NYSE:FLS
FLOWSERVE CORP
A global leader in flow control technology offering high-performance valves and automation solutions for energy and industrial sectors.
Key Metrics
Investment Thesis
Bull Case
Investors should consider FLOWSERVE due to its improving profitability trajectory and robust cash generation capabilities evident in the recent financial results. The company's strategic positioning in essential industrial infrastructure provides stable recurring revenue opportunities as global energy transition projects expand demand for flow control technology.
Bear Case
Concerns regarding high debt levels with $1.53B in long-term obligations relative to total equity could limit financial flexibility during economic downturns. Additionally, significant accumulated other comprehensive losses and a large retained earnings deficit suggest potential historical volatility that warrants cautious monitoring before increasing exposure.
About FLOWSERVE CORP
FLOWSERVE CORP designs, manufactures, and markets flow control solutions, including valves, actuators, and instrumentation systems for the oil and gas, chemical, power generation, and water treatment industries. The company serves global markets with a focus on providing reliable mechanical and electronic equipment essential for process control and safety in critical infrastructure sectors.
Analysis
Management Discussion
Net income surged to $369.8M in the latest period, representing a significant acceleration from $205.2M in 2023 and $301.2M in 2024. This growth was supported by strong operational cash flow of $505.9M despite investing outflows of $125.2M for acquisitions, indicating effective capital allocation while maintaining liquidity with $760.2M in cash.
Industry Overview
The industrial automation and flow control industry is critical for maintaining efficiency and safety in energy production and distribution networks worldwide. Companies in this sector face cyclical demand patterns tied to capital investment cycles in oil, gas, chemicals, and power generation but offer long-term growth potential through infrastructure modernization.
Financial Statements
Income Statement
Balance Sheet
Cash Flow
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Revenue | $0 | $0 | $0 | $0 |
| Cost of Revenue | $2.62B | $3.04B | $3.12B | $3.15B |
| Gross Profit | $994.3M | $1.28B | $1.43B | $1.58B |
| Operating Expenses | $797.1M | $943.3M | $972.0M | $1.18B |
| Operating Income | $197.2M | $333.6M | $462.3M | $399.9M |
| R&D | $39.9M | $48.7M | $69.9M | $54.1M |
| G&A | $815.5M | $961.2M | $978.0M | $1.06B |
| Stock-Based Comp | $25.5M | $27.8M | $30.5M | $38.3M |
| D&A | $91.0M | $83.7M | $85.6M | $95.5M |
| Depreciation | $77.6M | $73.5M | $75.8M | $79.2M |
| Amortization | $11.4M | $11.3M | $10.0M | $16.2M |
| Other OpEx | $-58.4M | $-66.6M | $-76.0M | $65.3M |
| Non-Operating Income | $-42.8M | $-109.8M | $-76.1M | $125.5M |
| Interest Expense | $46.2M | $66.9M | $69.3M | $77.7M |
| Pre-Tax Income | $154.4M | $223.8M | $386.2M | $525.4M |
| Income Tax | $-43.6M | $18.6M | $84.9M | $155.6M |
| Continuing Ops | $198.0M | $205.2M | $301.2M | $369.8M |
| Discontinued Ops | $0 | $0 | $0 | $0 |
| Net Income | $198.0M | $205.2M | $301.2M | $369.8M |
| Minority Interest | $9.3M | $18.4M | $18.5M | $23.6M |
| Net to Common | $188.7M | $186.7M | $282.8M | $346.2M |
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Current Assets | $2.45B | $2.70B | $2.90B | $3.04B |
| Cash & Equivalents | $435.0M | $545.7M | $675.4M | $760.2M |
| Accounts Receivable | $868.6M | $881.9M | $976.7M | $1.03B |
| Inventory | $803.2M | $879.9M | $837.3M | $789.9M |
| Prepaid Expenses | $110.7M | $116.1M | $116.2M | $141.2M |
| Other Current Assets | $233.5M | $280.2M | $298.9M | $322.5M |
| Long-Term Assets | $2.34B | $2.40B | $2.60B | $2.67B |
| Intangibles | $134.5M | $122.2M | $188.6M | $198.5M |
| Goodwill | $1.17B | $1.18B | $1.29B | $1.39B |
| Operating Leases | $175.0M | $156.4M | $159.4M | $166.0M |
| Other LT Assets | $862.1M | $944.0M | $962.0M | $908.8M |
| Total Assets | $4.79B | $5.11B | $5.50B | $5.71B |
| Current Liabilities | $1.24B | $1.44B | $1.47B | $1.50B |
| Accounts Payable | $476.7M | $547.8M | $545.3M | $554.2M |
| Current Leases | $32.5M | $32.4M | $33.6M | $35.6M |
| Deferred Revenue | $257.0M | $287.7M | $283.7M | $274.7M |
| Taxes Payable | $33.0M | $24.6M | $28.0M | $40.0M |
| Other Current Liab | $16.4M | $41.6M | $16.1M | $9.9M |
| Long-Term Liabilities | $1.69B | $1.70B | $1.98B | $1.95B |
| Long-Term Debt | $1.22B | $1.17B | $1.46B | $1.53B |
| LT Operating Leases | $155.2M | $138.7M | $149.8M | $149.6M |
| Other LT Liab | $309.5M | $389.1M | $371.1M | $277.2M |
| Total Liabilities | $2.93B | $3.13B | $3.45B | $3.45B |
| Shareholders' Equity | $1.86B | $1.98B | $2.05B | $2.25B |
| Retained Earnings | $3.77B | $3.85B | $4.03B | $4.26B |
| AOCI | $-647.8M | $-639.6M | $-741.4M | $-575.4M |
| Treasury Stock | $2.04B | $2.01B | $2.01B | $2.23B |
| Total L&E | $4.79B | $5.11B | $5.50B | $5.71B |
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Net Income (CFO) | $198.0M | $205.2M | $301.2M | $369.8M |
| Non-Cash Adjustments | $-674.3M | $-15.7M | $87.1M | $220.3M |
| Working Capital Changes | $436.3M | $136.3M | $37.0M | $-84.2M |
| Cash from Operations | $-40.0M | $325.8M | $425.3M | $505.9M |
| Cash from Investing | $-6.1M | $-68.6M | $-387.2M | $-125.2M |
| Share Buybacks | $0 | $0 | $20.1M | $254.9M |
| Dividends Paid | $104.5M | $105.0M | $110.4M | $109.6M |
| Cash from Financing | $-150.0M | $-153.0M | $117.5M | $-326.9M |
| FX Effect | $-27.4M | $6.5M | $-25.8M | $30.9M |
| Net Change in Cash | $-223.5M | $110.7M | $129.8M | $84.7M |
| Beginning Cash | $658.5M | $435.0M | $545.7M | $675.4M |
| Ending Cash | $435.0M | $545.7M | $675.4M | $760.2M |
Frequently Asked Questions
How does FLOWSERVE CORP make money?
The company's revenue is primarily driven by its Flow Control Solutions segment, which includes butterfly, gate, globe, ball, and check valves along with associated actuators and positioners. Additional revenue streams come from Instrumentation Systems providing flow measurement devices and control modules, as well as the Automation & Control systems offering digital solutions for process optimization.
What are the main risks for FLS?
1. Volatility in oil and gas commodity prices affecting customer capital expenditure and demand for flow control equipment. 2. Supply chain disruptions impacting the availability of raw materials and components required for manufacturing. 3. Intense competition from both established players and low-cost manufacturers potentially compressing profit margins.
What is FLS's competitive advantage?
1. Strong brand reputation and extensive global distribution network ensuring consistent market penetration across key industries. 2. Robust product portfolio combining mechanical reliability with advanced electronic capabilities to meet stringent safety and efficiency standards. 3. Deep engineering expertise enabling custom solutions for complex industrial applications and harsh operating environments.
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Not financial advice. All content is for informational purposes only. Data may contain errors. Consult a qualified financial advisor before making investment decisions.