Flowserve Corporation Reports Third Quarter 2024 Results; Reaffirms 2024 Adjusted EPS Guidance

Flowserve Corporation (NYSE: FLS) (“Flowserve” or the “Company”), 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, 2024.

Third Quarter 2024 Highlights (all comparisons to the 2023 third quarter, unless otherwise noted)

• Total bookings were $1.20 billion, up $136.1 million or 12.7%. On a constant currency basis⁴, total bookings were up $142.8 million or 13.4%
  • Original equipment bookings were $589.0 million, up $103.8 million or 21.4%. On a constant currency basis, original equipment bookings were up $106.1 million or 21.9%
  • Aftermarket bookings were $614.6 million, up $32.3 million or 5.6%. On a constant currency basis, aftermarket bookings were up $36.7 million or 6.3%
• Sales were $1.13 billion, up $38.4 million or 3.5%. On a constant currency basis, sales were up $43.4 million or 4.0%
  • Original equipment sales were $555.8 million, up $26.6 million or 5.0%. On a constant currency basis, original equipment sales were up $27.6 million or 5.2%
  • Aftermarket sales were $577.3 million, up $11.7 million or 2.1%. On a constant currency basis, aftermarket sales were up $15.7 million or 2.8%
• Reported gross and operating margins were 31.5% and 9.1%, respectively, up 250 basis points and 270 basis points, respectively
  • Adjusted gross and operating margins were 32.4% and 11.1%, respectively, up 270 basis points and 240 basis points, respectively
  • Both Reported and Adjusted third quarter 2024 operating margins were impacted by a $12.0 million expense charge from an actuarial-determined assessment of certain long-term liabilities, which reduced operating margins by approximately 106 basis points
• Reported EPS of $0.44 and Adjusted EPS of $0.62, compared to $0.35 and $0.50, respectively
  • Third quarter 2024 Reported EPS includes after-tax adjusted expenses of $23.5 million, comprised of realignment charges, an in-process R&D technology purchase, pension plan transition expense, below-the-line foreign currency impact and MOGAS Industries acquisition expense
  • Both Reported and Adjusted EPS were impacted by a $9.2 million (7 cents per share) expense charge resulting from an actuarial-determined assessment of certain long-term liabilities
• Backlog of $2.8 billion was up 3.7% sequentially with a third quarter book-to-bill of 1.06x

“Our third quarter results reflect strong operational performance, including meaningful year-over-year improvements in margins, EPS and cash flow. The Flowserve Business System is beginning to deliver results as we advance our operational excellence and portfolio excellence initiatives. We generated $1.2 billion in bookings during the quarter, which included a healthy mix of project awards, strong aftermarket activity and record bookings from our 3D strategic initiatives,” said Scott Rowe, Flowserve’s President and Chief Executive Officer. “We believe our 3D strategy, combined with the Flowserve Business System, are the key drivers to accelerating growth and continuing to expand our margins.”

Rowe concluded, “With backlog at near-record levels of $2.8 billion and our successful closing of the MOGAS Industries acquisition earlier this month, we expect to exit 2024 with positive momentum. We are well-positioned to continue our meaningful progress in 2025 toward our 2027 financial targets. I am confident that our sustained progress will enable us to create long-term value for our customers, associates, and shareholders.”

2024 Guidance⁵

Flowserve today reaffirmed its previously announced Adjusted EPS target range, as well as certain other financial metrics, provided in its full-year 2024 guidance issued on July 29, 2024. Flowserve’s 2024 Adjusted EPS target range excludes expected adjusted items including realignment charges of approximately $45 million and the potential impact of below-the-line foreign currency effects and certain other discrete items which may arise during the course of the year. In addition, Flowserve lowered its full-year 2024 Reported EPS target range. 2024 Guidance excludes the recently completed MOGAS Industries acquisition.

Third Quarter 2024 Results Conference Call

Flowserve will host its conference call with the financial community on Tuesday, October 29^th at 10:00 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 “Investors” section.

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: 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 U.S. export/re-export control, foreign corrupt practice laws, economic sanctions and import laws and regulations; any continued volatile regional and global economic conditions resulting from the COVID-19 pandemic 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; 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; 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; 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. 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.

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