Date 2024 - Segment Results
(dollars in millions, comparison vs. 2023 third quarter and year-to-date, unaudited)

	FPD										FCD
	3rd Qtr					YTD					3rd Qtr					YTD
Bookings	$	886.6				$	2,488.6				$	318.4				$	1,008.3
- vs. prior year		151.9		20.7	%		266.3		12.0	%		-12.1		-3.7	%		-13.8		-1.4	%
- on constant currency		158.8		21.6	%		279.6		12.6	%		-12.3		-3.7	%		-11.0		-1.1	%

Sales	$	782.1				$	2,363.7				$	353.1				$	1,021.4
- vs. prior year		15.9		2.1	%		132.0		5.9	%		22.4		6.8	%		91.4		9.8	%
- on constant currency		22.3		2.9	%		140.4		6.3	%		21.1		6.4	%		92.4		9.9	%

Gross Profit	$	253.2				$	761.3				$	106.5				$	305.5
- vs. prior year		14.9	%				13.9	%				9.1	%				12.8	%

Gross Margin (% of sales)		32.4	%				32.2	%				30.2	%				29.9	%
- vs. prior year (in basis points)	360 bps					220 bps					70 bps					80 bps

Operating Income	$	109.3				$	351.1				$	46.7				$	113.7
- vs. prior year		31.0		39.6	%		95.8		37.5	%		3.2		7.4	%		15.5		15.8	%
- on constant currency		32.7		41.8	%		99.3		38.9	%		3.4		7.6	%		16.4		16.7	%

Operating Margin (% of sales)		14.0	%				14.9	%				13.2	%				11.1	%
- vs. prior year (in basis points)	380 bps					350 bps					0 bps					50 bps

Adjusted Operating Income *	$	128.1				$	380.7				$	49.4				$	131.5
- vs. prior year		33.8		35.8	%		100.0		35.6	%		0.6		1.2	%		10.1		8.3	%
- on constant currency		35.5		37.7	%		103.5		36.9	%		0.8		1.5	%		11.0		9.1	%

Adj. Oper. Margin (% of sales)*		16.4	%				16.1	%				14.0	%				12.9	%
- vs. prior year (in basis points)	410 bps					350 bps					(70) bps					(20) bps

Backlog	$	1,982.8									$	814.4

* Adjusted Operating Income and Adjusted Operating Margin exclude realignment charges and other specific discrete items

CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
	September 30,			December 31,
(Amounts in thousands, except par value)		2024			2023

ASSETS
Current assets:
Cash and cash equivalents	$	611,745		$	545,678
Accounts receivable, net of allowance for expected credit losses of $80,757 and $80,013, respectively		971,261			881,869
Contract assets, net of allowance for expected credit losses of $4,808 and $4,993, respectively		299,421			280,228
Inventories		862,477			879,937
Prepaid expenses and other		124,883			116,065
Total current assets		2,869,787			2,703,777
Property, plant and equipment, net of accumulated depreciation of $1,184,833 and $1,158,451, respectively		502,430			506,158
Operating lease right-of-use assets, net		170,395			156,430
Goodwill		1,188,609			1,182,225
Deferred taxes		216,241			218,358
Other intangible assets, net		117,999			122,248
Other assets, net of allowance for expected credit losses of $65,989 and $66,864, respectively		209,097			219,523
Total assets	$	5,274,558		$	5,108,719

LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	572,776		$	547,824
Accrued liabilities		472,454			504,430
Contract liabilities		294,222			287,697
Debt due within one year		66,919			66,243
Operating lease liabilities		33,995			32,382
Total current liabilities		1,440,366			1,438,576
Long-term debt due after one year		1,172,771			1,167,307
Operating lease liabilities		158,216			138,665
Retirement obligations and other liabilities		397,684			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		496,673			506,525
Retained earnings		3,976,016			3,854,717
Treasury shares, at cost – 45,701 and 45,885 shares, respectively		(2,008,361	)		(2,014,474	)
Deferred compensation obligation		8,076			7,942
Accumulated other comprehensive loss		(639,100	)		(639,601	)
Total Flowserve Corporation shareholders' equity		2,054,295			1,936,100
Noncontrolling interests		51,226			38,951
Total equity		2,105,521			1,975,051
Total liabilities and equity	$	5,274,558		$	5,108,719

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
	Nine Months Ended September 30,
(Amounts in thousands)		2024			2023

Cash flows – Operating activities:
Net earnings (loss), including noncontrolling interests	$	217,716		$	137,744
Adjustments to reconcile net earnings (loss) to net cash provided (used) by operating activities:
Depreciation		56,765			55,292
Amortization of intangible and other assets		6,482			7,782
Loss on sale of business		12,981			-
Stock-based compensation		24,608			22,127
Foreign currency, asset write downs and other non-cash adjustments		11,580			(11,827	)
Change in assets and liabilities:
Accounts receivable, net		(96,402	)		1,524
Inventories		2,944			(114,596	)
Contract assets, net		(23,293	)		(10,239	)
Prepaid expenses and other, net		3,505			(6,727	)
Accounts payable		24,654			1,910
Contract liabilities		8,466			15,879
Accrued liabilities		(33,850	)		21,429
Retirement obligations and other liabilities		8,696			38,838
Net deferred taxes		3,108			(27,996	)
Net cash flows provided (used) by operating activities		227,960			131,140
Cash flows – Investing activities:
Capital expenditures		(52,169	)		(47,544	)
Payments for disposition of business		(2,555	)		-
Other		612			(833	)
Net cash flows provided (used) by investing activities		(54,112	)		(48,377	)
Cash flows – Financing activities:
Payments on term loan		(45,000	)		(30,000	)
Proceeds under revolving credit facility		100,000			230,000
Payments under revolving credit facility		(50,000	)		(145,000	)
Proceeds under other financing arrangements		1,001			242
Payments under other financing arrangements		(784	)		(2,098	)
Repurchases of common shares		(20,070	)		-
Payments related to tax withholding for stock-based compensation		(9,407	)		(6,203	)
Payments of dividends		(82,848	)		(78,712	)
Other		(272	)		(320	)
Net cash flows provided (used) by financing activities		(107,380	)		(32,091	)
Effect of exchange rate changes on cash and cash equivalents		(401	)		(5,185	)
Net change in cash and cash equivalents		66,067			45,487
Cash and cash equivalents at beginning of period		545,678			434,971
Cash and cash equivalents at end of period	$	611,745		$	480,458

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/20241028698418/en/

Contacts

Investor Contacts:

Brian Ezzell, Vice President, Investor Relations, Treasurer & Corporate Finance (469) 420-3222

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 Third Quarter 2024 Results; Reaffirms 2024 Adjusted EPS Guidance

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