Financial Data and Key Metrics Changes - The company reported second quarter earnings with adjusted EPS of $0.91, representing a 25% increase year-over-year [19][8] - Full year adjusted EPS guidance was increased to $3.25 to $3.40, reflecting a more than 25% year-over-year increase at the midpoint [7][30] - Revenue for the second quarter was $1.2 billion, a 3% growth compared to the prior year [19][7] - Adjusted gross margins expanded by 260 basis points to 34.9% [21][19] - Adjusted operating margins were reported at 14.6%, with impressive incremental margins of 94% during the quarter [8][21] Business Line Data and Key Metrics Changes - The Aftermarket business achieved bookings above $600 million for the fifth consecutive quarter, with aftermarket revenues growing by 7% [9][19] - Original Equipment sales decreased by 2%, primarily due to lower engineered-to-order work [20] - FPD (Flowserve Pump Division) reported a sales growth of 1% year-over-year, driven by aftermarket activity, with adjusted gross margins of 36.8% [23][20] - FCD (Flowserve Control Division) experienced a 2% growth in bookings and a 7% increase in sales, but margins were impacted by the Mogus acquisition [24][20] Market Data and Key Metrics Changes - Strong year-over-year growth of 9% was observed in general industries, while energy and chemical bookings decreased due to the non-recurrence of large projects [12][11] - The project funnel remains healthy, with a strong backlog of $2.9 billion, positioning the company well for future growth [14][15] - The nuclear project funnel is at its highest level, with total nuclear bookings of nearly $60 million in the second quarter [10][11] Company Strategy and Development Direction - The company remains committed to a disciplined approach to capital allocation, including M&A opportunities, despite the termination of the merger with Chart Industries [5][6] - The Flowserve business system is being fully implemented across all business units, focusing on operational excellence and margin expansion [17][21] - The company is excited about the potential of the Mogus acquisition to enhance offerings in the mining and minerals markets [24][25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to execute at a high level despite a dynamic macro environment [7][6] - The company anticipates organic sales growth to range from 3% to 4% for the full year, a slight decrease from previous guidance [30][31] - Management noted that while the macroeconomic environment remains uncertain, the project funnel is growing, and they expect a book-to-bill ratio of approximately 1.0 for the full year [14][45] Other Important Information - The company received a $266 million termination payment from the terminated merger agreement, which will be evaluated for shareholder value creation [5][6] - The impact of tariffs is estimated to be neutral to earnings for the second quarter, with ongoing efforts to mitigate tariff impacts [15][16] - The company closed the quarter with a net debt to adjusted EBITDA ratio of 1.25 times, the lowest level in a decade, providing flexibility for capital allocation [29][28] Q&A Session Summary Question: Can you provide more insight into the bookings environment and expectations for the book-to-bill ratio? - Management indicated that while the macro environment has caused some project delays, the aftermarket business remains strong, and they expect a book-to-bill ratio of 1.0 for the year, with a positive outlook for the second half [40][45] Question: How should we view the potential improvement in the FCD segment moving forward? - Management acknowledged that while FCD margins are currently below expectations, they are implementing the same operational excellence strategies that have benefited FPD, and they expect improvements in the future [48][56] Question: What are the implications of the Chart merger experience on future growth ambitions? - Management confirmed that they remain open to M&A opportunities that align with their strategic goals, emphasizing a disciplined approach to any future transactions [60][66] Question: What are the biggest remaining levers for margin expansion in the FPD segment? - Management highlighted initiatives focused on aftermarket capture and the ongoing implementation of the 8020 program as key drivers for margin expansion [72][74] Question: Can you clarify the timing and impact of the remaining modular deliveries from Mogus? - Management confirmed that the last large fabrication is nearly complete and will be delivered in 2026, with a significant margin differential expected once these modules are cleared from the business [100][103]

Q2 2025 Financial Highlights - Total bookings reached $1.1 billion, driven by aftermarket and MRO activity[8, 11] - Sales amounted to $1.2 billion, representing a 3% revenue growth compared to the prior year[8] - Adjusted gross margins improved to 34.9%, a robust year-over-year increase of 260 basis points[8] - Adjusted EPS increased by 25% versus last year, reaching $0.91[8] - Adjusted operating margins increased by 210 basis points versus prior year to 14.6%[8] - Cash from operations generated a strong $154 million during the second quarter[8, 24] Segment Performance - FPD segment bookings were $723.8 million, a decrease of 19.5% year-over-year, while revenue increased by 0.8% to $818.9 million[21] - FPD adjusted gross margin was 36.8%, up 390 basis points year-over-year, and adjusted operating margin was 20.3%, up 340 basis points[21] - FCD segment bookings were $354.7 million, an increase of 1.6% year-over-year, and revenue increased by 6.8% to $371.5 million[22] - FCD adjusted gross margin was 30.8%, up 20 basis points year-over-year, while adjusted operating margin was 12.2%, down 120 basis points[22] Market Outlook and Tariffs - The company estimates the annualized gross impact of tariffs to be between $50 million to $60 million, which they expect to fully offset through mitigating actions[17] - The company expects full-year book-to-bill conversion ratio to be approximately 1.0x[14] Full Year 2025 Guidance - The company increased full-year earnings guidance on robust first-half results and continued execution momentum[30, 39] - Organic sales growth is expected to be up 3% - 4%, and total sales growth is expected to be up 5% - 6%[30] - Adjusted EPS is projected to be $3.25 - $3.40, which equates to nearly 60% growth in adjusted EPS since 2023[30, 32] - Expect full-year adjusted operating margin expansion of approximately 200 basis points[32]

Financial Data and Key Metrics Changes - The company reported consolidated sales of $587.4 million for Q2 2025, an 8% increase year-over-year [17] - Fully diluted earnings per share were $1.31, up from $1.26 in the prior year, reflecting a 6 cent increase [17] - Consolidated operating income reached $88.1 million, an 11% increase from $79.1 million in the previous year, with operating income margin at 15%, up from 14.6% [20][24] Business Line Data and Key Metrics Changes - Water Systems segment sales increased by 8% year-over-year, with operating income at $61.8 million, a slight decrease from the previous year due to margin pressures [13][22] - Energy Systems sales grew by 6%, with operating income rising to $29.1 million and operating income margin improving to 37.5% [14][24] - Distribution segment sales were $200 million, a 5% increase, with operating income at $16.1 million, reflecting a 300 basis point improvement in operating income margin [15][22] Market Data and Key Metrics Changes - Sales in markets outside the US and Canada for Water Systems increased by 12%, with foreign currency translation negatively impacting sales by 1% [21] - The company noted a healthy backlog and order trends, indicating stability in demand across various markets [6][65] Company Strategy and Development Direction - The company is focused on innovation, global portfolio expansion, and strengthening its leadership position in key markets [28] - Recent acquisitions are performing well, and the company aims to leverage synergies to enhance operational efficiency [29] - The company plans to maintain its capital return strategy while investing in growth opportunities [29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustaining momentum despite global market uncertainties related to tariffs and commodity inflation [8][26] - The company anticipates a normal market cadence in the second half of the year, with a focus on executing its growth strategy [65][66] Other Important Information - The company ended Q2 2025 with a cash balance of $104.6 million and generated $52 million in net cash flows from operating activities [25] - A quarterly cash dividend of 26.5 cents was announced, payable on August 21 [25] Q&A Session Summary Question: Did Q2 benefit from pull forward orders? - Management indicated there was no significant pull forward from Q3 to Q2, stating it was business as usual [36] Question: How much did cost actions contribute to margin expansion in the distribution segment? - Cost actions contributed about a third of the 300 basis points margin expansion, with operational efficiency also playing a significant role [38] Question: Update on integration at PumpEngine and Barnes? - Integration is progressing well, with strong growth synergies being realized faster than expected [41] Question: Insights on the water segment's product mix? - Most of the mix pressure is product-driven, with a strong order book and backlog expected to support performance in the back half [49] Question: What catalysts are expected for the residential market? - The company is focusing on new product innovations and believes it can offset weaker housing starts through its high service and replacement demand [53] Question: Thoughts on the M&A pipeline? - The company has a robust M&A pipeline and is optimistic about future opportunities to enter faster-growing markets [68] Question: Strength in orders and backlog compared to last year? - Backlogs are up in the low double digits year-over-year, with a book-to-bill ratio above one for all segments [83]

Q1 2025 Highlights - Total bookings reached $1.2 billion, with 3D bookings accounting for 31% of the total[8] - Sales amounted to $1.1 billion, representing a 5% increase compared to the previous year[8] - Adjusted gross margins improved to 33.5%, a 180 basis points increase year-over-year[8] - Adjusted EPS increased nearly 25% year-over-year to $0.72[8] - $49 million was returned to shareholders through dividends ($28 million) and share repurchases ($21 million)[8] Bookings Overview - Total bookings grew by 18% compared to the prior year, with a book-to-bill ratio of 1.07x[9] - Power bookings increased by more than 45%[9] - Aftermarket bookings reached a record of nearly $690 million[12] - Original equipment bookings were $557 million in Q1 2025 compared to $462 million in Q1 2024[10] Segment Performance - FPD segment bookings increased by 21.2% year-over-year to $852.9 million[29] - FPD segment revenue increased by 1.8% year-over-year to $783.1 million[29] - FCD segment bookings increased by 10.2% year-over-year to $376.0 million[30] - FCD segment revenue increased by 13.6% year-over-year to $364.1 million[30] Financial Outlook - The company reaffirmed its full-year 2025 guidance, expecting organic growth of 3.0% - 5.0% and total sales growth of 5.0% - 7.0%[41] - Adjusted EPS is projected to be between $3.10 and $3.30[41] - Net interest expense is estimated at approximately $70 million, with an adjusted tax rate of around 21%[41]