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 support global industries, including energy, chemical, power generation and general, which includes water management and pharmaceuticals, 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 approximately 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 energy, chemical, power generation and general, which includes water management and pharmaceuticals, 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 relied upon to maximize the 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.

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 152 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

The reputation of our product portfolio is built on more than 50 well-respected brand names such as Worthington, IDP, SIHI, INNOMAG, Valtek, Limitorque, Durco and Argus, which we believe to be one of the most comprehensive in the industry. Our products and services are sold either directly or through designated channels to more than 10,000 companies, including some of the world’s leading engineering, procurement and construction ("EPC") firms, original equipment manufacturers, distributors and end users.

Current wording

The reputation of our product portfolio is built on more than 50 well-respected brand names such as Worthington, IDP, SIHI, INNOMAG, Valtek, Limitorque, Durco, Argus and Durametallic, which we believe to be one of the most comprehensive in the industry. Our products and services are sold either directly or through designated channels to more than 10,000 companies, including some of the world’s leading engineering, procurement and construction ("EPC") firms, original equipment manufacturers, distributors and end users.

Previous wording

We continue to see growth from the end-markets we serve and 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 strategy is expected to deliver sustainable growth, while the Flowserve Business System is expected to unlock gains in organizational and operational efficiency. The current macroeconomic environment is dynamic and uncertainty exists given the trade policy actions introduced through April, including higher import tariffs in a number of countries in which we operate, the potential implementation of modified or new tariffs and related retaliatory actions. We plan to leverage our global footprint, expansive manufacturing network, flexible supply chain and ability to incorporate tariff impacts into pricing decisions to minimize the economic impact of this uncertainty to our business. We will continue to monitor and manage macroeconomic trends and uncertainties, including inflationary and recessionary pressures resulting from the ongoing tariffs and geopolitical climate; however, with our strong backlog, improved execution and recent acquisition of MOGAS, we expect to deliver annual revenue growth in 2025.

Current wording

We continue to see growth from the end-markets we serve and 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 strategy is expected to deliver sustainable growth, while the Flowserve Business System is expected to unlock gains in organizational and operational efficiency. The current macroeconomic environment is dynamic and uncertainty exists given the trade policy actions introduced throughout 2025, including higher import tariffs in a number of countries in which we operate, the potential implementation of modified or new tariffs and related retaliatory actions. We plan to leverage our global footprint, expansive manufacturing network, flexible supply chain and ability to incorporate tariff impacts into pricing decisions to minimize the economic impact of this uncertainty to our business. We will continue to monitor and manage macroeconomic trends and uncertainties, including inflationary and recessionary pressures resulting from the ongoing tariffs and geopolitical climate; however, with our strong backlog, improved execution and recent acquisition of MOGAS, we expect to deliver annual revenue growth in 2025.

Previous wording

As of March 31, 2025, we have cash and cash equi valents of$540.8 million and $662.2 million of borr owings available under our Second Amended and Restated Credit Agreement. 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 currently available to us. We will continue to actively monitor the credit markets in order to maintain sufficient liquidity and access to capital throughout 2025.

Current wording

As of June 30, 2025, we have cash and cash equi valents of $629.2 million and $661.0 million of borr owings available under our Second Amended and Restated Credit Agreement. 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 currently available to us. We will continue to actively monitor the credit markets in order to maintain sufficient liquidity and access to capital throughout 2025.

Previous wording

As discussed in Note 2, "Acquisition," to our condensed consolidated financial statements included in this Quarterly Report, effective October 15, 2024, we acquired for inclusion in FCD, all of the equity interests of MOGAS Industries, Inc., MOGAS Real Estate LLC and MOGAS Systems & Consulting LLC (such entities collectively, "MOGAS"). We incurred $1.3 million in acquisition and integration related costs for the three-month period ended March 31, 2025 associated with the acquisition which are included within selling, general and administrative expense ("SG&A") in our condensed consolidated statement of income. The impact of the acquisition of MOGAS is not material for the three-month period ended March 31, 2025.

Current wording

As discussed in Note 2, "Acquisition," to our condensed consolidated financial statements included in this Quarterly Report, effective October 15, 2024, we acquired for inclusion in FCD, all of the equity interests of MOGAS Industries, Inc., MOGAS Real Estate LLC and MOGAS Systems & Consulting LLC (such entities collectively, "MOGAS"). We incurred $5.2 million in acquisition and integration related costs for the six months ended June 30, 2025 associated with the acquisition which are included within selling, general and administrative expense ("SG&A") in our condensed consolidated statement of income. The impact of the acquisition of MOGAS is not material for the six months ended June 30, 2025.

Previous wording

Our realignment activities are implemented in phases. We currently anticipate a total investment of approximately $23 million in the 2025 Realignment Programs that have been evaluated and initiated, of which $8 million is estimated to be non-cash. We are evaluating the annualized cost savings expected to be achieved upon completion of the activities of the 2025 Realignment Programs that have been identified and initiated to date. Actual savings could vary from expected savings. 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

Our realignment activities are implemented in phases. We currently anticipate a total investment of approximately $28 million in the 2025 Realignment Programs that have been evaluated and initiated, of which $9 million is estimated to be non-cash. We are evaluating the annualized cost savings expected to be achieved upon completion of the activities of the 2025 Realignment Programs that have been identified and initiated to date. Actual savings could vary from expected savings. 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

(1) Includes the immaterial reversal of previously recognized realignment charges associated with our 2023 Realignment Programs, which was recognized in the first quarter of 2025. Our 2023 Realignment Programs are substantially completed.

Current wording

(2) Includes the immaterial reversal of previously recognized realignment charges associated with our 2023 Realignment Programs and an immaterial non-cash gain recognized on the early cancellation of certain lease agreements and the resulting write-off of the remaining operating lease liabilities associated with our 2023 Realignment Programs, which were recognized in the first and second quarters of 2025, respectively. Our 2023 Realignment Programs are substantially completed.

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, 2025 increased by $188.1 million, or 18.1%, as compared to the same period in 2024. The increase included negative currency effects of $25 million. The increased bookings were driven by increased customer orders of $88 million in the general industries, $58 million in the power generation industry and $41 million in the energy industry, partially offset by a decrease of $4 million in the chemical industry. The increase in customer bookings was driven by both original equipment and aftermarket 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, 2025 decreased by $172.2 million, or 13.8%, as compared with the same period in 2024. The decrease included currency benefits of approximately $12 million. The decreased bookings were driven by decreased customer orders of $146 million in the energy industry, $39 million in the chemical industry and $23 million in the power industry, partially offset by an increase of $29 million in the general industries. The decrease in customer bookings was driven by original equipment bookings.

Previous wording

Sales for the three months ended March 31, 2025 increased by $57.0 million, or 5.2%, as compared to the same period in 2024. The increase included negative currency effects of approximately $24 million. The increased sales were driven by both aftermarket and original equipment customer sales, with increased customer sales of $27 million into North America, $21 million into the Middle East, $20 million into Asia Pacific and $7 million into Latin America, partially offset by decreased customer sales of $9 million into both Europe and Africa, respectively. Net sales to international customers, including export sales from the United States, were approxim ately 63% and 64% of total salesfor the three months ended March 31, 2025 and 2024, respectively. Aftermarket sales represented approximately 51% of total sales for both periods.

Current wording

Sales for the six months ended June 30, 2025 increased by $88.3 million, or 3.9%, as compared to the same period in 2024. The increase included negative currency effects of approximately $12 million. The increased sales were driven by both aftermarket and original equipment customer sales, with increased customer sales of $60 million into North America, $21 million into the Middle East, $13 million into Asia Pacific and $7 million into Africa, partially offset by decreased customer sales of $8 million into Europe and $4 million into Latin America. Net sales to international customers, including export sales from the United States, were approximately 62% and 63% of total sales for the six months ended June 30, 2025 and 2024, respectively. Aftermarket sales represented approximately 52% of total sales, as compared with approximately 51% of total sales for the same period in 2024.

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 $2,902.9 million at March 31, 2025 increased by $113.3 million, or 4.1%, as compared to December 31, 2024. Currency effects provided an increase of approximately $49 million (currency effects on backlog are calculated using the change in period end exchange rates). Approximately 40% of the backlog at March 31, 2025 and 37% of the backlog at December 31, 2024 was related to aftermarket orders. Backlog includes our unsatisfied (or partially unsatisfied) performance obligations of approximately$962 million related to contracts having an original expected duration of over one year as discussed in Note 3, "Revenue Recognition," 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, cancellations and currency effects. Backlog of $2,853.2 million at June 30, 2025 increased by $63.6 million, or 2.3%, as compared to December 31, 2024. Currency effects provided an increase of approximately $159 million (currency effects on backlog are calculated using the change in period end exchange rates). Approximately 40% of the backlog at June 30, 2025 and 37% of the backlog at December 31, 2024 was related to aftermarket orders. Backlog includes our unsatisfied (or partially unsatisfied) performance obligations of approximately $994 million related to contracts having an original expected duration of over one year as discussed in Note 4, "Revenue Recognition," to our condensed consolidated financial statements included in this Quarterly Report.

Previous wording

Gross profit for the three months ended March 31, 2025 increased by $30.3 million, or 8.9%, as compared to the same period in 2024. Gross profit margin for the three months ended March 31, 2025 of 32.3% increased from 31.2% for the same period in 2024. The increase in gross profit margin was primarily due to the favorable impact of previously implemented sales price increases and an improved selective bidding approach, partially offset by higher broad-based annual incentive compensation, increased charges of $4.3 million related to our realignment activities and $3.5 million in amortization of step-up in value of acquired inventories and acquisition related intangibles assets associated with the MOGAS acquisition as compared to the same period in 2024.

Current wording

Gross profit for the six months ended June 30, 2025 increased by $70.8 million, or 10.0%, as compared with the same period in 2024. Gross profit margin for the six months ended June 30, 2025 of 33.3% increased from 31.4% for the same period in 2024. The increase in gross profit margin was primarily due to the favorable impact of previously implemented sales price increases and an improved selective bidding approach, partially offset by $6.9 million of integration costs and amortization of step-up in value of acquired inventories and acquisition related intangibles assets associated with the MOGAS acquisition, higher broad-based annual incentive compensation and increased charges of $1.9 million related to our realignment activities as compared to the same period in 2024.

Previous wording

SG&A for the three months ended March 31, 2025 increased by $14.8 million, or 6.5%, as compared to the same period in 2024. Currency effects yielded a decrease of approximately $5 million. SG&A increased due to higher broad-based annual incentive compensation, increased bad debt expense of $2.2 million, a reversal of previously recognized expenses of $2.0 million related to our financial exposure in Russia in the first quarter of 2024 that did not recur, $1.3 million of acquisition and integration expense related to the MOGAS acquisition and $1.3 million in amortization of step-up in value of acquisition related intangible assets associated with the MOGAS acquisition, partially offset by a decrease in research and development costs of $3.1 million and decreased charges of $2.8 million related to our realignment activities as compared to the same period in 2024. SG&A as a percentage of sales for the three months ended March 31, 2025 increased 20 basis points driven by cost increases.

Current wording

SG&A for the six months ended June 30, 2025 increased by $42.1 million, or 9.0%, as compared with the same period in 2024. Currency effects yielded a decrease of approximately $2 million. SG&A increased due to $15.5 million in transaction costs incurred associated with the Chart Merger, $7.1 million of integration costs and amortization of acquisition related intangibles assets associated with the MOGAS acquisition, increased bad debt expense of $3.0 million and higher broad-based annual incentive compensation, partially offset by a decrease in research and development costs of $4.4 million, decreased charges of $4.3 million related to our realignment activities and a $1.8 million discrete software asset impairment recognized in 2024 that did not recur as compared to the same period in 2024. SG&A as a percentage of sales for the six months ended June 30, 2025 increased 100 basis points driven by cost increases.

Previous wording

Net earnings from affiliates for the three months ended March 31, 2025 increased by $3.2 million, or 128.0%, as compared to the same period in 2024. The increase in net earnings was primarily a result of increased earnings of our FPD joint ventures in South Korea.

Current wording

Net earnings from affiliates for the six months ended June 30, 2025 increased by $2.3 million, or 24.7%, as compared with the same period in 2024. 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, 2025 increased $3.9 million, as compared to the same period in 2024, primarily due to higher outstanding debt during the period. Interest income for the three months ended March 31, 2025 increased by $0.5 million primarily due to higher average balance as compared to the same period in 2024.

Current wording

Interest expense for the three months ended June 30, 2025 increased by $3.4 million, as compared with the same period in 2024, primarily due to higher outstanding debt during the period. Interest income for the three months ended June 30, 2025 increased by $1.3 million primarily due to higher average balance as compared to the same period in 2024.

Previous wording

Other expense, net for the three months ended March 31, 2025 increased $16.4 million as compared to the same period in 2024, primarily due to a $9.8 million increase in losses arising from transactions on foreign exchange forward contracts and a $2.9 million increase in losses from transactions in currencies other than our sites' functional currencies. The net change was primarily due to the foreign currency exchange rate movements in the Euro, Swedish krona, Singapore dollar and Brazilian real during the three months ended March 31, 2025, as compared to the same period in 2024. The three-month period ended March 31, 2025 also includes a pension settlement loss of $1.5 million incurred in conjunction with the freeze of our U.S. Qualified pension plan, which represents a portion of the estimated full year expected settlement loss of $6 million - $7 million triggered due to expected cash outflows exceeding service and interest costs.

Current wording

Other expense, net for the three months ended June 30, 2025 increased $19.7 million as compared to the same period in 2024, primarily due to a $23.1 million increase in losses from transactions in currencies other than our sites' functional currencies, partially offset by a $3.3 million increase in gains arising from transactions on foreign exchange forward contracts. The net change was primarily due to the foreign currency exchange rate movements in the Euro, Swedish krona, Singapore dollar and Indian rupee real during the three months ended June 30, 2025, as compared to the same period in 2024. The three-month period ended June 30, 2025 also includes a pension settlement loss of $1.5 million incurred in conjunction with the freeze of our U.S. Qualified pension plan, which represents a portion of the estimated full year expected settlement loss of $6 million - $7 million triggered due to expected cash outflows exceeding service and interest costs.

Previous wording

The effective tax rate of 18.3% for the three months ended March 31, 2025 decreased from 20.5% for the same period in 2024. The effective tax rate varied from the U.S. federal statutory rate for the three months ended March 31, 2025 primarily due to the net impact of U.S. discrete items, partially offset by state income taxes. Refer to Note 15, "Income Taxes," to our condensed consolidated financial statements included in this Quarterly Report for further discussion.

Current wording

The effective tax rate of 16.6% for the six months ended June 30, 2025 decreased from 22.2% for the same period in 2024. The effective tax rate varied from the U.S. federal statutory rate for the six months ended June 30, 2025 primarily due to the net impact of foreign operations and U.S. discrete items, partially offset by state income tax. Refer to Note 16, "Income Taxes," to our condensed consolidated financial statements included in this Quarterly Report for further discussion.

Previous wording

Other comprehensive income for the three months ended March 31, 2025 increased by $74.8 million from a loss of $26.9 million in the same period in 2024. The income was due to foreign currency translation adjustments resu lting primarily from exchange rate movements of the Euro, British pound and Brazilian real versus the U.S. dollar during the three months ended March 31, 2025, as compared to the same period in 2024.

Current wording

Other comprehensive income for the three months ended June 30, 2025 increased by $134.0 million from a loss of $23.6 million in the same period in 2024. The increase was due to foreign currency translation adjustments resulting primarily from exchange rate movements of the Euro, British pound, and Mexican peso versus the U.S. dollar during the three months ended June 30, 2025, as compared to the same period in 2024.

Previous wording

Our largest business segment is FPD, through which we design, manufacture, pretest, distribute and service highly custom engineered pumps, pre-configured industrial pumps, pump systems, mechanical seals and auxiliary systems (collectively referred to as "original equipment") and related services. FPD includes highly engineered pump products with longer lead times and mechanical seals that are generally manufactured within shorter lead times. FPD also manufactures replacement parts and related equipment and provides aftermarket services. FPD primarily operates in the energy, power generation, chemical, and general industries. FPD operates in 49 countries with 37 manufacturing facilities worldwide, 12 of which are located in North America, 11 in Europe and the Middle East, eight in Asia Pacific and six in Latin America, and it operates 130 QRCs, including those co-located in manufacturing facilities and/or shared with FCD.

Current wording

Our largest business segment is FPD, through which we design, manufacture, pretest, distribute and service highly custom engineered pumps, pre-configured industrial pumps, pump systems, mechanical seals, and auxiliary systems (collectively referred to as "original equipment") and related services. FPD includes highly engineered pump products with longer lead times and mechanical seals, that are generally manufactured within shorter lead times. FPD also manufactures replacement parts and related equipment and provides aftermarket services. FPD primarily operates in the energy, power generation, chemical, and general industries. FPD operates in 49 countries with 37 manufacturing facilities worldwide, 12 of which are located in North America, 11 in Europe and the Middle East, eight in Asia Pacific, and six in Latin America, and it operates 127 QRCs, including those co-located in manufacturing facilities and/or shared with FCD.

Previous wording

Sales for the three months ended March 31, 2025 increased by $13.7 million, or 1.8% as compared to the same period in 2024 and included negative currency effects of approximately $19 million. The increase was driven by aftermarket customer sales. Increased customer sales of approximately $16.3 million into North America, $9.6 million into the Middle East and $1.2 million into Latin America were partially offset by decreased customer sales of $9.3 million into Asia Pacific, $4.2 million into Europe and $2.4 million into Africa.

Current wording

Sales for the six months ended June 30, 2025 increased by $20.5 million, or 1.3% as compared to the same period in 2024 and included negative currency effects of approximately $10 million. The increase was driven by aftermarket customer sales. Increased customer sales of approximately $36 million into North America, $14 million into Africa and $10 million into the Middle East were partially offset by decreased customer sales of approximately $16 million into Asia Pacific, $15 million into Latin America and $10 million into Europe.

Previous wording

Gross profit for the three months ended March 31, 2025 increased by $20.6 million, or 8.3%, as compared to the same period in 2024. Gross profit margin for the three months ended March 31, 2025 of 34.3% increased from 32.2% for the same period in 2024. The increase in gross profit margin was primarily due to strategic sourcing decisions, an improved selective bidding approach, favorable mix and decreased charges of $2.1 million related to our realignment activities, partially offset by higher broad-based annual incentive compensation as compared to the same period in 2024.

Current wording

Gross profit for the three months ended June 30, 2025 increased by $39.0 million, or 15.0%, as compared to the same period in 2024. Gross profit margin for the three months ended June 30, 2025 of 36.5% increased from 32.0% for the same period in 2024. The increase in gross profit margin was primarily due to strategic sourcing decisions, an improved selective bidding approach, favorable mix and decreased charges of $5.5 million related to our realignment activities, partially offset by higher broad-based annual incentive compensation as compared to the same period in 2024.

Previous wording

SG&A for the three months ended March 31, 2025 decreased by $2.0 million, or 1.4%, as compared to the same period in 2024. Currency effects yielded a decrease of approximately $4 million. The decrease in SG&A was primarily due to decreased research and development costs of $2.8 million, decreased charges of $2.0 million related to our realignment activities and decreased bad debt expense of $0.4 million, partially offset by higher broad-based annual incentive compensation and a reversal of previously recognized expenses of $2.0 million related to our financial exposure in Russia in the first quarter of 2024 that did not recur as compared to the same period in 2024.

Current wording

SG&A for the six months ended June 30, 2025 increased by $4.3 million, or 1.6%, as compared to the same period in 2024. Currency effects yielded a decrease of approximately $2 million. The increase in SG&A was primarily due to higher broad-based annual incentive compensation and increased charges of $0.4 million related to our realignment activities, partially offset by decreased research and development expense of $5.4 million and decreased bad debt expense of $0.7 million as compared to the same period in 2024.

Previous wording

Operating income for the three months ended March 31, 2025 decreased by $3.2 million, or 9.2%, as compared to the same period in 2024. The decrease included negative currency effects of approximately $1 million. The decrease was primarily due to the $10.7 million increase in SG&A partially offset by $7.5 million increase in gross profit.

Current wording

Operating income for the six months ended June 30, 2025 increased by $57.4 million, or 23.7%, as compared to the same period in 2024. The increase included negative currency effects of approximately $1 million. The increase was primarily due to the $59.5 million increase in gross profit partially offset by the $4.3 million increase in SG&A.

Previous wording

FCD designs, manufactures and distributes a broad portfolio of engineered-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 seven of its 19 manufacturing operations located in Europe and the Middle East, six located in the United States, five located in Asia Pacific and one located in Latin America. Based on independent industry sources, we believe that FCD ranks among the top three largest industrial valve suppliers worldwide.

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 44 manufacturing facilities and QRCs in 22 countries around the world, with six of its 19 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, 2025 increased by $34.9 million, or 10.2%, as compared to the same period in 2024. Bookings included negative currency effects of approximately $5 million. The increase in customer bookings was primarily driven by increased customer orders of $23.8 million in the energy industry, $7.7 million in the general industries and $3.2 million in the power generation industry, partially offset by decreased customer orders of $2.4 million in the chemical industry. Increased customer bookings were driven by increased orders of approximately $41.8 million into North America, $26.1 million into the Middle East and $1.7 million into Latin America, partially offset by decreased orders of $20.0 million into Europe, $15.9 million into Asia Pacific and $1.4 million into Africa. The increase in customer bookings was driven by both customer original equipment and aftermarket bookings.

Current wording

Bookings for the three months ended June 30, 2025 increased by $5.5 million, or 1.6%, as compared with the same period in 2024. Bookings included currency benefits of approximately $2 million. The increase in customer bookings was driven by increased customer orders of $13 million in the energy industry and $2 million in the general industries, partially offset by decreased customer orders of $8 million in the chemical industry and $7 million in the power industry. Increased customer bookings were driven by increased orders of $20 million into the Middle East, $4 million into North America and $2 million into Africa, partially offset by decreased orders of $19 million into Europe, $6 million into Asia Pacific and $2 million into Latin America. The increase was primarily driven by customer aftermarket bookings.

Previous wording

Gross profit for the three months ended March 31, 2025 increased by $7.5 million, or 8.1%, as compared to the same period in 2024. Gross profit margin for the three months ended March 31, 2025 of 27.5% decreased from 28.9% for the same period in 2024. The decrease in gross profit margin was primarily due to increased charges of $6.3 million related to our realignment activities and $3.5 million in amortization of step-up in value of acquired inventories and acquisition related intangibles assets associated with the MOGAS acquisition, partially offset by the favorable impact of previously implemented sales price increases as compared to the same period in 2024.

Current wording

Gross profit for the three months ended June 30, 2025 increased by $1.4 million, or 1.3%, as compared with the same period in 2024. Gross profit margin for the three months ended June 30, 2025 of 29.0% decreased from 30.6% for the same period in 2024. The decrease in gross profit margin was primarily due to $3.4 million of integration costs and amortization of step-up in value of acquired inventories and acquisition related intangibles assets associated with the MOGAS acquisition and increased charges of $3.0 million related to our realignment activities, partially offset by the favorable impact of previously implemented sales price increases as compared to the same period in 2024.

Previous wording

Our cash balance decreased by $134.6 million to $540.8 million at March 31, 2025, as compared to December 31, 2024. The cash activity during the first three months of 2025 included cash used by operating activities, $27.6 million in dividend payments, $21.1 million of share repurchases, $15.0 million contingent consideration payment related to the MOGAS acquisition, $11.7 million in capital expenditures and $9.4 million of payments on our $500.0 million unsecured term loan facility (the "Term Loan").

Current wording

Our cash balance decreased by $46.2 million to $629.2 million at June 30, 2025, as compared with December 31, 2024. The cash activity during the first six months of 2025 included cash provided by operating activities, $55.2 million in dividend payments, $52.8 million of share repurchases, $15.0 million contingent consideration payment related to the MOGAS acquisition, $28.3 million in capital expenditures and $18.8 million of payments on our $500.0 million unsecured term loan facility (the "Term Loan").

Previous wording

For the three months ended March 31, 2025, our cash used by operating activities was $49.9 million, as compared to cash provided of $62.3 million for the same period in 2024. Cash flow used for working capital increased for the three months ended March 31, 2025, primarily due to increased cash flows used by, or decreased cash flows provided by, accounts receivable, contract assets, accounts payable and accrued liabilities, partially offset by increased cash flows provided by, or decreased cash flows used by, inventories, prepaid expenses and other assets, and contract liabilities as compared to the same period in 2024.

Current wording

For the six months ended June 30, 2025, our cash provided by operating activities was $104.2 million, as compared to cash provided of $49.5 million for the same period in 2024. Cash flow used by working capital decreased for the six months ended June 30, 2025, primarily due to increased cash flows provided by, or decreased cash flows used by, accounts receivable, inventories and prepaid expenses and other assets , partially offset by decreased cash flows provided by, or increased cash flows used by, contract assets, accounts payable, contract liabilities and accrued liabilities as compared to the same period in 2024.

Previous wording

Increases in accounts receivable used $50.7 million of cash flow for the three months ended March 31, 2025, compared to cash used of $39.7 million for the same period in 2024. As of March 31, 2025, our days’ sales outstanding ("DSO") was 82 days as compared to 76 days as of March 31, 2024.

Current wording

Increases in accounts receivable used $22.6 million of cash flow for the six months ended June 30, 2025, compared to cash used of $168.5 million for the same period in 2024. As of June 30, 2025, our days’ sales outstanding ("DSO") was 80 days as compared to 80 days as of June 30, 2024.

Previous wording

Increases in contract assets used $9.4 million of cash flow for the three months ended March 31, 2025, as compared to cash used of $8.1 million for the same period in 2024.

Current wording

Increases in contract assets used $28.9 million of cash flow for the six months ended June 30, 2025, as compared to cash used of $13.3 million for the same period in 2024.

Previous wording

Changes in inventory provided $8.8 million of cash flow for the three months ended March 31, 2025, as compared to cash used of $11.5 million for the same period in 2024. Inventory turns were 3.6 times at March 31, 2025, as compared to 3.3 times as of March 31, 2024.

Current wording

Changes in inventory provided $14.2 million of cash flow for the six months ended June 30, 2025, as compared to cash provided of $3.6 million for the same period in 2024. Inventory turns were 3.5 times at June 30, 2025, as compared to 3.6 times as of June 30, 2024.

Previous wording

Decreases in accounts payable used $16.9 million of cash flow for the three months ended March 31, 2025, as compared to cash provided of $5.1 million for the same period in 2024. Decreases in accrued liabi lities used $89.5 million of cash flow for thethree months ended March 31, 2025, as compared to cash provided of $30.9 million for the same period in 2024, which was partially driven by the earlier payout of our annual performance-based incentive compensation which occurred in the first quarter of 2025 as compared to the second quarter of 2024.

Current wording

Changes in accounts payable used $10.4 million of cash flow for the six months ended June 30, 2025, as compared to cash provided of $14.4 million for the same period in 2024. Decreases in accrued liabilities used $84.5 million of cash flow for the six months ended June 30, 2025, as compared to cash used of $47.8 million for the same period in 2024.

Previous wording

Changes in contract liabilities used $3.6 million of cash flow for the three months ended March 31, 2025, as compared to cash used of $6.4 million for the same period in 2024.

Current wording

Decreases in contract liabilities used $15.3 million of cash flow for the six months ended June 30, 2025, as compared to cash provided of $10.9 million for the same period in 2024.

Previous wording

Cash flows used by investing activities during the three months ended March 31, 2025 were $11.3 million, as compared to cash used of $13.6 million for the same period in 2024. Capital expenditures during the three months ended March 31, 2025 were $11.7 million, a decrease of $1.9 million as compared to the same period in 2024. Our capital expenditures are generally focused on strategic initiatives to pursue information technology infrastructure, ongoing scheduled replacements and upgrades and cost reduction opportunities. In 2025, we currently estimate capital expenditures to be between $80 million and $90 million, before consideration of any acquisition activity.

Current wording

Cash flows used by investing activities during the six months ended June 30, 2025 were $27.5 million, as compared to cash used of $30.1 million for the same period in 2024. Capital expenditures during the six months ended June 30, 2025 were $28.3 million, an increase of less than $0.1 million as compared with the same period in 2024. Our capital expenditures are generally focused on strategic initiatives to pursue information technology infrastructure, ongoing scheduled replacements and upgrades and cost reduction opportunities. In 2025, we currently estimate capital expenditures to be between $80 million and $90 million, before consideration of any merger and acquisition activity.

Previous wording

Cash flows used by financing activities during the three months ended March 31, 2025 were $84.2 million, as compared to $54.2 million of cash flow used for the same period in 2024. Cash outflows in the three months ended March 31, 2025 resulted primarily from the $27.6 million of dividend payments, $21.1 million in stock repurchases, $15.0 million contingent consideration payment related to the MOGAS acquisition, $11.1 million in payments related to tax withholding for stock-based compensation and $9.4 million of payments on our Term Loan. Cash outflows during the three months ended March 31, 2024 resulted primarily from the $27.7 million of dividend payments and $15.0 million of payments on our Term Loan.

Current wording

Cash flows used by financing activities during the six months ended June 30, 2025 were $154.4 million, as compared to $36.7 million of cash flows used for the same period in 2024. Cash outflows in the six months ended June 30, 2025 resulted primarily from the $52.8 million in stock repurchases, $55.2 million of dividend payments, $18.8 million of payments on our Term Loan, $15.0 million contingent consideration payment related to the MOGAS acquisition and $11.3 million in payments related to tax withholding for stock-based compensation. Cash outflows during the six months ended June 30, 2024 resulted primarily from the $55.3 million of dividend payments, $30.0 million of payments on our Term Loan and $16.2 million in stock repurchases.

Previous wording

As of March 31, 2025, we had an available capacity of$662.2 million on our Second Amended and Restated Credit Agreement, which provides fora $800.0 million unsecured revolving credit facility with a maturity date of October 10, 2029. Our borrowing capacity is subject to financial covenant limitations based on the terms of our Second Amended and Restated Credit Agreement and is also reduced by outstanding letters of credit. Our Second Amended and Restated Credit Agreement is committed and held by a diversified group of financial institutions. Refer to Note 7, "Debt and Finance Lease Obligations," to our condensed consolidated financial statements included in this Quarterly Report for additional information concerning our Second Amended and Restated Credit Agreement.

Current wording

As of June 30, 2025, we had an available capacity of $661.0 million on our Second Amended and Restated Credit Agreement, which provides for a $800.0 million unsecured revolving credit facility with a maturity date of October 10, 2029. Our borrowing capacity is subject to financial covenant limitations based on the terms of our Second Amended and Restated Credit Agreement and is also reduced by outstanding letters of credit. Our Second Amended and Restated Credit Agreement is committed and held by a diversified group of financial institutions. Refer to Note 8, "Debt and Finance Lease Obligations," to our condensed consolidated financial statements included in this Quarterly Report for additional information concerning our Second Amended and Restated Credit Agreement.

Previous wording

During thethree months ended March 31, 2025, 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 2025, but have authorization for contributions up to $10 million. At December 31, 2024, 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 the six months ended June 30, 2025, 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 2025, but have authorization for contributions up to $10 million. At December 31, 2024, 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, 2025, we have $258.8 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.

Current wording

As of June 30, 2025, we have $227.1 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

As of March 31, 2025, we have cash and cash equi valents of $540.8 million and $662.2 million of borrowings available under our Second Amended and Restated Credit Agreement. 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 currently 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 throughout 2025.

Current wording

As of June 30, 2025, we have cash and cash equi valents of $629.2 million and $661.0 million of borrowings available under our Second Amended and Restated Credit Agreement. 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 throughout 2025.