Flowserve(FLS)2023-10-26 21:51Financial Data and Key Metrics - Adjusted earnings per share for Q3 2023 was 1.1 billion, the highest quarterly revenue since 2015, with an adjusted gross margin of nearly 30% [13] - Bookings for Q3 were nearly 2.8 billion [13] - Year-to-date operating cash flow improved by 131 million compared to the prior year [19] - Adjusted gross margin increased by 230 basis points year-over-year to 29.7% [17] - Adjusted operating margin increased by 630 basis points to 8.7% in Q3 [42] Business Line Performance - Aftermarket bookings exceeded 500 million [15] - Original equipment and aftermarket revenues increased by 28% and 23% respectively compared to the prior year [40] - FPD's original equipment sales grew by 45% year-over-year, while FCD contributed a 14% increase [40] - Aftermarket revenues increased by 28% in FCD and 22% in FPD [40] Market Performance - Middle East and Africa, Latin America, and North America saw year-over-year revenue growth of 51%, 43%, and 24% respectively [40] - Europe and Asia also delivered substantial increases of 18% and 14% respectively [40] - The Middle East showed significant growth, with visibility to several large projects, particularly in oil and gas and petrochemical markets [14][59] Company Strategy and Industry Competition - The company's 3D strategy (diversification, decarbonization, and digitization) is driving accelerated growth, with 3D bookings representing 26% of total awards in Q3 [39] - The company is focusing on operational excellence and product management to drive margin expansion [17] - The termination of the Velan acquisition does not change the company's confidence in its 3D growth strategy, which includes a programmatic M&A approach [21] - The company is leveraging its position in energy security and energy transition to drive growth, particularly in hydrogen, carbon capture, nuclear, and LNG markets [45] Management Commentary on Operating Environment and Future Outlook - The company expects full-year 2023 revenue growth of 18% to 19% and adjusted EPS of 2.05 [43] - The company anticipates mid-single-digit revenue growth in 2024, with adjusted operating margin improvement of approximately 100 basis points and adjusted EPS growth of 20% to 25% [43] - The company remains committed to its 2027 financial goals, including growing revenues at a 5% CAGR and expanding adjusted operating margins to 14% to 16% [22] - The company is confident in its ability to maintain operating momentum and deliver further improvement in 2024 [22] Other Important Information - The company achieved a 60 million liability but views it as manageable given current insurance proceeds and legal management [5] Question: Seasonality and Q4 expectations [95] - The company expects modest revenue growth in Q4, with a focus on maintaining consistent performance across quarters [95]