The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with our condensed consolidated
financial statements and notes thereto, and the other financial data included
elsewhere in this Quarterly Report. The following discussion should also be read
in conjunction with our audited consolidated financial statements, and notes
thereto, and "Management's Discussion and Analysis of Financial Condition and
Results of Operations" ("MD&A") included in our 2021 Annual Report.

EXECUTIVE OVERVIEW

Our Company



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,
chemical, power generation and water management, as well as general industrial
markets where our products and services add value. 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, repair and retrofitting. We currently employ approximately 15,000
employees in more than 50 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 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 significantly 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 service and solutions business, which is primarily
served by our network of 153 QRCs 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 business strategy.

Our operations are conducted through two business segments that are referenced throughout this MD&A:

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

•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.


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Our business segments share a focus on industrial flow control technology and
have a number of common customers. These segments also have complementary
product offerings and technologies that are often combined in applications that
provide us a net competitive advantage. Our segments also benefit from our
global footprint and our economies of scale in reducing administrative and
overhead costs to serve customers more cost effectively. For example, our
segments share leadership for operational support functions, such as sales,
research and development, marketing and supply chain.

The reputation of our product portfolio is built on more than 50 well-respected
brand names such as Worthington, IDP, Valtek, Limitorque, Durco, Argus, Edward,
Valbart and 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 companies, including some of the world's
leading engineering, procurement and construction ("EPC") firms, original
equipment manufacturers, distributors and end users.

We continue to leverage our QRC network to be positioned as near to customers as
possible for service and support in order to capture valuable aftermarket
business. Along with maintaining the local capability to sell, install and
service our equipment in remote regions, it is equally imperative to
continuously improve our global operations. Despite headwinds caused by the
COVID-19 pandemic, we continue to enhance our global supply chain capabilities
to increase our ability to meet global customer demands and improve the quality
and timely delivery of our products over the long-term. Additionally, we
continue to devote resources to improve the supply chain processes across our
business segments and find areas of synergy and cost reduction, all along
improving our supply chain management capability to meet global customer
demands. We also remain focused on improving on-time delivery and quality, while
managing warranty costs as a percentage of sales across our global operations,
through the assistance of a focused Continuous Improvement Process ("CIP")
initiative. The goal of the CIP initiative, 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.

COVID-19 Update



Our cross-functional crisis management team established during the first quarter
of 2020 has continued monitoring and making recommendations to management to
help us continue operating as an essential business, while also protecting the
health and safety of our associates. We continue to actively monitor the impacts
of the COVID-19 pandemic on all aspects of our business and geographies.

While we cannot reasonably estimate with certainty the duration and severity of
the COVID-19 pandemic or its ultimate impact on the global economy, our business
or our financial condition and results, we nonetheless remain committed to
providing the critical support, products and services that our customers rely
on, and currently believe that we will emerge from these events well positioned
for long-term growth.

Health and Safety of Our Associates



The health and safety of our associates, suppliers and customers around the
world continues to be a priority as we navigate the COVID-19 pandemic, including
recent spikes in cases of the virus and its variants in various geographies in
which we operate. These recent spikes related to the Omicron variant have caused
significant disruption in certain geographies where we operate, including in
Europe and China, which contributed to the labor availability and other COVID-19
operational challenges faced during the first quarter of 2022. Our associates
have continued to demonstrate strong resilience in adapting to continually
evolving health and safety guidelines while addressing these challenging times
and providing products and services to our customers.

At the beginning of the pandemic we implemented policies and practices to help
protect our workforce so they can safely and effectively carry out their vital
work, and we have continued to revise those policies and practices in light of
guidance received from local and regional health authorities where appropriate.

Our employees and facilities have a key role in keeping essential infrastructure
and industries operating, including oil and gas, water, chemical, power
generation and other essential industries, such as food and beverage and
healthcare. While all of our facilities generally remain open and operational,
we continue to occasionally experience temporary shutdowns in specific
geographies as a result of COVID-19 disruption, such as the recent
government-mandated shutdowns in Shanghai, China. The measures described above,
combined with continued employee costs and under-absorption of manufacturing
costs as a result of temporary closures and work-from-home policies, have had
and are expected to continue having an adverse impact on our financial
performance throughout the remainder of the pandemic. Despite the increased
challenges of labor availability in the first quarter of 2022, we continue to
expect a decline of these adverse impacts as we navigate further through the
pandemic in 2022.

Customer Demand
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During the first three months of 2022, the ongoing effects of the COVID-19
pandemic in global markets has continued to adversely impact our customers,
particularly in the oil and gas markets. As a result of the pandemic's effect
(among certain other effects) on oil prices during 2020, many of our large
customers reduced capital expenditures and budgets in 2020. To date, while
spending for maintenance and repair projects and aftermarket services have
returned close to pre-pandemic levels over the past several quarters,
project-based customer spending has yet to return to pre-pandemic levels despite
some meaningful improvement in the first three months of 2022. In this regard,
we saw an overall increase in bookings of 14.9% in the first three months of
2022 as compared to the same period in 2021. Despite the meaningful improvement
in customer spending, during the first quarter of 2022 we continued to
experience customer-driven delays in the witnessing and inspection necessary to
take delivery of equipment, which we expect will continue as long as we and our
customers continue to experience the supply chain and logistics headwinds
described below under the heading "Supply Chain Impact."

While many of the repair and maintenance projects that were paused by our
customers in 2020 as a result of the pandemic were completed in 2021, repair and
maintenance delays continued in 2021 and the first quarter of 2022, that will
ultimately need to be completed, the timing will largely depend on the duration
of the COVID-19 pandemic and how the virus continues to spread in our customers'
various geographies, given the impact of the pandemic on demand, utilization and
required maintenance. While we saw some recovery in capital expenditure budgets
in the first quarter of 2022, capital spending did not approach pre-pandemic
levels. We expect planned capital spending to increase through the rest of 2022
but remain below pre-pandemic levels.

Supply Chain Impact



Since the onset of the pandemic, many of our suppliers have also experienced
varying lengths of production and shipping delays related to the COVID-19
pandemic and its effects, some of which continue to exist in highly affected
countries. Additionally, the additional global supply chain and logistics
constraints that have been affecting global markets since the third quarter of
2021 have continued to cause additional headwinds in the first quarter of 2022.
These conditions have had an adverse effect on the speed at which we can
manufacture and ship our products to customers, and have also led to an increase
in logistics, transportation and freight costs, requiring that we diversify our
supply chain and, in some instances, source materials from new suppliers.
Additionally, these conditions have in some cases impacted our ability to
deliver products to customers on time, which has in turn led to an increase in
backlog at some of our manufacturing sites. These disruptions in our supply
chain and their effects have continued and we expect they will continue as the
COVID-19 pandemic and ongoing global supply chain and logistics headwinds
continue.

Operational Impacts



We have engaged in a number of cost savings measures in order to help mitigate
certain of the adverse effects of the COVID-19 pandemic on our financial
results, including certain realignment activities (further described below under
"RESULTS OF OPERATIONS - Three months ended March 31, 2022 and 2021"),
reductions in capital expenditures and continued cuts in other discretionary
spending due to our response to the effects of COVID-19, which partially offsets
the continued costs and operational impacts of the safety protocols and
procedures that we have implemented and sustained as described above under the
heading "Health and Safety of Our Associates." We continue to evaluate
additional cost savings measures in order to reduce the impact of the COVID-19
pandemic on our financial results.

We continually monitor and assess the spread of COVID-19 and known variants,
including in areas that have seen recent increases in cases, and we will
continue to adapt our operations to respond the changing conditions as needed.
During the first quarter, we continued to experience the same increased
difficulty in maintaining staffing and productivity levels due to both a higher
quarantine rate and a tighter labor market for new hiring as we experienced in
the second half of 2021. As we continue to
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manage our business through this time of uncertainty and market volatility, we
will remain focused on the health and safety of our associates, suppliers,
customers, and will continue to provide essential products and services to our
customers.

Impact of Russia-Ukraine Conflict on our Business



In response to the recent and ongoing military conflict in Ukraine, 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 February 2022 we stopped accepting new orders in Russia and
temporarily suspended fulfillment of existing orders. In March 2022, we made the
decision to permanently cease all Company operations in Russia. We have
commenced the necessary actions to cease operations of our Russian subsidiary,
including taking steps to cancel existing contracts with customers, terminate
our approximately 50 Russia-based employees and terminate other related
contractual commitments, and currently expect this process to continue
throughout 2022.

In 2021 our Russian subsidiary had approximately $14 million of sales with an
additional $36 million of sales from certain of our other foreign subsidiaries
into the Russian market. As of March 31, 2022, the net assets held on our
Russian subsidiary's balance sheet were $2.7 million, including $7.1 million of
cash, $3.6 million of accounts receivables, net, a $9.3 million net intercompany
payable position and other immaterial amounts. In addition, certain of our other
foreign subsidiaries had open contracts with Russian customers that were
subsequently cancelled for which revenue had been previously recognized over
time utilizing the percentage of completion ("POC") method. As a result of the
above, in the first quarter of 2022 we recorded a $20.2 million pre-tax charge
($21.0 million after-tax) to reserve the asset positions of our Russian
subsidiary (excluding cash) as of March 31, 2022, to record a contra-revenue for
previously recognized revenue and estimated cancellation fees on open contracts
that were previously accounted for under POC and subsequently canceled, to
establish a reserve for the estimated cost to exit the operations of our Russian
subsidiary and to record a reserve for our estimated financial exposure on
contracts that have or are anticipated to be cancelled.

The following table presents the above impacts of the Russia pre-tax charge:

                                                                   Three Months Ended March 31, 2022
(Amounts in thousands)                                    FPD              

    FCD             Consolidated Total
Sales                                               $      (5,429)         $       (2)         $           (5,431)
Cost of sales                                               3,510               1,112                       4,622
Gross loss                                                 (8,939)             (1,114)                    (10,053)
Selling, general and administrative expense                 9,111               1,082                      10,193
Operating loss                                      $     (18,050)         $   (2,196)         $          (20,246)


We continue to monitor the situation involving Russia and Ukraine and its impact
on the rest of our global business. To date, these impacts have not been
material to our business and we do not currently expect that any incremental
impact in future quarters, including any financial impacts caused by our
cancellation of customer contracts and ceasing of operations in Russia, will be
material to the Company.

2022 Outlook

As the world continues to make progress against COVID-19 largely through
increased vaccinations, we have seen an inflection in our served end-markets as
commodity prices and mobility levels increase. With our increased backlog and
improved market environment we expect to return to growth in 2022, however the
combined effects of the supply chain, logistics and labor availability headwinds
are expected to continue into the first half of 2022. Further, we have not seen
and do not expect to see an increase in cancellations from our backlog. We
therefore expect to continue to deliver on our backlog during 2022, though with
a slightly longer cycle time than originally expected.

As of March 31, 2022, we have cash and cash equivalents of $575.8 million and
$383.5 million of borrowings available under our Senior Credit Facility. 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. Additionally, we expect that the costs savings
measures planned and already in place will enable us to maintain adequate
liquidity over the next 12 months as we manage through the current market
environment. We will continue to actively monitor the potential impacts of
COVID-19 and related events on the credit markets in order to maintain
sufficient liquidity and access to capital 12 months from the issuance date of
these financial statements.


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RESULTS OF OPERATIONS - Three months ended March 31, 2022 and 2021



Throughout this discussion of our results of operations, we discuss the impact
of fluctuations in foreign currency exchange rates. We have calculated currency
effects on operations by translating current year results on a monthly basis at
prior year exchange rates for the same periods.

In the second quarter of 2020, we identified and initiated certain realignment
activities to right-size our organizational operations based on the current
business environment, with the overall objective to reduce our workforce costs.
We anticipate a total investment in 2020 Realignment Program activities of
approximately $95 million and the vast majority of the charges were incurred in
2020 and 2021 with the remainder to be incurred in 2022.

Realignment Activity

The following tables present out realignment activity by segment related to our 2020 Realignment Program:



                                                                                      Three Months Ended March 31, 2022

                                                                                       Subtotal-Reportable           Eliminations and
(Amounts in thousands)                            FPD                  FCD                   Segments                   All Other             Consolidated Total
Total Realignment Charges
COS                                         $     (83)             $    (54)         $                (137)         $           (61)         $             (198)
SG&A                                               75                    17                             92                     (293)                       (201)

Total                                       $      (8)             $    (37)         $                 (45)         $          (354)         $             (399)



                                                                                    Three Months Ended March 31, 2021

                                                                                  Subtotal-Reportable           Eliminations and
 (Amounts in thousands)                         FPD               FCD                   Segments                   All Other              Consolidated Total
Total Realignment Charges
   COS                                      $  7,919          $    897          $               8,816          $           590          $             9,406
   SG&A                                          157          $    859                          1,016                    3,280                        4,296

Total                                       $  8,076          $  1,756          $               9,832          $         3,870          $            13,702




Consolidated Results

Bookings, Sales and Backlog

                               Three Months Ended March 31,
(Amounts in millions)                2022                   2021
Bookings                $        1,086.1                  $ 945.0
Sales                              821.1                    857.3




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 March 31, 2022 increased by $141.1 million, or 14.9%,
as compared with the same period in 2021. The increase included negative
currency effects of approximately $26 million. The increase was driven by
increased customer orders in the oil and gas, power generation and the water
management industries, partially offset by decreased customer orders in the
chemical and general industries. The increase in customer bookings was more
heavily weighted towards aftermarket bookings.
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Sales for the three months ended March 31, 2022 decreased by $36.2 million, or
4.2%, as compared with the same period in 2021. The decrease included negative
currency effects of approximately $19 million and $5.4 million of negative
impact as a result of the reserve of our Russia exposure. The decreased sales
were driven by both original equipment and aftermarket, with decreased sales
into Europe, Asia Pacific and the Middle East and Africa, partially offset by
increased sales into Latin America and North America. Net sales to international
customers, including export sales from the U.S., were approximately 62% and 68%
of total sales for the three months ended March 31, 2022 and 2021, respectively.

Backlog represents the aggregate value of booked but uncompleted customer orders
and is influenced primarily by bookings, sales, cancellations and currency
effects. Backlog of $2,229.8 million at March 31, 2022 increased by $226.2
million, or 11.3%, as compared with December 31, 2021 and include the negative
impact of $25.2 million of order cancellations in the first quarter of 2022 due
to our exposure in Russia. Currency effects provided a decrease of approximately
$15 million. Approximately 38% of the backlog at both March 31, 2022 and
December 31, 2021 was related to aftermarket orders. Backlog includes our
unsatisfied (or partially unsatisfied) performance obligations related to
contracts having an original expected duration in excess of one year of
approximately $544 million, as discussed in Note 2 to our condensed consolidated
financial statements included in this Quarterly Report.

Gross Profit and Gross Profit Margin



                                                   Three Months Ended March

31,


(Amounts in millions, except percentages)         2022                          2021
Gross profit                                $       209.6                    $ 250.9
Gross profit margin                                  25.5   %                   29.3  %



Gross profit for the three months ended March 31, 2022 decreased by $41.3
million, or 16.5%, as compared with the same period in 2021. Gross profit margin
for the three months ended March 31, 2022 of 25.5% decreased from 29.3% for the
same period in 2021. The decrease in gross profit margin was primarily due to
revenue recognized on lower margin original equipment orders, lower conversion
of customer backlog to revenue and increased freight costs largely due to global
supply chain and logistics constraints, a $4.6 million charge taken in the first
quarter of 2022 related to our financial exposure in Russia and under absorption
of fixed manufacturing costs. Aftermarket sales represented approximately 53% of
total sales for both periods in 2022 and 2021.

Selling, General and Administrative Expense



                                                   Three Months Ended March

31,


(Amounts in millions, except percentages)         2022                          2021
SG&A                                        $       206.1                    $ 198.3
SG&A as a percentage of sales                        25.1   %                   23.1  %



SG&A for the three months ended March 31, 2022 increased by $7.8 million, or
3.9%, as compared with the same period in 2021. Currency effects yielded a
decrease of approximately $5 million. SG&A as a percentage of sales for the
three months ended March 31, 2022 increased 200 basis points primarily due to a
$10.2 million charge taken in the first quarter of 2022 related to our financial
exposure in Russia and lower sales leverage, partially offset by lower
broad-based annual incentive compensation as compared with the same period in
2021.

Net Earnings from Affiliates


                                        Three Months Ended March 31,
(Amounts in millions)                         2022                     2021
Net earnings from affiliates   $           3.9                        $ 3.5



Net earnings from affiliates for the three months ended March 31, 2022 increased
$0.4 million, or 11.4%, as compared with the same period in 2021. The increase
was primarily a result of increased earnings of our FPD joint venture in South
Korea.

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Operating Income and Operating Margin



                                                    Three Months Ended March 31,
(Amounts in millions, except percentages)         2022

2021


Operating income                            $        7.4                        $ 56.1
Operating income as a percentage of sales            0.9    %                      6.5  %




Operating income for the three months ended March 31, 2022 decreased by $48.7
million, or 86.8%, as compared with the same period in 2021. The decrease
included currency benefits of approximately $1 million. The decrease was
primarily a result of the $41.3 million decrease in gross profit and the $7.8
million increase in SG&A.

Interest Expense and Interest Income



                               Three Months Ended March 31,
(Amounts in millions)                2022                   2021
Interest expense        $        (10.7)                   $ (16.8)
Interest income                    0.9                        0.6



Interest expense for the three months ended March 31, 2022 decreased $6.1
million, as compared with the same period in 2021, primarily due to lower debt
outstanding and foreign currency exchange rate movements as compared with the
same period in 2021.

Loss on Extinguishment of Debt




                                         Three Months Ended March 31,
(Amounts in millions)                          2022                    2021
Loss on extinguishment of debt   $         -                         $

(7.6)





Loss on extinguishment of debt for the three months ended March 31, 2021 of $7.6
million resulted from the loss on early extinguishment of our 2022 Euro Senior
Notes in the first quarter of 2021.

Other Income (Expense), Net

                                      Three Months Ended March 31,
(Amounts in millions)                      2022                    2021
Other income (expense), net   $         (8.1)                    $ (11.4)


Other expense, net for the three months ended March 31, 2022 decreased $3.3
million as compared with the same period in 2021, due primarily to a $12.3
million decrease in losses from transactions in currencies other than our sites'
functional currencies, partially offset by a $8.5 million increase in losses
arising from transactions on foreign exchange contracts. The net change was
primarily due to the foreign currency exchange rate movements in the Canadian
dollar, Brazilian real, Euro, and Japanese yen in relation to the U.S. dollar
during the three months ended March 31, 2022, as compared with the same period
in 2021.
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Income Taxes and Tax Rate

                                                     Three Months Ended March 31,
(Amounts in millions, except percentages)          2022

2021


Provision for (benefit from) income taxes   $         3.2                         $ 3.8
Effective tax rate                                  (30.5)   %                     18.1  %


The effective tax rate of (30.5)% for the three months ended March 31, 2022
decreased from 18.1% for the same period in 2021. The effective tax rate varied
from the U.S. federal statutory rate for the three months ended March 31, 2022
primarily due to the current and anticipated tax impact of the Russia-Ukraine
conflict on our business, partially offset by the net impact of foreign
operations. Refer to Note 13 to our condensed consolidated financial statements
included in this Quarterly Report for further discussion.

Other Comprehensive Income (Loss)



                                            Three Months Ended March 31,
(Amounts in millions)                             2022

2021


Other comprehensive income (loss)   $          (13.1)                    $

(6.4)




Other comprehensive loss for the three months ended March 31, 2022 increased
$6.7 million as compared to the same period in 2021. The increased loss was
primarily due to foreign currency translation adjustments resulting primarily
from exchange rate movements of the Euro, British pound, Brazilian real, and
Mexican peso versus the U.S. dollar during the three months ended March 31,
2022, as compared with the same period in 2021.

Business Segments



We conduct our operations through two business segments based on the type of
product and how we manage the business. We evaluate segment performance and
allocate resources based on each segment's operating income. The key operating
results for our two business segments, FPD and FCD, are discussed below.

Flowserve Pump Division Segment Results



Our largest business segment is FPD, through which we design, manufacture,
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 primarily
operates in the oil and gas, power generation, chemical and general industries.
FPD operates in 49 countries with 35 manufacturing facilities worldwide, 10 of
which are located in Europe, 11 in North America, eight in Asia and six in Latin
America, and it operates 133 QRCs, including those co-located in manufacturing
facilities and/or shared with FCD.

                                                                       Three Months Ended March 31,
(Amounts in millions, except percentages)                               2022                   2021
Bookings                                                          $       795.6           $     653.8
Sales                                                                     575.6                 602.6
Gross profit                                                              156.9                 182.9
Gross profit margin                                                        27.3   %              30.4  %
SG&A                                                                      139.8                 132.6

Segment operating income                                                   21.0                  53.8
Segment operating income as a percentage of sales                           3.6   %               8.9  %



Bookings for the three months ended March 31, 2022 increased by $141.8 million,
or 21.7%, as compared with the same period in 2021. The increase included
negative currency effects of approximately $19 million. The increase in customer
bookings was driven by increased customer orders in the oil and gas, power
generation and water management industries, partially offset by decreased
customer orders in the general and chemical industries. Customer bookings
increased $24.0 million into North America, $52.0 million into the Middle East,
$75.1 million into Europe, $18.1 million into Asia Pacific and $0.3 million into
Africa and were partially offset by decreased customer orders of $9.4 million
into Latin America. The increase was more heavily weighted towards aftermarket
bookings.
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Sales for the three months ended March 31, 2022 decreased by $27.0 million, or
4.5% as compared with the same period in 2021 and included negative currency
effects of approximately $14 million and $5.4 million of negative impact as a
result of the reserve of our Russia exposure. The decrease was more heavily
weighted by customer original equipment sales. Decreased customer sales of $23.4
million into Asia Pacific, $15.0 million into Europe, $5.7 million into the
Middle East and $5.4 million into Africa, were partially offset by increased
sales of $14.2 million into North America and $5.5 million into Latin America.

Gross profit for the three months ended March 31, 2022 decreased by $26.0
million, or 14.2%, as compared with the same period in 2021. Gross profit margin
for the three months ended March 31, 2022 of 27.3% decreased from 30.4% for the
same period in 2021. The decrease in gross profit margin was primarily
attributable to revenue recognized on lower margin original equipment orders,
lower conversion of customer backlog to revenue and increased freight costs
largely due to global supply chain and logistics constraints, a $3.5 million
charge taken in the first quarter of 2022 related to our financial exposure in
Russia and under absorption of fixed manufacturing costs, partially offset by a
mix shift to higher margin aftermarket as compared to the same period in 2021.

SG&A for the three months ended March 31, 2022 increased by $7.2 million, or
5.4%, as compared with the same period in 2021. Currency effects provided a
decrease of approximately $4 million. The increase in SG&A was primarily due a
$9.1 million charge taken in the first quarter of 2022 related to our financial
exposure in Russia, partially offset by lower broad-based annual incentive
compensation as compared to the same period in 2021.

Operating income for the three months ended March 31, 2022 decreased by $32.8
million, or 61.0%, as compared with the same period in 2021. The decrease
included currency benefits of approximately $1 million. The decrease was
primarily due to the $26.0 million decrease in gross profit and the $7.2 million
increase in SG&A.

Backlog of $1,563.5 million at March 31, 2022 increased by $194.6 million, or
14.2%, as compared with December 31, 2021 and include the negative impact of
$19.0 million of order cancellations in the first quarter of 2022 due to our
exposure in Russia. Currency effects provided a decrease of approximately $10
million.

Flow Control Division Segment Results



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. FCD has a total of 44 manufacturing
facilities and QRCs in 22 countries around the world, with five of its 19
manufacturing operations located in the U.S., eight located in Europe, 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.

                                                                       Three Months Ended March 31,
(Amounts in millions, except percentages)                               2022                   2021
Bookings                                                          $       294.3           $     294.0
Sales                                                                     247.9                 255.8
Gross profit                                                               59.5                  74.6
Gross profit margin                                                        24.0   %              29.2  %
SG&A                                                                       44.3                  49.9

Segment operating income                                                   15.2                  24.7
Segment operating income as a percentage of sales                           6.1   %               9.7  %


Bookings for the three months ended March 31, 2022 increased by $0.3 million, or
0.1%, as compared with the same period in 2021. Bookings included negative
currency effects of approximately $6 million. The increase in customer bookings
was primarily driven by increased customer orders in the chemical, oil and gas
and general industries, substantially offset by decreased customer orders in the
power generation industry. Increased customer orders of $6.7 million into North
America, $8.7 million into Europe, $1.8 million into the Middle East and $0.4
million into Latin America were substantially offset by decreased customer
orders of $15.1 million into Asia Pacific and $0.5 million into Africa. The
increase was driven by customer original equipment bookings.

Sales for the three months ended March 31, 2022 decreased $7.9 million, or 3.1%,
as compared with the same period in 2021. The decrease included negative
currency effects of approximately $5 million. Decreased sales were driven by
original equipment sales. The decrease was primarily driven by decreased
customer sales of $11.2 million into Asia Pacific, $3.1 million into Africa,
$3.4 million into the Middle East, $7.2 million into Europe and $1.3 million
into Latin America, partially offset by increased customer sales of $17.1
million into North America.
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Gross profit for the three months ended March 31, 2022 decreased by $15.1
million, or 20.2%, as compared with the same period in 2021. Gross profit margin
for the three months ended March 31, 2022 of 24.0% decreased from the 29.2% for
the same period in 2021. The decrease in gross profit margin was primarily
attributable to lower conversion of customer backlog to revenue and increased
freight costs largely due to global supply chain and logistics constraints and a
$1.1 million charge taken in the first quarter of 2022 related to our financial
exposure in Russia as compared to the same period in 2021.

SG&A for the three months ended March 31, 2022 decreased by $5.6 million, or
11.2%, as compared with the same period in 2021. Currency effects provided a
decrease of less than one million. The decrease in SG&A was primarily due to
lower broad-based annual incentive compensation, partially offset by a $1.1
million charge taken in the first quarter of 2022 related to our financial
exposure in Russia as compared to the same period in 2021.

Operating income for the three months ended March 31, 2022 decreased by $9.5
million, or 38.5%, as compared with the same period in 2021. The decrease
included negative currency effects of less than one million. The decrease was
primarily due to the $15.1 million decrease in gross profit, partially offset by
the $5.6 million decrease in SG&A.

Backlog of $672.3 million at March 31, 2022 increased by $32.5 million, or 5.1%,
as compared with December 31, 2021 and include the negative impact of $9.8
million of order cancellations in the first quarter of 2022 due to our exposure
in Russia. Currency effects provided a decrease of approximately $5 million.

LIQUIDITY AND CAPITAL RESOURCES

Cash Flow and Liquidity Analysis



                                                                      Three Months Ended March 31,
(Amounts in millions)                                                  2022                    2021

Net cash flows provided (used) by operating activities $ (26.8) $ 36.4 Net cash flows provided (used) by investing activities

                     (12.2)                 (9.5)
Net cash flows provided (used) by financing activities                     (38.4)               (449.9)


Existing cash, cash generated by operations and borrowings available under the
Senior Credit Facility are our primary sources of short-term liquidity. We
monitor the depository institutions that hold our cash and cash equivalents on a
regular basis, and we believe that we have placed our deposits with creditworthy
financial institutions. Our sources of operating cash generally include the sale
of our products and services and the conversion of our working capital,
particularly accounts receivable and inventories. Our cash balance at March 31,
2022 was $575.8 million as compared with $658.5 million at December 31, 2021.

Our cash balance decreased by $82.7 million to $575.8 million at March 31, 2022,
as compared with December 31, 2021. The cash activity during the first three
months of 2022 included cash used by operating activities, $26.1 million in
dividend payments, $14.1 million in capital expenditures and $7.6 million of
payments on our Term Loan.

For the three months ended March 31, 2022, our cash used by operating activities
was $26.8 million, as compared to cash provided of $36.4 million for the same
period in 2021. Cash flow provided from working capital increased slightly for
the three months ended March 31, 2022, due primarily to decreased cash flows
used by accounts payable, substantially offset by increased cash flows used or
decreased cash flows provided by accounts receivable, inventory, contract assets
and contract liabilities as compared to the same period in 2021.

Decreases in accounts receivable provided $5.0 million of cash flow for the three months ended March 31, 2022, as compared to $9.0 million for the same period in 2021. As of March 31, 2022, our days' sales outstanding ("DSO") was 80 days as compared with 77 days as of March 31, 2021.



Increases in contract assets used $5.7 million of cash flow for the three months
ended March 31, 2022, as compared with cash flows used of $2.2 million for the
same period in 2021.

Increases in inventory used $48.7 million and $17.0 million of cash flow for the
three months ended March 31, 2022 and March 31, 2021, respectively. Inventory
turns were 3.3 times at March 31, 2022, as compared to 3.6 as of March 31, 2021.

Increases in accounts payable provided $8.2 million of cash flow for the three
months ended March 31, 2022, as compared with $47.1 million cash used for the
same period in 2021. Increases in accrued liabilities and income taxes payable
provided $7.3 million of cash flow for the three months ended March 31, 2022, as
compared with $0.2 million for the same period in 2021.

Increases in contract liabilities provided $2.6 million of cash flow for the
three months ended March 31, 2022, as compared to cash flows provided of $9.0
million for the same period in 2021.
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Cash flows used by investing activities during the three months ended March 31,
2022 were $12.2 million, as compared to $9.5 million for the same period in
2021. Capital expenditures during the three months ended March 31, 2022 were
$14.1 million, an increase of $2.6 million as compared with the same period in
2021. Our capital expenditures are generally focused on strategic initiatives to
pursue information technology infrastructure, ongoing scheduled replacements and
upgrades and cost reduction opportunities. In 2022, we currently estimate
capital expenditures to be between $60 million and $70 million before
consideration of any acquisition activity. In addition, proceeds received during
the three months ended March 31, 2022 from disposal of assets provided $1.8
million. Proceeds received during the three months ended March 31, 2021 from
disposal of assets provided $1.9 million.

Cash flows used by financing activities during the three months ended March 31,
2022 were $38.4 million, as compared to $449.9 million for the same period in
2021. Cash outflows in the three months ended March 31, 2022 resulted primarily
from the $7.6 million of payments on our Term Loan and $26.1 million of dividend
payments. Cash outflows during the three months ended March 31, 2021 resulted
primarily from a $407.5 million payment on long-term debt resulting from the
redemption of our 2022 Euro Senior Notes, $26.5 million of dividend payments and
the repurchase of $5.1 million of common shares.

Our Amended and Restated Credit Agreement matures in September 13, 2026.
Approximately $25 million of our outstanding Term Loan Facility is due to mature
in the remainder of 2022 and approximately $40 million in 2023. As of March 31,
2022, we had an available capacity of $383.5 million on our Senior Credit
Facility, which provides for a $800.0 million unsecured revolving credit
facility with a maturity date of September 13, 2026. Our borrowing capacity is
subject to financial covenant limitations based on the terms of our Senior
Credit Facility and is also reduced by outstanding letters of credit. Our Senior
Credit Facility is committed and held by a diversified group of financial
institutions. Refer to Note 6 to our condensed consolidated financial statements
included in this Quarterly Report for additional information concerning our
Senior Credit Facility.

During the three months ended March 31, 2022 we made no cash contributions to
our U.S. pension plan. At December 31, 2021 our U.S. pension plan was fully
funded as defined by applicable law. After consideration of our funded status,
we currently anticipate making $20 million in contributions to our U.S. pension
plan in 2022, excluding direct benefits paid. We continue to maintain an asset
allocation consistent with our strategy to maximize total return, while reducing
portfolio risks through asset class diversification.

Considering our current debt structure and cash needs, we currently believe cash
flows generated from operating activities combined with availability under our
Senior Credit Facility and our existing cash balance will be sufficient to meet
our cash needs for the next 12 months. Cash flows from operations could be
adversely affected by economic, political and other risks associated with sales
of our products, operational factors, competition, fluctuations in foreign
exchange rates and fluctuations in interest rates, among other factors. See
"Financing" and "Cautionary Note Regarding Forward-Looking Statements" below.

As of March 31, 2022, we have $96.1 million of remaining capacity for Board of
Directors approved share repurchases. While we currently intend to continue to
return cash through dividends and/or share repurchases for the foreseeable
future, any future returns of cash through dividends and/or share repurchases
will be reviewed individually, declared by our Board of Directors at its
discretion and implemented by management.

Financing

Credit Facilities



See Note 6 to our condensed consolidated financial statements included in this
Quarterly Report for a discussion of our Senior Credit Facility and related
covenants. We were in compliance with all applicable covenants under our Senior
Credit Facility as of March 31, 2022.

As of March 31, 2022, we have cash and cash equivalents of $575.8 million and
$383.5 million of borrowings available under our Senior Credit Facility. 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. Additionally, we expect that the costs savings
measures planned and already in place will enable us to maintain adequate
liquidity over the next 12 months as we manage through the current market
environment. We will continue to actively monitor the potential impacts of
COVID-19 and related events on the credit markets in order to maintain
sufficient liquidity and access to capital 12 months from the issuance date of
these financial statements.
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CRITICAL ACCOUNTING POLICIES AND ESTIMATES



Management's discussion and analysis of financial condition and results of
operations are based on our condensed consolidated financial statements and
related footnotes contained within this Quarterly Report. Our critical
accounting policies used in the preparation of our condensed consolidated
financial statements were discussed in "Item 7. Management's Discussion and
Analysis of Financial Condition and Results of Operations" of our 2021 Annual
Report. The critical policies, for which no significant changes have occurred in
the three months ended March 31, 2022, include:

•Revenue Recognition;

•Deferred Taxes, Tax Valuation Allowances and Tax Reserves;

•Reserves for Contingent Loss;

•Pension and Postretirement Benefits; and

•Valuation of Goodwill, Indefinite-Lived Intangible Assets and Other Long-Lived Assets.



The process of preparing condensed consolidated financial statements in
conformity with U.S. GAAP requires the use of estimates and assumptions to
determine certain of the assets, liabilities, revenues and expenses. These
estimates and assumptions are based upon what we believe is the best information
available at the time of the estimates or assumptions. The estimates and
assumptions could change materially as conditions within and beyond our control
change. Accordingly, actual results could differ materially from those
estimates. The significant estimates are reviewed quarterly with the Audit
Committee of our Board of Directors.

Based on an assessment of our accounting policies and the underlying judgments
and uncertainties affecting the application of those policies, we believe that
our condensed consolidated financial statements provide a meaningful and fair
perspective of our consolidated financial condition and results of operations.
This is not to suggest that other general risk factors, such as changes in
worldwide demand, changes in material costs, performance of acquired businesses
and others, could not adversely impact our consolidated financial condition,
results of operations and cash flows in future periods. See "Cautionary Note
Regarding Forward-Looking Statements" below.

ACCOUNTING DEVELOPMENTS

We have presented the information about pronouncements not yet implemented in Note 1 to our condensed consolidated financial statements included in this Quarterly Report.

Cautionary Note Regarding Forward-Looking Statements



This Quarterly Report 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," "predicts" or other similar expressions
are intended to identify forward-looking statements, which include, without
limitation, statements concerning our future financial performance, future debt
and financing levels, investment objectives, implications of litigation and
regulatory investigations and other management plans for future operations and
performance.

The forward-looking statements included in this Quarterly Report 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 are currently, or in the
future could be, amplified by the COVID-19 pandemic. Specific factors that might
cause such a difference include, without limitation, the following:

•uncertainties related to the impact of the COVID-19 pandemic on our business and operations, financial results and financial position, our customers and suppliers, and on the global economy, including its impact on our sales;

•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 the global financial markets and the availability of capital 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. The liquidity and financial position of our
customers could impact capital investment decisions and their ability to pay in
full and/or on a timely basis;

•if we are not able to successfully execute and realize the expected financial benefits from our strategic transformation,

realignment and other cost-saving initiatives, our business could be adversely affected;

•risks associated with cost overruns on fixed fee projects and in accepting 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 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/reexport 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, particularly
the Euro and British pound and in hyperinflationary countries such as Venezuela
and Argentina;

•our furnishing of products and services to nuclear power plant facilities and other critical applications;

•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 third-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;

•risks and potential liabilities associated with cyber security threats; and

•ineffective internal controls could impact the accuracy and timely reporting of our business and financial results.



These and other risks and uncertainties are more fully discussed in the risk
factors identified in "Item 1A. Risk Factors" in Part I of our 2021 Annual
Report and Part II of this Quarterly Report, and may be identified in our
Quarterly Reports on Form 10-Q and our other filings with the SEC and/or press
releases from time to time. All forward-looking statements included in this
document are based on information available to us on the date hereof, and we
assume no obligation to update any forward-looking statement.

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