Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil EL&P Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries Flowserve Corporation Reports Second Quarter 2023 Results; Raises 2023 Financial Guidance By: Flowserve Corporation via Business Wire August 01, 2023 at 16:05 PM EDT 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/Contacts Investor Contacts: Jay Roueche, Vice President, Investor Relations & Treasurer, (972) 443-6560 Mike Mullin, Director, Investor Relations, (214) 697-8568 Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. 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Flowserve Corporation Reports Second Quarter 2023 Results; Raises 2023 Financial Guidance By: Flowserve Corporation via Business Wire August 01, 2023 at 16:05 PM EDT 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/Contacts Investor Contacts: Jay Roueche, Vice President, Investor Relations & Treasurer, (972) 443-6560 Mike Mullin, Director, Investor Relations, (214) 697-8568
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
