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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 September 30, 2025

☐ 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 Boulevard, Suite 700,

Irving,

Texas

75039

(Address of principal executive offices)

(Zip Code)

(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 ☑

As of October 22, 2025 there were 127,115,509 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 – Three Months Ended September 30, 2025 and 2024 (unaudited)			1
Condensed Consolidated Statements of Income and Condensed Consolidated Statements of Comprehensive Income – Nine Months Ended September 30, 2025 and 2024 (unaudited)			2
Condensed Consolidated Balance Sheets – September 30, 2025 and December 31, 2024 (unaudited)			3
Condensed Consolidated Statements of Shareholders' Equity – Three Months Ended September 30, 2025 and 2024 (unaudited)			4
Condensed Consolidated Statements of Shareholders' Equity – Nine Months Ended September 30, 2025 and 2024 (unaudited)			5
Condensed Consolidated Statements of Cash Flows – Nine Months Ended September 30, 2025 and 2024 (unaudited)			6
Notes to Condensed Consolidated Financial Statements (unaudited)			7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			28
Item 3. Quantitative and Qualitative Disclosures About Market Risk			42
Item 4. Controls and Procedures			42

PART II – OTHER INFORMATION
Item 1. Legal Proceedings			43
Item 1A. Risk Factors			43
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			43
Item 3. Defaults Upon Senior Securities			44
Item 4. Mine Safety Disclosures			44
Item 5. Other Information			44
Item 6. Exhibits			45
SIGNATURES			46

PART I — FINANCIAL INFORMATION

Item 1.Financial Statements

FLOWSERVE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)


	Three Months Ended September 30,
	2025		2024
	(Amounts in thousands, except per share data)
Sales	$	1,174,434	$	1,133,087
Cost of sales	(794,148)		(776,020)
Gross profit	380,286		357,067
Selling, general and administrative expense	(305,152)		(259,025)

Net earnings from affiliates	4,138		5,150
Operating income	79,272		103,192
Interest expense	(18,738)		(16,587)

Interest income	792		1,403
Other income (expense), net	256,220		(5,920)
Earnings before income taxes	317,546		82,088
Provision for income taxes	(93,688)		(18,739)
Net earnings, including noncontrolling interests	223,858		63,349
Less: net earnings attributable to noncontrolling interests	(4,276)		(4,967)
Net earnings attributable to Flowserve Corporation	$	219,582	$	58,382
Net earnings per share attributable to Flowserve Corporation common shareholders:
Basic	$	1.69	$	0.44
Diluted	1.67		0.44

Weighted average shares - basic	130,315		131,395
Weighted average shares - diluted	131,235		132,247

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)


	Three Months Ended September 30,
	2025		2024
	(Amounts in thousands)
Net earnings, including noncontrolling interests	$	223,858	$	63,349
Other comprehensive income (loss):
Foreign currency translation adjustments, net of taxes of $368 and $66, respectively	(16,916)		52,872
Pension and other postretirement effects, net of taxes of ($373) and ($23), respectively	2,987		(2,221)
Cash flow hedging activity, net of taxes of ($7) and ($7), respectively	25		23
Other comprehensive income (loss):	(13,904)		50,674
Comprehensive income including noncontrolling interests	209,954		114,023
Comprehensive (income) loss attributable to noncontrolling interests	28,388		(4,966)
Comprehensive income attributable to Flowserve Corporation	$	238,342	$	109,057

See accompanying notes to condensed consolidated financial statements.

FLOWSERVE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)


	Nine Months Ended September 30,
	2025		2024
	(Amounts in thousands, except per share data)
Sales	$	3,507,069	$	3,377,458
Cost of sales	(2,350,867)		(2,315,326)
Gross profit	1,156,202		1,062,132
Selling, general and administrative expense	(814,237)		(726,070)
Loss on sale of business	—		(12,981)
Net earnings from affiliates	15,786		14,494
Operating income	357,751		337,575
Interest expense	(58,166)		(48,820)

Interest income	5,063		3,746
Other income (expense), net	213,958		(12,057)
Earnings before income taxes	518,606		280,444
Provision for income taxes	(127,067)		(62,728)
Net earnings, including noncontrolling interests	391,539		217,716
Less: Net earnings attributable to noncontrolling interests	(16,298)		(12,498)
Net earnings attributable to Flowserve Corporation	$	375,241	$	205,218
Net earnings per share attributable to Flowserve Corporation common shareholders:
Basic	$	2.87	$	1.56
Diluted	2.85		1.55

Weighted average shares - basic	130,910		131,520
Weighted average shares - diluted	131,836		132,343

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)


	Nine Months Ended September 30,
	2025		2024
	(Amounts in thousands)
Net earnings, including noncontrolling interests	$	391,539	$	217,716
Other comprehensive income (loss):
Foreign currency translation adjustments, net of taxes of ($5,360) and $3,174, respectively	142,314		197
Pension and other postretirement effects, net of taxes of ($1,119) and $26, respectively	2,022		(26)
Cash flow hedging activity, net of taxes of ($21) and ($50), respectively	73		42
Other comprehensive income (loss):	144,409		213
Comprehensive income including noncontrolling interests	535,948		217,929
Comprehensive (income) loss attributable to noncontrolling interests	16,273		(12,212)
Comprehensive income attributable to Flowserve Corporation	$	552,221	$	205,717

See accompanying notes to condensed consolidated financial statements.

FLOWSERVE CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)




(Amounts in thousands, except par value)	September 30,		December 31,
	2025		2024

ASSETS
Current assets:
Cash and cash equivalents	$	833,847	$	675,441
Accounts receivable, net of allowance for expected credit losses of $89,606 and $79,059, respectively	1,049,798		976,739
Contract assets, net of allowance for expected credit losses of $4,915 and $3,404, respectively	344,446		298,906
Inventories	847,732		837,254

Prepaid expenses and other	89,002		116,157
Total current assets	3,164,825		2,904,497
Property, plant, and equipment, net of accumulated depreciation of $1,219,158 and $1,142,667, respectively	557,677		539,703
Operating lease right-of-use asset, net	170,075		159,400
Goodwill	1,343,417		1,286,295
Deferred taxes	185,116		221,742
Other intangible assets, net	177,533		188,604
Other assets, net of allowance for expected credit losses of $66,152 and $66,081, respectively	231,671		200,580
Total assets	$	5,830,314	$	5,500,821
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	600,927	$	545,310
Accrued liabilities	542,705		561,486
Contract liabilities	279,760		283,670
Debt due within one year	46,350		44,059

Operating lease liabilities	35,085		33,559
Total current liabilities	1,504,827		1,468,084
Long-term debt due after one year	1,435,568		1,460,132
Operating lease liabilities	154,148		149,838
Retirement obligations and other liabilities	411,337		371,055
Contingencies (See Note 12)
Shareholders’ equity:
Preferred shares, $1.00 par value	—		—
Shares authorized — 1,000, no shares issued
Common shares, $1.25 par value	220,991		220,991
Shares authorized — 305,000
Shares issued — 176,793 and 176,793, respectively
Capital in excess of par value	496,356		502,045
Retained earnings	4,317,965		4,025,750
Treasury shares, at cost — 48,817 and 45,688 shares, respectively	(2,180,651)		(2,007,869)
Deferred compensation obligation	6,526		8,172
Accumulated other comprehensive loss	(596,990)		(741,424)
Total Flowserve Corporation shareholders' equity	2,264,197		2,007,665
Noncontrolling interests	60,237		44,047
Total equity	2,324,434		2,051,712
Total liabilities and equity	$	5,830,314	$	5,500,821

See accompanying notes to condensed consolidated financial statements.

FLOWSERVE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(Unaudited)


	Total Flowserve Corporation Shareholders' 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
	Shares	Amount						Shares	Amount
	(Amounts in thousands)
Balance - July 1, 2025	176,793	$	220,991	$	489,530	$	4,125,669	(46,233)	$	(2,036,348)	$	6,413	$	(583,204)	$	55,951	$	2,279,002

Stock activity under stock plans	—	—		(139)		—		19	820		113		—		—		794
Stock-based compensation	—	—		6,965		—		—	—		—		—		—		6,965

Net earnings	—	—		—		219,582		—	—		—		—		4,276		223,858
Cash dividends declared ($0.21 per share)	—	—		—		(27,286)		—	—		—		—		—		(27,286)
Repurchases of common shares	—	—		—		—		(2,603)	(145,123)		—		—		—		(145,123)
Other comprehensive income, net of tax	—	—		—		—		—	—		—		(13,786)		(118)		(13,904)

Other, net	—	—		—		—		—	—		—		—		128		128
Balance - September 30, 2025	176,793	$	220,991	$	496,356	$	4,317,965	(48,817)	$	(2,180,651)	$	6,526	$	(596,990)	$	60,237	$	2,324,434

Balance - July 1, 2024	176,793	$	220,991	$	489,786	$	3,945,577	(45,620)	$	(2,004,494)	$	7,979	$	(689,775)	$	46,260	$	2,016,324

Stock activity under stock plans	—	—		(321)		—		2	41		97		—		—		(183)
Stock-based compensation	—	—		7,208		—		—	—		—		—		—		7,208

Net earnings	—	—		—		58,382		—	—		—		—		4,967		63,349
Cash dividends declared ($0.21 per share)	—	—		—		(27,943)		—	—		—		—		—		(27,943)
Repurchases of common shares	—	—		—		—		(83)	(3,908)		—		—		—		(3,908)
Other comprehensive income (loss), net of tax	—	—		—		—		—	—		—		50,675		(1)		50,674


Balance - September 30, 2024	176,793	$	220,991	$	496,673	$	3,976,016	(45,701)	$	(2,008,361)	$	8,076	$	(639,100)	$	51,226	$	2,105,521

FLOWSERVE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(Unaudited)


	Total Flowserve Corporation Shareholders' 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
	Shares	Amount						Shares	Amount
	(Amounts in thousands)
Balance - January 1, 2025	176,793	$	220,991	$	502,045	$	4,025,750	(45,688)	$	(2,007,869)	$	8,172	$	(741,424)	$	44,047	$	2,051,712

Stock activity under stock plans	—	—		(31,476)		—		639	25,138		(1,646)		—		—		(7,984)
Stock-based compensation	—	—		25,787		—		—	—		—		—		—		25,787

Net earnings	—	—		—		375,241		—	—		—		—		16,298		391,539
Cash dividends declared ($0.63 per share)	—	—		—		(83,026)		—	—		—		—		—		(83,026)
Repurchases of common shares	—	—		—		—		(3,768)	(197,920)		—		—		—		(197,920)
Other comprehensive income (loss), net of tax	—	—		—		—		—	—		—		144,434		(25)		144,409

Other, net	—	—		—		—		—	—		—		—		(83)		(83)
Balance - September 30, 2025	176,793	$	220,991	$	496,356	$	4,317,965	(48,817)	$	(2,180,651)	$	6,526	$	(596,990)	$	60,237	$	2,324,434

Balance - January 1, 2024	176,793	$	220,991	$	506,525	$	3,854,717	(45,885)	$	(2,014,474)	$	7,942	$	(639,601)	$	38,951	$	1,975,051

Stock activity under stock plans	—	—		(34,460)		—		608	26,183		134		—		—		(8,143)
Stock-based compensation	—	—		24,608		—		—	—		—		—		—		24,608

Net earnings	—	—		—		205,218		—	—		—		—		12,498		217,716
Cash dividends declared ($0.63 per share)	—	—		—		(83,919)		—	—		—		—		—		(83,919)
Repurchases of common shares	—	—		—		—		(424)	(20,070)		—		—		—		(20,070)
Other comprehensive income income (loss), net of tax	—	—		—		—		—	—		—		499		(286)		213

Other, net	—	—		—		—		—	—		—		2		63		65
Balance - September 30, 2024	176,793	$	220,991	$	496,673	$	3,976,016	(45,701)	$	(2,008,361)	$	8,076	$	(639,100)	$	51,226	$	2,105,521
See accompanying notes to condensed consolidated financial statements.

FLOWSERVE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


(Amounts in thousands)	Nine Months Ended September 30,
	2025		2024
Cash flows — Operating activities:
Net earnings, including noncontrolling interests	$	391,539	$	217,716
Adjustments to reconcile net earnings to net cash provided by operating activities
Depreciation	58,685		56,765
Amortization of intangible and other assets	14,009		6,482

Loss on sale of business	—		12,981
Stock-based compensation	25,787		24,608
Foreign currency, asset write downs and other non-cash adjustments	(3,326)		11,580
Change in assets and liabilities:
Accounts receivable, net	(26,081)		(96,402)
Inventories	26,727		2,944
Contract assets, net	(35,157)		(23,293)
Prepaid expenses and other assets, net	(7,362)		3,505
Accounts payable	31,158		24,654
Contract liabilities	(17,857)		8,466
Accrued liabilities	(30,488)		(33,850)
Retirement obligations and other liabilities	31,900		8,696
Net deferred taxes	46,524		3,108
Net cash flows provided by operating activities	506,058		227,960
Cash flows — Investing activities:
Capital expenditures	(45,534)		(52,169)

Proceeds from disposal of assets	1,067		612
Payments for disposition of business	—		(2,555)



Net cash flows (used) by investing activities	(44,467)		(54,112)
Cash flows — Financing activities:



Payments on term loan	(28,125)		(45,000)


Proceeds under revolving credit facility	50,000		100,000
Payments under revolving credit facility	(50,000)		(50,000)
Proceeds under other financing arrangements	10,562		1,001
Payments under other financing arrangements	(3,310)		(784)
Repurchases of common shares	(197,920)		(20,070)
Payments related to tax withholding for stock-based compensation	(11,584)		(9,407)
Payments of dividends	(82,671)		(82,848)
Contingent consideration payment related to acquired business	(15,000)		—
Other	(2,899)		(272)
Net cash flows (used) by financing activities	(330,947)		(107,380)
Effect of exchange rate changes on cash and cash equivalents	27,762		(401)
Net change in cash and cash equivalents	158,406		66,067
Cash and cash equivalents at beginning of period	675,441		545,678
Cash and cash equivalents at end of period	$	833,847	$	611,745

See accompanying notes to condensed consolidated financial statements.

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 September 30, 2025 and December 31, 2024, and the related condensed consolidated statements of income, condensed consolidated statements of comprehensive income, condensed consolidated statements of shareholders' equity for the three and nine months ended September 30, 2025 and 2024 and condensed consolidated statements of cash flows for the nine months ended September 30, 2025 and 2024 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.

The accompanying condensed consolidated financial statements and notes in this Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2025 ("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, 2024 ("2024 Annual Report").

Termination of Merger with Chart Industries, Inc. - As previously disclosed, on June 3, 2025, Flowserve entered into an Agreement and Plan of Merger (the “Merger Agreement”), by and among Flowserve, Big Sur Merger Sub, Inc., a Delaware corporation and a direct wholly owned subsidiary of Flowserve (“First Merger Sub”), Napa Merger Sub LLC, a Delaware limited liability company and a direct wholly owned subsidiary of Flowserve (“Second Merger Sub”), and Chart Industries, Inc., a Delaware corporation (“Chart”), which provided that, upon the terms and subject to the conditions set forth therein, First Merger Sub would merge with and into Chart (the “First Merger”), with Chart surviving as a wholly owned subsidiary of Flowserve (the “Initial Surviving Company”) and (ii) immediately following the First Merger, and as part of the same overall transaction as the First Merger, the Initial Surviving Company would merge with and into Second Merger Sub (the “Second Merger”), with Second Merger Sub surviving the Second Merger as a wholly owned subsidiary of Flowserve (collectively, the "Chart Merger").

On July 28, 2025, Flowserve, Chart, First Merger Sub and Second Merger Sub entered into an agreement to terminate the Merger Agreement (the “Mutual Termination Agreement”). Pursuant to the Mutual Termination Agreement, the Merger Agreement was terminated and, in connection therewith, Flowserve received a payment of $266 million dollars in cash on behalf of Chart consisting of (i) the $250 million termination fee payable to Flowserve pursuant to the Merger Agreement and (ii) an additional agreed upon amount of $16 million to reimburse Flowserve for certain expenses. The termination fee is included in Other income (expense), net in our condensed consolidated statements of income and as a part of operating activities within our condensed consolidated statement of cash flows for the period ended September 30, 2025.

The Mutual Termination Agreement also provides for the mutual release by each of Flowserve and Chart of all claims relating to or arising out of the Merger Agreement and the transactions contemplated thereby. Pursuant to the Mutual Termination Agreement, Flowserve and Chart have also entered into a letter of intent between Chart and Flowserve to amend an existing supply agreement between them (or their affiliates) to extend the term and to expand the coverage thereof to include certain additional products of Flowserve during such term. We incurred $25.7 million in transaction costs related to the Chart Merger for the three-month period ended September 30, 2025 and $41.2 million for the nine-month period ended September 30, 2025, which are included within selling, general and administrative expense ("SG&A") in our condensed consolidated statements of income.

Russia and Ukraine Conflict - In response to the Russia-Ukraine conflict, 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 March 2022 we permanently ceased all Company operations in Russia.

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 and made a $2 million adjustment during the period ended March 31, 2024 to reduce the existing reserves. We made no further adjustments through September 30, 2025. To date, 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.

NAF AB Divestiture — Effective May 4, 2024, we divested NAF AB, a previously wholly owned subsidiary and control valves business within our Flow Control Division ("FCD") segment, including the NAF AB facility located in Linkoping, Sweden. The sale included cash paid to the buyer of $2.6 million and resulted in both a pre-tax and after-tax loss of $13.0 million recorded in loss on sale of business in the condensed consolidated statements of income. In 2024, through the date of disposition, we recorded revenues of approximately $3.0 million and an immaterial amount of operating income.

Accounting Developments

Pronouncements Implemented

In August 2023, the FASB issued ASU No. 2023-05, "Business Combinations - Joint Venture Formations (Subtopic 805-60): Recognition and Initial Measurement." The amendments require that newly formed joint ventures measure the net assets and liabilities contributed at fair value. Subsequent measurement is in accordance with the requirements for acquirers of a business in Sections 805-10-35, 805-20-35, and 805-30-35, and other generally accepted accounting principles. The amendments were effective prospectively for all joint venture formations with a formation date on or after January 1, 2025, but companies may elect to apply the amendments retrospectively to joint ventures formed prior to January 1, 2025, if it has sufficient information. The adoption of this ASU did not have a material impact on the Company.

Pronouncements Not Yet Implemented

In December 2023, the FASB issued ASU No. 2023-09, "Income Taxes (Topic 740)." The amendments require that entities on an annual basis disclose specific categories in the rate reconciliation, provide additional information for reconciling items that meet a quantitative threshold, and disclose specific information about income taxes paid. The amendments eliminate previously required disclosures around changes in unrecognized tax benefits and cumulative amounts of certain temporary differences. The amendments are effective prospectively for annual periods beginning after December 15, 2024. Early adoption is permitted. The amendments may be applied prospectively or retrospectively. We do not expect the impact of this ASU to be material.

In November 2024, the FASB issued ASU No. 2024-03, "Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40)." The amendments require disclosure of amounts, in the notes to financial statements, of purchases of inventory, employee compensation, depreciation, intangible asset amortization, and depletion for each income statement line item that contains those expenses. Specified expenses, gains and losses that are already disclosed under existing U.S. GAAP are also required to be included in the disaggregated income statement expense line item disclosure. The amendments also require disclosure of the total amount of selling expenses and the entity's definition of selling expenses. The amendments are effective for annual reporting periods beginning after December 15, 2026. ASU No. 2025-01 on the same topic issued in January 2025 further clarifies the effective date for interim periods. The amendments are effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The amendments may be applied prospectively or retrospectively. We are evaluating the impact of this ASU on our disclosures.

In May 2025, the FASB issued ASU No. 2025-03, "Business Combinations (Topic 805) and Consolidation (Topic 810) - Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity." The amendments require an entity involved in an acquisition transaction effected primarily by exchanging equity interests to consider certain additional factors not required by current U.S. GAAP when the acquiree is a Variable Interest Entity that meets the definition of a business. The amendments are intended to enhance the comparability across entities engaging in acquisition transactions effected primarily by exchanging equity interest when the legal acquiree meets the definition of a business. The amendments are effective prospectively for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods. Early adoption is permitted. The amendments require prospective application to any acquisition transaction that occurs after the initial application date. We do not expect the adoption of this ASU to have a material impact on the Company or our disclosures and we will evaluate the impact of this ASU if such transaction occurs.

In July 2025, the FASB issued ASU No. 2025-05, "Financial Instruments - Credit Losses (Topic 326)."The amendments provide a practical expedient for all entities related to the estimation of expected credit losses for current accounts receivable and current contract assets that arise from transactions accounted for under ASC 606. Under the update, an entity who elects the practical expedient assumes that current conditions as of the balance sheet date do not change for the remaining life of the asset when developing reasonable and supportable forecasts to estimate expected credit losses. The update also includes an accounting policy election which is not relevant to Flowserve as a public business entity. The amendments are effective prospectively for annual periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. Early adoption is permitted. We are evaluating the impact of this ASU on our consolidated financial statements.

In September 2025, the FASB issued ASU No. 2025-06, "Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40)." The amendments affect criteria for capitalization of internal-use software costs, removing references to project stages and adding guidance on how an entity should evaluate whether there is significant uncertainty associated with the development activities prior to capitalizing development costs, referred to the “probable-to-complete recognition threshold”. The updates are intended to provide accounting guidance that is neutral to different software development methods used. The amendments also specify that the disclosures in Subtopic 360-10, Property, Plant, and Equipment – Overall, are required for all capitalized internal-use software costs rather than the disclosure requirements in ASC 350-30-50-1 through 50-3, and relocated website development costs guidance to Subtopic 350-40, superseding Subtopic 350-50. The amendments are effective for annual periods beginning after December 15, 2027, and interim periods within those annual reporting periods. Early adoption is permitted. The amendments may be applied prospectively, retrospectively, or in a modified transition approach. We are evaluating the impact of this ASU on our consolidated financial statements.

In September 2025, the FASB issued ASU No. 2025-07, "Derivatives and Hedging (Topic 815) and Revenue from Contracts with Customers (Topic 606)." The amendments refine the derivative scope in Topic 815 to exclude non-exchange-traded contracts with underlyings that are based on operations or activities specific to one of the parties from derivative accounting. The update also includes a scope clarification that requires an entity to apply the guidance in Topic 606 to a revenue contract that includes share-based noncash consideration from a customer. The amendments are effective for annual periods beginning after December 15, 2026, and interim periods within those annual reporting periods. Early adoption is permitted. The amendments may be applied prospectively or in a modified retrospective basis through a cumulative-effect adjustment to the opening balance of retained earnings. We are evaluating the impact of this ASU on our consolidated financial statements.

2. ACQUISITION

On October 15, 2024, we acquired for inclusion in FCD, all of the equity interests of MOGAS Industries, Inc., MOGAS Real Estate LLC and MOGAS Systems & Consulting LLC (such entities collectively, "MOGAS"), for a purchase price of $290.0 million, subject to additional closing working capital adjustments of $17.2 million and net of cash acquired of $3.1 million, and an incremental contingent earn-out payment of $15.0 million which was paid in the first quarter of 2025. MOGAS, a previously privately held provider of mission-critical severe service valves and associated aftermarket services, is based in Houston, Texas and has operations primarily in North America and, to a lesser extent, Europe and Asia Pacific. The acquisition was funded using a combination of cash on hand and term loan financing under our Second Amended and Restated Credit Agreement discussed in Note 7, "Debt and Finance Lease Obligations." MOGAS's differentiated valve products are expected to enhance our installed base, creating meaningful aftermarket opportunities with the addition of MOGAS's strong brand, heritage, and technical expertise in diverse and attractive end markets, including the growing mining industry. The acquisition was accounted for as a business combination under Accounting Standards Codification 805, Business Combinations, using the acquisition method of accounting.

During the fourth quarter of 2024, the fair value of assets acquired and liabilities assumed was recorded on a preliminary basis as presented in Note 2, "Acquisition" in our consolidated financial statements included in our 2024 Annual Report. During the third quarter of 2025 we recorded immaterial measurement period adjustments related to working capital accounts, property, plant and equipment and the final determination of purchase price with a net offsetting impact to goodwill of $8.2 million. The allocation of the purchase price is considered final as of the period ended September 30, 2025. The preliminary and final allocation of the purchase price is summarized below:


(Amounts in thousands)	October 15, 2024 (As originally reported)	Measurement Period Adjustments		October 15, 2024 (As adjusted)
Accounts receivable	55.0	$	—	$55.0
Contract assets	13.7	$	—	$	13.7
Inventories	45.3	(2.2)		43.1
Prepaid expenses and other	4.6	—		4.6
Indemnification asset	7.5	—		7.5
Total current assets	126.1	(2.2)		123.9
Intangible assets
Trademark	19.0	—		19.0
Existing customer relationships	48.5	—		48.5
Backlog	10.5	—		10.5
Total intangible assets	78.0	—		78.0
Property, plant and equipment	41.9	(0.6)		41.3
Right-of-use assets	1.0	—		1.0
Total assets	247.0	(2.8)		244.2





Current liabilities	(58.8)	$	(1.2)	(60.0)
Noncurrent liabilities	(0.5)	$	—	(0.5)
Net assets	187.7	(4.0)		183.7
Goodwill	127.2	8.2		135.4
Purchase price, net of cash acquired of $3.1 million	314.9	$	4.2	$	319.1

The excess of the acquisition date fair value of the total purchase price over the estimated fair value of the net assets was recorded as goodwill. Goodwill of $135.4 million represents the value expected to be obtained from expanding Flowserve's market presence and strengthening our portfolio of products and services through the addition of MOGAS's valve products. The goodwill related to this acquisition is recorded in the FCD segment and is expected to be fully deductible for tax purposes. The trademark is an indefinite-lived intangible. Existing customer relationships and backlog have expected weighted average useful lives of 10 years and one year, respectively. In total, amortizable intangible assets have a weighted average useful life of approximately eight years. We recorded an indemnification asset and corresponding liability of $7.5 million related to legal matters that existed pre-acquisition and were unresolved at the date of acquisition, for which the seller agreed to indemnify us. The indemnification asset and liability are included within prepaid expenses and other and accrued liabilities, respectively, in our condensed consolidated balance sheets. Several of the litigation matters addressed in the indemnification have been settled

since the date of acquisition and as of September 30, 2025, the remaining indemnification asset and liability are immaterial. We incurred $9.5 million in acquisition and integration related costs for the nine-month period ended September 30, 2025 associated with the acquisition which are included within SG&A and cost of sales in our condensed consolidated statements of income.

3. 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. More complex contracts with our customers typically have longer lead times and 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 thresholds requiring separate disclosure.

Revenue from products and services transferred to customers over time accounted for approximately 18% and 17% of total revenue for the three-month period ended September 30, 2025 and 2024, respectively, and 18% and 17% for the nine month period ended September 30, 2025 and 2024, respectively. Our primary method for recognizing revenue over time is the percentage of completion ("POC") method. If control does not transfer over time, then control transfers at a point in time. For both POC and point-in-time methods, we recognize revenue 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 82% and 83% of total revenue for the three month period ended September 30, 2025 and 2024, and 82% and 83% for the nine month period ended September 30, 2025 and 2024, respectively. Refer to Note 3, "Revenue Recognition," to our consolidated financial statements included in our 2024 Annual Report for a more comprehensive discussion of our policies and accounting practices of revenue recognition.

Disaggregated Revenue

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

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

•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 two business segments generates Original Equipment and Aftermarket revenues.

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


	Three Months Ended September 30, 2025
(Amounts in thousands)	FPD		FCD		Total
Original Equipment	$	277,556	$	272,009	$	549,565
Aftermarket	521,750		103,119		624,869
	$	799,306	$	375,128	$	1,174,434

	Three Months Ended September 30, 2024
	FPD		FCD		Total
Original Equipment	$	282,895	$	272,939	$	555,834
Aftermarket	498,477		78,776		577,253
	$	781,372	$	351,715	$	1,133,087



	Nine Months Ended September 30, 2025
(Amounts in thousands)	FPD		FCD		Total
Original Equipment	$	842,267	$	819,794	$	1,662,061
Aftermarket	1,556,028		288,980		1,845,008
	$	2,398,295	$	1,108,774	$	3,507,069

	Nine Months Ended September 30, 2024
	FPD		FCD		Total
Original Equipment	$	869,799	$	781,006	$	1,650,805
Aftermarket	1,490,949		235,704		1,726,653
	$	2,360,748	$	1,016,710	$	3,377,458

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 September 30, 2025
(Amounts in thousands)	FPD		FCD		Total
North America(1)	$	340,352	$	157,051	$	497,403
Latin America(2)	69,978		10,628		80,606
Middle East and Africa	143,807		54,881		198,688
Asia Pacific	94,461		85,868		180,329
Europe	150,708		66,700		217,408
	$	799,306	$	375,128	$	1,174,434

	Three Months Ended September 30, 2024
	FPD		FCD		Total
North America(1)	$	313,744	$	133,944	$	447,688
Latin America(2)	81,434		7,103		88,537
Middle East and Africa	133,600		58,652		192,252
Asia Pacific	109,070		89,339		198,409
Europe	143,524		62,677		206,201
	$	781,372	$	351,715	$	1,133,087


	Nine Months Ended September 30, 2025
(Amounts in thousands)	FPD		FCD		Total
North America(1)	$	1,030,089	$	452,577	$	1,482,666
Latin America(2)	198,016		33,373		231,389
Middle East and Africa	438,810		155,398		594,208
Asia Pacific	290,869		277,542		568,411
Europe	440,511		189,884		630,395
	$	2,398,295	$	1,108,774	$	3,507,069

	Nine Months Ended September 30, 2024
	FPD		FCD		Total
North America(1)	$	966,870	$	406,317	$	1,373,187
Latin America(2)	224,787		18,257		243,044
Middle East and Africa	404,514		155,530		560,044
Asia Pacific	321,204		252,832		574,036
Europe	443,373		183,774		627,147
	$	2,360,748	$	1,016,710	$	3,377,458

__________________________________

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

(2) Latin America includes Mexico.

On September 30, 2025, the aggregate transaction price allocated to unsatisfied (or partially unsatisfied) performance obligations related to contracts having an original expected duration in excess of one year was approximately $994 million. We estimate recognition of approximately $199 million of this amount as revenue in the remainder of 2025 and an additional $795 million in 2026 and thereafter.

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 bill the customer under the terms of a contract. A contract liability represents our contractual billings in advance of revenue recognized for a contract.

The following tables present beginning and ending balances of contract assets and contract liabilities, current and long-term, for the nine months ended September 30, 2025 and 2024:


(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, 2025	$	298,906	$	923	$	283,670	$	673
Revenue recognized that was included in the contract liabilities at the beginning of the period	—		—		(211,569)		—
Revenue recognized in the period in excess of billings	616,402		—		—		—
Billings arising during the period in excess of revenue recognized	—		—		198,519		4,222
Amounts transferred from contract assets to receivables	(565,783)		(936)		—		—
Currency effects and other, net	(5,079)		259		9,140		90
Ending balance, September 30, 2025	$	344,446	$	246	$	279,760	$	4,985


(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, 2024	$	280,228	$	1,034	$	287,697	$	1,543
Revenue recognized that was included in the contract liabilities at the beginning of the period	—		—		(199,580)		(174)
Revenue recognized in the period in excess of billings	639,717		—		—		—
Billings arising during the period in excess of revenue recognized	—		—		206,998		—
Amounts transferred from contract assets to receivables	(604,907)		(709)		—		—
Currency effects and other, net	(15,617)		620		(893)		(365)
Ending balance, September 30, 2024	$	299,421	$	945	$	294,222	$	1,004

_____________________________________

(1) Included in other assets, net.

(2) Included in retirement obligations and other liabilities.

4. 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 accounts 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. Accounts receivable are written off against the allowance in the period when the receivable is deemed to be uncollectible and further collection efforts have ceased. Subsequent recoveries of previously written off amounts are reflected as a reduction to credit impairment losses in the condensed consolidated statements of income.

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 accounts receivable and short-term contract assets for the nine months ended September 30, 2025 and 2024:


(Amounts in thousands)	Trade receivables		Contract assets
Beginning balance, January 1, 2025	$	79,059	$	3,404
Charges to cost and expenses, net of recoveries	6,931		1,473
Write-offs	(1,282)		(16)
Currency effects and other, net	4,898		54
Ending balance, September 30, 2025	$	89,606	$	4,915

Beginning balance, January 1, 2024	$	80,013	$	4,993
Charges to cost and expenses, net of recoveries	11,431		(111)
Write-offs	(9,026)		(47)
Currency effects and other, net	(1,661)		(27)
Ending balance, September 30, 2024	$	80,757	$	4,808

Our allowance on long-term receivables, included in other assets, net, represents 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 nine months ended September 30, 2025 and 2024:


(Amounts in thousands)	2025		2024
Beginning balance, January 1,	$	66,081	$	66,864


Currency effects and other, net	71		(875)
Ending balance, September 30,	$	66,152	$	65,989

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 September 30, 2025.

5. 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, 5,455,413 were available for issuance as of September 30, 2025. 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 September 30, 2025, 114,943 stock options with a weighted average exercise price of $48.63 and a weighted average remaining contractual life of less than two years were outstanding and exercisable. No stock options have been granted or vested 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 for awards issued prior to 2024. For awards of Restricted Shares granted beginning in 2024 and subject to the 55/10 Provision, compensation expense is recognized over a required six-month service period. We had unearned compensation of $29.7 million and $19.2 million at September 30, 2025 and December 31, 2024, respectively, which is expected to be recognized over a remaining weighted-average period of approximately one year. This amount 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 September 30, 2025 and 2024 was $0.3 million. The total fair value of Restricted Shares vested during the nine months ended September 30, 2025 and 2024 was $25.9 million and $28.3 million, respectively.

We awarded a one-time grant of approximately $5.0 million in the form of restricted shares to a group of employees during the first quarter of 2025 in conjunction with the freeze of our Company-sponsored qualified defined benefit pension plan in the United States. The restricted shares are subject to three-year cliff-vesting. Refer to Note 13, "Pension and Postretirement Benefits," to our condensed consolidated financial statements included in this Quarterly Report for further discussion.

We recorded stock-based compensation expense of $7.0 million ($5.4 million after-tax) and $7.2 million and ($5.6 million after-tax) for the three months ended September 30, 2025 and 2024, respectively. We recorded stock-based compensation expense of $25.8 million ($19.9 million after-tax) and $24.6 million ($19.0 million after-tax) for the nine months ended September 30, 2025 and 2024, respectively.

The following table summarizes information regarding Restricted Shares:


	Nine Months Ended September 30, 2025
	Shares	Weighted Average Grant-Date Fair Value
Number of unvested Restricted Shares:
Outstanding as of January 1, 2025	1,666,683	$	39.18
Granted	666,182	61.55
Vested	(692,283)	37.44
Cancelled	(82,182)	51.01
Outstanding as of September 30, 2025	1,558,400	$	48.90

Unvested Restricted Shares outstanding as of September 30, 2025 included approximately 513,000 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 annual return on invested capital and free cash flow as a percent of net income over a three-year period. Performance units issued in 2025, 2024 and 2023 include a secondary measure, relative total shareholder return, which can increase or decrease the number of vesting units by up to 15% depending on the Company's performance versus peers. Performance units issued have a vesting percentage up to 230%. Compensation 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 expected achievement of the performance targets for all performance-based units granted. Vesting provisions range from 0 to approximately 1,181,000 shares based on performance targets. As of September 30, 2025, we estimate vesting of approximately 578,000 shares based on expected achievement of performance targets.

6. DERIVATIVES AND HEDGING ACTIVITIES

Our risk management and foreign currency derivatives and hedging policy specifies the conditions under which we may enter into derivative contracts. See Note 9, "Fair Value of Financial Instruments," 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 $199.3 million and $695.9 million at September 30, 2025 and December 31, 2024, respectively. At September 30, 2025, the length of foreign exchange forward contracts currently in place ranged from 14 days to 19 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 contracts are summarized below:




	September 30,		December 31,
(Amounts in thousands)	2025		2024

Current derivative assets	$	3,470	$	4,633
Noncurrent derivative assets	156		13
Current derivative liabilities	365		4,926
Noncurrent derivative liabilities	—		374

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 contracts are summarized below:


	Three Months Ended September 30,				Nine Months Ended September 30,
(Amounts in thousands)	2025		2024		2025		2024
(Losses) gains recognized in income	$	(3,308)	$	(24)	$	(5,339)	$	4,501

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

7. DEBT AND FINANCE LEASE OBLIGATIONS

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




	September 30,		December 31,
(Amounts in thousands, except percentages)	2025		2024

3.50% USD Senior Notes due October 1, 2030, net of unamortized discount and debt issuance costs of $3,420 and $3,882, respectively	$	496,580	$	496,118
2.80% USD Senior Notes due January 15, 2032, net of unamortized discount and debt issuance costs of $4,140 and $4,585, respectively	495,860		495,415
Term Loan Facility, interest rate of 5.48% at September 30, 2025 and 5.80% at December 31, 2024, net of debt issuance costs of $799 and $993, respectively	461,701		489,632

Finance lease obligations and other borrowings	27,777		23,026
Debt and finance lease obligations	1,481,918		1,504,191
Less amounts due within one year	46,350		44,059
Total debt due after one year	$	1,435,568	$	1,460,132

Senior Credit Facility

As discussed in Note 13, "Debt and Finance Lease Obligations," to our consolidated financial statements included in our 2024 Annual Report, our credit agreement (the "Senior Credit Agreement") provides a $800.0 million unsecured revolving credit facility (the "Revolving Credit 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, and a $300.0 million unsecured term loan facility (the "Term Loan") with a maturity date of September 13, 2026, which has been amended and extended to October 10, 2029, per the Second Amended and Restated Credit Agreement (as defined below).

On February 3, 2023, we amended our Senior Credit Agreement (the “Amendment”) to (i) replace LIBOR with Secured Overnight Financing Rate (“SOFR”) as the benchmark reference rate, (ii) lower the Material Acquisition (as defined in the Senior Credit Agreement) threshold from $250.0 million to $200.0 million and (iii) extend compliance dates for certain financial covenants.

On October 10, 2024, we entered into a Second Amended and Restated Credit Agreement (the "Second Amended and Restated Credit Agreement") with Bank of America, N.A., as administrative agent, and the other lenders (together, the "Lenders") and letter of credit issuers party thereto to (i) retain from the Senior Credit Agreement the $800.0 million Revolving Credit Facility, and the right, subject to certain conditions including Lenders approval of such increase, to increase the amount of such Revolving Credit Facility by an aggregate amount not to exceed $400.0 million, (ii) increase our Term Loan from $300.0 million to $500.0 million, and (iii) extend the maturity date to October 10, 2029. We believe this Second Amended and Restated Credit Agreement will provide greater flexibility and additional liquidity as we continue to pursue our business goals and strategy. Most other terms and conditions under the previous Senior Credit Agreement remained unchanged.

Under the terms and conditions of the Second Amended and Restated Credit Agreement, the interest rates per annum applicable to the Revolving Credit Facility and Term Loan, other than with respect to swing line loans, are adjusted Term Secured Overnight Financing Rate ("Adjusted 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 Second Amended and Restated Credit Agreement) plus between 0.000% to 0.750% depending on our debt rating by either Moody’s or S&P. At September 30, 2025, the interest rate on the Revolving Credit Facility was the Adjusted Term SOFR plus 1.375% in the case of Adjusted 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 nine months ended September 30, 2025. At September 30, 2025, the interest rate on the Term Loan was Adjusted Term SOFR plus 1.375% in the case of Adjusted Term SOFR loans and the Base Rate plus 0.375% in the case of Base Rate loans.

As of September 30, 2025 and December 31, 2024, we had no revolving loans outstanding and had outstanding letters of credit of $84.7 million and $144.0 million, respectively. After consideration of the outstanding letters of credit as of September

30, 2025, the amount available for borrowings under our Revolving Credit Facility was limited to $715.4 million. As of December 31, 2024, the amount available for borrowings under our Revolving Credit Facility was $656.0 million. We have scheduled repayments of $9.4 million due in each of the next four quarters on our Term Loan.

Our compliance with applicable financial covenants under the Second Amended and Restated Credit Agreement are tested quarterly. We were in compliance with all applicable covenants as of September 30, 2025.

8. SUPPLIER FINANCE PROGRAMS

We partner with two banks to offer our suppliers the option of participating in a supplier financing program and receive payment early. Under the program agreement, we must reimburse each bank for approved and valid invoices in accordance with the originally agreed upon terms with the supplier. We have no obligation for fees; subscription, service, commissions or otherwise with either bank. We also have no obligation for pledged assets or other forms of guarantee and may terminate either program agreement with appropriate notice. As of September 30, 2025 and December 31, 2024, $8.2 million and $8.6 million, respectively, remained outstanding with the supply chain financing partner banks and recorded within accounts payable on our condensed consolidated balance sheets.

9. FAIR VALUE OF FINANCIAL INSTRUMENTS

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 6, "Derivatives and Hedging Activities." The fair value of the MOGAS related contingent consideration was determined based on contractual provisions set forth in the purchase agreement and was fully paid in the first quarter of 2025.

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. The carrying value of our debt is included in Note 7, "Debt and Finance Lease Obligations" The estimated fair value of our Senior Notes at September 30, 2025 was $917.9 million compared to the carrying value of $992.4 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 September 30, 2025 and December 31, 2024.

10. INVENTORIES

Inventories consisted of the following:




	September 30,		December 31,
(Amounts in thousands)	2025		2024

Raw materials	$	404,829	$	391,562
Work in process	282,323		262,173
Finished goods	255,858		275,975

Less: Excess and obsolete reserve	(95,278)		(92,456)
Inventories	$	847,732	$	837,254

11. 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 September 30,
(Amounts in thousands, except per share data)	2025		2024
Net earnings of Flowserve Corporation	$	219,582	$	58,382

Earnings attributable to common and participating shareholders	$	219,582	$	58,382
Weighted average shares:
Common stock	130,287		131,363
Participating securities	28		32
Denominator for basic earnings per common share	130,315		131,395
Effect of potentially dilutive securities	920		852
Denominator for diluted earnings per common share	131,235		132,247
Earnings per common share:
Basic	$	1.69	$	0.44
Diluted	1.67		0.44


	Nine Months Ended September 30,
(Amounts in thousands, except per share data)	2025		2024
Net earnings attributable to Flowserve Corporation	$	375,241	$	205,218

Earnings attributable to common and participating shareholders	$	375,241	$	205,218
Weighted average shares:
Common stock	130,880		131,480
Participating securities	30		40
Denominator for basic earnings per common share	130,910		131,520
Effect of potentially dilutive securities	926		823
Denominator for diluted earnings per common share	131,836		132,343
Earnings per common share:
Basic	$	2.87	$	1.56
Diluted	2.85		1.55

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.

12. 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, the number of new claims may fluctuate or increase between periods, and there can be no assurance that total outstanding claims will continue to decline, 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:


	Three Months Ended September 30,		Nine Months Ended September 30,
	2025	2024	2025	2024
Beginning claims(1)	7,487	8,146	8,127	8,236
New claims	758	667	2,224	1,936
Resolved claims	(1,146)	(704)	(3,244)	(2,280)
Other(2)	2	2	(6)	219
Ending claims(1)	7,101	8,111	7,101	8,111

____________________

(1) Beginning and ending claims data in each period excludes inactive claims, as the Company assumes that inactive cases will not be pursued further by the respective plaintiffs. A claim is classified as inactive either due to inactivity over a period of time 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:


(Amounts in thousands)	2025		2024
Beginning balance, January 1,	$	110,332	$	102,903
Asbestos liability adjustments, net	52,358		23,740
Cash payment activity	(10,632)		(7,089)
Other, net	(7,948)		(4,187)
Ending balance, September 30,	$	144,110	$	115,367

During the three and nine months ended September 30, 2025, and 2024, the Company incurred expenses (net of insurance) of approximately $32.2 million and $36.3 million, respectively, compared to $13.9 million and $20.8 million, respectively, for the same periods in 2024 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 $(16.9) million and $(2.5) million during the nine months ended September 30, 2025 and 2024, respectively.

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

We believe that our reserve for asbestos claims and the receivable for recoveries from insurance carriers that we have recorded for these claims reflect 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 in future periods are resolved more favorably than reflected in the recorded receivables, would result in discrete gains in the applicable quarter.

Divestiture of Asbestos-Related Assets and Liabilities

On October 28, 2025, we entered into a binding Share Purchase Agreement to permanently divest our legacy asbestos liabilities through the sale of one of our wholly owned subsidiaries, BW/IP New Mexico, Inc. The transaction includes the sale of all asbestos liabilities, related insurance and deferred tax assets, and approximately $199 million of cash to the buyer, a third party entity. As part of the Share Purchase Agreement, Flowserve will be indemnified from future asbestos claims and related liabilities. As a result of the divestiture, the buyer will assume full responsibility for administering and resolving all current and future asbestos-related claims associated with the acquired liabilities, and the BW/IP New Mexico, Inc. entity will be capitalized upon close of the transaction with the related assets and the cash contributed to the entity by Flowserve, financed with cash on hand, and cash contributed by the buyer. In connection with the divestiture, our Board of Directors received a solvency opinion from an independent advisory firm that will form the basis (along with other inputs) of our determination that the BW/IP New Mexico, Inc. entity is solvent and adequately capitalized as of the date of, and after giving effect to the transaction. Closing of the divestiture is expected to occur in the fourth quarter of 2025.

Other

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.

13. PENSION AND POSTRETIREMENT BENEFITS

Components of the net periodic cost for pension and postretirement benefits for the three months ended September 30, 2025 and 2024 were as follows:


	U.S. Defined Benefit Plans				Non-U.S. Defined Benefit Plans				Postretirement Medical Benefits
(Amounts in millions)	2025		2024		2025		2024		2025		2024
Service cost	$	0.2	$	6.0	$	1.6	$	1.3	$	—	$	—
Interest cost	5.5		5.2		3.5		3.2		0.2		0.2
Expected return on plan assets	(5.8)		(5.8)		(2.0)		(2.1)		—		—
Settlement loss (1)	1.5		—		—		—		—		—
Amortization of unrecognized prior service cost and other costs	—		—		(0.1)		0.1		—		—
Amortization of unrecognized net loss (gain)	0.1		—		0.6		0.7		(0.1)		0.1
Net periodic cost recognized	$	1.5	$	5.4	$	3.6	$	3.2	$	0.1	$	0.3

Components of the net periodic cost for pension and postretirement benefits for the nine months ended September 30, 2025 and 2024 were as follows:


	U.S. Defined Benefit Plans				Non-U.S. Defined Benefit Plans					Postretirement Medical Benefits
(Amounts in millions)	2025		2024		2025			2024		2025		2024
Service cost	$	0.6	$	18.0	$	4.8		$	3.9	$	—	$	—
Interest cost	16.4		15.6		10.4			9.2		0.4		0.5
Expected return on plan assets	(17.3)		(17.4)		(6.2)			(6.0)		—		—
Settlement loss (1)	4.5		—		—			—		—		—
Amortization of unrecognized prior service cost and other costs	0.1		—		0.1			0.3		0.1		0.1
Amortization of unrecognized net loss (gain)	0.3		—		1.7			2.0		(0.3)		0.1
Net periodic cost recognized	$	4.6	$	16.2	$	10.8	10.8	$	9.4	$	0.2	$	0.7

_________________

(1) Represents a pension settlement accounting loss incurred in conjunction with the freeze of our Company-sponsored qualified defined benefit pension plan in the United States (the "Qualified Plan") for non-union employees. Full year cash outflows are expected to exceed the service and interest cost components and trigger a settlement loss in the fourth quarter of 2025 in the range of $5 million - $6 million. The first, second and third quarter losses were recorded based on this full year estimate.

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.

In August 2023, we amended the Company-sponsored Qualified Plan for non-union employees to discontinue future benefit accruals under the Qualified Plan and freeze existing accrued benefits effective January 1, 2025. Benefits earned by participants under the Qualified Plan prior to January 1, 2025, are not affected. We also amended the Company-sponsored non-qualified defined benefit pension plan in the United States (the "Non-Qualified Plan") that provides enhanced retirement benefits to select members of management. The Qualified Plan and the Non-Qualified Plan were closed to new entrants effective January 1, 2024, and September 1, 2023, respectively. The amendments resulted in a curtailment of both plans, and the curtailment loss incurred and the change in projected benefit obligation was immaterial.

In conjunction with the amendment of the Qualified Plan, the Organization and Compensation Committee of our Board of Directors approved certain transition benefits associated with freezing the Qualified Plan. During the first quarter of 2025, a one-time cash transition benefit was paid to a limited group of employees in the United States that met certain criteria. We recorded a $5.0 million liability for this obligation prior to payment which is included within accrued liabilities in our condensed consolidated balance sheet at December 31, 2024. We also issued approximately the same amount of value in the form of restricted shares to an additional group of employees in the United States during the first quarter of 2025. The restricted shares are subject to three-year cliff-vesting.

14. 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 September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
Dividends declared per share	$	0.21	$	0.21	$	0.63	$	0.63

Share Repurchase Program – In 2014, our Board of Directors approved a $500.0 million share repurchase authorization. As of December 31, 2023, we had $96.1 million of remaining capacity under the prior share repurchase authorization. Effective February 19, 2024, the Board of Directors approved an increase in our total remaining capacity under the share repurchase program to $300.0 million, and effective August 8, 2025 the Board of Directors approved an increase in our total remaining capacity under the share repurchase program to $400.0 million, which included approximately $227.1 million of remaining capacity under the prior 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 repurchased 2,603,363 shares of our outstanding common stock for $145.1 million and 82,785 shares of our outstanding common stock for $3.9 million during the three months ended September 30, 2025 and 2024, respectively. We repurchased 3,768,461 shares of our outstanding common stock for $197.9 million and 423,785 shares of our outstanding common stock for $20.1 million during the nine months ended September 30, 2025 and 2024, respectively. As of September 30, 2025, we had $254.9 million of remaining capacity under our current share repurchase program.

15. INCOME TAXES

On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was enacted into law. The OBBBA makes permanent key elements of the Tax Cuts and Jobs Act, including 100% bonus depreciation, domestic research cost expensing, and the business interest expense limitation. The OBBBA also provides for changes to the global intangible low-taxed income (“GILTI”) provision, the base-erosion and anti-abuse tax (“BEAT”) provision and the foreign derived intangible income (“FDII”) provision. ASC 740, “Income Taxes”, requires the effects of changes in tax rates and laws on deferred tax balances to be recognized in the period in which the legislation is enacted. Consequently, the Company has recorded the impacts in the provisional tax expense for the three months ended September 30, 2025 which resulted in a net provisional charge of $24.9 million. The charge is comprised of $16.7 million of tax expense related to the establishment of valuation allowance against our U.S. foreign tax credit carryforwards on general category income and an additional $8.2 million of tax expense related to indirect permanent impacts of OBBBA on U.S. foreign inclusions and state taxes, primarily as a result of domestic research cost expensing.

For the three months ended September 30, 2025, we earned $317.5 million before taxes and recorded a provision for income taxes of $93.7 million resulting in an effective tax rate of 29.5%. For the nine months ended September 30, 2025, we earned $518.6 million before taxes and recorded a provision for income taxes of $127.1 million resulting in an effective tax rate of 24.5%. The effective tax rate varied from the U.S. federal statutory rate for the three months ended September 30, 2025 primarily due to the impacts pursuant to the enactment of OBBBA and state income taxes, partially offset by the net impact of foreign operations. The effective tax rate varied from the U.S. federal statutory rate for the nine months ended September 30, 2025 the impacts pursuant to the enactment of OBBBA and state income taxes, partially offset by the net impact of foreign operations.

For the three months ended September 30, 2024, we earned $82.1 million before taxes and recorded a provision for income taxes of $18.7 million resulting in an effective tax rate of 22.8%. For the nine months ended September 30, 2024, we earned $280.4 million before taxes and recorded a provision for income taxes of $62.7 million resulting in an effective tax rate of

22.4%. The effective tax rate varied from the U.S. federal statutory rate for the three months ended September 30, 2024 primarily due to the net impact of foreign operations. The effective tax rate varied from the U.S. federal statutory rate for the nine months ended September 30, 2024 primarily due to the net impact of foreign divestiture and foreign operations.

The Company maintains a full valuation allowance against the net deferred tax assets in certain foreign tax jurisdictions as of September 30, 2025. 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. We assess our forecast of future taxable income and available tax planning strategies that could be implemented to realize the net deferred tax assets in determining the sufficiency of our valuation allowances. Failure to achieve forecasted taxable income in the applicable tax jurisdictions could affect the ultimate realization of deferred tax assets and could result in an increase in our effective tax rate on future earnings. It is possible there may be sufficient positive evidence to release a portion of the remaining valuation allowance in those foreign jurisdictions. Release of the valuation 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.

On December 20, 2021, the Organisation for Economic Co-operation and Development (“OECD”) released the Model GloBE Rules for Pillar Two defining a 15% global minimum tax rate for large multinational corporations. 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. As of September 30, 2025, the company is not expecting material impacts under currently enacted legislation.

16. BUSINESS 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 September 30, 2025
(Amounts in thousands)	FPD	FCD	Subtotal – Reportable Segments	Eliminations and All Other	Consolidated Total
Sales to external customers	799,306	375,128	1,174,434	—	1,174,434
Intersegment sales	1,002	2,255	3,257	(3,257)	—
Cost of Sales	(534,532)	(263,133)	(797,665)
Selling, general and administrative expense	(135,046)	(67,810)	(202,856)
Other Segment items (1)	4,138	—	4,138
Segment operating income	134,869	46,440	181,309
Depreciation and amortization	10,718	8,956	19,674	4,736	24,410
Identifiable assets	3,340,680	1,756,283	5,096,963	733,351	5,830,314
Capital expenditures	8,305	2,350	10,655	6,539	17,194

	Three Months Ended September 30, 2024
(Amounts in thousands)	FPD	FCD	Subtotal – Reportable Segments	Eliminations and All Other	Consolidated Total

Sales to external customers	781,372	351,715	1,133,087	—	1,133,087
Intersegment sales	762	1,410	2,172	(2,172)	—
Cost of Sales	(528,950)	(246,622)	(775,572)
Selling, general and administrative expense	(149,060)	(59,790)	(208,850)
Other Segment items (1)	5,150	—	—
Segment operating income	109,274	46,713	155,987
Depreciation and amortization	11,473	4,269	15,742	5,231	20,973
Identifiable assets	3,266,724	1,415,798	4,682,522	592,036	5,274,558
Capital expenditures	16,540	3,551	20,091	3,789	23,880


	Nine Months Ended September 30, 2025
(Amounts in thousands)	FPD		FCD		Subtotal – Reportable Segments		Eliminations and All Other		Consolidated Total
Sales to external customers	$	2,398,295	$	1,108,774	$	3,507,069	$	—	$	3,507,069
Intersegment sales	4,097		4,165		8,262		(8,262)		—
Cost of Sales	(1,568,925)		(790,808)		(2,359,733)
Selling, general and administrative expense	(415,126)		(206,437)		(621,563)
Other Segment items (1)	15,786		—		15,786
Segment operating income	434,128		115,694		549,822
Depreciation and amortization	31,147		27,843		58,990		13,704		72,694
Identifiable assets	3,340,680		1,756,283		5,096,963		733,351		5,830,314
Capital expenditures	25,872		7,977		33,849		11,685		45,534

	Nine Months Ended September 30, 2024
(Amounts in thousands)	FPD		FCD		Subtotal – Reportable Segments		Eliminations and All Other		Consolidated Total

Sales to external customers	2,360,748		1,016,710		3,377,458		—		3,377,458
Intersegment sales	2,959		4,658		7,617		(7,617)		—
Cost of Sales	(1,602,369)		(715,899)		(2,318,268)
Selling, general and administrative expense	(424,824)		(178,816)		(603,640)
Other Segment items (1)	14,632		(12,981)		1,651
Segment operating income	351,146		113,673		464,819
Depreciation and amortization	34,348		13,314		47,662		15,585		63,247
Identifiable assets	3,266,724		1,415,798		4,682,522		592,036		5,274,558
Capital expenditures	37,581		7,618		45,199		6,970		52,169

__________________

(1) Other Segment items comprises Net Earnings from Affiliates and for the nine-month period ended September 30, 2024 includes the Loss on sale of business of $13 million recorded in the FCD segment in the second quarter of 2024 related to disposal of the NAF AB control valves business.

The following are reconciliations from total segment operating income to earnings before income tax reported in the condensed consolidated income statements.


	Three Months Ended September 30,
	2025	2024
	(Amounts in thousands)
Total segment operating income	181,309	155,987
Intersegment sales	(3,257)	(2,172)
Eliminations and all other cost of sales	3,516	(448)
Eliminations and all other SG&A	(102,296)	(50,175)
Interest expense	(18,738)	(16,587)
Interest income	792	1,403
Net earnings (loss) from affiliates	—	—
Other income (expense), net	256,220	(5,920)
Earnings before income taxes	317,546	82,088


	Nine Months Ended September 30,
	2025	2024
	(Amounts in thousands)
Total segment operating income	549,822	464,819
Intersegment sales	(8,262)	(7,617)
Eliminations and all other cost of sales	8,865	2,941
Eliminations and all other SG&A	(192,674)	(122,431)
Interest expense	(58,166)	(48,820)
Interest income	5,063	3,746
Net earnings (loss) from affiliates	—	(137)
Other income (expense), net	213,958	(12,057)
Earnings before income taxes	518,606	280,444

17. ACCUMULATED OTHER COMPREHENSIVE LOSS

The following table presents the changes in Accumulated Other Comprehensive Loss ("AOCL"), net of tax for the three months ended September 30, 2025 and 2024:


	2025								2024
(Amounts in thousands)	Foreign currency translation items(1)		Pension and other postretirement effects		Cash flow hedging activity (2)		Total (1)		Foreign currency translation items(1)		Pension and other postretirement effects		Cash flow hedging activity (2)		Total (1)
Balance - July 1	$	(472,867)	$	(116,863)	$	(699)	$	(590,429)	$	(576,548)	$	(119,687)	$	(794)	$	(697,029)
Other comprehensive income (loss) before reclassifications (3)	(16,916)		1,149		—		(15,767)		52,872		(3,080)		—		49,792
Amounts reclassified from AOCL	—		1,838		25		1,863		—		859		23		882
Net current-period other comprehensive income (loss) (3)	(16,916)		2,987		25		(13,904)		52,872		(2,221)		23		50,674
Balance - September 30	$	(489,783)	$	(113,876)	$	(674)	$	(604,333)	$	(523,676)	$	(121,908)	$	(771)	$	(646,355)

________________________________

(1) Includes foreign currency translation adjustments attributable to noncontrolling interests of $(7.2) million and $(7.3) million at July 1, 2025 and 2024, respectively, and $(7.3) million and $(7.3) million at September 30, 2025 and 2024, 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:


		Three Months Ended September 30,
(Amounts in thousands)	Affected line item in the statement of income	2025(1)		2024(1)












Pension and other postretirement effects
Amortization of actuarial losses(2)	Other income (expense), net	$	(557)	$	(724)
Prior service costs(2)	Other income (expense), net	(154)		(158)
Settlements and other(2)	Other income (expense), net	(1,500)		—
	Tax benefit (expense)	373		23
	Net of tax	$	(1,838)	$	(859)

Cash flow hedging activity
Amortization of Treasury rate lock	Interest income (expense)	$	(32)	$	(30)
	Tax benefit (expense)	7		7
	Net of tax	$	(25)	$	(23)

__________________________________

(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 13, "Pension and Postretirement Benefits," for additional details.

The following table presents the changes in AOCL, net of tax for the nine months ended September 30, 2025 and 2024:


	2025								2024
(Amounts in thousands)	Foreign currency translation items(1)		Pension and other postretirement effects		Cash flow hedging activity (2)		Total (1)		Foreign currency translation items(1) (4)		Pension and other postretirement effects		Cash flow hedging activity (2)		Total (1)
Balance - January 1	$	(632,097)	$	(115,898)	$	(747)	$	(748,742)	$	(523,873)	$	(121,882)	$	(813)	$	(646,568)
Other comprehensive income (loss) before reclassifications (3)	142,314		(3,533)		—		138,781		(3,369)		(2,549)		—		(5,918)
Amounts reclassified from AOCL	—		5,555		73		5,628		3,566		2,523		42		6,131
Net current-period other comprehensive income (loss) (3)	142,314		2,022		73		144,409		197		(26)		42		213
Balance - September 30	$	(489,783)	$	(113,876)	$	(674)	$	(604,333)	$	(523,676)	$	(121,908)	$	(771)	$	(646,355)

________________________________

(1) Includes foreign currency translation adjustments attributable to noncontrolling interests of $(7.3) million and $(7.0) million at January 1, 2025 and 2024, respectively, and $(7.3) million and $(7.3) million at September 30, 2025 and 2024, 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.

(4) Amounts reclassified from AOCL within foreign currency translation items had no associated tax benefit (expense) and are included within loss on sale of business in our condensed consolidated statements of income.

The following table presents the reclassifications out of AOCL:


		Nine Months Ended September 30,
(Amounts in thousands)	Affected line item in the statement of income	2025(1)		2024(1)












Pension and other postretirement effects
Amortization of actuarial losses(2)	Other income (expense), net	(1,707)		(2,033)
Prior service costs(2)	Other income (expense), net	(467)		(464)
Settlements and other(2)	Other income (expense), net	(4,500)		—
	Tax benefit (expense)	1,119		(26)
	Net of tax	$	(5,555)	$	(2,523)

Cash flow hedging activity
Amortization of Treasury rate lock	Interest income (expense)	$	(94)	$	(92)
	Tax benefit (expense)	21		50
	Net of tax	$	(73)	$	(42)

__________________________________

(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 13, "Pension and Postretirement Benefits," for additional details.

18. REALIGNMENT PROGRAMS

In the first quarter of 2023, we identified and initiated certain realignment activities concurrent with the consolidation of our FPD aftermarket and pump operations into a single operating model. This consolidated operating model was 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. During 2023, we also initiated certain product and portfolio optimization activities. Collectively, the above realignment activities are referred to as the "2023 Realignment Programs." The activities of the 2023 Realignment Programs were identified and implemented in phases throughout 2023 and 2024 and are substantially completed.

In the fourth quarter of 2024, we launched the complexity reduction ("CORE") program within the portfolio excellence category of the Flowserve Business System. We deployed the Flowserve Business System to guide the enterprise on incorporating best in class operational practices within five categories: people excellence; operational excellence; portfolio excellence; commercial excellence; and innovation excellence. The CORE program focuses on product rationalization and continuous improvement of our overall product portfolio. During 2025, we also initiated certain other portfolio and footprint optimization activities. These optimization activities together with the CORE program, are referred to as the "2025 Realignment Programs." We currently anticipate a total investment in the 2025 Realignment Programs, which have been evaluated and initiated, of approximately $65 million of which $11 million is estimated to be non-cash. We are evaluating the annualized cost savings expected to be achieved upon completion of the activities of the 2025 Realignment Programs that have been identified and initiated to date. Actual savings could vary from expected savings.

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 and professional service fees. Expenses are primarily reported in cost of sales ("COS") or SG&A, as applicable, in our condensed consolidated statements of income. There are certain remaining realignment activities that are currently being evaluated, but have not yet been approved and therefore are not included in the above anticipated total investment.

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 activities:


	Three Months Ended September 30, 2025
(Amounts in thousands)	FPD		FCD		Subtotal - Reportable Segments		All Other		Consolidated Total
Realignment Charges
Restructuring Charges
COS	$	21,105	$	1,748	$	22,853	$	(524)	$	22,329
SG&A	210		2,220		2,430		—		2,430

	$	21,315	$	3,968	$	25,283	$	(524)	$	24,759
Non-Restructuring Charges
COS	$	523	$	2,638	$	3,161	$	(9)	$	3,152
SG&A	(122)		175		53		2,088		2,141

	$	401	$	2,813	$	3,214	$	2,079	$	5,293





Total Realignment Charges
COS	$	21,628	$	4,386	$	26,014	$	(533)	$	25,481
SG&A	88		2,395		2,483		2,088		4,571

Total	$	21,716	$	6,781	$	28,497	$	1,555	$	30,052


	Three Months Ended September 30, 2024
(Amounts in thousands)	FPD		FCD		Subtotal - Reportable Segments		All Other		Consolidated Total
Realignment Charges
Restructuring Charges
COS	$	7,856	$	(2,342)	$	5,514	$	—	$	5,514
SG&A	484		1,254		1,738		—		1,738

	$	8,340	$	(1,088)	$	7,252	$	—	$	7,252
Non-Restructuring Charges
COS	$	559	$	752	$	1,311	$	(12)	$	1,299
SG&A	232		125		357		47		404

	$	791	$	877	$	1,668	$	35	$	1,703





Total Realignment Charges
COS	$	8,415	$	(1,590)	$	6,825	$	(12)	$	6,813
SG&A	716		$	1,379	2,095		47		2,142

Total	$	9,131	$	(211)	$	8,920	$	35	$	8,955




	Nine Months Ended September 30, 2025
(Amounts in thousands)	FPD		FCD		Subtotal - Reportable Segments		All Other		Consolidated Total

Restructuring Charges
COS	$	25,508	$	10,038	$	35,546	$	(524)	$	35,022
SG&A	2,031		(1,285)		746		—		746

	$	27,539	$	8,753	$	36,292	$	(524)	$	35,768
Non-Restructuring Charges
COS	$	987	$	4,666	$	5,653	$	(75)	$	5,578
SG&A	(1,191)		55		(1,136)		1,871		735

	$	(204)	$	4,721	$	4,517	$	1,796	$	6,313






Total Realignment Charges
COS	$	26,495	$	14,704	$	41,199	$	(599)	$	40,600
SG&A	840		(1,230)		(390)		1,871		1,481

Total	$	27,335	$	13,474	$	40,809	$	1,272	$	42,081




	Nine Months Ended September 30, 2024
(Amounts in thousands)	FPD		FCD		Subtotal - Reportable Segments		All Other		Consolidated Total

Restructuring Charges
COS	$	19,264	$	(2,198)	$	17,066	$	—	$	17,066
SG&A	1,235		1,185		2,420		(28)		2,392
Loss on sale of business (1)	—		12,981		12,981		—		12,981
	$	20,499	$	11,968	$	32,467	$	(28)	$	32,439
Non-Restructuring Charges
COS	$	1,573	$	1,595	$	3,168	$	(228)	$	2,940
SG&A	(199)		256		57		920		977

	$	1,374	$	1,851	$	3,225	$	692	$	3,917






Total Realignment Charges
COS	$	20,837	$	(603)	$	20,234	$	(228)	$	20,006
SG&A	1,036		1,441		2,477		892		3,369
Loss on sale of business (1)	—		12,981		12,981		—		12,981
Total	$	21,873	$	13,819	$	35,692	$	664	$	36,356

__________________________________

(1) Loss on sale of business related to NAF AB control valves business as described within Note 1, "Basis of Presentation and Accounting Policies," to our condensed consolidated financial statements included in this Quarterly Report.

The following is a summary of total inception to date charges, net of adjustments, related to the 2025 Realignment Programs:


	Inception to Date
(Amounts in thousands)	FPD		FCD		Subtotal - Reportable Segments		All Other		Consolidated Total
Realignment Charges
Restructuring Charges
COS	$	25,508	$	10,038	$	35,546	$	(524)	$	35,022
SG&A	2,031		(1,285)		746		—		746

	$	27,539	$	8,753	$	36,292	$	(524)	$	35,768
Non-Restructuring Charges
COS	$	3,929	$	4,666	$	8,595	$	(75)	$	8,520
SG&A	(1,191)		55		(1,136)		1,871		735

	$	2,738	$	4,721	$	7,459	$	1,796	$	9,255





Total Realignment Charges
COS	$	29,437	$	14,704	$	44,141	$	(599)	$	43,542
SG&A (1)	840		(1,230)		(390)		1,871		1,481

Total	$	30,277	$	13,474	$	43,751	$	1,272	$	45,023

__________________________________

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

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


	Inception to Date
(Amounts in thousands)	FPD		FCD		Subtotal - Reportable Segments		All Other		Consolidated Total
Restructuring Charges
COS	$	27,076	$	5,041	$	32,117	$	66	$	32,183
SG&A	1,355		12,376		13,731		(28)		13,703
Loss on sale of business (1)	—		12,981		12,981		—		12,981
	$	28,431	$	30,398	$	58,829	$	38	$	58,867
Non-Restructuring Charges
COS	$	11,506	$	6,612	$	18,118	$	(655)	$	17,463
SG&A	14,256		2,112		16,368		19,893		$	36,261
	$	25,762	$	8,724	$	34,486	$	19,238	$	53,724
Total Realignment Charges
COS	$	38,582	$	11,653	$	50,235	$	(589)	$	49,646
SG&A	15,611		14,488		30,099		19,865		$	49,964
Loss on sale of business (1)	—		12,981		12,981		—		$	12,981
Total	$	54,193	$	39,122	$	93,315	$	19,276	$	112,591

__________________________________

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. Restructuring charges include charges related to approved, but not yet announced, facility closures.

The following is a summary of restructuring charges, net of adjustments, for our restructuring activities:


	Three Months Ended September 30, 2025
(Amounts in thousands)	Severance		Contract Termination		Asset Write-Downs (Gains)		Other		Total
COS	$	20,772	$	—	$	116	$	1,441	$	22,329
SG&A	2,322		—		(1)		109		2,430

Total	$	23,094	$	—	$	115	$	1,550	$	24,759


	Three Months Ended September 30, 2024
(Amounts in thousands)	Severance		Contract Termination		Asset Write-Downs (Gains)		Other		Total
COS	$	2,593	$	—	$	2,597	$	324	$	5,514
SG&A	(1,055)		—		2,455		338

FLOWSERVE CORP 10-Q