10-Q · April 29, 2026
Flowserve Corporation's Q1 2026 results show a decline in revenue and profitability compared to the previous quarter and year. Revenue decreased to $1.068 billion, a drop of 6.7% year-over-year, and diluted EPS dropped…
Earnings analysis · 10-Q
FLS earnings analysis
Filed July 29, 2026 · Our reading of the company's report
The latest report
Flowserve reported Q2 revenue of $1.169 billion, down 1.6% year over year but up 9.3% sequentially, while operating margin improved to 13.0% from 12.3% a year earlier. Order momentum was strong, with bookings up 25.5%…
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Flowserve reported Q2 revenue of $1.169 billion, down 1.6% year over year but up 9.3% sequentially, while operating margin improved to 13.0% from 12.3% a year earlier. Order momentum was strong, with bookings up 25.5% and backlog up 16.3% since year-end, but FCD profitability weakened sharply as realignment charges and Middle East disruption compressed its margin to 3.1%. Cash and revolver availability totaled $1.494 billion, although the TVD/FAMCO acquisitions required $517.7 million of first-half cash and increased interest expense.
From revenue to operating profit
Where each $100 of revenue went in this report.
Cost of sales, operating expenses, and what remained. Figures are rounded to whole dollars.
Where revenue came from
The business segments reported by the company.
Shares of the segments disclosed in this filing, largest first.
What stood out
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Sequential revenue and operating-margin recovery
Q2 revenue was $1.169 billion, down $18.9 million (1.6%) year over year, but up $99.2 million (9.3%) from Q1 2026 revenue of $1.070 billion. Q2 operating income increased $4.8 million (3.3%) to $151.4 million and operating margin expanded 70 basis points to 13.0%.
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Strong orders drive backlog to $3.3 billion
Bookings rose $274.2 million (25.5%) year over year to $1.348 billion, lifting backlog by $468.2 million (16.3%) since December 31, 2025 to $3.3 billion. FPD bookings grew 29.6% to $938.1 million and FCD bookings grew 17.6% to $417.1 million.
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FPD profitability improved materially
FPD segment operating income grew $18.5 million (11.4%) to $181.2 million despite sales declining 0.6% to $814.1 million; its segment operating margin increased to 22.3% from 19.9%.
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Aftermarket mix increased by 5 points
Aftermarket sales represented approximately 58% of Q2 sales versus approximately 53% a year earlier. This higher-margin mix partially offsets weakness in original-equipment sales.
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Positive first-half free cash flow
Operating cash flow was $86.2 million for the first six months and capex was $33.8 million, implying $52.4 million of free cash flow. Capex was 1.5% of six-month sales of $2.237 billion.
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Liquidity supports acquisition-funded strategy
Liquidity remained substantial, with $731.0 million of cash and $763.3 million of revolver availability at June 30, 2026. The new credit agreement includes a $1.0 billion revolver and a $450.0 million term loan maturing April 15, 2031.
What to watch
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FCD margin and earnings deteriorated sharply
FCD Q2 sales fell $14.2 million (3.8%) to $357.3 million, while segment operating income declined $26.8 million (70.9%) to $11.0 million. Its operating margin compressed 710 basis points to 3.1%, principally reflecting a $19.2 million increase in realignment charges in cost of sales and higher SG&A.
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Realignment and Middle East disruptions pressured margin
Consolidated gross margin declined 130 basis points year over year to 32.9%, as gross profit fell $21.9 million (5.4%) to $384.7 million. Management cited $27.9 million of Q2 realignment charges, higher annual incentive compensation, and Middle East disruptions.
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Acquisition financing increased interest burden
Acquisitions consumed $517.7 million of cash in the first half, funded partly by $499.3 million of 2036 senior-note proceeds and $74.8 million of term-loan proceeds. Q2 interest expense increased $5.4 million year over year to $25.7 million due primarily to higher outstanding debt.
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Working capital reduced operating cash conversion
Working-capital use constrained first-half operating cash flow to $86.2 million from $104.2 million a year earlier. Accounts payable changes used $52.3 million, accrued-liability changes used $80.8 million, and inventory changes used $4.3 million of cash.
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Tariff-recovery timing remains uncertain
The company identified no material changes to risk factors from its 2025 Annual Report and subsequent filings. Nevertheless, it reports $35.4 million of IEEPA tariff-refund claims, for which Phase 3 claim timing has not been established and recovery timing remains uncertain.
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Operating income benefited from one-time gain
No reported diluted EPS was included in the supplied 10-Q extract. Reported Q2 operating-income growth of $4.8 million included a $27.1 million increase in affiliate earnings, primarily a $27.7 million FAMCO remeasurement gain, indicating earnings were supported by a non-recurring acquisition-related item.
Management's outlook
The 10-Q does not provide quantitative revenue or EPS guidance. Management said existing backlog, improved execution and announced acquisitions provide a solid 2026 revenue base; it estimates 2026 capital expenditures of approximately $100.0 million and expects the identified 2025 Realignment Programs to generate $140.0 million of annualized cost savings from approximately $170.0 million of investment.
Earlier filings 1
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