Flowserve Corporation (NYSE: FLS), a leading provider of flow control products and services for the global infrastructure markets, today announced its financial results for the first quarter ended March 31, 2024.

First Quarter 2024 Highlights (all comparisons to the 2023 first quarter, unless otherwise noted)

  • Reported EPS of $0.56 and Adjusted EPS of $0.58, compared to $0.20 and $0.40, respectively
    • First quarter 2024 Reported EPS includes after-tax adjusted expenses of $3.2 million, comprised of realignment charges, partially offset by below-the-line foreign exchange and a reduction to reserves
  • Total bookings were $1.04 billion, down $19.0 million or 1.8%. On a constant currency basis5, total bookings were down $18.7 million or 1.8%
    • Original equipment bookings were $462.5 million, down $44.5 million or 8.8%. On a constant currency basis, original equipment bookings were down $44.9 million or 8.9%
    • Aftermarket bookings were $575.8 million, up $25.5 million or 4.6%. On a constant currency basis, aftermarket bookings were up $26.2 million or 4.8%
    • Second quarter 2024 bookings have started strong, as indicated by the recently announced project awards valued at over $150 million
  • Sales were $1.09 billion, up $107.2 million or 10.9%. On a constant currency basis, sales were up $104.3 million or 10.6%
    • Original equipment sales were $528.6 million, up $65.2 million or 14.1%. On a constant currency basis, original equipment sales were up $62.5 million or 13.5%
    • Aftermarket sales were $558.9 million, up $42.0 million or 8.1%. On a constant currency basis, aftermarket sales were up $41.8 million or 8.1%
  • Reported gross and operating margins were 31.2% and 10.4%, respectively, up 90 basis points and 460 basis points, respectively
    • Adjusted gross and operating margins were 31.7% and 10.9%, respectively, up 130 basis points and 260 basis points, respectively
  • Backlog of $2.6 billion, down 3.1% compared to year-end 2023, and down 6.9% compared to March 31, 2023
    • First quarter 2024 book-to-bill ratio solid at 0.95x

“We delivered strong first quarter results, with significant year-over-year growth in revenue, margins, adjusted earnings, and cash flow. We are pleased with our level of bookings during the period, primarily driven by the strength of our base business, including aftermarket and short-cycle original equipment awards,” said Scott Rowe, Flowserve’s President and Chief Executive Officer. “As anticipated, we were excited to announce winning two sizable projects this April in the Middle East, collectively valued at over $150 million which will be reflected in our second quarter results.”

Rowe concluded, “With our solid performance in the first quarter and the opportunities ahead during the year, we have increased our full-year Adjusted EPS target range to $2.50 to $2.70, a near 24% increase at the midpoint year-over-year. We are committed to building on our recent operational momentum to expand margins, including through effective product management and portfolio optimization. Our 3D strategy is delivering results, and we remain committed to further expanding our diversification, decarbonization and digitization activities in faster-growing, attractive markets. I am confident that our continued progress will enable us to create long-term value for our customers, associates, and shareholders.”

Revised 2024 Guidance3

Flowserve is raising its Adjusted EPS guidance metrics for 2024 and reaffirmed its other financial targets, as shown in the table below:

 

 

Prior Target Range6

 

Revised Target Range

Revenue Growth

Up 4.0% to 6.0%

 

Reaffirmed

Reported Earnings Per Share

$2.25 - $2.45

 

Reaffirmed

Adjusted Earnings Per Share

$2.40 - $2.60

 

$2.50 - $2.70

Net Interest Expense

$60 to $65 million

 

Reaffirmed

Adjusted Tax Rate

~20%

 

Reaffirmed

Capital Expenditures

$75 - $85 million

 

Reaffirmed

 

Flowserve’s 2024 Adjusted EPS target range excludes expected adjusted items including realignment charges of approximately $30 million, as well as the potential impact of below-the-line foreign currency effects and certain other discrete items which may arise during the course of the year.

First Quarter 2024 Results Conference Call

Flowserve will host its conference call with the financial community on Tuesday, April 30th at 11:00 AM Eastern. Scott Rowe, President and Chief Executive Officer, as well as other members of the management team will be presenting. The call can be accessed by shareholders and other interested parties at www.flowserve.com under the “Investor Relations” section.

 
1 See Consolidated Reconciliation of Non-GAAP Financial Measures to the Most Directly Comparable GAAP Financial Measure (Unaudited) and Segment Reconciliation of Non-GAAP Financial Measures to the Most Directly Comparable GAAP Financial Measure (Unaudited) tables for a detailed reconciliation of reported results to adjusted measures.
2 Adjusted EPS excludes identified realignment expenses, the impact from other specific discrete items and below-the-line foreign currency effects and utilizes the then-applicable FX rates and approximately 132 million fully diluted shares.
3 Adjusted 2024 EPS excludes realignment expenses as well as the impact of below-the-line foreign currency effects and certain other discrete items which may arise during the year and utilizes March 2024 foreign exchange rates and approximately 132 million fully diluted shares.
4 Adjusted gross and operating margins are calculated by dividing adjusted gross profit and adjusted operating income, respectively, by revenues. Adjusted gross profit and adjusted operating income are derived by excluding the adjusted items. See Consolidated Reconciliation of Non-GAAP Financial Measures to the Most Directly Comparable GAAP Financial Measure (Unaudited) and Segment Reconciliation of Non-GAAP Financial Measures to the Most Directly Comparable GAAP Financial Measure (Unaudited) tables for a detailed reconciliation.
5 Constant currency is a non-GAAP financial measure. We have calculated constant currency amounts and the associated currency effects on operations by translating current year results on a monthly basis at prior year exchange rates for the same periods.
6 Prior target range was provided as of February 20, 2024.
 

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

 

Three Months Ended March 31,

(Amounts in thousands, except per share data)

2024

2023

 

Sales

$

1,087,479

 

$

980,305

 

Cost of sales

 

(748,511

)

 

(683,475

)

Gross profit

 

338,968

 

 

296,830

 

Selling, general and administrative expense

 

(228,418

)

 

(244,268

)

Net earnings from affiliates

 

2,529

 

 

4,624

 

Operating income

 

113,079

 

 

57,186

 

Interest expense

 

(15,317

)

 

(16,211

)

Interest income

 

1,169

 

 

1,494

 

Other income (expense), net

 

(874

)

 

(8,020

)

Earnings (loss) before income taxes

 

98,057

 

 

34,449

 

Provision for income taxes

 

(20,142

)

 

(4,453

)

Net earnings (loss), including noncontrolling interests

 

77,915

 

 

29,996

 

Less: Net earnings attributable to noncontrolling interests

 

(3,695

)

 

(3,230

)

Net earnings (loss) attributable to Flowserve Corporation

$

74,220

 

$

26,766

 

 

 

Net earnings (loss) per share attributable to Flowserve Corporation common shareholders:

 

 

Basic

$

0.56

 

$

0.20

 

Diluted

 

0.56

 

 

0.20

 

 

 

Weighted average shares – basic

 

131,510

 

 

130,930

 

Weighted average shares – diluted

 

132,368

 

 

131,754

 

 

Consolidated Reconciliation of Non-GAAP Financial Measures to the Most Directly Comparable GAAP Financial Measure (Unaudited)

 

(Amounts in thousands, except per share data)

 

Three Months Ended March 31, 2024

Gross Profit

Selling, General
& Administrative
Expense

Operating
Income

Other
Income
(Expense),
Net

Provision For
(Benefit From)
Income Taxes

Net
Earnings
(Loss)

Effective
Tax Rate

Diluted
EPS

Reported

$

338,968

 

$

228,418

 

$

113,079

 

$

(874

)

$

20,142

 

$

74,220

 

20.5

%

 

0.56

 

Reported as a percent of sales

 

31.2

%

 

21.0

%

 

10.4

%

 

-0.1

%

 

1.9

%

 

6.8

%

Realignment charges (a)

 

5,673

 

 

(1,494

)

 

7,167

 

 

-

 

 

723

 

 

6,444

 

10.1

%

 

0.05

 

Discrete item (b)

 

-

 

 

2,000

 

 

(2,000

)

 

-

 

 

-

 

 

(2,000

)

0.0

%

 

(0.02

)

Below-the-line foreign exchange impacts (c)

 

-

 

 

-

 

 

-

 

 

(1,323

)

 

(51

)

 

(1,273

)

3.8

%

 

(0.01

)

Adjusted

$

344,641

 

$

228,924

 

$

118,246

 

$

(2,197

)

$

20,814

 

$

77,392

 

20.4

%

 

0.58

 

Adjusted as a percent of sales

 

31.7

%

 

21.1

%

 

10.9

%

 

-0.2

%

 

1.9

%

 

7.1

%

 

Note: Amounts may not calculate due to rounding

(a) Charges represent realignment costs incurred as a result of realignment programs of which $800 is non-cash.

(b) Represents a reduction to reserves associated with our ongoing financial exposure in Russia that were adjusted for Non-GAAP measures when established in 2022.

(c) Below-the-line foreign exchange impacts represent the remeasurement of foreign exchange derivative contracts as well as the remeasurement of assets and liabilities that are denominated in a currency other than a site’s respective functional currency.

 

Three Months Ended March 31, 2023

Gross Profit

Selling, General
& Administrative
Expense

Operating
Income

Other
Income
(Expense),
Net

Provision For
(Benefit From)
Income Taxes

Net
Earnings
(Loss)

Effective
Tax Rate

Diluted
EPS

Reported

$

296,830

 

$

244,268

 

$

57,186

 

$

(8,020

)

$

4,453

 

$

26,766

 

12.9

%

$

0.20

 

Reported as a percent of sales

 

30.3

%

 

24.9

%

 

5.8

%

 

-0.8

%

 

0.5

%

 

2.7

%

Realignment charges (a)

 

202

 

 

(16,677

)

 

16,879

 

 

-

 

 

3,184

 

 

13,695

 

18.9

%

 

0.10

 

Discrete asset write-downs (b)(c)

 

1,173

 

 

(2,917

)

 

4,090

 

 

-

 

 

1,038

 

 

3,052

 

25.4

%

 

0.02

 

Acquisition related (d)

 

-

 

 

(3,096

)

 

3,096

 

 

-

 

 

822

 

 

2,274

 

26.6

%

 

0.02

 

Below-the-line foreign exchange impacts (e)

 

-

 

 

-

 

 

-

 

 

7,406

 

 

549

 

 

6,857

 

7.4

%

 

0.05

 

Adjusted

$

298,205

 

$

221,578

 

$

81,251

 

$

(614

)

$

10,046

 

$

52,644

 

15.2

%

$

0.40

 

Adjusted as a percent of sales

 

30.4

%

 

22.6

%

 

8.3

%

 

-0.1

%

 

1.0

%

 

5.4

%

 

Note: Amounts may not calculate due to rounding

(a) Charges represent realignment costs incurred as a result of realignment programs of which $7,597 is non-cash.

(b) Charge represents a further $1,173 non-cash write-down of inventory associated with a customer sales contract that was determined to be uncollectible and adjusted out for Non-GAAP measures in a previous period.

(c) Charge represents a $2,917 non-cash write-down of a licensing agreement.

(d) Charges represent costs associated with a terminated acquisition.

(e) Below-the-line foreign exchange impacts represent the remeasurement of foreign exchange derivative contracts as well as the remeasurement of assets and liabilities that are denominated in a currency other than a site’s respective functional currency.

 
 

SEGMENT INFORMATION

(Unaudited)

 

 

FLOWSERVE PUMPS DIVISION

Three Months Ended March 31,

(Amounts in millions, except percentages)

2024

 

2023

Bookings

$

703.5

 

$

728.5

 

Sales

 

769.4

 

 

700.1

 

Gross profit

 

247.9

 

 

221.4

 

Gross profit margin

 

32.2

%

 

31.6

%

SG&A

 

139.7

 

 

147.0

 

Segment operating income

 

110.9

 

 

79.1

 

Segment operating income as a percentage of sales

 

14.4

%

 

11.3

%

 

FLOW CONTROL DIVISION

Three Months Ended March 31,

(Amounts in millions, except percentages)

2024

 

2023

Bookings

$

341.1

 

$

332.0

 

Sales

 

320.5

 

 

281.6

 

Gross profit

 

92.7

 

 

80.3

 

Gross profit margin

 

28.9

%

 

28.5

%

SG&A

 

58.0

 

 

61.8

 

Segment operating income

 

34.7

 

 

18.5

 

Segment operating income as a percentage of sales

 

10.8

%

 

6.6

%

 
 

Segment Reconciliation of Non-GAAP Financial Measures to the Most Directly Comparable GAAP Financial Measure (Unaudited)

(Amounts in thousands)

 

Flowserve Pumps Division

Three Months Ended March 31, 2024

Gross Profit

Selling, General &
Administrative
Expense

Operating Income

Three Months Ended March 31, 2023

Gross Profit

Selling, General &
Administrative
Expense

Operating
Income

Reported

$

247,938

 

$

139,710

 

$

110,894

 

Reported

$

221,427

 

$

146,979

 

$

79,073

 

Reported as a percent of sales

 

32.2

%

 

18.2

%

 

14.4

%

Reported as a percent of sales

 

31.6

%

 

21.0

%

 

11.3

%

Realignment charges (a)

 

5,044

 

 

(1,041

)

 

6,085

 

Realignment charges (a)

 

390

 

 

(2,050

)

 

2,440

 

Discrete item (b)

 

-

 

 

2,000

 

 

(2,000

)

Discrete asset write-downs (b)(c)

 

1,173

 

 

(2,917

)

 

4,090

 

Adjusted

$

252,982

 

$

140,669

 

$

114,979

 

Adjusted

$

222,990

 

$

142,012

 

$

85,603

 

Adjusted as a percent of sales

 

32.9

%

 

18.3

%

 

14.9

%

Adjusted as a percent of sales

 

31.9

%

 

20.3

%

 

12.2

%

 

Flow Control Division

 

Three Months Ended March 31, 2024

Gross Profit

Selling, General &
Administrative
Expense

Operating Income

Three Months Ended March 31, 2023

Gross Profit

Selling, General &
Administrative
Expense

Operating
Income

Reported

$

92,695

 

$

57,987

 

$

34,708

 

Reported

$

80,293

 

$

61,759

 

$

18,534

 

Reported as a percent of sales

 

28.9

%

 

18.1

%

 

10.8

%

Reported as a percent of sales

 

28.5

%

 

21.9

%

 

6.6

%

Realignment charges (a)

 

767

 

 

(114

)

 

881

 

Realignment charges (a)

 

11

 

 

(8,906

)

 

8,917

 

Adjusted

$

93,462

 

$

57,873

 

$

35,589

 

Acquisition related (d)

 

-

 

 

(3,096

)

 

3,096

 

Adjusted as a percent of sales

 

29.2

%

 

18.1

%

 

11.1

%

Adjusted

$

80,304

 

$

49,757

 

$

30,547

 

Adjusted as a percent of sales

 

28.5

%

 

17.7

%

 

10.8

%

 

Note: Amounts may not calculate due to rounding

Note: Amounts may not calculate due to rounding

(a) Charges represent realignment costs incurred as a result of realignment programs of which $800 is non-cash.

(a) Charges represent realignment costs incurred as a result of realignment programs of which $7,597 is non-cash.

(b) Represents a reduction to reserves associated with our ongoing financial exposure in Russia that were adjusted for Non-GAAP measures when established in 2022.

(b) Charge represents a further $1,173 non-cash write-down of inventory associated with a customer sales contract that was determined to be uncollectible and adjusted out for Non-GAAP measures in a previous period.

(c) Charge represents a $2,917 non-cash write-down of a licensing agreement.

(d) Charges represent costs associated with a terminated acquisition.

 
 
 
 
First Quarter - Segment Results
(dollars in millions, comparison vs. 2023 first quarter, unaudited)
 

FPD

 

FCD

1st Qtr

 

1st Qtr

Bookings

$

703.5

 

$

341.1

 

- vs. prior year

 

-25.0

 

-3.4

%

 

9.1

 

2.7

%

- on constant currency

 

-25.5

 

-3.5

%

 

9.9

 

3.0

%

 
Sales

$

769.4

 

$

320.5

 

- vs. prior year

 

69.3

 

9.9

%

 

38.9

 

13.8

%

- on constant currency

 

66.1

 

9.4

%

 

39.2

 

13.9

%

 
Gross Profit

$

247.9

 

$

92.7

 

- vs. prior year

 

12.0

%

 

15.4

%

 
Gross Margin (% of sales)

 

32.2

%

 

28.9

%

- vs. prior year (in basis points)

60 bps

40 bps

 
Operating Income

$

110.9

 

$

34.7

 

 

- vs. prior year

 

31.8

 

40.2

%

 

16.2

 

87.6

%

- on constant currency

 

32.1

 

40.7

%

 

16.5

 

88.9

%

 

 

Operating Margin (% of sales)

 

14.4

%

 

10.8

%

 

- vs. prior year (in basis points)

310 bps

420 bps

 

 

Adjusted Operating Income *

$

115.0

 

$

35.6

 

 

- vs. prior year

 

29.4

 

34.3

%

 

5.1

 

16.7

%

- on constant currency

 

29.7

 

34.7

%

 

5.4

 

17.7

%

 

Adj. Oper. Margin (% of sales)*

 

14.9

%

 

11.1

%

 

- vs. prior year (in basis points)

270 bps

30 bps

 

 
Backlog

$

1,784.2

 

$

841.7

 

 
* Adjusted Operating Income and Adjusted Operating Margin exclude realignment charges and other specific discrete items
 

CONDENSED CONSOLIDATED BALANCE SHEETS

 

(Unaudited)

 

March 31,

 

December 31,

(Amounts in thousands, except par value)

2024

 

2023

 

ASSETS

 

Current assets:

 

Cash and cash equivalents

$

531,981

 

$

545,678

 

Accounts receivable, net of allowance for expected credit losses of $78,305 and $80,013, respectively

 

914,357

 

 

881,869

 

Contract assets, net of allowance for expected credit losses of $4,986 and $4,993, respectively

 

287,058

 

 

280,228

 

Inventories

 

883,341

 

 

879,937

 

Prepaid expenses and other

 

149,840

 

 

116,065

 

Total current assets

 

2,766,577

 

 

2,703,777

 

Property, plant and equipment, net of accumulated depreciation of $1,162,548 and $1,158,451, respectively

 

499,499

 

 

506,158

 

Operating lease right-of-use assets, net

 

163,183

 

 

156,430

 

Goodwill

 

1,173,368

 

 

1,182,225

 

Deferred taxes

 

215,216

 

 

218,358

 

Other intangible assets, net

 

119,355

 

 

122,248

 

Other assets, net of allowance for expected credit losses of $66,357 and $66,864, respectively

 

212,727

 

 

219,523

 

Total assets

$

5,149,925

 

$

5,108,719

 

 

 

LIABILITIES AND EQUITY

 

 

Current liabilities:

 

 

Accounts payable

$

549,515

 

$

547,824

 

Accrued liabilities

 

547,382

 

 

504,430

 

Contract liabilities

 

279,216

 

 

287,697

 

Debt due within one year

 

66,428

 

 

66,243

 

Operating lease liabilities

 

31,635

 

 

32,382

 

Total current liabilities

 

1,474,176

 

 

1,438,576

 

Long-term debt due after one year

 

1,152,336

 

 

1,167,307

 

Operating lease liabilities

 

144,740

 

 

138,665

 

Retirement obligations and other liabilities

 

382,461

 

 

389,120

 

Shareholders’ equity:

 

 

Common shares, $1.25 par value

 

220,991

 

 

220,991

 

Shares authorized – 305,000

 

 

Shares issued – 176,793 and 176,793, respectively

 

 

Capital in excess of par value

 

483,963

 

 

506,525

 

Retained earnings

 

3,900,922

 

 

3,854,717

 

Treasury shares, at cost – 45,372 and 45,885 shares, respectively

 

(1,992,404

)

 

(2,014,474

)

Deferred compensation obligation

 

6,767

 

 

7,942

 

Accumulated other comprehensive loss

 

(666,259

)

 

(639,601

)

Total Flowserve Corporation shareholders' equity

 

1,953,980

 

 

1,936,100

 

Noncontrolling interests

 

42,232

 

 

38,951

 

Total equity

 

1,996,212

 

 

1,975,051

 

Total liabilities and equity

$

5,149,925

 

$

5,108,719

 

 

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

Three Months Ended March 31,

(Amounts in thousands)

2024

 

2023

 

Cash flows – Operating activities:

 

Net earnings (loss), including noncontrolling interests

$

77,915

 

$

29,996

 

Adjustments to reconcile net earnings (loss) to net cash provided (used) by operating activities:

 

 

Depreciation

 

19,326

 

 

18,928

 

Amortization of intangible and other assets

 

2,254

 

 

2,663

 

Stock-based compensation

 

8,657

 

 

9,953

 

Foreign currency, asset write downs and other non-cash adjustments

 

1,189

 

 

(2,728

)

Change in assets and liabilities:

Accounts receivable, net

 

(39,687

)

 

(26,249

)

Inventories

 

(11,452

)

 

(70,721

)

Contract assets, net

 

(8,051

)

 

4,325

 

Prepaid expenses and other assets, net

 

(16,001

)

 

(16,019

)

Accounts payable

 

5,053

 

 

7,008

 

Contract liabilities

 

(6,372

)

 

32,676

 

Accrued liabilities

 

30,917

 

 

35,374

 

Retirement obligations and other

 

(2,426

)

 

9,477

 

Net deferred taxes

 

935

 

 

(8,095

)

Net cash flows provided (used) by operating activities

 

62,257

 

 

26,588

 

Cash flows – Investing activities:

 

 

Capital expenditures

 

(13,610

)

 

(15,318

)

Other

 

24

 

 

(1,138

)

Net cash flows provided (used) by investing activities

 

(13,586

)

 

(16,456

)

Cash flows – Financing activities:

Payments on term loan

 

(15,000

)

 

(10,000

)

Proceeds under other financing arrangements

 

72

 

 

78

 

Payments under other financing arrangements

 

(25

)

 

(1,515

)

Repurchases of common shares

 

(2,549

)

 

-

 

Payments related to tax withholding for stock-based compensation

 

(8,857

)

 

(5,850

)

Payments of dividends

 

(27,654

)

 

(26,229

)

Other

 

(201

)

 

(303

)

Net cash flows provided (used) by financing activities

 

(54,214

)

 

(43,819

)

Effect of exchange rate changes on cash and cash equivalents

 

(8,154

)

 

3,442

 

Net change in cash and cash equivalents

 

(13,697

)

 

(30,245

)

Cash and cash equivalents at beginning of period

 

545,678

 

 

434,971

 

Cash and cash equivalents at end of period

$

531,981

 

$

404,726

 

 

About Flowserve

Flowserve Corp. is one of the world’s leading providers of fluid motion and control products and services. Operating in more than 50 countries, the company produces engineered and industrial pumps, seals and valves as well as a range of related flow management services. More information about Flowserve can be obtained by visiting the company’s Web site at www.flowserve.com.

Safe Harbor Statement: This news release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, as amended. Words or phrases such as, "may," "should," "expects," "could," "intends," "plans," "anticipates," "estimates," "believes," "forecasts," "predicts" or other similar expressions are intended to identify forward-looking statements, which include, without limitation, earnings forecasts, statements relating to our business strategy and statements of expectations, beliefs, future plans and strategies and anticipated developments concerning our industry, business, operations and financial performance and condition.

The forward-looking statements included in this news release are based on our current expectations, projections, estimates and assumptions. These statements are only predictions, not guarantees. Such forward-looking statements are subject to numerous risks and uncertainties that are difficult to predict. These risks and uncertainties may cause actual results to differ materially from what is forecast in such forward-looking statements, and include, without limitation, the following: economic, political and other risks associated with our international operations, including military actions, trade embargoes, epidemics or pandemics or changes to tariffs or trade agreements that could affect customer markets, particularly North African, Latin American, Asian and Middle Eastern markets and global oil and gas producers, and non-compliance with U.S. export/re-export control, foreign corrupt practice laws, economic sanctions and import laws and regulations; any continued volatile regional and global economic conditions resulting from the COVID-19 pandemic on our business and operations; global supply chain disruptions and the current inflationary environment could adversely affect the efficiency of our manufacturing and increase the cost of providing our products to customers; a portion of our bookings may not lead to completed sales, and our ability to convert bookings into revenues at acceptable profit margins; changes in global economic conditions and the potential for unexpected cancellations or delays of customer orders in our reported backlog; our dependence on our customers’ ability to make required capital investment and maintenance expenditures; if we are not able to successfully execute and realize the expected financial benefits from any restructuring and realignment initiatives, our business could be adversely affected; the substantial dependence of our sales on the success of the oil and gas, chemical, power generation and water management industries; the adverse impact of volatile raw materials prices on our products and operating margins; increased aging and slower collection of receivables, particularly in Latin America and other emerging markets; our exposure to fluctuations in foreign currency exchange rates, including in hyperinflationary countries such as Venezuela and Argentina; potential adverse consequences resulting from litigation to which we are a party, such as litigation involving asbestos-containing material claims; expectations regarding acquisitions and the integration of acquired businesses; the potential adverse impact of an impairment in the carrying value of goodwill or other intangible assets; our dependence upon third-party suppliers whose failure to perform timely could adversely affect our business operations; the highly competitive nature of the markets in which we operate; environmental compliance costs and liabilities; potential work stoppages and other labor matters; access to public and private sources of debt financing; our inability to protect our intellectual property in the U.S., as well as in foreign countries; obligations under our defined benefit pension plans; our internal control over financial reporting may not prevent or detect misstatements because of its inherent limitations, including the possibility of human error, the circumvention or overriding of controls, or fraud; the recording of increased deferred tax asset valuation allowances in the future or the impact of tax law changes on such deferred tax assets could affect our operating results; our information technology infrastructure could be subject to service interruptions, data corruption, cyber-based attacks or network security breaches, which could disrupt our business operations and result in the loss of critical and confidential information; ineffective internal controls could impact the accuracy and timely reporting of our business and financial results; and other factors described from time to time in our filings with the Securities and Exchange Commission.

All forward-looking statements included in this news release are based on information available to us on the date hereof, and we assume no obligation to update any forward-looking statement.

The Company reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). However, management believes that non-GAAP financial measures which exclude certain non-recurring items present additional useful comparisons between current results and results in prior operating periods, providing investors with a clearer view of the underlying trends of the business. Management also uses these non-GAAP financial measures in making financial, operating, planning and compensation decisions and in evaluating the Company's performance. Non-GAAP financial measures, which may be inconsistent with similarly captioned measures presented by other companies, should be viewed in addition to, and not as a substitute for, the Company’s reported results prepared in accordance with GAAP.