FLOWSERVE CORP

Previous wording

We are a world-leading manufacturer and aftermarket service provider of comprehensive flow control systems. We develop and manufacture precision-engineered flow control equipment integral to the movement, control and protection of the flow of materials in our customers’ critical processes. Our product portfolio of pumps, valves, seals, automation and aftermarket services supports global infrastructure industries, including oil and gas, chemical, power generation and water management, as well as general industrial markets where our products and services enable customers to achieve their goals. Through our manufacturing platform and global network of Quick Response Centers ("QRCs"), we offer a broad array of aftermarket equipment services, such as installation, advanced diagnostics and turnkey maintenance programs. We currently have approximately 16,000 employees globally and a footprint of manufacturing facilities and QRCs in more than 50 countries.

Current wording

We are a world-leading manufacturer and aftermarket service provider of comprehensive flow control systems. We develop and manufacture precision-engineered flow control equipment integral to the movement, control and protection of the flow of materials in our customers’ critical processes. Our product portfolio of pumps, valves, seals, automation and aftermarket services supports global infrastructure industries, including oil and gas, chemical, power generation, nuclear and water management, as well as general industrial markets where our products and services enable customers to achieve their goals. Through our manufacturing platform and global network of Quick Response Centers ("QRCs"), we offer a broad array of aftermarket equipment services, such as installation, advanced diagnostics and turnkey maintenance programs. We currently have approximately 16,000 employees globally and a footprint of manufacturing facilities and QRCs in more than 50 countries.

Previous wording

Our business model is significantly influenced by the capital and operating spending of global infrastructure industries for the placement of new products into service and maintenance spending for aftermarket services for existing operations. The worldwide installed base of our products is an important source of aftermarket revenue, where products are intended to maximize operating time of many key industrial processes. We continue to invest in our aftermarket strategy to provide local support to drive customer investments in our offerings and use of our services to replace or repair installed products. The aftermarket portion of our business also helps provide business stability during various economic periods. The aftermarket business, which is primarily served by our network of 156 QRCs (some of which are shared by our two business segments) located around the globe provides a variety of service offerings for our customers including spare parts, service solutions, product life cycle solutions and other value-added services. It is generally a higher margin business compared to our original equipment business and a key component of our profitable growth strategy.

Current wording

Our business model is significantly influenced by the capital and operating spending of global infrastructure industries for the placement of new products into service and maintenance spending for aftermarket services for existing operations. The worldwide installed base of our products is an important source of aftermarket revenue, where products are relied upon to maximize operating time of many key industrial processes. We continue to invest in our aftermarket strategy to provide local support to drive customer investments in our offerings and use of our services to replace or repair installed products. The aftermarket portion of our business also helps provide business stability during various economic periods. The aftermarket business, which is primarily served by our network of 155 QRCs (some of which are shared by our two business segments) located around the globe, provides a variety of service offerings for our customers including spare parts, service solutions, product life cycle solutions and other value-added services. It is generally a higher margin business compared to our original equipment business and a key component of our profitable growth strategy.

Previous wording

Our business segments share a focus on industrial flow control technology and have a high number of common customers. These segments also have complementary product offerings and technologies that are often combined in applications that provide us a net competitive advantage. Our segments also benefit from our global footprint, our economies of scale in reducing administrative and overhead costs to serve customers more cost effectively and our shared leadership for operational support functions, such as research and development marketing and supply chain.

Current wording

Our business segments share a focus on industrial flow control technology and have a number of common customers. These segments also have complementary product offerings and technologies that are often combined in applications that provide us a net competitive advantage. Our segments also benefit from our global footprint, our economies of scale in reducing administrative and overhead costs to serve customers more cost effectively and our shared leadership for operational support functions, such as research and development, marketing, and supply chain.

Previous wording

We continue to leverage our QRC network to be positioned as near to customers as possible for service and support in order to capture valuable aftermarket business. Along with seeking to ensure that we have the local capability to sell, install and service our equipment in remote regions, we seek to continuously improve our global operations. We continuously strive to enhance our global supply chain capability to increase our ability to meet global customer demands and improve the quality and timely delivery of our products over the long-term. Additionally, we continue to devote resources to improving the supply chain processes across our business segments to find areas of synergy and cost reduction and to improve our supply chain management capability to meet global customer demands. We also remain focused on improving on-time delivery and quality, while managing warranty costs as a percentage of sales across our global operations, through our operational excellence program. The goal of the program, which includes lean manufacturing, six sigma business management strategy and value engineering, is to maximize service fulfillment to customers through on-time delivery, reduced cycle time and quality at the highest internal productivity.

Current wording

We continuously strive to enhance our global supply chain capability to increase our ability to meet global customer demands and improve the quality and timely delivery of our products over the long-term. Additionally, we continue to devote resources to improving the supply chain processes across our business segments to find areas of synergy and cost reduction and to improve our supply chain management capability to meet global customer demands. We also remain focused on improving on-time delivery and quality, while managing warranty costs as a percentage of sales across our global operations, through our operational excellence program. The goal of the program, which includes lean manufacturing, six sigma business management strategy and value engineering, is to maximize service fulfillment to customers through on-time delivery, reduced cycle time and quality at the highest internal productivity.

Previous wording

As our operations have generally stabilized from the COVID-19 pandemic, we have seen growth from our supportive served end-markets and our focus on our strategic plan that takes a balanced approach to integrating both short-term and long-term initiatives and aims to accelerate growth through three key areas: diversification, decarbonization, and digitization, the "3D Strategy." Our sales volume is expected to deliver sustainable and healthy growth, while our 2023 Realignment Programs and the new operating model have unlocked gains in organizational efficiency. With our strong backlog and supportive market environment, we expect to continue revenue growth in 2024.

Current wording

As our operations have generally stabilized from the COVID-19 pandemic, we have seen growth from our supportive served end-markets and our focus on our strategic plan that takes a balanced approach to integrating both short-term and long-term initiatives and aims to accelerate growth through three key areas: diversification, decarbonization, and digitization, the "3D Strategy." Our sales volume is expected to deliver sustainable and healthy growth, while our 2023 Realignment Programs and the new operating model have unlocked gains in organizational efficiency. With our strong backlog and supportive market environment, we expect to continue revenue growth into the second half of 2024.

Previous wording

As of March 31, 2024, we have cash and cash equi valents of$532.0 million and $672.2 million of borr owings available under our Senior Credit Facility. We do not currently anticipate, nor are we aware of, any significant market conditions or commitments that would change any of our conclusions of the sufficient liquidity available to us. We expect the liquidity discussed above coupled with the costs savings measures planned and already in place will further enable us to maintain adequate liquidity over the short-term (next 12 months) and long-term (beyond the next 12 months). We will continue to actively monitor the credit markets in order to maintain sufficient liquidity and access to capital.

Current wording

As of June 30, 2024, we have cash and cash equi valents of$515.1 million and $621.2 millionof borrowings available under our Senior Credit Facility. We do not currently anticipate, nor are we aware of, any significant market conditions or commitments that would change any of our conclusions of the liquidity available to us. We expect the liquidity discussed above coupled with the costs savings measures planned and already in place will further enable us to maintain adequate liquidity over the short-term (next 12 months) and long-term (beyond the next 12 months). We will continue to actively monitor the credit markets in order to maintain sufficient liquidity and access to capital.

Previous wording

RESULTS OF OPERATIONS — Three months ended March 31, 2024 and 2023

Current wording

RESULTS OF OPERATIONS — Three and six months ended June 30, 2024 and 2023

Previous wording

The activities of the 2023 Realignment Programs were identified and implemented in phases throughout 2023 and are continuing into 2024. We currently anticipate a total investment in realignment activities that have been evaluated and initiated of approximately $100 million of which $18 million is estimated to be non-cash. Based on the activities of the 2023 Realignment Programs initiated to date, we estimate that we recognized cost savings of approximately $45 million through March 31, 2024. Upon completion of the activities of the 2023 Realignment Programs that have been identified and initiated to date, we expect to achieve annualized cost savings in excess of $100 million. Actual savings could vary from expected savings, which represent management's best estimate to date. There are certain remaining realignment activities that are currently being evaluated, but have not yet been approved and therefore are not included in the above anticipated total investment or estimated savings.

Current wording

The activities of the 2023 Realignment Programs were identified and implemented in phases throughout 2023 and are continuing into 2024. We currently anticipate a total investment in realignment activities that have been evaluated and initiated of approximately $107 million of which $31 million is estimated to be non-cash. Based on the activities of the 2023 Realignment Programs initiated to date, we estimate that we recognized cost savings of approximately $66 million through June 30, 2024. Upon completion of the activities of the 2023 Realignment Programs that have been identified and initiated to date, we expect to achieve annualized cost savings in excess of $100 million. Actual savings could vary from expected savings, which represent management's best estimate to date. There are certain remaining realignment activities that are currently being evaluated, but have not yet been approved and therefore are not included in the above anticipated total investment or estimated savings.

Previous wording

We define a booking as the receipt of a customer order that contractually engages us to perform activities on behalf of our customer with regard to manufacturing, service or support. Bookings recorded and subsequently canceled within the year-to-date period are excluded from year-to-date bookings. Bookings for the three months ended March 31, 2024 decreased by $18.9 million, or 1.8%, as compared with the same period in 2023. The decrease included negative currency effects of less than one million. The decreased bookings were driven by decreased customer orders in the oil and gas, chemical and water management industries, partially offset by power generation and general industries. The decrease in customer bookings was driven by original equipment bookings.

Current wording

We define a booking as the receipt of a customer order that contractually engages us to perform activities on behalf of our customer with regard to manufacturing, service or support. Bookings recorded and subsequently canceled within the year-to-date period are excluded from year-to-date bookings. Bookings for the three months ended June 30, 2024 increased by $135.1 million, or 12.2%, as compared with the same period in 2023. The increase included negative currency effects of approximately $9 million. The increase was driven by increased customer orders in the oil and gas, chemical and power generation industries, partially offset by the general and water management industries. The increase in customer bookings was driven substantially by original equipment bookings and included the impact of FPD orders booked in the second quarter of 2024 in excess of $150 million to supply pumps and related equipment to support the continued development of an onshore unconventional gas project and a petrochemical project in the Middle East.

Previous wording

Sales for the three months ended March 31, 2024 increased by $107.2 million, or 10.9%, as compared with the same period in 2023. The increase included currency benefits of approximately $3 million. The increased sales were driven by both aftermarket and original equipment customer sales, with increased customer sales into North America, Europe, Latin America, Asia Pacific, Africa and Middle East. Net sales to international customers, including export sales from the United States, were approxim ately 64% and 63% of total sales for the three months ended March 31, 2024 and 2023, respectively. Aftermarket sales represented approximately 51% of total sales, as compared with approximately 53% of total sales for the same period in 2023.

Current wording

Sales for thesix months ended June 30, 2024 increased by $183.7 million, or 8.9%, as compared with the same period in 2023. The increase included negative currency effects of approximately $4 million. The increased sales were driven by both aftermarket and original equipment customer sales, with increased customer sales into North America, Europe, Latin America, Asia Pacific, Middle East and Africa. Net sales to international customers, including export sales from the United States, were approximately 63% of total sales for both the six months ended June 30, 2024 and 2023, respectively. Aftermarket sales represented approximately 51% of total sales, as compared with approximately 52% of total sales for the same period in 2023.

Previous wording

Backlog represents the aggregate value of booked but uncompleted customer orders and is influenced primarily by bookings, sales, cancellat ions and currency effects. Backlog of $2,612.5 million at March 31, 2024 decreased by $82.6 million, or 3.1%, as compared with December 31, 2023. Currency effects provided a decrease of approximately $26 million (currency effects on backlog are calculated using the change in period end exchange rates). Approximately 38% of the backlog at March 31, 2024 and 37% of the backlog at December 31, 2023 was related to aftermarket orders. Backlog includes our unsatisfied (or partially unsatisfied) performance obligations related to contracts having an original expected duration in excess of one year of approxi mately $637 million, as discussed in Note 2 to our condensed consolidated financial statements included in this Quarterly Report.

Current wording

Backlog represents the aggregate value of booked but uncompleted customer orders and is influenced primarily by bookings, sales, cancellat ions and currency effects. Backlog of $2,684.4 million at June 30, 2024 decreased by $10.7 million, or 0.4%, as compared with December 31, 2023. Currency effects provided a decrease of approximately $35 million. Approximately 37% of the backlog at both June 30, 2024 and December 31, 2023 was related to aftermarket orders. Backlog includes our unsatisfied (or partially unsatisfied) performance obligations related to contracts having an original expected duration in excess of one year of approxi mately $775 million, as discussed in Note 2, "Revenue Recognition," to our condensed consolidated financial statements included in this Quarterly Report.

Previous wording

SG&A for the three months ended March 31, 2024 decreased by $15.9 million, or 6.5%, as compared with the same period in 2023. Currency effects yielded an increase of approximately $1 million. SG&A decreased due to decreased charges of $15.2 million related to our 2023 Realignment Programs, $3.1 million of expense related to the terminated Velan acquisition incurred in the first quarter of 2023 that did not recur, a $2.9 million write-down of an impaired licensing intangible in the first quarter of 2023 that did not recur, and a reversal of previously recognized expenses of $2.0 million related to our financial exposure in Russia, partially offset by an increase in research and development costs of $4.9 million and an increase in bad debt expense of $2.4 million as compared with the same period in 2023. SG&A as a percentage of sales for the three months ended March 31, 2024 decreased 390 basis points primarily due to increased sales leverage and cost decreases.

Current wording

SG&A for the six months ended June 30, 2024 decreased by $7.4 million, or 1.6%, as compared with the same period in 2023. Currency effects yielded a decrease of less than $1 million. SG&A decreased due to decreased charges of $22.9 million related to our 2023 Realignment Programs, $6.0 million of expense related to the terminated Velan acquisition in 2023 that did not recur, a $2.9 million impairment of a licensing intangible in 2023 that did not recur and the reversal of previously recognized expenses of $2.0 million related to our financial exposure in Russia, partially offset by an increase in research and development costs of $9.2 million, an increase in bad debt expense of $4.8 million, higher broad-based annual incentive compensation, a $1.8 million discrete software asset impairment and $1.1 million related to ongoing merger and acquisition costs as compared with the same period in 2023. SG&A as a percentage of sales for the six months ended June 30, 2024 decreased 220 basis points primarily due to increased sales leverage and cost decreases.

Previous wording

Net earnings from affiliates for the three months ended March 31, 2024 decreased by $2.1 million, or 45.7%, as compared with the same period in 2023. The decrease in net earnings was primarily a result of decreased earnings of our FPD joint ventures in Chile and South Korea.

Current wording

Net earnings from affiliates for the three months ended June 30, 2024 increased by $2.8 million, or 70.0%, as compared with the same period in 2023. The increase in net earnings was primarily a result of increased earnings of our FPD joint venture in South Korea.

Previous wording

Interest expense for the three months ended March 31, 2024 decreased $0.9 million, as compared with the same period in 2023, primarily due to lower outstanding debt, partially offset by higher effective interest rates as compared with the same period in 2023.

Current wording

Interest expense for the six months ended June 30, 2024 decreased by $0.6 million, as compared with the same period in 2023, primarily due to lower outstanding debt during the period, partially offset by higher effective interest rates as compared with the same period in 2023.

Previous wording

Other expense, net for the three months ended March 31, 2024 decreased $7.1 million as compared with the same period in 2023, due primarily to a $1.5 million decrease in losses from transactions in currencies other than our sites' functional currencies and $7.3 million increase in gains arising from transactions on foreign exchange forward contracts, partially offset by a $0.8 million increase in pension related costs. The net change was primarily due to the foreign currency exchange rate movements in the Euro, Hungarian forint, Mexican peso, and United Arab Emirates dirhams during the three months ended March 31, 2024, as compared with the same period in 2023.

Current wording

Other expense, net for the three months ended June 30, 2024 decreased by $0.2 million as compared with the same period in 2023, primarily due to a $5.6 million decrease in losses from transactions in currencies other than our sites' functional currencies, partially offset by a $3.6 million impairment of a debt investment and a $1.0 million increase in losses arising from transactions on foreign exchange forward contracts. The net change was primarily due to the foreign currency exchange rate movements in the Swedish krona, Mexican peso, Euro, and Brazilian real during the three months ended June 30, 2024, as compared with the same period in 2023.

Previous wording

The effective tax rate of 20.5% for the three months ended March 31, 2024 increased from 12.9% for the same period in 2023. The effective tax rate varied from the U.S. federal statutory rate for the three months ended March 31, 2024 primarily due to the net impact of foreign operations and state income taxes. Refer to Note 13 to our condensed consolidated financial statements included in this Quarterly Report for further discussion.

Current wording

The effective tax rate of 23.8% for the three months ended June 30, 2024 decreased from 27.9% for the same period in 2023. The effective tax rate varied from the U.S. federal statutory rate for the three months ended June 30, 2024 primarily due to the net impact of foreign divestiture. Refer to Note 13, "Income Taxes," to our condensed consolidated financial statements included in this Quarterly Report for further discussion.

Previous wording

Other comprehensive income (loss) for the three months ended March 31, 2024 decreased by $40.0 million from income of $13.1 million in the same period in 2023. The loss was due to foreign currency translation adjustments resulting primarily from exchange rate movements of the Euro, British pound, Chinese yuan, Singapore dollar and Mexican peso versus the U.S. dollar during the three months ended March 31, 2024, as compared with the same period in 2023.

Current wording

Other comprehensive loss for the three months ended June 30, 2024 increased by $31.7 million from an income of $8.1 million in the same period in 2023. The loss was primarily due to foreign currency translation adjustments resulting primarily from exchange rate movements of the Euro, Brazilian real, Colombian peso and Mexican peso versus the U.S. dollar during the three months ended June 30, 2024, as compared with the same period in 2023.

Previous wording

Bookings for the three months ended March 31, 2024 decreased by $25.0 million, or 3.4%, as compared with the same period in 2023. The decrease included currency benefits of approximately $1 million. The decrease in customer bookings was driven by decreased customer orders in the oil and gas, power generation and chemical industries, partially offset by increased customer orders in the general and water management industries. Customer bookings decreased $25.3 million into Asia Pacific, $16.6 million into the Middle East, $9.6 million into Africa, and $0.6 million into North America, and were partially offset by increased customer orders of $14.2 million into Europe and $13.6 million into Latin America. The decrease was driven by original equipment bookings.

Current wording

Bookings for the three months ended June 30, 2024 increased by $138.8 million, or 18.3%, as compared with the same period in 2023. The increase included negative currency effects of approximately $7 million. The increase in customer bookings was driven by increased customer orders in the oil and gas, power generation and chemical industries, partially offset by decreased customer orders in the general and water management industries. Customer bookings increased $182.4 million into the Middle East, partially offset by decreased customer orders of $15.4 million into Europe, $11.4 million into Asia Pacific, $6.9 million into Africa, $1.8 million into North America, and $0.3 million into Latin America. The increase was primarily driven by original equipment bookings and included the impact of orders booked in the second quarter of 2024 in excess of $150 million to supply pumps and related equipment to support the continued development of an onshore unconventional gas project and a petrochemical project in the Middle East.

Previous wording

Sales for the three months ended March 31, 2024 increased by $69.3 million, or 9.9% as compared with the same period in 2023 and included currency benefits of approximately $3 million. The increase was driven by both aftermarket and original equipment customer sales. Increased customer sales of $28.7 million into North America, $20.2 million into Europe, $18.7 million into the Middle East, $6.5 million into Latin America, and $3.4 million into Africa were partially offset by decreased sales of $7.0 million into Asia Pacific.

Current wording

Sales for the three months ended June 30, 2024 increased by $46.8 million, or 6.1% as compared with the same period in 2023 and included negative currency effects of approximately $5 million. The increase was driven by both aftermarket and original equipment customer sales. Increased customer sales of $25.7 million into North America, $11.8 million into Europe, $11.6 million into the Middle East and $10.1 million into Latin America were partially offset by decreased sales of $6.7 million into Africa and $4.3 million into Asia Pacific.

Previous wording

SG&A for the three months ended March 31, 2024 decreased by $7.3 million, or 5.0%, as compared with the same period in 2023. Currency effects provided an increase of less than one million. The decrease in SG&A was primarily due to a reversal of previously recognized expenses of $2.0 million related to our financial exposure in Russia and a decrease of $1.0 million related to our 2023 Realignment Programs, partially offset by a $4.0 million increase in research and development costs and higher broad-based annual incentive compensation as compared to the same period in 2023.

Current wording

SG&A for the six months ended June 30, 2024 decreased by $4.0 million, or 1.4%, as compared with the same period in 2023. Currency effects provided a decrease of less than $1 million. The decrease in SG&A was primarily due to a $2.9 million impairment of a licensing intangible in 2023 that did not recur, the reversal of previously recognized expenses of $2.0 million related to our financial exposure in Russia and decreased charges of $1.7 million related to our 2023 Realignment Programs, partially offset by a $6.9 million increase in research and development costs, $3.0 million increase in bad debt expense and higher broad-based annual incentive compensation as compared to the same period in 2023.

Previous wording

Backlog of $841.7 million at March 31, 2024 increased by $14.9 million, or 1.8%, as compared with December 31, 2023. Currency effects provided a decrease of approximately $6 million.

Current wording

Backlog of $1,857.8 million at June 30, 2024 decreased by $33.9 million, or 1.8%, as compared with December 31, 2023. Currency effects provided a decrease of approximately $28 million.

Previous wording

FCD designs, manufactures and distributes a broad portfolio ofengineered-to-order and configured-to-order isolation valves, control valves, valve automation products and related equipment. FCD leverages its experience and application know-how by offering a complete menu of engineered services to complement its expansive product portfolio. FCD has a total of 44 manufacturing facilities and QRCs in 22 countries around the world, with five of its 19 manufacturing operations located in the United States, eight located in Europe and the Middle East, five located in Asia Pacific and one located in Latin America. Based on independent industry sources, we believe that FCD is the second largest industrial valve supplier on a global basis.

Current wording

FCD designs, manufactures and distributes a broad portfolio ofengineered-to-order and configured-to-order isolation valves, control valves, valve automation products and related equipment. FCD leverages its experience and application know-how by offering a complete menu of engineered services to complement its expansive product portfolio. FCD has a total of 42 manufacturing facilities and QRCs in 22 countries around the world, with five of its 18 manufacturing operations located in the United States, seven located in Europe and the Middle East, five located in Asia Pacific and one located in Latin America. Based on independent industry sources, we believe that FCD is the second largest industrial valve supplier on a global basis.

Previous wording

Bookings for the three months ended March 31, 2024 increased by $9.1 million, or 2.7%, as compared with the same period in 2023. Bookings included negative currency effects of approximately $1 million. The increase in customer bookings was primarily driven by increased customer orders in the oil and gas and power generation industries, partially offset by decreased customer orders in the chemical, general and water management industries. Increased customer bookings were driven by increased orders of $27.2 million into Asia Pacific, $8.7 million into Europe, $2.3 million into Africa, and $1.2 million into Latin America, partially offset by decreased orders of $20.6 million into North America and $8.7 million into the Middle East. The increase was primarily driven by customer aftermarket bookings.

Current wording

Bookings for the three months ended June 30, 2024 decreased by $10.5 million, or 2.9%, as compared with the same period in 2023. Bookings included negative currency effects of approximately $2 million. The decrease in customer bookings was driven by decreased customer orders in the oil and gas, chemical and water management industries, partially offset by increased customer orders in the power generation industry. Decreased customer bookings were driven by decreased orders of $16.8 million into Asia Pacific, $7.4 million into the Middle East, $4.9 million into Europe and $0.4 million into Africa, partially offset by increased orders of $10.3 million into Latin America and $9.9 million into North America. The decrease was primarily driven by customer original equipment bookings.

Previous wording

Gross profit for the three months ended March 31, 2024 increased by $12.4 million, or 15.4%, as compared with the same period in 2023. Gross profit margin for the three months ended March 31, 2024 of 28.9% increased from the 28.5% for the same period in 2023. The increase in gross profit margin was primarily due to the favorable impact of previously implemented sales price increases and higher sales volume, partially offset by slightly unfavorable mix, increased charges of less than one million related to our Realignment Programs and higher broad-based annual incentive compensation as compared to the same period in 2023.

Current wording

Gross profit for the three months ended June 30, 2024 increased by $13.2 million, or 14.2%, as compared with the same period in 2023. Gross profit margin for the three months ended June 30, 2024 of 30.6% increased from the 29.3% for the same period in 2023. The increase was primarily due to the favorable impact of previously implemented sales price increases, higher sales volume, decreased charges of $2.9 million related to our 2023 Realignment Programs and lower broad-based annual incentive compensation, partially offset by slightly unfavorable mix as compared to the same period in 2023.

Previous wording

Existing cash, cash generated by operations and borrowings available under the Senior Credit Facility are our primary sources of short-term liquidity. We monitor the depository institutions that hold our cash and cash equivalents on a regular basis, and we believe that we have placed our deposits with creditworthy financial institutions. Our sources of operating cash generally include the sale of our products and services and the conversion of our working capital, particularly accounts receivable and inventories. Our cash balance at March 31, 2024 was $532.0 million as compared with $545.7 million at December 31, 2023.

Current wording

Existing cash, cash generated by operations and borrowings available under the Senior Credit Facility are our primary sources of short-term liquidity. We monitor the depository institutions that hold our cash and cash equivalents on a regular basis, and we believe that we have placed our deposits with creditworthy financial institutions. Our sources of operating cash generally include the sale of our products and services and the conversion of our working capital, particularly accounts receivable and inventories. Our cash balance at June 30, 2024 was $515.1 million as compared with $545.7 million at December 31, 2023.

Previous wording

Our cash balance decreased by $13.7 million to $532.0 million at March 31, 2024, as compared with December 31, 2023. The cash activity during the first three months of 2024 included cash provided by operating activities, $27.7 million in dividend payments, $13.6 million in capital expenditures, $15.0 million of payments on our Term Loan and $2.5 million of share repurchases.

Current wording

Our cash balance decreased by $30.6 million to $515.1 million at June 30, 2024, as compared with December 31, 2023. The cash activity during the first six months of 2024 included cash provided by operating activities, $55.3 million in dividend payments, $28.3 million in capital expenditures, $30.0 million of payments on our Term Loan and $16.2 million of share repurchases.

Previous wording

For the three months ended March 31, 2024, our cash provided by operating activities was $62.3 million, as compared to cash provided of $26.6 million for the same period in 2023. Cash flow used for working capital increased for the three months ended March 31, 2024, due primarily to increased cash flows used by or decreased cash flows provided by accounts receivable, contract assets, accounts payable, contract liabilities, accrued liabilities, and retirement obligations and other liabilities partially offset by increased cash flows provided by or decreased cash flows used by inventories, prepaid expenses and other assets, and net deferred taxes as compared to the same period in 2023.

Current wording

For the six months ended June 30, 2024, our cash provided by operating activities was $49.5 million, as compared to cash provided of $50.4 million for the same period in 2023. Cash flow used for working capital increased for the six months ended June 30, 2024, primarily due to increased cash flows used by or decreased cash flows provided by accounts receivable, contract assets, accrued liabilities, and retirement obligations and other liabilities, partially offset by increased cash flows provided by or decreased cash flows used by inventories, prepaid expenses and other, accounts payable, contract liabilities and net deferred taxes as compared to the same periodin 2023.

Previous wording

Increases in accounts receivable used $39.7 million of cash flow for the three months ended March 31, 2024, as compared to $26.2 million used for the same period in 2023. As of March 31, 2024, our days’ sales outstanding ("DSO") was 76 days as compared with 83 days as of March 31, 2023.

Current wording

Increases in accounts receivable used $168.5 million of cash flow for the six months ended June 30, 2024, as compared to $5.4 million used for the same period in 2023. As of June 30, 2024, our days’ sales outstanding ("DSO") was 80 days as compared with 74 days as of June 30, 2023.

Previous wording

Increases in contract assets used $8.1 million of cash flow for the three months ended March 31, 2024, as compared with cash flows provided of $4.3 million for the same period in 2023.

Current wording

Increases in contract assets used $13.3 million of cash flow for the six months ended June 30, 2024, as compared with cash flows provided of $9.9 million for the same period in 2023.

Previous wording

Increases in inventory used $11.5 million and $70.7 million of cash flow for the three months ended March 31, 2024 and March 31, 2023, respectively. Inventory turns were 3.3 times at March 31, 2024, as compared to 3 times as of March 31, 2023.

Current wording

Decreases in inventory provided $3.6 million of cash flow for the six months ended June 30, 2024, as compared with cash flows used of $99.2 million for the same period in 2023. Inventory turns were 3.6 times at June 30, 2024, as compared to 3.2 times as of June 30, 2023.

Previous wording

Increases in accounts payable provided $5.1 million of cash flow for the three months ended March 31, 2024, as compared with $7.0 million of cash provided for the same period in 2023. Increases in accrued liabi lities provided $30.9 million of cash flow for thethree months ended March 31, 2024, as compared with $35.4 million of cash flow provided for the same period in 2023.

Current wording

Increases in accounts payable provided $14.4 million of cash flow for the six months ended June 30, 2024, as compared with $7.1 million of cash provided for the same period in 2023. Decreases in accrued liabilities used $47.8 million of cash flow for the six months ended June 30, 2024, as compared with $2.1 million of cash flow used for the same period in 2023.

Previous wording

Decreases in contract liabilities used $6.4 million of cash flow for the three months ended March 31, 2024, as compared to cash flows provided of $32.7 million for the same period in 2023.

Current wording

Increases in contract liabilities provided $10.9 million of cash flow for the six months ended June 30, 2024, as compared to cash flows provided of $10.8 million for the same period in 2023.

Previous wording

Cash flows used by investing activities during the three months ended March 31, 2024 were $13.6 million, as compared to cash flows used of $16.5 million for the same period in 2023. Capital expenditures during the three months ended March 31, 2024 were $13.6 million, a decrease of $1.7 million as compared with the same period in 2023. Our capital expenditures are generally focused on strategic initiatives to pursue information technology infrastructure, ongoing scheduled replacements and upgrades and cost reduction opportunities. In 2024, we currently estimate capital expenditures to be between $75 million and $85 million before consideration of any acquisition activity.

Current wording

Cash flows used by investing activities during the six months ended June 30, 2024 were $30.1 million, as compared to cash flows used of $32.8 million for the same period in 2023. Cash outflows in the six months ended June 30, 2024 resulted primarily from capital expenditures of $28.3 million, a decrease of $3.6 million and payment for disposition of business of $2.4 million as compared with the same period in 2023. Our capital expenditures are generally focused on strategic initiatives to pursue information technology infrastructure, ongoing scheduled replacements and upgrades and cost reduction opportunities. In 2024, we currently estimate capital expend itures to be between $75 million and $85 million before consideration of any acquisition activity.

Previous wording

Cash flows used by financing activities during the three months ended March 31, 2024 were $54.2 million, as compared to $43.8 million of cash flows used for the same period in 2023. Cash outflows in the three months ended March 31, 2024 resulted primarily from the $15.0 million of payments on our Term Loan and $27.7 million of dividend payments. Cash outflows during the three months ended March 31, 2023 resulted primarily from the $10.0 million of payments on our Term Loan and $26.2 million of dividend payments.

Current wording

Cash flows used by financing activities during the six months ended June 30, 2024 were $36.7 million, as compared to $32.3 million of cash flows used for the same period in 2023. Cash outflows in the six months ended June 30, 2024 resulted primarily from the $30.0 million of payments on our Term Loan, $55.3 million of dividend payments, $25.0 million of payments on our Revolving Credit Facility and $16.2 million of share repurchases, partially offset by $100.0 million of cash proceeds from our Revolving Credit Facility. Cash outflows during the six months ended June 30, 2023 resulted primarily from $20.0 million of payments on our Term Loan, $100.0 million repayments under our Revolving Credit Facility and $52.5 million of dividend payments, partially offset by cash inflows of $150.0 million from our Revolving Credit Facility.

Previous wording

Our Senior Credit Facility Agreement matures in September 13, 2026. Approx imately $45 million of our outstanding Term Loan is due to mature in the remainder of 2024 and approximately $60 million in 2025. As of March 31, 2024, we had an available capacity of$672.2 million on our Senior Credit Facility, which provides fora $800.0 million unsecured revolving credit facility with a maturity date of September 13, 2026. Our borrowing capacity is subject to financial covenant limitations based on the terms of our Senior Credit Facility and is also reduced by outstanding letters of credit. Our Senior Credit Facility is committed and held by a diversified group of financial institutions. Refer to Note 6 to our condensed consolidated financial statements included in this Quarterly Report for additional information concerning our Senior Credit Facility.

Current wording

Our Senior Credit Facility Agreement matures in September 13, 2026. Approx imately $30 million of our outstanding Term Loan Facility is due to mature in the remainder of 2024 and approximately $60 million in 2025. As of June 30, 2024, we had an available capacity of $621.2 million on our Senior Credit Facility, which provides for a $800.0 million unsecured revolving credit facility with a maturity date of September 13, 2026. Our borrowing capacity is subject to financial covenant limitations based on the terms of our Senior Credit Facility and is also reduced by outstanding letters of credit. Our Senior Credit Facility is committed and held by a diversified group of financial institutions. Refer to Note 6, "Debt and Finance Lease Obligations," to our condensed consolidated financial statements included in this Quarterly Report for additional information concerning our Senior Credit Facility.

Previous wording

During thethree months ended March 31, 2024 we have made no cash contributions to our U.S. pension plan. We have no obligation to make contributions to our U.S. pension plans in 2024, but have authorization for contributions up to $20 million. At December 31, 2023, our U.S. pension plan was fully funded as defined by applicable law. We continue to maintain an asset allocation consistent with our strategy to maximize total return, while reducing portfolio risks through asset class diversification.

Current wording

During thesix months ended June 30, 2024, we have made no cash contributions to our U.S. pension plan. We have no obligation to make contributions to our U.S. pension plans in 2024, but have authorization for contributions up to $20 million. At December 31, 2023, our U.S. pension plan was fully funded as defined by applicable law. We continue to maintain an asset allocation consistent with our strategy to maximize total return, while reducing portfolio risks through asset class diversification.

Previous wording

As of March 31, 2024, we have $297.5 million of remaining capacity for Board of Directors approved share repurchases. While we currently intend to continue to return cash through dividends and/or share repurchases for the foreseeable future, any future returns of cash through dividends will be reviewed individually, declared by our Board of Directors at its discretion and implemented by management.

Current wording

As of June 30, 2024, we have $283.8 million of remaining capacity for Board of Directors approved share repurchases. While we currently intend to continue to return cash through dividends and/or share repurchases for the foreseeable future, any future returns of cash through dividends will be reviewed individually, declared by our Board of Directors at its discretion and implemented by management.

Previous wording

See Note 6 to our condensed consolidated financial statements included in this Quarterly Report for a discussion of our Senior Credit Facility and related covenants. We were in compliance with all applicable covenants under our Senior Credit Facility as of March 31, 2024.

Current wording

See Note 6, "Debt and Finance Lease Obligations," to our condensed consolidated financial statements included in this Quarterly Report for a discussion of our Senior Credit Facility and related covenants. We were in compliance with all applicable covenants under our Senior Credit Facility as of June 30, 2024.

Previous wording

As of March 31, 2024, we have cash and cash equi valents of $532.0 million and $672.2 million of borrowings available under our Senior Credit Facility. In April 2024, the Company borrowed $100.0 million on the Revolving Credit Facility for general corporate purposes and, as of April 29, 2024, the Company has $100.0 million outstanding. We do not currently anticipate, nor are we aware of, any significant market conditions or commitments that would change any of our conclusions of the sufficient liquidity available to us. We expect the liquidity discussed above coupled with the costs savings measures planned and already in place will further enable us to maintain adequate liquidity over the short-term (next 12 months) and long-term (beyond the next 12 months). We will continue to actively monitor the credit markets in order to maintain sufficient liquidity and access to capital.

Current wording

As of June 30, 2024, we have cash and cash equi valents of $515.1 million and $621.2 million of borrowings available under our Senior Credit Facility. During the second quarter of 2024, the Company borrowed on the Revolving Credit Facility for general corporate purposes and as of June 30, 2024 had $75.0 million outstanding. We do not currently anticipate, nor are we aware of, any significant market conditions or commitments that would change any of our conclusions of the liquidity available to us. We expect the liquidity discussed above coupled with the costs savings measures planned and already in place will further enable us to maintain adequate liquidity over the short-term (next 12 months) and long-term (beyond the next 12 months). We will continue to actively monitor the credit markets in order to maintain sufficient liquidity and access to capital.

Previous wording

Management’s discussion and analysis of financial condition and results of operations are based on our condensed consolidated financial statements and related footnotes contained within this Quarterly Report. Our critical accounting policies used in the preparation of our condensed consolidated financial statements were discussed in "Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" of our 2023 Annual Report. The critical policies, for which no significant changes have occurred in the three months ended March 31, 2024, include:

Current wording

Management’s discussion and analysis of financial condition and results of operations are based on our condensed consolidated financial statements and related footnotes contained within this Quarterly Report. Our critical accounting policies used in the preparation of our condensed consolidated financial statements were discussed in "Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" of our 2023 Annual Report. The critical policies, for which no significant changes have occurred in the six months ended June 30, 2024, include: