☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2025 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File No. 1-13179 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FLOWSERVE CORPORATION FORM 10-Q (Mark One) (Exact name of registrant as specified in its charter) New York 31-0267900 (State or other jurisdiction of ...

Financial Data and Key Metrics Changes - The company reported second quarter earnings with adjusted EPS of $0.91, reflecting a 25% increase year-over-year [9][19] - Full year adjusted EPS guidance was raised to $3.25 to $3.40, indicating a more than 25% year-over-year increase at the midpoint [8][29] - Revenue for the second quarter was $1,200,000,000, representing a 3% growth compared to the prior year [19][20] - Adjusted gross margins expanded by 260 basis points to 34.9%, while adjusted operating margins increased to 14.6% [9][21] Business Line Data and Key Metrics Changes - The Aftermarket business achieved bookings above $600,000,000 for the fifth consecutive quarter, with aftermarket revenues growing by 7% [10][19] - Original Equipment sales decreased by 2%, primarily due to lower engineered-to-order work [20] - FPD (Flowserve Pump Division) reported a 1% sales growth driven by aftermarket activity, with adjusted gross margins improving to 36.8% [23] - FCD (Flowserve Control Division) experienced a 2% growth in bookings and a 7% increase in sales, but margins were impacted by the Mogus acquisition [24][25] Market Data and Key Metrics Changes - Strong year-over-year growth of 9% was noted in general industries, while energy and chemical bookings decreased due to the non-recurrence of large projects [12] - The project funnel remains healthy, with a strong backlog of $2,900,000,000, providing certainty for future growth [14][15] - The macroeconomic environment has caused some project approvals to be delayed, particularly in the chemical and energy sectors [14][16] Company Strategy and Development Direction - The company remains committed to a disciplined approach to capital allocation, including potential share repurchases and M&A opportunities [6][64] - The Flowserve business system is being fully implemented across all business units, focusing on operational excellence and margin expansion [18][34] - The company is exploring partnerships, such as the MOU with Honeywell to integrate digital offerings, enhancing efficiency and creating recurring revenue streams [12][13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate a dynamic macro environment and maintain strong execution [7][34] - The company anticipates organic sales growth of 3% to 4% for the full year, slightly down from previous guidance [29] - Management highlighted the importance of maintaining a healthy balance sheet and investment-grade rating while pursuing growth opportunities [66] Other Important Information - The company received a $266,000,000 termination payment from the terminated merger with Chart Industries, which will be used for capital allocation [5][62] - The impact of tariffs is estimated to be neutral to earnings for the second quarter, with ongoing efforts to mitigate tariff effects [16][28] Q&A Session Summary Question: Can you provide more insight into the bookings environment and expectations for the book-to-bill ratio? - Management noted that the project spending was impacted by macroeconomic uncertainties, but the aftermarket business remained strong, with a book-to-bill ratio expected to be around 1.0 for the year [40][46] Question: How should we view the potential improvement in the FCD segment moving forward? - Management indicated that while FCD margins are currently below expectations, they are implementing the same operational excellence strategies that have benefited FPD, with confidence in future margin improvements [48][56] Question: What are the implications of the Chart merger experience on future growth ambitions? - Management emphasized that while disappointed with the merger outcome, they remain committed to pursuing M&A opportunities that align with their strategic goals [61][66] Question: Can you elaborate on the commercial excellence initiative and its deployment? - Management explained that the commercial excellence initiative aims to enhance commercial performance across the organization, focusing on growth and offsetting revenue reductions from the 8020 program [90][94]

Financial Data and Key Metrics Changes - The company reported second quarter earnings with adjusted EPS of $0.91, representing a 25% increase year-over-year [19][8] - Full year adjusted EPS guidance was increased to $3.25 to $3.40, reflecting a more than 25% year-over-year increase at the midpoint [7][30] - Revenue for the second quarter was $1.2 billion, a 3% growth compared to the prior year [19][7] - Adjusted gross margins expanded by 260 basis points to 34.9% [21][19] - Adjusted operating margins were reported at 14.6%, with impressive incremental margins of 94% during the quarter [8][21] Business Line Data and Key Metrics Changes - The Aftermarket business achieved bookings above $600 million for the fifth consecutive quarter, with aftermarket revenues growing by 7% [9][19] - Original Equipment sales decreased by 2%, primarily due to lower engineered-to-order work [20] - FPD (Flowserve Pump Division) reported a sales growth of 1% year-over-year, driven by aftermarket activity, with adjusted gross margins of 36.8% [23][20] - FCD (Flowserve Control Division) experienced a 2% growth in bookings and a 7% increase in sales, but margins were impacted by the Mogus acquisition [24][20] Market Data and Key Metrics Changes - Strong year-over-year growth of 9% was observed in general industries, while energy and chemical bookings decreased due to the non-recurrence of large projects [12][11] - The project funnel remains healthy, with a strong backlog of $2.9 billion, positioning the company well for future growth [14][15] - The nuclear project funnel is at its highest level, with total nuclear bookings of nearly $60 million in the second quarter [10][11] Company Strategy and Development Direction - The company remains committed to a disciplined approach to capital allocation, including M&A opportunities, despite the termination of the merger with Chart Industries [5][6] - The Flowserve business system is being fully implemented across all business units, focusing on operational excellence and margin expansion [17][21] - The company is excited about the potential of the Mogus acquisition to enhance offerings in the mining and minerals markets [24][25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to execute at a high level despite a dynamic macro environment [7][6] - The company anticipates organic sales growth to range from 3% to 4% for the full year, a slight decrease from previous guidance [30][31] - Management noted that while the macroeconomic environment remains uncertain, the project funnel is growing, and they expect a book-to-bill ratio of approximately 1.0 for the full year [14][45] Other Important Information - The company received a $266 million termination payment from the terminated merger agreement, which will be evaluated for shareholder value creation [5][6] - The impact of tariffs is estimated to be neutral to earnings for the second quarter, with ongoing efforts to mitigate tariff impacts [15][16] - The company closed the quarter with a net debt to adjusted EBITDA ratio of 1.25 times, the lowest level in a decade, providing flexibility for capital allocation [29][28] Q&A Session Summary Question: Can you provide more insight into the bookings environment and expectations for the book-to-bill ratio? - Management indicated that while the macro environment has caused some project delays, the aftermarket business remains strong, and they expect a book-to-bill ratio of 1.0 for the year, with a positive outlook for the second half [40][45] Question: How should we view the potential improvement in the FCD segment moving forward? - Management acknowledged that while FCD margins are currently below expectations, they are implementing the same operational excellence strategies that have benefited FPD, and they expect improvements in the future [48][56] Question: What are the implications of the Chart merger experience on future growth ambitions? - Management confirmed that they remain open to M&A opportunities that align with their strategic goals, emphasizing a disciplined approach to any future transactions [60][66] Question: What are the biggest remaining levers for margin expansion in the FPD segment? - Management highlighted initiatives focused on aftermarket capture and the ongoing implementation of the 8020 program as key drivers for margin expansion [72][74] Question: Can you clarify the timing and impact of the remaining modular deliveries from Mogus? - Management confirmed that the last large fabrication is nearly complete and will be delivered in 2026, with a significant margin differential expected once these modules are cleared from the business [100][103]

Q2 2025 Financial Highlights - Total bookings reached $1.1 billion, driven by aftermarket and MRO activity[8, 11] - Sales amounted to $1.2 billion, representing a 3% revenue growth compared to the prior year[8] - Adjusted gross margins improved to 34.9%, a robust year-over-year increase of 260 basis points[8] - Adjusted EPS increased by 25% versus last year, reaching $0.91[8] - Adjusted operating margins increased by 210 basis points versus prior year to 14.6%[8] - Cash from operations generated a strong $154 million during the second quarter[8, 24] Segment Performance - FPD segment bookings were $723.8 million, a decrease of 19.5% year-over-year, while revenue increased by 0.8% to $818.9 million[21] - FPD adjusted gross margin was 36.8%, up 390 basis points year-over-year, and adjusted operating margin was 20.3%, up 340 basis points[21] - FCD segment bookings were $354.7 million, an increase of 1.6% year-over-year, and revenue increased by 6.8% to $371.5 million[22] - FCD adjusted gross margin was 30.8%, up 20 basis points year-over-year, while adjusted operating margin was 12.2%, down 120 basis points[22] Market Outlook and Tariffs - The company estimates the annualized gross impact of tariffs to be between $50 million to $60 million, which they expect to fully offset through mitigating actions[17] - The company expects full-year book-to-bill conversion ratio to be approximately 1.0x[14] Full Year 2025 Guidance - The company increased full-year earnings guidance on robust first-half results and continued execution momentum[30, 39] - Organic sales growth is expected to be up 3% - 4%, and total sales growth is expected to be up 5% - 6%[30] - Adjusted EPS is projected to be $3.25 - $3.40, which equates to nearly 60% growth in adjusted EPS since 2023[30, 32] - Expect full-year adjusted operating margin expansion of approximately 200 basis points[32]

Core Insights - Flowserve reported revenue of $1.19 billion for the quarter ended June 2025, reflecting a year-over-year increase of 2.7% but a slight miss of 1.98% against the Zacks Consensus Estimate of $1.21 billion [1] - The company's EPS for the quarter was $0.91, up from $0.73 in the same quarter last year, resulting in a positive surprise of 16.67% compared to the consensus estimate of $0.78 [1] Financial Performance Metrics - Flowserve's sales in the FCD segment were $371.5 million, which was below the average estimate of $388.79 million from four analysts, but showed a year-over-year increase of 6.8% [4] - In the FPD segment, sales were reported at $818.9 million, slightly below the estimated $824.2 million, with a year-over-year change of 0.8% [4] - Adjusted Operating Income for the FPD segment was $166.52 million, exceeding the average estimate of $144.45 million, while for the FCD segment, it was $45.47 million, falling short of the $54.96 million estimate [4] Stock Performance - Over the past month, Flowserve's shares have returned +4.8%, outperforming the Zacks S&P 500 composite's +3.6% change [3] - The stock currently holds a Zacks Rank 1 (Strong Buy), indicating potential for outperformance in the near term [3]

Flowserve (FLS) came out with quarterly earnings of $0.91 per share, beating the Zacks Consensus Estimate of $0.78 per share. This compares to earnings of $0.73 per share a year ago. These figures are adjusted for non- recurring items. This quarterly report represents an earnings surprise of +16.67%. A quarter ago, it was expected that this company that makes pumps, valves and other parts for the oil and gas industries would post earnings of $0.59 per share when it actually produced earnings of $0.72, deliv ...

[Second Quarter 2025 Results Overview](index=1&type=section&id=Second%20Quarter%202025%20Results%20Overview) Flowserve achieved sales and earnings growth, expanded margins, and raised full-year adjusted EPS guidance, driven by strategic execution and solid financial performance [Management Commentary](index=1&type=section&id=Management%20Commentary) Flowserve's CEO, Scott Rowe, highlighted the successful execution of the 3D strategy and Flowserve Business System, leading to sales and earnings growth, margin expansion, and an increased full-year adjusted EPS guidance - Successful ongoing execution of the 3D strategy and the Flowserve Business System, driving sales and earnings growth while expanding margins[3](index=3&type=chunk) - Increased full-year 2025 Adjusted EPS guidance from **$3.10-$3.30** to **$3.25-$3.40**, representing an increase of more than **25%** at the midpoint versus last year[4](index=4&type=chunk) [Key Financial Highlights](index=1&type=section&id=Key%20Financial%20Highlights) The second quarter saw solid bookings, robust gross and adjusted gross margins, expanded operating and adjusted operating margins, and strong cash from operations, contributing to increased reported and adjusted earnings per share - Solid bookings of **$1.1 billion**, including **$621 million** of durable aftermarket bookings[4](index=4&type=chunk) Q2 2025 Key Financial Highlights | Metric | Value | Change vs. Prior Year | | :--- | :--- | :--- | | Gross Margin | 34.2% | +260 bps | | Adjusted Gross Margin | 34.9% | +260 bps | | Operating Margin | 12.3% | +180 bps | | Adjusted Operating Margin | 14.6% | +210 bps | | Reported EPS | $0.62 | +12.7% | | Adjusted EPS | $0.91 | +24.7% | | Cash From Operations | $154 million | Significant increase | [Merger with Chart Industries, Inc. Termination](index=2&type=section&id=Merger%20with%20Chart%20Industries%2C%20Inc.%20Termination) Flowserve terminated its previously announced merger agreement with Chart Industries, Inc. after Chart's board determined an unsolicited proposal from Baker Hughes constituted a 'superior proposal', with Flowserve receiving a $266 million termination payment - Flowserve terminated its merger agreement with Chart Industries, Inc[5](index=5&type=chunk) - The termination followed Chart's Board of Directors determining a proposal from Baker Hughes was a 'superior proposal'[5](index=5&type=chunk) - Flowserve will receive a **$266 million** termination payment[5](index=5&type=chunk) [Key Financial Figures & 2025 Guidance](index=2&type=section&id=Key%20Financial%20Figures%20%26%202025%20Guidance) Flowserve reported increased backlog, sales growth, and expanded operating margins for Q2 and YTD 2025, leading to an upward revision of its full-year Adjusted EPS guidance [Key Financial Figures (Q2 & YTD 2025 vs 2024)](index=2&type=section&id=Key%20Financial%20Figures%20%28Q2%20%26%20YTD%202025%20vs%202024%29) Flowserve reported a **6.3%** increase in backlog for both Q2 and YTD 2025. While Q2 bookings decreased by **13.8%**, YTD bookings saw a slight increase of **0.7%**. Sales grew by **2.7%** in Q2 and **3.9%** YTD. Both reported and adjusted operating margins expanded, and adjusted EPS showed strong growth of **24.7%** in Q2 and **24.4%** YTD Key Financial Figures (Q2 & YTD 2025 vs 2024) | Metric | Q2 2025 | Q2 2024 | Q2 Change | YTD 2025 | YTD 2024 | YTD Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Backlog | $2,853.2M | $2,684.4M | 6.3% | $2,853.2M | $2,684.4M | 6.3% | | Bookings | $1,073.9M | $1,246.1M | (13.8%) | $2,299.4M | $2,283.8M | 0.7% | | Sales | $1,188.1M | $1,156.9M | 2.7% | $2,332.6M | $2,244.4M | 3.9% | | Operating Margin | 12.3% | 10.5% | 180 bps | 11.9% | 10.4% | 150 bps | | Adjusted Operating Margin | 14.6% | 12.5% | 210 bps | 13.8% | 11.7% | 210 bps | | Earnings Per Share | $0.62 | $0.55 | 12.7% | $1.18 | $1.11 | 6.3% | | Adjusted Earnings Per Share | $0.91 | $0.73 | 24.7% | $1.63 | $1.31 | 24.4% | | Cash From Operations | $154.1M | ($12.8M) | $166.9M | $104.2M | $49.5M | $54.7M | [2025 Guidance Update](index=2&type=section&id=2025%20Guidance%20Update) Flowserve updated its full-year 2025 guidance, increasing the Adjusted EPS target range and slightly narrowing the organic sales growth forecast, with the impact from acquisitions now expected to be lower and foreign exchange translation projected to be neutral - The Company updated its full-year 2025 guidance, including increasing its Adjusted EPS target range[7](index=7&type=chunk) Full-Year 2025 Guidance Comparison | Metric | Prior Range | Current Range | | :--- | :--- | :--- | | Organic sales growth | +3% to +5% | +3% to +4% | | Impact from acquisitions | Approx. +300 bps | Approx. +200 bps | | Impact from foreign exchange translation | Approx. (100) to 0 bps | Approx. 0 bps | | Total sales growth | +5% to +7% | +5% to +6% | | Adjusted EPS | $3.10 to $3.30 | $3.25 to $3.40 | | Net interest expense | Approx. $70 million | Approx. $70 million | | Adjusted tax rate | Approx. 21% | Approx. 20% | | Capital expenditures | $80 to $90 million | $80 to $90 million | [Consolidated Financial Statements (Unaudited)](index=4&type=section&id=Consolidated%20Financial%20Statements%20%28Unaudited%29) The unaudited consolidated financial statements for Q2 and YTD 2025 show increased sales, gross profit, operating income, and net earnings, alongside growth in total assets and equity [Condensed Consolidated Statements of Income (Three Months Ended June 30)](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20%28Three%20Months%20Ended%20June%2030%29) For Q2 2025, Flowserve reported a **2.7%** increase in sales to **$1,188.1 million**, with gross profit rising by **11.1%** to **$406.6 million**, operating income grew by **20.8%** to **$146.6 million**, and net earnings attributable to Flowserve Corporation increased by **12.6%** to **$81.8 million**, resulting in a diluted EPS of **$0.62** Q2 Consolidated Statements of Income (Amounts in thousands) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Sales | $1,188,092 | $1,156,892 | | Cost of sales | $(781,510) | $(790,796) | | Gross profit | $406,582 | $366,096 | | Operating income | $146,590 | $121,304 | | Earnings before income taxes | $103,860 | $100,298 | | Net earnings attributable to Flowserve Corporation | $81,754 | $72,616 | | Diluted EPS | $0.62 | $0.55 | [Condensed Consolidated Statements of Income (Six Months Ended June 30)](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20%28Six%20Months%20Ended%20June%2030%29) For the first six months of 2025, sales increased by **3.9%** to **$2,332.6 million**, with gross profit growing by **10.0%** to **$775.9 million**, operating income rose by **18.8%** to **$278.5 million**, and net earnings attributable to Flowserve Corporation increased by **6.0%** to **$155.7 million**, resulting in a diluted EPS of **$1.18** YTD Consolidated Statements of Income (Amounts in thousands) | Metric | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | | Sales | $2,332,635 | $2,244,371 | | Cost of sales | $(1,556,719) | $(1,539,307) | | Gross profit | $775,916 | $705,064 | | Operating income | $278,479 | $234,382 | | Earnings before income taxes | $201,060 | $198,355 | | Net earnings attributable to Flowserve Corporation | $155,659 | $146,836 | | Diluted EPS | $1.18 | $1.11 | [Condensed Consolidated Balance Sheets](index=15&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets increased to **$5,682.5 million** from **$5,500.8 million** at year-end 2024, driven by increases in accounts receivable, contract assets, and goodwill, while total equity also grew significantly to **$2,279.0 million** from **$2,051.7 million**, primarily due to higher retained earnings and a reduction in accumulated other comprehensive loss Consolidated Balance Sheets (Amounts in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total current assets | $3,004,028 | $2,904,497 | | Property, plant and equipment, net | $558,345 | $539,703 | | Goodwill | $1,337,747 | $1,286,295 | | Total assets | $5,682,525 | $5,500,821 | | Total current liabilities | $1,430,382 | $1,468,084 | | Long-term debt due after one year | $1,440,676 | $1,460,132 | | Total equity | $2,279,002 | $2,051,712 | [Condensed Consolidated Statements of Cash Flows](index=16&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2025, net cash provided by operating activities more than doubled to **$104.2 million** from **$49.5 million** in the prior year, while net cash used in financing activities significantly increased to **$154.4 million**, primarily due to higher share repurchases and a contingent consideration payment related to an acquired business YTD Consolidated Statements of Cash Flows (Amounts in thousands) | Metric | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | | Net cash flows provided by operating activities | $104,212 | $49,475 | | Net cash flows (used) by investing activities | $(27,473) | $(30,090) | | Net cash flows (used) by financing activities | $(154,444) | $(36,683) | | Net change in cash and cash equivalents | $(46,238) | $(30,595) | | Cash and cash equivalents at end of period | $629,203 | $515,083 | [Consolidated Non-GAAP Financial Measures Reconciliation (Unaudited)](index=5&type=section&id=Consolidated%20Non-GAAP%20Financial%20Measures%20Reconciliation%20%28Unaudited%29) This section reconciles reported GAAP figures with non-GAAP measures for Q2 and YTD 2025 and 2024, highlighting adjustments for merger costs, realignment charges, and foreign exchange impacts to provide a clearer view of underlying performance [Three Months Ended June 30, 2025 Reconciliation](index=5&type=section&id=Three%20Months%20Ended%20June%2030%2C%202025%20Reconciliation) For Q2 2025, adjusted gross profit margin was **34.9%** (vs. 34.2% reported) and adjusted operating margin was **14.6%** (vs. 12.3% reported), with adjusted diluted EPS reaching **$0.91** (vs. $0.62 reported), and key adjustments including merger transaction costs and below-the-line foreign exchange impacts Q2 2025 Consolidated Non-GAAP Reconciliation (Amounts in thousands) | Metric | Reported | Adjusted | | :--- | :--- | :--- | | Gross Profit | $406,582 | $415,124 | | Gross as % of sales | 34.2% | 34.9% | | Operating Income | $146,590 | $173,732 | | Operating as % of sales | 12.3% | 14.6% | | Net Earnings | $81,754 | $119,976 | | Diluted EPS | $0.62 | $0.91 | - Key adjustments included **$15.5 million** for merger transaction costs and **$20.0 million** for below-the-line foreign exchange impacts[12](index=12&type=chunk)[14](index=14&type=chunk)[15](index=15&type=chunk) [Three Months Ended June 30, 2024 Reconciliation](index=6&type=section&id=Three%20Months%20Ended%20June%2030%2C%202024%20Reconciliation) For Q2 2024, adjusted gross profit margin was **32.3%** (vs. 31.6% reported) and adjusted operating margin was **12.5%** (vs. 10.5% reported), with adjusted diluted EPS at **$0.73** (vs. $0.55 reported), and significant adjustments for realignment charges and discrete asset write-downs Q2 2024 Consolidated Non-GAAP Reconciliation (Amounts in thousands) | Metric | Reported | Adjusted | | :--- | :--- | :--- | | Gross Profit | $366,096 | $373,617 | | Gross as % of sales | 31.6% | 32.3% | | Operating Income | $121,304 | $144,434 | | Operating as % of sales | 10.5% | 12.5% | | Net Earnings | $72,616 | $96,332 | | Diluted EPS | $0.55 | $0.73 | - Significant adjustments included **$20.2 million** for realignment charges and **$4.0 million** for discrete asset write-downs[16](index=16&type=chunk)[17](index=17&type=chunk) [Six Months Ended June 30, 2025 Reconciliation](index=10&type=section&id=Six%20Months%20Ended%20June%2030%2C%202025%20Reconciliation) For YTD 2025, adjusted gross profit margin was **34.2%** (vs. 33.3% reported) and adjusted operating margin was **13.8%** (vs. 11.9% reported), with adjusted diluted EPS reaching **$1.63** (vs. $1.18 reported), and major adjustments for merger transaction costs and below-the-line foreign exchange impacts YTD 2025 Consolidated Non-GAAP Reconciliation (Amounts in thousands) | Metric | Reported | Adjusted | | :--- | :--- | :--- | | Gross Profit | $775,916 | $797,981 | | Gross as % of sales | 33.3% | 34.2% | | Operating Income | $278,479 | $320,804 | | Operating as % of sales | 11.9% | 13.8% | | Net Earnings | $155,659 | $215,509 | | Diluted EPS | $1.18 | $1.63 | - Major adjustments included **$15.5 million** for merger transaction costs and **$31.4 million** for below-the-line foreign exchange impacts[27](index=27&type=chunk)[28](index=28&type=chunk) [Six Months Ended June 30, 2024 Reconciliation](index=10&type=section&id=Six%20Months%20Ended%20June%2030%2C%202024%20Reconciliation) For YTD 2024, adjusted gross profit margin was **32.0%** (vs. 31.4% reported) and adjusted operating margin was **11.7%** (vs. 10.4% reported), with adjusted diluted EPS at **$1.31** (vs. $1.11 reported), and significant adjustments for realignment charges and discrete asset write-downs YTD 2024 Consolidated Non-GAAP Reconciliation (Amounts in thousands) | Metric | Reported | Adjusted | | :--- | :--- | :--- | | Gross Profit | $705,064 | $718,258 | | Gross as % of sales | 31.4% | 32.0% | | Operating Income | $234,382 | $262,679 | | Operating as % of sales | 10.4% | 11.7% | | Net Earnings | $146,836 | $173,724 | | Diluted EPS | $1.11 | $1.31 | - Significant adjustments included **$27.4 million** for realignment charges and **$4.0 million** for discrete asset write-downs[29](index=29&type=chunk)[31](index=31&type=chunk) [Segment Information (Unaudited)](index=6&type=section&id=Segment%20Information%20%28Unaudited%29) This section details the Q2 and YTD 2025 performance of the Flowserve Pumps Division (FPD) and Flow Control Division (FCD), including bookings, sales, and margin analysis [Flowserve Pumps Division (FPD)](index=6&type=section&id=Flowserve%20Pumps%20Division%20%28FPD%29) The Flowserve Pumps Division demonstrated strong margin expansion and operating income growth in Q2 and YTD 2025, despite a decrease in Q2 bookings [FPD Q2 Reported Performance](index=6&type=section&id=FPD%20Q2%20Reported%20Performance) In Q2 2025, Flowserve Pumps Division's sales increased slightly by **0.8%** to **$818.9 million**, despite a **19.5%** decrease in bookings, while the division significantly improved its gross profit margin by **450 basis points** to **36.5%** and saw a **24.2%** rise in segment operating income to **$162.7 million**, with operating margin expanding to **19.9%** FPD Q2 Reported Performance (Amounts in millions) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Bookings | $723.8 | $898.8 | (19.5%) | | Sales | $818.9 | $812.2 | 0.8% | | Gross profit margin | 36.5% | 32.0% | 450 bps | | Segment operating income | $162.7 | $131.0 | 24.2% | | Segment operating income as a percentage of sales | 19.9% | 16.1% | 380 bps | [FPD Q2 Non-GAAP Reconciliation](index=7&type=section&id=FPD%20Q2%20Non-GAAP%20Reconciliation) For Q2 2025, FPD's adjusted gross profit margin was **36.8%** (vs. 36.5% reported) and adjusted operating margin was **20.3%** (vs. 19.9% reported), reflecting adjustments primarily for realignment charges and discrete items FPD Q2 Non-GAAP Reconciliation (Amounts in thousands) | Metric | Reported (Q2 2025) | Adjusted (Q2 2025) | | :--- | :--- | :--- | | Gross Profit | $299,229 | $301,152 | | Gross as % of sales | 36.5% | 36.8% | | Operating Income | $162,745 | $166,516 | | Operating as % of sales | 19.9% | 20.3% | [FPD YTD Reported Performance](index=11&type=section&id=FPD%20YTD%20Reported%20Performance) For the first six months of 2025, FPD's sales increased by **1.3%** to **$1,602.1 million**, with bookings decreasing slightly by **1.6%**, while gross profit margin improved by **330 basis points** to **35.4%**, and segment operating income grew by **23.7%** to **$299.3 million**, with operating margin reaching **18.7%** FPD YTD Reported Performance (Amounts in millions) | Metric | YTD 2025 | YTD 2024 | Change | | :--- | :--- | :--- | :--- | | Bookings | $1,576.1 | $1,602.2 | (1.6%) | | Sales | $1,602.1 | $1,581.6 | 1.3% | | Gross profit margin | 35.4% | 32.1% | 330 bps | | Segment operating income | $299.3 | $241.9 | 23.7% | | Segment operating income as a percentage of sales | 18.7% | 15.3% | 340 bps | [FPD YTD Non-GAAP Reconciliation](index=12&type=section&id=FPD%20YTD%20Non-GAAP%20Reconciliation) For YTD 2025, FPD's adjusted gross profit margin was **35.7%** (vs. 35.4% reported) and adjusted operating margin was **19.0%** (vs. 18.7% reported), after accounting for realignment charges and discrete items FPD YTD Non-GAAP Reconciliation (Amounts in thousands) | Metric | Reported (YTD 2025) | Adjusted (YTD 2025) | | :--- | :--- | :--- | | Gross Profit | $567,691 | $572,621 | | Gross as % of sales | 35.4% | 35.7% | | Operating Income | $299,259 | $305,164 | | Operating as % of sales | 18.7% | 19.0% | [Flow Control Division (FCD)](index=7&type=section&id=Flow%20Control%20Division%20%28FCD%29) The Flow Control Division achieved sales and operating income growth in Q2 and YTD 2025, though gross profit margins saw a slight decline in both periods [FCD Q2 Reported Performance](index=7&type=section&id=FCD%20Q2%20Reported%20Performance) In Q2 2025, Flow Control Division's sales increased by **6.8%** to **$371.5 million**, and bookings rose by **1.6%** to **$354.7 million**, while gross profit margin decreased by **160 basis points** to **29.0%**, but segment operating income grew by **17.1%** to **$37.8 million**, with operating margin at **10.2%** FCD Q2 Reported Performance (Amounts in millions) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Bookings | $354.7 | $349.2 | 1.6% | | Sales | $371.5 | $347.7 | 6.8% | | Gross profit margin | 29.0% | 30.6% | (160) bps | | Segment operating income | $37.8 | $32.3 | 17.1% | | Segment operating income as a percentage of sales | 10.2% | 9.3% | 90 bps | [FCD Q2 Non-GAAP Reconciliation](index=8&type=section&id=FCD%20Q2%20Non-GAAP%20Reconciliation) For Q2 2025, FCD's adjusted gross profit margin was **30.8%** (vs. 29.0% reported) and adjusted operating margin was **12.2%** (vs. 10.2% reported), with adjustments including realignment charges, acquisition-related costs, purchase accounting step-up, and discrete items FCD Q2 Non-GAAP Reconciliation (Amounts in thousands) | Metric | Reported (Q2 2025) | Adjusted (Q2 2025) | | :--- | :--- | :--- | | Gross Profit | $107,694 | $114,310 | | Gross as % of sales | 29.0% | 30.8% | | Operating Income | $37,771 | $45,472 | | Operating as % of sales | 10.2% | 12.2% | - Adjustments include **$3.9 million** for acquisition-related costs and **$3.9 million** for purchase accounting step-up and intangible asset amortization[21](index=21&type=chunk)[24](index=24&type=chunk) [FCD YTD Reported Performance](index=11&type=section&id=FCD%20YTD%20Reported%20Performance) For the first six months of 2025, FCD's sales increased by **10.1%** to **$735.6 million**, and bookings grew by **5.9%** to **$730.4 million**, while gross profit margin decreased by **150 basis points** to **28.3%**, and segment operating income rose by **3.4%** to **$69.3 million**, with operating margin at **9.4%** FCD YTD Reported Performance (Amounts in millions) | Metric | YTD 2025 | YTD 2024 | Change | | :--- | :--- | :--- | :--- | | Bookings | $730.4 | $689.9 | 5.9% | | Sales | $735.6 | $668.2 | 10.1% | | Gross profit margin | 28.3% | 29.8% | (150) bps | | Segment operating income | $69.3 | $67.0 | 3.4% | | Segment operating income as a percentage of sales | 9.4% | 10.0% | (60) bps | [FCD YTD Non-GAAP Reconciliation](index=12&type=section&id=FCD%20YTD%20Non-GAAP%20Reconciliation) For YTD 2025, FCD's adjusted gross profit margin was **30.6%** (vs. 28.3% reported) and adjusted operating margin was **12.2%** (vs. 9.4% reported), with adjustments including realignment charges, acquisition-related costs, purchase accounting step-up, and discrete items FCD YTD Non-GAAP Reconciliation (Amounts in thousands) | Metric | Reported (YTD 2025) | Adjusted (YTD 2025) | | :--- | :--- | :--- | | Gross Profit | $207,881 | $225,078 | | Gross as % of sales | 28.3% | 30.6% | | Operating Income | $69,254 | $90,060 | | Operating as % of sales | 9.4% | 12.2% | - Adjustments include **$5.2 million** for acquisition-related costs and **$8.7 million** for purchase accounting step-up and intangible asset amortization[33](index=33&type=chunk)[34](index=34&type=chunk) [Second Quarter and Year-to-Date 2025—Segment Results Summary](index=14&type=section&id=Second%20Quarter%20and%20Year-to-Date%202025%E2%80%94Segment%20Results%20Summary) The Flowserve Pumps Division (FPD) showed strong margin expansion in Q2 and YTD 2025, despite a decrease in Q2 bookings, while the Flow Control Division (FCD) experienced sales growth in both periods but saw a decline in gross and adjusted operating margins in Q2, though YTD adjusted operating margin remained stable Segment Results Summary (Q2 & YTD 2025 vs 2024, Amounts in millions) | Metric | FPD Q2 2025 | FPD Q2 Change | FPD YTD 2025 | FPD YTD Change | FCD Q2 2025 | FCD Q2 Change | FCD YTD 2025 | FCD YTD Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Bookings | $723.8 | -19.5% | $1,576.1 | -1.6% | $354.7 | 1.6% | $730.4 | 5.9% | | Sales | $818.9 | 0.8% | $1,602.1 | 1.3% | $371.5 | 6.8% | $735.6 | 10.1% | | Gross Margin (% of sales) | 36.5% | 450 bps | 35.4% | 330 bps | 29.0% | (160) bps | 28.3% | (150) bps | | Operating Income | $162.7 | 24.2% | $299.3 | 23.7% | $37.8 | 17.1% | $69.3 | 3.4% | | Operating Margin (% of sales) | 19.9% | 380 bps | 18.7% | 340 bps | 10.2% | 90 bps | 9.4% | (60) bps | | Adjusted Operating Income | $166.5 | 21.0% | $305.2 | 20.8% | $45.5 | -2.2% | $90.1 | 9.7% | | Adj. Oper. Margin (% of sales) | 20.3% | 340 bps | 19.0% | 300 bps | 12.2% | (120) bps | 12.2% | (10) bps | [Additional Information](index=3&type=section&id=Additional%20Information) This section provides details on the upcoming conference call, an overview of Flowserve Corporation, contact information, a safe harbor statement, and an explanation of non-GAAP financial measures [Webcast and Conference Call Instructions](index=3&type=section&id=Webcast%20and%20Conference%20Call%20Instructions) Flowserve will host a conference call on Wednesday, July 30, at 11:00 a.m. Eastern Time to discuss its second quarter results, with access available on the company's Investors page - Conference call to discuss Q2 results on Wednesday, July 30, at 11:00 a.m. Eastern Time[9](index=9&type=chunk) - Accessible by shareholders and interested parties on Flowserve's Investors page[9](index=9&type=chunk) [About Flowserve](index=17&type=section&id=About%20Flowserve) Flowserve Corporation is a global leader in fluid motion and control products and services, operating in over 50 countries and providing engineered and industrial pumps, seals, valves, and related flow management services - Flowserve Corporation is one of the world's leading providers of fluid motion and control products and services[39](index=39&type=chunk) - Operates in more than **50 countries**[39](index=39&type=chunk) - Produces engineered and industrial pumps, seals and valves as well as a range of related flow management services[39](index=39&type=chunk) [Flowserve Contacts](index=17&type=section&id=Flowserve%20Contacts) Contact information is provided for Investor Relations, including Brian Ezzell and Tarek Zeni, and for Media inquiries, David Mason - Investor Contacts: Brian Ezzell, Vice President, Investor Relations, Treasurer & Corporate Finance (469) 420-3222; Tarek Zeni, Director, Investor Relations (469) 420-4045[40](index=40&type=chunk) - Media Contact: David Mason, Senior Director, Communications (214) 500-9687[40](index=40&type=chunk) [Safe Harbor Statement](index=17&type=section&id=Safe%20Harbor%20Statement) The news release contains forward-looking statements that are predictions, not guarantees, and are subject to numerous difficult-to-predict risks and uncertainties, including global supply chain disruptions, inflationary pressures, potential order cancellations, dependence on customer investments, volatile raw material prices, and various economic, political, and operational challenges associated with international business - Forward-looking statements are based on current expectations, projections, estimates, and assumptions, but are 'only predictions, not guarantees' and 'subject to numerous risks and uncertainties'[40](index=40&type=chunk)[42](index=42&type=chunk) - Key risks include global supply chain disruptions, inflationary environment, potential for unexpected cancellations or delays of customer orders, dependence on customer capital investment, volatile raw materials prices, and economic, political, and other risks associated with international operations[42](index=42&type=chunk) - Other risks include public health emergencies, increased aging and slower collection of receivables, tariffs, foreign currency fluctuations, litigation (e.g., asbestos claims), acquisitions, goodwill impairment, dependence on third-party suppliers, competition, new product development, environmental compliance, labor matters, debt financing access, intellectual property protection, pension plans, internal control limitations, deferred tax asset valuation, and IT infrastructure security[42](index=42&type=chunk) [Non-GAAP Financial Measures Explanation](index=18&type=section&id=Non-GAAP%20Financial%20Measures%20Explanation) Flowserve uses non-GAAP financial measures to provide additional useful comparisons and a clearer view of underlying business trends by excluding certain non-recurring items, which are utilized for internal decision-making and performance evaluation but are not a substitute for GAAP results - Non-GAAP financial measures are used to present additional useful comparisons and provide a clearer view of underlying business trends by excluding certain non-recurring items[44](index=44&type=chunk) - Management uses these non-GAAP measures for financial, operating, planning, compensation decisions, and performance evaluation[44](index=44&type=chunk) - Non-GAAP financial measures should be viewed in addition to, and not as a substitute for, the Company's reported results prepared in accordance with GAAP[44](index=44&type=chunk)

Market Overview - Wall Street's winning streak continues, driven by positive trade news and strong economic data, with the S&P 500 reaching a record high following a significant trade deal between the United States and Japan, which lowers tariffs and opens up $550 billion in new investments [1] - Retail sales exceeded expectations in June, and jobless claims decreased, indicating a robust labor market and steady consumer spending despite ongoing tariff concerns [1][9] Trade Negotiations and Economic Environment - Progress in trade negotiations with the U.K., Indonesia, and the Philippines, along with positive signals from China and the EU, creates an encouraging backdrop for equities [2] - The current earnings season is contributing to market momentum, suggesting that focusing on relative price strength can help investors identify leading stocks [2] Stock Recommendations - Recommended stocks based on relative price strength include Western Digital Corporation (WDC), Flowserve Corporation (FLS), OPENLANE, Inc. (KAR), AngloGold Ashanti plc (AU), and Jabil Inc. (JBL) [3][9] - These stocks are outperforming their peers, supported by strong relative price strength metrics [9] Relative Price Strength Strategy - Earnings growth and valuation multiples are crucial for assessing a stock's potential returns and its performance relative to peers [4] - Investors are advised to avoid underperforming stocks and focus on those that are outperforming their respective industries or benchmarks [5] Screening Parameters - Stocks are screened based on relative price changes over 12 weeks, 4 weeks, and 1 week, as well as positive current-quarter estimate revisions [8] - Stocks that have shown better performance than the S&P 500 over the last 1 to 3 months and have solid fundamentals are considered for investment [6] Company Profiles - **Western Digital Corporation (WDC)**: Market cap of $23.4 billion, expected EPS growth of 2,465% year-over-year for fiscal 2025, with a trailing four-quarter earnings surprise of approximately 7.3% [11][12] - **Flowserve Corporation (FLS)**: Market cap not specified, expected EPS growth rate of 14.2% over three to five years, with a 22.1% year-over-year growth estimate for 2025 [13][14] - **OPENLANE, Inc. (KAR)**: Market cap of $2.7 billion, expected EPS growth of 17.7% year-over-year for 2025, shares up 44% in a year [14][15] - **AngloGold Ashanti plc (AU)**: Market cap of $21.8 billion, expected EPS growth of 125.8% year-over-year for 2025, shares up 89% in a year [16] - **Jabil Inc. (JBL)**: Market cap not specified, expected EPS growth rate of 16.6% over three to five years, with a 10.6% year-over-year growth estimate for 2025 [17][18]

Core Viewpoint - Flowserve (FLS) has been upgraded to a Zacks Rank 1 (Strong Buy), indicating a positive trend in earnings estimates which is a significant factor influencing stock prices [1][2]. Earnings Estimates and Stock Price Impact - The Zacks rating system is based on changes in earnings estimates, which are closely correlated with short-term stock price movements, particularly due to institutional investors adjusting their valuations based on these estimates [3][5]. - An increase in earnings estimates typically leads to higher fair value calculations for stocks, prompting institutional investors to buy or sell, thus affecting stock prices [3]. Flowserve's Earnings Outlook - For the fiscal year ending December 2025, Flowserve is expected to earn $3.20 per share, which remains unchanged from the previous year, but the Zacks Consensus Estimate has increased by 2.6% over the past three months [7]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 stocks historically generating an average annual return of +25% since 1988 [6]. - The upgrade of Flowserve to Zacks Rank 1 places it in the top 5% of Zacks-covered stocks, indicating strong potential for near-term price appreciation [9].

Group 1 - FLSmidth & Co. A/S initiated a share buy-back programme on 25 June 2025, with a maximum amount of DKK 1.4 billion and up to 4,600,000 shares, representing approximately 8 percent of the company's share capital [1] - The share buy-back programme is executed in accordance with EU regulations on market abuse and safe harbour [1] - As of 8 July 2025, a total of 218,000 shares have been bought back under the programme, with a total transaction value of DKK 84,480,553.18 [2][3] Group 2 - Following the transactions, FLSmidth holds 785,002 treasury shares, which is 1.36 percent of the total share capital [3] - The average transaction prices for shares bought back during the specified period ranged from DKK 381.46 to DKK 390.75 [2] - The company aims to improve sustainability in the mining industry and has set a target for zero emissions by 2030 [4]