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Flowserve Corporation Reports Fourth Quarter and Full Year 2020 Results; Issues 2021 Financial Guidance

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first_img(4) Represents $28.0 million related to Flowserve 2.0 transformation efforts and $3.3 million related to voluntary retirement program expense Loss on sale of business Long-term debt due after one year $ 0.55 56,893 Diluted DALLAS–(BUSINESS WIRE)–Feb 23, 2021– 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 fourth quarter and full year ended December 31, 2020. Fourth Quarter 2020 Highlights (all comparisons to the 2019 fourth quarter, unless otherwise noted) 1Reported Earnings Per Share (EPS) of $0.43 and Adjusted EPS 2 of $0.53Reported EPS includes after-tax adjusted items of approximately $12.9 million, including realignment, transformation and below-the-line foreign exchange impacts $ ) – Backlog at December 31, 2020 was $1.9 billion, down 14.0% versus prior year Full Year 2020 Highlights (all comparisons to full year 2019, unless otherwise noted)Reported EPS of $0.89 and Adjusted EPS 2 of $1.74Reported EPS includes after-tax adjusted items of approximately $111.1 million, including realignment, transformation, below-the-line foreign exchange impacts and certain non-cash impairments 1.4 – vs. prior year Reported gross and operating margins of 30.0% and 6.7%, respectivelyAdjusted gross and operating margins 3 were 31.2% and 9.8%, respectively 86,175 $ ) Down 4.0% to 7.0% 146.6 $1.15 – $1.40 92.8 -9.8 Net interest expense $ $ Basic number of shares used for calculation $ $ ) By Digital AIM Web Support – February 23, 2021 811.4 15,306 – vs. prior year % Adjusted 2021 EPS will exclude the Company’s realignment expenses, the impact from other specific one-time events and below-the-line foreign currency effects and utilizes year-end 2020 FX rates and approximately 131 million fully diluted shares. Local NewsBusiness ) 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: the impact of the global outbreak of COVID-19 on our business and operations; 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 our strategic transformation and realignment initiatives, our business could be adversely affected; risks associated with cost overruns on fixed-fee projects and in taking customer orders for large complex custom engineered products; 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; 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, Russian 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; 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; our furnishing of products and services to nuclear power plant facilities and other critical processes; 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; our relative geographical profitability and its impact on our utilization of deferred tax assets, including foreign tax credits; the potential adverse impact of an impairment in the carrying value of goodwill or other intangible assets; our dependence upon fourth-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. Throughout our materials we refer to non-GAAP measures as “Adjusted.” 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. CONSOLIDATED STATEMENTS OF INCOME Basic number of shares used for calculation 116,326 Earnings before income taxes Other intangible assets, net (1,555 ) $ Bookings (45,220 54.4 Net earnings per share attributable to Flowserve Corporation common shareholders: 96.1 130,395 1,065.8 131,050 ) Net cash flows provided (used) by operating activities 13,862 % $ $ 109,887 Operating income Gross Margin (% of sales) 2,627 130,995 Total assets 95,300 – 2020 (16,779 % Diluted $ 893.5 604 (718,598 (Amounts in millions, except percentages) (4,607 -28.4 % % (856 % ) (2) Includes tax impact of items above and uncertain tax position release of $4.0 million (856 41.4 (63,465 Current assets: $ 405.5 ) (9,754 (3,565 (Amounts in millions, except percentages) Other Items ) ) $ Gross profit $ 130,995 CONSOLIDATED BALANCE SHEETS 1,068,179 -5.9 $ (4,451 $ (2,611,365 27,252 1,116,769 8,995 (0.06 1,190,869 Interest expense % % 990.0 ) Debt due within one year $ 1,240.9 $ ) $ Operating income Amortization of intangible and other assets Income taxes paid (net of refunds) 74,038 Basic (966,584 72.6 FLOW CONTROL DIVISION 21.0 ) % (2,467 2,753.5 (22,571 $ -8.6 Proceeds from short-term financing 77.4 2,675.7 30.3 ) 2nd % ) RECONCILIATION OF NON-GAAP MEASURES (7,930 1.81 95,300 (75,493 Change in assets and liabilities: $ $ $ ) $ ) % $ $ (16,886 ) 246,940 – ) ) Diluted $ 1,095,274 ) Earnings before income taxes 17.9 Earnings before income taxes Basic number of shares used for calculation 2,358.4 – 92,886 -13.5 168,496 15,705 $ Net earnings per share attributable to Flowserve Corporation common shareholders: 16,236 (5) (19,506 253,054 Diluted 17.4 130,995 – on constant currency $ 1,365,977 ) RECONCILIATION OF NON-GAAP MEASURES % Gross profit $ 111,766 % % (81,466 (4) Represents $7.0 million related to Flowserve 2.0 transformation efforts and $3.3 million related to voluntary retirement program expense ) (5) Represents below-the-line foreign exchange impacts Capital expenditures Sales (7.7 332.9 – (31,331 $ (913,203 30.7 1,746,739 Payments for disposition of business ) 84.2 90,924 % (Amounts in thousands, except par value) As Adjusted $ RECONCILIATION OF NON-GAAP MEASURES $ 0.53 – 885.8 130,343 Twitter (60,031 (3,900 ) 2020 ) $ 194,227 131,034 (1) Represents realignment expense incurred as a result of realignment programs As Adjusted SEGMENT INFORMATION (a) Reported in conformity with U.S. GAAP Net earnings attributable to Flowserve Corporation Other income (expense), net See Reconciliation of Non-GAAP Measures table for detailed reconciliation of reported results to adjusted measures. % (7,930 ) % (11,493 As Adjusted Year Ended December 31, $ 1,068,179 Flowserve Corporation Reports Fourth Quarter and Full Year 2020 Results; Issues 2021 Financial Guidance 12.1 ) 775.7 (Amounts in thousands, except per share data) December 31, ) (4) Represents below-the-line foreign exchange impacts -17.0 (34,773 (2,051,583 % 7,727 -21.1 ) 110,844 207.7 ) Loss on disposition of business 61.3 % 33.2 0.64 (13,506 ) Retained earnings 23,882 FCD 64.8 (232,974 $ Contract assets, net Net earnings per share attributable to Flowserve Corporation common shareholders: % Adj. Oper. Margin (% of sales)* (0.53 Earnings before income taxes 123,679 Sales were $985.3 million, down 7.8%, or 8.9% on a constant currency basisOriginal equipment sales were $506.9 million, down 7.1%, or 9.4% on a constant currency basisAftermarket sales were $478.4 million, down 8.4%, or 9.3% on a constant currency basis Earnings before income taxes ) ) ) 739.5 – (9,455 Notes: (7,340 $ Realignment (1) Year Ended December 31, 2020 0.40 (33,383 (17,234 (1) Represents realignment (expense) income incurred as a result of realignment programs. Income in selling, general and administrative due to gains from the sales of non-strategic manufacturing facilities that are included in our Realignment Programs Year Ended December 31, ) $ (0.04 – vs. prior year Earnings per share (1): Sales (16,886 ) % 566.5 1,057.5 (9,792 321.9 $ 4,938,277 18.6 12,418 $ 6.7 17.9 % 277,734 15.5 (231,464 TAGS  Contract assets, net % Pinterest 15.3 (6) 12,560 ) Operating income as a percentage of sales 84,825 (64,190 $ 34.5 51.4 56,893 (0.02 – ) (0.07 (3) 2.08 -17.0 ) 0.55 419.9 % Earnings (loss) per share(1): Year Ended December 31, ) (0.07 54.0 116,326 2,358.4 130,863 2020 131,783 7,589 $ Backlog 130,863 289.0 % Quarter (3) Represents Voluntary Retirement Program expense $ (5) Represents below-the-line foreign exchange impacts Total liabilities and equity (8,766 (2) FLOWSERVE PUMP DIVISION $ Bookings 2020 566.5 36,052 ) % $ 756.0 FPD 61,314 (Amounts in thousands, except per share data) ) (2,650,354 Net cash flows provided (used) by financing activities $ 29.9 % ) (5) ) 126.1 ) -3.6 Segment operating income WhatsApp Gross margin 1st 310,537 0.07 6,465 FLOW CONTROL DIVISION (Amounts in thousands, except per share data) 60,458 Basic 2019 (82,070 Selling, general and administrative expense 1 (40,123 $ 1,289,343 $ Current liabilities: 447,582 6,164 Net change in cash and cash equivalents ) 31.9 2019 % 101.4 (9,153 985,308 Property, plant and equipment, net $ (75,716 57.3 $ ) Sales Total bookings were $3.41 billion, down 19.5%, or 18.9% on a constant currency basisOriginal equipment bookings were $1.62 billion, or 48% of total bookings, down 26.7%, or 26.4% on a constant currency basisAftermarket bookings were $1.79 billion, or 52% of total bookings, down 11.7%, or 10.9% on a constant currency basis 104,430 % (75,000 (Amounts in thousands, except per share data) 2020 10.1 266.5 Sales Retirement obligations and other 3,728,134 $ Segment operating income as a percentage of sales ) 3,835,699 Net earnings attributable to Flowserve Corporation Operating income ) Gross profit % Gross profit % (3,087 2.10 ) 1.74 401,385 ) 109,887 % ) – vs. prior year (in basis points)(160) bps(260) bps30 bps(360) bps ) $55 – $60 million – (Unaudited) 111.8 (0.01 985,308 Total equity % $ (3) Includes $22.7 million related to Flowserve 2.0 transformation efforts and $11.5 million related to discrete asset write-downs 2,285 Prepaid expenses and other % 31.9 14,578 -34.5 * Adjusted Operating Income and Adjusted Operating Margin exclude realignment charges and other specific discrete items 1.74 Pinterest 0.44 (3) Net earnings per share attributable to Flowserve Corporation common shareholders: 8,409 % 32.7 (10,254 11,753 Adjustments to reconcile net earnings to net cash provided (used) by operating activities: $ Net earnings from affiliates ) (60,000 Revenues % Provision for income taxes 0.45 227,387 4th (75,493 ) 670,980 $ (3) Represents Flowserve 2.0 transformation efforts (247,576 ) ) $ Diluted number of shares used for calculation 2,883 % Interest expense (35,382 – 24.9 Net earnings attributable to Flowserve Corporation 66,372 Gross profit margin 3,007.9 -13.0 104,508 207.7 Basic (689,913 695.7 59.8 1.82 180,805 0.80 – Accrued liabilities and income taxes payable -0.4 (6,712 (0.04 156,437 $ 924.3 Net earnings, including noncontrolling interests Realignment (1) ) (Unaudited) Sales Accounts payable – Proceeds from disposal of assets ) (1) Represents realignment expense incurred as a result of realignment programs ) – on constant currency 3,728,134 (3,663 – % ) Gross profit 125.6 (18,880 9.7 42,333 556,873 Prepaid expenses and other assets, net 31.2 (Amounts in thousands, except per share data) ) 0.41 1,141,633 Provision for income taxes % ) 5,679 YTD 2 703,445 % ) $ (41,700 (34,269 ) $ % % 9.8 (58,160 215.0 Cash and cash equivalents at end of year Diluted number of shares used for calculation $ As Reported (a) (25,448 Reported gross and operating margins were 30.0% and 9.7%, respectivelyAdjusted gross and operating margins 3 were 30.7% and 11.3%, respectively % -13.8 ) $ – $ Cost of sales 1.82 Segment operating income as a percentage of sales (0.32 1,117,442 Inventories, net (69,510 Contract liabilities (Amounts in millions, except percentages) 32.7 – 90,924 ) $ $ Cost of sales $ 32.1 9.8 % (5,854 -3.6 516,087 (29,314 % Net earnings attributable to Flowserve Corporation 130,395 84.2 Sales were $3.73 billion, down 5.4%, or 4.9% on a constant currency basisOriginal equipment sales were $1.90 billion, down 3.1%, or 2.9% on a constant currency basisAftermarket sales were $1.83 billion, down 7.6%, or 6.9% on a constant currency basis ) ) ) 23.4 % ) Gross profit 660,837 ) $ % Interest and other expense, net Operating lease right-of-use assets, net (99,557 $ % ) 19,699 -28.3 Tax Rate Cash and cash equivalents 530,994 Facebook $ (3) % (6,712 Notes: $ 130,395 Sales Diluted number of shares used for calculation 0.43 131,719 Total bookings were $825.1 million, down 21.6%, or 22.7% on a constant currency basis and up modestly sequentiallyOriginal equipment bookings were $404.7 million, or 49% of total bookings, down 24.4%, or 25.8% on a constant currency basisAftermarket bookings were $420.4 million, or 51% of total bookings, down 18.7%, or 19.5% on a constant currency basis 131,050 SG&A LIABILITIES AND EQUITY % 33.2 141.9 0.55 -20.9 – ) $ 2,425 295,395 ) (Amounts in thousands, except per share data) – ) 298.6 3,939,697 $ Sales WhatsApp 290.7 $ 3,939,697 191.9 ) (4,315 ) (8,766 ) 1,224,886 24,678 (5) RECONCILIATION OF NON-GAAP MEASURES (4) ) As Adjusted (2) $ -1.1 – Net earnings attributable to Flowserve Corporation $ 130,863 324,097 (4) YTD 30.0 695.7 ) – (2,059,309 ) $ (Unaudited) $ % – 0.43 (9,856 – vs. prior year % Other income (expense), net % 925.0 204.2 Earnings before income taxes Fourth Quarter and Full Year 2020 – Segment Results Net earnings, including noncontrolling interests (49,731 $ -7.4 Capital in excess of par value CONSOLIDATED STATEMENTS OF CASH FLOWS ) 2,675.7 % 376,348 Provision for income taxes 2020 ) 22% to 24% (2) Reported Earnings Per Share (a) Reported in conformity with U.S. GAAP 33.2 Sales 0.41 – 2,706.3center_img Interest and other expense, net – on constant currency 12.1 Selling, general and administrative expense ) 51.4 (17,811 186,812 Three Months Ended December 31, $ 11.9 (9,754 147,587 % ) Three Months Ended December 31, 2019 274,521 $ (19,843 (1,428 619,683 130,343 90.9 Year Ended December 31, – ) Sales 30.4 Tax Rate 11,143 245.6 (0.27 29.9 ) $ 131,034 131,034 $ ) (2) Includes tax impact of items above 309,005 51,297 131,719 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 reconciliation of Non-GAAP Measures table for detailed reconciliation. 75,000 (34,269 (0.01 440,199 52.4 1,218.8 (12,954 670,980 -18.5 563,564 % Gross profit margin ) 2020 (7,727 (6,478 (5) Includes tax impact of items above and $13.2 million benefit related to legal entity simplification and restructuring $ 130,995 $ % 72,585 Three Months Ended December 31, Sales $ Other Items 30.0 (5) % 61,314 Proceeds from issuance of senior notes Selling, general and administrative expense 30.3 45,648 33.2 250,277 29.6 0.54 349,581 3,636 Common shares, $1.25 par value ) $ $ 16.8 Operating lease liabilities ) Adjusted Tax rate (60,031 343.5 Basic number of shares used for calculation (3) Represents Voluntary Retirement Program expense % 258.4 12.7 2018 (10,483 3,652,244 $ $ Earnings before income taxes (Unaudited) 2019 196.3 ) (15,106 ) 552.2 ) 69.7 $ % $ (9,853 Operating Income (878,245 FLOWSERVE PUMP DIVISION 23.1 $ Net earnings from affiliates 2,001 $ % % (26,595 % -14.6 (47,297 $ % Contract liabilities (878,245 % % -15.6 11.9 % % Provision for income taxes 578.9 (a) Reported in conformity with U.S. GAAP 92,042 -15.1 6,190 Gross margin 4th Qtr 16,653 4th Qtr 131,783 0.65 Shares authorized – 305,000 2019 130,863 ) Operating income as a percentage of sales 0.89 ) $ % – % CONSOLIDATED QUARTERLY FINANCIAL DATA % 7,618 670,980 502,227 2,623.3 Gross profit (19,569 (191,258 Payments of dividends ) Segment operating income ) (0.32 10,604 $ (4) 30,330 1,236.9 (10,455 130,343 Total current liabilities 899.3 22.2 Operating income as a percentage of sales 36.5 ) 131,719 (312 272,914 753,462 9,304 % $ ) 0.55 ) Realignment (1) (15,000 % Payments under other financing arrangements ) Gross Profit % 131,034 1,732,470 51.0 21,051 (83,993 $ 87,009 0.43 Cash flows – Financing activities: 186,812 – vs. prior year (in basis points)(110) bps(30) bps(80) bps(260) bps Loss on sale of business -26.0 (Unaudited) (Unaudited) Accounts receivable, net 201.0 Three Months Ended December 31, 2020 (196 238,828 % 220,991 -1.0 (46,550 -21.6 -16.3 258.4 ) 56.9 % 271.0 – % 213.6 (10,287 131,050 Other Items % 2020 (15,491 -10.3 (2) Includes tax impact of items above and uncertain tax position release of $4.0 million (891,176 % Other $ 354,228 Gross profit Deferred compensation obligation 1,164,066 69,815 Gross margin 985.3 Operating Margin (% of sales) 32,955 ) Operating income % Payments on long-term debt Quarter 811.4 % ) Other Items $ 995.7 269.7 -2.7 ) 52.1 $ ) – (3) Net cash flows provided (used) by investing activities 7.7 290.7 619,683 % $ Treasury shares, at cost – 46,768 and 46,262 shares, respectively Net earnings (loss) attributable to Flowserve Corporation Diluted 2019 Selling, general and administrative expense % (Amounts in thousands) Net earnings per share attributable to Flowserve Corporation common shareholders: ) (Unaudited) ) -14.7 ) Accrued liabilities % 501,045 Diluted (6) Includes tax impact of items above % – $ -12.0 ) 5,314,677 (61,976 (54,980 (173,284 Twitter – $ Provision for income taxes (Amounts in millions, except per share data) ) (a) Reported in conformity with U.S. GAAP 30.4 Gross profit ) ) (6) Includes tax impact of items above Accounts receivable, net (93,715 Selling, general and administrative expense $ Payments related to tax withholding for stock-based compensation 3,404 3rd 104,430 Gross profit margin ) 72,585 106,478 Total current assets % 2,506,747 227,701 View source version on businesswire.com:https://www.businesswire.com/news/home/20210223006032/en/ CONTACT: Investor Contacts: Jay Roueche, Vice President, Investor Relations & Treasurer, (972) 443-6560 Mike Mullin, Director, Investor Relations, (972) 443-6636Media Contact: Lars Rosene, Vice President, Corporate Communications & Public Affairs, (972) 443-6644 KEYWORD: UNITED STATES NORTH AMERICA TEXAS INDUSTRY KEYWORD: ENGINEERING CHEMICALS/PLASTICS UTILITIES OIL/GAS MANUFACTURING ENERGY OTHER MANUFACTURING SOURCE: Flowserve Corporation Copyright Business Wire 2021. PUB: 02/23/2021 04:05 PM/DISC: 02/23/2021 04:05 PM http://www.businesswire.com/news/home/20210223006032/en $ (82,070 208,125 566.3 Goodwill (12,835 1,193,010 (11,154 30,538 54,879 Realignment (1) Cash flows – Operating activities: – 91.1 221,426 CONSOLIDATED STATEMENTS OF INCOME 1,306,772 (11,724 1,057.5 – 4,938,277 % 795,538 Segment operating income 34,990 $ Adjusted Earnings Per Share 2019 0.55 19,912 (3,092 Interest income Net earnings per share attributable to Flowserve Corporation common shareholders: 221,095 1,095,274 $ (0.53 – (0.27 36,108 0.07 Gross profit margin ) ) 1,717,911 – (2) ) 151,523 Tax Rate 667,228 $ Shareholders’ equity: Basic 2021 Target Range 322,433 1,915 Shares issued – 176,793 and 176,793, respectfully ) 0.80 Interest paid ) 10,483 Tax Rate SG&A 302,057 Provision for income taxes (196 (57,386 $ (7,953 8,334 13.7 Bookings ) (584,292 ) ) – ) December 31, 131,050 25,602 Cash flows – Investing activities: Three Months Ended December 31 34,262 Sales (41,551 32.7 ) Diluted (14,459 Deferred taxes ) Less: Net earnings attributable to noncontrolling interests 2019 2,904,333 (5,379 Operating lease liabilities (21,818 126,781 $ 330.2 As Reported (a) (247,576 ) Depreciation “In a challenging market environment, we delivered solid performance in the fourth quarter including meaningful working capital improvements and free cash flow of $185 million. Additionally, our associates continued to operate safely and efficiently throughout the pandemic to meet the needs of our customers, while also delivering meaningful progress on our transformation program,” said Scott Rowe, Flowserve’s president and chief executive officer. “In light of the ongoing COVID-induced market headwinds over the past year, we accelerated our Flowserve 2.0 transformation cost reduction initiatives and took over $100 million of costs out of the business during 2020. This swift and decisive action and our ongoing operational performance enabled us to limit decremental adjusted operating margins to only 14 percent in the fourth quarter.” “In 2021 we are returning our focus to the growth and optimization aspects of the Flowserve 2.0 agenda,” added Rowe. “Innovation and new product development are key aspects of our growth strategy, and we expect to build upon the momentum we achieved in 2020, which included 21 commercial launches of new, redesigned or upgraded products. Additionally, this year we further differentiated our product offering by commercializing RedRaven, Flowserve’s IoT offering to optimize our customers’ flow control processes and lower their operating costs.” 2021 Guidance4 Flowserve is providing Reported and Adjusted EPS guidance for 2021, as well as certain other financial metrics, as shown in the table below. 424,294 95,820 110,635 ) $ ) (2,644,830 ) Segment operating income ) % ) (8,112 % ) 386,623 $ SEGMENT INFORMATION -34.5 Foreign currency, asset impairment and other non-cash adjustments Interest and other expense, net (45,986 246,940 Bookings Gross margin (4,572 1,772,341 Sales % $ Cash and cash equivalents at beginning of year (6) Net deferred taxes 0.40 23.0 12.3 (4) 4,258 ) Provision for U.S. Tax Cuts and Jobs Act of 2017 Payment of deferred loan cost (1) Represents realignment expense incurred as a result of realignment programs $ (5,582 (671 (1,453 2019 ) ) (34,066 – 4,175 (6,662 Facebook 250,277 $1.30 – $1.55 (0.02 0.46 0.89 50,203 – (15,248 17.7 % 386,623 (3,357 SG&A $ -25.1 Previous articleUpland Capital Group Launches New Excess Transportation Liability ProgramNext articleChellsie’s Chase; Olympian Memmel’s comeback turning serious Digital AIM Web Support % ) Total Flowserve Corporation shareholders’ equity 10.8 1,238.9 295,395 % – 131,783 (4) Represents below-the-line foreign exchange impacts Basic 13.1 0.89 – ) 24.7 ) 3,377 Other assets, net 131,719 0.55 (71,163 – – 317.9 ) Effect of exchange rate changes on cash 186,218 -14.1 % $ 2020 % – ) ) ) (105,000 – 0.44 Operating income 1,289,343 498,280 $ 16.7 130,395 ) $ – 190,831 FX headwind is calculated by comparing the difference between the actual average FX rates of 2020 and the year-end 2020 spot rates both as applied to our 2021 expectations, divided by the number of shares expected for 2021. – Operating income 426,079 Payments on short-term financing (913,203 $ (57,405 – Proceeds under other financing arrangements SG&A ) (5,654 ) 84.4 (1.3 463,222 322,433 1,068,179 (Amounts in millions, except percentages) -12.3 220,991 1.81 ) Accumulated other comprehensive loss (3,061 Diluted Repurchases of common shares 130,343 Interest income $ ) Retirement obligations and other liabilities 33.9 (104,159 1,065.8 (32,112 ) (2) Includes tax impact of items above – 321.9 2018 $ – $ (4,331 Gross profit % 92.8 10.1 (192,918 11.6 $ 329.6 7,870 – vs. prior year 1st ) Net earnings attributable to Flowserve Corporation (83,762 Prior period comparisons are impacted by the accounting revision related to incurred but not reported accruals for expected future asbestos litigation as well as certain other non-material adjustments further detailed in “Revisions to Prior Periods” section. Adjusted Operating Income * 3,656,449 $ Less: Net earnings attributable to noncontrolling interests Segment operating income as a percentage of sales 1,762,800 – $ 0.44 125.6 (33,986 176,246 Basic Segment operating income as a percentage of sales 985,308 2,414 53,607 $ % Accounts payable (1) Earnings per share is computed independently for each of the quarters presented. The sum of the quarters may not equal the total year amount due to the impact of changes in weighted average quarterly shares outstanding. – on constant currency 57,041 Diluted number of shares used for calculation 54,576 ) Operating income as a percentage of sales (202,722 – 11.3 4th 3rd 2nd 1,116,769 75,342 Earnings before income taxes % 366,616 ) $ -20.6 3,728,134 (5) Includes tax impact of items above, $25.4 million related to Italian tax valuation allowance and $15.6 million benefit related to legal entity simplification and restructuring ) 295.4 285.2 ) -15.4 238,828 (99,416 72.3 % 74.4 ) 4 1,274.3 9.7 $ 126,781 Net earnings, including noncontrolling interests (24,566 – ) % 0.39 17.7 Flowserve’s 2021 Adjusted EPS target range excludes expected realignment charges of approximately $25 million, as well as the potential impact of below-the-line foreign currency effects and certain other discrete items. In a change of our approach in 2021, Flowserve 2.0 transformation-related expenses of approximately 5 cents per share will now be included in both our reported and adjusted EPS. Additionally, both the Reported and the Adjusted EPS target range includes the expected revenue decrease of approximately 4.0 to 7.0 percent year-over-year, and is based on current foreign currency rates and commodity prices, 2020 year-end backlog, expected bookings levels and market conditions, the reset of annual incentive performance goals, a broad-based merit increase, modest above-the-line foreign currency benefit, net interest expense in the range of $55 to $60 million and an adjusted tax rate of 22 to 24 percent. The quarterly phasing of expected 2021 earnings is anticipated in-line with Flowserve’s traditional seasonality. Comment on Outlook Rowe concluded, “The impact of the COVID-driven downturn impacted our financial performance in 2020, but due to our late-cycle nature, it will have a larger impact to our business in 2021 given our lower starting backlog and the ongoing management of the pandemic across our global footprint. However, I am increasingly optimistic, as the pandemic gets further contained, that our end markets will be well-positioned for significant growth.” “We are encouraged by the progress of the vaccines, increased global mobility, stability in commodity prices, and the pent-up demand for our parts and services to existing infrastructure. Since we cannot accurately predict the timing of the inflection, our guidance only reflects modest end-market improvement. We do believe, assuming progress continues against the pandemic, that we will return to bookings growth this calendar year which would position us for improved financial performance in 2022.” Fourth Quarter 2020 Results Conference Call Flowserve will host its conference call with the financial community on Wednesday, February 24 th 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. Basic ASSETS – vs. prior year (in basis points)(330) bps(290) bps(200) bps(230) bps -12.3 2018 (dollars in millions, comparison vs. 2019 fourth quarter and full year, unaudited) 271.0 0.39 ) 349,581 Selling, general and administrative expense (31,058 ) Gross profit 11,272 Gross profit Inventories, net Stock-based compensation – (594,052 (809,203 1,068.2 (0.06 (Unaudited) $ Interest and other expense, net $ Bookings Basic ) Notes: Net earnings attributable to Flowserve Corporation 131,783 ) 2019 – 3 3,939,697 6,397 (57,611 $ ) 0.89 Noncontrolling interests ) $ 9.8 $ ) (17,619 Sales (31,527 ) – $ (24,411 (202,722 As Reported (a) $ Notes: 13.4 623.1 $ Year Ended December 31, 2019 As Reported (a) – 349.5 5,314,677 $ 2018last_img


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