• Third quarter earnings per share (“EPS”) expected to be negatively impacted by approximately 18 to 22 cents due to certain unanticipated, period-specific issues
• Continue to expect bookings to exceed $1 billion for the third consecutive quarter based on supportive traditional and energy transition end-markets
• Diversify, Decarbonize and Digitize (“3D”) strategy has accelerated bookings growth
• Global supply chain environment continues to stabilize, positioning the company to deliver significant sequential improvement in Fourth Quarter results
• Flowserve will provide updates to its full year target range metrics as part of its Third Quarter 2022 earnings release
Flowserve Corporation, a leading provider of flow control products and services for the global infrastructure markets, provided an update regarding the company’s expected results for the third quarter ending September 30, 2022.
• Flowserve implemented a new enterprise resource planning (“ERP”) system early in the third quarter at certain of its high-volume manufacturing and quick response centers in North America intended to significantly enhance operations and customer experience, and to replace the prior unsupported, legacy system. While most of the company’s ERP transitions since 2017 have gone live without operational disruption, the company experienced challenges with this implementation during the first two months of the third quarter that negatively impacted volumes. Flowserve has taken actions to resolve these issues and as a result, the impacted facilities are nearing normal operating levels. Flowserve expects that it will largely recover this quarter’s lost volumes in future periods, however it currently anticipates this issue will reduce EPS in the quarter by 10 to 12 cents.
• Additionally, the company expects to incur certain unanticipated increases in corporate expenses, including Flowserve’s annual adjustment for incurred but not reported liability accruals that the company undertakes annually in conjunction with a third-party actuarial consultant. These corporate expenses are expected to impact the company’s results by 8 to 10 cents per share in the 2022 third quarter.
“These period specific events are expected to negatively impact our reported and adjusted EPS by 18 to 22 cents in the 2022 third quarter,” said Scott Rowe, Flowserve’s president and chief executive officer. “While we are disappointed by these developments, we have confidence that the impact will be largely limited to the third quarter. With respect to the ERP implementation, we have allocated substantial resources to resolve the issues and return the impacted facilities to their traditional production levels. The progress we have made in the past few weeks is significant, which should ensure that the impact to Flowserve and our customers is largely behind us.”
“Despite these challenges, Flowserve has continued to see robust bookings momentum thus far in the quarter, positioning the company to potentially achieve the highest quarterly bookings by value thus far in 2022,” Rowe continued. “The fundamentals of the business are strong, and our traditional end-markets remain supportive, as energy independence and energy security have become national priorities almost globally.
In addition, our 3D strategy has proven successful to date and has provided accelerated bookings growth. We expect these trends to continue in future quarters based on the current market environment and that this strength will result in improving financial performance.”
Flowserve will provide updates to its full year target range metrics, as needed, when it reports its Third Quarter 2022 earnings, currently expected to occur in the last full week of October. As previously announced on September 9, 2022, Flowserve will participate in certain investor conferences this week.
