Core Viewpoint - Flowserve Corporation is experiencing growth due to strong performance across its segments and strategic acquisitions, enhancing its appeal to shareholders [1][2]. Business Strength - The aftermarket business is showing solid momentum, with a 21.2% year-over-year increase in bookings for the Flowserve Pumps Division in Q1, supported by a book-to-bill ratio above 1.0x [3]. - Increased bookings in general industries, energy, and power end markets are contributing positively to the Flow Control Division's performance [3]. End Market Strength - Flowserve's booking levels are driven by strength in various end markets and its 3D strategy, with improved customer orders from large project wins in the energy sector [4]. - The chemical end market is also strong, supported by an unconventional gas project and a petrochemical project in the Middle East, with expectations for significant capacity additions [4]. - Growth in the power generation market is linked to increased data center capacity and rising activity in Artificial Intelligence [4]. Expansion Efforts - Flowserve is focused on expanding its market presence through acquisitions, such as the October 2024 acquisition of MOGAS Industries, which enhanced its valve and automation product portfolio [5]. - The MOGAS acquisition contributed positively to sales growth by 3.3% in Q1 2025 [5]. - In July 2024, Flowserve acquired intellectual property related to cryogenic LNG submerged pump technology from NexGen Cryogenic Solutions, expanding its LNG product portfolio [6]. Rewards to Shareholders - Flowserve rewards shareholders through dividends and share buybacks, distributing $27.6 million in dividends and repurchasing shares worth $21.1 million in Q1 2025 [7]. - The company's shares have gained 1.7% over the past year, outperforming the industry's growth of 0.2% [7].

Core Insights - The article discusses the expertise of Vladimir Dimitrov, CFA, who has a background in brand and intangible assets valuation, particularly in the technology, telecom, and banking sectors [1] Group 1: Analyst Background - Vladimir Dimitrov has experience as a strategy consultant and has worked with major global brands [1] - He graduated from the London School of Economics and focuses on identifying reasonably priced businesses with sustainable long-term competitive advantages [1]

Group 1 - FLSmidth appointed Julian Soles as President of Mining Products Business Line starting from May 1, 2025, and Toni Laaksonen as President of Mining Service Business Line starting from June 1, 2025 [1] - The company is a full flowsheet technology and service supplier to the global mining and cement industries [2] - FLSmidth aims to achieve zero emissions in mining and cement by 2030 as part of its sustainability ambition, MissionZero [2]

Core Insights - FLSmidth's Q1 2025 results exceeded expectations, leading to an upgraded financial guidance due to strong commercial performance and effective backlog management [2][15] Financial Performance - Group revenue decreased by 2% year-over-year to DKK 4,729 million, with service revenue increasing by 11% while products revenue decreased by 26% [12][23] - Mining revenue increased by 4% compared to Q1 2024, with service revenue rising by 14% driven by consumables and effective backlog management [10][23] - Cement revenue decreased by 15% compared to Q1 2024, with products revenue down by 37% due to portfolio pruning and divestments [11][23] - Adjusted EBITA margin for the group improved to 13.9% from 9.2% in Q1 2024, reflecting operational efficiency [12][23] Order Intake - Group order intake decreased by 12% compared to Q1 2024, with service order intake down by 4% and products order intake down by 27% [9][23] - Mining order intake decreased by 10%, while cement order intake fell by 18% [5][8][23] Business Segments - Mining Service revenue grew by 14%, with an Adjusted EBITA margin of 15.1% [6][10] - Cement business continues to face challenges, with an Adjusted EBITA margin of 9.5% and ongoing negotiations for potential divestment [6][14] Strategic Initiatives - The company is in exclusive negotiations for the potential sale of its Cement business to Pacific Avenue Capital Partners [2][14] - Continued focus on sustainability targets and operational efficiency is evident, with a commitment to reducing emissions by 2030 [24]

Core Insights - FLSmidth has raised its financial guidance for the full year 2025 due to strong performance in the Mining business in Q1 2025 [1] - The Adjusted EBITA margin for the Mining business is now expected to be between 14.0% and 14.5%, an increase from the previous range of 13.5% to 14.0% [1][4] - The overall Adjusted EBITA margin for the Group is now projected to be between 13.0% and 13.5%, up from 12.5% to 13.0% [2][4] Financial Guidance - The financial guidance for 2025 reflects ongoing business simplification, transformation efforts, and improvements in the Mining business, along with strategic initiatives in the Cement business [3] - Revenue expectations for the Mining segment are approximately DKK 15.0 billion, while Cement revenue is expected to be around DKK 4.0 billion, leading to a consolidated Group revenue of about DKK 19.0 billion [4] - The Adjusted EBITA margin for the Cement business is expected to remain between 9.0% and 9.5%, unchanged from previous guidance [4] Market Outlook - The Mining Service business is expected to see stable and active market demand, while the Mining Products business is anticipated to remain soft compared to 2024 [5] - The short-term outlook for the cement industry is affected by macroeconomic uncertainty, and revenue guidance reflects the divestment of the MAAG business completed in 2024 [6] Cost Considerations - The guidance for the Adjusted EBITA margin excludes transformation and separation costs of approximately DKK 200 million for the Mining business and around DKK 50 million for the Cement business for the full year 2025 [5][7]

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]