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Flowserve Corporation Reports Second Quarter 2022 Results; Affirms 2022 Adjusted EPS Guidance

  • Strong bookings of $1.04 billion increased 9.6% year-over-year and 14.5% constant currency, marking the second consecutive quarter with bookings over $1 billion
  • Backlog of $2.32 billion at June 30 was up 15.6% versus 2021 year-end and 18.8% year-over-year, reaching its highest level since Q3 2015 and positioning the Company for growth
  • Diversify, Decarbonize and Digitize (“3D”) strategy accelerating bookings growth in current market conditions
  • Sequential incremental adjusted operating margin of 60% on 7.4% revenue growth
  • Reported Earnings Per Share of 34 cents, includes 4 cents of net benefit due primarily to $10 million below-the-line foreign exchange gain
  • Adjusted Earnings Per Share of 30 cents, exceeding prior expectations

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, 2022.

Second Quarter 2022 Highlights (all comparisons to the 2021 second quarter, unless otherwise noted)

  • Reported Earnings Per Share (EPS) of $0.34 and Adjusted EPS1 of $0.30
    • Reported EPS includes a $10.1 million below-the-line FX benefit, partially offset by a $3.0 million discrete asset write-down and modest realignment expenses
  • Total bookings were $1.04 billion, up 9.6%, or 14.5% on a constant currency basis
    • Original equipment bookings were $518.0 million, up 21.1% or 26.9% on a constant currency basis
    • Aftermarket bookings were $526.0 million, up 0.2%, or 4.5% on a constant currency basis
  • Sales were $882.2 million, down 1.8%, or up 2.8% on a constant currency basis
    • Original equipment sales were $411.3 million, down 5.3%, or 0.2% on a constant currency basis
    • Aftermarket sales were $470.9 million, up 1.6%, or up 5.7% on a constant currency basis
  • Reported gross and operating margins were 28.3% and 6.8%, respectively
    • Adjusted gross and operating margins2 were 28.4% and 7.2%, respectively

“We delivered strong sequential earnings and margin improvement in the second quarter, supported by solid operational execution and continued efforts to mitigate ongoing supply chain and inflationary headwinds,” said Scott Rowe, Flowserve’s president and chief executive officer. “With our strong customer relationships and comprehensive flow control portfolio, we continued to capitalize on healthy demand across our served markets, which drove solid bookings growth, particularly within our aftermarket and MRO-focused businesses. We expect improved demand for both our traditional energy and energy transition offerings to continue in the quarters ahead, as our project funnel continues to grow.”

Rowe concluded, “Flowserve is well positioned to deliver further revenue and earnings growth in the second half of the year. These expectations are driven by our highest backlog since 2015 and our belief that supportive end-markets will continue, particularly for energy, chemical and power investments. Our 3D strategy to diversify, decarbonize and digitize has gained significant traction year-to-date, with strong first half bookings exceeding our targets, particularly as a result of strength in decarbonization and energy transition projects. Looking forward, we will continue to take action to mitigate external headwinds while we focus on accelerating our backlog conversion and margin expansion. We expect to build on our progress and exit 2022 with positive momentum, positioning us well to deliver substantial long-term value to our customers, shareholders and associates.”

2022 Guidance3

Flowserve today reaffirmed its previously announced target ranges, as well as certain other financial metrics, it has provided in its full-year 2022 guidance issued on May 3, 2022. The company did indicate, however, that should the US Dollar persist at the current strong level through the remainder of the year, it expects full-year revenue, GAAP EPS and Adjusted EPS at the low end of those respective ranges. The company also noted that it expects to exit the fourth quarter of 2022 with an adjusted operating margin in the 12% to 14% range.

Second Quarter 2022 Results Conference Call

Flowserve will host its conference call with the financial community on Thursday, July 28th 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 Reconciliation of Non-GAAP Measures table for detailed reconciliation of reported results to adjusted measures.

2 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 reconciliation of Non-GAAP Measures table for detailed reconciliation.

3 Adjusted 2022 EPS excludes realignment expenses, the impact from other specific discrete items and below-the-line foreign currency effects and utilizes current FX rates and approximately 131 million fully diluted shares.

_ FX impact is calculated by comparing the difference between the actual average FX rates of 2022 and the year-end 2021 spot rates both as applied to our 2022 expectations, divided by the number of shares expected for 2022.

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 second-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.

 
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)

Three Months Ended June 30,

(Amounts in thousands, except per share data)

 

2022

 

 

 

2021

 

 
Sales

$

882,222

 

$

898,178

 

Cost of sales

 

(632,393

)

 

(619,940

)

Gross profit

 

249,829

 

 

278,238

 

Selling, general and administrative expense

 

(194,606

)

 

(210,789

)

Gain on sale of business

 

-

 

 

1,806

 

Net earnings from affiliates

 

5,109

 

 

2,907

 

Operating income

 

60,332

 

 

72,162

 

Interest expense

 

(11,062

)

 

(14,322

)

Interest income

 

854

 

 

465

 

Other income (expense), net

 

7,589

 

 

(7,850

)

Earnings before income taxes

 

57,713

 

 

50,455

 

Provision for income taxes

 

(11,618

)

 

(2,711

)

Net earnings, including noncontrolling interests

 

46,095

 

 

47,744

 

Less: Net earnings attributable to noncontrolling interests

 

(1,318

)

 

(2,390

)

Net earnings attributable to Flowserve Corporation

$

44,777

 

$

45,354

 

 
Net earnings per share attributable to Flowserve Corporation common shareholders:
Basic

$

0.34

 

$

0.35

 

Diluted

 

0.34

 

 

0.35

 

 
Weighted average shares - basic

 

130,666

 

 

130,305

 

Weighted average shares - diluted

 

131,245

 

 

130,804

 

 
RECONCILIATION OF NON-GAAP MEASURES
(Unaudited)
 

Three Months Ended June 30, 2022

(Amounts in thousands, except per share data)

As Reported (a)

 

 

Realignment (1)

 

 

Other Items

 

 

As Adjusted

 
Sales

$

882,222

 

$

-

 

$

-

 

$

882,222

 

Gross profit

 

249,829

 

 

(467

)

 

-

 

 

250,296

 

Gross margin

 

28.3

%

 

-

 

 

-

 

 

28.4

%

 
Selling, general and administrative expense

 

(194,606

)

 

(62

)

 

(3,036

)

(3)

 

(191,508

)

Net earnings from affiliates

 

5,109

 

 

-

 

 

-

 

 

5,109

 

 
Operating income

 

60,332

 

 

(529

)

 

(3,036

)

 

63,897

 

Operating income as a percentage of sales

 

6.8

%

 

-

 

 

-

 

 

7.2

%

 
Interest and other expense, net

 

(2,619

)

 

-

 

 

10,112

 

(4)

 

(12,731

)

 
Earnings before income taxes

 

57,713

 

 

(529

)

 

7,076

 

 

51,166

 

Provision for income taxes

 

(11,618

)

 

101

 

(2)

 

(1,335

)

(5)

 

(10,384

)

Tax Rate

 

20.1

%

 

19.1

%

 

18.9

%

 

20.3

%

 
Net earnings attributable to Flowserve Corporation

$

44,777

 

$

(428

)

$

5,741

 

$

39,464

 

 
Net earnings per share attributable to Flowserve Corporation common shareholders:
Basic

$

0.34

 

$

-

 

$

0.04

 

$

0.30

 

Diluted

 

0.34

 

 

-

 

 

0.04

 

 

0.30

 

 
Basic number of shares used for calculation

 

130,666

 

 

130,666

 

 

130,666

 

 

130,666

 

Diluted number of shares used for calculation

 

131,245

 

 

131,245

 

 

131,245

 

 

131,245

 

 
(a) Reported in conformity with U.S. GAAP
Notes:
(1) Represents realignment adjustments incurred as a result of realignment programs
(2) Includes tax impact of items above
(3) Represents discrete asset write-down
(4) Represents below-the-line foreign exchange impacts
(5) Includes tax impact of items above
 
RECONCILIATION OF NON-GAAP MEASURES
(Unaudited)
 

Three Months Ended June 30, 2021

(Amounts in thousands, except per share data)

As Reported (a)

 

 

Realignment (1)

 

 

Other Items

 

 

As Adjusted

 
Sales

$

898,178

 

$

-

 

$

-

 

$

898,178

 

Gross profit

 

278,238

 

 

(3,825

)

 

-

 

 

282,063

 

Gross margin

 

31.0

%

 

-

 

 

-

 

 

31.4

%

 
Selling, general and administrative expense

 

(210,789

)

 

(1,790

)

 

-

 

 

(208,999

)

Gain on sale of business

 

1,806

 

 

-

 

 

1,806

 

(3)

 

-

 

Net earnings from affiliates

 

2,907

 

 

-

 

 

-

 

 

2,907

 

 
Operating income

 

72,162

 

 

(5,615

)

 

1,806

 

 

75,971

 

Operating income as a percentage of sales

 

8.0

%

 

-

 

 

-

 

 

8.5

%

 
Interest and other expense, net

 

(21,707

)

 

-

 

 

(4,197

)

(4)

 

(17,510

)

 
Earnings before income taxes

 

50,455

 

 

(5,615

)

 

(2,391

)

 

58,461

 

Provision for income taxes

 

(2,711

)

 

4,486

 

(2)

 

959

 

(5)

 

(8,156

)

Tax Rate

 

5.4

%

 

79.9

%

 

40.1

%

 

14.0

%

 
Net earnings attributable to Flowserve Corporation

$

45,354

 

$

(1,129

)

$

(1,432

)

$

47,915

 

 
Net earnings per share attributable to Flowserve Corporation common shareholders:
Basic

$

0.35

 

$

(0.01

)

$

(0.01

)

$

0.37

 

Diluted

 

0.35

 

 

(0.01

)

 

(0.01

)

 

0.37

 

 
Basic number of shares used for calculation

 

130,305

 

 

130,305

 

 

130,305

 

 

130,305

 

Diluted number of shares used for calculation

 

130,804

 

 

130,804

 

 

130,804

 

 

130,804

 

 
(a) Reported in conformity with U.S. GAAP
Notes:
(1) Represents realignment expense incurred as a result of realignment programs
(2) Includes tax impact of items above and realignment related tax release
(3) Represents final settlement gain on sale of business in 2018
(4) Represents below-the-line foreign exchange impacts
(5) Includes tax impact of items above
 
SEGMENT INFORMATION
(Unaudited)
 
FLOWSERVE PUMP DIVISION

Three Months Ended June 30,

(Amounts in millions, except percentages)

 

2022

 

 

 

2021

 

Bookings

$

717.8

 

$

668.8

 

Sales

 

614.9

 

 

617.5

 

Gross profit

 

184.0

 

 

196.4

 

Gross profit margin

 

29.9

%

 

31.8

%

SG&A

 

131.7

 

 

133.6

 

Gain on sale of business

 

-

 

 

1.8

 

Segment operating income

 

57.3

 

 

67.8

 

Segment operating income as a percentage of sales

 

9.3

%

 

11.0

%

 
FLOW CONTROL DIVISION

Three Months Ended June 30,

(Amounts in millions, except percentages)

 

2022

 

 

 

2021

 

Bookings

$

329.9

 

$

289.1

 

Sales

 

268.4

 

 

281.2

 

Gross profit

 

80.3

 

 

84.8

 

Gross profit margin

 

29.9

%

 

30.2

%

SG&A

 

50.0

 

 

48.0

 

Segment operating income

 

30.4

 

 

37.2

 

Segment operating income as a percentage of sales

 

11.3

%

 

13.2

%

 
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)

Six Months Ended June 30,

(Amounts in thousands, except per share data)

 

2022

 

 

 

2021

 

 
Sales

$

1,703,280

 

$

1,755,486

 

Cost of sales

 

(1,243,803

)

 

(1,226,348

)

Gross profit

 

459,477

 

 

529,138

 

Selling, general and administrative expense

 

(400,816

)

 

(409,104

)

Gain on sale of business

 

-

 

 

1,806

 

Net earnings from affiliates

 

9,039

 

 

6,425

 

Operating income

 

67,700

 

 

128,265

 

Interest expense

 

(21,755

)

 

(31,101

)

Loss on extinguishment of debt

 

-

 

 

(7,610

)

Interest income

 

1,797

 

 

1,067

 

Other income (expense), net

 

(524

)

 

(19,213

)

Earnings before income taxes

 

47,218

 

 

71,408

 

Provision for income taxes

 

(14,800

)

 

(6,503

)

Net earnings, including noncontrolling interests

 

32,418

 

 

64,905

 

Less: Net earnings attributable to noncontrolling interests

 

(3,458

)

 

(5,471

)

Net earnings attributable to Flowserve Corporation

$

28,960

 

$

59,434

 

 
Net earnings per share attributable to Flowserve Corporation common shareholders:
Basic

$

0.22

 

$

0.46

 

Diluted

 

0.22

 

 

0.45

 

 
Weighted average shares - basic

 

130,554

 

 

130,366

 

Weighted average shares - diluted

 

131,148

 

 

130,905

 

 
RECONCILIATION OF NON-GAAP MEASURES
(Unaudited)
 

Six Months Ended June 30, 2022

(Amounts in thousands, except per share data)

As Reported (a)

 

 

Realignment (1)

 

 

Other Items

 

 

As Adjusted

 
Sales

$

1,703,280

 

$

-

 

$

-

 

$

1,703,280

 

Gross profit

 

459,477

 

 

(269

)

 

(10,053

)

(3)

 

469,799

 

Gross margin

 

27.0

%

 

-

 

 

-

 

 

27.6

%

 
Selling, general and administrative expense

 

(400,744

)

 

139

 

 

(13,229

)

(3)

 

(387,654

)

Net earnings from affiliates

 

8,967

 

 

-

 

 

-

 

 

8,967

 

 
Operating income

 

67,700

 

 

(130

)

 

(23,282

)

 

91,112

 

Operating income as a percentage of sales

 

4.0

%

 

-

 

 

-

 

 

5.3

%

 
Interest and other expense, net

 

(20,482

)

 

-

 

 

4,418

 

(4)

 

(24,900

)

 
Earnings before income taxes

 

47,218

 

 

(130

)

 

(18,864

)

 

66,212

 

Provision for income taxes

 

(14,800

)

 

27

 

(2)

 

(1,101

)

(5)

 

(13,726

)

Tax Rate

 

31.3

%

 

20.8

%

 

-5.8

%

 

20.7

%

 
Net earnings attributable to Flowserve Corporation

$

28,960

 

$

(103

)

$

(19,965

)

$

49,028

 

 
Net earnings per share attributable to Flowserve Corporation common shareholders:
Basic

$

0.22

 

$

-

 

$

(0.14

)

$

0.38

 

Diluted

 

0.22

 

 

-

 

 

(0.15

)

 

0.37

 

 
Basic number of shares used for calculation

 

130,554

 

 

130,554

 

 

130,554

 

 

130,554

 

Diluted number of shares used for calculation

 

131,148

 

 

131,148

 

 

131,148

 

 

131,148

 

 
(a) Reported in conformity with U.S. GAAP
Notes:
(1) Represents realignment adjustments incurred as a result of realignment programs
(2) Includes tax impact of items above
(3) Represents the reserve of Russia related financial exposures and a discrete asset write-down. The impact of $5.4 million of previously recognized revenue and estimated cancellation fees on open contracts that were previously accounted for under POC and subsequently canceled have been reflected in the above adjustment to gross profit
(4) Represents below-the-line foreign exchange impacts
(5) Includes tax impact of items above
 
RECONCILIATION OF NON-GAAP MEASURES
(Unaudited)
 

Six Months Ended June 30, 2021

(Amounts in thousands, except per share data)

As Reported (a)

 

 

Realignment (1)

 

 

Other Items

 

 

As Adjusted

 
Sales

$

1,755,486

 

$

-

 

$

-

 

$

1,755,486

 

Gross profit

 

529,138

 

 

(13,231

)

 

-

 

 

542,369

 

Gross margin

 

30.1

%

 

-

 

 

-

 

 

30.9

%

 
Selling, general and administrative expense

 

(409,104

)

 

(6,086

)

 

-

 

 

(403,018

)

Gain on sale of business

 

1,806

 

 

-

 

 

1,806

 

(3)

 

-

 

Net earnings from affiliates

 

6,425

 

 

-

 

 

-

 

 

6,425

 

 
Operating income

 

128,265

 

 

(19,317

)

 

1,806

 

 

145,776

 

Operating income as a percentage of sales

 

7.3

%

 

-

 

 

-

 

 

8.3

%

 
Interest and other expense, net

 

(56,857

)

 

-

 

 

(21,313

)

(4)

 

(35,544

)

 
Earnings before income taxes

 

71,408

 

 

(19,317

)

 

(19,507

)

 

110,232

 

Provision for income taxes

 

(6,503

)

 

7,842

 

(2)

 

5,799

 

(5)

 

(20,144

)

Tax Rate

 

9.1

%

 

40.6

%

 

29.7

%

 

18.3

%

 
Net earnings attributable to Flowserve Corporation

$

59,434

 

$

(11,475

)

$

(13,708

)

$

84,617

 

 
Net earnings per share attributable to Flowserve Corporation common shareholders:
Basic

$

0.46

 

$

(0.09

)

$

(0.11

)

$

0.65

 

Diluted

 

0.45

 

 

(0.09

)

 

(0.10

)

 

0.65

 

 
Basic number of shares used for calculation

 

130,366

 

 

130,366

 

 

130,366

 

 

130,366

 

Diluted number of shares used for calculation

 

130,905

 

 

130,905

 

 

130,905

 

 

130,905

 

 
(a) Reported in conformity with U.S. GAAP
Notes:
(1) Represents realignment expense incurred as a result of realignment programs
(2) Includes tax impact of items above and realignment related tax release
(3) Represents final settlement gain on sale of business in 2018
(4) Represents below-the-line foreign exchange impacts and $7.6 million of expense as a result of early extinguishment of debt
(5) Includes tax impact of items above and $1.3 million benefit related to legal entity simplification and restructuring
 
SEGMENT INFORMATION
(Unaudited)
 
FLOWSERVE PUMP DIVISION

Six Months Ended June 30,

(Amounts in millions, except percentages)

 

2022

 

 

 

2021

 

Bookings

$

1,513.0

 

$

1,322.2

 

Sales

 

1,190.5

 

 

1,220.1

 

Gross profit

 

340.9

 

 

379.2

 

Gross profit margin

 

28.6

%

 

31.1

%

SG&A

 

271.5

 

 

266.2

 

Gain on sale of business

 

-

 

 

1.8

 

Segment operating income

 

78.3

 

 

121.6

 

Segment operating income as a percentage of sales

 

6.6

%

 

10.0

%

 
FLOW CONTROL DIVISION

Six Months Ended June 30,

(Amounts in millions, except percentages)

 

2022

 

 

 

2021

 

Bookings

$

624.2

 

$

582.6

 

Sales

 

516.3

 

 

537.0

 

Gross profit

 

139.8

 

 

159.4

 

Gross profit margin

 

27.1

%

 

29.7

%

SG&A

 

94.2

 

 

97.8

 

Segment operating income

 

45.6

 

 

61.9

 

Segment operating income as a percentage of sales

 

8.8

%

 

11.5

%

 

Second Quarter and Year-to-Date 2022 - Segment Results

(dollars in millions, comparison vs. 2021 second quarter and year-to-date, unaudited)

 

FPD

FCD

Bookings

$

717.8

$

1,513.0

$

329.9

$

624.2

- vs. prior year

 

7.3%

 

14.4%

 

14.1%

 

7.1%

- on constant currency

 

12.4%

 

18.4%

 

18.8%

 

10.6%

 
Sales

$

614.9

$

1,190.5

$

268.4

$

516.3

- vs. prior year

 

-0.4%

 

-2.4%

 

-4.6%

 

-3.9%

- on constant currency

 

4.4%

 

1.2%

 

-0.6%

 

-0.9%

 
Gross Profit

$

184.0

$

340.9

$

80.3

$

139.8

- vs. prior year

 

-6.3%

 

-10.1%

 

-5.3%

 

-12.3%

 
Gross Margin (% of sales)

 

29.9%

 

28.6%

 

29.9%

 

27.1%

- vs. prior year (in basis points)

(190) bps

 

(250) bps

 

(30) bps

 

(260) bps

 
Operating Income

$

57.3

$

78.3

$

30.4

$

45.6

- vs. prior year

 

-15.5%

 

-35.6%

 

-18.3%

 

-26.3%

- on constant currency

 

-10.8%

 

-33.6%

 

-17.0%

 

-25.1%

 
Operating Margin (% of sales)

 

9.3%

 

6.6%

 

11.3%

 

8.8%

- vs. prior year (in basis points)

(170) bps

 

(340) bps

 

(190) bps

 

(270) bps

 
Adjusted Operating Income *

$

57.7

$

96.7

$

33.5

$

50.9

- vs. prior year

 

-18.3%

 

-27.0%

 

-10.4%

 

-20.2%

- on constant currency

 

-13.8%

 

-25.2%

 

-9.0%

 

-18.9%

 
Adj. Oper. Margin (% of sales)*

 

9.4%

 

8.1%

 

12.5%

 

9.9%

- vs. prior year (in basis points)

(200) bps

 

(280) bps

 

(80) bps

 

(200) bps

 
Backlog

$

1,619.8

$

701.9

 
* 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)

 

2022

 

 

 

2021

 

 
ASSETS
Current assets:
Cash and cash equivalents

$

458,345

 

$

658,452

 

Accounts receivable, net of allowance for expected credit losses of $78,776 and $74,336, respectively

 

735,895

 

 

739,210

 

Contract assets, net of allowance for expected credit losses of $3,704 and $2,393, respectively

 

197,128

 

 

195,598

 

Inventories, net

 

748,920

 

 

678,287

 

Prepaid expenses and other

 

140,639

 

 

117,130

 

Total current assets

 

2,280,927

 

 

2,388,677

 

Property, plant and equipment, net of accumulated depreciation of $1,150,876 and $1,191,823, respectively

 

487,299

 

 

515,927

 

Operating lease right-of-use assets, net

 

178,974

 

 

193,863

 

Goodwill

 

1,162,514

 

 

1,196,479

 

Deferred taxes

 

34,582

 

 

44,049

 

Other intangible assets, net

 

139,786

 

 

152,463

 

Other assets, net of allowance for expected credit losses of $67,968 and $67,696, respectively

 

298,650

 

 

258,310

 

Total assets

$

4,582,732

 

$

4,749,768

 

 
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable

$

433,508

 

$

410,062

 

Accrued liabilities

 

374,575

 

 

445,092

 

Contract liabilities

 

205,175

 

 

202,965

 

Debt due within one year

 

46,306

 

 

41,058

 

Operating lease liabilities

 

32,153

 

 

32,628

 

Total current liabilities

 

1,091,717

 

 

1,131,805

 

Long-term debt due after one year

 

1,241,636

 

 

1,261,770

 

Operating lease liabilities

 

153,580

 

 

166,786

 

Retirement obligations and other liabilities

 

341,906

 

 

352,062

 

Shareholders’ equity:
Common shares, $1.25 par value

 

220,991

 

 

220,991

 

Shares authorized – 305,000
Shares issued – 176,793
Capital in excess of par value

 

500,013

 

 

506,386

 

Retained earnings

 

3,666,935

 

 

3,691,023

 

Treasury shares, at cost – 46,377 and 46,794 shares, respectively

 

(2,037,839

)

 

(2,057,706

)

Deferred compensation obligation

 

6,921

 

 

7,214

 

Accumulated other comprehensive loss

 

(635,618

)

 

(563,589

)

Total Flowserve Corporation shareholders' equity

 

1,721,403

 

 

1,804,319

 

Noncontrolling interests

 

32,490

 

 

33,026

 

Total equity

 

1,753,893

 

 

1,837,345

 

Total liabilities and equity

$

4,582,732

 

$

4,749,768

 

 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

Six Months Ended June 30,

(Amounts in thousands)

 

2022

 

 

 

2021

 

 
Cash flows – Operating activities:
Net earnings, including noncontrolling interests

$

32,418

 

$

64,905

 

Adjustments to reconcile net earnings to net cash provided (used) by operating activities:
Depreciation

 

40,034

 

 

44,491

 

Amortization of intangible and other assets

 

6,748

 

 

7,433

 

Loss on extinguishment of debt

 

-

 

 

7,610

 

Stock-based compensation

 

16,896

 

 

16,472

 

Foreign currency, asset write downs and other non-cash adjustments

 

(3,982

)

 

12,460

 

Change in assets and liabilities:
Accounts receivable, net

 

(21,638

)

 

14,285

 

Inventories, net

 

(96,737

)

 

(30,784

)

Contract assets, net

 

(7,705

)

 

12,232

 

Prepaid expenses and other assets, net

 

(19,769

)

 

(16,187

)

Accounts payable

 

33,550

 

 

(41,146

)

Contract liabilities

 

9,642

 

 

17,026

 

Accrued liabilities and income taxes payable

 

(65,773

)

 

(37,123

)

Retirement obligations and other

 

10,028

 

 

(2,761

)

Net deferred taxes

 

(5,079

)

 

(7,607

)

Net cash flows provided (used) by operating activities

 

(71,367

)

 

61,306

 

Cash flows – Investing activities:
Capital expenditures

 

(31,012

)

 

(22,541

)

Proceeds from disposal of assets and other

 

2,015

 

 

(1,299

)

Net cash flows provided (used) by investing activities

 

(28,997

)

 

(23,840

)

Cash flows – Financing activities:
Payments on senior notes

 

-

 

 

(407,473

)

Payments on term loan

 

(15,921

)

 

-

 

Proceeds under other financing arrangements

 

1,029

 

 

1,386

 

Payments under other financing arrangements

 

(720

)

 

(3,256

)

Repurchases of common shares

 

-

 

 

(17,531

)

Payments related to tax withholding for stock-based compensation

 

(4,497

)

 

(5,777

)

Payments of dividends

 

(52,267

)

 

(52,168

)

Other

 

(5,334

)

 

(6,275

)

Net cash flows provided (used) by financing activities

 

(77,710

)

 

(491,094

)

Effect of exchange rate changes on cash

 

(22,033

)

 

(11,249

)

Net change in cash and cash equivalents

 

(200,107

)

 

(464,877

)

Cash and cash equivalents at beginning of period

 

658,452

 

 

1,095,274

 

Cash and cash equivalents at end of period

$

458,345

 

$

630,397

 

 

Contacts

Flowserve Contacts

Investor Contacts:

Jay Roueche, Vice President, Investor Relations & Treasurer (972) 443-6560

Mike Mullin, Director, Investor Relations (214) 697-8568

Media Contact:

Lars Rosene, Vice President, Corporate Communications & Public Affairs (972) 443-6644

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