• Raised full-year Revenue and Adjusted EPS guidance range following strong year-to-date performance and expectations for the 2023 fourth quarter

• Reported and Adjusted¹ Earnings Per Share (EPS)² of 35 cents and 50 cents, respectively, continuing strong operational performance

• Delivered solid bookings of $1.07 billion, including strong aftermarket awards in excess of $580 million, maintaining near-record backlog levels at $2.77 billion

• Drove revenue growth of 25.4% and generated a 630 basis point improvement in adjusted operating margin compared to prior year

• Improved operating cash flow by over $240 million year-to-date, with $81 million of operating cash flow generated in the 2023 third quarter

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, 2023.

Third Quarter 2023 Highlights (all comparisons to the 2022 third quarter, unless otherwise noted)

• Reported Earnings Per Share (EPS) of $0.35 and Adjusted Earnings Per Share (EPS)¹ of $0.50, compared to $0.29 and $0.09, respectively
  • Third quarter 2023 Reported EPS includes after-tax adjusted expenses of $20.5 million, comprised primarily of realignment charges, below-the-line foreign exchange, and the release of a tax valuation allowance benefit
  • Both Reported and Adjusted EPS were impacted by an $10.7 million (6 cents per share³) non-cash expense, resulting from an actuarial-determined assessment of certain long-term liabilities
• Total bookings were $1.07 billion, down $155.8 million or 12.7%. On a constant currency basis⁴, total bookings were down $175.4 million or 14.3%
  • Third quarter 2022 bookings included over $210 million of original equipment orders related to a Middle East gas project, representing one of Flowserve’s largest awards ever
  • Original equipment bookings were $485.3 million, down $194.4 million or 28.6%. On a constant currency basis⁴, original equipment bookings were down $202.0 million or 29.7%
  • Aftermarket bookings were $582.2 million, up $38.6 million or 7.1%. On a constant currency basis⁴, aftermarket bookings were up $26.6 million or 4.9%
• Sales were $1.09 billion, up $221.8 million or 25.4%. On a constant currency basis⁴, sales were up $200.7 million or 23.0%
  • Original equipment sales were $529.2 million, up $117.1 million or 28.4%. On a constant currency basis⁴, original equipment sales were up $106.8 million or 25.9%
  • Aftermarket sales were $565.5 million, up $104.7 million or 22.7%. On a constant currency basis⁴, aftermarket sales were up $94.0 million or 20.4%
• Reported gross and operating margins were 29.0% and 6.4%, up 160 and 360 basis points, respectively
  • Adjusted gross and operating margins⁵ were 29.7% and 8.7%, up 230 and 630 basis points, respectively
  • Both Reported and Adjusted third quarter 2023 operating margins were impacted by the $10.7 million non-cash expense, which reduced operating margins by approximately 100 basis points⁶
• Backlog of $2.77 billion, up $170.9 million or 6.6% compared to the 2022 third quarter
  • Book-to-bill solid at 1.03x year-to-date
• Completed actions to achieve the 2023 cost-reduction target of $50 million annualized savings

“We delivered strong third quarter results, including significant revenue and earnings growth, while building on the operating momentum of the last year,” said Scott Rowe, Flowserve’s President and Chief Executive Officer. “Our new organizational model is driving speed, accountability, and cost efficiency throughout the company. The combination of our improved operating performance and our positive market outlook gives us the confidence to increase our full year revenue and adjusted EPS guidance range for the third time this year.”

Rowe concluded, “Driven by our 3D strategy, Flowserve is well-positioned to capture accelerated growth from energy transition investments and decarbonization initiatives. Flowserve is also competitively differentiated to capitalize in our traditional markets by ensuring global energy security. Additionally, we expect both aftermarket and MRO opportunities will remain strong through 2024 and beyond. As a result of these combined dynamics, we continue to believe we are in the early stages of a multi-year upcycle. Our focus remains on profitably converting our near-record $2.8 billion backlog to deliver solid revenue and earnings growth over the coming years, while creating long-term value for our shareholders, associates and customers.”

Revised 2023 Guidance²

Flowserve is raising its Revenue and Adjusted EPS guidance metrics for 2023, as well as updating or re-affirming certain other financial metrics, as shown in the table below:

Flowserve’s 2023 Adjusted EPS target range excludes expected adjusted items including identified realignment charges of approximately $55 million, as well as the potential impact of below-the-line foreign currency effects and certain other discrete items which may arise during the course of the year, including the potential for additional realignment expense.

Third Quarter 2023 Results Conference Call

Flowserve will host its conference call with the financial community on Thursday, October 26^th 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.

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; global supply chain disruptions and the current inflationary environment could adversely affect the efficiency of our manufacturing and increase the cost of providing our products to customers; a portion of our bookings may not lead to completed sales, and our ability to convert bookings into revenues at acceptable profit margins; changes in global economic conditions and the potential for unexpected cancellations or delays of customer orders in our reported backlog; our dependence on our customers’ ability to make required capital investment and maintenance expenditures; if we are not able to successfully execute and realize the expected financial benefits from any restructuring and realignment initiatives, our business could be adversely affected; the substantial dependence of our sales on the success of the oil and gas, chemical, power generation and water management industries; the adverse impact of volatile raw materials prices on our products and operating margins; economic, political and other risks associated with our international operations, including military actions, trade embargoes, epidemics or pandemics or changes to tariffs or trade agreements that could affect customer markets, particularly North African, Latin American, Asian and Middle Eastern markets and global oil and gas producers, and non-compliance with U.S. export/re-export control, foreign corrupt practice laws, economic sanctions and import laws and regulations; increased aging and slower collection of receivables, particularly in Latin America and other emerging markets; our exposure to fluctuations in foreign currency exchange rates, including in hyperinflationary countries such as Venezuela and Argentina; potential adverse consequences resulting from litigation to which we are a party, such as litigation involving asbestos-containing material claims; expectations regarding acquisitions and the integration of acquired businesses; the potential adverse impact of an impairment in the carrying value of goodwill or other intangible assets; our dependence upon third-party suppliers whose failure to perform timely could adversely affect our business operations; the highly competitive nature of the markets in which we operate; environmental compliance costs and liabilities; potential work stoppages and other labor matters; access to public and private sources of debt financing; our inability to protect our intellectual property in the U.S., as well as in foreign countries; obligations under our defined benefit pension plans; our internal control over financial reporting may not prevent or detect misstatements because of its inherent limitations, including the possibility of human error, the circumvention or overriding of controls, or fraud; the recording of increased deferred tax asset valuation allowances in the future or the impact of tax law changes on such deferred tax assets could affect our operating results; our information technology infrastructure could be subject to service interruptions, data corruption, cyber-based attacks or network security breaches, which could disrupt our business operations and result in the loss of critical and confidential information; ineffective internal controls could impact the accuracy and timely reporting of our business and financial results; and other factors described from time to time in our filings with the Securities and Exchange Commission.

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

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

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