Financial Data and Key Metrics Changes - First quarter bookings reached $1.09 billion, a 15% increase year-over-year and an 18% increase on a constant currency basis, marking the highest bookings level since Q2 2019 [7] - Adjusted EPS for Q1 was $0.07, while reported loss per share was $0.12, impacted by a $0.16 charge related to exiting Russia [25][26] - First quarter revenue declined by 4.2% or 2% on a constant currency basis, primarily due to supply chain and logistics challenges [29] Business Line Data and Key Metrics Changes - Aftermarket bookings grew by 18.6% year-over-year, totaling $542 million, the highest quarterly bookings since 2014 [11] - Original equipment bookings increased by 11.5% to $544 million, driven by the return of a more normalized market environment [13] - FPD (Flow Control Division) saw over 20% growth in both original equipment and aftermarket orders, while FCD (Flowserve Control Division) contributed modest growth [28] Market Data and Key Metrics Changes - Oil and gas bookings increased over 36% year-over-year, with significant contributions from project bookings [15] - Power bookings rose over 65% compared to the prior year, including significant nuclear aftermarket and OE project awards [16] - Regional bookings growth was led by the Middle East and Africa (up 51%), Europe (up 45%), and North America (up 9%), while Latin America saw a decline of 12% [16] Company Strategy and Development Direction - The company is focused on its 3D growth strategy, which aims to diversify, decarbonize, and digitize its offerings [44] - Efforts are being made to capture opportunities in underserved markets, particularly in water and specialty chemicals [46] - The company is committed to supporting customers' decarbonization efforts and has secured contracts related to carbon capture and sustainable chemicals [49][50] Management's Comments on Operating Environment and Future Outlook - Management acknowledged significant challenges in Q1 due to supply chain constraints, inflation, and the impact of the Russia-Ukraine conflict [8][19] - The company expects to see strong demand in the second and third quarters, driven by a robust project pipeline and energy independence initiatives [53][55] - Future earnings are anticipated to be heavily weighted towards the second half of the year, with expectations for improved backlog conversion rates [37][42] Other Important Information - The company has ceased operations in Russia and is addressing the financial impacts of this decision [19][26] - Inflation expectations for the full year have increased by nearly 50%, with procurement costs expected to rise in the high single-digit range [21] - The company maintains a strong liquidity position with $576 million in cash and $384 million in available credit [36] Q&A Session Summary Question: Did the company gain market share with the recent order growth? - Management indicated that the competitive nature of the projects won suggests a gain in market share, particularly in aftermarket and MRO segments [64][66] Question: What are the current sourcing challenges? - The primary concern is related to supply chain disruptions in Asia, particularly China, affecting the ability to source and transport products [67][68] Question: What is the outlook for bookings growth in the second half of the year? - Management expressed optimism about continued strong demand and project visibility, particularly in LNG and nuclear sectors, despite potential inflationary pressures [72][74]

| --- | --- | --- | |----------------------------------|-------|-------| | | | | | | | | | 2021 EARNINGS THIRD QUARTER | | | | | | | | October 28, 2021 CONFERENCE CALL | | | | | | | | | | | | | | | Q3 2021 EARNINGS CONFERENCE CALL | --- | --- | |------------------------------------------------------------------------------------------------------------------------------------------------------------|-------| | | | | We have provided tables in the appendix that reconcile these non-GAAP measures to their corr ...

Financial Data and Key Metrics Changes - The adjusted EPS for Q2 2021 was $0.37, reflecting a 32% sequential improvement [6] - Reported EPS increased significantly to $0.35 compared to the prior year [18] - Revenue for Q2 2021 was $898 million, down 2.9% year-over-year [20] - Adjusted gross margin decreased by 70 basis points to 31.4% [21] - Cash balance at the end of Q2 was $630 million, with liquidity remaining strong at nearly $1.4 billion [26] Business Line Data and Key Metrics Changes - Bookings for Q2 2021 totaled $953 million, a nearly 18% year-over-year improvement [6][13] - Aftermarket awards reached almost $525 million, returning to pre-pandemic levels [13] - Original equipment sales declined by 6.1%, while aftermarket sales were relatively resilient [20] Market Data and Key Metrics Changes - Solid growth was observed globally, except in the Asia Pacific market, which was impacted by COVID-19 resurgence in India [14] - The oil and gas and chemical markets were the biggest drivers of year-over-year growth, increasing by 39% and 19% respectively [13] Company Strategy and Development Direction - The company is focused on energy transition opportunities, estimating $100 million to $150 million annually in related business [36] - The Flowserve 2.0 operating model is expected to be fully embedded by the end of the year, aiming for continuous improvement and margin expansion [45][47] - The company anticipates a return to growth and margin expansion in 2022 [34] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in restoring bookings to pre-pandemic levels, driven by increased customer spending as economies recover from COVID-19 [7][8] - The Delta variant poses challenges, but management does not foresee a negative impact on business growth outlook [11] - The company expects to see significant bookings growth in the next two quarters compared to 2020 [16] Other Important Information - The company experienced significant disruption in Indian operations but has seen improvements, currently operating at about 80% associate participation [12] - The company is committed to delivering free cash flow conversion in excess of 100% of net income for the second consecutive year [29] Q&A Session Summary Question: Will the backlog continue to build and potentially exceed $2 billion? - Management expects to continue building backlog and anticipates a higher backlog at the end of the year compared to last year [49] Question: Can you provide more details on the margin impacts this quarter? - The largest impact on margins was due to foreign exchange movements and the return of certain temporary cost benefits from 2020 [50][51] Question: How is the company managing price costs? - The company is experiencing inflation on costs, particularly in motors, electronics, and logistics, and has announced price increases to mitigate these impacts [56][57] Question: What indicators are being used to track the larger project funnel? - The company has seen a 25% increase in its project funnel compared to last year, supported by customer discussions and improved market conditions [62] Question: How is the Flowserve 2.0 program performing? - The program has been effective in driving growth in aftermarket and MRO business, returning to pre-pandemic levels [69]

| --- | --- | --- | --- | --- | --- | |-------|-------|-------|---------------------------------|-------|-----------------------------------------------------------| | | | | | | | | | | | | | | | | | | | | Flowserve Corporation | | | | | Credit Suisse 26 Scott Rowe – | th | Annual Energy Summit President & Chief Executive Officer | | | | | | | | | | | | 2021 Flowserve Corporation | | March 2, 2021 | | --- ...

Financial Performance - Q3 2020 reported and adjusted EPS were $0.39 and $0.50 respectively[9] - Bookings decreased by 21.2%, or 21.6% in constant currency[9] - Aftermarket bookings decreased by 13.5%, or 13.6% in constant currency, amounting to $425 million[9] - Revenue decreased by 7.2%, or 7.7% in constant currency[9] - The company has a strong liquidity position of $1.7 billion as of September 30, 2020, including $921 million in cash and cash equivalents[9] Bookings and Sales Mix - In Q3 2020, Oil & Gas bookings accounted for 30% ($806 million) and sales accounted for 41% ($996 million)[11] - Power bookings and sales both accounted for 22% in Q3 2020[11] - Chemical bookings accounted for 13% and sales accounted for 23% in Q3 2020[11] Original Equipment/Aftermarket - Original equipment bookings decreased 28.3%, or 29.0% in constant currency, compared to Q3 2019[14] - Aftermarket bookings decreased 13.5%, or 13.6% in constant currency, compared to Q3 2019, amounting to $425 million[15] - Original equipment sales decreased 5.6%, or 6.3% in constant currency, compared to Q3 2019[14] - Aftermarket sales decreased 8.8% reported and in constant currency compared to Q3 2019[15] Outlook - The company expects Q4 2020 bookings to be in line with Q2 and Q3 levels and anticipates an upward inflection in mid-to-late 2021[21] - The company is on track to exceed its initial $100 million cost reduction plan[21] - The company aims to generate at least $100 million in Q4 free cash flow[21]