UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, ~~2022~~2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File No. 1-13179

FLOWSERVE CORPORATION

(Exact name of registrant as specified in its charter)

New York

31-0267900

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

5215 N. O’Connor Blvd., Suite 700,

Irving,

Texas

75039

(Address of principal executive offices)

(Zip Code)

(

~~972~~

)(972)

443-6500

(Registrant’s telephone number, including area code)

Former name, former address and former fiscal year, if changed since last report: N/A

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of Each Exchange on Which Registered

Common Stock, $1.25 Par Value

FLS

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☑ Yes ¨ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☑ Yes ¨ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☑

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

AAs of July 28, 2023 ther~~s of~~ e wer~~July 22, 2022~~ ~~there were~~ ~~130,693,455~~e 131,207,268 shares of the issuer’s common stock outstanding.

FLOWSERVE CORPORATION

FORM 10-Q

TABLE OF CONTENTS


			Page
			No.
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Statements of Income and Condensed Consolidated Statements of Comprehensive Income (Loss) – Three Months Ended June 3 0 30 , ~~2022~~2023 and ~~2021~~2022 (unaudited)			1
Condensed Consolidated Statements of Income and Condensed Consolidated Statements of Comprehensive Income (Loss) – Six Months Ended June 30, 202 23 and 202 12 (unaudited)			2
Condensed Consolidated Balance Sheets – ~~Condensed Consolidated Balance Sheets –~~ June 3 0 , ~~2022~~2023 and December 31, ~~2021~~2022 (unaudited)			3
Condensed Consolidated Statements of Shareholders' Equity – Three Months Ended June 3 0 , ~~2022~~2023 and ~~2021~~2022 (unaudited)			4
Condensed Consolidated Statements of Stockholders' Equity – ~~Six~~Si x Months Ended June , 30, 202 23 and 202 12 (unaudited)			5
Condensed Consolidated Statements of Cash Flows – Six Months Ended June 3 0 , ~~2022~~2023 and ~~2021~~2022 (unaudited)			6
Notes to Condensed Consolidated Financial Statements (unaudited)			7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			2521
Item 3. Quantitative and Qualitative Disclosures About Market Risk			3936
Item 4. Controls and Procedures			3936

PART II – OTHER INFORMATION
Item 1. Legal Proceedings			4037
Item 1A. Risk Factors			4037
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			4037
Item 3. Defaults Upon Senior Securities			4239
Item 4. Mine Safety Disclosures			4239
Item 5. Other Information			4239
Item 6. Exhibits			4239
SIGNATURES			4340

Table of Contents

PART I — FINANCIAL INFORMATION

Item 1.Financial Statements

FLOWSERVE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)


(Amounts in thousands, except per share data)	(Amounts in thousands, except per share data)	Three Months Ended June 30,				(Amounts in thousands, except per share data)	Three Months Ended June 30,
		2022		2021			2023		2022
Sales	Sales	$	882,222	$	898,178	Sales	$	1,080,376	$	882,222
Cost of sales	Cost of sales	(632,393)		(619,940)		Cost of sales	(757,616)		(632,393)
Gross profit	Gross profit	249,829		278,238		Gross profit	322,760		249,829
Selling, general and administrative expense	Selling, general and administrative expense	(194,606)		(210,789)		Selling, general and administrative expense	(230,082)		(194,606)
Gain on sale of business		—		1,806

Net earnings from affiliates	Net earnings from affiliates	5,109		2,907		Net earnings from affiliates	3,970		5,109
Operating income	Operating income	60,332		72,162		Operating income	96,648		60,332
Interest expense	Interest expense	(11,062)		(14,322)		Interest expense	(16,554)		(11,062)

Interest income	Interest income	854		465		Interest income	1,907		854
Other income (expense), net	Other income (expense), net	7,589		(7,850)		Other income (expense), net	(5,543)		7,589
Earnings before income taxes	Earnings before income taxes	57,713		50,455		Earnings before income taxes	76,458		57,713
Provision for income taxes	Provision for income taxes	(11,618)		(2,711)		Provision for income taxes	(21,304)		(11,618)
Net earnings, including noncontrolling interests	Net earnings, including noncontrolling interests	46,095		47,744		Net earnings, including noncontrolling interests	55,154		46,095
Less: Net earnings attributable to noncontrolling interests	Less: Net earnings attributable to noncontrolling interests	(1,318)		(2,390)		Less: Net earnings attributable to noncontrolling interests	(3,951)		(1,318)
Net earnings attributable to Flowserve Corporation	Net earnings attributable to Flowserve Corporation	$	44,777	$	45,354	Net earnings attributable to Flowserve Corporation	$	51,203	$	44,777
Net earnings per share attributable to Flowserve Corporation common shareholders:	Net earnings per share attributable to Flowserve Corporation common shareholders:					Net earnings per share attributable to Flowserve Corporation common shareholders:
Basic	Basic	$	0.34	$	0.35	Basic	$	0.39	$	0.34
Diluted	Diluted	0.34		0.35		Diluted	0.39		0.34

Weighted average shares - basic		130,666		130,305
Weighted average shares - diluted		131,245		130,804
Weighted average shares – basic						Weighted average shares – basic	131,171		130,666
Weighted average shares – diluted						Weighted average shares – diluted	131,810		131,245

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)


(Amounts in thousands)	(Amounts in thousands)	Three Months Ended June 30,				(Amounts in thousands)	Three Months Ended June 30,
		2022		2021			2023		2022
Net earnings, including noncontrolling interests	Net earnings, including noncontrolling interests	$	46,095	$	47,744	Net earnings, including noncontrolling interests	$	55,154	$	46,095
Other comprehensive income (loss):	Other comprehensive income (loss):					Other comprehensive income (loss):
Foreign currency translation adjustments, net of taxes of $(7,299) and $(6,401), respectively		(64,160)		13,998
Pension and other postretirement effects, net of taxes of $(457) and $(472), respectively		6,570		2,059
Cash flow hedging activity, net of taxes of $(9) and $(5), respectively		29		15
Foreign currency translation adjustments, net of taxes of $(163) and $(7,299), respectively						Foreign currency translation adjustments, net of taxes of $(163) and $(7,299), respectively	8,901		(64,160)
Pension and other postretirement effects, net of taxes of $(29) and $(457), respectively						Pension and other postretirement effects, net of taxes of $(29) and $(457), respectively	(839)		6,570
Cash flow hedging activity, net of taxes of $(7) and $0, respectively						Cash flow hedging activity, net of taxes of $(7) and $0, respectively	30		29
Other comprehensive income (loss)	Other comprehensive income (loss)	(57,561)		16,072		Other comprehensive income (loss)	8,092		(57,561)
Comprehensive income (loss), including noncontrolling interests	Comprehensive income (loss), including noncontrolling interests	(11,466)		63,816		Comprehensive income (loss), including noncontrolling interests	63,246		(11,466)
Comprehensive (income) loss attributable to noncontrolling interests	Comprehensive (income) loss attributable to noncontrolling interests	(1,321)		(2,403)		Comprehensive (income) loss attributable to noncontrolling interests	(4,196)		(1,321)
Comprehensive income (loss) attributable to Flowserve Corporation	Comprehensive income (loss) attributable to Flowserve Corporation	$	(12,787)	$	61,413	Comprehensive income (loss) attributable to Flowserve Corporation	$	59,050	$	(12,787)

See accompanying notes to condensed consolidated financial statements.

Table of Contents

FLOWSERVE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)


(Amounts in thousands, except per share data)	(Amounts in thousands, except per share data)	Six Months Ended June 30,				(Amounts in thousands, except per share data)	Six Months Ended June 30,
		2022		2021			2023		2022
Sales	Sales	$	1,703,280	$	1,755,486	Sales	$	2,060,681	$	1,703,280
Cost of sales	Cost of sales	(1,243,803)		(1,226,348)		Cost of sales	(1,441,090)		(1,243,803)
Gross profit	Gross profit	459,477		529,138		Gross profit	619,591		459,477
Selling, general and administrative expense	Selling, general and administrative expense	(400,816)		(409,104)		Selling, general and administrative expense	(474,359)		(400,816)
Gain on sale of business		—		1,806

Net earnings from affiliates	Net earnings from affiliates	9,039		6,425		Net earnings from affiliates	8,603		9,039
Operating income	Operating income	67,700		128,265		Operating income	153,835		67,700
Interest expense	Interest expense	(21,755)		(31,101)		Interest expense	(32,766)		(21,755)
Loss on extinguishment of debt		—		(7,610)

Interest income	Interest income	1,797		1,067		Interest income	3,401		1,797
Other income (expense), net	Other income (expense), net	(524)		(19,213)		Other income (expense), net	(13,562)		(524)
Earnings before income taxes	Earnings before income taxes	47,218		71,408		Earnings before income taxes	110,908		47,218
Provision for income taxes	Provision for income taxes	(14,800)		(6,503)		Provision for income taxes	(25,757)		(14,800)
Net earnings, including noncontrolling interests	Net earnings, including noncontrolling interests	32,418		64,905		Net earnings, including noncontrolling interests	85,151		32,418
Less: Net earnings attributable to noncontrolling interests	Less: Net earnings attributable to noncontrolling interests	(3,458)		(5,471)		Less: Net earnings attributable to noncontrolling interests	(7,181)		(3,458)
Net earnings attributable to Flowserve Corporation	Net earnings attributable to Flowserve Corporation	$	28,960	$	59,434	Net earnings attributable to Flowserve Corporation	$	77,970	$	28,960
Net earnings per share attributable to Flowserve Corporation common shareholders:	Net earnings per share attributable to Flowserve Corporation common shareholders:					Net earnings per share attributable to Flowserve Corporation common shareholders:
Basic	Basic	$	0.22	$	0.46	Basic	$	0.59	$	0.22
Diluted	Diluted	0.22		0.45		Diluted	0.59		0.22

Weighted average shares - basic	Weighted average shares - basic	130,554		130,366		Weighted average shares - basic	131,051		130,554
Weighted average shares - diluted	Weighted average shares - diluted	131,148		130,905		Weighted average shares - diluted	131,782		131,148

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)


(Amounts in thousands)	(Amounts in thousands)	Six Months Ended June 30,				(Amounts in thousands)	Six Months Ended June 30,
		2022		2021			2023		2022
Net earnings, including noncontrolling interests	Net earnings, including noncontrolling interests	$	32,418	$	64,905	Net earnings, including noncontrolling interests	$	85,151	$	32,418
Other comprehensive income (loss):	Other comprehensive income (loss):					Other comprehensive income (loss):
Foreign currency translation adjustments, net of taxes of $(20,605) and $(5,747), respectively		(80,904)		3,109
Pension and other postretirement effects, net of taxes of $(711) and $(942), respectively		10,157		6,318
Cash flow hedging activity, net of taxes of $(18) and $(67), respectively		58		217
Foreign currency translation adjustments, net of taxes of $554 and $(20,605), respectively						Foreign currency translation adjustments, net of taxes of $554 and $(20,605), respectively	22,407		(80,904)
Pension and other postretirement effects, net of taxes of $(41) and $(711), respectively						Pension and other postretirement effects, net of taxes of $(41) and $(711), respectively	(1,282)		10,157
Cash flow hedging activity, net of taxes of $(14) and $0, respectively						Cash flow hedging activity, net of taxes of $(14) and $0, respectively	60		58
Other comprehensive income (loss)	Other comprehensive income (loss)	(70,689)		9,644		Other comprehensive income (loss)	21,185		(70,689)
Comprehensive income (loss), including noncontrolling interests	Comprehensive income (loss), including noncontrolling interests	(38,271)		74,549		Comprehensive income (loss), including noncontrolling interests	106,336		(38,271)
Comprehensive (income) loss attributable to noncontrolling interests	Comprehensive (income) loss attributable to noncontrolling interests	(4,798)		(5,633)		Comprehensive (income) loss attributable to noncontrolling interests	(4,265)		(4,798)
Comprehensive income (loss) attributable to Flowserve Corporation	Comprehensive income (loss) attributable to Flowserve Corporation	$	(43,069)	$	68,916	Comprehensive income (loss) attributable to Flowserve Corporation	$	102,071	$	(43,069)

See accompanying notes to condensed consolidated financial statements.

Table of Contents

FLOWSERVE CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


(Amounts in thousands, except par value)	(Amounts in thousands, except par value)	June 30,		December 31,		(Amounts in thousands, except par value)	June 30,		December 31,
		2022		2021			2023		2022
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	458,345	$	658,452	Cash and cash equivalents	$	422,837	$	434,971
Accounts receivable, net of allowance for expected credit losses of $78,776 and $74,336, respectively		735,895		739,210
Contract assets, net of allowance for expected credit losses of $3,704 and $2,393, respectively		197,128		195,598
Accounts receivable, net of allowance for expected credit losses of $84,358 and $83,062, respectively						Accounts receivable, net of allowance for expected credit losses of $84,358 and $83,062, respectively	887,867		868,632
Contract assets, net of allowance for expected credit losses of $4,420 and $5,819, respectively						Contract assets, net of allowance for expected credit losses of $4,420 and $5,819, respectively	227,636		233,457
Inventories, net	Inventories, net	748,920		678,287		Inventories, net	914,288		803,198

Prepaid expenses and other	Prepaid expenses and other	140,639		117,130		Prepaid expenses and other	126,756		110,714
Total current assets	Total current assets	2,280,927		2,388,677		Total current assets	2,579,384		2,450,972
Property, plant and equipment, net of accumulated depreciation of $1,150,876 and $1,191,823, respectively		487,299		515,927
Property, plant and equipment, net of accumulated depreciation of $1,139,149 and $1,172,957, respectively						Property, plant and equipment, net of accumulated depreciation of $1,139,149 and $1,172,957, respectively	500,075		500,945
Operating lease right-of-use assets, net	Operating lease right-of-use assets, net	178,974		193,863		Operating lease right-of-use assets, net	164,391		174,980
Goodwill	Goodwill	1,162,514		1,196,479		Goodwill	1,177,131		1,168,124
Deferred taxes	Deferred taxes	34,582		44,049		Deferred taxes	158,835		149,290
Other intangible assets, net	Other intangible assets, net	139,786		152,463		Other intangible assets, net	125,216		134,503
Other assets, net of allowance for expected credit losses of $67,968 and $67,696, respectively		298,650		258,310
Other assets, net of allowance for expected credit losses of $66,857 and $66,377, respectively						Other assets, net of allowance for expected credit losses of $66,857 and $66,377, respectively	214,983		211,820
Total assets	Total assets	$	4,582,732	$	4,749,768	Total assets	$	4,920,015	$	4,790,634

LIABILITIES AND EQUITY	LIABILITIES AND EQUITY					LIABILITIES AND EQUITY
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	433,508	$	410,062	Accounts payable	$	492,623	$	476,747
Accrued liabilities	Accrued liabilities	374,575		445,092		Accrued liabilities	441,520		427,578
Contract liabilities	Contract liabilities	205,175		202,965		Contract liabilities	269,725		256,963
Debt due within one year	Debt due within one year	46,306		41,058		Debt due within one year	55,781		49,335

Operating lease liabilities	Operating lease liabilities	32,153		32,628		Operating lease liabilities	32,440		32,528
Total current liabilities	Total current liabilities	1,091,717		1,131,805		Total current liabilities	1,292,089		1,243,151
Long-term debt due after one year	Long-term debt due after one year	1,241,636		1,261,770		Long-term debt due after one year	1,245,253		1,224,151
Operating lease liabilities	Operating lease liabilities	153,580		166,786		Operating lease liabilities	146,255		155,196
Retirement obligations and other liabilities	Retirement obligations and other liabilities	341,906		352,062		Retirement obligations and other liabilities	314,408		309,529
Commitments and contingencies (See Note 10)		0		0
Contingencies (See Note 10)						Contingencies (See Note 10)
Shareholders’ equity:	Shareholders’ equity:					Shareholders’ equity:
Common shares, $1.25 par value	Common shares, $1.25 par value	220,991		220,991		Common shares, $1.25 par value	220,991		220,991
Shares authorized – 305,000	Shares authorized – 305,000					Shares authorized – 305,000
Shares issued – 176,793
Shares issued – 176,793 and 176,793, respectively						Shares issued – 176,793 and 176,793, respectively
Capital in excess of par value	Capital in excess of par value	500,013		506,386		Capital in excess of par value	495,281		507,484
Retained earnings	Retained earnings	3,666,935		3,691,023		Retained earnings	3,798,984		3,774,209
Treasury shares, at cost – 46,377 and 46,794 shares, respectively		(2,037,839)		(2,057,706)
Treasury shares, at cost – 45,894 and 46,359 shares, respectively						Treasury shares, at cost – 45,894 and 46,359 shares, respectively	(2,014,932)		(2,036,882)
Deferred compensation obligation	Deferred compensation obligation	6,921		7,214		Deferred compensation obligation	7,815		6,979
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(635,618)		(563,589)		Accumulated other comprehensive loss	(623,687)		(647,788)
Total Flowserve Corporation shareholders’ equity	Total Flowserve Corporation shareholders’ equity	1,721,403		1,804,319		Total Flowserve Corporation shareholders’ equity	1,884,452		1,824,993
Noncontrolling interests	Noncontrolling interests	32,490		33,026		Noncontrolling interests	37,558		33,614
Total equity	Total equity	1,753,893		1,837,345		Total equity	1,922,010		1,858,607
Total liabilities and equity	Total liabilities and equity	$	4,582,732	$	4,749,768	Total liabilities and equity	$	4,920,015	$	4,790,634

See accompanying notes to condensed consolidated financial statements.

Table of Contents

FLOWSERVE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(Unaudited)


		Total Flowserve Corporation Shareholders’ Equity																																			Total Flowserve Corporation Shareholders’ Equity
					Capital in Excess of Par Value				Retained Earnings										Deferred Compensation Obligation			Accumulated Other Comprehensive Income (Loss)											Total Equity													Capital in Excess of Par Value					Retained Earnings												Deferred Compensation Obligation			Accumulated Other Comprehensive Income (Loss)						Total Equity
		Common Stock									Treasury Stock										Non- controlling Interests								Common Stock															Treasury Stock																Non- controlling Interests
		Shares	Amount								Shares			Amount												Shares						Amount										Shares							Amount
																																					(Amounts in thousands)
Balance — April 1, 2023																																				Balance — April 1, 2023	176,793				$	220,991							$	492,147				$	3,774,379				(45,922)				$	(2,016,517)		$	6,852		$	(631,534)		$	33,379		$	1,879,697

Stock activity under stock plans																																				Stock activity under stock plans	—				—					(2,791)					—					28				1,585			963			—			—			(243)
Stock-based compensation																																				Stock-based compensation	—									5,925					—					—				—			—			—			—			5,925

Net earnings																																				Net earnings	—				—					—					51,203					—				—			—			—			3,951			55,154
Cash dividends declared ($0.20 per share)																																				Cash dividends declared ($0.20 per share)	—				—					—					(26,598)					—				—			—			—			—			(26,598)

Other comprehensive income (loss), net of tax																																				Other comprehensive income (loss), net of tax	—				—					—					—					—				—			—			7,847			245			8,092

Other, net																																				Other, net	—				—					—					—					—				—			—			—			(17)			(17)
Balance — June 30, 2023																																				Balance — June 30, 2023	176,793				$	220,991				$	495,281				$	3,798,984				(45,894)				$	(2,014,932)		$	7,815		$	(623,687)		$	37,558		$	1,922,010
		(Amounts in thousands)
Balance — April 1, 2022	Balance — April 1, 2022	176,793	$	220,991			$	496,151			$	3,648,678		(46,424)			$	(2,039,900)						$	7,122					$	(578,053)							$	36,066			$	1,791,055		Balance — April 1, 2022	176,793					$	220,991				$	496,151			$	3,648,678		(46,424)			$	(2,039,900)		$	7,122		$	(578,053)		$	36,066		$	1,791,055

Stock activity under stock plans	Stock activity under stock plans	—	—				(2,024)				—			47			2,061					(201)					—								—					(164)	Stock activity under stock plans		—					—					(2,024)					—				47			2,061			(201)			—			—			(164)
Stock-based compensation	Stock-based compensation	—			5,886				—				—		—				—			—					—						5,886			Stock-based compensation	—									5,886					—					—				—			—			—			—			5,886

Net earnings	Net earnings	—	—		—				44,777				—		—				—			—					1,318						46,095			Net earnings	—				—					—					44,777					—				—			—			—			1,318			46,095
Cash dividends declared		—	—		—				(26,520)				—		—				—			—					—						(26,520)
Cash dividends declared ($0.20 per share)																																				Cash dividends declared ($0.20 per share)	—				—					—					(26,520)					—				—			—			—			—			(26,520)

Other comprehensive income (loss), net of tax	Other comprehensive income (loss), net of tax	—	—		—				—				—		—				—			(57,565)					4						(57,561)			Other comprehensive income (loss), net of tax	—				—					—					—					—				—			—			(57,565)			4			(57,561)

Other, net	Other, net	—	—		—				—				—		—				—			—					(4,898)						(4,898)			Other, net	—				—					—					—					—				—			—			—			(4,898)			(4,898)
Balance — June 30, 2022	Balance — June 30, 2022	176,793	$	220,991	$	500,013			$	3,666,935			(46,377)		$	(2,037,839)			$	6,921		$	(635,618)				$	32,490					$	1,753,893		Balance — June 30, 2022	176,793				$	220,991				$	500,013				$	3,666,935				(46,377)				$	(2,037,839)		$	6,921		$	(635,618)		$	32,490		$	1,753,893

Balance — April 1, 2021		176,793	$	220,991	$	488,906			$	3,658,158			(46,496)		$	(2,045,937)			$	6,114		$	(616,200)				$	29,754					$	1,741,786

Stock activity under stock plans		—	—		(1,397)				—				1		107				963			—					—						(327)
Stock-based compensation		—	—		6,712				—				—		—				—			—					—						6,712

Net earnings		—	—		—				45,354				—		—				—			—					2,390						47,744
Cash dividends declared		—	—		—				(26,395)				—		—				—			—					—						(26,395)
Repurchases of common shares		—	—		—				—				(311)		(12,449)				—			—					—						(12,449)
Other comprehensive income (loss), net of tax		—	—		—				—				—		—				—			16,058					14						16,072

Other, net		—	—		—				—				—		—				—			(1)					(2,450)						(2,451)
Balance — June 30, 2021		176,793	$	220,991	$	494,221			$	3,677,117			(46,806)		$	(2,058,279)			$	7,077		$	(600,143)				$	29,708					$	1,770,692
See accompanying notes to condensed consolidated financial statements.	See accompanying notes to condensed consolidated financial statements.																																			See accompanying notes to condensed consolidated financial statements.

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FLOWSERVE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(Unaudited)


		Total Flowserve Corporation Shareholders’ Equity																																			Total Flowserve Corporation Shareholders’ Equity
					Capital in Excess of Par Value				Retained Earnings										Deferred Compensation Obligation			Accumulated Other Comprehensive Income (Loss)											Total Equity													Capital in Excess of Par Value					Retained Earnings												Deferred Compensation Obligation			Accumulated Other Comprehensive Income (Loss)						Total Equity
		Common Stock									Treasury Stock										Non- controlling Interests								Common Stock															Treasury Stock																Non- controlling Interests
		Shares	Amount								Shares			Amount												Shares						Amount										Shares							Amount
																																					(Amounts in thousands)
Balance — January 1, 2023																																				Balance — January 1, 2023	176,793				$	220,991							$	507,484				$	3,774,209				(46,359)				$	(2,036,882)		$	6,979		$	(647,788)		$	33,614		$	1,858,607

Stock activity under stock plans																																				Stock activity under stock plans	—				—					(28,081)					—					465				21,950			836			—			—			(5,295)
Stock-based compensation																																				Stock-based compensation	—				—					15,878					—					—				—			—			—			—			15,878

Net earnings																																				Net earnings	—				—					—					77,970					—				—			—			—			7,181			85,151
Cash dividends declared ( $0.40 per share)																																				Cash dividends declared ( $0.40 per share)	—				—					—					(53,195)					—				—			—			—			—			(53,195)

Other comprehensive income (loss), net of tax																																				Other comprehensive income (loss), net of tax	—				—					—					—					—				—			—			24,101			(2,916)			21,185

Other, net																																				Other, net	—				—					—					—					—				—			—			—			(321)			(321)
Balance — June 30, 2023																																				Balance — June 30, 2023	176,793				$	220,991				$	495,281				$	3,798,984				(45,894)				$	(2,014,932)		$	7,815		$	(623,687)		$	37,558		$	1,922,010
		(Amounts in thousands)
Balance — January 1, 2022	Balance — January 1, 2022	176,793	$	220,991			$	506,386			$	3,691,023		(46,794)			$	(2,057,706)						$	7,214					$	(563,589)							$	33,026			$	1,837,345		Balance — January 1, 2022	176,793					$	220,991				$	506,386			$	3,691,023		(46,794)			$	(2,057,706)		$	7,214		$	(563,589)		$	33,026		$	1,837,345

Stock activity under stock plans	Stock activity under stock plans	—	—				(23,270)				—			417			19,867					(293)					—								—					(3,696)	Stock activity under stock plans		—					—					(23,270)					—				417			19,867			(293)			—			—			(3,696)
Stock-based compensation	Stock-based compensation	—	—		16,897				—				—		—				—			—					—						16,897			Stock-based compensation	—				—					16,897					—					—				—			—			—			—			16,897

Net earnings	Net earnings	—	—		—				28,960				—		—				—			—					3,458						32,418			Net earnings	—				—					—					28,960					—				—			—			—			3,458			32,418
Cash dividends declared		—	—		—				(53,048)				—		—				—			—					—						(53,048)
Cash dividends declared ($0.40 per share)																																				Cash dividends declared ($0.40 per share)	—				—					—					(53,048)					—				—			—			—			—			(53,048)

Other comprehensive income (loss), net of tax	Other comprehensive income (loss), net of tax	—	—		—				—				—		—				—			(72,029)					1,340						(70,689)			Other comprehensive income (loss), net of tax	—				—					—					—					—				—			—			(72,029)			1,340			(70,689)

Other, net	Other, net	—	—		—				—				—		—				—			—					(5,334)						(5,334)			Other, net	—				—					—					—					—				—			—			—			(5,334)			(5,334)
Balance — June 30, 2022	Balance — June 30, 2022	176,793	$	220,991	$	500,013			$	3,666,935			(46,377)		$	(2,037,839)			$	6,921		$	(635,618)				$	32,490					$	1,753,893		Balance — June 30, 2022	176,793				$	220,991				$	500,013				$	3,666,935				(46,377)				$	(2,037,839)		$	6,921		$	(635,618)		$	32,490		$	1,753,893

Balance — January 1, 2021		176,793	$	220,991	$	502,227			$	3,670,543			(46,768)		$	(2,059,309)			$	6,164		$	(609,625)				$	30,330					$	1,761,321

Stock activity under stock plans		—	—		(24,478)				—				402		18,561				913			—					—						(5,004)
Stock-based compensation		—	—		16,472				—				—		—				—			—					—						16,472

Net earnings		—	—		—				59,434				—		—				—			—					5,471						64,905
Cash dividends declared		—	—		—				(52,860)				—		—				—			—					—						(52,860)
Repurchases of common shares		—	—		—				—				(440)		(17,531)				—			—					—						(17,531)
Other comprehensive income (loss), net of tax		—	—		—				—				—		—				—			9,482					162						9,644

Other, net		—	—		—				—				—		—				—			—					(6,255)						(6,255)
Balance — June 30, 2021		176,793	$	220,991	$	494,221			$	3,677,117			(46,806)		$	(2,058,279)			$	7,077		$	(600,143)				$	29,708					$	1,770,692
See accompanying notes to condensed consolidated financial statements.	See accompanying notes to condensed consolidated financial statements.																																			See accompanying notes to condensed consolidated financial statements.

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FLOWSERVE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


(Amounts in thousands)	(Amounts in thousands)	Six Months Ended June 30,				(Amounts in thousands)	Six Months Ended June 30,
		2022		2021			2023		2022
Cash flows – Operating activities:	Cash flows – Operating activities:					Cash flows – Operating activities:
Net earnings, including noncontrolling interests	Net earnings, including noncontrolling interests	$	32,418	$	64,905	Net earnings, including noncontrolling interests	$	85,151	$	32,418
Adjustments to reconcile net earnings to net cash provided (used) by operating activities:	Adjustments to reconcile net earnings to net cash provided (used) by operating activities:					Adjustments to reconcile net earnings to net cash provided (used) by operating activities:
Depreciation	Depreciation	40,034		44,491		Depreciation	37,452		40,034
Amortization of intangible and other assets	Amortization of intangible and other assets	6,748		7,433		Amortization of intangible and other assets	5,158		6,748
Loss on extinguishment of debt		—		7,610

Stock-based compensation	Stock-based compensation	16,896		16,472		Stock-based compensation	15,878		16,896

Foreign currency, asset write downs and other non-cash adjustments	Foreign currency, asset write downs and other non-cash adjustments	(3,982)		12,460		Foreign currency, asset write downs and other non-cash adjustments	(8,418)		(3,982)
Change in assets and liabilities:	Change in assets and liabilities:					Change in assets and liabilities:
Accounts receivable, net	Accounts receivable, net	(21,638)		14,285		Accounts receivable, net	(5,350)		(21,638)
Inventories, net	Inventories, net	(96,737)		(30,784)		Inventories, net	(99,240)		(96,737)
Contract assets, net	Contract assets, net	(7,705)		12,232		Contract assets, net	9,917		(7,705)
Prepaid expenses and other assets, net		(19,769)		(16,187)
Prepaid expenses and other, net						Prepaid expenses and other, net	(105)		(19,769)
Accounts payable	Accounts payable	33,550		(41,146)		Accounts payable	7,118		33,550
Contract liabilities	Contract liabilities	9,642		17,026		Contract liabilities	10,831		9,642
Accrued liabilities and income taxes payable	Accrued liabilities and income taxes payable	(65,773)		(37,123)		Accrued liabilities and income taxes payable	(2,091)		(65,773)
Retirement obligations and other		10,028		(2,761)
Retirement obligations and other liabilities						Retirement obligations and other liabilities	8,412		10,028

Net deferred taxes	Net deferred taxes	(5,079)		(7,607)		Net deferred taxes	(14,329)		(5,079)
Net cash flows provided (used) by operating activities	Net cash flows provided (used) by operating activities	(71,367)		61,306		Net cash flows provided (used) by operating activities	50,384		(71,367)
Cash flows – Investing activities:	Cash flows – Investing activities:					Cash flows – Investing activities:
Capital expenditures	Capital expenditures	(31,012)		(22,541)		Capital expenditures	(31,893)		(31,012)

Proceeds from disposal of assets and other		2,015		(1,299)
Other						Other	(941)		2,015

Net cash flows provided (used) by investing activities	Net cash flows provided (used) by investing activities	(28,997)		(23,840)		Net cash flows provided (used) by investing activities	(32,834)		(28,997)
Cash flows – Financing activities:	Cash flows – Financing activities:					Cash flows – Financing activities:

Payments on senior notes		—		(407,473)

Payments on term loan	Payments on term loan	(15,921)		—		Payments on term loan	(20,000)		(15,921)
Proceeds under revolving credit facility						Proceeds under revolving credit facility	150,000		—
Payments under revolving credit facility						Payments under revolving credit facility	(100,000)		—
Proceeds under other financing arrangements	Proceeds under other financing arrangements	1,029		1,386		Proceeds under other financing arrangements	197		1,029
Payments under other financing arrangements	Payments under other financing arrangements	(720)		(3,256)		Payments under other financing arrangements	(3,458)		(720)
Repurchases of common shares		—		(17,531)

Payments related to tax withholding for stock-based compensation	Payments related to tax withholding for stock-based compensation	(4,497)		(5,777)		Payments related to tax withholding for stock-based compensation	(6,235)		(4,497)
Payments of dividends	Payments of dividends	(52,267)		(52,168)		Payments of dividends	(52,471)		(52,267)
Other	Other	(5,334)		(6,275)		Other	(320)		(5,334)
Net cash flows provided (used) by financing activities	Net cash flows provided (used) by financing activities	(77,710)		(491,094)		Net cash flows provided (used) by financing activities	(32,287)		(77,710)
Effect of exchange rate changes on cash	Effect of exchange rate changes on cash	(22,033)		(11,249)		Effect of exchange rate changes on cash	2,603		(22,033)
Net change in cash and cash equivalents	Net change in cash and cash equivalents	(200,107)		(464,877)		Net change in cash and cash equivalents	(12,134)		(200,107)
Cash and cash equivalents at beginning of period	Cash and cash equivalents at beginning of period	658,452		1,095,274		Cash and cash equivalents at beginning of period	434,971		658,452
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	$	458,345	$	630,397	Cash and cash equivalents at end of period	$	422,837	$	458,345

See accompanying notes to condensed consolidated financial statements.

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FLOWSERVE CORPORATION

(Unaudited)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.Basis of Presentation and Accounting Policies

Basis of Presentation

The accompanying condensed consolidated balance sheet as of June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, and the related condensed consolidated statements of income, condensed consolidated statements of comprehensive income (loss), condensed consolidated statements of shareholders' equity for the three and six months ended June 30, ~~2022~~2023 and ~~2021~~2022 and condensed consolidated statements of cash flows for the six months ended June 30, ~~2022~~2023 and ~~2021~~2022 of Flowserve Corporation are unaudited. In management’s opinion, all adjustments comprising normal recurring adjustments necessary for fair statement of such condensed consolidated financial statements have been made. Prior period information has been updated to conform to current year presentation.

The accompanying condensed consolidated financial statements and notes in this Quarterly Report on Form 10-Q for the quarterly period ended June 30, ~~2022~~2023 ("Quarterly Report") are presented as permitted by Regulation S-X and do not contain certain information included in our annual financial statements and notes thereto. Accordingly, the accompanying condensed consolidated financial information should be read in conjunction with the audited consolidated financial statements presented in our Annual Report on Form 10-K for the year ended December 31, ~~2021~~2022 ("~~2021~~2022 Annual Report").

Coronavirus ~~Pandemic~~ ("COVID-19") - D~~uring~~We continue to assess and proactively respond to the remaining impacts of COVID-19 on all aspects of our business and geographies, including with respect to our associates, customers and communities, supply chain impacts and labor availability issues, and to take appropriate actions in an effort to mitigate adverse effects of the pandemic. During the first six months of ~~2022, we continue~~2023, COVID-related supply chain, logistics and labor availability impacts decreased when compared to be challenged by macroeconomics and global economic impacts based on the disruption and uncertainties caused by COVID-19. As a result of the COVID-19 pandemic’s effect on oil prices, many of our large customers reduced capital expenditures and budgets in 2020. To date, while we have seen customer maintenance, repair and overhaul ("MRO") and aftermarket spending return to pre-pandemic levels, and although we are seeing momentum in project-based capital expenditures, such oil and gas business has yet to return to pre-pandemic levels. In addition, many of our suppliers have also experienced varying lengths of production and shipping delays related to the COVID-19 pandemic and its effects, some of which continue to exist in highly affected countries. These conditions have had an adverse effect on the speed at which we can manufacture and ship our products to customers, and have also led to an increase in logistics, transportation and freight costs. As a result of the macroeconomic impact of COVID-19 we have also experienced labor constraints and inflationary pressures.

2022. The ~~preparation of our~~Company's condensed consolidated financial statements ~~requires us to make~~presented reflect management's estimates ~~judgments~~ and assumptions ~~that may affect~~regarding the ~~reported amounts~~effects of assets, liabilities, equity, revenues and expenses and related disclosure of contingent assets and liabilities. We evaluate our estimates, judgments and methodologies on an ongoing basis. We base our estimates on historical experience and on various other assumptions that we believe are reasonable, the results of which form the basis for making judgments about the carrying values of assets, liabilities and equity and the amount of revenues and expenses. The full extent to which the COVID-19 pandemic directly or indirectly impacts our business, results of operations and financial condition, including sales, expenses, our allowance for expected credit losses, stock based compensation, the carrying value of our goodwill and other long-lived assets, financial assets, and valuation allowances for tax assets, will depend on future developments that are highly uncertain, including as a result of new information that may emerge concerning COVID-19 and the actions taken to contain it or treat it, as well as the economic impact on local, regional, national and international customers, suppliers and markets. We have made estimates of the ~~impact~~date of ~~COVID-19 within our~~the condensed consolidated financial ~~statements and there may be changes to those estimates in the near to mid-term as new information becomes available. Actual results may differ from these estimates.~~statements.

Russia and Ukraine Conflict - In response to the ongoing military conflict in Ukraine, several countries, including the United States, have imposed economic sanctions and export controls on certain industry sectors and parties in Russia. As a result of this conflict, including the aforementioned sanctions and overall instability in the region, in February 2022 we stopped accepting new orders in Russia and temporarily suspended fulfillment of existing orders. In March 2022, we made the decision to permanently cease all Company operations in Russia. We have ~~commenced~~substantially completed the necessary actions to cease operations of our Russian subsidiary, including taking steps to cancel existing contracts with customers and terminate our approximately 50 Russia-based employees and terminate other related contractual ~~commitments, and currently expect this process to continue throughout 2022.~~

In 2021 our Russian subsidiary had approximately $14 million of sales with an additional $36 million of sales from certain of our other foreign subsidiaries into the Russian market. As of March 31, 2022, the net assets held on our Russian subsidiary's balance sheet were $2.7 million, including $7.1 million of cash, $3.6 million of accounts receivables, a $9.3 million net intercompany payable position and other immaterial amounts. In addition, certain of our other foreign subsidiaries had open contracts with Russian customers that were subsequently cancelled for which revenue had been previously recognized over time utilizing the percentage of completion ("POC") method.commitments. As a result of the ~~above, in~~conflict and the resulting macroeconomic impacts, we have also experienced supply shortages and inflationary pressures.

In the first quarter of 2022, we recorded a

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~~$20.2~~ $20.2 million pre-tax charge ($21.0 million after-tax) to reserve the asset positions of our Russian subsidiary (excluding cash) as of March 31, 2022, to record a contra-revenue for previously recognized revenue and estimated cancellation fees on open contracts that were previously accounted for under POC and subsequently canceled, to establish a reserve for the estimated cost to exit the operations of our Russian subsidiary and to record a reserve for our estimated financial exposure on contracts that have or ~~are~~ anticipated to be ~~cancelled. We~~canceled.

In addition, we reevaluated our financial exposure as of ~~June 30,~~December 31, 2022 and ~~concluded that~~recorded an incremental $13.6 million pre-tax charge ($9.8 million after-tax) in the fourth quarter of 2022 for additional contract cancellation fees, to reserve ~~recorded~~our residual financial exposure due to increased Russia sanctions imposed during the latter part of 2022 and our decision to cancel backlog as ~~of March 31, 2022 is sufficient and no changes to material reserves were needed.~~

~~The following table presents the above impacts~~a result of the ~~Russia pre-tax charge:~~

Six Months Ended June 30, 2022
(Amounts in thousands) Flowserve Pump Division Flow Control Division Consolidated Total
Sales $ (5,429) $ (2) $ (5,431)
Cost of sales 3,510 1,112 4,622
Gross loss (8,939) (1,114) (10,053)
Selling, general and administrative expense 9,111 1,082 10,193
Operating loss $ (18,050) $ (2,196) $ (20,246)
additional sanctions.

We continue to monitor the situation involving Russia and Ukraine and its impact on the rest of our global business. This includes the macroeconomic impact, including with respect to global supply chain issues and inflationary pressures. We reevaluated our financial exposure as of June 30, 2023 and concluded that the reserve recorded as of December 31, 2022 is sufficient and no changes to material reserves were needed. To date, ~~these~~ impacts have not been material to our business and we do not currently expect that any incremental impact in future quarters, including any financial impacts caused by our cancellation of customer contracts and ceasing of operations in Russia, will be material to the Company.

The following table presents the above impacts of the Russia pre-tax charge in the first six months of 2022:

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	Six Months Ended June 30, 2022
(Amounts in thousands)		Flowserve Pump Division		Flow Control Division		Consolidated Total
Sales		$	(5,429)	$	(2)	$	(5,431)
Cost of sales ("COS")		3,510		1,112		4,622
Gross loss		(8,939)		(1,114)		(10,053)
Selling, general and administrative expense ("SG&A")		9,111		1,082		10,193
Operating loss		$	(18,050)	$	(2,196)	$	(20,246)

Acquisition — On February 9, 2023 the Company entered into a definitive agreement under which it will acquire all of the outstanding equity of Velan Inc., a manufacturer of highly engineered industrial valves, in an all cash transaction valued at approximately $245 million. The transaction remains subject to customary closing conditions, including applicable regulatory approvals. All such regulatory approvals have been obtained, other than French Foreign Investment Screening approvals. The timing of both such approval and the close of the transaction are currently uncertain.

Accounting Developments

Pronouncements ~~Not Yet~~ Implemented

In October 2021, the FASB issued ASU No. 2021-08, "Accounting for Contract Assets and Contract Liabilities from Contracts with Customers." The amendments in this ~~Update~~ASU improve comparability for both the recognition and measurement of acquired revenue contracts with customers at the date of and after a business combination. The amendments are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years and should be applied prospectively to business combinations occurring on or after the effective date of the amendments. ~~We do not expect the impact~~The adoption of this ASU ~~to be material.~~did not have a material impact on our condensed consolidated balance sheets, condensed consolidated statements of income or condensed consolidated statements of cash flows.

In ~~November 2021,~~September 2022, the FASB issued ASU No. ~~2021-10, "Government Assistance (Topic 832).~~2022-04, "Liabilities—Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations." The amendments require a buyer that uses supplier finance programs to make annual disclosures about the program’s key terms, the balance sheet presentation of related amounts, the confirmed amount outstanding at the end of the period and associated roll-forward information. Only the amount outstanding at the end of the period must be disclosed in ~~this ASU do not change GAAP and, therefore, are not expected to result in a significant change in practice. Rather,~~interim periods following the ~~amendments aim to provide increased transparency by requiring business entities to disclose information about certain types~~year of ~~government assistance they receive in the notes to the financial statements.~~adoption. The amendments are effective for ~~annual periods~~all entities for fiscal years beginning after December 15, ~~2021~~2022 on a retrospective basis, including interim periods within those fiscal years, except for the requirement to disclose roll-forward information, which is effective prospectively for fiscal years beginning after December 15, 2023.

We adopted ASU No. 2022-04 effective January 1, 2023. Flowserve partners with two banks to offer our suppliers the option of participating in a supplier financing program and ~~can~~receive payment early. Under the program agreement, Flowserve must reimburse each bank for approved and valid invoices in accordance with the originally agreed upon terms with the supplier. Flowserve has no obligation for fees; subscription, service, commissions or otherwise with either bank. Flowserve also has no obligation for pledged assets or other forms of guarantee and may terminate either program agreement with appropriate notice. As of June 30, 2023, $13.5 million remained outstanding with the supply chain financing partner banks and recorded within accounts payable on our condensed consolidated balance sheet.

Pronouncements Not Yet Implemented

In March 2023, the FASB issued ASU No. 2023-01, "Leases (Topic 842): Common Control Arrangements." The amendments permits leasehold improvements to be ~~applied either prospectively or retrospectively.~~amortized over the useful life of the asset when the lessee controls the use of the underlying asset and the lease is between common control entities. The amendments further allow entities to account for leasehold improvements as a transfer of assets between entities under common control through an equity adjustment when the lessee is no longer in control of the underlying asset. The amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. We do not expect the impact of this ASU to be material.

In March ~~2022,~~2023, the FASB issued ASU No. ~~2022-02, "Troubled Debt Restructurings~~2023-02, "Equity Method and ~~Vintage Disclosures.~~Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method." The amendments ~~eliminate~~allow companies to account for all of their tax equity investments using the ~~accounting guidance for troubled debt restructurings by creditors that have adopted~~proportional amortization method if certain conditions are met. Companies can elect to apply the Current Expected Credit Loss ("CECL") model and enhance the disclosure requirements for loan refinancing and restructurings made with borrowers experiencing financial difficulty. In addition, the amendments require disclosure of current-period gross write-offs for financing receivables and netproportional amortization method on a tax-credit-program-by-tax-credit-program rather than unilaterally or on an individual investment ~~in leases by year of origination in the vintage disclosures.~~basis. The amendments are effective on either a modified retrospective or retrospective basis for fiscal years beginning after December 15, ~~2022,~~2023, including interim periods within those fiscal years, ~~and should be applied prospectively.~~depending on whether the company elects to evaluate its investments for which it still expects to receive income tax credits or

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other income tax benefits as of the beginning of the period of adoption or at the beginning of the earliest period presented. We ~~are evaluating~~do not expect the impact of this ASU ~~on our disclosures.~~to be material.

2.Revenue Recognition

The majority of our revenues relate to customer orders that typically contain a single commitment of goods or services which have lead times under a year. Longer lead time, more complex contracts with our customers typically have multiple commitments of goods and services, including any combination of designing, developing, manufacturing, modifying, installing and commissioning of flow management equipment and providing services and parts related to the performance of such products. Control transfers over time when the customer is able to direct the use of and obtain substantially all of the benefits of our work as we perform. Service-related revenues do not typically represent a significant portion of contracts with our customers and do not meet the ~~asset.~~

8thresholds requiring separate disclosure.

~~Table of~~ ~~Contents~~

~~Our primary method for recognizing revenue over time is the~~ ~~POC method.~~ Revenue from products and services transferred to customers over time accounted for approximately ~~13%~~15% and ~~15%~~13% of total revenue for the three month period ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively, and ~~12%~~15% and ~~16%~~12% for the six month period ended June 30, 2023 and 2022, ~~and 2021,~~ respectively. Our primary method for recognizing revenue over time is the POC method. If control does not transfer over time, then control transfers at a point in time. We recognize revenue at a point in time at the level of each performance obligation based on the evaluation of certain indicators of control transfer, such as title transfer, risk of loss transfer, customer acceptance and physical possession. Revenue from products and services transferred to customers at a point in time accounted for approximately ~~87%~~85% and ~~85%~~87% of total revenue for the three month period ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively, and ~~88%~~85% and ~~84%~~88% for the six month period ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively. Refer to Note 32 to our consolidated financial statements included in our ~~2021~~2022 Annual Report for a more comprehensive discussion of our policies and accounting practices of revenue recognition.

Disaggregated Revenue

We conduct our operations through 2two business segments based on the type of product and how we manage the business:

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

•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.

Our revenue sources are derived from our original equipment manufacturing and our aftermarket sales and services. Our original equipment revenues are generally related to originally designed, manufactured, distributed and installed equipment that can range from pre-configured, short-cycle products to more customized, highly-engineered equipment ("Original Equipment"). Our aftermarket sales and services are derived from sales of replacement equipment, as well as maintenance, advanced diagnostic, repair and retrofitting services ("Aftermarket"). Each of our 2two business segments generate Original Equipment and Aftermarket revenues.

The following tables present our customer revenues disaggregated by revenue source:


		Three Months Ended June 30, 2022							Three Months Ended June 30, 2023
(Amounts in thousands)	(Amounts in thousands)	FPD		FCD		Total		(Amounts in thousands)	FPD		FCD		Total
Original Equipment	Original Equipment	$	212,760	$	198,597	$	411,357	Original Equipment	$	284,053	$	233,770	$	517,823
Aftermarket	Aftermarket	401,665		69,200		470,865		Aftermarket	480,798		81,755		562,553
		$	614,425	$	267,797	$	882,222		$	764,851	$	315,525	$	1,080,376

		Three Months Ended June 30, 2021							Three Months Ended June 30, 2022
		FPD		FCD		Total			FPD		FCD		Total
Original Equipment	Original Equipment	$	220,387	$	214,097	$	434,484	Original Equipment	$	212,760	$	198,597	$	411,357
Aftermarket	Aftermarket	397,047		66,647		463,694		Aftermarket	401,665		69,200		470,865
		$	617,434	$	280,744	$	898,178		$	614,425	$	267,797	$	882,222

Six Months Ended June 30, 2022
(Amounts in thousands) FPD FCD Total
Original Equipment $ 413,100 $ 381,439 $ 794,539
Aftermarket 775,312 133,429 908,741
$ 1,188,412 $ 514,868 $ 1,703,280
Six Months Ended June 30, 2021
FPD FCD Total
Original Equipment $ 434,541 $ 406,817 $ 841,358
Aftermarket 785,059 129,069 914,128
$ 1,219,600 $ 535,886 $ 1,755,486

Table of Contents



	Six Months Ended June 30, 2023
(Amounts in thousands)	FPD		FCD		Total
Original Equipment	$	536,785	$	444,522	$	981,307
Aftermarket	927,545		151,829		1,079,374
	$	1,464,330	$	596,351	$	2,060,681

	Six Months Ended June 30, 2022
	FPD		FCD		Total
Original Equipment	$	413,100	$	381,439	$	794,539
Aftermarket	775,312		133,429		908,741
	$	1,188,412	$	514,868	$	1,703,280

Our customer sales are diversified geographically. The following tables present our revenues disaggregated by geography, based on the shipping addresses of our customers:


	Three Months Ended June 30, 2023
(Amounts in thousands)	FPD		FCD		Total
North America(1)	$	317,994	$	143,446	$	461,440
Latin America(2)	63,107		7,190		70,297
Middle East and Africa	130,158		36,536		166,694
Asia Pacific	110,390		72,510		182,900
Europe	143,202		55,843		199,045
	$	764,851	$	315,525	$	1,080,376

	Three Months Ended June 30, 2022
	FPD		FCD		Total
North America(1)	$	265,657	$	119,791	$	385,448
Latin America(2)	48,294		4,955		53,249
Middle East and Africa	84,935		22,049		106,984
Asia Pacific	97,557		72,418		169,975
Europe	117,982		48,584		166,566
	$	614,425	$	267,797	$	882,222

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Three Months Ended June 30, 2022
(Amounts in thousands) FPD FCD Total
North America(1) $ 265,657 $ 119,791 $ 385,448
Latin America(2) 48,294 4,955 53,249
Middle East and Africa 84,935 22,049 106,984
Asia Pacific 97,557 72,418 169,975
Europe 117,982 48,584 166,566
$ 614,425 $ 267,797 $ 882,222
Three Months Ended June 30, 2021
FPD FCD Total
North America(1) $ 243,611 $ 98,118 $ 341,729
Latin America(2) 52,219 8,879 61,098
Middle East and Africa 69,662 26,530 96,192
Asia Pacific 119,375 88,944 208,319
Europe 132,567 58,273 190,840
$ 617,434 $ 280,744 $ 898,178


		Six Months Ended June 30, 2022							Six Months Ended June 30, 2023
(Amounts in thousands)	(Amounts in thousands)	FPD		FCD		Total		(Amounts in thousands)	FPD		FCD		Total
North America(1)	North America(1)	$	504,368	$	227,429	$	731,797	North America(1)	$	600,258	$	269,124	$	869,382
Latin America(2)	Latin America(2)	95,914		10,504		106,418		Latin America(2)	127,102		15,055		142,157
Middle East and Africa	Middle East and Africa	156,636		43,398		200,034		Middle East and Africa	244,524		64,931		309,455
Asia Pacific	Asia Pacific	199,156		140,209		339,365		Asia Pacific	223,774		140,342		364,116
Europe	Europe	232,338		93,328		325,666		Europe	268,672		106,899		375,571
		$	1,188,412	$	514,868	$	1,703,280		$	1,464,330	$	596,351	$	2,060,681

		Six Months Ended June 30, 2021							Six Months Ended June 30, 2022
		FPD		FCD		Total			FPD		FCD		Total
North America(1)	North America(1)	$	467,582	$	188,368	$	655,950	North America(1)	$	504,368	$	227,429	$	731,797
Latin America(2)	Latin America(2)	94,256		15,694		109,950		Latin America(2)	95,914		10,504		106,418
Middle East and Africa	Middle East and Africa	152,207		54,226		206,433		Middle East and Africa	156,636		43,398		200,034
Asia Pacific	Asia Pacific	244,027		167,600		411,627		Asia Pacific	199,156		140,209		339,365
Europe	Europe	261,528		109,998		371,526		Europe	232,338		93,328		325,666
		$	1,219,600	$	535,886	$	1,755,486		$	1,188,412	$	514,868	$	1,703,280

(1) North America represents the United States and Canada.

(2) Latin America includes Mexico.

On June 30, ~~2022,~~2023, the aggregate transaction price allocated to unsatisfied (or partially unsatisfied) performance obligations was approximately ~~$562~~$751 million. We estimate recognition of approximately ~~$258~~$276 million of this amount as revenue in the remainder of ~~2022~~2023 and an additional ~~$304~~$475 million in ~~2023~~2024 and thereaft~~thereafter.~~er.

Contract Balances

We receive payment from customers based on a contractual billing schedule and specific performance requirements as established in our contracts. We record billings as accounts receivable when an unconditional right to consideration exists. A contract asset represents revenue recognized in advance of our right to receive payment under the terms of a contract. A contract liability represents our right to receive payment in advance of revenue recognized for a contract.

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The following tables present beginning and ending balances of contract assets and contract liabilities, current and long-term, for the six months ended June 30, ~~2022~~2023 and ~~2021:~~2022:


(Amounts in thousands)	(Amounts in thousands)	Contract Assets, net (Current)		Long-term Contract Assets, net(1)		Contract Liabilities (Current)		Long-term Contract Liabilities(2)		(Amounts in thousands)	Contract Assets, net (Current)		Long-term Contract Assets, net(1)		Contract Liabilities (Current)		Long-term Contract Liabilities(2)
Beginning balance, January 1, 2022		$	195,598	$	426	$	202,965	$	464
Beginning balance, January 1, 2023										Beginning balance, January 1, 2023	$	233,457	$	297	$	256,963	$	1,059
Revenue recognized that was included in contract liabilities at the beginning of the period	Revenue recognized that was included in contract liabilities at the beginning of the period	—		—		(118,177)		—		Revenue recognized that was included in contract liabilities at the beginning of the period	—		—		(169,722)		—
Revenue recognized in the period in excess of billings	Revenue recognized in the period in excess of billings	256,608		1,659		—		—		Revenue recognized in the period in excess of billings	301,548		—		—		—
Billings arising during the period in excess of revenue recognized	Billings arising during the period in excess of revenue recognized	—		—		122,502		—		Billings arising during the period in excess of revenue recognized	—		—		176,491		661
Amounts transferred from contract assets to receivables	Amounts transferred from contract assets to receivables	(246,405)		(380)		230		—		Amounts transferred from contract assets to receivables	(310,232)		(301)		—		—

Currency effects and other, net	Currency effects and other, net	(8,673)		(1,671)		(2,345)		(19)		Currency effects and other, net	2,863		473		5,993		5,851
Ending balance, June 30, 2022		$	197,128	$	34	$	205,175	$	445
Ending balance, June 30, 2023										Ending balance, June 30, 2023	$	227,636	$	469	$	269,725	$	7,571


(Amounts in thousands)	(Amounts in thousands)	Contract Assets, net (Current)		Long-term Contract Assets, net(1)		Contract Liabilities (Current)		Long-term Contract Liabilities(2)		(Amounts in thousands)	Contract Assets, net (Current)		Long-term Contract Assets, net(1)		Contract Liabilities (Current)		Long-term Contract Liabilities(2)
Beginning balance, January 1, 2021		$	277,734	$	1,139	$	194,227	$	822
Beginning balance, January 1, 2022										Beginning balance, January 1, 2022	$	195,598	$	426	$	202,965	$	464
Revenue recognized that was included in contract liabilities at the beginning of the period	Revenue recognized that was included in contract liabilities at the beginning of the period	—		—		(112,835)		—		Revenue recognized that was included in contract liabilities at the beginning of the period	—		—		(118,177)		—
Revenue recognized in the period in excess of billings	Revenue recognized in the period in excess of billings	321,040		54		—		—		Revenue recognized in the period in excess of billings	256,608		1,659		—		—
Billings arising during the period in excess of revenue recognized	Billings arising during the period in excess of revenue recognized	—		—		126,591		—		Billings arising during the period in excess of revenue recognized	—		—		122,502		—
Amounts transferred from contract assets to receivables	Amounts transferred from contract assets to receivables	(326,634)		(28)		—		—		Amounts transferred from contract assets to receivables	(246,405)		(380)		230		—

Currency effects and other, net	Currency effects and other, net	(9,909)		(86)		1,109		(19)		Currency effects and other, net	(8,673)		(1,671)		(2,345)		(19)
Ending balance, June 30, 2021		$	262,231	$	1,079	$	209,092	$	803
Ending balance, June 30, 2022										Ending balance, June 30, 2022	$	197,128	$	34	$	205,175	$	445

(1) Included in other assets, net.

(2) Included in retirement obligations and other liabilities.

3.Allowance for Expected Credit Losses

The allowance for credit losses is an estimate of the credit losses expected over the life of our financial assets and instruments. We assess and measure expected credit losses on a collective basis when similar risk characteristics exist, including market, geography, credit risk and remaining duration. Financial assets and instruments that do not share risk characteristics are evaluated on an individual basis. Our estimate of the allowance is assessed and quantified using internal and external valuation information relating to past events, current conditions and reasonable and supportable forecasts over the contractual terms of an asset.

Our primary exposure to expected credit losses is through our trade receivables and contract assets. For these financial assets, we record an allowance for expected credit losses that, when deducted from the gross asset balance, presents the net amount expected to be collected. Primarily, our experience of historical credit losses provides the basis for our estimation of the allowance. We estimate the allowance based on an aging schedule and according to historical losses as determined from our history of billings and collections. Additionally, we adjust the allowance for factors that are specific to our customers’ credit risk such as financial difficulties, liquidity issues, insolvency, and country and geopolitical risks. We also consider both the current and forecasted macroeconomic conditions as of the reporting date. As identified and needed, we adjust the allowance and recognize adjustments in the income statement each period. Trade receivables are written off against the allowance in the period when the receivable is deemed to be uncollectible. Subsequent recoveries of previously written off amounts are reflected as a reduction to credit impairment losses in the condensed consolidated statements of income.

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Contract assets represent a conditional right to consideration for satisfied performance obligations that become a receivable when the conditions are satisfied. Generally, contract assets are recorded when contractual billing schedules differ from revenue recognition based on timing and are managed through the revenue recognition process. Based on our historical credit loss experience, the current expected credit loss for contract assets is estimated to be approximately 1% of the asset balance.

The following table presents the changes in the allowance for expected credit losses for our ~~trade receivables~~accounts receivable and short-term contract assets for the six months ended June 30, ~~2022~~2023 and ~~2021:~~2022:


(Amounts in thousands)	(Amounts in thousands)	Trade receivables		Contract assets		(Amounts in thousands)	Trade receivables		Contract assets
Beginning balance, January 1, 2023						Beginning balance, January 1, 2023	$	83,062	$	5,819
Charges to cost and expenses, net of recoveries						Charges to cost and expenses, net of recoveries	2,645		—
Write-offs						Write-offs	(2,891)		(1,406)
Currency effects and other, net						Currency effects and other, net	1,542		7
Ending balance, June 30, 2023						Ending balance, June 30, 2023	$	84,358	$	4,420

Beginning balance, January 1, 2022	Beginning balance, January 1, 2022	$	74,336	$	2,393	Beginning balance, January 1, 2022	$	74,336	$	2,393
Charges to cost and expenses, net of recoveries	Charges to cost and expenses, net of recoveries	6,763		1,338		Charges to cost and expenses, net of recoveries	6,763		1,338
Write-offs	Write-offs	(600)		—		Write-offs	(600)		—
Currency effects and other, net	Currency effects and other, net	(1,723)		(27)		Currency effects and other, net	(1,723)		(27)
Ending balance, June 30, 2022	Ending balance, June 30, 2022	$	78,776	$	3,704	Ending balance, June 30, 2022	$	78,776	$	3,704

Beginning balance, January 1, 2021		$	75,176	$	3,205
Charges to cost and expenses, net of recoveries		865		—
Write-offs		(2,015)		—
Currency effects and other, net		756		(167)
Ending balance, June 30, 2021		$	74,782	$	3,038

Our allowance on long-term receivables, included in other assets, net, represent receivables with collection periods longer than 12 months and the balance primarily consists of reserved receivables associated with the national oil company in Venezuela. The following table presents the changes in the allowance for long-term receivables for the six months ended June 30, ~~2022~~2023 and ~~2021:~~2022:


(Amounts in thousands)	(Amounts in thousands)	2022		2021		(Amounts in thousands)	2023		2022
Balance at January 1	Balance at January 1	$	67,696	$	67,842	Balance at January 1	$	66,377	$	67,696

Currency effects and other, net	Currency effects and other, net	272		(72)		Currency effects and other, net	480		272
Balance at June 30	Balance at June 30	$	67,968	$	67,770	Balance at June 30	$	66,857	$	67,968

We also have exposure to credit losses from off-balance sheet exposures, such as financial guarantees and standby letters of credit, where we believe the risk of loss is immaterial to our financial statements as of June 30, ~~2022.~~2023.

4.Stock-Based Compensation Plans

We maintain the Flowserve Corporation 2020 Long-Term Incentive Plan (“2020 Plan”), which is a shareholder approved plan authorizing the issuance of 12,500,000 shares of our common stock in the form of restricted shares, restricted share units and performance-based units (collectively referred to as "Restricted Shares"), incentive stock options, non-statutory stock options, stock appreciation rights and bonus stock. Of the shares of common stock authorized under the 2020 Plan~~9,669,056~~, 8,244,139 were available for issuance as of June 30, ~~2022.~~2023. Restricted Shares primarily vest over a three year period. Restricted Shares granted to employees who retire and have achieved at least 55 years of age and 10 years of service continue to vest over the original vesting period ("55/10 Provision"). As of June 30, ~~2022,~~ 2023, 114,943 stock options were outstanding. No stock options ~~were~~have been granted or vested ~~during the six months ended June 30, 2022 and 2021~~.since 2020.

Restricted Shares – Awards of Restricted Shares are valued at the closing market price of our common stock on the date of grant. The unearned compensation is amortized to compensation expense over the vesting period of the restricted shares, except for awards related to the 55/10 Provision which are expensed in the period granted. We had unearned ~~compensati~~compensatonion of ~~$34.0~~$30.6 million and ~~$24.2~~$18.0 million at June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively, which is expected to be recognized over a remaining weighted-average period of approximately one year. These amounts will be recognized into net earnings in prospective periods as the awards vest. The total fair value of Restricted Shares vested during both the three months ended June 30, 2023 and 2022 ~~and 2021~~ was ~~$1.9 million~~ ~~and $0.9 million~~, ~~respectively.~~$1.9 million. The total fair value of Restricted Shares vested during the six months ended June 30, ~~2022~~2023 and ~~2021~~2022 was ~~$22.5~~$23.7 million and ~~$24.4~~$22.5 million, respectively.

We recorded stock-based compensation expense ofof $4.6 million ($5.9 million pre-tax) ~~and $5.1 million ($6.7 million pre-tax)~~ for both the three months ended June 30, 2023 and 2022, ~~and 2021,~~ respectively. We recorded stock-based compensation expense o~~f $13.1~~

~~Table~~ of ~~Contents~~

$12.3 million ($~~16.9~~15.9 million pre-tax) and ~~$12.7~~$13.1 million ($~~16.5~~16.9 million pre-tax) for the six months ended June 30, 2023 and 2022, ~~and 2021, respectively.~~respectively.

Table of Contents

The following table summarizes information regarding Restricted Shares:


		Six Months Ended June 30, 2022				Six Months Ended June 30, 2023
		Shares	Weighted Average Grant-Date Fair Value			Shares	Weighted Average Grant-Date Fair Value
Number of unvested shares:	Number of unvested shares:				Number of unvested shares:
Outstanding as of January 1, 2022		1,671,011	$	43.06
Outstanding as of January 1, 2023					Outstanding as of January 1, 2023	1,697,779	$	37.17
Granted	Granted	967,278	32.93		Granted	908,866	36.16
Vested	Vested	(523,055)	43.03		Vested	(630,529)	37.61
Forfeited	Forfeited	(214,147)	45.72		Forfeited	(198,545)	44.22
Outstanding as of June 30, 2022		1,901,087	$	37.62
Outstanding as of June 30, 2023					Outstanding as of June 30, 2023	1,777,571	$	35.71

Unvested Restricted Shares outstanding as of June 30, ~~2022~~2023 included approximately ~~481,000~~470,000 units with performance-based vesting provisions issuable in common stock and vest upon the achievement of pre-defined performance metrics. Targets for outstanding performance awards are based on our average return on invested capital ~~total shareholder return ("TSR") or~~and free cash flow as a percent of net income over a three-year period. Performance units issued in 2023, 2022 and 2021 include a secondary measure, relative ~~TSR,~~total shareholder return, which can increase or decrease the number of vesting units by 15% depending on the Company's performance versus ~~peers.~~peers. Performance units issued ~~in 2022 and 2021~~ have a vesting percentage ~~between 0% and~~up to 230%. ~~Performance units issued in 2020 have a vesting percentage between 0% and 200%.~~Com ~~Compensation~~pensation expense is recognized ratably over a cliff-vesting period of 36 months, based on the fair value of our common stock on the date of grant, adjusted for actual forfeitures. During the performance period, earned and unearned compensation expense is adjusted based on changes in ~~the~~the expected achievement of the performance targets for all performance-based units ~~granted except for the TSR-based units.~~granted. Vesting provisions range from 0 to approximately ~~1,059,000~~1,081,000 shares based on performance targets. As of June 30, ~~2022,~~2023, we estimate vesting of approximately ~~410,000~~368,000 shares based on ~~expected~~expected achievement of performance targets.

5.Derivative Instruments and Hedges

Our risk management and foreign currency derivatives and hedging policy specifies the conditions under which we may enter into derivative contracts. See Notes 1 and 98 to our consolidated financial statements included in our ~~2021~~2022 Annual Report and Note 7 of this Quarterly Report for additional information on our derivatives. We enter into foreign exchange forward contracts to hedge our cash flow risks associated with transactions denominated in currencies other than the local currency of the operation engaging in the transaction. We have not elected hedge accounting for our foreign exchange forward contracts and the changes in the fair values are recognized immediately in our condensed consolidated statements of income.

Foreign exchange forward contracts with third parties had a notional value of ~~$413.9~~$683.3 million and ~~$425.2~~$459.2 million at June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively. At June 30, ~~2022,~~2023, the length of foreign exchange forward contracts currently in place ranged from 216 days to 3220 months.

We are exposed to risk from credit-related losses resulting from nonperformance by counterparties to our financial instruments. We perform credit evaluations of our counterparties under foreign exchange forward contracts agreements and expect all counterparties to meet their obligations. We have not experienced credit losses from our counterparties.

The fair values of foreign exchange forward contracts are summarized below:


		June 30,		December 31,			June 30,		December 31,
(Amounts in thousands)	(Amounts in thousands)	2022		2021		(Amounts in thousands)	2023		2022
Current derivative assets	Current derivative assets	$	831	$	740	Current derivative assets	$	4,310	$	2,207
Noncurrent derivative assets	Noncurrent derivative assets	—		2		Noncurrent derivative assets	10		66
Current derivative liabilities	Current derivative liabilities	5,050		2,924		Current derivative liabilities	3,100		4,422
Noncurrent derivative liabilities	Noncurrent derivative liabilities	112		82		Noncurrent derivative liabilities	23		63

Current and noncurrent derivative assets are reported in our condensed consolidated balance sheets in prepaid expenses and other and other assets, net, respectively. Current and noncurrent derivative liabilities are reported in our condensed consolidated balance sheets in accrued liabilities and retirement obligations and other liabilities, respectively.

The impact of net changes in the fair values of foreign exchange forward contracts are summarized below:


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
(Amounts in thousands)	(Amounts in thousands)	2022		2021		2022		2021		(Amounts in thousands)	2023		2022		2023		2022
Gains (losses) recognized in income	Gains (losses) recognized in income	$	2,592	$	(4,312)	$	233	$	1,793	Gains (losses) recognized in income	$	258	$	2,592	$	(1,725)	$	233

Gains and losses recognized in our condensed consolidated statements of income for foreign exchange forward contracts are classified as other income (expense), net.

As a means of managing the volatility of foreign currency exposure with the Euro/U.S. dollar exchange rate, we ~~enter~~entered into cross-currency swap agreements ("Swaps") as a hedge of our Euro investment in certain of our international subsidiaries. Accordingly, on April 14, 2021 and March 9, 2021, we entered into ~~cross currency swap agreements,~~Swaps, with both having termination dates of October 1, 2030 and the March 9, 2021 cross currency swap having an early termination date of March 11, 2025. Also, during the third quarter of 2020 we entered into a cross currency swap agreement with a termination date of October 1, 2030 and an early termination date of September 22, 2025. The swap agreements ~~are~~were designated as net investment hedges and ~~as of June 30, 2022 the combined notional value of these swaps~~ ~~was €423.2 million. The swaps are~~ classified as Level II under the fair value hierarchy. On December 20, 2022 all outstanding swap agreements were early terminated resulting in net cash proceeds received of $66.0 million. Prior to the early termination the cross-currency swaps had a combined notional value of €423.2 million and a fair value of $68.2 million.

~~The fair values of our~~ ~~cross-currency swaps~~ ~~are summarized below:~~

June 30, December 31,
(Amounts in thousands) 2022 2021
Other assets, net $ 68,990 $ 23,129

~~We exclude~~Prior to early termination we excluded the interest accruals on the swaps from the assessment of hedge effectiveness and recognize the interest accruals in earnings within interest expense. For each reporting period, the change in the fair value of the swaps attributable to changes in the spot rate and differences between the change in the fair value of the excluded components and the amounts recognized in earnings under the swap accrual process are reported in accumulated other comprehensive loss ("AOCL") on our consolidated balance sheet. For the three and six months ending June 30, 2022 an interest accrual of $2.1 million and $4.2 million ~~respectively,~~ was recognized within interest expense in our condensed consolidated statements of income. ~~For the three months and six months ending June 30, 2021, an interest accrual of $1.8 million and $2.4 million, respectively, was recognized within interest expense.~~

The cumulative net investment hedge (gains) losses, net of deferred taxes, under cross-currency swaps recorded in AOCL on our condensed consolidated balance sheet are summarized below:


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
(Amounts in thousands)	(Amounts in thousands)	2022		2021		2022		2021		(Amounts in thousands)	2023		2022		2023		2022
(Gain) loss-included component (1)	(Gain) loss-included component (1)	$	(18,870)	$	1,798	$	(44,256)	$	185	(Gain) loss-included component (1)	$	—	$	(18,870)	$	—	$	(44,256)
(Gain) loss-excluded component (2)	(Gain) loss-excluded component (2)	(7,634)		(11,749)		(8,508)		3,890		(Gain) loss-excluded component (2)	—		(7,634)		—		(8,508)
(Gain) loss recognized in AOCL	(Gain) loss recognized in AOCL	$	(26,504)	$	(9,951)	$	(52,764)	$	4,075	(Gain) loss recognized in AOCL	$	—	$	(26,504)	$	—	$	(52,764)

(1) Change in the fair value of the swaps attributable to changes in spot rates.

(2) Change in the fair value of the swaps due to changes other than those attributable to spot rates.

~~In March 2015, we designated €255.7 million of our 1.25% E~~UR 2022 Senior Notes ("2022 Euro Senior Notes") as a net investment hedge of our Euro investment in certain of our international subsidiaries. On September 22, 2020, we increased the designated hedged value on the 2022 Euro Senior Notes to ~~€336.3 million, which reflected the remaining balance of the 2022 Euro Senior Notes.~~ For each reporting period, the change in the carrying value due to the remeasurement of the effective portion was reported in AOCL on our condensed consolidated balance sheet and the remaining change in the carrying value of the ineffective portion, if any, was recognized in other income (expense), net in our condensed consolidated statements of income. As a result of the redemption of our 2022 Euro Senior Notes in the first quarter of 2021, we dedesignated the hedged value of our net investment hedge.

Prior to the dedesignation, the cumulative impact recorded in AOCL on our condensed consolidated balance sheet from the change in carrying value due to the remeasurement of the effective portion of the net investment hedge is summarized below:

Three Months Ended June 30, Six Months Ended June 30,
(Amounts in thousands) 2022 2021 2022 2021
Loss recognized in AOCL $ — $ — $ — $ 29,554

~~We use the spot method to measure the effectiveness of our net investment hedges and evaluate the effectiveness on a prospective basis at the beginning of each quarter.~~ ~~We did not record any ineffectiveness~~ ~~during the three and~~ ~~six~~ ~~months ended June 30, 2022 and 2021, respectively.~~14

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6.Debt

Debt, including finance lease obligations, net of discounts and debt issuance costs, consisted of:


		June 30,		December 31,			June 30,		December 31,
(Amounts in thousands, except percentages)	(Amounts in thousands, except percentages)	2022		2021		(Amounts in thousands, except percentages)	2023		2022
3.50% USD Senior Notes due October 1, 2030, net of unamortized discount and debt issuance costs of $5,335 and $5,611, respectively		$	494,665	$	494,389
2.80% USD Senior Notes due January 15, 2032, net of unamortized discount and debt issuance costs of $6,003 and $6,273, respectively		493,997		493,727
Term Loan Facility, interest rate of 3.50% at June 30, 2022 and 1.45% at December 31, 2021, net of debt issuance costs of $540 and $639, respectively		276,960		291,861
3.50% USD Senior Notes due October 1, 2030, net of unamortized discount and debt issuance costs of $4,770 and $5,055, respectively						3.50% USD Senior Notes due October 1, 2030, net of unamortized discount and debt issuance costs of $4,770 and $5,055, respectively	$	495,230	$	494,945
2.80% USD Senior Notes due January 15, 2032, net of unamortized discount and debt issuance costs of $5,447 and $5,727, respectively						2.80% USD Senior Notes due January 15, 2032, net of unamortized discount and debt issuance costs of $5,447 and $5,727, respectively	494,553		494,273
Term Loan Facility, interest rate of 6.59% at June 30, 2023 and 5.98% at December 31, 2022, net of debt issuance costs of $357 and $444, respectively						Term Loan Facility, interest rate of 6.59% at June 30, 2023 and 5.98% at December 31, 2022, net of debt issuance costs of $357 and $444, respectively	239,643		259,556
Revolving Credit Facility, interest rate of 6.61% at June 30, 2023						Revolving Credit Facility, interest rate of 6.61% at June 30, 2023	50,000		—
Finance lease obligations and other borrowings	Finance lease obligations and other borrowings	22,320		22,851		Finance lease obligations and other borrowings	21,608		24,712
Debt and finance lease obligations	Debt and finance lease obligations	1,287,942		1,302,828		Debt and finance lease obligations	1,301,034		1,273,486
Less amounts due within one year	Less amounts due within one year	46,306		41,058		Less amounts due within one year	55,781		49,335
Total debt due after one year	Total debt due after one year	$	1,241,636	$	1,261,770	Total debt due after one year	$	1,245,253	$	1,224,151

~~Senior Notes~~

~~On March 19, 2021, we redeemed the remaining~~ ~~$400.9 million of our 2022 Euro Senior Notes and recorded a loss on early extinguishment of~~ ~~$7.6 million~~ ~~in the first quarter of~~ ~~2021, which included the impact of a $6.6 million make-whole premium~~.

Senior Credit Facility

As discussed in Note 1312 to our consolidated financial statements included in our ~~2021~~2022 Annual Report, ~~we amended~~ our credit agreement ~~("Amended and Restated~~(the "Senior Credit Agreement") under our Senior Credit Facility ("Credit Facility") with Bank of America, N.A. ("Administrative Agent") and the other lenders to provide greater flexibility in maintaining adequate liquidity and access to available borrowings. The Amended and Restated Credit Agreement, (i) retained, from the previous credit agreement, theprovides a $800.0 million unsecured ~~Revolving~~revolving credit facility (the "Revolving Credit ~~Facility,~~Facility"), which includes a $750.0 million sublimit for the issuance of letters of credit and a $30.0 million sublimit for swing line loans ~~(ii) provides for an up to~~and a $300 million unsecured ~~Term Loan Facility~~term loan facility (the "Term ~~Loan"~~Loan Facility")~~, (iii) extends the~~ with a maturity date of ~~the agreement to~~ September 13, 2026, (iv) reduces commitment fees, (v) extends net leverage ratio covenant definition through the maturity of the agreement, and (vi) provides the ability to make certain adjustments to the otherwise applicable commitment fee, interest rate and letter of credit fees based on the Company’s performance against to-be-established key performance indicators with respect to certain of the Company’s environmental, social and governance targets.2026.

The interest rates per annum applicable to the Revolving Credit Facility, ~~are unchanged under the Amended and Restated Credit Agreement. The interest rates per annum applicable to the Credit Facility,~~ other than with respect to swing line loans, are ~~LIBOR~~Term Secured Overnight Financing Rate ("Term SOFR") plus between 1.000% to 1.750%, depending on our debt rating by either Moody’s Investors Service, Inc. ("Moody's") or Standard & Poor’s Financial Services LLC ("S&P"), or, at our option, the Base Rate (as defined in the ~~Amended and Restated~~Senior Credit Agreement) plus between 0.000% to 0.750% depending on our debt rating by either Moody’s or S&P. At June 30, ~~2022,~~2023, the interest rate on the Revolving Credit Facility was ~~LIBOR~~the Term Secured Overnight Financing Rate ("SOFR") plus 1.375% in the case of ~~LIBOR~~Term SOFR loans and the Base Rate plus 0.375% in the case of Base Rate loans. In addition, a commitment fee is payable quarterly in arrears on the daily unused portions of the Revolving Credit Facility. The commitment fee will be between 0.080% and 0.250% of unused amounts under the Revolving Credit Facility depending on our debt rating by either Moody’s or S&P. The commitment fee was 0.175% (per annum) during the ~~three and~~ period~~six~~ ended June 30, ~~2022.~~2023.

Under the terms and conditions of ~~the Amended and Restated~~Senior Credit Agreement, interest rates per annum applicable to the Term Loan Facility are stated as ~~LIBOR~~Term SOFR plus between 0.875% to 1.625%, depending on the Company’s debt rating by either Moody’s

or S&P, or, at the option of the Company, the Base Rate plus between 0.000% to 0.625% depending on the Company’s debt rating by either Moody’s or S&P.

As of June 30, ~~2022~~2023 and December 31, ~~2021, we had no revolving loans outstanding and~~2022, we had outstanding letters of credit of ~~$66.2~~$103.8 million and ~~$78.3~~$71.7 million, atrespectively. During the second quarter of 2023 the Company borrowed on the Revolving Credit Facility for general corporate purposes and as of June 30, ~~2022 and December 31, 2021, respectively.~~ 2023 had $50.0 million outstanding. As of August 1, 2023, the outstanding balance was $90 million after incremental borrowing of $40 million during the third quarter of 2023. After consideration of the financial covenants under our Senior Credit Facility, outstanding short-term borrowings and outstanding letters of credit as of June 30, ~~2022,~~ 2023, the amount available for borrowings was limited to ~~$277.1 million~~.$553.8 million. As of December 31, ~~2021, t~~he2022, the amount available for borrowings under our Revolving Credit Facility was ~~$614.2~~$293.9 million.

Our compliance with applicable financial covenants under the Senior Notes and Senior Credit Facility are tested quarterly. We were in compliance with all applicable covenants as of June 30, ~~2022.~~2023. We have scheduled repayments ~~on our~~ ~~Term Loan~~ of ~~$7.5~~$10.0 million due in each of the ~~third quarter of 2022~~next two quarters and ~~$10.0~~$15.0 million due in each of the subsequent ~~three~~two quarters through June 30, ~~2023~~2024 on our Term Loan.

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7.Fair Value

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Where available, fair value is based on observable market prices or parameters or derived from such prices or parameters. Where observable prices or inputs are not available, valuation models may be applied. Assets and liabilities recorded at fair value in our condensed consolidated balance sheets are categorized by hierarchical levels based upon the level of judgment associated with the inputs used to measure their fair values. Recurring fair value measurements are limited to investments in derivative instruments. The fair value measurements of our derivative instruments are determined using models that maximize the use of the observable market inputs including interest rate curves and both forward and spot prices for currencies, and are classified as Level II under the fair value hierarchy. The fair values of our derivatives are included in Note 5.

The carrying value of our financial instruments as reflected in our condensed consolidated balance sheets approximates fair value, with the exception of our long-term debt. The estimated fair value of our long-term debt, excluding the Senior Notes, approximates the carrying value and is determined using Level II inputs under the fair value ~~hierarchy.~~hierarchy. The carrying value of our debt is included in Note 6. The estimated fair value of our Senior Notes at June 30, ~~2022~~2023 was $824.4 million c~~$832.3 million~~ ~~compared~~ompared to the carrying value of $~~988.7~~989.8 million. The estimated fair value of the Senior Notes is based on Level I quoted market rates. The carrying amounts of our other financial instruments (e.g., cash and cash equivalents, accounts receivable, net, accounts payable and short-term debt) approximated fair value due to their short-term nature at June 30, ~~2022~~2023 and December 31, ~~2021.~~2022.

8.Inventories

Inventories, net consisted of the following:


		June 30,		December 31,			June 30,		December 31,
(Amounts in thousands)	(Amounts in thousands)	2022		2021		(Amounts in thousands)	2023		2022
Raw materials	Raw materials	$	348,402	$	318,348	Raw materials	$	426,943	$	360,039
Work in process	Work in process	273,677		242,143		Work in process	331,568		295,678
Finished goods	Finished goods	223,211		213,096		Finished goods	262,555		245,494

Less: Excess and obsolete reserve	Less: Excess and obsolete reserve	(96,370)		(95,300)		Less: Excess and obsolete reserve	(106,778)		(98,013)
Inventories, net	Inventories, net	$	748,920	$	678,287	Inventories, net	$	914,288	$	803,198

1316

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9.Earnings Per Share

The following is a reconciliation of net earnings of Flowserve Corporation and weighted average shares for calculating net earnings per common share. Earnings per weighted average common share outstanding was calculated as follows:


		Three Months Ended June 30,					Three Months Ended June 30,
(Amounts in thousands, except per share data)	(Amounts in thousands, except per share data)	2022		2021		(Amounts in thousands, except per share data)	2023		2022
Net earnings of Flowserve Corporation	Net earnings of Flowserve Corporation	$	44,777	$	45,354	Net earnings of Flowserve Corporation	$	51,203	$	44,777
Dividends on restricted shares not expected to vest	Dividends on restricted shares not expected to vest	—		—		Dividends on restricted shares not expected to vest	—		—
Earnings attributable to common and participating shareholders	Earnings attributable to common and participating shareholders	$	44,777	$	45,354	Earnings attributable to common and participating shareholders	$	51,203	$	44,777
Weighted average shares:	Weighted average shares:					Weighted average shares:
Common stock	Common stock	130,626		130,279		Common stock	131,133		130,626
Participating securities	Participating securities	40		26		Participating securities	38		40
Denominator for basic earnings per common share	Denominator for basic earnings per common share	130,666		130,305		Denominator for basic earnings per common share	131,171		130,666
Effect of potentially dilutive securities	Effect of potentially dilutive securities	579		499		Effect of potentially dilutive securities	639		579
Denominator for diluted earnings per common share	Denominator for diluted earnings per common share	131,245		130,804		Denominator for diluted earnings per common share	131,810		131,245
Earnings per common share:	Earnings per common share:					Earnings per common share:
Basic	Basic	$	0.34	$	0.35	Basic	$	0.39	$	0.34
Diluted	Diluted	0.34		0.35		Diluted	0.39		0.34


		Six Months Ended June 30,					Six Months Ended June 30,
(Amounts in thousands, except per share data)	(Amounts in thousands, except per share data)	2022		2021		(Amounts in thousands, except per share data)	2023		2022
Net earnings of Flowserve Corporation	Net earnings of Flowserve Corporation	$	28,960	$	59,434	Net earnings of Flowserve Corporation	$	77,970	$	28,960
Dividends on restricted shares not expected to vest	Dividends on restricted shares not expected to vest	—		—		Dividends on restricted shares not expected to vest	—		—
Earnings attributable to common and participating shareholders	Earnings attributable to common and participating shareholders	$	28,960	$	59,434	Earnings attributable to common and participating shareholders	$	77,970	$	28,960
Weighted average shares:	Weighted average shares:					Weighted average shares:
Common stock	Common stock	130,518		130,342		Common stock	131,010		130,518
Participating securities	Participating securities	36		24		Participating securities	41		36
Denominator for basic earnings per common share	Denominator for basic earnings per common share	130,554		130,366		Denominator for basic earnings per common share	131,051		130,554
Effect of potentially dilutive securities	Effect of potentially dilutive securities	594		539		Effect of potentially dilutive securities	731		594
Denominator for diluted earnings per common share	Denominator for diluted earnings per common share	131,148		130,905		Denominator for diluted earnings per common share	131,782		131,148
Earnings per common share:	Earnings per common share:					Earnings per common share:
Basic	Basic	$	0.22	$	0.46	Basic	$	0.59	$	0.22
Diluted	Diluted	0.22		0.45		Diluted	0.59		0.22

Diluted earnings per share above is based upon the weighted average number of shares as determined for basic earnings per share plus shares potentially issuable in conjunction with stock options and Restricted Shares.

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10.Legal Matters and Contingencies

Asbestos-Related Claims

We are a defendant in a substantial number of lawsuits that seek to recover damages for personal injury allegedly caused by exposure to asbestos-containing products manufactured and/or distributed by our heritage companies in the past. Typically, these lawsuits have been brought against multiple defendants in state and federal courts. While the overall number of asbestos-related claims in which we or our predecessors have been named has generally declined in recent years, there can be no assurance that this trend will continue, or that the average cost per claim to us will not further increase. Asbestos-containing materials incorporated into any such products were encapsulated and used as internal components of process equipment, and we do not believe that significant emission of asbestos fibers occurred during the use of this equipment.

Our practice is to vigorously contest and resolve these claims, and we have been successful in resolving a majority of claims with little or no payment, other than legal fees. Activity related to asbestos claims during the periods indicated was as ~~follows:~~follows:

~~Table of~~ ~~Contents~~


		Three Months Ended June 30,		Six Months Ended June 30,			Three Months Ended June 30,		Six Months Ended June 30,
		2022	2021	2022	2021		2023	2022	2023	2022
Beginning claims(1)	Beginning claims(1)	8,800	8,445	8,712	8,366	Beginning claims(1)	8,071	8,800	8,139	8,712
New claims	New claims	622	603	1,295	1,232	New claims	590	622	1,167	1,295
Resolved claims	Resolved claims	(505)	(479)	(1,090)	(1,023)	Resolved claims	(697)	(505)	(1,337)	(1,090)
Other(2)	Other(2)	—	(10)	—	(16)	Other(2)	86	—	81	—
Ending claims(1)	Ending claims(1)	8,917	8,559	8,917	8,559	Ending claims(1)	8,050	8,917	8,050	8,917

____________________

(1) Beginning and ending claims data in each period excludes inactive claims, as the Company considers it unlikely that inactive cases will be pursued further by the respective plaintiffs. A claim is classified as inactive either due to inactivity over a period of ~~time~~three years or if designated as inactive by the applicable court.

(2) Represents the net change in claims as a result of the reclassification of active cases as inactive and inactive cases as active during the period indicated. Cases moved from active to inactive status are removed from the claims count without being accounted for as a "Resolved claim", and cases moved from inactive status to active status are added back to the claims count without being accounted for as a “New claim”.

The following table presents the changes in the estimated asbestos ~~liability:~~liability:


(Amounts in thousands)	(Amounts in thousands)	2022		2021		(Amounts in thousands)	2023		2022
Beginning balance, January 1,	Beginning balance, January 1,	$	94,423	$	99,530	Beginning balance, January 1,	$	98,652	$	94,423
Asbestos liability adjustments, net	Asbestos liability adjustments, net	—		1,000		Asbestos liability adjustments, net	2,394		—
Cash payment activity	Cash payment activity	(2,460)		(3,761)		Cash payment activity	(8,016)		(2,460)
Other, net	Other, net	(1,819)		(1,284)		Other, net	(2,677)		(1,819)
Ending balance, June 30,	Ending balance, June 30,	$	90,144	$	95,485	Ending balance, June 30,	$	90,353	$	90,144

During both the three and six months ended June 30, ~~2022~~2023 the Company incurred expenses (net of insurance) of approximately ~~$1.8~~$4.3 million and ~~$3.6~~$6.0 million, respectively, compared to $1.8 million and ~~$4.5~~$3.6 million, respectively, for the same periods in ~~2021~~2022 to defend, resolve or otherwise dispose of outstanding claims, including legal and other related expenses. These expenses are included within SG&A in our condensed consolidated statements of income.

The Company had cash inflows (outflows) (net of insurance and/or indemnity) to defend, resolve or otherwise dispose of outstanding claims, including legal and other related expenses of approximately ~~$2.7~~$(11.7) million and ~~$(7.0)~~$2.7 million, respectively, during the six months ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively.

Historically, a high percentage of resolved claims have been covered by applicable insurance or indemnities from other companies, and we believe that a substantial majority of existing claims should continue to be covered by insurance or indemnities, in whole or in part.

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We believe that our reserve for asbestos claims and the receivable for recoveries from insurance carriers that we have recorded for these claims reflects reasonable and probable estimates of these amounts. Our estimate of our ultimate exposure for asbestos claims, however, is subject to significant uncertainties, including the timing and number and types of new claims, unfavorable court rulings, judgments or settlement terms and ultimate costs to settle. Additionally, the continued viability of carriers may also impact the amount of probable insurance recoveries. We believe that these uncertainties could have a material adverse impact on our business, financial condition, results of operations and cash flows, though we currently believe the likelihood is remote.

Additionally, we have claims pending against certain insurers that, if resolved more favorably than reflected in the recorded receivables, would result in discrete gains in the applicable quarter.

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Other Claims

We are also a defendant in a number of other lawsuits, including product liability claims, that are insured, subject to the applicable deductibles, arising in the ordinary course of business, and we are also involved in other uninsured routine litigation incidental to our business. We currently believe none of such litigation, either individually or in the aggregate, is material to our business, operations or overall financial condition. However, litigation is inherently unpredictable, and resolutions or dispositions of claims or lawsuits by settlement or otherwise could have an adverse impact on our financial position, results of operations or cash flows for the reporting period in which any such resolution or disposition occurs.

Although none of the aforementioned potential liabilities can be quantified with absolute certainty except as otherwise indicated above, we have established or adjusted reserves covering exposures relating to contingencies, to the extent believed to be reasonably estimable and probable based on past experience and available facts. While additional exposures beyond these reserves could exist, they currently cannot be estimated. We will continue to evaluate and update the reserves as necessary and appropriate.

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11.Pension and Postretirement Benefits

Components of the net periodic cost for pension and postretirement benefits for the three months ended June 30, ~~2022~~2023 and ~~2021~~2022 were as follows:


		U.S. Defined Benefit Plans				Non-U.S. Defined Benefit Plans				Postretirement Medical Benefits					U.S. Defined Benefit Plans				Non-U.S. Defined Benefit Plans				Postretirement Medical Benefits
(Amounts in millions)	(Amounts in millions)	2022		2021		2022		2021		2022		2021		(Amounts in millions)	2023		2022		2023		2022		2023		2022
Service cost	Service cost	$	6.1	$	5.8	$	1.4	$	1.9	$	—	$	—	Service cost	$	5.7	$	6.1	$	1.2	$	1.4	$	—	$	—
Interest cost	Interest cost	3.2		2.9		1.6		1.4		0.1		0.1		Interest cost	5.0		3.2		3.1		1.6		0.2		0.1
Expected return on plan assets	Expected return on plan assets	(6.2)		(6.2)		(1.3)		(1.7)		—		—		Expected return on plan assets	(5.7)		(6.2)		(1.8)		(1.3)		—		—
Amortization of unrecognized prior service cost and other costs	Amortization of unrecognized prior service cost and other costs	—		0.1		0.2		0.1		—		0.1		Amortization of unrecognized prior service cost and other costs	0.1		—		0.1		0.2		0.1		—
Amortization of unrecognized net loss	Amortization of unrecognized net loss	0.7		2.0		0.7		1.2		0.1		—		Amortization of unrecognized net loss	—		0.7		0.3		0.7		—		0.1
Net periodic cost recognized	Net periodic cost recognized	$	3.8	$	4.6	$	2.6	$	2.9	$	0.2	$	0.2	Net periodic cost recognized	$	5.1	$	3.8	$	2.9	$	2.6	$	0.3	$	0.2

Components of the net periodic cost for pension and postretirement benefits for the six months ended June 30, ~~2022~~2023 and ~~2021~~2022 were as follows:


		U.S. Defined Benefit Plans				Non-U.S. Defined Benefit Plans				Postretirement Medical Benefits					U.S. Defined Benefit Plans				Non-U.S. Defined Benefit Plans				Postretirement Medical Benefits
(Amounts in millions)	(Amounts in millions)	2022		2021		2022		2021		2022		2021		(Amounts in millions)	2023		2022		2023		2022		2023		2022
Service cost	Service cost	$	12.4	$	12.6	$	3.0	$	3.7	$	—	$	—	Service cost	$	10.7	$	12.4	$	2.3	$	3.0	$	—	$	—
Interest cost	Interest cost	6.6		6.0		3.3		2.8		0.2		0.2		Interest cost	10.2		6.6		6.0		3.3		0.4		0.2
Expected return on plan assets	Expected return on plan assets	(12.7)		(12.7)		(2.9)		(3.2)		—		—		Expected return on plan assets	(12.0)		(12.7)		(3.4)		(2.9)		—		—
Amortization of unrecognized prior service cost and other costs	Amortization of unrecognized prior service cost and other costs	0.1		0.1		0.3		0.2		0.1		0.1		Amortization of unrecognized prior service cost and other costs	0.1		0.1		0.2		0.3		0.1		0.1
Amortization of unrecognized net loss	Amortization of unrecognized net loss	1.7		3.9		1.4		2.3		0.1		—		Amortization of unrecognized net loss	—		1.7		0.6		1.4		—		0.1
Net periodic cost recognized	Net periodic cost recognized	$	8.1	$	9.9	$	5.1	$	5.8	$	0.4	$	0.3	Net periodic cost recognized	$	9.0	$	8.1	$	5.7	$	5.1	$	0.5	$	0.4

The components of net periodic cost for pension and postretirement benefits other than service costs are included in other income (expense), net in our condensed consolidated statements of income.

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12.Shareholders’ Equity

Dividends – Generally, our dividend date-of-record is in the last month of the quarter, and the dividend is paid the following month. Any subsequent dividends will be reviewed by our Board of Directors and declared in its discretion.

Dividends declared per share were as follows:

Three Months Ended June 30, Six Months Ended June 30,
2022 2021 2022 2021
Dividends declared per share $ 0.20 $ 0.20 $ 0.40 $ 0.40


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Dividends declared per share	$	0.20	$	0.20	$	0.40	$	0.40

Share Repurchase Program – In 2014, our Board of Directors approved a $500.0 million share repurchase authorization. Our share repurchase program does not have an expiration date and we reserve the right to limit or terminate the repurchase program at any time without notice.

We had had no repurchases of shares of our outstanding common stock ~~during~~for both of the three and six months ended June 30, ~~2022, compared to 311,000~~2023 and ~~440,000 shares, respectively, repurchased for $12.5 million and $17.5 million, respectively, for the same periods in 2021.~~2022. As of June 30, ~~2022,~~2023, we had $96.1 million of remaining capacity under our current share repurchase program.

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13.Income Taxes

For the three months ended June 30, 2023, we earned $76.5 million before taxes and recorded a provision for income taxes of $21.3 million resulting in an effective tax rate of 27.9%. For the six months ended June 30, 2023, we earned $110.9 million before taxes and recorded a provision for income taxes of $25.8 million resulting in an effective tax rate of 23.2%. The effective tax rate varied from the U.S. federal statutory rate for the three months ended June 30, 2023 primarily due to the net impact of foreign operations partially offset by the release of the valuation allowance on a Section 163(j) carryforward. The effective tax rate varied from the U.S. federal statutory rate for the six months ended June 30, 2023 primarily due to the net impact of foreign operations and state income taxes partially offset by the benefits of a tax planning strategy.

For the three months ended June 30, 2022, we earned $57.7 million before taxes and recorded a provision for income taxes of $11.6 million resulting in an effective tax rate of 20.1%. For the six months ended June 30, 2022, we earned $47.2 million before taxes and ~~recorded a provision~~provided for income taxes of $14.8 million resulting in an effective tax rate of 31.4%. The effective tax rate varied from the U.S. federal statutory rate for the three months ended June 30, 2022 primarily due to the net impact of foreign operations, partially offset by ~~BEAT.~~Base Erosion and Anti-Abuse Tax ("BEAT"). The effective tax rate varied from the U.S. federal statutory rate for the six months ended June 30, 2022 primarily due to the ~~current~~current and anticipated tax impact of the Russia-Ukraine conflict on our business, partially offset by the net impact of foreign ~~operati~~operations~~ons.~~

~~For the three months ended June 30, 2021, we earned $50.5 million before taxes and provided for income taxes of $2.7 million resulting in an effective tax rate of 5.4%~~. ~~For the~~ ~~six months ended~~ June 30, 2021, we earned $71.4 million before taxes and provided for income taxes of $6.5 million resulting in an effective tax rate of 9.1%. The effective tax rate varied from the U.S. federal statutory rate for the three months ended June 30, 2021 primarily due to the net impact of foreign operations and favorable resolution of audits in foreign jurisdictions. The effective tax rate varied from the U.S. federal statutory rate for the ~~six months ended~~ June 30, 2021, primarily due to the net impact of foreign operations, the reversal of certain deferred tax liabilities as a result of restructuring specific aspects of our global financing arrangements and higher withholding taxes related to transactions with and amongst various foreign subsidiaries.

As of June 30, ~~2022,~~2023, the amount of unrecognized tax benefits increased by ~~$6.3~~$6.8 million from December 31, ~~2021.~~2022. With limited exception, we are no longer subject to U.S. federal income tax audits for years through 2017, state and local income tax audits for years through ~~2015~~2016 or non-U.S. income tax audits for years through ~~2014.~~2015. We are currently under examination for various years in Canada, ~~China,~~ Germany, India, Indonesia, Italy, Kenya, Madagascar, Malaysia, Mexico, ~~the Philippines,~~Morocco, Saudi Arabia, Switzerland, the U.S. and Venezuela.

It is reasonably possible that within the next 12 months the effective tax rate will be impacted by the resolution of some or all of the matters audited by various taxing authorities. It is also reasonably possible that we will have the statute of limitations close in various taxing jurisdictions within the next 12 months. As such, we estimate we could record a reduction in our tax expense of approximately ~~$14~~$15 million within the next 12 months.

The Company maintains a full valuation allowance against the net deferred tax assets in certain foreign tax jurisdictions as of June 30, ~~2022.~~2023. As of each reporting date, management considers new evidence, both positive and negative, that could affect its view of the future realization of net deferred tax assets. It is possible that within the next 12 months there may be sufficient positive evidence to release a portion or all of the remaining valuation allowance in ~~certain~~those foreign ~~tax~~ jurisdictions. Release of ~~these~~the valuation ~~allowances~~allowance would result in a benefit to income tax expense for the period the release is recorded, which could have a material impact on net earnings. The timing and amount of the potential valuation allowance release are subject to significant management judgment and the level of profitability achieved.

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14.Segment Information

The following is a summary of the financial information of the reportable segments reconciled to the amounts reported in the condensed consolidated financial statements:


		Three Months Ended June 30, 2022											Three Months Ended June 30, 2023
(Amounts in thousands)	(Amounts in thousands)	FPD		FCD		Subtotal–Reportable Segments		Eliminations and All Other		Consolidated Total		(Amounts in thousands)	FPD		FCD		Subtotal–Reportable Segments		Eliminations and All Other		Consolidated Total
Sales to external customers	Sales to external customers	$	614,425	$	267,797	$	882,222	$	—	$	882,222	Sales to external customers	$	764,851	$	315,525	$	1,080,376	$	—	$	1,080,376
Intersegment sales	Intersegment sales	445		609		1,054		(1,054)		—		Intersegment sales	530		2,185		2,715		(2,715)		—
Segment operating income	Segment operating income	57,346		30,369		87,715		(27,383)		60,332		Segment operating income	98,003		36,115		134,118		(37,470)		96,648

		Three Months Ended June 30, 2021											Three Months Ended June 30, 2022
		FPD		FCD		Subtotal–Reportable Segments		Eliminations and All Other		Consolidated Total			FPD		FCD		Subtotal–Reportable Segments		Eliminations and All Other		Consolidated Total
Sales to external customers	Sales to external customers	$	617,434	$	280,744	$	898,178	$	—	$	898,178	Sales to external customers	$	614,425	$	267,797	$	882,222	$	—	$	882,222
Intersegment sales	Intersegment sales	257		416		673		(673)		—		Intersegment sales	445		609		1,054		(1,054)		—
Segment operating income	Segment operating income	67,845		37,229		105,074		(32,912)		72,162		Segment operating income	57,346		30,369		87,715		(27,383)		60,332


		Six Months Ended June 30, 2022												Six Months Ended June 30, 2023
(Amounts in thousands)	(Amounts in thousands)	FPD		FCD		Subtotal–Reportable Segments			Eliminations and All Other		Consolidated Total		(Amounts in thousands)	FPD		FCD		Subtotal–Reportable Segments		Eliminations and All Other		Consolidated Total
Sales to external customers	Sales to external customers	$	1,188,412	$	514,868	$	1,703,280	0	$	—	$	1,703,280	Sales to external customers	$	1,464,330	$	596,351	$	2,060,681	$	—	$	2,060,681
Intersegment sales	Intersegment sales	2,043		1,393		3,436			(3,436)		—		Intersegment sales	1,168		2,975		4,143		(4,143)		—
Segment operating income	Segment operating income	78,347		45,606		123,953			(56,253)		67,700		Segment operating income	177,076		54,649		231,725		(77,890)		153,835

		Six Months Ended June 30, 2021												Six Months Ended June 30, 2022
		FPD		FCD		Subtotal–Reportable Segments			Eliminations and All Other		Consolidated Total			FPD		FCD		Subtotal–Reportable Segments		Eliminations and All Other		Consolidated Total
Sales to external customers	Sales to external customers	$	1,219,600	$	535,886	$	1,755,486	0	$	—	$	1,755,486	Sales to external customers	$	1,188,412	$	514,868	$	1,703,280	$	—	$	1,703,280
Intersegment sales	Intersegment sales	733		1,096		1,829			(1,829)		—		Intersegment sales	2,043		1,393		3,436		(3,436)		—
Segment operating income	Segment operating income	121,627		61,942		183,569			(55,304)		128,265		Segment operating income	78,347		45,606		123,953		(56,253)		67,700

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15.Accumulated Other Comprehensive Income (Loss)

The following table presents the changes in AOCL, net of tax for the three months ended June 30, ~~2022~~2023 and ~~2021:~~2022:


		2022								2021									2023								2022
(Amounts in thousands)	(Amounts in thousands)	Foreign currency translation items(1)		Pension and other post-retirement effects		Cash flow hedging activity (2)		Total		Foreign currency translation items(1)		Pension and other post-retirement effects		Cash flow hedging activity (2)		Total		(Amounts in thousands)	Foreign currency translation items(1)		Pension and other post-retirement effects		Cash flow hedging activity (2)		Total		Foreign currency translation items(1)		Pension and other post-retirement effects		Cash flow hedging activity (2)		Total
Balance - April 1	Balance - April 1	$	(472,769)	$	(98,078)	$	(1,307)	$	(572,154)	$	(467,326)	$	(142,464)	$	(286)	$	(610,076)	Balance - April 1	$	(541,177)	$	(86,799)	$	(903)	$	(628,879)	$	(472,769)	$	(98,078)	$	(1,307)	$	(572,154)
Other comprehensive income (loss) before reclassifications (3)	Other comprehensive income (loss) before reclassifications (3)	(64,160)		5,415		—		(58,745)		13,998		(713)		—		13,285		Other comprehensive income (loss) before reclassifications (3)	8,901		(1,345)		—		7,556		(64,160)		5,415		—		(58,745)
Amounts reclassified from AOCL	Amounts reclassified from AOCL	—		1,155		29		1,184		—		2,772		15		2,787		Amounts reclassified from AOCL	—		506		30		536		—		1,155		29		1,184
Net current-period other comprehensive income (loss) (3)	Net current-period other comprehensive income (loss) (3)	(64,160)		6,570		29		(57,561)		13,998		2,059		15		16,072		Net current-period other comprehensive income (loss) (3)	8,901		(839)		30		8,092		(64,160)		6,570		29		(57,561)
Balance - June 30	Balance - June 30	$	(536,929)	$	(91,508)	$	(1,278)	$	(629,715)	$	(453,328)	$	(140,405)	$	(271)	$	(594,004)	Balance - June 30	$	(532,276)	$	(87,638)	$	(873)	$	(620,787)	$	(536,929)	$	(91,508)	$	(1,278)	$	(629,715)

(1) Includes foreign currency translation adjustments attributable to noncontrolling interests of ~~$5.9~~$2.7 million and ~~$6.1~~$5.9 million at April 1, ~~2022~~2023 and ~~2021,~~2022, respectively, and ~~$5.9~~$2.9 million and ~~$6.1~~$5.9 million at June 30, ~~2022~~2023 and ~~2021,~~2022, respectively. Also includes the impacts from the changes in fair value of our cross-currency swaps, which were $26.5 million ~~and $10.0 million~~ for the three months ended June 30, ~~2022 and 2021, respectively.~~2022.

(2) Other comprehensive loss before reclassifications and amounts reclassified from AOCL to interest expense related to designated cash flow hedges.

(3) Amounts in parentheses indicate an increase to AOCL.

The following table presents the reclassifications out of AOCL:

Three Months Ended June 30,
(Amounts in thousands) Affected line item in the statement of income 2022(1) 2021(1)
Pension and other postretirement effects
Amortization of actuarial losses(2) Other income (expense), net $ (1,468) $ (3,089)
Prior service costs(2) Other income (expense), net (144) (155)
Tax benefit 457 472
Net of tax $ (1,155) $ (2,772)
Cash flow hedging activity
Amortization of Treasury rate lock Interest expense $ (38) $ (20)
Tax benefit 9 5
Net of tax $ (29) $ (15)

~~(1) Amounts in parentheses indicate decreases to income. None of the reclassified amounts have a noncontrolling interest component.~~

~~(2) These AOCL components are included in the computation of net periodic pension cost. See Note 11 for additional details.~~

~~Table of~~ ~~Contents~~

~~The following table presents the changes in AOCL, net of tax for the six months ended June 30, 2022 and 2021:~~

2022 2021
(Amounts in thousands) Foreign currency translation items(1) Pension and other post-retirement effects Cash flow hedging activity (2) Total Foreign currency translation items(1) Pension and other post-retirement effects Cash flow hedging activity (2) Total
Balance - January 1 $ (456,025) $ (101,665) $ (1,336) $ (559,026) $ (456,437) $ (146,723) $ (488) $ (603,648)
Other comprehensive income (loss) before reclassifications (3) (80,904) 7,373 — (73,531) 3,109 804 — 3,913
Amounts reclassified from AOCL — 2,784 58 2,842 — 5,514 217 5,731
Net current-period other comprehensive income (loss) (3) (80,904) 10,157 58 (70,689) 3,109 6,318 217 9,644
Balance - June 30 $ (536,929) $ (91,508) $ (1,278) $ (629,715) $ (453,328) $ (140,405) $ (271) $ (594,004)

(1) Includes foreign currency translation adjustments attributable to noncontrolling interests of $4.6 million and $5.9 million at January 1, 2022 and 2021, respectively, and $5.9 million and $6.1 million at June 30, 2022 and 2021, respectively. Also includes the impacts from the changes in fair value of our cross-currency swaps, which were $35.1 million and $9.8 million for the six months ended June 30, 2022 and 2021, respectively.

~~(2) Other comprehensive loss before reclassifications and amounts reclassified from AOCL to interest expense related to designated cash flow hedges.~~

~~(3) Amounts in parentheses indicate an increase to AOCL.~~

~~The following table presents the reclassifications out of AOCL:~~


			Six Months Ended June 30,						Three Months Ended June 30,
(Amounts in thousands)	(Amounts in thousands)	Affected line item in the statement of income	2022(1)		2021(1)		(Amounts in thousands)	Affected line item in the statement of income	2023(1)		2022(1)

Pension and other postretirement effects	Pension and other postretirement effects						Pension and other postretirement effects
Amortization of actuarial losses(2)	Amortization of actuarial losses(2)	Other income (expense), net	$	(3,200)	$	(6,148)	Amortization of actuarial losses(2)	Other income (expense), net	$	(381)	$	(1,468)
Prior service costs(2)	Prior service costs(2)	Other income (expense), net	(295)		(308)		Prior service costs(2)	Other income (expense), net	(154)		(144)
		Tax benefit	711		942			Tax benefit	29		457
		Net of tax	$	(2,784)	$	(5,514)		Net of tax	$	(506)	$	(1,155)

Cash flow hedging activity	Cash flow hedging activity						Cash flow hedging activity
Amortization of Treasury rate lock	Amortization of Treasury rate lock	Interest expense	$	(76)	$	(284)	Amortization of Treasury rate lock	Interest income (expense)	$	(37)	$	(29)
		Tax benefit	18		67			Tax benefit (expense)	7		—
		Net of tax	$	(58)	$	(217)		Net of tax	$	(30)	$	(29)

(1) Amounts in parentheses indicate decreases to income. None of the reclassified amounts have a noncontrolling interest component.

(2) These AOCL components are included in the computation of net periodic pension cost. See Note 11 for additional details.

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The following table presents the changes in AOCL, net of tax for the six months ended June 30, 2023 and 2022:


	2023								2022
(Amounts in thousands)	Foreign currency translation items(1)		Pension and other post-retirement effects		Cash flow hedging activity (2)		Total		Foreign currency translation items(1)		Pension and other post-retirement effects		Cash flow hedging activity (2)		Total
Balance - January 1	$	(554,683)	$	(86,356)	$	(933)	$	(641,972)	$	(456,025)	$	(101,665)	$	(1,336)	$	(559,026)
Other comprehensive income (loss) before reclassifications (3)	22,407		(2,210)		—		20,197		(80,904)		7,373		—		(73,531)
Amounts reclassified from AOCL	—		928		60		988		—		2,784		58		2,842
Net current-period other comprehensive income (loss) (3)	22,407		(1,282)		60		21,185		(80,904)		10,157		58		(70,689)
Balance - June 30	$	(532,276)	$	(87,638)	$	(873)	$	(620,787)	$	(536,929)	$	(91,508)	$	(1,278)	$	(629,715)

(1) Includes foreign currency translation adjustments attributable to noncontrolling interests of $5.8 million and $4.6 million at January 1, 2023 and 2022, respectively, and $2.9 million and $5.9 million at June 30, 2023 and 2022, respectively. Also includes the impacts from the changes in fair value of our cross-currency swaps, which were $35.1 million for the six months ended June 30, 2022.

(2) Other comprehensive loss before reclassifications and amounts reclassified from AOCL to interest expense related to designated cash flow hedges.

(3) Amounts in parentheses indicate an increase to AOCL.

The following table presents the reclassifications out of AOCL:


		Six Months Ended June 30,
(Amounts in thousands)	Affected line item in the statement of income	2023(1)		2022(1)












Pension and other postretirement effects
Amortization of actuarial losses(2)	Other income (expense), net	$	(664)	$	(3,200)
Prior service costs(2)	Other income (expense), net	(305)		(295)
	Tax benefit	41		711
	Net of tax	$	(928)	$	(2,784)

Cash flow hedging activity
Amortization of Treasury rate lock	Interest income (expense)	$	(74)	$	(58)
	Tax benefit (expense)	14		—
	Net of tax	$	(60)	$	(58)

(1) Amounts in parentheses indicate decreases to income. None of the reclassified amounts have a noncontrolling interest component.

(2) These AOCL components are included in the computation of net periodic pension cost. See Note 11 for additional details.

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16.Realignment Programs

In the second quarter of 2020, we identified and initiated certain realignment activities to right-size our organizational operations based on the current business environment, with the overall objective to reduce our workforce costs, including manufacturing optimization through the consolidation of certain facilities ("2020 Realignment Program"). As of December 31, 2022 the 2020 Realignment Program was substantially complete with a minimal amount of residual charges to be incurred prospectively.

In the first quarter of 2023, we identified and initiated certain realignment activities concurrent with the consolidation of our aftermarket and pump operations into a single operating model. This consolidated operating model is designed to better align our go to market strategy with our product offerings, enable end-to-end lifecycle responsibility and accountability, and to facilitate more efficient operations. Additionally, we committed to an estimated $50 million in cost reduction efforts to begin in 2023. Collectively, the above realignment activities are referred to as the 2023 Realignment Program. The 2023 Realignment Program activities will be identified and implemented in phases throughout 2023. The realignment activities consist of restructuring and non-restructuring charges. Restructuring charges represent costs associated with the relocation of certain business activities and facility closures and include related severance costs. Non-restructuring charges are primarily employee severance associated with ~~the~~ workforce ~~reductions.~~reductions and professional service fees. Expenses are primarily reported in cost of sales ("COS") or selling, general and administrative ("SG&A"), as applicable, in our consolidated statements of income. We currently anticipate a total investment in ~~these~~realignment activities that have been evaluated and initiated of approximately ~~$95~~$40 million ~~and the vast majority~~ of ~~the charges were incurred in 2020 and 2021 with the remainder~~which $13 million is estimated to be ~~incurred in 2022.~~non-cash. There are certain other realignment activities that are currently being evaluated, but have not yet been ~~finalized~~initiated and therefore are not included in the above anticipated total investment.

Generally, the aforementioned charges will be paid in cash, except for asset write-downs, which are non-cash charges. The following is a summary of total charges, net of adjustments, incurred related to our Realignment ~~Program:~~Programs:


		Three Months Ended June 30, 2022											Three Months Ended June 30, 2023
(Amounts in thousands)	(Amounts in thousands)	FPD		FCD		Subtotal–Reportable Segments		All Other		Consolidated Total		(Amounts in thousands)	FPD		FCD		Subtotal–Reportable Segments		All Other		Consolidated Total
Realignment Charges	Realignment Charges											Realignment Charges
Restructuring Charges	Restructuring Charges											Restructuring Charges
COS	COS	$	604	$	76	$	680	$	—	$	680	COS	$	1,410	$	—	$	1,410	$	—	$	1,410
SG&A	SG&A	—		—		—		—		—		SG&A	—		(29)		(29)		1		(28)

		$	604	$	76	$	680	$	—	$	680		$	1,410	$	(29)	$	1,381	$	1	$	1,382
Non-Restructuring Charges	Non-Restructuring Charges											Non-Restructuring Charges
COS	COS	$	(225)	$	12	$	(213)	$	—	$	(213)	COS	$	(457)	$	3,153	$	2,696	$	—	$	2,696
SG&A	SG&A	2		33		35		27		62		SG&A	17		29		46		7,427		7,473
		$	(223)	$	45	$	(178)	$	27	$	(151)		$	(440)	$	3,182	$	2,742	$	7,427	$	10,169

Total Realignment Charges	Total Realignment Charges											Total Realignment Charges
COS	COS	$	379	$	88	$	467	$	—	$	467	COS	$	953	$	3,153	$	4,106	$	—	$	4,106
SG&A	SG&A	2		33		35		27		62		SG&A	17		—		17		7,428		7,445

Total	Total	$	381	$	121	$	502	$	27	$	529	Total	$	970	$	3,153	$	4,123	$	7,428	$	11,551

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		Three Months Ended June 30, 2021											Three Months Ended June 30, 2022
(Amounts in thousands)	(Amounts in thousands)	FPD		FCD		Subtotal–Reportable Segments		All Other		Consolidated Total		(Amounts in thousands)	FPD		FCD		Subtotal–Reportable Segments		All Other		Consolidated Total
Realignment Charges	Realignment Charges											Realignment Charges
Restructuring Charges	Restructuring Charges											Restructuring Charges
COS	COS	$	2,016	$	171	$	2,187	$	—	$	2,187	COS	$	604	$	76	$	680	$	—	$	680
SG&A	SG&A	667		—		667		—		667		SG&A	—		—		—		—		—

		$	2,683	$	171	$	2,854	$	—	$	2,854		$	604	$	76	$	680	$	—	$	680
Non-Restructuring Charges	Non-Restructuring Charges											Non-Restructuring Charges
COS	COS	$	1,558	$	80	$	1,638	$	—	$	1,638	COS	$	(225)	$	12	$	(213)	$	—	$	(213)
SG&A	SG&A	338		(129)		209		915		1,124		SG&A	2		33		35		27		62
		$	1,896	$	(49)	$	1,847	$	915	$	2,762		$	(223)	$	45	$	(178)	$	27	$	(151)
Total Realignment Charges	Total Realignment Charges											Total Realignment Charges
COS	COS	$	3,574	$	251	$	3,825	$	—	$	3,825	COS	$	379	$	88	$	467	$	—	$	467
SG&A	SG&A	1,005		(129)		876		915		1,791		SG&A	2		33		35		27		62

Total	Total	$	4,579	$	122	$	4,701	$	915	$	5,616	Total	$	381	$	121	$	502	$	27	$	529


		Six Months Ended June 30, 2022											Six Months Ended June 30, 2023
(Amounts in thousands)	(Amounts in thousands)	FPD		FCD		Subtotal–Reportable Segments		All Other		Consolidated Total		(Amounts in thousands)	FPD		FCD		Subtotal–Reportable Segments		All Other		Consolidated Total
Realignment Charges	Realignment Charges											Realignment Charges
Restructuring Charges	Restructuring Charges											Restructuring Charges
COS	COS	$	885	$	71	$	956	$	—	$	956	COS	$	398	$	—	$	398	$	66	$	464
SG&A	SG&A	—		—		—		—		—		SG&A	—		8,876		8,876		1		8,877

		$	885	$	71	$	956	$	—	$	956		$	398	$	8,876	$	9,274	$	67	$	9,341
Non-Restructuring Charges	Non-Restructuring Charges											Non-Restructuring Charges
COS	COS	$	(589)	$	(37)	$	(626)	$	(61)	$	(687)	COS	$	945	$	3,164	$	4,109	$	(265)	$	3,844
SG&A	SG&A	77		50		127		(266)		(139)		SG&A	2,067		30		2,097		13,148		15,245
		$	(512)	$	13	$	(499)	$	(327)	$	(826)		$	3,012	$	3,194	$	6,206	$	12,883	$	19,089

Total Realignment Charges	Total Realignment Charges											Total Realignment Charges
COS	COS	$	296	$	34	$	330	$	(61)	$	269	COS	$	1,343	$	3,164	$	4,507	$	(199)	$	4,308
SG&A	SG&A	77		50		127		(266)		(139)		SG&A	2,067		8,906		10,973		13,149		24,122

Total	Total	$	373	$	84	$	457	$	(327)	$	130	Total	$	3,410	$	12,070	$	15,480	$	12,950	$	28,430

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		Six Months Ended June 30, 2021											Six Months Ended June 30, 2022
(Amounts in thousands)	(Amounts in thousands)	FPD		FCD		Subtotal–Reportable Segments		All Other		Consolidated Total		(Amounts in thousands)	FPD		FCD		Subtotal–Reportable Segments		All Other		Consolidated Total
Realignment Charges	Realignment Charges											Realignment Charges
Restructuring Charges	Restructuring Charges											Restructuring Charges
COS	COS	$	6,043	$	470	$	6,513	$	—	$	6,513	COS	$	885	$	71	$	956	$	—	$	956
SG&A	SG&A	667		(9)		658		—		658		SG&A	—		—		—		—		—

		$	6,710	$	461	$	7,171	$	—	$	7,171		$	885	$	71	$	956	$	—	$	956
Non-Restructuring Charges	Non-Restructuring Charges											Non-Restructuring Charges
COS	COS	$	5,449	$	678	$	6,127	$	590	$	6,717	COS	$	(589)	$	(37)	$	(626)	$	(61)	$	(687)
SG&A	SG&A	495		739		1,234		4,195		5,429		SG&A	77		50		127		(266)		(139)
		$	5,944	$	1,417	$	7,361	$	4,785	$	12,146		$	(512)	$	13	$	(499)	$	(327)	$	(826)

Total Realignment Charges	Total Realignment Charges											Total Realignment Charges
COS	COS	$	11,492	$	1,148	$	12,640	$	590	$	13,230	COS	$	296	$	34	$	330	$	(61)	$	269
SG&A	SG&A	1,162		730		1,892		4,195		6,087		SG&A	77		50		127		(266)		(139)

Total	Total	$	12,654	$	1,878	$	14,532	$	4,785	$	19,317	Total	$	373	$	84	$	457	$	(327)	$	130

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The following is a summary of total inception to date charges, net of adjustments, related to the 2023 Realignment ~~Program:~~Programs:


		Inception to Date											Inception to Date
(Amounts in thousands)	(Amounts in thousands)	FPD		FCD		Subtotal–Reportable Segments		All Other		Consolidated Total		(Amounts in thousands)	FPD		FCD		Subtotal–Reportable Segments		All Other		Consolidated Total
Realignment Charges	Realignment Charges											Realignment Charges
Restructuring Charges	Restructuring Charges											Restructuring Charges
COS	COS	$	26,761	$	2,107	$	28,868	$	—	$	28,868	COS	$	398	$	—	$	398	$	66	$	464
SG&A	SG&A	716		333		1,049		(17)		1,032		SG&A	—		8,876		8,876		1		8,877

		$	27,477	$	2,440	$	29,917	$	(17)	$	29,900		$	398	$	8,876	$	9,274	$	67	$	9,341
Non-Restructuring Charges	Non-Restructuring Charges											Non-Restructuring Charges
COS	COS	$	24,818	$	686	$	25,504	$	581	$	26,085	COS	$	945	$	3,164	$	4,109	$	(265)	$	3,844
SG&A	SG&A	11,126		5,312		16,438		21,529		37,967		SG&A	2,067		30		2,097		13,148		15,245
		$	35,944	$	5,998	$	41,942	$	22,110	$	64,052		$	3,012	$	3,194	$	6,206	$	12,883	$	19,089
Total Realignment Charges	Total Realignment Charges											Total Realignment Charges
COS	COS	$	51,579	$	2,793	$	54,372	$	581	$	54,953	COS	$	1,343	$	3,164	$	4,507	$	(199)	$	4,308
SG&A	SG&A	11,842		5,645		17,487		21,512		38,999		SG&A	2,067		8,906		10,973		13,149		24,122

Total	Total	$	63,421	$	8,438	$	71,859	$	22,093	$	93,952	Total	$	3,410	$	12,070	$	15,480	$	12,950	$	28,430

Restructuring charges represent costs associated with the relocation or reorganization of certain business activities and facility closures and include costs related to employee severance at closed facilities, contract termination costs, asset write-downs and other costs. Severance costs primarily include costs associated with involuntary termination benefits. Contract termination costs include costs related to the termination of operating leases or other contract termination costs. Asset write-downs include accelerated depreciation of fixed assets, accelerated amortization of intangible assets, divestiture of certain non-strategic assets and inventory write-downs. Other costs generally include costs related to employee relocation, asset relocation, vacant facility costs (i.e., taxes and insurance) and other charges.

The following is a summary of restructuring charges, net of adjustments, for our restructuring activities related to our Realignment ~~Program:~~Programs:


		Three Months Ended June 30, 2022											Three Months Ended June 30, 2023
(Amounts in thousands)	(Amounts in thousands)	Severance		Contract Termination		Asset Write-Downs		Other		Total		(Amounts in thousands)	Severance		Contract Termination		Asset Write-Downs (Gains)		Other		Total

COS	COS	$	570	$	—	$	19	$	91	$	680	COS	$	255	$	228	$	33	$	894	$	1,410
SG&A	SG&A	—		—		—		—		—		SG&A	(5)		—		(29)		6		(28)

Total	Total	$	570	$	—	$	19	$	91	$	680	Total	$	250	$	228	$	4	$	900	$	1,382

Three Months Ended June 30, 2021
(Amounts in thousands) Severance Contract Termination Asset Write-Downs Other Total
COS $ (154) $ — $ (849) $ 3,190 $ 2,187
SG&A 168 — — 499 667
Total $ 14 $ — $ (849) $ 3,689 $ 2,854


		Six Months Ended June 30, 2022											Three Months Ended June 30, 2022
(Amounts in thousands)	(Amounts in thousands)	Severance		Contract Termination		Asset Write-Downs		Other		Total		(Amounts in thousands)	Severance		Contract Termination		Asset Write-Downs (Gains)		Other		Total

COS	COS	$	568	$	—	$	259	$	129	$	956	COS	$	570	$	—	$	19	$	91	$	680
SG&A	SG&A	—		—		—		—		—		SG&A	—		—		—		—		—

Total	Total	$	568	$	—	$	259	$	129	$	956	Total	$	570	$	—	$	19	$	91	$	680

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		Six Months Ended June 30, 2021											Six Months Ended June 30, 2023
(Amounts in thousands)	(Amounts in thousands)	Severance		Contract Termination		Asset Write-Downs		Other		Total		(Amounts in thousands)	Severance		Contract Termination		Asset Write-Downs (Gains)		Other		Total

COS	COS	$	1,219	$	—	$	1,341	$	3,953	$	6,513	COS	$	441	$	294	$	(1,270)	$	999	$	464
SG&A	SG&A	168		—		—		490		658		SG&A	—		—		8,871		6		8,877

Total	Total	$	1,387	$	—	$	1,341	$	4,443	$	7,171	Total	$	441	$	294	$	7,601	$	1,005	$	9,341


	Six Months Ended June 30, 2022
(Amounts in thousands)	Severance		Contract Termination		Asset Write-Downs (Gains)		Other		Total

COS	$	568	$	—	$	259	$	129	$	956
SG&A	—		—		—		—		—

Total	$	568	$	—	$	259	$	129	$	956

The following is a summary of total inception to date restructuring charges, net of adjustments, related to our 2023 Realignment ~~Program:~~Programs:


		Inception to Date											Inception to Date
(Amounts in thousands)	(Amounts in thousands)	Severance		Contract Termination		Asset Write-Downs		Other		Total		(Amounts in thousands)	Severance		Contract Termination		Asset Write-Downs (Gains)		Other		Total
COS	COS	$	16,772	$	86	$	4,354	$	7,656	$	28,868	COS	$	441	$	294	$	(1,270)	$	999	$	464
SG&A	SG&A	251		—		14		767		1,032		SG&A	—		—		8,871		6		8,877

Total	Total	$	17,023	$	86	$	4,368	$	8,423	$	29,900	Total	$	441	$	294	$	7,601	$	1,005	$	9,341

The following represents the activity, primarily severance charges from reductions in force, related to the restructuring reserves for the six months ended June 30, ~~2022~~2023 and ~~2021:~~2022:


(Amounts in thousands)	(Amounts in thousands)	2022		2021		(Amounts in thousands)	2023		2022
Balance at January 1	Balance at January 1	$	4,868	$	18,255	Balance at January 1	$	965	$	4,868
Charges, net of adjustments	Charges, net of adjustments	696		5,830		Charges, net of adjustments	1,739		696
Cash expenditures	Cash expenditures	(2,082)		(14,388)		Cash expenditures	(1,231)		(2,082)
Other non-cash adjustments, including currency	Other non-cash adjustments, including currency	(310)		(461)		Other non-cash adjustments, including currency	(170)		(310)
Balance at June 30	Balance at June 30	$	3,172	$	9,236	Balance at June 30	$	1,303	$	3,172

Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and notes thereto, and the other financial data included elsewhere in this Quarterly Report. The following discussion should also be read in conjunction with our audited consolidated financial statements, and notes thereto, and "Management’s Discussion and Analysis of Financial Condition and Results of Operations" ("MD&A") included in our ~~2021~~2022 Annual Report.

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EXECUTIVE OVERVIEW

Our Company

We are a world-leading manufacturer and aftermarket service provider of comprehensive flow control systems. We develop and manufacture precision-engineered flow control equipment integral to the movement, control and protection of the flow of materials in our customers’ critical processes. Our product portfolio of pumps, valves, seals, automation and aftermarket services supports global infrastructure industries, including oil and gas, chemical, power generation and water management, as well as general industrial markets where our products and services add value. 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, repair and retrofitting. We currently employ approximately ~~15,000~~17,000 employees in more than 50 ~~countries.~~countries.

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 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 significantly 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 service and solutions business, which is primarily served by our network of ~~151~~159 QRCs located around the globe, provides a variety of service offerings for our

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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 business strategy.

Our operations are conducted through two business segments that are referenced throughout this MD&A:

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

•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.

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

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

We continue to leverage our QRC network to be positioned as near to customers as possible for service and support in order to capture valuable aftermarket business. Along with maintaining the local capability to sell, install and service our equipment in remote regions, it is equally imperative to continuously improve our global operations. Despite ~~headwinds~~supply chain disruption caused by ~~the~~ COVID-19, ~~pandemic,~~ we continue to enhance our global supply chain capabilities to increase our ability to meet global customer demands and improve the quality and timely delivery of our products over the long-term. Additionally, we continue to devote resources to improve the supply chain processes across our business segments and find areas of synergy and cost reduction, all along improving our supply chain management capability to meet global customer demands. We also remain focused on improving on-time delivery and quality, while managing warranty costs as a percentage of sales across our global operations, through the assistance of a focused Continuous Improvement Process ("CIP") initiative.The goal of the CIP initiative, which includes lean manufacturing, six sigma business management strategy and value engineering, is to maximize service fulfillment to customers through on-time delivery, reduced cycle time and quality at the highest internal productivity.

~~COVID-19 Update~~

~~Our cross-functional crisis management team established during~~On February 9, 2023 the first quarter of 2020 has continued monitoring and making recommendations to management to help us continue operating as an essential business, while also protecting the health and safety of our associates.~~We continue to actively monitor the impacts~~Company entered into a definitive agreement under which it will acquire all of the ~~COVID-19 pandemic on~~outstanding equity of Velan Inc., a manufacturer of highly engineered industrial valves, in an all ~~aspects~~cash transaction valued at approximately $245 million. The transaction remains subject to customary closing conditions, including applicable regulatory approvals. All such regulatory approvals have been obtained, other than French Foreign Investment Screening approvals. The timing of ~~our business~~both such approval and ~~geographies.~~

~~While we cannot reasonably estimate with certainty~~ the ~~duration and severity~~close of the COVID-19 pandemic or its ultimate impact on the global economy, our business or our financial condition and results, we nonetheless remain committed to providing the critical support, products and services that our customers rely on, andtransaction are currently ~~believe that we will emerge from these events well positioned for long-term growth.~~uncertain.

~~Health and Safety of Our Associates~~

The health and safety of our associates, suppliers and customers around the world continues to be a priority as we navigate the COVID-19 pandemic, including recent spikes in cases of the virus and its variants in various geographies in which we operate. These recent spikes related to multiple Omicron variants have caused significant disruption in certain geographies where we operate, including in Europe and China, which contributed to the labor availability and other COVID-19 operational challenges faced during the first half of 2022. Our associates have continued to demonstrate strong resilience in adapting to continually evolving health and safety guidelines while addressing these challenging times and providing products and services to our customers.

At the beginning of the pandemic we implemented policies and practices to help protect our workforce so they can safely and effectively carry out their vital work, and we have continued to revise those policies and practices in light of guidance received from local and regional health authorities where appropriate.

Our employees and facilities have a key role in keeping essential infrastructure and industries operating, including oil and gas, water, chemical, power generation and other essential industries, such as food and beverage and healthcare. While all of our facilities generally remain open and operational, we continue to occasionally experience temporary shutdowns in specific

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~~geographies as a result~~COVID-19 and Related Impacts

We continue to assess and proactively respond to the remaining impacts of COVID-19 ~~disruption, such as~~on all aspects of our business and geographies, including with respect to our associates, customers and communities, supply chain impacts and labor availability issues, and to take appropriate actions in an effort to mitigate adverse effects of the ~~recent government-mandated shutdowns in Shanghai, China. The measures described above, combined~~pandemic.

During 2022 we experienced a number of COVID-related headwinds including with ~~continued employee costs and under-absorption of manufacturing costs as a result of~~respect to temporary closures of our facilities, supply chain and ~~work-from-home policies, have had~~logistics disruptions, and ~~are expected to continue having an adverse impact on our financial performance throughout the remainder of the pandemic. Despite the increased challenges of~~ labor availability ~~in the first half of 2022, we continue to expect a decline of these adverse impacts as we navigate through the remainder of 2022.~~

~~Customer Demand~~

issues.During the first six months of ~~2022, the ongoing effects of the COVID-19 pandemic in global markets has continued to adversely impact our customers, particularly in the oil~~2023, COVID-related supply chain, logistics and gas markets. As a result of the pandemic’s effect (among certain other effects) on oil prices during 2020, many of our large oil and gas customers reduced capital expenditures and budgets in 2020. To date, while spending for maintenance and repair projects and aftermarket services have returned to pre-pandemic levels over the past several quarters, project-based, oil and gas customer spending has yet to return to pre-pandemic levels despite some meaningful improvement in the first six months of 2022. In this regard, we saw an overall increase in bookings of 12.3% in the first six months of 2022 aslabor availability impacts decreased when compared to ~~the same period in 2021. Despite the meaningful improvement in customer spending, during the first half of 2022 we continued to experience customer-driven delays in the witnessing~~2022.

The strong U.S. dollar has made and ~~inspection necessary to take delivery of equipment, which we expect will continue as long as we and our customers~~may continue to ~~experience the supply chain~~make our products more expensive overseas and ~~logistics headwinds described below under the heading "Supply Chain Impact."~~

~~While many of the repair and maintenance projects that were paused by~~has made it challenging to meet our ~~customers in 2020 as a result of the pandemic were completed in 2021, repair and maintenance delays continued in 2021 and the first half of 2022, that~~international customers’ pricing expectations.We will ~~ultimately need~~strive to continue to be ~~completed, the timing will largely depend on the duration of the COVID-19 pandemic and how the virus continues to spread~~proactive in our customers’ various geographies, given the impact of the pandemic on demand, utilization and required maintenance. While we saw some recovery in oil and gas capital expenditure budgets in the first half of 2022, capital spending did not yet reach pre-pandemic levels. We continueefforts to ~~expect planned oil and gas capital spending to increase through the rest of 2022 but remain below pre-pandemic levels.~~

~~Supply Chain Impact~~

Since the onset of the pandemic, many of our suppliers have also experienced varying lengths of production and shipping delays related to the COVID-19 pandemic and its effects, some of which continue to exist in highly affected countries. Additionally, the global supply chain and logistics constraints that have been affecting global markets since the third quarter of 2021 have continued to cause additional headwinds through the first half of 2022. These conditions have had an adverse effect on the speed at which we can manufacture and ship our products to customers, and have also led to an increase in logistics, transportation and freight costs, requiring that we diversify our supply chain and, in some instances, source materials from new suppliers. Additionally, these conditions have in some cases impacted our ability to deliver products to customers on time, which has in turn led to an increase in backlog at some of our manufacturing sites. These disruptionsstay competitive in our ~~supply chain~~prices and ~~their effects have continued and~~market share.

Throughout COVID-19, we ~~expect they will continue as the COVID-19 pandemic and ongoing global supply chain and logistics headwinds continue.~~

~~Operational Impacts~~

~~We have~~ engaged in a number of cost savings measures in order to help mitigate ~~certain of~~ the adverse effects of ~~the~~ COVID-19 ~~pandemic~~ on our financial results, including certain realignment activities (further described below under “RESULTS OF OPERATIONS – Six months ended June 30, 2022 and 2021”), reductions in capital expenditures and continued cuts in other discretionary spending due to our response to the global macroeconomic effects of COVID-19, which partially offsets the continued costs and operational impacts of the safety protocols and procedures that we have implemented and sustained as described above under the heading "Health and Safety of Our Associates" and resulting inflationary pressures.activities. We will continue to evaluate additional cost savings measures in order to reduce the impact of ~~the~~ COVID-19 ~~pandemic~~ on our financial ~~results.~~

~~We continually monitor and assess~~results, including the ~~spread of COVID-19 and known variants, including in areas that have seen recent increases in cases,~~2023 Realignment Program, and we will continue to adapt our operations to respond to the changing conditions as ~~needed. During~~needed but we expect these actions to reduce as the ~~first half~~adverse impacts of 2022, we continued to experience the same increased difficulty in maintaining staffing and productivity levels due to both a higher quarantine rate and a tighter labor market for new hiring as we experienced in the second half of 2021. As we

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COVID-19 continue to manage our business through this time of uncertainty and market volatility, we will remain focused on the health and safety of our associates, suppliers, customers, and will continue to provide essential products and services to our customers.decrease in 2023.

Impact of Russia-Ukraine Conflict on our Business

In response to the ongoing military conflict in Ukraine, several countries, including the United States, have imposed economic sanctions and export controls on certain industry sectors and parties in Russia. As a result of this conflict, including the aforementioned sanctions and overall instability in the region, in February 2022 we stopped accepting new orders in Russia and temporarily suspended fulfillment of existing orders. In March 2022, we made the decision to permanently cease all Company operations in Russia. We have ~~commenced~~substantially completed the necessary actions to cease operations of our Russian subsidiary, including taking steps to cancel existing contracts with customers and terminate our approximately 50 Russia-based employees and terminate other related contractual ~~commitments, and currently expect this process to continue throughout 2022.~~

In 2021 our Russian subsidiary had approximately $14 million of sales with an additional $36 million of sales from certain of our other foreign subsidiaries into the Russian market. As of March 31, 2022, the net assets held on our Russian subsidiary's balance sheet were $2.7 million, including $7.1 million of cash, $3.6 million of accounts receivables, net, a $9.3 million net intercompany payable position and other immaterial amounts. In addition, certain of our other foreign subsidiaries had open contracts with Russian customers that were subsequently cancelled for which revenue had been previously recognized over time utilizing the percentage of completion ("POC") method.commitments. As a result of the ~~above, in~~conflict and the resulting macroeconomic impacts, we have also experienced supply shortages and inflationary pressures.

In the first quarter of 2022, we recorded a $20.2 million pre-tax charge ($21.0 million after-tax) to reserve the asset positions of our Russian subsidiary (excluding cash) as of March 31, 2022, to record a contra-revenue for previously recognized revenue and estimated cancellation fees on open contracts that were previously accounted for under POC and subsequently canceled, to establish a reserve for the estimated cost to exit the operations of our Russian subsidiary and to record a reserve for our estimated financial exposure on contracts that have or ~~are~~ anticipated to be ~~cancelled. We~~canceled.

~~The following table presents the above impacts~~a result of the ~~Russia pre-tax charge:~~

Six Months Ended June 30, 2022
(Amounts in thousands) FPD FCD Consolidated Total
Sales $ (5,429) $ (2) $ (5,431)
Cost of sales 3,510 1,112 4,622
Gross loss (8,939) (1,114) (10,053)
Selling, general and administrative expense 9,111 1,082 10,193
Operating loss $ (18,050) $ (2,196) $ (20,246)

additional sanctions. We continue to monitor the situation involving Russia and Ukraine and its impact on the rest of our global business. This includes the macroeconomic impact, including with respect to global supply chain issues and inflationary pressures. To date, these impacts have not been material to our business and we do not currently expect that any incremental impact in future quarters, including any financial impacts caused by our cancellation of customer contracts and ceasing of operations in Russia, will be material to the Company.

~~2022~~The following table presents the above impacts of the Russia pre-tax charge in the first six months of 2022:


	Six Months Ended June 30, 2022
(Amounts in thousands)		FPD		FCD		Consolidated Total
Sales		$	(5,429)	$	(2)	$	(5,431)
Cost of sales ("COS")		3,510		1,112		4,622
Gross loss		(8,939)		(1,114)		(10,053)
Selling, general and administrative expense ("SG&A")		9,111		1,082		10,193
Operating loss		$	(18,050)	$	(2,196)	$	(20,246)

2023 Outlook

As the world continues to ~~make progress against~~recover from COVID-19, ~~largely through increased vaccinations,~~ we have seen an inflection in our served end-markets as commodity prices and mobility levels increase. With our increased backlog and improved market environment, we expect to return to growth in ~~2022,~~2023; however, the combined effects of the supply chain, logistics and labor availability headwinds ~~have continued into the first half~~are expected to

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continue in 2023. Further, we have not seen and do not expect to see an increase in cancellations from our backlog. We ~~therefore expect to~~will continue to ~~deliver on~~be proactive in our ~~backlog during 2022, though with a slightly longer cycle time than originally expected.~~efforts to stay competitive in our prices and market share.

As of June 30, ~~2022,~~2023, we have cash and cash ~~equivalents~~equivalents of ~~$458.3~~$422.8 million and ~~$277.1~~$553.8 million of borrowings available under our Senior Credit Facility. During the second quarter of 2023 the Company borrowed on the Revolving Credit Facility for general corporate purposes and as of June 30, 2023 had $50.0 million outstanding. As of August 1, 2023, the outstanding balance was $90 million after incremental borrowing of $40 million during the 3rd quarter of 2023. 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. ~~Additionally, we~~We expect ~~that~~the liquidity discussed above coupled with the costs savings measures planned and already in place will further enable us to maintain adequate liquidity over the short-term (next 12 months) and long-term (beyond the next 12 months) ~~as we manage through the current market environment.~~. We will continue to actively monitor ~~the potential impacts of COVID-19 and related events on~~ the credit markets in order to maintain sufficient liquidity and access to capital.

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RESULTS OF OPERATIONS — Three and six months ended June 30, ~~2022~~2023 and ~~2021~~2022

Throughout this discussion of our results of operations, we discuss the impact of fluctuations in foreign currency exchange rates. We have calculated currency effects on operations by translating current year results on a monthly basis at prior year exchange rates for the same periods.

In the second quarter of 2020, we identified and initiated certain realignment activities to right-size our organizational operations based on the current business environment, with the overall objective to reduce our workforce ~~costs.~~costs, including manufacturing optimization through the consolidation of certain facilities ("2020 Realignment Program"). As of December 31, 2022, the 2020 Realignment Program was substantially complete with a minimal amount of residual charges to be incurred prospectively.

In the first quarter of 2023, we identified and initiated certain realignment activities concurrent with the consolidation of our aftermarket and pump operations into a single operating model. This consolidated operating model is designed to better align our go to market strategy with our product offerings, enable end-to-end lifecycle responsibility and accountability, and to facilitate more efficient operations. Additionally, we committed to an estimated $50 million in cost reduction efforts to begin in 2023. Collectively, the above realignment activities are referred to as the 2023 Realignment Program. The 2023 Realignment Program activities will be identified and initiated in phases throughout 2023. We currently anticipate a total investment in realignment activities that have been identified and initiated to date of approximately $40 million of which $13 million is estimated to be non-cash. Based on 2023 Realignment Program activities initiated to date, we estimate that we have recognized cost savings of approximately ~~$95~~$3 million ~~and~~during the ~~vast majority~~six months ended June 30, 2023. Upon completion of the ~~charges were incurred~~2023 Realignment Program activities that have been identified and initiated to date, we expect full year run-rate savings of approximately $16 million in ~~2020 and 2021 with the remainder~~2024. Actual savings could vary from expected savings, which represent management's best estimate to ~~be incurred in 2022~~.date. There are certain other realignment activities that are currently being evaluated, but have not yet been ~~finalized~~initiated, and therefore are not included in the above anticipated total ~~investment.~~investment or estimated savings.

Realignment Activity

The following tables present out realignment activity by segment related to our Realignment ~~Program:~~Programs:


		Three Months Ended June 30, 2022											Three Months Ended June 30, 2023

(Amounts in thousands)	(Amounts in thousands)	FPD		FCD		Subtotal–Reportable Segments		Eliminations and All Other		Consolidated Total		(Amounts in thousands)	FPD		FCD		Subtotal–Reportable Segments		Eliminations and All Other		Consolidated Total
Total Realignment Charges	Total Realignment Charges											Total Realignment Charges
COS	COS	$	379	$	88	$	467	$	—	$	467	COS	$	953	$	3,153	$	4,106	$	—	$	4,106
SG&A	SG&A	2		33		35		27		62		SG&A	17		—		17		7,428		7,445

Total	Total	$	381	$	121	$	502	$	27	$	529	Total	$	970	$	3,153	$	4,123	$	7,428	$	11,551

Three Months Ended June 30, 2021
(Amounts in thousands) FPD FCD Subtotal–Reportable Segments Eliminations and All Other Consolidated Total
Total Realignment Charges
COS $ 3,574 $ 251 $ 3,825 $ — $ 3,825
SG&A 1,005 $ (129) 876 915 1,791
Total $ 4,579 $ 122 $ 4,701 $ 915 $ 5,616

Six Months Ended June 30, 2022
(Amounts in thousands) FPD FCD Subtotal–Reportable Segments Eliminations and All Other Consolidated Total
Total Realignment Charges
COS $ 296 $ 34 $ 330 $ (61) $ 269
SG&A 77 50 127 (266) (139)
Total $ 373 $ 84 $ 457 $ (327) $ 130

Six Months Ended June 30, 2021
(Amounts in thousands) FPD FCD Subtotal–Reportable Segments Eliminations and All Other Consolidated Total
Total Realignment Charges
COS $ 11,492 $ 1,148 $ 12,640 $ 590 $ 13,230
SG&A 1,162 730 1,892 4,195 6,087
Total $ 12,654 $ 1,878 $ 14,532 $ 4,785 $ 19,317

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	Three Months Ended June 30, 2022

(Amounts in thousands)	FPD		FCD		Subtotal–Reportable Segments		Eliminations and All Other		Consolidated Total
Total Realignment Charges
COS	$	379	$	88	$	467	$	—	$	467
SG&A	2		$	33	35		27		62

Total	$	381	$	121	$	502	$	27	$	529


	Six Months Ended June 30, 2023

(Amounts in thousands)	FPD		FCD		Subtotal–Reportable Segments		Eliminations and All Other		Consolidated Total
Total Realignment Charges
COS	$	1,343	$	3,164	$	4,507	$	(199)	$	4,308
SG&A	2,067		8,906		10,973		13,149		24,122

Total	$	3,410	$	12,070	$	15,480	$	12,950	$	28,430


	Six Months Ended June 30, 2022

(Amounts in thousands)	FPD		FCD		Subtotal–Reportable Segments		Eliminations and All Other		Consolidated Total
Total Realignment Charges
COS	$	296	$	34	$	330	$	(61)	$	269
SG&A	77		50		127		(266)		(139)

Total	$	373	$	84	$	457	$	(327)	$	130

Consolidated Results

Bookings, Sales and Backlog


		Three Months Ended June 30,					Three Months Ended June 30,
(Amounts in millions)	(Amounts in millions)	2022		2021		(Amounts in millions)	2023		2022
Bookings	Bookings	$	1,044.0	$	952.8	Bookings	$	1,111.0	$	1,044.0
Sales	Sales	882.2		898.2		Sales	1,080.4		882.2


		Six Months Ended June 30,					Six Months Ended June 30,
(Amounts in millions)	(Amounts in millions)	2022		2021		(Amounts in millions)	2023		2022
Bookings	Bookings	$	2,129.7	$	1,896.8	Bookings	$	2,167.4	$	2,129.7
Sales	Sales	1,703.3		1,755.5		Sales	2,060.7		1,703.3

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, ~~2022~~2023 increased by ~~$91.2~~$67.0 million, or ~~9.6%~~6.4%, as ~~compared~~compared with the same period in ~~2021.~~ 2022. The increase included negative currency effects of approximately ~~$47~~$2 million. The increase was driven by increased customer orders in the oil and gas, ~~chemical,~~ general, ~~and the~~ water management and power generation industries, partially offset by ~~decreased bookings in power generation~~the chemical industry. The increase in customer bookings was ~~primarily~~ driven substantially by ~~original equipment~~aftermarket bookings.

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Bookings for the six months ended June 30, ~~2022~~2023 increased by ~~$232.9~~$37.7 million,, or ~~12.3%~~1.8%, as compared with the same period in ~~2021.~~2022. The increase included negative currency effects of approximately ~~$73~~$25 million. TheThe increase was driven by increased customer bookings in the ~~and~~ oil and gas, ~~chemical,~~general and water management industries, partially offset by the power generation and ~~the water management~~chemical industries. The increase in customer ~~bookings~~bookings was ~~more heavily weighted towards~~ ~~original equipment~~driven by aftermarket bookings.

Sales for the three months ended June 30, ~~2022 decrease~~2023 increased by ~~$16.0~~$198.2 million, or ~~1.8%~~22.5%, asas compared with the same period in ~~2021.~~ 2022. The ~~decrease~~increase included negative currency effects of approximately ~~$41 million~~. $4 million. The ~~decreased~~increased sales were driven by both aftermarket and original equipment customer sales, with ~~decreased sales into Europe, Asia Pacific and Latin America, partially offset by~~ increased customer sales into North America, ~~Africa~~Europe, Latin America, Asia Pacific and ~~the~~ Middle ~~East.~~ East, partially offset by decreased customer sales into Africa. Net sales toto international customers, including export sales from the U.S., were approximately 62% ~~and 66%~~ of total sales for both the three months ended June 30, ~~2022~~2023 and ~~2021, respectively.~~2022. Aftermarket sales represented approximately 52% of total sales, as compared with approximately 53% of total sales for the same period in 2022.

Sales for the six months ended June 30, ~~2022 decreased~~2023 increased by ~~$52.2~~$357.4 million, or ~~3.0%~~21.0%, as compared with the same period in ~~2021.~~2022. The ~~decrease~~increase included negative currency effects of approximately ~~$60~~$28 million. The ~~decreased~~increased sales were driven by both aftermarket and original equipment ~~and aftermarket,~~customer sales, with ~~decreased~~increased customer sales into North America, Europe, Latin America, Asia Pacific ~~Latin America~~ and ~~the~~ Middle East, partially offset by ~~increased~~decreased customer sales into ~~North America.~~Africa. Net sales toto international customers, including export sales from the U.S., were ~~approximately~~approximately 63% and 62% ~~and 67%~~ of total sales for the ~~three~~six months ended June 30, 2023 and 2022, ~~and 2021,~~ respectively.Aftermarket sales represented approximately 52% of total sales, as compared with approximately 53% of total sales for the same period in 2022.

Backlog represents the aggregate value of booked but uncompleted customer orders and is influenced primarily by bookings, sales, cancellations and currency effects. Backlog of ~~$2,316.2~~$2,843.2 million at June 30, ~~2022~~2023 increased by ~~$312.6~~$107.9 million, or ~~15.6%~~3.9%, as compared with December 31, ~~2021 and include the negative impact of $25.2 million of order cancellations in the first quarter of 2022 due to our exposure in Russia.~~2022. Currency effects provided ~~a decrease~~an increase of approximately ~~$73~~$24 million. ~~Approxim~~A~~ately 37% and 38%~~pproximately 35% of thethe backlog at June 30, ~~2022~~2023 and 34% of the backlog at December 31, ~~2021, respectively,~~2022 was related to aftermarket orders. ~~Backlog~~Backlog includes our unsatisfied (or partially unsatisfied) performance obligations related to contracts having an original expected duration in excess of one year of approximately ~~$562~~$751 million, as discussed in Note 2 to our condensed consolidated financial statements included in this Quarterly Report.

Gross Profit and Gross Profit Margin


		Three Months Ended June 30,							Three Months Ended June 30,
(Amounts in millions, except percentages)	(Amounts in millions, except percentages)	2022			2021			(Amounts in millions, except percentages)	2023			2022
Gross profit	Gross profit	$	249.8		$	278.2		Gross profit	$	322.8		$	249.8
Gross profit margin	Gross profit margin	28.3		%	31.0		%	Gross profit margin	29.9		%	28.3		%

~~Table of~~ ~~Contents~~

Six Months Ended June 30,
(Amounts in millions, except percentages) 2022 2021
Gross profit $ 459.5 $ 529.1
Gross profit margin 27.0 % 30.1 %


	Six Months Ended June 30,
(Amounts in millions, except percentages)	2023			2022
Gross profit	$	619.6		$	459.5
Gross profit margin	30.1		%	27.0		%

Gross profit for the three months ended June 30, ~~2022 decreased~~2023 increased by ~~$28.4~~$73 million, or ~~10.2%~~29.2%, as compared with the same period in ~~2021.~~2022. Gross profit margin for the three months ended June 30, ~~2022~~2023 of ~~28.3% decreased~~29.9% increased from ~~31.0%~~28.3% for the same period in ~~2021.~~2022. The ~~decrease~~increase in gross profit margin was primarily due to ~~revenue recognized on~~the favorable impact of previously implemented sales price increases and lower ~~margin original equipment orders, lower conversion of customer backlog to revenue and increased freight costs largely due to global~~ supply chain ~~and logistics constraints and under absorption of fixed manufacturing costs,~~inflationary pressure, partially offset by ~~a mix shift to~~ higher ~~aftermarket sales and lower~~ broad-based annual incentive compensation and increased charges related to our Realignment Programs as compared to the same period in ~~2021. Aftermarket sales represented approximately 53% of total sales, as compared with approximately 52% of total sales for the same period in 2021.~~2022.

Gross profit for the six months ended June 30, ~~2022 decreased~~2023 increased by ~~$69.6~~$160.1 million, or ~~13.2%~~34.8%, as compared with the same period in ~~2021.~~2022. Gross profit margin for the six months ended June 30, ~~2022~~2023 of ~~27.0% decreased~~30.1% increased from ~~30.1%~~27.0% for the same period in ~~2021.~~2022. The ~~decrease~~increase in gross profit margin was primarily due to ~~revenue recognized on~~the favorable impact of previously implemented sales price increases, lower ~~margin original equipment orders,~~supply chain inflationary pressure and a $4.6 million charge taken in the first quarter of 2022 related to our financial exposure in Russia ~~lower conversion of customer backlog to revenue and increased freight costs largely due to global supply chain and logistics constraints and under absorption of fixed manufacturing costs,~~that did not recur, partially offset by ~~as mix shift to~~ higher ~~aftermarket sales and lower~~ broad-based annual incentive compensation and increased charges related to our Realignment Programs as compared to the same period in ~~2021. Aftermarket sales represented approximately~~ ~~53% of total sales, as compared with approximately 52% of total sales for the same period in 2021.~~2022.

Selling, General and Administrative Expense

Three Months Ended June 30,
(Amounts in millions, except percentages) 2022 2021
SG&A $ 194.6 $ 210.8
SG&A as a percentage of sales 22.1 % 23.5 %

Six Months Ended June 30,
(Amounts in millions, except percentages) 2022 2021
SG&A $ 400.8 $ 409.1
SG&A as a percentage of sales 23.5 % 23.3 %

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	Three Months Ended June 30,
(Amounts in millions, except percentages)	2023			2022
SG&A	$	230.1		$	194.6
SG&A as a percentage of sales	21.3		%	22.1		%


	Six Months Ended June 30,
(Amounts in millions, except percentages)	2023			2022
SG&A	$	474.4		$	400.8
SG&A as a percentage of sales	23.0		%	23.5		%

SG&A for the three months ended June 30, ~~2022 decreased~~2023 increased by ~~$16.2~~$35.5 million, or ~~7.7%~~18.2%, as compared with the same period in ~~2021.~~2022. Currency effects yielded a decrease of ~~approximately $7~~less than $1 million. SG&A as a percentage of sales for the three months ended June 30, ~~2022~~2023 decreased ~~140~~80 basis points primarily due to ~~decreased~~increased sales leverage and a $4.0 million reduction of costs associated with a discrete legal matter, partially offset by higher broad-based annual incentive compensation, increased charges related to our ~~realignment actions~~Realignment Programs, a $3.6 million increase in research and ~~lower broad-based annual incentive compensation~~development costs and $2.9 million of expense related to the pending acquisition of Velan Inc. as compared with the same period in ~~2021.~~2022.

SG&A for the six months ended June 30, ~~2022~~ ~~decreased~~2023 increased by ~~$8.3~~$73.6 million, or ~~2.0%~~18.4%, as compared with the same period in ~~2021.~~2022. Currency effects yielded a decrease of approximately ~~$12 million. S~~G$4 million. SG&A as a percentage of sales for the six months ended June 30, ~~2022~~ ~~increased 20~~2023 decreased 50 basis points primarily due to a $10.2 million charge taken in the first quarter of 2022 related to our financial exposure in Russia that did not recur and increased sales leverage, partially offset by ~~decreased costs related to our realignment actions and decreased~~higher broad-based annual incentive compensation, increased charges related to our Realignment Programs, a $7.3 million increase in research and development costs, $6.0 million of expense related to the pending acquisition of Velan Inc. and a $2.9 million impairment of a licensing intangible as compared with the same period in ~~2021.~~2022.

Net Earnings from Affiliates


		Three Months Ended June 30,					Three Months Ended June 30,
(Amounts in millions)	(Amounts in millions)	2022		2021		(Amounts in millions)	2023		2022
Net earnings from affiliates	Net earnings from affiliates	$	5.1	$	2.9	Net earnings from affiliates	$	4.0	$	5.1

~~Table of~~ ~~Contents~~

Six Months Ended June 30,
(Amounts in millions) 2022 2021
Net earnings from affiliates $ 9.0 $ 6.4


	Six Months Ended June 30,
(Amounts in millions)	2023		2022
Net earnings from affiliates	$	8.6	$	9.0

Net earnings from affiliates for the three months ended June 30, ~~2022 increased~~2023 decreased by ~~$2.2~~$1.1 million, or ~~75.9%~~21.6%, as compared with the same period in ~~2021.~~2022. The ~~increase~~decrease in net earnings was primarily a result of ~~increased~~decreased earnings of our FPD joint venture in South Korea.

Net earnings from affiliates for the six months ended June 30, ~~2022 increased~~2023 decreased by ~~$2.6~~$0.4 million, or ~~40.6%~~4.4%, as compared with the same period in ~~2021.~~2022. The ~~increase~~decrease was primarily a result of ~~increased~~decreased earnings of our FPD joint venture in South Korea.

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Operating Income and Operating Margin


		Three Months Ended June 30,							Three Months Ended June 30,
(Amounts in millions, except percentages)	(Amounts in millions, except percentages)	2022			2021			(Amounts in millions, except percentages)	2023			2022
Operating income	Operating income	$	60.3		$	72.2		Operating income	$	96.6		$	60.3
Operating income as a percentage of sales	Operating income as a percentage of sales	6.8		%	8.0		%	Operating income as a percentage of sales	8.9		%	6.8		%

Six Months Ended June 30,
(Amounts in millions, except percentages) 2022 2021
Operating income $ 67.7 $ 128.3
Operating income as a percentage of sales 4.0 % 7.3 %


	Six Months Ended June 30,
(Amounts in millions, except percentages)	2023			2022
Operating income	$	153.8		$	67.7
Operating income as a percentage of sales	7.5		%	4.0		%

Operating income for the three months ended June 30, ~~2022 decreased~~2023 increased by ~~$11.9~~$36.3 million, or ~~16.5%~~60.2%, as compared with the same period in ~~2021.~~2022. The ~~decrease~~increase included negative currency effects of approximately $3$2 million. The ~~decrease~~increase was primarily a result of the ~~$28.4~~$73.0 million ~~decrease~~increase in gross profit partially offset by the ~~$16.2~~$35.5 million ~~decrease~~increase in SG&A.

Operating income for the six months ended June 30, ~~2022~~ ~~decreased~~2023 increased by ~~$60.6~~$86.1 million, or ~~47.2%~~127.2%, as compared with the same period in ~~2021.~~2022. The ~~decrease~~increase included negative currency effects of approximately $2$9 million. The ~~decrease~~increase was primarily a result of the ~~$69.6~~$160.1 million ~~decrease~~increase in gross profit, partially offset by the ~~$8.3~~$73.6 million ~~decrease~~increase in SG&A.

Interest Expense and Interest Income


		Three Months Ended June 30,					Three Months Ended June 30,
(Amounts in millions)	(Amounts in millions)	2022		2021		(Amounts in millions)	2023		2022
Interest expense	Interest expense	$	(11.1)	$	(14.3)	Interest expense	$	(16.6)	$	(11.1)
Interest income	Interest income	0.9		0.5		Interest income	1.9		0.9


		Six Months Ended June 30,					Six Months Ended June 30,
(Amounts in millions)	(Amounts in millions)	2022		2021		(Amounts in millions)	2023		2022
Interest expense	Interest expense	$	(21.8)	$	(31.1)	Interest expense	$	(32.8)	$	(21.8)
Interest income	Interest income	1.8		1.1		Interest income	3.4		1.8

Interest expense for the three months ended June 30, ~~2022 decreased $3.2~~2023 increased $5.5 million, as compared with the same period in ~~2021,~~2022, primarily due to ~~lower~~higher effective interest rates on our outstanding debt ~~as compared with~~resulting in part to the ~~same period~~termination of cross-currency swap agreements in ~~2021.~~the 4th quarter of 2022.

Interest expense for the six months ended June 30, ~~2022 decreased $9.3~~2023 increased $11.0 million, as compared with the same period in ~~2021,~~2022, primarily due to ~~lower~~higher effective interest rates on our outstanding debt ~~as compared with~~resulting in part to the ~~same period in 2021.~~

~~Loss on Extinguishment of Debt~~

~~Table of~~ ~~Contents~~

Six Months Ended June 30,
(Amounts in millions) 2022 2021
Loss on extinguishment of debt $ — $ (7.6)

~~Loss on extinguishment of debt for the six months ended June 30, 2021~~termination of ~~$7.6 million resulted from the~~ ~~loss on early extinguishment of our 2022 Euro Senior Notes~~cross-currency swap agreements in the ~~first~~4th quarter of ~~2021.~~2022.

Other Income (Expense), Net


		Three Months Ended June 30,					Three Months Ended June 30,
(Amounts in millions)	(Amounts in millions)	2022		2021		(Amounts in millions)	2023		2022
Other income (expense), net	Other income (expense), net	$	7.6	$	(7.9)	Other income (expense), net	$	(5.5)	$	7.6


		Six Months Ended June 30,					Six Months Ended June 30,
(Amounts in millions)	(Amounts in millions)	2022		2021		(Amounts in millions)	2023		2022
Other income (expense), net	Other income (expense), net	$	(0.5)	$	(19.2)	Other income (expense), net	$	(13.6)	$	(0.5)

Other expense, net for the three months ended June 30, ~~2022 decreased $15.5~~2023 increased $13.1 million as compared with the same period in ~~2021,~~2022, due primarily to a ~~$7.0~~$12.5 million increase in ~~gains~~losses from transactions in currencies other than our sites' functional currencies and a ~~$6.9~~$2.3 million ~~decrease~~increase in losses arising from transactions on foreign exchange forward contracts. The net change was primarily due to the foreign currency exchange rate movements in the United Arab Emirates dirham, Hungarian forint, ~~Brazilian real,~~ Euro, and ~~Russian ruble~~Brazilian real in relation to the U.S. dollar during the three months ended June 30, ~~2022,~~2023, as compared with the same period in ~~2021.~~2022.

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Other expense, net for the six months ended June 30, ~~2022 decreased $18.7~~2023 increased $13.1 million as compared with the same period in ~~2021,~~2022, due primarily to a ~~$19.7~~$14.6 million ~~decrease~~increase in losses from transactions in currencies other than our sites' functional currencies ~~partially offset by~~and a ~~$1.6~~$2.0 million ~~decrease~~increase in ~~gains~~losses arising from transactions on foreign exchange forward contracts. The net change was primarily due to the foreign currency exchange rate movements in the ~~Canadian dollar,~~United Arab Emirates dirham, Indian rupee, Hungarian forint ~~Euro~~ and ~~Russian ruble~~Mexican peso in relation to the U.S. dollar during the six months ended June 30, ~~2022,~~2023, as ~~compar~~edcompared with the same period in ~~2021.~~2022.

Income Taxes and Tax Rate


		Three Months Ended June 30,							Three Months Ended June 30,
(Amounts in millions, except percentages)	(Amounts in millions, except percentages)	2022			2021			(Amounts in millions, except percentages)	2023			2022
Provision for (benefit from) income taxes	Provision for (benefit from) income taxes	$	11.6		$	2.7		Provision for (benefit from) income taxes	$	21.3		$	11.6
Effective tax rate	Effective tax rate	20.1		%	5.4		%	Effective tax rate	27.9		%	20.1		%


		Six Months Ended June 30,							Six Months Ended June 30,
(Amounts in millions, except percentages)	(Amounts in millions, except percentages)	2022			2021			(Amounts in millions, except percentages)	2023			2022
Provision for (benefit from) income taxes	Provision for (benefit from) income taxes	$	14.8		$	6.5		Provision for (benefit from) income taxes	$	25.8		$	14.8
Effective tax rate	Effective tax rate	31.4		%	9.1		%	Effective tax rate	23.2		%	31.4		%

In December 2022, the European Union (“EU”) member states reached an agreement to implement the minimum tax component (“Pillar Two”) of the Organization for Economic Co-operation and Development’s tax reform initiative. Many countries continue to consider changes in their tax laws and regulations based on the Pillar Two proposals. We are continuing to evaluate the impact of these proposed and enacted legislative changes as new guidance becomes available. Some of these legislative changes could result in double taxation of our non-U.S. earnings, a reduction in the tax benefit received from our tax incentives, or other impacts to our effective tax rate and tax liabilities.

The effective tax rate of ~~20.1%~~27.9% for the three months ended June 30, ~~2022~~2023 increased from ~~5.4%~~20.1% for the same period in ~~2021.~~2022. The effective tax rate varied from the U.S. federal statutory rate for the three months ended June 30, ~~2022~~2023 primarily due to the net impact of foreign operations partially offset by ~~BEAT.~~the release of the valuation allowance on a Section 163(j) carryforward. Refer to Note 13 to our condensed consolidated financial statements included in this Quarterly Report for further discussion.

The effective tax rate of ~~31.4%~~23.2% for the six months ended June 30, ~~2022 increased~~2023 decreased from ~~9.1%~~31.4% for the same period in ~~2021.~~2022. The effective tax rate varied from the U.S. federal statutory rate for the six months ended June 30, ~~2022~~2023 primarily due to ~~the current and anticipated tax impact of the Russia-Ukraine conflict on our business, partially offset by~~ the net impact of foreign ~~operations.~~operations and state income taxes partially offset by the benefits of a tax planning strategy. Refer to Note 13 to our condensed consolidated financial statements included in this Quarterly Report for further discussion.

~~Table of~~ ~~Contents~~

Other Comprehensive Income (Loss)


		Three Months Ended June 30,					Three Months Ended June 30,
(Amounts in millions)	(Amounts in millions)	2022		2021		(Amounts in millions)	2023		2022
Other comprehensive income (loss)	Other comprehensive income (loss)	$	(57.6)	$	16.1	Other comprehensive income (loss)	$	8.1	$	(57.6)


		Six Months Ended June 30,					Six Months Ended June 30,
(Amounts in millions)	(Amounts in millions)	2022		2021		(Amounts in millions)	2023		2022
Other comprehensive income (loss)	Other comprehensive income (loss)	$	(70.7)	$	9.6	Other comprehensive income (loss)	$	21.2	$	(70.7)

Other comprehensive ~~loss~~income for the three months ended June 30, ~~2022~~2023 increased ~~$73.6~~$65.7 million ~~as compared to~~from a loss of $57.6 million in the same period in ~~2021.~~2022. The ~~increased loss~~income was ~~primarily due to foreign currency translation adjustments resulting primarily from exchange rate movements of~~ ~~the Euro, British pound, Indian rupee and Chinese yuan versus the U.S. dollar during the three months ended June 30, 2022, as compared with the same period in 2021.~~

~~Other~~ ~~comprehensive loss for the six months ended June 30, 2022 increased $80.3 million as compared to the same period in 2021. The increased loss was~~ primarily due to foreign currency translation adjustments resulting primarily from exchange rate movements of the Euro, British pound, ~~Indian rupee~~Chinese yuan and Mexican peso versus the U.S. dollar during the three months ended June 30, 2023, as compared with the same period in 2022.

Other comprehensive income for the six months ended June 30, 2023 increased $91.9 million from a loss of $70.7 million in the same period in 2022. The income was primarily due to foreign currency translation adjustments resulting primarily from

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exchange rate movements of the Euro, British pound, Chinese yuan and Mexican peso versus the U.S. dollar during the six months ended June 30, ~~2022,~~2023, as compared with the same period in ~~2021.~~2022.

Business Segments

We conduct our operations through two business segments based on the type of product and how we manage the business. We evaluate segment performance and allocate resources based on each segment’s operating income. The key operating results for our two business segments, FPD and FCD, are discussed below.

Flowserve Pump Division Segment Results

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 ~~"origin~~al"original equipment") and re~~lated~~related services. FPD primarily operates in the oil and gas, power generation, chemical and general industries. FPD operates in 49 countries with 35 manufacturing facilities worldwide, 10 of which are located in Europe, 11 in North America, eight in Asia and six in Latin America, and it operates ~~131~~134 QRCs, including those co-located in manufacturing facilities and/or shared with FCD.


		Three Months Ended June 30,							Three Months Ended June 30,
(Amounts in millions, except percentages)	(Amounts in millions, except percentages)	2022			2021			(Amounts in millions, except percentages)	2023			2022
Bookings	Bookings	$	717.8		$	668.8		Bookings	$	760.0		$	717.8
Sales	Sales	614.9			617.5			Sales	765.4			614.9
Gross profit	Gross profit	184.0			196.4			Gross profit	226.8			184.0
Gross profit margin	Gross profit margin	29.9		%	31.8		%	Gross profit margin	29.6		%	29.9		%
SG&A	SG&A	131.7			133.6			SG&A	132.8			131.7
Gain on sale of business		—			1.8

Segment operating income	Segment operating income	57.3			67.8			Segment operating income	98.0			57.3
Segment operating income as a percentage of sales	Segment operating income as a percentage of sales	9.3		%	11.0		%	Segment operating income as a percentage of sales	12.8		%	9.3		%

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		Six Months Ended June 30,							Six Months Ended June 30,
(Amounts in millions, except percentages)	(Amounts in millions, except percentages)	2022			2021			(Amounts in millions, except percentages)	2023			2022
Bookings	Bookings	$	1,513.0		$	1,322.2		Bookings	$	1,487.8		$	1,513.0
Sales	Sales	1,190.5			1,220.1			Sales	1,465.5			1,190.5
Gross profit	Gross profit	340.9			379.2			Gross profit	448.2			340.9
Gross profit margin	Gross profit margin	28.6		%	31.1		%	Gross profit margin	30.6		%	28.6		%
SG&A	SG&A	271.5			266.2			SG&A	279.8			271.5
Gain on sale of business		—			1.8
Segment operating income	Segment operating income	78.3			121.6			Segment operating income	177.1			78.3
Segment operating income as a percentage of sales	Segment operating income as a percentage of sales	6.6		%	10.0		%	Segment operating income as a percentage of sales	12.1		%	6.6		%

Bookings for the three months ended June 30, ~~2022~~2023 increased by ~~$49.0~~$42.2 million, or ~~7.3%~~5.9%, as compared with the same p~~eriod~~period in ~~2021.~~ 2022. The increase included ~~negative~~ currency ~~effects~~benefits of approximately ~~$34~~$1 million. The increase in customer bookings was driven by increased customer orders in the ~~chemical, general,~~oil and gas, power generation and ~~water management~~general industries, partially offset by decreased customer orders in the ~~oil~~chemical and ~~gas~~water management industries. Customer bookings increased ~~$62.1~~$3.9 million into the Middle East, $16.3 million into Europe, $23.3 million into North America, ~~$17.6~~$8.9 million into ~~Asia Pacific and $7.6 million into Africa~~Latin America and were partially offset by decreased customer orders of ~~$25.6~~$12.7 million into ~~the Middle East, $7.0~~Asia Pacific and $1.4 million into ~~Europe and $5.3 million into Latin America.~~Africa. The increase was ~~more heavily weighted towards original equipment~~driven by aftermarket bookings.

Bookings for the six months ended June 30, ~~2022 increased~~2023 decreased by ~~$190.8~~$25.2 million, or ~~14.4%~~1.7%, as compared with the same period in ~~2021.~~2022. The ~~increase~~decrease included negative currency effects of approximately ~~$52.9 million~~.$14 million. The ~~increase~~ decrease in customer bookings was driven b~~y increased~~ by decreased customer ~~orders~~orders in the oil and gas, power generation, chemical and water management industries, partially offset by ~~decreased~~increased customer orders in the general ~~industries.~~industry. Customer bookings ~~increased $86.1 million into North America, $26.4~~decreased $27.6 million into the Middle East, ~~$35.7~~$33.2 million into Asia Pacific ~~$68.1~~and $60.1 million into Europe ~~and $7.9 million into Africa~~ and were partially offset by ~~decreased~~increased customer orders of ~~$14.7~~$56.3 million into North America, $10.8 million into Africa and $15.7 million into Latin America. The ~~increase~~decrease was driven by ~~both~~ original equipment ~~and aftermarket~~ bookings.

Sales for the three months ~~ended~~ended June 30, ~~2022 decreased~~2023 increased by ~~$2.6~~$150.5 million, or ~~0.4%~~24.5% as compared with the same period in ~~2021 an~~d2022 and included negative currency effects of approximately ~~$30~~$1 million. The ~~decrease~~ increase was driven by ~~customer~~ both aftermarket and

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original equipment customer sales. ~~Decreased~~Increased customer sales of ~~$21.9~~$13.0 million into Asia Pacific, ~~$14.9~~$25.4 million into Europe, ~~and $4.0 million into Latin America were substantially offset by increased sales of $21.6~~$52.7 million into North America, ~~$4.8~~$53.6 million into the Middle East and ~~$10.3~~$14.9 million into Latin America were partially offset by decreased sales of $8.2 million into Africa.

Sales for the six months ended June 30, ~~2022 decreased~~2023 increased by ~~$29.6~~$275.0 million, or ~~2.4%~~23.1% as compared with the same period in ~~2021~~2022 and ~~included~~included negative currency effects of approximately ~~$44 million~~$17 million. The increase was driven by both aftermarket and ~~$5.4 million of negative impact as a result of the reserve for our Russia exposure.~~ ~~Thedecreasewas more heavily weighted by customer~~ original equipment customer sales. ~~Decrease~~dIncreased customer sales of ~~$45.3~~$25.1 million into Asia Pacific, ~~$29.9~~$36.9 million into Europe, $97.2 million into North America, $31.5 million into Latin America and ~~$0.8~~$99.8 million into the Middle East were partially offset by ~~increased sales of $35.8~~decreased $11.3 million into ~~North America, $4.9 million into Africa and $1.4 million into Latin America.~~Africa.

Gross profit for the three months ended June 30, ~~2022~~2023 ~~decreased~~increased by ~~$12.4~~$42.8 million, or ~~6.3%~~23.3%, as compared with the same period in ~~2021.~~2022. Gross profit margin for the three months ended June 30, ~~2022~~2023 of ~~29.9%~~29.6% decreased from ~~31.8%~~29.9% for the same period in ~~2021.~~2022. The decrease in gross profit margin was primarily attributable to revenue recognized on lower margin original equipment orders, lower conversion of customer backlog to revenue and increased freight costs largely due to global supply chain and logistics constraints, partially offset by a mix shift to higher ~~margin aftermarket, lower~~ broad-based annual incentive compensation, ~~and decreased costs~~increased charges related to our ~~realignment actions~~Realignment Programs and mix shift away from higher margin aftermarket sales, partially offset by the favorable impact of previously implemented sales price increases and lower supply chain inflationary as compared to the same period in ~~2021.~~2022.

Gross profit for the six months ended June 30, ~~2022~~2023 ~~decreased~~increased by ~~$38.3~~$107.3 million, or ~~10.1%~~31.5%, as compared with the same period in ~~2021.~~2022. Gross profit margin for the six months ended June 30, ~~2022~~2023 of ~~28.6% decreased~~30.6% increased from ~~31.1%~~28.6% for the same period in ~~2021.~~2022. The ~~decrease~~increase in gross profit margin was primarily ~~attributable to revenue recognized on lower margin original equipment orders, lower conversion of customer backlog to revenue and increased freight costs largely~~ due to ~~global~~the favorable impact of previously implemented sales price increases, lower supply chain ~~and logistics constraints~~inflationary pressure and a $3.5 million charge taken in the first quarter of 2022 related to our financial exposure in Russia that did not recur, partially offset by ~~a mix shift to~~ higher ~~margin aftermarket, lower~~ broad-based annual incentive compensation, ~~and decreased costs~~increased charges related to our ~~realignment actions~~Realignment Programs and a mix shift away from higher margin aftermarket sales as compared to the same period in ~~2021.~~2022.

SG&A for the three months ended June 30, ~~2022 decreased~~2023 increased by ~~$1.9~~$1.1 million, or ~~1.4%~~0.8%, as compared with the same period in ~~2021.~~2022. Currency effects provided ~~a decrease~~an increase of ~~approximately $5~~less than $1 million. The ~~decrease~~increase in SG&A was primarily due to ~~lower~~higher broad-based annual incentive compensation and ~~decreased~~a $2.6 million increase in research and development costs ~~related to our realignment actions~~ as compared to the same period in ~~2021.~~2022.

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SG&A for the six months ended June 30, ~~2022~~2023 increased by ~~$5.3~~$8.3 million, or ~~2.0%~~3.1%, as compared with the same period in ~~2021.~~2022. Currency effects provided ~~increase~~a decrease of approximately ~~$8.6~~$2 million. The increase in SG&A was primarily due ~~a $9.1 million charge taken in the first half of 2022~~to higher broad-based annual incentive compensation, increased charges related to our ~~financial exposure~~Realignment Programs, $4.8 million increase in ~~Russia, partially offset by lower broad-based annual incentive compensation~~research and development costs and a $2.9 million impairment of a licensing intangible as compared to the same period in ~~2021.~~2022.

Operating income for the three months ended June 30, ~~2022 decreased~~2023 increased by ~~$10.5~~$40.7 million, or ~~15.5%~~71.0%, as compared with the same period in ~~2021.~~2022. The ~~decrease~~increase included negative currency effects of approximately $3$1 million. The ~~decrease~~increase was primarily due to the $~~12.4~~42.8 million ~~decrease~~increase in gross profit partially offset by the ~~$1.9~~$1.1 million ~~decrease~~increase in SG&A.

Operating income for the six months ended June 30, ~~2022 decreased~~2023 increased by ~~$43.3~~$98.8 million, or ~~35.6%~~126.2%, as compared with the same period in ~~2021.~~2022. The ~~decrease~~increase included negative currency effects of approximately $2$7 million. The ~~decrease~~increase was primarily due to the $~~38.3~~107.3 million ~~decrease~~increase in gross profit ~~and~~partially offset by the ~~$5.3~~$8.3 million increase in SG&A.

Backlog of ~~$1,619.8~~$2,026.4 million at June 30, ~~2022~~2023 increased by ~~$250.9~~$17.5 million, or ~~18.3%~~0.9%, as compared with December 31, ~~2021 and~~2022 ~~include the negative impact of $19.0 million of order cancellations in the first quarter of 2022 due to our exposure in Russia.~~. Currency effects provided ~~a decrease~~an increase of approximately ~~$21~~$20 million.

Flow Control Division Segment Results

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~~engineered services to complement its expansive product portfolio. FCD has a total of 44 manufacturing facilities and QRCs in 22 countries around the world, with five of its 19 manufacturing operations located in the U.S., eight located in Europe, 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.

Three Months Ended June 30,
(Amounts in millions, except percentages) 2022 2021
Bookings $ 329.9 $ 289.1
Sales 268.4 281.2
Gross profit 80.3 84.8
Gross profit margin 29.9 % 30.2 %
SG&A 50.0 48.0
Segment operating income 30.4 37.2
Segment operating income as a percentage of sales 11.3 % 13.2 %

Six Months Ended June 30,
(Amounts in millions, except percentages) 2022 2021
Bookings $ 624.2 $ 582.6
Sales 516.3 537.0
Gross profit 139.8 159.4
Gross profit margin 27.1 % 29.7 %
SG&A 94.2 97.8
Segment operating income 45.6 61.9
Segment operating income as a percentage of sales 8.8 % 11.5 %

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	Three Months Ended June 30,
(Amounts in millions, except percentages)	2023			2022
Bookings	$	359.7		$	329.9
Sales	317.7			268.4
Gross profit	93.1			80.3
Gross profit margin	29.3		%	29.9		%
SG&A	56.9			50.0

Segment operating income	36.1			30.4
Segment operating income as a percentage of sales	11.4		%	11.3		%


	Six Months Ended June 30,
(Amounts in millions, except percentages)	2023			2022
Bookings	$	691.6		$	624.2
Sales	599.3			516.3
Gross profit	173.4			139.8
Gross profit margin	28.9		%	27.1		%
SG&A	118.7			94.2
Segment operating income	54.6			45.6
Segment operating income as a percentage of sales	9.1		%	8.8		%

Bookings for the three months ended June 30, ~~2022~~2023 increased by ~~$40.8~~$29.8 million, or ~~14.1%~~9.0%, as compared with the same period in ~~2021.~~2022. Bookings included negative currency effects of approximately ~~$14~~$3 million. The increase in customer bookings was primarily driven by increased customer orders in the ~~chemical,~~ oil and gas, chemical, water management and general industries, partially offset by decreased customer orders in the power generation industry. Increased customer bookings were driven by increased orders of ~~$11.8 million into North America, $14.8~~$15.2 million into Asia Pacific, ~~$5.3 million into Africa, $3.5~~$14.5 million into Europe ~~$5.7~~and $14.7 million into the Middle East, partially offset by decreased orders of $14.0 million into North America, $1.7 million into Africa and ~~$0.8~~$0.3 million into Latin America. The increase was driven by both aftermarket and customer original equipment bookings.

Bookings for the six months ended June 30, ~~2022~~2023 increased by ~~$41.6~~$67.4 million, or ~~7.1%~~10.8%, as compared with the same period in ~~2021.~~2022. Bookings included negative currency effects of approximately ~~$20~~$12 million. The increase in customer bookings was primarily driven by increased customer orders in the ~~chemical,~~ oil and gas, chemical, water management, power generation and general ~~industries, partially~~

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~~offset by decreased customer orders in the power generation industry.~~industries. Increased customer bookings were driven by increased orders of ~~$18.5~~$6.4 million into North America, ~~$12.1 million into Europe, $4.7 million into Africa, $7.5~~$50.6 million into the Middle East and $9.6 million into Europe, partially offset by decreased orders of $0.6 million into Asia Pacific, $1.9 million into Africa and $1.2 million into Latin ~~America were partially offset by decreased customer orders of $0.3 million into Asia Pacific.~~America. The increase was ~~primarily~~ driven by both aftermarket and customer original equipment bookings.

Sales for the three months ended June 30, ~~2022 decreased $12.8~~2023 increased $49.3 million, or ~~4.6%~~18.4%, as compared with the same period in ~~2021.~~2022. The ~~decrease~~increase included negative currency effects of approximately ~~$11~~$3 million. ~~Decreased~~Increased customer sales were driven by both aftermarket and customer original equipment sales. The ~~decrease~~increase was primarily driven by ~~decreased~~increased customer sales of ~~$16.2~~$22.9 million into ~~Asia Pacific, $1.7~~North America, $4.7 million into Africa, ~~$2.6~~$9.6 million into the Middle East, ~~$9.5~~$6.9 million into Europe and ~~$3.9~~$2.2 million into Latin ~~America, partially offset by increased customer sales of $22.3 million into North~~ America.

Sales for the six months ended June 30, ~~2022 decreased $20.7~~2023 increased $83.0 million, or ~~3.9%~~16.1%, as compared with the same period in ~~2021.~~2022. The ~~decrease~~increase included negative currency effects of approximately ~~$16~~$11 million. ~~Decreased~~Increased customer sales were driven by both aftermarket and customer original equipment sales. The ~~decrease~~increase was primarily driven by ~~decreased~~increased customer sales of ~~$27.3~~$40.9 million into ~~Asia Pacific, $4.8~~North America, $7.6 million into Africa, ~~$6.0~~$13.7 million into the Middle East, ~~$16.6~~$13.2 million into Europe and ~~$5.2~~$4.5 million into Latin ~~America, partially offset by increased customer sales of $39.4 million into North~~ America.

Gross profit for the three months ended June 30, ~~2022 decreased~~2023 increased by ~~$4.5~~$12.8 million, or ~~5.3%~~15.9%, as compared with the same period in ~~2021.~~2022. Gross profit margin for the three months ended June 30, ~~2022~~2023 of ~~29.9%~~29.3% decreased from the ~~30.2%~~29.9% for the same period in ~~2021.~~2022. The decrease in gross profit margin was primarily attributable to ~~lower conversion of customer backlog to revenue~~higher broad-based annual incentive compensation and increased ~~freight costs largely due~~charges related to ~~global supply chain and logistics constraints,~~our Realignment Programs, partially offset by the favorable impact of previously implemented sales price increases, favorable original equipment mix and lower ~~broad-based annual incentive compensation~~supply chain inflationary pressure as compared to the same period in ~~2021.~~2022.

Gross profit for the six months ended June 30, ~~2022 decreased~~2023 increased by ~~$19.6~~$33.6 million, or ~~12.3%~~24.0%, as compared with the same period in ~~2021.~~2022. Gross profit margin for the six months ended June 30, ~~2022~~2023 of ~~27.1% decreased~~28.9% increased from the ~~29.7%~~27.1% for the same

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period in ~~2021.~~2022. The ~~decrease in~~increase gross profit margin was primarily ~~attributable to lower conversion of customer backlog to revenue, increased freight costs largely~~ due to ~~global~~the favorable impact of previously implemented sales price increases, favorable original equipment mix and lower supply chain inflationary pressure, partially offset by higher broad-based annual incentive compensation and ~~logistics constraints and a $1.1 million charge taken in the first half of 2022~~increased charges related to our ~~financial exposure in Russia, partially offset by lower broad-based annual incentive compensation~~Realignment Programs as compared to the same period in ~~2021.~~2022.

SG&A for the three months ended June 30, ~~2022~~2023 increased by ~~$2.0~~$6.9 million, or ~~4.2%~~13.8%, as co~~mpared~~compared with the same period in ~~2021.~~2022. Currency effects provided a decrease of less than $1 million. The increase in SG&A was primarily due to higher broad-based annual incentive compensation and $2.9 million of expense related to the pending acquisition of Velan Inc. as compared to the same period in 2022.

SG&A for the six months ended June 30, 2023 increased by $24.5 million, or 26.0%, as compared with the same period in 2022. Currency effects provided a decrease of approximately $2 million. The increasein SG&A was primarily due to higher ~~bad debt expense and a discrete asset write-down, partially offset by lower~~ broad-based annual incentive compensation, increased charges related to our Realignment Programs and $6.0 million of expense related to the pending acquisition of Velan Inc. as compared to the same period in ~~2021.~~

~~SG&A for the six months ended June 30, 2022 decreased by $3.6 million, or 3.7%, as compared with the same period in 2021. Currency effects provided a decrease of approximately $3 million.~~ ~~The~~ ~~a decrease~~in SG&A was primarily due to lower broad-based annual incentive compensation, partially offset by a $1.1 million charge taken in the first quarter of 2022 related to our financial exposure in Russia as compared to the same period in 2021.2022.

Operating income for the three months ended June 30, ~~2022 decreased~~2023 increased by ~~$6.8~~$5.7 million, or ~~18.3%~~18.8%, as compared with the same period in ~~2021.~~2022. The ~~decrease~~increase included negative currency effects of ~~less than one~~approximately $1 million. The ~~decrease~~increase was primarily due to the ~~$4.5~~$12.8 million ~~decrease~~increase in gross profit, ~~and~~partially offset by the ~~$2.0~~$6.9 million increase in SG&A.

Operating income for the six months ended June 30, ~~2022 decreased~~2023 increased by ~~$16.3~~$9.0 million, or ~~26.3%~~19.7%, as compared with the same period in ~~2021.~~2022. The ~~decrease~~increase included negative currency effects of ~~less than one~~approximately $2 million. The ~~decrease~~increase was primarily due to the ~~$19.6~~$33.6 million ~~decrease~~increase in gross profit, partially offset by the ~~$3.6~~$24.5 million ~~decrease~~increase in SG&A.

Backlog of ~~$701.9~~$835.6 million at June 30, ~~2022~~2023 increased by ~~$62.1~~$90.1 million, or ~~9.7%~~12.1%, as compared with December 31, ~~2021 and include the negative impact of $9.8 million of order cancellations in the first quarter of~~ 2022 ~~due to our exposure in Russia~~. Currency effects provided ~~a decrease~~an increase of approximately ~~$52~~$4 million.

LIQUIDITY AND CAPITAL RESOURCES

Cash Flow and Liquidity Analysis


		Six Months Ended June 30,					Six Months Ended June 30,
(Amounts in millions)	(Amounts in millions)	2022		2021		(Amounts in millions)	2023		2022
Net cash flows provided (used) by operating activities	Net cash flows provided (used) by operating activities	$	(71.4)	$	61.3	Net cash flows provided (used) by operating activities	$	50.4	$	(71.4)
Net cash flows provided (used) by investing activities	Net cash flows provided (used) by investing activities	(29.0)		(23.8)		Net cash flows provided (used) by investing activities	(32.8)		(29.0)
Net cash flows provided (used) by financing activities	Net cash flows provided (used) by financing activities	(77.7)		(491.1)		Net cash flows provided (used) by financing activities	(32.3)		(77.7)

Existing cash, cash generated by operations and borrowings available under the Senior Credit Facility are our primary sources of short-term liquidity. We monitor the depository institutions that hold our cash and cash equivalents on a regular

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basis, and we believe that we have placed our deposits with creditworthy financial institutions. Our sources of operating cash generally include the sale of our products and services and the conversion of our working capital, particularly accounts receivable and inventories. Our cash balance at June 30, ~~2022~~2023 was ~~$458.3~~$422.8 million as compared with ~~$658.5~~$435.0 million at December 31, ~~2021.~~2022.

Our cash balance decreased by ~~$200.2~~$12.2 million to ~~$458.3~~$422.8 million at June 30, ~~2022,~~2023, as compared with December 31, ~~2021~~.2022. The cash activity during the first six months of ~~2022~~2023 included cash ~~used~~provided by operating activities, ~~$52.3~~$52.5 million in dividend payments, ~~$31.0~~cash proceeds of $150.0 million from borrowings on our Revolving Credit Facility, cash payments of $100.0 million on our Revolving Credit Facility, $31.9 million in capital expenditures and ~~$15.9~~$20.0 million of payments on our Term Loan.

For the six months ended June 30, ~~2022,~~2023, our cash ~~used~~provided by operating activities was ~~$71.4~~$50.4 million, as compared to cash ~~provided~~used of ~~$61.3~~$71.4 million for the same period in ~~2021.~~2022. Cash flow ~~provided from~~used for working capital decreased for the six months ended June 30, ~~2022,~~2023, due primarily to ~~increased~~decreased cash flows used by or ~~decreased~~increased cash flows provided by accounts receivable, ~~inventory,~~ contract assets, contract liabilities, ~~and~~ accrued liabilities and income ~~tax~~taxes payable and prepaid expenses and other, partially offset by ~~increased~~decreased cash flows provided by or ~~decreased~~increased cash flows used by inventories and accounts payable ~~and retirement obligations and other liabilities~~ as compared to the same period in ~~2021.~~2022.

Increases in accounts receivable used ~~$21.6~~$5.4 million of cash flow for the six months ended June 30, ~~2022,~~2023, as compared to ~~provided $14.3~~$21.6 million used for the same period in ~~2021.~~2022. As of June 30, ~~2022,~~2023, our days’ sales outstanding ("DSO") was 7574 days as compared with 7375 days as of June 30, ~~2021.~~2022.

~~Increases~~Decreases in contract assets ~~used $7.7~~provided $9.9 million of cash flow for the six months ended June 30, ~~2022,~~2023, as compared with cash flows ~~provided~~used of ~~$12.2~~$7.7 million for the same period in ~~2021.~~2022.

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Increases in inventory u~~sed $96.7~~ used $99.2 million and ~~$30.8~~$96.7 million of cash flow for the six months ended June 30, ~~2022~~2023 and June 30, ~~2021,~~2022, respectively. ~~Inventory~~Inventory turns were ~~3.3 tim~~es3.2 times at June 30, ~~2022,~~2023, as compared to ~~3.6~~3.3 times as of June 30, ~~2021.~~2022.

Increases in in accounts payable provided ~~$33.6~~$7.1 million of cash flow for the six months ended June 30, ~~2022,~~2023, as compared with ~~$41.1~~$33.6 million of cash ~~used~~provided for the same period in ~~2021. Decreases~~2022. Increases in accrued liabilities and income taxes payable ~~used $65.8~~provided $2.1 million of cash flow for the six months ended June 30, ~~2022,~~2023, as compared with ~~$37.1~~$65.8 million of cash flow used for the same period in 2021. Cash used from accrued liabilities and income tax payable included a one-time tax payment of approximately $30 million associated with accrued withholding taxes related to foreign undistributed earnings for the six months ended June 30, 2022.

Increases in contract liabilities provided ~~$9.6~~$10.8 million of cash flow for the six months ended June 30, ~~2022,~~2023, as compared to cash flows provided of ~~$17.0~~$9.6 million for the same period in ~~2021.~~2022.

Cash flows usedby investing activities during the six months ended June 30, ~~2022~~2023 were ~~$29.0~~$32.8 million, as compared to ~~$23.8~~cash flows used of $29.0 million for the same period in ~~2021.~~2022. Capital expenditures during the six months ended June 30, ~~2022~~2023 were ~~$31.0~~$31.9 million, an increase of ~~$8.5~~$0.9 million as compared with the same period in ~~2021.~~2022. Our capital expenditures ~~are~~ generally ~~focused~~focus on strategic initiatives to pursue information technology infrastructure, ongoing scheduled replacements and upgrades and cost reduction opportunities. In ~~2022,~~2023, we currently estimate capital ~~expenditures~~expenditures to be between ~~$60~~$75 million and ~~$70~~$85 million before consideration of any acquisition activity. ~~In addition, proceeds received during the six months ended June 30, 2022 from disposal of assets provided $0.2 million.~~ ~~Proceeds received during the~~ ~~six~~ ~~months ended June 30, 2021 from disposal of assets provided $2.1 million.~~

Cash flows used by financing activities during the six months ended June 30, ~~2022~~2023 were ~~$77.7~~$32.3 million, as compared to ~~$491.1~~$77.7 million of cash flows used for the same period in ~~2021.~~2022. Cash outflows in the six months ended June 30, 2023 resulted primarily from the $20.0 million of payments on our Term Loan, $52.5 million of dividend payments and $100.0 million of payments on our Revolving Credit Facility, partially offset by $150.0 million of cash proceeds from our Revolving Credit Facility. Cash outflows during the six months ended June 31, 2022 resulted primarily from the $15.9 million of payments on our Term Loan and $52.3 million of dividend payments. Cash outflows during the six months ended June 30, 2021 resulted primarily from a $407.5 million payment on long-term debt resulting from the redemption of our 2022 Euro Senior Notes, $52.2 million of dividend payments and the repurchase of $17.5 million of common shares.

Our ~~Amended and Restated~~Senior Credit Facility Agreement matures in September 13, 2026. ~~Approximately~~ Approx~~$18~~imately $20 million of our outstanding Term Loan Facility is due to mature in the remainder of ~~2022~~2023 and approximately $60 million i~~$40 million~~ ~~in 2023.~~n 2024. As of June 30, ~~2022,~~2023, we had an available capacity of $~~277.1~~553.8 million on our Senior Credit Facility, which provides for a $800.0 million unsecured revolving credit facility with a maturity date of September 13, 2026. Our borrowing capacity is subject to financial covenant limitations based on the terms of our Senior Credit Facility and is also reduced by outstanding letters of credit. Our Senior Credit Facility is committed and held by a diversified group of financial institutions. Refer to Note 6 to our condensed consolidated financial statements included in this Quarterly Report for additional information concerning our Senior Credit Facility.

During the six months ended June 30, ~~2022~~2023 we have made no cash contributions to our U.S. pension ~~plan.~~plan. At December 31, ~~2021~~2022, our U.S. pension plan was fully funded as defined by applicable law. After consideration of our funded ~~status,~~status, we currently do not anticipate making ~~$20 million in~~any contributions to our U.S. pension plan in ~~2022, excluding direct benefits paid.~~2023. We continue to maintain an asset allocation consistent with our strategy to maximize total return, while reducing portfolio risks through asset class diversification.

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Considering our current debt structure and cash needs, we currently believe cash flows generated from operating activities combined with availability under our Senior Credit Facility 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. Cash flows from operations could be adversely affected by economic, political and other risks associated with sales of our products, operational factors, competition, fluctuations in foreign exchange rates and fluctuations in interest rates, among other factors. See "Financing" and "Cautionary Note Regarding Forward-Looking Statements" below.

As of June 30, ~~2022,~~2023, we have $96.1 million of remaining capacity for Board of Directors approved share repurchases. While we currently intend to continue to return cash through dividends and/or share repurchases for the foreseeable future, any future returns of cash through dividends and/or share repurchases will be reviewed individually, declared by our Board of Directors at its discretion and implemented by management.

Financing

Credit Facilities

See Note 6 to our condensed consolidated financial statements included in this Quarterly Report for a discussion of our Senior Credit Facility and related covenants. We were in compliance with all applicable covenants under our Senior Credit Facility as of June 30, ~~2022.~~2023.

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As of June 30, ~~2022,~~2023, we have cash and cash ~~equivalents~~equivalents of ~~$458.3~~$422.8 million and ~~$277.1~~$553.8 million of ~~borrowings~~borrowings available under our Senior Credit Facility. WeDuring the second quarter of 2023 the Company borrowed on the Revolving Credit Facility for general corporate purposes and as of June 30, 2023 had $50.0 million outstanding. As of August 1, 2023, the outstanding balance was $90 million after incremental borrowing of $40 million during the 3rd quarter of 2023.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. ~~Additionally, we~~We expect ~~that~~the liquidity discussed above coupled with the costs savings measures planned and already in place will further enable us to maintain adequate liquidity over the short-term (next 12 months) and long-term (beyond the next 12 months) ~~as we manage through the current market environment.~~. We will continue to actively monitor ~~the potential impacts of COVID-19 and related events on~~ the credit markets in order to maintain sufficient liquidity and access to capital.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Management’s discussion and analysis of financial condition and results of operations are based on our condensed consolidated financial statements and related footnotes contained within this Quarterly Report. Our critical accounting policies used in the preparation of our condensed consolidated financial statements were discussed in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" of our ~~2021~~2022 Annual Report. The critical policies, for which no significant changes have occurred in the six months ended June 30, ~~2022,~~2023, include:

•Revenue Recognition;

•Deferred Taxes, Tax Valuation Allowances and Tax Reserves;

•Reserves for Contingent Loss;

•Pension and Postretirement Benefits; and

•Valuation of Goodwill, Indefinite-Lived Intangible Assets and Other Long-Lived Assets.

The process of preparing condensed consolidated financial statements in conformity with U.S. GAAP requires the use of estimates and assumptions to determine certain of the assets, liabilities, revenues and expenses. These estimates and assumptions are based upon what we believe is the best information available at the time of the estimates or assumptions. The estimates and assumptions could change materially as conditions within and beyond our control change. Accordingly, actual results could differ materially from those estimates. The significant estimates are reviewed quarterly with the Audit Committee of our Board of Directors.

Based on an assessment of our accounting policies and the underlying judgments and uncertainties affecting the application of those policies, we believe that our condensed consolidated financial statements provide a meaningful and fair perspective of our consolidated financial condition and results of operations. This is not to suggest that other general risk factors, such as changes in worldwide demand, changes in material costs, performance of acquired businesses and others, could not adversely impact our consolidated financial condition, results of operations and cash flows in future periods. See "Cautionary Note Regarding Forward-Looking Statements" below.

ACCOUNTING DEVELOPMENTS

We have presented the information about pronouncements not yet implemented in Note 1 to our condensed consolidated financial statements included in this Quarterly Report.

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report 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," "predicts" or other similar expressions are intended to identify forward-looking statements, which include, without limitation, statements concerning our future financial performance, future debt and financing levels, investment objectives, implications of litigation and regulatory investigations and other management plans for future operations and performance.

The forward-looking statements included in this Quarterly Report 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 are currently, or in the future could be, amplified by ~~the COVID-19 pandemic.~~COVID-19. Specific factors that might cause such a difference include, without limitation, the following:

•uncertainties related to the impact of ~~the~~ COVID-19 ~~pandemic~~ on our business and operations, financial results and financial position, our customers and suppliers, and on the global economy, including its impact on our sales;

•the global supply chain disruption, logistics constraints, 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 the global financial markets and the availability of capital 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. The liquidity and financial position of our customers could impact capital investment decisions and their ability to pay in full and/or on a timely basis;

•if we are not able to successfully execute and realize the expected financial benefits from our ~~strategic transformation,~~restructuring, realignment and other cost-saving initiatives, our business could be adversely affected;

•~~risks associated with cost overruns on fixed fee projects and in accepting customer orders for large complex custom engineered products;~~

•the substantial dependence of our sales on the success of the oil and gas, chemical, power generation and water management industries;

•the adverse impact of volatile raw materials prices on our products and operating margins;

•economic, political and other risks associated with our international operations, including military actions, trade embargoes or changes to tariffs or trade agreements that could affect customer markets, particularly North African ~~Russian~~ and Middle Eastern markets and global oil and gas producers, and non-compliance with U.S. export/reexport control, foreign corrupt practice laws, economic sanctions and import laws and regulations;

•increased aging and slower collection of receivables, particularly in Latin America and other emerging markets;

•our exposure to fluctuations in foreign currency exchange rates, particularly the Euro and British pound and in hyperinflationary countries such as Venezuela and Argentina;

•~~our furnishing of products and services to nuclear power plant facilities and other critical applications;~~

•potential adverse consequences resulting from litigation to which we are a party, such as litigation involving asbestos-containing material claims;

•expectations regarding acquisitions and the integration of acquired businesses;

•~~our relative geographical profitability and its impact on our utilization of deferred tax assets, including foreign tax credits;~~

•the potential adverse impact of an impairment in the carrying value of goodwill or other intangible assets;

•our dependence upon 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;

•environmental compliance costs and liabilities;

•potential work stoppages and other labor matters;

•access to public and private sources of debt financing;

•our inability to protect our intellectual property in the U.S., as well as in foreign countries;

•obligations under our defined benefit pension plans;

•our internal control over financial reporting may not prevent or detect misstatements because of its inherent limitations, including the possibility of human error, the circumvention or overriding of controls, or fraud;

•the recording of increased deferred tax asset valuation allowances in the future or the impact of tax law changes on such deferred tax assets could affect our operating results;

•risks and potential liabilities associated with cyber security threats; and

•ineffective internal controls could impact the accuracy and timely reporting of our business and financial results.

These and other risks and uncertainties are more fully discussed in the risk factors identified in "Item 1A. Risk Factors" in Part I of our ~~2021~~2022 Annual Report and Part II of this Quarterly Report, and may be identified in our Quarterly Reports on Form 10-Q and our other filings with the SEC and/or press releases from time to time. All forward-looking statements included in this document are based on information available to us on the date hereof, and we assume no obligation to update any forward-looking statement.

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Item 3.Quantitative and Qualitative Disclosures About Market Risk.

We have market risk exposure arising from changes in foreign currency exchange rate movements in foreign exchange forward contracts. We are exposed to credit-related losses in the event of non-performance by counterparties to financial instruments, but we currently expect our counterparties will continue to meet their obligations given their current creditworthiness.

~~LIBOR~~

On March 5, 2021, the UK Financial Conduct Authority (“FCA”), which regulates the London Interbank Offered Rate (“LIBOR”) issued an announcement on the future cessation or loss of representativeness of LIBOR benchmark settings currently published by ICE Benchmark Administration. That announcement confirmed that LIBOR will either cease to be provided by any administrator or will no longer be representative after December 31, 2021 for all non-USD LIBOR reference rates, and for 1-Week and 2-Month USD LIBOR and after June 30, 2023 for other USD LIBOR reference rates. The U.S. Federal Reserve, in conjunction with the Alternative Reference Rate Committee, has proposed the replacement of U.S. dollar LIBOR rates with a new index calculated by short-term repurchase agreements backed by U.S. Treasury securities called the Secured Overnight Financing Rate (“SOFR”). Whether or not SOFR is generally accepted as the LIBOR replacement remains in question and the future of LIBOR at this time is uncertain. The Company’s Amended and Restated Credit Agreement includes a provision for the determination of a successor LIBOR rate when appropriate by reference to the then-prevailing market convention for determining an interest rate for syndicated loans in the United States, subject to a right of the lenders thereunder to reject the application of the determined rate by written notice. While we will work with our administrative agent to incorporate a successor reference rate, there can be no assurances as to what alternative reference rates may be and whether such rates will be more or less favorable than LIBOR and any other unforeseen impacts of the potential discontinuation of LIBOR.

Foreign Currency Exchange Rate Risk

A substantial portion of our operations are conducted by our subsidiaries outside of the U.S. in currencies other than the U.S. dollar. Almost all of our non-U.S. subsidiaries conduct their business primarily in their local currencies, which are also their functional currencies. Foreign currency exposures arise from translation of foreign-denominated assets and liabilities into U.S. dollars and from transactions, including firm commitments and anticipated transactions, denominated in a currency other than our or a non-U.S. subsidiary’s functional currency. ~~As a means of managing the volatility of foreign currency exposure with the Euro/U.S. dollar exchange rate, we entered into~~ ~~three~~ swap agreements associated with our Euro investment in certain of our international subsidiaries. The swap agreements are designated as a net investment hedges and as of June 30, 2022, the notional value of the swaps agreements was ~~€423.2 million~~. Routinely, we review our investments in foreign subsidiaries from a long-term perspective and use capital structuring techniques to manage our investment in foreign subsidiaries as deemed necessary. For further discussion related to these swap agreements refer to Note 5 to our condensed consolidated financial statements included in this Quarterly Rep~~ort.~~ We recognized net gains (losses) associated with foreign currency translation of ~~$(64.2)~~$8.9 million and ~~$14.0~~$(64.2) million for the three months ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively, and ~~$(80.9)~~$22.4 million and ~~$3.1~~$(80.9) million for the six months ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively, which are included in other comprehensive income (loss).

We employ a foreign currency risk management strategy to minimize potential changes in cash flows from unfavorable foreign currency exchange rate movements. Where available, the use of foreign exchange forward contracts allows us to mitigate transactional exposure to exchange rate fluctuations as the gains or losses incurred on the foreign exchange forward contracts will help offset, in whole or in part, losses or gains on the underlying foreign currency exposure. As of June 30, ~~2022,~~2023, we had a U.S. dollar equivalent of $~~413.9~~683.3 million in aggregate notional amount outstanding in foreign exchange forward contracts with third parties, as compared with ~~$425.2~~$459.2 million at December 31, ~~2021.~~2022. Transactional currency gains and losses arising from transactions outside of our sites’ functional currencies and changes in fair value of non-designated foreign exchange forward contracts are included in our consolidated results of operations. We recognized foreign currency net gains (losses) of ~~$10.1~~$(4.8) million and ~~$(4.2)~~$10.1 million for the three months ended June 30, 2023 and 2022, respectively, and ~~2021, respectively,~~$(12.2) million and $4.4 million ~~and $(13.7) million~~for the six months ended June 30, 2023 and 2022, ~~and~~respectively, which ~~2021, respectively,~~ are included in other income (expense), net in the accompanying condensed consolidated statements of income.

Based on a sensitivity analysis at June 30, ~~2022,~~2023, a 10% change in the foreign currency exchange rates for the six months ended June 30, ~~2022~~2023 would have impacted our net earnings by approximately $3$1 million. This calculation assumes that all currencies change in the same direction and proportion relative to the U.S. dollar and that there are no indirect effects, such as changes in non-U.S. dollar sales volumes or prices. This calculation does not take into account the impact of the foreign currency exchange forward contracts discussed above.

Item 4.Controls and Procedures.

Disclosure Controls and Procedures

Disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) are controls and other procedures that are designed to ensure that the information that we are required to disclose in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Principal Executive Officer and Principal Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

In connection with the preparation of this Quarterly Report, our management, under the supervision and with the participation of our Principal Executive Officer and Principal Financial Officer, carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, ~~2022.~~2023. Based on this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of June 30, ~~2022.~~2023.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act) during the quarter ended June 30, ~~2022~~2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II — OTHER INFORMATION

Item 1.Legal Proceedings.

We are party to the legal proceedings that are described in Note 10 to our condensed consolidated financial statements included in "Item 1. Financial Statements" of this Quarterly Report, and such disclosure is incorporated by reference into this "Item 1. Legal Proceedings." In addition to the foregoing, we and our subsidiaries are named defendants in certain other ordinary routine lawsuits incidental to our business and are involved from time to time as parties to governmental proceedings, all arising in the ordinary course of business. Although the outcome of lawsuits or other proceedings involving us and our subsidiaries cannot be predicted with certainty, and the amount of any liability that could arise with respect to such lawsuits or other proceedings cannot be predicted accurately, management does not currently expect the amount of any liability that could arise with respect to these matters, either individually or in the aggregate, to have a material adverse effect on our financial position, results of operations or cash flows.

Item 1A.Risk Factors.

There are numerous factors that affect our business, financial condition, results of operations, cash flows, reputation and/or prospects, many of which are beyond our control. In addition to other information set forth in this Quarterly Report, careful consideration should be given to "Item 1A. Risk Factors" in Part I and "Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations" in Part II of our ~~2021~~2022 Annual Report, which contain descriptions of significant factors that might cause the actual results of operations in future periods to differ materially from those currently projected in the forward-looking statements contained therein.

There have been no material changes in risk factors discussed in our ~~2021~~2022 Annual Report and subsequent SEC filings. The risks described in this Quarterly Report filed for the period ended June 30, ~~2022~~2023, our ~~2021~~2022 Annual Report and in our other SEC filings or press releases from time to time are not the only risks we face. Additional risks and uncertainties are currently deemed immaterial based on management's assessment of currently available information, which remains subject to change; however, new risks that are currently unknown to us may surface in the future that materially adversely affect our business, financial condition, results of operations or cash flows.

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds.

Note 12 to our condensed consolidated financial statements included in this Quarterly Report includes a discussion of our share repurchase program and payment of quarterly dividends on our common stock.

During the quarter ended June 30, ~~2022,~~2023, we had no repurchases of our common stock shares. As of June 30, ~~2022,~~2023, we have ~~$96.1~~$96.1 million of ~~remaining~~remaining capacity under our current share repurchase program. The following table sets forth the activity for each of the three months during the quarter ended June 30, ~~2022:~~2023:


		Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Program (1)		Maximum Number of Shares (or Approximate Dollar Value) That May Yet Be Purchased Under the Program (in millions)				Total Number of Shares Purchased			Average Price Paid per Share			Total Number of Shares Purchased as Part of Publicly Announced Program (1)		Maximum Number of Shares (or Approximate Dollar Value) That May Yet Be Purchased Under the Program (in millions)
Period	Period								Period
April 1 - 30	April 1 - 30	264	(2)	$	35.59		—		$	96.1			April 1 - 30	1,287			(2)	$	32.10	—	$	96.1
May 1 - 31	May 1 - 31	6,360	(3)	30.06		—		96.1			May 1 - 31	6,937		(3)	35.21			—		96.1
June 1 - 30	June 1 - 30	332	(2)	29.12		—		96.1			June 1 - 30	1,008		(2)	36.18			—		96.1
Total	Total	6,956		$	30.23	—					Total	9,232			$	34.88		—

(1)On November 13, 2014, our Board of Directors approved a $500.0 million share repurchase authorization. Our share repurchase program does not have an expiration date, and we reserve the right to limit or terminate the repurchase program at any time without notice.

(2)Represents shares that were tendered by employees to satisfy minimum tax withholding amounts for Restricted ~~Shares~~.Shares.

(3)In~~cludes 5,440~~Includes 5,139 shares that were tendered by employees to satisfy minimum tax withholding amounts for Restricted Shares at an average price per share of ~~$29.86~~$35.10 and ~~920~~1,798 shares purchased at a price of ~~$31.28~~$35.50 per share by a rabbi trust that we established in connection with our director deferral plans, pursuant to which non-employee directors may elect to defer directors’ quarterly cash compensation to be paid at a later date in the form of common stock.

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Item 3.Defaults Upon Senior Securities.

None

Item 4.Mine Safety Disclosures.

Not applicable.

Item 5.Other Information.

~~None~~Insider Trading Arrangements.

Our directors and executive officers may, from time to time, enter into plans or other arrangements for the purchase or sale of our shares that are intended to satisfy the affirmative defense conditions of Rule 10b5 -1(c) or may represent a non-Rule 10b5-1 trading arrangement under the Exchange Act. During the quarter ended June 30, 2023, no such plans or other arrangements were adopted, terminated or modified.

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Item 6.Exhibits


Exhibit No.						Description




3.1						Restated Certificate of Incorporation of Flowserve Corporation, as amended and restated effective May 20, 2021 (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on May 25, 2021).

3.2						Flowserve Corporation By-Laws, as amended and restated effective ~~May~~April 12, ~~2022~~2023 (incorporated by reference to Exhibit ~~3.2~~3.1 to the Registrant’s Current Report on Form 8-K filed on ~~May~~April 12, ~~2022)~~2023).


~~10.1+~~						~~Amendment to Performance Restricted Stock Unit Agreements under the Flowserve Corporation 2020 Long-Term Incentive Plan by and between Flowserve Corporation and R. Scott Rowe dated April 19, 2022*.~~

31.1+						Certification of Principal Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2+						Certification of Principal Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1++						Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2++						Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.













101.INS						XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH						XBRL Taxonomy Extension Schema Document

101.CAL						XBRL Taxonomy Extension Calculation Linkbase Document

101.LAB						XBRL Taxonomy Extension Label Linkbase Document

101.PRE						XBRL Taxonomy Extension Presentation Linkbase Document

101.DEF						XBRL Taxonomy Extension Definition Linkbase Document

104						The cover page from the Company’s Quarterly Report on Form 10-Q for the period ended June 30, ~~2022,~~2023, formatted in Inline XBRL (included as Exhibit 101)

_______________________

*Management contracts and compensatory plans and arrangements required to be filed as exhibits to this Quarterly Report on Form 10-Q.

+ Filed herewith.

++ Furnished herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


						FLOWSERVE CORPORATION


Date:	~~July 27, 2022~~August 1, 2023	/s/ Amy B. Schwetz
		Amy B. Schwetz
		Senior Vice President and Chief Financial Officer (Principal Financial Officer)




Date:	~~July 27, 2022~~August 1, 2023	/s/ Scott K. Vopni
		Scott K. Vopni
		Vice President and Chief Accounting Officer (Principal Accounting Officer)

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