• Strong bookings of $1.22 billion increased 34.2% year-over-year and 40.8% on a constant currency basis, including one of Flowserve’s largest awards in its history
• Reported Earnings Per Share of 29 cents, includes 20 cents of net benefit due primarily to $30 million below-the-line foreign exchange gain, Adjusted Earnings per Share of 9 cents
• As previously announced, Reported and Adjusted Earnings per Share were impacted by approximately 22 cents per share of certain discrete items in the third quarter
• Backlog of $2.6 billion was up 29.9% versus 2021 year-end and 32.1% year-over-year, reaching its highest level since Q2 2015 and positioning the Company for growth
• With the highest backlog since 2015, and expectations for continued supportive end-markets, Flowserve is well-positioned for sequential revenue and earnings growth in the fourth quarter and full-year 2023
• Announced the acquisition of Chart Industries’ in-process R&D for hydrogen pumps to support our Diversify, Decarbonize and Digitize (“3D”) strategy

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 third quarter ended September 30, 2022.

Third Quarter 2022 Highlights (all comparisons to the 2021 third quarter, unless otherwise noted)

• Reported Earnings Per Share (EPS) of $0.29 and Adjusted EPS¹ of $0.09
  • Reported EPS includes a $30.5 million below-the-line FX benefit, $2.7 million reserve reversal of a prior discrete asset write-down and a modest realignment benefit
• Total bookings were $1.22 billion, up 34.2%, or 40.8% on a constant currency basis
  • Original equipment bookings were $679.7 million, up 63.0% or 70.1% on a constant currency basis
  • Aftermarket bookings were $543.7 million, up 9.9%, or 16.2% on a constant currency basis
• Sales were $872.9 million, up 0.8%, or 7.2% on a constant currency basis
  • Original equipment sales were $412.1 million, down 3.1%, or up 3.6% on a constant currency basis
  • Aftermarket sales were $460.8 million, up 4.5%, or up 10.6% on a constant currency basis
• Reported gross and operating margins were 27.4% and 2.8%, respectively
  • Adjusted gross and operating margins² were 27.4% and 2.4%, respectively

“Our third quarter results were impacted by a number of previously disclosed discrete, period-specific issues impacting our EPS and margin performance,” said Scott Rowe, Flowserve’s President and Chief Executive Officer. “While we are disappointed by these results, our performance in the third quarter does not reflect what the business is capable of delivering or our opportunities for the future. We have since put these non-recurring items behind us and have taken corrective actions to remedy the operating issues. Third quarter bookings, however, were exceptionally strong with large project awards in our traditional markets, solid aftermarket and MRO activity, and numerous awards driven by our 3D growth strategy. Our current project funnel remains healthy and includes significant opportunities in energy transition and energy security.”

Rowe concluded, “We look to close out the year with significant sequential revenue growth and improved margins given the one-time nature of most of the factors that impacted our third quarter performance. We continue to make progress on our efforts to mitigate supply chain headwinds that have challenged our revenue conversion this year and are implementing new cost reduction measures to improve efficiency and address underutilization at certain facilities. With our highest backlog in seven years, increased spending in our traditional markets driven by energy security concerns and continued progress and momentum in our 3D strategy, we believe Flowserve is positioned to deliver sequential revenue growth and earnings improvement for the remainder of the year and for full-year 2023.”

2022 Fourth Quarter Guidance³

Flowserve expects 2022 fourth quarter Reported and Adjusted EPS of at least 40 cents on year-over-year quarterly revenue growth of approximately 8-10%. Additionally, several of the issues that impacted the third quarter, including business disruption due to an ERP conversion, discrete one-time accounting issues, the purchase of R&D and elevated bad debt expenses are not expected to recur in the fourth quarter. Fourth quarter Adjusted EPS will exclude realignment expenses, below-the-line FX impacts and other potential specific discrete items.

Third Quarter 2022 Results Conference Call

Flowserve will host its conference call with the financial community on Tuesday, November 1^st 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.

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; 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 our strategic transformation and realignment initiatives, our business could be adversely affected; risks associated with cost overruns on fixed-fee projects and in taking customer orders for large complex custom engineered products; 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, Russian 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; our furnishing of products and services to nuclear power plant facilities and other critical processes; 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; our relative geographical profitability and its impact on our utilization of deferred tax assets, including foreign tax credits; 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. Throughout our materials we refer to non-GAAP measures as “Adjusted.” 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.

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