A global manufacturer of pumps, valves, mechanical seals, and automation gear, Flowserve supplies the heavy machinery that moves fluids through oil refineries, chemical plants, power stations, and water systems — and keeps that installed equipment running with aftermarket parts and service centers around the world. The company itself was formed in 1997 when pump maker BW/IP and valve maker Durco merged, taking a name that blends "flow" with "serve" to signal a focus on both products and service. Though the brand is young, its roots stretch back to Byron Jackson, a California inventor who founded his pump company in 1872, making Flowserve a home for some of the industry's oldest pump names.
Bookings rebounded 25.5% to $1.35B, but gross margin fell 130 bps to 32.9% as realignment charges rose.
rebounded sharply after two quarters of decline, but profitability slipped. fell 1.6% to $1.17B and contracted 130 to 32.9% as a $27.9M increase in overwhelmed pricing gains, though still rose 3.3% to $151.4M on a non-cash acquisition gain. The quarter shows demand recovering while the cost of restructuring eats into the .
Key takeaways
Consolidated rose 25.5% to $1,348.1M, reversing declines in the prior two quarters, driven by a $169.6M increase in energy industry orders.
fell 130 to 32.9% from 34.2% a year ago, as a $27.9M increase in more than offset benefits from the Flowserve Business System and complexity reduction programs.
rose 3.3% to $151.4M, boosted by a $27.7M of the previously held equity interest in FAMCO upon acquiring the remaining 51% stake.
Section summaries
Management's Discussion and Analysis
Q2 2026 bookings rose 25.5% to $1.35B driven by energy orders, while sales fell 1.6% to $1.17B and gross margin declined 130 bps to 32.9% on higher realignment charges.
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Consolidated increased 25.5% to $1,348.1M in Q2 2026, led by a $169.6M rise in energy industry orders, while sales decreased 1.6% to $1,169.2M due to lower original equipment volume.
SG&A was nearly flat at $266.3M, as $9.5M in higher realignment costs and $6.1M in acquisition-related expenses were offset by the absence of $15.5M in prior-year Chart Merger termination costs.
The company received $20.9M in cash refunds during Q2 related to IEEPA tariffs, with a total $35.4M receivable recognized, of which $30.4M reversed cost of sales in Q1 2026.
rose 47.3% to $2,122.4M, following $499.3M in senior note issuances to fund the $517.7M in TVD and FAMCO acquisitions.
What changed
The Q1 2026 watch item on materialized positively: after a 6.4% decline in Q1, bookings rebounded 25.5% in Q2 to $1,348.1M, driven by energy orders, suggesting the softening in original equipment demand may have been temporary rather than the start of a sustained decline.
The Q1 2026 watch item on underlying ex-tariff refund is partially resolved: Q2 gross margin of 32.9% — down 130 and below the ~32.7% underlying rate in Q1 — indicates the true run rate is settling in the low-30s, well below the 34-35% levels reported in recent quarters with one-time benefits.
The $35.4M IEEPA tariff refund receivable flagged in Q1 saw $20.9M collected in cash during Q2, reducing but not eliminating the uncertainty around timing and amount of the remaining balance.
The deployment of the growing cash balance flagged in prior periods is now clearer: cash fell 7.7% sequentially to $731.0M as the company issued $499.3M in new debt and deployed $517.7M for the TVD and FAMCO acquisitions, shifting the capital allocation decisively toward M&A rather than debt reduction.
What to watch
Whether can stabilize above 32% in Q3 2026 now that the $27.9M in Q2 have flowed through, or whether additional restructuring costs continue to pressure profitability.
The trajectory of in Q3 2026 after the 25.5% Q2 rebound — whether the energy-driven order strength is sustained or if Q2 was a one-time catch-up from deferred projects.
How the company manages its $2.12B in following the TVD and FAMCO acquisitions, particularly whether of $112.3M in Q2 is sufficient to service the increased debt load.
The integration and performance of the newly acquired TVD and FAMCO businesses, including whether they contribute positively to margins or introduce purchase accounting adjustments that weigh on future earnings.
margin declined to 32.9% from 34.2% primarily due to a $27.9M increase in , partially offset by benefits from the Flowserve Business System and complexity reduction programs.
SG&A rose slightly to $266.3M, with $9.5M in higher realignment costs and $6.1M in acquisition-related expenses, partly offset by the absence of $15.5M in prior-year costs from the terminated Chart Merger.
increased 3.3% to $151.4M, boosted by a $27.7M non-cash gain on remeasurement of the previously held equity interest in FAMCO upon acquiring the remaining 51% stake.
The company recognized a $35.4M receivable for IEEPA tariff refunds, with $30.4M reversing cost of sales in Q1 2026, and received $20.9M in cash refunds during Q2.
Liquidity remains strong with $731.0M in cash and $763.3M available under the new credit agreement, following $499.3M in senior note issuances and $517.7M in acquisition payments for TVD and FAMCO.
Quantitative and Qualitative Disclosures About Market Risk
Foreign currency translation and transaction exposures are the primary market risk, partially hedged with forward contracts.
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Foreign currency translation losses of $38.2 million were recorded in other comprehensive income for the six months ended June 30, 2026, versus a $159.2 million gain in the prior-year period.
Transactional currency net gains of $2.7 million were recognized in for the six months ended June 30, 2026, compared to a $31.4 million loss a year earlier.
The company uses foreign exchange forward contracts to mitigate transactional exposure, with an aggregate of $342.1 million outstanding as of June 30, 2026, down from $456.9 million at year-end 2025.
A hypothetical 10% adverse change in all foreign exchange rates relative to the U.S. dollar would have reduced by approximately $18.0 million for the six-month period, excluding any offset from forward contracts.
Credit risk from counterparty non-performance on financial instruments is monitored, and the company currently expects counterparties to meet their obligations.
We are party to the legal proceedings that are described in Note 12, "Legal Matters and Contingencies," to our condensed consolidated financial statements included in "Item 1. Financial Statements" of this Quarterly Report, and such disclosure is incorporated by reference into t…
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We are party to the legal proceedings that are described in Note 12, "Legal Matters and Contingencies," to our condensed consolidated financial statements included in "Item 1. Financial Statements" of this Quarterly Report, and such disclosure is incorporated by reference into this "Item 1. Legal Proceedings." In addition to the foregoing, we and our subsidiaries are named defendants in certain other ordinary routine lawsuits incidental to our business and are involved from time to time as parties to governmental proceedings, all arising in the ordinary course of business. Although the outcome of lawsuits or other proceedings involving us and our subsidiaries cannot be predicted with certainty, and the amount of any liability that could arise with respect to such lawsuits or other proceedings cannot be predicted accurately, management does not currently expect the amount of any liability that could arise with respect to these matters, either individually or in the aggregate, to have a material adverse effect on our financial position, results of operations or cash flows.
There are numerous factors that affect our business, financial condition, results of operations, cash flows, reputation and/or prospects, many of which are beyond our control. In addition to other information set forth in this Quarterly Report, careful consideration should be gi…
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There are numerous factors that affect our business, financial condition, results of operations, cash flows, reputation and/or prospects, many of which are beyond our control. In addition to other information set forth in this Quarterly Report, careful consideration should be given to "Item 1A. Risk Factors" in Part I and "Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations" in Part II of our 2025 Annual Report, which contain descriptions of significant factors that might cause the actual results of operations in future periods to differ materially from those currently projected in the forward-looking statements contained therein.
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 June 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.