Flowserve Corporation (FLS) Cash Flow Statement

The gap between net income and operating cash flow is the dominant signal here, with quarters such as 2025Q1 and 2026Q1 showing roughly $150M working capital outflows that turned profitable quarters into cash-negative ones. Conversion ratios above 2.0x in several quarters appear to reflect receivables and inventory unwinding rather than structurally higher cash earnings. Investors should monitor whether this pattern persists, as it warrants further investigation before treating reported profits as a reliable proxy for cash generation.

The recent positive run in 2026Q2 and 2026Q3, with FCF margins near 10%, is encouraging but follows multiple quarters of cash burn, so the trend is not yet established. Compared with peers such as Graco at 25.4% and IDEX at 18.2%, FLS's typical FCF margin appears structurally lower, which may reflect its margin profile and working capital intensity. Trailing averages over a full cycle would give a more reliable read than any single quarter.

CapEx running consistently near D&A levels of roughly $21M to $24M per quarter indicates the company is largely reinvesting to maintain its asset base rather than funding significant growth expansion. This suggests much of reported cash flow is available for deployment, though underinvestment would only become evident over a longer horizon. The spike to 2.4% of revenue in 2024Q4 may indicate a discrete project and merits monitoring.

Quarterly dividend payments appear covered in most periods where operating cash flow was positive, but were not covered in quarters such as 2026Q1 and 2025Q1 when operating cash flow was negative. The large 2026Q2 acquisition outflow dwarfs routine capital return and may indicate a strategic shift toward inorganic growth. Investors should monitor how this acquisition is financed and whether returns on that capital justify the deployment.

The alternating pattern of large inflows and outflows suggests that collection efficiency and inventory management are not yet stable, which is consistent with the mixed earnings-quality signals noted in the prior income statement analysis. Repeated large outflows in the first quarter of several years may reflect seasonal build patterns, though this inference requires confirmation from the balance sheet detail. The working capital cycle warrants further investigation as the primary driver of cash volatility.