Flowserve Corporation Reports Third Quarter 2018 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, 2018.

Third Quarter 2018 Highlights (all comparisons to the 2017 third quarter, unless otherwise noted)

  • Reported Earnings Per Share (EPS) of $0.21 and Adjusted EPS[1] of $0.49
    • Reported EPS includes pre-tax adjusted items of approximately $47 million, primarily related to realignment and transformation expenses, a loss on previously announced divestitures and below-the-line foreign exchange impacts
    • Adjusted EPS increased 32.4%, and 19.5% on a sequential basis
  • Sales were $953 million, up 7.8%, or 8.8% on a constant currency basis and included approximately 1% negative impact related to divested businesses
    • Aftermarket sales were $457 million, up 3.9%, or 5.0% on a constant currency basis
    • Original equipment sales were $496 million, up 11.8%, or 12.5% constant currency
  • Reported gross and operating margins of 32.4% and 6.5%
    • Adjusted gross and operating margins[2] increased 130 and 160 basis points to 33.2% and 11.0%, respectively – the highest levels since the 2016 fourth quarter
  • Total bookings exceeded $1.0 billion, up 13.2%, or 14.1% on a constant currency basis, and included approximately 1% negative impact related to divested businesses
    • Aftermarket bookings were $507 million, or 50% of total bookings, up 11.6%, or 13.0% on a constant currency basis
    • Original equipment bookings were $504 million, up 14.8%, or 15.3% on a constant currency basis
  • Backlog at September 30, 2018 was $1.9 billion, up 1.4% versus June 30, 2018 backlog

We delivered solid results in the third quarter, including our second consecutive quarter with bookings over $1 billion. With a book-to-bill of 1.06, we increased sequential backlog and grew year-over-year revenues by 7.8%, while also delivering annual and sequential improvement in our adjusted profit margins, said Scott Rowe, Flowserves president and chief executive officer.

Our Flowserve 2.0 transformation strategy is fundamentally changing the way we think, act and operate across our organization, Rowe continued. While were still early in the companys transformational journey, we expect that our continued progress on these growth and operational initiatives will further position Flowserve to more fully capitalize on the expected improvement in our core energy markets.

 Stay Updated To Save Money & Time. Join Our Free Newsletter 
. Indepth Analysis & Opinion       . Interviews      . Exclusive Reports  
. Free Digital Magazines      News & updates      . Event Invitations 
                     
& Much More Delivered To Your Inbox For Free.
Submit
We Will Not Spam, Rent, or Sell Your Information.
All emails include an unsubscribe link. You may opt-out at any time. See our privacy policy.

 

Based on our solid performance in the first three quarters of 2018 and our confidence in delivering on our fourth quarter commitments, Flowserve today revised its full year guidance, including raising our Adjusted EPS[3] target range to $1.65 to $1.75 from $1.50 to $1.70, added Lee Eckert, Flowserves senior vice president and chief financial officer.

Rowe concluded, As we look ahead to 2019, we are building operating momentum to better capture the growth and value-creation potential inherent in our business. We expect to continue to simplify our business model, improve our productivity, lower our cost position and deliver enhanced long-term value for our customers, employees and shareholders.

Revised 2018 Guidance

Flowserve today revised its guidance metrics as described hereafter. The company now expects full year 2018 revenues to increase year-over-year in a range between 5% to 7%, which includes an approximate 1% benefit from currency offset by an approximate 1% negative impact from divestitures. GAAP EPS is now forecast between $0.75 to $0.85, while the Adjusted EPS target range was increased to $1.65 to $1.75. The company expects a full year adjusted tax rate between 27%-28%.

Third Quarter 2018 Results Conference Call

Flowserve will host its conference call with the financial community on Thursday, November 8th 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 and related investor presentation materials can be accessed by shareholders and other interested parties at www.flowserve.com under the Investor Relations section.

Investor Day

As previously announced, Flowserve will host analysts and investors in New York City on December 13th for its 2018 Analyst Day. Scott Rowe, president and chief executive officer, as well as other members of the management team will be presenting. The event and related investor presentation materials will be accessible by shareholders and other interested parties at www.flowserve.com under the Investor Relations section. Additional detail regarding the event will be provided later in November.

 
[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 2018 EPS will exclude the Companys realignment expenses, the impact from other specific discrete events and below-the-line foreign currency effects and utilizes year-end 2017 FX rates and approximately 132 million fully diluted shares.
_ FX headwind is calculated by comparing the difference between the actual average FX rates of 2018 and the year-end 2017 spot rates both as applied to our 2018 expectations, divided by the number of shares expected for 2018.
 

About Flowserve

Flowserve Corp. is one of the worlds 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 companys 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; 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 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; 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 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; 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; if we are not able to successfully execute and realize the expected financial benefits from our strategic realignment and other cost-savings initiatives, our business could be adversely affected; 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 Companys 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)   2018     2017  
 
Sales $ 952,716 $ 883,380
Cost of sales   (644,215 )   (615,368 )
Gross profit 308,501 268,012
Selling, general and administrative expense (241,878 ) (206,001 )
(Loss) gain on sale of businesses (7,727 ) 9,864
Net earnings from affiliates   3,295     2,918  
Operating income 62,191 74,793
Interest expense (13,826 ) (15,043 )
Interest income 1,269 1,108
Other (expense) income, net   (5,283 )   7,511  
Earnings before income taxes 44,351 68,369
Provision for income taxes   (14,912 )   (19,628 )
Net earnings, including noncontrolling interests 29,439 48,741
Less: Net earnings attributable to noncontrolling interests   (1,234 )   (1,136 )
Net earnings attributable to Flowserve Corporation $ 28,205   $ 47,605  
 
Net earnings per share attributable to Flowserve Corporation common shareholders:
Basic $ 0.22 $ 0.36
Diluted 0.21 0.36
 
Cash dividends declared per share $ 0.19 $ 0.19
       
RECONCILIATION OF NON-GAAP MEASURES
(Unaudited)
 
Three Months Ended September 30, 2018
(Amounts in thousands, except per share data) As Reported (a) Realignment (1) Other Items As Adjusted
 
Sales $ 952,716 $ $ $ 952,716
Gross profit 308,501 (8,208 ) 316,709
Gross margin 32.4 % 33.2 %
 
Selling, general and administrative expense (241,878 ) (2,919 ) (23,986 ) (3) (214,973 )
Loss on sale of business (7,727 ) (7,727 ) (4)
 
Operating income 62,191 (11,127 ) (31,713 ) 105,031
Operating income as a percentage of sales 6.5 % 11.0 %
 
Interest and other expense, net (17,840 ) (4,335 ) (5) (13,505 )
 
Earnings before income taxes 44,351 (11,127 ) (36,048 ) 91,526
Provision for income taxes (14,912 ) 2,636 (2) 8,857 (6) (26,405 )
Tax Rate 33.6 % 23.7 % 24.6 % 28.8 %
 
Net earnings attributable to Flowserve Corporation $ 28,205 $ (8,491 ) $ (27,191 ) $ 63,887
 
Net earnings per share attributable to Flowserve Corporation common shareholders:
Basic $ 0.22 $ (0.06 ) $ (0.21 ) $ 0.49
Diluted $ 0.21 $ (0.06 ) $ (0.21 ) $ 0.49
 
Basic number of shares used for calculation 130,843 130,843 130,843 130,843
Diluted number of shares used for calculation 131,350 131,350 131,350 131,350
 
(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 IPD loss on sale of 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, 2017
(Amounts in thousands, except per share data) As Reported (a) Realignment (1) Other Items As Adjusted
 
Sales $ 883,380 $ $ $ 883,380
Gross profit 268,012 (14,220 ) 282,232
Gross margin 30.3 % 31.9 %
 
Selling, general and administrative expense (206,001 ) (2,571 ) (1,189 ) (3) (202,241 )
Gain on sale of businesses 9,864 9,864 (4)
 
Operating income 74,793 (16,791 ) 8,675 82,909
Operating income as a percentage of sales 8.5 % 9.4 %
 
Interest and other expense, net (6,424 ) 8,447 (5) (14,871 )
 
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 $1.0 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
 
SEGMENT INFORMATION    
(Unaudited)
ENGINEERED PRODUCT DIVISION Three Months Ended September 30,
(Amounts in millions, except percentages)   2018     2017  
Bookings $ 519.8 $ 432.5
Sales 466.2 424.2
Gross profit 151.3 136.7
Gross profit margin 32.5 % 32.2 %
SG&A 97.0 87.3
Segment operating income 57.4 52.1
Segment operating income as a percentage of sales 12.3 % 12.3 %
 
INDUSTRIAL PRODUCT DIVISION Three Months Ended September 30,
(Amounts in millions, except percentages)   2018     2017  
Bookings $ 199.8 $ 196.9
Sales 199.1 189.7
Gross profit 47.0 39.3
Gross profit margin 23.6 % 20.7 %
SG&A 42.1 43.2
Loss on sale of business (7.7 )
Segment operating loss (2.5 ) (3.5 )
Segment operating loss as a percentage of sales (1.3 %) (1.8 %)
 
FLOW CONTROL DIVISION Three Months Ended September 30,
(Amounts in millions, except percentages)   2018     2017  
Bookings $ 314.2 $ 285.9
Sales 306.2 287.7
Gross profit 109.4 91.9
Gross profit margin 35.7 % 31.9 %
SG&A 52.9 52.9
Gain on sale of business 9.9
Segment operating income 56.4 48.8
Segment operating income as a percentage of sales 18.4 % 17.0 %
   
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Nine Months Ended September 30,
(Amounts in thousands, except per share data)   2018     2017  
 
Sales $ 2,845,798 $ 2,626,762
Cost of sales   (1,979,807 )   (1,844,303 )
Gross profit 865,991 782,459
Selling, general and administrative expense (711,845 ) (680,305 )
(Loss) gain on sale of businesses (7,727 ) 141,158
Net earnings from affiliates   7,908     9,027  
Operating income 154,327 252,339
Interest expense (43,645 ) (44,689 )
Interest income 4,237 2,373
Other expense, net   (17,206 )   (13,971 )
Earnings before income taxes 97,713 196,052
Provision for income taxes   (37,028 )   (85,836 )
Net earnings, including noncontrolling interests 60,685 110,216
Less: Net earnings attributable to noncontrolling interests   (4,117 )   (1,682 )
Net earnings attributable to Flowserve Corporation $ 56,568   $ 108,534  
 
Net earnings per share attributable to Flowserve Corporation common shareholders:
Basic

$

0.43

$

0.83
Diluted

0.43

0.83

 
Cash dividends declared per share $ 0.57 $ 0.57
       
RECONCILIATION OF NON-GAAP MEASURES
(Unaudited)
 
Nine Months Ended September 30, 2018
(Amounts in thousands, except per share data) As Reported (a) Realignment (1) Other Items As Adjusted
 
Sales $

2,845,798

$ $ $

2,845,798

Gross profit 865,991 (31,593 ) (7,713 ) (3) 905,297
Gross margin 30.4 % 31.8 %
 
Selling, general and administrative expense (711,845 ) (11,747 ) (44,365 ) (4) (655,733 )
Gain on sale of business (7,727 ) (7,727 ) (5)
 
Operating income 154,327 (43,340 ) (59,805 ) 257,472
Operating income as a percentage of sales 5.4 % 9.0 %
 
Interest and other expense, net (56,614 ) (16,349 ) (6) (40,265 )
 
Earnings before income taxes 97,713 (43,340 ) (76,154 ) 217,207
Provision for income taxes (37,028 ) 9,652 (2) 13,211 (7) (59,891 )
Tax Rate 37.9 % 22.3 % 17.3 % 27.6 %
 
Net earnings attributable to Flowserve Corporation $ 56,568 $ (33,688 ) $ (62,943 ) $ 153,199
 
Net earnings per share attributable to Flowserve Corporation common shareholders:
Basic $ 0.43 $ (0.26 ) $ (0.48 ) $ 1.17
Diluted $ 0.43 $ (0.26 ) $ (0.48 ) $ 1.17
 
Basic number of shares used for calculation 130,816 130,816 130,816 130,816
Diluted number of shares used for calculation 131,224 131,224 131,224 131,224
 
(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 $7.7 million related to IPD divestiture write-down of assets
(4) Represents $9.7 million related to IPD divestiture write-down of assets, $7.3 million related to implementation costs for the adoption of ASC 606 and $27.4 million related to Flowserve 2.0 transformation efforts
(5) Represents IPD loss on sale of business
(6) Represents below-the-line foreign exchange impacts
(7) Includes tax impact of items above
 
       
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 $ 2,626,762 $ $ $ 2,626,762
Gross profit 782,459 (33,371 ) (16,928 ) (3) 832,758
Gross margin 29.8 % 31.7 %
 
Selling, general and administrative expense (680,305 ) (25,636 ) (29,683 ) (4) (624,986 )
Gain on sale of business 141,158 141,158 (5)
 
Operating income 252,339 (59,007 ) 94,547 216,799

Operating income as a percentage of sales

9.6 % 8.3 %
 
Interest and other expense, net (56,287 ) (9,671 ) (6) (46,616 )
 
Earnings before income taxes 196,052 (59,007 ) 84,876 170,183
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 $3.2 million of SIHI integration costs and purchase price adjustments (“PPA”), $26.0 million of Brazil property, plant and equipment impairment charge and $0.4 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
 
   
SEGMENT INFORMATION
(Unaudited)
ENGINEERED PRODUCT DIVISION Nine Months Ended September 30,
(Amounts in millions, except percentages)   2018     2017  
Bookings $ 1,450.3 $ 1,357.2
Sales 1,414.6 1,276.6
Gross profit 439.4 404.4
Gross profit margin 31.1 % 31.7 %
SG&A 299.9 305.3
Segment operating income 147.8 107.8
Segment operating income as a percentage of sales 10.4 % 8.4 %
 
INDUSTRIAL PRODUCT DIVISION Nine Months Ended September 30,
(Amounts in millions, except percentages)   2018     2017  
Bookings $ 633.2 $ 616.6
Sales 603.0 559.9
Gross profit 130.1 98.3
Gross profit margin 21.6 % 17.6 %
SG&A 148.0 144.5
Loss on sale of business (7.7 )
Segment operating loss (25.2 ) (45.7 )
Segment operating loss as a percentage of sales (4.2 %) (8.2 %)
 
FLOW CONTROL DIVISION Nine Months Ended September 30,
(Amounts in millions, except percentages)   2018     2017  
Bookings $ 957.9 $ 911.2
Sales 889.9 843.5
Gross profit 298.6 278.0
Gross profit margin 33.6 % 33.0 %
SG&A 161.1 163.8
Gain on sale of businesses 141.2
Segment operating income 136.7 255.1
Segment operating income as a percentage of sales 15.4 % 30.2 %
           
Third Quarter and Year-to-Date 2018 – Segment Results
(dollars in millions, comparison vs. 2017 third quarter and year-to-date, unaudited)
 
EPD IPD FCD
3rd Qtr YTD 3rd Qtr YTD 3rd Qtr YTD
Bookings $ 519.8 $ 1,450.3 $ 199.8 $ 633.2 $ 314.2 $ 957.9
– vs. prior year 20.2 % 6.9 % 1.5 % 2.7 % 9.9 % 5.1 %
– on constant currency 20.9 % 5.3 % 2.4 % -0.1 % 11.3 % 3.1 %
 
Sales $ 466.2 $ 1,414.6 $ 199.1 $ 603.0 $ 306.2 $ 889.9
– vs. prior year 9.9 % 10.8 % 5.0 % 7.7 % 6.4 % 5.5 %
– on constant currency 10.3 % 8.7 % 6.1 % 4.9 % 7.9 % 3.7 %
 
Gross Profit $ 151.3 $ 439.4 $ 47.0 $ 130.1 $ 109.4 $ 298.6
– vs. prior year 10.7 % 8.7 % 19.6 % 32.6 % 19.0 % 7.4 %
 
Gross Margin (% of sales) 32.5 % 31.1 % 23.6 % 21.6 % 35.7 % 33.6 %
– vs. prior year (in basis points) 30 -60 290 410 380 60
 
Operating Income / (Loss) $ 57.4 $ 147.8 $ (2.5 ) $ (25.2 ) $ 56.4 $ 136.7
– vs. prior year 10.2 % 37.1 % 28.6 % 44.9 % 15.6 % -46.4 %
– on constant currency 15.5 % 33.8 % 25.1 % 48.3 % 18.0 % -46.3 %
 
Operating Margin (% of sales) 12.3 % 10.4 % -1.3 % -4.2 % 18.4 % 15.4 %
– vs. prior year (in basis points) 200 50 400 140 -1480
 
Adjusted Operating Income / (Loss) * $ 63.9 $ 174.8 $ 5.6 $ 5.9 $ 56.9 $ 141.3
– vs. prior year 6.9 % 13.4 % NM NM 26.2 % 11.5 %
– on constant currency 11.5 % 11.1 % NM NM 28.8 % 11.4 %
 
Adj. Oper. Margin (% of sales)* 13.7 % 12.4 % 2.8 % 1.0 % 18.6 % 15.9 %
– vs. prior year (in basis points) -40 30 320 150 290 90
 
Backlog $ 870.7 $ 390.2 $ 626.5
 
* Adjusted Operating Income and Adjusted Operating Margin exclude realignment charges,
below-the-line FX impacts and other specific discrete items
 
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30, December 31,
(Amounts in thousands, except par value)   2018     2017  
 
ASSETS
Current assets:
Cash and cash equivalents $ 529,942 $ 703,445
Accounts receivable, net of allowance for doubtful accounts of $54,481 and $59,113, respectively 780,408 856,711
Contract assets, net 261,417
Inventories, net 655,652 884,273
Prepaid expenses and other   97,248     114,316  
Total current assets 2,324,667 2,558,745
Property, plant and equipment, net of accumulated depreciation of $952,293 and $968,033, respectively 608,739 671,796
Goodwill 1,203,768 1,218,188
Deferred taxes 61,153 51,974
Other intangible assets, net 195,864 210,049
Other assets, net   210,873     199,722  
Total assets $ 4,605,064   $ 4,910,474  
 
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable $ 400,281 $ 443,113
Accrued liabilities 398,285 724,196
Contract liabilities 174,245
Debt due within one year   67,269     75,599  

Total current liabilities

1,040,080 1,242,908
Long-term debt due after one year 1,436,746 1,499,658
Retirement obligations and other liabilities 497,511 496,954
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 489,066 488,326
Retained earnings 3,505,051 3,503,947
Treasury shares, at cost “ 46,240 and 46,471 shares, respectively (2,049,535 ) (2,059,558 )
Deferred compensation obligation 7,025 6,354
Accumulated other comprehensive loss   (559,559 )   (505,473 )
Total Flowserve Corporation shareholders’ equity 1,613,039 1,654,587
Noncontrolling interests   17,688     16,367  
Total equity   1,630,727     1,670,954  
Total liabilities and equity $ 4,605,064   $ 4,910,474  
   
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended September 30,
(Amounts in thousands)   2018     2017  
 
Cash flows “ Operating activities:
Net earnings, including noncontrolling interests $ 60,685 $ 110,216
Adjustments to reconcile net earnings to net cash provided (used) by operating activities:
Depreciation 72,668 75,177
Amortization of intangible and other assets 12,548 12,767
Loss (gain) on disposition of businesses 7,727 (141,158 )
Stock-based compensation 14,130 20,291
Foreign currency, asset impairments and other non-cash adjustments 31,678 24,696
Change in assets and liabilities:
Accounts receivable, net (9,481 ) 63,835
Inventories, net (46,699 ) (20,355 )
Contract assets, net (54,822 )
Prepaid expenses and other assets, net (16,340 ) 22,456
Accounts payable (29,963 ) (68,012 )
Contract liabilities 3,410
Accrued liabilities and income taxes payable (13,690 ) (6,702 )
Retirement obligations and other (1,480 ) (18,720 )
Net deferred taxes   (4,033 )   (2,131 )
Net cash flows provided by operating activities   26,338     72,360  
Cash flows “ Investing activities:
Capital expenditures (49,976 ) (40,620 )
Proceeds from disposal of assets and other 4,062 2,977
(Payments) proceeds from disposition of businesses   (3,663 )   208,775  
Net cash flows (used) provided by investing activities   (49,577 )   171,132  
Cash flows “ Financing activities:
Payments on long-term debt (45,000 ) (45,000 )
Proceeds under other financing arrangements 2,720 6,234
Payments under other financing arrangements (9,093 ) (12,560 )
Payments related to tax withholding for stock-based compensation (2,972 ) (6,287 )
Payments of dividends (74,548 ) (74,412 )
Other   (4,333 )   (4,189 )
Net cash flows used by financing activities (133,226 ) (136,214 )
Effect of exchange rate changes on cash   (17,038 )   27,703  
Net change in cash and cash equivalents (173,503 ) 134,981
Cash and cash equivalents at beginning of period   703,445     367,162  
Cash and cash equivalents at end of period $ 529,942   $ 502,143  

Flowserve
Investor Contacts:
Jay Roueche, 972-443-6560
Vice
President, Investor Relations & Treasurer

Mike Mullin,
972-443-6636
Director, Investor Relations

Media
Contact:
Lars Rosene, 972-443-6644
Vice President, Global
Communications and Public Affairs

 Stay Updated To Save Money & Time. Join Our Free Newsletter 
. Indepth Analysis & Opinion       . Interviews      . Exclusive Reports  
. Free Digital Magazines      News & updates      . Event Invitations 
                     
& Much More Delivered To Your Inbox For Free.
Submit
We Will Not Spam, Rent, or Sell Your Information.
All emails include an unsubscribe link. You may opt-out at any time. See our privacy policy.

 
Close
Stay Updated To Save Money & Time. Join Our Free Newsletter. 
. Indepth Analysis & Opinion       Interviews          . Exclusive Reports 
. Free Digital Magazines        . News & updates        . Event Invitations
& Much More Delivered To Your Inbox For Free. 
Submit
We Will Not Spam, Rent, or Sell Your Information.
All emails include an unsubscribe link. You may opt-out at any time. See our privacy policy.
 
Close