Flowserve(US:FLS)2025-04-30 14:00Financial 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]