Flowserve Corporation Reports Third Quarter 2023 Results; Raises 2023 Financial Guidance
- 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 and 50 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
DALLAS–(BUSINESS WIRE)–Flowserve Corporation (NYSE: FLS), a leading provider of flow control products and services for the global infrastructure markets, today announced its financial results for the third quarter ended September 30, 2023.
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
-
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 a Middle 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%
-
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%
-
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 Scott Rowe, Flowserve’s President and Chief Executive Officer. “Our new organizational model is driving speed, accountability, and cost efficiency throughout the company. The combination of our improved operating performance and our positive market outlook gives us the confidence to increase our full year revenue and adjusted EPS guidance range for the third time this year.”
Rowe concluded, “Driven by our 3D strategy, Flowserve is well-positioned to capture accelerated growth from energy transition investments and decarbonization initiatives. Flowserve is also competitively differentiated to capitalize in our traditional markets by ensuring global energy security. Additionally, we expect both aftermarket and MRO opportunities will remain strong through 2024 and beyond. As a result of these combined dynamics, we continue to believe we are in the early stages of a multi-year upcycle. Our focus remains on profitably converting our near-record $2.8 billion backlog to deliver solid revenue and earnings growth over the coming years, while creating long-term value for our shareholders, associates and customers.”
Revised 2023 Guidance2
Flowserve is raising its Revenue and Adjusted EPS guidance metrics for 2023, as well as updating or re-affirming certain other financial metrics, as shown in the table below:
|
|
Prior Target Range7 |
Revised Target Range |
||
|
Revenue Growth |
Up 16.0% to 18.0% |
Up 18% to 19% |
|
|
|
Reported Earnings Per Share |
$1.40 – $1.65 |
$1.40 – $1.50 |
|
|
|
Adjusted Earnings Per Share |
$1.85 – $2.00 |
$1.95 – $2.05 |
|
|
|
Net Interest Expense |
~$60 million |
Re-affirmed |
|
|
|
Adjusted Tax Rate |
~20% |
Re-affirmed |
|
|
|
Capital Expenditures |
$75 – $85 million |
Re-affirmed |
|
Flowserve’s 2023 Adjusted EPS target range excludes expected adjusted items including identified realignment charges of approximately $55 million, as well as the potential impact of below-the-line foreign currency effects and certain other discrete items which may arise during the course of the year, including the potential for additional realignment expense.
Third Quarter 2023 Results Conference Call
Flowserve will host its conference call with the financial community on Thursday, October 26th 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 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 $10.7 million expense at 25.6% effective tax rate and dividing by 132 million shares |
|
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 $10.7 million non-cash charge in SG&A divided by total sales |
|
7 Prior target range was provided as of August 1, 2023, and included revisions from Flowserve’s initial guidance range provided February 10, 2023 and its previously revised range on May 2, 2023 |
|
CONDENSED CONSOLIDATED STATEMENTS OF INCOME |
|||||||
|
(Unaudited) |
|||||||
|
Three Months Ended September 30, |
|||||||
|
(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 Flowserve Corporation |
$ |
46,156 |
|
$ |
38,400 |
|
|
|
|
|
||||||
|
Net earnings per share attributable to Flowserve Corporation common shareholders: |
|
|
|||||
|
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 September 30, 2023 |
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 September 30, 2022 |
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 $89 is non-cash. |
||||||||||||||||||||||||||
|
(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 September 30, |
||||||
|
(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 September 30, |
||||||
|
(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 September 30, 2023 |
Gross Profit |
Selling, General & Administrative Expense |
Operating Income |
Three Months Ended September 30, 2022 |
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 September 30, 2023 |
Gross Profit |
Selling, General & Administrative Expense |
Operating Income |
Three Months Ended September 30, 2022 |
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 $89 is non-cash. |
|||||||||||||||||||
|
(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 September 30, |
|||||||
|
(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 Flowserve Corporation |
$ |
124,126 |
|
$ |
67,359 |
|
|
|
|
|
||||||
|
Net earnings per share attributable to Flowserve Corporation common shareholders: |
|
|
|||||
|
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 September 30, 2023 |
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 $7,601 is non-cash. |
||||||||||||||||||||||||||
|
(b) Charges represent costs associated with a terminated acquisition |
||||||||||||||||||||||||||
|
(c) Charge represents a further expense of $1,834 associated with a sales contract that was initially reserved for in 2017. |
||||||||||||||||||||||||||
|
(d) Charge represents a further $1,173 non-cash write-down of inventory associated with a customer sales contract that was originally determined to be uncollectible in 2020. |
||||||||||||||||||||||||||
|
(e) Charge represents a $2,917 non-cash write-down of a licensing agreement. |
||||||||||||||||||||||||||
|
(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 September 30, 2022 |
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 $170 is non-cash. |
||||||||||||||||||||||||||
|
(b) Charge represents a $3,036 non-cash asset write-down associated with the impairment of a trademark. |
||||||||||||||||||||||||||
|
(c) Charges represent a $20,246 reserve of Russia-related financial exposures. |
||||||||||||||||||||||||||
|
(d) Includes reversal of expenses that were adjusted for Non-GAAP measures in previous periods of $2,732 |
||||||||||||||||||||||||||
|
(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 September 30, |
||||||
|
(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 September 30, |
||||||
|
(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 September 30, 2023 |
Gross Profit |
Selling, General & Administrative Expense |
Operating Income |
Nine Months Ended September 30, 2022 |
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 September 30, 2023 |
Gross Profit |
Selling, General & Administrative Expense |
Operating Income |
Nine Months Ended September 30, 2022 |
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 $7,601 is non-cash. |
(a) Charges represent realignment costs incurred as a result of realignment programs of which $170 is non-cash. |
|||||||||||||||||||
|
(b) Charge represents a further expense of $1,834 associated with a sales contract that was initially reserved for in 2017. |
(b) Charges represent the reserve of Russia-related financial exposures of $20,246. |
|||||||||||||||||||
|
(c) Charge represents a further $1,173 non-cash write-down of inventory associated with a customer sales contract that was originally determined to be uncollectible in 2020. |
(c) Includes reversal of expenses that were adjusted for Non-GAAP measures in previous periods of $2,732 | |||||||||||||||||||
|
(d) Charge represents a $2,917 non-cash write-down of a licensing agreement. |
(d) Charge represents a non-cash asset write-down of $3,036 associated with the impairment of a trademark. |
|||||||||||||||||||
|
(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 |
|||||||||||||||||||||||||
Contacts
Flowserve
Investor:
Jay Roueche, Vice President, Investor Relations & Treasurer, (972) 443-6560
Mike Mullin, Director, Investor Relations, (214) 697-8568
Media:
Wes Warnock, Vice President, Corporate Communications & Public Affairs, (972) 443-6900
