NEWS RELEASE
Flowserve Corporation Reports Third Quarter 2023 Results; Raises 2023 Financial Guidance
10/25/23
- Raised full-year Revenue and Adjusted EPS guidance range following strong year-to-date performance and expectations for the 2023 fourth quarter
-
Reported and Adjusted1 Earnings Per Share (EPS)2 of
35 cents and50 cents , respectively, continuing strong operational performance
-
Delivered solid bookings of
$1.07 billion , including strong aftermarket awards in excess of$580 million , maintaining near-record backlog levels at$2.77 billion
- Drove revenue growth of 25.4% and generated a 630 basis point improvement in adjusted operating margin compared to prior year
-
Improved operating cash flow by over
$240 million year-to-date, with$81 million of operating cash flow generated in the 2023 third quarter
Third Quarter 2023 Highlights (all comparisons to the 2022 third quarter, unless otherwise noted)
-
Reported Earnings Per Share (EPS) of
$0.35 and Adjusted Earnings Per Share (EPS)1 of$0.50 , compared to$0.29 and$0.09 , respectively-
Third quarter 2023 Reported EPS includes after-tax adjusted expenses of
$20.5 million , comprised primarily of realignment charges, below-the-line foreign exchange, and the release of a tax valuation allowance benefit -
Both Reported and Adjusted EPS were impacted by an
$10.7 million (6 cents per share3) non-cash expense, resulting from an actuarial-determined assessment of certain long-term liabilities
-
Third quarter 2023 Reported EPS includes after-tax adjusted expenses of
-
Total bookings were
$1.07 billion , down$155.8 million or 12.7%. On a constant currency basis4, total bookings were down$175.4 million or 14.3%-
Third quarter 2022 bookings included over
$210 million of original equipment orders related to aMiddle East gas project, representing one of Flowserve’s largest awards ever -
Original equipment bookings were
$485.3 million , down$194.4 million or 28.6%. On a constant currency basis4, original equipment bookings were down$202.0 million or 29.7% -
Aftermarket bookings were
$582.2 million , up$38.6 million or 7.1%. On a constant currency basis4, aftermarket bookings were up$26.6 million or 4.9%
-
Third quarter 2022 bookings included over
-
Sales were
$1.09 billion , up$221.8 million or 25.4%. On a constant currency basis4, sales were up$200.7 million or 23.0%-
Original equipment sales were
$529.2 million , up$117.1 million or 28.4%. On a constant currency basis4, original equipment sales were up$106.8 million or 25.9% -
Aftermarket sales were
$565.5 million , up$104.7 million or 22.7%. On a constant currency basis4, aftermarket sales were up$94.0 million or 20.4%
-
Original equipment sales were
-
Reported gross and operating margins were 29.0% and 6.4%, up 160 and 360 basis points, respectively
- Adjusted gross and operating margins5 were 29.7% and 8.7%, up 230 and 630 basis points, respectively
-
Both Reported and Adjusted third quarter 2023 operating margins were impacted by the
$10.7 million non-cash expense, which reduced operating margins by approximately 100 basis points6
-
Backlog of
$2.77 billion , up$170.9 million or 6.6% compared to the 2022 third quarter- Book-to-bill solid at 1.03x year-to-date
-
Completed actions to achieve the 2023 cost-reduction target of
$50 million annualized savings
“We delivered strong third quarter results, including significant revenue and earnings growth, while building on the operating momentum of the last year,” said
Rowe concluded, “Driven by our 3D strategy,
Revised 2023 Guidance2
|
|
|
||
Revenue Growth |
Up 16.0% to 18.0% |
Up 18% to 19% |
|
|
Reported Earnings Per Share |
|
|
|
|
Adjusted Earnings Per Share |
|
|
|
|
Net Interest Expense |
|
Re-affirmed |
|
|
Adjusted Tax Rate |
~20% |
Re-affirmed |
|
|
Capital Expenditures |
|
Re-affirmed |
|
Flowserve’s 2023 Adjusted EPS target range excludes expected adjusted items including identified realignment charges of approximately
Third Quarter 2023 Results Conference Call
1 See Consolidated Reconciliation of Non-GAAP Financial Measures to the Most Directly Comparable GAAP Financial Measure (Unaudited) and Segment Reconciliation of Non-GAAP Financial Measures to the Most Directly Comparable GAAP Financial Measure (Unaudited) tables for a detailed reconciliation of reported results to adjusted measures. |
2 Adjusted 2023 EPS excludes identified realignment expenses, the impact from other specific discrete items (including terminated Velan acquisition) and below-the-line foreign currency effects and utilizes current FX rates and approximately 132 million fully diluted shares. |
3 EPS impact calculated by tax effecting the |
4 Constant currency is a non-GAAP financial measure. We have calculated constant currency amounts and the associated currency effects on operations by translating current year results on a monthly basis at prior year exchange rates for the same periods |
5 Adjusted gross and operating margins are calculated by dividing adjusted gross profit and adjusted operating income, respectively, by revenues. Adjusted gross profit and adjusted operating income are derived by excluding the adjusted items. See Consolidated Reconciliation of Non-GAAP Financial Measures to the Most Directly Comparable GAAP Financial Measure (Unaudited) and Segment Reconciliation of Non-GAAP Financial Measures to the Most Directly Comparable GAAP Financial Measure (Unaudited) tables for a detailed reconciliation.. |
6 Basis point impact calculated as the |
7 Prior target range was provided as of |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME |
|||||||
(Unaudited) |
|||||||
Three Months Ended |
|||||||
(Amounts in thousands, except per share data) |
2023 |
|
2022 |
||||
|
|||||||
Sales |
$ |
1,094,718 |
|
$ |
872,881 |
|
|
Cost of sales |
|
(777,024 |
) |
|
(633,304 |
) |
|
Gross profit |
|
317,694 |
|
|
239,577 |
|
|
Selling, general and administrative expense |
|
(252,065 |
) |
|
(221,142 |
) |
|
Net earnings from affiliates |
|
4,627 |
|
|
5,782 |
|
|
Operating income |
|
70,256 |
|
|
24,217 |
|
|
Interest expense |
|
(17,273 |
) |
|
(11,582 |
) |
|
Interest income |
|
2,134 |
|
|
1,141 |
|
|
Other income (expense), net |
|
(13,710 |
) |
|
28,676 |
|
|
Earnings before income taxes |
|
41,407 |
|
|
42,452 |
|
|
Benefit from (provision for) income taxes |
|
11,186 |
|
|
(1,817 |
) |
|
Net earnings, including noncontrolling interests |
|
52,593 |
|
|
40,635 |
|
|
Less: Net earnings attributable to noncontrolling interests |
|
(6,437 |
) |
|
(2,235 |
) |
|
Net earnings attributable to |
$ |
46,156 |
|
$ |
38,400 |
|
|
|
|
||||||
Net earnings per share attributable to |
|
|
|||||
Basic |
$ |
0.35 |
|
$ |
0.29 |
|
|
Diluted |
|
0.35 |
|
|
0.29 |
|
|
|
|
||||||
Weighted average shares – basic |
|
131,183 |
|
|
130,703 |
|
|
Weighted average shares – diluted |
|
132,026 |
|
|
131,402 |
|
|
Consolidated Reconciliation of Non-GAAP Financial Measures to the Most Directly Comparable GAAP Financial Measure (Unaudited) |
||||||||||||||||||||||||||
(Amounts in thousands, except per share data) |
||||||||||||||||||||||||||
Three Months Ended |
Gross Profit |
Selling, General & Administrative Expense |
Operating Income |
Other Income (Expense), Net |
Income Taxes |
Earnings Attributable to Noncontrolling Interests |
Net Earnings (Loss) |
Effective Tax Rate |
Diluted EPS |
|||||||||||||||||
Reported |
$ |
317,694 |
|
$ |
252,065 |
|
$ |
70,256 |
|
$ |
(13,710 |
) |
$ |
(11,186 |
) |
$ |
6,437 |
|
$ |
46,156 |
|
|
-27.0 |
% |
$ |
0.35 |
Reported as a percent of sales |
|
29.0 |
% |
|
23.0 |
% |
|
6.4 |
% |
|
-1.3 |
% |
|
-1.0 |
% |
|
0.6 |
% |
|
4.2 |
% |
|||||
Realignment charges (a) |
|
7,240 |
|
|
(14,954 |
) |
|
22,194 |
|
|
- |
|
|
4,250 |
|
|
- |
|
|
17,944 |
|
|
19.1 |
% |
|
0.14 |
Acquisition related (b) |
|
- |
|
|
(2,539 |
) |
|
2,539 |
|
|
- |
|
|
443 |
|
|
- |
|
|
2,096 |
|
|
17.4 |
% |
|
0.02 |
Correction of prior period errors (c) |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
(3,559 |
) |
|
3,559 |
|
|
0 |
% |
|
0.03 |
Discrete tax benefit (d) |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
13,000 |
|
|
- |
|
|
(13,000 |
) |
|
0 |
% |
|
-0.10 |
Below-the-line foreign exchange impacts (e) |
|
- |
|
|
- |
|
|
- |
|
|
12,164 |
|
|
2,276 |
|
|
- |
|
|
9,888 |
|
|
18.7 |
% |
|
0.07 |
Adjusted |
$ |
324,934 |
|
$ |
234,572 |
|
$ |
94,989 |
|
$ |
(1,546 |
) |
$ |
8,783 |
|
$ |
2,878 |
|
$ |
66,643 |
|
|
11.2 |
% |
$ |
0.50 |
Adjusted as a percent of sales |
|
29.7 |
% |
|
21.4 |
% |
|
8.7 |
% |
|
-0.1 |
% |
|
0.8 |
% |
|
0.3 |
% |
|
6.1 |
% |
|||||
Note: Amounts may not calculate due to rounding |
||||||||||||||||||||||||||
(a) Charges represent realignment costs incurred as a result of realignment programs. |
||||||||||||||||||||||||||
(b) Charges represent costs associated with a terminated acquisition |
||||||||||||||||||||||||||
(c) Represents the amount to correct the cumulative impact of prior period errors |
||||||||||||||||||||||||||
(d) Represents a discrete tax benefit due to release of tax valuation allowance on the net deferred tax assets in a foreign jurisdiction. The associated tax expense was adjusted out in 2015. |
||||||||||||||||||||||||||
(e) Below-the-line foreign exchange impacts represent the remeasurement of foreign exchange derivative contracts as well as the remeasurement of assets and liabilities that are denominated in a currency other than a site’s respective functional currency. |
||||||||||||||||||||||||||
Three Months Ended |
Gross Profit |
Selling, General & Administrative Expense |
Operating Income |
Other Income (Expense), Net |
Income Taxes |
Net Earnings (Loss) |
Effective Tax Rate |
Diluted EPS |
||||||||||||||||||
Reported |
$ |
239,577 |
|
$ |
221,142 |
|
$ |
24,217 |
|
$ |
28,676 |
|
$ |
1,817 |
|
$ |
38,400 |
|
|
4.2 |
% |
$ |
0.29 |
|
||
Reported as a percent of sales |
|
27.4 |
% |
|
25.3 |
% |
|
2.8 |
% |
|
3.3 |
% |
|
0.2 |
% |
|
4.4 |
% |
||||||||
Realignment charges (a) |
|
(395 |
) |
|
(99 |
) |
|
(296 |
) |
|
- |
|
|
(94 |
) |
|
(202 |
) |
|
31.8 |
% |
|
0.00 |
|
||
Discrete asset write-downs (b) |
|
(209 |
) |
|
2,523 |
|
|
(2,732 |
) |
|
- |
|
|
(624 |
) |
|
(2,108 |
) |
|
22.8 |
% |
|
-0.02 |
|
||
Below-the-line foreign exchange impacts (c) |
|
- |
|
|
- |
|
|
- |
|
|
(30,482 |
) |
|
(6,730 |
) |
|
(23,752 |
) |
|
22.1 |
% |
|
-0.18 |
|
||
Adjusted |
$ |
238,973 |
|
$ |
223,566 |
|
$ |
21,189 |
|
$ |
(1,806 |
) |
$ |
(5,631 |
) |
$ |
12,338 |
|
|
-63.0 |
% |
$ |
0.09 |
|
||
Adjusted as a percent of sales |
|
27.4 |
% |
|
25.6 |
% |
|
2.4 |
% |
|
-0.2 |
% |
|
-0.6 |
% |
|
1.4 |
% |
||||||||
Note: Amounts may not calculate due to rounding |
||||||||||||||||||||||||||
(a) Charges represent realignment costs credit as a result of realignment programs of which |
||||||||||||||||||||||||||
(b) Represents reversals of expenses that were adjusted for Non-GAAP measures in previous periods |
||||||||||||||||||||||||||
(c) Below-the-line foreign exchange impacts represent the remeasurement of foreign exchange derivative contracts as well as the remeasurement of assets and liabilities that are denominated in a currency other than a site’s respective functional currency. |
||||||||||||||||||||||||||
SEGMENT INFORMATION |
|||||||
(Unaudited) |
|||||||
|
|||||||
FLOWSERVE PUMP DIVISION |
Three Months Ended |
||||||
(Amounts in millions, except percentages) |
2023 |
|
2022 |
||||
Bookings |
$ |
734.7 |
|
$ |
925.8 |
|
|
Sales |
|
766.2 |
|
|
592.6 |
|
|
Gross profit |
|
220.3 |
|
|
170.0 |
|
|
Gross profit margin |
|
28.8 |
% |
|
28.7 |
% |
|
SG&A |
|
146.7 |
|
|
136.9 |
|
|
Segment operating income |
|
78.3 |
|
|
38.9 |
|
|
Segment operating income as a percentage of sales |
|
10.2 |
% |
|
6.6 |
% |
|
|
|||||||
FLOW CONTROL DIVISION |
Three Months Ended |
||||||
(Amounts in millions, except percentages) |
2023 |
|
2022 |
||||
Bookings |
$ |
330.5 |
|
$ |
300.0 |
|
|
Sales |
|
330.7 |
|
|
282.6 |
|
|
Gross profit |
|
97.6 |
|
|
78.2 |
|
|
Gross profit margin |
|
29.5 |
% |
|
27.7 |
% |
|
SG&A |
|
54.0 |
|
|
48.5 |
|
|
Segment operating income |
|
43.5 |
|
|
29.7 |
|
|
Segment operating income as a percentage of sales |
|
13.2 |
% |
|
10.5 |
% |
|
Segment Reconciliation of Non-GAAP Financial Measures to the Most Directly Comparable GAAP Financial Measure (Unaudited) |
||||||||||||||||||||
(Amounts in thousands) |
||||||||||||||||||||
Flowserve Pump Division |
||||||||||||||||||||
Three Months Ended |
Gross Profit |
Selling, General & Administrative Expense |
Operating Income |
Three Months Ended |
Gross Profit |
Selling, General & Administrative Expense |
Operating Income |
|||||||||||||
Reported |
$ |
220,321 |
|
$ |
146,679 |
|
$ |
78,269 |
|
Reported |
$ |
170,046 |
|
$ |
136,915 |
|
$ |
38,912 |
|
|
Reported as a percent of sales |
|
28.8 |
% |
|
19.1 |
% |
|
10.2 |
% |
Reported as a percent of sales |
|
28.7 |
% |
|
23.1 |
% |
|
6.6 |
% |
|
Realignment charges (a) |
|
6,141 |
|
|
(9,929 |
) |
|
16,070 |
|
Realignment charges (a) |
|
(417 |
) |
|
(74 |
) |
|
(343 |
) |
|
Adjusted |
$ |
226,462 |
|
$ |
136,750 |
|
$ |
94,339 |
|
Discrete asset write-downs (b) |
|
(209 |
) |
|
2,523 |
|
|
(2,732 |
) |
|
Adjusted as a percent of sales |
|
29.6 |
% |
|
17.8 |
% |
|
12.3 |
% |
Adjusted |
$ |
169,420 |
|
$ |
139,364 |
|
$ |
35,837 |
|
|
Adjusted as a percent of sales |
|
28.6 |
% |
|
23.5 |
% |
|
6.0 |
% |
|||||||||||
Flow Control Division |
||||||||||||||||||||
Three Months Ended |
Gross Profit |
Selling, General & Administrative Expense |
Operating Income |
Three Months Ended |
Gross Profit |
Selling, General & Administrative Expense |
Operating Income |
|||||||||||||
Reported |
$ |
97,563 |
|
$ |
54,016 |
|
$ |
43,547 |
|
Reported |
$ |
78,173 |
|
$ |
48,454 |
|
$ |
29,718 |
|
|
Reported as a percent of sales |
|
29.5 |
% |
|
16.3 |
% |
|
13.2 |
% |
Reported as a percent of sales |
|
27.8 |
% |
|
17.2 |
% |
|
10.6 |
% |
|
Realignment charges (a) |
|
1,099 |
|
|
(1,572 |
) |
|
2,671 |
|
Realignment charges (a) |
|
22 |
|
|
(7 |
) |
|
29 |
|
|
Acquisition related (b) |
|
- |
|
|
(2,539 |
) |
|
2,539 |
|
Adjusted |
$ |
78,195 |
|
$ |
48,447 |
|
$ |
29,747 |
|
|
Adjusted |
$ |
98,662 |
|
$ |
49,905 |
|
$ |
48,757 |
|
Adjusted as a percent of sales |
|
27.8 |
% |
|
17.2 |
% |
|
10.6 |
% |
|
Adjusted as a percent of sales |
|
29.8 |
% |
|
15.1 |
% |
|
14.7 |
% |
|||||||||||
Note: Amounts may not calculate due to rounding |
Note: Amounts may not calculate due to rounding |
|||||||||||||||||||
(a) Charges represent realignment costs incurred as a result of realignment programs. |
(a) Charges represent realignment costs credit as a result of realignment programs of which |
|||||||||||||||||||
(b) Charges represent costs associated with a terminated acquisition |
(b) Represents reversal of expenses that were adjusted for Non-GAAP measures in previous periods. |
|||||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME |
|||||||
(Unaudited) |
|||||||
Nine Months Ended |
|||||||
(Amounts in thousands, except per share data) |
2023 |
|
2022 |
||||
|
|||||||
Sales |
$ |
3,155,399 |
|
$ |
2,576,161 |
|
|
Cost of sales |
|
(2,218,114 |
) |
|
(1,877,108 |
) |
|
Gross profit |
|
937,285 |
|
|
699,053 |
|
|
Selling, general and administrative expense |
|
(726,424 |
) |
|
(621,956 |
) |
|
Net earnings from affiliates |
|
13,229 |
|
|
14,821 |
|
|
Operating income |
|
224,090 |
|
|
91,918 |
|
|
Interest expense |
|
(50,039 |
) |
|
(33,337 |
) |
|
Interest income |
|
5,535 |
|
|
2,938 |
|
|
Other income (expense), net |
|
(27,271 |
) |
|
28,152 |
|
|
Earnings before income taxes |
|
152,315 |
|
|
89,671 |
|
|
Benefit from (provision for) income taxes |
|
(14,571 |
) |
|
(16,618 |
) |
|
Net earnings, including noncontrolling interests |
|
137,744 |
|
|
73,053 |
|
|
Less: Net earnings attributable to noncontrolling interests |
|
(13,618 |
) |
|
(5,694 |
) |
|
Net earnings attributable to |
$ |
124,126 |
|
$ |
67,359 |
|
|
|
|
||||||
Net earnings per share attributable to |
|
|
|||||
Basic |
$ |
0.95 |
|
$ |
0.52 |
|
|
Diluted |
|
0.94 |
|
|
0.51 |
|
|
|
|
||||||
Weighted average shares – basic |
|
131,095 |
|
|
130,604 |
|
|
Weighted average shares – diluted |
|
131,864 |
|
|
131,233 |
|
|
Consolidated Reconciliation of Non-GAAP Financial Measures to the Most Directly Comparable GAAP Financial Measure (Unaudited) |
||||||||||||||||||||||||||
(Amounts in thousands, except per share data) |
||||||||||||||||||||||||||
Nine Months Ended |
Gross Profit |
Selling, General & Administrative Expense |
Operating Income |
Other Income (Expense), Net |
Income Taxes |
Earnings Attributable to Noncontrolling Interests |
Net Earnings (Loss) |
Effective Tax Rate |
Diluted EPS |
|||||||||||||||||
Reported |
$ |
937,285 |
|
$ |
726,424 |
|
$ |
224,090 |
|
$ |
(27,271 |
) |
$ |
14,571 |
|
$ |
13,618 |
|
$ |
124,126 |
|
|
9.6 |
% |
$ |
0.94 |
Reported as a percent of sales |
|
29.7 |
% |
|
23.0 |
% |
|
7.1 |
% |
|
-0.9 |
% |
|
0.5 |
% |
|
0.4 |
% |
|
3.9 |
% |
|||||
Realignment charges (a) |
|
11,548 |
|
|
(39,076 |
) |
|
50,624 |
|
|
- |
|
|
10,415 |
|
|
- |
|
|
40,209 |
|
|
20.6 |
% |
|
0.30 |
Acquisition related (b) |
|
- |
|
|
(8,491 |
) |
|
8,491 |
|
|
- |
|
|
1,997 |
|
|
- |
|
|
6,494 |
|
|
23.5 |
% |
|
0.05 |
Discrete asset write-downs (c)(d)(e) |
|
1,969 |
|
|
(3,955 |
) |
|
5,924 |
|
|
- |
|
|
1,517 |
|
|
- |
|
|
4,407 |
|
|
25.6 |
% |
|
0.03 |
Below-the-line foreign exchange impacts (f) |
|
- |
|
|
- |
|
|
- |
|
|
24,328 |
|
|
2,669 |
|
|
- |
|
|
21,659 |
|
|
0.0 |
% |
|
0.16 |
Correction of prior period errors (g) |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
(3,559 |
) |
|
3,559 |
|
|
0.0 |
% |
|
0.03 |
Discrete tax benefit (h) |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
13,000 |
|
|
- |
|
|
(13,000 |
) |
|
0.0 |
% |
|
-0.10 |
Adjusted |
$ |
950,802 |
|
$ |
674,902 |
|
$ |
289,129 |
|
$ |
(2,943 |
) |
$ |
44,169 |
|
$ |
10,059 |
|
$ |
187,454 |
|
|
18.3 |
% |
$ |
1.42 |
Adjusted as a percent of sales |
|
30.1 |
% |
|
21.4 |
% |
|
9.2 |
% |
|
-0.1 |
% |
|
1.4 |
% |
|
0.3 |
% |
|
5.9 |
% |
|||||
Note: Amounts may not calculate due to rounding |
||||||||||||||||||||||||||
(a) Charges represent realignment costs incurred as a result of realignment programs of which |
||||||||||||||||||||||||||
(b) Charges represent costs associated with a terminated acquisition |
||||||||||||||||||||||||||
(c) Charge represents a further expense of |
||||||||||||||||||||||||||
(d) Charge represents a further |
||||||||||||||||||||||||||
(e) Charge represents a |
||||||||||||||||||||||||||
(f) Below-the-line foreign exchange impacts represent the remeasurement of foreign exchange derivative contracts as well as the remeasurement of assets and liabilities that are denominated in a currency other than a site’s respective functional currency. |
||||||||||||||||||||||||||
(g) Represents the amount to correct the cumulative impact of prior period errors |
||||||||||||||||||||||||||
(h) Represents a discrete tax benefit due to release of tax valuation allowance on the net deferred tax assets in a foreign jurisdiction. The associated tax expense was adjusted out in 2015. |
||||||||||||||||||||||||||
Nine Months Ended |
Gross Profit |
Selling, General & Administrative Expense |
Operating Income |
Other Income (Expense), Net |
Income Taxes |
Net Earnings (Loss) |
Effective Tax Rate |
Diluted EPS |
||||||||||||||||||
Reported |
$ |
699,053 |
|
$ |
621,956 |
|
$ |
91,918 |
|
$ |
28,152 |
|
$ |
16,618 |
|
$ |
67,359 |
|
|
18.5 |
% |
$ |
0.51 |
|
||
Reported as a percent of sales |
|
27.1 |
% |
|
24.1 |
% |
|
3.6 |
% |
|
1.1 |
% |
|
0.6 |
% |
|
2.6 |
% |
||||||||
Realignment charges (a) |
|
(126 |
) |
|
40 |
|
|
(166 |
) |
|
- |
|
|
(67 |
) |
|
(99 |
) |
|
40.4 |
% |
|
0.00 |
|
||
Discrete asset write-downs (b)(c)(d) |
|
9,844 |
|
|
(10,706 |
) |
|
20,550 |
|
|
- |
|
|
(694 |
) |
|
21,244 |
|
|
-3.4 |
% |
|
0.16 |
|
||
Below-the-line foreign exchange impacts (e) |
|
- |
|
|
- |
|
|
- |
|
|
(34,900 |
) |
|
(7,761 |
) |
|
(27,139 |
) |
|
0.0 |
% |
|
-0.20 |
|
||
Adjusted |
$ |
708,771 |
|
$ |
611,290 |
|
$ |
112,302 |
|
$ |
(6,748 |
) |
$ |
8,096 |
|
$ |
61,365 |
|
|
10.8 |
% |
$ |
0.47 |
|
||
Adjusted as a percent of sales |
|
27.5 |
% |
|
23.7 |
% |
|
4.4 |
% |
|
-0.3 |
% |
|
0.3 |
% |
|
2.4 |
% |
||||||||
Note: Amounts may not calculate due to rounding |
||||||||||||||||||||||||||
(a) Charges represent realignment costs incurred as a result of realignment programs of which |
||||||||||||||||||||||||||
(b) Charge represents a |
||||||||||||||||||||||||||
(c) Charges represent a |
||||||||||||||||||||||||||
(d) Includes reversal of expenses that were adjusted for Non-GAAP measures in previous periods of |
||||||||||||||||||||||||||
(e) Below-the-line foreign exchange impacts represent the remeasurement of foreign exchange derivative contracts as well as the remeasurement of assets and liabilities that are denominated in a currency other than a site’s respective functional currency. |
||||||||||||||||||||||||||
SEGMENT INFORMATION |
|||||||
(Unaudited) |
|||||||
|
|||||||
FLOWSERVE PUMP DIVISION |
Nine Months Ended |
||||||
(Amounts in millions, except percentages) |
2023 |
|
2022 |
||||
Bookings |
$ |
2,222.3 |
|
$ |
2,433.6 |
|
|
Sales |
|
2,231.7 |
|
|
1,783.1 |
|
|
Gross profit |
|
668.6 |
|
|
510.9 |
|
|
Gross profit margin |
|
30.0 |
% |
|
28.7 |
% |
|
SG&A |
|
426.4 |
|
|
408.4 |
|
|
Segment operating income |
|
255.3 |
|
|
117.3 |
|
|
Segment operating income as a percentage of sales |
|
11.4 |
% |
|
6.6 |
% |
|
|
|||||||
FLOW CONTROL DIVISION |
Nine Months Ended |
||||||
(Amounts in millions, except percentages) |
2023 |
|
2022 |
||||
Bookings |
$ |
1,022.1 |
|
$ |
923.2 |
|
|
Sales |
|
930.0 |
|
|
798.8 |
|
|
Gross profit |
|
270.9 |
|
|
218.0 |
|
|
Gross profit margin |
|
29.1 |
% |
|
27.3 |
% |
|
SG&A |
|
172.7 |
|
|
142.7 |
|
|
Segment operating income |
|
98.2 |
|
|
75.3 |
|
|
Segment operating income as a percentage of sales |
|
10.6 |
% |
|
9.4 |
% |
|
Segment Reconciliation of Non-GAAP Financial Measures to the Most Directly Comparable GAAP Financial Measure (Unaudited) |
||||||||||||||||||||
(Amounts in thousands) |
||||||||||||||||||||
Flowserve Pump Division |
||||||||||||||||||||
Nine Months Ended |
Gross Profit |
Selling, General & Administrative Expense |
Operating Income |
Nine Months Ended |
Gross Profit |
Selling, General & Administrative Expense |
Operating Income |
|||||||||||||
Reported |
$ |
668,562 |
|
$ |
426,438 |
|
$ |
255,345 |
|
Reported |
$ |
510,949 |
|
$ |
408,439 |
|
$ |
117,259 |
|
|
Reported as a percent of sales |
|
30.0 |
% |
|
19.1 |
% |
|
11.4 |
% |
Reported as a percent of sales |
|
28.7 |
% |
|
22.9 |
% |
|
6.6 |
% |
|
Realignment charges (a) |
|
7,484 |
|
|
(11,996 |
) |
|
19,480 |
|
Realignment charges (a) |
|
(121 |
) |
|
(151 |
) |
|
30 |
|
|
Discrete asset write-downs (b)(c)(d) |
|
1,969 |
|
|
(3,955 |
) |
|
5,924 |
|
Discrete asset write-downs (b)(c) |
|
8,730 |
|
|
(6,588 |
) |
|
15,318 |
|
|
Adjusted |
$ |
678,015 |
|
$ |
410,487 |
|
$ |
280,749 |
|
Adjusted |
$ |
519,558 |
|
$ |
401,700 |
|
$ |
132,607 |
|
|
Adjusted as a percent of sales |
|
30.4 |
% |
|
18.4 |
% |
|
12.6 |
% |
Adjusted as a percent of sales |
|
29.1 |
% |
|
22.5 |
% |
|
7.4 |
% |
|
Flow Control Division |
||||||||||||||||||||
Nine Months Ended |
Gross Profit |
Selling, General & Administrative Expense |
Operating Income |
Nine Months Ended |
Gross Profit |
Selling, General & Administrative Expense |
Operating Income |
|||||||||||||
Reported |
$ |
270,914 |
|
$ |
172,718 |
|
$ |
98,196 |
|
Reported |
$ |
218,012 |
|
$ |
142,688 |
|
$ |
75,324 |
|
|
Reported as a percent of sales |
|
29.1 |
% |
|
18.6 |
% |
|
10.6 |
% |
Reported as a percent of sales |
|
27.3 |
% |
|
17.9 |
% |
|
9.4 |
% |
|
Realignment charges (a) |
|
4,263 |
|
|
(10,478 |
) |
|
14,741 |
|
Realignment charges (a) |
|
56 |
|
|
(57 |
) |
|
113 |
|
|
Acquisition related (e) |
|
- |
|
|
(8,491 |
) |
|
8,491 |
|
Discrete asset write-downs (b)(d) |
|
1,114 |
|
|
(4,118 |
) |
|
5,232 |
|
|
Adjusted |
$ |
275,177 |
|
$ |
153,749 |
|
$ |
121,428 |
|
Adjusted |
$ |
219,182 |
|
$ |
138,513 |
|
$ |
80,669 |
|
|
Adjusted as a percent of sales |
|
29.6 |
% |
|
16.5 |
% |
|
13.1 |
% |
Adjusted as a percent of sales |
|
27.4 |
% |
|
17.3 |
% |
|
10.1 |
% |
|
Note: Amounts may not calculate due to rounding |
Note: Amounts may not calculate due to rounding |
|||||||||||||||||||
(a) Charges represent realignment costs incurred as a result of realignment programs of which |
(a) Charges represent realignment costs incurred as a result of realignment programs of which |
|||||||||||||||||||
(b) Charge represents a further expense of |
(b) Charges represent the reserve of |
|||||||||||||||||||
(c) Charge represents a further |
(c) Includes reversal of expenses that were adjusted for Non-GAAP measures in previous periods of |
|||||||||||||||||||
(d) Charge represents a |
(d) Charge represents a non-cash asset write-down of |
|||||||||||||||||||
(e) Charges represent costs associated with a terminated acquisition |
|
|
|
|
|
|
|
|
|
|||||||||||
|
|
|
|
|
|
|
|
|
Third Quarter and Year-to-Date 2023 - Segment Results |
|||||||||||||||||||||||||
(dollars in millions, comparison vs. 2022 third quarter and year-to-date, unaudited) |
|||||||||||||||||||||||||
FPD |
FCD |
||||||||||||||||||||||||
3rd Qtr |
YTD |
3rd Qtr |
YTD |
||||||||||||||||||||||
Bookings |
$ |
734.7 |
|
$ |
2,222.3 |
|
$ |
330.5 |
|
$ |
1,022.1 |
|
|||||||||||||
- vs. prior year |
|
-191.1 |
|
-20.6 |
% |
|
-211.3 |
|
-8.7 |
% |
|
30.5 |
|
10.2 |
% |
|
98.9 |
|
10.7 |
% |
|||||
- on constant currency |
|
-191.1 |
|
-22.4 |
% |
|
-211.3 |
|
-8.8 |
% |
|
30.5 |
|
9.2 |
% |
|
98.9 |
|
11.7 |
% |
|||||
Sales |
$ |
766.2 |
|
$ |
2,231.7 |
|
$ |
- |
|
$ |
930.0 |
|
|||||||||||||
- vs. prior year |
|
173.6 |
|
29.3 |
% |
|
448.6 |
|
25.2 |
% |
|
48.1 |
|
17.0 |
% |
|
131.2 |
|
16.4 |
% |
|||||
- on constant currency |
|
173.6 |
|
26.3 |
% |
|
448.6 |
|
25.1 |
% |
|
48.1 |
|
15.8 |
% |
|
131.2 |
|
17.3 |
% |
|||||
Gross Profit |
$ |
220.3 |
|
$ |
668.6 |
|
$ |
97.6 |
|
$ |
270.9 |
|
|||||||||||||
- vs. prior year |
|
29.6 |
% |
|
30.9 |
% |
|
24.8 |
% |
|
24.3 |
% |
|||||||||||||
Gross Margin (% of sales) |
|
28.8 |
% |
|
30.0 |
% |
|
29.5 |
% |
|
29.1 |
% |
|||||||||||||
- vs. prior year (in basis points) |
10 bps |
130 bps |
180 bps |
180 bps |
|||||||||||||||||||||
Operating Income |
$ |
78.3 |
|
$ |
255.3 |
|
$ |
43.5 |
|
|
|
$ |
98.2 |
|
|
||||||||||
- vs. prior year |
|
39.4 |
|
101.3 |
% |
|
138.0 |
|
117.6 |
% |
|
13.8 |
|
46.5 |
% |
|
|
22.9 |
|
30.4 |
% |
||||
- on constant currency |
|
39.4 |
|
93.9 |
% |
|
138.0 |
|
121.7 |
% |
|
13.8 |
|
46.6 |
% |
|
|
22.9 |
|
32.8 |
% |
||||
|
|
|
|
|
|||||||||||||||||||||
Operating Margin (% of sales) |
|
10.2 |
% |
|
11.4 |
% |
|
13.2 |
% |
|
|
|
10.6 |
% |
|
||||||||||
- vs. prior year (in basis points) |
360 bps |
480 bps |
270 bps |
120 bps |
|||||||||||||||||||||
|
|
|
|
|
|||||||||||||||||||||
Adjusted Operating Income * |
$ |
94.3 |
|
$ |
280.7 |
|
$ |
48.8 |
|
|
|
$ |
121.4 |
|
|
||||||||||
- vs. prior year |
|
58.5 |
|
163.4 |
% |
|
148.1 |
|
111.7 |
% |
|
19.1 |
|
64.3 |
% |
|
|
40.8 |
|
50.6 |
% |
||||
- on constant currency |
|
58.5 |
|
155.5 |
% |
|
148.1 |
|
115.2 |
% |
|
19.1 |
|
64.3 |
% |
|
|
40.8 |
|
52.9 |
% |
||||
|
|
|
|
||||||||||||||||||||||
Adj. Oper. Margin (% of sales)* |
|
12.3 |
% |
|
12.6 |
% |
|
14.7 |
% |
|
|
|
13.1 |
% |
|
||||||||||
- vs. prior year (in basis points) |
630 bps |
520 bps |
420 bps |
|
|
300 bps |
|
||||||||||||||||||
|
|
||||||||||||||||||||||||
Backlog |
$ |
1,959.0 |
|
$ |
829.7 |
|
|||||||||||||||||||
* Adjusted Operating Income and Adjusted Operating Margin exclude realignment charges and other specific discrete items |
|||||||||||||||||||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS |
|||||||
(Unaudited) |
|||||||
|
|
|
|||||
(Amounts in thousands, except par value) |
2023 |
|
2022 |
||||
|
|||||||
ASSETS |
|
||||||
Current assets: |
|
||||||
Cash and cash equivalents |
$ |
480,458 |
|
$ |
434,971 |
|
|
Accounts receivable, net of allowance for expected credit losses of |
|
868,855 |
|
|
868,632 |
|
|
Contract assets, net of allowance for expected credit losses of |
|
245,133 |
|
|
233,457 |
|
|
Inventories, net |
|
916,107 |
|
|
803,198 |
|
|
Prepaid expenses and other |
|
127,972 |
|
|
110,714 |
|
|
Total current assets |
|
2,638,525 |
|
|
2,450,972 |
|
|
Property, plant and equipment, net of accumulated depreciation of |
|
492,323 |
|
|
500,945 |
|
|
Operating lease right-of-use assets, net |
|
156,784 |
|
|
174,980 |
|
|
|
|
1,164,388 |
|
|
1,168,124 |
|
|
Deferred taxes |
|
171,387 |
|
|
149,290 |
|
|
Other intangible assets, net |
|
122,549 |
|
|
134,503 |
|
|
Other assets, net of allowance for expected credit losses of |
|
219,257 |
|
|
211,820 |
|
|
Total assets |
$ |
4,965,213 |
|
$ |
4,790,634 |
|
|
|
|
||||||
LIABILITIES AND EQUITY |
|
|
|||||
Current liabilities: |
|
|
|||||
Accounts payable |
$ |
481,337 |
|
$ |
476,747 |
|
|
Accrued liabilities |
|
461,841 |
|
|
427,578 |
|
|
Contract liabilities |
|
270,725 |
|
|
256,963 |
|
|
Debt due within one year |
|
61,213 |
|
|
49,335 |
|
|
Operating lease liabilities |
|
31,699 |
|
|
32,528 |
|
|
Total current liabilities |
|
1,306,815 |
|
|
1,243,151 |
|
|
Long-term debt due after one year |
|
1,266,423 |
|
|
1,224,151 |
|
|
Operating lease liabilities |
|
138,907 |
|
|
155,196 |
|
|
Retirement obligations and other liabilities |
|
339,777 |
|
|
309,529 |
|
|
Shareholders’ equity: |
|
|
|||||
Common shares, |
|
220,991 |
|
|
220,991 |
|
|
Shares authorized – 305,000 |
|
|
|||||
Shares issued – 176,793 and 176,793, respectively |
|
|
|||||
Capital in excess of par value |
|
501,378 |
|
|
507,484 |
|
|
Retained earnings |
|
3,818,392 |
|
|
3,774,209 |
|
|
|
|
(2,014,879 |
) |
|
(2,036,882 |
) |
|
Deferred compensation obligation |
|
7,878 |
|
|
6,979 |
|
|
Accumulated other comprehensive loss |
|
(659,653 |
) |
|
(647,788 |
) |
|
|
|
1,874,107 |
|
|
1,824,993 |
|
|
Noncontrolling interests |
|
39,184 |
|
|
33,614 |
|
|
Total equity |
|
1,913,291 |
|
|
1,858,607 |
|
|
Total liabilities and equity |
$ |
4,965,213 |
|
$ |
4,790,634 |
|
|
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
|||||||
(Unaudited) |
|||||||
Nine Months Ended |
|||||||
(Amounts in thousands) |
2023 |
|
2022 |
||||
|
|||||||
Cash flows – Operating activities: |
|
||||||
Net earnings, including noncontrolling interests |
$ |
137,744 |
|
$ |
73,053 |
|
|
Adjustments to reconcile net earnings to net cash provided (used) by operating activities: |
|
|
|||||
Depreciation |
|
55,292 |
|
|
59,207 |
|
|
Amortization of intangible and other assets |
|
7,782 |
|
|
10,051 |
|
|
Stock-based compensation |
|
22,127 |
|
|
23,757 |
|
|
Foreign currency, asset write downs and other non-cash adjustments |
|
(11,827 |
) |
|
(24,085 |
) |
|
Change in assets and liabilities: |
|||||||
Accounts receivable, net |
|
1,524 |
|
|
(78,376 |
) |
|
Inventories, net |
|
(114,596 |
) |
|
(151,938 |
) |
|
Contract assets, net |
|
(10,239 |
) |
|
(21,912 |
) |
|
Prepaid expenses and other assets, net |
|
(6,727 |
) |
|
(14,881 |
) |
|
Accounts payable |
|
1,910 |
|
|
29,307 |
|
|
Contract liabilities |
|
15,879 |
|
|
27,237 |
|
|
Accrued liabilities and income taxes payable |
|
21,429 |
|
|
(32,735 |
) |
|
Retirement obligations and other |
|
38,838 |
|
|
24,123 |
|
|
Net deferred taxes |
|
(27,996 |
) |
|
(32,293 |
) |
|
Net cash flows provided (used) by operating activities |
|
131,140 |
|
|
(109,485 |
) |
|
Cash flows – Investing activities: |
|
|
|||||
Capital expenditures |
|
(47,544 |
) |
|
(45,831 |
) |
|
Other |
|
(833 |
) |
|
184 |
|
|
Net cash flows provided (used) by investing activities |
|
(48,377 |
) |
|
(45,647 |
) |
|
Cash flows – Financing activities: |
|||||||
Payments on term loan |
|
(30,000 |
) |
|
(24,239 |
) |
|
Proceeds under revolving credit facility |
|
230,000 |
|
|
- |
|
|
Payments under revolving credit facility |
|
(145,000 |
) |
|
- |
|
|
Proceeds under other financing arrangements |
|
242 |
|
|
1,135 |
|
|
Payments under other financing arrangements |
|
(2,098 |
) |
|
(356 |
) |
|
Payments related to tax withholding for stock-based compensation |
|
(6,203 |
) |
|
(4,578 |
) |
|
Payments of dividends |
|
(78,712 |
) |
|
(78,406 |
) |
|
Other |
|
(320 |
) |
|
(5,334 |
) |
|
Net cash flows provided (used) by financing activities |
|
(32,091 |
) |
|
(111,778 |
) |
|
Effect of exchange rate changes on cash |
|
(5,185 |
) |
|
(39,672 |
) |
|
Net change in cash and cash equivalents |
|
45,487 |
|
|
(306,582 |
) |
|
Cash and cash equivalents at beginning of period |
|
434,971 |
|
|
658,452 |
|
|
Cash and cash equivalents at end of period |
$ |
480,458 |
|
$ |
351,870 |
|
|
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: the impact of the global outbreak of COVID-19 on our business and operations; global supply chain disruptions and the current inflationary environment could adversely affect the efficiency of our manufacturing and increase the cost of providing our products to customers; a portion of our bookings may not lead to completed sales, and our ability to convert bookings into revenues at acceptable profit margins; changes in global economic conditions and the potential for unexpected cancellations or delays of customer orders in our reported backlog; our dependence on our customers’ ability to make required capital investment and maintenance expenditures; if we are not able to successfully execute and realize the expected financial benefits from any restructuring and realignment initiatives, our business could be adversely affected; the substantial dependence of our sales on the success of the oil and gas, chemical, power generation and water management industries; the adverse impact of volatile raw materials prices on our products and operating margins; economic, political and other risks associated with our international operations, including military actions, trade embargoes, epidemics or pandemics or changes to tariffs or trade agreements that could affect customer markets, particularly North African, Latin American, Asian and Middle Eastern markets and global oil and gas producers, and non-compliance with
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
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