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Flowserve Corporation Reports Second Quarter 2020 Results

07/30/20

  • Strong Adjusted EPS performance, up 152% sequentially and flat with prior year
  • Sequential and year-over-year adjusted operating margin expansion through solid execution and cost actions
  • Executing ahead of plan on $100 million of annual cost reduction actions
  • Continued progress on Flowserve 2.0 transformation efforts and COVID-19 response measures
  • Expect second half 2020 Adjusted EPS performance to exceed first half levels

DALLAS--(BUSINESS WIRE)--Jul. 30, 2020-- 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, 2020.

Second Quarter 2020 Highlights (all comparisons to the 2019 second quarter, unless otherwise noted)

  • Reported Earnings Per Share (EPS) of $0.07 and Adjusted EPS[1] of $0.53, up 152% sequentially and a penny below prior year
    • Reported EPS includes after-tax adjusted items of approximately $60.2 million, including realignment, transformation and below-the-line foreign exchange impacts
  • Total bookings were $808.3 million, down 26.9%, or 25.1% on a constant currency basis
    • Original equipment bookings were $365.6 million, or 45% of total bookings, down 38.7%, or 37.3% on a constant currency basis
    • Aftermarket bookings were $442.7 million, or 55% of total bookings, down 12.9%, or 10.7% on a constant currency basis
  • Sales were $925.0 million, down 6.6%, or 4.2% on a constant currency basis
    • Original equipment sales were $462.8 million, down 6.1%, or 3.3% on a constant currency basis
    • Aftermarket sales were $462.2 million, down 7.1%, or 5.0% on a constant currency basis
  • Reported gross and operating margins were 28.9% and 4.6%, respectively
    • Adjusted gross and operating margins[2] were 32.1% and 11.6%, respectively
  • Backlog at June 30, 2020 was $2.1 billion, down 5.3% sequentially

“We delivered a resilient financial performance this quarter, including strong sequential adjusted EPS and margin growth, in the face of a global pandemic and the volatility in energy-related markets,” said Scott Rowe, Flowserve’s president and chief executive officer. “Our results are a testament to the hard work and commitment of our associates around the world, and I am especially grateful to our essential front-line workers, who continued to progress our work and serve our customers despite the situation. During the quarter, we efficiently restored productivity at our COVID-impacted sites and delivered the critical support, products and services that our customers expect from us.”

“The Flowserve 2.0 transformation journey to create a more efficient and flexible operating model, as well as improve the health of the organization, positioned us to quickly assess the downturn and accelerate decisive cost actions in the second quarter,” added Rowe. “We believe these actions will enable us to achieve, or exceed, the full year cost savings target of $100 million while continuing to provide a high-level of service for our customers. As we advance additional transformation initiatives, we expect to emerge from the current environment a stronger, more competitive and differentiated enterprise.”

Outlook

Rowe concluded, “Looking forward, we expect to build on the momentum of the second quarter as we execute on our $2.1 billion backlog. While we continue to expect to see challenges in the back half of the year due to energy market volatility and the COVID-19 pandemic, we remain confident that the company is well-positioned to drive long-term value for our customers, associates and shareholders.”

As announced on April 6, 2020, Flowserve withdrew its full year 2020 guidance in light of the significant market uncertainty as a result of the COVID-19 pandemic, and its related affects. The company did announce today that it expects second half 2020 reported and adjusted EPS to exceed the amount generated during the first half of the year, assuming no government-mandated or illness-driven shut downs of significant operating locations.

Second Quarter 2020 Results Conference Call

Flowserve will host its conference call with the financial community on Friday, July 31st 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.

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.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)
Three Months Ended June 30,
(Amounts in thousands, except per share data)

2020

2019

 
Sales

$

924,965

$

990,084

Cost of sales

 

(657,805)

 

(672,051)

Gross profit

 

267,160

 

318,033

Selling, general and administrative expense

 

(227,358)

 

(223,676)

Net earnings from affiliates

 

3,086

 

3,661

Operating income

 

42,888

 

98,018

Interest expense

 

(12,900)

 

(14,013)

Interest income

 

1,149

 

2,218

Other income (expense), net

 

(14,941)

 

(3,336)

Earnings before income taxes

 

16,196

 

82,887

Provision for income taxes

 

(5,409)

 

(22,413)

Net earnings, including noncontrolling interests

 

10,787

 

60,474

Less: Net earnings attributable to noncontrolling interests

 

(2,142)

 

(2,302)

Net earnings attributable to Flowserve Corporation

$

8,645

$

58,172

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

$

0.07

$

0.44

Diluted

 

0.07

 

0.44

RECONCILIATION OF NON-GAAP MEASURES
(Unaudited)
 
Three Months Ended June 30, 2020
(Amounts in thousands, except per share data) As Reported (a) Realignment (1) Other Items As Adjusted
 
Sales

$

924,965

$

-

$

-

$

924,965

Gross profit

 

267,160

 

(29,853)

 

-

 

297,013

Gross margin

 

28.9%

 

-

 

-

 

32.1%

 
Selling, general and administrative expense

 

(227,358)

 

(28,630)

 

(5,618)

(3)

 

(193,110)

 
Operating income

 

42,888

 

(58,483)

 

(5,618)

 

106,989

Operating income as a percentage of sales

 

4.6%

 

-

 

-

 

11.6%

 
Interest and other expense, net

 

(26,692)

 

-

 

(14,072)

(4)

 

(12,620)

 
Earnings before income taxes

 

16,196

 

(58,483)

 

(19,690)

 

94,369

Provision for income taxes

 

(5,409)

 

10,736

(2)

 

7,189

(5)

 

(23,334)

Tax Rate

 

33.4%

 

18.4%

 

36.5%

 

24.7%

 
Net earnings attributable to Flowserve Corporation

$

8,645

$

(47,747)

$

(12,501)

$

68,893

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

$

0.07

$

(0.37)

$

(0.10)

$

0.53

Diluted

 

0.07

 

(0.37)

 

(0.10)

 

0.53

 
Basic number of shares used for calculation

 

130,170

 

130,170

 

130,170

 

130,170

Diluted number of shares used for calculation

 

130,730

 

130,730

 

130,730

 

130,730

 
(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.
RECONCILIATION OF NON-GAAP MEASURES
(Unaudited)
 
Three Months Ended June 30, 2019
(Amounts in thousands, except per share data) As Reported (a) Realignment (1) Other Items As Adjusted
 
Sales

$

990,084

$

-

$

-

$

990,084

Gross profit

 

318,033

 

(3,863)

 

-

 

321,896

Gross margin

 

32.1%

 

-

 

-

 

32.5%

 
Selling, general and administrative expense

 

(223,676)

 

(2,437)

 

(7,573)

(3)

 

(213,666)

 
Operating income

 

98,018

 

(6,300)

 

(7,573)

 

111,891

Operating income as a percentage of sales

 

9.9%

 

-

 

-

 

11.3%

 
Interest and other expense, net

 

(15,131)

 

-

 

(3,079)

(4)

 

(12,052)

 
Earnings before income taxes

 

82,887

 

(6,300)

 

(10,652)

 

99,839

Provision for income taxes

 

(22,413)

 

980

(2)

 

2,552

(5)

 

(25,945)

Tax Rate

 

27.0%

 

15.6%

 

24.0%

 

26.0%

 
Net earnings attributable to Flowserve Corporation

$

58,172

$

(5,320)

$

(8,100)

$

71,592

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

$

0.44

$

(0.04)

$

(0.06)

$

0.55

Diluted

 

0.44

 

(0.04)

 

(0.06)

 

0.54

 
Basic number of shares used for calculation

 

131,147

 

131,147

 

131,147

 

131,147

Diluted number of shares used for calculation

 

131,754

 

131,754

 

131,754

 

131,754

 
(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.
SEGMENT INFORMATION
(Unaudited)
 
FLOWSERVE PUMP DIVISION Three Months Ended June 30,
(Amounts in millions, except percentages)

2020

2019

Bookings

$

536.5

$

761.9

Sales

 

674.1

 

674.6

Gross profit

 

198.0

 

222.7

Gross profit margin

 

29.4%

 

33.0%

SG&A

 

140.6

 

150.2

Segment operating income

 

60.4

 

76.2

Segment operating income as a percentage of sales

 

9.0%

 

11.3%

 
FLOW CONTROL DIVISION Three Months Ended June 30,
(Amounts in millions, except percentages)

2020

2019

Bookings

$

274.6

$

346.4

Sales

 

252.2

 

316.9

Gross profit

 

73.6

 

99.4

Gross profit margin

 

29.2%

 

31.4%

SG&A

 

50.0

 

53.3

Segment operating income

 

23.6

 

46.2

Segment operating income as a percentage of sales

 

9.4%

 

14.6%

CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Six Months Ended June 30,
(Amounts in thousands, except per share data)

2020

2019

 
Sales

$

1,819,422

$

1,880,135

Cost of sales

 

(1,286,285)

 

(1,268,026)

Gross profit

 

533,137

 

612,109

Selling, general and administrative expense

 

(470,980)

 

(428,830)

Net earnings from affiliates

 

6,283

 

5,970

Operating income

 

68,440

 

189,249

Interest expense

 

(25,863)

 

(28,044)

Interest income

 

2,898

 

4,241

Other income (expense), net

 

8,521

 

(6,476)

Earnings before income taxes

 

53,996

 

158,970

Provision for income taxes

 

(41,719)

 

(38,999)

Net earnings, including noncontrolling interests

 

12,277

 

119,971

Less: Net earnings attributable to noncontrolling interests

 

(4,242)

 

(4,538)

Net earnings attributable to Flowserve Corporation

$

8,035

$

115,433

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

$

0.06

$

0.88

Diluted

 

0.06

 

0.88

RECONCILIATION OF NON-GAAP MEASURES
(Unaudited)
 
Six Months Ended June 30, 2020
(Amounts in thousands, except per share data) As Reported (a) Realignment (1) Other Items As Adjusted
 
Sales

$

1,819,422

$

-

$

-

$

1,819,422

Gross profit

 

533,137

 

(39,313)

 

-

 

572,450

Gross margin

 

29.3%

 

-

 

-

 

31.5%

 
Selling, general and administrative expense

 

(470,980)

 

(29,908)

 

(21,701)

(3)

 

(419,371)

 
Operating income

 

68,440

 

(69,221)

 

(21,701)

 

159,362

Operating income as a percentage of sales

 

3.8%

 

-

 

-

 

8.8%

 
Interest and other expense, net

 

(14,444)

 

-

 

11,581

(4)

 

(26,025)

 
Earnings before income taxes

 

53,996

 

(69,221)

 

(10,120)

 

133,337

Provision for income taxes

 

(41,719)

 

11,698

(2)

 

(20,531)

(5)

 

(32,886)

Tax Rate

 

77.3%

 

16.9%

 

-202.9%

 

24.7%

 
Net earnings attributable to Flowserve Corporation

$

8,035

$

(57,523)

$

(30,651)

$

96,209

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

$

0.06

$

(0.44)

$

(0.23)

$

0.74

Diluted

 

0.06

 

(0.44)

 

(0.23)

 

0.73

 
Basic number of shares used for calculation

 

130,462

 

130,462

 

130,462

 

130,462

Diluted number of shares used for calculation

 

131,152

 

131,152

 

131,152

 

131,152

 
(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) Includes $11.3 million related to Flowserve 2.0 transformation efforts and $10.4 million related to discrete asset write-downs.
(4) Represents below-the-line foreign exchange impacts.
(5) Includes tax impact of items above, $25.4 million related to Italian tax valuation allowance and $2.0 million benefit related to tax reform.
RECONCILIATION OF NON-GAAP MEASURES
(Unaudited)
 
Six Months Ended June 30, 2019
(Amounts in thousands, except per share data) As Reported (a) Realignment (1) Other Items As Adjusted
 
Sales

$

1,880,135

$

-

$

-

$

1,880,135

Gross profit

 

612,109

 

(9,363)

 

-

 

621,472

Gross margin

 

32.6%

 

-

 

-

 

33.1%

 
Selling, general and administrative expense

 

(428,830)

 

14,993

 

(15,986)

(3)

 

(427,837)

 
Operating income

 

189,249

 

5,630

 

(15,986)

 

199,605

Operating income as a percentage of sales

 

10.1%

 

-

 

-

 

10.6%

 
Interest and other expense, net

 

(30,279)

 

-

 

(5,786)

(4)

 

(24,493)

 
Earnings before income taxes

 

158,970

 

5,630

 

(21,772)

 

175,112

Provision for income taxes

 

(39,000)

 

961

(2)

 

5,263

(5)

 

(45,224)

Tax Rate

 

24.5%

 

-17.1%

 

24.2%

 

25.8%

 
Net earnings attributable to Flowserve Corporation

$

115,433

$

6,591

$

(16,509)

$

125,351

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

$

0.88

$

0.05

$

(0.13)

$

0.96

Diluted

 

0.88

 

0.05

 

(0.13)

 

0.95

 
Basic number of shares used for calculation

 

131,065

 

131,065

 

131,065

 

131,065

Diluted number of shares used for calculation

 

131,643

 

131,643

 

131,643

 

131,643

 
(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.
(3) Represents Flowserve 2.0 transformation efforts.
(4) Represents below-the-line foreign exchange impacts.
(5) Includes tax impact of items above.
SEGMENT INFORMATION
(Unaudited)
 
FLOWSERVE PUMP DIVISION Six Months Ended June 30,
(Amounts in millions, except percentages)

2020

2019

Bookings

$

1,220.1

$

1,512.0

Sales

 

1,309.7

 

1,284.0

Gross profit

 

393.7

 

423.3

Gross profit margin

 

30.1%

 

33.0%

SG&A

 

299.9

 

272.6

Segment operating income

 

100.1

 

156.6

Segment operating income as a percentage of sales

 

7.6%

 

12.2%

 
 
FLOW CONTROL DIVISION Six Months Ended June 30,
(Amounts in millions, except percentages)

2020

2019

Bookings

$

570.8

$

659.6

Sales

 

512.6

 

599.1

Gross profit

 

147.9

 

197.2

Gross profit margin

 

28.9%

 

32.9%

SG&A

 

107.6

 

106.6

Segment operating income

 

40.3

 

90.6

Segment operating income as a percentage of sales

 

7.9%

 

15.1%

Second Quarter and Year-to-Date 2020 - Segment Results

(dollars in millions, comparison vs. 2019 second quarter and year-to-date, unaudited)
 
FPD FCD
2nd Qtr YTD 2nd Qtr YTD
Bookings

$ 536.5

$ 1,220.1

$ 274.6

$ 570.8

- vs. prior year

-29.6%

-19.3%

-20.7%

-13.5%

- on constant currency

-27.7%

-17.4%

-19.1%

-11.8%

 
Sales

$ 674.1

$ 1,309.7

$ 252.2

$ 512.6

- vs. prior year

-0.1%

2.0%

-20.4%

-14.4%

- on constant currency

2.8%

4.4%

-19.1%

-13.1%

 
Gross Profit

$ 198.0

$ 393.7

$ 73.6

$ 147.9

- vs. prior year

-11.1%

-7.0%

-26.0%

-25.0%

 
Gross Margin (% of sales)

29.4%

30.1%

29.2%

28.9%

- vs. prior year (in basis points) (360) bps (290) bps (220) bps (400) bps
 
Operating Income

$ 60.4

$ 100.1

$ 23.6

$ 40.3

- vs. prior year

-20.7%

-36.1%

-48.9%

-55.5%

- on constant currency

-14.8%

-32.6%

-47.9%

-55.2%

 
Operating Margin (% of sales)

9.0%

7.6%

9.4%

7.9%

- vs. prior year (in basis points) (230) bps (460) bps (520) bps (720) bps
 
Adjusted Operating Income *

$ 93.5

$ 144.1

$ 33.6

$ 60.0

- vs. prior year

14.6%

-3.1%

-27.6%

-34.5%

- on constant currency

20.0%

0.6%

-26.7%

-34.2%

 
Adj. Oper. Margin (% of sales)*

13.9%

11.0%

13.3%

11.7%

- vs. prior year (in basis points) 180 bps (60) bps (130) bps (360) bps
 
Backlog

$ 1,418.2

$ 652.5

 
* 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)

2020

2019

 
ASSETS
Current assets:
Cash and cash equivalents

$

561,705

$

670,980

Accounts receivable, net of allowance for expected credit losses of $72,084 and
$53,412, respectively

 

759,381

 

795,538

Contract assets, net of allowance for expected credit losses of $3,010 at June 30, 2020

 

309,149

 

272,914

Inventories, net

 

684,431

 

660,837

Prepaid expenses and other

 

115,889

 

105,101

Total current assets

 

2,430,555

 

2,505,370

Property, plant and equipment, net of accumulated depreciation of $1,034,893 and
$1,013,207, respectively

 

541,768

 

572,175

Operating lease right-of-use assets, net

 

173,212

 

186,218

Goodwill

 

1,187,735

 

1,193,010

Deferred taxes

 

31,119

 

54,879

Other intangible assets, net

 

172,709

 

180,805

Other assets, net of allowance for expected credit losses of $98,971 and $101,439, respectively

 

218,604

 

227,185

Total assets

$

4,755,702

$

4,919,642

 
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable

$

428,856

$

447,582

Accrued liabilities

 

401,041

 

401,385

Contract liabilities

 

214,135

 

216,541

Debt due within one year

 

9,058

 

11,272

Operating lease liabilities

 

35,648

 

36,108

Total current liabilities

 

1,088,738

 

1,112,888

Long-term debt due after one year

 

1,367,478

 

1,365,977

Operating lease liabilities

 

138,735

 

151,523

Retirement obligations and other liabilities

 

470,400

 

473,295

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

 

499,152

 

501,045

Retained earnings

 

3,643,868

 

3,695,862

Treasury shares, at cost – 46,873 and 46,262 shares, respectively

 

(2,064,302)

 

(2,051,583)

Deferred compensation obligation

 

6,036

 

8,334

Accumulated other comprehensive loss

 

(643,173)

 

(584,292)

Total Flowserve Corporation shareholders' equity

 

1,662,572

 

1,790,357

Noncontrolling interests

 

27,779

 

25,602

Total equity

 

1,690,351

 

1,815,959

Total liabilities and equity

$

4,755,702

$

4,919,642

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended June 30,
(Amounts in thousands)

2020

2019

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

$

12,277

$

119,971

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

 

43,350

 

46,666

Amortization of intangible and other assets

 

6,136

 

8,003

Stock-based compensation

 

18,475

 

15,354

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

 

21,739

 

(20,206)

Change in assets and liabilities:
Accounts receivable, net

 

858

 

(13,445)

Inventories, net

 

(36,575)

 

(47,610)

Contract assets, net

 

(44,229)

 

12,432

Prepaid expenses and other assets, net

 

(9,341)

 

4,949

Accounts payable

 

(9,139)

 

(20,660)

Contract liabilities

 

3,468

 

6,744

Accrued liabilities and income taxes payable

 

5,787

 

(56,935)

Retirement obligations and other

 

13,618

 

(6,824)

Net deferred taxes

 

(5,193)

 

911

Net cash flows provided (used) by operating activities

 

21,231

 

49,350

Cash flows – Investing activities:
Capital expenditures

 

(31,971)

 

(25,267)

Proceeds from disposal of assets and other

 

10,810

 

40,302

Net cash flows provided (used) by investing activities

 

(21,161)

 

15,035

Cash flows – Financing activities:
Payments on long-term debt

 

-

 

(30,000)

Proceeds under other financing arrangements

 

1,477

 

1,699

Payments under other financing arrangements

 

(2,497)

 

(5,124)

Repurchases of common shares

 

(32,112)

 

-

Payments related to tax withholding for stock-based compensation

 

(3,850)

 

(3,441)

Payments of dividends

 

(52,054)

 

(49,772)

Other

 

(2,845)

 

(190)

Net cash flows provided (used) by financing activities

 

(91,881)

 

(86,828)

Effect of exchange rate changes on cash

 

(17,464)

 

(770)

Net change in cash and cash equivalents

 

(109,275)

 

(23,213)

Cash and cash equivalents at beginning of period

 

670,980

 

619,683

Cash and cash equivalents at end of period

$

561,705

$

596,470

 

Investor Contacts:
Jay Roueche, Vice President, Investor Relations & Treasurer (972) 443-6560
Mike Mullin, Director, Investor Relations (972) 443-6636

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

Source: Flowserve Corporation