Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil Hydroworld Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries Flowserve Corporation Reports First Quarter 2024 Results and Raises Full-Year 2024 Guidance By: Flowserve Corporation via Business Wire April 29, 2024 at 16:05 PM EDT First quarter Reported and Adjusted1 Earnings Per Share (EPS)2 of 56 cents and 58 cents, an increase of 180% and 45%, respectively, reflects continued strong operational momentum Raised full-year 2024 Adjusted EPS guidance3 to $2.50 to $2.70, almost a 24% year-over-year increase at the midpoint Delivered solid first quarter Bookings of $1.04 billion, including strong aftermarket activity exceeding $575 million Adjusted Gross and Operating Margin4 of 31.7% and 10.9%, respectively, increased 130 and 260 basis points compared to prior year Record first quarter Operating Cash Flow of $62 million 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 first quarter ended March 31, 2024. First Quarter 2024 Highlights (all comparisons to the 2023 first quarter, unless otherwise noted) Reported EPS of $0.56 and Adjusted EPS of $0.58, compared to $0.20 and $0.40, respectively First quarter 2024 Reported EPS includes after-tax adjusted expenses of $3.2 million, comprised of realignment charges, partially offset by below-the-line foreign exchange and a reduction to reserves Total bookings were $1.04 billion, down $19.0 million or 1.8%. On a constant currency basis5, total bookings were down $18.7 million or 1.8% Original equipment bookings were $462.5 million, down $44.5 million or 8.8%. On a constant currency basis, original equipment bookings were down $44.9 million or 8.9% Aftermarket bookings were $575.8 million, up $25.5 million or 4.6%. On a constant currency basis, aftermarket bookings were up $26.2 million or 4.8% Second quarter 2024 bookings have started strong, as indicated by the recently announced project awards valued at over $150 million Sales were $1.09 billion, up $107.2 million or 10.9%. On a constant currency basis, sales were up $104.3 million or 10.6% Original equipment sales were $528.6 million, up $65.2 million or 14.1%. On a constant currency basis, original equipment sales were up $62.5 million or 13.5% Aftermarket sales were $558.9 million, up $42.0 million or 8.1%. On a constant currency basis, aftermarket sales were up $41.8 million or 8.1% Reported gross and operating margins were 31.2% and 10.4%, respectively, up 90 basis points and 460 basis points, respectively Adjusted gross and operating margins were 31.7% and 10.9%, respectively, up 130 basis points and 260 basis points, respectively Backlog of $2.6 billion, down 3.1% compared to year-end 2023, and down 6.9% compared to March 31, 2023 First quarter 2024 book-to-bill ratio solid at 0.95x “We delivered strong first quarter results, with significant year-over-year growth in revenue, margins, adjusted earnings, and cash flow. We are pleased with our level of bookings during the period, primarily driven by the strength of our base business, including aftermarket and short-cycle original equipment awards,” said Scott Rowe, Flowserve’s President and Chief Executive Officer. “As anticipated, we were excited to announce winning two sizable projects this April in the Middle East, collectively valued at over $150 million which will be reflected in our second quarter results.” Rowe concluded, “With our solid performance in the first quarter and the opportunities ahead during the year, we have increased our full-year Adjusted EPS target range to $2.50 to $2.70, a near 24% increase at the midpoint year-over-year. We are committed to building on our recent operational momentum to expand margins, including through effective product management and portfolio optimization. Our 3D strategy is delivering results, and we remain committed to further expanding our diversification, decarbonization and digitization activities in faster-growing, attractive markets. I am confident that our continued progress will enable us to create long-term value for our customers, associates, and shareholders.” Revised 2024 Guidance3 Flowserve is raising its Adjusted EPS guidance metrics for 2024 and reaffirmed its other financial targets, as shown in the table below: Prior Target Range6 Revised Target Range Revenue Growth Up 4.0% to 6.0% Reaffirmed Reported Earnings Per Share $2.25 - $2.45 Reaffirmed Adjusted Earnings Per Share $2.40 - $2.60 $2.50 - $2.70 Net Interest Expense $60 to $65 million Reaffirmed Adjusted Tax Rate ~20% Reaffirmed Capital Expenditures $75 - $85 million Reaffirmed Flowserve’s 2024 Adjusted EPS target range excludes expected adjusted items including realignment charges of approximately $30 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. First Quarter 2024 Results Conference Call Flowserve will host its conference call with the financial community on Tuesday, April 30th 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 Adjusted EPS excludes identified realignment expenses, the impact from other specific discrete items and below-the-line foreign currency effects and utilizes the then-applicable FX rates and approximately 132 million fully diluted shares. 3 Adjusted 2024 EPS excludes realignment expenses as well as the impact of below-the-line foreign currency effects and certain other discrete items which may arise during the year and utilizes March 2024 foreign exchange rates and approximately 132 million fully diluted shares. 4 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. 5 Constant currency is a non-GAAP financial measure. We have calculated constant currency amounts and the associated currency effects on operations by translating current year results on a monthly basis at prior year exchange rates for the same periods. 6 Prior target range was provided as of February 20, 2024. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) Three Months Ended March 31, (Amounts in thousands, except per share data) 2024 2023 Sales $ 1,087,479 $ 980,305 Cost of sales (748,511 ) (683,475 ) Gross profit 338,968 296,830 Selling, general and administrative expense (228,418 ) (244,268 ) Net earnings from affiliates 2,529 4,624 Operating income 113,079 57,186 Interest expense (15,317 ) (16,211 ) Interest income 1,169 1,494 Other income (expense), net (874 ) (8,020 ) Earnings (loss) before income taxes 98,057 34,449 Provision for income taxes (20,142 ) (4,453 ) Net earnings (loss), including noncontrolling interests 77,915 29,996 Less: Net earnings attributable to noncontrolling interests (3,695 ) (3,230 ) Net earnings (loss) attributable to Flowserve Corporation $ 74,220 $ 26,766 Net earnings (loss) per share attributable to Flowserve Corporation common shareholders: Basic $ 0.56 $ 0.20 Diluted 0.56 0.20 Weighted average shares – basic 131,510 130,930 Weighted average shares – diluted 132,368 131,754 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 March 31, 2024 Gross Profit Selling, General & Administrative Expense Operating Income Other Income (Expense), Net Provision For (Benefit From) Income Taxes Net Earnings (Loss) Effective Tax Rate Diluted EPS Reported $ 338,968 $ 228,418 $ 113,079 $ (874 ) $ 20,142 $ 74,220 20.5 % 0.56 Reported as a percent of sales 31.2 % 21.0 % 10.4 % -0.1 % 1.9 % 6.8 % Realignment charges (a) 5,673 (1,494 ) 7,167 - 723 6,444 10.1 % 0.05 Discrete item (b) - 2,000 (2,000 ) - - (2,000 ) 0.0 % (0.02 ) Below-the-line foreign exchange impacts (c) - - - (1,323 ) (51 ) (1,273 ) 3.8 % (0.01 ) Adjusted $ 344,641 $ 228,924 $ 118,246 $ (2,197 ) $ 20,814 $ 77,392 20.4 % 0.58 Adjusted as a percent of sales 31.7 % 21.1 % 10.9 % -0.2 % 1.9 % 7.1 % Note: Amounts may not calculate due to rounding (a) Charges represent realignment costs incurred as a result of realignment programs of which $800 is non-cash. (b) Represents a reduction to reserves associated with our ongoing financial exposure in Russia that were adjusted for Non-GAAP measures when established in 2022. (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. Three Months Ended March 31, 2023 Gross Profit Selling, General & Administrative Expense Operating Income Other Income (Expense), Net Provision For (Benefit From) Income Taxes Net Earnings (Loss) Effective Tax Rate Diluted EPS Reported $ 296,830 $ 244,268 $ 57,186 $ (8,020 ) $ 4,453 $ 26,766 12.9 % $ 0.20 Reported as a percent of sales 30.3 % 24.9 % 5.8 % -0.8 % 0.5 % 2.7 % Realignment charges (a) 202 (16,677 ) 16,879 - 3,184 13,695 18.9 % 0.10 Discrete asset write-downs (b)(c) 1,173 (2,917 ) 4,090 - 1,038 3,052 25.4 % 0.02 Acquisition related (d) - (3,096 ) 3,096 - 822 2,274 26.6 % 0.02 Below-the-line foreign exchange impacts (e) - - - 7,406 549 6,857 7.4 % 0.05 Adjusted $ 298,205 $ 221,578 $ 81,251 $ (614 ) $ 10,046 $ 52,644 15.2 % $ 0.40 Adjusted as a percent of sales 30.4 % 22.6 % 8.3 % -0.1 % 1.0 % 5.4 % Note: Amounts may not calculate due to rounding (a) Charges represent realignment costs incurred as a result of realignment programs of which $7,597 is non-cash. (b) Charge represents a further $1,173 non-cash write-down of inventory associated with a customer sales contract that was determined to be uncollectible and adjusted out for Non-GAAP measures in a previous period. (c) Charge represents a $2,917 non-cash write-down of a licensing agreement. (d) Charges represent costs associated with a terminated acquisition. (e) Below-the-line foreign exchange impacts represent the remeasurement of foreign exchange derivative contracts as well as the remeasurement of assets and liabilities that are denominated in a currency other than a site’s respective functional currency. SEGMENT INFORMATION (Unaudited) FLOWSERVE PUMPS DIVISION Three Months Ended March 31, (Amounts in millions, except percentages) 2024 2023 Bookings $ 703.5 $ 728.5 Sales 769.4 700.1 Gross profit 247.9 221.4 Gross profit margin 32.2 % 31.6 % SG&A 139.7 147.0 Segment operating income 110.9 79.1 Segment operating income as a percentage of sales 14.4 % 11.3 % FLOW CONTROL DIVISION Three Months Ended March 31, (Amounts in millions, except percentages) 2024 2023 Bookings $ 341.1 $ 332.0 Sales 320.5 281.6 Gross profit 92.7 80.3 Gross profit margin 28.9 % 28.5 % SG&A 58.0 61.8 Segment operating income 34.7 18.5 Segment operating income as a percentage of sales 10.8 % 6.6 % Segment Reconciliation of Non-GAAP Financial Measures to the Most Directly Comparable GAAP Financial Measure (Unaudited) (Amounts in thousands) Flowserve Pumps Division Three Months Ended March 31, 2024 Gross Profit Selling, General & Administrative Expense Operating Income Three Months Ended March 31, 2023 Gross Profit Selling, General & Administrative Expense Operating Income Reported $ 247,938 $ 139,710 $ 110,894 Reported $ 221,427 $ 146,979 $ 79,073 Reported as a percent of sales 32.2 % 18.2 % 14.4 % Reported as a percent of sales 31.6 % 21.0 % 11.3 % Realignment charges (a) 5,044 (1,041 ) 6,085 Realignment charges (a) 390 (2,050 ) 2,440 Discrete item (b) - 2,000 (2,000 ) Discrete asset write-downs (b)(c) 1,173 (2,917 ) 4,090 Adjusted $ 252,982 $ 140,669 $ 114,979 Adjusted $ 222,990 $ 142,012 $ 85,603 Adjusted as a percent of sales 32.9 % 18.3 % 14.9 % Adjusted as a percent of sales 31.9 % 20.3 % 12.2 % Flow Control Division Three Months Ended March 31, 2024 Gross Profit Selling, General & Administrative Expense Operating Income Three Months Ended March 31, 2023 Gross Profit Selling, General & Administrative Expense Operating Income Reported $ 92,695 $ 57,987 $ 34,708 Reported $ 80,293 $ 61,759 $ 18,534 Reported as a percent of sales 28.9 % 18.1 % 10.8 % Reported as a percent of sales 28.5 % 21.9 % 6.6 % Realignment charges (a) 767 (114 ) 881 Realignment charges (a) 11 (8,906 ) 8,917 Adjusted $ 93,462 $ 57,873 $ 35,589 Acquisition related (d) - (3,096 ) 3,096 Adjusted as a percent of sales 29.2 % 18.1 % 11.1 % Adjusted $ 80,304 $ 49,757 $ 30,547 Adjusted as a percent of sales 28.5 % 17.7 % 10.8 % 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 $800 is non-cash. (a) Charges represent realignment costs incurred as a result of realignment programs of which $7,597 is non-cash. (b) Represents a reduction to reserves associated with our ongoing financial exposure in Russia that were adjusted for Non-GAAP measures when established in 2022. (b) Charge represents a further $1,173 non-cash write-down of inventory associated with a customer sales contract that was determined to be uncollectible and adjusted out for Non-GAAP measures in a previous period. (c) Charge represents a $2,917 non-cash write-down of a licensing agreement. (d) Charges represent costs associated with a terminated acquisition. First Quarter - Segment Results (dollars in millions, comparison vs. 2023 first quarter, unaudited) FPD FCD 1st Qtr 1st Qtr Bookings $ 703.5 $ 341.1 - vs. prior year -25.0 -3.4 % 9.1 2.7 % - on constant currency -25.5 -3.5 % 9.9 3.0 % Sales $ 769.4 $ 320.5 - vs. prior year 69.3 9.9 % 38.9 13.8 % - on constant currency 66.1 9.4 % 39.2 13.9 % Gross Profit $ 247.9 $ 92.7 - vs. prior year 12.0 % 15.4 % Gross Margin (% of sales) 32.2 % 28.9 % - vs. prior year (in basis points) 60 bps 40 bps Operating Income $ 110.9 $ 34.7 - vs. prior year 31.8 40.2 % 16.2 87.6 % - on constant currency 32.1 40.7 % 16.5 88.9 % Operating Margin (% of sales) 14.4 % 10.8 % - vs. prior year (in basis points) 310 bps 420 bps Adjusted Operating Income * $ 115.0 $ 35.6 - vs. prior year 29.4 34.3 % 5.1 16.7 % - on constant currency 29.7 34.7 % 5.4 17.7 % Adj. Oper. Margin (% of sales)* 14.9 % 11.1 % - vs. prior year (in basis points) 270 bps 30 bps Backlog $ 1,784.2 $ 841.7 * Adjusted Operating Income and Adjusted Operating Margin exclude realignment charges and other specific discrete items CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) March 31, December 31, (Amounts in thousands, except par value) 2024 2023 ASSETS Current assets: Cash and cash equivalents $ 531,981 $ 545,678 Accounts receivable, net of allowance for expected credit losses of $78,305 and $80,013, respectively 914,357 881,869 Contract assets, net of allowance for expected credit losses of $4,986 and $4,993, respectively 287,058 280,228 Inventories 883,341 879,937 Prepaid expenses and other 149,840 116,065 Total current assets 2,766,577 2,703,777 Property, plant and equipment, net of accumulated depreciation of $1,162,548 and $1,158,451, respectively 499,499 506,158 Operating lease right-of-use assets, net 163,183 156,430 Goodwill 1,173,368 1,182,225 Deferred taxes 215,216 218,358 Other intangible assets, net 119,355 122,248 Other assets, net of allowance for expected credit losses of $66,357 and $66,864, respectively 212,727 219,523 Total assets $ 5,149,925 $ 5,108,719 LIABILITIES AND EQUITY Current liabilities: Accounts payable $ 549,515 $ 547,824 Accrued liabilities 547,382 504,430 Contract liabilities 279,216 287,697 Debt due within one year 66,428 66,243 Operating lease liabilities 31,635 32,382 Total current liabilities 1,474,176 1,438,576 Long-term debt due after one year 1,152,336 1,167,307 Operating lease liabilities 144,740 138,665 Retirement obligations and other liabilities 382,461 389,120 Shareholders’ equity: Common shares, $1.25 par value 220,991 220,991 Shares authorized – 305,000 Shares issued – 176,793 and 176,793, respectively Capital in excess of par value 483,963 506,525 Retained earnings 3,900,922 3,854,717 Treasury shares, at cost – 45,372 and 45,885 shares, respectively (1,992,404 ) (2,014,474 ) Deferred compensation obligation 6,767 7,942 Accumulated other comprehensive loss (666,259 ) (639,601 ) Total Flowserve Corporation shareholders' equity 1,953,980 1,936,100 Noncontrolling interests 42,232 38,951 Total equity 1,996,212 1,975,051 Total liabilities and equity $ 5,149,925 $ 5,108,719 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Three Months Ended March 31, (Amounts in thousands) 2024 2023 Cash flows – Operating activities: Net earnings (loss), including noncontrolling interests $ 77,915 $ 29,996 Adjustments to reconcile net earnings (loss) to net cash provided (used) by operating activities: Depreciation 19,326 18,928 Amortization of intangible and other assets 2,254 2,663 Stock-based compensation 8,657 9,953 Foreign currency, asset write downs and other non-cash adjustments 1,189 (2,728 ) Change in assets and liabilities: Accounts receivable, net (39,687 ) (26,249 ) Inventories (11,452 ) (70,721 ) Contract assets, net (8,051 ) 4,325 Prepaid expenses and other assets, net (16,001 ) (16,019 ) Accounts payable 5,053 7,008 Contract liabilities (6,372 ) 32,676 Accrued liabilities 30,917 35,374 Retirement obligations and other (2,426 ) 9,477 Net deferred taxes 935 (8,095 ) Net cash flows provided (used) by operating activities 62,257 26,588 Cash flows – Investing activities: Capital expenditures (13,610 ) (15,318 ) Other 24 (1,138 ) Net cash flows provided (used) by investing activities (13,586 ) (16,456 ) Cash flows – Financing activities: Payments on term loan (15,000 ) (10,000 ) Proceeds under other financing arrangements 72 78 Payments under other financing arrangements (25 ) (1,515 ) Repurchases of common shares (2,549 ) - Payments related to tax withholding for stock-based compensation (8,857 ) (5,850 ) Payments of dividends (27,654 ) (26,229 ) Other (201 ) (303 ) Net cash flows provided (used) by financing activities (54,214 ) (43,819 ) Effect of exchange rate changes on cash and cash equivalents (8,154 ) 3,442 Net change in cash and cash equivalents (13,697 ) (30,245 ) Cash and cash equivalents at beginning of period 545,678 434,971 Cash and cash equivalents at end of period $ 531,981 $ 404,726 About Flowserve Flowserve Corp. is one of the world’s leading providers of fluid motion and control products and services. Operating in more than 50 countries, the company produces engineered and industrial pumps, seals and valves as well as a range of related flow management services. More information about Flowserve can be obtained by visiting the company’s Web site at www.flowserve.com. Safe Harbor Statement: This news release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, as amended. Words or phrases such as, "may," "should," "expects," "could," "intends," "plans," "anticipates," "estimates," "believes," "forecasts," "predicts" or other similar expressions are intended to identify forward-looking statements, which include, without limitation, earnings forecasts, statements relating to our business strategy and statements of expectations, beliefs, future plans and strategies and anticipated developments concerning our industry, business, operations and financial performance and condition. The forward-looking statements included in this news release are based on our current expectations, projections, estimates and assumptions. These statements are only predictions, not guarantees. Such forward-looking statements are subject to numerous risks and uncertainties that are difficult to predict. These risks and uncertainties may cause actual results to differ materially from what is forecast in such forward-looking statements, and include, without limitation, the following: economic, political and other risks associated with our international operations, including military actions, trade embargoes, epidemics or pandemics or changes to tariffs or trade agreements that could affect customer markets, particularly North African, Latin American, Asian and Middle Eastern markets and global oil and gas producers, and non-compliance with U.S. export/re-export control, foreign corrupt practice laws, economic sanctions and import laws and regulations; any continued volatile regional and global economic conditions resulting from the COVID-19 pandemic on our business and operations; global supply chain disruptions and the current inflationary environment could adversely affect the efficiency of our manufacturing and increase the cost of providing our products to customers; a portion of our bookings may not lead to completed sales, and our ability to convert bookings into revenues at acceptable profit margins; changes in global economic conditions and the potential for unexpected cancellations or delays of customer orders in our reported backlog; our dependence on our customers’ ability to make required capital investment and maintenance expenditures; if we are not able to successfully execute and realize the expected financial benefits from any restructuring and realignment initiatives, our business could be adversely affected; the substantial dependence of our sales on the success of the oil and gas, chemical, power generation and water management industries; the adverse impact of volatile raw materials prices on our products and operating margins; increased aging and slower collection of receivables, particularly in Latin America and other emerging markets; our exposure to fluctuations in foreign currency exchange rates, including in hyperinflationary countries such as Venezuela and Argentina; potential adverse consequences resulting from litigation to which we are a party, such as litigation involving asbestos-containing material claims; expectations regarding acquisitions and the integration of acquired businesses; the potential adverse impact of an impairment in the carrying value of goodwill or other intangible assets; our dependence upon third-party suppliers whose failure to perform timely could adversely affect our business operations; the highly competitive nature of the markets in which we operate; environmental compliance costs and liabilities; potential work stoppages and other labor matters; access to public and private sources of debt financing; our inability to protect our intellectual property in the U.S., as well as in foreign countries; obligations under our defined benefit pension plans; our internal control over financial reporting may not prevent or detect misstatements because of its inherent limitations, including the possibility of human error, the circumvention or overriding of controls, or fraud; the recording of increased deferred tax asset valuation allowances in the future or the impact of tax law changes on such deferred tax assets could affect our operating results; our information technology infrastructure could be subject to service interruptions, data corruption, cyber-based attacks or network security breaches, which could disrupt our business operations and result in the loss of critical and confidential information; ineffective internal controls could impact the accuracy and timely reporting of our business and financial results; and other factors described from time to time in our filings with the Securities and Exchange Commission. All forward-looking statements included in this news release are based on information available to us on the date hereof, and we assume no obligation to update any forward-looking statement. The Company reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). However, management believes that non-GAAP financial measures which exclude certain non-recurring items present additional useful comparisons between current results and results in prior operating periods, providing investors with a clearer view of the underlying trends of the business. Management also uses these non-GAAP financial measures in making financial, operating, planning and compensation decisions and in evaluating the Company's performance. Non-GAAP financial measures, which may be inconsistent with similarly captioned measures presented by other companies, should be viewed in addition to, and not as a substitute for, the Company’s reported results prepared in accordance with GAAP. View source version on businesswire.com: https://www.businesswire.com/news/home/20240429424747/en/Contacts Investor Contacts: Jay Roueche, Vice President, Investor Relations & Treasurer, (972) 443-6560 Tarek Zeni, Director, Investor Relations, (469) 420-4045 Media Contact: Wes Warnock, Vice President, Marketing, Communications & Public Affairs, (972) 443-6900 Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. By accessing this page, you agree to the following Privacy Policy and Terms and Conditions.
Flowserve Corporation Reports First Quarter 2024 Results and Raises Full-Year 2024 Guidance By: Flowserve Corporation via Business Wire April 29, 2024 at 16:05 PM EDT First quarter Reported and Adjusted1 Earnings Per Share (EPS)2 of 56 cents and 58 cents, an increase of 180% and 45%, respectively, reflects continued strong operational momentum Raised full-year 2024 Adjusted EPS guidance3 to $2.50 to $2.70, almost a 24% year-over-year increase at the midpoint Delivered solid first quarter Bookings of $1.04 billion, including strong aftermarket activity exceeding $575 million Adjusted Gross and Operating Margin4 of 31.7% and 10.9%, respectively, increased 130 and 260 basis points compared to prior year Record first quarter Operating Cash Flow of $62 million 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 first quarter ended March 31, 2024. First Quarter 2024 Highlights (all comparisons to the 2023 first quarter, unless otherwise noted) Reported EPS of $0.56 and Adjusted EPS of $0.58, compared to $0.20 and $0.40, respectively First quarter 2024 Reported EPS includes after-tax adjusted expenses of $3.2 million, comprised of realignment charges, partially offset by below-the-line foreign exchange and a reduction to reserves Total bookings were $1.04 billion, down $19.0 million or 1.8%. On a constant currency basis5, total bookings were down $18.7 million or 1.8% Original equipment bookings were $462.5 million, down $44.5 million or 8.8%. On a constant currency basis, original equipment bookings were down $44.9 million or 8.9% Aftermarket bookings were $575.8 million, up $25.5 million or 4.6%. On a constant currency basis, aftermarket bookings were up $26.2 million or 4.8% Second quarter 2024 bookings have started strong, as indicated by the recently announced project awards valued at over $150 million Sales were $1.09 billion, up $107.2 million or 10.9%. On a constant currency basis, sales were up $104.3 million or 10.6% Original equipment sales were $528.6 million, up $65.2 million or 14.1%. On a constant currency basis, original equipment sales were up $62.5 million or 13.5% Aftermarket sales were $558.9 million, up $42.0 million or 8.1%. On a constant currency basis, aftermarket sales were up $41.8 million or 8.1% Reported gross and operating margins were 31.2% and 10.4%, respectively, up 90 basis points and 460 basis points, respectively Adjusted gross and operating margins were 31.7% and 10.9%, respectively, up 130 basis points and 260 basis points, respectively Backlog of $2.6 billion, down 3.1% compared to year-end 2023, and down 6.9% compared to March 31, 2023 First quarter 2024 book-to-bill ratio solid at 0.95x “We delivered strong first quarter results, with significant year-over-year growth in revenue, margins, adjusted earnings, and cash flow. We are pleased with our level of bookings during the period, primarily driven by the strength of our base business, including aftermarket and short-cycle original equipment awards,” said Scott Rowe, Flowserve’s President and Chief Executive Officer. “As anticipated, we were excited to announce winning two sizable projects this April in the Middle East, collectively valued at over $150 million which will be reflected in our second quarter results.” Rowe concluded, “With our solid performance in the first quarter and the opportunities ahead during the year, we have increased our full-year Adjusted EPS target range to $2.50 to $2.70, a near 24% increase at the midpoint year-over-year. We are committed to building on our recent operational momentum to expand margins, including through effective product management and portfolio optimization. Our 3D strategy is delivering results, and we remain committed to further expanding our diversification, decarbonization and digitization activities in faster-growing, attractive markets. I am confident that our continued progress will enable us to create long-term value for our customers, associates, and shareholders.” Revised 2024 Guidance3 Flowserve is raising its Adjusted EPS guidance metrics for 2024 and reaffirmed its other financial targets, as shown in the table below: Prior Target Range6 Revised Target Range Revenue Growth Up 4.0% to 6.0% Reaffirmed Reported Earnings Per Share $2.25 - $2.45 Reaffirmed Adjusted Earnings Per Share $2.40 - $2.60 $2.50 - $2.70 Net Interest Expense $60 to $65 million Reaffirmed Adjusted Tax Rate ~20% Reaffirmed Capital Expenditures $75 - $85 million Reaffirmed Flowserve’s 2024 Adjusted EPS target range excludes expected adjusted items including realignment charges of approximately $30 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. First Quarter 2024 Results Conference Call Flowserve will host its conference call with the financial community on Tuesday, April 30th 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 Adjusted EPS excludes identified realignment expenses, the impact from other specific discrete items and below-the-line foreign currency effects and utilizes the then-applicable FX rates and approximately 132 million fully diluted shares. 3 Adjusted 2024 EPS excludes realignment expenses as well as the impact of below-the-line foreign currency effects and certain other discrete items which may arise during the year and utilizes March 2024 foreign exchange rates and approximately 132 million fully diluted shares. 4 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. 5 Constant currency is a non-GAAP financial measure. We have calculated constant currency amounts and the associated currency effects on operations by translating current year results on a monthly basis at prior year exchange rates for the same periods. 6 Prior target range was provided as of February 20, 2024. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) Three Months Ended March 31, (Amounts in thousands, except per share data) 2024 2023 Sales $ 1,087,479 $ 980,305 Cost of sales (748,511 ) (683,475 ) Gross profit 338,968 296,830 Selling, general and administrative expense (228,418 ) (244,268 ) Net earnings from affiliates 2,529 4,624 Operating income 113,079 57,186 Interest expense (15,317 ) (16,211 ) Interest income 1,169 1,494 Other income (expense), net (874 ) (8,020 ) Earnings (loss) before income taxes 98,057 34,449 Provision for income taxes (20,142 ) (4,453 ) Net earnings (loss), including noncontrolling interests 77,915 29,996 Less: Net earnings attributable to noncontrolling interests (3,695 ) (3,230 ) Net earnings (loss) attributable to Flowserve Corporation $ 74,220 $ 26,766 Net earnings (loss) per share attributable to Flowserve Corporation common shareholders: Basic $ 0.56 $ 0.20 Diluted 0.56 0.20 Weighted average shares – basic 131,510 130,930 Weighted average shares – diluted 132,368 131,754 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 March 31, 2024 Gross Profit Selling, General & Administrative Expense Operating Income Other Income (Expense), Net Provision For (Benefit From) Income Taxes Net Earnings (Loss) Effective Tax Rate Diluted EPS Reported $ 338,968 $ 228,418 $ 113,079 $ (874 ) $ 20,142 $ 74,220 20.5 % 0.56 Reported as a percent of sales 31.2 % 21.0 % 10.4 % -0.1 % 1.9 % 6.8 % Realignment charges (a) 5,673 (1,494 ) 7,167 - 723 6,444 10.1 % 0.05 Discrete item (b) - 2,000 (2,000 ) - - (2,000 ) 0.0 % (0.02 ) Below-the-line foreign exchange impacts (c) - - - (1,323 ) (51 ) (1,273 ) 3.8 % (0.01 ) Adjusted $ 344,641 $ 228,924 $ 118,246 $ (2,197 ) $ 20,814 $ 77,392 20.4 % 0.58 Adjusted as a percent of sales 31.7 % 21.1 % 10.9 % -0.2 % 1.9 % 7.1 % Note: Amounts may not calculate due to rounding (a) Charges represent realignment costs incurred as a result of realignment programs of which $800 is non-cash. (b) Represents a reduction to reserves associated with our ongoing financial exposure in Russia that were adjusted for Non-GAAP measures when established in 2022. (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. Three Months Ended March 31, 2023 Gross Profit Selling, General & Administrative Expense Operating Income Other Income (Expense), Net Provision For (Benefit From) Income Taxes Net Earnings (Loss) Effective Tax Rate Diluted EPS Reported $ 296,830 $ 244,268 $ 57,186 $ (8,020 ) $ 4,453 $ 26,766 12.9 % $ 0.20 Reported as a percent of sales 30.3 % 24.9 % 5.8 % -0.8 % 0.5 % 2.7 % Realignment charges (a) 202 (16,677 ) 16,879 - 3,184 13,695 18.9 % 0.10 Discrete asset write-downs (b)(c) 1,173 (2,917 ) 4,090 - 1,038 3,052 25.4 % 0.02 Acquisition related (d) - (3,096 ) 3,096 - 822 2,274 26.6 % 0.02 Below-the-line foreign exchange impacts (e) - - - 7,406 549 6,857 7.4 % 0.05 Adjusted $ 298,205 $ 221,578 $ 81,251 $ (614 ) $ 10,046 $ 52,644 15.2 % $ 0.40 Adjusted as a percent of sales 30.4 % 22.6 % 8.3 % -0.1 % 1.0 % 5.4 % Note: Amounts may not calculate due to rounding (a) Charges represent realignment costs incurred as a result of realignment programs of which $7,597 is non-cash. (b) Charge represents a further $1,173 non-cash write-down of inventory associated with a customer sales contract that was determined to be uncollectible and adjusted out for Non-GAAP measures in a previous period. (c) Charge represents a $2,917 non-cash write-down of a licensing agreement. (d) Charges represent costs associated with a terminated acquisition. (e) Below-the-line foreign exchange impacts represent the remeasurement of foreign exchange derivative contracts as well as the remeasurement of assets and liabilities that are denominated in a currency other than a site’s respective functional currency. SEGMENT INFORMATION (Unaudited) FLOWSERVE PUMPS DIVISION Three Months Ended March 31, (Amounts in millions, except percentages) 2024 2023 Bookings $ 703.5 $ 728.5 Sales 769.4 700.1 Gross profit 247.9 221.4 Gross profit margin 32.2 % 31.6 % SG&A 139.7 147.0 Segment operating income 110.9 79.1 Segment operating income as a percentage of sales 14.4 % 11.3 % FLOW CONTROL DIVISION Three Months Ended March 31, (Amounts in millions, except percentages) 2024 2023 Bookings $ 341.1 $ 332.0 Sales 320.5 281.6 Gross profit 92.7 80.3 Gross profit margin 28.9 % 28.5 % SG&A 58.0 61.8 Segment operating income 34.7 18.5 Segment operating income as a percentage of sales 10.8 % 6.6 % Segment Reconciliation of Non-GAAP Financial Measures to the Most Directly Comparable GAAP Financial Measure (Unaudited) (Amounts in thousands) Flowserve Pumps Division Three Months Ended March 31, 2024 Gross Profit Selling, General & Administrative Expense Operating Income Three Months Ended March 31, 2023 Gross Profit Selling, General & Administrative Expense Operating Income Reported $ 247,938 $ 139,710 $ 110,894 Reported $ 221,427 $ 146,979 $ 79,073 Reported as a percent of sales 32.2 % 18.2 % 14.4 % Reported as a percent of sales 31.6 % 21.0 % 11.3 % Realignment charges (a) 5,044 (1,041 ) 6,085 Realignment charges (a) 390 (2,050 ) 2,440 Discrete item (b) - 2,000 (2,000 ) Discrete asset write-downs (b)(c) 1,173 (2,917 ) 4,090 Adjusted $ 252,982 $ 140,669 $ 114,979 Adjusted $ 222,990 $ 142,012 $ 85,603 Adjusted as a percent of sales 32.9 % 18.3 % 14.9 % Adjusted as a percent of sales 31.9 % 20.3 % 12.2 % Flow Control Division Three Months Ended March 31, 2024 Gross Profit Selling, General & Administrative Expense Operating Income Three Months Ended March 31, 2023 Gross Profit Selling, General & Administrative Expense Operating Income Reported $ 92,695 $ 57,987 $ 34,708 Reported $ 80,293 $ 61,759 $ 18,534 Reported as a percent of sales 28.9 % 18.1 % 10.8 % Reported as a percent of sales 28.5 % 21.9 % 6.6 % Realignment charges (a) 767 (114 ) 881 Realignment charges (a) 11 (8,906 ) 8,917 Adjusted $ 93,462 $ 57,873 $ 35,589 Acquisition related (d) - (3,096 ) 3,096 Adjusted as a percent of sales 29.2 % 18.1 % 11.1 % Adjusted $ 80,304 $ 49,757 $ 30,547 Adjusted as a percent of sales 28.5 % 17.7 % 10.8 % 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 $800 is non-cash. (a) Charges represent realignment costs incurred as a result of realignment programs of which $7,597 is non-cash. (b) Represents a reduction to reserves associated with our ongoing financial exposure in Russia that were adjusted for Non-GAAP measures when established in 2022. (b) Charge represents a further $1,173 non-cash write-down of inventory associated with a customer sales contract that was determined to be uncollectible and adjusted out for Non-GAAP measures in a previous period. (c) Charge represents a $2,917 non-cash write-down of a licensing agreement. (d) Charges represent costs associated with a terminated acquisition. First Quarter - Segment Results (dollars in millions, comparison vs. 2023 first quarter, unaudited) FPD FCD 1st Qtr 1st Qtr Bookings $ 703.5 $ 341.1 - vs. prior year -25.0 -3.4 % 9.1 2.7 % - on constant currency -25.5 -3.5 % 9.9 3.0 % Sales $ 769.4 $ 320.5 - vs. prior year 69.3 9.9 % 38.9 13.8 % - on constant currency 66.1 9.4 % 39.2 13.9 % Gross Profit $ 247.9 $ 92.7 - vs. prior year 12.0 % 15.4 % Gross Margin (% of sales) 32.2 % 28.9 % - vs. prior year (in basis points) 60 bps 40 bps Operating Income $ 110.9 $ 34.7 - vs. prior year 31.8 40.2 % 16.2 87.6 % - on constant currency 32.1 40.7 % 16.5 88.9 % Operating Margin (% of sales) 14.4 % 10.8 % - vs. prior year (in basis points) 310 bps 420 bps Adjusted Operating Income * $ 115.0 $ 35.6 - vs. prior year 29.4 34.3 % 5.1 16.7 % - on constant currency 29.7 34.7 % 5.4 17.7 % Adj. Oper. Margin (% of sales)* 14.9 % 11.1 % - vs. prior year (in basis points) 270 bps 30 bps Backlog $ 1,784.2 $ 841.7 * Adjusted Operating Income and Adjusted Operating Margin exclude realignment charges and other specific discrete items CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) March 31, December 31, (Amounts in thousands, except par value) 2024 2023 ASSETS Current assets: Cash and cash equivalents $ 531,981 $ 545,678 Accounts receivable, net of allowance for expected credit losses of $78,305 and $80,013, respectively 914,357 881,869 Contract assets, net of allowance for expected credit losses of $4,986 and $4,993, respectively 287,058 280,228 Inventories 883,341 879,937 Prepaid expenses and other 149,840 116,065 Total current assets 2,766,577 2,703,777 Property, plant and equipment, net of accumulated depreciation of $1,162,548 and $1,158,451, respectively 499,499 506,158 Operating lease right-of-use assets, net 163,183 156,430 Goodwill 1,173,368 1,182,225 Deferred taxes 215,216 218,358 Other intangible assets, net 119,355 122,248 Other assets, net of allowance for expected credit losses of $66,357 and $66,864, respectively 212,727 219,523 Total assets $ 5,149,925 $ 5,108,719 LIABILITIES AND EQUITY Current liabilities: Accounts payable $ 549,515 $ 547,824 Accrued liabilities 547,382 504,430 Contract liabilities 279,216 287,697 Debt due within one year 66,428 66,243 Operating lease liabilities 31,635 32,382 Total current liabilities 1,474,176 1,438,576 Long-term debt due after one year 1,152,336 1,167,307 Operating lease liabilities 144,740 138,665 Retirement obligations and other liabilities 382,461 389,120 Shareholders’ equity: Common shares, $1.25 par value 220,991 220,991 Shares authorized – 305,000 Shares issued – 176,793 and 176,793, respectively Capital in excess of par value 483,963 506,525 Retained earnings 3,900,922 3,854,717 Treasury shares, at cost – 45,372 and 45,885 shares, respectively (1,992,404 ) (2,014,474 ) Deferred compensation obligation 6,767 7,942 Accumulated other comprehensive loss (666,259 ) (639,601 ) Total Flowserve Corporation shareholders' equity 1,953,980 1,936,100 Noncontrolling interests 42,232 38,951 Total equity 1,996,212 1,975,051 Total liabilities and equity $ 5,149,925 $ 5,108,719 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Three Months Ended March 31, (Amounts in thousands) 2024 2023 Cash flows – Operating activities: Net earnings (loss), including noncontrolling interests $ 77,915 $ 29,996 Adjustments to reconcile net earnings (loss) to net cash provided (used) by operating activities: Depreciation 19,326 18,928 Amortization of intangible and other assets 2,254 2,663 Stock-based compensation 8,657 9,953 Foreign currency, asset write downs and other non-cash adjustments 1,189 (2,728 ) Change in assets and liabilities: Accounts receivable, net (39,687 ) (26,249 ) Inventories (11,452 ) (70,721 ) Contract assets, net (8,051 ) 4,325 Prepaid expenses and other assets, net (16,001 ) (16,019 ) Accounts payable 5,053 7,008 Contract liabilities (6,372 ) 32,676 Accrued liabilities 30,917 35,374 Retirement obligations and other (2,426 ) 9,477 Net deferred taxes 935 (8,095 ) Net cash flows provided (used) by operating activities 62,257 26,588 Cash flows – Investing activities: Capital expenditures (13,610 ) (15,318 ) Other 24 (1,138 ) Net cash flows provided (used) by investing activities (13,586 ) (16,456 ) Cash flows – Financing activities: Payments on term loan (15,000 ) (10,000 ) Proceeds under other financing arrangements 72 78 Payments under other financing arrangements (25 ) (1,515 ) Repurchases of common shares (2,549 ) - Payments related to tax withholding for stock-based compensation (8,857 ) (5,850 ) Payments of dividends (27,654 ) (26,229 ) Other (201 ) (303 ) Net cash flows provided (used) by financing activities (54,214 ) (43,819 ) Effect of exchange rate changes on cash and cash equivalents (8,154 ) 3,442 Net change in cash and cash equivalents (13,697 ) (30,245 ) Cash and cash equivalents at beginning of period 545,678 434,971 Cash and cash equivalents at end of period $ 531,981 $ 404,726 About Flowserve Flowserve Corp. is one of the world’s leading providers of fluid motion and control products and services. Operating in more than 50 countries, the company produces engineered and industrial pumps, seals and valves as well as a range of related flow management services. More information about Flowserve can be obtained by visiting the company’s Web site at www.flowserve.com. Safe Harbor Statement: This news release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, as amended. Words or phrases such as, "may," "should," "expects," "could," "intends," "plans," "anticipates," "estimates," "believes," "forecasts," "predicts" or other similar expressions are intended to identify forward-looking statements, which include, without limitation, earnings forecasts, statements relating to our business strategy and statements of expectations, beliefs, future plans and strategies and anticipated developments concerning our industry, business, operations and financial performance and condition. The forward-looking statements included in this news release are based on our current expectations, projections, estimates and assumptions. These statements are only predictions, not guarantees. Such forward-looking statements are subject to numerous risks and uncertainties that are difficult to predict. These risks and uncertainties may cause actual results to differ materially from what is forecast in such forward-looking statements, and include, without limitation, the following: economic, political and other risks associated with our international operations, including military actions, trade embargoes, epidemics or pandemics or changes to tariffs or trade agreements that could affect customer markets, particularly North African, Latin American, Asian and Middle Eastern markets and global oil and gas producers, and non-compliance with U.S. export/re-export control, foreign corrupt practice laws, economic sanctions and import laws and regulations; any continued volatile regional and global economic conditions resulting from the COVID-19 pandemic on our business and operations; global supply chain disruptions and the current inflationary environment could adversely affect the efficiency of our manufacturing and increase the cost of providing our products to customers; a portion of our bookings may not lead to completed sales, and our ability to convert bookings into revenues at acceptable profit margins; changes in global economic conditions and the potential for unexpected cancellations or delays of customer orders in our reported backlog; our dependence on our customers’ ability to make required capital investment and maintenance expenditures; if we are not able to successfully execute and realize the expected financial benefits from any restructuring and realignment initiatives, our business could be adversely affected; the substantial dependence of our sales on the success of the oil and gas, chemical, power generation and water management industries; the adverse impact of volatile raw materials prices on our products and operating margins; increased aging and slower collection of receivables, particularly in Latin America and other emerging markets; our exposure to fluctuations in foreign currency exchange rates, including in hyperinflationary countries such as Venezuela and Argentina; potential adverse consequences resulting from litigation to which we are a party, such as litigation involving asbestos-containing material claims; expectations regarding acquisitions and the integration of acquired businesses; the potential adverse impact of an impairment in the carrying value of goodwill or other intangible assets; our dependence upon third-party suppliers whose failure to perform timely could adversely affect our business operations; the highly competitive nature of the markets in which we operate; environmental compliance costs and liabilities; potential work stoppages and other labor matters; access to public and private sources of debt financing; our inability to protect our intellectual property in the U.S., as well as in foreign countries; obligations under our defined benefit pension plans; our internal control over financial reporting may not prevent or detect misstatements because of its inherent limitations, including the possibility of human error, the circumvention or overriding of controls, or fraud; the recording of increased deferred tax asset valuation allowances in the future or the impact of tax law changes on such deferred tax assets could affect our operating results; our information technology infrastructure could be subject to service interruptions, data corruption, cyber-based attacks or network security breaches, which could disrupt our business operations and result in the loss of critical and confidential information; ineffective internal controls could impact the accuracy and timely reporting of our business and financial results; and other factors described from time to time in our filings with the Securities and Exchange Commission. All forward-looking statements included in this news release are based on information available to us on the date hereof, and we assume no obligation to update any forward-looking statement. The Company reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). However, management believes that non-GAAP financial measures which exclude certain non-recurring items present additional useful comparisons between current results and results in prior operating periods, providing investors with a clearer view of the underlying trends of the business. Management also uses these non-GAAP financial measures in making financial, operating, planning and compensation decisions and in evaluating the Company's performance. Non-GAAP financial measures, which may be inconsistent with similarly captioned measures presented by other companies, should be viewed in addition to, and not as a substitute for, the Company’s reported results prepared in accordance with GAAP. View source version on businesswire.com: https://www.businesswire.com/news/home/20240429424747/en/Contacts Investor Contacts: Jay Roueche, Vice President, Investor Relations & Treasurer, (972) 443-6560 Tarek Zeni, Director, Investor Relations, (469) 420-4045 Media Contact: Wes Warnock, Vice President, Marketing, Communications & Public Affairs, (972) 443-6900
First quarter Reported and Adjusted1 Earnings Per Share (EPS)2 of 56 cents and 58 cents, an increase of 180% and 45%, respectively, reflects continued strong operational momentum Raised full-year 2024 Adjusted EPS guidance3 to $2.50 to $2.70, almost a 24% year-over-year increase at the midpoint Delivered solid first quarter Bookings of $1.04 billion, including strong aftermarket activity exceeding $575 million Adjusted Gross and Operating Margin4 of 31.7% and 10.9%, respectively, increased 130 and 260 basis points compared to prior year Record first quarter Operating Cash Flow of $62 million
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 first quarter ended March 31, 2024. First Quarter 2024 Highlights (all comparisons to the 2023 first quarter, unless otherwise noted) Reported EPS of $0.56 and Adjusted EPS of $0.58, compared to $0.20 and $0.40, respectively First quarter 2024 Reported EPS includes after-tax adjusted expenses of $3.2 million, comprised of realignment charges, partially offset by below-the-line foreign exchange and a reduction to reserves Total bookings were $1.04 billion, down $19.0 million or 1.8%. On a constant currency basis5, total bookings were down $18.7 million or 1.8% Original equipment bookings were $462.5 million, down $44.5 million or 8.8%. On a constant currency basis, original equipment bookings were down $44.9 million or 8.9% Aftermarket bookings were $575.8 million, up $25.5 million or 4.6%. On a constant currency basis, aftermarket bookings were up $26.2 million or 4.8% Second quarter 2024 bookings have started strong, as indicated by the recently announced project awards valued at over $150 million Sales were $1.09 billion, up $107.2 million or 10.9%. On a constant currency basis, sales were up $104.3 million or 10.6% Original equipment sales were $528.6 million, up $65.2 million or 14.1%. On a constant currency basis, original equipment sales were up $62.5 million or 13.5% Aftermarket sales were $558.9 million, up $42.0 million or 8.1%. On a constant currency basis, aftermarket sales were up $41.8 million or 8.1% Reported gross and operating margins were 31.2% and 10.4%, respectively, up 90 basis points and 460 basis points, respectively Adjusted gross and operating margins were 31.7% and 10.9%, respectively, up 130 basis points and 260 basis points, respectively Backlog of $2.6 billion, down 3.1% compared to year-end 2023, and down 6.9% compared to March 31, 2023 First quarter 2024 book-to-bill ratio solid at 0.95x “We delivered strong first quarter results, with significant year-over-year growth in revenue, margins, adjusted earnings, and cash flow. We are pleased with our level of bookings during the period, primarily driven by the strength of our base business, including aftermarket and short-cycle original equipment awards,” said Scott Rowe, Flowserve’s President and Chief Executive Officer. “As anticipated, we were excited to announce winning two sizable projects this April in the Middle East, collectively valued at over $150 million which will be reflected in our second quarter results.” Rowe concluded, “With our solid performance in the first quarter and the opportunities ahead during the year, we have increased our full-year Adjusted EPS target range to $2.50 to $2.70, a near 24% increase at the midpoint year-over-year. We are committed to building on our recent operational momentum to expand margins, including through effective product management and portfolio optimization. Our 3D strategy is delivering results, and we remain committed to further expanding our diversification, decarbonization and digitization activities in faster-growing, attractive markets. I am confident that our continued progress will enable us to create long-term value for our customers, associates, and shareholders.” Revised 2024 Guidance3 Flowserve is raising its Adjusted EPS guidance metrics for 2024 and reaffirmed its other financial targets, as shown in the table below: Prior Target Range6 Revised Target Range Revenue Growth Up 4.0% to 6.0% Reaffirmed Reported Earnings Per Share $2.25 - $2.45 Reaffirmed Adjusted Earnings Per Share $2.40 - $2.60 $2.50 - $2.70 Net Interest Expense $60 to $65 million Reaffirmed Adjusted Tax Rate ~20% Reaffirmed Capital Expenditures $75 - $85 million Reaffirmed Flowserve’s 2024 Adjusted EPS target range excludes expected adjusted items including realignment charges of approximately $30 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. First Quarter 2024 Results Conference Call Flowserve will host its conference call with the financial community on Tuesday, April 30th 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 Adjusted EPS excludes identified realignment expenses, the impact from other specific discrete items and below-the-line foreign currency effects and utilizes the then-applicable FX rates and approximately 132 million fully diluted shares. 3 Adjusted 2024 EPS excludes realignment expenses as well as the impact of below-the-line foreign currency effects and certain other discrete items which may arise during the year and utilizes March 2024 foreign exchange rates and approximately 132 million fully diluted shares. 4 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. 5 Constant currency is a non-GAAP financial measure. We have calculated constant currency amounts and the associated currency effects on operations by translating current year results on a monthly basis at prior year exchange rates for the same periods. 6 Prior target range was provided as of February 20, 2024. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) Three Months Ended March 31, (Amounts in thousands, except per share data) 2024 2023 Sales $ 1,087,479 $ 980,305 Cost of sales (748,511 ) (683,475 ) Gross profit 338,968 296,830 Selling, general and administrative expense (228,418 ) (244,268 ) Net earnings from affiliates 2,529 4,624 Operating income 113,079 57,186 Interest expense (15,317 ) (16,211 ) Interest income 1,169 1,494 Other income (expense), net (874 ) (8,020 ) Earnings (loss) before income taxes 98,057 34,449 Provision for income taxes (20,142 ) (4,453 ) Net earnings (loss), including noncontrolling interests 77,915 29,996 Less: Net earnings attributable to noncontrolling interests (3,695 ) (3,230 ) Net earnings (loss) attributable to Flowserve Corporation $ 74,220 $ 26,766 Net earnings (loss) per share attributable to Flowserve Corporation common shareholders: Basic $ 0.56 $ 0.20 Diluted 0.56 0.20 Weighted average shares – basic 131,510 130,930 Weighted average shares – diluted 132,368 131,754 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 March 31, 2024 Gross Profit Selling, General & Administrative Expense Operating Income Other Income (Expense), Net Provision For (Benefit From) Income Taxes Net Earnings (Loss) Effective Tax Rate Diluted EPS Reported $ 338,968 $ 228,418 $ 113,079 $ (874 ) $ 20,142 $ 74,220 20.5 % 0.56 Reported as a percent of sales 31.2 % 21.0 % 10.4 % -0.1 % 1.9 % 6.8 % Realignment charges (a) 5,673 (1,494 ) 7,167 - 723 6,444 10.1 % 0.05 Discrete item (b) - 2,000 (2,000 ) - - (2,000 ) 0.0 % (0.02 ) Below-the-line foreign exchange impacts (c) - - - (1,323 ) (51 ) (1,273 ) 3.8 % (0.01 ) Adjusted $ 344,641 $ 228,924 $ 118,246 $ (2,197 ) $ 20,814 $ 77,392 20.4 % 0.58 Adjusted as a percent of sales 31.7 % 21.1 % 10.9 % -0.2 % 1.9 % 7.1 % Note: Amounts may not calculate due to rounding (a) Charges represent realignment costs incurred as a result of realignment programs of which $800 is non-cash. (b) Represents a reduction to reserves associated with our ongoing financial exposure in Russia that were adjusted for Non-GAAP measures when established in 2022. (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. Three Months Ended March 31, 2023 Gross Profit Selling, General & Administrative Expense Operating Income Other Income (Expense), Net Provision For (Benefit From) Income Taxes Net Earnings (Loss) Effective Tax Rate Diluted EPS Reported $ 296,830 $ 244,268 $ 57,186 $ (8,020 ) $ 4,453 $ 26,766 12.9 % $ 0.20 Reported as a percent of sales 30.3 % 24.9 % 5.8 % -0.8 % 0.5 % 2.7 % Realignment charges (a) 202 (16,677 ) 16,879 - 3,184 13,695 18.9 % 0.10 Discrete asset write-downs (b)(c) 1,173 (2,917 ) 4,090 - 1,038 3,052 25.4 % 0.02 Acquisition related (d) - (3,096 ) 3,096 - 822 2,274 26.6 % 0.02 Below-the-line foreign exchange impacts (e) - - - 7,406 549 6,857 7.4 % 0.05 Adjusted $ 298,205 $ 221,578 $ 81,251 $ (614 ) $ 10,046 $ 52,644 15.2 % $ 0.40 Adjusted as a percent of sales 30.4 % 22.6 % 8.3 % -0.1 % 1.0 % 5.4 % Note: Amounts may not calculate due to rounding (a) Charges represent realignment costs incurred as a result of realignment programs of which $7,597 is non-cash. (b) Charge represents a further $1,173 non-cash write-down of inventory associated with a customer sales contract that was determined to be uncollectible and adjusted out for Non-GAAP measures in a previous period. (c) Charge represents a $2,917 non-cash write-down of a licensing agreement. (d) Charges represent costs associated with a terminated acquisition. (e) Below-the-line foreign exchange impacts represent the remeasurement of foreign exchange derivative contracts as well as the remeasurement of assets and liabilities that are denominated in a currency other than a site’s respective functional currency. SEGMENT INFORMATION (Unaudited) FLOWSERVE PUMPS DIVISION Three Months Ended March 31, (Amounts in millions, except percentages) 2024 2023 Bookings $ 703.5 $ 728.5 Sales 769.4 700.1 Gross profit 247.9 221.4 Gross profit margin 32.2 % 31.6 % SG&A 139.7 147.0 Segment operating income 110.9 79.1 Segment operating income as a percentage of sales 14.4 % 11.3 % FLOW CONTROL DIVISION Three Months Ended March 31, (Amounts in millions, except percentages) 2024 2023 Bookings $ 341.1 $ 332.0 Sales 320.5 281.6 Gross profit 92.7 80.3 Gross profit margin 28.9 % 28.5 % SG&A 58.0 61.8 Segment operating income 34.7 18.5 Segment operating income as a percentage of sales 10.8 % 6.6 % Segment Reconciliation of Non-GAAP Financial Measures to the Most Directly Comparable GAAP Financial Measure (Unaudited) (Amounts in thousands) Flowserve Pumps Division Three Months Ended March 31, 2024 Gross Profit Selling, General & Administrative Expense Operating Income Three Months Ended March 31, 2023 Gross Profit Selling, General & Administrative Expense Operating Income Reported $ 247,938 $ 139,710 $ 110,894 Reported $ 221,427 $ 146,979 $ 79,073 Reported as a percent of sales 32.2 % 18.2 % 14.4 % Reported as a percent of sales 31.6 % 21.0 % 11.3 % Realignment charges (a) 5,044 (1,041 ) 6,085 Realignment charges (a) 390 (2,050 ) 2,440 Discrete item (b) - 2,000 (2,000 ) Discrete asset write-downs (b)(c) 1,173 (2,917 ) 4,090 Adjusted $ 252,982 $ 140,669 $ 114,979 Adjusted $ 222,990 $ 142,012 $ 85,603 Adjusted as a percent of sales 32.9 % 18.3 % 14.9 % Adjusted as a percent of sales 31.9 % 20.3 % 12.2 % Flow Control Division Three Months Ended March 31, 2024 Gross Profit Selling, General & Administrative Expense Operating Income Three Months Ended March 31, 2023 Gross Profit Selling, General & Administrative Expense Operating Income Reported $ 92,695 $ 57,987 $ 34,708 Reported $ 80,293 $ 61,759 $ 18,534 Reported as a percent of sales 28.9 % 18.1 % 10.8 % Reported as a percent of sales 28.5 % 21.9 % 6.6 % Realignment charges (a) 767 (114 ) 881 Realignment charges (a) 11 (8,906 ) 8,917 Adjusted $ 93,462 $ 57,873 $ 35,589 Acquisition related (d) - (3,096 ) 3,096 Adjusted as a percent of sales 29.2 % 18.1 % 11.1 % Adjusted $ 80,304 $ 49,757 $ 30,547 Adjusted as a percent of sales 28.5 % 17.7 % 10.8 % 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 $800 is non-cash. (a) Charges represent realignment costs incurred as a result of realignment programs of which $7,597 is non-cash. (b) Represents a reduction to reserves associated with our ongoing financial exposure in Russia that were adjusted for Non-GAAP measures when established in 2022. (b) Charge represents a further $1,173 non-cash write-down of inventory associated with a customer sales contract that was determined to be uncollectible and adjusted out for Non-GAAP measures in a previous period. (c) Charge represents a $2,917 non-cash write-down of a licensing agreement. (d) Charges represent costs associated with a terminated acquisition. First Quarter - Segment Results (dollars in millions, comparison vs. 2023 first quarter, unaudited) FPD FCD 1st Qtr 1st Qtr Bookings $ 703.5 $ 341.1 - vs. prior year -25.0 -3.4 % 9.1 2.7 % - on constant currency -25.5 -3.5 % 9.9 3.0 % Sales $ 769.4 $ 320.5 - vs. prior year 69.3 9.9 % 38.9 13.8 % - on constant currency 66.1 9.4 % 39.2 13.9 % Gross Profit $ 247.9 $ 92.7 - vs. prior year 12.0 % 15.4 % Gross Margin (% of sales) 32.2 % 28.9 % - vs. prior year (in basis points) 60 bps 40 bps Operating Income $ 110.9 $ 34.7 - vs. prior year 31.8 40.2 % 16.2 87.6 % - on constant currency 32.1 40.7 % 16.5 88.9 % Operating Margin (% of sales) 14.4 % 10.8 % - vs. prior year (in basis points) 310 bps 420 bps Adjusted Operating Income * $ 115.0 $ 35.6 - vs. prior year 29.4 34.3 % 5.1 16.7 % - on constant currency 29.7 34.7 % 5.4 17.7 % Adj. Oper. Margin (% of sales)* 14.9 % 11.1 % - vs. prior year (in basis points) 270 bps 30 bps Backlog $ 1,784.2 $ 841.7 * Adjusted Operating Income and Adjusted Operating Margin exclude realignment charges and other specific discrete items CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) March 31, December 31, (Amounts in thousands, except par value) 2024 2023 ASSETS Current assets: Cash and cash equivalents $ 531,981 $ 545,678 Accounts receivable, net of allowance for expected credit losses of $78,305 and $80,013, respectively 914,357 881,869 Contract assets, net of allowance for expected credit losses of $4,986 and $4,993, respectively 287,058 280,228 Inventories 883,341 879,937 Prepaid expenses and other 149,840 116,065 Total current assets 2,766,577 2,703,777 Property, plant and equipment, net of accumulated depreciation of $1,162,548 and $1,158,451, respectively 499,499 506,158 Operating lease right-of-use assets, net 163,183 156,430 Goodwill 1,173,368 1,182,225 Deferred taxes 215,216 218,358 Other intangible assets, net 119,355 122,248 Other assets, net of allowance for expected credit losses of $66,357 and $66,864, respectively 212,727 219,523 Total assets $ 5,149,925 $ 5,108,719 LIABILITIES AND EQUITY Current liabilities: Accounts payable $ 549,515 $ 547,824 Accrued liabilities 547,382 504,430 Contract liabilities 279,216 287,697 Debt due within one year 66,428 66,243 Operating lease liabilities 31,635 32,382 Total current liabilities 1,474,176 1,438,576 Long-term debt due after one year 1,152,336 1,167,307 Operating lease liabilities 144,740 138,665 Retirement obligations and other liabilities 382,461 389,120 Shareholders’ equity: Common shares, $1.25 par value 220,991 220,991 Shares authorized – 305,000 Shares issued – 176,793 and 176,793, respectively Capital in excess of par value 483,963 506,525 Retained earnings 3,900,922 3,854,717 Treasury shares, at cost – 45,372 and 45,885 shares, respectively (1,992,404 ) (2,014,474 ) Deferred compensation obligation 6,767 7,942 Accumulated other comprehensive loss (666,259 ) (639,601 ) Total Flowserve Corporation shareholders' equity 1,953,980 1,936,100 Noncontrolling interests 42,232 38,951 Total equity 1,996,212 1,975,051 Total liabilities and equity $ 5,149,925 $ 5,108,719 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Three Months Ended March 31, (Amounts in thousands) 2024 2023 Cash flows – Operating activities: Net earnings (loss), including noncontrolling interests $ 77,915 $ 29,996 Adjustments to reconcile net earnings (loss) to net cash provided (used) by operating activities: Depreciation 19,326 18,928 Amortization of intangible and other assets 2,254 2,663 Stock-based compensation 8,657 9,953 Foreign currency, asset write downs and other non-cash adjustments 1,189 (2,728 ) Change in assets and liabilities: Accounts receivable, net (39,687 ) (26,249 ) Inventories (11,452 ) (70,721 ) Contract assets, net (8,051 ) 4,325 Prepaid expenses and other assets, net (16,001 ) (16,019 ) Accounts payable 5,053 7,008 Contract liabilities (6,372 ) 32,676 Accrued liabilities 30,917 35,374 Retirement obligations and other (2,426 ) 9,477 Net deferred taxes 935 (8,095 ) Net cash flows provided (used) by operating activities 62,257 26,588 Cash flows – Investing activities: Capital expenditures (13,610 ) (15,318 ) Other 24 (1,138 ) Net cash flows provided (used) by investing activities (13,586 ) (16,456 ) Cash flows – Financing activities: Payments on term loan (15,000 ) (10,000 ) Proceeds under other financing arrangements 72 78 Payments under other financing arrangements (25 ) (1,515 ) Repurchases of common shares (2,549 ) - Payments related to tax withholding for stock-based compensation (8,857 ) (5,850 ) Payments of dividends (27,654 ) (26,229 ) Other (201 ) (303 ) Net cash flows provided (used) by financing activities (54,214 ) (43,819 ) Effect of exchange rate changes on cash and cash equivalents (8,154 ) 3,442 Net change in cash and cash equivalents (13,697 ) (30,245 ) Cash and cash equivalents at beginning of period 545,678 434,971 Cash and cash equivalents at end of period $ 531,981 $ 404,726 About Flowserve Flowserve Corp. is one of the world’s leading providers of fluid motion and control products and services. Operating in more than 50 countries, the company produces engineered and industrial pumps, seals and valves as well as a range of related flow management services. More information about Flowserve can be obtained by visiting the company’s Web site at www.flowserve.com. Safe Harbor Statement: This news release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, as amended. Words or phrases such as, "may," "should," "expects," "could," "intends," "plans," "anticipates," "estimates," "believes," "forecasts," "predicts" or other similar expressions are intended to identify forward-looking statements, which include, without limitation, earnings forecasts, statements relating to our business strategy and statements of expectations, beliefs, future plans and strategies and anticipated developments concerning our industry, business, operations and financial performance and condition. The forward-looking statements included in this news release are based on our current expectations, projections, estimates and assumptions. These statements are only predictions, not guarantees. Such forward-looking statements are subject to numerous risks and uncertainties that are difficult to predict. These risks and uncertainties may cause actual results to differ materially from what is forecast in such forward-looking statements, and include, without limitation, the following: economic, political and other risks associated with our international operations, including military actions, trade embargoes, epidemics or pandemics or changes to tariffs or trade agreements that could affect customer markets, particularly North African, Latin American, Asian and Middle Eastern markets and global oil and gas producers, and non-compliance with U.S. export/re-export control, foreign corrupt practice laws, economic sanctions and import laws and regulations; any continued volatile regional and global economic conditions resulting from the COVID-19 pandemic on our business and operations; global supply chain disruptions and the current inflationary environment could adversely affect the efficiency of our manufacturing and increase the cost of providing our products to customers; a portion of our bookings may not lead to completed sales, and our ability to convert bookings into revenues at acceptable profit margins; changes in global economic conditions and the potential for unexpected cancellations or delays of customer orders in our reported backlog; our dependence on our customers’ ability to make required capital investment and maintenance expenditures; if we are not able to successfully execute and realize the expected financial benefits from any restructuring and realignment initiatives, our business could be adversely affected; the substantial dependence of our sales on the success of the oil and gas, chemical, power generation and water management industries; the adverse impact of volatile raw materials prices on our products and operating margins; increased aging and slower collection of receivables, particularly in Latin America and other emerging markets; our exposure to fluctuations in foreign currency exchange rates, including in hyperinflationary countries such as Venezuela and Argentina; potential adverse consequences resulting from litigation to which we are a party, such as litigation involving asbestos-containing material claims; expectations regarding acquisitions and the integration of acquired businesses; the potential adverse impact of an impairment in the carrying value of goodwill or other intangible assets; our dependence upon third-party suppliers whose failure to perform timely could adversely affect our business operations; the highly competitive nature of the markets in which we operate; environmental compliance costs and liabilities; potential work stoppages and other labor matters; access to public and private sources of debt financing; our inability to protect our intellectual property in the U.S., as well as in foreign countries; obligations under our defined benefit pension plans; our internal control over financial reporting may not prevent or detect misstatements because of its inherent limitations, including the possibility of human error, the circumvention or overriding of controls, or fraud; the recording of increased deferred tax asset valuation allowances in the future or the impact of tax law changes on such deferred tax assets could affect our operating results; our information technology infrastructure could be subject to service interruptions, data corruption, cyber-based attacks or network security breaches, which could disrupt our business operations and result in the loss of critical and confidential information; ineffective internal controls could impact the accuracy and timely reporting of our business and financial results; and other factors described from time to time in our filings with the Securities and Exchange Commission. All forward-looking statements included in this news release are based on information available to us on the date hereof, and we assume no obligation to update any forward-looking statement. The Company reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). However, management believes that non-GAAP financial measures which exclude certain non-recurring items present additional useful comparisons between current results and results in prior operating periods, providing investors with a clearer view of the underlying trends of the business. Management also uses these non-GAAP financial measures in making financial, operating, planning and compensation decisions and in evaluating the Company's performance. Non-GAAP financial measures, which may be inconsistent with similarly captioned measures presented by other companies, should be viewed in addition to, and not as a substitute for, the Company’s reported results prepared in accordance with GAAP. View source version on businesswire.com: https://www.businesswire.com/news/home/20240429424747/en/
Investor Contacts: Jay Roueche, Vice President, Investor Relations & Treasurer, (972) 443-6560 Tarek Zeni, Director, Investor Relations, (469) 420-4045 Media Contact: Wes Warnock, Vice President, Marketing, Communications & Public Affairs, (972) 443-6900