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 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 48 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 48 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 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 operating and capital 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

•FPD designs, manufactures, pretests, distributes and services highly custom engineered pumps, pre-configured industrial pumps, pump systems, mechanical seals, auxiliary systems and replacement parts and related services; and

Current wording

•Flowserve Pumps Division ("FPD") designs, manufactures, pretests, distributes and services highly custom engineered pumps, pre-configured industrial pumps, pump systems, mechanical seals, auxiliary systems and replacement parts and related services; and

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.

Current wording

•Flow Control Division ("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.

Previous wording

We have seen growth from the end-markets we serve and continue to advance our strategy by driving operational excellence and efficiency throughout the organization supported by the Flowserve Business System. The current macroeconomic environment is dynamic and uncertainty exists given the current armed conflict with Iran and ongoing geopolitical instability and continued trade policy actions, 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. While we will continue to monitor and manage macroeconomic trends and uncertainties, including inflationary and recessionary pressures resulting from the ongoing tariffs and geopolitical climate, our existing backlog, improved execution and announced acquisitions activity, provide a solid revenue base for 2026.

Current wording

We have seen growth from the end-markets we serve and continue to advance our strategy by driving operational excellence and efficiency throughout the organization supported by the Flowserve Business System. The current macroeconomic environment is dynamic and uncertainty exists given the current armed conflict with Iran, ongoing geopolitical instability, and continued trade policy actions, 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. While we will continue to monitor and manage macroeconomic trends and uncertainties, including inflationary and recessionary pressures resulting from the ongoing tariffs and geopolitical climate, our existing backlog, improved execution and announced acquisitions activity, provide a solid revenue base for 2026.

Previous wording

As of March 31, 2026, we have cash and cash equivalents of $792.4 million and $470.7 million of borrowings available under our Second Amended and Restated Credit Agreement. On April 15, 2026, we entered into the Third Amended and Restated Credit Agreement, which includes a $1,000 million Revolving Credit Facility and$450.0 million Term Loan. 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 2026.

Current wording

As of June 30, 2026, we have cash and cash equivalents of $731.0 million and $763.3 million of borrowings available under our Third Amended and Restated Credit Agreement. On April 15, 2026, we entered into the Third Amended and Restated Credit Agreement, which includes a $1,000 million Revolving Credit Facility and$450.0 million Term Loan. 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 2026.

Previous wording

RESULTS OF OPERATIONS — Three months ended March 31, 2026 and 2025

Current wording

OUR RESULTS OF OPERATIONS — Three and Six months ended June 30, 2026 and 2025

Previous wording

As discussed in Note 1, "Basis of Presentation and Accounting Policies," to our condensed consolidated financial statements included in this Quarterly Report, on February 20, 2026, the U.S. Supreme Court held in Learning Resources, Inc. v. Trump that the International Emergency Economic Powers Act (“IEEPA”) does not authorize a U.S. President to impose tariffs during peacetime national emergencies and that the challenge to the legality of the tariffs imposed under IEEPA was within the exclusive jurisdiction of the U.S. Court of International Trade (“CIT”), thus affirming the prior decision of the CIT in V.O.S. Selections, Inc. v. United States that the tariffs imposed under IEEPA were invalid.

Current wording

As discussed in Note 1, "Basis of Presentation and Accounting Policies," to our condensed consolidated financial statements included in this Quarterly Report, on February 20, 2026, the U.S. Supreme Court held in Learning Resources, Inc. v. Trump that the International Emergency Economic Powers Act (“IEEPA”) does not authorize a U.S. President to impose tariffs during peacetime national emergencies and that the challenge to the legality of the tariffs imposed under IEEPA was within the exclusive jurisdiction of the U.S. Court of International Trade (“CIT”), thus affirming the prior decision of the CIT in V.O.S. Selections, Inc. v. United States that the tariffs imposed under IEEPA were invalid. As a result of this ruling, the CIT issued an order directing the U.S. Customs and Border Protection (“CBP”) agency to begin formalizing a process for refunds. On April 20, 2026, the CBP launched an online portal to process tariff refund requests and the Company was able to submit its tariff refund requests through this portal. We have paid IEEPA tariffs to the U.S. government since the enactment on February 1, 2025, and accordingly we submitted our request covering our Phase 1 entries for refund of $35.4 million related to IEEPA tariffs paid during the period from February 1, 2025 to February 20, 2026. The timing for submitting claims related to our Phase 3 entries has not yet been established. We did not have any entries eligible for refunds under CBP’s Phase 2. The timing and amount of any recoveries remain uncertain and subject to execution by the CBP.

Previous wording

We have paid IEEPA tariffs to the U.S. government since the enactment on February 1, 2025 and accordingly we submitted our request for refund of $35.4 million related to IEFPA tariffs paid during the period from February 1, 2025 to February 20, 2026. Based on the U.S. Supreme Court's ruling, related CIT proceedings, and the Company's submission of tariff refund requests and assessment of the recoverability of amounts paid, the Company has concluded that a refund of IEEPA tariffs is probable under a loss recovery accounting model. Accordingly, we recognized a refund of previously paid tariffs imposed under IEEPA for $35.4 million for the period ended March 31, 2026, which resulted in a reversal of Cost of sales in the condensed consolidated income statement for $30.4 million during the three-month period ended March 31, 2026.

Current wording

Based on the U.S. Supreme Court's ruling, related CIT proceedings, and the Company's submission of tariff refund requests and assessment of the recoverability of amounts paid, the Company concluded as of March 31, 2026 that the recovery of previously incurred Phase 1 IEEPA tariffs was probable. Under a loss recovery accounting method, we recognized a receivable of $35.4 million for the IEEPA tariffs incurred in Other assets within the condensed consolidated balance sheet and a corresponding reversal of cost of sales ("COS") and inventory for $30.4 million and $5.0 million within our condensed consolidated statement of income for the three-month period ended March 31, 2026 and the condensed consolidated balance sheet for the period ended March 31, 2026, respectively.

Previous wording

As discussed in Note 2, "Acquisitions," 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 was not material for the three-month period ended March 31, 2025.

Current wording

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-month period 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 was not material for the six-months ended June 30, 2025.

Previous wording

As discussed in Note 2, "Acquisitions," to our condensed consolidated financial statements included in this Quarterly Report, effective December 16, 2025, Flowserve acquired for inclusion in FPD, United Kingdom-based Greenray Turbine Solutions, Ltd. ("Greenray"), a comprehensive provider of aftermarket products and services for industrial gas turbines. We incurred $1.1 million in acquisition and integration-related costs for the three month period ended March 31, 2026 associated with the acquisition which are included within SG&A in our condensed consolidated statement of income. The impact of the acquisition of Greenray is not material for the three month period ended March 31, 2026.

Current wording

As discussed in Note 2, "Acquisitions," to our condensed consolidated financial statements included in this Quarterly Report, effective December 16, 2025, Flowserve acquired for inclusion in FPD, United Kingdom-based Greenray Turbine Solutions, Ltd. ("Greenray"), a comprehensive provider of aftermarket products and services for industrial gas turbines. We incurred $0.6 million in acquisition and integration-related costs for the six-month period ended June 30, 2026, associated with the acquisition which is included within SG&A in our condensed consolidated statements of income. The impact of the acquisition of Greenray is not material for the three and six-month periods ended June 30, 2026.

Previous wording

Our realignment activities are implemented in phases. We currently anticipate a total investment in the 2025 Realignment Programs, which have been evaluated and initiated, of approximately $120 million of which $17 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 in the 2025 Realignment Programs, which have been evaluated and initiated, of approximately $170 million of which $23 million is estimated to be non-cash. Upon completion of the 2025 Realignment Programs that have been identified and initiated to date, we expect to achieve annualized cost savings of $140.0 million. 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

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, 2026 decreased by $78.2 million, or 6.4%, as compared with the same period in 2025. The decrease included currency benefits of $42.8 million. The decreased bookings were driven by decreased customer orders of $37.4 million in the energy industry, $26.8 million in the power generation industry and $16.3 million in the general industries, partially offset by an increase of $7.0 million in the chemical industry. 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, 2026 increased by $274.2 million, or 25.5%, as compared with the same period in 2025. The increase included currency benefits of approximately $14.4 million. The increased bookings were driven by increased customer orders of $169.6 million in the energy industry, $50.5 million in the power generation industry, $37.8 million in general industries and $16.2 million in the chemical industry. The increase in customer bookings was driven by original equipment and aftermarket bookings.

Previous wording

$6.6 million into Latin America and $1.3 million into Europe, partially offset by increased customer sales of $17.1 million into North America and $7.1 million into Africa. Net sales to international customers, including export sales from the United States, were approximately 61% and 63% of total sales for the three months ended March 31, 2026 and 2025, respectively. Aftermarket sales represented approximately 57% of total sales, as compared with approximately 51% of total sales for the same period in 2025.

Current wording

Sales for the three months ended June 30, 2026 decreased by $18.9 million, or 1.6%, as compared to the same period in 2025. The decrease included currency benefits of approximately $9.5 million. The decreased sales were driven by original equipment sales, with decreased customer sales of $16.4 million into Europe, $14.2 million into the Middle East, $12.0 million into Asia Pacific, $3.0 million into Africa and $1.0 million into North America, partially offset by increased customer sales of $21.2 million into Latin America. Net sales to international customers, including export sales from the United States, were approximately 61% and 62% of total sales for the three-months ended June 30, 2026 and 2025, respectively. Aftermarket sales represented approximately 58% of total sales, as compared with approximately 53% of total sales for the same period in 2025.

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 $2.9 billion at March 31, 2026 increased by $78.0 million, or 2.7%, as compared with December 31, 2025. Currency effects provided a decrease of approximately $7.7 million (currency effects on backlog are calculated using the change in period end exchange rates). Approximately 43.4% of the backlog at March 31, 2026 and 42.0% of the backlog at December 31, 2025 was related to aftermarket orders. Backlog includes our unsatisfied (or partially unsatisfied) performance obligations of approximately $1.0 billion related to contracts having an original expected duration in excess of 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 $3.3 billion at June 30, 2026 increased by $468.2 million, or 16.3%, as compared to December 31, 2025. Currency effects provided an increase of approximately $25.7 million (currency effects on backlog are calculated using the change in period end exchange rates). Approximately 41.1% of the backlog at June 30, 2026 and 42.0% of the backlog at December 31, 2025 was related to aftermarket orders. Backlog includes our unsatisfied (or partially unsatisfied) performance obligations of approximately $1.1 billion 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.

Previous wording

SG&A for the three months ended March 31, 2026 increased by $20.2 million, or 8.3%, as compared with the same period in 2025. Currency effects yielded an increase of approximately $9.2 million. SG&A increased due to increased charges of $13.7 million related to our realignment activities, increased charges of $7.3 million for acquisition and integration related costs associated with the Greenray and Trillium Valves acquisitions in 2026 compared to MOGAS related charges incurred in the comparative period, a $1.4 million charge incurred during the first quarter of 2026 related to a taxing authority matter in Latin America and a $0.9 million increase in amortization of acquisition related intangible assets, partially offset by a decrease in bad debt expense of $2.3 million as compared to the same period in 2025. SG&A as a percentage of sales for the three months ended March 31, 2026 increased 350 basis points driven by cost increases.

Current wording

SG&A for the six months ended June 30, 2026 increased by $20.6 million, or 4.0%, as compared with the same period in 2025. Currency effects yielded an increase of approximately $12.2 million. SG&A increased due to increased charges of $23.3 million related to our realignment activities, increased charges of $13.4 million for acquisition and integration related costs associated with the Greenray, TVD and FAMCO acquisitions and transaction costs associated with the PMV Divestiture incurred in 2026 compared to MOGAS acquisition and integration related charges incurred in the comparative period, increased amortization expense on intangible assets, including acquisition related intangible assets, of $2.7 million and a $1.4 million charge incurred during the first quarter of 2026 related to a taxing authority matter in Latin America, partially offset by $15.5 million in transaction costs incurred during the comparative period associated with the terminated Chart Merger that did not recur, lower broad-based annual incentive compensation, a decrease in research and development costs of $2.1 million, and a decrease in bad debt expense of $1.1 million. SG&A as a percentage of sales for the six months ended June 30, 2026 increased 190 basis points driven by cost increases.

Previous wording

Net earnings from affiliates for the three months ended March 31, 2026 decreased by $2.7 million, or 47.1%, as compared with the same period in 2025. The decrease in net earnings was primarily a result of decreased earnings of our FPD joint ventures in South Korea.

Current wording

Net earnings from affiliates for the six months ended June 30, 2026 increased by $24.4 million, or 210.3%, as compared with the same period in 2025. The increased net earnings from affiliates was primarily a result of a $27.7 million gain recognized on the remeasurement of our previously held equity interest in FAMCO, partially offset by decreased earnings of our FPD joint venture in South Korea.

Previous wording

Interest expense for the three months ended March 31, 2026 increased by $1.3 million, as compared to the same period in 2025, primarily due to higher outstanding debt during the period. Interest income for the three months ended March 31, 2026 decreased by $0.2 million primarily due to lower average balances as compared to the same period in 2025.

Current wording

Interest expense for the three months ended June 30, 2026 increased by $5.4 million, as compared with the same period in 2025, primarily due to higher outstanding debt during the period. Interest income for the three months ended June 30, 2026 increased by $2.5 million primarily due to interest income earned on IEEPA tariff refunds and a higher average balance as compared to the same period in 2025.

Previous wording

Other income (expense), net for the three months ended March 31, 2026 increased $24.3 million as compared with the same period in 2025, primarily due to a $5.6 million gain arising from transactions on foreign exchange forward contracts and a $14.8 million gain from transactions in currencies other than our sites' functional currencies during the first quarter of 2026. The net change was primarily due to the foreign currency exchange rate movements in the Euro, British pound and Indian Rupee during the three months ended March 31, 2026, as compared to the same period in 2025. The three-month period ended March 31, 2026 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 $5.0 million - $6.0 million triggered due to expected cash outflows exceeding service and interest costs.

Current wording

Other expense, net for the three months ended June 30, 2026 decreased $12.9 million as compared to the same period in 2025 primarily due to a $14.1 million decrease in losses from transactions in currencies other than our sites' functional currencies partially offset by a $0.4 million loss arising from transactions on foreign exchange forward contracts. The net currency change was primarily due to the foreign currency exchange rate movements in the Euro, Singaporean dollar, Swedish krona and Mexican peso during the three months ended June 30, 2026, as compared to the same period in 2025. The three months ended June 30, 2026 also includes a pension settlement loss of $3.1 million incurred in conjunction with pension plans in the United States and Canada.

Previous wording

The effective tax rate of 19.7% for the three months ended March 31, 2026 increased from 18.3% for the same period in 2025. The effective tax rate varied from the U.S. federal statutory rate for the three months ended March 31, 2026 primarily due to the net impact of U.S. discrete items, partially offset by state income taxes and the net impact of foreign operations. 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 16.9% for the six months ended June 30, 2026 increased from 16.6% for the same period in 2025. The effective tax rate varied from the U.S. federal statutory rate for the six months ended June 30, 2026 primarily due to the net impact of U.S. discrete items, the non-taxable FAMCO acquisition gain and foreign operations, 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.

Previous wording

Other comprehensive income (loss) for the three months ended March 31, 2026, decreased by $71.1 million from $47.9 million of income from the same period in 2025. The loss was due to foreign currency translation adjustments resulting primarily from exchange rate movements of the Euro, Brazilian real and Indian rupee versus the U.S. dollar during the three months ended March 31, 2026, as compared with the same period in 2025.

Current wording

Other comprehensive income for the three months ended June 30, 2026 decreased by $119.3 million to a loss of $8.9 million from income of $110.4 million in the same period in 2025. The decrease was due to foreign currency translation adjustments resulting primarily from exchange rate movements of the Euro, Indian rupee and Mexican peso versus the U.S. dollar during the three months ended June 30, 2026, as compared to the same period in 2025.

Previous wording

Our largest business segment is FPD, through which we design, manufacture, 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, which 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 48 countries with 37 manufacturing facilities worldwide, 12 of which are located in North America, 11 in Europe and the Middle East, eight in Asia and six in Latin America, and it operates 126 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 48 countries with 38 manufacturing facilities worldwide, 13 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 126 QRCs, including those co-located in manufacturing facilities and/or shared with FCD.

Previous wording

As discussed above, we revised the end market categories for bookings during the first quarter of 2026. All bookings by industry amounts discussed below, including the 2025 comparative period, where applicable, have been reclassified from five categories (i.e., oil and gas, chemical, power generation, water management, and general industries) to four categories (i.e., energy, chemical, power generation and general industries) to conform to our current classification of end markets.

Current wording

As discussed above, we revised the end market categories for bookings during the first quarter of 2025. All bookings by industry amounts discussed below, including the 2025 comparative period, have been reclassified from five categories (i.e., oil and gas, chemical, power generation, water management, and general industries) to four categories (i.e., energy, chemical, power generation and general industries) to conform to our current classification of end markets.

Previous wording

Sales for thethree months ended March 31, 2026 decreased by $38.6 million, or 4.9% as compared to the same period in 2025 and included currency benefits of approximately $33.5 million. The decrease was driven by original equipment sales. Decreased customer sales of approximately $38.4 million into the Middle East, $14.3 million into Asia Pacific, $6.0 million into Latin America and $1.7 million into Europe, were partially offset by increases of $13.5 million into North America and $7.4 million into Africa.

Current wording

Sales for the three months ended June 30, 2026 decreased by $4.8 million, or 0.6% as compared to the same period in 2025 and included currency benefits of approximately $9.4 million. The decrease was driven by original equipment customer sales. Decreased customer sales of approximately $18.2 million into the Middle East, $6.1 million into Europe, $5.7 million into Asia Pacific and $5.4 million into Africa were partially offset by increased customer sales of approximately $21.4 million into Latin America and $4.1 million into North America.

Previous wording

Gross profit for the three months ended March 31, 2026 increased by $1.4 million, or 0.5%, as compared to the same period in 2025. Gross profit margin for the three months ended March 31, 2026 of 36.3% increased from 34.3% for the same period in 2025. The increase in gross profit margin was primarily due to continued execution of the Flowserve Business System and our Operational Excellence and Portfolio Excellence programs, with a focus on complexity reduction and product rationalization. The increase also includes the impact of $14.0 million in IEEPA tariff refunds recorded during the first quarter of 2026 and lower broad-based annual incentive compensation, partially offset by disruptions in the Middle East, a $7.9 million charge incurred during the first quarter of 2026 related to a taxing authority matter in Latin America, increased charges of $7.1 million related to our realignment activities and a $1.0 million increase in amortization of acquisition related intangible assets associated with the Greenray acquisition as compared to the same period in 2025.

Current wording

Gross profit for the six months ended June 30, 2026 decreased by $1.6 million, or 0.3%, as compared to the same period in 2025. Gross profit margin for the six months ended June 30, 2026 of 36.3% increased from 35.4% for the same period in 2025. The increase in gross profit margin was primarily due to continued execution of the Flowserve Business System and our Operational Excellence and Portfolio Excellence programs, with a focus on complexity reduction and product rationalization, lower broad-based annual incentive compensation and lower sales volume, partially offset by increased charges of $15.7 million related to our realignment activities, a $7.9 million charge incurred during the first quarter of 2026 related to a taxing authority matter in Latin America, increased amortization expense on intangible assets, including acquisition related intangible assets, of $2.5 million and disruptions in the Middle East as compared to the same period in 2025. The increase in gross profit margin also includes the impact of $14.0 million in IEEPA tariff refunds recorded during the first quarter of 2026.

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 48 manufacturing facilities and QRCs in 22 countries around the world, with seven of its 19 manufacturing operations located in the 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 is the second largest industrial valve supplier on a global basis.

Current 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. Not including the recently acquired TVD facilities, FCD has a total of 48 manufacturing facilities and QRCs in 23 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 is the second largest industrial valve supplier on a global basis.

Previous wording

As discussed above, we revised the end market categories for bookings during the first quarter of 2026. All bookings by industry amounts discussed below, including the 2025 comparative period, where applicable, have been reclassified from five categories (i.e., oil and gas, chemical, power generation, water management, and general industries) to four categories (i.e., energy, chemical, power generation and general industries) to conform to our current classification of end markets.

Current wording

As discussed above, we revised the end market categories for bookings during the first quarter of 2025. All bookings by industry amounts discussed below, including the 2025 comparative period, have been reclassified from five categories (i.e., oil and gas, chemical, power generation, water management, and general industries) to four categories (i.e., energy, chemical, power generation and general industries) to conform to our current classification of end markets.

Previous wording

Our cash balance increased by $32.2 million to $792.4 million at March 31, 2026, as compared with December 31, 2025. The cash activity during the first three months of 2026 included cash used by operating activities, $16.9 million in capital expenditures, $26.7 million in dividend payments, $22.6 million of payments related to tax withholdings for stock-based compensation and $9.4 million of payments on our $500.0 million unsecured term loan facility (the "Term Loan"), offset by $150.0 million proceeds under the Revolving Credit Facility and $9.7 million proceeds from the disposal of assets.

Current wording

Our cash balance decreased by $29.2 million to $731.0 million at June 30, 2026, as compared with December 31, 2025. The cash activity during the first six months of 2026 included cash provided by operating activities, $517.7 million in payments for acquisitions, net of cash acquired, $100.0 million in payments under our revolving credit facility, $77.9 million of payments on our $450.0 million unsecured term loan facility (the "Term Loan"), $54.8 million in dividend payments, $33.8 million in capital expenditures, $25.0 million in repurchases of common shares, $23.0 million of payments related to tax withholdings for stock-based compensation, $5.3 million in payments under other financing arrangements and $4.9 million in deferred loan costs, partially offset by $499.3 million proceeds from the issuance of senior notes, $150.0 million proceeds under the Revolving Credit Facility, $74.8 million proceeds from our Term Loan, and $9.9 million proceeds from the disposal of assets.

Previous wording

For the three months ended March 31, 2026, our cash used by operating activities was $43.1 million, as compared to cash used of $49.9 million for the same period in 2025. Cash flow used by working capital increased for the three months ended March 31, 2026, primarily due to decreased cash flows provided by, or increased cash flows used by, inventories, contract assets, prepaid expenses and other assets, accounts payable, contract liabilities and accrued liabilities, partially offset by creased cash flows provided by, or decreased cash flows used by, accounts receivable, as compared to the same period in 2025.

Current wording

For the six months ended June 30, 2026, our cash provided by operating activities was $86.2 million, as compared to cash provided of $104.2 million for the same period in 2025. Cash flow used by working capital increased for the six months ended June 30, 2026, primarily due to decreased cash flows provided by, or increased cash flows used by, inventories and accounts payable, partially offset by increased cash flows provided by, or decreased cash flows used by, accounts receivable, contract assets, contract liabilities, prepaid expenses and other assets and accrued liabilities, as compared to the same period in 2025.

Previous wording

Decreases in accounts receivable provided $63.5 million of cash flow for the three months ended March 31, 2026, compared to cash used of $50.7 million for the same period in 2025. As of March 31, 2026, our days’ sales outstanding ("DSO") was 81 days as compared to 82 days as of March 31, 2025.

Current wording

Increases in accounts receivable provided $6.9 million of cash flow for the six months ended June 30, 2026, compared to cash used of $22.6 million for the same period in 2025. As of June 30, 2026, our days’ sales outstanding ("DSO") was 82 days as compared to 80 days as of June 30, 2025.

Previous wording

Increases in contract assets used $38.5 million of cash flow for the three months ended March 31, 2026, as compared to cash used of $9.4 million for the same period in 2025.

Current wording

Increases in contract assets used $11.2 million of cash flow for the six months ended June 30, 2026, as compared to cash used of $28.9 million for the same period in 2025.

Previous wording

Changes in inventories used $24.6 million of cash flow for the three months ended March 31, 2026, as compared to cash provided of $8.8 million for the same period in 2025. Inventory turns were 3.3 times at March 31, 2026, as compared to 3.6 times as of March 31, 2025.

Current wording

Changes in inventories used $4.3 million of cash flow for the six months ended June 30, 2026, as compared to cash provided of $14.2 million for the same period in 2025. Inventory turns were 3.6 times at June 30, 2026, as compared to 3.5 times as of June 30, 2025.

Previous wording

Decreases in accounts payable used $32.4 million of cash flow for the three months ended March 31, 2026, as compared to cash used of $16.9 million for the same period in 2025. Decreases in accrued liabilities used $110.1 million of cash flow for the three months ended March 31, 2026, as compared to cash used of $89.5 million for the same period in 2025.

Current wording

Decreases in accounts payable used $52.3 million of cash flow for the six months ended June 30, 2026, as compared to cash used of $10.4 million for the same period in 2025. Decreases in accrued liabilities used $80.8 million of cash flow for the six months ended June 30, 2026, as compared to cash used of $84.5 million for the same period in 2025.

Previous wording

Decreases in contract liabilities used $3.7 million of cash flow for the three months ended March 31, 2026, as compared to cash used of $3.6 million for the same period in 2025.

Current wording

Changes in contract liabilities used $10.4 million of cash flow for the six months ended June 30, 2026, as compared to cash used of $15.3 million for the same period in 2025.

Previous wording

Cash flows used by investing activities during the three months ended March 31, 2026 were $7.2 million, as compared to cash used of $11.3 million for the same period in 2025. Capital expenditures during the three months ended March 31, 2026 were $16.9 million, an increase of $5.2 million as compared with the same period in 2025. Our capital expenditures are generally focused on strategic initiatives to pursue information technology infrastructure, ongoing scheduled replacements and upgrades and cost reduction opportunities. In 2026, we currently estimate capital expenditures to be between $90.0 million and $100.0 million, before consideration of any merger and acquisition activity.

Current wording

Cash flows used by investing activities during the six months ended June 30, 2026 were $543.7 million, as compared to cash used of $27.5 million for the same period in 2025. The increase in cash used resulted primarily from the $517.7 million payment for the acquisitions of TVD and FAMCO. Capital expenditures during the six months ended June 30, 2026 were $33.8 million, an increase of $5.5 million as compared with the same period in 2025. Our capital expenditures are generally focused on strategic initiatives to pursue information technology infrastructure, ongoing scheduled replacements and upgrades and cost reduction opportunities. In 2026, we currently estimate capital expenditures to be approximately $100.0 million, before consideration of any merger and acquisition activity.

Previous wording

Cash flows provided by financing activities during the three months ended March 31, 2026 were $88.5 million, as compared to $84.2 million of cash flows used for the same period in 2025. Cash inflows in the three months ended March 31, 2026 resulted primarily from the $150.0 million of proceeds from our Revolving Credit Facility, partially offset by cash outflows of $26.7 million for dividend payments, $22.6 million in payments related to tax withholding for stock-based compensation, $9.4 million of payments on our Term Loan, and $2.6 million of payments on other financing arrangements. Cash outflows during the three months ended March 31, 2025 resulted primarily from the $27.6 million of dividend payments, $21.1 million of share 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.

Current wording

Cash flows provided by financing activities during the six months ended June 30, 2026 were $434.7 million, as compared to $154.4 million of cash flows used for the same period in 2025. Cash inflows in the six months ended June 30, 2026 resulted primarily from the $499.3 million proceeds from the issuance of the 2036 senior notes, $150.0 million of proceeds from our Revolving Credit Facility and $74.8 million of proceeds from our long-term debt, partially offset by cash outflows of $100.0 million payment on our Revolving Credit Facility, $77.9 million for payments on our Term Loan, $54.8 million for dividend payments, $25.0 million in repurchases of common shares, $23.0 million in payments related to tax withholding for stock-based compensation, $5.3 million of payments on other financing arrangements and $4.9 million for payments of deferred loan costs.

Previous wording

During the three months ended March 31, 2026, we have made no contributions to our U.S. pension plan. We have no obligation to make contributions to our U.S. pension plans in 2026, but have authorization for contributions up to $10 million. At December 31, 2025, 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, 2026, we have made no contributions to our U.S. pension plan. We have no obligation to make contributions to our U.S. pension plans in 2026, but have authorization for contributions up to $10 million. At December 31, 2025, 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

Considering our current debt structure and cash needs, we currently believe cash flows generated from operating activities combined with availability under our Second Amended and Restated Credit Agreement and our existing cash balance will be sufficient to meet our cash needs for our short-term (next 12 months) and long-term (beyond the next 12 months) business needs. However, cash flows from operations could be adversely affected by a decrease in the rate of general global economic growth and an extended decrease in capital spending of our customers, as well as economic, political and other risks associated with sales of our products, operational factors, competition, regulatory actions, fluctuations in foreign currency exchange rates and fluctuations in interest rates, among other factors. See "Financing" and "Cautionary Note Regarding Forward-Looking Statements" below.

Current wording

Considering our current debt structure and cash needs, we currently believe cash flows generated from operating activities combined with availability under our Third Amended and Restated Credit Agreement and our existing cash balance will be sufficient to meet our cash needs for our short-term (next 12 months) and long-term (beyond the next 12 months) business needs. However, cash flows from operations could be adversely affected by a decrease in the rate of general global economic growth and an extended decrease in capital spending of our customers, as well as economic, political and other risks associated with sales of our products, operational factors, competition, regulatory actions, fluctuations in foreign currency exchange rates and fluctuations in interest rates, among other factors. See "Financing" and "Cautionary Note Regarding Forward-Looking Statements" below.

Previous wording

As of March 31, 2026, we had $197.9 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, 2026, we had $172.9 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 7, "Debt and Finance Lease Obligations," to our condensed consolidated financial statements included in this Quarterly Report for a discussion of our Second Amended and Restated Credit Agreement, Third Amended and Restated Credit Agreement and related covenants. We were in compliance with all applicable covenants under our Second Amended and Restated Credit Agreement as of March 31, 2026.

Current wording

See Note 7, "Debt and Finance Lease Obligations," to our condensed consolidated financial statements included in this Quarterly Report for a discussion of our Third Amended and Restated Credit Agreement and related covenants. We were in compliance with all applicable covenants under our Third Amended and Restated Credit Agreement as of June 30, 2026.