Flowserve(US:FLS)2026-02-17 21:05Financial Performance - Total bookings for 2025 were $4.7 billion, consistent with 2024, and an increase from $4.3 billion in 2023[28]. - In 2025, Flowserve reported bookings of $4.7 billion, an increase of $52.2 million, or 1.1%, compared to 2024, driven by increased customer bookings in general industries and power generation[221]. - Sales for 2025 reached $4.73 billion, reflecting an increase of $171.5 million, or 3.8%, compared to 2024, with aftermarket sales constituting about 53% of total sales[223]. - The backlog at December 31, 2025, was $2.9 billion, up $78.1 million, or 2.8%, from the previous year, with approximately 42% related to aftermarket orders[222]. - Operating income decreased by $62.4 million, or 13.5%, to $462.3 million, primarily due to increased SG&A and losses on divestitures[232]. - Net earnings attributable to Flowserve Corporation increased by $63.5 million to $346.2 million, or $2.64 per diluted share[239]. - Gross profit in 2025 increased by $147.2 million, or 10.3%, to $1,581.4 million, with a gross profit margin of 33.4%, up from 31.5% in 2024[226]. - SG&A expenses rose by $84.1 million, or 8.6%, to $978.0 million, with SG&A as a percentage of sales increasing to 21.5%[227]. Backlog and Orders - FPD's backlog of orders as of December 31, 2025, was $2,044.8 million, up from $1,930.4 million as of December 31, 2024, with an expected revenue recognition of approximately 73% during 2026[53]. - FCD's backlog of orders as of December 31, 2025, was $828.6 million, down from $869.6 million as of December 31, 2024, with an expected revenue recognition of approximately 82% during 2026[69]. - Backlog at December 31, 2025, was $2.0 billion, an increase of $114.4 million, or 5.9%, compared to December 31, 2024[250]. Research and Development - The company is focusing on diversification into nuclear, power generation, water, specialty chemicals, and new vacuum and seal technologies[20]. - The company is investing in R&D to enhance energy efficiency and reduce total cost-of-ownership across flow control systems[24]. - The company has invested in R&D focused on enhancing user experience and advancing technological leadership, particularly in energy transition solutions[63]. - The company continues to explore additive manufacturing techniques to reduce lead time and lower production costs[47]. Operational Efficiency - The proprietary IIoT solution, RedRaven, is being implemented to improve equipment monitoring and operational efficiency[23]. - The company added condition monitoring services for control valves in 2022, enabled by its proprietary IIoT solution, RedRaven[61]. - The Flowserve Energy Advantage Program aims to help operators achieve carbon reduction goals and lower total cost of ownership[22]. Market and Customer Base - The company has a diversified customer base of over 10,000, including leading EPC firms and original equipment manufacturers[28]. - The company operates 37 manufacturing facilities globally, with 126 Quick Response Centers (QRCs) to support aftermarket services[40]. - FCD's products are manufactured in 18 principal facilities globally, with a distribution network of 26 Quick Response Centers (QRCs) worldwide[55]. Financial Position and Liquidity - As of December 31, 2025, the company had a cash balance of $760.2 million, an increase of $84.7 million from the previous year, driven by $505.9 million in operating cash inflows[275]. - The company reported a total liquidity of approximately $1,376 million, consisting of $760 million in cash and cash equivalents and $616 million available under the Credit Facility[277]. - The Second Amended and Restated Credit Agreement includes an $800.0 million Revolving Credit Facility and a Term Loan increased from $300.0 million to $500.0 million, with a maturity date extended to October 10, 2029[272]. Capital Expenditures and Investments - The company anticipates capital expenditures between $90 million and $100 million in 2026, focusing on strategic initiatives and IT infrastructure[213]. - The company expects capital expenditures in 2026 to be between $90 million and $100 million, excluding any merger and acquisition activities[267]. Employee and Compensation - The company maintains a market-based compensation strategy and offers competitive health and wellness programs to support employee well-being[84]. - The company focuses on developing its associates through various training and development opportunities, including leadership programs and performance management systems[85]. - The company operates with approximately 16,000 employees globally, with 9,000 in FPD and 4,000 in FCD as of December 31, 2025[80]. Tax and Regulatory - The effective tax rate increased to 29.6% in 2025 from 22.0% in 2024, influenced by the One Big Beautiful Bill Act and state income taxes[236]. Pension and Benefits - The company made $10.0 million cash contributions to its U.S. pension plan in 2025, down from $20.0 million in 2024, with the plan fully funded as of December 31, 2025[276]. - The projected benefit obligation for defined benefit pension plans was $700.3 million as of December 31, 2025, slightly down from $700.7 million in 2024[286]. - The expected net pension expense for 2026 is projected to be approximately $7.2 million lower than the $27.7 million in 2025, primarily due to settlement charges incurred in 2025 on non-U.S. pension plans[296].