Nov 1, 2017   SOURCE: BusinessWire

Flowserve Corporation Reports Third Quarter 2017 Results

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, 2017.

Third Quarter 2017 Highlights (all comparisons to 2016 third quarter, unless otherwise noted)

  • Reported Earnings Per Share (EPS) of $0.36 and Adjusted EPS[1] of $0.37
    • Both Reported & Adjusted EPS include $0.04 of certain discrete inventory and accounts receivable reserves
  • Sales were $883 million, down 6.6%, including an approximately 2% negative impact related to divested businesses
    • Aftermarket sales were $439 million, up 6.4%, or 5.1% on a constant currency basis
  • Reported gross and operating margins of 30.3% and 8.4%
    • Adjusted gross and operating margins[2] were 31.9% and 9.3%
  • Total bookings were $893 million, down 6.9%, or 8.6% on a constant currency basis, and included approximately 2% negative impact related to divested businesses
    • Aftermarket bookings were $454 million, or 51% of total bookings, up 0.5%, or down 0.8% on a constant currency basis
    • Total book-to-bill was 1.01
  • Backlog at September 30, 2017 was $2.1 billion, up 12.5% versus 2016 year-end

“Flowserve’s third quarter results were largely in-line with our expectations for the period, although our results were impacted by natural disasters, working capital reserves and bookings headwinds from ongoing delays in customer final investment decisions,” said Scott Rowe, Flowserve’s president and chief executive officer. “Our aftermarket business remained resilient, delivering solid revenue growth and bookings stability in the quarter. While the Industrial Product Division (IPD) segment’s turnaround effort is progressing slower than we would like, we are confident that the new IPD team is driving the necessary actions to deliver future results. Looking ahead, we continue to expect seasonal improvement in the fourth quarter, including potentially increased Gulf Coast activity as customers address hurricane damage.”

Rowe added, “We are well positioned to pursue operational improvements throughout the company as part of the developing Flowserve 2.0 strategy. We believe our markets are at, or near, the bottom of the cycle, and that Flowserve will be better positioned to capitalize on growth opportunities as market conditions improve. We remain focused on our strategic approach to simplify our business model, be market led and customer focused, while driving an efficient, flexible cost structure and delivering value to our customers and shareholders throughout market cycles.”

Full Year 2017 Guidance

Flowserve narrowed its 2017 guidance ranges and now expects Reported and Adjusted[3] EPS target ranges of $1.05 to $1.15 and $1.30 to $1.40, respectively. Both EPS target ranges are based on an expected 7 to 9 percent decline in revenues year-over-year. Adjusted EPS guidance also anticipates a fourth quarter tax rate, of approximately 30%, and excludes expected realignment expense, as well as the potential impact of below-the-line foreign currency effects and certain other discrete items.

Third Quarter 2017 Results Conference Call

Flowserve will host its conference call with the financial community on Thursday, November 2nd 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 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 2017 EPS will exclude the Company’s realignment expenses, the impact from other specific one-time events and below-the-line foreign currency effects and utilizes year-end 2016 FX rates and approximately 131 million fully diluted shares.

_ FX headwind is calculated by comparing the difference between the actual average FX rates of 2016 and the year-end 2016 spot rates both as applied to our 2017 expectations, divided by the number of shares expected for 2017.

About Flowserve

Flowserve Corp. is one of the world’s leading providers of fluid motion and control products and services. Operating in more than 55 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: 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; 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; our ability to execute and realize the expected financial benefits from our strategic manufacturing optimization and realignment initiatives; economic, political and other risks associated with our international operations, including military actions or trade embargoes 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; 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; a foreign government investigation regarding our participation in the United Nations Oil-for-Food Program; expectations regarding acquisitions and the integration of acquired businesses; our ability to anticipate and manage cybersecurity risk, including the risk of potential business disruptions or financial losses; 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; 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; 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)   2017     2016  
 
Sales $ 883,380 $ 945,939
Cost of sales   (615,848 )   (667,960 )
Gross profit 267,532 277,979
Selling, general and administrative expense (206,295 ) (281,261 )
Gain on sale of businesses 9,864 -
Net earnings from affiliates   2,918     3,394  
Operating income 74,019 112
Interest expense (15,043 ) (15,141 )
Interest income 1,108 924
Other income, net   8,285     1,899  
Earnings (loss) before income taxes 68,369 (12,206 )
Provision for income taxes   (19,628 )   (2,827 )
Net earnings (loss), including noncontrolling interests 48,741 (15,033 )
Less: Net earnings attributable to noncontrolling interests   (1,136 )   (808 )
Net earnings (loss) attributable to Flowserve Corporation $ 47,605   $ (15,841 )
 
Net earnings per share attributable to Flowserve Corporation common shareholders:
Basic $ 0.36 $ (0.12 )
Diluted 0.36 (0.12 )
 
Cash dividends declared per share $ 0.19 $ 0.19
                   
 
RECONCILIATION OF NON-GAAP MEASURES
(Unaudited)
 
Three Months Ended September 30, 2017
(Amounts in thousands, except per share data) As Reported (a) Realignment (1) Other Items As Adjusted
 
Sales $ 883,380 $ - $ - $ 883,380
Gross profit 267,532 (14,220 ) - 281,752
Gross margin 30.3 % - - 31.9 %
 
Selling, general and administrative expense (206,295 ) (2,571 ) (1,189 ) (3) (202,535 )
Gain on sale of businesses 9,864 - 9,864 (4) -
 
Operating income 74,019 (16,791 ) 8,675 82,135
Operating income as a percentage of sales 8.4 % - - 9.3 %
 
Interest and other expense, net (5,650 ) - 8,447 (5) (14,097 )
 
Earnings before income taxes 68,369 (16,791 ) 17,122 68,038
Provision for income taxes (19,628 ) 1,953 (2) (3,228 ) (6) (18,353 )
Tax Rate 28.7 % 11.6 % 18.9 % 27.0 %
 
Net earnings attributable to Flowserve Corporation $ 47,605 $ (14,838 ) $ 13,894 $ 48,549
 
Net earnings per share attributable to Flowserve Corporation common shareholders:
Basic $ 0.36 $ (0.11 ) $ 0.11 $ 0.37
Diluted $ 0.36 $ (0.11 ) $ 0.11 $ 0.37
 
Basic number of shares used for calculation 130,760 130,760 130,760 130,760
Diluted number of shares used for calculation 131,396 131,396 131,396 131,396
 
(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, partially offset by $1.000 million of realignment expense recorded in provision for income taxes. Realignment expense in certain jurisdictions is not tax deductible.
(3) Represents SIHI integration costs and purchase price adjustments ("PPA")
(4) Represents gain related to the sale of Vogt business
(5) Represents below-the-line foreign exchange impacts
(6) Includes tax impact of items above
                   
 
RECONCILIATION OF NON-GAAP MEASURES
(Unaudited)
 
Three Months Ended September 30, 2016
(Amounts in thousands, except per share data) As Reported (a) Realignment (1) Other Items As Adjusted
 
Sales $ 945,939 $ - $ - $ 945,939
Gross profit (loss) 277,979 (24,503 ) (8,156 ) (3) 310,638
Gross margin (loss) 29.4 % - - 32.8 %
 
Selling, general and administrative expense (281,261 ) (6,983 ) (76,163 ) (4) (198,115 )
 
Operating income 112 (31,486 ) (84,319 ) 115,917
Operating income (loss) as a percentage of sales 0.0 % - - 12.3 %
 
Interest and other (expense) income, net (12,318 ) - 1,357 (5) (13,675 )
 
(Loss) earnings before income taxes (12,206 ) (31,486 ) (82,962 ) 102,242
Provision for income taxes (2,827 ) 4,203 (2) 22,107 (6) (29,137 )
Tax Rate -23.2 % 13.3 % 26.6 % 28.5 %
 
Net (loss) earnings attributable to Flowserve Corporation $ (15,841 ) $ (27,283 ) $ (60,855 ) $ 72,297
 
Net earnings per share attributable to Flowserve Corporation common shareholders:
Basic $ (0.12 ) $ (0.21 ) $ (0.47 ) $ 0.55
Diluted $ (0.12 ) $ (0.21 ) $ (0.46 ) $ 0.55
 
Basic number of shares used for calculation 130,299 130,558 130,558 130,558
Diluted number of shares used for calculation 130,299 131,102 131,102 131,102
 
(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, partially offset by $5.400 million of realignment expense recorded in provision for income taxes
(3) Represents Brazil inventory write-down of $6.290 million and Venezuela inventory reserve of $1.866 million
(4) Represents Venezuela accounts receivable reserve of $73.533 million and SIHI integration costs/purchase price adjustments ("PPA") of $2.630 million
(5) Represents below-the-line foreign exchange impacts
(6) Includes tax impact of items above. There is no tax impact associated with the Brazil inventory write-down.
       
 
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Nine Months Ended September 30,
(Amounts in thousands, except per share data)   2017     2016  
 
Sales $ 2,626,762 $ 2,919,553
Cost of sales   (1,845,796 )   (2,015,755 )
Gross profit 780,966 903,798
Selling, general and administrative expense (681,181 ) (747,513 )
Gain on sale of businesses 141,158 -
Net earnings from affiliates   9,027     8,522  
Operating income 249,970 164,807
Interest expense (44,689 ) (44,982 )
Interest income 2,373 2,243
Other (expense) income, net   (11,602 )   1,070  
Earnings before income taxes 196,052 123,138
Provision for income taxes   (85,836 )   (49,518 )
Net earnings, including noncontrolling interests 110,216 73,620
Less: Net earnings attributable to noncontrolling interests   (1,682 )   (1,222 )
Net earnings attributable to Flowserve Corporation $ 108,534   $ 72,398  
 
Net earnings per share attributable to Flowserve Corporation common shareholders:
Basic $ 0.83 $ 0.56
Diluted 0.83 0.55
 
 
Cash dividends declared per share $ 0.57 $ 0.57
                   
 
RECONCILIATION OF NON-GAAP MEASURES
(Unaudited)
 
Nine Months Ended September 30, 2017
(Amounts in thousands, except per share data) As Reported (a) Realignment (1) Other Items As Adjusted
 
Sales $ 2,626,761 $ - $ - $ 2,626,761
Gross profit 780,965 (33,371 ) (16,928 ) (3) 831,264
Gross margin 29.7 % - - 31.6 %
 
Selling, general and administrative expense (681,180 ) (25,636 ) (29,683 ) (4) (625,861 )
Gain on sale of business 141,158 - 141,158 (5) -
 
Operating income 249,970 (59,007 ) 94,547 214,430
Operating income as a percentage of sales 9.5 % - - 8.2 %
 
Interest and other expense, net (53,919 ) - (9,671 ) (6) (44,248 )
 
Earnings before income taxes 196,051 (59,007 ) 84,876 170,182
Provision for income taxes (85,836 ) 12,642 (2) (42,726 ) (7) (55,752 )
Tax Rate 43.8 % 21.4 % 50.3 % 32.8 %
 
Net earnings attributable to Flowserve Corporation $ 108,534 $ (46,365 ) $ 42,150 $ 112,749
 
Net earnings per share attributable to Flowserve Corporation common shareholders:
Basic $ 0.83 $ (0.35 ) $ 0.32 $ 0.86
Diluted $ 0.83 $ (0.35 ) $ 0.32 $ 0.86
 
Basic number of shares used for calculation 130,685 130,685 130,685 130,685
Diluted number of shares used for calculation 131,338 131,338 131,338 131,338
 
(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 reserve for costs incurred related to a contract to supply oil and gas platform equipment to an end user in Latin America
(4) Represents $3.204 million of SIHI integration costs and purchase price adjustments ("PPA"), $26.042 million of Brazil property, plant and equipment impairment charge and $0.437 million reserve for costs incurred related to a contract to supply oil and gas platform equipment to an end user in Latin America
(5) Represents gain related to the sale of Gestra and Vogt businesses
(6) Represents below-the-line foreign exchange impacts
(7) Includes tax impact of items above. There is no tax impact associated with the Brazil property, plant and equipment impairment charge
                   
 
RECONCILIATION OF NON-GAAP MEASURES
(Unaudited)
 
Nine Months Ended September 30, 2016
(Amounts in thousands, except per share data) As Reported (a) Realignment (1) Other Items As Adjusted
 
Sales $ 2,919,553 $ - $ - $ 2,919,553
Gross profit 903,798 (42,910 ) (12,744 ) (3) 959,452
Gross margin 31.0 % - - 32.9 %
 
Selling, general and administrative expense (747,514 ) (22,185 ) (79,594 ) (4) (645,735 )
 
Operating income 164,806 (65,095 ) (92,338 ) 322,239
Operating income as a percentage of sales 5.6 % - - 11.0 %
 
Interest and other expense, net (41,668 ) - 2,467 (5) (44,135 )
 
Earnings before income taxes 123,138 (65,095 ) (89,871 ) 278,104
Provision for income taxes (49,516 ) 14,548 (2) 22,856 (6) (86,920 )
Tax Rate 40.2 % 22.3 % 25.4 % 31.3 %
 
Net earnings attributable to Flowserve Corporation $ 72,398 $ (50,547 ) $ (67,015 ) $ 189,960
 
Net earnings per share attributable to Flowserve Corporation common shareholders:
Basic $ 0.56 $ (0.39 ) $ (0.51 ) $ 1.46
Diluted $ 0.55 $ (0.39 ) $ (0.51 ) $ 1.45
 
Basic number of shares used for calculation 130,385 130,385 130,385 130,385
Diluted number of shares used for calculation 130,907 130,907 130,907 130,907
 
(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, partially offset by $5.400 million of realignment expense recorded in provision for income taxes
(3) Represents Brazil inventory write-down of $10.878 million and Venezuela inventory reserve of $1.866 million
(4) Represents Venezuela accounts receivable reserve of $73.533 million and SIHI integration costs/purchase price adjustments ("PPA") of $6.061 million
(5) Represents below-the-line foreign exchange impacts
(6) Includes tax impact of items above. There is no tax impact associated with the Brazil inventory write-down.
       
 
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30, December 31,
(Amounts in thousands, except par value)   2017     2016  
 
ASSETS
Current assets:
Cash and cash equivalents $ 502,143 $ 367,162
Accounts receivable, net of allowance for doubtful accounts of $65,106 and $51,920, respectively 851,246 882,638
Inventories, net 951,598 897,690
Prepaid expenses and other   134,023     150,199  
Total current assets 2,439,010 2,297,689
Property, plant and equipment, net of accumulated depreciation of $967,458 and $882,151, respectively 673,555 724,805
Goodwill 1,211,544 1,205,054
Deferred taxes 93,638 83,722
Other intangible assets, net 212,425 214,527
Other assets, net   203,968     183,126  
Total assets $ 4,834,140   $ 4,708,923  
 
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable $ 360,844 $ 412,087
Accrued liabilities 706,838 680,986
Debt due within one year   80,635     85,365  
Total current liabilities 1,148,317 1,178,438
Long-term debt due after one year 1,506,057 1,485,258
Retirement obligations and other liabilities 412,137 407,839
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 488,249 491,848
Retained earnings 3,634,750 3,598,396
Treasury shares, at cost – 46,503 and 46,980 shares, respectively (2,061,054 ) (2,078,527 )
Deferred compensation obligation 6,256 8,507
Accumulated other comprehensive loss   (540,504 )   (624,788 )
Total Flowserve Corporation shareholders' equity 1,748,688 1,616,427
Noncontrolling interests   18,941     20,961  
Total equity   1,767,629     1,637,388  
Total liabilities and equity $ 4,834,140   $ 4,708,923  
       
 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended September 30,
(Amounts in thousands)   2017     2016  
 
Cash flows – Operating activities:
Net earnings, including noncontrolling interests $ 110,216 $ 73,620
Adjustments to reconcile net earnings to net cash provided (used) by operating activities:
Depreciation 75,177 74,875
Amortization of intangible and other assets 12,767 12,424
(Gain) loss on dispositions of businesses (141,158 ) 7,664
Stock-based compensation 20,291 29,966
Latin America accounts receivable reserve - 73,451
Foreign currency, asset impairment and other non-cash adjustments 24,696 (1,037 )
Change in assets and liabilities:
Accounts receivable, net 63,835 69,818
Inventories, net (20,355 ) (31,462 )
Prepaid expenses and other 43,546 (58,743 )
Other assets, net (21,090 ) (19,512 )
Accounts payable (68,012 ) (98,782 )
Accrued liabilities and income taxes payable (6,702 ) (82,318 )
Retirement obligations and other (18,720 ) 7,821
Net deferred taxes   (2,131 )   13,155  
Net cash flows provided by operating activities   72,360     70,940  
Cash flows – Investing activities:
Capital expenditures (40,620 ) (64,475 )
Proceeds from disposal of assets 2,977 632
Proceeds from (payments for) dispositions of businesses   208,775     (5,064 )
Net cash flows provided (used) by investing activities   171,132     (68,907 )
Cash flows – Financing activities:
Payments on long-term debt (45,000 ) (45,000 )
Proceeds under other financing arrangements 6,234 24,701
Payments under other financing arrangements (12,560 ) (12,060 )
Payments related to tax withholding for stock-based compensation (6,287 ) (10,267 )
Payments of dividends (74,412 ) (72,960 )
Other   (4,189 )   1,325  
Net cash flows used by financing activities (136,214 ) (114,261 )
Effect of exchange rate changes on cash   27,703     6,654  
Net change in cash and cash equivalents 134,981 (105,574 )
Cash and cash equivalents at beginning of period   367,162     366,444  
Cash and cash equivalents at end of period $ 502,143   $ 260,870  
       
 
SEGMENT INFORMATION
(Unaudited)
ENGINEERED PRODUCT DIVISION Three Months Ended September 30,
(Amounts in millions, except percentages)   2017     2016  
Bookings $ 432.5 $ 497.5
Sales 424.2 458.5
Gross profit 136.5 140.2
Gross profit margin 32.2 % 30.6 %
Segment operating income (loss) 51.8 (22.0 )
Segment operating income (loss) as a percentage of sales 12.2 % (4.8 %)
 
INDUSTRIAL PRODUCT DIVISION Three Months Ended September 30,
(Amounts in millions, except percentages)   2017     2016  
Bookings $ 196.9 $ 189.6
Sales 189.7 203.3
Gross profit 39.3 30.5
Gross profit margin 20.7 % 15.0 %
Segment operating loss (3.6 ) (17.1 )
Segment operating loss as a percentage of sales (1.9 %) (8.4 %)
 
FLOW CONTROL DIVISION Three Months Ended September 30,
(Amounts in millions, except percentages)   2017     2016  
Bookings $ 285.9 $ 291.9
Sales 287.7 299.3
Gross profit 91.7 108.0
Gross profit margin 31.9 % 36.1 %
Segment operating income 48.5 53.7
Segment operating income as a percentage of sales 16.9 % 17.9 %
       
 
SEGMENT INFORMATION
(Unaudited)
ENGINEERED PRODUCT DIVISION

Nine Months Ended September 30,

(Amounts in millions, except percentages)   2017     2016  
Bookings $ 1,357.2 $ 1,387.5
Sales 1,276.6 1,444.2
Gross profit 403.8 459.5
Gross profit margin 31.6 % 31.8 %
Segment operating income 106.9 97.4
Segment operating income as a percentage of sales 8.4 % 6.7 %
 
INDUSTRIAL PRODUCT DIVISION

Nine Months Ended September 30,

(Amounts in millions, except percentages)   2017     2016  
Bookings $ 616.6 $ 609.5
Sales 559.9 615.8
Gross profit 98.1 128.5
Gross profit margin 17.5 % 20.9 %
Segment operating loss (46.0 ) (10.4 )
Segment operating loss as a percentage of sales (8.2 %) (1.7 %)
 
FLOW CONTROL DIVISION

Nine Months Ended September 30,

(Amounts in millions, except percentages)   2017     2016  
Bookings $ 911.2 $ 913.8
Sales 843.5 915.5
Gross profit 277.4 315.0
Gross profit margin 32.9 % 34.4 %
Segment operating income 254.1 140.5
Segment operating income as a percentage of sales 30.1 % 15.3 %
 
 
Third Quarter and Year-to-Date 2017 - Segment Results
(dollars in millions, comparison vs. 2016 third quarter and year-to-date, unaudited)
                       
EPD IPD FCD
3rd Qtr YTD 3rd Qtr YTD 3rd Qtr YTD
Bookings $ 432.5 $ 1,357.2 $ 196.9 $ 616.6 $ 285.9 $ 911.2
- vs. prior year -13.1 % -2.2 % 3.9 % 1.2 % -2.1 % -0.3 %
- on constant currency -14.4 % -1.9 % 1.5 % 1.3 % -3.8 % -0.1 %
 
Sales $ 424.2 $ 1,276.6 $ 189.7 $ 559.9 $ 287.7 $ 843.5
- vs. prior year -7.5 % -11.6 % -6.7 % -9.1 % -3.9 % -7.9 %
- on constant currency -8.7 % -11.3 % -8.7 % -8.9 % -5.7 % -7.9 %
 
Gross Profit $ 136.5 $ 403.8 $ 39.3 $ 98.1 $ 91.7 $ 277.4
- vs. prior year -2.6 % -12.1 % 28.9 % -23.7 % -15.1 % -11.9 %
 
Gross Margin (% of sales) 32.2 % 31.6 % 20.7 % 17.5 % 31.9 % 32.9 %
- vs. prior year (in basis points) 160 -20 570 -340 -420 -150
 
Operating Income / (Loss) $ 51.8 $ 106.9 $ (3.6 ) $ (46.0 ) $ 48.5 $ 254.1
- vs. prior year 335.5 % 9.8 % 78.9 % -342.3 % -9.7 % 80.9 %
- on constant currency 331.0 % 12.0 % 82.8 % -339.5 % -10.6 % 83.0 %
 
Operating Margin (% of sales) 12.2 % 8.4 % -1.9 % -8.2 % 16.9 % 30.1 %
- vs. prior year (in basis points) 1700 170 650 -650 -100 1480
 
Adjusted Operating Income / (Loss) * $ 59.5 $ 153.3 $ (0.7 ) $ (3.3 ) $ 44.8 $ 125.7
- vs. prior year -10.5 % -25.7 % -111.7 % -113.4 % -20.8 % -17.0 %
- on constant currency -12.0 % -24.6 % -100.7 % -112.2 % -21.7 % -15.0 %
 
Adj. Oper. Margin (% of sales)* 14.0 % 12.0 % -0.4 % -0.6 % 15.6 % 14.9 %
- vs. prior year (in basis points) -50 -230 -340 -460 -330 -160
 
Backlog $ 1,079.7 $ 437.0 $ 659.8

* Adjusted Operating Income and Adjusted Operating Margin exclude realignment charges, below-the-line FX impacts and other specific discrete items