XML 21 R10.htm IDEA: XBRL DOCUMENT v3.23.2
Revenue Recognition
 6 Months Ended
Jun. 30, 2023
Revenue from Contract with Customer [Abstract]  
Revenue Recognition Revenue Recognition
The majority of our revenues relate to customer orders that typically contain a single commitment of goods or services which have lead times under a year. Longer lead time, more complex contracts with our customers typically have multiple commitments of goods and services, including any combination of designing, developing, manufacturing, modifying, installing and commissioning of flow management equipment and providing services and parts related to the performance of such products. Control transfers over time when the customer is able to direct the use of and obtain substantially all of the benefits of our work as we perform. Service-related revenues do not typically represent a significant portion of contracts with our customers and do not meet the thresholds requiring separate disclosure.
Revenue from products and services transferred to customers over time accounted for approximately 15% and 13% of total revenue for the three month period ended June 30, 2023 and 2022, respectively, and 15% and 12% for the six month period ended June 30, 2023 and 2022, respectively. Our primary method for recognizing revenue over time is the POC method. If control does not transfer over time, then control transfers at a point in time. We recognize revenue at a point in time at the level of each performance obligation based on the evaluation of certain indicators of control transfer, such as title transfer, risk of loss transfer, customer acceptance and physical possession. Revenue from products and services transferred to customers at a point in time accounted for approximately 85% and 87% of total revenue for the three month period ended June 30, 2023 and 2022, respectively, and 85% and 88% for the six month period ended June 30, 2023 and 2022, respectively. Refer to Note 2 to our consolidated financial statements included in our 2022 Annual Report for a more comprehensive discussion of our policies and accounting practices of revenue recognition.
Disaggregated Revenue
We conduct our operations through two business segments based on the type of product and how we manage the business:
•Flowserve Pump Division ("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
•Flow Control Division ("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.
Our revenue sources are derived from our original equipment manufacturing and our aftermarket sales and services. Our original equipment revenues are generally related to originally designed, manufactured, distributed and installed equipment that can range from pre-configured, short-cycle products to more customized, highly-engineered equipment ("Original Equipment"). Our aftermarket sales and services are derived from sales of replacement equipment, as well as maintenance, advanced diagnostic, repair and retrofitting services ("Aftermarket"). Each of our two business segments generate Original Equipment and Aftermarket revenues.
The following tables present our customer revenues disaggregated by revenue source:
Three Months Ended June 30, 2023
(Amounts in thousands)FPDFCDTotal
Original Equipment$284,053 $233,770 $517,823 
Aftermarket480,798 81,755 562,553 
$764,851 $315,525 $1,080,376 
Three Months Ended June 30, 2022
FPDFCDTotal
Original Equipment$212,760 $198,597 $411,357 
Aftermarket401,665 69,200 470,865 
$614,425 $267,797 $882,222 
Six Months Ended June 30, 2023
(Amounts in thousands)FPDFCDTotal
Original Equipment$536,785 $444,522 $981,307 
Aftermarket927,545 151,829 1,079,374 
$1,464,330 $596,351 $2,060,681 
Six Months Ended June 30, 2022
FPDFCDTotal
Original Equipment$413,100 $381,439 $794,539 
Aftermarket775,312 133,429 908,741 
$1,188,412 $514,868 $1,703,280 
Our customer sales are diversified geographically. The following tables present our revenues disaggregated by geography, based on the shipping addresses of our customers:
Three Months Ended June 30, 2023
(Amounts in thousands)FPDFCDTotal
North America(1)$317,994 $143,446 $461,440 
Latin America(2)63,107 7,190 70,297 
Middle East and Africa 130,158 36,536 166,694 
Asia Pacific110,390 72,510 182,900 
Europe143,202 55,843 199,045 
$764,851 $315,525 $1,080,376 
Three Months Ended June 30, 2022
FPDFCDTotal
North America(1)$265,657 $119,791 $385,448 
Latin America(2)48,294 4,955 53,249 
Middle East and Africa84,935 22,049 106,984 
Asia Pacific97,557 72,418 169,975 
Europe117,982 48,584 166,566 
$614,425 $267,797 $882,222 
Six Months Ended June 30, 2023
(Amounts in thousands)FPDFCDTotal
North America(1)$600,258 $269,124 $869,382 
Latin America(2)127,102 15,055 142,157 
Middle East and Africa 244,524 64,931 309,455 
Asia Pacific223,774 140,342 364,116 
Europe268,672 106,899 375,571 
$1,464,330 $596,351 $2,060,681 
Six Months Ended June 30, 2022
FPDFCDTotal
North America(1)$504,368 $227,429 $731,797 
Latin America(2)95,914 10,504 106,418 
Middle East and Africa156,636 43,398 200,034 
Asia Pacific199,156 140,209 339,365 
Europe232,338 93,328 325,666 
$1,188,412 $514,868 $1,703,280 
__________________________________
(1) North America represents the United States and Canada.
(2) Latin America includes Mexico.

On June 30, 2023, the aggregate transaction price allocated to unsatisfied (or partially unsatisfied) performance obligations was approximately $751 million. We estimate recognition of approximately $276 million of this amount as revenue in the remainder of 2023 and an additional $475 million in 2024 and thereafter.
Contract Balances
We receive payment from customers based on a contractual billing schedule and specific performance requirements as established in our contracts. We record billings as accounts receivable when an unconditional right to consideration exists. A contract asset represents revenue recognized in advance of our right to receive payment under the terms of a contract. A contract liability represents our right to receive payment in advance of revenue recognized for a contract.
The following tables present beginning and ending balances of contract assets and contract liabilities, current and long-term, for the six months ended June 30, 2023 and 2022:

(Amounts in thousands) Contract Assets, net (Current)Long-term Contract Assets, net(1)Contract Liabilities (Current)Long-term Contract Liabilities(2)
Beginning balance, January 1, 2023$233,457 $297 $256,963 $1,059 
Revenue recognized that was included in contract liabilities at the beginning of the period— — (169,722)— 
Revenue recognized in the period in excess of billings301,548 — — — 
Billings arising during the period in excess of revenue recognized— — 176,491 661 
Amounts transferred from contract assets to receivables(310,232)(301)— — 
Currency effects and other, net2,863 473 5,993 5,851 
Ending balance, June 30, 2023$227,636 $469 $269,725 $7,571 


(Amounts in thousands)Contract Assets, net (Current)Long-term Contract Assets, net(1)Contract Liabilities (Current)Long-term Contract Liabilities(2)
Beginning balance, January 1, 2022$195,598 $426 $202,965 $464 
Revenue recognized that was included in contract liabilities at the beginning of the period— — (118,177)— 
Revenue recognized in the period in excess of billings256,608 1,659 — — 
Billings arising during the period in excess of revenue recognized— — 122,502 — 
Amounts transferred from contract assets to receivables(246,405)(380)230 — 
Currency effects and other, net(8,673)(1,671)(2,345)(19)
Ending balance, June 30, 2022$197,128 $34 $205,175 $445 
_____________________________________
(1) Included in other assets, net.
(2) Included in retirement obligations and other liabilities.