Flowserve Corporation Reports Third Quarter 2022 Results; Issues Fourth Quarter 2022 Financial Guidance

Rhea-AI Summary

Flowserve Corporation (NYSE: FLS) reported strong third-quarter financial results, highlighted by bookings of $1.22 billion, a 34.2% increase year-over-year. Reported Earnings Per Share (EPS) was $0.29, benefiting from a below-the-line foreign exchange gain of $30 million. The company has a backlog of $2.6 billion, up 29.9% from the end of 2021, positioning it for growth. Flowserve announced an acquisition aimed at enhancing its 3D strategy focusing on hydrogen pumps. Looking forward, the company anticipates fourth-quarter EPS of at least $0.40 with an 8-10% revenue growth.

Positive

• Bookings increased by 34.2% year-over-year, totaling $1.22 billion.
• Backlog reached $2.6 billion, the highest since Q2 2015, indicating strong future growth potential.
• Fourth quarter EPS guidance expects at least $0.40, with 8-10% revenue growth projected.

Negative

• Reported EPS includes a $30.5 million foreign exchange benefit, which may not be sustainable.
• Third quarter Adjusted EPS was only $0.09, highlighting operational issues.

• Strong bookings of $1.22 billion increased 34.2% year-over-year and 40.8% on a constant currency basis, including one of Flowserve’s largest awards in its history
• Reported Earnings Per Share of 29 cents, includes 20 cents of net benefit due primarily to $30 million below-the-line foreign exchange gain, Adjusted Earnings per Share of 9 cents
• As previously announced, Reported and Adjusted Earnings per Share were impacted by approximately 22 cents per share of certain discrete items in the third quarter
• Backlog of $2.6 billion was up 29.9% versus 2021 year-end and 32.1% year-over-year, reaching its highest level since Q2 2015 and positioning the Company for growth
• With the highest backlog since 2015, and expectations for continued supportive end-markets, Flowserve is well-positioned for sequential revenue and earnings growth in the fourth quarter and full-year 2023
• Announced the acquisition of Chart Industries’ in-process R&D for hydrogen pumps to support our Diversify, Decarbonize and Digitize (“3D”) strategy

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, 2022.

Third Quarter 2022 Highlights (all comparisons to the 2021 third quarter, unless otherwise noted)

• Reported Earnings Per Share (EPS) of $0.29 and Adjusted EPS¹ of $0.09
  • Reported EPS includes a $30.5 million below-the-line FX benefit, $2.7 million reserve reversal of a prior discrete asset write-down and a modest realignment benefit
• Total bookings were $1.22 billion, up 34.2%, or 40.8% on a constant currency basis
  • Original equipment bookings were $679.7 million, up 63.0% or 70.1% on a constant currency basis
  • Aftermarket bookings were $543.7 million, up 9.9%, or 16.2% on a constant currency basis
• Sales were $872.9 million, up 0.8%, or 7.2% on a constant currency basis
  • Original equipment sales were $412.1 million, down 3.1%, or up 3.6% on a constant currency basis
  • Aftermarket sales were $460.8 million, up 4.5%, or up 10.6% on a constant currency basis
• Reported gross and operating margins were 27.4% and 2.8%, respectively
  • Adjusted gross and operating margins² were 27.4% and 2.4%, respectively

“Our third quarter results were impacted by a number of previously disclosed discrete, period-specific issues impacting our EPS and margin performance,” said Scott Rowe, Flowserve’s President and Chief Executive Officer. “While we are disappointed by these results, our performance in the third quarter does not reflect what the business is capable of delivering or our opportunities for the future. We have since put these non-recurring items behind us and have taken corrective actions to remedy the operating issues. Third quarter bookings, however, were exceptionally strong with large project awards in our traditional markets, solid aftermarket and MRO activity, and numerous awards driven by our 3D growth strategy. Our current project funnel remains healthy and includes significant opportunities in energy transition and energy security.”

Rowe concluded, “We look to close out the year with significant sequential revenue growth and improved margins given the one-time nature of most of the factors that impacted our third quarter performance. We continue to make progress on our efforts to mitigate supply chain headwinds that have challenged our revenue conversion this year and are implementing new cost reduction measures to improve efficiency and address underutilization at certain facilities. With our highest backlog in seven years, increased spending in our traditional markets driven by energy security concerns and continued progress and momentum in our 3D strategy, we believe Flowserve is positioned to deliver sequential revenue growth and earnings improvement for the remainder of the year and for full-year 2023.”

2022 Fourth Quarter Guidance³

Flowserve expects 2022 fourth quarter Reported and Adjusted EPS of at least 40 cents on year-over-year quarterly revenue growth of approximately 8-10%. Additionally, several of the issues that impacted the third quarter, including business disruption due to an ERP conversion, discrete one-time accounting issues, the purchase of R&D and elevated bad debt expenses are not expected to recur in the fourth quarter. Fourth quarter Adjusted EPS will exclude realignment expenses, below-the-line FX impacts and other potential specific discrete items.

Third Quarter 2022 Results Conference Call

Flowserve will host its conference call with the financial community on Tuesday, November 1^st at 11:00 AM Eastern. Scott Rowe, president and chief executive officer, as well as other members of the management team will be presenting. The call can be accessed by shareholders and other interested parties at www.flowserve.com under the “Investor Relations” section.

1 See Reconciliation of Non-GAAP Measures table for detailed reconciliation of reported results to adjusted measures.

2 Adjusted gross and operating margins are calculated by dividing adjusted gross profit and adjusted operating income, respectively, by revenues. Adjusted gross profit and adjusted operating income are derived by excluding the adjusted items. See reconciliation of Non-GAAP Measures table for detailed reconciliation.

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

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

About Flowserve

Flowserve Corp. is one of the world’s leading providers of fluid motion and control products and services. Operating in more than 50 countries, the company produces engineered and industrial pumps, seals and valves as well as a range of related flow management services. More information about Flowserve can be obtained by visiting the company’s Web site at www.flowserve.com.

Safe Harbor Statement: This news release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, as amended. Words or phrases such as, "may," "should," "expects," "could," "intends," "plans," "anticipates," "estimates," "believes," "forecasts," "predicts" or other similar expressions are intended to identify forward-looking statements, which include, without limitation, earnings forecasts, statements relating to our business strategy and statements of expectations, beliefs, future plans and strategies and anticipated developments concerning our industry, business, operations and financial performance and condition.

The forward-looking statements included in this news release are based on our current expectations, projections, estimates and assumptions. These statements are only predictions, not guarantees. Such forward-looking statements are subject to numerous risks and uncertainties that are difficult to predict. These risks and uncertainties may cause actual results to differ materially from what is forecast in such forward-looking statements, and include, without limitation, the following: the impact of the global outbreak of COVID-19 on our business and operations; a portion of our bookings may not lead to completed sales, and our ability to convert bookings into revenues at acceptable profit margins; changes in global economic conditions and the potential for unexpected cancellations or delays of customer orders in our reported backlog; our dependence on our customers’ ability to make required capital investment and maintenance expenditures; if we are not able to successfully execute and realize the expected financial benefits from our strategic transformation and realignment initiatives, our business could be adversely affected; risks associated with cost overruns on fixed-fee projects and in taking customer orders for large complex custom engineered products; the substantial dependence of our sales on the success of the oil and gas, chemical, power generation and water management industries; the adverse impact of volatile raw materials prices on our products and operating margins; economic, political and other risks associated with our international operations, including military actions, trade embargoes, epidemics or pandemics or changes to tariffs or trade agreements that could affect customer markets, particularly North African, Russian and Middle Eastern markets and global oil and gas producers, and non-compliance with U.S. export/re-export control, foreign corrupt practice laws, economic sanctions and import laws and regulations; increased aging and slower collection of receivables, particularly in Latin America and other emerging markets; our exposure to fluctuations in foreign currency exchange rates, including in hyperinflationary countries such as Venezuela and Argentina; our furnishing of products and services to nuclear power plant facilities and other critical processes; potential adverse consequences resulting from litigation to which we are a party, such as litigation involving asbestos-containing material claims; expectations regarding acquisitions and the integration of acquired businesses; our relative geographical profitability and its impact on our utilization of deferred tax assets, including foreign tax credits; the potential adverse impact of an impairment in the carrying value of goodwill or other intangible assets; our dependence upon 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 September 30,
(Amounts in thousands, except per share data)	2022				2021
Sales	$	872,881			$	866,118
Cost of sales		(633,304	)			(612,626	)
Gross profit		239,577				253,492
Selling, general and administrative expense		(221,142	)			(200,862	)
Net earnings from affiliates		5,782				4,732
Operating income		24,217				57,362
Interest expense		(11,582	)			(14,746	)
Loss on extinguishment of debt		-				(563	)
Interest income		1,141				827
Other income (expense), net		28,676				(1,504	)
Earnings before income taxes		42,452				41,376
(Provision for) benefit from income taxes		(1,817	)			10,433
Net earnings, including noncontrolling interests		40,635				51,809
Less: Net earnings attributable to noncontrolling interests		(2,235	)			(2,024	)
Net earnings attributable to Flowserve Corporation	$	38,400			$	49,785
Net earnings per share attributable to Flowserve Corporation common shareholders:
Basic	$	0.29			$	0.38
Diluted		0.29				0.38
Weighted average shares - basic		130,703				130,242
Weighted average shares - diluted		131,402				130,789

RECONCILIATION OF NON-GAAP MEASURES
(Unaudited)
	Three Months Ended September 30, 2022
(Amounts in thousands, except per share data)	As Reported (a)					Realignment (1)					Other Items					As Adjusted
Sales	$	872,881				$	-				$	-				$	872,881
Gross profit		239,577					395					209		(3)			238,973
Gross margin		27.4	%				-					-					27.4	%
Selling, general and administrative expense		(221,142	)				(99	)				2,523		(3)			(223,566	)
Net earnings from affiliates		5,782					-					-					5,782
Operating income		24,217					296					2,732					21,189
Operating income as a percentage of sales		2.8	%				-					-					2.4	%
Interest and other expense, net		18,235					-					30,482		(4)			(12,247	)
Earnings before income taxes		42,452					296					33,214					8,942
Provision for income taxes		(1,817	)				(94	)	(2)			(7,354	)	(5)			5,631
Tax Rate		4.3	%				31.8	%				22.1	%				-63.0	%
Net earnings attributable to Flowserve Corporation	$	38,400				$	202				$	25,860				$	12,338
Net earnings per share attributable to Flowserve Corporation common shareholders:
Basic	$	0.29				$	-				$	0.20				$	0.09
Diluted		0.29					-					0.20					0.09
Basic number of shares used for calculation		130,703					130,703					130,703					130,703
Diluted number of shares used for calculation		131,402					131,402					131,402					131,402

(a) Reported in conformity with U.S. GAAP

Notes:

(1) Represents realignment adjustments incurred as a result of realignment programs

(2) Includes tax impact of items above

(3) Represents reversals of expenses that were adjusted for Non-GAAP measures in previous periods

(4) Represents below-the-line foreign exchange impacts

(5) Includes tax impact of items above

RECONCILIATION OF NON-GAAP MEASURES
(Unaudited)
	Three Months Ended September 30, 2021
(Amounts in thousands, except per share data)	As Reported (a)					Realignment (1)					Other Items					As Adjusted
Sales	$	866,118				$	-				$	-				$	866,118
Gross profit		253,492					(2,582	)				-					256,074
Gross margin		29.3	%				-					-					29.6	%
Selling, general and administrative expense		(200,862	)				(368	)				-					(200,494	)
Gain on sale of business		-					-					-					-
Net earnings from affiliates		4,732					-					-					4,732
Operating income		57,362					(2,950	)				-					60,312
Operating income as a percentage of sales		6.6	%				-					-					7.0	%
Interest and other expense, net		(15,986	)				-					(2,520	)	(3)			(13,466	)
Earnings before income taxes		41,376					(2,950	)				(2,520	)				46,846
(Provision for) benefit from income taxes		10,433					624		(2)			16,935		(4)			(7,126	)
Tax Rate		-25.2	%				21.2	%				672.0	%				15.2	%
Net earnings attributable to Flowserve Corporation	$	49,785				$	(2,326	)			$	14,415				$	37,696
Net earnings per share attributable to Flowserve Corporation common shareholders:
Basic	$	0.38				$	(0.02	)			$	0.11				$	0.29
Diluted		0.38					(0.02	)				0.11					0.29
Basic number of shares used for calculation		130,242					130,242					130,242					130,242
Diluted number of shares used for calculation		130,789					130,789					130,789					130,789

(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 below-the-line foreign exchange impacts and $1.5 million of expense as a result of early extinguishment of debt and duplicate interest expense.

(4) Includes tax impact of items above and $16.6 million benefit related to legal entity restructuring of foreign holding companies.

SEGMENT INFORMATION
(Unaudited)
FLOWSERVE PUMP DIVISION	Three Months Ended September 30,
(Amounts in millions, except percentages)	2022				2021
Bookings	$	925.8			$	660.9
Sales		592.6				601.8
Gross profit		170.0				182.9
Gross profit margin		28.7	%			30.4	%
SG&A		136.9				128.5
Segment operating income		38.9				59.1
Segment operating income as a percentage of sales		6.6	%			9.8	%
FLOW CONTROL DIVISION	Three Months Ended September 30,
(Amounts in millions, except percentages)	2022				2021
Bookings	$	300.0			$	253.6
Sales		282.6				266.1
Gross profit		78.2				77.0
Gross profit margin		27.7	%			28.9	%
SG&A		48.5				49.3
Segment operating income		29.7				27.7
Segment operating income as a percentage of sales		10.5	%			10.4	%

CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
	Nine Months Ended September 30,
(Amounts in thousands, except per share data)	2022				2021
Sales	$	2,576,161			$	2,621,604
Cost of sales		(1,877,108	)			(1,838,974	)
Gross profit		699,053				782,630
Selling, general and administrative expense		(621,956	)			(609,965	)
Gain on sale of business		-				1,806
Net earnings from affiliates		14,821				11,157
Operating income		91,918				185,628
Interest expense		(33,337	)			(45,847	)
Loss on extinguishment of debt		-				(8,173	)
Interest income		2,938				1,893
Other income (expense), net		28,152				(20,717	)
Earnings before income taxes		89,671				112,784
(Provision for) benefit from income taxes		(16,618	)			3,929
Net earnings, including noncontrolling interests		73,053				116,713
Less: Net earnings attributable to noncontrolling interests		(5,694	)			(7,495	)
Net earnings attributable to Flowserve Corporation	$	67,359			$	109,218
Net earnings per share attributable to Flowserve Corporation common shareholders:
Basic	$	0.52			$	0.84
Diluted		0.51				0.83
Weighted average shares - basic		130,604				130,325
Weighted average shares - diluted		131,233				130,867

RECONCILIATION OF NON-GAAP MEASURES
(Unaudited)
	Nine Months Ended September 30, 2022
(Amounts in thousands, except per share data)	As Reported (a)					Realignment (1)					Other Items					As Adjusted
Sales	$	2,576,161				$	-				$	-				$	2,576,161
Cost of sales		(1,877,108	)				126					(9,844	)	(3)			(1,867,390	)
Gross profit		699,053					126					(9,844	)	(3)			708,771
Gross margin		27.1	%				-					-					27.5	%
Selling, general and administrative expense		(621,956	)				40					(10,706	)	(3)			(611,290	)
Loss on sale of business		-					-					-					-
Net earnings from affiliates		14,821					-					-					14,821
Operating income		91,918					166					(20,550	)				112,302
Operating income as a percentage of sales		3.6	%				-					-					4.4	%
Interest and other expense, net		(2,247	)				-					34,900		(4)			(37,147	)
Earnings before income taxes		89,671					166					14,350					75,155
Provision for income taxes		(16,618	)				(67	)	(2)			(8,455	)	(5)			(8,096	)
Tax Rate		18.5	%				40.4	%				58.9	%				10.8	%
Net earnings (loss), including noncontrolling interests		73,053					99					5,895					67,059
Less: Net earnings attributable to noncontrolling interests		(5,694	)				-					-					(5,694	)
Net earnings attributable to Flowserve Corporation	$	67,359				$	99				$	5,895				$	61,365
Net earnings per share attributable to Flowserve Corporation common shareholders:
Basic	$	0.52				$	-				$	0.05				$	0.47
Diluted		0.51					-					0.04					0.47
Basic number of shares used for calculation		130,604					130,604					130,604					130,604
Diluted number of shares used for calculation		131,233					131,233					131,233					131,233

(a) Reported in conformity with U.S. GAAP

Notes:

(1) Represents realignment adjustments incurred as a result of realignment programs

(2) Includes tax impact of items above

(3) Represents the reserve of Russia related financial exposures and a discrete asset write-down. The impact of $5.4 million of previously recognized revenue and estimated cancellation fees on open contracts that were previously accounted for under POC and subsequently canceled have been reflected in the above adjustment to gross profit. In addition, includes reversals of expenses that were adjusted for Non-GAAP measures in previous periods.

(4) Represents below-the-line foreign exchange impacts

(5) Includes tax impact of items above

RECONCILIATION OF NON-GAAP MEASURES
(Unaudited)
	Nine Months Ended September 30, 2021
(Amounts in thousands, except per share data)	As Reported (a)					Realignment (1)					Other Items					As Adjusted
Sales	$	2,621,604				$	-				$	-				$	2,621,604
Gross profit		782,630					(15,813	)				-					798,443
Gross margin		29.9	%				-					-					30.5	%
Selling, general and administrative expense		(609,965	)				(6,454	)				-					(603,511	)
Gain on sale of business		1,806					-					1,806		(3)			-
Net earnings from affiliates		11,157					-					-					11,157
Operating income		185,628					(22,267	)				1,806					206,089
Operating income as a percentage of sales		7.1	%				-					-					7.9	%
Interest and other expense, net		(72,844	)				-					(23,833	)	(4)			(49,011	)
Earnings before income taxes		112,784					(22,267	)				(22,027	)				157,078
(Provision for) benefit from income taxes		3,929					8,466		(2)			22,734		(5)			(27,271	)
Tax Rate		-3.5	%				38.0	%				103.2	%				17.4	%
Net earnings attributable to Flowserve Corporation	$	109,218				$	(13,801	)			$	707				$	122,312
Net earnings per share attributable to Flowserve Corporation common shareholders:
Basic	$	0.84				$	(0.11	)			$	0.01				$	0.94
Diluted		0.83					(0.11	)				0.01					0.93
Basic number of shares used for calculation		130,325					130,325					130,325					130,325
Diluted number of shares used for calculation		130,867					130,867					130,867					130,867

(a) Reported in conformity with U.S. GAAP

Notes:

(1) Represents realignment expense incurred as a result of realignment programs.

(2) Includes tax impact of items above and realignment related tax release.

(3) Represents final settlement gain on sale of business in 2018.

(4) Represents below-the-line foreign exchange impacts and $9.1 million of expense as a result of early extinguishment of debt and duplicate interest expense.

(5) Includes tax impact of items above and $17.9 million benefit related to legal entity restructuring of foreign holding companies.

SEGMENT INFORMATION
(Unaudited)
FLOWSERVE PUMP DIVISION	Nine Months Ended September 30,
(Amounts in millions, except percentages)	2022				2021
Bookings	$	2,433.6			$	1,982.5
Sales		1,783.1				1,821.9
Gross profit		510.9				562.1
Gross profit margin		28.7	%			30.9	%
SG&A		408.4				394.7
Gain on sale of business		-				1.8
Segment operating income		117.3				180.7
Segment operating income as a percentage of sales		6.6	%			9.9	%
FLOW CONTROL DIVISION	Nine Months Ended September 30,
(Amounts in millions, except percentages)	2022				2021
Bookings	$	923.2			$	834.0
Sales		798.8				803.1
Gross profit		218.0				236.4
Gross profit margin		27.3	%			29.4	%
SG&A		142.7				147.1
Segment operating income		75.3				89.7
Segment operating income as a percentage of sales		9.4	%			11.2	%

Third Quarter and Year-to-Date 2022 - Segment Results
(dollars in millions, comparison vs. 2021 third quarter and year-to-date, unaudited)
		FPD						FCD
			3rd Qtr			YTD			3rd Qtr			YTD
Bookings		$	925.8		$	2,433.6		$	300.0		$	923.2
- vs. prior year			40.1%			22.8%			18.3%			10.7%
- on constant currency			46.8%			27.7%			24.7%			15.0%
Sales		$	592.6		$	1,783.1		$	282.6		$	798.8
- vs. prior year			-1.5%			-2.1%			6.2%			-0.5%
- on constant currency			4.8%			2.4%			12.5%			3.6%
Gross Profit		$	170.0		$	510.9		$	78.2		$	218.0
- vs. prior year			-7.1%			-9.1%			1.6%			-7.8%
Gross Margin (% of sales)			28.7%			28.7%			27.7%			27.3%
- vs. prior year (in basis points)		(170) bps			(220) bps			(120) bps			(210) bps
Operating Income		$	38.9		$	117.3		$	29.7		$	75.3
- vs. prior year			-34.2%			-35.1%			7.2%			-16.1%
- on constant currency			-25.4%			-31.0%			11.3%			-13.8%
Operating Margin (% of sales)			6.6%			6.6%			10.5%			9.4%
- vs. prior year (in basis points)		(320) bps			(330) bps			(10) bps			(180) bps
Adjusted Operating Income *		$	35.8		$	132.6		$	29.7		$	80.6
- vs. prior year			-41.4%			-31.5%			6.1%			-12.3%
- on constant currency			-33.0%			-27.6%			10.2%			-10.2%
Adj. Oper. Margin (% of sales)*			6.0%			7.4%			10.5%			10.1%
- vs. prior year (in basis points)		(420) bps			(320) bps			(0) bps			(130) bps
Backlog		$	1,911.1					$	701.8
* Adjusted Operating Income and Adjusted Operating Margin exclude realignment charges and other specific discrete items

CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
	September 30,				December 31,
(Amounts in thousands, except par value)	2022				2021
ASSETS
Current assets:
Cash and cash equivalents	$	351,870			$	658,452
Accounts receivable, net of allowance for expected credit losses of $82,101 and $74,336, respectively		770,152				739,210
Contract assets, net of allowance for expected credit losses of $3,999 and $2,393, respectively		205,236				195,598
Inventories, net		779,449				678,287
Prepaid expenses and other		117,077				117,130
Total current assets		2,223,784				2,388,677
Property, plant and equipment, net of accumulated depreciation of $1,135,437 and $1,191,823, respectively		473,224				515,927
Operating lease right-of-use assets, net		173,442				193,863
Goodwill		1,135,538				1,196,479
Deferred taxes		44,833				44,049
Other intangible assets, net		134,105				152,463
Other assets, net of allowance for expected credit losses of $66,210 and $67,696, respectively		321,062				258,310
Total assets	$	4,505,988			$	4,749,768
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	414,372			$	410,062
Accrued liabilities		382,535				445,092
Contract liabilities		216,094				202,965
Debt due within one year		47,962				41,058
Operating lease liabilities		30,723				32,628
Total current liabilities		1,091,686				1,131,805
Long-term debt due after one year		1,232,248				1,261,770
Operating lease liabilities		155,328				166,786
Retirement obligations and other liabilities		334,967				352,062
Shareholders’ equity:
Common shares, $1.25 par value		220,991				220,991
Shares authorized – 305,000
Shares issued – 176,793
Capital in excess of par value		506,744				506,386
Retained earnings		3,678,817				3,691,023
Treasury shares, at cost – 46,376 and 46,794 shares, respectively		(2,037,758	)			(2,057,706	)
Deferred compensation obligation		6,950				7,214
Accumulated other comprehensive loss		(718,619	)			(563,589	)
Total Flowserve Corporation shareholders' equity		1,657,125				1,804,319
Noncontrolling interests		34,634				33,026
Total equity		1,691,759				1,837,345
Total liabilities and equity	$	4,505,988			$	4,749,768

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
	Nine Months Ended September 30,
(Amounts in thousands)	2022				2021
Cash flows – Operating activities:
Net earnings, including noncontrolling interests	$	73,053			$	116,713
Adjustments to reconcile net earnings to net cash provided (used) by operating activities:
Depreciation		59,207				66,316
Amortization of intangible and other assets		10,051				10,643
Loss on extinguishment of debt		-				8,173
Stock-based compensation		23,757				23,610
Foreign currency, asset write downs and other non-cash adjustments		(24,085	)			9,897
Change in assets and liabilities:
Accounts receivable, net		(78,376	)			24,361
Inventories, net		(151,938	)			(47,533	)
Contract assets, net		(21,912	)			35,358
Prepaid expenses and other, net		(14,881	)			2,429
Accounts payable		29,307				(58,600	)
Contract liabilities		27,237				9,379
Accrued liabilities and income taxes payable		(32,735	)			9,136
Retirement obligations and other liabilities		24,123				(23,842	)
Net deferred taxes		(32,293	)			(34,933	)
Net cash flows provided (used) by operating activities		(109,485	)			151,107
Cash flows – Investing activities:
Capital expenditures		(45,831	)			(34,034	)
Other		184				(4,679	)
Net cash flows provided (used) by investing activities		(45,647	)			(38,713	)
Cash flows – Financing activities:
Payments on senior notes		-				(407,473	)
Proceeds from issuance of senior notes		-				498,280
Proceeds from long-term debt		-				300,000
Payments of deferred loan cost		-				(5,399	)
Payments on term loan		(24,239	)			-
Proceeds under other financing arrangements		1,135				1,408
Payments under other financing arrangements		(356	)			(6,215	)
Repurchases of common shares		-				(17,531	)
Payments related to tax withholding for stock-based compensation		(4,578	)			(5,899	)
Payments of dividends		(78,406	)			(78,551	)
Other		(5,334	)			(6,276	)
Net cash flows provided (used) by financing activities		(111,778	)			272,344
Effect of exchange rate changes on cash		(39,672	)			(22,743	)
Net change in cash and cash equivalents		(306,582	)			361,995
Cash and cash equivalents at beginning of period		658,452				1,095,274
Cash and cash equivalents at end of period	$	351,870			$	1,457,269

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20221031005685/en/

Investor Contacts:

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

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

Source: Flowserve Corporation

FAQ

What were Flowserve's total bookings in the third quarter of 2022?

Flowserve reported total bookings of $1.22 billion in Q3 2022.

What is Flowserve's EPS guidance for the fourth quarter of 2022?

Flowserve expects fourth quarter EPS of at least $0.40.

How has Flowserve's backlog changed year-over-year?

Flowserve's backlog increased to $2.6 billion, up 29.9% from the year-end 2021.

What significant acquisition did Flowserve announce?

Flowserve announced the acquisition of Chart Industries' in-process R&D for hydrogen pumps.

How much did Flowserve's bookings increase on a constant currency basis?

Bookings increased by 40.8% on a constant currency basis.