- Fourth quarter Reported and Adjusted1 Earnings Per Share
(EPS)2 of 47 cents and 68 cents, respectively, reflects continued
strong operational performance
- Delivered solid fourth quarter bookings of $1.04 billion,
including strong aftermarket awards exceeding $550 million
- Increased quarterly cash dividend 5% to $0.21 per share and
replenished total stock repurchase authorization to $300
million
- Initiated full year 2024 guidance3, including revenue growth
between 4%-6% and Reported and Adjusted EPS of $2.25 to $2.45 and
$2.40 to $2.60, respectively
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 fourth
quarter and full-year ended December 31, 2023.
Fourth Quarter 2023
Highlights (all comparisons to the 2022 fourth quarter,
unless otherwise noted)
- Reported EPS of $0.47 and Adjusted EPS1 of $0.68, compared to
$0.92 and $0.63, respectively
- Fourth quarter 2023 Reported EPS includes after-tax adjusted
expenses of $27.6 million, comprised primarily of realignment
charges and below-the-line foreign exchange
- Total bookings were $1.04 billion, down $63.1 million or 5.7%.
On a constant currency basis4, total bookings were down $78.5
million or 7.1%
- Sales were $1.17 billion, up $126.2 million or 12.1%. On a
constant currency basis4, sales were up $104.4 million or 10.1%
- Original equipment sales were $576.1 million, up $76.3 million
or 15.3%. On a constant currency basis4, original equipment sales
were up $65.3 million or 13.1%
- Aftermarket sales were $589.1 million, up $49.9 million or
9.3%. On a constant currency basis4, aftermarket sales were up
$39.1 million or 7.2%
- Reported gross and operating margins were 29.1% and 9.4%,
respectively
Full Year 2023 Highlights
(all comparisons to full year 2022, unless otherwise noted)
- Reported EPS of $1.42 and Adjusted EPS1 of $2.10, compared to
$1.44 and $1.10, respectively
- Full-year 2023 Reported EPS includes after-tax adjusted
expenses of $90.9 million, comprised primarily of realignment
charges, below-the-line foreign exchange, and terminated
acquisition costs, partially offset by the release of tax valuation
allowances
- Total bookings were $4.27 billion, down $175.8 million or 4.0%.
On a constant currency basis4, total bookings were down $185.2
million or 4.2%
- 2022 full-year bookings included over $230 million of original
equipment orders related to a Middle East gas project, representing
one of Flowserve’s largest awards ever
- Original equipment bookings were $1.99 billion, down $289.9
million or 12.7%. On a constant currency basis4, original equipment
bookings were down $292.4 million or 12.8%
- Aftermarket bookings were $2.28 billion, up $114.1 million or
5.3%. On a constant currency basis4, aftermarket bookings were up
$107.2 million or 5.0%
- Sales were $4.32 billion, up $705.5 million or 19.5%. On a
constant currency basis4, sales were up $690.3 million or 19.1%
- Original equipment sales were $2.09 billion, up $379.7 million
or 22.3%. On a constant currency basis4, original equipment sales
were up $371.8 million or 21.8%
- Aftermarket sales were $2.23 billion, up $325.8 million or
17.1%. On a constant currency basis4, aftermarket sales were up
$318.5 million or 16.7%
- Reported gross and operating margins were 29.6% and 7.7%, up
210 and 220 basis points, respectively
- Adjusted gross and operating margins5 were 30.1% and 9.5%, up
220 and 330 basis points, respectively
- Backlog of $2.70 billion, down 1.5% compared to prior year-end
- Full year 2023 book-to-bill solid at 0.99x
“I am incredibly pleased with our progress and the results that
we delivered in 2023, as evidenced by our significant
year-over-year growth in revenue, adjusted earnings, and cash
flow,” said Scott Rowe, Flowserve’s President and Chief Executive
Officer. “The organizational design and operational discipline that
we implemented last year delivered as expected and positions the
company extremely well for 2024. Our strong performance in 2023 is
a testament to the hard work of our associates who continue to
execute at a high-level and position Flowserve for long term
success.”
Rowe concluded, “Flowserve’s 3D strategy is the catalyst for
accelerated growth and positions us to capture the increased
spending levels on energy security and decarbonization investments.
Additionally, we expect both aftermarket and MRO opportunities to
remain at elevated levels in 2024 and beyond. In 2024, we intend to
increase the conversion percentage of our strong $2.7 billion
backlog, continue to deliver outsized growth, and expand operating
margins through improved operational excellence and enhanced
product management. As we build on the momentum established last
year, we are confident in Flowserve’s future and believe that
executing on our objectives will create long-term value for our
customers, associates, and shareholders.”
2024 Guidance3
Flowserve today also initiated Reported and Adjusted EPS
guidance for 2024, as well as certain other financial metrics, as
shown in the table below.
2024
Target Range
Revenue Growth
Up 4.0% to 6.0%
Reported Earnings Per Share
$2.25 to $2.45
Adjusted Earnings Per Share
$2.40 to $2.60
Net Interest Expense
$60 to $65 million
Adjusted Tax Rate
~20%
Capital Expenditures
$75 to $85 million
Flowserve’s 2024 Adjusted EPS target range excludes expected
adjusted items including realignment charges of approximately $30
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.
Amy Schwetz, Flowserve’s Senior Vice President and Chief
Financial Officer said, “We believe our 2024 guidance range has
Flowserve well-positioned on its trajectory towards the long-term
financial targets unveiled at our 2023 analyst day. We remain
confident in our ability to drive further Adjusted margin
improvement and Adjusted EPS growth as we pursue a disciplined
capital allocation approach to deliver long-term shareholder value
creation.”
Buyback Authorization Replenished to
$300 Million and Quarterly Cash Dividend Increased
Flowserve’s Board of Directors authorized a 5% increase in the
quarterly cash dividend to $0.21 per share on the company's
outstanding shares of common stock and replenished the total share
repurchase authorization under the current share repurchase program
to $300 million, inclusive of approximately $96 million of capacity
remaining.
The dividend is payable on April 12, 2024, to shareholders of
record as of the close of business on March 28, 2024. While
Flowserve currently intends to pay regular quarterly cash dividends
for the foreseeable future, any future dividends, at this $0.21 per
share rate or otherwise, will be reviewed individually and declared
by the Board at its discretion.
Fourth Quarter and Full Year 2023
Results Conference Call
Flowserve will host its conference call with the financial
community on Wednesday, February 21st 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/investors.
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
and below-the-line foreign currency effects and utilizes the
then-applicable FX rates and approximately 132 million fully
diluted shares.
3
Adjusted 2024 EPS excludes realignment
expenses as well as the impact of below-the-line foreign currency
effects and certain other discrete items which may arise during the
year and utilizes year-end 2023 FX rates and approximately 132
million fully diluted 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.
CONSOLIDATED STATEMENTS OF
INCOME
(Unaudited)
Three Months Ended December
31,
(Amounts in thousands, except per share
data)
2023
2022
Sales
$
1,165,179
$
1,038,959
Cost of sales
(825,635
)
(743,718
)
Gross profit
339,544
295,241
Selling, general and administrative
expense
(234,744
)
(193,588
)
Net earnings from affiliates
4,663
3,647
Operating income
109,463
105,300
Interest expense
(16,886
)
(12,909
)
Interest income
1,457
1,025
Other income (expense), net
(22,599
)
(28,711
)
Earnings before income taxes
71,435
64,705
Benefit from (provision for) income
taxes
(3,991
)
60,257
Net earnings, including noncontrolling
interests
67,444
124,962
Less: Net earnings attributable to
noncontrolling interests
(4,827
)
(3,633
)
Net earnings attributable to Flowserve
Corporation
$
62,617
$
121,329
Net earnings per share attributable to
Flowserve Corporation common shareholders:
Basic
$
0.48
$
0.93
Diluted
0.47
0.92
Weighted average shares – basic
131,184
130,710
Weighted average shares – diluted
132,132
131,560
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 December 31,
2023
Gross Profit
Selling, General &
Administrative Expense
Operating Income
Other Income (Expense),
Net
Provision For (Benefit From)
Income Taxes
Net Earnings (Loss)
Effective Tax Rate
Diluted EPS
Reported
$
339,544
$
234,744
$
109,463
$
(22,599
)
$
3,991
$
62,617
5.6
%
0.47
Reported as a percent of sales
29.1
%
20.1
%
9.4
%
-1.9
%
0.3
%
5.4
%
Realignment charges (a)
9,464
(5,949
)
15,413
-
4,534
10,879
29.4
%
0.08
Discrete asset write-downs (b)(c)
(1,254
)
-
(1,254
)
2,000
94
652
12.6
%
0.01
Acquisition related (d)
-
1,244
(1,244
)
-
(293
)
(951
)
23.6
%
(0.01
)
Below-the-line foreign exchange impacts
(e)
-
-
-
16,764
(274
)
17,038
-1.6
%
0.13
Adjusted
$
347,754
$
230,039
$
122,378
$
(3,835
)
$
8,052
$
90,235
7.8
%
0.68
Adjusted as a percent of sales
29.8
%
19.7
%
10.5
%
-0.3
%
0.7
%
7.7
%
Note: Amounts may not calculate due to
rounding
(a) Charges represent realignment costs
incurred as a result of realignment programs of which $2,100 is
non-cash.
(b) Includes reversals of expenses that
were adjusted for Non-GAAP measures in previous periods of
$1,254.
(c) Charge represents a non-cash asset
write-down of $2,000 associated with the impairment of an equity
investment.
(d) Represents reversal of costs
associated with a terminated acquisition that were adjusted for
Non-GAAP measures in previous periods.
(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 December 31,
2022
Gross Profit
Selling, General &
Administrative Expense
Operating Income
Other Income (Expense),
Net
Provision For (Benefit From)
Income Taxes
Net Earnings (Loss)
Effective Tax Rate
Diluted EPS
Reported
$
295,241
$
193,588
$
105,300
$
(28,711
)
$
(60,257
)
$
121,329
-93.1
%
0.92
Reported as a percent of sales
28.4
%
18.6
%
10.1
%
-2.8
%
-5.8
%
11.7
%
Realignment charges (a)
481
480
1
-
1,866
(1,865
)
N/A
(0.01
)
Discrete asset write-downs (b)(c)
3,646
(2,885
)
6,531
-
2,661
3,870
40.7
%
0.03
Below-the-line foreign exchange impacts
(d)
-
-
-
25,206
6,170
19,036
24.5
%
0.14
Discrete tax benefit (e)
-
-
-
-
59,313
(59,313
)
0.0
%
(0.45
)
Adjusted
$
299,368
$
191,183
$
111,832
$
(3,505
)
$
9,753
$
83,057
10.1
%
0.63
Adjusted as a percent of sales
28.8
%
18.4
%
10.8
%
-0.3
%
0.9
%
8.0
%
Note: Amounts may not calculate due to
rounding
(a) Charges represent realignment costs
incurred and cost credits as a result of realignment programs.
(b) Includes reversals of expenses that
were adjusted for Non-GAAP measures in previous periods of
$7,111.
(c) Charges represent a $13,642 reserve of
Russia-related financial exposures.
(d) 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.
(e) Represents a discrete tax benefit due
to release of tax valuation allowance on the net deferred tax
assets in foreign jurisdictions. The associated tax expense was
adjusted out in 2017.
SEGMENT INFORMATION
(Unaudited)
FLOWSERVE PUMPS DIVISION
Three Months Ended December
31,
(Amounts in millions, except
percentages)
2023
2022
Bookings
$
722.2
$
786.2
Sales
832.8
739.4
Gross profit
238.2
217.1
Gross profit margin
28.6
%
29.4
%
SG&A
149.4
130.1
Segment operating income
93.5
90.7
Segment operating income as a percentage
of sales
11.2
%
12.3
%
FLOW CONTROL DIVISION
Three Months Ended December
31,
(Amounts in millions, except
percentages)
2023
2022
Bookings
$
326.9
$
324.9
Sales
336.0
301.8
Gross profit
101.9
87.5
Gross profit margin
30.3
%
29.0
%
SG&A
52.1
49.4
Segment operating income
49.8
38.1
Segment operating income as a percentage
of sales
14.8
%
12.6
%
Segment Reconciliation of Non-GAAP
Financial Measures to the Most Directly Comparable GAAP Financial
Measure (Unaudited)
(Amounts in thousands)
Flowserve Pumps
Division
Three Months Ended December 31,
2023
Gross Profit
Selling, General &
Administrative Expense
Operating Income
Three Months Ended December
31, 2022
Gross Profit
Selling, General &
Administrative Expense
Operating Income
Reported
$
238,213
$
149,354
$
93,522
Reported
$
217,134
$
130,084
$
90,698
Reported as a percent of sales
28.6
%
17.9
%
11.2
%
Reported as a percent of sales
29.4
%
17.6
%
12.3
%
Realignment charges (a)
3,313
(2,537
)
5,850
Realignment charges (a)
358
2
356
Discrete asset write-downs (b)
(1,254
)
-
(1,254
)
Discrete asset write-downs (b)(c)
3,342
(2,247
)
5,589
Adjusted
$
240,272
$
146,817
$
98,118
Adjusted
$
220,834
$
127,839
$
96,643
Adjusted as a percent of sales
28.9
%
17.6
%
11.8
%
Adjusted as a percent of sales
29.9
%
17.3
%
13.1
%
Flow Control
Division
Three Months Ended December 31,
2023
Gross Profit
Selling, General &
Administrative Expense
Operating Income
Three Months Ended December
31, 2022
Gross Profit
Selling, General &
Administrative Expense
Operating Income
Reported
$
101,894
$
52,056
$
49,838
Reported
$
87,501
$
49,409
$
38,093
Reported as a percent of sales
30.3
%
15.5
%
14.8
%
Reported as a percent of sales
29.0
%
16.4
%
12.6
%
Realignment charges (a)
6,313
(915
)
7,228
Realignment charges (a)
123
452
(329
)
Acquisition related (c)
-
1,244
(1,244
)
Discrete asset write-downs (c)
304
(638
)
942
Adjusted
$
108,207
$
52,385
$
55,822
Adjusted
$
87,928
$
49,223
$
38,706
Adjusted as a percent of sales
32.2
%
15.6
%
16.6
%
Adjusted as a percent of sales
29.1
%
16.3
%
12.8
%
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 $2,100 is
non-cash.
(a) Charges represent realignment costs
incurred and cost credits as a result of realignment programs.
(b) Represents reversals of expenses that
were adjusted for Non-GAAP measures in previous periods.
(b) Includes reversals of expenses that
were adjusted for Non-GAAP measures in previous periods of
$7,111.
(c) Represents reversal of costs
associated with a terminated acquisition that were adjusted for
Non-GAAP measures in previous periods.
(c) Charges represent the reserve of
Russia-related financial exposures of $13,642.
CONSOLIDATED STATEMENTS OF
INCOME
Year Ended December
31,
(Amounts in thousands, except per share
data)
2023
2022
2021
Sales
$
4,320,577
$
3,615,120
$
3,541,060
Cost of sales
(3,043,749
)
(2,620,825
)
(2,491,335
)
Gross profit
1,276,828
994,295
1,049,725
Selling, general and administrative
expense
(961,169
)
(815,545
)
(797,076
)
Gain on sale of business
-
-
1,806
Net earnings from affiliates
17,894
18,469
16,304
Operating income
333,553
197,219
270,759
Interest expense
(66,924
)
(46,247
)
(57,617
)
Loss on extinguishment of debt
-
-
(46,176
)
Interest income
6,991
3,963
2,764
Other income (expense), net
(49,870
)
(559
)
(36,142
)
Earnings before income taxes
223,750
154,376
133,588
Benefit from (provision for) income
taxes
(18,562
)
43,639
2,594
Net earnings, including noncontrolling
interests
205,188
198,015
136,182
Less: Net earnings attributable to
noncontrolling interests
(18,445
)
(9,326
)
(10,233
)
Net earnings attributable to Flowserve
Corporation
$
186,743
$
188,689
$
125,949
Net earnings per share attributable to
Flowserve Corporation common shareholders:
Basic
$
1.42
$
1.44
$
0.97
Diluted
1.42
1.44
0.96
Weighted average shares – basic
131,117
130,630
130,305
Weighted average shares – diluted
131,931
131,315
130,857
Consolidated Reconciliation of Non-GAAP
Financial Measures to the Most Directly Comparable GAAP Financial
Measure (Unaudited)
(Amounts in thousands, except per share
data)
Twelve Months Ended December 31,
2023
Gross Profit
Selling, General &
Administrative Expense
Operating Income
Other Income (Expense),
Net
Provision For (Benefit From)
Income Taxes
Net Earnings Attributable to
Noncontrolling Interests
Net Earnings (Loss)
Effective Tax Rate
Diluted EPS
Reported
$
1,276,828
$
961,169
$
333,553
$
(49,870
)
$
18,562
$
18,445
$
186,743
8.3
%
1.42
Reported as a percent of sales
29.6
%
22.2
%
7.7
%
-1.2
%
0.4
%
0.4
%
4.3
%
Realignment charges (a)
21,012
(45,025
)
66,037
-
14,949
-
51,088
22.6
%
0.39
Discrete asset write-downs
(b)(c)(d)(e)
715
(3,955
)
4,670
2,000
1,611
-
5,059
24.2
%
0.04
Acquisition related (f)
-
(7,247
)
7,247
-
1,704
-
5,543
23.5
%
0.04
Below-the-line foreign exchange impacts
(g)
-
-
-
41,092
2,395
-
38,697
5.8
%
0.29
Correction of prior period errors (h)
-
-
-
-
-
(3,559
)
3,559
0.0
%
0.03
Discrete tax benefit (i)
-
-
-
-
13,000
-
(13,000
)
0.0
%
(0.10
)
Adjusted
$
1,298,555
$
904,942
$
411,507
$
(6,778
)
$
52,221
$
14,886
$
277,689
15.1
%
2.10
Adjusted as a percent of sales
30.1
%
20.9
%
9.5
%
-0.2
%
1.2
%
0.3
%
6.4
%
Note: Amounts may not calculate due to
rounding
(a) Charges represent realignment costs
incurred as a result of realignment programs of which $9,701 is
non-cash.
(b) Charge represents a further expense of
$1,834 associated with a sales contract that was initially adjusted
out of Non-GAAP measures in 2017.
(c) Includes reversals of expenses that
were adjusted for Non-GAAP measures in previous periods of $81.
(d) Charge represents a $2,917 non-cash
write-down of a licensing agreement.
(e) Charge represents a non-cash asset
write-down of $2,000 associated with the impairment of an equity
investment.
(f) Charges represent costs associated
with a terminated acquisition.
(g) 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.
(h) Represents the amount to correct the
cumulative impact of immaterial prior period errors.
(i) 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 on Non-GAAP measures in 2015.
Twelve Months Ended December 31,
2022
Gross Profit
Selling, General &
Administrative Expense
Operating Income
Other Income (Expense),
Net
Provision For (Benefit From)
Income Taxes
Net Earnings (Loss)
Effective Tax Rate
Diluted EPS
Reported
$
994,295
$
815,545
$
197,219
$
(559
)
$
(43,639
)
$
188,689
-28.3
%
$
1.44
Reported as a percent of sales
27.5
%
22.6
%
5.5
%
0.0
%
-1.2
%
5.2
%
Realignment charges (a)
355
520
(165
)
-
1,799
(1,964
)
-1090.3
%
(0.01
)
Discrete asset write-downs (b)(c)(d)
13,490
(13,591
)
27,081
-
1,967
25,114
7.3
%
0.19
Below-the-line foreign exchange impacts
(e)
-
-
-
(9,694
)
(1,591
)
(8,103
)
16.4
%
(0.06
)
Discrete tax benefit (f)
-
-
-
-
59,313
(59,313
)
0.0
%
(0.45
)
Adjusted
$
1,008,140
$
802,474
$
224,135
$
(10,253
)
$
17,849
$
144,423
10.4
%
$
1.10
Adjusted as a percent of sales
27.9
%
22.2
%
6.2
%
-0.3
%
0.5
%
4.0
%
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) Includes reversals of expenses that
were adjusted for Non-GAAP measures in previous periods of
$9,843.
(c) Charges represent a $33,888 reserve of
Russia-related financial exposures.
(d) Charge represents a $3,036 non-cash
asset write-down associated with the impairment of a trademark.
(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.
(f) Represents a discrete tax benefit due
to release of tax valuation allowance on the net deferred tax
assets in foreign jurisdictions. The associated tax expense was
adjusted out of Non-GAAP measures in 2017.
SEGMENT INFORMATION
(Unaudited)
FLOWSERVE PUMPS DIVISION
Year Ended December
31,
(Amounts in millions, except
percentages)
2023
2022
Bookings
$
2,941.2
$
3,214.7
Sales
3,064.5
2,522.5
Gross profit
906.8
728.1
Gross profit margin
29.6
%
28.9
%
SG&A
575.8
538.5
Segment operating income
348.9
208.0
Segment operating income as a percentage
of sales
11.4
%
8.2
%
FLOW CONTROL DIVISION
Year Ended December
31,
(Amounts in millions, except
percentages)
2023
2022
Bookings
$
1,345.9
$
1,247.2
Sales
1,266.0
1,100.6
Gross profit
372.8
305.5
Gross profit margin
29.4
%
27.8
%
SG&A
224.8
192.1
Segment operating income
148.0
113.4
Segment operating income as a percentage
of sales
11.7
%
10.3
%
Segment Reconciliation of Non-GAAP
Financial Measures to the Most Directly Comparable GAAP Financial
Measure (Unaudited)
(Amounts in thousands)
Flowserve Pumps
Division
Twelve Months Ended December 31,
2023
Gross Profit
Selling, General &
Administrative Expense
Operating Income
Twelve Months Ended December
31, 2022
Gross Profit
Selling, General &
Administrative Expense
Operating Income
Reported
$
906,775
$
575,792
$
348,867
Reported
$
728,083
$
538,523
$
207,957
Reported as a percent of sales
29.6
%
18.8
%
11.4
%
Reported as a percent of sales
28.9
%
21.3
%
8.2
%
Realignment charges (a)
10,797
(14,533
)
25,330
Realignment charges (a)
237
(149
)
386
Discrete asset write-downs (b)(c)(d)
715
(3,955
)
4,670
Discrete asset write-downs (b)(c)
12,072
(8,835
)
20,907
Adjusted
$
918,287
$
557,304
$
378,867
Adjusted
$
740,392
$
529,539
$
229,250
Adjusted as a percent of sales
30.0
%
18.2
%
12.4
%
Adjusted as a percent of sales
29.4
%
21.0
%
9.1
%
Flow Control
Division
Twelve Months Ended December 31,
2023
Gross Profit
Selling, General &
Administrative Expense
Operating Income
Twelve Months Ended December
31, 2022
Gross Profit
Selling, General &
Administrative Expense
Operating Income
Reported
$
372,808
$
224,774
$
148,034
Reported
$
305,514
$
192,097
$
113,417
Reported as a percent of sales
29.4
%
17.8
%
11.7
%
Reported as a percent of sales
27.8
%
17.5
%
10.3
%
Realignment charges (a)
10,576
(11,393
)
21,969
Realignment charges (a)
179
395
(216
)
Acquisition related (e)
-
(7,247
)
7,247
Discrete asset write-downs (b)(d)
1,418
(4,756
)
6,174
Adjusted
$
383,384
$
206,134
$
177,250
Adjusted
$
307,111
$
187,736
$
119,375
Adjusted as a percent of sales
30.3
%
16.3
%
14.0
%
Adjusted as a percent of sales
27.9
%
17.1
%
10.8
%
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 $9,701 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 adjusted
out of Non-GAAP measures in 2017.
(b) Charges represent the reserve of
Russia-related financial exposures of $33,888.
(c) Includes reversals of expenses that
were adjusted for Non-GAAP measures in previous periods of $81.
(c) Includes reversals of expenses that
were adjusted for Non-GAAP measures in previous periods of
$9,843.
(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.
Fourth Quarter and
Year-to-Date 2023 - Segment Results
(dollars in millions, comparison
vs. 2022 fourth quarter and year-to-date, unaudited)
FPD
FCD
4th Qtr
YTD
4th Qtr
YTD
Bookings
$
722.2
$
2,941.2
$
326.9
$
1,345.9
- vs. prior year
-64.0
-8.1
%
-273.5
-8.5
%
2.0
0.6
%
98.7
7.9
%
- on constant currency
-75.8
-9.6
%
-288.1
-9.0
%
-1.6
-0.5
%
103.9
8.3
%
Sales
$
832.8
$
3,064.5
$
336.0
$
1,266.0
- vs. prior year
93.4
12.6
%
542.0
21.5
%
34.2
11.3
%
165.4
15.0
%
- on constant currency
75.8
10.2
%
523.7
20.8
%
30.0
10.0
%
168.6
15.3
%
Gross Profit
$
238.2
$
906.8
$
101.9
$
372.8
- vs. prior year
9.7
%
24.5
%
16.5
%
22.0
%
Gross Margin (% of sales)
28.6
%
29.6
%
30.3
%
29.4
%
- vs. prior year (in basis points)
(80) bps
70 bps
130 bps
160 bps
Operating Income
$
93.5
$
348.9
$
49.8
$
148.0
- vs. prior year
2.8
3.1
%
140.9
67.7
%
11.7
30.7
%
34.6
30.5
%
- on constant currency
0.2
0.2
%
142.9
68.7
%
11.4
30.0
%
36.1
31.9
%
Operating Margin (% of sales)
11.2
%
11.4
%
14.8
%
11.7
%
- vs. prior year (in basis points)
(110) bps
320 bps
220 bps
140 bps
Adjusted Operating Income *
$
98.1
$
378.9
$
55.8
$
177.3
- vs. prior year
1.5
1.6
%
149.6
65.2
%
17.1
44.2
%
57.9
48.5
%
- on constant currency
-1.1
-1.2
%
151.6
66.1
%
16.8
43.4
%
59.4
49.8
%
Adj. Oper. Margin (% of sales)*
11.8
%
12.4
%
16.6
%
14.0
%
- vs. prior year (in basis points)
(130) bps
330 bps
380 bps
320 bps
Backlog
$
1,891.7
$
826.8
* Adjusted Operating Income and Adjusted Operating Margin
exclude realignment charges and other specific discrete items
CONSOLIDATED BALANCE SHEETS
December 31,
December 31,
(Amounts in thousands, except par
value)
2023
2022
ASSETS
Current assets:
Cash and cash equivalents
$
545,678
$
434,971
Accounts receivable, net
881,869
868,632
Contract assets, net
280,228
233,457
Inventories, net
879,937
803,198
Prepaid expenses and other
116,065
110,714
Total current assets
2,703,777
2,450,972
Property, plant and equipment, net
506,158
500,945
Operating lease right-of-use assets,
net
156,430
174,980
Goodwill
1,182,225
1,168,124
Deferred taxes
218,358
149,290
Other intangible assets, net
122,248
134,503
Other assets, net
219,523
211,820
Total assets
$
5,108,719
$
4,790,634
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable
$
547,824
$
476,747
Accrued liabilities
504,430
427,578
Contract liabilities
287,697
256,963
Debt due within one year
66,243
49,335
Operating lease liabilities
32,382
32,528
Total current liabilities
1,438,576
1,243,151
Long-term debt due after one year
1,167,307
1,224,151
Operating lease liabilities
138,665
155,196
Retirement obligations and other
liabilities
389,120
309,529
Shareholders’ equity:
Common shares, $1.25 par value
220,991
220,991
Shares authorized – 305,000
Shares issued – 176,793 and 176,793,
respectively
Capital in excess of par value
506,525
507,484
Retained earnings
3,854,717
3,774,209
Treasury shares, at cost – 45,885 and
46,359 shares, respectively
(2,014,474
)
(2,036,882
)
Deferred compensation obligation
7,942
6,979
Accumulated other comprehensive loss
(639,601
)
(647,788
)
Total Flowserve Corporation shareholders'
equity
1,936,100
1,824,993
Noncontrolling interests
38,951
33,614
Total equity
1,975,051
1,858,607
Total liabilities and equity
$
5,108,719
$
4,790,634
CONSOLIDATED STATEMENTS OF CASH
FLOWS
Year Ended December
31,
(Amounts in thousands)
2023
2022
2021
Cash flows – Operating
activities:
Net earnings, including noncontrolling
interests
$
205,188
$
198,015
$
136,182
Adjustments to reconcile net earnings to
net cash provided (used) by operating activities:
Depreciation
73,464
77,636
85,175
Amortization of intangible and other
assets
10,283
13,317
14,647
Loss on extinguishment of debt
-
-
46,176
Stock-based compensation
27,808
25,530
29,478
Foreign currency, asset write downs and
other non-cash adjustments
(17,331
)
(27,758
)
29,772
Change in assets and liabilities:
Accounts receivable, net
4,744
(152,011
)
(8,675
)
Inventories, net
(59,831
)
(147,492
)
(32,124
)
Contract assets, net
(41,149
)
(41,768
)
74,333
Prepaid expenses and other assets, net
7,825
17,461
1,302
Accounts payable
53,065
78,968
(19,505
)
Contract liabilities
26,837
61,684
14,196
Accrued liabilities and income taxes
payable
59,213
(5,226
)
(13,948
)
Retirement obligations and other
38,497
(1,430
)
(15,690
)
Net deferred taxes
(62,841
)
(136,936
)
(91,200
)
Net cash flows provided (used) by
operating activities
325,772
(40,010
)
250,119
Cash flows – Investing
activities:
Capital expenditures
(67,359
)
(76,287
)
(54,936
)
Proceeds from disposal of assets
2,057
4,422
2,663
Proceeds from termination of
cross-currency swap
-
66,004
-
Net affiliate investment activity
(3,278
)
(225
)
(7,204
)
Net cash flows provided (used) by
investing activities
(68,580
)
(6,086
)
(59,477
)
Cash flows – Financing
activities:
Payments on senior notes
-
-
(1,243,548
)
Proceeds from issuance of senior notes
-
-
498,280
Payments on term loan
(40,000
)
(32,500
)
(7,500
)
Proceeds from issuance of long-term
debt
-
-
300,000
Payment of deferred loan cost
-
-
(6,739
)
Proceeds from short-term financing
280,000
45,000
-
Payments on short-term financing
(280,000
)
(45,000
)
-
Proceeds under other financing
arrangements
1,114
1,733
1,408
Payments under other financing
arrangements
(2,604
)
(1,790
)
(2,086
)
Payments related to tax withholding for
stock-based compensation
(6,245
)
(4,683
)
(5,984
)
Repurchases of common shares
-
-
(17,531
)
Payments of dividends
(104,955
)
(104,549
)
(104,604
)
Other
(324
)
(8,223
)
(11,403
)
Net cash flows provided (used) by
financing activities
(153,014
)
(150,012
)
(599,707
)
Effect of exchange rate changes on
cash
6,529
(27,373
)
(27,757
)
Net change in cash and cash
equivalents
110,707
(223,481
)
(436,822
)
Cash and cash equivalents at beginning of
period
434,971
658,452
1,095,274
Cash and cash equivalents at end of
period
$
545,678
$
434,971
$
658,452
Income taxes paid (net of refunds)
$
119,275
$
60,085
$
65,621
Interest paid
64,865
41,629
72,247
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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240220188620/en/
Investor Contacts: Jay Roueche, Vice President, Investor
Relations & Treasurer, (972) 443-6560 Tarek Zeni, Director,
Investor Relations, (469) 420-4045 Media Contact: Wes
Warnock, Vice President, Corporate Communications & Public
Affairs, (972) 443-6900
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