Business Wire | Aug 5, 2021 04:05PM EDT

Flowserve Corporation Reports Second Quarter 2021 Results

Aug. 05, 2021

DALLAS--(BUSINESS WIRE)--Aug. 05, 2021--Flowserve Corporation (NYSE: FLS), a leading provider of flow control products and services for the global infrastructure markets, today announced its financial results for the second quarter ended June 30, 2021.

Second Quarter 2021 Highlights (all comparisons to the 2020 second quarter, unless otherwise noted)1

* Reported Earnings Per Share (EPS) of $0.35 and Adjusted EPS2 of $0.37 Reported EPS includes after-tax adjusted items of $2.6 million, including realignment costs, below-the-line foreign exchange impacts and gain on the sale of business

* Total bookings were $952.8 million, up 17.9%, or 13.0% on a constant currency basis and up modestly sequentially Original equipment bookings were $427.9 million, or 45% of total bookings, up 17.0%, or 11.7% on a constant currency basis and down 12.3% on a sequential basis Aftermarket bookings were $524.9 million, or 55% of total bookings, up 18.6%, or 14.1% on a constant currency basis and up 14.8% on a sequential basis

* Sales were $898.2 million, down 2.9%, or 7.1% on a constant currency basis Original equipment sales were $434.5 million, down 6.1%, or 10.7% on a constant currency basis and up 6.8% on a sequential basis Aftermarket sales were $463.7 million, up 0.3%, or down 3.5% on a constant currency basis and up 3.0% on a sequential basis

* Reported gross and operating margins were 31.0% and 8.0%, respectively Adjusted gross and operating margins3 were 31.4% and 8.5%, respectively

* Backlog at June 30, 2021 was $1.95 billion, up 5.1% versus December 31, 2020

"Flowserve delivered solid second quarter results, including year-over-year bookings growth of nearly 18 percent, driven by the continued activity in our shorter cycle MRO and aftermarket services," said Scott Rowe, Flowserve's president and chief executive officer. "The ongoing progress of our Flowserve 2.0 transformation initiative has delivered results, including a strong sequential increase in Adjusted EPS and incremental margin improvement. Following last year's disruptive impact of the pandemic and volatile commodity prices, we believe Flowserve is set to build upon the growing momentum in our operations and end-markets."

Rowe concluded, "Our early cycle markets have clearly begun to recover, and we have confidence that we are approaching an inflection point for larger project opportunities. In addition to the improving outlook in our core energy and chemical markets, we continue to believe that Flowserve is well-positioned to benefit from the expected increase in energy transition and decarbonization investments across our served end-markets. The combination of stronger bookings coupled with our operational progress lays the foundation for escalating earnings growth in the second half of 2021."

Revised 2021 Guidance4

Flowserve today raised certain of the full-year metrics of our 2021 target range.

Revised Target Range Prior Target Range

Revenues Down 2.0% to 4.0% Down 3.0% to 5.0%

Adjusted Earnings Per Share $1.45 - $1.65 $1.40 - $1.60

Adjusted Tax Rate 21%-23% 22%-24%

Previously announced metrics not shown above are reaffirmed as of today.

Consistent with the prior range, Flowserve's 2021 Adjusted EPS target range excludes expected realignment charges of approximately $25 million, as well as the potential impact of below-the-line foreign currency effects and certain other discrete items. In a change to the approach for 2021, Flowserve 2.0 transformation-related expenses of approximately 5 cents per share will now be included in both the Company's reported and adjusted EPS.

Second Quarter 2021 Results Conference Call

Flowserve will host its conference call with the financial community on Friday, August 6th at 11:00 AM Eastern. Scott Rowe, president and chief executive officer, as well as other members of the management team will be presenting. The call can be accessed by shareholders and other interested parties at www.flowserve.com under the "Investor Relations" section.

1 Prior period comparisons are impacted by certain accounting revisions. Reference Flowserve's Form 8-K filed on November 5, 2020 and Form 10-Q for the period ending June 30, 2021 for additional details. 2 See Reconciliation of Non-GAAP Measures table for detailed reconciliation of reported results to adjusted measures. 3 Adjusted gross and operating margins are calculated by dividing adjusted gross profit and adjusted operating income, respectively, by revenues. Adjusted gross profit and adjusted operating income are derived by excluding the adjusted items. See reconciliation of Non-GAAP Measures table for detailed reconciliation. 4 Adjusted 2021 EPS excludes realignment expenses, the impact from other specific discrete items and below-the-line foreign currency effects and utilizes year-end 2020 FX rates and approximately 131 million fully diluted shares. - FX impact is calculated by comparing the difference between the actual average FX rates of 2020 and the year-end 2020 spot rates both as applied to our 2021 expectations, divided by the number of shares expected for 2021.

About Flowserve

Flowserve Corp. is one of the world's leading providers of fluid motion and control products and services. Operating in more than 50 countries, the company produces engineered and industrial pumps, seals and valves as well as a range of related flow management services. More information about Flowserve can be obtained by visiting the company's Web site at www.flowserve.com.

Safe Harbor Statement This news release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, as amended. Words or phrases such as, "may," "should," "expects," "could," "intends," "plans," "anticipates," "estimates," "believes," "forecasts," "predicts" or other similar expressions are intended to identify forward-looking statements, which include, without limitation, earnings forecasts, statements relating to our business strategy and statements of expectations, beliefs, future plans and strategies and anticipated developments concerning our industry, business, operations and financial performance and condition.

The forward-looking statements included in this news release are based on our current expectations, projections, estimates and assumptions. These statements are only predictions, not guarantees. Such forward-looking statements are subject to numerous risks and uncertainties that are difficult to predict. These risks and uncertainties may cause actual results to differ materially from what is forecast in such forward-looking statements, and include, without limitation, the following: the impact of the global outbreak of COVID-19 on our business and operations; a portion of our bookings may not lead to completed sales, and our ability to convert bookings into revenues at acceptable profit margins; changes in global economic conditions and the potential for unexpected cancellations or delays of customer orders in our reported backlog; our dependence on our customers' ability to make required capital investment and maintenance expenditures; if we are not able to successfully execute and realize the expected financial benefits from our strategic transformation and realignment initiatives, our business could be adversely affected; risks associated with cost overruns on fixed-fee projects and in taking customer orders for large complex custom engineered products; the substantial dependence of our sales on the success of the oil and gas, chemical, power generation and water management industries; the adverse impact of volatile raw materials prices on our products and operating margins; economic, political and other risks associated with our international operations, including military actions, trade embargoes, epidemics or pandemics or changes to tariffs or trade agreements that could affect customer markets, particularly North African, Russian and Middle Eastern markets and global oil and gas producers, and non-compliance with U.S. export/re-export control, foreign corrupt practice laws, economic sanctions and import laws and regulations; increased aging and slower collection of receivables, particularly in Latin America and other emerging markets; our exposure to fluctuations in foreign currency exchange rates, including in hyperinflationary countries such as Venezuela and Argentina; our furnishing of products and services to nuclear power plant facilities and other critical processes; potential adverse consequences resulting from litigation to which we are a party, such as litigation involving asbestos-containing material claims; expectations regarding acquisitions and the integration of acquired businesses; our relative geographical profitability and its impact on our utilization of deferred tax assets, including foreign tax credits; the potential adverse impact of an impairment in the carrying value of goodwill or other intangible assets; our dependence upon second-party suppliers whose failure to perform timely could adversely affect our business operations; the highly competitive nature of the markets in which we operate; environmental compliance costs and liabilities; potential work stoppages and other labor matters; access to public and private sources of debt financing; our inability to protect our intellectual property in the U.S., as well as in foreign countries; obligations under our defined benefit pension plans; our internal control over financial reporting may not prevent or detect misstatements because of its inherent limitations, including the possibility of human error, the circumvention or overriding of controls, or fraud; the recording of increased deferred tax asset valuation allowances in the future or the impact of tax law changes on such deferred tax assets could affect our operating results; our information technology infrastructure could be subject to service interruptions, data corruption, cyber-based attacks or network security breaches, which could disrupt our business operations and result in the loss of critical and confidential information; ineffective internal controls could impact the accuracy and timely reporting of our business and financial results; and other factors described from time to time in our filings with the Securities and Exchange Commission.

All forward-looking statements included in this news release are based on information available to us on the date hereof, and we assume no obligation to update any forward-looking statement.

The Company reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). However, management believes that non-GAAP financial measures which exclude certain non-recurring items present additional useful comparisons between current results and results in prior operating periods, providing investors with a clearer view of the underlying trends of the business. Management also uses these non-GAAP financial measures in making financial, operating, planning and compensation decisions and in evaluating the Company's performance. Throughout our materials we refer to non-GAAP measures as "Adjusted." Non-GAAP financial measures, which may be inconsistent with similarly captioned measures presented by other companies, should be viewed in addition to, and not as a substitute for, the Company's reported results prepared in accordance with GAAP.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME(Unaudited) Three Months Ended June 30,

(Amounts in thousands, except per share data) 2021 2020

Sales $ 898,178 $ 925,012

Cost of sales (619,940 ) (655,305 )

Gross profit 278,238 269,707

Selling, general and administrative expense (210,789 ) (229,343 )

Gain on sale of business 1,806 -

Net earnings from affiliates 2,907 3,088

Operating income 72,162 43,452

Interest expense (14,322 ) (12,935 )

Interest income 465 1,149

Other income (expense), net (7,850 ) (18,907 )

Earnings before income taxes 50,455 12,759

Provision for income taxes (2,711 ) (4,485 )

Net earnings, including noncontrolling interests 47,744 8,274

Less: Net earnings attributable to noncontrolling (2,390 ) (2,142 )interestsNet earnings attributable to Flowserve Corporation $ 45,354 $ 6,132

Net earnings per share attributable to FlowserveCorporation common shareholders:Basic $ 0.35 $ 0.05

Diluted 0.35 0.05

RECONCILIATION OF NON-GAAPMEASURES(Unaudited)



Three Months Ended June 30, 2021

(Amounts in As Reported Realignmentthousands, (a) (1) Other Items As Adjustedexcept pershare data)

Sales $ 898,178 $ - $ - $ 898,178

Gross profit 278,238 (3,825 ) - 282,063

Gross margin 31.0 % - - 31.4 %



Selling,general and (210,789 ) (1,790 ) - (208,999 )administrativeexpenseGain on sale 1,806 - 1,806 (3) - of businessNet earnings 2,907 - - 2,907 fromaffiliates

Operating 72,162 (5,615 ) 1,806 75,971 incomeOperatingincome as a 8.0 % - - 8.5 %percentage ofsales

Interest and (21,707 ) - (4,197 ) (4) (17,510 )other expense,net

Earnings 50,455 (5,615 ) (2,391 ) 58,461 before incometaxesProvision for (2,711 ) 4,486 (2) 959 (5) (8,156 )income taxesTax Rate 5.4 % 79.9 % 40.1 % 14.0 %



Net earningsattributable $ 45,354 $ (1,129 ) $ (1,432 ) $ 47,915 to FlowserveCorporation

Net earningsper shareattributable to FlowserveCorporationcommonshareholders:Basic $ 0.35 $ (0.01 ) $ (0.01 ) $ 0.37

Diluted 0.35 (0.01 ) (0.01 ) 0.37



Basic numberof shares used 130,306 130,306 130,306 130,306 forcalculationDiluted numberof shares used 130,805 130,805 130,805 130,805 forcalculation

(a) Reported in conformitywith U.S. GAAP

Notes:

(1) Represents realignment expense incurred as a result of realignmentprograms.(2) Includes tax impact of items above and realignment related tax release.(3) Represents final settlement gain on sale of business in 2018.(4) Represents below-the-line foreign exchange impacts.(5) Includes tax impact of items above.RECONCILIATION OF NON-GAAPMEASURES(Unaudited)



Three Months Ended June 30, 2020

(Amounts in As Reported Realignmentthousands, (a) (1) Other Items As Adjustedexcept pershare data)

Sales $ 925,012 $ - $ - $ 925,012

Gross profit 269,707 (26,951 ) - 296,658

Gross margin 29.2 % - - 32.1 %



Selling,general and (229,343 ) (28,630 ) (5,618 ) (3) (195,095 )administrativeexpenseNet earnings 3,088 - - 3,088 fromaffiliates

Operating 43,452 (55,581 ) (5,618 ) 104,651 incomeOperatingincome as a 4.7 % - - 11.3 %percentage ofsales

Interest and (30,693 ) - (18,037 ) (4) (12,656 )other expense,net

Earnings 12,759 (55,581 ) (23,655 ) 91,995 before incometaxesProvision for (4,485 ) 10,736 (2) 7,554 (5) (22,775 )income taxesTax Rate 35.2 % 19.3 % 31.9 % 24.8 %



Net earningsattributable $ 6,132 $ (44,845 ) $ (16,101 ) $ 67,078 to FlowserveCorporation

Net earningsper shareattributable to FlowserveCorporationcommonshareholders:Basic $ 0.05 $ (0.34 ) $ (0.12 ) $ 0.52

Diluted 0.05 (0.34 ) (0.12 ) 0.51



Basic numberof shares used 130,170 130,170 130,170 130,170 forcalculationDiluted numberof shares used 130,730 130,730 130,730 130,730 forcalculation

(a) Reported in conformitywith U.S. GAAP

Notes:

(1) Represents realignment expense incurred as a result of realignmentprograms.(2) Includes tax impact of items above.(3) Represents Flowserve 2.0 transformation efforts.(4) Represents below-the-line foreign exchange impacts.(5) Includes tax impact of items above.SEGMENT INFORMATION(Unaudited) FLOWSERVE PUMP DIVISION Three Months Ended June 30,

(Amounts in millions, except percentages) 2021 2020

Bookings $ 668.8 $ 536.5

Sales 617.5 674.1

Gross profit 196.4 197.9

Gross profit margin 31.8 % 29.4 %

SG&A 133.6 140.6

Gain on sale of business 1.8 -

Segment operating income 67.8 60.4

Segment operating income as a percentage of sales 11.0 % 9.0 %

FLOW CONTROL DIVISION Three Months Ended June 30,

(Amounts in millions, except percentages) 2021 2020

Bookings $ 289.1 $ 274.6

Sales 281.2 252.3

Gross profit 84.8 76.2

Gross profit margin 30.2 % 30.2 %

SG&A 48.0 50.0

Segment operating income 37.2 26.2

Segment operating income as a percentage of sales 13.2 % 10.4 %

CONDENSED CONSOLIDATED STATEMENTS OF INCOME(Unaudited) Six Months Ended June 30,

(Amounts in thousands, except per share data) 2021 2020

Sales $ 1,755,486 $ 1,818,526

Cost of sales (1,226,348 ) (1,282,360 )

Gross profit 529,138 536,166

Selling, general and administrative expense (409,104 ) (474,794 )

Gain on sale of business 1,806 -

Net earnings from affiliates 6,425 6,283

Operating income 128,265 67,655

Interest expense (31,101 ) (25,898 )

Loss on extinguishment of debt (7,610 ) -

Interest income 1,067 2,898

Other income (expense), net (19,213 ) 19,295

Earnings before income taxes 71,408 63,950

Provision for income taxes (6,503 ) (41,453 )

Net earnings, including noncontrolling 64,905 22,497 interestsLess: Net earnings attributable to (5,471 ) (4,243 )noncontrolling interestsNet earnings attributable to Flowserve $ 59,434 $ 18,254 Corporation Net earnings per share attributable toFlowserve Corporation common shareholders:Basic $ 0.46 $ 0.14

Diluted 0.45 0.14

RECONCILIATION OF NON-GAAPMEASURES(Unaudited)



Six Months Ended June 30, 2021

(Amounts in As Reported Realignmentthousands, (a) (1) Other Items As Adjustedexcept pershare data)

Sales $ 1,755,486 $ - $ - $ 1,755,486

Gross profit 529,138 (13,231 ) - 542,369

Gross margin 30.1 % - - 30.9 %



Selling,general and (409,104 ) (6,086 ) - (403,018 )administrativeexpenseGain on sale 1,806 - 1,806 (3) - of businessNet earnings 6,425 - - 6,425 fromaffiliates

Operating 128,265 (19,317 ) 1,806 145,776 incomeOperatingincome as a 7.3 % - - 8.3 %percentage ofsales

Interest and (56,857 ) - (21,313 ) (4) (35,544 )other expense,net

Earnings 71,408 (19,317 ) (19,507 ) 110,232 before incometaxesProvision for (6,503 ) 7,842 (2) 5,799 (5) (20,144 )income taxesTax Rate 9.1 % 40.6 % 29.7 % 18.3 %



Net earningsattributable $ 59,434 $ (11,475 ) $ (13,708 ) $ 84,617 to FlowserveCorporation

Net earningsper shareattributable to FlowserveCorporationcommonshareholders:Basic $ 0.46 $ (0.09 ) $ (0.11 ) $ 0.65

Diluted 0.45 (0.09 ) (0.10 ) 0.65



Basic numberof shares used 130,366 130,366 130,366 130,366 forcalculationDiluted numberof shares used 130,905 130,905 130,905 130,905 forcalculation

(a) Reported in conformitywith U.S. GAAP

Notes:

(1) Represents realignment expense incurred as a result of realignmentprograms.(2) Includes tax impact of items above and realignment related tax release.(3) Represents final settlement gain on sale of business in 2018.(4) Represents below-the-line foreign exchange impacts and $7.6 million ofexpense as a result of early extinguishment of debt.(5) Includes tax impact of items above and $1.3 million benefit related tolegal entity simplification and restructuring.RECONCILIATION OF NON-GAAPMEASURES(Unaudited)



Six Months Ended June 30, 2020

(Amounts in As Reported Realignmentthousands, (a) (1) Other Items As Adjustedexcept pershare data)

Sales $ 1,818,525 $ - $ - $ 1,818,525

Gross profit 536,166 (34,977 ) - 571,143

Gross margin 29.5 % - - 31.4 %



Selling,general and (474,794 ) (29,908 ) (21,701 ) (3) (423,185 )administrativeexpenseNet earnings 6,283 - - 6,283 fromaffiliates

Operating 67,655 (64,885 ) (21,701 ) 154,241 incomeOperatingincome as a 3.7 % - - 8.5 %percentage ofsales

Interest and (3,705 ) - 22,356 (4) (26,061 )other expense,net

Earnings 63,950 (64,885 ) 655 128,180 before incometaxesProvision for (41,453 ) 11,698 (2) (21,481 ) (5) (31,670 )income taxesTax Rate 64.8 % 18.0 % 3279.5 % 24.7 %



Net earningsattributable $ 18,254 $ (53,187 ) $ (20,826 ) $ 92,267 to FlowserveCorporation

Net earningsper shareattributable to FlowserveCorporationcommonshareholders:Basic $ 0.14 $ (0.41 ) $ (0.16 ) $ 0.71

Diluted 0.14 (0.41 ) (0.16 ) 0.70



Basic numberof shares used 130,463 130,463 130,463 130,463 forcalculationDiluted numberof shares used 131,152 131,152 131,152 131,152 forcalculation

(a) Reported in conformitywith U.S. GAAP

Notes:

(1) Represents realignment expense incurred as a result of realignmentprograms.(2) Includes tax impact of items above.(3) Includes $11.3 million related to Flowserve 2.0 transformation efforts and$10.4 million related to discrete asset write-downs.(4) Represents below-the-line foreign exchange impacts.(5) Includes tax impact of items above, $25.4 million related to Italian taxvaluation allowance and $2.0 million benefit related to legal entitysimplification and restructuring.SEGMENT INFORMATION(Unaudited) FLOWSERVE PUMP DIVISION Six Months Ended June 30,

(Amounts in millions, except percentages) 2021 2020

Bookings $ 1,322.2 $ 1,220.1

Sales 1,220.1 1,309.7

Gross profit 379.2 393.7

Gross profit margin 31.1 % 30.1 %

SG&A 266.2 299.9

Gain on sale of business 1.8 -

Segment operating income 121.6 100.1

Segment operating income as a percentage of sales 10.0 % 7.6 %

FLOW CONTROL DIVISION Six Months Ended June 30,

(Amounts in millions, except percentages) 2021 2020

Bookings $ 582.6 $ 570.8

Sales 537.0 511.7

Gross profit 159.4 151.0

Gross profit margin 29.7 % 29.5 %

SG&A 97.8 107.6

Segment operating income 61.9 43.4

Segment operating income as a percentage of sales 11.5 % 8.5 %

Second Quarter and Year-to-Date 2021 - Segment Results(dollars in millions, comparison vs. 2020 second quarter and year-to-date,unaudited) FPD FCDBookings $ 668.8 $ 1,322.2 $ 289.1 $ 582.6

- vs. prior year 24.7 % 8.4 % 5.3 % 2.1 %

- on constant currency 19.3 % 4.6 % 1.5 % -1.3 %

Sales $ 617.5 $ 1,220.1 $ 281.2 $ 537.0

- vs. prior year -8.4 % -6.8 % 11.5 % 4.9 %

- on constant currency -12.4 % -10.3 % 6.6 % 0.9 %

Gross Profit $ 196.4 $ 379.2 $ 84.8 $ 159.4

- vs. prior year -0.8 % -3.7 % 11.3 % 5.6 %

Gross Margin (% of sales) 31.8 % 31.1 % 30.2 % 29.7 %

- vs. prior year (in basis points) 240 bps 100 bps 0 bps 20 bps Operating Income $ 67.8 $ 121.6 $ 37.2 $ 61.9

- vs. prior year 12.3 % 21.5 % 42.0 % 42.6 %

- on constant currency 4.6 % 15.6 % 36.3 % 38.0 %

Operating Margin (% of sales) 11.0 % 10.0 % 13.2 % 11.5 %

- vs. prior year (in basis points) 200 bps 240 bps 280 bps 300 bps Adjusted Operating Income * $ 70.6 $ 132.5 $ 37.4 $ 63.8

- vs. prior year -24.5 % -8.0 % 12.3 % 8.7 %

- on constant currency -29.5 % -12.2 % 7.8 % 5.2 %

Adj. Oper. Margin (% of sales)* 11.4 % 10.9 % 13.3 % 11.9 %

- vs. prior year (in basis points) (250) bps (10) bps 10 bps 40 bps Backlog $ 1,294.1 $ 660.4

* Adjusted Operating Income and Adjusted Operating Margin exclude realignmentcharges and other specific discrete itemsCONDENSED CONSOLIDATED BALANCE SHEETS(Unaudited) June 30, December 31,

(Amounts in thousands, except par value) 2021 2020



ASSETSCurrent assets:Cash and cash equivalents $ 630,397 $ 1,095,274

Accounts receivable, net of allowance for 729,551 753,462 expected credit losses of $74,782 and $75,176,respectivelyContract assets, net of allowance for expected 262,231 277,734 credit losses of $3,038 and $3,205,respectivelyInventories, net 690,145 667,228

Prepaid expenses and other 128,364 110,635

Total current assets 2,440,688 2,904,333

Property, plant and equipment, net of 526,101 556,873 accumulated depreciation of $1,107,765 and$1,093,348, respectivelyOperating lease right-of-use assets, net 204,075 208,125

Goodwill 1,213,103 1,224,886

Deferred taxes 46,904 30,538

Other intangible assets, net 160,653 168,496

Other assets, net of allowance for expected 227,145 221,426 credit losses of $67,770 and $67,842,respectivelyTotal assets $ 4,818,669 $ 5,314,677

LIABILITIES AND EQUITYCurrent liabilities:Accounts payable $ 393,608 $ 440,199

Accrued liabilities 422,161 463,222

Contract liabilities 209,092 194,227

Debt due within one year 9,599 8,995

Operating lease liabilities 35,256 34,990

Total current liabilities 1,069,716 1,141,633

Long-term debt due after one year 1,307,149 1,717,911

Operating lease liabilities 173,388 176,246

Retirement obligations and other liabilities 497,724 517,566

Shareholders' equity:Common shares, $1.25 par value 220,991 220,991

Shares authorized - 305,000Shares issued - 176,793Capital in excess of par value 494,221 502,227

Retained earnings 3,677,117 3,670,543

Treasury shares, at cost - 46,806 and 46,768 (2,058,279 ) (2,059,309 )shares, respectivelyDeferred compensation obligation 7,077 6,164

Accumulated other comprehensive loss (600,143 ) (609,625 )

Total Flowserve Corporation shareholders' 1,740,984 1,730,991 equityNoncontrolling interests 29,708 30,330

Total equity 1,770,692 1,761,321

Total liabilities and equity $ 4,818,669 $ 5,314,677

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited) Six Months Ended June 30,

(Amounts in thousands) 2021 2020

Cash flows - Operating activities:Net earnings, including noncontrolling interests $ 64,905 $ 22,497

Adjustments to reconcile net earnings to net cashprovided by operating activities:Depreciation 44,491 41,711

Amortization of intangible and other assets 7,433 6,136

Loss on extinguishment of debt 7,610 -

Stock-based compensation 16,472 18,475

Foreign currency, asset write downs and other 12,460 10,970 non-cash adjustmentsChange in assets and liabilities:Accounts receivable, net 14,285 858

Inventories, net (30,784 ) (36,575 )

Contract assets, net 12,232 (44,276 )

Prepaid expenses and other assets, net (16,187 ) (3,956 )

Accounts payable (41,146 ) (9,201 )

Contract liabilities 17,026 4,412

Accrued liabilities and income taxes payable (37,123 ) (1,140 )

Retirement obligations and other (2,761 ) 15,717

Net deferred taxes (7,607 ) (5,445 )

Net cash flows provided (used) by operating 61,306 20,183 activitiesCash flows - Investing activities:Capital expenditures (22,541 ) (29,072 )

Proceeds from disposal of assets and other 2,085 10,810

Net affiliate investment activity (3,384 ) -

Net cash flows provided (used) by investing (23,840 ) (18,262 )activitiesCash flows - Financing activities:Payments on long-term debt (407,473 ) -

Proceeds under other financing arrangements 1,386 1,990

Payments under other financing arrangements (3,256 ) (4,862 )

Repurchases of common shares (17,531 ) (32,112 )

Payments related to tax withholding for (5,777 ) (3,850 )stock-based compensationPayments of dividends (52,168 ) (52,054 )

Other (6,275 ) (2,844 )

Net cash flows provided (used) by financing (491,094 ) (93,732 )activitiesEffect of exchange rate changes on cash (11,249 ) (17,464 )

Net change in cash and cash equivalents (464,877 ) (109,275 )

Cash and cash equivalents at beginning of period 1,095,274 670,980

Cash and cash equivalents at end of period $ 630,397 $ 561,705

View source version on businesswire.com: https://www.businesswire.com/news/home/20210805005978/en/

CONTACT: Investor Contacts: Jay Roueche, Vice President, Investor Relations & Treasurer, (972) 443-6560 Mike Mullin, Director, Investor Relations, (972) 443-6636

CONTACT: Media Contact: Lars Rosene, Vice President, Corporate Communications & Public Affairs, (972) 443-6644