Flowserve(FLS) - 2025 Q1 - Quarterly Report

Financial Performance - Bookings for Q1 2025 increased by $188.1 million, or 18.1$1,226.4 million[130] - Sales for Q1 2025 rose by $57.0 million, or 5.2$1,144.5 million[131] - Gross profit for Q1 2025 increased by $30.3 million, or 8.9$369.3 million, with a gross profit margin of 32.3%[133] - Operating income for Q1 2025 rose by $18.8 million, or 16.6$3.2 million, or 128.0%, primarily due to higher earnings from FPD joint ventures in South Korea[137] - SG&A for Q1 2025 increased by $14.8 million, or 6.5$3.9 million due to higher outstanding debt, while interest income rose by $0.5 million[139] - Other net expense for Q1 2025 increased by$16.4 million, primarily due to foreign exchange losses and a pension settlement loss of $1.5 million[140] - The effective tax rate for Q1 2025 decreased to 18.3$74.8 million, resulting from foreign currency translation adjustments[142] Backlog and Future Expectations - Backlog as of March 31, 2025, was $2,902.9 million, an increase of$113.3 million, or 4.1%, from December 31, 2024[132] - The company expects to deliver annual revenue growth in 2025, supported by a strong backlog and improved execution[122] - Backlog increased by $19.8 million, or 2.3$889.4 million at March 31, 2025, with currency effects contributing approximately $9 million[161] Segment Performance - FPD segment bookings for Q1 2025 increased by$149.4 million, or 21.2%, with significant growth in general industries and power generation[147] - FCD segment bookings for Q1 2025 increased by $34.9 million, or 10.2$49.9 million for the three months ended March 31, 2025, compared to cash provided of $62.3 million for the same period in 2024[164] - Cash balance decreased by$134.6 million to $540.8 million at March 31, 2025, due to various cash outflows including$27.6 million in dividends and $21.1 million in share repurchases[163] - Capital expenditures for the three months ended March 31, 2025 were$11.7 million, a decrease of $1.9 million compared to the same period in 2024[169] - Cash flows used by financing activities were$84.2 million for the three months ended March 31, 2025, compared to $54.2 million for the same period in 2024[170] - As of March 31, 2025, the company had$662.2 million of available capacity under its Second Amended and Restated Credit Agreement[171] - The company has $258.8 million of remaining capacity for Board of Directors approved share repurchases as of March 31, 2025[174] Risks and Challenges - The company faces increased aging and slower collection of receivables, particularly in Latin America and other emerging markets[188] - Potential adverse effects from new tariffs and related retaliatory actions could impact business operations[188] - The company is exposed to fluctuations in foreign currency exchange rates, especially in hyperinflationary countries like Argentina[188] - The company may face adverse impacts from impairment in the carrying value of goodwill or other intangible assets[188] - The competitive nature of the markets in which the company operates poses challenges to maintaining its competitive position[188] - The company must successfully develop and introduce new products and integrate new technologies, including artificial intelligence and machine learning[188] - The company is dependent on third-party suppliers, whose failure to perform timely could adversely affect operations[188] - Ineffective internal controls could impact the accuracy and timely reporting of business and financial results[188] Acquisition and Investment - The company incurred$1.3 million in acquisition-related costs for the acquisition of MOGAS in Q1 2025[125] - The 2025 Realignment Programs are anticipated to require a total investment of approximately $23 million, with$8 million estimated to be non-cash[126]