Flowserve : First Quarter 2025 Press Release

Published: 2025-04-29 19:34:13 ET FLS

Strong Start to the Year; Reaffirms Full-year 2025 Guidance

DALLAS--(BUSINESS WIRE)-- Flowserve Corporation (NYSE: FLS), a leading provider of flow control products and services for the global infrastructure markets, reported its financial results for the first quarter ended March 31, 2025.

Highlights:

Management Commentary:

"Our first quarter results were a strong start to the year, with robust bookings growth, margin expansion, and earnings acceleration all driven by healthy end markets and improved execution. These results demonstrate the strength of our diversified portfolio and the exceptional performance of our associates around the world operating under the Flowserve Business System," said Scott Rowe, Flowserve's President and Chief Executive Officer.

Rowe continued, "As we pivot to the second quarter and rest of the year, the macro environment has become more dynamic as tariffs increase global uncertainty. While we continue to monitor the environment closely, I am confident in our ability to navigate these rapidly evolving challenges. With $2.9 billion of backlog, improved execution, and expected benefits from the Flowserve Business System, we are positioned well to create value for our customers, shareholders, and associates."

Key Figures:

(dollars in millions, except per share)

2025 Q1

2024 Q1

Change

Backlog

$2,902.9

$2,612.5

11.1%

Bookings

$1,226.4

$1,038.3

18.1%

Original Equipment

$537.8

$462.5

16.3%

Aftermarket

$688.6

$575.8

19.6%

Sales5

$1,144.5

$1,087.5

5.2%

Organic

410 bps

Acquisitions

330 bps

Foreign Exchange

(220) bps

Operating Margin

11.5%

10.4%

110 bps

Adjusted Operating Margin

12.8%

10.9%

190 bps

Earnings Per Share

$0.56

Adjusted Earnings Per Share

$0.72

$0.58

24.1%

Cash From Operations

($49.9)

$62.3

(180.2%)

2025 Guidance:

The Company reaffirmed its full-year 2025 guidance communicated on February 18, 2025, including Adjusted EPS target range of $3.10 to $3.30. 2025 guidance reflects the estimated impact of recently announced tariffs, net of estimated mitigating actions.

Guidance

Organic sales growth

+3% to +5%

Impact from acquisitions

Approx. +300 bps

Impact from foreign exchange translation

Approx. (100) to 0 bps

Total sales growth

+5% to +7%

Adjusted EPS

$3.10 to $3.30

Net interest expense

Approx. $70 million

Adjusted tax rate

Approx. 21%

Capital expenditures

$80 to $90 million

Webcast and Conference Call Instructions:

Flowserve will host its conference call to discuss first quarter results on Wednesday, April 30, at 10:00 a.m. Eastern Time. The call can be accessed by shareholders and other interested parties on Flowserve's Investors page.

Footnotes (pages 1-2)

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 gross margin is calculated by dividing adjusted gross profit by sales. Adjusted gross profit is derived by excluding the adjusted items. 3 Adjusted operating margin is calculated by dividing adjusted operating income by sales. Adjusted operating income is derived by excluding the adjusted items. 4 Adjusted 2025 EPS excludes potential realignment expenses, below-the-line foreign currency effects, and certain other discrete items which may arise during the year and utilizes foreign exchange rates of the prior 30-day period and approximately 132 million fully diluted shares. 5 Organic is defined as the change in Sales, as defined by U.S. GAAP, excluding the impacts of currency translation and acquisitions. The impact of currency translation is calculated by translating current year results on a monthly basis at prior year exchange rates for the same period.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

Three Months Ended March 31,

(Amounts in thousands, except per share data)

2025

2024

Sales

1,144,543

1,087,479

Cost of sales

(775,209

)

(748,511

)

Gross profit

369,334

338,968

Selling, general and administrative expense

(243,177

)

(228,418

)

Net earnings from affiliates

5,732

2,529

Operating income

131,889

113,079

Interest expense

(19,175

)

(15,317

)

Interest income

1,745

1,169

Other income (expense), net

(17,259

)

(874

)

Earnings (loss) before income taxes

97,200

98,057

(Provision for) benefit from income taxes

(17,743

)

(20,142

)

Net earnings (loss), including noncontrolling interests

79,457

77,915

Less: Net earnings attributable to noncontrolling interests

(5,552

)

(3,695

)

Net earnings (loss) attributable to Flowserve Corporation

73,905

74,220

Net earnings (loss) per share attributable to Flowserve Corporation common shareholders:

Basic

0.56

Diluted

0.56

Weighted average shares - basic

131,566

131,510

Weighted average shares - diluted

132,670

132,368

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 March 31, 2025

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

369,334

243,177

131,889

(17,259

)

17,743

73,905

18.3

0.56

Reported as a percent of sales

32.3

21.2

11.5

-1.5

1.6

6.5

Realignment charges (a)

10,015

1,304

8,711

1,871

6,840

21.5

0.05

Acquisition related (b)

(1,281

)

1,281

301

980

23.5

0.01

Purchase accounting step-up and intangible asset amortization (c)

3,475

(1,300

)

4,775

1,361

3,414

28.5

0.03

Discrete items (d)(e)

(383

)

416

1,500

451

1,465

23.5

0.01

Below-the-line foreign exchange impacts (f)

11,373

2,445

8,928

21.5

0.07

Adjusted

382,857

241,517

147,072

(4,386

)

24,172

95,532

19.3

0.72

Adjusted as a percent of sales

33.5

21.1

12.8

-0.4

2.1

8.3

Note: Amounts may not calculate due to rounding

(a) Charges represent realignment costs incurred as a result of realignment programs of which $1,500 is non-cash.

(b) Charge represents acquisition and integration related costs associated with the MOGAS acquisition.

(c) Charge represents amortization of step-up in value of acquired inventories and acquisition related intangible assets associated with the MOGAS acquisition.

(d) Charge represents share-based compensation expense associated with a one-time discretionary restricted stock grant, subject to three-year cliff vesting, provided to certain employees in conjunction with the freeze of our US Qualified pension plan.

(e) Charge represents a pension settlement accounting loss incurred in conjunction with the freeze of our US Qualified pension plan.

(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.

Three Months Ended March 31, 2024

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

338,968

228,418

113,079

(874

)

20,142

74,220

20.5

0.56

Reported as a percent of sales

31.2

21.0

10.4

-0.1

1.9

6.8

Realignment charges (a)

5,673

(1,494

)

7,167

723

6,444

10.1

0.05

Discrete item (b)

2,000

(2,000

)

(2,000

)

0.0

(0.02

)

Below-the-line foreign exchange impacts (c)

(1,323

)

(51

)

(1,273

)

3.8

(0.01

)

Adjusted

344,641

228,924

118,246

(2,197

)

20,814

77,392

20.4

0.58

Adjusted as a percent of sales

31.7

21.1

10.9

-0.2

1.9

7.1

Note: Amounts may not calculate due to rounding

(a) Charges represent realignment costs incurred as a result of realignment programs of which $800 is non-cash.

(b) Represents a reduction to reserves associated with our ongoing financial exposure in Russia that were adjusted for Non-GAAP measures when established in 2022.

(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.

(Unaudited)

FLOWSERVE PUMPS DIVISION

Three Months Ended March 31,

(Amounts in millions, except percentages)

2025

2024

Bookings

852.9

703.5

Sales

783.1

769.4

Gross profit

268.5

247.9

Gross profit margin

34.3

32.2

SG&A

137.7

139.7

Segment operating income

136.5

110.9

Segment operating income as a percentage of sales

17.4

14.4

FLOW CONTROL DIVISION

Three Months Ended March 31,

(Amounts in millions, except percentages)

2025

2024

Bookings

376.0

341.1

Sales

364.1

320.5

Gross profit

100.2

92.7

Gross profit margin

27.5

28.9

SG&A

68.7

58.0

Segment operating income

31.5

34.7

Segment operating income as a percentage of sales

8.6

10.8

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 March 31, 2025

Gross

Profit

Selling,

General &

Administrative

Expense

Operating

Income

Three Months Ended March 31, 2024

Gross

Profit

Selling,

General &

Administrative

Expense

Operating

Income

Reported

268,462

137,680

136,515

Reported

247,938

139,710

110,894

Reported as a percent of sales

34.3

17.6

17.4

Reported as a percent of sales

32.2

18.2

14.4

Realignment charges (a)

2,979

998

1,981

Realignment charges (a)

5,044

(1,041

)

6,085

Discrete items (b)

(125

)

153

Discrete item (b)

2,000

(2,000

)

Adjusted

271,469

138,553

138,649

Adjusted

252,982

140,669

114,979

Adjusted as a percent of sales

34.7

17.7

Adjusted as a percent of sales

32.9

18.3

14.9

Flow Control Division

Three Months Ended March 31, 2025

Gross

Profit

Selling,

General &

Administrative

Expense

Operating

Income

Three Months Ended March 31, 2024

Gross

Profit

Selling,

General &

Administrative

Expense

Operating

Income

Reported

100,187

68,705

31,482

Reported

92,695

57,987

34,708

Reported as a percent of sales

27.5

18.9

8.6

Reported as a percent of sales

28.9

18.1

10.8

Realignment charges (a)

7,102

121

6,981

Realignment charges (a)

767

(114

)

881

Acquisition related (c)

(1,281

)

1,281

Adjusted

93,462

57,873

35,589

Purchase accounting step-up and intangible asset amortization (d)

3,475

(1,300

)

4,775

Adjusted as a percent of sales

29.2

18.1

11.1

Discrete items (b)

(64

)

Adjusted

110,768

66,181

44,587

Adjusted as a percent of sales

30.4

18.2

12.2

Note: Amounts may not calculate due to rounding

(a) Charges represent realignment costs incurred as a result of realignment programs of which $1,500 is non-cash.

(a) Charges represent realignment costs incurred as a result of realignment programs of which $800 is non-cash.

(b) Charge represents share-based compensation expense associated with a one-time discretionary restricted stock grant, subject to three-year cliff vesting, provided to certain employees in conjunction with the freeze of our US Qualified pension plan.

(b) Represents a reduction to reserves associated with our ongoing financial exposure in Russia that were adjusted for Non-GAAP measures when established in 2022.

(d) Charge represents amortization of step-up in value of acquired inventories and acquisition related intangible assets associated with the MOGAS acquisition.

1st Quarter 2025 - Segment Results

(dollars in millions, comparison vs. 2024 first quarter, unaudited)

FPD

FCD

1st Qtr

Bookings

852.9

376.0

- vs. prior year

149.4

21.2

34.9

10.2

- on constant currency

169.7

24.1

39.9

11.7

Sales

783.1

364.1

- vs. prior year

13.7

1.8

43.6

13.6

- on constant currency

32.6

4.2

48.9

15.3

Gross Profit

268.5

100.2

- vs. prior year

8.3

8.1

Gross Margin (% of sales)

34.3

27.5

- vs. prior year (in basis points)

210 bps

(140) bps

Operating Income

136.5

31.5

- vs. prior year

25.6

23.1

-3.2

-9.3

- on constant currency

29.1

26.2

-2.4

-7.0

Operating Margin (% of sales)

17.4

8.6

- vs. prior year (in basis points)

300 bps

(220) bps

Adjusted Operating Income *

138.6

44.6

- vs. prior year

23.7

20.6

9.0

25.3

- on constant currency

27.1

23.6

9.8

27.6

Adj. Oper. Margin (% of sales)*

17.7

12.2

- vs. prior year (in basis points)

280 bps

110 bps

Backlog

2,018.7

889.4

* Adjusted Operating Income and Adjusted Operating Margin exclude realignment charges and other specific discrete items

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

March 31,

December 31,

(Amounts in thousands, except par value)

2025

2024

ASSETS

Current assets:

Cash and cash equivalents

540,804

675,441

Accounts receivable, net of allowance for expected credit losses of $85,444 and $79,059, respectively

1,043,707

976,739

Contract assets, net of allowance for expected credit losses of $3,997 and $3,404, respectively

312,154

298,906

Inventories

841,546

837,254

Prepaid expenses and other

126,696

116,157

Total current assets

2,864,907

2,904,497

Property, plant and equipment, net of accumulated depreciation of $1,173,858 and $1,142,667, respectively

542,490

539,703

Operating lease right-of-use assets, net

161,743

159,400

Goodwill

1,303,111

1,286,295

Deferred taxes

219,849

221,742

Other intangible assets, net

184,689

188,604

Other assets, net of allowance for expected credit losses of $65,940 and $66,081, respectively

206,509

200,580

Total assets

5,483,298

5,500,821

LIABILITIES AND EQUITY

Current liabilities:

Accounts payable

537,827

545,310

Accrued liabilities

481,888

561,486

Contract liabilities

284,697

283,670

Debt due within one year

44,197

44,059

Operating lease liabilities

33,689

33,559

Total current liabilities

1,382,298

1,468,084

Long-term debt due after one year

1,451,214

1,460,132

Operating lease liabilities

150,825

149,838

Retirement obligations and other liabilities

369,696

371,055

Shareholders' equity:

Preferred shares, $1.00 par value

Shares authorized - 1,000, no shares issued

Common shares, $1.25 par value

220,991

Shares authorized - 305,000

Shares issued - 176,793 and 176,793, respectively

Capital in excess of par value

482,529

502,045

Retained earnings

4,071,710

4,025,750

Treasury shares, at cost - 45,616 and 45,688 shares, respectively

(2,010,045

)

(2,007,869

)

Deferred compensation obligation

8,114

8,172

Accumulated other comprehensive loss

(693,528

)

(741,424

)

Total Flowserve Corporation shareholders' equity

2,079,771

2,007,665

Noncontrolling interests

49,494

44,047

Total equity

2,129,265

2,051,712

Total liabilities and equity

5,483,298

5,500,821

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

Three Months Ended March 31,

(Amounts in thousands)

2025

2024

Cash flows - Operating activities:

Net earnings, including noncontrolling interests

79,457

77,915

Adjustments to reconcile net earnings to net cash provided (used) by operating activities:

Depreciation

18,831

19,326

Amortization of intangible and other assets

5,571

2,254

Stock-based compensation

8,656

8,657

Foreign currency, asset write downs and other non-cash adjustments

(7,350

)

1,189

Change in assets and liabilities:

Accounts receivable, net

(50,679

)

(39,687

)

Inventories

8,804

(11,452

)

Contract assets, net

(9,447

)

(8,051

)

Prepaid expenses and other assets, net

6,669

(16,001

)

Accounts payable

(16,861

)

5,053

Contract liabilities

(3,648

)

(6,372

)

Accrued liabilities

(89,467

)

30,917

Retirement obligations and other liabilities

(5,448

)

(2,426

)

Net deferred taxes

4,978

935

Net cash flows provided (used) by operating activities

(49,934

)

62,257

Cash flows - Investing activities:

Capital expenditures

(11,738

)

(13,610

)

Proceeds from disposal of assets

462

Net cash flows (used) by investing activities

(11,276

)

(13,586

)

Cash flows - Financing activities:

Payments on term loan

(9,375

)

(15,000

)

Proceeds under other financing arrangements

150

Payments under other financing arrangements

(101

)

(25

)

Repurchases of common shares

(21,088

)

(2,549

)

Payments related to tax withholding for stock-based compensation

(11,063

)

(8,857

)

Payments of dividends

(27,617

)

(27,654

)

Contingent consideration payment related to acquired business

(15,000

)

Other

(138

)

(201

)

Net cash flows (used) by financing activities

(84,232

)

(54,214

)

Effect of exchange rate changes on cash and cash equivalents

10,805

(8,154

)

Net change in cash and cash equivalents

(134,637

)

(13,697

)

Cash and cash equivalents at beginning of period

675,441

545,678

Cash and cash equivalents at end of period

540,804

531,981

About Flowserve:

Flowserve Corporation 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 website 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: 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 energy, chemical, power generation and general 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 and 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; the impact of public health emergencies, such as outbreaks of epidemics, pandemics, and contagious diseases, on our business and operations; increased aging and slower collection of receivables, particularly in Latin America and other emerging markets; potential adverse effects resulting from the implementation of new tariffs and related retaliatory actions and changes to or uncertainties related to tariffs and trade agreements; our exposure to fluctuations in foreign currency exchange rates, including in hyperinflationary countries such as 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; if we are not able to maintain our competitive position by successfully developing and introducing new products and integrate new technologies, including artificial intelligence and machine learning; 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 United States, 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.

Flowserve Contacts Investor Contacts: Brian Ezzell, Vice President, Investor Relations, Treasurer & Corporate Finance, (469) 420-3222 Tarek Zeni, Director, Investor Relations, (469) 420-4045

Media Contact: Wes Warnock, Vice President, Marketing, Communications & Public Affairs, (972) 443-6900

Disclaimer

Flowserve Corporation published this content on April 29, 2025, and is solely responsible for the information contained herein. Distributed via Public Technologies (PUBT), unedited and unaltered, on April 29, 2025 at 23:24 UTC.