FLS 10-K & 10-Q changes, risk factors and insider trading

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, reputationreputation, prospects, or prospectsstock price could be materially adversely affected. While we believe all known material risks are disclosed, additional risks and uncertainties not presently known to us, or that we currently deem immaterial, may also materially adversely affect our business, financial condition, results of operations, cash flows, reputation, prospectsprospects, or stock price. 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. Because of the risk factors discussed below and elsewhere in this Annual Report and in other filings we make with the SEC, as well as other variables affecting our operating results, past financial performance may not be a reliable indicator of future performance, historical trends should not be used to anticipate results or trends in future periods and actual results could differ materially from those projected in the forward-looking statements contained in this Annual Report.

Our business depends on our customers’ levels of capital investment and maintenance expenditures, which in turn are affected by numerous factors, including changes in the state of domestic and global economies, global energy demanddemand, and the liquidity cyclicality and condition of global credit and capital markets, which have impacted and which could continue to impact the ability or willingness of our customers to invest in our products and services and adversely affect our financial condition, results of operationsoperations, and cash flow.

The businesses of many of our customers, particularly oil and gasenergy 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. For example, our chemical customers generally tend to reduce their spending on capital investments and operate their facilities at lower levels in a soft economic environment, which reduces demand for our products and services. An economic slowdown or recession in the United States or in any other country that significantly affects the supply of or demand for oil or natural gas could negatively impact our operations and therefore adversely affect our results. Additionally, fluctuating energy demand forecasts and lingering uncertainty concerning commodity pricing, specifically the price of oil, have caused, and may in the future cause, our customers to be more conservative in their capital planning, reducing demand for our products and services. 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. Any of these results could continue to adversely affect our business, financial condition, results of operations and cash flows.

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 uncertaintyuncertainty, and volatility in the financial and commodity markets, including global volatility in supply and demand for oil and gas andenergy, 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.

Our backlog represents the value of uncompleted customer orders. While we cannot be certain that reported backlog will be indicative of future results, our ability to accurately value our backlog can be adversely affected by numerous factors, including the health of our customers' businesses and their access to capital, volatility in commodity prices (e.g., copper, nickel, stainless steel) and economic uncertainty. 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 cancellationscancellations, thatwhich can occur as a result fromof the aforementioned economic conditions or other factors beyond our control, it could impede or delay our ability to realize anticipated revenues on our backlog. Such a loss of anticipated revenues could have a material adverse effect on our business, financial condition, results of operations and cash flows.

At December 31, 2024,2025, our backlog was $2.8$2.9 billion. In 2025,2026, 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. 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,trade protection measures, including tariffs or import-export restrictions, acts of God, or other reasons. We may also encounter capacity limitations due to changes in demand despite our forecasting efforts. Many of the contracts we enter into with our customers require long manufacturing lead times and contain penalty clauses related to late delivery. Failure to deliver in accordance with contract terms and customer expectations could subject us to financial penalties, damage existing customer relationships, increase our costs, reduce our sales and have a material adverse effect on our business, financial condition, results of operations and cash flows.

The markets for our products and services are geographically diverse and highly competitive. 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, timelinessdelivery of delivery,timeliness, contractual terms, project management, proximity to service centers, previous installation history and reputation for quality and reliability. Competitive environments in slow-growth industries and for original equipment orders have been inherently more influenced by pricing and domestic and global economic conditions and current economic forecasts suggest that the competitive influence of pricing has broadened. Additionally, some of our customers have been attempting to reduce the number of vendors from which they purchase in order to reduce the size and diversity of their supply chain. To remain competitive, we must invest in manufacturing, technology, such as artificial intelligence and machine learning, marketing, customer service and support and our distribution networks. No assurances can be made that we will have sufficient resources to continue to make the investment required to maintain or increase our market share or that our investments will be successful. A relatively strong U.S. dollar in recent years has made and maycan continue to make our products more expensive overseas, which maycan make our ability to meet our international customers’ pricing expectations particularly challenging and may result in erosion of product margin and market share. In addition, negative publicity or other organized campaigns critical of us, through social media or otherwise, could negatively affect our reputation and competitive position. If we do not compete successfully, our business, financial condition, results of operations and cash flows could be materially adversely affected.

In addition, the continued creation, development and advancement of new technologiestechnologies, such as artificial intelligence, machine learning, quantum computing, data analytics, 3-D printing, robotics, sensor technology, data storage, neural networks, and augmented reality, amongst others, as well as other technologies in the future that are not foreseen today, continue to transform the Company’s processes, productsproducts, and services. In order to remain competitive, the Company will need to stay abreast of such technologies, require its employees to continue to learn and adapt to new technologies and be able to integrate them into its current and future business models, products, services and processes and also guard against disruptions to its business by existing and new competitors using such technologies. The Company’s strategy, operating model and new product innovation pipeline all have important technological elements and many of the Company’s products and services are based on technological advances. In addition, the Company will need to compete for talent that is familiar with such technologies, including upskilling its workforce. There can be no assurance that the Company will continue to compete effectively with its industry peers as new technology evolves, which could result in a material adverse effect on the Company's business and results of operations.

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 historically and are influenced by factors that are outside our control. InFor example, in recent years, the prices for energy, metal alloys, nickelnickel, and certain other of our raw materials have been volatile. Our operating margins and results of operations and cash flows may be adversely affected if 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 provisionsprovisions, and gains in operational efficiencies are not achieved.

Inflation has the potential to adversely affect our business, financial condition and results of operations by increasing our overall cost structure, including with respect to purchased parts, commodity and raw material costs. Our operating costs are subject to fluctuations, particularly due to changes in prices for commodities, parts, raw materials, energy and related utilities, freight, and cost of labor which have been and may continue to be driven by inflation, tightening labor markets, prevailing price levels, exchange rates, and other economic factors. Throughout 2024,2025, 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. In order to remain competitive, we may not be able to recover all or a portion of these higher costs from our customers through price increases, which would reduce our profit margins and cash flows. Actions we take to mitigate volatility in manufacturing and operating costs may not be successful and, as a result, our business, financial condition, cash flows and results of operations could be materially and adversely affected.

As a global company with a large international footprint, we are subject to increased risk of damage or disruption to us, our employees, facilities, partners, suppliers, distributors, resellers or customers due to, among other things, terrorist acts, conflicts (including as a result of geopolitical uncertainty and/or conflicts in the countries and/or regions where we operate, including the Middle East, Ukraine, the European Union and the Trans-Pacific region), severe weather conditions, the potential physical effects of climate change, and other natural or manmade disasters, including power outages, fires, floods, earthquakes, hurricanes, storms, rising sea levels, explosions, cyber-based attacks, epidemics or pandemics, labor disputes, and acts of God wherever located around the world. 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 andwar, ongoing instability in Middle East, and heightened political and economic tensions involving the United States and Venezuela, have created many economic and political uncertainties. In addition, as a global company with headquarters and significant operations located in the United States, actions against or by the United StatesStates, such as the imposition of new U.S. tariffs and any retaliatory tariffs, may impact our business or employees. Changes in general economic conditions or any of the foregoing events, or our inability to accurately forecast these changes or events or mitigate the impact of these conditions on our business, 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 climatesustainability changeissues and our commitments to reduce our carbon emissions presents challenges to our business which could materially adversely affect us.

The potential effects of climateglobal changesustainability issues 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. Increased public awareness and concern regarding global climatesustainability changeissues and greenhouse gas ("GHG") emissions has and will result in more regulations designed to reduce GHG emissions. As a result, and as discussed hereafter in our risk factor entitled “We are exposed to certain regulatory and financial risks related to climatesustainability change,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.

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. While we have beentaken steps to adopt sustainability goals and remain committed to being responsive to climate change and to reducingreduce our carbon footprint,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 thethese foregoing energy transitionefforts 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, any of the aforementioned cybersecurity incidents or disruptions could expose us to a risk of loss, disclosure, misuse, corruption, or interruption of sensitive and critical data, information and functions, including our proprietary and confidential information and information related to our customers, suppliers and employees. It is also possible a cybersecurity incident could result in theft of material trade secrets or other material intellectual property. While we devote substantial resources to maintaining adequate levels of cybersecurity, there can be no assurance that we will be able to prevent all of the rapidly evolving forms of increasingly sophisticated and frequent cyberattacks, or avoid or limit a material adverse impact on our systems after such incidents or attacks occur. 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.mitigate, which may inhibit our ability to provide prompt, full, and reliable information about such incidents to our customers, regulators, and the public. 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. The potential consequences of a material cybersecurity incident include reputational damage, loss of customers, litigation with third parties, regulatory actions and fines, theft of intellectual property, systems disruption, disruption of manufacturing plant operations and increased cybersecurity protection and remediation costs. Any of the foregoing can be exacerbated by a delay or failure to detect a cybersecurity incident or the full extent of such incident. In addition, our liability insurance, which includes cyber insurance, might not be sufficient in type or amount to cover us against claims related to cybersecurity incidents, attacks and other related incidents. If we are unable to prevent, anticipate, detect or adequately respond to cybersecurity incidents, our operations could be disrupted and our business could be materially and adversely affected.

•trade protection measures, such as tariffthe increases,threat of imposition of tariffs, and import and export licensing and control requirementsrequirements, or other trade restrictions, as well as any retaliatory actions;

For example, political unrest or work stoppages negatively impact the demand for our products from customers in affected countries and other customers, such as U.S. oil refineries, that are affected by the resulting disruption in the supply of crude oil. Similarly, military conflicts in Russia/Ukraine, the Middle East, Asia and North AfricaAfrica, 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. 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. 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. 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 DevelopmentsDevelopments," 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.

The United States hascontinues implementedto 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. For example, in 2025, the United States expanded and increased existing tariffs on steel and aluminumaluminum, importedimposing into the country. In response, certain foreign governments have implemented or reportedly considered implementing additional50% tariffs on steel, aluminum, and products containing steel and aluminum from a range of U.S. goods.trading Thepartners. More significant tariffs have been proposed by the current U.S. Presidential administrationadministration, hasalthough indicatedit is not possible to predict the possibilityextent or focus of imposingany such tariffs onat importsthis from Mexico, Canada and China during his second term.time. In addition, there have been recentchanges changesand uncertainty with respect to trade agreements, like the United States withdrawal from the Trans-Pacific Partnership and the replacement of the North American Free Trade Agreement withincluding the United States-Mexico-Canada Agreement, and more changes may be forthcoming under the current U.S. administration. Uncertainties with respect to tariffs, trade agreements, or any potential trade wars may negatively impact the global economic markets and could affect our customers’ ability to invest in capital expenditures, which may in turn result in reduced demand for our products and services, and could have a material adverse effect on our financial condition, results of operations and cash flows. Changes in tariffstariffs, 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.

In particular, there is uncertainty related to new or existing treaty and trade relationships with other countries which may affect restrictions or tariffs imposed on products we buy or sell. These factors, together with other key global events during 20242025 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. This uncertainty may also affect regulations and trade agreements affecting U.S. companies, global stock markets (including the NYSE, on which our common shares are traded), currency exchange rates, and general global economic conditions. All of these factors are outside of our control, but may nonetheless cause us to adjust our strategy in order to compete effectively in global markets. For further discussion of the impact of tariffs and trade agreements on our business, please see the discussion above under the heading "Implementation of new tariffs and changes to or uncertainties related to tariffs and trade agreements could adversely affect our business."

We are exposed to certain regulatory and financial risks related to climatesustainability change,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 climateglobal changesustainability areissues receivingcontinue everto increasinggarner attention worldwide,globally, which has led to significant legislative and regulatory efforts to limit GHG emissions. 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. 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. 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 20252028 and non-E.U. operations by 2029). 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. As regulatory requirements such as CSRD and other climate changesustainability regulations continue to evolve, the anticipated costs and operational impacts could adversely affect our financial condition and results of operations.

When our customers, particularly those involved in the oil and gas,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. 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 gasenergy production or power generation resulting in lower spending by customers for our products and services. These actions could also increase costs associated with our operations, including costs for raw materials and transportation. There is also increased focus, including by governmental and non-governmental organizations, environmental advocacy groups, investors and other stakeholders on these and other sustainability matters, and adverse publicity in the global marketplace about the levels of GHG emissions by companies in the manufacturing and energy industry could reduce customer demand for our products and services or harm our reputation. 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.

From time to time, we are exposed to product liability and warranty claims when the use of one of our products results in, or is alleged to result in, bodily injury and/or property damage or our products actually or allegedly fail to perform as expected. Some of our products are designed to support the most critical, severe service applications in the markets that we serve and any failure of such products could result in significant product liability and warranty claims, as well as damage to our reputation in the marketplace. While we maintain insurance coverage with respect to certain product liability claims, we may not be able to obtain such insurance on acceptable terms in the future, and any such insurance may not provide adequate coverage against product liability claims. In addition, product liability claims can be expensive to defend and can divert the attention of management and other personnel for significant periods of time, regardless of the ultimate outcome. An unsuccessful defense of a product liability claim could have an adverse effect on our business, financial condition, results of operations and cash flows. 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. 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.

We continuallyregularly review our funding policy related to our U.S. pension plan in accordance with applicable laws and regulations. U.S. regulations have increased the minimum level of funding for U.S. pension plans in prior years, which has at times required significant contributions to our pension plans. Contributions to our pension plans reduce the availability of our cash flows to fund working capital, capital expenditures, R&D efforts and other general corporate purposes.

Goodwill is not amortizedamortized, but is tested for impairment at the reporting unit level, which is an operating segment or one level below an operating segment. Goodwill is required to be tested for impairment annually and between annual tests if events or circumstances indicate that it is more likely than not that the fair value of a reporting unit is less than its carrying value. Reductions in or impairment of the value of our goodwill or other intangible assets will result in charges against our earnings, which could have a material adverse effect on our reported results of operations and financial position in future periods.

There are numerous risks that may cause the fair value of a reporting unit to fall below its carrying amount, which could lead to the measurement and recognition of goodwill impairment. These risks include, but are not limited to, lowered expectations of future financial results, adverse changes in the business climate, increase in the discount rate, an adverse action or assessment by a regulator, the loss of key personnel, a more-likely-than-not expectation that all or a significant portion of a reporting unit may be disposed of, failure to realize anticipated synergies from acquisitions, a sustained decline in the Company’s market capitalization, and significant, prolonged negative variances between actual and expected financial results. 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 gasenergy markets. Although we have concluded that there is no impairment on the goodwill associated with our pump reporting unit as of December 31, 2024,2025, 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. Management's Discussion and Analysis of Financial Condition and Results of Operations,Operations" of this Annual Report and under 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.

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. Competition in our industry for officers and employees is intense and we may not be successful in attracting and retaining such personnel.

We are a world-leading manufacturer and aftermarket service provider of comprehensive flow control systems. We develop and manufacture precision-engineered flow control equipment integral to the movement, control and protection of the flow of materials in our customers’ critical processes. Our product portfolio of pumps, valves, seals, automation and aftermarket services supports global infrastructure industries, including oil and gas,energy, chemical, power generation includingand nucleargeneral, plantswhich includes water management and water management, as well as general industrial marketspharmaceuticals, where our products and services enable customers to achieve their goals. 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, 2024,2025, we have approximately 16,000 employees globally and a footprint of manufacturing facilities and QRCs in approximately 5048 countries.

Our business model is significantly influenced by the capital and operating spending of global infrastructure industries for the placement of new products into service and maintenance spending for aftermarket services for existing operations. 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 aftermarket portion of our business also helps provide business stability during various economic periods. The aftermarket business, which is primarily served by our network of 157152 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. It is generally a higher margin business compared to our original equipment business and a key component of our profitable growth strategy.

•FPD designs, manufactures, pretests, distributesdistributes, and services highly custom engineered pumps, pre-configured industrial pumps, pump systems, mechanical seals, auxiliary systems and replacement parts and related services; and

•FCD designs, manufacturesmanufactures, and distributes a broad portfolio of engineered-to-order and configured-to-order isolation valves, control valves, valve automation products and related equipment.

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 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 researchR&D, and development, marketingmarketing, and supply chain.

The reputation of our product portfolio is built on more than 50 well-respected brand names such as Worthington, IDP, SIHI, INNOMAG, Valtek, Limitorque, DurcoDurco, Argus and Argus,Durametallic, which we believe to be one of the most comprehensive in the industry. Our products and services are sold either directly or through designated channels to more than 10,000 customers,companies, including some of the world’s leading engineering, procurement and construction ("EPC") firms, original equipment manufacturers, distributors and end users.

Through the Flowserve Business System, we are committed to operational excellence, which includes continuous enhancements of our global supply chain capability to increase our ability to meet global customer demands and improve the quality and timely delivery of our products over the long term. One of the main focus areas of the Flowserve Business System is portfolio excellence. As part of these efforts, in 2024, we launched the complexity reduction (“CORE”) program that focuses on product rationalization and continuous improvement of our overall product portfolio. The CORE program has now been implemented in all of our main product segments. Additionally, we continue to devote resources to improving the supply chain processes across our business segments to find areas of synergy and cost reduction and to improving our supply chain management capabilities to meet global customer demands. We also remain focused on improving on-time delivery and quality, while managing warranty costs across our global operations, through our operational excellence program. 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. As part of these efforts, in 2024, we launched the complexity reduction ("CORE") program that focuses on product rationalization and continuous improvement of our overall product portfolio.

In the first quarter of 2023, we identified and initiated certain realignment activities concurrent with the consolidation of our FPD aftermarket and pump operations into a single operating model. This consolidated operating model was designed to better align our go-to-market strategy with our product offerings, enable end-to-end lifecycle responsibility and accountability, and to facilitate more efficient operations. Additionally, we committed to an estimated $50 million in cost reduction efforts beginning in 2023. Collectively, the above realignment activities are referred to as the "2023 Realignment Programs." The activities of the 2023 Realignment Programs were identified and implemented in phases throughout 2023 and 2024.2024 and are substantially completed. In the fourth quarter of 2024, we launched the CORE program within the portfolio excellence category of the Flowserve Business System,System. referredDuring to2025 aswe thealso "COREinitiated Realignmentcertain Program."other Togetherportfolio and footprint optimization activities. These optimization activities, together with the 2023CORE Realignment Programs, all realignment activitiesprogram are referred to as the "20232025 Realignment Programs," and COREcollectively with the 2023 Realignment Programs are referred to as the "Realignment Programs."

Our products and services are used in several distinct industries: oil and gas,energy, chemical, power generation, water management, and several other industries, such as water management, pharmaceuticals, mining, food and beverage, steel, and pulp and paper, that are collectively referred to as "general industries."

General industries represented, in the aggregate, approximately 26%34% and 31% of our bookings in both 20242025 and 2023,2024, respectively. General industries comprise a variety of different businesses, including water management, pharmaceuticals, mining and ore processing, pulp and paper, food and beveragebeverage, steel, and other smaller applications, none of which individually represented more than 5% of total bookings in 2024 and 2023.applications. General industries also include sales to distributors, whose end customers operate in the industries we primarily serve. General industry activity levels increased in 20242025 for the secondthird consecutive year, primarily due to customers' increased repair and maintenance budgets.budgets and the demand for fresh water, water treatment and re-use, desalination and flood control considerations that impact the water management component of this industry group.

The chemical industry represented approximately 19% and 21% of our bookings in 2024both 2025 and 2023, respectively.2024. The chemical industry is comprised of petrochemical,petrochemical and specialty chemical and pharmaceutical products. Customer spending in 20242025 remained resilient for the fourth consecutive year following the pandemic's negative impact on demand for chemical products in 2020. Customers'Bookings levels increased modestly in 2025 as customers increased their repair and maintenance budgets increased in 2024 and 2023,lowered andproject bookings levels returned to roughly pre-pandemic levels.work.

The outlook for the chemical industry remains heavily dependent on global economic conditions. As global economies and unemployment conditions improve, a rise in consumer spending should follow. An increase in spending would drive greater demand for petrochemical,petrochemical and specialty chemical and pharmaceutical products supporting improved levels of capital investment. We believe the chemical industry will continue to invest in North America and Middle East capacity additions, maintenance and upgrades for optimization of existing assets and that developing regions will selectively invest in capital infrastructure to meet current and future indigenous demand. We believe our global presence and our localized aftermarket capabilities are well-positioned to serve the potential growth opportunities in this industry.

As countries around the world look for opportunities to gain additional energy independence,independence and satisfy increasing energy demands, nuclear power remains an important contributor to the global energy mix and is a key factor in our Diversification strategy. We continue to support our significant installed base in the global nuclear fleet by providing aftermarket and life extension products and services. Due to our extensive history,history and proven product portfolio, we believe we are well positioned to take advantage of this ongoing source of aftermarket and new project opportunities.

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. We also believe that our long-standing reputation in the power generation industry, our portfolio of offerings for the various generating methods, our advancements in serving the renewable energy market and carbon capture methodologies, as well as our global service and support structure, position us well for the future opportunities in this important industry.

We have seen growth from the end-marketsend markets we serve and continue to focus on our strategic plan that takes a balanced approach to integrating both short-term and long-term initiatives and aims to accelerate growth through three key areas: diversification, decarbonization, and digitization, the "3D Strategy." Our sales volumestrategy is expected to deliver sustainable and healthy growth, while the Flowserve Business System is expected to unlock gains in organizational and operational efficiency. WithThe current macroeconomic environment is dynamic and uncertainty exists given the current geopolitical climate and continued trade policy actions, including higher import tariffs in a number of countries in which we operate, the potential implementation of modified or new tariffs and related retaliatory actions. We plan to leverage our global footprint, expansive manufacturing network, flexible supply chain and ability to incorporate tariff impacts into pricing decisions to minimize the economic impact of this uncertainty to our business. We will continue to monitor and manage macroeconomic trends and uncertainties, including inflationary and recessionary pressures resulting from the ongoing tariffs and geopolitical climate; however, with our strong backlog, improved market environmentexecution and recent acquisitionacquisitions of MOGAS,activity, we expect to deliver annual revenue growth in 2025.2026.

Our bookings were $4.7 billion during 2024.the year ended December 31, 2025. Because a booking represents a contract that can be, in certain circumstances, modified or canceled, and can include varying lengths between the time of booking and the time of revenue recognition, there is no guarantee that bookings will result in comparable revenues or otherwise be indicative of future results. Assuming a positive general macroeconomic environment and continued supportive environments in our end markets, we expect full-year bookings growth in 2025.2026.

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. On December 31, 2024,2025, we had $991.5$992.7 million of fixed-rate Senior Notes outstanding. We expect our interest expense in 20252026 will be higherrelatively comparedconsistent with amounts incurred in 2024 primarily as a result of term loan financing under our Second Amended and Restated Credit Agreement.2025. Our results of operations may also be impacted by unfavorable foreign currency exchange rate movements. See “Item 7A. Quantitative and Qualitative Disclosures about Market Risk” of this Annual Report.

TheOur realignment activities of the 2023 and CORE Realignment Programs were identified andare implemented in phases throughout 2023 and 2024.phases. We currently anticipate a total investment of approximately $93 million in realignmentthe activities2025 Realignment Programs that have been evaluated and initiated of approximately $134 millioninitiated, of which $45$17 million is estimated to be non-cash. BasedWe onare evaluating the activities of the 2023 and CORE Realignment Programs initiated to date, we estimate that we recognizedannualized cost savings ofexpected approximatelyto $114be millionachieved through December 31, 2024. Uponupon completion of the activities of the 2023 and CORE2025 Realignment Programs that have been identified and initiated to date, we expect to achieve annualized cost savings in excess of $100 million.date. Actual savings could vary from expected savings, which represent management's best estimate to date.savings. There are certain remaining realignment activities that are currently being evaluated, but have not yet been approved and therefore are not included in the above anticipated total investment or estimated savings.

The following tables present our realignment activity by segment related to our 2023 and CORE Realignment Programs:

Restructuring charges are included within Total Realignment charges and include charges related to approved, but not yet announced, facilitysite closures.

We define a booking as the receipt of a customer order that contractually engages us to perform activities on behalf of our customer with regard to manufacturing, service or support. Bookings recorded and subsequently canceled within the year-to-date period are excluded from year-to-date bookings. Bookings cancelled from the prior fiscal periods are excluded from the reported bookings and represent less than 1% for all periods presented. Bookings of $4.7 billion in 20242025 increased by $389.0$52.2 million, or 9.1%,1.1%, as compared with 2023.2024. The increase included negative currency effectsbenefits of approximately $30$32 million.million The increaseand was driven by increased customer bookings of $125$157.2 million in thegeneral powerindustries, generation, $115$93.5 million in thepower oilgeneration and gas, $71$6.0 million in the general industries and $61 million water management industries,chemical, partially offset by decreased customer bookings of $13$193.9 million in the chemicalenergy industry. The increase in customer bookings was driven by both original equipment bookings and aftermarket bookings and included the impact of FPD 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.bookings.

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$2.9 billion at December 31, 20242025 increased by $94.5$78.1 million, or 3.5%,2.8%, as compared with December 31, 2023.2024. Currency effects yieldedprovided aan decreaseincrease of approximately $84$154 million (currency effects on backlog are calculated using the change in period end exchange rates). Approximately 42% of the backlog at December 31, 2025 and 37% of the backlog at both December 31, 2024 and December 31, 2023 waswere related to aftermarket orders. We expect to recognize revenue on approximately 83%76% of the December 31, 20242025 backlog during 2025.2026. Backlog includes our unsatisfied (or partially unsatisfied) performance obligations related to contracts having an original expected duration in excess of one year of approximately $853$1.0 millionbillion as discussed in Note 3, "Revenue Recognition," to our consolidated financial statements included in "Item 8. Financial Statements and Supplementary Data" of this Annual Report.

Sales in 20242025 increased by $237.2$171.5 million, or 5.5%,3.8%, as compared with 2023.2024. The increase included negative currency effectsbenefits of approximately $21$31 million. The increased sales were driven by both aftermarket and original equipment customer sales, with increased customer sales of $86.1$152 million into North America, $35 million into Africa and $34 million into the Middle East, $63.9 million into Europe, $52.4 million into Asia Pacific, $26.9 million into North America and $24.1 million into Latin America, partially offset by decreased customer sales of $2.5$46 million into Africa.Asia Pacific, $10 million into Latin America and $2 million in Europe. Aftermarket sales represented approximately 51% of total sales, as compared with approximately 52%53% of total sales forin the2025 sameand period51% of total sales in 2023.2024.

Sales to international customers, including export sales from the United States, were approximately 64% of total sales63% in 20242025 and 62%64% in 2023.2024. Sales into Europe, the Middle East and Africa ("EMA") were approximately 35%36% of total sales in 20242025 and 34%35% in 2023.2024. Sales into Asia Pacific were approximately 17%16% of total sales in both 20242025 and 2023.17% in 2024. Sales into Latin America were approximately 7% of total sales in both 20242025 and 2023.2024.

Gross profit in 20242025 increased by $157.4$147.2 million, or 12.3%,10.3%, as compared with 2023.2024. Gross profit margin in 20242025 of 31.5%33.4% increased from 29.6%31.5% in 2023.2024. The increase in gross profit margin was primarily due to the favorable impact of previously implemented sales price increases, higher sales volumes, an improved selective bidding approach andapproach, lower broad-based annual incentive compensation,compensation and $2.7 million in one-time U.S. pension transition benefit expense incurred in 2024 that did not recur, partially offset by increased charges of $10.6$23.1 million related to our 2023realignment activities and CORE Realignment Programs, $3.1$9.8 million inof integration costs and amortization of step-up in value of acquired inventories and acquisition related intangible assets associated with the MOGAS acquisition, and $2.7 million in one-time U.S. pension transition benefit expenseacquisition as compared to the same period in 2023.2024.

The loss on sale of business increaseddecreased by $13.0 million from zero in 2023 to $13.0 million in 20242025 due to the divestiture of NAF AB,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.Sweden, that did not recur. See Note 1, "BasisSignificant ofAccounting PresentationPolicies and Accounting Policies,Developments," to our consolidated financial statements included in this AnnualQuarterly Report for additional information on this transaction.

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 in 20242025 increased by $1.2$1.6 million, or 6.7%,8.5%, as compared to the prior year, primarily as a result of increased earnings offrom our FPD joint venture in South Korea.

Operating income in 20242025 increaseddecreased by $128.7$62.4 million, or 38.6%,(13.5)%, as compared with 2023.2024. The increasedecrease included negative currency effectsbenefits of approximately $5$7 million. The increasedecrease was primarily a result of the $157.4$147.2 million increase in gross profit, partially offset by $16.8the $84.1 million increase in SG&A and $13.0 millionthe loss on saledivestiture of business.asbestos-related assets and liabilities of $140.1 million.

Interest expense in 20242025 increased by $2.4$8.4 million as compared with 2023.2024. The increase was primarily attributable to higher outstanding debt during the year related to the issuance of the Second Amended and Restated Credit Agreement due October 10, 2029 as discussed in Note 13, "Debt and Finance Lease Obligations,"period as compared to 2023.2024. Interest income in 20242025 decreasedincreased by $1.6$2.2 million as compared to 2023.2024. The decreaseincrease in interest income was primarily attributed to lowerhigher interest rates on our average cash balances compared with same period in 2023.2024.

Other expense,income (expense), net decreasedincreased by $37.7$207.9 million as compared to 2023,2024, due primarily dueto the $266.0 million payment received per the Mutual Termination Agreement in connection with the termination of the planned merger with Chart (see Note 1, “Significant Accounting Policies and Accounting Developments,” to our consolidated financial statements for further information), partially offset by a $20.7$28.2 million decreaseincrease in losses from transactions in currencies other than our sites' functional currencies and a $22.7$18.0 million decreaseincrease in losses arising from transactions on foreign exchange forward contracts. The net currency related change was primarily due to the foreign currency exchange rate movements in the Euro, ArgentinianMexican peso, HungarianEuro, forintSwedish krona, Brazilian real, and Mexican peso in relation to the U.S.Singapore dollar during the year ended December 31, 2024,2025, as compared withto the same period in 2023.2024. This was further offset by $13.1 million in pension settlement accounting losses incurred in conjunction with the freeze of our U.S. Qualified pension plan and on a United Kingdom based pension plan.

Our effective tax rate of 22.0%29.6% for the year ended December 31, 20242025 increased from 8.3%22.0% in 20232024 and differed from the federal statutory tax rate of 21% primarily due to the impacts pursuant to the enactment of the One Big Beautiful Bill Act (OBBBA) and its related impacts, the Asbestos Divestiture and, state income taxes, partially offset by the net impact of foreign divestiture and foreign operations.

The 20232024 effective tax rate differed from the federal statutory rate of 21% primarily due to the benefits of a tax planning strategy and the release of valuation allowances on the net deferred tax assets in Brazil and France, partially offset by the net impact of foreign divestiture and foreign operations.

Our effective tax rate is based upon current earnings and estimates of future taxable earnings for each domestic and international location. The assumptions about future taxable income require the use of significant judgment and are consistent with the plans and estimates used in the underlying business. Changes in any of these and other factors, including our ability to utilize foreign tax credits and net operating losses or results from tax audits, could impact the tax rate in future periods. As of December 31, 2024,2025, we had U.S. foreign tax credit carryforwards of $67.4$77.1 million, expiring in 2028-20342028-2035 tax years, against which we recorded a full valuation allowance of $54.1 million related to the U.S. foreign tax credit carryforwards on foreign branch category income.allowance. Additionally, we have recorded other net deferred tax assets of $206.7$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. Should we not be able to utilize all or a portion of these credits and losses, our effective tax rate would increase.

Net earnings in 20242025 increased by $96.1$63.5 million to $282.8$346.2 million, or to $2.14$2.64 per diluted share, as compared with 2023.2024. The increase was primarily attributable to ana $207.9 million increase in operating income of $128.7 million and a $37.7 million decrease in other expense,income, net, partially offset by a $66.3decrease in operating income of $62.4 million, a $8.4 million increase in interest expense, a $70.7 million increase in income tax expense and a $2.4$5.1 million increase in interestnet expense.earnings attributable to noncontrolling interests.

Other comprehensive income (loss) in 20242025 increased by $97.6$268.1 million from a loss of $4.6$102.2 million in 2023.2024. The net lossincome in 20242025 was primarily due to foreign currency translation adjustments resulting primarily from exchange rate movements of the Euro, BrazilianBritish realpound and Mexican peso versus the U.S. dollar at December 31, 20242025 as compared with 2023,2024, partially offset byand pension and other postretirement activity.

Our largest business segment is FPD, through which we design, manufacture, pretest, distribute and service highly custom engineered pumps, pre-configured industrial pumps, pump systems, mechanical seals and auxiliary systems (collectively referred to as "original equipment") and related services. FPD includes highly engineered pump products with longer lead times and mechanical seals that are generally manufactured within shorter lead times. FPD also manufactures replacement parts and related equipment and provides aftermarket services. FPD primarily operates in the oil and gas,energy, power generation, chemical, water managementchemical and general industries. FPD operates in 4948 countries with 37 manufacturing facilities worldwide, 12 of which are located in North America, 11 in Europe and the Middle East,Europe, eight in Asia Pacific and six in Latin America, and we have 130126 QRCs, including those co-located in manufacturing facilities and/or shared with FCD.

Bookings in 20242025 increaseddecreased by $363.1$31.0 million, or 12.3%,0.9%, as compared with 2023.2024. The increasedecrease included negative currency effectsbenefits of approximately $26$29 million. The increasedecrease in customer bookings was driven by increaseda decrease in orders of $102$199.5 million infrom the oilenergy and gas, $94$4.4 million infrom thechemical, partially offset by increased bookings of $129.2 million from general industries and $48.5 million from power generation,generation. $74 million in the general industries, $66 million the water management and $12 million in the chemical industries. IncreasedDecreased customer orders of $191.7$142.1 million into the Middle East, $116.5$72.8 million into NorthEurope, America,and $108.0$13.7 million into EuropeAsia and $12.3 million into AfricaPacific were partially offset by decreasedincreased customer orders of $70.6$172.1 million into AsiaNorth PacificAmerica and $9.2$28.7 million into Latin America.Africa. The increasedecrease 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. Of the $3.3 billion of bookings in 2024,2025, approximately 39%38% were from oil and gas, 27% from general industries, 16%33% were from chemical,energy, 12%15% from chemical and 14% from power generation and 6% from water management.generation.

Sales in 20242025 increased $94.1$76.7 million, or 3.1%,2.4%, as compared with 2023.2024. The increase included negative currency effectsbenefits of approximately $19$26 million. The increase was mostly driven by aftermarket customer sales, resulting from increased customer sales of $51.9 million into Europe, $30.5$97.3 million into North America, $24.3$43.6 million into Latin AmericaAfrica and $14.5 million into the Middle East, partially offset by decreased customer sales of $9.9$42.4 million into Asia PacificPacific, and $8.6$24.1 million into Africa.Latin America and $19.9 million into Europe.

There have been no material changes in risk factors discussed in our 2025 Annual Report and subsequent SEC filings. The risks described in this Quarterly Report filed for the period ended MarchJune 31,30, 2026, our 2025 Annual Report and in our other SEC filings or press releases from time to time are not the only risks we face. Additional risks and uncertainties are currently deemed immaterial based on management's assessment of currently available information, which remains subject to change; however, new risks that are currently unknown to us may surface in the future that materially adversely affect our business, financial condition, results of operations or cash flows.

We are a world-leading manufacturer and aftermarket service provider of comprehensive flow control systems. We develop and manufacture precision-engineered flow control equipment integral to the movement, control and protection of the flow of materials in our customers’ critical processes. 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. Through our manufacturing platform and global network of Quick Response Centers ("QRCs"), we offer a broad array of aftermarket equipment services, such as installation, advanced diagnostics and turnkey maintenance programs. We currently have approximately 16,000 employees globally and a footprint of manufacturing facilities and QRCs in more than 48 countries.

Our business model is significantly influenced by the capitaloperating and operatingcapital spending of global infrastructure industries for the placement of new products into service and maintenance spending for aftermarket services for existing operations. 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 aftermarket portion of our business also helps provide business stability during various economic periods. The aftermarket business, which is primarily served by our network of 155 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. It is generally a higher margin business compared to our original equipment business and a key component of our profitable growth strategy.

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

•Flow Control Division ("FCD") designs, manufactures and distributes a broad portfolio of engineered-to-order and configured-to-order isolation valves, control valves, valve automation products and related equipment.

We have seen growth from the end-markets we serve and continue to advance our strategy by driving operational excellence and efficiency throughout the organization supported by the Flowserve Business System. The current macroeconomic environment is dynamic and uncertainty exists given the current armed conflict with Iran andIran, ongoing geopolitical instabilityinstability, and continued trade policy actions, including higher import tariffs in a number of countries in which we operate, the potential implementation of modified or new tariffs and related retaliatory actions. We plan to leverage our global footprint, expansive manufacturing network, flexible supply chain and ability to incorporate tariff impacts into pricing decisions to minimize the economic impact of this uncertainty to our business. While we will continue to monitor and manage macroeconomic trends and uncertainties, including inflationary and recessionary pressures resulting from the ongoing tariffs and geopolitical climate, our existing backlog, improved execution and announced acquisitions activity, provide a solid revenue base for 2026.

As of MarchJune 31,30, 2026, we have cash and cash equivalents of $792.4$731.0 million and $470.7$763.3 million of borrowings available under our SecondThird Amended and Restated Credit Agreement. On April 15, 2026, we entered into the Third Amended and Restated Credit Agreement, which includes a $1,000 million Revolving Credit Facility and $450.0 million Term Loan. We do not currently anticipate, nor are we aware of, any significant market conditions or commitments that would change any of our conclusions of the liquidity currently available to us. We will continue to actively monitor the credit markets in order to maintain sufficient liquidity and access to capital throughout 2026.

OUR RESULTS OF OPERATIONS — Three and Six months ended MarchJune 31,30, 2026 and 2025

As discussed in Note 1, "Basis of Presentation and Accounting Policies," to our condensed consolidated financial statements included in this Quarterly Report, on February 20, 2026, the U.S. Supreme Court held in Learning Resources, Inc. v. Trump that the International Emergency Economic Powers Act (“IEEPA”) does not authorize a U.S. President to impose tariffs during peacetime national emergencies and that the challenge to the legality of the tariffs imposed under IEEPA was within the exclusive jurisdiction of the U.S. Court of International Trade (“CIT”), thus affirming the prior decision of the CIT in V.O.S. Selections, Inc. v. United States that the tariffs imposed under IEEPA were invalid. As a result of this ruling, the CIT issued an order directing the U.S. Customs and Border Protection (“CBP”) agency to begin formalizing a process for refunds. On April 20, 2026, the CBP launched an online portal to process tariff refund requests and the Company was able to submit its tariff refund requests through this portal. We have paid IEEPA tariffs to the U.S. government since the enactment on February 1, 2025, and accordingly we submitted our request covering our Phase 1 entries for refund of $35.4 million related to IEEPA tariffs paid during the period from February 1, 2025 to February 20, 2026. The timing for submitting claims related to our Phase 3 entries has not yet been established. We did not have any entries eligible for refunds under CBP’s Phase 2. The timing and amount of any recoveries remain uncertain and subject to execution by the CBP.

We have paid IEEPA tariffs to the U.S. government since the enactment on February 1, 2025 and accordingly we submitted our request for refund of $35.4 million related to IEFPA tariffs paid during the period from February 1, 2025 to February 20, 2026. Based on the U.S. Supreme Court's ruling, related CIT proceedings, and the Company's submission of tariff refund requests and assessment of the recoverability of amounts paid, the Company hasconcluded concludedas of March 31, 2026 that athe refundrecovery of previously incurred Phase 1 IEEPA tariffs iswas probableprobable. underUnder a loss recovery accounting model. Accordingly,method, we recognized a refundreceivable of previously paid tariffs imposed under IEEPA for $35.4 million for the IEEPA tariffs incurred in Other assets within the condensed consolidated balance sheet and a corresponding reversal of cost of sales ("COS") and inventory for $30.4 million and $5.0 million within our condensed consolidated statement of income for the three-month period ended March 31, 2026 and the condensed consolidated balance sheet for the period ended March 31, 2026, which resulted in a reversal of Cost of sales in the condensed consolidated income statement for $30.4 million during the three-month period ended March 31, 2026.respectively.

As discussed in Note 2, "Acquisitions," to our condensed consolidated financial statements included in this Quarterly Report, effective October 15, 2024, we acquired for inclusion in FCD, all of the equity interests of MOGAS Industries, Inc., MOGAS Real Estate LLC and MOGAS Systems & Consulting LLC (such entities collectively, "MOGAS"). We incurred $1.3$5.2 million in acquisition and integration related costs for the three-monthsix-month period ended MarchJune 31,30, 2025 associated with the acquisition which are included within selling, general and administrative expense ("SG&A") in our condensed consolidated statement of income. The impact of the acquisition of MOGAS was not material for the three-month periodsix-months ended MarchJune 31,30, 2025.

As discussed in Note 2, "Acquisitions," to our condensed consolidated financial statements included in this Quarterly Report, effective December 16, 2025, Flowserve acquired for inclusion in FPD, United Kingdom-based Greenray Turbine Solutions, Ltd. ("Greenray"), a comprehensive provider of aftermarket products and services for industrial gas turbines. We incurred $1.1$0.6 million in acquisition and integration-related costs for the three monthsix-month period ended MarchJune 31,30, 20262026, associated with the acquisition which areis included within SG&A in our condensed consolidated statementstatements of income. The impact of the acquisition of Greenray is not material for the three monthand periodsix-month periods ended MarchJune 31,30, 2026.

Our realignment activities are implemented in phases. We currently anticipate a total investment in the 2025 Realignment Programs, which have been evaluated and initiated, of approximately $120$170 million of which $17$23 million is estimated to be non-cash. We are evaluating the annualized cost savings expected to be achieved uponUpon completion of the activities of the 2025 Realignment Programs that have been identified and initiated to date.date, we expect to achieve annualized cost savings of $140.0 million. Actual savings could vary from expected savings. There are certain remaining realignment activities that are currently being evaluated, but have not yet been approved and therefore are not included in the above anticipated total investment or estimated savings.

We define a booking as the receipt of a customer order that contractually engages us to perform activities on behalf of our customer with regard to manufacturing, service or support. Bookings recorded and subsequently canceled within the year-to-date period are excluded from year-to-date bookings. Bookings for the three months ended MarchJune 31,30, 2026 decreasedincreased by $78.2$274.2 million, or 6.4%,25.5%, as compared with the same period in 2025. The decreaseincrease included currency benefits of $42.8approximately $14.4 million. The decreasedincreased bookings were driven by decreasedincreased customer orders of $37.4$169.6 million in the energy industry, $26.8$50.5 million in the power generation industryindustry, and $16.3$37.8 million in the general industries,industries partiallyand offset by an increase of $7.0$16.2 million in the chemical industry. The decreaseincrease in customer bookings was driven by original equipment and aftermarket bookings.

Sales for the three months ended MarchJune 31,30, 2026 decreased by $76.2$18.9 million, or 6.7%,1.6%, as compared withto the same period in 2025. The decrease included currency benefits of approximately $40.9$9.5 million. The decreased sales were driven by original equipment customer sales, with decreased customer sales of $55.4$16.4 million into Europe, $14.2 million into the Middle East, $12.0 million into Asia Pacific, $41.2$3.0 million into theAfrica Middleand East $6.6$1.0 million into LatinNorth America and $1.3 million into Europe,America, partially offset by increased customer sales of $17.1$21.2 million into NorthLatin America and $7.1 million into Africa.America. Net sales to international customers, including export sales from the United States, were approximately 61% and 63%62% of total sales for the three monthsthree-months ended MarchJune 31,30, 2026 and 2025, respectively. Aftermarket sales represented approximately 57%58% of total sales, as compared with approximately 51%53% of total sales for the same period in 2025.

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$3.3 billion at MarchJune 31,30, 2026 increased by $78.0$468.2 million, or 2.7%,16.3%, as compared withto December 31, 2025. Currency effects provided aan decreaseincrease of approximately $7.7$25.7 million (currency effects on backlog are calculated using the change in period end exchange rates). Approximately 43.4%41.1% of the backlog at MarchJune 31,30, 2026 and 42.0% of the backlog at December 31, 2025 was related to aftermarket orders. Backlog includes our unsatisfied (or partially unsatisfied) performance obligations of approximately $1.0$1.1 billion related to contracts having an original expected duration inof excess ofover one year as discussed in Note 3, "Revenue Recognition," to our condensed consolidated financial statements included in this Quarterly Report.

Gross profit for the three months ended MarchJune 31,30, 2026 increaseddecreased by $10.5$21.9 million, or 2.8%,5.4%, as compared with the same period in 2025. Gross profit margin for the three months ended MarchJune 31,30, 2026 of 35.6%32.9% increaseddecreased from 32.3%34.2% for the same period in 2025. The increasedecrease in gross profit margin was primarily due to increased charges of $27.9 million related to our realignment activities, higher broad-based annual incentive compensation and disruptions in the Middle East, partially offset by decreased amortization expense on intangible assets, including acquisition related intangible assets, of $1.1 million and continued execution of the Flowserve Business System and our Operational Excellence and Portfolio Excellence programs, with a focus on complexity reduction and product rationalization. The increase also includes the impact of $30.4 million in IEEPA tariff refunds recorded during the first quarter of 2026, lower broad-based annual incentive compensation and a $2.5 million decrease in amortization of acquisition related intangible assets, partially offset by disruptions in the Middle East, a $7.9 million charge incurred during the first quarter of 2026 related to a taxing authority matter in Latin America and increased charges of $6.5 million related to our realignment activities as compared to the same period in 2025.

SG&A for the three months ended MarchJune 31,30, 2026 increased by $20.2$0.4 million, or 8.3%,0.2%, as compared with the same period in 2025. Currency effects yielded an increase of approximately $9.2$3.1 million. SG&A increased due to increased charges of $13.7$9.5 million related to our realignment activities, increased charges of $7.3$6.1 million for acquisition and integration related costs associated with the GreenrayTVD and Trillium ValvesFAMCO acquisitions and transaction costs associated with the PMV Divestiture incurred in the second quarter of 2026 compared to MOGAS acquisition and integration related charges incurred in the comparative period, ahigher $1.4broad-based millionannual chargeincentive incurredcompensation, during the first quarter of 2026 related to a taxing authority matter in Latin America and a $0.9 million increase inincreased amortization ofexpense on intangible assets, including acquisition related intangible assets,assets partiallyof offset$1.8 bymillion aand decreasean increase in bad debt expense of $1.1 million, partially offset by $15.5 million in transaction costs incurred during the comparative period associated with the terminated Chart Merger that did not recur and decreased research and development costs of $2.3 millionmillion, as compared to the same period in 2025. SG&A as a percentage of sales for the three months ended MarchJune 31,30, 2026 increased 35040 basis points driven by cost increases.increases and lower sales volume.

Net earnings from affiliates for the three months ended MarchJune 31,30, 2026 decreasedincreased by $2.7$27.1 million, or 47.1%,459.3%, as compared with the same period in 2025. The decrease inincreased net earnings from affiliates was primarily a result of decreaseda earnings$27.7 million gain recognized on the remeasurement of our FPDpreviously jointheld venturesequity interest in South Korea.FAMCO.

OperatingNet incomeearnings from affiliates for the threesix months ended MarchJune 31,30, 2026 decreasedincreased by $12.5$24.4 million, or 9.4%,210.3%, as compared with the same period in 2025. The decreaseincreased includednet negativeearnings currencyfrom effects of approximately $1.1 million. The decreaseaffiliates was primarily a result of thea $20.2$27.7 million increasegain recognized on the remeasurement of our previously held equity interest in SG&A,FAMCO, partially offset by thedecreased $10.5earnings millionof increaseour FPD joint venture in grossSouth profit.Korea.

Interest expense for the three months ended MarchJune 31,30, 2026 increased by $1.3$5.4 million, as compared towith the same period in 2025, primarily due to higher outstanding debt during the period. Interest income for the three months ended MarchJune 31,30, 2026 decreasedincreased by $0.2$2.5 million primarily due to lowerinterest income earned on IEEPA tariff refunds and a higher average balancesbalance as compared to the same period in 2025.

Other Income (Expense),Expense, Net

Other income (expense),expense, net for the three months ended MarchJune 31,30, 2026 increaseddecreased $24.3$12.9 million as compared withto the same period in 2025,2025 primarily due to a $5.6$14.1 million gaindecrease arisingin from transactions on foreign exchange forward contracts and a $14.8 million gainlosses from transactions in currencies other than our sites' functional currencies duringpartially theoffset firstby quartera of$0.4 2026.million loss arising from transactions on foreign exchange forward contracts. The net currency change was primarily due to the foreign currency exchange rate movements in the Euro, BritishSingaporean pounddollar, Swedish krona and IndianMexican Rupeepeso during the three months ended MarchJune 31,30, 2026, as compared to the same period in 2025. The three-monththree periodmonths ended MarchJune 31,30, 2026 also includes a pension settlement loss of $1.5$3.1 million incurred in conjunction with the freeze of our U.S. Qualified pension plan,plans which represents a portion ofin the estimatedUnited full year expected settlement loss of $5.0 million - $6.0 million triggered due to expected cash outflows exceeding serviceStates and interest costs.Canada.

The effective tax rate of 19.7%14.4% for the three months ended MarchJune 31,30, 2026 increaseddecreased from 18.3%15.1% for the same period in 2025. The effective tax rate varied from the U.S. federal statutory rate for the three months ended MarchJune 31,30, 2026 primarily due to the net impact of U.S.the discretenon-taxable items,FAMCO acquisition gain and foreign operations, partially offset by state income taxes and the net impact of foreign operations.taxes. Refer to Note 15, "Income Taxes," to our condensed consolidated financial statements included in this Quarterly Report for further discussion.

Other comprehensive income (loss) for the three months ended MarchJune 31,30, 2026,2026 decreased by $71.1$119.3 million to a loss of $8.9 million from $47.9income of $110.4 million of income fromin the same period in 2025. The lossdecrease was due to foreign currency translation adjustments resulting primarily from exchange rate movements of the Euro, BrazilianIndian realrupee and IndianMexican rupeepeso versus the U.S. dollar during the three months ended MarchJune 31,30, 2026, as compared withto the same period in 2025.

Our largest business segment is FPD, through which we design, manufacture, pretest, distribute and service highly custom engineered pumps, pre-configured industrial pumps, pump systems, mechanical seals, and auxiliary systems (collectively referred to as "original equipment") and related services. FPD includes highly engineered pump products with longer lead times and mechanical seals, whichthat are generally manufactured within shorter lead times. FPD also manufactures replacement parts and related equipment and provides aftermarket services. FPD primarily operates in the energy, power generation, chemical, and general industries. FPD operates in 48 countries with 3738 manufacturing facilities worldwide, 1213 of which are located in North America, 11 in Europe and the Middle East, eight in Asia Pacific, and six in Latin America, and it operates 126 QRCs, including those co-located in manufacturing facilities and/or shared with FCD.

As discussed above, we revised the end market categories for bookings during the first quarter of 2026.2025. All bookings by industry amounts discussed below, including the 2025 comparative period, where applicable, have been reclassified from five categories (i.e., oil and gas, chemical, power generation, water management, and general industries) to four categories (i.e., energy, chemical, power generation and general industries) to conform to our current classification of end markets.

Bookings for the three months ended MarchJune 31,30, 2026 decreasedincreased by $79.0$214.4 million, or 9.3%,29.6%, as compared to the same period in 2025. The decreaseincrease included currency benefits of approximately $34.0$12.5 million. The decreaseincrease in customer bookings was primarily driven by decreasedincreased customer orders of $55.4$134.7 million in the energy industry, $39.3 million in general industries, $22.5 million in the power generation industry, $24.2 million in the general industriesindustry and $1.1$10.5 million in the chemical industry, partially offset by increases of $6.9 million in the Energy industry. Customer bookings decreasedincreased $30.5$120.0 million into Europe,North $22.2America, $31.7 million into Africa,Latin $13.3America, $29.9 million into the Middle East, $10.0$11.1 million into NorthAfrica, America and $3.9$9.4 million into LatinEurope America,and partially offset by increased customer orders of $6.2$5.3 million into Asia Pacific. The decreaseincrease in customer bookings was driven by original equipment bookings.

Sales for the three months ended MarchJune 31,30, 2026 decreased by $38.6$4.8 million, or 4.9%0.6% as compared to the same period in 2025 and included currency benefits of approximately $33.5$9.4 million. The decrease was driven by original equipment customer sales. Decreased customer sales of approximately $38.4$18.2 million into the Middle East, $14.3$6.1 million into Europe, $5.7 million into Asia Pacific,Pacific $6.0and $5.4 million into Africa were partially offset by increased customer sales of approximately $21.4 million into Latin America and $1.7 million into Europe, were partially offset by increases of $13.5$4.1 million into North America and $7.4 million into Africa.America.

Operating incomeSales for the threesix months ended MarchJune 31,30, 2026 decreased by $10.7$43.5 million, or 7.8%,2.7% as compared withto the same period in 2025.2025 The decreaseand included currency benefits of approximately $0.8$43 million. The decrease was primarilydriven dueby tooriginal equipment customer sales. Decreased customer sales of approximately $56.6 million into the $9.5Middle East, $20.0 million increaseinto inAsia SG&A,Pacific and $7.7 million into Europe were partially offset by theincreased $1.4customer sales of approximately $17.6 million increaseinto inNorth grossAmerica, profit.$15.4 million into Latin America and $2.1 million into Africa.

Backlog of $2.1$2.2 billion at MarchJune 31,30, 2026 increased by $31.0$158.7 million, or 1.5%,7.8%, as compared to December 31, 2025. Currency effects provided aan decreaseincrease of approximately $5.4$21.9 million.

FCD designs, manufactures and distributes a broad portfolio of engineered-to-order and configured-to-order isolation valves, control valves, valve automation products and related equipment. FCD leverages its experience and application know-how by offering a complete menu of engineered services to complement its expansive product portfolio. Not including the recently acquired TVD facilities, FCD has a total of 48 manufacturing facilities and QRCs in 2223 countries around the world, with seven of its 19 manufacturing operations located in the Europe and the Middle East, six located in the United States, five located in Asia Pacific and one located in Latin America. Based on independent industry sources, we believe that FCD is the second largest industrial valve supplier on a global basis.

As discussed above, we revised the end market categories for bookings during the first quarter of 2026.2025. All bookings by industry amounts discussed below, including the 2025 comparative period, where applicable, have been reclassified from five categories (i.e., oil and gas, chemical, power generation, water management, and general industries) to four categories (i.e., energy, chemical, power generation and general industries) to conform to our current classification of end markets.

Bookings for the threesix months ended MarchJune 31,30, 2026 decreasedincreased by $1.8$60.9 million, or 0.5%,8.3%, as compared towith the same period in 2025. Bookings included currency benefits of approximately $8.8$10.7 million. The decreaseincrease in customer bookings was primarily driven by decreasedincreased customer orders of $44.3 million in the energy industry, partially offset by decreases of $28.6$56.6 million in the power generation industry, $8.0$13.7 million in the chemical industry and $7.9$6.5 million in general industries.industries, Decreasedpartially offset by decreased customer orders of $9.4 million in the energy industry. Increased customer bookings were driven by increased orders of $55.3 million into Asia Pacific, $31.8 million into Europe, $17.5 million into North America and $0.4 million into Africa, partially offset by decreased orders of approximately $35.4$37.5 million into the Middle East and $9.9 million into North America, partially offset by increases of $21.0 million into Asia Pacific, $17.5 million into Europe, $3.7 million into Africa and $3.4$0.2 million into Latin America. The decreaseincrease in customer bookings was driven by customerboth original equipment and aftermarket bookings.

Sales for the three months ended MarchJune 31,30, 2026 decreased $36.5$14.2 million, or 10.0%,3.8%, as compared towith the same period in 2025. The decrease included currency benefits of approximately $7.4$0.1 million. TheDecreased decreasesales waswere driven by reductions in original equipment customer sales. DecreasedThe decrease was primarily driven by decreased customer sales of $41.1$10.4 million into Europe, $6.3 million into Asia Pacific, $2.9 million into the Middle East, $0.6 million into Latin America and $0.4 million into Africa were partially offset by increased sales of $3.6$5.2 million into North America and $0.3$0.1 million into Europe.Latin America, partially offset by increased customer sales of $4.0 million into the Middle East and $2.3 million into Africa.