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What changed in FLOWSERVE CORP's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of FLOWSERVE CORP's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+300 added−290 removedSource: 10-K (2026-02-17) vs 10-K (2025-02-26)

Top changes in FLOWSERVE CORP's 2025 10-K

300 paragraphs added · 290 removed · 259 edited across 7 sections

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

60 edited+7 added−9 removed133 unchanged
Biggest changeAny of these factors could, however, materially adversely affect our international operations and, consequently, our financial condition, results of operations and cash flows. Implementation of new tariffs and changes to or uncertainties related to tariffs and trade agreements could adversely affect our business. The United States has implemented certain tariffs on steel and aluminum imported into the country.
Biggest changeImplementation of new tariffs and changes to or uncertainties related to tariffs and trade agreements could adversely affect our business. The United States continues to implement certain trade actions, including imposing tariffs on certain goods imported from China, India, Mexico, and other countries, which have also resulted in certain retaliatory tariffs being imposed.
We compete against large and well-established national and global companies, as well as regional and local companies, low-cost replicators of spare parts and in-house maintenance departments of our end-user customers. We compete based on price, technical expertise, timeliness of delivery, contractual terms, project management, proximity to service centers, previous installation history and reputation for quality and reliability.
We compete against large and well-established national and global companies, as well as regional and local companies, low-cost replicators of spare parts and in-house maintenance departments of our end-user customers. We compete based on price, technical expertise, delivery timeliness, contractual terms, project management, proximity to service centers, previous installation history and reputation for quality and reliability.
We purchase substantially all electric power and other raw materials we use in the manufacturing of our products from outside sources. The costs of these raw materials have been volatile historically and are influenced by factors that are outside our control.
We purchase substantially all electric power and other raw materials we use in the manufacturing of our products from outside sources. The costs of these raw materials have been historically volatile and are influenced by factors that are outside our control.
Our operating margins and results of operations and cash flows may be adversely affected if we are unable 13 to pass increases in the costs of our raw materials on to our customers or if other methods to offset our increased costs through supply chain management, contractual provisions and gains in operational efficiencies are not achieved.
Our operating margins and results of operations and cash flows may be adversely affected if 13 we are unable to pass increases in the costs of our raw materials on to our customers or if other methods to offset our increased costs through supply chain management, contractual provisions, and gains in operational efficiencies are not achieved.
Similarly, certain countries, have adopted the Paris Climate Agreement and these and other existing international initiatives, such as the agreement resulting from the 2023 United Nations Climate Change Conference, or those under consideration may affect our operations. As regulators and investors increasingly focus on climate change and sustainability issues, we are subject to new disclosure frameworks and regulatory reporting obligations.
Similarly, certain countries, have adopted the Paris Climate Agreement and these and other existing international 19 initiatives, such as the agreement resulting from the 2023 United Nations Climate Change Conference, or those under consideration may affect our operations. As regulators and investors increasingly focus on climate and sustainability issues, we are subject to new disclosure frameworks and regulatory reporting obligations.
Existing or future legislation and regulations related to GHG emissions and climate change by the U.S. Congress, state and foreign legislatures and federal, state, local and foreign governmental agencies could adversely affect our business. Additionally, it is uncertain whether, when and in what form mandatory carbon dioxide emissions reduction programs may be adopted.
Existing or future legislation and regulations related to GHG emissions and climate by the U.S. Congress, state and foreign legislatures and federal, state, local and foreign governmental agencies could adversely affect our business. Additionally, it is uncertain whether, when and in what form mandatory carbon dioxide emissions reduction programs may be adopted.
The adoption of new or revised accounting principles may require us to make changes to our systems, processes and internal controls, which could have a significant effect on our reported financial results and internal controls, cause unexpected financial reporting fluctuations, retroactively affect previously reported results or require us to make costly changes to our operational processes and accounting systems upon adopting these standards.
The adoption of new or revised accounting principles may require us to make changes to our systems, processes and internal controls, which could have a significant effect on our reported financial results and internal controls, cause 22 unexpected financial reporting fluctuations, retroactively affect previously reported results or require us to make costly changes to our operational processes and accounting systems upon adopting these standards.
In addition, we 18 cannot predict the nature, scope or effect of future regulatory requirements to which our international operations might be subject or the manner in which existing laws might be administered or interpreted. Compliance with laws and any new laws or regulations may increase our operations costs or require significant capital expenditures.
In addition, we cannot predict the nature, scope or effect of future regulatory requirements to which our international operations might be subject or the manner in which existing laws might be administered or interpreted. Compliance with laws and any new laws or regulations may increase our operations costs or require significant capital expenditures.
Our inability to timely access capital on satisfactory terms, including as a result of market disruptions, could limit our ability to expand our business as desired and refinance our indebtedness. 21 In addition, the agreements governing our indebtedness impose certain operating and financial restrictions on us and somewhat limit management's discretion in operating our businesses.
Our inability to timely access capital on satisfactory terms, including as a result of market disruptions, could limit our ability to expand our business as desired and refinance our indebtedness. In addition, the agreements governing our indebtedness impose certain operating and financial restrictions on us and somewhat limit management's discretion in operating our businesses.
The new reporting obligations under the CSRD require in-scope companies to provide expansive disclosures on various sustainability topics including climate change, biodiversity, workforce, supply chain, and business ethics, all of which will significantly increase our reporting obligations and costs of 19 compliance.
The new reporting obligations under the CSRD require in-scope companies to provide expansive disclosures on various sustainability topics including climate change, biodiversity, workforce, supply chain, and business ethics, all of which will significantly increase our reporting obligations and costs of compliance.
In addition, actual or alleged violations could damage our reputation or ability to do business. Regulatory and Legal Risks Our operations are subject to a variety of complex and continually changing laws, regulations and policies, both internationally and domestically, which could adversely affect our business.
In addition, actual or alleged violations could damage our reputation or ability to do business. Regulatory and Legal Risks 18 Our operations are subject to a variety of complex and continually changing laws, regulations and policies, both internationally and domestically, which could adversely affect our business.
We are also required to maintain debt ratings, comply with leverage and interest coverage financial covenants and deliver to our lenders audited annual and unaudited quarterly financial statements. Our ability to comply with these covenants may be affected by events beyond our control.
We are also required to maintain debt ratings, comply with leverage and interest coverage financial covenants and deliver to our lenders audited annual and unaudited quarterly financial statements. Our ability to comply with these 21 covenants may be affected by events beyond our control.
Financial and Accounting Risks Significant changes in pension fund investment performance or assumptions changes may have a material effect on the valuation of our obligations under our defined benefit pension plans, the funded status of these plans and our pension expense.
Financial and Accounting Risks 20 Significant changes in pension fund investment performance or assumptions changes may have a material effect on the valuation of our obligations under our defined benefit pension plans, the funded status of these plans and our pension expense.
In 2025, our ability to meet customer delivery schedules for backlog is dependent on a number of factors including, but not limited to, sufficient manufacturing plant capacity, adequate supply channel access to the raw materials and other inventory required for production, an adequately trained and capable workforce, project engineering expertise for certain large projects and appropriate planning and scheduling of manufacturing resources.
In 2026, our ability to meet customer delivery schedules for backlog is dependent on a number of factors including, but not limited to, sufficient manufacturing plant capacity, adequate supply channel access to the raw materials and other inventory required for production, an adequately trained and capable workforce, project engineering expertise for certain large projects and appropriate planning and scheduling of manufacturing resources.
ITEM 1A. RISK FACTORS Please carefully consider the following discussion of material factors, events, and uncertainties that make an investment in our securities risky. If any of the factors, events and contingencies discussed below or elsewhere in this Annual Report materialize, our business, financial condition, results of operations, cash flows, reputation or prospects could be materially adversely affected.
ITEM 1A. RISK FACTORS Please carefully consider the following discussion of material factors, events, and uncertainties that make an investment in our securities risky. If any of the factors, events and contingencies discussed below or elsewhere in this Annual Report materialize, our business, financial condition, results of operations, cash flows, reputation, prospects, or stock price could be materially adversely affected.
While we were not a party to or involved in the case, we are monitoring further developments related to the United Kingdom's High Court ruling in the case of Virgin Media Ltd v. NTL Pensions Trustees II Limited. We continually review our funding policy related to our U.S. pension plan in accordance with applicable laws and regulations.
While we were not a party to or involved in the case, we are monitoring further developments related to the United Kingdom's High Court ruling in the case of Virgin Media Ltd v. NTL Pensions Trustees II Limited. We regularly review our funding policy related to our U.S. pension plan in accordance with applicable laws and regulations.
In addition, new laws and regulations that might favor the increased use of non-fossil fuels, including nuclear, wind, solar and bio-fuels or that are designed to increase energy efficiency, could dampen demand for oil and gas production or power generation resulting in lower spending by customers for our products and services.
In addition, new laws and regulations that might favor the increased use of non-fossil fuels, including nuclear, wind, solar and bio-fuels or that are designed to increase energy efficiency, could dampen demand for energy production or power generation resulting in lower spending by customers for our products and services.
Although we have concluded that there is no impairment on the goodwill associated with our pump reporting unit as of December 31, 2024, we will continue to monitor its performance and related market conditions for future indicators of potential impairment. For additional information, see the discussion in "Item 7.
Although we have concluded that there is no impairment on the goodwill associated with our pump reporting unit as of December 31, 2025, we will continue to monitor its performance and related market conditions for future indicators of potential impairment. For additional information, see the discussion in "Item 7.
When our customers, particularly those involved in the oil and gas, power generation, petrochemical processing or petroleum refining industries, are subject to any of these or other similar proposed or newly enacted laws and regulations, we are exposed to risks that the additional costs by customers to comply with such laws and regulations could impact their ability or desire to continue to operate at similar levels in certain jurisdictions as historically seen or as currently anticipated, which could negatively impact their demand for our products and services.
When our customers, particularly those involved in the energy, power generation, petrochemical processing or petroleum refining industries, are subject to any of these or other similar proposed or newly enacted laws and regulations, we are exposed to risks that the additional costs by customers to comply with such laws and regulations could impact their ability or desire to continue to operate at similar levels in certain jurisdictions as historically seen or as currently anticipated, which could negatively impact their demand for our products and services.
Based on our assessment of our def erred tax assets, we determined, based on projected future income and certain available tax planning strategies, that approximately $326 million of our deferred tax assets will more likely than not be realized in the future, and no valuation allowance is currently required for this portion of our deferred tax assets.
Based on our assessment of our def erred tax assets, we determined, based on projected future income and certain available tax planning strategies, that approximately $264 million of our deferred tax assets will more likely than not be realized in the future, and no valuation allowance is currently required for this portion of our deferred tax assets.
In recent years, the prices for energy, metal alloys, nickel and certain other of our raw materials have been volatile.
For example, in recent years, the prices for energy, metal alloys, nickel, and certain other of our raw materials have been volatile.
For example, the Corporate Sustainability Reporting Directive (“CSRD”), one of the key directives of the European Union sustainability legal framework, mandates enhanced corporate responsibility reporting that will affect both our E.U. and non-E.U. business operations in the coming years (i.e., E.U. operations by 2025 and non-E.U. operations by 2029).
For example, the Corporate Sustainability Reporting Directive (“CSRD”), one of the key directives of the European Union sustainability legal framework, mandates enhanced corporate responsibility reporting that will affect both our E.U. and non-E.U. business operations in the coming years (i.e., E.U. operations by 2028 and non-E.U. operations by 2029).
Accordingly, our business and results of operations are subject to risks associated with doing business internationally, including: 16 • instability in a specific country's or region's political or economic conditions, particularly economic conditions in Europe and Latin America, and political conditions in the Middle East, Asia, North Africa, Latin America, the Trans-Pacific region and other emerging markets; • trade protection measures, such as tariff increases, and import and export licensing and control requirements; • political, financial market or economic instability relating to epidemics or pandemics; • uncertainties related to any geopolitical, economic and regulatory effects or changes due to recent or upcoming domestic and international elections; • the imposition of governmental economic sanctions on countries in which we do business; • potentially negative consequences from changes in tax laws or tax examinations; • difficulty in staffing and managing widespread operations; • increased aging and slower collection of receivables, particularly in Latin America and other emerging markets; • difficulty of enforcing agreements and collecting receivables through some foreign legal systems; • differing and, in some cases, more stringent labor regulations; • potentially negative consequences from fluctuations in foreign currency exchange rates; • partial or total expropriation; • differing protection of intellectual property; • inability to repatriate income or capital; and • difficulty in administering and enforcing corporate policies, which may be different than the customary business practices of local cultures.
Accordingly, our business and results of operations are subject to risks associated with doing business internationally, including : • instability in a specific country's or region's political or economic conditions, particularly economic conditions in Europe and Latin America, and political conditions in the Middle East, Asia, North Africa, Latin America, the Trans-Pacific region and other emerging markets; • trade protection measures, such as the threat of imposition of tariffs, and import and export licensing and control requirements, or other trade restrictions, as well as any retaliatory actions; • political, financial market or economic instability relating to epidemics or pandemics; • uncertainties related to any geopolitical, economic and regulatory effects or changes due to recent or upcoming domestic and international elections; • the imposition of governmental economic sanctions on countries in which we do business; • potentially negative consequences from changes in tax laws or tax examinations; • difficulty in staffing and managing widespread operations; • increased aging and slower collection of receivables, particularly in Latin America and other emerging markets; • difficulty of enforcing agreements and collecting receivables through some foreign legal systems; • differing and, in some cases, more stringent labor regulations; • potentially negative consequences from fluctuations in foreign currency exchange rates; • partial or total expropriation; • differing protection of intellectual property; • inability to repatriate income or capital; and • difficulty in administering and enforcing corporate policies, which may be different than the customary business practices of local cultures.
A relatively strong U.S. dollar has made and may continue to make our products more expensive overseas, which may make our ability to meet our international customers’ pricing expectations particularly challenging and may result in erosion of product margin and market share.
A relatively strong U.S. dollar in recent years has made and can continue to make our products more expensive overseas, which can make our ability to meet our international customers’ pricing expectations particularly challenging and may result in erosion of product margin and market share.
These factors, together with other key global events during 2024 (such as the ongoing conflicts and terrorist activity), may adversely impact the ability or willingness of non-U.S. companies to transact business in the United States.
These factors, together with other key global events during 2025 and beyond (such as the ongoing conflicts and terrorist activity), may adversely impact the ability or willingness of non-U.S. companies to transact business in the United States.
As a result, and as discussed hereafter in our risk factor entitled “We are exposed to certain regulatory and financial risks related to climate change, which could adversely affect our financial condition, results of operations and cash flows,” we may be required to make increased capital expenditures to adapt our business and operations to meet new regulations and standards.
As a result, and as discussed hereafter in our risk factor entitled “We are exposed to certain regulatory and financial risks related to sustainability issues, which could adversely affect our financial condition, results of operations and cash flows,” we may be required to make increased capital expenditures to adapt our business and operations to meet new regulations and standards.
Compliance with GDPR, new state laws, and other current and future applicable U.S. and international privacy, data protection, cybersecurity, artificial intelligence and other data-related laws can be costly and time-consuming; any failure to comply with these regulatory standards could subject us to legal and reputational risks, including proceedings against the Company by governmental entities or others, fines and penalties, damage to our reputation and credibility and could have a negative impact on our business and results of operations.
Compliance with GDPR, new state laws, and other current and future applicable U.S. and international privacy, data protection, cybersecurity, artificial intelligence and other data-related laws can be costly and time-consuming; any failure to comply with these regulatory standards could subject us to legal and reputational risks, including proceedings against the Company by governmental entities or others, fines and penalties, damage to our reputation and credibility and could have a negative impact on our business and results of operations. 16 Risks Related to International Operations Economic, political and other risks associated with our international operations could adversely affect our business.
Changes in tariffs could also result in changes in supply and demand of our raw material needs, affect our manufacturing capabilities and lead to increased prices that we may not be able to effectively pass on to customers, each of which could materially adversely affect our operating margins, results of operations and cash flows.
Changes in tariffs, export controls, and sanctions laws could also result in changes in supply and demand of our raw material needs, affect our manufacturing capabilities and lead to increased prices that we may not be able to effectively pass on to customers, each of which could materially adversely affect our operating margins, results of operations and cash flows.
Such a loss of anticipated revenues could have a material adverse effect on our business, financial condition, results of operations and cash flows. Our inability to deliver our backlog on time could affect our revenues, future sales and profitability and our relationships with customers. At December 31, 2024, our backlog was $2.8 billion.
Such a loss of anticipated revenues could have a material adverse effect on our business, financial condition, results of operations and cash flows. Our inability to deliver our backlog on time could affect our revenues, future sales and profitability and our relationships with customers. At December 31, 2025, our backlog was $2.9 billion.
In past years, the estimated fair value of our pump reporting unit has fluctuated, partially due to broad-based capital spending declines and heightened pricing pressures experienced in the oil and gas markets.
In past years, the estimated fair value of our pump reporting unit has fluctuated, partially due to broad-based capital spending declines and heightened pricing pressures experienced in the energy markets.
While we attempt to mitigate the financial consequences of order delays and cancellations through contractual provisions and other means, if we were to experience a significant increase in order delays or cancellations that can result from the aforementioned economic conditions or other factors beyond our control, it could impede or delay our ability to realize anticipated revenues on our backlog.
While we attempt to mitigate the financial consequences of order delays and cancellations through contractual provisions and other means, if we were to experience a significant increase in order delays or cancellations, which can occur as a result of the aforementioned economic conditions or other factors beyond our control, it could impede or delay our ability to realize anticipated revenues on our backlog.
As regulatory requirements such as CSRD and other climate change regulations continue to evolve, the anticipated costs and operational impacts could adversely affect our financial condition and results of operations.
As regulatory requirements such as CSRD and other sustainability regulations continue to evolve, the anticipated costs and operational impacts could adversely affect our financial condition and results of operations.
See also the discussion below under the heading "Economic, political and other risks associated with international operations could adversely affect our business." Global climate change and our commitments to reduce our carbon emissions presents challenges to our business which could materially adversely affect us.
See also the discussion below under the heading "Economic, political and other risks associated with international operations could adversely affect our business." Global sustainability issues and our commitments to reduce our carbon emissions presents challenges to our business which could materially adversely affect us.
Our manufacturing plant operations, capacity and supply chain are subject to disruption as a result of equipment failure, severe weather conditions and other natural or manmade disasters, including power outages, fires, explosions, terrorism, cyber-based attacks, conflicts or unrest, epidemics or pandemics, labor disputes, tariffs, acts of God, or other reasons.
Our manufacturing plant operations, capacity and supply chain are subject to disruption as a result of equipment failure, severe weather conditions and other natural or manmade disasters, including power outages, fires, explosions, terrorism, cyber-based attacks, conflicts or unrest, epidemics or pandemics, labor disputes, trade protection measures, including tariffs or import-export restrictions, acts of God, or other reasons.
Moreover, we may determine that it is in the best interest of our company and our shareholders to prioritize other business, social, governance or sustainable investments over the achievement of our current commitments based on economic, regulatory and social factors, business strategy or pressure from investors, activist groups or other stakeholders. 14 If we are unable to meet these commitments, then, in addition to regulatory and legal risks related to compliance, we could incur adverse publicity and reaction from investors, customers or other stakeholders, which could adversely impact our reputation, which could in turn adversely impact our results of operations.
Moreover, we may determine that it is in the best interest of our company and our shareholders to prioritize other business, social, governance or sustainable investments over the achievement of our current commitments based on economic, regulatory and social factors, business strategy or pressure from investors, activist groups or other stakeholders. 14 If we are unable to meet these commitments, or if these commitments do not meet the rapidly evolving, varied and often times conflicting expectations of our stakeholders, then, in addition to regulatory and legal risks related to compliance, we could incur adverse publicity and reaction from investors, customers or other stakeholders, which could adversely impact our reputation, which could in turn adversely impact our results of operations.
Volatile regional and global economic conditions stemming from public health emergencies, such as outbreaks of epidemics, pandemics, and contagious diseases, including actions taken by governments in response, could in the future cause a substantial curtailment of business activities (including the decrease in demand for a broad variety of goods and services), weakened economic conditions, supply chain disruptions, significant economic uncertainty and volatility in the financial and commodity markets, including global volatility in supply and demand for oil and gas and may precipitate and aggravate many of the factors described above, and could cause these factors to adversely impact our operations and financial performance as well as those of many of our customers and suppliers.
Any of these results could continue to adversely affect our business, financial condition, results of operations and cash flows. 11 Volatile regional and global economic conditions stemming from public health emergencies, such as outbreaks of epidemics, pandemics, and contagious diseases, including actions taken by governments in response, could in the future cause a substantial curtailment of business activities (including the decrease in demand for a broad variety of goods and services), weakened economic conditions, supply chain disruptions, significant economic uncertainty, and volatility in the financial and commodity markets, including global volatility in supply and demand for energy, may precipitate and aggravate many of the factors described above, and could cause these factors to adversely impact our operations and financial performance as well as those of many of our customers and suppliers.
The potential for future such events, the national and international responses to such events or perceived threats to national security, and other actual or potential conflicts or wars, such as the Russia-Ukraine conflict, the Israel-Hamas war and ongoing instability in Middle East, have created many economic and political uncertainties.
The potential for future such events, the national and international responses to such events or perceived threats to national security, and other actual or potential conflicts or wars, such as the Russia-Ukraine conflict, the Israel-Hamas war, ongoing instability in Middle East, and heightened political and economic tensions involving the United States and Venezuela, have created many economic and political uncertainties.
Some of the more common challenges associated with acquisitions that we may experience, and have experienced in the past, include: • loss of key employees or customers of the acquired company; • conforming the acquired company's standards, processes, procedures and controls, including accounting systems and controls, with our operations, which could cause deficiencies related to our internal control over financial reporting; • coordinating operations that are increased in scope, geographic diversity and complexity; • retooling and reprogramming of equipment; • hiring additional management and other critical personnel; and 15 • the diversion of management's attention from our day-to-day operations.
Some of the more common challenges associated with acquisitions that we may experience, and have experienced in the past, include: • loss of key employees or customers of the acquired company; • conforming the acquired company's standards, processes, procedures and controls, including accounting systems and controls, with our operations, which could cause deficiencies related to our internal control over financial reporting; • coordinating operations that are increased in scope, geographic diversity and complexity; 15 • retooling and reprogramming of equipment; • integrating the acquired company's information systems, which may increase the scope and complexity of our information technology networks and related systems, resulting in new security vulnerabilities or increased exposure to cyber-attacks; • hiring additional management and other critical personnel; and • the diversion of management's attention from our day-to-day operations.
Throughout 2024, our operating costs were impacted by price inflation, including with respect to the cost of certain raw materials, commodities, freight and logistics, and we expect this to continue for the foreseeable future.
Throughout 2025, our operating costs were impacted by tariff actions as well as price inflation, including with respect to the cost of certain raw materials, commodities, freight and logistics, and we expect this to continue for the foreseeable future.
While we have been and remain committed to being responsive to climate change and to reducing our carbon footprint, there can be no assurance that our commitments and current and future strategic plans to achieve those commitments will be successful, that the costs related to the foregoing energy transition may not be higher than expected, that the technological advancements and innovations we are relying upon will come to fruition in the timeframe we expect, or at all, or that proposed regulation or deregulation related to climate change will not have a negative competitive impact, any one of which could have a material adverse effect on our capital expenditures, operating margins and results of operations.
While we have taken steps to adopt sustainability goals and reduce our carbon emissions, there can be no assurance that our commitments and current and future strategic plans to achieve those commitments will be successful, that the costs related to these efforts may not be higher than expected, that the technological advancements and innovations we are relying upon will come to fruition in the timeframe we expect, or at all, or that proposed regulation or deregulation related to climate change will not have a negative competitive impact, any one of which could have a material adverse effect on our capital expenditures, operating margins and results of operations.
In addition, emerging markets pose other uncertainties, including challenges to our ability to protect our intellectual property, pressure on the pricing of our products and increased risk of political instability, and may prefer local suppliers because of existing relationships, local restrictions or incentives.
We also must communicate and monitor standards and directives across our global network. In addition, emerging markets pose other uncertainties, including challenges to our ability to protect our intellectual property, pressure on the pricing of our products and increased risk of political 17 instability, and may prefer local suppliers because of existing relationships, local restrictions or incentives.
We are exposed to certain regulatory and financial risks related to climate change, which could adversely affect our financial condition, results of operations and cash flows. Emissions of carbon dioxide and other greenhouse gases and their role in climate change are receiving ever increasing attention worldwide, which has led to significant legislative and regulatory efforts to limit GHG emissions.
We are exposed to certain regulatory and financial risks related to sustainability issues, which could adversely affect our financial condition, results of operations and cash flows. Emissions of carbon dioxide and other greenhouse gases and their role in global sustainability issues continue to garner attention globally, which has led to significant legislative and regulatory efforts to limit GHG emissions.
Our business may be adversely impacted by work stoppages and other labor matters. As of December 31, 2024, we had approximately 16,000 employees, of which approximately 4,700 were located in the United States. Approximately 3% of our U.S. employees are represented by unions.
Our business may be adversely impacted by work stoppages and other labor matters. As of December 31, 2025, w e had approximat ely 16,000 empl oyees, of which approximately 4,600 were located in the United States . Approximatel y 3% of our U.S. employees are represented by unions.
Risks Related to International Operations Economic, political and other risks associated with our international operations could adversely affect our business. A substantial portion of our operations is conducted and located outside the United States. We have manufacturing, sales or service facilities in approximately 50 countries and sell to customers in over 90 countries, i n addition to the United States.
A substantial portion of our operations is conducted and located outside the United States. We have manufacturing, sales or service facilities in approximately 50 countries and sell to customers in over 90 countries, i n addition to the United States.
In addition, as a global company with headquarters and significant operations located in the United States, actions against or by the United States may impact our business or employees.
In addition, as a global company with headquarters and significant operations located in the United States, actions against or by the United States, such as the imposition of new U.S. tariffs and any retaliatory tariffs, may impact our business or employees.
Additionally, increasing tensions between the United States and China may result in further restrictions or actions by the U.S. government with respect to doing business in China or by the Chinese government with respect to business conducted by foreign entities in China, which could impact certain of our manufacturing operations, as well as supply for our raw materials and components. 17 Our future success will depend, in large part, on our ability to anticipate and effectively manage these and other risks associated with our international operations.
Additionally, increasing tensions between the United States and China may result in further restrictions or actions by the U.S. government with respect to doing business in China or by the Chinese government with respect to business conducted by foreign entities in China, which could impact certain of our manufacturing operations, as well as supply for our raw materials and components.
Because it is uncertain what laws will be enacted, we cannot predict the potential impact of such laws on our future financial condition, results of operations and cash flows, but such new or additional laws could adversely affect our business. We are party to asbestos-containing product litigation that could adversely affect our financial condition, results of operations and cash flows.
Because it is uncertain what laws will be enacted, we cannot predict the potential impact of such laws on our future financial condition, results of operations and cash flows, but such new or additional laws could adversely affect our business. Inability to protect our intellectual property could negatively affect our competitive position.
Reduced demand for our products and services from time to time results in the delay or cancellation of existing orders or leads to excess manufacturing capacity, which unfavorably impacts our absorption of fixed manufacturing costs.
Reduced demand for our products and services from time to time results in the delay or cancellation of existing orders or leads to excess manufacturing capacity, which unfavorably impacts our absorption of fixed manufacturing costs. This reduced demand has in the past and may continue in the future to also erode average selling prices in our industry.
The businesses of many of our customers, particularly oil and gas companies, chemical companies and general industrial companies, are to varying degrees cyclical and have experienced periodic downturns. Our customers in these industries, particularly those whose demand for our products and services is primarily profit-driven, tend to delay large capital projects, including expensive maintenance and upgrades, during economic downturns.
Our customers in these industries, particularly those whose demand for our products and services is primarily profit-driven, tend to delay large capital projects, including expensive maintenance and upgrades, during economic downturns.
Our future success will depend in part on the continued service of key executive officers and personnel. The loss of the services of any key individual could harm our business.
Our future success will depend in part on the continued service of key executive officers and personnel. The loss of the services of any key individual could harm our business. Our future success also depends on our ability to recruit, retain and engage our personnel sufficiently, both to maintain our current business and to execute our strategic initiatives.
The ability of our customers to finance capital investment and maintenance is also affected by factors independent of the conditions in their industry, such as the condition of global credit and capital markets.
The ability of our customers to finance capital investment and maintenance is also affected by factors independent of the conditions in their industry, such as the condition of global credit and capital markets. The businesses of many of our customers, particularly energy companies, chemical companies and general industrial companies, are to varying degrees cyclical and have experienced periodic downturns.
Even if we are successful in defending against a claim relating to our products, claims of this nature could cause our customers to lose confidence in our products and our company. 20 Warranty claims are not generally covered by insurance, and we may incur significant warranty costs that are not reimbursable, which could adversely affect our financial condition, results of operations and cash flows.
Warranty claims are not generally covered by insurance, and we may incur significant warranty costs that are not reimbursable, which could adversely affect our financial condition, results of operations and cash flows.
The rapid evolution and increased availability of artificial intelligence may intensify cybersecurity risks by making targeted attacks more sophisticated and cybersecurity incidents more difficult to detect, contain, and mitigate.
The rapid evolution and increased availability of artificial intelligence technologies, including generative artificial intelligence models, may intensify cybersecurity risks by making targeted attacks more sophisticated and cybersecurity incidents more difficult to detect, contain, and mitigate, which may inhibit our ability to provide prompt, full, and reliable information about such incidents to our customers, regulators, and the public.
See Note 1, "Significant Accounting Policies and Accounting Developments" to our consolidated financial statements included in "Item 8. Financial Statements and Supplemental Data" of this Annual Report for further discussion of the termination of our Russian operations. In order to manage our day-to-day operations, we must overcome cultural and language barriers and assimilate different business practices.
Financial Statements and Supplemental Data" of this Annual Report for further discussion of the termination of our Russian operations. In order to manage our day-to-day operations, we must overcome cultural and language barriers and assimilate different business practices. In addition, we are required to create compensation programs, employment policies and other administrative programs that comply with laws of multiple countries.
Similarly, military conflicts in Russia/Ukraine, the Middle East, Asia and North Africa could soften the level of capital investment and demand for our products and services. We have experienced logistics disruptions as a result of the Israel-Hamas war that have increased expenses and delayed import of our products in the region.
Similarly, military conflicts in Russia/Ukraine, the Middle East, Asia and North Africa, as well as the current and developing geopolitical tensions between the United States and Venezuela, could soften the level of capital investment and demand for our products and services.
The conflict is ongoing and the length, impact, and outcome is highly unpredictable. If the conflict further intensifies or develops, it could have an adverse impact on our business operations in the Middle East or other affected areas.
If the conflict further intensifies or develops, it could have an adverse impact on our business operations in the Middle East or other affected areas. 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.
Changes in accounting principles and guidance could result in unfavorable accounting charges or effects. We prepare our consolidated financial statements in conformity with accounting principles generally accepted in the United States. A change in these principles can have a significant effect on our reported financial position and financial results.
Competition in our industry for officers and employees is intense and we may not be successful in attracting and retaining such personnel. Changes in accounting principles and guidance could result in unfavorable accounting charges or effects. We prepare our consolidated financial statements in conformity with accounting principles generally accepted in the United States.
In addition, there have been recent changes to trade agreements, like the United States withdrawal from the Trans-Pacific Partnership and the replacement of the North American Free Trade Agreement with the United States-Mexico-Canada Agreement, and more changes may be forthcoming under the current U.S. administration.
Presidential administration, although it is not possible to predict the extent or focus of any such tariffs at this time. In addition, there have been changes and uncertainty with respect to trade agreements, including the United States-Mexico-Canada Agreement, and more changes may be forthcoming under the current U.S. administration.
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.
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. See Note 1, "Significant Accounting Policies and Accounting Developments," to our consolidated financial statements included in "Item 8.
Increased public awareness and concern regarding global climate change has and will result in more regulations designed to reduce GHG emissions.
The potential effects of global sustainability issues create financial and operational risks to our business, both directly and indirectly. Increased concern regarding global sustainability issues and greenhouse gas ("GHG") emissions has and will result in more regulations designed to reduce GHG emissions.
Removed
This reduced demand has in the past and may continue in the future to also erode average selling prices in our industry. 11 Any of these results could continue to adversely affect our business, financial condition, results of operations and cash flows.
Added
The disclosures in this section reflect our beliefs and opinions as to factors that could materially and adversely affect us in the future. References to past events are provided by way of example only and are not intended to be a complete listing or a representation as to whether or not such factors have occurred in the past.
Removed
The effects of climate change create financial and operational risks to our business, both directly and indirectly. There is a general consensus that greenhouse gas (“GHG”) emissions are linked to global climate change, and that these emissions must be reduced dramatically to avert the worst effects of climate change.
Added
Furthermore, businesses which we have acquired, or may in the future acquire, may have cybersecurity weaknesses which could subject us to increased risks of cybersecurity incidents.
Removed
In addition, we are required to create compensation programs, employment policies and other administrative programs that comply with laws of multiple countries. We also must communicate and monitor standards and directives across our global network.
Added
We have experienced logistics disruptions as a result of the Israel-Hamas war that have increased expenses and delayed import of our products in the region. The conflict is ongoing and the length, impact, and outcome is highly unpredictable.
Removed
In response, certain foreign governments have implemented or reportedly considered implementing additional tariffs on U.S. goods. The current U.S. Presidential administration has indicated the possibility of imposing tariffs on imports from Mexico, Canada and China during his second term.
Added
Our future success will depend, in large part, on our ability to anticipate and effectively manage these and other risks associated with our international operations. Any of these factors could, however, materially adversely affect our international operations and, consequently, our financial condition, results of operations and cash flows.
Removed
We are a defendant in a substantial number of lawsuits that seek to recover damages for personal injury allegedly resulting from exposure to asbestos-containing products formerly manufactured and/or distributed by us.
Added
For example, in 2025, the United States expanded and increased existing tariffs on steel and aluminum, imposing 50% tariffs on steel, aluminum, and products containing steel and aluminum from a range of U.S. trading partners. More significant tariffs have been proposed by the current U.S.
Removed
Such products were used as internal components of process equipment, and we do not believe that there was any significant emission of asbestos-containing fibers during the use of this equipment.
Added
Even if we are successful in defending against a claim relating to our products, claims of this nature could cause our customers to lose confidence in our products and our company.
Removed
Although we are defending these allegations vigorously and believe that a high percentage of these lawsuits are covered by insurance or indemnities from other companies, there can be no assurance that we will prevail or that coverage or payments made by insurance or such other companies would be adequate.
Added
A change in these principles can have a significant effect on our reported financial position and financial results.
Removed
Unfavorable rulings, judgments or settlement terms could have a material adverse impact on our business, financial condition, results of operations and cash flows. Inability to protect our intellectual property could negatively affect our competitive position.
Removed
Our future success also depends on our ability to recruit, retain and engage our personnel sufficiently, both to maintain our current business and to execute our strategic initiatives. 22 Competition for officers and employees in our industry is intense and we may not be successful in attracting and retaining such personnel.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeIn addition to regularly scheduled Technology, Risk and Finance Committee reviews, we have in place processes and protocols by which certain cybersecurity incidents are reported 23 immediately to the Company’s executive leadership team, and subsequently thereafter, as appropriate to the Technology, Risk and Finance Committee.
Biggest changeIn addition to regularly scheduled Technology, Innovation and Risk Committee reviews, we have in place processes and protocols by which certain cybersecurity incidents are reported immediately to the Company’s executive leadership team, and subsequently thereafter, as appropriate to the Technology, Innovation and Risk Committee.
While we have not experienced any material cybersecurity incidents, there can be no guarantee that we will not be the subject of future incidents. For additional information on cybersecurity risks we face, see “Item 1A. Risk Factors”, of this Annual Report, which should be read in conjunction with the foregoing information.
While we have not experienced any material cybersecurity incidents, there can be no guarantee that we will not be the subject of future incidents. For additional information on cybersecurity risks we face, see “Item 1A. Risk Factors” in this Annual Report, which should be read in conjunction with the foregoing information.
The CIO and Director of Cybersecurity are informed about and monitor the prevention, detection, mitigation, and remediation of cybersecurity incidents through reports from this team and regularly review risk management measures implemented by the Company to identify and mitigate cyber security risks.
The CIO and Director of Cybersecurity are informed about and monitor the prevention, detection, mitigation, and remediation of 23 cybersecurity incidents through reports from this team and regularly review risk management measures implemented by the Company to identify and mitigate cyber security risks.
The Technology, Risk and Finance Committee receives regular reports from management, including our Chief Information Officer (CIO), and reports to the Board of Directors at least annually on data protection and cybersecurity matters and reviews the measures implemented by the Company to identify and mitigate data protection and cybersecurity risks.
The Technology, Innovation and Risk Committee receives regular reports from management, including our Chief Information Officer ("CIO"), and reports to the Board of Directors at least annually on data protection and cybersecurity matters and reviews the measures implemented by the Company to identify and mitigate data protection and cybersecurity risks.
ITEM 1C. CYBERSECURITY Governance Our Board of Directors has delegated the primary responsibility to oversee cybersecurity matters to the Technology, Risk and Finance Committee of our Board of Directors.
ITEM 1C. CYBERSECURITY Governance Our Board of Directors has delegated the primary responsibility to oversee cybersecurity matters to the Technology, Innovation and Risk Committee of our Board of Directors.
The CIO also attends regular meetings of the Technology, Risk and Finance Committee to report information on material risks from cybersecurity threats.
The CIO also attends regular meetings of the Technology, Innovation and Risk Committee to report information on material risks from cybersecurity threats.

Item 2. Properties

Properties — owned and leased real estate

2 edited+0 added−0 removed4 unchanged
Biggest changeBusiness" in this Annual Report for further information with respect to all of our manufacturing and operational facilities, including QRCs. 24 Number of Facilities Approximate Aggregate Square Footage FPD U.S. 7 1,171,000 Non-U.S. 19 3,975,000 FCD U.S. 6 1,121,000 Non-U.S. 11 1,151,000 We own the majority of our manufacturing facilities, and those manufacturing facilities we do not own are leased.
Biggest changeBusiness" in this Annual Report for further information with respect to all of our manufacturing and operational facilities, including QRCs. 24 Number of Facilities Approximate Aggregate Square Footage FPD U.S. 7 1,171,000 Non-U.S. 19 3,998,000 FCD U.S. 6 1,029,000 Non-U.S. 10 1,421,000 We own the majority of our manufacturing facilities, and those manufacturing facilities we do not own are leased.
We have the option to renew the current lease for two additional five-year periods. We currently occupy approximately 130,000 square feet at this facility. Our major manufacturing facilities (those with 50,000 or more square feet of manufacturing capacity) operating at December 31, 2024 are presented in the table below. See "Item 1.
We have the option to renew the current lease for two additional five-year periods. We currently occupy approximately 130,000 square feet at this facility. Our major manufacturing facilities (those with 50,000 or more square feet of manufacturing capacity) operating at December 31, 2025 are presented in the table below. See "Item 1.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeITEM 3. LEGAL PROCEEDINGS We are party to the legal proceedings that are described in Note 16, "Legal Matters and Contingencies," to our consolidated financial statements included in "Item 8. Financial Statements and Supplementary Data" of this Annual Report, and such disclosure is incorporated by reference into this "Item 3.
Biggest changeITEM 3. LEGAL PROCEEDINGS We are party to the legal proceedings that are described in Note 17, "Legal Matters and Contingencies," to our consolidated financial statements included in "Item 8. Financial Statements and Supplementary Data" of this Annual Report, and such disclosure is incorporated by reference into this "Item 3.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeIssuer Purchases of Equity Securities 25 Effective February 19, 2024, the Board of Directors approved a $300.0 million share repurchase authorization, which included approximately $96.1 million of remaining capacity under the prior $500.0 million share repurchase authorization. During the quarter ended December 31, 2024, we had no repurchases of our common stock shares.
Biggest changeAny subsequent dividends will be reviewed by our Board of Directors and declared in its discretion. 25 Issuer Purchases of Equity Securities Effective August 8, 2025, the Board of Directors approved a $400.0 million share repurchase authorization, which included approximately $227.1 million of remaining capacity under the prior $300.0 million 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. (4) Note 18, "Shareholders' Equity," to our consolidated financial statements included in "Item 8. Financial Statements and Supplementary Data" of this Annual Report provides additional information regarding our share repurchase activity.
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 . (4) Note 19, "Shareholders' Equity," to our consolidated financial statements included in "Item 8. Financial Statements and Supplementary Data" of this Annual Report provides additional information regarding our share repurchase activity.
Stock Performance Graph The following graph depicts the most recent five-year performance of our common stock with the S&P 500 Index and S&P 500 Industrials. The graph assumes an investment of $100 on December 31, 2019, and assumes the reinvestment of any dividends over the following five years.
Stock Performance Graph The following graph depicts the most recent five-year performance of our common stock with the S&P 500 Index and S&P 500 Industrials. The graph assumes an investment of $100 on December 31, 2020, and assumes the reinvestment of any dividends over the following five years.
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock is traded on the New York Stock Exchange ("NYSE") under the symbol "FLS". On February 21, 2025, our records showed 798 shareholders of record.
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock is traded on the New York Stock Exchange ("NYSE") under the symbol "FLS." On February 12, 2026, our records showed 761 shareholders of record.
(2) Includes 263 shares that were tendered by employees to satisfy minimum tax withholding amounts for Restricted Shares at an average price per share of $59.88 and 1,630 shares purchased at a price of $59.24 per share by a rabbi trust that we established in connection with our director deferral plans, pursuant to which non-employee directors may elect to defer directors’ quarterly cash compensation to be paid at a later date in the form of common stock.
(2) Includes 1,851 shares that were tendered by employees to satisfy minimum tax withholding amounts for Restricted Shares purchased at a price of $67.16 and 1,487 shares purchased at a price of $69.27 per share by a rabbi trust that we established in connection with our director deferral plans, pursuant to which non-employee directors may elect to defer directors’ quarterly cash compensation to be paid at a later date in the form of common stock.
(3) On November 13, 2014, our Board of Directors approved a $500.0 million share repurchase authorization. Effective February 19, 2024, the Board of Directors approved a $300.0 million share repurchase authorization, which included approximately $96.1 million of remaining capacity under the prior $500.0 million share repurchase authorization.
(3) On November 13, 2014, our Board of Directors approved a $500.0 million share repurchase authorization. Effective August 8, 2025, the Board of Directors approved a $400.0 million share repurchase authorization, which included approximately $227.1 million of remaining capacity under the prior $300.0 million share repurchase authorization.
The following table sets forth the repurchase data for each of the three months during the quarter ended December 31, 2024: Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plan (3)(4) Approximate Dollar Value That May Yet Be Purchased Under the Plan (In millions) October 1 - 31 76 (1) $ 53.69 — $ 279.9 November 1 - 30 1,893 (2) 59.33 — 279.9 December 1 - 31 1,874 (1) 60.84 — 279.9 Total 3,843 $ 59.95 — _______________________________________ (1) Shares tendered by employees to satisfy minimum tax withholding amounts for Restricted Shares.
The following table sets forth the repurchase data for each of the three months during the quarter ended December 31, 2025: Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plan (3)(4) Approximate Dollar Value That May Yet Be Purchased Under the Plan (In millions) October 1 - 31 1,082,426 $ 52.60 1,082,426 $ 197.9 November 1 - 30 3,338 (2) 68.10 — 197.9 December 1 - 31 2,122 (1) 71.49 — 197.9 Total 1,087,886 $ 52.69 1,082,426 _______________________________________ (1) Shares tendered by employees to satisfy minimum tax withholding amounts for Restricted Shares.
We have his torically paid quarterly dividends based on a d ividend date-of-record in the last month of each quarter with the dividend paid the following month. Any subsequent dividends will be reviewed by our Board of Directors and declared in its discretion.
We have historically paid quarterly dividends base d on a d ividend date-of-record in the last month of each quarter with the dividend paid the following month.
As of December 31, 2024, we had $279.9 million of remaining capacity under our current share repurchase program.
During the quarter ended December 31, 2025, we repurchased 1,082,426 shares of our outstanding common stock for $56.9 million. As of December 31, 2025, we had $197.9 million of remaining capacity under our current share repurchase program.
The stock price performance shown in the graph is not necessarily indicative of future price performance. 26 Base Period December 31, Company/Index 2019 2020 2021 2022 2023 2024 Flowserve Corporation $100.00 $76.13 $64.63 $66.62 $91.48 $129.79 S&P 500 Index 100.00 118.39 152.34 124.73 157.48 196.85 S&P 500 Industrials 100.00 111.05 134.48 127.07 150.04 176.00 27
The stock price performance shown in the graph is not necessarily indicative of future price performance. 26 Base Period December 31, Company/Index 2020 2021 2022 2023 2024 2025 Flowserve Corporation $100.00 $84.90 $87.51 $120.16 $170.49 $208.76 S&P 500 Index 100.00 128.68 105.35 133.02 166.27 195.97 S&P 500 Industrials 100.00 121.10 114.42 135.11 158.48 189.03 27 ITEM 6. [Reserved]

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeIn 2024, SG&A increased due to increased research and development costs of $21.2 million which includes the $7.2 million strategic acquisition of intellectual property related to certain LNG technology, $9.9 million of acquisition and integration expense related to the MOGAS acquisition, an increase in bad debt expense of $6.0 million, $2.3 million in one-time U.S. pension plan transition benefit expense, a $1.8 million discrete software asset impairment, increased asbestos-related costs of $1.7 million for IBNR asbestos liability accruals and $1.0 million in amortization of step-up in value of acquisition related intangible assets associated with the MOGAS acquisition, partially offset by decreased charges of $40.1 million related to our 2023 and CORE Realignment Programs, $8.5 million of expense related to the terminated Velan acquisition incurred in 2023 that did not recur, lower broad-based annual incentive compensation, a $2.9 million impairment of a licensing intangible in 2023 that did not recur and the reversal of previously recognized expenses of $2.0 million related to our financial exposure in Russia as compared with the same period in 2023.
Biggest change("Chart") (see Note 1, " Significant Accounting Policies and Accounting Developments," to our consolidated financial statements for further information), increased asbestos-related costs of $14.8 million for Incurred But Not Reported ("IBNR") asbestos liability activity prior to the Asbestos Divestiture, acquisition and integration costs and amortization of acquisition related intangibles assets associated with the MOGAS acquisition of $18.0 million and $1.7 million of other merger and acquisition costs, partially offset by a decrease in R&D costs of $15.8 million, lower broad-based annual incentive compensation, a decrease in bad debt expense of $5.3 million, $2.3 million in one-time U.S. pension plan transition benefit expense incurred in 2024 that did not recur and decreased charges of $1.3 million related to our realignment activities.
The worldwide installed base of our products is an important source of aftermarket revenue, where products are relied upon to maximize the operating time of many key industrial processes. We continue to invest in our aftermarket strategy to provide local support to drive customer investments in our offerings and use of our services to replace or repair installed products.
The worldwide installed base of our products is an important source of aftermarket revenue, where products are relied upon to maximize operating time of many key industrial processes. We continue to invest in our aftermarket strategy to provide local support to drive customer investments in our offerings and use of our services to replace or repair installed products.
The most significant estimates made by management include: timing and amount of revenue recognition; deferred taxes, tax valuation allowances and tax reserves; 45 reserves for contingent loss; pension and postretirement benefits; and valuation of goodwill, indefinite-lived intangible assets and other long-lived assets. The significant estimates are reviewed at least annually if not quarterly by management.
The most significant estimates made by 45 management include: timing and amount of revenue recognition; deferred taxes, tax valuation allowances and tax reserves; reserves for contingent loss; pension and postretirement benefits; and valuation of goodwill, indefinite-lived intangible assets and other long-lived assets. The significant estimates are reviewed at least annually if not quarterly by management.
Subsequently, on October 10, 2024, we amended and restated our Senior Credit Agreement and entered into the 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 a Lender approving 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.
Subsequently, on October 10, 2024, we amended and restated our Senior Credit Agreement and entered into the 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) 40 retain from the Senior Credit Agreement the $800.0 million Revolving Credit Facility, and the right, subject to certain conditions including a Lender approving 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.
The amount of income taxes we pay is subject to ongoing audits by federal, state and foreign tax authorities, which often result in proposed assessments. Significant judgment is required in determining income tax provisions and evaluating 46 tax positions. We establish reserves for open tax years for uncertain tax positions that may be subject to challenge by various tax authorities.
The amount of income taxes we pay is subject to ongoing audits by federal, state and foreign tax authorities, which often result in proposed assessments. Significant judgment is required in determining income tax provisions and evaluating tax positions. We establish reserves for open tax years for uncertain tax positions that may be subject to challenge by various tax authorities.
We believe the long-term fundamentals for the power generation industry remain solid based on projected increases in demand for electricity driven by the continued use and proliferation of artificial intelligence systems and machine learning, global population growth, growth of urbanization in developing markets and the increased use of electricity driven transportation.
We believe the long-term fundamentals for the power generation industry remain solid positive based on projected increases in demand for electricity driven by the continued use and proliferation of artificial intelligence systems and machine learning, global population growth, growth of urbanization in developing markets and the increased use of electricity driven transportation.
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. Implementation of different tax structures in certain jurisdictions could, if successful, result in future reductions of certain valuation allowances.
Failure to achieve forecasted taxable income in the applicable tax jurisdictions could affect the ultimate realization of deferred tax 46 assets and could result in an increase in our effective tax rate on future earnings. Implementation of different tax structures in certain jurisdictions could, if successful, result in future reductions of certain valuation allowances.
For 47 plans in the United Kingdom and the Eurozone we use the discount rate obtained from an analysis of AA-graded corporate bonds used to generate a yield curve. For other countries or regions without a corporate AA bond market, government bond rates are used.
For plans in the United Kingdom and the Eurozone we use the discount rate obtained from an analysis of AA-graded corporate bonds used to generate a yield curve. For other countries or regions without a corporate AA bond market, government bond rates are used.
Our business segments share a focus on industrial flow control technology and have a high number of common customers. These segments also have complementary product offerings and technologies that are often combined in applications that provide us a net competitive advantage.
Our business segments share a focus on industrial flow control technology and have a number of common customers. These segments also have complementary product offerings and technologies that are often combined in applications that provide us a net competitive advantage.
We believe this Second Amended and Restated Credit Agreement will provide greater flexibility 40 and additional liquidity under our Credit Facility as we continue to pursue our business goals and strategy. Most other terms and conditions under the previous Credit Facility remained unchanged.
We believe this Second Amended and Restated Credit Agreement will provide greater flexibility and additional liquidity under our Credit Facility as we continue to pursue our business goals and strategy. Most other terms and conditions under the previous Credit Facility remained unchanged.
Financial Statements and Supplementary Data" of this Annual Report. These assumptions are assessed annually in consultation with independent actuaries and investment advisors as of December 31 and adjustments are made as needed.
Financial Statements and 47 Supplementary Data" of this Annual Report. These assumptions are assessed annually in consultation with independent actuaries and investment advisors as of December 31 and adjustments are made as needed.
Unless specified 42 otherwise, the references in this section are to all of our U.S. and non-U.S. plans. None of our common stock is directly held by these plans.
Unless specified otherwise, the references in this section are to all of our U.S. and non-U.S. plans. None of our common stock is directly held by these plans.
Risk Factors” and the section titled “Forward-Looking Information is Subject to Risk and Uncertainty” included in this Annual Report on Form 10-K for the year ended December 31, 2024 ("Annual Report") for a discussion of the risks, uncertainties and assumptions associated with these statements. Unless otherwise noted, all amounts discussed herein are consolidated.
Risk Factors” and the section titled “Forward-Looking Information is Subject to Risk and Uncertainty” included in this Annual Report on Form 10-K for the year ended December 31, 2025 ("Annual Report") for a discussion of the risks, uncertainties and assumptions associated with these statements. Unless otherwise noted, all amounts discussed herein are consolidated.
Assuming a positive general macroeconomic environment and continued supportive environments in our end markets, we expect full-year bookings growth in 2025. On October 10, 2024, we entered into the Second Amended and Restated Credit Agreement, which includes a $800.0 million Revolving Credit Facility and $500.0 million Term Loan.
Assuming a positive general macroeconomic environment and continued supportive environments in our end markets, we expect full-year bookings growth in 2026. On October 10, 2024, we entered into the Second Amended and Restated Credit Agreement, which includes a $800.0 million Revolving Credit Facility and $500.0 million Term Loan.
The aftermarket business, which is primarily served by our network of 157 QRCs (some of which are shared by our two business segments) located around the globe, provides a variety of service offerings for our customers including spare parts, service solutions, product life cycle solutions and other value-added services.
The aftermarket business, which is primarily served by our network of 152 QRCs (some of which are shared by our two business segments) located around the globe, provides a variety of service offerings for our customers including spare parts, service solutions, product life cycle solutions and other value-added services.
The increase in customer bookings was substantially driven by original equipment bookings, including the impact of original equipment orders booked in the second quarter of 2024 in excess of $150 million to supply pumps and related equipment to support the continued development of an onshore unconventional gas project and a petrochemical project in the Middle East.
The decrease in customer bookings was substantially driven by original equipment bookings, including the impact of original equipment orders booked in the second quarter of 2024 in excess of $150 million to supply pumps and related equipment to support the continued development of an onshore unconventional gas project and a petrochemical project in the Middle East.
To the extent that the expected tax outcome of these matters changes, such changes in estimate will impact the income tax provision in the period in which such determination is made. For a discussion related to deferred taxes, tax valuation allowances and tax reserves refer to Note 19, "Income Taxes," included in "Item 8.
To the extent that the expected tax outcome of these matters changes, such changes in estimate will impact the income tax provision in the period in which such determination is made. For a discussion related to deferred taxes, tax valuation allowances and tax reserves refer to Note 20, "Income Taxes," included in "Item 8.
We evaluate the funded status of each retirement plan using current assumptions and determine the appropriate funding level considering applicable regulatory requirements, tax deductibility, reporting considerations, cash flow requirements and other factors. We discuss our funding assumptions with the Technology, Risk and Finance Committee of our Board of Directors.
We evaluate the funded status of each retirement plan using current assumptions and determine the appropriate funding level considering applicable regulatory requirements, tax deductibility, reporting considerations, cash flow requirements and other factors. We discuss our funding assumptions with the Technology, Innovation and Risk Committee of our Board of Directors.
Cash flow used by working capital increased in 2024, primarily due to increased cash flows used by, or decreased cash flows provided by, accounts receivable, prepaid expenses and other assets, accounts payable, contract liabilities, and accrued liabilities, partially offset by increased cash flows provided by, or decreased cash flows used by, inventories and contract assets as compared to the same period in 2023 .
Cash flow used by working capital decreased in 2025, primarily due to increased cash flows provided by, or decreased cash flows used by, accounts receivable, inventories and contract assets, partially offset by decreased cash flows provided by, or increased cash flows used by, prepaid expenses and other assets, accounts payable, contract liabilities and accrued liabilities as compared to the same period in 2024.
Our material cash requirements for the next 12 months, include our estimated 2025 capital expenditures described above and our contractual obligations summarized below under the subheading "Contractual Obligations". In the aggregate, our cash needs vary based on working capital activity and will be evaluated throughout 2025.
Our material cash requirements for the next 12 months, include our estimated 2026 capital expenditures described above and our contractual obligations summarized below under the subheading "Contractual Obligations". In the aggregate, our cash needs vary based on working capital activity and will be evaluated throughout 2026.
The average discount rate for the non-U.S. plans increased from 4.22% to 4.71% based on analysis of bonds and other publicly traded instruments, by country, which had higher yields due to market conditions.
The average discount rate for the non-U.S. plans increased from 4.71% to 4.94% based on analysis of bonds and other publicly traded instruments, by country, which had higher yields due to market conditions.
The discussion and analysis of changes in the financial condition and results of operations for fiscal year 2023 compared to fiscal year 2022 that are not included in this Form 10-K may be found in Part II, "Item 7.
The discussion and analysis of changes in the financial condition and results of operations for fiscal year 2024 compared to fiscal year 2023 that are not included in this Form 10-K may be found in Part II, "Item 7.
Postretirement medical plans: Effect on Benefit Obligation (0.3) 0.3 44 Effect of Changes in the Expected Return on Assets and Constancy of Other Assumptions: 0.5% Increase 0.5% Decrease (Amounts in millions) U.S. defined benefit pension plan: Effect on net pension expense $ (1.9) $ 1.9 Non-U.S. defined benefit pension plans: Effect on net pension expense (0.8) 0.8 As discussed below, accounting principles generally accepted in the U.S.
Postretirement medical plans: Effect on Benefit Obligation (0.2) 0.2 44 Effect of Changes in the Expected Return on Assets and Constancy of Other Assumptions: 0.5% Increase 0.5% Decrease (Amounts in millions) U.S. defined benefit pension plan: Effect on net pension expense $ (1.8) $ 1.8 Non-U.S. defined benefit pension plans: Effect on net pension expense (0.8) 0.8 As discussed below, accounting principles generally accepted in the U.S.
Business Segments We conduct our operations through two business segments based on type of product and how we manage the business. We evaluate segment performance and allocate resources based on each segment’s operating income. See Note 20, "Business Segment Information," to our consolidated financial statements included in "Item 8.
Business Segments We conduct our operations through two business segments based on type of product and how we manage the business. We evaluate segment performance and allocate resources based on each segment’s operating income. See Note 21, 36 "Business Segment Information," to our consolidated financial statements included in "Item 8.
A discussion of changes in the Company’s liquidity and capital resources for the year ended December 31, 2023 and 2022 can be found in Part II, “Item 7.
A discussion of changes in the Company’s liquidity and capital resources for the year ended December 31, 2024 and 2023 can be found in Part II, “Item 7.
Our non-U.S. defined benefit plan assets include a significant concentration of United Kingdom fixed income securities, as discussed in Note 14, "Pension and Postretirements Benefits," to our consolidated financial statements included in "Item 8. Financial Statements and Supplementary Data" of this Annual Report. We monitor investment allocations and manage plan assets to maintain an acceptable level of risk.
Our non-U.S. defined benefit plan assets include a significant concentration of United Kingdom fixed income securities , as discussed in Note 15, " Pension and Postretirement Benefits," to our consolidated financial statements included in "Item 8. Financial Statements and Supplementary Data" of this Annual Report. We monitor investment allocations and manage plan assets to maintain an acceptable level of risk.
In 2024, energy security concerns drove continued investment in the power generation industry, including nuclear new build and life extensions as well as traditional thermal power sources.
In 2025, energy security concerns drove continued investment in the power generation industry, including nuclear new build and life extensions as well as traditional thermal power sources.
The assumptions include factors such as discount rates, health care cost trend rates, inflation, expected rates of return on plan assets, retirement rates, mortality rates, turnover, rates of compensation increases and other factors. The assumptions utilized to compute expense and benefit obligations are shown in Note 14, "Pension and Postretirements Benefits," to our consolidated financial statements included in "Item 8.
The assumptions include factors such as discount rates, health care cost trend rates, inflation, expected rates of return on plan assets, retirement rates, mortality rates, turnover, rates of compensation increases and other factors. The assumptions utilized to compute expense and benefit obligations are shown in Note 15, "Pension and Postretirement Benefits," to our consolidated financial statements included in "Item 8.
OUR RESULTS OF OPERATIONS The following is the discussion and analysis of changes in the financial condition and results of operations for fiscal year December 31, 2024 compared to fiscal year 2023.
OUR RESULTS OF OPERATIONS The following is the discussion and analysis of changes in the financial condition and results of operations for fiscal year December 31, 2025 compared to fiscal year 2024.
We believe that the following represent our critical accounting policies. For a summary of all of our significant accounting policies, see Note 1, "Basis of Presentation and Accounting Policies," to our consolidated financial statements included in "Item 8. Financial Statements and Supplementary Data" of this Annual Report.
We believe that the following represent our critical accounting policies. For a summary of all of our significant accounting policies, see Note 1, "Significant Accounting Policies and Accounting Developments," to our consolidated financial statements included in "Item 8. Financial Statements and Supplementary Data" of this Annual Report.
We review ongoing insurance coverage available for a significant amount of the potential future asbestos-related claims and in the future could secure additional insurance coverage as deemed necessary. For a discussion pertaining to asbestos claims refer to Note 16, "Legal Matters and Contingencies," included in "Item 8. Financial Statements and Supplementary Data" of this Annual Report.
We reviewed ongoing insurance coverage available for a significant amount of the potential future asbestos-related claims and in the future could secure additional insurance coverage as deemed necessary. For a discussion pertaining to asbestos claims refer to Note 17, "Legal Matters and Contingencies," included in "Item 8. Financial Statements and Supplementary Data" of this Annual Report.
We currently anticipate that our contributions to our non-U.S. pension plans will be approximately $2 million in 2025, excluding direct benefits paid. We have no obligation to make contributions to our U.S. pension plans in 2025, but have authorization for contributions up to $10 million.
We currently anticipate that our contributions to our non-U.S. pension plans will be approximately $3 million in 2026, excluding direct benefits paid. We have no obligation to make contributions to our U.S. pension plans in 2025, but have authorization for contributions up to $10 million.
Management's Discussion and Analysis of Financial Condition and Results of Operations," of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on February 20, 2024. Throughout this discussion of our results of operations, we discuss the impact of fluctuations in foreign currency exchange rates.
Management's Discussion and Analysis of Financial Condition and Results of Operations," of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed with the SEC on February 26, 2025. Throughout this discussion of our results of operations, we discuss the impact of fluctuations in foreign currency exchange rates.
The Amended and Restated Credit Agreement, (i) retained, from the previous credit agreement, the $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 ii) provides for an up to $300 million unsecured Term Loan Facility (the "Term Loan"), (iii) extends the maturity date of the agreement to September 13, 2026, (iv) reduces commitment fees, (v) extends net leverage ratio covenant definition through the maturity of the agreement, and (vi) provides the ability to make certain adjustments to the otherwise applicable commitment fee, interest rate and letter of credit fees based on the Company’s performance against to-be-established key performance indicators with respect to certain of the Company’s environmental, social and governance targets.
The Amended and Restated Credit Agreement, (i) retained, from the previous credit agreement, the $800.0 million unsecured Revolving Credit Facility (the "Revolving Credit Facility"), which included a $750.0 million sublimit for the issuance of letters of credit and a $30.0 million sublimit for swing line loans, (ii) provided for an up to $300 million unsecured Term Loan Facility (the "Term Loan"), (iii) extended the maturity date of the agreement to September 13, 2026, (iv) reduced commitment fees, (v) extended net leverage ratio covenant definition through the maturity of the agreement, and (vi) provided the ability to make certain adjustments to the otherwise applicable commitment fee, interest rate and letter of credit fees based on the Company’s performance against to-be-established key performance indicators with respect to certain of the Company’s environmental, social and governance targets.
The following are assumptions related to our defined benefit pension plans as of December 31, 2024: U.S. Plan Non-U.S.
The following are assumptions related to our defined benefit pension plans as of December 31, 2025: U.S. Plan Non-U.S.
Through our manufacturing platform and global network of QRCs, we offer a broad array of aftermarket equipment services, such as installation, advanced diagnostics and turnkey maintenance programs. As of December 31, 2024, we have approximately 16,000 employees globally and a footprint of manufacturing facilities and QRCs in approximately 50 countries.
Through our manufacturing platform and global network of QRCs, we offer a broad array of aftermarket equipment services, such as installation, advanced diagnostics and turnkey maintenance programs. As of December 31, 2025, we have approximately 16,000 employees globally and a footprint of manufacturing facilities and QRCs in approximately 48 countries.
In 2025, our cash flows for investing activities will be focused on strategic initiatives, information technology infrastructure, general upgrades and cost reduction opportunities and we currently estimate capital expenditures to be between $80 million and $90 million, before consideration of any acquisition activity.
In 2026, our cash flows for investing activities will be focused on strategic initiatives, information technology infrastructure, general upgrades and cost reduction opportunities and we currently estimate capital expenditures to be between $90 million and $100 million, before consideration of any acquisition activity.
(3) Retirement and postretirement benefits represent estimated benefit payments for our U.S. and non-U.S. defined benefit plans and our postretirement medical plans, as more fully described below and in Note 14, "Pension and Postretirements Benefits," to our consolidated financial statements included in "Item 8. Financial Statements and Supplementary Data" of this Annual Report.
(3) Pension and postretirement benefits represent estimated benefit payments for our U.S. and non-U.S. defined benefit plans and our postretirement medical plans, as more fully described below and in Note 15, "Pension and Postretirement Benefits," to our consolidated financial statements included in "Item 8. Financial Statements and Supplementary Data" of this Annual Report.
The reputation of our product portfolio is built on more than 50 well-respected brand names such as Worthington, IDP, SIHI, INNOMAG, Valtek, Limitorque, Durco and Argus, which we believe to be one of the most comprehensive in the industry.
The reputation of our product portfolio is built on more than 50 well-respected brand names such as Worthington, IDP, SIHI, INNOMAG, Valtek, Limitorque, Durco, Argus and Durametallic, w hich we believe to be one of the most comprehensive in the industry.
Additionally, we have recorded other net deferred tax assets of $206.7 million, which relate to net operating losses, tax credits and other deductible temporary differences that are available to reduce taxable income in future periods, most of which do not have a definite expiration.
Additionally, we have recorded other net deferred tax assets of $147.8 million, which relate to net operating losses, tax credits and other deductible temporary differences that are available to reduce taxable income in future periods, most of which do not have a definite expiration.
During 2024, we made $20.0 million cash contributions to our U.S. pension plan, compared to $2.0 million cash contributions in 2023. At December 31, 2024 and 2023, as a result of the values of the plan’s assets and our contributions to the plan, our U.S. pension plan was fully-funded as defined by applicable law.
During 2025, we made $10.0 million cash contributions to our U.S. pension plan, compared to $20.0 million cash contributions in 2024. At December 31, 2025 and 2024, as a result of the values of the plan’s assets and our contributions to the plan, our U.S. pension plan was fully-funded as defined by applicable law.
We did not record a material impairment for goodwill, indefinite-lived intangible assets or long-lived assets in 2024, 2023 or 2022.
We did not record a material impairment for goodwill, indefinite-lived intangible assets or long-lived assets in 2025, 2024 or 2023.
ACCOUNTING DEVELOPMEN TS We have presented the informati on about accounting pronouncements not yet implemented in Note 1, "Basis of Presentation and Accounting Policies," to our consolidated financial statements included in "Item 8. Financial Statements and Supplementary Data" of this Annual Report. 48
ACCOUNTING DEVELOPMEN TS We have presented the informati on about accounting pronouncements not yet implemented in Note 1, "Significant Accounting Policies and Accounting Developments," to our consolidated financial statements included in "Item 8. Financial Statements and Supplementary Data" of this Annual Report. 48
Our segments also benefit from our global footprint, our economies of scale in reducing administrative and overhead costs to serve customers more cost effectively and our shared leadership for operational support functions, such as research and development, marketing and supply chain.
Our segments also benefit from our global footprint, our economies of scale in reducing administrative and overhead costs to serve customers more cost effectively and our shared leadership for operational support functions, such as R&D, marketing, and supply chain.
Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on February 20, 2024.
Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed with the SEC on February 26, 2025.
The non-service cost portion of net pension expense (e.g., interest cost, actuarial gains and losses and expected return on plan assets) for our defined benefit pensi on plans included in other income (expense), net was $6.0 million in 2024, compared to $4.5 million in 2023.
The non-service cost portion of net pension expense (e.g., interest cost, actuarial gains and losses and expected return on plan assets) for our defined benefit pensi on plans included in other income (expense), net was $20.6 million in 2025, compared to $6.0 million in 2024.
We believe our global presence and our localized aftermarket capabilities are well-positioned to serve the potential growth opportunities in this industry. Power Generation The power generation industry represented approximately 13% and 11% of our bookings in 2024 and 2023, respectively.
We believe our global presence and our localized aftermarket capabilities are well-positioned to serve the potential growth opportunities in this industry. Power Generation The power generation industry represented approximately 14% and 13% of our bookings in 2025 and 2024, respectively.
Net Earnings from Affiliates 2024 2023 2022 (Amounts in millions) Net earnings from affiliates $ 19.1 $ 17.9 $ 18.5 Net earnings from affiliates represents our net income from investments in five joint ventures (one located in each of Chile, India, Saudi Arabia, South Korea and the United Arab Emirates) that are accounted for using the equity method of accounting.
Net Earnings from Affiliates 2025 2024 2023 (Amounts in millions) Net earnings from affiliates $ 20.7 $ 19.1 $ 17.9 Net earnings from affiliates represents our net income from investments in five joint ventures (one located in each of Chile, India, Saudi Arabia, South Korea and the United Arab Emirates) that are accounted for using the equity method of accounting.
Effect of Discount Rate Changes and Constancy of Other Assumptions: 0.5% Increase 0.5% Decrease (Amounts in millions) U.S. defined benefit pension plan: Effect on net pension expense $ 0.1 $ 2.1 Effect on Benefit Obligation (13.4) 14.4 Non-U.S. defined benefit pension plans: Effect on net pension expense 0.4 0.7 Effect on Benefit Obligation (15.1) 16.8 U.S.
Effect of Discount Rate Changes and Constancy of Other Assumptions: 0.5% Increase 0.5% Decrease (Amounts in millions) U.S. defined benefit pension plan: Effect on net pension expense $ 0.6 $ (0.6) Effect on Benefit Obligation (13.1) 14.2 Non-U.S. defined benefit pension plans: Effect on net pension expense (0.8) (0.3) Effect on Benefit Obligation (14.5) 16.0 U.S.
For a discussion pertaining to goodwill, indefinite-lived intangible assets and long-lived assets refer to Note 1 included in "Item 8. Financial Statements and Supplementary Data" of this Annual Report.
For a discussion pertaining to goodwill, indefinite-lived intangible assets and long-lived assets refer to Note 1, "Significant Accounting Policies and Accounting Developments," included in "Item 8. Financial Statements and Supplementary Data" of this Annual Report.
We have estimated that the liability for pending and future claims not yet asserted, and which are probable and estimable, could be experienced through 2054, which represents the expected end of our asbestos liability exposure with no further ongoing claims expected beyond that date.
We previously estimated the liability for pending and future claims not yet asserted, and which are probable and estimable, could be experienced through 2054, which represented the expected end of the asbestos liability exposure with no further ongoing claims expected beyond that date.
See discussion of our accounting for and assumptions related to pension and postretirement benefits in the “Our Critical Accounting Estimates” section of this MD&A. In 2024, the service cost component of the pension expense for our defined benefit pension plans included in operating income was $30.3 million compared to $26.0 million in 2023.
See discussion of our accounting for and assumptions related to pension and postretirement benefits in the “Our Critical Accounting Estimates” section of this MD&A. In 2025, the service cost component of the pension expense for our defined benefit pension plans included in operating income was $7.1 million compared to $30.3 million in 2024.
As of December 31, 2024 direct benefits paid by the U.S. pension plan were $1.8 million. We continue to maintain an asset allocation consistent with our strategy to maximize total return, while reducing portfolio risks through asset class diversification.
As of December 31, 2025 direct benefits paid by the U.S. pension plan were 2.0 million. We continue to maintain an asset allocation consistent with our strategy to maximize total return, while reducing portfolio risks through asset class diversification.
The Benefit Obligation for our defined benefit postretirement medical plans was $11.8 million and $12.4 million as of December 31, 2024 and 2023, respectively. Accrual Accounting and Significant Assumptions We account for pension benefits using the accrual method, recognizing pension expense before the payment of benefits to retirees.
The Benefit Obligation for our defined benefit postretirement medical plans was $7.9 million and $11.8 million as of December 31, 2025 and December 31, 2024, respectively. Accrual Accounting and Significant Assumptions We account for pension benefits using the accrual method, recognizing pension expense before the payment of benefits to retirees.
The amendments resulted in a curtailment of both plans during the year ended December 31, 2023. 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.
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.
In connection with our ongoing review of asbestos-related claims, we have also reviewed the amount of potential insurance coverage for such claims, taking into account the remaining limits of such coverage, the number and amount of claims on our insurance from co-insured parties, ongoing litigation against the Company’s insurers, potential remaining recoveries from insolvent insurers, the impact of previous insurance settlements and coverage available from solvent insurers not party to the coverage litigation.
Prior to the Asbestos Divestiture, we also reviewed the amount of potential insurance coverage for such claims, taking into account the remaining limits of such coverage, the number and amount of claims on our insurance from co-insured parties, ongoing litigation against the Company’s prior insurers, potential remaining recoveries from insolvent insurers, the impact of previous insurance settlements and coverage available from solvent insurers not party to the coverage litigation.
LIQUIDITY AND CAPITAL RESOURCES Cash Flow Analysis 2024 2023 2022 (Amounts in millions) Net cash flows provided (used) by operating activities $ 425.3 $ 325.8 $ (40.0) Net cash flows provided (used) by investing activities (387.2) (68.6) (6.1) Net cash flows provided (used) by financing activities 117.5 (153.0) (150.0) The following is a discussion and analysis of the Company’s liquidity and capital resources for the years ended December 31, 2024 and 2023.
LIQUIDITY AND CAPITAL RESOURCES Cash Flow Analysis December 31, 2025 December 31, 2024 December 31, 2023 (Amounts in millions) Net cash flows provided by operating activities $ 505.9 $ 425.3 $ 325.8 Net cash flows used by investing activities (125.2) (387.2) (68.6) Net cash flows (used) provided by financing activities (326.9) 117.5 (153.0) The following is a discussion and analysis of the Company’s liquidity and capital resources for the years ended December 31, 2025 and 2024.
At December 31, 2024, as compared with December 31, 2023, we increased our discount rate for the U.S. plan from 5.41% to 5.73% based on an analysis of publicly traded investment grade U.S. corporate bonds, which had higher yields due to current market conditions.
At December 31, 2025, as compared with December 31, 2024, we decreased our discount rate for the U.S. plan from 5.73% to 5.58% based on an analysis of publicly traded investment grade U.S. corporate bonds, which had lower yields due to current market conditions.
We expect to issue approximately the same amount of value in the form of restricted shares to an additional group of employees in the United States in 2025. The restricted shares are expected to be subject to three year cliff-vesting. Our U.S. defined benefit plan assets consist of a portfolio of equity and fixed income securities.
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. Our U.S. defined benefit plan assets consist of a portfolio of equity and fixed income securities.
Backlog represents the aggregate value of booked but uncompleted customer orders and is influenced primarily by bookings, sales, cancellations and currency effects. Backlog of $2.8 billion at December 31, 2024 increased by $94.5 million, or 3.5%, as compared with December 31, 2023.
Backlog represents the aggregate value of booked but uncompleted customer orders and is influenced primarily by bookings, sales, cancellations and currency effects. Backlog of $2.9 billion at December 31, 2025 increased by $78.1 million, or 2.8%, as compared with December 31, 2024.
The goal of the program, which includes lean manufacturing, six sigma business management strategy and value engineering, is to maximize service fulfillment to customers through on-time delivery, reduced cycle time and quality at the highest internal productivity. Another main focus area of the Flowserve Business System is portfolio excellence.
The goal of the program, which includes lean manufacturing, six sigma business management strategy and value engineering, is to maximize service fulfillment to customers through on-time delivery, reduced cycle time and quality at the highest internal productivity.
At December 31, 2024, the estimated fair market value of U.S. and non-U.S. plan assets for our defined ben efit pension plans decreased to $520.0 million from $540.6 million at December 31, 2023. Assets were allocated as follows: U.S.
At December 31, 2025, the estimated fair market value of U.S. and non-U.S. plan assets for our defined ben efit pension plans increased to $528.4 million from $520.0 million at December 31, 2024. Assets were allocated as follows: U.S.
The average assumed rate of compensation for the U.S. plan was 4.00%, for both 2024 and 2023, and for our non-U.S. plans increased to 3.51% from 3.24% in 2023.
The average assumed rate of compensation for the U.S. plan was 4.00% for both 2025 and 2024, and for our non-U.S. plans decreased to 3.39% from 3.51% in 2025.
Net earnings from affiliates in 2024 increased by $1.2 million, or 6.7%, as compared to the prior year, primarily as a result of in creased earnings of our FPD joint venture in South Korea.
Net earnings from affiliates in 2025 increased by $1.6 million, or 8.5%, as compared to the prior year, primarily as a result of increased earnings from our FPD joint venture in South Korea.
PENSION AND POSTRETIREMENT BENEFITS OBLIGATIONS Plan Descriptions We and certain of our s ubsidiaries have defined benefit pension plans and defined contribution plans for full-time and part-time employees. Approximately 68% of total defined benefit pension plan assets and approximately 58% of defined benefit pension obligations are related to the U.S. qualified plan as of December 31, 2024.
PENSION AND POSTRETIREMENT BENEFITS OBLIGATIONS Plan Descriptions We and certain of our subsidiaries have defined benefit pension plans and defined contribution plans for full-time and part-time employees. Approximately 69% of total defined benefit pension plan assets and approximately 57% of defined 42 benefit pension obligations are related to the U.S. qualified plan as of December 31, 2025.
As of December 31, 2024, we had an available capacity of $656.0 million under our Second Amended and Restated Credit Agreement, which provided for a $80 0.0 million unsecured revolving credit facility.
As of December 31, 2025, we had an available capacity of $615.8 million under our Second Amended and Restated Credit Agreement, which provided for a $800.0 million unsecured revolving credit facility.
To determine the 2024 pension expense, the expected rate of return on the U.S. plan assets was 6.00% for both 2024 and 2023, and on the non-US plan assets increased to 4.65% from 3.97% in 2023, based on our target allocations and expected long-term asset returns.
To determine the 2025 pension expense, the expected rate of return on U.S. plan assets increased to 6.25% from 6.00% in 2024, and the expected rate of return on non-US plan assets increased to 4.82% from 4.65% in 2024, based on our target allocations and expected long-term asset returns.
Plans Weighted average assumptions used to determine Benefit Obligation: Discount rate 5.73 % 4.71 % Rate of increase in compensation levels 4.00 3.51 Weighted average assumptions used to determine 2024 net pension expense: Long-term rate of return on assets 6.00 % 4.65 % Discount rate 5.41 4.22 Rate of increase in compensation levels 4.00 3.24 Weighted-average interest crediting rates 4.00 % 2.06 % The following provides a sensitivity analysis of alternative assumptions on the U.S. qualified, aggregate non-U.S. pension plans and U.S. postretirement plans.
Plans Weighted average assumptions used to determine Benefit Obligation: Discount rate 5.58 % 4.94 % Rate of increase in compensation levels 4.00 3.39 Weighted average assumptions used to determine 2025 net pension expense: Long-term rate of return on assets 6.25 % 4.82 % Discount rate 5.73 4.71 Rate of increase in compensation levels 4.00 3.51 Weighted-average interest crediting rates 4.50 % 2.13 % The following provides a sensitivity analysis of alternative assumptions on the U.S. qualified, aggregate non-U.S. pension plans and U.S. postretirement plans.
Plan Asset category 2024 2023 Cash and Cash Equivalents 1 % 2 % Global Equity 24 % 21 % Global Real Assets 19 % 15 % Equity securities 43 % 36 % Diversified Credit 18 % 15 % Liability-Driven Investment 38 % 47 % Fixed income 56 % 62 % Non-U.S.
Plan Asset category December 31, 2025 December 31, 2024 Cash and Cash Equivalents 2 % 1 % Global Equity 24 % 24 % Global Real Assets 19 % 19 % Equity securities 43 % 43 % Diversified Credit 19 % 18 % Liability-Driven Investment 36 % 38 % Fixed income 55 % 56 % Non-U.S.
For the year ended December 31, 2024 our cash provided by operating activities was $425.3 million, as compared to cash provided of $325.8 million in 2023. Working capital levels vary from period to period and are primarily affected by our volume of work, and can be impacted by billing schedules on our projects.
At December 31, 2025, our cash provided by operating activities was $505.9 million, as compared to cash provided of $425.3 million in 2024. Working capital levels vary from period to period and are primarily affected by our volume of work, and can be impacted by billing schedules on our projects.
Government Gilt Index 32 % 39 % Liability-Driven Investment 15 % 12 % Fixed income 47 % 51 % Multi-asset 21 % 19 % Buy-in Contract 18 % 18 % Other 13 % 12 % Other types 52 % 49 % The projected benefit obligation ("Benefit Obligation") for our defined benefit pension plans was $700.7 million and $715.2 million as of December 31, 2024 and 2023, respectively.
Government Gilt Index 46 % 32 % Liability-Driven Investment 5 % 15 % Fixed income 51 % 47 % Multi-asset 21 % 21 % Buy-in Contract 10 % 18 % Other 16 % 13 % Other types 47 % 52 % The projected benefit obligation ("Benefit Obligation") for our defined benefit pension plans was $700.3 million and $700.7 million as of December 31, 2025 and December 31, 2024, respectively.
The increase was mostly driven by aftermarket customer sales, resulting from increased customer sales of $51.9 million into Europe, $30.5 million into North America, $24.3 million into Latin America and $14.5 million into the Middle East, partially offset by decreased customer sales of $9.9 million into Asia Pacific and $8.6 million into Africa.
The increase was driven by aftermarket customer sales, resulting from increased customer sales of $97.3 million into North America, $43.6 million into Africa and $14.5 million into the Middle East, partially offset by decreased customer sales of $42.4 million into Asia Pacific, $24.1 million into Latin America and $19.9 million into Europe.
The net loss in 2024 was primarily due to foreign currency translation adjustments resulting primarily from exchange rate movements of the Euro, Brazilian real and Mexican peso versus the U.S. dollar at December 31, 2024 as compared with 2023, partially offset by pension and other postretirement activity.
The net income in 2025 was primarily due to foreign currency translation adjustments resulting primarily from exchange rate movements of the Euro, British pound and Mexican peso versus the U.S. dollar at December 31, 2025 as compared with 2024, and pension and other postretirement activity.
Our sources of operating cash generally include the sale of our products and services and the conversion of our working capital, particularly accounts receivable and inventories. Our cash balance at December 31, 2024 was $675.4 million, compared with $545.7 million at December 31, 2023.
Our sources of operating cash generally include the sale of our products and services and the conversion of our working capital, particularly accounts receivable and inventories. Our total cash balance at December 31, 2025 was $760.2 million, compared to $675.4 million at December 31, 2024.
There were increased customer orders of $11.3 million into North America, $10.8 million into Europe and $10.6 million into Latin America, partially offset by decreased customer orders of $12.5 million into Asia Pacific, $6.6 million into Africa and $3.0 million into the Middle East. The increase in customer bookings was driven by aftermarket bookings.
There were increased customer orders of $72.3 million into North America, $43.5 million into the Middle East, $11.4 million into Africa and $6.5 million into Latin America, partially offset by decreased bookings of $34.3 million into Asia Pacific and $10.7 million into Europe. The increase in customer bookings was driven by both original equipment and aftermarket bookings.
Loss on Sale of Business 2024 2023 2022 (Amounts in millions) Loss on sale of business $ (13.0) $ — $ — The loss on sale of business increased by $13.0 million from zero in 2023 to $13.0 million in 2024 due to the divestiture of NAF AB, a previously wholly owned subsidiary and control valves business within our FCD segment, including the NAF AB facility located in Linkoping, Sweden.
Loss on Sale of Business 2025 2024 2023 (Amounts in millions, except percentages) Loss on sale of business $ — $ (13.0) $ — The loss on sale of business decreased by $13.0 million in 2025 due to the divestiture of NAF AB in 2024, a previously wholly owned subsidiary and control valves business within our FCD segment, including the NAF AB facility located in Linkoping, Sweden, that did not recur.
See Note 1, "Basis of Presentation and Accounting Policies," to our consolidated financial statements included in this Annual Report for additional information on this transaction.
See Note 1, "Significant Accounting Policies and Accounting Developments," to our consolidated financial statements included in this Quarterly Report for additional information on this transaction.
The increase was driven by both increased customer original equipment and aftermarket sales, resulting from increased customer sales of $71.5 million into the Middle East, $62.3 million into Asia Pacific, $12.1 million into Europe and $6.1 million into Africa, partially offset by decreased customer sales of $3.6 million into North America and $0.2 million into Latin America.
The increase was driven by both increased customer original equipment and aftermarket sales, resulting from increased customer sales of $54.5 million into North America, $19.5 million into the Middle East, $18.2 million into Europe and $14.2 million into Latin America, partially offset by decreased customer sales of $8.9 million into Africa and $3.5 million into Asia Pacific.
At the same time, we continue to take advantage of new investments in concentrated solar power generating capacity, where our pumps, valves, and seals are uniquely positioned for both molten salt applications as well as the traditional steam cycle.
However, many proposed methods of capturing and limiting carbon dioxide emissions offer business opportunities for our products and services. At the same time, we continue to take advantage of new investments in concentrated solar power generating capacity, where our pumps, valves, and seals are uniquely positioned for both molten salt applications as well as the traditional steam cycle.
Our product portfolio of pumps, valves, seals, automation and aftermarket services supports global infrastructure industries, including oil and gas, chemical, power generation including nuclear plants and water management, as well as general industrial markets where our products and services enable customers to achieve their goals.
Our product portfolio of pumps, valves, seals, automation and aftermarket services supports global infrastructure industries, including energy, chemical, power generation and general, which includes water management and pharmaceuticals, where our products and services enable customers to achieve their goals.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

6 edited+0 added−0 removed8 unchanged
Biggest changeWe recognized foreign currency net gains (losses) of $2.3 million, $(41.1) million and $9.7 million for the years ended December 31, 2024, 2023 and 2022, respectively, which are included in other income (expense), net in the accompanying consolidated statements of income.
Biggest changeWe recognized foreign currency net gains (losses) of $(43.9) million, $2.3 million and $(41.1) million for the years ended December 31, 2025, December 31, 2024 and December 31, 2023, respectively, which are included in other income (expense), net in the accompanying consolidated statements of income.
Based on a sensitivity analysis at December 31, 2024, a 10% change in the foreign currency exchange rates for the year ended December 31, 2024 would have impacted our net earnings by approximately $23 million.
Based on a sensitivity analysis at December 31, 2025, a 10% change in the foreign currency exchange rates for the year ended December 31, 2025 would have impacted our net earnings by approximately $29 million.
At December 31, 2023, a 10% change in the foreign currency exchange rates for the year ended December 31, 2023 would have impacted our net earnings by approximately $1 million.
At December 31, 2024, a 10% change in the foreign currency exchange rates for the year ended December 31, 2024 would have impacted our net earnings by approximately $23 million.
We recognized net gains (losses) associated with foreign currency translation of $(108.2) million, $30.8 million and $(98.7) million for the years ended December 31, 2024, 2023 and 2022, respectively, which are included in other comprehensive income (loss).
We recognized net gains (losses) associated with foreign currency translation of $146.6 million, $(108.2) million and $30.8 million for the years ended December 31, 2025, December 31, 2024 and December 31, 2023, respectively, which are included in other comprehensive income (loss).
As of December 31, 2024, we had a U.S. dollar equivalent of $695.9 million in aggregate notional amount outstanding in foreign exchange contracts with third parties, compared with $656.6 million at December 31, 2023.
As of December 31, 2025, we had a U.S. dollar equivalent of $456.9 million in aggregate notional amount outstanding in foreign exchange contracts with third parties, compared with $695.9 million at December 31, 2024.
The net loss in 2024 was primarily due to foreign currency translation adjustments resulting primarily from exchange rate movements of the Euro, Brazilian real and Mexican peso versus the U.S. dollar at December 31, 2024 as compared with December 31, 2023.
The net income in 2025 was primarily due to foreign currency translation adjustments resulting primarily from exchange rate movements of the Euro, British pound and Mexican peso versus the U.S. dollar at December 31, 2025 as compared with 2024.

Other FLS 10-K year-over-year comparisons