Ãâ·Ñ³Ô¹Ï

CHARLOTTE, N.C.,ÌýAug. 1, 2018Ìý// --ÌýÃâ·Ñ³Ô¹Ï, Inc. (NYSE: FLOW) today reported results for the quarter endedÌýJune 30, 2018Ìýand reaffirmed its 2018 full year guidance.

"During the second quarter we made solid progress across many fronts on our journey to transform Ãâ·Ñ³Ô¹Ï into a high performing operating enterprise.Ìý ÌýWe continued to grow our high value product lines and aftermarket business, while emphasizing crisp execution across our operations.Ìý Our global team is engaged and committed to building a customer-centric culture, rooted in continuous improvement, and to achieving excellence across all phases of our business.Ìý As we move forward, we see great potential to drive higher customer satisfaction, improved operating performance and greater shareholder value," saidÌýMarc Michael, President and Chief Executive Officer.

Michael continued, "In Q2 we delivered solid growth and improvement versus the prior year period, underscored by 14% order growth, 7% revenue growth and 330 points of operating margin expansion.Ìý Net income wasÌý$23 millionÌýand EPS wasÌý$0.54, up 125% versus the prior year.Ìý We generatedÌý$62 millionÌýof EBITDA, up 41% year-over-year, driven by the revenue growth, savings from cost reduction initiatives and a higher level of productivity in our factories.Ìý As compared to our guidance, we delivered stronger than anticipated results through solid backlog execution which enabled us to offset currency headwinds and a netÌý($0.03)Ìýper share impact from taxes.Ìý Additionally, we strengthened our financial position for the sixth consecutive quarter, by reducing gross debt 3% and net leverage to 2.6x."

"Q2 orders wereÌý$575 millionÌýmarking our highest level of quarterly orders since Q1 2015.Ìý Organic order growth of 12% was broad-based with growth across all three reporting segments, led by sharp, double-digit growth in medium-size capital orders for Food and Beverage systems and North American oil pipeline valves.Ìý Notably, for the second consecutive quarter we delivered high-single digit organic order growth across our highest value food and beverage and industrial product lines, reflecting continued progress executing our growth strategy."ÌýÌýÌý

"On a sequential basis, orders increased 13% in total and 16% organically.Ìý Our backlog remained strong atÌý$1.05 billion, up 13% year-over-year and flat sequentially as 5% organic backlog growth offset a 5% currency headwind during the period."

"For the full year, we reaffirmed guidance for EPS in the range ofÌý$2.21ÌýtoÌý$2.56Ìýper share, EBITDA betweenÌý$240ÌýandÌý$260 millionÌýand Free Cash Flow betweenÌý$105ÌýandÌý$125 million.Ìý Our target revenue range remains betweenÌý$2.055ÌýandÌý$2.105 billionÌýand now reflects mid-single digit organic growth and a 1% currency benefit, as compared to low-single digit organic growth and a 4% currency benefit in our previous guidance," concluded Michael.Ìý

Second Quarter 2018 Consolidated Results

Note:Ìý The commentary below is on an organic basis and as compared to the prior year period.

• Backlog increased 12.4%, orÌý$115.8 millionÌýwith growth across all three segments, including double-digit growth in the Food and Beverage and Industrial backlogs.
• Orders grew 12.5% driven by sharp, double-digit growth in medium-size capital orders for Food and Beverage systems and North American OE pipeline valves.Ìý Orders for Food and Beverage and Industrial components grew double-digits in aggregate and aftermarket orders across the enterprise grew mid-single-digits.
• Revenues* grew 2.5%, primarily driven by increased shipments of Industrial products, and Food and Beverage components.Ìý Aftermarket revenues grew mid-single digits with growth across each segment.
• Operating income wasÌý$48.5 million, or 9.1% of revenues, an increase ofÌý$19.5 million, or 330 points.Ìý The increase in income and margin was driven by the organic growth referenced above, savings from cost reduction initiatives and a higher level of productivity.Ìý Additionally, the company recordedÌý$1.1 millionÌýof special charges, as compared toÌý$6.7 millionÌýin the prior year period.
• Diluted earnings per share wereÌý$0.54, up 125% and included:
  • A net tax charge ofÌý($0.03)Ìýper share as compared to the company's guidance, due primarily to a reduction of previously recorded foreign tax credits available to the company from distributions of income taxed under the transition tax provisions of the U.S. Tax Cuts and Jobs Act.
• EBITDA* increased toÌý$61.9 millionÌýor 41.3%, primarily driven by the increase in operating income noted above.
• Free cash flow* was aÌý($4.2) millionÌýinvestment and includedÌý$7.2 millionÌýof capital expenditures andÌý$6.3 millionÌýof restructuring payments.

Second Quarter 2018 Results by Segment

Food and Beverage

Note:Ìý The commentary below is on an organic basis and as compared to the prior year period.

• Backlog increased 19.1% driven primarily by an increase in dairy processing system orders including two large orders awarded in Q4 2017 which totaledÌý$71.5 million.
• Orders grew 18.5% driven by sharp double-digit growth in system orders, primarily for fresh liquid dairy processing.Ìý Component and aftermarket orders grew mid-single digits.Ìý
• Revenues* grew modestly as growth in component and aftermarket sales was partially offset by a lower level of volume of system revenue.
• The increase in segment income and margin was driven by the organic revenue growth described above, savings from cost reduction initiatives, improved project execution and increased productivity in our Bydgoszcz,ÌýPolandÌýfacility.

Power and Energy

Note:Ìý The commentary below is on an organic basis and as compared to the prior year period.

• Backlog increased 5.8% driven primarily by a higher level of OE pump and valve orders related to North American midstream oil applications and to a lesser extent, nuclear power.
• Orders increased by 14.8% primarily driven by an increased level of demand for oil pipeline valves in the North American midstream market along with an uptick in aftermarket activity for nuclear and upstream pumps.Ìý This growth was partially offset by a lower level of OE orders for nuclear pumps.
• Revenues* decreased (1.6%) due primarily to a lower level of filtration shipments, partially offset by an increase in midstream pipeline valve shipments and modest aftermarket growth.
• The increase in segment income and margin was driven by savings from cost reduction initiatives, a higher margin revenue mix and improved productivity.

Industrial

Note:Ìý The commentary below is on an organic basis and as compared to the prior year period.

• Backlog increased 15.0% with the growth concentrated in the mixer and pump product lines and to a lesser extent, in the dehydration and hydraulic tools product lines.
• Orders grew 5.5% led by growth across the hydraulic tools, mixer and heat exchanger product lines, and to a lesser extent pumps.Ìý
• Revenues* grew 7.8%, driven by solid aftermarket growth and increased shipments of dehydration equipment, pumps, mixers, and hydraulic tools.
• The segment income growth and margin expansion was driven by the organic growth described above, as well as savings from cost reduction initiatives.

OTHER ITEMS

Debt Repayment:ÌýÌýÌýIn Q2 2018 the company made a voluntary prepayment ofÌý$20.0 millionÌýon its term loan.Ìý This payment, coupled with the required quarterly principal payment ofÌý$5.0 million, reduced the outstanding principal balance of the term loan toÌý$210.0 million.

Form 10-Q:ÌýThe company expects to file its quarterly report on Form 10-Q for the quarter endedÌýJune 30, 2018Ìýwith the Securities and Exchange Commission onÌýAugust 1, 2018. This news release should be read in conjunction with that filing, which will be available on the company's website atÌý, in the Investor Relations section.

Ãâ·Ñ³Ô¹Ï Ãâ·Ñ³Ô¹Ï, Inc.:ÌýÌýÌýÌýBased inÌýCharlotte, North Carolina,ÌýÃâ·Ñ³Ô¹Ï, Inc.Ìý(NYSE: FLOW) innovates with customers to help feed and enhance the world by designing, delivering and servicing high value solutions at the heart of growing and sustaining our diverse communities. The company's product offering is concentrated in rotating, actuating and hydraulic technologies, as well as automated process systems, into food and beverage, industrial and power and energy markets.ÌýÃâ·Ñ³Ô¹ÏÌýhas approximatelyÌý$2 billionÌýin annual revenues with operations in more than 30 countries and sales in more than 150 countries. To learn more about Ãâ·Ñ³Ô¹Ï, please visitÌý.

*Non-GAAP measure. See attached schedules for reconciliation from most comparable GAAP measure.Ìý Management believes these Non-GAAP metrics are commonly used financial measures for investors to evaluate our operating performance for the periods presented, and when read in conjunction with our condensed consolidated financial statements, present a useful tool to evaluate our ongoing operations and provide investors with metrics they can use to evaluate our management of the business from period to period. In addition, these are some of the factors we use in internal evaluations of the overall performance of our business.Ìý

Management acknowledges that there are many items that impact a company's reported results and the adjustments reflected in these Non-GAAP measures are not intended to present all items that may have impacted these results. In addition, these Non-GAAP measures are not necessarily comparable to similarly-titled measures used by other companies.

⁽¹⁾ÌýOrganic revenue growth (decline) is calculated on a constant currency basis and excludes the net impact related to the adoption of the ASC 606 revenue recognition standard.

Note:Ìý Net leverage is as defined by the company's credit facility.

Certain statements in this press release are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and are subject to the safe harbor created thereby. Please read these results in conjunction with the company's documents filed with the Securities and Exchange Commission. These filings identify important risk factors and other uncertainties that could cause actual results to differ from those contained in the forward-looking statements. Actual results may differ materially from these statements. The words "expect", "anticipate", "plan", "target", "project", "believe" and similar expressions identify forward-looking statements. Although the company believes that the expectations reflected in its forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. In addition, estimates of future operating results are based on the company's current complement of businesses, which is subject to change.Ìý Statements in this press release speak only as of the date of this press release, and Ãâ·Ñ³Ô¹Ï disclaims any responsibility to update or revise such statements.

Investor and Media Contact:
Ryan Taylor, Vice President, Communications and Investor RelationsÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý
Phone: 704-752-4486ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý
Email:Ìýinvestor@Ãâ·Ñ³Ô¹Ï.com

Ìý

Ìý

Ìý

Ìý

Ìý

Ìý

Ìý

Ìý

Ìý

Ìý

Ìý

Ìý

Ìý

Ìý

Ìý

Ìý

View original content:

SOURCE Ãâ·Ñ³Ô¹Ï, Inc.