NEWS RELEASE
Flowserve Corporation Reports Fourth Quarter and Full Year 2019 Results; Issues 2020 Financial Guidance
02/17/20
- Strong full year bookings and backlog growth, up 5.4% and 14.0%, respectively
-
Full year margin expansion through
Flowserve 2.0 transformation program -
2019 free cash flow improved
$140 million , a 130% increase year-over-year
Fourth Quarter 2019 Highlights (all comparisons to the 2018 fourth quarter, unless otherwise noted)
-
Reported Earnings Per Share (EPS) of
$0.53 , up 10.4% and Adjusted EPS[1] of$0.66 , up 13.8%-
Reported EPS includes pre-tax adjusted items of approximately
$27 million , including realignment, transformation, voluntary retirement plan expenses and below-the-line foreign exchange impacts - Adjusted EPS increased 11.9% on a sequential basis
-
Reported EPS includes pre-tax adjusted items of approximately
-
Total bookings were
$1.05 billion , up 0.7%, or 1.7% on a constant currency basis-
Original equipment bookings were
$535 million , or 51% of total bookings, up 4.5%, or 5.3% on a constant currency basis -
Aftermarket bookings were
$517 million , or 49% of total bookings, down 2.9%, or 1.8% on a constant currency basis
-
Original equipment bookings were
-
Sales were
$1.07 billion , up 8.2%, or 9.3% on a constant currency basis-
Original equipment sales were
$546 million , up 11.3%, or 12.1% on a constant currency basis -
Aftermarket sales were
$522 million , up 5.3%, or 6.6% on a constant currency basis
-
Original equipment sales were
-
Reported gross and operating margins were 32.7% and 10.0%, respectively
- Adjusted gross and operating margins[2] decreased 50 and 10 basis points to 33.2% and 11.8%, respectively
Full Year 2019 Highlights (all comparisons to full year 2018, unless otherwise noted)
-
Reported EPS of
$1.93 , up 112.1% and Adjusted EPS[1] of$2.20 , up 25.7%-
Reported EPS includes pre-tax adjusted items of approximately
$54 million , primarily related to realignment and transformation expenses and below-the-line foreign exchange impacts
-
Reported EPS includes pre-tax adjusted items of approximately
-
Total bookings were
$4.24 billion , up 5.4%, or 8.1% on a constant currency basis, and included approximately 0.8% negative impact related to divested businesses. Book-to-bill was 1.07.-
Original equipment bookings were
$2.21 billion , or 52% of total bookings, up 10.9%, or 13.4% on a constant currency basis -
Aftermarket bookings were
$2.03 billion , or 48% of total bookings, up 0.1%, or 2.9% on a constant currency basis
-
Original equipment bookings were
-
Backlog at
December 31, 2019 was$2.16 billion , up 14.0% versus 2018 beginning backlog -
Sales were
$3.94 billion , up 2.9%, or 5.4% on a constant currency basis and included approximately 0.8% negative impact related to divested businesses-
Original equipment sales were
$1.97 billion , up 1.6%, or 3.6% on a constant currency basis -
Aftermarket sales were
$1.98 billion , up 4.3%, or 7.3% on a constant currency basis
-
Original equipment sales were
-
Reported gross and operating margins of 32.8% and 10.3%, respectively
- Adjusted gross and operating margins[2] increased 100 and 150 basis points to 33.3% and 11.3%, respectively
“We delivered strong results in 2019 thanks to the hard work and unwavering commitment of our associates,” said
Rowe concluded, “As we begin the second half of the
2020 Initial Guidance[3]
2020 Target Range |
|||||
Revenues |
Up 3.0% to 5.0% |
||||
Reported Earnings Per Share |
|
|
$2.05 - $2.20 |
||
Adjusted Earnings Per Share |
$2.30 - $2.45 |
||||
Net interest expense |
$45 - $50 million |
||||
Adjusted Tax rate |
|
|
|
24% - 26% |
Flowserve’s 2020 Adjusted EPS target range excludes expected realignment and transformation charges of approximately
Fourth Quarter 2019 Results Conference Call
[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 2020 EPS will exclude the Company’s realignment expenses, the impact from other specific one-time events and below-the-line foreign currency effects and utilizes year-end 2019 FX rates and approximately 132 million fully diluted shares. |
– FX headwind is calculated by comparing the difference between the actual average FX rates of 2018 and the year-end 2018 spot rates both as applied to our 2019 expectations, divided by the number of shares expected for 2019. |
About
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: 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
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.
CONSOLIDATED STATEMENTS OF INCOME | ||||||||
(Unaudited) | ||||||||
Three Months Ended December 31, |
||||||||
(Amounts in thousands, except per share data) |
|
2019 |
|
|
|
2018 |
|
|
Sales |
$ |
1,068,171 |
|
$ |
986,867 |
|
||
Cost of sales |
|
(718,598 |
) |
|
(665,022 |
) |
||
Gross profit |
|
349,573 |
|
|
321,845 |
|
||
Selling, general and administrative expense |
|
(244,768 |
) |
|
(231,869 |
) |
||
Net earnings from affiliates |
|
2,425 |
|
|
3,235 |
|
||
Operating income |
|
107,230 |
|
|
93,211 |
|
||
Interest expense |
|
(12,954 |
) |
|
(14,516 |
) |
||
Interest income |
|
1,915 |
|
|
2,228 |
|
||
Other income (expense), net |
|
(9,521 |
) |
|
(2,362 |
) |
||
Earnings before income taxes |
|
86,670 |
|
|
78,561 |
|
||
Provision for income taxes |
|
(15,424 |
) |
|
(14,196 |
) |
||
Net earnings, including noncontrolling interests |
|
71,246 |
|
|
64,365 |
|
||
Less: Net earnings attributable to noncontrolling interests |
|
(1,453 |
) |
|
(1,262 |
) |
||
Net earnings attributable to Flowserve Corporation |
$ |
69,793 |
|
$ |
63,103 |
|
||
Net earnings per share attributable to Flowserve Corporation common shareholders: | ||||||||
Basic |
$ |
0.53 |
|
$ |
0.48 |
|
||
Diluted |
|
0.53 |
|
|
0.48 |
|
RECONCILIATION OF NON-GAAP MEASURES | ||||||||||||||||||
(Unaudited) | ||||||||||||||||||
Three Months Ended December 31, 2019 |
||||||||||||||||||
(Amounts in thousands, except per share data) |
As Reported (a) |
|
Realignment (1) |
|
|
Other Items |
|
|
As Adjusted |
|||||||||
Sales |
$ |
1,068,171 |
|
$ |
- |
|
$ |
- |
|
$ |
1,068,171 |
|
||||||
Gross profit |
|
349,573 |
|
|
(4,451 |
) |
|
(196 |
) |
(3) |
|
354,220 |
|
|||||
Gross margin |
|
32.7 |
% |
|
- |
|
|
- |
|
|
33.2 |
% |
||||||
Selling, general and administrative expense |
|
(244,768 |
) |
|
(4,315 |
) |
|
(10,287 |
) |
(4) |
|
(230,166 |
) |
|||||
Operating income |
|
107,230 |
|
|
(8,766 |
) |
|
(10,483 |
) |
|
126,479 |
|
||||||
Operating income as a percentage of sales |
|
10.0 |
% |
|
- |
|
|
- |
|
|
11.8 |
% |
||||||
Interest and other expense, net |
|
(20,560 |
) |
|
- |
|
|
(7,726 |
) |
(5) |
|
(12,834 |
) |
|||||
Earnings before income taxes |
|
86,670 |
|
|
(8,766 |
) |
|
(18,209 |
) |
|
113,645 |
|
||||||
Provision for income taxes |
|
(15,425 |
) |
|
5,679 |
|
(2) |
|
4,122 |
|
(6) |
|
(25,226 |
) |
||||
Tax Rate |
|
17.8 |
% |
|
64.8 |
% |
|
22.6 |
% |
|
22.2 |
% |
||||||
Net earnings attributable to Flowserve Corporation |
$ |
69,793 |
|
$ |
(3,087 |
) |
$ |
(14,087 |
) |
$ |
86,967 |
|
||||||
Net earnings per share attributable to Flowserve Corporation common shareholders: | ||||||||||||||||||
Basic |
$ |
0.53 |
|
$ |
(0.02 |
) |
$ |
(0.11 |
) |
$ |
0.66 |
|
||||||
Diluted |
|
0.53 |
|
|
(0.02 |
) |
|
(0.11 |
) |
|
0.66 |
|
||||||
Basic number of shares used for calculation |
|
130,863 |
|
|
130,863 |
|
|
130,863 |
|
|
130,863 |
|
||||||
Diluted number of shares used for calculation |
|
131,667 |
|
|
131,667 |
|
|
131,667 |
|
|
131,667 |
|
||||||
(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 exit tax benefit of $4.0 million | |||||||
(3) Represents Voluntary Retirement Program expense | |||||||
(4) Represents $7.0 million related to Flowserve 2.0 transformation efforts and $3.3 million related to voluntary retirement program expense | |||||||
(5) Represents below-the-line foreign exchange impacts | |||||||
(6) Includes tax impact of items above |
RECONCILIATION OF NON-GAAP MEASURES | ||||||||||||||||||
(Unaudited) | ||||||||||||||||||
Three Months Ended December 31, 2018 |
||||||||||||||||||
(Amounts in thousands, except per share data) |
As Reported (a) |
|
Realignment (1) |
|
|
Other Items |
|
|
As Adjusted |
|||||||||
Sales |
$ |
986,867 |
|
$ |
- |
|
$ |
- |
|
$ |
986,867 |
|
||||||
Gross profit |
|
321,845 |
|
|
(11,104 |
) |
|
- |
|
|
332,949 |
|
||||||
Gross margin |
|
32.6 |
% |
|
- |
|
|
- |
|
|
33.7 |
% |
||||||
Selling, general and administrative expense |
|
(231,869 |
) |
|
513 |
|
|
(13,815 |
) |
(3) |
|
(218,567 |
) |
|||||
Loss on sale of business |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
||||||
Operating income |
|
93,211 |
|
|
(10,591 |
) |
|
(13,815 |
) |
|
117,617 |
|
||||||
Operating income as a percentage of sales |
|
9.4 |
% |
|
- |
|
|
- |
|
|
11.9 |
% |
||||||
Interest and other expense, net |
|
(14,650 |
) |
|
- |
|
|
(2,337 |
) |
(4) |
|
(12,313 |
) |
|||||
Earnings before income taxes |
|
78,561 |
|
|
(10,591 |
) |
|
(16,152 |
) |
|
105,304 |
|
||||||
Provision for income taxes |
|
(14,197 |
) |
|
3,211 |
|
(2) |
|
10,062 |
|
(5) |
|
(27,470 |
) |
||||
Tax Rate |
|
18.1 |
% |
|
30.3 |
% |
|
62.3 |
% |
|
26.1 |
% |
||||||
Net earnings attributable to Flowserve Corporation |
$ |
63,103 |
|
$ |
(7,380 |
) |
$ |
(6,090 |
) |
$ |
76,573 |
|
||||||
Net earnings per share attributable to Flowserve Corporation common shareholders: | ||||||||||||||||||
Basic |
$ |
0.48 |
|
$ |
(0.06 |
) |
$ |
(0.05 |
) |
$ |
0.59 |
|
||||||
Diluted |
|
0.48 |
|
|
(0.06 |
) |
|
(0.05 |
) |
|
0.58 |
|
||||||
Basic number of shares used for calculation |
|
130,845 |
|
|
130,845 |
|
|
130,845 |
|
|
130,845 |
|
||||||
Diluted number of shares used for calculation |
|
131,413 |
|
|
131,413 |
|
|
131,413 |
|
|
131,413 |
|
||||||
(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 | |||||||
(3) Represents Flowserve 2.0 transformation efforts | |||||||
(4) Represents below-the-line foreign exchange impacts | |||||||
(5) Includes tax impact of items above and a $5.7 million tax benefit related to the U.S. Tax Cuts and Jobs Act of 2017 |
SEGMENT INFORMATION | ||||||||
(Unaudited) | ||||||||
FLOWSERVE PUMP DIVISION |
Three Months Ended December 31, |
|||||||
(Amounts in millions, except percentages) |
|
2019 |
|
|
|
2018 |
|
|
Bookings |
$ |
756.0 |
|
$ |
728.6 |
|
||
Sales |
|
739.5 |
|
|
662.5 |
|
||
Gross profit |
|
245.6 |
|
|
206.1 |
|
||
Gross profit margin |
|
33.2 |
% |
|
31.1 |
% |
||
SG&A |
|
146.6 |
|
|
131.1 |
|
||
Segment operating income |
|
101.4 |
|
|
78.2 |
|
||
Segment operating income as a percentage of sales |
|
13.7 |
% |
|
11.8 |
% |
||
|
||||||||
FLOW CONTROL DIVISION |
Three Months Ended December 31, |
|||||||
(Amounts in millions, except percentages) |
|
2019 |
|
|
|
2018 |
|
|
Bookings |
$ |
298.6 |
|
$ |
318.0 |
|
||
Sales |
|
330.2 |
|
|
325.9 |
|
||
Gross profit |
|
111.8 |
|
|
118.3 |
|
||
Gross profit margin |
|
33.9 |
% |
|
36.3 |
% |
||
SG&A |
|
54.4 |
|
|
53.8 |
|
||
Segment operating income |
|
57.3 |
|
|
64.5 |
|
||
Segment operating income as a percentage of sales |
|
17.4 |
% |
|
19.8 |
% |
CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||
Year Ended December 31, |
||||||||||||
(Amounts in thousands, except per share data) |
|
2019 |
|
|
|
2018 |
|
|
|
2017 |
|
|
Sales |
$ |
3,944,850 |
|
$ |
3,832,666 |
|
$ |
3,660,831 |
|
|||
Cost of sales |
|
(2,649,480 |
) |
|
(2,644,830 |
) |
|
(2,571,878 |
) |
|||
Gross profit |
|
1,295,370 |
|
|
1,187,836 |
|
|
1,088,953 |
|
|||
Selling, general and administrative expense |
|
(899,813 |
) |
|
(943,714 |
) |
|
(901,727 |
) |
|||
Gain (loss) on sale of businesses |
|
- |
|
|
(7,727 |
) |
|
141,317 |
|
|||
Net earnings from affiliates |
|
10,483 |
|
|
11,143 |
|
|
12,592 |
|
|||
Operating income |
|
406,040 |
|
|
247,538 |
|
|
341,135 |
|
|||
Interest expense |
|
(54,980 |
) |
|
(58,160 |
) |
|
(59,730 |
) |
|||
Interest income |
|
8,409 |
|
|
6,465 |
|
|
3,429 |
|
|||
Other income (expense), net |
|
(17,619 |
) |
|
(19,569 |
) |
|
(21,827 |
) |
|||
Earnings before income taxes |
|
341,850 |
|
|
176,274 |
|
|
263,007 |
|
|||
Provision for income taxes |
|
(80,070 |
) |
|
(51,224 |
) |
|
(258,679 |
) |
|||
Net earnings, including noncontrolling interests |
|
261,780 |
|
|
125,050 |
|
|
4,328 |
|
|||
Less: Net earnings attributable to noncontrolling interests |
|
(8,112 |
) |
|
(5,379 |
) |
|
(1,676 |
) |
|||
Net earnings attributable to Flowserve Corporation |
$ |
253,668 |
|
$ |
119,671 |
|
$ |
2,652 |
|
|||
Net earnings per share attributable to Flowserve Corporation common shareholders: | ||||||||||||
Basic |
$ |
1.94 |
|
$ |
0.91 |
|
$ |
0.02 |
|
|||
Diluted |
|
1.93 |
|
|
0.91 |
|
|
0.02 |
|
RECONCILIATION OF NON-GAAP MEASURES | ||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||
Year Ended December 31, 2019 | ||||||||||||||||||||
(Amounts in thousands, except per share data) | As Reported (a) | Realignment (1) | Other Items | As Adjusted | ||||||||||||||||
Sales |
$ |
3,944,850 |
|
$ |
- |
|
$ |
- |
|
$ |
3,944,850 |
|
||||||||
Gross profit |
|
1,295,370 |
|
|
(17,234 |
) |
|
(196 |
) |
(3 |
) |
|
1,312,800 |
|
||||||
Gross margin |
|
32.8 |
% |
|
- |
|
|
- |
|
|
33.3 |
% |
||||||||
Selling, general and administrative expense |
|
(899,813 |
) |
|
9,304 |
|
|
(31,331 |
) |
(4 |
) |
|
(877,786 |
) |
||||||
Operating income |
|
406,040 |
|
|
(7,930 |
) |
|
(31,527 |
) |
|
445,497 |
|
||||||||
Operating income as a percentage of sales |
|
10.3 |
% |
|
- |
|
|
- |
|
|
11.3 |
% |
||||||||
Interest and other expense, net |
|
(64,190 |
) |
|
- |
|
|
(14,460 |
) |
(5 |
) |
|
(49,730 |
) |
||||||
Earnings before income taxes |
|
341,850 |
|
|
(7,930 |
) |
|
(45,987 |
) |
|
395,767 |
|
||||||||
Provision for income taxes |
|
(80,070 |
) |
|
7,618 |
|
(2 |
) |
|
10,463 |
|
(6 |
) |
|
(98,151 |
) |
||||
Tax Rate |
|
23.4 |
% |
|
96.1 |
% |
|
22.8 |
% |
|
24.8 |
% |
||||||||
Net earnings attributable to Flowserve Corporation |
$ |
253,668 |
|
$ |
(312 |
) |
$ |
(35,524 |
) |
$ |
289,504 |
|
||||||||
Net earnings per share attributable to Flowserve Corporation common shareholders: | ||||||||||||||||||||
Basic |
$ |
1.94 |
|
$ |
- |
|
$ |
(0.27 |
) |
$ |
2.21 |
|
||||||||
Diluted |
|
1.93 |
|
|
- |
|
|
(0.27 |
) |
|
2.20 |
|
||||||||
Basic number of shares used for calculation |
|
131,034 |
|
|
131,034 |
|
|
131,034 |
|
|
131,034 |
|
||||||||
Diluted number of shares used for calculation |
|
131,689 |
|
|
131,689 |
|
|
131,689 |
|
|
131,689 |
|
||||||||
(a) Reported in conformity with U.S. GAAP |
Notes: | |||||||
(1) Represents realignment (expense) income incurred as a result of realignment programs. Income in selling, general and administrative due to gains from the sales of non-strategic manufacturing facilities that are included in our Realignment Programs | |||||||
(2) Includes tax impact of items above and exit tax benefit of $4.0 million | |||||||
(3) Represents Voluntary Retirement Program expense | |||||||
(4) Represents $28.0 million related to Flowserve 2.0 transformation efforts and $3.3 million related to voluntary retirement program expense | |||||||
(5) Represents below-the-line foreign exchange impacts | |||||||
(6) Includes tax impact of items above |
RECONCILIATION OF NON-GAAP MEASURES | ||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||
Year Ended December 31, 2018 | ||||||||||||||||||||
(Amounts in thousands, except per share data) | As Reported (a) | Realignment (1) | Other Items | As Adjusted | ||||||||||||||||
Sales |
$ |
3,832,666 |
|
$ |
- |
|
$ |
- |
|
$ |
3,832,666 |
|
||||||||
Gross profit |
|
1,187,836 |
|
|
(42,697 |
) |
|
(7,713 |
) |
(3 |
) |
|
1,238,246 |
|
||||||
Gross margin |
|
31.0 |
% |
|
- |
|
|
- |
|
|
32.3 |
% |
||||||||
Selling, general and administrative expense |
|
(943,714 |
) |
|
(11,235 |
) |
|
(58,180 |
) |
(4 |
) |
|
(874,299 |
) |
||||||
Gain on sale of business |
|
(7,727 |
) |
|
- |
|
|
(7,727 |
) |
(5 |
) |
|
- |
|
||||||
Operating income |
|
247,538 |
|
|
(53,932 |
) |
|
(73,620 |
) |
|
375,090 |
|
||||||||
Operating income as a percentage of sales |
|
6.5 |
% |
|
- |
|
|
- |
|
|
9.8 |
% |
||||||||
Interest and other expense, net |
|
(71,264 |
) |
|
- |
|
|
(18,686 |
) |
(6 |
) |
|
(52,578 |
) |
||||||
Earnings before income taxes |
|
176,274 |
|
|
(53,932 |
) |
|
(92,306 |
) |
|
322,512 |
|
||||||||
Provision for income taxes |
|
(51,225 |
) |
|
12,863 |
|
(2 |
) |
|
23,273 |
|
(7 |
) |
|
(87,361 |
) |
||||
Tax Rate |
|
29.1 |
% |
|
23.9 |
% |
|
25.2 |
% |
|
27.1 |
% |
||||||||
Net earnings attributable to Flowserve Corporation |
$ |
119,671 |
|
$ |
(41,069 |
) |
$ |
(69,033 |
) |
$ |
229,773 |
|
||||||||
Net earnings per share attributable to Flowserve Corporation common shareholders: | ||||||||||||||||||||
Basic |
$ |
0.91 |
|
$ |
(0.31 |
) |
$ |
(0.53 |
) |
$ |
1.76 |
|
||||||||
Diluted |
|
0.91 |
|
|
(0.31 |
) |
|
(0.53 |
) |
|
1.75 |
|
||||||||
Basic number of shares used for calculation |
|
130,823 |
|
|
130,823 |
|
|
130,823 |
|
|
130,823 |
|
||||||||
Diluted number of shares used for calculation |
|
131,271 |
|
|
131,271 |
|
|
131,271 |
|
|
131,271 |
|
||||||||
(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 | |||||||
(3) Represents $7.7 million related to IPD divestiture write-down of assets | |||||||
(4) Represents $9.7 million related to IPD divestiture write-down of assets, $7.3 million related to implementation costs for the adoption of ASC 606 and $41.2 million related to Flowserve 2.0 transformation efforts | |||||||
(5) Represents IPD loss on sale of business | |||||||
(6) Represents below-the-line foreign exchange impacts | |||||||
(7) Includes tax impact of items above and a $5.7 million tax benefit related to the U.S. Tax Cuts and Jobs Act of 2017 |
SEGMENT INFORMATION | ||||||||||||
(Unaudited) | ||||||||||||
FLOWSERVE PUMP DIVISION |
Year Ended December 31, |
|||||||||||
(Amounts in millions, except percentages) |
|
2019 |
|
|
|
2018 |
|
|
|
2017 |
|
|
Bookings |
$ |
3,007.9 |
|
$ |
2,753.5 |
|
$ |
2,587.4 |
|
|||
Sales |
|
2,706.3 |
|
|
2,623.3 |
|
|
2,478.7 |
|
|||
Gross profit |
|
899.3 |
|
|
775.7 |
|
|
692.1 |
|
|||
Gross profit margin |
|
33.2 |
% |
|
29.6 |
% |
|
27.9 |
% |
|||
SG&A |
|
566.3 |
|
|
578.9 |
|
|
593.0 |
|
|||
Loss on sale of businesses |
|
- |
|
|
(7.7 |
) |
|
- |
|
|||
Segment operating income |
|
343.5 |
|
|
201.0 |
|
|
112.3 |
|
|||
Segment operating income as a percentage of sales |
|
12.7 |
% |
|
7.7 |
% |
|
4.5 |
% |
|||
FLOW CONTROL DIVISION |
Year Ended December 31, |
|||||||||||
(Amounts in millions, except percentages) |
|
2019 |
|
|
|
2018 |
|
|
|
2017 |
|
|
Bookings |
$ |
1,240.9 |
|
$ |
1,274.3 |
|
$ |
1,225.7 |
|
|||
Sales |
|
1,244.0 |
|
|
1,215.8 |
|
|
1,188.1 |
|
|||
Gross profit |
|
411.6 |
|
|
416.9 |
|
|
396.7 |
|
|||
Gross profit margin |
|
33.1 |
% |
|
34.3 |
% |
|
33.4 |
% |
|||
SG&A |
|
213.6 |
|
|
215.0 |
|
|
213.6 |
|
|||
Gain on sale of businesses |
|
- |
|
|
- |
|
|
141.3 |
|
|||
Segment operating income |
|
198.0 |
|
|
201.2 |
|
|
323.7 |
|
|||
Segment operating income as a percentage of sales |
|
15.9 |
% |
|
16.5 |
% |
|
27.2 |
% |
Fourth Quarter and Full Year 2019 - Segment Results | |||||||||||||||||
(dollars in millions, comparison vs. 2018 fourth quarter and full year, unaudited) | |||||||||||||||||
FPD | FCD | ||||||||||||||||
4th Qtr | YTD | 4th Qtr | YTD | ||||||||||||||
Bookings |
$ |
756.0 |
|
$ |
3,007.9 |
|
$ |
298.6 |
|
$ |
1,240.9 |
|
|||||
- vs. prior year |
|
3.8 |
% |
|
9.2 |
% |
|
-6.1 |
% |
|
-2.6 |
% |
|||||
- on constant currency |
|
4.9 |
% |
|
12.1 |
% |
|
-5.3 |
% |
|
-0.4 |
% |
|||||
Sales |
$ |
739.5 |
|
$ |
2,706.3 |
|
$ |
330.2 |
|
$ |
1,244.0 |
|
|||||
- vs. prior year |
|
11.6 |
% |
|
3.2 |
% |
|
1.3 |
% |
|
2.3 |
% |
|||||
- on constant currency |
|
12.7 |
% |
|
5.7 |
% |
|
2.2 |
% |
|
4.6 |
% |
|||||
Gross Profit |
$ |
245.6 |
|
$ |
899.3 |
|
$ |
111.8 |
|
$ |
411.6 |
|
|||||
- vs. prior year |
|
19.2 |
% |
|
15.9 |
% |
|
-5.5 |
% |
|
-1.3 |
% |
|||||
Gross Margin (% of sales) |
|
33.2 |
% |
|
33.2 |
% |
|
33.9 |
% |
|
33.1 |
% |
|||||
- vs. prior year (in basis points) | 210 bps | 360 bps | (240) bps | (120) bps | |||||||||||||
Operating Income |
$ |
101.4 |
|
$ |
343.5 |
|
$ |
57.3 |
|
$ |
198.0 |
|
|||||
- vs. prior year |
|
29.7 |
% |
|
70.9 |
% |
|
-11.2 |
% |
|
-1.6 |
% |
|||||
- on constant currency |
|
31.1 |
% |
|
76.0 |
% |
|
-10.5 |
% |
|
-0.1 |
% |
|||||
Operating Margin (% of sales) |
|
13.7 |
% |
|
12.7 |
% |
|
17.4 |
% |
|
15.9 |
% |
|||||
- vs. prior year (in basis points) | 190 bps | 500 bps | (240) bps | (60) bps | |||||||||||||
Adjusted Operating Income * |
$ |
104.7 |
|
$ |
341.9 |
|
$ |
61.7 |
|
$ |
204.3 |
|
|||||
- vs. prior year |
|
15.6 |
% |
|
25.9 |
% |
|
-1.8 |
% |
|
0.1 |
% |
|||||
- on constant currency |
|
16.8 |
% |
|
29.7 |
% |
|
-1.2 |
% |
|
1.6 |
% |
|||||
Adj. Oper. Margin (% of sales)* |
|
14.2 |
% |
|
12.6 |
% |
|
18.7 |
% |
|
16.4 |
% |
|||||
- vs. prior year (in basis points) | 50 bps | 230 bps | (60) bps | (40) bps | |||||||||||||
Backlog |
$ |
1,560.9 |
|
$ |
600.1 |
|
|||||||||||
* Adjusted Operating Income and Adjusted Operating Margin exclude realignment charges and other specific discrete items |
CONSOLIDATED BALANCE SHEETS | ||||||||
December 31, |
|
December 31, |
||||||
(Amounts in thousands, except par value) |
|
2019 |
|
|
2018 |
|
||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents |
$ |
670,980 |
|
$ |
619,683 |
|
||
Accounts receivable, net |
|
795,538 |
|
|
792,434 |
|
||
Contract assets, net |
|
272,914 |
|
|
228,579 |
|
||
Inventories, net |
|
660,837 |
|
|
633,871 |
|
||
Prepaid expenses and other |
|
105,101 |
|
|
108,578 |
|
||
Total current assets |
|
2,505,370 |
|
|
2,383,145 |
|
||
Property, plant and equipment, net |
|
572,175 |
|
|
610,096 |
|
||
Operating lease right-of-use assets, net |
|
186,218 |
|
|
- |
|
||
Goodwill |
|
1,193,010 |
|
|
1,197,640 |
|
||
Deferred taxes |
|
54,879 |
|
|
44,682 |
|
||
Other intangible assets, net |
|
180,805 |
|
|
190,550 |
|
||
Other assets, net |
|
227,185 |
|
|
190,164 |
|
||
Total assets |
$ |
4,919,642 |
|
$ |
4,616,277 |
|
||
LIABILITIES AND EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable |
$ |
447,582 |
|
$ |
418,893 |
|
||
Accrued liabilities |
|
401,385 |
|
|
391,406 |
|
||
Contract liabilities |
|
216,541 |
|
|
202,458 |
|
||
Debt due within one year |
|
11,272 |
|
|
68,218 |
|
||
Operating lease liabilities |
|
36,108 |
|
|
- |
|
||
Total current liabilities |
|
1,112,888 |
|
|
1,080,975 |
|
||
Long-term debt due after one year |
|
1,365,977 |
|
|
1,414,829 |
|
||
Operating lease liabilities |
|
151,523 |
|
|
- |
|
||
Retirement obligations and other liabilities |
|
473,295 |
|
|
459,693 |
|
||
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 |
|
501,045 |
|
|
494,551 |
|
||
Retained earnings |
|
3,695,862 |
|
|
3,543,007 |
|
||
Treasury shares, at cost – 46,262 and 46,237 shares, respectively |
|
(2,051,583 |
) |
|
(2,049,404 |
) |
||
Deferred compensation obligation |
|
8,334 |
|
|
7,117 |
|
||
Accumulated other comprehensive loss |
|
(584,292 |
) |
|
(573,947 |
) |
||
Total Flowserve Corporation shareholders' equity |
|
1,790,357 |
|
|
1,642,315 |
|
||
Noncontrolling interests |
|
25,602 |
|
|
18,465 |
|
||
Total equity |
|
1,815,959 |
|
|
1,660,780 |
|
||
Total liabilities and equity |
$ |
4,919,642 |
|
$ |
4,616,277 |
|
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||||
Year Ended December 31, |
||||||||||||
(Amounts in thousands) |
|
2019 |
|
|
|
2018 |
|
|
|
2017 |
|
|
Cash flows – Operating activities: | ||||||||||||
Net earnings, including noncontrolling interests |
$ |
261,780 |
|
$ |
125,050 |
|
$ |
4,328 |
|
|||
Adjustments to reconcile net earnings to net cash provided by operating activities: | ||||||||||||
Depreciation |
|
90,619 |
|
|
95,820 |
|
|
101,438 |
|
|||
Amortization of intangible and other assets |
|
13,862 |
|
|
16,653 |
|
|
17,016 |
|
|||
Loss (gain) on disposition of businesses |
|
- |
|
|
7,727 |
|
|
(141,317 |
) |
|||
Stock-based compensation |
|
23,882 |
|
|
19,912 |
|
|
22,820 |
|
|||
Provision for U.S. Tax Cuts and Jobs Act of 2017 |
|
- |
|
|
(5,654 |
) |
|
115,320 |
|
|||
Foreign currency, assets impairment and other non-cash adjustments |
|
(11,224 |
) |
|
36,052 |
|
|
33,087 |
|
|||
Change in assets and liabilities: | ||||||||||||
Accounts receivable, net |
|
2,883 |
|
|
(25,448 |
) |
|
60,216 |
|
|||
Inventories, net |
|
(31,058 |
) |
|
(29,314 |
) |
|
48,642 |
|
|||
Contract assets, net |
|
(45,939 |
) |
|
(23,693 |
) |
|
- |
|
|||
Prepaid expenses and other assets, net |
|
13,289 |
|
|
(7,869 |
) |
|
32,935 |
|
|||
Contract liabilities |
|
22,870 |
|
|
(4,823 |
) |
|
12,403 |
|
|||
Accounts payable |
|
14,390 |
|
|
33,710 |
|
|
- |
|
|||
Accrued liabilities and income taxes payable |
|
4,184 |
|
|
(18,248 |
) |
|
(3,383 |
) |
|||
Retirement obligations and other |
|
(39,881 |
) |
|
(44,314 |
) |
|
(43,431 |
) |
|||
Net deferred taxes |
|
(6,916 |
) |
|
15,270 |
|
|
50,992 |
|
|||
Net cash flows provided (used) by operating activities |
|
312,741 |
|
|
190,831 |
|
|
311,066 |
|
|||
Cash flows – Investing activities: | ||||||||||||
Capital expenditures |
|
(66,170 |
) |
|
(83,993 |
) |
|
(61,602 |
) |
|||
Proceeds from disposal of assets |
|
42,333 |
|
|
6,190 |
|
|
5,435 |
|
|||
(Payments for) proceeds from disposition of businesses |
|
- |
|
|
(3,663 |
) |
|
232,767 |
|
|||
Net cash flows provided (used) by investing activities |
|
(23,837 |
) |
|
(81,466 |
) |
|
176,600 |
|
|||
Cash flows – Financing activities: | ||||||||||||
Payments on long-term debt |
|
(105,000 |
) |
|
(60,000 |
) |
|
(60,000 |
) |
|||
Payments of deferred loan costs |
|
- |
|
|
- |
|
|
(1,503 |
) |
|||
Proceeds from short-term financing |
|
75,000 |
|
|
- |
|
|
- |
|
|||
Payments on short-term financing |
|
(75,000 |
) |
|
- |
|
|
- |
|
|||
Proceeds under other financing arrangements |
|
4,639 |
|
|
3,377 |
|
|
7,359 |
|
|||
Payments under other financing arrangements |
|
(9,281 |
) |
|
(9,853 |
) |
|
(19,030 |
) |
|||
Payments related to tax withholding for stock-based compensation |
|
(3,900 |
) |
|
(3,061 |
) |
|
(6,238 |
) |
|||
Repurchases of common shares |
|
(15,000 |
) |
|
- |
|
|
- |
|
|||
Payments of dividends |
|
(99,557 |
) |
|
(99,416 |
) |
|
(99,233 |
) |
|||
Other |
|
(1,555 |
) |
|
(4,331 |
) |
|
(6,708 |
) |
|||
Net cash flows provided (used) by financing activities |
|
(229,654 |
) |
|
(173,284 |
) |
|
(185,353 |
) |
|||
Effect of exchange rate changes on cash |
|
(7,953 |
) |
|
(19,843 |
) |
|
33,970 |
|
|||
Net change in cash and cash equivalents |
|
51,297 |
|
|
(83,762 |
) |
|
336,283 |
|
|||
Cash and cash equivalents at beginning of year |
|
619,683 |
|
|
703,445 |
|
|
367,162 |
|
|||
Cash and cash equivalents at end of year |
$ |
670,980 |
|
$ |
619,683 |
|
$ |
703,445 |
|
|||
Income taxes paid (net of refunds) |
$ |
66,372 |
|
$ |
87,009 |
|
$ |
59,409 |
|
|||
Interest paid |
|
53,607 |
|
|
54,576 |
|
|
56,808 |
|
CONSOLIDATED QUARTERLY FINANCIAL DATA | ||||||||||||
(Unaudited) | ||||||||||||
(Amounts in millions, except per share data) | ||||||||||||
2019 |
||||||||||||
Quarter |
4th |
|
3rd |
|
2nd |
|
1st |
|||||
Sales |
$ |
1,068.2 |
$ |
996.5 |
$ |
990.1 |
$ |
890.1 |
||||
Gross profit |
|
349.6 |
|
333.7 |
|
318.0 |
|
294.1 |
||||
Earnings before income taxes |
|
86.7 |
|
96.2 |
|
82.9 |
|
76.1 |
||||
Net earnings attributable to Flowserve Corporation |
|
69.8 |
|
68.4 |
|
58.2 |
|
57.3 |
||||
Earnings per share (1): | ||||||||||||
Basic |
$ |
0.53 |
$ |
0.52 |
$ |
0.44 |
$ |
0.44 |
||||
Diluted |
$ |
0.53 |
$ |
0.52 |
$ |
0.44 |
$ |
0.44 |
||||
2018 |
||||||||||||
Quarter |
4th |
|
3rd |
|
2nd |
|
1st |
|||||
Sales |
$ |
986.9 |
$ |
952.7 |
$ |
973.1 |
$ |
920.0 |
||||
Gross profit |
|
321.8 |
|
308.5 |
|
286.1 |
|
271.4 |
||||
Earnings before income taxes |
|
78.6 |
|
44.4 |
|
28.3 |
|
25.0 |
||||
Net earnings attributable to Flowserve Corporation |
|
63.1 |
|
28.2 |
|
13.2 |
|
15.1 |
||||
Earnings per share (1): | ||||||||||||
Basic |
$ |
0.48 |
$ |
0.22 |
$ |
0.10 |
$ |
0.12 |
||||
Diluted |
$ |
0.48 |
$ |
0.21 |
$ |
0.10 |
$ |
0.12 |
(1) Earnings per share is computed independently for each of the quarters presented. The sum of the quarters may not equal the total year amount due to the impact of changes in weighted average quarterly shares outstanding. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20200217005476/en/
Source:
Flowserve
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