Flowserve(US:FLS)2025-10-28 20:01Financial Performance - The company reported bookings of $1,213.0 million for the three months ended September 30, 2025, representing an increase of $9.4 million, or 0.8%, compared to the same period in 2024[160]. - Sales for the three months ended September 30, 2025, were $1,174.4 million, up from $1,133.1 million in the same period of 2024[160]. - Bookings for the nine months ended September 30, 2025, increased by $24.0 million, or 0.7%, compared to the same period in 2024[161]. - Sales for the three months ended September 30, 2025 increased by $41.3 million, or 3.6%, compared to the same period in 2024, driven by aftermarket customer sales[163]. - Sales for the nine months ended September 30, 2025 increased by $91.5 million, or 9.0%, compared to the same period in 2024, driven by increased customer sales in North America ($46 million) and Asia Pacific ($25 million)[204]. Profitability and Margins - Gross profit for the three months ended September 30, 2025 increased by $23.2 million, or 6.5%, with a gross profit margin of 32.4%, up from 31.5% in 2024[166]. - Gross profit for the Flowserve Pumps Division for the three months ended September 30, 2025, increased by $12.6 million, or 5.0%, with a gross profit margin of 33.2%[192]. - Gross profit for the three months ended September 30, 2025 increased by $7.7 million, or 7.2%, with a gross profit margin of 30.3%, up from 30.2% in the same period in 2024[205]. - Operating income for the three months ended September 30, 2025 decreased by $23.9 million, or 23.2%, with operating income as a percentage of sales at 6.7% compared to 9.1% in 2024[173]. - Operating income for the Flowserve Pumps Division for the three months ended September 30, 2025, increased by $25.6 million, or 23.4%, compared to the same period in 2024[197]. - Operating income for the nine months ended September 30, 2025 increased by $2.0 million, or 1.8%, despite a $27.6 million increase in SG&A[211]. Expenses and Costs - SG&A expenses for the three months ended September 30, 2025 increased by $46.2 million, or 17.8%, with SG&A as a percentage of sales rising to 26.0% from 22.9% in 2024[168]. - SG&A for the Flowserve Pumps Division for the three months ended September 30, 2025, decreased by $14.1 million, or 9.5%, compared to the same period in 2024[194]. - SG&A for the nine months ended September 30, 2025 increased by $27.6 million, or 15.4%, primarily due to increased acquisition and integration costs associated with the MOGAS acquisition[208]. - The company incurred $9.5 million in acquisition and integration-related costs for MOGAS for the nine months ended September 30, 2025[154]. Backlog and Future Expectations - Backlog as of September 30, 2025 was $2,896.1 million, an increase of $106.5 million, or 3.8%, from December 31, 2024, with approximately 41% related to aftermarket orders[165]. - The backlog at September 30, 2025, was $2,006.5 million, an increase of $76.1 million, or 3.9%, compared to December 31, 2024[198]. - The company expects to deliver annual revenue growth in 2025, supported by a strong backlog and improved execution following the acquisition of MOGAS[150]. Cash and Investments - The company has cash and cash equivalents of $833.8 million as of September 30, 2025, with $715.4 million of borrowings available under its credit agreement[151]. - Cash provided by operating activities for the nine months ended September 30, 2025 was $506.1 million, compared to $228.0 million for the same period in 2024[215]. - Cash balance increased by $158.4 million to $833.8 million at September 30, 2025, compared to December 31, 2024[214]. - Capital expenditures for the nine months ended September 30, 2025 were $45.5 million, a decrease of $6.6 million compared to the same period in 2024[220]. - The company has $254.9 million of remaining capacity for Board of Directors approved share repurchases as of September 30, 2025[225]. Tax and Other Income - The effective tax rate for the three months ended September 30, 2025 was 29.5%, up from 22.8% in 2024, influenced by state income taxes and foreign operations[179]. - The effective tax rate for the nine months ended September 30, 2025, increased to 24.5% from 22.4% in the same period of 2024[180]. - Other income for the three months ended September 30, 2025 increased by $262.1 million, primarily due to a $266.0 million payment received from the terminated Chart Merger[177]. - Other comprehensive income for the three months ended September 30, 2025, decreased by $64.6 million to a loss of $13.9 million compared to income of $50.7 million in the same period of 2024[182]. Market and Operational Risks - The company faces risks from global supply chain disruptions and inflation, which could increase manufacturing costs and affect product delivery efficiency[235]. - There is a substantial dependence on the success of the energy, chemical, and power generation industries for sales performance[235]. - The company is exposed to credit-related losses due to potential non-performance by counterparties to financial instruments[237]. - Increased aging and slower collection of receivables, particularly in Latin America and other emerging markets, could adversely affect cash flow[235]. - The company is at risk from potential adverse effects of new tariffs and retaliatory actions, impacting international operations[241]. - The company’s ability to maintain competitive positioning relies on successful development and introduction of new products and technologies, including AI and machine learning[241]. Foreign Currency Impact - The company recognized net foreign currency translation losses of $(16.9) million for Q3 2025, compared to gains of $52.9 million in Q3 2024[238]. - For the nine months ended September 30, 2025, the company reported foreign currency translation losses of $142.3 million, significantly higher than $0.2 million in the same period of 2024[238]. - As of September 30, 2025, the company had $199.3 million in aggregate notional amount outstanding in foreign exchange forward contracts, down from $695.9 million at December 31, 2024[239]. - A sensitivity analysis indicated that a 10% change in foreign currency exchange rates could impact net earnings by approximately $30.0 million for the nine months ended September 30, 2025[240].