Slide 1: Flowserve Second Quarter 2017 Earnings Conference Call
Flowserve Second Quarter 2017 Earnings Conference Call July 28, 2017 1
Slide 2: Forward Looking Statements and Non-GAAP Measures
Forward Looking Statements and Non-GAAP Measures Safe Harbor Statement: This presentation includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, which are made pursuant to the safe harbor provisions
Slide 3: Q2 Overview
Q2 Overview • Reported 2017 Second quarter EPS* of $0.32, Adjusted EPS of $0.22 (1) • Adjusted EPS excludes $0.10 of adjusted items • Bookings decreased 0.4%, or increased 0.8% on a constant currency basis, with solid OE constant currency bookings growth of 5.1% • Continued progress on transformatio
Slide 4: Q2 2017 Bookings and Industry Outlook
Q2 2017 Bookings and Industry Outlook Oil & Gas Chemical Power General Industries Water Q2 2017 35% 21% 15% 26% 3% $971M Q2 2016 33% 22% 15% 26% 4% $975M OIL & GAS OPEC announcements have stimulated a moderate rebound. Oil price continues to trade in a limited range. North America upstream capex
Slide 5: Q2 2017 Sales & Regional Outlook
Q2 2017 Sales & Regional Outlook North America Europe Asia-Pacific Middle East & Africa Latin America Q2 2017 41% 23% 21% 10% 5% $877M Q2 2016 40% 24% 17% 12% 7% $1.03B NORTH AMERICA Oil & Gas upstream and midstream investments firm. Ethylene crackers 2nd wave momentum builds for 2018 – 2028 in No
Slide 6: Q2 2017 - Consolidated Financial Results
Q2 2017 - Consolidated Financial Results 2nd Quarter 2nd Quarter Adjusted 2017 2017 2016 ($ millions) 2017 2016 Delta ($) Delta (%) Constant Adjusted Adjusted Adjusted Delta ($) Delta (%) Constant FX (%)* Results FX (%)* Items Results Bookings $ 971.3 $ 975.4 $ (4.1) (0.4)% 0.8% $ — $ 971.3 $ 975.4
Slide 7: Year-to-Date 2017 - Consolidated Financial Results
Year-to-Date 2017 - Consolidated Financial Results Year to Date Year-to-Date Adjusted 2017 2017 2016 ($ millions) 2017 2016 Delta ($) Delta (%) Constant Adjusted Adjusted Adjusted Delta ($) Delta (%) Constant FX (%)* Items Results Results FX (%)* Bookings $ 1,928.1 $ 1,896.7 $ 31.4 1.7% 2.9% $ — $ 1
Slide 8: Q2 Consolidated Bookings & Sales
Q2 Consolidated Bookings & Sales Bookings Sales Original Equipment Aftermarket Q2 2017 53% 47% $971M 51% 49% $877M Q2 2016 51% 49% $975M 56% 44% $1.03B Q2 Bookings • Bookings decreased 0.4%, or increased 0.8% constant currency • Original equipment bookings increased 3.7%, or 5.1% constant currency •
Slide 9: Q2 & Year-to-Date 2017 Cash Flows
Q2 & Year-to-Date 2017 Cash Flows Q2 Q1 Year-to-Date ($ millions) 2017 2017 2017 2016 Net Income $ 46 $ 15 $ 61 $ 89 Depreciation and amortization 28 29 57 58 Change in working capital 83 (56) 27 (175) Gain on sale of business & other (114) 16 (98) 39 Total Operating Activities 43 4 47 11 Capital ex
Slide 10: 2017 Guidance Assumptions
2017 Guidance Assumptions Previous 2017 Current 2017 (1) Revenue Guidance Assumptions Guidance Guidance Revenue Guidance vs. 2016 -6% to -11% -6% to -10% EUR Rate 1.05 (yr-end 2016) 1.15 (current) FX headwinds vs. 2016 ~2.5% ~0.5% Constant Currency Guidance ~-3.5% to ~-8.5% ~-5.5% to ~-9.5% Previous
Slide 11: 2017 Cash Use Priorities
2017 Cash Use Priorities • Strategic investment of approximately $100 million in cost efficiency and manufacturing optimization initiatives • Estimate capital expenditures to be $80 – $90 million • Capital allocation policy of annually returning 40 – 50% of running 2-year average net earnings to sha
Slide 12: Questions and Answers
Questions and Answers Flowserve Q2 2017 Earnings Conference Call 12
Slide 13: Appendix
Appendix Flowserve Q2 2017 Earnings Conference Call 13
Slide 14: Engineered Product Division Q2 & Year-to-Date 2017 Segment Results
Engineered Product Division Q2 & Year-to-Date 2017 Segment Results 2nd Quarter Year-to-Date ($ millions) Constant Constant 2017 2016 Delta ($) Delta (%) FX (%)* 2017 2016 Delta ($) Delta (%) FX (%)* Bookings $ 465.1 $ 465.6 $ (0.5) (0.1)% 1.2% $ 925.1 $ 890.2 $ 34.9 3.9% 5.2% Sales $ 427.7 $ 512.9 $
Slide 15: Engineered Product Division Q2 & Year-to-Date 2017 Bookings and Sales
Engineered Product Division Q2 & Year-to-Date 2017 Bookings and Sales 2nd Quarter Year-to-Date Constant Constant ($ millions) 2017 2016 Delta (%) FX (%)* 2017 2016 Delta (%) FX (%)* OE 144 129 12% 14% 288 240 20% 23% Bookings 31% 28% 300 bps 31% 27% 400 bps Mix ** AM 321 336 (4)% (4)% 637 650 (2)% (
Slide 16: Industrial Product Division Q2 & Year-to-Date 2017 Segment Results
Industrial Product Division Q2 & Year-to-Date 2017 Segment Results 2nd Quarter Year-to-Date Constant Constant ($ millions) 2017 2016 Delta ($) Delta (%) FX (%)* 2017 2016 Delta ($) Delta (%) FX (%)* Bookings $ 213.3 $ 212.3 $ 1.0 0.5% 1.6% $ 420.0 $ 420.0 $ — —% 1.3% Sales $ 191.8 $ 215.0 $ (23.2) (
Slide 17: Industrial Product Division Q2 & Year-to-Date 2017 Bookings and Sales
Industrial Product Division Q2 & Year-to-Date 2017 Bookings and Sales 2nd Quarter Year to Date ($ millions) 2017 2016 Delta (%) Constant 2017 2016 Delta (%) Constant FX (%)* FX (%)* OE 135 129 5% 6% 267 262 2% 3% Bookings 63% 61% 200 bps 64% 62% 200 bps Mix ** AM 78 83 (6)% (5)% 153 158 (3)% (2)% 37
Slide 18: Flow Control Division Q2 & Year-to-Date 2017 Segment Results
Flow Control Division Q2 & Year-to-Date 2017 Segment Results 2nd Quarter Year-to-Date Delta Constant Constant ($ millions) 2017 2016 Delta ($) (%) FX (%)* 2017 2016 Delta ($) Delta (%) FX (%)* Bookings $ 316.2 $ 312.9 $ 3.3 1.1% 1.9% $ 625.6 $ 622.6 $ 3.0 0.5% 1.6% Sales $ 275.4 $ 317.2 $ (41.8) (13
Slide 19: Flow Control Division Q2 & Year-to-Date 2017 Bookings and Sales
Flow Control Division Q2 & Year-to-Date 2017 Bookings and Sales 2nd Quarter Year-to-Date Constant Constant ($ millions) 2017 2016 Delta (%) FX (%)* 2017 2016 Delta (%) FX (%)* OE 245 244 —% 1% 479 485 (1)% —% Bookings 78% 78% (0) bps 77% 78% (100) bps Mix ** AM 71 69 3% 3% 147 138 7% 7% 22% 22% 0 bp
Slide 20: Primary Working Capital
Primary Working Capital Balances for All Periods as a % of Trailing Twelve Months Sales Q2 2017 Q2 2016 ($ millions) $ % $ % Receivables 832 22.1% 942 21.6% Inventory 942 25.1% 1,033 23.7% Payables (367) -9.8% (417) (9.6)% Primary Working Capital 1,407 37.4% 1,558 35.7% Advance Cash* (273) (7.3)% (3
Slide 21: Flowserve Q2 2017 Earnings Conference Call
Flowserve Q2 2017 Earnings Conference Call 21