Flowserve Corporation Reports First Quarter 2022 Results

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Flowserve Corporation, a provider of flow control products and services for the global infrastructure markets, announced its financial results for the first quarter ended March 31, 2022.

• First quarter 2022 highlights (all comparisons to the 2021 first quarter, unless otherwise noted)
  • Reported loss per share (LPS) of $0.12 and adjusted earnings per share (EPS) of $0.07
  • Reported LPS includes a net after-tax adjusted loss of $25.4 million, comprised primarily of reserves of Russia-related financial exposures and below-the-line foreign exchange impacts
• Total bookings were $1.09 billion, up 14.9%, or 17.6% on a constant currency basis
  • Original equipment bookings were $543.8 million, up 11.5% or 14.1% on a constant currency basis
  • Aftermarket bookings were $542.3 million, up 18.6%, or 21.4% on a constant currency basis, and represent highest bookings quarter since 2014
• Sales were $821.1 million, down 4.2%, or 2.0% on a constant currency basis
  • Original equipment sales were $383.2 million, down 5.8%, or 3.8% on a constant currency basis
  • Aftermarket sales were $437.9 million, down 2.8%, or 0.4% on a constant currency basis
• Reported gross and operating margins were 25.5% and 0.9%, respectively
  • Adjusted gross and operating margins were 26.7% and 3.3%, respectively

“Demand across our end markets continued to improve in the first quarter of 2022, including the release of a number of project awards which had been deferred over the last two years,” said Scott Rowe, Flowserve’s president and chief executive officer. “High utilization rates in our customers’ facilities continued to support strong aftermarket and MRO spending, which drove our highest aftermarket bookings quarter in over seven years. While we are encouraged by our ability to capture solid bookings in this improved demand environment, rapid material and logistics inflation, extended supply chain lead times and labor availability issues, including the associated mitigation costs, resulted in backlog conversion and margin challenges which significantly impacted our first quarter financial results.”

Flowserve to Exit All Russian Operations

In the first quarter 2022, in response to the invasion of Ukraine and the ongoing military actions taken by Russia, Flowserve made the decision to exit the company’s operations in Russia. This includes commencing the necessary actions to cease the operations of its Russian subsidiary, suspending fulfillment of existing Russian-located orders, canceling existing contracts in backlog and terminating other related contractual commitments. This process is expected to continue throughout 2022.

In prior years, Russian-associated work typically represented between 1-2 percent of Flowserve’s consolidated revenues. In addition to the charge established related to existing assets and contracts, there will be an ongoing opportunity cost associated with no longer pursuing future Russian work, however the company expects the overall impact to be immaterial.