- Raised full-year Revenue and Adjusted EPS guidance range as
a result of strong year-to-date results and increased expectations
for the remainder of the year
- Reported and Adjusted1 Earnings Per Share (EPS)4 grew 15 and
73 percent year-over-year to 39 cents and 52 cents,
respectively
- Achieved sixth consecutive quarter with bookings above $1
billion including the second quarter’s healthy $1.1 billion; driven
by aftermarket growth of 12.3%
- Generated substantial revenue growth of 22.5%, delivering an
adjusted operating margin of 10.4%, an increase of 320 bps
year-over-year
- Sizable backlog of $2.84 billion increased 3.9%, or $108
million, versus 2022 year-end, supported by 1.03x book-to-bill in
the second quarter
- Increased year-to-date operating cash flow by $122 million
versus prior year
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, 2023.
Second Quarter 2023
Highlights (all comparisons to the 2022 second quarter,
unless otherwise noted)
- Reported Earnings Per Share (EPS) of $0.39 and Adjusted
Earnings Per Share (EPS)1 of $0.52, compared to $0.34 and $0.30,
respectively
- Second quarter 2023 Reported EPS includes after-tax adjusted
expenses of $17.0 million, comprised of realignment charges,
below-the-line foreign exchange, Velan acquisition and integration
costs, and additional expense related to a previously reserved
sales contract
- Total bookings were $1.11 billion, up $67.0 million or 6.4%. On
a constant currency basis2, total bookings were up $69.0 million or
6.6%
- Original equipment bookings were $520.1 million, up $2.1
million or 0.4%. On a constant currency basis2, original equipment
bookings were up $1.1 million or 0.2%
- Aftermarket bookings were $590.9 million, up $64.9 million or
12.3%. On a constant currency basis2, aftermarket bookings were up
$67.9 million or 12.9%
- Sales were $1.08 billion, up $198.2 million or 22.5%. On a
constant currency basis2, sales were up $202.0 million or 22.9%
- Original equipment sales were $517.8 million, up $106.5 million
or 25.9%. On a constant currency basis2, original equipment sales
were up $107.9 million or 26.2%
- Aftermarket sales were $562.6 million, up $91.7 million or
19.5%. On a constant currency basis2, aftermarket sales were up
$94.1 million or 20.0%
- Reported gross and operating margins were 29.9% and 8.9%,
respectively
- Adjusted gross and operating margins3 were 30.3% and 10.4%,
respectively
- Backlog of $2.84 billion, up $527.0 million or 22.8%, compared
to the 2022 second quarter
“We are pleased to report strong revenue growth and enhanced
margins in the second quarter, building on the momentum we
established over the past several quarters,” said Scott Rowe,
Flowserve’s president and chief executive officer. “The improved
operating environment, combined with our internal process changes,
has Flowserve delivering at a much higher level. My confidence
around our operational execution continues to grow, which has led
us to increase our full year guidance range for the second time
this year.”
Rowe concluded, “Our 3D strategy remains aligned with the
current environment, and has the company positioned for growth
despite some global economic uncertainty. We fully expect that the
strong aftermarket and MRO spending environment will continue at
least into next year. Combining these short cycle trends with our
solid project funnel supports our expectations for revenue growth
through at least 2024. Our significantly improved execution,
near-record backlog levels, and healthy market outlook should
enable Flowserve to deliver increased value to our customers,
shareholders, and associates in 2023 and beyond.”
Revised 2023 Guidance4
Flowserve is raising its Revenue and Adjusted EPS guidance
metrics for 2023, as well as updating or re-affirming certain other
financial metrics, as shown in the table below:
Prior
Target Range5
Revised
Target Range
Revenue Growth
Up 10.0% to 12.0%
Up 16.0% to 18.0%
Reported Earnings Per Share
$1.40 - $1.65
Re-affirmed
Adjusted Earnings Per Share
$1.65 - $1.85
$1.85 - $2.00
Net Interest Expense
$55 - $60 million
~$60 million
Adjusted Tax Rate
18% - 20%
~20%
Capital Expenditures
$75 - $85 million
Re-affirmed
The outlook excludes any contribution from the previously
announced pending acquisition of Velan Inc. Additionally,
Flowserve’s 2023 Adjusted EPS target range also excludes expected
adjusted items including identified realignment charges of
approximately $40 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, including the
potential for additional realignment expense.
Second Quarter 2023 Results Conference
Call
Flowserve will host its conference call with the financial
community on Wednesday, August 2nd at 11:00 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 “Investor Relations” 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 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.
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 Adjusted 2023 EPS excludes
identified realignment expenses, the impact from other specific
discrete items (including planned Velan acquisition) and
below-the-line foreign currency effects and utilizes current FX
rates and approximately 131.8 million fully diluted shares.
5 Prior target range was provided
as of May 2, 2023, and included revisions from Flowserve’s initial
guidance range provided February 10, 2023
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: the impact of the global
outbreak of COVID-19 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; 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; 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.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited) Three Months Ended June 30, (Amounts in
thousands, except per share data)
2023
2022
Sales
$
1,080,376
$
882,222
Cost of sales
(757,616
)
(632,393
)
Gross profit
322,760
249,829
Selling, general and administrative expense
(230,082
)
(194,606
)
Net earnings from affiliates
3,970
5,109
Operating income
96,648
60,332
Interest expense
(16,554
)
(11,062
)
Interest income
1,907
854
Other income (expense), net
(5,543
)
7,589
Earnings before income taxes
76,458
57,713
Provision for income taxes
(21,304
)
(11,618
)
Net earnings, including noncontrolling interests
55,154
46,095
Less: Net earnings attributable to noncontrolling interests
(3,951
)
(1,318
)
Net earnings attributable to Flowserve Corporation
$
51,203
$
44,777
Net earnings per share attributable to Flowserve Corporation
common shareholders: Basic
$
0.39
$
0.34
Diluted
0.39
0.34
Weighted average shares – basic
131,171
130,666
Weighted average shares – diluted
131,810
131,245
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, 2023 Gross Profit Selling,
General & Administrative Expense Operating Income
Other Income (Expense), Net 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 and integration-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 acquisition
and integration-related costs associated with the pending
acquisition of Velan Inc. (c) Charge represents a further expense
of $1,834 associated with a sales contract that was initially
reserved for 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.
Three Months Ended June 30, 2022
Gross Profit Selling, General & Administrative
Expense Operating Income Other Income (Expense),
Net Income Taxes Net Earnings (Loss) Effective
Tax Rate Diluted EPS Reported
$
249,829
$
194,606
$
60,332
$
7,589
$
11,618
$
44,777
20.1
%
$
0.34
Reported as a percent of sales
28.3
%
22.1
%
6.8
%
0.9
%
1.3
%
5.1
%
Realignment charges (a)
467
(62
)
529
-
101
428
19.1
%
0.00
Acquisition and integration-related
-
-
-
-
-
-
0.0
%
0.00
Discrete asset write-downs (b)
-
(3,036
)
3,036
-
729
2,307
24.0
%
0.02
Below-the-line foreign exchange impacts (c)
-
-
-
(10,112
)
(2,064
)
(8,048
)
20.4
%
-0.06
Adjusted
$
250,296
$
191,508
$
63,897
$
(2,523
)
$
10,384
$
39,464
20.3
%
$
0.30
Adjusted as a percent of sales
28.4
%
21.7
%
7.2
%
-0.3
%
1.2
%
4.5
%
Note: Amounts may not calculate due to rounding (a) Charges
represent realignment costs incurred as a result of realignment
programs of which $19 is non-cash. (b) Charge represents a non-cash
asset write-down associated with the impairment of a trademark. (c)
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
PUMP DIVISION Three Months Ended June 30, (Amounts in
millions, except percentages)
2023
2022
Bookings
$
760.0
$
717.8
Sales
765.4
614.9
Gross profit
226.8
184.0
Gross profit margin
29.6
%
29.9
%
SG&A
132.8
131.7
Segment operating income
98.0
57.3
Segment operating income as a percentage of sales
12.8
%
9.3
%
FLOW CONTROL DIVISION Three Months Ended June
30, (Amounts in millions, except percentages)
2023
2022
Bookings
$
359.7
$
329.9
Sales
317.7
268.4
Gross profit
93.1
80.3
Gross profit margin
29.3
%
29.9
%
SG&A
56.9
50.0
Segment operating income
36.1
30.4
Segment operating income as a percentage of sales
11.4
%
11.3
%
Segment Reconciliation of Non-GAAP Financial Measures to the
Most Directly Comparable GAAP Financial Measure (Unaudited)
(Amounts in thousands)
Flowserve
Pump Division Three Months Ended June 30, 2023
Gross Profit Selling, General & Administrative
Expense Operating Income Three Months Ended June 30,
2022 Gross Profit Selling, General &
Administrative Expense Operating Income Reported
$
226,814
$
132,780
$
98,003
Reported
$
183,959
$
131,722
$
57,346
Reported as a percent of sales
29.6
%
17.3
%
12.8
%
Reported as a percent of sales
29.9
%
21.4
%
9.3
%
Realignment charges (a)
953
(17
)
970
Realignment charges (a)
379
(2
)
381
Discrete asset write-downs (b)
796
(1,038
)
1,834
Discrete asset write-downs
-
-
-
Adjusted
$
228,563
$
131,725
$
100,807
Adjusted
$
184,338
$
131,720
$
57,727
Adjusted as a percent of sales
29.9
%
17.2
%
13.2
%
Adjusted as a percent of sales
30.0
%
21.4
%
9.4
%
Flow Control Division
Three Months Ended June 30, 2023 Gross Profit
Selling, General & Administrative Expense Operating
Income Three Months Ended June 30, 2022 Gross
Profit Selling, General & Administrative Expense
Operating Income Reported
$
93,058
$
56,943
$
36,115
Reported
$
80,324
$
49,955
$
30,369
Reported as a percent of sales
29.3
%
17.9
%
11.4
%
Reported as a percent of sales
29.9
%
18.6
%
11.3
%
Realignment charges (a)
3,153
-
3,153
Realignment charges (a)
88
(33
)
121
Acquisition and integration-related (d)
-
(2,856
)
2,856
Acquisition and integration-related
-
-
-
Discrete asset write-downs
-
-
-
Discrete asset write-downs (b)
-
(3,036
)
3,036
Adjusted
$
96,211
$
54,087
$
42,124
Adjusted
$
80,412
$
46,886
$
33,526
Adjusted as a percent of sales
30.3
%
17.0
%
13.3
%
Adjusted as a percent of sales
30.0
%
17.5
%
12.5
%
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 $4 is
non-cash.
(a) Charges represent realignment
costs incurred as a result of realignment programs of which $19 is
non-cash.
(b) Charge represents a further
expense of $1,834 associated with a sales contract that was
initially reserved for in 2017.
(b) Charge represents a non-cash
asset write-down associated with the impairment of a trademark.
(c) Charges represent acquisition
and integration-related costs associated with the pending
acquisition of Velan Inc.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited) Six Months Ended June 30, (Amounts in
thousands, except per share data)
2023
2022
Sales
$
2,060,681
$
1,703,280
Cost of sales
(1,441,090
)
(1,243,803
)
Gross profit
619,591
459,477
Selling, general and administrative expense
(474,359
)
(400,816
)
Net earnings from affiliates
8,603
9,039
Operating income
153,835
67,700
Interest expense
(32,766
)
(21,755
)
Interest income
3,401
1,797
Other income (expense), net
(13,562
)
(524
)
Earnings before income taxes
110,908
47,218
Provision for income taxes
(25,757
)
(14,800
)
Net earnings, including noncontrolling interests
85,151
32,418
Less: Net earnings attributable to noncontrolling interests
(7,181
)
(3,458
)
Net earnings attributable to Flowserve Corporation
$
77,970
$
28,960
Net earnings per share attributable to Flowserve Corporation
common shareholders: Basic
$
0.59
$
0.22
Diluted
0.59
0.22
Weighted average shares – basic
131,051
130,554
Weighted average shares – diluted
131,782
131,148
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, 2023 Gross Profit Selling, General
& Administrative Expense Operating Income Other
Income (Expense), Net 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 and integration-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
acquisition and integration-related costs associated with the
pending acquisition of Velan Inc. (c) Charge represents a further
expense of $1,834 associated with a sales contract that was
initially reserved for 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.
Six Months Ended June 30, 2022
Gross Profit Selling, General & Administrative
Expense Operating Income Other Income (Expense),
Net Income Taxes Net Earnings (Loss) Effective
Tax Rate Diluted EPS Reported
$
459,477
$
400,816
$
67,700
$
(524
)
$
14,800
$
28,960
31.4
%
$
0.22
Reported as a percent of sales
27.0
%
23.5
%
4.0
%
0.0
%
0.9
%
1.7
%
Realignment charges (a)
269
139
130
-
27
103
20.8
%
0.00
Acquisition and integration-related
-
-
-
-
-
-
0.0
%
0.00
Discrete asset write-downs (b)(c)
10,053
(13,229
)
23,282
-
(70
)
23,352
-0.3
%
0.18
Below-the-line foreign exchange impacts (d)
-
-
-
(4,418
)
(1,031
)
(3,387
)
23.3
%
-0.03
Adjusted
$
469,799
$
387,726
$
91,112
$
(4,942
)
$
13,726
$
49,028
20.7
%
$
0.37
Adjusted as a percent of sales
27.6
%
22.8
%
5.3
%
-0.3
%
0.8
%
2.9
%
Note: Amounts may not calculate due to rounding (a) Charges
represent realignment costs incurred as a result of realignment
programs of which $259 is non-cash. (b) Charge represents a $3,096
non-cash asset write-down associated with the impairment of a
trademark. (c) Charges represent a $20,246 reserve of
Russia-related financial exposures. (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 PUMP DIVISION Six
Months Ended June 30, (Amounts in millions, except percentages)
2023
2022
Bookings
$
1,487.8
$
1,513.0
Sales
1,465.5
1,190.5
Gross profit
448.2
340.9
Gross profit margin
30.6
%
28.6
%
SG&A
279.8
271.5
Segment operating income
177.1
78.3
Segment operating income as a percentage of sales
12.1
%
6.6
%
FLOW CONTROL DIVISION Six Months Ended June
30, (Amounts in millions, except percentages)
2023
2022
Bookings
$
691.6
$
624.2
Sales
599.3
516.3
Gross profit
173.4
139.8
Gross profit margin
28.9
%
27.1
%
SG&A
118.7
94.2
Segment operating income
54.6
45.6
Segment operating income as a percentage of sales
9.1
%
8.8
%
Segment Reconciliation of Non-GAAP Financial Measures to the
Most Directly Comparable GAAP Financial Measure (Unaudited)
(Amounts in thousands)
Flowserve
Pump Division Six Months Ended June 30, 2023
Gross Profit Selling, General & Administrative
Expense Operating Income Six Months Ended June 30,
2022 Gross Profit Selling, General &
Administrative Expense Operating Income Reported
$
448,241
$
279,759
$
177,076
Reported
$
340,903
$
271,523
$
78,347
Reported as a percent of sales
30.6
%
19.1
%
12.1
%
Reported as a percent of sales
28.6
%
22.8
%
6.6
%
Realignment charges (a)
1,343
(2,067
)
3,410
Realignment charges (a)
296
(77
)
373
Discrete asset write-downs (b)(c)(d)
1,969
(3,955
)
5,924
Discrete asset write-downs (b)
8,939
(9,111
)
18,050
Adjusted
$
451,553
$
273,737
$
186,410
Adjusted
$
350,138
$
262,335
$
96,770
Adjusted as a percent of sales
30.8
%
18.7
%
12.7
%
Adjusted as a percent of sales
29.4
%
22.0
%
8.1
%
Flow Control Division
Six Months Ended June 30, 2023 Gross Profit
Selling, General & Administrative Expense Operating
Income Six Months Ended June 30, 2022 Gross
Profit Selling, General & Administrative Expense
Operating Income Reported
$
173,351
$
118,702
$
54,649
Reported
$
139,840
$
94,234
$
45,606
Reported as a percent of sales
28.9
%
19.8
%
9.1
%
Reported as a percent of sales
27.1
%
18.3
%
8.8
%
Realignment charges (a)
3,164
(8,906
)
12,070
Realignment charges (a)
34
(50
)
84
Acquisition and integration-related (e)
-
(5,952
)
5,952
Acquisition and integration-related
-
-
-
Discrete asset write-downs
-
-
-
Discrete asset write-downs (b)(c)
1,114
(4,118
)
5,232
Adjusted
$
176,515
$
103,844
$
72,671
Adjusted
$
140,988
$
90,066
$
50,922
Adjusted as a percent of sales
29.5
%
17.3
%
12.1
%
Adjusted as a percent of sales
27.3
%
17.4
%
9.9
%
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 $4 is non-cash. (a) Charges represent realignment costs
incurred as a result of realignment programs of which $19 is
non-cash. (b) Charge represents a further expense of $1,834
associated with a sales contract that was initially reserved for in
2017. (b) Charges represent the reserve of Russia-related financial
exposures of $20,246. (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. (c) Charge represents a non-cash asset write-down of $3,036
associated with the impairment of a trademark. (d) Charge
represents a $2,917 non-cash write-down of a licensing agreement.
(e) Charges represent acquisition and integration-related costs
associated with the pending acquisition of Velan Inc.
Second
Quarter and Year-to-Date 2023 - Segment Results (dollars in
millions, comparison vs. 2022 second quarter and year-to-date,
unaudited) FPD FCD 2nd Qtr YTD 2nd Qtr YTD Bookings
$
760.0
$
1,487.8
$
359.7
$
691.6
- vs. prior year
42.2
5.9
%
-25.2
-1.7
%
29.8
9.0
%
67.4
10.8
%
- on constant currency
41.3
5.8
%
-11.3
-0.7
%
32.8
10.0
%
79.0
12.7
%
Sales
$
765.4
$
1,465.5
$
317.7
$
599.3
- vs. prior year
150.5
24.5
%
275.0
23.1
%
49.3
18.4
%
83.0
16.1
%
- on constant currency
151.4
24.6
%
292.1
24.5
%
52.3
19.5
%
93.7
18.2
%
Gross Profit
$
226.8
$
448.2
$
93.1
$
173.4
- vs. prior year
23.3
%
31.5
%
15.9
%
24.0
%
Gross Margin (% of sales)
29.6
%
30.6
%
29.3
%
28.9
%
- vs. prior year (in basis points)
(30) bps
200 bps
(60) bps
180 bps
Operating Income
$
98.0
$
177.1
$
36.1
$
54.6
- vs. prior year
40.7
71.0
%
98.8
126.2
%
5.7
18.8
%
9.0
19.7
%
- on constant currency
41.9
73.1
%
106.2
135.5
%
6.7
22.2
%
10.8
23.8
%
Operating Margin (% of sales)
12.8
%
12.1
%
11.4
%
9.1
%
- vs. prior year (in basis points)
350 bps
550 bps
10 bps
30 bps
Adjusted Operating Income *
$
100.8
$
186.4
$
42.1
$
72.7
- vs. prior year
43.1
74.7
%
89.7
92.8
%
8.6
25.7
%
21.8
42.8
%
- on constant currency
44.3
76.8
%
97.1
100.4
%
9.6
28.7
%
23.6
46.4
%
Adj. Oper. Margin (% of sales)*
13.2
%
12.7
%
13.3
%
12.1
%
- vs. prior year (in basis points)
380 bps
460 bps
80 bps
220 bps
Backlog
$
2,026.4
$
835.6
* 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)
2023
2022
ASSETS Current assets: Cash and cash equivalents
$
422,837
$
434,971
Accounts receivable, net of allowance for expected credit losses of
$84,358 and $83,062, respectively
887,867
868,632
Contract assets, net of allowance for expected credit losses of
$4,420 and $5,819, respectively
227,636
233,457
Inventories, net
914,288
803,198
Prepaid expenses and other
126,756
110,714
Total current assets
2,579,384
2,450,972
Property, plant and equipment, net of accumulated depreciation of
$1,139,149 and $1,172,957, respectively
500,075
500,945
Operating lease right-of-use assets, net
164,391
174,980
Goodwill
1,177,131
1,168,124
Deferred taxes
158,835
149,290
Other intangible assets, net
125,216
134,503
Other assets, net of allowance for expected credit losses of
$66,857 and $66,377, respectively
214,983
211,820
Total assets
$
4,920,015
$
4,790,634
LIABILITIES AND EQUITY Current liabilities: Accounts
payable
$
492,623
$
476,747
Accrued liabilities
441,520
427,578
Contract liabilities
269,725
256,963
Debt due within one year
55,781
49,335
Operating lease liabilities
32,440
32,528
Total current liabilities
1,292,089
1,243,151
Long-term debt due after one year
1,245,253
1,224,151
Operating lease liabilities
146,255
155,196
Retirement obligations and other liabilities
314,408
309,529
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
495,281
507,484
Retained earnings
3,798,984
3,774,209
Treasury shares, at cost – 45,894 and 46,359 shares, respectively
(2,014,932
)
(2,036,882
)
Deferred compensation obligation
7,815
6,979
Accumulated other comprehensive loss
(623,687
)
(647,788
)
Total Flowserve Corporation shareholders' equity
1,884,452
1,824,993
Noncontrolling interests
37,558
33,614
Total equity
1,922,010
1,858,607
Total liabilities and equity
$
4,920,015
$
4,790,634
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended June
30,
(Amounts in thousands)
2023
2022
Cash flows – Operating activities: Net earnings,
including noncontrolling interests
$
85,151
$
32,418
Adjustments to reconcile net earnings to net cash provided (used)
by operating activities: Depreciation
37,452
40,034
Amortization of intangible and other assets
5,158
6,748
Stock-based compensation
15,878
16,896
Foreign currency, asset write downs and other non-cash adjustments
(8,418
)
(3,982
)
Change in assets and liabilities: Accounts receivable, net
(5,350
)
(21,638
)
Inventories, net
(99,240
)
(96,737
)
Contract assets, net
9,917
(7,705
)
Prepaid expenses and other assets, net
(105
)
(19,769
)
Accounts payable
7,118
33,550
Contract liabilities
10,831
9,642
Accrued liabilities and income taxes payable
(2,091
)
(65,773
)
Retirement obligations and other
8,412
10,028
Net deferred taxes
(14,329
)
(5,079
)
Net cash flows provided (used) by operating activities
50,384
(71,367
)
Cash flows – Investing activities: Capital expenditures
(31,893
)
(31,012
)
Other
(941
)
2,015
Net cash flows provided (used) by investing activities
(32,834
)
(28,997
)
Cash flows – Financing activities: Payments on term loan
(20,000
)
(15,921
)
Proceeds under revolving credit facility
150,000
-
Payments under revolving credit facility
(100,000
)
-
Proceeds under other financing arrangements
197
1,029
Payments under other financing arrangements
(3,458
)
(720
)
Payments related to tax withholding for stock-based compensation
(6,235
)
(4,497
)
Payments of dividends
(52,471
)
(52,267
)
Other
(320
)
(5,334
)
Net cash flows provided (used) by financing activities
(32,287
)
(77,710
)
Effect of exchange rate changes on cash
2,603
(22,033
)
Net change in cash and cash equivalents
(12,134
)
(200,107
)
Cash and cash equivalents at beginning of period
434,971
658,452
Cash and cash equivalents at end of period
$
422,837
$
458,345
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230801974121/en/
Investor Contacts: Jay Roueche, Vice President, Investor
Relations & Treasurer, (972) 443-6560 Mike Mullin, Director,
Investor Relations, (214) 697-8568
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