Flowserve Corporation Reports Second Quarter 2021 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 second quarter ended June 30, 2021.

Second Quarter 2021 Highlights (all comparisons to the 2020 second quarter, unless otherwise noted)1

  • Reported Earnings Per Share (EPS) of $0.35 and Adjusted EPS2 of $0.37
    • Reported EPS includes after-tax adjusted items of $2.6 million, including realignment costs, below-the-line foreign exchange impacts and gain on the sale of business
  • Total bookings were $952.8 million, up 17.9%, or 13.0% on a constant currency basis and up modestly sequentially
    • Original equipment bookings were $427.9 million, or 45% of total bookings, up 17.0%, or 11.7% on a constant currency basis and down 12.3% on a sequential basis
    • Aftermarket bookings were $524.9 million, or 55% of total bookings, up 18.6%, or 14.1% on a constant currency basis and up 14.8% on a sequential basis
  • Sales were $898.2 million, down 2.9%, or 7.1% on a constant currency basis
    • Original equipment sales were $434.5 million, down 6.1%, or 10.7% on a constant currency basis and up 6.8% on a sequential basis
    • Aftermarket sales were $463.7 million, up 0.3%, or down 3.5% on a constant currency basis and up 3.0% on a sequential basis
  • Reported gross and operating margins were 31.0% and 8.0%, respectively
    • Adjusted gross and operating margins3 were 31.4% and 8.5%, respectively
  • Backlog at June 30, 2021 was $1.95 billion, up 5.1% versus December 31, 2020

“Flowserve delivered solid second quarter results, including year-over-year bookings growth of nearly 18 percent, driven by the continued activity in our shorter cycle MRO and aftermarket services,” said Scott Rowe, Flowserve’s president and chief executive officer. “The ongoing progress of our Flowserve 2.0 transformation initiative has delivered results, including a strong sequential increase in Adjusted EPS and incremental margin improvement. Following last year’s disruptive impact of the pandemic and volatile commodity prices, we believe Flowserve is set to build upon the growing momentum in our operations and end-markets.”

Rowe concluded, “Our early cycle markets have clearly begun to recover, and we have confidence that we are approaching an inflection point for larger project opportunities. In addition to the improving outlook in our core energy and chemical markets, we continue to believe that Flowserve is well-positioned to benefit from the expected increase in energy transition and decarbonization investments across our served end-markets. The combination of stronger bookings coupled with our operational progress lays the foundation for escalating earnings growth in the second half of 2021.”

Revised 2021 Guidance4

Flowserve today raised certain of the full-year metrics of our 2021 target range.

 

Revised Target Range

Prior Target Range

Revenues

Down 2.0% to 4.0%

Down 3.0% to 5.0%

Adjusted Earnings Per Share

$1.45 - $1.65

$1.40 - $1.60

Adjusted Tax Rate

21%-23%

22%-24%

Previously announced metrics not shown above are reaffirmed as of today.

Consistent with the prior range, Flowserve’s 2021 Adjusted EPS target range excludes expected realignment charges of approximately $25 million, as well as the potential impact of below-the-line foreign currency effects and certain other discrete items. In a change to the approach for 2021, Flowserve 2.0 transformation-related expenses of approximately 5 cents per share will now be included in both the Company’s reported and adjusted EPS.

Second Quarter 2021 Results Conference Call

Flowserve will host its conference call with the financial community on Friday, August 6th 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 Prior period comparisons are impacted by certain accounting revisions. Reference Flowserve’s Form 8-K filed on November 5, 2020 and Form 10-Q for the period ending June 30, 2021 for additional details.
2 See Reconciliation of Non-GAAP Measures table for detailed reconciliation of reported results to adjusted measures.
3 Adjusted gross and operating margins are calculated by dividing adjusted gross profit and adjusted operating income, respectively, by revenues. Adjusted gross profit and adjusted operating income are derived by excluding the adjusted items. See reconciliation of Non-GAAP Measures table for detailed reconciliation.
4 Adjusted 2021 EPS excludes realignment expenses, the impact from other specific discrete items and below-the-line foreign currency effects and utilizes year-end 2020 FX rates and approximately 131 million fully diluted shares.
- FX impact is calculated by comparing the difference between the actual average FX rates of 2020 and the year-end 2020 spot rates both as applied to our 2021 expectations, divided by the number of shares expected for 2021.

About Flowserve

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

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

The forward-looking statements included in this news release are based on our current expectations, projections, estimates and assumptions. These statements are only predictions, not guarantees. Such forward-looking statements are subject to numerous risks and uncertainties that are difficult to predict. These risks and uncertainties may cause actual results to differ materially from what is forecast in such forward-looking statements, and include, without limitation, the following: the impact of the global outbreak of COVID-19 on our business and operations; a portion of our bookings may not lead to completed sales, and our ability to convert bookings into revenues at acceptable profit margins; changes in global economic conditions and the potential for unexpected cancellations or delays of customer orders in our reported backlog; our dependence on our customers’ ability to make required capital investment and maintenance expenditures; if we are not able to successfully execute and realize the expected financial benefits from our strategic transformation and realignment initiatives, our business could be adversely affected; risks associated with cost overruns on fixed-fee projects and in taking customer orders for large complex custom engineered products; the substantial dependence of our sales on the success of the oil and gas, chemical, power generation and water management industries; the adverse impact of volatile raw materials prices on our products and operating margins; economic, political and other risks associated with our international operations, including military actions, trade embargoes, epidemics or pandemics or changes to tariffs or trade agreements that could affect customer markets, particularly North African, Russian and Middle Eastern markets and global oil and gas producers, and non-compliance with U.S. export/re-export control, foreign corrupt practice laws, economic sanctions and import laws and regulations; increased aging and slower collection of receivables, particularly in Latin America and other emerging markets; our exposure to fluctuations in foreign currency exchange rates, including in hyperinflationary countries such as Venezuela and Argentina; our furnishing of products and services to nuclear power plant facilities and other critical processes; potential adverse consequences resulting from litigation to which we are a party, such as litigation involving asbestos-containing material claims; expectations regarding acquisitions and the integration of acquired businesses; our relative geographical profitability and its impact on our utilization of deferred tax assets, including foreign tax credits; the potential adverse impact of an impairment in the carrying value of goodwill or other intangible assets; our dependence upon second-party suppliers whose failure to perform timely could adversely affect our business operations; the highly competitive nature of the markets in which we operate; environmental compliance costs and liabilities; potential work stoppages and other labor matters; access to public and private sources of debt financing; our inability to protect our intellectual property in the U.S., as well as in foreign countries; obligations under our defined benefit pension plans; our internal control over financial reporting may not prevent or detect misstatements because of its inherent limitations, including the possibility of human error, the circumvention or overriding of controls, or fraud; the recording of increased deferred tax asset valuation allowances in the future or the impact of tax law changes on such deferred tax assets could affect our operating results; our information technology infrastructure could be subject to service interruptions, data corruption, cyber-based attacks or network security breaches, which could disrupt our business operations and result in the loss of critical and confidential information; ineffective internal controls could impact the accuracy and timely reporting of our business and financial results; and other factors described from time to time in our filings with the Securities and Exchange Commission.

All forward-looking statements included in this news release are based on information available to us on the date hereof, and we assume no obligation to update any forward-looking statement.

The Company reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). However, management believes that non-GAAP financial measures which exclude certain non-recurring items present additional useful comparisons between current results and results in prior operating periods, providing investors with a clearer view of the underlying trends of the business. Management also uses these non-GAAP financial measures in making financial, operating, planning and compensation decisions and in evaluating the Company's performance. Throughout our materials we refer to non-GAAP measures as “Adjusted.” Non-GAAP financial measures, which may be inconsistent with similarly captioned measures presented by other companies, should be viewed in addition to, and not as a substitute for, the Company’s reported results prepared in accordance with GAAP.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)

Three Months Ended June 30,

(Amounts in thousands, except per share data)

2021

 

2020

 
Sales

$

898,178

 

$

925,012

 

Cost of sales

 

(619,940

)

 

(655,305

)

Gross profit

 

278,238

 

 

269,707

 

Selling, general and administrative expense

 

(210,789

)

 

(229,343

)

Gain on sale of business

 

1,806

 

 

-

 

Net earnings from affiliates

 

2,907

 

 

3,088

 

Operating income

 

72,162

 

 

43,452

 

Interest expense

 

(14,322

)

 

(12,935

)

Interest income

 

465

 

 

1,149

 

Other income (expense), net

 

(7,850

)

 

(18,907

)

Earnings before income taxes

 

50,455

 

 

12,759

 

Provision for income taxes

 

(2,711

)

 

(4,485

)

Net earnings, including noncontrolling interests

 

47,744

 

 

8,274

 

Less: Net earnings attributable to noncontrolling interests

 

(2,390

)

 

(2,142

)

Net earnings attributable to Flowserve Corporation

$

45,354

 

$

6,132

 

 
Net earnings per share attributable to Flowserve Corporation common shareholders:
Basic

$

0.35

 

$

0.05

 

Diluted

 

0.35

 

 

0.05

 

RECONCILIATION OF NON-GAAP MEASURES

 

 

(Unaudited)

 

 

 

 

Three Months Ended June 30, 2021

(Amounts in thousands, except per share data)

As Reported (a)

 

Realignment (1)

 

 

Other Items

 

 

As Adjusted

 

 

Sales

$

898,178

 

$

-

 

 

$

-

 

 

$

898,178

 

Gross profit

 

278,238

 

 

(3,825

)

 

 

-

 

 

 

282,063

 

Gross margin

 

31.0

%

 

-

 

 

 

-

 

 

 

31.4

%

 

 

Selling, general and administrative expense

 

(210,789

)

 

(1,790

)

 

 

-

 

 

 

(208,999

)

Gain on sale of business

 

1,806

 

 

-

 

 

 

1,806

 

(3)

 

-

 

Net earnings from affiliates

 

2,907

 

 

-

 

 

 

-

 

 

 

2,907

 

 

 

Operating income

 

72,162

 

 

(5,615

)

 

 

1,806

 

 

 

75,971

 

Operating income as a percentage of sales

 

8.0

%

 

-

 

 

 

-

 

 

 

8.5

%

 

 

Interest and other expense, net

 

(21,707

)

 

-

 

 

 

(4,197

)

(4)

 

(17,510

)

 

 

Earnings before income taxes

 

50,455

 

 

(5,615

)

 

 

(2,391

)

 

 

58,461

 

Provision for income taxes

 

(2,711

)

 

4,486

 

(2)

 

959

 

(5)

 

(8,156

)

Tax Rate

 

5.4

%

 

79.9

%

 

 

40.1

%

 

 

14.0

%

 

 

Net earnings attributable to Flowserve Corporation

$

45,354

 

$

(1,129

)

 

$

(1,432

)

 

$

47,915

 

 

 

Net earnings per share attributable to Flowserve Corporation common shareholders:

 

 

Basic

$

0.35

 

$

(0.01

)

 

$

(0.01

)

 

$

0.37

 

Diluted

 

0.35

 

 

(0.01

)

 

 

(0.01

)

 

 

0.37

 

 

 

Basic number of shares used for calculation

 

130,306

 

 

130,306

 

 

 

130,306

 

 

 

130,306

 

Diluted number of shares used for calculation

 

130,805

 

 

130,805

 

 

 

130,805

 

 

 

130,805

 

 

 

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

 

 

 

 

Notes:

 

 

(1) Represents realignment expense incurred as a result of realignment programs.
(2) Includes tax impact of items above and realignment related tax release.
(3) Represents final settlement gain on sale of business in 2018.
(4) Represents below-the-line foreign exchange impacts.
(5) Includes tax impact of items above.
RECONCILIATION OF NON-GAAP MEASURES

 

 

(Unaudited)

 

 

 

 

Three Months Ended June 30, 2020

(Amounts in thousands, except per share data)

As Reported (a)

 

Realignment (1)

 

 

Other Items

 

 

As Adjusted

 

 

Sales

$

925,012

 

$

-

 

 

$

-

 

 

$

925,012

 

Gross profit

 

269,707

 

 

(26,951

)

 

 

-

 

 

 

296,658

 

Gross margin

 

29.2

%

 

-

 

 

 

-

 

 

 

32.1

%

 

 

Selling, general and administrative expense

 

(229,343

)

 

(28,630

)

 

 

(5,618

)

(3)

 

(195,095

)

Net earnings from affiliates

 

3,088

 

 

-

 

 

 

-

 

 

 

3,088

 

 

 

Operating income

 

43,452

 

 

(55,581

)

 

 

(5,618

)

 

 

104,651

 

Operating income as a percentage of sales

 

4.7

%

 

-

 

 

 

-

 

 

 

11.3

%

 

 

Interest and other expense, net

 

(30,693

)

 

-

 

 

 

(18,037

)

(4)

 

(12,656

)

 

 

Earnings before income taxes

 

12,759

 

 

(55,581

)

 

 

(23,655

)

 

 

91,995

 

Provision for income taxes

 

(4,485

)

 

10,736

 

(2)

 

7,554

 

(5)

 

(22,775

)

Tax Rate

 

35.2

%

 

19.3

%

 

 

31.9

%

 

 

24.8

%

 

 

Net earnings attributable to Flowserve Corporation

$

6,132

 

$

(44,845

)

 

$

(16,101

)

 

$

67,078

 

 

 

Net earnings per share attributable to Flowserve Corporation common shareholders:

 

 

Basic

$

0.05

 

$

(0.34

)

 

$

(0.12

)

 

$

0.52

 

Diluted

 

0.05

 

 

(0.34

)

 

 

(0.12

)

 

 

0.51

 

 

 

Basic number of shares used for calculation

 

130,170

 

 

130,170

 

 

 

130,170

 

 

 

130,170

 

Diluted number of shares used for calculation

 

130,730

 

 

130,730

 

 

 

130,730

 

 

 

130,730

 

 

 

(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 Flowserve 2.0 transformation efforts.
(4) Represents below-the-line foreign exchange impacts.
(5) Includes tax impact of items above.
SEGMENT INFORMATION
(Unaudited)
 
FLOWSERVE PUMP DIVISION

Three Months Ended June 30,

(Amounts in millions, except percentages)

2021

 

2020

Bookings

$

668.8

 

$

536.5

 

Sales

 

617.5

 

 

674.1

 

Gross profit

 

196.4

 

 

197.9

 

Gross profit margin

 

31.8

%

 

29.4

%

SG&A

 

133.6

 

 

140.6

 

Gain on sale of business

 

1.8

 

 

-

 

Segment operating income

 

67.8

 

 

60.4

 

Segment operating income as a percentage of sales

 

11.0

%

 

9.0

%

 
FLOW CONTROL DIVISION

Three Months Ended June 30,

(Amounts in millions, except percentages)

2021

 

2020

Bookings

$

289.1

 

$

274.6

 

Sales

 

281.2

 

 

252.3

 

Gross profit

 

84.8

 

 

76.2

 

Gross profit margin

 

30.2

%

 

30.2

%

SG&A

 

48.0

 

 

50.0

 

Segment operating income

 

37.2

 

 

26.2

 

Segment operating income as a percentage of sales

 

13.2

%

 

10.4

%

CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)

Six Months Ended June 30,

(Amounts in thousands, except per share data)

2021

 

2020

 
Sales

$

1,755,486

 

$

1,818,526

 

Cost of sales

 

(1,226,348

)

 

(1,282,360

)

Gross profit

 

529,138

 

 

536,166

 

Selling, general and administrative expense

 

(409,104

)

 

(474,794

)

Gain on sale of business

 

1,806

 

 

-

 

Net earnings from affiliates

 

6,425

 

 

6,283

 

Operating income

 

128,265

 

 

67,655

 

Interest expense

 

(31,101

)

 

(25,898

)

Loss on extinguishment of debt

 

(7,610

)

 

-

 

Interest income

 

1,067

 

 

2,898

 

Other income (expense), net

 

(19,213

)

 

19,295

 

Earnings before income taxes

 

71,408

 

 

63,950

 

Provision for income taxes

 

(6,503

)

 

(41,453

)

Net earnings, including noncontrolling interests

 

64,905

 

 

22,497

 

Less: Net earnings attributable to noncontrolling interests

 

(5,471

)

 

(4,243

)

Net earnings attributable to Flowserve Corporation

$

59,434

 

$

18,254

 

 
Net earnings per share attributable to Flowserve Corporation common shareholders:
Basic

$

0.46

 

$

0.14

 

Diluted

 

0.45

 

 

0.14

 

RECONCILIATION OF NON-GAAP MEASURES

 

 

(Unaudited)

 

 

 

 

Six Months Ended June 30, 2021

(Amounts in thousands, except per share data)

As Reported (a)

 

Realignment (1)

 

 

Other Items

 

 

As Adjusted

 

 

Sales

$

1,755,486

 

$

-

 

 

$

-

 

 

$

1,755,486

 

Gross profit

 

529,138

 

 

(13,231

)

 

 

-

 

 

 

542,369

 

Gross margin

 

30.1

%

 

-

 

 

 

-

 

 

 

30.9

%

 

 

Selling, general and administrative expense

 

(409,104

)

 

(6,086

)

 

 

-

 

 

 

(403,018

)

Gain on sale of business

 

1,806

 

 

-

 

 

 

1,806

 

(3)

 

-

 

Net earnings from affiliates

 

6,425

 

 

-

 

 

 

-

 

 

 

6,425

 

 

 

Operating income

 

128,265

 

 

(19,317

)

 

 

1,806

 

 

 

145,776

 

Operating income as a percentage of sales

 

7.3

%

 

-

 

 

 

-

 

 

 

8.3

%

 

 

Interest and other expense, net

 

(56,857

)

 

-

 

 

 

(21,313

)

(4)

 

(35,544

)

 

 

Earnings before income taxes

 

71,408

 

 

(19,317

)

 

 

(19,507

)

 

 

110,232

 

Provision for income taxes

 

(6,503

)

 

7,842

 

(2)

 

5,799

 

(5)

 

(20,144

)

Tax Rate

 

9.1

%

 

40.6

%

 

 

29.7

%

 

 

18.3

%

 

 

Net earnings attributable to Flowserve Corporation

$

59,434

 

$

(11,475

)

 

$

(13,708

)

 

$

84,617

 

 

 

Net earnings per share attributable to Flowserve Corporation common shareholders:

 

 

Basic

$

0.46

 

$

(0.09

)

 

$

(0.11

)

 

$

0.65

 

Diluted

 

0.45

 

 

(0.09

)

 

 

(0.10

)

 

 

0.65

 

 

 

Basic number of shares used for calculation

 

130,366

 

 

130,366

 

 

 

130,366

 

 

 

130,366

 

Diluted number of shares used for calculation

 

130,905

 

 

130,905

 

 

 

130,905

 

 

 

130,905

 

 

 

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

 

 

 

 

Notes:

 

 

(1) Represents realignment expense incurred as a result of realignment programs.
(2) Includes tax impact of items above and realignment related tax release.
(3) Represents final settlement gain on sale of business in 2018.
(4) Represents below-the-line foreign exchange impacts and $7.6 million of expense as a result of early extinguishment of debt.
(5) Includes tax impact of items above and $1.3 million benefit related to legal entity simplification and restructuring.
RECONCILIATION OF NON-GAAP MEASURES

 

 

(Unaudited)

 

 

 

 

Six Months Ended June 30, 2020

(Amounts in thousands, except per share data)

As Reported (a)

 

Realignment (1)

 

 

Other Items

 

 

As Adjusted

 

 

Sales

$

1,818,525

 

$

-

 

 

$

-

 

 

$

1,818,525

 

Gross profit

 

536,166

 

 

(34,977

)

 

 

-

 

 

 

571,143

 

Gross margin

 

29.5

%

 

-

 

 

 

-

 

 

 

31.4

%

 

 

Selling, general and administrative expense

 

(474,794

)

 

(29,908

)

 

 

(21,701

)

(3)

 

(423,185

)

Net earnings from affiliates

 

6,283

 

 

-

 

 

 

-

 

 

 

6,283

 

 

 

Operating income

 

67,655

 

 

(64,885

)

 

 

(21,701

)

 

 

154,241

 

Operating income as a percentage of sales

 

3.7

%

 

-

 

 

 

-

 

 

 

8.5

%

 

 

Interest and other expense, net

 

(3,705

)

 

-

 

 

 

22,356

 

(4)

 

(26,061

)

 

 

Earnings before income taxes

 

63,950

 

 

(64,885

)

 

 

655

 

 

 

128,180

 

Provision for income taxes

 

(41,453

)

 

11,698

 

(2)

 

(21,481

)

(5)

 

(31,670

)

Tax Rate

 

64.8

%

 

18.0

%

 

 

3279.5

%

 

 

24.7

%

 

 

Net earnings attributable to Flowserve Corporation

$

18,254

 

$

(53,187

)

 

$

(20,826

)

 

$

92,267

 

 

 

Net earnings per share attributable to Flowserve Corporation common shareholders:

 

 

Basic

$

0.14

 

$

(0.41

)

 

$

(0.16

)

 

$

0.71

 

Diluted

 

0.14

 

 

(0.41

)

 

 

(0.16

)

 

 

0.70

 

 

 

Basic number of shares used for calculation

 

130,463

 

 

130,463

 

 

 

130,463

 

 

 

130,463

 

Diluted number of shares used for calculation

 

131,152

 

 

131,152

 

 

 

131,152

 

 

 

131,152

 

 

 

(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) Includes $11.3 million related to Flowserve 2.0 transformation efforts and $10.4 million related to discrete asset write-downs.
(4) Represents below-the-line foreign exchange impacts.
(5) Includes tax impact of items above, $25.4 million related to Italian tax valuation allowance and $2.0 million benefit related to legal entity simplification and restructuring.
SEGMENT INFORMATION
(Unaudited)
 
FLOWSERVE PUMP DIVISION

Six Months Ended June 30,

(Amounts in millions, except percentages)

2021

 

2020

Bookings

$

1,322.2

 

$

1,220.1

 

Sales

 

1,220.1

 

 

1,309.7

 

Gross profit

 

379.2

 

 

393.7

 

Gross profit margin

 

31.1

%

 

30.1

%

SG&A

 

266.2

 

 

299.9

 

Gain on sale of business

 

1.8

 

 

-

 

Segment operating income

 

121.6

 

 

100.1

 

Segment operating income as a percentage of sales

 

10.0

%

 

7.6

%

 
 
FLOW CONTROL DIVISION

Six Months Ended June 30,

(Amounts in millions, except percentages)

2021

 

2020

Bookings

$

582.6

 

$

570.8

 

Sales

 

537.0

 

 

511.7

 

Gross profit

 

159.4

 

 

151.0

 

Gross profit margin

 

29.7

%

 

29.5

%

SG&A

 

97.8

 

 

107.6

 

Segment operating income

 

61.9

 

 

43.4

 

Segment operating income as a percentage of sales

 

11.5

%

 

8.5

%

Second Quarter and Year-to-Date 2021 - Segment Results
(dollars in millions, comparison vs. 2020 second quarter and year-to-date, unaudited)
 
FPD FCD
Bookings

$

668.8

 

$

1,322.2

 

$

289.1

 

$

582.6

 

- vs. prior year

 

24.7

%

 

8.4

%

 

5.3

%

 

2.1

%

- on constant currency

 

19.3

%

 

4.6

%

 

1.5

%

 

-1.3

%

 
Sales

$

617.5

 

$

1,220.1

 

$

281.2

 

$

537.0

 

- vs. prior year

 

-8.4

%

 

-6.8

%

 

11.5

%

 

4.9

%

- on constant currency

 

-12.4

%

 

-10.3

%

 

6.6

%

 

0.9

%

 
Gross Profit

$

196.4

 

$

379.2

 

$

84.8

 

$

159.4

 

- vs. prior year

 

-0.8

%

 

-3.7

%

 

11.3

%

 

5.6

%

 
Gross Margin (% of sales)

 

31.8

%

 

31.1

%

 

30.2

%

 

29.7

%

- vs. prior year (in basis points) 240 bps 100 bps 0 bps 20 bps
 
Operating Income

$

67.8

 

$

121.6

 

$

37.2

 

$

61.9

 

- vs. prior year

 

12.3

%

 

21.5

%

 

42.0

%

 

42.6

%

- on constant currency

 

4.6

%

 

15.6

%

 

36.3

%

 

38.0

%

 
Operating Margin (% of sales)

 

11.0

%

 

10.0

%

 

13.2

%

 

11.5

%

- vs. prior year (in basis points) 200 bps 240 bps 280 bps 300 bps
 
Adjusted Operating Income *

$

70.6

 

$

132.5

 

$

37.4

 

$

63.8

 

- vs. prior year

 

-24.5

%

 

-8.0

%

 

12.3

%

 

8.7

%

- on constant currency

 

-29.5

%

 

-12.2

%

 

7.8

%

 

5.2

%

 
Adj. Oper. Margin (% of sales)*

 

11.4

%

 

10.9

%

 

13.3

%

 

11.9

%

- vs. prior year (in basis points) (250) bps (10) bps 10 bps 40 bps
 
Backlog

$

1,294.1

 

$

660.4

 

 
* Adjusted Operating Income and Adjusted Operating Margin exclude realignment charges and other specific discrete items
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

June 30,

 

December 31,

(Amounts in thousands, except par value)

2021

 

2020

 

 

 

ASSETS
Current assets:
Cash and cash equivalents

$

630,397

 

$

1,095,274

 

Accounts receivable, net of allowance for expected credit losses of $74,782 and $75,176, respectively

 

729,551

 

 

753,462

 

Contract assets, net of allowance for expected credit losses of $3,038 and $3,205, respectively

 

262,231

 

 

277,734

 

Inventories, net

 

690,145

 

 

667,228

 

Prepaid expenses and other

 

128,364

 

 

110,635

 

Total current assets

 

2,440,688

 

 

2,904,333

 

Property, plant and equipment, net of accumulated depreciation of $1,107,765 and $1,093,348, respectively

 

526,101

 

 

556,873

 

Operating lease right-of-use assets, net

 

204,075

 

 

208,125

 

Goodwill

 

1,213,103

 

 

1,224,886

 

Deferred taxes

 

46,904

 

 

30,538

 

Other intangible assets, net

 

160,653

 

 

168,496

 

Other assets, net of allowance for expected credit losses of $67,770 and $67,842, respectively

 

227,145

 

 

221,426

 

Total assets

$

4,818,669

 

$

5,314,677

 

 
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable

$

393,608

 

$

440,199

 

Accrued liabilities

 

422,161

 

 

463,222

 

Contract liabilities

 

209,092

 

 

194,227

 

Debt due within one year

 

9,599

 

 

8,995

 

Operating lease liabilities

 

35,256

 

 

34,990

 

Total current liabilities

 

1,069,716

 

 

1,141,633

 

Long-term debt due after one year

 

1,307,149

 

 

1,717,911

 

Operating lease liabilities

 

173,388

 

 

176,246

 

Retirement obligations and other liabilities

 

497,724

 

 

517,566

 

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

 

494,221

 

 

502,227

 

Retained earnings

 

3,677,117

 

 

3,670,543

 

Treasury shares, at cost – 46,806 and 46,768 shares, respectively

 

(2,058,279

)

 

(2,059,309

)

Deferred compensation obligation

 

7,077

 

 

6,164

 

Accumulated other comprehensive loss

 

(600,143

)

 

(609,625

)

Total Flowserve Corporation shareholders' equity

 

1,740,984

 

 

1,730,991

 

Noncontrolling interests

 

29,708

 

 

30,330

 

Total equity

 

1,770,692

 

 

1,761,321

 

Total liabilities and equity

$

4,818,669

 

$

5,314,677

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

Six Months Ended June 30,

(Amounts in thousands)

2021

 

2020

 
Cash flows – Operating activities:
Net earnings, including noncontrolling interests

$

64,905

 

$

22,497

 

Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation

 

44,491

 

 

41,711

 

Amortization of intangible and other assets

 

7,433

 

 

6,136

 

Loss on extinguishment of debt

 

7,610

 

 

-

 

Stock-based compensation

 

16,472

 

 

18,475

 

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

 

12,460

 

 

10,970

 

Change in assets and liabilities:
Accounts receivable, net

 

14,285

 

 

858

 

Inventories, net

 

(30,784

)

 

(36,575

)

Contract assets, net

 

12,232

 

 

(44,276

)

Prepaid expenses and other assets, net

 

(16,187

)

 

(3,956

)

Accounts payable

 

(41,146

)

 

(9,201

)

Contract liabilities

 

17,026

 

 

4,412

 

Accrued liabilities and income taxes payable

 

(37,123

)

 

(1,140

)

Retirement obligations and other

 

(2,761

)

 

15,717

 

Net deferred taxes

 

(7,607

)

 

(5,445

)

Net cash flows provided (used) by operating activities

 

61,306

 

 

20,183

 

Cash flows – Investing activities:
Capital expenditures

 

(22,541

)

 

(29,072

)

Proceeds from disposal of assets and other

 

2,085

 

 

10,810

 

Net affiliate investment activity

 

(3,384

)

 

-

 

Net cash flows provided (used) by investing activities

 

(23,840

)

 

(18,262

)

Cash flows – Financing activities:
Payments on long-term debt

 

(407,473

)

 

-

 

Proceeds under other financing arrangements

 

1,386

 

 

1,990

 

Payments under other financing arrangements

 

(3,256

)

 

(4,862

)

Repurchases of common shares

 

(17,531

)

 

(32,112

)

Payments related to tax withholding for stock-based compensation

 

(5,777

)

 

(3,850

)

Payments of dividends

 

(52,168

)

 

(52,054

)

Other

 

(6,275

)

 

(2,844

)

Net cash flows provided (used) by financing activities

 

(491,094

)

 

(93,732

)

Effect of exchange rate changes on cash

 

(11,249

)

 

(17,464

)

Net change in cash and cash equivalents

 

(464,877

)

 

(109,275

)

Cash and cash equivalents at beginning of period

 

1,095,274

 

 

670,980

 

Cash and cash equivalents at end of period

$

630,397

 

$

561,705