Flowserve Corporation Reports Fourth Quarter and Full Year 2025 Results

Flowserve Corporation Reports Fourth Quarter and Full Year 2025 Results February 5, 2026 3D Growth Strategy and Flowserve Business System Deliver Strong Q4 and Full Year Results; Initiated 2026 Guidance and 2030 Financial Targets Flowserve Corporation (NYSE: FLS), a leading provider of flow control products and services for the global infrastructure markets, reported its financial results for the fourth quarter and full year ended December 31, 2025. Q4 and FY 2025 Highlights: Fourth quarter bookings of $1.2 billion, including 10% aftermarket growth to over $680 millionFourth quarter operating margin of 3.5%, including one-time impact from asbestos divestiture, and adjusted 1 operating margin 2 of 16.8%Fourth quarter reported and adjusted earnings per share (EPS) 3 of ($0.23) and $1.11, respectively. Reported EPS includes adjusted net expense items of $1.34, comprised of the one-time impact from asbestos divestiture, among other itemsFull year bookings of $4.7 billion, including approximately $400 million in nuclear awardsFull year cash from operations of $506 million driven by strong earnings and working capital management, with $365 million of cash returned to shareholders through dividends and share repurchases 2026 and Strategic Highlights: Announced acquisition of Trillium Flow Technologies’ Valves Division 4Initiated full year 2026 guidance 3, including total sales growth of 5% to 7% and adjusted EPS of $4.00 to $4.20, which at the midpoint, represents a 13% increase versus full year 2025 adjusted EPS 3Established 2030 financial targets including mid-single digit organic sales CAGR, ~20% adjusted operating margin, and double digit adjusted EPS CAGR Management Commentary: “We delivered outstanding financial results in the fourth quarter and for the full year 2025,” said Scott Rowe, Flowserve’s President and Chief Executive Officer. “I am incredibly proud of our global team’s dedication and strong execution of the Flowserve Business System, which has been instrumental in reaching our 2027 adjusted operating margin target two years ahead of schedule.” Rowe continued, “With healthy end markets, a focus on expanding power generation opportunities, and the continued progress of the Flowserve Business System, we are confident in our 2026 guidance and updated long-term financial targets. We have significant operational momentum and are executing with discipline to drive greater value for our associates, customers, and shareholders.” Acquisition of Trillium Flow Technologies’ Valves Division4: In a separate press release issued today, the Company also announced it had signed a definitive agreement to acquire Trillium Flow Technologies’ Valves Division, a market leading provider of highly engineered mission-critical valves and actuators used in nuclear, traditional power, industrial, and critical infrastructure applications. The press release can be viewed on Flowserve’s Investors page. Key Figures (unaudited): (dollars in millions, except per share) 2025 Q4 2024 Q4 Change 2025 2024 Change Original Equipment Bookings $526.6 $557.2 (5.5%) $2,068.5 $2,238.4 (7.6%) Aftermarket Bookings $682.3 $618.1 10.4% $2,644.5 $2,422.4 9.2% Total Bookings $1,208.9 $1,175.3 2.9% $4,713.0 $4,660.8 1.1% Organic Sales5 0.8% 0.9% Acquisitions Impact 30 bps 220 bps Foreign Exchange Impact 240 bps 70 bps Reported Sales $1,222.2 $1,180.3 3.5% $4,729.3 $4,557.8 3.8% Operating Margin 3.5% 10.6% (710 bps) 8.5% 10.1% (160 bps) Adjusted Operating Margin 16.8% 12.6% 420 bps 14.8% 11.8% 300 bps Earnings Per Share ($0.23) $0.59 (139.0%) $2.64 $2.14 23.4% Adjusted Earnings Per Share $1.11 $0.70 58.6% $3.64 $2.63 38.4% Cash From Operations6 ($0.2) $197.3 ($197.5) $505.9 $425.3 $80.6 Backlog $2,867.8 $2,789.6 2.8% $2,867.8 $2,789.6 2.8% 2026 Guidance3: The Company initiated 2026 guidance: Organic Sales Growth +1% to +3% Impact From Acquisitions Approx. +300 bps Impact From Foreign Exchange Translation Approx. +100 bps Total Sales Growth +5% to +7% Adjusted EPS $4.00 to $4.20 Net Interest Expense Approx. $80 million Adjusted Tax Rate 21% to 22% Capital Expenditures $90 million to $100 million Full-year 2026 guidance assumes the acquisition of Trillium Flow Technologies’ Valves Division closes mid-year 2026 and, including incremental interest expense related to financing the acquisition, the acquisition will be roughly neutral to 2026 adjusted EPS. The guidance also assumes tariff rates in place as of February 1, 2026. 2030 Financial Targets: The Company introduced 2030 financial targets, which include expectations for: Organic Sales CAGR (2025-2030) Mid-Single Digit Growth Adjusted Operating Margin (by 2030) ~20% Adjusted EPS CAGR (2025-2030) Double-Digit Growth Webcast and Conference Call Instructions: Flowserve will host its conference call to discuss fourth quarter and full year results on Friday, February 6, at 10:00 a.m. Eastern Time. The call can be accessed by shareholders and other interested parties on Flowserve’s Investors page. Footnotes 1 See Consolidated Reconciliation of Non-GAAP Financial Measures to the Most Directly Comparable GAAP Financial Measure (unaudited) and Segment Reconciliation of Non-GAAP Financial Measures to the Most Directly Comparable GAAP Financial Measure (unaudited) tables for a detailed reconciliation of reported results to adjusted measures. 2 Adjusted operating margin is calculated by dividing adjusted operating income by sales. Adjusted operating income is derived by excluding the adjusted items. 3 Adjusted EPS excludes realignment expenses, the impact from other specific discrete and below-the-line foreign currency effects and utilizes the then-applicable FX rates and fully diluted shares. Adjusted 2026 EPS excludes certain other discrete items which may arise during the year. 4 Transaction excludes Trillium Valves’ French operations. 5 Organic is defined as the change in Sales, as defined by U.S. GAAP, excluding the impacts of currency translation and acquisitions. The impact of currency translation is calculated by translating current year results on a monthly basis at prior year exchange rates for the same period. 6 Cash from Operations for the fourth quarter 2025 includes a ($199) million one-time impact from legacy asbestos liabilities divestiture. Cash from Operations for the full year 2025 includes the impact of a $173 million one-time merger termination fee paid to Flowserve (net of incurred transaction costs and taxes) and a ($199) million one-time impact from legacy asbestos liabilities divestiture. CONSOLIDATED STATEMENTS OF INCOME (Unaudited) Three Months Ended December 31, (Amounts in thousands, except per share data) 2025 2024 Sales $ 1,222,191 $ 1,180,348 Cost of sales (796,956 ) (808,234 ) Gross profit 425,235 372,114 Selling, general and administrative expense (247,863 ) (251,966 ) Loss on divestiture of asbestos-related assets and liabilities (140,092 ) - Net earnings from affiliates 4,893 4,557 Operating income 42,173 124,705 Interest expense (19,574 ) (20,481 ) Interest income 2,488 1,625 Other income (expense), net (18,294 ) (137 ) Earnings before income taxes 6,793 105,712 Provision for income taxes (28,529 ) (22,202 ) Net earnings, including noncontrolling interests (21,736 ) 83,510 Less: Net earnings attributable to noncontrolling interests (7,259 ) (5,969 ) Net (loss) earnings attributable to Flowserve Corporation $ (28,995 ) $ 77,541 Net earnings per share attributable to Flowserve Corporation common shareholders: Basic $ (0.23 ) $ 0.59 Diluted (0.23 ) 0.59 Weighted average shares – basic 127,294 131,393 Weighted average shares – diluted 128,411 132,395 Consolidated Reconciliation of Non-GAAP Financial Measures to the Most Directly Comparable GAAP Financial Measure (Unaudited) (Amounts in thousands, except per share data) Three Months Ended December 31, 2025 Gross Profit Selling, General & Administrative Expense Loss on Divestiture of Asbestos-Related Assets and Liabilities Operating Income Other Income (Expense), Net Provision For (Benefit From) Income Taxes Net Earnings (Loss) Effective Tax Rate Diluted EPS Reported $ 425,235 $ 247,863 $ 140,092 $ 42,173 $ (18,294 ) $ 28,529 $ (28,995 ) 420.1 % (0.23 ) Reported as a percent of sales 34.8 % 20.3 % 11.5 % 3.5 % -1.5 % 2.3 % -2.4 % Realignment charges (a) 14,061 (2,115 ) - 16,176 - 3,591 12,585 22.2 % 0.10 Acquisition related (b)(c) (126 ) (5,181 ) - 5,055 - 1,189 3,866 23.5 % 0.03 Purchase accounting step-up and intangible asset amortization (d) 438 (1,300 ) - 1,738 - 409 1,329 23.5 % 0.01 Discrete items (e)(f) 15 (296 ) - 311 8,564 206 8,669 2.3 % 0.07 Loss on asbestos divestiture (g) - - (140,092 ) 140,092 - 2,644 137,448 1.9 % 1.07 Below-the-line foreign exchange impacts (h) - - - - 7,096 (1,156 ) 8,252 -16.3 % 0.06 Adjusted $ 439,623 $ 238,971 $ - $ 205,543 $ (2,634 ) $ 35,411 $ 143,154 19.1 % 1.11 Adjusted as a percent of sales 36.0 % 19.6 % 0.0 % 16.8 % -0.2 % 2.9 % 11.7 % Note: Amounts may not calculate due to rounding (a) Charges represent realignment costs incurred as a result of realignment programs, net of a $6,888 gain associated with the divestiture of a pump product line. (b) Charge represents $3,315 of acquisition and integration related costs associated with the MOGAS acquisition. (c) Charge represents $1,740 of costs associated with merger and acquisition activity. (d) Charge represents amortization of acquisition related intangible assets associated with the MOGAS acquisition. (e) Charge represents non-cash share-based compensation expense associated with a one-time discretionary restricted stock grant, subject to three-year cliff vesting, provided to certain employees in conjunction with the freeze of our US Qualified pension plan. (f) Charge includes $641 for a non-cash pension settlement accounting loss incurred in conjunction with the freeze of our US Qualified pension plan and $7,923 for a non-cash pension settlement accounting loss incurred in conjunction with a United Kingdom based pension plan. (g) Charge represents the one-time loss associated with the divestiture of our asbestos-related assets and liabilities including $199,000 of cash funded to the divested entity and $8,335 of transaction costs incurred. (h) Below-the-line foreign exchange impacts represent the remeasurement of foreign exchange derivative contracts as well as the remeasurement of assets and liabilities that are denominated in a currency other than a site’s respective functional currency. Three Months Ended December 31, 2024 Gross Profit Selling, General & Administrative Expense Operating Income Other Income (Expense), Net Provision For (Benefit From) Income Taxes Net Earnings (Loss) Effective Tax Rate Diluted EPS Reported $ 372,114 $ 251,966 $ 124,705 $ (138 ) $ 22,202 $ 77,541 21.0 % 0.59 Reported as a percent of sales 31.5 % 21.3 % 10.6 % 0.0 % 1.9 % 6.6 % Realignment charges (a) 11,569 (1,570 ) 13,139 - 2,849 10,290 21.7 % 0.08 Acquisition related (b) - (7,150 ) 7,150 - 1,682 5,468 23.5 % 0.04 Purchase accounting step-up and intangible asset amortization (c) 3,067 (1,033 ) 4,100 - 1,300 2,800 31.7 % 0.02 Below-the-line foreign exchange impacts (d) - - - (4,370 ) (1,423 ) (2,947 ) 32.6 % (0.02 ) Adjusted $ 386,750 $ 242,213 $ 149,094 $ (4,508 ) $ 26,610 $ 93,152 21.2 % 0.70 Adjusted as a percent of sales 32.8 % 20.5 % 12.6 % -0.4 % 2.3 % 7.9 % Note: Amounts may not calculate due to rounding (a) Charges represent realignment costs incurred as a result of realignment programs of which $8,600 is non-cash. (b) Charge represents acquisition and integration related costs associated with the MOGAS acquisition. (c) Charge represents amortization of step-up in value of acquired inventories and acquisition related intangible assets associated with the MOGAS acquisition. (d) Below-the-line foreign exchange impacts represent the remeasurement of foreign exchange derivative contracts as well as the remeasurement of assets and liabilities that are denominated in a currency other than a site’s respective functional currency. SEGMENT INFORMATION (Unaudited) FLOWSERVE PUMPS DIVISION Three Months Ended December 31, (Amounts in millions, except percentages) 2025 2024 Bookings $ 883.6 $ 816.4 Sales 833.0 794.9 Gross profit 305.2 255.7 Gross profit margin 36.6 % 32.2 % SG&A 143.4 131.4 Segment operating income 166.8 129.1 Segment operating income as a percentage of sales 20.0 % 16.2 % FLOW CONTROL DIVISION Three Months Ended December 31, (Amounts in millions, except percentages) 2025 2024 Bookings $ 330.3 $ 363.4 Sales 391.5 387.9 Gross profit 123.5 118.5 Gross profit margin 31.5 % 30.5 % SG&A 59.5 73.9 Segment operating income 64.0 44.6 Segment operating income as a percentage of sales 16.3 % 11.5 % Segment Reconciliation of Non-GAAP Financial Measures to the Most Directly Comparable GAAP Financial Measure (Unaudited) (Amounts in thousands) Flowserve Pumps Division Three Months Ended December 31, 2025 Gross Profit Selling, General & Administrative Expense Operating Income Three Months Ended December 31, 2024 Gross Profit Selling, General & Administrative Expense Operating Income Reported $ 305,245 $ 143,380 $ 166,757 Reported $ 255,710 $ 131,402 $ 129,069 Reported as a percent of sales 36.6 % 17.2 % 20.0 % Reported as a percent of sales 32.2 % 16.5 % 16.2 % Realignment charges (a) 4,120 (3,092 ) 7,212 Realignment charges (a) 9,890 (41 ) 9,931 Discrete items (b) 9 (36 ) 45 Adjusted $ 265,600 $ 131,361 $ 139,000 Acquisition related (c) - (740 ) 740 Adjusted as a percent of sales 33.4 % 16.5 % 17.5 % Adjusted $ 309,374 $ 139,512 $ 174,754 Adjusted as a percent of sales 37.1 % 16.7 % 21.0 % Flow Control Division Three Months Ended December 31, 2025 Gross Profit Selling, General & Administrative Expense Operating Income Three Months Ended December 31, 2024 Gross Profit Selling, General & Administrative Expense Operating Income Reported $ 123,529 $ 59,537 $ 63,992 Reported $ 118,503 $ 73,859 $ 44,592 Reported as a percent of sales 31.5 % 15.2 % 16.3 % Reported as a percent of sales 30.5 % 19.0 % 11.5 % Realignment charges (a) 9,417 1,313 8,104 Realignment charges (a) 1,679 (1,655 ) 3,334 Acquisition related (d) (126 ) (3,441 ) 3,315 Acquisition related (b) - (7,150 ) 7,150 Purchase accounting step-up and intangible asset amortization (e) 438 (1,300 ) 1,738 Purchase accounting step-up and intangible asset amortization (c) 3,067 (1,033 ) 4,100 Discrete items (b) 5 (86 ) 91 Adjusted $ 123,249 $ 64,021 $ 59,176 Adjusted $ 133,263 $ 56,023 $ 77,240 Adjusted as a percent of sales 31.8 % 16.5 % 15.3 % Adjusted as a percent of sales 34.0 % 14.3 % 19.7 % Note: Amounts may not calculate due to rounding Note: Amounts may not calculate due to rounding (a) Charges represent realignment costs incurred as a result of realignment programs, net of a $6,888 gain associated with the divestiture of a pump product line. (a) Charges represent realignment costs incurred as a result of realignment programs of which $8,600 is non-cash. (b) Charge represents non-cash share-based compensation expense associated with a one-time discretionary restricted stock grant, subject to three-year cliff vesting, provided to certain employees in conjunction with the freeze of our US Qualified pension plan. (b) Charge represents acquisition and integration-related costs associated with the MOGAS acquisition. (c) Charge represents costs associated with merger and acquisition activity. (c) Charge represents amortization of step-up in value of acquired inventories and acquisition related intangible assets associated with the MOGAS acquisition. (d) Charge represents acquisition and integration-related costs associated with the MOGAS acquisition. (e) Charge represents amortization of acquisition related intangible assets associated with the MOGAS acquisition. CONSOLIDATED STATEMENTS OF INCOME (Unaudited) Year Ended December 31, (Amounts in thousands, except per share data) 2025 2024 2023 Sales $ 4,729,260 $ 4,557,806 $ 4,320,577 Cost of sales (3,147,823 ) (3,123,560 ) (3,043,749 ) Gross profit 1,581,437 1,434,246 1,276,828 Selling, general and administrative expense (1,062,100 ) (978,037 ) (961,169 ) Loss on sale of business - (12,981 ) - Loss on divestiture of asbestos-related assets and liabilities (140,092 ) - - Net earnings from affiliates 20,679 19,051 17,894 Operating income 399,924 462,279 333,553 Interest expense (77,740 ) (69,301 ) (66,924 ) Interest income 7,551 5,371 6,991 Other income (expense), net 195,663 (12,194 ) (49,870 ) Earnings before income taxes 525,398 386,155 223,750 Provision for income taxes (155,596 ) (84,929 ) (18,562 ) Net earnings, including noncontrolling interests 369,802 301,226 205,188 Less: Net earnings attributable to noncontrolling interests (23,555 ) (18,467 ) (18,445 ) Net earnings attributable to Flowserve Corporation $ 346,247 $ 282,759 $ 186,743 Net earnings per share attributable to Flowserve Corporation common shareholders: Basic 2.66 $ 2.15 $ 1.42 Diluted 2.64 2.14 1.42 Weighted average shares – basic 130,005 131,488 131,117 Weighted average shares – diluted 130,979 132,356 131,931 Consolidated Reconciliation of Non-GAAP Financial Measures to the Most Directly Comparable GAAP Financial Measure (Unaudited) (Amounts in thousands, except per share data) Twelve Months Ended December 31, 2025 Gross Profit Selling, General & Administrative Expense Loss on Divestiture of Asbestos-Related Assets and Liabilities Operating Income Other Income (Expense), Net Provision For (Benefit From) Income Taxes Net Earnings (Loss) Effective Tax Rate Diluted EPS Reported $ 1,581,437 $ 1,062,100 $ 140,092 $ 399,924 $ 195,663 $ 155,596 $ 346,247 29.6 % 2.64 Reported as a percent of sales 33.4 % 22.5 % 3.0 % 8.5 % 4.1 % 3.3 % 7.3 % Realignment charges (a) 54,660 (3,595 ) - 58,255 - 13,687 44,568 23.5 % 0.34 Acquisition related (b)(c) 635 (13,895 ) - 14,530 - 3,417 11,113 23.5 % 0.08 Purchase accounting step-up and intangible asset amortization (d) 9,180 (5,200 ) - 14,380 - 4,138 10,242 28.8 % 0.08 Discrete items (e)(f)(g) 121 (31,412 ) - 31,533 13,064 8,609 35,988 19.3 % 0.27 Merger transaction costs (h) - (41,197 ) - 41,197 - 9,534 31,663 23.1 % 0.24 Merger termination payment (i) - - - - (266,000 ) (60,957 ) (205,043 ) 22.9 % (1.57 ) Discrete tax items (j) - - - - - (24,860 ) 24,860 0.0 % 0.19 Loss on asbestos divestiture (k) - - (140,092 ) 140,092 - 2,644 137,448 1.9 % 1.05 Below-the-line foreign exchange impacts (l) - - - - 43,893 4,821 39,072 11.0 % 0.30 Adjusted $ 1,646,033 $ 966,801 $ - $ 699,911 $ (13,380 ) $ 116,629 $ 476,158 18.9 % 3.64 Adjusted as a percent of sales 34.8 % 20.4 % 0.0 % 14.8 % -0.3 % 2.5 % 10.1 % Note: Amounts may not calculate due to rounding (a) Charges represent realignment costs incurred as a result of realignment programs of which $5,300 is non-cash and net of a $6,888 gain associated with the divestiture of a pump product line. (b) Charge represents $12,790 of acquisition and integration related costs associated with the MOGAS acquisition. (c) Charge represents $1,740 of costs associated with merger and acquisition activity. (d) Charge represents amortization of step-up in value of acquired inventories and acquisition related intangible assets associated with the MOGAS acquisition. (e) Charge represents non-cash share-based compensation expense associated with a one-time discretionary restricted stock grant, subject to three-year cliff vesting, provided to certain employees in conjunction with the freeze of our US Qualified pension plan. (f) Charge includes $5,141 for a non-cash pension settlement accounting loss incurred in conjunction with the freeze of our US Qualified pension plan and $7,923 for a non-cash pension settlement accounting loss incurred in conjunction with a United Kingdom based pension plan. (g) Charge of $30,100 represents the Q3 2025 non-cash adjustment to our estimated liability for incurred by not reported asbestos claims based on an annual actuarial study. (h) Charge represents transaction costs incurred associated with the terminated Chart Industries merger. (i) Amount represents the Chart Industries merger termination fee paid to Flowserve. (j) Amount represents a one-time tax charge related to enactment of the One Big Beautiful Bill Act during Q3 2025. (k) Charge represents the one-time loss associated with the divestiture of our asbestos-related assets and liabilities including $199,000 of cash funded to the divested entity and $8,335 of transaction costs incurred. (l) Below-the-line foreign exchange impacts represent the remeasurement of foreign exchange derivative contracts as well as the remeasurement of assets and liabilities that are denominated in a currency other than a site’s respective functional currency. Twelve Months Ended December 31, 2024 Gross Profit Selling, General & Administrative Expense Loss on Sale of Business Operating Income Other Income (Expense), Net Provision For (Benefit From) Income Taxes Net Earnings (Loss) Effective Tax Rate Diluted EPS Reported $ 1,434,246 $ 978,037 $ 12,981 $ 462,279 $ (12,194 ) $ 84,929 $ 282,759 22.0 % 2.14 Reported as a percent of sales 31.5 % 21.5 % 0.3 % 10.1 % -0.3 % 1.9 % 6.2 % Realignment charges (a) 31,576 (4,939 ) (12,981 ) 49,496 - 4,884 44,612 9.9 % 0.34 Discrete items (b)(c)(d) 2,700 (7,500 ) - 10,200 - 2,869 7,331 28.1 % 0.06 Acquisition related (e) - (9,944 ) - 9,944 - 2,340 7,604 23.5 % 0.06 Discrete asset write-downs (f)(g) - (1,795 ) - 1,795 3,567 1,342 4,020 25.0 % 0.03 Purchase accounting step-up and intangible asset amortization (h) 3,067 (1,033 ) - 4,100 - 1,300 2,800 31.7 % 0.02 Below-the-line foreign exchange impacts (i) - - - - (2,302 ) (1,912 ) (390 ) 83.1 % (0.00 ) Adjusted $ 1,471,589 $ 952,826 $ - $ 537,814 $ (10,929 ) $ 95,752 $ 348,736 20.7 % 2.63 Adjusted as a percent of sales 32.3 % 20.9 % 0.0 % 11.8 % -0.2 % 2.1 % 7.7 % Note: Amounts may not calculate due to rounding (a) Charges represent realignment costs incurred as a result of realignment programs of which $33,700 is non-cash. (b) Charge represents a reduction to reserves of $2,000 associated with our ongoing financial exposure in Russia that were adjusted for Non-GAAP measures when established in 2022. (c) Charge represents a one-time $5,000 discretionary cash transition benefit provided to certain employees in conjunction with the freeze of our US Qualified pension plan. (d) Charge represents the $7,200 strategic acquisition of intellectual property related to certain liquefied natural gas technology. (e) Charge represents acquisition and integration related costs associated with the MOGAS acquisition. (f) Charge represents a $1,795 non-cash write-down of a software asset. (g) Charge represents a $3,567 non-cash write-down of a debt investment. (h) Charge represents amortization of step-up in value of acquired inventories and acquisition related intangible assets associated with the MOGAS acquisition. (i) Below-the-line foreign exchange impacts represent the remeasurement of foreign exchange derivative contracts as well as the remeasurement of assets and liabilities that are denominated in a currency other than a site’s respective functional currency. SEGMENT INFORMATION (Unaudited) FLOWSERVE PUMPS DIVISION Year Ended December 31, (Amounts in millions, except percentages) 2025 2024 Bookings $ 3,273.3 $ 3,304.3 Sales 3,235.3 3,158.6 Gross profit 1,138.7 1,017.0 Gross profit margin 35.2 % 32.2 % SG&A 558.5 556.2 Segment operating income 600.9 480.2 Segment operating income as a percentage of sales 18.6 % 15.2 % FLOW CONTROL DIVISION Year Ended December 31, (Amounts in millions, except percentages) 2025 2024 Bookings $ 1,454.3 $ 1,370.7 Sales 1,504.5 1,409.3 Gross profit 445.7 424.0 Gross profit margin 29.6 % 30.1 % SG&A 266.0 252.7 Loss on sale of business - (13.0 ) Segment operating income 179.7 158.3 Segment operating income as a percentage of sales 11.9 % 11.2 % Segment Reconciliation of Non-GAAP Financial Measures to the Most Directly Comparable GAAP Financial Measure (Unaudited) (Amounts in thousands) Flowserve Pumps Division Twelve Months Ended December 31, 2025 Gross Profit Selling, General & Administrative Expense Operating Income Twelve Months Ended December 31, 2024 Gross Profit Selling, General & Administrative Expense Operating Income Reported $ 1,138,712 $ 558,507 $ 600,884 Reported $ 1,017,048 $ 556,225 $ 480,216 Reported as a percent of sales 35.2 % 17.3 % 18.6 % Reported as a percent of sales 32.2 % 17.6 % 15.2 % Realignment charges (a) 30,614 (3,932 ) 34,546 Realignment charges (a) 30,727 (1,078 ) 31,805 Discrete items (b) 96 (323 ) 419 Discrete items (b)(c)(d) 1,700 (6,000 ) 7,700 Acquisition related (c) - (740 ) 740 Adjusted $ 1,049,475 $ 549,147 $ 519,721 Adjusted $ 1,169,422 $ 553,512 $ 636,589 Adjusted as a percent of sales 33.2 % 17.4 % 16.5 % Adjusted as a percent of sales 36.1 % 17.1 % 19.7 % Flow Control Division Twelve Months Ended December 31, 2025 Gross Profit Selling, General & Administrative Expense Operating Income Twelve Months Ended December 31, 2024 Gross Profit Selling, General & Administrative Expense Loss on Sale of Business Operating Income Reported $ 445,660 $ 265,973 $ 179,687 Reported $ 423,973 $ 252,675 $ 12,981 $ 158,265 Reported as a percent of sales 29.6 % 17.7 % 11.9 % Reported as a percent of sales 30.1 % 17.9 % 0.9 % 11.2 % Realignment charges (a) 24,121 2,544 21,577 Realignment charges (a) 1,077 (3,095 ) (12,981 ) 17,153 Acquisition related (d) 635 (12,155 ) 12,790 Discrete item (b) 800 (400 ) - 1,200 Purchase accounting step-up and intangible asset amortization (e) 9,180 (5,200 ) 14,380 Acquisition related (e) - (9,944 ) - 9,944 Discrete items (b) 19 (294 ) 313 Purchase accounting step-up and intangible asset amortization (f) 3,067 (1,033 ) - 4,100 Adjusted $ 479,615 $ 250,868 $ 228,747 Adjusted $ 428,917 $ 238,203 $ - $ 190,662 Adjusted as a percent of sales 31.9 % 16.7 % 15.2 % Adjusted as a percent of sales 30.4 % 16.9 % 0.0 % 13.5 % Note: Amounts may not calculate due to rounding Note: Amounts may not calculate due to rounding (a) Charges represent realignment costs incurred as a result of realignment programs of which $5,300 is non-cash and net of a $6,888 gain associated with the divestiture of a pump product line. (a) Charges represent realignment costs incurred as a result of realignment programs of which $33,700 is non-cash. (b) Charge represents non-cash share-based compensation expense associated with a one-time discretionary restricted stock grant, subject to three-year cliff vesting, provided to certain employees in conjunction with the freeze of our US Qualified pension plan. (b) Charge represents a one-time $3,700 discretionary cash transition benefit provided to certain employees in conjunction with the freeze of our US Qualified pension plan. (c) Charge represents costs associated with merger and acquisition activity. (c) Charge represents a reduction to reserves of $2,000 associated with our ongoing financial exposure in Russia that were adjusted for Non-GAAP measures when established in 2022. (d) Charge represents acquisition and integration-related costs associated with the MOGAS acquisition. (d) Charge represents the $7,200 strategic acquisition of intellectual property related to certain liquefied natural gas technology. (e) Charge represents amortization of step-up in value of acquired inventories and acquisition related intangible assets associated with the MOGAS acquisition. (e) Charge represents acquisition and integration related costs associated with the MOGAS acquisition. (f) Charge represents amortization of step-up in value of acquired inventories and acquisition related intangible assets associated with the MOGAS acquisition. Fourth Quarter and Full Year 2025 - Segment Results (dollars in millions, comparison vs. 2024 fourth quarter and full year, unaudited) FPD FCD 4th Qtr Full Year 4th Qtr Full Year Bookings $ 883.6 $ 3,273.3 $ 330.3 $ 1,454.3 - vs. prior year 67.2 8.2 % -31.0 -0.9 % -33.2 -9.1 % 83.6 6.1 % - on constant currency 43.6 5.3 % -60.0 -1.8 % -36.5 -10.0 % 80.9 5.9 % Sales $ 833.0 $ 3,235.3 $ 391.5 $ 1,504.5 - vs. prior year 38.1 4.8 % 76.8 2.4 % 3.6 0.9 % 95.2 6.8 % - on constant currency 14.4 1.8 % 50.7 1.6 % -0.9 -0.2 % 90.0 6.4 % Gross Profit $ 305.2 $ 1,138.7 $ 123.5 $ 445.7 - vs. prior year 19.4 % 12.0 % 4.2 % 5.1 % Gross Margin (% of sales) 36.6 % 35.2 % 31.5 % 29.6 % - vs. prior year (in basis points) 440 bps 300 bps 100 bps (50) bps Operating Income $ 166.8 $ 600.9 $ 64.0 $ 179.7 - vs. prior year 37.7 29.2 % 120.7 25.1 % 19.4 43.5 % 21.4 13.5 % - on constant currency 31.2 24.2 % 111.7 23.3 % 19.5 43.8 % 22.6 14.3 % Operating Margin (% of sales) 20.0 % 18.6 % 16.3 % 11.9 % - vs. prior year (in basis points) 380 bps 340 bps 480 bps 70 bps Adjusted Operating Income * $ 174.8 $ 636.6 $ 77.2 $ 228.7 - vs. prior year 35.8 25.7 % 116.9 22.5 % 18.1 30.5 % 38.1 20.0 % - on constant currency 29.3 21.1 % 107.9 20.8 % 18.2 30.7 % 39.3 20.6 % Adj. Oper. Margin (% of sales)* 21.0 % 19.7 % 19.7 % 15.2 % - vs. prior year (in basis points) 350 bps 320 bps 440 bps 170 bps Backlog $ 2,044.8 $ 828.6 * Adjusted Operating Income and Adjusted Operating Margin exclude realignment charges and other specific discrete items CONSOLIDATED BALANCE SHEETS (Unaudited) December 31, December 31, (Amounts in thousands, except par value) 2025 2024 ASSETS Current assets: Cash and cash equivalents $ 760,183 $ 675,441 Accounts receivable, net of allowance for expected credit losses of $83,094 and $79,059, respectively 1,029,095 976,739 Contract assets, net 322,472 298,906 Inventories 789,898 837,254 Prepaid expenses and other 141,237 116,157 Total current assets 3,042,885 2,904,497 Property, plant and equipment, net 566,751 539,703 Operating lease right-of-use assets, net 166,031 159,400 Goodwill 1,391,988 1,286,295 Deferred taxes 156,250 221,742 Other intangible assets, net 198,475 188,604 Other assets, net 185,820 200,580 Total assets $ 5,708,200 $ 5,500,821 LIABILITIES AND EQUITY Current liabilities: Accounts payable $ 554,243 $ 545,310 Accrued liabilities 587,475 561,486 Contract liabilities 274,669 283,670 Debt due within one year 49,868 44,059 Operating lease liabilities 35,630 33,559 Total current liabilities 1,501,885 1,468,084 Long-term debt due after one year 1,525,210 1,460,132 Operating lease liabilities 149,565 149,838 Retirement obligations and other liabilities 277,216 371,055 Shareholders’ equity: Preferred shares, $1.00 par value Shares authorized – 1,000, no shares issued Common shares, $1.25 par value 220,991 220,991 Shares authorized – 305,000 Shares issued – 176,793 and 176,793, respectively Capital in excess of par value 508,890 502,045 Retained earnings 4,261,977 4,025,750 Treasury shares, at cost – 49,763 and 45,688 shares, respectively (2,231,685 ) (2,007,869 ) Deferred compensation obligation 6,629 8,172 Accumulated other comprehensive loss (575,405 ) (741,424 ) Total Flowserve Corporation shareholders' equity 2,191,397 2,007,665 Noncontrolling interests 62,927 44,047 Total equity 2,254,324 2,051,712 Total liabilities and equity $ 5,708,200 $ 5,500,821 CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Year Ended December 31, (Amounts in thousands) 2025 2024 2023 Cash flows – Operating activities: Net earnings, including noncontrolling interests $ 369,802 $ 301,226 $ 205,188 Adjustments to reconcile net earnings to net cash provided by operating activities - Depreciation 79,236 75,849 73,464 Amortization of intangible and other assets 16,218 9,749 10,283 Loss on sale of business - 12,981 - Loss on sale of asbestos-related assets and liabilities 140,092 - - Contribution to divest asbestos-related assets and liabilities (199,000 ) - - Stock-based compensation 38,263 30,474 27,808 Foreign currency, asset write downs and other non-cash adjustments (15,226 ) 24,172 (17,331 ) Change in assets and liabilities, net of businesses acquired: Accounts receivable, net 691 (82,188 ) 4,744 Inventories 86,678 38,872 (59,831 ) Contract assets, net (13,279 ) (18,513 ) (41,149 ) Prepaid expenses and other assets, net (56,489 ) 15,116 7,825 Accounts payable (28,852 ) (12,336 ) 53,065 Contract liabilities (23,502 ) (6,070 ) 26,837 Accrued liabilities 25,210 49,578 59,213 Retirement obligations and other 38,088 1,456 38,497 Net deferred taxes 47,954 (15,058 ) (62,841 ) Net cash flows provided by operating activities 505,884 425,308 325,772 Cash flows – Investing activities: Capital expenditures (70,927 ) (81,019 ) (67,359 ) Payments for acquisitions, net of cash acquired (65,881 ) (305,924 ) - Proceeds from disposal of assets 11,551 2,244 2,057 Payments for disposition of business - (2,555 ) - Net affiliate investment activity 96 40 (3,278 ) Net cash flows used by investing activities (125,161 ) (387,214 ) (68,580 ) Cash flows – Financing activities: Payments on term loan (37,500 ) (95,375 ) (40,000 ) Proceeds from term loan - 366,000 - Proceeds under revolving credit facility 200,000 100,000 280,000 Payments under revolving credit facility (100,000 ) (100,000 ) (280,000 ) Proceeds under other financing arrangements 15,309 1,437 1,114 Payments under other financing arrangements (5,888 ) (1,455 ) (2,604 ) Payments related to tax withholding for stock-based compensation (11,754 ) (9,581 ) (6,245 ) Repurchases of common shares (254,860 ) (20,070 ) - Payments of dividends (109,639 ) (110,440 ) (104,955 ) Contingent consideration payment related to acquired business (15,000 ) - - Other (7,596 ) (13,021 ) (324 ) Net cash flows provided (used) provided by financing activities (326,928 ) 117,495 (153,014 ) Effect of exchange rate changes on cash 30,947 (25,826 ) 6,529 Net change in cash and cash equivalents 84,742 129,763 110,707 Cash and cash equivalents at beginning of period 675,441 545,678 434,971 Cash and cash equivalents at end of period $ 760,183 $ 675,441 $ 545,678 Supplemental Cash Flow Information: Income taxes paid (net of refunds) $ 92,327 $ 81,172 $ 119,275 Interest paid 75,472 66,809 64,865 Non-Cash Investing and Financing Activities: Contingent liabilities incurred related to acquired business, but not paid $ 674 $ 15,000 $ - About Flowserve: Flowserve Corporation is one of the world’s leading providers of fluid motion and control products and services. Operating in more than 50 countries, the Company produces engineered and industrial pumps, seals and valves as well as a range of related flow management services. More information about Flowserve can be obtained by visiting the Company’s website at www.flowserve.com. Safe Harbor Statement: This news release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, as amended. Words or phrases such as, "may," "should," "expects," "could," "intends," "plans," "anticipates," "estimates," "believes," "forecasts," "predicts" or other similar expressions are intended to identify forward-looking statements, which include, without limitation, earnings forecasts, statements relating to our business strategy and statements of expectations, beliefs, future plans and strategies and anticipated developments concerning our industry, business, operations and financial performance and condition. The forward-looking statements included in this news release are based on our current expectations, projections, estimates and assumptions. These statements are only predictions, not guarantees. Such forward-looking statements are subject to numerous risks and uncertainties that are difficult to predict. These risks and uncertainties may cause actual results to differ materially from what is forecast in such forward-looking statements, and include, without limitation, the following: global supply chain disruptions and the current inflationary environment could adversely affect the efficiency of our manufacturing and increase the cost of providing our products to customers; a portion of our bookings may not lead to completed sales, and our ability to convert bookings into revenues at acceptable profit margins; changes in global economic conditions and the potential for unexpected cancellations or delays of customer orders in our reported backlog; our dependence on our customers’ ability to make required capital investment and maintenance expenditures; if we are not able to successfully execute and realize the expected financial benefits from any restructuring and realignment initiatives, our business could be adversely affected; the substantial dependence of our sales on the success of the energy, chemical, power generation and general industries; the adverse impact of volatile raw materials prices on our products and operating margins; economic, political and other risks associated with our international operations, including military actions, trade embargoes, epidemics or pandemics and changes to tariffs or trade agreements that could affect customer markets, particularly North African, Latin American, Asian and Middle Eastern markets and global oil and gas producers, and non-compliance with U.S. export/re-export control, foreign corrupt practice laws, economic sanctions and import laws and regulations; the impact of public health emergencies, such as outbreaks of epidemics, pandemics, and contagious diseases, on our business and operations; increased aging and slower collection of receivables, particularly in Latin America and other emerging markets; potential adverse effects resulting from the implementation of new tariffs and related retaliatory actions and changes to or uncertainties related to tariffs and trade agreements; our exposure to fluctuations in foreign currency exchange rates, including in hyperinflationary countries such as Argentina; potential adverse consequences resulting from litigation to which we are a party, such as litigation involving asbestos-containing material claims; expectations regarding acquisitions and the integration of acquired businesses; the potential adverse impact of an impairment in the carrying value of goodwill or other intangible assets; our dependence upon third-party suppliers whose failure to perform timely could adversely affect our business operations; the highly competitive nature of the markets in which we operate; if we are not able to maintain our competitive position by successfully developing and introducing new products and integrate new technologies, including artificial intelligence and machine learning; environmental compliance costs and liabilities; potential work stoppages and other labor matters; access to public and private sources of debt financing; our inability to protect our intellectual property in the United States, as well as in foreign countries; obligations under our defined benefit pension plans; our internal control over financial reporting may not prevent or detect misstatements because of its inherent limitations, including the possibility of human error, the circumvention or overriding of controls, or fraud; the recording of increased deferred tax asset valuation allowances in the future or the impact of tax law changes on such deferred tax assets could affect our operating results; our information technology infrastructure could be subject to service interruptions, data corruption, cyber-based attacks or network security breaches, which could disrupt our business operations and result in the loss of critical and confidential information; ineffective internal controls could impact the accuracy and timely reporting of our business and financial results; and other factors described from time to time in our filings with the Securities and Exchange Commission. All forward-looking statements included in this news release are based on information available to us on the date hereof, and we assume no obligation to update any forward-looking statement. The Company reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). However, management believes that non-GAAP financial measures which exclude certain non-recurring items present additional useful comparisons between current results and results in prior operating periods, providing investors with a clearer view of the underlying trends of the business. Management also uses these non-GAAP financial measures in making financial, operating, planning and compensation decisions and in evaluating the Company's performance. Non-GAAP financial measures, which may be inconsistent with similarly captioned measures presented by other companies, should be viewed in addition to, and not as a substitute for, the Company’s reported results prepared in accordance with GAAP. Source: Flowserve Corporation