Core Insights - A progressive Indian miner and steelmaker has chosen FLS to supply a comprehensive flotation technology package for a new iron ore beneficiation plant, which is expected to be one of the largest and most efficient globally [1] - The plant will utilize domestic low-grade iron ore, which will be upgraded to a high-purity final product using FLS flotation systems [1] Group 1: Technology and Performance - FLS conducted extensive laboratory and on-site pilot testing to develop a beneficiation flowsheet that ensures high metallurgical performance and operational flexibility [2] - The selected technology includes FLS nextSTEP™ flotation cells, equipped with mechanical and process condition monitoring, along with KREBS millMAX pumps for froth and slurry transport [2] Group 2: Customer Relationship and Orders - This order marks the third consecutive purchase from the customer within six months, with the iron ore being processed from 18 vertical tower mills ordered from FLS for Q1 2025 [3] - The customer also ordered two high-pressure grinding rolls (HPGRs) from FLS in Q4 2024, along with additional KREBS pumps and hydrocyclones for the grinding circuits [3] Group 3: Installation Timeline and Impact - All FLS technologies are expected to be installed and commissioned during 2026/2027 [4] - The CEO of FLS emphasized the significance of this order as a testament to strong customer relations and confidence in FLS's market-leading technologies, which will lead to reductions in energy, water, and grinding media consumption [5] Group 4: Order Details - The order was booked in Q2 2025, although the value of the order has not been disclosed [6]

Core Viewpoint - Flowserve Corporation reported a strong performance in Q1 2025, highlighting growth in bookings and revenue, along with improved margins [4]. Financial Performance - Bookings increased by 18% year-over-year to $1.2 billion [5]. - Revenue rose by 5% compared to the previous year [5]. - Adjusted gross margins expanded by 180 basis points to 33.5% [5]. - Adjusted operating margins were reported at 12.8%, with incremental margins exceeding 50% for the quarter [5].

Core Viewpoint - Flowserve Corporation reported strong first-quarter 2025 results, with adjusted earnings per share of 72 cents, exceeding estimates and reflecting a 24.1% year-over-year increase, driven by higher revenues [1] Financial Performance - Total revenues for the quarter reached $1.14 billion, surpassing the consensus estimate of $1.11 billion, marking a 5.2% year-over-year increase [1] - Aftermarket sales rose by 5.1% year over year, while Original equipment sales increased by 5.4% year over year [1] Bookings and Backlog - Total bookings amounted to $1.23 billion, reflecting an 18.1% year-over-year increase [2] - The backlog at the end of the quarter was $2.9 billion, up 11.1% year over year [2] Segment Performance - Flowserve Pumps Division generated revenues of $783.1 million, up 1.8% year over year, with bookings increasing by 21.2% to $852.9 million [3] - Flow Control Division reported revenues of $364.1 million, a 13.6% year-over-year increase, with bookings of $376.0 million, up 10.2% [4] Margin Profile - Cost of sales increased by 3.6% year over year to $775.2 million, while gross profit rose by 9% to $369.3 million, resulting in a gross margin of 32.3% [5] - Operating income increased by 16.6% year over year to $131.9 million, with an operating margin of 11.5% [5] Balance Sheet and Cash Flow - Cash and cash equivalents at the end of the first quarter were $540.8 million, down from $675.4 million at the end of 2024 [6] - Long-term debt was $1.45 billion, slightly down from $1.46 billion reported at the end of 2024 [6] - The company used net cash of $49.9 million from operating activities, compared to $62.3 million generated in the same period last year [7] 2025 Guidance - Flowserve expects a revenue increase of 5-7% from the previous year and anticipates adjusted earnings per share between $3.10 and $3.30 [8] - The adjusted tax rate is projected to be approximately 21%, with net interest expense and capital expenditure forecasted at $70 million and $80-$90 million, respectively [8]

Financial Data and Key Metrics Changes - Bookings grew 18% year-over-year to $1,200 million, while revenue increased by 5% [6] - Adjusted gross margins expanded by 80 basis points to 33.5%, and adjusted operating margins were 12.8%, resulting in impressive incremental margins of over 50% [6][23] - Adjusted earnings per share was $0.72 for the quarter, an increase of nearly 25% compared to the prior year [6][23] Business Line Data and Key Metrics Changes - The aftermarket business saw record bookings of almost $690 million, marking the fourth consecutive quarter above $600 million [8][10] - FPD (Flowserve Pump Division) delivered bookings growth of 21% year-over-year, with adjusted gross margins of 34.7%, an increase of 180 basis points [25] - FCD (Flowserve Control Division) experienced bookings growth of 10% and sales growth of 14%, with aftermarket bookings increasing by 19% [27] Market Data and Key Metrics Changes - Nuclear bookings exceeded $100 million for the third consecutive quarter, with power bookings up more than 45% year-over-year [10] - The company reported strong asset utilization in large process industries, with maintenance spending continuing as expected [16] - April bookings remained healthy across both run rate and aftermarket business [17] Company Strategy and Development Direction - The company is focused on mitigating tariff impacts through regional manufacturing and supply chain optimization [12][14] - The Flowserve business system is being leveraged to drive consistency and results across the organization, with expectations of margin expansion from the portfolio excellence program by 2027 [20][21] - The company is maintaining a critical eye on M&A opportunities to create long-term value [31] Management's Comments on Operating Environment and Future Outlook - Management acknowledged macroeconomic uncertainties but expressed confidence in the company's ability to navigate challenges and maintain strong performance [7][22] - The company reaffirmed its full-year guidance, expecting organic growth of 3% to 5% and adjusted earnings per share of $3.1 to $3.3 [33] - Management noted that while the end markets remain healthy, there is potential for a slowdown in the second half of 2025 due to tariff uncertainties [45] Other Important Information - The company repurchased $53 million of shares year-to-date at an average cost of $45 per share [31] - Cash from operations was a $50 million use of cash in the quarter, driven by higher temporary working capital requirements [29] Q&A Session Summary Question: Sustainability of bookings and outlook for the second half - Management indicated strong aftermarket bookings and a healthy project funnel, but acknowledged potential project deferrals due to macro uncertainties [39][46] Question: Guidance for Q2 and impact of tariffs - Management expects Q2 results to be similar or slightly better than Q1, with some mix headwinds anticipated [48][50] Question: Competitive footprint and pricing power - Management highlighted a competitive advantage in regional manufacturing and noted that pricing actions have been well-received [54][60] Question: Visibility into project pipeline - Management confirmed strong visibility into project orders, particularly in the nuclear sector, with limited project pushouts observed [88][93] Question: Mitigation of tariff impacts - Management outlined strategies to offset tariff impacts through pricing and supply chain initiatives, expecting to mitigate the full $90 to $100 million impact [96][100]

Financial Data and Key Metrics Changes - Bookings grew 18% year-over-year to $1,200 million, while revenue increased by 5% [4] - Adjusted gross margins expanded by 80 basis points to 33.5%, and adjusted operating margins reached 12.8%, resulting in incremental margins of over 50% [4] - Adjusted earnings per share was $0.72, reflecting a nearly 25% increase compared to the previous year [4][20] Business Line Data and Key Metrics Changes - Aftermarket bookings reached a record of almost $690 million, marking the fourth consecutive quarter above $600 million [6] - Nuclear bookings exceeded $100 million for the third consecutive quarter, with power bookings up more than 45% year-over-year [7] - FPD segment saw bookings growth of 21% and adjusted operating margin of 17.7%, while FCD segment experienced bookings growth of 10% and sales growth of 14% [22][24] Market Data and Key Metrics Changes - The company reported strong asset utilization in large process industries, with maintenance spending continuing as expected [14] - April bookings remained healthy across run rate and aftermarket business, with limited project deferrals observed in select industries [15] - The backlog stood at $2,900 million, providing a level of certainty for future revenues [16] Company Strategy and Development Direction - The company is focused on navigating the current tariff environment while building on strong first-quarter results [5] - Emphasis on the 8020 program to reduce complexity and improve margins, with expectations of 200 basis points of margin expansion by 2027 [18] - The company is leveraging its global footprint to optimize work locations and mitigate tariff impacts [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to execute at a high level despite macroeconomic uncertainties [5] - The company is monitoring customer behavior closely, with expectations of continued capital spending unless the macro environment worsens [42] - Overall visibility into project pipelines remains strong, particularly in the nuclear sector, which provides long-term revenue assurance [90][92] Other Important Information - The company repurchased $53 million of shares year-to-date at an average cost of $45 per share, viewing its share price as undervalued [27] - Adjusted primary working capital as a percentage of sales increased to 29.8%, with expectations for significant improvement in cash flow and working capital efficiency [26] Q&A Session Summary Question: Sustainability of bookings and outlook for the second half - Management noted strong aftermarket bookings and a healthy project funnel, but acknowledged potential uncertainties due to tariffs and macroeconomic conditions [36][42] Question: Guidance for Q2 and impact of tariffs - Management indicated that Q2 results are expected to be similar or slightly better than Q1, with some mix headwinds anticipated [45][48] Question: Competitive footprint and pricing power - The company highlighted its regional manufacturing advantages and noted that pricing actions have been well-received, with expectations for continued pricing power [52][60] Question: Visibility into project pipeline and potential pushouts - Management confirmed strong visibility into project pipelines, particularly in nuclear, with limited signs of project pushouts at this time [88][90] Question: Mitigation of tariff impacts - The company plans to offset tariff impacts through pricing actions and supply chain repositioning, with expectations to mitigate the full $90 to $100 million impact [94][96]

Q1 2025 EARNINGS CONFERENCE CALL April 30, 2025 FORWARD LOOKING STATEMENT AND NON-GAAP MEASURES Safe Harbor Statement: This presentation 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, ...

Core Insights - Flowserve reported revenue of $1.14 billion for the quarter ended March 2025, reflecting a 5.3% increase year-over-year and surpassing the Zacks Consensus Estimate of $1.11 billion by 3.35% [1] - The company's EPS was $0.72, up from $0.58 in the same quarter last year, resulting in an EPS surprise of 22.03% compared to the consensus estimate of $0.59 [1] Revenue Performance - Sales from FPD segment reached $783.10 million, exceeding the average estimate of $749.56 million, with a year-over-year change of 1.9% [4] - FCD segment sales were reported at $364.10 million, above the average estimate of $358.78 million, showing a significant year-over-year increase of 14.2% [4] - Intersegment sales reported a slight decline of -$2.70 million, compared to the average estimate of -$2.20 million, but still represented a year-over-year change of 10.8% [4] Operating Income - Adjusted Operating Income for the FPD segment was $138.60 million, surpassing the average estimate of $116.22 million [4] - Adjusted Operating Income for the FCD segment was $44.60 million, slightly above the average estimate of $42.93 million [4] Stock Performance - Flowserve's shares have returned -8.6% over the past month, contrasting with the Zacks S&P 500 composite's -0.8% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market in the near term [3]

Flowserve (FLS) came out with quarterly earnings of $0.72 per share, beating the Zacks Consensus Estimate of $0.59 per share. This compares to earnings of $0.58 per share a year ago. These figures are adjusted for non- recurring items. This quarterly report represents an earnings surprise of 22.03%. A quarter ago, it was expected that this company that makes pumps, valves and other parts for the oil and gas industries would post earnings of $0.77 per share when it actually produced earnings of $0.70, delive ...

Financial Performance - First quarter bookings reached $1.2 billion, with record aftermarket bookings of nearly $690 million[5] - Power bookings increased over 45% year-over-year, including more than $100 million in nuclear awards for the third consecutive quarter[5] - Gross margin and adjusted gross margin were 32.3% and 33.5%, respectively, reflecting increases of 110 and 180 basis points compared to the prior year[5] - Operating income and adjusted operating income were $132 million and $147 million, representing increases of 17% and 24% year-over-year[5] - The backlog stood at $2.9 billion, an 11.1% increase from $2.6 billion in the previous year[6] - The Flowserve Pumps Division reported bookings of $852.9 million, up from $703.5 million in the previous year[19] - The Flow Control Division saw bookings increase to $376.0 million from $341.1 million year-over-year[19] - Flowserve's Pumps Division reported a gross profit of $268,462, representing 34.3% of sales for Q1 2025, an increase from 32.2% in Q1 2024[20] - The Flow Control Division achieved a gross profit of $100,187, which is 27.5% of sales, compared to 28.9% in the same quarter last year[21] - Total bookings for the Pumps Division were $852.9 million, up 21.2% year-over-year, while the Flow Control Division saw bookings of $376.0 million, a 10.2% increase[26] - The adjusted operating income for the Pumps Division was $138.6 million, reflecting a 20.6% increase compared to the previous year[26] - The company reported a net earnings of $79,457 thousand for Q1 2025, compared to $77,915 thousand in Q1 2024[28] - The operating income margin for the Pumps Division improved to 17.4%, up 300 basis points from the previous year[26] Guidance and Projections - The company reaffirmed its full-year 2025 guidance, targeting adjusted EPS in the range of $3.10 to $3.30[7] - Total sales growth is projected to be between 5% to 7% for 2025, with organic sales growth expected at 3% to 5%[8] Cash Flow and Assets - Cash from operations was reported at ($49.9 million), a decline of 180.2% compared to $62.3 million in the prior year[6] - Cash and cash equivalents decreased to $540,804 thousand from $675,441 thousand at the end of 2024[27] - The total assets of Flowserve as of March 31, 2025, were $5,483,298 thousand, slightly down from $5,500,821 thousand at the end of 2024[27] Risks and Challenges - Forward-looking statements are based on current expectations and are subject to numerous risks and uncertainties, including global supply chain disruptions and inflationary pressures[31] - The company faces risks related to the conversion of bookings into revenues and the potential for unexpected cancellations or delays in customer orders[31] - There is a substantial dependence on the success of the energy, chemical, power generation, and general industries for sales[31] - The company is exposed to fluctuations in foreign currency exchange rates, particularly in hyperinflationary countries like Argentina[31] - The company acknowledges potential adverse impacts from public health emergencies, such as pandemics, on its business operations[31] - Increased aging and slower collection of receivables are particularly noted in Latin America and other emerging markets[31] - The company is dependent on third-party suppliers, and their failure to perform could adversely affect business operations[31] Management and Strategy - Management emphasizes the importance of successfully developing and introducing new products and integrating new technologies, including artificial intelligence and machine learning, to maintain competitive position[31] - Management does not assume any obligation to update forward-looking statements based on information available as of the date of the release[32] - The company incurred realignment charges of $2,979 thousand in the Pumps Division during the quarter[20]

Financial Performance - Bookings for Q1 2025 increased by $188.1 million, or 18.1%, compared to Q1 2024, totaling $1,226.4 million[130] - Sales for Q1 2025 rose by $57.0 million, or 5.2%, compared to Q1 2024, reaching $1,144.5 million[131] - Gross profit for Q1 2025 increased by $30.3 million, or 8.9%, totaling $369.3 million, with a gross profit margin of 32.3%[133] - Operating income for Q1 2025 rose by $18.8 million, or 16.6%, with an operating margin of 11.5%[138] - Net earnings from affiliates for Q1 2025 increased by $3.2 million, or 128.0%, primarily due to higher earnings from FPD joint ventures in South Korea[137] - SG&A for Q1 2025 increased by $14.8 million, or 6.5%, compared to Q1 2024, with SG&A as a percentage of sales rising to 21.2%[136] - Interest expense for Q1 2025 increased by $3.9 million due to higher outstanding debt, while interest income rose by $0.5 million[139] - Other net expense for Q1 2025 increased by $16.4 million, primarily due to foreign exchange losses and a pension settlement loss of $1.5 million[140] - The effective tax rate for Q1 2025 decreased to 18.3% from 20.5% in Q1 2024[141] - Other comprehensive income for Q1 2025 increased by $74.8 million, resulting from foreign currency translation adjustments[142] Backlog and Future Expectations - Backlog as of March 31, 2025, was $2,902.9 million, an increase of $113.3 million, or 4.1%, from December 31, 2024[132] - The company expects to deliver annual revenue growth in 2025, supported by a strong backlog and improved execution[122] - Backlog increased by $19.8 million, or 2.3%, to $889.4 million at March 31, 2025, with currency effects contributing approximately $9 million[161] Segment Performance - FPD segment bookings for Q1 2025 increased by $149.4 million, or 21.2%, with significant growth in general industries and power generation[147] - FCD segment bookings for Q1 2025 increased by $34.9 million, or 10.2%, driven by orders in the energy and general industries[156] - Gross profit margin for FPD in Q1 2025 improved to 34.3%, while FCD's gross profit margin decreased to 27.5%[149][158] Cash Flow and Capital Management - Cash used by operating activities was $49.9 million for the three months ended March 31, 2025, compared to cash provided of $62.3 million for the same period in 2024[164] - Cash balance decreased by $134.6 million to $540.8 million at March 31, 2025, due to various cash outflows including $27.6 million in dividends and $21.1 million in share repurchases[163] - Capital expenditures for the three months ended March 31, 2025 were $11.7 million, a decrease of $1.9 million compared to the same period in 2024[169] - Cash flows used by financing activities were $84.2 million for the three months ended March 31, 2025, compared to $54.2 million for the same period in 2024[170] - As of March 31, 2025, the company had $662.2 million of available capacity under its Second Amended and Restated Credit Agreement[171] - The company has $258.8 million of remaining capacity for Board of Directors approved share repurchases as of March 31, 2025[174] Risks and Challenges - The company faces increased aging and slower collection of receivables, particularly in Latin America and other emerging markets[188] - Potential adverse effects from new tariffs and related retaliatory actions could impact business operations[188] - The company is exposed to fluctuations in foreign currency exchange rates, especially in hyperinflationary countries like Argentina[188] - The company may face adverse impacts from impairment in the carrying value of goodwill or other intangible assets[188] - The competitive nature of the markets in which the company operates poses challenges to maintaining its competitive position[188] - The company must successfully develop and introduce new products and integrate new technologies, including artificial intelligence and machine learning[188] - The company is dependent on third-party suppliers, whose failure to perform timely could adversely affect operations[188] - Ineffective internal controls could impact the accuracy and timely reporting of business and financial results[188] Acquisition and Investment - The company incurred $1.3 million in acquisition-related costs for the acquisition of MOGAS in Q1 2025[125] - The 2025 Realignment Programs are anticipated to require a total investment of approximately $23 million, with $8 million estimated to be non-cash[126]